Setra Sustainability Report 2019 by Setra Group

Sustainability Report Setra Group

Year of Grรถnsamhet

2019

Progress with Grönsamhet 2019

Sustainability Report 2019 — Setra Group

04 This is Setra 05 Our 2019 06 CEO’s comments 08 Setra’s value chain 10 Setra’s sustainability work 13 Progress with Grönsamhet 2019 14 Our portfolio 18 Climate-smart raw material 24 Resource-efficient business 30 Climate report 34 Sustainable transport 38 Culture and colleagues 44 Management and organisation 45 Five-year report 46 Managing Setra’s sustainability work 48 GRI index 50 Addresses

Sustainability Report 2019 — Setra Group

This is Setra

Our production units Rolfs** Pine sawmills

Malå*

Spruce sawmills Processing units

Setra is one of Sweden’s largest wood industry companies. We process raw material from responsibly managed forests and offer climate-friendly products for construction, housing, the paper and pulp industry and energy production. We help our customers do better business in a global marketplace and contribute towards the transition to a bioeconomy. The head office is located in Solna, with customer service and logistics based in Gävle. The Group has seven sawmills and two wood processing units, one of which is in the UK. Setra has approximately 800 employees and annual sales of around SEK 4 billion. Exports to Europe, North Africa, the Middle East, Asia and Australia account for 65% of sales. Setra employs around 50 people abroad, with sales offices in the UK, Germany, Poland, Spain, Tunisia, Japan and China. Setra is owned 50% by Sveaskog, Sweden’s largest forest owner, and 49.5% by the forest owners’ association Mellanskog. The remaining 0.5% is owned by approximately 1,400 small shareholders.

Färila

Kastet Skutskär**

Långshyttan

Nyby Heby

Skinnskatteberg

Hasselfors

Setra Wood Products (UK)

Our markets

Production and employees

Sales offices

Per unit 2019

Pine sawmills

Sweden 34%

UK Germany Spain

Employees at year end

Skinnskatteberg

255,000

Kastet

246,000

Nyby

166,000

Malå*

204,000

35,000

Hasselfors

310,000

100

Heby

246,000

Färila

179,000

39,000

Rolfs* **

Poland Japan

Tunisia

Europe 28%

Production m3

China

Asia & Australia 21%

Spruce sawmills

Processing units

North Africa & Middle East 17%

Skutskär** Långshyttan

52,000

Setra Wood Products

20,000

* Some of the sawn volume is further processed. ** Closed or sold in 2019.

Sustainability Report 2019 — Setra Group

Our 2019

Our 2019 -48%

590

Reduced climate impact

Investment focus

Setra’s goal is for our business to be climate neutral by 2030. Compared with the base year 2011, we now have 48% lower emissions of greenhouse gases per m3 sawn timber.

Setra invested over half a billion kronor in 2019.

SEKm

145,000 m 3

+4% Growing demand for glulam Glulam sales rose by 4% and we delivered our biggest project to date: the frame for Setra’s new trimming and planing line in Hasselfors.

3.6/100 Safety first The number of workplace accidents with sick leave per 100 employees was 3.6 in 2019. Risk observations continued to rise, a sign that our preventive work is beginning to yield results.

Establishing a wood industry hub Setra’s wood industry hub in Långshyttan took shape in 2019, and will have capacity for 100,000 m3 crosslaminated timber and 45,000 m3 components.

SEKm

Operating profit The past year generated an operating profit of SEK 30 million, adjusted for non-recurring items.

Net sales by business (SEKm)

2 893

EMI

Motivation at work The employee motivation index (EMI) increased from 70 to 71. This is a combined measure of how our employees feel at work and how motivated they are. Setra’s aim is for the EMI to increase year on year.

452 Sawn

Processed

639 Bioproducts

Sustainability Report 2019 — Setra Group

CEO’s comments

An intensive 2019 was the year that society’s interest in industrial wood construction really took off. For us at Setra, it is apparent that our focus on sustainable, valueadded products is entirely in tune with the times. With the construction and real estate sector facing major climate challenges, interest in wood as a raw material is growing. In 2019, this trend became increasingly clear – both in Sweden and abroad. At a national level, Setra backed the wood construction industry’s target that wood will account for 50% of apartment block construction and 30% of other building by 2025. Achieving this target would bring a substantial cut to the construction sector’s carbon emissions. At the same time, we have continued Setra’s advances as a modern wood products company. Our vision of Grönsamhet, our clear sustainability profile and our strategy for value-added products have taken on a more concrete form over the year.

Our focus on value-added products has taken on an increasingly concrete form over the year.

Strategic investments moving forward Our large investments in highly efficient production of cross-laminated timber, or crosslam, at our wood industry hub in Långshyttan have got off to a flying start. Custom floor panels, roof panels and walls can now be produced here in a way that speeds up many of the construction industry’s lead times. We look forward to launching new offerings in this area in 2020, not least through deeper collaboration with architects and construction companies. In Hasselfors, we will soon be inaugurating our ultramodern new planing line, with production expected to start in the spring. This means that here too we will be able to focus on the

year for Setra highly efficient manufacture of products in the area of construction timber. In the summer, work will also begin on building our pyrolysis plant alongside Kastet sawmill in Gävle. In partnership with fuel company Preem, we will convert sawdust into bio-oil, which will then be turned into an alternative to fossil fuels. This exciting project is expected to come on stream in 2021. In line with our strategic decisions and investments, we divested ourselves of two operations in 2019. In May we sold the planing mill in Skutskär to Valbo Trä, a company that we have good relations with and to which we will continue to deliver raw material. June saw the end of production at Setra Rolfs in Kalix, a unit that has unfortunately suffered poor profitability. Around 70 employees were affected by the closure but, as former Mill Manager at Rolfs, I am still proud of how Setra has handled the process and of the retirement and retraining solutions that the company has been able to offer.

market, we nevertheless managed to capture new market share in China through a 20% increase in our sales to the Chinese furniture industry. In the Japanese construction industry, we noted a slowdown in early 2019, but demand has now begun to pick up again. However, the outbreak of the coronavirus has led to other challenges concerning travel and the distribution of our goods to Asia and other markets. When it comes to the UK, one of our larger markets, we are following developments concerning Brexit. In this context, there are administrative export issues that we need to deal with, but we do not consider them to be particularly concerning. Once our new planing mill in Hasselfors is up and running, we expect a large proportion of its products to serve the construction industry in the UK, but also the USA and Australia. With the spread of the European spruce bark beetle in Europe, there is a risk that large volumes of low-quality timber will flood the market.

Slowdown in the economy The Setra Group’s operating profit for 2019 amounted to SEK 30 million, compared with SEK 361 million in 2018. Net sales were SEK 3,924 million (compared with SEK 3,873 million). It is important to remember, however, that for the majority of 2018 we enjoyed an extremely strong market, with one of the best results in Setra’s history. Towards the end of 2018, we began to see a slowdown in the construction industry, and this dip then continued until the end of 2019. As a consequence of the market situation, in December we decided to reduce production at our plants in Malå and Skinnskatteberg, which regrettably meant having to make 40 employees redundant. Despite the downturn in 2019, we managed to successfully balance our stock levels and prices. Like the construction industry, the wood industry is a good early indicator of economic fluctuations. In the midst of this contraction in the

Strengthening the organisation from the inside Internally, during the year we have consolidated work on our vision, Grönsamhet and our values of commitment, innovation and responsibility. We have recently also begun the journey of defining what these concepts mean for each and every one of us in the form of actions and behaviours. In addition, we are maintaining a strong focus on our flows and reviewing efficiency options for our warehouses. In May last year we established a new supply chain organisation, with all our production planners, product managers and raw material team gathered together, in line with new working practices. This change will be most noticeable internally, but also among our raw material suppliers.

Katarina Levin, Setra’s new CEO “In my post at Setra I am proud to be involved in advancing the Group’s work on Grönsamhet. The climate benefits of wood truly make it the material of the future,” says Katarina Levin, Setra’s new President and CEO since January 2020. Katarina has an MSc in Forestry Science plus extensive experience in the sawmill industry, including as Sawmill Manager at SCA’s plants in Tunadal and Bollsta. “Together with our customers, we have an exciting year ahead of us. Both our crosslam factory in Långshyttan and the new trimming and planing line in Hasselfors are due to launch operations this year, which will strengthen our position in the market for building solutions and processed wood products,” states Katarina Levin.

Anders Nordmark, acting CEO in 2019

Sustainability Report 2019 — Setra Group

Setra’s value chain

Setra’s value chain Our value chain stretches from forest to city and society. Setra’s work and responsibility begins when we choose wood from sustainably managed forests in the local area. We ensure that 100% of each log is put to good use and our own bioenergy provides the sawmills with heat. By taking an approach where we analyse shortcomings and work on constant improvements, we build up commitment at our workplaces and improve production efficiency.

We work hard to establish smart logistical systems, and by delivering wood products and building solutions, we help to reduce the climate footprint of the construction industry and our customers. With our wood built into a structure or used for recyclable packaging or renewable energy, the value and climate benefit from the forest are transferred over to society.

Sawmill

Sawn Wood Products

Processed Wood Products

Raw Material

Bioproducts Bio-oil

Bark Chips Sawdust

Sustainability Report 2019 — Setra Group

Direct economic value generated and distributed Customers

Sales of wood products, bioproducts and building systems 3,938

Suppliers, raw material

Purchases of timber raw material -1,982

Suppliers, transport

Transport costs -553

Suppliers, other

Purchases of other goods and services plus depreciation -872

Employees

Salaries and social security costs -524

Lenders

Interest -11

State

Taxes -6

Net profit/loss

-10

Dividend to owners

Sustainability Report 2019 — Setra Group

Setra’s sustainability work

Our responsibility and contribution to sustainable development Our work for a sustainable Setra is about creating value through a climate-smart portfolio and about taking full responsibility for the impact that our business has on individuals, society and the environment.

GRÖNSAMHET SHOULD BE a feature of everything Setra does, which means taking account of economic, social and environmental perspectives as we run and develop our business. The starting point is to minimise negative impacts and maximise value creation and positive effects, along the whole value chain from raw material production in the forest to use of the end product. We focus on the areas in which we have the greatest influence and potential to make a difference. We also strive to develop in a way that keeps pace with the wider world and the demands and expectations placed on us as a company.

Sustainability on the global agenda We face major shared challenges in achieving sustainable social development, where everyone on the planet has an opportunity for a good life within the limits of the planet’s resources. As awareness has grown and we have seen more tangible effects of climate change and resource shortages, sustainability issues have shot up the social agenda, not least for many of our stakeholders. We are noticing an

increase in both interest and expectations – from our employees, customers and owners alike – concerning Setra’s contribution to climate-focused work and acceptance of our responsibilities. Global trends of particular significance for Setra’s business and sustainability work include: • Focus on climate and bioeconomy The world’s greenhouse gas emissions need to fall rapidly if the 1.5 degree target in the Paris Agreement is to be achieved. Sweden has expressed the ambition to become the first fossil-free welfare state, with a target of zero net emissions by 2045. Many industries, including the forest industry, have submitted a Roadmap for fossil free competitiveness to the government. The forest industry’s plan highlights the sector’s role in replacing fossil fuels and materials with bio-based alternatives, as well as storing carbon in forests and wood products, and gives an undertaking to reduce its own use of fossil energy.

Our contribution to the 2030 Agenda 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 economic, social and environmental perspectives and are to be achieved by 2030. Setra supports the agenda in its entirety and knows that through our business we have the ability to contribute to several of the goals. The most important factor is the climate benefit of our products, but it is also about our responsibility as an employer, supplier, partner and local community actor.

Sustainability Report 2019 — Setra Group

• Loss of biodiversity The loss of species and the deterioration of the ecosystem services on which we humans depend pose a serious threat to our future. It is vital to ensure sustainable forestry that preserves biodiversity and protects key biotopes from harvesting. • Rising value of the forest’s resources Sweden is one of the world’s leading nations in forest industry research, and already has the capability to produce everything from clothing to packaging using wood raw material. Renewable fuels made from bioproducts are one area where production is expected to increase moving forwards. New applications and increased demand for forest raw material are prompting an increasingly important debate on what it is worth and should mainly be used for. • Strong interest in wood as a construction material As a renewable construction material, wood has a significantly smaller climate footprint than steel and concrete. The global construction industry accounts for enormous emissions of greenhouse gases, while at the same time demand for new housing is increasing in line with population growth and urbanisation. In the transition to a more climatefriendly construction process, wood will be an important part of the solution. Structural frames in crosslam and glulam expand the design horizons hugely. In Sweden, the government has decided that wood construction should be promoted. Figures from Statistics Sweden show that the proportion of apartment blocks built with a timber frame rose from 9% to 13% between 2010 and 2018.

Our core areas

Our work on identifying our key sustainability areas takes account of the impact from our business along the whole value chain, and of the demands and expectations placed on us by the wider world. Read more about the analysis behind our priorities on page 46.

