Responsibility Report 2017

Supply chain management

The purpose of Fennovoima’s supply chain management is to provide a way of managing, monitoring and developing the performance of the entire supply chain of the Hanhikivi 1 project.

Our practices

High-quality supply chain management requires appropriate contracts, experienced and qualified personnel, a proper description of the management system and the processes, close relationships with the subcontractors, active monitoring and guiding, and immediate corrective action if non-conformances are found.

The fulfillment of the safety requirements is a prerequisite for acting as a supplier in the Hanhikivi 1 project. Fennovoima ensures that only those suppliers who have the capacity to comply with the requirements and have clear quality management and assurance procedures can participate in deliveries.

Fennovoima has set three goals for the responsible supply chain management and labor practices. These goals are a qualified and well-functioning supply chain, effectively preventing the gray economy, and respecting and supporting human and labor rights and fair labor practices.

Fennovoima’s supply chain management assesses prospective supplier companies in a comprehensive manner. The selection criteria to act as a supplier in the Hanhikivi 1 project includes for instance technical, financial and safety requirements, compliance with Finnish and international laws, fulfilment of the contractual requirements  and compliance with  the occupational safety and environmental requirements of the OHSAS 18001 and ISO 14001 standards.

Also, safety-related suppliers must have a quality management system that is appropriately certified or independently evaluated by a third party, e.g. ISO 9001 certification, and suppliers must have in place processes to control the operations of their own sub-suppliers.

In addition to the above-mentioned requirements, Fennovoima expects its suppliers to comply with the ethical requirements of Fennovoima’s Code of Conduct and to monitor the compliance of their own sub-suppliers.

 

The Code of Conduct requires the suppliers and sub-suppliers to ensure:

 

  • Full compliance with all applicable laws,
  • Prohibition of corruptive behavior,
  • Occupational safety in all operations,
  • Respect for human rights, including prohibition of child labor and slavery,
  • Environmental compliance and sustainability actions, and
  • Promotion of Fennovoima’s Code of Conduct amongst stakeholders, especially sub-suppliers.

Qualified and well-functioning supply chain

Developing a qualified and well-functioning supply chain for the construction of the nuclear power plant is one of the key requirements for a successful commissioning phase.

In total, 331 new sub-suppliers have been accepted for the RAOS Project’s and Fennovoima’s supply chains during 2017.

GE Alstom Power Systems has been selected for the supply of complete turbine generator set and in November, Titan-2 and Rolls-Royce signed an agreement for the I&C licensing support work. The final I&C delivery contract is under negotiation by Titan-2.

Fennovoima and RAOS Project have a supply chain working group that gathers monthly to discuss supply chain development matters. In addition, the working group arranges topical workshops and seminars about specific themes (e.g. the Machinery Directive) when necessary.

During 2017, the assessment and approval practices of the supply chain have been further developed, and attention was paid to ensuring that the sub-suppliers have the required awareness and understanding of the regulatory and contractual requirements of the Hanhikivi 1 project.

Also, the pre-qualification of suppliers and supplier compliance and ethics assessment methods were developed to include the compliance management and monitoring processes of prospective and actual suppliers. The implementation of the new processes is scheduled for 2018.

To ensure that the suppliers fulfil the requirements and have the required abilities to produce the products or services they are contracted for, Fennovoima executes established supplier audit procedures.

Fennovoima's scope of work 2017 2016
Total number of suppliers 184 158
Suppliers by country    
Finland 84% 89%
Sweden 9% 5%
United Kingdom 1.5% 2%
USA 1.5% 0%
Others (Czech, Denmark, Germany, South Africa, Switzerland) 4% 4%

Fennovoima’s supply chain included 184 companies, of which 84 percent were Finnish (12/2017).

raos project's scope of work 2017 2016
Total number of suppliers 524 210
Suppliers by country    
Finland 80% 72%
Russia 15% 23%
Estonia 1% <0.5%
France 1% 1%
Netherlands 0.5% 1%
United Kingdom 0.5% 1%
Others (Bulgaria, Czech, Germany, Hungary, Latvia, Lithuania, Sweden, Ukraine) 2% 2%

RAOS Project’s supply chain included 524 companies, of which 80 percent were Finnish (12/2017).

