Impact on society
Management approach
Energy is a basic requirement in modern society. Vattenfall serves society by delivering the energy needed to make society work and become prosperous. Vattenfall also plays an important role in society as an employer and business partner, and corporate citizenship is emphasised in markets where the company operates. Vattenfall’s responsibility is to contribute to sustainable development of society while providing energy solutions that meet customers’ – and thus society’s – needs.
All activities are guided by Vattenfall’s core values:
- Openness: “We tell what we know and show the whole picture of what we do. Our business is not only transparent in a passive way; we also actively seek dialogue with our stakeholders.”
- Accountability: “We take responsibility for everything we do and act as a responsible citizen in society.”
- Effectiveness: “We strive to do the right things in the right way. This goes beyond mere process-related efficiency. It is important not only how we do things, but also what we do.”
Preventing corruption and bribery
Vattenfall works against corruption in all forms, including extortion and bribery. Vattenfall’s business ethics principles state that no employee may offer or receive improper benefits or benefits that may be regarded as improper remuneration in order to obtain, retain or direct business or in order to secure any other improper advantage in business conduct. Such prohibited benefits (bribes, etc.) include cash, items, pleasure trips or services of another nature.
The key to anti-corruption work is to educate all managers and others with extensive external contacts on all levels of the organisation about internal and external rules and, for management, to ensure compliance with these rules. Vattenfall has Annual Group-wide to the board reporting in place in order to ensure compliance.
Moreover, Vattenfall has signed an anti-corruption initiative launched by the World Economic Forum in co-operation with Transparency International and the Basel Institute of Governance. Vattenfall thereby supports ‘Partnering against Corruption – Principles for Countering Bribery’ (the PACI Principles), derived from Transparency International’s ‘Business Principles for Countering Bribery’. Adherence to the PACI Principles means adopting a zero-tolerance policy on bribery and a commitment to develop a practical and effective internal programme for implementing this policy. More information about the PACI Principles and definitions can be found at www.weforum.org. In May 2006, Vattenfall also became a Principal Corporate Member of Transparency International Sweden, part of a network against corruption headquartered in Berlin.
Preventing anti-competitive behaviour
Vattenfall has a range of principles, policies and rules designed to ensure that it does not engage in anti-competitive behaviour. Effective and fair competition is vital to ensuring market efficiency. Competition rules are important tools that serve this purpose. As it is truly beneficial from a business perspective, the Vattenfall Group is dedicated not only to complying with competition rules, but also to acting in accordance with business standards that meet the highest expectations from customers and the public.
Vattenfall’s Code of Conduct states: “We are to carry on our business activities effectively and in fair competition. We do not enter into or carry into effect restrictive agreements with competitors.”
Vattenfall has also adopted specific antitrust and competition rules designed to ensure fair trade and practice in the market. An antitrust compliance programme has been initiated by the Executive Group Management (EGM) and is part of Vattenfall’s global leadership development programme. This programme supports Vattenfall’s core values of openness, accountability and effectiveness while fostering an overall common business culture and attitude.
The key to anti-corruption work is to educate all managers and others with extensive external contacts on all levels in the organisation about the internal and external rules and, for management, to ensure compliance with these rules. Vattenfall has a monthly Group-wide reporting system in place in order to ensure compliance. In addition, this is reported annually to the board.
A specific issue related to competition among energy utilities is unbundling. Vattenfall complies with unbundling rules. These rules form part of national legislation, based on EU directives, and state that the transmission and distribution business must be separated (for instance placed in separate legal entities) from other businesses, especially the electricity generation and sales businesses. Accordingly, the regulated monopoly business is separated from the businesses under free competition. Compliance with unbundling rules is essential to ensuring that Vattenfall only uses fair means of competition. For instance, Vattenfall’s transmission and distribution companies may not discriminate against generation and sales companies from outside the Vattenfall Group. In return, Vattenfall also expects transmission and distribution companies from outside the Vattenfall Group to not discriminate against Vattenfall’s generation and sales business.
In cases of non-compliance, Vattenfall’s management may, in accordance with internal instructions, take all necessary actions. Employees found responsible for a breach of the instructions and/or competition rules are held accountable. Depending on the nature of the breach, appropriate disciplinary actions, not excluding dismissal, will be considered and taken.
Public policy
The energy sector is a complex industry that is highly dependent on public policy and political decisions. Being a large energy supplier, Vattenfall is an important actor in society and actively participates in the public debate and democratic process. For example, one major challenge that society and Vattenfall faces is to increase generation from renewable energy. A number of factors must be taken into account when planning for new energy, such as environmental concerns, public confidence, and legal and regulatory aspects. All public policy work at Vattenfall aims at creating the best possible conditions for providing energy to society at commercial grounds.
Through openness and transparency, Vattenfall strives to maintain a continuous dialogue with decision makers and other stakeholders on regional, national and international levels. All activities are handled according to Vattenfall’s Business Ethics Principles, which stipulate that all actions and activities must be based on full respect for democratic principles as well as for laws, rules and regulations.
Vattenfall’s main operations are in the countries in which the company is a provider of electricity and heat: Finland, Denmark, the UK, Germany, Poland and Sweden. In addition, Vattenfall is active on the European scene, primarily through the Vattenfall European Affairs Office in Brussels.