Our portfolio Setra’s most important contribution to work on climate change is to promote greater use of wood products, for example in construction. We are also working to increase the value added in our portfolio, not least with a focus on crosslam, which makes it possible for wooden buildings to go bigger and taller. We are also developing new, climate-friendly products. This includes our investment in pyrolysis oil, which is produced from sawdust and is a raw material for the manufacture of biofuels.

Climate-smart raw material The forests supply our core raw material. Guaranteeing that the wood comes from sustainable forestry is important to both us and our customers. Through FSC® and PEFC™ certification, combined with checks against set criteria, we ensure that the raw material we use comes from legal logging activities that preserve key biotopes.

Resourceefficient business

Culture and colleagues

We work systematically to create efficient flows and reduce Setra’s negative environmental impact. Over 95% of the energy that Setra consumes is renewable and we are focusing on reducing our energy use. Making use of the whole sawlog ensures high resource efficiency. Our goal is for the entire business to be climate neutral by 2030.

Committed and healthy employees are the foundation of our business. Setra is a values-driven organisation where everyone can feel involved and contribute to our shared goals. Health and safety are constant priority areas.

Sustainable transport Many of Setra’s wood products are exported and this distribution 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.

Sustainability Report 2019 — Setra Group

Progress with Grönsamhet 2019

25,000 tonnes

This is how much bio-oil will be produced annually at Pyrocell’s plant in Kastet, Gävle. That would run as many as 17,000 cars for a whole year. Read more on page 34.

Sustainability Report 2019 — Setra Group

rt l

Progress with Grönsamhet

Progress with Grönsamhet 2019 Our sustainability work covers many different issues and is integrated into both everyday work and strategic business development. Our knowledgeable and committed employees are the driving force behind this work, and the reason that we can proudly report several exciting advances in 2019. A few of them are presented in the following section.

Sustainable transport

Our portfolio PAGE 14

Climate-smart raw material PAGE 18

Culture and Resource-efficient colleagues business PAGE 24

The factory for future buildings

Culture and Resource-efficient Climate-smart Långshyttan is our hub for modern wood colleagues business product manufacturing. Production willraw material begin here in our new crosslam factory in 2020. Custom-made cross-laminated wood elements enable the construction of almost anything – in a resourceefficient and climate-friendly way.

From forest to tank Sustainable transport PAGE 34

Responsibility for the raw material at Climate-smart SustainableCulture and OurResource-efficient Culture and Sustainable every stageOur raw material portfolio transport colleagues portfolio business colleagues transport The forests around the sawmill in Färila were hit hard by the wildfires in the summer of 2018. By clearing and sawing the fire-damaged logs, we were able to recover considerable value that would otherwise have been lost. At the same time, we gained experience and know ledge that will be valuable for the future.

New ideas reduce energy consumption

PAGE 38

Setra is developing renewable fuel through the new company Pyrocell. Ourwith Preem, Culture and Together we will be Resource-efficient portfolio colleagues business refining sawdust into bio-oil, which in turn is a key raw material in fuel, thus contributing to the transition to a fossil-free transport sector.

A stronger safety culture Setra has always made a safe working environment its highest priority. Resource-efficient Nevertheless, there are risks in our business business and accidents do happen. By working on our behaviour and focusing on non-compliances and risk observations, we have begun to notice positive effects, for example at the sawmill in Malå.

Read more about our progress with Grönsamhet ➔

Setra’s business is energy-intensive and we are always looking for ways to make energy use more efficient. The sawmill in Heby is a leader in cutting kilowatt-hours, not least through new and more efficient wood drying methods.

Sustainability Report 2019 — Setra Group

14 Our portfolio – Progress with Grönsamhet

The factory for future buildings

Climate-smart raw material

Sustainable transport

Our portfolio

This year saw the development of Setra’s wood industry hub for processed products. Our latest investment in cross-laminated timber is a win for everyone, not least our customers, who are now even better placed to achieve their climate goals and build more sustainably.

THE PEOPLE and the machines are all now in place, ready to get Setra’s investment project in Långshyttan rolling on schedule. The new factory for cross-laminated timber, or crosslam, is an ultra modern plant with machinery that enables us to manufacture the market’s largest crosslam elements. Prefabricating the solid, large-scale elements in the factory ensures easier assembly on site and keeps construction times down. The crosslam elements are made of wood primarily sourced from our own sawmill in Heby, while the raw material is harvested in the forests of central Sweden. “We’re seeing wood construction capture market share, as more and more builders try using crosslam and realise the benefits. They understand the forces at work and are choosing to develop their skills and promote themselves in the field of wood construction,” says Anna-Lena Gull, who has been responsible for establishing the new factory.

Glulam offers commercial synergies Production in the crosslam factory is digitalised and uses the latest Computer Numerical Control (CNC) technology, which makes it possible to produce elements to order for each specific project. The technology also makes production of the panels highly efficient, with minimal waste. The proximity to Setra’s glulam factory, also located in Långshyttan, is a huge advantage. Glulam is used in most crosslam projects, so this brings several commercial synergies for the customer in terms of both production and transport. “In addition to the employees’ expertise in finger-jointing and laminate bonding, our glulam manufacturing has come a long way in terms of efficiency, short lead times and quick deliveries, and this successful methodology is now being implemented in the crosslam factory,” continues Anna-Lena Gull. Cross-laminated timber really took off in the late 1990s, with Austria leading the way in both production and use. When, in 1994, Sweden lifted the ban on building high-rise blocks in wood, interest in the material grew, although it is only in recent years that crosslam has taken on a more prominent role in Swedish construction. “One of Setra’s advantages is that we own the whole chain from sawmill to end product. This

Sustainability Report 2019 — Setra Group

allows us to calibrate every part of our business and make improvements to ensure optimal use of the raw material,” says Anna-Lena Gull. Part of the solution to climate change Of all the benefits that crosslam offers, the environmental and climate arguments are among the most important. Wood is a renewable raw material and the manufacture of the structural elements takes place in an energy-efficient process with a low carbon footprint. The material also serves as a carbon sink for the whole lifetime of the building. It used to be assumed that the greatest climate gains could be achieved during a building’s operational phase. Now we know that the construction and material phases account for a considerable portion of the climate impact during the lifecycle of a building. “Wood is part of the solution to the world’s climate issues and will play a key role in the transition to a fossil-free society. If we are to meet our climate commitments, we simply have to switch to building much more in wood,” says Anna-Lena Gull. Setra’s investments have got everyone in Långs hyttan excited about the future. In addition to new jobs, the conditions are in place for the establishment of new businesses in related fields. “It feels right that Setra’s development of new, sustainable construction systems is going hand-in-hand with the positive development of Långshyttan,” says Anna-Lena Gull.

Cross-laminated timber Cross-laminated timber (crosslam) is an engineered panel comprising planed timber that is glued together in layers at 90 degrees to each other. The material is dimensionally strong and has a high load-bearing capacity in relation to its own weight. Using large and stable crosslam elements ensures both rational and efficient assembly on site and keeps construction times down. A building in crosslam differs from buildings in concrete and steel, since the engineered wood binds large quantities of carbon for the whole lifetime of the building. This makes cross-laminated timber a climate-smart choice.

Culture and Resource-efficient colleagues business

Strong focus on planed products 2020 will mark the start of production at Setra’s next big investment – a new trimming and planing line in Hasselfors. This investment opens up new opportunities for us to meet the global demand for planed products. What does the investment mean? Improved efficiency and a stronger position for Setra in the global construction market. The planed products will account for around two thirds of the estimated production volume of 320,000 cubic metres. This will provide greater flexibility and better service for new and existing customers alike. What will the product portfolio look like? We will primarily be producing planed construction timber in various dimensions, including roof truss timber and joists. The timber will be sorted mechanically and strength-graded according to the standards that apply in the respective markets. Having the planing integrated into the production process cuts out a whole stage and enables the end product to be created under one roof. This brings many benefits, not least the savings on transport. What parts of the world will the products be used in? We will continue our strong presence in Scandinavia and the rest of Europe. The difference now is that we can explore more markets and make the most of the economic situation in different parts of the world.

Wood is part of the solution to the world’s climate issues and will play a key role in the transition to a fossil-free society.

How do you see Setra Hasselfors developing further? I hope and believe that the positive attitude towards building in wood will continue, in which case we can expect considerable expansion in the markets for our broad and flexible portfolio of planed products.

Anna-Lena Gull, VP Building Solutions

Jouko Mäkimattila, Product Manager, Planed Wood Products

Sustainability Report 2019 — Setra Group

Our portfolio – How we work

Our portfolio Our wood products are manufactured from renewable raw materials and contribute towards the transition to a sustainable society.

How we work

Our opportunities and challenges Here at Setra, we believe in Grönsamhet. This means that we want to do business where everyone prospers – not just ourselves but also our customers, society and nature. By processing wood from responsibly managed forests into sustainable products for the construction and wood industries, we are helping with the transition to a fossil-free society, in partnership with our customers. Increasing construction in wood is a core issue for Setra, since wood is renewable and binds carbon dioxide for the whole of its lifecycle. Our challenge is to deliver products and services that make it easy to choose wood over other materials such as steel and concrete.

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.

Sustainability Report 2019 — Setra Group

A broad range Setra’s product range spans from sawn wood products and construction timber to further processed products such as glulam, door and window components and structural elements. Our range also includes bioproducts such as bark, sawdust and wood chips. As a result of the construction sector and wood industry’s growing demand for value-added products, Setra is focusing on increasing the degree of processing and developing customer-specific solutions. In 2020, we will begin delivering building solutions in cross-laminated timber and in 2021 we will ramp up production of planed construction timber.

Where Setra’s products go (percentage of sales) 16% BIOPRODUCTS

remain visible, including flooring, furniture and doors, plus pressure-treated products such as decking. Spruce is the dominant wood for building and construction, since it meets high strength requirements. It is also used in glulam and cladding. Processed wood products Our portfolio of processed products includes glulam, decking, joists, construction timber and components for doors and windows. The customers are builders’ merchants and wood product manufacturers, primarily in Scandinavia. Glulam is also sold in project-specific solutions directly to the builder or via a builders’ merchant. 2020 saw the launch of standard halls in glulam for industrial, warehousing and agricultural use. Setra’s glulam factory in Långshyttan has worked long and hard on perfecting its production and is now able to deliver glulam to the customer’s specifications within six working days of ordering.

73% SAWN WOOD PRODUCTS

11% PROCESSED WOOD PRODUCTS

Sawn wood products Sawn wood products in spruce and pine are important for our export markets and account for the majority of Setra’s sales. Planks and boards from our sawmills can be found in everything from furniture and packaging to finished buildings around the globe. The largest markets are Europe, North Africa, the Middle East and Asia. Our customers operate mainly in the wood processing industry comprising, for example, planing mills and manufacturers of glulam, buildings and packaging. Pine is easy to process and is often used for products where the wood will

Bioproducts Making use of the whole log and using it as efficiently as possible is a key issue for Setra. Around 50% of each sawlog is turned into boards and planks, and the rest becomes bioproducts such as bark, chips and sawdust. These bioproducts are sold on as cellulose chips, biofuel or animal bedding. The customers are largely paper and pulp mills, and energy producers.

100,000 m

The amount of crosslam that will be produced annually in Långshyttan. This would be enough to build around 4,500 apartments.

1,727 GWh

Where Setra’s bioproducts go (volume m3) 43% HEATING AND POWER PLANTS

In 2019, Setra delivered 1,727 GWh bioenergy. That is enough to heat around 200,000 apartments.

9% PELLETINDUSTRY 1% OTHER

47% PULP AND PAPER MILLS

The transition to a bioeconomy, where we use renewable resources from the forest, for example, instead of fossil fuels and materials, suggests a growing market for bioproducts. Setra’s investment in extracting bio-oil from sawdust is one example of many new applications for these bioproducts. Read more about the investment on page 34. Crosslam and planed products Demand for wood as a construction material is rising, and there is every indication that the trend is only in its infancy. The construction industry accounts for substantial greenhouse gas emissions and rapid change is needed to achieve the

world’s climate goals. Wood is the only renewable construction material and it generates a significantly lower carbon footprint than steel and concrete, as confirmed by comparative lifecycle analyses. Setra’s new wood industry hub with crosslam manufacture in Långshyttan and trim saw with integrated planing machine in Hasselfors are designed with these developments in mind. Modern industrial wood construction using cross-laminated timber makes it possible to create large-scale projects in a more efficient and competitive manner than ever before. We apply a project model where we maintain a close dialogue with the customer and provide expertise in

What our customers think Helping our customers to do better business is part of Setra’s business concept and our vision for Grönsamhet. We work hard to maintain a high level of service and expertise, and in order to find out what customers think, we conduct regular customer surveys in all our markets. The latest survey, which went out to European customers in 2018, shows that customers are very satisfied and consider our delivery reliability to be much higher than that of our competitors. The customers praise the ease of making contact with us and obtaining service and state that we are efficient and provide the support required. Setra’s net promoter score in the survey is +67. This is a measure of how inclined the customers are to recommend us, on a scale that ranges between -100 and +100. The most recent survey of Swedish customers, conducted in 2017, also produced a net promoter score of +67.

project planning and structural engineering, so that even those building in wood for the first time can move forward with confidence. The flexibility in the factory enables us to optimise the production of structural elements and minimise waste. Future customers for Setra’s building solutions will be contractors, construction companies and building pre-fabricators, primarily in Sweden and Scandinavia. Planed construction timber from Hassel fors is expected to benefit customers in the construction industry in Scandinavia, Europe, the USA and Australia.

