Stora Enso in 2019 We are the renewable materials company

Our raw material is Our products Our renewable products renewable, recyclable, replace fossil- contribute to a circular and fossil-free. based materials. bioeconomy.

Sales EUR 10.1 billion

Employees The future Sustainability and high cash flow, despite the challenging 26 000 innovation at the core market conditions. grows in We continue to build a strong portfolio, While megatrends and our customers’ helping our customers to be more needs support our strategic direction, competitive and sustainable – for today Stora Enso is also affected by today’s Countries where the forest Stora Enso has production, and tomorrow. Our promise to society and political and economic instability. To mitigate plantations or projects our foundation for innovation is “Everything these effects, we implemented a profit For our customers, leaders that is made from fossil-based materials protection programme during 2019 and will and society, the need for today can be made from a tree tomorrow.” continue this into 2021. a shift towards a sustainable 100% of our wood comes from bioeconomy with positive climate sustainable sources where biodiversity Transformation continues impact is more apparent than values are secured. With the acquisition of One of our biggest decisions during 2019 ever. Stora Enso is in a unique forests from Bergvik Skog in Sweden, we was to convert the mill into Personnel by country1 position to lead a transition from became one of the largest private owners packaging materials. Other milestones a linear to a circular economy, of biological assets in the world. Stora Enso include the finalisation of the cross- 25% from dependency on finite or supports all 17 Sustainable Development laminated timber (CLT) investment at 19% fossil-based materials towards Goals (SDGs) defined by the United Gruvön sawmill. The conversion of Enocell Sweden 20% materials and solutions that are Nations and we have identified the three Mill into dissolving that can be used Poland 8% renewable, recyclable and with strategic goals where we contribute most: for textile applications, is another example Germany 4% low or zero carbon footprint. Responsible Consumption and Production, of replacing materials from finite sources Russia 4% Climate Action and Life on Land. We have with more sustainable alternatives. set tough science-based targets regarding Other 16% the reduction of greenhouse gas emissions Openness to change and 3% and will continue our drive to improve Our greatest assets are our people and our Other countries 1% energy efficiency and reduce our use of ecosystems of customers, partners and

1 Including 50% of the employees at Veracel in Brazil fossil fuels. suppliers. Taking the lead requires courage and Montes del Plata in Uruguay. and a mind-set of openness to change. Result 2019 I’m very proud of leading this In 2019, 72% of sales and 78% of fantastic company. We are well equipped operational EBIT came from our growth to deliver on our strategy and take businesses of packaging, wood products the challenge of creating a world based Sales by destination and biomaterials. Over 7% of our sales on renewable materials. Legend Value in % Exact value Europe 73% came from new products and services. Finland 25% 10 25% Our operational EBIT was affected by lower China Pacific19% 17% 10 19% 20% 10 20% prices for our products. I am not pleased Sweden North America 3% Poland 8% 10 8% with our profitability levels, but we have Germany South America4% 2% 10 4% focused on areas we can influence. I am Annica Bresky 4% 10 4% Russia Other 5% very satisfied that we delivered a record Stora Enso’s President and CEO Other Europe 16% 10 16% Brazil and Uruguay 3% 10 3% Other countries 1% 10 1% Total 100% 90 XX% This is a summary of Stora Enso in 2019. The full annual report is available at storaenso.com/annualreport 1

Legend Value in % Exact value Europe 73% 10 73% Asia Pacific 17% 10 17% North America 3% 10 3% 2% 10 2% Other 5% 10 5% Total 100% 50 XX%

