ESG Questionnaire

General industry

Please list the industry’s three biggest sustainability (ESG) related challenges and briefly describe the process for identifying these challenges?

The key focus areas Aspo has defined for its sustainability work are the following:

• Lowering carbon intensity
• Driving sustainable innovations
• Improving recycling and waste management

• Ensuring employee safety
• Improving the employee, customer and principal experience
• Enhancing product and service quality
  
  

• Sound governance practices
• Thorough risk management
• Continuous development of our sustainability program
  
  

Aspo’s key focus areas and ESG targets are based on extensive target setting process, which included thorough business-specific materiality assessments, stakeholder interviews and benchmark analyses.

Does the company have a Science Based Target, report to the CDP or engage in any similar sustainability initiatives?

Since 2018, Aspo has been a member of the UN’s Global Compact initiative, and the Group’s operations are steered by the ten Global Compact principles related to human rights, working life principles, the environment, and the prevention of corruption.

ESL Shipping committed to setting short- and long-term science-based emissions reduction targets at the end of 2023. Aspo will join the Science-based targets initiative (SBTi) during 2024.

Have you conducted any preliminary assessments of your company in relation to the EU Taxonomy? If so, what was the outcome?

Based on the preliminary assessment conducted in 2021, Telko and Leipurin operations fall outside the scope of EU Taxonomy while ESL Shipping’s turnover, capital expenditure and operating expenditure are all 100% taxonomy eligible.

Environment

Please list the firm's three primary risks related to climate change and if any, the firm's climate related opportunities.

Climate change and the transition to a lower-carbon global economy poses risks to Aspo’s businesses for example through tightened environmental regulation in maritime transport, extreme weather conditions impacting the yields and resulting in a shortage of raw materials, and more comprehensive regulation on the use plastics and certain chemicals.

The long-term target of Aspo Group is that Aspo’s businesses are forerunners in sustainability in their industries, with the aim of turning climate-related risks into opportunities and competitive advantage.

Does the firm anticipate any climate related investments, and if so to what extent?

In 2023, the first next-generation electric hybrid vessel, Electramar, was delivered to ESL Shipping’s subsidiary AtoB@C Shipping. Equipped with a shore-side electricity connection and one megawatt-hour batteries, the vessels are the most energy-efficient in the world in their size category, and their greenhouse gas emissions per transported unit of cargo are nearly 50% lower compared with current vessels. A new vessel is delivered to AtoB@C Shipping every three months, and the order consists of a total of 12 vessels. 

In April 2023, a program was launched to accelerate ESL Shipping’s green transition by assessing three alternative measures: the establishment of a new investment pool for fossil-free vessels, the strengthening of ESL Shipping’s capital by a minority owner, and the sale of two Supramax vessels of the shipping company. As the first result of this assessment, Aspo signed an agreement with OP Finland Infrastructure in November on an equity investment in ESL Shipping, and Varma joined the agreement in February 2024 by making an investment of its own alongside OP Finland Infrastructure.

We will continue our development by modernizing our fleet and deploying new non-fossil fuels. Playing a significant role in the zero-emission transportation of our industrial partners’ zero-emission products is the cornerstone of our shipping company’s strategy.

Circular Economy: how are purchases and waste managed? If the firm rely on any scarce resources, please describe what efforts are made to mitigate the risk of those resources becoming scarcer in the future, e.g. recycling, reusing substitutes or improved resource efficiency?

Improving recycling and waste management is one of the main environmental focus areas for the whole Group. Targets and means naturally vary by business and industry.

ESL Shipping’s goal is to exceed the level set by regulation and pump all cargo hold wash water onshore. The company invested systematically in this in 2023, as a result of which 43.5% (9.3%) of water was pumped onshore for processing. Furthermore, ESL Shipping aims to significantly increase the percentage of waste water pumped to shore reception facilities, targeting 100% rate by 2030.