Sustainability Report 2019 — Setra Group

Climate-smart raw material – Progress with Grönsamhet

Responsibility for the raw material at every stage

Climate-smart raw material

The wildfires that struck the forests of Hälsingland in summer 2018 were a real trial, not least for the forest owners who saw much of their holdings go up in smoke. It was a huge relief for those affected, when Setra’s plant in Färila stepped in to saw the fire-damaged logs. An undertaking that would continue well into 2019. ALMOST TWO years have passed since the forests

of Hälsingland suffered extensive wildfires. People were forced to flee their homes and the fire and rescue service fought tirelessly for weeks against a fire that would turn out to be the biggest in modern Swedish history. The area of forest damaged in the municipality of Ljusdal amounted to around 8,000 hectares, a significant proportion of which belonged to Sveaskog and members of Mellanskog, who jointly own the majority of Setra’s shares. “Visibility was poor and there was smoke everywhere, when we heard that we would have 25 minutes to leave our house if the fire came any nearer. At that point, I could see that it was serious, but I had no idea what lay ahead of us,” relates Mattias Forslund, Mill Manager at Setra’s sawmill in Färila. Like a military operation The sawmill’s local management team quickly convened a crisis meeting. They drew up a plan for the worst-case scenario and what action they would take if the fire reached a certain point, close to the sawmill. The Swedish Civil Contingencies Agency needed to use Setra’s site for its countermeasures. The area was cleaned up and in just a few hours it was essentially transformed into a disaster control centre. “It was obvious to us that we should help deal with the wood and recover as much value as possible. Our owners Sveaskog and Mellanskog were hit hard by the fires and our plant in Färila is only 25 km from the main sites affected,” says Mattias Forslund. The intervention came to resemble a military operation and faced a number of challenges – not least logistically, since the fire-damaged logs could not be mixed with the existing stock. A few weeks after the fires had been put out, Setra Färila was ready to start sawing damaged logs and keep them separate from the rest of the production. At the beginning of December 2018, the regular intake of spruce was stopped and work began on the firedamaged logs. “One of the many challenges was getting a clear idea of the scale. The initial figure was over 200,000 cubic metres solid volume, which for us is more than half a

Sustainability Report 2019 — Setra Group

year’s production. However, we ended up dealing with 130,000 cubic metres,” says Mattias Forslund. No time for detailed planning While the fires were ongoing, Setra Färila had received indications from Mellanskog and Sveaskog that the majority of the fire-damaged wood was pine. In fact, 80% of the wood turned out to be pine. This represented a major undertaking for a sawmill that usually only saws spruce and does not have a prepared market for pine products. During both the fires and the sawing of the fire-damaged logs, Setra’s raw material coordinator Magnus Olsson worked closely with Mattias Forslund in Färila. Magnus was on site early and remembers the devastation in the fire-hit area. “It can best be described as a lunar landscape. Everything was so fiercely burned that gravel, rock and black soot were the only things left. In these circumstances, there was no time for any detailed planning. We just had to roll up our sleeves and get to work. “Sawing fire-damaged logs is a prime example of Grönsamhet. We recovered considerable value in a cost-effective way and managed to produce perfectly good sawn wood products. As the climate changes, extreme weather events are likely to become increasingly common. We now have valuable experience in how to react to unforeseeable situations, which will prove a real strength moving forward,” concludes Magnus Olsson.

Climate change poses a challenge for forestry Global warming is changing the temperature and rainfall patterns that we are used to. Heatwaves lasting several weeks may become common in low-lying areas, increasing the risk of forest fires, as well as damaging seedlings and providing an opening for insect pests and fungi. Increased rain and snowfall will be a challenge in places that already have problems with sea levels, flooding and drainage.

Sustainable transport

Our portfolio

Bark beetle causes massive damage

It was obvious to us that we should help our owners deal with the wood and recover as much value as possible. Mattias Forslund, Mill Manager Setra Färila

Dry and hot summers increase the risk of attack from the European spruce bark beetle, a pest that does huge damage and causes forest owners to lose millions. In 2019, 7 million cubic metres of forest was affected in Sweden, which is double the figure for the previous year. What is the reason for this increase? There are always bark beetles in the forest. Normally, they attack the dead and half-dead trees, while the healthy ones survive. It’s believed that the attacks we’re seeing now are related to drought and low groundwater levels, which have made the forest less resilient against a mass outbreak. Why is Setra processing bark beetle-damaged logs? It’s in our owners’ interests to try to recover the value in the forest and we spotted a business opportunity here. We also feel for the landowners and their situation, and it’s important to clear half-dead forest, to stop the outbreaks spreading. How do you process the wood? Damaged logs require special preparation and must be handled separately and kept apart. We’re setting up a test sawing of bark beetle-damaged wood in order to be well prepared in the event that the volumes increase. The project is both exciting and hard work, and although it’s a commercial risk, we’re learning a lot. What will the bark beetledamaged wood be used for? The end product may well be construction timber, primarily for the North American market, as long as the wood meets the strength grading requirements. Alternatively, it could be a grade that works for different types of packaging, where the quality requirements are not as high. This type of product is, to some extent, a new niche for us.

Klas Flygare, Manager Bioproducts and Raw Material

Sustainability Report 2019 — Setra Group

Climate-smart raw material – How we work

Climate-smart raw material Our raw material comes from forests that are managed responsibly for the benefit of future generations. Every log we use can be traced back to the harvesting site.

Our opportunities and challenges Setra’s business begins in the forest. We must be able to guarantee that our raw material comes from sustainably managed forests – where economic, environmental and social assets are developed in a balanced way. We therefore value long relationships with our suppliers and only accept logs that are certified or where we can check the origin ourselves.

There is huge potential for those of us who work with raw material from the forest and it is growing as new research is conducted into the properties of the material. In a future where wood is set to play an increasingly important role, it will be essential to continue protecting the Swedish forestry model, where we preserve biodiversity while at the same time working to achieve good returns. Climate change also presents us with new challenges in dealing with damaged wood. We choose to see these challenges as new business opportunities, and a chance to make a significant difference in terms of sustainability.

Sustainability Report 2019 — Setra Group

How we work Sustainable forestry The Swedish Forestry Act stipulates how we should manage our forests. Sweden imposes an obligation under which reforestation of the land must commence within three years of harvesting, by planting, sowing seed or using seed tree stands. At least two new trees are planted for each one harvested. The amount of growth is greater than the amount harvested and this was the case for the entire 20th century, which means that there is now twice as much forest in Sweden as there was 100 years ago. Annual growth is put at around 120 million cubic metres of forest, and around 90 million cubic metres is harvested each year. A key aspect when it comes to silviculture is the capacity of the growing trees to absorb carbon dioxide. Managing the forest is of considerable benefit to the climate, since young, growing trees absorb more carbon dioxide than older ones. When we use the logs to produce wood products, we help to lock in carbon dioxide – stored as carbon – in buildings, for example. Wood sourcing Setra has no forests of its own and buys in all its timber raw material. Over 99% of our raw material comes from Sweden, with the remaining volume imported from Norway. Setra’s owners Sveaskog and Mellanskog provide a large proportion of the raw timber, and we have around 15 suppliers in total. In 2019, Setra purchased 3.45 million cubic metres of raw timber, of which 57% was pine and 43% was spruce, often of local or regional origin. Our catchment area is normally within a radius of about 100 kilometres from the sawmill.

Raw material purchasing Setra buys in pine and spruce from around 15 suppliers.

57% PINE

43% SPRUCE

Setra’s timber purchasing includes harvesting and delivery to our mills, with the majority of the wood transported by timber truck. Some of the plants have their own railway track and in 2019 a little over 4% of Setra’s timber arrived by train. We hope to be able to increase the percentage of rail deliveries in the future. Close supplier partnerships Setra is dependent on getting the right logs to the right sawmill at the right time. The cutting is often tailored to the customers’ wishes actually in the forest. The quality and reliability of the deliveries is incredibly important. The fact that Setra’s biggest suppliers Sveaskog and Mellanskog are also our owners provides a solid foundation for a secure raw material supply. Sustainable forestry is also a crucial issue for them. State-owned Sveaskog is Sweden’s largest forest owner, and has obtained FSC and PEFC certification for its entire holding of managed forest. Mellanskog is an association owned by 26,000 private forest owners, with around 40% of its forest area PEFC certified.

3.45 million m3 How much raw timber Setra purchased in 2019.

Sustainability Report 2019 — Setra Group

Climate-smart raw material – How we work

100% All of the wood purchased by Setra is traceable, and meets requirements on controlled raw materials.

Sales of sawn wood products Certified and controlled, proportion of sales

100% 100 %

100% 100% 100% 100 % 100 % 100 % 100100% %

20%

23%

19%

17%

18%

20%

2015

2016

2017

2018

2019

■ CONTROLLED ■ PROPORTION PEFC ■ PROPORTION FSC

Sustainability Report 2019 — Setra Group

Demand for sustainable forestry These days, many people want to know the origin of the wood products they buy. It is becoming increasingly common to require sustainable forestry and certification of the raw material. All but a few of Setra’s raw material suppliers hold FSC or PEFC certification, or both. This means that the forest owner has made a voluntary commitment to responsible and sustainable forestry, and is subject to inspection by third-party auditors. The minimum requirement for wood supplied to Setra is that the origins are traceable and meet five basic criteria. Setra does not accept: • Illegally harvested wood • Wood from forests with serious social conflict • Wood from forests worthy of conservation

• Wood from harvesting that threatens forest assets of high conservation value • Wood from forests in which genetically modified trees are planted If the timber comes from a certified supplier, it is down to the supplier to check that it meets the requirements. Timber that does not come from certified suppliers is checked by Setra’s own raw material coordinators, for example through supplier visits and follow-up of harvesting. Setra pays a premium for certified raw material. The amount of certified timber bought in is steered by customer demand, which is steadily rising. In 2019, 43% of Setra’s sold wood products were FSC or PEFC certified, which is a rise of 4 percentage points compared with 2018. At the same time, 30% (22%) of the cellulose chips and 16% (15%) of the biofuel was sold

Certified raw material

100 km Our raw material comes from forests within around 100 km of the sawmills.

as certified. Demand for certified wood is also strong within the construction industry. The structural elements that Setra is beginning to manufacture in 2020 are produced from certified wood. Traceability Setra requires transparency and traceability from all our suppliers. Being able to trace the wood back to the harvesting site is essential in enabling us to check that no wood from forest areas of high conservation value is supplied as logs to Setra’s sawmills. In Sweden, all harvested areas larger than half a hectare must be reported to the Swedish Forest Agency. Using the coordinates of the harvesting site, we can check with the Swedish Forest Agency that the harvesting complies with the regulations in the Swedish Forestry Act and

whether any part of the area is protected. We are thus able to trace the wood from harvesting to log sorting at Setra. Damaged wood For us at Setra, it is important that as much as possible of the forest’s value is realised, both out of respect for nature and for the benefit of the forest owners. We therefore accept timber that is felled in storms or damaged by insects and forest fires. All these are naturally occurring incidents but, as the climate changes, the damage may well become greater and more frequent. Such incidents affect the harvesting in the forest and the reliability of our deliveries, which is why we see a need for greater preparedness in the event of storms, for example.

PEFC, Programme for the Endorsement of Forest Certification, is an independent umbrella organisation that works for sustainable private forestry through certification by an independent third party. In Sweden approximately 11.5 million hectares of forest land are PEFC certified. FSC, Forest Stewardship Council, is a non-profit, international, independent organisation of its members that offers a voluntary certification system for responsible forest management. Approximately half of the productive forest land in Sweden is FSC certified.

Governance All the timber raw material that Setra buys in is either certified or controlled. Certification is carried out in line with FSC® and PEFC™, the world’s largest forest certification systems. The purchasing of wood from suppliers who are not certified is governed by Setra’s raw material policy, which follows the policy for FSC Controlled Wood and PEFC Controlled Sources. This ensures that we also comply with the requirements in the European Timber Regulation. Setra’s sawmills and processing units are certified according to FSC and PEFC’s Chain-ofCustody standards and FSC’s standard for Controlled Wood.

