Year of Grönsamhet 2021 by Setra Group

Year of Grönsamhet 2021 Setra Group Sustainability Report

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2 This is Setra __________________________ 3 Setra 2021 ____________________________ 4 CEO´s comments ___________________ 5

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet ___________ 8

Setra’s value chain ________________ 10

Sustainability work

Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our key sustainability areas_____ 14 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37

GRI Index

Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Contact details

Setra Group’s sustainability report for the 2021 financial year has been reviewed in summary form. The audited annual report can be found in Swedish at setragroup.com. Figures in brackets refer to outcomes from the previous year.

Setra Group Sustainability Report 2021

This is Setra _________________________ 3 Setra 2021 ____________________________ 4 CEO´s comments ___________________ 5

Setra’s sustainability

work ____ 6

This is Setra Setra is one of the largest wood industry companies in Sweden. We want to do business where everyone prospers – not just ourselves but also our customers, society and nature. When a business is beneficial for everyone, we call it Grönsamhet. It comes down to creating green value.

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Setra processes raw material from responsibly managed forests and supplies climate-friendly products for construction, housing, the paper and pulp industry and energy production. Our customers are global and our wood products are a key part of the transition to a bioeconomy. Wood as a building material for residential, municipal and commercial buildings is strongly on the rise, helping to reduce the climate impact of the construction industry. Wood binds carbon throughout its lifetime, when the trees are growing and then in the form of wood products. Our business objectives include increasing the value of our products, working

Production m3 Malå*

● PINE SAWMILLS

Kastet

250,000

Skinnskatteberg

237,000

Nyby

202,000

Malå*

147,000

Hasselfors*

331,000

Heby

291,000

Färila

215,000

Sweden

31%

Färila

Långshyttan Skinnskatteberg

Kastet Nyby Heby

● SPRUCE SAWMILLS

Hasselfors*

USA

Employees at year end

GRI Index

Our markets

Our production units

more resource-efficiently and reducing our climate footprint. Setra’s culture is defined by our core values – commitment, innovation and responsibility. Our Head Office is located in Solna, Sweden, while our customer service and logistics departments are based in Gävle. The Group comprises seven sawmills and two wood processing units, one of which is located in the UK. We also have sales offices in the UK, Germany, Poland, Spain, Tunisia, Japan and China. Setra employs approximately 800 people and in 2021 generated sales of around SEK 5.8 billion. Setra’s main owners are Sveaskog and Mellanskog.

Sustainability work

Governance of Setra’s sustainability work _____________ 39

Introduction

Introduction ________________________ 2

Rest of Europe

35%

11%

20%

● PROCESSED WOOD PRODUCTS

Långshyttan

70,000

111

Setra Wood Products (UK)

21,000

* Also includes processed goods.

Contact details

North Africa & Middle East

Asia & Australia

Setra Group Sustainability Report 2021

This is Setra __________________________ 3 Setra 2021 ____________________________ 4 CEO´s comments ___________________ 5

Setra’s sustainability work ____ 6 Executive Management _______ 37 Board of Directors _____________ 38

1.3

Record profit The operating profit of SEK 1.59 billion is Setra’s strongest figure ever. Demand for wood products has been extraordinarily high for most of the year.

Cederhusen

million tonnes CO2

Setra supplied the CLT and glulam frames for the first two blocks in Folkhem’s Cederhusen project in Stockholm – one of the largest climate-smart wooden housing developments in the world. Watch the project video at setragroup.com

Read more in the CEO’s message on page 5.

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

That’s how much carbon dioxide is locked up in this year’s output of wood products – and will remain locked up throughout the products’ life cycle. Read more in the Climate report on page 25.

Cooperation

Direct economic value generated and distributed (SEKm)

69%

of Setra’s sales were exported – including to our new market, the USA.

Customers

Sales of wood products, bioproducts and building systems

5,868

Suppliers, raw material

Purchases of wood raw material

-1,914

Suppliers, transport

Transport costs

Suppliers, other

Purchases of other goods and services plus depreciation -1,237

Employees

Salaries and social security costs

Lenders

Interest

State

Taxes

Shareholders

Board’s proposed dividend

-593

Net sales by business

(SEKm)

3,777

-536 -17 -313

Sales of processed wood products have increased by 250%.

Contact details

Together with Preem, we have set up the world’s first factory for the production of bio-oil from sawdust directly from the sawmills. Oil from the joint venture Pyrocell is already on the market, enabling Preem’s customers to be a little greener when they fuel their cars.

Setra’s business has benefited from people investing in their houses during the pandemic, but the wide spread of the virus in the community has of course been challenging for us. Thanks to great commitment, good teamwork and problem-solving skills, we have been able to keep production running and supply our customers with wood products throughout the year.

GRI Index

Unique factory

Net profit/loss

Sustainability work

Governance of Setra’s sustainability work _____________ 39

Setra 2021

Introduction

Introduction ________________________ 2

1,424

1,258

619

629 Sawn

405 Processed Bioproducts 4

Setra Group Sustainability Report 2021

This is Setra __________________________ 3 Setra 2021 ____________________________ 4 CEO´s comments ___________________ 5

Setra’s sustainability

work ____ 6

An exceptional year for Setra

Introduction

Introduction ________________________ 2

On the one hand, a stressful pandemic. On the other hand, record global demand for wood products. For Setra, 2021 will go down in history as an exceptional year, not least in terms of profits.

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

venture with the fuel company Preem. Here, next-door to Setra Kastet, sawdust is converted into non-fossil pyrolysis oil, which can then be processed into renewable diesel and petrol. We are proud to own the first inte grated sawmill in the world that can now use a residual product in this pioneering form.

Investments for the future

Three of our focus areas In 2021, we have advanced our positions in three areas in particular. The trim saw and planing machine that we brought on stream in Hasselfors in autumn 2020 has enabled us to quickly build our business in exporting planed construction timber to markets including the UK, the US and Australia. At the same time, we have been able to ramp up production of cross-laminated timber (CLT) at our factory in Långshyttan. Over the year, Setra continued to supply

CLT frames to the prestigious Cederhusen project, Stockholm’s first modern wood-built inner city residential development. Demand for CLT is high and continues to rise. The construction industry’s efforts to reduce its climate footprint are being aided by wood raw material, as wood is the only renewable, low-carbon building material available. Our third area demonstrates how we are also taking other innovative steps to combat climate change. The end of 2021 saw the opening of the Pyrocell plant in Gävle, a joint

Katarina Levin, CEO

Contact details

There has been a global wood products shortage since spring 2020, driven by increased residential and commercial building in wood, as well as an upturn in home improvements. Unprecedented demand has pushed prices to historically high levels. The Setra Group’s operating profit for 2021 amounted to SEK 1,588 million, compared with SEK 107 million in the previous year. Net sales were SEK 5,841 million, compared with SEK 4,131 million in 2020. In many ways these are incredible, market-driven figures, but behind them lie hard work, key strategic decisions and welltimed investments.

GRI Index

High demand for wood products

Setra’s future looks bright, both in the short and long term. There are some dark clouds on the horizon, concerning the security situation in Europe, the global economy after the pandemic and political threats to the sustainable forest management practices that we are used to in Sweden, but it is difficult to predict what will become of them. For us at Setra, Grönsamhet is a platform for everything we do, meaning that our business should generate green value not only us but also our customers, society and nature. Linked to this, we are keenly pursuing our goal of becoming climate neutral by 2030, which is primarily about finding the most climate-smart transport solutions possible. Internally, we continue to upgrade our sawmills and make our primary production more efficient. A number of new strategic investments were decided in 2021, the largest of them being new saw lines in Skinnskatteberg and Malå and drying kilns in Heby and Hasselfors.

Sustainability work

Governance of Setra’s sustainability work _____________ 39

The second year of the pandemic brought real social impacts, such as increased sick leave, quarantine rules and continued working from home. We were also affected by a turbulent international freight market and container shortages, among other things. The situation has required a high degree of flexibility, both internally from Setra’s organisation and production units, and in our logistics flow. I am proud to say that thanks to determination, goodwill and teamwork, we have coped with all these challenges very well. I would even go so far as to say that the trials have deepened our cooperation internally and with partners, strengthened our team spirit and honed our problem-solving capacity. This in itself is a mark of strength, as our growth journey now continues apace.

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2 Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet ___________ 8

Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29

Sustainability work

Our key sustainability areas_____ 14

Setra’s sustainability work

Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Contact details

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet ___________ 8

Setra’s value

chain ________________ 10

Global trends _______________________ 11

We create green value

Introduction

Introduction ________________________ 2

We strive to make Setra’s entire business a source of Grönsamhet – generating green value not just for ourselves but also our customers, society and nature. Our sustainability work is about creating climate-smart products and taking full responsibility for our impact on people, society and the environment along the entire value chain.

Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15

Stakeholder dialogue

Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

We take account of financial, social and environmental perspectives as we run and develop our business. The starting point is to minimise the negative impact and maximise value creation and positive effects in every link of the value chain from raw material production in the forest to final use by the customer. We focus our sustainability work on the areas in which we have the greatest influence and potential to make a difference.

Read more about our sustainability areas on page 14 and about how we manage sustainability risks on page 40.

Our vision is to do business in a way that we, as well as others – our clients, society and nature – can benefit from. This is what we call Grönsamhet. It comes down to creating green value. Grönsamhet is based on five principles derived from our core values: commitment, innovation and responsibility, with Group Management driving the process forward,

For more details, visit setragroup.com

Overarching climate goals One of Setra’s overall goals is to be climate neutral by 2030. This goal applies to all areas of the value chain, with the exception of foreign distribution. We have begun the journey by identifying activities for us to focus on, and a concrete roadmap is being developed. One challenge in our value chain is that large-scale emissions fall outside our own operations, making them difficult to monitor, control and reduce. Our short-term way forward on climate change is to focus on the elements we can influence here and now. We actively monitor the development of new regulatory requirements and policy decisions affecting the transport market. All these activities together contribute to our goal of becoming the wood industry in Europe with the strongest sustainability profile by 2025. We also manage our sustainability work so that it contributes to the UN Sustainable Development Goals and the 2030 Agenda, find out more on page 13.

Contact details

We identify the most important sustainability topics through stakeholder dialogues, which we then develop into a materiality analysis. This is based on both the impact of the business along the value chain and the demands and expectations of the outside world. This report shows how we work on our key sustainability areas, set targets and monitor progress towards them.

Setra’s vision of Grönsamhet

together with our committed employees. The timeline on the next page summarises our journey so far and, for each key issue in the report, we highlight a green achievement that we are proud of.

GRI Index

Governance of Setra’s sustainability work _____________ 39

Since 2014, we have actively engaged in stakeholder dialogues both internally and with owners, customers, suppliers, environmental organisations and others. We do this to keep up to date with what the outside world expects from us, but also to gain insight into what is most important and valuable to us. In general, we note a clear expectation from customers and stakeholders regarding responsibility and climate work, as well as an increased awareness of sustainability issues among employees and society at large. An update of the stakeholder dialogues, planned for 2022, will include new customer groups in Building solutions. In the future, we will conduct stakeholder dialogues every two or three years to keep our materiality analysis up to date, as our business evolves and external expectations change.

Sustainability work

Our key sustainability areas_____ 14

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value

chain ________________ 10

Our path to Grönsamhet

Introduction

Introduction ________________________ 2

At Setra, we are actively working to develop our sustainability work and take it to the next level. Here we outline key steps that will help us move closer to our vision of Grönsamhet – green value.

Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw

material _____ 18

Resource-efficient business ___ 21 Sustainable transport ___________ 29

Executive Management _______ 37

• Sustainability reporting according to Global Reporting Initiative, GRI

• New trim saw in Skinnskatteberg, focus on health and safety at work

• Climate calculations reported under the Greenhouse Gas Protocol guidelines.

• Investments in new drying capacity in Hasselfors

Climate repor t _____________________ 25 Safety, culture and colleagues __________________________ 32

• “Healthy at Setra”, aimed at reducing sickness absence and increasing healthy attendance

• Certified (since 2005)

• Certified (since 2010)

• Launch of long-term work to meet the EU Machinery Directive and the Swedish Work Environment Authority’s provisions on use of work equipment

• Two internal leadership development programmes introduced, “Leadership for long-term profitability”

• Long-term work on energy surveys of production units begins • All units’ saw lines and trim saws equipped with machine guards • Risk observations in SIA

Appendix __________________________ 45 Contact details ___________________ 47

• Procurement of Group-wide occupational healthcare solution • All contractors must complete SSG Entré safety training, and our own staff must complete the SSG Employee Safety course

2010

2011

2012

• ISO 9001 certified (Långshyttan since 1999)

2015

• Our fossil fuel use shrinks by almost 50%

• We register all industrial accidents and near misses in SIA, the sawmill industry’s common system for reporting industrial injuries

• Long-term focus on noise abatement measures in production begins • Trainee programme in collaboration with the Swedish University of Agricultural Sciences to bring more young graduates into the wood industry • Fitness initiative “Around the sawmill”

• Two new ethics policies introduced: one for gifts, benefits and third-party hospitality, and one for compliance with competition legislation

• Dialogue with our main freight carriers to cooperate on climate action • Guidelines for company cars revised and emission requirements for new car purchases tightened

• Risk analyses reported in SIA 8

Contact details

• Safety index measured = near misses/accidents

2014

• “One Setra” for a long-term, values-driven organisation

• ISO 14001 certified (since 2007)

• Safety and risk analyses in the production environment

2013

GRI Index

GRI index __________________________ 43

• Decision on joint targets for energy efficiency, climate performance and safe working environment

Continues on next page →

Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

• Group Sustainability Policy drawn up and established among employees

Sustainability work

Our key sustainability areas_____ 14

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2 Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8

• Continued work on the Roadmap for Climate Neutral Setra 2030

Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15

• Development of Environmental Product Declaration, for Glulam

Climate-smart raw material _____ 18

• Wood industry hub takes shape in Långshyttan, producing glulam, components and CLT

Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37

• CLT factory opens in Långshyttan • Climate reports also produced for each production and processing unit

• Further development on the 2030 Agenda SDGs

• New trimming and planing line in Hasselfors comes on stream

• New targets for energy, climate and health & safety

• Setra recycles computers

• Continued development and efficiency work on transport, energy use and noise

• We launch partnership with Preem to produce pyrolysis oil

• Biogas-powered logistics solution between Hasselfors and E.ON’s thermal energy plant in Örebro

• We started purchasing 100% renewable electricity

• Our car policy is further tightened to reward greener cars

Sustainability work

• Our new Grönsamhet vision takes shape and is launched

Our key sustainability areas_____ 14

• Continued work on the goal of having the industry’s strongest sustainability profile by 2025

• Online training FSC/PEFC • New environmental permits for Malå and Kastet

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

2016

• Sustainability organisation in place • Goal for 2025: We will be one of the leading wood products companies in Europe and the one with the strongest sustainability profile.