1

1 This is Divisions in brief 2020 Stora Enso

Part of the bioeconomy, Stora Enso is a leading global provider of renewable solutions in packaging, biomaterials, Our purpose: wooden construction and paper. We employ some 26 000 people in more than 30 countries and our shares are listed on Do good for people the (STEAV, STERV) and Stockholm (STE A, STE R) exchanges. and the planet. Replace fossil-based Packaging Materials Packaging Solutions Biomaterials Our fiber-based materials are renewable, recyclable and The ambition of Packaging Materials Packaging Solutions division develops The Biomaterials division offers fossil-free. Our solutions offer low-carbon alternatives materials with division is to be a global leader in circular and sells world class fiber-based a wide variety of pulp grades to meet to products based on finite resources. We believe that economy with our high-quality renewable packaging products and services. the demands of paper, board, tissue, everything that is made from fossil-based materials today renewable solutions. packaging materials based on both virgin We constantly innovate and find new ways textile and hygiene product producers. can be made from a tree tomorrow. and recycled fiber. Addressing the needs to replace fossil-based packaging with We maximise the business potential of Our values: of today’s eco-conscious consumers, renewable, eco-friendly alternatives. Our the side streams of our processes, such we help customers and brand owners to high-end packaging solutions are used as tall oil and turpentine from biomass. find the best material for their packaging by leading customers and brands across Based on our strong innovation approach, Lead. and to replace fossil-based materials multiple industries. all fractions of biomass, like and Do What’s Right. with low carbon footprint, renewable and sugars, hold substantial potential for use recyclable alternatives. in various applications.

Wood Products Forest Paper Operational EBIT The Wood Products division is a leading The new Forest division, which started Stora Enso is the second largest paper provider of innovative wood-based solutions. operations in the beginning of 2020, includes producer in Europe with an established 78% from growth businesses The product range covers applications for Stora Enso’s Swedish forest assets and customer base and a wide product construction, the window and door industry, the 41% share of Tornator with the majority portfolio for print and office use. 2019 26% 14% 24% 11% 22% 2% as well as for the packaging and decoration of its forest assets located in Finland. Customers benefit from Stora Enso’s industries. Biocomposites offer plastic The division also includes wood supply broad selection of made from replacement opportunities in e.g. consumer operations in Finland, Sweden, Russia and recycled and virgin fiber as well as our 2006 35% 6% 62% -3% goods, industrial components, cosmetics the Baltic countries. The division’s key focus valuable industry experience, know-how and packaging. Pellets provide a sustainable areas are sustainable forest management, and customer support. from growth businesses solution for heating. The offering includes competitive wood supply to Stora Enso’s 38% service concepts such as Building Solutions mills and innovation. As a major player in and e-business. Our solutions meet strict the bioeconomy, access to wood is critical Consumer Board Packaging Solutions¹ Biomaterials Wood Products Paper² Other and eliminations requirements regarding safety, quality, for Stora Enso. Today, Stora Enso is one of design and sustainability. the biggest private forest owners in the world. 1 In 2006 in Consumer Board 2 In 2006 includes merchants

As of 1 January 2020, Stora Enso merged its containerboard business in the Packaging Solutions division with the Consumer Board division, creating a new Stora Enso is transforming from a traditional paper and board producer to a renewable materials growth company. Packaging Materials division. The remaining business in Packaging Solutions together with the recently created Formed Fiber unit, will constitute a more focused Five of our divisions are growing, while our Paper division is focused on cash generation. Packaging Solutions division. The Group has also established a new Forest division.

2 3 Consumer Packaging Wood Other and Biomaterials Paper² Outside line Board Solutions¹ Products eliminations 2019 26% 14% 24% 11% 22% 2% 2006 35% 0% 0% 6% 62% 3% -3%

0% 0%

1 Ownership distribution, Key figures % of shares held 9.8% 72% Operational ROCE of sales from growth businesses Oy¹ 10.7% FAM AB² 10.2% Social Insurance Institution of Finland () 3.1% Finnish institutions (excl. Solidium and KELA) 12.5% Swedish institutions (excl. FAM) 9.3% Net debt to Debt to Finnish private shareholders 4.4% Swedish private shareholders 4.2% operational EBITDA equity ratio ADR holders 1.8% Under nominee names (non-Finnish/non-Swedish shareholders) 43.8%

2.1 0.43 1 Entirely owned by Finnish state. Target <2.0 Target <0.60 2 As confirmed to Stora Enso.

