VR Group joined the UN Global Compact initiative in 2020 and is committed to adopting, supporting and implementing the ten principles
of the initiative. The fundaments of the operations of VR Group follow these ten principles, and we now report on the progress for the first
time in the Summer of 2021

VR Group’s procurement is divided between slightly more than 4,000
suppliers, of which some 40 suppliers account for more than one-half of all
procurement. The biggest individual suppliers were associated with rolling stock
investments and energy procurement, which partly influences these suppliers’
considerable share of total procurement. A clear majority of procurement
concerns Finnish suppliers or suppliers other European suppliers. A process has
been specified for ensuring the responsibility of procurement, which includes
approving the Group’s Code of Conduct, risk country assessment, supplier’s
self-assessment, Vastuu Group audit and any additional approvals and audits

In 2020, the commitment of VR Group’s suppliers to VR Group’s Code of
Conduct for Partners and their practices for ensuring responsibility and
sustainability were reviewed with a special self-assessment survey. The survey
is sent to each supplier accounting for more than EUR 100,000 of procurement
annually. Together with other observations, the self-assessment survey guides
VR Group’s measures in the continuous development of its suppliers and any
follow-up audits. Going forward, completing the self-assessment survey at
required intervals is set as a prerequisite for maintaining the suppliers’ supplier
status, in addition to which suppliers will be required to commit themselves to
continuous development with regard to the environment.

VR Group will continue its work to develop the sustainability and responsibility
of the supply chain. In order to supply products and/or services to VR Group,
suppliers must accept VR Group’s Code of Conduct for Partners, which deal with
ensuring legal compliance as well as conformity with international sanctions,
suppliers’ ethics, human rights and labour rights and the environment. These
terms and conditions are an essential part of VR Group’s bidding and contract
process, in which suppliers are also required to make sure that their own supply
chains are committed to the same terms and conditions. In tenders pursuant
to the Act on Public Contracts in Special Sectors, completing the ESPD form
(European Single Procurement Document) is mandatory. With the form, the
bidder assures that the exclusion criteria are in order and the requirements for
eligibility are met. We also require our suppliers to fulfil the obligations of the Act
on the Contractor’s Obligations and Liability when Work is Contracted Out.

VR Group is committed to respecting human rights, such as equality and non-
discrimination, and offers everyone equal rights and opportunities regardless of
race, gender, nationality, religion or other similar characteristics. VR Group is also
committed to the UN Sustainable Development Goals to reduce inequality and
offer decent work. VR Group signed the FIBS Diversity Charter in 2015. By signing
it, VR Group committed itself to the following principles:

1 We offer equal opportunities
2 We identify and make use of individual expertise and needs
3 We justly manage the personnel and customer accounts and
4 We communicate about our objectives and achievements.

The Group has zero tolerance to inappropriate treatment, harassment and
occupational discrimination. Laws, agreements and other obligations are
followed with regard to employment relationships. The right of employees to
form and join trade unions is respected. The processing of personal data and
data protection matters are subject to the principles of the EU’s General Data
Protection Regulation and national legislation.

VR Group’s equality plan and related guidelines (guideline on good behaviour at
VR Group’s workplaces and social media guidelines) were updated together with
representatives of the personnel in late 2020. An analysis of the current equality
situation was prepared in conjunction with the update. The analysis did not
indicate substantial challenges with regard to processes, operating methods or
statistics. Necessary development measures include increasing awareness and
tips for how everyone can promote equality and diversity in their day-to-day lives.
The key goal of updating the plan is to incorporate the measures into the day-to-
day work of each VR Group employee during 2021. This makes the commitments
relating to the UN Sustainable Development Goals, FIBS Diversity Charter and
development of the employee experience more concrete. The updated plan that
will be valid until the end of 2022 and related instructions are available to the
personnel on the intranet and as part of induction.

