Stora Enso Green Bond Report 2022

Stora Enso
Green Bond
Stora Enso Sustainability at Stora Enso
Sustainability is an integral part of our strategy – it is at the core of what we do.

in a nutshell
We contribute to the transformation of the materials system in three areas where
we have the biggest impact and opportunities: climate change, biodiversity,

Report 2022 and circularity. Our aim is to provide fully circular products and solutions that
help reduce climate impact and support biodiversity restoration, helping our
customers to reach their ESG targets.

Part of the global bioeconomy, Stora Enso is a leading provider

of renewable products in packaging, biomaterials, and wooden Sustainable finance at Stora Enso
construction, and one of the largest private forest owners in the world. Stora Enso has the long-term aim to secure funding partners that have
sustainability as a fundamental part of their agenda. We aim to influence and
Stora Enso has approximately 21,000 employees and Group sales develop the financial markets to ensure that sustainability becomes an integral
in 2022 of EUR 11.7 billion. Stora Enso shares are listed on Nasdaq part of decisions and credit evaluation. In addition to green bonds described in
Helsinki Oy (STEAV, STERV) and Nasdaq Stockholm AB (STE A, STE R). this report, Stora Enso has an undrawn EUR 700 million Revolving Credit Facility
In addition, the shares are traded in the USA as ADRs (SEOAY). (RCF) loan signed in 2021, where the pricing mechanism is linked to our science-
based climate targets. Stora Enso commits to reducing absolute scope 1 and
2 greenhouse gas (GHG) emissions from its own operations, as well as scope 3
Our fiber-based materials are renewable, recyclable, and fossil free. GHG emissions from its value chain, by 50% by 2030 from the 2019 base-year.
Our solutions offer low-carbon alternatives to products based on finite The targets relating to own operations are aligned with the scenario that limits
resources. We believe that everything that is made from fossil-based global warming to 1.5 degrees.
Stora Enso’s Sustainable Finance strategy is an integrated part of our overall
materials today can be made from a tree tomorrow. strategy. Stora Enso aims to have access to sufficient and competitively priced
funding at any time to be able to pursue its strategy and achieve its targets.
Stora Enso signed its first sustainability-linked credit facility in 2017 and issued
its first green bonds in 2019. With the Green Bond Framework, our ambition
is to offer a format to support fixed income investors and to report the direct
environmental impacts of the financed investments and business activities.

The Financial Stability Board’s (FSB) Task Force on Climate-related

Financial Disclosures (TCFD) recommends a framework for disclosing
Contents climate-related risks and opportunities that goes beyond current practices.
Stora Enso published its first TCFD-aligned reporting in the Report of
Stora Enso in a nutshell 2 Board of Directors in 2019. Stora Enso has assessed a business impact
scenario for 2030 according to the global transition required to limit
Sustainability at Stora Enso 2
the global average temperature increase in line with the Paris agreement
Sustainable finance at Stora Enso 2 of 1.5 degrees (RCP 1.9). The work concluded that the overall transition
Green bonds at Stora Enso 3 to a low carbon, circular bioeconomy is well aligned with Stora Enso’s
Green Bond Categories 3 strategy. For more information on Stora Enso’s reporting according to TCFD
Outstanding Green Bonds and Bilateral Loans 3 recommendations, see Annual Report 2022.

We are the renewable

Allocated proceeds and impact reporting 4
Governance 6
Commentaries 6
Contacts 6 materials company.
2
Green bonds at Stora Enso Green Bond Categories
Stora Enso’s Green Bond Framework is based on and aligned with the 2017 To be eligible for Green Bond proceeds, the projects must fall within one of the following Eligible Categories.
version of the Green Bond Principles (GBP) published by the International Capital
Markets Association (ICMA). The framework lists the possibilities and limitations
of the project categories that Stora Enso has defined as eligible for green funding.
Proceeds from Green Bonds are used solely to finance or refinance (going back 1. Sustainable 3. Energy efficiency 5. Sustainable
up to two years) projects and activities defined under the Eligible Categories. forest management By using materials efficiently and water management
The relevant use of proceeds is outlined for each Eligible Category and is Forests are the foundation of our replacing non-renewable materials, Production at Stora Enso’s board,
comprised of individual projects or a portfolio of projects that has been selected business. Sustainable forest and Stora Enso operates at the heart of pulp and paper units requires large
based on Stora Enso’s policies and governance structure. Where appropriate, plantation management secures the bioeconomy. The environmental amounts of water. The units withdraw
the use of proceeds may be used to finance operating expenditures (for example the long-term availability of work at our mills, including water and process and cooling water almost
forest management or R&D) and will be tracked on a project or portfolio basis. wood and pulp, while ensuring energy management and resource entirely from surface waters. Only
Only projects or investments controlled and managed by Stora Enso, or within the preservation of ecosystems efficiency, is supported by third-party- around 4% of water is consumed
one of Stora Enso group controlled subsidiaries, are deemed eligible. and biodiversity. We ensure that certified environmental management in production processes while
our forests grow more than they systems. A fundamental part of our almost 96% is recycled back into
are harvested and that every part of work is a central energy and water the environment.
the harvested tree is used optimally. efficiency investment fund.