2017

2018

2019

2020

• Mapping the contribution of activities to the Sustainable Development Goals of the 2030 Agenda

2022 onwards

• Pyrocell plant inaugurated in Gävle • Conversion to 100% HVO on all container shipments from sawmill to port/rail terminal

• Biodiesel blended into fuel for production vehicles

• We participate in the Chamber of Commerce of Central Sweden’s transport initiative • All Setra’s raw material suppliers are certified in line with FSC and/or PEFC • Overarching climate goal decided: Climate Neutral Setra 2030 • In-depth and concrete work on Grönsamhet and further long-term investment in leadership development programmes

• Sustainability link to core funding for operations

Contact details

• Climate investment funding received from the Swedish Environmental Protection Agency to develop the pyrolysis oil production project

2021

GRI Index

Governance of Setra’s sustainability work _____________ 39

• Digitalisation of the accounting process • Development of EPD for CLT • In-depth root cause analyses of accidents • Decisions on major investments in Malå, Skinnskatteberg, Heby and Hasselfors 9

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain

________________ 10

Setra’s value chain

Introduction

Introduction ________________________ 2

Our value chain stretches from the forest and out into society, where our wood products become sustainable homes and where our bioproducts are used to make cellulose and biofuels.

Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21

we build up commitment at our workplaces and improve production efficiency. We strive to find climate-smart solutions in the fields of logistics and transport. When our wood products are used in buildings and furnishing solutions, or for renewable energy, the value and climate benefit from the forest is relocated to society as a whole. In this way, we are helping to reduce the climate footprint of the construction industry and our customers alike.

Sustainability work

Our key sustainability areas_____ 14

Setra’s work and responsibility begin when we choose locally produced wood from sustainably managed forests. We take our customers’ needs as our starting point and make sure to use the whole log. Whatever is not used for wood products becomes bioproducts and is incorporated into the production of paper goods, biofuel and renewable fuel, or used in our own heating system. By taking an approach where we analyse shortcomings and work on constant improvements,

Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32 Sawmill

Executive Management _______ 37

Sawn Wood Products

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45

GRI Index

Governance of Setra’s sustainability work _____________ 39

Processed Wood Products Raw Material

Contact details ___________________ 47

Bioproducts

Contact details

Bio-oil

Bark Chips Sawdust

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value

chain ________________ 10

Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw

material _____ 18

Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Climate transition increasingly important By 2045, Sweden aims to have net zero greenhouse gas emissions. Willingness to participate in the transition is high, among businesses and citizens alike, despite the protracted pandemic. We are seeing a great deal of innovation and drive in transition efforts, but there is every indication that we need to accelerate further to achieve the climate goals. There has been an intensive dialogue on climate change in recent years. Business and politicians need to engage strategically in the EU’s efforts to speed up the climate transition. How the world’s sustainability agenda is set

has a huge impact on how we as companies can help to accelerate the pace of change. Important preconditions for advancing in the right direction include sectors and actors working together to achieve emission reductions along the entire value chain, and the use of more policy instruments aimed at promoting renewables and completely phasing out fossil fuels. We have high expectations of the EU’s and Sweden’s plan for the climate transition. COP26 in Glasgow in 2021 was an important opportunity to influence and accelerate the green transition, as is the upcoming UN summit in Stockholm in June 2022.

In pursuit of sustainable building materials

Global demand for wood remains strong The coronavirus pandemic triggered a wave of renovations and construction projects in 2020. The trend lasted well into 2021, resulting in major price increases for wood products. At the same time, demand for larger living spaces and detached family homes increased, which looks set to remain a global trend for several years after the pandemic. This, combined with strong factors such as urbanisation and population growth, is driving demand for new housing, and thus wood consumption, globally. At the same time, wood is increasing in market share relative to other construction materials. For suppliers of wood products in a global market, flexibility, reliable deliveries and a stable supply of raw material are increasingly important.

The need for an economy based on renewable resources, reuse and recycling has been much discussed in recent years, both in Swedish politics and in the EU. In 2021, the Swedish government decided on a national strategy for a circular economy, which lays the foundation for a long-term and sustainable transformation of society. The action plan highlights the importance of sustainable materials from the forest, sending a crucial and positive signal to the Swedish forest industry. With a strong forest industry, we believe that Sweden has a very good chance of developing a sustainable bioeconomy. From our perspective, a bio economy is also a circular economy. Nothing from a tree goes to waste and we always strive for the highest possible added value – turning as much of each log as possible into long-lasting products. Our wood products and bioproducts have a wide range of uses and in many cases can be recycled or reused. The latest addition to the business, Pyrocell, is a superb example of a circular, bio-based solution.

Contact details

The climate transition in the construction industry means that sustainable building materials such as wood are increasingly in demand in both Sweden and the rest of the world. The construction sector faces the challenge of halving its emissions by 2030, according to the UN Environment Programme (UNEP). Wooden frames have a significantly lower climate footprint than traditional steel and concrete building systems and are an effective way to reduce emissions from the construction phase. New regulations, such as Sweden’s requirement for climate declarations for new buildings from 2022, are contributing strongly to this development, as well as boosting awareness of how much the climate impact differs between wood and other materials.

Bioeconomy and circular economy

GRI Index

Governance of Setra’s sustainability work _____________ 39

We operate in a world where conditions are constantly changing, with the coronavirus pandemic as a prime example. Our business, operations and sustainability work are naturally influenced by what happens in the world around us. Here we describe some of the main trends and factors affecting Setra.

Sustainability work

Our key sustainability areas_____ 14

Global trends

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2 Setra’s sustainability work ____ 6

New frameworks and steering instruments

We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Forestry and the forest’s potential through the Swedish National Forest Inventory. At the same time, there is an ongoing public debate about Swedish forestry and what the raw material from the forest should be used for. It is vital to ensure the continuation of long-term sustainable forestry in Sweden that nurtures biodiversity and simultaneously allows climate-friendly development of our society with unchanged levels of welfare.

of the log becomes wood products. The remainder becomes bioproducts that can be converted into bio-oil, for example.

system means that all fuel suppliers must reduce greenhouse gas emissions from petrol and diesel by a certain percentage by blending in sustainable biofuels. We believe this to be an important instrument that enables the industry to transition here and now, with existing vehicles and existing infrastructure. Pyrocell, our joint bio-oil venture with Preem, is a proud contribution to that transition. Electrification could make Sweden very well placed to succeed in the transition to a fossil free economy, both in manufacturing and in the transport sector. 12

Contact details

Renewable raw material from forests has the potential to replace many of the fossil materials used today. In Sweden, huge advances have been made, with high-performance textiles, packaging and fuels from forest products as some examples. We also have one of the world’s most efficient forestry systems, an annual growth rate that exceeds harvest, and the ability to closely monitor forest development

50%

GRI Index

Governance of Setra’s sustainability work _____________ 39

Sustainability work

Our key sustainability areas_____ 14

Sustainability work and the way we report it will also be affected in the coming years by the update of the Global Reporting Initiative (GRI) framework, which will come into force in 2023. The purpose of the update is to achieve more consistent and comparable sustainability reporting between companies that report according to GRI, as Setra does. More focus is being placed on applying due diligence in the management of sustainability issues and on human rights reporting. We are also monitoring developments regarding the forthcoming EU Taxonomy Regulation, which is intended to act as a driver of sustainable investment. The taxonomy has long been discussed in Swedish forestry. It covers a wide range of areas, such as increasing climate ambitions, biodiversity conservation, circularity and resource efficiency, plus green energy and sustainable investment – and the forest touches all these areas. The challenge of the taxonomy for us and the entire forest sector is how to define sustainable forest management and what requirements will be placed on the whole value chain. Since we will need to manage both sustainability reporting and reporting related to the Taxonomy Regulation, it is important for us to remain at the forefront in our sustainability reporting, so that we can keep up with the transition to a green economy. Policy instruments such as increased reduction obligations also affect us, as does the government’s forthcoming strategy for increased electrification in Sweden. The reduction obligation quota

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive

Management _______ 37

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Setra’s work to promote sustainable development of our business and operations involves creating positive value and taking full responsibility for the impact that our business has on individuals, society and the environment. The most important factor is the climate benefit of our products, but our responsibility along the whole value chain and as an employer, business partner and local community actor also comes into play.

Mapping the goals 2015 saw the adoption of the 2030 Agenda, the world’s collective plan for sustainable development. The agenda comprises 17 Sustainable Development Goals and 169 targets that balance financial, social and environmental perspectives, and are to be achieved by 2030. To achieve the goals, everyone needs to play their part based on the 2030 Agenda, a framework that provides guidance on how to engage with the world around us. Setra supports the agenda in its entirety and, through our business, has both the responsibility and the capacity to make an active contribution to several of the goals. Through a mapping exercise, we have identified the goals and targets that are most relevant to us and now we are working to develop our own goals and action plans in line with them. Our goal and roadmap “Climate Neutral Setra 2030” has a direct link to the 2030 Agenda. In 2022, we will continue to develop measurable targets and key performance indicators for our contribution to the SDGs, which will then be monitored and reported on.

GRI Index

Governance of Setra’s sustainability work _____________ 39

We face some major shared challenges if we are to achieve environmentally, socially and socio-economically sustainable development – in which everyone is given the conditions for a good life within the limits of what our planet can bear over time. Setra supports the world’s joint 2030 Agenda for sustainable development and actively contributes towards achieving it.

Sustainability work

Our key sustainability areas_____ 14

Our contribution to the UN SDGs

Introduction

Introduction ________________________ 2

Contact details

Setra’s responsibilities and contributions Pages 45–46 provide an overview of the global goals (and targets) that are most relevant to Setra’s operations, how they link to opportunities to make a positive contribution, and the challenges we see.

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value

chain ________________ 10

Global trends _______________________ 11

Our key sustainability areas

Introduction

Introduction ________________________ 2

Our sustainability work encompasses many different issues and is an integrated part of our everyday operations and strategic business development. Our knowledgeable and committed employees are the driving force behind this work. On the following pages, we report on how our key sustainability areas have evolved in 2021.

Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw

material _____ 18

Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Working to promote greater use of wood products – having more houses built of wood, for example – is the most important contribution Setra makes to climate issues because wood products are climate positive. We are also working to increase the level of processing in our portfolio, for example, through industrial production of construction solutions in CLT and glulam, to enable larger and taller wooden buildings and a more efficient construction process. In addition, we are developing new, climate-friendly products such as bio-oil, a renewable oil made from sawdust and used in the production of biofuel.

Climate-smart raw material

We work systematically to create efficient flows and to reduce Setra’s negative environmental impact. We almost exclusively use renewable energy and we focus on reducing our energy consumption. 100 percent of the wood raw material we buy in is put to good use, being processed into either wood products or bioproducts for paper or energy.

Climate report

Sustainable transport

Our overall climate goal is for the whole business to be climate neutral by 2030, excluding foreign distribution. Achieving this will require efforts from everyone at Setra. The Climate report helps us to monitor where emissions occur and how they change over time. We include all emissions from seedling planting until the goods reach the customer.

Setra’s wood products have to be transported in order to reach our customers, and it is transport that accounts for the majority of our greenhouse gas emissions. We are working to connect more of our units to the rail network and helping to develop renewable fuels. Cutting emissions from transport is a challenge that we share with customers and suppliers. Many of the initiatives in this area are therefore based on collaboration.

Safety, culture and colleagues Committed, satisfied employees are a prerequisite for the success of our business. Setra is a values-based organisation where we want everyone to feel involved and able to contribute to our shared goals. Occupational health and safety is a permanently prioritised area.

Progress with Grönsamhet 2021 has been an eventful year with many exciting advances in sustainability work at Setra. For each sustainability area in the report, we highlight an example from our operations that marks a leap forward towards our vision of Grönsamhet.

Contact details

The forest is the source of our most important raw material. Sourcing timber from sustainable forestry is important both to us and to our customers. Through certification by FSC® and PEFC™ and controlling against set criteria, we ensure that the raw material we use comes from legal logging activities that protect biodiversity.

Resource-efficient business

GRI Index

Governance of Setra’s sustainability work _____________ 39

Our portfolio

Sustainability work

Our key sustainability areas_____ 14

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7

Our portfolio

Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10

Introduction

Introduction ________________________ 2

Our renewable construction materials and bioproducts play a role in the transition to a sustainable society.

Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13

Sustainability work

Our key sustainability areas_____ 14 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Sweden’s first FSClabelled building

Contact details

The observation tower at Naturum Siljansnäs in Dalarna is built using locally produced CLT and glulam from Setra’s factory in Långshyttan. The landmark is the first FSC-certified building in Sweden and a beacon of sustainable construction. Visit setragroup.com to read more

Setra Group Sustainability Report 2021

Executive Management _______ 37

As a manufacturer of renewable products for the construction and wood industry, we and our customers are participating actively in the climate transition of the construction sector. Increasing the use of wood as a construction material is one of Setra’s core aims, given that wood is a renewable raw material that also binds carbon dioxide throughout its life cycle. We want to deliver competitive products, solutions and services that make it simple to choose wood over other materials with a larger climate footprint. While demand for wood products continues to expand strongly, creating good growth opportunities, we also face challenges in increasing production reliability, delivery service and quality. We also need to continuously improve our ability to deliver products with a lower climate footprint throughout the chain.

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

How we work A broad and sustainable range

30%

increased processing The wood industry hub in Långshyttan increased production by 30 percent and the planing mill in Hasselfors by 1,400 percent in 2021. Once Setra’s processing units reach full production, we will manufacture more than 400,000 m3 processed wood products per year.

Where Setra's products go (percentage of sales) 24% Processed wood products 11% Bioproducts

65% Sawn wood products

Our business concept The future is built on wood. With a raw material that originates from responsibly managed forests, we create refined climate-smart products and solutions for construction, housing, pulp and paper manufacture and energy production. We thereby help our customers do better business in a global marketplace and are part of the solution in the transition to a bioeconomy.

Contact details

We supply climate-smart and highly processed wood products to the construction industry in Sweden and around the world. Our products are mainly used for building and construction, while our residual streams of bark, chips and shavings become bioproducts used for pulp and heat production and as raw material for biofuel. A key element of our offering is also that we deliver a sustainable product, taking into account our entire value chain. We are continuously working to take responsibility, streamline our processes and transport, reduce our climate footprint and provide customers with climate data and environmental product declarations (LCAs and EPDs) for our products.

