Nokian Renkaat

The role of the administrative, management and supervisory bodies

Composition of administrative, management and supervisory bodies

Board of Directors composition (2024):

• Total members: 9 non-executive members
• Executive directors: The President and CEO was an executive director
• Employee representation: No employee representation on the Board of Directors
• Independence: 89% independent (8 out of 9 members). All members were independent of the company and major shareholders except Reima Rytsölä, who was deemed not independent of a significant shareholder based on his position as CEO of Solidium Oy (ownership 10.10%)

Diversity breakdown (Board of Directors and President and CEO, end of 2024):

Board composition details:

• 6 male members (66.7%) and 3 female members (33.3%)
• 3 different nationalities
• Age range: 48–67 years
• President and CEO: male and Finnish (Jukka Moisio until end 2024; Paolo Pompei from January 2025, male and Italian)

Relevant experience of Board members:

• Tire industry
• CEO experience
• International experience (especially Nordic, Central European and North American markets)
• Financing
• Corporate risk management
• Corporate governance

Board Committees with sustainability oversight

People and Sustainability Committee (PSC):

• Established by the Board of Directors
• All members are independent of the company and major shareholders
• No independent decision-making power; collective decisions made by Board of Directors
• Members (as of April 30, 2024): Elina Björklund (Chair), Susanne Hahn, Jukka Hienonen
• Responsibilities:
  • Prepares sustainability topics for the Board of Directors
  • Monitors developments in the operating environment and regulation relating to sustainability
  • Regularly reviews with management the progress of the company's sustainability program
  • Monitors sustainability reporting process
  • Reviews sustainability topics at least three times a year or as needed

Other Board Committees:

• Audit Committee: Jouko Pölönen (Chair), Reima Rytsölä, Elisa Markula
• Investment Committee: Christopher Ostrander (Chair), Markus Korsten, Pekka Vauramo (established April 30, 2024 to focus on strategic investments)

Sustainability-related roles and expertise

Board level:

• The Board of Directors is the entire group's highest body overseeing sustainability, including impacts, risks and opportunities
• Approves key sustainability targets and group policies
• Skills and competencies in leadership, strategy development and execution, governance, risk management, remuneration, communications and stakeholder relations are relevant for sustainability program development and execution
• Board committee work enables deepening of sustainability expertise through topic-specific presentations and trainings
• Internal and external sustainability professionals can be asked to speak at committee meetings

Management level:

• Senior Vice President, Operation Excellence: Leads sustainability work, member of Management Team
• VP, Quality and Sustainability: Reports sustainability matters to People and Sustainability Committee at least three times a year or as needed
• Sustainability Steering Group: Supervises and monitors sustainability work, comprises senior representatives from Operation Excellence, Products & Innovations, Legal, Finance, Human Resources, and Communications functions
• GHG Steering Group: Supervises and monitors progress in reducing greenhouse gas emissions

Working groups:

• Sustainability working group
• Safety management working group
• Environmental working group
• Energy efficiency working group
• Sustainable purchasing working group

Frequency of sustainability discussions

• Sustainability topics are included in the agenda of People and Sustainability Committee meetings
• Topics chosen based on relevance and importance
• VP, Quality and Sustainability reports to People and Sustainability Committee at least three times a year or as needed
• To maintain regular information flow, sustainability topics are on PSC meeting agendas
• Results of double materiality analysis and material impacts, risks, and opportunities were presented to Board in February 2024
• Updated science-based greenhouse gas emissions reduction targets confirmed by Board in 2024
• Annual risk review integrated into strategy work presented to Board (includes ESG risks)

Governance arrangements

Board of Directors:

• Responsible for overall management and organization of operations
• Authority to lead and represent company (unless matter belongs to General Meeting)
• Holds general authority pursuant to Finnish Limited Liability Companies Act and Articles of Association
• Policies and key tasks defined in Finnish Limited Liability Companies Act, Articles of Association, and Board Charter
• Discusses most significant risks, risk appetite and related measures in connection with strategy process and decisions on business objectives and major investments

President and CEO:

• Appointed by Board of Directors
• Responsible for day-to-day management in accordance with Board instructions
• Conducts business and manages operations pursuant to Finnish Limited Liability Companies Act
• Responsible for informing Board regarding business and financial situation
• Prepares strategy and objectives for Board approval
• Implements approved strategy and plans
• Ensures legal compliance of bookkeeping
• Arranges reliable asset management

Management Team:

• Includes member responsible for sustainability (SVP Operation Excellence)
• All supervisors have duties including day-to-day leadership of sustainability

Remuneration of Board of Directors (2024)

The Annual General Meeting decided on the following remuneration:

Annual fees:

• Chair of the Board: EUR 115,000 per year
• Deputy Chair and Chairs of Committees: EUR 76,000 per year each
• Other members: EUR 53,500 per year each
• 60% paid in cash, 40% in company shares

Meeting fees:

• EUR 700 for each Board and Board Committee meeting
• For Board members resident in Europe: fee doubled for meetings in Europe outside home country, tripled for meetings outside Europe
• For Board members resident outside Europe: fee tripled for meetings outside home country
• EUR 700 for participation via telephone or video connection
• Travel expenses compensated according to company travel policy

Integration of sustainability in remuneration

Remuneration Policy:

• Links sustainability-related performance measurements into incentive schemes
• Ensures management remuneration is linked to achievement of sustainability goals
• Aligns management interests with company and stakeholders
• Presented to and adopted by Annual General Meeting 2024
• Board of Directors oversees company remuneration, including sustainability-related rewards
• Board follows progress in meeting targets in PSC meetings and approves President and CEO remuneration

Performance Share Plan 2023–2027:

• Performance periods cover 2023–2024, 2024–2025, and 2025–2027
• 2024–2025 performance period criteria:
  • EBITDA
  • Increase in passenger car tire production volume
  • Reduction in direct CO2 emissions
• CO2e sustainability target carries 10% weight of total target setting
• Approximately 150 persons in target group (including President and CEO and Management Team)
• Rewards paid partly in shares, partly in cash
• One-year retention period
• President and CEO and Management Team members obliged to hold 50% of received net shares until total shareholding corresponds to annual gross salary

Restricted Share Plan 2024:

• Complementary long-term incentive tool for retention of key employees
• Three-year retention period
• Financial performance criterion for Management Team: threshold value for segments ROCE must be exceeded
• Maximum approximately 120,000 gross shares for RSP 2024–2026

Integration of sustainability-related performance in incentive schemes

Roles covered

Nokian Tyres' incentive schemes include sustainability-related performance measurements for:

• The President and CEO
• The Management Team
• Other selected key employees

The Board of Directors oversees the company's remuneration, including the sustainability-related rewards, by following the company's progress in meeting the targets in the People and Sustainability Committee meetings and by approving the President and CEO remuneration.

Short-term incentive (STI)

No specific details of STI structure or sustainability KPIs are disclosed.

Long-term incentive (LTI)

Nokian Tyres Performance Share Plan

The current performance criteria in the company's main long-term incentive plan, the Nokian Tyres Performance Share Plan, are:

• Cumulative EBITDA
• Increase in passenger car tire production volume
• Reduction of Scope 1 and 2 carbon dioxide equivalent (CO₂e) emissions

Weighting: The CO₂e sustainability target carries 10 percent weight of the total of 100 percent target setting within long-term incentives.

Performance period: Share-based incentive plans typically have performance periods of a minimum of three years.

Target structure: The Board of Directors decides on the terms and conditions of the plans and on the performance criteria and related objectives separately for each performance period. The achievement of performance criteria is evaluated after each performance period and the amount of the reward is determined based on the extent to which the goals have been reached during the performance period.

Nokian Tyres Restricted Share Plan

This plan serves as a complementary long-term incentive tool, used for the retention of Nokian Tyres President and CEO, the Management Team, and other selected key employees. No specific sustainability KPIs disclosed for this plan.

Purpose and design

A significant aspect of the Remuneration Policy is to link sustainability-related performance measurements into incentive schemes. This ensures that the management's remuneration is linked to the achievement of sustainability goals, thereby aligning the management's interests with the company and its stakeholders.

The Nokian Tyres Performance Share Plan is intended to:

• Align the objectives of the Nokian Tyres' shareholders and key employees for increasing the value of the company in the long term
• Retain the key employees at the company
• Offer them a competitive incentive scheme that is based on earning and accumulating shares

The criteria for the performance period are based on strategic, financial, production, and sustainability-related goals.

Payout against sustainability KPIs in the reporting period

No disclosure of actual payout or achievement against the CO₂e reduction target for 2024.

Governance

The Board of Directors approves the key sustainability targets as well as the group's policies guiding the group's operations and internal control. The People and Sustainability Committee prepares sustainability topics for the Board of Directors and monitors developments in the operating environment and regulation relating to sustainability.

Strategy, business model and value chain

Description of business model and value chain

Nokian Tyres' product portfolio includes winter, summer, all-weather, and all-season tires for passenger cars as well as special tires, wheels and retreading materials for heavy-duty machinery, trucks and buses. The Vianor chain provides tire and car services.

In 2024, Nokian Tyres' products were sold in 46 countries. Nokian Tyres' key markets are the Nordic countries, where the company is the market leader in premium passenger car tires, and North America and Central Europe, where the company seeks growth. Nokian Tyres' direct customers are business customers, the most significant of which are tire dealers, car dealerships, and vehicle manufacturers. Vianor service centers operate in Finland, Sweden, and Norway, serving both business customers and end users.

In 2024, Nokian Tyres employed 3,810 people at the end of the year, of which 2,722 in the Nordic countries, 618 in North America, and 470 in Central Europe.

Net sales by geographical area:

• Nordic countries: 54% (57%)
• Other Europe: 25% (19%)
• Americas: 21% (23%)
• Other countries: 0% (1%)

Employees by geographical area:

• Nordics: 71% (78%)
• Other Europe: 12% (6%)
• North America: 16% (16%)

Business units

Nokian Tyres' business is divided into three units: Passenger Car Tyres, Heavy Tyres, and Vianor.

Passenger Car Tyres business unit develops, manufactures and sells high-quality winter, summer and all-season tires for passenger cars, SUVs, and vans. The unit operates within the premium tire segment and focuses on the replacement tire market, generating more than half of Nokian Tyres' total net sales. The Passenger Car Tyres business unit comprises three business areas: Nordics, Central Europe, and North America. Nokian Tyres' factories are located in Nokia, Finland, Dayton, US, and Oradea, Romania. Manufacturing partners complement own production.

Heavy Tyres business unit develops and manufactures special tires for trucks and heavy machinery, focusing on niche product segments. The core products include forestry tires, tires for ports and terminals, mining, agriculture, trucks and buses, and other heavy uses, such as earthmoving and road maintenance. Manufacturing of heavy industrial tires takes place in Nokia, Finland, while wheels for heavy machinery are produced in Nastola, Finland. Additionally, truck and bus tires are produced by manufacturing partners.

Vianor is the largest car maintenance and tire services chain in the Nordic countries with a wide network of service centers and online stores. The target is to support sales and premium brand position in the Nordic countries by ensuring the sales of Nokian Tyres' products through strong distribution and excellent service, while also delivering positive results as a standalone unit.

Strategy and sustainability integration

Nokian Tyres' vision is to lead the world to drive smarter.

The cornerstones of Nokian Tyres' strategy are:

1. The safest tires for all conditions
2. Responsive and effective supply chain
3. Premium Nokian Tyres brand
4. Leader in sustainability
5. Nokian Tyres team

Especially cornerstones 1, 4, and 5 are related to and/or impacted by sustainability matters and reflect the company's ambition to continuously develop sustainability and show leadership.

Financial target: To achieve net sales of two billion euros with strong profits.

Long-term financial targets:

• Net sales growth: Annual growth of 5 percent
• Segments operating profit margin: At least 15 percent
• Gearing: Maximum 70 percent
• Dividend: Minimum 50 percent of earnings per share

Sustainability-related goals embedded in the business model

Nokian Tyres' sustainability-related goals regarding significant product groups and stakeholder relationships are the following:

Product-related goals:

• Maintain the status that tires do not contain Substances of Very High Concern
• Increase the share of renewable or recycled raw materials in tires to 50 percent by 2030
• Have at least 60 products in the best rolling resistance A class by 2028
• Maintain the status that 100 percent of premium tires of the selected scope are in the best wet grip A or B class in the EU Tyre Labelling and that all of the Nokian Tyres Hakkapeliitta products meet the EU ice grip requirements

People-related goals:

• Decrease lost-time incident frequency (LTIF) from 8.3 (2018) to 1.5 by 2025
• Develop personnel well-being

Supply chain-related goals:

• Maintain the status that 100 percent of sustainability high-risk suppliers have been audited
• Maintain the status that 100 percent of natural rubber processor suppliers are either GPSNR members or have signed Nokian Tyres' sustainability commitment

Climate goals: Nokian Tyres' new greenhouse gas emissions reduction targets, approved by the Science Based Targets initiative in 2024:

Near-term targets for 2030:

• Absolute Scope 1 and 2 GHG emissions: Reduce by 42 percent from the 2022 base year
• Scope 3 GHG emissions: Reduce by 51.6 percent per ton of product purchased (includes emissions from purchased goods and services, and upstream transportation and distribution)

Long-term targets for 2050:

• Absolute Scope 1 and 2 GHG emissions: Reduce by 90 percent from the 2022 base year
• Scope 3 GHG emissions: Reduce by 97 percent per ton of product purchased (includes emissions from purchased goods and services, capital goods, and upstream transportation and distribution)
• Reach net-zero emissions across the value chain by 2050

Value chain description

Upstream value chain:

Suppliers: The main raw material groups in tire manufacturing are synthetic rubber, fillers, chemicals, reinforcing materials, and natural rubber. Nokian Tyres uses more than 200 different raw material suppliers. Manufacturing partners complement Nokian Tyres' own production. Vianor imports tires and purchases goods for tire and car service. Nokian Tyres requires that all sustainability critical suppliers adhere to the Supplier Code of Conduct, and supplier sustainability audits have been conducted since 2016.

Subcontractors: Nokian Tyres and Vianor work with several subcontractors in various fields, such as construction, security, cleaning, and logistics. All new subcontractors offering their services are expected to commit to the Supplier Code of Conduct.

Transportation of raw materials: Most of the raw materials for tires are transported by sea to large ports in Europe from where they are shipped to Finland and the US.

Own operations:

Nokian Tyres Group employs more than 3,800 people. Nokian Tyres produces passenger car, van and heavy tires in Finland, and passenger car and light truck tires in the US. The new factory in Romania produces passenger car tires. In addition, there are sales companies in the key markets. Two test centers are located in Finland and one in Spain. Vianor offers tire and car services and also operates five retreading plants in Finland, Sweden and Norway.

Downstream value chain:

Logistics: From the logistics centers, the tires are transported to warehouses by land and sea.

Distribution: Nokian Tyres' products are sold to end users via Vianor and Vianor Partner chains, car dealerships and tire stores. Due to the extensive distribution network, Nokian Tyres' products are sold in 46 countries.

Consumers and end users: Consumers and end users are people who drive or operate vehicles that have Nokian Tyres' tires. They can be, for example, passenger car drivers, people working for transport companies driving trucks, buses or vans, or people working in forestry or agriculture. Vianor offers tire and car services for both consumers and business customers. Approximately 90 percent of a Nokian Tyres tire's carbon footprint is generated during its use.

Society: Nokian Tyres' impact is directly seen in the factory locations as a locally significant job creator and a permanent part of the surrounding community. The purchases, salaries, and taxes as well as the dividends to shareholders contribute to well-being throughout the world.

Recycling: End-of-life tires can be shredded or granulated to be utilized in various applications. Bus and truck tires can be retreaded two to four times. Used tires can also be combusted for energy. Nokian Tyres uses some recycled materials in the products, such as recycled steel and carbon black.

Key inputs and outputs

Key inputs:

• Raw materials: synthetic rubber, fillers, chemicals, reinforcing materials, and natural rubber (more than 200 different raw material suppliers)
• Energy (total energy consumption 379,966 MWh in 2024, of which 55.6% from renewable sources)
• Water
• Manufacturing equipment and technology

Key outputs:

• Passenger car, van and heavy tires
• Tire and car services (through Vianor)
• Employment for 3,810 people
• Net sales: EUR 1,289.8 million (2024)

Strategic investments and capacity

During 2024, a critical project was the building and preparing for the ramp-up of the new factory in Romania. The Romanian factory operates without utilizing any fossil energy, making it the world's first full-scale tire factory with zero CO2 emissions. Part of the electricity used in the factory is generated by on-site solar power units. Steam used to cure the tires is generated by innovative electric boilers, which use fully CO2 emission free electricity.

In the short term, the top priority is the successful ramp-up of the new factory in Romania while simultaneously enhancing manufacturing capabilities in Finland and the US. With dedicated production facilities closer to customers and consumers, Nokian Tyres is building a more agile business model to better serve key markets.

Interests and views of stakeholders

Nokian Tyres is committed to minimizing its negative impacts and maximizing its positive impacts on the economy, environment, and people. An essential part of driving this positive change is understanding how Nokian Tyres' stakeholders view sustainability and which sustainability topics are relevant for society and the company's business. This is done by engaging stakeholders when conducting double materiality assessments every three years. The feedback from stakeholders is taken into account in operational development and decision-making.

In addition to the materiality assessments, engagement occurs as presented in the following table by key stakeholder group. The table also presents the purpose of engagement, topics that different stakeholder groups prioritized in the most recent materiality assessment, and how those views have been or are considered in Nokian Tyres' operations, business model, and strategy.

Key stakeholder groups and stakeholder engagement at Nokian Tyres

Integration of stakeholder views into strategy and decision-making

The prioritization of sustainability topics in different stakeholder groups was presented to the Management Team and to the Board of Directors in February 2024 together with the results of the double materiality analysis.

Engagement with consumers and end users

Creating safe tires for all conditions is an essential part of Nokian Tyres' business model, and Nokian Tyres' products are developed to help both drivers and other people using the roads stay safe in traffic. From the perspectives of consumers and end users, collecting information about their views is part of the process when developing a new passenger car tire. For heavy tires, the insight is gained through customer surveys. Consumers and end users can also contact the company and leave product feedback through the websites. Additionally, they can participate in materiality assessments through public links shared on the company's social media channels. Furthermore, the tire and car service chain Vianor and Nokian Tyres' customers sell Nokian Tyres' products to consumers and end users and have insight into their views.

Engagement with affected stakeholders in due diligence

Engagement with affected stakeholders occurs in all key steps of the due diligence process as outlined in the relevant sections:

• Hearing the interests and views of stakeholders: Table on stakeholder engagement with suppliers, business partners, and subcontractors
• Identifying and assessing adverse impacts (Workers in the value chain): Audits help identify the topics to be improved
• Taking actions to address those adverse impacts (Workers in the value chain): Audits help identify the topics to be improved
• Tracking the effectiveness of these efforts and communicating (Workers in the value chain): Audits help identify the topics to be improved

Material impacts, risks and opportunities and their interaction with strategy and business model

Overview of material sustainability topics

According to the double materiality analysis conducted between September 2023 and February 2024, the most material topics for Nokian Tyres are:

• Climate change
• Pollution
• Biodiversity and ecosystems
• Resource use and circular economy
• Own workforce
• Workers in the value chain
• Consumers and end users
• Business conduct

Material impacts, risks and opportunities by topic

E1 Climate change

E2 Pollution

E4 Biodiversity and ecosystems

E5 Resource use and circular economy

S1 Own workforce

S2 Workers in the value chain

S4 Consumers and end users

G1 Business conduct

Linkage to strategy and business model

Nokian Tyres' strategy includes five cornerstones, three of which are directly related to material sustainability topics:

1. Safest tires for all conditions - directly relates to consumer safety (S4) and product quality
2. Leader in sustainability - encompasses climate change (E1), pollution (E2), biodiversity (E4), and circular economy (E5)
3. Nokian Tyres team - relates to own workforce (S1) and working conditions

The company's financial target is to achieve net sales of EUR 2 billion with segments operating profit of approximately 15%. The sustainability targets are integrated into this strategy:

• Climate: Science-based targets approved by SBTi, commitment to net-zero by 2050, new Romania factory is zero CO₂e emissions
• Materials: 50% recycled or renewable raw materials in tires by 2030
• Supply chain: 100% of sustainability high-risk suppliers audited, 100% of natural rubber processors GPSNR members or signed commitment
• Product safety: At least 60 products in rolling resistance class A by 2028, 100% of premium tires in wet grip A or B class

Resilience considerations

The company conducted a climate scenario analysis between December 2023 and February 2024 examining resilience to physical and transition risks in short (<2030), medium (2030-2040), and long term (2040-2050) horizons.

