Setra Sustainability report for 2023

This is Setra 3

CEO’s comments

Setra’s sustainability work

This is Setra

Setra is one of the largest wood industry companies in Sweden. We process raw material from responsibly managed forests into sustainable wood products for building and living in a global market. We ensure that the entire log is put to good use and contributes bioproducts for domestic energy production and the pulp industry.

Wood is not just the only renewable building material – it also absorbs carbon dioxide from the atmosphere and locks it in as carbon throughout its lifetime. We take a long-term approach and work to ensure that as much of each log as possible becomes long-lived products – but even what is left over when we process the wood has an incredible climate benefit, as it goes towards making renewable packaging, green energy and fossil-free fuel. All our products make an important contribution to the green transition by replacing fossil alternatives in society.

Our markets

Setra’s sawmills and processing units have a long industrial history and we are constantly developing. By investing wisely, we are increasing our provision of renewable products – such as cross-laminated timber building solutions, which make it possible to build both sustainably and efficiently on a large scale. Our vision of Grönsamhet, or green value, and our sustainability work run as a common thread throughout the organisation and we work in a focused way along the whole value chain to achieve our goals. We employ 860 people and our core values – commitment, innovation and responsibility – define the culture at Setra.

Our production units

● Pine sawmills

* Also includes processed goods.

** Setra and Preem each own 50% of Pyrocell.

The Group comprises seven sawmills and two wood processing units, one of which is located in the UK, plus our Head Office in Solna and customer service, IT and logistics in Gävle. We have sales offices in the UK, Poland, Spain, Tunisia, Japan and China, and generated sales of SEK 5.3 billion in 2023. Setra is owned by Sveaskog (50%) and Mellanskog (49.5%) and was formed in 2003 by merging the sawmills and processing units of AssiDomän Timber and Mindab.

Introduction 2

This is Setra 3

Setra 2022 4

CEO’s comments 5 Setra’s sustainability work 6

Setra 2023

Wood construction growing

Interest in industrial wood construction remains high – not least in public projects such as schools and for building attractive offices. Our building solutions in cross-laminated timber and glulam are being used in an increasing number of large-scale projects in Sweden and Norway.

Explore our reference projects at setragroup.com

1

.6 million m3 wood products

This year’s production will lock in 1.3 million tonnes of carbon dioxide – for the entire lifetime of the wood products.

Read more in the Climate report on page 35.

Strategic investments

We continue to invest in order to increase production and processing. Setra’s new saw line in Skinnskatteberg is expected to deliver major efficiency boosts both locally and at neighbouring sawmills – and help turn more timber from the surrounding forests into long-lived products. A new saw line is under construction in Malå, and in Långshyttan, the factory for cross-laminated timber is gaining another CNC machine that will more than double current capacity.

Challenging year

The global economic downturn and high timber prices made 2023 a challenging year for the wood industry.

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

Safer together

Continuing our strong emphasis on safety, we managed to further reduce the number of serious accidents in 2023. Work on strengthening the safety culture continues.

Read more in Safety, culture and colleagues on page 27.

Direct economic value generated and distributed (SEKm) 2023 Customers Sales of wood products, building systems and bioproducts 5,302

Introduction 2

This is Setra 3

Setra 2022 4

CEO’s comments 5

Setra’s sustainability work 6

Executive Management 38

Board of Directors 39

Good outlook despite challenging environment

2023 was defined by the global economic downturn with a resulting fall in selling prices which, combined with rising timber prices, created a challenging situation for the wood industry. Looking a little further ahead, however, the outlook is bright – our renewable wood products have a vital role to play in the green transition and we are continuing to invest in transferring value from the forest to society.

When I took over as CEO of Setra in May 2023, prices were falling and the global downturn was affecting demand for wood products. Construction activity remained weak in most of our markets for much of the year and housing construction in Sweden was particularly hard hit. Another strong contributing factor to the negative earnings trend is the pressure on raw material supplies, which to some extent also limited production.

However, Setra’s focus on wood products for construction and our earlier decision to expand our value-added processing have paid off. Interest in wood as a building material continues to grow and people are increasingly realising the many benefits that come with more industrialised wood construction. In terms of our cross-laminated timber building solutions, the lack of residential construction during the year has been largely offset by publicly funded buildings such as schools and sports centres, and other large buildings such as industrial halls and offices.

Contributing to society’s green transition

Setra’s operations have a natural role in the ongoing transition to a bioeconomy. As well as offering fossil-free and renewable alternatives, our wood products sequester car-

bon dioxide throughout their lifetime. Wood can also be recycled and reused, which will further contribute to the growing circular economy. The prospects for wood as a building material are good, and as we increase production and processing, our climate benefit will also increase. The wood products we sold in 2023 hold 1.3 million tonnes of carbon dioxide, which corresponds to almost 3 percent of Sweden’s greenhouse gas emissions. It also equates to 11 percent of the emissions from the construction and real estate sector (2021).

Wood processing is a well-developed value chain in which we generate virtually no waste. The residual streams from our production of wood products are used in place of fossil-intensive alternatives in packaging for example, and as energy and fuel. Pyrocell in particular is worth mentioning at this point. Setra and Preem’s globally unique investment in renewable fuel from sawdust is now in full production and this year received a sustainability certificate that gives the green light for exports. The forest industry’s unique potential to help achieve a more sustainable society was spelled out in 2023 in three future pledges that we at Setra fully endorse. Our climate goals are aligned with the industry’s shared objectives, which include making our operations fossil-free by 2040.

“Interest in wood as a building material continues to grow and people are increasingly realising the many benefits that come with more industrialised wood construction.”

Investments that increase production – and climate benefits

Most of our sawmills have been around for over a century, and our plan is for them to continue being the sustainable engine that both creates jobs outside the cities and produces long-lived wood products for construction and housing. We are therefore making a series of strategic investments in new technologies at our production and processing facilities in order to improve safety, efficiency and productivity. Our ambition is to get as much as possible out of the log

and add value through greater processing. 2023 saw the completion of a new saw line for small-diameter logs in Skinnskatteberg, which will enable us to convert more of the timber in the local forests into long-lived wood products. It also allows us to increase efficiency at our other nearby sawmills. Production is scheduled to start in the first half of 2024.

In Långshyttan, we are gradually stepping up the capacity of the cross-laminated timber factory. Installation of an additional CNC machine began in 2023 and on completion this will more than double the existing production capacity. In 2024, we will also launch a factory to produce industrial pellets using the residual streams from our wood processing.

The next strategic investment will be a new saw line in Malå, with an updated trim saw and a new drying facility that will allow us to increase production and product quality while reducing our climate footprint.

Future outlook

Towards the end of 2023, demand picked up in the US and Asia, while low stocks and generally low production in Europe and North America improved the market balance in the global timber market. Prices bottomed out in the fourth quarter and then rebounded in early 2024, despite the expectation that underlying demand for wood products will continue to be affected by a generally weak construction sector in 2024.

Marcus Westdahl, President and CEO

Setra’s sustainability work

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues

We create green value

Grönsamhet is our vision, and implementing it means doing business that is profitable not just for us but for our customers, society and nature. In line with this vision, sustainability work at Setra is about taking responsibility for the effect we have on people, society and the environment along our entire value chain.

Starting points for sustainability work

At Setra we work to promote sustainable development. We take account of financial, social and environmental perspectives as we run and develop our business. We work to reduce any negative impacts and increase the positive effects along our entire value chain – from the raw material in the forest until our products reach the customers. Setra’s sustainability policy lays the foundation for our sustainability strategy and sustainability work. It describes, for example, our responsibility, how we should act on our values, how we do business that benefits more people than just us, how our communication should be honest and transparent, how we comply with laws and regulations that affect our business and how we should always work to achieve continuous improvement.

Our key sustainability issues

Setra’s sustainability work focuses on the issues where we have the greatest influence and potential to make a difference. In the materiality analysis, we balance our stakeholders’ values with the actual impact of our operations, as well as external factors and risks. The key issues include both aspects related to our own operations, such as resource-efficient production and occupational health and safety, and areas that we can influence indirectly, such as climate-smart

raw material and transport. Read more about our key sustainability issues on page 13.

Overall goals

Climate change is one of the greatest challenges of our time. In 2015, the UN adopted the Paris Agreement to keep global warming well below 2 degrees and aim for no more than 1.5 degrees. As a major industrial company, we have a responsibility to reduce our climate impact and contribute to society’s transition in pursuit of that 1.5 degree target.

In 2019, Setra adopted a goal of becoming climate neutral by 2030. This climate goal applies to the entire value chain, with the exception of foreign distribution, and involves taking emissions from operations to a net sum of zero by 2030. Read about our work on the roadmap for climate neutrality on page 38 and about our other sustainability goals on page 11.

The climate goal also feeds into our overall business objective, which is to be one of the leading wood products companies in Europe and the one with the strongest sustainability profile by 2025. In addition to the overall goals, we also direct and embed our sustainability work with reference to the 2030 Agenda. Read more about this on page 12.

The new EU requirements for more comprehensive sustainability reporting and

transparent sustainability communication also require us to set science-based and achievable targets that contribute to the EUwide roadmap – the Green Deal. In 2024, Setra will review and revise its overall goals to bring them in line with the future agenda of the Swedish Forest Industries Federation, the EU’s climate roadmap and the new regulatory framework.

The sustainability policy can be viewed at setragroup.com

Read more about the vision and our milestones on the path to Grönsamhet at setragroup.com

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

External factors

2023 has been a challenging year of continuing war, geopolitical tensions and a strained economic situation. However, our belief in the green transition and the opportunities it brings remains strong. This section describes key external factors affecting Setra’s business, operations and sustainability work, now and in the future.

The economy is slowing and construction decreasing

The Swedish economy is judged to be in a recession that will last until 2025, while the wider global economy is also in a mild recession that is expected to last a similar length of time. In 2023, we saw a sharp decline in demand for wood products in several of Setra’s markets. In Sweden, new housing construction fell from 62,000 units in 2022 to around 25,000 in 2023. Demand has also been affected in Germany and France, but not as strongly as in Sweden. The most positive exception is the UK, where imports of wood products have remained at a high level compared to other European markets.

Contact details

Housing construction is expected to remain low in 2024. However, interest in building in wood remains high and industrial wood construction is becoming an increasingly established solution.

Despite the tough situation, industry body Swedish Wood predicts rising demand for wood products in the medium to long term, driven by this interest in greater wood construction, renovations and energy efficiency. As a wood industry company, we would stress the importance of showing

the world the sustainability benefits of building more in wood. Renewability, reduced climate emissions and carbon sequestration are three important arguments in favour of wood as one of the solutions to the construction industry’s climate challenge, but bolder political decisions are needed to fully exploit the positive climate impact of wood.

Global and national frameworks and action plans

COP28

The 28th United Nations Climate Change Conference (COP28) was held on 30 November – 13 December 2023 in Dubai, United Arab Emirates. Government representatives from around the world came together to follow up on the Paris Agreement and agree on new measures to meet international climate commitments.

A final agreement was ultimately reached at COP28, stating that the world will move away from fossil fuels at an accelerated

pace, triple renewable energy and improve energy efficiency. The Swedish business community is hopeful and interested to see how Sweden is going to start delivering. Sweden needs political instruments and a united political front if we are to achieve the goals in the agreement. The most important thing now is that we actually have an agreement and thus a sound basis for a transition.

‘Paris Agreement’ for biodiversity

At the UN summit in Montreal in 2022, governments from around the world decided on a global framework for biodiversity, a ‘Paris Agreement’ for nature. The agreement sets targets for the world to protect 30 percent of all land and sea areas and restore 30 percent of all degraded ecosystems by 2030. For Sweden, this involves increasing the focus on preserving forests of high conservation value and using forestry methods that promote biodiversity to an even greater extent. Rich biodiversity and

thriving ecosystems are essential for life on our planet and our ability to cope with future climate change.

Sweden’s first contributions and provisional commitments to the joint effort to protect and restore biodiversity were submitted to the EU in summer 2023.

By 2030, Sweden will improve the status of a number of habitat types and species and increase the area of protected land. You can read more about this on the Swedish Environmental Protection Agency’s website under Topics.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues

EU initiatives and new regulations

Sweden’s decision to sharply reduce the reduction obligation (cutting the admixture of renewable diesel to 6 percent) means a rise in the share of fossil fuel and a decrease in the share of renewables. This goes against the wishes of the entire industry, and will add extra greenhouse gas emissions to most companies’ climate reports. The new supplement to the Greenhouse Gas Protocol (GHG), an international calculation and reporting standard for organisations that want to report their greenhouse gas emissions, will also affect Setra’s Climate report in the future, as we report in line with this protocol. The new Land Sector and Removals Guidance concerns businesses that have land-intensive activities in their value chain, such as forestry. The guidance will address the emissions and absorption of carbon dioxide resulting from land use changes and from carbon sequestration in biogenic products, including wood products. The supplement was not finalised in 2023 and we are continuing to monitor the issue.

The Science Based Targets initiative is also working on its own Forest, Land and Agricultural Guidance (FLAG) for the green sector. This will enable companies in land-intensive activities to set stringent climate targets that follow the science. FLAG is the world’s first guidance document to

include guidelines for land-based emissions reductions and removals. This means that some emission sources that were previously ineligible will now be approved for inclusion and some forms of carbon sequestration can also be counted towards target fulfilment.

A number of key initiatives and regulations in support of the EU roadmap for climate neutrality by 2050 were designed and updated in 2023. These include:

• The EU Taxonomy – a classification system for what can be considered an environmentally sustainable economic activity.

• The EU’s new Corporate Sustainability Reporting Directive (CSRD).

• Upcoming legislation relating to the Corporate Sustainability Due Diligence Directive (CSDDD), which deals with the obligation of companies to show ‘due diligence’ in their operations and throughout the value chain, in order to combat negative impacts on human rights, climate and the environment.

• The EU’s Green Claims Directive or Directive on Environmental Claims, which is about protecting consumers from misleading environmental marketing (‘greenwashing’).