Setra is one of Sweden’s leading suppliers of structural elements in wood. Our ambition is to have the product portfolio with the strongest sustainability profile in the industry. Our CLT factory in Långshyttan has been in operation since mid-2020. Deliveries have included structural frames for Cederhusen in Hagastaden, Stockholm’s first inner city modern housing development in wood, and the observation tower in Siljansnäs, Sweden’s first FSC-labelled building. The expansion of the Universeum science centre in Gothenburg is largely being carried out using advanced glulam components from Setra. Together with the construction company ByggPartner, we have begun to offer turnkey solutions for wooden frames, from design to assembly. Långshyttan is also home to our wooden components factory, which this year added the production of finger-jointed joists. One of the autumn’s milestones was the inauguration and start of production at the Pyrocell bio-oil plant in Gävle. Sawdust from Setra’s Kastet sawmill is converted into bio-oil, which is then refined by Preem in Lysekil to be blended into petrol and diesel. Co-owned by Setra and Preem, Pyrocell is a pioneering venture in the development of renewable, fossil free fuels. Our earlier investments in a new planing mill in Hasselfors have opened the doors to a large new export market. March 2021 saw Setra dispatch its first delivery of planed construction timber to the USA. In addition, we have supplied large volumes of these products to the UK market. During the year, Setra’s Board made several major strategic investment decisions. In Malå, around SEK 390 million is being invested in modernisations that will double the sawmill’s production capacity within a few years. In Skinnskatteberg, around SEK 170 million is set to be invested in a new saw

GRI Index

Governance of Setra’s sustainability work _____________ 39

Product development

Sustainability work

Our key sustainability areas_____ 14

Our opportunities and challenges

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

line, and a total of SEK 100 million will be spent on expanding drying capacity in Heby and Hasselfors. Taken together, these are vital investments to increase, modernise and streamline production at our sawmills.

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8

Sawn wood products

Global trends _______________________ 11

Sawn wood products in spruce and pine are important for our export markets and account for the majority of Setra’s sales. Spruce has good strength properties in construction, while pine is often used for floors, doors or other products where the wood will remain on show. Planks and boards from our sawmills can also be found in everything from furniture and fittings to packaging. Our biggest markets for sawn wood products are Sweden, Europe, North Africa, the Middle East and Asia.

Our contribution to the UN SDGs _______________________ 13 Our key sustainability areas_____ 14 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive

Processed wood products

Management _______ 37

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

1,736 GWh

(percentage of sales)

32% Heating and power plants 3% Other 8% Pellet industry

57% Pulp and paper mills

Customer surveys Helping our customers to do better business is a part of Setra’s business concept and our vision of Grönsamhet. To ensure that we maintain a high level of quality and service, we conduct regular qualitative customer surveys. In 2022, we are planning a new survey to measure customer satisfaction across all major customer groups and markets. 17

Contact details

The amount of bioenergy supplied by Setra in 2021. This is sufficient to heat approx. 231,000 apartments.

Where Setra’s bioproducts go

Making use of the whole log and utilising it as effectively as possible is a key issue for Setra. Around 50 percent of each log is turned into planks and boards, while the remaining bark, chips and shavings are converted into bioproducts such as cellulose chips and bio fuels. Our biofuels received a sustainability decision from the Swedish Energy Agency in 2021, which means that they meet the Agency’s criteria to be classified as sustainable. Bioproducts are expected to become a growing market as society transitions to a bioeconomy, where renewable resources from forests, for example, replace fuels and materials of fossil origin. The aforementioned company Pyrocell is an example of the progress being made in this particular area.

GRI Index

Governance of Setra’s sustainability work _____________ 39

Setra is seeing strong growth in the processed range. Within a few years, production will reach around 400,000 m3 processed goods per year. Our portfolio of processed products includes CLT and glulam, planed construction timber, decking, joists and components for doors and windows. The solid sheets of CLT have high load-bearing capacity and stiffness, making them suitable for apartment buildings, offices, schools and other large buildings. The wooden panels are prefabricated in the factory, with cut-outs for doors, windows, plumbing and cabling to facilitate assembly on site. Our glulam is sold as a standard range via builders’ merchants and as project solutions for building developers, wood industries and the construction trade, primarily in Sweden and the rest of Scandinavia. We also provide a concept of “standard halls” made of glulam for industrial, warehousing and agricultural use, as well as padel courts, for example.

Bioproducts

Sustainability work

Setra’s value chain ________________ 10

Setra supplies a complete solution in CLT and glulam for construction projects, where a project team accompanies the customer through all phases of the process. In addition to the frame material, Setra provides technical expertise and guidance in the areas of project planning, construction solutions, logistics and transport. Our range of construction timber includes various planed products, such as roof truss timber and joists. The products are sold to distributors, builders’ merchants, industries and major construction projects in Europe, the US and Australia.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11

Climate-smart raw material

Introduction

Introduction ________________________ 2

We only use wood from responsibly managed forests.

Our contribution to the UN SDGs _______________________ 13

Sustainability work

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

X-rays give better control of the raw material Contact details

All of Setra’s pine sawmills have now been equipped with X-ray scanners to sort and use the timber more efficiently. More consistent wood quality paves the way for better customer offerings and the data collected on the timber helps suppliers to make smart raw material adjustments back in the forest. This development benefits Setra, our customers and the climate.

Setra Group Sustainability Report 2021

Executive

Management _______ 37

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Governance All the wood raw material that Setra purchases is either certified or controlled by a certified supplier. Certification is carried out in line with FSC® and PEFC™, the world’s largest forest certification systems. Setra’s sawmills and processing units hold Chain of Custody certification from both FSC and PEFC, as well as FSC Controlled Wood certification. Controlled wood complies with Setra’s raw material policy. This ensures that we are also in compliance with the requirements set out in the EU Timber Regulation. As of 2019, all our timber suppliers are FSC- and/or PEFC-certified.

How we work Setra used only Swedish forest raw material from our suppliers in 2021. A key concept in the Swedish Forestry Act is the “reforestation obligation”, which requires the forest owner to start planting, sowing or using seed tree

million m3

How much timber Setra processed in 2021. All our raw material comes from sustainably and responsibly managed forests.

Climate benefits of wood There is huge climate benefit linked to working the forests because young, growing trees capture more carbon dioxide than older trees. While harvesting releases carbon dioxide from the soil and the remaining debris (branches and tops), the reforestation obligation ensures a cycle of growing forests of all ages, with significantly more carbon dioxide thus bound up in the forest landscape. When we use the logs to produce wood products, we help to keep the carbon dioxide locked in. It is stored as carbon in homes, for example – a process that continues throughout the life of the building. And if they are subsequently demolished, the material can be reused or sent for incineration to generate electricity and heat. When burned, the stored carbon is converted into biogenic carbon dioxide, which is once again absorbed by the growing forest.

Setra’s raw material policy

Traceable timber Setra buys all its sawlogs from suppliers, from whom we always demand transparency and traceability. One of our basic requirements is that the timber can be traced back to the place of harvest. Coordinates from the harvesting site can be checked with the Swedish Forestry Agency to make sure that the wood does not originate from a conservation area. Much of the raw material comes from our owners, Sveaskog and Mellanskog. In 2021, Setra purchased a total of 3.52 million cubic metres of timber, half of which was pine and half spruce. The timber is often of local or

Raw material purchasing Setra buys pine and spruce from around 20 suppliers.

50% Pine

As a minimum, wood delivered to Setra must be fully traceable and meet five fundamental criteria. Certified suppliers check that the wood meets the requirements. Setra does not accept: • Illegally harvested wood. • Wood from forests in areas with serious social conflicts.

50% Spruce

• Wood from forests of high conservation value (as defined by the Swedish Forest Agency).

Contact details

Swedish forest raw material

3.52

GRI Index

Governance of Setra’s sustainability work _____________ 39

Although Setra does not own any forest itself, it is in the forest that our business begins. We have a responsibility to guarantee that the timber we use comes from sustainably managed forests, i.e. forests where financial, economic and social values have been developed in a balanced manner. In a future in which wood plays an increasingly important role, it is vital to continue safeguarding the Swedish forestry model, where we maintain biodiversity while simultaneously working to generate high returns.

stands within three years of harvesting. The growth in Swedish forests has long exceeded harvesting. For every tree felled, at least two new ones are planted, which means that there is twice as much forest in Sweden today as there was 100 years ago.

Sustainability work

Our key sustainability areas_____ 14

Our opportunities and challenges

Introduction

Introduction ________________________ 2

• Wood from forests in which genetically modified trees are planted.

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6

Controlled and certified wood products Proportion of sawn volumes controlled and certified 100%

100%

Our contribution to the UN SDGs _______________________ 13

19%

20%

23%

Our key sustainability areas_____ 14

17%

18%

20%

22%

Our portfolio ________________________ 15

2016

2017

2018

2019

2020

2021

Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11

Climate-smart raw

material _____ 18

Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29

■ Controlled

■ PEFC

28%

22%

■ FSC

All the timber Setra buys is controlled wood and some is also certified. We only use certified suppliers. Wood from forests that are not certified must fulfil Setra’s raw material policy, which is checked by the supplier.

Safety, culture and colleagues __________________________ 32

Executive

Management _______ 37

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

FSC – Forest Stewardship Council® – is a non-profit, independent, international members’ organisation that provides a system for the voluntary certification of responsible forest management. Approximately half of the productive forest land in Sweden is FSC-certified. According to the FSC forest standard, 5 percent of the land must be set aside for conservation purposes. In addition, a further 5 percent must be managed using adapted methods to preserve and develop natural or social values. PEFC – Programme for the Endorsement of Forest Certification – is an independent umbrella organisation working to promote sustainable private forestry through independent third-party certification. In Sweden, approximately 16.4 million hectares of forest land are PEFC-certified.

transported by rail. Train deliveries are set to gradually increase as more of Setra’s units gain access to more efficient rail solutions.

Optimal flow to our sawmills The correct timber for the different purposes is selected out in the forests, where cutting

Quality and reliable raw material deliveries are crucial to Setra’s business. The fact that our leading suppliers – Sveaskog and Mellanskog – are also our owners provides a firm basis for a secure supply of raw material. State-owned Sveaskog is Sweden’s largest forest owner, and has obtained FSC® and PEFC™ certification for its entire holding of managed forest. Sveaskog works to realise the national climate and environment objectives of sustainable forests and a rich diversity of plant and animal life. The emphasis is on enhancing forest growth and boosting ecological values, taking into account the high social values the forest generates. Mellanskog is an association belonging to 27,000 private forest owners. The association is certified by PEFC and traceability certified by FSC. Approximately one-third of the members and 40 percent of their forest area is PEFC-certified. Mellanskog purchases its members’ wood and sells it

Many customers who buy wood products want information about their origin. It is becoming increasingly common to demand sustainable forestry and certified raw material. Forest owners that hold FSC or PEFC certification have made a voluntary commitment to responsible and sustainable forestry, and agree to inspections by third-party auditors. Setra pays a premium for certified raw material. The proportion of certified timber purchased is defined by customer demand. In 2021, fully 44 (50) percent of the wood products sold by Setra was FSC- or PEFC-certified. At the same time, 34 (23) percent of the cellulose chips and 13 (15) percent of the biofuel was sold as certified. Demand for certified wood is also strong within the construction industry. Setra’s CLT factory is certified, which means that the building elements can be sold as certified.

Damaged wood We at Setra are committed to ensuring that as much benefit as possible is drawn from forest assets – taking into account both respect for nature and the interests of the forest owners. We therefore accept timber that is felled in storms or damaged by insect attacks and forest fires. However, a crucial factor for all sawmills is the freshness of the raw material. It is therefore of utmost importance that damaged timber can be quickly dealt with in the forest.

Contact details

regional origin and comes from forests within a 13-mile radius of the sawmills. The short distances provide a competitive advantage by making transport climate-efficient. Setra’s price for the timber includes harvesting and delivery. The majority arrives at the sawmills by truck, while a small share, 4 percent, is

Close working relationships with suppliers

Certified products

GRI Index

Governance of Setra’s sustainability work _____________ 39

Certified raw material

to customers including Setra. When selling, the association checks that timber that is not certified still fulfils the requirements in Setra’s raw material policy. Mellanskog’s certified members have voluntarily set aside the equivalent of 97,000 football pitches of forest for nature conservation.

Sustainability work

100%

We create green value _____________ 7

is adapted to match customers’ wishes and requirements. In 2021, the sawmills have placed a strong focus on precision measurements, among other things. Setra and Sveaskog have continued their participation in the DiVISI research project on digitalised value chains in the forestry industry, the purpose of which is to share data throughout the value chain to optimise the flow from harvesting to sawmills. The aim is to achieve benefits for both sustainability and profitability. Since May, Setra has also been participating in a project coordinated by RISE Research Institutes of Sweden. A laboratory study is being conducted to determine whether a near-infrared (NIR) camera can help sawmills sort timber by quickly detecting rot or other defects. The study will be completed in 2022.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

We work with a fantastic, sustainable raw material and want to make the best use of every log. At the same time, we are focused on reducing our energy consumption and the overall environmental impact of Setra’s operations.

Sustainability work

Our key sustainability areas_____ 14

Resourceefficient business

Introduction

Introduction ________________________ 2

Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Investments with a climate effect

Contact details

In 2021, decisions were made on strategic investments in Malå, Heby, Hasselfors and Skinnskatteberg that will enable us to produce more wood products of higher quality in a more energyefficient way. These include more efficient kilns for Setra’s most energy-intensive process – drying. For more details, visit setragroup.com

Setra Group Sustainability Report 2021

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Governance

It is important to make use of the entire log, from the perspectives of profitability and sustainability alike. We strive to achieve a high saw yield, i.e. a high volume of sawn product in relation to the volume of incoming timber. The saw yield is defined by the log dimensions, sawing technique and the way the log is sawn into boards and planks on the basis of the financial value of the end products and customer demand. The saw yield was 49.2 percent in both 2020 and 2021. About half of every log that arrives at Setra’s sawmills becomes sawn products in the form of planks and boards. The rest is turned into bioproducts such as cellulose chips and biofuel. The bioproducts are used by customers in the pulp and paper industry, the energy sector and in our own thermal energy production for the wood drying kilns. Optimal use of raw materials is of course also important in further processing. Setra’s production of cross-laminated timber is based around flexible widths, which allows us to use fewer resources and minimise waste. In the production of wooden components, where defects such as knotholes are cut away, we take the residual material and glue it into finger-jointed joists.

Focus on energy consumption The most energy-intensive parts of the sawmill process are drying and sawing. We almost entirely use renewable energy sources and energy efficiency is a priority. Setra’s electricity consumption per cubic metre of sawn timber has increased by 8.7 percent and fuel consumption by 7.3 percent over the past five years. This key performance indicator is affected by our rising level of processing

Energy consumption 2021 Setra consumed a total of 669,687 MWh 122,356 MWh Renewable electricity 15,684 MWh Diesel in internal transport 11,104 MWh Heating oil (district heating or own boiler)

Contact details

Resource efficiency and energy recovery play a key role in the work to reduce our climate footprint and are therefore monitored both centrally and in each unit. The way we manage our environmental and climate impact is regulated in Setra’s sustainability policy, which can be read at setragroup.com. Our operations require an environmental permit and are subject to comprehensive environmental legislation. Setra’s sawmills and processing units are certified according to the ISO 14001 standard and apply systematic environmental management programmes that include procedures and continuous monitoring.