Physical risks: Analysis of extreme weather events (flooding, tropical cyclones) concluded that financial impact of a single flood is low to medium. Only multiple simultaneous floods would have high financial impact in medium and long term. The company has invested in building design and insurances to mitigate such risks.

Transition risks: Climate-related regulations were identified as most likely to affect operations. Carbon pricing may affect operational costs while policies about deforestation may affect prices and availability of raw materials. The company is mitigating these risks through increased use of non-fossil materials and participation in industry working groups.

A separate qualitative analysis on resilience is planned for 2025.

Time horizons

Reporting does not deviate from the medium- or long-term time horizons defined by ESRS 1 section 6.4. Short-term is defined as <2030, medium-term as 2030-2040, and long-term as 2040-2050 based on the climate scenario analysis.

Value chain coverage

The sustainability statement includes information about the value chain when relevant regarding material impacts, risks, or opportunities:

• E1 Climate change: Greenhouse gas emissions (upstream and downstream value chain)
• E2 Pollution: Tire and road wear particles and their reduction (downstream value chain)
• E4 Biodiversity and ecosystems: Biodiversity impacts in raw material sourcing (upstream value chain)
• E5 Circular economy: Material use (upstream value chain), tire end-of-life impacts (downstream value chain)
• S2 Workers in the value chain: Prevention and mitigation of adverse human rights impacts (upstream value chain)
• S4 Consumers and end users: Contribution to road and end user safety, increasing end user awareness, privacy (downstream value chain)
• G1 Business Conduct: Ethical and sustainable sourcing practices, advancing legislation, supplier relationship management

Integration into sustainability-linked financing

The Group has arranged part of its external financing as sustainability-linked funding. In 2023, Nokian Tyres issued the first sustainability-linked bond under its Sustainability-Linked Bond Framework. The framework has two KPIs, both related to greenhouse gas emissions intensity:

1. Scope 1 and 2 emissions in t CO₂e/production ton
2. Scope 3 emissions from product use in t CO₂e/production ton

Sustainalytics' second-party evaluation considers both KPIs to be "Very strong" and the Sustainability Performance Targets "Ambitious". Failure to meet these KPIs would result in additional interest expenses.

Connection to remuneration

The current performance criteria in the company's main long-term incentive plan, the Nokian Tyres Performance Share Plan, include:

• Cumulative EBITDA
• Increase in passenger car tire production volume
• Reduction of Scope 1 and 2 carbon dioxide equivalent (CO₂e) emissions

The CO₂e sustainability target carries 10 percent weight of the total of 100 percent target setting within long-term incentives.

Description of the process to identify and assess material impacts, risks and opportunities

Overview

Nokian Tyres carried out a sustainability double materiality assessment according to the European Sustainability Reporting Standards' requirements for the first time during September 2023–February 2024. The assessment process consisted of a contextual analysis based on public and internal sources, stakeholder survey, internal assessment and working group meetings. The results were reviewed and validated by Nokian Tyres' Management Team, the Audit Committee, the People and Sustainability Committee, as well as the Board of Directors. The process followed the principles of internal control and risk management confirmed by Nokian Tyres' Board of Directors.

Contextual analysis

The analysis served to give an understanding of the context and a starting point for the materiality assessment. The aim of the analysis was to preliminarily identify and evaluate the potentially relevant sustainability aspects (impacts, risks, and opportunities) to the tire industry and across Nokian Tyres' value chain. The contextual analysis was based on publicly available and internal materials, looking into the larger sustainability trends in the media, an overview of relevant regulation, sector-specific frameworks, and industry publications, as well as a peer benchmark.

Identifying sustainability-related impacts, risks, and opportunities

As a result of the contextual analysis, a number of actual and potential, negative and positive impacts, as well as risks and opportunities relevant in Nokian Tyres' own operations and through its business relationships were identified and categorized as per the ESRS topic division. The key features of the value chain were considered on a general level, including the key inputs and outputs, Nokian Tyres' own functions, as well as the main stakeholders including suppliers and consumers.

Stakeholder engagement

The identified list of material topics served as basis for the stakeholder engagement via an online survey. Through the survey, Nokian Tyres engaged with a wide range of stakeholder representatives to understand their views and interests on relevant sustainability topics for Nokian Tyres. Participants included Nokian Tyres' employees, suppliers, business partners, corporate customers, retailers, investors, board members, authorities, media, NGOs, and industry associations. The views of these stakeholders informed the subsequent assessment of material impacts, risks, and opportunities.

Assessment and determination of material impacts, risks, and opportunities

The materiality of the identified impacts, risks and opportunities was assessed in accordance with the principles of the ESRS. The severity of the negative and positive effects (considering the scale, scope and, in the case of negative effects, also the irremediable character of the impact), the magnitude of the financial impact of the risks and opportunities, as well as the likelihood of their occurrence were each assessed on a scale of 1 to 5. For the identification and assessment of climate-related risks and opportunities, Nokian Tyres' simultaneously conducted separate climate risk assessment was utilized and integrated into the double materiality assessment process.

The result of the severity/magnitude scores and the corresponding likelihood scores formed the total materiality scores of each sustainability topic, by which a quantitative materiality prioritization of the identified items was created. The double materiality scores for the sustainability matters were determined based on both the impact materiality scores and risk materiality scores. The median value of all the materiality scores was employed as the initial quantitative threshold for determining the materiality of a single sustainability topic (impact, risk, or opportunity). After further discussion and analysis in working group meetings and discussions with the assurance provider, qualitative materiality adjustments were made during 2024 for individual impacts, risks, and opportunities, resulting in the final list of material topics.

The double materiality assessment is revised yearly during the first half of the year, and the next comprehensive assessment is planned to be conducted in 2026–2027.

Climate-specific methodology

The double materiality assessment identified and evaluated impacts related to climate change. Nokian Tyres addresses climate change related risks through a procedure encompassing identification, evaluation, prioritization, and action. This process was integrated into the double materiality assessment process.

Risk process

Step 1: Mapping and identification of relevant climate-related risks

The first step involves mapping and identifying pertinent climate-related risks, which are integrated into the broader risk management framework of the company. Risks and opportunities related to Nokian Tyres' operations and the entire value chain are identified by conducting a double materiality analysis and consulting internal stakeholders.

Step 2: Strategic evaluation at company level

As part of Nokian Tyres' integrated risk management process, the company further evaluates the strategic implications of climate-related risks and opportunities at the group level, including physical and transition risks. This assessment encompasses various factors including strategic risks, market effects, reputation risks, potential for goodwill, and strategic opportunities.

Step 3: Determining impact

The strategic evaluation of climate-related risks is conducted in conjunction with all other corporate risk assessments as part of the annual enterprise risk analyses. Within these analyses, Nokian Tyres utilizes a ranking system that considers severity, likelihood of the risk occurring, and existing controls. Both the long-term strategic and financial impacts on the company are assessed, and the highest risk impacts and most beneficial opportunities are identified and prioritized.

Extreme weather events disrupting the production and logistics supply chain were identified as an important physical risk. However, in the double materiality analysis it was identified as non-material. Nokian Tyres also conducted a scenario analysis to further investigate how different acute weather events such as flooding at the production facility in Romania and the warehouse in Germany, and tropical cyclones at the US locations would affect the operations in the short (<2030), medium (2030–2040), and long term (2040–2050). In the analysis of physical risks, the SSP scenarios SSP1-2.6 and SSP5-8.5 were used. After the analysis it was concluded that the financial impact of a single flood is low or medium. Only if several floods occurred at the same time, their combined financial impact would be high in the medium and long term. Nokian Tyres has also invested in building design and insurances to mitigate such risks. For cyclones, the financial impact is considered low during the short term and medium in the medium and long term. Therefore the results of the scenario analysis are in line with the results of the double materiality assessment.

For transition risks, climate-related regulations were identified as most likely to affect Nokian Tyres' operations in several ways. Policies about deforestation may affect prices and availability of raw material while carbon pricing may affect Nokian Tyres' operational costs and regulatory changes may lead to having to develop the product portfolio accordingly. Another analyzed transition risk is the replacement of fossil-based raw materials with more renewable materials, touching on price and availability.

For the transition risks, two of the International Energy Agency's (IEA) climate related scenarios were used; The Announced Pledges Scenario (APS) incorporates climate commitments made by governments, including Nationally Determined Contributions (NDCs) and net zero targets. The Net Zero Emissions by 2050 (NZE) Scenario aims to limit global warming to 1.5 °C and assumes aggressive gains in energy efficiency and consumer behaviour changes. The chosen scenarios are based on the most recent scientific research and align with the terms set out in the Paris Climate Agreement. The scenarios chosen are relevant to look at as they present a narrative for risks to play out in both best-case scenarios as well as worst-case scenarios. The time horizons in the analysis were short (<2030), medium (2030–2040), and long term (2040–2050).

Step 4: Responding to climate-related risks and opportunities

Responsibility for strategic responses to climate-related risks and opportunities, as determined by enterprise risk management (ERM), rests with the appropriate managers. Based on the environmental information generated by the company's sustainability specialists, the annual development targets (indicators and development actions) are set with the management responsible of each function. The management is responsible for implementing the development and the specialists follow the development and indicators, providing follow-up information at group level.

Opportunity process

Similarly, climate-related opportunities are integrated into strategy and other financial planning but are also treated by dedicated specialists in environmental and sustainability matters to reflect their strategic importance. A similar approach is applied to climate-related opportunities, which are part of annual strategic evaluations and analyses. Financial impact and likelihood of an opportunity unfolding determines the overall ranking and impact of opportunities.

Overall risk management process

The group's Enterprise Risk Management Policy focuses on managing both the risks pertaining to business and the risks affecting the achievement of the group's goals in the changing operating environment. The risks are classified as strategic, financial, and hazard risks. The process outlined above for identifying, assessing, prioritizing, and monitoring climate-related risks and opportunities falls under the category of strategic risks.

Responsibility for identifying, evaluating and, to a large extent, managing risks, is delegated to business units, business areas and functions. The process for identifying and evaluating climate risk is the task of the specialized environmental and sustainability unit. Assisted by the People and Sustainability Committee, the company's Board of Directors has the overall responsibility, and it monitors and assesses the efficiency of the company's risk management mechanisms. It also monitors the assessment and management of risks related to the company's strategy and operations.

Pollution-specific considerations

The double materiality assessment identified and evaluated relevant impacts, risks, and opportunities related to pollution. However, the assessment did not include screenings of site locations concerning Nokian Tyres' own operations and upstream and downstream value chain.

Consultations with affected communities were completed as part of the assessment's stakeholder engagement. Nokian Tyres also conducted internal environmental impact and risk assessments, chemical operation supervisors performed site visits, and the Finnish Safety and Chemicals Agency (TUKES) carried out inspections.

Nokian Tyres' double materiality assessment concluded that Nokian Tyres' key impacts regarding pollution come from tire and road wear particles (TRWP) and chemical use. TRWP are considered as microplastics and can degrade local air quality, water and soil, and have negative effects on both ecosystems and human health. Ensuring chemical and environmental safety in all operations is part of the continuous sustainability work.

Water-specific considerations

The topic Water and marine resources was assessed but not considered material. Water risk assessments for Nokian Tyres' production sites have been conducted using the WWF's water risks filters, and they are updated every three years. The assessments confirm that Nokian Tyres' water-related risks are minor and that the company does not operate in water-stressed areas.

As for Nokian Tyres' suppliers, less than three percent operate near areas of water stress. However, Nokian Tyres includes some disclosures on water in the Sustainability Statement's section Additional sustainability disclosures in order to provide data for corporate sustainability assessments and interested stakeholders.

Biodiversity-specific considerations

The double materiality assessment identified and evaluated relevant impacts, risks, and opportunities related to biodiversity and ecosystems. The assessment did not include the screening of site locations pertaining to Nokian Tyres' operations, however.

As a tire manufacturer, Nokian Tyres is dependent on natural rubber, the cultivation of which has been identified to cause negative biodiversity impacts. In the summer 2023 shortly before the double materiality assessment process began, the biodiversity risks in Nokian Tyres' supply chain were assessed using the WWF's biodiversity risk filter. The filter includes systemic, transition, and physical risk and opportunity assessment and identification. According to this assessment that later was utilized in the double materiality analysis, the biggest and the broadest biodiversity impacts in Nokian Tyres' raw material chain come from pollution, deforestation, and land use change, and natural rubber cultivation impacts biodiversity the most. In the assessment, the most important supplier locations and industry sectors were prioritized based on how high their physical versus reputational risk scores were. 32 sites were considered most impactful on biodiversity. Of the 32 sites, 23 are natural rubber farmers and manufacturers, three metal cord manufacturers, two textile/belt manufacturers, one is an oil company, and one is a chemical manufacturer. Regarding biodiversity risks, the most important countries for Nokian Tyres are Indonesia and Malaysia. The actual biodiversity impacts of individual supplier sites have not been investigated. Any mitigation measures required have not yet been defined.

Nokian Tyres is a member of the Global Platform for Sustainable Natural Rubber (GPSNR) and is informed of the affected communities views through the GPSNR cooperation.

Natural diversity and the factors affecting have been assessed at the tire factories in Finland, the US, and Romania, as well as the test tracks and the Vianor service centers owned by the company. According to the assessments, Nokian Tyres' current operations have no direct effects on biodiversity.

Circular economy-specific considerations

Nokian Tyres' double materiality assessment identified and evaluated the use of material resources, as well as impacts, risks, and opportunities related to the circular economy. This assessment did not include the screening of site locations pertaining to Nokian Tyres' operations, however.

During the assessment process, the company engaged with stakeholders and consulted the affected communities. No further assessments concerning circular economy risks and opportunities have been conducted.

Business conduct-specific considerations

During the double materiality analysis, Business conduct was mainly evaluated through the risk of potentially occurring misconduct or violations and therefore, received a fairly low materiality score. Nokian Tyres has well-established, existing processes in place through which it can demonstrate and report how it mitigates potentially occurring impacts and risks. Ethical business conduct was, however, included in the scope of materiality, as it often represents a hygiene factor and foundation for sustainable business. The impacts and opportunities that received the highest score in the assessment were included in reporting.

Transition plan for climate change mitigation

Overview

Nokian Tyres is currently creating its transition plan in line with the EU's Corporate Sustainability Due Diligence Directive and will finalize it in spring 2025. The foundation of the plan already exists, as in 2024 the company's new, more ambitious emissions reduction targets were approved by the Science Based Targets initiative (SBTi) and confirmed by Nokian Tyres' Board of Directors. Nokian Tyres' new Scope 1 and 2 targets align with the 1.5-degree pathway, and the company also has new Scope 3 targets. The approval process involved adjusting the operational units included in the scope and refining calculation methods for tracking progress.

Scope of the plan

The transition plan covers Nokian Tyres' operations across the entire value chain:

• Own operations: Factories in Nokia (Finland), Dayton (US), and Oradea (Romania)
• Value chain: Upstream (raw materials, purchased goods and services, capital goods, upstream transportation and distribution) and downstream (use of sold products)
• Base year: 2022

Target years and net-zero commitment

Long-term target (2050):

• Net-zero GHG emissions across the value chain by 2050

Near-term targets (2030):

• Reduce absolute Scope 1 and 2 GHG emissions by 42% from 2022 base year
• Reduce Scope 3 GHG emissions by 51.6% per ton of product purchased from 2022 base year

SBTi validation and Paris alignment

• Science Based Targets initiative (SBTi) approved Nokian Tyres' new greenhouse gas emissions reduction targets in November 2024
• Targets include both near-term targets for 2030 and long-term targets to reach net-zero emissions across the value chain by 2050
• Scope 1 and 2 targets align with the 1.5°C pathway
• The SBTi approval means that Nokian Tyres' targets are considered to be in line with what the latest climate science deems necessary to limit global warming to 1.5°C

Emissions reduction targets and milestones

Short-term targets, by 2030:

Absolute Scope 1 and 2 GHG emissions:

• Reduce by 42 percent from the 2022 base year

Scope 3 GHG emissions:

• Reduce by 51.6 percent per ton of product purchased
• Targets include emissions from purchased goods and services, and upstream transportation and distribution

Long-term targets, by 2050:

Absolute Scope 1 and 2 GHG emissions:

• Reduce by 90 percent from the 2022 base year

Scope 3 GHG emissions:

• Reduce by 97 percent per ton of product purchased
• Targets include emissions from purchased goods and services, capital goods, and upstream transportation and distribution

Key decarbonization levers

Energy and facilities

Romania zero CO2e emission factory:

• The new Oradea factory in Romania is the world's first full-scale tire factory with zero CO2 emissions (Scope 1 and 2)
• All energy used at the factory comes from zero-emission sources such as wind, hydro, biomass, solar energy, or a mix of these
• Part of the electricity used in the factory is generated by on-site solar power units
• Steam used to cure the tires is generated by innovative electric boilers, which use fully CO2 emission free electricity instead of fossil fuels such as coal or gas
• The tire manufacturing process is energy efficient as it utilizes the most modern technology and machinery
• Once fully operational, the factory will have an annual production capacity of six million tires, with potential for future expansion

Energy transition:

• Study for replacing fossil fuels is ongoing
• Nokian Tyres will transition to zero-emission energy sources, particularly in the US factory
• In 2024, 66.3% of all energy used in tire factories was produced from renewable energy sources
• Continued purchasing of zero CO2e and renewable energy certificates for the factories in Finland and in the US and for Vianor

Product innovations

Low rolling resistance tires:

• Approximately 90% of a Nokian Tyres' tire's carbon footprint is created during its use
• The level of lower rolling resistance tires (class A, B, and C tires) manufactured by Nokian Tyres is over 90%
• Target: At least 60 products in the best rolling resistance A class by 2028 (current status: 10 in 2024)
• Tires with low rolling resistance may save more than 0.5 liters of fuel per 100 kilometers, and thus reduce CO2 emissions

Sustainable raw materials:

• Target: Increase the share of recycled and renewable raw materials in tires to 50% by 2030
• In August 2024, Nokian Tyres' factory in Nokia, Finland obtained the International Sustainability and Carbon Certification (ISCC) PLUS
• Introduction of certified raw materials when new flagship products are launched
• Development cooperation with Reselo AB for renewable Reselo Rubber as a potential new raw material in tires
• Partnership with UPM for Nokian Tyres Green Step Ligna concept tire using fully renewable UPM BioMotion™ RFF lignin raw material
• Purchase agreement on recycled carbon black to manufacture even more sustainable tires and increase circular economy

Supply chain

• The company will increasingly use greenhouse gas emission levels as one supplier selection criterion
• Participation in the Global Platform for Sustainable Natural Rubber (GPSNR)

Climate risk analysis

Nokian Tyres carried out a scenario analysis between December 2023 and February 2024 to increase understanding of the resiliency of the company and how certain scenarios in the short (<2030), medium (2030–2040), and long term (2040–2050) may impact the company financially moving forward.

