Good corporate governance and


We are committed to our operating principles. Together, we generate economic value added.
  • The K Code of Conduct steers all our operations.
  • We follow good corporate governance principles.
  • Together, we improve financial profitability.
Topic Objective
Progress of objectives 2017
Progress of objectives 2016
Progress of objectives 2015

K Code of Conduct

All of our personnel act in compliance with the K Code of Conduct.

GRI 205-1, 205-2, 205-3

As of 2017, we oblige the entire personnel to annually confirm their compliance with the K Code of Conduct guidelines. By the end of 2017, 65% of personnel had made the annual confirmation.

We updated Our Responsible Working Principles guidelines in 2016. The new guidelines were named the K Code of Conduct and were published in the languages of all our operating countries in October 2016. We named 20 K Code of Conduct ambassadors as the messengers and contact persons. We will update all new and renewed employment contracts to include a clause about the requirement for personnel to familiarise themselves and comply with the K Code of Conduct. We will add a K Code of Conduct contract clause to all agreements signed by Kesko Group companies. As of 2017, we oblige the entire personnel to annually acknowledge their compliance with the K Code of Conduct guidelines. 

From the beginning of 2015, all of Kesko's Russian business companies have had their own anti-corruption policies. We decided to update Our Responsible Working Principles guidelines in 2016.

We organise regular training on the K Code of Conduct.

GRI 205-1, 205-2, 205-3

We continued to communicate and implement the K Code of Conduct in practice according to the annual plan. Some 20 K Code of Conduct ambassadors in different operating countries have been appointed to act as messengers and contact persons. Kesko’s Legal Affairs, Risk Management and Internal Audit organised K Code of Conduct training in the subsidiaries in Norway, Poland and Sweden in 2017. The events focused especially on corruption and fraud-related issues. The K Code of Conduct eLearning programme targeted at the entire personnel had been completed by 8,867 people by the end of 2017.

As part of the ongoing responsibility training, a training event on the K Code of Conduct was organised in Suomen Lähikauppa and two Russian subsidiaries in 2016. The events focused largely on corruption and fraud-related issues. The eLearning training targeted at all personnel had been attended by 3,159 people at the end of 2016. We drew an annual plan for 2017 which includes procedures to increase the personnel's awareness of the K Code of Conduct such as communication and training events for every quarter.

The online training on responsibility, which was published in 2015 and directed at all Kesko employees, describes Our Responsible Working Principles. As part of the ongoing responsibility training, a training event on Our Responsible Working Principles was organised for the key employees of Kesko’s company in Belarus in 2015.

Return on capital

Kesko's objective is to achieve a 14% comparable return on capital employed and a 12% return on equity.

In 2017, the comparable return on capital employed was 12.2% and the comparabe return on equity was 10.9%.

The comparable return on capital employed was 11.9%, and the comparable return on equity was 9.8%.

The comparable return on capital employed was 11.7%, and the comparable return on equity was 8.2%.

Human rights

We respect human rights and take them into account in all our operations.

GRI 412-1, 412-2

We followed up our human rights assessment by conducting a review of working conditions in the supply chain of grapes in collaboration with the Trade Union Solidarity Centre of Finland (SASK). The human rights assessment will be reviewed every three years, with the next review taking place in 2019.  

We published our human rights assessment and human rights commitment on our website. We will review and update it every three years. We will construct our operating models so that respect for human rights is observed in all our operations.

We continued to assess human rights related impacts in accordance with the UN Guiding Principles on Business and Human Rights. During the extensive report work, we heard the thoughts of customers and personnel as well as employees in high-risk countries' factories on human rights and how well they are realised in K Group's operations.



Economic performance

201-1 Direct economic value generated and distributed

Kesko's operations generate economic benefits for the different stakeholder groups in Kesko’s operating countries and market areas. Key stakeholder groups include shareholders, customers, personnel, retailers, suppliers of goods and providers of services, and society. Kesko promotes the growth of welfare throughout its supply chain, including developing countries.

The following tables show cash flows between Kesko and its stakeholders, as well as the distribution of economic value added between stakeholder groups. The most important cash flows comprise revenue from customers and retailers, purchases from suppliers of goods and providers of services, dividends to shareholders, salaries and wages paid to personnel, taxes and capital expenditure.