The whole log is used

GRI Index

Governance of Setra’s sustainability work _____________ 39

Energy use, noise and emissions from machinery and bio-boilers at the sawmills and processing units are our main environmental impacts from production. Compared to many other industries, wood processing is a relatively low-energy, low-emission process, and our raw material is renewable. We use renewable energy sources and have the advantage of being able to use bark, wood chips and shavings from the production process as biofuel in our own production. We can make our production even more efficient and continue to reduce its environmental impact through improved working practices and investments in new technology. We are monitoring advances in electric forklifts and continue to increase the share of renewable fuels, as well as exploring ways to improve the efficiency of internal transport.

How we work

Sustainability work

Our key sustainability areas_____ 14

Our opportunities and challenges

Introduction

Introduction ________________________ 2

13,291 MWh Biodiesel in internal transport 507,252 MWh Bioenergy (district heating or own boiler)

Setra Group Sustainability Report 2021

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

More efficient drying

of all the energy we consumed in 2021 was renewable.

Effects of the coronavirus pandemic

expertise. Setra’s Board also decided to invest in new, more energy-efficient kilns for Heby and Hasselfors. Malå will gain a new drying plant as part of a larger investment, incorporating everything from a new log intake and saw line to an updated trim saw. A major investment will also be made in Skinnskatteberg, which will get a new saw line for narrow timber. Overall, the technological upgrades will have a major impact in terms of improving production efficiency, increasing product quality and reducing the climate footprint per cubic metre produced. Other measures to reduce energy consumption include replacing all light sources with LED lighting, and progressively

replacing systems powered by hydraulic oil with electric systems. We are also continuing to install occupancy controls on light fittings and review the maintenance temperature in our premises. In addition to the Group-wide measures, each unit is responsible for identifying and implementing those measures that are expected to generate the greatest impact locally. Read more in the Climate report on page 25.

Efficient production flows Setra’s units plan their production on the basis of customer needs, so as to generate the most efficient flows possible. In this way, we ensure that the timber we bring in is

The pandemic led to increased demand for wood products for most of the year. At the same time, the extra precautions required to prevent transmission in the community have meant that we have been short of staff for extended periods. In order to meet demand while maintaining, or in some cases even increasing, production volumes, we have increased rotation and flexibility between departments. We have also hired extra staff when the situation has become particularly difficult.

Energy partnerships Over 98 percent of Setra’s thermal energy is produced using renewable fuel. Bark and sawdust from our own production is incinerated in boilers and the heat is then used in the drying kilns. Fossil oil is only used in con23

Contact details

The greatest potential lies in the efficiency of the drying kilns. The drying process accounts for over 50 percent of the company’s electricity consumption and more than 90 percent of our thermal energy consumption. We optimise drying management using special software. 2021 saw the launch of a forum that brings together all of Setra’s kiln technicians to exchange experiences and

96%

GRI Index

Governance of Setra’s sustainability work _____________ 39

used to produce high-demand, high-value goods. A process-oriented approach was introduced about four years ago and now characterises our entire production. Maximising availability – i.e. the time our sawmills and processing units run without interruption – is directly linked to efficiency. Fewer stoppages translate into higher production and lower energy consumption per volume produced. Fewer stoppages also mean that employees devote less time to operational disruptions and urgent maintenance – tasks that can also be associated with elevated risk. Software to measure and analyse production stoppages has been installed in all the units, and work is ongoing to identify measures to prevent such stoppages. We are also working on reducing downtime during retooling and making maintenance more efficient by involving operators in the care of the equipment, in order to increase availability at the sawmills.

Sustainability work

Our key sustainability areas_____ 14

and production volumes. In this context, it is worth mentioning that both factors support the development of sustainable wood construction and the more we produce, the more biogenic carbon is stored in the wood products we sell. Total energy consumption amounted to 670 GWh in 2021. Thermal energy accounted for 78 percent, electrical energy just under 18 percent and fuel consumption a little over 4 percent Our overall goal is for the business to be climate neutral by 2030, excluding foreign transports. Setra is working systematically to map energy consumption and identify potential savings. We are subject to the Swedish Act on Energy Audits in Large Enterprises (EKL), and we have surveyed consumption at all our production units at least once since 2016. In 2021, energy consumption at Kastet (Gävle) and Nyby was investigated for the second time. The findings indicate which measures are most viable from the perspective of energy savings and are reported to the Swedish Energy Agency. One of the many measures we are proud of in improving energy efficiency in 2021 is the replacement of the compressor on the trim saw in Heby, which has cut energy consumption by an average of 53 percent. In the coming years, the units will review the measures identified in the energy audits and work on them on an ongoing basis. We see great potential for improvement.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6

Electricity consumption 2017–2021 kWh/m3 sawn timber

We create green value _____________ 7 Our path to Grönsamhet _________ 8

62.4

2017

2018

63.7

64.3

2019

2020

Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our key sustainability areas_____ 14 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Setra’s electricity consumption per cubic metre produced is influenced by both the total volume produced and the rising level of processing. A higher volume contributes to a lower ratio, while processing such as the production of CLT and planed goods generally involves higher electricity consumption. As of 2018, Setra purchases electricity exclusively from renewable sources.

Executive Management _______ 37

Diesel consumption 2017–2021

Board of Directors _____________ 38

kWh/m3 sawn timber 15.1

16.0

15.7

16.2

2018

2019

2020

2021

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47 2017

Setra’s outdoor forklifts run on diesel, which had a minimum renewable content of at least 32 percent in 2021. The proportion of hydro genated vegetable oil (HVO, fossil free diesel) varies between units, depending on local agreements with our suppliers. Electric forklifts are mainly used indoors. Machines are gradually being replaced by newer models with better environmental performance. Setra is closely monitoring the development of powertrains for the forklift market and will consider electric forklifts as the technology matures. Several initiatives are underway to improve the efficiency of internal logistics at the sawmills and processing units. For example, we are improving timber management through GPS Timber software, which results in both lower fuel consumption and higher yields, and we are providing eco-driving training at several of our units. At the CLT and components production plant, which is being scaled up, work is ongoing to streamline internal transport in parallel with the development of new processes.

Waste sorting and recycling Sorting, recycling and using recycled materials in our processes is a matter of course for Setra. Our ambition is to increase the degree of recycled material and expand waste sorting. Our sorting categories in our production and processing units and offices currently include household waste, metal, scrap metal, plastic, cardboard, office paper, corrugated board, electricity, batteries and scrap wood. Computers are also recycled and parts reused. Overall, around 64 percent of Setra’s waste recycling was sent for material recovery in 2021. The plastic wrapping on our wood packages contains up to 70 percent recycled plastic. The thicker plastic straps used for packaging are made from PET that is also recycled.

Contact details

Diesel consumption has increased by 7 percent in the last five years. At the same time, the share of biodiesel has grown to 46 percent, as shown in green. In the future, we will increase the biodiesel in the fuel mix and in the longer term we will move to completely fossil free alternatives.

Internal transport

Disruptive noise is always a high-priority issue when making new investments and operational changes. Noise calculations make it possible to determine how any new operations will affect local residents, and how the plant can be designed to prevent unnecessary disruption. In accordance with our environmental permits, we take noise measurements as required. The challenges we face moving forward are to meet the noise requirements of the new environmental permits for our new, large-scale investments in the units. Analyses and action plans are constantly being worked on for all external environmental issues. The glulam factory in Långshyttan has been working for the past two years to reduce noise levels for those living near to the site. Old chip extraction systems have been replaced by new ones that are quieter and more energy-efficient. Pipes have also been insulated to reduce the spread of sound from point sources.

GRI Index

Governance of Setra’s sustainability work _____________ 39

2021

Noise

Sustainability work

63.1

68.6

nection with boiler problems or the servicing/ maintenance of bio-boilers. In several locations, we have also set up energy partnerships with the local community. Malå, Gävle and Skinnskatteberg all use biofuel from Setra in their district heating boilers, with some of the energy generated being returned to our industrial plants. In Nyby, we also use our own boiler to generate district heating for the nearby town of Björklinge. Since 2018, Setra has only purchased ecolabelled electricity from suppliers of hydropower, wind power and bioenergy.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7

Climate report

Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11

Introduction

Introduction ________________________ 2

Our overall climate goal is to be climate neutral by 2030. This goal applies to all areas of the value chain, with the exception of foreign transports.

Our contribution to the UN SDGs _______________________ 13

Sustainability work

Our key sustainability areas_____ 14 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate report _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

First in the world to make fuel from sawdust

Contact details

Autumn 2021 saw the production of bio-oil from sawdust begin at Pyrocell’s factory in Gävle – a pioneering value chain that stretches all the way from the forest to the petrol tank, via Setra’s Kastet sawmill. The oil is refined into renewable fuels with emissions up to 90 percent lower than fossil alternatives. Pyrocell is jointly owned by Setra and fuel company Preem. For more details, visit setragroup.com

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Climate report _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Governance

Climate calculations in line with the GHG Protocol Setra’s climate calculations are made in line with the international Greenhouse Gas (GHG) Protocol and are presented in three categories, known as scopes. The report presents our emissions from a life cycle perspective: from planting the spruce and pine seedlings to delivery of the sawn and processed products, as well as bioproducts, to customers. Indirect emissions, such as purchased electricity and heating, purchased transport, travel and the climate impact of purchased raw materials and products, are also included. For example, the wood raw material we buy generates emissions from the machinery and transport associated with forest management and harvesting. Setra’s emissions of greenhouse gases from its own heating boilers, machinery and vehicles (Scope 1) account for a small proportion, around 5 percent, of the total emissions. Indirect emissions from purchased energy (Scope 2) account for less than 1 percent of the total emissions. This is because Setra only buys renewable, ecolabelled electricity. The vast majority of emissions, 94 percent, are thus indirect, coming

Common roadmap for the forestry industry Setra is participating in the Swedish forestry industry’s roadmap for fossil free competitiveness. The plan sets out the key role of renewable forest raw materials in society’s transition efforts, focusing on three areas in which the industry contributes to work on climate issues: • Substitution – enabling fossil goods or products that generate major fossil emissions to be replaced with bio-based products. • Carbon capture – binding carbon in forests and bio-based products. • Reduced energy use – cutting greenhouse gas emissions from the industry’s own consumption of fossil energy.

1.3

million tonnes CO2 The amount of carbon dioxide stored as carbon in the wood products Setra sold in 2021 (1.7 million m3). This storage equates to the greenhouse gas emissions of around 150,000 Swedes.

Contact details

The annual Climate report indicates where in our operation emissions are generated – and how large they are – in relation to the value chain as a whole. Setra also prepares local climate reports for every unit in Sweden. These reports help us to prioritise our efforts and monitor our goal of becoming climate neutral. In addition to the Group-wide work, each unit and department decides on its own activities to reduce emissions and reach our targets. We work actively to monitor the environmental aspects of our operations

How we work

GRI Index

Governance of Setra’s sustainability work _____________ 39

Wood is incredibly sustainable. Growing trees capture carbon dioxide from the atmosphere and store it as carbon. The carbon locked up in our sawn wood products is several times greater than the emissions along our entire value chain, from seedling planting to the wood products reaching the customer. Our products are thus inherently climate positive. The net effect is about 800 kg of bound carbon dioxide per cubic metre of sawn timber. As a manufacturer of wooden structural elements, we can play our part in the construction sector’s green transition. The bioproducts generated when we manufacture wood products are also put to good use, including for recyclable packaging and renewable energy in the heating and transport sectors – areas where they replace fossil raw materials. Over the next few years, we will be placing a strong focus on the roadmap towards climate neutrality by 2030. The biggest challenge we face along the way is switching to fossil free transport.

and of each unit through key performance indicators, which are well established in our environmental management system and reviewed annually. Our key environmental indicators include raw materials, inputs, bioproducts, energy consumption, emissions to air and waste. At the beginning of each year, there is a major push to compile data and information for the Climate report, both internally and from external partners. In 2022, we will develop new energy and climate targets to make Setra climate neutral by 2030.

Sustainability work

Our key sustainability areas_____ 14

Our opportunities and challenges

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2 Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11 Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15 Climate-smart raw

material _____ 18

Resource-efficient business ___ 21 Climate report _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37

Setra reports its emissions in accordance with the GHG protocol. The emissions are classified as follows:

Setra’s climate footprint 2021 Tonnes of carbon dioxide

SCOPE 3

SCOPE 2

SCOPE 1

Scope 1: Direct emissions from the business (fuel combustion at own plants and in company vehicles)

SCOPE 1______________________ 5.4%

SCOPE 3_______________________ 94.5%

Drying and heating__________ 5,005

Fuel and energy-related activities _____________________________ 2,740

Machines__________________________ 4,134 Business travel______________________ 32 Total__________________________________ 9,171

Scope 2: Indirect emissions from purchased energy (electricity, district heating, district cooling)

Raw material and inputs_____ 17,485 Waste in own operations___________ 19

Sustainability work

Our key sustainability areas_____ 14

Emission categories

Commuting and business travel________________________ 514

SCOPE 2________________________ 0.1%

Scope 3: Indirect emissions from other parts of the value chain, such as purchased transport, travel and the climate footprint of the raw materials.

Purchased electricity, heating and cooling_______________ 60 Total_____________________________________ 60

Inbound timber deliveries_____________________________ 11,445 Transport to customers____ 127,430 Total, incl. transport__________________ 159,632

The calculations include emissions from divested and sold units, as well as from wholly owned new investments. Setra’s full Climate report is available at setragroup.com.

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

from other parts of the value chain (Scope 3). Within this category, the distribution of goods to customers accounts for more than 80 percent of emissions.

Roadmap to climate neutrality

on Setra’s climate reports, climate targets, implemented measures and existing action plans. Defining interim targets, developing action programmes with climate calculations and key indicators/figures, and gap analysis will also be part of the plan.

Specific measures for the future We will also continue to work on new energy, climate and efficiency measures. In the coming years, energy-intensive parts of the business will be modernised to make production more efficient and ensure high availability. Extensive investments have already been announced for Malå, Heby and Hasselfors that will enable us to produce more while reducing our climate footprint per cubic metre produced. Shifting from dieselpowered forklifts to forklifts that run on

renewable fuel, and continuing to set requirements for our timber suppliers and freight carriers will also be crucial moves, as will continuing to step up the use of renewable fuels in our machines. In collaboration with the Swedish Transport Administration and Region Uppsala, work is underway to connect more of Setra’s units to the rail network. Within a few years, it will be possible to increase the share of rail transport for both timber and finished products, which will bring considerable environmental benefits. Becoming climate neutral and achieving our vision for Grönsamhet will require efforts from everyone at Setra. To this end, all the units and departments develop climate impact reduction targets as part of their annual business planning.

