Metsä Board Annual Review 2024

METSÄ BOARD Annual review 2024

Metsä Board’s 2030 sustainability targets

other key policies such as the Equality Policy, Personal Data Protection Policy and Information Security Policy every three years. The e-learning course in information security was revised in 2024. The e-learning course in the Code of Conduct includes Metsä Board’s key ethical principles and describes the best practices related to business sustainability through examples and exercises. Depending on the employees’ duties, they are also required to complete e-learning courses related to other policies such as the antitrust, procure- ment, agreement and legal affairs policies. In 2024, a revised e-learning course in agreement and legal policy was launched and supplemented with classroom training in agreement law, and with online and classroom training in the Know Your Customer process for all employees in sales and marketing. Workshops for local management dealing with diversity, equality and inclusion, which were launched in 2022, continued in 2024 (the workshops are discussed in more detail under S1 – Own workforce ). A section developing supervisors’ capability of addressing ethical grievances and encouraging the reporting of grievances was added to the training offered to supervisors. Ethical operations and doing the right thing are also part of the induction of new white-collar employees and apprenticeship trainees. The completion of e-learning courses and classroom training is regularly monitored by the Compliance Committee, which supervises the Compliance and Ethics programme, and the results are reported once a year to the Audit Committee of the company’s Board of Directors as part of the Compliance and ethics review. The completion percentage of the Code of Conduct e-learning course is presented in the Completion of e-learning courses table. A culture of diversity, equality and inclusion (DEI), and the implemen- tation and development of an ethical and respectful corporate culture, is one of the focal areas of the Motivated people strategic programme. The programme’s focal areas and goal are discussed under S1 – Own workforce . The implementation and development of the culture of doing the right thing are measured with the ethics index, calculated based on the ethics statements in the employee survey, which measures the employees’ experience with ethics in the company’s operations. According to the most recent survey, conducted in 2024, financial misconduct, corruption, conflicts of interest, inappropriate influencing of partners’ decision-making and data protection breaches are not considered material risks. The results of the ethics statements will be discussed at all sites by the end of January 2025. Each site will define development measures for 2025 to remedy the problems observed. Corruption and bribery risks are assessed as part of Metsä Group’s risk management process. Of the company’s internal functions, sales and marketing, procurement and lobbying have been identified as those most susceptible to corruption and bribery. The measures for preventing and detecting corruption and bribery are described on page 93. Metsä Board annually participates in several environmental, social responsibility and business practice assessments conducted by third parties such as CDP, EcoVadis, ISS, Sustainalytics, MSCI and Moody’s. Metsä Board’s partners can also assess Metsä Board’s sustainability through the Sedex system. In addition, third-party SMETA audits (Sedex Members Ethical Trade Audit) are conducted on Metsä Board’s sites. In 2024, a SMETA audit was carried out at the Äänekoski paperboard mill.

To ensure the sustainability of its suppliers, customers and other partners, Metsä Board follows third-party due diligence in its Know Your Business Partner process, in which the partner’s background is checked for any risks related to trade sanctions, corruption, money laundering, human rights violations, environmental offences and various other misconduct before a binding agreement is concluded, as well as during the cooperation relationship by means of continuous monitoring. In 2024, the process was developed by automating background checks, harmonising processes, clarifying roles and responsibilities, and publishing new guide- lines for background checks, the Know Your Business Partners principles. Relationships with goods and service suppliers are described in more detail on page 92. In 2022, Metsä Board ended all business related to Russia and Belarus due to Russia’s military aggression against Ukraine. Following the business transaction in 2024, Metsä Board and Metsä Group have no more holdings in Russia. Mechanisms for identifying, reporting and investigating concerns Employees and stakeholders are encouraged to report any ethical concerns and non-compliance with the law related to Metsä Board’s oper- ations. Observations can be reported to the supervisor, local management, HR and the Compliance Committee, or through Metsä Group’s Compliance and Ethics Channel, which is available in ten languages to all stakeholders on the company’s website. Reports can be made anonymously. The chan- nel’s technical implementation is handled by an external service provider. The employee survey’s ethics statements and open feedback are used to monitor the effectiveness of the Compliance and Ethics Channel and other reporting methods for reporting and handling concerns. In addition to e-learning courses, awareness of the Compliance and Ethics Channel is promoted by improving the channel’s visibility with posters supplied to production units and in the supplier network used to manage supplier cooperation. Moreover, satisfaction with and awareness of engagement methods are assessed as part of supplier surveys. No separate assess- ment is currently conducted of the downstream value chain’s, affected communities’ or consumers’ and end-users’ awareness of and confidence in reporting methods or the effectiveness of reporting methods among these groups. Every breach or violation, and suspected breach or violation, of which the company becomes aware is investigated. The investigation is supervised by the Compliance Committee. The committee is tasked with monitoring that the consequences of the investigations are applied consistently in cases of equal gravity. Corrective actions must be adequate as described in the company’s Code of Conduct, and the Principles on non-compliance notifications and the related investigation. Any illegal activities are reported to the authorities. Neither the person investigated nor their supervisor participates in the investigation of the breach or suspected breach. If called for by the significance of the breach under investigation, the Compliance Committee reports the incident to Metsä Board’s management and Board of Directors at a regular meeting, or immediately if required. The cases are divided into the following categories: fraud or other criminal behaviour; corruption and bribery; competition law; conflicts of interest; employee matters; discrimination or harassment; privacy and

