Corporate social responsibility
Our company’s roots are in Lahti, Finland, where we still maintain our headquarters. We are a significant employer and tax payer in Finland, and we have made noteworthy investments in and around the Lahti area. We recognize our responsibility towards our owners, employees, customers, partners, and society. We comply with local laws and respect the local culture wherever we operate. We develop our operations in a systematic and controlled manner by combining information, technology and diverse expertise for a sustainable future. We take responsibility for our activities and for their environmental impacts.
Luhta is a family company founded in 1907 in Lahti, Finland, where the company still maintains its headquarters. As an established, financially robust and trustworthy employer, partner and corporate citizen, we are one of the biggest textile sector companies in the Nordic countries. We employ some 1,600 people and have turnover of about EUR 245 million. We create added value for our customers around the world, and our principal export markets are Europe, Asia, and North America.
The geographical distribution of our sales in 2019, as shown in the accompanying figure: Finland 35%, Scandinavia and Baltics 5%, Russia and Eastern Europe 12%, Central Europe 40%, Southern Europe and elsewhere 8%.
We aim to achieve success by offering unique experiences to end consumers and delivering value to our employees, partners and investors.
By combining dynamic design, high-quality production, solid customer understanding, and effective marketing, we have built a portfolio of premium volume brands. By focusing on these, we have realized how to create value over the long-term for our owners. We strive to anticipate consumer expectations and to continuously develop our monitoring methods to be as effective as possible. By maintaining a close relationship with customers and end consumers, we have the best tools to achieve commercial success and to build a solid reputation. Financial success enables the responsible development of our company’s business operations also in the future.
Our company’s personnel expenses in 2019 were EUR 42 million, or 17,3% of turnover. Personnel expenses include wages and salaries, pension and other social expenses. Our company’s tax footprint in 2019 was EUR 49,3 million. The tax footprint includes tax revenue and tax-like payments generated for society. The fair payment of taxes is necessary to support the wellbeing of society.
At times, our company implements operational efficiency improvement projects developed to ensure the continuity of profitable operations. Any headcount reductions resulting from these measures are implemented in a responsible manner and in compliance with the local legislation and good HR governance principles.
The network of our own subsidiaries and sales organizations spans more than 50 countries. We do our best to meet the different needs of our customers. Our diverse retail network includes small boutiques, large independent department stores, and the world’s biggest retail chains. Information received through our distribution network increases our customer understanding and enables us to utilize the information in our product development. Our product development expenses in 2019 were EUR 5,3 million, or 2.2% of turnover for the financial period.
We take responsibility for the products we design and manufacture. We take responsibility for ensuring that our products are free of defects and safe and that the information we communicate about them is accurate and sufficient. We take sustainability principles into consideration when designing our products and in our material choices. We design premium products that can be used for years. As part of sourcing agreements, all our subcontractors must commit to our Code of Conduct and our unconditional operating principles.
We are dedicated to respecting animal rights worldwide. Sales of products that use down as thermal insulation account for less than one percent of total sales. The use of genuine fur accessories in our products has decreased over the last three years for individual products. In the new collections of our brands from Winter 2022 onwards, genuine fur accessories are not used any more.
We require a certificate of origin for any of the fur, down and feathers that are used in our products, and a prerequisite for their use is the ethical treatment of animals. The share of recyclable materials in our products has almost tripled in one year.
We take responsibility for risk management of harmful substances through compliance with the REACH regulations on the Registration, Evaluation, Authorization and Restriction of Chemicals.
Luhta employs 1,600 people in 12 countries and understands the importance of competent and motivated employees. Our employees are a close-knit group of committed, actively involved individuals with a shared ambition to excel. We respect knowledge, experience and each other. Believing in ourselves and in what we do makes the difference.
We respect all our employees, and their health and safety are of utmost importance to us. A flat organizational structure and the freedom to plan one’s own work in their area of responsibility while complying with the company’s general operating principles and regulations is a reflection of the company’s values. Entrepreneurship is the foundation of our business, innovation is our core competence, and transformation is our edge.
