METSÄ BOARD Annual review 2024
Reporting principles for metrics The amount of forest regeneration and young stand management includes, in hectares, the soil preparation and young stand management, or early cleaning and thinning, carried out by Metsä Group’s Wood Supply and Forest Services. The amount of forest fertilisation includes, in hectares, the growth, boron and ash fertilisation carried out by Metsä Group’s Wood Supply and Forest Services. The share of continuous cover forestry in peatland forest regeneration includes Metsä Group’s Wood Supply’s standing sales, as well as the group selection cutting, selection cutting and strip felling carried out to regenerate peatlands, and it is calculated based on the amount of felling. Calculated based on the area of the cuttings, the result would be 22%. The amount of carbon stored in wood products is calculated based on Metsä Group’s mechanical wood products. The carbon content is calculated using tree species-specific database factors to ensure comparable results between tonnes of wood (carbon dioxide equivalent). The amount of fossil-free raw materials and packaging materials includes the raw materials and packaging materials of products produced by Metsä Board. The weight of raw materials is converted to dry tonnes for the target’s calculation using the factors provided by the suppliers. A raw material is considered fossil-free if none of its main raw materials contains fossil-based oil. Materials that do not remain in the product, such as some process chemicals, are not taken into account in calculation. Energy consumption encompasses all Metsä Board’s production units. Metsä Board’s internal heat transfer is taken into account to avoid double counting. Energy consumption is expressed as final energy consumption, which means that the efficiency factors of electricity and heat are not taken into account. Final energy consumption is obtained by summing up the fuel consumed at production units, self-generated hydropower, and the amount of purchased electricity and purchased heat. Internal logistics and the electricity purchased for buildings outside mill areas, such as warehouses and office facilities, is excluded from the calculation, as their share of total energy consumption, and thus of Scope 1 and Scope 2 emissions, is assessed to be non-material. Local factors are used to calculate the energy contained in different fuels. Metsä Board’s heat consumption is mainly based on steam. Metsä Board’s main business, paperboard and market pulp, is considered a high impact climate sector. Energy intensity has therefore been calculated based on the entire company’s energy consumption and turnover. The improvement of energy efficiency is determined as specific energy consumption, meaning the ratio of energy consumption and production volume. Specific energy consumption is calcu- lated for individual production lines, including the consumption of electricity, heat and fuels as megawatt hours (MWh). Tonnes and cubic metres are both used as units in production volume calculations. They are considered to be of equal value. The energy efficiency of Metsä Board’s power plants is not taken into account in calculations. Discontinued lines are included in the calculations for as long as they are used in production. New production units are included in the calculations from the year in which their production begins. GHG emissions include the emissions of all Metsä Board production units. In emissions calculations, Metsä Board’s internal heat transfer is taken into account to avoid double counting. GHG emissions are calculated in accordance with the
GHG Protocol Corporate Accounting and Reporting Standard and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The scope of reporting is based on operational control. Reporting covers direct GHG emissions (Scope 1) from Metsä Board’s own operations, indirect GHG emissions (Scope 2) from the production of purchased energy, and indirect GHG emissions from other parts of the value chain (Scope 3), including upstream and downstream. Power plant emissions are allocated to the production units that use the energy generated by the plants. The calculation includes all the greenhouse gases covered by the GHG Protocol (CO 2 , CH4, N2O, HFCs, PFCs, SF6 and NF3). Emissions have been converted into carbon dioxide equivalents. Scope 1 emissions have been calculated from the fuels used by production units. The calculation is based on supplier-specific emission factors for fuels or on national emission factors. Diffuse emissions have been excluded. Two different methods are used for Scope 2 carbon dioxide emissions. The market-based method uses supplier-specific emissions factors, supplemented with national residual mix emission factors for untracked purchased electricity. In the location-based method, country-specific average emission factors for electricity are used. The residual mix factors and country-specific factors have been obtained from the AIB (Association of Issuing Bodies) report on emission factors. The use of emission factors always involves uncertainty, as the factors are based on average values that may not reflect the special characteristics of operations or the situation at the time. Where possible, the factors are updated with supplier-specific values. The 2023 figures for energy consumption and GHG emissions have been revised retroactively. Scope 1 GHG emissions for 2023 have been revised from 201,984 tonnes to 202,227 tonnes. This revision was due to a mistake in the Joutseno mill’s carbon diox- ide emission calculations, which was detected during emission validation. In addition, a mistake was detected in the energy source ratio for 2023 purchased heat. The figure for purchased electricity and heat has been revised for renewable wood-based options from 663,692 megawatt hours to 667,468 megawatt hours, and for fossil-based options from 22,538 megawatt hours to 18,763 megawatt hours. The revised figures have a proportion- ate influence on the energy source distribution in the total energy consumption but not on the total energy consumption. The change in the energy sources of purchased heat also influenced Scope 2 GHG emissions, in which market-based emissions have been revised retroactively from 5,108 tonnes to 3,747 tonnes, and location-based from 300,726 tonnes to 299,365 tonnes. The revised figures also affect the actual 2023 figure for Metsä Board’s 2030 sustainability target “0 tonnes of fossil-based carbon dioxide emissions”, which has been revised from 184,713 tonnes to 183,600 tonnes. In 2024, 90% of Metsä Board’s purchased electricity was covered by guarantees of origin, of which 80% had been defined in purchased electricity agreements. Of all the guarantees of origin for purchased electricity: • 75% were nuclear power certificates, long-term power purchase agreement, • 5.1% were hydroelectric power certificates, long-term power purchase agreement, • 9.7% were nuclear power certificates, long-term power purchase agreement.
