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Corporate Responsibilityand Nokias Supply Chain


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This booklet is intended to provide Nokia suppliers

around the world with a brief introduction to the

background and content of the environmental and

social elements of Nokias newly updated Supplier

Requirements. The full set of requirements, scheduled

for formal release later in 2006, reflect the increasingimportance of environmental issues, ethics, health

and safety and labor conditions in the supply-chain.

The creation of this booklet also coincides with the

launch of Nokias new Corporate Responsibility Report.

We have therefore included a brief overview of Nokiasown progress and achievements in some important

environmental and social areas during 2005.


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At Nokia, we see sound environmental and social prin-

ciples as an important part of sustaining a successful

and responsible business. We expect the companiesin our supplier network to take a similar ethical busi-

ness approach and we take this into account when

selecting our suppliers and developing longer-term

relationships with them.

In recent years, our suppliers have asked us for clearer

specifications on the standards we expect. This docu-

ment broadly introduces select environmental and

social elements of our new Nokia Supplier Require-

ments. These requirements, scheduled to be intro-

duced in full later in 2006, reflect the increasing im-

portance to our customers and the wider public of

environmental issues, ethics, health and safety and

labor conditions.

Our aim has been to frame our new requirements in

terms of mainstream business practices. For example,we talk more pragmatically about recruitment prac-

tices and waste management rather than using emo-

tive labels such as child labor and pollution. We have

also revisited our environmental criteria and intro-

duced an entirely new section focusing on making

Human Resources issues more explicit.

I am convinced that high social and environmental

standards are good for your business and for ours.

Effective environmental management, for example,

cuts waste and reduces costs. Responsible labor prac-

tices can result in lower absenteeism and labor turnover

as well as higher productivity, creativity and quality.

We are constantly aiming to improve Nokias social

and environmental performance. During 2005, thanks

to our suppliers, we were able to launch the indus-

trys first mobile phone and network product fully

compliant with the European Unions new RoHS di-rective restricting the use of certain hazardous sub-

stances in electrical and electronic equipment. In other

areas, highlights include rolling out a new code of

conduct for all employees, staging a successful global

stakeholder event and initiating a mobile phone

microfinancing project in Africa.

Find more details on Nokias 2005 performance on page 11 of

this document or in our CR report at www.nokia.com/CRreport.

Message from Olli-Pekka Kallasvuo, CEO

Nokia Corporation


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At Nokia, we see our suppliers as an extension of our

own business and in a very real sense they are. In our

relationships with suppliers, we seek to be very active,

encouraging regular communications, conducting sup-

plier assessments and driving mutual improvements.

At Nokia, we work hard to anticipate risk, demonstrate

company values, enhance our governance practices,

increase employee satisfaction and look after the com-

munities where we do business. We expect the compa-

nies in our supplier network to take a similar ethical

business approach and to demonstrate progress and

achievements in these areas as well as in educating and

overseeing the practices of their own suppliers.

We see sound environmental and social performance

as the way we should go about our business, and not as

a separate add-on feature assigned to a CR department.

We also take ethical performance into account when

selecting our suppliers and developing longer-term

relationships with them.

At industry-level, Nokia is actively participating in thesupply-chain working group of the Global e-sustainability

initiative (GeSi). Together with other ICT companies, the

aim of this workgroup is to promote good conduct and

develop tools, management practices, processes and sys-

tems to assist members in dealing with Corporate Res-

ponsibility related supply-chain issues. During 2005/6 the

supply chain working group, together with the Electronics

Industry Code of Conduct implementation group finalized

a supplier self-assessment questionnaire and riskassessment tool.

Nokia and our suppliers


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Main supplier locations

Nokia factories

You can find more details onour Supply Chain activities at

www.nokia.com.

Please note, the map is not depicting an exact number and/or location of suppliers but is an indication.


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We set requirements and then let our

suppliers decide how they can best meet

them in terms of their existing culture and

way of working. Nokia at the same time calls

upon them to demonstrate progress andachievements in these areas as well as overall

accountability in conducting responsible busi-

ness and in educating and overseeing the

practices of our suppliers own suppliers.

We take these requirements seriously and

expect them to be met in full. However, we do

not see them merely as a set of rules. In many

cases they become tools for increased coopera-tion that make good business sense and help

build mutual trust.

In revisiting the environmental and ethical

elements of Nokias supplier requirements, the

aim has been to link them more closely with main-

stream business practices as well as present a clear

correlation between upholding these principlesand building long-term business value.

Based on feedback from our suppliers, we have

fully updated our environmental and health and

safety requirements as well as introduced some

entirely new requirements, including a section

focused on making Human Resource issues more

explicit.

Nokias supplier requirements communi-

cate our expectations for our suppliers and

their business. They provide a basis for sup-

plier qualification and are linked to contracts,

supplier assessments and development and

improvement.

Our approach


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Environmental and social elements

Following is a broad synopsis of selected environ-

mental and social elements from Nokias new sup-

plier requirements, scheduled to be communicated

in full later in 2006. These reflect examples of the

SOCIAL

Guiding policy, values and business conduct

For long-term business success it is important that our suppliers share similar values. Nokia suppliers

are therefore expected to have a company policy or framework that demonstrates their commitment

to ethical conduct, appropriate business behaviour and respect for human rights.

