Corporate Responsibility

As a leading provider of telecommunication services, TeliaSonera is a vital part of the social and economic infrastructure in the markets where we operate. Our communication services drive growth, competitiveness and the transition to a knowledge-based society. Our services help people and companies communicate in a simple, effective and environmentally friendly way.

TeliaSonera is committed to managing business operations in a responsible and ethical manner, with the aim of capturing business opportunities and managing risks.

Key issues

We have identified the following four areas to be the most material in maintaining the trust of our stakeholders and ensuring the success of our business:

• Helping to bridge the digital divide – the unequal access to information and communication technology
• Meeting the demand for communication services that contribute to sustainability
• Becoming a world-class service company
• Maintaining high ethical standards as we expand our operations in emerging markets

Bridging the digital divide

TeliaSonera believes that access to information and communication technology, or ICT – regardless of income, age, gender or geography – is a great enabler of economic and social development as well as improved chances in life for the individual. We contribute to bridging the digital divide in a number of ways; by increasing coverage, providing services that are easy to use and investing in emerging markets. Our services reach people in 20 markets, including associated companies. In 2008, the total number of subscriptions reached 135 million of which 109 million in Eurasia, including majority- and minority-owned operations. Through our presence in emerging markets, we contribute to improve access to ICT in these countries.

Sustainable communication services

The growing concerns about climate change are driving demand for solutions that contribute to sustainability. We help to reduce climate impact by providing new means of communication. Services for telephone, internet or video meetings can substantially cut the need to travel, while other services can contribute to sustainability by optimizing traffic flows, electricity consumption and logistics.

World-class service company

Our success is based on providing world-class services and high-quality networks, two of our six focus areas. We continue to invest in upgrading our networks and strengthen our supervision and back-up systems. In 2008, we introduced the widely respected Six Sigma methodology to ensure high quality and continuous improvement in our business processes. We also recognize that without the right leadership and employee focus on our customers, we cannot expect to retain the confidence that we have earned.

High ethical standards in all markets

TeliaSonera's Code of Ethics, combined with a solid internal control environment, holds top managers personally responsible for following the key policies and procedures. The Eurasian markets represent an excellent opportunity for growth, but there are also challenges and risks related to the region. To further strengthen the control environment we regularly rotate managers.

Corporate responsibility management framework

The starting point for TeliaSonera's approach to corporate responsibility is the commitment to the highest standards of conduct by every employee. Their commitment to preserve our reputation and enhance the customer experience is found in our vision of Simplicity, our Shared Values and our Code of Ethics.

At TeliaSonera, we believe that corporate responsibility must be integrated in the day-to-day business if it is to be effective and credible. Our approach is to strive for continuous improvement, step by step.

During 2008 we initiated a review of our CR policies and processes in order to implement an integrated framework for all majority-owned companies and to integrate and align the CR work with TeliaSonera's overall business objectives. This work continues in 2009.

Fair Business

At TeliaSonera, we have a long history of achieving success through honest and fair business practices. Common standards of behavior have been defined in the Code of Ethics that applies to all employees in majority-owned operations as well as contractors, suppliers and service providers. A specific Code of Ethics and Conduct for the Eurasian operations focuses on particular challenges found in these markets.

Major elements of these Codes include:

• Ethical business practices, including zero tolerance of corruption. Employees are to refrain from doing anything that could compromise their ability to perform their role objectively and professionally.
• Winning by better products and better performance. TeliaSonera will not seek competitive advantages through illegal or unethical business practices.
• Blowing the whistle. Employees are expected to report anything they witness that does not appear to comply with the Codes or other internal policies, and without fear of adverse consequences.
• Acting with respect and valuing integrity, thus ensuring equal opportunities for our employees regardless of race, gender, ethnicity, religion, political conviction and sexual preferences.

TeliaSonera requires high corporate responsibility standards by our suppliers. In 2008 we launched group-wide supply chain standards regarding environmental, social and ethical issues, including human rights. The requirements will be used both as a tool for selecting suppliers and as a basis for active engagement with them to promote good corporate responsibility management practices. We expect our suppliers to demonstrate continuous improvement.

Customer experience

With the ambition to improve customer experience we introduced the business management approach Six Sigma during 2008. Six Sigma is a methodology that seeks to identify and remove causes of defects and errors in processes.

The first Six Sigma projects have been successfully completed.

