Sustainability Report 2011

Transcription

1 Sustainability Report 2011

2 Report facts REPORTING PERIOD BOUNDARY OF THE REPORT FEEDBACK AND QUESTIONS The first stand-alone Sustainability report for 2010 was published in April Data is reported for each plant according to the length of time it has been part of the Ahlstrom Group. This Sustainability report has been prepared with reference to the Global Reporting Initiative 3.1 guidelines to the level B.

3 Company facts PRESIDENT & CEO BUSINESS CUSTOMERS HEADQUARTERS MANUFACTURING PLANTS SALES OFFICES EMPLOYEES NET SALES LISTED FOUNDED Jan Lång Ahlstrom is a high performance materials company, partnering with leading businesses around the world to help them stay ahead. Well-known global companies Helsinki, Finland 33 plants in 14 countries (as of ) 32 in 28 countries 5,185 employees in 28 countries on six continents EUR 1.6 billion in 2011 (continuing operations) on the NASDAQ OMX Helsinki since 2006 in 1851 You can find out more about us at

4 Contents 1 Who we are 24 People and culture 2 Key figures and targets 3 Business areas 4 CEO s message Highlights 6 Governance and management 7 Where do we operate in the world? 8 Core purpose, Vision, Values, Brand promise 9 Our sustainability framework 10 Interacting with our stakeholders 12 Materiality assessment 14 Our products with purpose 20 Sustainability in product design 26 Ahlstrom as an employer 28 One Ahlstrom 30 Health and safety 32 Community impacts 33 Code of Conduct and human rights 34 Supply chain 36 Responsible sourcing 38 Environmental management in manufacturing 44 Appendix 1 Renewed Code of Conduct 46 Appendix 2 Adherence to GRI Appendix 3 Adherence to the Ten Principles of the United Nations Global Compact 48 Our history of corporate responsibility

5 Who we are Ahlstrom is a high performance materials company, partnering with leading businesses around the world to help them stay ahead. We make products that people use every day, both in the home and industry. We have a leading market position in all four of our business areas, Building and Energy, Filtration, Food and Medical, and Label and Processing. 1

6 Key figures and targets Key financial figures Our sustainability performance and targets EUR million 2011* 2010 * Change, % 2009 Net sales 1, , ,596.1 Operating profit / loss Operating profit excluding non-recurring items % of net sales Profit / loss before taxes Profit / loss for the period Earnings per share, EUR Return on capital employed, % Capital expenditure excluding acquisitions* 66.4** 47.2 ** Gearing ratio, % 38.2** 46.9 ** 57.7 Net cash from operative activities Dividend per share, EUR 1.30*** *Continuing operations **Including discontinued operations ***The Board of Directors proposal to the Annual General Meeting. Consisting of a dividend of EUR 0.87 per share and an extra dividend of EUR 0.43 per share. SOCIAL PERFORMANCE IN 2011 TARGETS FOR 2012 Achieve Zero Lost Time Accidents, Accident Frequency Rate 0 51 LTA's, AFR LTA s, AFR 1.98 Complete compliance training for all key white-collar personnel 456 employees 100% Complete Code of Conduct training for all white-collar employees N/A 100% Human Potential Index Goal and development discussion for all employees 72% 100% Employee turnover 4.2% 5% Key strategic development program completion for targeted employees 33 employees 50 employees ENVIRONMENTAL Achieve zero waste to landfill by kg/t 13.5 kg/t Reduce water intake by 5% in 5 years 42.8 m3/t 43.1 m3/t Cut electricity usage by 5% in 5 years MWh/T MWh/T Cut fuel energy usage by 5% in 5 years GJ/T GJ/T Cut CO 2 emissions by 10% in 5 years 553 kg/t 565 kg/t Have 100% of production capacity ISO certified 98% 99% ECONOMIC Our target is to achieve at least 13% Return On Capital Employed (ROCE), which for 2011 was only 2%. 2

7 Business areas Net sales by business area Operating profit by business area Building and Energy 18% Filtration 20% Food and Medical 21% Label and Processing 41% Building and Energy 3% Filtration 45% Food and Medical 24% Label and Processing 28% Building and Energy Filtration Food and Medical Label and Processing is one of the leading players globally for materials used in wallcoverings, floorings and windmill blades. It has plants in Belgium, China, Finland, France, Russia and Sweden. is the global leader in transportation filtration materials. It has plants in Brazil, China, Finland, Italy, Spain, South Korea and the U.S. is one of the leading players globally for materials used in teabags, food packaging, masking tape and medical gowns and drapes. It has plants in China, Finland, France, India, the U.K. and the U.S. is one of the largest suppliers of specialty papers globally. It has plants in Brazil, France, Germany and Italy. Strategic priorities Strategic priorities Strategic priorities Strategic priorities To strengthen wallcovering material presence particularly in Asia and expand the differentiated offering. To strengthen position in cushionvinyl flooring materials globally. To align supply platform for reinforcements materials for wind energy and marine industries to global trends. To grow next generation applications and invest in global supply platform in transportation filtration. To grow substantially and establish global presence in air, water and life science materials. To expand the range of sustainable products and strengthen global presence in food applications. To expand the differentiated product offering and strengthen global platform in medical applications. To focus on cost effective materials with sustainable features. To grow release liners globally. Customers Customers Customers Customers construction, energy, fabric, marine and transportation industries automotive, water, energy, healthcare and food industries food, beverage, medical, healthcare and construction industries labeling, food and industrial packaging, graphics, cosmetics and pharmaceutical packaging, printing, furniture and construction industries 3