In total Stora Enso has issued seven 2. Renewable, low-carbon, 4. Renewable energy 6. Waste management
green bonds or bilateral loans in 2019–2022, and eco-efficient products, and waste to energy and pollution control
with total nominal amount of about product technologies, Stora Enso’s production generates Stora Enso works to reuse and

1,500 EUR million

and processes residuals and by-products such as recycle materials, to minimise waste
Our low-carbon materials are black liquor, bark, and different kinds of and to maximise the value of material
renewable and recyclable and sludge. These materials together with streams by creating circular material
come from sustainably managed harvesting residues and recovered wood flows in its value chain. At the same
forests and plantations. They form all constitute important biomass sources time, Stora Enso aims to reduce its
the building blocks for a range of which can be used to produce energy. own process waste to landfill to as
innovative solutions in packaging, Stora Enso’s sites generate and distribute close to zero as legally, technically
Allocated green bond categories as of 31 Dec 2022 biomaterials, and wooden construction energy to local district heating systems and commercially possible.
that can replace and substitute and industrial partners largely based on
fossil-based materials. residuals from harvesting operations and

90%
Sustainable Forest production processes.
Management

Renewable, Low-Carbon,

8% and Eco-Efficient Products,

Product Technologies,
and Processes
Outstanding green bonds and bilateral loans

Amount (million)
Nominal Amount
at 31 Dec 2022 (EUR million) Issued Maturity Coupon
1. SEK 1,250 112 2019 February 2024 STIB0R +1.45%

2% Renewable Energy
and Waste to Energy
2.
3.*
SEK 1,750
SEK 1,000
157
90
2019
2019
February 2024
May 2026
1.875%
private
4. SEK 1,550 139 2020 April 2025 STIBOR +2.2%
5. SEK 1,550 139 2020 April 2025 2.375%
6. EUR 500 500 2020 December 2030 0.625%
*bilateral loan

3
Allocated proceeds and impact reporting
Green Bond and Environmental
Eligible category Eligible project Description allocated proceeds impact metric (KPI) Performance 2022
Acquisition of Acquisition of Swedish forest Bonds 1–5: 100% % of the lands owned The acquired forest assets are
Swedish certified holdings in 2019 in connection with Bond 6: 60% or leased that are in 100% certified2 and amount to
forestland the restructuring of Bergvik Skog. wood production and 1.39 million hectares, including
harvesting covered by forest 1.14 million hectares of productive
Sustainable certification schemes.1 forest land with standing stock
Forest Management of 150.5 million m3 forest.
Sustainable forest Stora Enso forests in Sweden Bond 6: 10% Positive climate impact As an average of 2020–2022,
management Sustainable forest management through forests’ carbon Stora Enso’s forests in Sweden
projects in activities funded are: sequestration based sequestered an estimated 1.7
Sweden (OPEX) • Regeneration of forests and on estimated net forest million tonnes of CO2 annually.3
plantations managed and growth for Stora Enso
harvested by Stora Enso forests in Sweden.
• Wood harvesting of FSC or PEFC- Stora Enso launched a biodiversity
certified forests (e.g. labor costs) programme for own forests in Sweden
• Seedlings (e.g. production and
procurement of pine, spruce, birch In 2022, Stora Enso launched a comprehensive
used in forest regeneration) biodiversity programme and related targets for its land
• Silvicultural operations (e.g.soil holdings in Sweden. The programme, which covers
preparation, planting,pre- the Group’s forest land in Sweden, has five focus
commercial thinning) areas, each with specific actions and measurable
• Fertilisation (e.g. labor costs)
targets for 2030.
• Infrastructure to facilitate
sustainable forest management Stora Enso is one of the country’s largest private
• Restoration of native forests and Case forest owners. Safeguarding biodiversity has been an
conservation of biodiversity. integral part of Stora Enso’s forest management for
1
Biodiversity is an integral part of forest certifications including protection of valuable ecosystems. The reporting is complemented by selected biodiversity indicators on the Group’s website.
decades. The new programme aims to strengthen this
2
Certification by Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC). Stora Enso Communications’ FSC® trademark license number is FSC-N001919. work further. Combined with the ongoing biodiversity
3
Including the above and below-ground biomass of trees. Currently excluding soil carbon. For more information, see Sustainable forestry and biodiversity.
work, the new biodiversity programme with more than
30 actions will lead to increased nature values and
strengthened biodiversity across Stora Enso’s land
holdings in Sweden.

