kone corporate responsibility report 2011

7/31/2019 KONE Corporate Responsibility Report 2011

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102

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |

CorporateResponsibility ReporKONE 2011



4344

4546

Table o contentsCo p n n o c on 2

KONE in brie 2Stakeholders 3Focus areas 4Letter ro the Chair ano the Board o Directors

6

Letter ro the CEO 7Strategy and egatrends 8Key gures 10

V l e c e on 12

Value creation 12

Sol ons 16

People Flow solutions 16Eco-e ciency o solutions 18Sa ety 24

KONE has identi ed ve develop ent progra s

to help the co pany to eet its goals, build on itsstrengths, and tackle develop ent needs. Theprogra s are Custo er Experience, E ployeeEngage ent, Innovative Solutions or PeopleFlow®, Service Leadership, and Delivery ChainExcellence. These develop ent progra s alongwith KONE’s ocus areas – sa ety, quality, andsi pli cation – also play a key role in KONE’sresponsibility work.

Ope ons 28

Delivery chain 28Suppliers 30Environ ental i pacts o operations 31

People 36

Personnel 36Ethical business practices 41

Reporting scopeIndependent assurance report onCO2 e issionsGlossaryGRI



DEVELOPmENT PROGRAm

CuStOmEr ExPEriENCE

Delivering real value througha solid, long-ter partnershipRegal Entertain ent Group operates the largest and

ost geographically diverse ovie theater circuit inthe United States, consisting o 528 theaters spanning37 states and the District o Colu bia. In 2010 over 200 illion oviegoers visited a Regal Entertain entGroup theater.

Regal Entertainment Group asked KONE to takeresponsibility or servicing their installed base o orethan 300 elevators and escalators in over 180 locationsacross the United States. KONE supports Regal’s ai o providing the best possible entertainment experience toall visitors by ensuring that people can ove sa ely andreliably through the group’s ovie theaters.KONE has built a solid partnership with Regal based onour understanding o what brings value to the customer,and is now considered a key partner in their NationalServices Progra . As a result o their highly success ulcollaboration, KONE and Regal have agreed to extendthe existing service contract ahead o schedule in order to maximize the benefts o all aspects o the partnership.



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |KONE IN BRIEF

Providing industry-leadingPeople Flow solutions

KONE is present

Head o ce

Global R&D site

Production site

KONE collaborates withauthorized distributorsand agents in over 60 countries.

Hyvinkää

ChennaiTorreón

Allen

Coal Valley

Kunshan

HelsinkiÙsti nad Labe

Essen

PeroCadrezzate

KONE is one o the global leaders in the elevator and escalator industry. We provide industry-leadingelevators, escalators, and auto atic building doors,as well as innovative solutions or odernization and

aintenance. Our objective is to o er the best PeopleFlow® experience by developing and deliveringsolutions that enable people to ove s oothly, sa ely,co ortably, and without waiting, in buildings within a

rapidly urbanizing environ ent.

KONE serves around 400,000 custo ers acrossthe globe, the ajority o which are aintenancecusto ers. KONE’s key custo ers are builders,building owners, acility anagers, and developers. Inaddition, architects, authorities, and consultants arekey parties in the decision- aking process regardingelevators and escalators. The range o buildings coversresidential buildings, hotels, o ces and retail centers,in rastructure, and edical acilities. KONE also servesspecial sectors such as leisure and education centers,

industrial properties, and ships.In 2011, KONE had annual net sales o EUR 5.2 billionand on average 35,000 e ployees. KONE Corporation’sclass B shares are listed on the NASDAQ OmX HelsinkiLtd in Finland.

KONE worldwide

INNOVATIVEMOST

THE WORLD’S

COMPANIES

2011

Forbes ranks KONE in world’s 50 ostinnovative co panies

In 2011, leading US business agazine Forbesranked KONE the 39th ost innovative co panyin the world. KONE is the only elevator andescalator co pany to ake the top 50.

The Forbes ranking is based on a etric called

the “Innovation Pre iu ”. This is a grade givento a co pany by Forbes based on the pre iuthe stock arket has placed on the value o theco pany. This pre iu is based on expectationso uture innovative products, services, and new

arkets that will generate even larger inco estrea s.



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |STAKEHOLDERS

making a positive contribution toour stakeholders We work closely with our stakeholders to aintain anactive dialogue. It is our responsibility to ensure thatthe business we carry out is sustainable and akesa positive contribution to ul lling our stakeholders’objectives.

We ai to create value or our shareholders, deliver the best People Flow® solutions to our custo ers,

provide our e ployees with training and develop entopportunities, and build long-ter and utually

bene cial relationships with our suppliers. These e ortsare also e bedded in our strategic targets o osteringcusto er loyalty, aking KONE a great place to work,leading the industry in pro table growth, and providingthe best user experience or the people who use our equip ent.

With open dialogue, we can aintain e cient

collaboration with our stakeholders and ensure apredictable business environ ent or all parties.

KONE is an active participant and a major contributor to the development o codes, standards, and guidelines or improvingsa ety, accessibility, energy e fciency, and other important aspects o elevator and escalator products around the world. Seethe list o organizations that KONE is a member at kone.com/memberships



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |FOCUS AREAS

Our corporate responsibility ocus areas

Buildings consu e approxi ately 40% o theworld’s energy. Elevators and escalators canaccount or 2–10% o the energy consu ption o

a building. 70% o the environ ental i pact o our products ste s ro the energy consu ed bythe products over their li eti e. By reducing theenergy consu ption o our products, KONE seeksto decrease the environ ental i pact o buildings.

Energy e ciency o products

Logistics is the biggest contributor to KONE'scarbon ootprint, accounting or 38% o greenhouse gas e issions. KONE’s logisticsoperations are based on accurate, reliable, and

ti ely in or ation at all phases o the deliverychain, and on using distribution odels that takeeco-e ciency into account.

KONE’s service vehicle feet is responsible or approxi ately 35% o the carbon ootprint. KONEcontinuously looks or new and innovative ways o reducing the carbon ootprint o its vehicle feet.

Logistics and vehicle feet

KONE oves illions o people with elevators andescalators every day. We enhance the sa ety o our products and services through rigorous attention to our design, anu acturing, installation, and aintenanceprocesses. Our 12,000 service technicians around theworld ensure that the equip ent aintained by KONE

unctions properly 24/7. We constantly strive towards

achieving our ulti ate goal o zero accidents through thecontinuous develop ent o our people and processes.

Sa ety



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |FOCUS AREAS

In 2011, KONE had on average 35,000e ployees globally. According to oneo our strategic targets, we want to

ake KONE a great place to work andto inspire, engage, and develop our e ployees or outstanding per or ance.many o our e ployees have long

careers with the co pany; or instance inGer any, Italy, and Finland the averagelength o service is ore than 10 years.

E ployee engage ent

KONE operates globally through ore than 1,000o ces in around 50 countries. Due to KONE’sglobal presence, we consider it critical to ensure

that clear rules and guidance or ethical businesspractices are in place and easily accessible to all our e ployees, who represent over 100 nationalities.

Global presence, ethical business practices Value distributed to stakeholders

In 2011, KONE generated a totalo EUR 2.4 billion o added value tobe distributed to stakeholders (read

ore on page 15). Good econo icper or ance not only creates value or our owners, it also allows us to serve our custo ers better, provide e ploy entopportunities, sustain suppliers, andpursue an active role in the co unity.



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |LETTER FROm THE CHAIRmAN OF THE BOARD

A culture o responsibility supports our long-ter success

To us, the unda ental purpose o corporateresponsibility is to act each day in a way that ensuresKONE’s sustainability and long-ter success. With our Finnish heritage co es a very prag atic approachto corporate responsibility. We accept accountability

or our i pact on the co unity at large, and striveto align our business with values and nor s thatgo well beyond legal and regulatory require ents.Our objective is to achieve sustainable and pro tablegrowth by eeting the needs and expectations o all our e ployees, custo ers, shareholders, and the societies inwhich we operate.

We spend a considerable a ount o ti e assessing anddeter ining the egatrends that drive our industry. The

ost i portant o these is urbanization, alongside anaging population and an ever-growing e phasis on sa etyand energy e ciency. They underline our vision, whichis to deliver the best People Flow experience. This visioncenters on the people who use our equip ent and is

ounded on our strong culture or innovation. We believeKONE’s solutions play an i portant role in aking urban

areas better places to live.KONE has grown ro a tiny achine shop in southernFinland to a truly global co pany with ore than

1,000 o ces in ore than 50 countries. During thiscentury-long journey, we have learnt to respect di erentcultures and understand their nor s and values. Atthe sa e ti e, we have held true to our own values.Our values lead our everyday actions, and they act as aguide towards achieving our vision.

Pro table growth is a precondition o sustainability.

KONE’s econo ic per or ance brings i portantbene ts to all our stakeholders by enhancing our ability to serve our custo ers, securing e ploy entopportunities, sustaining suppliers, and allowing us topursue an active role in the co unity.

The KONE Corporation Centennial Foundation,ounded in 2010, is one part o our initiative to support

local and o ten disadvantaged co unities. During2011, the oundation provided unding and supportto an educational center in a slu neighborhoodo Chennai, India. The s all center or children and

youths, originally built in 1947, was renovated in ti eor India’s Independence Day celebrations on August15. The oundation supplied the centre with a borewell,a pu p, and a storage tank or potable water, as wellas so e badly-needed urniture, whiteboards, andbooks or a library. It gives unding or teachers and alsosupports a non-govern ental educational consultingorganization, Aid India, in training teachers andproviding progra aterials.

All in all, 2011 was another success ul year in KONE’slong history. I want to thank all our stakeholders or thissuccess. Although the current econo ic cli ate eansthere ay be urther challenges ahead, there are alsogreat opportunities. With your continued support, Ia con dent that we can look towards the uture withopti is .

Antti Herlin

Chair an o the Board

KONE Corporation



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |LETTER FROm THE CEO

Sustainable business in a challengingenviron ent

During 2011 our operating environ ent re ainedchallenging outside Asia-Paci c. In southern Europe andNorth A erica, construction activity was at a low levelthroughout the year. In central and northern Europe, the

arkets recovered in the rst hal o the year with thegrowth leveling o towards the end o the year.

Since early 2008, our objective has been to take theprevailing di cult arket environ ent in Europe andNorth A erica as an opportunity. In this period we haveinvested signi cant a ounts in developing people. Theopportunity indset together with active sales e orts,good product co petitiveness, continued i prove entsin our overall quality and productivity, and stronginvest ents in key growth arkets resulted in a continuedpositive develop ent in our business per or ance in 2011.

At the beginning o 2011, we set ourselves ve newdevelop ent progra s to support us in achieving our strategic goals. All in all, our develop ent progra s haveshown their strong positive i pact on the KONE business,and they will continue to drive us in the right direction in

the years to co e. The progress we have ade in theseareas in co bination with the ore balanced geographicix o our business contributes to our ability to create

value or our custo ers and other stakeholders.

Strong e ployee engage entOne o our develop ent progra s is E ployeeEngage ent, with a ocus on urther i provingour leadership capabilities, providing growth anddevelop ent opportunities or all KONE e ployees,and ensuring their well-being at work.

It has given e great pleasure to see the progress

ade. KONE’s success is the result o our e ployees’dedication and passion or what they do. It is pleasingto see the record-high response rate in our 2011e ployee survey that shows this dedication.

We have also succeeded in i proving workplace sa ety,as indicated by the continued decline o the IndustrialInjury Frequency Rate. I proved sa ety awarenesswas con r ed by “KONE’s co it ent to e ployeesa ety” again being the highest single score registeredwhen asked about KONE’s workplace sa ety in the 2011annual e ployee survey.

