Materiality and value creation Materiality Our sustainability and corporate responsibility activities focus on the topics that are most important, or material, to our business. We use a combination of factors to identify material topics, analyzing the shared value for people, the planet, and our company. These include: Our renewed company vision and corporate strategy Assessments of risks and opportunities through Nokia Enterprise Risk Management system Our long history and experience in sustainability and corporate responsibility Our regular engagement with various stakeholders, including industry cooperation around key sustainability topics Our customers’ sustainability requirements and evaluation criteria in the EcoVadis supplier assessment Requirements and feedback from investors, and indices such as the Dow Jones Sustainability Indices and the CDP Global macro trends and challenges and issues that are subject to public debate and media and analyst interest UN Sustainable Development Goals International sustainability frameworks such as the Global Reporting Initiative (GRI) G4 and the UN Global Compact. At the beginning of 2017, we finalized the review and update of our materiality analysis whereby we systematically evaluated more than 40 sustainability topics selected based on the above criteria. Each topic was carefully defined and weighed against its impact on our commercial success and sustainable development - including UN Sustainable Development Goals, and also taking into account the possibilities we have to influence sustainable development throughout the value chain. As a part of the analysis we conducted close to 50 interviews with Nokia experts representing all the key sustainability related areas within the company, customers representing both traditional and new customer segments, and investor, employee, UN and NGO representatives. The analysis was also reviewed in Nokia Responsibility Council, Board of Directors, and by external sustainability experts. The results of the materiality assessment helped us to identify the key topics and focus areas and set the long-term targets for the most material areas. Compared to our earlier sustainability materiality analysis, some of the key findings during the analysis were: The overall importance of sustainability has, to some extent, increased No issue has clearly declined in importance The issues which already hold high importance, such as connecting people and things, ethical business practices, and product energy efficiency, continue to increase in importance The highest increase in materiality relates to the issue of sustainability related products and services. The second highest increase is in privacy & data security. Our re-entry into the consumer business via licensing increases the importance of several issues Two new emerging issues have bubbled up in our materiality map, both of which were earlier included in other issues: 1. materials traceability and conflict minerals, 2. diversity, inclusion, and anti-discrimination. During the second half of 2017, we enhanced the materiality of our key topics by further analyzing the company’s economic, social and environmental value creation. The materiality maps below show the 20 most material topics, their relevance to sustainable development and Nokia business success, as well as their linkage to the UN Sustainable Development Goals where we can have the greatest impact through the technology solutions we create and deliver. Value creation Over recent years, various stakeholders have become increasingly interested in understanding the overall quantified positive and negative impacts of companies on environment, economy and society. We have been one of the forerunners in this value creation thinking. For example, we participated in the Aalto University (Finland) CEMS program, which made an extensive analysis of Nokia’s positive and negative social, environmental, and economic impacts throughout the value chain in terms of monetary value where feasible. We also presented some of our value chain impact analysis in our previous People & Planet reports. Moreover, the conclusions of our materiality analysis and sustainability related risks and opportunities in our enterprise risk management system are also to some extent based on the analysis of our positive and negative impacts in terms of monetary value. In 2017, we joined The Upright Project which develops value creation analyses and related methodology in cooperation with several companies and organizations. In the Upright model the negative and positive value creations with monetary values is analyzed and shown in 5 main dimensions: Economic, Environmental, Health, Social and Knowledge. Each of these dimensions are divided into several impact areas (see the image below). Based on the analysis carried out by The Upright Project, our main impacts were shown to be related to our network technology. It brings major net positive impact through knowledge creation (information infrastructure and related innovations), economic benefits, and job creation throughout the value chain. Moreover, the project showed that in environmental issues, the positive impact of communications technology exceeds the negative impacts of our own operational activities, for example, by enabling other industries to become more energy efficient. It is generally a challenge to value impact and then convert into euro equivalents. The approach of The Upright Project was to grasp the scale of different impacts rather than try to measure each one accurately. Note: The conclusions in the above chart for the 20 impact areas are from The Upright Project, and estimations based on public data and various assumptions. For example, in the economic area, the values of paid salaries and taxes are based on the reported euro values, and in the environmental area, the Nokia reported GHG emissions, water usage and waste figures are converted by Upright into euro figures, using sources such as The Kering E P&L, carbon tax country-specific pricing, and global water tariff averages.