Sustainability - Fortum...Sustainability targets and results Fortum's sustainability targets consist of Group-level key indicators and division-level indicators. In addition to these,

Sustainability

Annual Report 2013

Table of contentsTable of contentsSustainability 3

Sustainability Approach 4

Key management topics in 2013 6

Sustainability target setting 7

Targets and results 8

Sustainability indexes 12

Our business 13

Solar economy production forms 17

Nuclear power 20

Thermal energy 24

Power distribution 26

Heat distribution 28

Electricity and heat sales 29

Purchasing 30

Generating economic value for stakeholders 35

Our stakeholders 40

Stakeholder collaboration 43

Support for society 54

Stakeholder views 55

GRI Section 59

Sustainability management 59

Reporting principles 61

Assurance 63

GRI index 64

Economic performance indicators 74

Environmental performance indicators 79

Social performance indicators 91

Assurance statement 104

Acronyms, quantities and units used in the report 106

Contact information 107

Legal notice 108

Annual Report 2013 Table of contents

This is an automatically generated PDF document of Fortum's online Annual Report and may not be as comprehensive as the complete Annual Report, which is available at http://annualreport2013.fortum.com/

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Fortum's Annual Report 2013Fortum's Annual Report 2013Fortum is an energy company highly committed to sustainability. Catering to the versatile needs of ourcustomers, we generate, distribute and sell electricity and heat and offer related expert services.

SustainabilitySustainability

Sustainable business is our competitive advantage. We produce and distribute environmentally-benignelectricity and heat, and offer customer-driven energy products and services. We interact with millions ofpeople on a daily basis and build a sustainable energy future together with our various stakeholders.

Annual Report 2013 Sustainability


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Sustainability is an integral part of Fortum's strategy. In its operations, Fortum gives balanced consideration toeconomic, social and environmental responsibility.

Our economic responsibility includescompetitiveness, performance excellenceand market-driven production, which createlong-term value and enable profitable growth.We aim for performance excellence. Acompany that is financially strong is able toshoulder its responsibility for theenvironment, take care of its personnel, meetthe needs of its customers and support thedevelopment of the entire society.

The efficient use of resources and the needto mitigate climate change are emphasised inour environmental responsibility. Our know-how in CO2-free hydro and nuclear powerproduction and in energy-efficient CHPproduction plays a key role in this. Throughresearch and development activities, we arecreating prerequisites for environmentallybenign energy solutions.

Our social responsibility includes being agood corporate citizen and taking care of ourown personnel and the surroundingcommunity. Our innovations and the securesupply of power and heat support thedevelopment of society and increase well-being. We promote well-being and safety inthe work community, respect for individualsand mutual trust, and responsible operationsin our supply chain and in society in large.

Annual Report 2013 Sustainability Approach


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Management modelManagement model

Sustainability management at Fortum isstrategy-driven and is based on thecompany's values, the Code of Conduct, andthe policies and their specifying instructionsdefined at the Group level. We comply withlaws and regulations. In addition to ourvalues, all of our operations are guided bygood governance, effective risk management,adequate controls and the internal auditprinciples supporting them.

At Fortum, responsibility for issues related tosustainability lies with division and Groupfunction management, and, ultimately, thePresident and CEO and the Board ofDirectors. The Board of Directors has notappointed any of its members specificallyconversant in sustainability and thus inits decision-making relies on the informationand expert statements provided by theFortum Management Team and the Group'ssustainability experts. Fortum's corporategovernance is discussed in the Governancesection of the Annual Report 2013.

Sustainabilitymanagement at Fortumis strategy-driven andline management hasclear responsibility in it.

Corporate Sustainability unitCorporate Sustainability unit

The Corporate Sustainability unit isresponsible for coordinating and developingsustainability at the Group level. In 2013,Corporate Sustainability was part ofCorporate Finance. In addition to businessdivisions, Sustainability unit closelycollaborates with the other units of CorporateFinance: Risk, Mergers and Acquisitions,Strategy, Purchasing, and Internal Audit units.Also the cooperation with the Legal, theCommunications and the Corporate Relationsunits is part of everyday activities. The headof Corporate Finance, Fortum's ChiefFinancial Officer, reports to the CEO and is amember of the Fortum Management Team.The CFO also participates in Fortum's Boardmeetings.

The Corporate Sustainability unit managesthe Group's Environment and Health andSafety (EHS) network. CorporateSustainability is a member of the Group'sFinance Forum dealing with investments andgives sustainability approval (environmental,occupational health, safety and socialimpacts) for all significant investments,acquisitions and divestments as part ofFortum's investment evaluation and approvalprocedure. In addition, CorporateSustainability plays a central role in theGroup's market outlook and public affairsprocesses and supports investor relationswith its expertise.

In February 2014, Fortum announceda reorganisation of its business structure asof 1 March 2014. Along with this change partof group level functions were administrativelylocated in business divisions. CorporateSustainability will become part of Heat,Electricity Sales and Solutions division. Thehead of this division will report to Fortum'sChief Operating Officer (COO) and is amember of the Fortum ExecutiveManagement.

Line managementLine managementresponsibilityresponsibility

Fortum's line management is responsible forsustainability management, and therealisation of targets is part of Fortum'sincentive system.

Read more aboutRead more about

• Sustainability target setting• Sustainability management



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http://annualreport2013.fortum.com/en/governance/remuneration/


http://annualreport2013.fortum.com/en/sustainability/sustainability-approach/sustainability-target-setting/

http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/gri-section/sustainability-management/

Key sustainability management topicsKey sustainability management topicsin 2013in 2013In accordance with our sustainability policy, we continuously improve our operations by assessing our impactsand by considering sustainability in our whole business value chain.

During the year the development ofsustainability management focused on threekey areas:

• Systematic handling of sustainability-related issues at the Board level

• Assessment of the impacts of Fortum'sactivities on human rights

• Development of tools for country andpartner risk assessment fromsustainability perspective

In June 2013, Fortum's Board of Directorssupplemented its working order with theapproval of Fortum Corporation'sSustainability Policy, sustainability targetsetting and follow-up as well as review ofFortum's Sustainability Report. In the samemeeting the Board approved Fortum'srenewed Sustainability Policy. In December2013, the Board approved the Group'ssustainability targets for the year 2014 andthe sustainability components included inboth the short-term (STI) and long-term (LTI)incentive schemes.

Fortum has included the UN GuidingPrinciples (Protect-Respect-Remedyframework) on Business and Human Rights inits procurement processes and hasimplemented a raise a concern channel formisconduct reporting. In 2013, Fortumincluded the assessment based onthose principles as part of a systematiccountry and partner risk assessment. Duringthe year the most significant countryassessed was India. In addition to countryrisk assessment, altogether around twentypotential partners were assessed.

Climate at the top ofClimate at the top of thetheagendaagenda

Among the global sustainability challenges,climate change mitigation is one of the mostrelevant issues for Fortum. In 2013, Fortumactively promoted a market-based energy andclimate policy regarding the future EU target

setting, the emissions trading scheme andthe functioning of the internal energy market.

In July, Fortum made a proposal to reform theETS using a so-called automatic supplyadjustement mechanism. The proposal wasfollowed by an extensive dialogue withseveral governmental organisations andpoliticians in the EU and member states.During the year Fortum joined threeinternational business initiatives promotingthe role of business in climate changemitigation: Caring For Climate Initiative underthe UN Global Compact, Single Target 2030Initiative and twelve CEOs' Initiative for betterenergy policy.

In 2013, Fortum joinedthree internationalbusiness initiativespromoting the role ofbusiness in climatechange mitigation.

Development actionsDevelopment actions

The long-term development of the operationalsustainability performance based oncontinuous improvement continued. Newtopics investigated included Fortum's waterbalance, definition and mapping ofenvironmental liabilities and extendedauditing of social responsibility issues amongcontractors. A common procurementmodel and safety requirements forcontractors were implemented during theyear.



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https://www.fortum.com/en/corporation/corporate-governance/code_of_conduct/raise-a-concern/Pages/default.aspx

http://caringforclimate.org/

Sustainability target settingSustainability target settingThe Fortum Management Team decides on Fortum's sustainability approach and Group-level sustainabilitytarget setting, which guide annual planning. The targets are approved by Fortum's Board of Directors.

The divisions define detailed targets anddevelop action plans supporting theachievement of the targets, and they ensurethat sustainability goals are included in thebusiness goals. Group-level key sustainabilityindicators are reported quarterly. Safety andenvironmental incidents and indicatorsmeasuring the reliability of power distributionand the availability of CHP plants arereported monthly. The Fortum ManagementTeam regularly monitors the achievement ofthe targets in its monthly meetings and inquarterly performance reviews. As of thebeginning of 2013, results of thesustainability indicators have been regularlyreported to Fortum's Board of Directors.

Sustainability targets are based on thecontinuous improvement of operations. Therenewed targets, which came into force at

the beginning of 2013, emphasise Fortum'srole in society and measure not onlyenvironmental targets, but also Fortum'sreputation, customer satisfaction, and thesecurity of supply of power and heat. As ofthe beginning of 2014, the target setting wasadjusted by adding contractors' injuryfrequency to the corporate targets andexpanding the CHP plant availability target tocover the whole Group (in 2013, HeatDivision only).

Sustainability targets affect every Fortumemployee and are part of Fortum's short-termincentive scheme. The 2013 incentivescheme included an index that was based onthe One Fortum survey and measuredFortum's reputation among the general publicand customers. The index approved by theBoard of Directors for 2014 measures lost

workday injury frequency for Fortumemployees and contractors, the number ofmajor EHS incidents and Fortum's ability toimprove its performance in the Dow JonesSustainability Assessment.

Sustainability targetsaffect every Fortumemployee and are part ofFortum's short-termincentive scheme.



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Sustainability targets and resultsSustainability targets and resultsFortum's sustainability targets consist of Group-level key indicators and division-level indicators. In addition tothese, Fortum has set targets for Group-wide projects, such as supply chain monitoring, promoting work well-being, and minimum requirements for the environment, occupational health and safety. In 2013, we improvedour performance in regard to many indicators, but a couple of targets were not achieved.

Group sustainability targets and performance in 2013

TargetStatus at theend of 2013 Remarks for 2013

Reputation indexTarget result 69.6 in One FortumSurvey (long-term target >70) 69.8

Customer satisfaction index (CSI)CSI divisional scores at level “good”(70-74) in One Fortum Survey 61-77

Customer satisfaction improved in 4 out of 5customer segments. Power Solutionsbusiness area achieved the target.

Environmental responsibility

Specific CO2 emissions

Electricity production in the EU < 80 g/kWh, 5-year average 66 g/kWhEmissions in 2013 were 70 g/kWh. 5-yearaverage was up from 60 g/kWh in 2012.

Total production (electricity & heat, allcountries) < 200 g/kWh, 5-year average 186 g/kWh

Emissions in 2013 were 196 g/kWh. 5-yearaverage was up from 179 g/kWh in 2012.5-year average has been increasing since2008.

Energy efficiency

Total efficiency of combustion(Definition: produced energy divided bythe primary energy of fuel) > 70%, 5-year average 66%

Efficiency in 2013 was 61%. 5-year averagewas down from 67% in 2012. 5-year averagehas been decreasing since 2008.

Major EHS incidents < 40 Fortum-wide 51

(Fires, leaks, explosions, INES1) events exceeding level 0, dam safetyincidents, environmental non-compliances)



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Social responsibility

Security of supply

SAIDI2) < 110 minutes 220 minutesHigh SAIDI was caused by severe storms inthe Nordic countries in December

CHP plant availability in Europe > 92% 94%

Occupational safety

Lost workday injury frequency (LWIF)3),Fortum personnel < 1 1.1

1) International Nuclear Event Scale

2) System Average Interruption Duration Index

3) LWIF = Lost workday injury frequency per one million working hours

Other sustainability targets and related performance in 2011-2013

Target 2013 2012 2011

Occupational safety

Total recordable injury frequency (TRIF) 1), Fortumpersonnel < 3.0 2.8 3.4 3.5

Lost workday injury frequency (LWIF) 2), contractors < 3.5 4.8 3.8 3.2

Number of fatalities, Fortum personnel 0 0 0 0

Number of fatalities, contractors 0 1 1 1

Number of lost workday injuries, Fortum personnel - 20 29 29

Number of lost workday injuries, contractors - 76 57 45

Number of safety walks 8,920 16,644 17,507 15,324

Number of improvement proposals and near-missreports 7,800 21,876 6,362 10,087

Supply chain management

Supplier audits 9 3) 13 10 -

1) TRIF = Total recordable injury frequency per one million working hours


3) Three suppliers in risk countries/division, excluding ESD Division



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Our key areas of developmentOur key areas of development

Environmental responsibilityEnvironmental responsibilityindicatorsindicators

Our key environmental responsibilityindicators, specific CO2 emissions andenergy efficiency, are embedded in the coreareas of our strategy: CO2-free hydro andnuclear power production and energy-efficient combined heat and powerproduction. We use these key indicators tomeasure our ability to respond to two majorglobal sustainability challenges: mitigatingclimate change and improving resourceefficiency.

In terms of environmental targets, however,the situation is challenging. Our fuel useefficiency and our specific CO2 emissionsfrom total energy production have developedunfavourably during the past five years,although we are still on the better side of thetarget level. Specific CO2 emissions fromtotal energy production have been on the risewith the increased use of fossil fuels. OurRussian investment programme in its originalform was factored into our target of <200 g/kWh set in 2010. However, the higher thaninitially planned use of coal has led to higheremissions than anticipated. Our goal in theupcoming years is to reverse the growthtrend in specific emissions. In this regard, theplan in 2014 is to find emissions reductionopportunities for our biggest sources ofemissions in Russia.

During the last fiveyears, the overallefficiency of fuel use andthe specific CO2

emissions from totalenergy production havedeveloped unfavourablyin regard to our targets.

The overall efficiency of fuel use hasdecreased because of the increase incondensing power production; consequently,we have not reached our 70% target. The twogas turbine power plants commissioned in2013 at the Nyagan plant in Russia were theprimary contributors to the increase incondensing power production. Power

generation at the Inkoo coal-fired condensingpower plant in Finland ended inFebruary 2014, which will reduce some of ourcondensing power production. Additionally,Fortum has two big CHP plants underconstruction: in Chelyabinsk, Russia, and inStockholm, Sweden. Their commissioning, in2015 and 2016, will contribute to improvedefficiency of fuel use.

The total number of major EHS incidents, acategory that covers fires, leaks of over100 litres, explosions, nuclear and damsafety incidents, and environmental permitnon-compliances, was 51; the target was 40.To some extent, the reasons for exceedingthe target can be attributed to changes indefinitions and in reporting practices.However, incidents increased in someprojects and exceptional situations.Improvement measures for these incidentsare local, such as better management ofchanges in projects and the developmentprogramme for the Heat Division's Swedishfunctions. Corrective measures also includee.g. renovation projects to reducetransformer oil leaks and modifications toRussian plants to reduce waste water permitviolations.

Social responsibility indicatorsSocial responsibility indicators

Of our key social responsibility indicators, thesecurity of supply of energy reflects Fortum’srole in securing reliable energy supply forsociety. Safe operations and a good level ofsafety are demonstrations of professionaloperations and the level of expertise.

With regard to social responsibility indicators,we did not achieve our targets in security ofelectricity supply or in contractor work safety.Due to the severe storms in December, theSystem Average Interruption Duration Index(SAIDI), which indicates reliability ofelectricity distribution, was double comparedto our target.

With regard to socialresponsibility indicators,we did not achieve ourtargets in security ofelectricity supply or incontractor safety.

Our preparedness to respond to stormdamage improved significantly, and repairswere completed more quickly than before.However, power outages affected a largenumber of customers, and as a result theSAIDI was high. Construction of a weather-proof grid continues; the aim is to have abouthalf of our customers in Finland and nearly allof our customers in Sweden within thesphere of weather-proof power distribution bythe end of 2014.

The number of improvement proposals andnear-miss reports increased considerably dueto high activity in the Heat and RussiaDivisions and the clarification of reportingpractices in the Russia Division.

Despite many development measures, thelost workday injury frequency (LWIF) forcontractors worsened and was 4.8 (2012:3.8). In 2013, there was one fatal accidentinvolving a contractor employee at theChelyabinsk CHP-2 plant in Russia. InFebruary 2014, a contractor employee died inan accident in power distribution in Sweden.

Additionally, the number of contractoraccidents increased from the previous year.Most of the units and projects were able toimprove contractor safety, but the weakdevelopment in a few of the organisations ledto an unsatisfactory overall result.

The biggest challenges were the constructionand renovation projects in Russia andSweden, and the electricity transmissionrepair and modification work mainly inFinland.

Contractor safety is a major challenge andwill remain a focus area in 2014. To improvethe situation, existing development projectshave been continued and new projects havebeen launched. A common contractormanagement model was adopted Fortum-wide in 2013. To emphasise the importanceof contractor safety, LWIF for contractorswas made one of the Group-levelsustainability key indicators for 2014.Contractor safety is also a more prominentpart of Fortum's incentive schemes.Additionally, the auditing of issues related tosocial responsibility was expanded amongcontractors.



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Corporate sustainability targets in 2014

Target

Reputation index Target result 70.8 in One Fortum Survey

Customer satisfaction index (CSI) CSI divisional scores at level “good” (70-74) in One Fortum Survey

Environmental responsibility Target

Specific CO2 emissions

Electricity production in the EU < 80 g/kWh, 5-year average

Total production (electricity & heat, all countries) < 200 g/kWh, 5-year average

Energy efficiency

Total efficiency of combustion(Definition: produced energy divided by the primary energy of fuel) > 70%, 5-year average

Major EHS incidents < 35

(Fires, leaks, explosions, INES1) > 0 events, dam safety incidents, environmental non-compliances)

Social responsibility Target

Security of supply

SAIDI2)

- Sweden < 100 min

- Norway < 96 min

CHP plant availability > 95%

Occupational safety

Lost workday injury frequency (LWIF)3), Fortum personnel < 1

Lost workday injury frequency (LWIF)3), contractors < 3.5

1) International Nuclear Event Scale

2) System Average Interruption Duration Index




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Sustainability indexesSustainability indexesExpert assessments of sustainability and good rankings in significant sustainability indexes are important toFortum because they support the development and continuous improvement of our operations.

In 2013, Fortum achieved its all-time highestscoring in the Carbon Disclosure Project's(CDP) Climate Disclosure Leadership Index: afull 100 points. In the Climate PerformanceIndex Fortum's result was A- in scale A-C.Fortum shared the first place in CDP's Nordicclimate index. With its peak scoring, Fortumwould have shared a top ranking also in theglobal index. Because the company's marketcapitalisation was below the threshold forinclusion among the 500 largest companiesworldwide, it was only assessed in the Nordicindex.

Fortum was awarded a Prime Status (B-)rating by the German oekom research AG.Fortum is listed in the STOXX Global ESGLeaders indexes, which list global leaders interms of environmental, social andgovernance criteria, and in the NASDAQOMX's and GES Investment Service's OMXGES Sustainability Finland index, whichcompares the leading companies listed onthe NASDAQ OMX Helsinki and theircorporate responsibility.

In December Fortum was listed in ECPI®Indices. ECPI is a rating and index companydedicated to ESG (environment, social,governance) research.

Fortum is included in the SustainabilityYearbook 2013, published by the SAM Group.The assessment included more than 2000companies, with the top 15 per cent in eachsector earning a spot in the yearbook.

Fortum achieved its all-time highest scoring inthe Climate DisclosureLeadership Index: a full100 points.

During 2003-2013 Fortum was listed in theDow Jones Sustainability World Index, butwas excluded for 2013-2014. In the 2013ranking, the industry classification waschanged. Fortum's performance scoresremained at the level of the previous year, butdue to the new industry classification Fortumdid not make the index.

Honourable mention for ourHonourable mention for oursustainability reportsustainability report

Fortum's Sustainability Report 2012, receivedan honourable mention at the Corporate

Responsibility Reporting Competition inFinland. Altogether 140 companiesparticipated in the competition. Fortum wasgiven special credit for a clear and balancedreport, the review of the supply chain and itsimpacts, and also for comprehensivereporting of its tax footprint. The report wasalso characterised as clearly structured andreader friendly.



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Fortum's business activities cover the production, sales and distribution of electricity and heat as well asenergy-sector expert services. Investments and fuels make up a big part of Fortum's purchases.

We produce electricity and heat in anenvironmentally benign manner usingversatile energy sources. We distributeenergy to our customers while taking intoconsideration long-term, sustainablecommunity planning. We sell electricity andheat and energy-sector expert services.

Energy production, distribution and use resultin many kinds of environmental impacts.Some of them are global and extensive bynature, some regional or local. The biggestenvironmental concerns are related toclimate change, acidification, diminishingnatural resources and biodiversity.

Fortum takes into consideration the entire lifecycle of its energy products and reduces theenvironmental impacts of its operations byapplying best practices and the best availabletechnologies, using natural resources in aresponsible manner, and efficient operatingand maintenance processes.

Fortum takes intoconsideration the entirelife cycle of its energyproducts and aimsat minimising theenvironmental impactsof its operations as partof the daily business.

Fortum's investments pursue a financiallyprofitable balance that provides thepossibility to increase capacity and reduceemissions. In line with our strategy, we investin carbon dioxide-free hydro and nuclearpower production and in energy-efficientcombined heat and power (CHP) production.

We produce economic added value for ourstakeholder groups. We support thefunctioning of society by e.g. compensatingdebt investors and shareholders, payingtaxes, employing people and supporting non-profit activities.

As part of our daily business, we strive tominimise the negative environmental impactsof our operations. We act responsibly, and weaim to ensure that our business partners actresponsibly and comply with our Code ofConduct and Supplier Code of Conduct.

Read moreRead more

• Fortum's energy production in differentcountries

• Impacts of energy production and use(PDF)

Annual Report 2013 Our business


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http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/customers/consulting-services/

http://annualreport2013.fortum.com/en/sustainability/our-business/solar-economy-production-forms/hydropower/

http://annualreport2013.fortum.com/en/sustainability/our-business/nuclear-power/


http://annualreport2013.fortum.com/en/sustainability/our-business/thermal-energy/combined-heat-and-power/

http://annualreport2013.fortum.com/en/sustainability/our-business/generating-economic-value-for-stakeholders/

http://www.fortum.com/en/energy-production/energy-production-on-the-map/pages/default.aspx

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http://fortum-ar-2013.studio.crasman.fi/file/dl/i/PhYAOA/0DcGVhUNzBD4jQawFcGP-Q/Impacts_of_energy_sources.pdf

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Solar economy production formsSolar economy production formsFortum's diversified production portfolio utilises several solar economy energy forms in an environmentallybenign way. In addition to hydropower, these include bioenergy, solar power, wind power and energyproduced by heat pumps. Fortum is also actively researching many future solar economy productiontechnologies, such as wave power.

HydropowerHydropowerHydropower is Fortum's most significant renewable electricity production form. About one third of Fortum'sannual electricity production is hydropower; the share fluctuates yearly based on the hydrological situation. In2013, our hydropower production was 18.0 TWh, i.e. 26% of the company's electricity production.

Fortum's hydropower production capacity inthe Nordic countries is about 4,600 MW. Atyear-end 2013, we owned or co-owned 159hydropower plants in Sweden and Finland.Fortum has production control of 139 ofthem. The power plants with the largestcapacity are located on the Dalälven,Indalsälven and Ljusnan rivers in centralSweden and on the Oulujoki, Kemijoki andVuoksi rivers in Finland.

Hydropower refurbishmentsHydropower refurbishments

Refurbishments and power upgrades increasethe efficiency and production of ourhydropower plants without additionalenvironmental load. Modernisation of

machinery and equipment improvesefficiency, occupational safety andoperational reliability. The risk and extent ofoil spills and fires is reduced throughrefurbishments.

Hydropowerrefurbishments increasethe efficiency and safetyof power plants andreduce environmentalrisks.

During 2013, refurbishment was completedat the Pyhäkoski power plant in Finland andthe Edsforsen and Hansjö power plants inSweden. In Sweden, refurbishment continuedat Gammelänge power plant and newprojects started at the Noppikoski, Väsa andSkedvi power plants. The refurbishmentscompleted during 2013, produced 12 MW ofadditional capacity, which equalsapproximately 24 GWh annual powergeneration.

Reducing environmental impactsReducing environmental impactsThe most significant environmental impactsof hydropower are caused by theconstruction of plants and dams and thedredging of riverbeds. Hydropower can alterriver systems, shorelines, and the routes andnatural flow rates of rivers. Regulating thelevel of water in lakes and rivers affects theaquatic habitat as well as other uses of thewater systems. Fortum actively participates inmitigating the impacts of hydropower and inresearch related to the impacts ofhydropower.

Regulation of water systemsRegulation of water systems

Because of hydropower production, the flowof water systems is regulated both onan annual level and in the short term. Annualregulation includes the storage of floodwaters and shifting of water discharges towinter time when electricity consumption ishigh. Short-term regulation means regulatingthe discharges during the day to correspondwith electricity demand.

The permit conditions for Fortum’shydropower plants and lake regulation define

the limits for surface water levels and flow-rate variations in the water systems. Thepermits also define obligations to prevent andto compensate for other environmentalimpacts. As a result of careful operation,Fortum’s hydropower plants had onlyone significant permit non-compliance in2013.

In the Oulujoki water system in Finland,Fortum worked with the local Centres forEconomic Development, Transport and theEnvironment to find ways to develop theregulation of the entire water system in aneffort to reduce the kind of flooding



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experienced in summer 2012. As part of thedevelopment work, shoreline propertyowners, residents and other water systemusers were asked about their experienceswith water regulation.

Fortum invested EUR 2.4million to compensatefor the impacts ofhydropower productionon the fish industry.

Fish stockingsFish stockings

To compensate for the environmentalimpacts of hydropower production on the fishindustry, in 2013 Fortum restocked about265,000 salmon and sea trout smolts, and267,000 sea whitefish smolts in Finland.

In inland water systems, lake trout,landlocked salmon, pike perch, Europeangrayling and whitefish were restocked based

on plans drafted in cooperation with fisherycollectives. About 520,000 salmon andrainbow trout smolts and 50,000 eels wererestocked in Sweden’s water systems.

Water system restorationWater system restoration

Voluntary projects also helped to lessen theenvironmental impacts of hydropower. InFinland, the fish habitats in three sections ofthe Vuoksi river between the Tainionkoskiand Imatra power plants were restored. Therestoration projects were funded by proceedsfrom the sales of EKOenergy-labelledhydroelectricity. In the Oulujoki water system,restoration of the Kiantajärvi flood plain areascontinued. The restoration will improve themigrating and nesting conditions for birdlifeas well as the recreational use of the area.

As a result of the restoration work carried outin the surroundings of the Krokströmmerplant in the Ljusnan river in Sweden, troutcan migrate to Valvtjärnsbäcken creek to thefreshwater pearl mussel habitat. In 2013,Fortum also participated in migratory fishresearch by, e.g., modelling the movement of

migrating fish in dammed rivers. Research inthe Klarälven river focused on improving thesurvival of smolts as they migrate down theriver.

Improving dam safetyImproving dam safety

Fortum is continuously improving the safetyof its hydropower plant dams, and thecondition of the dams is monitored inaccordance with the safety inspectionprogrammes approved by the dam authority.In Sweden, Fortum’s refurbishment project ofthe Höljes dam launched in 2012 iscontinuing; it launched a refurbishmentproject at the Spjutmo dam in 2013. TheHöljes dam is one of the biggest dams inSweden, and during the project the dam willbe refurbished to meet the currentrequirements for dam safety. The project isthe biggest of the ongoing investmentprojects in Fortum’s hydropower productionand is scheduled for completion during 2015.

BioenergyBioenergyFortum utilises both solid biomass and liquid biofuels in CHP production and in heat-only production. Thesefuels include e.g. forest chips and other wood-derived fuels and vegetable and animal oils and fats. Inaddition, part of the municipal and industrial waste burned is bio-based.

In 2013, Fortum used a total of 6.8 terawatt-hours (TWh) of biomass and biofuels,accounting for about 5% of our primaryenergy use. The amount increased by 11%from 2012.

Solid biomass and liquid biofuels are used inFortum's CHP production and in heat-onlyboilers in Sweden, Finland, Poland and theBaltic countries. During the year four newCHP plants utilising biomass and waste, wereinaugurated in Klaipeda (Lithuania), Jelgava(Latvia), Järvenpää (Finland) and Brista(Sweden).

Additionally, the production of bio-oil basedon pyrolysis technology started in Novemberat the Joensuu CHP plant in Finland.

Construction of a 410 MW bio-CHP plantstarted at Värtan, Stockholm, in January2013. The plant is expected to be inoperation in 2016 and will be one of theworld's largest bio-fuelled CHP plants.

Fortum's plant to becommissioned in 2016 inStockholm will be one ofthe largest bio-fuelledCHP plants in the world.

Increasing the use of bioenergy wasresearched at many power plants. At theVärtan power plant in Sweden, testing theuse of olive stones in the fuel mix continued.Altogether 12,200 tonnes were burned andtheir share in the fuel used was 2%. At theCzestochowa CHP plant in Poland, the shareof biomass, both forest and agricultural, infuel use was one third during 2013.

Fortum is also a leading user of municipalwaste in the Nordic and Baltic countries. Theuse of waste fuel amounted to 2.8 TWh(2012: 2.3). Utilising municipal waste is an

essential part of sustainable wastemanagement because it can reduce theamount of waste that would otherwise end upin landfills. It is also environmentally benignsince the energy content of the waste can beutilised thus reducing the need for otherenergy sources.

The sustainability, especially the carbonneutrality and renewal, of biomass is subjectto intense debate in the EU. Fortumparticipated in the discussion on this topicand has established its position and actionsto ensure sustainable use of bioenergy in itsoperations. Fortum is a member in severalinternational networks and organisationspromoting the sustainable sourcing and useof bioenergy.



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Fortum is involved inseveral internationalorganisations promotingthe sustainable sourcingand use of bioenergy.

Heat pumpsHeat pumpsFortum utilises waste heat from wastewater and thermal energy from sea water, among other energy sources,to produce heat and cooling energy. Energy produced by heat pumps replaces the use of fossil fuels.

Fortum produces district heating and coolingbased on heat pump technology inStockholm, Sweden, and Espoo, Finland. InStockholm Fortum operates 17 large-scaleheat pumps in two separate locations. At theHammarby plant seven heat pumps with atotal capacity of 225 MW use sewage waterto produce heat for the district heatingsystem, and at Värtan/Ropsten a total of 10heat pumps with a capacity of 256 MW usesea water to produce heat and cooling.

Heat pumps utilising excess heat fromcustomers are used in the Open DistrictHeating pilot in Sweden.

Waste heat is being utilisedWaste heat is being utilised

In Espoo, Finland, Fortum is building a newheat pump station near the Suomenoja powerplant. The heat pump station uses the wasteheat from the purified wastewater from thenear-by wastewater treatment plant before

the water is released into sea. Thestation produces some 300 GWh heat,corresponding to the annual consumption ofroughly 15,000 single-family homes. Heatpumps also cool the wastewater, thusreducing the environmental impact of thewastewater treatment plant. The heat will beutilised in the district heating network in theEspoo area.

In Espoo, Finland,Fortum is building a heatpump station to producedistrict heat from heat inwastewater. Productionof the plant equals theannual consumptionof 15,000 single-familyhomes.

The heat pump will significantly reduce thelocal emissions from district heat production.The annual CO2 emissions will decrease byabout 150,000 tonnes compared to the useof fossil fuels. The construction work on theheat pumps started at the end of 2013, andthey will be commissioned at the end of2014.

A heat pump is an energy-efficient andclimate-benign production form that doesn'tgenerate emissions in the production phase,with the exception of possible minor losses ofrefrigerants or heating medium from thepump equipment. The environmental impactsfrom the use of heat pumps originate fromthe production of the electricity used by thepumps.

Solar powerSolar powerFortum is gradually moving from the research phase of solar energy to commercial use. Solar powertechnologies are developing rapidly and the use of solar energy is already cost efficient in sunny areas ona small scale.

In 2013, Fortum started solar powerproduction in India by acquiring a 5.4-MWsolar power plant in the state of Rajasthan,

north-western India. The annual production isabout 9 GWh. Our short-term ambition is tobuild a small photo-voltaic solar portfolio in

order to gain experience in different solartechnologies and in operating in the Indianpower market.

Biomass Waste

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5

10

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There have been solar energy demonstrationand research projects ongoing for severalyears in Fortum. At the beginning of 2012,a solar business team was started at Fortum.The team analyses the solar energy market

and technology development andassesses potential business concepts.

Fortum sells solar power kits in the Nordiccountries. Fortum's Solar Kit is a turnkey

solution including solar panels installed at thecustomer's facilities. Fortum is alsocommitted to buying the surplus electricityfrom the customer.

Wave powerWave powerFortum has been developing wave power since 2007, and currently we have three ongoing projects. We believethat wave energy will be one of the production methods in the future energy system.

In spring 2013, Fortum, the French large-scale maritime enterprise DCNS and AW-Energy signed a development agreement inwave power research and development. Aspart of the agreement, the companies willdevelop a joint 1.5-MW wave powerdemonstration project in Bretagne, France.The project is based on the WaveRoller™technology of AW-Energy. Fortum isresponsible for project development and willbe the owner of the demonstration park.

Fortum is also a partner in the Finnish waveenergy technology company AW-Energy. The

WaveRoller™, developed by AW-Energy, cangenerate electricity from the bottom waves ofthe sea. Three WaveRoller™ units with a totaloutput of 300 kilowatts have been testedduring the past years offshore in Peniche,Portugal.

Fortum and the Swedish Seabased AB arecurrently building a demonstration wavepower park in Sotenäs, on the west coast ofSweden. If all the planned phases areconstructed, it will be one of the world'slargest wave-power demonstration projectsand will have a 10-MW output. The initial

phase 1, capacity of 1MW, is currently beingconstructed. The project is scheduled forcompletion in 2014.


• Fortum's wave power development

Wind powerWind powerThroughout the 2000s, Fortum has been developing several wind power projects in Finland and Sweden.Fortum's current wind power capacity of approximately 30 MW originates from associated companies inSweden and Finland.

Fortum's wind power capacity originatesmainly from its minority share in BlaikenVindAB in Sweden. Upon completion, Blaikenwind park will have a capacity of 250 MW,making it one of Europe's largest land-basedwind farms. Commercial production of the

first phase of Blaiken wind power park startedin the first quarter of 2013. In Finland,Fortum also has minority interests in AbÖskata Vind Närpes - Öskatan Tuuli NärpiöOy, and a one-fourth interest in TVO's one-megawatt wind turbine in Olkiluoto.

In 2013, Fortum divested two permitted sitesin northern Finland (Kuolavaara-Keulakkopääand Joukhaisselkä), and shares in TunturituuliOy. In early 2014, Fortum announced thatit sold the Tohkoja wind power project inKalajoki, Finland.

Nuclear powerNuclear powerNuclear power has a central role in Fortum's energy production. In 2013, Fortum's nuclear power productionwas 23.7 terawatt-hours (TWh), i.e. 34% of the company's electricity production. Fortum is also a significantprovider of nuclear consulting services.

In Finland, Fortum owns and operates theLoviisa power plant. In addition, we have a26.6% share in Olkiluoto's two reactors and a25% share in the third reactor underconstruction.

In Sweden, Fortum has a 22% share inForsmark's power production and a 43%share in Oskarshamn's power production.Fortum's nuclear power production capacityis 3,276 MW.



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Safety and availabilitySafety and availabilityFortum has long experience in the responsible operation of nuclear power. The safety of Fortum's nuclearpower plants is at a high level and we continuously develop the safety and availability of the plants based onthe principle of continuous improvement.

In 2013, our Loviisa power plantproduced 8.04 TWh of electricity, which wasabout 9% of the electricity production inFinland. The load factor describing theavailability of the nuclear power plant was92.5%, i.e. excellent by internationalstandards. The availability of pressurised-water reactors globally was 83% in 2013. Inthe annual maintenance outage, both unitsunderwent a so-called refuelling outage, withno major alterations or repairs carried out. Inaddition, there were three repair outages.

During the year, the Loviisa power plantrecorded two incidents impacting safety(level 1 on the INES scale used by theInternational Atomic Energy Agency). Theincidents did not cause any danger to people,

the environment or the power plant.According to the IAEA definition, INES 1incidents do not pose a risk but do indicate alack of safety provisions.

The load factor at theLoviisa power plant was92.5%, whereas theglobal average for thatparticular reactor typewas 83%.

Availability in co-owned plants was good,excluding Oskarshamn units 1 and 3. Theprolonged repairs and availability problems atOskarshamn 1 continued until the start-up ofthe plant in January 2014. A problemrequiring a plant modification was discoveredin autumn in the Oskarshamn 3 turbine plant;this will limit the plant's output until thespring 2014 annual outage.

In December 2012, the Swedish RadiationSafety Authority (SSM) placed theOskarshamn nuclear power plant underspecial supervision. The operationalimprovement programme launched at theplant progressed as planned in 2013.

Continuous development of nuclear safetyContinuous development of nuclear safetyNuclear safety and, in particular,preparedness for extreme externalevents, were actively discussed after theFukushima accident in 2011. Consequently,the European Union launched nuclear powersafety assessments, the so-called stresstests. In addition to these, national safetyassessments have also been carried out.Based on the work done during and after thestress tests, the European Commissionreleased a proposal for the renewal of theNuclear Safety Directive in summer 2013.The new directive proposal is under review bythe Council of the European Union.

According to the safety assessments carriedout in 2012, the design basis for Fortum'snuclear power plants in Finland and Swedenare proper in terms of external events. Themost important development measures at theLoviisa power plant are related to theplanning of air-cooled cooling towers that areindependent of seawater and improved floodprotection in case of the very improbableexceptionally high seawater level.