Excellence in eco-e ciencyOur objective is to be the eco-e ciency leader withinour industry. In 2011, we continued the previous years’ excellent develop ent by urther i provingthe energy e ciency o our elevators and escalators.This ollows on ro 2008 – 2010 when we achievedour a bitious target o a 50 percent reduction in theenergy consu ption o our new elevators. In addition,a wide range o KONE elevators has been awarded the A-class energy rating according to the VDI 4707 (VereinDeutscher Ingenieure) energy classi cation guideline. Wehave also taken steps to urther reduce our own carbon

ootprint.

We continuously look or new opportunities to developour people, solutions, and processes. Corporateresponsibility is no exception to this – it is e beddedin everything we do. The valuable work we have donein all areas o corporate responsibility, ro econo icand social to environ ental responsibility, in itsel strengthens KONE.

matti AlahuhtaPresident & CEOKONE Corporation



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |STRATEGY AND mEGATRENDS

KONE’s vision is to deliver the best People Flow®experience. Our strategy is to deliver a per or anceedge or our custo ers by o ering innovative, cost-co petitive, and eco-e cient solutions that ove peoplewith ease, sa ety, and co ort. We want to ake urbanareas better places to live, act responsibly in everythingwe do, and create value or all our stakeholders.

To help us realize KONE’s vision o creating the bestPeople Flow experience, we continually strive to expandour understanding o custo ers’ needs. By respondingto these needs and ocusing on our people leadershipand internal processes, we can achieve our our strategictargets o serving increasingly loyal custo ers, akingKONE a great place to work, leading the industry inpro table growth, and providing the best user experience.

KONE WAY

MEGATRENDS

Urbanization

Aging population

Safety

Environment

STRATEGIC TARGETS

Customer loyalty

Great placeto work Profitable

growthBestPeople Flow ™ experience

KONE delivers the bestPeople Flow ™ experience

Vision

Energy for Renewal

Passion for Performance

WinningTogether

Delightingthe Customer

VALUES

HIGH PRIORITY AREAS

Safety

Quality

Simplification

DEVELOPMENT PROGRAMS

Customer Experience

Employee Engagement

Innovative Solutions for People Flow ™

Service Leadership

Delivery Chain Excellence

KONE’s e orts to eet its strategic targets aresupported by develop ent progra s that are designedto help us turn our strategy into reality. These progra sare reviewed and rede ned at regular intervals inresponse to both achieve ents and changes in thebusiness environ ent.

The develop ent progra s and strategic targets

are ounded on KONE’s core values o delighting thecusto er, energy or renewal, passion or per or ance,and winning together.

We have also re ned the three high priority areas thatare the backbone or everything we do. These aresa ety, quality, and si pli cation.

making urban areas better places to live



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |STRATEGY AND mEGATRENDS

opu at on n rura vs. ur an areas ons o peop e

2.03.04.0

5.06.0

8.07.0

9.0

0.01.0

1950 1960 1970 1980 1990 2000 2010 2020 2030

Annual growth2010-2030

Rural0.0%

Urban1.7%

+ 1.4billion

8.3

3.43.5

3.4

3.5 4.2 4.9

7.76.9

6.15.3

4.4

3.73.02.5

0.7 1.0 1.3 1.7 2.3 2.81.82.0

2.42.7

3.0 3.3

Source: U.N. World Urbanization Prospects 2009 revision; mcKinsey Global Institute

Read more about KONE's business environmentand megatrends at kone.com/megatrends

popuat on str uton y age group(share of population in age group, % of total)

2.0

3.0

4.0

5.0

6.0

7.0

8.0

0.0

1.0

5-9 15-19 25-29 35-39 45-49 55-59 65-69 75-79 85+

2000: 18% 2050: 31%

Source: OECD (Organization or Econo ic Co-Operation and Develop ent)De ographic and Labour Force database

Our strategy is to deliver a per or ance edge or our custo ers by o eringinnovative, cost-co petitive,and eco-e cient solutions that

ove people with ease, sa ety,and co ort.

megatrends driving KONE's growthThe direction and shape o the global elevator andescalator industry are driven by our egatrends:urbanization, changing de ographics, the increasingi portance o sa ety, and concern or the environ ent.KONE contributes to sustainable urban develop entby developing eco-e cient solutions that ove peoples oothly and sa ely in urban environ ents.

UrbanizationUrbanization is the single ost i portant egatrendwithin the global elevator and escalator industry. It isexpected to drive de and or years to co e.

Environ entBuildings account or approxi ately 40 percent o the world’s energy consu ption, and elevators andescalators can account or two to 10 percent o theenergy consu ption o an individual building. Theelevator and escalator industry can play a vital role inhelping to counter cli ate change and its negativee ects by providing innovative solutions that helpto reduce the energy consu ption o buildings. Thede and or energy-e cient solutions or ovingpeople in and between buildings is driven by voluntarysustainability ratings and national green building ratings.

Sa etyUrban in rastructure syste s in certain arkets areaging. National and international sa ety codes and

standards play a key role in deter ining the sa ety levelo elevators and escalators. Particularly in Europe, anycountries have adopted strict standards or sa ety and

odernization in recent years.

Aging population

The global de ographic structure is changing. Thegrowing nu ber o older people raises the i portance o accessibility in buildings and urban in rastructure. Thereis an ever-growing need or People Flow solutions thato er convenience and accessibility. An elevator can helpelderly residents live in their ho es longer, acilitate thelives o all residents in the building, as well as add valueto an existing property.



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |KEY FIGURES

Key gures 2011

?

Relative operational carbon footprint

2010 YoY

-3.9%Service vehicle eet

kgCO 2e/Unit in service 89.1

+2.6%ElectricitykgCO 2e/Headcount 873

+13.0%Business air travelkgCO 2e/Headcount 200

-10.6%Logistics*tCO 2e/Unit 1.42

+0.9%Overall operationskgCO 2e/k€ Revenue

2009

95.0

854

149

1.40

46.3 45.1

2011

85.6

896

226

1.27

45.5

* Excluding air freight and India. Read more on page 32.

Employees by market, Dec. 31, %

Asia-PacicAmericas

Europe, MiddleEast, Africa (EMEA)0

25

100

50

75

2009

55

17

28

2010

55

15

30

2011

50

14

36100

0

25

50

75

Employees by job category, Dec. 31, %

Administration,IT, R&D

Manufacturing

New equipmentsales & installation

Maintenance andmodernization

2010

99

23

59

2011

99

24

58

2009

25

57

108

Econo ic responsibility

Sales by market, 2011 (2010), %

EMEA* 55% (58%)

Americas 18% (21%)

Asia-Pacic 27% (21%)

* Europe, Middle East, Africa



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |KEY FIGURES

Environ ental excellence progra



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T | VA LUE CREATION

DEVELOPmENT PROGRAm

SErViCE LEadErShiP

Local service presencewith a global reach KONE maintains over 850,000 elevators and escalatorsglobally. Every single day, illions o people aroundthe world use KONE- aintained equip ent to ovein and between buildings. Our nu ber-one priorityis to ensure sa ety or all o the and enable s ooth,uninterrupted journeys 24/7.Thanks to our global network o customer care centers– which operate around the clock – we can guaranteea rapid response to requests rom both customersand end users. KONE custo er care centers provideservice in the local language, ensuring that all queriesand service requests are handled as quickly as possible.

KONE aims to build strong relationships based on

trust and con dence. Being available whenever andwherever our custo ers and end users need us playsa huge part in helping us achieve this goal.



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT | VA LU E CR EAT ION

Creating value throughpro table growthKONE’s objective is to achieve sustainable andpro table growth by eeting the needs andexpectations o our custo ers in the ost e cientway. KONE’s ore ost responsibility is to our shareholders. However, econo ic per or ancenot only creates value or our owners, it also bringsi portant bene ts or other stakeholders.

In addition to creating value or shareholders, pro tablegrowth allows us to continue to serve our custo ersbetter, provide e ploy ent opportunities, sustainsuppliers, and pursue an active role in the co unity.Through the active and continuous develop ent o our entire business syste , we ai to beco e an evenstronger player within our industry.

KONE’s growth and long-ter success is driven by thedesire and ability to eet the needs and require entso our custo ers. The ai s o our co pany-widedevelop ent progra s are to continuously i prove

KONE’s co petitiveness and to help us achieve our strategic targets. Our internal control processes ensureconsistent nancial per or ance and support us inachieving our long-ter targets.

Our shareholders and the nancial co unity as awhole are i portant stakeholders or KONE, as they arethe ulti ate decision- akers and providers o capital or our business and its growth. At the end o 2011 KONEhad approxi ately 30,000 shareholders, ranging roinstitutional investors and co panies to individuals,public institutions, and non-pro t organizations. KONEai s to generate a return on shareholders’ invest entby conducting its business in a pro table, sustainable,and transparent anner.

Growth and stabilityIn 2011 KONE’s develop ent was good despite anuncertain and challenging econo ic environ entoutside the Asia-Paci c region. Orders receivedincreased 17.2 percent co pared to 2010, reachingEUR 4.5 billion (3.8 billion). Sales in 2011 a ountedto EUR 5.2 billion (5.0 billion), an increase o 4.8percent ro the previous year. Syste atic e orts todevelop KONE’s geographic presence and ocus on

areas o growth have been i portant contributors toour pro table growth in recent years. Our broad globalreach provides stability, especially when so e arketsare challenging. KONE’s develop ent in Asia-Paci c

continued to be particularly strong, with the regionaccounting or 27 percent o our sales in 2011.

KONE provides solutions or the whole li e cycle o itsproducts, ro new equip ent sales to aintenanceand odernization. Co petitiveness in all threebusinesses is essential in order to be success ul globally.New equip ent installations are the ost i portant

source o growth or our aintenance business.KONE’s ocus on building solid, long-ter custo er relationships and delivering high quality service haveallowed us to secure a high rate o conversion roour new equip ent installations into our aintenancebase, which exceeded 850,000 elevators and escalatorsin service at the end o 2011. maintenance, althoughhighly co petitive, is less vulnerable to fuctuationsin the arket environ ent than the new equip entand odernization businesses, and is thus another

actor that provides stability or KONE’s business ina challenging econo ic environ ent. When the

equip ent reaches an age where ore thoroughrepair is needed, odernization solutions – rangingro the replace ent o individual co ponents toull replace ent – can signi cantly i prove its sa ety,

accessibility, energy e ciency, and per or ance.modernization represents an i portant potential areao uture growth, with a large aging installed base o elevators and escalators worldwide.

Pro tability and nancial strengthKONE’s operating inco e rose to EUR 725.1 (696.4)

illion in 2011, or 13.9 (14.0) percent o sales.Contributing actors to the growth in operatinginco e were good business progress in Asia-Paci cand central and northern Europe, growth in the

aintenance business, and an overall i prove ent

Pro table growth allowsus to continue to serve our custo ers better, providee ploy ent opportunities,

sustain suppliers, andpursue an active role in theco unity.



14

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T | VA LUE CREATION

Sales by business, 2011 (2010), %

Service 54% (54%) • Maintenance 37% (37%) • Modernization 17% (17%)

New equipment 46% (46%)

Sales by market, 2011 (2010), %

EMEA* 55% (58%)

Americas 18% (21%)

Asia-Pacic 27% (21%)

* Europe, Middle East, Africa

in quality and productivity. The growth in operatinginco e was burdened by increased aterial costs,increased labor costs in Asia, and intensi ed priceco petition. In addition, KONE increased xed costs inareas supporting uture growth, such as R&D, processdevelop ent, and Asia-Paci c.