All the above regulations will affect Setra in some way. Of these, the preparations for the CSRD and its related standards (ESRS) require the most immediate action on our part.

The government’s climate policy action plan

Swedish Forest Industries road to the future

and emissions

In December, the government presented Sweden’s climate action plan to achieve net zero emissions by 2045. Core issues and initiatives included analyses and studies to support new policy instruments, domestic energy production,

reduction, specifically in the transport sector, and the introduction of the newly expanded EU Emissions Trading System. It also highlighted the importance of restoring wetlands and building a greater proportion of apartment blocks in wood rather than concrete.

In the autumn of 2022, the Swedish Forest Industries Federation began working with its member companies on what is now called Swedish Forest Industries road to the future. This sets out three pledges in three different areas that look ahead to 2040, when the

next generation will reach adulthood. The areas are climate, circularity and biodiversity. Setra’s overall climate goals will be reworked and aligned with these industry-wide pledges. Read more, in Swedish, about Swedish Forest Industries road to the future here.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material

Setra’s value chain

Our core business is processing wood and our value chain extends from the forest out into society. Here, our climate-smart wood products contribute to sustainable construction and our bioproducts are used for pulp and for bioenergy, in the form of heat and renewable fuel.

1. Raw material

We buy all our timber from certified suppliers who practise responsible forestry with respect for both the climate and biodiversity. Setra’s raw material policy forms the basis for our purchasing of raw materials, and Setra also holds FSC and PEFC Chain of Custody certification. Although the timber comes from areas close to the sawmills, timber transport accounts for a significant portion of Setra’s total carbon footprint.

2. Purchasing

We purchase large quantities of wood raw material and transport services, both of which are managed by a central logistics organisation within Setra. Other major purchases include energy, materials, chemicals and services. Our Code of Conduct for Suppliers is an important tool for trust-building and monitoring purposes. Setra has several foreign suppliers, which makes monitoring more challenging. We risk-assess our main suppliers and work to create close partnerships in risk countries, through checks and action plans to improve transparency and performance.

3. Inbound and outbound transport

Mainly consists of transporting logs to the sawmills and products to customers by road, sea and rail. Transport is our biggest challenge when it comes to climate emissions, as our wood products are distributed all over the world. We are working continuously to find greener and more efficient logistics solutions together with our carriers and partners. In recent years, Setra has invested in extending railway lines to several of our sawmills.

4. Production and processing of wood products

Our core business comprises seven sawmills and two processing units. This is where our direct emissions occur, which gives us greater scope to influence them. We are working actively on everything from energy efficiency to investments in renewable energy, resource efficiency and external environmental issues, along with more processing of our wood products and bioproducts.

5. Bioproducts/Resource efficiency

We use the whole log, nothing goes to waste. As much as possible becomes long-lived wood products, while the rest becomes bioproducts for the pulp and paper industry, the energy sector and the production of renewable fuels. We also use bioproducts for our own heat production.

6. Customers/Society

Setra’s customers are located all over the world. When our products are used in buildings, furniture and packaging, or for renewable energy, the value and climate benefit from the forest is transferred to society as a whole. The wood products continue to store carbon for their entire lifetime, plus we help customers to reduce their climate footprint by replacing fossil materials and energy with renewables. The products are also circular, enabling recycling and reuse in the form of new products or bioenergy, for example. We thus contribute to society’s bioeconomy.

Sågade trävaror Sågverk

5 Processed wood products Sawn wood products Sawmill Bioproducts

Bio-oil

Bark Wood chips Sawdust

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Our sustainability goals

Setra works with both short- and long-term goals for sustainable development. The goals below are linked to Setra’s key sustainability issues.

Climate-smart raw material

Resourceefficient business

Cost-effective and more environmentally friendly logistics Heby sawmill was opened up to vehicles in weight class BK4 in March this year. Vehicle combinations in class BK4 have a maximum weight of 74 tonnes.

15% reduction in diesel consumption per m3 sawn timber in 2025, compared with 2010 (17.6 kWh/m3).

16.7 kWh/m3, up 5% on the previous year, but 5% down on 2010.

Hasselfors will be approved for class BK4 in summer 2024. Setra will then have achieved its target of all our production sites accepting BK4. We are also continuing to develop rail terminals for our facilities. Work on establishing a terminal for Kastet sawmill in Gävle will begin in 2024.

We carried out feasibility studies on electric forklifts and HVO during the year. In future, the production units will monitor diesel, heat and electricity consumption on a monthly basis in order to more actively develop action plans to meet the goals. We will also analyse the effect of the trialled eco-driving initiative.

Contact details

Climate report

Energy efficiency of wood drying kilns

During the year, the internal Strategic Drying Forum continued to exchange experiences and analyse measurement data. Decision taken to implement adaptive control of dryers. Implementation ongoing in 2023–2024.

Continued implementation of adaptive control of dryers in 2024, and analysis and monitoring of results.

Increased net revenue from bioproducts Pellet production to begin in 2024. Alternative means of transport and fuels, reducing transport kilometres and loads, and increasing value added.

Setra will be climate neutral by 2030, with the exception of foreign distribution.

Sustainable transport

Safety, culture and colleagues

By 2025, Setra will reduce its total climate footprint (CO2 emissions) by at least 35% compared with the base year 2015.

More green and efficient transport solutions – rail projects and renewable fuels

LTAFR (LTA frequency): zero vision, interim target 2025 = 10, target 2023: 15. Safety index ((risk observations + near misses)/accidents): target = 10.

Organisational and social work environment (OSWE) index – aim is to constantly improve the work environment and thus achieve a higher index

Work on an action plan for climate neutrality, feasibility studies on electric forklift trucks, solar cells and bio-oil for our own boilers and continued energy efficiency measures. The 2023 Climate report shows a remaining emission reduction amount of 90,500 tonnes CO2e (excluding foreign distribution).

Reduction of 58,500 tonnes CO2e from 2022 to 2023. This represents a 25% reduction.

New rail capacity from the sawmills in Hasselfors and Skinnskatteberg. Ongoing evaluation of transport route using liquefied biogas.

LTAFR (LTA frequency): 12.8

Safety index: 11.9

73/100

In 2024, Setra will review and revise the current climate goal. Our journey towards fossil-free production will also continue.

The interim target for 2024 is to reduce our total carbon footprint by a further 7%. Activities are based on the Roadmap for Climate Neutral Setra 2030 and our work towards fossil-free production.

The next planned rail project is at Heby sawmill. A preliminary study is in progress. Continue the close dialogue and cooperation with freight carriers for more efficient and green transport solutions.

Focus on activities relating to culture, leadership and behaviour, including: risk analyses, safety inspections, training, employment law and organisational behaviour management.

We have switched from 6 measurements (2022) to 5 measurements (2023) and in 2024 we plan to take 3 measurements. After each Pulse survey, the team reviews the results and draws up an action plan to improve the situation.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Our contribution to the UN SDGs

Setra supports the UN’s 2030 Agenda. We face major shared challenges if we are to achieve the three dimensions of sustainable development: environmental, social and economic. We work actively on the SDGs over which we have the most influence.

Our responsibility as a company

Adopted by world leaders in 2015, the 2030 Agenda is a framework that guides the nations of the world on how they should engage with the issues around them. The agenda comprises 17 sustainable development goals and 169 targets that balance financial, social and environmental perspectives. To achieve the goals by 2030, everyone needs to contribute, including us as a business.

Setra supports the agenda in its entirety and, through our business, has both the responsibility and the capacity to make an active contribution to several of the goals. Our work to promote sustainable development of our business and operations involves creating positive value and taking full responsibility for the impact that our business has on individuals, society and the environment. The most important factor is the climate benefit of our products, but our responsibility along the whole value chain and as an employer, business partner and local community actor also comes into play.

Integrated work

The 2030 Agenda is well integrated into Setra’s key sustainability issues. We have identified the sustainable development goals and targets that are most applicable to Setra and take them into account in our projects and investments.

In focusing on the challenges we see in our key sustainability issues, we are also helping to solve the challenges outlined in the SDGs. Working on our climate goals is an important part of our contribution.

Read more about our contribution

An overview of the SDGs (and their targets) that are most relevant to Setra’s operations is available at setragroup.com. It describes the challenges we have identified and our ability to make a positive contribution towards these SDGs.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

Our key sustainability issues

Sustainability work at Setra focuses on the areas in which we have the greatest influence and potential to make a difference.

All our priorities present both opportunities and challenges. On the following pages, we report on how our work is progressing.

Our portfolio

Encouraging greater construction in wood is our most important contribution to the climate. As well as being the only renewable building material, wood also stores carbon absorbed from the atmosphere. We work in a targeted way to add further value and contribute to the transformation of the construction industry, not least by offering CLT and glulam building solutions that enable large-scale construction that is still climate efficient. Bioproducts such as bark, wood chips and sawdust from residual streams also play an important role in the climate transition, replacing fossil fuels and materials.

Climate-smart raw material

Although Setra does not own any forest itself, it is in the forest that our business begins. It is extremely important for us and our customers that the raw material comes from sustainable forestry and is traceable. Through certification by FSC ® and PEFC and controlling against set criteria, we ensure that the timber used at our sawmills comes from legal logging that protects areas of high conservation value and biodiversity. Our own production units also hold FSC and PEFC Chain of Custody certification.

Resource-efficient business

We use 100 percent of the wood raw material. As much as possible is processed into long-lived wood products and the residual streams become various bioproducts that offer great climate benefits. Production represents a small part of Setra’s total climate footprint but is the part we can influence the most. We already use almost exclusively renewable energy and are aiming to make our production completely fossil-free in the long term. We work systematically to reduce energy consumption and create efficient and circular flows.

Safety, culture and colleagues

Making sure that our employees are not injured at work, and ensuring their well-being and development, is the most important factor for our success as a company. Safety is our top priority and we work hard to create a culture of safe behaviours, clear leadership and commitment, while also investing in modern and new technologies. Setra is a valuesdriven organisation where everyone is expected to contribute to our shared goals.

Sustainable transport

Transport is required to get the logs to the sawmills and the finished products out to customers, and it is transport that accounts for the majority of our greenhouse gas emissions. We are working on connecting 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 with our carriers.

Climate report

We work systematically to reduce our own emissions and collaborate all the way along the value chain from the forest onwards to achieve our climate goals. The Climate report helps us map where emissions occur and how they are affected by both external factors and our own climate actions. In the report, we include all emissions from the planting of forest seedlings to the point when the goods reach the customer, i.e. our entire climate footprint.

Progress with Grönsamhet

We want to be a business that also benefits our customers, society and nature – this green value is what we at Setra call Grönsamhet. The activities and measures leading towards our vision are then referred to as progress with Grönsamhet. For each sustainability issue in the report, we present an achievement that we are particularly proud of.

Introduction 2

Setra’s sustainability work 6

We create green value 7

Our portfolio

Renewable building materials and bioproducts for a more sustainable society.

Frame cuts carbon footprint of Electrolux headquarters

As the Electrolux Group expands its headquarters in Stockholm, the timber frame from Setra will play a defining role – by binding carbon dioxide and by making the visible wood part of the streetscape.

“As a leading company in the field of sustainability, we want to make our own contribution to urban development and to more sustainable building and living. Using wood from the forests of central Sweden allows us to reduce the climate footprint of the new buildings. We hope the buildings will live on for many generations, storing carbon dioxide for a long time to come.” Ulrika

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our opportunities and challenges

Wood is a renewable raw material that stores carbon dioxide in the form of carbon throughout its lifecycle. As a manufacturer of building materials and products for the wood industry, we are part of the solution to reducing the climate impact of the construction industry. Interest in building with wood is increasing, creating long-term growth opportunities both in Sweden and around the world. Innovations and new technologies are boosting the amount of value added, not least in our bioproducts, which are vital raw materials in the pulp and paper industry and in energy and fuel production. Using raw material from sustainably managed forests, we transfer the value from the forest to society, where our products replace fossilintensive alternatives in a variety of sectors.

Our main challenge is to continue delivering even more resource-efficient products with a smaller climate footprint, across our entire value chain. Our building solutions in CLT and glulam seek to demonstrate that modern, industrial construction in wood provides a fast, safe and cost-effective construction process that is also better for the climate.

Governance

Setra’s business concept is based on a sustainable value chain that begins in the forest and culminates in climate-smart products based on our customers’ needs. Sustainability is a vital component of our offering, as reflected in our vision of Grönsamhet – wanting to do business where everyone prospers, including our customers, society and nature.

Customer surveys are a valuable part of the stakeholder dialogue, with the results used to improve our offering.

How we work

A sustainable range that is evolving

Setra aims to be a reliable and available partner that is responsive to customer needs and market developments. With our knowledge and working practices, we make it easy to be a Setra customer. We endeavour to ensure that as much of each log as possible becomes long-lived wood products, and to work strategically to increase the degree of value added in all product areas.

Sawn wood products

Sawn wood products in pine and spruce account for most of Setra’s sales. The products are used in construction, as well as being further processed into items such as glulam, flooring, doors, furniture, fittings and packaging. Sweden is the largest single market for sawn wood products, but the majority are exported, mainly to Europe, North Africa and Asia.

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.

A CLIMATE-SMART RAW MATERIAL – MANY PRODUCTS

Setra is par t of the well-developed forest value chain, where the whole tree is used so that each par t provides the most benefit.

Branches and tops become renewable bioenerg y in power and heating plants Bark and sawdust from Setra’s plants are used here too. Some of our sawdust is used to make renewable fuel

The thinner par ts of the tree are used by the pulp and paper industry The raw chips that we plane off the outer par ts of the log are sold on to them too.

About 50 percent of the harvest becomes timber raw material which we at Setra use to make construction materials, including timber frames.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

Safety, culture and colleagues

Sustainable transport 32

Climate report 35

Executive Management

Board of Directors

Governance of Setra’s sustainability work

Sustainability risks

GRI content index 47

Contact details

Processed wood products

Processed wood products are a growing part of Setra’s product portfolio as they approach annual production of 500,000 cubic metres.