8 CEO s message We believe our role, as a business, is to offer our customers products that make a positive contribution to their own sustainability performance, while achieving improvements in our own. This ambition is at the heart of everything we do, from our management of resources to our membership of the World Business Council for Sustainable Development, to our investment in new environmentally-friendly products. As the world s population rises and concentrates increasingly in cities, we see significant opportunities to contribute to a more sustainable future. We can do this by developing products that help the world save resources, and make everyday life easier, healthier, and greener, from air filters, to components for wind turbines, to specialized medical fabrics. Our recent acquisition of 49 percent of Porous Power Technologies, a US company developing separators to lithium batteries used in electric cars, is another excellent example. Unlike many companies of our size, we already use a significant proportion of renewable raw materials 87 percent in 2011 and this continues to rise as we apply our expert knowledge to make more and more products from renewable fibers. Our challenges as a business relate to the fact that ours is a resource-intensive industry, and those resources are becoming scarcer, and competition for them more intense. Our response is to become more efficient in our use of those resources every year, and to continually look for new ways to consume less energy, use less water, and produce 4

9 2011 Highlights We created a new vision Inspiring people, passionate about new ideas, growing with our customers. page 8 less waste and help our customers do the same. We have important initiatives underway in all of these areas, including a plan to reduce our waste to landfill to zero by There are more details on all of these initiatives later in this report. In other ways we are similar to all other major businesses across the world, as we face the challenges of difficult economic conditions, volatile and rising commodity prices, changes in environmental regulation, and the risks as well as the opportunities of expanding our business into emerging markets. I am confident that we will address these issues as well as the specific challenges of sustainability in the same spirit that Ahlstrom has demonstrated since it was founded in We have always been a responsible company, and one that has adapted successfully to change, and these principles are made explicit both in our updated Code of Conduct, which we launched this year, and in our values, which are Acting responsibly, Creating value, and Learning and renewing. These values have helped Ahlstrom become the internationally successful company it is today, and they will help us meet the sustainability challenges of tomorrow. renewed our Code of Conduct. We believe that our business dealings should not harm people, the environment or society at large. page 33, joined the World Business Council for Sustainable Development and its Sustainable Forest Products Industry working group. page 11 developed our own Life Cycle Assessment expertise at our Research Center. page reduced our waste generation by 3.9% over 24 months. page 38 reached zero waste to landfill from 9 plants. page 41 reached zero lost time accidents in 16 plants. page 30 Jan Lång President and CEO modernized our training program portfolio. page 27 made a large donation to advance human rights in India. page 33 5

10 Governance and management Ahlstrom Group s Governance Statement 2011 is included in the Annual Report. Our sustainability and Health, Safety, Environment and Asset management (HSEA) governance and management practices ensure that we integrate environmental and social responsibility into our daily operations. We employ several tools to do this, such as our group-wide policies and processes, sustainability targets and KPI s, environmental management systems with third party assurance, internal audits, common sustainability measurement system and reporting. Our Sustainability function is tasked with the development and implementation of our activities in this area. It is led by the VP, Sustainability, and VP, HSEA, who report to the EVP Sustainability and Human Resources reporting to the CEO. Ahlstrom s Executive Management Team (EMT) is responsible for all policy issues related to sustainability. In 2011, we decided to strengthen the organization and move to a regional HSEA structure, with dedicated persons responsible for Europe, the Americas as well as Asian countries. Everyday sustainability issues are handled by the Group Sustainability function together with the Supply Chain and business areas, who are responsible for the operational management of their sustainability issues. The Group function convenes regularly with the business areas to monitor performance and implement actions. Every manufacturing plant has an identified person responsible for health, safety and environmental matters. Likewise, plants with a Chain-of-Custody certificate each have a person responsible for forest certifications. Matters of social responsibility fall under the remit of plant management together with Human Resources function, who work together to ensure that each plant has the strong culture and leadership which are necessary to achieve high standards of safety and well-being. 6

