Setra_Sustainability_Report_2024

Sustainability Report 2024

This is Setra

Setra is one of the largest wood industry companies in Sweden, with over a century of history. We process forest raw material from responsibly managed forests in the local area into climate-smart wood products for building and living in a global market. Our bioproducts, such as bark, chips and sawdust, are put to use in the paper and pulp industry and in the production of thermal energy and fuel.

Wood is not just the only renewable building material – it also absorbs carbon dioxide from the atmosphere as the trees grow and stores it as carbon throughout its lifetime. We work to ensure that as much of each log as possible becomes long-lived products – 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. Setra’s sawmills and processing units have a long industrial history and we are constantly developing. We

are increasing our delivery of renewable products through wise investments, not least in new technologies at our sawmills, which help to drive up capacity and efficiency so that we can convert more wood raw material into wood products faster, while improving safety and the work environment at the plants. Our vision – doing business that benefits more than just ourselves – 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 cut emissions. We employ 865 people and our core values – commitment, innovation and responsibility – define the culture at Setra.

Kastet/Pyrocell

Långshyttan Nyby

Hasselfors Heby Skinnskatteberg

Setra Wood Products (UK)

* Also includes processed goods. ** Setra and Preem each own 50% of Pyrocell. ● Sawmills

Pyrolysis factory, Bio-oil

– Pyrocell** 25,000 14

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 5.2 billion in 2024. Setra is owned by Sveaskog (50%) and Mellanskog (49.5%) and was formed in 2003 by merging the

and processing units of AssiDomän Timber and Mindab. This ownership structure applied until December 2024. On 12 December 2024, a letter of intent was issued regarding the sale of Sveaskog’s holding in Setra Group AB to Mellanskog.

Färila

Strategic investments

In recent years, Setra has invested around SEK 2 billion in modern technology and equipment at several of our production facilities.

2024 saw the inauguration of the highly efficient small-diameter log saw in Skinnskatteberg, which has the capacity to saw one log per second – an impressive three times faster than before. One of the world’s largest sawmill

Climate goals by 2040

intakes is being built in Malå, with an innovative concept that will increase capacity and contribute to optimised yields and higher productivity. We have also invested in our wood industry hub in Långshyttan, adding another CNC machine for cross-laminated timber (CLT) and continuing the construction of a pellet factory to make use of residual streams from Långshyttan’s production.

In 2024, we revised Setra’s climate goals to better harmonise with the industry’s Road to the Future, projecting as far as 2040. To align ourselves with the Swedish Forest Industries Federation’s Future Agenda, we have defined three focus areas for Setra’s climate work up to 2040.

Read more about this in Grönsamhet – green business for a sustainable future, page 7 and in the Climate report, page 35.

1.5 million m 3 wood products

This year’s production will lock in 1.2 million tonnes of carbon dioxide – for the entire lifetime of the wood products.

Read more in the Climate report on page 35

Challenging year but Setra is looking forward

A global economic downturn and weak construction activity, followed by high timber prices and squeezed margins, made 2024 a highly challenging year for the wood industry. Nevertheless, we are looking to the future by strengthening our competitiveness, entering growing markets and investing in our facilities to further contribute to the green transition.

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 compared with previous years. Our preventive safety work continues. As part of Setra’s belief in the importance of a strong, shared corporate culture, we provide courses in workplace health and safety and conduct Employee Pulse surveys to maintain a good dialogue between managers and employees.

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

Processed Sawn Bioproducts

Setra continues to forge ahead

Historically high timber prices, combined with a weak construction sector, made 2024 a challenging year for the Swedish wood industry. However, this has not prevented us from continuing to boost Setra’s competitiveness and contribution to the green transition.

The year featured political unrest, war and conflict in Europe and the Middle East, resulting in weak construction activity both globally and in our domestic market in Sweden. Selling prices have partially recovered during the year, but our margins have been squeezed by the rising prices of raw material. The limited availability of raw material has held back our production and constitutes a strong contributing factor to this year’s results. The supply of timber will continue to be a high priority for Setra. Forests are an asset and a renewable resource, and we feel it is important that we recognise the full value and potential of forests in the green transition, both nationally and internationally. This is where the industry and politicians need to join forces and help each other.

Investments and improvements for a stronger Setra

Despite the challenging conditions, we have continued our strategic investments in new technology. We are accelerating the green transition while strengthening our competitiveness in the global market – not least by adding a new saw line for small-diameter logs in Skinnskatteberg. This allows us to take even more wood raw material from the local area and convert it into building materials at a speed that is, in fact, three times faster than before. This also frees up capacity for larger dimensions at our other sawmills.

In Malå, too, a new and much more efficient saw line is being set up, which will increase the value added and utilise the excellent raw material in the local area. We look forward to starting production in 2025.

Over the past year, our wood industry hub in Långshyttan has gained another CNC machine to more than double our capacity for cross-laminated timber. From 2025, we will also start processing the residual streams from the hub’s production into industrial pellets.

In total, Setra has invested almost SEK 2 billion in recent years. All these improvements allow us to make better use of each log and increase the value added – in line with our long-term strategy and supporting both profitability and sustainability.

In 2024, we initiated an internal structured improvement and efficiency programme at Setra. The 100+ improvement programme aims to identify cost-saving measures across the organisation and put work processes and structures in place for implementation and follow-up. The programme will be launched in its entirety in Q1 2025 and is expected to improve Setra’s profitability by just over SEK 100 million once it has taken full effect.

Wood has a natural role in the future Setra’s operations have a natural role to play in a society based on renewable resources. As well as offering fossil-free and renewable alternatives, our wood products sequester

carbon dioxide throughout their lifetime.

Wood can also be recycled and reused, which will further contribute to the growing circular economy.

The wood products we sold in 2024 hold 1,211,200 tonnes of carbon dioxide1, which is equivalent to almost three percent of Sweden’s entire greenhouse gas emissions2 in one year – or as much as seven percent of the construction and real estate sector’s emissions 3 in Sweden in one year. The residual streams from our production replace fossil-intensive alternatives in packaging for example, and as energy and fuel.

With the right conditions, the Swedish forest industry has the power to bring about the green transition. The industry has agreed on a ‘Future Agenda’, with three pledges that you can read more about on the Swedish Forest Industries Federation website. In support of this Future Agenda, Setra has three climate goals of its own, as explained in the section on Grönsamhet.

Future outlook

There are strong indications that global demand for wood products will eventually pick up, although the slowdown in construction is likely to persist through 2025. In particular, we see greater potential in the US, China and Eastern Europe.

At the end of the year, the forest owners’ association Mellanskog announced its intention to acquire Sveaskog’s share in

Setra, making Mellanskog the sole principal shareholder. This change of ownership is planned to be executed in the first quarter of 2025 and does not entail any operational changes for the company. However, it is positive for Setra that we will have a clear majority owner with operations in central Sweden. This will give us the opportunity to continue developing with an owner, Mellanskog, that sees our business as a key pillar of its long-term strategy.

