Sanoma Oyj (SANOMA) Earnings Call Transcript & Summary

Welcome to Sanoma Sustainability Day 2021. Sustainability is truly at the core of our business, both in learning and in media. We are delighted to have this opportunity to give you more insight on our recently updated sustainability strategy. My name is Kaisa Uurasmaa. I'm heading Investor Relations and Sustainability at Sanoma. Today, we have 6 executive management members giving you more insight on the strategy. As investors, you are used to meet on a regular basis with our President and CEO, Susan Duinhoven; and CFO and COO, Markus Holm. In addition, you have about 6 months ago, in our previous Virtual Capital Markets Day, met with Rob Kolkman, CEO of Sanoma Learning; and Pia Kalsta, CEO of Sanoma Media Finland. They will be showcasing how sustainability is truly integrated into our business. On top, as people and data are really key elements in our sustainability strategy, we also have executives responsible of those areas in the lineup today. Gieta Veersma, our Chief HR Officer; and Ken Bardsen, our Chief Information Officer. Due to the pandemic situation and our management working in multiple locations across Europe, we have prerecorded the presentations. The Q&A will be virtually live today. And I will give more instructions how that works after the presentations. And in the webcast platform, you have the chat function already available, so you can place your questions to the chat during the presentations. And this event will be recorded, and the recording is available on our website soon after the event. With this, I would like to kick off the presentations. And first, we will hear Susan Duinhoven, to give you an overview of our sustainability strategy and insight on 3 topics: remuneration, ethics and governance, in particular.

