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Letter from the President and CEO

Rajeev Suri

Today, we are a fundamentally different company, with perhaps the broadest product portfolio in our industry. From the enabling infrastructure for 5G and the Internet of Things, to emerging applications in virtual reality and digital health, we are shaping the future of technology. I am pleased to say that, in fact, our integration provided the opportunity to apply the best practices of each company to deliver a robust sustainability platform.

Sustainability remains an important foundation for our business. Aligned with our renewed corporate strategy as well as our brand commitments, our work is driven by performance as well as our deep commitment to ethics and integrity. Our activities focus on four priority areas: improving people’s lives with technology, protecting the environment, conducting our business with integrity, and respecting our own people. We measure progress of our efforts against the highest standards, those frameworks which are recognized globally for sustainability. In 2016, we continued to further embed the UN Sustainable Development Goals into our sustainability activities, supporting the UN Global Compact (UNGC) principles and assessing our performance in alignment with the UNGC Advanced Level principles. Let me share some highlights, and you can then find more detail in the rest of this report.

Improving people’s lives with technology

We believe we can make our greatest impact on the world’s sustainability challenges by developing and enhancing solutions that improve lives. This core belief is at the heart of everything we do, and as a global leader in delivering technology solutions, we know we must continue to apply our solutions, our robust innovation, to make a positive impact on the world and those living in it.

In 2016, we made progress building a resilient infrastructure, promoting sustainable industrialization, and fostering innovation – key objectives listed as part of the UN Sustainable Development Goals – across a range of technology innovations. Our radio networks’ customers serve around 5.5 billion subscriptions worldwide; we performed more than 40 use case trials in 5G, the next generation of wireless networks; and, in the emerging Internet of Things (IoT) market, we launched innovations that provide the building blocks for IoT solutions in health care, connected cars, first responder, smart cities, and utilities, among others.

Thanks to our Withings acquisition, we expanded our offerings in digital health, empowering people to take control of their physical wellbeing. Wellness and preventative health care is also a personal passion of mine, and I took pride in working with the UN Broadband Commission – along with some of the brightest minds in the world – to create powerful research that provided practical guidance to global leaders implementing national digital health systems and solutions.

Protecting the environment

We take very seriously the risks of climate change and the depletion of natural resources. And last year, we worked tirelessly to support our customers in reducing their environmental impact by improving the energy efficiency of our products. For example, by modernizing 27% more base station sites last year, our customers averaged 43% more energy savings than those running on non-modernized networks. This is a significant improvement by any standard.

We also continued to expand our zero CO2 emissions offering. Today, 120 customers use at least one zero emission product or service, and 104 customers use renewable energy sources through Nokia. And we work hard in our own operations to reduce our environmental impact. Last year our facility emissions decreased by 14%.

Conducting our business with integrity

For more than 150 years, Nokia has managed its business with integrity. Today, we continue to embrace a culture of integrity through our Code of Conduct, which we apply daily to our internal and external business activities.

Technology vendors such as Nokia have an important role to play to help ensure that the technologies we provide are used to respect, and not infringe, human rights. We believe that in addition to exercising human rights due diligence that minimize technology misuse, transparency plays an equally important role in companies’ duty to respect human rights. Accordingly, to further advance transparency and to push the dialog on challenges in the telecoms sector further, we are, as part of this report, publishing the first anonymized human rights due diligence case examples. Furthermore, as part of our efforts to increase transparency, we joined the Global Network Initiative (GNI), and thus made a commitment to undergo external assessments by the GNI Board to confirm that we continue, as a company, to make best faith efforts to implement the GNI Principles. We also aim to increase our reporting transparency in other areas as we release our first Modern Slavery report in June 2017, in line with the UK Modern Slavery Act.

Responsible sourcing is also inherent to our culture of high ethical standards and integrity. Last year, we expanded our work by conducting 390 supply chain audits, including 45 on-site audits on corporate responsibility. And we more than doubled the amount of days spent on in-depth on-site supplier auditing to ensure our suppliers apply the same high integrity standards that we have for ourselves.