Planning of these measures continued, andthey will be implemented within theframework of the annual investment

programmes. A decision was made toconstruct a new air cooling systemindependent of seawater cooling during2014. The new system will improve theplant's preparedness for extreme conditionswhen seawater for some reason becomesunavailable for its normal cooling function.

The cooling systemindependent of sea waterto be built at Loviisapower plant in 2014 willimprove the plant'spreparedness forextreme events.

In Sweden, the Oskarshamn and Forsmarkplants have presented their safetyimprovement plans to the Swedish RadiationSafety Authority. The authority will require theplants to have, e.g., independent emergencyfeed water systems and a stronger focus onanalysing the aging of the plants.

Development measures inDevelopment measures in20132013

We are developing the safety of our nuclearpower plants in line with the principle ofcontinuous improvement. The risks related toheavy lifts were reduced and an alternativecable connection was added for theemergency diesel generator engine at theLoviisa power plant. We also launched theLoviisa power plant's periodic extensivesafety assessment, the results of which willbe submitted to Finland's Radiation andNuclear Safety Authority (STUK) during 2014and 2015.

The goal of Fortum's R&D related to nuclearpower is to ensure first-rate nuclear safetyand nuclear waste management as well asgood efficiency of fuel use. In addition to itsown research programmes, Fortumparticipates in Finnish national researchprogrammes and in the development ofSwedish nuclear power research.



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Modernisations and capacity upgradesModernisations and capacity upgradesThe efficiency and power capacity of both units at the Loviisa nuclear power plant have been increased duringthe past by the modernisation of the plant, and the work will continue during the next few years. Powerupgrades are being carried out also in our co-owned plants in Sweden.

A decision has been made to modernise theLoviisa power plant's high-pressure turbinesin 2014–2017. Additionally, the plant's eightmoisture separators and reheaters will bemodernised in 2015-2017. Themodernisations will increase the plant'snominal output by a total of 29 MW. Theseare examples of projects we are undertakingto ensure the reliable electricity production of

the plant units to the end of their operationallifetime.

Projects related to capacity upgradescontinued at the Oskarshamn and Forsmarknuclear power plants. The test-run period ofthe Forsmark 2 capacity upgrade that hadbeen postponed to spring 2013 wascompleted as planned in May. During the

year the plant's nominal output increasedfrom 996 MW to 1,120 MW. Oskarshamn 2unit was shut down at the beginning of Juneto implement preparations for modificationsto improve safety and for capacity upgrades.

Reducing nuclear power's environmentalReducing nuclear power's environmentalimpactsimpactsCarbon dioxide-free nuclear power has an important role in mitigating climate change. Under normalconditions, nuclear power production does not have any health or environmental impacts.

Nuclear power's most significant factors arerelated to nuclear safety, nuclear wastemanagement, and the impacts of coolingwaters.

The most significant environmental impact ofa nuclear power plant during operation is theincreased water temperature in theimmediate vicinity of the plant as a result of

cooling water, when seawater cooling is used.In 2013, the Loviisa power plant's thermalload on the sea was 15.7 TWh. Based ontemperature measurements, the coolingwater has raised the surface watertemperature by 1-2 degrees within a 1-2kilometre radius of the cooling waterdischarge location.

The thermal load on the sea could bereduced by making the nuclear power plant acombined heat and power plant. This wouldincrease the power plant's energy efficiencyby several tens of per cents. So far, this typeof solution has not been realised in anycountry on a large scale.

Nuclear waste managementNuclear waste managementBoth radioactive and conventional waste is generated in nuclear power production. The solutions for finaldisposal of nuclear waste from the Loviisa nuclear power plant and from Fortum's co-owned nuclear powerplants are in the forefront in the world.

The waste generated in the operating of anuclear power plant is treated within thesphere of either conventional (non-radioactive) or radioactive wastemanagement. As in a normal workenvironment, conventional waste isgenerated in, e.g., the transportation ofgoods and in office work. Depending on itsactivity, radioactive waste is sorted into eitherlow-, intermediate- or high-level radioactivewaste.

The Loviisa power plant's low- andintermediate-level radioactive waste isdisposed of in the underground repositorybuilt in the plant area. A periodic safetyassessment of the repository was made in2013. Separate facilities fordecommissioning waste will be built in therepository in due course. Final disposal ofdecommissioning waste will be subject to anenvironmental impact assessment followedby a corresponding licensing procedure thatwas carried out for the final repository foroperation and maintenance waste.

The finalising of the liquid waste storage andsolidification plant continued. The plan is tocommission the solidification plant by 2016.

High-level radioactive nuclear waste will bestored at the Loviisa power plant before it willbe disposed of in the nuclear waste finalrepository to be constructed in Olkiluoto,Eurajoki.

After use in the reactor, the fuel assembliesare removed and stored, first in deep waterbasins inside the reactor building for a few



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years and then in water basins in an interimstorage.

Final disposal of nuclear wasteFinal disposal of nuclear wasteIn Finland and Sweden, the producers ofnuclear waste are responsible formanagement and final disposal of the nuclearwaste and for the related costs.

The practical implementation of the finaldisposal of spent nuclear fuel from theLoviisa and Olkiluoto nuclear power plants ishandled by Posiva Oy, which is co-owned byFortum and Teollisuuden Voima Oyj. Spentnuclear fuel will be placed in Olkiluoto's finalrepository in Eurajoki. Posiva submitted itsconstruction licence application for a finalrepository for spent nuclear fuel to theMinistry of Employment and the Economy atthe end of 2012. During 2013, additional

reports have been submitted in response tothe special questions that emerged duringthe authority's review of the constructionlicence. Readiness to start the finalrepository operations is estimated to bearound 2020.

In Sweden, Svensk Kärnbränslehantering AB(SKB) handles the final disposal of theexisting plants' spent nuclear fuel. In March2011, the company submitted an applicationfor a construction licence for anencapsulation and final disposal facility; theapplication is under review by the authorities.The final repository is planned to be inForsmark. Disposal operations could be

started after construction and testing periodin late 2020's.

In 2013, Fortum updated the technical plansand cost estimates related to nuclear wastemanagement in Finland. The plan and costestimate include also the decommissioning ofthe plant.


• Loviisa nuclear power plant's nuclearliability

Nuclear consulting servicesNuclear consulting servicesFortum's nuclear expertise is recognised worldwide. We provide nuclear safety and waste management servicesand system supplies in various nuclear technology areas for the nuclear power industry.

New breakthroughs were made in thecommercialisation of Fortum's nuclear powerexpertise in 2013. We signed a collaborationagreement with the Russian State AtomicEnergy Corporation ROSATOM and with theBritish Rolls-Royce Plc in the area of nuclearpower development. The collaboration willjointly investigate the feasibility ofROSATOM's VVER-type reactors for the UKnew-build programme. During the first phase,the partners will launch preparatory worktowards Generic Design Assessment of aVVER-type power plant and preparationsfor plant licensing. Fortum's contribution tothe project is, for example, its special

expertise in nuclear safety and nuclear wastemanagement.

We also continued supplying ion exchangematerials to the American EnergySolutionsLLC in Japan. The ion exchange materials arebeing used to purify the radioactive waters atthe damaged Dai-ichi power plant inFukushima, Japan. Since 2012, Fortum hasdelivered thousands of kilos of ion exchangematerials in granulated form in order to purifythe radioactive waters of the nuclear powerplant.

Fortum has delivered ionexchange materialsworth of dozens ofmillion euros in order topurify the radioactivewaters in Fukushima,Japan.



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Thermal energyThermal energyFortum produces electricity and heat from a versatile mix of fuels in thermal energy production. Most of ourthermal energy production consists of combined heat and power production (CHP) units; in addition, we havecondensing power production and heat-only boilers (HOB). In 2013, our thermal energy production was27.0 TWh of electricity and 39.7 TWh heat.

We have 28 CHP production facilities inFinland, Sweden, Russia, Poland, the Balticcountries and in Great Britain. In 2013,CHP plants accounted for 33% (2012: 32%) ofour total power production and 83% (2012:79%) of our total heat production.

Fortum has condensing power plants inFinland and in Russia. Fortum has two coal-

fuelled condensing power plants in Finland:Inkoo and Meri-Pori. The new gas-fuelledNyagan power plants in Russia arecondensing plants. In 2013, condensingpower production accounted for 6.7% of ourtotal power production.

Heat-only boilers serve as reserve units orpeak-load boilers during the coldest time of

the year. Fortum has heat-only boilers inalmost all its operating countries. In 2013,heat-only boilers accounted for 17% of ourtotal heat production.

Combined heat and powerCombined heat and powerCombined heat and power production (CHP) is one of the cornerstones in Fortum's strategy. We produceenergy in CHP plants in eight countries. We utilise versatile and flexible energy sources in our CHP production.

Fortum produces heat, steam andelectricity in its CHP plants. The majority ofdistrict heat is produced at CHP plants.

Fortum's long-term aim is to replace heat-only plants and old CHP units with new CHPplants. In 2013, a total of four new CHP unitsstarted production: in Järvenpää, Finland; inBrista, Sweden; in Jelgava, Latvia; and inKlaipeda, Lithuania. The new plants added86 MW to the production capacity of our CHP

electricity and 225 MW to our CHP heat.Preparations for three major CHPinvestments, a biomass CHP plant inStockholm, Sweden, and two natural gas CHPunits in Chelyabinsk, Russia, continued.

In normal operation, the Järvenpää CHP unituses only biomass, mostly forest chips orforest industry by-products like saw dust andbark. The biomass is local, typically harvestedfrom within 100 km of the unit. The

investment reduces the CO2 emissions ofheat production in the area by 70%. The plantcan also use peat or natural gas whenneeded.

The Klaipeda CHP unit is the first waste-fuelled power plant in the Baltic countries. Ituses municipal and industrial waste andbiomass. The Klaipeda CHP unit replaces old,natural gas-fired capacity and reduces annualCO2 emissions by 100,000 tonnes.

Diverse use of fuelsDiverse use of fuelsFortum utilises a diverse and flexible mix ofenergy sources in its CHP production andaims at increasing the use of renewable fuels.In 2013, the fuel mix in CHP productionconsisted of natural gas 76%, coal 13%,waste-derived fuels 3%, biomass andbioliquids 7% and peat 0.6%. Increasing theuse of bioenergy was researched andimplemented at many of Fortum's existingpower plants. Additionally, Fortum increasedthe use of biomass by starting up two newbiomass-fuelled CHP plants in Järvenpää,Finland, and in Jelgava, Latvia.

Fortum is a major user of municipal waste inthe Nordic and Baltic countries. Utilisingmunicipal waste is an essential part of

sustainable waste management because itcan reduce the amount of waste that wouldotherwise end up in landfills. Fortumincreased the use of waste-derived fuels bystarting up two new municipal waste-fuelledCHP plants in Klaipeda, Lithuania, and inBrista, Sweden. CHP improves energyefficiency

CHP has an important role in enhancingresource efficiency, as it substantiallyincreases the efficiency of primary energyuse. Almost 90% of the primary energy of fuelcan be utilised in the CHP process.

The total efficiency of a CHP unit can befurther increased with a so-called CHP+

solution where a third product, like liquid fuel,is produced in addition to electricity and heatproduction. An example is the pyrolysistechnology-based CHP plant in Joensuu,Finland, which produces OTSO bio-oil andincreases the plant's efficiency due toincreasing heat production. Plant wascommissioned at the end of 2013. Bio-oil willreplace fossile-based oil in Fortum's ownheat-only boilers and in heating plants of ourcustomers.



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Availability of CHP plants at aAvailability of CHP plants at agood levelgood level

High availability enables the efficient and safeuse of a power plant, reliable energy deliveryand reduced environmental impacts. Sincethe beginning of 2013, Fortum has made theavailability of its CHP plants one of itssustainability performance indicators. In

2013, the availability was 94% and the target> 92%.

Fortum's target is to continuously improveplant availability and reliability. Severalimprovement projects are under way. Forexample, an availability improvementprogramme focusing on both technicalimprovements and competence building wasstarted in Russia. The Zabrze CHP plant in

Poland, started using gas instead of coal dustin the start-ups and managed to reduce thenumber of start-up's. In Sweden, the projecttargeting improved plant availability throughpreventive maintenance was continued.

Condensing powerCondensing powerFortum produces condensing power in Russia, Finland and Sweden. In the Nordic countries, condensing powerworks as peak load power and as reserve capacity for other power generation; consequently, the annualcondensing power generation also fluctuates considerably depending on the market situation.

Condensing thermal power plantsproduce electricity only, and therefore theefficiency of primary energy use (typically40-45%) is lower than in CHP production (upto 90%).

During 2013, Fortum operated two coal-fuelled condensing power plants in Finland:the Meri-Pori and Inkoo plants. Power

generation at the Inkoo power plant ended inFebruary 2014.

The share of condensing power production inFortum's electricity production will increasesignificantly in the next few years due to thenew Nyagan gas-fuelled units in Russia.These units are located in an area where heatproduction cannot be utilised on a large

scale. Other Fortum plants in Russia, alsoproduce some condensing power.

Reducing environmental impacts of thermalReducing environmental impacts of thermalenergyenergyThermal energy production is based on the combustion of fuels, and its most significant environmentalimpacts are related to flue-gas emissions, emissions to water, and wastes and by-products, like ash anddesulphurisation products.

The impacts of thermal energy production onthe environment can be reduced with the useof various combustion and flue-gas cleaningtechnologies and by fuel switching. The mainway to reduce the environmental impacts ofthermal energy production is to switch fromfossil fuels to renewable fuels. This reducesespecially carbon dioxide and sulphurdioxide emissions, and, depending on thecombustion technique, there is also areduction in nitrogen oxide.

The overall efficiency of fuel use in CHPproduction is high compared to thatof condensing power production. Thereforethe emissions per produced energy unit arelower than in condensing power production,and CHP reduces the environmental impacts.In CHP production, the need for cooling water

is minimal and thus the thermal load intowater systems is significantly reduced.

Emissions to airEmissions to air

The environmental impacts of thermal energyplants are regulated by plant-specificenvironmental permits, which set limitationsfor emissions and obligations for monitoringand reporting emissions. In 2013, Fortumcontinued preparations for the investmentsneeded to fulfil the new emissionsrequirements set by the Industrial EmissionsDirective (IED) in the EU countries. The IEDtightens the emissions requirements forpractically all of Fortum's thermal powerplants (CHP plants and condensing powerplants) from 2016 onwards.

In Russia, actions continued to use betterquality coal within technical and contractuallimitations at Fortum's thermal powerplants. This has resulted in reduced sulphurdioxide and particle emissions per used tonof coal. Boiler efficiency was improvedthrough boiler modifications at a couple ofpower plants.

Our key environmental responsibilityindicators, specific CO2 emissions from totalenergy production and efficiency of fuel use,developed unfavourably in spite ofimprovement actions. Specific CO2 emissionsfrom total energy production have been on acontinuous rise with the increased use offossil fuels during the last five years. Theemissions, however, are lower than the targetlevel of 200 g/kWh. The overall efficiency offuel use has decreased during the last five



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years because of increased condensingpower production, and we have not reachedour 70% target.

Utilisation of waste and by-Utilisation of waste and by-productsproducts

In 2013, the utilisation rate for ash was 48%(2012: 51%) and for gypsum 99% (2012:89%). Gypsum utilisation rate in 2012 hasbeen recalcuated based on reclassification ofdesulphurisation products. At Fortum's plantsin Europe, by-products and waste are utilisedand recycled as efficiently as possible.Gypsum is used as raw material inthe plasterboard industry. Fly ash is used inthe construction material industry, roadconstruction, land filling and mine filling. TheJoensuu power plant applied for a permit to

build a noise reduction wall around the plantarea using ashes from the plant. A project toget CE labelling for the bottom ashes fromFortum's plants started during the year.

In Russia, ash is stored in ash basins becausethere is no demand for ash utilisation.

Impact on water systems to beImpact on water systems to befurther reducedfurther reduced

The impacts of thermal power plants on watersystems result from the thermal load ofcooling water, the release of solids, andnitrogen, phosphorus and heavy metalemissions. Wastewater from power plants istreated mechanically, chemically orbiologically before being released into water

systems. The wastewater from certain plantsis led into municipal wastewater networks.

In recent years, Fortum's Russian powerplants have had repeated exceedings ofwastewater permit conditions. Actions toimprove the situation continued in 2013, butthe number of exceedances remained at the2012 level. The actions included changingthe anticorrosion agent, and separating andreducing the water flowings through theash ponds of the coal-fired plants. In additionstudies were started to install better oilseparation systems. Possible investmentdecisions will be made in 2014.

Power distributionPower distributionThe reliable delivery of energy is a priority for Fortum. When developing the distribution network, we take intoconsideration customer needs and long-term, sustainable community planning.

Fortum owns and operates regional and localelectricity networks and supplies electricity toabout 1.6 million customers in Finland,Sweden and Norway. The total length of thecompany's electricity network isapproximately 160,000 km, which is fourtimes the circumference of the earth. In2013, 42.4 TWh electricity was transmitted inFortum's networks.

In December, Fortum announced that it hassold its electricity distribution business inFinland to Suomi Power Networks Oy, whichis owned by a consortium of Finnish pensionfunds Keva and LocalTapiola Pensiontogether with international infrastructureinvestors First State Investments and BorealisInfrastructure.

Fortum expects to complete the divestmentprocess during the first quarter of 2014,subject to the necessary regulatory approvalsas well as customary closing conditions.Fortum is also evaluating the possible futuredivestment opportunities within the electricitydistribution business country by country.

Improving reliability of electricity distributionImproving reliability of electricity distributionElectricity distribution reliability is becoming increasingly important for society using a lot of electricity. Theneeds of consumers and society alike demand efficient communications in power outages.

Fortum continuously invests in networkupdates and maintenance and in furtherimproving security of supply. In 2013, theDistribution business area invested a total ofEUR 260 million in Finland, Sweden andNorway. Fortum invested in smart meters,underground cables, overhead lines andsubstations. Network automation for thecritical parts of the grid also has beenincreased. Through its electricity networkinvestments, Fortum aims to make thenetwork smarter and to decrease and shortenpower outages.

Legal requirements forLegal requirements forsecurity of supplysecurity of supply

The Electricity Market Act, that came intoforce in September 2013, in Finland sets newrequirements for the security of electricitysupply. The duration of a power outagecaused by a storm cannot be longer than sixhours for urban areas and 36 hours for ruralareas.

Electricity distribution companies must meetthese requirements by 2028 at the latest. Thenew Electricity Market Act, also obligates

distribution network owners also to informnetwork users in outage situations and toprovide an estimate about the duration andextensiveness of the outage.

Several severe storms inSeveral severe storms inautumnautumn

Finnish electricity distribution networks werehit by four severe storms in late autumn. Inmany areas the storms were of the samemagnitude as those experienced inDecember 2011. As a result of the storm



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damage, at one point 145,000 Fortumcustomers were without power. The majorityof the power outages were caused by strongwinds toppling trees onto overhead powerlines. The mild and rainy conditions in lateautumn had saturated the ground so it wassoft and the trees were susceptible to fallingonto power lines. However, the impacts onelectricity users were smaller than was thecase in the storms in 2011.

Communicating customers has improved andthe repairing of outages has become quicker.In terms of the autumn storms, thecommunication about the outage wassuccessful. Fortum customers receivedinformation through e.g. text messages,mobile applications and the website.

Due to severe storms in December, thesystem average interruption duration index(SAIDI) per customer was double our target.The SAIDI in Fortum's network was 220minutes (2012: 103), and the customeraverage interruption duration index (CAIDI)was 115 minutes (2012: 61). Fortum has setcountry-specific SAIDI targets for 2014:Sweden <100 minutes and Norway <96minutes.

Due to severe storms inDecember the systemaverage interruptionduration per customerwas double our target.

Construction of weather-proofConstruction of weather-proofnetwork continuesnetwork continues

In 2012, Fortum launched the VahvaVerkkoproject in Finland aiming to improve reliabilityof electricity distribution. The target is tohave about 280,000 Fortum customers(almost half of our customers) within thescope of weather-proof electricity distributionin Finland by the end of 2014. The long-termgoal is to cut the number of power outages inhalf and to double the number of customerscurrently within the scope of weather-proofdistribution in Finland by 2020.

Decisions on this long-term project will bemade by Suomi Power Networks Oy. Fortumsigned a contract on the sales of the

distribution network in Finland with SuomiPower Networks Oy in December 2013.

In Sweden, the SäkraNät network investmentprogramme launched in 2006 continued. Theinitial target of the programme was to cut theoutage times for Fortum's customers in therural network areas by half in five years. Thistarget was reached in 2010 but theprogramme is still continuing. By the end of2013, approximately 740,000 Fortum'scustomers (82% of customers) in Sweden livein areas with a weather-proof electricitydistribution network.

In addition to underground cabling, thereliability of electricity distribution will beimproved by moving power lines from theforests to the roadsides and by increasingelectricity distribution automation. It is easierand faster to repair power lines that run alongroads than those in the middle of a forest.With electricity distribution automation, faultlocations can be isolated as quickly aspossible and power restored to customersoutside the area affected by the fault.

Smart meteringSmart meteringThe installation of smart meters for customers is a significant step towards demand-side management. Themodern network enables customers to track and actively influence their consumption.

A smart grid gives electricity users betteropportunities to influence their own energyconsumption. In essence, this means flexibleelectricity transmission that adjusts todemand fluctuations. In the third quarter of2013, Fortum finalised the installations ofsmart electricity meters for its approximately

620,000 electricity network customers inFinland.

In Sweden, Fortum already finalised theinstallations of new meters for all itscustomers. The installation of new meters inNorway is planned to begin in 2015. A total

of 100,000 households and small businessesin Fortum's electricity network area will beconnected to the new system by 2018.

Reduction of environmental impactsReduction of environmental impactsConstruction, use and maintenance of the energy distribution network impact the surrounding environment.Environmental impacts are reduced through careful operational planning and technology solutions and bypracticing environmentally benign ways of operating.

When planning an electricity distributionnetwork, the impacts on land use, thelandscape and nature are taken intoconsideration. Through the planning, zoningand permit processes, the aim is to find thebest solution for society for securingelectricity distribution.

In the construction phase of a distributionnetwork, environmental impacts are causedby e.g. the removal of trees, and byconstruction traffic, noise and dust. Wasteand environmental aspects are taken intoconsideration in the contractor selectionprocess, and environmental impacts are

reduced through careful operational planningand by practicing environmentally benignways of operating.

The distribution network is inspected,maintained and renewed regularly.Improvements in electricity distribution



27

reliability are achieved with undergroundcabling, the use of isolated overhead lines, bymoving power lines from the forests to theroadsides and public areas wheneverpossible, by clearing power line corridors andby introducing automation in critical parts ofthe network.

Underground cabling also protectsbiodiversity and reduces the impact on thelandscape and birds. Bird collisions are

reduced by mounting marker balls onoverhead lines and landing perches on poles.

Efforts are made to recycle waste materialthat is created in the construction andrenewal of distribution networks. In 2013,Fortum's distribution operations created3,900 tonnes of waste, 75% of which wasrecycled and 25% was disposed of in landfills.Contaminated soil areas from transformer oilleaks are cleaned as quickly as possible. New

transformers sit on oil trays to prevent oilfrom seeping into the environment in theevent of an accident. In Norway, the aim is touse biodegradeable oil in transformerslocated in groundwater areas.

Heat distributionHeat distributionHeat produced in CHP plants and heat-only boilers is transferred to consumers in the district heat network.Smart metering and control systems as well as open, two-way district heat networks are new types of solutionsin the development of heat distribution.

Fortum owns and operates about 1,200 kmof district heat network in Finland, 2,400 kmin Sweden, 860 km in Poland, 300 km in theBaltic countries and 480 km in Russia.Additionally, in Stockholm Fortum owns theworld's most extensive district coolingnetwork, which consists of 204 km and has acapacity of 350 MW. In Espoo, Fortum alsohas a small local district cooling networkof 1.5 km.

The environmental impacts of district heatdistribution occur in the network constructionphase. They are temporary in nature andcommon to other construction projects insociety. With the exception of occasionalwater leaks, there are no environmentalimpacts arising from the use of district heatnetworks.

Uninterrupted heat deliveryUninterrupted heat delivery

An uninterrupted supply of district heat isimportant, particularly in the cold weather

conditions of the North. Fortum iscontinuously improving the reliability of itsdistrict heat networks by repairing faultsfound during scheduled maintenance and byinvesting in new network when needed.

As a result of interruptions caused by variousreasons, district heat customers in the Nordiccountries are without heat supply for only 1-2hours per year on average. About half of theinterruptions are caused by damage to thenetwork and the work to repair it, and half arefor some other reason, like networkrefurbishment work and connecting newcustomers to the district heat network. Ingeneral, new connections and district heatnetwork branching can be implementedwithout interrupting heat distribution. Whendoing repair work that will cause aninterruption in distribution, the aim is toschedule the work outside the heatingseason.

Reduction of heat losses inReduction of heat losses inRussiaRussia

In Russia, Fortum produces more than 90% ofthe heat demand of the cities Tyumen,Chelyabinsk, Tobolsk and Ozersk. Fortum isaiming to build modern and energy-efficientheat distribution systems in the cities withinits operating area. Refurbishment measurescan reduce heat losses from district heatnetworks by 20-30%.

Fortum continued the modernisation of theChelyabinsk district heat networkinfrastructure in 2013. Development of amodern heat distribution network alsocontinued in Tyumen.

Smart meteringSmart meteringSmart metering and control systems give also heat network customers the opportunity to influence their ownheat consumption. With smart meters, consumption data is received in real-time and heat consumptionmonitoring is more efficient.

All Fortum's district heat customers inFinland and Poland are within the sphere ofsmart metering. In Sweden, the majority of

customers are also within the sphere of smartmetering. In Latvia and Estonia, the target is

to finalise the automated meter readingsystem by the end of 2014.



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Open district-heat networkOpen district-heat networkMaking the district-heat networks two-way enables consumers to sell the surplus heat to the network. Utilisingthe heat that would otherwise be lost reduces energy costs and the carbon footprint of the energy system.

The opening of the district-heat network istechnically simple and does not require anymajor investments. The biggest change is inthe business logic and mind-set. An opendistrict-heat network makes it easier touse, for example, solar energy in heatproduction. Buildings, industrial processesand production plants generate a lot of waste

heat, and individual households sometimesproduce surplus heat energy.

The open district heating launched by Fortumin Stockholm, Sweden, is a novel solution forheat recovery and energy recycling. Therecovered energy is used to heat residentialhomes and to produce hot tap water acrossthe city.

In Espoo, Finland, Fortum has launched thenation's first open district-heat network pilot.Fortum's new energy solution enables theuse of waste heat from the Espoo Hospital inthe district heating of the city. This solutionreduces the environmental impact of districtheating.

Electricity and heat salesElectricity and heat salesFortum sells electricity and heat to private and business customers. More and more customers are requiring aguarantee of origin for the electricity they buy, i.e. information about the way the electricity is produced.Fortum is one of the leading sellers of CO2-free and guarantee-of-origin-labelled electricity in the Nordic

countries.

Fortum is one of the leading electricity salescompanies in the Nordic countries. Thecompany markets and sells electricity to1.2 million customers in Sweden, Finland andNorway. In 2013, the company sold a totalof 12.1 terawatt-hours (TWh) of electricity(2012: 12.1).

Fortum's heat sales were 43.1 TWh (2012:46.1). Fortum is the Nordic countries' leading

seller of district heat. In all Fortum sellsdistrict heat in eight countries and has40,000 district heat customers. In Russia thecompany has more than 250 majorcustomers, mainly industry and residentialhousing companies.

The new smart solutions Fortum haslaunched in the markets in recent years givecustomers better opportunities to control

their electricity consumption and reduce theircosts. As a small-scale producer, a user ofFortum's solar panel kit can sell the surpluselectricity to Fortum. The Fortum Fiksuproduct sold in Finland, decreases customercosts by choosing the day's lowest hourlyspot prices to heat the water boiler.

Climate-benign electricity productsClimate-benign electricity productsIn 2013, all electricity sold to privatecustomers in Finland was CO2-free, producedby hydropower and wind power. The origin ofhydropower and wind power was guaranteedwith European Guarantees of Origin or withthe EKOenergy label of the FinnishAssociation for Nature Conservation.

In 2013, all electricity in Sweden was soldwith an environmental value. Customers can

choose either the Fortum Enkel product,which is electricity produced from a mix ofwind power and hydropower, or they canchoose either wind or hydropower. TheFortum Enkel product has the SwedishSociety for Nature Conservation's GoodEnvironmental Choice (Bra Miljöval) label.Electricity sold as a 100% wind power orhydropower product is based on theEuropean Guarantee of Origin certificate.

In Sweden, customers who don't choose eco-labelled electricity receive electricityproduced with nuclear power, which iscarbon dioxide-free in the production phase.Also customers in Norway are offered CO2-free electricity produced 100% withrenewable energy.



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Climate-benign heat productsClimate-benign heat productsFortum sells heat to companies,municipalities and private customers. Fortumis a leading provider of heat in Nordiccountries and fifth largest in the world. In2013, Fortum sold 43.1 TWh of heat, ofwhich 24.1 TWh in Russia.

A climate-neutral heat product is available fordistrict heating customers in Finland and

Sweden. This product allows customers topurchase international emission reductionunits and offset the greenhouse gasemissions of district heating.

In 2013, Fortum introduced new products fordistrict heating customers in Sweden andFinland. Customers and co-ops can nowchoose between different products based on

their consumption profile and preferences.New service and maintenance products forthe district heating system were alsointroduced in 2013.

Energy-efficiency products and servicesEnergy-efficiency products and servicesIn 2013, Fortum continued to offer newproducts and services that improve energy-efficiency.

The Fortum Kotinäyttö (home display) showsthe household's electricity consumption inreal-time. Real-time information makes itpossible to identify the most significantopportunities to save energy.

Two Fortum Fiksu products were launched in2013. One of the products is targeted atcustomers who have electric hot waterheating. The product automatically shifts theheating of the water boiler to the hours when

the electricity price is lowest. This levels outconsumption peaks and helps customers toreduce their electricity bill. An electricityagreement with hourly-based pricing makes itpossible to take advantage of the lowesthourly rates.

In October 2013, a new version of FortumFiksu was introduced for oil heaters. FortumFiksu for oil heating switches the heatingsystem hour by hour between oil andelectricity depending on which energy formis cheaper at that time.

Customers can also buy solar panels fromFortum. With the Fortum Aurinkopaketti(solar kit) connected to the grid, customerscan produce some or all of their electricityand sell the produced electricity exceedingtheir own consumption to Fortum at a Nordicwholesale electricity price.

Fortum actively promotes the adoption ofelectric vehicles and develops solutions thatenable the smart charging of electric vehiclebatteries based on the electricity marketsituation and price.

PurchasingPurchasingFortum is a significant purchaser of goods and services. Investments and fuels make up a big part of Fortum'spurchases. In 2013, Fortum had about 13,300 suppliers of goods and services (2012: 15,200). Ourpurchasing volume was EUR 4.1 billion (2012: 4.2).

Of our purchases, EUR 1.3 billion (2012: 1.6),targeted investments. The biggestinvestments were made in Sweden (EUR 497million) and Russia (EUR 435 million).

Along with investments, fuels(EUR 1,085 million in 2013) make up asignificant part of Fortum's purchases. Wepurchase fuels from international and localsuppliers. Our fossil fuel purchases totalledabout EUR 864 million (2012: 910), biomassand bioliquids about EUR 155 million (2012:130), and nuclear fuel about EUR 66 million(2012: 20).

The rest of our purchases (EUR 1.7 billion in2013) consist of other operational goods andservices. The figure includes electricitypurchased by the Electricity Sales businessarea from the Nordic wholesale electricity

market for retail sales. Purchases of othergoods and services are related to those usedin operation and maintenance and to otherservices, like IT, marketing and travel.

More than half of the purchasing volume,excluding the purchases from the Nordicwholesale electricity market, was purchased

1,284

1,085

1,688

Investments (1,284) Fuels (1,085)

Other purchases (1,688)

Purchases, EUR million



30

from suppliers operating in Europe, mostly inFinland, Sweden and Poland. This does notinclude electricity purchases from the Nordicwholesale market. About 40% of the total

volume of purchases came from riskcountries. These purchases mainly consistedof fuel purchases and the Russia Division'slocal purchases in Russia.

Purchases1) excluding investments in 2011-2013

EUR million 2013 2012 2011

Nordic countries 1,685 1,612 1,903

Russia 813 769 692

Poland 143 161 148

Estonia 29 36 64

Other countries 103 99 44

Total 2,773 2,677 2,851

1) Includes purchases of fuel, power and other materials and services.

InvestmentsInvestmentsIn 2013, Fortum continued its strategy-based investments in energy-efficient combined heat and powerproduction and carbon dioxide-free energy forms.

In 2013, Fortum's capital expenditures andinvestments in shares totalled EUR 1,299million (2012: 1,574). Investments, excludingacquisitions, were EUR 1,284 million (2012:1,558), of which EUR 449 million (2012: 482)targeted CO2-free* production. During theyear biomass-fuelled CHP plants wereinaugurated in Järvenpää and Jelgava, andwaste-fuelled CHP plants in Brista andKlaipeda. In addition, a bio-oil productionplant was commissioned at the Joensuu CHPplant.

In hydropower, Fortum continuedrefurbishments of its hydropower plants inFinland and Sweden.

Fortum acquired the Amrit Solar powerstation in India. Two gas-fired power plantunits in Nyagan were commissioned as partof Fortum's investment programme in Russiain 2013.

In 2013, investments in nuclear powercontinued through capacity upgrades at ourco-owned plants at Forsmark and

Oskarshamn in Sweden. In Finland, Fortumparticipates in Teollisuuden Voima Oy'sOlkiluoto 3 nuclear power plant, which isunder construction, and in the Olkiluoto 4project, which is in the design phase. Theseare financed mainly with shareholder loans.

Fortum's investments in 2013, are describedin detail in the Financials.

*)includes: hydro, nuclear, wind, wave and solar

power as well as electricity and heat production from

bioenergy and waste-derived fuels.

Sustainable management of supply chainSustainable management of supply chainFortum expects its business partners to act responsibly and to comply with the Fortum Code of Conduct andSupplier Code of Conduct. In 2013, Fortum continued sustainability-related supplier audits. Altogether 13audits were conducted.

The Fortum Code of Conduct provides thebasis for ethical business conduct, andFortum's Supplier Code of Conduct sets thebasic sustainability requirements for suppliersof services and goods. The Supplier Code ofConduct is based on the principles of theUnited Nations Global Compact and isdivided into four sections: business practices,human rights, labour standards and theenvironment. The Supplier Code of Conduct

is implemented in all Fortum's operatingcountries and is included in purchaseagreements exceeding EUR 50,000. In theRussia Division suppliers must sign acommitment to follow the Supplier Code ofConduct, in order to be able to participate incompetitive negotiations.

Fortum has been a member of the Bettercoalinitiative since 2012. The aim of the

Bettercoal initiative is to promote theprinciples of sustainable development in coalmining. Bettercoal Code, adopted in 2013,sets expectations for ethical, social andenvironmental performance in coalproduction. In coal purchasing, Fortumfollows the principles defined in theBettercoal Code.



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http://annualreport2013.fortum.com/en/financials/operating-and-financial-review/financial-performance-and-position/capital-expenditure--investments---divestments-of-shares/

http://www.fortum.com/en/corporation/corporate-governance/code_of_conduct/pages/default.aspx

http://www.fortum.com/en/corporation/purchasing/supplier-standards/pages/default.aspx

http://bettercoal.org/


In 2013, several activities, including therenewal of relevant corporate instructions,definition of common EHS requirements anddevelopment of the contractor evaluationprocess, were carried out to improvecontractor EHS management.

Pre-selection and supplierPre-selection and supplieraudits to support assessmentaudits to support assessment

We assess the level of operations of ourbusiness partners through pre-selection andsupplier audits. Pre-selection includes asupplier questionnaire and verification ofcredit. The supplier questionnaire is used toidentify general and sustainability-relatedpractices, and it helps suppliers tounderstand Fortum's expectations forcompliance with the Supplier Code ofConduct. The supplier questionnaire alsohelps to identify potential high-risk suppliersand thus the need for further actions. In 2014the aim is to harmonise Russia Division's pre-selection with the Corporate instructions.

The audit assesses the supplier's compliancewith the requirements in Fortum's SupplierCode of Conduct. Audits are always done on-site and they include production inspection,employee interviews and review ofdocuments and records. If non-compliancesare found, the supplier makes a plan forcorrective actions and we monitor theimplementation of it.

From non-compliances toFrom non-compliances tocorrective actionscorrective actions

In 2013, Fortum's goal was to audit threerisk-country or otherwise risky suppliers ineach division. Fortum's classification of riskcountries is based on the ILO's Decent WorkAgenda, the UN Human Development Index,and Transparency International's CorruptionPerceptions Index. Altogether thirteen auditswere conducted and they included suppliersboth in risk and non-risk countries who areeither in a direct contractual relationwith Fortum or act as a subcontractor toFortum's supplier. The goal was reached in alldivisions except ESD. In the ESD Division,audits were not started due to theassessment of the electricity distributionbusiness future alternatives.

The most significant non-compliancesbrought out in the supplier audits wererelated to occupational safety, overtimehours and management of sub-suppliers.

Based on the audit results, in some cases, anagreement with a supplier has not beenrenewed or the co-operation with the supplierhas been put on hold until the supplier hasmade the needed improvements. In June2013, an audit conducted on a contractorrevealed significant shortcomings and thework was put on hold immediately until themajor shortcomings were corrected. A re-audit of the contractor was conducted at theend of summer to assure that the correctiveactions were done.

The most significantnon-compliances broughtout in the supplier auditswere related tooccupational safety,overtime hours andmanagement of sub-suppliers.