• Mobility Services Sweden Customer Care: Increased service capacity by optimizing time usage.
• Mobility Services Sweden Product & Production: Reduced variation for mobile call defect ratio by optimizing certain selected cells (400 out of 20,000) in the radio network. Estimated benefit: more consistent customer experience to mobile calls, with a 50 percent reduction in variation.

Customer protection

We strive to protect our customers from illegal or abusive use of our networks, such as distribution of child pornography. We provide technology and information to help our customers protect themselves from e-bullying and unwanted content. Initiatives include:

• Supporting and committing to the European Framework for Safer Mobile Use by Younger Teenagers and Children. The guidelines cover access control mechanisms and promotion of customer awareness.
• Collaboration with Ecpat – a global network working together for the elimination of child prostitution and child pornography.
• Partnership with the World Childhood Foundations in projects to prevent e-bullying.
• Our wholesale carrier, TeliaSonera International Carrier, offers a free-of-charge service for preventing the access to internet sites with sexually abusive content.

Customer satisfaction

To measure and benchmark our performance from the customer perspective, we participate in the European Performance Satisfaction Index (EPSI). According to the EPSI results 2008, customer satisfaction improved in most our Nordic and Baltic businesses in 2008. On the whole, mobile customers were more satisfied than broadband customers. The best results were achieved by Omnitel in Lithuania nearly reaching the “excellent” index score with a result of 79.3.

Improved customer satisfaction, EPSI 2008

The EPSI method is a well established method for measuring
customer satisfaction and loyalty. Research is public and from a reliable source with statistically verified data. EPSI-rating is based on international research insight from studies in many industries during the past 15 years, with varieties between markets.

Freedom of expression and privacy

Access to communication technology promotes freedom of expression and encourages openness in otherwise closed societies. But technological advances also mean that people's personal data is processed and stored more frequently than ever before. These changes create significant freedom of expression, privacy and data protection challenges.

TeliaSonera complies with the data protection laws that govern our markets and takes all reasonable care to prevent unauthorized access to personal data.

During 2008 The Global Network Initiative – a multi stakeholder forum that TeliaSonera participated in initially – introduced Principles on Protecting and Advancing Freedom of Expression and Privacy in Information and Communications Technologies. The Principles were signed by the US internet companies. TeliaSonera and other telecom operators did not sign the principles, but will continue to work with these issues individually and through industry organizations.

Environmental Performance

The direct environmental impact of TeliaSonera's operations is limited in relation to the economic value of our services. More importantly, by replacing the need to travel, TeliaSonera's services help our customers reduce their environmental impact, including greenhouse gas emissions.

Increased energy efficiency and reduced CO₂ emissions

In our internal operations we strive to minimize our impact on the environment by continuously improving our resource efficiency. Reducing carbon dioxide emissions is a priority and we are achieving this by a transition to eco-labeled electricity, where possible, to cut the emission of our energy consumption. For example in Sweden and Finland, 100 percent of our energy consumption is eco-labeled.

CO₂ emissions by source 2008

Sweden, Finland, Norway, Denmark, Lithuania

In order to limit fossil energy consumption, TeliaSonera has piloted the introduction of fuel cell technology to produce backup power for base stations in Sweden. In 2008, the number of pilot fuel cell powered base stations was increased from four to six.

In 2008, the total carbon dioxide emissions from wholly-owned operations, in relation to the number of subscriptions in those operations, fell by 11 percent. The main part of this decline can be attributed to an increased use of renewable energy sources and improved energy efficiency.

Reduced travel

Within TeliaSonera we aim to take a lead in using tele meetings as a replacement for physical meetings, thus reducing the need to travel. For example in 2008, by replacing physical traveling with the virtual meeting service TelePresence in Sweden and Finland, TeliaSonera achieved time savings equaling 40 months of full time work of one employee, SEK 5.8 million in traveling costs and some 170 tons in carbon dioxide emissions.

TeliaSonera CO₂ emissions 2006–2008

Sweden, Finland, Norway, Denmark, Lithuania

Transparency in climate reporting

TeliaSonera has strived to be a pioneer in climate reporting. In 2008, this ambition was acknowledged by the Carbon Disclosure Project when it recognized TeliaSonera as the leading Swedish large-cap company for climate reporting. See www.cdproject.net for additional information.