Key transition risks identified:

• Renewable materials availability and pricing: Both price and availability of more renewable materials can be expected to be vulnerable. Likelihood: high in short-term, medium in medium and long-term. Potential financial risk: high in short-term, medium in medium- and long-term. Mitigation: Keep investing in R&D regarding both natural rubber and other alternatives to fossil-based materials

• Carbon taxes: Carbon taxes are expected to rise significantly. Likelihood of carbon prices affecting the company: high in short, medium and long term. Potential financial impact: medium. Mitigation: Increase the use of non-fossil materials; participate in industry sector working groups; closely monitor emerging regulation

CapEx and investments

Romania factory:

• Investment in new zero CO2e emission production capacity in Romania
• The factory reached planned milestones on time and within budget in 2024
• Will start to support passenger car tire sales from 2025 onwards

US factory:

• Investment phase at the US factory was finalized in 2024

Gross investments:

• 2024: EUR 350.1 million
• 2023: EUR 252.1 million
• 2022: EUR 129.7 million

Locked-in emissions and stranded assets

Not explicitly disclosed in the provided excerpts.

Carbon credits and removals

Not explicitly disclosed in the provided excerpts. The company states it is aiming for net-zero emissions across the value chain by 2050, but does not detail the role of carbon credits or removals in achieving this target.

Progress and governance

• The President and CEO is responsible for the implementation of climate-related policies
• Board of Directors confirmed the science-based targets in 2024
• In 2024, the annual risk review was integrated into the strategy work presented to the Board of Directors
• Material climate risks analyzed in strategy work and mitigation measures identified
• The Board of Directors discusses the most significant risks, risk appetite and related measures in connection with the strategy process and decisions related to business objectives and major investments

Policies related to climate change mitigation and adaptation

Nokian Tyres has disclosed several policies that address climate change mitigation and adaptation:

Code of Conduct

Key content:

• States that the company is committed to reducing greenhouse gas emissions

Governance:

• The President and CEO is accountable for its implementation

Public availability:

• Updated in 2024
• Training provided to all personnel, included in induction of new employees
• 78% of personnel had completed the training by end of 2024

Environmental, Safety, and Quality Guideline

Key content:

• Elaborates the company's commitment to environmental responsibility, which includes:
  • Reducing greenhouse gas emissions
  • Improving energy efficiency
  • Preferring renewable energy
  • Setting targets to reduce environmental impacts
• The company is committed to consulting with stakeholders on environmental matters and reporting on them regularly

Governance:

• The President and CEO is accountable for its implementation

Public availability:

• Available on the company website
• Updated in 2024, taking customer requirements into account
• In previous updates, the views of other stakeholders had also been considered

Supplier Code of Conduct

Key content:

• Requires that the supplier shall identify, monitor, manage, and reduce emissions to air from its operations
• The supplier shall seek for low carbon solutions, when possible

Scope:

• Applies to suppliers

Governance:

• The company's Senior Vice President, Operation Excellence, who is a member of the Management Team, is the most senior executive accountable for the implementation

Public availability:

• Available on the company website

Sustainable Natural Rubber Policy

Key content:

• Expects natural rubber suppliers to join in the combat against climate change
• Suppliers are expected to:
  • Manage their operations in a manner that minimizes and mitigates greenhouse gas emissions (including carbon emissions)
  • Actively seek for low carbon solutions, when possible

Scope:

• Applies to natural rubber suppliers

Governance:

• The company's Senior Vice President, Operation Excellence, who is a member of the Management Team, is the most senior executive accountable for the implementation

Public availability:

• Available on the company website

Greenhouse gas emissions commitment

Key content:

• Nokian Tyres is committed to reducing greenhouse gas emissions from its operations in order to combat climate change
• Greenhouse gas emissions from the operations are calculated annually and reduced systematically
• The company monitors and reports its greenhouse gas emissions through the calculation of the CO2 equivalent unit, CO2e
• GHG emissions from raw material purchasing to the disposal of the product are calculated in compliance with the ISO 14064 standard and the GHG protocol

Link to international standards:

• ISO 14064 standard
• GHG protocol
• In May 2018, the company joined the Science Based Targets initiative (SBTi)
• Science-based greenhouse gas emissions reduction targets published in May 2020
• Nokian Tyres was the first company in the tire industry to have its targets officially approved by the Science Based Targets initiative
• In 2023, Nokian Tyres committed to setting targets to reach science-based net-zero greenhouse gas emissions by 2050
• SBTi approved new and more ambitious emission reduction targets in 2024, aligned with the 1.5-degree pathway

Governance:

• Targets confirmed by Nokian Tyres' Board of Directors

Actions and resources in relation to climate change policies

Reducing greenhouse gas emissions

Action 1: Purchasing zero CO2e and renewable energy certificates

• Scope: Own operations (factories in Finland, US, and Vianor)
• Time horizon: Current reporting year and future periods (ongoing)
• Description: Nokian Tyres will continue purchasing zero CO2e and renewable energy certificates for the factories in Finland and in the US and for Vianor. This approach will cover Scope 2 emissions for both the reporting year and future periods. The company estimates electricity use for both factories and assesses how these certificates reduce GHG emissions both now and in the future.
• Expected outcomes: Coverage of Scope 2 emissions
• Resources allocated: Not quantified

Action 2: Construction of the factory in Romania

• Scope: Own operations
• Time horizon: Impacting both the reporting year and future (in progress)
• Description: The construction of the factory in Romania is a critical action. Since the Romanian factory is a zero CO2e factory, it is important for Nokian Tyres to evaluate how much less emissions are created by producing tires there compared to production in Finland or in the US.
• Expected outcomes: Significant emissions reductions estimated
• Resources allocated: Not quantified

Action 3: Future actions to be defined in the transition plan

• Time horizon: Coming years
• Description: In the coming years, Nokian Tyres will concentrate on actions that are to be defined in the transition plan.
• Resources allocated: Not quantified

Reducing emissions from traffic

Action 4: Increase products in rolling resistance A class

• Scope: Downstream value chain (product use phase)
• Time horizon: By 2028
• Description: To reduce emissions from traffic, the company aims to have at least 60 products in the best rolling resistance A class by 2028. The number of A class tires does not increase linearly but is dependent on new product launches as well as discontinued products.
• Expected outcomes: Minimum 60 products in rolling resistance class A by 2028 (10 products achieved in 2024)
• Link to targets: Supports reduction of Scope 3 emissions from product use
• Resources allocated: Not quantified

Note on product development

The company continues to invest in the development of new low rolling resistance tires. The level of lower rolling resistance tires (class A, B, and C tires) manufactured by Nokian Tyres is over 90 percent. Tires with low rolling resistance may save more than 0.5 liters of fuel per 100 kilometers and thus reduce CO2 emissions. Approximately 90 percent of a Nokian Tyres' tire's carbon footprint is created during its use.

Targets related to climate change mitigation and adaptation

Nokian Tyres has set science-based greenhouse gas (GHG) emissions reduction targets, approved by the Science Based Targets initiative (SBTi) in November 2024. The targets align with the 1.5°C pathway and were confirmed by the Board of Directors. The base year for all targets is 2022.

Near-term targets (by 2030)

Scope 1 and 2 absolute GHG emissions:

• Target: Reduce by 42 percent from the 2022 base year
• Target year: 2030
• Baseline year: 2022
• Type: Absolute reduction
• Scope: Own operations (Scope 1 and 2)
• Validation: Science-based (SBTi approved, 1.5°C pathway)
• Progress to date: Not explicitly quantified for this specific target in the excerpts

Scope 3 GHG emissions:

• Target: Reduce by 51.6 percent per ton of product purchased
• Target year: 2030
• Baseline year: 2022
• Type: Intensity-based (per ton of product purchased)
• Scope: Value chain - purchased goods and services, and upstream transportation and distribution
• Validation: Science-based (SBTi approved, 1.5°C pathway)
• Progress to date: Not explicitly quantified for this specific target in the excerpts

Long-term targets (by 2050)

Scope 1 and 2 absolute GHG emissions:

• Target: Reduce by 90 percent from the 2022 base year
• Target year: 2050
• Baseline year: 2022
• Type: Absolute reduction
• Scope: Own operations (Scope 1 and 2)
• Validation: Science-based (SBTi approved, net-zero pathway)
• Milestone: 12,000 tCO2eq by 2025; 10,000 tCO2eq by 2030; 2,000 tCO2eq by 2050 (from base year value of 10,978 tCO2eq in 2022)
• Progress 2024: 15,195 tCO2eq (116% increase from 2023 value of 13,151 tCO2eq)

Scope 3 GHG emissions:

• Target: Reduce by 97 percent per ton of product purchased
• Target year: 2050
• Baseline year: 2022
• Type: Intensity-based (per ton of product purchased)
• Scope: Value chain - purchased goods and services, capital goods, and upstream transportation and distribution
• Validation: Science-based (SBTi approved, net-zero pathway)

Supporting climate-related targets

Rolling resistance (contributing to Scope 3 use-phase emissions reduction):

• Target: Have at least 60 products in the best rolling resistance A class by 2028
• Target year: 2028
• Scope: Product portfolio (EU Tyre Labelling scope)
• Progress 2024: 10 products in A class
• Note: Number does not increase linearly; dependent on new product launches and discontinued products. No new A-class products added in 2024.

Renewable and recycled raw materials (contributing to emissions reduction):

• Target: Increase the share of recycled and renewable raw materials in tires to 50 percent by 2030
• Target year: 2030
• Progress 2024: 25 percent (0.8% recycled + 24.2% renewable materials in own-produced tires)
• Baseline: Not explicitly stated, but company reports being "halfway to meeting our goal"

Zero CO2 emissions factory milestone

The new factory in Romania, opened in September 2024, operates as the world's first full-scale tire factory with zero CO2 emissions (Scope 1 and 2). This supports both near-term and long-term GHG reduction targets.

Energy consumption and mix

Nokian Tyres' energy consumption in 2024 was driven by its tire factories. In 2024, 66.3 percent of all energy used in the tire factories was produced from renewable energy sources.

Energy consumption and mix (MWh)

Energy intensity per net sales

Scope and methodology:

Nokian Tyres purchases energy for the factories from external suppliers, and the company also generates some of the electricity and steam that it uses.

The high climate impact sectors used to determine the energy intensity are Manufacture of rubber and plastic products NACE code C22.11 for Nokian Tyres and Sale of motor vehicle parts and accessories NACE code G45.3 for Vianor.

Part of the electricity used at the Romanian factory is generated by on-site solar power units. Steam used to cure tires at the Romanian factory is generated by innovative electric boilers using fully CO2 emission free electricity.

Gross Scopes 1, 2, 3 and Total GHG emissions

Nokian Tyres calculates greenhouse gas (GHG) emissions in compliance with the ISO 14064 standard and the GHG Protocol. Scope 1 emissions include emissions from self-generated energy and from vehicles, calculated using Defra emissions factors and fleet management company data. Scope 2 location-based calculation uses average emissions intensity of power grids from IEA. Scope 2 market-based calculation uses supplier-based emissions factors where available, otherwise country-level residual mix factors from AIB. District heating factors are from Defra.

Scope 3 categories exclude those not related to Nokian Tyres' business (e.g. category 15) and those accounting for less than one percent of total emissions (e.g. category 6). The base year for science-based targets is 2022.

Greenhouse gas emissions

¹ Includes the tire factories in Finland and in the US.

GHG intensity per net sales

Scope 3 calculation methodology notes

Category 1: Purchased goods and services
Raw material emissions calculated by multiplying mass of received raw materials with emissions factors from suppliers or sustainability software libraries. For other purchased products, emissions factors estimated using Nokian Tyres' production data. For steel, emissions factors from steel producer. All other goods/services calculated using spend-data multiplied with Defra monetary emissions factors. Primary data: 80%. Secondary data: 20%.

Category 2: Capital goods
CO2e emissions calculated using spend data multiplied with Defra emissions factors. Primary data: 0%. Secondary data: 100%.

Category 3: Fuel- and energy-related activities
Main sources: Nokian Tyres' own systems and meters, energy supplier invoices or portals. Vianor electricity from centralized portals or electricity provider portals; service centers not in portals calculated using average consumption per center. Vianor heat energy estimated based on Vianor Finland average. Primary data: 100%. Secondary data: 0%.

Category 4: Upstream transportation and distribution
Approximately 20% covered by supplier CO2e reports. Remaining share calculated using mass of received goods per country of origin and estimated distances per transportation mode. Primary data: 30%. Secondary data: 70%.

Category 5: Waste generated in operations
Activity data from waste management suppliers' portals and reports. Waste classified by type and treatment, multiplied with Defra emissions factors. Warehouses, sales companies and test centers' waste excluded due to lack of precise data (0.001% of total Scope 3 emissions). Primary data: 100%. Secondary data: 0%.

Category 6: Business travel
Excluded from GHG inventory (0.01% of total Scope 3 emissions). GHG emissions data only partly available from travel agencies.

Category 7: Employee commuting
Includes only tire factories in Finland and US. Calculated by multiplying employee quantity with average commuting days and distance. Headcount actual from HR system; days and distances are estimates.

Category 8: Upstream leased assets
Includes leased warehouses, offices, and vehicles. Warehouse energy consumption estimated using average from known warehouses. Office consumption calculated using average per employee multiplied by employee count. CO2 emissions calculated with Defra emissions factors.

Category 9: Downstream transportation
Total distances split per transportation mode. Transportation mode shares are estimates. Total kilometers per mode linked to Defra emissions factors. Primary data: 0%. Secondary data: 100%.

Category 11: Use of sold products
Approximately 90% of a Nokian Tyres tire's carbon footprint is generated during its use.

Category 12: End-of-life treatment of sold products
No specific methodology disclosed.

Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

Phase-in Exemption

Nokian Renkaat is using the phase-in exemption for ESRS E1-9. The following disclosure requirements are subject to phase-in:

• ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66
• ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 a
• ESRS E1-9 Location of significant assets at material physical risk paragraph 66 c
• ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy efficiency classes paragraph 67 c
• ESRS E1-9 Degree of exposure of the portfolio to climate-related opportunities paragraph 69

The disclosure requirement E1-9 is assessed as Material, but specific quantified financial effects, time horizons, methodologies, and asset-specific impacts are not disclosed in the reporting year due to the phase-in exemption.

Policies related to pollution

Nokian Tyres is committed to environmental responsibility in its own operations and in the value chain. The company has established four key policies addressing pollution management:

Code of Conduct

• Scope: Own operations and supply chain
• Key content: Commitment to continuously enhancing products, functions, and production facilities to minimize environmental impact, including preventing pollution of air, water, and soil and addressing environmental effects throughout Nokian Tyres' supply chain
• Governance: The President and CEO is the most senior executive accountable for implementation
• Public availability: Available on the Nokian Tyres website
• International standards: Through implementation of this policy, Nokian Tyres commits to the ten principles of the UN Global Compact

Environmental, Safety, and Quality Guideline

• Scope: Products, services, and processes across all operations
• Key content: Pledge to continually improve the quality, safety, and environmental sustainability of products, services, and processes, considering the entire lifecycle of products. The company aims for efficiency, zero errors, and zero accidents across all operations to safeguard both employees and the environment. Commitment to environmental responsibility includes adhering to laws and regulations, preserving biodiversity, maintaining air and soil quality, and responsible chemical management with efforts to reduce or phase out hazardous substances. Emergency plans are in place to control and mitigate impacts on people and the environment during unexpected situations
• Governance: The President and CEO is the most senior executive accountable for implementation. The guideline received minor updates in spring 2024, consisting of small additions and wording adjustments based on customer needs
• Public availability: Available on the Nokian Tyres website
• International standards: Operations are based on and fulfill the requirements of the ISO 14001 standard. Through implementation of this policy, Nokian Tyres commits to the ten principles of the UN Global Compact

Supplier Code of Conduct

• Scope: Value chain/suppliers
• Key content: Nokian Tyres expects suppliers to minimize negative impacts on local and surrounding communities, adopt a precautionary approach to environmental challenges, and proactively prevent environmental incidents. Suppliers must comply with all relevant environmental laws, regulations, and permits in their operating countries. Emphasizes continuous improvement in environmental performance, including proper handling, storage, and disposal of chemicals to protect employees and the environment. Requires suppliers to implement proper processes and technologies to protect water quantity and quality, prevent contamination from chemicals, and safeguard soil quality. Suppliers are required to prepare for and respond to emergencies such as fires, natural disasters, and chemical spills, with appropriate emergency plans, evacuation procedures, hazard detection equipment, training, and drills
• Governance: The Senior Vice President, Operation Excellence, who is a member of the Management Team, is the most senior executive accountable for implementation
• Public availability: Available on the Nokian Tyres website
• International standards: Through implementation of this policy, Nokian Tyres commits to the ten principles of the UN Global Compact

Sustainable Natural Rubber Policy

• Scope: Natural rubber supply chain
• Key content: Addresses pollution by committing to prevent air, water, and soil contamination. The policy's framework aligns with that of the Global Platform for Sustainable Natural Rubber (GPSNR), an industry initiative focused on promoting sustainability in the natural rubber supply chain
• Governance: The Senior Vice President, Operation Excellence, who is a member of the Management Team, is the most senior executive accountable for implementation
• Public availability: Available on the Nokian Tyres website
• International standards: Aligns with the framework of the Global Platform for Sustainable Natural Rubber (GPSNR)

Implementation and monitoring

Nokian Tyres prioritizes stakeholder interests when setting and updating policies. The company monitors implementation through:

• Annual environmental programs prepared by the Senior Manager of Sustainability in collaboration with environmental experts, setting targets for the entire company and specific targets for each tire factory regarding pollutants
• Documentation of annual environmental impacts at tire factories, reported to local authorities as required in each country
• Feedback from affected communities and own workforce recorded in the company's internal register (KETO), with corrective actions taken when necessary
• Environmental experts in Finland and the US responsible for maintaining records and ensuring feedback on environmental aspects is addressed
• Two annual audits conducted by chemical specialists focusing on the use and storage of chemicals in Nokian Tyres' factories to verify compliance with legislation

Actions and resources related to pollution

Safeguarding chemical and environmental safety

Scope: Own operations, upstream and downstream value chain

Nokian Tyres is committed to reducing pollution of air, water, and soil, which includes the minimization of tire and road wear particles (TRWP). Ensuring chemical and environmental safety across all operations is a key aspect of continuous sustainability efforts at the company.

Resources allocated (non-financial):

• R&D department focuses on developing more sustainable products
• Environmental representatives and local working groups dedicated to enhancing daily sustainability practices
• Environmental experts in Finland and the US handle practical coordination and training, covering areas such as chemical safety, emissions control, and waste management
• Senior Manager of Sustainability prepares annual environmental program in collaboration with environmental experts

Governance: The company's Senior Vice President, Operation Excellence (member of Management Team) is the most senior executive accountable for implementation of Supplier Code of Conduct and Sustainable Natural Rubber Policy.

Monitoring: Nokian Tyres documents annual environmental impacts of tire factories and reports them to local authorities. Feedback from affected communities and own workforce is recorded in internal register KETO, with corrective actions taken when necessary.

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Annual environmental programs

Scope: Own operations (all tire factories)

Time horizon: Annual

The primary document guiding environmental protection efforts is the Integrated Management System Manual. An annual environmental program sets targets for the entire company, including specific targets for each tire factory with regard to pollutants, such as volatile organic compounds (VOCs). The program outlines detailed targets, actions, schedules, and assigned responsibilities to achieve strategic goals. Individual units undertake their own projects to develop operations and processes further.