Contact details

Our goal of a climate neutral Setra by 2030 includes all operations from forest to customer, with the exception of foreign distribution. The goal is for our operations to make a net zero climate impact overall. At present, the emissions in question amount to about 50,000 tonnes of carbon dioxide per year. In the first instance, we will reduce emissions as far as possible. For the emissions we cannot eliminate, it may be necessary in the long term to purchase what is known as “carbon offsetting” such that our net sum is zero. To achieve climate neutrality, we will

need strong political support and closer collaboration with other stakeholders. We have previously identified the core activities that have the greatest potential to reduce our climate footprint and worked to implement some of these. We have cut our emissions in recent years through, for example, the purchase of renewable electricity, higher blends of renewable fuels in our machines, and getting our timber suppliers and freight carriers to reduce emissions in their value chains. In 2022, we will develop a more detailed plan for achieving the goal of climate neutrality, setting out what actions need to be taken and when. The plan will include business intelligence to establish how the world around us affects the demands placed on us, plus a description of the current situation, based

GRI Index

Governance of Setra’s sustainability work _____________ 39

Setra Group Sustainability Report 2021

800

Setra’s sustainability work ____ 6

Wood has a positive effect on the climate

We create green value _____________ 7

■ Carbon dioxide emissions, excl. transport, in kg.

Our path to Grönsamhet _________ 8

■ Carbon dioxide emissions, incl. transport, in kg.

Setra’s value chain ________________ 10 Global trends _______________________ 11

■ Amount of carbon bound in wood, converted into CO2.

Sweden

Our contribution to the UN SDGs _______________________ 13 Our portfolio ________________________ 15

Germany

Climate report _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Kg CO2/m3 sawn timber, excluding transport to customer 60 50 40

79 232

The table shows the binding effect in relation to the carbon dioxide emissions generated, from seedling planting to delivery to customers in different countries. For example, using wood from Setra for construction in Sweden helps to lock in 772 kg of carbon dioxide per cubic metre (800 kg – 28 kg).

Increase building in wood

ness for CLT-based building systems” and the IndBygg – Industrial Wood Construction project, run by the Paper Province business cluster, are examples of studies in which we have participated over the year. Setra is also providing construction materials for the Villazero project, for which Fiskarhedenvillan and Mondo Architects are developing a carbon neutral detached house.

2014

2016

2017

2018

2019

2020

2021

Setra has halved greenhouse gas emissions per cubic metre of sawn timber (excluding transport to customers) since 2014, when we produced our first complete three-scope Climate report. The single most important measure so far has been the purchase of renewable electricity. In addition, climate action by our timber suppliers has led to significant reductions in emissions. Increasing the share of renewable diesel in our machines has also had a major impact. The specific emissions have not been corrected for changes in emission factors or inconsistencies identified subsequently.

Total climate footprint 2019–2021 Tonnes of carbon dioxide, including transport to customer 198,129

Collaboration with suppliers A large proportion of our emissions are generated indirectly – when we purchase transport services, for example. To influence them, we are conducting a detailed dialogue and setting requirements for suppliers. Fuel choices are a key issue, among both timber suppliers and carriers of goods to customers. The ability to optimise capacity utilisation and plan routes also has an impact on Setra’s climate footprint. Read more about how we work on this in the Sustainable transport section.

2015

2019

182,002

2020

168,863

2021

Over the past three years, Setra has reduced its total footprint by 15 percent (29,266 tonnes). Specifically, emissions have decreased significantly in Scope 3. Our total climate footprint is heavily influenced by production volumes and the export balance between different markets.

Contact details

Wood is the only renewable construction material. It has a significantly lower climate footprint than concrete and steel, and also stores carbon dioxide throughout its life cycle – which means that buildings with wooden frames are often climate positive. Our most important contribution to the climate is therefore to promote building with wood, which we do, for example, by providing product information, quality-assured climate data and environmental product declarations (EPDs) for our products. In cooperation with a building contractor, we simplify the procedure for those who want to build in wood by offering wooden frames on a turnkey basis, from design to assembly. We also participate in studies and analyses of industrial wood construction and the climate benefits of the material. Luleå University of Technology’s study on productivity measures (published in 2021), Linnaeus University’s project “Greater competitive-

GRI Index

Governance of Setra’s sustainability work _____________ 39

Carbon dioxide emissions 2014–2021

Climate-smart raw material _____ 18 Resource-efficient business ___ 21

Japan

Wood binds the equivalent of 800 kg of carbon dioxide per cubic metre of sawn timber.

Sustainability work

Our key sustainability areas_____ 14

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11

Sustainable transport

Introduction

Introduction ________________________ 2

Setra’s business is dependent on transport operations, and these account for the majority of our greenhouse gas emissions. We are working in a targeted way to make them as efficient and sustainable as possible.

Our contribution to the UN SDGs _______________________ 13

Sustainability work

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Switching to HVO makes a big impact Contact details

Switching to the fossil free fuel HVO for our container movements from sawmill to port provides a reduction of around 475 tonnes of carbon dioxide emissions per year, equivalent to the annual emissions of around 190 cars.

Setra Group Sustainability Report 2021

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Our sawmills and processing units are located in rural Sweden, and approximately 70 percent of sales are to export customers, many of them outside Europe. In total, transport operations account for almost 85 percent of our total climate emissions (see the Climate report on page 25 for details). Viewed from the perspective of the entire life cycle, our wood products strongly benefit the climate even if they are transported to the other side of the world, because they bind so much more carbon dioxide than is emitted along the supply chain. Nevertheless, it is still important to do what we can to minimise fossil emissions. We are doing this, for example, by exploring and investing more in rail-based transport, and by working and engaging with transport operators to increase the share of renewables. Our main challenge is that we buy in all our logistics services, which makes it harder to exert any influence, especially when it comes to overseas transport.

Climate positive products Our wood products are climate positive even when transported to the other side of the world, as they store several times more carbon dioxide than is emitted along the entire supply chain.

How we work Working relationships, dialogue and follow-up

Fundamentally, the transport options we use must be efficient, safe and eco-friendly; they must also meet requirements for a good working environment and good working conditions for transport company employees. Our requirements are based on the Swedish Forest Industries Federation’s sustainability criteria for road transport and criteria from Q3, an association for sustainable road transport.

We choose our partners with care and only work with reliable shipping lines and dispatchers who maintain a high level of quality and comply with all applicable laws and regulations. Setra’s Code of Conduct for Suppliers sets out basic sustainability requirements relating to areas such as environmental work and employee conditions. The Code of Conduct is included in all contracts with our carriers and must be signed, with follow-up of any non-compliances. We hold regular

More fossil free in the tank For domestic road transport, we have a longterm contract with a main supplier, Unite, facilitating efficient and smart transport chains. In 2021, Unite’s transport flows involving Setra had an average fossil free mix of 25.1 percent. Unite has a well-developed environmental programme, with a goal of being fossil free by 2030. As part of this, the company is actively exploring future technologies, alternative fuels and vehicles of the future. 2020 saw the launch of a cooperation

project between Setra and Unite involving a wood chip truck running on liquid biogas (LBG) – making the transport 100 percent fossil free. This only relates to one vehicle at the moment, but Unite is assessing whether this solution can be rolled out to more freight carriers and transport routes. Interest in fossil free transport is especially high with regard to our construction solutions in CLT and glulam. We therefore offer a transport solution that runs on 100 percent hydrogenated vegetable oil (HVO). In 2021, our carriers will also have switched to HVO in all the trucks that carry our containers from the sawmills to the port or rail terminal. 30

Contact details

Governance

meetings with carriers to follow up on guidelines, requirements, conditions, statistics and development work.

GRI Index

Governance of Setra’s sustainability work _____________ 39

Our opportunities and challenges

Sustainability work

Our key sustainability areas_____ 14

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6

Innovative contribution to the transport sector’s transition

Principal type of transport Share of sold wood products by volume

material _____ 18

Resource-efficient business ___ 21 Climate repor t _____________________ 25 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Sea

Road

Part of route by rail: 21%

Efficiency in every load Together with our carriers, we want to achieve the most optimal logistics flows possible. The aim is to always make maximum use of the cargo space and minimise the distance travelled unladen. The partnership with our main carrier Unite means, for example, that the same vehicle can be used to transport timber from a sawmill to a processing unit, collect finished products and deliver them to nearby customers. In 2021, the system of standard weights that we have previously used for loading was replaced by precise weights for each package of timber. The installation of package scales at Setra’s sawmills optimises the load factor, while making distribution safer.

Investing in rail and investigating shipping

In order to make a bigger contribution to a more sustainable transport sector, we are actively involved in a number of industry forums and dialogues. As a member of the Swedish Forest Industries Federation, Setra is involved in driving issues such as the introduction of longer and heavier trucks that create less traffic and emissions. The electrification of heavy goods vehicles, more intermodal transport (solutions involving different means of transport) and emission issues linked to maritime transport are other areas where we are working to exert influence. During the year, we have also intensified our cooperation with other industrial companies and actors in the transport sector by participating in the project “Sustainable and Competitive Freight Transport” initiated by the Chamber of Commerce of Central Sweden.

Contact details

From an environmental point of view, rail is the best mode of transport and Setra uses this option whenever possible. Maritime transport also produces fewer emissions per tonne-kilometre than road transport, and we

Industry partnerships

GRI Index

Governance of Setra’s sustainability work _____________ 39

53% 47%

Sustainability work

Our key sustainability areas_____ 14

As a processor of raw material from forests, Setra is uniquely placed to promote an increase in renewable fuel and a reduction in the climate impact of transport. The company Pyrocell, which Setra owns jointly with Preem, produces bio-oil from sawdust. The oil replaces some of the fossil raw material in petrol and diesel, which is estimated to cut carbon emissions by 80–90 percent. Pyrocell’s factory is located next to Setra’s Kastet sawmill in Gävle and started production in September 2021. The plant’s annual production is expected to be around 25,000 tonnes of bio-oil, equivalent to the annual consumption of up to 17,000 cars.

are actively working to find more efficient shipping routes and partnerships. Currently around 21 percent of our sawn wood products travel part of the distance by rail, compared with 18 percent in 2020. Much of Setra’s export flows to Asia go through the Port of Gothenburg, and we use rail solutions for container transport to and from the port. The share of rail transport is set to gradually increase. Over the next few years, Setra will be completing several track expansion projects in cooperation with the Swedish Transport Administration, affecting the sawmills Hasselfors (completed in 2021), Skinnskatteberg (begins in 2022) and Heby (begins in 2025). Once Setra can link rail connections between several of our units, our carbon emissions will be further reduced. It will also be easier and more cost-effective to move timber in the event of storms or insect attacks, for example.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 We create green value _____________ 7 Our path to Grönsamhet _________ 8 Setra’s value chain ________________ 10 Global trends _______________________ 11

Safety, culture and colleagues

With employee health and safety as our top priority, we are working to become a high-performance organisation where everyone contributes.

Introduction

Introduction ________________________ 2

Our contribution to the UN SDGs _______________________ 13

Sustainability work

Executive Management _______ 37 Board of Directors _____________ 38

GRI Index

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

A growing feedback culture

Contact details

Indicators measuring our working climate, whether we give feedback and how our managers contribute to increased motivation levels all point in a positive direction in the Setra employee survey. One factor that we believe feeds into this is our leadership development programme, which was launched three years ago and includes training in feedback and coaching. Leadership is closely linked to employee motivation – which in turn has a major impact on Setra’s ability to achieve its goals.

Setra Group Sustainability Report 2021

Executive Management _______ 37

Our vision of Grönsamhet – a commitment to doing business that benefits not only Setra, but also our customers, society and nature – is a motivator for many of the people who work at Setra and apply to join the company. One of our challenges entails establishing a strong and stable safety culture. The wood industry is a high-risk sector from the perspective of the number of workplace accidents, and systematic work is required to raise and maintain awareness in the whole company. Setra operates across a large geographical area, with global offices and a market that spans almost the entire world. We always strive to work according to our core values, with clear leadership and an inclusive culture. Strong commitment is vital to increasing our competitiveness.

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Governance

Setra applies values-based leadership, where commitment, innovation and responsibility are key concepts. For several years now, there has been a major effort to strengthen leadership skills. Committed managers whose leadership is based on our core values enable us to help employees perform better and achieve greater results. All Swedish managers with personnel responsibilities complete our leadership development programme and new managers are trained on an ongoing basis. Most of our managers, more than 60 people, have so far completed the programme. In 2021, a development programme was also launched for specialists, aimed at deepening project management skills and creating internal networks that strengthen the company. The hope is that it will become a recurring initiative. A leadership forum for ongoing skills development of our managers was also launched during the year. The training meetings on different topical themes are organised up to five times a year. The first session focused on how to detect and deal with victimisation as a manager. Setra also has a digital manager’s handbook to support managers with personnel responsibilities. In order to ensure that we are all working to achieve Setra’s overarching strategy and business plan, we apply a shared model of management by objectives. This model is based on managers and other leaders clearly communicating their expectations and setting goals in consultation with employees and work teams. We want to have a continuous dialogue about work and performance at Setra. An important part of this is the annual appraisal between employee and manager, which

Average age of Setra employees

Contact details

Setra’s values and sustainability policy emphasise that safety, business ethics and the working environment – also including social and organisational factors – are all priority issues. We have a zero vision regarding workplace accidents, plus an internal management system that covers occupational health and safety, a subject that is addressed regularly via risk analyses, safety inspections, internal audits and so on. Workplace accidents are reported and monitored in SIA, the Swedish sawmill industry’s system for reporting work injuries. Our units all comply with competition legislation, guidelines from the Swedish Anti-Corruption Institute, and international provisions regarding sanctions.

Values and leadership

GRI Index

Governance of Setra’s sustainability work _____________ 39

How we work

Sustainability work

Our key sustainability areas_____ 14

Our opportunities and challenges

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Employee Employee distribution distribution 2021 2021

Workplace accidents

73% 73%

92% 92%

Blue Blue collar collar

Employees Employees in Sweden in Sweden

27% 27%

8%8%

White White collar collar

Employees Employees in other in other countries countries

Our portfolio ________________________ 15

Climate-smart raw material _____ 18 Resource-efficient business ___ 21 Sustainable transport ___________ 29 Safety, culture and colleagues __________________________ 32

Executive Management _______ 37

Average no. of employees

Proportion of women

2021

801

19%

2020

775

18%

2019

771

17%

2018

861

17%

2017

793

14%

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

aims to develop both the business and the employee. The appraisal is a forum in which to receive and give feedback and to raise issues relating to the working environment, well-being and skills development – providing employees with the opportunity to develop in their professional role and to make use of their skills.

Reporting workplace accidents

2018

2019

2020

2021

Lost Time Accident (LTA) Frequency Rate: number of accidents resulting in sick leave, calculated per million hours worked 10 Target for LTA Frequency Rate in 2025

Setra has a zero vision for workplace accidents. We have adopted an interim target for 2025 whereby the accident rate should not exceed 10. This statistic covers everyone who works at Setra, including temporary staff and long-term contractors. During the coronavirus pandemic, the staffing situation has been strained at times and we have used more temporary staff than usual, which increases the risk of accidents.

sick leave, was lower than in previous years. In addition, we note that we have a higher ratio of risk observations and reported near misses (events that could have led to an accident) per accident that occurred, which is essential for us to be able to turn the tide.

