Metsä Board Annual review 2023

METSÄ BOARD Annual review 2023

• The CEO presented one environmental review, including matters such as the most significant observed environmental risks and adverse events. • The SVP, Development and Metsä Group’s sustainability specialist presented one sustainability review, discussing matters such as the company’s plan for transitioning to fossil free production and the actual progress made in the 2030 sustainability targets. • The SVP, Development presented two R&D reviews, including a plan for innovations to support the achievement of the 2030 sustainability tar- gets, create new products and improve the company’s competitiveness. • The CEO reported on occupational accidents monthly and presented one review of accidents and one follow-up review of the development of the company’s occupational safety. • The Board of Directors discussed Metsä Group’s new service related to wood supply, which aims to improve biodiversity, once. • The Board of Directors discussed a legal affairs review once, including topical information about regulatory reforms concerning the Board of Directors’ and the company’s operations. • The Board of Directors decided on updates to several of the company’s policies and guidelines. • In the 2023 financial period, the Board members, CEO and Corporate Management Team completed an e-learning course on the company’s insider guidelines. Board Committees To ensure the efficient management of the Board’s duties, the Board of Directors has appointed an Audit Committee and a Nomination and HR Committee from among its members. They prepare the decisions made by the Board and support the Board in its supervisory role. The Audit Committee’s tasks are determined by the Limited Liability Companies Act and the Committee’s written Rules of Procedure approved by the Board. Among other things, the Audit Committee assesses the effi- ciency and scope of internal control, internal audit and risk management systems, key risk areas, and compliance with the law and regulations. It also approves the annual plan for internal audit and reviews the audit reports. In addition, the Audit Committee discusses the information secu- rity review twice a year and the compliance review once a year. The results of the company’s risk assessment are presented to the Audit Committee twice a year. The risk assessment results also include any sustainability-re- lated risks, to the extent that these are assessed to be of key importance to achieving the company’s operational targets. The tasks of the Nomination and HR Committee are defined in the Com- mittee’s written Rules of Procedure approved by the Board of Directors. Among other things, the Committee assesses the effectiveness of human resource management processes, including occupational health and safety and the wellbeing and development of employees. The Committee reviews the results of employee surveys, assesses the results of studies measuring the ethics of activities, prepares the forms of remuneration and incentive schemes, and approves their key principles and criteria It also supervises the implementation of social responsibility in remuneration and appointment matters and the company’s other operations, including the realisation of human rights and the employees’ workplace wellbeing. The Committee also prepares a proposal on the Board’s composition to the Annual General Meeting, and in connection with preparing the proposal, it annually reviews and assesses the Board’s independence, experience and competence, for example.

In the 2023 financial period, the Board’s Audit Committee convened five (2022: 4) times and discussed the following sustainability topics at its meetings: • The CEO made quarterly presentations of the company’s key sustain- ability figures, the strategic sustainability targets up to 2030, and the most significant risks and uncertainties related to the environmental, employee and social matters. • Metsä Group’s VP, Compliance and Ethics presented one compliance review to the Audit Committee, including a report of misconduct cases examined in the company, completed e-learning courses, the results of the employees’ ethics barometer, and a plan for the development of diversity and equality. • The Audit Committee twice discussed an information security review concerning the company’s information security risks and measures. • Metsä Group’s internal auditor presented the company’s internal audit report and action plan twice. • The Audit Committee once discussed the annual internal control monitoring report, which includes key sustainability controls and their results. • The Audit Committee discussed regulatory development related to sustainability reporting three times. CEO and Corporate Management Team Metsä Board’s CEO is in charge of the implementation of sustainability measures in accordance with the Board’s instructions. Once a year, the CEO reports to the Board on material impacts, risks and opportunities related to sustainability and on the progress made in sustainability targets by presenting a sustainability review and a separate environmental review to the Board, either alone or jointly with the company’s sustainability specialists In addition, the CEO presents to the Board of Directors an occupational safety review and, jointly with the SVP, Development, an R&D review once a year. The CEO reports to the Board without delay on all sustainability-related risks with a significant impact on the company. The company’s Corporate Management Team prepares sustainabili- ty-related matters before the CEO presents them to the Board of Directors and for its part, supervises the implementation of the approved sustaina- bility measures and sustainability-related impacts, risks and opportunities regularly at its meetings. Of the Corporate Management Team’s members, the SVP, Development is responsible for research and product development, business develop- ment and sustainability. The SVP, Development reports monthly to the Corporate Management Team on topical sustainability-related matters that affect the company. Metsä Board’s and Metsä Group’s sustainability specialists present a review of sustainability matters to the Corporate Management Team twice a year. The SVP, Development participates in the management team of Metsä Group’s sustainability process and reports the results of sustainability measures to the team quarterly. The SVP, Development manages Metsä Board’s product safety and sustainability function, which includes the company’s Product Safety and Sustainability Director and several specialists. The team works in close cooperation with production, wood supply, procurement and logistics, HR, marketing and sales, communications, investor relations, finance, and legal affairs. Wood supply and procurement are centrally handled in Metsä Group. The SVP, Development ensures that the sustainability principles and targets defined by the company are integrated into the daily work

of employees, and that the company’s suppliers, customers and other partners are also required to operate sustainably. In addition, the company’s CFO heads Metsä Board’s Risk Committee, which handles sustainability risks as part of the company’s general risk assessment. The Corporate Management Team regularly discusses reviews related to occupational safety, the environment, energy, information security and compliance. In addition, the Corporate Management Team discusses the internal control monitoring report, including sustainability controls and their results, twice a year