In June 2017, Kesko sold Indoor Group, which is responsible for the Asko and Sotka furniture trade chains, and the K-maatalous agricultural business. K-maatalous is consolidated into Kesko Group up until 31 May 2017 and Indoor Group up until 30 June 2017.

In April 2016 Kesko acquired Suomen Lähikauppa Oy, in June 2016 Onninen Oy and in December 2016 Oy Autocarrera Ab. Suomen Lähikauppa Oy (currently K-Market Oy) has been consolidated into Kesko Group as of 12 April 2016, Onninen Group as of 1 June 2016 and Oy Autocarrera Ab as of 1 December 2016. In 2016, Kesko disposed of the Russian grocery trade and the Russian Intersport business. The Russian grocery trade business is included in the figures until 30 November 2016.

In February 2018, Kesko announced it will discontinue its building and home improvement trade operations in Russia. The Russian building and home improvement trade operations are included in the 2017 figures.

Further information on the structural changes is available in note 3.2 to the financial statements.

The consolidated income statement, the consolidated statement of financial position and the consolidated statement of cash flows can be read in full in the Report by the Board of Directors and financial statements section.

Economic benefits from Kesko's operations to stakeholders

Economic benefits from Kesko's operations to stakeholder groups
€ million 2017 2016 2015
Customers1 Revenues 11,467 10,879 9,479
Value added generated 11,467 10,879 9,479
Distribution of value added:
Suppliers Goods, materials and services purchased -10,221 -9,839 -8,593
Employees Salaries, fees and social security expenses -759 -723 -545
Payments to providers of capital Net finance income/costs 1 -1 -7
Owners Dividend -2192 -199 -248
Public sector Taxes3 -63 -50 -92
Community investments Donations -2 -2 -1
Development of business operations 205 67 -7
The data is based on audited figures.
1 Incl. net sales and other operating income
2 Proposal to the General Meeting
3 Incl. income taxes, real estate taxes and net worth taxes

The division of the economic benefit generated by Kesko and K-retailers to Finnish regions is presented under Society in the Responsibility programme.

Additional information on employee benefit expenses can be found in note 2.4 of the financial statements.

Dividend policy

According to its dividend policy, Kesko Corporation distributes at least 50% of its comparable earnings per share as dividends, taking into account, however, the company’s financial position and operating strategy. Kesko’s Board of Directors proposes to the General Meeting to be held in April 2018 that a total dividend of €219 million be paid for the year 2017, which would represent 84.9% of earnings per share and 96.6% of comparable earnings per share. In 2017, Kesko distributed a total of €199 million as dividends for the 2016 profit, which represented 201.3% of earnings per share and 99.5% of comparable earnings per share.

Further information on the financial statements’ indicators and Kesko shares and shareholders can be found in the Report by the Board of Directors and financial statements section.

Economic benefits from Kesko’s operations by market area in 2017
€ million Purchases Capital expenditure Salaries and share-based payments Social security expenses Taxes¹ Total
Finland 5,821 299 440 98 814 7,472
Other Nordic countries 1,008 3 65 22 61 1,159
Baltic countries and Poland 534 22 87 9 103 756
Russia and Belarus 210 25 29 9 17 289
Other countries 1,388 1,388
Total 8,961 350 621 138 995 11,065
¹ Taxes include income taxes, real estate taxes, value-added taxes, excise duties, car taxes, customs duties, net-worth taxes and withholding taxes

201-2 Financial implications and other risks and opportunities for the organisation’s activities related to climate change

One of the themes of Kesko’s responsibility programme is mitigating the progress of climate change. In June 2017, the Science Based Targets initiative approved the emission targets set by Kesko through which Kesko shows its commitment to the target of below 2°C global warming, as set by the Paris Climate Agreement.

Kesko’s operations are surveyed regularly by risk assessments, which also cover changes that may be necessitated by climate change. The Group’s risk map, the most significant risks and uncertainties, as well as changes in and management responses to them are discussed by the Kesko Board’s Audit Committee when the interim reports and financial statements are handled.

Read more about our risk management and control practices.