Marcus Westdahl, President and CEO

1 CO2 sequestered in sawn timber is estimated to average 800 kg/m3. Source: IVL, Swedish Wood.

2 Sweden’s greenhouse gas emissions (2023). Source: Swedish Environmental Protection Agency.

3 Emissions from the construction and real estate sector (2022). Source: Swedish National Board of Housing, Building and Planning (Boverket)

Grönsamhet – green business for a sustainable future

Our vision is to create long-term profitability and aid the global green transition by doing business where everyone prospers.

We call this Grönsamhet – green value. In line with our vision and overall goals, Setra’s sustainability work focuses on taking responsibility for our impact on people, society and the environment along the entire value chain.

Starting points for sustainability work

At Setra we work to promote sustainable development. We take account of economic, 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 the finished products reach the customers.

Setra’s sustainability strategy and sustainability work are rooted in our sustainability policy, which sets out our responsibility for both negative and positive impacts on the environment and people. It also addresses how we apply our core values, while ensuring that we do business where everyone prospers, that our communication is honest and transparent, that we comply with relevant laws and regulations, and that we actively work to achieve continuous improvements. The sustainability policy is communicated to employees via internal channels and externally to our stakeholders at meetings and presentations, and online.

Our key sustainability issues

Setra’s sustainability work focuses on the areas where we have the greatest influence and potential to make a difference. When conducting our materiality analysis, we balance our stakeholders’ values with the actual impacts, risks and opportunities of our operations, as well as external factors.

The key sustainability 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 renewable raw material and our transport. Read more about our 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°C and aim for no more than 1.5°C. As one of Sweden’s major industrial companies, we have a responsibility to reduce our climate impact and contribute to society’s transition in pursuit of these targets.

Setra’s overall commercial goal is to be a leading and profitable player in the wood industry, with a clear sustainability focus.

In line with the EU’s requirements for more comprehensive sustainability reporting and transparent sustainability communication, we are working actively to set realistic but still ambitious goals that contribute to the EU-wide roadmap – the Green Deal.

In line with our vision, commercial goal and applicable requirements and regulations, we revised Setra’s overarching climate goals during the year. This active work has involved close collaboration between Setra’s Executive Management and Board. The new

climate goals are based on and aligned with the Future Agenda of the Swedish Forest Industries Federation. This industry-wide agenda focuses on shaping a sustainable future through three key pledges on climate, circularity and biodiversity, with a time horizon of 2040. Based on these future pledges, Setra has defined three focus areas for climate

goals, with the same target year of 2040:

• Setra’s production will be fossil-free.

• Setra’s transport within Sweden will be fossil-free.

• Setra will increase its climate benefit through greater sales of wood products that bind carbon and substitute fossilintensive alternatives.

Read more about the Future Agenda here, and about our other sustainability goals on page 11

In addition to the overarching goals, our sustainability work is guided by the 2030 Agenda. Read more about this on page 12.

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

Visitor centre, Siljansnäs in Dalarna

External factors

As we enter 2025, we can look back on a year of tensions, marked by economic challenges, polarisation, extreme weather events amplified by climate change, and escalating wars. At the same time, global cooperation on many issues continues and the EU has entered a new five-year term, with a new Parliament and a new Commission focused on societal transformation.

Economic question marks

Global geopolitical uncertainties and faltering climate policies are affecting markets, including the wood products market. Despite political statements and scientific evidence in favour of increasing wood construction, there is a lack of strong supportive policies. High inflation and interest rates strongly affected investment and construction in the wood products sector in 2024, with demand in the Swedish market at its lowest in many years.

Looking at 2025, there is cautious optimism; falling interest rates and lower inflation should lead to a slight increase in construction activity. However, the current shortage of raw material and high timber prices are set to continue in 2025.

The European market is seeing cautiously positive development, but wood consumption in 2025 will still be low by historical standards. The US market, however, is developing more favourably due to significant demand for housing. If interest rate cuts continue, US residential construction is likely to recover in 2025. At the same time, there are uncertainties about the continuing weak economy and property crisis in Germany and China, as well as the policies of newly elected US President Donald Trump. Increased tariffs and the risk of trade wars could hamper the timber market globally. On the other hand, increasingly strong climate policies globally are helping to incentivise wood construction.

Stricter requirements and new directives

The new regulations set high standards for transparency and sustainability, which presents both challenges and opportunities for the forest industry’s development. For example, the Corporate Sustainability Reporting Directive (CSRD) requires detailed sustainability reporting according to EU standards (ESRS). Setra will be reporting according to CSRD for the financial year 2025 in the reporting year 2026. The EU Taxonomy is help -

Regulations and EU initiatives

The EU has stepped up efforts to advance the climate transition and enhance biodiversity, and aims to become climate neutral by 2050 through new regulations and initiatives,

ing to strengthen investment opportunities in sustainable businesses, while upcoming directives such as the Corporate Sustainability Due Diligence Directive (CSDD) are tightening the requirements for responsible supply chains.

Stricter rules on environmental claims are being introduced in the EU Green Claims Directive (GCD), which aims to combat greenwashing.

including the core European Green Deal. For the forest industry, this means an increased focus on sustainable use of natural resources, a circular economy and biodiversity.

Challenges in climate reporting

International climate goals and standards are continuously evolving, but uncertainties and delays remain. Setra prepares its climate report in line with the GHG protocol, and will be applying its upcoming Land Sector and Removals Guidance (LSRG). This guidance aims to standardise the reporting of emissions and carbon removals from land use, making it crucial for creating transparency and comparability in the forest industry. Another steering document is the Forest, Land and Agriculture Guidance (FLAG) from the Science Based Targets initiative (SBTi), which involves drawing up relevant climate goals for forestry. Both sets of guidelines have been delayed, creating uncertainty for companies with land-intensive value chains. Despite these challenges, we continue to apply existing standards while preparing for future requirements. Setra actively collaborates with industry players to develop solutions and ensure that reporting processes are of the highest standard.

Lumi office block in Uppsala. White Arkitekter.

Global environmental cooperation

On the international stage, global cooperation on the environment is developing. The UN Climate Change Conference COP29 in Baku in November 2024 saw negotiations on issues of climate finance and emission reductions, and since the Paris Agreement in 2015, global cooperation has reduced expected warming by the end of the century by one degree, which is a significant improvement.

Another key UN issue is biodiversity. The Conference of the Parties (COP16) in Cali did not result in a plan to boost funding for nature conservation, but an extraordinary meeting in Rome in February 2025 could be crucial in determining the impact of previous decisions to increase the level of ambition in nature conservation – in

particular, the goals to protect 30 percent of all land and marine areas by 2030, and to restore 30 percent of all degraded ecosystems.

