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.

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.

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.

Materiality analysis

The key areas for a sustainable Setra

VERY HIGH

Importance for stakeholders

HIGH

• Indirect economic impact on local community.

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

• Diversity and gender equality.

• Local social engagement. • Values and culture, including business ethics.

• Skills development and talent management.

Importance for Setra VERY HIGH

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

Sustainability risks

Description of risk Risk assessment 2019 * Risk management

Environmental responsibility

Breaches of environmental legislation

Unplanned emissions to land, air and/or water

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

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.

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.

Social responsibility

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

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.

Business ethics

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

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

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.

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

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

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.

* 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 categories 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.