Good afternoon. Also from my end, a warm welcome to the sustainability event. We're very keen and glad to have the opportunity to present through the sustainability aspects of our business. And we have updated our sustainability strategy in March, and we'll go through the 6 themes that are composing of that. Now Sanoma is in a bit of a unique position because there are very few companies where sustainability is truly at the core of the business. With our learning business, inclusive learning, helping teachers get the optimal out of every student and with Media business contributing with trusted Finnish journalism and inspiring entertainment for everyone and for now and the future, that is the core of what we do on a daily basis. And that is having a positive impact on society. And therefore, you see that throughout our organization, all is centered around that positive contribution. And therefore, sustainability is truly in our genes already from the beginning of the company. So now what we have done is we have clarified and indicated the full width of sustainability, not only the 2 core businesses, but also how we work on reducing our climate impact that is already small but how we as global citizens want to further reduce that. Now that is of key importance, not only to management and Board, but it's important for our whole organization. As a creative organization, people want to work at Sanoma because of that positive impact that their work has on the society around them. So that is what we will show you today. And for those of you who have not followed Sanoma closely in the last years, let me first take a bit of a step back and explain where we stand at the moment. If you look at Sanoma, it's a growing company, and we're specifically growing in journey. We are now active in 11 European countries and focused on K-12, meaning primary, secondary and vocational education. And that business has doubled in size in the past 5 years. If you then look at the Media business, it's now focused on Finland, and it's going through a very successful digital transformation. Overall company, 5,000 employees active in 11 European countries, and the outlook for this year is net sales of EUR 1.2 billion to EUR 1.3 billion, growing, coming from EUR 1.1 billion last year; and an operational EBIT margin, excluding PPA, of 14% to 16%. And this has been the result of quite a successful transformation. We have come from being predominantly a media company by divesting the Dutch and the Belgium media assets, now a focused media in Finland, but predominantly a learning company. And that shows that 70% of our earnings nowadays is coming out of learning. But also within Media Finland, quite a transformation has taken place. Already close to 60% of the revenues are coming from consumer income, reducing, therefore, our dependency on advertising, which is typically more volatile. And out of that consumer income, already 2/3 is subscription-based revenues. Now the digital transformation is the other axis of our transformation, and that has taken place both in Learning and in Media Finland. In Learning, we already for years sell what we call hybrid propositions, so printed books, digital content, digital platforms, working in cohesion as one solution for the teacher and the school. But also in Media Finland, digitalization has been quite successful. And just as one example, Helsingin Sanomat has grown its total subscriber base now for the fourth year in a row, and that's largely due to the growth in digital subscriptions. So all in all, the successful transformation has brought us to being a growing company. And with that growth, we also grew our positive impact on society. And as I said, we're typically not the ones that get the hard questions from our stakeholders on sustainability because people know us as a creative industry contributing in a positive way. But therefore, we now thought it was a good moment to ask our stakeholders, actively go out to 1,500 of our customers, suppliers, NGOs, investors and, above all, also our employees and ask them, what is important for you when it concerns sustainability? And what is important for Sanoma? And of course, a number of quite common elements came out. Climate impact, people values, compliance and governance. Those are more common shared sustainability elements between all companies. But what came out quite strongly for Sanoma from all stakeholders is data. And data both as a positive contribution to make our products even better, but also as a potential risk. So therefore, trustworthy handling of data came out as a very clear theme with high importance. So all in all, that is a clear output that we have then taken, the results out of this survey and the interviews we have taken as a management and Board, we have turned that into 6 key themes. And sustainability in that sense is also critical for us as a company, not only for external stakeholders, but as I said, specifically also for employees. As a creative business, we are dependent on being able to attract and retain the key talents out of the market. And we see that as an employer and our employer brand is very dependent on that positive impact on society. So sustainability is truly part of our core as Sanoma. But now let me indicate the 6 themes. And today, my colleagues will also go through a number of these in quite a bit of detail. But you see, of course, the inclusive learning and sustainable media; trustworthy data, as I indicated, of key importance; valued people, to be an equal working environment, but also an inspiring working environment where employees can get the maximum out of themselves and learn and grow as individuals. And then vital environment. Our climate footprint as a company is quite small. We're a creative industry, but we see it as essential that we also contribute to the targets that the world has put itself at large and that are essential for us as a society. So we have put a strong climate target that by 2030 we want to be emission-neutral. And we will have a science-based approach to that to come to 2030. And then the governance, the responsible business practices are a more logical part of any listed company and specifically as a Nordic-listed company, quite strong focus on governance. And later in my presentation, I will come back to that a bit. Now with these 6 themes, we also cover the 9 Global Sustainability Goals from the United Nations. And recently, we have also become a signatory to the UN Global Compact. That is not something new to us. The 10 principles of the UN Global Compact were already very much part of our code of conduct. So when related to human rights, to labor practices, environment, anti-corruption, those were all key elements of our code of conduct already for years. But we think it is important to participate and communicate that we are part of this global compact. But then let me give a bit more flavor around one of those themes, and that is governance. Good governance is part of our daily practice and has been already for years. We have established practices there, a very active and strong board participation governing all aspects of the business, including sustainability. And we have an audit committee that typically supports the Board and prepares the Board decisions on all financial and now also sustainability aspects. The compliance to these -- to the code of conduct and to all its subsidiary policies is supported throughout the whole of the organization. That is not something limited to management and Board. And we do that through internal trainings, e-learnings. And now that we are also acquiring new companies, we focus quite a bit that, in the first 3 to 6 months, a new company's team is brought on to our way of working through these trainings and e-learnings. Now part of good governance is also to make sure that the remuneration is fully aligned with shareholders' interest. And sustainability is nowadays quite strongly integrated into that remuneration. The majority of our employees have a performance-based incentive program, a short-term incentive program. And that is typically 80% of the shared goals, our financial goals, operational EBIT, cash flow are typically featuring in that. And 20% of the shared objectives are centered around sustainability. Two aspects of it: people values and data and privacy. And the extent and the targets, of course, depend then on the person's position to make it tailored and to make sure that as an organization, as a whole, we can make the improvements. Now in addition to the short-term incentives, we also have long-term incentive, and that's over 200 employees that have a share-based incentive program. And those KPIs typically include free cash flow and operational EPS. So again, aligning with shareholder interest. The performance period is 1 year due to the rapid transformation that we have gone through, and then the testing period is 2 years. Now overall, for senior management, we are keen to have a policy that the remuneration is strongly performance-based, and that means that we typically target the base salary to be a bit in the lower quartile with our peers, where then the short-term incentive and, specifically, the long-term incentives bring only with excellent performance, bring that up to the benchmark or even above with overperformance. So remuneration, an important element of our governance and well distributed throughout the organization. But as I indicated to you already, sustainability is crucial for us as an organization. We feel strongly about it. We are attracted to Sanoma because of its positive contribution to society. But you don't need to take my word for that. I think it's interesting to ask a number of employees and see how they work, their commitment to sustainability and to Sanoma. [Presentation]

After these employee views and the overview given by Susan, we will move on and take a closer look at the learning business and how sustainability works there in action. In this presentation, you will have an opportunity to see concrete examples from our business units in Poland, Belgium and Spain. And the presentation is naturally given by Rob Kolkman, CEO of Sanoma Learning since January 2020.