11 Where do we operate in the world? 7 4 1, , ,120 23% , , ,629 53% MANUFACTURING Plants AS OF SALES OFFICES EMPLOYEES PER CONTINENT* TONS PURCHASED PER CONTINENT TONS OF PRODUCTION PER CONTINENT % of sales in euro per continent We sell our products across the world with just over half our sales in Europe. We source much of our Eucalyptus pulp in South America. Compared to 2010, we had fewer manufacturing plants in Europe and the Americas in 2011, after the sale of the Home and Personal business. We increased our manufacturing volumes in Asia by 17 percent compared to 2010 and opened two new sales offices there. A new plant opened in Binzhou, China, which will produce glassfiber reinforcements for wind turbine blade manufacturers , ,491 11% ,869 33,809 13% * Europe, North and South America, Asia-Pacific and rest of the world 7

12 Core purpose Ahlstrom is a high performance materials company, partnering with leading businesses around the world to help them stay ahead. Vision Values Brand promise Stay ahead Inspiring people Passionate about new ideas Growing with customers Act responsibly Create value Learn and renew Performance Improvement Certainty Simplicity 8

13 Our sustainability framework We want Ahlstrom to be a successful and sustainable business, not just economically, but socially and environmentally. Everything we do is underpinned by this belief, from the way we manage our supply chain, to the way we manage our workplaces. We put this into practice by organizing our sustainability efforts in the same way as we organize our business. And right across Ahlstrom you ll find the same commitment to safety and human rights, and a shared ambition to be a leader in sustainability in our sector. Product development It all starts with product development. We make products that are designed to be useful, but thanks to the high proportion of renewable raw materials we use they are also sustainable. The product development process is particularly significant in this respect, because as much as 80 percent of a product s environmental impacts are determined in the design phase. Responsible sourcing Sourcing is an important area for us, given the nature of our products. In percent of our fiber raw materials came from renewable sources, and all our wood fiber suppliers have third party certification for their forests. Manufacturing Our manufacturing operations are always striving to be more efficient. It s all about doing more with less, and saving both money and resources. At the same time we want to minimize our emissions to air, water and soil. Sales and marketing We are good stewards of the products we make, and pride ourselves on building long-term relationships with our customers. They face many of the same sustainability challenges that we do, and we can help them meet these challenges by providing more sustainable products, and sharing our own expertise. Economic, social and environmental FOCUS AREAS in Ahlstrom s value chain: Product development Responsible sourcing Manufacturing Sales and Marketing Minimized environmental impacts of the products over their life cycle (LCA) Social impacts of products Certified fiber sources Supplier Code of Conduct Water use Waste minimization Resource efficiency Energy use Minimized emissions to air, water and soil Product stewardship Sustainable value propositions Helping customers to solve their sustainability challenges Safety in workplace, human rights, leadership and management practices 9

14 Interacting with our stakeholders STAKEHOLDER GROUP EXAMPLES OF DIALOGUE ASSESSMENTS Customers Employees Suppliers Shareholders and investors, analysts, media Academia Society: government, regulators, national and local authorities, communities Industry peers, competitors, business partners, NGO s, trade associations Face to face meetings and other contacts via the sales force, Joint product development projects Annual and Sustainability reports Daily contacts Performance management process Ahlstrom Academy training program Insite intranet Inside magazine Ahlstrom s European Dialogue Internal information meetings Local cooperation with unions and employee representatives Face to face meetings and other contacts via the Global Sourcing organization Joint seminars (e.g. Sustainability) Joint product development projects Joint cost reduction projects Annual General Meeting Annual Capital Markets Day Quarterly conference calls and webinars Annual and Sustainability reports Interim reports Stock exchange and press releases Road shows Face to face meetings Practical training and degree theses Research and development projects Recruitment fairs Student visits Local level cooperation with the authorities Open house events at production plants Public hearings Participation in trade associations, lobbying and joint projects in environmental matters Customer satisfaction surveys Feedback Employee surveys Pulse surveys Supplier surveys Media monitoring Bi-annual media visibility report Preferred employer surveys Employee feedback A company-wide employee survey was run for the second time in 2011 with the purpose of assessing the level of satisfaction, motivation and commitment of the whole Ahlstrom Group, and giving our people an opportunity to express their views and recommendations on ways to improve their own work and workplaces. The response rate was a very good 80.5 percent (74.3% in 2010) with 4,221 respondents in 17 languages and 27 countries. There was an improvement in all areas this year, as measured by a Human Potential Index, with the sole exception of Ahlstrom s image as an employer. This received some critical feedback. Employees appreciate being able to make their own decisions at work, and office workers felt stimulated and challenged in their work. Production workers felt most satisfied with the levels of cooperation within their teams. Work/life balance was felt to be one of Ahsltrom s strengths, and people also felt empowered to try new ideas, which is a positive reflection of our values. People are also satisfied with the amount of information they receive concerning their own work. A main area for improvement was team spirit. An important action is to activate goal and development discussions to cover everyone, as it seems to have a clear and positive connection with job motivation and engagement. Customer feedback Customer satisfaction is a strategic KPI for Ahlstrom. We conducted a customer survey measuring loyalty according to Net Promoter Index in We were not fully satisfied with the results and have put plans in place to make improvements. These include ways to make our customer service reflect our values, make it more predictable and reliable, and speed up our response times. The results were further analyzed by business and sales units for specific follow-up plans. We aim to repeat the survey twice per year. The results were further analyzed by business and sales units for specific follow-up plans. We aim to repeat the survey twice per year. Academia The nature of our business, and the specific sustainability challenges we face, make it vitally important for us to have close relationships with key universities, and specifically those close to our major plants. In Italy, we have collaborated with the University of Turin and in France with Centre Technique du Papier in Grenoble. In the United States we support North Carolina State University. A major grant was paid in 2010 and 2011 to Aalto University in Finland. Over the years, numerous students have completed their degrees by doing their diploma work or thesis at Ahlstrom. In 2011 we had 39 people working for their M.Sc. or Ph.D. degrees in our units. We also like to welcome student visits to our plants. 10

