Metsä Board Annual and sustainability report 2022

■ R&D and innovation In Metsä Board’s R&D, ensuring and developing the recyclability and compostability of paperboards is of key importance. In the fibre-based packaging material circular economy, the company’s task is to provide the market with premium fresh fibre paperboards as resource-efficiently as possible, contribute to the replacement of fossil-based materials and reduce the carbon footprint of packaging. The company continues to focus on reducing the weight of paperboard and developing recyclable protective coatings for use in food packaging. The weight reduction of paperboards plays a key role in the pre-engineering of the Kaskinen folding boxboard mill, which aims for world-class resource efficiency and a product that enables a reduced carbon footprint. The mill is designed to run fully fossil free production with notably lower wood, energy and water consumption per tonne of folding boxboard produced compared to currently operating production units. In the biobarrier programme launched in 2021, the company continued to study new alternative products for reducing plastic. Several potential products are being tested in the laboratory, and some have proceeded to production testing. In 2022, Metsä Board’s 360 Services system was used actively to strengthen customer relationships. The Excellence Centre in Äänekoski hosted 45 packaging development workshops. The production of Metsä Group’s 3D fibre product began in May 2022 at Metsä Group and Valmet’s demo plant in Äänekoski. The products are pressed into their final form using brand new technology. The renewable and recyclable product is a good alternative to plastic in food packaging, for example. In 2022, Metsä Board’s research and development expenses totalled EUR 6.1 million (6.0), or 0.2% (0.3) of sales. The costs include direct expenses, excluding depreciations and operational investments.

the company’s self-sufficiency in pulp and ensure end products of consist- ently high quality. Metsä Board’s decision-making is guided by financial and sustainability targets and long-term, responsible growth of shareholder value. Climate change mitigation and efficient use of resources are an integral part of the company’s strategy and operational business. Metsä Board’s goal is to have fossil free production and products by the end of 2030. Lightweight, recyclable and/or compostable products that are produced resource-effi- ciently have a low carbon footprint, support the circular economy and offer alternatives to plastics. For example, a Metsä Board cherry tomato box made from paperboard has a carbon footprint up to 80% lower than a box made from recycled plastic, according to an independent study (Source: Natural Resources Institute Finland). Meeting ambitious targets will require investments, operational development and introduction of new solutions. For more information on sustainability targets, see the section on Material aspects related to non-financial information. Sustainability governance Work at Metsä Board is guided by Metsä Group’s Code of Conduct, comple- mented by policies concerning personnel, equality, environmental matters, competition law and information security, among other things. All Metsä Board mills apply quality, occupational health and safety, environmental and energy efficiency management systems as well as the management and monitoring system required by food safety. At Metsä Board, the realisation of sustainability is supported and monitored by the company’s Board of Directors, CEO and Corporate Man- agement Team. Sustainability is incorporated into the company’s strategy, long-term business and investment plans, risk assessments and annual action plans approved by the company’s Board of Directors. The Board discusses and approves sustainability topics presented by the CEO, such as sustainability targets and related investment plans, and monitors their implementation. Sustainability topics are regularly discussed by Metsä Board’s Corporate Management Team and Board of Directors several times a year. The CEO is responsible for implementing sustainability measures in accordance with the instructions given by the Board of Directors. The SVP, Development, is responsible for research and development, business development and sustainability, and participates in Metsä Group’s Sus- tainability Process Management Team and reports on the realized results of the sustainability measures to the Sustainability Process Management Team quarterly. Each Metsä Board employee’s performance bonus target includes a measurable sustainability target, which is defined on a person- or unit-specific basis based on the job function. In 2022, the management’s sustainability targets included occupational safety, reduction of energy and water use, sustainability cooperation with customers and development of sustainable products. For a more detailed description of sustainability management and the link between sustainability and remuneration, see Metsä Board’s Sustainability Report 2022 pages 20–21.

■ Disclosure of non-financial information

Business model Metsä Board is part of Metsä Group, and benefits from Metsä Group’s unique value chain, from pure northern fibre to end products. The company produces premium recyclable fresh fibre paperboards, used mainly in consumer product packaging. Metsä Board’s eight production units are located in Finland and Sweden, close to its main raw material, high-quality northern wood fibre. The raw wood is sourced centrally through Metsä Group, mainly from Finland and Sweden. The wood is sourced only from forests, in which the regeneration of the forests and biodiversity is safeguarded. This is explained in more detail in the section Environment - Forests and raw materials. Most of the wood purchased in Finland comes from forests owned by Metsäliitto Cooperative’s owner-members. In Sweden, the company has a long-term wood delivery agreement with the Swedish forest owner cooperative Norra Skog. Metsä Board owns 24.9% of its associate company Metsä Fibre. Metsä Board’s own pulp production and holding in Metsä Fibre together secure


Report of the Board of Directors | METSÄ BOARD ANNUAL AND SUSTAINABILITY REPORT 2022

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