Legend Value in % Exact value Solidium Oy¹ 10.7% 1 10.7% Combatting global warmingFAM AB² 10.2% 1 10.2% Social Insurance Institution of Finland (KELA) 3.1% 1 3.1% Finnish institutions (excl. Solidium and KELA) 12.5% 1 12.5% Swedish institutions (excl. FAM) 9.3% 1 9.3% Finnish private shareholders 4.4% 1 4.4% Swedish private shareholders 4.2% 1 4.2% ADR holders 1.8% 1 1.8% –25%Under nominee names (non-Finnish/non- 43.8% 1 43.8% Swedish shareholders) lowerTotal CO2e in 2019 than the 2010 100% 9 Stora Enso R Share vs indices base-year level 1.1.2015 = 100

250 200 Total area of lands 150 Stora Enso owns or manages 100 50 2.35 million 0 2015 2016 2017 2018 2019 hectares Stora Enso (EUR) OMX Helsinki Basic Materials (EUR) OMX Helsinki (EUR) Promoting sustainable forestry Dividend proposal

Data can be found on the last sheet 98 % EUR 0.50 of the lands we own or manage were

per share covered by forest certification schemes 1

4 5

1 Everything that’s made from fossil-based materials today can be made from a tree tomorrow.

6 7 The drive for a sustainable future in the bioeconomy The global megatrends continue to affect industries and businesses around the world. The signposts are quite clear, pointing to an acute need for raw materials that are renewable, recyclable and fossil-free. This is huge advantage for Stora Enso. We have a promise, which also steers our innovation agenda, and that is “Everything that is made out of fossil-based materials Stora Enso is one of the largest producers Total retail e-commerce sales The nature of the global pulp business are forecast to grow by today can be made from a tree tomorrow.” of virgin fiber board in the world. We are continues to remain cyclic. However, its the global leader in liquid packaging and long-term growth is strongly supported the biggest producer of food service 15% annually. by the megatrends such as the growth of board and carton board in our strategic the middle class in the developing countries segments in Europe. Our growth is This is pushing growth in corrugated and progress in digitalisation, urbanisation, faster than the global packaging market, packaging, which accounts for most of eco-awareness and changing lifestyles. accelerated by our renewable materials the e-commerce packaging. More people and more consumption mean that the planet’s resources are being stretched even further and innovations that can replace fossil- As an industry leader in renewable The market for renewable textiles, based packaging materials. packaging, we hold a strong position in nonwoven materials, carton the corrugated packaging focus markets: boards for packaging, hygiene Even with existing a leading status in the Nordics, second in products, specialty and tissue Global warming Urbanisation Changing lifestyles packaging technologies, the Baltics and Poland, third in China and papers continues to grow. Carbon neutrality will Close to 70% of the world’s China’s demand for packaged fifth in Russia. create a EUR 6 000 billion population are expected to food will continue to grow at about This in turn generates demand for our market for smart green live in urban areas by 2050. 8 percent a year up to 2024. 25% various pulp grades specifically with solutions by 2050. With pressure on infrastructure Source: Research and Markets: the aging population driving demand Eco awareness and resources, urbanisation is Packaged food markets in China of European plastic packaging Source: Sitra megatrends for fluff pulp. As many as 70 percent creating significant opportunities could be replaced with of consumers state that for more sustainable living. Growing population renewable solutions. The global population is they have purchased an Digitalisation Source: Sitra megatrends environmentally friendly Retail e-commerce expected to reach 9 billion product, even if it was sales are projected to by 2050, leading to greater more expensive. A total increase to over USD Growing middle class resource shortage. By 2030, of 66 percent have 4 000 billion, making By 2030, 60 percent of the global population of avoided a particular up 14.6% of total retail the world’s population will people aged 65 and older product or brand for spending. be middle class, earning will double to one billion. Sources: Sitra megatrends, environmental reasons. Source: eMarketer USD 10–100 a day. National Institute on Aging Source: Millward Brown Source: UN Development for TetraPak: Environment Program Research Stora Enso is the largest supplier of As the second largest paper producer wooden construction material in Europe in Europe, we provide a wide range of and the fourth largest in the world with 21 products and services for print and office production units in 11 different countries. use to our customers. Most of Wood Products sales go directly to industrial manufacturers, Print and digital media merchants or retailers with the remaining complement each other: channels going through wholesalers and flyers and folders are used in trading houses. Our aim is to increase advertising, and online retailers the share of value-added products and publish printed magazines and services, while also developing our catalogues and establish physical distribution centres. This means that store locations to improve the share of direct sales will grow in customer experience. the future. Publishers still create most of their revenues The global market growth for from print and print media remains the most sawn softwood is estimated to be trusted source of information. Print advertising brings consumers into stores. Book paper sales have remained quite 2–3% annually. stable as many people prefer reading books in the traditional paper and ink format. Copy paper is performing relatively well as people Increasing demand for raw material that is renewable, recyclable, and fossil-free continue to print at offices and home.