In 2014, Fortum will continue with thesupplier audits; the goal is to audit at leastfifteen suppliers or partners. Contractors willalso be within the scope of the audits.Suppliers to be audited will be selected basedon risk or significance of the contract.

Own personnel as auditorsOwn personnel as auditors

Fortum's own personnel are responsible forthe supplier audits. Auditors receive 1.5 daysof internal training, during which they reviewthe requirements of the Supplier Code ofConduct, the sub-areas to be audited, andthe tools to be used to verify compliance withthe requirements. After the training, supplieraudits are started together with anexperienced auditor. Our goal is to trainauditors from different divisions andoperating countries. In 2013, we trained atotal of 11 auditors from Poland and Sweden.In addition, five persons have receivedauditor training on the Social Accountability(SA8000) standard.



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Supplier audits conducted by Fortum 2013Supplier audits conducted by Fortum 2013

Responsible fuel purchasingResponsible fuel purchasingFuels represent a significant purchasing category at Fortum, EUR 1,085 million in 2013 (2012: 1,057).Increasing attention is being paid to the origin and responsible production of the fuels in purchasing.

Natural gasNatural gas

The natural gas used in Fortum's operationsin Russia, the Baltic countries and Finlandoriginated from Russia, where the gas ispurchased from several suppliers. Gas usedin Poland originated mainly from Russia, butpart of the gas was sourced from Poland. Gasused in Sweden's operations originated fromNorway. In Great Britain, Fortum purchasesnatural gas from the national gas networkand it originates mostly from the Britain andNorwegian gas fields in the North Sea.

CoalCoal

All of the coal used by Fortum in Finland andSweden originated from Russia despite oneshipment from Poland. Coal used in Polandmainly originated from Poland, but there werealso small amounts imported from the CzechRepublic. Fortum's Russian power plantsused coal from Russia and Kazakhstan.

Fortum has been a member of the Bettercoalinitiative since 2012. The aim of the initiativeis to promote the principles of sustainabledevelopment in coal mining. In 2013,

Bettercoal reached a major milestone as anew code was adopted by the members ofthe organisation. The Code sets expectationsfor ethical, social and environmentalperformance in coal production. Thecompliance will be assured by the supplier'sself-assessment, which were started at year-end 2013, and mine assessments performedby independent third-party assessors.Fortum's representatives tested the self-assessment tool with a Polish coal supplier atyear-end 2013.

Biomass and bioliquidsBiomass and bioliquids

The majority (95%) of the biomass used byFortum consisted of wood pellets, wood chipsand industrial wood residues that originatedfrom Finland, Sweden and Estonia. Othertypes of biofuels were acquired from, forexample, Brazil and Malaysia.

Fortum has recognised the challenges relatedto the origin of biomass and other biofuelsand develops measures to verify thetraceability and sustainability of fuels. In2013, a verification system was establishedfor the bio-oil production in the bio-oil plantintegrated with Fortum's Joensuu power

plant. The compliance with sustainabilitycriteria according to the law of biofuels andbio liquids is proven through the verificationsystem. It is estimated that the EnergyAuthority will approve the system in the firstquarter of 2014.

Fortum activelyparticipates globally inthe dialogue aboutresponsible fuelpurchasing withcompanies in the sectorand with stakeholders.

The Dutch non-governmental organisationSOMO published a report in June 2013discussing the biomass purchasing policiesand the transparency regarding the origin ofbiomass in the energy companies operatingin the Netherlands. Based on the reportFortum evaluated its practices and considersthem sufficient for the time being. Fortum'sgoal in 2014 is to start gathering data on the



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volume of certified wood-based biomass usedas fuel in Finland and Sweden.

In Sweden, Fortum's subsidiary FortumVärme is a participant in the WWF GlobalForest & Trade Network (GFTN) throughGFTN Sweden. Additionally, Fortum Värmehas been a member of the Roundtable ofSustainable Palm Oil (RSPO) since 2005 andbecame a member of the Forest StewardshipCouncil (FSC) in 2012.

UraniumUranium

The fuel assemblies used at Loviisa's powerplant are completely of Russian origin. Thefuel supplier acquires the uranium used in thefuel assemblies from various mines. The Dalururanium mine received ISO 14001environmental certification in September2012. The supplier's goal is to getcertification also for the other minessupplying uranium to Fortum. The zirconiummaterial manufacturing plant and the plantresponsible for manufacturing uranium oxidepellets and fuel assemblies also have ISO14001 and OHSAS 18001 certification.

Fortum carries out regular reviews of thequality, environmental, and health and safetymanagement systems of its nuclear fuelsuppliers and the manufacturing of nuclearfuel assemblies. In summer 2013, as in theprevious year, Fortum's experts reviewed thefuel supplier's uranium mine in Russia. TheKrasnokamensk mine (JSC PIMCU) strives forcertification of management systems forquality, environment, and occupational healthand safety by the end of 2015. In 2013, themine focused on developing its occupationalhealth and safety systems based on theDuPont model.

Origin of fuels used at Fortum in 20131)

Fuel Country of origin

Biomass Sweden, Finland, Estonia

Coal Russia, Poland, Kazakhstan, Czech Republic

Natural gas Russia, Great Britain, Norway

Uranium Russia

Oil Russia

Peat Finland, Estonia

1) The biggest countries of origin based on the purchasing volumes in 2013



34

Generating economic value forGenerating economic value forstakeholdersstakeholdersFortum is a significant economic actor in Finland, Sweden, Russia, Poland, Norway and the Baltic countries.We continuously monitor the impact and added welfare of our operations.

The most significant direct monetary flows ofFortum's operations come from salesrevenue from customers, procurements fromsuppliers, compensation to investors andshareholders, growth and maintenanceinvestments, employee wages and salaries,and payments of taxes.

Our operations also have indirect economicimpacts. The Finnish State owns 50.8% ofFortum's shares, and we contribute to afunctioning society by, among otherthings, paying taxes and dividends. Thesesecure the basic functioning of Finnish

society and build well-being. Investments andthe procurement of goods and servicesprovide employment both locally and outsideour operating areas. The wages and taxespaid have a positive impact on localcommunities.

The graphic beside presents Fortum'smonetary flows by stakeholder group in 2013and examples of the generation of addedvalue. With mouse-over on the stakeholdergroups you can find additional information onFortum's direct and indirect economicimpacts on different stakeholders.

Taxes borne in ouroperating countriestotalled EUR 644 millionin 2013. The largestshare of taxes borne wasfor the state of Sweden,EUR 382 million.

Generation of added valueGeneration of added value(values from 2012 in parenthesis)(values from 2012 in parenthesis)



35

PersonnelPersonnel

• Operations are concentrated to theNordic countries, Russia and the Balticrim area

• Fortum employed an average of 10,246(10,600) people

• Fortum develops the competence andperformance of its employees throughskills and leadership training and throughjob rotation

• Wages and bonuses impact privateconsumption, and taxes paid bypersonnel have an impact on thegeneration of social well-being

Public sectorPublic sector

• Fortum's income, property andproduction taxes totaled about EUR 588(587) million

• Support for society totaled about EUR 3.2(5.8) million

• Fortum supports social development andwell-being by paying taxes and socialsecurity costs

• Fortum supports research in the natural,economic and technical sciences withinthe energy sector

Investors and shareholdersInvestors and shareholders

• 132,072 (124,451) shareholders, theFinnish State owns 50.8% of Fortum

• Dividends EUR 888 (888) million werepaid

• About 73.8% of dividends was paid toFinnish shareholders

• Fortum's total shareholder returns haveoutperformed its European peers during afive-year period

• The dividend income on the Finnishstate's shares has an impact onmaintaining both short- and long-termsocial welfare

InvestmentsInvestments

• Majority of growth was made in Heat andRussia Divisions

• Almost all of the planned investments inEurope target CO2-free production

• Maintenance, productivity and legislation-based investments were EUR 794 (848)million

• Growth investments were EUR 492 (588)million

• Research and development expenditurewas EUR 49 (41) million

• Fortum's investments develop e.g. safety,production capacity, energy efficiency,local infrastructure and electricitydistribution reliability

• Fortum's investments create businessopportunities as well as jobs for suppliersof goods and services

SuppliersSuppliers

• Fortum refines natural energy sourcesinto electricity and heat

• Fortum purchases fuels, goods, andservices from local and and globalsuppliers

• About half of the goods and servicesFortum purchases are from suppliersoperating in Europe

• Uranium, gas and majority of coal werepurchased from Russia in 2013

• Collaboration creates jobs for suppliersand unlocks business opportunities in theNordic, Baltic, Polish and Russianmarkets

• Collaboration, networking andpartnerships increase Fortum'sintellectual capital, enable a wide projectbase and support the successfulthroughput of R&D projects

CustomersCustomers

• Fortum offers electricity, heating, coolingand town gas as well as related expertservices

• Fortum has 1.2 million private andbusiness customers and 1.6 millionelectricity distribution customers in theNordic countries. Wholesale electricitymarket customers in Russia.

• Fortum has district heat customers ineight countries and tens of cities

• Fortum knows the markets it operates inand develops competitive products andservices for its customers

• The services and environmentally-benignproducts Fortum offers help to improveenergy efficiency and reduce both costsand emissions

• Fortum develops smart grids that supportsustainable community planning



36

Fortum as a tax payerFortum as a tax payerFortum's policy is to pay taxes on the production, employment, property and earnings of each of the Group'sbusinesses in accordance with each country's local regulations.

Fortum operates in competitive marketswhere legal certainty and flexibility are bothimportant for the business. Fortum'stax management follows these samepriorities. The Group's tax principles supportthe commercial operations of the Group, andthe implications for all taxes are consideredearly in the business and decision makingprocess. Tax is one factor that is taken intoaccount when making business decisions inorder to achieve business targets and abalanced tax position.

Fortum's operations in the various operatingcountries are driven by the commercial andoperational objectives of the Group and theneed to operate the business effectively andefficiently. Fortum's corporate functions arebased in EU countries - except for Guernsey,where Fortum has a fully owned captiveinsurance company, and the Cayman Islands,where Fortum has a stake in the NatureElements Asia Renewable Energy andCleantech Fund L.P.

As part of safeguarding its shareholders'interests, Fortum takes steps to mitigate taxuncertainty by seeking tax rulings and takingother legal action to protect its position. The

overall aim is to organise all taxes to be ableto meet future challenges and to avoidsurprises. Tax-related uncertainties areassessed annually in line with the Group'stax principles.

Tax governanceTax governance

The Corporate Tax Team instructs and guidesthe business units in all tax matters in linewith agreed tax principles. The business unitsare required to follow the guidance andcontrols, including risk assessments, andreviews are in place to monitor compliance.The key findings and actions aroundtax issues and tax risks are reported annuallyto Fortum's risk and audit committee.

Tax environmentTax environment

The current economic situation in Fortum'skey operating countries has created anunstable tax environment leading toincreasing or new taxes. Interpretations ofexisting tax laws may also changesurprisingly. This in turn has led to

unexpected challenges for Fortum in the waythe Group is organised and how itsoperations are taxed. Where there isuncertainty, Fortum seeks to maintain itsposition in line with its tax principles andto have dialogue with the tax authoritieswhere they have differing interpretations ofthe law.


• Subsidiaries by segment• On-going tax appeals• Public affairs

For every EUR 1 ofcorporate tax, Fortumpays EUR 1.69 othertaxes.



37

http://annualreport2013.fortum.com/en/financials/financial-statements/consolidated-financial-statements/notes-to-the-consolidated-financial-statements/42.-subsidiaries-by-segment-on-31-december-2013/

http://annualreport2013.fortum.com/en/financials/financial-statements/consolidated-financial-statements/notes-to-the-consolidated-financial-statements/39.-legal-actions-and-official-proceedings/

http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/authorities-and-energy-industry-organisations/

Tax contribution to societyTax contribution to society

Fortum is a large tax payer in its mainoperating countries of Finland and Sweden.Fortum also pays several different taxes inother countries where it does business.Fortum's total tax contribution is materialas taxes borne and collected have a directimpact on the area where Fortum'soperations are located.

Fortum makes all reasonable efforts tocomply with tax rules for all the taxes that itpays in all the countries where it operates sothat the Group makes an appropriatecontribution to the communities where itdoes business.

Statutory corporate income tax rates haverecently decreased in Finland, Sweden and insome other Fortum's operating countries.Meanwhile, especially real estate taxes havebeen increasing in Sweden. Changes instatutory corporate income tax createbig fluctuations in the effective tax rate, eventhough the total tax rate is steadilyincreasing.

For 2013, Fortum's effective tax rate, was14.7% (2012: 4.7%) and the total tax rate33.8% (2012: 29%).


• Income tax Other payments to and fromOther payments to and fromthe public sectorthe public sector

In addition to taxes borne and taxescollected, Fortum has other compulsory tax-like payments to the public sector, paymentsthat are not compensation related to anyservice or commodity. For example, in 2013Fortum had EUR 56 million (2012: 55) incompulsory pension contributions for

employees. Fortum has also receivedfinancial support from the public sector in theform of production-related subsidies,investments, R&D and other significant grants(over EUR 0.5 million) worth EUR 9 million(2012: 3). The figure excludes freeemission allowances and electricitycertificates.

Fortum is also a significant dividend payer.The Board of Directors' proposal to increasethe dividend for 2013 by 10% would result inEUR 89 million more in income for the Stateof Finland.

Tax transparencyTax transparency

Fortum aims for improved transparency in taxreporting and increased understanding of theGroup's tax footprint. The company makes allreasonable efforts to communicate relevanttax related information accurately and at thecorrect time to tax authorities, investors andother stakeholders. Fortum recognises theimportance of open communication about itsmain tax-related information, such as auditsand appeals.

36.9

29.4

6.5

26.6

0.6

Corporate income tax (36.9)

Production taxes (29.4)

Employment taxes (6.5)

Taxes on property (26.6)

Cost of indirect taxes (0.6)

36.2

13.5

45.1

5.2

Net VAT (36.2) Payroll taxes (13.5)

Excise taxes (45.1)

Withholding taxes (5.2)

Taxes borne by country and type in 2013, %

1.1 0.1 1.5 1.0 0.0 0.0 2.2 1.67.3

34.3

71.3 66.8

0.2

26.0

0.010.11.6

7.6

18.4

12.1

37.7

35.5

0.0

9.8

29.7

34.8

8.8

12.5

5.8

6.9

0.0

6.4

60.3

23.1

0.07.6

56.3

31.6

97.7

72.1

Cost of indirect taxes Taxes on property Employment taxes Production taxes Corporate income tax

Finland Sweden Russia Poland Estonia Norway Netherlands Othercountries

0

20

40

60

80

100

19.1

18.5

27.2

35.2

Dividend distribution, Finnish State (19.1)

Dividend distribution, Other shareholders (18.5)

Taxes borne (27.2)

Taxes collected (35.2)

Taxes borne, % Taxes collected, %

Economic value distribution, %



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• Deferred income taxes• Press releases

Taxes borne in 2012-2013

Finland Sweden Russia Poland Estonia Norway Netherlands

Other

countries Total

EUR million 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Corporate income tax 1) 105 97 89 93 -1 1 1 2 1 1 2 0 31 7 11 2 239 203

Production taxes 2) 51 49 133 140 2 2 1 1 0 0 0 0 0 0 1 1 188 193

Employment taxes 3 4 29 28 5 4 1 1 1 1 2 2 0 0 2 1 43 41

Taxes on property 13 12 131 86 19 19 5 5 0 0 1 1 0 0 2 2 171 125

Cost of indirect taxes 2 2 0 0 0 0 0 0 0 0 0 0 1 1 0 0 3 3

Total 174 164 382 347 25 26 8 9 2 2 5 3 32 8 16 6 644 565

Excluding custom duties

1) Corporate income tax includes current taxes booked as cost for the year and adjustments to the previous year's current taxes.

2) Production taxes include also production taxes and taxes on property paid through electricity purchased from associated companies.

Taxes collected in 2012-2013

Finland Sweden Russia Poland Estonia Norway Netherlands

Other

countries Total

EUR million 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Sales VAT 455 543 861 767 370 324 49 60 19 14 56 50 1 1 48 45 1,859 1,804

VAT on Purchases 403 488 657 608 373 328 35 51 14 18 35 38 0 2 43 67 1,560 1,600

Net VAT 3) 52 55 204 159 0 0 14 9 5 0 21 12 1 0 5 0 302 235

Payroll taxes 52 54 39 41 11 10 3 4 0 1 3 3 0 0 5 4 113 117

Excise taxes 158 156 181 166 0 0 0 0 0 0 35 33 0 0 2 2 376 357

Withholding taxes 42 39 0 0 0 0 1 1 0 0 0 0 0 0 0 0 43 40

Total 304 304 424 366 11 10 18 14 5 1 59 48 1 0 12 6 834 749

3) If net VAT is negative, included as zero. In 2012 Fortum reported VAT in the table as gross amount for input and output VAT. The gross amount of taxes collected was EUR 3,918

million in 2012.



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http://www.fortum.com/en/mediaroom/Pages/fortum-taxed-for-the-same-revenue-in-finland-belgium-and-sweden-clarity-in-taxation-in-the-eu-countries-needed.aspx

Fortum interacts with millions of people through its business operations. Collaboration and dialogue withdifferent stakeholder groups helps us to assess and meet the expectations that important stakeholder groupshave towards our company. We report openly about the stakeholder collaboration and impacts of ouroperations.

Important stakeholdersImportant stakeholders

Local communities' expectations Fortum's actions

• Plant safety• Elimination of noise and emissions• Safeguarding biodiversity and recreational use of nature• Support and donations to local communities• Dialogue and collaboration

• Management of our risks and operating in line with our Code ofConduct, policies and instructions

• Infrastructure and plant safety investments• Good employer and neighbour• Active and open communication• Meetings with local residents and customers• Support for local community activities

Annual Report 2013 Our stakeholders


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http://annualreport2013.fortum.com/en/financials/operating-and-financial-review/risk-management/



http://annualreport2013.fortum.com/en/sustainability/our-business/purchasing/investments/

http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/local-communities/

Customers' expectations Fortum's actions

Customer relationship and products

• Safe and reliable electricity company• Good service• Fair pricing; straightforward and accurate billing• Support for efficient and smart energy use, environmentally

benign products

Energy production and distribution

• Delivery reliability of energy• Efficient energy production• Responsible operations in society• Real time disturbance communication

Our products and customer relationship management

• Products that meet customer needs• Striving for safe, easy and long-term relationship• Customer service development• Services including web, social media and mobile• Energy-conservation instructions and energy-efficiency services• Origin-labelled electricity• Climate-benign heat products• Product developments with customers

Energy production and distribution, and our activities in society

• Distribution network improvements• Effective disturbance communication• Use of environmentally benign forms of energy• Investments in energy efficiency

Services and goods suppliers' expectations Fortum's actions

Fortum's business operations

• Good financial position and ability to take care of the agreedobligations

• Responsible operations• Good reputation (e.g. Fortum as a good customer reference)

Business relations with suppliers

• Fair and equal treatment of suppliers• Long-term business relations• Development of suppliers' business and products/services

Fortum's business and purchasing principles

• Compliance with the Fortum Code of Conduct, regulations andagreements

• Professional purchasing process consistent with good purchasingprinciples (including public procurements)

• Supplier pre-selection and audits• Monitoring of reputation development

Supplier relationship management

• Systematic supplier relationship management• Category management model in use for most significant

purchasing categories• Joint development projects with suppliers and creation of new

business opportunities for our suppliers

General public's expectations Fortum's actions

• Activities for the good of society• Fair pricing• Transparency• Reasonable financial returns and fairness in management

remuneration

• Tax payment and development of the energy sector to meetsociety’s needs

• Active and open communication• Remuneration complies with the Cabinet Committee guidelines

and principles• Support to non-profit activities

Media's expectations Fortum's actions

• Relevant, reliable and transparent communication • Active and open communication• Easily accessible through media desk• Continuous development of crisis communication preparedness



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http://annualreport2013.fortum.com/en/sustainability/our-business/electricity-and-heat-sales/energy-efficiency-products-and-services/

http://annualreport2013.fortum.com/en/sustainability/our-business/electricity-and-heat-sales/climate-benign-heat-products/


http://annualreport2013.fortum.com/en/sustainability/our-business/purchasing/sustainable-management-of-supply-chain/


http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/support-for-society/

http://www.fortum.com/en/mediaroom/pages/default.aspx

Non-governmental organisations' expectations Fortum's actions

• Operational responsibility• Environmentally benign investments• Promoting renewable/efficient energy production• Collaboration projects, open interaction and dialogue• Reliable reporting

• Active and open communication• Publishing tax footprint• Collaboration with Finnish and Swedish nature conservation

associations regarding our environmentally benign electricityproducts

• Collaboration in responsible procurement of wood fuel materialand in sponsorship projects

• Monitoring of NGO activities and engagement in dialogue• Third-party assurance of reports

Personnel's expectations Fortum's actions

Employment relationship

• Job security• Equal treatment• Performance-based wages

Working environment

• Work well-being and safe working conditions• Opportunities for professional development• Recognition of work contribution• Open interaction

Employment relationship

• 96.2% of personnel permanent employees• Support for equality, respect for cultures and values of individuals

and groups• Performance-based wages, commitment to uniform guidelines and

tools in remuneration

Working environment

• Promotion and improvement of well-being and safety• Active development of competence, by career advancement and

job rotation• Opportunity of personnel to influence the content of own work• Development of leadership and management skills• Support in change situations• Compliance with the Fortum Code of Conduct

Energy-sector organisations' expectations Fortum's actions

• Advocating for shared interests• Maintaining dialogue

• We advocate on behalf of shared interests• Position papers and views on energy-sector development

Authorities' and decision makers' expectations Fortum's actions

• Compliance with laws and regulations• Paying taxes• Maintaining dialogue• Transparency and reliable reporting

• Compliance management• Payment of taxes and dividends• Publishing tax footprint• Active dialogue with authorities and decision makers about key

issues in the energy sector• Active and open communication, reports assured by a third party

Investors' and shareholders' expectations Fortum's actions

• High-yield share• Risk management• Responsible operations

• Dedicated to achievement of our financial targets• Dividends paid every year



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http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/non-governmental-organisations/

http://annualreport2013.fortum.com/en/sustainability/gri-section/social-performance-indicators/employees-and-work-conditions/


http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/personnel/wellbeing-at-work/

http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/personnel/safety/

http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder-collaboration/personnel/human-resources-management/






http://www.fortum.com/en/mediaroom/in-focus/commentaries/position-papers/pages/default.aspx

http://annualreport2013.fortum.com/en/sustainability/our-business/generating-economic-value-for-stakeholders/fortum-as-a-tax-payer/


http://annualreport2013.fortum.com/en/sustainability/gri-section/assurance/

http://annualreport2013.fortum.com/en/#!/financials

http://www.fortum.com/en/investors/share-information/dividends/pages/default.aspx

• A stable, sustainable and over time increasing dividend of 50-80%of earnings per share excluding one-off items

• Compensation for investors as agreed• Systematic management of risks and operations in line with our

Code of Conduct

Stakeholder collaborationStakeholder collaborationFortum is aware of the impacts its operations have on the surrounding society and communities. Dialogue,feedback and good collaboration are key ways to promote mutual understanding with our stakeholders. Ourcorporate responsibility includes the continuous mapping of our stakeholders' views and finding a balancebetween the different expectations of our stakeholders.

Management of stakeholder collaboration atFortum is divided by stakeholder groupamong a number of people, particularly theheads of communications, corporaterelations and human resources, sustainability,and the managers responsible for electricityand heat sales, as well as several expertareas. Fortum increasingly engages indialogue with its stakeholders also in thesocial media in its operating countries.

Stakeholder work is managed mainly basedon the stakeholder group or the interactiontheme. Annual plans have been drafted forthe key interaction areas, like corporaterelations, and corporate and customerscommunications. Fortum has an informalAdvisory Council consisting ofrepresentatives of Fortum's stakeholdergroups as invited by the Board of Directors.The Advisory Council aims to advanceFortum's businesses by facilitating dialogueand exchange of views between Fortum andits stakeholders. During 2013, the AdvisoryCouncil consisted of 13 representatives ofFortum's stakeholder groups and threeemployee representatives.

Meetings are convened by the company'smanagement, and also other people mayparticipate in them depending on the topicson the agenda.

We report openly about dialogues with ourstakeholders and the impacts of ouroperations. In our annual reporting, we focuson the shareholders, investors, analysts,decision makers and the media. Our activitiesare affected also by other importantstakeholder groups, such as employees,customers, goods suppliers and serviceproviders, and non-governmentalorganisations.

Information through surveysInformation through surveys

We work with third parties to conduct severalannual surveys regarding stakeholder groupcollaboration. The aim of these stakeholdergroup surveys is to help Fortum to assess theexpectations the important stakeholdergroups have for the company and to respondto them.

The surveys also provide information aboutgrowing sustainability trends and risks to thecompany's operations. We regularly monitorand assess the public discussion in ouroperating countries.

Stakeholder views are mapped and thesuccess of stakeholder collaboration ismeasured systematically through varioussurveys and feedback questionnaires. Themain surveys and questionnaires conductedregularly are presented in the following table.

The survey results are used in businessplanning and development. The feedbackreceived from customers guide thedevelopment of products and services.Additionally, our activities in national andinternational organisations help to deepenour understanding of global sustainabilityissues and their connections to our business.



43


Survey/questionnaire Target groups Target countries Frequency

One Fortum Customers Finland, Sweden, Norway, Annually

Public administration Poland, Baltic countries,

Capital markets Russia

NGO:sOpinionmakersPersonnel

EPSI customer Electricity sales Finland, Sweden, Norway Annually

satisfaction customers

surveys

PR-barometer Media Finland, Sweden, Poland, Annually

Baltic countries, Russia

Media tracking Media All operating countries Daily

Student surveys Students Finland Employer surveys by T-Media and

Sweden Universum and Uratie survey by

Talentum in Finland in 2013.

Employer surveys by Universum in Sweden.

SocialSocial mediamedia

Fortum actively participates in social media.Our social media presence is primarilycountry-specific, and there are somedifferences between our operating countriesin the use of the services. Facebook andTwitter are our main social media channels.Additionally, we use other social mediaservices, like LinkedIn, YouTube and blogs.We use Facebook to engage in a dialoguewith our customers and the general public

about Fortum and topical issues related tothe energy sector. We have also used it tocommunicate with our customers in powerand district heat outages. We use Twitter as acommunication channel and for engaging in adialogue with our customers, the generalpublic, the media, organisations and opinionleaders, and other companies. The topics ofdiscussion on Twitter include our currentactivities and new issues of interest in theenergy sector. We have also used Twitter incustomer communications about power andheat outages.


• Stakeholders' expectations and Fortum'sactions in respond to them



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CustomersCustomersFortum has several millions of customers, and customer satisfaction is of utmost importance to us. In 2013, weintroduced numerous new consumer products, and we continued our investments to improve the reliability ofour distribution networks. We also improved communication in power outage situations and extended ourpresence in social media.

Fortum has 1.2 million electricity customersand 1.6 million electricity distributioncustomers in Finland, Sweden and Norway.We sell electricity to the Nordic powerexchange and to the Russian powerexchange. Fortum delivers heat to severalmillions of people in dozens of cities in eightcountries and heat and steam to industry.

We regularly assess customer satisfactionand feedback so that we can better meetcustomer expectations. We involvecustomers also in the development ofproducts and services.

In 2013, Fortum's customer satisfaction in allbusiness divisions improved compared to the

previous year. In most business areas,customer service and the price/value ratioreceived the biggest improvementsin customer satisfaction. We are continuouslydeveloping these areas to fulfill theexpectations of our customers.

Services for electricity distribution customersServices for electricity distribution customersIn 2013, Fortum developed its customerservice channels and improved the reliabilityof the distribution network.

In 2012, Fortum introduced a text messageservice to provide information about poweroutages to its electricity distributioncustomers in the Nordic countries. In 2013,new customers have been added to theservice. Widespread distribution disruptionsare also communicated through social mediachannels and on Fortum's website.

Customer communications in Finland wereimproved with the introduction of an onlineelectricity distribution investment map in May2013. The map shows the most significantgrid improvement projects in Finland, andcustomers can quickly see Fortum's gridimprovement work in their residence area.

Fortum continued the construction of theweather-proof network in Finland with theVahvaVerkko project. In Sweden, theSäkraNät project improving electricitydistribution reliability continued.

In the autumn Fortum completed theinstallation of smart electricity meters inFinland. A total of 620,000 smart meterswere installed on schedule in Fortum'selectricity distribution area. During the smartmeter project, more than 40 customerevents, attended by 5,000+ people, wereheld at libraries and in conjunction withvarious events.

Services for heat customersServices for heat customersFortum is improving the reliability of itsdistrict heating networks by repairingmalfunctions detected in regularmaintenance and by investing to newnetworks when necessary. Smart meteringand control systems give district heatingcustomers the opportunity to influence theirown heat consumption. All of Fortum'sdistrict heating customers in Finland andPoland and the majority of Fortum's districtheating customers in Sweden are within thesphere of smart metering. In Latvia and

Estonia, the aim is to finalise the automatedmeter reading system by the end of 2014.

In 2012, Fortum opened up the possibility forcustomers in Stockholm, Sweden, to sell thesurplus heat they produce to Fortum'sheating network at market price. The servicehas raised interest among customers andseveral contracts were signed in 2013.

Fortum is actively developing heating servicesalso in Russia by modernising the heating

networks in Chelyabinsk and Tyumen.Modernisation of Chelyabinsk district heatingnetworks continued in 2013. In 2013, a newpipeline was built to connect ChelyabinskCHP-1 and CHP-2. The new pipeline willimprove energy efficiency and heatdistribution in the adjacent urban areas.



45


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Consulting servicesConsulting servicesFortum's Power Solutions business area isresponsible for sales of energy production-related consulting services and products incompetitive global markets. The offeringsrange from long-term, full-scope operationand maintenance (O&M) solutions to highlyspecialised expert products and services. Theservices help to secure maximum availabilityand productivity as well as energy and costefficiency.

The services are based on Fortum's longexperience and cover all forms of energyproduction - from thermal, hydro and nuclearto wind and solar power. In 2013, PowerSolutions launched its renewed Hydro powerservices, and the first contracts have beensigned.

Deliveries of ion exchange materials tothe Fukushima nuclear power plant in Japan

continued. Power Solutions also startedtraining collaboration in the UK withRosatom. Fortum has delivered over 750burners worldwide to lower emissions, mainlyoxides of nitrogen (NOx). In 2013, PowerSolutions delivered low-NOx burners toWroclaw and Krakow in Poland. Fortum's low-NOx burners are also used to decreaseemissions of oil shale power plants in Narva,Estonia.

Demand-side managementDemand-side managementFortum increases the flexibility of itscustomers' electricity demand by offeringproducts that are based on different pricingmodels and by promoting smart electricitymeters.

Distribution's sizable smart meter project is asignificant step towards promoting demandflexibility. Replacing old electricity meterswith hourly-based meters improves loadmanagement and increases opportunities forenergy savings. All of Fortum's distributioncustomers in Finland and Sweden areincluded in the sphere of smart metering. InNorway, the planning of the smart metersystem is continuing, and the preliminary

legislation on it will take effect on 1 January2019.

Smart meters record electricity consumptionon an hourly basis. Fortum's electricityclients, who have a smart electricity meter,can follow their electricity consumption on ayearly-, monthly-, daily- and hourly-level atFortum's website. With the smart meters,electricity billing is based on actualconsumption rather than the previousestimated and balance billing. An electricitybill based on actual consumption is easier forcustomers to understand and increasesawareness about electricity use.

In market-based, hourly-priced electricityretail products in Finland, the price forelectricity is based on the hourly spot priceon the Nord Pool Spot electricity exchange.An hourly-priced electricity agreementcombined with the hourly-basedmeasurement of electricity consumptionallows customers to choose the moreeconomical hours to use electricity.

Customers can monitor their ownconsumption with Internet and mobileservices. The services help customers to seehow energy conservation efforts affect theirown consumption. This gives customers abetter picture of their electricity use andallows them to also have an impact on it.

Electricity distribution pricingElectricity distribution pricingCurrently, pricing in electricity distribution forthe majority of business customers is basedon the electrical power used. Householdelectricity distribution customers, in turn,have the option to choose a two-timemetering and tariff, making the electricity

price lower at night. The system is particularlysuitable for distribution customers withelectrically heated water boilers. Hourly-based monitoring of consumption will offeropportunities also for the development oftransmission tariffs and load services. Load

management services are also available forlarge-volume customers.



46

PersonnelPersonnelThe aim of Fortum's personnel strategy is to promote the commitment and well-being of employees. At the endof 2013, Fortum had 9,886 employees in 11 countries, majority of which, 4,162, worked in Russia.

In 2013, the focus was on implementing the2013-2014 efficiency programme, developingleadership, harmonising Group-level people

processes and maintaining and developingstrategy-aligned competencies.

Human resources managementHuman resources management

Fortum aims to be a preferred employer that attracts and retains qualified employees at all levels. We believethat good leadership is the foundation to employee engagement and performance, and we strive to createattractive career and development opportunities to continuously grow the professional skills of individuals.

Leadership developmentLeadership development

In line with the Leading Performance &Growth initiative launched in 2010,leadership and the organisational culturehave been developed by integrating Fortum'skey behaviours – challenge, co-create, coachand celebrate – into daily routines.

An important part of the transition processhas been Leadership Impact, a leadershipdevelopment programme for managers. Themain objective of the programme has been toenhance the self-awareness of theparticipants and their coaching skills; it isbelieved that this will have a positive impacton the organisational culture. In 2011-2013 atotal of 1,000 Fortum managers fromdifferent countries participated in theLeadership Impact programme.

The plan is to continue enhancing a coachingculture throughout the organisation.Managers have received coaching training aspart of the Leadership Impact programme,and starting in 2013 coaching training hasalso been arranged for other personnel.

Altogether 1,000 Fortummanagers haveparticipated in theLeadership Impact, aleadership developmentprogramme formanagers.

Various development activities relatedto coaching leadership at the organisational,team and unit levels have also been arranged.For example, the Heat Division in Poland hasorganised workshops that have enhancedcollaboration across organisationalboundaries and have collectively pursuedsolutions to business challenges.

Uniform HR processesUniform HR processes

Our aim is to adopt fair and effective peopleprocesses at all Fortum's sites. Group-levelpeople processes – Manage Strategic HRPlanning, Recruit and Select Employees,Develop Employees, Reward and RetainEmployees, and Manage EmployeeInformation – were defined in 2012. In 2013,the use of Performance Development Processwas broadened so that it covers Fortum'soperating countries. The defining of otherGroup-level processes continued and thefocus in 2014 is on adopting, monitoring andfurther developing them.

Strategy at the individual levelStrategy at the individual level

Fortum aims to put the company's strategicgoals into practice at the team and employeelevel. The key tool for implementation is theannual Performance Development Process(PDP).

The PDP is supported by the CareerDevelopment Framework concept adopted in2012; one of the goals of the concept is tomaintain and develop strategy-alignedcompetencies. The model-based role andcompetence descriptions will be phased in to

support also other people processes. Forexample, in conjunction with the recruitingprocess renewal in 2013, role andcompetence descriptions were introduced asrecruiting criteria basis and evaluationsupport. In 2013, some 1,000 employees inthe Nordic countries, Poland and the Balticcountries were within the sphere of thecompetence assessments. Development ofthe model will continue and it will be rolledout to more of the organisation in 2014.

In 2013, some 1,000employees in the Nordiccountries, Poland andthe Baltic countries werewithin the sphere of thecompetenceassessments.

Efficiency programme goalsEfficiency programme goals

Fortum's efficiency programme will run in2013-2014, and it aims to strengthen thecash flow by over one billion euros. Eachdivision and unit has set its own targets toachieve the efficiency programme's goals.The aim has been to implement possibleheadcount reductions resulting from theefficiency programme through attrition,restructuring of vacant jobs and retirement.During 2013, the efficiency programmeproceeded according to plan.



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In situations of organisational restructuring,Fortum negotiates with personnelrepresentatives in compliance with eachcountry's local legislation and contractualprocedures. The minimum notice period isbased on local legislation, collectiveagreements or employment contracts, whichare compliant with local legislation andagreements. In situations involving headcountreductions, Fortum's priority is to support there-employment of personnel.

An interesting employerAn interesting employer

During Fortum's efficiency programme, theaim has been to fill vacant jobs primarilythrough internal recruiting. To support theinternal mobility of employees, EmployeeMobility practices have been developedduring 2012-2013. The internal mobility ofemployees between different countries anddivisions strengthens know-how and

promotes the deployment of best practicesthroughout the organisation.

Fortum strives to maintain sufficient expertiseand leadership potential with the TalentManagement Process, which was renewed in2012. Being an interesting employer helpsFortum in recruiting new employees. In asurvey of students and young professionals,conducted by the employer brandingcompany Universum, Fortum was ranked asthe 11th most desirable employer in Finlandin 2013. In the Swedish Universum studentsurvey, the company ranked amongst the 30most desirable companies among master's-level technology students.

Summer Energy, the campaign launchedevery February to recruit summer employees,was of interest to young job seekers. 4,700applications were submitted for the 110summer jobs offered in Finland and Sweden.

Employee engagement is measured with theannual One Fortum survey of stakeholdersand personnel and with the Fortum Soundemployee survey, which is conducted roughlyat two-year intervals.

Fortum's reputation weakened slightlyamongst the 1,045 employees whoparticipated in the One Fortum survey in2013, but it was at a higher level than in the2011 survey. Decision on the timescheduleof the next Fortum Sound has not been madeyet.


• Fortum employees and work conditions

Well-being at workWell-being at work

Well-being at work is supported by developing managerial work, by offering tools to support leadership and bycoaching work communities towards a work culture that recognises our key behaviours. ForCARE, Fortum'sprogramme for overall well-being at work, offers information and professional services in issues related to well-being at work.