We operate in a socially responsible way. The importance of responsible operations is emphasized as our operations become increasingly more international and networked. We comply with laws and international norms, the ILO Declaration on Fundamental Principles and Rights at Work, and the UN Universal Declaration of Human Rights, and we are committed to the continuous improvement of our social responsibility program.
Global operations bring risks and challenges from the perspective of personnel and human rights, and emphasize the importance of responsible governance in all operating countries. Our Code of Conduct plays a central role in our own operations and in the collaboration with our various stakeholders. Our Code of Conduct specifies the minimum requirements we set for our own operations, and we expect our suppliers and other partners to operate in line with them. We also require our subcontractors and suppliers to always comply with applicable laws and regulations. Commitment to the shared Code of Conduct is always confirmed by mutual agreement in the sourcing agreements signed by our company.
We participate in the amfori Business Social Compliance Initiative (amfori BSCI), the world’s most recognized social responsibility program. The amfori BSCI works to promote safe, healthy and ethically acceptable working conditions around the world. The program includes subcontractor audits conducted by independent, amfori BSCI-certified companies. Our goal is to increase the number of our amfori BSCI-audited subcontractor companies to fifty in 2020.
Environmental awareness is part of our company’s operations. We are continuously developing our operations for a cleaner environment. A significant share of the products we design and manufacture are for outdoor use, so a clean environment is of special relevance to our business. We want future generations to also have the opportunity to enjoy the great outdoors in a clean environment.
We systematically implement development programs related to waste recycling, workplace cleanliness, and the use of energy and water. We require similar responsible actions from our subcontractors and suppliers.
Among the most significant environmental impacts arising from our business operations are the use of raw materials, emissions into the air, and operational waste. The company does not use raw materials or methods that would pose a major environmental risk.
In assessing the environmental impacts of textiles, we take into consideration the entire product life-cycle. In our view, the best textile products from an environmental perspective are those that remain in good condition and in circulation for as long as possible. Indeed, in our view, being ecological is primarily about designing high-quality, long-lasting products that can be used year after year, and then have a recycling value.
We ship left over seasonal products to our own network of outlet stores to be sold to consumers at reduced prices. We also donate products to charity.
When choosing materials, we take into consideration that natural and artificial fibres both have appropriate areas of use in textile products. We have also given attention to eco-friendly packaging. More efficient packaging and the use of recyclable packaging saves energy in production and transportation, and generates less waste. In our retail functions, we have replaced conventional, environmentally detrimental plastic bags with renewable, recyclable materials. We always reuse hangers at the stores.
To reduce the environmental impacts of transportation, we strive to maximize the share of maritime and rail transports and minimize air transports. We aim to consolidate small shipments into bigger delivery batches and to optimize production so that the transport volumes between factories and distribution companies are as minimal as possible.
We care for the environment also through the technology solutions we use in our buildings. Our current headquarters, completed in January 2013, is an energy-efficient building with a minimal environmental load. The functional and comfortable building has low servicing and maintenance costs, and it was designed to provide a long service life. Our energy-efficient choices have minimized our greenhouse gas emissions.
With the extensive automation project at our Lahti logistics centre completed in 2019, we achieved significant savings in energy consumption. Back in autumn 2014, we shifted from heat produced with fossilized natural gas to eco-friendly district heating produced with recycled fuels and certified wood. In conjunction with the 2019 upgrade, we solved air-conditioning issues with energy-efficient heat recovery equipment, we changed the lighting to energy-saving LED technology and the building automation systems to agile, cost- and energy-efficient alternatives. As a result of the changes, the annual consumption of district heating and electricity decreased by 40 percent.
The building automation at the Renkomäki warehouse was renewed at the end of the last decade, resulting in an energy savings of about ten percent.
Significant solar panel investments are planned for the headquarters and the Lahti logistics centre in Nastola in 2021.
The company sorts all waste materials. The volume of mixed waste at the headquarters has been cut in half as a result of sorting and loss reduction. Biowaste amounts have decreased by one fifth.
Operating responsibly is a prerequisite for continuity.