KONE’s nancial strength allows us to be proactive in

developing the co pany or the long ter . At the endo 2011, KONE’s net cash position was signi cantlypositive, at EUR 829.1 illion (749.8). Cash fow rooperations is KONE’s principal source o unding, andwe ai to aintain negative working capital in order to ensure healthy cash fow at all ti es. In 2011,KONE’s cash fow ro operations (be ore nancingite s and taxes) re ained strong, at EUR 819.8 illion(857.2). Although KONE has no speci c target or itscapital structure, our ai is to aintain strong creditquality in order to provide a ple access to external

unding should business growth de and it. KONE’s

strong balance sheet provides stability in an uncertainecono ic environ ent and allows us to take advantageo potential business opportunities that will create value.

Internal control and risk anage entKONE’s internal control processes are designed toensure that the Group’s operations are e cientand pro table, that the business risk anage entis adequate and appropriate, and that nancialin or ation is accurate and reliable. These processesand controls enable us to oversee the business’adherence to agreed operating principles andinstructions. These are unda ental to securing KONE’s

nancial per or ance and the ability to achieve our long-ter targets. KONE’s internal control proceduresare laid down in care ully de ned principles andinstructions. A uni ed and globally har onized

ra ework provides processes, tools, and instructions tocover both anagerial and external nancial reporting.

Risk anage ent ai s to coordinate and develop asyste atic assess ent o risks and opportunities withincore business planning and decision- aking processes.KONE continuously assesses the risks and opportunitieso its business decisions in order to li it unnecessary

or excessive risk in achieving its business and nancialobjectives.

• Growth: aster than the arket

• Pro tability: 16% earnings be ore interest andtaxes

• Cash fow: i proved working capital rotation

New long-ter nancial targets set in 2011



15

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT | VA LU E CR EAT ION

Value creation and stakeholders

Development of KONE’s share price versus OMX Helsinki

504540353025201510

50

Jun 1,2005 Dec 312011Jan 1,2011Jan 1,2010Jan 1,2009Jan 1,2008Jan 1,2007Jan 1,2006

KONE B (HEL) OMX Helsinki Cap OMX Helsinki Industrials

KONE's econo c p c s

Employees 1,345 (1,254) mEUR

Public sector 502 (563) mEUR

Creditors –18 (–6) mEUR

Shareholders 358 (230) mEUR

Customers 5,225 (4,987) mEUR

Suppliers 2,824 (2,653) mEUR

Economic value retained in the company 214 (294) mEUR

VaLuE addEd 2,401 (2,334) mEur

The distribution o added value created by KONE in itsbusiness operations is presented in the diagra below.The di erence between KONE’s sales and contributionspaid to suppliers represents added value, which isdistributed to various stakeholders.

The largest o these stakeholder groups in ter s o distributed value are e ployees (wages and salaries),shareholders (pro t distribution), and the public sector (taxes and other contributions). The re ainder, EUR 214

illion or the 2011 nancial year, is retained in order todevelop and grow the business, and seize potential utureopportunities.



16

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |SOLUTIONS

DEVELOPmENT PROGRAm

iNNOVatiVE SOLutiONS FOrPEOPLE FLOw ®

Accessibility in ocus onPeople Flow Day 2011 KONE’s ai is to be an expert in transporting peoplein and between buildings smoothly, e ciently, andin a sa e anner without waiting. Our annual PeopleFlow day is an important part o gaining a deeper insight into what this eans in practice.People Flow Day is designed to bring us closer to

end users and our custo ers. E ployee tea s act asresearchers, talking to customers, interviewing thepublic, aking on-site observations, and co pletingquestionnaires. Closely studying how, where, andwhy people move in buildings during a typicalweekday helps the tea s gather valuable rst-handin ormation on both the user experience and thecusto er experience.People Flow Day 2011 took place in October in over 30 countries. Participants rom KONE paid specialattention to the accessibility challenges aced by

di erent user groups, such as wheelchair users, thosewith visual i pair ents, senior citizens, people in ahurry, and a ilies with young children.



17

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |SOLUTIONS

Delivering s ooth People Flow or everyone

People Flow® eans oving people s oothly, sa ely,co ortably, and without waiting in and betweenbuildings.

Driven by the urbanization egatrend, so e 500,000new pieces o equip ent are being installed each year.In 2010, it is esti ated that there were over 10 illionelevators and escalators in operation globally. Every

single day, illions o people around the world useKONE- aintained equip ent to ove in and betweenbuildings.

People Flow is about providing high quality accessibilityor everybody. KONE sees People Flow ro di erent

perspectives, ocusing on the ove ent o individuals,larger crowds o people, and goods.

Opti al solutions or key custo er groupsBy constantly analyzing the People Flow in di erentbuildings and understanding the custo er's business,

KONE is able to provide the with opti al solutions.KONE’s key custo er groups are builders, building owners, acility anagers, and developers. Architects,authorities, and consultants are also key parties inthe decision- aking process regarding elevators andescalators. KONE’s expert project anage ent servicesensure that projects run s oothly, and provide toolsthat help custo ers in their work.

Providing the best possible end-user experienceKONE has an in-depth understanding o the uniquerequire ents o di erent buildings. KONE hasseg ented its arket according to the purpose o thebuilding. The ain seg ents are residential buildings,

hotels, o ces and retail centers, in rastructure, andedical acilities. KONE also serves special sectors such

as leisure and education centers, industrial properties,and ships. With care ul planning, KONE can ensurethat the ost suitable and user- riendly solutions areinstalled in the building.

KONE continuously studies the fow o people to

understand the needs o di erent end-users such aselderly and disabled people, and people with babystrollers. KONE works closely with speci c end-user groups to see where urther accessibility i prove entscan be ade. Research on accessibility is a continuouse ort, and we aintain an active dialogue withassociations that pro ote the interests o individualswith i paired obility to better understand their needs.

With KONE Care™ preventive aintenance, elevators,escalators, and auto atic building doors can be keptin good working order, and odernization ensures

that they eet the latest sa ety and accessibilitystandards.



18

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |ECO-EFFICIENCY OF SOLUTIONS AND SERVICES

Developing eco-e cient solutions or a ore sustainable uture According to KONE’s environ ental state ent, weprovide sa e, eco-e cient, and responsible high-per or ance services, odernizations, and solutions. We strive or continuous i prove ent in all our businessactivities by ollowing or exceeding the require ents setout by all applicable laws, rules, and regulations.

KONE’s long ter environ ental objectives are to

urther i prove the eco-e ciency o our solutions,odernize existing elevators and escalators to akethe ore energy-e cient, and to urther reduce theenviron ental i pact o our operations, particularlywith regard to operational carbon ootprint.

Energy-e cient solutionsthat lead to greener buildingsKONE is a pioneer in developing eco-e cient solutionsin the elevator and escalator industry. The Environ entalLi e Cycle Assess ents o KONE’s elevators and escalatorsshow that the biggest environ ental i pact relates to

the a ount o electricity used by the equip ent over itsli eti e. This underlines the i portance o continuing todevelop and i prove energy-e cient innovations.

KONE is helping to co bat cli ate change andcontributing to the develop ent o next-generationgreen buildings by delivering eco-e cient elevator,escalator, and auto atic building door solutions or sustainable and net zero energy buildings.

The increasing interest in achieving green buildingcerti cations such as LEED, BREEAm, Green Star, andGreen mark is one o the driving actors behind theincrease in de and or eco-e cient elevators andescalators.

KONE’s expertise in eco-e ciency enables us toper or in-depth analyses o tra c patterns, energyconsu ption, and the potential carbon ootprintreduction over the entire operational li espan o thesolutions we o er our custo ers. The tools used toconduct these analyses are particularly valuable inhelping custo ers design net zero energy buildings andco ply with green building require ents.

Eco-e ciency drives the R&D processEco-e ciency is one o the key drivers o our R&Dprocess and is at the heart o the entire KONE o ering,

ro low- and high-rise elevators to escalator and

Pri arily driven by the need or energy e ciency,net zero energy buildings – buildings that produceas uch energy as they consu e each year – are agrowing trend in the cutting-edge green building

arket.

Energy can be produced on-site, o ten through aco bination o technologies like solar, wind, or geother al, eaning that net zero energy buildingscan even be independent ro the energy gridsupply. The overall a ount o energy used can alsobe reduced with energy e cient heating, ventilation,air conditioning, and lighting technologies.

KONE’s advanced industry-leading elevator technology o ers excellent opportunities or saving even ore energy. For instance, a KONEregenerative drive, which re-uses braking energythat nor ally goes to waste, coupled with aKONE EcoDisc® hoisting achine, reduces energyconsu ption on a day-to-day basis by up to 35percent, depending on elevator speed and buildingheight. LED lighting and standby solutions urther

lower the energy consu ption o KONE elevators.In 2011, KONE delivered solutions or its rst net zeroenergy building projects in Europe and North A erica.

Boosting eco-e ciency in net zero energy

buildings

auto atic building door solutions. When we aredeveloping new solutions, we ocus on ini izing theenviron ental i pact throughout the li ecycle o theequip ent. This ocus extends ro the extraction o raw aterials to end-o -li e processes such as recycling,waste treat ent, and the reuse o recovered aterials.

The KONE R&D process ai s to:

• reduce energy consu ption• reduce aterial use (including packaging and waste)• avoid the use o hazardous substances• axi ize aterial durability and recycled content• axi ize recyclability• ensure that our products eet voluntary green

building certi cation require ents• ini ize water consu ption



19

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |ECO-EFFICIENCY OF SOLUTIONS AND SERVICES

Ene e c enc cl ssKONE miniSpace™KONE monoSpace® A A

BC

D

E

F

G

KONE monoSpace®Special

Every solution creation project at KONE ust ollowdetailed eco-e ciency criteria, veri ed using prototypesand pilots, with a special ocus on ini izing energyconsu ption. In ter s o product anage ent, everynew change to a product is evaluated against theexisting solution to veri y that the new solution deliversi proved per or ance in ter s o ini ized i pacton the environ ent.

Reduction o energy consu ption continuesKONE seeks to decrease the environ ental i pacto buildings by continuing to reduce the energyconsu ption o its elevators and escalators. Our newrange o volu e elevators consu es 50 percent lessenergy on average than the typical KONE elevator con guration ro 2008.

Top-class energy e ciencyIn 2011, KONE urther increased the nu ber o energy-e cient elevator installations globally, especially in Asia.

A nu ber o KONE solutions in Europe and Asia rangingro low- and id-rise to high-rise elevators received

an A-class energy rating as de ned by VDI 4707, theguidelines published by the Association o Ger anEngineers (Verein Deutscher Ingenieure), which classi yelevators based on their energy consu ption. The VDI

classi cation ranges ro A to G, ro the ost to theleast energy e cient syste , and it is co only used bythe elevator industry. In 2011, the KONE monoSpace®Special elevator was awarded an A-class rating, with theKONE monoSpace® and KONE miniSpace™ elevatorsalready having achieved an A-class rating in 2010.

All A-class VDI certi cations have been achieved on

custo ers’ sites with easure ents conducted by thirdparties, in building types varying ro s all residentialbuildings to high-rise o ce buildings and hospitals.KONE has also achieved an A-class VDI certi cate or adouble deck elevator, which is a special application or buildings with very high tra c volu es.



2 0


KONE co pleted a co prehensive elevator odernization project or the high-rise residential

Waterside building in Singapore. The building’sowners wanted to replace the 24 existing elevatorswith odern technology that would axi izeenergy e ciency and ini ize operating costs or the entire li e cycle o the equip ent.

KONE’s solution was the KONE Resolve™ X2,the ost energy-e cient elevator odernizationconcept or high-rise buildings on the arket. With KONE Resolve X2, the electri cation syste ,

control, and hoisting achinery can be replacedwith ini u disruption to daily operations in thebuilding. This innovative solution also opti izesthe use o existing and new co ponents, therebyreducing waste.

