Metsä Board Annual and sustainability report 2022





The EU Taxonomy

Conduct also includes a commitment to anti-corruption and anti-bribery. In the ethics barometer conducted in 2022 surveying the implementation of the Code of Conduct in practice, the risk of financial misconduct did not emerge. Compliance and Ethics channel Metsä Group has a joint Compliance and Ethics Channel through which personnel and stakeholder representatives can anonymously report any shortcomings they detect. The reporting of such shortcomings is encour- aged, for example, in the Code of Conduct online training. All breaches and violations, as well as suspected breaches and violations, brought to the attention of the company are investigated. The Compliance Committee is responsible for guiding and implementing the investigation. In 2022, Metsä Board received a total of 6 (10) cases that led to an investigation. The cases are categorised as fraud or other criminal activity, corruption and bribery, competition law, conflicts of interest, human resources issues, discrimi- nation, privacy and data security, work safety, environment, violations of the Supplier Code of Conduct and other cases. None of the cases resulted in legal proceedings, administrative investigations or fines, nor did they concern corruption, bribery, human rights violations, child or forced labour. Supply chain Sustainability of wood procurement is ensured through a process described in the section Environment. The sourcing of other raw materials and services is centralised in Metsä Group, where a Group-wide purchasing process ensures that partners in the Group’s supply chain act responsibly. This aims to minimise risks in the supply chain, such as those related to the environment, health, corruption, child labour and human rights violations. Metsä Board’s minimum requirement in supply agreements is that suppliers commit to Metsä Group’s Supplier Code of Conduct or equivalent supplier-specific principles. In addition, the supply agreements may contain other sustainability requirements. A risk analysis is carried out as a part of the supplier selection process. It considers the suppliers’ country and category risks as well as their compliance with the law. Metsä Board conducts third-party due diligence in the Know Your Business Partner background check, which investigates a supplier’s background for trade sanctions, money laundering, corruption, human rights violations and other key risks. Metsä Board also has a similar process in place for customers. In addition, the key suppliers and potentially risky suppliers are subject to a sustainability assessment questionnaire. The results of these can be found in the table Non-financial key figures. Metsä Group and external parties audit some of Metsä Board’s suppliers each year. Based on the assessments and audit results, suppliers are informed of deviations and recommendations, and suppliers who are expected to improve their sustainability management are followed up. In 2022, Metsä Group conducted 2 (0) audits and external party 14 (17) at the premises of Metsä Board’s suppliers. In 2022, Metsä Board continued to improve the traceability of raw materials, such as process, base and coating chemicals, and packaging materials. The aim is to make information on the country of raw material production a more integral part of risk analyses to better target supplier background checks and audits to suppliers in high-risk countries. The identification of risk countries is based on the CPI (corrup- tion perception index), which measures the level of corruption in the public sector in different countries.

General The Taxonomy is a classification system for the financial market based on Regulation (EU) 2020/852, valid as of the beginning of 2022, which lists economic activities that qualify as sustainable in terms of the climate and the environment. The goal of the Taxonomy is to channel money to sus- tainable investments so that the EU can achieve the ambitious emissions reduction targets it has set for itself. According to the European Commission, the Taxonomy is under contin- uous development. The Commission has prioritised the establishment of criteria for economic activities that offer the greatest potential contribution to the climate and the environment. Metsä Board’s main business operations, the paperboard and market pulp businesses, are not currently covered by the Taxonomy. The company’s Taxonomy-eligible and Taxono- my-aligned economic activities, especially in sales and operating expenses, account for only a minor share. Metsä Board is currently unaware of the schedule and extent to which the Taxonomy’s scope may come to cover the company’s main economic activities. Metsä Board’s key objectives include the mitigation of global warming and adapting business operations to a low-carbon future. The company aims for entirely fossil free production and products by the end of 2030. In accordance with the principles of the circular economy, Metsä Board focuses in sustainable forest use and resource-efficient processes. In addi- tion, it focuses on minimising waste and emissions and keeping materials in circulation for a long time. Metsä Board’s products offer an alternative to products made from fossil-based raw materials. Taxonomy reporting The Taxonomy defines six sustainable environmental objectives against which different economic activities are assessed. These environmental objectives are: (a) climate change mitigation; (b) climate change adapta- tion; (c) the sustainable use and protection of water and marine resources; (d) the transition to a circular economy; (e) pollution prevention and con- trol; and (f) the protection and restoration of biodiversity and ecosystems. For the 2022 financial period, Metsä Board will disclose information on its Taxonomy-eligible and Taxonomy-aligned business operations in terms of the climate objectives, that is, climate change mitigation and climate change adaptation. Business disclosures include the share of sales, capital expenditure and operating expenses. The Taxonomy-aligned disclosures indicate how the economic activity in question supports the confirmed environmental objectives. An economic activity is considered Taxonomy-aligned if it contributes substantially to one of the defined environmental objectives and causes no significant harm to the other objectives. In addition, operations must meet minimum social safeguards. Metsä Board’s reporting principles In its Taxonomy-eligible sales, Metsä Board includes the product and service sales included in Metsä Board’s reported sales. The company’s Taxonomy-aligned sales include the sale of electricity produced with bio- energy at the Husum pulp mill under category 4.20 Cogeneration of heat/ cool and power from bioenergy. Taxonomy-eligible sales under category


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