The main products are construction timber, pressure-treated construction timber, crosslaminated timber (CLT), glulam, and components for the door and window industry.

Construction timber is a strength-graded building material for load-bearing structures. We produce rafters and joists, for example, that are tailored to the requirements in each market. The wood is planed in Hasselfors and sold in Europe, the USA and Australia.

Pressure-treated construction timber is produced in Malå and sold in Europe.

CLT is used for the frames of large buildings ranging from apartment blocks and offices to public buildings such as schools. The mass timber panels consisting of crossglued layers are machined into building elements with cut-outs for doors, windows and utilities. Glulam often also features in our deliveries of timber frames, together with CLT.

We offer construction industry players and property developers an opportunity to develop their own standardised solutions for

Influential construction projects

In 2023, timber frames from Setra were used in Electrolux’s new head office in Stockholm, Vasaskronan’s Lumi office in Uppsala, Terrassgården in Lund and Green House in Linköping, Skellefteå Hospital and a number of schools and apartment blocks in both Sweden and Norway. During the summer, Universeum science centre in Gothenburg opened its new landmark extension, for which Setra supplied an advanced glulam structure.

1,687GWh

The amount of bioenergy supplied by Setra in 2023.

This is sufficient to heat approx. 190,000 apartments.

How our wood products contribute to the substitution effect

Setra’s wood products contribute climate benefits on two fronts – storage and substitution. Storage refers to the carbon sequestered in our wood products, and substitution is about these products replacing the use of fossil fuels. So when our wood and bioproducts are used around the world not just for construction, but also for making paper packaging or producing heat and renewable energy, it helps to reduce fossil fuel emissions, which in turn will be better for our climate.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12 Our key sustainability

timber frames (see ‘Next steps for industrial wood construction’) and have a wide network of partners for planning and design services.

Our CLT, glulam and components are manufactured at the Setra wood industry hub in Långshyttan. The main markets for construction solutions in CLT and glulam are Sweden and Norway. Setra’s glulam is supplied to builders’ merchants in Sweden and Norway, and to wood product manufacturers primarily in Sweden and Japan. The wooden components are used by door and window manufacturers in Scandinavia and France.

In the UK, we offer a wide range of valueadded products for the construction and DIY market from our planing mill in King’s Lynn, which also has a distribution warehouse for processed construction products.

Bioproducts

We make use of the entire log – including the bark, chips and sawdust. These residual streams are converted into bioproducts, including cellulose chips for the pulp and paper industry, and pellets and biofuels for cogeneration plants. Biofuels from the forest are a renewable energy source that can replace heat and electricity production from fossil fuels, and constitute an important part

of Sweden’s domestic energy supply. Sawdust from Setra helps to heat hundreds of thousands of Swedish homes, for example.

Our biofuels have a sustainability certificate from the Swedish Energy Agency, which means they are classed as sustainable. Setra is a member of the Swedish Bioenergy Association (Svebio).

Bio-oil for renewable fuel

Our bioproducts also help to reduce fossilfuel dependency in the transport sector.

In a unique value chain from forest to fuel tank, bio-oil (pyrolysis oil) is produced from sawdust alongside Setra’s sawmill in Gävle. Pyrocell, a company owned equally by Setra and Preem, produces around 25,000 tonnes of renewable oil per year, equating to the annual fuel consumption of around 15,000 cars. The bio-oil is used to replace fossil oil in Preem’s production of petrol and diesel, reducing greenhouse gas emissions by over 95 percent compared with fossil alternatives.

In 2023, Pyrocell’s oil gained sustainability certification under the International Sustainability & Carbon Certification (ISCC) system, so it can now also be offered to customers outside Sweden.

Next stage for industrial wood construction

For wood construction and its environmental benefits to be expanded on a large scale, a more industrialised approach is needed. We want to help the parties in construction projects to become more process-oriented, with standardised and replicable solutions for timber frame systems.

Setra is scaling up its CLT production capacity to 90,000 m3 over the next few years. An additional CNC machine is being installed in the first quarter of 2024, more than doubling the existing capacity.

Product development

We work strategically to further develop Setra’s offering and increase the level of refinement.

In 2023, we procured a new plant for industrial pellets, which will be installed in Långshyttan in 2024. Pellet production allows us to increase the value of residual streams such as sawdust and wood chips from the production of CLT, glulam and components, while making them much more efficient to transport.

Industrial pellets are a sustainable alternative to fossil fuels in industrial heating systems. Our production will begin at the end of the year, with the pellets destined for industrial facilities in central Sweden.

CSI 89 out of 100

Customer Satisfaction Index surveys were conducted in two different customer groups in 2023. The feedback was generally very positive, with our service and delivery reliability coming in for particular praise. We also received suggestions on where we might improve, making the results of the surveys an important part of Setra’s work on continuous improvement and development.

How the surveys were conducted:

The surveys are carried out in cooperation with an external partner, who interviews customers in the wood industry, import/distribution, construction and retail. The customers interviewed are located in our key markets in Europe, the Middle East, North Africa, Asia and the USA, and account for a significant proportion of Setra’s turnover.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

Safety, culture and colleagues 27

Sustainable transport 32

Climate report 35

Executive Management 40

Board of Directors 41

Governance of Setra’s sustainability work 42

Sustainability risks 45

GRI content index 47

Contact details 49

Climate-smart raw material

Our wood comes from responsibly managed forests.

More long-lived wood products as we increase timber extraction

“By reducing the minimum diameter of timber and accepting logs with shorter lengths, we were able to increase timber extraction from Sveaskog and Mellanskog’s forests by up to 5 percent in autumn 2023, compared with the corresponding period in the previous year. This has been made possible thanks to Setra’s trimming and planing line in Hasselfors, which means timber that would otherwise have been pulped can now be processed into construction timber for the US market. Our new saw line in Skinnskatteberg has also contributed by enabling us to buy pine timber in smaller dimensions, and over the long term this investment will lead to even higher timber extraction from the forest.”

Victor Asmoarp, Raw Material Coordinator

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18 Resource-efficient business 22 Safety, culture and colleagues

Our opportunities and challenges

The forest is where our business begins. We want to be able to guarantee that our wood products come from sustainably managed forests where ecological, economic and social values are developed in a balanced manner. Setra does not own its own forest, but shares a responsibility with its timber suppliers to ensure that this is fulfilled.

Forest raw material has a key role to play in the transition to a fossil-free and sustainable society. The forest has the capacity to provide us with renewable raw materials, absorb carbon dioxide from the atmosphere and maintain robust ecosystems. However, forests are being affected by climate change, and the risk of damage is increasing. As something that may well impact on us as well, it is an issue that we are actively working to address.

Governance

According to our sustainability policy, the timber Setra uses must come from responsibly managed forests. All the sawlogs we buy are certified or controlled in line with Setra’s raw material policy. As of 2019, all our timber suppliers are FSC ® and/or PEFC-certified. Setra’s sawmills and processing units hold Chain of Custody certification from both FSC and PEFC, as well as FSC Controlled Wood certification. Our raw material policy and Chain of Custody certifications ensure that we also comply with the requirements set out in the EU Timber Regulation. From 2025, the EU Timber Regulation will be replaced by a new Deforestation Regulation. FSC, PEFC and the Swedish Forest Industries Federa -

tion are monitoring the transition and Setra is preparing to implement the provisions of the new regulation.

How we work

Swedish raw material

Setra mainly purchases Swedish forest raw materials, with the exception of small volumes (<1%) from Norway and Finland. The value chain is therefore rooted in Swedish forestry, where the forest is seen as a renewable resource that should provide a good yield for generations.

The Swedish Forestry Act places environmental and production objectives on an equal footing, requiring forest owners to take account of nature, the cultural environment, reindeer husbandry and other interests. A key concept is the reforestation obligation, which means that the forest owner must, by law, leave seed trees in place when felling, or start planting or sowing within three years of harvesting.

Around 27 percent of Swedish forest land is excluded from forestry activities (Source: Statistics Sweden). This can be divided into three categories: formally protected forest land (around 9 percent), forest land exempted from forestry activities under the Forestry Act (around 13 percent) and voluntary set-asides (about 5 percent). Two thirds of the formally protected forest is productive forest land. Much of the forest land that is exempted under the Forestry Act has very low productive capacity, which means that it is sensitive to impacts and therefore needs to be protected.

Like many other forest owners, Setra’s suppliers voluntarily set aside areas of productive forest land to preserve natural

Raw material purchasing

Setra buys pine and spruce from around 20 suppliers.

Setra’s raw material policy

As a minimum, wood delivered to Setra must be fully traceable and meet these fundamental criteria.

Certified suppliers check that the wood meets the requirements. Setra does not accept:

• Illegally harvested wood.

• Wood from forests in areas with serious social conflicts.

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

• Wood from forests in which genetically modified trees are planted

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain

10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

Safety, culture and colleagues 27

Sustainable transport 32

Climate report 35

Executive Management 40

Board of Directors 41

Governance of Setra’s sustainability work 42

Sustainability risks 45

GRI content index 47

Contact details 49

assets, heritage environments or social values without being required to do so by law. Forest owners who are FSC or PEFC-certified are required to set aside 5 percent of their land area for nature conservation purposes.

Carbon sequestration

Forests have a vital role to play in the climate transition. As forests grow, carbon is ab -

sorbed from the atmosphere. At the same time, the forests release carbon through tree and soil respiration, when trees die or are harvested and when the biomass is broken down or burned. Wood is in many ways a climate-friendly raw material, and wood products keep the absorbed carbon locked in.

The greatest climate benefit comes from sustainable forest management over the

long term. In Sweden, forestry is governed by laws and regulations on biodiversity, protected areas of forest and continuous reforestation, with a view to ensuring longterm productive capacity. This allows the carbon storage effect to continue expanding, while forestry can continue to deliver climate-smart products and energy.

Traceability system

3.2

million m3

That is how much timber Setra processed in 2023. Our raw material is sourced within a radius of just over 100 km from the sawmills.

The suppliers’ certification includes regular inspections by third-party auditors, including checks against the criteria for FSC Controlled Wood to confirm compliance with Setra’s raw material policy. If and when Setra buys timber from a non-certified supplier, we conduct our own thorough checks against the raw material policy and the criteria of the certifications.

Setra buys all its timber through contracts that include harvesting and delivery to our mills, The timber is usually sourced within a radius of just over 100 km from the sawmills, ensuring climate-efficient transport. In 2023, Setra purchased 3.2 million cubic metres of wood in total, of which 52 percent was pine and 48 percent spruce. One of our core requirements is that the timber can be traced back to the place of harvest. The coordinates of the site can be checked with the Swedish Forestry Agency to make sure that the wood does not originate from a conservation area. Our suppliers are certified and check themselves that the timber is traceable and fulfils all the requirements in Setra’s raw material policy. The requirements of the raw material policy are the same as in the FSC ® Controlled Wood standard.

Forestry certifications

FSC ® – Forest Stewardship Council® – is a non-profit, independent, international members’ organisation that provides a system for the voluntary certification of responsible forest management. Over half of the productive forest land in Sweden is FSC-certified. 5 percent of the land is set aside for conservation purposes and a further 5 percent must be managed by certified forest owners in Sweden using adapted methods to preserve and develop natural or social values.

PEFC – Programme for the Endorsement of Forest Certification – is an independent umbrella organisation working to promote sustainable private forestry through independent third-party certification. Around 60 percent of Sweden’s forest land is PEFC-certified. 5 percent of the land is set aside for conservation purposes.

Setra has Chain of Custody certification, which means we can track the timber’s path back to the forest. Compliance with the certification schemes is continuously reviewed by internal and external auditors.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14 Climate-smart raw material

Supplier collaborations

High raw material quality and reliable deliveries are important to Setra. Our main suppliers are our owners Sveaskog and Mellanskog, which provides a firm basis for a secure supply of raw material.

In 2023, Setra and Sveaskog continued and completed their participation in the DiVISI research project concerning digitalised value chains in the forest industry, coordinated by the Swedish forestry research institute Skogforsk. The project aimed to improve the flow from harvesting to the sawmill, and to reduce resource use and waste between Setra and the raw material supplier.

Setra also continued its participation in a lab study coordinated by RISE Research Institutes of Sweden. Its purpose was to determine whether a near-infrared (NIR) camera could help sawmills sort timber by quickly detecting rot or other defects. Using the results of the study, which was completed during the year, we will be developing our equipment to handle more wood species in our sawmills. Enabling more sawmills to take a wider variety of woods will cut the average transport distance from the harvesting sites.

Biodiversity

Biodiversity and climate change are two critical areas that have been the subject of intense debate and attention in recent years, both in Sweden and internationally. Although Setra does not own or manage forests, our wood products come from the forest. We have a responsibility to ensure that our products come from sustainably managed forests where ecosystems and biodiversity are respected and where active nature conservation is practised.

Our owners, who are our main suppliers of timber, have expressed their ambition to be at the forefront of the EU-wide biodiversity strategy. Like our owners, we consider it essential to increase investment in biodiversity and active nature conservation. Sveaskog currently sets aside just over 460,0001 hectares of nature conservation forest throughout Sweden and Mellanskog’s members have voluntarily set aside 57,0002 hectares.

During the year, Setra increased its expertise in this area by training leaders, managers, salespeople and central functions in what biodiversity means and how our owners and suppliers are working on this on a daily basis.

Climate change

The Swedish forest will be affected by climate change. In a warmer climate, forests are expected to grow faster, while at the same time running a higher risk of damage from, for example, storms, insect and fungal attacks, or more severe droughts and wildfires. Natural disasters often require large volumes to be dealt with. In 2023, we made a concerted effort to utilise the trees felled by Storm Hans in the area around Malå. Over the years, Setra has accrued considerable experience in processing damaged timber, a capability that may become more important in a future with a warmer climate. We are investing in rail infrastructure to facilitate the distribution of raw materials between Setra’s production units. This will make our operations more efficient and climate-smart, and help us to better manage timber felled, for example, by storms or fires.

