Metsä Board Annual review 2023

E1 – Climate change

METSÄ BOARD Annual review 2023

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023

Material impacts, risks and opportunities related to climate change mitigation and energy

DNSH criteria (‘does not significantly harm’)

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

Financial year 2023

Year

Substantial contribution criteria

Impacts

Risks and opportunities for Metsä Board

Management

Greenhouse gas emissions in own operations Metsä Board’s production generates climate-warming greenhouse gas emissions (Scope 1 and Scope 2), p. 37.

Market opportunity : By generating and consuming renew- able energy, Metsä Board can replace fossil-based energy sources. Renewable energy already accounts for 74% of the energy used in Metsä Board’s production (Scope 1 and Scope 2), p. 37. Most of the energy generated at Metsä Board is used in the company’s own production, and the company’s energy self-sufficiency is high. Market opportunity : In 2023, Metsä Group studied technical and business opportunities for recovering biogenic carbon dioxide and reusing it as a raw material for renewable bioproducts. Regulatory risk : Regulation sets significant requirements for new production technology reducing emissions or affects the sustainability criteria of biogenic carbon dioxide emissions in terms of climate neutrality. This may cause changes in the pricing of energy and greenhouse gas emissions, increasing expenses in both production and transports. Market opportunity : Metsä Board’s main raw material, wood, is mainly procured from Finnish and Swedish forests (p. 67), keeping transport distances – and thus emissions – moderate. Regulatory and market risk : Regulation and customer requirements increase the demands to reduce greenhouse gas emissions in the value chain. A comprehensive identi- fication, accurate measurement and reduction of climate impacts is more challenging in the value chain than in the company’s own operations.

• Metsä Board’s strategic target is to improve energy efficiency and the transition to entirely fossil free fuels, as well as fossil free purchased electricity and heat. • During the financial year, a survey was conducted on the feasibility of technological carbon sinks in Metsä Group’s operations. • Active dialogue with policymakers develops the oper- ating environment. Political influencing is discussed in more detail in section G1 – Business conduct.

Strategy and financial targets

Value creation

The company’s biogenic carbon dioxide emis- sions are classified as carbon-neutral, p. 37.

Economic activities

Financial development 10 Key figures 12

EUR million %

Y; N; N/EL

Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

Metsä Board produces renewable energy from bio-based fuels, which mainly comprise wood- based production side streams and logging residue.

Report of the Board of Directors

A.1 Environmentally sustainable activities (Taxonomy-aligned) Cogeneration of heat/cool and power from bioenergy CCM 4.20.

20 72

• Sustainability statement • Sustainability statement assurance report

5.2 4% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y

OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)

5.2 4%4%0%0%0%0%0%Y Y Y Y Y Y Y

Greenhouse gas emissions in the upstream and downstream value chain Metsä Board’s upstream and downstream value chain generates climate-warming green- house gas emissions (Scope 3), p. 37.

Consolidated financial statements

Of which enabling 0.0 0% 0% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y

• During the financial year, the calculation of Scope 3 emissions was further developed. • Suppliers are encouraged to set emissions targets, for example, in line with the SBTi. Metsä Board has a Scope 3 target approved by the SBTi for supplier commitment. • Joint emissions reduction projects are agreed with suppliers. They are related to the company’s strategic target of setting a joint sustainability target with partner suppliers. • Active dialogue with policymakers develops the operat- ing environment. • By 2030, Metsä Group aims to have reduced fossil carbon dioxide emissions from wood supply in Finland by 30 per cent from the 2022 level. One way to reduce emissions is to introduce electric and biogas lorries to wood transports. • Metsä Group’s Wood Supply has a regenerative forestry strategy that aims to measurably strengthen the state of nature by 2030. • Wood Supply has strategic targets, the achievement of which increases carbon storage in commercial forests and promotes forest biodiversity. • Raw materials are used resource efficiently to avoid waste in production. The goal is to make full use of production side streams. • The calculation and reporting of the carbon balance of forests is being developed in cooperation with partners. • Active dialogue with policymakers develops the operat- ing environment. • The main raw material of products is renewable wood, and the goal is for all raw materials and packaging mate- rials to be fossil free by 2030. • The use of fossil free energy in production reduces the carbon footprint of products. • The carbon footprint calculation of products is being developed. • Active dialogue with policymakers develops the operat- ing environment.

Of which transitional

0% 0%

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

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/ EL EL; N/ EL EL; N/ EL EL; N/ EL EL; N/ EL EL; N/ EL

Cogeneration of heat/cool and power from bioenergy

CCM 4.20. CCM 4.24.

4.1

3% EL N/EL N/EL N/EL N/EL N/EL

Production of heat/cool from bioenergy

2.7 2% EL N/EL N/EL N/EL N/EL N/EL

CE 3.2.

Renovation of existing buildings

1.1

1% N/EL N/EL N/EL N/EL EL N/EL

OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned) activities (A.2) A. OpEx of Taxonomy eligible activities (A.1+A.2)

Carbon balance of forests

7.9 6% 5% 0% 0% 0% 1% 0%

Regulatory risk : Regulation concerning the use of forests as carbon storage restricts harvesting volumes. Market risk : Consumers’ critical view of forest use, as forests are seen as carbon storage. Market opportunity : Wood is Finland’s most significant processed natural resource, providing a good basis for the bioeconomy, circular economy and innovations based on a renewable raw material.

Metsä Group’s Wood Supply and Forest Services provides owner-members with forest management services that aim for regener- ative forestry, promoting carbon storage in commercial forests. Metsä Group is develop- ing a calculation to verify the impact of wood supply and forest management on the carbon balance. In Finland, wood is mainly procured from the owner-members of the parent com- pany, Metsäliitto Cooperative. Owner-mem- bers own 31% of Finnish forests.

13.1 10% 9% 0% 0% 0% 1% 0%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities

123.8 90%

TOTAL

136.9 100%

Form 1 for the economic activities of certain energy sectors – Nuclear energy and fossil gas related activities

Products

Regulatory opportunity : Regulation that acknowledg- es that forest industry products can replace materials made from fossil-based raw materials, or the production of which generates substantial amounts of fossil-based emissions. Market opportunity : Consumers favour easily recyclable packaging made from a renewable, fossil free raw material.

Metsä Board uses mainly fossil free raw mate- rials and packaging materials, p. 34.

Row Nuclear energy related activities

1. The undertaking carries out, funds or has exposures to the research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. NO

2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.

170 Remuneration report 174 Investor relations and investor information

3. The undertaking carries out, funds or has exposures to the safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. NO Fossil gas related activities

4. The undertaking carries out, funds or has exposures to the construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.

5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. NO 6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. NO

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