Metsä Board Annual review 2023

METSÄ BOARD Annual review 2023

■ Political influence and lobbying activities Metsä Board participates in advocacy as part of Metsä Group at the EU and national level especially in Finland, Sweden and Germany. Metsä Group’s parent company Metsäliitto Cooperative is registered in the EU’s Transparency Register and complies with its code of conduct. Its member number in the Transparency Register is 962687110415-94. The Board of Directors of Metsäliitto Cooperative ensures that the com- pany has an appropriate corporate affairs function in view of its business. Metsä Group’s President and CEO, supported by Metsä Group’s Executive Management Team, determines the priorities of political influence for Metsä Board and other business operations and monitors the progress made in them. Metsä Group’s corporate affairs function coordinates prac- tical influence work, handling the related cooperation among Metsä Board and other functions, and reporting the work’s progress and effectiveness to Metsä Board’s and Metsä Group’s management teams and Boards of Directors. To identify the most significant legislative risks and focal areas of lob- bying, Metsä Group has conducted a comprehensive assessment of reg- ulatory risks, which covers all the business areas, including Metsä Board. These risks have been considered in the double materiality assessment. Metsä Group follows and participates in discussions about forests and biodiversity and influences policy questions related to the bioeconomy and products. Metsä Group has actively influenced several legal initiatives in the EU, including the deforestation regulation, nature restoration regulation, packaging and packaging waste regulation, and sustainable product policy. Metsä Group promotes the circular bioeconomy and emphasises the role of forests and wood-based products in climate change mitigation, and the safeguarding of biodiversity. The company supports EU’s environmen- tal targets and the 2050 climate neutrality target. Metsä Board’s advocacy efforts as part of Metsä Group focus on: • Promoting the recyclability of wood fibre-based packaging. • Increasing the understanding of the role of fresh fibre in product safety and the advantages of sustainable fibre-based food packaging in terms of the environment and health. • Supporting a comprehensive approach to laws that influence forestry practices and the availability of wood raw material as part of the joint production of forest-based ecosystem services. • Energy-related topics in the EU, such as reducing dependence on fossil-based fuels, focusing greater attention on the opportunities provided by biogenic carbon dioxide capture, and defining renewable energy targets based on something other than the direct energy use of convertible wood biomass.

The following are the main measures for preventing and detecting corruption and bribery: • Training in the Code of Conduct and other policies guiding Metsä Group’s operations (discussed on pages 65–66 , 68 ). • The ethics barometer that measures the ethics of operations and seeks to identify areas in need of development (discussed on page 66 ). • The Compliance and Ethics Channel, which is available to all internal and external stakeholders. A standardised process is defined for handling reports (discussed on page 66 ). • Due diligence in ensuring the sustainability of partners, and the required background checks (third-party due diligence) as part of the Know Your Business Partner process (discussed on pages 66–67 ). • Continuous development of ethical operations in the supply chain. The key measures in this respect include supplier commitment to the Supplier Code of Conduct in line with the 2030 sustainability targets, as well as supplier audits and assessments (discussed on pages 65–67 ).

Metsä Board has representatives in the 4evergreen alliance’s steering group and team of public relations experts. 4evergreen represents the entire value chain of fibre-based packaging and has set as its target the raising of the recycling rate of fibre-based packaging to 90 per cent by 2030. Metsä Board also participates in the activities of the European Paper Packaging Alliance (EPPA). The alliance stands for the sustainability of wood fibre-based food and food service packaging and the circular economy. Metsä Board is a member of several national trade and industrial organisations. Key memberships in organisations and advocacy groups: • Confederation of European Paper Industries (Cepi) • European Association of Carton and Cartonboard manufacturers (Pro Carton) • CEPI Cartonboard • CEPI Containerboard