15 Memberships of associations World Business Council for Sustainable Development (WBCSD) WBCSD is a coalition of international companies united by a shared commitment to sustainable development. Ahlstrom joined WBCSD in 2011 and became a member of its Sustainable Forest Products Industry working group. Relationships with our stakeholders Society; government, regulators, national and local authorities Industry peers, competitors, business partners, NGO s, trade associations customers employees European Disposable and Nonwovens Association (EDANA) Ahlstrom is an active member of EDANA with a board chairmanship held by Jean-Marie Becker until when he became a Suominen executive due to the divestment of the Home and Personal business. Ahlstrom is also a member of the Board Working Group of Sustainability and participates in its Environmental Evaluation Committee and other business area specific committees. PaperImpact PaperImpact is the European Speciality Paper Manufacturers Association where Ahlstrom is a founding member. Ahlstrom is a member of its Board of Directors and leading the Public Affairs and Legislation Working Group. academia Shareholders and investors, analysts, media suppliers National Industry Federations Ahlstrom has representatives on the Confederation of Finnish Industries (EK), Copacel (Confederation Francaise de l Industrie des Papiers), Assocarta in Italy and the German Pulp and Paper Association. LengTH of the relationship: shorter to longer Strength of The relationship: weaker to stronger Sector specific associations Ahlstrom is represented in various sector specific associations, both internationally and in local markets where it operates, e.g. American Filtration Society, FINAT (the world-wide association for manufacturers of self-adhesive labels and related products and services) and many others. 11

16 Materiality assessment Level of concern to stakeholders Low MEDIUM HIGH Support for employees affected by redundancies Supplier Code of Conduct Renewable raw materials Life Cycle Assessment Stakeholder engagement Community Human rights Certifications Product stewardship Reducing environmental impacts of customers with products Code of Conduct Health and safety Better and targeted sustainability information about products Megatrends creating new markets Cost savings through sustainability Availability and price of raw materials Open and transparent communication Employee attraction Efficiency of operations and minimizing emissions Integration of sustainability into business processes and product development Waste management Emerging market opportunities Well-being Raw material safety Sustainability training to employees Low MEDIUM HIGH Level of concern to AHLSTROM 12

17 Strategic sustainability priorities We commissioned PwC Helsinki to conduct a materiality assessment of the aspects of our business relevant to sustainability in They evaluated a stakeholder sustainability survey conducted in late 2010, a list of sustainability trends and issues raised by our competitors and peer group companies, and interviews with our executive management team, as well as our Sustainability Annual Plan for Those issues deemed to be material were ranked by the executive management team in a Sustainability workshop, which helped us set new and ambitious targets in these areas. As a result of the workshop, we decided that helping our customers to reduce the environmental impact of their own businesses with the help of our products is the highest priority for Ahlstrom. For example, our products help to save energy and waste, reduce greenhouse gas emissions, clean the air or water, and minimize the use of resources. We already have many products that do this (pages 14 19) and we are determined to develop more. We believe there are new markets and emerging opportunities for these products, all of which are indeed products with purpose. In general, our products are our best and most important sustainability asset. We want to be good stewards of them, ensuring that they are safe, and can be made, used, and disposed of with minimal environmental impacts. We also aim to provide our customers with sustainability information about our product ranges which is more transparent, and more targeted. Managing our resources as efficiently as possible and minimizing waste in all phases of the process is of strategic importance to Ahlstrom and paramount for the sustainability of any operation. Our decision to update our Code of Conduct in 2011, based on our company values, and implement a new Supplier Code of Conduct in 2012 is proof of the importance we attach to business ethics, both within Ahlstrom, and in our relationships with business partners. 13