Certified wood products

Proportion of FSC or PEFC certified products of the total sold volume per product category.

47% 25% 50%

Our ambition is to always be able to offer our customers certified products. Sales of certified products are almost entirely driven by demand from customers in different markets and can vary somewhat from year to year.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

Safety, culture and colleagues 27

Sustainable transport 32

Climate report 35

Executive Management 40

Board of Directors

Resource-efficient business

We extract the greatest possible benefit from each log and are working to make production completely fossil-free.

Higher sawmill yields

“Ensuring that as much of the wood we saw as possible becomes products with a long lifetime such as planks and boards is crucial – for sustainability and for profitability. Setra’s sawmills have implemented a number of local initiatives with excellent results and I’m delighted that we have succeeded in increasing saw yield. This is especially gratifying in the context of a lower volume for the average log and a business climate that demands greater flexibility. Wood is our single biggest cost so over a year, improvements of a few tenths of a percent make a huge difference.”

Jonas Gustavsson, SVP Production and Sustainability.

Read more about how we increased saw yield on page 25.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors

............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22 Safety,

Our opportunities and challenges

As a renewable raw material, wood has a vital role to play in the green transition and every log should be used as efficiently as possible. Wood processing is a relatively energy-efficient process with low emissions compared to other manufacturing industries. Our environmental impact consists mainly of energy use, noise and emissions from machinery and bio-boilers. We use 100 percent renewable electricity and work systematically to reduce energy consumption.

Residual streams of bark, chips and sawdust from manufacturing are put to good use, including as biofuel when producing heat for our own operations. One challenge going forward is to replace the fossil energy currently used in internal forklift transport with HVO or electricity. Although the direct impact of our operations is a small part of Setra’s overall climate footprint, this is where we have the most influence. Our ambition is to replace even the last fossil energy in production with renewable alternatives.

Governance

Setra’s operations are certified according to the ISO 14001 standard which means we apply systematic environmental management, incorporating procedures and continuous monitoring. This involves addressing environmental aspects from input raw materials and production all the way to emissions and waste.

Our operations require environmental permits and are subject to comprehensive

environmental legislation. Resource and energy efficiency are key as we work to reduce our climate footprint and they are therefore monitored at both Group and local level. The basic principles underpinning our approach to our environmental and climate impact are set out in Setra’s sustainability policy.

How we work

Using the whole log

Our production process makes use of the whole log. More than half of the log becomes sawn timber and the rest is turned into various bioproducts. We strive to achieve a high saw yield, i.e. a large volume of sawn product in relation to the volume of incoming timber. The yield is affected by the log dimensions, sawing technique and the way the log is processed on the basis of the financial value of the end products and customer demand.

In 2023, the saw yield was 50.1 percent, up on the 49.7 percent of the previous year. This is despite the average log diameter being somewhat lower in 2023. We have carried out a number of effective measures in recent years and draw up individual action plans for each production unit.

In further processing too, we strive for the highest possible yield, e.g. by using flexible width dimensions in the cross-laminated timber factory and using offcuts from the component factory to manufacture joists. In 2023, we introduced new working methods and process improvements that have enabled us to reduce the trimming allowance by 50 percent when manufacturing CLT structural elements.

96

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business

Bark, wood chips and sawdust – what we call our residual streams – are transformed into bioproducts. One of these is pyrolysis oil, made at Pyrocell’s plant outside Gävle. Here, we have built a resource-efficient value chain with a unique, integrated solution whose aim is for all sawdust from the nearby sawmill in Kastet to be turned into bio-oil.

This renewable oil replaces fossil oil in the production of petrol and diesel.

Read more about how we use residual streams in the section Our portfolio.

Energy consumption

Our total energy consumption during the year amounted to 640 GWh. Thermal energy accounted for 77 percent, electrical energy for 18 percent and fuel consumption 4 percent.

Drying, heating and fuel consumption are the most energy-intensive elements in our production. Electricity consumption per

Electricity consumption 2019 –2023

kWh/m3

timber

116,916 MWh

Renewable electricit y

28,166 MWh

Contact

489,282 MWh

Bioenerg y (district heating or own boiler)

Diesel in internal transpor t

9,331 MWh

Biodiesel in internal transpor t

5,495 MWh

Heating oil (district heating or own boiler)

Setra consumed a total of 639,859 MWh in 2023. Our total energy consumption has fallen in the past three years, partly due to lower production volumes but also to strategic energy ef ficiency efforts.

Setra’s electricity consumption per cubic metre of sawn wood has increased, largely because we are processing an increasing propor tion of our products, for example at the planing mill in Hasselfors and the CLT factor y in Långshyttan. The increase this year compared with the previous year is due to a decrease in production volumes in 2023.

cubic metre of sawn timber has fallen by 6 percent in the past five years. Fuel consumption has also increased by around 6 percent, see diagram. This is partly because we are further processing an increasing proportion of our wood products, which requires additional machining and transport.

Energy efficiency

We work systematically to identify and implement energy saving measures. Setra is subject to the Swedish Act on Energy Audits in Large Enterprises (EKL) and all units are surveyed at least once every four years. In 2023 energy consumption was surveyed at Heby, Hasselfors and Skinnskatteberg. Thanks to many small measures, in some years our energy consumption has decreased but due to changes in volume and processing, consumption has nevertheless increased somewhat over time.

Diesel consumption per cubic metre of

timber has increased since last year. This is due to a decrease in production The share of biodiesel is shown in green. The reduction in the propor tion of biodiesel is mainly due to the fact that we have moved from HVO 100 to a diesel more compatible with the reduction obligation at some of our plants. This is naturally a result of a negative price trend for HVO 100 but also future decisions to lower the level of the reduction obligation. In the longer term, Setra’s aim is to move to renewable fuel/electricit y across the whole of production

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

We are constantly working to minimise disruption and increase productivity. Measuring downtime and carrying out root cause analyses see us getting to the bottom of underlying factors. In 2023, we introduced new maintenance procedures that will help us to prevent future interruptions.

Continuous investments in new technology and equipment are improving efficiency, productivity and safety at Setra’s units. New equipment is more energy efficient and helps us to eliminate production bottlenecks. For example, at the end of the year our new CNC machine was installed in Långshyttan, allowing us to use the whole production line in a more resource-efficient way. In Skinnskatteberg a new saw line was installed, improving productivity both locally and at other neighbouring sawmills.

More efficient drying

Setra’s drying kilns currently account for more than 50 percent of electricity consumption and 90 percent of heat consumption. We have therefore set up a working group known as our Strategic Drying Forum, where representatives from all the units exchange experiences and analyse results.

In 2023–2024 we are installing a new control system for the drying kilns at the sawmill. The new system simplifies cooperation between the units and enables adaptive drying, where the drying programmes are adapted to the moisture content of the wood.

The system is expected to reduce our total energy consumption while improving quality and increasing capacity.

Renewable electricity and heat

96 percent of the energy we consume in our plants is renewable. Our own heat

Examples of measures

To increase saw yield:

production using biofuels accounts for the majority of our energy consumption and is 99 percent renewable, as we burn our own bark and shavings in bio-boilers. Fossil oil is only used when the regular boilers are being maintained or repaired.

We own and operate boilers at three of our sawmills, in Färila, Heby and Nyby, and our own boilers will come on stream at Skinnskatteberg and Hasselfors from 2024. At Nyby sawmill, we also produce district heating for the residents of nearby Björklinge. In several locations we work with energy companies that use biofuel from Setra in their district heating boilers and supply some of the energy back to our operations – beneficial partnerships that support local systems.

All the electricity we buy in is ecolabelled and comes from hydropower, wind power and bioenergy. In 2022–2023 we invested in feasibility studies and installing solar

panels at some of our production plants and completed Setra’s first solar farm in King’s Lynn in the UK. In 2023, this produced just under 200 MWh of solar energy which was used internally. We are investigating the potential for future investments in solar panels at our production sites, but are holding off for the moment due to the unstable economic situation and other priorities. In 2023, we explored opportunities to replace the fossil oil used in our boilers with a renewable alternative, and identified technical and economic challenges. We are continuing to monitor technological developments in order to switch to 100 percent renewables over time.

Internal transport

Internal transport accounts for a large proportion of the emissions from our operations. In recent years, we have invested in switching to HVO 100 at some of our

• Camera sorting of our sawn wood products

• X-ray scanners at all our pine mills measure the internal properties of the log

• More effective timber management with GPS Timber software

To reduce energy consumption:

• New control system for wood drying based on moisture content

• Systems run on hydraulic oil have been switched to electric power

• New, more efficient compressors

• Reduced compressed air leaks thanks to organised leak detection inspections

• Installation of heat recovery systems

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22 Safety,

production units. In 2023, we also investigated the opportunity of switching entirely to HVO 100 for our vehicle fleet. However, the higher price of HVO in 2023 resulted in us using slightly more conventional diesel than in the previous year.

We have also explored opportunities to electrify our fleet. As electric vehicles are still relatively expensive and the technology is not yet fully developed, this may not be possible for a few years. Until then, we are monitoring developments and equipping our plants to be ready for future electrification.

The current goal is to reduce diesel consumption for internal transport by 15 percent by 2025, calculated per cubic metre of sawn timber compared with the base year of 2010. This target will be hard to achieve, but we are continuing to work on the issue on several levels. In 2023, we ran training in eco-driving at one of our sawmills. Other current initiatives to improve internal logistics are our new software, GPS Timber, for better timber management and an investment in load plates to automate loading.

Setra’s increased level of processing has led to more internal transport between the units, which is taken care of by our main carrier. There are good opportunities here to collaborate on climate-smart transport arrangements as volumes grow.

Noise and other disturbances

Noise levels are a priority issue when making new investments and changes to operations and in the event of complaints from neighbours. We perform noise measurements whenever necessary, in accordance with our environmental permits. The major investments planned at the units will make meeting the noise requirements of the new environmental permits quite a challenge,

especially at Kastet. Noise reduction measures are therefore being incorporated right from the design stage.

In recent years, we have made special efforts to reduce the noise level around the glulam factory in Långshyttan, for the benefit of local residents. Noise levels have been cut by almost 10 decibels.

At the new planing mill in Hasselfors, sawdust has been a nuisance for local residents. We have remedied the problem by making changes to extraction and ventilation and setting up a tent (to be completed in the first half of 2024) to prevent the saw-

Material recycling

Setra’s waste materials are managed by an external party. We are working together to improve and streamline waste management. Hazardous waste from Setra is reported in the Swedish Environmental Protection Agency’s electronic waste register. In addition to this, small amounts

dust from blowing away in the wind during loading.

Waste sorting and recycling

Waste sorting and recycling are taken for granted at Setra. We also use a certain amount of recycled material in our own processes and our aim is to increase this proportion over time.

Our sorting categories in our production and processing units and offices include household waste, metal, scrap metal, plastic, cardboard, office paper, corrugated board, electricals, batteries and scrap wood.

Computers are also recycled and parts reused. In total, just over 63 percent of Setra’s waste recycling went for material recovery in 2023, an increase of approximately 3 percentage points compared with the previous year. We aim to increase this figure in the years ahead.

The timber packages are wrapped in plastic covers containing up to 10 percent recycled material and a covering film containing up to 65 percent recycled material. The plastic straps used for packaging are made from PET that is also recycled.

of waste in the form of oily sludge and storm drain sludge have been dispatched from Nyby, Skinnsberg and Långshyttan through another external party. To fulfil its producer responsibility, Setra is affiliated with the Swedish packaging recycling initiative FTI.

Via FTI’s customer portal, the annual quantity of packaging is also reported to the Swedish Environmental Protection Agency. The amount of plastic reported in the Swedish market for 2023 is 221 tonnes (straps and packaging).

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

Safety, culture and colleagues

We put safety first and work to continuously improve our operations and ourselves to best drive Setra forward.

We are continuing to strengthen our safety culture

“Obviously safety comes first, but sustained efforts are needed to ensure that this approach is part of the DNA of our production units. In the past two years, we have succeeded in reducing the number of serious accidents at Setra and multiplied preventive reporting of risks, but we will not be satisfied until we have reached our zero vision. In 2023, we therefore started to introduce another tool – a common standard with consequences for misconduct and rewards for behaviour we want to encourage. We think this will reinforce the safety culture and build trust in the organisation.”

Anneli Hansson, HR Business Partner

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors

............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Our opportunities and challenges

Every weekday morning, 860 people go to work at Setra. Their not being injured at work, staying healthy and enjoying their work is an important success parameter for us. The wood industry is a high-risk sector in terms of workplace accidents and we know that prevention is crucial. This demands clear leadership, commitment and improvement efforts throughout the organisation. We want to encourage a decent and equal climate in our own workplaces and in the industry as a whole. We contribute to thriving rural communities by creating jobs in modern sawmills and processing plants. Other important questions for us are recruiting more women and increasing diversity in the company, plus maintaining high ethical standards in our business relations.

Governance

The working environment, employees and business ethics are key elements of our sustainability policy. The internal management system includes health and safety, which is checked regularly by means of daily briefings, regular employee surveys and employee appraisals, annual internal audits and risk analyses, observations, root cause analyses and safety inspections. Workplace accidents are reported and followed up in the sawmill industry’s joint SIA system. Our units all comply with competition legislation, guidelines from the Swedish Anti-Corruption Institute, and international provisions regarding sanctions. In line with the Act on the Protection of Persons Reporting Irregularities, Setra has an external whistleblowing function that guarantees anonymity.

How we work

Values and leadership

Setra is a values-driven company. Our core values of responsibility, commitment and innovation are to influence everything we do. A beneficial climate at work will see us strengthening our competitiveness in the long run. Training the company’s managers is an important factor in this regard and our leadership programme was carried out as planned during the year.

A beneficial working climate is also about minimising harmful stress at individual and team level and we actively work to spot, prevent and tackle mental health problems. Setra has external partners to consult and for support on mental health issues as well as an online management handbook to support managers with staff responsibilities. We apply a management by objectives model, which is based on managers and other leaders clearly communicating their expectations and setting goals in consultation with employees. We strive to maintain an ongoing dialogue on performance and results, with the annual employee appraisal as a key component. In 2023, 99 percent of our employees completed their employee appraisal. Statistical monitoring of the number of appraisals is carried out by HR and within each team.

