Sustainability long-term plan

We recognize that our sustainability impacts occur throughout the value chain, and focus our corporate responsibility (CR) work around three long-term objectives – minimize environmental impact, be an ethical forerunner, and create value for all stakeholders.

As a company, we are convinced that our long-term success is connected to playing an active role in sustainable development. This requires a business model that takes into account social and environmental aspects, covering business operations, partners and suppliers, as well as services and solutions. Therefore, sustainability is a natural part of Tieto’s daily business operations and integrated into our value chain.

CR long-term plan supporting sustainable development

CR demands from customers have intensified during the past years. For many of our customers, compliance with the United Nations Global Compact is a minimum-level requirement. To meet stakeholder requirements and expectations we engage in open dialogue about sustainability. Our aim is to integrate sustainability from policy as well as practice perspectives. 

Our long-term CR objectives are to lower the environmental impacts of the company as well as our customers and supply chain, to be an ethical forerunner in the global society, and to create value to all stakeholders. Our current CR long-term plan is based on the CR materiality analysis conducted together with stakeholders in 2013-2014. This plan also comprises the elements of the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises. 

At the end of 2016, we started a new materiality analysis together with our stakeholders for the renewal of our CR long-term plan and targets for the current strategy period. In addition to reviewing stakeholder expectations, new CR initiatives and compliance requirements will also be taken into account. Among other things, this new plan will reflect Tieto’s contribution to the United Nations Sustainable Development Goals. 

The following table summarizes our current CR targets for prioritized CR areas during the strategy period 2013-2016.

Minimize environmental impact
CR aspect Long-term target (2014-2016)1 Result 2016 (2015)
Energy consumption Reduce total indirect energy consumption by 3.5% annually -6% (-9%)
Use of materials and chemicals Reduce paper consumption by 5% annually -34% (-8%)
Waste management Only partners accepting Supplier Code of Conduct Rule used for e-waste recycling (relation of e-waste partners) 74% (40%)
     
Be an ethical forerunner in society    
CR aspect Long-term target (2014-2016)1 Result 2016 (2015)
Business ethics No breaches of Code of Conduct 0 (0)
  100% of employees trained on Code of Conduct and Anti-corruption annually 86% (73%)
Procurement and supply chain 100% of suppliers serving Tieto on regular basis to adhere to Supplier Code of Conduct Rule2 49%3 (31%)
  Zero violations of Supplier Code of Conduct Rule of contracts 0 (0)
Employee health and wellbeing 100% of employees (minimum 95%) to have energy above work related demand 91% (93%)
Create value for stakeholders
CR aspect Long-term target (2014-2016)1 Result 2016 (2015)
Customer experience Customer Experience Index 8.2 by 20202 (scale 1-10) 7.64 (7.54)
Quality of products and services ISO 9001 certification based on business needs (% of employees) 77% (73%)
  ISO 27001 certification based on business needs (% of employees) 48% (48%)
  All sites >50 employees to be certified with ISO 14001
(% of employees)
92% (82%)
  ISO non-conformities to be closed according to the requirements Goal met (Goal met)
Financial performance IT services revenue growth above the market (CAGR)2 IT services’ sales growth of 4%. IT services market estimated to have grown by 2%.
  10% EBIT margin as a long-term objective2
Adjusted3 margin sustainably over 10%
9.4% (8.6%)
10.2% (10.3%)
  Dividend increasing annually in absolute terms (min. 50% of net results)2 Proposed dividend up 5% to EUR 1.15 (1.10). Extra dividend of EUR 0.22 also proposed. Dividend yield 5.3%, payout ratio 94%, including extra dividend.
  Net debt/EBITDA 1.5 as an upper limit in the long-run2 0.6 (0.1)

Minimizing environmental impact

Tieto recognizes that climate change is a global concern, which needs to be addressed by all enterprises and organizations. Already in 2015, Tieto actively expressed its support for the COP 21 Conference in Paris (21st Conference of the Parties to the United Nations Framework Convention on Climate Change), and the results thereof, through CDP.