18 Our products with purpose Our products are an integral part of the modern world. You may not always notice them, but they play a key role in industry, in the home, and in transport. On the following pages you will find examples of our products from wallcovering to wind turbines and water filters. We use 100 percent recycled polyester fibers in all our wallcoverings, which has reduced their cradle to gate environmental footprint by 10 percent. We re now looking for natural fibers to replace the synthetic ones wallcoverings like this are hung by pasting the wall first, so our challenge is to find a formulation that will maintain our products paste-the-wall performance. Glassfiber tissue has a whole range of uses, from laminate flooring to building panels. As this suggests, glassfiber tissue has to be both strong and reliable, but it also needs to be resistant to mold and moisture, to prevent weather damage and the spread of bacteria. We currently use synthetic binders in our products, but our Life Cycle Assessment work has encouraged us to look for renewable alternatives, which will significantly reduce their environmental impact. Our glassfiber reinforcements are used as surfacing materials for the blades of wind turbines. Wind power is one of the most significant and promising forms of renewable energy, and by 2008 had already saved close to 300 million tons of CO 2 emissions per year, and EUR 6.6 billion of fuel costs, according to the European Wind Energy Association. With the expansion of off-shore technology turbines will become even bigger and more efficient, and we re meeting this demand by developing new glassfiber reinforcements that can cope with these demanding conditions. 14

19 We ve developed a new fabric specially designed for teabag manufacturers. Ahlstrom BioWeb TM is made entirely from renewable raw materials, and its carbon footprint is at least 30 percent lower than other similar products. It uses almost no water during manufacture, and can be made into teabags at a lower temperature, which means our customers can save energy. Another one of our specialty products is called Cristal Evolution. It is made only from cellulose fibers sourced from responsibly managed forests. These fibers are fully recyclable and biodegrade in just a few weeks. Ahlstrom Cristal Evolution was the very first product that could be used to replace the plastic in envelope windows, which has made it possible to recycle over 3,000 tons of paper every year. Cristal Evolution is also ideal for bread bags it s light, thin, and allows the bread to breathe, and can also be printed on. We provide high performance Ahlstrom Genuine Vegetable Parchment molds for customers seeking an environmentallyfriendly solution to plastic or aluminium. Produced from renewable sources, parchment molds are 100 percent biodegradable and produce a significantly lower carbon footprint than alternatives like aluminium. 15

20 We have a range of poster papers for use on billboards and in open-air urban environments, which are all made of natural fibers from renewable and responsible sources. Outdoor posters are still one of the most effective forms of marketing in terms of return on investment, and we re helping to make this form of advertising more sustainable. One of our most important products is what is known as a release liner. These are the backing sheets used to supply the adhesive labels you see on thousands of consumer goods, from food and drink to car tyres. Liners like this are coated with silicone, which allows the sticky label to come away easily. We ve recently developed a new Ahlstrom Acti-V TM release liner which is far more sustainable than its competitors it s made from 100 percent renewable raw materials, and the silicone can be applied at a lower temperature, which saves energy. This silicone also contains as much as 60 percent less platinum than traditional alternatives. Our indicator papers are packed with surgical instruments, so that surgeons and nurses and see at once whether they have been properly sterilized, and be confident in using them. 16

21 Ahlstrom air filtration is trusted to create a cleanroom environment for hospital operating theatres. Our filters keep the air free from dust, bacteria, viruses and airborne microbes. We sell similar filters to other organizations that require ultra-clean air, such as electronics manufacturers. Ahlstrom specialty materials are also used for other medical and diagnostics applications. You can find them in home pregnancy kits, or in some of the testing materials used in hospitals. They re also used in the very sensitive process of screening newborn babies for lifethreatening hereditary and genetic conditions. A small amount of the baby s blood is spotted onto Ahlstrom paper and tested, which allows for early diagnosis and more effective preventative treatment. We have a full range of specialized medical fabrics which are used to create protective barriers that help prevent the spread of infection. They re used in surgical drapes, gowns and, sterilization barrier systems used in operating theatres. They are specifically designed to be disposable, because this requires fewer resources than laundering, sterilization, and re-packaging them for subsequent use. All of these products can be safely incinerated. 17

22 Filter products are an important product area for us, especially those used in cars, with as many as 50 percent of the world s automobiles using Ahlstrom filters. We now offer to the filter manufacturers for the automotive industry fast curing filter materials for use in vehicles. This process allows the materials to be turned into the required filter component at a lower temperature, which saves energy. These materials can also be used in flame retardant products which are more sustainable than other alternatives, because they do not involve the use of the potentially hazardous PBDEs (Polybrominated Di-phenyl Ethers). We re already selling our new fast-curing filter materials in Europe, Asia and South America. As air quality becomes an increasingly important health concern, we re developing more and more indoor air filtration products, designed to remove the damaging particulates and volatile organic molecules which may come in from outside, as well as the gases that can be produced from cleaning and cooking inside the building. 18

23 Our gas turbine filtration media help ensure that this vital machinery works at maximum efficiency, however challenging the environment. Optimizing the filtration process can increase power plant output by up to 20 percent and cut gas consumption by 10 percent, which also reduces CO 2 emissions. Our filter products are just as vital to consumers as they are to industry. Our milk filter media are used on farms to ensure that bacteria are kept under control. This helps maximize dairy production and protect the purity of the milk. Ahlstrom Disruptor is one of our advanced water filtration products. It produces clean and safe residential drinking water in gravityflow filter devices, without the need for chemicals or electricity. Ahlstrom Disruptor removes pesticides, trace pharmaceuticals, chlorine, bromine, and iodine. It can also be used at a municipal level to test water quality. 19

