SUSTAINABILITY STORA ENSO 2006 Feedback on Sustainability 2006 Report

TR NO20 SUSTAINABILITY STORA ENSO 2006 Feedback on Sustainability 2006 report

Please, ﬁ ll in the feedback form and give your comments about the Sustainability 2006 report. Alternatively, you can ﬁ ll in the form online at www.storaenso.com/sustainability/feedback

1. In your opinion, how well does the report address the following issues?

Stora Enso’s approach to sustainability Stakeholder engagement Stora Enso’s sustainability targets and performance Issues regarding raw material sourcing Sustainability aspects in wood procurement Climate change Economic aspects of sustainability Occupational health and safety Employee well-being Product and customer-related sustainability issues

Scale: 5 = Extensively 4 = Well 3 = Adequately 2 = Poorly 1 = Don’t know Stora Enso Oyj 2. Please, rate how strongly you agree with the following P.O. Box 309 statements: FI-00101 Helsinki, Finland Visiting address: Kanavaranta 1 The structure of the report is clear. Tel. +358 2046 131 The content covers the most relevant Fax +358 2046 21471 sustainability issues to Stora Enso. Sustainability The content is well balanced between Stora Enso AB different sections. P.O. Box 70395 The content is credible. SE-107 24 Stockholm, Sweden Visiting address: World Trade Center, The content is understandable. Klarabergsviadukten 70

Scale: 5 = Strongly agree 4 = Agree 3 = Neutral 2 = Disagree 1 = Strongly disagree Tel. +46 1046 46000 Fax +46 8 10 60 20 3. After reading the report, how has your opinion of Stora Enso changed? Stora Enso International Ofﬁ ce 9 South Street Positively London W1K 2XA, UK No change Tel. +44 20 7016 3100 Negatively Fax +44 20 7016 3200

www.storaenso.com 4. How would you wish to see future reports developed? [email protected]

5. Which stakeholder group do you belong to?

Stora Enso employee or contractor Customer Shareholder Analyst or investor Member of a Governmental Body NGO representative Sustainability professional Media

Academia Graphic design: Incognito Other, please specify: Photos: Lasse Arvidson, Taisto Saari, Stora Enso image archive and UNICEF/ HQ06-1473/Giacomo Pirozzi Printing: Libris Oy Cover stock: Ensocoat 230 g/m2, Stora Enso, Imatra Mills (ISO 14001 -certifi ed and EMAS-registered FIN-000009) Text stock: MultiFine 115 g/m2, Stora Enso, Nymölla Mill (ISO 14001 -certifi ed and EMAS-registered S-000090) WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 [email protected] SE-107 24Stockholm,Sweden P.O. Box70395 Stora EnsoAB Fax +468106020 Tel. +46104646000 or WI 54495-8050,USA Wisconsin Rapids Stora Enso,P.O. Box8050 Fax +17154223625 Tel. +17154223693 Senior Vice President,StoraEnsoEnvironment James D.Weinbauer [email protected] 9 SouthStreet,LondonW1K2XA,UK Stora EnsoInternationalOffi Fax +442070163208 Tel. +442070163140 Executive Vice President,CorporateCommunications Kari Vainio CONTACTS or bycontactinganyofthecorporateoffi Printed copiesofthereportmaybeorderedthroughourwebsiteatwww.storaenso.com/order Stora Enso’s AnnualReport2006comprisesthree separatebooklets BoardofDirectorsandmanagement Divisional presentations Strategyandactionsin2006 Lettertoshareholders ce, ces (seebackcover). Capital markets Risk management Reportonoperations Financialstatementsandnotes www.storaenso.com/contacts [email protected] FI-00101 Helsinki,Finland Stora EnsoOyj,P.O. Box309 Fax +358204621267 Tel. +358204621348 Vice President,SustainabilityCommunicationsandCSR Eija Pitkänen

Sustainabilityinthevaluechain Sustainabilitygovernance,stakeholder engagement, targetsandperformance markets theGroup rawmaterialsandsuppliers technologies. We userawmaterials,energyandotherresources effi To minimiseourimpactontheenvironment,weconsideralifecycleapproachanduseapplicablecontrol Environmental responsibility partner. We strivetocontributetheeconomicwell-beingofsocietiesinwhichweoperate. day work. organisation. We thesecommitmentsandresponsibilities intheirevery expectallofouremployeestoobserve Sustainability ispartofStoraEnso’s corporategovernance,andresponsibilitiesareassignedthroughout the Management neighbour, andwedoourpartinsupportingsocialdevelopment. and labourrights,wecreateahealthysafeworkplaceforallofouremployees.We arearesponsible We adheretoethicalbusinesspracticesinallouractivities.We honourandsupportgloballyaccepted human Social responsibility them fromlegalandacceptablesources and promotesustainableforestry. from renewablerawmaterials,arerecyclableandsafetouse.We verifytheoriginofwoodandfi We mustbeaprofi Economic responsibility with StoraEnso’s policiesandprinciplesrelatedtosustainability. We addresssustainabilitythroughoutourvaluechain,andweexpectsupplierspartnerstocomply go beyondtherequirementsofnationallegislationandregulations. different cultures,customsandvaluesofthesocietieswhereweoperate.We complywithandwhennecessary werespect Asaglobalcompanyweoperateaccordingtoourvalues,policiesandprincipleseverywhere; performance. engage ourstakeholdersinactiveandconstructivedialogue.We measureandpubliclyreportoursustainability We We strivetocontinuallyimproveour sustainabilityperformance. aretransparentinourcommunicationand stakeholders. forsustainablebusinessandbenefi economic, environmentalandsocialresponsibilitiesisnecessary Stora Ensoiscommittedtomanaginganddevelopingitsbusinessinasustainablemanner. Balancingour Policy Sustainability Enso’s Stora geographic marketsor fl Group, thepotentialintroduction ofcompetingproductsandtechnologies bycompetitors;and(3)generaleconomic conditions,s and futureglobalmarketpricesfortheGroup’s productsandthepricing pressuresthereto,pricefl conditions,such patents andotherintellectualpropertyrights, theavailabilityofcapitalonacceptableterms;(2)industry success oftheexistingandfuturecollaboration arrangements,changesinbusinessstrategyordevelopmentplanstargets,ch of manufacturingactivitiesandtheachievement ofeffi statements.Suchfactorsinclude,butar cause actualresultstomateriallydifferfrom those expressedinsuchforward-looking United StatesPrivateSecuritiesLitigationReform Actof1995.Sincethesestatementsarebasedoncurrentplans,estimatesan for growthandprofi It shouldbenotedthatcertainstatementsherein whicharenothistoricalfacts,including,withoutlimitationthoseregarding tability; andstatementsprecededby“believes”,“expects”, “anticipates”,“foresees”,orsimilarexpressions,areforward-loo uctuations inexchangeandinterestrates. table businessandanattractive andtrustworthyinvestment,employer, supplierandbusiness ciencies therein, continued success of product development, acceptance of new products or services bytheGroup’sciencies therein,continuedsuccessofproductdevelopment,acceptancenew productsorservices targetedcus uctuations inrawmaterials, fi Ourproductsaremainlyproduced ciently. as strengthofproductdemand,intensity competition, prevailing expectationsformarketgrowthanddevelopments; expectations e notlimitedto:(1)operatingfactorssuchas continuedsuccess nancial conditionofthecustomersandcompetitors the d projections,theyinvolverisksanduncertainties, whichmay anges inthedegreeofprotectioncreatedby theGroup’s uch asratesofeconomic growthintheGroup’s principal king statementswithinthemeaningof bre, onlyprocure cial to our our to cial tomers,

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Fold hereandstaple Stora Enso Oyj Corporate Communications Sustainability P. O. BOX 309 FI–00101 HELSINKI FINLAND WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 SCOPE AND PROFILE

Scope and profile of this report

n this report Stora Enso follows the • Human Resources (HR) data derived house gas emissions are consistent with new guidelines from the Global from fi nancial accounting (average the World Resource Institute/World Busi- IReporting Initiative (GRI) as far as number of employees and employee ness Council for Sustainable Develop- they are applicable. The GRI content distribution by country) covers all ment Greenhouse Gas Protocol. index, presented on pp. 48–50, contains employees on the payroll during the Stora Enso’s sustainability reporting information on how Stora Enso has year. HR data derived from separately also addresses the main sustainability reported the various information and collected HR statistics covers perma- concerns raised by the Group’s stake- indicators specifi ed in the GRI guide- nent employees as at 31 December holders (see pp. 8–9). lines, also stating where in the annual 2006. report this information can be found. Internal and external assurance Stora Enso supports the ten princi- Due to the fact that the joint venture at The environmental and HR performance ples of the UN Global Compact. For Veracel in Brazil, of which Stora Enso data is checked internally before data information about how Stora Enso has owns 50%, has attracted attention consolidation. All performance data and addressed these principles in 2006, see among stakeholders, Stora Enso also related texts in this sustainability report pp. 48–50. reports here on the most signifi cant have been subjected to an external assur- stakeholder issues with relation to Vera- ance process by an independent third Scope cel Pulp Mill and its associated planta- party (see p. 52). • The scope of consolidated data on sus- tions. However, Veracel is not consoli- tainability generally follows the princi- dated into the Group’s performance ples of fi nancial reporting. This means data. Readers requesting more back- that the consolidated performance data ground material about Stora includes the parent company, Stora Enso Profi le Enso’s sustainability management Oyj, and all companies in which it Environmental and social performance or previous years’ reports can visit holds, directly or indirectly, over 50% of data is reported according to the Group’s www.storaenso.com/sustainability the voting rights. Associated companies internal guidelines. The guidelines for are not included in the consolidated per- environmental liabilities, capital expend- Several Stora Enso units produce unit-spe- formance data. These companies repre- iture and operating expenses are based cifi c sustainability reports. These publica- sent undertakings in which the Group on International Financial Reporting tions can be found at has signifi cant infl uence, but which it Standards (IFRS) and EU recommenda- www.storaenso.com/EMAS does not control (see notes in the Finan- tions on the recognition, measurement cials 2006 report). and disclosure of environmental issues For more information on Veracel’s sustain- The following limitations relate to in the annual accounts and annual ability performance, please see their sepa- the principles described above: reports of companies. Emission factors rate sustainability report at • Consolidated environmental per- used for calculating and reporting green- www.veracel.com.br formance data covers all production units unless otherwise specifi ed. Sales offi ces, merchants and staff functions are excluded. • Data on social responsibility covers Stora Enso in brief 42 223 of the total average 45 631 Stora Enso is an integrated paper, packaging, and forest products company, employees. Staff functions are producing publication and fi ne paper, packaging board, and wood products excluded. – all areas in which the Group is a global market leader. Stora Enso’s sales totalled • Consolidated Occupational Health EUR 14.6 billion in 2006. The Group has some 44 000 employees in more than 40 and Safety (OHS) performance data countries on fi ve continents. Stora Enso has an annual production capacity of 16.5 covers 42 077 employees of the total million tonnes of paper and board and 7.4 million cubic metres of sawn wood 43 887 employees. Some smaller staff products, including 3.2 million cubic metres of value-added products. Stora Enso’s functions and sales offi ces are not yet shares are listed in Helsinki, Stockholm, and New York. included in the Group’s OHS statistics.

STORA ENSO SUSTAINABILITY 2006• 1 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 2006 IN BRIEF

INTRODUCTION RAW MATERIALS AND SUPPLIERS

Stora Enso’s Sustainability 2006 report continues to describe the Group’s challenges and opportunities along the value chain: raw materials and their suppliers; the Group’s economic, environmental and social performance; the markets for Stora Enso’s products; and other issues of importance for customers. Stora Enso utilises detailed stakeholder reviews to ensure that the Group’s sustainability strategy and resources are suitably directed. A new Sustainability Policy was created during 2006 to better refl ect the Group’s current sustainability challenges. Stora Enso has continued to focus on creating stronger fi nancial performance through two programmes, Profi t 2007 and Asset Performance Review, which have resulted in considerable workforce reductions, mostly in Europe. The Group- • SUPPLY CHAIN ...... 14–15 wide guidelines for responsible reductions in In order to manage environmental and social issues in workforce were successfully implemented in Stora Enso’s procurement operations, the Group has Hammarby Mill in Sweden and in Varkaus Mill in developed a broad set of tools to ensure a uniform approach towards all suppliers and contractors. The man- Finland, providing good examples of ways to fi nd agement of sustainability along the supply chain also innovative solutions in such diffi cult situations. forms a vital part of mills’ environmental management In 2006, Stora Enso provided increased resources systems. for sustainability work in plantation projects in Brazil and Uruguay. • WOOD ...... 16–19 During 2006, Stora Enso’s traceability guidelines for wood purchases were reviewed to ensure global coverage • SCOPE AND PROFILE ...... 1 and to include pulp procurement. Stora Enso promotes forest certifi cation, and is working to increase the amount of wood originating from certifi ed forests. In • OPENING WORDS ...... 4–5 2006, 55% of the wood used by Stora Enso came from certifi ed forests with or without chain-of-custody certifi - cation. • SUSTAINABILITY AND GOVERNANCE ...... 6–7 • CHEMICALS ...... 20 • STAKEHOLDER ENGAGEMENT ...... 8–9 Stora Enso uses chemicals responsibly so as to minimise environmental impacts and the risks to people. Chemical safety is constantly monitored by occupational health • STRATEGY AND TARGETS ...... 10–11 and safety professionals, and through environmental, risk and quality management systems. In 2006, Stora Enso started to implement the EU’s new “REACH” chemi- • MANAGEMENT SYSTEMS ...... 12–13 cal legislation at unit level to ensure future compliance and avoid any discontinuity in production.

• ENERGY AND CLIMATE CHANGE ...... 21–23 Stora Enso is helping to mitigate climate change by improving energy efﬁ ciency, increasing the use of biofuels and combined heat and power, and supporting nuclear power. In 2006, the share of biofuels in Stora Enso’s internal energy production remained high at 64%. Stora Enso’s production ensures that carbon is stored in growing forests and in manufactured wood products which have a smaller carbon footprint than many competing products.

2 • STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 THE GROUP MARKETS

• ECONOMIC RESPONSIBILITY ...... 24–29 • CUSTOMERS AND PRODUCTS ...... 42–43 At Stora Enso, the concept of economic responsibility According to interviews conducted with key customers in incorporates both fi nancial and socio-economic perform- 2006, customers generally appreciate Stora Enso’s sustain- ance. In 2006, Stora Enso’s focus was on creating stronger ability performance. Many see Stora Enso as a sustainabil- fi nancial performance through the Profi t 2007 and Asset ity leader in the forest industry. Customers also recognise Performance Review programmes. the importance of sustainability in both the raw material Stora Enso supports global and local community supply and production. projects and seeks strategic partnerships from which both Stora Enso and key customers have continued to run parties can benefi t. The Group particularly values part- the Tikhvin-Chlana joint project in Russia, leading to nerships with such organisations as UNICEF and the further improvements in the social and environmental United Nations Development Programme (UNDP). aspects of wood procurement. Results and best practices will be shared with other Russian wood suppliers.

• ENVIRONMENTAL RESPONSIBILITY ...... 30–33 Most of Stora Enso’s environmental performance indicators continued to develop favourably per unit of produc- APPENDIXES tion. In 2006, Stora Enso set a new Group-level target to reduce process water discharges by 10% per tonne of • SUSTAINABILITY DATA TABLE ...... 44 pulp, paper and board production from 2005 to the end of 2010. This represents a reduction of 2.7 m3/tonne from the baseline by the end of 2010, and would mean saving • GRI AND THE UN GLOBAL COMPACT ...... 48 about 50 million m3 of water annually, depending on production volume. • GLOSSARY ...... 51 • SOCIAL RESPONSIBILITY ...... 34–41 Focus areas for 2006 included broadening the coverage of ASSURANCE STATEMENT ...... 52 social management systems, increasing gender diversity, and improving occupational health and safety performance. The Women in Stora Enso (WISE) network was expanded, and progress has been made on the related action plan and the identiﬁ cation of best practices. Safety improvement actions bore fruit in 2006, but the need to improve safety performance still represents a considerable challenge. The number of fatal accidents has dimin- ished and average accident rates were slightly lower than in 2005.

STORA ENSO SUSTAINABILITY 2006• 3 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 OPENING WORDS

New sustainability policy – a foundation for long-term success

Since the formation of Stora Enso, there have been major changes in the global business environment. Stora Enso’s approach to sustainability and the standards and tools used around the world have also changed. For these reasons, we decided the time was right to revise our Environmental and Social Responsibility Policy.

am happy to report that Stora Enso’s new Sustainability Policy has been Iapproved, after careful consideration. The new policy now highlights economic responsibility in addition to previously prioritised environmental and social aspects of sustainability. We remain committed to transparency in our communications and stakeholder dialogues. Resource efﬁ ciency, the origin of wood, human and labour rights and employee well-being have all been integrated into the new policy, which accurately reﬂ ects our current sustainability challenges. In the past we have dealt with the economic, environmental and social elements of sustainability separately in our business planning. But we are now working to integrate these distinct elements of sustainability more comprehensively into our business planning and strategy. Sustainability risks are also now given a higher priority in our business risk management. We are increasingly utilising stakeholder reviews to ensure that our sustainability strategy and resources are suitably directed.

Part of the solution to climate change Climate change is a major global issue that affects all of us. It is widely agreed that greenhouse gas emissions have to be signiﬁ cantly reduced. The forest products industry contributes towards global efforts to mitigate climate change by improving energy and operational efﬁ - ciency. It is important to remember that 64% of the fuels used by Stora Enso are

4 • STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 carbon-neutral biofuels. Our products Health and safety efforts bear fruit ty work. We feel that proactive stake- also store carbon throughout their active All Stora Enso’s employees are entitled to holder engagement is an important way service life, they are recyclable, and they safe and healthy workplaces. In 2006, to earn our licence to operate in these provide a less carbon-intensive alterna- our safety improvement actions started markets. tive to many competing products. to pay back and the average lost-time Our Sustainability Committee has accident rate continued to decrease. International collaboration decided to measure our carbon footprint, There is a special focus on improving Our co-operation with WWF continued and evaluate the feasibility of greenhouse occupational health and safety perform- successfully. Members of our Executive gas emission reduction targets. Our aim is ance in emerging markets. Management Group held two think-tank to complete this work during 2007. Work-related fatal accidents are meetings together with WWF representa- unacceptable, and in 2006 there was a tives during 2006 in order to review Good performance – better profi tability special focus on safety in units where progress on current projects and plan for Good sustainability performance leads to fatal accidents had occurred during the new areas of co-operation. So far, Stora better profi tability and reduces risks for previous year. The number of fatal acci- Enso and WWF have run 14 different stakeholders. I am proud to report that dents has decreased, but we deeply regret projects together. we have made good progress towards our that there were still three fatal accidents We are also continuing our global environmental and social targets this in 2006. corporate partnership with UNICEF, aim- year. ing to promote basic education for chil- We are committed to using raw Profi t improvement actions dren. In 2006, many units continued materials, energy and other resources Financial success is a key element of sus- their voluntary fund-raising to comple- effi ciently. We especially value water as tainability. In 2006, Stora Enso contin- ment our wider corporate efforts. an essential natural resource, and now ued to focus on creating stronger fi nan- Our successful partnership with the have a target to reduce our process water cial performance through various pro- United Nations Development Pro- discharge by 10% by the end of 2010. By grammes and actions. Related measures gramme China (UNDP) continued with doing this we will save about 50 million included the closure of four units and the launch of a fi ve-year agreement to cubic metres of water annually. Reducing the divestment of fi ve, mostly in Europe. support rural livelihoods by creating water use also leads to savings in water These actions resulted in total workforce community telecentres. Another project treatment and energy use. reductions of 1 930 people. aims to promote biodiversity in South Stora Enso’s operations use manage- Our Group-wide guidelines for Guangxi. ment systems for environmental issues, responsible reductions in workforce Stora Enso has supported the UN quality and safety. Many mills have have been successfully implemented. Global Compact’s ten principles on sus- already successfully integrated these man- Hammarby Mill in Sweden and Varkaus tainability since 2001 and our recent agement systems to further improve effi - Mill in Finland have both applied exem- progress is described in this report. ciency and performance, and more mills plary best practices for responsible This year’s stakeholder reviews indi- are now following in their footsteps. reductions in workforce by fi nding cate that our key strategic priorities and I am pleased to say that Stora Enso innovative solutions through open dia- resource allocations are well aligned. We Wood Supply has published its fi rst com- logues. will continue to strive to improve our mon verifi ed environmental statement, Unfortunately, the profi t improve- sustainability performance, particularly covering all of our European business ment actions also generated two major focusing on occupational health and units. This is expected to contribute to labour union disputes, one at Corbehem safety, on responsible reductions in the development of the European EMAS Mill in France and the other at Port workforce, on climate change, and on regulation, by enabling multinational Hawkesbury Mill in Canada. the acceptability of our wood sources. statements to be registered with EMAS The progress achieved during 2006 has in the future. Focus on emerging markets created an improved platform to effi - From our wood raw material, mean- In 2006, Stora Enso provided increased ciently address current challenges and ing roundwood, chips, sawdust and resources for sustainability work in plan- minimise business risks.• external pulp, 55% came from sources tation projects in Brazil and Uruguay. In with certifi ed forest management both cases we have also started environ- schemes, and all the wood was covered mental and social impact assessment by Stora Enso’s own traceability systems. processes. These differ from traditional Notable progress on forest management assessments in that they are each man- certifi cation was achieved in Russia, aged by an independent third party, and where fi ve of Stora Enso’s subsidiary log- stakeholders can infl uence processes at Elisabet Salander Björklund ging companies achieved FSC forest every stage. This sets an example of best Chairman of the Sustainability Committee management and chain-of-custody certi- practice in terms of enabling local stake- Senior Executive Vice President, fi cation during 2006. holders to participate in our sustainabili- Stora Enso Forest Products

