Sustainability management and reporting

Valio’s operations are guided by our values: Personal responsibility; Listening to customers and consumers, and exceeding their expectations; Caring for people, animals and the environment; and Succeeding together. Our mission is to create well-being and taste sensations responsibly, and our goal is international profitable growth with world class value added. Reaching that goal enables Valio to pay its Finnish dairy farmer entrepreneurs the highest raw milk price in Europe.

Corporate governance determines the composition of the Valio Supervisory Board and Board of Directors, and the powers of decision vested in different operational components, such as the Annual General Meeting, Supervisory Board, Board of Directors, CEO, Executive Board, business units, Group functions, and business processes.

Valio’s Annual General Meeting elects the members of the Supervisory Board comprising 23 representatives of Valio Group co-operatives and four representatives elected by personnel groups. The Supervisory Board elects the four dairy farmer members of the Board of Directors, and the Board of Directors appoints the CEO. Valio Ltd is organised into entities responsible for business operations, and Group functions.

Valio’s business operations are guided by the Group’s mission, goals, values, strategy, and corporate governance.

The key themes and goals related to corporate sustainability at Valio are determined in the sustainability program approved by Valio’s Board of Directors, and sustainability goals approved by the Valio Executive Board. Sustainability goals are managed as a component of business operations in the relevant areas of responsibility, and under the supervision of the appropriate member of the Executive Board. The realisation of the sustainability goals and whether they may require updating is reviewed by a working group that includes representatives from the business organisations responsible for the key themes and is headed up by the member of the Executive Board responsible for Operations. Goal realisation is reported annually in the Corporate Sustainability Report. Valio’s sustainability guidelines and goals are addressed in the orientation program run for every Valio employee.

Valio’s sustainability program

Valio’s Management Team has approved five themes and related goals for Valio’s sustainability program. They concern the whole Valio Group, but the goals are set at different levels, one for Finland and one for the subsidiaries as a whole. The goals have been set for 2020 and 2025, and the results are reported annually in the Corporate Sustainability Report.

The five themes are: Dairy co-operatives; Sustainable milk production and processing; Supply chain; Cows and calves; Product range and well-being. They are based on stakeholder surveys from 2016 (Luottamus & Maine, Trust & reputation) and 2015 (“Corporate responsibility in a dairy company and its development through stakeholder dialogue” [Master’s thesis, Aalto University, 1 April 2015]), and the megatrends identified in the operating environment.

The sustainability program themes and their goals describe those operations we believe give the company a competitive advantage. And within the areas addressed by the themes, we operate at a level amongst the best in the world. The sustainability goals also address e.g. issues related to personnel well-being and food safety, which also fall under the domain of sustainable business operations.

Reporting and its extent

Valio’s operations and the outcomes of its responsibility goals are reported annually on the website, applying the GRI G4 guidelines. The Corporate Sustainability Report is published yearly. The 2016 report describes Valio’s operations and the realisation of the goals related to sustainability for the year. Reporting covers Valio’s operations in Finland. Around 80% of the company’s personnel works in Finland and two-thirds of turnover is accumulated from the country. There are 12 production plants in Finland, two in Estonia and one in Russia. The website also describes Valio’s operations using articles and infographs.

Valio’s subsidiaries in Russia, the Baltic States, Sweden, Denmark, the US and China are not included in reporting. Valio nevertheless employs similar procedures to ensure product safety and traceability, compliance with environmental regulations, and to ensure the well-being of personnel in each country where Valio operates. The sustainability goals concern the whole Valio Group, and their results are reported either at Finland or Group level, depending on whether the goals are realised at Group level.

The report also includes the CEO’s review, and descriptions of the supply chain, operating environment, of sustainability management and reporting, and of stakeholder activities, as well as the Ethical principals of Valio. The sustainability program adds a new section to the report.

Risk management and opportunities

The goal of Valio Risk Management is to identify those significant events and uncertainty factors that impact the realisation of the company’s strategic, operational and financial goals. Risk Management is part of the normal management of operations which aims to identify the risks related to the operations and prevent the realisation of unfavourable impacts where possible.

Risks are identified and assessed regularly, and their financial consequences have been taken into account in Valio’s insurance solutions. The most important non-life insurance solutions have been compiled into insurance programs covering the whole of Valio Group. Valio occupies a position of critical importance for national emergency dairy supply in Finland, so its risk management also has a societal dimension.

Risks related to occupational safety, and personnel activities, are managed using guidelines and a notification procedure. Valio’s intranet offers a feature to submit a report on a detected occupational safety risk, and from 2016 a report on detected or suspected unethical activities. Reports on unethical activities will be handled anonymously. In 2016, xx reports on unethical activities were submitted, none resulting in further action.

Risk management is implemented using a number of certificates. Methods of risk identification are continuously developed, and the main focus of risk management lies on the development of preventive actions. The company has a crisis communications plan and instructions for the management of food safety crises. The occupational safety goal is zero accidents.

Certificates and standards

Valio operates in accordance with certified quality systems ISO 9001 and ISO 22000, and related technical specifications ISO/TS 22002-1 and ISO 17025. Valio is an AB member of the international organisation Sedex and operates in accordance with the ETI Base Code of the Ethical Trading Initiative. Valio also complies with a number of stated principles, and customer requirements.

Instructions to Valio employees on a range of tasks can be found in the Operations System which is maintained on Valio’s intranet and includes e.g. instructions in case of a food crisis or other crisis. The Operations System also includes the “Valio Group Corporate Responsibility, Values and Operating Policy” document signed by the CEO, and the “Valio Ltd ethical guidelines – Bribery and conflicts of interest” document. Valio’s sustainability guidelines are part of the orientation program for new Valio employees.

Valio complies with the principles of the SFS-ISO 26000 certificate regarding accountability, transparency, ethical behaviour, respect for stakeholder interests, respect for the rule of law, respect for international norms of behaviour, and respect for human rights.

Valio’s operations are conducted in accordance with standard SA8000 with respect to labour, although these operations have not been certified.