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Managing dust, odor, and VOC emissions

Scope: Own operations (Finland and US factories)

Description:

• Mixing equipment equipped with effective ventilation and dust collection systems
• Water cleaners achieve separation rates exceeding 99 percent
• At Finnish factory: particle emissions measured using concentration and pressure gauges, with regular measurements by external experts
• At US factory: air emissions calculated from amount of raw materials used

Expected outcomes: Particle concentrations at both factories have consistently remained within permit limits. Dust that escapes the filter system primarily causes aesthetic inconvenience and poses no significant environmental or health risks.

Performance 2024:

• Finland factory: approximately 1.5 tons dust emissions
• US factory: 58.5 tons dust emissions

VOC emissions: Solvents (VOCs) represent the most significant air emissions at Finland factory. A 2022 spread modeling study estimated that VOC concentrations and their environmental effects are minimal.

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Chemical operation supervisors' audits

Scope: Own operations (all factories)

Time horizon: Annual (two audits per year)

Chemical specialists conduct two audits annually focusing on use and storage of chemicals in Nokian Tyres' factories. Chemical operation supervisors inspect storage and handling of chemicals to verify compliance with legislation, including:

• Chemical package labels correctness
• Storage location cleanliness
• Leak control arrangements
• Potentially explosive atmospheres appropriateness

A report is drawn up on the inspection and production departments define corrective actions for deficiencies found.

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Continuous R&D efforts for safer and more sustainable raw materials

Scope: Own operations and upstream value chain

Product Development aims to create safer and more sustainable products. Nokian Tyres is committed to reducing the use of harmful substances to enhance occupational safety in production.

Actions:

• Company was first in the industry to eliminate high-aromatic oils
• Department-specific usage permit system: no auxiliary chemicals used without permit issued by chemical control team
• Several ongoing projects focused on finding alternative raw materials to reduce harmful chemicals

Expected outcomes: Consistent use of chemicals throughout the company and prioritizing replacement of harmful chemicals with safer alternatives.

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Tire and road wear particles (TRWP) reduction initiatives

Scope: Own operations and industry collaboration

Time horizon: Long-term (ongoing regulatory development)

Industry engagement:

• Full member of European Tyre and Rim Technical Organisation (ETRTO)
• Active involvement in global standardization efforts
• ETRTO contributing to UNECE's development of tire abrasion test method with goal of creating a test that is repeatable, reproducible, cost-effective, practical, and representative of real driving conditions
• Member of ETRMA (European Tyre and Rubber Manufacturers' Association)
• Active contribution to TRWP Platform (launched July 2018) to build scientific knowledge and develop practical solutions for reducing environmental particle levels

Internal capabilities: In parallel with regulatory developments, Nokian Tyres is advancing in-house testing capabilities to meet future requirements for durable tires.

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Supplier requirements

Scope: Upstream value chain

Nokian Tyres mandates compliance from suppliers through:

• Supplier Code of Conduct
• Sustainable Natural Rubber Sourcing Policy

Specific requirements:

• All chemical suppliers must provide safety data sheets (SDS) that comply with current legislation before chemicals are purchased
• SDSs registered in database accessible to all employees
• Suppliers must implement proper processes and technologies to protect water quantity and quality, prevent contamination from chemicals, and safeguard soil quality
• Suppliers required to prepare for and respond to emergencies (fires, natural disasters, chemical spills) with appropriate emergency plans, evacuation procedures, hazard detection equipment, training, and drills

Targets related to pollution

Chemical use and control

Target: Avoid the use of carcinogenic chemicals or Substances of Very High Concern (SVHC) as defined by the EU's REACH regulation in tire production.

• Target value: Zero carcinogenic or SVHC chemicals in tires
• Target year: Ongoing
• Baseline year: Not specified
• Baseline value: Not specified
• Scope: Own operations (tire production)
• Type: Absolute
• Validation: Voluntary, internally monitored
• Progress (2024): Target achieved - Nokian Tyres' tires did not contain any carcinogenic or SVHC chemicals

Audit target: Conduct two audits per year by chemical specialists, focusing on the use and storage of chemicals at Nokian Tyres' factories.

• Target value: 2 audits per year
• Target year: Ongoing
• Baseline year: Not specified
• Baseline value: Not specified
• Scope: Own operations (factories)
• Type: Absolute
• Validation: Internal
• Progress (2024): Target achieved - audits were completed

VOC emissions (Finland factory)

Target: Reduce VOC emissions to less than 60 percent of the solvents used at Finnish tire factory.

• Target value: <60% of solvents used
• Target year: Ongoing (mandatory under environmental permit)
• Baseline year: Not specified
• Baseline value: Not specified
• Scope: Own operations (Finnish tire factory)
• Type: Intensity-based (% of solvents used)
• Validation: Mandatory environmental permit requirement
• Progress (2024): Target not achieved - VOC emissions were approximately 40.6 tons (72% of the solvents used), exceeding the 60% limit

Particle emissions

Target (Finland factory): Maximum of 5 mg/m³ after filters and droplet separators.

• Target value: ≤5 mg/m³
• Target year: Ongoing
• Baseline year: Not specified
• Baseline value: Not specified
• Scope: Own operations (Finnish tire factory)
• Type: Absolute
• Validation: Internal
• Progress (2024): Target achieved

Target (US factory): Operate within the limits set by air permits.

• Target value: Within air permit limits
• Target year: Ongoing
• Baseline year: Not specified
• Baseline value: Not specified
• Scope: Own operations (US tire factory)
• Type: Absolute
• Validation: Regulatory requirement
• Progress (2024): Target not achieved - total VOC emissions in 2024 were 34.7 tons, exceeding the air permit limit. A technical Notice of Violation was issued in December 2024

Water and soil emissions

Target: Prevent any accidental discharges from Nokian Tyres' factories into water or soil.

• Target value: Zero accidental discharges
• Target year: Ongoing
• Baseline year: Not specified
• Baseline value: Not specified
• Scope: Own operations (all factories)
• Type: Absolute
• Validation: Internal
• Progress (2024): Target achieved - no incidents occurred

Product-related targets (reducing emissions from traffic)

Target: Have at least 60 products in the best rolling resistance A class by 2028.

• Target value: ≥60 products in rolling resistance class A
• Target year: 2028
• Baseline year: 2024
• Baseline value: 10 products in rolling resistance class A
• Scope: Own products (EU Tyre Labelling)
• Type: Absolute
• Validation: Internal
• Progress (2024): 10 products in rolling resistance class A. No new products were added to class A during 2024

Note: While not a pollution target per se, this target directly reduces CO2 emissions from vehicle use, as tires with low rolling resistance may save more than 0.5 liters of fuel per 100 kilometers.

Pollution of air, water and soil

Tire and road wear particles (TRWP)

TRWP levels in the environment are influenced not only by tire design but also by external factors, such as driving behavior, road conditions, vehicle characteristics, and weather. Currently, it is not possible to report tire abrasion for new type-approved tires until 2028, as there is no valid and official method in place.

A new UNECE test method is being designed for type-approval of tires, likely using a unit of measurement expressed as mg/km/t, which indicates the amount of tire emissions (in milligrams) per kilometer, per tire, normalized by the mass of the vehicle.

Particle emissions from chemical use

In 2024, the tire factories used 116,687 tons of raw materials, and released approximately 60 tons of particle emissions, primarily composed of dust from used chemicals. The emissions are equivalent to about 0.05 percent of the total raw materials used.

Particle emissions by factory (2024):

Particle concentrations at both factories have consistently remained within permit limits. Dust that escapes the filter system primarily causes aesthetic inconvenience and poses no significant environmental or health risks.

Volatile organic compounds (VOC) emissions

Solvents, or volatile organic compounds (VOCs), are among Nokian Tyres' most significant air emissions.

VOC emissions:

Finland: VOCs come from heavy tire assembly at the Finnish factory, and they are collected and processed at a catalytic incineration plant. Capturing all solvent emissions from heavy tire production remains challenging because the sources cannot be completely sealed. The VOC-related target was not achieved as emissions were not within environmental permit limits.

US: In December 2024, Nokian Tyres was issued a technical Notice of Violation for unaccounted VOC emissions. After recalculations with a new calculation method, total VOC emissions in 2024 were 34.7 tons, exceeding the air permit limit. The recalculations also showed that the air permit limit had been exceeded since 2021.

NOx and SOx emissions

Odor emissions

Surveys commissioned by Nokian Tyres indicate that odor emissions are temporary. Droplet separators are used to reduce odors from mastication, and the number of separate mastication processes has been decreased to further minimize odors. The factories have also implemented new odor control equipment that represents the best available technology (BAT).

A 2022 spread modeling study estimated that VOC concentrations and their environmental effects are minimal.

Water and soil emissions

Under normal operations, Nokian Tyres' production does not cause emissions to water or soil. However, emissions could occur during incidents, such as chemical spills, which could significantly impact the surrounding environment. Proactive measures are in place to prevent such accidents.

In 2024, no incidents with accidental discharges from Nokian Tyres' factories into water or soil occurred. The ongoing goal is to prevent any accidental discharges from Nokian Tyres' factories into water or soil.

E-PRTR and regulatory disclosure

Nokian Tyres documents the annual environmental impacts of its tire factories and reports them to local authorities, as required in each country. Feedback from, for example, affected communities and own workforce is recorded in the company's internal register, KETO, and corrective actions are taken when necessary.

Substances of concern

Substances of concern in 2024, main hazard classes (tonnes):

Note: During the vulcanization of tires chemical reactions take place, and, consequently, some substances of concern turn into other substances. Thus, in finished products the amount of substances of concern is not as high as presented in the table.

Substances of concern and substances of very high concern

Commitment to REACH compliance

Nokian Tyres aims to avoid the use of carcinogenic chemicals or Substances of Very High Concern (SVHC) as defined by the EU's REACH regulation in tire production. The target is voluntary but monitored monthly. In 2024, Nokian Tyres' tires once again did not contain any carcinogenic or SVHC chemicals.

Nokian Tyres' products do not contain Substances of Very High Concern as defined in the EU REACH regulation. All Nokian Tyres' products also meet the EU REACH requirements concerning Polycyclic aromatic hydrocarbons (PAH). The company is committed to ensuring that the products sold in Vianor service centers, both now and in the future, are free from harmful chemicals. Nokian Tyres' products do not contain any conflict minerals.

Substances of concern in production

Nokian Tyres uses chemicals that are classified as hazardous to health and chemicals classified as hazardous to both health and the environment. In 2024, the tire factories used 116,687 tons of raw materials. It must be noted that during the vulcanization of tires chemical reactions take place, and, consequently, some substances of concern turn into other substances. Thus, in finished products the amount of substances of concern is not as high as presented in the table. In the future, the calculation method will be developed to take the chemical reactions and their impact on the quantities of different substances into consideration as well.

Quantitative disclosure

Substances of concern in 2024, main hazard classes (tonnes)

Management approach

There is no specific target for other substances of concern. However, Nokian Tyres continuously works to improve the environmental sustainability of its products, and finding alternatives for chemicals is part of that work.

The control of chemicals ensures their safest possible use for employees, the environment, and end users. Nokian Tyres complies with European regulations – namely REACH and CLP – and local legislation. No auxiliary chemicals are used at Nokian Tyres factories without approval from the company's chemical control team, which issues usage permits for each department. This practice aims to standardize chemical use across the company and replace harmful chemicals with safer alternatives when possible.

Nokian Tyres mandates compliance from its suppliers through the Supplier Code of Conduct and the Sustainable Natural Rubber Sourcing Policy. Additionally, Nokian Tyres requires all chemical suppliers to provide safety data sheets (SDS) that comply with current legislation before chemicals are purchased. These SDSs are registered in a database that is accessible to all employees.

Anticipated financial effects from pollution-related impacts, risks and opportunities

There were no significant operational expenditures or capital expenditures related to major incidents or deposits in 2024.

Transition plan and consideration of biodiversity and ecosystems in strategy and business model

Biodiversity in corporate strategy and business model

As a tire manufacturer, Nokian Tyres purchases significant amounts of natural rubber, which is one of the main ingredients in tires and thus an integral part of the company's business. Nokian Tyres material biodiversity impacts are indirect, as they occur in the beginning of the value chain. There are biodiversity risks caused by deforestation and land use change that mainly come from cultivation of natural rubber.

As one of the cornerstones of Nokian Tyres' strategy is to be a leader in sustainability, the company is generally well prepared to address sustainability-related material impacts, risks, and opportunities, including those related to biodiversity. In 2023 and 2024 the company worked toward being compliant with the new EU Regulation on Deforestation-free Products EUDR. Local and indigenous knowledge and nature-based solutions have been incorporated into the EUDR framework.

A separate assessment of the resilience of the current business model and strategy to biodiversity and ecosystems-related physical, transition and systemic risks has not been conducted yet.

Biodiversity targets

In 2024, the target was achieved as 100 percent of the natural rubber processor suppliers are either GPSNR members or signed Nokian Tyres sustainability commitment.

Nokian Tyres has screened the EU's Biodiversity Strategy to inform its targets.

Geographic and value-chain scope

During summer 2023, biodiversity risks in Nokian Tyres' current supply chain were assessed using the WWF's biodiversity risk filter. According to the assessment, the biggest and the broadest biodiversity impacts in the raw material chain come from pollution, deforestation, and land use change. In Nokian Tyres' raw material chain, natural rubber cultivation impacts biodiversity the most, as the biodiversity risks caused by deforestation and land use change mainly come from the cultivation of natural rubber.

In the assessment, the most important supplier locations and industry sectors were prioritized based on how high their physical versus reputational risk scores were. 32 sites were considered to be most impactful on biodiversity. Of the 32 sites, 23 are natural rubber farmers and manufacturers, three metal cord manufacturers, two textile/belt manufacturers, one is an oil company, and one is a chemical manufacturer. Regarding biodiversity risks, the most important countries for Nokian Tyres are Indonesia and Malaysia.

The examination of natural diversity and the factors affecting it started at the Finnish tire factory site and has since been extended to the factory in the US and Romania, the test tracks, and the Vianor service centers that are owned by Nokian Tyres. According to the assessments, Nokian Tyres' current operations have practically no direct effects on biodiversity.

However, the start of operations, such as construction of factories and other establishments in a certain area, has long-term effects on the area's original biodiversity. That is why the species, especially endangered or otherwise protected species living in the operating areas have been mapped. Nokian Tyres has taken into account the requirements of the species living in the vicinity of the company's operating environments, and the aim is to develop the company's operations considering these requirements. Potential affected threatened species nearby the tire factory in Finland are the red-throated diver, asp and freshwater pearl mussel.

Use of frameworks

Nokian Tyres' Sustainable Natural Rubber Policy expects its suppliers to share its strive toward a natural rubber value chain that takes biodiversity and healthy and functioning ecosystems into account. The policy's framework aligns with that of the Global Platform for Sustainable Natural Rubber (GPSNR), an industry initiative focused on promoting sustainability in the natural rubber supply chain.

The Sustainable Natural Rubber Policy includes eight major components:

• Commitment to legal compliance
• Healthy functioning ecosystems
• Respecting human rights
• Community livelihoods
• Increased production efficiency
• Supply chain assessment and traceability
• Monitoring and reporting, and
• Driving effective implementation of all these components

Linkage to nature-related risk assessment

During summer 2023, biodiversity risks in Nokian Tyres' current supply chain were assessed using the WWF's biodiversity risk filter. Other stakeholders were not involved in the assessment. Nokian Tyres performs sustainability on-site audits at high sustainability risk suppliers' sites. During the audits it is evaluated, among other topics, whether the suppliers have performed biodiversity assessments in their own operations and in their supply chains. If any shortcomings are identified, Nokian Tyres requests mitigation actions from the suppliers.

EUDR compliance and deforestation-free commitment

Ensuring EUDR compliance is complicated and requires a substantial effort from Nokian Tyres, its suppliers, and customers. Since the regulation entered into force in June of 2023, Nokian Tyres has, for example:

• Started an internal task force project in fall 2023
• Reviewed its products that contain natural rubber
• Actively collaborated with its suppliers to ensure that the EUDR requirements will be met
• Mapped the availability of EUDR-compliant natural rubber and segregated those by assigning an EUDR code for them
• Reviewed its supply chain and production setup

Nokian Tyres continues the work to ensure compliance with the EUDR regulation.

No biodiversity offsets were used in Nokian Tyres' action plans. Local and indigenous knowledge and nature-based solutions have been incorporated into the EUDR framework.

Nokian Tyres has two factories in Europe that are affected by the EU Deforestation Regulation, and thus the company is obligated to know the origins of its rubber that is imported into the EU and to ensure the no-deforestation status of the sourced rubber.

Policies related to biodiversity and ecosystems

Nokian Tyres is committed to environmental responsibility in its own operations and in the value chain. The company addresses biodiversity and ecosystems through three key policies.

Code of Conduct

• Key content: Reflects the company's commitment to continuously enhancing its products, functions, and production facilities to minimize environmental impact. This includes addressing environmental effects throughout Nokian Tyres' supply chain.
• Governance: The President and CEO is the most senior executive accountable for the implementation of the Code of Conduct.
• Public availability: Available on the Nokian Tyres website.

Environmental, Safety, and Quality Guideline

• Key content: Underscores Nokian Tyres' pledge to continually improve the quality, safety, and environmental sustainability of its products, services, and processes. Nokian Tyres is committed to preserving biodiversity as well as air and soil quality and to causing no deforestation in its own operations, and to setting targets to reduce environmental impacts. The guideline commits to environmental responsibility, which includes not only adhering to laws and regulations but also preserving biodiversity and maintaining air and soil quality.
• Governance: The President and CEO is the most senior executive accountable for the implementation of the Environmental, Safety, and Quality Guideline.
• Updates: Received minor updates in the spring of 2024, consisting of small additions and wording adjustments based on customer needs.
• Public availability: Available on the Nokian Tyres website.
• Coverage: Covers biodiversity and ecosystem protection at operational sites owned, leased, or managed, and sustainable land practices. Also addresses deforestation.

Supplier Code of Conduct

• Scope: Extends environmental responsibilities across the value chain.
• Key content: Nokian Tyres expects its suppliers to:
  • Minimize negative impacts on local and surrounding communities
  • Adopt a precautionary approach to environmental challenges
  • Proactively prevent environmental incidents
  • Comply with all relevant environmental laws, regulations, and permits in their operating countries
  • Continuously improve environmental performance, including understanding impacts on biodiversity and, as relevant, act to safeguard biodiversity and surrounding ecosystems
  • Implement proper processes and technologies to protect water quantity and quality, prevent contamination from chemicals, and safeguard soil quality
  • Prepare for and respond to emergencies such as fires, natural disasters, and chemical spills, with appropriate emergency plans, evacuation procedures, hazard detection equipment, training, and drills
• Governance: The Senior Vice President, Operation Excellence, who is a member of the Management Team, is the most senior executive accountable for the implementation of the Supplier Code of Conduct.
• Public availability: Available on the Nokian Tyres website.

Sustainable Natural Rubber Policy

• Key content: Expects suppliers to share Nokian Tyres' strive toward a natural rubber value chain that takes biodiversity and healthy and functioning ecosystems into account. The policy's framework aligns with that of the Global Platform for Sustainable Natural Rubber (GPSNR), an industry initiative focused on promoting sustainability in the natural rubber supply chain.
• Governance: The Senior Vice President, Operation Excellence, who is a member of the Management Team, is the most senior executive accountable for the implementation of the Sustainable Natural Rubber Policy.
• Public availability: Available on the Nokian Tyres website.
• Links to international frameworks: Aligns with the Global Platform for Sustainable Natural Rubber (GPSNR).