Hello. Sanoma Learning is here to help all students reach their potential. And a very important way of doing that is by developing and delivering inclusive learning solutions. And we also have a really unique perspective with servicing 20 million students every day across Europe. And today, I'm here to explain to you in a little bit more detail how we do that and also how we combine that with growing our business. But let's now first have a look at what Sanoma Learning looks like today. So that unique position that I mentioned, we really use that to develop those printed and digital learning materials, the blended learning, so to speak. And it really helps schools to support those students on a day-to-day basis. But let me bring that to life a little bit more for you by showing you what it means when we talk about a day in a life of the student and also the teachers and the schools and the parents. That's what you see here on this slide. So if you think about a primary education child or pupil, he or she is using, for example, Bingel, our gamified platform, but also uses methods like Milli for maths, or Planet and Nowa for geography in Poland. So those are all examples of what they use on a day-to-day basis, really inclusive learning materials. If you look at it from a secondary education student, then we talk, for example, about the app we give them and that they use on a day-to-day basis to see what their homework is, but also what their test results are. If you look at it from a teacher point of view, we look at the learning management systems, and they support the teachers with -- they're following the students and really having that sort of personalized learning experience on a student-by-student basis. And if you then look at it from a parent's point of view, they also can go to our app, and they can see how their kids are doing both from a homework point of view and test results point of view. And lastly, if you look at it from a school perspective, we help them with their administration to make that as efficient as possible. We have identified 3 goals to sort of highlight our ambition to help all these students to reach their potential. So the first one is about co-creating together with the teachers of the lesson materials, of those inclusive learning materials, those blended learning materials. The second one is around promoting equal access to education across all the countries that we operate in. And thirdly, it's about developing inclusive learning solutions that really support diversity and also differentiation. Let's now zoom in on that first goal, the goal of co-creating really high-quality and motivating learning materials. And here, I would like to share with you an example from our business in Belgium, Van In. [Presentation]

After that example from Van In, let's now zoom in on promoting equal access to education. And for this, we would also like to make the link with the Sustainable Development Goals that are being set by the United Nations. And the example I would like to show you is one from our Spanish business, Santillana, that really is trying to help the schools with bringing those Sustainable Development Goals to life. So let's see that example now. [Presentation]

So after that example of equal access to education, let's now look at how we look at developing inclusive learning solutions to really support diversity and also differentiation. And let me explain that in a little bit more detail. So for us, if we think about inclusive learning and teaching, it really means recognizing that all students have a right to a learning experience that respects that they're individuals, that they have diversity, that there is a difference in the way they would like to participate, and also really trying to remove barriers as well as anticipate and consider a variety of learning needs to really go for that personalized learning. And it also means designing and delivering teaching and learning methods that help all these students to engage with the curriculum to really help them on that day-to-day basis. And this is important for every child and no matter where they are and also what the background is. So let's for this have a look at our Polish business, Nowa Era. And they have developed learning products. This particular example is about how they help children with autism. So let's have a look at that. [Presentation]

So now you've had a look at some of these examples across our business. Let's also have a look at how these solutions work. And you see here 3 metrics that we focus on. The first one, where you see the 97%, is really around teachers saying our materials support them in reaching curriculum objectives. Obviously, that is very crucial if you look at it from a teacher perspective. If we then look at the second one, the 87%, also very, very high, is of teachers saying that our material supports them in managing their classes efficiently, so also including those different needs for students, that personalized learning approach. And then thirdly, and this all comes from our research that we do on an annual basis, teachers are also indicating that all our solutions help them to become more efficient and, therefore, also save time, which we estimated at about 8 hours a week. So all this really helps to reach the curriculum objectives and also work more efficiently. So in summary, if you look at what we try to do on a day-to-day basis, we really impact the life of 20 million students and their teachers and the schools across Europe with our inclusive learning solutions. It is also our mission to help all these students reach their potential, their individual potential that they have. And delivering of those inclusive learning materials is absolutely key for that. And then also, of course, by doing that to the best of our ability helps us to grow our business organically. And at the same time, we continue to focus to broaden our scope even further via M&A and to increase the number of students we support across Europe even further. So by combining educational technologies and also pedagogical expertise, we can really offer best-in-class learning products and services with the highest learning impact, but most importantly, accessible to all students. Thank you.

Data is crucial for both the Learning and the Media business. And that's why we would like to discuss data here in between the 2 business presentations. The presentation about data will be given by Ken Bardsen, our Chief Information Officer since 2018. And Ken will elaborate what kind of role data plays on top of governance perspective.