Policy
Vattenfall’s Code of Conduct regulates the company’s approach to interaction with society. The Code is based on the company’s philosophy and core values. The Code of Conduct describes, among other things, the company’s responsibility with respect to the owner, customers, employees, the environment, the business environment and the community. High ethical standards must be maintained in all actions and in all contexts.
Compliance with codes, agreements and frameworks
Vattenfall has no specific, formal framework for managing societal interaction and support. Instead, it relies on several principles and tools, for example:
- The company’s philosophy, Business Ethics Principles and Code of Conduct.
- Vattenfall has formed a stakeholder platform and surveys stakeholders’ expectations and opinions. This forms a basis for operational and reporting matters, such as for improving this report.
- Vattenfall supports and complies with the principles of the UN’s Global Compact.
- Partnering against Corruption – Principles for Countering Bribery
(the PACI Principles).
Organisational responsibility
Organisational responsibility for managing societal impact and interaction follows the regular governance structure. Organisational responsibility for managing the impact of operations (including sponsoring and donations) is handled by the respective business units. However, some of these tasks are centralised or managed in co-operation with Group functions.
With respect to community and public policy development, a separate organisation exists within Vattenfall – Vattenfall Public Affairs, under Group Communication. This is a wide-ranging function that co-ordinates Vattenfall’s positions on key issues and is the direct link to Vattenfall’s owner – the Swedish state.
The most senior position in public policy matters is the Head of Group Communication, who is also a vice president of the company.
Public affairs functions exist in every country in which Vattenfall operates. The Group Public Affairs function co-ordinates activities between countries. Activities are conducted in close co-operation with Vattenfall’s European Affairs Office in Brussels.
The General Counsel of the Vattenfall Group (who is also Head of Group Function Legal Affairs) co-ordinates the guidelines, instructions and follow-up of measures to prevent corruption and anti-competitive behaviour. It is the responsibility of each manager in the line organisation to ensure compliance (e.g., by implementing local instructions) and to report on this compliance. The line organisation also reports all major disputes to Group Function Legal Affairs regularly and on specific cases
Training and awareness
Vattenfall’s managers and employees throughout the Group carry on a continuous dialogue with stakeholders in society. Vattenfall strives to improve communication skills at all levels of the company, for example through media training and workshops.
Vattenfall offers training programmes on corruption, public policy and anti-competitive behaviour. For example, in the Antitrust Compliance Programme developed and implemented by Vattenfall’s Executive Group Management (EGM), one-day seminars are held at which discussions are conducted on Vattenfall business cases and how to apply the Company’s rules in different situations. The participants prepare for each seminar using a special e-learning tool. The target group is all managers at the Business Group and business unit levels as well as other employees with extensive external and competitor contacts. The objectives of these seminars are to:
- Ensure a shared basic understanding of the rules and how to comply with them and Vattenfall’s internal values, policies and rules,
- Support a shared Vattenfall business attitude and a shared corporate mind-set, and
- Enable delegation of responsibility for compliance with the rules.
Goals, performance and risk pertaining to impact on society
Customer Satisfaction Index
Vattenfall has set a customer satisfaction target to measure success; the aim is to achieve a Customer Satisfaction Index score of 63 for retail customers for the period 2008–2010. The long-term goal is 70. For further information, see the indicator PR5.
Vattenfall Reputation Monitor
Vattenfall is interested in how society perceives the company and in people’s opinions about the company, and strives to continuously improve stakeholder relationships. One important tool to collect feedback from all stakeholder groups is the annual Vattenfall Reputation Monitor (VRM), which measures awareness, reputation and preference of Vattenfall – among many other parameters – and by statistical simulation suggests actions areas for improvement.
Risk
Vattenfall’s operations are exposed to a number of risks that affect earnings and the balance sheet. To manage these risks, Vattenfall has established an organisation and risk management process. Governance takes place through a set strategy and established body of rules. To be able to effectively manage manageable risks, methods and models are being continuously developed to measure and evaluate risks and their management. Read more about risks in the 2008 Annual Report.
Political risk is defined as the commercial risk that can arise as a result of political decisions. Examples of this are price regulation in electricity distribution and transmission, uncertainty regarding a new political majority, or changes in finance policies. In connection with acquisitions and other investments, this type of risk is managed by adjusting the cost of capital. Another type of political risk stems from changes in the rules governing the energy industry. These can concern such factors as changed taxes, environmental surcharges, changes in how natural monopolies are regulated, and political goals for the energy system. This type of risk is more difficult to predict and protect against. To mitigate this risk, Vattenfall conducts active business intelligence activities and maintains contacts with decision-makers in relevant markets. Vattenfall also belongs to various national and international trade organisations.
Non-compliance can have considerable financial consequences, especially with regard to anti-competitive behaviour. Furthermore, there is an obvious risk of damage to the Vattenfall brand.
Vattenfall has a zero-tolerance policy regarding the soliciting and accepting of bribes, and it expects its suppliers to respect this position. Internally, prevention of corruption and anti-competitive behaviour is mainly regulated by instructions at different levels in the Group. With respect to Vattenfall’s suppliers, Vattenfall’s code of conduct for suppliers has been adopted as part of the agreement with suppliers. Prevention of corruptive behaviour is followed up by regular reporting to the responsible Group functions. This regulation, in turn, is audited by the Internal Audit function. In 2008 a Group-wide seminar for purchasers focusing on compliance was developed and held for the first time (see HR2–3).