Climate change presents physical and regulatory risks and opportunities as well as risks and opportunities affecting reputational factors

Physical impacts

  • Extreme weather phenomena, such as storms and heavy rains, have consequences for the built environment. Physical risks are related to both the physical store network and logistics. Unusual weather patterns can cause interruptions in operations or problems in the availability of products and changes in sales, particularly in the building and technical trade.
  • Climate change can affect the procurement sources and availability of products both within and outside Europe. Due to drought and desertification, water has become less available in many countries, reducing the productive potential of local economies. Agricultural production will suffer if desertification and rising sea levels reduce arable land area. Drought or floods may destroy agricultural harvests. Intensifying competition for raw materials may lead to higher prices.
  • The availability of energy sources and emission limits may affect energy prices.
  • Accidents and epidemics resulting from natural phenomena can cause damage or business interruptions that cannot be prevented.


  • Climate change may have an impact in terms of risks involved in regulation, such as various permit procedures, or costs arising from emission pricing and taxation.
  • The implementation of the EU and Finnish Government climate and energy policy will affect energy solutions and may increase energy prices, adding to pressures for energy savings and energy self-sufficiency.


  • Customers are paying increasing attention to issues related to sustainability. Environmentally friendly products, corporate responsibility communications, retail stores’ K-responsibility concept and package labelling can help customers make purchasing decisions that mitigate climate change. Any failures to implement responsible practices in this area may weaken Kesko’s reputation.
  • Kesko takes part in the development of circular economy by offering recycling services at its stores and by taking part in innovative initiatives such as the Ham Trick campaign or the manufacture of Pirkka products using biogas made from inedible biowaste collected from K-food stores.

Opportunities and risks related to climate change are also described in the report’s Operating environment / Opportunities and Risks section.

201-3 Coverage of the organisation's defined benefit plan obligations

The Group operates several pension plans in its different operating countries. In Finland, statutory pension provision for personnel is organised through pension insurance companies and voluntary supplementary pension provision is mainly organised through Kesko Pension Fund’s department A. At the end of the year, the number of employees eligible to receive supplementary retirement benefits from department A was 2,651.

The statutory pension provision organised through a pension insurance company is a defined contribution plan. The supplementary pension provision organised by Kesko Pension Fund is a defined benefit plan. As at 31 December 2017, the defined benefit plan obligation was €266.6 million (€302.3 million in 2016), which is fully covered. Calculated under IFRS, the surplus amount was €207.5 million as at 31 December 2017 (€164.7 million in 2016). Calculated under IFRS, the Group’s total pension expenses represent 13.9% of the amount of salaries (13.6% in 2016). Read more in the financial statements section, note 3.8.

In the other countries, pensions are arranged in compliance with local legislation. The former pension plan operated in Norway was classified as a defined benefit plan, but the related liability expired during the financial year 2017.

201-4 Financial assistance received from government

In 2017, the Group received financial assistance of €1.4 million from the public sector. This amount mainly consists of assistance received from Finland (€1.1 million) and from Sweden (€0.3 million). The majority of public sector assistance in Finland is related to investments in the utilisation of solar power.

Indirect economic impacts

203-2 Significant indirect economic impacts, including the extent of impacts

Kesko is a service sector company which has significant indirect impacts related to the production, use and recyclability of products.

Purchases by Kesko and the retailers have economic impacts on the suppliers and service providers, such as an increase in the number of jobs. Furthermore, purchases from local producers affect regional business activities. The salaries, taxes, social security expenses and capital expenditure paid by Kesko and retailers have impacts on regional economic welfare.

In 2017, Kesko operated in nine countries in which it is engaged in both retail and wholesale. On 16 February 2018, we announced we would discontinue our building and home improvement trade operations in Russia. 

It is one of Kesko’s principles that taxes on operating income and assets are always paid to the respective operating country in compliance with local laws and regulations.

Kesko is a significant tax payer. In 2017, the income taxes paid by Kesko to Finland totalled €46.5 million and to other countries €9.7 million. The Group’s effective tax rate was 17.9%. Kesko paid €3.7 million in real estate taxes and net worth taxes to Finland and €2.8 million to its other operating countries in 2017.