24 Our ambition is to incorporate the principles of sustainability and green chemistry into our product design. Dr. Paul Stenson, EVP, Product and Technology Development Sustainability in product design Ahlstrom s product development is run by a central group based at Pont-Evêque, France, and there is also a network of experts working within our four business areas Building and Energy, Filtration, Food and Medical, and Label and Processing. 20

25 Meeting customer demands for sustainable products Our 2012 target is to incorporate a Sustainability checklist into the process we follow for all our new product designs, and we also aim to extend our Life Cycle Assessment expertise to cover more of our strategic product ranges. A longer term ambition, but one where we are already making progress, is to adopt the principles of green chemistry into our new product development processes. Green chemistry Green chemistry is a whole new approach to product design, which aims to reduce or eliminate hazardous chemicals from product development and manufacture. The key point is that this assessment occurs in the design phase, on the basis that it is better to prevent waste or harmful emissions than to deal with them later. There are twelve core principles of green chemistry, which range from pollution prevention, to energy efficiency, to the use of safer solvents. You can read more about this on the green chemistry website, warnerbabcock.com/green_chemistry/ A good practical example of how we are applying the green chemistry approach is the gradual removal of all hazardous raw materials from our existing products and manufacturing operations. Formaldehyde, for example, is a component in the synthetic binders we use to improve the strength of paper, nonwoven and glass-based products. As a result, traces of formaldehyde are found in the emissions from the drying ovens in our Filtration, and Building and Energy production plants, which require careful monitoring and ventilation. We have now started work to completely eliminate formaldehyde from our production processes. Saving energy Energy reduction is another priority for us, and there are numerous examples of progress in this area. We are, for instance, looking at treating our raw pulp with enzymes this natural process starts breaking the fibers down before they are refined, which means we will need less energy later. Our Filtration business is also introducing new fast curing materials for our key automotive filter customers. These materials can be turned into specific filter components more quickly and at a lower temperature, which saves our customers energy. New technologies We re always exploring ways of using new technology to make our products more effective and more sustainable. For example, we have now launched the innovative Ahlstrom Acti-V TM technology for the backing sheets that supply product labels. The technical name for these sheets is release liners, and they are coated with silicone to ensure that the adhesive label comes away easily. Our new process allows these liners to be coated with silicone at a lower temperature, and reduces the platinum content, without compromising the quality of the product. We have also developed a special Ahlstrom BioWeb TM fabric for teabag manufacturers. Its carbon footprint is at least 30 percent lower than similar products, it needs minimal water during manufacture, and it can be made into teabags at a lower temperature, allowing our customers to save energy. Meeting customer expectations Our customers expect us to deliver products that are sustainably sourced, and manufactured in a safe and reliable manner, without causing pollution to the environment. As much as 87 percent of our raw material fibers are already green, because they are sourced from renewable sources. The comparable figure for a petrochemicals based materials supplier would be around 20 percent. By applying the principles of green chemistry to our product design and manufacture we hope to further improve our performance, and demonstrate our ambition to be a leader in this field in our sector. 21

26 Material processing Raw material extraction Manufacturing End-of-life LIFE CYCLE Product use Conversion and packaging Assessing the Life Cycle impacts of our products From cradle to gate During 2011 we developed our own Life Cycle Assessment expertise so that we can assess the impact of our products from cradle to gate in other words, from raw materials to the moment the product leaves our factory. In some cases we can extend that analysis through to the product s use and final disposal, though clearly this is a harder task, as the data is more difficult to come by. Our Life Cycle Assessment evaluations take into account all the product s potential environmental impacts, from carbon emissions, to energy and water use. This assessment helps us make better decisions internally, but it is also invaluable externally, since more and more of our customers are now asking us about the environmental performance of our products. We ve carried out four Life Cycle studies so far, using the international ISO and ISO standards to assess our wallcoverings, release liners, glassfiber and vegetable parchment products. This work has concentrated on the products impacts to the point they leave the factory gate: we ve focused on this part of the cycle because this is where we can have the most influence. Eco-design approach Looking forwards, we aim to fully integrate our Life Cycle Assessment into the research and design stage of the development process, since it is known that up to 80 percent of a product s impacts are determined by the decisions made then. 22