Data is at the core of our business. It is what powers our growth both in Learning and in Media. The broad and increasing wealth of content consumer and student data that we have access to is integral to how we operate. It creates both opportunities and responsibilities on how we use it. And as such, we have put data at the center of our sustainability strategy. And today, I'm going to tell you how we do that. Firstly, it's important to understand just how big an impact we have. It may seem obvious that data is very important to every business out there today. But to us, it is absolutely fundamental. You've heard Rob talk earlier about the scale and opportunity that we have in learning, and that means that the schools and parents of 20 million students trust us to use their data to improve the futures of their children and to keep it safe. In Media, our scale in Finland is impressive as we reach 97% of Finns weekly. This places a huge responsibility on us to deliver high-quality media with journalistic integrity. Our customers and our consumers trust us with their data to provide them personalized media experience. Every user of a digital solution leaves a digital footprint behind, and that's why protecting data and using it responsibly is at the core of our strategy. Let's have a look at how that works in Learning. Learning is an exciting place to be at the moment. The digital transformation in Learning is accelerating. It's driving growth and opportunity for students and teachers and ourselves. While the pandemic has been challenging for all of us, it has also significantly accelerated the use of digital learning tools. We saw a 31% increase overall as we supported schools in shifting to remote learning. Educators and students have been discovering new ways to learn at a much higher pace than any of us expected just over a year ago. Quality data is fundamental here to developing classroom-as-a-service, to keeping students highly engaged, to providing adaptive and personalized learning tools, and to helping educators to be more effective. It's important to note here that the schools are accountable for the children's data. They trust us to process this data on their behalf. They rely on our integrity. And I'm proud to say that we're driving much of this digital transformation. We use AI and data analytics to continuously develop and grow our products and services. For example, in our primary school platform, Bingel, teachers can monitor where individual students prefer completing their exercises, whether that's in school or whether that's outside of school, or they can holistically assess which exercises have the best success rates. Students are motivated to tackle appropriate next tasks based on recent performance and on a fun reward system. In its learning, teachers can monitor and adapt their effectiveness via dashboards and heat maps. This is based on a broad set of data providing them with feedback that they would otherwise never get. The data underpinning all of this is our children's data. Their privacy is paramount. It's something that we take very seriously. Let's switch to our Media business. You'll hear Pia talk about trust and inspiration in Media and the opportunities that it brings. Data is at the very heart of delivering on both trust and inspiration. And here, we would think of customer and subscription data. We would think about consumer data and consumer preferences, but also the content of our news and features is data that we use. And similarly to what we discussed in Learning, in Media, the opportunity to take more advantage from the data for our consumers is evolving rapidly. For example, by applying machine learning, we can drive a much better customer-centered marketing. We can enhance on the consumer experience, and we can deliver trusted journalistic content, and we do much more. In Media, it is not only our responsibility to safeguard all this data, but also to continuously improve on our journalism. Let's get a bit more specific on that. You'll be familiar with some of the industry challenges like news bubbles and inherent bias. We use AI and data to address these and to innovate in the journalistic process. I'll give you an example of what I mean. Mobile devices have very limited screen space. At Helsingin Sanomat, we use machine learning to blend user preferences with editorial choices. This creates an engaging personalized front page while ensuring that the editorial team stay in control of what kind of content everyone should have access to in order to avoid information bubbles. This is so important in maintaining trust both with consumers and with advertisers. I'll give you another example. The editorial team uses data analytics to track and manage and balance their content. Things like the percentage of articles that included women over the past day gives them the ability to course-correct in almost real-time to avoid bias. Now that we've covered a little on how data drives our business, let me switch to how we safeguard it. We govern the safeguards through 3 ongoing inputs. Firstly, we have an active risk management process, which collects internal and external risks. As an example, we would use threat intelligence services from specialist companies as part of that. Secondly, we stay abreast of regulatory requirements via our legal team, but also through our industry associations. One item we're currently following closely is the emerging EU legislation around the ethical use of artificial intelligence and privacy. Thirdly, we listen to our stakeholders, and they would include customers, suppliers, employees and a variety of others. These 3 things give us the insights to operate in a highly dynamic environment. Specifically, we have been running our privacy program for almost a decade. We have a robust team of people building privacy and data protection competencies across our organization. They also deal with advances in regulation, and they also handle actual data breaches. Information security is not new to us either. We continue to grow our investments in information security technologies. All employees are trained to keep them alert and knowledgeable about potential threats. One of the bigger threats companies face right now is ransomware, as certain U.S. oil pipeline company will tell you about. We continue to evolve our comprehensive business continuity program and crisis management to prepare for such an event. And we run broad business campaigns. We also improved on our digital perimeter tools to keep us safer. Over 4 years ago, we established our Privacy- and Security-by-Design process. This is a process which covers privacy impact assessments, development standards, compliance and much more. Developers are trained to design and develop secure solutions. The newest part of our safeguards is the development of ethical AI principles. This means focusing on the explainability of how the AI works, the ability to test its reliability and just give transparency about how we use that. As you would expect, we give this program the visibility that it deserves. Our program reports to an executive steering committee and it reports to the Board via the Audit Committee. It engages all of the stakeholders from customer representatives, data scientists, tech team, legal, developers, business process owners, third parties and a variety of task forces. We have a compulsory privacy and information security training of all our employees, which we keep focused on. Privacy and security KPIs are built into our incentive plans. Our network of over 35 business champions ensure that the program continues to meet the evolving needs of the business. Like everyone, we have some minor data breaches, but I'm happy to say that we've had no major data breaches. And just over 2 years ago, we lifted our business continuity program to a point where even during the pandemic, we have been able to run 20 rehearsals a year. There's much more, of course. But the bottom line of this is, while nothing is absolute, this program works, and it safeguards the data that powers Sanoma. It also puts us in a good position for our sustainability goals. As you've seen, data is critical to every aspect of our future. That's the reason we have chosen to put it at the core of our sustainability strategy and not treat it just as a compliance topic. As Susan mentioned earlier, it is consistent with the feedback from our suppliers and stakeholders who rated data as a key sustainability priority. Data certainly drives our business growth. We have a well-established security and privacy team process, and we value the ethical use of artificial intelligence. As you've seen, all of this is embedded in the way we do business day in and day out. I know it can be a lot to take in, so I'll leave you with these 3 thoughts. Firstly, data is at the core of all our business. Data drives our future growth, and we have a robust governance of our data. We know how to secure our data because we care about our data. Thank you very much.