Sustainability Report 2019 — Setra Group

Resource-efficient business – Progress with Grönsamhet

New ideas reduce energy consumption Climate-smart raw material

Sustainable transport

Our portfolio

Culture and Resource-efficient colleagues business

One of Setra’s core sustainability goals is to reduce energy consumption. The plant in Heby is busy hunting down leakages, reviewing diesel use and switching to LED bulbs. In 2019, employees managed to cut electricity consumption by a whole 4.5%.

IT IS MONDAY morning and at Setra Heby a new and hectic week as begun. As Mill Manager Jan-Erik Johansson-Vik and his right-hand man Olle Johansson tour the plant, they are quick to pick up on any new ideas. “With motivated and committed employees, there is never any lack of suggestions for improvements. Often, the bottleneck ends up being at management level,” states Jan-Erik Johansson-Vik humbly. Before he was recruited by Setra in autumn 2017, he ran a consultancy firm specialising in Lean, constant improvements and organisational development. Now he uses his expertise to fine-tune production within Setra. “Our approach involves the senior managers being part of daily operations. We need to be experts in listening, asking the right questions and understanding what it takes to run this plant even more smartly,” he asserts. Much of that work boils down to measuring and cutting electricity consumption per cubic metre of sawn timber produced.

On the right path The forest industry as a whole set a target of reducing electricity consumption by 20% between the years 2010 and 2020. This is a target that Setra also signed up to and is well on the way to meeting. “Here at Heby, we’re currently conducting a major energy survey. This includes breaking down electricity consumption into smaller units and measuring what draws power in the different departments,” explains Olle Johansson. The main challenge lies in the kiln drying department, where the ambition is to optimise kilowatthours by making the drying process more efficient. “Drying the timber is the most energy-intensive process in the whole mill, but we’ve changed the

Sustainability Report 2019 — Setra Group

control system and are conducting rolling main tenance work to reduce heat leakage,” explains Jan-Erik Johansson-Vik. Alongside the large-scale investments, employees at Setra Heby have also overhauled the lighting, with LED bulbs replacing incandescent bulbs in both the office and the large warehouse on site. Fuel-efficient driving However, the focus is not just on electricity use. Other measures are also under consideration, not least cuts in diesel consumption. One way is to coordinate the warehouses to make the forklift trucks’ journeys shorter. Another is to provide training in eco-driving for improved fuel efficiency, and to gradually switch to more energy-efficient vehicles. Some ideas come out of the daily briefings, at which each department reports on the status of production and any non-compliances and disruptions. “The key is to identify and eliminate our noncompliances as quickly as possible, so that we can design out everything that doesn’t create value. There is a great deal to be gained, for example, by repairing things before they break down. It’s an effective way to avoid production stoppages,” says Jan-Erik. He stresses that success breeds success. New working practices and greater flexibility within the organisation have gone hand-in-hand with both energy savings and increases in productivity. “When the employees see that they can have some influence over the details, their commitment improves. More ideas are being generated than we have time to implement, and we also make sure that we exchange experience with our other units.”

More ideas are being generated than we have time to implement, and we also make sure that we exchange experience with other units. Jan-Erik Johansson-Vik, Mill Manager Setra Heby

Sustainability Report 2019 — Setra Group

Resource-efficient business – How we work

Resource-efficient business We work systematically to improve the efficiency of our flows, make maximum use of the raw material and reduce the environmental impact of Setra’s business.

Our opportunities and challenges The main environmental impact from the sawmills relates to energy use, noise and emissions to air from internal transport and biofuel boilers. Many stages of the sawmill process are heavily reliant on electricity, but there is scope for improvement. We can make our production more efficient and reduce its environmental impact through improved working practices and smart investments. Another major opportunity for Setra is that the bark, chips and sawdust generated during manufacture can be used as biofuel in our own boilers or to benefit the local community. We have energy partnerships in place in several locations, whereby surplus energy is used to heat premises and homes nearby.

How we work Supply Chain keeps things rolling 2019 saw the creation of a new department – Supply Chain – whose role is to plan and guide operations within the value chain from raw material to delivery of finished goods as efficiently as possible. Supply Chain ensures that each sawmill receives the right amount and quality of timber to manufacture their product mix. They check that customers receive the right goods on time, that we have the right volumes in stock and that our portfolio is in line with customer demand.

Governance Climate and the environment are an important focus area in Setra’s sustainability policy, which puts aspects such as resource efficiency, energy consumption and climate impact front and centre. Setra’s sawmills and processing units are certified according to the environmental management standard ISO 14001. Our operations require an environmental permit and are subject to extensive environmental legislation.

Sustainability Report 2019 — Setra Group

All production centred on the customer Setra’s units plan their production to create flows that are as efficient as possible from the customers’ perspective. This approach requires the production organisation to always improve their working practices, informed by the needs of the customers. Implementation of this approach across the whole organisation has been ramped up over the past two years. We are already seeing improved results due to faster and clearer management of

non-compliances. At the start of every new working day/shift, a status update or briefing is held, addressing safety, quality, delivery and efficiency. All the units have now been trained in this way of working. Over the longer term, there are several potential benefits from a sustainability perspective: less stock and shorter lead times, which means increased customer satisfaction and reductions in quality damage, for example from blue stain. Work to reduce stoppages Maximising availability – the time that our sawmills and processing units run without interruption – is clearly linked to efficiency. Fewer stoppages lead to higher availability and higher production, which in turn results in lower energy consumption per produced volume. It also means that employees need to spend less time on operational disruptions and emergency maintenance, jobs that can be risky. To understand what lies behind a production stoppage, we break down non-compliances into their root causes and work on solutions to prevent a repeat of the problems. Our experience shows that production stoppages due to faults in machinery and equipment or existing working practices can be improved. The starting point is to first ensure that tasks are being done in the best way possible, before we replace equipment. Another element of this work is to exchange experience between the units and ensure that everyone follows the working practices that have proven to work best. Software for visualising stoppage time measurements was tested in 2019 and will be introduced at all units in 2020. The aim of the software is to facilitate continued work on non-compliances by clarifying the cause of the stoppage and so improving availability. We are also working on reducing downtime during

-11%

Fuel consumption within Setra has fallen by 11% between the years 2010 and 2020.

Sustainability Report 2019 — Setra Group

Resource-efficient business – How we work

retooling and making maintenance more efficient by involving operators in the care of the equipment, giving the maintenance mechanics more time for preventive measures. The whole log is used Making use of the whole log comes naturally to Setra, due to its importance for both profitability and sustainability. We strive to attain a high saw yield, i.e. a high volume of sawn product in relation to the volume of incoming timber raw material. The saw yield is affected by the dimensions of the log, the sawing technology and the choice of sawing the log into planks or boards depending on the economic value of the end products. In 2019, the saw yield came in at 49.5%, which is the same as in 2018. The residual material generated by our production is used as cellulose chips, biofuel or animal bedding. The quality of the bioproducts is important; they are an important raw material or fuel in the customer’s processes.

Goals for cutting energy consumption Many elements of the sawmill process require large amounts of energy, making reductions in consumption a priority issue. Setra’s overarching goal is to cut electricity consumption by 20% and fuel consumption by 15% per cubic metre of sawn timber between 2010 and 2020. Electricity consumption is steadily falling at our units, having already been brought down 10%. We are conducting energy-saving measures, while also working to improve availability and thus productivity. This will lead to a reduction in specific emissions, since we report our electricity consumption in relation to the volume produced in cubic metres. However, electricity consumption was slightly higher in 2019 than in the previous year. At a couple of units, we had problems achieving our planned productivity levels over the course of the year, in part due

Sustainability Report 2019 — Setra Group

to a shortage of timber and sawing of fire-damaged timber. This has had a negative impact on our key indicators. Fuel consumption has fallen by 11% since 2010, which is good news. We see this as a sign that, despite reduced production levels and high stocks, we have managed to make our forklift use more efficient. Setra’s total energy consumption amounted to 651 GWh in 2019. Thermal energy accounted for 78%, electrical energy just under 18% and fuel consumption a little over 4%. Energy survey reveals opportunities Setra is conducting systematic work on surveying our energy consumption, in order to identify potential savings. We are subject to the Swedish Act on Energy Audits in Large Enterprises (EKL), and since 2016 we have surveyed consumption at all the production units except one, although this is expected to be completed in the first quarter of 2020. The results give an indication of the measures with the greatest potential impact in terms of energy savings and are reported to the Swedish Energy Agency.

Our conclusion is that the greatest potential lies in improving the efficiency of kiln drying the timber. The drying process accounts for 50% of the company’s electricity consumption and 95% of our thermal energy consumption. A report drawn up at Kastet sawmill in 2019 outlines concrete measures that could give us the capacity to dry significantly more timber of the same quality for the same or even lower energy consumption. The conclusions from the report will be applied at all our units. Other savings could potentially be made by investing in new, energy-efficient equipment and developing new working practices and procedures. In 2019, Setra decided to invest in a more modern dryer in Hasselfors and a new saw line in Nyby, all of which will be implemented in 2020. We are continuing to replace light sources with LED lighting and systems that run on hydraulic oil are gradually being switched to electric power. Other ongoing projects include installing occupancy sensors to light fittings, reviewing the maintenance temperature in our premises and extending eco-driving training.

Renewable energy and energy partnerships Over 98% of Setra’s thermal energy is produced using renewable fuel. Bark and sawdust from our own production is combusted in boilers and the heat is used in the drying kilns. In several locations, we also have energy partnerships with the local community. Malå, Gävle and Skinnskatteberg use biofuel from Setra in their district heating boilers, with some of the generated energy then supplied back to our industrial plants. In Nyby we produce district heating for the residents of nearby Björklinge using our own boiler. The breakdown of the bio fuel boiler in Nyby meant, however, that we were forced to burn fossil oil in the back-up boiler for a few weeks of 2019. Since 2018, Setra has purchased eco labelled electricity produced using hydro power, wind power and bioenergy.

Energy consumption 2019 Total consumption amounted to 650,704 MWh

499,492 MWh Bioenergy district heating or own boiler 18,527 MWh Internal transport (diesel) 9,050 MWh Internal transport (biodiesel) 115,274 MWh Electrical energy 8,361 MWh Heating oil district heating or own boiler

Electricity consumption 2010–2019 (kWh/m3 sawn timber)* 75 70

71.1 66.7

63.1

63.7

62.4

Targets 2020 56.9 kWh/m3 (-20% compared with 2010)

55 50

2010

2016

2017

2018

2019

Setra’s electricity consumption has been cut by 10% since 2010. However, consumption rose slightly in 2019, due to productivity not reaching planned levels at a couple of units. Reduced emissions from internal transport Setra’s forklift trucks mainly run on diesel, with the exception of those at the unit in Färila, for which we use HVO. As the result of a new procurement drive, all the forklifts will be replaced with newer models with better environmental performance over the course of 2020. Setra has also tested electric forklifts and concluded that we are well placed to increase their use in the future. Electrically powered forklifts are used indoors at the new crosslam factory in Långshyttan. Noise Disruptive noise is always a priority issue when making new investments and operational changes. Noise assessments enable us to determine how a new operation will affect local residents and how the plant should be designed to avoid unnecessary disruption.

Diesel consumption 2010–2019 (kWh/m3 sawn timber)* 18

17.6 16

16.0

15.9

15.7

15.1 14

Targets 2020 15.0 kWh/m3 (-15% compared with 2010)

2010

2016

2017

2018

2019

Diesel consumption has fallen by 11% since 2010, thanks to more efficient driving.

* Calculated for units with year-round production

Sustainability Report 2019 — Setra Group

Resource-efficient business – How we work

Climate report Our goal is for Setra’s business to be climate neutral by 2030. The goal applies along the entire value chain, with the exception of foreign distribution.

Our opportunities and challenges Wood binds carbon and our products are climate positive. The climate benefits of using wood as a construction material far outweigh the emissions from production and transport of the products. For Setra’s wood products, the net effect lies between around 600 and 800 kg captured carbon per cubic metre of wood, depending on the transport distances involved. To make the business climate neutral, we also need to work on our own negative carbon footprint, with the main challenge in this area coming down to our dependence on energy for production and transport.

Governance

The annual climate report shows where the emissions are occurring in our operations and the size of these emissions, seen in relation to the whole lifecycle. The climate report help us to prioritise where we need to put interventions in place and follow up their effects.

Climate neutral The term climate neutral means that the total climate impact of a certain operation or a product is net zero. First and foremost, the emissions that the operation causes must be reduced to the minimum possible. The business is able to offset the remaining emissions so that the net total is zero.