Environmental and quality management system

In Sweden, TeliaSonera has had certified management systems since 1992. An integrated management system in accordance with ISO 14001 and ISO 9001 was implemented in 2001. In Finland, our operations have been certified according to ISO 9001 certificate since 2007. These certification programs aim to ensure a systematic approach to handling environmental and quality issues relevant to our operations.

Employee commitment and performance

As an in international telecom operator, employing around 32,000 people, TeliaSonera is strongly committed to develop its employees' competence and leadership. Working across borders and driving international solutions is essential to us.

Performance management and competence development

TeliaSonera is pushing to be even more commercial and customer-oriented and it is essential that our employees possess the right combination of competences. Customer migration from traditional fixed-voice services to new mobility and IP-based services in the more developed of our markets, particularly in Sweden and Finland, adds to this need. We conducted several competence development activities in 2008 with the aim to develop our capabilities to meet our business objectives.

A Performance Management Model is under implementation in TeliaSonera in order to maximize performance and in a structured way encourage all employees to strive towards the same goals. The model will:

• Create focus, clarity and alignment of our business objectives and values
• Provide solid feedback where high performance is rewarded and poor performance addressed
• Offer employees opportunities to develop and grow
• Make individual and business success more transparent

The Performance Management Model is being introduced for TeliaSonera's top 300 managers in 2009 and is intended to be launched for all employees in 2010.

To meet our demand for employees who can take responsibility for driving forward change, TeliaSonera conducts Group-wide programs:

• The Business Acumen Certificate aims at improving the general understanding of what drives our business. In 2008, we certified 150 employees, who work as “change agents” within their own organizations. The program is run by the Stockholm School of Economics.
• The IT/IP program targets a number of key employees, with the purpose of creating “IT/IP Ambassadors” in the organization. The program is run together with Sweden's Royal Institute of Technology.
• TeliaSonera Business School for middle managers and a few key specialists across our operations was conducted with about 30 participants.
• The Top Talent program generates a pool of top talents coming from across our operations and who are expected to become future top leaders. 25 individuals took part in the program in 2008.
• TeliaSonera International Trainee Program aims at attracting external young talents who can form a future base for coming top leaders and key specialists. The program started in February 2008, with 34 participants from our Nordic, Baltic and Eurasian operations.

Management review and succession planning

On an annual basis TeliaSonera's Leadership Team carries out a management review lead by the CEO. It is an activity that responds to short- as well as long-term business needs of leadership capability and supply.

The purpose of the management review and succession planning is to provide for a solid overview of current leadership capability, and succession planning, secure a future talent pool and follow up on succession planning activities in the respective business areas and functions.

The objective of the management review and succession planning is to ensure a constant focus on the improvement of readiness levels (that is candidates ready to step up and succeed current managers), and of the mix of nationalities and gender.

Today the majority of the management is of Swedish or Finnish nationality. This is natural given the history of the company and the fact that the head office is in Sweden, but with our geographic expansion this is changing.

Gender distribution

In the majority-owned operations the share of women has increased to from 42 to 44 percent since the merger of Telia and Sonera late 2002. At the same time the share of female senior executives, other than board members, has increased from 18 to 32 percent. See Note 32 to the consolidated financial statements for more information.

The share of women is highest in Kazakhstan and Azerbaijan (both 54 percent) but significantly lower in Norway and Cambodia (both 32 percent).

Development of the number of employees

Distribution of nationalities 2008

Employee commitment

One of TeliaSonera's six focus areas is to become a world-class service company. We regard employee satisfaction as a key driver of service improvement.

Employee commitment improved in 2008 and reached the highest level since we started measuring in 2004, according to the TeliaSonera Employee Commitment Score, ECS. TeliaSonera's ambition is to reach a score of 67 in 2010.

Employee commitment improved in 2008

Reporting

We monitor our CR performance through robust internal reporting systems and present our results and progress annually in a digital CR report available on our website www.teliasonera.com. We are gradually expanding our CR reporting to cover not only our wholly-owned operations and in 2008 we started including our majority-owned operations.

Our reporting is based on the standards of the Global Reporting Initiative (www.globalreporting.org) as well as the telecommunications sector supplement and we publish a GRI reporting index on our website.

International guidelines

TeliaSonera supports the following international guidelines for corporate responsibility:

• United Nations Global Compact www.globalcompact.org (through our ETNO membership)
• OECD Guidelines for Multinational Enterprises www.oecd.org/
• Core ILO Conventions www.ilo.org