Metsä Board Annual Review 2024

METSÄ BOARD Annual review 2024

Policies As part of Metsä Group, Metsä Board is committed in its environmental policy to transitioning to fully fossil-free fuels at its production units, replacing purchased electricity and heat with fossil-free alternatives, improving its energy efficiency, and finding fossil-free alternatives to all the company’s raw materials and packaging materials. Policy commitments and related actions are the key measures for managing the identified impacts, transition risks and opportunities described on pages 41–42. Commitments also encompass ways to manage physical climate risks through water efficiency and sustainable forestry, for example. The environmental policy is followed worldwide by all Metsä Group companies and legal units, and the impacts of the Group’s operations have been identified across the value chain. The policy is owned by the SVP, Corporate Affairs, and its implementation is handled by the heads of sustainability in each business area. The main stakeholders affected by the policy are the company’s own workforce, suppliers and workers in the value chain, and local communities. Environmental management and environmental performance are guided by the requirements of the production units’ certified quality, environmen- tal management and energy management systems. The production units systematically conduct internal and external audits in accordance with the ISO 14001 and ISO 50001 standards. In the Leader in sustainability strategic programme, the climate focus is on reaching the strategic sustainability targets for fossil-free operations at production units, fossil-free products, and water and energy efficiency. Forest use is guided by Metsä Group’s principles for forest use and management, in which Metsä Group commits to increasing the amount of carbon bound in forests and to promoting forest biodiversity, among other things. Certified quality and environmental management systems are in use in Metsä Group’s wood supply. Suppliers are required to commit to Metsä Group’s Supplier Code of Conduct or to their own equivalent codes. Among other things, the Supplier Code of Conduct encourages the setting of reduction targets for greenhouse gas emissions in accordance with the principles of the Science Based Targets initiative, and to continuously improve environmental performance and efficient energy use. Suppliers are required to adopt a certified environmental management system where applicable.

Production shutdowns and a production speed lower than normal reduce the energy efficiency of production units. In 2024, Metsä Board’s paperboard and high-yield pulp production was restricted, among other things, by political strikes in Finland, production curtailment measures adopted to adjust to demand, and the gas explosion at Metsä Fibre’s Kemi bioproduct mill. Metsä Board’s Kemi paperboard mill, which produces white top kraftliner, is part of the Kemi integrated mill. While the bioproduct mill was being repaired, white top kraftliner was produced at a lower than normal production rate using dried pulp and alternative energy sources. Due to the explosion, the targets for enhancing water and energy use specified in the Kemi board mill’s development programme were not fully met in 2024. Energy efficiency was improved by the deployment of a new turbine and generator at the biopower plant of Metsä Board’s Kyro board mill in 2024. Thanks to the new turbine’s improved efficiency, the biopower plant’s electricity self-sufficiency will increase from 30 to 50%. The investment will also increase the share of fossil-free electricity at the Kyro mill. In 2024, the investment’s capital expenditure amounted to EUR 5 million. In 2023, the first phase of the Husum pulp mill’s renewal was completed, including the installation of a new recovery boiler and turbine. These improved the mill’s energy efficiency. In 2024, capital expenditure of EUR 13 million was associated with the investment. In 2024, the company launched the renewal of the Simpele folding box- board machine, which will enable fossil fuels to be replaced in paperboard production. Deployment is scheduled to take place in 2025. The total value of the investment is EUR 60 million. In the first half of the year, the Simpele mill discontinued the use of peat and replaced it with renewable energy sources. In 2024, Metsä Group explored large-scale carbon capture. The study focused on the capture of four million tonnes of carbon dioxide at a facility the size of Metsä Group’s Kemi bioproduct mill. According to the study, large-scale capture of all the carbon dioxide from a large bioproduct mill is feasible, and in the future, captured carbon dioxide can be used as raw material in the hydrogen economy, but this will require large investments, as well as capture technology and market development before profitable business can be created. Metsä Group is progressing in phases on the carbon capture project, and capture will be piloted at the Rauma pulp mill in the summer of 2025. Future investments to further improve the efficiency of energy use, and their exact timing, will gradually become known to Metsä Board over the coming years. Greenhouse gas emissions in the value chain The commitment of Metsä Board’s suppliers to science-based greenhouse gas emissions (SBTi compliant) is discussed on page 43, under Progress in targets . The value chain’s greenhouse gas emissions are also reduced through emissions reduction targets jointly set by Metsä Group and its suppliers. The joint 2030 target of Metsä Group and VR, a logistics group, will halve emissions from transports covered by the cooperation. The joint target with Royal Wagenborg, a Dutch maritime logistics company, is to reduce products’ carbon dioxide emissions from marine transports by 30% (per tonne per mile) from the 2021 level by 2030. Logistics emissions will be continuously reduced by planning efficient routes, minimising transport distances, optimising fill rates and favouring rail connections to road connections on selected routes. For example, in