8 9 Substituting materials from finite resources is our key competitive advantage As a company, Stora Enso contributes to a better climate. Trees in our sustainably managed

forests absorb CO2 from the atmosphere and when harvested act as a store. Carbon stays in the fibers when they are made into products, and even through recycling. Carbon storage can be increased by substituting materials from finite resources with renewable alternatives. This is a significant and growing opportunity for us. By substituting fossil-based materials, Stora Enso’s products saved an estimated 20 million tonnes of

CO2 in 2019 which is comparable to the average

annual CO2 emissions of 5.1 million cars.

Our total climate benefit:

12 Mt CO2

Our products substitute fossil-based products, saving

20 Mt CO2

Our business is a net contributor to prevent Our forests are carbon neutral and absorb

global warming 3 Mt CO2

Resource efficient Sustainable forestry is the foundation for long-term value chain, emissions:

carbon neutral raw material from forests. Best climate 11 Mt CO2 benefit comes from combining forest-based products and For information about the calculation method, please see sustainable forestry with a resource efficient value chain. storaenso.com/sustainability

10 11 A circular view for a better and brighter world

A leader in the bioeconomy, Stora Enso also wants to contribute to a circular economy where resources are kept in use for as long as possible, reusing and finally recovering materials for other purposes. Altogether, the circular bioeconomy is a good formula for keeping the planet healthier. Driving the change towards more efficient recycling of packaging

1 4 We work with our value chain partners, Circular design Zero waste participate in industry collaboration and co-create with our customers for circular 2 design. One example of this is the aim to Circular start recycling used paper cups on a large products scale at Langerbrugge paper mill in Belgium. Bringing paper cups into the recycling scheme represents a new business opportunity as cups are such an underutilized source of quality recycled fiber.

Renewable New business raw from recycled materials products

5 3 Biodegradability Extend value with recycling and reuse

1 Circular design models is all about collaboration. We form Foundation in collaboration with the UN Circular design refers to designing partnerships to build circular value chains Environment Programme. for the whole system and all stages for the future. of the product lifecycle. It considers 4 Zero waste the materials used, the manufacturing 3 Extend value with We work to minimise waste process, the product, its distribution and reuse and recycling and resource use overall. In our own the potential for reuse, or recycling. Our We collaborate with customers and operations, we focus on optimising our use aim is to maintain the value of products partners to develop circular solutions to of resources and on creating value out of for as long as possible through product replace plastics and cut down on waste by-products. design, innovation and recycling. along the supply chain. We examine We are collaborating with customers how our products perform in different 5 Biodegradability 2 New business from recycling systems, and analyse lifecycles When a product has reached and partners to develop circular solutions circular products and solutions in terms of carbon footprint. This is the end of its life, we promote recycling In the circular bioeconomy, products are supported by alliances and commitments, and energy recovery to create further bio-based. They are also shared, reused, such as CEPI’s 4evergreen initiative value. At the end of the life cycle, many of to replace plastics and cut down on remanufactured and finally recycled. and the New Plastics Economy Global our products are biodegradable or can be Creating new products and business Commitment, led by the Ellen MacArthur burned for energy. waste along the supply chain.