Kesko collects, reports and remits also indirect taxes, such as value-added taxes and excise duties. Kesko remits value-added taxes to tax recipients in its capacity as a company selling goods and services. In 2017, Kesko’s value-added taxes payable in Finland amounted to €410.3 million, and €129.2 million in other countries. Kesko remits car taxes and excise duties on, for instance, confectionery, alcohol and soft drinks. In 2017, Kesko remitted excise duties in Finland to a total amount of €61.1 million.

Kesko’s measurable indirect impact on society, such as its employment impact, increased municipal tax income, or income in the producer and supply chain, is evaluated case-by-case, in connection with the establishment of a new store, for example.

Taxes payable 2017

Taxes remitted in 2017

Taxes by country in 2017


205-1 Operations assessed for risks related to corruption,

205-2 Communication and training about anti-corruption policies and procedures,

205-3 Confirmed incidents of corruption and actions taken

Risks related to corruption are discussed as part of Kesko Group's risk management. Key risks, including risks related to corruption, are identified, assessed, managed, monitored and reported regularly as part of business operations in all operating countries.

Kesko’s anti-corruption principles are included in the K Code of Conduct guidelines published in 2016. The guidelines and website have been published in the languages of all our operating countries. Kesko employees and business partners have their own versions of the K Code of Conduct.

Kesko has prepared a mandatory eLearning package for its employees to smoothly internalise the K Code of Conduct.

Kesko arranges K Code of Conduct sessions in its companies: in 2017, such events were organised in the Norwegian, Polish and Swedish subsidiaries. The events focused largely on corruption and fraud-related issues.

In 2017, the prevention of malpractice was one of the focus areas for Kesko’s corporate security function. During the year, individual cases of suspected malpractice came to our knowledge and the corporate security unit assisted in investigating them.

Towards the end of 2016, Kesko introduced the Group-wide SpeakUp channel through which employees and business partners can report any violations of the K Code of Conduct. During 2017, 38 notices were submitted through the SpeakUp channel, related to e.g. managerial work, store staff and customer service, and Kesko’s partnerships with its suppliers.

In 2017, no corruption related lawsuits against any Kesko Group company came to our knowledge.

Anti-competitive behaviour

206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices

In August 2017, Kesko Senukai Latvia received a €920,618 fine for breach of competition law regulations.

Labour/management relations

402-1 Minimum notice periods regarding operational changes

Kesko complies with local legislation in all of its operating countries. In Finland, the key statutes governing restructuring situations are included in the Act on Co-operation within Undertakings, which stipulates that the employer must provide reasonable notice of decisions for consideration on the basis of negotiations. The collective agreement for the trading sector does not specify any minimum notice periods applying to restructuring situations.

In Sweden, the statutory minimum notice period in the event of organisational changes is 8–24 weeks depending on the nature of the change. The collective agreement applying to operations in Sweden also does not specify minimum notice periods for restructuring situations. No specific minimum notice period for organisational changes is defined in Norway, but both legislation and the collective agreement stipulate that personnel shall be informed of organisational changes at the earliest opportunity.

Russian legislation states that personnel must be informed of restructuring 8.5 weeks before the new structure takes effect. For major organisational changes concerning more than 20% of the personnel, the authorities must also be informed 8–12 weeks prior to the change. In Estonia and Latvia, the minimum notice period in restructuring situations is four weeks. The corresponding notice period in Belarus is eight weeks. There are no collective agreements in these operating countries.

In all its operating countries, Kesko applies the notice periods specified in local labour legislation. In Finland, the notice period is from two weeks to six months depending on the duration of employment.


406-1 Incidents of discrimination and corrective actions taken

There were no pending incidents of discrimination in 2017.

Freedom of association and collective bargaining

407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

The freedom of association or the right to collective bargaining is not seen to be at risk in Kesko’s operating countries within the EU (Finland, Sweden, Estonia, Latvia, Lithuania and Poland) or Norway.

Out of the total personnel, 44% are covered by collective agreements.

So far, no binding industry-wide collective agreements have been drawn up in the Baltic countries and Poland.

The control of the association of suppliers’ employees in high-risk countries and corrective actions are included in social responsibility audits.

Human rights assessments

412-1 Operations that have been subject to human rights reviews or impact assessments

In September 2016, Kesko published its statement of commitment on human rights and impact assessment in compliance with the UN's Guiding Principles on Business and Human Rights.