In 2024, a third global environmental negotiation took place, aimed at establishing a new international agreement on plastic pollution. The background to this is that many plastics create problems for human health and biodiversity. Both the physical and chemical properties of plastics can cause damage, while the raw material is usually fossil fuels, which have a climate impact. However, there are good opportunities to produce plastics with a significantly lower environmental impact, not least based on renewable raw materials. Negotiations will continue in 2025.

Research and investments for the future

The EU and Sweden are investing in initiatives to transform the forest industry. There is, for example, a major focus on carbon capture and storage (CCS) as a means of achieving climate neutrality by 2050. Sweden has allocated SEK 203 million for the period 2025–2028

EU environmental policy in development

Global processes are reflected in EU policies. In 2024, European Parliament elections were held and Ursula von der Leyen’s mandate as President of the European Commission was renewed.

By 2050, the EU aims to be the world’s first climate-neutral region. The Commission’s policy focus up until 2029 is on sustainable prosperity and competitiveness, with a Clean Industrial Deal both contributing

to the climate transition and strengthening the economy. However, implementation of von der Leyen’s commitment to tightening the EU’s climate goals for 2040 has been postponed, suggesting a slower pace of future reform. Nevertheless, proposals are expected in several areas, such as boosting competitiveness, cutting red tape, an energy union, raw material supply, a circular economy and digital technologies.

EU initiatives for a more sustainable forest industry

In addition to the reporting requirements, the EU is working on initiatives for more sustainable forestry. RED III (Renewable Energy Directive III) sets guidelines for biomass, which affects bio-based products, while the Nature Restoration Law aims to restore ecosystems. Other regulations include the Deforestation Regulation, the Habitats

Directive and the Packaging and Packaging Waste Regulation (PPWR), which aim to reduce waste, strengthen traceability and protect biodiversity. This all poses challenges for Setra, as well as opportunities to enhance sustainability work through innovative solutions.

The Swedish climate action plan

The Swedish business community has shown strong commitment to the climate issue, as evident in UN negotiations within the framework of Fossil Free Sweden’s work and many individual initiatives. Numerous businesses are calling for a clear and widely supported climate transition policy.

to fund research into the circular bioeconomy, which will boost innovation in wood and biobased products. The EU Forest Monitoring Law, which is still under discussion, could improve reporting and management of the role of forests in climate action.

The Swedish government attaches great importance to the EU’s climate policy, but reported in summer 2024 that it does not go far enough to meet goals and requirements concerning emission reductions, renewable energy, land use and energy efficiency. Both the Climate Policy Council and the Fiscal Policy Council in Sweden strongly criticised

the EU climate policy, stating that the associated action plan fails to meet the requirements of the Swedish Climate Act. In October 2024, the Government appointed a climate steering committee that is expected to complete its work by spring 2026. A parliamentary committee has also been set up to review the climate goals and report on its work by 31 October 2025.

In summary, the political map – from global to national level – remains unclear. The outcomes of UN negotiations and EU processes in 2025 may determine whether the conditions for green industries will be favourable or unfavourable.

Sources: Land Sector and Removals: Workstream Update | GHG Protocol, Suspension of the Timber and Woodfiber Pathway, Skog och klimat – Skogsstyrelsen, Det var det viktigaste som hände i skogsindustrin 2024 – Skogsindustrin

Setra’s value chain

Our core business is processing wood and our value chain extends from the forest out into society, where our climate-smart wood products contribute to sustainable building. 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 raw material purchasing. In addition, Setra 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 climate footprint.

2. Purchasing

We purchase large quantities of wood raw material and transport services. Other major purchases include energy, materials, machinery, chemicals and services. Our Code of Conduct for Suppliers is an important tool for establishing trust and ensuring monitoring processes. 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, more reliable 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 and investments in renewable energy to resource efficiency, external environmental issues and adding greater value to our wood products and bioproducts.

5. Bioproducts/Resource efficiency

We use the whole log, nothing goes to waste. As much as possible becomes long-lasting wood products, while the rest is turned into residual streams – bioproducts for areas including 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 our customers to reduce their climate footprint by replacing fossil materials and energy with renewables. Wood also improves wellbeing. What is more, the products are circular, enabling recycling and reuse in the form of new products or bioenergy, for example. We thus contribute to society’s bioeconomy.

Sågade

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.

Resource-

Cost-effective and more

Hasselfors sawmill was opened up to trucks in weight class BK4, which means that the vehicles may weigh a maximum of 74 tonnes. More cargo on each truck means fewer journeys and a smaller climate footprint.

15% reduction in diesel consumption per m3 sawn timber in 2025, compared with 2010 (17.6 kWh/m3). 17.0 kWh/m3, up 1.8% on the previous year, but 3.4% down on 2010.

Energy efficiencies for wood drying kilns. Implementation of adaptive drying finalised. Analysing and monitoring that the implementation meets the project objectives.

Lower minimum diameter and higher timber yields for a greater proportion of long-lived forest products.

Increased net revenue from bioproducts Pellet production facility completed, ready for use in Q1 2025. We have an increased interest in using renewable fuels in the transport of bioproducts via our partners.

Climate report Climate goals 2040:

• Setra’s production will be fossil-free.

• Setra’s transport within Sweden will be fossil-free.

• Setra will increase its climate benefit through greater sales of wood products that bind carbon and substitute fossil-intensive alternatives.

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

Our transport (CO2 emissions) by at least 35% compared to base year 2015.

Safety, culture and colleagues

LTAFR (LTA frequency): zero vision, interim target 2027 <5, target 2024: <10. 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

Established new climate goals in line with the industry’s Future Agenda.

Monitor diesel consumption on a monthly basis and the action plan Climate goal – Fossil-free production.

Continued analysis and follow-up of results and four focus areas going forward:

• Standardised working practices

• Energy savings and capacity improvements

• Quality improvements

• Optimisation of boiler utilisation rate

Alternative modes of transport and fuels, reduce transport mileage and cut number of loads, and increase level of value added.

In 2025: action plan developed with interim targets for 2040.

Reduction of 25% (equivalent to -60,000 tonnes CO2e) since the base year 2015.

Transfer to rail in Bastuträsk instead of Gävle for all container transport from Malå. A sizeable flow to a customer, which previously used diesel, has been running entirely on HVO 100 since the autumn.

LTAFR (LTA frequency): 11.9 Safety index: 14.5

72/100

The decrease from 2023 to 2024 is around 1%. Setra will continue to work towards this goal through various activities and measures along the value chain.

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.

3 Employee Pulse surveys and 1 leadership survey are planned for 2025. After each Pulse survey, the team reviews the results and draws up an action plan to improve the situation.

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. Our ambition is always to work more towards 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 economic, social and environmental perspectives. To achieve the goals by 2030, everyone needs to contribute, including us as a wood industry 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 wood products, but our responsibility along the whole value chain and our role as an employer, business partner and local community actor also come 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. For example, working towards our own climate goals is a key element 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.

Our key sustainability issues

Setra’s sustainability work focuses on the areas where we have the greatest influence and can make the biggest difference. Our priorities present both opportunities and challenges. On the following pages, we report on how our work is progressing.

