METSÄ BOARD Annual review 2024
uses in its products is mainly procured from Finland, Sweden and the Baltic countries. A breakdown of wood supply by country is presented in the table under G1 – Business conduct . Metsä Group requires all its partners to comply with legislation, and operations adhere to the European Timber Regulation (EUTR), US Lacey Act and UK Timber Regulation (UKTR). In 2024, Metsä Group updated its due diligence system to comply with the requirements of the EU’s Deforestation Regulation (EUDR). Wood supply is described in greater detail under G1 – Business conduct . Metsä Group’s Wood Supply also considers the impacts of its operations on its key stakeholders, including forest owners, mill locations and their residents, nature, and people who earn their livelihood from nature, such as indigenous peoples (the Sámi), as well as other parties interested in the environment, such as NGOs. In the home region of the Sámi, Metsä Group engages in local dialogue about the coordination of reindeer husbandry and forestry with key stakeholders such as forest owners and reindeer owners’ associations. Communication with the Sámi is typically related to practical questions. Reindeer owners’ associations in the home region of the Sámi have been identified as a local community to be engaged with. Production units Environmental management and the maintenance of environmental per- formance are guided by the requirements of the production units’ certified quality, environmental management and energy management systems, as well as the principles of environmental management. The production units conduct planned internal and external audits in accordance with the ISO 14001 and ISO 50001 standards. Metsä Group has set as its target the strengthening of the state of nature in its operations by 2030, including on the sites of its production units. Metsä Group’s regenerative land-use principles guide the achievement of the targets in industrial environments. The goal is to make the improve- ment of biodiversity on production unit sites part of the production units’ operations and reporting. The production units’ biodiversity roadmaps are discussed under Actions . Policies related to water use and water discharges are described under E2 – Pollution and E3 – Water and marine resources . The engagement of local communities in the production units’ operations from an environmen- tal perspective is discussed under E2 – Pollution . Actions Actions related to climate change mitigation and adaptation, as well as pollution, are discussed under E1 – Climate change and E2 – Pollution . Wood supply and forest management services Wood raw material is used as efficiently as possible, ensuring high added value and minimising the forest area needed for harvesting. The utilisation of side streams is described in greater detail under E5 – Resource use and circular economy . The targets of regenerative forestry are discussed under Policies. In the regenerative forestry programme, monitoring systems are developed jointly with stakeholders so that the impacts of operations on the state of nature can be measured and disclosed. Forest and nature management and the harvesting methods used are based on recent research, and Metsä Group cooperates actively with a diverse research community. Some of the key biodiversity-promoting
measures that follow the principles of regenerative forestry include the following: • Wood is procured only from certified forests or sources of controlled origin. Metsä Group actively participates in the development of the worldwide PEFC and FSC standards. Owner-members are offered the opportunity to certify their forests under the PEFC and FSC systems, and a higher price is paid for certified wood. • For industrial use, Metsä Group only procures tree species naturally occurring in the area – that is, spruce, pine, silver birch, downy birch and aspen. In their natural range and suitable growth sites, trees live in interaction with other species. • Mixed forests increase forest biodiversity and forest resilience against storm and insect damage, for example. Metsä Group offers forest owners a forest regeneration service in which both spruce and pine are planted in the same area. Broad-leaved trees such as birch, which spreads to stands naturally, must also be retained in forests. • Decaying wood is increased by retaining dead trees, preferably leaving retention trees in groups, and making high biodiversity stumps during thinning and regeneration felling. • Nature management measures in herb-rich forests and voluntary protection of the best sites are recommended for forest owners. Nature management measures thus focus on places where they have the greatest impact on biodiversity. Protective thickets are left for animals at all stages of forest management. • Metsä Group’s nature site service helps focus the protection required by FSC on the sites most valuable in terms of nature. • Buffer zones along waterbodies promote biodiversity and prevent the runoff of soil and nutrients. A buffer zone is a strip along the waterbody where forest management measures are performed more lightly or omitted completely. • Continuous cover forestry is chosen on sites for which it is suited. A very tangible example of the practical implementation of regenerative forestry measures is the Metsä Group Plus service, which is a forest man- agement model designed for Metsäliitto Cooperative’s owner-members. In the model, measures that safeguard and improve the state of forest nature more comprehensively than current standard practices are agreed in con- nection with wood trade and orders for young stand management. Under the model, more retention trees are left, and more high biodiversity stumps are made per hectare during felling. To accelerate the creation of decaying wood and to secure the living conditions of species that inhabit burnt environments, more retention trees will be burned. In valuable habitats and littoral forests, the service represents the highest level of requirements currently in use. Metsä Group pays a bonus per hectare for Metsä Group Plus wood to compensate any loss of wood trade income caused by the additional measures. The service was introduced in 2023, and in 2024, 21% of wood trade took place under the Metsä Group Plus agreement. The costs incurred from the service are not reported because they are sensitive information. Metsä Group has actively participated in drawing up a biodiversity roadmap for the wood processing industry in cooperation with other operators. As part of the roadmap work, a harmonised and standardised monitoring system is being developed for measuring and monitoring the impacts on biodiversity. In 2024, Natural Resources Institute Finland drew up calculations on the state of forest nature and its development