The syste -level easure ent and analysistools o KONE’s electrical site survey, the KONEESiteSurvey™, enabled us to analyze all the criticalpara eters o the existing equip ent and engineer a sa e, reliable, and high per or ance new solution

or the custo er. The survey utilizes advanced

sensor, easuring, odeling, and opti izationtechniques to odel the properties o the existingsolution while ini izing disruption or passengersusing the equip ent.

The new energy-e cient elevator solution hasdecreased the total annual energy consu ptiono the building’s elevators by 60 percent and theelevators’ standby energy consu ption by 80percent.

Eco-e cient odernization in Singapore

The Shard is the rst phase o the London BridgeQuarter, a new co ercial district. Sustainabilityhas been a clear priority in this i pressive project,where KONE has been involved ro the verybeginning. To boost construction ti e e ciency,KONE's advanced Ju pLi t technology has beenused. Construction ti e use elevators such as theKONE Ju pLi t bring e ciency gains that can resultin thousands o saved hours. The KONE Ju pLi t’sunique sca oldless installation ethod, co bined

with the i prove ents in sa ety and energye ciency it provides, ake it an invaluable tool or odern construction projects.

Boosting construction-ti e e ciency

Today, KONE’s European volu e elevators consu e 60percent less energy, Asian volu e elevators 50 percentless, and US volu e elevators 40 percent less energy thanin 2008. This signi cant reduction has been achievedby developing new technologies such as ore e cienthoisting achinery, regenerative technologies that recover the energy ro ascending and descending elevators and

eed it back into the building’s electricity network, as wellas ore e cient lighting and standby solutions.

KONE volume elevators energy consumptionreduced by 50%kWh/year

Europe Asia-Pacic Americas

2008 2011

Calculations based on:Europe: elevator speed of 1 m/s, load of 630 kg, 150,000 starts per year,travel height of 9 m.

Asia-Pacic: elevator speed of 1.6 m/s, load of 800 kg, 200,000 starts per year, travel height of 60 m.

Americas: elevator speed of 0.75 m/s, load of 1,134 kg, 85,000 starts per year, travel height of 11 m.

-50%

-40%

-60%

Saving energy through odernizationHuge reductions in energy consu ption can beachieved by odernizing old equip ent. KONE hasdeveloped odernization solutions that can reduceenergy consu ption by up to 70 percent or elevators,and up to 40 percent or escalators.

Read more about KONE’s R&D process and eco-e f-cient products at kone.com/environment



21


KONE Ecod sc ® o s n c ne

L b c on- ee s ep c n

re ene ve sol on

LEd l n

S n b sol ons

KONE Ecomo ™ o e n z on

re ene ve sol on

Eco-e c en ope on

des n on con ol s s e

Ene -e c en sl n oo

I proving the eco-e ciency o People Flow® solutions

Eco-e cient elevator solutions• Elevators equipped with the energy-e cient KONE

EcoDisc® hoisting achine are 50–70 percent oree cient than elevators that use conventional traction2-speed or hydraulic technology. Unlike hydraulicelevators, the KONE EcoDisc® requires no oil or holedrilling.

• KONE’s regenerative solutions can provide energysavings o 20–35 percent by recovering the energythat is released when the elevator is used.

• LED and eco-e cient fuorescent lighting can reduceenergy consu ption by up to 80 percent co paredto halogen lighting.

• Standby solutions power down the equip ent whenit is not in use, providing substantial energy savings,especially in buildings with periods o low elevator usage.

• The KONE Polaris™ destination control systeopti izes elevator tra c, aking it possible toreduce both the size and the nu ber o elevatorsneeded in a building.

Eco-e cient escalator solutions• The lubrication- ree step chain saves oil, reduces

chain wear, and decreases re risk.• Eco-e cient operation can cut energy consu ption

by up to 50 percent by slowing down or stoppingthe escalator when it is not in use or increasing thee ciency o the otor when tra c volu es are low.

• Regenerative solutions reduce energy consu ptionby up to 60 percent by recovering the energy that isreleased when the escalator is used.

• LED lighting consu es up to 80 percent less energyco pared to conventional lighting technologies.

• The KONE Ecomod™ solution enables an escalator to be odernized without re oving the truss, savingboth construction ti e and aterials.

Eco-e cient auto atic building doors solutions• KONE’s energy-e cient sliding door solution

regulates the door’s opening width and openingti e based on the outside te perature, enablingsavings o up to 4,000 kWh per year in building

heating and cooling costs.



2 2


KONE’s environ ental responsibility covers the ull li ecycle o its products, ro design and anu acturing to

aintenance, odernization, and end-o -li e treat ent.KONE’s li e cycle i pact assess ent, carried out inaccordance with the ISO 14040 standard (Eco-Indicator 99 ethod), shows that our greatest environ ental

Li e Cycle I pact Assess ent (LCIA) values assessed according to the Eco-Indica-tor 99 ethod illustrate the total environ ental i pact o each li e cycle stage.

The assess ent is based on the KONE monoSpace® elevator, with a rated loado 630 kg, a speed o 1 /s, an esti ated li eti e o 25 years, and a requencyo 150,000 starts per year traveling between ve foors. The KONE mono-Space® represents 50 percent o all elevators ordered ro KONE in 2011.

The assess ent is based on the KONE Travelmaster™ 110 escalator, with anequivalent step load o 25 kg, an esti ated li eti e o 15 years, operating 14hours per day, 6 days per week, and 52 weeks per year. KONE Travelmas-ter™ escalators represent 70 percent o all escalators ordered ro KONE in2011.

i pact ste s ro the energy consu ed by our products during their operational li eti e. By reducingthe energy consu ption we are success ully reducingthe environ ental i pact o KONE products duringtheir operational li eti e.

KONE monoSp ce® elev o

Life cycle stage, LCIA values (EI99)

Material production 26.2%

Componentmanufacturing 14.3%

Delivery 1.9%

Use 56.2%

Maintenance 1.2%

End-of-life treatment 0.3%

KONE t velm s e ™ 110 esc l o

Life cycle stage, LCIA values (EI99)

Material production 10.0%

Componentmanufacturing 3.9%

Delivery 0.005%

Installation 0.02%

Use 85.8%

Maintenance 0.09%

End-of-life treatment 0.2%

Li e cycle i pact assess ents



2 3


Providing eco-e ciency in every phase o a building’s li e cycle

Illustration

We provide services that help our custo ers achievetheir eco-e ciency goals in every phase o their building’s li e cycle – ro designing and constructingthe building to aintaining and odernizing it. We paycare ul attention to the way our services are producedand delivered to ensure that they create as littleenviron ental i pact as possible.

Supporting green building design• Environ ental product declarations about theenviron ental i pact o KONE products.

• Energy calculation tools to esti ate equip entenergy consu ption.

• Participation in the develop ent o global energyeasure ent standards such as ISO/DIS 25745,

Energy Per or ance o Li ts and Escalators.• Cooperation with green building associations around

the world.

Eco-e cient construction•

E cient installation processes and ethods thatreduce the nu ber o technicians required on siteand the environ ental i pacts o traveling.

• The KONE Ju pLi t™ helps increase sa ety, saveti e, and boost productivity during buildingconstruction.

• Clearly de ned site require ents that ust beul lled be ore installation starts, eli inating

unnecessary site visits.• Environ entally e cient waste handling on site,

using separate containers or hazardous, etal,electrical, wood, and ixed waste.

• Reduced che ical use through new installationethods, such as reducing the a ount o solvent

needed or guide rail handling.

E cient aintenance processes• Regular pro essional aintenance that helps prevent

breakdowns and increase equip ent li eti e.• Route-planning technology opti izes technicians’

driving routes, thereby reducing e issions.• Wireless technology and re ote onitoring solutions

that provide technicians with real-ti e in or ation,enabling better-planned aintenance visits and

reducing unnecessary call-outs.• Eco-sa e driving principles, which are ollowed by

service technicians.• Spare part stocks in vehicles to reduce warehouse

visits, thereby urther decreasing e issions.• An eco-e cient vehicle feet.

Eco-e ciency through odernization• modernization solutions that can enable up to

70 percent reduction in energy consu ption or elevators and 40 percent or escalators.

• The co prehensive KONE Care or Li e™ assess ent,

which identi es the energy-saving potential o elevators and escalators.• A broad port olio o elevator odernization

solutions, ranging ro retro tted LED lights to aco pletely new elevator equipped with energy-regeneration technology.

• The eco-e cient KONE Ecomod™ escalator odernization, which saves energy and enablesodernization without re oving the existing truss –

saving aterial, ti e, and costs.

Read more about the eco-e fciency o our solutions atkone.com/environment



24

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |SAFETY

The sa ety o our e ployees, subcontractors, and thepeople who use our products and services is seen aspara ount at KONE. We constantly strive towardsachieving our ulti ate goal o zero accidents through thecontinuous develop ent o our people and processes. Itis our strong belie that all accidents are preventable.

We enhance the sa ety o KONE products and

services through rigorous attention to our design,anu acturing, installation, and aintenance processes.Sa e practices are pro oted or our e ployees andsubcontractors, as well as or custo ers and peoplewho use our equip ent.

Elevators and escalators are a ong the sa est odeso travel. KONE is actively involved in the develop ent

Focusing on the sa ety o people, products,and services

5 e s s o p ove elev o s e n ccess b l

5 easy ways to i prove sa ety1. Adequate lighting prevents accidents and akes people

eel sa er

2. A two-way voice co unication syste i proves sa etyand gives passengers peace o ind

3. Interior doors and auto atic landing doors preventaccidents and i prove accessibility

4. Accurate landing prevents people ro stu bling on thedoor sill

5. An e ergency syste includes an alar with a two-wayphone and an e ergency power supply

5 easy ways to i prove accessibility

1. I prove ents in space e ciency ake a di erence. By or exa ple odernizing an elevator, the space inside the car can be increased by 50%

2. Wide-opening doors ake entry and exit easier or passengers using a wheelchair or pushing a stroller

3. Accessories such as handrails and irrors provide supportand help to i prove visibility

4. Braille signalization and audio announce ents help peoplewith hearing and vision i pair ents

5. An elevator can be installed in a building previously withoutone, in the stairwell or attached to an outside wall

12

2

55

4

4

33

1

o codes and standards that ai to urther i proveequip ent sa ety. We also pro ote sa ety through our participation in industry trade associations, and o er additional sa ety devices that exceed the ini urequire ents.

The sa ety level o elevators, escalators, and auto aticdoors in service varies because technology, codes,

and standards are continuously evolving. Elevator andescalator sa ety requires a joint e ort. Technologyproviders ust anu acture equip ent that eetsapplicable codes and standards. Building owners and

aintenance service providers have a responsibility toake sure that equip ent is pro essionally aintained

and kept in good condition. Elevator and escalator usersalso need to pay attention to their own behavior when

Read more about sa ety and accessibility atkone.com/safety



2 5

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |SAFETY

using the equip ent. For exa ple, children shouldbe properly supervised when using both elevators andescalators, and large ite s such as baby strollers, heavyluggage, or shopping carts should not be transportedon escalators.

managing the sa ety o our people,products, and servicesKONE has global policies, processes, and guidelinesto ensure that our business activities, includingsubcontractor operations, are organized and conductedin a structured and globally har onized way. We also

ocus on aking sure every KONE e ployee has thenecessary co petence to per or their work in apro essional and sa e anner. Our e ployees receivetraining to a general level in health and sa ety, as well astraining relevant to their respective work roles and tasks.Unit heads are responsible or taking an active lead onsa ety.

Every anager is responsible or ensuring that allnecessary arrange ents are in place to protect thesa ety o their tea s as well as the general public.E ployees and subcontractors ollow the de ned rulesand ethods to ensure the sa ety o the selves andanyone else who ay be a ected by their activities.

