E – Environment
METSÄ BOARD Annual review 2023
Based on the results of the materiality assessment, Metsä Board’s key sus- tainability matters include climate change, biodiversity, the environmental impacts of products, and the occupational safety of the company’s own workforce and value chain workers. The results of the materiality assess- ment are presented on page 26 . Sub-topics classified as moderate (a value of 5–9) or high (a value of 10–25) were determined as material sub-topics. The table does not include sub-topics of low materiality. The results of the materiality assessment and the general annual risk assessment process guide the management of sustainability risks. Metsä
Group’s internal control unit monitors and reports on sustainability risks to Metsä Board’s Corporate Management Team and Audit Committee in accordance with Metsä Group’s general internal control governance model and the annual cycle. The control of sustainability risks is planned, described and implemented on a risk basis in business processes. Control is carried out in accordance with Metsä Group’s general model for internal control. Internal controls are described in more detail in the Corporate Governance Statement .
financial statements. The overall turnover used to calculate the key figure corresponds to the turnover disclosed in the consolidated financial statements. The accounting principles used for turnover are discussed in Note 2.2 to the consolidated financial statements. In category 4.20 (cogeneration of heat/cool and power from bioenergy), the Group’s taxonomy-aligned turnover includes the turnover of electric power produced with bioenergy at the Husum pulp mill. Taxonomy-eligible turnover in category 4.20 includes the turnover of district heat produced at the Simpele and Kyro power plants to the nearby regions. Capital expenditure Metsä Board’s taxonomy-eligible capital expenditure includes additions to tangible and intangible fixed assets, including any additions to right-of-use assets recognised based on long-term lease agreements. Any increase in goodwill recognised for acquisitions is not included in the capital expendi- ture specified in the Taxonomy. These items are handled in accordance with IAS 38 Intangible Assets, IAS 16 Property, Plant and Equipment, and IFRS 16 Leases. Additions to intangible assets are presented in Note 4.1, and additions to property, plant and equipment in Note 4.2, to the consolidated financial statements. Taxonomy-aligned capital expenditure includes investments made in the Husum pulp mill recovery boiler and turbine under category 4.20. Taxonomy-eligible capital expenditure also includes maintenance invest- ments in the Simpele and Kyro power plants under category 4.20, as well as maintenance investments in the Kaskinen power plant and chemicals recovery facility under category 4.24. Category 3.2. (Renovation of existing buildings) includes renovation investments in Metsä Board’s real estate. Operating expenditure Metsä Board’s taxonomy-eligible operating expenditure includes research and development expenditure recognised as expenses and the mainte- nance costs of production units and property, supplemented by the costs of waste management and short-term lease agreements. The reported expenses include both external service costs and the wages, including indi- rect employee costs, of the company’s own employees responsible for the listed activities. In the group’s income statement, the operating expenditure specified in the Taxonomy is included in materials and services, employee expenses and other operating expenses. Operating expenses are disclosed in Note 2.4 to the consolidated financial statements. Operating expenses related to the recovery of chemicals and heat at the Husum pulp mill under category 4.20 make up the most significant part of the taxonomy-aligned operating expenditure. Taxonomy-eligible operating expenditure under category 3.2 includes the repair costs for the company’s real estate assets. Taxonomy-eligible operating expenditure also includes the costs of Simpele and Kyro power plants in category 4.20 and costs of Kaskinen power plant and the chemical recovery plant in category 4.24. To avoid double counting, external sales have been included in the Tax- onomy operations only once. In addition, measures have been adopted to ensure that capital expenditure and operating expenses are kept separate for each operation.