Media is something that we all use every day in a form or the other. Sanoma Media Finland has a solid purpose to provide independent media also for future generations. Let Pia Kalsta, CEO of Sanoma Media Finland, and 2 of our editors-in-chief tell you more about it. [Presentation]

That was Sanoma Media Finland in 30 seconds. When talking about sustainability, we are actually talking about our business. Let me tell you how I see this. Our work in media is by default visible to public. We reach 97% of all Finns weekly. With that reach, combined with engaging content, we can have a positive impact on society. We need to earn the trust of our audiences every day, and by doing that, we keep and increase our audiences. And that, in turn, is a key to grow our business as well. So for Sanoma Media Finland, sustainability is in the core of everything that we do. It's difficult to distinct sustainability from the business itself. Our sustainability targets and actions are perfectly in line with the targets of our core strategic areas. In news and feature, it's all about fighting disinformation with fact-based content. It's about breaking down silos. It is about increasing awareness and tolerance with our portfolio of over 40 journalistic brands. In entertainment, we bring joy and relaxation to people. We contribute to togetherness and shared experiences, and do that together with the whole creative industry. Our B2B marketing services contribute to the success of Finnish companies through efficient marketing. When we measure the success of our business through our consumer KPIs, like engagement and readership, those same KPIs are actually very good KPIs for sustainability actions as well. Let me now give you a few examples to illustrate how sustainability can be good for the business and good for the society. The first example, Helsingin Sanomat, gives news a sub-brand of Helsingin Sanomat targeted at children from 8- to 12-year old, telling stories about politics, culture and sport. But why is this important? We feel that it's our duty to bring up educated, active citizens, to make sure that also children have access to news and that they get used to consuming journalistic content. But it has proven to be a good business as well. Within just a year, we have grown our subscription base to over 20,000 subscriptions. In addition, we deliver newspapers to Finnish schools to support media literacy in teaching. Helsingin Sanomat, the largest subscription paper in the Nordics, is a powerful platform to increase awareness on important topics for the society. In April '21 alone, Helsingin Sanomat published over 70 articles on climate and environment. And since we measure everything carefully, we know that this content is also highly appreciated by our readers, and that way contributes also to the success of our business. And the third example comes from our festival business. We are committed to paving a path to sustainable events, events that are safe, accessible to all, fair and carbon-neutral by 2030. In the short term, however, our key question is what to do with our festivals this summer. It would have been easier to cancel all of them since we know that they will not deliver profit this year due to the restrictions, but we feel very strongly with the artists and with the whole creative community suffering from the pandemic and also with all of us who are eager to go to festivals or who just want to listen to music -- live music with friends. So we will do our best to organize as many events as possible this summer, but to do that, of course, safely and responsibly. As you see, sustainability is deeply embedded in our business. We are not only committed, but excited about it. Everything that we do in sustainability contribute to engaging our audiences and our people, and thus also to growing our audiences and business. Interest in sustainability, ethics and transparency in the whole media industry actually works for Sanoma Media Finland, strengthening our position amid global competition. As said, sustainability is everyday choices. Let me now provide you with some firsthand experiences and insights on the topic from our 2 editors-in-chief. [Presentation]

Before we move on in the agenda, I would like to remind you of the opportunity to use the chat function for questions. We will moderate the chat and publish the questions we get on the platform, so you can see what other people have been asking. And moving on, both Learning and Media are knowledge industries, and that puts the skills, development, diversity and well-being of our employees crucial to our success. I would like to introduce our Chief HR Officer, Gieta Veersma, who has an extensive career in HR positions at Sanoma. She will elaborate more on our people strategy.