Additional commitment

To reduce the environmental burden of sea transport in its supply chain, Nokian Tyres gave the Baltic Sea Action Group (BSAG) a Baltic Sea commitment for the years 2023–2026. The commitment is focused on cooperation in the BSAG's Ship Waste Action initiative.

Limitations

The policies do not address the social consequences of biodiversity and ecosystems-related impacts.

Actions and resources related to biodiversity

Ship Waste Action

Description: Vessels under direct shipping company contracts discharge wastewaters in reception facilities in Finnish ports. Nokian Tyres advises forwarding agents to follow the same principle when handling the company's cargo.

Scope: Own operations and downstream value chain (freight carriers)

Resources: Ship Waste Action is one of the criteria influencing the selection of freight carriers in freight tenders (non-financial: partnership/supplier selection criteria)

Ensuring EUDR compliance to avoid deforestation and increase traceability

Description: Actions to comply with EU regulation 2023/1115 (EUDR) to stop deforestation linked to natural rubber imports.

Scope: Upstream value chain (natural rubber suppliers)

Actions taken in 2024:

• Mapped the availability of EUDR-compliant natural rubber and segregated those by assigning an EUDR code for them
• Reviewed its supply chain and production setup

Status: Nokian Tyres continues the work to ensure compliance with the EUDR regulation.

Approach: No biodiversity offsets were used in action plans. Local and indigenous knowledge and nature-based solutions have been incorporated into the EUDR framework.

Researching guayule, the European source of natural rubber

Description: Active initiative to find an alternative for natural rubber. Guayule originates from the desert, can survive in very dry and poor soil conditions, does not exploit areas of any other vegetation or food production, and makes use of wastelands.

Scope: Upstream value chain (raw material sourcing)

Time horizon: Several years (ongoing)

Resources: Nokian Tyres participates in the MIDAS research project (non-financial: partnership)

Supply chain assessment and traceability

Description: Sustainability audit model evaluates suppliers' alignment with Nokian Tyres Sustainable Natural Rubber Policy.

Scope: Upstream value chain (natural rubber suppliers)

Implementation: Follow-up audits are performed every third year at high sustainability risk suppliers' sites. The audit model tracks the effectiveness of the company's Sustainable Natural Rubber Policy.

Requirements: All sustainability critical raw material suppliers and manufacturing partners need to adhere to Nokian Tyres' Supplier Code of Conduct, which includes safeguarding biodiversity and surrounding ecosystems. Natural rubber suppliers additionally need to commit to Nokian Tyres' Sustainable Natural Rubber Policy or be members of the GPSNR.

Resources: Non-financial - audit programme

Link to policy: Linked to Sustainable Natural Rubber Policy and Supplier Code of Conduct

Link to target: Supports the target that 100% of natural rubber processor suppliers are either GPSNR members or signed Nokian Tyres sustainability commitment (achieved in 2024)

Targets related to biodiversity and ecosystems

Target: Natural rubber processor supplier compliance

Target metric: Percentage of natural rubber processor suppliers that are either GPSNR members or signed Nokian Tyres sustainability commitment

Target value: 100%

Target year: Not specified

Baseline year: Not disclosed

Baseline value: Not disclosed

Scope: Natural rubber processor suppliers (value chain)

Type: Absolute percentage target

Validation: Not science-based. Internal target focused on confirming that suppliers follow policies related to biodiversity impacts.

Rationale: This target serves as a mitigation and prevention measure for negative biodiversity impacts, because GPSNR membership and signing Nokian Tyres sustainability commitment both mean that the natural rubber processor is committed to preserving biodiversity and operates in alignment with Nokian Tyres' policies.

Progress in 2024: Target achieved - 100% of natural rubber processor suppliers are either GPSNR members or signed Nokian Tyres sustainability commitment.

Impact metrics related to biodiversity and ecosystems change

Biodiversity risk assessment in supply chain

During summer 2023, biodiversity risks in Nokian Tyres' current supply chain were assessed using the WWF's biodiversity risk filter. According to the assessment, the biggest and the broadest biodiversity impacts in the raw material chain come from pollution, deforestation, and land use change. In Nokian Tyres' raw material chain, natural rubber cultivation impacts biodiversity the most.

32 sites were considered to be most impactful on biodiversity:

• 23 natural rubber farmers and manufacturers
• 3 metal cord manufacturers
• 2 textile/belt manufacturers
• 1 oil company
• 1 chemical manufacturer

Most important countries regarding biodiversity risks: Indonesia and Malaysia

Own operations assessment

Natural diversity and the factors affecting it have been assessed at:

• Tire factories in Finland, the US, and Romania
• Test tracks
• Vianor service centers owned by the company

Result: According to the assessments, Nokian Tyres' current operations have practically no direct effects on biodiversity.

Protected areas and threatened species

The species, especially endangered or otherwise protected species living in the operating areas have been mapped.

Potential affected threatened species nearby the tire factory in Finland:

• Red-throated diver
• Asp
• Freshwater pearl mussel

Limitations

The actual biodiversity impacts of individual supplier sites have not been investigated. Any mitigation measures required have not yet been defined.

The double materiality assessment did not include the screening of site locations pertaining to Nokian Tyres' operations.

A separate assessment of the resilience of the current business model and strategy to biodiversity and ecosystems-related physical, transition and systemic risks has not been conducted yet.

EUDR compliance target (2024)

Target: 100% of natural rubber processor suppliers are either GPSNR members or signed Nokian Tyres sustainability commitment

Achievement: 100% target achieved in 2024

Policies related to resource use and circular economy

Nokian Tyres discloses policies and commitments relevant to resource use and circular economy under ESRS E5-1.

Environmental, Safety, and Quality Guideline

Key content and principles:

• Promises to continuously improve the quality, safety and environmental sustainability of products, services, and processes, considering the products' entire life cycle
• Commits to environmental responsibility, including consuming and managing resources sustainably and reducing waste

Governance:

• Approved by: President and CEO
• Accountable for implementation: President and CEO

Public availability: Not specified

Links to international standards: Not specified

Sustainable Natural Rubber Policy

Scope: Natural rubber procurement and production

Key content and principles:

• Commitment to legal compliance
• Community livelihoods
• Healthy, functioning ecosystems – including no deforestation
• Respecting all human rights in natural rubber procurement and production

Governance:

• Accountable for implementation: Senior Vice President, Operation Excellence (member of Management Team)

Links to international standards:

• Aligned with the Global Platform for Sustainable Natural Rubber (GPSNR) policy framework
• Reflects GPSNR commitments (Nokian Tyres is a member)

Public availability: Not specified

Circular economy commitments

Principles and internal guidelines:

• Commitment to increasing the share of renewable or recycled raw materials in tires to 50 percent by 2030
• Internal principles for environmental stewardship, safety, and quality – including chemical safety – aligned with the 50% target
• Production processes adhere to the waste hierarchy, supported by comprehensive training materials and detailed waste flow diagrams
• Sustainability-related goal setting introduced in the product lifecycle process, covering work instructions for the new product development process

Monitoring implementation:

• ISCC PLUS Certification obtained for the factory in Nokia, Finland in 2024, enabling introduction of ISCC PLUS-certified raw materials
• Operations at factories focused on increasing internal waste utilization

External engagement:

• Member of U.S. Tire Manufacturers Association (USTMA), participating in working groups on environmental protection, tire safety, chemical safety, and future legislation
• Member of European Tyre and Rubber Manufacturers' Association (ETRMA), involved in working groups addressing similar themes

Actions and resources related to circular economy

E5-2 Optimizing the use of raw materials

Overview Nokian Tyres utilizes high-quality raw materials that enhance both the safety and performance of its tires. Technical quality and safety of each product is ensured through rigorous testing and analysis of every raw material used in manufacturing, along with continuous improvements to rubber compounds.

Target: Increase the share of renewable or recycled raw materials in tires to 50 percent by 2030.

Scope: Own operations (manufacturing and product development)

Raw material replacement initiatives

Factory in Finland gained ISCC PLUS Certification

Action: ISCC PLUS certification obtained at Nokia, Finland factory in 2024

Scope: Own operations (Nokia factory, Finland)

Time horizon: Achieved in 2024; certified raw materials to be introduced when new flagship products are launched

Purpose: Enable introduction of new ISCC PLUS-certified raw materials in tires as a step toward the 2030 target

Application: Manufacturing of passenger car tires at the factory in Finland

2024 targets and outcomes:

• Target: Introduce at least one new raw material from the renewable and recycled category
• Target: Introduce at least one new ISCC PLUS-certified material into use
• Outcome: Both targets were achieved - a new material from renewable resources as well as ISCC PLUS-certified material was taken into use in production during 2024

Recycled carbon black research and implementation

Action: Research and projects on recycled carbon black use

Scope: Own operations (product development and manufacturing)

Time horizon: Ongoing research

Details: Nokian Tyres has extensively researched the use of recycled carbon black in tire production. Multiple projects are actively being pursued in this area. The emissions from manufacturing recovered carbon black are potentially over 90 percent lower than those from virgin carbon blacks.

Development agreement with Reselo AB

Action: Development agreement with Swedish biomaterial science company Reselo AB

Scope: Upstream value chain (renewable material development)

Purpose: Further develop the renewable material Reselo Rubber as a potential new raw material for tires

Material details: Reselo Rubber is a completely renewable material made from birch bark sourced from the residue of the global pulp, paper, and plywood industry

Status: Initial lab tests indicate that Reselo Rubber has strong potential

Advancing tire recycling

Action: Founding member of Finnish Tyre Recycling initiative

Scope: Downstream value chain (end-of-life tire management)

Time horizon: New-generation facility inaugurated in Loppi, Finland in 2023

Purpose: Enable collection and refinement of recycled materials for industrial use

Outcome: Finland has achieved 100% tire recycling rate

Performance 2024: Nokian Tyres achieved a 92% recycling rate for the passenger car tires it sold

Tire production waste utilization

Action: Production waste reduction and utilization programs

Scope: Own operations (all tire factories)

Time horizon: Ongoing; 100% utilization first achieved in 2022

Details:

• Production units have action plans to reduce the amount of non-vulcanised scrap rubber and scrap tire generation
• Amounts of production waste are monitored daily
• Action plans are updated when needed
• Waste is sorted and delivered for reuse whenever technologically and economically feasible

Target: Ensure that 100% of tire production waste continues to be utilized, with zero waste sent to landfill (voluntary target exceeding legal requirements)

Outcome 2024: Target achieved - 100% of tire factories' production waste was utilized with no waste to landfill from tire production

Tire retreading business

Action: Tire retreading services for heavy machinery, bus and truck tires

Scope: Downstream value chain (extending product life)

Time horizon: Ongoing operations

Purpose: Prolong tire service life by removing old tread and attaching new, safe tread. In Nordic countries, majority of truck and bus tires are retreaded after wear.

Performance: With optimized retreading processes, bus and truck tires can be given a second, third, or fourth lease on life. By retreading the same tire several times, it can be driven up to a million kilometers.

EU Taxonomy eligibility: Tire retreading business activities represented 14.9% of total net sales in 2024 (eligible with EU Taxonomy under Remanufacturing of Transition to circular economy)

Product lifecycle sustainability integration

Action: Introduction of sustainability-related goal setting in the product lifecycle process

Scope: Own operations (product development)

Time horizon: Implemented

Details: Work instructions for the new product development process now include sustainability goals

EU Taxonomy alignment resources

Economic activities: Manufacture of tires with low life-cycle GHG emissions and tire retreading represented 14.9% of total net sales in 2024

Financial resources (2024):

• Net sales (Taxonomy-eligible): EUR 192.5 million (15% of total EUR 1,289.8 million)
• OpEx (Taxonomy scope): 11.9% of group OpEx
• CapEx (Taxonomy scope): 3.8% of group CapEx (EUR 15.4 million eligible CapEx out of EUR 400.1 million total)

Non-financial resources:

• ISCC PLUS certification at Nokia factory
• R&D resources allocated to renewable and recycled materials development
• Membership in USTMA and ETRMA working groups on environmental protection and circular economy
• Membership in Global Platform for Sustainable Natural Rubber (GPSNR)
• Partnership with Reselo AB for renewable materials
• Finnish Tyre Recycling initiative founding membership

Performance metrics 2024

Resource inflows:

• Total technical and biological materials used: 145,835 tons
• Recycled materials share: 0.8%
• Renewable materials share: 24.2%
• Combined renewable/recycled share: 25% (baseline for 50% by 2030 target)

Resource outflows:

• 100% tire production waste utilization (zero to landfill)
• 92% recycling rate for passenger car tires sold
• All products (tires, retreading materials, disc wheel rims, steel structures) are recyclable

Targets related to circular economy

Target 1: Increase share of renewable or recycled raw materials

2024 milestone targets achieved:

• Introduce at least one new raw material from the renewable and recycled category: ✓ Achieved
• Introduce at least one new ISCC PLUS-certified material into use: ✓ Achieved

Target 2: Maximize waste diversion from landfill

E5-4 Resource inflows

Respect for the environment is part of the company's product development philosophy.

Total materials used in 2024: 145,835 tonnes of technical and biological materials.

When reporting biological materials, Nokian Tyres refers to them as renewable materials.

Breakdown by material type and source

Nokian Tyres' target of increasing the share of renewable and recycled raw materials to 50 percent by 2030 focuses on external renewable or recycled feedstock, and not internal waste.

In 2024 (own-produced tires):

• Recycled materials: 0.8%
• Renewable raw materials: 24.2%

Tire materials composition and alternatives

Approximately 100 different raw materials are used in tire production. The main material categories are:

Methodology

Nokian Tyres uses direct measurements of the raw materials used in product manufacturing to accurately calculate data on resource inflows. Double counting is avoided by specified coding of each material.

Resource outflows

Recycled and renewable materials in tires

Nokian Tyres aims to increase the share of recycled and renewable raw materials in tires to 50 percent by 2030. In 2024, the company achieved 25% share of recycled and renewable materials in tires.

The company is gradually integrating renewable and recyclable raw materials into its products while implementing extensive product development and testing to ensure the optimal combination of properties for tire performance. It is crucial that the adoption of renewable and recycled materials does not compromise the safety characteristics of Nokian Tyres' products.

Product durability and end-of-life

Nokian Tyres develops high-quality products that offer safe driving kilometers. Approximately 90 percent of a Nokian Tyres tire's carbon footprint is generated during its use, which makes durability and rolling resistance key factors.

Bus and truck tires can be retreaded two to four times. All Nokian Tyres' products (tires and wheels) are recyclable.

Circular economy initiatives

The company is involved in the development of new, innovative raw materials to extend the life cycle of tires and improve the recycling of materials. Nokian Tyres uses some recycled materials in products, such as recycled steel and carbon black.

In 2024, Nokian Tyres signed a purchase agreement on recycled carbon black with the aim to manufacture even more sustainable tires and to increase the circular economy.

The company's factory in Finland received the International Sustainability and Carbon Certification (ISCC) PLUS certificate, making it possible to increase the use of sustainable raw materials in tires.

As one of the original founders of Finnish Tire Recycling Ltd, Nokian Tyres is involved in their work of looking for new ways to recycle and utilize tires.

End-of-life tire recycling rates

In Finland, nearly 100 percent of tires are recycled. In all of Europe the figure is 92 percent. In the US, the tire recycling rate of collected tires is 79 percent.

Waste

Waste management performance

In 2022, 2023, and 2024, 100 percent of the tire production waste was utilized.

Waste management approach

Ensuring waste minimization and management is part of Nokian Tyres' continuous sustainability work. The company is committed to waste minimization and management as part of environmental responsibility.

Nokian Tyres expects its suppliers to implement proper processes and technologies and to prepare for and respond to emergencies such as fires, natural disasters, and chemical spills, with appropriate emergency plans, evacuation procedures, hazard detection equipment, training, and drills.

End-of-life tires can be shredded or granulated to be utilized in various applications. Bus and truck tires can be retreaded two to four times. Used tires can also be combusted for energy.

Scope of waste data

Warehouses, sales companies and test centers' waste was excluded from Scope 3 calculations due to lack of precise data. However, the share is small (0.001% of total Scope 3 emissions).

Policies related to own workforce

Nokian Tyres has several policies that address its own workforce, covering health and safety, working conditions, equal treatment, training, and broader human rights commitments.

Code of Conduct

Policy name: Code of Conduct

Scope: All employees

Governance and oversight:

• The President and CEO is the most senior executive accountable for implementation
• The Board of Directors approves the policy
• The policy is reviewed annually by the Board of Directors and Management Team

Key content and principles:

• Zero tolerance for forced labor, human trafficking, or child labor
• Employment contracts drawn up in writing in adherence with local legislation
• Compliance with local legislation and regulations relating to working hours and overtime work
• Commitment to never pay less than the minimum wage defined in local legislation
• Respect for human rights and equal treatment of all individuals
• Non-tolerance of harassment, bullying or discrimination on any basis (race, ethnicity, color, sexual orientation, gender, gender identity, disability, age, religion, political opinion, union membership, national or social origin, etc.)
• Promotion of equal development and learning opportunities for employees
• Commitment to ensuring a safe working environment and creating working conditions that preserve physical and mental health and promote workplace well-being
• Occupational health, safety and well-being are integral parts of daily management
• Emphasis on prevention of occupational accidents
• Entitlement to family-related leave through social policy and/or collective bargaining agreements
• Respect for freedom of association and the freedom of workers to organize
• Active participation at different levels of the organization and respecting the right of participation

Public availability: Available on the company website at company.nokiantyres.com/sustainability/responsible-business/corporate-culture-and-business-conduct/code-of-conduct/

Links to international standards:

• UN Global Compact initiative (supporting member, following ethical principles)
• UN Guiding Principles for Business and Human Rights
• ILO Declaration on Fundamental Principles and Rights at Work

Training and monitoring:

• Mandatory training provided to all personnel on the Code of Conduct, included in induction of new employees
• At the end of 2024, 78% of personnel had completed the training
• Updated in 2024 with new material topics of well-being and skill and career development, and expanded considerations around equality

Environmental, Safety, and Quality Guideline

Policy name: Environmental, Safety, and Quality Guideline

Scope: All operations

Governance and oversight:

• The President and CEO is the most senior executive accountable for implementation
• The Board of Directors approves the policy

Key content and principles:

• Commitment to creating healthy and safe working conditions for all individuals under the company's supervision
• Every employee is responsible for identifying dangers in the working environment and minimizing risks
• Supervisors accountable for carrying out job-related risk assessments in cooperation with team members
• Striving toward efficiency, zero errors, and zero accidents in all operating areas
• Responsible chemical management, including pledge to reduce or phase out hazardous substances
• Commitment to environmental responsibility
• Pledge to continually improve quality, safety, and environmental sustainability of products, services, and processes

Public availability: Available on the company website

Links to international standards:

• ISO 14001 standard (operations based on and fulfill requirements)
• ISO 45001 (tire factories in Finland and US are certified)
• UN Global Compact (through implementation, commits to ten principles)

Monitoring:

• Minor updates in spring 2024 based on customer needs
• Stakeholder consultation on environmental matters
• Regular reporting on environmental matters

Nokian Tyres' Safety Management Model

Policy name: Nokian Tyres' Safety Management Model

Scope: All Nokian Tyres employees and operations

Key content and principles:

• Serves as the company's workplace accident prevention policy and management system
• Describes company mindset for safety work that all employees must maintain
• Sets the bar for common practices
• Provides tools for continuous improvement for departments and operations
• Departments assess their own safety work and identify maturity level and needs for improvement
• Emphasizes departments' ownership on safety improvements
• Includes 16 standards covering: Leadership, Planning, Employee Engagement, Risk Management, Legal Requirements, Training, Behavior and Observation, Communication, Monitoring, Accident Reporting and Investigation, Workplace Inspections, Emergency Preparedness, Contractor Management, Management of Change, Preventative Actions, and Other Operational Procedures