12 13 How we create value as a renewable materials company

Key inputs Key outputs Key impacts • Investments in Human Rights Due Diligence programme • Development areas mapped against • Respect for Human Rights in all operations the highest priority human rights during 2019

• 26 000 direct employees in more than 30 countries • Personnel turnover 15.0% • EUR 1 331 million salaries and benefits • OHS and well-being • 7.0 TRI rate • Impacts of injuries, illness, and well-being • Employee and leadership development • Illness related absenteeism 3.2% • Engaged and motivated employees and a capable organisation • Partnerships with communities and universities • 30 hours of training per employee • EUR 2 032 million value through taxes borne and collected

Social • EUR 2.7 million voluntary community investments • Leadership index 83/100 • Value creation with local communities • Business ethics and compliance • 441 voluntary community investment projects • Value through ethical operations in the market place • Code of Conduct index 84/100

• 2.35 million hectares of lands under ownership or management • 10.5 million tonnes of board, market pulp, and paper • Total climate benefit 12 million tonnes of CO2e with our • 37.1 million m3 of wood used • 4.9 million m3 of wood products renewable products and forest carbon sinks • EUR 54 million environmental investments • Certification coverage 98% for lands in wood production • Environmental impacts of operations and along the value chain • 2.2 million tonnes of Paper for Recycling (PfR) and harvesting and 75% sourced wood • Forests work as carbon sinks and provide ecosystem services • 2.3 million tonnes of pigments, fillers and other chemicals • 25% utilisation rate for Paper for Recycling • 599 million m3 water withdrawal • 98% utilisation rate for process residuals and waste • 41.8 TWh fuels of which 82% biomass Our fiber-based • 96% of water withdrawal returned back to the environment incl. • 7.0 TWh purchased electricity materials 298 million m3 process water discharges are renewable • 3.04 million tonnes fossil CO2e emissions from generated and purchased energy 2 • 1.2 TWh externally delivered electricity/heat/steam Environmental and recyclable. Our solutions provide low-carbon alternatives to products based on finite resources. • EUR 10 632 million capital employed • Customer satisfaction: Net Promoter Score 56% • EUR 10.1 billion sales of products and services • EUR 141 million R&D investments • 65 patent applications and over 430 patents granted • 7% of sales from new products • Over 20 000 suppliers and 23 500 private forest owners • 96% of supplier spend covered by Supplier Code of Conduct • EUR 6.9 billion paid to suppliers • 112 000 shareholders • 62 third-party supplier audits • EUR 656 million capital expenditure • EUR 10.3 billion market capitalisation • EUR 394 million dividends for shareholders • EUR 154 million interests for creditors Economic

NPS

Trees absorb CO2 and store carbon together with wood-based products, which can then be recycled as raw material or used for energy generation. Adopting the Sustainable Development Goals Stora Enso supports all 17 SDGs, and the following three goals are identified as the most strategic to our business:

14 15 Highlights of 2019

Strong consumer demand Renewable to replace fossil-based plastics has positively impacted the attractiveness of new fiber-based materials solutions to our customers. More dissolving pulp capacity to fulfil market demand

take us to Enocell Mill has been converted to focus entirely on the production of dissolving pulp, used as a raw material in the textile industry, a fossil-free for example, to replace cotton and fossil-based materials, such as polyester. Demand for dissolving pulp is growing at above future the industrial average, driven by increased demand for viscose-type Bio-based carbon materials for energy storage fabrics in the textile industry and non-woven applications. Stora Enso is investing EUR 10 million to build a pilot facility for producing bio-based carbon materials based on lignin. Wood-based carbon can be utilised as a crucial component in batteries typically used in consumer electronics, the automotive industry and large-scale energy storage systems. The investment further strengthens Stora Enso’s opportunities to replace fossil-based and mined raw materials as well as to connect sustainable materials to ongoing technology innovations. Oulu Mill to produce packaging materials