Telko is working towards lowering its raw material waste percentage to well below industry average. All chemical and other waste is collected carefully and sent to waste handling to authorized companies.

For Leipurin, operating as part of the wider food chain, increasing material efficiency and reducing waste are key priorities. The goal of Leipurin is to reduce its environmental footprint especially by minimizing food waste and the volume of waste. Leipurin has significantly reduced its waste in recent years. This has been possible, for example, by improving the efficiency of procurement activities and holding monthly meetings between procurement, sales and quality. These actions have helped to accelerate the storage turnover rate.

Transition related risks (for example changed customer preferences or legislation): Do you anticipate any risks or opportunities due to the transition to a carbon neutral society? Is there any risk of the firm’s offer being negatively affected? If yes, how has the firm positioned itself to handle that risk?

Most of our operations have a relatively minor footprint and transition-related risks are estimated low. The Group’s most energy intensive business, ESL Shipping, is an industry forerunner in the evolution towards fossil-free sea transports, and we see this as a clear opportunity.

Please disclose your Scope 1, 2 & 3 GHG emissions. If not available, do you have a time plan for when to start reporting?

The table above shows the Group’s Scope 1 & Scope 2 emission development. Aspo is in the process of further developing its sustainability reporting. Scope 3 GHG emissions will be reported in Aspo’s Sustainability report 2024.

Have you set a target to become carbon neutral? If so, how have you defined carbon neutrality?

ESL Shipping has committed to the Science Based Target initiative (SBTi) at the end of 2023 and will set short- and long-term science-based emissions reduction targets that are in line with the Paris Agreement to limit global warming to 1.5 degrees. Aspo will join the SBTi during 2024.

For the whole Aspo Group, the key sustainability target is to reduce carbon intensity by 30% by 2025. By 2023, we have achieved to reduce carbon intensity (CO2e (tn) / Net sales (t€)) down to 0.37 from the 2020 baseline of 0.45. The target for 2025 is 0.30. We will set science-based targets after joining the SBTi. 

Please list the firm’s (1-2) primary means of making a positive environmental impact or minimising negative environmental impact. Please list the corresponding most relevant UN Sustainable Development Goals. What proportion of sales can be directly linked to selected UN SDGs?

Through further investments in energy-efficient vessels and energy sourcing, ESL Shipping is targeting to reduce its CO2 emissions by 50% by 2030, and net zero operations by 2040.

The largest environmental impact of Leipurin and Telko, which operate in the fields of trade and logistics, come from elsewhere in the supply chain. As defined by Aspo’s the goal of these businesses is to be the best and the most responsible partners for their customers and principals in their respective fields and to reduce emissions in the entire supply chain through their expertise.

The UN’s Sustainable Development Goals that have been defined to be the most significant for Aspo and as goals on which Aspo can have the most impact:

• Good health and well-being
• Decent work and economic growth
• Climate action
• Partnerships for the goals

Social

Does the firm have a history of accidents? If so, how have these been managed? Are there any preventive measures, such as policies?

Ensuring employee safety is one of our main sustainability targets: Key KPI is Lost time incident rate (Lost Time Injury Frequency Rate per Million person-hours). In 2023, the TRIF was 4.8, while the target for 2023 was 6.0. Long-term target is zero.

ESL Shipping’s operations and all of its vessels are certified in accordance with the requirements of the International Maritime Organization’s International Safety Management (ISM) code which provides an international standard for the safe management and operation of ships and for pollution prevention.

Operating models have been developed to address safety and investments have been made in communication, with the long-term goal being to develop the company’s safety culture. Telko continued the new Safety Walk policy in its own and external warehouses and at each of its offices to increase safety and awareness of it. The process has proven an effective and productive way to make observations that improve safety and to carry out corrective measures on the basis of them.

If applicable, please state your targets for gender and cultural equality and indicate the relative split of men/women at every level of the firm, particularly the Board of Directors and management team.