Monitoring:

• The entire workforce is covered by the Health and Safety Management System and KETO safety reporting tool
• Tire factories in Finland and US certified according to ISO 45001
• Safety management at Vianor follows ISO 45001 but not externally certified
• All accidents and incidents must be reported in KETO by the next business day
• Every accident requires thorough investigation
• Job-related risk assessments and safety actions managed in KETO
• Target of five safety actions per employee on average

Total Rewards Philosophy and Guideline

Policy name: Total Rewards Philosophy and Guideline

Scope: All employees

Key content and principles:

• Forms a consistent framework for retaining, recognizing, and rewarding employees
• Aims to support the company's goal of cultivating an engaged and high-performing organization
• Ensures fair and equal treatment of employees across the organization
• Emphasizes equity and fairness in pay decisions
• Base salary setting follows collective agreements and local market practice based on defined job architecture
• All employees belong in short-term incentive program
• Offers competitive packages including both monetary and non-monetary elements
• Monetary elements include base salary, benefits, and different kinds of incentives

Monitoring:

• Reward structure monitored regularly to ensure it supports future performance and employee engagement
• Reward training planned to enhance understanding across the organization

People Review

Policy name: People Review (instruction/process)

Scope: All employees

Key content and principles:

• Focuses on managing performance and employees' personal development
• Employees own their development and career, while managers support them by providing resources and learning opportunities
• Development planning can occur with goal-setting discussions or separately
• Manager and employee review future competence needs, current strengths, and career aspirations
• Together, they define development actions using the 70-20-10 model
• Employee development philosophy: 70% growth from on-the-job experience, 20% from learning from others, 10% from formal training

Governance:

• Approved by a member of Nokian Tyres Management Team

Monitoring:

• In 2024, 88% of employees participated in the people review process (90% female, 87% male; 82% blue collar, 91% white collar)

Human Rights Due Diligence Process

Key content and principles:

• Defined human rights due diligence (HRDD) process
• If any impacts are identified, they are measured and needed actions are taken
• Main focus in 2023 was on own personnel with planned measures to minimize risks and impacts

Links to international standards:

• UN Guiding Principles for Business and Human Rights
• OECD's Guiding Principles on Labour and Human Rights
• ILO Declaration on Fundamental Principles and Rights at Work

Whistleblowing Policy

Policy name: Whistleblowing Policy

Scope: All employees and external stakeholders

Key content and principles:

• Purpose is to ensure governance systems operate at high-quality level
• Encourages interest groups to report activities that infringe upon legislation, Code of Conduct, or other guidelines
• All whistleblowers protected against any form of retaliation
• Anonymous reports treated with same level of importance as named reports
• Channel available since 2011, renewed in 2024 with external third-party service provider
• All messages handled confidentially and encrypted
• Service provider deletes all metadata including IP addresses to ensure anonymity

Public availability:

• Available to external stakeholders on company website
• Information available on company intranet for employees

Governance:

• Whistleblowing Committee formed in 2019 to guide and monitor activities
• Access to messages restricted to members of whistleblowing team
• Legal function coordinated the process and related investigations in 2024
• All material findings and general statistics reported to Audit Committee and People and Sustainability Committee of Board of Directors

Training:

• Code of Conduct eLearning includes training on whistleblowing channel
• Communication via general info calls, team meetings, and activities to promote awareness

Data Protection Policy

Policy name: Data Protection Policy

Scope: All operations involving personal data

Governance and oversight:

• Board of Directors responsible for overseeing data protection governance and management effectiveness
• President and CEO approves and assigns roles and responsibilities, defines strategic objectives, allocates resources
• General Counsel oversees and directs personal data protection governance
• Business Unit, Business Area, and function leaders accountable for implementing principles and practices within their areas

Key content and principles:

• Emphasizes privacy protection and strictly complies with relevant legislation
• Lays down basic fundamental requirements for personal data processing
• Personal data provided by customers and other parties used only as permitted by privacy laws

Supporting guidelines:

• Data Subject Rights Guideline: process for responding to data subject requests
• Data Breach Guideline: procedure for managing data breaches
• Data Retention Guideline: principles for retaining personal data
• Privacy Statements: describe how personal data is processed
• Information Security Policy: process for protecting confidentiality, integrity and availability of information assets

Monitoring:

• Number of incoming Data Subject Requests monitored internally
• Response times tracked to ensure compliance with legal requirements
• Data privacy management activities structured in annual cycles with planned actions for each quarter
• In 2024, training plan introduced to raise employees' awareness, including intranet updates, e-learning module promotion, and monitoring completion rates

Taking action on material impacts on own workforce

Nokian Tyres conducts various initiatives including training, audits, and an annual people process and engagement survey to address material impacts and seize opportunities related to its workforce. Management is led by HR and safety functions, with all supervisors responsible for implementing relevant actions.

Training and competence development

Employee development program

• Approach: Follows the 70-20-10 principle (70% on-the-job experience, 20% learning from others, 10% formal training)
• Scope: Own operations
• Resources: Updated eLearning platform (2023), team of employees trained to develop online courses
• Actions: Internal job rotation, on-the-job learning, diverse development solutions, digitalization enabling access to online learning (webcasts, podcasts, professional forums)
• New courses introduced: Safety, sustainability, procurement, data protection

Leadership Growth Track

• Status: Piloted in 2024
• Target group: New managers
• Scope: Own operations
• Objectives: Develop self-awareness, cultivate growth mindset, prevent adverse impacts on employee motivation, improve motivation, skills and career development
• Components: Shared learning sessions, individual development plans, peer support

Employee engagement initiatives (2024)

• Internal communications survey
• Defining Nokian Tyres' human rights due diligence process
• Employee participation in strategic planning (facilitated discussions in November, open to all employees)
• Drive! Engagement Survey

Total Rewards Philosophy and Guideline

• Objective: Clarify principles behind total rewards, support managers in fair and consistent pay decisions
• Expected outcomes: Foster transparency, promote motivation and engagement, equitable and fair working conditions
• Planned action: Reward training to enhance understanding across the organization (coming year)
• Link to target: Increase manager's competence on rewarding guidelines (over 60% attendance in 2025)

Occupational health and safety

Safety Management Model

• Scope: Own operations
• Actions: Procedures to avoid and mitigate adverse impacts on employee safety, comprehensive occupational health services through healthcare partner companies
• Outcomes: Proactively prevent and mitigate risks, provide remedies if issues arise

Safety roadmap

• Time horizon: Next few years
• Scope: Entire company, each location and all functions
• Objectives: Develop safety culture, improve safety maturity, increase personnel and stakeholder participation
• Governance: Regularly monitored by Management Team and other relevant groups

KETO reporting tool

• Requirement: All accidents and incidents reported by next business day
• Process: Thorough investigation of every accident, manager responsibility for reporting and investigation
• Scope: Common reporting tool across locations; introduced at Oradea factory in Romania
• Communication: Major accidents communicated internally across locations, production units, and functions; causes and corrective actions reviewed to identify common risks and share best practices

Safety actions and observations

• Target: Five safety actions per employee on average
• Actions: Job-related risk assessments, safety actions to understand actual risks
• Link to target: Decrease LTIF from 8.3 (2018) to 1.5 by 2025

Oradea factory safety integration

• Scope: New factory in Oradea, Romania
• Actions: Safety leadership training for managers and supervisors, introduction of KETO reporting tool
• Objectives: Empower teams to take ownership and lead in safety practices, develop occupational safety

Well-being initiatives

Hybrid working model

• Status: Maintained in 2024 with full Management Team support
• Scope: Own operations (where possible)
• Components: Flexible hours and work arrangements (adhering to local laws), modern work environment with digital tools, team collaboration on best working practices
• Compliance: Local laws regarding flexible hours, part-time options, paid parental and family leave

Further well-being actions

• Developing leadership
• Defining human rights approach
• Promoting culture of equal opportunities
• Reviewing Human Rights Commitment and defining due diligence process

Stakeholder engagement in target-setting

Nokian Tyres' own workforce and workforce representatives engaged directly in:

• Setting safety-related targets
• Tracking performance against targets
• Identifying lessons or improvements
• Channels: Safety committees, KETO safety reporting tool, Drive! Engagement Survey, sustainability steering group, Työsuojelutoimikunta (Nokia)

Linked targets

• Increase manager's competence on rewarding guidelines and practices (>60% training attendance of all managers in 2025)
• Improve job rotation (% of transfers and promotions, baseline to be measured 2025)
• Continuous improvement of equal opportunities sentiment (Drive! survey: baseline 2021: 65, result 2024: 67)
• Decrease LTIF from 8.3 (2018) to 1.5 by 2025

Targets related to own workforce

Nokian Tyres has disclosed the following targets related to its own workforce:

1. Manager competence on rewarding guidelines

• Target metric: Manager's competence on Nokian Tyres' rewarding guidelines and practices
• Measurement: Training attendance
• Target value: Over 60 percent attendance of all managers
• Target year: 2025
• Baseline year/value: Not disclosed
• Scope: All managers (own operations)
• Type: Not specified
• Validation: Internal

2. Job rotation improvement

• Target metric: Percentage of transfers and promotions
• Target value: To be improved (qualitative)
• Target year: Not specified
• Baseline year/value: Base to be measured 2025
• Scope: Own operations
• Type: Not specified
• Validation: Internal

3. Equal opportunities sentiment

• Target metric: Continuous improvement of the sentiment of equal opportunities, related to Drive! survey question "Regardless of background, everyone at our company has an equal opportunity to succeed"
• Target value: Continuous improvement (qualitative)
• Baseline year/value: 2021: 65
• Target year: Not specified
• Scope: Own operations
• Type: Not specified
• Validation: Internal
• Progress to date: Result in 2024: 67

4. Lost-time incident frequency (LTIF)

• Target metric: Lost-time incident frequency (LTIF)
• Target value: 1.5
• Target year: 2025
• Baseline year/value: 2018: 8.3
• Scope: Group-wide (own operations)
• Type: Absolute
• Validation: Internal
• Progress to date: In 2024, the group-wide LTIF improved to 4.6 (4.7 in previous year). The LTIF target was not met. Total recordable injury frequency improved from 12.0 to 11.3. Safety actions per person achieved the targeted level of 5.0 (4.6).

Characteristics of the undertaking's employees

Total headcount and FTE

Employee figures are based on the total headcount, including both full-time and part-time employees. Vianor employees are included in Group figures.

At the end of the review period (headcount):

• 2024: 3,810
• 2023: 3,754
• 2022: 3,517

Average number of personnel:

• 2024: 3,850
• 2023: 3,754
• 2022: 3,517
• 2021: 4,941
• 2020: 4,859

Vianor (own) employees at the end of the review period:

• 2024: 1,428
• 2023: 1,387
• 2022: 1,400

At the end of 2024, the company employed a total of 3,810 employees with 1,712 being white collars and 2,098 being blue collars.

Headcount by gender

*Gender as specified by the employees themselves where possible for persons to legally register themselves as having a third, often neutral, gender.

Among the blue collars, 88 percent were male, and 12 percent were female. Of the white collars, 73 percent were male, and 27 percent were female.

Headcount by country/region

Employees in countries where Nokian Tyres has at least 50 employees representing at least 10% of total number of employees:

By region:

Headcount by contract type

Broken down by gender (headcount):

Broken down by region (headcount):

Employee turnover

Number of terminated employees includes employees who have left voluntarily or due to dismissal, retirement, or death in service during the reporting period. In calculating the turnover rate, the denominator used is the number of head count at the end of the reporting period.

Seasonal employees

There are two tire changing seasons each year when the headcount increases temporarily by approximately 500–700 employees. During 2024, Nokian Tyres employed a total of 1,350 seasonal employees in the Nordics at Nokian Tyres' Vianor tire and car service chain.

Non-employees

By the end of 2024, there were 342 non-employees, the majority of whom (225) were employed through private employment agencies in production roles at the Finnish tire factory. The term non-employees refers to individuals who are not direct employees of the organization but whose work is managed and overseen by the company.

Characteristics of non-employees in the undertaking's own workforce

Total non-employee workers

In 2024, there were 342 non-employees (2023: 383), most of them private employment agency workers (225), working in the Finnish factory production.

Methodology

Non-employee figures are reported in headcount at the end of reporting period on December 31, 2024.

Definition

Nokian Tyres refers to non-employees as workers who do not have a direct employment relationship with the company, but whose work is controlled and led by Nokian Tyres.

Breakdown by type

Year-on-year comparison

Collective bargaining coverage and social dialogue

67 percent of Nokian Tyres' employees were covered by collective bargaining in 2024.

There are no agreements with employees for representation by a European Works Council (EWC), a Societas Europaea (SE) Works Council, or a Societas Cooperativa Europaea (SCE) Works Council in Central Europe due to the small size of operations, with a low number of employees in each country, the setup of the regional operations and local legislations.

When there is no collective labor agreement, the company follows the employment regulations that are available. Nokian Tyres complies with the country-level legislation and regulation in each country.

Collective Bargaining Coverage and Social Dialogue by Region

Non-EEA coverage: North America is indicated in the 0-19% coverage bracket.

Scope

Collective bargaining coverage is reported for countries with more than 50 employees representing more than 10% of total employment. Workplace representation figures are reported for EEA countries only, applying the same threshold.

Diversity metrics

Nokian Tyres' top management consists of the President and CEO and the Management Team. The figures are based on the official headcount on December 31, 2024.

Gender distribution at top management level

Board of Directors composition (2024)

At the end of 2024, the Board of Directors had six male (66.7%) and three female members (33.3%) and three different nationalities. The age range was between 48–67 years.

Board diversity aspects:

Distribution of employees by age group

President and CEO

The President and CEO was male and Finnish. The new President and CEO started in January 2025, and he is male and Italian.

Adequate wages

S1-10 Adequate wages

Nokian Tyres will never pay anyone less than the minimum wage defined in local legislation. Additionally, the company follows the local market practice as well as collective agreements when applicable.

Benchmark used

No living wage benchmark is disclosed. The company commits only to:

• Minimum wage compliance as defined in local legislation
• Local market practice
• Collective agreements where applicable

Coverage and methodology

No coverage percentage or assessment methodology against a living wage benchmark is provided.

Value chain expectations

For suppliers, Nokian Tyres' Supplier Code of Conduct expects suppliers to "provide employees at least with the minimum wage as required by local laws."

During sustainability audits in 2024, one severe labor rights issue was identified where "the audited company paid the workers less than minimum wage defined by the government. The audited company has performed corrective actions."

Policy statements in Code of Conduct

The Code of Conduct states: "We comply with local legislation and regulations relating to working hours and overtime work. Nokian Tyres will never pay anyone less than the minimum wage defined in the local legislation."

Targets

No specific targets related to adequate wages or living wage assessment are disclosed.

Social protection

All Nokian Tyres employees are covered by social protection through either public programs or company-provided benefits.

This coverage safeguards against income loss due to major life events such as sickness, unemployment, work-related injuries, acquired disabilities, parental leave, and retirement. Coverage begins as soon as employees start working for the company.

Coverage metrics

Coverage scope

Social protection covers:

• Sickness
• Unemployment
• Work-related injuries
• Acquired disabilities
• Parental leave
• Retirement

Coverage begins as soon as employees start working for the company.

Training and skills development metrics

People Review discussions, which focus on managing performance and employees' personal development, are targeted to all employees. The company's employee development program emphasizes internal job rotation, on-the-job learning, and diverse development solutions. It follows the 70–20–10 principle: 70 percent of growth comes from on-the-job experience, 20 percent from learning from others, and 10 percent from formal training.

Average training hours per employee in 2024

By gender:

By employee category:

By age group:

Performance and career development reviews

The company states that all employees participate in People Review discussions, which focus on managing performance and employees' personal development. Internal job rotation, on-the-job learning, and other learning solutions have a key role in supporting employee development.

Coverage of performance reviews:

Health and safety metrics

Coverage of Health and Safety Management System

The entire Nokian Tyres workforce is covered by the company's Health and Safety Management System and the KETO safety reporting tool. The tire factories in Finland and in the US are certified according to the international ISO 45001 occupational health and safety standard. Safety management at Vianor follows the ISO 45001 standard but it is not externally certified.

Lost-time incident frequency (LTIF)

*Number of lost-time incidents / 1,000,000 hours worked

Total recordable injury frequency (TRIF)

*Number of recordable injuries / 1,000,000 hours worked

Number of recordable accidents

Occupational illness frequency (OIFR)

*Work-related ill health cases / 1,000,000 hours worked

Number of cases of recordable work-related ill health of employees

Number of fatalities

Number of days lost to work-related injuries and work-related ill health

In 2024, 450 days were lost to work-related injuries and fatalities due to work-related accidents, work-related ill health, and fatalities from ill health related to non-employees.

Work-life balance metrics

Family-related leave entitlement

All employees are entitled to family-related leave through social policy and/or collective bargaining agreements.

Leave uptake and return-to-work rates

No quantitative metrics disclosed regarding:

• Percentage of entitled employees who took family-related leave (by gender)
• Return-to-work rates after parental leave (by gender)

Related policies

The company adheres to local laws regarding flexible hours, part-time options, and paid parental and family leave. A modern work environment, equipped with digital tools, enables teams to organize work flexibly and supports employee well-being.

In 2024, the company maintained its hybrid working model, with full support from the Management Team. This includes flexible hours and work arrangements whenever possible.

Compensation metrics

Pay gap

Nokian Tyres discloses the following gender pay gap metrics:

¹ Gender pay gap is defined as the difference of average gross hourly pay levels between female and male employees, expressed as percentage of the average pay level of male employees.

Remuneration ratio

² Total remuneration ratio is defined as annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual). Calculation includes compensation elements stored in Nokian Tyres Global HR system: employees' base salary, main allowances and bonuses on target opportunity level (defined in bonus programs or as actually paid on median level). Ratio is impacted by the high volume of blue-collar workers in the workforce.

Methodology

All reported data is sourced from the global HR system and is calculated in euros for consistency across all employees. The remuneration ratio for 2023 was not disclosed, indicating this is the first year of full reporting for this metric.

Incidents, complaints and severe human rights impacts

Own Workforce

During the year, no work-related incidents of discrimination were confirmed to have occurred on the grounds of gender, racial or ethnic origin, nationality, religion or belief, disability, age, sexual orientation, or other relevant forms of discrimination involving internal and/or external stakeholders across operations. This includes incidents of harassment as a specific form of discrimination.

Zero complaints concerning misconduct referred to above were reported to the whistleblowing channel.

In addition, no severe human rights issues and incidents connected to own workforce were reported during the year and there were zero cases of non-respect of UN Guiding Principles and OECD Guidelines for Multinational Enterprises.

There were no fines, penalties, and compensation for damages as result of such incidents.

Value Chain Workers

Nokian Tyres identified one severe labor rights issue during 2024. During an on-site sustainability audit it was discovered that the audited company paid the workers less than minimum wage defined by the government. The audited company has performed corrective actions.

No grievances linked to Nokian Tyres were reported through the GPSNR (Global Platform for Sustainable Natural Rubber) Grievance Mechanism and considered valid by the GPSNR Compliance Panel in 2024.

Policies related to value chain workers

Nokian Tyres has established policies specifically addressing value chain workers, particularly in its supply chain. The company requires all sustainability critical suppliers to adhere to these policies and conducts sustainability audits since 2016.