ForCARE aims to promote health, safety,employee work capacity and work communityfunctionality. The programme activities aretailored to take into account the legislativerequirements and unique cultural aspects indifferent countries.

Support for managers andSupport for managers andpersonnel during situations ofpersonnel during situations ofchangechange

Changes and restructuring are a constant atFortum and in its operating environment.Changes can be a source of anxiety andstress for employees.

The strategic assessment of Fortum'selectricity distribution business wascompleted in Finland towards the end of2013, when Fortum announced that it will sellits electricity distribution business to SuomiPower Networks Oy. A total of 320employees will transfer with the business atclosing with existing terms of employment.

During the assessment process, regulardialogue opportunities were arranged for the

personnel in an effort to prevent and alleviateany assessment-related uncertainty. Twiceduring the nearly year-long assessmentperiod, employees were asked for feedbackregarding the managers' management ofchange and their communication about it.

At the work community level, employees havebeen coached to update their own copingstrategies and have been encouraged toengage in open and continuous interactionwith managers and their colleaques. Thematerials in the managers' portal haveprovided support for managers.

The materials will be further developed intoa change management toolbox for managers.The aim is to create the prerequisites forsuccessful change that take intoconsideration the organisation's specialneeds. Well-being skills of new managershave been developed with the newmanagerial training programme in Swedenand Finland.

Employee responsibility forEmployee responsibility forwell-being at workwell-being at work

The ForCARE programme emphasises eachwork community's responsibility for its ownwork well-being and for the joint developmentof the work community's well-being.Employee well-being at work stems fromworking together at the workplace. Managingwell-being at work starts with developing thecapacity of individuals to manage their ownlives and work in a healthy manner.

In 2013, the focus has been on developingthe self-management capacity of individuals.The topics in Finland have included, e.g.,healthy nutrition, adequate sleep and a work-life balance.

Monitoring and assessing well-Monitoring and assessing well-being at workbeing at work

Well-being at work is monitored with anoverall well-being at work index included inthe regular Fortum Sound employee survey.Among other things, it measures opinions



48



related to the openness of the dialogue in thework community, personal accountability andthe level of challenge of work tasks. Theresult of the index in 2012 was 3.88 (on ascale of 1-5).

Well-being at work ismonitored with anoverall well-being atwork index included inthe Fortum Soundemployee survey everysecond year.

In addition to the work well-being index, well-being at work is also monitored with otherGroup-level key indicators, such as sick leave,which is tracked quarterly, and the ratiobetween actual retirement age and thestatutory start of the retirement pension.

In 2013, the number of people retiring fromFortum was 164 (2012: 137). The figureincludes age-related, early and disabilityretirements. The average retirement age was61. Fortum had 782 (2012: 769) employeeswho were over the age of 60.

Workplace well-being projectsWorkplace well-being projects

A Fortum-level workplace assessment model,developed in 2013, will be used tocommensurably determine psycho-socialfactors in the work environment and workcommunity and their impact on well-being atwork.

The goal is for the work community to findthe key development targets for well-being atwork and safety when the risks are identified

ForCARE programmeForCARE programme

and assessed. The plan is to pilot the modelin 2-3 different countries in 2014.

Fortum's well-being at work programmeincludes also country-specific work well-beingprojects. The work community's – andparticularly the managers' – knowledge of theeffects of harmful stress on work productivityis promoted with the work well-being sectionincluded in the occupational safety training orin training tailored to the work community.


• Fortum employees and work conditions

SafetySafety

Fortum's target is to be a company where the employees, the contractors and service providers who work for uscan come to work safely and leave for home at the end of the work shift unharmed. We believe that all workinjuries are preventable when the competence and the right attitude prevails, when potential risks areaddressed and when measures are taken to protect against them.

Contractor safety a challengeContractor safety a challenge

The systematic work to improve occupationalsafety continued. The lost workday injuryfrequency (LWIF) per million work hours for

Fortum's own personnel improved to 1.1(2012: 1.5), which is Fortum's best-everresult. In spite of the hard work the LWIF forcontractors increased to 4.8 (2012: 3.8).



49


Fortum reached its bestresult ever in theoccupational safety of itsown personnel.

In 2013, one fatal accident involving acontractor's employee occured at theChelyabinsk CHP-2 unit in Russia. And,unfortunately, another fatal contractoraccident occurred in February 2014 inDistribution in Sweden. The total number ofcontractor accidents also increased in2013 compared to 2012. Most of our powerplants and projects reported improvementsin contractor safety, but, due to thechallenges in some parts of the company, thetotal result was unsatisfactory. The biggestchallenges were identified in our investmentprojects in Russia and Sweden and in repairand improvement works in electricitydistribution.

The situation in plant safety worsenedcompared to 2012. A new KPI, major EHSincidents, was introduced as a Fortum-levelindicator. It combines fires, leaks over 100litres, explosions, dam and nuclear safety(INES) incidents, and environmental non-compliances. During 2013, there were 51incidents; the target was less than 40. TwoINES 1 (International Nuclear Event Scale)incidents occurred at the Loviisa plant (2012:3). They didn't cause any injuries to people ordamage to the plant or the environment.

Contractor safety improvementContractor safety improvementactionsactions

A common contractor safety managementmodel was adopted during the year. In orderto ensure an even higher focus on contractorsafety, a contractor LWIF was included in theGroup-wide targets starting 1 January 2014.

The Electricity Solutions and DistributionDivision continued implementing of the onlinetraining programme aimed at contractors andthe contractor assessment practice; regularsafety meetings with the contractorsexperiencing the biggest performancechallenges also continued. Theimplementation of common EHSrequirements for contractors continued in thePower and Heat divisions. Additionally, safetypractices in investment projects wereimproved by utilising the new project safetymanual in the CHP project in Sweden, bydeveloping a safety manual for small projects,

and by developing a contractor evaluationtool in Heat Finland. At the Loviisa nuclearpower plant, more focus was put oncontractor management and onmanagement activity and influence during theannual maintenance period. The results werepromising: the number of contractoraccidents decreased from 8 to 2.

Unfortunately, a fatal accident involving acontractor occurred in the Russia Division.After the accident, contractor safetyinstructions and requirements as well as dailysafety management practices at the powerplants were renewed. Improvements relatedto hazardous works, such as working atheights, were introduced. Additionally, animproved procedure for contractor safetyaudits was developed. The implementation ofthese practices is monitored together withthe Corporate Sustainability unit.

Safety is about continuousSafety is about continuousimprovementimprovement

During the year we implemented manyinitiatives that were developed in 2012: forexample, a new safety video and safetyhandbook were introduced. Additionally,Fortum's common "stop and think" safetytraining material was updated, and a newsafety walk e-learning tool was developed.

The annual safety award was given to theImatra hydro-power plant in Finland for long-term successful safety work that is based onmaking safety an integral part of thedaily work, and for the culture of caring foreach other that prevails within theorganisation. Implementation of Fortum'sminimum requirements for environmental,health and safety (EHS) managementcontinued. A new reporting and managementsystem for EHS incidents, near-misses andimprovement proposals was adopted duringthe year, and its use will be extended in2014.

In the Power Division, the work continued byincreasing management commitment andvisibility during maintenance periods and byimproving the work permit system.

In the Fortum Heat Division, the use of theproactive safety index was started in allcountries. In Heat Poland, the integration ofthe Zabrze and Bytom plants was completedand OHSAS 18001 and ISO 14001certificates were received. The performanceof the units has remained clearly better thanbefore integration. The plant-safetyimprovement investments continued with a

focus on boiler start-up and coal handling. Anextensive safety awareness campaign bothfor own personnel and contractors wasstarted throughout the Polish operation.

The annual safety awardwas given to the Imatrapower plant,where safety is anintegral part of the dailywork and a culture ofcaring for each otherprevails within theorganisation.

The most important measures in the HeatBaltic operations were related to the safecommissioning of the new units in Latviaand Lithuania. No accidents or incidents tookplace during the commissioning process.Heat Finland enchanced the risk assessmentand work permit practice. The new pyrolysisprocess at the Joensuu CHP plant wascommissioned without incidents.

In Heat Sweden, a comprehensive safetyculture improvement programme waslaunched due to the excessive numberof accidents and incidents. This programmewill continue in 2014.

In the Russia Division the EHS action plan,started in 2009, to improve work and plantsafety, was concluded. The ISO 14001 andOHSAS 18001 certification processproceeded in Russia, and District heatingoperations received certification during 2013.Asbestos removal continued during the year;about 390 tonnes of asbestos were removed.Other activities included improved accidentinvestigation, integration of the Nyagan unitsinto the management system of the rest ofthe organisation, and "stop and think" safetyrefreshment trainings. Fortum Indiastarted implementation of the Fortum way ofoperating. The first actions wereimprovements to the work-place and personalprotective equipment, and a more systematicEHS risk assessment practice.


• Occupational health and safety at Fortum



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ShareholdersShareholdersShareholders, investors and analysts are a key stakeholder group to us. As a listed company, Fortum'sobligation is to provide correct, adequate and up-to-date information regularly and equally to all marketparticipants.

Fortum Corporation's shares are listed on theNASDAQ OMX Helsinki exchange. At the endof 2013 Fortum had 132,072 (2012:124,451) shareholders. The Finnish Stateowned 50.8% of Fortum's shares. Of theshares, 26.2% (2012: 25.4%) were in foreignownership.

In line with Fortum's principle oftransparency, the Investor Relations functionensures that stakeholder groups receivecorrect and adequate information throughregular meetings and from the Investorssection on Fortum’s website. The key valuesof Fortum's Investor Relations are openness,transparency and easy approachability.

To support stakeholder group collaboration,Investor Relations meets with investors andanalysts regularly in conjunction with thepublication of the quarterly financialstatements, at investor meetings, roadshows, and shareholders’ meetings.

Investor Relations and top managementcommunicate with analysts, shareholders andpotential investors also at seminars andconferences in Finland and abroad. At events,Fortum presents issues of topical importanceto the company and discusses them withinvestors. Discussions focusing onsustainability in particular have beenarranged with some investors.

During the year, Fortum met with some 200investor sector professionals in one-on-onemeetings or in other events. In 2013, investorevents were held in the Nordic countries,other European countries and in the UnitedStates and Canada.


• Fortum's share and shareholders

Suppliers of goods and servicesSuppliers of goods and servicesRead more aboutRead more about

• Purchasing and investments

Authorities and energy industry organisationsAuthorities and energy industry organisationsCollaboration with authorities is important in the energy sector. Fortum engages in an active dialogue on keyissues in the energy sector and annually publishes several comments and position papers on relevant topics.

At the EU level and in our countries ofoperation, we are directly and indirectlyinvolved in approximately 62 sectorassociations and organisations. We activelypresent our views on energy policy issues andoffer our energy sector expertise to decisionmakers and organisations in the sector. A listof the Energy sector organisations can befound on Fortum's website.

Public affairs themes in 2013Public affairs themes in 2013

Fortum's public affairs activities in Finlandfocused on tax issues and, in particular, onthe so-called windfall tax, as well as on therevision of the Electricity Market Act. InSweden, tax issues, especially the real estatetax on hydropower, were also high on theagenda.

Heating costs for end-customers is asignificant issue in all the Baltic countries. Wefocus on questions concerning thecompetitiveness and liberalisation of districtheating as well as on other legislationaffecting the energy sector, such as differentsubsidies and planned retroactive changes ofthem. In Lithuania, waste management issuesare also followed closely, due to the newlyopened waste-to-energy plant in Klaipeda.

In Russia, Fortum focused on energyefficiency and on Russian electricity and heatmarket legislation. Fortum hosted severalgroups of Russian federal and regionalauthority representatives visiting otherFortum countries to familiarise themselveswith the functioning of power and heatmarkets. Legislation regarding the heatmarket and heat pricing were most actively

debated in Russia, especially the proposednew heat market model.

At the EU level, our representatives discussedissues related to the EU's future climate andenergy policy targets, functioning of theEmissions Trading Scheme and the internalenergy market, as well as the impact ofdifferent policy targets and measures onenergy prices and hence on thecompetitiveness of EU industry.

In November 2013, Fortum updated thecompany's information in the TransparencyRegister maintained jointly by the EuropeanParliament and European Commission. Theregister offers information aboutorganisations that aim to influence EUdecision making.



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http://annualreport2013.fortum.com/en/sustainability/our-business/purchasing/

http://www.fortum.com/en/corporation/corporate-relations/links/pages/default.aspx

http://annualreport2013.fortum.com/en/sustainability/our-stakeholders/stakeholder--views/



http://annualreport2013.fortum.com/en/annual-review/market-development/market-development-in-russia/

http://annualreport2013.fortum.com/en/annual-review/market-development/carbon-market-development/



http://ec.europa.eu/transparencyregister/info/homePage.do?locale=en


Fortum's Corporate Relations functionreporting to the President and CEO isresponsible for all public affairs activities, and

the Group does not use third parties forlobbying purposes.

MediaMediaFrom the media's perspective, Fortum's operations are interesting particularly in the Nordic countries becausewe are one of the biggest listed companies in Finland and among the biggest energy-sector players also inSweden.

Laws and regulations governing thecommunications of publicly listed companiesset the framework for our communications.As a listed company, we follow the rules andrecommendations of the NASDAQ OMXHelsinki stock exchange. Furthermore, wefollow the regulations set forth in the FinnishCompanies Act and Finnish SecuritiesMarkets Act and other relevant laws as wellas the standards of the Financial SupervisionAuthority (FSA) in Finland. Fortum alsoobserves other recommendations for publiclylisted companies set forth by the EuropeanUnion.

We communicate openly and proactively toensure that our stakeholder groups havesufficient information available aboutdecisions and factors that are likely to have amaterial impact also on Fortum's share price.We communicate actively and consistentlyalso to increase awareness about thecompany's strategy and business.

The State's majority ownership in Fortum alsoincreases the media's and the generalpublic's interest in the company in Finland. Inother countries where it operates, Fortum is aforeign player in the energy sector. In linewith its communication principles, Fortumcommunicates with its stakeholders in animpartial, open and timely manner. Weengage in a continuous dialogue with themedia at press conferences, press visits,other visits, and by giving interviews andresponding to daily media contacts.

In 2013, we continued strengthening ourcrisis communication preparedness bydrafting specific, Group-wide communicationsguidelines for exceptional situations relatedto district heating. In March we participatedin an international crisis communicationsexercise involving the Loviisa nuclear powerplant. We also boosted our social mediapresence in countries where we operate.

During the year we arranged a number oflocal media events in all the countries wherewe operate and had plant inaugurations inFinland, Latvia, Lithuania, Russia andSweden. We met hundreds of mediarepresentatives at these events. Theinauguration of the Nyagan power plant inRussia was the biggest of the events, withparticipation by over 180 mediarepresentatives from around Russia andEurope.

The inauguration of theNyagan power plant inRussia was attended byover 180 mediarepresentatives fromaround Russia andEurope.

Non-governmental organisationsNon-governmental organisationsWe follow the activities of non-governmental organisations and engage in a dialogue. In addition, we realisemost of our sponsorships in collaboration with organisations.

We engage in collaboration withenvironmental organisations regarding theeco-labelling of electricity products in Finlandand Sweden. We also participate in projectsrelated to local environmental conservationand maintaining biodiversity. Part of thefunding for the environmental projects comesfrom the sales of eco-labelled electricity.

Since 2006 Fortum has been a supporter ofthe John Nurminen Foundation's Clean BalticSea project that is mitigating eutrophication

of the Baltic Sea and offering maritimesolutions with the goal to prevent oil spills inthe Gulf of Finland. In 2013, the project wasgranted 75,000 euros.

In Sweden, Fortum additionally sponsors therelease of salmon and trout into the waters ofStockholm with the purpose of preserving theunique fishing in the city centre.

Fortum participates in the Bettercoal initiativepromoting sustainability in coal mining. In

Sweden, Fortum is a member in the ForestStewardship Council (FSC), an organisationpromoting sustainable forest management,and a participant in WWF's Global Forest andTrade Network activities. These programmesaim to ensure the responsible sourcing of fueland are primarily business-orientedinteraction.



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http://annualreport2013.fortum.com/en/sustainability/gri-section/environmental-performance-indicators/biodiversity/

http://www.puhdasitameri.fi/en

http://www.puhdasitameri.fi/en


http://se.fsc.org/

http://se.fsc.org/

http://gftn.panda.org/

http://gftn.panda.org/

Local communitiesLocal communitiesFortum collaborates closely with local communities in the municipalities where it has power plants. We are animportant employer and significant tax payer in our operating areas. Our investments also improve the localinfrastructure.

We take local communities into account inpower plant maintenance, improvement andenvironmental work, and we meet with localresidents, e.g., at open-house events atpower plants.

Examples of Fortum activities with localcommunities in 2013:

• In Finland and Sweden, Fortum supportedprojects to reduce the adverseenvironmental impacts of hydropowerproduction and to promote biodiversity inbuilt-up water systems. The companycollaborates with universities, localauthorities, fishermen and environmentalorganisations. In a number of projects,river basins are being restored andhabitats for fish and freshwater pearlmussels are being improved. Manyprojects were carried out to improverecreational use of the Oulujoki river inFinland, especially in terms of swimmingand boating. The projects were part ofthe framework agreement within whichthe municipalities of the region, Fortumand environmental authoritiescontinuously work in tight cooperation.

• Fortum worked with the local authoritiesof the Oulujoki watershed to study howdeveloping the regulation of thewatershed could reduce flooding. Manymeetings were held to give localresidents information about waterregulation and to discuss hydropower ona more general level.

• A significant share of Fortum'shydropower-related environmental worktargets the impacts on fish stocks.Fortum aims to deliver information onthese impacts and on the researchprojects funded by Fortum. Fortumparticipates in events organised by localfishing associations and in the activitiesof the migratory fish forum.

• Fortum is involved in lighting projects incities and municipalities. In Stockholm,Sweden, various projects wereimplemented in 2013. Energy-efficientlighting on a popular running and walkingpath in Stockholm was implemented withsupport from the citizens who voted forthe location. Within the same project,Fortum has also supported a charitycampaign by the City of Stockholm tohelp homeless people.

• Fortum launched the National Clean RiverChampionship in which 30 tonnes ofgarbage was collected during the one-dayeffort along the three big river banks.More than 1,000 young people collectedfunds for their recreational activities bycleaning up the river banks in in Fortum'shydro power areas in Värmland, Dalarna,Hälsingland and Härjedalen.

• The Loviisa nuclear power plant publishesa stakeholder magazine called Naapurinavoimala (Power plant as a neighbour) andholds regular discussions with theresidents and representatives of the cityof Loviisa, Finland.

• In the past three years Fortum hasengaged in an active dialogue with localauthorities, politicians and organisationsin France about hydropowerdevelopment. In the framework of theFrench National debate on energytransition, Fortum organised an event forFrench and Nordic players to discusshydropower, biomass and marineenergies.

• In Russia, Fortum supported variousprojects at its power plant locations inChelyabinsk, Tyumen, Tobolsk andNyagan. On a local level, we support achildren's sports school and an icehockey team as well as various culturaland residential events.

• The inauguration ceremony of theKlaipeda waste-to-energy power plantwas held in May in the presence ofthe Presidents of the Republics ofLithuania and Finland. A similarinauguration ceremony was held inSeptember in Jelgava, Latvia,accompanied by the Latvian and FinnishPresidents. The events triggered bigmedia coverage on combined heat andpower technology (CHP). Several groupshave visited the power plants during theirfirst months of operation.

• In Poland, Fortum met with localresidents in different events organised inthe municipalities where it has powerplants. Open-house events wereorganised at the CHP plants in Zabrzeand Czestochowa. In four cities whereFortum has operations (Bytom,Czestochowa, Wrocław and Zabrze)1 000 runners participated in the FortumHonorary Energy Donor programme. Itlasted from March to September, andFortum gave a donation to a charityorganisation.

• For the third consecutive year, Fortumsupported talented Silesian children whohave grown up in difficult conditions. In2013, 120 children participated inworkshops organised by Fortum. Fortumalso awarded scholarships for thechildren.

• In Bhilwara, India Fortum has equippedthree schools providing education toaround 1,200 students with solar-powered infrastructure. Solar panels willmeet the schools' power needs in anefficient and sustainable way.

• In India, Fortum is also participatingWorld Vision’s Weconomy Start programaiming to find a win-win sustainablebusiness concept to use local biomass inFortum’s CHP plants.



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Support for societySupport for societyFortum supports organisations and communities working for the common good in the countries where weoperate. The goal is for collaboration to be mutually beneficial.

In 2013, Fortum's support for activitiespromoting the common good totalled aboutEUR 3.2 million (2012: 5.8), of which theshare of grants awarded by the FortumFoundation was about EUR 432,000 (2012:780,000). Fortum Foundation supportsresearch, education and development innatural and technical sciences as well aseconomics within the energy area.

Fortum is the mainfinancer of the solareconomy professorshipestablished atLappeenranta Universityof Technology in 2013.

Collaboration with universitiesCollaboration with universitiesand collegesand colleges

The goal of the collaboration with universitiesand colleges is to develop Fortum's businessand to promote Fortum's research anddevelopment work and its recruiting andtraining opportunities.

A solar economy professorship focusing onthe research and teaching of marketmechanisms related to a solar economybegan at Lappeenranta University ofTechnology in Finland 2013. Fortum issupporting the start-up of operations with a75% share for a five-year period. ChristianBreyer was nominated as the first solareconomy professor.

In Sweden, Fortum is working with variousstakeholders, for example the Royal Instituteof Technology, to develop solutions forsustainable urban living in the NorraDjurgårdstad new residential area.

Projects include, among others, developmentof smart grids and analysis of carbonfootprint in housing. Fortum also researcheswith the University of Karlstad how toimprove the living conditions for fishmigration in river environments.

In Poland, Fortum has developed a researchprogramme for producing district cooling,which is currently being implemented in

collaboration with the Technical Universitiesof Wroclaw and Czestochowa.

In Russia, Fortum has a collaborationagreement with Ural Federal University forfurther training of Fortum employees andresearch collaboration in the energy sector.

In Latvia, Fortum cooperates with RigaTechnical University and Latvia University ofAgriculture, and in Lithuania, with KlaipedaTechnical School by providing internships forstudents as well as by supporting energysector-related conferences and seminars.

Fortum's sponsorshipprojects focus on youthactivities, culture andactivities to improveliveability at the locallevel.

SponsorshipSponsorship supportingsupporting youthyouthsporting activitiessporting activities

In 2013, Fortum sponsored junior footballand junior volleyball in Finland through theFortum Tutor programme. The goal of thejunior football programme implemented incollaboration with the Football Association ofFinland is to ensure each child can have aninspiring and motivating coach. About 100tutors mentor the junior football coaches andprovide them with useful tools for coaching.

A similar programme was launched with theFinnish Volleyball Association in January 2014to strengthen the coaching of juniorvolleyball. The Fortum Para School Day tour,implemented in collaboration with the FinnishParalympics Committee, encouraged childrenand young people at dozens of schoolsaround Finland to engage in physicalactivities within their own capacities.

39

29

17

10

5

Sweden (39) Finland (29)

Russia (17) Poland (10)

Other countries (5)

Environment (32)

Children and youth (26)

Sports (12)

Culture (6)

Other (24)

Environment (32)

Children and youth (26) Sports (12)

Culture (6) Other (24)

Fortum's support to societyin 2013 by country, %

Fortum's support to societyin 2013 by target, %



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http://www.fortum.com/en/corporation/links/fortum-foundation/pages/default.aspx

http://www.fortumtutor.fi/

Stakeholder viewsStakeholder viewsThe Fortum sustainability themes that are most important to stakeholder groups are selected on the basis ofthe materiality assessment, the annual One Fortum survey, public discussion, media follow-up and thebusiness value chain.

Key topics 2013Key topics 2013

In 2013, the following issues important interms of our company's operations wereamong the topics of public discussion in thecompany's market areas:

Reliability of electricity distribution:Reliability of electricity distribution:

• In Finland the new Electricity Market Actrequires electricity companies to bebetter prepared to handlewidespread power outages causedby natural phenomena. The newAct entered into force on 1September 2013. The new law includesthe national legislation changes requiredby the EU's third internal energy marketpackage.

• Fortum’s preparedness to handle stormsituations and their aftercare was betterthan in previous years. Fortum proactivelyinformed customers through textmessages and social media. Stormdamage repairs were carried out morequickly than before.


• Fortum’s actions to improve weather-proof electricity distribution in Finland.

• The reliability of Fortum’s electricitydistribution

Divestment of Finnish electricityDivestment of Finnish electricitydistribution business:distribution business:

• The strategic assessment and divestmentof Fortum’s Finnish distribution networkshas sparked an active public dialogue.There was public suspicion that thesecurity of energy supply would collapseif Fortum’s distribution networks weresold to foreigners. Additionally, it wasassumed that divesting the networkswould automatically lead to an increasein the electricity price for consumers.Distrust towards foreign owners emerged,and it was speculated that they lack theknow-how and interest to invest in a gridin Finland.

• Fortum has communicated that thepeople who have taken care of thedistribution network operations so far arethe same ones who work in the newcompany. The new owner is governed bythe laws of Finland and the Finnishauthority oversees its operations.

• About 20% of Finland’s distributionnetwork is within the scope of the sale,so there is no impact on the security ofsupply. The new foreign owners areamong the world’s largest infrastructureinvestors and have experience also inelectricity networks around the world.The authority’s oversight modeldetermines the profit from thedistribution business, and the new owneroperates within this framework.

Change in electricity billing:Change in electricity billing:

• With the installation of smart meters,there has been a switch to billing basedon actual electricity consumption. Inparticular, switching to hourly-basedmetering, the correctness of billing aftermeter replacement, and discontinuing theinstalment billing have causeduncertainty and discussion amongcustomers. The bigger bill resulting fromincreased consumption during winter hascome as a surprise to some people.

EnergyEnergy market functioningmarket functioningandand development:development:

• Energy and climate policy and energymarket development were importanttopics in the dialogue with the authoritiesin our different operating countries and atthe EU level. Fortum has activelyparticipated in the preparation of theEU’s 2030 energy and climate packageand in the related discussions.

• Fortum expects clarity and consistencyfrom European energy policy in the faceof the climate challenge. The companyhas emphasised setting ambitious andbinding emissions target for 2030.

• Energy sector investments require astable and long-term policy, because

decisions are made for the long-term andrequire significant capital. Transitioning toa low-carbon system as cost efficiently aspossible requires a well functioning,integrated internal energy market. Todevelop the internal energy market,Fortum also suggests consideration of amore binding target to develop a cross-border electricity distribution network.


• Carbon market development

Increased use of coal:Increased use of coal:

• Fortum’s coal use increased in Finland,Sweden and Russia. There was an activediscussion about the increased use ofcoal. The growth in the use of coal hasincreased local emissions in power plantmunicipalities, and the stakeholders’concerns are warranted. On the otherhand electricity production in Fortum'scoal-fired Inkoo power plant in Finlandended in February 2014. This hassparked a discussion in Finland aboutenergy self-sufficiency. The use of coal atFortum’s Suomenoja CHP plant increasedby nearly 90% from 2012. In 2013, coal’sshare of the total heat production inEspoo was about 80%. The increase incoal use is due to the higher price fornatural gas and the decreased price foremission allowances coupled with thenatural gas tax changes and lowerelectricity prices. At the end of the lastdecade, Fortum invested in a new naturalgas-fired power plant that was believed tobe competitive in the electricity andheating markets. Unfortunately, in thecurrent situation, the plant operation isnot profitable.

• At the Värtan plant in Sweden, the use ofcoal increased by a quarter from theprevious year, due to the betteravailability of the plant and theelimination of the CO2 tax overlappingwith emissions trading.



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http://www.fortum.com/countries/fi/yksityisasiakkaat/services-in-english/distribution-connections/pages/default.aspx




• Fortum’s responses to the discussionemphasise expanding the focus area fromthe local level to the entire market area.Fortum operates in the Nordic electricitymarket and on the European emissionallowance market. Many internal andexternal factors affect these markets.

• In the United States, the entry of shalegas into the markets has increased gasuse and reduced coal consumption.Europe has received a stream of moreeconomically priced coal, and its use hasincreased. The profitability of energyproduced with natural gas has weakened,and new gas-fired power plants havebeen shut down due to unprofitability.

• In EU’s emissions trading, the emissionscap is set at the EU level. Even though,from a local perspective, the increase in asingle power plant’s carbon emissions isunfortunate, the EU’s overall emissionstarget will be achieved. Conversely, if theuse of fossil fuels were completelystopped in one EU country's electricityand heat production that is within thesphere of emissions trading, there wouldbe no decrease in Europe’s emissions,because the decrease in emissions inthat particular country would make roomfor emissions growth elsewhere in theEU.

Taxation:Taxation:

• In Finland, the power plant tax (previouslycalled the windfall tax) has been adoptedas of 2014. It will be applied providedthat the European Commission finds thatit is in line with the general tax principlesand regime in Finland and that it does notinclude forbidden state aid to powerplants excluded from the tax. The taxwould target hydro, wind and nuclearpower plants built prior to 2004. Fortumwould be the single biggest payer of thetax, and its share of the tax would beabout half, i.e. an estimated 25 millioneuros a year. Fortum has submitted acomplaint to the European Commissionand has requested clarification whetherthe tax treats companies in a similarsituation in an equal manner and whether

the tax is prohibited State aid to plantsexcluded from the tax. In April, Fortumfiled a complaint to the EuropeanCommission in order to find out whetherthe Swedish real estate tax on hydro-plants is in line with the EU regulationsand whether the different tax levels ofreal estate on renewables, such as wind-,hydro- and bioplants, are to beconsidered as state aid or not. The realestate tax for hydro power plants inSweden will be increased by nearly 50%during 2013-2018.

• In January 2014, the non-profitorganisation Finnwatch published areport regarding the role of holdingcompanies in the operation of Finnishcompanies. According to the report, the20 biggest companies, based onturnover, have over 225 holdingcompanies in countries that Finnwatchclassifies as tax havens. Fortum is alsoincluded in the report. The report and theensuing discussion was widelycommunicated in the media. Fortum wasthe first Finnish company to publish itstax footprint in the Sustainability Report2012.


• Fortum's tax footprint

Progress and earnings expectations of theProgress and earnings expectations of theRussian investment programme:Russian investment programme:

• Fortum’s investment programme andearnings expectations in Russia isregularly a source of interest for mediaand investors. Fortum has announced itstarget to achieve an operating profit level(EBIT) of about EUR 500 million run-ratein its Russia Division during 2015 and tocreate positive economic value added inRussia.

• The completion of the last units inFortum’s investment programme hasbeen delayed by some months from theoriginal timetable; the programme will becompleted by the middle of 2015. Themost significant part of Fortum’s Russian

investment programme – two units at theNyagan power plant – were inauguratedin September. The plant’s inaugurationwas widely reported in Russian andNordic media.


• Russia Division

Hydropower’s future in Sweden:Hydropower’s future in Sweden:

• A report published in Sweden about theneed for changes in hydropower-relatedlegislation sparked a dialogue about thefuture of hydropower. Hydropower plantsmay be forced to apply for new operatingpermits, and, in conjunction with theprocessing of the permits, the productionof the plants may be limited. The impactwould target the small hydropower plantsin particular. Fortum views the change asa risk and emphasises that the use ofemissions-free hydropower is essential inclimate change mitigation, and it is ofcritical importance as regulating power inthe Nordic markets. Fortum has anongoing hydropower refurbishmentprogramme to modernise plants.Additionally, Fortum is involved involuntary environmental conservationefforts to reduce the adverse effects ofhydropower and to safeguard the otheruses of water systems.

Impact of hydropower on fish:Impact of hydropower on fish:

• During the year the status of themigratory fish stocks evoked a lot ofdiscussion in conjunction with, amongothers, the salmon and sea trout strategywork lead by the Ministry of Agricultureand Forestry.


• How hydropower is involved and Fortum'sview on fishing-related issues



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http://annualreport2013.fortum.com/en/sustainability/our-business/solar-economy-production-forms/hydropower/reducing-environmental-impacts/


Materiality assessmentMateriality assessmentFortum's sustainability reporting focuses on describing operations important from the stakeholders' perspectiveand their impacts. The aim is to provide reporting that is comprehensive and transparent and takes intoconsideration all significant stakeholders. Our report is verified by a third party.

Fortum will move to GRI G4 reportingduring 2014 and will publish its firstsustainability report that is consistentwith the G4 Guidelines in spring 2015. TheG4 Guidelines highlight the reporting ofaspects material to stakeholders and tocompany operations. Fortum will renew itsmateriality assessment in spring 2014 so thatthe stakeholder expectations and informationgathered will provide the best possibletransition to G4 reporting.

Fortum previously conducteda comprehensive stakeholder analysis in2010. Since then, Fortum has assessedthe issues material to different stakeholdersbased on the themes raised in the yearly One

Fortum stakeholder survey and in thecompany's dialogue with stakeholders. Forthe 2013 report, Fortum also used the TVRreport, published by the TwoTomorrowsconsultancy, and the Sustainability Topics forSectors report, published by GRI, as externalbenchmarks.

Of the aspects assessed as material byFortum, CO2 emissions and climate changemitigation, operational safety, security ofsupply and power plant availability as well ascustomer service and customer satisfactioncorrespond very well with the aspectsassessed as material by TwoTomorrows. Forthese aspects, Fortum has also set Group-level targets.

Fortum also has a Group-level target forenergy efficiency, one of the aspectsassessed as material by GRI. Energyproduction by fuel type and especially use ofrenewable energy sources are also listed asmaterial aspects by GRI. Fortum also believesthat future energy production will be basedon a solar economy and presents the solareconomy production forms as a category ofits own in this report.

As government subsidies are recognised as amaterial aspect under economicresponsibility by GRI, Fortum has includedthis information in its 2013 reporting.

Assessment of sustainability aspectsAssessment of sustainability aspects



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Customer satisfaction surveysCustomer satisfaction surveysFortum annually measures customer and stakeholder satisfaction, as well as development of the company'sreputation and the factors that impact it, through the extensive One Fortum and regular EPSI surveys.

The One Fortum survey covers customers,governmental bodies, capital markets, non-governmental organisations and opinionleaders as well as Fortum's personnel. In2013, the survey was conducted in Finland,Sweden, Norway, Poland, the Baltic countriesand Russia, as in the previous year. For thePower Division, the survey also coveredcustomers in Germany and Great Britain. InFinland and Sweden, the survey covered thegeneral public as well. In addition, Fortummonitors customer satisfaction throughregular EPSI customer satisfaction surveys inFinland, Sweden and Norway.

The results of thecustomer satisfactionsurveys are reviewed byFortum's topmanagement and areused for planning anddevelopment of thecompany's business.

The survey results are reviewed by Fortum'stop management and are used for planningand development of the company's business.In 2013, Fortum's reputation and customersatisfaction were part of the Group'ssustainability target setting, and Fortum'sreputation among the general public andcustomers were also part of the Group'sshort-term incentive system (STI).

Better image among customersBetter image among customersand the general publicand the general public

The results of the One Fortum Survey for2013 were mainly positive in regards toreputation and customer satisfaction.Compared to 2012, Fortum's reputationimproved noticeably amongst the general

public and customers. Customer satisfactionalso increased, compared to the previousyear. Fortum's reputation has continuallygained strength over the last three years thatthe One Fortum survey has been conducted.

Fortum's reputation improved not onlyamongst customers and the general public,but also amongst governmentrepresentatives. However, its reputationslightly declined amongst capital marketoperators, employees, opinion leaders andcivic organisations. Fortum's reputation is stillthe highest in the opinions of capital marketoperators, despite the slight downturn in itsreputation amongst this group.

In all divisions of Fortum, customers weremore satisfied than before, but the Group'starget for customer satisfaction was reachedonly in the Power Solutions business unit ofthe Power Division. Customer satisfactionamong the ESD Division's businesscustomers declined slightly after its rise in2012.

As in the previous year, Fortum's leadership,operations and financial performance weregiven high scores. The reputation improvedthe most, especially among the generalpublic, in two development areas identifiedthe previous year: Customer Orientation andSocial Responsibility. These two areas willcontinue to be important targets ofdevelopment in 2014. Fortum's employerimage and reputation among the employeesalso remained as development areas.

The improvement incustomer satisfaction isthe result of newcustomer-orientedproducts and servicesand our ability to provideguidance on energyefficiency.

The international and independent EPSIRating annually surveys customer satisfactionwith

electricity retail companies in Finland,Sweden and Norway. Based on the 2013EPSI survey, customer satisfaction with theelectricity industry improved in Finland,Sweden and Norway. In Finland andSweden, Fortum's customer satisfaction rosemore than the industry average. In Finland,Fortum was the top gainer of the year. Ourresult in Norway was somewhat lower than inthe previous year. The considerableimprovement in customer satisfaction is theresult of new customer-oriented products andservices and our ability to provide guidanceon energy efficiency.

Customers value the price-quality ratio ofFortum's products. Customer satisfactionamong private customers in Finland hasimproved steadily since 2006.

Fortum's satisfaction index in Finland hasrisen 2.7 index units from the previous year.Fortum has improved its result amongbusiness customers in Finland by nearly 10index units.

In December 2013, an indicator measuringFortum's reputation among the generalpublic, customers and employees wasincluded in the long-term incentive systems(LTI) for the years 2014-2016.

Annual Report 2013 GRI Section


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Sustainability managementSustainability managementFortum's sustainability approach, management model, roles and responsibilities together with target-settingare discussed in the report section Sustainability Approach. Fortum's governance model is discussed in theGovernance Statement 2013.