27 Life Cycle impacts What we have learned so far is that the raw materials and energy we use have the greatest bearing on our products environmental impacts. As a result, we are endeavoring to use a higher proportion of renewable polymers, like poly-lactic acid (PLA), and recycled synthetic polymers, like polyethyleneterephtalate (rpet). We are also working on our energy efficiency. Contribution analysis of a wallcover product 8% 8% 16% 18% 23% 50% 1% 5% 44% 61% 66% Water eutrophication potential Air acidification potential Global warming potential Raw materials Energy Transportation of raw materials Water and waste treatment We studied the contribution of raw materials, energy, water and waste treatment as well as transportation of raw materials to the main environmental impacts of Ahlstrom wallcovering products. Energy is the main contributor to carbon footprint (global warming potential), while raw materials account for the biggest impacts on acid rain (air acidification potential) or harmful nutrients in water (water eutrophication potential). Vegetable parchment molds Our vegetable parchment molds are made of 98 percent renewable raw materials. We have compared their life cycle impacts to those of aluminium molds. In cradle to gate comparisons, Vegetable Parchment molds have half of the carbon footprint impacts. The performance of aluminium is more affected by the end-of-life phase if it is recycled it comes closer to parchment. Composting parchment does not, however, significantly lower its impacts compared to landfilling and incineration. Inbound freight Another useful piece of information relates to our logistics footprint. Our analysis has shown that the bulk shipping of wood pulp from South America to our European manufacturing plants is actually a relatively environmentallyefficient method of transportation. % CED Nonrenewable CED Renewable CED TOT Global warming potential CED=Cumulative Energy Demand Water use Abiotic depletion Acidification Eutrophication Ozone layer depletion Photochemical oxidation Wallpaper with eucalyptus from South America Wallpaper with eucalyptus from Portugal 23

28 People and culture Common culture and global processes are key objectives of One Ahlstrom. 24

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30 Ahlstrom as an employer Inspiring people One of the three elements of our vision is inspiring people. This ambition extends from our own employees to our customers and business partners, and all our other stakeholders. We particularly want to inspire our own people empower them to succeed and encourage them to fulfill their potential. We want to be an employer of choice and an organization that never stops learning. There were 5,185 people working at Ahlstrom at the end of 2011, compared to 5,639 at the end of This reduction was largely due to the sale of the Home and Personal business to Suominen Corporation, and the profit improvement program. The employee turnover rate was 4.2, and 98 percent were in permanent positions, compared to 96 percent the year before. Diversity We have always believed that a more diverse business is a more creative business. We have employees in 28 countries, with 64 percent in Europe, 20 percent in North America and 8.5 percent in Asia. In 2011 our Board had one female director out of a total of seven. Three of the members were over 50 years old, and the other four were between 30 and 50. Two of the ten members of the Executive Management Team were female, and four executives were older than 50 years. Of the total workforce 23 percent were women, compared to 19 percent in There is a balance of ages across the whole Group. Dialogue We manage employee relations at a local level. Many of our employees are covered by local collective bargaining agreements. We held our annual Ahlstrom European Dialogue meeting on May 11, 2011 in Vantaa, Finland. This involved 18 representatives from 13 European plants. The meeting included a briefing from management on our financial results, and an update on the progress being made on our strategy, objectives and key projects. Each representative brought a list of questions to the meeting, which had been agreed by their colleagues beforehand. Meetings like this are one way for our people to give feedback, but we also run surveys across the whole company. In 2011 over 4,000 people took part to our employee survey, which was a response rate of over 80 percent. We analyze the results of this survey to calculate what is known as our Human Potential Index, HPI. The level of our HPI is a key performance indicator for us, and is one of the factors taken into account when determining managers bonuses. There s more on this survey on page 10. Performance management A good performance appraisal system is as important to the individual as it is to the company. It helps us ensure we have the skills we need to execute our strategy effectively, and identifies opportunities for personal and professional development for our staff. Since 2011, all our white-collar employees in Ahlstrom have been using the same performance management process. Headcount* by age Headcount* by educational level Headcount* by country 24% 3% 13% 3% 13% 23% 3% 13% 23% 27% 27% 34% 34% 33% 27% < 29 < 39 < 49 < 59 > 60 13% 13% 9% 7% 8% 11% 31% 35% 36% 50% 45% 42% Basic Professional B.Sc. M.Sc. Ph.D. 10% 20% 8% 11% 23% 7% 7% 12% 7% 9% 24% 7% 9% 8% 5% 9% 21% 13% 22% 10% 12% 11% 11% 24% USA France Italy Finland Asia Brazil Germany Others 26 *Employed *Employed *Employed