Audits are conducted to easure co pliance withKONE’s policies, rules, and de ned working ethods.me bers o the senior anage ent tea s regularlyparticipate in workplace sa ety audits, and i ediatecorrective actions are taken i deviations are identi ed.I obstacles to sa e working are identi ed, the work in

question stops until a sa e way to continue has beenapproved. In cases where any e ployee deliberatelyor repeatedly deviates ro policies, rules, or de nedworking ethods, the violations procedure is ollowed,which ay result in corrective or disciplinary actionas appropriate. I a subcontractor violates any KONEpolicies or rules, it ay result in the ter ination o their contract.

To support continuous i prove ent in KONE's sa etyper or ance, a procedure is in place to report andinvestigate accidents. The underlying root causes areidenti ed and corrective actions i ple ented so theaccident or near- iss incident is not repeated.

KONE organizes quarterly global sa ety networkeetings to share lessons learned ro accidents and

near- iss incidents. The eetings also serve as a oruor sharing good practices and discussing concerns.

Unit sa ety anagers share the in or ation in their

respective unit’s regular anage ent eetings, andin or ation is cascaded down ro line anagers totea leaders or sharing in tea eetings and other e ployee oru s. This two-way in or ation channelhelps to ensure all concerns and initiatives are e ectivelyco unicated, and that any necessary preventiveactions are taken.

• Ulti ate goal o zero accidents

• In our annual e ployee survey, Pulse, thequestion about KONE’s co it ent toe ployee sa ety again received a very high scorein 2011

•

In 2011 our industrial injury requency rate (IIFR)was 4.1 – a 6 percent reduction co pared to2010

Sa ety targets and achieve ents

IIFR = industrial injury requency rate

IIFR development

2

4

6

8

10

12

020062005

6.0 5.2

4.3 4.1

7.58.48.7

2007 2008 2010 20112009

KONE tracks the nu ber o lost ti e injuries o one day or ore, per illionhours worked, as a key per or ance indicator.



2 6

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |SAFETY

We enhance the sa ety o our products andservices through rigorous attention to our design,

anu acturing, installation, and aintenance processes.Sa e practices are pro oted or our e ployees andsubcontractors, as well as or custo ers and peoplewho use our equip ent.

Sa ety every step o the way

• KONE pro otes the sa ety awareness o its e ployees through applicable healthand sa ety training as well as sa ety-related internal co unication.

• KONE pre ises are anaged by building

anagers to pro ote the sa e andhealthy working environ ent.

O ce

• KONE's Supplier Code o Conductde nes sa ety-related require ents.KONE expects all its suppliers toprotect the health and sa ety o their own e ployees.

• KONE expects its suppliers to eetstrict quality require ents, andwe continuously easure their

per or ance against de nable targets.In addition, our quality pro essionalsregularly audit key suppliers to

onitor the sa ety and quality o delivered co ponents and products.

Suppliers

• By care ully controlling raw aterialsand production processes, we canenhance the quality and sa ety o allco ponents used in production. AllKONE production sites are ISO 9001certi ed.

• We protect our e ployees byi ple enting the 5S* ethodologyand by conducting regular sa ety

training.

Production site• Sa ety plan is created in productdevelop ent projects. It includesboth workplace sa ety and productsa ety. In the R&D process, potentialsa ety hazards a ecting the ull li ecycle are syste atically identi edand eli inated be ore products arereleased.

• Existing solutions are continuouslydeveloped to i prove their sa etyand unctionality.

R&D

*The na e o the 5S ethodology co es ro the words sort, stabilize, shine, standardize, and sustain.



2 7

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |SAFETY

• KONE supports custo ers and buildingowners in pro oting the sa e use o elevators, escalators, and auto aticbuilding doors.

•

KONE co unicates actively aboutsa ety issues, and organizes events or end users to pro ote the sa e use o theequip ent we aintain.

Use

• KONE’s installation ethods andprocesses are designed to protectinstaller sa ety while enablingproduct quality and reliability.

• KONE uses continuous training, site

audits, sa ety passports, and provenrisk-assessed ethods to axi izesite sa ety.

Installation

• KONE develops odernizationsolutions or upgrading or replacing old equip ent withnew solutions that eet thelatest sa ety standards.

• KONE’s odernizationprocesses and productsupdate the equip ent tothe latest sa ety standards,which i proves the sa ety o residents and tenants. Products

are installed by pro essionaltechnicians ollowing strictodernization processes and

sa ety guidelines.

modernization

• KONE aintains the sa ety o elevators,escalators, and auto atic buildingdoors through preventive aintenance

ethods.

• We ocus on aking sure that our aintenance pro essionals have the

required co petence to per or their work sa ely through regular pro essionaltraining.

maintenance



2 8

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |OPERATIONS

DEVELOPmENT PROGRAm

dELiVEry ChaiN ExCELLENCE

Fostering supplier relationships– a two-way street KONE’s annual Supplier Day helps us oster relationships with strategically important suppliers.The event is an excellent oru or sharing KONE’sstrategy, developing relationships urther, andrecognizing outstanding per ormance. The theme

or the 2011 event – the th o its kind – was SupplyChain Excellence, in accordance with KONE’s Delivery

Chain Excellence develop ent progra .The event was held in Shanghai, China, with morethan 100 people attending. The program includedspeeches rom top management, best-practicesharing, and workshops, with the aim being to identi yconcrete actions and i prove ent opportunities or

urther developing KONE’s supply chain.Direct eedback ro our suppliers is one o the ostimportant outcomes rom the event. The results o theannual supplier survey showed that suppliers valueopenness and airness – values that KONE osters in its

relationships with all o its stakeholders. The Supplier Day is also an excellent opportunity to give direct,

ace-to- ace eedback, and, through collaborativeworking ethods, learn ore about each other andour businesses.



2 9

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |OPERATIONS

The KONE delivery chain incorporates all the actionsand processes that are involved in bringing products

ro the actories to the installation sites. The chainends when the custo er accepts the installation.KONE’s delivery chain consists o eight production sites,seven global distribution centers or elevators, and our distribution centers or spare parts. A total o 3,600(2010: 2,600)* people keep KONE’s supply operations

running, covering new equip ent, odernization, andspares supply. Our delivery chain also incorporates asigni cant nu ber o aterial suppliers and logisticsservice providers.

Following the plan to relocate and expand our production site and R&D center in the Kunshan New &Hi-tech Industrial Develop ent Zone in China, KONEcelebrated the groundbreaking o the new acilitiesin April 2011. When co pleted and operational, the

acility will be KONE’s biggest production site in ter so volu e.

*India was not included in the 2010 gure

Suppliers Distribution siteKONE production site Spare part distribution center Construction site

Ensuring a high quality, e cient, andconsistent delivery chain

Strategic ocusDelivery Chain Excellence is one o KONE’s ve globaldevelop ent progra s, which ai to oster strategyi ple entation. We ocus on i proving internale ectiveness, increasing collaboration with the di erentparties and tea s in the delivery chain, and synchronizingall delivery process phases to ensure accurate deliveries

ro suppliers right through to installation. By i proving

the e ciency o our operations and opti izing processes,KONE ai s to urther decrease its overall carbon ootprintwhile continuing to i prove quality and sa ety.

KONE syste atically builds a culture o continuouslearning and i prove ent. In addition to participating intraining progra s, our e ployees are actively encouragedto take part in the i prove ent o processes, products,

ethods, and the working environ ent by ollowing theKaizen concept o continuous i prove ent.

KONE actively e ploys Lean and Six Sig a tools and

ethods to i prove the productivity and quality o our operations. In the uture, supported by extensive trainingprogra s, i ple entation o these tools and ethods willbe expanded to cover installation operations and suppliers.



3 0


maintaining a solid supplier network

KONE conducts business with al ost 22,000suppliers, o which approxi ately 70 are consideredto be strategic. KONE purchases 80 percent o itsraw aterials, co ponents, and syste s supply or new equip ent production ro approxi ately 100suppliers located close to our production centers.Suppliers include raw aterial providers, contract

anu acturers, and co ponent anu acturers, as well

as subcontractors in the installation phase.

• Ethics

• Environ ent

•

Labor • Health and sa ety

• manage ent syste

KONE’s Supplier Code o Conduct addresses:

KONE’s Supplier Excellence Certi cation Prograassesses our key suppliers’ sites based on criteriasuch as environ ental and quality anage entsyste s, per or ance scorecards, and supplier

audit result. A supplier’s ISO 14001 co plianceis one o the ele ents assessed as part o thecerti cation.

Our key suppliers’ actories are also required toattain Supplier Excellence certi cation. In 2011, 64(2010: 66) supplier actories were certi ed.

All suppliers are required to act in co pliance withthe KONE Supplier Code o Conduct. A breach o the code by a partner ay result in the ter inationo all its contracts with KONE.

Supplier anage ent and collaboration

KONE’s Supplier Code o Conduct is available at:kone.com/suppliers

Supplier risk anage ent We assess risks related to sourcing as part o our risk

anage ent processes. KONE’s risk onitoringsyste is based on a thorough assess ent o suppliers,including analysis o nancial and business viability, aswell as the supplier’s dependence on its business withKONE. As part o our risk itigation activities, we alsowork in close collaboration with our strategic suppliers

to secure raw aterial price levels.



31


The environ ental i pact o KONE’soperations in 2011KONE’s operational environ ental work ocuseson reducing our carbon ootprint and i proving

aterial e ciency, as well as reducing waste, water consu ption, and the use o hazardous substances. We work with our suppliers and custo ers to ini izethe e issions and waste generated by our businessoperations and, whenever possible, to prevent thealtogether. In order to address the areas that have the

ost signi cant environ ental i pacts, KONE hasbeen assessing its carbon ootprint since 2008.

In 2011 the greenhouse gas e issions o KONE’soperations a ounted to 249 (2010: 225) ktCO2e(thousand tonnes o carbon dioxide equivalent). Thereporting scope has been extended as ollows:

• Air reight has been included in logistics reporting(9 ktCO2e)

• Reporting accuracy has been i proved or electricity

and heating• KONE’s headcount has increased and ore branch

o ces in China and North A erica have beenincluded in the reporting scope

In 2011 KONE’s operational carbon ootprint relative tonet sales increased by 0.9 percent co pared to 2010.The operational carbon ootprint o assured scope 1and scope 2 greenhouse gas e issions relative to netsales decreased by 3.3 percent. KONE’s 2011 absoluteoperational carbon ootprint a ounted to 249 ktCO2e.

With 96 k (2010: 77 k) tCO2e in 2011, the ajor source o carbon e issions was KONE’s logisticsoperations. The other ajor co ponents are our service vehicle feet with 89 k (2010: 88 k) tCO2e,electricity consu ption with 32 k (2010: 29 k) tCO2e,

uels or heating/cooling and anu acturing processeswith 13 k (2010: 14 k) tCO2e, and obility, includingbusiness air travel and e ployee co uting, with 19k (2010: 17 k) tCO2e.

Operational carbon footprint, ktCO 2e*

Heatingand waste

Electricity

Vehicle eet

Air travel andemployee commuting

Logistics

100

150

250

200

0

50

2009 2010

225

15

77

17

88

220

71

15

91

29 2914

2011

250231

96

19

89

3214

Air freight 9 ktCO 2e

Absolute operational carbon footprint per category,ktCO

2e

1020304050607080

10090

0 Vehicle

eetHeating fuels

& coolinggases

Electricity Business air travel

Logistics*

11

2009 2010 2011

91

71

13

29

88

77

14

29

89

13

32

5 7 8

* Excluding India

Scope 1: Direct emissions Scope 2:Indirect

emissions 96

Air freight 9 ktCO 2eScope 3: Other relevant

indirect emissions

Relative operational carbon footprint

2010 YoY

-3.9%Service vehicle eet

kgCO 2e/Unit in service 89.1

+2.6%ElectricitykgCO 2e/Headcount 873

+13.0%Business air travelkgCO 2e/Headcount 200

-10.6%Logistics*tCO 2e/Unit 1.42

+0.9%Overall operationskgCO 2e/k€ Revenue

2009

95.0

854

149

1.40

46.3 45.1

2011

85.6

896

226

1.27

45.5

* Excluding air freight and India. Read more on page 32.