 

 

Supply chain auditing

Fennovoima’s audits cover all the safety-significant suppliers of the Hanhikivi 1 project supply chain according to a graded approach. Fennovoima conducted 35 audits of its own and the plant suppliers’ supply chain in 2017.

The plant supplier performs its own audits of its sub-suppliers within the whole supply chain of the Hanhikivi 1 project. In addition to Fennovoima and the plant supplier, in different phases of the Hanhikivi 1 project, audits and inspections can be conducted by sub-suppliers, third parties or the Finnish Nuclear and Radiation Authority (STUK), if any audit is regarded as necessary within the scope of work. STUK always has the authority to participate in these audits according to its own decision.

Requirements to perform audits and assessments are referred to in the YVL Nuclear Safety Guides. Fennovoima’s Responsibility Program together with the Compliance and Ethics Program set requirements for ethics and compliance assessments of the supply chain.

During 2017, the focus of the implemented audits was on the management system, safety culture, design process, requirements

 

management, and manufacturing capabilities of long lead items. Most of the remarks identified in the supplier audits were related to missing practices and poor implementation of documented practices.

Fennovoima also audited the environmental and occupational health and safety management systems of the plant supplier, RAOS Project, and its main contractor, Titan-2. In addition, we participated as an observer in most of the audits that were conducted by the plant supplier and its sub-suppliers.

During 2018, we continue to focus on clarifying the EPC agreement requirements and YVL Nuclear Safety Guides to the supply chain.

The manufacturing of components critical for nuclear safety will impact the scope of audits in 2018. Future audits will place more emphasis on nuclear safety culture, requirements management, configuration management, the design review process, and the safety assessment of design analysis.


Gray economy is effectively prevented

Fennovoima has committed to effectively preventing the gray economy and ensuring compliance with Finnish labor legislation in the Hanhikivi 1 construction site. Addressing and managing labor practices is necessary for Fennovoima to ensure functioning and responsible labor practices and for the successful execution of the construction phase.

The subcontractor network is managed and supervised, and the gray economy prevented through efficient cooperation with labor and employer unions, the plant supplier, and authorities.Fennovoima’s Construction unit is responsible for ensuring that the Site Agreement on the common rules at the construction site is followed, human rights are respected, and the gray economy prevented.

 

Fennovoima utilizes a site register to ensure that all required information regarding the supply chain companies and people working at the site are in order and the construction site always complies with applicable legal obligations. During 2017, the register was updated to improve the monitoring of the Contractors Liability Act documentation. Also, training regarding the site register was organized.

All required information regarding the supply chain companies and people working at the site was in order in 2017, and no access to the site was granted to unregistered companies or persons.


Respecting and supporting human and labor rights, fair labor practices

Compliance and ethics assessments that include monitoring practices for e.g. compliance with human and labor rights will be implemented in Fennovoima’s procurement and supply chain management procedures from 2018 onwards.

A compliance and ethics questionnaire, which includes questions on respecting human rights will be incorporated in the existing supplier pre-qualification questionnaire and sent to suppliers in Fennovoima’s own supply chain. The suppliers will undergo a compliance and ethics assessment that is based on the SA 8000 standard, ISO 37001:2016 anti-bribery management systems and Fennovoima’s Code of Conduct.

Also, a compliance and ethics steering committee will be established with representatives from the Compliance function, Contract Management, Corporate Responsibility, Sourcing and Quality. The committee analyzes compliance concerns raised in supplier pre-qualification and supplier reviews, and makes decisions concerning required corrective actions or consequences.