Guiding policies andGuiding policies andinternational commitmentsinternational commitments

The renewal of Group-level policies andinstructions has been ongoing during2012-2013. The renewed policies require theBoard's approval. In June 2013, Fortum'sBoard of Directors approved FortumCorporation's Sustainability Policy. Publicpolicies will be available on Fortum's website

after the Board's approval. Our main policiesand instructions supporting sustainabilityinclude:

• Code of Conduct• Supplier Code of Conduct• Sustainability policy (including

environmental, and occupational healthand safety policies)

• Human resources policy• Group risk policy

• Sponsorship steering document Groupmanual on investment evaluation andapproval procedure

• Group instructions on Competition Law• Group instructions on anti-corruption and

anti-bribery• Group instructions for

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• Minimum requirements for EHSmanagement

Fortum respects and supports the UnitedNations Universal Declaration of HumanRights, the United Nations Convention on theRights of the Child, and the core conventionsof the International Labour Organisation(ILO). Additionally, Fortum recognises in itsoperations the statutes of the OECDGuidelines for Multinational Enterprises, theInternational Chamber of Commerce's anti-bribery and anti-corruption guidelines, andthe Bettercoal initiative's Code onresponsible coal mining. Fortum has been amember of the UN Global Compact initiativesince June 2010 and joined the UN Caring forClimate initiative in November 2013.

Management approach toManagement approach toeconomic responsibilityeconomic responsibility

Fortum's economic responsibility emphasisesstrong financial performance, profitablegrowth and added value over the long term. Acompany that is financially strong is able tobe responsible for the environment, take careof its personnel, meet the needs of itscustomers, support the development ofsociety and produce added value for itsdifferent stakeholders. Strong financialperformance and growth must be achieved incompliance with sustainability principles andthe company's target setting. Every newresearch and development project isassessed against carbon dioxide-free andresource efficiency criteria. Likewise, everynew investment proposal is assessed againstsustainability criteria as part of Fortum'sinvestment evaluation and approvalprocedure. In investments we are looking foreconomically viable options that enable acapacity increase and reduced emissions.

Fortum's key financial figures are preparedand presented in compliance withInternational Financial Reporting Standards(IFRS). Fortum uses the informationpresented in the financial statements as wellas the applicable Global Reporting Initiative(GRI) indicators for reporting economicresponsibility and discloses in itsSustainability Report some figures that arecollected as part of the financial statementprocess, but are not included in the actualfinancial statements.


• Economic performance indicators

Management approach toManagement approach toenvironmental responsibilityenvironmental responsibility

Environmental responsibility at Fortumemphasises the efficient use of naturalresources and the need to mitigate climatechange, and it highlights our know-how inCO2-free hydro and nuclear power productionand in energy-efficient CHP production.Research and development activities createrequisites for environmentally benign energysolutions.

Fortum's environmental management isbased on the Group's policies andcommitments as well as the international ISO14001 standard; the goal is for all operativefunctions to have ISO 14001 environmentalcertification. During the year the Zabrze andBytom operations in Poland and OAOFortum's district heat network operations inRussia received ISO 14001 certification. Atthe end of 2013, the certification rate ofFortum's operations was 100%. Thecertification rate is based on the share ofsales generated in certified operations (2013net sales values) out of Fortum's total sales.

Key environmental performance indicatorsinclude CO2 emissions per produced kWh,energy efficiency and the number of EHSincidents. EHS incidents are reportedmonthly and CO2 emissions and energyefficiency quarterly to the FortumManagement Team and regularly to the Boardof Directors.


• Environmental performance indicators

Management approach toManagement approach tooccupational health and safetyoccupational health and safety

Fortum's safety management emphasises thecompany's strategic intent to create a safeworkplace for all individuals working inFortum's operations. We believe that all workinjuries are preventable. Safety managementis based on the Group's policies andcommitments as well as Group-levelinstructions and Group-defined minimumrequirements for environmental andoccupational health and safety work.Fortum's goal is for all operative functions tohave OHSAS 18001, occupational health andsafety certification.

At the end of 2013, the certification rate ofFortum's operations was 73%. During the

year certification was awarded to Zabrze andBytom operations in Poland and OAOFortum's district heat network operations inRussia. The Electricity Solutions andDistribution (ESD) Division does not haveOHSAS 18001 certification.

In reporting injuries, Fortum complies withthe principles of the United StatesOccupational Safety & Health Administration(OSHA) and the ILO's Practice on Recordingand Notification of Occupational Accidentsand Diseases (1995) to the extent that theyconform to the legislation in Fortum'scountries of operation.

A key occupational safety performanceindicator includes lost workday incidentfrequency (LWIF) for own employees which isreported monthly to Fortum ManagementTeam and regularly to the Board of Directors.Operative management receives acomprehensive safety report covering bothown employees and contractors, monthly.


• Social performance indicators,occupational health and safety

• Well-being at work• Occupational safety

Human resources and well-Human resources and well-being managementbeing management

Fortum aims to have engaged and satisfiedemployees. We want to create attractivecareer and development opportunities forindividuals to continuously grow theirprofessional skills and know-how. Fortum'sCode of Conduct and HR policy guide HRpractices, which are supported by Group-levelHR processes: strategic planning, recruiting,personnel development, performancemanagement, benefits and remuneration, andcareer and personal data management.

We value diversity and foster fair treatmentand equal opportunity in recruitment,remuneration, development andadvancement of employees, regardless ofrace, religion, political opinion, gender, age,national origin, language, sexual orientation,marital status and disability. Theimplementation of the HR practices ismonitored through employee surveys, annualperformance and development reviews aswell as other feedback channels.

The focus areas of Fortum's HR managementin 2013 were coaching leadership,



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competence management and developmentaligned with the strategy, and development ofGroup-wide HR processes.

ForCARE is Fortum's well-being programmethat comprehensively covers issues related toemployee well-being. The programme's goalsare to promote health and safety, support theemployees' capacity to work throughout theircareer and promote the functionality of workcommunities at Fortum. Each member of thework community is responsible for their ownwell-being and competence and for themutual development of well-being. The modelis customised according to each country'slegislation in collaboration with localoccupational safety organisations, thepersonnel and management.

Well-being is monitored through sick leaves,which is tracked quarterly and the ratiobetween actual retirement and the statutorystart of the retirement age. Employee survey,which is conducted at two-year intervals alsoincludes index measuring well-being.


• Social performance indicators,employees and work conditions

• ForCARE - A model for overall well-beingat work

Human rightsHuman rights

Fortum's approach to human rights isdescribed in Fortum's Code of Conduct,Supplier Code of Conduct and HumanResources policy. Fortum endorses the UNUniversal Declaration of Human Rights, theUN Convention of the Rights of the Child, and

the key conventions of the InternationalLabour Organisation. Additionally, Fortumrecognises the statutes of the OECDGuidelines for Multinational Enterprises, theInternational Chamber of Commerce's anti-bribery and anti-corruption principles andrules, and the Bettercoal initiative's Code onresponsible coal mining. Fortum has been amember of the United Nations GlobalCompact initiative since June 2010.

In 2013, Fortum included the UN GuidingPrinciples (Protect-Respect-RemedyFramework) on Business and Human Rightsas part of its systematic country and partnerrisk assessment.

Supplier questionnaires and audit resultsassessing the realisation of human rights arerecorded along with the corrective measuresin the supplier database, which is available toall Fortum employees. Fortum has set aGroup target for the number of audits andaudits performed are reported quarterly tooperative management.


• Social performance indicators, humanrights

• Sustainable management of the supplychain

SocietySociety

Fortum's Code of Conduct guides ourmanagement approach to society. Fortumfollows good business practices and ethicalprinciples in all of its operations. We competefairly and ethically and work within theframework of applicable competition laws

and Group competition instructions. We avoidall situations where our own personalinterests may conflict with the interests ofthe Fortum Group. Notably, we never acceptor give a bribe or other improper payment forany reason.

We base our customer relations on honestyand trust. We treat our suppliers andsubcontractors fairly and equally and wechoose them based on merit; and with theexpectation that they will consistently complywith our requirements and with Fortum'sSupplier Code of Conduct.

As an active corporate citizen, Fortum offersexpert advice to decision makers and non-governmental organisations in energy-relatedissues. Fortum as a company does notsupport, directly or indirectly, any politicalparties or other political organisations, nordoes it participate in financing electioncampaign for any candidates.

Through our business, Fortum interacts withmillions of people. According to ourSustainability Policy, we want to develop ouroperations in co-operation with ourstakeholders. Open, honest and proactivecommunication and listening to ourstakeholders are important in targeting ourstrategic aims. Special attention is paid tothe local communities and people around ourproduction plants.


• Social performance indicators,community

• Support for society• Stakeholder engagement

Reporting principlesReporting principlesFortum's Annual Report consists of fourparts: Financials, Annual Review, Governanceand Sustainability. The entire Annual Reportwill be published online in Finnish and Englishon Fortum's website.

Fortum as a company and key information onproduction capacity, customers, certifiedmanagement systems and carbon dioxideemissions is described in the Annual Review.

The Sustainability Report reviews Fortum'soperations in 2013 and also contains someinformation from January-February 2014. The2012 Sustainability Report was published in

March 2013, and the 2014 report will bepublished in March 2015.

The report is divided into four sections. Thefirst section describes sustainability as part ofFortum's strategy. The second sectionfocuses on Fortum's business value chainand the role of different production anddistribution forms in it. Fortum's keystakeholder groups and their expectationsabout Fortum's sustainability work arediscussed in the third section. The standarddisclosures of the Global Reporting Initiative(GRI) G3.1 Guidelines are presented in thefourth section.

Contact persons providing more informationrelated to the report can be found on thecontacts page.

Report scope and boundaryReport scope and boundary

Reporting related to operations andmanagement covers all functions underFortum's control, including subsidiaries in allcountries of operation. The consolidationincludes the parent company FortumCorporation and all the companies in whichFortum Corporation has the power to governthe financial and operating policies and in



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which it generally holds, directly or indirectly,more than 50% of the voting rights. Possibledeviations to this principle are reported inconjunction with information applyingdifferent boundaries.

The reporting of management practices doesnot fully cover Fortum's minority ownerships,and thus the defining of the scope ofreporting is not fully compliant with the GRIBoundary Protocol. According to the GRIBoundary Protocol, entities with 50%ownership or less and with significantsustainability impacts should be included inthe management approach disclosures. InFortum's case, management practices of theOlkiluoto nuclear power plant (26%ownership), Kemijoki Oy (18% ownership inequity capital, 64% ownership in hydropowershares) and Turun Seudun Maakaasu jaEnergiantuotanto Oy (49.5% ownership) inFinland and the management practices of theForsmark (26% ownership) and Oskarshamn(46% ownership) nuclear power plants inSweden are excluded from the reporting.

Information from previous years is presentedas pro forma information, i.e., presented onthe basis of the organisation and thefunctions of each year; the impacts ofownership changes in production facilities,for example, have not been updatedafterwards in the previous key indicators.

Capacity changesCapacity changes

New and acquired capacityNew and acquired capacity

Four new CHP plants were inaugurated in2013: Järvenpää (Finland), Brista (Sweden),Klaipeda (Lithuania) and Jelgava (Latvia). InRussia, two units of the gas-fired Nyaganpower plant were commissioned. In addition,Fortum acquired Amrit Solar power plant inNorth-Western India.

The plants and capacity acquired during ayear are included in reporting starting from

the takeover. The same principle applies tonew capacity built and new plantsinaugurated during the year.

Leased and divested capacityLeased and divested capacity

Fortum sold the Kuusamo Power Plant inFinland to Adven Oy on 1 October 2013. TheKuusamo Power Plant is included in Fortum'ssustainability reporting for the period January-September. At the end of 2013 Fortum alsosold the Kauttua and Nokia power plants, andthe ownership of the Uimaharju power plantwas transferred back to Stora Enso inaccordance with the agreement signed in1990. These plants are included in reportingfor the whole year of 2013.

Measurement and calculationMeasurement and calculationprinciplesprinciples

Data for economic performance indicators iscollected from the audited financialstatements and from financial accounting andconsolidation systems.

The environmental information of the reportcovers the plants for which Fortum is thelegal holder of the environmental permit.Normally, Fortum is the majority shareholderof such plants, but the company can be theholder of a plant's environmental permit alsowhen it is a minority shareholder. In suchcases, the plant information is reported in itsentirety, but only the share of production andemissions corresponding to Fortum's share ofownership are calculated in the specificemissions figures.

Fortum utilises a Group-wide database withinstructions for collecting site-levelenvironmental data. Sites are responsible fordata input, emissions calculations andassurance. The Corporate Sustainability unitcompiles all data and is responsible fordisclosed sustainability information.

Fortum's CO2 emissions subject to the EUEmissions Trading Scheme are annuallyverified at the site-level by external verifiers.Direct and indirect greenhouse gas emissionshave been reported in accordance with theGreenhouse Gas Protocol and based on theGreenhouse Gas Analysis performed by anexternal consultant.

Fortum's human resources (HR) managementsystem HeRMeS is currently used in Finland,Sweden, Norway and Poland, excluding theZabrze and Bytom functions, and it is themain system for all employee-relatedpersonal and job data. In 2013, HeRMeS wasintroduced partly also in Estonia, Latvia andLithuania. Other social responsibility data,such as occupational health-related data,originates from various data systems and iscollected by the relevant contact persons anddelivered to Corporate Sustainability unit inthe format recommended by GRI.

Global Compact reportingGlobal Compact reporting

Fortum has been a member of the UnitedNations Global Compact initiative since June2010. This report describes the realisation ofthe Global Compact's ten principles inFortum's operations. Global Compactapproves the use of the indicators in the GRIG3.1 Guidelines in Communication onProgress (COP) reporting. The GRI indexpresents the indicators used to measureFortum's performance in fulfilling theprinciples of human rights, labour standards,the environment and anti-corruption.

Fortum joined the Caring for Climate initiativein November 2013. Fortum meets thereporting requirements of the Caring forClimate initiative by participating annually inthe assessment in the CDP's climate changeprogramme and by publishing its response onthe CDP's website.



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AssuranceAssuranceFortum's Sustainability Report 2013 ispublished online in Finnish and English andcan be read atannualreport2013.fortum.com. The report isbased on the GRI G3.1 Guidelines. TheFinnish version of the Sustainability Report isgiven limited assurance by Deloitte & ToucheOy, Fortum Corporation's financial auditors.The assurance scope covers the Finnishversion of the sustainability reporting materialpresented at annualreport2013.fortum.com .

In addition to the G3.1 Guidelines Fortum hasalso reported, when applicable, some of theindicators presented in the Electric UtilitySector Supplement of the GRI. Sector-

specific additions to the G3.1 indicators havenot been acknowledged. Fortum hasconducted a self-assessment on thecomprehensiveness of the reporting, asrequired by the GRI. The application level hasalso been reviewed by the assuranceprovider, and both parties are in agreementthat Fortum has followed application level B+of the GRI 3.1 Guidelines. In its reporting,Fortum has also adhered to the AA1000Accountability Principles Standard (AA1000APS).

The report content is not updated afterassurance, and any amendments to thecontent will be reported the following year.

Deloitte & Touche Oy has also providedlimited assurance for emission calculations(Scope 1-3) based on the GHG Protocolaccording to the requirements published byCDP (Verification of Climate Data). Theassurance report will be delivered to CDP aspart of Fortum's CDP reporting.


• Assurance statement



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GRI indexGRI index

● Fully reported

● Partially reported

● Not reported

STANDARD DISCLOSURES PART I: Profile Disclosures

Code DescriptionInclusive-ness Section/Further information

1. STRATEGY AND ANALYSIS

1.1 Statement from the most senior decision-maker of the organisation ● Annual Review/CEO's Review

1.2 Description of key impacts, risks, and opportunities ● Annual Review/Market Development

Sustainability targets and results

2. ORGANISATIONAL PROFILE

2.1 Name of the organisation ● Annual Review/Fortum in 2013/Group business structure

2.2 Primary brands, products, and/or services ● Annual Review/Fortum in 2013/Group business structure

2.3 Operational structure ● Annual Review/Fortum in 2013/Group business structure

2.4 Location of organisation's headquarters ● Annual Review/Fortum in 2013/Group business structure

2.5 Countries where the organisation operates ● Annual Review/Fortum in 2013/Fortum's operations andmarket areas

2.6 Nature of ownership and legal form ● Annual Review/Financials 2013/The Fortum share andshareholders

2.7 Markets served ● Annual Review/Fortum in 2013/Group business structure

2.8 Scale of the reporting organisation ● Annual Review/Fortum in 2013/Group business structure

Annual Review/Fortum in 2013/Year 2013 in figures/Salesand production

2.9Significant changes during the reporting period regarding size, structure,or ownership

●Financials/Operating and financial review /Financialperformance and position/Capital expenditure,investments&divestments of shares

Sustainability/GRI Section/Reporting principles

2.10 Awards received in the reporting period ● Sustainability/Sustainability Approach/Sustainability indexes

Fortum's Sustainability Report 2012 was selected as the winnerin the Corporate Responsibility Reporting competition inFinland.

3. REPORT PARAMETERS

3.1 Reporting period ● Sustainability/GRI Section/Reporting principles

3.2 Date of most recent previous report ● Sustainability/GRI Section/Reporting principles

3.3 Reporting cycle ● Sustainability/GRI Section/Reporting principles

3.4 Contact information ● Contact information

3.5 Process for defining report content ● Sustainability/Stakeholder views/Materiality assessment

Sustainability/Our stakeholders/Stakeholder collaboration

3.6 Boundary of the report ● Sustainability/GRI Section/Reporting principles

3.7 State any specific limitations on the scope or boundary of the report. ● Sustainability/GRI Section/Reporting principles



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3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities,outsourced operations, and other entities that can significantly affectcomparability from period to period and/or between organizations.

●Sustainability/GRI Section/Reporting principles

3.9 Data measurement techniques and the bases of calculations ● Sustainability/GRI Section/Reporting principles

3.10Explanation of the effect of any re-statements of information provided inearlier reports ● Sustainability/GRI Section/Reporting principles

3.11Significant changes from previous reporting periods in the scope,boundary, or measurement methods applied in the report. ● Sustainability/GRI Section/Reporting principles

3.12 GRI content index ● Sustainability/GRI Section/GRI index

3.13Policy and current practice with regard to seeking external assurance forthe report ● Assurance Statement

4. GOVERNANCE, COMMITMENTS, AND ENGAGEMENT

4.1 Governance structure of the organisation ●Governance/Corporate Governance Statement/Governingbodies of Fortum

4.2 The Board Chair's function within the organisation's management ● Governance/Corporate Governance Statement/Governingbodies of Fortum

4.3 Independence of Board members ● Governance/Corporate Governance Statement/Governingbodies of Fortum

4.4Mechanisms for shareholders and employees to providerecommendations or direction to the highest governance body ● Sustainability/GRI Section/Social performance indicators/

Employees and work conditions

The shareholders have the right to make decisions overcompany matters in a General Meeting of Shareholders and toask questions about the issues covered in the meeting. Theoperations and duties of the Annual General Meeting and theBoard of Directors are explained in the Fortum Financials.

Governance/Corporate Governance Statement/Governingbodies of Fortum

4.5Linkage between compensation for members of the Board and themanagement, and the organisation's sustainability performance ● Governance/Remuneration

4.6Processes in place for the Board to ensure conflicts of interest areavoided ● Governance/Corporate Governance Statement/Governing

bodies of Fortum

4.7

Process for determining the composition, qualifications, and expertise ofthe members of the highest governance body and its committees,including any consideration of gender and other indicators of diversity.

● Governance/Corporate Governance Statement/Governingbodies of Fortum

4.8Mission, values, codes of conduct, and principles and the status of theirimplementation ● Annual Review/Strategy

Sustainability/GRI Section/Sustainability management

4.9

Procedures of the highest governance body for overseeing theorganisation's identification and management of economic,environmental, and social performance, including relevant risks andopportunities, and adherence or compliance with internationally agreedstandards, codes of conduct, and principles

●Governance/Corporate Governance Statement/Governingbodies of Fortum

As of the beginning of 2013, results of the sustainabilityindicators are regularly reported to Fortum Board of Directors.

Financials/Operating and financial review/Risk management

Sustainability/Sustainability Approach/Sustainability targetsetting

4.10Processes for evaluating the highest governance body's ownperformance ● Governance/Corporate Governance Statement/Governing

bodies of Fortum

The Board of Directors conducts an annual self-assessment.

4.11 Explanation of how the precautionary principle is addressed ● Sustainability/Sustainability Approach

Sustainability assessment is part of every acquisition andinvestment.



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Financials/Operating and financial review/Risk management

4.12

Externally developed economic, environmental, and social charters,principles, or other initiatives to which the organization subscribes orendorses.

●Sustainability/GRI Section/Sustainability management

Sustainability/Our stakeholders/Stakeholder collaboration/Authorities and energy industry organisations

4.13 Memberships in associations and advocacy organisations ● Sustainability/Our stakeholders/Stakeholder collaboration/Authorities and energy industry organisations

List of collaboration partner can be found from Fortum'swebsite

4.14 List of stakeholder groups engaged by the organisation ● Sustainability/Our stakeholders

4.15Basis for identification and selection of stakeholders with whom toengage ● Sustainability/Our stakeholders/Stakeholder views/Materiality

assessment

Sustainability/Our stakeholders/Stakeholder views/Customersatisfaction

4.16 Approaches to stakeholder engagement ● Sustainability/Our stakeholders/Stakeholder collaboration

4.17Key topics and concerns that have been raised through stakeholderengagement ● Sustainability/Our stakeholders/Stakeholder views

STANDARD DISCLOSURES PART II: Disclosures on Management Approach (DMAs)

DescriptionInclusive-ness Section/Further information

ECONOMIC RESPONSIBILITY

Aspects Economic performance and indirect economic impacts ● Sustainability/GRI Section/Sustainability management

Market presence ● Annual Review/Market Development

Annual Review/Fortum in 2013/ Operations and marketareas

ENVIRONMENTAL RESPONSIBILITY

AspectsMaterials, energy, water, emissions, effluents and waste, products andservices, compliance and overall ● Sustainability/GRI Section/Sustainability management

Fortum Sustainability Policy

Biodiversity ● Sustainability/GRI Section/Sustainability management


Biodiversity guidelines

Transport ● Sustainability/GRI Section/Sustainability management


Fortum's response to CDP

SOCIAL RESPONSIBILITY/LABOUR PRACTICES

Aspects

Employment, labor/management relations, occupational health andsafety, training and education, diversity and equal opportunity and equalremuneration for women and men

●Sustainability/GRI Section/Sustainability management

Fortum HR Policy

SOCIAL RESPONSIBILITY/HUMAN RIGHTS

Aspects Investment and procurement practices, indigenous rights ● Investment evaluation and approval procedure

Non-discrimination ● Sustainability/GRI Section/Sustainability management

Fortum HR Policy

Freedom of association and collective bargaining, child labor,prevention of forced and compulsory labor and security practices ● Sustainability/GRI Section/Sustainability management

Fortum HR Policy

Fortum Code of Conduct



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Fortum Supplier Code of Conduct

Assessment, remediation ● Sustainability/GRI Section/Sustainability management

Fortum HR Policy

Fortum Code of Conduct

Fortum Supplier Code of Conduct

Investment evaluation and approval procedure

SOCIAL RESPONSIBILITY/SOCIETY

Aspects Local communities ● Sustainability/Our stakeholders/Stakeholder collaboration/Local communities

Sustainability/Our stakeholders/Stakeholder views

Corruption, anti-competitive behavior and compliance ● Fortum Code of Conduct

Supplier Code of Conduct

Public policy ● Sustainability Policy

SOCIAL RESPONSIBILITY/PRODUCT RESPONSIBILITY

Aspects Customer health and safety ● Sustainability/Our stakeholders/Stakeholder collaboration/Customers

Product and service labelling ● Sustainability/Our business/Electricity and heat sales

Marketing communications, customer privacy and compliance ● Fortum Code of Conduct

STANDARD DISCLOSURES PART III: Performance Indicators

Code DescriptionInclusive-ness Section/Further information

ECONOMIC RESPONSIBILITY

Economic performance

EC1 Direct economic value generated and distributed ● EC1

EC2Financial implications and other risks and opportunities due to climatechange ● EC2

Financials/Strategic risks

Fortum's CDP reporting

EC3 Coverage of the organisation's defined benefit plan obligations ● Governance/Remuneration/Pensions

EC4 Significant financial assistance received from government ● Sustainability/Our business/Generating economic value forstakeholders/Fortum as a tax payer

Support not specified by categories.

Market presence

EC5Standard entry level wage by gender compared to local minimum wageat significant locations of operation ●

EC6 Spending on locally-based suppliers ● EC6

Local purchasing volumes presented in euros, not aspercentages. A guiding policy on local purchasing is notavailable.

Responsible fuel purchasing

EC7 Procedures for local hiring ● EC7

Local hiring policy not available.

Indirect economic impacts

EC8Development and impact of infrastructure investments and servicesprovided for public benefit ● EC8



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http://annualreport2013.fortum.com/en/financials/operating-and-financial-review/risk-management/risk-factors/strategic-risks/

http://www.fortum.com/SiteCollectionDocuments/Sustainability/2013/130530%20CDP%202013_Fortum%20response.pdf

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On a larger scale, Fortum's investments in infrastructure –especially in the districting heating network in Russia – can beconsidered as providing public benefit, even though theinvestments also have economic benefits.

Fortum's economic impacts

EC9 Significant indirect economic impacts, including the extent of impacts ● EC9

Negative, indirect economic impacts have not been analysed.Benchmarking has not been done.

Fortum's economic impacts

EU6Management approach to ensure short and long-term electricityavailability and reliability ● Fortum in Brief/Group Business Structure

Our Business/Energy Distribution

EU7Demand-side management programs including residential, commercial,institutional and industrial programs ● Our Stakeholders/Customers

EU8Research and development activity and expenditure aimed at providingreliable electricity and promoting sustainable development ● Our Strategy/Research and Development

EU9 Provisions for decommissioning of nuclear power sites ● Financials/Consolidated financial statements Note 30 Nuclearrelated assets and liabilities

EU10Planned capacity against projected electricity demand over the longterm, broken down by energy source and regulatory regime ● EU10

Annual Review/Market Development

Financials/Operating and financial review/Capital expenditure,investments & divestments of shares

EU11Average generation efficiency of thermal plants by energy source andregulatory regime ● EU11

Generation efficiency of thermal plants reported for totalproduction, without the breakdown required in the indicator.

EU12 Transmission and distribution losses as a percentage of total energy ● EU12

ENVIRONMENTAL RESPONSIBILITY

Materials

EN1 Materials used ● EN1

EN2 Materials used that are recycled input materials ● EN2

Energy

EN3 Direct energy consumption ● EN3

EN4 Indirect energy consumption ● EN4

Primary energy sources for purchased electricity are notexactly known.

EN5 Energy saved due to conservation and efficiency improvements ● EN5

EN6 Energy-efficient or renewable energy based products and services ● EN6

Fortum offers electricity products produced with renewableenergy sources. We also offer energy efficiency advice anddevices (e.g. home displays) which help our customers tocontrol their electricity consumption.

EN7Initiatives to reduce indirect energy consumption and reductionsachieved ● EN7

Achieved reductions are not reported.

Water

EN8 Water withdrawal ● EN8

Environmental summary



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http://annualreport2013.fortum.com/en/sustainability/gri-section/economic-performance-indicators/system-efficiency/

http://annualreport2013.fortum.com/en/sustainability/gri-section/economic-performance-indicators/system-efficiency/

http://annualreport2013.fortum.com/en/sustainability/gri-section/environmental-performance-indicators/materials/

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EN9 Water sources significantly affected by withdrawal of water ● EN9

EN10 Water recycled and reused ● EN10

Biodiversity

EN11

Location and size of land owned, leased, managed in, or adjacent to,protected areas and areas of high biodiversity value outside protectedareas

●EN11

EN12Description of significant impacts of activities on biodiversity inprotected areas and areas of high biodiversity value ● EN12

Impacts have not been described in detail.

EN13 Habitats protected or restored ● EN13

Size of habitats has not been reported.

Reducing hydropower’s environmental impacts

Reducing the environmental impacts of energy distribution

EN14Strategies, current actions, and future plans for managing impacts onbiodiversity ● EN14

Reducing hydropower’s environmental impacts

Reducing the environmental impacts of energy distribution

EN15Number of IUCN Red List species and national conservation list specieswith habitats in areas affected by operations ● EN15

No comprehensive study has been made on threatenedspecies.

Emissions, effluents and waste

EN16 Direct and indirect greenhouse gas emissions ● EN16


EN17 Other relevant indirect greenhouse gas emissions ● EN17

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved ● EN18

Hydropower

Emissions, effluents and waste/Increasing the use of biomass

CHP/Diverse use of fuels

Financials/Consolidated financial statements/Note 19.2Capital expenditure

EN19 Emissions of ozone-depleting substances ● EN19

EN20 NOx, SOx, and other significant air emissions by type ● EN20

The whole list of heavy metals has not been reported, onlymercury.


EN21 Water discharge ● EN21

Waste water volumes have not been reported by type oftreatment.

Reducing CHP’s environmental impacts


EN22 Total weight of waste by type and disposal method ● EN22

Waste volumes have not been reported in detail by type oftreatment.

Reducing nuclear power’s environmental impacts

Nuclear waste management


EN23 Total number and volume of significant spills ● EN23



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http://annualreport2013.fortum.com/en/sustainability/our-business/solar-economy-production-forms/hydropower


http://annualreport2013.fortum.com/en/sustainability/our-business/thermal-energy/combined-heat-and-power/diverse-use-of-fuels/

http://annualreport2013.fortum.com/en/financials/financial-statements/consolidated-financial-statements/notes-to-the-consolidated-financial-statements/19.-property--plant-and-equipment/

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http://annualreport2013.fortum.com/en/sustainability/our-business/nuclear-power/reduction-of-environmental-impacts/

http://annualreport2013.fortum.com/en/sustainability/our-business/nuclear-power/nuclear-waste-management-2/



EN24Weight of transported, imported, exported, or treated waste deemedhazardous ● Not relevant for Fortum.

EN25Water bodies and related habitats significantly affected by the reportingorganization's discharges of water and runoff ● EN25

Products and services

EN26 Initiatives to mitigate environmental impacts of products and services ● EN26

EN27Percentage of products sold and their packaging materials that arereclaimed by category ● Not relevant for Fortum.

Compliance

EN28 Compliance with environmental law and regulations ● EN28

Possible disputes have not been reported.

Transport

EN29 Significant environmental impacts of transporting ● EN29

Measures to mitigate environmental impacts have not beenreported.

Overall

EN30 Total environmental protection expenditures and investments by type ● EN30

SOCIAL RESPONSIBILITY: LABOR PRACTICES AND DECENT WORK

Employment

LA1Total workforce by employment type, employment contract, and region,broken down by gender ● LA1

Social summary

LA2 Employee turnover ● LA2

Social summary

LA3 Benefits provided to permanent employees ● LA3

Financial summary

EC3

LA15 Return to work and retention rates after parental leave, by gender ●Labor/management relations

LA4 Percentage of employees covered by collective bargaining agreements ● LA4

Fortum does not monitor the unionisation of its employees.

LA5 Minimum notice period(s) regarding significant operational changes ● LA5

Occupational health and safety

LA6Percentage of total workforce represented in formal health and safetycommittees ● LA6

LA7Rates of injury, occupational diseases, lost days, and absenteeism, andnumber of work-related fatalities by region and by gender ● LA7

Rates of injury are not reported by country, occupationaldiseases reported only in Finland.

Social summary

LA8Education and counseling to assist workforce members regarding seriousdiseases ● LA8

LA9 Health and safety topics covered in formal agreements with trade unions ●Training and education

LA10Average hours of training per year per employee by gender, and byemployee category ●

LA11 Programs for skills management and lifelong learning ● LA11



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http://annualreport2013.fortum.com/en/sustainability/gri-section/environmental-performance-indicators/overall/


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http://annualreport2013.fortum.com/en/annual-review/2013-in-figures/financial-summary/









Programs for managing career endings not reported.

LA12 Performance and career development reviews, by gender ● LA12

Diversity and equal opportunity

LA13Composition and diveristy of governance bodies and employeecategories ● LA13

Minority groups are not reported.

Social summary

Governance/Board of Directors

Equal remuneration for women and men

LA14 Ratio of basic salary and remuneration of women to men ● LA14

Reported excluding Russia.

SOCIAL RESPONSIBILITY: HUMAN RIGHTS

Investment and procurement practices

HR1 Human rights screening in investment decisions ● HR1

Total number and percentage are not reported.

HR2 Suppliers and contractors that have undergone human rights screening ● HR2

Percentage is not reported.

HR3Employee training on policies and procedures concerning aspects ofhuman rights ● HR3

Training hours are not reported.

Non-discrimination

HR4 Total number of incidents of discrimination and corrective actions taken ● HR4

Freedom of association and collective bargaining

HR5Operations in which the right to exercise freedom of association andcollective bargaining may be violated ● HR5

LA4

Child labor

HR6Operations identified as having significant risk for incidents of child labor,and measures taken to contribute to the effective abolition of child labor ● HR6

HR

HR7

Operations identified as having significant risk for incidents of forced orcompulsory labor, and measures to contribute to the elimination of allforms of forced or compulsory labor

●HR7

Security practices

HR8 Percentage of security personnel trained in aspects of human rights ●Indigenous rights

HR9Total number of incidents of violations involving rights of indigenouspeople and actions taken ●

Assessment

HR10Operations that have been subject to human rights reviews and/orimpact assessments ●

Remediation

HR11Number of grievances related to human rights filed, addressed andresolved through formal grievance mechanisms ●

EU16Policies and requirements regarding health and safety of employees andemployees of contractors and subcontractors ● EU16



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EU17Days worked by contractors and subcontractor employees involved inconstruction, operation and maintenance activities ● LA1

EU18Percentage of contractor and subcontractor employees that haveundergone relevant health and safety training ● EU18


SOCIAL RESPONSIBILITY: SOCIETY

Local communities

SO1Programmes that assess and manage the impacts of operations oncommunities ● SO1


SO9Operations with significant potential or actual negative impacts on localcommunities. ●

SO10Prevention and mitigation measures implemented in operations withsignificant potential or actual negative impacts on local communities ●

Corruption

SO2Percentage and total number of business units analysed for risks relatedto corruption ● SO2

SO3Percentage of employees trained in anti-corruption policies andprocedures ● SO3


SO4 Actions taken in response to incidents of corruption ● SO4

Public policy

SO5Public policy positions and participation in public policy development andlobbying. ● SO5

Our stakeholders

Our stakeholders/Authorities and energy industry organisations

SO6Total value of financial and in-kind contributions to political parties,politicians, and related institutions ● SO6

EC8

Anti-competitive behavior

SO7Legal actions for anti-competitive behavior, anti-trust, and monopolypractices ● SO7

Compliance

SO8Monetary value of significant fines and total number of non-monetarysanctions for non-compliance with laws and regulations. ● SO8

EU19Stakeholder participation in the decison making process related toenergy planning and infrastructure development ● EU19

Projects are not reported.

EU21Contingency planning measures, disaster/emergency management planand training programs, and recovery/restoration plans ● EU21

Specific projects/models are not reported on a local level.

SOCIAL RESPONSIBILITY: PRODUCT RESPONSIBILITY

Customer health and safety

PR1 Assessment of health and safety impacts of products ●

PR2Non-compliance with regulations concerning health and safety impactsof products ●



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Product and service labelling

PR3 Product information required by procedures ● PR3


PR4Non-compliance with regulations concerning product information andlabelling ●

PR5 Customer satisfaction ● PR5

Our Stakeholders/Customers

Marketing communications

PR6Adherence to marketing communications laws, standards and voluntarycodes ●

PR7Non-compliance with marketing communications regulations andvoluntary codes ● PR7

Customer privacy

PR8Total number of substantiated complaints regarding breaches ofcustomer privacy and losses of customer data. ●

Compliance

PR9Monetary value of significant fines for non-compliance with laws andregulations concerning the provision and use of products and services ● PR9

EU28 Power outage frequency ● EU28

EU29 Average power outage duration ● EU29



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Economic performance indicatorsEconomic performance indicators

Economic performanceEconomic performanceEC1 Direct economic valueEC1 Direct economic valuegenerated and distributedgenerated and distributed

Fortum analyses the economic impacts andproduced prosperity from its operations todifferent stakeholders in its operatingcountries and market areas. These includeshareholders and investors, customers,

employees, suppliers of services and goods,and the public sector. In terms of suppliers,Fortum analyses its impact also globally,paying special attention to risk countries.

In 2013, the difference between added valuegenerated and distributed to stakeholderswas EUR 1,136 million (2012: 746) for thedevelopment of own operations.


• Generating value for stakeholders• Fortum and taxation

Monetary flows by stakeholder group in 2011-2013

EUR million 2013 2012 2011

Generation of added value

Income from customers

Income from customers on the basis ofproducts and services sold, financialincome and income from divestment ofbusiness activities or plants 6,539 6,398 7,192

Purchases from suppliersCash payments to suppliers of rawmaterials, goods and services -3,067 -3,002 -3,272

Fortum produced added value 3,472 3,396 3,920

Distribution of added value

Employees compensationWages, salaries, remunerations and otherindirect employee costs -529 -5431) -529

Funders compensationDividends, interest and financial expensespaid to investors -1,216 -1,514 -1,431

Public sectorIncome and production taxes paid, supportfor society and donations -591 -593 -728

Distributed to stakeholders -2,336 -2,650 -2,688

Retained in business 1,136 746 1,232

1) Comparative period information for 2012 has been restated due to the accounting change for pensions.



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Breakdown of Fortum's added value by operating country in 2011-2013

Capital expenditure Employee costs Taxes1) Total

EUR million 2013 2012 2011 2013 20122) 2011 2013 2012 2011 2013 2012 2011

Finland 266 338 239 208 221 209 153 137 250 627 696 698

Sweden 497 492 392 177 181 181 325 367 440 999 1,040 1,013

Russia 435 568 670 88 83 80 19 19 15 542 670 765

Estonia 16 10 12 5 5 7 1 1 0 22 16 19

Poland 10 19 18 15 18 21 7 10 8 32 47 47

Norway 13 36 19 15 16 14 2 2 1 30 54 34

Other countries 47 95 58 21 19 17 81 49 7 149 163 82

Total 1,284 1,558 1,408 529 543 529 588 585 721 2,401 2,686 2,658

1) Includes paid income taxes, production taxes and property taxes

2) Comparative period information for 2012 has been restated due to the accounting change for pensions.

