Nokia About Eng

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Our story continues


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Nokias ongoing evolution

Nokia in 2006Largest markets by net sales

China, United States, India,United Kingdom, Germany,Russia, Italy, Spain, Indonesiaand Brazil

Production facilitiesMain supplier locations

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Now, in what marks the next phase of Nokiasevolution, we are increasingly providing consum-ers with experiences in music, navigation, video,television, imaging, games, business mobility andthe Internet through our devices. An integral partof this experience-led strategy is for our advanceddevices to be the tools of choice for people partici

Nokia continued to build on its leading positionin 2006 a year of strong growth, decisive actionand planned evolution for the company. With ourtrusted brand, wide product portfolio, and globalmanufacturing and distribution networks, we wereable to capitalize on a buoyant global device marketto achieve record-breaking full-year device volumes

and net sales.We also integrated our corporate resonsibilityinitiatives more concretely with Nokias businessactivities. Our global employee guidelines and up-dated supplier requirements communicate ethicalbusiness practices within Nokias production chain,and we have enhanced Nokias environmental com-mitment by aligning climate change considerationsinto our business strategy. I firmly believe that No-kias development over the longer term is linked tothe responsible business practices we employ today.

One of the most notable strategic moves we madein 2006 was the decision to combine our networksbusiness with Siemens carrier-related operationsfor fixed and mobile networks, to form a new com-pany called Nokia Siemens Networks. The company,which is jointly owned by Nokia and Siemens andstarted operations on April 1 2007 has a world


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Nokias interests depend on compliance with thehighest standards of business conduct and we aimto be among the worlds leading companies in re-sponsible practices. Nokia examines its value chain

and product lifecycles to strive towards meeting andexceeding expectations. Our values are communi-cated through our employees, whose work practicesare reflective of Nokias Code of Conduct.

The business of being responsible

1. Brand reputation Brand loyalty is based on trust of products, identity,

behavior and communications

2. Working with suppliers

All Nokia products and services should be sourced

according to internationally accepted standards We evaluate our suppliers in terms of Nokias

environmental and ethical requirements Compliance is ensured through supplier contracts,

training, plus on-site assessments

3. Environment

Nokia aims to develop advanced human technologywith no undue environmental impact

Our environment strategy targets lifecycle thinkingfocusing on substance management, energy efficiency

and take-back/recycling efforts


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4. Personnel

Nokia is committed to an inclusive and diverseworking environment

Corporate Social Responsibility is vital to attractingand retaining the best talent

Nokias Code of Conduct, international ethical standardsand local legislation guide employee practices

Our operations are regularly assessed internally

5. Community involvement

Aiming for a positive impact beyond the advancedtechnology, products and services we provide

Initiatives target youth and support educationwith mobile technology

Affordable mobile communications provided forrural communities

Charitable giving and disaster relief

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Nokia always aims to offer a broad and balancedrange of commercially appealing mobile deviceswith attractive aesthetics, design, features and func-tionality for all major consumer segments and pricepoints. From our entry-level phones to our advancedmultimedia computers, all Nokia devices are basedon the companys core strengths of usability, high-quality and innovation.

While today mobile devices are still used primarilyfor voice and text message communication, people

increasingly also use them to take and send pictures,listen to music, record video, watch television, playgames, surf the Internet, check e-mail, manage theirschedules, browse and create documents, and more.

Mobile devices for all

This trend where mobile devices increasinglysupport the features of single-purposed productcategories such as music players, cameras, pocket-able computers and gaming consoles is typicallyreferred to as digital convergence. And these mul-tifunctional devices are often called converged de-vices.

In 2006, Nokia shipped a total of 39 million con-verged devices, approximately 140 million deviceswith an integrated digital camera, and close to 70

million music enabled devices. This makes us theleader in the converged device segment and theworlds largest manufacturer of cameras anddigital music players.

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Secure mobile connectionsIn addition to mobile devices, Nokia provides fire-wall gateways and software-based tools designedto help companies grant their employees accessto corporate information, and to establish secureremote connections between corporate networksand devices.

Nokia leads the global device marketNokias estimated share of the 2006 global devicemarket was 36% making us the industry leader.According to our estimates we have held thisnumber one position since 1998.


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Becoming the worlds most loved a

Since the early 90s, Nokias products have definedour brand in peoples minds making Nokia themobile phone icon of our industry. At the core of theNokia brand has always been a very human andemotional sensibility, as expressed in our ConnectingPeople slogan. We believe connecting is about humanrelationships and feeling close to everything thatmatters. We believe value does not lie in objects, butin the infinite network of experiences we unleash.