Reporting and follow-up of accidents

We have a zero vision for workplace accidents – no one at Setra should be injured at work. After a couple of years of rises in the number of serious workplace accidents, we have put a range of measures in place and are pleased to report that for the second year in a row, the figure is significantly lower than before.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12 Our key sustainability issues

With our sights set on a zero vision, we have adopted an interim target for 2025 that the accident rate, measured as LTA (lost time accidents, i.e. accidents leading to sick leave) should not exceed 10 per million hours worked. Setra’s results are on a par with comparable companies and 2023 has seen a general improvement across the industry. There were 18 accidents resulting in sick leave during the year. The most common accidents at Setra are slips, cuts and crushing injuries. An in-depth root cause analysis is carried out immediately after each accident leading to sick leave. We investigate whether a working practice was breached, what the consequences were and the action required. The conclusions are then shared with all staff on the intranet and information screens. In 2023, Setra was ordered to pay corporate fines totalling SEK 1.8 million for three serious accidents that occurred in 2022. The fines concerned a machinery accident involving a planing machine, a fall and an accident where an employee was hit by a falling package of timber, and were issued on the grounds of failings in instructions and risk assessment. We have put measures in place to rectify all shortcomings.

Preventive safety work

near misses and accidents. These reports are compiled regularly and form the basis of our continuous improvement work. The number of risk observations and near misses has more than doubled in recent years, which we see as a good sign. We aim for a high proportion of reports per accident and track the ratio as a safety index.

Contractors and other non-employees carry out risk assessments and investigations in their own systems and any potential workplace accidents of theirs are recorded in SIA by employees at Setra.

The reduction in the number of serious accidents in the past two years can be linked to the strong focus on safety within the organisation. Managers in production, where the majority of Setra’s employees are located, carry out weekly leadership briefings aimed at developing leadership behaviours. Risks and dilemmas are discussed in all teams at least once a month. When anyone is injured at work despite these measures, we make every effort to find alternative duties that the employee can perform irrespective of the injury.

All accidents at Setra are recorded and reported to the authorities when required. Workplace accidents in Sweden are reported and followed up in the sawmill industry’s joint SIA system. Accident frequency is measured using the LTA (Lost Time Accident) Frequency Rate, which presents the number of accidents resulting in sick leave per million hours worked The result for 2023 is an LTA of 12.8, which is a slight improvement on 2022. From 2023 onwards, the accident rate at Setra’s unit in the UK is also included. The LTA covers ever yone who works at Setra, including temporar y staff and long-term contractors.

Setra runs a systematic programme of improvements. We follow up on leadership and goals at daily briefings in the production units, and improve in response to noncompliances. The whole shift is involved in production and safety issues and everyone is expected to contribute according to their professional role. We often share information and practices between production units and are striving to be even better.

Everyone at Setra is expected to think proactively and report risk observations,

Basic training in safe working practices is mandatory for all new employees. We use SSG’s safety training course, which is an established concept in Swedish industry. The industry-specific training programme Safe Sawmills is also mandatory. Before contractors can carry out work at our units, they are required to have completed SSG Entré, a basic training programme that is standard in Swedish industry.

Perimeter protection and personal protective equipment

All of Setra’s production lines are fitted with barriers and safety guards that disconnect the power if anyone comes too close to the

Employment breakdown

**

machinery. All the units, including Hasselfors and Skinnskatteberg from 2023, also have external perimeter protection to create a safer environment around our facilities.

Our production units always require hi-vis vests and hearing protection as a bare minimum, as well as additional protective equipment for certain types of work, based on the assessed risk.

Setra is currently involved in a multi-year project on machine safety, as part of which we are reviewing and risk-assessing the production lines together with external machine safety experts. The results of the risk assessment are incorporated into our

All of Setra’s employees in Sweden are covered by collective bargaining agreements. Employees in other countries have local agreements in line with their country’s regulations. Fixedterm contracts are used for probationary periods and to create flexibility in the production organisation. Setra has approximately 70 non-employed staff in the form of contractors via 17 contractor firms. They carry out services such as timber and wood measurement, electrical and sheet metal work. In our UK

action plan for better machine safety and preventive risk management.

Setra’s work environment is alcohol and drug free. We have alcohol locks on vehicle key cabinets and conduct random alcohol and drug tests on our own staff, as well as contractors and agency staff. Two of our units carried out gate checks during the year where all employees were tested on entry to the site.

Working environment

Employees and managers share responsibility for maintaining and improving our working environment. Responsibility

representatives, safety officers from the work committee, the safety health and environment chair and representatives of the sustainability, production, HR and communication departments. The committee will meet three times a year. The forum seeks to reinforce work environment management at overarching level and will address questions on the organisational and social work environment (OSWE), sick leave and behavioural safety. In 2023 a forum was launched to cooperate and share knowledge and experiences on safety, health and environment issues (SHE). All mill managers, SHE coordinators and the sustainability and HR departments attend the forum, which meets once a month.

Setra’s managers, leaders and safety officers all take the training course titled BAM – Bättre arbetsmiljö (Better Working Environment). This lays the foundation for systematic work to improve the physical, organisational and social work environment. The training course is held every year to include new managers, leaders and safety officers and anyone who needs a recap.

for health and safety is delegated to the managers at Setra. Each production unit has its own safety committee tasked with following up and taking decisions on issues relating to the working environment. The safety committee consists of safety officers from different departments in the unit. The safety officers participate in planning and implementing health and safety measures. There is also a chief safety officer at each unit, appointed by the employees to represent them in overarching work environment management.

In 2024 we will set up a central safety committee comprising the CEO, union

The BAM training, the leadership development programme and our work on OSWE also include aspects such as workplace culture and victimisation, for which there is of course zero tolerance. A training course on banter and inclusion was run at two units during the year and more units plan to carry it out. Setra also has a system for reporting, processing and following up on victimisation.

We regularly check in on employee wellbeing, job satisfaction and what they think of their work environment. This comprises short online Employee Pulse surveys, which also ask for comments on the responses. The results are compiled in an OSWE index

Introduction 2

Setra’s sustainability work 6

We create green value

External factors ............................. 8

Setra’s value chain

Our sustainability goals

SDGs

where we monitor the organisational and social work environment, and a Setra index that measures how well we are living up to our values. The survey was conducted for the first time in 2022 when it replaced our annual employee survey. Five measurements were taken in 2023 and the trend for both our indices is stable. The OSWE index ranged from 71–73 and the Setra index from 75–77. The results of the Employee Pulse surveys are primarily intended to provide qualitative evidence in the dialogue between the employee and their manager. In the UK, an annual employee survey is carried out instead of Employee Pulse surveys.

Employee health

Our objective is to have a healthy attendance rate of at least 95 percent at Setra. We know that many factors affect how often and how long we are absent, and we are working on the question in employee appraisals by analysing the results of the Employee Pulse surveys and of leadership development initiatives. The rate of sick leave stood

at 6.4 (6.6) percent in 2023. Since the pandemic, we have seen somewhat higher figures than before and are now exploring how we can improve efforts to achieve our target of lower absence rates.

Setra has partnered with a company that is helping us to tackle the issue of concealed mental health issues stemming from stress or problems with drugs and alcohol. All Setra managers with subordinate employees are trained in spotting the signs of concealed mental health issues.

All employees are offered occupational healthcare and are expected to participate in rehabilitation. Occupational health is an expert resource on work environment issues that we also hire for preventive health and safety work. Sensitive personal data is protected against unauthorised access.

Setra encourages exercise, offers all employees an annual fitness allowance and also sponsors Setra Sports Club, which is exclusively for employees.

Attractive employer

95%

Our goal is for at least 95 percent healthy attendance in a normal year.

a much-appreciated training course on banter and macho culture. Setra also continues to be active in the Women Building Sweden network, which is working for higher gender equality in the industry.

The proportion of women stands at 21 percent, and thus remains unchanged from last year. The proportion of women among managers is around 22 percent. The last pay survey was conducted in Sweden in 2023 and showed equal remuneration levels. Setra’s Equal Pay Index is 99.8, which is 4.5 percentage points higher than the Swedish average from the Swedish National Mediation Office. When recruiting new staff, we always take the diversity and equality perspective into account. When several applicants fulfil the basic requirements, we choose the under-represented gender.

Recruitment and skills development

Business ethics

Setra strives to maintain high ethical standards in all our business relations and to act responsibly in all interactions with our customers, suppliers and partners. Our business ethics guidelines cover compliance with competition legislation, gifts and hospitality, plus our Code of Conduct for Suppliers.

We have a digital course on business ethics that is aimed at all white collar workers, agents who work on behalf of Setra, and production staff who have contact with customers, suppliers and/or partners. Setra also has a white book that provides guidance on business ethics dilemmas, based on real-life cases. No confirmed incidents of corruption occurred in 2023.

To safeguard our long-term competitiveness, we need to be an attractive employer, attract the right skills and build pride in the company. Many people who work at Setra and apply to join us are attracted by our vision of Grönsamhet and the opportunity to work with a sustainable and climate-smart product that fulfils several important functions in society. We are also committed to continuous improvement as an employer. All permanent employees who leave are asked to fill in a questionnaire about their time at Setra and why they chose to go.

As part of a male-dominated industry, we have a lot to gain from more equal gender representation. We are working on the issue on several levels and during the year we held

We are noticing that sustainable wood construction is attractive to applicants, and that there is competition in Swedish industry to recruit employees with the right skills. Setra often uses recruitment agencies to fill positions in the production organisation. Promoting gender equality is recognised as an important part of their mission and this has resulted in more female employees in our workplaces.

Setra’s operations increasingly require technical expertise and the ability to handle more complex tasks. New duties, knowledge sharing with colleagues and job rotation are ways to increase internal know-how. There are also opportunities for external training and advice from external consultants. Part of the annual appraisal involves drawing up an individual development plan, and we encourage all our employees to maintain a continuous dialogue about their development.

An external whistleblowing service for anonymous reporting was introduced in 2022, in line with current legal requirements. Reports go to the external supplier for initial consideration, and then on to the CEO, CFO or SVP HR at Setra.

Percentage, including long and short-term sick leave. From 2023 onwards, sick leave at Setra’s unit in the UK is also included.

Introduction 2

Setra’s sustainability work 6

We create green value 7

Sustainable transport

We depend on transport and work with logistics suppliers to make our transport as climate-efficient as possible.

Maximised capacity with new system support

“Transporting air isn’t sustainable for the environment or our pocket. This is why we work to optimise the load factor of every vehicle.

Setra’s sawmills already have package scales installed. They help us to control how much we can load on every truck without exceeding the permitted maximum load. In 2023 we developed new system support for even better monitoring of the load factor in our transport.

Reliable statistics enable us to work in a structured way to maximise capacity utilisation in our fleet and so reduce the number of journeys.”

Maria Jansson, Logistics Manager

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14 Climate-smart raw

Our opportunities and challenges

Setra’s sawmills and processing units are located where the forest is – in the countryside. However, the market for wood products is global and 82 percent of the volume we produce is exported. Transport accounts for around 60 percent of our emissions that affect the climate, but our major challenge is that all our logistics services are bought in, which makes it more difficult to influence factors such as emissions and working conditions, especially regarding international transport. Nevertheless, we see great potential in rail investments, as well as in cooperating even more with and imposing requirements on carriers.

Governance

The transport we use should be efficient, safe and sustainable. Our requirements reflect the industry organisation the Swedish Forest Industries Federation’s sustainability criteria for road transport. Setra’s Code of Conduct for Suppliers, based on the UN Global Compact and relevant international conventions, also sets basic sustainability requirements. The Code of Conduct is signed as part of all contracts we enter into with our carriers.

How we work

Working relationships, dialogue and follow-up

Setra chooses partners with care and only works with reliable shipping lines and dispatchers who maintain a high level of quality

and have a long-term focus. We engage in close dialogue with the companies we hire and hold regular check-in meetings to follow up on our requirements and conditions.

Rail transport first choice

In environmental terms, trains are the best mode of transport and we use them as often as possible. However, the majority of our raw material currently travels by timber truck from forest to sawmill. In 2023, around 4 (5) percent of the raw materials were transported by rail. For our deliveries to customers, a somewhat larger share is transported by rail, with about 19 (22) percent of the goods travelling some of the distance by train. Rail is particularly suitable for large, continuous flows and we therefore use rail transport to ports.

Our roadmap for climate neutrality includes working to increase the share of rail transport. In recent years, Setra has made several important rail investments in cooperation with the Swedish Transport Administration. After extending the track at our sawmills in Hasselfors and Skinnskatteberg (2021–2022), we are now focusing on the next rail project to Heby sawmill where a feasibility study is in progress. The rail expansion lets us move our transport of raw materials and bioproducts from road to rail, simplifies our logistics flows and lowers our carbon emissions.

Efficient road transport using renewables

For domestic road transport, we have a long-term contract with a main supplier, which creates the conditions for efficient and smart transport chains, with fossil-free fuels as part of the solution. In 2023, our main carrier had an average fossil-free mix

CLIMATE-POSITIVE PRODUCTS

Our wood products are climate positive even when transported to the other side of the world, as they store several times more carbon dioxide than is emitted along the entire supply chain. See how big the sequestration effect is for different destinations in the table on page 37.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues

of 28 percent in the transport flows involving Setra, which is in line with the levels set by the reduction obligation.

15 percent of our domestic transport uses the renewable fuel HVO 100. We prioritise completely fossil-free transport where this is required by customers and when transport is subject to regulations that set emission requirements, for example in the construction sector. More than 70 percent

of our domestic transport of cross-laminated timber ran on HVO 100 during the year. The trucks that transport our containers from the sawmill to the port or rail terminal also ran on HVO 100 in 2023.