Our portfolio

Promoting the use of wood instead of fossil-based materials is our most vital contribution to the climate issue. 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 largescale construction that is still climate efficient. Bioproducts such as bark, wood chips and shavings from waste streams also play an important role in the climate transition, replacing fossil fuels and materials, as well as promoting sustainable and resource-efficient use of raw materials.

Renewable 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 our timber 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 raw timber, by which we mean the entire log that we buy. Over half 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 fossil-free energy and are aiming for completely fossil-free production by 2040. We work systematically to reduce energy consumption and create efficient and circular flows.

Safety, culture and colleagues

Our success as a company depends on our ability to ensure that our employees feel happy and healthy, enjoy personal development and avoid injury at work. With safety our top priority at all times, we strive to build a strong culture of safe behaviours, clear leadership and genuine commitment. At the same time, we constantly invest in modern technology to create a safe and sustainable work environment. Setra is a values-driven organisation where everyone is expected to contribute to our shared goals and our corporate culture.

Our 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. Our goal is to make domestic transport fossil-free by 2040. We choose rail transport whenever possible and contribute to the development of renewable fuels. Cutting emissions from the transport sector is a challenge that we share with both our customers and our suppliers, which is why many of our initiatives in this area are based on close cooperation with freight carriers.

Climate report

We work systematically to reduce our own emissions and collaborate all the way along the value chain 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. It covers our entire climate footprint in the value chain – from planting forest seedlings until the goods reach the customer.

Progress with Grönsamhet

We want to do business where everyone prospers – this green value is what we at Setra call Grönsamhet. The activities and measures that drive us 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.

Lumi office block in Uppsala. White Arkitekter.

Hybrid frame gives Enköping Town Hall a very low climate footprint

Setra and Heidelberg Materials Precast Contiga have jointly developed a hybrid frame that combines CLT, glulam, concrete and steel for climate-smart building. Enköping’s new town hall is the first project to use this construction solution and will be completed in 2025. The design meets high expectations in terms of both reduced CO2 emissions and innovative architectural solutions.

“Demands for lower emissions are increasing, especially in urban development, and hybrid frames are a popular choice. The partnership with Setra is therefore hugely important to us as joint pioneers in sustainable building.”

Jörgen Sigurdsson, Sales Manager at Heidelberg Materials

Precast Contiga.

Read more about the Enköping Town Hall project

Enköping Town Hall. C.F. Møller Architects

Our opportunities and challenges

Wood is a renewable raw material. Throughout its life cycle, it stores carbon dioxide in the form of carbon. By manufacturing building materials and products for the wood industry, we are playing our part in reducing the climate impact of the construction industry.

The growing interest in building with wood is creating long-term growth opportunities both in Sweden and around the world. Innovations and new technologies are allowing us to boost 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 multiple sectors. Our greatest challenge is to continue delivering even more resource-efficient products with a smaller climate footprint, throughout our value chain. Our building solutions in CLT and glulam 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 core 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, a valuable part of our dialogue with stakeholders, are used to improve our offering.

How we work

A sustainable range that is evolving

Setra aims to be a reliable and available partner that listens carefully to customer needs and market developments. We aim for our expertise and working methods to make it easy to be a Setra customer. We endeavour to maximise the proportion of each log that becomes long-lived wood products, and work strategically to increase the degree of value added in all product areas.

Sawn and planed wood products

Setra’s sales are dominated by wood products in pine and spruce. These 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 wood products, but the majority is exported, mainly to the US, Europe, North Africa and Asia.

Processed wood products

Processed wood products are a growing part of Setra’s product portfolio. At full capacity, we can process around 650,000 cubic metres of our total production of sawn wood products. Our main products

Our business concept

We manufacture and sell highquality sawn and processed wood products, offering high-precision deliveries in a global market.

ONE RENEWABLE RAW MATERIAL – MANY PRODUCTS

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

Branches and tops become renewable bioenerg y in power and heating plants Bark and sawdust from Setra’s facilities 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 sawlogs which we at Setra use to make construction materials, including timber frames.

include construction timber and decking, 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 market’s requirements. The wood is planed in Hasselfors and sold in Europe, the US, Japan 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 timber frames and have a wide network of partners for planning and design services.

Setra’s CLT, glulam and components are manufactured at our wood industry hub in Långshyttan. The main markets for construction solutions in CLT and glulam are Sweden and Norway. Setra’s glulam is

Key construction projects during the year

Electrolux: Headquarters and apartments with timber frames.

Enköping Town Hall: New municipal centre built with a hybrid frame.

Månstenen Preschool: Built in Norrköping with a timber frame.

Väktaren: Renovation and upward extension of an office building in central Stockholm with a focus on reuse.

Tunagården: Retirement home with wooden upward extension, awarded LEED Gold and Noll CO2 certification.

Greenhouse: Wooden apartment block in Linköping.

1,302 GWh

The amount of bioenergy supplied by Setra in 2024. This is sufficient to heat approx. 155,000* apartments.

*Source: Boverket – housing stock and housing conditions.

How our wood products contribute to the substitution effect

Setra’s wood products benefit the climate in two ways: by storing carbon in the products we supply and by our wood products replacing the use of fossil materials (substitution effect). When used globally for construction, paper packaging, heat production and renewable energy, our wood and bioproducts help to reduce fossil emissions and generate a positive climate impact.

• 1 m3 sawn wood products stores 800 kg of carbon dioxide.

• Setra’s contribution to the net increase in carbon storage in society is 240 kg CO2e per m3 sawn timber or a full 360,000 tonnes of CO2e in 2024.

• Setra’s potential substitution effect in society is 960 kg CO2e (~1 tonne) per m3 of sawn timber or as much as 1.4 million tonnes CO2e in 2024.

Electrolux headquarters and new apartments.

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, where we also have a distribution warehouse for processed construction products.

Bioproducts

We make use of the entire log, including the bark, chips and sawdust. These by-products are converted into bioproducts such as cellulose chips for the pulp and paper industry, and pellets and biofuels for cogeneration plants.

Forest-based biofuels are a renewable energy source that can replace fossil fuels in heat and electricity production, and constitute an important part of Sweden’s energy supply. For example, sawdust from

CSI 89 out of 100

Setra helps to heat hundreds of thousands of Swedish homes. Our biofuels have a sustainability certificate from the Swedish Energy Agency, which means they are classed as sustainable.

Setra is also a member of the Swedish Bioenergy Association (Svebio).

Bio-oil for renewable fuel

Our bioproducts help reduce dependence on fossil fuels in the transport sector. In a unique value chain from forest to fuel tank, bio-oil (pyrolysis oil) is produced from sawdust at Setra’s sawmill in Gävle.

Pyrocell, a company jointly owned by Setra and Preem, produces around 25,000 tonnes of renewable oil per year, enough to fuel as many as 15,000 cars. This bio-oil replaces fossil oil in Preem’s petrol and diesel production, reducing greenhouse gas emissions by over 95 percent compared to fossil alternatives.