Preventive safety work At Setra, systematic work is underway to improve safety, quality, delivery reliability and productivity. A key aspect of this work is our meeting structure, where we follow up on targets on a daily basis, learning from any non-compliances. Daily briefings are a forum for involving the entire shift in safety issues and for keeping a continuous flow in production. Everyone is expected to provide input on non-compliances and suggestions

for improvement based on their professional role, such as solutions to improve facilities, orderliness, machine calibration and operator maintenance. The most common accidents at Setra are slips, cuts and crushing injuries, and they often occur when work is being done to deal with a disruption to operations. Through an increased focus on reporting, we have multiplied the number of reported near misses and risk observations in recent years. Our strategy has been to avoid the most serious accidents by learning from the observations. As the number of accidents with sick leave had not decreased, several new prevention tools were introduced in 2020 and the work has been taken further over the past year. For each accident involving sick leave, an 34

Contact details

Setra has a stated zero vision: no-one is to come to harm through their work. Reporting and follow-up of accidents and near misses is handled through SIA, the sawmill industry’s common system for reporting industrial injuries. We measure accident frequency using the LTA (Lost Time Accident) Frequency Rate, which presents the number of acci-

dents resulting in sick leave per million hours worked. This statistic covers everyone who works at Setra’s Swedish facilities, including temporary staff and long-term contractors. The target for 2021 was not to exceed an LTA of 15, which corresponds to 20 accidents within the company. Unfortunately, the outcome was 31 accidents, giving us an accident rate of 23.7. This is a slight increase compared to 2020 (LTA 21) and an indication that a continued focus on strengthening the safety culture at Setra is required. We have faced a difficult situation, with high staff absences during the pandemic, and a general increase in stress across society, which may well have affected the results. On the other hand, the total number of accidents, i.e. accidents with and without

2017

GRI Index

Governance of Setra’s sustainability work _____________ 39

Sustainability work

Our key sustainability areas_____ 14

Climate repor t _____________________ 25

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Perimeter protection and personal protective equipment

Executive Management _______ 37 Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

disruptions to operations lead to more highrisk situations than when the equipment is running as planned. Our goal for 2022 is to continue to strengthen our prevention work on risk observations and near misses, and to achieve an even higher ratio of reports to accidents occurring. Furthermore, we will carry out deeper investigative work on accidents to both increase understanding and break the negative trend. Greater focus will also be placed on internal communication of safety issues via Setra’s intranet. Training in safe working practices is a key

Working environment Employees and managers share responsibility for maintaining and improving our working environment. Each production unit has its own safety committee tasked with following up and taking decisions on issues relating to the working environment. Setra’s managers, leaders and safety officers all take the training course titled BAM – Bättre arbetsmiljö (Better Working Environment). The objective is to lay the foundations for systematic work

Physical and mental health The sickness absence rate amounted to 5.8 (6.3) percent, including both long- and short35

Contact details

in-depth root cause analysis is immediately carried out, for consideration by the production organisation’s management team. The analysis aims to find out whether working practices were breached, what the consequences were and whether any action is required. The results are communicated further within the organisation. Two key factors in reducing accidents at Setra are to establish a behaviour where safety always takes priority, whatever the circumstances, and to cut the number of stoppages in our production. We know that

GRI Index

Governance of Setra’s sustainability work _____________ 39

Setra’s production units have a requirement that personnel must always wear a hi-vis vest, safety shoes and hearing protection as a bare minimum. Most units require a breathalyser test to drive forklifts and loaders. All our saw lines, trim saws and factories are fitted with barriers and safety guards that disconnect the power if anyone comes too close to the machinery. All units except Hasselfors also have external perimeter protection such as fences and gates to create a safer environment around our industrial facilities. There are plans to improve perimeter protection in Hasselfors as well. During the coronavirus pandemic, extra hygiene procedures have been put in place to reduce the risk of spreading the disease.

to improve the physical, organisational and social working environment at our work places. The training course is held every year to include all new managers, leaders and safety officers. In 2021, 32 people received the training. The employee appraisal and the Setra ringen employee survey are two valuable tools that we use to improve the working environment. Setraringen is an annual, anonymous survey that measures, among other things, work climate, leadership and motivation at work. The results from May 2021 show that motivation remains high, with an Employee Motivation Index (EMI) of 72, a figure unchanged from 2020. The result is stable and in line with comparable industries. The objective is for the EMI to continue to rise, reaching 75 by 2025. In the latest survey, our indices for work climate and managers’ ability to lead and motivate both increased. Setra’s focus on developing leadership and the work on the daily briefings may go some way to explaining this trend. The survey also shows that there are cases of victimisation in the workplace, for which there is of course zero tolerance. Setra has a system for reporting, processing and following up on victimisation, and is working tirelessly on the issue. Aspects such as workplace culture and victimisation feature in both the BAM training course and the leadership development programme, and were raised at the leadership forum in 2021. Random drug and alcohol tests have been carried out at all parts of Setra since 2019. The offices in Solna and Gävle were excluded from testing in 2021 because most of the employees worked from home.

Sustainability work

component of the preventive work. Setra uses SSG’s safety training course, which is an established concept in Swedish industry. SSG Employee Safety is mandatory for all new employees at Setra and this training is complemented by the industry-specific Safe Sawmills training, which is renewed every two years. All contractors who carry out work on our units must have completed SSG Entré, a training course that provides basic knowledge on health, safety and the environment.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Executive

Management _______ 37

Board of Directors _____________ 38

GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

2017

Setra strives to maintain high ethics in all our business relations and to demonstrate responsibility and integrity in all interactions

6.3

2018 2019 2020 2021

EMI is an overarching measure of how motivated our employees are in their work. Setra’s result is stable and in line with comparable industries. Our goal is to achieve an EMI of 75 by 2025. As of 2019, employees outside Sweden are also included in the results.

5.1

2017

4.5

5.2

5.8

2018 2019 2020 2021

Sick leave has been higher than normal in both 2020 and 2021 due to the coronavirus pandemic. Setra works in many ways to increase healthy attendance and our goal is for at least 95 percent healthy attendance in a normal year.

Total sick

Employee Motivation Index 71

with our customers, suppliers and partners. Our business ethics guidelines cover compliance with competition legislation, gifts and hospitality, plus our Code of Conduct for Suppliers. We have a digital course on business ethics that is aimed at all white collar workers, agents who work on behalf of Setra, and production staff who have contact with customers, suppliers and/or partners. The course was run for the first time in 2019 and renewed in 2021. Fully 95 percent of the target group had completed the course by

the end of the year. Setra also has a white book that provides guidance on business ethics dilemmas, based on actual cases from a survey of the company’s business risks. During the year, the company procured an external whistleblower service for anonymous reporting, which will be launched in spring 2022. Reports in the new tool will go to the external supplier for an initial check, and then on to the CEO, CFO or SVP HR at Setra.

2017

Percent, Setra in

72 5.1

2017

2018 2019 2020 2021

4.5

2018 20

Sick leave has be normal in both 20 to the coronaviru works in many wa healthy attendan for at least 95 pe attendance in a n

Contact details

Business ethics

Percent, Setra in Sweden

GRI Index

Governance of Setra’s sustainability work _____________ 39

Recruitment and skills development Our business requires more and more technical skills across the board. New duties, knowledge sharing with colleagues and job rotation are ways to increase internal competence, and there are also opportunities for external training. The aim of skills development is for employees to feel confident in their roles both now and in the longer term. During the year, Setra has recruited mainly for our wood industry hub in Långshyttan. We are noticing that sustainable building in wood is something that attracts applicants, but there is fierce competition for skills. As part of a male-dominated industry, we have a lot to gain from more equal gender representation. Setra uses recruitment agencies to fill positions in the production organisation and this has proven to be a success factor in increasing the number of women.

Total sick leave

Employee Motivation Index

Sustainability work

Our key sustainability areas_____ 14

term sick leave. Short-term absenteeism was about one percentage point higher than in normal years due to the pandemic and the extra caution being taken. Our objective is to achieve a healthy attendance rate of at least 95 percent. We are well aware that numerous factors affect how often we are off sick – and for how long – and we are working on the issue in several ways, for example in employee appraisals and by developing leadership. Setra has an agreement with a company that is helping us with the issue of concealed mental health issues stemming from stress or problems with drugs and alcohol. All Setra managers with subordinate employees are trained in spotting the signs of concealed mental health issues.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 Executive Management _______ 37

Executive Management

Introduction

Introduction ________________________ 2

Board of Directors _____________ 38

Setra’s organisation

Governance of Setra’s sustainability work _____________ 39

Sustainability work

GRI index __________________________ 43

CEO

Appendix __________________________ 45

Katarina Levin

Olle Berg

Pontus Friberg

Contact details ___________________ 47

President and CEO Born: 1964 Employed since: 2020 Education: MSc Forestry Science

EVP Market and Business Development Born: 1965 Employed since: 2013 Education: MSc Econ.

SVP Enterprise Risk Management Born: 1962 Employed since: 1993 Education: MSc Forestry Science

Finance and Accounts HR and Payroll

IT Risk Management Communication

Production and Sustainability

Supply Chain and Technology

Market and Business Development

BA Building Solutions and Components

Sustainability

Johanna Gydingsgård

EVP Supply Chain and CTO Born: 1961 Employed since: 2017 Education: MSc Eng.

CFO and acting CIO Born: 1974 Employed since: 2018 Education: MSc in Business Economics

Daniel Halvarsson

Joakim Nyqvist

EVP Building Solutions and Components Born: 1979 Employed since: 2019 Education: MSc Eng.

SVP HR Born: 1971 Employed since: 2018 Education: Bachelor’s degree in education

Environment

Contact details

Anders Nordmark

EVP Production and Sustainability Born: 1973 Employed since: 2020 Education: MSc Eng.

GRI Index

Jonas Gustavsson

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 Executive Management _______ 37

Board of Directors

Introduction

Introduction ________________________ 2

Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

Appendix __________________________ 45 Contact details ___________________ 47

Sven Wird

Per Matses

Fredrik Munter

Lennart Sundén

Chairman since January 2020. Director since 2018. Main occupation: Various board positions, including Chairman of the Swedish Hockey League, SHL. Born: 1959

Director since September 2020. Main occupation: Various board positions, including Director of Sveaskog AB and RISE AB. Born: 1951

Director since January 2012. Main occupation: Chairman of the Audit Committee. Director of SJ AB. Born: 1958

Director since January 2020. Main occupation: CEO Mellanskog Born: 1974

Director since January 2020. Main occupation: Various board positions, including Director of Mellanskog and Preem AB. Born: 1952

Juha Taavila

Ellinor Berglund

Lennart Berglund

Tomas Larsson

Director since January 2020. Main occupation: Independent advisor. Previously several years at Stora Enso Wood Products. Born: 1956

Employee Representative. Board Member since 2009. Main occupation: Customer Service. Employed since 1989. Born: 1969

Employee Representative. Board Member since 2019. Main occupation: Forklift Operator. Employed since 1986. Born: 1969

Employee Representative. Board Member since 2016. Main occupation: Shift Leader. Employed since 1989. Born: 1968

Jonny Treard Andersson

GRI Index

Anders Källström

Sustainability work

GRI index __________________________ 43

Contact details

Employee Representative. Deputy Board Member since 2019. Main occupation: Operator. Employed since 2005. Born: 1963

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 Executive Management _______ 37 Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

Appendix __________________________ 45 Contact details ___________________ 47

Setra’s aim is for sustainability to be an integral part of everything we do. Our core values of commitment, innovation and responsibility are to serve as our guiding lights in making sustainable decisions and acting ethically in our everyday work. Materiality analysis and prioritised sustainability topics

Stakeholder dialogue Setra’s priority stakeholders are customers, employees, owners and suppliers. We maintain an ongoing dialogue with these parties to identify areas for improvements, pick up on ideas for stimulating working relationships, and remain up to date with the latest requirements and expectations. A major

responsibilities. Operational work on environmental, ethical, health and safety and employee issues takes place within each unit and department, and each manager has delegated responsibility for these from Group Management or the CEO. The EVP Production and Sustainability has overall responsibility for sustainability within Setra, while the Sustainability Manager has the task of leading, driving and developing the work, providing expertise and supporting the entire organisation on sustainability issues. Responsibility for risk management is delegated from the CEO to the SVP Enterprise Risk Management.

Sustainability policy

Setra has the following overall sustainability goals: • The company will be climate neutral by 2030 (excluding foreign distribution) • Zero vision for workplace accidents, with an interim target that the number of workplace accidents with sick leave per million hours worked (LTA Frequency Rate) will not exceed 10 by 2025. • To have a 95 percent healthy attendance rate among employees. We also had ongoing energy and carbon reduction targets up to 2020. In 2022, thorough work will begin on formulating new targets for resource efficiency and climate perfor-

Setra’s sustainability policy is the over arching governing document for our work on sustainability. The policy highlights the focus areas of business ethics, employees, occupational health and safety, the climate and the environment, and is available at setragroup.com.

Organisation and responsibility Sustainability work at Setra forms an integral part of our processes and common way of working. All managers and employees are required to make a contribution within the framework of their respective roles and

Sustainability goals

Contact details

update of the stakeholder dialogues is planned for 2022, a process that will then recur as we update the materiality analysis. The issue of climate change remains important to our stakeholders, and our customers in particular. They are interested in the origin of the product, its climate performance and how we are working to reduce emissions from our operations. The issue of sustainable forestry and biodiversity is also seen as important to stakeholders and has received considerable attention in the media and public debate in 2021. This is a core issue for us, and one on which we are working constantly in partnership with the industry, our owners and our suppliers.

GRI Index

In order to identify our key sustainability areas, we conduct materiality analyses, taking as our starting point both the impact our business generates in every link of the value chain, and the demands and expectations placed on us by the outside world. The materiality analysis is updated every two to three years in step with the development of our business, changes in the world around us and the progression of our stakeholders’ expectations. The materiality analysis has identified six key areas: Our portfolio, Resource-efficient

business, Climate report, Safety, culture and colleagues, Climate-smart raw material and Sustainable transport. What we consider important in each area, how we work, goals and follow-up are all set out in the sustainability report.

Sustainability work

GRI index __________________________ 43

Governance of Setra’s sustainability work

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6 Executive Management _______ 37 Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

Appendix __________________________ 45 Contact details ___________________ 47

Board of Directors President and CEO Group Management

Delegation of operational environmental work to site managers Delegation of health and safety responsibilities to all managers

Permits and legal requirements

Production and Sustainability Sustainability

Cross-functional networks (Other departments, site managers and HSE coordinators)

Environment and support function Health and Safety

mance. In addition to this, each unit will decide on its own local sustainability goals.