The EU Taxonomy
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
■ General The Taxonomy is a classification system for the financial market based on Regulation (EU) 2020/852, valid as of the beginning of 2022, listing economic activities sustainable in terms of climate and the environment. The goal of the Taxonomy is to direct money to sustainable investments so that the EU can achieve its ambitious emission reduction targets. The Taxonomy does not currently include technical screening criteria for Metsä Board’s main business operations, the paperboard and market pulp businesses. ■ Taxonomy reporting The taxonomy defines six main environmental objectives against which the company’s different economic activities are assessed. These environmental objectives are: (a) climate change mitigation, (b) climate change adaptation, (c) sustainable use and protection of water and marine resources, (d) transition to a circular economy, (e) pollution prevention and control, and (f) protection and restoration of biodiversity and ecosystems. For the 2023 financial period, Metsä Board discloses its taxonomy-eligible business activities in terms of all six environmental targets, as well as its taxonomy-aligned business activities in terms of climate change mitigation and adaptation. Business disclosures include the share of sales, capital expenditure and operating expenditure. 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, the activity must meet minimum social safeguards. Metsä Board has carried out its assessment of taxonomy eligibility and taxonomy alignment based on the EU Taxonomy Regulation, the Climate Delegated Act and the best interpretation of the currently available guidelines issued by the European Commission. Metsä Board’s specialists in each topic have assessed whether the financial operations indicated in the Taxonomy meet the criteria of taxonomy alignment. For each financial operation, the assessment considered the criteria for ‘significant contribu- tion’ and ‘no significant harm’ to determine taxonomy alignment. Minimum safeguards were examined at the company level. Metsä Board was also supported by external specialists in the assessment. The assessment and its results have also been externally assured. In Metsä Board’s opinion, the company meets the Taxonomy’s minimum social safeguards, which cover human rights, corruption and bribery, fair competition and taxation. The company has reviewed each of these from two perspectives: the presence of relevant processes and the addressing of violations. For example, human rights due diligence is described in more detail under this Sustainability statement’s sections S – Social responsibility and G – Governance .
Strategy and financial targets
8
Value creation
Metrics and targets
Financial development 10 Key figures 12
2023 ACTUAL
2023 PROGRESS
TARGET
2030 TARGET
UN SDG
Report of the Board of Directors
E – ENVIRONMENT 1. Safeguarding biodiversity and the ecological sustainability of forest use MG: Retention trees on regeneration felling sites, %
20 72
• Sustainability statement • Sustainability statement assurance report
• • • • • • • • • • • • • • • • • • • • • • • •
100
96
13, 15
MG: High biodiversity stumps on harvesting sites, %
100
92
13, 15
74
Consolidated financial statements
MG: Spruce as the only tree species after young stand management, %
0
25
13, 15
MG: Measures promoting biodiversity, number
10,000
816
13, 15
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
2. Mitigating climate change and reducing emissions Improvement in energy efficiency from the 2018 level, %
+10
-5.8
7, 12, 13
Fossil-based carbon dioxide emissions (Scope 1 and Scope 2 market-based), t
0
184,713
12, 13
Share of target group suppliers with targets set in accordance with the SBTi by 2024 (Scope 3), %
70
19
13
Fossil free raw materials and packaging materials, share of dry tonnes, %
100
98.8
9, 12
MG: Amount of forest regeneration and young stand management from the 2018 level, %
+30
+14
13, 15
MG: Amount of forest fertilisation from the 2018 level, %
+50
-26
13, 15
MG: Share of continuous cover forestry in peatland forest regeneration, %
30
17
13, 15
MG: Amount of carbon stored in wood products from the 2018 level, %
+30
-21
12, 13
3. Resource efficiency and sustainable production Reduction in process water use per produced tonne from the 2018 level, %
-35
+2.0
6, 12
Process waste delivered to landfills, t
0
1,164
12
S – SOCIAL RESPONSIBILITY 4. Respecting everyone and doing the right thing Anonymous recruitment for vacancies open to all, %
100
72
5, 8
Women in management positions, %
>30
21
5, 8
5. Promoting safety and wellbeing at work Total recordable incident frequency, own employees (TRIF)
0
6.1
8
Employee job satisfaction
AAA
A+
5, 8
G – GOVERNANCE 6. Innovation and open-minded cooperation and 7. The significance of forest-based bioeconomy to society Implementation of ethics barometer measures, % 100
100
5, 8
Traceability of raw materials, share of total purchases, %
100
97
9, 12
170 Remuneration report 174 Investor relations and investor information
Share of certified wood fibre, %
>90
91
15
Suppliers’ commitment to the Supplier Code of Conduct, share of total purchases, %
100
99.0
8, 12
Supplier assessments and audits of core suppliers, %
100
68
8, 12
MG: Joint sustainability targets with partner suppliers, %
100
100
12, 13
Progress in 2023 compared with the previous year. Exceeds target (significant progress) • On target (progress as planned) • Short of target (no progress or weaker progress) •
MG: The target has been set at the level of Metsä Group. Targets will be reached by the end of 2030. For example, fossil fuels will be abandoned by 31 December 2030. Metsä Board’s target of “0 accidents at work” also applies to service suppliers. In future, service suppliers will be included in the performance figure. The targets for different topics are described in more detail in the topic-specific sections of this Sustainability statement.
■ Reporting principles
Turnover In the calculation of the key figure for turnover, Metsä Board applies the same IFRS-compliant accounting principles applied in the consolidated
28
29
Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2023
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