Good afternoon. As you know, Sanoma is a growing Learning and Media company on a successful transformation path. We are growing through both organic but also through acquisitions. This means that every day, we are integrating new businesses into older businesses. In practice, what this means is that we are integrating people and behavior, values and cultures. This obviously comes with demands on our employees, and the important question is, have we been able to keep our talent? Have we been able to keep up the motivation and integrate cultures? And are we able to attract new talents? The short answer is yes. According to many of our indicators, we know that we are an attractive company where people would love to work for and where they see exciting career opportunities. We see this reflected in not only our financial numbers, but also in our engagement index and also in our high staff retention numbers. Our sustainable success comes not only from our great growth stories, but comes also from our passionate and engaged people. What does our growth strategy look like when we look at the employee numbers over a period of the last 12 months? Over the last 12 months, we have successfully integrated another 700 employees into our businesses. How do we do this? Let me take as an example Santillana, our most recent acquisition, a leading learning company in Spain with 580 employees. At the start of every integration process, we kick off with an international onboarding program to connect Santillana to our strategy and to our Sanoma Learning family. Having companies in 11 countries across the whole of Europe means we have also culture differences. Therefore, we invest in culture awareness to enhance collaboration and deliver on our business strategy. For example, in our integration process with Santillana, but also Alma Media, the regional business media in Finland, we have done culture scans and workshops to support the integration of both companies and people. And we host town hall meetings to connect our new employees to our strategy and create with this a feeling of inclusion. These 5,000 passionate people are key to Sanoma's continuing success. Let's see what our people strategy looks like. From both global surveys and our own engagement with employees and customers, we can really see that the interest in sustainability is very high. So how do we define and develop our sustainability strategy? We do that through 3 focus areas, which are: well-being, training and safety; an inclusive workplace; we support an inspiring and a sustainable company culture. In the coming slides, I will give you some examples of our approach to deliver on these goals, and let's look at our goals more closely. As a Learning and Media company, the professional development of our employees is crucial to us. This is why we invest in talent and in leadership development. We use our regular performance reviews and our annual talent reviews to support the professional development of our employees. We also connect our employees through various center of excellences. These are platforms for us to create new insights, to share ideas, and that will bring us innovation. These centers currently are focused, for example, around pedagogies and around product development. We have a large portfolio on online trainings. On average, our employees uses 10 hours annual each on trainings like privacy, information security, ethics. As COVID-19 challenged our way of working and leading the businesses, Sanoma's goal is to ensure that managers are supported and equipped with skills and competencies to handle their work impactfully in this new situation. During the pandemic, we trained 150 managers in cooperation with Aalto University to manage their teams to work remotely and to keep the connection and motivation up and also reaching our business KPIs. In addition to investing in future leadership skills and training of our employees, we also invest in the mental and physical well-being of our people. During the pandemic, the #1 priority for us was to secure safety, motivation and engagement of our employees, but also safeguard our productivity and business results. Through surveys and discussions, we really learned what our staff needed and how we could support them in their well-being. We focus especially on reducing stress factors often related to the mental aspect of the work. Mental well-being is supported through management that helps employees in prioritizing their tasks and reaching their goals, but also initiatives to reduce the stress level of our people. For example, in Sanoma Media Finland, we started a project called Work to Belong to especially find those who feel lonely during this pandemic. We can really see in global surveys that especially millenniums feel loneliness during remote working. In addition to work-life balance and supporting the mental well-being, we can see a clear need for developing the physical well-being of our employees. In addition to competence development and well-being, one of the important things for our company culture is the feeling of inclusiveness. Do I belong to Sanoma? And is this a secure and positive environment for me? Also as Susan already mentioned, we are in our sustainability strategy committed to adopting the sustainability goals of the United Nations. Two important goals refer to building the diversity, reducing inequalities and building gender equality. These goals are something that we work towards because we believe that the feeling of secure and positive environment is built through respecting diversity and developing also an inclusive culture. Our diversity efforts are guided by the group diversity and inclusion policy approved by the Sanoma Board. Here are a couple of examples on how we approach that. One of the most important metrics that we follow is our annual employee engagement survey. The majority of our people feel that they are able to speak up and that we have a safe and inclusive work environment, and this is of great value for us. This brings motivation and high engagement and, thus, better business results. We develop an inclusive workplace for all genders and aim to have both genders equally in our management teams represented. To increase the diversity of our senior leadership teams, we track the share of women and men. Many generation also work together. As you see, ages of our employees ranges from 20 to over 60 years. Although we monitor diversity on an annual basis, and our community of almost 5,000 people is diverse in many aspects, we see building diversity one of the key future development areas. Ultimately, what we built through developing inclusion, well-being and our talents is a great place to work for everyone. Only that way we are able to attract new talents and keep the existing ones. Our engagement index shows that we have a very solid basis to build on. Our people really take pride in working for Sanoma, and this is what stands out in our employee engagement and also in other surveys we do. Here you can see our 2020 employee engagement results. Every year, the response rate has been high, and this really shows the commitment of our people. They want to express their opinions. In the results, we can also see that our passionate people are really driven by our purpose. Our employee engagement results were even higher than last year, despite the pandemic. And also compared to other benchmarks, Sanoma performed very well. We can see that the high engagement and commitment of our workforce leads to a high retention rate. An interesting fact is that, for example, over 40% of our employees have been with the company for more than 10 years. Ultimately, we want to, of course, also see our good results reflected on our employee Net Promoter Score. That is the score that reflects how many employees would recommend Sanoma as an employer. And currently, our score is 8.6, which is above European average, and that is really a great given. So why is a sustainable people strategy so important for Sanoma? To summarize, as you know, Sanoma is an ambitious growth company, and in order to help us be as competitive as possible and to meet our strategic and financial goals, we need to keep attracting talent and retain also the talented teams. And we will do this by continue to invest in training opportunities, also invest in a diverse and an inclusive workforce and, last but not least, continue to demonstrate and to show and tell that Sanoma is a great place to work for. Thank you for your attention.