2030 target

2024

2023

2022

Ethics index

100

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

Traceability of raw materials, share of total purchases, %

100

Share of certified wood fibre, %

>90

Suppliers’ commitment to the Supplier Code of Conduct, share of total purchases, %

100

99.0

98.7

Supplier assessments and audits of core suppliers, %

100

Strategy and financial targets

MG: Joint sustainability target with partner suppliers, %

100

Value creation

MG: The target has been set at the level of Metsä Group. In 2024, ethics index monitoring was changed from actions-based to index-based, which is why no comparison years are available.

Financial development 10 Key figures 12

Metsä Board’s strategic 2030 sustainability targets, and their setting and monitoring, are discussed in greater detail under Sustainability governance and strategy and Material sustainability-related impacts, risks and opportunities . Progress in targets • Ethics index – The 2024 result is below target. From 2025, in addition to the trend in the ethics index, monitoring will focus on the progress made in development actions determined based on the survey results. The target implementation rate for them is 100%. • Traceability of raw materials, share of total purchases – The tracea- bility of raw materials remained at a high level in 2024. • Share of certified wood fibre – The sustainability target set for 2030 was already achieved in 2023. The certification target has been updated, and from 2025 onwards, the new goal is 100%. • Suppliers’ commitment to the Supplier Code of Conduct, share of total purchases – Suppliers’ commitment to the Supplier Code of Conduct remained at a high level in 2024. • Supplier assessments and audits of core suppliers – Significant progress was made in the target in 2024. EcoVadis sustainability assessments were widely adopted to evaluate suppliers. The number of supplier assessments also increased slightly from the previous year. • Joint sustainability targets with partner suppliers – A sustainability target has been set with all current partner suppliers, meaning that the target has been achieved. In 2024, cooperation with partners continued in the form of more detailed target specification and plans – and with some suppliers, in implementation.

The Compliance Committee’s role in investigating ethical concerns is described under Mechanisms for identifying, reporting and investigating concerns . All the Board members have gained significant experience of good governance from their previous duties in operational management and/ or as Board members in a listed company or another large corporation. The Board members complete training in the company’s insider guidelines annually. The identification and assessment of material impacts, risks and opportunities The material impacts, risks and opportunities related to governance and corporate culture have been identified in a double materiality assessment based on the principles of the company’s risk management process. The materiality assessment is discussed on pages 26–28. The Know Your Business Partner process, supplier assessments and audits, the company’s ethics index, and the Compliance and Ethics Channel are key elements in the identification, analysis and management of impacts, risks and opportunities related to governance and corporate culture. Policies The sustainability of Metsä Board’s business conduct is guided by appli- cable legislation, as well as the values, Metsä Group’s Code of Conduct and various policies approved by the company’s Board of Directors. Metsä Board is committed to operating in accordance with the UN Guiding Principles on Business and Human Rights and requires the same of its business partners. Since 2003, Metsä Board has supported the UN Global Compact and its principles on human rights, employees, the environment and anti-corruption. The owner of the Code of Conduct is the President and CEO of Metsä Group, and Metsä Board’s Corporate Management Team contributes to supervising the Code’s implementation. Metsä Group’s Compliance function takes care of compliance with legislation, the Code of Conduct, policies and internal guidance, trains personnel and ensures that policies are up to date in cooperation with policy owners. Metsä Group has 16 policies, three of which are public policies, and 13 are internal policies. The policies are mandatory, and all Metsä Board employees must comply with the principles and provisions they specify. Each policy sets out its targets, purpose, scope of application, responsible parties, and decision-making and change process. All employees are required to complete e-learning courses in the Code of Conduct and

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

The role of the administrative, management and supervisory bodies

The Compliance and Ethics programme is supervised by the Compliance Committee, composed of Metsä Group’s directors in charge of legal affairs, internal audit, HR, and compliance and ethics. In 2024, the Compliance Committee convened six times. Once a year, the director in charge of compliance and ethics presents a compliance and ethics review to Metsä Board’s Corporate Management Team and Audit Committee. In addition, the directors in charge of legal affairs, taxes, and compliance and ethics present a legal affairs, compli- ance and tax review twice a year to the CEO and CFO.

196 Remuneration report 201 Investor relations and investor information

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