Scope 1 and 2 data assured by PricewaterhouseCoopers Oy



3 2


LogisticsThe logistics carbon ootprint relative to units deliveredto custo ers decreased by 10.6 percent. Logisticsincluding air reight account or 96 ktCO2e, or 38 percento KONE’s operational carbon ootprint, aking it thebiggest contributor in ter s o greenhouse gas e issions.

Due to the inclusion o air reight in the reporting

scope, as well as longer road reight distances inEurope and sea reight distances in China, the logisticse issions contribution has increased. KONE was ableto control the increase o logistics e issions by urther opti izing its logistics network. We have also i provedour reporting accuracy in China, and included rail andriver transportation in the e issions calculations.

KONE’s logistics operations are based on accurate andti ely in or ation at all phases o the delivery chain,and on using distribution odels that take eco-e ciencyinto account. Special attention is paid to reducing thei pact o transportation through route and ship entopti ization, as well as care ul analysis o alternativetransportation odels. The i pact o packaging is

anaged, or exa ple, by using environ entally

conscious packaging design and this applies to both our own packaging and that o our suppliers.

We constantly look or ways to ensure cost-e ectiveand environ entally riendly delivery o aterials and

odules to our production and distribution centers, aswell as products and services to our custo ers.



33


KONE vehicle feet Altogether, 35 percent o KONE’s operationalgreenhouse gases are e itted by our global servicevehicle feet, aking it the second biggest contributor in ter s o greenhouse gas e issions. In 2011 thetotal size o our feet re ained at 14,000. Two thirds o the feet are service vehicles (the rest being e ployeebene t cars), e itting 89 k (2010: 88 k) tCO2e. The

absolute service vehicle feet carbon ootprint increasedby 0.7 percent, whereas the relative carbon ootprint(per unit in service) reduction was 3.9 percent.

KONE continuously looks or new and innovative wayso reducing the carbon ootprint o its vehicle feet.

Relative carbon footprint of service vehicle eet,kgCO 2e / UIS

84

86

88

90

92

94

96

80

82

k g

C O

2 e

20102009

95.0

89.1

2011

85.6

-3.9%-6.2%

ElectricityElectricity consu ption accounts or 32 k (2010: 29 k)tCO2e, or 13 percent o KONE’s operational carbon

ootprint. The electricity is used in KONE’s o ces,warehouses, and production acilities.

In total, 7 (2010: 11) percent o the electricity usedin our operations is green electricity produced using

renewable sources.KONE has co itted to speci c energy consu ptionand electricity saving progra s. For exa ple,

KONE’s Finnish country organization is ai ing toreduce the electricity consu ption at its acilitiesby 9 percent by 2016, using 2008 as the base year. In addition, KONE’s Ger an, Swedish, andDanish country organizations, as well as our Italianproduction unit, all use green electricity. Two orecountry organizations have plans to start using greenelectricity in 2012.

Business air travelBusiness air travel accounts or 3 percent o KONE’soperational carbon ootprint. In 2011 air travel related



3 4


greenhouse gas e issions increased by 19 percent to8,000 (2010: 7,000) tCO2e. The relative increase was13 percent.

KONE actively encourages the use o virtual eetingtools – including video con erencing – in order toreduce the need or travel and urther acilitate globalcollaboration. In 2011 virtual eeting ti e again

increased by 10 percent.

Fuels or heating and anu acturingIn 2011 uels or heating or cooling and anu acturingprocesses generated 13 k (2010: 14 k) tCO2e o greenhouse gas e issions. This represents a decrease o 7percent co pared to 2010. The reduction was achievedthrough increased space e ciency and an increased

anage ent ocus on acility-related environ entalissues. There were certain countries that ade signi cantachieve ents in reducing their greenhouse gas e issions.For exa ple, our Italian production unit reduced its

heating energy consu ption by 15 percent, our Finnishproduction unit reduced its heating energy consu ptionby 20 percent by replacing the production site's roo withan energy-e cient solution, and our Chinese productionunit reduced its consu ption o heating and other energy

uels by 20 percent.

material anage ent and waste opti izationIn 2011 KONE used 407 k tonnes o aterials or producing and packaging its elevators and escalators.The gures have been calculated based on the li ecycle i pact assess ent data. The scope o the 2011calculations has been extended to include the KONEmonoSpace® and KONE 3000X miniSpace™ elevatorsas well as the KONE Travelmaster™ 110 escalator.The earlier calculations were based on only the KONEmonoSpace® elevator, which explains the increasein the aterial consu ption gures. The gures or 2011 are not co parable with the 2009 and 2010

gures.

KONE ocuses strongly on aterial anage ent andthe opti ization o our own operations. Our pri arygoal is to reduce waste ro the very early stages o our anu acturing chain, beginning with the product

develop ent stage. KONE also ai s to reduce wastein its anu acturing acilities and o ces throughreduction at the source, reuse and recycling, and bysending waste to incineration.

Waste is always handled in local KONE organizationsaccording to applicable laws and regulations. KONEai s to be as aterial-e cient as possible, and we aito exceed legal require ents.

Only 3 percent o the waste generated by KONE’sglobal delivery chain, which co prises 10 engineeringand production sites, is sent to land ll. The re aining

97 percent is recycled or incinerated.

Although the water consu ption in KONE’s productionand aintenance processes is ini al, we arecontinuing to opti ize and urther ini ize our usageo water. KONE uses unicipal water, and waste water is released into co unity treat ent syste s thatabide by local regulations. The total a ount o water used in our production and our o ce acilities re ainedat 270 k (2010: 270 k) ³.

All o the waste generated by our Finnish, Indian, and North A erican pro-duction sites is recycled or incinerated – none is sent to land ll. In China, only0.5% o the waste ro production is sent to land ll.

97% o waste roproduction sites

recycled or incinerated

3% sent to land ll



3 5


Environ ental data

KONE has over 1,000 acilities globally, includingo ce spaces and installation and service operationhubs. In 2012, KONE will launch a Global FacilitiesPolicy to create a har onized approach to theselection and anage ent o our sites and pre ises.

The pri ary objective o the policy is to i proveoperational eco-e ciency by i proving the useo space, opti izing energy usage o buildingprocesses such as heating and lighting, increasingthe a ount o green electricity used, i proving

aterial e ciency, reducing waste, increasingrecycling, and pre erring eco-e cient service

suppliers.

KONE has also initiated a preli inary study toevaluate the energy e ciency o its nine biggesto ce locations around the world. The results showedthat the sites were rated higher in energy e ciencythan the industry average in each location with oneexception, which is oving to new pre ises in 2012.

In order to attain the title o energy e cient, abuilding ust score 75 or higher out o 100. Eighto the nine KONE locations evaluated in the studyachieved this. The study used the global EnergyStar rating syste , which is a joint progra o theU.S. Environ ental Protection Agency and the U.S.

Depart ent o Energy.

I proving the eco-e ciency o KONE o ces around the world

Scope 1 and 2 data assured by PricewaterhouseCoopers Oy



3 6


DEVELOPmENT PROGRAm

EmPLOyEE ENgagEmENt

Creating a personalconnection to the strategy In order to see the connection between their daily tasks and KONE's global strategy, employeesneed to rst understand what the strategy is allabout. KONE's strategy is brought to li e througha set o concrete actions with clear targets that alle ployees can contribute to in their daily work.The per ormance management process de nes

the way to cascade the strategy through theorganization.

In 2011, KONE's strategy was discussed regularlyas part o various e ployee events and eetingsthroughout the year, and the key messageswere visible through a wide range o channels,including videos, leafets, posters, magazines,and the KONE intranet.For example, KONE China devised andimplemented a program to engage employeesaround the strategy. Local management planned

and ran a roadshow covering 12 locations in10 di erent districts in China. Each event wasbuilt around a co on agenda. A anage entpresentation about KONE's strategy was ollowedby an interactive workshop session whereparticipants were engaged in discussion througha set o exercises. The workshops were success ulin creating concrete connections to the KONEstrategy through a set o actions at regional,branch, tea , and individual levels.

Read more about KONE's strategy on

pages 8–9.



37

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |PEOPLE

Building a great place to work

In 2011, KONE had an average o 35,000 e ployees inore than 50 countries around the world. Our objective

is to provide all our e ployees with air treat ent,equal opportunities, and a sa e working environ ent,as well as to ake KONE a great place to work. Weo er versatile opportunities that support personalgrowth and career develop ent. As a refection o this,a signi cant proportion o our e ployees have long

tenures with KONE.

The objective o KONE's personnel strategy is to supportthe co pany in eeting its business targets. The

ain goals o this strategy are to urther secure theavailability, engage ent, otivation, and continuousdevelop ent o our e ployees. All our activities areguided by ethical principles. E ployees’ rights includethe right to a sa e and healthy working environ ent,personal well-being, and the right to work ree rodiscri ination o any kind.

E ployee Engage ent develop ent prograKONE de ned E ployee Engage ent as one o its venew develop ent progra s at the beginning o 2011.The E ployee Engage ent develop ent prograbuilds on the earlier People Leadership progra ,

ocusing on the urther i prove ent o leadershipcapabilities, on providing growth and develop entopportunities or our e ployees, and on ensuring well-being and sa ety at work.

During 2011, KONE began putting the prograinto action by building an integrated ra ework

or e ployee well-being and by co pleting aeasibility study on fexible working practices as well

as an e ployee bene t audit. The plan also includedredesigning the global leadership develop entprogra s, delivering training on entoring, and takingseveral easures that ai to acilitate job rotation.

I proving leadership capabilitiesThe delivery o learning progra s such as theSupervisor Develop ent Progra or rst-level

anagers and the KONE Leader progra or iddle anage ent continued as planned. In total,

approxi ately 2,500 rst-level and 1,300 iddle

anage ent anagers have been trained duringthe rst round o the progra . A new progra or top anage ent was piloted in preparation or ulli ple entation in 2012. We also continued to develop

Number of employees, Dec. 31, 2011

10,000

20,000

30,000

40,000

0

37,542

2011

33,755

2010

33,988

2009

34,831

2008

our virtual training courses and aterials, and launcheda recruit ent training package globally.

In 2011, KONE put special ocus on entoringand coaching across units and around the world. Approxi ately 350 anaging directors and anagersattended training on entoring and coaching, andthe nu ber o entoring relationships increased

signi cantly.

The develop ent o the online learning anage entsyste continued into the piloting phase ahead o aplanned launch in 2012. This new syste will help usto provide better visibility o , and access to, our trainingo ering or e ployees worldwide on topics such asproduct releases, IT tools, and guidelines.

KONE ai s to have the best possible pro essional ineach position. Our annual leadership and talent reviewprocess ensures that resources are allocated in the

right way to eet current and uture business needs.In this process, we evaluate our anage ent, identi ysuccessors, plan or career develop ent, and identi ypotential candidates or uture anage ent positions.In 2011 we held several workshops to acceleratethe identi cation and develop ent o uture leadersand successor candidates, with approxi ately 1,000e ployees being included in the process.

KONE had 37,542* e ployees at the end o Dece ber 2011 (Dece ber 31, 2010: 33,755). The average nu ber o e ployees in 2011 was 34,769(2010: 33,566).

