Executive summary
COMPLIANCE & ETHICS IN FOCUS

Nammo’s number one social responsibility is reflected in the company’s core business: to develop and manufacture high-quality defense products that support and protect our national and allied armed forces.

2017 has been an eventful year with strong growth, the acquisition of four new companies, a unique agreement with the US government and a stronger position in our core markets.

Corporate social responsibility is part of our everyday operations, and is essential for our success as a company. We embrace our values, and let them drive our performance within corporate social responsibility. We promote sustainable development through business operations that strongly emphasize our environmental, ethical and social considerations. We are committed to ensuring that human and labor rights are followed in all our entities and areas where we operate.

Nammo follows the Global Reporting Initiative (GRI) Standard: Core option, for sustainable reporting.

Ethics

We have a zero-tolerance policy for corruption and bribery. Consequently, Nammo has maintained its strong focus on training employees within ethics and anti-corruption throughout 2017. All our employees and any third parties acting on our behalf must comply with our ethical code of conduct, and follow our reporting guidelines, which include options for whistleblowing.

At Nammo, we believe that the best way to ensure that our employees understand and “live” the Group’s high level of ethical standards is through continuous communication and training. In 2017, we have conducted courses in both dilemma and red flag training through presentations and workshops at several legal entities and management groups.

The companies acquired in 2017 have all completed our 100-day introduction program, which includes an introduction to the Nammo culture and our ethical code of conduct, including training with interactive workshops. These activities are part of our general risk reduction when acquiring new companies.

Our Proactive Fraud and Anti-Corruption training program started in 2015 and has continued in 2017. This comprises tailor-made training for management and key personnel at a legal entity, with the objective to reinforce the importance of raising awareness of the effects and costs of fraud and corruption. It also demonstrates how corporate HR and compliance can drive an active anti-fraud and anti-corruption culture across Nammo.

Nammo has not been subjected to any investigations, fines or sanctions in 2017 relating to ethical breach of laws and/or regulations.

Compliance

The defense and aerospace industry is highly regulated by the national authorities in the countries where it operates. In addition to national regulations, the industry must also comply with a wide range of requirements within quality, supply chain, security and military standards, as well as others introduced by industrial or governmental customers. For the company to be compliant with these requirements, all employees must follow the established routines, systems and standards.

The main purpose of the compliance function in Nammo is to assess risk across the business, develop training and internal communications strategies, evaluate data and conduct critical investigations in close cooperation with legal counsel when necessary. Other assignments include internal review of legal entities and risk monitoring, as well as working on influencing organizational culture and behavior and clearly communicating the vision, mission and strategy of the ethics and compliance program.

Compliance is of utmost importance to Nammo. All our entities must be in compliance with national laws and regulations if they are to be allowed to operate, and thereby fulfill their business purpose. Our focus on compliance is now increasing even further, as external requirements continue to grow. To successfully address this challenge, we continue to improve our skills by taking advantage of ongoing education opportunities, with Nammo compliance professionals attending training programs both in the US and in Europe.

Compliance also provides a competitive advantage; if we are not compliant, we risk our reputation and make ourselves vulnerable to severe economic consequences. As such, ensuring compliance in all areas is one of our highest priorities.

People

Our people are our most important resource. Nammo has designed a personnel policy to ensure equal opportunities and rights and to prevent discrimination on the grounds of gender, ethnicity, national origin, language, religion, philosophy of life and/or age. This applies in particular to recruitment, career development, equal pay for equal work and working conditions.

Diversity

The share of women among our employees remains stable at around 25 percent, though it was slightly reduced by our recent acquisitions. Encouraging female university graduates and women with other relevant backgrounds to join Nammo continues to be important, and we strive to motivate women to apply for management positions. We are working actively through training and recruitment programs to address this challenge.

Health, safety and security

Nammo operates in the explosives industry and handles energetic materials. Conditions relating to health, environment, safety and security (HESS) must always have high priority for Nammo’s employees, and these conditions are a fixed item on the agenda of all management meetings. The Group’s policy is evaluated annually. All accidents or near-accidents involving employees are reported and preventive actions taken accordingly.

Seventeen HESS audits were conducted at the different sites in 2017. This is an annual procedure performed by the HESS Director in the Nammo Group. All sites individually set their own annual HESS targets and implement an improvement plan.

Newly acquired companies have been prioritized for regular audits to make sure that the HESS level conforms to Nammo’s high standards. Every year, one specific focus area is selected for the HESS audits. In 2017, this was risk analysis connected with operational activities. In general, Nammo maintains a very high HESS standard, and with a few exceptions the findings in the audits were all minor.

