Materiality analysis

The materiality analysis provides insight into the areas that are significant to Essity’s stakeholders and forms the basis of the company’s strategy and operations.

A total of approximately 1,000 customers, consumers, suppliers, investors, representatives of the media and the community, and Essity employees participated in the online survey carried out in 2017, which formed the basis of the materiality analysis.

Stakeholder opinions are highly significant to Essity’s strategic priorities. Financial, environmental and social aspects were encompassed by the survey. The selection of subject areas to be included in the materiality analysis was guided by such governing documents as the Global Reporting Initiative, the UN Global Compact, Essity’s Code of Conduct and other subjects considered to be material based on Essity’s strategy. The survey covered 21 subject areas, all of which are important to Essity.

The respondents were able to select the ten areas they considered to be most important from the list of 21. The order of priority they assigned to the areas was weighed against Essity’s own assessment of how important the areas are to the company’s business strategy and were then placed in the materiality analysis as coordinates. The stakeholder groups’ results were weighted to provide a balanced view of the results. Essity’s own assessment was based on the evaluation of the top 100 senior executives.

In terms of materiality, there is a high degree of consensus between the views of stakeholders and those of Essity with respect to the top five areas. Overall, the most material areas were deemed to be business ethics, innovation, customer and consumer satisfaction, health and safety, and strong brands. Among investors and analysts, corporate governance came in second place and supply chain and purchasing in fourth. Among customers and consumers, product safety and CO₂ emissions were among the top five priority areas. Among suppliers, transparency was ranked in fourth place. The results of the survey appear to be reasonable and relevant and provide us with a basis for the further development of our strategy and operations, and for the content of the Annual and Sustainability Report.

The diagram below shows how the 21 areas were ranked in the survey: the horizontal X axis shows the responses of all respondents except Essity’s senior executives, whose responses are shown on the Y axis.

The following is an account of all 21 areas included in the survey and how they were ranked once all the responses were compiled.

Essity’s materiality analysis

1Business ethics

Business ethics was given the greatest weight in the survey. Free and fair competition is an important cornerstone in every society, and for every sustainable business operation. Essity has zero tolerance for corrupt and unethical behavior. Essity’s human rights and corruption risk analysis is based on assessments carried out by Amnesty, Sedex and Transparency International. Approximately 23% of Essity’s revenue is generated in countries with a high risk of human rights violations. About 33% comes from countries with a relatively high risk of corruption.

Essity’s risk assessments are also included in the Group’s audits in connection with acquisitions. Anti-corruption is included in Essity’s Code of Conduct. Essity conducts all activities in accordance with applicable laws and regulations, and performs regular risk assessments relating to corruption. These assessments include due diligence of suppliers and other business partners.

Essity has developed an anti-corruption e-learning course, translated into 21 languages. This e-learning is included in onboarding programs. In 2017, just over 200 new employees took part in the course. Read more about business ethics and human rights in the chapter Business ethics and human rights.

2Innovation

Innovation was ranked as the second most important area by stakeholders. By maintaining close proximity to our customers and consumers, understanding their needs and transforming this know-ledge into products and solutions, Essity makes a positive difference in people’s everyday lives, and strengthens our market positions and brands. We work continuously to develop better products and services in which sustainability aspects are integrated into the innovation process. In 2017, we launched 41 innovations. Read more about our innovation work in the chapter Innovate bigger brands.

3Customer and consumer satisfaction

Customer and consumer satisfaction was ranked third in the survey. Customer understanding and consumer insight determine the innovations Essity deve-lops and how finished products and services are delivered to the market. A dialogue with consumers is conducted through focus groups, in-depth interviews and other alternatives. Our sales representatives provide a great deal of know-how to the development team. Read more about customers and consumers in the chapter Focus on customers and consumers.

4Health and safety

Health and safety are important to our stakeholders and critical for Essity’s business. Our aim is zero workplace accidents. The health and safety of employees in the workplace is highly prioritized. In addition to promoting health and safety at our own sites, we check suppliers’ practices and collaborate with them to improve safety performance. Read more about health and safety in the chapter Health and safety.

5Brands

Strong brands and market positions are built on innovative products and solutions that simplify everyday life for people. Essity is a new brand as of 2017. Innovative products and solutions simplify everyday life for people and strengthen Essity’s brands and market positions. Strong brands mean the company can increase the impact of its innovations. A strong corporate brand helps the company to become more attractive among potential new employees. Read more about the Essity brand and our initiatives in the chapter The Essity brand and our initiatives.

6Human rights

Violations of human rights are taken very seriously at Essity. These are reported and managed in the same way as other breaches of the company Code of Conduct. Essity’s approach to human rights is informed by the United Nation’s Guiding Principles on Business and Human rights (UNGP). Read more about business ethics and human rights in the chapter Business ethics and human rights.