Setra tests and evaluates logistics solutions with our main carrier. We improve energy and cost efficiency by increasing the run rate and operating on the basis of a shared ambition to reduce carbon emissions from transport. Setra is also working to improve the efficiency of internal transport and reduce its environmental impact, read more on page 25.

Transport by sea

In many cases, we are dependent on cargo ships to reach our export markets. Transport by sea generates lower emissions per tonne-kilometre, but because Setra exports a significant proportion of its production volume outside the Nordic region, it accounts for a larger proportion of Setra’s total climate emissions.

domestic transport and freight within Europe is mainly by road. Maritime transport is used to ship goods to the UK, the US, North Africa, the Middle East, Asia and Australia. Rail is mainly used for container transport on sections of the route to the port. In 2023 a larger

Unfortunately, we have less power to influence sea transport and policy instruments are necessary going forward. From 2024 onwards, the shipping sector will be included in the EU Emissions Trading System. The market for greener shipping is still immature and emission allowances will result in higher costs for the cargo ships we use today. The new rules are intended to increase the use of greener fuels in the shipping industry in the long term.

Efficiency in every load

We work with our carriers to optimise route planning, maximise the use of cargo space and minimise the distance travelled without cargo. At our sawmills, we weigh the timber packages to optimise the load factor and

contribute to safer distribution. The partnership with our main carrier means that the same vehicle can be used to transport timber from a sawmill to a processing unit, collect finished products and deliver them to customers.

During the year we developed new system support for better monitoring of the load factor in our transport. Reliable statistics enable us to work in a structured way to maximise capacity utilisation in our fleet and so reduce the number of journeys.

Directly contributing to a greener transport sector

Setra has a unique opportunity to contribute to the production of renewable fuel for the transport sector. Since 2021, sawdust from Setra Kastet in Gävle has been used to produce bio-oil (pyrolysis oil), which can replace some of the fossil raw material in petrol and diesel. The factory is located

next to our sawmill and is operated by Pyrocell, a company that Setra co-owns with Preem. Read more in the section Our portfolio

Lobbying through industry collaborations

We want to make transport even more sustainable by actively participating in various industry collaborations and forums. Setra is involved, for example, in lobbying via the Swedish Forest Industries Federation, which wants to see reduced emissions through longer and heavier trucks, electrification of heavy goods vehicles and so on. As Sweden’s largest buyer of transport services, the forest industry has the capacity to influence the transport sector. The forest industry has jointly set out a plan for this in its future agenda, one of the aims of which is fossilfree domestic transport by 2040.

Introduction 2

Setra’s sustainability work 6

We create green value 7

Climate report

We transparently report our climate impact throughout Setra’s value chain with the aim of improving all the time.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13 Our portfolio 14

Our opportunities and challenges

Wood is the only renewable building material and in climate terms it is especially smart to use it for long-lived products able to replace fossil alternatives. Growing trees capture carbon dioxide from the atmosphere and store it as carbon throughout the lifetime of the material. The carbon bound up in Setra’s wood products is higher than the carbon dioxide emissions that occur in the processing chain, from forestry, via sawing and further processing to transport to the customer, measured per cubic metre of sawn product.

Setra’s wood products also create climate benefits, for example, when they replace building materials with a greater climate impact, such as steel and concrete. The residual streams from production, including sawdust and wood chips, become raw material for circular products in the pulp and paper industry and for producing heat and renewable fuel.

Setra’s overall climate objective is to be climate neutral by 2030, excluding foreign distribution. We see this as a major challenge but also as a driver for improving environmental performance. The Climate report shows that the highest emissions occur in the transport sector in Scope 3, the area over which we have the least control. Making the transition to climate-smart transport is Setra’s biggest challenge on the road to climate neutrality. As more new regulations are on the way from the EU, we will also be reviewing Setra’s climate targets and definitions in 2024.

Governance

Our Climate report is an important tool for us and our customers to monitor the climate footprint in Setra’s value chain and of the products we deliver. The result shows where in the value chain the emissions occur and how big they are. The Climate report is produced for all of Setra’s operations and per production unit, providing important data for analysing, prioritising, acting and setting concrete emission reduction measures. Some measures are Group-wide, while others concern specific units. However, a large proportion of the emissions occur outside of our own operations, as stated above. Despite this, we can help to reduce emissions by cooperating with and setting requirements for actors in other parts of the value chain, such as timber suppliers and carriers.

How we work

Climate calculations in line with the GHG Protocol

Setra’s Climate report is prepared in accordance with the international Greenhouse Gas (GHG) Protocol. The standard divides emissions into three categories, known as scopes, where emissions are reported from a lifecycle perspective. Scope 1 relates to the emissions that occur ‘inside the gates’ at Setra, in other words, in our own operations. Scope 1 makes up just under 5 percent of total emissions and includes, for example, emissions from machinery, boilers and vehicles. Scope 2 covers the emissions generated in producing the energy that Setra buys in. Since Setra has been buying renewable electricity for many years, emissions in Scope 2 are very low, at almost zero.

1.3 million tonnes CO2

The amount of carbon dioxide stored as carbon in the wood products Setra sold in 2023 (1.6 million m3). This sequestration equates to the greenhouse gas emissions of around 150,000 Swedes.*

* Source: Swedish Environmental Protection Agency, naturvardsverket.se

Setra’s sustainability work

Scope 3 covers emissions upstream and downstream from Setra’s operations, which account for 95 percent of total emissions.

Upstream emissions include emissions from forestry and transporting timber but also emissions from manufacturing fuel for machinery and manufacturing of other raw materials and materials. Downstream emissions include emissions from transport to the customer. Emissions from inbound and outbound transport account for around 63 percent of Setra’s total climate footprint.

other to get greenhouse gas emissions down.

Wood has a positive effect on the climate

* Wood binds the equivalent of 800 kg of carbon dioxide per cubic metre of sawn timber. The figure is an average of pine and spruce, reference: Skogforsk, IVL and Swedish Wood. Introduction

Reducing the climate footprint in Scopes 1–3 is a challenging and complex task. We are affected by the emissions of our suppliers, contractors and carriers and at the same time we influence the next stage with emissions from our value chain. Basically, we affect each other, which means we need to help each

Emission categories

Setra reports its emissions in accordance with the Greenhouse Gas Protocol (GHG Protocol).

The emissions are classified as follows:

Scope 1: Direct emissions from the business (fuel combustion at own plants and in 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 climate footprint of the raw materials.

Setra’s full Climate report is available at setragroup.com

A couple of additions and changes have been made to this year’s Climate report. We have expanded Scope 3 by adding a couple of new emission items (read more in Setra’s Climate report at setragroup.com). Another addition is that from this year, we are including emissions from Setra Wood Products (SWP) in the UK, and 50 percent of emissions from Pyrocell, which is 50 percent owned by Setra and 50 percent by Preem. We have also seen a change in emissions from the transport segment regarding transport by sea to our global customers, where emissions are lower than last year. This is due to refined data and an improved quality audit in this year’s financial statement calculation. For further information, see the GRI content index, disclosures 2–4 and Setra’s complete Climate report.

The table shows the sequestration effect (green column) in relation to the carbon emissions generated, from seedling planting to delivery to customers in different countries. For example, using wood from Setra in Sweden helps to lock in 758 kg of carbon dioxide per cubic metre of sawn timber.

■ Carbon dioxide emis sions excluding transp or t to customers in kg CO 2e/m3 sawn timber.

■ Carbon dioxide emis sions including transp or t to average customer in a typical de stination in kg CO 2e/m3 sawn timber.

■ Amount of carbon bound in wood, conver ted into CO 2

Scope 3 Scope 1 Scope 2

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors

............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

SDGs

The GHG Protocol is also currently being redeveloped regarding land-intensive activities, including forestry. The new guidance specifies how companies should calculate and report carbon emissions and sequestration related to land use and to carbon storage in biogenic products, such as wood products. This new guidance will influence the content of Setra’s future climate reports.

Setra’s climate ambitions

In 2019 we adopted our climate target that Setra will be climate neutral throughout its value chain by 2030 with the exception of foreign distribution. Several new directives and requirements are now being developed in the EU under the EU’s Green Deal and Fit for 55. Two of many legislative proposals in development by the European Commission are the new sustainability directive CSRD and the new Green Claims proposal. Reporting is set to become more extensive and will make greater demands of the whole value chain in terms of monitoring targets, risks and opportunities. Communication needs to follow accepted practice and be honest, transparent and proven. The upcoming requirements mean that Setra will review targets and definitions in the year ahead. We also aim to work across the industry for the green transition and are involved in drawing up industry-wide targets and agendas. We will continue to focus on reducing emissions where we have the greatest opportunity to make an impact, i.e. within our own operations, our Swedish timber purchases and domestic transport. Our target of a climate-neutral Setra means that emissions will be reduced in the first instance, while the emissions that can’t be reduced will be offset. This year, Setra’s total emissions, excluding international transport, amount to 90,500 (80,000) tonnes of

carbon dioxide. The increase from the previous year is due to an expanded Scope 3, as explained in ‘Climate calculations in line with the GHG Protocol’. About 9 percent of the total emissions come from our own operations and the remaining 91 percent from other parts of the value chain. The aim is to reduce emissions as far as possible in our own operations but also in Scope 2 and Scope 3. As a last resort, when lower emissions cannot be achieved, carbon offsetting may be used.

In 2021, Setra developed a revised interim target for our total climate footprint (including all transport). This means that by 2025, emissions will be reduced by at least 35 percent, corresponding to 82,500 tonnes of carbon dioxide, compared with the base year 2015. The outcome up to 2023 came in at a reduction of 58,500 tonnes of carbon dioxide, equivalent to a reduction of 25 percent compared with the base year. The result of the roadmap shows that Setra and our partners and carriers would need to make major investments to reduce emissions and additionally earmark large amounts for offsetting emissions that cannot be reduced. This, plus the prevailing economic situation, and the lack of instruments to aid the green transition and of new research-based definitions and targets for net zero emissions, means we see several challenges along the way. However, at the same time we see great potential and a strong desire to make changes in the right direction in our own operations.

We will continue our journey towards our vision and our long-term climate goals, and work actively together to achieve fossil-free production. We believe in the potential of our wood products to contribute to increased climate benefits and a circular society and help to reach the EU’s climate goals.

Since Setra’s first complete Climate report was produced in 2014, total emissions excluding transpor t to customers have been reduced by more than 45 percent, calculated per cubic metre of sawn timber Significant measures have included purchasing renewable electricit y, making our production more energy ef ficient and choosing renewable fuels. As we process more of the products, emissions per cubic metre produced will increase slightly.

Over the past three years, Setra has reduced its total footprint by 15% (31,481 tonnes CO2e). Compared with the previous year, the footprint has reduced by 12% (25,011 tonnes CO2e). We see a marked reduction in the category transport to customers, where this year we have focused on refining and quality assuring our data.

Continued energy efficiency measures within our own operations and more efficient and greener transport in cooperation with our partners have been, and will continue to be, important activities for achieving our environmental and climate goals. Our total climate footprint is affected by, among other things, production volumes, the export balance between different markets, and our own and our suppliers’ climate calculations and ambitions.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

SPECIFIC ENVIRONMENTAL AND CLIMATE MEASURES

In 2023, several steps were taken to reduce greenhouse gas emissions. Some of these are aimed at reducing emissions in Setra’s value chain, while others involve product development where the benefits accrue to customers in their climate work.

Energy efficiency and higher productivity

In 2023, for example, we have invested in a small-diameter log saw, a sawmill infeed and camera sorting, which help to improve optimisation and saw yield. Getting as many wood products as possible out of the log is sustainable and important to us.

Drying wood is the most energy-intensive process in Setra’s production. During the year, the representatives from our sawmills in our Strategic Drying Forum continued to analyse and share experiences with each other. We also made the decision to invest in adaptive control for those dryers that are not yet equipped with the technology. Adaptive control is about optimising the drying process to achieve higher energy efficiency and capacity. This investment decision means that all the dryers in Setra’s operations, almost 100 of them, will be fitted with adaptive control by the end of 2024.

Out in our units, we conduct annual energy surveys and work on several different measures to improve efficiency.

Circular business models

Setra wants to be as resource efficient a business as possible and is working to increase our level of processing. To this end, we are involved in investigating and engaging in dialogue on innovative, future and circular partnership projects. We are currently building a pellet production plant at the Setra Timber Industry Centre in Långshyttan, which is estimated to be complete in 2024, where sawdust, chips and offcuts, residual streams from production in

other words, are used as raw materials. We are also looking at other interesting innovation projects with potential partners, where we think our wood products and/or residual streams can be processed more and play their part in the green transition.

Increasing modern wood construction

Wooden building materials and renewable fuels are important for the construction and property sector’s ability to reach its climate goals. The sector accounts for 22 percent of Sweden’s total greenhouse gas emissions, with the greatest emissions coming from the manufacture of building materials and products and from energy use in buildings.

Setra is carrying out several initiatives to promote building in wood, including helping to spread information about wood construction and conducting dialogues with researchers to develop the sector. Our modern Setra Timber Industry Centre brings together experts and many years of experience and is constantly developing in line with customer need and demand. Besides working with wood which itself is renewable, climate positive and binds carbon dioxide, we are also working to deliver the right wood material in the right place at the right time. We provide Environmental Product Declarations (EPDs) with quality-assured environmental and climate data for our products, which helps the construction industry to make climate-smart choices. We have EPDs for cross-laminated timber and glulam and update them as the business and the market change. We want to help the construction

industry to lower its emissions by demonstrating and teaching the benefits of wood. Setra contributes expert knowledge and financing to various research projects. For example, we are involved in a project at Linnaeus University exploring how the resource efficiency, performance and cost efficiency of wood-based products can be improved. Other important partners in terms of research and development are Swedish Wood, RISE, Wood City Sweden, WoodCenter North at Luleå University of Technology, the construction sector charity Byggdialog Dalarna and Dalarna University.