concerning Metsä Group’s own wood supply area in Finland. Moreover, model scenarios were made of the impacts that the Metsä Group Plus service has on biodiversity. Metsä Board has identified the key legislative initiatives that may affect forest use and the production of Metsä Board’s products. As part of Metsä Group, Metsä Board participates in the management of regulatory risks by actively engaging in policy dialogue and targeting its key messages based on the identified regulatory risks. Advocacy is discussed under G1 – Business conduct . Regenerative forestry makes business more resilient to impacts related to legislation, the markets and climate change. It also helps implement a goal-oriented action programme to decouple the weakening of natural capital and economic growth. In the planning and implementation of wood supply and forest services, and in forest certification, attention is also paid to safeguarding the rights of indigenous peoples in the Sámi home region and its vicinity. Metsä Group requires wood suppliers to consider the Sámi culture and reindeer herding in their forestry measures through agreements and their own assurance. Wood suppliers are also audited regularly. The attention paid to local communities and indigenous peoples in forestry is discussed in more detail under S3 – Affected communities . Indigenous peoples are heard as part of the continuous stakeholder interaction process, which is reported to management every six months. In 2024, representatives of indigenous peoples were engaged in the human rights process, and their views were considered in the impact assessment results and the specification of development actions. Production unit locations Biodiversity plans will be drawn up for the production unit sites owned by the company and the surrounding land areas in the company’s ownership. The action plan was launched in Kemi, which will serve as the pilot site for the entire project. In 2025, a comprehensive plan for implementing biodi- versity plans at production units will be prepared. The implementation of biodiversity plans will take one to five years, depending on the production unit, after which the maintenance of the production unit sites and the surrounding land areas will be integrated with environmental management at the production units. The planning areas encompass the mill site and its safety areas, which are often in recreational use. The special features of local nature will be taken into account in the action plan, and the living conditions of endangered species will be improved. The work carried out with an expanding cooperation network aims for internationally approved planning principles that will help improve the state of nature in the built and industrial environments independent of the sector. In 2024, there were no expenses related to biodiversity plans and measures. The amounts
spent by Metsä Board on pollution prevention actions are disclosed under E2 – Pollution . The amount used for actions related to biodiversity and ecosystems differs from the Taxonomy disclosures, as only a small part of Metsä Board’s business is taxonomy-eligible. Actions related to emissions to air and water discharges are discussed under E2 – Pollution . Funding programme for nature projects Metsä Group’s funding programme for nature projects annually funds regionally effective development projects that are carried out outside commercial forests in Finland and improve biodiversity and the state of waterbodies. The funding programme is detached from Metsä Group’s own impacts and value chains. Projects are selected for the funding programme once a year. In the 2024 application process, 26 projects related to the management and restoration of Finnish biodiversity were selected for funding. They focused on the following areas: wetlands and aquatic bird habitats, restoration of watercourses and migratory fish, alien species, pollinators, the state of waterbodies, and traditional landscapes. The funding for these projects totalled EUR 600,000. Impacts and dependencies on ecosystem services Wood production is one of nature’s key ecosystem services for Metsä Board. If the state of forest nature deteriorates, forests become more vul- nerable to climate-change-induced weather phenomena and alien species. Forests’ climate resilience will increase as a result of the comprehensive management of ecosystem services, or benefits obtained from nature, and regenerative forestry that improves the state of nature. The goal of Metsä Group’s forest management services is to safeguard locally, nationally and internationally significant ecosystem services. Forest owner-members have greater opportunities to create added value for their forest assets the more diverse the assets are when transferred from one generation to the next. The key resources for actions related to biodiversity and ecosystems include the employees, development activities, system development and – indirectly – the machinery used in forestry work. The key resource for forestry measures is a comprehensive geographic information system of forests in the operating area. To remedy any environmental deviations, Metsä Group will introduce a voluntary nature compensation as part of regenerative forestry, which will overcompensate the harm to nature resulting from any legal violations. The development of the compensation model is underway, and it will be applied retroactively from 2023 to identified deviations. The compensation model is described in more detail under S3 – Affected communities .
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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