Investments are not recognised in thecalculation of distributed added value in

accordance with GRI, but Fortum hasincluded investments in its own assessment

of economic impacts, as their annual volumeand impact on the society is significant.

Capital expenditure1) by country of operation in 2012-2013

Finland Sweden Estonia Poland NorwayOther

countries Total

EUR million 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Power

Hydropower 17 12 91 86 - - - - - - - - 108 98

Nuclearpower 60 53 - - - - - - - - - - 60 53

Fossil-basedelectricity 2 4 - - - - - - - - - - 2 4

Renewable-basedelectricity 4 1 3 27 - - - - - - - - 7 28

Other 1 1 - - - - - - - - 0 6 1 7

Total Power 84 71 94 113 - - - - - - 0 6 178 190

Heat

Fossil-basedheat 7 9 6 12 - - 2 3 - - 1 - 16 24

Fossil-basedelectricity - - - - - - 2 1 - - - - 2 1

Renewable heat,of which 17 66 218 150 - - - - - - 39 87 274 303

Waste 0 0 105 106 - - - - - - 14 47 119 153

Biofuels 17 66 111 41 - - - - - - 25 40 153 147

Other - - 2 3 - - - - - - - - 2 3

District heatnetwork 14 12 42 33 16 10 6 15 4 21 4 0 86 91

Other 5 12 14 32 - 0 0 - - - 0 1 19 45

Total Heat 43 99 280 227 16 10 10 19 4 21 44 88 397 464



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Distribution 128 158 123 151 - 0 - - 9 15 - - 260 324

Electricity Sales 1 - - 0 - - - - - - - 1 1 1

Other 10 10 0 1 - - 0 - - - 3 - 13 11

Total, excludingRussia Division 266 338 497 492 16 10 10 19 13 36 47 95 849 990

Russia

Fossil-basedelectricity 387 535

Fossil-based heat 48 32

Other 0 1

Total Russia 435 568

Total, includingRussia Division 1,284 1,558

1) Includes capital expenditure to both intangible assets and property, plant and equipment.

Maintenance investments during 2013 in property, plant and equipment were EUR 239 million (2012: 247). Investments due to requirementsof legislation were EUR 187 million (2012: 223). Investments increasing productivity were EUR 385 million (2012: 422) and growthinvestments were EUR 473 million (2012: 666).

EC2 Financial implications andEC2 Financial implications andother risks and opportunitiesother risks and opportunitiesfor the organisation's activitiesfor the organisation's activitiesdue to climate changedue to climate change

Climate change poses both financial,regulatory and physical risks as wellas opportunities for Fortum. As energyproduction and use is the largest source ofgreenhouse gases, the energy sector has acentral role in building a low-carbon future.The energy industry has established visionsand roadmaps of the future energy systemand is prepared to invest in new climate-benign production capacity, provided that therelated policy framework and preconditionsof society are in place.

The primary impact of climate regulation forFortum is the price of carbon dioxide in theEU's emissions trading and the cost arisingfrom it. This also determines the financialvalue for the reduction of emissions. Theprice of CO2 increases the production cost offossil-based energy, but it also raises theprices of energy products. The best way toreduce the risk related to the price of carbondioxide is to increase CO2-free and low-carbon production capacity.

In 2013, about 88% of Fortum's electricityproduction in the EU was CO2-free. In 2013,Fortum had a total of 83 (2012: 79) plants insix member states within the EU's emissionstrading scheme. About 98% of the CO2

emissions in the EU area were included in theemissions trading system. In 2013, Fortumwas granted 3.0 million tonnes in freeemissions allowances. The company'semissions in the EU emissions tradingscheme were 6.0 million tonnes. Thus, interms of emissions allowances, Fortumshowed a deficit.

In the third, ongoing ETS period, 2013-2020,the volume of Fortum's free emissionsallowances will decrease significantly,because electricity production has topurchase all allowances from the market orauctions. Only in Poland and the Balticcountries, Fortum's CHP plants will receivefree allowances also for electricity productionon the basis of the derogation rules of theEmissions Trading Directive.

In Russia, Fortum's CO2 emissions aregrowing in upcoming years as a result of theincreasing energy production capacity. InRussia, carbon dioxide emissions do not haveeconomic value, so far. During the Kyotoperiod 2008-2012, the so-called JointImplementation (JI) mechanism could beutilised. Fortum implemented several projectsin this framework.

Fortum is participating in two internationalclimate funds, the Prototype Carbon Fund(PCF) and the Testing Ground Facility (TGF).In 2013, Fortum received a total 325,000emission reduction units from these funds. Ofthe emission reduction units received,274,000 were CER units and 51,000 were

ERU units. Fortum's emission reduction unitsreceived so far total 710,000 and weestimate that we will still receive about300,000 units during the funds' operatingperiod.

Fortum is exposed to physical risks of climatechange, including changes in weatherpatterns that may change energy demandand supply from, e.g., hydropower plants.More frequent and intensive storms mayimpact the operation and maintenance of thedistribution network. Higher precipitation mayaffect hydropower production, dam safetyand bioenergy supply. In addition to climatechange mitigation, Fortum is also takingmeasures to adapt its operations to climatechange and to take impacts intoconsideration in e.g. production planning andin evaluating growth projects.

Concern about climate change is expected toresult in an increasing demand for low-carbonand energy-efficient energy products andsolutions. Fortum's know-how in CO2-freehydro and nuclear power and in energy-efficient CHP as well as research anddevelopment in the future energy system andtechnologies, like wave and solar energy, canprove to be a competitive advantage. Fortumis investing in CO2-free production in Europeand sees business opportunities in providingclimate-benign energy solutions forsustainable urban living and the electrificationof transport.



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• Risks and opportunities of climatechange for Fortum

EC3 Coverage of theEC3 Coverage of theorganisation's defined benefitorganisation's defined benefitplan obligationsplan obligations

Fortum's pension arrangements conform tothe local regulations and practices in each

country where Fortum companies operate;these are discussed in section 32 Pensionobligations of the notes of the Financials2013.

Market presenceMarket presenceEC6 Policy, practices andEC6 Policy, practices andspending on local suppliersspending on local suppliers

Fortum buys fuels, goods and services frominternational and local suppliers. A significantpart of Fortum's procurements are related to

investments. Fortum classifies purchases aslocal for those countries in which Fortum hasoperations. The most significant purchases,excluding investments, are from the Nordiccountries (EUR 1,685 million) and Russia(EUR 813 million).

Fuels accounted for about EUR 1,085 millionof the total annual purchasing volume. Fossilfuels accounted for about EUR 864 million,biofuels about EUR 155 million and nuclearfuel about EUR 66 million.

Purchases1) excluding investments in 2011-2013

EUR million 2013 2012 2011

Nordic countries 1,685 1,612 1,903

Russia 813 769 692

Poland 143 161 148

Estonia 29 36 64

Other countries 103 99 44

Total 2,773 2,677 2,851

1) Includes purchases of fuel, power and other materials and services.

In 2013, Fortum's investments, excludingacquisitions, were EUR 1,284 million (2012:1,558), of which EUR 449 million (2012: 482)was for CO2-free production. Investmentstotalled 21% of sales (2012: 25%). Fortum'sinvestments have a significant local impact,as they create business and job opportunitiesfor local suppliers and develop the localinfrastructure. The biggest investments weremade in Russia, EUR 435 million (2012: 568),and in Sweden, EUR 497 million (2012: 492).Investments in renewable energy forms wereEUR 389 million (2012: 429).

EC7 Local hiring proceduresEC7 Local hiring proceduresand proportions of local seniorand proportions of local seniormanagementmanagement

Based on Fortum's definition, seniormanagement consists of persons who aremembers of corporate function-level ordivision-level management teams. Fortum'sbusiness is global and covers severalcountries. Therefore, also function- anddivision-level management teams consist ofseveral nationalities. The Russia Division'smanagement team is an exeption, with one

German member, and the rest beingRussians.

Senior management, according to Fortum'sdefinition consists of 72 persons. Of these,61% are Finns, 21% Swedes and 14%Russians. Senior Management also includesone Norwegian, one German and one Polishperson. In local hiring, Fortum usesadvertised recruitment and direct searchmethods.



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Indirect impactsIndirect impactsEC8 InfrastructureEC8 Infrastructureinvestments and servicesinvestments and servicesprovided primarily for publicprovided primarily for publicbenefitbenefit

Fortum supports organisations andcommunities working for the common goodin the countries where it operates. The goal isfor sponsorships to be mutually beneficial.Collaboration in research and developmentprojects with Nordic universities in particularis significant. A solar economy professorshipwas established at Lappeenranta Universityof Technology in Finland 2013. Fortum issupporting the financing with a 75% share fora five-year period.

In 2013, Fortum's support for public benefittotalled about EUR 3.2 million (2012: 5.8), ofwhich the share of grants awarded by theFortum Foundation was EUR 432,000 (2012:780,000). The purpose of the Fortum

Foundation is to support research, educationand development in natural, technical andeconomical sciences within the energyindustry. In 2013, Fortum Foundation grantedscholarships to 38 students.

Fortum's investments in infrastructure –especially in the district heating network inRussia – provide public benefits. However, asFortum's investments in district heatingnetworks have also economic andenvironmental benefits, they are not regardedas investments for public benefit referred toin the GRI.

The amount donated to non-profit targets isdecided by Fortum's Board of Directors.Donations are not awarded for any kind ofpolitical activities, religious organisations,authorities, municipalities or localadministrations, nor are they ever part ofbusiness agreements.

EC9 Significant indirectEC9 Significant indirecteconomic impacts, includingeconomic impacts, includingthe extent of impactsthe extent of impacts

Fortum supports social development andwell-being by, e.g., increasing localemployment and paying taxes, salaries andsocial security costs. The tax benefits Fortumproduces for society include income taxesand taxes related to the business operations– such as property, waste and fuel taxes.Fortum also has pass-through taxes, such asthe value added tax, and withholding taxes,which Fortum is obligated to collect andreport on behalf of the government.

The dividend income on the shares of theFinnish State has an impact on maintainingsocial infrastructure.

Availability and reliabilityAvailability and reliabilityEU10 Planned capacity againstEU10 Planned capacity againstprojected electricity demandprojected electricity demandover the long term, by energyover the long term, by energysource and regulatory regimesource and regulatory regime

Fortum is currently investing substantially innew energy production capacity both in

Russia and Europe. In Russia, Fortum iscommitted to a EUR 2.5 billion investmentprogramme that will increase electricitycapacity by 2,300 MW and heat capacity by662 MW. The last units in the programme arescheduled for commissioning in 2015. TheRussian investment programme is basedmainly on natural gas, whereas the

investments in Europe (~800 MW electricityand 280 MW heat, under construction) targetmainly CO2-free production.

System efficiencySystem efficiencyEU11 Average generationEU11 Average generationefficiency of thermal plantsefficiency of thermal plants

Fortum has a Group-level target (>70%) foroverall efficiency of fuel-use as a 5-yearaverage. Efficiency in 2013 was 61.4% (2012:64.2%) and the 5-year rolling average 65.6%(2012: 66.9%). Fortum's target setting isbased on the present production portfolio,planned new capacity both in Europe andRussia, as well as planned actions forincreased efficiency and flexible fuel use.


• Combined heat and power production

EU12 Transmission andEU12 Transmission anddistribution losses as adistribution losses as apercentage of total energypercentage of total energy

Fortum's power transmission and distributionlosses totalled 1.4 TWh (2012: 1.4 TWh). This

corresponds to 3.2% (2012: 3.3%) of the totalvolume of power transmission anddistribution. Guarantees of origin (CO2-freeelectricity) were acquired for all the electricitypurchased for network losses.


• Power distribution• Heat distribution



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Environmental performance indicatorsEnvironmental performance indicators

MaterialsMaterialsEN1 Materials used by weightEN1 Materials used by weightor volumeor volume

Fuel useFuel use

Fortum's materials and energy use mainlyconsists of fuels. Fortum produces electricity

and heat from a diverse range of energysources: in Europe mostly from renewableand low-carbon energy sources and in Russiafrom fossil fuels. In its operations, Fortumaims to use natural resources efficiently andsparingly.

Energy content of the fuels is described inEN3.

Natural gas and 58% (2012: 57%) of solid andliquid fuels were of non-renewable origin.

Fuel consumption in 2011-2013

2013 2012 2011

Natural gas, million m3 7,844 7,844 7,909

Coal, 1,000 t 3,092 2,536 3,587

Biomass and biofuels, 1,000 t 2,096 1,790 1,439

Waste-derived fuel, 1,000 t 987 806 754

Peat, 1,000 t 227 269 254

Fuel oil, 1,000 t 36 49 100

Nuclear fuel, t 20 21 23

Other fuels, 1,000 t 5 4 54

Fuel consumption by country in 2013

Russia Finland Sweden PolandOther

countries Total

Natural gas, million m3 7,324 160 17 5 338 7,844

Coal, 1,000 t 1,152 1,290 249 402 3,092

Biomass and biofuels, 1,000 t 706 668 146 576 2,096

Waste-derived fuel, 1,000 t 75 765 146 987

Peat, 1,000 t 142 85 227

Fuel oil, 1,000 t 1 16 18 1 36

Nuclear fuel, t 20 20

Other fuels, 1,000 t 2 3 5

Other materials useOther materials use

In addition to fuels, other materials used on alarge-scale in energy production includechemicals for flue-gas cleaning, e.g.,limestone, ammonia and urea.



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Use of chemicals in 2011-2013

tonnes 2013 2012 2011

Chemicals used for air pollution control 68,000 58,000 69,000

Chemicals for water treatment 13,000 13,000 14,000

Other chemicals and additives 4,500 8,600 3,200

Lubricants 540 200 470

EN2 Recycled materials usedEN2 Recycled materials used

Fortum used 987,000 tonnes (2012:806,000) of waste-derived fuels in Sweden,Finland and Lithuania. About 16,400 tonnes(2012: 37,300) of the waste-derived fuelsused in Sweden originated from other

countries, including Norway, Great Britain andIreland (combustible municipal waste, EWC191210). Fortum and the waste suppliercompanies hold the licences for wasteimport. Fortum is responsible for reporting itsannual imports of waste to the authorities.

Recycled input materials accounted for 15%(2012: 14%) of Fortum's fuel use volume(excluding natural gas) and 2.2% (2012: 1.8%)of the total energy content of fuels.

EnergyEnergyEN3 Direct energyEN3 Direct energyconsumption by primaryconsumption by primaryenergy sourceenergy source

Fortum's direct primary energy consumptionin own energy production in 2013 was

140 terawatt-hours (TWh) (2012: 143). Themost significant primary energy sources werenatural gas, uranium and coal. Non-renewable energy sources accounted for 84%(2012: 82%) of the direct consumption ofprimary energy.

Renewable energy sources accounted for29% (2012: 36%) of Fortum's powergeneration and 21% (2012: 20%) of its heatproduction.

Direct energy consumption by energy source in 2011-2013

TWh 2013 2012 2011

Natural gas 73.6 76.0 75.6

Nuclear fuel 23.1 24.7 24.3

Hydropower 14.4 18.3 17.1

Coal 17.9 14.2 21.8

Biomass and biofuels 6.8 6.1 6.2

Waste-derived fuel 2.8 2.3 2.5

Peat 0.6 0.7 1.2

Fuel oil 0.4 0.6 1.3

Other fuels 0.1 0.1 0.2

Total 139.7 143.0 150.2

Direct energy consumption by country in 2011-2013

TWh 2013 2012 2011

Russia 72.9 74.0 69.6

Finland 39.8 38.0 49.2

Sweden 18.2 22.1 21.5

Poland 3.0 3.7 3.6

Great Britain 3.4 3.3 4.1

Other countries 2.4 1.9 2.2

Total 139.7 143.0 150.2



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As an exception to the generally appliedreporting boundary in this report, the figures

shown below for Fortum's power and heatproduction by energy source in 2011-2013

include also production from sharedcompanies.

Fortum's power production by energy source in 2011-2013

TWh 2013 2012 2011

Hydropower 17.9 25.2 21.0

Nuclear power 23.7 23.4 24.9

Natural gas 20.0 19.4 18.5

Coal 4.6 3.3 5.8


Peat 0.1 0.1 0.2

Other 0.8 0.3 0.6

Total 68.7 73.1 72.7

Fortum's heat production by energy source in 2011-2013

TWh 2013 2012 2011

Natural gas 26.1 27.0 28.6

Coal 5.7 5.3 7.2


Heat pumps, electricity 3.1 3.4 2.7

Waste-derived fuel 2.2 1.9 1.0

Oil 0.2 0.4 1.0

Peat 0.3 0.4 0.6

Others 0.0 0.0 1.0

Total 42.8 43.3 47.3

EN4 Indirect energyEN4 Indirect energyconsumptionconsumption

Fortum's indirect energy consumption in2013 was 5.1 TWh (2012: 4.6). The largest

part of this is electricity and heat acquiredfrom external sources for operating powerplants and for compensating for networklosses in power distribution.

Indirect energy use in 2011-2013

GWh 2013 2012 2011

External heat procurement 2,384 2,196 2,366

Electricity transmission and distribution losses 1,374 1,432 1,402

Other external electricity procurement 1,340 962 969

Total 5,098 4,590 4,737

A major part of the external heat originatedfrom the Enocell pulp mill in Finland and wasproduced from biomass. Electricity is boughtfrom various suppliers and the exact primaryenergy sources are not known. Guarantees oforigin (CO2-free electricity) were acquired forall the electricity for network losses.

By assuming 75% energy efficiency for powerproduction and 85% energy efficiency for heatproduction, indirect primary energyconsumption amounted to 6.4 TWh (2012:5.8). The share of renewable energy sources

in indirect primary energy consumption wasover 50%.

EN5 Energy saved due toEN5 Energy saved due toconservation and efficiencyconservation and efficiencyimprovementsimprovements

In combustion-based energy production,Fortum aims to utilise the fuel as efficientlyas possible. Fortum's efficiency of fuel usewas 61% (2012: 64%), while the

corresponding target is 70% as a five-yearaverage.

Energy-efficient CHP production, in which upto 90% of the energy content of the fuel canbe utilised, is Fortum's most important tool toincrease the efficiency of fuel use. CHPplants accounted for 33% (2012: 32%) ofFortum's total electricity production and 83%(2012: 79%) of heat production.

The implementation of the energy analyses,energy-efficiency training and technology



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measures related to Fortum Power and HeatOy's 2008–2016 energy-efficiencyprogramme continued in 2013. The goal ofthe programme is to improve energyefficiency in power plants in Sweden, Finlandand Great Britain by 600 GWh per year. Themain focus is on improving power plantefficiency and on increasing the capacity ofCO2-free production. About 30 projects willbe implemented every year. In 2013, theefficiency improvements resulted in energysavings of about 50 GWh (2012: 95).

During 2013, refurbishment was completedat Pyhäkoski power plant in Finland and atEdsforsen and Hansjö power plants inSweden. In Sweden, refurbishment continuedat Gammelänge power plant and newprojects started at Noppikoski, Väsa andSkedvi power plants.

At Meri-Pori power plant, burners werereplaced and soot blowers were refurbishedto be more energy efficient. A heat pumpproject was launched at Suomenoja. The heatpumps will be used to annually recover about300 GWh of thermal energy from thewastewater treated there. This thermalenergy, which would otherwise go into thesea, equals the annual consumption of about15,000 single family houses. The utilisation ofwaste heat to heat boiler air was started inJoensuu, and the oxygen control of heatingplants was improved in Espoo.

Fortum is participating in the Europeanelectricity sector's Energy Wisdom

programme and reports on its projects thatimprove energy efficiency and reducegreenhouse gases.

EN6 Initiatives to provideEN6 Initiatives to provideenergy efficient or renewableenergy efficient or renewableenergy-based products andenergy-based products andservicesservices

Fortum is contributing to a low-carbonsociety by offering energy products andservices that can help mitigate climatechange and improve energy efficiency also inother sectors of society. Fortum providescustomers with energy advice, offers energy-efficiency consulting and energy-savingproducts, like energy consumption meteringdevices (e.g. Kotinäyttö/Home Display),heating control systems and solar panels. Amore detailed description of environmentallybenign products is given in EN26.

EN7 Initiatives to reduceEN7 Initiatives to reduceindirect energy consumptionindirect energy consumptionand reductions achievedand reductions achieved

Own use of energy in a power plant can bereduced with technical modifications,systematic and preventive maintenance, andby training personnel in the optimal operationand monitoring of the plant's operationaleconomy.

Fortum has invested in automatic metermanagement in power distribution in Swedenand Finland in recent years. This improvesthe quality of loss data and creates newpossibilities for load management, which inturn reduces distribution losses.

Losses in power distribution can also bereduced by optimising network operations,increasing transmission capacity in lines withthe highest loads and replacing obsoletetransformers with new, more energy efficientones. The impact of an individual measure isoften minor and even the cumulative impactscan only be seen over the longer term.However, in the long term the network loadtends to grow, which makes quantification ofenergy efficiency improvements difficult.

Fortum's power distribution losseswere 1,374 GWh, which is a little less than inthe previous year (2012: 1,432). The lossesaccounted for 3.2% (2012: 3.3%) of totalpower distribution volume. The volume ofpower distribution decreased to 21.6 TWh(2012: 26.6) and the volume of regionalpower transmission to 16.3 TWh (2012:17.3).

The volume of electricity acquired fromexternal sources for operating powerplants, heat boilers and district heat networkswas 1,340 GWh (2012: 962). Increase isbased on more comprehensive reporting ofelectricity consumption of the district heatnetworks.

WaterWaterEN8 Total water withdrawal byEN8 Total water withdrawal bysourcesource

Fortum withdrew a total of 2,460 millioncubic metres (2012: 2,210) of water, ofwhich the majority, 2,245 million cubicmetres (2012: 2,017), was used as coolingwater in thermal power plants. Direct seawater cooling is applied at the condensingpower plants in Finland. When cooling waterflows through the condenser, its temperature

rises, but the volume of water remainsunchanged.

Fortum's power plants in Russia and Polanduse cooling towers where part of the water isevaporated into the atmosphere. In Russia,water is used also for pumping ash from coal-fired power plants into ash ponds.

In hydropower production, all the water runsthrough turbines, so the water volume andquality remain unchanged. Hydropower

production is not included in the abovementioned figures for water withdrawal.

In 2013, Fortum carried out a systematicsurvey on water use at all its power plants.Based on the survey, the water withdrawalvolumes in 2011 and 2012 wererecalculated, especially with regard to thecooling waters at our Russian power plants.Water withdrawal for heat pumps in Swedenis included as of 2012.



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Water withdrawal by source in 2011-2013

million m3 2013 2012 2011

Sea water 1,840 1,629 1,950

Fresh surface water 606 573 641

Tap water 8.4 8.1 8.6

Other source 5.3 0.2 0.2

Total 2,460 2,210 2,600

Water withdrawal by country in 2011-2013

million m3 2013 2012 2011

Finland 1,764 1,538 2,071

Russia 544 526 524

Sweden 148 143 1.2


Poland 0.9 1.0 0.8


Total 2,460 2,210 2,600

Water use in 2011-2013

million m3 2013 2012 2011

Cooling water 2,245 2,017 2,517

Sea water to heat pumps 138 130 -

Process and auxiliary water 76 64 83

Recycled water 12.5 9.5 36

EN9 Water sourcesEN9 Water sourcessignificantly affected bysignificantly affected bywithdrawal of waterwithdrawal of water

Fortum withdraws sea, lake or river water.The withdrawn volume is small compared tothe watercourse volume and flow, so none ofthese water sources is significantly affected.Water scarcity is not an issue in the operationareas of Fortum's power plants.

Poland is Fortum's only area of operationdefined as water-stressed in the Global Water

Tool of the World Business Council forSustainable Development. The criterion for

water stress in the tool is 1700 m3 of annualrenewable water supply per person.

Fortum's power and heat plants in Poland aremostly small and use mainly municipal tapwater. The aggregated water consumption isabout one million cubic metres annually. Norisk of shortage in the municipal watersupplies has been identified in the areaswhere Fortum operates. All of our operationsin water-stressed areas have ISO 14001environmental certification.

EN10 Percentage and totalEN10 Percentage and totalvolume of water recycled andvolume of water recycled andreusedreused

The volume of water recycled was 12.5(2012: 9.5) million cubic metres, which was16% (2012: 15%) of the process waterintake. The majority of the recycled wateroriginated from the ash and wastewaterponds at our Russian power plants.

BiodiversityBiodiversityEN11 Location and size of landEN11 Location and size of landholdings in areas of highholdings in areas of highbiodiversitybiodiversity

Fortum has land holdings with energyproduction facilities in protected areas. InFinland, Fortum owns 52 hectares of land in4 protected areas near Fortum's power

plants. Some 15 hectares of protected areasare on Fortum's land with electricitydistribution facilities. The areas consist ofnatural conservation programme areas,nature and wilderness conservation areas,and Natura 2000 areas. In Sweden,971 hectares in 12 protected areas arelocated within areas owned by Fortum nearpower plants. These areas consist of Natura

2000 areas and nature conservation areas. Inaddition Fortum has several land holdings inprotected areas without energy production ordistribution facilities. A more comprehensivelist of Fortum's land holdings nearconservation areas is available here.



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EN12 Description of significantEN12 Description of significantimpacts of activities, products,impacts of activities, products,and services on biodiversityand services on biodiversity

Fortum's impacts on biodiversity are above allrelated to hydropower production that Fortumhas in the Nordic countries. Consequently theconsideration of impacts and actions isgeographically restricted mainly to the Nordiccountries. Impacts are often local and mainlylinked to the use of land and water areas. Insome cases, the impacts of hydropowerproduction are related to dams, whichprevent fish migration and reduce the numberof rapids as habitats.

In addition, Fortum's electricity distributionbusiness and fuel procurement may have anegative impact in areas of high biodiversity.Fortum's discharges into water systems,particularly cooling and runoff waters, haveonly a minor impact on water systems andthe related habitats and aquatic biodiversity.

Utilising fuels (for example, peat andbiomass) in energy production can affectbiodiversity. Biodiversity aspects are alsotaken into consideration in other fuelpurchasing. Fortum's only own fuelproduction site is the bio-oil plantcommissioned in autumn 2013 in Joensuu,Finland. Bio-oil is produced from forest chipsand other wood biomass, such as forestindustry by-products, sourced locally from theJoensuu region.

EN13 Habitats protected orEN13 Habitats protected orrestoredrestored

Fortum took part in several habitatrestorations in 2013. In Finland, grayling andtrout habitats were restored in threelocations on the Vuoksi river. In the Utosjokiriver, a tributary of the Oulujoki river, 16areas were restored by placing rocks inrapids, adding gravel for spawning andwatering small dry tributaries.

Restoration of Kiantajärvi lake's flood-meadows in Finland was implemented bycreating nesting areas for birds and fishhabitats. Almost 100 different bird specieshave been spotted in the flood-meadowsduring the breeding period.

In Sweden the freshwater pearl mussel wasreintroduced to the Bulsjö river. The resultand the survival of the mussels will befollowed up during 2014. Fortum alsofinanced the restoration of a small creek,Valvtjärnsbäcken, a tributary to the Ljusnan

river. The restoration will increase thefreshwater pearl mussel's chances forreproduction.

At the Untra power plant on the riverDalälven, environmental management of theforests in an area of 260 hectares in Fortum'sreal estate has continued during the year.Various measures have been implemented toprotect the very rich biodiversity in the forest,meadows and water. Continuous use ofenvironmentally benign forest managementpractices will be monitored with ecologicalsurveys.

EN14 Managing impacts onEN14 Managing impacts onbiodiversitybiodiversity

Fortum's Biodiversity guidelines set theprinciples for taking biodiversity intoconsideration and for managing the impactsof the company's operations on biodiversity.Fortum recognises that biodiversity is anessential element of sustainable developmenton a global and local scale.

In January 2014 Fortum joined FinnishBusiness & Society's (FiBS) Corporations andbiodiversity programme, which aims toincrease companies' awareness about thesignificance of biodiversity in business, helpcompanies understand and achieve the goalsset for the protection of natural resources,and support companies' own developmentand improvement in environmentalresponsibility. Fortum is also participating inthe Master Class training within theframework of the programme.

The main impacts on biodiversity areassessed in the pre-feasibility phase of anyproject, e.g., in hydropower projects, beforethe investment decision. If an investmentproject impacts a specific species, it mayresult in modification to the plant design or inthe initiation of measures to preserve orrestore the ecological value. Biodiversityimpacts are assessed in depth as part of theEIA (Environmental Impact Assessment)process.

Fortum compensates for the environmentalimpacts caused by its hydro-powerproduction by stocking several fish species.General biodiversity and environmental actionplans for Finnish rivers with Fortum'shydropower production were completed in2013. In Sweden, the work with biodiversityand environmental action plans is ongoing.An inventory of possible environmentalmeasures in six Swedish rivers where Fortum

is one of the hydro-power operators wascarried out during the year.

In addition to the legal obligations, Fortumreduces the environmental and biodiversityimpacts of hydropower production withvoluntary environmental projects. Part of thefunds used to the projects originate from thesales of Bra Miljöval -labeled (GoodEnvironmental Choice) electricity in Sweden.In 2013, one project in Finland was financedwith funding from the eco-labelled electricity.In 2013, Fortum spent about EUR 710,000on various voluntary environmental projectsrelated to hydropower production. Allprojects are typically carried out incooperation with authorities, municipalitiesand research institutes.

In electricity network operations undergroundcabling protects biodiversity and reduces theimpact on the landscape and birds. Measuresto prevent bird collisions and electric shocksinclude isolation of the live parts of thenetwork and mounting marker balls onoverhead lines and landing perches on poles.New power lines will be built on public areasand roadsides whenever possible.

In biomass and biofuel purchases, Fortumaims to increase the share of certified woodfuel. This kind of fuel originates fromsustainable energy sources in which, e.g.biodiversity is taken into consideration.During 2014, Fortum's goal is to startgathering data on the volume of certifiedwood-based biomass used as fuel in Finlandand Sweden.

EN15 Species with extinctionEN15 Species with extinctionrisk with habitats in areasrisk with habitats in areasaffected by operationsaffected by operations

Fortum has not conducted a comprehensivestudy on the presence of species withextinction risk in the vicinity of its operatingareas, but is continuously increasing theawareness of the endangered species in thevicinity of its power plants. The Saimaa ringedseal (Pusa hispida saimensis) is classified inFinland as an extremely endangered specieson the IUCN's red list. There have been a fewyears when Fortum has altered water flows inthe Vuoksi river to enhance the survival ofseal pups in their nests.

One important threatened species in Finnishand Swedish rivers is the freshwater pearlmussel. Fortum has implemented severalvoluntary projects related to restoration ofthe mussel habitats. Fortum also fundsKarlstad University's research project that is



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producing information about the freshwaterpearl mussel reproduction and thesignificance of the origin of the mussel's hostfish (trout) on the life-cycle of mussels.

A threatened sedge species (Carexheleonaste) grows close to the Laforsen

hydropower plant on the Ljusnan river inSweden. To protect this threatened species,annual maintenance work is carried out toensure good living conditions for this species.

In Sweden, Fortum is participating in an eel(Anguilla anguilla) conservation project and

research together with seven hydropowercompanies and the Swedish Agency forMarine and Water Management (Havs ochvattenmyndigheten).

Emissions, effluents and wasteEmissions, effluents and wasteEN16 Total direct and indirectEN16 Total direct and indirectgreenhouse gas emissionsgreenhouse gas emissions

Carbon dioxide (COCarbon dioxide (CO22))

Fortum emitted 21.4 million tonnes (2012:20.7) of CO2. Of this amount, 72% resultedfrom the Russian operations and 16% fromFinland. The increase in CO2 emissions wasmainly due to increased condensing powerproduction in Finland.

The specific CO2 emissions from total energyproduction rose to 196 g/kWh (2012: 177).The five-year average, including 2013,increased to 186 g/kWh (2012: 179).

The five-year average of the specific CO2

emissions from total energy production havebeen increasing during the last five years,although we are still below the target level of< 200 g/kWh. The increase in the specificemissions is a result of the increased share ofour Russian energy production based onnatural gas and coal. In addition, use of coalincreased in Finland and Sweden in 2013.

Fortum's total and specific CO2 emissionswill further increase in the future as aconsequence of the commissioning of the

new production capacity in Russia. Moreover,the share of coal in the fuel use of ourRussian power plants will evidently increasedue to relative prices and availability of fuels.

The specific CO2 emissions from powerproduction in the EU were 70 g/kWh (2012:42) and the five-year average, including 2013,was 66 g/kWh (2012: 60). Increase inemissions was mainly caused by increasedcoal condensing power production in Finland.

The specific CO2 emissions from Fortum'spower production are low compared to othermajor European power producers. Ourspecific emissions in 2012 were slightly over10% of the average specific emissions ofEuropean utilities, 350 g/kWh. Including ourRussian power production, our specificemissions were slightly below half of the levelof European utilities. European reference datafor 2013 is not yet available.

Total greenhouse gas emissionsTotal greenhouse gas emissions

Fortum reports greenhouse gases inaccordance with the principles of theGreenhouse Gas Protocol recommended bythe Global Reporting Initiative (GRI), whereemissions are categorised into scope 1,scope 2 and scope 3 emissions.

The reporting covers direct and indirect CO2,methane (CH4) and nitrous oxide (N2O)emissions. Indirect emissions are calculatedusing literature-based emission factors andassumptions on different parts of the fuelchains. Starting from 2013 the scope 3greenhouse gas emissions have beencalculated according to the requirements ofthe revised Corporate Value Chain (Scope 3)Accounting and Reporting standard.

About 79% (2012: 80%) of Fortum'sgreenhouse gas emissions were direct CO2

emissions (scope 1), which are generatedwhen burning fossil fuels to produceelectricity and heat. Additionally, the directemissions include the CO2 emissions ofcompany cars. The share of indirectemissions from electricity, heat and steampurchased from outside sources (scope 2)was about 1% of all greenhouse gasemissions.

Indirect emissions from the production andtransportation of fuels, from purchasedcapital goods, materials and services, fromthe use and processing of our products, fromemployee travel and from waste generated inour operations (scope 3) accounted for about20% (2012: 19%) of greenhouse gasemissions.

Total greenhouse gas emissions, 2011-2013

MtCO2-eq 2013 2012 2011

CO2 CH4 N2O Total CO2 CH4 N2O Total CO2 CH4 N2O Total

Scope 1 21.4 0.1 0.2 21.7 20.7 0.1 0.2 21.0 23.5 ~ 0 0.2 23.7

Scope 2 0.3 ~ 0 ~ 0 0.3 0.1 ~ 0 ~ 0 0.1 0.2 ~ 0 ~ 0 0.2

Scope 3 5.51) 5.51) 1.9 2.9 ~ 0 4.8 2.2 3.3 ~ 0 5.5

Total 27.2 0.1 0.2 27.5 22.8 3.0 0.2 26.0 25.9 3.3 0.2 29.4

1) In 2013 scope 3 emissions reported only as CO2-eq, not gas by gas.



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EN17 Other relevant indirectEN17 Other relevant indirectgreenhouse gas emissionsgreenhouse gas emissions

The refrigerants used at Fortum's heat pumpfacilities are strong greenhouse gases.Refrigerant leaks into air amounted to 5.8tonnes (2012: 3.7), which is equivalentto 7,600 tonnes (2012: 5,100) of CO2

emissions. The figures for 2012 have beenrestated based on corrected emissioninformation.

SF6 is used as isolation gas in switchgears ata number of substations located in urbanareas. SF6 is a strong greenhouse gas, butthe gas volume is low and the gas is wellconfined in the equipment. In 2013,about 43 kg (2012: 24) of SF6 was leakedinto the atmosphere from Fortum'sinstallations. This is equal to 980 tonnes(2012: 540) of CO2 emissions.

EN18 Initiatives to reduceEN18 Initiatives to reducegreenhouse gas emissions andgreenhouse gas emissions andreductions achievedreductions achieved

New CONew CO22-free and low-carbon-free and low-carboncapacitycapacity

One of Fortum's most important measures incurbing climate change are to increase CO2-free or low-carbon energy production and toimprove energy efficiency.

In line with its strategy, Fortum is focusing onCO2-free hydro and nuclear power and onenergy-efficient combined heat and power(CHP) production. Emissions trading is alsoan important climate action at Fortum.

During 2013, we inaugurated four newbiomass- and waste fuel-fired CHP plants inJärvenpää (Finland), Klaipeda (Lithuania),Jelgava (Latvia) and Brista (Sweden). The totalproduction capacity of these power plants is86 MW of electricity and 225 MW of heat.Currently we are building a 410-MW biomass-fired CHP plant in Stockholm in Sweden. Newcarbon-free and low-carbon capacity isdescribed in more detail in the section onCombined Heat and Power.

Refurbishment of our hydropower plantsproduced in total 12 MW of new capacity.Modernisation and power upgrades atnuclear power plants created 29 MW ofadditional carbon-free capacity.

Increasing the use of bioenergyIncreasing the use of bioenergy

Increasing the use of bioenergy was studiedat many power plants. At the Värtan powerplant, testing of the use of olive stones in thefuel mix continued and their share of the fueluse was 2%. At the Czestochowa CHP plant inPoland, biomass accounted for one third ofthe total fuel use.

In November 2013, Fortum inaugurated apyrolysis oil production plant at the Joensuupower plant. The plant will produce 50,000tonnes (corresponding to 200-220 GWh offuel energy) of bio-oil annually, and it is thefirst commercial-scale demonstration planton pyrolysis technology. Primary rawmaterials will be sawdust and forest residues.