STORA ENSO SUSTAINABILITY 2006• 5 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 SUSTAINABILITY AND GOVERNANCE

Sustainability – from values to value added

At Stora Enso, sustainability is deﬁ ned as the responsible Sustainability management of economic, social and environmental issues. Stora Enso addresses sustainability throughout its whole value chain Economic Social Environmental and aims to be accountable to its stakeholders. Accountability: transparency, stakeholder dialogue

conomic responsibility comprises responsibility in less-developed com- The new Stora Enso Sustainability the fi nancial and socio-economic munities. The risks in such contexts are Policy addresses commitment to manag- Eperformance of the Group. Environ- different from those in more mature ing and developing business in a sustain- mental responsibility consists of issues markets, so extra efforts are needed to able manner. The policy highlights the related to the sourcing of wood from identify and manage them. On the importance of continually improving acceptable sources, and environmental other hand, the opportunities to sustainability performance, and measur- management and performance related to achieve business benefi ts and differenti- ing and transparently reporting perform- production and transportation. Commu- ation through responsible actions are ance. The policy states the importance of nity involvement, transparent communi- greater. addressing sustainability throughout the cation, ethical business practices, respon- value chain, and of ensuring that suppli- sible reductions in workforce, and issues New policy ers and partners comply with Stora related to human and labour rights Stora Enso’s Environmental and Social Enso’s sustainability policies and princi- together form the basis of Stora Enso’s Responsibility Policy, approved in 1999, ples. Stora Enso expects all of its employ- social responsibility. has formed the basis for the Group’s sus- ees to observe these commitments and Stora Enso has shown a long-term tainability work until now. Recent responsibilities in their daily work. • commitment to sustainability by taking changes in the Group’s business environ- a consistent and target-oriented ment and the new approach to sustaina- Read the new Sustainability Policy approach. The Group’s Sustainability bility necessitated the development of a on the inside back cover of this Policy is anchored to Stora Enso’s Mis- new policy to refl ect Stora Enso’s present report. sion, Vision and Values, and forms the ambition level. cornerstone of the Group’s sustainability Expansion to emerging markets with Read more about Stora Enso’s strategy in work. Sustainability also has a promi- new sustainability challenges, increased the Company 2006 report on pp. 8–9. nent role in Stora Enso’s governance investor interest and customer demands structure and business strategy. Policy on sustainability are key examples of Stora Enso’s Mission, Vision and Values can and strategic decisions on sustainability such changes in the business environ- be found in the Company 2006 report on are taken at the highest level. ment. The Group’s overall approach to p. 8 and at www.storaenso.com An accelerating shift towards the sustainability continues to evolve, and is emerging markets of South America, now managed and reported as a single All Stora Enso’s policies and principles relat- Russia and China, as part of the Group’s concept. It has also been integrated into ed to sustainability can be found at overall strategy, has increased the the Group’s governance framework and www.storaenso.com/sustainability or importance of social and environmental risk management. www.storaenso.com/codeofethics

6 • STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Governing sustainability

The key aim of Stora Enso’s sustainability governance is to provide a means to ensure that the changing nature of both stakeholder needs and the operational environment are included in decision-making processes.

s a member of the Executive Man- • co-ordinating and following up rela- agement Group and reporting to tions and communication with stake- Stora Enso’s main tools for Athe CEO, the Senior Executive Vice holders such as governmental and managing sustainability President, Forest Products, has the over- non-governmental organisations; • Corporate policies and principles all responsibility for sustainability issues • taking initiatives for the development • Governance structure within Stora Enso. Strategy and policy of relevant management procedures; • Group-level sustainability targets issues are advanced to the CEO for fi nal • producing the annual sustainability • Management systems for decisions. report. • environment Operational management is respon- • occupational health and safety sible for sustainability performance at The Sustainability Committee has • quality each organisational level, in order to four support teams and two sub-teams, • social responsibility achieve compliance with the Group’s whose role is to address sustainability • traceability systems for wood commitments. The Corporate Environ- issues throughout Stora Enso’s value • forest certifi cation ment, Forest Environment, and Social chain, and to monitor, assess and publi- • Sustainability in strategic planning Responsibility support groups provide cise emerging issues in order to promote • due diligence sustainability expertise and support to the implementation of the Group’s sus- • Environmental and Social the Group’s business operations and tainability policies and strategies. Impact Assessment (ESIA) staff functions. The teams are: • Sustainability in internal training • the Environment Co-ordination Team programmes The Sustainability Committee • the Climate Change Working Group • Supply chain management Stora Enso’s Sustainability Committee is • the Customer Support Team • Customer support network an operative committee chaired by the • the Corporate Social Responsibility • Third-party assurance of Group-level Senior Executive Vice President, Forest Team sustainability report and verifi ed Products. Other members of the commit- • the Forest Environment Team unit-specifi c EMAS statements tee, representing divisions, business areas • the Forest Environment Planta- • Stora Enso Business Excellence and relevant staff functions, are appoint- tions Team Guide ed by the CEO. The Sustainability Committee is The major items on the agenda for the responsible for: Sustainability Committee during 2006 Read more about corporate gov- • formulating corporate policy and included a new sustainability policy, a ernance in the Company 2006 strategy on environmental and social new reduction target for process water report on pp. 34–39, or visit responsibility issues; discharge, a new corporate stakeholder www.storaenso.com/governance • ensuring that these policies and engagement process, and a decision to strategies are well established and defi ne Stora Enso’s carbon footprint and respected throughout the Group; develop benchmark information.•

STORA ENSO SUSTAINABILITY 2006• 7 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 STAKEHOLDER ENGAGEMENT

Focusing on

stakeholder expectations

Stora Enso regularly interacts with various stakeholders in its everyday operations. Risks exist when there are inconsistencies between the Group’s actions and the expectations of stakeholders. Stora Enso strives to be responsive to stakeholder views and needs, and to maintain trust in the company.

Stora Enso has defi ned its key stakehold- customers, and of a questionnaire sent to • climate change: mitigation and relat- ers as follows: 20 sales offi ces. According to the con- ed business opportunities • Customers: All current and potential densed results, the most important sus- • life cycle thinking: bleaching, recy- companies and individuals that tainability issues infl uencing Stora Enso’s cling rates and waste management. choose Stora Enso to provide goods customers’ business are: or services to them. • sourcing of raw materials from legal Conclusions • Employees: All employees of the and sustainable sources The reviews confi rmed that sustainable Group and employees in operations • effi cient use of resources forestry and plantation management controlled by the Group. • mitigating climate change continue to be major issues for Stora • Investors: All current and potential own- • renewability and recyclability of raw Enso’s key stakeholders. It is also clear ers of the company’s equity and debt. materials and products that mitigating climate change, sustaina- • Partners: Suppliers, co-investors and • good environmental performance ble transportation and social responsibil- those who join Stora Enso in mutual- • social responsibility. ity in emerging markets will be among ly benefi cial activities – including the major areas of concern for stakehold- trade and business associations of Non-governmental organisations ers in the future. which Stora Enso is a member. (NGOs) Stora Enso feels that it is well posi- • Civil society: Individual citizens in Stora Enso’s NGO screening was based tioned in relation to these stakeholder the neighbouring communities and on reviews of public information availa- needs, and is confi dent that the Group’s public organisations engaged in civic ble from 50 global NGOs important for current key strategic sustainability issues and charitable work, as well as non- Stora Enso. Conserving forests and biodi- cover the main issues of stakeholder con- governmental organisations. versity is the main sustainability priority cerns. However, transportation is clearly • Governmental bodies and for three-quarters of these NGOs. This an area where Stora Enso needs to authorities: Local and national gov- includes issues related to the protection improve its reporting. ernmental bodies, authorities, politi- of old-growth forests and Brazil’s Atlantic cians and elected offi cials, as well as Rainforest. Over 60% of the NGOs focus Feedback on transnational bodies such as the UN. on climate change and promoting sus- Sustainability 2005 report tainable energy sources. In the Sustainability 2005 report, Stora Stora Enso aims to develop an engage- Around 35% of the NGOs campaign Enso asked for feedback from its stake- ment practice that is applicable to every on sustainable transportation systems holders. There were altogether 63 Stora Enso unit. This practice will and genetically modifi ed organisms, responses, covering all major stakeholder involve building and maintaining con- while 20% focus on indigenous peoples’ groups. Based on these answers, the tacts with key stakeholders, developing rights, land ownership issues and the report’s structure was seen as clear, the effective stakeholder strategies, and effec- social rights of landless people. Other content was understandable, and the tive confl ict management. The model is important areas are toxic chemicals, most relevant issues were covered. In currently being tested by Stora Enso pesticides, waste/recycling, plantations addition, Stora Enso’s approach to sus- Latin America in the new plantation and illegal logging. tainability was reported well from the projects in Brazil and Uruguay. stakeholders’ point of view. However, Investors the feedback clearly indicated that Stora Reviewing stakeholder needs Investor screening consisted of 16 inter- Enso should focus more on reporting the In 2006, Stora Enso conducted three views conducted with members of the effects of climate change, as well as sus- stakeholder reviews in order to identify fi nancial community. According to the tainability issues related to products and present and future sustainability issues results, sustainability issues in order of customers. among key customers, non-governmen- priority for the interviewed investors tal organisations and investors. The aim are: External recognition from indexes of these reviews is to ensure that stake- • emerging markets: land ownership, In 2006, Stora Enso was selected for holders’ needs are considered when deci- community relations, social and eco- inclusion on the pan-European DJSI sions are made within Stora Enso. nomic development of communities, STOXX index for the sixth year in a row. indigenous people Stora Enso’s strengths compared to Customers • human rights its industry peers were considered to be The customer review consisted of inter- • sustainable forestry and plantation strong policies and comprehensive envi- views conducted with 15 key Stora Enso management ronmental management and monitoring

8 • STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 systems, environmental performance Membership in international associations and eco-effi ciency and good sustainability reporting. The World Business Council for Sustainable Development (WBCSD) Areas to be improved are Code of WBCSD is a coalition of international companies united by a shared commitment to Ethics enforcement and monitoring, sustainable development. Stora Enso has several representatives in different WBCSD human capital development, talent working groups. attraction and retention, the Group’s approach to stakeholder engagement The Forests Dialogue (TFD) and systematic supply chain management. TFD is a group of various stakeholders from different regions that are committed to Regarding issues where improve- the conservation and sustainable use of forests. Stora Enso actively participates in TFD ments were recommended in the corre- and has a member on the steering committee. sponding DJSI Assessment in 2005, Stora Enso has clearly improved its OHS per- Confederation of European Paper Industries (CEPI) formance (see pp. 40–41). Concerning CEPI represents the interests of the European pulp and paper industry to the European the Code of Ethics enforcement and institutions. Stora Enso has several representatives on CEPI’s Board and employees human capital development, Stora Enso participating in CEPI’s working groups. will continue its efforts to implement and manage these areas in a more effi - UN Global Compact Nordic Network cient way. This network enhances and promotes the implementation of the UN Global Compact Stora Enso has also been listed by principles by sharing information among Nordic UN Global Compact companies. FTSE4Good, which particularly focuses on human rights issues. In addition, ISO 26000 Working Group on Social Responsibility Stora Enso has been included in the Stora Enso is currently chairing the Finnish ISO working group and participating Ethibel Pioneer Sustainability Index and in the development of this new standard. Ethical Index Euro and Global. Stora Enso was also included in the Global Global Roundtable on Climate Change (GROCC) 100, a list of the 100 most sustainable Stora Enso actively participates in the GROCC which brings together more than companies in the world.• 150 stakeholders to discuss key scientifi c, technological and economic issues critical to shaping long-term policies on climate change.

Stakeholder Examples of engagement methods Stora Enso’s major stakeholder projects in 2006

Customers Stora Enso Account Management (SEAM) UNICEF Stora Enso’s global partnership continued Customer satisfaction survey (see p. 28). Customer support networks at sales offices Tikhvin-Chalna Second phase of the project to improve the trans- Customer interviews and feedback parency of the social and ecological conditions of Employees Employee satisfaction survey wood procurement from Russia (see p. 43). Value & attitude survey WWF Stora Enso and WWF continued to run a series of Internal customer satisfaction survey joint projects (see p. 29). HRD programmes Internal communications channels and materials UNDP Co-operation between UNDP and Stora Enso continued in China on the social dimension, particularly Investors Annual General Meeting with local communities (see p. 29). Road shows and one-to-one meetings Quarterly telephone and web conferences The Forests Stora Enso continued to be an active participant in Investor pages at www.storaenso.com Dialogue The Forests Dialogue. Focal themes were environ- Providing information in questionnaires mental issues related to plantations, and the links Public reporting between forestry and poverty reduction (see p. 17). Partners Supplier satisfaction surveys Supplier evaluation and auditing Partnership projects Participation in industry organisations Major stakeholder disputes in 2006 involving Stora Enso Civil society Image surveys Public hearings Upper Lapland, The land use conflict continued. Stora Enso is no Open House days at production units Finland longer directly involved in the dispute as Stora Enso Local information lines does not accept wood from the disputed areas Issue-specific dialogues and co-operation with NGOs unless an agreement has been reached between Public reporting Metsähallitus and local reindeer herders’ co-operative (see pp. 17–18). Governmental Co-operation with intergovernmental organisations Wood from Stora Enso was accused of using wood harvested bodies and (e.g. UNDP and UNICEF) Russia from illegal sources. Stora Enso only accepts legal authorities Issue-specific dialogue with authorities wood (see p. 18). Public reporting

STORA ENSO SUSTAINABILITY 2006• 9 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 STRATEGY AND TARGETS Re-evaluating strategy – increasing proactiveness

During 2006, Stora Enso initiated t present Stora Enso’s sustainability addition, related objectives and key suc- a strategy project aiming to work focuses on the following stra- cess factors will be defi ned. In addition, improve the Group’s ability to Ategic sustainability issues defi ned the project will defi ne an implementa- in 2003 by the Group: tion plan for the selected objectives, as proactively identify and respond • Sustainability in emerging markets well as a model and the necessary tools to strategic sustainability issues. • Occupational health and safety for monitoring progress and planning Another important objective was • Acceptability of wood sources future sustainability management. • Responsible reductions in workforce During 2006, the focus of the project to look for opportunities to further • Environemental performance, includ- was to select those sustainability issues integrate sustainability aspects into ing emissions and climate change that would contribute to competitive the Group’s overall business advantage, management of business risks The strategy project aims to further and maintenance of the Group’s license strategy. defi ne key sustainability issues important to operate.• for Stora Enso’s business strategy. In

Stora Enso aims to save about 50 million cubic metres of water annually through planned improvements in processes.

10• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Common targets assure joint efforts

To ensure effective sustainability tora Enso evaluates the signiﬁ cance tonne of pulp, paper and board produc- management at all levels of the of the present targets and the need tion from 2005 to the end of 2010. This Sfor any additional targets on an represents a reduction of 2.7 m3/tonne organisation, Stora Enso has annual basis, to achieve and maintain from the baseline by the end of 2010, established Group sustainability industry-leading performance. and would mean saving about 50 million targets and continues to report In 2006, Stora Enso set a new Group- m3 of water annually, depending on pro- progress towards achieving them. level target to reduce the amount of duction volume.• process water discharge by 10% per

Targets from 2006 onwards Progress during 2006 Common targets Policies and Sustainability policies and principles reflect the current opera- New Sustainability Policy approved and communications plan principles tional environment and stakeholder demands and are imple- in place. mented throughout the Group.

Code of Ethics Develop enforcement support and monitoring according to Implementation plan prepared the implementation plan.

Sustainability in Ability to proactively identify strategic sustainability issues Initial identification of key sustainability issues, related objec- business strategy tives and key success factors completed. Gap analysis conducted with current sustainability policies and principles.

Supply chain Corporate suppliers and contractors in compliance with Audit scheme for sustainability standards developed management Stora Enso’s sustainability standards Environmental targets Acceptability of Third-party certified traceability: 91% in 2006 and 2007 90% of the wood procured by the Group covered by third- wood party certified traceability systems.

Air emissions Sulphur dioxide (SO2): 15% reduction by the end of 2009 12% reduction from 2004*

Water discharges Chemical Oxygen Demand (COD): 10% reduction by the 6% reduction end of 2009 from 2004*

Waste Waste to landfill: 10% reduction by the end of 2009 from 2004* 23% reduction

Water use Process water discharge: 10% reduction by end of 2010 from 2005* 3% reduction

Energy Increased trend in the power-to-heat ratio of internal energy 18% in 2006 compared to 17% in 2005 production. Energy efficiency reviews conducted at each pulp, paper and During 2005–2006, 41 reviews conducted compared to board mill at least once in a two-year cycle. 51 reviews during 2004–2005 Social targets Social management 100% of the Group’s employees covered by social manage- 48.5% of the Group’s employees now covered systems** ment systems by the end of 2007. Review and develop Group-wide social indicators.

Diversity Train female candidates for management vacancies as part WISE network activities revitalised of the 2007 Management Audit Process. Continue with the WISE Network meetings and establish a pilot mentor programme for WISE Network members.

Occupational health All production units 100% covered by certified OHS manage- 13 new certificates achieved yielding a total coverage of 48% and safety (OHS) and ment systems of the production units at the end of the year employee well-being Lost-time accident rate in each unit in the upper quartile Average lost-time accident rate reduced by 0.7% from 2005 within the national forest industry Absenteeism rate in each unit lower than the national forest Average absenteeism the same as in 2005 industry average

*Targets are normalised for production of saleable pulp, paper and board products (expressed as emissions per tonne of product). Baseline corrections will be applied as changes in the production structure and product portfolio occur. Only production units owned by the Group for the entire year 2006 are included in the scope of the targets. **Stora Enso’s internal systems to help units to identify an manage the most significant social aspects of their operations.

STORA ENSO SUSTAINABILITY 2006• 11 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 MANAGEMENT SYSTEMS

Ensuring continuous improvement

Stora Enso’s policies and principles are translated into practice through management systems that help units to recognise the most signiﬁ cant aspects of their operations. These systems are used to set targets, and to follow-up on performance related to environmental issues, forestry, OHS, social responsibility, product safety and hygiene.

ince 2003, all of Stora Enso’s pulp, paper and board production has Sbeen covered by ISO 14001 and/or EMAS. Currently third-party-verifi ed environmental management systems cover 99% of production. The recently acquired Arapoti Mill in Brazil will start working towards ISO 14001 certifi cation in 2007. Around 92% of sawmilling and further processing capacity is covered by ISO 14001 and/or EMAS. In 2006, much progress was made in implementing environmental management systems in Stora Enso Timber’s Central European Production Unit. Stora Enso’s wood supply units have ISO 14001 and/or EMAS certifi cation in the Baltic countries, Canada, Finland, Sweden and the USA.

Knowing the origin of wood Stora Enso uses different tools to help ensure that only wood (roundwood, chips, sawdust and external pulp) from acceptable sources is used by the Group. Examples of tools used are Stora Enso’s own traceability systems, forest management certifi cation and chain-of-custody certifi cation. Traceability systems are Stora Enso’s internal systems and document the origin of wood from the forest until the fi rst Stora Enso reception point. They cover all wood used, roundwood, chips, sawdust and external pulp, sourced from both certifi ed and uncertifi ed sources. Forest management certifi cation means that the management of a forest area has been audited by an independent certifi er to meet a defi ned set of performance standards in line with the principles for sustainable forest management. Chain-of-custody certifi cation is linked to forest management certifi cation, and is a certifi ed system to track wood coming from certifi ed forests. If chain-of-custody certifi cation is implemented throughout the supply chain, and enough wood comes from certifi ed forests, many systems offer a possibility for product labelling. In 2006, all wood was covered by traceability systems and 90% of the

12• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Stora Enso´s wood traceability system and chain-of-custody

Stora Enso´s traceability systems Chain-of-custody for certifi ed forests Chain-of- Chain-of- Chain-of- custody custody custody Certifi ed and uncertifi ed forests First reception Mill Customer Customer´s point end product

Stora Enso’s traceability systems cover all wood used by the Group, whereas chain-of-custody only cover wood from certiﬁ ed forests. Stora Enso’s traceability systems end when wood enters the ﬁ rst Stora Enso reception point, whereas chain-of-custody can be implemented throughout the supply chain to the product level.

wood was covered by third-party certifi - Progress in managing occupational ees are covered by social management cation through chain-of-custody, con- health and safety (OHS) systems. During 2006, 11 more units trolled wood, EMAS and/or ISO 14001. Since 2004, all production units have started implementing new social man- In 2006, 55% of the wood came from been working towards a Group-wide tar- agement systems. forest management certifi ed sources get to establish certifi ed OHS manage- (with and/or without chain-of-custody ment systems by the end of 2007, accord- Ensuring product safety certifi cation). ing to either the ISO standard OHSAS All of Stora Enso’s mills producing food 18001, or acceptable national OHS stand- packaging materials for direct food con- Sustainable forest management ards. To date, a total of 31 OHS manage- tact have set up or are in the process of Stora Enso manages and leases forests in ment system certifi cates cover 35.9% of establishing certifi ed hygiene manage- Canada and Russia, and plantations in the total average of 45 631 employees. ment systems based on Hazard Analysis China. The forestlands managed by Port and Critical Control Points (HACCP) and Hawkesbury Woodlands Unit are double- Social management systems Good Manufacturing Practice (GMP).• certifi ed, and the forests leased by fi ve According to Stora Enso’s objective set in Wood Supply Russia’s subsidiaries 2003, each unit should develop its own The sustainability data table on pp. achieved FSC forest management and social management system, based on 44–47 indicates which Stora Enso chain-of-custody certifi cation during Stora Enso’s social responsibility princi- units are certifi ed under ISO 14001, 2006. The Group has started to obtain ples, by identifying the signifi cant social EMAS and/or OHSAS 18001. All the relevant certifi cation for all recently purchased or impacts of its operations, and developing certifi cates can be downloaded at leased land areas and plantations. Stora related action plans and key perform- www.storaenso.com/certificates Enso promotes forest certifi cation wher- ance indicators. ever the Group operates. So far, 48.5% of the Group’s employ-

Forests, plantations and lands owned by Stora Enso Forests and plantations leased and managed by Stora Enso Forest certification Forest certification Unit Hectares management Unit Hectares management system system

Veracel plantations and 205 000, of which CERFLOR, prepara- Port Hawkesbury 607 300 CSA, SFI, prepara- lands, Bahia, Brazil*) 77 000 planted tions started for FSC Woodlands tions started for FSC Unit, Canada Ararpoti plantations and 50 000, of wich CERFLOR lands, Paraná, Brazil 28 000 planted Olonetsles, Russia 222 500 Preparations started for FSC Plantations and lands, 46 000, of which Rio Grande do Sul, Brazil 5 000 planted Ladenso, Russia 154 000 FSC

Plantations and lands, 30 000, of which Russkiy Les, Russia 152 000 FSC Uruguay 4 600 planted

Port Hawkesbury 23 900 CSA, SFI, preparations Woodlands Unit, Canada started for FSC KLPP, Russia 52 800 FSC

Wood Supply U.S. 2 200 SFI, FSC Terminal, Russia 42 800 FSC

Wood Supply Baltic, 900 STF Stug, Russia 22 500 FSC Latvia STF Gudov, Russia 22 300 FSC Wood Supply Baltic, Estonia 700

Wood Supply Baltic, 600 FSC Plantations and lands, 90 000, of which Lithuania Guangxi, China 44 000 planted

Trial plantations, Thailand 1 200

*) 50% ownership

STORA ENSO SUSTAINABILITY 2006• 13 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Sustainability along the supply chain

Stora Enso’s material ﬂ ows are diverse, and the manage environmental and social issues in responsibility for purchases is shared between Stora Enso’s procurement operations, the Group different units, so managing sustainability has developed a broad set of tools to ensure a throughout the supply chain in a consistent uniform approach towards all suppliers and manner is a considerable challenge. In order to contractors.

14• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 ood is by far the most important The main areas in Stora Enso’s corpo- Guidelines on ethical raw material for Stora Enso. rate sustainability standards for suppliers purchasing operations W Wood Supply units are responsi- and contractors include: Stora Enso has function-specifi c policies ble for wood purchases and transporta- • environmental standards related to and guidelines in place to ensure an ethi- tions. Pulp Marketing and Procurement legislation, organisational responsi- cal approach and acceptable behaviour under Corporate Technology has responsibilities, training and instructions; between Stora Enso’s employees and its bility for pulp procurement issues, while • social standards in the contexts of business partners: Stora Enso Energy Services takes care of business practices, occupational • “Code of Ethics” for all Stora Enso’s energy procurement at the Group level. health and safety, and workers’ rights; employees Stora Enso Purchasing is responsible for • general standards concerning suppli- • “Social Responsibility Principles” for corporate purchasing of pigments, fi llers, ers’ own supply chain management, all Stora Enso’s employees chemicals and paper machine clothing. the provision of information, and • “Moral and Ethics Guidelines” for Stora Enso Transport and Distribution is co-operation on sustainability audits. corporate-level purchasing personnel responsible at the Group level for trans- • “How to Do Business with Stora porting products from the mills to the cus- Stora Enso has various tools for follow- Enso” guidelines for Stora Enso’s tomers. The mills have a shared responsi- ing suppliers’ performance, like supplier business partners bility for their own chemical purchases, audits, traceability systems, forest certifi - • “Principles for Sustainable Wood and other purchases, local energy contracts, cation schemes, and environmental and Fibre Procurement and Land Man- and their own transportation solutions. social management systems. agement” for wood and pulp pro- The main tool to monitor suppliers’ curement operations. Monitoring suppliers compliance is a database called Stora Enso’s corporate sustainability COMPASS. Information from supplier All employees involved in purchasing standards set the minimum level of sus- questionnaires, direct follow-ups and operations are expected to follow these tainability performance and management audit reports are recorded together with guidelines.• expected from suppliers and contractors. details of the monitoring status of the Suppliers are generally evaluated on their supplier in a special data system. sustainability management and perform- During 2006, 177 suppliers were Composition of raw material and ance every second year to ensure that sus- evaluated through the COMPASS system service costs* tainability performance is up to standard and 68% of them were found to meet along the supply chain, and to help sup- the required standards. pliers to improve the sustainability of their operations. Non-compliance and Stora Enso Purchasing and Stora Enso corrective actions Transport and Distribution have included If evidence of a supplier’s non-compliance the corporate sustainability standards in with Stora Enso’s standards is detected, all new and renewed purchasing con- the supplier is asked to develop a correc- Wood ...... 30% tracts. Wood Supply’s minimum require- tive action plan to improve their activi- Chemicals and fi llers ...... 13% ments are already expressed in the Princi- ties, with the assistance of Stora Enso if Energy ...... 13% ples for Sustainable Wood and Fibre Pro- necessary. If a supplier refuses to draw up Production services and materials ...... 18% curement and Land Management. The such a plan, or shows no improvement management of sustainability along the regardless of several notifi cations during Logistics and commissions ...... 19% supply chain is also included in the mills’ a follow-up period, appropriate action Other variable costs ...... 7% environmental management systems. will be taken to select another supplier. *% of variable costs

Standards for transportation Stora Enso transported 74.9 million gas emissions related to these transports to identify potential reduction opportunities. tonnes of raw materials and Stora Enso is continuously striving to products in 2006, up from 72.3 reduce the environmental impacts of million tonnes in 2005. Nearly two- transport by improving logistics and uti- thirds of this total consists of wood lising the best possible methods. transportation, and the rest is other Nordic transport system raw materials and products. In 2006, the northern Finnish ports of Oulu and Kemi were connected to the t Stora Enso almost all transport is North European Transport Supply System carried out by subcontractors, who (NETSS) hub port in Gothenburg, Sweden. A are covered by Stora Enso’s sus- This system already includes the mills tainability standards. from Sweden and southern Finland. Three new long distance vessels contracted for Emissions the Oulu-Kemi-Gothenburg service were Air emissions result from the transport of designed to minimise impacts on the envi- raw materials to Stora Enso’s mills and ronment. The vessels use low-sulphur fuel Three new purpose-built vessels ferry paper and the transport of products from the mills to minimise sulphur emissions, and also board products from Oulu and Kemi mills to to customers. In 2007, the Group will utilise catalytic cleaning to reduce NOX Stora Enso’s NETSS transport system hub in start deﬁ ning and quantifying greenhouse emissions by more than 95%.• Gothenburg.

STORA ENSO SUSTAINABILITY 2006• 15 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Tracing wood sources

During 2006, Stora Enso’s trolled wood, EMAS and/or ISO 14001. Stora Enso is offering group forest traceability guidelines for wood As part of the traceability system, audits management certifi cation to private for- are conducted to ensure compliance est owners in Finland, the Baltic Coun- purchases were reviewed to with Stora Enso’s requirements. tries, Canada, Sweden and the USA in ensure global coverage and to order to mitigate the high cost of forest include pulp procurement. Promoting forest certifi cation certifi cation for small private forest Stora Enso promotes forest management owners. In 2006, Stora Enso ran an FSC certifi cation, and is working to increase group forest management certifi cation the amount of wood originating from project in Estonia where seven private tora Enso uses traceability systems certifi ed forests. The forest certifi cation forest owners and 360 hectares were to check that all wood, meaning systems relevant for Stora Enso include audited for FSC certifi cation. Stora Enso Sroundwood, chips, sawdust and FSC, PEFC, CSA, SFI, ATFS and CERFLOR. provided help with administration and external pulp, has been harvested in The Group is working for harmonisation training. compliance with the Group’s principles of national standards. A notable contribution to forest and national legislation. Traceability sys- In 2006, 55% of the wood came from management certifi cation was achieved tems, that cover all wood used by the certifi ed forests with or without chain-of- in Russia, where fi ve of Stora Enso’s sub- Group, document the origin of wood custody certifi cation. This percentage is sidiary logging companies achieved FSC from the forest until the fi rst Stora Enso an aggregate fi gure covering various busi- forest management and chain-of-custody reception point. In 2006, 90% of the ness areas. However, all wood used by certifi cation during 2006. wood passing through these systems was Stora Enso is covered by the Group’s also covered by third-party certifi cation traceability systems to assure its accepta- Environmental statement schemes such as, chain-of-custody, con- bility for Stora Enso. In 2006, Wood Supply published its fi rst

16• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 third-party-verifi ed environmental state- actively participates in The Forests Dia- Forest disputes ment covering all European Wood logue – an international forestry discus- Upper Lapland, Finland Supply units. The statement, which was sion forum hosted by Yale University in The land use confl ict continued in 2006. prepared in line with the EMAS regula- the United States. The dialogue has a Stora Enso is no longer directly involved tion, covers the Wood Supply business wide range of participants from industry, in the dispute as Stora Enso does not areas and compiles unit-specifi c targets research, labour representatives, family accept wood from the disputed areas and results. This was a pilot project forest owners, and inter-governmental, unless an agreement has been reached designed to contribute to the review social and environmental organisations. between Metsähallitus and local reindeer of the EMAS regulation by examining The aim is to increase mutual under- herders’ co-operative. The lands under how multinational statements could standing and collaboration between the dispute, 90 000 hectares, are owned by also be registered under EMAS in the different interest groups through open the Finnish State and managed by the future. Under the current EMAS regula- dialogue and interaction. Issues dis- State enterprise Metsähallitus. tion only single country-reports can cussed include forest certifi cation, illegal The confl ict concerns two main be registered. logging, plantations, biodiversity conser- issues: the need to balance reindeer vation, and poverty reduction. In 2006, herding and forestry, as well as the land Stakeholder co-operation the main themes were tree plantations use and ownership rights of the Sámi Stora Enso is active in dialogue and and their environmental and social people. projects with suppliers, customers and aspects, as well as the links between for- A detailed academic study commis- NGOs. The collaboration in the Tikhvin- estry and poverty reduction. As part of sioned by the Finnish Ministry of Justice Chalna project with customers and sup- The Forests Dialogue, Stora Enso hosted was published in October, aiming to clarify pliers is an example of such stakeholder a plantation meeting in Guangxi, China, the land ownership issue in Upper Lapland initiative (see p. 43). Stora Enso also in April 2006. by referring to historical and legal docu-

STORA ENSO SUSTAINABILITY 2006• 17 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Wood procurement areas and wood ﬂ ows Other countries 0.1 11.4 13.0 Canada Finland 0.2 7.1 Sweden Russia 2.9 2.7 The Baltic countries US 7.1 Continental Europe

Portugal 0.7

Brazil 0.2

Stora Enso‘s wood ﬂ ows (roundwood, chips and sawdust).

Total amount of wood (roundwood, chips and sawdust) procured within these areas and delivered to own mills. In 2006, the total amount was 45.4 million m3 (solid under bark).

mentation. According to the report, no that two Stora Enso suppliers had logged external auditor. The conclusions from basis for Sámi land ownership was found. in two sites for which EIAs had not been these audits were that the sites had been These ﬁ ndings will be used by the Finnish conducted, and that one supplier had logged in accordance with logging per- State to try to resolve the land use issue. also carried out regeneration harvesting mits and, hence harvested in line with incorrectly and caused excessive soil regulations of the Republic of Karelia, Russian Karelia damage at one site. Stora Enso’s policy is even though the authorities had not In autumn 2006, Greenpeace published to only accept wood that is legally har- requested Environmental Impact Assess- a report alleging that Finnish companies, vested, and hence started immediate ments (EIA). According to the new Forest including Stora Enso, received illegally investigations of the sites. code, no state EIA is required for forest harvested wood from the Republic of Stora Enso organised external audits management plans in Russia since Russian Karelia. of the logging sites, conducted by 2007.• The main allegation by Greenpeace researchers from two Russian forest was that the authorities have failed to research institutes, the Karelian Research enforce federal law by not requiring Center and the St. Petersburg Forest Environmental Impact Assessments Research Institute together with the for- (EIAs) for forest management plans in est administration and supplier compa- the region. Greenpeace further alleged nies. Both sites were also audited by an

More focus on tree plantations

tora Enso recognises the increasing- Arapoti. The Group also has plantation Brazil, Uruguay and China come into ly signifi cant role of tree planta- projects in China, Uruguay and southern production. Stions in global industrial wood pro- Brazil. Stora Enso also owns small trial Stora Enso’s plantations are estab- duction and actively promotes sustaina- plantations in Thailand. lished and managed primarily for pro- ble plantation development. Currently, some 5% of the wood ducing raw material for the pulp and Stora Enso’s established plantations used by Stora Enso originates from tree paper industry. They are classifi ed as in Brazil are the 50% owned joint ven- plantations. This fi gure is expected to industrial fast-growing tree plantations. ture Veracel and the recently acquired increase as plantations in southern The structure, management and species

18• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 composition of these fast-growing plan- plantation forestry. Various participatory benefi ts for the local communities, stake- tations differ considerably from those of tools, such as Environmental and Social holder engagement and ESIA. native forests, and their ecological char- Impact Assessments (ESIAs) and land- In China, the challenges include the acteristics resemble those of cultivated scape ecological planning, are used to clarity and transparency of rental agree- croplands more than natural forests. promote sound land use decisions. ments, communication with local com- Most controversies related to tree Stora Enso does not convert native munities in order to ensure that informa- plantations arise from varying percep- forests into plantations and recognises tion reaches all levels of affected com- tions of their environmental and social indigenous peoples’ legitimate rights to munities effectively and transparently impacts. Tree plantations have attracted their traditional lands and land use prac- and sustainability in the supply chain. criticism for their effects on biodiversity, tices. For Stora Enso, managed planta- Read more about Stora Enso’s planta- soils and the water supply, as well as tions can only be sustainable if they are tions in the Company 2006 report on their limited benefi ts to local communi- economically profi table, enhance local p. 30.• ties, and consequent changes in land use welfare and support the conservation of and tenure. native ecosystems. Stora Enso develops plantations in Major sustainability challenges for the local land use context and carefully Stora Enso’s plantations in Brazil and addresses their impacts. Plantations are Uruguay include conservation of biodi- planned and managed in line with wide- versity and hydrological resources, man- ly accepted standards for sustainable agement of the outsourced operations,

A major consumer of recovered ﬁ bre

ecovered fi bre is a strategically cycle. Stora Enso’s main end uses for tral Europe, close to major sources of important raw material for Stora recovered fi bre include newsprint, recycled paper. Langerbrugge Mill is REnso. The Group is committed to magazine paper, and certain types of Stora Enso’s largest consumer of recov- increasing the use of recovered fi bre and board. The average recycled content for ered paper using annually almost promoting the recycling of paper prod- standard newsprint in 2006 was 700 000 tonnes. Having already pro- ucts as part of its manufacturer responsi- 70% (64%). duced newsprint made entirely from bility. The majority of the recovered paper recovered paper since 2003, Langer- Stora Enso is among the largest con- used by Stora Enso comes from house- brugge Mill has now also switched its sumers of recovered paper in Europe. In hold collection. In 2006, 19% (18%) of magazine paper production to 100% the USA, Stora Enso is a leading user of the Group’s total demand for fi bre raw recovered paper in 2006. recovered fi bre in the coated paper sec- material was met by recovered paper. In 2006, Stora Enso invested in a tor. In 2006, 16 Stora Enso mills used a However, fi bre cannot be recycled indefi - Spanish company Palwaste Recycling S.L. total of 2.7 million tonnes of recovered nitely, since its quality is reduced each that has developed a new way to recycle fi bre as raw material (2.5 million tonnes time it is processed, so fresh fi bre beverage cartons. The effi cient recycling in 2005). remains an essential element in paper of liquid packaging boards is strategically Recovered fi bre is channelled to uses and board production. very important for Stora Enso, since con- where it creates the most value for the The mills that consume the largest siderable amounts of beverage cartons Group and its customers. It is particular- quantities of recovered fi bre are concen- are used as raw material at Varkaus Mill ly suitable for products with a short life trated in densely populated areas of Cen- and Barcelona Mill.•

Sustainable pulp

tora Enso’s pulp production is inte- Wood and Fibre Procurement and Land optimisation of quality, production grated into the paper and board Management. processes and environmental impacts. Sbusiness. However, 15% of Stora Stora Enso recommends that all One of Stora Enso’s pulp mills uses Enso’s chemical pulp consumption today pulp suppliers establish chain-of-custo- Totally Chlorine-Free (TCF) processes is externally sourced for quality and dy certiﬁ cation and environmental with another having the capability to logistical reasons. Consequently, the management systems. In 2006, all of use TCF. The others use Elemental Chlo- pulp surplus is sold on the external mar- Stora Enso’s pulp suppliers had environ- rine-Free (ECF) processes. ECF bleaching ket. Mechanical pulp is produced inter- mental systems in place – up from 75% has been recognised as a Best Available nally in sufﬁ cient volumes. in 2005. Technology by the European Commis- Purchased pulp has to meet the same Stora Enso does not use elemental sion and the US Environmental Protec- requirements as purchased wood. This chlorine in bleaching processes at any tion Agency.• means that purchased pulp has to com- of its 13 chemical pulp mills. The choice ply with the Principles for Sustainable of the bleaching method is based on the

STORA ENSO SUSTAINABILITY 2006• 19 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Responsible use of chemicals

Chemicals are essential for pulping and paper-making processes. Small amounts of chemicals are also used in plantations. Stora Enso uses chemicals responsibly so as to minimise the risks to people and environmental impacts.

n the pulping process, chemicals are used for cooking, bleaching and Iimproving the effi ciency of pulp production. Many of these chemicals are recycled in the process, or diverted to energy production. In the paper-making process, pigments and fi llers like calcium carbonate, clay, talc and other chemicals like bind- ers, starch and retention aids are used to improve the quality, strength and printa- bility of the paper. Many of the chemicals used as pigments and fi llers are abundant in nature. Chemicals are also used in various mill support processes, such as water and waste water treatment facilities, and for maintenance work. Chemical suppliers provide key information on their products on material safety data sheets that are processed and stored in various data systems. These systems ensure the availability of the necessary safety information for every- one who handles or uses chemicals. At each mill, chemical contact persons are Process chemicals are carefully labelled and stored to enable their safe use. appointed and trained to be responsible for chemical safety. Chemical safety is also constantly monitored by OHS pro- chemicals. In 2006, Stora Enso started to ses of water, sediments and soil are con- fessionals, and through environmental, implement REACH legislation at the unit ducted as part of good plantation man- risk and quality management systems. level in order to ensure compliance in agement practices. All detected cases of non-conformity future, and to avoid any discontinuity in Chemical containers are handled with chemical safety regulations and production. and disposed of in strict accordance with guidelines are investigated, and correc- national legislation and internal guide- tive actions are taken. Chemicals in plantations lines. All workers exposed to chemicals Various chemicals are carefully used in have to wear appropriate protective Prepared for REACH Stora Enso’s established plantations equipment, and are duly trained in the The EU’s new chemical legislation, according to strict controls. Fertilisers are use, application, storage and transporta- known as REACH (Registration, Evalua- used for soil improvement, pesticides are tion of chemicals. All employees, includ- tion, Authorization and Restriction of applied to control leaf-cutter ants and ing outsourced contractors, are under Chemicals), will require the registration termites, and herbicides are used against medical surveillance. Health and safety of chemicals together with documenta- weeds and fungi. audits are additionally conducted to tion on their effects on the environment Decisions to use chemicals are based assess contractors’ performance. and humans. This information will on continuous monitoring. Chemicals Stora Enso’s new plantation projects become publicly available. are only used where other alternative in China, Brazil and Uruguay will be Stora Enso will be affected by the control methods do not work effectively. developing the same procedures for safe new regulation as a major downstream The dosages of all chemicals are regulat- handling of chemicals as part of their user, manufacturer and importer of ed by national legislation. Regular analy- good plantation management practices.•

20• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Energy issues require a long-term focus

Energy is an essential part of the pulp, paper and board manufacturing process. Stora Enso’s energy supply strategy focuses on the long term. The Group’s approach to energy use, production and fuel mix supports actions to help mitigate climate change. The wide use of combined heat and power supplies energy efﬁ ciently and has a lower impact on climate change than conventional power production.

tora Enso continuously looks for each pulp, paper and board mill at least The Energy 2005 project at Skoghall Mill opportunities to increase the share once in a two-year cycle. was completed in August 2006. The of biofuels in its fuel mix. In 2006, The power-to-heat ratio shows how project will reduce the mill’s oil con- S 3 the share of biofuels in Stora Enso’s much electricity is produced in relation sumption by 60 000 m a year, thereby internal energy production remained to the total amount of heat energy gen- cutting fossil CO2 emissions by 170 000 high at 64% (63%). The most important erated. In 2006, the Group-level power- tonnes annually. This represents 3% of biofuels for the Group are black liquor, to-heat ratio was 18%, compared to 17% Stora Enso’s total CO2 emissions. Both bark, logging residues and internal resid- in 2005. The increase was due to comple- of these targets will be achieved during uals including de-inking sludge and bio- tion of the Energy 2005 project at 2007. sludge. Skoghall Mill and full-year operation at The rebuilding of the bark boiler at the Finnish mills. Hylte Mill was completed in April. Biofu- Guaranteeing electricity supply The energy effi ciency review target els now account for about 60% of all fuels Stora Enso is continuing to develop its was achieved during the two-year period consumed at the mill. This is expected to electricity procurement with a long-term 2005–2006, when a total of 41 (51 in increase to over 75% during 2007. focus. The most important components 2004–2005) reviews were conducted. Fors Mill has now installed wood in the Group’s procurement portfolio are Energy reviews help units to identify powder burners in its oil boiler, which internal electricity production and long- new opportunities to reduce energy con- will reduce oil consumption by 10 000 3 term procurement contracts. Approxi- sumption. In 2006, an energy effi ciency m annually, and cut CO2 emissions by mately 80% of the Group’s electricity task force was established to help mills approximately 25 000 tonnes a year needs for the next 10 years are already to act on the basis of their effi ciency from 2007. covered by internal generation and reviews, and to promote best practices Anjala Mill introduced a PDF-packag- external procurement contracts, but it within the Group. Energy effi ciency ing-derived fuel to improve its fuel mix is essential to continue to develop the reviews are just one part of the Group’s by replacing more expensive fossil fuels, Group’s own electricity production continuous work to reduce energy costs whereas Heinola Fluting Mill installed a capacity so as to optimise its fuel mix and improve results. new turbine to increase its electricity and minimise costs. self-suffi ciency. Investing in energy supply Progress towards targets Increasing energy prices and rising envi- Nuclear power The Group’s energy targets for 2004– ronmental costs are the main drivers Stora Enso currently owns nuclear power 2009 are to increase the power-to-heat behind investments in improved energy generation capacity in Finland through ratio of internal energy production, and asset quality. part-ownership of the power company, to conduct energy effi ciency reviews at Pohjolan Voima Oy. •

Read more about energy efﬁ cien- Energy consumption in 2006 cy in this report on pp. 22–23 Fuel Electricity and about energy costs in the Financials 2006 report.