Working environment

Sick leave among Nammo’s employees averaged at 4.6percent in 2017. This is an increase from 2016, and indicates a need for increased attention on the implementation of preventive actions. A higher variation of activities is also required, such as workplace improvements, as well as measures to secure a good and healthy working environment, protective equipment and physical training. This is now a focus area for management.

There were 36 lost time injuries (LTI)that resulted in employees being absent from work at Nammo in 2017. This included two LTI involving explosives. This is not an acceptable result and needs more attention to achieve improvements. The majority of LTI accidents are caused by slipping and falling, or small finger injuries with fewer than five days off work.

Reporting of incidents, accidents and dangerous conditions increased in 2017 and exceeded the target for the year. There has been a positive increase in reporting of dangerous conditions, near misses and accidents in 2017. The Group will continue its preventive work in all areas and will maintain a high focus on safe working conditions for all employees.

ICT-security

We experience regular attempts to infect our computers with malicious software. The target of such attempts is either to enable adversaries to steal technical data or fraud, sabotage and extortion. Faced with such an increase in threats, we continuously strive to improve technical security, limit the attack surface and raise awareness levels among employees. This has been done by mandatory and continuous e-learning throughout the year for all employees having access to computers.

Environment

Nammo has a direct impact on the environment through its production and testing of ordnance products and services, consumption of paper and energy, waste management, procurement and use of transport. All main Nammo sites are certified in accordance with ISO 14001, or they are operated in compliance with similar environmental standards.

Preventive actions and environmental standards are on the agenda during every audit. The HESS directive requires all sites to update improvement plans and report any nonconformities. All European Nammo sites must comply with the REACH regulations. This means that they must all adhere to their requirements, and prepare to change any chemicals that are to be phased out. In parallel with this effort, we continuously search for more environmentally friendly solutions in our daily operations.

Risk analysis

Risk analyses on the environmental side are carried out at all sites, and analyses have not uncovered any high risk of severe environmental accidents within Nammo. The sites manage potential risk by preventive work. There is no major concern that climate change will affect our activities at the different locations.

We continuously work to standardize our risk management system, carrying out internal training in conjunction with emergency plans.

Emissions

We follow up and measure waste emissions to water and the atmosphere, reduce noise levels and handle other environmental factors in accordance with existing regulations and internal instructions.

We have some environmental challenges in following up historically polluted areas at two sites. This is considered to be under control, and is being followed up through internal plans for improvements and in close cooperation with national authorities.

Energy

Energy efficiency measures provide economic and environmental benefits. As such, reducing energy consumption and energy conservation measures are a high priority at all sites. By using alternative energy sources, Nammo has already made significant cost savings.

Society

Nammo has a strong ambition to be a positive contributor to the development of the local communities where the sites are located.

Our stakeholders 

We initiate dialogue with our stakeholders, including the political community, political youth organizations, non-governmental organizations (NGOs), local community and defense administrations in the countries where we operate.

Nammo has always been open for dialogue with NGOs, and we welcome any NGO that wants to visit our company and learn more about the industry and the business.

We intend to contribute to the development of local communities in which we operate, such as science projects for young people, local charitable initiatives and various sporting activities. Our goal is to increase the Nammo Group’s visibility, and to demonstrate our values and priorities through support of organizations that reflect these values.

One stakeholder that is of growing importance to Nammo is the international defense trade press. We believe that a vibrant and active trade press is essential to the continued health of our industry, and therefore spend considerable time and resources on maintaining good relations with them. We also wish to reward young talent looking to make a career in trade journalism, and consequently in 2017 sponsored an award for the best young aerospace journalist, which was awarded during a formal ceremony in Paris in June 2017. During 2018, we are planning to expand this activity further, by sponsoring two awards for young trade press journalists.

Our employees are excellent Nammo ambassadors in the local community and with other stakeholders, for instance when presenting the company to students at local and national universities and engineering schools. During 2017, we initiated several projects aimed at strengthening the insight and understanding of our employees into the company’s activities and policies, in order to enable them to do so more effectively.

Another important task is to increase the knowledge and understanding of Nammo and the defense industry in society more generally. Going forward, Nammo will increase its focus on developing and distributing content and materials that provide a wider audience with accessible and relevant insights into our company and the industry in general.

Local and national sponsorship

We have continued our sponsorship of the two national sports teams in Norway: one within the women’s national biathlon team, and the other as main sponsor of the women’s national ski jumping team, including a technology program with the Norwegian ski association. Our sponsorship commitments illustrate our desire to build a strong company culture and promote the internal focus on empowering women in the company.