In 2023, Pyrocell’s oil gained sustainability certification under the International

A Customer Satisfaction Index survey was conducted in 2024 in the sawn and planed timber customer group. Overall, we received very positive feedback. Service and delivery reliability are areas where our customers give us a very high rating, putting us in a positive position compared to our competitors.

However, in 2024, our customers noticed the problems relating to the shortage of wood raw material, which has led to a slightly lower rating for our delivery capacity compared to the 2023 survey.

The results of the survey are part of Setra’s ongoing development work.

How the surveys were conducted:

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

Sustainability & Carbon Certification (ISCC) system, so it can now also be offered to customers outside Sweden.

Product development

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

During the year, we installed a new industrial pellet plant in Långshyttan, which is expected to be operational in early 2025. 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.

Next stage for industrial wood construction

During the year, Hasselfors obtained a JAS certificate, which enabled us to begin selling CLS products on the Japanese market. In the UK, a partnership with a customer has been initiated for the sale and distribution of the TR26 product on the UK market. The aim of this is to strengthen our construction product offering in selected markets.

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.

In the first quarter of 2024, another CNC machine was added to Setra’s CLT line in Långshyttan. This machine gives the plant a total production capacity of 90,000 cubic metres CLT, making Setra a major player in wood construction in Sweden.

Lumi office block in Uppsala. White Arkitekter.

Dual species increase timber extraction

With the availability of timber falling in recent years, we need a more resilient supply close to each sawmill. Therefore, in 2024 Setra started to accept both spruce and pine at the sawmills in Hasselfors and Färila.

“We previously only handled one species of tree per mill, which meant we needed to source raw material from a wider geographical area. By accepting dual species, we can make better use of local forests, reduce transport distances and convert more of the timber into long-lived wood products, which promotes a more resource-efficient and sustainable forest industry.”

Victor Asmoarp, Raw Material Coordinator

Our opportunities and challenges

The forest is where our business begins. We need to be confident that our wood products come from sustainably managed forests where ecological, economic and social values are developed in a balanced manner. While Setra doesn’t own any of its own forest, we share responsibility with the timber suppliers when it comes to meeting the requirements set out in national legislation and certification schemes.

Forest raw material has a key role to play in the transition to a fossil-free, circular and sustainable society. The forest not only provide us with a renewable raw material, but also captures and stores carbon from the atmosphere and supports robust ecosystems. However, forests are being affected by climate change, putting them at increased risk of damage, for example. This may have consequences for us too and we are actively working to address these challenges.

Governance

According to our sustainability policy and raw material policy, the timber we use must come from certified and responsibly managed forests. All the sawlogs we buy are thus certified and/or controlled. As of 2019, all our timber suppliers are FSC ® and/or PEFC certified. Setra’s sawmills and processing units hold FSC and PEFC Chain of Custody certification, including FSC Controlled Wood and PEFC Controlled Sources. The latter two standards apply to controlled wood. Our raw material policy and Chain of Custody certifications ensure that we comply with the EU Timber Regulation. From 2025/2026, the EU Timber Regulation will be replaced

by a new Deforestation Regulation. Setra will then be subject to the new regulation and the requirements that it places on us and the wood products we sell on the European market. FSC, PEFC and the Swedish Forest Industries Federation are monitoring the transition and Setra is working with the industry to prepare for implementation of the new requirements in 2025.

How we work

Swedish raw material

Setra mainly buys Swedish wood raw material, with the exception of small volumes (<1 percent) from Norway and Finland. The value chain is therefore rooted in Swedish forestry, where the forest is seen as an asset and 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.

In 2023, around 27 percent of Swedish forest land was excluded from forestry activities (Source: Statistics Sweden). This is divided into four categories: formally protected forest land (9.2 percent), unproductive forest land outside formal protection (10.9 percent), consideration patches (1.9 percent) and voluntary set-asides (4.8 percent). Two thirds of the formally protected forest is productive forest land. The forest land protected under the Forestry Act tends to have very low productive capacity, making it vulnerable to impacts and in need of protection.

Raw material purchasing

Setra buys pine and spruce from around 30 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 worthy of conservation.

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

3.0 million m3

That is how much timber Setra processed in 2024. Our raw material is sourced within a radius of just over 100 km from the sawmills.

Like many other forest owners, Setra’s suppliers voluntarily set aside areas of productive forest land to preserve natural assets, heritage environments or social values – even where not required to do so by law. Forest owners who are FSC or PEFC certified are required to set aside at least 5 percent of their land area for nature conservation purposes.

Carbon sequestration

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 (source: FSC). 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. Over 60 percent of Sweden’s forest land is PEFC certified. 5 percent of the land is set aside for nature conservation purposes.

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

The forest has a crucial role to play in the climate transition. As forests grow, they absorb carbon 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. We consider wood to be a renewable and climate-smart raw material, as wood products continue to store the absorbed carbon throughout their lifetime. The greatest climate benefit is achieved through 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 long-term productive capacity. This allows the carbon storage effect to continue expanding, while forestry can continue to deliver sustainable products and homegrown bioenergy.

Traceability system

Setra buys in all its timber, with the price including harvesting and delivery. The timber is usually sourced within a radius of just over 100 km from the sawmills, ensuring more climate-efficient transport in our timber logistics. In 2024, Setra purchased 3.0 million cubic metres of wood in total, of which 52 percent was pine and 48 percent spruce.

One of the most important requirements is that the timber can be traced back to the harvesting site. Traceability is becoming increasingly important as new regulations (such as the Deforestation Regulation, EUDR) are implemented. Given the coordinates, we can check that the wood does not originate from a conservation area. Our suppliers are certified and ensure that the timber is traceable and fulfils all the requirements in Setra’s raw material policy, which also complies with the FSC standard for Controlled Wood.

As part of the certification process, suppliers also undergo inspections of their operations by third-party auditors, including checks against the criteria for FSC Controlled Wood to confirm compliance with Setra’s raw material policy. If Setra buys timber from an uncertified supplier, we conduct our own due diligence review with reference to the raw material policy and certification requirements.

Supplier collaborations

High raw material quality and reliable deliveries are vital for Setra. Our largest suppliers are Sveaskog and Mellanskog, which were also our two principal shareholders until December 2024. On 12 December 2024 it was announced that the forest owners’ association Mellanskog had signed a letter of intent to acquire Sveaskog’s entire stake in Setra, which now makes Mellanskog the sole principal shareholder. The plan is for the change of ownership to be implemented in the first quarter of 2025. Sveaskog will continue to be an important timber supplier for Setra in the future.