The extensive survey involved listening to the views of customers, personnel and high-risk country factory workers on human rights and on the implementation of human rights in K Group's operations. The survey covered the customers of all of Kesko’s lines of business, and personnel in Finland. Surveys in high-risk countries were carried out in China, India, Bangladesh and the Philippines. Read more about Kesko’s commitment and impact assessment.

In November 2017, Kesko followed up the assessment by publishing a study on working conditions in the supply chain of grapes in Brazil, South Africa and India. The study showed that the human rights of workers involved in the picking, packaging and transport of grapes are vulnerable to violations. Kesko has proposed expanding amfori BSCI audits to cover also logistics in high-risk countries. Read more about the study.

412-2 Employee training on human rights policies or procedures

The K Code of Conduct guidelines include a section on human rights. The K Code of Conduct eLearning programme targeted at the entire personnel had been completed by 8,867 people by the end of 2017. Awareness of the K Code of Conduct is regularly promoted through communications and training arranged by K Code of Conduct ambassadors. An article related to the #metoo campaign was published in December 2017 on intranets in Kesko’s operating countries, noting the K Code of Conduct guideline “We treat one another equally” and giving instructions on what to do if people notice inappropriate behaviour at the workplace.

Trainings in responsible purchasing continued in 2017. The trainings focused on the implementation of human rights in global purchasing chains. A total of three trainings were organised in Finland for people engaged in purchasing in Kesko’s grocery trade and building and technical trade. One training was held for the personnel of the Kesko Onninen Purchasing Office in Shanghai, China.  The training sessions discussed the amfori BSCI Code of Conduct principles, the assurance process in purchasing from high-risk countries, and the social responsibility assessment systems approved by Kesko. The trainings will continue in 2018.

Public policy

415-1 Political contributions

In election years, political parties and candidates are given equal opportunities to arrange campaign events in the yards and entrance halls of K Group stores. In addition, Kesko may participate in economic and tax policy seminars arranged by political parties, on content basis at its discretion and without indicating partiality.

Kesko does not make monetary donations to political parties. In 2017, Kesko did not participate in political parties’ seminars subject to a charge and did not publish commercial advertisements in party newspapers.

Non-compliance concerning marketing communications

417-3 Incidents of non-compliance concerning marketing communications

Kesko constantly monitors the amendments to legislation and authorities’ recommendations related to marketing communications and provides information about them to the staff responsible for marketing in each unit.

In 2017, there were no advertisements by Kesko or its subsidiaries submitted for consideration by the Council of Ethics in Advertising or any incidents of non-compliance with legislation or voluntary principles.  

In June 2017, the Consumer Ombudsman imposed a prohibition order with a notice of a conditional fine in a matter concerning Intersport Finland Oy’s offer marketing in 8/2016-1/2017.

Kesko Senukai Lithuania received a caution from authorities in 2017 for sending direct marketing to one customer who had prohibited it.

Customer privacy

418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data

In 2017, no information leaks or other personal data breaches were detected.


419-1 Non-compliance with laws and regulations in the social and economic area

There were no non-compliance with laws and regulations in the social and economic area in 2017.

GRI management approach

Material aspects 

  • Economic performance
  • Indirect economic impacts
  • Anti-corruption
  • Anti-competitive behaviour
  • Compliance
  • Grievance mechanisms for impacts on society
  • Customer privacy
We generate economic value added

At Kesko, economic responsibility refers to the good management of finances, the efficient use of resources, as well as generating stable, long-term economic benefits for the various stakeholders. Kesko's operations generate economic benefits for shareholders, personnel, retailers, suppliers of goods and services and their employees and customers, as well as municipalities and states.

The K Code of Conduct and reputation management

Different aspects of responsibility, such as the ethicality of production and sourcing, the fair and equal treatment of employees and environmental protection are increasingly important for customers. Kesko's attitude to bribery and other malpractice is absolutely uncompromising. Responsible working principles are essential for building trust between Kesko, K-stores, our customers and our business partners.

Public policy

Kesko plays an active role in trade and industry organisations in Finland and in the European Union, contributing its expertise to social development and legislative work. Kesko does not donate funds to political parties.