People bring a set of expectations to our brand. At

the rational level, they think about ease of use, qual-ity, reliability, design and what the device can do forthem. At the emotional level, we want them to feeland think that Nokia is the only brand that connectspeople through very human technology.

Ever closer to peopleIn 2006, we refreshed our brand image through acombination of efforts in design, a broader product

brands strategic direction, launching a series ofmarketing initiatives aimed at solidifying the con-sumer experience and achieving our goal of becom-ing the worlds most loved and admired brand.

During the year we introduced a renewed categorymodel to drive product segmentation and encouragea fundamental change in the way trade customersand consumers choose and buy our devices shift-ing from a product focus to an experience focus. Weare now marketing our devices around four different

product categories, with the aim of addressing spe-cific sets of customer needs and making it easier forpeople to choose a device aligned with their lifestyle.

We continued with our roll-out of Nokia Flagshipstores during the year, opening at prime retail loca-tions in Chicago, Helsinki, Hong Kong, Mexico Cityand New York. Visitors to the stores get expert adviceon Nokia products, and can purchase as well as set

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d admired brand

Nokia brand tops chartsIn 2006, the Business Week and Interbrandannual rating of Best Global Brands posi-tioned Nokia as the worlds sixth most valuedbrand for the second year running. Moreover,Nokia was ranked as the number one brand

in Asia for 2006 by market-research companySynovate in its annual survey of Asias top1 000 brands.

The Nokia Flagship store in Moscow


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Very human technology

Nokia takes a human approach to design with the goal of creating stylishproducts that work just the way people want them to. Simplicity, relevanceand experience are central to our design ethos.

Nokias multi-disciplinary design team comprises approximately 250 psycho-logists, researchers, anthropologists and technology specialists representing 25different nationalities. The team conducts a vast amount of consumer research,analyzing trends and observing lifestyles so that Nokia can create devices andengender experiences that enhance peoples daily lives. Our design team is alsoresponsible for new and different technologies, materials, shapes and styles forNokias future devices.

During 2006, Nokia made a number of changes at its design organization,including altering the organizations structure, recruiting new design talent,and announcing the opening of new Nokia design studios.

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How do you charge a mobile device whenelectricity is scarce?Nokias Design Insight and Innovation team investigated thisconcern in 2006, reviewing phone use in Uganda. The design fac-tors the team identified include a need for affordable stand alonecharging services (such as solar), a reduction of power consump-

tion, design elements that support the customization of batteriesfor owner identification, and status updates on local power avail-ability.

RoHS compliance ahead of timeDuring 2006, Nokia successfully completed itswork on phasing out hazardous substances asrequired by the European Unions RoHS direc-tive (Restriction of the use of certain HazardousSubstances). Nokia had a fully RoHS compliantdevice portfolio in the EU well before the July2006 phase-out deadline. Furthermore, Nokiaaims that all its mobile devices will be EU RoHScompliant in 2007.

Substance management is a key component

of Nokias environmental strategy. Accordingly,we aim to phase out the use in our products ofsubstances that are banned, restricted or havebeen identfied for reduction. Nokia is workingclosely with its suppliers to achieve this goal.


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Nokias long history of successful research anddevelopment continues today in both multiradiotechnologies and software. Our technology researchfocuses on broadly accepted standards such as GSM,WCDMA, EDGE, CDMA, Bluetooth and WLAN, as wellas on growing and forthcoming technologies likemobile DVB-H, Wibree, WiMAX, NFC and LTE. In soft-ware, Nokia works on both the platforms that allowthe implementation of technologies, as well asthe application software visible to the end user.

The foundation for innovation

Nokias global network of relationships with univer-sities and other industry R&D experts expands thescope of our long-term technology development.Highlights from 2006 and early 2007 include theopening of the Nokia Research Center Cambridgein Massachusetts, in collaboration with the Massa-chusetts Institute of Technology; the establishmentof a new Nokia Research Center site in Palo Alto,California; collaboration with Stanford University;and collaboration on nanotechnology research withCambridge University and the Helsinki University of

Technology.

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Strong in Intellectual PropertyRights (IPR)Nokia has been building up its IPR portfoliosince the early 1990s, and by March 2007 ownedmore than 11 000 patent families.