Collaboration with suppliers

A large proportion of our greenhouse gas emissions are generated indirectly – when we purchase timber and transport services, for example. We try to influence our carriers

by engaging closely in dialogue and setting requirements. Several of Setra’s suppliers and partners also set ambitious climate targets themselves. A key issue is the choice of fuel by transport operators. The ability to optimise the load factor and empty running rate and to plan routes also has an impact on Setra’s climate footprint. We have taken an active decision together with our carriers to continue exploring electrification and alternative renewable fuels for our national transport needs. We are also monitoring the development of electrification so that we can switch to electric vehicles in our own production. Transport is a major challenge for Setra and requires that we work with other companies to find smart, effective and more climate-friendly solutions. Read more about this work in the Sustainable transport section on page 34.

Setra’s sustainability work 6

We create green value 7

Executive Management

Marcus Westdahl

President and CEO

Born: 1974

Employed since: 2023

Education: Bachelor’s degree in Business Economics

Jonas Gustavsson

SVP Production and Sustainability

Born: 1973

Employed since: 2020

Education: MSc Eng.

Lotta Olsson

CIO

Born: 1967

Employed since: 2022

Education: BSc in Wood Technology

Olle Berg

EVP Market and Business Development

Born: 1965

Employed since: 2013

Education: MSc Econ.

Anders Nordmark

EVP Supply Chain and Technology

Born: 1961

Employed since: 2017

Education: MSc Eng.

Daniel Halvarsson

EVP Building Solutions and Components

Born: 1979

Employed since: 2019

Education: MSc Eng.

Pontus Friberg

SVP Enterprise Risk Management

Born: 1962

Employed since: 1993

Education: MSc Forestry Science

Johanna Gydingsgård

CFO

Born: 1974

Employed since: 2018

Education: Master’s in Business Economics

Joakim Nyqvist

SVP HR

Born: 1971

Employed since: 2018

Education: BSc in Education

Setra’s organisation

Finance and Accounts

Production and Sustainability

Sustainability

Environment CEO

HR and Payroll IT Communication Risk Management

Market and Business Development

Supply Chain and Technology BA Building Solutions and Components

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22

Safety, culture and colleagues 27

transport

report

Board of Directors

Anders Källström

Chairman since January 2020. Director since 2018.

Main occupation: Various directorships, including Chairman of Svensk Travsport.

Born: 1959

Erik Brandsma

Director since May 2022.

Main occupation: CEO Sveaskog.

Member of the Remuneration Committee.

Born: 1964

Charlotte Lindahl

Director since May 2022.

Main occupation: CFO Infranord. Member of the Audit Committee.

Born: 1969

Fredrik Munter

Director since January 2020.

Main occupation: CEO Mellanskog. Member of the Audit Committee.

Born: 1974

Per Callenberg

Director since May 2023.

Main occupation: Head of Sustainable Business Development, Sveaskog.

Born: 1980

Ellinor Berglund

Employee Representative.

Board Member since 2009.

Main occupation: Customer Service.

Employed since 1989.

Born: 1969

Tomas Larsson

Employee Representative. Board Member since 2016.

Main occupation: Shift Leader.

Employed since 1989.

Born: 1968

Jonny Treard Andersson

Employee Representative. Deputy Board Member since 2019.

Main occupation: Operator. Employed since 2005.

Born: 1963

Lennart Sundén

Director since January 2020.

Main occupation: Various directorships, including Director of Mellanskog and Preem AB.

Born: 1952

Juha Taavila

Director since January 2020.

Main occupation: Independent advisor. Previously several years at Stora Enso Wood Products.

Born: 1956

Lennart Berglund

Employee Representative. Board Member since 2019.

Main occupation: Forklift Operator. Employed since 1986.

Born: 1969

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors

............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13 Our portfolio 14

Governance of Setra’s sustainability work

We work with a climate-smart and sustainable product, and sustainability is part of Setra’s DNA. Our core values of commitment, innovation and responsibility are to serve as our guiding lights in making sustainable decisions and acting ethically in our everyday work.

Materiality analysis and prioritised sustainability issues

We conduct materiality analyses as a way to identify our key sustainability issues. The analyses are based both on the impact of the business throughout the value chain and on external demands and expectations, and also take into account sustainability-related risks and opportunities for Setra’s business. The materiality analysis is continuously reviewed and updated as necessary, in line with developments and changes globally and within our own organisation. Ahead of the EU’s forthcoming Corporate Sustainability Reporting Directive (CSRD), Setra will be carrying out more extensive work on a new materiality analysis.

The results of the current materiality analysis have been summed up in six key issues: Our portfolio, Resource-efficient business, Climate report, Safety, culture and colleagues, Climate-smart raw material and Sustainable transport. The sustainability report sets out what we consider important in each area, how we work, goals and follow-up.

Stakeholder dialogue

Setra’s priority stakeholders include customers, owners, employees, suppliers, neighbours and government agencies. We maintain an ongoing dialogue with them to keep up to date on requirements and expectations, identify areas for improvement and

find opportunities for stimulating working relationships. A new or updated stakeholder dialogue is conducted approximately every three years. The Sustainability Manager is responsible for the dialogue and analysis, with the results then reported to the Executive Management. They also form part of the annual follow-up of the sustainability strategy by the Board of Directors. Since Setra’s Board is largely made up of our owners, contacts with stakeholders are also made through the owners’ own networks. The requirements of the new CSRD and its European Sustainability Reporting Standards (ESRS) mean that our new materiality analysis will incorporate double materiality, i.e. our impact on the environment and people and the financial impact on the company. Preparations ahead of the implementation of the new regulations will be made jointly with management, the Board of Directors, employees and auditors in the period 2024–2025. Setra will be covered by the directive for the financial year 2025 and therefore the reporting year 2026.

Areas that continue to grow in importance for our customers and other stakeholders are the origin and climate performance of our products and our work on climate targets and reduced climate impact in Setra’s value chain. Issues related to the forest, sustainable forestry and the impact on biodiversity continue

to become increasingly important to more people, while also becoming more prominent in the public debate and in political discussions in Sweden and the EU. These are core issues for us, which we are constantly working on together with our owners, suppliers and the industry. Our work on FSC and PEFC certification is an important element in this.

Sustainability policy

Setra’s sustainability policy, set by the Board, is the general governing document for our work on sustainability. The policy clarifies that, along our entire value chain, we are committed to responsible business practices that promote good business ethics, human rights, good working conditions, environmental consideration and a

good working environment. The policy also describes our approach in each of these areas. Setra’s whistleblowing service for anonymous reporting was introduced in 2022, as required by law, and is now included in the policy. Our key sustainability areas in the policy – business ethics, employees, occupational health and safety, the environment and the climate – are also governed by other policies and instructions. The policy’s commitments are communicated each year in operational and action plans and follow-ups in the organisation and to customers through their supplier follow-ups and other surveys. The sustainability policy can be viewed at setragroup.com.

Organisation and responsibility

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

Our ambition is for the overarching sustainability goals to be broken down and incorporated into every area of the organisation. Each manager has a responsibility delegated from the Executive Management or the CEO. Operational work on environmental, ethical, health and safety and employee issues takes place on the ground, out in the respective units and departments.

The Production and Sustainability department has overall responsibility for Setra’s sustainability work and strategy, carried out in close dialogue with Setra’s Executive Management. The Sustainability Manager is tasked with leading, pursuing and developing work going forward, being responsible for expertise and supporting the organisation and the CEO on sustainability-related issues.

Governance and follow-up of sustainability work

Alongside the company’s budget process, we also develop business plans for each department and unit. These business plans include Setra’s process for management by objectives, where we formulate goals for the year based on Group-wide strategic objectives, identify success factors, develop indicators, create action plans and monitor the status of the goals. The operational plans are decided by the Executive Management and the CEO and made available by presentations, in forums, meetings and documentation in our management system. More information on Setra’s sustainability goals can be found in the section on Sustainability goals and follow-up. Responsibility for overarching risk management is delegated from the CEO to the SVP Enterprise Risk Management. The sustainability risks are reviewed at least once a

of work on Setra’s priority sustainability issues. Our strategic objectives are:

• Good health and high safety – zero vision for workplace accidents and an interim target for 2025 to significantly reduce serious accidents. To have a 95 percent healthy attendance rate among employees.

• Climate-neutral operations by 2030 – on our way to fossil-free production

• Increase the level of processing and value added to our products

• Attractive employer that sustainably develops internal expertise

Certified management systems

year with the SVP Enterprise Risk Management and other members of the Executive Management team. All this work is followed up on an ongoing basis as part of reporting on strategy work, goals and projects, audits of all Setra’s management systems and follow-ups with the Executive Management. Annual reporting and follow-up of the sustainability work is carried out for the Board in connection with the CEO’s strategy review. Both the CEO and the Board are also responsible for reviewing and approving the annual sustainability report.

Sustainability strategy

We have set four strategic objectives based on our overall goal of being a leading wood industry company with a clear sustainability profile, and on our standpoint in our sustainability policy. These set out the direction

All Swedish operations are environmentally certified according to ISO 14001. In addition, the operations in Långshyttan are certified according to ISO 9001. Setra’s management system also includes the management of OHSAS and fire safety, and it is checked regularly through internal audits and insurance inspections. These elements have not been externally certified. Setra’s sawmills and processing units are certified in accordance with FSC ® and PEFC Chain of Custody standards and the FSC standard for Controlled Wood. The certification demonstrates that the company has a system in place for tracking the raw wood material and ensuring that it originates from a responsibly managed forest. The Pyrocell factory, which Setra co-owns with Preem, is sustainability certified in line with the International Sustainability & Carbon Certification system (ISCC).

Audits

We take a systematic approach to work environment management, safety and fire protection internally at Setra. Internal audits of health and safety, environment, quality,

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors

............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13 Our portfolio 14 Climate-smart raw material 18

fire, FSC/PEFC and ISCC are carried out each year. External audits are conducted covering the environment, quality, FSC/ PEFC and ISCC. Our internal and external audits ensure that we operate in accordance with our certifications and certified management systems and the requirements they set. The aim is to constantly improve sustainability performance at work.

All units in Sweden have been internally audited during the year. Furthermore, external environmental audits have been carried out in Heby, Kastet, Hasselfors and Långshyttan, along with an external quality audit in Långshyttan, and an external audit of FSC/PEFC in Kastet, Hasselfors and head office in Solna. The auditors report that Setra meets the requirements of the standard and that it conducts forward-looking work, where environmental issues form a natural and integrated part of the company’s overall sustainability work. This year’s external environmental audit resulted in 14 minor non-compliances and six improvement measures. All these non-compliances have now been addressed, reported and resolved. This year’s FSC and PEFC audits resulted in only one minor non-compliance that is planned to be resolved in the first quarter of 2024. As a whole, the assessment of the external auditors is that Setra’s improvement work is in line with the requirements.

Permits and legal requirements

All Setra’s production units are obliged to hold permits or to submit reports under the Environmental Code. The principal sources of environmental impact from our production are energy utilisation and noise. No non-compliances or penalties related to the environmental permits were reported in 2023. Setra complies with and monitors

legislation using a monitoring service on the environment and health and safety, in line with the ISO management system and its requirements. Compliance is constantly monitored, with a broader check at least once a year. Additionally, the respective unit/department monitors legislation and rules in its own area and ensures that requirements set in contracts or made by customers are fulfilled. No breaches of legislation, rules or other incidents occurred in 2023.

Several of Setra’s production units have previously worked with wood impregnation and/or used various wood preservatives that may have resulted in soil pollution. Some other processes and activities may also have contributed to pollution. In addition, there are around 15 identified sites where the Group has had operations in the past. The environmental authorities have requested an investigation and, in certain cases, subsequent remediation measures at some of these sites. With other requirements possible going forward, Setra has set aside funds to cover any future remediation measures.

Sustainability requirements for suppliers

Setra’s Code of Conduct for Suppliers is based on the UN Global Compact’s principles for responsible business conduct, the ILO’s core conventions and the UN’s conventions. The Code of Conduct also reflects Setra’s sustainability policy – we want our suppliers to follow what we are committed to in our policy. The Code of Conduct covers all suppliers – suppliers of goods and services and Setra’s other partners, in Sweden and internationally.

The Code of Conduct is part of all new supplier contracts. We also conduct a

dialogue with existing suppliers and require that they operate in line with the code. To identify suppliers who are a high risk in terms of ecological, social or economic sustainability, we carry out an annual risk assessment of all suppliers with an annual purchase value of at least SEK 2 million. The risk analysis is based on country, sector, product category, specific social, ethical and environmental risks, certifications and supplier category. New suppliers are subject to sustainability assessments if the risk analysis indicates that the business or product is a high risk. Just over 10 percent of suppliers procured in 2023 underwent environmental assessment at the procurement stage.

In our largest and most important purchasing categories, timber and transport, as well as in certain other categories where high risks have been identified, there is a continuous focus on setting and monitoring requirements and on dialogue for closer co -

operation. See also the sections on Climatesmart raw material (page 20) and Sustainable transport (page 33). As of 2020, Setra only buys wood raw material from suppliers certified according to FSC ® or PEFC.

Risk management and sustainability risks

Setra has an Enterprise Risk Management (ERM) process in place to prevent and manage risks identified within the business and its stakeholders. Read more about this in Setra’s annual report, page 54. Responsibility for risk management ultimately lies with the company’s SVP Enterprise Risk Management, who is a member of the Executive Management. A summary of the company’s risks related to sustainability is presented on pages 45–46. These are primarily operational risks within a timeframe of 1–3 years. Financial risks and market risks are dealt with in the overarching company risk process, but are not reported here.

Introduction 2

Setra’s sustainability work 6

We create green value 7

Sustainability risks

Setra’s work on sustainability risks involves identifying, managing and following up on risk mitigation measures. The risks are evaluated every year.

The greatest potential risks are shown below based on a major risk assessment exercise.

■ Potentially high risk

Risk category

■ Medium risk

■ Low risk

Description of risk Risk management

Fire We operate in an industry with a risk of fire, but we conduct internal systematic fire safety work that is audited and reviewed every year as part of our routines.