Reporting principles for metrics The implementation of ethics barometer measures depicts the share of implemented measures of all the measures determined based on the ethics barometer in the reporting year. The supplier commitment to the Supplier Code of Conduct indicates the share of all purchases made from suppliers committed to the Metsä Group Supplier Code of Conduct or their own equivalent codes. The figure does not cover the authorities, associations or wood supply. Supplier assessments and audits of core suppliers cover partner, key and preferred suppliers in accordance with the supplier classification. The target does not include wood supply operators. The joint sustainability targets with partner suppliers applies to the nine partner suppliers agreed in connection with Metsä Group’s supplier classification. The figure does not include wood supply, but partner suppliers include other suppliers in wood supply and forest management services. The target of traceable raw materials covers the raw materials used in product production and product packaging materials. The target’s calculation is based on the value of the raw materials in euros. A raw material that is traceable at least to the level of country of manufacture is considered traceable. The share of certified wood covers the share of certified wood fibre of all the wood fibre used by Metsä Board. The figure includes the wood used in Metsä Board’s own production of pulp and high-yield pulp, as well as the wood used for the pulp pur- chased from Metsä Fibre. The chip deliveries from the company’s own industries are not included in the calculation to avoid double counting. In the completion rate of the Code of Conduct and DEI e-learning courses, the divisor is the number of active employees at the time of reporting. In other words, employees absent on family leave or for other reasons are not included in the calculation. The figures for payment practices do not account for raw wood purchases from forest owners or industrial suppliers. The payment term has been calculated as a weighted average based on the supplier invoices paid in the review period. The total value of the invoice is used in weighting.

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

Strategy and financial targets

Value creation

Financial development 10 Key figures 12

Report of the Board of Directors

20 72

• Sustainability statement • Sustainability statement assurance report

• European Carton Makers Associations (ECMA) • The European Paper Packaging Alliance (EPPA) • 4evergreen • Finnish Forest Industries Federation, Finland • Swedish Forest Industries’ Federation, Sweden • Die Papierindustrie, Germany

Completion of Code of Conduct and Equality e-learning courses

Consolidated financial statements

2023

2022

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

CODE OF CONDUCT Number of employees who completed the revised Code of Conduct training Share of all employees who have completed the revised Code of Conduct training, % Share of Board members who have completed the revised Code of Conduct training, % EQUALITY Number of employees who have completed the previous Equality training Share of all employees who have completed the previous Equality training, % Number of employees who have completed the revised Equality training Share of all employees who have completed the revised Equality training, %

2,214

1,423

In 2023, Metsä Board paid a total of EUR 1.2 million in membership fees to trade and industrial organisations. Metsä Board does not make direct political contributions. The company may participate in seminars that deal with the forest industry or forest policy. ■ Payment practices The average time it takes for Metsä Board to pay an invoice from the date when the contractual or statutory term of payment calculation begins is 49 days. The standard payment term in Metsä Board’s general terms and conditions for purchases is 60 days net. However, this can be reconsidered individually in the case of smaller suppliers, for example. Metsä Board is not party to any legal proceedings due to late payments.

100

2,215

2,226

1,995

Incidents of non-compliance with good governance or ethical corporate culture

2023

2022

ALL REPORTS RELATED TO UNETHICAL BEHAVIOUR Reports resulting in an investigation

6 0

Critical reports to the Board

ANTI-COMPETITIVE BEHAVIOUR Legal actions for anti-competitive behaviour

CORRUPTION OR BRIBERY Confirmed incidents of corruption or bribery Confirmed incidents in which a business agreement has been terminated or has not been renewed due to a case linked to corruption or bribery Number of judgments issued in corruption or bribery cases. Amount of fines issued in corruption or bribery cases.

All Metsä Group’s main advocacy messages are described in Metsä Group’s Sustainability statement .

170 Remuneration report 174 Investor relations and investor information

Cooperation with trade and industrial organisations As part of Metsä Group, Metsä Board is an active member of the Confed- eration of European Paper Industries (Cepi), which represents the forest industry producing fibre-based products across Europe. Metsä Group’s President and CEO chaired the Board of Cepi in 2023. Representatives of Metsä Group also actively participated in the work of Cepi’s committees and working groups.

The case reported to the Board in 2023 was related to occupational safety.

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