Customer privacy

Customers' personal data is, for instance, processed in various personal data registers and online stores' customer registers that are collected for the implementation of marketing activities. Furthermore, Kesko manages and maintains the K-Plussa customer loyalty system, operated by K-chains and K-Plussa partners. Using the information received from the K-Plussa customer loyalty system, we can develop and tailor our operations to better suit our customers' needs. Taking care of our customers' privacy is of utmost importance to us.

Policies, principles and commitments

  • Accounting policies
    • Kesko Group complies with International Financial Reporting Standards (IFRS) approved for adoption by the European Union.
  • Corporate Governance principles
    • Kesko's decision-making and corporate governance are guided by Kesko's values and the K Code of Conduct guidelines. Decision-making and corporate governance comply with the Finnish Limited Liability Companies Act, regulations concerning publicly quoted companies, Kesko's Articles of Association, the charters of Kesko's Board and its Committees and the rules and guidelines of Nasdaq Helsinki Ltd. The company complies with the Finnish Corporate Governance Code for Listed Companies that entered into force on 1 January 2016.
  • Risk management principles
  • Good trading practices
    • Kesko's grocery trade and Kespro are committed to good trading practices.
  • K Code of Conduct
    • The K Code of Conduct is used to ensure that everyone at Kesko has the same understanding of the values and principles that guide our daily work. The principles are the same for every Kesko employee in all our operating countries. We also expect our business partners to operate responsibly.
  • Data protection policy
    • The data protection policy defines how Kesko Group strives for compliance with the law in the processing of personal data and a high level of data protection in all of its operations and operating countries.

Monitoring and control systems

  • Financial reporting and planning
    • Kesko's financial reporting and planning are based on the Kesko Group's management system. The Group's financial development and achievement of financial objectives are monitored by financial reporting covering the entire Group.
  • Compliance
    • Kesko runs compliance programmes to ensure that Kesko employees are familiar with the key laws relating to operations and act in compliance with them. For Kesko, knowledge of and compliance with competition laws is of primary importance.
  • Prevention of malpractice
    • The Kesko Group's Internal Audit monitors and secures the functioning and efficiency of management, supervision, risk management and corporate governance in the Kesko Group. Kesko's Internal Audit pays special attention to the efficiency of controls that prevent malpractice and financial losses. Kesko organises K Code of Conduct training in its various companies. The events focus especially on corruption and fraud-related issues.
  • Risk management
    • Kesko has a uniform risk assessment and reporting system. Risk identification is based on business objectives and opportunities and the defined risk appetite. Risks are prioritised on the basis of their significance by evaluating their impact in financial terms and probability. When assessing the impact of materialisation, the impacts on reputation, people's wellbeing and the environment are considered in addition to the impact in euros. Risk management measures are assigned persons in charge who are responsible for planning, implementing and monitoring the measures. The measures defined are added in action plans and monitoring systems. Kesko's Internal Audit has annually assessed the functioning and efficiency of Kesko's risk management system.
  • Privacy protection
    • Personal data collected for various purposes on the grounds defined in the Finnish Personal Data Act form separate person registers. For example, the customer information of K-Plussa cardholders forms a customer database that is used, with the customer's permission, for managing customer relationships, for customer contacts and the marketing purposes of the companies that have joined the K-Plussa system. K-Plussa customers can prohibit the connection of product or product group level information to their identified customer relationship. In compliance with the Personal Data Act, the file description is available in Finnish at
    • Data controllers ensure that customer information is only used for the purposes specified in the file description. Information on individual customers is secured by issuing instructions to personnel and by using technical systems. Customer data is only disclosed to third parties if required by law.

Responsibilities and resources

  • Kesko's Corporate Governance structure is presented at Kesko's Corporate Governance principles
  • Group Legal Affairs Unit
  • Internal Audit Unit
  • Risk Management and Corporate Security Unit
  • K Digital Unit

Grievance mechanisms

Through Kesko's intranet, employees can give feedback and ask questions concerning operations not only in their own units but also directly to top management. Feedback can be given openly or anonymously.

SpeakUp is a confidential reporting channel meant for reporting crime and malpractice suspicions when, for one reason or another, the information cannot be passed directly to Kesko's persons in charge.


Corporate governance Kesko
Finance Kesko