Sustainability Report 2019 — Setra Group

How we work Monitoring emissions with climate report For several years now, Setra has produced an annual climate report for the business. The climate report shows emissions from a lifecycle perspective, from planting spruce or pine seedlings to delivering sawn and processed wood products and bioproducts to customers. Setra’s emissions of greenhouse gases from its own heating boilers, machinery and vehicles (Scope 1) account for a small proportion, around 5%, of the total emissions. Indirect emissions from purchased energy (Scope 2) account for less than 1% of emissions. This is because Setra has bought in ecolabelled electricity since 2018. The vast majority of the emissions thus fall within Scope 3, with transport accounting for

the most (read more about our transport on page 36). Climate calculations in line with the GHG Protocol Setra’s climate calculations are conducted in line with the Greenhouse Gas (GHG) Protocol, an international calculation standard. The standard divides the emissions into three categories, or scopes, as follows: • Scope 1: Direct emissions from the business (fuel combustion at own plants and company vehicles) • Scope 2: Indirect emissions from purchased energy (electricity, district heating, district cooling) • Scope 3: Indirect emissions from other parts of the value chain, such as purchased transport, travel and the carbon footprint of the raw materials.

Emission categories SCOPE 3

SCOPE 2

SCOPE 1

The forest industry’s roadmap for fossil free competitiveness

Carbon emissions Emissions from Setra’s operations (tonnes). 2019*

2018

2017

2016

Scope 1

9,236

8,979

8,119

9,880

Scope 2

226

231

37,657

43,032

Scope 3, including transport

183,831

191,089

194,945

151,855

Scope 3, excluding transport

(21,977)

(23,282)

(20,858)

(24,076)

193,293

200,299

240,721

204,767

Total: Scope 1

Direct emissions from our own operations.

Scope 2 Indirect emissions from purchased energy. When Setra buys in electricity, district heating and district cooling, the emissions do not occur inside the gates but where the energy is produced. Scope 3 Indirect emissions from purchased transport, hired machinery and the climate impact of purchased products, for example.

Setra is part of the Swedish forest sector’s roadmap for fossil free competitiveness. The plan focuses on three areas in which the forest sector can contribute to Sweden’s work on climate change: • Substitution – replacing fossil products or products whose production creates major fossil emissions with bio-based products. • Carbon capture – binding carbon in the forest and in bio-based products. • Reducing energy use – cutting climate emissions from the industry’s own use of fossil energy.

*Including emissions from divested and sold units and new investments. The complete climate report for 2019 is available at setragroup.com

Sustainability Report 2019 — Setra Group

Resource-efficient business – How we work

Wood from a climate perspective Emissions and respective carbon sequestration in kg CO2/m3 sawn timber for different destinations. Emissions are calculated based on a lifecycle perspective from planting to transport of finished goods to the customer. 231 25

Sweden

Germany

2,9 2,7 ■ Excluding outbound deliveries

Japan

2,5

2 ■ Including transport to an average customer in a typical destination ■ Amount of carbon bound in wood recalculated as CO2

-800

Calculations show that wood binds the equivalent of 800 kg of carbon dioxide per cubic metre of sawn timber. At the same time, the carbon emissions from a lifecycle perspective from planting to delivery to an average customer in Sweden are 36 kg. Using wood for construction and housing produces a carbon sequestration effect of 764 kg carbon per cubic metre of sawn timber.

Plan for climate-neutral Setra Our goal is to make Setra carbon neutral by 2030. In 2019, we clarified how we are going to get there. As part of the operational planning, all the units and parts of the business have identified activities that will be collated in a Roadmap for climate-neutral Setra. In order to clearly set out each production unit’s impacts and contribution to the collective road map, we will also be drawing up a climate report for each unit. Concrete measures for the climate As well as being the only renewable construction material, wood also stores carbon dioxide for the whole of its lifecycle. Our most important contribution to work on climate change is therefore to promote greater use of wood as a construction material. We are working on various fronts to increase our own and our customers’ knowledge of how wood and bio-based raw materials benefit the climate. • We are providing our customers with product information, quality-assured climate data and environmental product declarations (EPD). • We are participating in studies and analyses to expand knowledge and reporting concerning the climate benefits of wooden buildings. This includes supporting Linnaeus University’s research project to increase the competitiveness of cross-laminated timber as a construction material. • We are taking part in and investing in innovation and the development of new products and applications for forest

Sustainability Report 2019 — Setra Group

raw material and bioproducts. A prime example of this is our investment in biofuel. Read more on page 34. To become carbon neutral, we also need to minimise and, in the long term, entirely eradicate our own negative carbon footprint. We have succeeded in halving greenhouse gas emissions per cubic metre of sawn timber from around 48 kg, excluding transport (base year 2011), to around 25 kg. The single most effective measure has been the purchase of renewable electricity. Other measures have included increasing the proportion of biodiesel in our machines, making the drying process more efficient and investing in energyefficient equipment. High accessibility, and thus high production, is essential to attaining the target. In 2019, work included energy surveys at our facilities in Heby, Hasselfors and Skinnskatteberg. Vital activities in the plan looking ahead include: • Working to improve accessibility and production. • Ongoing energy efficiency improvements through more specific surveys of potential savings. • Expanded dialogue and specified requirements for freight carriers on optimising space utilisation and route planning. • Enable rail transport for timber as well as finished products.

1.3 million tonnes CO2 The volume of wood products Setra sold in 2019 (1.666 million cubic metres) has thus captured in the region of 1.3 million tonnes of carbon dioxide. That equates to the greenhouse gas emissions of around 150,000 people in Sweden.

Greenhouse gases Greenhouse gas emissions per activity, 2019

2.8% ENERGY 3.2% MACHINES 0.2% BUSINESS TRAVEL 10.4% TIMBER TRANSPORT 0.2% EMPLOYEE COMMUTING 9.8% RAW MATERIALS AND MATERIALS 73.4% OUTBOUND DELIVERIES

Emissions per product type Average emissions in kg CO2 per m3 manufactured SAWN WOOD PRODUCTS 25 GLULAM 44 CROSS-LAMINATED TIMBER 47* * Preliminary calculation

Sustainability Report 2019 — Setra Group

Sustainable transport – Progress with Grönsamhet

From forest to fuel tank with Pyrocell

Climate-smart raw material

Sustainable transport

Setra is sitting on one of the solutions for increasing domestic production of renewable biofuel. In partnership with fuel company Preem, a joint production facility is currently being built to produce bio-oil at the sawmill in Kastet outside Gävle.

THE JOINTLY-OWNED company Pyrocell will pro-

duce bio-oil from sawdust. Setra is responsible for the raw material, sawdust, and Preem for refineries and filling stations. “For several years, we’ve been looking at how we can improve profitability and secure revenue for our bioproducts and develop our sawdust business. A lot of pieces fell into place when we found a partner in Preem,” explains Pontus Friberg, SVP Enterprise Risk Management at Setra and Chairman of the Board of Pyrocell. Used where it does the most benefit Today sawdust has various uses, including district heating. But it produces the greatest benefit as a raw material for biofuel, a product that is in short supply in Sweden. Today, 85% of renewable fuels are imported or based on imported raw materials. At the same time, use of renewable fuels needs to more than double if we are to attain our target of a 70% reduction in carbon emissions in the transport sector by 2030. “Sawdust has long been seen as a waste product. Now we have assessed where we think it can produce the greatest climate benefit, and the answer is by reducing carbon emissions in the transport sector. The investment in Pyrocell is sustainable from a commercial and environmental perspective,” says Pontus Friberg. The project has been awarded SEK 117 million in investment grants from the government’s Klimatklivet initiative, which supports local and regional measures to reduce climate gas emissions. This support shows that the project is considered to have potentially wide-ranging benefits for the climate. Direct impact on the roads Pyrolysis oil can replace fossil oil and be used in heating boilers in the energy sector and in industry more widely, or, as in Pyrocell’s case, to produce biofuel. Once Preem has refined the bio-oil, it will replace part of the fossil raw material in ordinary petrol and diesel. It will have a direct impact on emissions on the roads and make a real contribution to the transition to a fossil-free transport sector.

Sustainability Report 2019 — Setra Group

Other advantages of domestic biofuel production are that it will be easier to control the environmental impact of production and ensure that acceptable working conditions are provided. “Pyrocell’s plant at Kastet will be the first production facility for pyrolysis oil in Europe, and possibly the world, linked to a refinery. What is unique about the project is that we are linking up the whole value chain from forest to fuel tank,” says Pontus Friberg. Pyrocell will also produce steam that goes back to the sawmill, where it will be used in the drying process. The factory, which will be completed in 2021, will produce about 25,000 tonnes of pyrolysis oil per year. This is equivalent to the annual fuel consumption of up to 17,000 cars. “Exactly how big the overall climate impact will be is hard to say, but we have estimated that we could attain a reduction in carbon dioxide compared with fossil fuel of 80 to 90%,” says Pontus Friberg. At the moment, many actors are looking to make their products greener. Demand is outstripping supply and Pontus Friberg is not opposed to the idea of more production plants adjoining Setra’s sawmills. “The investment in bio-oil makes us an attractive business partner and employer, and results that demonstrate Grönsamhet will increase the value of our brand.

Pyrolysis Pyrolysis is a process in which a substance is rapidly heated to a high temperature without adding oxygen so that the solid material is vaporised and can be condensed into a liquid. Through pyrolysis, branches, roots, tops and sawdust can be turned into oil, which can then be refined into renewable petrol and diesel. Pyrolysis oil is a dark brown liquid with a strong, slightly smoky odour and a low pH value. According to the CLP Regulation, which contains rules on the classification, labelling and packaging of chemical products, the oil is not classified as flammable or hazardous to the environment. Read more at pyrocell.se

Our portfolio

Culture and Res colleagues

“The partnership with Setra is a milestone” The new company PyroCell sees Setra and Preem joining forces to create a commercially viable value chain from forest to fuel. The pyro lysis oil will be used as a renewable raw material in the production of biofuel at Preem’s refinery in Lysekil. What potential does Preem see in pyrolysis oil as a fuel? Ever since Preem started producing renewable fuel, we’ve recognised the particularly high potential of waste products from the forest. The partnership with Setra is a milestone and an important part of Preem’s investment in renewables. Together we can create completely new value chains that will help to eventually phase out fossil transport fuel. What are the challenges? Sweden has unique opportunities to be the best in the world at renewable fuel, but progress is rather slow. The new rules clearly require a reduction in the carbon content of fuel, which is a good sign. However, domestic production of renewable fuels is lagging behind. Unfortunately, the reason for this is legislation that currently favours the import of cheaper renewable fuels offering less climate benefit.

The investment in Pyrocell is sustainable from a commercial and environmental perspective.

Does forest-based fuel offer more advantages? The environmental and climaterelated benefits of renewable fuel are naturally the most important ones for us. But we also see other positive effects, not least in the labour market, where our investments are creating new, green jobs in small towns and rural areas. Using our domestic raw materials also reduces dependence on imports of both fossil raw materials and renewables.

Pontus Friberg, SVP Enterprise Risk Management at Setra and Chairman of the Board of Pyrocell.

Petter Holland, CEO Preem

Sustainability Report 2019 — Setra Group

Sustainable transport– How we work

Sustainable transport Setra’s operations depend on transport, in and outside Sweden. Transport accounts for the majority of Setra’s greenhouse gas emissions and we are therefore taking a broad approach to make it as sustainable and efficient as possible.

How we work

Our opportunities and challenges Efficient logistics are an important part of our business. We transport large volumes, often over long distances. Our timber raw material is transported to our facilities and finished products need to be transported to our customers. Our own operations are located in rural areas of Sweden and about 65% of sales are exported to Europe, North Africa, the Middle East and Asia. Overall, transport accounts for about 10–15% of Setra’s costs and almost 85% of our total carbon emissions (read more in the climate report on page 30). In a broader perspective, our wood products benefit the climate even when transported to the other side of the globe, because they capture so much more carbon dioxide per cubic metre than the emissions caused by their production and transport. Nevertheless, it is still important to do what we can to minimise emissions.

Sustainability Report 2019 — Setra Group

Good cooperation, dialogue and follow-up We choose our partners with care and only use reliable shipping lines and shipping agents that uphold high quality and comply with legislation and rules. Overall, our operations provide employment for between 300 and 400 people in the transport sector. For domestic road transport, we have a long-term agreement with a main supplier, Unite, which gives us a greater opportunity to attain optimised, smart, transport chains. The same vehicle can transport timber from a sawmill to a processing unit, pick up finished products and deliver them on to customers nearby. Unite has well-developed environmental credentials with clear goals to increase the proportion of load capacity used, increase the proportion of renewable fuel and quality assure transport from a safety perspective.