In 2023, 30% of all Aspo Group personnel are women.

Three out of seven members of Aspo’s Board of Directors are women.

Does the company conduct any other community engagement activities aside from those directly connected to the business?

As proposed by Aspo’s Board of Directors, the Annual Shareholders’ Meeting on April 6, 2022, authorized the Board to decide on contributions in the total maximum amount of EUR 100,000 for charitable or similar purposes, and to decide on the recipients, purposes and other terms of the contributions. In 2023, donations of approximately EUR 10,000 were made. 

How often does the firm conduct audits of its suppliers, and how often do you discover incidents not compliant with your code of conduct?

To ensure appropriate operating methods, Aspo’s businesses monitor compliance with the Supplier Code of Conduct in various ways. For example, specific sustainability audits have been conducted by Telko since 2019. Warehouse audits conducted in partners’ facilities are also part of Telko’s toolkit to verify the compliance of its supply chain with regulations. In addition to on-site audits, a larger group of suppliers is monitored through self-assessment.

Many of the partners of ESL Shipping, Telko and Leipurin are large international companies, with which each of these businesses have been engaged in long-term cooperation and which have their own stabilized processes for the responsible management of supply chains. Aspo’s Internal Audit and Legal Affairs departments also conduct audits within all businesses in accordance with annual plans. No major incidents of non-compliance have been discovered in recent years.

Governance

Do all staff members receive continuing education on anti-corruption? Is there an external whistle blower function? Are there any ongoing or historical incidents involving corruption, cartels or any other unethical business conduct? Have any preventive measures been taken?

Our Code of Conduct and Compliance trainings are mandatory for all personnel and are conducted yearly.

Since 2020, Aspo has been using a fully anonymous whistleblowing channel maintained by an external party. The system makes the processing of reported cases more effective and guarantees the anonymous and encrypted exchange of messages with the person who reported each case.

Please state the firm’s business tax residence ( i.e. where the firm pays tax) and explain why that specific tax residence was chosen.

Finland. Aspo is headquartered in Espoo, Finland, and is listed on Nasdaq Helsinki stock exchange.

How many independent members sits on the Board of Directors?

All seven members of Aspo’s Board of Directors are independent of the company. Five out of seven board members are independent of company’s major shareholders.

Please state if and to what extent, the company has transactions with related parties.

Aspo complies with the legislation governing related party transactions, the Finnish Corporate Governance Code, and the rules and instructions of Nasdaq Helsinki Oy.

Aspo’s related party transactions are described in Note 5.2 (Related parties) of the 2023 consolidated financial statements. Related party transactions are not significant for the company, nor do they differ from the company’s normal business activities, and they have been carried out at normal market conditions.

Which KPIs dictate the renumeration to management (are sustainability and diversity goals included)?

In 2021, we published key environmental, social and corporate governance (ESG) themes and sustainability goals for Aspo and its businesses. In February 2023, the Board of Directors of Aspo Plc decided to establish a new share-based incentive plan for 2023–2025. The share-based incentive plan consists of three earnings periods, with the earned reward being based on the Group’s earnings per share (EPS, weight value 80%) and two sustainability indicators (emission intensity and accident frequency, weight value 20%).

Describe the company’s process for monitoring and reporting ESG issues and performance to senior management/the Board. In you response please confirm what KPIs are monitored (if any) and how frequently reporting is undertaken.

Aspo reports on its key sustainability target on a quarterly basis as part of our interim reports. In addition, Aspo along with its businesses publishes an annual sustainability report detailing the progress made in our sustainability work.

Internally, the sustainability targets and performance are regularly assessed on a Group and business level by the Management teams and Board of Directors of Aspo and its subsidiaries. We are in the process of further developing our reporting and monitoring tools and continue to analyze the EU taxonomy requirements.

Have you signed a Union agreement?

A substantial part of Aspo’s employees are members of trade unions, and several collective bargaining agreements have been made with these unions.