In 2024, Setra carried out two projects in collaboration with RISE Research Institutes of Sweden, with the aim of quality assuring

the sawmills’ sorting of pine and spruce logs, and identifying defects. Enabling more sawmills to take a wider variety of woods will cut the average transport distance from the harvesting sites. The project produced good, stable sorting results, which we hope one of our machine suppliers will use to design a cheaper measurement system in combination with 3D log measurement. Setra also ran its own project to develop a specification for using this technology in Skinnskatteberg, where we will be handling both pine and spruce, but we have chosen to do the sorting with our existing X-ray scanner instead.

Biodiversity

Biodiversity and climate change have been in the spotlight in recent years, both in Sweden and internationally. Although Setra neither owns or manages any 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 owner (see information on the change of ownership in the above text on page 20 and the CEO’s comments on page 5) and our main timber suppliers share an ambition to be at the forefront of the EU biodiversity strategy. Together, 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, while Mellanskog’s members have voluntarily set aside 57,0002 hectares.

In 2025, we look forward to further exploring sustainable forestry and biodiversity together with our owner Mellanskog. Setra

will also implement a more in-depth e-learning course internally on forestry, FSC and PEFC certification and how Setra’s certification initiatives work and are applied.

The impact of climate change

Forests are expected to grow faster in a warmer climate, while at the same time being subject to a greater risk of damage from storms, insect and fungal attack, drought and fires. Setra has long experience of handling damaged timber – a capability and community support service that is becoming increasingly important as extreme weather events become more common. To make it easier to distribute raw material between Setra’s production units, we are investing in rail infrastructure that will make it possible to handle timber felled in storms or fires in a more efficient and climate-smart way. Natural disasters often require large volumes to be dealt with over a long period. 2024 was a year free of any widespread natural disasters, but we have continued to process the forest felled by Storm Hans in 2023, which affected the area around Malå.

In recent years, the entire forestry industry has suffered a shortage of raw materials, especially timber. Drought and widespread spruce bark beetle attacks in the late 2010s have led to a slowdown in growth rates. At the same time, many landowners have harvested large volumes of forest and are now holding back to preserve the old forest they have left. In 2024, Setra took several measures to maximise timber extraction from each harvest. The minimum diameter for timber has been reduced by around one centimetre for both spruce and pine, increasing the proportion of usable forest. A length programme has been introduced to increase the variation of log lengths, which

Certified products

Proportion of FSC- or PEFC-certi ed products of the total sold volume per product category

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

means that Setra can now extract 3–4 percent more timber from the same harvested volume. In addition, the sawmills in Hasselfors and Färila have started to take in both spruce and pine, instead of only handling one type of tree, which makes more efficient use of the forest in the immediate area and reduces the transport distances from forest to sawmill. Taken together, these changes ensure that a greater proportion of timber is being converted into long-lived wood products.

¹ Source: Sveaskog

2 Source: Mellanskog.

Resource-efficient business

We

Small changes for big gains

In 2024, we have seen many initiatives and collaborations between our sawmills that have increased log yield. Nyby and Hasselfors sawmills have each increased their volume yield by more than 1 percentage point during the year. Small changes have also had a major impact on sustainability and profitability – an important element in what we call Grönsamhet. Optimising the log as much as possible to increase yield enables us to increase the value of the forest raw material and the number of areas of use to which wood can be put. On an annual basis, a 0.1 percent adjustment to the saw process adds up to improved profitability worth millions of kronor.

Many of these improvement initiatives have also improved the quality of our wood products, which we are delighted to deliver to our customers in the processing chain.

Jonas Gustavsson, EVP Production.

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. It is also important that our production is able to adapt in times of irregular access to raw materials.

Wood processing is a relatively energyefficient 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 fossil-free 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 to produce heat for our own operations. One challenge going forward is to replace the fossil fuel currently used for 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 greatest opportunity to bring about change.

Setra’s new climate goals, adopted in 2024, state that we will replace the very last fossil energy in our production with renewable alternatives by 2040 at the latest. Our domestic transport will also be entirely fossil-free by the same date.

Governance

Setra applies systematic environmental management involving procedures and continuous monitoring and is certified under ISO 14001. 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 are therefore monitored at both Group and local level. The fundamental principles of our sustainability work 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 2024 the saw yield was 50.4 percent, an improvement of 0.3 percentage points compared with the previous year and 0.7 percentage points since 2022. This is despite the average log diameter being somewhat lower than in previous years. We have carried out a number of effective measures in recent years and are drawing up individual action plans for each production unit. A new saw line for small-diameter logs was taken into operation in Skinnskatteberg in 2024, freeing up capacity for larger logs at other sawmills and enabling higher yield and higher productivity overall.

In processing too, we strive to achieve as high a yield as possible. In 2024, we reduced the trimming allowance of sawn goods

that are processed into CLT and made it possible to use shorter wood in production.

Setra’s CLT panels are produced in flexible widths to minimise waste and in component manufacturing, offcut sections are used to make construction joists.

Bark, wood chips and sawdust – what we call our residual streams – are transformed into bioproducts. In 2024, a factory was completed which will produce industrial pellets from all residual streams at Långshyttan from 2025 onwards. This will increase the value of the bioproducts while also improving transport efficiency.

Pyrocell’s facility outside Gävle produces pyrolysis oil from sawdust from our neighbouring Kastet sawmill. This is a resource-efficient value chain with a unique integrated solution, where the aim is to convert all sawdust from the sawmill.

The renewable pyrolysis 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 615 GWh. Thermal energy accounted for 77 percent, electrical energy 18 percent, and fuel consumption 4.5 percent. Drying, heating and fuel consumption are the most energy-intensive elements in our production. Electricity consumption per cubic metre of sawn timber has risen by 5.3 percent in the past five years. Fuel consumption has also increased by 8.2 percent, see diagram. This trend is partly due to lower production volumes and the fact that 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. This year, energy consumption was surveyed at Kastet and Nyby. Thanks to many small actions, our energy consumption has fallen in these units. Nevertheless, lower production volumes of sawn wood products and increased further processing have resulted in total consumption at Setra per manufactured cubic metre increasing slightly over time.

We are constantly working to minimise disruption and increase productivity.

During the year we implemented a new maintenance system and new standardised maintenance procedures that will help us to prevent future disruption. We have already noted positive effects, including more maintenance work being completed than before. 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. In early 2024, another CNC machine was commissioned in Långshyttan, allowing us to make more resource-efficient use of the whole production line.

In Skinnskatteberg, production began on a new saw line for small-diameter logs, improving productivity both locally and at other neighbouring sawmills. Another technology upgrade is in progress in Malå,

Green

electricity

metre of sawn wood has increased, largely because we are further processing an increasing propor tion of our products, for example at the planing mill in Hasselfors and the CLT factory in Långshyttan. The increases in 2023 and 2024 are also due to lower production volumes.

timber (including sawn raw material for processing) has increased since the previous year, due to reduced production. In 2024, we only used diesel subject to the reduction obligation. The lowering of the reduction obligation in 2024 increases our propor tion of fossil fuels In the longer term, Setra’s aim is to gradually move to renewable fuel or electricity across the whole of production.