Supplier Code of Conduct

Scope:

• All sustainability critical suppliers are required to adhere to the Supplier Code of Conduct
• Manufacturing partners that complement Nokian Tyres' own production
• Service providers (Vianor imports tires and purchases goods for tire and car service, and their service providers are expected to commit)
• Natural rubber suppliers and processors

Governance:

• Senior Vice President, Operation Excellence (member of the Management Team) is the most senior executive accountable for implementation

Key content/principles:

• Respect for human rights, including labor rights
• Prohibition of discrimination
• Prohibition of child labor and forced labor
• No participation in or benefit from any form of modern slavery
• Provision of at least minimum wage as required by local laws
• Safe working environment
• Respect for rights of migrant and foreign workers
• Promotion of ethical recruitment practices with requirement that recruitment fees are not borne by employees
• Provision of decent living conditions (adequate housing, access to drinking water, food security) for employees working and living on site
• Support for local communities
• Ensuring labor rights apply to all employees with no discrimination based on employment status
• Minimizing negative impacts on local and surrounding communities
• Adopting precautionary approach to environmental challenges
• Compliance with all relevant environmental laws and regulations
• Continuous improvement in environmental performance
• Proper handling, storage, and disposal of chemicals
• Protecting water quantity and quality
• Safeguarding soil quality
• Preparing for and responding to emergencies
• Identifying, monitoring, managing, and reducing air emissions
• Seeking low carbon solutions
• Understanding impacts on biodiversity and acting to safeguard biodiversity and surrounding ecosystems

Public availability:

• Available on the company website (referenced as publicly available at company.nokiantyres.com)

Alignment with international standards:

• Aligned with UN Guiding Principles for Business and Human Rights (UNGPs)
• International Labour Organization's (ILO) Declaration on Fundamental Principles and Rights at Work
• ILO Conventions 1 to 8 (fundamental conventions)
• OECD Guidelines for Multinational Enterprises
• UN Global Compact principles
• International Bill of Human Rights

Monitoring and implementation:

• Supplier due diligence process conducted for all new suppliers before approval
• Supplier risk assessment using four categories: quality, sustainability (environmental, social & governance), business/strategic criticality, and safety at work
• Sustainability on-site audits conducted at high sustainability risk suppliers' sites since 2016
• Follow-up audits performed every third year at high sustainability risk suppliers' sites
• Actions required from suppliers if shortcomings identified during audits
• Group-level grievance mechanism maintained (aligned with UN Guiding Principles effectiveness criteria)
• Whistleblowing channel available for reporting concerns

Sustainable Natural Rubber Policy

Scope:

• Natural rubber suppliers and processors
• 100% of natural rubber processor suppliers targeted to be either GPSNR members or signed to Nokian Tyres sustainability commitment

Governance:

• Senior Vice President, Operation Excellence (member of the Management Team) is the most senior executive accountable for implementation

Key content/principles: The policy includes eight major components:

1. Commitment to legal compliance
2. Healthy functioning ecosystems
3. Respecting human rights
4. Community livelihoods
5. Increased production efficiency
6. Supply chain assessment and traceability
7. Monitoring and reporting
8. Driving effective implementation of all these components

Specific expectations for natural rubber suppliers:

• Protecting and improving biodiversity
• Taking biodiversity and healthy ecosystems into account
• Joining combat against climate change
• Managing operations to minimize and mitigate greenhouse gas emissions
• Actively seeking low carbon solutions
• Preventing air, water, and soil contamination

Public availability:

• Available on the Nokian Tyres website

Alignment with international standards:

• Framework aligns with Global Platform for Sustainable Natural Rubber (GPSNR)
• UN Global Compact principles (through company membership)

Monitoring and implementation:

• Sustainability audit model evaluates suppliers' alignment with the policy
• Follow-up audits performed every third year at high sustainability risk suppliers' sites
• Assessment of biodiversity impacts during audits
• Supply chain traceability requirements (though acknowledged as challenging)
• Commitment requirement from all natural rubber processor suppliers

Procurement Guideline

Scope:

• Nokian Tyres' Procurement function
• General principles of sustainable procurement

Governance:

• Not specified

Key content/principles:

• Establishes general principles of sustainable procurement
• Guides Procurement function's work
• Follows UN Global Compact ethical principles

Public availability:

• Not specified as publicly available

Alignment with international standards:

• UN Global Compact principles

Code of Conduct (relevant to value chain)

Scope:

• While primarily for own operations, includes expectations for suppliers and business partners

Key content/principles relevant to value chain:

• Commitment to continuously enhancing products, functions, and production facilities
• Minimizing environmental impact throughout supply chain
• Preventing pollution of air, water, and soil

Public availability:

• Available on company website

Alignment with international standards:

• UN Global Compact principles (10 principles)

EU Deforestation Regulation (EUDR) Compliance

While not a standalone policy, Nokian Tyres has implemented measures to comply with EUDR requirements for value chain workers:

• Started internal task force project in fall 2023
• Active collaboration with suppliers to ensure EUDR requirements are met
• Mapping availability of EUDR-compliant natural rubber
• Supply chain and production setup review

Implementation approach:

Nokian Tyres requires suppliers to provide safety data sheets (SDS) for all chemicals before purchase. The company conducts Know Your Counterparty process and Supplier Risk Analysis process before approving new suppliers.

The company has committed to having 100% of sustainability high-risk suppliers audited as one of its non-financial targets. During audits, value chain workers are interviewed to gain understanding of those who are or could be materially affected.

Common issues identified during audits include:

• Language and content of employment contracts
• Missing or partial records of working hours, rest times, and holidays
• Rest times and holidays not always granted according to local law
• Recruitment of foreign workers in some countries

The company is a member of the Global Platform for Sustainable Natural Rubber (GPSNR), where views of value chain workers are presented.

Taking action on material impacts on value chain workers

Sustainability Audit Programme (Natural Rubber Suppliers)

Description: Nokian Tyres started a partnership with an external auditor in 2016 to improve sustainability in its natural rubber value chain. The natural rubber sustainability auditing process is based on Nokian Tyres Supplier Code of Conduct and principles that comply with the UN Global Compact goals. In 2022, the audit model was updated to evaluate suppliers' alignment with Nokian Tyres Sustainable Natural Rubber Policy.

Scope:

• Upstream value chain (natural rubber processing plant suppliers)
• Manufacturing partners (tire production)

Time horizon:

• Ongoing since 2016
• Follow-up audits conducted every three years
• 2024: Five sustainability audits performed

Resources allocated:

• External auditing agency partnership (since 2016)
• External consulting company for audit model development
• Sustainability department coordination (Sustainability Manager)
• Procurement function coordination (Category Manager)

Process and outcomes:

• 100% of sustainability critical rated suppliers audited on a three-year cycle (target achieved in 2023, maintained in 2024)
• Confidential interviews with value chain workers during audits
• Full audit reports shared with suppliers to support improvement
• Common issues identified: employment contract language/content, working hours records, rest times/holidays compliance, foreign worker recruitment costs
• One severe labor rights issue identified in 2024: workers paid below minimum wage (corrective actions performed)
• Manufacturing partners audited based on ISO9001, ISO14001, and SA8000 standards (only minor remarks noted)

Corrective action and monitoring:

• Suppliers required to provide corrective action plans
• Sustainability department follows up on implementation
• Eight supplier sites currently have mitigation plans being monitored
• Suppliers can be put on hold status if corrective actions not completed
• 30% of suppliers with substantial impacts had agreed corrective actions/improvement in 2024
• 20 suppliers with substantial impacts were terminated in 2024

KPIs (2024):

• Minimum five sustainability audits performed ✓ (achieved: 5 audits)
• 100% of natural rubber processor suppliers are either GPSNR members or signed Nokian Tyres sustainability commitment ✓ (achieved)

Link to policy: Aligned with Sustainable Natural Rubber Policy (2021) and Supplier Code of Conduct

Sustainable Natural Rubber Policy Implementation

Description: In 2021, Nokian Tyres adopted a Sustainable Natural Rubber Policy fully aligned with the Global Platform for Sustainable Natural Rubber (GPSNR) policy framework. The policy was approved by the Senior Vice President, Operation Excellence.

Scope: Upstream value chain (natural rubber sourcing)

Time horizon: Adopted 2021, ongoing implementation

Resources allocated:

• Management Team approval and oversight
• GPSNR membership
• Integration with procurement processes

Policy components:

• Commitment to legal compliance
• Healthy functioning ecosystems
• Respecting human rights
• Community livelihoods
• Increased production efficiency
• Supply chain assessment and traceability
• Monitoring and reporting
• Driving effective implementation

Outcomes:

• 100% of approved natural rubber processors either GPSNR members or committed to Nokian Tyres' Sustainable Natural Rubber Policy (2024)
• Exclusively purchases rubber processed in approved plants

Link to policy: Sustainable Natural Rubber Policy (2021)

Supplier Due Diligence and Assessment Programme

Description: Ongoing supplier due diligence, assessments and audits with follow-up actions, including subcontractor cooperation on occupational safety.

Scope: Upstream value chain (raw material providers, subcontractors across communications, IT, R&D, HR and other functions)

Resources allocated:

• Cross-functional engagement (Sustainability and Procurement departments)
• External third-party auditing agencies

2024 metrics:

• 43 significant suppliers (Tier 1 and non-Tier 1) identified
• 23 suppliers assessed via desk/on-site assessments
• 53% of significant suppliers assessed
• 23 suppliers with substantial actual/potential negative impacts identified
• 0 suppliers supported in corrective action plan implementation

Specific actions:

• Occupational safety trainings for subcontractors
• Offering subcontractors access to Nokian Tyres' safety observation recording system

Link to policy: Supplier Code of Conduct

Grievance Mechanism Access (GPSNR)

Description: Access to the GPSNR Grievance Mechanism for value chain workers to express concerns about GPSNR members and resolve disputes.

Scope: Upstream value chain (natural rubber suppliers)

Process:

• Grievances submitted via email (info@gpsnr.org) or online form
• GPSNR Compliance Panel validation
• Corrective action requests issued to Nokian Tyres if cases are valid
• No requests received in 2024

Link to policy: Sustainable Natural Rubber Policy, GPSNR membership framework

Whistleblowing Channel

Description: Confidential channel for value chain workers and stakeholders to report concerns or suspected infringements.

Scope: All value chain workers (upstream and downstream)

Resources allocated:

• Dedicated whistleblowing system
• Protection against retaliation for all whistleblowers
• Anonymous reporting capability

Link to policy: Code of Conduct and governance systems

Targets related to value chain workers

Target 1: Sustainability high-risk supplier audits

Target metric: Percentage of sustainability high-risk suppliers in the value chain that have been audited

Target value: 100%

Target year: Ongoing (maintain status achieved in 2023)

Baseline year: 2023

Baseline value: 100%

Scope: Value chain (sustainability high-risk suppliers)

Target type: Absolute

Validation: Internal

Progress (2024): Target achieved. Status of 100% of sustainability high-risk suppliers audited maintained.

Supporting KPIs (2024)

Target 2: Natural rubber processor suppliers sustainability commitment

Target metric: Percentage of natural rubber processor suppliers that are either GPSNR members or have signed Nokian Tyres Sustainable Natural Rubber Policy

Target value: 100%

Target year: 2025 (maintain status)

Baseline year: Not disclosed

Baseline value: Not disclosed

Scope: Value chain (natural rubber processor suppliers)

Target type: Absolute

Validation: Internal

Progress (2024): Achieved 100%

Policies related to consumers and end-users

Nokian Tyres has identified several policies that guide its work with consumers and end-users, primarily addressing product safety, data protection, and ethical marketing practices.

Code of Conduct

Scope: All employees and operations

Approval and oversight: The President and CEO is responsible for implementing the Code of Conduct. The Board of Directors and Nokian Tyres Management Team review it annually.

Key content: The Code of Conduct defines Nokian Tyres' approach to marketing and communications, focusing on effective engagement with stakeholders, including consumers and end users. It promotes reliable, balanced, and timely communication, ethical marketing practices, and the provision of truthful information. The policy also emphasizes privacy protection and strictly complies with relevant legislation. It protects individuals from retaliation when raising concerns about misconduct.

Public availability: Publicly accessible on Nokian Tyres' website

Link to international standards: The Code of Conduct reflects the UN Guiding Principles for Business and Human Rights. Nokian Tyres operates in alignment with these principles and is dedicated to avoiding any actions that could cause or contribute to human rights violations.

Monitoring: The Code of Conduct eLearning is included in the induction training of all new employees and includes training on the whistleblowing channel.

Data Protection Policy

Scope: Group-wide personal data processing

Approval and oversight: The Board of Directors is responsible for overseeing the organization's data protection governance and management effectiveness. The President and CEO approves and assigns roles and responsibilities for data protection management, defines strategic objectives, and allocates resources. The General Counsel oversees and directs personal data protection governance, while Business Unit, Business Area, and function leaders are accountable for implementing data protection principles and practices within their respective areas.

Key content: The Data Protection Policy emphasizes privacy protection and strictly complies with relevant legislation. It lays down the basic fundamental requirements for personal data processing. Personal data provided by customers and other parties is used only as permitted by privacy laws. The policy respects the protection of privacy and adheres to privacy legislation.

Public availability: Publicly accessible on Nokian Tyres' website

Link to international standards: Aligned with GDPR requirements (established through an extensive GDPR project in 2018)

Monitoring: Data protection responsibilities are clearly defined within the Data Protection Policy, ensuring compliance and accountability. Data privacy management activities are structured in annual cycles, with planned actions outlined for each quarter. In 2024, Nokian Tyres introduced a training plan to raise employees' awareness of data protection, including posting updates on the intranet, promoting the e-learning module, and monitoring completion rates, with plans to extend training to Vianor and customer service outlets.

Supporting Guidelines (Data Protection)

Nokian Tyres has established several written guidelines for handling personal data:

Data Subject Rights Guideline

Key content: Outlines the process for responding to data subject requests in compliance with applicable laws. Sets out a process for executing data subject requests in compliance with applicable laws.

Link to international standards: Aligned with GDPR requirements

Monitoring: The number of incoming Data Subject Requests is monitored internally, and response times are tracked to ensure compliance with legal requirements.

Data Breach Guideline

Key content: Details the procedure for managing data breaches in accordance with legal requirements. Sets out a process for handling data breaches in compliance with applicable laws. If a personal data breach takes place, the company will notify local supervisory authorities and affected individuals in accordance with applicable laws.

Link to international standards: Aligned with GDPR requirements

Data Retention Guideline

Key content: Defines the principles for retaining personal data across the group. Sets out the guiding principles on retention of personal data within the group.

Privacy Statements

Key content: Made available to the data subjects to describe how their personal data is being processed by Nokian Tyres group. Available on Nokian Tyres's website and include instructions on how to contact the company.

Public availability: Available on the website; consumers are informed about Privacy Statements when registering for any of Nokian Tyres or Vianor's services

Environmental, Safety, and Quality Guideline

Approval and oversight: The President and CEO is responsible for implementing the guideline. Minor updates were made in the spring of 2024.

Key content: Affirms the company's commitment to developing and manufacturing high-quality premium products and services that provide users with safe, economical, and comfortable driving experiences. It also pledges to deliver the best service in the tire industry across all areas.

Public availability: Publicly accessible on Nokian Tyres' website

Information Security Policy

Key content: Describes the group's process for protecting the confidentiality, integrity and availability of information assets in order to manage and reduce information risks.

Product Lifecycle Process

Approval and oversight: Approved by a member of Nokian Tyres' Management Team

Key content: Guides internal procedures for developing new products while ensuring quality and safety standards are maintained throughout the entire product lifecycle. Driven by rigorous testing policies.

Public availability: Publicly accessible on Nokian Tyres' website

Alignment with UN Guiding Principles

Nokian Tyres operates in alignment with the UN Guiding Principles for Business and Human Rights and its own Code of Conduct, which reflects these principles. The company is dedicated to avoiding any actions that could cause or contribute to human rights violations. If such impacts occur, Nokian Tyres takes prompt action to address them. Additionally, Nokian Tyres aims to prevent or mitigate human rights risks directly linked to its operations, products, or services. For consumers and end users, these risks may involve issues related to security and privacy rights. In case adverse human rights impacts occur, Nokian Tyres has established procedures to ensure proper remediation.

Policy Updates

No significant changes were made to the Data Protection Policy or related guidelines during the reporting year. The Environmental, Safety, and Quality Guideline received minor updates in the spring of 2024, consisting of small additions and wording adjustments.

Taking action on material impacts on consumers

Overview

In 2024, Nokian Tyres did not identify any severe human rights issues or incidents involving consumers or end users. To proactively manage potential material impacts, the company has allocated resources across key functions. Data protection responsibilities are clearly defined within the Data Protection Policy, ensuring compliance and accountability.

Resource allocation by function

Products and Innovations unit: Takes the lead in managing impacts for the development of passenger car tires' safety properties.

Nokian Heavy Tyres business unit: Oversees heavy tire safety, reinforcing the company's commitment to end user and product safety.

Sustainability team and corporate communications: Handle corporate sustainability communications and collaborate with business area marketing teams to develop educational content.

Specific actions and initiatives

1. Data protection training initiative (2024)

Action: In 2024, Nokian Tyres introduced a training plan to raise employees' awareness of data protection.

Purpose: This initiative supports the implementation of the Data Protection Policy and related guidelines.

Scope: Own operations (internal employees, Vianor, customer service outlets)

Time horizon: Ongoing (2024 onwards)

Resources allocated: Non-financial - training content, e-learning modules, intranet communications

Key actions:

• Posting updates on the intranet
• Promoting the e-learning module
• Monitoring completion rates
• Plans to extend training to Vianor and customer service outlets, focusing on the Data Subject Rights process

Links to policy: Data Protection Policy, Data Subject Rights Guideline, Data Breach Guideline

2. GDPR compliance project (2018)

Action: In 2018, Nokian Tyres conducted an extensive GDPR project to establish compliant practices.

Purpose: To ensure compliant practices for managing data subject rights and data breaches.

Scope: Own operations (group-wide)

Guidelines established: Both the Data Subject Rights Guideline and Data Breach Guideline are aligned with GDPR requirements.

Management approach: Data privacy management activities are structured in annual cycles, with planned actions outlined for each quarter of the year.

3. EU Tyre Labelling test method development

Action: Active participation in the continued development of EU Tyre Labelling test methods for regulatory purposes, including wet grip and ice grip testing.

Purpose: These performance features are critical for passenger car tire safety, determining how quickly a vehicle with particular tires can stop on wet or icy roads.

Scope: Downstream (product safety standards)

Time horizon: Ongoing

Organizational involvement: Nokian Tyres contributes to the European Tyre and Rubber Manufacturers Association's (ETRTO) development work.

Links to policy: Environmental, Safety, and Quality Guideline; Product Lifecycle Process

4. Heavy tire safety training for customers

Action: NHT's personnel train customers on products and product safety.

Scope: Downstream (B2B customers)

Resources allocated: Personnel time, training materials

Responsible role: The most senior role responsible for engagement is the Executive Vice President of Heavy Tyres and Nokia Factory.

Additional channels: End users of heavy tires can also give feedback, request materials, and ask for technical information via NHT's web page: www.nokiantyres.com/heavy/contact-us/feedback/

5. Educational content and consumer awareness

Action: Nokian Tyres offers educational content focused on safety, environmental responsibility, and other considerations to raise consumer awareness.

Scope: Downstream (B2C and B2B end users)

Time horizon: Ongoing

Content includes:

• Practical advice on checking tire pressure
• Selecting the right tires
• Ensuring proper tire recycling
• Tire and traffic safety information

Distribution channels:

• Company websites
• Social media platforms
• Press releases
• Consumer newsletters (Nordics and North America)
• Vianor marketing team communications (Nordics)

Resources allocated: Sustainability team and corporate communications personnel collaborate with business area marketing teams.