The first GSM connectionOn July 1, 1991, Finnish Prime Minister Harri Holkerimade the worlds first GSM call, using Nokia equip-ment. From the start Nokia was in the vanguard ofGSMs development. Our expertise in the standard,coupled with the deregulation of European tel-ecommunications markets in the 1980s and 1990s,was to be the cornerstone of our internationalsuccess.

We delivered our first GSM network to the Finn-ish company Radiolinja in 1989 and launched our

first digital handheld GSM phone, the Nokia 1011,in 1992. By the end of the 1990s we had suppliedGSM systems to more than 90 operators around theworld and were offering a wide portfolio of GSMdevices.

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At the end of 2006 we employed 68 483 people of

more than 120 nationalities; had production facili-ties in nine countries; sales in more than 150 coun-tries; and a global network of sales, customer serviceand other operational units.

Each of our mobile device manufacturing plants iscapable of making devices for most of the worldsmajor cellular standards. This gives us the flexibilityto respond rapidly to the changing needs of differentgeographic markets.

It is extremely important to Nokia that labor condi-tions at all our production sites meet recognizedinternational standards. Accordingly, we have de-veloped an internal labor conditions managementsystem that requires regular assessments, action

planning, follow-up, and business management

reporting and ownership. In 2006, we conductedinternal labor conditions assessments at all Nokiaproduction sites globally.

Nokias global employment guidelines, created in2005, were further implemented during 2006, withthe companys local human resources organizationsensuring that new local employment policies arealigned with these global principles. Nokias guide-lines cover basic principles related to compensation,

working time and location, employee well-being,equal opportunities, confidentiality and privacy is-sues, guidance on external assignments, instructionsfor identifying conflicts of interest, ensuring efficientcommunications, and the recognition of freedom ofassociation.

A world-class team

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Following Nokias Code of ConductNokias Code of Conduct, applicable to all Nokiaemployees, gives guidance in different business situ-ations and defines boundaries between appropriateand inappropriate business behavior.

Following the decision to revise our Code of Conductin 2005, we continued the roll out of a significante-learning and communication campaign designedto bring the revised Code of Conduct to life for ourpeople, as well as to make sure that everyone in theorganization is committed to the Code and its mes-

sages. Currently, the Code of Conduct is availablein 31 languages, with an enhanced focus directedtowards our production sites, where e-learning ac-tivities are less readily available. By the end of 2006,almost 56,000 Nokia employees (more than 81%)had completed the Code of Conduct e-learning.

Going greenIn 2006, Nokia entered into a deal withScottish and Southern Energy to supply100% of the energy for its UK operationsfrom green electricity. Nokia is aiming for25% of its global energy needs to be metby green electricity during 2007-2009,increasing to 50% in 2010.

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In line with industry practice, we source a large pro-portion of components for our mobile devices froma global network of suppliers. This includes electroniccomponents, such as integrated circuits, microproc-essors, memory devices, cameras, displays, batteriesand chargers; and mechanical components, suchas covers, connectors, key mats and antennas. Ourproducts also incorporate software provided by thirdparties.

In 2005, we began to update Nokias supplier re-

quirements as part of our commitment to continu-ous improvement within the sourcing organization.This work progressed throughout 2006, duringwhich the knowledge and experience gained fromNokias on-site supplier assessments and stakeholderfeedback was incorporated into the process. Thenew and updated provisions in Nokias supplier

requirements aim to increase environmental andsocial focus, with particular requirements directedtowards human resource management. These newprovisions will require suppliers to define and imple-ment an ethical policy, ensure the implementationof effective workplace planning activities, and pro-vide necessary competence development programsfor employees. Rollout of Nokias revised supplierrequirements is scheduled for 2007.

Nokias supplier requirements come as an addition

to Nokias standard policies on discrimination, ap-propriate disciplinary practices, compensation, work-ing hours, and other such areas. Nokia has also up-dated its environmental requirements by placing agreater emphasis on suppliers waste and substancemanagement activities.

Enhancing our supply chain

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On-site supplier assessmentsDuring 2006, Nokia conducted over 100 on-sitesystem assessments of its suppliers, covering en-vironmental, health and safety, and labor issues.

Global e-Sustainability Initiative(GeSI)Nokia is an active participant in this industry wide

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The socio-economic benefits of mobility are widespread, extending

from the local impact on individual livelihood to higher growth ingross domestic product.

To further understand the implications of mobility at the groundlevel, Nokia teamed up with the Center for Knowledge Societiesin 2006 to create The Mobile Development Report. This study hasshown how rural income could further grow through the creationof appropriate technologies, and identifies seven major service sec-tors transport, micro-commerce, finance, healthcare, governance,education, and infotainment that could be radically transformed

through mobile technologies.