Biofuels ...... 64% External purchasing ...... 54% Gas ...... 19% Internal generation ...... 36% Coal ...... 9% Pohjolan Voima Oy ...... 10% Oil ...... 4% Peat ...... 4%

Biofuels already account for some 64% (63%) of Stora Enso’s own mills consumed 23.9 (24.1) TWh Stora Enso’s total annual fuel consumption of of electricity in 2006. Electricity self-sufficiency was 215 900 (208 200) TJ. 46% (40%).

STORA ENSO SUSTAINABILITY 2006• 21 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS Climate change – challenges and opportunities

Climate change is a global extreme weather events, shifts in agricul- Stora Enso’s Climate Change Working problem that requires global tural and forest productivity, the loss of Group co-ordinates climate change land and property due to rising sea levels, issues, working within the Group’s sus- solutions. Stora Enso is taking reductions in biodiversity, and possible tainability governance structure. The actions to contribute toward changes in ocean circulation patterns. Sustainability Committee recently decid- mitigating climate change. Stora Stora Enso’s products store carbon ed that the Group’s carbon footprint Enso’s challenge is to minimise both in growing forests and in manufac- should be defi ned and the feasibility of tured wood products. Wood-based prod- greenhouse gas emission reduction tar- business risks while competing in ucts offer a lower carbon footprint alter- gets evaluated. This work is aimed to a carbon-constrained economy. native than many competing products. be completed during 2007. In addition, 64% of the Group’s energy Direct fossil CO2 emissions have needs are met with carbon-neutral biofu- Reducing CO2 emissions been reduced by 10% per unit els. However, there is a need to fi nd more Stora Enso has been making progress on sales production and 2% total sustainable, clean, affordable, safe and efforts to help mitigate climate change. since 2002. socially acceptable raw materials, energy During the past fi ve years, Stora Enso’s sources and transport solutions. pulp, paper, board and converted product facilities have reduced their direct

cientifi c consensus concludes that Actions to help mitigate climate change fossil CO2 emission intensity by 10% the Earth is warming as the concen- Stora Enso is taking the following actions (see p. 23) due to investments in energy Strations of greenhouse gases accumu- to reduce greenhouse gas emissions asso- production assets and mill energy effi - late in the atmosphere. Scientists believe ciated with the Group’s manufacturing ciency projects. These investments were human activities are largely responsible for processes: designed to increase the use of biofuels this trend. The combustion of fossil fuels • energy effi ciency improvements; and to improve the effi ciency of energy signifi cantly contributes to the increase of • increased use of biofuels; generation and production processes. greenhouse gases, including carbon diox- • increased use of combined heat and Total direct fossil CO2 emissions in- ide (CO2). Greenhouse gases accumulate in power from plants that utilise the creased slightly in 2006 due to increased the atmosphere and act like a blanket, heat content of fuel more effi ciently sales production and increased internal warming the planet by trapping heat that than conventional power plants; power generation, but are down slightly would otherwise escape. Global climate • use of nuclear power and energy since 2002. change is a serious concern, because from renewable sources such as warmer temperatures may lead to more hydropower and wind power.

Carbon cycle for the forest products industry 2

4 Fossil CO

Non-fossil CO2

2 Bio carbon Bio carbon Bio carbon 1 2 3

4 Fossil fuels Fossil fuels

1) Trees absorb CO2 (both fossil and non-fossil) from the atmosphere. 2) Trees store carbon in their woody tissue. This carbon is transferred and stored also in wood products. 3) Use of biofuels and recycling of these products release non-fossil CO2 which is again absorbed by the trees. Emissions from biofuels are considered to be carbon-neutral because CO2 is recycled through the atmosphere and stored by growing forests. 4) Use of fossil fuels introduces “new” carbon to the atmosphere in the form of fossil CO2.

22• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 1) Direct fossil CO2

Indirect CO2 emissions 6.2 400 Stora Enso’s total estimated indirect fossil CO2 emissions from purchased electricity and heat were 6.4 million tonnes in 2006, 6.0 380 down from 6.9 million tonnes in 2005. The emission estimates 5.8 360 were primarily lower in 2006 due to the labour dispute at Port 5.6 340 5.4 320 Hawkesbury Mill. The indirect emission estimates were 5.2 300 developed by multiplying energy purchases with country- 5.0 280 speciﬁ c emission factors or more speciﬁ c regional factors within 4.8 260 countries where data was available. These estimates will vary 4.6 240 from year-to-year based on regional energy mix, especially in 2002 2003 2004 2005 2006 Trend: 2002—2006 the Nordic countries where variations in hydropower million tonnes 5.73 5.95 6.00 5.59 5.62 -2% generation is balanced by fossil fuel based generation. While kg/tonne 349 350 332 320 313 -10%

the Group cannot directly control the fuel mix and CO2 Stora Enso’s direct fossil CO emissions continued to decrease per saleable tonne of pulp, emissions from purchased energy, indirect emissions can be 2 reduced by improving energy efﬁ ciency and increasing internal paper, board and converted product. The reductions were mainly due to investments in generation from carbon-neutral fuel sources. energy production assets, mill energy efficiency projects and increased use of biofuels.

Emissions trading Electricity consumption 1) The EU Greenhouse Gas Emission Trading Scheme started in 25 1.50 January 2005. Even though the scheme’s greenhouse gas emis- 24 1.45 sion targets are country-specifi c, the allocations of emission 23 1.40 rights are mill-specifi c. Mills utilising emission trading have 22 1.35 implemented suitable procedures and measures to monitor 21 1.30 and verify their CO2 emissions according to the respective nation- 20 1.25 al legislation. In 2006, the Group’s allocated emission allowances 19 1.20 were 4.6 million tonnes, compared to CO2 emissions of 3.9 mil- 18 1.15 lion tonnes. The surplus allowances were sold on the market. 17 1.10 2002 2003 2004 2005 2006 Trend: 2002—2006 Preparing for Kyoto compliance TWh 22.7 23.3 24.5 23.7 23.5 +4% Stora Enso’s operations in Europe and Canada are subject to MWh/tonne 1.38 1.37 1.35 1.36 1.31 -5% the Kyoto Protocol and the required greenhouse gas emission TWh (terawatt-hour) = 109 kilowatt-hours reductions. In the EU, National Allocation Plans (NAP) grant- MWh (megawatt-hour) = 103 kilowatt-hours ing emission rights for the fi rst Kyoto compliance period (2008–2012) are currently being developed. In Europe, Stora Heat consumption 1), 2) Enso is actively engaged in the NAP development process through national federations and the Confederation of Euro- 160 9.50 pean Paper Industries. In Canada, Stora Enso is continuing 150 9.00 to follow developments related to the Kyoto and greenhouse 140 8.50 gas reduction requirements. 130 8.00 120 7.50 Going beyond legal requirements 110 7.00 In the USA, where there is currently no carbon legislation, 100 6.50 Stora Enso’s operations are involved with three voluntary 90 6.00 80 5.50 greenhouse gas reduction programmes: 2002 2003 2004 2005 2006 Trend: 2002—2006 • Chicago Climate Exchange PJ 139.9 142.2 148.7 140.6 140.9 +1% • US Environmental Protection Agency’s Climate Leaders GJ/tonne 8.52 8.37 8.22 8.07 7.86 -8% Program PJ (petajoule) = 1015 joules US Administration’s Climate Vision Program (through the • GJ (gigajoule) = 109 joules American Forest & Paper Association). 1) From pulp, paper, board and converted product facilities. Normalised figures are Participation in these voluntary programmes helps the Group’s reported per unit sales production. North American operations to reduce their greenhouse gas 2) Excluding heat for electricity generation. emissions, prepare for potential future regulation, develop a better understanding of the region’s emission profi le, and gain Read more about the costs of European emissions trading experience in emissions trading. • in the Financials 2006 report.

STORA ENSO SUSTAINABILITY 2006• 23 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Economic responsibility

At Stora Enso, the concept of economic responsi- economies. Risk management is also an important bility includes both ﬁ nancial performance and the part of economic responsibility, so it is essential to value Stora Enso creates for its stakeholders by include sustainability-related risks in the corporate contributing to local, regional and national risk management framework.

24• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 n 2006, Stora Enso’s focus was on cre- which EUR 1 675.5 million was paid in ly important from society’s point of view, ating stronger fi nancial performance wages and salaries (EUR 1 638.0 million), but are diffi cult to measure. Stora Enso’s Ithrough the Profi t 2007 and Asset Per- including incentive bonuses based on indirect impacts are related to the busi- formance Review programmes. The con- profi tability and the achievement of key nesses of its customers and suppliers, sequent changes resulted in considerable business targets. Bonus schemes current- the use of natural resources, the develop- workforce reductions, mostly in Europe. ly cover around 75–80% of all the ment of know-how and competence, However, new job opportunities were Group’s employees. new innovations, the local development generated in emerging markets where The wages and salaries paid in of communities, and the whole forestry the Group continued to grow during Europe totalled EUR 1 432.5 (EUR sector. the year. 1 379.6) million, while the correspond- Stora Enso’s sales and profi tability ing fi gures for North America were EUR Proactive management of risks increased in 2006. Return on capital 222.9 (EUR 243.2) million, for Asia Stora Enso has identifi ed a number of employed (excl. net non-recurring items) Pacifi c EUR 13.8 (EUR 13.1) million, and potential risks that could impact its was 6.6%. However, the profi tability is for South America EUR 5.9 (EUR 1.8) future profi tability and development. still far below the target of 13% over the million. Stora Enso’s corporate risk management business cycle. Read more about the areas are divided into strategic, opera- fi nancial performance in the Financials Shareholders tional, hazard and fi nancial risks. 2006 report. At the end of 2006, Stora Enso had Sustainability is an essential part of approximately 68 500 shareholders regis- Stora Enso’s risk management, as poten- Direct monetary fl ows tered in the Helsinki, Stockholm and tial risks related to sustainability could Stora Enso sells goods to customers, buys New York stock exchanges. The two larg- result in either material or reputational materials and services from suppliers, est shareholders in the Company are the damage if they are not proactively man- and pays salaries, dividends and taxes to Finnish State and the Wallenberg foun- aged. the benefi t of local employees, commu- dations. The Group has many methods and nities and economies. All these actions Stora Enso’s shareholders are tools to manage sustainability risks, generate direct monetary fl ows that rewarded through dividends and possi- including various policies, principles and indicate the scale of the relationships ble increases in share prices. The objec- guidelines implemented via manage- between Stora Enso and various types of tive of Stora Enso’s dividend policy is to ment systems related to environmental stakeholders at the Group level. distribute at least one half of net profi ts issues, wood traceability and social per- over a business cycle. The total sum formance. Customers paid out in dividends during 2006 was Stora Enso’s Mergers and Acquisition Stora Enso’s impact on customers’ eco- EUR 355 (EUR 365) million. In 2006, Guidelines (2005) include a sustainability nomic capacity is the result of the prod- the Stora Enso R share price rose by due diligence procedure, and the Group ucts and services provided. The Group 5% (2%) at the Helsinki Stock uses Environmental and Social Impact mainly serves business-to-business cus- Exchange. Assessments (ESIA) to fully understand tomers, largely through its international the environmental and social impacts of sales and marketing network. Indirect socio-economic impacts its operations, develop necessary action In 2006, Stora Enso’s total sales Direct monetary fl ows generate various plans, and allocate resources to reduce amounted to EUR 14 593.9 (EUR indirect economic impacts that are equal- any negative impacts.• 13 187.5) million. The main markets were Europe, which accounted for 71.8% of the Group’s sales, North America 15% and Asia Pacifi c with 7.5%. Stora Enso’s sustainability risks by risk management category

Suppliers Strategic risks Operational risks Stora Enso provides a reliable source of • Business environment risks • Market risks income and plays an important role in • Business development risks • Labour market disruptions the future of many small companies • Acceptability of wood • Supply chain risk working as contractors and suppliers. • Human resources risks In 2006, Stora Enso acquired materials • Climate change risks and services valued at EUR 8 111.5 (EUR 7 232.3) million. Hazard risks Financial risks • Environmental risks Employees • Antitrust risks Stora Enso has some 44 000 employees • Product safety in more than 40 countries on ﬁ ve conti- • Occupational health and safety risks nents. The salaries paid by Stora Enso • Personnel security risks have a direct effect on the employees’ • Natural catastrophes purchasing power, and consequently also on the economic vitality of the local community or region. In 2006, personnel expenses totalled Stora Enso’s sustainability-related risks are described in detail in the Financials EUR 2 225.5 (EUR 2 182.5) million, of 2006 report.

STORA ENSO SUSTAINABILITY 2006• 25 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Customers Suppliers Employees Sales by market Materials and services Personnel expenses by market by region

Europe ...... 71.8% Europe ...... 87.5% Europe ...... 83.8% North America ...... 15.0% North America ...... 10.9% North America ...... 15.1% Asia Pacifi c ...... 7.5% Asia Pacifi c ...... 0.9% Asia Pacifi c ...... 0.7% Other ...... 4.1% South America ...... 0.7% South America ...... 0.4% South America ...... 1.6%

Total EUR 14.6 billion Total EUR 11.4 billion Total EUR 2.2 billion

Wood Supply pioneering change in Russia

Stora Enso Wood Supply Russia has merging some functions and using outsourced, including maintenance. been acquiring logging companies in shared resources, investing in new Stora Enso has been working together Northwest Russia in order to gain more harvesters and forwarders, with forestry equipment manufacturers control over the supply chain. computerising accounting and HR John Deere and Ponsse to fi nd new jobs The acquired companies have a systems, and introducing new for the people made redundant. This history of ineffi ciency and having guidelines. As a result, the logging has had a positive impact on local excessively bureaucratic cultures. companies already have better economies by creating new businesses Harvesting has been unproductive; performance levels, they can fully utilise and job opportunities. there is a large number of employees; their harvesting quotas, and health and Wood Supply Russia supports local there is limited outsourcing; and safety performance has also improved. communities by building roads and outdated labour-intensive technologies As a consequence of these actions, contributing to local hospitals and are still in use. there have been considerable health clinics. Local residents are able In order to make these acquired reductions in workforce. In 2004–2006, to use fuel wood at low cost or free of logging companies more effi cient, a total of 535 employees were made charge. Stora Enso has identifi ed synergies by redundant. Many functions have been

Economic value generated and distributed 2005–2006

EUR billion 2005 2006 Customers + Sales 13.2 14.6 Suppliers - Purchases and equipment 10.8 11.4 = Economic value generated 2.4 3.2 Employees - Personnel expenses 2.2 2.2 Shareholders - Dividends paid and repurchases of own shares 0.7 0.4 Creditors - Net financial items 0.2 0.1 Public sector - Taxes 0.0 0.0 = Economic value distributed 3.0 2.7 Retained earnings -0.6 0.5

Stora Enso creates value for its stakeholders in different forms. The table above shows how the value added is distributed between various stakeholders.

26• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Being a responsible member of society

Stora Enso wants to be seen as a additionally monitors legal compliance Council amounting to LVL 7 989 (EUR reliable business partner and as through annual checks. 11 000) for alleged violations of competi- a responsible member of all the tion law. SIA Papyrus is considering an Political contributions in 2006 appeal against the decision. communities where the Group Political contributions can only be On 13 December 2006 the US Anti- operates. Focused partnerships at donated with the approval of a member trust authorities announced that Stora local, national and global levels of Stora Enso’s Executive Management Enso North America Corp. had been have a vital role to play. Group, and in accordance with the indicted for its alleged anticompetitive applicable laws. conduct in connection with the sale of During 2006, Stora Enso paid a total coated magazine paper in the USA from n many locations, Stora Enso is the sum of BRL 1 006 604 (EUR 365 812) in autumn 2002 until spring 2003. No Stora single largest employer and many contributions to the election campaigns Enso employee was charged individually. Iunits have long traditions of working of Brazil’s President, governors, federal Stora Enso denies any wrongdoing and closely together with their local commu- and state representatives, and senators. will enter a plea of not guilty in the nities. Such co-operation may include This sum includes BRL 271 604 (EUR court proceedings. shared infrastructure, regular meetings 98 704) paid by Stora Enso Latin America On 21 December the Finnish Com- with local associations and other mem- and BRL 735 000 (EUR 267 108) paid by petition Authority did propose to the bers of the community, and providing Veracel (50% owned by Stora Enso). This Finnish Market Court that a fi ne of EUR district heating to the local community. information is also publicly available in 30 million shall be imposed on Stora Portuguese at www.tse.gov.br. Enso for violating competition laws in Uniform business practices the purchasing of timber in Finland in Stora Enso operates in some business Competition law compliance the period from 1997 to 2004. Stora Enso environments where corrupt practices Stora Enso has since 2004 been the sub- considers the proposal groundless and are a particular challenge, according to ject of preliminary governmental anti- will defend itself. sources such as Transparency Interna- trust investigations in Europe and Unit- The law fi rms of Van Bael & Bellis in tional. Corrupt practices may take many ed States relating to fi ne paper in Europe, Brussels and Sivenius & Suvanto in Hel- forms, including bribes, facilitation pay- publication paper in Europe, magazine sinki are representing the Group in the ments or kickbacks. Stora Enso’s objec- paper in the USA, the purchase of recov- EU and Finland, respectively. In the USA, tive is to identify and eliminate any ered paper in Germany, and the pur- the law fi rm McDermott, Will & Emery possible risks that the Group might face chase of wood in Finland. Coincident is assisting the Group in the US govern- with the help of uniform defi nitions and with these investigations, Stora Enso has mental case as well as in the class guidelines. been named in a number of class action actions. Stora Enso also applies several detailed lawsuits fi led in the USA. Investigations by the Competition function-specifi c sets of guidelines that Following the 2004 inspections, Authorities can take a long time, and defi ne acceptable behaviour for the Stora Enso has been notifi ed that the Stora Enso cannot estimate when these Group’s employees and business partners: European Commission had closed its cases will be concluded. • Business Practices in Sales Companies investigations into the fi ne paper sector Stora Enso’s Competition Law Com- • Moral & Ethics Guidelines (corporate and the publication paper sector, on 9 pliance Programme, which was launched guidelines for purchasing personnel) August 2006 and 16 November 2006, in 2002, based on previous Enso, Stora • How to Do Business with Stora Enso respectively. and Consolidated Paper policies, is con- (guidelines for business partners) On 26 October Stora Enso’s Lithua- tinuously kept up to date. The current • Principles for Sustainable Wood and nian merchant UAB Schneidersohne version dates from August 2006. The Fibre Procurement and Land Man- Baltija, and certain other paper mer- programme clearly states Stora Enso’s agement chants, received a fi ne from the Lithua- support of free and fair competition, • Stora Enso’s Communications Policy. nian Competition Council amounting to and Stora Enso’s commitment to comply LTL 235 330 (EUR 68 000) for having with competition laws. This commit- Information on business practices is inte- violated competition rules by exchang- ment is an integral part of Stora Enso’s grated into the Group-wide training pro- ing information with its competitors. CSR Principles and Code of Ethics. Stora grammes. All Stora Enso managers take UAB Schneidersohne Baltija denies any Enso is continuing to take action to responsibility for the monitoring and violation, and has appealed the decision. emphasise its commitment to compli- observation of the Group’s principles Further, on 21 December Stora Enso’s ance through corporate policies and and guidelines related to business prac- Latvian merchant SIA Papyrus received a training.• tices. Stora Enso’s Internal Audit unit fi ne from the Latvian Competition

STORA ENSO SUSTAINABILITY 2006• 27 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Philanthropy and strategic partnerships