Method of transport by volume sold 47% ROAD TRANSPORT

53% SHIPPING

Setra’s code of conduct for suppliers applies to all new agreements we enter into. Work is also in progress to get our existing suppliers to sign up. The code sets out fundamental sustainability requirements that address areas such as

employees’ terms and conditions and the environmental work of suppliers. We also follow up on the systematic sustainability work of our partners by requesting and evaluating responses to a survey from Q3, an organisation that works for sustainable road transport. In addition, we conduct follow-up by obtaining emissions reports as a basis for our climate calculations. We carry out regular feedback meetings with our suppliers where sustainability is a fixed point on the agenda. Smart logistics – no unnecessary transport Together with our partners, we strive to attain as optimum transport flows as possible. This involves developing flexible and effective transport chains where as much of the load capacity is used as possible and the distance that the vehicle drives without a load is minimised. Adapting sales volumes to the capacity of the vehicle and installing scales at our units to weigh each load are two examples of measures that are improving load capacity. Working with Triona and the digital platform C-load enables us to hire the supplier that is the best match in terms of geography and volume for each shipment. Transport needs and available transport capacity are automatically coordinated such that freight carriers can more easily take loads that fit their flow, reducing the proportion of driving with spare or empty capacity and improving transport efficiency. Investment in rail Today about 10% of our sawn wood products and 4% of timber transport does part of the journey by rail. We see great potential in increasing the proportion of rail transport. More timber transport by rail produces a major climate benefit – not

Governance Our starting point is that the transport we use must be efficient, safe, climate and eco-friendly and comply with health and safety requirements 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.

merely for our own flows but also for timber transporters and surrounding society. In 2019 Setra’s Board of Directors and management decided to invest in connecting more units by rail. Existing rail connections at Kastet, Skinnskatteberg and Hasselfors will be linked to the unit in Heby. The decision was based on financial and environmental benefits. One important reason is to be able to move timber long distances cost-effectively when storms or insect attacks hit. In the long term, we also see excellent opportunities to use railways to transport bioproducts, pulpwood and finished products longer distances. Overall, we estimate that our investment in rail in Heby has the potential to cut emissions in the region of 2,500–3,000 tonnes of carbon dioxide per year thanks to the volumes that can be switched from road to rail. One important step on the way is the co-financing agreement to expand railway lines that we have signed with the Swedish Transport Administration and Region Uppsala. The co-financing is based on the Swedish Transport Administration wanting access to more reloading and service locations and Region Uppsala looking to move traffic from road to rail for environmental reasons. The investment will result in industrial

track to the plants, improved terminal solutions and electrical safety solutions. Heby is the site of the most extensive measures where changes may be needed to the municipality’s detailed development plan. The project is in progress but has been delayed by the planning process and we estimate that it will be able to be completed by 2024 at the latest. The measures in Hasselfors and Skinnskatteberg are planned to begin in 2020–2021.

10%

of sawn wood products in 2019 were transported by rail part of the way.

contribution towards more renewable fuel and reduced climate impact from road traffic. The jointly-owned company Pyrocell sees Setra joining forces with Preem to produce bio-oil from sawdust. Read more about Pyrocell on page 34. Industry partnerships To further contribute towards a more sustainable transport sector looking ahead, we are actively involved in forums and dialogues in the sector. During the year we launched a new collaboration with other transport-heavy companies via the Mid Sweden Chamber of Commerce. The Swedish Forest Industries Federation, of which Setra is a member, is lobbying for longer and heavier vehicles to be permitted on Sweden’s roads, a move that would cut traffic and emissions. Electrification of heavy goods traffic, more intermodal transport (combination of road and sea) plus emissions issues associated with shipping are other areas in which we are working with the sector to make a difference.

Developing renewable fuel As a processor of forest raw material, Setra has a unique opportunity to make a

Sustainability Report 2019 — Setra Group

Culture and colleagues – Progress with Grönsamhet

A stronger safety culture Climate-smart raw material

Sustainable transport

Our portfolio

Culture and Resource-efficient colleagues business

Rotating machinery, constant forklift traffic and heavy, mechanical lifting equipment. These are some of the reasons why the wood industry is a high-risk sector in terms of the proportion of workplace accidents. Setra has a zero vision for work-related injuries. Therefore, major efforts are being made to build up a strong safety culture with daily, systematic work on health and safety.

COMING HOME from work in the same state of health as you arrived is absolutely a sustainability issue. For Marlene Bergström, Mill Manager at Setra Malå, this is paramount. When she was 13, her father died in a work-related accident in the civil engineering industry, where he worked as an excavator operator. Now she is 43 and ultimately responsible for day to day operation and safety at the sawmill in inland Västerbotten in northern Sweden. “To constantly improve safety at work, we need to examine every single piece of machinery and all behaviours. To aid us, we have systematic processes that help to ensure that we can quickly identify and tackle any risks,” says Marlene Bergström. One of these is Setra’s daily briefings. These daily meetings on the production side always have safety at the top of the agenda. “We have to work together to constantly keep safety front and centre. Committed employees are essential to our success, and it is important that we help to inform each other about potential risks. It might be something as simple as reminding people to use ice grips on their shoes when it’s slippery outside,” says Marlene Bergström.

The right training As a manager, she has a responsibility to ensure that all employees have the training they need to deal with elements of their job that involve risk. Everyone must be aware of how the most dangerous risks are to be minimised using personal protective equipment and the correct working methods. “Only those employees who have undergone the right induction and training may enter environments with saw blades and other rotating machinery. But in a sawmill there are also many other risks: forklifts and tractors, loading and unloading of timber and heavy packages, and steps and stairs with a risk of falling or tripping. Here we need clear procedures and instructions to everyone entering the facility, whether employees, visitors or contractors,” emphasises Marlene Bergström. Setra Malå will shortly be reinforcing its perimeter

Sustainability Report 2019 — Setra Group

protection with a fence. This will prevent reindeer and other unauthorised visitors from entering the area. The human factor Building out risks and installing safety devices on the machinery are relatively easy steps to take. The most important thing is to steer human factors and behaviours. “If people break the rules or don’t feel 100% at work, that is a safety risk in itself. This is why it is excellent that we are investing in leadership training and supporting employees, where we are learning more about mental illness and have systems for carrying out random alcohol and drug tests,” says Marlene Bergström. In 2019 the number of accidents leading to sick leave increased. Anna Rasmuson, Setra’s EVP Production, views the situation seriously, and says that 2019 has been a year with a great focus on reporting near misses and risk observations. Learning from non-compliances means that serious accidents can be avoided. This is the basis of the model that derives from what is termed the Heinrich triangle. According to the model, every serious accident will have been preceded by 29 accidents and 300 near misses. In other words, the most serious accidents can be avoided by learning from non-compliances. “Our follow-ups and key indicators show that in the past year we have got a lot better at reporting near misses and observed risks. The reports are an important part of our continued work to reduce accidents and near misses,” says Anna Rasmuson. Every Monday a briefing is held at which all Setra’s mill managers share information about the latest non-compliances and take action ahead of the week to come. “It’s a way of learning from each other and working preventively throughout the whole organisation. Leadership is very important here – it’s the managers who have to show that safety always comes first. Minimising risks in our operations is our absolute top priority – and a task that is never complete,” says Anna Rasmuson.

1/100

One accident per 100 employees is the goal for 2020 (concerns accidents leading to sick leave). The ultimate vision is for zero.

Committed employees are essential to success. Marlene Bergström , Mill Manager, Setra Malå

Sustainability Report 2019 — Setra Group

Culture and colleagues – How we work

Culture and colleagues We strive to develop a high-performance, values-driven organisation in which everyone contributes.

How we work Management by objectives every step of the way To make sure that everyone is working to achieve Setra’s overarching strategy and business plan, we use a common management by objectives model. The model is based on managers and leaders passing on their expectations, and employees and teams setting the targets. The idea is to make the most of every employee’s commitment and for each person to see their part in Setra’s results and development. Management by objectives simultaneously helps the organisation to make the most of the skills, potential and personal drive of its employees.

Our opportunities and challenges The wood industry is a green industry of the future that helps to build sustainable societies. But the industry is often considered to be both heavy and accident-prone. To attract the skills needed for the future, it is important that we manage to convey what working in the modern wood industry is all about. We can do this by working further on Grönsamhet, our vision to do good business that benefits us, customers, nature and society. We are also working on several fronts to improve health and safety in the workplace. The geographical location of and distance between our units and sales offices also poses challenges in the form of a certain labour shortage and having to work harder to boost an internal sense of community. By working based on our values, with clear leadership and a culture in which everyone is involved and contributes, we see major opportunities to strengthen wellbeing and engagement, which is vital to increasing our competitiveness.

Sustainability Report 2019 — Setra Group

Values-driven leadership Setra embraces values-driven leadership in which the values of commitment, innovation and responsibility are brought to life every day. There has been a need to develop skills around leadership in line with Setra’s values and to ensure good leadership throughout the company. In 2019 therefore, an extensive initiative was launched for a new leadership programme together with an external partner. The programme is compulsory for managers responsible for staff. It is structured so that every manager is coached by their own manager. When evaluated by the managers themselves, the training was consistently highly rated. The aim is for the leadership programme to contribute to a culture in which the employees feel valued, able to show initiative and listened to, and understand their own role in attaining the company’s overarching goals. In 2019, a digital management handbook was also introduced to support the work of all managers with responsibility for staff. Constant improvements In our operations we strive to systematically improve our results. We want to

increase safety, quality, delivery reliability and productivity. An important part of the work is our meeting structure, in which we follow up on our targets and improve ourselves where we fall short. All production units have now been trained in this structure with the support of an external partner. Departments outside the production side have also been inspired to adopt the same approach. The structure is based on all employees being involved and actively contributing. The daily meetings are a forum where the whole shift is involved in how production is going and everyone is expected to produce input on non-compliances and suggest improvements based on their role. The opportunity to be involved and influence things is an important factor in increasing wellbeing at work. We have already seen several concrete examples where greater involvement led to constructive solutions. One example is Heby, where a cross-functional group succeeded in removing a bottleneck that had reduced saw capacity for several years. The solution has also improved the working environment and lowered the workload for the operators. Employeeship and dialogue Employees are our most important resource. It is their expertise, drive and commitment that takes Setra forwards. This is why employees and managers share responsibility for strengthening and improving health and safety. One fundamental aspect of this work is performance reviews, which place the focus on health and safety, and how we are developing and enjoying our work. The reviews are held once a year between each employee and their manager. The annual employee survey, Setra ringen, is an additional tool to improve our work environment. The survey shows changes in attitudes over time and the result sheds light on the questions that need attention. This year’s survey shows that the employee motivation index has gone up from 70 to 71. The result is stable

17%

Proportion of women of total employees

Total sick leave (Setra in Sweden) 5.7%

LEKTIVANSTÄLLDA

5.3%

5.1%

5.2% 4.5%

2015 2016 2017 2018 2019 Sick leave at Setra unfortunately increased in 2019. Read more on page 43.

75% PROPORTION BLUE COLLAR

Employee motivation index, EMI (Setra in Sweden) 69

2013

2016

2017

2018

2019

25% PROPORTION WHITE COLLAR

STEMÄN

Employee distribution 2019

TÄLLDA I SVERIGE

75% PROPORTION BLUE COLLAR

The SetraRingen employee survey has been an annual occurrence since 2016. The EMI is an overarching measurement of how motivated and satisfied employees are with their work. Setra’s results are stable and in line with comparable industries.

93% PROPORTION OF EMPLOYEES IN SWEDEN

25% PROPORTION WHITE COLLAR

7% PROPORTION OF EMPLOYEES IN OTHER COUNTRIES

Governance

TÄLLDA UTANFÖR SVERIGE

Key figures, employees

93% PROPORTION OF EMPLOYEES 2019 IN SWEDEN

2018 7% 2017 PROPORTION OF EMPLOYEES IN OTHER COUNTRIES 2016

2015

Number of employees

Proportion of women

767

17%

861

17%

849

14%

855

14%

938

14%

Setra’s sustainability policy shows which values apply at Setra and lays down that business ethics, health and safety, including social and organisational factors, are priority issues. Our business complies with competition law, the guidelines of the Swedish Anti-Corruption Institute and international provisions on sanctions.