the transport of products from the Kemi paperboard mill to ports, the load size of transport units is maximised, and all fuels are fossil-free. At the Tako paperboard mill, products are transported fossil-free to the nearby ter- minal, and from there, shipping containers are delivered by low-emission lorries to the port. These actions particularly affect suppliers. In 2024, the supply chain’s plans and readiness for emissions reductions were surveyed in cooperation with 19 suppliers and two customers. In late 2024, Metsä Group set as its target the reduction of GHG emissions in category 4, ‘Upstream transport and distribution’, by 30% per tonne produced. The target’s baseline year is 2022, and it is in force from 2025. Further information about target-setting is available in the transition plan. Carbon balance of forests Metsä Group’s principles of regenerative forestry aim for measures in wood supply and forest services with which the state of nature will begin to verifi- ably improve in Finland. Regenerative forestry actions will increase forests’ carbon storage, biodiversity and ability to adapt to climate change. Forest certification demonstrates that the forest has been managed sustainably. Key practical actions related to climate change mitigation include the following: • Forests are swiftly renewed after regeneration felling. The faster and better a new forest is established, the sooner it begins to store carbon from the atmosphere. Cultured seeds and seedlings of local tree species are used in renewal whenever available. Domesticated trees grow better than naturally generated trees. • Young stand management and thinning ensure that stands remain vital, and growth is focused on the best trees. • Forest fertilisation improves tree growth, maintains the growth condi- tions of the soil and ensures the vitality of trees. • Increasing the share of continuous cover forestry helps curb and adapt to climate change, as it minimises the GHG emissions from peatland forests. The goal of continuous cover forestry is to maintain a steady sur- face level of groundwater to prevent the carbon stored in peat from being released into the atmosphere and to minimise impacts on waterbodies. Metsä Group’s Wood Supply and Forest Services have strategic sustaina- bility targets for these actions, and they are presented in the table on page 43. The actions particularly affect Metsä Group’s owner-members. Products The aspects most relevant in terms of the climate impact and carbon footprint of paperboard packaging are the energy used in its production and the paperboard’s light weight. As Metsä Board shifts to using fully fossil-free energy in its production, the carbon footprint of the company’s products will continue to decrease. According to life-cycle assessments carried out by Metsä Board, the carbon footprint of pharmaceutical packaging made from the company’s fresh fibre paperboard can be more than 50% smaller than that of recycled fibre or solid bleached board packaging of equivalent stiffness. The results of the assessment concerning the carbon footprint of pharmaceutical packaging were validated by IVL Svenska Miljöinstitutet, a Swedish research institution. The related technical background report and valida- tion statement are available on Metsä Board’s website. Metsä Board’s paperboards offer an alternative to packaging materials made of non-renewable raw materials such as plastic. According to an independent study, the carbon footprint of a cherry tomato box made of

Metsä Board’s paperboard is as much as 80% smaller than that of a box made from recycled plastic (source: Natural Resources Institute Finland, 2019). Further reducing the weight of paperboard is a priority in Metsä Board’s R&D operations. Metsä Board aims to replace the fossil-based raw materials and packaging materials still in use with fossil-free alternatives by the end of 2030. The transition to fully fossil-free raw materials is being promoted collaboratively in Metsä Group’s strategic R&D programme. Replacing fossil-based binders used in Metsä Board’s paperboard coatings with bio-based alternatives is a key priority in pilot and mill trials. Surveys of bio-based alternatives for product packaging materials are conducted collaboratively in Metsä Group. All in all, cooperation with the scientific community and raw material providers is important. The progress of work is monitored by Metsä Group’s procurement organisation. An investment decision made in 2024 will enable the use of a bio-based binder for paperboard coating at the Simpele board mill. The new equipment will be introduced in 2025. R&D work will continue for other production units. These actions primarily affect customers and consumers. The share of fossil-free raw materials and packaging materials is pre- sented in the table on page 43. Further information about the company’s R&D operations is available under section E5 – Resource use and circular economy and in the Board of Directors’ report under R&D and innovation . Climate change adaptation Climate change adaptation calls for adaptation to both acute hazards such as extreme weather phenomena and chronic hazards, caused by the impacts of climate change on water availability, harvesting conditions, growth conditions of different tree species, or snow, storm, drought, forest fire, insect, and fungi damage in forests. Metsä Board continuously prepares for the threats arising from extreme weather phenomena at both the company and mill levels. Examples of actions include controlling water levels with dam arrangements and ensuring power distribution in exceptional situations. The supply chain is preparing for alternative transport routes or partners. The company’s production units are not located in areas with high water risk, which supports the company’s competitiveness in the face of climate change. Metsä Board’s target of reducing process water use and increasing water recycling of water within the process also reduces water risk. These actions particularly affect local communities. Metsä Group’s wood supply always considers weather conditions and related changes in harvesting. Wood is harvested only in suitable condi- tions. If required, wood storage can be used to smooth out variation caused by harvesting conditions. Metsä Group’s regenerative forestry principles and sustainable forest management services help forests adapt to climate change and promote forest biodiversity. Regenerative forestry is discussed in greater detail under E4 – Biodiversity and ecosystems . In 2024, actions related to climate change adaptation did not involve significant expenses. Financial effects No material physical climate risks are associated with Metsä Board’s production units. The climate scenarios used in the identification and assessment of the production units’ physical climate risks are discussed in the Identification and assessment of material impacts, risks and opportunities section.

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 20 37 70 89 96

• Sustainability statement

General information

E – Environment

S – Social responsibility

G – Governance

Annexes to the Sustainability statement

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

Actions

Greenhouse gas emissions and energy in the company’s own operations Metsä Board’s plan for climate change mitigation comprises investments and measures for replacing fossil fuels with renewable fuels or fossil-free electricity at all the company’s production units and power plants. The measures apply to the fuels and backup fuels used at power plants and to the process fuels used at production units. The company will also transition to fully renewable or fossil-free alternatives in its purchased energy. In addition, the company will improve the efficiency of its energy and water use through continuous development and investment. Reducing water use is a way of mitigating climate change, as process water use and wastewater treatment consume energy, causing greenhouse gas emissions. Measures related to water use are discussed under E3 – Water and marine resources . The measures especially affect local communities and the company’s own workforce.

196 Remuneration report 201 Investor relations and investor information

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