*Includes GiantKONE e ployees ollowing the consolidation o GiantKONE asa subsidiary as o Dece ber 1, 2011.



3 8

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |PEOPLE

managing per or ance Along with the handling o well-being issues,develop ent and career planning took a ore centralrole in annual per or ance discussions. The online toolused or docu enting the discussions was updated atthe end o 2011 and ade available or anagers ande ployees in January 2012.

Career planning and job rotation is one o the topicsin the annual per or ance discussions. In line withour belie that job rotation is one o the best ways

or e ployees to develop, KONE’s open positions arepublished in our online recruit ent tool or internalcandidates. In 2011 we published ore than 2,200open positions through this tool.

Ensuring well-being and sa ety at workIn 2011 we developed a global ra ework or our e ployee well-being progra s and created ani ple entation plan or 2012. Special ocus will be

placed on work-li e balance, health education, andstress anage ent.

We also created guidelines on global fexible workingpractices and agreed on the pilot units that willi ple ent these guidelines in 2012.

measuring e ployee satis action We conduct an annual survey with our e ployeesto easure their level o satis action with KONE as aworkplace. more than 28,000 e ployees gave their

eedback in the 2011 survey, and the global responserate reached an all-ti e high o 87 percent, up ro 78percent in 2010.

The survey covers areas such as e ployee engage ent,corporate responsibility, strategy and values,leadership, custo er relationships, co unication andinvolve ent, growth and develop ent opportunities,as well as how respondents view their job, per or ancereview, and their anagers. We also ask i people haveseen actions being taken based on the results o theprevious survey.

The e ployee survey easures e ployee engage entand o ers e ployees the opportunity to give their

eedback. It also provides an insight into the level o engage ent with KONE’s core values. The survey resultswere co unicated and discussed in all tea s duringspring and su er 2011, and action plans were thencreated or the key i prove ent areas. These plans were

ollowed up quarterly by the Executive Board.

In 2011 the global results re ained stable. Thehighest scores related to KONE’s approach to sa ety

and e ployees being treated with respect by their anager and being trusted to take the necessaryactions to ensure good custo er service. The greatesti prove ents were seen in the scores or the ollow-upo the previous survey and the co unication o KONE’s values and strategy.

Continuing develop ent o co unicationand collaborationUnderstanding the co pany’s strategy is one o the keyele ents driving e ployee engage ent. During thebeginning o 2011 new develop ent progra s weresuccess ully launched globally at workshops, roadshows,and other events. All e ployees were invited to

Employees by market, Dec. 31, %

Asia-Pacic

Americas

Europe, MiddleEast, Africa (EMEA)0

25

100

50

75

2009

55

17

28

2010

55

15

30

2011

50

14

36100

0

25

50

75

Employees by job category, Dec. 31, %

Administration,IT, R&D

Manufacturing

New equipmentsales & installation

Maintenance andmodernization

2010

99

23

59

2011

99

24

58

2009

25

57

108



3 9


participate, with the objective being to ensure thatevery e ployee knows the key aspects o the KONEstrategy and understands what they ean in practiceon both an individual and tea level.

In 2011, we also launched the KONE Collaboration Workplace develop ent progra . It ai s tocontinue the develop ent o the KONE intranet as a

collaborative workplace. The objective is to build oreco prehensive collaboration, docu ent sharing, andsocial networking capabilities, as well as to i prove theuser experience. The rst phase o i prove ents willbegin during 2012.

All KONE e ployees can stay up to date with the latestnews and events through the global and local intranetsites as well as through internal e ployee agazinesand newsletters, which are published both globally andlocally. In 2011 KONE published three editions o itsglobal e ployee agazine, move, in nine languages.

Since 1993 we have organized an annual EuropeanE ployee Foru that brings together top anage entand e ployee representatives to discuss issues ranging

ro sa ety to custo er ocus. In 2011 the the e wase ployee engage ent, and 21 e ployees ro 15European countries participated. A s aller workinggroup eets two to our ti es a year to ensurecontinuous consultation and co unication oni portant develop ents a ecting KONE e ployees.

We also carried out an e ployer branding reviewin 2011, where we identi ed our e ployer valueproposition and key the es, created an e ployer branding network, and updated the relevant aterialsand guidelines.

Accepting and valuing diversity At KONE, diversity is accepted and highly valued. We are co itted to creating an equal opportunityenviron ent where discri ination o any kind isprohibited. E ployees should be placed in positions thatare best suited to their capabilities and which, at thesa e ti e, allow or personal and pro essional growth.

Our e ployee survey's globalresponse rate reached an all-ti e high o 87 percent.

In 2011 KONE’s International Trainee Prograo ered students and graduates the opportunityto work on interesting projects in di erent KONEunits around the world. KONE also o ered varioussu er traineeships and thesis opportunities inseveral countries.

KONE’s International Trainee Progra



4 0


Our objective is to provideall our e ployees with air treat ent, equal opportunities,and a sa e working environ ent,as well as to ake KONE a greatplace to work.



41


Co itted to ethical business practices

KONE has ore than 1,000 o ces in over 50 countriesaround the world. Our global presence akes it crucialto ensure that clear rules and guidance or ethicalbusiness practices are in place and easily accessible toall our e ployees.

KONE’s global Code o Conduct clearly sets out our position on ethical business practices. With respect to

co petition law atters, the Code o Conduct’s zerotolerance policy is supple ented by a ore detailedCo petition Co pliance Policy.

KONE’s Code o ConductKONE’s Code o Conduct addresses atters regardingco pliance with the laws and rules o society, thework environ ent, product and service arketing,

air co petition, as well as the environ ent andsustainability. It sets out the standard o behavior thatis expected o KONE e ployees and KONE co panies,and gives clear guidance and rules regarding the kind

o behavior that is not tolerated. All our e ployees areexpected to a iliarize the selves with the code andunderstand it, and to report any violations o the codeto the Corporate Co pliance O cer or to the global,or relevant local, legal unction.



42


Co petition Co pliance PolicyThe principles o air co petition presented in theCode o Conduct are expanded urther in KONE’sCo petition Co pliance Policy. The policy outlinesour una biguous position against anti-co petitivepractices. It sets out the rules and principles that allKONE e ployees ust ollow in order to ensure thatthe co pany co plies ully with co petition laws.

Two online training progra sIn 2011 KONE launched a ollow-up training round

or its online training progra s and introduced a newcentralized process or inviting new e ployees toparticipate in the training.

• Online training progra s delivered in 24languages co ple ent classroo trainingprovided to e ployees in their respectivebusiness units

• Policy docu ents available in 25 languages toall e ployees

Training and in or ation Participants in the Code o Conduct online trainingprogra include all KONE e ployees with personalKONE e- ail accounts; participants or the Co petitionCo pliance Policy progra are deter ined globallyand selected on the basis o their role and position.These participants include the e bers o KONE’sexecutive board, local anage ent personnel, salesand sales support tea s, as well as other e ployeeswho have access to con dential in or ation. Wherethey eel it is necessary, individual business units canno inate additional participants.

En orcing the codes and policies A dedicated corporate co pliance o cer providese ployees with any support they ay require inrelation to co plying with KONE’s Code o Conduct.E ployees can contact the co pliance o cer through

ultiple channels, and have the right to ake contactin their native language.

Supplier Code o ConductKONE’s Supplier Code o Conduct sets out the ethicalbusiness practice require ents that we expect our

suppliers to adhere to. The Supplier Code o Conduct isexplained in ore detail on page 30 o this report.



43

KONE 2011 CORPOR ATE RESPONSIBIL ITY REPORT |REPORTING

Our reporting scopeKONE has chosen to report using the Global ReportingInitiative (GRI) guidelines in order to acilitate easier co parison o our per or ance with other co paniesand to strea line our own corporate responsibilityreporting e orts. KONE has published a CorporateResponsibility Report annually since 2008. The previousreport was published in June 2011. The reports ollow GRI(G3) reporting guidelines as ar as they are applicable.

The report or 2011 covers econo ic, social, andenviron ental responsibility. A table detailing how

this report co plies with the GRI guidelines is shownon pages 46–47. We have sel -declared our reportingto be Application Level B+ o the GRI G3 Guidelines.PricewaterhouseCoopers Oy has checked our reporting andhas con r ed it to be Application Level B+. The reportingperiod corresponds with the calendar year and withKONE’s nancial year o January 1–Dece ber 31, 2011.

When developing the report content and choosingindicators, the driver has been the ateriality to KONE’soperations. The ateriality analysis was per or ed by atea representing di erent organizational units within

KONE. The purpose o this analysis was to identi yand prioritize the key aspects o KONE’s corporateresponsibility. These aterial topics are described onpages 4–5. KONE’s approach to corporate responsibilityhas also been described in the CEO's and Chair an o the Board's reviews on pages 6–7, and in Strategy onpages 8–9. All ajor local and regional organizationsand all production units are included in the reportingscope.

All nancial data and a signi cant proportion o thee ployee-related data has been collected throughKONE’s enterprise resource anage ent and nancialreporting syste s. All nancial gures presented in thisreport are based on KONE Corporation’s consolidatedand audited nancial state ents or 2010 and2011. On Dece ber 1, 2011, KONE co pleted theacquisition o a urther 40 percent stake in GiantKONEand beca e the ajority shareholder o the co panywith a shareholding o 80 percent.

The personnel data is provided by our HR organizationand – with the exception o the data relating to personnelby country, length o service, and gender distribution in

anage ent – covers the entire KONE Group.

The environ ental data was collected ro KONE’s10 production units worldwide and ro 29 ajor country organizations with sales, installation, and service

operations in Asia, Europe, and North A erica. Thecollected environ ental data covers 81 percent (2010:77) o KONE’s e ployees, excluding GiantKONE in China.The data collected ro the reporting organizations wasthen extrapolated or the entire KONE organization. Thegoal is to gradually extend our environ ental reportingto cover all o KONE. Data on business air travel wascollected ro 27 countries and data on the servicevehicle feet uel consu ption ro 21 countries. Datarelated to product and spare parts logistics was collectedcentrally by the corporate organization.

In 2011 KONE deployed a new environ entalper or ance so tware syste . The environ ental datawas collected ro branch o ces using a custo izeddata collection spreadsheet consolidated on the countrylevel. The country-level data was entered into the newsyste . The data was then urther consolidated globallyin a co bined e ort with KONE’s global carbon ootprintassess ent. The environ ental per or ance has beenreported in accordance with the Greenhouse Gas Protocoland ISO 14064 guidelines. KONE’s environ ental data

or scope 1 and scope 2 GHG e issions has been assured

by PricewaterhouseCoopers Oy.I proved data collection ethodology has resulted ini proved accuracy in the gures or 2011. This has alsohad an i pact on the gures or 2010 and 2009.

We ai to continuously i prove our data collection andveri cation procedures in order to provide as accuratea representation as possible o our current progressrelating to corporate responsibility.

We welco e any eedback on this report or our overallcorporate responsibility per or ance. I you have anyco ents or suggestions, please contact corporateco unications at corporate.co [email protected] .

In 2011, KONE eatured along with 25 other co panies in the Carbon Disclosure Project’s(CDP) Nordic Carbon Disclosure Leadership Index,scoring 83 points out o a possible 100 (2010: 61).The Carbon Disclosure Leadership Index highlightsthe co panies listed on the Nordic OmX thathave displayed the ost pro essional approach to

corporate governance practices regarding cli atechange in or ation disclosure. The CDP is aglobal, non-pro t cli ate change reporting systerepresenting so e 650 institutional investors.