Read more:
Sustainable forestry and biodiversity

4
 Green Bond and Environmental
Eligible category Eligible project Description allocated proceeds impact metric (KPI) Performance 2022
Gruvön Cross EUR 45 million investment in Bond 6: 9% Annual CLT production CLT production capacity at
Laminated Timber a new CLT unit at the Gruvön site capacity (m3), also the Gruvön site was 80,000 m3
(CLT) site investment in Sweden was completed and considered as a proxy in 2022, ramping up towards the
production started in 2019. for positive climate full capacity of 100,000 m3/year. Case
Renewable, Low- impact through carbon
Carbon, and Eco- storage and substitution
Efficient Products, of carbon-intensive
Product Technologies, construction materials4
and Processes Ždírec Cross EUR 79 million investment in Bond 6: 16% Annual CLT production The estimated annual production
Laminated Timber a new production line for CLT capacity, (m3), also capacity will be approximately
(CLT) site investment at Stora Enso’s Ždírec site considered as a proxy 120,000 m3 after ramp-up.
in the Czech Republic. for positive climate
Production started in impact through carbon
the third quarter of 2022. storage and substitution
Stora Enso launched a building solution
of carbon-intensive
construction materials4 for low carbon construction
Steam turbine EUR 25 million investment to Bond 6: 5% Reduction of fossil CO2 The reduction of fossil CO2
investment at boost green energy generation at emissions (tonnes) emissions as a consequence To meet the demand for sustainable and innovative
the Maxau site5 Stora Enso’s Maxau paper site in of the investment is estimated construction solutions, Stora Enso launched Sylva™
Germany. The project installed a to be approximately 50,000 by Stora Enso in 2022. Sylva is Stora Enso’s range of
Renewable Energy new steam turbine with a closed- tonnes annually. engineered and prefabricated products such as cross-
and Waste to Energy loop cooling system and additional laminated timber (CLT), laminated veneer lumber
biomass storage. The investment (LVL) and glued laminated timber (GLT). The solution
improves energy efficiency enables faster construction, reduced costs, more
andenables the use of a higher efficient use of raw material and fewer emissions than
biomass share and, consequently, concrete or steel.
reduces fossil CO2 emissions.
Wood products can help transform the construction
4
One cubic metre (m3) of CLT stores an equivalent of CO2-eq. The production unit specific calculations of avoided CO2 emissions and carbon storage is additionally informed by third-party verified Environmental Product Declarations available at our website. sector from a source of greenhouse gas emissions
5
As announced in September 2022, Stora Enso has signed an agreement to dispose of the Maxau paper production site. The proceeds for the site will be re-allocated and reported in the next Green Bond Report.
to a carbon sink. Every cubic meter of wood used
as a substitute for non-renewable building materials
reduces CO2 emissions by an average of 1.5 tonnes.
This carbon stays stored in wooden buildings
for generations.

Read more:
Wood products

5
Governance
We have defined a set of Green Bond specific steps, which have been
integrated into the existing governance model of Stora Enso.
Stora Enso’s strategic investment projects are approved on group-level
following the mandate by the CEO and Board of Directors. Each division will
also be granted an annual allocation intended for smaller annual replacement
and development needs in relation to investments. All large projects are
reviewed by the Investment Working Group comprising group and division
representatives and headed by the CFO.
Group investment guidelines stipulate the process, governance, risk
management, and monitoring procedures for strategic projects. Post
completion audits are carried out for all significant investments. Risks are
mitigated through detailed pre-feasibility and feasibility studies which are
prepared for each large investment. Green Bonds are administered by
the Treasury team supported by experts from across the company to ensure
alignment to the framework. Approvals for Green Bonds use of proceeds
for investment are additionally approved by our Sustainability Council.
The Sustainability Council consists of members from all divisions and
the Sourcing and Logistics function, and is chaired by the Executive Vice
President, Sustainability.
In recent years, Stora Enso has been through The goal of our Sustainable Finance strategy is
a comprehensive transformation process. We to have access to sufficient and competitively
have proactively repositioned our business from priced funding at any time to be able to pursue our
Outline of the Green Bond selection process largely a pulp and paper company to a global strategy and achieve our targets.
renewable materials company. Sustainability I’m very pleased with the investor demand for
trends underpin our opportunity for long-term and our green bonds as well as the results of the funded
profitable growth. projects. Green bonds have been crucial to finance
Investment Stora Enso’s overall investment projects are Our goal is to offer 100% regenerative solutions our strategy, especially with the Group’s forest
Working Group proposed to the Investment Working Group. by 2050. This means providing renewable and assets. With our investors’ support, we have
fully circular products and solutions that help advanced our renewable solutions offering as well
reduce climate impact and support biodiversity as our sustainable forest management, promoted
restoration. We have also set science-based biodiversity and reduced our fossil CO2 emissions.
Approved projects are subsequently targets for 2030 for the three areas where we have Green funding supports our business and
reviewed by the Sustainability Council and the biggest impact and opportunities: climate helps our customers in transformation towards
Sustainability
evaluated in accordance with the Green change, biodiversity, and circularity. a biobased circular economy.
Council
Bond Framework and Stora Enso’s To achieve such ambitious targets, co-operation
sustainability policies and guidelines. with our entire value chain and the finance Seppo Parvi
community is the only way forward. Chief Financial Officer (CFO), Deputy CEO,
Country Manager Finland
Annette Stube
Only investmet projects approved by Executive Vice President, Sustainability
both the Investment Working Group and
Green bonds
the Sustainability Council will be available
Eligible Projects
for the Treasury team to allocate Green bond
proceeds to.

See our latest ESG ratings on our website storaenso.com Contacts: Kaarlo Höysniemi, SVP, Group Treasury, [email protected]