In 2024, 3% of Metsä Board’s heat purchases were covered by guarantees of origin defined in purchased heat agreements. Of the guarantees of origin, 100% were biomass certificates from Metsä Fibre’s Äänekoski bioproduct mill, which is Metsä Board’s only heat supplier in Äänekoski. The remaining 61% of purchased heat was acquired from Metsä Fibre at the Kemi and Joutseno integrated mills. Of this, 99% was biomass-based renewable heat. Metsä Board’s 2030 sustainability target, “0 tonnes of fos- sil-based carbon dioxide emissions”, concerns Scope 1 and Scope 2 emissions and only encompasses fossil-based carbon dioxide emissions, excluding other greenhouse gases. In other respects, the target has been calculated in accordance with the GHG Protocol. The target does not include buildings outside the mill areas or internal logistics, as their share of emissions is assessed to be non-material. The baseline year is 2018, which was selected because it was a year of steady production, thus representing a normal year very well. The target will be reviewed at least every five years, starting from 2030. The company’s biogenic carbon dioxide emissions originate in wood-based fuels. A carbon dioxide emission factor of 396 tonnes of CO 2 /GWh, provided by Statistics Finland, has been used in their calculation. The materiality of each of the 15 Scope 3 categories was determined using a spend-based materiality assessment. All the categories assessed as material were calculated. Categories in which the amount of greenhouse gases was insignificant were also included in the Scope 3 inventory. The categories included in the calculation are listed in the table on GHG emissions. Only three categories were excluded from the calculation – upstream leased assets, downstream leased assets and franchising – as they were assessed to be non-material. Metsä Board does not have significant leased assets under Scope 3 that would not already be included in Scope 1 and Scope 2. Metsä Board does not engage in franchising. All the Group’s companies are included in the calculation. The Scope 3 inventory has been calculated as tonnes of CO 2 equivalent, excluding biogenic CO 2 . The operational data used in the calculation are obtained from Metsä Group’s internal systems. In the absence of accurate data, assumptions have been used. The emission factors used are mainly from global databases, including ecoinvent 3.9.1, EXIOBASE 3, DEFRA’s GHG conversion factors (full set 2022) and IEA’s Life Cycle Upstream Emission Factors (2023). Overall, supplier-specific emission factors have been used for 19% of Scope 3 emissions. In addition, for Category 4 ’Upstream transportation and distribution,’ a supplier-specific emission factor has been used for 56% of Metsä Board’s operational data. For Category 1 ’purchased goods and services’ a supplier-specific emission factor has been used for 81% of operational data (excluding raw wood). To improve accuracy, supplier-specific emission factors are collected when available, and the emission factors are reviewed annually to ensure that the latest are in use. Regarding purchased goods and services, in the absence of accurate data, assumptions and generalisations have been made in the selection of a suitable emission factor for specific purchase
categories or individual materials and services, for example. Assumptions have also been made for raw materials and packag- ing materials in the conversion of materials from different units to tonnes if average material conversion factors have been used in calculations in the absence of product-specific data. Some of the supplier-specific emission factors in logistics only cover CO 2 in current calculations, but they will be updated to include other material greenhouse gases in the next few years as the international disclosure guidelines for logistics develop. Currently, many of the supplier-specific emission factors in logistics only cover TTW (tank-to-wheel) emissions. As a rule, WTW (well-to-wheel) emission factors are used if available from suppliers. In the case of suppliers and transport routes for which supplier-specific emission factors are unavailable, the library factors considered most suitable have been used. The selection of emission factors involves assumptions of the transport mode and more specific type of transport fleet based on the available activity data, for example. In the absence of accurate data when calculating processing of sold products, assumptions have been made of the processing methods of products sold to customers. The Group’s calculations are not based on primary data collected from customers. Suitable emission factors have been chosen for the assumed product processing methods. The products’ waste treatment methods have been estimated based on publicly available location-based waste treatment data, including statistics (Eurostat, state statistical offices) and studies (EPA, PEFCR, ResearchGate, MDPI), as well as the Group’s information about our products’ sales areas. The Group’s calculations are not based on primary data collected from customers or end-users, and in the absence of accurate data, assumptions have been made on the final waste treatment methods of products sold based on the sales areas and publicly available waste treatment statistics. According to the Scope 3 target approved by SBTi, the target group contains 70% of Metsä Board’s non-fibre suppliers and logistics operators related to customer deliveries, measured as a share of total purchases. Metsä Board’s investment emissions data are based on the company’s share of Metsä Fibre’s Scope 1 and Scope 2 emissions, corresponding to Metsä Board’s holding (24.9%) in Metsä Fibre, excluding the emissions associated with pulp raw materials procured from Metsä Fibre that have been assigned to the first category of the Scope 3 inventory. A more detailed description of scope 3 calculation methods is available on Metsä Group’s website . The emission calculation for emissions under the scope of EU ETS is validated by an external party as part of emissions trade. The 2023 calculation was validated by Kiwa Inspecta. The 2024 calculation will be validated in the first half of 2025. Metsä Board has not been excluded from the EU Paris-aligned Benchmarks.
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Strategy and financial targets
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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
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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