VR Group reports demographics of management and employees by diversity factors as part of Corporate Responsibility Report 2020 and Corporate Governance Statement 2020

There were no incidents of discrimination and corrective actions taken in 2020

The most significant environmental risks caused by VR Group’s operations are
related to accidents that may cause contamination of soil and groundwater
and other environmental damage. VR Group also manages several shunting
yard, depot and refuelling site premises where soil contamination, which
occurred decades ago, requires comprehensive risk management. Additionally,
restrictions and requirements due to disturbance caused by noise and vibration
impair the operating conditions of rail traffic.

Mitigating climate change requires both increasing energy efficiency and
reducing emissions. VR Group has expanded its emissions accounting in line
with the GHG Protocol (GHG Protocol Corporate Accounting and Reporting
Standard) so as to provide an increasingly comprehensive view of the Group’s
impact on climate change.

Public transport and rail traffic in particular play a key role in mitigating climate
change. An electric train is a more environmentally friendly option than other
modes of transport. It produces less emissions and consumes less energy
than other modes of transport. Also, VR Group has used electricity produced
with renewable energy, in other words, hydropower since 2008. VR Group also
offsets the greenhouse gas emissions of its passenger service routes on which
renewable energy cannot be used. Mitigating climate change provides rail traffic
with new growth opportunities, with people paying increasing attention to the
carbon footprint of their activities.

The risks caused by climate change to train traffic are mostly related to the
effects of extreme weather conditions, such as storms and floods, on traffic and
the railway network. They cause delays and increase costs. On the other hand,
increasing energy prices and reducing emissions result in economic impacts as
well.

The economic impacts of climate change have not been assessed on monetary
terms, because the data required for that is not available.

In 2020, VR Group defined its new environmental
goals for 2021–2025. They focus particularly on increasing energy efficiency and
reducing greenhouse gas emissions.

The aftercare of the environmental accident in transport in Kinni, Mäntyharju in
2018 was continued during 2020. In the accident, 35 tonnes of methyl tert-butyl
ether (MTBE) leaked to the ground. The MTBE concentrations of surface and
groundwater and wells have been monitored in accordance with the monitoring
plan approved by the environmental authorities. Fisheries were surveyed using
roe box tests and electrofishing surveys. Based on the results, the chemical
leakage did not have a negative impact on fisheries. According to a risk
assessment conducted by Ramboll Finland Ltd in March, there is no need for
restoration of soil or groundwater in the area.

Three major chemical leakages took place in 2020, two of which were rolling
stock leakages and one a case of vandalism. Approximately 200–300 litres
of fuel leaked from a diesel locomotive in Tampere in January. The cause was
a faulty fuel filter. 60–70 m3 of soil had to be excavated. In February, a total of
1,200 litres of transformer oil leaked from an electric locomotive in Kivesjärvi,
Paltamo, after the transformer broke down. Snow, ice and ballast mixed with
oil was removed from the area. Based on surveys and a risk assessment, there
was no more extensive need for decontamination in the area. In November, a
case of vandalism was observed at the Kontiomäki depot, in which a 200-litre
transmission oil barrel had been broken and pushed over. 15 m3 of soil had to be
excavated.

VR Group has an environmental management system compliant with the
requirements and implementation guidelines of the ISO 14001 standard. As
a result of organisational and responsibility changes, the system description
was updated in early 2020. The Group’s environmental policy, i.e. principles
of environmental activities, has also been updated to correspond with the
Group’s strategy and responsibility promises. The environmental policy is
followed throughout the Group. At VR Group, everyone is responsible for taking
environmental concerns into account in their own work and personnel is trained
to act in an environmentally responsible manner. Our management is committed
to ensuring responsible operations and taking environmental aspects into
account in decision-making.

VR Group adheres to its Code of Conduct that includes anti-corruption
guidelines. The Code of Conduct is available on the Group’s website and to
the personnel on the intranet.

Each employee in the Group must complete
the training on the Code of Conduct and all new employees are instructed to
complete the training when they start working in the Group. VR Group also has
separate anti-corruption guidelines and related training for key personnel and
supervisors.

VR Group encourages its personnel to report all suspected irregularities
and violations of the Code of Conduct. The company has an anonymous
whistleblowing service to report suspected irregularities. Notifications received
through this channel during 2020 have been properly processed. No significant
corruption-related risks were identified or realised in 2020.