Links to policy: Code of Conduct (ethical marketing practices and provision of truthful information)

6. Tire condition checks at Vianor service centers

Action: When a customer visits Vianor for car or tire service, the condition of their vehicle's tires is checked, and information about the tires' condition is shared with them.

Scope: Downstream (B2C end users)

Time horizon: Ongoing

Process: If necessary, the customer receives a recommendation to replace the tires to ensure road safety. Similarly, the condition of customers' tires stored at Vianor is checked, and if the tires are no longer road-safe, the customer is informed prior to the next tire change with a recommendation to purchase new tires.

Links to policy: Environmental, Safety, and Quality Guideline

7. Product information transparency

Action: Nokian Tyres' products covered by the EU Tyre Labelling Regulation are equipped with the EU Tyre Label. Detailed labelling information is also available on the company's website.

Scope: Downstream (all consumers and end users)

Additional information: Nokian Heavy Tyres provides product information, including certificates and technical manuals, for all customers and consumers on NHT's website.

Links to policy: EU Tyre Labelling Regulation compliance; Code of Conduct (truthful information)

Effectiveness monitoring

• Response times for Data Subject Requests are tracked to ensure compliance with legal requirements
• Training completion rates are monitored
• Consumer feedback and ratings are actively collected on the company website

Known gaps

There are currently no processes in place to track the effectiveness of whistleblowing reporting channels or consumers' and end users' awareness and trust toward these structures and processes.

Targets related to consumers

S4-5 Targets to improve road and end user safety

Improving grip in various road conditions – such as wet, snow, and ice – is a continuous development target for Nokian Tyres' R&D, directly linked to the company's safety policy commitments. Although consumers and end users were not involved in setting or tracking these targets, the EU Tyre Label's classification criteria for wet grip, rolling resistance, noise, fuel efficiency, snow grip, and ice grip help simplify and guide purchase decisions.

The EU Tyre Label classification is used in Nokian Tyres' Product Lifecycle Process to establish specific product performance targets, as achieving certain labeling classifications or fulfilling the criteria for labeling markings provide a means to assess product performance reliably and transparently.

Additional information:

• Nokian Tyres remains committed to maintaining high safety standards and continues to develop future products accordingly
• The company actively collects user feedback and ratings on its website, allowing consumers to provide insights and suggestions for improvements

Business conduct policies and corporate culture

Nokian Tyres' business conduct is guided by ethical principles presented in several Board-approved policies that form the company's compliance framework. These policies are reviewed annually by the Board of Directors and the Management Team.

Code of Conduct

Scope: All employees

Governance: The President and CEO is the most senior executive accountable for implementation. The Board of Directors approves the policy.

Key content:

• Zero tolerance for forced labor, human trafficking, or child labor
• Employment contracts drawn up in writing and in adherence with local legislation
• Compliance with local legislation and regulations relating to working hours and overtime work
• Commitment to paying at least the minimum wage defined in local legislation
• Respect for human rights, valuing diversity and treating all individuals equally
• Zero tolerance for harassment, bullying or discrimination
• Freedom of expression with accountability
• Promotion of equal development and learning opportunities
• Commitment to ensuring a safe working environment and working conditions that preserve physical and mental health and promote workplace well-being
• Active participation at different levels of the organization and respect for the right of participation
• Respect for freedom of association and freedom of workers to organize
• Commitment to reducing greenhouse gas emissions
• Commitment to reliable, balanced, and timely communication, ethical marketing practices, and provision of truthful information
• Zero tolerance policy regarding monetary or in-kind support to political parties or groups or individual politicians

Public availability: Available on the company website at company.nokiantyres.com/sustainability/responsible-business/corporate-culture-and-business-conduct/code-of-conduct/

International standards alignment: The Code of Conduct implements the ten principles of the UN Global Compact. Nokian Tyres is committed to acting in the manner required by the UN's Guiding Principles for Business and Human Rights and following the International Labour Organization's (ILO) Declaration on Fundamental Principles and Rights at Work. Nokian Tyres is a supporting member of the UN's Global Compact initiative.

Monitoring: Mandatory training is provided to all personnel on the Code of Conduct, included in the induction of new employees. At the end of 2024, 78 percent of personnel had completed the training. The policy was updated in 2024 with new material topics of well-being and skill and career development introduced, while considerations around equality were further expanded.

Environmental, Safety, and Quality Guideline

Scope: Own operations and products throughout their lifecycle

Governance: The President and CEO is the most senior executive accountable for implementation.

Key content:

• Commitment to continuously improving the quality, safety, and environmental sustainability of products, services, and processes
• Consideration of the entire lifecycle of products
• Commitment to environmental responsibility, including complying with laws and regulations, preserving biodiversity, and maintaining air and soil quality
• Causing no deforestation in own operations
• Setting targets to reduce environmental impacts
• Responsible chemical management, including pledge to reduce or phase out hazardous substances
• Commitment to creating healthy and safe working conditions
• Emergency plans in place to control and mitigate impacts on people and the environment
• Striving toward efficiency, zero errors, and zero accidents in all operating areas

Public availability: Available on the company website

International standards alignment: Operations are based on and fulfill the requirements of the ISO 14001 standard. Implementation of the guideline commits to the ten principles of the UN Global Compact.

Monitoring: The guideline received minor updates in spring 2024 based on customer needs. Stakeholder requirements are taken into account when updating the guideline.

Nokian Tyres' Safety Management Model

Scope: All Nokian Tyres employees and operations

Key content:

• Serves as the company's workplace accident prevention policy and management system
• Describes the company mindset for safety work that all employees must maintain
• Sets the bar for common practices
• Provides tools for continuous improvement for departments and operations
• Includes 16 standards, each with a clear purpose, defined toolset, and specific approach covering: Leadership, Commitment and Responsibilities; Planning, Goals and Targets; Employee Engagement; Safety Risk and Opportunity Management; Legal Safety Requirements and Other Commitments; Safety Training, Competency and Awareness; Behavior and Observation; Employee Safety Communication; Monitoring and Measurement; Accident/Incident Reporting and Investigation; Workplace Inspections and Audits; Emergency Preparedness and Response; Contractor Selection and Management; Management of Change; Preventative and Corrective Actions; and Other Operational Procedures

Monitoring: Departments assess their own safety work and identify their maturity level and needs for improvement. The model emphasizes departments' ownership on safety improvements.

Anti-Bribery and Conflict of Interest Code of Conduct

Scope: Not explicitly specified

Governance: Part of the compliance framework reviewed annually by the Board of Directors and Management Team

Key content: Not detailed in the excerpts

Monitoring: In 2024, no compliance breaches were found relating to corruption or bribery, conflict of interest, money laundering or insider trading.

Supplier Code of Conduct

Scope: All sustainability critical suppliers. Manufacturing partners complement Nokian Tyres' own production. All new subcontractors offering their services are expected to commit to the Supplier Code of Conduct.

Governance: The Senior Vice President, Operation Excellence (member of the Management Team) is the most senior executive accountable for implementation.

Key content:

• Respect for human rights, including labor rights
• Prohibition of discrimination and use of child labor or forced labor
• Must not participate in or benefit from any form of modern slavery
• Minimize negative impacts on local and surrounding communities
• Adopt a precautionary approach to environmental challenges
• Proactively prevent environmental incidents
• Comply with all relevant environmental laws, regulations, and permits in operating countries
• Continuous improvement in environmental performance
• Proper handling, storage, and disposal of chemicals to protect employees and the environment
• Identification, monitoring, management, and reduction of emissions to air from operations
• Seeking low carbon solutions when possible
• Implement proper processes and technologies to protect water quantity and quality, prevent contamination from chemicals, and safeguard soil quality
• Prepare for and respond to emergencies with appropriate emergency plans, evacuation procedures, hazard detection equipment, training, and drills
• Understanding impacts on biodiversity and acting to safeguard biodiversity and surrounding ecosystems as relevant
• Maintenance of a group-level grievance mechanism appropriate for receiving complaints and providing remedy for adverse human rights impacts

Public availability: Available on the company website

International standards alignment: Through implementation, commits to the ten principles of the UN Global Compact. Requirements align with UN's Guiding Principles for Business and Human Rights and International Labour Organization's (ILO) Declaration on Fundamental Principles and Rights at Work.

Monitoring: Nokian Tyres requires that all sustainability critical suppliers adhere to the Supplier Code of Conduct. Supplier sustainability audits have been conducted since 2016. The backgrounds of all new suppliers are checked according to Nokian Tyres' Due Diligence process before supplier approval.

Sustainable Natural Rubber Policy

Scope: Natural rubber suppliers in the upstream value chain

Governance: The Senior Vice President, Operation Excellence (member of the Management Team) is the most senior executive accountable for implementation.

Key content: The policy includes eight major components:

• Commitment to legal compliance
• Healthy functioning ecosystems
• Respecting human rights
• Community livelihoods
• Increased production efficiency
• Supply chain assessment and traceability
• Monitoring and reporting
• Driving effective implementation of all these components

Additional expectations:

• Joining in the combat against climate change
• Managing operations to minimize and mitigate greenhouse gas emissions
• Actively seeking low carbon solutions when possible
• Sharing the strive toward a natural rubber value chain that takes biodiversity and healthy and functioning ecosystems into account
• Commitment to preventing air, water, and soil contamination

Public availability: Available on the company website

International standards alignment: The policy's framework aligns with that of the Global Platform for Sustainable Natural Rubber (GPSNR), an industry initiative focused on promoting sustainability in the natural rubber supply chain.

Monitoring: In 2022, the audit model was updated to evaluate suppliers' alignment with the Sustainable Natural Rubber Policy. Target: 100 percent of natural rubber processor suppliers are either GPSNR members or signed Nokian Tyres sustainability commitment. This target was achieved in 2024. Sustainability audits of natural rubber processing plants have been conducted since 2016, with follow-up audits every three years at high sustainability risk suppliers' sites.

Data Protection Policy

Scope: All personal data processing within the Group

Governance: The Board of Directors is responsible for overseeing data protection governance and management effectiveness. The President and CEO approves and assigns roles and responsibilities, defines strategic objectives, and allocates resources. The General Counsel oversees and directs personal data protection governance. Business Unit, Business Area, and function leaders are accountable for implementing data protection principles within their areas.

Key content:

• Emphasis on privacy protection and strict compliance with relevant legislation
• Personal data provided by customers and other parties used only as permitted by privacy laws
• Fundamental requirements for personal data processing

Supporting guidelines:

• Data Subject Rights Guideline: Process for responding to data subject requests in compliance with applicable laws
• Data Breach Guideline: Procedure for managing data breaches in accordance with legal requirements (aligned with GDPR requirements)
• Data Retention Guideline: Principles for retaining personal data across the group
• Privacy Statements: Made available to data subjects describing how their personal data is being processed

Public availability: Privacy Statements available on Nokian Tyres' website

International standards alignment: Complies with GDPR and privacy legislation

Monitoring: In 2024, Nokian Tyres introduced a training plan to raise employees' awareness of data protection. Actions included posting updates on the intranet, promoting the e-learning module, and monitoring completion rates. Data Protection Impact Assessments (DPIAs) conducted in compliance with data protection laws. Number of incoming Data Subject Requests monitored internally, and response times tracked to ensure compliance with legal requirements.

Whistleblowing Policy

Scope: All employees and external stakeholders

Governance: Whistleblowing Committee formed in 2019 to guide and monitor activities relating to the whistleblowing channel. Material issues reported to the Audit Committee and People and Sustainability Committee at least once a year.

Key content:

• Encourages reporting of activities that infringe upon legislation, the Code of Conduct, or other provided guidelines
• All messages handled confidentially and encrypted
• Anonymous reports allowed
• All whistleblowers protected against any form of retaliation
• Anonymous reports treated with the same level of importance as named reports
• Access to messages restricted to members of the whistleblowing team
• Internal instructions and training concerning the investigation process in place for team members

Public availability: Whistleblowing channel available to external stakeholders on the company website. Information available as part of Code of Conduct.

Monitoring: The channel was renewed in 2024, starting to utilize whistleblowing service provided by an external third party. Training on the whistleblowing channel included in Code of Conduct eLearning. When adopting new service tool in 2024, the company communicated the change through general info calls, team meetings, and organizing activities to promote awareness. In 2024, no compliance breaches were found relating to corruption or bribery, conflict of interest, money laundering or insider trading, or any subjects referred to in the EU Whistleblowing Directive.

Procurement Guideline

Scope: Nokian Tyres' Procurement function

Key content:

• Establishes general principles of sustainable procurement
• Guides Procurement function's work

International standards alignment: As a participant in the UN Global Compact initiative, Nokian Tyres follows the UNGC's ethical principles.

Total Rewards Philosophy and Guideline

Scope: All employees

Key content:

• Aims to clarify principles behind total rewards
• Supports managers in making fair and consistent pay decisions
• Fosters transparency so employees can better understand the company's rewards system
• Promotes motivation and engagement
• Emphasizes equity and fairness

Monitoring: Focus on reward training to enhance understanding across the organization. Reward structure monitored regularly to ensure it supports future performance and employee engagement.

Tax Policy

Scope: Not explicitly specified

Governance: Part of the compliance framework reviewed annually by the Board of Directors and Management Team

Enterprise Risk Management Policy

Scope: Not explicitly specified

Governance: Part of the compliance framework reviewed annually by the Board of Directors and Management Team

Information Security Policy

Key content:

• Describes the group's process for protecting the confidentiality, integrity and availability of information assets
• Aims to manage and reduce information risks

Internal Audit Charter and Policy

Scope: All business activities, functions and processes within the Nokian Tyres Group

Governance: Board of Directors approves the policy. Internal Audit reports administratively to the CFO and functionally to the Audit Committee. Audit Committee approves focus areas each year.

Key content:

• Principles for Internal Audit confirmed
• Systematically carries out assessments and audits on efficiency of risk management, internal control, and corporate governance processes
• Independent and objective function aimed at helping the organization achieve its goals
• Audit assignments based on key strategic focus areas and associated risks

Monitoring: Audit findings, recommendations and management action plans presented to the Audit Committee, with ongoing monitoring and follow-up on implementation.

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Grievance mechanisms:

Nokian Tyres maintains a whistleblowing channel (renewed in 2024) available since 2011 for both employees and external stakeholders. The channel allows anonymous reporting and is accessible through the company website and intranet. All reports are handled confidentially by a whistleblowing team, with material issues reported to the Audit Committee and People and Sustainability Committee. In 2024, the Legal function coordinated the whistleblowing process and related investigations.

Training and awareness:

All policies relevant to business conduct include mandatory training programs. Code of Conduct training is included in induction for new employees (78% completion rate at end of 2024). Data protection training plan introduced in 2024. Information about the whistleblowing channel communicated through Code of Conduct e-training and various internal channels.

Alignment with international frameworks:

Nokian Tyres' policies align with:

• UN Global Compact (supporting member, following the ten principles)
• UN Guiding Principles for Business and Human Rights
• OECD Guidelines for Multinational Enterprises (confirmed compliance with OECD Guiding Principles on Labour and Human Rights)
• ILO Declaration on Fundamental Principles and Rights at Work
• ISO 14001 (Environmental, Safety, and Quality Guideline)
• ISO 45001 (essential standard for the company)
• GDPR (Data Protection Policy and related guidelines)
• Global Platform for Sustainable Natural Rubber framework (Sustainable Natural Rubber Policy)

Incidents of corruption or bribery

Confirmed incidents

In 2024, no compliance breaches were found relating to corruption or bribery, conflict of interest, money laundering or insider trading, or any subjects referred to in the EU Whistleblowing Directive.

Investigation and speak-up procedures

Nokian Tyres has a whistleblowing channel available since 2011, which was renewed in 2024. The channel is managed by an external third-party service provider and is available to both employees and external stakeholders through the company website.

All messages received through the whistleblowing channel are handled confidentially and are encrypted. Anonymous reports are allowed, and to ensure anonymity, the service provider deletes all metadata, including IP addresses. All whistleblowers are protected against any form of retaliation. Anonymous reports are treated with the same level of importance as named reports.

Access to messages is restricted to members of the whistleblowing team who have authority to handle whistleblowing cases. Their actions are logged, and handling is confidential. Internal instructions and training concerning the investigation process and rules are in place for the whistleblowing team members.

Nokian Tyres' Whistleblowing Committee was formed in 2019 to guide and monitor the activities relating to the whistleblowing channel. All material issues are reported to the Audit Committee and People and Sustainability Committee at least once a year.

In 2024, the Legal function coordinated the whistleblowing process and related investigations. All material findings and general statistics were reported to the Audit Committee and the People and Sustainability Committee of the Board of Directors.

Political influence and lobbying activities

Political engagement approach

Nokian Tyres' business is guided by the ethical principles presented in the Code of Conduct, which states that Nokian Tyres does not provide monetary or in-kind support to political parties or groups or individual politicians.

Every employee must adhere to the Code of Conduct. Participation in interest representation through memberships is conducted only in strict compliance with applicable laws, the Code of Conduct and related policies and procedures.

Ethical standards and guidelines

For the management of the company's lobbying activities and trade association memberships, the guiding principles are the following: lobbying work is transparent and characterized by accurate contribution of the company's technical expertise and knowledge concerning the tire industry and other related sectors, with a focus on products, safe and sustainable mobility, and innovation.

Lobbying is conducted through industry associations, and it is transparent and characterized by accurate contribution of the company's technical expertise and knowledge concerning the tire industry and other related sectors, with a focus on products, safe and sustainable mobility, and innovation.

EU Transparency Register

Nokian Tyres is registered with the European Transparency Register (registration number 604107415108-75).

Political contributions

Nokian Tyres does not provide monetary or in-kind support to political parties or groups or individual politicians.

Political funding and in-kind giving (2024)

Trade association memberships

Nokian Tyres is a member of certain industry and other associations, and of national and international advocacy organizations. These memberships also help Nokian Tyres identify new product development and business opportunities early on and create competitive business conditions that are sustainable over the long term.

In 2024, the company's membership fees for trade associations and contributions to lobbying activities totaled €1,271,640 globally.

Three largest membership fees of trade associations (2024)

Lobbying expenditure

Two largest contributions for particular topics (2024)

Focus areas

Two biggest contributions for lobbying topics were related to tire abrasion and tire noise.

The project related to tire abrasion is related to Nokian Tyres' material impact regarding pollution, as the project aims for reducing road transport emissions by setting global tire abrasion limits that are based on a reliable tire test method.

The indoor drum method project aims to reduce measurement uncertainty of the pass-by noise field test by transferring testing to indoor facilities.

Nokian Tyres' participation in the activities of industry and trade organizations depends on the current topics and opportunities to offer expertise. For example, Nokian Tyres' advocacy led to the addition of the ice grip marking and snow grip marking in the EU Tyre Label to help drivers choose safe winter tires for winter conditions. Currently the company participates, for example, in ETRMA's tire abrasion project that aims for reducing road transport emissions by setting global tire abrasion limits that are based on a reliable tire test method.

Payment practices

Standard payment terms

The standard payment term in Nokian Tyres' general terms and conditions for purchases is 60 days net and for raw material purchases 90 days net. In the case of smaller suppliers, for example, the payment terms are reconsidered when necessary.

85 percent of the invoices are paid aligned with these standard terms. Invoices for raw materials account for approximately 16 percent of Nokian Tyres' annual invoices by value.

Average time to pay invoices

In 2024, the average time it takes to pay an invoice, starting from the date when the contractual or statutory payment term begins, was 46 days. The payment term has been calculated as a weighted average based on the supplier invoices paid during the review period.

Late payment legal proceedings

At the end of 2024, there were no outstanding legal proceedings for late payments.

Payment policy

Nokian Tyres has standard payment terms, and there is no separate policy to prevent late payments. However, the basis of the procurement process is that justified invoices are paid on time.