Compared to many other industries, our climate footprint is relatively small. Yet, we have set ambitious climate target and have today committed also to science-based target approach in achieving those targets. So last but not least, Susan Duinhoven will give you more insight into our climate approach. She will also summarize the day and the presentations before we then move to Q&A.

Thank you, Kaisa, for this introduction, and let me now give a bit of a deep dive on our climate targets as part of our sustainability strategy. Even though Sanoma we have a small climate footprint, we see as, I would say, global citizens, the need to reduce emissions. And even though we're not a major contributor, we have put an ambitious target in place to come to zero emissions by 2030. And for that, we will do that in a science-based way, so the reduction targets will lead us through the science-based target initiative to 2030. And we strive to minimize our environmental impact across the whole of the supply chain, and that is important because we are only generating a very small part of our total emissions ourselves. But in addition, we will also -- being a Learning and Media company, we will also help create fact base about climate impact and climate improvements, and thus raise the environmental awareness. But if we then look at what is our climate footprint, there it's important to realize that close to 100,000 tonnes a year is our carbon footprint, but only 10% of that comes from our own facilities. So our own -- typically, rental cars or all offices, those type of facilities create 10% of the total emission. That means that 90% of the emissions come from our suppliers across the whole of the value chain, and that, therefore, drives an approach where we need to be quite oriented towards that supplier base in reaching our 2030 zero emission target. Our largest positive contribution is, as I just indicated, to add to the awareness and to contribute to what we would call the brain print in a positive way. If we then look at the 3 ways in which we want to contribute to reducing that climate footprint, we want to transform our own operations, and let me just give one example. We are transforming all our offices to renewable energy and using less energy as a whole. Take, for example, our head office in Helsinki done significant investments in order to reduce the energy consumption. But as I said, most important for us is to engage throughout our supply chain and to make sure that we select the right suppliers and help our suppliers through setting the right conditions and requirements in reaching their 2030 emission goals. But take there, for example, one thing that we have done in the past years where we went from in-house data centers, where we are not specialists in and therefore cannot easily mitigate the environmental impact, to cloud-based data centers, where specialist firms also take the right measures to minimize their climate footprint. And then the third part where we aim to contribute is being a voice for change for the positive, creating discussions, educating. And as you've seen in the presentation from Rob Kolkman, in Santillana, for example, educational materials were produced to highlight all the ESG objectives and teach children about sustainability, and that then includes the climate reduction targets. Now we find it very important that we do this in a structured way and that we, therefore, also know for sure that we will reach the 2030 targets. And we validate our climate targets by committing to the science-based target initiative. That's our commitment to reducing our already small climate footprint. And with that, I would like to close off the short deep dive into climate. And now let's look back at the event, and you have seen the examples out of the 6 themes that now compose our sustainability strategy. And you see us as 2 businesses, Learning and Media, with a positive impact on society growing in a sustainable way. So when you look at Sanoma as an investment, you see a sustainable investment. You see a growing learning company across Europe, already the leading player in K-12. You see the leading cross-media company in Finland, successful in its digital transformation. And you see us having EUR 300 million to EUR 400 million financial headroom that we intend to use to grow our learning business further. And when you look at Sanoma as an investment, you also see that our -- we have a strong commitment to a growing and solid dividend. So with that, I would like to round off the presentation part and hand back to Kaisa for questions.

Thank you. We have now concluded the presentations, and we'll give floor to your questions.

[Operator Instructions] And we have already received questions through the chat function in the webcast platform. We will start with those. [Operator Instructions] And now I think we have all the speakers also here live virtually to answer the questions. And we will start with the questions from the chat. First, about the people theme, so to Gieta, please. How difficult is it actually to attract talent and keep talent, especially related to tech and software skills? And how high demand is there for these skills in the market?

Thank you very much, Kaisa, for this question. Indeed, there is a war of talent going on and then specifically in the tech area. The way that we attract and retain tech people is through the nature of our companies, having that positive impact on society. And that, in itself, is a purpose that is really seen as a benefit to attracting these people. We also have a competitive remuneration for talents, and we offer them career opportunities and also development opportunities. So I would say, in itself, our company, also with a growth story and a sustainable growth story we have, is a very attractive place to work on the technical skills, and we also offer very attractive positions for those professionals.

