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FAM and Solidium expect Stora Enso to find a sustainable solution to child labour

23.4.2014

Highlights of speech by FAM and Solidium at Stora Enso Annual General Meeting, 23 April 2014

  • FAM and Solidium strongly support Stora Enso’s strategy of growth and transformation. We believe that the strategy will improve the company’s shareholder value and profitability in many ways and will create a solid foundation for the company’s long-term development.
  • With expansion into emerging markets, such as China, India, Brazil, Pakistan and Uruguay, follows also major responsibility. It is therefore essential for Stora Enso to prioritize corporate social responsibility as part of its strategy. The company’s long-term success is dependent on strong relations with local communities in all operating countries, and that the company’s operations are seen as a positive force in each country of business.
  • Child labour in Pakistan is an example of a major challenge, which any company entering the country must address. FAM and Solidium find the use of child labour completely unacceptable.
  • As long-term shareholders, we expect Stora Enso to find a sustainable solution to child labour in the supply chain of its joint venture in Pakistan in a time frame ensuring the well-being of the affected children in the best possible way. We also expect the company to communicate more actively and openly about its plans and developments in the situation.
  • Solidium and FAM are currently assessing how we as owners can be the best possible support to Stora Enso going forward. As one example, we are meeting international organizations and other experts to discover best practices for combating child labour.

For more information, please contact:

Lars Wedenborn, CEO, FAM
E-mail: lw(at)fam.se, Tel: +46 735 23 77 35

Kari Järvinen, CEO, Solidium
E-mail: kari.jarvinen(at)solidium.fi, Tel: +358 40 548 3995

 

FAM and Solidium speech at Stora Enso Annual General Meeting, 23 April 2014:

Dear shareholders,

I am Kari Järvinen, the CEO of Solidium Oy.

I would like to present a joint statement from Foundation Asset Management and Solidium.

Foundation Asset Management (FAM) and Solidium are both long-term, active shareholders of Stora Enso. Together we represent approximately 22 per cent of the capital and 52 per cent of the votes in Stora Enso. Due to the recent discussion around Stora Enso we felt that today’s annual general meeting was the right time to share our views on Stora Enso and its future with the rest of the company’s shareholders.

CEO Karvinen has just given us a thorough presentation on Stora Enso’s strategy and operations, and described the company’s corporate responsibility status in Pakistan.

Stora Enso is in the middle of a major strategic transformation from being a European pulp and paper company to a value creating, growth markets-focused, renewable materials company. The packaging industry is growing globally. A significant share of the growth is taking place in the emerging markets. Stora Enso has expanded into several of these emerging markets, which has been well justified by the growth in these regions.

FAM and Solidium strongly support Stora Enso’s strategy of growth and transformation. We believe that the strategy will improve the company’s shareholder value and profitability in many ways and will create a solid foundation for the company’s long-term development.

The strategic journey that Stora Enso is on will take time and puts high requirements on the Board, management and employees. With expansion into emerging markets follows also major responsibility. Stora Enso is investing in China, India, Brazil, Pakistan, Uruguay and other emerging regions. Each of these markets has its own complex characteristics and challenges. In emerging markets, the role of corporate social responsibility becomes increasingly important. It is therefore essential for Stora Enso to prioritize corporate social responsibility as part of its strategy. Stora Enso’s wholly and jointly owned operations affect many people in the countries they are active in, for example, in the forestland operations in China and Brazil. The company’s long-term success is dependent on strong relations with local communities in all operating countries, and that the company’s operations are seen as a positive force in each country of business.

Child labour in Pakistan is an example of a major challenge, which any company entering the country must address.

FAM and Solidium find the use of child labour completely unacceptable. This is a fundamental social value in Finland and Sweden. It is also a key issue from the perspective of responsible ownership. The Universal Declaration of Human Rights by the United Nations and the ILO Declaration on Fundamental Principles and Rights at Work are key policy statements that we respect. Stora Enso is also committed to respecting the principles of these key declarations.

As long-term shareholders, we expect Stora Enso to find a sustainable solution to child labour in the supply chain of its joint venture in Pakistan in a time frame ensuring the well-being of the affected children in the best possible way. We also expect the company to communicate more actively and openly about its plans and developments in the situation. It is important that Stora Enso gains trust in the way it addresses child labour and other sustainability issues. We have had a good and frequent dialogue with the company’s management and Board, which we will continue to emphasize going forward.

Addressing child labour in the supply chain and ensuring the well-being and schooling of these children will require determination and persistence from everyone involved. Here, we would like to emphasize the role of international cooperation. One company cannot solve the problem alone, and for this reason, we support Stora Enso’s close cooperation with international and local experts.

Solidium and FAM are currently assessing how we as owners can be the best possible support to Stora Enso going forward. As one example, we are meeting international organizations and other experts to discover best practices for combating child labour.

It is important for us all as shareholders to remember that good corporate social responsibility is a key indicator of long-term competitiveness for companies. In addition, it will inevitably create value for all shareholders. From the shareholder’s perspective, it is very important that the company pays attention to all key economic, social and environmental issues in an exemplary manner. In the best case, corporate social responsibility can also lead to entirely new business opportunities.

Stora Enso has the opportunity to have a significant positive impact on its emerging market environments. For local residents, packaging manufactured from locally sourced, renewable materials is an important part of, for example, food safety and thereby general well-being. The business will naturally also bring technology and expertise into each operating country.

Dear fellow Stora Enso shareholders, allow me to summarize:

Stora Enso’s growing packaging and biomaterials business plays a key part in the company’s strategy. Renewable materials, solid expertise and excellent products are a good combination. This mix will improve both social development and shareholder value, and will lead Stora Enso to a successful future. However, success in the future will require a very strong focus on sustainability and that it becomes an intrinsic part of the company’s daily operations.

Stora Enso has emphasized that it observes the principles of sustainable development when expanding into emerging markets. As owners, we support the company in its efforts to find solutions to corporate social responsibility questions and we will follow developments in the situation. Expansion and growth should be based on long-term responsibility towards all parties involved.

We would also like to thank CEO Jouko Karvinen for his persistent work in planning and executing the company’s strategy. Through his strong personal commitment, CEO Karvinen has played a key role in implementing the company’s transformation.

Thank you.

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