Sustainability Report 2019 — Setra Group

Culture and colleagues – How we work

45 The average age of Setra’s employees.

Sustainability Report 2019 — Setra Group

and in line with comparable industries. The aim is for the EMI to increase year on year. During the year, Setra launched a new intranet built to spread news and information further between units and departments. Skills development As Setra develops as a company, our skills needs will also change, and we are planning to launch a skills survey for the years ahead. One goal is to find new ways for employees to continue learning and developing. This can include internal mobility or development projects which do not require changing location. In the long term we are going to need more technical expertise, which will open up new opportunities for existing employees and new talent. In 2019, about ten new jobs were created at Setra, mainly in our wood industry hub in Långshyttan. Health and safety Setra has a fundamental zero vision. Noone is to suffer harm at work. One interim target on the way is to keep the figure below 1.0 accidents with sick leave per 100 employees in 2020. In 2019 there were 26 accidents leading to sick leave, typically slips and crush injuries. This is equivalent to 3.6 (2.5) and unfortunately means an increase compared with 2018. Health and safety is always at the top of the agenda in our new daily briefing approach. The result so far is that the number of risk observations and near miss reports have multiplied in the past three years. The plan is that this preventive and systematic work will lead to better safety and fewer accidents in the longer term. Setra uses SIA, the common system of the sawmill industry for reporting work-related injuries, to handle near misses and accidents. Training in safe working methods is also an important part of preventive work. Setra uses SSG’s safety training, which is an established concept in Swedish industry. The training is compulsory for all new employees and is updated every five years. Equivalent requirements are made of the contractors who carry out work in our units. All managers, leaders and safety officers at Setra must also complete the Swedish health and safety training, Bättre arbetsmiljö, BAM. Mangers and safety officers attend together with the aim of establishing systematic work to improve the physical, organisational and social work environment in the respective workplace. The training is run every year to ensure that new managers, leaders and safety officers have all completed it. To further increase safety and create a

Workplace accidents 5

3.6

3 2

2.7

2.9

2.5

15 10

2 1 0

2015

2016

2017

2018

2019

Workplace accidents with sick leave per 100 employees per year (left axis) LTA (Lost Time Accidents), workplace accidents with sick leave of more than one day per million hours worked (right axis) Workplace accidents have increased over the past two years. Safety always comes first at Setra and we are working systematically to prevent future accidents.

safe working environment, Setra started conducting random alcohol and drug testing in early 2019. The company also made the decision to introduce a smoking ban in all units. Perimeter protection Setra has invested heavily in perimeter protection over the years. All the saw lines and trim saws are fitted with barriers and safety guards that turn off the current if someone gets too close to the machinery. External perimeter protection such as fences and gates is needed to create a safer environment at our units. In 2019, we improved our external perimeter protection in Långshyttan and Färila. External perimeter protection at the remaining units will be improved in the years ahead. Physical and mental health Sick leave has unfortunately increased in 2019, after previously falling for several years in a row. Sick leave was 5.2% (4.5). This figure includes short-term and longterm sick leave. It is natural for people to be ill from time to time. But we are also aware that many factors, such as job satisfaction, leadership and health and safety, also affect how often and how long we are absent. Several of Setra’s units have undergone major changes that have affected our employees during the year. The planing mill in Skutskär was sold to a new owner and the business in Rolfs was shut down, resulting in 65 redundancies. Due to uncertain market conditions, in December 2019 the company was forced to announce job cuts in Malå and Skinnskatteberg.

Setra has an agreement with a company that helps us with hidden mental health problems involving e.g. stress, alcohol or drugs. The agreement also gives all employees an opportunity to ask anonymous questions about mental health, both work-related and private. Setra’s managers with employees who report to them have completed training in hidden mental illness over the year, including chief safety officers and local union shop stewards. Business ethics Business ethics are an important part of values-driven leadership. Setra strives to uphold high ethics in all our business relations and to treat our customers, suppliers and partners with responsibility and integrity. Setra’s business ethics guidelines include compliance with competition legislation, gifts and entertaining, as well as a code of conduct for suppliers. 2019 saw the introduction of a digital course on business ethics. The course is aimed at everyone who has business contact with customers, suppliers and partner companies. 40% of employees concerned had completed the training by the end of the year. Our aim is to increase this proportion to 75% by the second half of 2020. Setra also has a white book based on real-life case studies from a survey of the company’s business risks. The purpose of the white book is to provide further guidance on business ethics dilemmas.

Sustainability Report 2019 — Setra Group

Management and organisation

Setra’s management President and Group CEO

Finance Director

Katarina Levin

Johanna Gydingsgård

Born: 1964 Employed since: 2020 Education: MSc Forestry Science

Born: 1974 Employed since: 2018 Education: Master’s in Business Economics.

EVP Market and Business Development

EVP Building Solutions and Components

Olle Berg

Daniel Halvarsson

Born: 1965 Employed since: 2013 Education: MSc Econ.

Born: 1979 Employed since: 2019 Education: MSc Eng.

SVP Enterprise Risk Management

CIO / CDO

Pontus Friberg

Andreas Hörnfeldt

Born: 1962 Employed since: 1993 Education: MSc Forestry Science

Born: 1969 Employed since: 2016 Education: MSc Eng.

EVP Production

SVP HR

Anna Rasmuson

Joakim Nyqvist

Born: 1969 Employed since: 2017 Education: MSc Eng.

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

EVP SC / CTO

Anders Nordmark Born: 1961 Employed since: 2017 Education: MSc Eng.

Setra’s organisation

CEO

FINANCE AND ACCOUNTS RISK MANAGEMENT

IT AND DIGITALISATION HR Payroll SUSTAINABILITY Communications and Environment

PRODUCTION

Sustainability Report 2019 — Setra Group

SUPPLY CHAIN AND TECHNOLOGY

MARKETING

BUILDING SOLUTIONS AND COMPONENTS

Five-year report

Five-year report SEK million

2019

2018

2017

2016

2015

Sales growth Change in net sales compared with previous year, expressed as a percentage.

3,924

3,873

3,891

4,043

4,218

Operating margin Operating profit expressed as a percentage of net sales.

Income statement Net sales Other operating income Total income

3,938

3,901

3,905

4,128

4,224

Operating expenses

-3,795

-3,442

-3,620

-3,913

-4,049

-112

-98

-91

-100

-109

-19

Operating profit

361

194

153

Net financial items

-11

-14

-18

-21

Profit/loss after financial items

347

180

135

Depreciation according to plan Items affecting comparability

Tax

-6

-67

-30

-32

-6

Profit/loss for the year from remaining businesses

280

151

103

Profit/loss from discontinued operations, net after tax

-22

-51

-34

Profit/loss for the year

-10

230

116

103

Balance sheet Intangible assets Tangible assets

126

144

1,281

790

620

668

662

Financial assets

Deferred tax assets

1,123

1,392

1,222

1,285

1 273

154

546

501

310

324

Total assets

2,747

2,923

2,548

2,436

2,487

Equity

1,458

1,580

1,372

1,347

1,264 2

Current assets Cash and cash equivalents

Financial liabilities and interest-bearing provisions

Deferred tax liabilities

558

458

445

459

571

Operating liabilities

683

831

696

629

650

2,747

2,923

2,548

2,436

2,487

Sales growth, %

1.3

-0.5

-3.8

-4.1

0.6

Operating margin, %

0.8

9.3

5.0

3.8

1.1

Net margin, %

0.3

5.9

3.0

2.5

0.5

1,827

1,415

1,314

1,471

1,467 3.0

Total equity and liabilities

Key indicators

Operating capital, SEK million Return on operating capital, %

1.9

26.5

13.9

10.4

Return on equity, %

-0.7

14.6

8.5

7.6

1.6

Equity ratio, %

53.0

53.9

55.3

50.8

Financial net debt, SEK million

213

403

-121

-28

115

Net debt/equity ratio, %

-8

-2

Interest cover, multiple

0.8

21.7

13.9

11.9

8.3

-0.19

4.46

2.25

2.00

0.39

Cash flow from operating activities

173

388

347

185

269

Investments in tangible assets

593

297

108

Earnings per share, SEK

Net margin Profit/loss for the year expressed as a percentage of net sales. Operating capital Balance sheet total less cash and cash equivalents, financial assets and non-interest bearing liabilities and provisions. Return on operating capital Operating profit expressed as a percentage of average operating capital (based on the opening and closing balances for the period). Return on equity Profit/loss for the year expressed as a percentage of average equity (based on the opening and closing balances for the period). Equity ratio Equity expressed as a percentage of total assets. Financial net debt Interest-bearing liabilities and provisions minus cash and cash equivalents and short-term investments. Net debt/equity ratio Financial net debt divided by equity. Interest cover Operating profit plus financial income divided by financial expenses. Earnings per share Profit/loss for the year divided by the average number of shares during the year.

Cash flow and investments

Sustainability Report 2019â&#x20AC;&#x201A;â&#x20AC;&#x201D;â&#x20AC;&#x201A;Setra Group

Managing Setra’s sustainability work

Managing Setra’s sustainability work Setra’s aim is that a sustainability perspective will be an integral part of everything we do. Our core values of commitment, innovation and responsibility are to show the way in making sustainable decisions and acting ethically in work day to day.

Sustainability policy Setra’s sustainability policy an important overarching steering document for sustainability work. The policy highlights the focus areas of business ethics, employees, health and safety, and environment and climate and is published on setragroup.com. Organisation and responsibility Sustainability is an integrated part of Setra’s business concept and our vision of Grönsamhet – to do business that we, as well as others – our clients, society and nature – can profit from. The work is integrated in processes and shared working methods. Every manager and employee has a responsibility to play their part within their respective roles and responsibilities. Setra has a sustainability function which includes the environment and communications departments. The sustainability function is headed by the company’s Sustainability Manager and is tasked with developing work, providing expertise and supporting the business. The HR unit also plays an important role in work on sustainability. Responsibility for risk management is delegated from the CEO to the SVP Enterprise Risk Management. Operational work on environmental, ethical, health and safety and employee issues takes place on the ground out at the respective workplaces.

Sustainability Report 2019 — Setra Group

Materiality analysis The key areas for a sustainable Setra

VERY HIGH

Importance for stakeholders

Materiality analysis – prioritised sustainability areas Setra conducts ongoing dialogue with customers, employees, owners, suppliers and other stakeholders. It is in the dialogue with them that we identify areas for improvement, find ideas for stimulating partnerships and keep up to date on the requirements and expectations made of us. Stakeholder dialogue combined with our internal analysis has also produced a picture of the sustainability areas on which it is most essential for Setra to focus. We regularly update our materiality analysis and the result of the most recent summary in 2018 is shown to the right.

• Indirect economic impact on local community. • Noise, local environmental impact.

• Diversity and gender equality. • Local social engagement.

• Economic performance. • Responsible forest management. • Resource efficiency. • Climate impact, incl. transport. • Setra’s customer offering. • Work environment, occupational health and safety.

• Values and culture, including business ethics. • Skills development and talent management. VERY HIGH

HIGH

Importance for Setra

Certified management systems and shared goals Setra’s Swedish business operations are environmentally certified under ISO 14001. Setra’s management systems also include health and safety and fire safety, although these elements are not externally audited. Setra’s sawmills and processing units are certified under FSC and PEFC’s Chain-of-Custody standards and FSC’s standard for Controlled Wood. Certification shows that the company has a system for tracing wood raw material and ensuring that it comes from responsible forestry. There are four overall sustainability goals for the business: climate performance, energy use, occupational safety/accidents and sick leave. Local sustainability goals are also defined for each unit. External audits with good results In autumn 2019 the environmental management systems for the units in Färila, Malå and Nyby as well as the office in Gävle underwent environmental audits. The audit report states that Setra meets the criteria of the standard and has many positive things to say about our work.

Tidiness, good waste management and a company-wide risk management process are some of the elements highlighted. In the autumn an audit was carried out of our management systems for FSC and PEFC, with visits to Kastet, Färila and Hasselfors. The auditor found some minor non-compliances which have been tackled and the certificates have been renewed. Permit requirements under the Environmental Code All of Setra’s production units are subject to permit requirements or reporting requirements under the Environmental Code. The main environmental impact of production derives from energy consumption, noise, waste, chemicals management and emissions to air and water. Pressure treatment and/or the use of different wood protection materials has taken place at several of Setra’s production plants, which may have led to soil pollution. Other processes and activities may also have contributed to pollution. In addition, there are about 15 currently identified sites where Setra Group carried out operations in the past. The environmental

Managing Setra’s sustainability work 47

Sustainability risks Description of risk

Risk assessment 2019 *

Risk management

We have a systematic approach, but there is always a risk of incidents.

Setra works systematically to improve and safeguard its operations, supported by our ISO 14001-certified management system. Activities within the remit of this include: • Setting and following up environmental targets • Procedures/instructions • Internal and external audits • Monitoring legislation and implementing new legislation • Maintenance of plants • Dialogue with public agencies

Fire

We conduct systematic fire safety work and have an annually recurring programme of unit-by-unit risk inspections, etc. but we operate in an industry with a major fire risk.

Setra works on preventive and systematic fire safety, which includes: • Training • Installations to limit spread and injury, e.g. alarms and sprinklers • Risk inspections and action plans • Reporting observed risks and near misses with a focus on risks of fire and explosion

Natural disasters, impacts of climate change

In the short term, the evaluation is green, in the longer term we need to conduct more systematic work to tackle this type of risk.

Examples of activities are: • Setra works jointly with raw materials suppliers to minimise the consequences of climaterelated forest damage. This partly involves planning and preparedness to deal with stormfelled, fire-damaged and insect-damaged timber. • When setting up new operations, attention is paid to location and the risk of flooding and soil conditions.

Workplace accidents

Systematic efforts are in place but we work in a sector that involves risk and behaviour is key.

Setra works systematically on health and safety and has a documented health and safety management system. Work and measures for a safe working environment include: • Safety committee meetings and safety inspections • Risk analyses when installing new machinery and introducing other changes • Risk, accident and near miss reporting, daily management and reporting non-compliances • Perimeter protection such as barriers and safety guards • Training all employees and managers

Human rights breaches

Setra’s operations take place in Sweden, our largest suppliers are Swedish and we have strong legislation in Sweden. Human rights risks are mainly found in the supply chain, specifically in certain industries.

