METSÄ BOARD Annual review 2024
Sustainability statement General disclosures
of the capital expenditure for actions or the expenditure’s allocation to the promotion of different areas is not presented for all investments, as some of the expenses are indirect and are incurred as part of other investments. In these cases, the total value of the investment is reported. The Sustainability statement has been assured (limited assurance) by KPMG Oy Ab, an independent third party. Assurance was conducted in accordance with the ISAE 3000 international assurance standard (Revised). Comparative metrics were not assured as part of the 2024 assurance. This applies to comparative data for 2018, 2022 and 2023. The reported ESRS information, Metsä Board’s own metrics and their location in the Sustainability statement are indicated in the content index. The index also presents the ESRS indicators identified as being non-mate- rial for Metsä Board. On its website, Metsä Board has separately published content indices that comply with the requirements of the SASB Pulp & Paper Products industry standard and the TCFD and TNFD recommendations. TCFD and TNFD information is not included in the scope of assurance. SASB informa- tion, excluding the share of grid electricity and the amount of energy sold, is based on Metsä Board’s Sustainability statement, which is assured by a third party (limited assurance).
To ensure the accuracy and timeliness of disclosed information, internal controls have been adopted in Metsä Group as part of the common busi- ness processes. Their systematic monitoring is part of the internal control unit’s reporting. The internal control unit reports on the efficiency of the sustainability reporting controls according to the specified schedule in compliance with the common governance model and process followed in internal control. The results of internal control are monitored, and control is supervised quarterly by Metsä Group’s business and service operations and the management team for process development, twice a year by the Group’s Executive Management Team, and once a year by the Audit Committee. Internal audit inspects sustainability reporting controls and internal control practices as part of its audit work. Sustainability governance and strategy The role of, information provided to and sustainability matters addressed by the administrative, management and supervisory bodies This Sustainability statement provides details about sustainability govern- ance. Further information about the general duties, composition, diversity and experience of the administrative and supervisory bodies, as well as the processes of internal control, internal audit and risk management, is available in the 2024 Corporate Governance Statement . 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 Gov- ernance Code for Finnish listed companies, effective as of 28 November 2024, 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. Metsä Group’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 greater detail in Metsä Board’s Corporate Governance Statement. 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 on the company’s insider guidelines.
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Reporting principles
Sustainability statement reporting principles
Strategy and financial targets
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Value creation
Basic information Metsä Board Corporation and its subsidiaries form a forest industry group (“Metsä Board” or “group”). Metsä Board’s business operations comprise folding boxboards, white kraftliners and market pulp. Reporting covers the entire group and all the companies in which the group directly or indirectly holds more than 50% of the votes unless otherwise stated in connection with the disclosed information. Metsä Board owns 24.9% of its associated company Metsä Fibre Oy (“Metsä Fibre”), and financial reporting includes the share of Metsä Fibre’s net results and equity corresponding to this holding. The scope of consolidation is the same as that in the financial statements. The consolidation principles are discussed in greater detail in the consolidated financial statements under 7. Group structure . In sustain- ability reporting, the share corresponding to this holding is not included in Metsä Board’s sustainability information. Instead, Metsä Fibre is accounted for as part of the value chain. For example, Metsä Fibre’s Scope 1 and Scope 2 emissions are accounted for in the emissions from Metsä Board’s value chain (Scope 3). Metsä Board is part of Metsä Group, which publishes a Sustainability statement encompassing all of Metsä Group. In Metsä Board’s Sustainability statement, reporting mainly focuses on the Metsä Board Group. As Metsä Board follows Metsä Group’s policies and processes and uses Metsä Group’s shared services, reference is made to Metsä Group in some cases. Production unit-specific key figures related to the environment and employees are disclosed on page 97. The Sustainability statement is published annually as part of the Report of the Board of Directors. The reporting period coincides with that of financial reporting – that is, the financial period from 1 January 2024 to 31 December 2024. Basis for preparation The Sustainability statement is prepared in accordance with sustainability reporting standards (European Sustainability Reporting Standards, ESRS) referred to in Chapter 7 of the Accounting Act and with the Article 8 of Taxonomy Regulation.The progress made in Metsä Board’s 2030 sustaina- bility targets is also reported in this Sustainability statement. The disclosed sustainability matters and key figures are based on a dou- ble materiality assessment updated in 2024. The reporting requirements of the European Sustainability Reporting Standards that are material to the company’s operations, products and stakeholders were chosen based on the materiality assessment. Further information about the materiality assessment and its results is provided on pages 26–28. The reporting principles for metrics related to each topic are described at the end of each section. Of the metrics, the greatest uncertainty concerns calculations involving the use of default coefficients such as greenhouse gas emissions or carbon storage coefficients. Estimates have been used to calculate Scope 3 emissions. The reporting principles for Scope 3 emissions are discussed on pages 50–51. Moreover, a breakdown
Financial development 10 Key figures 12
Report of the Board of Directors
20 20 37 70 89 96
• Sustainability statement
General information
E – Environment
S – Social responsibility
G – Governance
Annexes to the Sustainability statement
Risk management and internal controls of sustainability reporting
98 Consolidated financial statements 102 Notes to the consolidated financial statements 150 Parent company financial statements 153 Notes to the parent company financial statements 166 The Board’s proposal to the Annual General Meeting for the distribution of funds 167 Auditor’s Report 171 Sustainability statement assurance report 173 Shares and shareholders 177 Ten years in figures 178 Taxes 179 Production capacities 181 Calculation of key ratios and comparable performance measures Corporate governance 183 Corporate governance statement 190 • Board of Directors of Metsä Board 194 • Corporate Management Team of Metsä Board
Metsä Board’s sustainability reporting complies with Metsä Group’s com- mon principles and processes for statutory reporting, risk management and internal control. In sustainability reporting, internal control is based on risk identification, analysis and a focus on the most material risks identified, as well as the best practices of internal control. Metsä Group’s internal control unit and internal control processes, as well as its risk management process, comply with the principles of the COSO (ERM) framework. The sustainability reporting control environment emphasises the company’s values, management’s commitment to sustainable operations, a corporate culture emphasising ethics and sustainability, policies promoting sustainable operations, centralised business processes, professional employees, and transparent operations. Metsä Board’s Chief Financial Officer, supported by the sustainability function, is in charge of the implementation of sustainability reporting. In its sustainability reporting, the company uses Metsä Group’s head office support functions, especially financial services. The risks identified in sustainability reporting include the accuracy of information and the timing of reporting. To ensure that the disclosed infor- mation is accurate and appropriately timed, Metsä Group has defined and adopted a governance model that specifies the roles and responsibilities in sustainability reporting. Metsä Group has included the capacities required to produce the disclosed information in the common business processes that Metsä Board and Metsä Group’s other business areas and head office functions follow in their operations. The owners of business processes ensure that the process environment can transparently produce the required information for disclosure. The responsibility for the accuracy of content, as well as compliance with reporting schedules and the provision of material to Metsä Group Account- ing, is assigned to the roles in Metsä Group’s business areas and service functions specified in the governance model.
Sustainability governance at Metsä Board
Board of Directors
Metsä Group Sustainability Process Management Team
CEO and Corporate Management Team
Product Safety and Sustainability function
Business functions
196 Remuneration report 201 Investor relations and investor information
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Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2024
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