Pyrolysis oil will replace the use of heavy fueloil in heat-only boilers and power plants. Theuse of 200 GWh of pyrolysis oil instead ofheavy fuel oil can reduce CO2 emissions byabout 60,000 tonnes. In 2013, Fortumreceived an environmental permit for the useof pyrolysis oil at the Vermo heat plant inEspoo.

The biomass-fuelled combined heat andpower (CHP) plant under construction inStockholm, Sweden, will use primarily forestbiomass, but can use a full range of othertypes of biomass as well. The share ofbioenergy in fuel use at the Värtan plant willincrease from today's 45% to as high as 70%upon completion of the plant in 2016. Theuse of fossil fuels will decrease accordingly.

In 2013, Fortum used 6,787 GWh ofbioenergy (solid biomass and liquidbiofuels), an 11% increase from the previousyear.


• Responsible fuel purchasing

Cutting emissions by improvingCutting emissions by improvingenergy efficiencyenergy efficiency

Fortum's activities in improving energyefficiency are described in EN5.

CCS as future abatement technologyCCS as future abatement technology

Carbon capture and storage (CCS) isexpected to have a key role in energy systemtransformation in the future. In 2013, Fortum

participated in CCS research programmes inFinland and the EU. Fortum was the mainfinancer of Cleen's CCS research and isrepresented in the Zero Emissions Platform.

However, the feasibility of CCS still facesmajor technical, economic, social andpolitical challenges. The current cost level ofCCS does not yet offer solid business casesfor successful investments. Fortum isfocusing on so-called second-generation CCSconcepts and technologies in its researchand considers them more promising than thetechnologies researched so far. Researchareas under development are e.g. use of bio-based fuels in district heating systems andrelated carbon capture and storage.

EN19 Emissions of ozone-EN19 Emissions of ozone-depleting substancesdepleting substances

A variety of refrigerants are used in Fortum'sheat pump facilities in Stockholm, Sweden,and in Espoo, Finland. Emissions ofrefrigerants into the atmosphere were 5.8(2012: 3.7) tonnes, which is 13 kg (2012:38) as CFC-11 equivalent. The figures for2012 have been restated based on correctedsource data.

EN20 NOEN20 NOXX, SO, SO22 and otherand othersignificant air emissionssignificant air emissions

In 2013, Fortum's thermal energy productionemitted 32,000 tonnes (2012: 29,400) ofNOX, 22,100 tonnes (2012: 19,800) of SO2

and 20,800 tonnes (2012: 16,000) of particleemissions. Due to technical and contractuallimitations the use of lower quality coalincreased at Russian power plants, whichcontributed especially to higher particleemissions. NOX and SO2 emissions were alsoaffected by increased condensing powerproduction in Finland.

About 69% (2012: 72%) of the flue-gasemissions (SO2 and NOX) and about 96%(2012: 96%) of the particle emissionsoriginated from the Russian operations. Themost significant source of particle emissions(13,500 tonnes in 2013) is the Argayashplant in Russia.

Fortum's mercury emissions into airwere 151 kg (2012: 130).



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SO2, NOx and particle emissions by country in 2013

thousand tonnes SO2 NOx Particles

Russia 14.0 23.1 20.0

Finland 4.1 4.9 0.2

Poland 3.7 1.6 0.6

Sweden 0.1 1.2 0.0



Fortum's SO2, NOX and particle emissions in 2011-2013

thousand tonnes 2013 2012 2011

SO2 22.1 19.8 24.9

NOX 32.0 29.4 36.0

Particles 20.8 16.0 16.6

EN21 Total water dischargeEN21 Total water discharge

Energy production's impacts on watersystems are mainly caused by the thermalload of cooling water discharges and theimpurities in wastewater effluents. Allwastewater is conducted directly to municipalsewage treatment plants or cleaned on-sitebefore being discharged into water systems.

In 2013, Fortum used a total of 2,245 million

m3 (2012: 2,017) of cooling water that wasmostly discharged back to water systems.The thermal load on the water systems

was 19 TWh (2012: 17). The biggest singlewater withdrawal in 2013 was at the Loviisanuclear power plant in Finland, where 1,390

million m3 of cooling water was withdrawnand discharged back to the sea. The thermalload into the sea was 16 TWh. Measurementsindicate that the cooling water has increasedthe temperature of surface water by 1–2 ºCwithin a distance of 1–2 kilometres from thedischarge point. During the year, about twotoness of oil was released into water systemswith the waste water discharges fromFortum's power plants. In addition, about onetonne of oil was released into the

environment in three separate oil leakincidents.

In recent years there have been frequentviolations of wastewater permits at Fortum'spower plants in Russia. Corrective actions toimprove performance continued in 2013; ananti-corrosive agent was changed and waterflows through the ash ponds were separatedand reduced at coal-fired power plants. Inaddition, a study was initiated on theinstallation of better oil separation systems.

Waste water emissions by recipient in 2011-2013

million m3 2013 2012 2011

Sea 9.9 9.1 3.9

Fresh water system 22.6 22.9 20.7

Municipal sewage 1.9 2.7 1.7

Other recipient 0.1 0.3 0.2

EN22 Total amount of waste byEN22 Total amount of waste bytype and disposal methodtype and disposal method

Fortum's thermal power plants use millions oftonnes of solid fuels annually. Ash fromincineration and gypsum from flue gasdesulphurisation account for the clearlybiggest share of the by-products and wastesfrom Fortum's energy production, over 90%on the average.

All energy production generates normalindustrial waste, which is either recycled ordisposed of at landfill sites. Part of waste isclassified as hazardous waste and is

trasported for treatment at licensedhazardous waste treatment plants. Thevolume of radioactive wastes generated innuclear power production is small, but specialsolutions are needed in their treatment anddisposal.

The total volume of by-products and wasteswas 1,025,000 tonnes (2012: 773,000). Theincrease was mainly caused by increasedvolumes of ashes and contaminated soil.

Ash and by-productsAsh and by-products

About 863,000 tonnes (2012: 720,000) ofash, 29,000 tonnes (2012: 9,200) of gypsumand 15,800 tonnes (2012: 10,100) of otherdesulphurisation product were generated in2013. About 37% of the ash was generated atRussian plants, 22% in Sweden and 21% inFinland.

In Europe, ash and gypsum fromdesulphurisation are utilised and recycled asefficiently as possible. In Russia, ash is storedin ponds because it does not have otherusages, except for building embankments forash ponds. In addition, the wet ash handling



87

makes utilisation more difficult. In 2013, theash recycling rate at Fortum was 48% (2012:51) and the gypsum recycling rate 99%(2012: 89%). The gypsum utilisation rate for2012 has been recalculated afterreclassifying desulphurisation product fromSuomenoja power plant as waste and not asgypsum.

Gypsum was utilised in the gypsum boardindustry. Fly ash was used in the construction

material industry, in road construction and inbackfilling mines. In Finland, the Joensuupower plant submitted a permit application inorder to construct a noise barrier around thepower plant area. The power plant's own ashwould be utilised in construction. The CE-marking for bottom ashes of Fortum powerplants was started in 2013.

Any remaining by-products that cannot beutilised are deposited in landfills or

intermediate storage. About 453,000 tonnes(2012: 351,000) of ash, 290 tonnes (2012:1000) of gypsum and 15,800 tonnes (2012:10,100) of other desulphurisation productwere deposited in landfill sites. Alldesulphurisation product from theSuomenoja power plant is disposed of aswaste, since it has no potential for utilisation.

Ash and gypsum handling in 2011-2013


Ash utilisation 410 369 429

Ash disposal 453 351 400

Gypsum utilisation 28.8 8.1 30.6

Gypsum disposal 0.3 1.0 0.1

Nuclear wasteNuclear waste

Fortum used 20 tonnes (2012: 23) ofuranium fuel at the Loviisa nuclear powerplant and produced a corresponding amountof high-level radioactive nuclear waste. In

addition, about 160 m3 (2012: 130) of low-and intermediate-level radioactive waste wasproduced. After measuring the radioactivity,some of the low-level waste was reclassifiedas non-radioactive and was released fromcontrol to be disposed of like otherconventional waste.

Low- and intermediate-level nuclear waste isdisposed of in the underground repository atthe power plant site in Loviisa. During

2013, 38 m3 (2012: 57) of low-levelmaintenance waste was disposed of in therepository. At the end of the 2013, 16% of thecurrent disposal capacity was in use. In 2013,

60 m3 (2012: 49) of liquid waste wasproduced. This liquid waste, like evaporationwaste and the ion exchange resins, will besolidified with conrete before final disposal.The solidification plant was in test use in2013. The volume of the evaporation waste isfurther reduced with a caesium removalsystem before solidification.


• Nuclear waste management• Final disposal of nuclear waste

Other wasteOther waste

Fortum's operations generated a totalof 48,800 tonnes (2012: 42,000) of waste(excluding gypsum and ash deposited inlandfills), 7,200 tonnes (2012: 10,400) ofwhich was hazardous. In addition, 85,000tonnes (2012: 3,100) of contaminated soilwas removed in building and site remediationprojects. Most of it originated from thefoundation works of the new CHP plant underconstruction in Stockholm, Sweden.

Waste handling in 2011-2013


Recycling/recovery 12.4 12.7 8.1

Landfill 29.2 18.81) 16.51)

Hazardous waste recovery 2.0 4.7 -

Hazardous waste disposal 5.2 5.8 12.8

Yhteensä 48.8 42.0 37.4

1) Recalculated based on reclassification of Suomenoja desulphurisation product

EN23 Total number andEN23 Total number andvolume of significant spillsvolume of significant spills

In 2013, there were 19 spills of more than100 litres (2012: 11) into the environment.The total volume of the spills was about

20 m3. Most of the spills were bio-oil. The

biggest single leak was 10 m3 of bio-oil at theHässelby power plant in Sweden.

About 5.8 tonnes of refrigerants was leakedinto the air from heat pump facilities. None ofthe spills caused major environmentalimpact.

EN24 Transported, imported,EN24 Transported, imported,exported, or treated hazardousexported, or treated hazardouswastewaste

Not relevant for Fortum.



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EN25 Water bodies andEN25 Water bodies andhabitats affected by dischargeshabitats affected by dischargesof waterof water

Fortum's discharges of waste water andrunoff have only a minor impact on water

bodies and related habitats. For a moredetailed description, see EN12 and EN14.

Products and servicesProducts and servicesEN26 MitigatingEN26 Mitigatingenvironmental impacts ofenvironmental impacts ofproducts and servicesproducts and services

Fortum's main products are electricity andheat, the use of which does not cause directemissions. Indirect emissions may be causedif electricity and heat are used in operationsthat themselves cause environmentalimpacts.

Fortum is building a low-carbon society byoffering products and services that can helpmitigate climate change also in other sectors

of society. Fortum's CO2-free electricity andheat products make it possible to reduce theenvironmental impacts of our customers'energy use (part of the customers' carbonfootprint).

In Finland and in Sweden, Fortum's carbon-neutral heat product offers users theopportunity to influence their CO2 emissions.Companies can purhcase internationalemissions reduction units to offset thecarbon emissions generated from the heatingthey use.

The CO2 emissions reduction of ourcustomers' energy use can be assessed byassuming that all the electricity sold byFortum in Finland and Sweden (10.6 TWh in2013) would have had the average specificCO2 emissions of the Nordic electricity mix(258 g/kWh in 2012). Calculated this waythe CO2 emissions would have been about2.7 million tonnes. The use of Fortum's CO2-free electricity generated no greenhouse gasemissions.

ComplianceComplianceEN28 Significant fines andEN28 Significant fines andsanctions for non-compliancesanctions for non-compliancewith environmentalwith environmentalregulationsregulations

In Fortum's European operations, twosignificant environmental non-compliances orpermit violations occurred in 2013 (2012: 0):a release of coloured district heating water,and an excessive water level in hydropower

production. In Russia, the total number ofnon-compliances (12) related to dischargewater emissions stayed at the same level asin 2012.

The amount of fines paid for discharge waterpermit violations in Russia remained at the2012 level, i.e. about EUR 1,000. The actionsto reduce the permit violations continued bychanging the anticorrosion agent, increasingthe water circulation, and separating andreducing the water flows through ash ponds

of the coal-fired power plants. Additionally,studies were initiated to install better oilseparation systems.

At the beginning of 2014 Fortum received afine of SEK 140,000 for a too low of a waterflow in 2011 at the Ljunga hydropower plantin Sweden.

TransportsTransportsEN29 Environmental impactsEN29 Environmental impactsof transportationof transportation

Fortum reports the greenhouse gas emissionsof its company car fleet and the companybenefit cars operated by its employees. In2013, the CO2 emissions from Fortum's carswere 2,500 tonnes. Fortum also reports theCO2 emissions from the flights of itsemployees and offsets for the emissions

annually. In 2013, the CO2 emissions fromFortum's air travel were 3,600 tonnes.Together, Fortum's cars and air travelaccounted for 0.02% of the total greenhousegas emissions.

The indirect emissions from the shipping ofcoal, oil and wood fuels have been roughlyestimated. The CO2 emissions were about193,000 tonnes, contributing to 0.7% ofFortum's total greenhouse gas emissions.

Transporting fuels and materials by road andrail results in emissions of SO2, NOX andparticles. Fortum has no relevant informationon the transport equipment of the fuelsuppliers; therefore, these emissions cannotbe calculated.



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OverallOverallEN30 Total environmentalEN30 Total environmentalprotection expenditures andprotection expenditures andinvestmentsinvestments

EHS expendituresEHS expenditures

Fortum's Environmental, Health and Safety(EHS) expenditures (EHS investments andoperating costs) are costs resulting frommeasures that primarily aim to manage andreduce the environmental impacts ofFortum's operations or to improveoperational safety.

Costs are defined as EHS costs regardless ofwhether the measures are mandatory on thebasis of legislation or permit conditions orwhether they are voluntary. Costs related toenvironmentally benign products and servicesare also included.

In 2013, Fortum's investments inenvironment and safety were a total ofEUR 69 million (2012: 63). The investmentswere mainly related to health and safety, airpollution control and dam safety. Operatingcosts related to the environment, health andsafety were EUR 65 million (2012: 62). Thecosts include, e.g., use and maintenance ofenvironmental protection equipment and

systems, emissions and environmentalmonitoring, decontamination of polluted soil,maintaining and developing biodiversity,development of EHS management systems,research and development work related toimproving the management of environmentalimpacts, and the necessary environmentalimpact assessment reports and permitapplications.

The figures are illustrative, because EHScosts and investments are not yet itemised indetail in cost accounting.

EHS operating costs1) in 2012-2013

EUR million 2013 2012

Environmental research 22.3 24.4

Health and safety 7.1 11.1

EHS management 4.3 7.9

Air pollution control 12.9 6.1

Waste management 5.2 4.0

Prevention and remediation of soil and water contamination 1.2 2.3

Waste water management 2.4 2.2

Other environmental protection 5.3 2.1

Environmental compensations and fines 3.3 1.8

Development of environmentally benign products and services 0.8 0.3

Total 64.8 62.2

1) Allocated data was not collected in 2011

Environmental liabilitiesEnvironmental liabilities

Environmental risks and liabilities in relationto past actions are regularly assessed andbased on this necessary provisions are madefor future remedial costs. In most casesenvironmental liabilities in relation to pastoperations relate to the dismantling ofbuildings and structures on contaminatedland, remediation of contaminated areas orlandscaping and after-treatment of closeddisposal areas. During 2013, Fortumcollected information on environmental riskcases of its operations. The aim is tocategorise the identified cases and to definethe related potential provisions in 2014.

In 2013, the provisions for future remedialcosts concerning environmental damageamounted to a total of EUR 11 million. The

main part of the provisions is likely to be usedwithin the next ten years.

In Sweden, third-party liabilities from damfailures are strictly the plant owner'sresponsibility. Together with other hydropower producers, Fortum has a shared damliability insurance programme in place thatcovers Swedish dam failure liabilities up toSEK 9,000 million.

According to the renewed Nuclear Energy Actin Finland Fortum submitted the proposal forthe nuclear waste management liabilityregarding the Loviisa nuclear power plant tothe Ministry of Employment and the Economyat the end of June 2013. The legal liability iscalculated according to the Nuclear EnergyAct in Finland and is decided by the Ministryevery year. The liability is based on atechnical plan, which is made every third

year. Based on the new technical plan, thecost estimate was updated in early 2013.Following the update of technical plan,the legal liability increased due to anticipatedincrease in the future costs of interim storageand final disposal of spent fuel.

The legal liability by the end of 2013, decidedby the Ministry of Employment and theEconomy and calculated according to theNuclear Energy Act, is EUR 1,059 million(2012: 996).


• Nuclear related asstes and liabilities.• Environmental liabilities



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Social performance indicatorsSocial performance indicators

Employees and work conditionsEmployees and work conditionsLA1 Total workforce byLA1 Total workforce byemployment type andemployment type andemployment contract, brokenemployment contract, brokendown by region and genderdown by region and gender

In 2013, an average of 10,246 employees(2012: 10,600) worked at Fortum. Thebiggest number of employees was in Russia,

4,245 employees (2012: 4,301) on average.Subcontractor employees worked at Fortumsites for a total of approximately 1,961,526(2012: 1,900,000) days during the year. Thefigure is based on contractors' hourly logsand on estimates based on job costs andaverage hourly rates. The figure has beencalculated on the basis of an 8-hour workday.

The number of Fortum's permanentemployees on 31 December 2013 was 9,515(2012: 9,899), i.e. 96.2% (2012: 95.4%) ofthe personnel. The number of full-timeemployees was 9,264 (2012: 9,644) andpart-time 251 (2012: 255). The percentage offixed-term employees was 3.8% (2012: 4.6%).

Workforce by employment contract and employment type, broken down by region and gender

Finland Sweden Russia PolandOther

countries Total

M F M F M F M F M F M F

Employment contract

Permanent 1,743 645 1,335 550 2,894 1,049 496 137 464 202 6,932 2,583

Fixed-term 53 36 22 32 136 83 1 2 1 5 213 158

Employment type (permanentlyemployed)

Full-time 1,692 592 1,287 484 2,891 1,045 496 137 458 182 6,824 2,440

Part-time 51 53 48 66 3 4 0 0 6 20 108 143

Personnel statistics from 2013, by country of operation

Finland Sweden Russia Poland Other countries Total

Personnel at year-end 2,477 1,939 4,162 636 672 9,886

male 1,796 1,357 3,030 497 465 7,145

female 681 582 1,132 139 207 2,741

Personnel,average 2,616 1,993 4,245 660 732 10,246

Personnel expenses,1,000 euros 208,142* 177,085 87,905 14,881 40,786* 528,799*

Personnel expenses perperson, 1,000 euros 79,6* 88.9 20.7 22.5 55,7* 51.6

*) The figures have been changed after the assurance in March 2014

Personnel by division, 31 Dec.

2013 2012 2011

Power 1,709 1,846 1,847

Heat 2,102 2,212 2,504

ESD 1,348 1,379 1,417

Russia 4,162 4,253 4,379

Other 565 681 633



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Total 9,886 10,371 10,780

Service years1) of the permanent employees in 2012-2013, %

2013 2012

0-5 yrs. 34 35

6-10 yrs. 18 15

11-15 yrs. 10 10

16-20 yrs. 10 10

21-26 yrs. 11 11

27-30 yrs. 8 9

31+ 9 10

1) Data was not collected in 2011.

LA2 Total number and rate ofLA2 Total number and rate ofnew employee hires andnew employee hires andemployee turnover by ageemployee turnover by agegroup, country and gendergroup, country and gender

During the year, 552 (2012: 878) newemployees joined Fortum and 910 (2012:1,176) employment relationships wereterminated. Divestments reduced the numberof personnel by a total of 126 (2012: 259).There were 36 (2012: 36) employees oninternational assignment. Departure turnoverin 2013 was 9.7% (2012: 12%)


• Fortum's employees

Total number and rate of new employee hires and employee turnover by age group, country and gender

Finland Sweden Russia Poland Other countries

New employee hires M F M F M F M F M F

no. no. no. no. no. no. no. no. no. no.

-25 0 1 8 1 59 18 0 0 0 3

25-29 9 4 13 3 80 26 1 0 10 4

30-34 12 1 7 3 59 13 1 0 5 2

35-39 9 2 13 4 25 8 0 0 4 2

40-44 4 0 9 1 19 8 2 0 8 1

45-49 0 2 2 1 12 2 3 1 4 0

50-54 3 1 4 1 18 5 5 1 6 0

55-59 1 0 0 0 2 1 1 0 2 1

60+ 0 0 0 0 1 1 1 0 8 0

New recruits, % 1.6 0.5 3.0 0.7 7.0 2.1 2.2 0.3 9.2 2.6

Finland Sweden Russia Poland Other countries

Employees leaving M F M F M F M F M F

no. no. no. no. no. no. no. no. no. no.

-25 1 0 2 5 25 7 0 0 4 1

25-29 10 3 3 4 37 17 2 0 14 3

30-34 19 3 13 10 34 20 4 2 17 1

35-39 17 6 14 12 37 10 2 1 10 2

40-44 17 8 16 8 27 22 5 2 11 1

45-49 10 4 16 5 28 11 7 4 15 4

50-54 13 4 10 6 34 11 5 5 8 3

55-59 18 2 13 5 32 13 11 5 8 3

60+ 16 0 19 2 27 11 5 5 16 6



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Departure turnover, % 5.1 1.3 5.6 3.0 7.1 3.1 6.5 3.8 20.2 4.7

LA3 Employee benefits for full-LA3 Employee benefits for full-time employeestime employees

In principle, Fortum's employee benefits arecountry-specific and comply with locallegislation and the prevailing marketsituation. Local market practices andeligibility criteria are followed for typicalfringe benefits and include, for example, carand mobile phone benefits. These benefitsare mainly for permanent employees. Inaddition to fringe benefits, Fortum alsoprovides various employee benefits. Theseinclude, for example, occupational healthcare, longevity pay for years of service,discounted electricity prices and recreationaland leisure activities. These benefits aremainly for all employees.

Fortum in Finland is participating in the TekesEVE - Electric Vehicle Systems Programme;employees choosing an electric company carwill receive monthly monetary subsidy. Thesubsidy applies to battery electric vehicles(BEVs) and Plug-in Hybrid Electric Vehicles(PHEVs).

Fortum encourages its employees to exerciseand to enjoy culture. In Finland, Sweden andRussia, all Fortum employees can joindifferent personnel clubs offering activitiesrelated to sports, nature and the arts.

In 2013, Fortum's support for employeerecreational and leisure activities in Finlandwas EUR 338,387 (2012: 415,000). Thesupport included clubs, fitness and culturevouchers, and activities related to vacationhomes. In Sweden, the support for clubs wasEUR 121,622 (2012: 111,100). In Poland,support for employee fitness activitiesamounted to EUR 8,860 (2012: 19,300). InRussia, support for employee socialprogrammes was about EUR 200,000 (2012:309,000).

Labour/management relationsLabour/management relations

Collaboration between employees andFortum management is based on locallegislation and the Code of Conduct. InFinland, Fortum's employee representation

system is site- and company- and division-specific, and representatives in the co-operation bodies are chosen by the employeerepresentatives from amongst themselves.Group collaboration meetings in Finland areheld at least twice a year in conjunction withthe Group's financial statements and interimreports.

In addition to Group collaboration meetings,there are also division- or function-level co-operation bodies that meet a few times peryear. The co-operation and employmentgroup is comprised of seven representativeschosen from amongst the delegates. Thisgroup holds meetings under the supervisionof Senior Vice President, Human Resourcesapproximately five times per year; it is thedecision making body in Finland-levelcollaboration issues and it also appointspersonnel representatives for the preparationof various development projects.

In Sweden, the system is fundamentallyidentical. In Sweden, collaboration betweenpersonnel representatives and Fortummanagement at the central level takes placein the Council (Sverigerådet) that convenestwice a year. The collaboration forms arebased on the agreement made between thecompany and personnel representatives.Additionally, there are a significant number ofmeetings held locally during the year.

In Estonia, the Working Councils convenedfive times during 2013. These councils are forco-operation between an employer and theemployees' representatives and focus onresolving, for example, occupational healthand safety issues in the enterprise.Additionally, there are meetings betweenpersonnel representatives and employerrepresentatives on an as-needed basis.

In Poland, some 35 meetings were arrangedwith the local labour union. The meetingsfocused on salary- and benefits-relatedissues, occupational safety, improvingcollaboration, and harmonisation of benefits.

In Russia, in line with local legislation, thecollective bargaining agreement and theFortum Code of Conduct, divisionmanagement closely collaborates with union

representatives within the labour relationsboard and veteran council. Thesebodies meet on an as-needed basis toresolve various matters related tomanagement and employees' relations.

As a rule, the Fortum European Council (FEC)convenes once a year. FEC is a Europe-wideco-operation body where employees andemployer representatives meet to discussFortum matters. In 2013, the FortumEuropean Council (FEC) held a meeting inMay in Finland, and personnelrepresentatives from Finland, Sweden,Poland, Norway and Estonia participated.Issues on the Council's agenda included theCEO's current review; themed workshopsincluded occupational health and safety, well-being as well as improving communicationand the handling of confidential information.

LA4 Coverage of collectiveLA4 Coverage of collectivebargaining agreementsbargaining agreements

Fortum respects its employees' freedom ofassociation and collective bargaining, anddoes not monitor the degree of unionisationof its employees. Fortum applies localcollective bargaining agreements in allcountries where it operates, in compliancewith the scope of each respective agreement.

LA5 Minimum notice periodLA5 Minimum notice periodregarding operational changesregarding operational changes

In situations of organisational restructuring,Fortum negotiates with personnelrepresentatives in compliance with eachcountry's local legislation and contractualprocedures. The minimum notice period isbased on local legislation, collectiveagreements or employment contracts, whichare in harmony with local legislation andagreements. In situations involving personnelreductions, Fortum aims primarily to supportthe re-employment of its personnel.



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Occupational health and safetyOccupational health and safetyLA6 Representation in jointLA6 Representation in jointhealth and safety committeeshealth and safety committees

Fortum's occupational health care isorganised in all countries of operation inaccordance with local laws and regulations.Workplace well-being and work safety areregularly addressed also in occupationalsafety committees, which operate in line withlocal legislative requirements and representall personnel groups.

LA7 Rates of injury,LA7 Rates of injury,occupational diseases, lostoccupational diseases, lostdays, fatalities anddays, fatalities andabsenteeism by area and byabsenteeism by area and bygendergender

Fortum's performance in occupational safetyfor its own personnel improved in 2013. Thelost workday injury frequency (LWIF) permillion working hours for Fortum's ownpersonnel decreased to 1.1 (2012: 1.5). Theresult was Fortum's all-time best. There were20 work-related injuries resulting in anabsence in 2013 (2012: 29). All of theinjuries happened to males. Fortumpersonnel's total recordable injury frequency(TRIF) per million working hours, whichincludes also minor injuries that do not leadto an absence, improved to 2.8 (2012: 3.4).There were no fatal accidents to ownpersonnel during 2013. The number ofserious occupational accidents to Fortumpersonnel, resulting in an absence of morethan 30 days, increased from 3 to 5. Fortumpersonnel absence days resulting from work-related injuries increased slightly from 2012to 599 days (2012: 560).

Safety management at Fortum equallyencompasses contractors and serviceproviders working at Fortum sites. The LWIFfor contractors weakened from 3.8 to 4.8. In2013, there was one contractor fatality at theChelyabinsk CHP-2 unit in Russia. In February

2014 a fatal contractor accident took placein electricity distribution inSweden. Unfortunately, both the total numberof contractor accidents and the number ofserious contractor accidents increased in2013. There were a total of 76 contractoraccidents leading to absence (2012: 57), 15of them were serious and resulted inan absence of more than 30 days (2012: 7).Most of our organisations improvedcontractor safety, but due to the challengesin some parts of the organisation, the totalresult was unsatisfactory. The biggestchallenges were experienced in improvementand investment projects in Sweden andRussia, and in repair and improvement worksin electricity distribution.

Contractor safety remains a major challengeand will continue to be a focus area in 2014.Several ongoing initiatives have beenextended and new initiatives started in orderto improve the situation.

A common contractor safety managementmodel was adopted during the year. In orderto ensure an even higher focus on contractorsafety, a contractor LWIF was included in theGroup-wide targets as of 1 January 2014.Contractor safety will also have moresignificance in the bonus systems.

In 2013, the proactive indicator targets(safety reports and initiatives, completion ofthe agreed actions and safety observationtours) were achieved. The number of safetyreports and initiatives increased considerablycompared to 2012 due to the high activity inthe Heat and Russia Divisions and the moreclearly defined reporting practices in theRussia Division.

Plant safety was somewhat worse than in2012. A new key performance indicator,major EHS incidents, was introduced as aFortum-level indicator. It combines fires,leaks over 100 l, explosions, dam and nuclearsafety (INES) incidents, and environmentalnon-compliances. Some clarificationsconcerning definitions and reporting were

made, so the result is not fully comparable tothe previous years' results. The target for2013 was to have fewer than 40 major EHSincidents. There were 51 incidents during theyear 2013. The majority of the incidents didnot cause damage to plants or theenvironment but some of the oil leaks causedthe need for soil remediation and some of thefires and explosions resulted in shortproduction disturbances. During 2013, therewere two INES 1 (International Nuclear EventScale) events at the Loviisa plant (2012: 3).They didn't cause any injuries to people ordamage to the plant or the environment.

Fortum strives to ensure safe and healthywork conditions for personnel and supportsthe maintenance and development of workingcapacity. The monitoring of sickness-relatedabsences is defined at the Group-level, andthe rate of absence due to sickness was 2.5%in 2013 (2012: 3.1%); the rate of absencedue to sickness was 2.3% (2012: 3.1%) formales and 3.3% (2012: 3%) for females. Thesickness rate is calculated based on thereported theoretical working hours of thepermanent employees.

In 2013, there were four (2012: 3) cases ofsuspected occupational diseases in Finland.The suspected occupational diseases arerelated to noise and occurred with males. Inspring about 50 people working at theHögdalen power-plant in Sweden, reportedrespiratory track and skin symptoms. Basedon the investigation done in collaborationwith the Swedish Centre of Occupational andEnvironmental Medicine (Centrum för Arbets-och miljömedicin), the most obvious cause ofthe respiratory track symptoms was thehigher than normal dust concentrationcombined with cold, dry weather. The skinirritation was most likely caused by tinyfibreglass-like fibres. None of the employeesreceived permanent damage or illness.Immediate actions were taken at the plant toprevent a recurrence of the problem.



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Key safety figures in 2011-2013

2013 2012 2011

Lost workday injury frequency (LWIF)1), own personnel 1.1 1.5 1.6

Lost workday injuries, own personnel 20 29 29

Lost workday injury frequency (LWIF)1), contractors 4.8 3.8 3.2

Lost workday injuries, contractors 76 57 45

Total recordable injury frequency, own personnel 2) 2.8 3.4 3.5

Fatalities, own personnel 0 0 0

Fatalities, contractors 1 1 1

Number of safety observation tours 16,644 17,507 15,324

Number of improvement proposals and near-miss reports 21,876 6,362 10,087


2) TRIF = Total recordable injury frequency per one million working hours

Sickness absence rate of the permanent employees in 2012-2013

2013 2012

Male Female Male Female

Finland 2.7 3.1 2.8 3.2

Sweden 2.3 3.7 2.2 3.9

Russia 2.0 1.9 2.1 2.2

Poland 2.6 4.6 3.5 5.0

Other countries 2.3 2.9 2.9 3.0

LA8 Education and counsellingLA8 Education and counsellingto assist workforce membersto assist workforce membersregarding serious diseasesregarding serious diseases

All Fortum employees are covered within thesphere of Fortum's occupational health careas required by local legislation.

Fortum's occupational health care serviceemphasises the significance of preventiveactivities in promoting well-being in thecompany as well as employee counselling forwork-related or serious illnesses. Fortumconducts regular examinations in accordancewith local laws; employees who are exposedto e.g. noise, dust, radiation or perform shiftwork are within the sphere of theexaminations. Occupational health careparticipates also in various discussions andassessments in the work community. Theoccupational health care professionalssupport management by providinginformation on preventive actions as well asalternatives when the ability to workdecreases. They also offer methods and toolsfor these situations.

In 2013, an average of 2,412 (2012: 2,660)employees in Finland was within the sphereof Fortum's occupational health care. About90% (2012: 80%) of them used Fortum's ownoccupational health care services and about10% (2012: 20%) used contracted healthclinics. The total costs of Fortum's ownoccupational health care in Finland wereabout EUR 1.2 million (2012: 1.3). Theoccupational health care costs per person inFinland, calculated from the share paid byFortum, were EUR 569 (2012: 580).Preventive activities accounted for 50%(2012: 43%) of occupational health carevisits. In Sweden, all employees are within thesphere of Fortum's occupational health careservices. 439 employees used the service(2012: 681). Occupational health care costsin Sweden were EUR 113 per person (2012:130).

Fortum covers all employees' occupationalhealth care in Fortum's countries of operationas required by law. In Russia, employees arewithin the sphere of a medical expensesinsurance plan and can use private medicalservices. Also each production plant in Russiahas a healthcare station with nursing-levelfirst-aid services.

EU16 Policies andEU16 Policies andrequirements regarding healthrequirements regarding healthand safety of employees andand safety of employees andemployees of contractors andemployees of contractors andsubcontractorssubcontractors

Everyday work is guided by Fortum- and local-level EHS (Environmental, Health and Safety)guidelines. There are some 20 Group-levelsafety instructions, such as instructions forcontractor management, incidentinvestigation, fire and electrical safety,asbestos management, change management,work permit system requirements, safetymanagement in investment projects, riskassessment practices, deviation reportingand EHS training. Additionally, there arecommon minimum requirements also for EHSmeetings, personal protective equipment andhigh-risk jobs. Local organisations addresstheir relevant safety issues, such as nuclearpower plant safety and dam safety, in moredetail. The instructions apply to Fortum's ownand contractor employees.



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• Safety

EU18 Percentage of contractorEU18 Percentage of contractorand subcontractor employeesand subcontractor employeesthat have undergone relevantthat have undergone relevanthealth and safety traininghealth and safety training

The safety of subcontractor and contractoremployees is as important as the safety ofFortum's own employees. Contractor safetytargets are set based on a continuousimprovement principle, safety incidents andaccidents are reported, accidents areinvestigated, and safety performanceindicators are monitored on a monthly basis.Contractor and subcontractor safety isconsidered in all aspects of contractormanagement – from selection and jobperformance to the post-performanceevaluation. Requirements are set forth in thecorporate-level safety instructions and the

purchasing organisation's instructions, andthe local organisation can have more specificinstructions. During 2013, new requirementsfor contractor safety management wereimplemented. Additionally, locally, forexample in Sweden and in Russia, improvedpractices were introduced after accidentsoccurred.

One of the key elements in the instructions isthe requirement to provide proper inductiontraining and on-site orientation to all workers,including contractors, before starting thework. Efficient induction training ensures agood understanding of site-specific risks,procedures and safety requirements.Induction training is valid for a limited period,typically, not more than three years.Induction training includes at least site-specific safety requirements, rules,instructions, work permit procedures, themain risks of the site and how to prepare forthem, the required personnel protectiveequipment, near-miss and incident reporting,emergency response, inspections,

housekeeping, fire protection, first-aidsystems, evacuation plans, and theindividuals responsible for these tasks.Verification that the safety procedures andrequirements given in the induction trainingare understood is ensured by usinginterpreters, when needed, and by testing. Allof these requirements cover all types ofcontractors and subcontractors.Implementation of the training is theresponsibility of the local organisations.

In 2013, safety training for subcontractorswas again a focus. E-learning training wasused in the ESD Division and in the HeatDivision's Finland operations. In the HeatDivision's Sweden operations, theimprovement of the existing e-learningtraining was started. In the Russia Division,the contractor safety training procedure wasimproved by adding a post-trainingevaluation. More than 22,000 contractorswere trained in Fortum's operations in 2013:some 15,000 in the Russia Division, andsome 7,000 in the Heat Division, Sweden.

Training and educationTraining and educationLA11 Programmes for skillsLA11 Programmes for skillsmanagement and lifelongmanagement and lifelonglearninglearning

Fortum offers its employees many internaltraining programmes to support the variousdevelopment needs. As part of the LeadingPerformance and Growth initiative, Fortumhas arranged a leadership developmentprogramme aimed at all managers. The keygoal of the Leadership Impact programmehas been to deepen the understanding andskills required from individuals inmanagement positions to lead performanceand growth. Increasing self-awareness anddeveloping coaching skills have been centralthemes in the programme. In 2013, the mainelements of the Leadership Impactprogramme were 360° assessments and a

one-day training event. Since autumn 2011,nearly 1,000 managers from all of Fortum'scountries of operation have participated inthe programmes offered in Finnish, Swedish,Polish, Russian and English. In the future, thesame themes will be covered in a newMASTER course, Growing Leader, targetedmainly for new managers.

The aim of the MASTER courses offered toFortum managers is to improve theircompetence in meeting the challenges ofsupervisory work. In addition, the intention isto harmonise and develop the way ofoperating in HR processes in Fortum. Theone-day MASTER courses consist of theory,exercises and dialogue. In 2013, the maincourse themes were performance anddevelopment discussions, recruitment, labourlaws, rewarding, growing in leadership,working environment and

convincing performance. There was a total of16 MASTER training days with 163participants.

In 2013, 107 employees (2012: 324) learnedabout Fortum's operations through theFortum Passport online onboardingprogramme for new employees. Theprogramme covers several different topics,including the Code of Conduct, sustainabilityprinciples and safety. The programme alsoincludes a Joiner's Survey that is used tocollect feedback about and develop therecruitment and onboarding process.

In 2013, training costs totaled approximatelyEUR 5.0 million (2012: 7.9).