OHSAS health risks

Accidents at work are also a health risk for our employees in production and processing, see Workplace accidents. Other minor health risks include noise, dust, chemicals and allergens. The organisational and social work environment (OSWE) also affects the wellbeing of our employees.

Setra conducts preventive and systematic fire safety work, which includes:

• Risk management instructions available in our shared document management system. The instructions are constantly reviewed by the Risk Manager.

• General risk management instructions with continuous follow-up and updating.

• Annual risk and insurance inspections by unit, including risk reduction action plans with follow-up.

• Reporting risk observations and near misses with an emphasis on fire.

• Fire safety installations to limit fire spread and damage, e.g. alarms and fire extinguishers and sprinklers.

• Instructions in emergency, evacuation and response planning at unit level.

• Regular training in flammable goods, hot work, fire risks, etc.

• Annual internal audits.

• For physical health and safety risks, see Workplace accidents.

• Setra runs the Employee Pulse survey, where every two months we measure the status of issues regarding the organisational and social work environment (Clarity, Efficiency, Inclusion, Value, Balance, Respect) in the organisation. The annual employee appraisal is another forum where social work environment issues are discussed. In order to manage any related ill health, the company has a solid partnership with Ljung & Sjöberg, who are experts in concealed mental illness. All employees are encouraged to call them, anonymously if they wish, if they feel worried about themselves, a colleague or someone in their circle. In addition to the services of Ljung & Sjöberg, Setra also offers occupational healthcare to all employees.

• Our production premises are noisy and in principle hearing protection is always required. All employees who spend time in noisy environments undergo hearing tests every three years. Wood dust is present in our operations and if it is suspected that the levels are too high, measurements and mitigating measures are taken. The same applies to allergens. Chemicals are managed via the purchasing process and are risk-assessed via our chemicals management system.

• Internal systematic health and safety with internal audits.

Changed/uncertain business climate

Geopolitical tensions, more and growing conflicts, polarisation, political instability, etc.

Workplace accidents

We work in an industry where there

Conflicts, polarisation and external security threats mean that we need to rethink our short and medium-term strategies and objectives and prioritise investments. Here Setra works with risk management, identifying and handling risks and opportunities in specific areas, with different stakeholder perspectives and with different timeframes. In the event of rapid changes, we switch to more short-term strategies to survive challenges without losing sight of the long-term strategies and goals.

War, conflicts and sanctions affect our ability to do business with customers and suppliers in different parts of the world and can also affect our transport flows. Other risks are reduced volumes of raw materials and inputs. A declining global economy brings a risk of lower sales and slowing down the green transition due to a weaker global economic situation.

Setra works systematically on OHSAS issues internally, with a strong emphasis on safety, and applies a documented OHSAS management system. Work and measures to ensure a safe working environment include:

• Review of accident status at briefings, presentation of LTAs (Lost Time Accidents), including actions and improvements, at management team meetings.

• Risk, accident and near miss reporting in SIA, plus root cause reporting of accidents, which from 2023 includes analysis of behaviour-based causes.

SIA is the industry’s joint system for reporting health and safety non-compliances. Safety briefings and increased communication.

• Safety committee meetings and safety inspections in production and processing units.

• Working on machine safety, risk assessment and CE marking.

• Perimeter protection such as barriers and safety guards.

• Training in OHSAS issues for all managers and employees.

• Internal systematic health and safety with internal audits.

■ Potentially high risk

■ Medium risk

■ Low risk Introduction 2

Risk category Description of risk

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the UN SDGs 12

Our key sustainability issues 13

Bribery and corruption

This risk primarily applies in the context of relations with customers and suppliers.

Setra has relations all over the world, which makes this risk difficult to check and monitor.

Political decisions/directions and regulatory requirements/ frameworks, e.g.: EU forest strategy, new EU sustainability directive – CSRD/ESRS, proposed EU legislation on human rights – CSDDD, Green claims – EU directive on Sustainability communication, Land Sector and Removals Guidance, additions to the GHG Protocol, global responsibility for biodiversity, taxonomy, etc.

Quality shortfalls in responsible forestry

There is currently a major debate in the EU about how forestry should be conducted in individual countries, how sustainable forestry and other forestry concepts should be defined, what forests should be used for and the use of wood as an energy source. Risk that new policies and regulations will limit and complicate opportunities to use forest raw material to heat buildings and as biofuel for the transport sector. There is also some uncertainty regarding the new addition to the GHG Protocol, in terms of how land-intensive activities should report their greenhouse gas emissions. Lowering the reduction obligation will make the transition more difficult in the transport sector and several new reporting requirements at EU level will increase the scope of the company’s sustainability work.

Risk management

Setra takes a zero tolerance approach to bribery and corruption. The preventive work in this area includes:

• Guidelines for compliance with competition legislation, as well as regarding gifts, benefits and third-party hospitality.

• A control function on the signing of significant contracts.

• Training and dilemma exercises for staff who have working relationships with customers/suppliers.

• The Code of Conduct for Suppliers includes requirements to combat corruption.

• Whistleblowing function implemented for anonymous reporting – goes first to external resource.

• Ongoing and active dialogue with industry organisations, owners and suppliers.

• Monitoring EU and Swedish policies, directives, guidelines and regulations and adapting accordingly.

• Keeping track of agendas, research and knowledge development and lobbying with the industry to make the best use of wood raw material.

• Disseminating knowledge about wood and its sustainability and how it can make a major contribution to the green transition.

Natural disasters, impacts of climate change

The risk of non-compliance with legislation and certification requirements in forestry. Our operations are FSC® & PEFC-certified. Our management system for FSC/PEFC is reviewed annually by internal and external auditors. As of 2020, Setra only purchases wood raw material from suppliers who are FSC® or PEFC-certified. All the timber we purchase is traceable and fulfils our requirements for controlled wood. We maintain a continuous dialogue with owners and suppliers to safeguard the process. The purpose of the audit includes ensuring that Setra’s work with FSC®/PEFC is managed in accordance with the requirements, dealing with non-compliances and contributing to improvements. In the event of shortcomings or major non-compliances, they are handled in line with procedures and requirements, followed up and remedied.

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

Examples of activities are: • Cooperation with raw material suppliers to minimise the consequences of climate-related forest damage. • Planning and preparedness to deal with storm-felled timber, fire and insect damaged timber, e.g. through greater opportunities to water timber stock. • Taking account of location, flood risk and soil conditions when setting up new operations. • Investing in railway infrastructure to make it easier to handle and transport wood.

Setra works systematically to improve and safeguard its operations, supported by our ISO 14001-certified management system and nternal health and safety work. Examples of activities are: • Setting and following up environmental target procedures/instructions. • Internal and external audits with noncompliance management and improvement measures. • Monitoring legislation, reviewing and informing about changes and implementing new legislation.

Human rights breaches Setra’s operations are located in Sweden and the UK and we also have employees abroad involved in sales. 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. In 2023, the European Parliament also approved a proposed Corporate Sustainability Due Diligence Directive (CSDDD). This sets out rules integrating human rights and environmental impact in corporate governance.

In 2023, Setra produced Setra’s human rights declaration in which we explain our position and how we work on and tackle these issues. Setra has clear policies and guidelines on equality and non-discrimination, gender equality, recruitment and pay. Corresponding requirements are applied to suppliers through Setra’s Code of Conduct. Separate requirements on risk reporting apply in the UK where we also have operations. The Modern Slavery Act came into effect in 2015, requiring all companies with operations in the UK to report risks and risk management measures with regard to forced labour and trafficking in the supply chain. Examples of measures to protect human rights include:

• Requirements from FSC® and PEFC certification regarding reporting of conditions under human rights and labour law. Risk management is also conducted via our internal systematic work environment management.

• Supplier evaluation and requirements specified for suppliers

• Code of Conduct for Suppliers

• Dialogue with employees, supported e.g. by the Employee Pulse Surveys, employee appraisals, status updates and manager training in employment law.

• We monitor proposed EU law via industry associations to prepare for any new requirements and reporting rules.

GRI content index

The Setra Group has reported in accordance with the GRI Standards for the period 1 January–31 December 2023.

From 2023 onwards, we also include our operations in the UK and Pyrocell, which is a joint venture between Setra and Preem. We have also refined some of our underlying data used in climate work, as explained in more detail in the Climate report section and its appendix. Setra has had a new CEO since spring 2023.

on the principles of the

Introduction 2

Setra’s sustainability work 6

We create green value

GRI 301: Materials 2016

3-3 Management of material topics

301-1 Materials used by weight or volume

GRI 302: Energy 2016

3-3 Management of material topics

302-1 Energy consumption within the organisation

302-4 Reduction of energy consumption

26 Setra’s disclosures relate to wood raw material

At the moment, it is difficult to determine how much of the reduction in use comes from production volume and how much from efficiency improvements. It is hoped that this can be measured better in the future.

of material topics

404-3 Percentage of employees receiving regular performance and career development reviews

About the report

This publication constitutes the Setra Group’s consolidated Sustainability Report for the 2023 financial year. In the absence of any statement to the contrary, the Sustainability Report covers the entire Setra Group. To ensure transparent and relevant reporting of work on sustainability, Setra applies the GRI Standards 2021. We have also adapted the content of our Annual Report to the requirements of the Swedish Annual Accounts Act on sustainability reporting.

Data from the Swedish Environmental Protection Agency has been used for Sweden’s territorial emissions (45.3 million tonnes in 2022) to calculate the storage of carbon dioxide in Setra’s products corresponding to the proportion of Sweden’s greenhouse gas emissions, page 5.

Data on emissions from the construction and property sector (11.1 million tonnes in 2021) was obtained from Boverket (the Swedish National Board of Housing, Building and Planning).

Sveaskog’s provisions are reported according to data at Sveaskog.se. Mellanskog’s provisions are in line with the annual report and sustainability report ‘Verksamhetsberättelse och hållbarhetsarbete 2023’.

The calculation of how many Swedes’ greenhouse gas emissions the carbon sequestration equates to, page 36, uses data from the Swedish Environmental Protection Agency regarding consumptionbased greenhouse gas emissions (8.4 tonnes per person per year in 2021).

The calculation of how many apartments the supplied bioenergy equates to, page 16, uses statistics from the City of Stockholm’s environmental barometer regarding energy use for heating and hot water per square metre (129 kWh/ square metre in 2022) and Statistics Sweden’s figures for the most common apartment size (68 square metres, 1 bedroom).

The auditors’ statement on the statutory Sustainability Report is on page 101 of Setra’s Annual Report and Sustainability Report. The Sustainability Report has not been the subject of additional external audits. Setra also publishes an annual Climate report, which documents our emissions and the climate footprint of our products. The annual Climate report is drawn up based on the guidelines of the GHG Protocol and published in full at setragroup.com.

In 2023, Setra supported the children’s rights organisation Bris by means of donations to their national helpline.

Introduction 2

Setra’s sustainability work 6

We create green value 7

External factors ............................. 8

Setra’s value chain 10

Our sustainability goals 11

Our contribution to the

UN SDGs 12

Our key sustainability issues 13

Our portfolio 14

Climate-smart raw material 18

Resource-efficient business 22 Safety,

Contact details

Head Office

Setra Group AB

Box 3027

SE-169 03 Solna

Street address:

Råsundavägen 12

169 67 Solna, Sweden

Phone: +46 8 705 03 00

E-mail: info@setragroup.com

More contact details can be found at setragroup.com

Sales, Customer Service & Logistics

Wood Products

Setra Trävaror AB

Box 223

SE-801 04 Gävle

Street and delivery address

Setra Trävaror AB

Skolgången 13

SE-802 57 Gävle

Building Solutions and Components

Setra Långshyttan

Amungsvägen 17

SE-776 72 Långshyttan

Telesales and Customer Service

+46 8 705 03 00

Get in touch!

Contact details

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

Melanie Sjögren

Sustainability Manager

melanie.sjogren@setragroup.com

+46 8 705 03 15

Production units

Sawmills

Setra Färila

Snasbäcken

SE-827 63 Färila

Phone: +46 651 76 81 00

Setra Hasselfors

Edevägen

SE-695 85 Hasselfors

Phone: +46 585 485 00

Setra Heby

Claes Wikströms väg 3

SE-744 32 Heby

Phone: +46 224 368 00

Setra Kastet

Box 430

SE-801 05 Gävle

Phone: +46 26 54 80 00

Setra Malå

Storgatan 92

SE-939 32 Malå

Phone: +46 953 414 00

Setra Nyby

Nybyvägen 8

SE-743 63 Björklinge

Phone: +46 18 56 08 00

Setra Skinnskatteberg

Box 100

SE-739 22 Skinnskatteberg

Phone: +46 222 452 00

Processing units

Setra Långshyttan

Setra Glulam

Amungsvägen 17

SE-776 72 Långshyttan

Phone: +46 225 635 00

Setra Building Solutions and Components

Hagabergsvägen 3

SE-776 72 Långshyttan

Phone: +46 225 635 00

Setra Wood Products Ltd

Estuary Road

King’s Lynn

Norfolk PE30 2HJ, United Kingdom

Phone: +44 1553 760 071

Sales offices outside Sweden

UK

Setra Wood Products Ltd

11, St. Mary’s Court

North Bar Within Beverley, East Yorkshire

HU17 8DG, United Kingdom

Phone: +44 1482 870 035

Poland

Setra Polska Sp. z o.o.

ul. Bankowa 2

PL 84-242 Luzino

Poland

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

JP-Tokyo 105-0011

Phone: +81 3 5404 7560

China

Setra Wood (Guangzhou) Co

Room 2720, Teem Tower No 208 Tianhe Road, Tianhe District, CN-Guangzhou 510 620

Phone: +86 20 2830 6431

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

Production: Setra Group AB in partnership with LeadContent and Trossa. Photography: Morgan Ekner, Malin Grönborg, Tomas Hajek, Swedish Wood/Fredrik Hjerling, Ola Högberg, Jansin & Hammarling, Emil Nordin, Klas Sjöberg, White Arkitekter/Vasakronan.