Thank you. And I will continue with the people theme. Have there been any permanent changes to ways of working during COVID? Are there practices that will not come back as the virus environment normalizes?

Well, thank you again. And indeed, it's quite a topic, of course, when returning to the office. And we had quite a year behind us, almost 1.5 years of 100% remote working. And we are now working, and we also know through surveys we did with our employees, that they would like to keep the benefits from the remote working and combine that, of course, when meeting people. So how we see the future of work in our learning companies and our media company is that we do see that it will be hybrid. So on average, people will work remotely, but they will work also at the office. And that in itself will be, of course, a challenge in terms of how will that work. We will do this by learning and doing pilots and see how we need to implement it. It's not like that we already know how that would be going, but we need to see also, of course, how the governmental regulations in all the other countries are. But how we see the future of work is hybrid, and we will learn from that and implement it step by step in our company.

Thank you, Gieta. And moving on to the data topic. You have no major data breaches in 2020, but close to 200 minor ones. How can this be reduced? And is that a name? And what is the risk that a minor data breach comes -- becomes a major one? Ken, please.

Yes. Thank you. That's effectively 2 questions. So we have a very low threshold for reporting data breaches. So if we send an invoice to the wrong person, that we consider a data breach. And in reality, the bulk of these 200 minor data breaches are of that nature and not related to system errors or solution errors as such. So therefore, the risk of a minor data breach as becoming a major one is relatively low. We have, of course, identified the nature of what is causing these beaches, and we have put a program in place to reduce the handling errors that makes up the bulk of the 200 minor breaches.

Thank you, Ken. And here in between maybe a question on -- from the ESG perspective about KPIs. What are the top 5 sustainability KPIs to focus on to assess annual development in Sanoma's sustainability road map? And maybe in my position, I will actually answer it myself without handing over to the speakers. I think the top KPIs to follow are related to our emissions, Scope 1, 2 and 3, so throughout the value chain. And on the data metrics that Ken already discussed, privacy e-learnings there and then, on the other hand, the breaches. And finally, the people topic, the employee engagement survey results are clearly key to us, and data and people KPIs also tied to our remuneration. And then let's move on to the climate topic. And related to that, when will Sanoma be carbon-neutral in its own operations? And what are Sanoma's climate-related commitments? And how -- what do they cost? I will hand this over to Susan.

Yes. The commitment that we have is very clear that we want to be emission-neutral by 2030. And that is, of course, across the whole of the value chain, so including both our own operations and suppliers. For our own operations, we expect to be earlier already carbon-neutral. With respect to the cost, that has been taken into our long-term budgets and into our guidance to the market for each of the businesses. So in that sense, it is very much part of our ongoing business and been included already in the earlier guidances.

Thank you. And continuing on the climate theme, how dominant is paper in the carbon footprint of the value chain? And in what ways can you reduce paper's CO2 footprint?

Yes. The paper is clearly one of the elements, and we see that, together with distribution and hosting, those are key elements for us across the value chain that create emissions. We are working with our suppliers to come up with, for example, lower grainage of paper, with still high-quality performance in order to reduce the emissions. And then the majority is, of course, with the suppliers and the supplier selection to make sure that their emissions will be neutral by 2030.

Thank you, Susan. And then moving on to a question about media. Do you consider your Media brands' combined share of condemnatory decisions issued the Council of Mass Media an important KPI? And if so, what is an acceptable level. Pia, please.

Thank you for a very good question. Of course, it would be alarming if our share would be over proportionate, which is not. But I think it's important to keep in mind that all our Media brands work under editors-in-chief. So in the -- Ilta-Sanomat make independent decisions. Helsingin Sanomat make independent decisions And also like Me Naiset make independent decisions. But for us, every case is a learning case, and we learn every day. And also with these decisions, we learn and develop the rules of journalism.

Thank you, Pia. And then we have one question about taxes, and I would like to hand this over to Markus Holm. How do you address the theme of being a responsible taxpayer?

Of course, we have a tax policy like all listed companies have that we follow carefully. And also we follow the local laws and regulations related to local taxation.

Thank you, Markus. [Operator Instructions] No questions there at the moment. I'm quickly scrolling through that we have tackled the questions that we have received so far, I think so. So in case there are no further questions, I would like to thank for participating the event, and I hope that this event gave you good insight to sustainability at Sanoma. And we would naturally like to continue to engage with all our stakeholders, so if you have any questions after the event, please be in contact with us at IR and Sustainability. And we would also value your feedback, and the feedback -- or link to our feedback survey is available on the event platform. And so thank you once more, and this now concludes the event.