Certified management systems

Autumn 2021 saw an external audit of the environmental management system for the

Setra’s Code of Conduct for Suppliers is based on the principles in the UN Global Compact and relevant international conventions. It is intended for suppliers of goods and services and for partners, in both Sweden and other countries. Setra’s largest and most important purchasing category is timber and as of 2020 we only buy wood raw material from suppliers certified according to FSC or PEFC. Other major purchases include transport, plastic wrap, stickers and

Setra has an Enterprise Risk Management (ERM) process in place to prevent and manage risks identified within the business and for its stakeholders. Responsibility for risk management ultimately lies with the company’s SVP Enterprise Risk Management, who is also a member of the Executive Management. The next few pages present a summary of the company’s risks related to sustainability. These are primarily operational risks within a timeframe of 1–3 years. Financial risks and market risks are dealt with in the overarching company risk process, but are not reported here.

Setra’s sustainability risks are presented on the next pages→

Contact details

External audit

Sustainability requirements for suppliers

Risk management and sustainability risks GRI Index

All Swedish operations are environmentally certified according to ISO 14001. In addition, the operations in Långshyttan are certified according to ISO 9001. Setra’s management system also includes the management of OHAS and fire safety, and it is checked regularly through internal audits and insurance inspections. These elements have not been externally certified. Setra’s sawmills and processing units are certified in accordance with FSC and PEFC Chain of Custody standards and the FSC standard for Controlled Wood. The certification demonstrates that the company has a system in place for tracking the raw wood material and ensuring that it originates from a responsibly managed forest.

units in Färila, Kastet, Långshyttan and Malå, plus Head Office in Solna. The auditor reports that Setra meets the requirements of the standard and that it conducts forwardlooking environmental work, where environmental issues form a natural and important part of the company’s overall sustainability work. The sustainability issue has been more clearly integrated into the business since the Sustainability Manager became part of the production management team in 2021. Internal audits play an important role in contributing to the development of the business and the dissemination of knowledge. Areas in need of improvement include updating documentation and environmental delegation when managers are replaced. The quality management system was also audited in Långshyttan, with no major non-compliances. During the year, the FSC and PEFC management systems were also audited. No major non-compliances were found and the certificates were renewed. The audit showed that traceability requirements are

All Setra’s production units are obliged to hold permits or to submit reports under the Environmental Code. The principal sources of environmental impact from our production are energy utilisation and noise. Several of Setra’s production units have previously worked with wood impregnation and/or used various wood preservatives that may have resulted in soil pollution. Some other processes and activities may also have contributed to pollution. In addition, there are around 15 – now identified – sites where the Group has carried out operations in the past. The environmental authorities have requested an investigation and, in some cases, subsequent remediation measures at a number of these sites. Other requirements may be made going forward, so Setra has established reserves to cover possible future remediation measures.

contracting services. The Code of Conduct is included in all supplier agreements, and we are progressively working with existing suppliers to get them to sign up to the Code. In order to identify the suppliers that pose the highest risk from the perspective of sustainability, we have analysed all parties that sell products or services to Setra worth at least SEK 1 million per year. The analysis, based on country, sector, product and supplier, informs our way of working with certain types of suppliers. We conduct sustainability assessments of new suppliers if the business or product is deemed to pose a risk. For the biggest purchase categories, timber and transport, and those considered to entail particular risks, we work continuously on specifying and following up on requirements – see the sections on Climate-smart raw material (page 18) and Sustainable transport (page 29).

Sustainability work

GRI index __________________________ 43

Governance and follow-up of sustainability work

well integrated into daily operations and that we have good procedures and processes in place to meet the requirements of the standards. In 2022, the organisational structure and responsibilities of our FSC/PEFC management system will be updated for greater clarity and efficiency. We will also implement digital training on FSC and PEFC in 2022.

Introduction

Introduction ________________________ 2

Setra Group Sustainability Report 2021

Sustainability risks ■ Potentially high risk

■ Medium risk

Introduction

Introduction ________________________ 2

■ Low risk

Setra’s sustainability work ____ 6 Executive Management _______ 37 Board of Directors _____________ 38

Fire

We work systematically with fire safety, but we operate in an industry with an elevated fire risk.

Setra conducts preventive and systematic fire safety work, which includes: • General risk management instructions with continuous follow-up • Risk and insurance inspections once a year plus follow-up and action plans • Reporting risk observations and near misses with an emphasis on fire • Installations to limit spread and damage – alarms and sprinklers, for example • Training on flammable goods, hot work, fire risks, etc. every 3–5 years

OHAS-related health risks on account of COVID-19

The pandemic has involved an OHAS-related health risk for our employees, especially those who work in production or, for one reason or another, are unable to work remotely.

Setra’s Executive Management, Executive Assistant and Head of Communications constitute the crisis management team. During the pandemic, the crisis management team met continuously via digital meetings. The team follows the advice and guidelines of the Public Health Agency of Sweden in the first instance. Risk analyses and action plans have been developed. Information and guidelines are communicated via the intranet to all of Setra’s employees.

Risk category

Description of risk

Risk management

Workplace accidents

Due to the nature of our business, our production and processing units have a hazardous working environment. We work in an industry where there is a risk of injuries, such as falls, pinching, slips, etc., due to non-compliance with procedures and/or negligence.

Setra works systematically on OHAS issues internally and applies a documented OHAS management system. Work and measures to ensure a safe working environment include: • Review of accident status at briefings, presentation of accidents with sick leave, including actions and improvements, at management team meetings • Risk, accident and near miss reporting in SIA, plus root cause reporting of accidents • Safety committee meetings and safety inspections in production and processing units • Risk analyses for the introduction of new machinery and other changes • Perimeter protection such as barriers and safety guards • Training in OHAS issues for all managers and employees

Bribery and corruption

This risk primarily applies in the context of relations with customers and suppliers. Setra has relations all over the world, which makes this risk difficult to check and monitor.

Setra takes a zero tolerance approach to bribery and corruption. The preventive work in this area includes: • Guidelines for compliance with competition legislation, as well as regarding gifts, benefits and third-party hospitality • A control function on the signing of significant contracts • Training and dilemma exercises for staff who have working relationships with customers/suppliers • The Code of Conduct for Suppliers includes requirements to combat corruption • Implementation of whistleblowing function 2022

EU forest strategy, biofuel regulations and restrictions, taxonomy

There is currently a major debate in the EU about how forestry should be conducted in individual countries, how sustainable forestry should be defined and the use of wood as an energy source. Risk that new policies and regulations will limit and complicate opportunities to use forest raw material to heat buildings and as biofuel for the transport sector.

• • • •

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43 Appendix __________________________ 45 Contact details ___________________ 47

Ongoing and active dialogue with industry organisations, owners and suppliers Monitoring policies and regulations from the EU & Sweden Keeping track of research and knowledge development in the sector to make best use of wood raw material Disseminating knowledge about wood and its sustainability and how it can make a major contribution to the green transition

Sustainability risks continued→ 41

Contact details

Risk management

GRI Index

Description of risk

Sustainability work

Risk category

Setra Group Sustainability Report 2021

Sustainability risks ■ Potentially high risk

■ Medium risk

Introduction

Introduction ________________________ 2

■ Low risk

Setra’s sustainability work ____ 6 Executive Management _______ 37 Board of Directors _____________ 38

Risk category

Description of risk The risk of non-compliance with legislation and requirements in forestry.

Our operations are FSC- & PEFC-certified. Our management system for FSC/PEFC is reviewed annually by internal and external auditors. As of 2020, Setra only purchases wood raw material from suppliers who are FCS- or PEFCcertified. All the timber we purchase is traceable and fulfils our requirements for controlled wood raw material. We maintain a continuous dialogue with owners and suppliers to safeguard the process. The purpose of the audit includes ensuring that Setra’s work with FSC/PEFC is managed in accordance with the requirements, dealing with non-compliances and contributing to improvements.

Natural disasters, impacts of climate change

Increased risk of storms, forest fires and insect attacks that may affect the reliability of timber deliveries to our units and require us to be prepared to handle damaged wood.

Examples of activities include: • Working with raw material suppliers to minimise the consequences of climate-related damage to forests • Planning and contingency measures to deal with storm-felled, fire damaged and insect damaged wood – through increased opportunities to water timber stocks, for example • Taking account of location, flood risk and soil conditions when setting up new operations • We are investing in rail infrastructure to facilitate the handling and transport of timber

Appendix __________________________ 45 Contact details ___________________ 47

Risk category Breaches of environmental legislation Unplanned emissions to the soil, air and/or water

Description of risk

Setra works systematically to improve and safeguard its operations, supported by our ISO 14001-certified management system. Examples of activities include: • Establishing and following up on environmental targets • Procedures/instructions • Internal and external audits with management of non-compliances and improvement measures • Monitoring legislation, reviewing and disseminating changes and implementation of new legislation • Risk, insurance and environmental liability inspections • Maintenance of plants • Dialogue with public authorities

Setra runs operations in Sweden and the UK, our biggest suppliers are Swedish, and Sweden has strict legislation. Human rights risks are primarily to be found in the supply chain, more specifically within certain sectors. The EU’s draft legislation on business and human rights will also soon be in place.

Setra has clear policies and guidelines concerning equal opportunities and non-discrimination, gender equality, recruitment and pay. Corresponding requirements are applied to suppliers through Setra’s Code of Conduct. Separate requirements for risk reporting apply in the UK. The Modern Slavery Act came into effect in 2015, requiring all companies with operations in the UK to report risks and risk management measures with regard to forced labour and trafficking in the supply chain. Examples of measures to protect human rights include: • Requirement for FSC- and PEFC-certification on purchased wood • Supplier assessments and requirements, Code of Conduct for Suppliers • Dialogue with employees, underpinned by employee surveys, employee appraisals and feedback meetings • We monitor proposed EU law via industry associations to prepare for any new requirements and reporting rules

GRI Index

Human rights breaches

Risk management

We have systematic working practices, but there is always a risk of incidents due to unforeseen events, human error, external circumstances, etc.

Soil pollution

Sustainability work

Quality shortfalls in responsible forestry

Governance of Setra’s sustainability work _____________ 39 GRI index __________________________ 43

Risk management

Contact details

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2

GRI index, general information

Setra’s sustainability work ____ 6 GRI

Executive Management _______ 37 Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

Appendix __________________________ 45

Reference

Comment

Organisational profile Name of the organisation

102-2

Activities, brands, products and services

3, 10, 15–17

102-3

Location of headquarters

3, 47

102-4

Location of operations

102-5

Ownership and legal form

102-6

Markets served

102-7

Scale of the organisation

3–4, 34

102-8

Information on employees and other workers, broken down by employment type, employment terms, region and gender

3, 34

102-9

Supply chain

10, 18–20

102-10

Significant changes to the organisation and its supply chain

Setra Group AB, corp. ID no. 556034-8483

Setra’s business operations are mainly conducted by the company’s own employees, with the majority of these being full-time, permanent employees. On 31 December 2021, Setra employed 779 people, of whom 57 were based outside Sweden (UK 45, Poland 2, Germany 1, Spain 2, Austria 1, China 3 and Japan 3). The organisation’s suppliers can be divided into three main groups: suppliers of wood raw material, suppliers of logistics services and other suppliers.

18–24

The Precautionary Principle is applied in the event of changes being made to business operations, for example the installation of new machines or choice of chemicals.

102-12

Externally developed economic, environmental and social charters, principles or other initiatives to which the organisation subscribes or which it endorses

20, 27, 40

ISO 14001; PEFC™, Programme for the Endorsement of Forest Certification; FSC®, Forest Stewardship Council; Climate report in line with the GHG Protocol.

Main memberships of industry or other associations, and national or international advocacy organizations.

Setra is a member of the Swedish Forest Industries Federation and Svebio.

Strategy Statement from senior decision-maker

Comment

102-18

Governance structure

The corporate governance report is available on pages 97–99 of Setra’s Annual Report and Sustainability Report.

102-40

List of stakeholder groups engaged by the organisation

7, 17, 39

102-41

Percentage of total employees covered by collective bargaining agreements

102-42

Identifying and selecting stakeholders

7, 39

102-43

Approach to stakeholder engagement

17, 35, 39

102-44

Key topics and concerns raised through stakeholder engagement

100% of Setra’s employees in Sweden are covered by collective bargaining agreements.

Setra conducted an employee survey during the year.

Reporting practice 102-45

Entities included in the consolidated financial statements

Facts and financial KPIs in the report refer to all the Group’s units.

102-46

Process for defining the report content and the topic boundaries

7, 39

102-47

List of the material topics identified in the process for defining report content

14, 39

102-48

Effect of any restatements of information given in previous reports

102-49

Significant changes from previous reporting periods in the list of material topics and topic boundaries

No significant changes in scope or topic boundaries.

102-50

Reporting period

The report covers 2021.

102-51

Date of most recent report

March 2021.

102-52

Reporting cycle

102-53

Contact point for questions regarding the report

102-54

Claims of reporting in accordance with the GRI Standards

102-55

GRI content index

102-56

External assurance

As of 2021, we report the average number of employees throughout Setra during the year instead of the number of employees at year end. Figures from previous years have been recalculated and are therefore comparable.

GRI Index

Setra and Preem’s pyrolysis plant at Kastet has become operational. From November 2021, Sustainability will be part of the Production and Sustainability department, reporting directly to the CEO. Communication, which was previously organised within Sustainability, now reports directly to the CEO, while Environment reports to Sustainability as before. In the supply chain, Setra has switched its packaging supplier to Owen’s Corning in India.

Precautionary Principle or approach

102-14

Reference

Communication and stakeholders

102-11

102-13

Information

Governance

102-1

Contact details ___________________ 47

GRI

Sustainability work

GRI index __________________________ 43

Information

Calendar year, annual. 47 The report has been prepared in accordance with Global Reporting Initiatives Standards for sustainability reporting at the Core level. 43–44 The report has not been externally audited.

Contact details

Ethics and integrity 102-16

Description of the organisation’s values, principles, standards and norms of behaviour

7, 33

Setra’s vision is to do business in a way that we, as well as others – our clients, society and nature – can benefit from. This is what we call Grönsamhet. It comes down to creating green value. Setra embraces values-based leadership and our values are commitment, innovation and responsibility. The focus areas of the sustainability policy are business ethics, employees, health and safety, environment and climate.

Setra Group Sustainability Report 2021

Introduction

Introduction ________________________ 2

GRI index, topic-specific information

Setra’s sustainability work ____ 6 GRI

Executive Management _______ 37 Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

Appendix __________________________ 45 Contact details ___________________ 47

Reference

Comment

GRI

Information

GRI 200 / Economic impact

GRI 400 / Social impact

201 Economic performance

103-1 103-2 103-3

Governance

201-1

Direct economic value generated and distributed

See page 53 of Setra’s Annual Report and Sustainability Report.