31 Reflections from a new and old Jumpee Learning Learning and renewing is one of our core values, and in the last year we ve made a number of improvements to each of the three main components of our portfolio of training courses. The first of these is the Ahlstrom Academy, which is open to all employees, and where we have continued to focus on skills of strategic importance for us. We are also streamlining the training offered across the Group, to reinforce our aim of being One Ahlstrom wherever we are in the world. For example we gave the same Project Management training in 5 different countries to a total of 130 employees. Almost 1,000 employees took part in an Ahlstrom Academy course during the year, which is close to 50 percent of the whitecollar workforce. Key human resources figures The second element of our training program is leadership and management development. During 2011 the first two groups of senior managers graduated from our The Way Forward program, which aims to build knowledge in key strategic areas such as leading people and change, sales and marketing, supply chain, strategy, and business practices in Asia. We also extended the third element of our training: our leadership development and mentoring program for future leaders, which is called JUMP, and which celebrated its 25th anniversary in This is one of our most important programs, and has helped us identify and develop some of our most successful leaders. Here are some views from those who attended the program one from 2011, and one from Number of employees at year-end 5,185 5,639 5,841 Employee turnover rate 4.20% 4.00% na Share of women among all employees 23% 19% 18% Women in Executive Management Team 2 out of 10 2 out of 10 2 out of 12 Women in Board of Directors 1 out of 7 1 out of 6 0 out of 7 Arvind Purushothaman has worked for the Building and Energy business area since January He helps develop nextgeneration products like battery separators, wallcoverings, and protective packaging for the automotive, apparel, and home furnishing sectors, with a special emphasis on finding more sustainable products and supporting our automotive customers. He found it stimulating to work with such a diverse group of like-minded people on the program: The JUMP training was an eye-opener for me. Topics like coaching techniques, cross-cultural intelligence and leadership were really interesting and thought-provoking. Daniele Borlatto has worked for Ahlstrom since 1990, in a range of different roles including accounting, sales, and VP positions in Filtration, and is now EVP for the Label and Processing business area. He attended JUMP in 1995, at an early stage of his career, and still considers it one of the best training programs he s ever done, It s a unique opportunity to discover yourself in respect of your personal goals and working ambitions. 27

32 One Ahlstrom One of Ahlstrom s special qualities as a company is the mix of people who work here. We rejoice in the diversity of nationalities and backgrounds that come together in Ahlstrom, and we are united in our belief in the same values, and our commitment to the same goals. We re proud of the positive working environment we create at Ahlstrom we believe in working hard and achieving goals, but it s equally important to have a good balance between work and free time. These stories from around the world show how our people are working together to improve safety at work, team spirit, care for their communities, and make progress on sustainability. 28

33 Collaboration in Italy Teams at our plant at Turin have made some real progress on safety in the last year, as part of their ambition to achieve a zero accident rate. Some of the improvements relate to better processes, such as speeding-up the reporting of near-misses, but the greatest improvement has come from empowering individuals to take more responsibility themselves. As Diego Bianca, the Health and Safety Manager at the plant says, we have a new approach called PARS, which stands in Italian for think and act responsibly and safely. It means everyone ensuring that they have the right training for the job, and the task is safe to do. Act responsibly is, of course, one of Ahlstrom s values, and this is a great example of how much this can achieve in practice. The plant hasn t achieved a zero accident rate yet, but there have been real improvements thanks to the new spirit of collaboration across the whole plant. Teambuilding in China Whenever we open a new facility we always start by focusing on the sort of company we are, and the values we believe in. When we began operations at our Chinese plant in Binzhou, for example, we organized two workshops about our values, and a team-building event around our vision: inspiring people and passionate about new ideas. The workshops helped the teams to discover that nothing is impossible, that new ideas are the root of success, and that working together with the same values allows the whole team to achieve its goals. This training inspires us and gives us new ideas for innovation, as well as improving the efficiency in our work, said Wang Xinhai, Winder Operator at the plant. Supporting the local community in Brazil Our two plants at Jacareí and Louveira, in Brazil, are both working actively with charities for local children. Jacareí works with AME (Associação Morada da Esperança), which helps children living in poverty, and Louveira supports CIELO, an organisation for people with learning disabilities. Every Christmas a special tree is erected in the plants reception areas, and decorated with baubles bearing a wish from a local child. Our employees volunteer to choose a bauble and make the wish come true. We also hold a Christmas party for the children. As Cid Portugal, a shift supervisor at Jacareí and one of the organizers of the party says, It is a magical moment, and particularly so for him, since he was once a recipient of one of these gifts as a child. In November 2011 the local authority held a special event to mark Ahlstrom s contribution to the community, and encouraged other companies in the city to do the same. It is gratifying to know that our small gestures can help, said José Laércio Pereira, our HR Manager for Brazil. Committed to sustainable operations in India We opened our manufacturing facility in Mundra, India in May India is one of the world s fastest growing economies, and the competition for talented employees is becoming extremely fierce. We re proud to say that Ahlstrom has proved to be an employer of choice locally, with almost 75 percent of our employees university graduates, the highest in the whole company. The number of people studying for higher degrees in Mundra was also the company s highest at 10 in The plant produces single-use protective fabrics for the healthcare industry, and it also uses state-of-the-art technology to minimize its environmental impacts. Water, in particular, is a crucial issue in India, where the climate is so dry, and we have worked hard to ensure our plant is extremely efficient in its use of water for humidification, cooling and general housekeeping. The plant uses only 11,441 m 3 of water annually, but unlike most similar facilities, does not release any effluent back into the environment. We purify our waste water and channel it to a drip irrigation system to water the hundreds of trees that our employees have planted around the plant. The first of these were planted in February 2010 and now there are over 400 coconut trees, 100 sapota trees, as well as many local species. 29