Nokia is committed to making universal access a reality. This meansworking closely with other private-sector companies, the public sec-tor, and civil society to promote the spread of mobile technology andrealize our vision of connected societies in which people can reachtheir full potential.

A catalyst for change

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Sustainability summary

See more details in the full CR report at www.nokia.com/crreport

All monetary figures are in EUR million unless otherwise noted. Figures found here align with Nokias Form 20-F report.

Nokia 2006 2005 2004

Net sales 41 121 34 191 29 371Operating profit 5 488 4 639 4 326Earnings/share diluted, EUR 1.05 0.83 0.69Payments to shareholders 1, EUR billion 4.9 5.8 4.1Market capitalization 61 390 64 463 52 138Research & development 3 897 3 825 3 776Total tax 1 357 1 281 1 446Liquid assets 8 537 9 910 11 542Total liabilities 10 557 9 938 8 270Retained earnings 11 123 13 308 13 874

Ethics 2006 2005 2004

Employee Code of Conduct awareness, % 81 75 NALanguages of the Code of Conduct 31 25 15

Supply chain 2006 2005 2004

Total purchases of goods and services 2, EUR billion 29.5 24.2 NASupplier diversity 3, USD million 28 20 NA

Employees 2006 2005 2004

Total number of employees 4 68 041 58 673 55 361Total number of permanent employees 62 851 50 839 47 883Employees in production 33 031 25 437 22 224Total payroll & benefits 3 457 3 127 2 805Pension expenses, net 310 252 253Total employee training cost 125 103 92Average cost of training per employee, EUR 1 908 1 850 1 665Injury/illness rate within production 5 0.82 1.08 0.66Women in senior management, % 12.5 12 12Non-Finnish nationalities in senior management, % 45.1 41 37.5Voluntary attrition, % 6.2 4.8 4.3Total attrition, % 9.8 8.8 7

Environment 2006 2005 2004

Energy consumption, GWh 850 810 770Indirect CO2, t 315 854 281 702 189 640Direct CO2, t 15 755 14 743 14 445Water consumption, m3 1 357 385 1 196 508 1 281 500Total waste, t 49 952 35 236 27 072

Solid waste recovery rate, % 83 82 84Emissions of ODS, kg of CFC-11 equivalent 6 326 101 139Countries with Nokia take-back points 7 85 NA NA

Society 2006 2005 2004

Countries with community involvement programs 37 35 20Countries with volunteer efforts 35 29 23Employee volunteer hours 25 000 17 700 16 800Total headcount volunteered, % 11 6.8 6.5

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Forward-looking statementsMany risk factors affect whether the forward-looking statements we make materialize a ccording to our current expectations. We identify these factors on an on-going basis andinclude them i.a. in our quarterly and annual earnings releases. For further information on these risk factors and forward-looking statements, please see Nokias Form 20-F for theyear ended December 31, 2006, or our earnings releases, all available on Nokias internet pages at www.nokia.com.

Engaging stakeholdersBeing a good corporate citizen means listeningto stakeholders, responding to their concernsand expectations, and developing business

accordingly. Here are some examples of Nokiasinvolvement with its stakeholders during 2006.

Industry-wide cooperationFalling under the umbrella of the Integrated Product Policy(IPP) of the European Commission, Nokia was selected to run apilot project to look at how the mobile phone industry can workwith stakeholder groups to reduce the environmental impact ofits products throughout their lifecycle. The group agreed to a se-ries of new initiatives, including reducing energy consumption,eliminating the use of specific materials of concern, improvingthe amount of phones collected through take-back schemes andrecycling, and giving consumers more environmental informa-tion about products.

Nokia Helping HandsNokia Helping Hands is our global volunteer program throughwhich Nokia employees contribute their time and effort tovarious good causes in their communities. During 2006, Nokiaemployees volunteered 25,000 hours in 35 countries. Activitiesincluded nature clean-ups, blood donations, raising funds forvarious good causes, mentoring, and collections for clothing,school supplies, and toys.

Nokia and WWF engagement and dialogueDuring 2006, Nokia and the global conservation organizationWWF extended their partnership for a second three-year period.The partnership is aimed at developing environmental aware-ness among Nokia employees, enhancing Nokias environmentalperformance, and supporting WWFs nature conservation goals.Joint activities include the internal web-based learning platform

Connect to Protect, management training workshops on busi-ness cases with an environmental focus, and seminars coveringrelevant and topical environmental issues.

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