Examples of measures

To increase saw yield:

• Camera sorting of sawn wood products

• More effective timber management with GPS Timber software

To reduce energy consumption:

• A new adaptive control system that dries the wood based on its moisture content

• Electric power replacing systems powered by hydraulic oil

• New, more efficient compressors

• Leak detection inspections reducing compressed air leakage

• Installation of heat recovery systems

with a new saw line, log intake, sorting and drying kiln. Significant investments have also been made in King’s Lynn in the UK, where the productivity of packaging stackers has increased by 49 percent compared with the previous year. During the year, we have seen excellent effects from working systematically to increase the calorific value of the bio-oil product at the Pyrocell factory in Gävle, with increased productivity and energy yield compared with our targets set for the year.

More efficient drying

Setra’s drying kilns account for more than 50 percent of the company’s electricity consumption and 90 percent of heat consumption. Improving the efficiency of the drying process has long been a priority. During the year, the installation of a new control system was completed, which simplifies cooperation between the units and enables adaptive drying, where the drying programmes are adapted to the moisture content of the wood. The system has reduced the energy consumption of the kilns by 2.2 percent, which is in line with expectations, while also considerably increasing kiln capacity and improving quality. Work in Setra’s strategic drying forum continues, focusing on optimising the new system and further improving the quality of wood products.

Fossil-free electricity and heating

95 percent of the energy we consume in our plants is fossil-free and 77 percent is renewable. Our own heat 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 already owned and operated boilers at our sawmills in Färila, Heby, Nyby and Långshyttan, and as of 2024 we also do so at Skinnskatteberg and Hasselfors. In addition, Nyby and Skinnskatteberg sawmills produce district heating for neighbouring communities. 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 fossil-free. Setra has had a solar farm in King’s Lynn in the UK for the past two years. In 2024, it produced 211 MWh of solar energy which was used internally. We have also conducted pilot studies on the possibility of installing solar panels at more production sites, but have chosen to put these investments on hold due to the prevailing economic situation and other priorities.

We are constantly evaluating opportunities to replace the fossil oil used in our boilers with a renewable alternative. Technical and economic challenges have been identified and we plan to gradually transition to meet the climate goals for 2040.

Internal transport

Internal transport accounts for a large proportion of the emissions from our operations. Setra has previously invested in switching to renewable diesel, HVO 100, at some of our production units. In 2023, we investigated the opportunity of switching entirely to HVO 100 for our vehicle fleet for internal transport. However, the higher price

of HVO resulted in Setra using conventional diesel in 2024.

We have also explored opportunities to electrify our fleet. This may not be feasible for a few years, as the technology is not yet fully developed. Until then, we are monitoring progress and equipping our plants to be ready for future electrification.

Setra adopted new climate goals in 2024 and we are now working towards completely fossil-free production and fossil-free domestic transport by 2040. A roadmap with milestones for achieving the 2040 goals will be drawn up in 2025 in close dialogue with

Material recycling

Setra’s Board of Directors. We continue to pursue our environmental goal to improve the energy efficiency of internal transport, namely reducing diesel consumption by 15 percent by 2025 compared to the base year of 2010, calculated per cubic metre of sawn timber. The base year value was 17.6 kWh and the reduction achieved by 2024 is 3.4 percent (see diagram on page 24). We are working on several levels to improve transport efficiency. For example, all units have started using the GPS Timber software to improve timber management. We have also invested in electrically

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 of waste in the form of oily sludge and storm drain sludge have been dispatched from Nyby, Skinnskatteberg and Långshyttan through another external party.

powered load plates to automate the loading of containers.

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 meas-

Setra is affiliated to the organisation NPA – Näringslivets Producentansvar (Trade Association Packaging Producer Responsibility) to fulfil its producer responsibility. The annual quantity of packaging is also reported to the Swedish Environmental Protection Agency via NPA’s customer portal. In 2024, 157 tonnes of plastic (straps and packaging) were reported in the Swedish market.

urements whenever necessary, in accordance with our environmental permits.

In recent years, we have put noise reduction measures in place and reduced the noise levels at the glulam factory in Långshyttan by almost 10 decibels. The noise levels from the new saw line in Skinnskatteberg will be monitored in 2025.

The major investments planned at the units will make meeting the noise requirements of the new environmental permits quite a challenge, especially at Kastet. Therefore, noise reduction measures are incorporated in the calculations right from the design stage.

Waste sorting and recycling

Waste sorting and recycling occur as a matter of course 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. Additionally, computers are also recycled and reused. In total, just over 56 percent of Setra’s waste recycling went for material recovery in 2024, an increase of approximately 6.6 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 30 percent recycled material and a covering film containing up to 65 percent recycled material. The plastic straps used for packaging are made from 100 percent recycled PET.

Safety, culture and colleagues

Setra’s investment in CPR training saves lives

When a driver had a heart attack while loading in Heby, colleagues acted fast. The driver was standing on the truck bed when one of the employees noticed he looked wobbly, and after jumping down, he collapsed. The employees immediately rang 112 and started doing chest compressions.

“Their quick response meant they were able to get the driver breathing again and his pulse beating before the ambulance arrived.

This is a textbook example of how this kind of situation should be handled, which also shows that Setra’s CPR training is really making a difference.”

Anneli Hansson, HR Business Partner

Our opportunities and challenges

Every weekday morning, 865 employees go to work at Setra. It is vital for performance and success that they are happy, healthy and work safely. The wood industry is a sector with a high risk of suffering a workplace accident and we know that preventive safety is crucial. We are completely convinced that a strong safety culture demands clear leadership, commitment and constant improvements.

We want to encourage a decent and equal climate in our workplaces and in the industry. We contribute to thriving rural communities by creating jobs in our production plants. Other key issues for us are recruiting more women, increasing diversity and upholding high business ethics.

Governance

The working environment, employees and business ethics are key elements of our sustainability policy. Our internal management system covers health and safety, which is checked regularly by means of daily briefings, regular leadership and employee surveys, 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 business complies 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 where our values – commitment, innovation and responsibility – inform our decisions and the work we do. A healthy culture and good health and safety help to boost our competitiveness, both internally and externally. We work actively to detect, prevent and manage mental health problems and have external partners and an online managers’ handbook to support our management staff. Our management by objectives model is based on managers and other leaders communicating their expectations and setting goals with employees. We strive for continuous dialogue on performance and results, with the annual employee appraisal as a key component.

In 2024, 98 (99) percent of our employees completed their employee appraisal; the second year in a row with extremely high participation rates. Followup is carried out by Setra’s HR team.

Reporting and follow-up of accidents

We have a zero vision for workplace accidents – no one at Setra should be injured at work. With our sights set on this 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 works actively to prevent all types of workplace accidents. For the third year in a row, we are pleased to say that the number of accidents is markedly lower than before. In 2024, there were 17 (18) accidents resulting in sick leave. Setra’s results are on a par with comparable companies and a general

improvement has been seen across the industry too.