7Product safety

Essity follows strict requirements and procedures to ensure that all materials in the company’s products are safe for consumers, employees and the environment. Essity has a global product safety position in place for all products to ensure that they are safe for their intended purpose. Essity’s Global Supplier Standard includes responsible business operations, quality, product safety, environmental and social requirements, and the company works closely with its suppliers to ensure that its high standards are met. Read more about sustainability governance in the chapter Manufacturing.

8Transparency

Open and responsible communication is important to Essity. We aim to be perceived as a transparent and professional partner, and we will continue to strengthen Essity’s position as a leading global hygiene and health company by being available, agile and proactive. We report our sustainability disclosures in accordance with the GRI Reporting Standards in our Annual and Sustainability Report, which is audited by external auditors. The GRI index is presented in the chapter GRI index.

9CO₂ emissions

Essity has established ambitious climate objectives and continuously endeavors to minimize emissions from its own production operations and purchased electricity. Essity’s efforts to reduce its climate impact and energy use are manifested through numerous pro-jects, investments and modifications of processes, all of which contribute individually to the target of reducing CO₂ emissions. Read more about climate and energy in the chapter Climate and energy.

10Resource efficiency

Essity takes a life cycle approach and promotes resource efficiency in relation to its production, products, services and innovations. We initiate partnerships and evaluate solutions to minimize waste, find alternative uses and/or create new resources – from raw materials to end-consumer.

Essity uses life cycle assessments (LCAs) to minimize waste, all the way from the product design stage to manufacturing and after use. Reducing the environmental impact of products throughout the product cycle, including the post-user phase, is part of Essity’s innovation process. Read more about resource-efficient production in the chapter Resource-efficient production.

11Water use and water purification

The issue of water is being dealt with systematically. Essity strives to reduce its water usage, and monitors the volume and origin of the water it uses as well as the quality of its effluent water. Read more in the chapter Water.

12Corporate governance

A transparent organization and corporate governance are necessary to support Essity’s strategy and ensure the Group’s commitments to all of its stakeholders. Read more about corporate governance in the chapter Corporate governance.

13Fiber Sourcing

Responsible sourcing is key for Essity and includes ensuring the Group’s fiber comes from responsible sources. Essity does not own any forests but contributes to sustainable forestry through its objectives and control of its fiber sourcing, with the aim of ensuring sustainable forestry management, preserving ecosystems and biodiversity, and protecting the rights of indigenous communities. Read more about responsible sourcing in the chapter Responsible sourcing.

14Value chain efficiency

Essity’s ambition is to promote sustainable and responsible business throughout its supply chain by choosing and rewarding partners who share our values and comply with our Code of Conduct Code of Conduct and Global Supplier Standard. We want to ensure safe and high-quality goods and services for our customers and consumers, delivered with respect for people and nature. Read more about sustainability governance in the chapter Sustainability governance.

15Market positions

Strengthening Essity’s positions and improving awareness of Essity’s product brands fuels profitability and supports growth. Read more about the Essity’s market positions in the chapter The global hygiene and health market.

16Post-consumer waste

Essity recognizes the need for solutions to address post-consumer waste, and the materials we use are to be compatible with current and future waste management systems. We strive to develop models for minimizing waste through the use of, for example, biodegradable materials, recycling and combustion. Read more about waste management in the chapter After-use management.

17Human capital

Human capital is assigned less importance by the stakeholders than by Essity. It appears reasonable that Essity has greater insight into how crucial the employees’ attitudes and expertise are to the Group’s success. Our employee surveys provide valuable knowledge about employee opinions and constitute a tool for improvement activities. It is important for Essity to attract, retain and develop top talents. Read more about our employees in the chapter Enable our employees to realize their fullpotential, as part of one winning team.

18Risk management

Essity manages financial, social, environmental and corporate governance risks in the most efficient way possible to ensure it is able to achieve the targets set for the Group. Read more about risk and risk management in the chapter Risks and risk management.

19Digitalization

Essity works with digitalization to maximize value creation for our customers, consumers, owners and other stakeholders. A greater digital focus entails using digital solutions to improve efficiency and productivity, build customer and consumer loyalty, continuously develop Essity’s digital platforms to make our products and solutions even more accessible and create awareness of hygiene and health via social media. Read more in the chapter Digitalization.

20Distribution

Essity monitors the environmental impact of its transport activities and is working on a broad front to reduce emissions. These efforts include increasing the fill ratio, applying various techniques to reduce fuel consumption, prioritizing transport means with less environmental impact, reducing distances traveled and strengthening purchasing procedures. Read more about our transport activities as part of our sustainability governance in the chapter Transport.

21Tax

For Essity, being a good corporate citizen means paying tax and complying with laws and regulations – even the spirit of the law. Read more under Note B4 Taxes.