A sustainable and circular bioeconomy business model of the forest based industries – climate change mitigation potential

Tytti Peltonen VP, Corporate Affairs Metsä Group Key figures 2018 * Internal sales eliminated **Listed on Nasdaq Helsinki

METSÄ GROUP | Sales* EUR 5.7 billion | Personnel 9,300 | Renewable energy 28,4 TWh

METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 103,000 Finnish forest owners

METSÄ FOREST METSÄ WOOD METSÄ FIBRE METSÄ BOARD** METSÄ TISSUE Wood supply and Wood products Pulp and Paperboard Tissue and forest services Sawn Timber Greaseproof Papers

Sales: Sales: Sales: Sales: Sales: EUR 2.0 billion EUR 0.4 billion EUR 2.5 billion EUR 1.9 billion EUR 1.0 billion Personnel: Personnel: Personnel: Personnel: Personnel: 840 1,500 1,200 2,400 2,800

METSÄ SPRING | Innovation Company

3 8 February 2018 Metsä Group Finland – the largest forest cover in Europe

The area of Finland

• Finland is the most forested country in 5% Cities, villages and roads 100+ Europe. Our forests grow more than they 10% Fields and agricultural use MILLION M3 are used 10% Lakes and rivers

• More than 50% of Finland’s forests are owned by private forest owners

• Metsäliitto Cooperative members own 75% Forest nearly half of the private forest area in Finland

• Sustainable forest management safeguards biodiversity and enables versatile use of forests

4 02/07/2019 Beyond traditional forest industry

PAPER- TISSUE BOARD PAPER COOKING PAPER Bark, branches and top for renewable energy Construction Paper, specialty products PULP WOOD Pulpwood for pulp and PRODUCTS other bioproducts Pulp-based textiles

ELEC- Bio- Logs for sawn timber, TRICITY RENEWABLE LIGNIN composites plywood and LVL ENERGY TALL OIL, HEAT TURPENTINE New bioproducts SULPHURIC LIME (in R&D) Biogas ACID

PRODUCT GAS Fertilisers Industry

All products in BOLD are manufatured by Metsä Group. All other products are manufactured within the industrial ecosystem. New bioproducts improve existing value chains and create jobs

Processing of products More value Processing added & jobs of wood New products from one tree from side streams

Recycling and use of side streams POPULATION Climate change GROWTH RESOURCE SCARCITY URBANISATION mitigation – potential CLIMATE CHANGE of the forest-based industries

Sustainable forestry

Mitigation actions Forest renewal MAKE – Sustainable forest management Biodiversity – Production: energy & resource PROCURED efficiency and breakthrough 81% WOOD USED WOOD of board packaging SAWN TIMBER technologies is recycled in Europe PLYWOOD AND PULP – Recyclable and long-term use products Using fresh fibre KERTO LVL ensures PAPERBOARD availability of TISSUE PAPER – Renewable energy from side streams recycled fibre: USE AND fibres are used on avg. COOKING RE-USE 3.5 times. PAPERS BIOCHEMICALS PULP-BASED RENEWABLE TEXTILES ENERGY LIGNIN-BASED PRODUCTS UTILISED SIDE STREAMS R&D Metsä Group’s 2030 sustainability objectives Supporting UN Sustainable Development Goals (SDG’s)

WE BRING WE WORK FOR A BETTER THE FOREST TO YOU CLIMATE AND ENVIRONMENT • Increasing the amount of carbon • Fossil free mills stored in forests and products • Resource efficient production • Safeguarding biodiversity

WE CREATE WELL-BEING WE OFFER SUSTAINABLE CHOICES • Responsible corporate culture • Fossil free raw materials • Accident-free work environment • Sustainable supply chain

8 Metsä Group is a significant carbon sink

+ 1 500 000

Fossil CO - 26 000 000 + Growth 2 emissions Products storing - 2 000 000 carbon Forestry* Production

- 8 500 000 tCO2

Logistics

Products replacing fossil + 18 000 000 _ Fossil fuels _ Sales materials

9 * Forests owned by the members of Metsäliitto Cooperative Investments to support low-carbon circular bioeconomy

• In 2015-2018 Metsä Group invested 2 billion EUR in the European bioeconomy – New bioproduct mill in Äänekoski, Finland (1.2 billion EUR)

• In 2018 Metsä Group established a new innovation company Metsä Spring Ltd – Identifies and develops new business opportunities in sustainable forest- based bioeconomy and circular economy – Textile fibre demo plant investment

• Metsä Group is planning three new investments worth 2 billion EUR – New bioproduct mill in Kemi, Finland – New pine sawmill in Rauma, Finland – First phase in renewing the Husum pulp mill, Sweden – Implementation in 2019 - 2023

10 Successful market-based and resource-wise bioeconomy

• Competitive forest industry means upgrading each part of the wood to its highest value • Our products succeed in international market and have great growth potential without regulatory subsidies • Healthy established businesses enable investing into new innovations • Public co-funding of R&D&I accelerates the development of new high-risk technologies

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