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Level of education of the permanent employees in 2011-2013, %

2013 2012 2011

Doctorate 1 1 0.5

University 37 35 34

Lower university 7 7 5.5

College 26 26 29

Vocational 22 22 21.5

Compulsory 3 3 3.5

Not indicated 4 6 6

LA12 Employees receivingLA12 Employees receivingregular performance andregular performance andcareer development reviews bycareer development reviews bygendergender

Fortum's permanent employees in alloperating countries are within the scope ofthe performance and development discussionprocesses, which are implemented on apersonal and/or team level. The annualperformance and development reviewssupport the employee/supervisor dialogueabout goals, achievements and opportunitiesfor professional development. Thediscussions aim to commit and motivateemployees, engage them in theimplementation of the strategy, business

goals and operating plans, and improveoperational planning, the workplaceatmosphere and the flow of information, aswell as promote performance and growth atthe individual and corporate level.

Personal and/or team-specific targetsaligned with Fortum's strategy are set at thebeginning of the year. At the same time, theneeded competence is verified and last year'sperformance is assessed. The achievement oftargets forms the basis for incentives to bepaid. Permanent employees, who havea minimum of three months of employment inFortum are within the scope of Fortum'sincentive plan. The aim is to implement aFortum-wide performance and developmentmodel at all Fortum sites.

The performance and development processapplies to all permanent employees, however,the electronic tool used in the process in2013 covered about 67% (2012: 64%) of thepersonnel globally, out of which theperformance and development process wasconducted for 97% (2012: 96%). Theperformance and development process wasnearly equally completed among femaleemployees 95% (2012: 95.8%) and maleemployees 98% (2012: 96.3%). Company-wide completion rate will be available whenall countries and employee groups arecovered by the electronic tool.

Equal opportunitiesEqual opportunitiesLA13 Composition ofLA13 Composition ofgovernance bodies andgovernance bodies andbreakdown of employeesbreakdown of employees

Fortum promotes equal treatment andopportunities in recruiting, remuneration,development and career advancement,regardless of the employee's race, religion,political views, gender, age, nationality,

language, sexual orientation, marital status orpossible disabilities. Any form of harassmentis forbidden and addressed immediately. InFinland and Sweden, Fortum has separateguidelines for workplace harassment anddiscrimination. In 2013, there was no casesof discrimination reported (2012: 1).

The average age of Fortum's permanentemployees in 2013 was 44 years (2012: 44),

and the share of employees over 50 yearswas 36% (2012: 36%). In 2013, womenaccounted for 28% (2012: 28%) of Fortum'stotal personnel. Women accounted for 31%(2012: 35%) of the Group- and division-levelmanagement teams. In 2013, the Board ofDirectors comprised seven members, three ofthem, including the chairman, were women.



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Personnel age distribution of the permanent employees in 2011-2013, %

2013 2012 2011

-25 yrs. 3 3 3

25-29 yrs. 10 10 9

30-34 yrs. 13 12 11

35-39 yrs. 12 12 12

40-44 yrs. 13 13 14

45-49 yrs. 14 14 15

50-54 yrs. 15 16 16

55-59 yrs. 12 13 13

60+ yrs. 8 7 7

LA14 Ratio of basic salary ofLA14 Ratio of basic salary ofmen to women by employeemen to women by employeecategory, by significantcategory, by significantoperation countriesoperation countries

In line with its HR policy, Fortum offers a fair,transparent and competitive compensationportfolio to its employees at all levels.Salaries and wages are based on locallegislation and labour market agreements andare compliant with established practices ineach country. Salary levels are based onpersonal work performance, on definedcompetence requirements, and the marketsituation in each country.

In Finland, the pay equality for men andwomen in white- and upper white-collarpositions has been monitored since 2005. In2013, reporting was also conducted withseparation between personnel groups.Previously, comparisons in the 'workers'personnel group were not possible due to thesmall group sizes.

More comprehensive HR information systemhas made it possible to report pay equalityalso in other countries. In 2013, acomparison was made in seven countries:Finland, Estonia, Latvia, Lithuania, Norway,Poland and Sweden.

The difference in average base salarybetween male and female employees was-8%. The total number of employees includedin the comparison was 4,695 of which 1,522(32%) are female. When taking intoconsideration the female share in thecomparison group, the difference in averagebase salary was -3%. The differences variedbetween countries, and years of service andjob grade levels also contributed to thedifferences. The amount of women in diffentlevels also has an impact. The mostnoticeable difference in favour for men was inEstonia where the average years of servicefor the male employees was nearly doublethat of the female employees.

Human rightsHuman rightsHR1 Investment agreementsHR1 Investment agreementsthat include human rightsthat include human rightsclausesclauses

A sustainability assessment is carried out forall of Fortum's investment projects and takesinto consideration the environmental,occupational health and safety, and socialimpacts of the project. Projects requiringapproval by the Fortum Management Teamare additionally subject to an assessment andapproval by Group-level sustainability experts.The sustainability assessment also includes ahuman rights evaluation, especially regardingnew operating areas.

In 2013, Fortum implemented human rightsassessment as part of a systematic countryand partner risk.

HR2 Suppliers and contractorsHR2 Suppliers and contractorsthat have undergone humanthat have undergone humanrights screeningrights screening

The majority of Fortum's purchases are fromthe Nordic countries. Fortum's purchasesfrom risk countries are 11% (2012: 5%),excluding the Russia Division's suppliers. In2013, Fortum conducted pre-selection on261 suppliers (2012: 264). Pre-selectionincludes a supplier questionnaire andverification of credit. Pre-selection is donewhen the volume of the purchase exceedsEUR 50,000 and, in the case of a Nordicsupplier, EUR 100,000. A supplierquestionnaire is used to gather general,sustainability and human rights informationabout suppliers. In 2014, the aim is toharmonise the Russia Division's pre-selectionwith the Corporate instruction.

Fortum's Supplier Code of Conduct isimplemented in all of Fortum's operatingcountries and it is included in all purchaseagreements exceeding EUR 50,000. With theSupplier Code of Conduct, Fortum aims toensure that e.g. the supplier provides safeworking conditions for its employees,complies with rules and regulations, andreduces environmental impacts caused by itsoperations.

In 2013, Fortum continued sustainability andhuman rights related audits of suppliers ofservices and goods; the audits assess howthe supplier meets the requirements ofFortum's Supplier Code of Conduct. A targetwas set to audit three main risk countrysuppliers per division, excluding the RussiaDivision. Fortum audited a total of 13suppliers (2012: 10), around 70% of whichoperate in risk countries. This represents 11%(2012: 13%) of the risk country suppliers,excluding the Russia Division's suppliers. Theaudited suppliers have either a direct



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contractual relation with Fortum or act as asubcontractor to Fortum's supplier. Theemphasis in the audits was on biofuelsuppliers and contractors.


• Sustainable supply chain management

HR3 Human rights-relatedHR3 Human rights-relatedtraining for employeestraining for employees

Fortum's online course for the Code ofConduct includes training in human rights-related issues.

Fortum's own personnel are responsible forsupplier audits. Auditors receive 1.5 days ofinternal training, during which they review therequirements of the Supplier Code ofConduct, the sub-areas to be audited, andthe tools to be used to verify conformancewith the requirements. The training alsoincludes human rights-related issues. Afterthe training, supplier audits are startedtogether with an experienced auditor.Fortum's goal is to train auditors fromdifferent divisions and operating countries. In2013, a total of 11 auditors from Poland andSweden were trained.

HR4 Incidents ofHR4 Incidents ofdiscrimination and actionsdiscrimination and actionstakentaken

In 2013, there were no cases ofdiscrimination reported (2012: 1).

HR5 Supporting the right toHR5 Supporting the right tofreedom of association andfreedom of association andcollective bargaining in riskcollective bargaining in riskareas, HR6 Measures taken toareas, HR6 Measures taken toeliminate child labour in riskeliminate child labour in riskareas and in operations ofareas and in operations ofsignificant suppliers and HR7significant suppliers and HR7Measures to eliminate forcedMeasures to eliminate forcedlabour in risk areas and inlabour in risk areas and inoperations of significantoperations of significantsupplierssuppliers

The majority of Fortum's purchases are fromthe Nordic countries. Fortum's purchasesfrom risk countries are 11% (2012: 5%),excluding the Russia Division's suppliers. Inrisk country classification, Fortum utilises theassessments of ILO Decent Work Agenda,Human Development Index of the UnitedNations and the Corruption Perceptions Indexby Transparency International. Violationsrelated to the environment and social issuesare more probable in these countries than inno-risk countries.

Fortum respects employees' right to freedomof association and collective bargaining aswell as the inviolability and integrity of labourunion representatives. In Fortum's operatingcountries, freedom of association andcollective bargaining are guaranteed by law,with the exception of India, which has notratified the International LabourOrganisation's (ILO) Convention on the rightto freedom of association and collectivebargaining. Fortum's functions in India havein place the same practices as in othercountries of operation, and Fortum doesn'tlimit or prohibit the right to freedom ofassociation.

All forms of child labour and forced labour arestrictly prohibited and in violation of Fortum'sCode of Conduct. Of Fortum's operatingcountries, India has not ratified theInternational Labour Organisation's (ILO)Convention on the minimum age and theworst forms of child labour. Fortum'sfunctions in India require job applicants to beof adult age.

All forms of forced labour are strictlyprohibited and in violation of Fortum's Codeof Conduct. There has been no risk related tothe use of forced labour identified in Fortum'sown operations.

In 2013, Fortum continued sustainabilityrelated audits of suppliers of services andgoods; the audits assess how effectively thesupplier meets the requirements of Fortum'sSupplier Code of Conduct. This also includesan assessment of the supplier's guidelines onpreventing the use of child and forced labourand how the right to freedom ofassociation is realised by the supplier. Fortumaudited a total of 13 suppliers in 2013 (2012:10), around 70% of which operate in riskcountries. This represents 11% (2012: 13%) ofthe risk country suppliers. The figures excludethe Russia Division's suppliers.

The audits conducted did not reveal non-compliances related to child or forced labour,nor were there any non-compliances relatedto freedom of association and collectivebargaining. However, a recommendation wasgiven to listen to employees' wishes onofficial unionisation through a trade union. Incurrent model, co-operation in theworkplace was conducted betweenthe employer and employees without a tradeunion.

CommunityCommunitySO1 Managing impacts ofSO1 Managing impacts ofoperations on communitiesoperations on communities

Open, honest and proactive communicationand listening to our stakeholders are of keyimportance when striving for our strategicaims. Special attention must be paid to thelocal communities and people around ourproduction plants.

Fortum conducts environmental impactassessments (EIA) in accordance withlegislative requirements. Stakeholder

consultation is part of the EIA process. Theenvironmental impact assessmentprogrammes and reports are publiclyavailable. In addition, relevant stakeholdersare heard in all licensing procedures.

EU19 StakeholderEU19 Stakeholderparticipation in the decision-participation in the decision-making process related tomaking process related toenergy planning andenergy planning andinfrastructure developmentinfrastructure development

Fortum engages in an active dialogue aboutkey issues in the energy sector and isinvolved in different associations andorganisations at the EU level and in countrieswhere it operates. Stakeholder participationin the decision-making process related to



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energy planning and infrastructuredevelopment is discussed in the sectionregarding stakeholders.

EU21 Management approach toEU21 Management approach todisaster/emergency planningdisaster/emergency planningand response; contingencyand response; contingencyplanning measures, disaster/planning measures, disaster/emergency management planemergency management planand training programmes, andand training programmes, andrecovery/restoration plansrecovery/restoration plans

Fortum's Operational Risk ManagementInstructions require our businesses to havesolid business continuity plans in place.

Corporate Security is responsible for crisismanagement development and CorporateCommunications is responsible for crisiscommunication and for development of therelated emergency preparedness. Fortum'scrisis communication instructions have beenprepared for the Group, country, division andunit level. In addition to the generalguidelines, Fortum uses separate crisiscommunication guidelines for e.g. power andheat outages and for crisis situations thatinvolve the Loviisa nuclear power plant. Crisismanagement is the responsibility of therespective division and line organisation.Crises that affect Group operations aremanaged at the Group-level. Testing andupdating plans is the responsibility of therespective units.

In 2013, extensive emergency training relatedto nuclear accident was held. In addition toFortum's Management Team,Communications, and Power Divisionrepresentatives, it also included other sectorsof the society such as the national rescueservices. In addition, training for crisissituations due to electricity outages was held,the most significant was joint rehearsal in theHelsinki capital area in Finland.

CorruptionCorruption

SO2 Business units analysedSO2 Business units analysedfor corruption risksfor corruption risks

Compliance risks related to corruption aremanaged as part of Fortum's riskmanagement and control procedures in allFortum's operating countries andbusiness units. The assessment ofcompliance risks is periodic anddocumented. Fortum has procedures toensure the prevention, oversight, reportingand enforcement based on the requirementsprescribed in international legislation. Asystematic compliance risk assessment isincluded in business plans, and follow-up ispart of the business performance review. Linemanagement regularly reports on thecompliance activities to the FortumManagement Team and further to the Auditand Risk Committee.

In 2013, Fortum's compliance processeswere further developed in terms ofcompliance reporting and the assessment ofthe country and partner risks. In addition tothe assessment of risks related to corruption,the country and partner risk assessment alsoincludes the assessment of otherenvironmental, social and governance (ESG)related risks.


• Compliance management and Code ofConduct, Governance 2013

SO3 Anti-corruption trainingSO3 Anti-corruption training

Fortum's anti-corruption principles have beenincluded in the Fortum Code of Conductsince 2007, and all Fortum employees haveparticipated in the Code of Conduct training.

The Fortum Code of Conduct was updated in2012. At the end of February 2013, 99% of allpersonnel had completed the training. Theimplementation of the updated Code wasseen as completed in March 2013, and as ofApril 2013, the Code of Conduct e-learninghas been part of the induction programme ofnew Fortum employees.

During the year, the Group's Legaldepartment supplemented the trainingorganised in 2012 and gave training toFortum's Indian operations. In Russia all newemployees received face-to-face complianceinduction training. In October a SupplierForum was organised and compliancetraining given for the top managers and keyexperts of the Russia Division suppliers.During the session Fortum representativesconfirmed their zero tolerance to corruption,informed their counterparties about the keycompliance policies and explained how onecan report misconduct. In Poland, twotraining sessions were organised on anti-competitive behaviour.

At the beginning of 2014, extensive anti-corruption training was started in Fortum'sdifferent functions. The different risk profilesof various activities have been taken intoaccount when planning the training. Inaddition purchasing authorities of a certain

monetary value have been used as a specificcriterion.

SO4 Actions taken in responseSO4 Actions taken in responseto incidents of corruptionto incidents of corruption

Fortum has procedures to ensure theprevention, oversight, reporting andenforcement based on the requirementsprescribed in international legislation. Fortumalso has a channel that is available for allstakeholders to report misconduct.

In January 2013, Fortum's Management Teamapproved a Business Ethics ComplianceReporting model based on the updated Codeof Conduct. According to the compliancereporting model, line management regularlyreports on the compliance activities to theFortum Management Team and further to theAudit and Risk Committee.

Fortum has internal procedures in place fordealing with the potential cases of corruptionprofessionally, in accordance with applicablelaws and with respect to the rights andpersonal integrity of the persons and partiesinvolved. Each incident will be first properlyinvestigated, including a hearing of therelevant persons and parties, and then theappropriate sanctions and corrective actions,if deemed necessary, will be considered.

Furthermore, after each incident anassessment is made regarding the need toraise awareness of the Fortum Code ofConduct. This can be done through e.g. e-learning or face-to-face training in therelevant business organisation to ensure thatemployees are fully aware of what is



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http://annualreport2013.fortum.com/en/governance/corporate-governance-statement/internal-control-and-risk-management-systems-in-relation-to-financial-reporting/internal-control-framework/compliance-management-and-code-of-conduct/


https://www.fortum.com/en/corporation/corporate-governance/code_of_conduct/raise-a-concern/Pages/default.aspx

considered appropriate conduct at Fortumand what their responsibility is in case of non-compliance. During the year one potentialcase of malpractice targeting a Fortumemployee was identified. The policeinvestigation was still ongoing at the time of

publishing this report. The incident resulted inthe termination of employment.

Based on publicly available sources, theassessment of country and partner risksrevealed suspicion of corruption in

connection with a few potential partners.Vagueness in relation to legal compliancewas also detected; thus no business relationwith these actors was initiated.

Public policyPublic policySO5 Public policy positionsSO5 Public policy positionsand participation in publicand participation in publicpolicy development andpolicy development andlobbyinglobbying

As an energy sector expert, Fortum activelyexpresses its views on energy and climatepolicy issues and offers expert advice todecision makers and non-governmentalorganisations pertaining to the policy areasmentioned. Fortum engages in an activedialogue about key issues in the energysector and publishes position papers onsignificant topics.

In 2013, a particular focus in public affairswas on developing the EU emissions tradingand establishing the EU energy and climatepolicy framework for 2030. Fortum publishedposition papers on, e.g. emission allowancesupply management and the EU consultationon structural options to strengthen the EUEmissions Trading Scheme. In 2013, we alsopublished a response on the Commission'sgreen paper and on the development ofcapacity mechanisms. During the year,Fortum representatives had several meetingswith different decision makers and officials atthe EU level and in its operating countries.

Fortum's lobbying in Finland focused on taxissues, such as the power plant tax, as wellas on the revision of the Energy MarketAct and its effects on electricity distribution.In Sweden, tax issues related to hydro andnuclear power were also high on the agenda.In Poland, Fortum contributed to advancingthe energy legislation renewal. Heating costsfor end-customers is a significant issue in allthe Baltic countries. In Lithuania, wastemanagement issues are followed closely dueto the newly opened waste-to-energy powerplant in Klaipeda.

In Russia, Fortum focused on energyefficiency and on Russian electricity and heatmarket legislation. During 2013, Fortumhosted a several groups of Russian federaland regional authority representatives visitingSweden, Finland and Norway. The groupswere introduced to the urban planning, wastehandling systems, and heat and powermarket models in the Nordic countries.

At the EU level, our representatives discussedissues related to the EU's future climate andenergy policy targets, the functioning of theEmissions Trading Scheme and the internalenergy market, as well as energy prices andtheir impact on the competitiveness of EUindustry.

In November 2013, Fortum updated thecompany's information in the TransparencyRegister maintained jointly by the EuropeanParliament and European Commission. Theregister offers information aboutorganisations that aim to influence EUdecision making.

Fortum is directly and indirectly involved in62 sector associations and organisations atthe EU level and in its countries of operation.The most important are Eurelectric,Energiateollisuus ry, Svensk Energi,International Energy Agency (IEA), FORATOMand EuroHeat & Power.

SO6 Contributions to politicalSO6 Contributions to politicalparties and related institutionsparties and related institutions

Fortum does not award donations for anykind of political activities, religiousorganisations, authorities, municipalities orlocal administrations.

ComplianceCompliance

Anti-competitive behaviourAnti-competitive behaviour

SO7 Legal actions for anti-SO7 Legal actions for anti-competitive behaviour, anti-competitive behaviour, anti-trust, and monopolytrust, and monopoly

In 2013, there were three final courtdecisions in Russia holding the heat businessof Fortum Russia liable for abuse of dominantposition. The related fines imposed arepresented under indicator SO8. The threecases derive from proceedings initiatedduring 2012.

In 2013, there was one case initiated anddecided by the Russian Federal CompetitionAuthority (FAS) holding the heat business ofFortum Russia liable for entering into anagreement that could limit competition. TheRussia Division had entered into a heatdistribution organisation agreement withTyumen Administration and the municipality'sheat networks operator. The FAS recognisedthat certain terms of the agreement couldlimit competition. There were no further courtproceedings and no fines were imposed onthe parties. The respective agreementsentered into were terminated by the partiesbefore implementation.

SO8 Fines and sanctions forSO8 Fines and sanctions fornon-compliance with laws andnon-compliance with laws andregulationsregulations

In Russia, the fines paid amounted to aboutEUR 86,500. These court decisions aredescribed in indicator SO7.



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Product responsibilityProduct responsibilityAccessAccess

EU28 Power outage frequencyEU28 Power outage frequency

Fortum applies international indicators (SAIFI,SAIDI and CAIDI) to measure electricitydistribution reliability. The number of faultbased power outages per customer (SAIFI)was 1.74 (2012: 1.40).

EU29 Average power outageEU29 Average power outagedurationduration

In 2013, the average duration of poweroutages per customer (SAIDI) was 220minutes (2012: 103). The average duration ofpower outages caused by faults (CAIDI) was115 minutes (2012: 61). In 2013, theseindicators (SAIDI and CAIDI) were affected bythe severe winter storms in the Nordiccountries in December. The set target forSAIDI for 2013 was 110 minutes, meaningthat actual SAIDI was double compared tothe target.

Product and service labellingProduct and service labelling

PR3 Product informationPR3 Product informationrequired by proceduresrequired by procedures

Fortum follows EU-based national legislationon the origin of electricity. This requires theelectricity producer to report the origin of theproduced electricity, the CO2 emissions andthe amount of radioactive waste.

In 2013, Fortum Markets sold electricity toresidential and business customers inSweden, Finland and Norway. Electricity wasacquired from Nord Pool. Depending on thetype of electricity contract, customersreceive electricity generated from differentenergy sources. Origin of the electricity isdeclared in accordance with the EuropeanGuarantee of Origin system.

Sources used to produce all the electricitysold by Fortum Markets in 2012:

• 36.4% renewable energy (33.3% was soldas environmental electricity)

• 58.4% nuclear power• 5.2% fossil fuels

Emissions generated in the production ofelectricity sold by Fortum:

• Accumulation of spent nuclear fuel:1.7 mg/kWh

• Carbon dioxide (CO2): 47 g CO2/kWh

Due to the Nordic reporting practice, figuresfor 2013 will be available in summer 2014.


• Kotitalouksien käyttämän sähkönalkuperä (in Finnish)

• Ursprungsmärkning (in Swedish)

PR5 Customer satisfactionPR5 Customer satisfaction

Fortum monitors customer satisfactionthrough regular EPSI customer satisfactionsurveys in Finland, Sweden and Norway. In2013, Fortum reached its all-time best scorein the annual EPSI rating in Sweden andFinland. In Norway, customer satisfaction wasslightly down compared to 2012. The longerterm customer satisfaction trend towardsFortum has developed favourably in Finland,Sweden and Norway. The trend has beenupward and faster than the average in thesector.

In all three countries, Fortum's perceivedprice-value has increased. In Finland,customer loyalty was significantly increased.In Sweden and Norway, Fortum's awarenessand brand preference remain the main areasof improvement.

Customer satisfaction* in 2011-2013

Finland Sweden Norway

2013 71 65 69

2012 68 64 69

2011 70 60 63

* In Finland and Norway research method was EPSI, in Sweden Svenskt Kvalitetsindex

Fortum annually measures customersatisfaction and the company's reputationand factors affecting it also with theextensive One Fortum survey targetingdifferent stakeholder groups: customers, thegeneral public, governmental bodies, capitalmarkets, non-governmental organisations andFortum's personnel. In 2013, the survey wasconducted in Finland, Sweden, Norway,Poland, the Baltic countries and Russia.

According to the survey, Fortum's reputationis still the strongest within the capitalmarkets and remains weakest amongst thegeneral public. Compared to the 2012results, Fortum's reputation among thegeneral public has developed favourably inFinland and Sweden. Positive developmentwas also seen among government officials inFinland and Sweden. Fortum's reputationamong its own employees weakenedsomewhat. The One Fortum survey indicatesthat customers in all divisions were more

satisfied than in 2012. Especially the PowerSolutions business unit in the Power Divisionachieved very high customer satisfactionlevels.



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http://www.fortum.com/countries/fi/yksityisasiakkaat/sahkosopimus/sahkon-alkupera/pages/default.aspx

http://www.fortum.com/countries/fi/yksityisasiakkaat/sahkosopimus/sahkon-alkupera/pages/default.aspx

http://www.fortum.com/countries/se/privat/el/miljoval/ursprungsmarkning/pages/default.aspx




Market CommunicationMarket Communication

PR7 Non-compliance withPR7 Non-compliance withmarketing communicationsmarketing communications

Fortum Markets AB in Sweden was found inviolation of the International ChamberCommerce Code for Advertising andMarketing Communication for anadvertisement from 2012 related to a winterprice offer for electricity. No fines werelevied.

In November 2013, Fortum Markets AB wasissued an injunction by the ElectricityMarkets Inspectorate to cease the useof contract terms that had entered into forceon September 1, 2013. The grounds for theinjunction were that Fortum Markets AB hadnot been clear in communicating the newcontract to the end customers prior to thecontract terms entering into force.

The inspectorate lifted the injunction inDecember 2013, after Fortum Markets ABtook steps to correctly inform all affected

customers about the new contract terms aswell as set a new starting date for the newcontract terms to enter into force (February1, 2014). No fines were levied.

ComplianceCompliance

PR9 Fines for non-compliancePR9 Fines for non-complianceconcerning the provision and use ofconcerning the provision and use ofproducts and servicesproducts and services

No such fines in 2013.



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Assurance statementAssurance statementIndependent assurance reportIndependent assurance reporton Fortum’s sustainabilityon Fortum’s sustainabilityreportingreporting

To the Management of FortumTo the Management of FortumCorporationCorporation

We have performed alimited assuranceengagement on the Fortum Oyj (hereafter:Fortum) sustainability reporting for thereporting period of January 1, 2013 toDecember 31, 2013. The information subjectto the assurance engagement is the Finnishversion of the sustainability reportingpublished in the websitehttp://annualreport2013.fortum.com/.

Management’s responsibilityManagement’s responsibility

Management is responsible for thepreparation of the sustainability reporting inconformity with the Sustainability ReportingGuidelines (G3.1) of the Global ReportingInitiative and principles of inclusivity,materiality and responsiveness as set out inthe AA1000 AccountAbility Principles(AA1000APS). This responsibility includes:designing, implementing and maintaininginternal control relevant to the preparationand fair presentation of the sustainabilityreporting that are free from materialmisstatement, whether due to fraud or error,selecting and applying appropriate criteriaand making estimates that are reasonable inthe circumstances. The scope of the 2013Fortum sustainability reporting and theinformation included therein depends on theFortum’s Corporate Sustainability priorityareas as well as the reporting policies appliedwhich are set out in reporting principles.

Auditor’s responsibilityAuditor’s responsibility

Our responsibility is to draw a limited(moderate) assurance conclusion on Fortum’ssustainability reporting based on ourengagement. This assurance report has beenprepared in accordance with the terms of ourengagement. We do not accept, or assumeresponsibility to anyone else, except toFortum for our work, for this report, or for theconclusions we have reached. We conductedour engagement in accordance with

International Assurance Standard ISAE3000.In addition, we have used the criteria inAA1000Assurance Standard (2008) toevaluate adherence AA1000APS (2008) fortype 1 assurance engagement. This requiresthat we comply with ethical requirements andplan and perform the engagement to obtainlimited assurance whether nothing has cometo our attention that causes us to believe thatFortum’s sustainability reporting is not in allmaterial aspects prepared in accordance withthe reporting criteria.

We did not perform any assuranceprocedures on the prospective information,such as targets, expectations and ambitions,disclosed in the sustainability reporting.Consequently, we draw no conclusion on theprospective information.

A limited assurance engagement with respectto sustainability reporting involves performingprocedures to obtain evidence about theinformation disclosed in the reporting. Theprocedures performed depend on thepractitioner’s judgment, but their nature isdifferent from, and their extent issubstantially less than, a reasonableassurance engagement. It does not includedetailed testing of source data or theoperating effectiveness of processes andinternal controls and consequently they donot enable us to obtain the assurancenecessary to become aware of all significantmatters that might be identified in areasonable assurance engagement.

Our procedures on this engagement included:

• Assessing the suitability of the reportingpolicies used by management and theconsistent application such policies,including assessing of the suitability ofthe reporting criteria, the inclusiveness ofthe responses on the stakeholderdialogue and the overall presentation inthe sustainability reporting;

• Conducting interviews with seniormanagement responsible forsustainability at Fortum to gain anunderstanding of Fortum’s targets forsustainability as part of the businessstrategy and operations;

• Inspecting internal and externaldocumentation and verifying to whatextent these documents and data supportthe information included in thesustainability reporting and evaluating

whether the information presented in thesustainability reporting is in line with ouroverall knowledge of sustainability atFortum;

• Conducting interviews with employeesresponsible for the collection andreporting of sustainability information andreview of the processes and systems fordata gathering, amongst others theaggregation of the data as included in thesustainability reporting;

• Performing analytical review proceduresand testing data on a sample basis toassess the accuracy of the presentedsustainability information;

• Site visits to selected sites in Finland andRussia to review compliance to reportingpolicies, to assess the reliability of thesustainability data reporting process aswell as to test the data collected locallyfor sustainability reporting purposes and;

• Assessing the Company’s statedapplication level according to GRI’sguidelines.

We believe that the evidence we haveobtained is sufficient and appropriate toprovide a basis for our conclusion.

Observations &Observations &RecommendationsRecommendations

Based on our limited assurance engagement,we provide the following recommendations inrelation to the Accountability PrinciplesAA1000APS (2008) and GRI G3.1 principles.The recommendations are to improvemanagement and reporting of sustainability infuture and do not affect our conclusions:

• InclusivityInclusivity – Fortum has acomprehensive stakeholder inclusivenessprocess in place and throughout thisprocess Fortum has identified a broadrange of relevant key stakeholder groups.We recommend that Fortum continues anopen and regular dialogue with allrelevant stakeholders and furtherstrengthen its internal communication ofissues raised by stakeholders to ensurethey are appropriately considered acrossFortum’s decision-making processes.

• Materiality –Materiality – Fortum has a process inplace to define what matters areimportant and material for Fortum´sstakeholders. We recommend that



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Fortum further develops the process tobe more systematic to ensure that allmaterial issues are acknowledged.

• ResponsivenessResponsiveness – The report included asignificant amount of issues and howFortum has managed and responded tothose issues. In 2013 Fortum has furtherdeveloped balanced presentation in itsreporting and reports more consistentlyon challenging aspects as well. Werecommend Fortum to maintain balancedreporting on sustainability themes andcontinue to transparently discuss issuesand events that have an impact onaspects, material to stakeholders, overthe reporting period and in the future.

Our independence andOur independence andcompetences in providingcompetences in providingassurance to Fortumassurance to Fortum

We comply with independence and otherethical requirements, which are included in

the Code of Ethics for ProfessionalAccountants issued by the InternationalEthics Standards Board for AccountantsIESBA (International Ethics Standards Boardfor Accountants).

This engagement was conducted by amultidisciplinary team including assuranceand sustainability expertise with professionalqualifications. Our team has many years ofexperience in providing sustainabilityreporting assurance.

ConclusionConclusion

On the basis of the procedures we haveperformed nothing has come to our attentionthat causes us to believe Fortum’ssustainability reporting for the year fromJanuary 1, 2013 to December 31, 2013, isnot prepared, in all material respects, inaccordance with the Sustainability ReportingGuidelines (G3.1) of the Global ReportingInitiative and to the AA1000 AccountAbility

Principles. The reporting fulfills therequirement of GRI G3.1 Application LevelB+.

Espoo 21.3.2013Deloitte & Touche Oy

Jukka VattulainenAuthorized PublicAccountant

Lasse IngströmAuthorized PublicAccountant



105

Acronyms, quantities and units usedAcronyms, quantities and units usedin the reportin the reportQuantities and units used in the report

Energy

1 terawatt hour (TWh) = 1,000 gigawatt hours (GWh) = 1,000,000 megawatt hours (MWh) = 1,000,000,000 kilowatt hours (kWh)

1 terawatt hour (TWh) = 3,600 terajoules (TJ)

1 terajoule (TJ) = 278 megawatt hours (MWh)

Capacity

1 megawatt (MW) = 1,000 kilowatts (kW) = 1,000,000 watts (W)

Volume

1 cubic metre (m3) = 1,000 litres (l)

1 normal cubic metre (Nm3) = 1 m3 of gas in normal atmospheric pressure (1.0 bar) and temperature 0 oC.

Mass

1 tonne (t) = 1,000 kilograms (kg)

1 megatonne (Mt) = 1,000,000 tonnes (t) = 1,000,000,000 kilograms (kg)

Acronyms used in the report

Acronym Term Definition

GRI Global Reporting Initiative International organisation promoting sustainability reporting

EHS Environment, Health and Safety -

CHP Combined Heat and Power -

LWIF Lost Workday Injury Frequency Frequency of injuries that lead to absence from work for one or more days

TRIF Total Recordable Injury Frequency Frequency of all injuries that require medical treatment

SAIDI System Average Interruption Duration IndexCumulative duration of power outages per customer in a specified timeinterval

CAIDI Customer Average Interruption Duration Index Average duration of power outages in a specified time interval

SAIFI Customer Average Interruption Frequency Index Number of power outages per customer in a specified time interval

CER Certified Emission Reduction Emission reduction unit in projects under Clean Development Mechanisms

ERU Emission Reduction Unit Emission reduction unit in Joint Implementation projects

IUCN International Union for Conservation of Nature -

Annual Report 2013 Contact information


106

Contact informationContact informationInvestor relationsInvestor relations

Sophie JollySophie JollyVice President, Investor Relationstel. +358 10 45 32552,[email protected]

Rauno TiihonenRauno TiihonenManager, Investor Relationstel. +358 10 45 36150,[email protected]

Financial communicationsFinancial communications

Pauliina VuosioPauliina VuosioVice President, Financial Communicationstel. +358 50 453 2383,[email protected]

Karoliina LehmusvirtaKaroliina LehmusvirtaManager, Financial Communicationstel. +358 40 581 3710,[email protected]

SustainabilitySustainability

Ulla RehellUlla RehellVice President, Sustainabilitytel. +358 10 45 29251,[email protected]

Kari KankaanpääKari KankaanpääSustainability Managertel. +358 10 45 32330,[email protected]

Annual Report 2013 Contact information


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Legal noticeLegal noticeTerms of UseTerms of Use

The use of the website of Fortum Corporationand its subsidiaries (together “FORTUM”)requires following the terms of use set forthbelow. You are not allowed to useFORTUM´S website if you do not agree tofollow these terms of use.

Intellectual Property RightsIntellectual Property Rights

The entire content of FORTUM'S website,such as text, graphics, names, images,figures, drawings, logos icons, recordings andsoftware, are property of FORTUM and itsassociated companies, licensors andpartners. Any rights not expressly grantedherein are reserved. Copying, transferring,modifying, saving, publishing and distributingthe content of FORTUM'S website or partthereof is prohibited without FORTUM'S priorwritten consent. The use of FORTUM'Swebsite for personal, non-commercialpurposes is permitted. Documents classifiedas public, such as press releases, may beused for public communications if the sourceof the information is displayed.

DisclaimerDisclaimer

FORTUM'S website and its content areprovided on “as is” basis. FORTUM does notgive any express or implied representation orwarranty with respect to the informationincluded in FORTUM'S website, including anyrepresentation or warranty as to theaccuracy, completeness or reliability of theinformation. Nothing included in FORTUM'Swebsite can be held as a binding offer orcommitment of FORTUM. FORTUM reservesthe right to modify these terms of use andFORTUM'S website and its content or partthereof at any time without prior notice.FORTUM does not make any representation

or warranty as to the accessibility ofFORTUM'S website.

FORTUM shall in no event be liable for anyloss or damage of whatsoever natureincluding, without limitation, indirect andconsequential damage, such as loss ofrevenue, loss of income, loss of profit,business interruption or loss of data, arisingfrom the use of this website or its content orthe interruption or loss of data, arising fromthe use of this website or its content or theinterruption or inavailability of the same.Neither shall FORTUM be liable for any lossor damage caused due to errors,interruptions or inavailability of data systemsor data communications or damage causeddue to malware of viruses. If the applicablejurisdiction does not allow the abovelimitation of liability, the liability of FORTUMshall be limited to the greatest extentpermitted by the applicable law.

The “Annual review” and “Sustainability”sections have not been audited. TheSustainability section has been providedlimited independent assurance by a thirdparty. References to the future presented onthese pages reflect Fortum's assessments atthe beginning of February 2014.Materialisation of such assessments isdependent on various factors, some of whichFortum may not have an impact on, and thusthe final outcome may deviate from theassessments presented. Fortum discloses itsoutlook statement and the risks related tothe realisation of the outlook statementseparately in accordance with the applicablelaws and regulations under the specificsections in the Operating and FinancialReview. Fortum Corporation's FinancialStatements and Operating and FinancialReview for 2013 and the related Auditor'sReport are available on this website.

Information Submitted by theInformation Submitted by theUserUser

The user of FORTUM'S website is solelyresponsible for the accuracy and delivery ofinformation and materials submitted toFORTUM'S website and that the user isentitled to provide FORTUM with suchinformation or materials. The user ofFORTUM'S website shall take all reasonablemeasures to make sure that information andmaterials submitted to FORTUM do notcontain malware or viruses. FORTUM shall begranted with a royalty-free and unlimited rightto modify, copy, publish and distribute allinformation and materials submitted toFORTUM'S website, either as such or as partof other materials or documentation, for anyand all commercial and non-commercial useto the extent permitted by the laws ofFinland.

Personal InformationPersonal Information

The privacy of customers' personalinformation is important to FORTUM.FORTUM complies with the applicablelegislation on personal data protection. Youmay request to have your personalinformation collected by FORTUM removed orcorrected at any time.

Applicable LawApplicable Law

These terms of use shall be governed by thelaws of Finland.

Enquiries and RemarksEnquiries and Remarks

Please address all enquiries and remarksregarding these terms of use to FORTUM'SLegal Affairs, P.O. BOX 1, 00048 FORTUM,FINLAND, Tel. +358 10 4511

Annual Report 2013 Legal notice


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http://annualreport2013.fortum.com/en/financials/operating-and-financial-review/

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