Stora Enso supports global and childcare while signifi cantly reducing lack of confi dence among some of the local community projects and the number of children out of school. local stakeholders towards UNDP Brazil. Stora Enso aims to raise a similar In 2004, Stora Enso had asked UNDP seeks strategic partnerships from amount through its operating units in Brazil, as a credible and independent which both parties can benefi t. the form of in-kind donations, local co- third party, to conduct a Socio-Economic The Group’s approach to philan- operation and employee participation Impact Assessment of the joint-venture thropy encompasses more than programmes. Many units and employee company Veracel. This study aimed to groups have supported the partnership evaluate the suffi ciency of present envi- making donations, and Stora Enso by contributing paper, board and fi nan- ronmental and social processes, to build greatly values partnerships with cial donations, and by buying and send- trust between different parties, and to such organisations as UNICEF and ing hundreds of thousands of UNICEF seek practical solutions for any potential- greeting cards. ly critical sustainability issues identifi ed. the United Nations Development Employees have initiated and man- The fi rst phase of this co-operation, Programme (UNDP). aged many successful activities to gener- which generated preliminary baseline ate income and raise awareness for information on local socio-economic tora Enso has been UNICEF’s global UNICEF through community events, conditions, was fi nalised in 2005. corporate partner in primary educa- such as art exhibitions and jumble sales, A precondition for UNDP Brazil to Stion since 2004. Each year, Stora and by fundraising at open house days continue the study was that the organi- Enso makes a corporate donation of USD and mill inaugurations. sation must be seen as a legitimate actor 250 000 to help UNICEF achieve a specif- by all key stakeholders in the area. Some ic educational priority. In 2006, this UNDP Brazil and Veracel’s groups of critical local stakeholders did donation was committed to the expan- sustainability assessment not fi nd UNDP Brazil to be independent sion of child-friendly schools in develop- In 2006, the Socio-Economic Impact enough to issue fair judgment and rec- ing countries. These community schools Assessment of Veracel’s pulp mill and ommendations; therefore the study was advance the quality of education and plantations was discontinued, due to the discontinued. UNDP Brazil and the part-

Child-friendly schools strive to create safe, protective and inclusive spaces for all children, especially girls, and encourage the involvement of parents and the community. Photo: UNICEF/ HQ06-1473/Giacomo Pirozzi

28• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 ners are looking for other possible co- They are also an effective channel for operation projects. dialogue between Stora Enso and the sur- International Veracel contracted Fundação Getulio rounding communities. The partnership Vargas (FGV), a well-known independent also involves UNDP China’s national co-operation Brazilian institute of economic studies, counterpart CICETE, and the Guangxi to conduct a study of the socio-econom- Ministry of Science and Technology. he co-operation with WWF contin- ic impacts of Veracel. The full study is Stora Enso supports the creation ued during 2006 aiming to develop available at Veracel website www.veracel. of a biodiversity action plan for South Tsustainable forestry practices in com.br. The preliminary results show Guangxi. Actions include protecting val- three priority areas, i.e. forest certifi ca- that in 2006 Veracel: uable areas and a trial project designed tion, sustainable forestry and the legality • was responsible for approximately to regenerate a degraded site. This of wood sourcing. New projects related 9% of Brazilian pulp production; project is being co-ordinated by UNDP to plantations and bioenergy are under • paid approximately BRL 49 million China, and involves expert domestic development. in taxes to the federal, state and and international partners. In Russia, the Pskov Model Forest municipal governments; project reached a signifi cant milestone • was responsible for the creation of Local involvement with communities when the Russian Federal Forest Agency 30 400 direct and indirect jobs Stora Enso’s mills and units actively par- approved large-scale testing on the throughout the Brazilian economy; ticipate in their local communities. Some ground of forestry practices developed in • was responsible for 14.9% of the mills have shared infrastructure or ser- the project. The forestry practices will be regional agriculture GNP and 42.5% vices such as waste water treatment tested in the regions of Leningrad, Pskov of the regional industrial GNP in the plants, fi re brigades or district heating and Novgorod in Northwest Russia until seven municipalities where the com- networks. The most typical way mills 2008. pany has its operations; interact with local stakeholders is at In a new effort called Vologda • paid BRL 171 million in labour costs, open house events. Several units also project, Stora Enso and WWF Russia labour benefi ts, taxes and social pro- support local educational projects or have created a framework and concept grammes, meaning that almost one engage in other philanthropic activities. for an analysis of the new Forest Code fi fth of what Veracel adds to the Brazil- During 2006, many mills have been of Russia, which was accepted in ian economy is returned to the society; working closely with local authorities, November 2006. The aim is to analyse • employed people of whom 80% have politicians and labour unions during the the implications of the new Forest Code a college level or high school educa- implementation of cost-cutting measures for the monitoring of the origin of tion in comparison to the Brazilian from the Profi t 2007 programme, in wood. average of 58.6%; order to minimise negative impacts on During 2006, Stora Enso and WWF • paid an average remuneration double the local community.• Finland launched a project to develop of the average Brazilian industrial and promote the concept of Green Forest remuneration; Highlights in 2006 Management plans for forest owners • during the period of 2003–2006 Anjalankoski Mill contributed EUR 1.5 with non-intensive forestry. A feasibility Veracel was responsible for 60% of million towards the cost of a bridge study was conducted and implementa- the economic growth in the seven built to replace a level crossing on a tion may start in 2007. municipalities where the company local railway line. The bridge was Stora Enso has also continued to has its operations. inaugurated in October, and will contribute to the WWF Finland Heritage considerably improve the safety levels Forest Programme on voluntary forest Next steps in the UNDP China for mill traffi c and local residents. protection, and promotional events were partnership jointly organised at schools. In 2006, UNDP and Stora Enso entered Sachsen Mill organised its tenth annual Stora Enso is introducing a Heritage into a fi ve-year partnership to address RECYCLE 2006 writing competition for Forest Programme in Nova Scotia, Cana- the key fi ndings of the Environmental young journalists in the German state of da together with the local WWF. The and Social Impact Assessment (ESIA) Sachsen. Approximately 1 400 school programme will promote sustainable for- conducted into Stora Enso’s plantation children participated, and the prize est management principles, forest certifi - operations in China. The partnership included an internship at a local cation schemes and conservation consists of two main areas: improving newspaper. options among forest owners and their rural livelihoods through the creation of families. During 2006, the needs and community telecentres, and promoting Stora Enso Sales China was granted interests of forest owners were deter- biodiversity in South Guangxi. Stora the Caring Company 2006 award by mined. The Heritage Forest Programme Enso will contribute USD 1 million over the Hong Kong Council of Social was ready for implementation at the end the fi ve-year period. Services for the third year in a row. of 2006. Community telecentres, offering This recognition stems from employees’ In 2006, Stora Enso and WWF also local villagers access to the internet and voluntary work visiting the elderly and worked together to develop and promote other media, are an effective way to organising tree-planting. cost-effi cient group forest certifi cation improve communications with and models for small-scale forest owners. between local communities. They can be Stora Enso’s US units continued to A discussion paper has been developed used to spread good farming practices raise funds for United Way, who outlining a new concept.• and offer new marketing channels for support non-profi t organisations in mill useful products, for instance, as well as communities in Wisconsin and Minne- to spread information on important sota. In 2006, USD 316 979 was raised. issues such as biodiversity or HIV/AIDS.

STORA ENSO SUSTAINABILITY 2006• 29 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Progress on environmental performance

Most of Stora Enso’s environmental performance indicators continued to develop favourably per unit of production. In 2006, Group environmental performance was inﬂ uenced by the labour dispute at Port Hawkesbury Mill, divesting mills and closing production units as a result of Stora Enso’s Asset Performance Review programme and the acquisition of Arapoti Mill in Brazil.

Air emissions and Stora Enso continues to make efforts to improve. Signifi cant contribu- Most emissions to air result from the progress towards achieving the Group’s tions in 2006 included: combustion of fuels to produce energy COD reduction target. The 2006 increase • use of all boiler ash from Anjalankoski for pulp- and paper-making processes. is largely due to increased internal pulp Mill in road construction projects; Total sulphur emissions (reported as production, and process and waste water • combustion of waste water treatment SO2) continued to decrease and Stora treatment upsets at some mills. and de-inking sludge in Hylte Mill’s Enso is making good progress towards Nitrogen and phosphorus discharges newly rebuilt biofuel boiler; the Group’s reduction target. Reductions were reduced. The reductions are due to • increased use of de-inking sludge in 2006 are primarily attributed to the improvements in waste water treatment from Duluth Mill for daily cover at following: plant nutrient control. Nitrogen and municpal landfi lls. • operation of a desulphurisation sys- phosphorus are added as nutrient sourc- The waste utilisation rate, expressed tem at Suzhou Mill; es for the biological organisms in the as the percentage of residuals being used • improvement of malodorous gas waste water treatment process. for benefi cial purposes, such as energy control at Norrsundet and Skutskär Stora Enso’s production units have recovery, soil improvement, road con- pulp mills; made steady improvements over the last struction and brick manufacturing,

• improvement of SO2 control at fi ve years in reducing the amount of remained high at 97%. Nymölla Mill; process water discharged. Stora Enso has • overall improvements in energy effi - made a good fi rst step in 2006 towards Hazardous waste ciency. achieving its newly established process Hazardous wastes from Stora Enso’s units water reduction target. The reductions generally include used oils, solvents,

NOx emissions increased slightly in 2006 are the result of small investments and paints, laboratory chemicals, batteries due to increased internal power genera- improvements in process control. Some and some spills. Hazardous waste is tion; however, there has been an overall examples include substitution of fresh reported on the basis of the country-spe- downward trend since 2002. water with fi ltrate or white water, chang- cifi c defi nitions applied in national regu- es in process chemistry allowing for lations. In 2006, Stora Enso’s facilities Water discharges process water reuse and energy effi ciency generated 5 210 tonnes of hazardous Discharges of AOX have increased due to projects to recover heat. waste compared to 5 140 tonnes in 2005. increased bleached chemical pulp pro- Hazardous wastes may either be burned duction and process and waste water Solid waste for energy recovery or safely handled treatment upsets at a few mills. Over the Due to Stora Enso’s continuous efforts to and disposed of at licensed hazardous last fi ve years, AOX discharges have fl uc- reduce waste and fi nd benefi cial uses, the waste facilities or incinerators.• tuated within a good performance range. quantity landfi lled continued to decrease. In 2006, COD discharges increased Stora Enso has already met the Group’s See unit-specifi c sustainability slightly, but the long-term trend is down waste to landfi ll target and will continue data on pp. 44–47.

30• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Air emissions, water discharges and waste1)

Total sulphur as SO2 NOX

21 1.25 20.0 1.25 20 1.20 19.5 1.20 19 1.15 19.0 1.15 18 1.10 18.5 1.10 17 1.05 18.0 1.05 16 1.00 17.5 1.00 15 0.95 17.0 0.95 14 0.90 16.5 0.90 13 0.85 16.0 0.85 2002 2003 2004 2005 2006 Trend: 2002—2006 2002 2003 2004 2005 2006 Trend: 2002—2006 1 000 tonnes 19.5 19.8 20.2 17.8 17.8 -9% 1 000 tonnes 18.7 19.3 19.5 18.0 18.8 0% kg/tonne 1.19 1.17 1.12 1.02 0.99 -17% kg/tonne 1.14 1.14 1.08 1.03 1.05 -8%

AOX2) COD

700 0.22 180 16 650 0.20 170 14 600 0.18 160 12 550 0.16 150 10 500 0.14 140 8 450 0.12 130 6 400 0.10 120 4 350 0.08 110 2 300 0.06 100 0 2002 2003 2004 2005 2006 Trend: 2002—2006 2002 2003 2004 2005 2006 Trend: 2002—2006 tonnes 579 663 645 568 663 +14% 1 000 tonnes 153 170 166 145 155 +1% kg/tonne 0.135 0.150 0.143 0.135 0.146 +8% kg/tonne 9.3 10.0 9.2 8.3 8.6 -7%

Nitrogen Phosphorous

2.0 0.16 400 0.026 1.9 0.14 350 0.024 1.8 0.12 300 0.022 1.7 0.10 250 0.020 1.6 0.08 200 0.018 1.5 0.06 150 0.016 1.4 0.04 100 0.014 1.3 0.02 50 0.012 1.2 0.00 0 0.010 2002 2003 2004 2005 2006 Trend: 2002—2006 2002 2003 2004 2005 2006 Trend: 2002—2006 1 000 tonnes 1.73 1.84 1.82 1.88 1.86 +8% tonnes 329 338 303 313 249 -24% kg/tonne 0.105 0.108 0.100 0.108 0.104 -1% kg/tonne 0.020 0.020 0.017 0.018 0.014 -31%

Process water discharge Waste to landfill

500 30 400 24 480 29 350 22 460 28 300 20 440 27 250 18 420 26 200 16 400 25 150 14 380 24 100 12 360 23 50 10 340 22 0 8 2002 2003 2004 2005 2006 Trend: 2002—2006 2002 2003 2004 2005 2006 Trend: 2002—2006 million m3 460 466 470 443 445 -3% 1 000 tonnes 293 324 348 293 269 -8% m3/tonne 28.0 27.5 26.0 25.4 24.8 -11% kg/tonne 17.9 19.1 19.2 16.8 15.0 -16%

1) From pulp, paper, board and converted product facilities. Normalised figures are reported per unit sales production. 2) From bleached chemical pulp production facilities only. Normalised figures are reported per unit bleached chemical pulp production.

STORA ENSO SUSTAINABILITY 2006• 31 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Working to ensure compliance

he requirements of environmental rective measures to achieve compliance ﬁ nes during 2006 (EUR 15 000 in 2005) permits regulating operations at and prevent recurrence. Mills also occa- to settle environmental incidents. The TStora Enso’s units were fully met in sionally receive complaints from local list below includes environmental inci- most cases. Whenever environmental residents, most commonly concerning dents resulting in major permit viola- incidents are identiﬁ ed, Stora Enso’s poli- noise and odour problems. Such issues tions, claims for compensation, or cy is that units promptly notify the are addressed promptly and resolved to reported in the media.• appropriate authorities and initiate cor- the extent possible. Stora Enso paid no

Unit Incident Status/corrective action

Biron Mill Volatile organic compound permit limit for a thermo- Pending – Continue to work with the regulatory agency to resolve. mechanical pulp line exceeded.

Imatra Mills Sodium hydroxide from the scrubber storage tank of Resolved – Risk analysis and operating procedures have been updat- the recovery boiler was spilled into Lake Saimaa through ed. The authorities issued no legal actions, as environmental impacts a clean water sewer. were considered to be negligible.

Imatra Mills Particulate emission limit for the lime kiln exceeded. Resolved – Air flow changes have been introduced and electrostatic precipitators cleaned.

Kemijärvi Pulp Mill Particulate emission limit for the bark boiler exceeded. Pending – A new electrostatic precipitator will be installed.

Kemijärvi Pulp Mill Waste water permit limits for AOX, BOD, COD, and Resolved – A new activated sludge plant was installed. phosphorous exceeded.

Kvarnsveden Mill Phosphorous guideline value exceeded. Resolved – Improvements have been made to the flotation stage at the waste water treatment plant. Optimisation of nutrient addition continues.

Kvarnsveden Mill NOX guideline value exceeded. Pending – Optimising of operation of the new boiler 8 is ongoing.

Ostrołęka Mill Noise limits exceeded. Resolved – The wood yard has been reorganised and noise reduction equipment installed.

Oulu Mill Particulate emission limit for the soda recovery boiler Resolved – A new electrostatic precipitator has been installed. exceeded.

Packaging Poland Noise limits exceeded. Resolved – Noise reduction equipment has been installed. – Mosina Converting Plant

Zdírec Sawmill Particulate emission limit for the boiler exceeded. Pending – A new cyclone filter has been installed. Measurements have been conducted, and submitted for confirmation from the authorities.

Skoghall Mill Sulphur guideline-level exceeded. Resolved – An automatic cleaning system will be installed for a new gas destruction incinerator.

Skoghall Mill Noise guideline-level exceeded. Pending – Based on noise measurements closer to the mill, new permit levels have been suggested. Further actions are pending based on a decision from the environmental court.

Skutskär Pulp Mill Dust emissions from lime kilns during the autumn Resolved – Assisted neighbours in cleaning their houses and cars. stoppage. Procedures for repairing lime kilns have been improved.

Water Renewal Total suspended solids daily limit exceeded on one Resolved – New tools have been purchased to better predict runna- Center (Stevens occasion. bility of the treatment plant. Improvements have also been made to Point and Whiting increase the level of dissolved oxygen in the aeration basins. mills)

Wood Supply Logging area exceeded by 2.1 ha in Vabadiko, Estonia. Pending – An official investigation is ongoing. Additional training has Baltic, Estonia been provided for employees, and further training on GPS use will be conducted.

32• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Investing in improved performance

Environmental investments are Environmental expenditures consist of investments, costs and liabilities. mainly directed to improve the EUR million 2004 2005 2006 quality of air and water, to Environmental investments 87 64 86 enhance resource utilisation, and Environmental costs*) 174 169 156 to minimise the risk of accidental Environmental liabilities 45 44 42 spills. Total environmental *) Excluding interest and depreciation investments amounted to EUR 86 ity of its waste water treatment plant. water treatment plant to comply with new million during 2006, up from This investment will minimise the risk environmental permit limits. The new EUR 64 million in 2005. of accidental discharges, and also reduce system started up in October 2006. noise levels. Air emissions Stora Enso is investing in a waste Environmental costs Niagara Mill invested EUR 5.9 million to water treatment plant at the Falun Cop- Stora Enso’s environmental costs totalled install a new particulate control system per Mine, to remove heavy metals from EUR 156 million (excluding interest and to meet future US regulatory require- the mine water, and extract saleable depreciation) in 2006 down from EUR ments. minerals. The project’s goal is to reduce 169 million in 2005. Total environmen- Heinola Fluting Mill is investing EUR costs and minimise risks related to waste tal costs (including depreciation) were 13.8 million in environmental protec- management. The Swedish government 194 million in 2006. The main environ- tion projects that will be completed by is contributing to the investment and mental cost categories are taxes, fees, the end of 2007. The projects will reduce operational costs. The total investment refunds and permit-related costs EUR 48 airborne emissions from the power will be EUR 12.6 million, of which Stora million, repair and maintenance EUR 31 plant, pulp mill and evaporation plant, Enso will contribute EUR 11.5 million. million, and chemicals and materials and also modernise boiler automation. Barcelona Mill has installed a new EUR 33 million. The mill’s particulate and sulphur diox- primary clarifi er and added two biologi- ide emissions are expected to be reduced cal reactors for secondary treatment to Environmental liabilities by 50%. These projects will additionally the existing waste water treatment plant. Estimates indicate that a total of EUR 42 reduce noise levels and upgrade the This investment will improve COD million will be required to cover future mill’s landfi ll to meet new environmen- removal and reduce fresh water use by corporate environmental liabilities. tal requirements. circulating more water for reuse in the There are currently no active or pending Oulu Mill has completed an invest- mill. These EUR 3.0 million facilities legal claims concerning environmental ment in a new electrostatic precipitator started up in summer 2006. issues which could have a material for the recovery boiler. This EUR 5.5 mil- Imatra Mills installed two new cool- adverse effect on Stora Enso’s fi nancial lion investment will reduce particulate ing towers to reduce disturbances in the position.• emissions by 80–90%. mills’ waste water treatment plant, and improve COD removal. The total invest- For details on environmental lia- Water discharges ment amounted to EUR 1.4 million. bilities and environmental legal Anjalankoski Mill has completed a EUR Kemijärvi Pulp Mill has invested EUR proceedings, see Financials 2006 7.0 million project to increase the capac- 11.2 million in a new biological waste report.

Skoghall Mill has invested in an energy project including conversion of a boiler to use biofuels instead of oil.

STORA ENSO SUSTAINABILITY 2006• 33 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Supporting global agreements on social responsibility

Stora Enso supports the United ny, Stora Enso believes in fostering and Nations Universal Declaration of Many ways to respecting diversity in all its forms Human Rights and the Core including country cultures, ethnic ori- manage diversity gins, gender, ideas and styles and expects Conventions of the International the leaders of the Group to take an active Labour Organization (ILO). These A key component of Stora Enso’s work- role in promoting diversity as part of international multilateral treaties force strategy is to continuously empha- their leadership responsibilities and as a guide Stora Enso’s operations in size and develop diversity within the key consideration in deﬁ ning future Group. To be a successful global compa- business success. areas where local legislation is weak or non-existent. Based on these agreements, Stora Enso has developed its own principles for managing social responsibility.

ocus areas for 2006 included broadening the coverage of social man- Fagement systems, increasing gender diversity, and improving occupational health and safety performance. At Stora Enso, each unit must develop related action plans and defi ne key performance indicators by the end of 2007. These social management systems help units to identify and manage the most signifi cant social aspects of their operations. By the end of the year 48.5% of the Group’s employees were covered by these management systems. In addition, 11 units started to create their social responsibility action plans during 2006. Aspects most commonly identifi ed as crucial in the units include business practices, employee health and safety, internal and external communications, and the management of social responsibility along the supply chain. During 2007, Group-wide indicators will be developed on the basis of these results.

34• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 A key component of our workforce strategy is to continuously emphasise and develop diversity within our company. To be a successful global company, we believe in fostering and respecting “diversity in all its forms including country cultures, ethnic origins, gender, age, ideas and styles. We expect the leaders of our company to take an active role in promoting diversity as part of their leadership responsibilities and as a key consideration in deﬁ ning future business success. - Jukka Härmälä, CEO ”

Where nationality ratios are con- The average age of Stora Enso’s are retained and transferred within the cerned, the number of employees in employees is rising, mainly because Group’s operations. China, Germany and Russia have many employees in the Nordic countries increased due to acquisitions and are approaching retirement age. This Trends in gender diversity expanding operations. Stora Enso’s total enables the active use of early retirement In 2006, the WISE (Women in Stora workforce decreased due to the sale or and pension schemes in connection with Enso) network was strengthened with closure of mills, staff reductions and out- workforce reductions. However, this also new members. Work has focused on con- sourcing carried out as part of two major means that action needs to be taken to tinuing work with the related action proﬁ tability improvement programmes. ensure that knowledge and capabilities plan, and ﬁ nding best practices. For 2007,

STORA ENSO SUSTAINABILITY 2006• 35 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Employee distribution and contracts by country

Number of employees per country1) % share Union Employee contracts Average member- in 2006 3), age ships2),% % (years)

2002 2003 2004 2005 2006 2006 2006 Full-time Part-time

Finland 14 676 14 479 13 820 13 596 12 879 28.2 92 97 3 46.0 Sweden 9 187 9 068 8 848 8 523 8 128 17.8 99 94 6 45.5 Germany 4 761 4 785 4 734 5 165 5 786 12.7 67 98 2 41.9 USA 5 731 5 182 4 644 4 454 4 314 9.5 71 99 1 46.7 Russia 581 741 1 710 1 927 2 199 4.8 N/A 99 1 37.3 Poland 83 75 69 1 936 1 848 4.0 46 100 0 42.4 France 1 333 1 312 1 260 1 345 1 307 2.9 4) 98 2 43.2 Austria 1 189 1 226 1 261 1 278 1 227 2.7 55 99 1 36.6 China 816 811 849 919 1 067 2.3 - 93 7 34.6 Estonia 132 1 140 970 1 079 1 045 2.3 N/A 100 0 36.5 Belgium 645 623 603 633 715 1.6 4) 93 7 41.4 Netherlands 858 829 954 945 697 1.5 N/A 87 13 42.6 Canada 850 849 775 664 608 1.3 82 100 0 45.3 Other countries 3 011 3 144 3 282 3 702 3 811 8.4 - 98 2 39.8

Total, average 43 853 44 264 43 779 46 166 45 631 100.0

Total, year end 42 461 42 814 45 307 46 664 43 887 97 3 43.2

1) Source: financial accounting 2) % of union members amongst blue-collar workers in 2006 3) Source: HR statistics database 4) In these countries it is illegal to collect union membership data

Diversity indicators

2002 2003 2004 2005 2006 Gender distribution Female 19% 18% 18% 19% 18% Male 81% 82% 82% 81% 82% Women in management Board of Directors 0% 9% 9% 10% 20% 2 women Management Group 0% 4% 4% 5% 5% 1 woman Divisional management teams 5%* 7%* 7%* 3%* 4% 2 women Staff unit management teams - 14% 23% 19% 19% 54 women Unit management teams 14% 16% 17% 18% 17% 150 women Women in recruitment Permanent hires - 25% 26% 19% 21% Permanent hires, bachelor’s or higher degree - 33% 38% 33% 40% Temporary contracts - 32% 28% 27% 25% Women in HR Development Stora Enso Management Programme 11% 30% 24% 25% 21% Stora Enso Executive Progamme 14% 3% 25% 12% 22% Management audits: early career talents - 20% 28% 26% 27% Management audit: TOP 200 - - - - 19% Total in Talent Pools ----23%

*) The figures are not comparable with 2006 figure due to organisational changes. Source: HR statistics database

Age distribution

35% 2006

30% 2005 2004 25% 2003 20% 2002 15%

10%

0 <20 21-30 31-40 41-50 51-60 >61 Source: HR statistics database

36• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Stora Enso has set a target to train female Stora Enso is currently running Council aims to create a shared perspec- candidates for management vacancies many different rotation activities in tive on business results and strategies as part of the 2007, Management Audit order to increase the employees’ business through open dialogue, and to share Process. During 2007, the Group will knowledge and competence. One Group- information on business results with all continue with the WISE network meet- level initiative, known as Go!, consists of employees. ings and establish a pilot mentor pro- a rotation programme for Early Career gramme for WISE Network members. Talents.• Labour disputes Currently, 23% of potential future Port Hawkesbury Mill was shutdown on managers in Stora Enso’s talent pool are Read more about Stora Enso’s 26 January when Stora Enso declared a women and 27% of identifi ed young tal- human resources strategy in the lock-out of the unionised workforce after ents are female. This is proportionally Company 2006 report on pp. 32–33. representatives failed to agree to the higher than the proportion of women mill’s fi nal contract offer. Contract nego- in Stora Enso’s whole workforce (18%). tiations ended when the union ratifi ed These fi gures correspond to the amount a new collective agreement on 20 June, of women in the human resource man- Employee which will run until 31 May 2009. The agement programmes Stora Enso Manag- mill restarted its operations in October. er and Stora Enso Executive.• relations As part of the Asset Performance Review, Stora Enso permanently shut The majority of Stora Enso employees down two paper machines at Corbehem are members of trade unions. However, Mill. A group of employees and union Talent the data on union membership is not members offered to acquire the two complete, as it is not legally possible to machines, but an agreement was not management collect such information from all coun- reached. This resulted in demonstrations tries where Stora Enso operates. Stora and court actions against Stora Enso. The The Group is investing in its employees’ Enso has employee representatives in court ruled that Stora Enso has con- competence development in different several Group, divisional and unit level formed to French laws during the process. ways. Employees are offered opportuni- committees. Employee relations are In Belgium, workers at Langerbrugge ties to participate in different types of managed on a national level. Mill went on strike in October 2005, training at Group, regional and business In Europe, the annual works council claiming that the salary increase offered unit level. Many tailor-made leadership meeting was organised in March 2006, was not acceptable. After 11 days the and business knowledge courses are also involving 30 employee representatives majority of the workers voted to return offered to divisions and business units. from several EU countries. Topics dis- to their jobs, thus ending the strike. These courses cover a broad range of top- cussed included the CEO’s review, the After the strike, Stora Enso dismissed ics from leadership training to business Profi t 2007 programme, and reviews of two shop stewards from the mill, as they environment. All Group-level courses the product divisions. did not command respect among the contain a sustainability module. The North American Works Council majority of the employees or other union (NAWC) also met during 2006. The representatives. However, this dismissal

STORA ENSO SUSTAINABILITY 2006• 37 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

caused demonstrations at the mill. Stora den. There were 85 people employed at applied during the shutdown was that co- Enso has followed Belgian legal procedures the mill, which was located in a very operation and communications should be for dismissals, and paid an indemnity to small village with only 300 households. honest, direct and consistent. A survey of the two former employees. No lawsuit was The overall objective agreed during resource requirements was carried out in fi led regarding this incident. the closure process was to fi nd new jobs order to fi nd out the future organisation Employees of the Finnish paper for all employees affected by the closure. structure, map the experiences and industry were on strike 15–17 May, stop- This process was initiated by contacting knowledge profi les of the employees. ping production at Stora Enso’s mills. In the regional and local government During the process, the need for a addition, the clerical employees not cov- authorities, as well as all network organi- total staff reduction of 155 was identifi ed ered by the collective labour agreement sations like Swedish Council of Out- with relocation being a possibility for 70 went on strike 17–18 May. According to placement, to receive their support dur- of these employees. In the end, 65 per- the employees, the reason for these ing the process. sons were offered a retirement or unem- strikes was the Finnish forest industry’s Altogether 37 people showed interest ployment pension package, 39 tempo- reductions in workforce. The employers’ in retraining. Eight persons were rary contracts were cancelled and 45 representatives consider these strikes to employed by an external company that contracts needed to be terminated, be illegal, and have taken the cases to provides sheeting services to Fors Mill in meaning that a total of 143 persons were Finnish labour court. • Sweden. Some 30 people were employed made redundant. on temporary contracts by a steel manu- The reasons behind these redundan- facturer located in a nearby village. cy decisions were clearly communicated Voluntary employees at Fors Mill were to the employees. The HR department Reductions in offered early retirement packages and 17 ensured that the process was conducted people accepted this offer. These retirees fairly and even-handedly. The supervi- workforce were replaced by workers from Hammarby sors were trained to support the employ- One of Stora Enso’s social responsibility Mill. By the end of the closedown, around ees through these discussions. principles addresses responsible reduc- 90% of Hammarby’s employees were All employees were offered various tions in workforce. This principle is working in permanent or new temporary support services including written infor- based on respect for the individual and positions at Stora Enso or external compa- mation, psychological services, volun- sensitivity to the employees’ needs. nies, and a new entrepreneur was also tary crisis discussions, and meetings with Group-wide guidelines for responsible found to buy the mill premises. the labour market authorities. A Ques- reductions in workforce defi ne responsi- Discussions with stakeholders have tions & Answers service was also made ble practices, principles, processes and confi rmed that the closure of Hammarby available on Stora Enso’s intranet to pro- tools, and they are to be used across the Mill was well-planned and executed. The mote openness during the process. whole organisation in all personnel negotiations held with unions during Retraining, coaching, outplacement reduction cases. the process were very constructive, and services and change support were also The background, reasons, and ration- co-operation with the local authorities organised on a voluntary basis. A special al behind reductions in the workforce are was also fruitful. All Stora Enso’s Swedish labour forum was held to exchange to be clearly communicated by managers units and networks were involved information about job opportunities and supervisors to all employees affect- throughout the process. within the metal industry and other ed. Decisions related to restructuring companies located in the same region.• must be unbiased and based on openly Open communication ease communicated criteria. Factors such as Varkaus shutdown the need to maintain diversity and pre- In October 2005, Stora Enso announced vent discrimination also have to be con- the shutdown of one paper machine at sidered. Varkaus Mill, Finland due to the machine’s old age and poor profi tability. Hammarby closure – intensive co- Altogether 800 people were affected by operation between all stakeholders the decision. In November 2005, Stora Enso decided The planning of the shutdown started to close down Hammarby Mill in Swe- immediately. The overreaching principle

38• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Major reductions in 2006

Due to the Asset Performance Voluntary severance packages, outplace- renewed and 23 employees were given Review, Stora Enso divested ment services and other forms of support notice. were offered to the 80 persons let go. Grycksbo Mill and Linghed Reisholz Mill – 50 employees. Five Sawmill in Sweden, Pankakoski Sales offi ces – 96 employees were made employees found jobs through internal Mill in Finland, Celbi Pulp Mill in redundant at various sales offi ces due to transfers, six retired, 20 retired early, two Portugal and Wolfsheck Mill in Profi t 2007 cost-cutting programme. temporary contracts were not renewed. Voluntary severance packages, outplace- Germany and the 1 280 Imatra Mills – 96 employees, due to ment services and further education employees were transferred to restructuring. 71 were eligible for old-age were offered. the new owners. retirement and 25 received unemployment pensions. Packaging Finland – 47 employees, due to restructuring and outsourcing. 29 Wood Supply Russia – 490 employees Hammarby Mill – 85 employees were temporary contracts were not renewed, due to restructuring and reorganisation. affected by the closure of the mill. Read 13 employees retired and fi ve accepted 17 employees were eligible for old-age more on p. 38. unemployment pension packages. retirement and 12 positions were outsourced. Employees were offered volun- Uetersen Mill – 85 employees, due to Wood Supply Sweden – 39 employees tary severance packages and outplace- Profi t 2007 cost-cutting programme. The due to cost cutting and outsourcing. ment services. mill was under scrutiny as part of the 10 retired, fi ve accepted early retirement APR programme. Six employees found packages. Voluntary severance packages Corbehem Mill – 394 employees due to jobs through internal transfers, 25 and outplacement services were offered shutting down two paper machines in retired, seven temporary contracts were to and accepted by 24 employees. conjunction with the APR programme. not renewed and individual early retire- Two employees accepted internal job ment plans were made. Further educa- Stevens Point Mill – 31 employees due to transfers, 75 employees retired early and tion was offered, and 65 were offered the closure of PM31 and an off-machine the remaining employees have been voluntary severance packages and 20 coater. Six found jobs through internal offered voluntary severance packages, people were offered outplacement services. transfers. Voluntary severance packages outplacement services and further edu- were offered. cation. Norrsundet and Skutskär pulp mills – 54 employees, due to cost cutting. Two Keräyskuitu Mill – 34 employees were Papyrus – 221 employees were made found other jobs through internal trans- made redundant due to the closure of redundant at various Papyrus companies fers, 33 employees retired early, nine the mill. Seven employees found jobs in Europe due to reorganisations and retired, eight temporary contracts were through internal transfers, four retired continuous effi ciency work. not renewed and 12 were let go. They and nine accepted unemployment pen- were offered voluntary severance packag- sion packages. Outplacement services Varkaus Mill – 143 employees were made es, outplacement services and further were offered to all. redundant due to the shutdown of PM1. education. Read more on p. 38. Summa Mill – 30 employees, due to Wood Supply Finland – 54 employees restructuring. One found a new job Berghuizer Mill – 147 employees, due due to the development of wood termi- through an internal transfer, eight to cost savings. 58 employees were out- nal operations and forestry work, and to retired and 21 retired early. sourced, 25 accepted early retirement, increase productivity. 18 employees one retired, one qualifi ed for disability found new jobs at Stora Enso mills, eight Anjalankoski Mill – 27 employees due to pension. Voluntary severance packages, employees retired, 22 accepted unem- centralising service functions, outsourc- outplacement services and training were ployment pension packages, four tempo- ing and cost-cutting. Opportunities for offered. rary contracts were not renewed and two internal transfer were identifi ed for seven employees were let go. employees, nine employees retired, Stora Enso Poland – 120 employees, due seven accepted unemployment pension to restructuring and Profi t 2007 cost-cut- Honkalahti Sawmill – 52 employees were packages and four positions were out- ting programme. Ten persons found new laid off due to decreased production. 27 sourced.• jobs through internal transfers, three accepted unemployment pension pack- retired, 25 early retirements and nine ages, two temporary contracts were not temporary contracts were not renewed.

STORA ENSO SUSTAINABILITY 2006• 39 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Still room for safety improvement

afety improvement actions resulted in better safety in 2006, but the Sneed to improve safety performance still represents a considerable challenge. The number of fatal accidents has dimin- ished, and the average accident rates were slightly lower than in 2005. How- ever, three fatal accidents occurred at 2006, and safety performance levels at several units are not yet up to expectations. There is a special need to focus on occupational health and safety (OHS) in emerging markets, to ensure that Stora Enso’s high performance expectations will be met.

Fatal accidents On 27 January, an employee of a contractor company working for Wood Sup- ply Baltic in Lithuania died from injuries sustained from a falling piece of tree during manual logging. On 9 November, an employee of Launkalne Sawmill in Latvia died from injuries sustained from a fall in the log sorting area. On 4 December, an employee of a Accident rates and absenteeism1) supplier of Barcelona Mill died from 2002 2003 2004 2005 2006 injuries sustained while unloading bales Accident rates of recovered paper from the supplier’s truck at the mill site. Lost-time accidents 2) Investigations into the Gruvön Saw- number of accidents per million worked hours 24.0 20.6 20.4 17.1 16.9 mill fatality case from 2005 were fi nal- number of accidents per 100 employees 4.0 3.52) 3.5 2.8 2.9 ised in 2006. According to the authori- All accidents in the workplace ties, the accident was work-related. The number of accidents per million worked hours 52.5 46.22) 49.4 52.1 45.9 most probable cause for this accident, number of accidents per 100 employees 8.7 7.82) 8.3 8.5 7.7 which had no eye-witnesses, was that Absenteeism the employee had been hit on the head Absenteeism due to sickness and accidents by a falling board. % of total theoretical working hours 4.9 4.8 4.6 4.5 4.5 Accident rates 1) Stora Enso’s own employees only According to the Group target, the lost- 2) Correction: Imatra Mills reported incorrect figures for accident rates for 2003, and due to the large size of this unit time accident rate at each unit should the figures had an effect on the Group averages. The figures presented here have been corrected. be in the upper quartile within the national forest industry. The corporate and this still has an effect on the overall North America are reported below as average lost-time accident rate in 2006 accident rate. they cover altogether 70% of the Stora was 16.9 accidents per one million As before, there were still marked dif- Enso personnel. worked hours, down from 17.1 in 2005. ferences in safety performance between In Finland, the average lost-time acci- The rate of all accidents in the work- different countries and between different dent rate at Stora Enso’s pulp, paper and place was 45.9 in 2006, compared to a units within specifi c countries, clearly board mills was 28.6 per one million corresponding rate of 52.1 in 2005. indicating that it is worthwhile to con- worked hours (29.9 in 2005). For com- Injuries requiring fi rst aid occurring at tinue on-going safety improvement parison, the national pulp and paper the US units have been included in the projects and actions. More specifi c fi g- industry average in 2005 (the latest avail- statistics for the second year in 2006, ures for Finland, Germany, Sweden and able fi gure) was 27.5 per one million

40• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 worked hours. In 2006, 8 out of average for Stora Enso’s Finnish sawmills social responsibility approach in these Stora Enso’s 33 Finnish pulp, paper, was 5.9% (6.0% in 2005), with the areas. board and maintenance units belonged national industry 2005 average being The safety improvement programme to the best quartile of the Finnish pulp 6.1%. launched at Wood Supply Russia in and paper industry in this respect, with In Germany, the average absenteeism spring 2005 was implemented according- 17 units having a lost- time accident rate rate was 4.3% (4.7% in 2005). ly, and concluded in September 2006. better than the national average. The In Sweden, the average absenteeism During 2006, there were no fatal acci- corresponding fi gures for Stora Enso’s rate for Stora Enso’s pulp, paper and dents in the operations of Wood Supply sawmills were 57.6 (48.5 in 2005), com- board mills was 4.6% (4.7% in 2005), Russia. pared to 48.7 for the whole Finnish compared to the Swedish pulp and paper At the on-going Huatai paper mill sawmill industry. One sawmill belonged industry national average of 5.4% in project in Dongying, China, a joint to the best quartile and 4 were better 2005. The average absenteeism rate for venture with Shandong Huatai Paper than the national average in this the whole Stora Enso organisation in Co., Ltd., special emphasis has been respect. Sweden was 4.5% (4.7% in 2005). The placed on safety training for construc- In Germany, the average rate of acci- Group’s Swedish units have set a target tion personnel and compliance with dents causing absenteeism of four days that 40% of all employees should be in safety regulations and guidelines. or more was 11.3 per one million worked the category of “long-term healthy hours in 2006 (11.1 in 2005). The corre- employees”, i.e. persons who have been Employee satisfaction sponding national paper industry aver- employed for at least three years, and By the end of 2006, a total of 34 747 per- age was 19.8 in 2005. have not been on sick leave during two sons (79% of the total Stora Enso work- In Sweden, the average lost-time consecutive years. This target was met in force) had been covered by the standard- accident rate at Stora Enso pulp, paper 45% of the units. ised employee satisfaction survey. When and board mills was 9.5 per one million In North America, the average absen- analysing the survey results, four indexes worked hours (10.0 in 2005). The nation- teeism rate was 2.0% (2.7% in 2005). are calculated on the basis of respond- al pulp and paper industry average in According to the Group guidelines, ents’ answers to selected sets of ques- 2005 was 12.2 per one million worked Stora Enso units shall also monitor and tions. Group averages and ranges for hours. 2 out of Stora Enso’s 10 Swedish report accident rates among contractors’ these four indexes have been derived for pulp, paper, board and maintenance employees who are working within their the surveys run in 2006: units belonged to the best quartile of the premises. Coverage of this reporting is • Employee Satisfaction Index 58.2 Swedish pulp and paper industry, with improving but not complete yet. (47.7–82.6) 8 units being better than the national • Organisational Culture Index 56.7 average. At Stora Enso’s Swedish saw- OHS certifi cates and safety audits (47.1–86.1) mills, the lost-time accident rate was The Group target is that all production • Competence Index 61.2 (50.4–84.3) 19.9 (26.5 in 2005). units should have a certifi ed OHS man- • Talent Index 60.7 (48.4–85.6) In North America, the average lost- agement system in place by the end of time accident rate at Stora Enso’s pulp, 2007. By the end of 2006, a total of 32 There are still marked differences in the paper and board mills was 7.1 per one OHS management system certifi cates scores between different units, and many million worked hours (8.5 in 2005), had been issued according to OHSAS units have identifi ed specifi c areas for compared to the American Forest and 18001 or equivalent standards, covering improvement. Profi t 2007 and Asset Paper Association 2005 average of 3.8. 47 units. Performance Review programmes have None out of 9 Stora Enso’s North Ameri- Regular external audits are run by had a slightly negative effect on employ- can mills belonged to the best national the certifi cation bodies at the OHS-certi- ee satisfaction in some units. Stora Enso quartile, and 2 were better than the fi ed units. Internal safety auditing sys- is continuing to promote employee national average. tems are also in place as an essential part satisfaction and well-being by taking of safety improvement efforts, and 33 concrete actions based on the survey Absenteeism internal safety, health and loss protec- results and other feedback from According to the Group target, the tion audits were conducted during 2006. employees. absenteeism rate at each unit should be These internal audits revealed that the lower than the national forest industry majority of the audited units already had Rewarding top OHS performer average. The corporate average rate of quite good OHS management systems For the fi rst time, Stora Enso has present- absenteeism due to illnesses and acci- and guidelines in place, but there is still ed an award to the Group’s top OHS per- dents was 4.5%, having been the same in generally a need to integrate occupation- former as part of the Business Excellence 2005. There are still marked differences al health and safety issues into everyday Award. The winner for 2006 was Duluth in absenteeism rates between different activities more comprehensively, in Mill in USA, where there has been a con- countries and units, partly related to cul- order to improve overall OHS perform- tinuous focus on OHS issues. The lost- tural differences and compensation prac- ance. time accident rate and absenteeism rate tices. have been well below the Stora Enso In Finland, the average absenteeism Emerging markets average and also low by US pulp and rate at Stora Enso pulp, paper and board Stora Enso is increasingly involved in paper industry standards. The unit has mills was 7.0% (6.5% in 2005), com- emerging markets: China, Latin America also been well rated in internal safety pared to the 2005 national pulp and and Russia. A strong focus on OHS issues audits.• paper industry average of 7.0%. The is also an essential part of the Group’s

STORA ENSO SUSTAINABILITY 2006• 41 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 RAW MATERIALS & SUPPLIERS THE GROUP MARKETS

Addressing customers’ sustainability concerns

During summer 2006, Stora Enso organised The purpose of these interviews was to identify the interviews on sustainability matters with 15 key sustainability issues that are most important for customers. In addition, sales managers at more Stora Enso’s customers, and to ﬁ nd out how they than 20 Stora Enso sales ofﬁ ces worldwide were would like the Group to address these issues. interviewed about their customers’ perspectives.

42• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 ccording to the interview results, Supporting customers Sales offi ce sustainability co-ordina- customers generally appreciated The Customer Support Team is one of tors are the fi rst point of contact AStora Enso’s sustainability perform- the Sustainability Committee’s four sup- between Stora Enso and the customer ance and many see Stora Enso as a sus- port teams. It addresses the customer regarding sustainability issues. On more tainability leader in the forest industry. concerns about sustainability, and complex questions, the staff of Stora The customers also recognised the ensures that their requests are met with Enso’s specifi c sustainability functions, importance of the sustainability of both consistent and well-managed messages. such as Social Responsibility, Environ- the raw material supply and production. The team also oversees the formulation ment, Energy Services, Research and of core messages and information sup- Wood Supply, can also provide support Read more about stakeholder port for Stora Enso’s global sales network for customers and their stakeholders.• reviews on pp. 8–9. and customers.

Renewable and recyclable products ll of Stora Enso’s paper, board and which are product declarations that con- mills producing such board have already wood products are made from a tain information on the environmental had their hygiene management systems Arenewable resource – wood, and at impacts of specifi c paper types. Paper certifi ed, or are in the process of doing so. the end of their life cycle, they can all be Profi les are available for paper grades recycled. Stora Enso’s products are also produced by Stora Enso mills in Belgium, Increasing use of ecolabels safe to use. Stora Enso studies the effects China, Finland, France, Germany, the Many of Stora Enso’s mills are now label- of its products’ life cycles as part of prod- Netherlands and Sweden. EMAS state- ling their products with information on uct and process development. ments are published at forest certifi cation systems or ecolabels. www.storaenso.com/emas. For example, Stora Enso’s offi ce papers Reducing environmental impacts may use the Nordic Swan ecolabel, By setting targets and using environmen- Meeting product safety standards which is widely recognised in the Nordic tal management systems, Stora Enso Stora Enso uses hygiene management Countries. In 2006, Stora Enso’s US mills reduces the various environmental systems to ensure that all board products introduced a range of FSC-certifi ed coat- impacts of its products. Information on that come into direct contact with food ed papers. These papers contain at least these impacts is available in mill-specifi c or pharmaceuticals meet product safety 10% fi bre content that comes from FSC- EMAS statements, and in Paper Profi les requirements. Nearly all of Stora Enso’s certifi ed forests.•

Recycling customer’s products

tora Enso’s customer, the global packaging solutions also play an impor- are combusted to generate energy. Alu- consumer packaging company tant role in making food and beverages minium coating from beverage cartons SHuhtamaki, is a major supplier of easily available to modern, busy consumers. can also be recovered and sold externally. paper cups, containers, plates and trays For example, Stora Enso’s Corenso Huhtamaki is a consumer packaging to fast food restaurants, food service Board Mill in Varkaus, Finland, annually and specialty packaging company with operators and food manufacturers. produces about 95 000 tonnes of core- operations in more than 30 countries. Huhtamaki sees sustainability issues board from recovered ﬁ bre, including It has about 15 000 employees and net as increasingly important in their choice paper cups, plates, general packages and sales totalled EUR 2 244 million in 2005. of packaging solutions, especially con- trays, as well as milk and juice cartons. Huhtamaki has been included in the cerning the renewability of raw materials During the process ﬁ bres are recycled to Dow Jones STOXX Index since 2003.• and the potential for recovery. Board produce core board and plastic coatings

Pioneering sustainable forestry in Russia The Tikhvin-Chalna project, started in The project team focused on the legality of wood. The adoption of new 2004, is a joint project with customers legality of wood, labour conditions, and logging technology and an extensive and wood suppliers to further improve forest certifi cation. Community training programme resulted in the social and environmental aspects of involvement was identifi ed as a fourth improved labour safety. wood procurement from Russia, and to priority area. Furthermore, fi ve of Stora Enso’s communicate the results openly. Six of During the project, the partners Russian subsidiaries prepared more than Stora Enso’s partners along the entire reviewed and upgraded their sustain- 400 000 hectares of lease areas for FSC wood supply chain have joined this ability policies, guidelines, supplier forest management certifi cation. co-operation: Russian logging requirements, and management Results and best practices from companies Russkiy Les and Shuyales, systems. Risk and gap analyses were Tikhvin-Chalna are shared with other and customers Axel Springer, The also developed to recognise all legality, Russian wood suppliers through Random House Group UK, Tetra Pak safety and environmental risks. supplier training. and Time Inc. External reviews were The logging companies adopted new provided by a research institute, the technical tools such as environmental Read more at Karelian Research Center, and a data mapping systems and a GPS www.tikhvinproject.ru non-governmental organisation, system for monitoring logging and Transparency International. transportation vehicles, to ensure the

STORA ENSO SUSTAINABILITY 2006• 43 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 SUSTAINABILITY DATA BY UNIT 2006 a)

Number Product Produc- Recove- Certifi- ISO ISO OHSAS Chain Social responsibility c) Unit of employ- tion red cates 9001 14001 18001 of management ees b) fibre d) EMAS custody system Baltic countries Stora Enso Packaging Tallinn, Tartu, Riga and Kaunas mills 259 ❺ 45 000 x Belgium Langerbrugge Mill 431 ❶ 501 000 x x x x Brazil Arapoti Mill j) 118 ❶ 66 000 Canada Port Hawkesbury Mill 608 ❶ 94 000 x x x China Suzhou Mill 665 ❷ 174 000 x x x x Finland Anjalankoski Mill 1 153 ❶❸ 661 000 x x x x FSC/PEFC x Enocell Pulp Mill 324 ❹ 655 000 x x x x PEFC x Heinola Fluting Mill 305 ❸ 275 000 x x x x PEFC x Imatra Mills 2 365 ❷❸➍ 1 214 000 x x x FSC/PEFC x Kemijärvi Pulp Mill 228 ❹ 227 000 x x x PEFC x Keräyskuitu k) 11 ❹ 22 000 Kotka Mill 617 ❶❸❺ 315 000 x x x x PEFC x Oulu Mill 1 023 ❷❹ 1 017 000 x x x x PEFC x Pankakoski Mill k) 185 ❸ 43 000 x x PEFC Stora Enso Packaging, Lahti, Heinola, Ruovesi, Tiukka mills 769 ❺ 95 000 x x x x Summa Mill 471 ❶ 400 000 x x x FSC/PEFC Varkaus Mill 1 103 ❶❷❸❺ 674 000 x x x x PEFC x Veitsiluoto Mill 1 284 ❶❷❹ 897 000 x x x x FSC/PEFC x France Corbehem Mill 807 ❶ 286 000 x x x PEFC Germany Baienfurt Mill 472 ❸ 192 000 x x x x Kabel Mill 1 065 ❶ 492 000 x x x x PEFC x Maxau Mill 859 ❶ 673 000 x x x x x FSC/PEFC Reisholz Mill 384 ❶ 197 000 x x x PEFC Sachsen Mill 361 ❶❹ 363 000 x x x x x Uetersen Mill 499 ❷❸ 251 000 x x x Wolfsheck Mill k) 90 ❶❸ 67 000 x x x x FSC/PEFC Hungary Stora Enso Packaging Páty Mill 108 ❺ 7 000 x x Malaysia Pasir Gudang Mill 41 ❺ 6 000 x x Netherlands Berghuizer Mill 342 ❷ 222 000 x x x x FSC/PEFC Poland Ostrołęka Mill 1 126 ❸❺ 309 000 x x x x x

Footnotes

a) See pages 44–47 in the Sustainability 2005 tions applied in national regulations. Heinola j) Acquired in 2006. Data only reflects period report for unit-specific environmental data for Fluting Mill figure includes 1 090 tonnes of of ownership. years 2004 and 2005. contaminated soil. k) Sold or closed in 2006. Data only reflects

b) Source: financial accounting database g) Total sulphur is reported as SO2 (sulphur diox- period of ownership. c) Figures refer to sales production excluding ide) and includes all sulphurous compounds. l) WQC serves Biron Mill and Wisconsin Rapids

inventory changes. Production of sawn timber is h) NOx is calculated as NO2 (nitrogen dioxide). Mill. reported in m³, other products in metric tonnes. i) All CO2 figures are calculated using the WRI/ m) WRC serves Stevens Point Mill and Whiting Mill. d) Mills using recovered fibre as raw material (fully WBCSD greenhouse gas protocol. Direct n) No energy production on site. or partly). emissions from internal transport and indirect o) Process water is treated in an external treat- e) Waste is reported in its dry state. emissions from external transport and from ment facility. f) Reported on the basis of country-specific defini- purchased heat and electricity are excluded. p) Šabac excluded

44• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Tonnes 1000 m3 g) h) Land- Hazardous SO2 NOX CO2 CO2 COD AOX Phospho- Nitrogen Process water fill e) waste f) fossil i) renewable i) rous discharge

42 2 3 30 24

81 58 8 105 7 832 137 544 1 577 2.1 0 7 007

2 661 0 0 3 51 47 801 247 1 230

36 1 153 107 17 773 79 952 989 6.9 0.9 5 728

3 779 10 174 139 203 245 155 0.8 5.4 2 759

1 663 81 18 292 349 577 179 221 2 902 5.6 148.9 12 359 8 350 37 363 1 035 102 807 1 732 735 8 856 124.6 2.8 48.3 24 477 7 959 1 180 1 450 449 179 576 211 747 1 115 2.3 18.3 4 121 11 490 255 176 2 030 179 642 2 648 613 22 069 179 11.8 188.8 64 108 3 067 37 262 410 42 375 730 254 9 849 40.4 11.3 120.4 16 659 256 14 0 4 504 145 0.3 0.6 444 2 898 72 47 348 260 399 347 412 2 279 4.6 38 9 430 10 177 69 615 992 401 611 1 214 973 8 418 71.2 10 59.3 18 804 6 0 4 40 1 126 45 629 114 0.1 1.3 1 086

258 41 33 15 4 155 29 4 601 72 28 138 12 103 185 299 3 137 7.2 87 8 081 11 985 455 344 998 163 932 822 694 5 746 24.3 7.1 80.7 17 419 4 041 27 1 054 1 199 433 526 1 331 828 12 834 53.6 7.9 90.5 14 106

2 898 34 980 571 254 190 917 1.7 16.1 0 9 568

335 36 0 5 4 880 354 0.4 1.5 8.7 4 195 887 173 0 n) 17 n) 21 139 1 141 0.2 3.7 18.9 7 552 1 047 558 3 233 213 016 76 101 2 540 0.8 5.1 11.5 7 069 08n) n) 65 97 o) 0.1 o) o) o) 1 996 14 1 0 340 163 708 69 594 757 0.7 1.8 14.8 3 820 0 60 0 36 71 006 43 o) 0.1 o) 0 o) 0.3 o) 1 542 018 n) n) 105 0.1 0.9 6.9 3 379

14 26 0 1 667 2

0 0 1 132

4 59 0 121 284 043 57 0.1 1 12.7 1 850

10 249 1 173 81 15 612 188 811 788 1.2 15.8 5 095

q) Mosina and Šabac excluded u) Employees belong to the Whiting Mill. x) See www.storaenso.com/certificates r) Included in the primary mill figures v) Water Renewal Center is covered by the Biron & s) Employees belong to the Wisconsin Rapids Mill. Whiting Mill ISO 14001 certificate. t) Water Quality Center is covered by the w) Water Renewal Center is covered by the Biron & Wisconsin Rapids Mill ISO 14001 certificate. Whiting Mill OHSAS 18001 certificate.

Products ❶ = newsprint and ❹ = market pulp ❻ = laminating paper magazine paper ❺ = converted products ❼ = wood products ❷ = fine paper (e.g. cores, impregnated ❽ = red paint pigment ❸ = board and packaging paper laminating paper, corrugated board)

STORA ENSO SUSTAINABILITY 2006• 45 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 SUSTAINABILITY DATA BY UNIT 2006 a)

Number Product Produc- Recove- Certifi- ISO ISO OHSAS Chain Social responsibility c) Unit of employ- tion red cates 9001 14001 18001 of management ees b) fibre d) EMAS custody system Poland and Serbia Stora Enso Poland Łódź, Mosina, Tychy and Šabac mills 495 ❺ 65 000 x p) x q) x q) x Portugal Celbi Pulp Mill k) 256 ❹ 182 000 x x x FSC Russia Stora Enso Packaging Arzamas Mill 169 ❺ 47 000 x Balabanovo Mill 305 ❺ 80 000 x Spain Barcelona Mill 281 ❸ 157 000 x x x x Sweden Falu Rödfärg 12 ❽ 1 000 x x Fors Mill 809 ❸ 357 000 x x x x x Fors Mill, Hammarby k) r) ❺ 7 000 x x x x x Grycksbo Mill k) 120 ❷ 65 000 x x Hylte Mill 855 ❶ 788 000 x x x x x Kvarnsveden Mill 1 011 ❶ 857 000 x x x Norrsundet Pulp Mill 349 ❹ 290 000 x x FSC Nymölla Mill 833 ❷❹ 431 000 x x x PEFC x Stora Enso Packaging Jönköping, Vikingstad and Skene mills 518 ❺ 84 000 x x Skoghall Mill 1 188 ❸ 683 000 x x x FSC/PEFC x Skoghall Mill, Forshaga r) ❺ 105 000 x x x FSC/PEFC x Skutskär Pulp Mill 488 ❹ 522 000 x x x FSC USA Biron Mill 408 ❶ 323 000 x x x x FSC Duluth Mill 295 ❶❹ 303 000 x x x x FSC x Kimberly Mill 609 ❷❸ 591 000 x x x FSC Niagara Mill 326 ❶ 213 000 x x x FSC x Stevens Point Mill 256 ❸ 128 000 x x x x Whiting Mill 340 ❶ 172 000 x x x x FSC Wisconsin Rapids Mill 1 027 ❷❸❹ 652 000 x x x FSC Water Quality Center l) s) t) Water Renewal Center m) u) v) w) Corenso Corenso, core factories 863 ❺ 197 000 x) x) x) x) x) Corenso Finland, Pori Board Mill 110 ❸ 105 000 x x x x x Corenso France, Soustre Mill 83 ❸ 87 000 x x x x Stora Enso Timber Non-integrated sawmills 4 700 ❼ 6 195 000 43% x) x) 78% x) 48% x) x) x Integrated sawmills 321 ❼ 622 000 100% x) x) 100% x) 40% x) x) x

Total pulp, paper, board and converted products, tonnes 17 929 000 Total wood products, m3 6 817 000

Grand total Footnotes

46• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Tonnes 1000 m3 g) h) Land- Hazardous SO2 NOX CO2 CO2 COD AOX Phospho- Nitrogen Process water fill e) waste f) fossil i) renewable i) rous discharge

117 1 6 278 33

4 334 20 48 229 27 768 341 532 3 436 15.5 34.1 31.9 5 870

250 4 1 4 3 092 26 510 5 1 3 4 831 65

13 812 43 0 89 188 403 1 378 1 924

1 1 1 741 205 100 32 99 40 676 207 924 2 410 0.2 1.2 22 4 179 017 8 7 0 43 16 22 877 26 0.1 0 1.7 441 26 214 297 12 262 71 164 225 440 1 853 1.4 3.6 31 7 148 115 230 57 216 79 263 313 531 3 305 1.8 3.9 121.7 13 458 6 319 197 470 374 40 321 890 350 4 680 28 14 56 13 800 145 84 491 522 0 884 455 13 236 4.9 14 116.1 31 205

16 15 4 3 537 3 023 240 281 477 133 501 867 408 7 518 15.5 7.2 70.5 21 382 91 31 10 961 27 522 756 72 991 1 489 220 10 801 64.8 27.3 247.9 21 955

15 291 1 5 377 2 247 476 524 16 082 o) o) o) o) 8 517 23 886 0 0 n) 0 n) 313 o) o) o) o) 5 849 22 893 125 1 732 658 333 687 260 2.6 9.1 21.8 11 801 8 062 1 1 076 699 194 330 25 446 1 773 7.5 8.5 9.8 8 139 228 1 0 36 69 687 o) o) o) o) 3 811 1 693 1 201 456 103 848 38 989 o) o) o) o) 3 521 26 740 1 1 529 1 955 321 156 1 369 437 o) o) o) o) 26 387 1 823 0 0 0 169 15 438 40.7 10.2 109.7 36 577 5 778 0 0 0 188 764 0.7 3.2 37.9 8 104

1 072 6 5 821 29

61 3 2 3 962 499 0.1 6.5 602 6 245 11 22 393 278 502

29 292 399 13 571 5 539 354 269 300 5.7 3.9 400

268 609 4 815 17 764 18 804 5 618 248 16 720 020 154 914 681 248.5 1 862.5 444 578 29 292 399 13 571 5 539 354 269 300 5.7 3.9 400

297 901 5 214 17 777 19 375 5 623 787 17 074 289 155 214 681 254.2 1 866.4 444 978

STORA ENSO SUSTAINABILITY 2006• 47 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 GRI AND UN GLOBAL COMPACT

Comparison of report content with the GRI guidelines

The Sustainability 2006 report follows the new Global Reporting Initiative (GRI) as far as it is appropriate and applicable to Stora Enso. The index below shows how and where Stora Enso addresses GRI indicators and the ten principles of the UN Global Compact in the Group’s annual reports for 2006.

PROFILE 4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT 1. STRATEGY AND ANALYSIS Governance 1.1 Statement from the Chairman of the SR 4-5 4.1 Governance structure CR 34-39 Sustainability Committee 4.2 Position of the chair of the board of directors CR 40 1.2 Description of key impacts, risks and SR 4-5, 25 opportunities 4.3 Independent, non-executive directors on the CR 34, board of directors 40-41 2. ORGANISATIONAL PROFILE 4.4 Mechanisms for shareholders and employees to 2.1 Name of the organisation SR 1 provide recommendations to the board of 2.2 Primary brands, products and/or services CR 4-5 directors 2.3 Operational structure of the organisation CR 42-44 4.5 Executive compensation FR Notes 2.4 Location of organisation’s headquarters CR 34 4.6 Avoiding conflicts of interest CR 34 2.5 Countries in which the organisation’s operations CR cover 4.7 Determining the qualifications and expertise are located board members need for guiding strategy on 2.6 Nature of ownership and legal form FR sustainability 2.7 Markets served CR 4-5 4.8 Mission or values statements, codes of conduct, CR 8 sustainability principles SR cover 2.8 Scale of the reporting organisation SR 1 4.9 Board-level procedures overseeing sustainability 2.9 Significant changes during the reporting period CR 56 performance SR 1 4.10 Evaluating board performance with respect to 2.10 Awards received during the reporting period sustainability performance 3. REPORT PARAMETERS Commitments to external initiatives Report profile 4.11 Addressing the precautionary approach or principle SR 25 3.1 Reporting period SR 1 4.12 External charters, principles or initiatives endorsed SR 4-5, 34 3.2 Date of most recent previous report SR 1 4.13 Memberships in associations SR 9 3.3 Reporting cycle SR 1 Stakeholder engagement 3.4 Contact point for questions SR cover 4.14 Stakeholder groups engaged SR 8-9 Report scope and boundary 4.15 Identification and selection of stakeholders SR 8-9 3.5 Process for defining report content SR 8-9 4.16 Approaches to stakeholder engagement SR 8-9 3.6 Boundary of the report SR 1 4.17 Responding to key topics resulting from stake- SR 8-9 3.7 Specific limitations on the scope or boundary SR 1 holder engagements 3.8 Basis for reporting on joint ventures, subsidiaries etc. SR 1 5. MANAGEMENT APPROACH AND 3.9 Data measurement techniques SR 1 PERFORMANCE INDICATORS 3.10 Explanation of the effect of any re-statements SR 1, 30, ECONOMIC INDICATORS of information 44-47 Economic performance 3.11 Significant changes from previous reporting EC1. Direct economic value generated and distributed SR 24-26 periods in the scope, boundary, or measurement SR 1 methods applied EC2. Risks and opportunities due to climate change SR 21-23 Assurance EC3. Coverage of defined benefit plan obligations FR Notes 3.13 Policy and current practice with regard to seeking EC4. Significant financial assistance from government FR Notes SR 52 external assurance

48• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 Stora Enso’s reports in 2006 Fully reported Company 2006 (CR) Partially reported Financials 2006 (FR) Not reported Sustainability 2006 (SR) Corresponds with the UN Global Compact Location Level Location Level Market presence EN25. Water bodies and habitats affeced by discharges of water EC5. Entry level wage compared to minimum wage EC6. Spending on locally-based suppliers Products and services EN26. Mitigating environmental impacts of products EC7. Local hiring SR 43 and services Indirect economic impacts EN27. Reclaimable products and reuse SR 19, 43 EC8. Infrastructure investments provided for public SR 29 Compliance benefit EN28. Fines and sanctions for non-compliance with EC9. Significant indirect impacts SR 25 SR 32 environmental regulations ENVIRONMENTAL INDICATORS Transport Materials EN29. Environmental impacts of transportation SR 15 EN1. Materials used by weight or volume Overall EN2. Recycled materials used SR 19 EN30. Environmental expenditures SR 33 Energy SOCIAL INDICATORS EN3. Direct energy consumption SR 21 Labour practices and decent work EN4. Indirect energy consumption SR 21 Employment EN5. Energy saved through conservation and SR 21 efficiency improvements LA1. Breakdown of workforce SR 36 EN6. Initiatives to provide energy-efficient or LA2. Breakdown of employee turnover CR 33 SR 21 renewable energy based products LA3. Employee benefits SR 25 EN7. Initiatives to reduce indirect energy consump- SR 21 Labour/management relations tion LA4. Coverage of collective bargaining agreements Water LA5. Minimum notice period regarding operational EN8. Total water withdrawal SR 31 changes EN9. Water sources significantly affected Occupational health and safety EN10. Total recycling and reuse of water SR 11 LA6. Workforce representation in joint health and SR 30-31 SR 37 safety committees Biodiversity LA7. Injuries, lost days, absentee rates and fatalities SR 40-41 EN11. Location and size of land holdings in SR 13 LA8. Programmes to assist workforce members biodiversity-rich habitats regarding serious diseases EN12. Significant impacts on biodiversity in protected LA9. Health and safety topics covered in trade union areas and biodiversity-rich areas outside agreements protected areas Training and education EN13. Habitats protected or restored SR 13 LA10. Average hours of training per year per employee CR 33 EN14. Managing impacts on biodiversity SR 17-18, 29 LA11. Programmes for skills management and lifelong learning to support continued employability EN15. Species with extinction risk with habitats in and manage career endings areas affected by operations LA12. Employees receiving performance and career Emissions, effluents and waste development reviews EN16. Total direct and indirect greenhouse gas emissions SR 44-47 Diversity and equal opportunity EN17. Other relevant indirect greenhouse gas emissions LA13. Composition of governance bodies and SR 36 employee breakdown EN18. Initiatives to reduce greenhouse gas emissions SR 21-23 LA14. Ratio of basic salary of men to women EN19. Emissions of ozone-depleting substances Human rights EN20. NOx, SOx, and other significant air emissions SR 44-47 Investment and procurement practices EN21. Total water discharge SR 44-47 HR1. Human rights screening or clauses included in SR 25 EN22. Total amount of waste SR 44-47 significant investment agreements EN23. Significant spills SR 32 HR2. Screening suppliers and contractors on human SR 14-19 EN24. Transported, imported, exported or treated rights and actions taken SR 44-47 hazardous waste HR3. Employee training on human rights SR 37

STORA ENSO SUSTAINABILITY 2006• 49 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 GRI AND UN GLOBAL COMPACT

Stora Enso’s reports in 2006 Fully reported Company 2006 (CR) Partially reported Financials 2006 (FR) Not reported Sustainability 2006 (SR) Corresponds with the UN Global Compact Location Level Location Level Non-discrimination Product responsibility HR4. Actions taken in incidents of discrimination Customer health and safety Freedom of association and PR1. Assessment of health and safety impacts of SR 43 collective bargaining products HR5. Supporting right to freedom of association and PR2. Non-compliance with regulations concerning collective bargaining in risk areas health and safety impacts of products Child labour Product and service labelling HR6. Measures taken to eliminate child labour in risk SR 14-15, PR3. Product information required by procedures SR 43 areas 18-19, 25 PR4. Non-compliance with regulations concerning Forced and compulsory labour product information and labelling HR7. Measures taken to eliminate forced and com- SR 14-15, PR5. Customer satisfaction SR 8-9, 43 pulsory labour in risk areas 18-19, 25 Marketing communications Security practices PR6. Adherence to marketing communications laws, HR8. Human rights training for security personnel standards and voluntary codes Indigenous rights PR7. Non-compliance with marketing communications regulations and voluntary codes HR9. Violations of indigenous people’s rights and actions taken Customer privacy Society PR8. Complaints regarding breaches of customer privacy Community Compliance

SO1. Management of impacts on communities in SR 29, PR9. Fines for non-compliance concerning the provi- areas affected by activities 38-39 sion and use of products and services Corruption SO2. Business units analyzed for corruption risks SR 27 SO3. Anti-corruption training SR 37 SO4. Actions taken in response to incidents of corruption Public policy SO5. Public policy development and lobbying SR 9 SO6. Contributions to political parties, politicians and SR 27 institutions Anti-competitive behaviour SO7. Anti-trust and monopoly court cases SR 27 Compliance SO8. Fines and sanctions for non-compliance with FR Note laws and regulations

50• STORA ENSO SUSTAINABILITY 2006 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 GLOSSARY

AOX Forest certifi cation Phosphorus Adsorbable organic halogen compounds – a collec- A procedure whereby an independent third party Excessive concentrations of phosphorus com- tive term for the amount of chlorine or other hal- inspects forest management and utilisation prac- pounds in water can lead to increased biological ogens bound to organic matter in waste water. tices to assess compliance with a set of ecological, activity, through eutrophication. Phosphorus is economic and social standards for sustainable for- added during the waste water treatment process ATFS estry. to aid in the breakdown of soluble organics. American Tree Farm System – a US forest certifi cation system. Fossil fuels REACH Solid, liquid or gaseous fuels formed in the ground The EU’s new regulation covering the Registration, Biofuels over millions of years by chemical and physical Evaluation, Authorization and Restriction of Fuels derived from renewable raw materials, such changes in plant and animal residues under high Chemicals as bark, black liquor or logging residuals. temperature and pressure, e.g. oil, natural gas and coal. Recovered fi bre BOD Fibre raw material produced from recovered paper. Biological Oxygen Demand – a measure of the FSC amount of oxygen consumed by micro-organisms Forest Stewardship Council – an international Recovered paper in breaking down organic matter in effl uent dur- forest certifi cation system. Used paper and board collected for re-use as fi bre ing a certain period. raw material. GMP CERFLOR Good Manufacturing Practice – a system designed SFI Sistema Brazileiro de Certifi cação Florestal – a to prevent hazards in food packaging processes. Sustainable Forestry Initiative® program – a North Brazilian forest certifi cation system endorsed by American forest certifi cation programme endorsed PEFC. Greenhouse gases by PEFC. A collective term for following gases: carbon diox-

Chain-of-custody ide (CO2), methane (CH4), and nitrous oxide SO2

Certifi ed chain-of-custody systems are used to (N2O), hydrofl uorocarbons (HFCs), perfl uorocar- Sulphur dioxide – a gas formed when fuels that ensure that wood comes from certifi ed forests. bons (PFCs), and sulphur hexafl uoride (SF6). contain sulphur, such as oil and coal, are burned. They are established and audited according to Sulphur dioxide contributes to the acidifi cation rules set by the relevant forest certifi cation system, GRI of soil and water. for example PEFC or FSC. Global Reporting Initiative – a widely used set of guidelines for sustainability reporting. Sustainability Combined heat and power Stora Enso equates sustainability with corporate An effi cient, clean, and reliable approach to gener- HACCP responsibility in the broadest sense, including eco- ating power and thermal energy from a common Hazard Analysis and Critical Control Point – a sys- nomic, environmental and social responsibility. fuel source tem designed to prevent hazards in food packaging processes. Traceability

CO2 The ability to trace the wood from the fi rst recep- Carbon dioxide – a gas formed during combustion ISO 14001 tion point back to its forest origin. and certain natural processes. Trees utilise carbon A global standard created for corporate environ- dioxide as they grow, through photosynthesis. mental management systems by the International Total Suspended Solids (TSS) Organization for Standardization. Other ISO certi- Measure of the amount of non-dissolved solid COD fi cations cover issues including quality manage- material present in water or waste water Chemical Oxygen Demand – a measure of the ment (ISO 9001). amount of oxygen required for the total chemical Volatile Organic Compounds (VOC) breakdown of organic substances in water. NGO Any organic compound which participates in Non-governmental organisation atmospheric photochemical reactions; a precursor Controlled wood to ground-level ozone formation FSC standard developed for wood without FSC for- Nitrogen est management certifi cation to ensure that wood An element common as a gas in the atmosphere. in FSC-certifi ed products is not mixed with wood Excessive concentrations of nitrogen compounds from unacceptable sources. in water can lead to increased biological activity, through eutrophication. Nitrogen is added during CSA Z809 the waste water treatment process to aid in the Canada’s National Standard on Sustainable Forest breakdown of soluble organics. Abbreviations and conversion table for units of Management – a Canadian forest certifi cation sys- measurement tem endorsed by PEFC. NOx A collective term for the nitrogen oxides formed TJ: Terajoule (1 000 billion joules) De-inking during combustion, which can contribute to the GWh: Gigawatt-hours (1 billion watt-hours) Chemical and mechanical processes used to sepa- acidifi cation of soil and water. TWh: Terawatt-hours (1 000 billion watt-hours) rate inks from fi bres when pulp is processed from recovered paper. OHSAS 18001 1 million gallons = 3 785.4 cubic metres A global standard created for occupational health 1 short ton = 0.907 metric tonnes EMAS and safety management by the International 1 million BTU = 1.055056 GJ Eco-Management and Audit Scheme – a voluntary Organization for Standardization. 1 Great Lakes rough cord = 2.33 cubic metres of solid environmental management system applicable in wood under bark (sub) Europe, based on the EU EMAS Regulation. PEFC Programme for the Endorsement of Forest Certifi - ESIA cation schemes – an international forest certifi ca- Environmental and Social Impact Assessment – tion system. a thorough study of the impact of an investment project on the environmental and social foundation of local communities.

STORA ENSO SUSTAINABILITY 2006• 51 WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 csrnetwork is a business focused, corporate social responsibility consultancy organisation, bringing together specialists from the ﬁ elds of environmental management, social accounting, and sustainable development. www.csrnetwork.com

SCOPE AND OBJECTIVES For Raw Materials Data (including Wood Supply data) and Environmental Perform- Stora Enso commissioned csrnetwork to provide independent assurance on the sus- ance Data (including compliance data): tainability information within the Stora Enso Sustainability 2006 Report (the • We are not aware of any material reporting units which have been excluded from Report). The objective of the assurance process was to check claims and review the the Group data, beyond those specifi ed in the scope of the Report. arrangements for the management of social and environmental issues and the sys- • Nothing has come to our attention that causes us to believe that the data have tems for collection of data. csrnetwork took account of the principles underlying not been properly collated from information reported at operations level. the AA1000 Assurance Standard in designing the assurance process. Case studies • We are not aware of any errors that would materially affect the Group data. are excluded from the scope of this assurance process. Financially related human resources data and environmental investment, cost and liability data is also exclud- For Social Performance Data (including Employee Relations data) and Employee ed. The systems for collection of these data were reviewed, but no independent Well-Being and Occupational Health and Safety Data: assessment of environmentally-related fi nancial liabilities has been made. Verifi ca- • We are not aware of any material reporting units which have been excluded from tion of greenhouse gas releases for carbon emission trading will be subject to a sepa- the Group data, beyond those specifi ed in the scope of the Report. rate regulatory process and is outside the scope of this assurance process. • Nothing has come to our attention that causes us to believe that the data has not been properly collated from information reported at operations level; however, RESPONSIBILITIES OF THE MANAGEMENT OF STORA ENSO between regions, there are differences in the defi nitions of theoretical working AND THE ASSURANCE PROVIDERS hours, which are used to calculate occupational health and safety metrics. The management of Stora Enso has the sole responsibility for the preparation of the Although redundancy data is not collated to present Group level statistics, differ- Report. This statement represents our independent opinion. We were not involved ences remain in defi nitions used to derive local data. in the preparation of any part of the Report and we have no other contract with • We are not aware of any calculation or transcription errors that would materially Stora Enso. This is the fourth year that we have acted as their independent assur- affect the Group data. ance providers. A statement of impartiality relating to our contract with Stora Enso will be made available on request. The opinion expressed in this assurance state- Materiality ment should not be relied upon as the basis for any fi nancial or investment deci- Nothing came to our attention to suggest that material issues have been omitted sions. The independent assurance team for this contract comprised Mark Line, from the scope of the Report. We found evidence that appropriate systems are in Todd Cort, Katy Anderson and Richard Hughes. Further information, including a place for monitoring and gathering information on relevant management arrange- statement of competencies relating to the team can be found at ments and performance. www.csrnetwork.com. This year’s Report contains a clearer expression of Stora Enso’s understanding of METHOD material Sustainability issues offering the prospect of greater clarity on the approach Basis of Our Opinion to future reporting priorities. Our work was designed to gather evidence on which to base our conclusions and to provide a limited level of assurance. We undertook the following activities: The adoption of the new Sustainability Policy is a particularly positive development • We conducted interviews in Stockholm, Helsinki and London with a selection and now sets the framework for future activities. There is evidence that Stora Enso’s of directors and senior managers responsible for areas of management and management recognise that the implementation of the new policy will be challeng- stakeholder relationships covered by the Report. The objective of these discus- ing, particularly in emerging markets, and that work is already ongoing towards sions was to understand Stora Enso’s governance arrangements and management identifying and responding to standards that fail to meet Stora Enso’s own for labour priorities; practice, environmental protection and social development. Stora Enso’s efforts to • We discussed Stora Enso’s approach to stakeholder engagement with relevant promote the development of forest certifi cation systems in emerging markets in managers at both the Group and site levels, although we undertook no direct cooperation with governments and non-governmental organisations is a good exam- engagement with stakeholders to test the fi ndings from these discussions; ple of this commitment. • We conducted a general review of issues raised by external parties that could be relevant to Stora Enso’s policies to provide a check on the appropriateness of Although we saw good examples of awareness of business ethics issues at the units which statements made in the Report. This review included the fi ndings from the Unit we visited, there is again no formal corporate monitoring of compliance. The new Sustain- ed Nations Development Program Environmental and Social Impact Assessment ability Policy represents a signifi cant driver for Stora Enso to specifi cally review and devel- for Stora Enso plantation development in Guangxi, China as well as an independ- op its internal controls regarding business ethics and other management priorities. ent opinion obtained by Stora Enso regarding Greenpeace allegations relating to Wood Supply from Russia; Recommendations for Future Reporting • The scope of our work included four operational site visits to: the mills situated The Group has made progress for example by adopting a new Traceability Guideline at Ostroł¸eka, Poland and Suzhou, China; Wood Supply Finland’s offi ces in Imatra, for Wood and Purchased Pulp as well as a new Environmental Statement for all Euro- Finland and plantation operations in Guangxi province, China. Site-level sus- pean wood supply units in line with EU EMAS Regulations. These developments tainability data for January through September 2006 was reviewed during these provide an opportunity for Stora Enso to further refi ne its communications strategy site visits. We also discussed local management arrangements with managers at for wood supply to better address the specifi c needs of stakeholders. each site; • We reviewed full 12-month sustainability data collated at the corporate level, and In order to overcome incompatibilities in OHS and HR data between sites, Stora Enso claims made in the Report. The external assurance team worked in parallel with, should continue to evaluate and seek methods to overcome national and regional but independently from, Stora Enso’s internal data validation processes. We inter- differences in data reporting practices. viewed managers responsible for internal data validation, reviewed their work processes and undertook sample checks on consolidated sustainability data and also sustainabili- Recommendations for Future Management ty data submitted by the four sites visited during the assurance process; Stora Enso has demonstrated a commitment to growing its own energy production • We undertook an assessment of the company’s reporting and management process- as part of its overall energy strategy in order to mitigate risk of supply disruptions. es against the principles of materiality, completeness and responsiveness as We recommend that the Group evaluate and progressively report upon its manage- described in the AA1000 Assurance Standard. The scope of our work did not ment of sustainability issues associated with energy production and procurement. include a formal review of the Report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines; Given the strong sustainability context for the new risk management text in the • The English language version of the report was used as the basis for the assurance. Group’s fi nancial disclosure and the commitments listed in the new Sustainability Policy, the Group should refl ect upon setting targets to fulfi l its commitments to OPINION continuous improvement and in order to manage the identifi ed risks. Completeness On the basis of the method and scope of work undertaken and the information The role of the Sustainability Committee and EMG should be reviewed to better inte- provided to us by Stora Enso: grate all of the Senior Executive into the management of sustainability performance.

csr network ltd U.K. February 2007

Mark Line, Director Todd Cort, Project Manager WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 [email protected] SE-107 24Stockholm,Sweden P.O. Box70395 Stora EnsoAB Fax +468106020 Tel. +46104646000 or WI 54495-8050,USA Wisconsin Rapids Stora Enso,P.O. Box8050 Fax +17154223625 Tel. +17154223693 Senior Vice President,StoraEnsoEnvironment James D.Weinbauer [email protected] 9 SouthStreet,LondonW1K2XA,UK Stora EnsoInternationalOfﬁ Fax +442070163208 Tel. +442070163140 Executive Vice President,CorporateCommunications Kari Vainio CONTACTS or bycontactinganyofthecorporateofﬁ Printed copiesofthereportmaybeorderedthroughourwebsiteatwww.storaenso.com/order Stora Enso’s AnnualReport2006comprisesthree separatebooklets BoardofDirectorsandmanagement Divisional presentations Strategyandactionsin2006 Lettertoshareholders ce, ces (seebackcover). Capital markets Risk management Reportonoperations Financialstatementsandnotes www.storaenso.com/contacts [email protected] FI-00101 Helsinki,Finland Stora EnsoOyj,P.O. Box309 Fax +358204621267 Tel. +358204621348 Vice President,SustainabilityCommunicationsandCSR Eija Pitkänen

Sustainabilityinthevaluechain Sustainabilitygovernance,stakeholder engagement, targetsandperformance markets theGroup rawmaterialsandsuppliers day work. organisation. We thesecommitmentsandresponsibilities intheirevery expectallofouremployeestoobserve Sustainability ispartofStoraEnso’s corporategovernance,andresponsibilitiesareassignedthroughout the Management neighbour, andwedoourpartinsupportingsocialdevelopment. and labourrights,wecreateahealthysafeworkplaceforallofouremployees.We arearesponsible We adheretoethicalbusinesspracticesinallouractivities.We honourandsupportgloballyaccepted human Social responsibility them fromlegalandacceptablesources and promotesustainableforestry. from renewablerawmaterials,arerecyclableandsafetouse.We verifytheoriginofwoodandfi technologies. We userawmaterials,energyandotherresources effi To minimiseourimpactontheenvironment,weconsideralifecycleapproachanduseapplicablecontrol Environmental responsibility partner. We strivetocontributetheeconomicwell-beingofsocietiesinwhichweoperate. We mustbeaprofi Economic responsibility with StoraEnso’s policiesandprinciplesrelatedtosustainability. We addresssustainabilitythroughoutourvaluechain,andweexpectsupplierspartnerstocomply go beyondtherequirementsofnationallegislationandregulations. different cultures,customsandvaluesofthesocietieswhereweoperate.We complywithandwhennecessary werespect Asaglobalcompanyweoperateaccordingtoourvalues,policiesandprincipleseverywhere; performance. engage ourstakeholdersinactiveandconstructivedialogue.We measureandpubliclyreportoursustainability We We strivetocontinuallyimproveour sustainabilityperformance. aretransparentinourcommunicationand stakeholders. forsustainablebusinessandbenefi economic, environmentalandsocialresponsibilitiesisnecessary Stora Ensoiscommittedtomanaginganddevelopingitsbusinessinasustainablemanner. Balancingour Policy Sustainability Enso’s Stora geographic marketsor fl Group, thepotentialintroduction ofcompetingproductsandtechnologies bycompetitors;and(3)generaleconomic conditions,s and futureglobalmarketpricesfortheGroup’s productsandthepricing pressuresthereto,pricefl conditions,such patents andotherintellectualpropertyrights, theavailabilityofcapitalonacceptableterms;(2)industry success oftheexistingandfuturecollaboration arrangements,changesinbusinessstrategyordevelopmentplanstargets,ch of manufacturingactivitiesandtheachievement ofeffi statements.Suchfactorsinclude,butar cause actualresultstomateriallydifferfrom those expressedinsuchforward-looking United StatesPrivateSecuritiesLitigationReform Actof1995.Sincethesestatementsarebasedoncurrentplans,estimatesan for growthandprofi It shouldbenotedthatcertainstatementsherein whicharenothistoricalfacts,including,withoutlimitationthoseregarding tability; andstatementsprecededby“believes”,“expects”, “anticipates”,“foresees”,orsimilarexpressions,areforward-loo uctuations inexchangeandinterestrates. table businessandanattractive andtrustworthyinvestment,employer, supplierandbusiness ciencies therein, continued success of product development, acceptance of new products or services bytheGroup’sciencies therein,continuedsuccessofproductdevelopment,acceptancenew productsorservices targetedcus uctuations inrawmaterials, fi Ourproductsaremainlyproduced ciently. as strengthofproductdemand,intensity competition, prevailing expectationsformarketgrowthanddevelopments; expectations e notlimitedto:(1)operatingfactorssuchas continuedsuccess nancial conditionofthecustomersandcompetitors the d projections,theyinvolverisksanduncertainties, whichmay anges inthedegreeofprotectioncreatedby theGroup’s uch asratesofeconomic growthintheGroup’s principal king statementswithinthemeaningof bre, onlyprocure cial to our our to cial tomers,

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Fold hereandstaple Stora Enso Oyj Corporate Communications Sustainability P. O. BOX 309 FI–00101 HELSINKI FINLAND WorldReginfo - f2065a8d-58e7-4232-81e9-0811925266a9 TR NO20 SUSTAINABILITY STORA ENSO 2006 Feedback on Sustainability 2006 report

Please, ﬁ ll in the feedback form and give your comments about the Sustainability 2006 report. Alternatively, you can ﬁ ll in the form online at www.storaenso.com/sustainability/feedback

1. In your opinion, how well does the report address the following issues?

www.storaenso.com 4. How would you wish to see future reports developed? [email protected]

5. Which stakeholder group do you belong to?

Stora Enso employee or contractor Customer Shareholder Analyst or investor Member of a Governmental Body NGO representative Sustainability professional Media

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Please, ﬁ ll in the feedback form and give your comments about the Sustainability 2006 report. Alternatively, you can ﬁ ll in the form online at www.storaenso.com/sustainability/feedback

1. In your opinion, how well does the report address the following issues?

www.storaenso.com 4. How would you wish to see future reports developed? [email protected]

5. Which stakeholder group do you belong to?

Stora Enso employee or contractor Customer Shareholder Analyst or investor Member of a Governmental Body NGO representative Sustainability professional Media