Sustainability risks and opportunities

Valmet has a systematic method for regularly assessing the probability and impact of sustainability and climate-related threats and opportunities.

Management of sustainability and climate-related risks is integrated into the multidisciplinary group-wide risk management process at Valmet. Each Valmet business line annually assesses the probability and impact of e.g. climate-related and environmental risks, and defines the need and priority of the actions to remove, mitigate, minimize, retain or utilize risks using Valmet’s risk profile, which lists company risks on the headline level.

This section describes Valmet’s most important sustainability risks and opportunities. More on climate-related risks and opportunities can be found in our TCFD website.

Supply chain 

Valmet’s global supply chain includes procurement from countries with different risk levels. Potential risks in the supply chain include for instance breaches to intellectual property rights and company assets, compromising human rights or labour rights, risks to occupational health and safety and causing environmental damage. Valmet’s suppliers can cause notable reputation or business risks to Valmet if they engage in such unethical behaviour. 

In order to effectively manage risks in the supply chain, Valmet has in place a comprehensive approach to sustainable supply chain management including a global process for supplier sustainability risk assessments, supplier self-assessments and supplier sustainability audits executed by a third party. Valmet requires all its suppliers to comply with its Sustainable Supply Chain Policy, which expects suppliers to adhere to the same high standards as Valmet does. 

Valmet’s own operations 

Climate related regulation and initiatives 

Climate-related risks in Valmet’s own operations relate to increased costs and administrative burden due to changes in regulations and policies in the areas of climate, energy and environment.  

Potential business impacts of climate change to Valmet come mainly from international agreements as well as national and regional commitments to carbon neutrality. These drivers mobilise developments that also in the mid and short-term affect our operating environment. One example of these is the European Green Deal with initiatives, such as the Fit for 55 -package to reduce emissions in the EU by at least 55 percent by 2030. 

Mitigating actions include the management of the potential risks and opportunities via monitoring and participating in the political debate related to the decision-making processes so as to be able to better adapt to and take advantage of the changing environment. This applies both to the Valmet offer as well as to Valmet’s own operations. 

Climate-related physical risks  

Due to climate change, changes in annual precipitation and extreme weather conditions are becoming more common. For example, floods or tornadoes could pose a threat to the continuity of Valmet’s operations. Valmet is managing these risks on group-level by monitoring the annual development in areas where low temperatures and large amounts of snow pose a risk and taking necessary preventative measures regarding production sites and equipment. 

Change in raw material prices 

The scarcity of raw materials, water shortage and rising energy costs could impact Valmet’s and its customers’ operations and business environments. For example, an increase in energy prices could have an impact on Valmet’s operational costs.  

Health, safety, and environment (HSE) 

In our own operations, the greatest threats to employee health and safety such as work related illnesses, accidents and occupational wellbeing arise from a working culture where our health and safety processes are not followed and risks in the work environment are not controlled or even recognized. The greatest environmental risks relate to the use of hazardous substances and to waste handling. 

We have in place a Health, Safety and Environment (HSE) policy, strategic initiatives for global HSE development, key group-wide processes such as an HSE incident management system (HSE monitor), the ISO 45001 health and safety and ISO 14001 environmental management systems as well as location-specific HSE action plans and permits to mitigate these risks. We focus on building a strong HSE culture, continuously improving our processes, and systematically monitoring compliance with our HSE standards and procedures. 

People and performance 

Competence gaps 

As Valmet continues to strengthen its presence closer to its customers, especially in emerging markets, we must ensure that there are necessary competencies in place across regions. Significant competence gaps in different markets could prevent Valmet from successfully executing its strategy and maintaining customer satisfaction. 

Unethical business behaviour 

Employee-related risks may also arise from violations to Valmet’s Code of Conduct and related principles, such as practices related to bribery, fraud, corruption, and misconduct, which could impact Valmet’s reputation and thus financial position. 

Valmet’s services and solutions 

Cost-effective sustainable solutions 

Valmet’s cost-effective sustainable solutions present an opportunity for Valmet. This is because our product development focuses on creating technologies that reduce the use of energy, water and raw materials. Our comprehensive service offering increases the life cycle of our products and helps to minimize environmental impacts when our customers use our technologies. 

Solutions based on resource efficiency and renewable energy 

Tightened climate-related regulation and initiatives create opportunities in the market for Valmet’s solutions through increased demand for resource efficiency and the use of renewable raw materials. The use of renewable energy is increasing around the world in the aspiration to achieve climate targets, and thus our know-how in biomass- and waste-based energy solutions is a significant competitive advantage for us. Valmet's solutions are developed to decrease energy, water and raw materials use, reduce effluents, and improve process efficiency.  

Product stewardship 

Risks related to product stewardship may arise from the use of metals subject to radiation or the use of restricted materials (such as conflict materials) in Valmet’s supply chain. Product safety can also be compromised if safety instructions are disregarded. Therefore, Valmet pays careful attention to safety labelling and CE-labelling and requires its suppliers to comply with Valmet’s Sustainable Supply Policy.  

Growth of emerging markets 

The balance of power in the global economy is rapidly shifting away from the developed economies to, for example, the BRIC countries. Valmet aims to expand its presence in emerging markets and strengthen its presence through services growth. 

Changing consumer behavior 

Consumer habits are changing globally due to climate change and rise in living standards, especially in emerging markets. Changing consumer habits create new business opportunities for Valmet due to the pressure that increased consumption coupled with increased environmental awareness places on finding resource and energy-efficient sustainable solutions. 

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