Workforce planning/recruiting

Efficient, effective and ethical workforce planning, recruitment and exit practices are essential for

a companys performance in having the right people at the right place at the right time. Suppliers

are expected to have a system to coordinate workforce activities for meeting current and future

needs in a sustainable and ethical way.

Occupational health and safety

To ensure employees can perform their tasks safely and efficiently, our requirements focus

on the need for established occupational health and safety systems in both production and

non production areas.

Competence development

Effective competence analysis techniques and development opportunities are essential to ensure

that employees can do their work as well as develop personally. Employees at Nokia suppliers are

expected to have access to education and training appropriate for them to fulfil their tasks well.

Suppliers are also required to conduct regular competence analyses and ensure that projected

training plans are in line with broader company strategy and workforce development needs.

principles of sustainable business that Nokia

also works to uphold and cover a range of topics

such as management responsibility, human re-

source management, environmental management,


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Time-off

Rest and time off is essential for people to work efficiently, productively and innovatively. Suppliers

are therefore expected to organize their schedules in such a way that employees can perform assigned

roles efficiently without exceeding the maximum working hours as defined by local labor laws or

relevant collective agreements.

Pay and benefits

Fair compensation and benefits are important for promoting employee motivation and preventing high turnover.

Suppliers must therefore be in a position to ensure that all employees, whether permanent, temporary or contract

workers receive fair compensation that meets or exceeds local legal and industry minimum standards, as well as

receive benefits to reward contributions, skills and behavior considered vital to company success.

Fair treatment

Employees at Nokia supplier facilities must be treated with respect and

dignity, equal opportunity and feel safe from abuse, harassment or bullying

of any kind.

Communication and feedback

It is important for transparency and clarity of strategy and vision that employers and employees have effective

communication channels. All Nokia suppliers should have channels in place for employees to give improvement ideas

and suggestions or complain about unethical conduct, unfair treatment or practices. Nokia suppliers should also respect

the right of their workers to form or join trade unions and to bargain collectively. In cases where this practice is legally

restricted, a parallel means should be in place to allow concerns to be brought to management attention.

quality management, risk management, security

and responsible product development. Our environ-

mental and social requirements are based on

recognised standards such as ISO14001,

OHSAS18001, SA8000, ILO and UN conventions.

of new Nokia Supplier Requirements


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ENVIRONMENTAL

Environmental management systems and improvement programs

In order to demonstrate an effective approach to environmental management, suppliers are expected

to be able to identify and measure the environmental impacts associated with their operations and

products/services as well as promote and run improvement programs to address these. Some suppliers

are required to have certified environmental management systems.

Waste management

Waste is one of the key environmental concerns in the electronics industry and Nokia suppliers need to

take responsibility for ensuring that all waste generated from their operations, products or customer assets

in their possession is managed appropriately. Not only are suppliers expected to investigate ways to reduce

reuse and recycle their waste, they also need to be able to track what happens to all waste generated.

Design for environment and raw material content

To promote efficient material use in their products as well as improve their energy efficiency

and recyclability, it is important for Nokia suppliers to consider environmental impacts at all phases

of product development. Suppliers are also expected to be able to list the raw material content of

those products supplied to Nokia and to ensure that they do not contain any restricted materials.

SUPPLIER MANAGEMENT

Improving environmental and social performance

To deliver sustainable environmental and social improvements throughout the supply chain, our suppliers are

expected to integrate these issues into their supply base management processes: setting clear requirements,

conducting assessments and supporting supplier development activities. Using this approach we hope

to gradually work down through the supply chain, ensuring that each tier fully understands and

is committed to the principles of corporate responsibility.


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Highlights of the CR report

We are increasingly approached by our suppliers to

engage on issues related to the environment, ethics,

health and safety and labor conditions. Our corpo-

rate responsibility report is one important channel

for this.

Report highlights

Nokias Executive Board fully updated the

company Code of Conduct, rolling it out in

September 2005 as a web-based learning tool,

which 75% of our employees have now com-

pleted.

The company staged a successful global stake-holder event, bringing together 110 participants

from 28 countries representing civil society, the

public sector, academia, and a range of busi-

nesses. The aim of the event was not to chair a

Nokia-centric forum, but provide a level platform

for participants to give frank views on broader

issues important in the societies where we

operate.

Nokia launched the industrys first mobile phone

and network product fully compliant with new

EU RoHS restrictions on hazardous substances.

Nokia Human Resources management intro-duced a new global time-off guideline, recom-

mending that Nokia employees dedicate one

to two working days per year to the companys

employee volunteer program. Last year, Nokia

employees around the world volunteered for

nearly 18 000 hours.

In the companys community involvement

work, Nokia and the Grameen Foundation USAjoined forces to bring affordable mobile commu-

nications access to rural villages in developing

countries through the use of microfinance. The

initiative, which includes a tailor made booster

antenna solution to reach villages outside regular

coverage, is based on Grameens successful micro-

financing model, helping mostly women, start

self-sustaining businesses. The Village Phone

program is now being scaled up to 3000-5000new villages in Uganda and Rwanda.


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