The Board of Directors’ tasks include approving the key business policies and orders aimed at ensuring Metsä Board’s compliance with the law and the company’s internal business principles. All the Board members have gained significant experience of good governance from their previous duties in operative management and/ or as Board members in a listed company or another large corporation. The Board members annually complete training in the company’s insider guidelines. ■ Integration of sustainability-related performance in incentive schemes At Metsä Board, remuneration is based on the following principles: • Ensuring sustainable and responsible business operations • Ensuring performance and profitable growth

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

Strategy and financial targets

Value creation

The expertise and skills of Board members regarding sustainability

Financial development 10 Key figures 12

The sustainability-related expertise and skills of Metsä Board’s Board members are ensured with regular sustainability, environmental and compliance reviews in accordance with the annual cycle, which provide the Board members with information about material impacts, risks and opportunities related to the company’s sustainability, and the progress made in the company’s sustainability targets. The reviews are presented by the company’s and Metsä Group’s internal specialists in various fields. If required, the Board of Directors and its committees can also acquire third-party expertise in sustainability matters. Several Board members have many years of experience of sustainability-related impacts risks and opportunities concerning the company’s branch of industry and its prod- ucts, which they have acquired from operative duties or positions of trust. Good governance In its governance, Metsä Board complies with Finnish laws, especially the Limited Liability Companies Act, the company’s Articles of Association, and rules and regulations issued under the law, as well as the rules and recommendations of Nasdaq Helsinki as applicable to listed companies. As a Finnish listed company, Metsä Board complies with the Corporate Governance Code for Finnish listed companies, effective as of 1 January 2020, which was issued by the Securities Market Association and contains recommendations on good governance. The Code is available at www. cgfinland.fi/en. Metsä Board does not currently depart from the Code’s recommendations. The Board of Directors and the CEO are in charge of Metsä Board’s administration. At Metsä Board, good governance is ensured with clear management and leadership, internal control, and internal auditing. External auditing is handled by the company’s auditor. The goal of internal control is to ensure the achievement of the company’s goals and targets; the economical, appropriate and efficient use of resources; the reliability and correctness of financial and other man- agement information; compliance with external regulations and internal policies; sufficient security of operations, information and property; and adequate and appropriately arranged manual and IT systems to support operations. The company’s internal audit assists the Board in its supervisory role and supports Metsä Board and its management in achieving the company’s targets by providing a systematic approach to assessing and improving the effectiveness of risk management, control, governance and management processes. The processes and tasks of Metsä Board’s internal control and audit are described in more detail in Metsä Board’s Corporate Governance Statement.

Report of the Board of Directors

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• Sustainability statement • Sustainability statement assurance report

• Supporting competence development and renewal • Consistency, competitiveness and transparency

Consolidated financial statements

To ensure the sustainability and responsibility of its business, Metsä Board uses remuneration to support the achievement of its strategic, operational and sustainability targets. The company encourages activities in line with its values and interests – responsible profitability, reliability, renewal and cooperation. The principles of Metsä Board’s remuneration and the overall remu- neration of the administrative, management and supervisory bodies are described in more detail in the Remuneration Report and Remuneration policy . The Board of Directors approves the CEO’s salary and remuneration, as well as the principles applied to the remuneration of other members of the Corporate Management Team. The Board of Directors also approves the structure, target group, principles and indicators of the company’s remuneration schemes and the relevant target values for the indicators. The Board of Directors’ Nomination and HR Committee assists the Board in handling matters related to the remuneration, terms of employment and rewarding of management and prepares the Board’s decisions concerning management remuneration. The CEO decides on the compensation of other Corporate Management Team members in cooperation with the Chair of the Board of Directors and in accordance with the principles approved and guidelines issued by the Board. The remuneration of the Board of Directors is not linked to Metsä Board’s performance. In 2023, sustainability was included in the annual personal goals of every Metsä Group employee. The target-setting model will continue to encourage the continuous assessment and improvement of sustainability matters. In 2023, the maximum level of remuneration available in the CEO’s short-term incentive system was, accounting for Metsä Group’s EBIT multiplier, 75% of the fixed annual salary. The reward is based on Metsä Board’s operating result (50% weighting) and the strategic targets defined by the Board of Directors (50% weighting), as well as the realisation of Metsä Group’s EBIT multiplier. In 2023, the CEO’s sustainability targets were related to Metsä Board’s 2030 sustainability targets, including occupational safety and strategic projects, the aim of which is to reduce fossil-based CO 2 emissions, promote the use of fossil free raw materials and reduce process water use in production. In 2023, the maximum level of remuneration available in the short-term incentive system for other Corporate Management Team members was,

78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board

170 Remuneration report 174 Investor relations and investor information

Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2023