Metsä Board Annual Review 2024

METSÄ BOARD Annual review 2024

Benchmark Regulation reference

EU Climate Law reference

E – Environment

included in Metsä Group’s Code of Conduct. Corruption and bribery are dis- cussed in greater detail in this Sustainability statement under G1 – Business conduct and taxation in the notes to the financial statements under Taxes . In addition, section G1 – Business conduct covers Metsä Board’s practices concerning fair competition. Reporting principles The IFRS-compliant accounting principles followed for the consolidated financial statements are also applied to calculate the key figure for Metsä Board’s turnover. The overall turnover used to calculate the key figure corresponds to the turnover disclosed in the consolidated financial state- ments. The accounting principles used for turnover are discussed in Note 2.2 to the consolidated financial statements. 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 acqui- sitions is not included in the capital expenditure 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. Operating expenses include research and development costs recognised as expenses, and the maintenance 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 indirect employee costs, of the company’s own employees responsible for the listed activities. In the group’s income state- ment, 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. The numerator for turnover, capital expenditure and operating expenses encompasses the items related to the assets or processes of economic activities in the scope of the Taxonomy. To avoid double counting, external turnover has been included in the Taxonomy operations only once. In addition, measures have been adopted to ensure that capital expenditure and operating expenses are kept separate for each operation. CE 3.2 Renovation of existing buildings Taxonomy-eligible capital expenditure includes the renovation of existing buildings, including renovation investments in Metsä Board’s real estate. This activity encompasses renovations with a value in excess of EUR 100,000, as renovation projects below are considered normal service and maintenance expenses. Taxonomy-eligible capital expenditure includes renovation work at the Äänekoski, Kyro, Simpele, Kemi, Joutseno and Husum production units. Taxonomy-eligible operating expenditure includes operating expenditure for renovations carried out on the buildings in the Tako and Husum mill areas.

Pillar 3 reference

ESRS INDICATOR

LOCATION & COMMENT

SFDR reference

ESRS S2 – Workers in the value chain SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b)

The EU Taxonomy

S2 The identification and assessment of material impacts, risks and opportunities

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

General

S2-1 Human rights policy commitments paragraph 17 S2-1 Policies related to value chain workers paragraph 18

S2 Policies

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 channel money to sustainable investments so that the EU can achieve the ambitious emissions reduction targets it has set for itself. 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. Taxonomy-eligible activities have been assessed against the environmental objective to which each activity contributes most substantially. In addition, an assessment has been made to determine that the activities do no harm to any other environmental objectives. In the Taxonomy, the share of revenue, capital expenditure, and operating expenditure are reported for economic activities. Taxonomy alignment reports the extent to which business activities support 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 environmental 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 economic activity indicated in the Taxonomy meet the criteria of taxonomy alignment. For each economic activity, the assessment considered the criteria for ‘substantial contribution’ and ‘no significant harm’ to determine taxonomy alignment. Minimum safeguards were examined at the Group level. Metsä Board was also supported by external specialists in the assessment. 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 Group has reviewed each of these from two perspectives: the presence of relevant processes; and the addressing of non-compliance. In its assessment, Metsä Board has detected no incidents of non-compliance or defects in the process. In the reporting year, a human rights impacts assessment was conducted at Metsä Board. It is described on page 28. The human rights due diligence process is described in greater detail under this Sustainability statement’s sections S – Social responsibility and G – Governance . Policies on anti-corruption and fair competition are

Strategy and financial targets

S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 paragraph 19 S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36

S2 Policies

Value creation

S2 Policies

Financial development 10 Key figures 12

S2 Actions

Report of the Board of Directors

ESRS S3 – Affected communities S3-1 Human rights policy commitments paragraph 16

20 20 37 70 89 96

• Sustainability statement

S3 Policies

General information

S3-1 Non-respect of UNGPs on Business and Human Rights, ILO princi- ples or and OECD guidelines paragraph 17

S3 Policies

E – Environment

S – Social responsibility

S3-4 Human rights issues and incidents paragraph 36

S3 Actions

G – Governance

Annexes to the Sustainability statement

ESRS S4 – Consumers and end-users S4-1 Policies related to consumers and end-users paragraph 16

S4 Policies

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

S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17

S4 Policies

S4-4 Human rights issues and incidents paragraph 35

S4 Actions

ESRS G1 – Business Conduct G1-1 United Nations Convention against Corruption paragraph 10 (b)

G1 Policies

G1-1 Protection of whistle-blowers paragraph 10 (d)

G1 Mechanisms for identifying, reporting and investigating concerns G1 Incidents of non-compliance with good governance or ethical corporate culture -table G1 Incidents of non-compliance with good governance or ethical corporate culture -table

G1-4 Fines for violation of anti-corruption and anti-bribery laws paragraph 24 (a)

G1-4 Standards of anti-corruption and anti-bribery paragraph 24 (b)

CCM 4.20 Cogeneration of heat/cool and power from bioenergy

196 Remuneration report 201 Investor relations and investor information

In the activity of cogeneration of heat/cool and power from bioenergy, taxonomy-eligible turnover is generated from the sale of heat produced at the Simpele power plant. The taxonomy-aligned turnover for the activity

Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2024