Stora Enso invests approximately EUR 350 million to convert the Oulu paper mill in Finland to produce kraftliner for packing. The conversion will enable us to further improve our position in the growing In 2019 Long-term target packaging business. The typical end Renewable tube for cosmetics packaging use for kraftliner is packaging that requires high strength, quality and A paperboard tube to reduce plastic in primary purity, such as for food, as well as packaging of cosmetics, which is a new application area over 7% 15% heavy-duty packaging. Production is for our paperboard. The body of the tube is made of of our sales came from of our sales is expected expected to start by the end of 2020. Natura Shape™ by Stora Enso, which is 70% based on After the conversion, Stora Enso renewable raw material and thus reduces the need to use new products and to come from new will no longer produce wood-free fossil-based raw material. services products and services coated papers.

16 17 Next generation eco-products designed for purpose

In 2019, Stora Enso announced an investment of EUR 5 million to build a new production line and related infrastructure to manufacture formed fiber products at Hylte Mill in Sweden. Formed fiber products are manufactured by pressing various wood-based pulps into a three-dimensional shape in a moulding machine. This enables a broad range of applications, including plastic-free cups, bowls, and plates.

Awarded corrugated Sustainable automated Increased CLT capacity ice cream packaging new retail solutions In 2019, Stora Enso opened its third In 2019, a packaging solution Stora Enso and the digital production unit for cross-laminated Biocomposites offer an affordable way to go green developed by Stora Enso in transformation company timber, this time in Sweden, at Gruvön for the Finnish artisan ice are bringing new automated retail sawmill. The production capacity DuraSense® by Stora Enso is a blend of wood fibers and cream manufacturer Vanhan solutions and services to the market. of 100 000 m3 annually amounts to polymers, offering our customers an affordable way to go Porvoon Jäätelötehdas was The new service is based on 4 500 normal-sized apartments. The green. The DuraSense® product family is suitable for a wide given two awards; the ScanStar the concept of “Intelligent Cabinets”, total production of CLT broke the one range of applications from consumer goods to industrial 2019 by the Scandinavian which are RFID (Radio Frequency million cubic metres mark this year. applications for manufacturing by injection moulding, Packaging Association and Identification) enabled e-kiosks CLT replaces non-renewable materials extrusion, and 3D printing. the WorldStar 2020 by the World designed for on-the-go purchasing. in the construction industry and we The re-usable and durable cutlery made from our Packaging Organisation. see a growing demand for sustainable biocomposites has a significantly lower carbon footprint solutions in the construction market. than conventional plastic cutlery.

18 Group Leadership Team Stora Enso Oyj P.O. Box 309 FI-00101 Helsinki, Finland Visiting address: Kanavaranta 1 Hannu Kasurinen Kati ter Horst Seppo Parvi Tel. +358 2046 131 Executive Vice President, Executive Vice President, Chief Financial Officer (CFO), Packaging Materials Division Paper Division Deputy to the CEO, Country Manager Finland Stora Enso AB Johanna Hagelberg Markus Mannström Jari Suominen P.O. Box 70395 Executive Vice President, Executive Vice President, Executive Vice President, SE-107 24 Stockholm, Sweden Sourcing and Logistics Biomaterials Division Forest Division Visiting address: World Trade Center Klarabergsviadukten 70 Tel. +46 1046 46 000

storaenso.com [email protected]

Noel Morrin Ulrika Lilja Annica Bresky Per Lyrvall Executive Vice President, Executive Vice President, President and Chief Executive Vice President, Legal, General Sustainability Communications Executive Officer (CEO) Counsel, Country Manager Sweden

For more detailed information about the Group Leadership Team, see Governance 2019, or storaenso.com/investors/governance. Concept and design: Miltton Oy

20 eplacePlastics Coose a pasticree tre

Its not enough to recycle. We need to replace plastic with renewable material i were going to meet the demands or a greener planet. In the uture your everyday products will come in packages made rom trees and plants. Welcome to the renewable materials company. storaensocorepacepastics