103-1 103-2 103-3

Governance

36, 39, 41

205-2

Communication and training about anti-corruption policies and procedures

205-3

Confirmed incidents of corruption and actions taken

The company’s business ethics guidelines include compliance with competition legislation, rules on gifts and hospitality, plus a Code of Conduct for Suppliers.

Governance Environment

19–31 39–40

The following aspects are governed: health and safety, training and skills development.

Materials used by weight or volume

33–35, 41

403-2

Hazard identification, risk assessment and incident investigation

34, 41

403-3

Occupational health services

403-4

Worker participation, consultation and 34 communication on occupational health and safety

403-5

Worker training on occupational health and safety

403-6

Promotion of worker health

34–36

403-7

Prevention and mitigation of occupational health and safety impacts directly linked by business relationships

34–35, 41

19–20

Used material, exchange. Responsible forest management.

302-1

Energy consumption within the organisation 22–24

302-4

Reduction of energy consumption

Setra has purchased ecolabelled electricity since 1 January 2018.

305 Emissions

403-8

Workers covered by an occupational health and safety management system

Direct (Scope 1) GHG emissions

27–28

The whole annual Climate report is published at setragroup.com.

305-2

Energy indirect (Scope 2) GHG emissions

27–28

The whole annual Climate report is published at setragroup.com.

305-3

Other indirect (Scope 3) GHG emissions

27–28

The whole annual Climate report is published at setragroup.com.

305-4

GHG emissions intensity

The whole annual Climate report is published at setragroup.com.

307 Environmental compliance There were no breaches of environmental legislation in 2021.

100%

403-9

Work-related injuries

34–35

403-10

Work-related ill health

Counted in sick leave

404 Training and education Percentage of employees receiving regular performance and career development reviews

33–34

Transparent and credible reporting To ensure transparent and relevant reporting of work on sustainability, Setra applies GRI Standards, Core level. We have also adapted the content of our annual report in line with the requirements stipulated in “Corporate reporting governing sustainability and diversity policies”. This publication constitutes the Setra Group’s consolidated Sustainability Report for the 2021 financial year. In the absence of any statement to the contrary, the Sustainability Report covers the entire Setra Group. For the calculation of the number of Swedes’ greenhouse gas emissions equating to the storage of carbon dioxide, page 26, data from the Swedish Environmental Protection Agency has been used regarding consumption-based greenhouse gas emissions (around 9 tonnes per person per year). For the calculation of the number of apartments equating to the amount of bioenergy supplied, page 17, statistics from the Swedish Energy Agency (2020) have been used regarding energy use for heating and hot water per square metre (132 kWh/square metre) and Statistics Sweden’s statistics for the most common apartment size (57 square metres, 1 bedroom). The auditors’ statement on the statutory Sustainability Report is on page 100 of Setra’s Annual Report and Sustainability Report. The Sustainability Report has not been the subject of additional external audits. Setra also publishes an annual Climate report, which documents our emissions and the climate footprint of our products. The annual Climate report is drawn up based on the guidelines of the GHG Protocol and published in full at setragroup.com.

In 2021, Setra and the housing development company Arvet donated a cross-laminated timber community hall to the UN settlement in Kalobeyei, Kenya. The building elements were manufactured in Långshyttan and the project was run in collaboration with UN-Habitat. Find out more at setragroup.com

Contact details

305-1

Agreement with company that supports mental health

Information

404-3

302 Energy

Non-compliance with environmental laws and regulations

Occupational health and safety management system

GRI Index

Aspects that are governed: resource efficiency/materials consumption, responsible forest management, energy consumption, greenhouse gas emissions and compliance. With regard to the goal for reducing greenhouse gas emissions, 2014 has been used as the comparison year as this was the first year Setra prepared a complete Climate report. Goal fulfilment is not affected. Environmental work is managed on the basis of ISO 14001. Responsibility is delegated from the CEO to site managers. The Sustainability Manager is responsible for the management system, etc. and is the designated expert. Legal compliance is among the issues monitored in internal and external environmental audits.

301 Material

307-1

33–36 39–40 41–42

403-1

No incidents reported.

GRI 300 / Environmental impact

301-1

Comment

403 (2018) Occupational health and safety

205 Anti-corruption

103-1 103-2 103-3

Governance social impact

Reference

Sustainability work

GRI

index __________________________ 43

Information

Setra Group Sustainability Report 2021

Appendix to page 13.

Setra’s sustainability work ____ 6

Overview of the global Sustainable Development Goals (SDGs) most relevant to Setra’s operations.

Executive Management _______ 37 Board of Directors _____________ 38 Governance of Setra’s sustainability work _____________ 39

Appendix __________________________ 45 Contact details ___________________ 47

Achieve gender equality and empower all women and girls 5.1 End all forms of discrimination against all women and girls everywhere

Our positive contributions

Our challenges

5.1, 5.4, 5.5 We promote gender equality and diversity and strive to bring more women into the company.

5.1, 5.4, 5.5 Communicating that the sawmill industry has evolved into a modern and automated workplace and attracting potential female employees.

7.2 Setra contributes renewable energy through the bioproducts such as wood chips, shavings and bark left over from production, which are used in the paper and pulp industry, as well as in the energy and transport sectors. As much as 99 percent of the thermal energy used in production is renewable and all the electricity we buy is renewable. Setra also supplies bioproducts to heating plants in the local area.

7.2 The main challenge is to increase the share of renewables in our distribution network, locally and globally. This requires arm-twisting and route planning with the carriers.

5.4 Recognise and value unpaid care and domestic work through the promotion of shared responsibility within the household 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making Ensure access to affordable, reliable, sustainable and modern energy for all 7.2 Increase substantially the share of renewable energy in the global energy mix 7.3 Double the global rate of improvement in energy efficiency

7.3 Energy efficiency is one of our top environmental priorities in production. Our production requires a great deal of energy and we are continuously working on energy efficiency, including energy surveys and efficiency targets.

8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation 8.5 Full and productive employment and decent work for all women and men, with equal pay for work of equal value 8.8 Protect labour rights and promote safe and secure working environments for all workers

8.2 We process raw material from responsibly managed forests and offer climate-friendly products and solutions for building and living in a global market, along with innovative partnerships and solutions for energy supply in the heating and transport sectors. 8.5 We are based close to the forest, often as a significant employer in the smaller towns where we operate. We comply with Swedish legislation, cooperate with trade unions, develop our employees and conduct job evaluations, pay surveys, employee appraisals, etc.

9.1 Develop quality, reliable, sustainable and resilient infrastructure

9.2 Setra plays an important role as a local industry and employer in many of the smaller towns where we operate. We are actively engaged in innovation and development to offer climate-friendly products and solutions for construction and housing, thermal energy production and transport.

9.1, 9.2, 9.4 We want to modernise and create an even more sustainable industry, but are aware that the time horizon for such projects is long. We have identified the next steps and are well on the way to accelerating the pace of progress.

Contact details

9.1 Setra is investing in linking more units to the rail network for more sustainable, safe and efficient logistics management.

9.4 Upgrade infrastructure and retrofit industries to make them more sustainable

8.8 Setra has always made a safe working environment its highest priority. The wood industry is a sector with physical health and safety risks, where accidents do occur. We work systematically to prevent ill health and accidents and to increase healthy attendance.

8.8 All of Setra’s employees in Sweden are covered by collective bargaining agreements.

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

9.2 Promote inclusive and sustainable industrialisation

7.3 Our production is electricity- and heat-intensive. We need to improve the way we run our drying kilns and boilers, and work with our local heating suppliers for more efficient solutions.

GRI Index

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Setra aims to be climate neutral by 2030 (excluding foreign distribution).

Sustainability work

GRI index __________________________ 43

Goals & targets

Introduction

Introduction ________________________ 2

9.4 We make strategic investments to modernise and improve the efficiency of our operations.

The overview continues → 45

Setra Group Sustainability Report 2021

Goals & targets

Setra’s sustainability work ____ 6

Ensure sustainable consumption and production patterns

Executive Management _______ 37

12.2 Achieve the sustainable management and efficient use of natural resources

Board of Directors _____________ 38

12.5 Substantially reduce waste generation

Governance of Setra’s sustainability work _____________ 39

Our positive contributions

Our challenges

12.2 We use a renewable raw material from responsibly managed forests. The whole log is used – we aim for a high saw yield and all bioproducts are put to good use.

12.2 Our ambition and aspiration going forward is to move away from fossil fuels to renewables. Some elements we can influence ourselves but need a mature and cost-efficient market, while other elements are more difficult for us to influence as services are bought in via subcontractors.

12.5 Setra’s waste from our units is handled by a waste contractor, we sort our waste at source and it is treated according to the waste hierarchy. We are looking to sort more waste fractions in the future.

Take urgent action to combat climate change and its impacts

13.1 We take care of storm-damaged timber to some extent at our sawmills.

Appendix __________________________ 45

13.1 Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters

13.2 We cooperate on lobbying through our trade associations, e.g. the Swedish Forest Industries Federation

Contact details ___________________ 47

13.2 Integrate climate change measures into national policies, strategies and planning

13.3 By establishing wood as the first choice in future housing to replace fossil building materials with renewables, using residual waste (bioproducts) as renewable raw material for heating, and finding innovative collaborations with other industries (e.g. Pyrocell which produces bio-oil), we are a pioneer that contributes positively to tackling climate change.

13.3 Improve education, awareness-raising and capacity on climate change mitigation

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss 15.1 Ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems

15.5 Reduce the degradation of natural habitats and halt the loss of biodiversity Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels 16.5 Substantially reduce corruption and bribery in all their forms

15.2 Responsible forest management is one of Setra’s top sustainability priorities. All the timber comes from traceable and responsibly managed forests, which means that the origin is known and that the forestry meets basic requirements under the FSC® and PEFC forest certification schemes. Our timber suppliers are also FSC/PEFC certified.

16.5 We maintain high ethical standards in all our business relationships. We treat our customers, suppliers and partners with responsibility and integrity. We compete on fair terms and we have zero tolerance of money laundering, bribery and other forms of anti-competitive influence.

13.1 Climate change affects forestry and thus Setra’s operations. Storms and pest/parasite outbreaks pose risks of tree loss, and erratic weather affects harvesting. 13.3 Setra has set the goal of becoming climate neutral by 2030, but there is still some way to go. We need to accelerate the pace of progress towards the goal.

15.1, 15.2, 15.3 We do not own any forest, so we buy timber from timber suppliers. This means there are several actors in the chain to take responsibility for these issues. We ensure quality in the chain through FSC/PEFC certifications, but there is always room for improvement and certifications are constantly evolving. Knowledge sharing and stronger collaboration between actors is important in managing this process.

GRI Index

15.2 Promote sustainable management of forests, halt deforestation and restore degraded forests

15.1, 15.5 By setting requirements for forest raw material through our raw material policy, we help to safeguard ecosystem functions and biodiversity.

12.5 Accelerating the work, plus the fact that all the units have made varying progress in the process.

Sustainability work

GRI index __________________________ 43

Introduction

Introduction ________________________ 2

16.5 We do business in many countries with different business cultures that can pose corruption risks, which we must be aware of and prevent.

There are guidelines covering compliance with competition legislation, as well as gifts, benefits and external hospitality, plus online training in business ethics.

Contact details

Setra Group Sustainability Report 2021

Setra’s sustainability work ____ 6

Contact details

Introduction

Introduction ________________________ 2

Executive Management _______ 37

Head Office

Governance of Setra’s sustainability work _____________ 39

Setra Group AB Box 3027 SE-169 03 Solna

GRI index __________________________ 43

Street address: Gårdsvägen 18 169 70 Solna

Appendix __________________________ 45 Contact details ___________________ 47

Phone: +46 8 705 03 00 E-mail: info@setragroup.com More contact details can be found at setragroup.com

Sales, Customer Service & Logistics Wood Products Setra Trävaror AB Box 223 SE-801 04 Gävle Street and delivery address Setra Trävaror AB Skolgången 13 SE-802 57 Gävle Building Solutions and Components Setra Långshyttan Amungsvägen 17 SE-776 72 Långshyttan

Get in touch!

Would you like more information about our sustainability work or this report? Feel free to contact us.

Melanie Sjögren Sustainability Manager melanie.sjogren@setragroup.com +46 8 705 03 15

Sawmills

Processing units

Setra Färila Snasbäcken SE-827 63 Färila Phone: +46 651 76 81 00

Setra Långshyttan

Setra Hasselfors SE-695 85 Hasselfors Phone: +46 585 485 00 Setra Heby SE-744 32 Heby Phone: +46 224 368 00 Setra Kastet Box 430 SE-801 05 Gävle Phone: +46 8 705 03 00 Setra Malå Storgatan 92 SE-939 32 Malå Phone: +46 953 414 00 Setra Nyby Nybyvägen 8 SE-743 63 Björklinge Phone: +46 18 56 08 00 Setra Skinnskatteberg Box 100 SE-739 22 Skinnskatteberg Phone: +46 222 452 00

Setra Glulam Amungsvägen 17 SE-776 72 Långshyttan Phone: +46 225 635 00 Setra Building Solutions and Components Hagabergsvägen 3 SE-776 72 Långshyttan Phone: +46 225 635 00 Setra Wood Products Ltd Estuary Road King’s Lynn Norfolk PE30 2HJ, United Kingdom Phone: +44 1553 76 00 71

UK Setra Wood Products Ltd 11, St. Mary’s Court North Bar Within Beverley, East Yorkshire HU17 8DG, United Kingdom Phone: +44 1482 87 00 35

China Setra Wood (Guangzhou) Co Room 2720, Teem Tower No 208 Tianhe Road, Tianhe District, CN-Guangzhou 510 620 Phone: +86 20 2830 6431

Poland Setra Polska Sp. z o.o. ul. Staromiejska 17 E PL-84-300 Lebork Phone: +48 784 300 450, +48 695 198 686

North Africa/Tunisia Setra Group c/o Mehdi Daldoul Rue du Lac Leman, Immeuble Regency, Bureau 301 Les Berges du Lac 1053 Tunis, Tunisia Phone: +216 71 861 700

Spain Setra Sales Spain C/Colombia 63, 4 B ES-28016 MADRID Phone: +34 91 353 39 20 Japan Setra Sales Japan 4th Floor, 32 Shiba-Koen Building 4-30, Shibakoen 3-chome Minato-ku JP-Tokyo 105-0011 Phone: +81 3 5404 7560

Production: Setra Group AB in partnership with LeadContent and Trossa. Photos: Anders Eliason, Morgan Ekner, Folkhem, Lars Hägglöf, Ola Högberg, Sten Jansin, Jansin & Hammarling, Magnus Laupa, Emil Nordin, Klas Sjöberg, Erik Westberg.

Contact details

Johanna Gydingsgård CFO johanna.gydingsgard@setragroup.com +46 8 705 03 03

Sales offices outside Sweden

GRI Index

Telesales and Customer Service +46 8 705 03 00

Production units

Sustainability work

Board of Directors _____________ 38