The management of our environmental impacts is mainly focusing on energy consumption (electricity, heating and cooling) for running data centres and offices, on business travel, and use of paper and other consumables. Hence, to us minimizing environmental impact means reducing energy consumption, increasing energy efficiency, replacing business travel with online conferencing options, and minimizing printing and consumables.

The bigger opportunity, however, lies in reducing emissions in other industries through innovative IT solutions and services. According to the Global eSustainability Initiative Smarter 2030 report, ICT can enable a 20% reduction of global CO2e (CO2 equivalent) emissions by 2030, thus holding emissions at 2015 levels. Tieto is committed to increasing the environmental friendliness of our data centres, and implementing solutions that improve customers’ sustainability as well as in society at large.

Being an ethical forerunner

Being an ethical forerunner in the global society means showing a good example as a corporate citizen across operating countries. The European Union’s Anti-Corruption Report concludes that corruption continues to be a challenge in Europe, and that the situation varies from one member state to another. In recent years, some Nordic companies have suffered from corruption cases too. The European Union has launched an ICT-sector guide on implementing the UN Guiding Principles on Business and Human Rights. To us, it means focusing on human rights, throughout our supply chain.

Tieto’s approach to business ethics is not only compliance-based, but is intended to create a culture based on transparency and openness. We call it an Open Source Culture.

Creating value for stakeholders

Creating value for stakeholders touches upon Tieto’s key stakeholder groups, customers, employees and investors, as well as society as a whole. Our aim is to create sustainable value for all stakeholders.

By delivering sustainable IT services and solutions to enterprises and society, Tieto helps to improve economic, societal, as well as environmental conditions in the world. At the same time the company’s profitability can be strengthened, which is crucial for our long-term success as an innovator, employer and taxpayer, to mention a few examples.

CR risks and opportunities

To address CR related risks and opportunities, Tieto strives to integrate CR impacts at the core of our business, and to include more CR elements in business processes and systems. We have identified four main risks related to CR. All four are connected to some of the highest priority CR aspects identified in the latest materiality analysis (2013-2014). 

Climate change concerns all of us – people, organizations and enterprises, and society. Tieto strives to mitigate climate change related risks via active environmental management through our Environmental Management System, and by lowering customers’ emissions with sustainable IT solutions.

Tieto also recognizes that the company’s supply chain poses potential risks in terms of human rights and labour rights. Supply chain risks are mainly mitigated via Supplier Code of Conduct Rule implementation, supplier management and continuous assessments. In addition, by increasing understanding of supply chain related impacts Tieto believes it’s possible to improve the conditions of human rights as well as labour rights together with suppliers. In this context, it is imperative to recognize and act upon the differences between the cultures in the Nordics and in other Tieto countries.

Corruption is another potential CR risk, not only for Tieto but for enterprises and society at large. According to Transparency International’s Corruption Perception Index 2016, measuring public sector corruption, 69 per cent of the 176 countries scored below 50, on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean). This year more countries declined in the index than improved, showing the need for urgent action.

The majority of Tieto’s business operations are located in countries that may be considered to be cleaner from corruption based on Transparency International’s measuring. However, Tieto recognizes that we may be exposed to corruption risks related to procurement and sales, especially in Eastern Europe and Asia. We strive to mitigate these risks via Code of Conduct and Anti-Corruption Rule implementation, communication with suppliers, and training of sales personnel and partners.

The fourth CR risk area touches upon employee health risks. Tieto recognizes that today’s operating environment with rapidly changing competence needs, work content and ways of working, might impact the psychosocial wellbeing of individual employees. Employee health risks are mitigated through our pro-active approach, line manager attention and follow-up, and communication. Tieto strives to offer employees a work environment which supports psychosocial wellbeing. Our Open Source Culture, where the employee experience has become a vital part, is one important element in this work. We also strive to offer a flexible and mobile work environment supporting a work-life balance.

As an IT services provider, we are convinced the biggest CR opportunities for Tieto relate to the positive sustainability impacts of our IT services and solutions, and to our role in creating a society where responsible and sustainable business is the norm. We have measured the sustainability impacts of IT since 2010 by calculating the emission reductions from our own digital transaction services and other digital services replacing paper. Tieto is committed to continuing the development of sustainable IT solutions.