Setra has clear policies and guidelines on equality and non-discrimination, gender equality, recruitment and pay. Equivalent requirements are set for suppliers through Setra’s code of conduct. For the UK, there are special requirements regarding the reporting of risks. The Modern Slavery Act introduced in 2015 requires all companies with operations in the UK to report risks and risk management relating to slavery and human trafficking in the supply chain. Examples of measures to protect human rights include: • Requiring FSC and PEFC certification for purchased timber • Supplier assessment and requirements set for suppliers • Dialogue with employees, including with the support of employee surveys

This is difficult to control and monitor and thus the risk is difficult to evaluate.

Setra has special guidelines for compliance with competition legislation, as well as for gifts, benefits and entertainment and meals provided by other parties. There is zero tolerance of bribery and corruption. • Control functions when signing significant contracts (to avoid legal disputes). • Employees with customer and supplier contact are trained in business ethics and given an opportunity to discuss example dilemmas. • Setra’s code of conduct for suppliers is based on the principles of the UN Global Compact, in which business ethics are an important aspect. • A whistleblower function is set up to enable anonymous reporting of suspected irregularities.

Environmental responsibility Breaches of environmental legislation Unplanned emissions to land, air and/or water Soil pollution

Social responsibility

Business ethics Bribery and corruption

* The risk evaluation weighs our working methods against the likelihood and consequences of the risk. Green, yellow and red stand for low, medium and high risk evaluation respectively.

authorities have demanded investigations and sometimes remediation at some of these sites, and additional requirements may be imposed in the future. Sustainabilty requirements made of suppliers Setra’s code of conduct for suppliers is based on the principles of the UN Global Compact and relevant international conventions. It is intended for suppliers of goods and services as well as partners, both in Sweden and abroad. Setra’s biggest and most important purchasing category is timber; other major purchasing catego-

ries are transport, plastic wraps, stickers and contracting services. Work on the code of conduct for suppliers began in 2017. In the past two years, we have focused on communicating it and getting it signed by our suppliers. To identify which suppliers involve the greatest risk from a sustainability viewpoint, we have analysed everyone who sells products or services to Setra amounting to at least SEK 1 million per year. The analysis was conducted by country, industry, product and supplier. The next step is for suppliers that pose a potential risk to complete a self-evaluation form, which is used to

make a more precise supplier assessment, and to create a follow-up procedure. Risks and risk management Setra has implemented a company-wide Enterprise Risk Management process (ERM) since 2018. The purpose is to prevent and tackle the risks identified in the business and for the company’s stakeholders better and more effectively. Responsibility for risk management ultimately lies with the company’s Senior Vice President Enterprise Risk Management, who is also on the Board.

Sustainability Report 2019 — Setra Group

GRI index

GRI index General disclosures GRI disclosure Description

Page

Comment

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

Organisational profile 102-1

Name of the organisation

102-2

Activities, brands, products and services

4, 8–9, 14–17, 34–35

102-3

Location of headquarters

4, 50

102-4

Location of operations

4, 14–17, 50

102-5

Ownership and legal form

102-6

Markets served

4, 14–17

102-7

Scale of the organisation

4, 8–9, 41, 44–45

102-8

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

4, 9, 40–41

Setra’s business operations are mainly conducted by the company’s own employees, with the majority of these being full-time, permanent employees. The average number of employees at Setra in 2019 was 768, of which 55 were based outside Sweden (UK 43, Poland 2, Germany 1, Spain 2, Austria 1, Tunisia 1, China 3 and Japan 2).

102-9

Supply chain

8–9, 18–23, 36–37, 47

The organisation’s suppliers can be divided into three main groups: suppliers of timber raw material, suppliers of logistics services and other suppliers. Procurement procedures for timber raw material and transport services include sustainability requirements. In 2017, work began on imposing sustainability requirements on other suppliers.

102-10

Significant changes to the organisation and its supply chain

See comment

The unit in Skutskär was sold in 2019 and the Rolfs unit in Kalix was closed. A new planing mill has started to be built in Hasselfors and construction of a component and crosslam plant is in progress in Långshyttan. Setra’s CEO Hannele Arvonen left and Anders Nordmark, EVP Supply Chain, was acting CEO from July. Katarina Levin was appointed Setra’s new CEO in June.

102-11

Precautionary Principle or approach

10, 20–29, 43, 46–47

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 char- 20–23, 26, ters, principles or other initiatives to which the organisation 30–33, 46–47 subscribes or which it endorses

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

102-13

Main memberships of industry or other associations and national or international advocacy organisations

See comment

Setra is a member of the Swedish Forest Industries Federation.

Statement from senior decision-maker

6–7

Strategy 102-14

Ethics and integrity 102-16

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

2, 6–11, 18–23, 40–43, 46–47

Setra’s vision is to do business that we, as well as others – our clients, society and nature – can profit from. This we call “Grönsamhet”. And we want to create Grönsamhet. Setra has value-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.

See comment

The corporate governance report is available on pages 89–91 of Setra’s Annual Report.

Governance 102-18

Governance structure

Stakeholder engagement 102-40

List of stakeholder groups engaged by the organisation

17, 46–47

102-41

Percentage of total employees covered by collective bargaining agreements

See comment

102-42

Identifying and selecting stakeholders

46–47

102-43

Approach to stakeholder engagement

41, 46–47

102-44

Key topics and concerns raised through stakeholder engagement

46–47

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

See comment

102-46

Process for defining the report content and the topic boundaries

10–13

102-47

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

10–11, 46–47

102-48

Effect of any restatements of information given in previous reports

See comment

The 2018 sustainability report gave the wrong information for emissions of CO2 calculated per amount of m3 sawn timber. The correct figure is 26 and not 25 kg/m3 sawn timber.

102-49

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

See comment

No significant changes in scope or aspect boundaries.

102-50

Reporting period

See comment

The report covers 2019.

102-51

Date of most recent report

See comment

March 2019.

102-52

Reporting cycle

See comment

Calendar year, annual.

102-53

Contact point for questions regarding the report

102-54

Claims of reporting in accordance with the GRI Standards

See comment

102-55

GRI index

48–49

102-56

External assurance

See comment

Sustainability Report 2019 — Setra Group

Facts and key financial figures in the report refer to all of the group’s entities apart from Skutskär and Rolfs (parent company and subsidiaries). The business operations of Setra Wood Products are not included in the sections on production, annual climate report and to a limited extent in the section on employees.

The report has been prepared in accordance with Global Reporting Initiatives Standards for sustainability reporting at the Core level.

The report has not been externally audited

GRI index

Subject-specific disclosures GRI disclosure Description

Page

Comment

See annual report page 53.

GRI 200 / Economic impact 201 Economic performance 103-1 103-2 103-3

Governance

See comment

201-1

Direct economic value generated and distributed

7–9, 45

205 Anti-corruption 103-1 103-2 103-3

Governance

43, 46–47

Anti-corruption measures promote sound and informed business decisions and form a key part of being a responsible and ethical company. In 2015 the Board adopted a sustainability policy for Setra, in which business ethics are an important element. There are special guidelines for compliance with competition legislation, as well as for gifts, benefits and entertainment and meals provided by other parties.

205-2

Communication and training about anti-corruption policies and procedures

43, 46–47

In 2019 e-learning on business ethics was launched internally.

205-3

Confirmed incidents of corruption and actions taken

See comment

No incidents reported.

Governance Environment

20–23, 26–29, 30–33

Aspects governed are: resource efficiency/materials consumption, responsible forest management, energy consumption, greenhouse gas emissions and compliance. 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.

Amount of material used in production, weight or volume

20, 28, 20–23

Used material, exchange. Responsible forest management

302-1

Energy consumption within the organisation

24–29

Setra has bought in ecolabelled electricity since 1 January 2018.

302-4

Reduction of energy consumption

24–29

305-1

Direct (Scope 1) GHG emissions

30–33

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

305-2

Energy indirect (Scope 2) GHG emissions

30–33

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

305-3

Other indirect (Scope 3) GHG emissions

30–33

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

305-4

Greenhouse gas intensity

30–33

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

See comment

In 2019 Setra Malå received a sanction of SEK 5,000 for failing to check leaks of coolant.

11, 40–43 46–47

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

Workers representation in formal joint management-worker health and safety committees

See comment

Employees in Sweden are represented by a safety officer and occupational health and safety committees. Systematic health and safety measures at Setra are carried out locally by our units. The site management, safety officers and employees take part in such measures. A group-wide Health and Safety Council headed by Setra’s Sustainability Manager supports overall work with communications, training and exchanging of experiences. The council includes safety officers, managers and HR. The Health and Safety Council was dormant in 2018–2019.

Types of injury and rates of injury, and number of days of absence due to illness

In 2019, there were 26 accidents that resulted in sick leave being taken and 208 accidents that did not lead to sick leave being taken. The number of days of absence resulting from work-related injuries amounted to approximately 254 days. Typical injuries include crush injuries, wounds and sprains. We record, manage and follow up work-related accidents and near-misses using SIA, the sawmill industry’s common system for reporting industrial injuries.

GRI 300 / Environmental impact 103-1 103-2 103-3

301 Material 301-1 302 Energy

305 Emissions

307 Environmental compliance 307-1

Breaches of environmental legislation

GRI 400 / Social impact 103-1 103-2 103-3

Governance social impact

403 Occupational health and safety 403-1

403-2

404 Training and education 404-3

Annual performance and career development reviews

We want to play a part in positive development also outside Setra and our own value chain. Therefore we are a proud sponsor of SOS Children’s Villages.

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 to the requirements for Corporate reporting governing sustainability and diversity policies. This publication is the Setra Group’s Sustainability Report for the financial year 2019. The Sustainability Report covers the whole Setra Group unless stated otherwise.

The auditors’ statement on the statutory Sustainability Report is on page 92 of Setra’s Annual Report and Sustainability Report, which can be read at setragroup. com. 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 carbon footprint of our products. The annual climate report is drawn up based on the guidelines of the GHG Protocol and is published in full at setragroup.com.

Sustainability Report 2019 — Setra Group

Addresses

Addresses Head Office Setra Group AB Box 3027 169 03 SOLNA Street address: Gårdsvägen 18 169 70 Solna Phone: +46 8 705 03 00 Fax: +46 8 705 03 20 E-mail: info@setragroup.com

Sales, customer service & logistics Setra Trävaror AB Box 223 SE-801 04 GÄVLE Street and delivery address Setra Trävaror AB Skolgången 13 SE-802 57 GÄVLE Phone sales and customer service: +46 8 705 03 00

Get in touch!

Production units Sawmills Setra Färila Snasbäcken SE-820 41 FÄRILA Phone: +46 651 76 81 00 Setra Hasselfors SE-695 85 HASSELFORS Phone: +46 585 485 00 Setra Heby 744 32 HEBY Phone: +46 224 368 00 Setra Kastet Box 430 SE-801 05 GÄVLE Phone: +46 26 54 80 00

Would you like more information about our sustainability measures or this report? Feel free to contact us Johanna Gydingsgård CFO johanna.gydingsgard@setragroup.com +46 8 705 03 03 Charlotte Thedéen Sustainability Manager charlotte.thedeen@setragroup.com +46 8 705 03 22

Setra Malå Storgatan 75 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

Processing units

Production Setra Group AB with LeadContent. Paper: Munken Kristall. An FSC-certified paper manufactured in Munkedal, Sweden. Printing: Åtta45.

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 Estuary Road King’s Lynn NORFOLK PE30 2HJ, UK Phone: +44 1553 76 00 71

Sustainability Report 2019 — Setra Group

Sales offices outside Sweden UK Setra Wood Products 11 St Mary’s Court North Bar Within, Beverley EAST YORKSHIRE HU17 8DG, UK Phone: +44 1482 87 00 35 Germany Setra Sales Germany GmbH Reichenberger Str. 5 DE-91207 LAUF Phone: +49 170 921 1121 Poland Setra Polska Sp. z o.o. ul. Staromiejska 17 E PL-84-300 LEBORK Phone: +48 784 300 450 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 TOKYO 105-0011 Phone: +81 3 5404 7560 China Setra Wood (Guangzhou) Co Room 2720, Teem Tower No 208 Tianhe Road, Tianhe District, GUANGZHOU 510 620 Phone: +86 20 2830 6431 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

Sustainability Report 2019 — Setra Group

Setra Group AB Box 3027 SE-169 03 Solna Tel: +46 8 705 03 00 info@setragroup.com www.setragroup.com

Setra Sustainability Report 2019

Articles inside

GRI index

Addresses

Managing Setra’s sustainability work

Five-year report

Progress with Grönsamhet 2019

Our portfolio

Sustainable transport

Resource-efficient business

Climate-smart raw material

Setra’s sustainability work

Climate report

CEO’s comments