Respecting our people

We placed special emphasis on our Nokia culture and people throughout our year of integration. And our team responded positively with a more favorable understanding of our vision, increasing from 85% favorable to 88%. This was measured by our regular Culture Cohesion Tracker, which was sent to all employees and garnered over 70 000 responses. As a result of integration work of the combined company, we raised our estimate of net operating cost synergies and announced a target of EUR 1.2 billion in total cost savings in 2018. And, I would note that delivering against this commitment has required that we reduce the number of employees that we employ. These reductions are never easy. Throughout the process, we have made it a priority to provide support for those employees and to treat them with dignity and respect.

As a global company, we also believe that it is important to reflect the diversity of the world. Therefore, last year we laid the foundation to improve the gender balance across our organization. This included training more than 1 900 leaders in gender balance topics and launching two high-touch career development programs targeted to 50 of our most talented women. This issue is important not only to our business but to me personally, and I take great pride in contributing to this effort.

We also respect others through a range of global initiatives. Launched last year, our new corporate community investment approach and programs made it possible for us to make a difference by leading projects around the globe that connect the unconnected, encourage gender diversity, and save lives.

Addressing our challenges

Sustainability is a continuous journey of learning and improvement. Accordingly, we identified the following areas where we can do better in 2017. We deeply regret that we had seven fatalities involving contractors or subcontractors carrying out work on behalf of Nokia. While each of these fatalities was related to accidents that occurred on public roads, they are unacceptable. The incidents have been thoroughly investigated, with remediation and corrective actions put in place.

In terms of gender balance, we are far short of our long-term aspiration. While we have put a range of activities in place in 2016 to improve in this area, those activities will only start to show meaningful results this year and beyond. To further accelerate progress, we have clear improvement goals established for each member of my leadership team. Thus, I am confident that we will start to deliver the needed changes, but remain impatient to see that progress happen.

In environmental activities, our total waste from our combined company facilities and operations increased by 14% from the previous year. This was partly a result of consolidation activities and the exit of real estate as part of our integration. We must do better this year, and plans are already underway to drive these improvements.

We did not achieve our 2016 goal to complete the phase-out of four phthalates, which are restricted chemical compounds typically used as a softener in plastic materials. This was a challenge experienced across the industry, as the supply base was not sufficiently prepared to deliver alternatives. As a result, the EU revised the goals previously set forth, and we are on track to achieving the new targets.

Finally, our greenhouse gas emissions related to upstream transportation and distribution of our products increased by 21% last year. For 2017, our focus will be to improve the environmental efficiency associated with the transportation of components from our suppliers.

Recognizing our industry leadership

Overall, 2016 has been a year of change, bringing the best of two industry leaders together to become a strong enterprise and a leader in sustainability. And we were acknowledged with accolades. Nokia was named the Supersector/CMT Group Leader in the Dow Jones Sustainability Indices, garnering top rankings in the economic, environmental, and social dimensions of sustainability. We also ranked 18th among the 100 most sustainable corporations in the world as judged by Corporate Knights, the Canadian-based media and research company. And, we took top honors in CDP for our work on the disclosure of climate change data.

Targets for a better tomorrow

Earning recognition as an industry leader isn’t enough, however. As we move into 2017 and beyond, we remain ever more committed to leveraging our strong global presence to improve lives through technology. Accordingly, we have set our most aggressive sustainability targets to date through to 2030 for our top sustainability focus areas. I’d like to mention one of these targets.

With a focus on making a positive long-term impact and fulfilling the global climate change targets set by the United Nations, we recently signed the Science Based Targets initiative commitment letter. In addition to setting long-term goals through to 2030, this commitment requires submission of our yearly emissions reduction targets and annual third party validation. This is significant to say the least, and the fact that we are the first telecommunications vendor to sign is a testimony to our unwavering support in the fight against global warming.

Finally, I would like to thank our Nokia team for their work in enabling us to achieve our leading sustainability performance in 2016. It is proof of the talent, innovation, and drive for excellence in everything we do.

Thank you also for your interest in Nokia’s sustainability efforts. I invite you to learn more in this full report.

Warm regards,

Rajeev Suri
Nokia President and CEO