Carbon disclosure takes a huge leap orward



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |REPORTING

Independent assurance reporton CO2 e issions

To the anage ent o KONE Oyj We have been engaged by the manage ent o KONECorporation’s (later “KONE”) to per or a li itedassurance engage ent on the Scope 1 and Scope 2CO2 e issions (the “subject atter”) or the period 1.1.– 31.12.2011.

manage ent’s responsibilityThe manage ent o KONE is responsible or producingthe Scope 1 and Scope 2 CO2 calculation accordingto the Reporting Criteria as set out in Greenhouse GasProtocol and in KONE’s reporting principles.

Practitioner’s responsibilityIt is our responsibility to present an independentconclusion on the Subject matter in or ation basedon our li ited assurance engage ent. We do notaccept, nor assu e responsibility to anyone else,except to KONE or our work, or this report, or or theconclusions that we have reached.

We have conducted the assurance engage entin accordance with the International Standard on Assurance Engage ents (ISAE) 3000 “Assuranceengage ents other than audits or reviewso historical nancial in or ation”. The ISAE3000-standard requires co pliance with ethicalprinciples as well as planning and per or ing theassurance engage ent to obtain li ited assurance onwhether any atters have co e to our attention thatwould cause us to believe that the Subject matter in or ation will not give a balanced and appropriateview, in all aterial respects, on KONE’s Scope 1and Scope 2 CO2 e issions in accordance with theReporting criteria.

In a li ited assurance engage ent the evidencegathering procedures are ore li ited than in areasonable assurance engage ent, and there ore lessassurance is obtained than in a reasonable assuranceengage ent. The procedures selected depend onthe practitioner’s judg ent, including an assess ento the risks o aterial isstate ent o the carbon

ootprint in or ation according to the ReportingCriteria. We have planned and per or ed our

assurance engage ent in a way that we have obtainedappropriate a ount o evidence to support our conclusions. Our work consisted o , a ongst others,the ollowing evidence gathering procedures:

• Conducting interviews with personnel responsible or Scope 1 and Scope 2 CO2 e issions calculation anddata collection and reporting;

• Testing the data co pleteness, co parability andaccuracy on sa ple basis;

• Testing the data consolidation on sa ple basis;• Inspecting the calculations and• Assessing the certainty o calculation actors and

assu ptions. ConclusionBased on the work described in this report nothing hasco e to our attention that would cause us to believethat the Subject matter in or ation will not give abalanced and appropriate view, in all aterial respects,on KONE’s Scope 1 and Scope 2 CO2 e issions inaccordance with the Reporting criteria.

Our assurance report should be read in conjunctionwith the inherent li itations o accuracy and

co pleteness or carbon dioxide e issions evaluation.This independent assurance report should not beused on its own as a basis or interpreting KONE’senviron ental per or ance.

Helsinki, April 26, 2012PricewaterhouseCoopers Oy

Sirpa Juutinen, Partner Sustainability & Cli ate Change



4 5


GlossaryBREEAmBuilding Research Establish ent Environ ental Assess ent method – a widely used assess ent ethoddeveloped by BRE Global to describe a building’senviron ental per or ance.

CDP (Carbon Disclosure Project) A global not- or-pro t cli ate change reporting systerepresenting so e 650 institutional investors.

Eco-e ciencyThe concept o creating goods and services while using

ewer resources and creating less waste and pollution.

EI99 (Eco-Indicator 99 ethod) A Li e Cycle I pact Assess ent (LCIA) ethod thatalso or s the basis or the calculation o eco-indicator scores or aterials and processes. The ethodology ishighly co patible with ISO 14042 require ents.

GHG (Greenhouse gas)The gaseous constituents o the at osphere that causethe greenhouse e ect. Water vapor (H2O), carbondioxide (CO2), nitrous oxide (N2O), ethane (CH4), andozone (O3) are the pri ary greenhouse gases in theEarth’s at osphere. There are also a nu ber o entirely

an- ade greenhouse gases.

GHG Protocol (Greenhouse gas protocol)The ost widely used international accounting tool

or govern ent and business leaders to understand,quanti y, and anage greenhouse gas e issions.

Green markThe Building and Construction Authority’s Greenmark Sche e is an initiative which ai s to pro oteenviron ental awareness in the construction and realestate sectors in Singapore.

Green Star A national, voluntary environ ental rating syste regulatedby the Green Building Council o Australia that evaluatesthe environ ental design and construction o buildings.

GRI (Global Reporting Initiative)The GRI guidelines are widely used or the reporting o econo ic, environ ental, and social per or ance.

IIFR (Industrial Injury Frequency Rate) A easure o occupational sa ety. IIFR is the nu ber o lost-ti e injuries that result in an absence ro work o

ore than one work day or shi t per illion hours worked.

ISO 14001 A global standard or corporate environ ental

anage ent syste s developed by the InternationalOrganization or Standardization.

ISO 9001 A global standard or organizations’ quality

anage ent syste s developed by the InternationalOrganization or Standardization.

LCIA (Li e Cycle I pact Assess ent)The investigation and quanti ying o the environ entali pact caused or necessitated by a given product or service.

Lean A set o ethods and tools used to identi y andeli inate waste.

LEED (Leadership in Energy andEnviron ental Design)LEED is an internationally recognized green buildingcerti cation syste developed by the US Green BuildingCouncil.

Net zero energy building A carbon-neutral building which produces as uchenergy as it uses over the course o a year. Net zeroenergy buildings can be independent o the energy gridsupply. Energy can be produced on-site, usually usingtechnologies such as solar, wind, and geother al.

REACH A European Co unity Regulation (EC 1907/2006) onche icals and their sa e use. It deals with the Registration,Evaluation, Authorization and restriction o Che icals.

RoHSThe Restriction o the Use o Certain HazardousSubstances in Electrical and Electronic Equip entDirective (2002/95/EC). This directive restricts the useo six hazardous aterials in the anu acture o varioustypes o electronic and electrical equip ent.

tCO2eTonne (1,000 kg) o carbon dioxide equivalent.Quantities o greenhouse gas e issions, expressed intonnes and reported to the equivalent global war ingpotential o carbon dioxide over 100 years.

UIS (Units in Service)Elevators, escalators, and auto atic building doorsunder KONE service contracts.

VOCs (Volatile Organic Co pounds)Organic che ical co pounds which have signi cantvapor pressures and can a ect both the environ entand hu an health. They include a range o di erentche icals, so e o which ay have both short-terand long-ter health e ects.

This publication is or general in or ational purposes only and we reserve the right at any ti e to alter the product design and speci cations. No state entcontained in this publication shall be construed as a warranty or condition, expressed or i plied, as to any product, its tness or any particular purpose, er-chantability, quality or shall be interpreted as a ter or condition o any purchase agree ent or the products or services contained in this publication. minor di erences between printed and actual colors ay exist. KONE®, Dedicated to People Flow®, KONE monoSpace®, KONE miniSpace® KONE EcoDisc®, KONEmaxiSpace™, KONE InnoTrack®, KONE Ecomaster® are trade arks or registered trade arks o KONE Corporation. Copyright © 2012 KONE Corporation.



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KONE 2011 CORPOR ATE RESPONSIBIL ITY REPOR T |REPORTING

GRI index



47


Co p son glob l repo n in ve el nes

GRI Content Included Page Co entsm ke p esence

EC6* Policy, practices, and spending on local suppliers Partly 30in ec econo c p c s

EC8*Develop ent and i pact o in rastructure invest ents provided or publicbene t Partly 6

Env on en l pe o nce n c o s

m n e en pp o c o env on en l espons b l Yes4, 9-10, 18-23,30-33, 35,41-42, 44

m e ls EN1* materials used by weight or volu e Yes 22

Ene

EN3* Direct energy consu ption Yes 34-35 Heating uel and natural gas reportedin ³.

EN4* Indirect energy consu ption Yes 33, 35EN5 Energy saved due to conservation and e ciency i prove ents Yes 33-34

EN6 Initiatives to provide energy-e cient or renewable energy based products andservices Yes 10, 18-21, 23

EN7 Initiatives to reduce indirect energy consu ption and reductions achieved Partly 34 Reductions achieved not reported.w e

EN8* Total water withdrawal by source Yes 34-35E ss ons, e f en s, n s e

EN16* Total direct and indirect greenhouse gas e issions Yes 35, 44EN17* Other relevant indirect greenhouse gas e issions Yes 35EN18 Initiatives to reduce greenhouse gas e issions Yes 32-34EN21* Total water discharge by quality and destination Yes 34EN22* Total a ount o waste by type and disposal ethod Yes 34-35

P o c s n se v cesEN26* m n env on en l p c s o p o c s n se v ces yes 10, 18-21, 23

t nspoEN29 Env on en l p c s o nspo on yes 31-34

Soc l pe o nce n c o sL bo p c ces n ecen o k m n e en pp o c o l bo p c ces n ecen o k Yes 25-26, 37-38E plo en

La1* Total work orce by e ploy ent type, e ploy ent contract and region Partly 37-38, 40 Not reported by e ploy ent type or e ploy ent contract.L bo /m n e en el ons

LA5* mini u notice period regarding operational changes Yes According to local legislation.Occ p on l e l n s e

La7* Rates o injury, occupational diseases, lost days, atalities and absenteeis Partly 25 Injury rate reported.La8* Education and prevention progra es regarding serious diseases Partly 38

t n n n e c onLa11 Progra es or skills anage ent and li elong learning Yes 37

d ve s n eq l oppo nLa13* Co position o governance bodies and breakdown o e ployees Partly 40 Breakdown by gender reported.

h n sm n e en pp o c o n s Yes 30, 37, 39, 41-42inves en n p oc e en p c ces

hr2* Suppliers and contractors that have undergone hu an rights screening andactions taken Partly 30 Percentage not reported.

hr3E ployee training on policies and procedures concerning hu an rights relevantto operations Partly 41-42

Description o Code o Conduct andtraining. Training hours or percentage o e ployees not reported.

C l l bo

hr6* Operations identi ed as having signi cant risk or child labor and easures takento contribute to the eli ination o child labor Yes

No risks related to the use o child labour have been identi ed in KONE's ownoperations.

Fo ce n co p lso l bo

hr7* Operations identi ed as having signi cant risk or orced or co pulsory labor andeasures taken to contribute to the eli ination o orced or co pulsory labor Yes

No risks related to the use o orced or co pulsory labour have been identi ed inKONE's own operations.

Soc em n e en pp o c o soc e Yes 3, 8-9, 41-42,P bl c pol c

SO7 Legal actions or anti-co petitive behaviour, anti-trust, and onopoly Yes FS 4Co pl nce

SO8* Signi cant nes and sanctions or non-co pliance with laws and regulations Yes No signi cant nes or sanctions duringthe reporting period.

P o c espons b lm n e en pp o c o p o c espons b l Yes 24-27, 41-42C s o e e l n s e

PR1* Assess ent o health and sa ety i pacts o products Yes 24-27* GRI Core indicator



KONE Corporation Finland

KONE Oyj

Keilasatama 3

P.O. Box 7

Espoo, 02150

Finland

Tel.: +358 (0)204 75 1

Fax.: +358 (0)204 75 4496

Business Identity Code: 1927400-1

KONE Corporation

www.kone.com

[email protected]

PublicationLiisa KiveläDirector External Communications

Economic performanceKarla LindahlDirector, Investor Relations

Environmental performanceHanna UusitaloEnvironmental Director

Personnel and social performanceKerttu TuomasExecutive Vice PresidentHuman Resources

Read more about KONE’s operations in these publications

KONE 2011Financial Statements

1:44P.M.HYATTCENTER,CHICAGO,USA

KeepingtheHyattCenter andotherChicagoskyscrapers functioningef ciently24/7.KONEsolutionsoptimizePeopleFlow®for businesscentersinChicagoandaroundtheworld,whethermarketsareopenorclosed.

2011

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1_ E_i rief_ _E .i 1 . . 1 1 .

kone corporate responsibility report 2011

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