The most common accidents at Setra are slips, impacts against solid objects, crushing and cutting injuries and being hit by flying or falling objects. An in-depth root cause analysis is carried out immediately after each accident leading to sick leave to identify causes and action to be taken. The results are reported and discussed at every production unit. Setra had no serious accidents or corporate fines in 2024.

Preventive safety work

Setra has a systematic improvement programme and we have introduced several successful safety measures in the past three years. 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. Experience and working methods are shared between the production units to foster constant improvement. Everyone at Setra is expected to think proactively and report risk observations, near misses and accidents. The reports are compiled and are an important factor in ongoing improvement efforts. The number of risk observations and near misses has increased 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 non-

employees carry out their own risk assessments and their workplace accidents are recorded in SIA by employees at Setra.

Using the Fair & Just tool sees us expanding leadership and employeeship in behaviour-based safety. Fair & Just is an effective and valuable complement to root cause analysis, and helps us to identify human factors in accidents. This provides a clearer picture of what needs to change to take safety efforts to the next level.

The high safety focus of the organisation has led to fewer serious accidents in the past three years. Risks and dilemmas are discussed in all teams at least once a month.

During the year we have held two safety days in Hasselfors and Färila to highlight priority safety aspects. If anyone is injured at work, we make every effort to find alternative duties that the employee can perform irrespective of the injury.

All new employees undergo compulsory basic training in safe working practices. We use SSG’s safety training course, which is an established concept in Swedish industry, and the industry-specific Safe Sawmills training. 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. Setra’s health and safety procedures are also applied to all of our contractors, along with our hot work procedures.

Perimeter protection, safety equipment and machine safety

All of Setra’s production lines are fitted with barriers and safety guards that disconnect the power if anyone comes too close to the machinery. All units also have external perimeter protection to ensure a safer working environment. 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 have brought in external expertise to risk assess the production lines. The results are being translated into an action plan containing actions to improve machine safety and preventive risk management.

Safety equipment is also included at our UK production unit Setra Wood Products (SWP). Permanent and mobile barriers are used to separate people, equipment and machinery. Only trained staff have access to the machinery and keys are used to access them for installation and maintenance. Safety boots, hearing protection and hi-vis clothing are compulsory everywhere in the plant.

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 2024 is an LTA of 11.93, which is an improvement on 2023. From 2023, 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.

We have similar safety procedures in place at our UK site, Setra Wood Products (SWP) and at the Pyrocell factory that Setra co-owns with Preem. Training and regular risk analyses are carried out to minimise risks. Work instructions are in place for contractors and our own employees, and particularly dangerous tasks require specific checklists and briefings.

In 2024, physical safety at Pyrocell was upgraded by installing code locks and perimeter protection. The work environment is constantly monitored by measuring air and gas, and all staff must wear appropriate protective equipment and a personal gas alarm. Precautions are taken when working alone, in the form of alarms linked to security companies and colleagues.

Setra’s working environment is alcohol and drug free. Vehicle key cabinets are fitted with alcohol locks and employees, contractors and temporary staff are subject to random testing.

Employment breakdown

Employees in other countries

* Average number of employees (headcounts) per form of employment in 2024

** Including probationary, temporary and seasonal employment

*** Setra owns 50% of Pyrocell

Working environment

Employees and managers share responsibility for maintaining and improving our working environment. Responsibility for health and safety is delegated to the respective manager. Each production unit has a safety committee that monitors and makes decisions on health and safety issues. The safety committees comprise safety representatives from different departments in the unit, who participate in planning and implementing health and safety measures.

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. Fixed-term 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 the UK, everyone working in the business is employed by Setra.

Every unit also has a chief safety officer, appointed by the employees to represent them in overarching work environment management.

Setra’s health and safety work also covers non-employees, such as contractors who carry out work at our facilities. Non-employees must comply with Setra’s work environment provisions, in which health and safety is paramount. Information and applicable documents are communicated before contractors start work on site.

serious incident investigation process, and safety culture, including proposals to reach the vision of Zero Accidents. Besides practical measures, behaviours, culture and the impact of the work environment are also discussed. Furthermore, in 2024 the SHE forum analysed the underlying causes of the three corporate fines Setra received in previous years. The most common reasons for accidents becoming a statutory offence are: lack of or failures in risk assessment, lack of or inadequate protection and shortcomings in application of the law. This is being followed up and we are continuing to work proactively to increase safety in our facilities.

Setra’s managers, leaders and safety representatives complete BWE (Better Work Environment) training to improve the physical, organisational and social work environment. The training is needs-based and is completed when required, for example as part of induction or as refresher training.

In 2023, a forum was launched to cooperate and share knowledge and experiences on safety, health and environment issues (SHE). The forum brings together mill managers, SHE coordinators and the sustainability and HR departments, and meets once a month. In 2024, the forum’s approach changed from tackling one-off practical issues to focusing on structural issues through a sustainability lens. The group has drawn up a plan for 2025–2026 covering risk analysis and control, an accident and

The BWE training and our own work on the organisational and social work environment (OSWE) also include workplace culture and dealing with discrimination, where we have a zero tolerance policy. A training course on banter and inclusion was run at three units during the year. Setra also has a system for reporting, processing and following up on victimisation.

We regularly monitor employee wellbeing, job satisfaction and what employees think of their work environment. This is done by means of short online Employee Pulse surveys, where employees can also add comments to their responses. The results are compiled in an OSWE index where we monitor the organisational and social work environment, and a Setra index that measures how well we are living up to our

values. Three measurements were taken in 2024 and the trend is stable, as in the previous year: The OSWE index for the year was 72 and the Setra index was 76. The results of the Employee Pulse surveys are primarily used as 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 there are many factors that affect attendance and we work on the issue via our employee appraisals, Employee Pulse analyses and drawing up a rehabilitation plan where required. Sickness absence was 6.29 (6.4) percent in 2024. We have seen somewhat higher figures since the pandemic, but the trend is heading in the right direction.

Setra has partnered with a company that is helping us to tackle the issue of concealed mental health issues stemming from

The wood industry is male-dominated and we are actively working to improve our gender balance. Setra is also active in the Women Building Sweden network, which is working for a more gender equal construction industry.

Business ethics

stress or problems with drugs and alcohol. All employees are offered occupational healthcare and are expected to participate in rehabilitation. The occupational health service is an expert resource for work environment issues and also supports our preventive wellness and occupational health and safety work. Setra encourages exercise, offers an annual fitness allowance and sponsors Setra Sports Club, which is exclusively for employees.

Attractive employer

To be competitive, we need to 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 longterm green value – Grönsamhet – and the opportunity to work with a sustainable product. We are also committed to continuous improvement as an employer. All permanent employees who leave Setra are given the opportunity to fill in a questionnaire about their time with the company. The results are followed up by HR and discussed by the Executive Management Team.

The proportion of women who work for us remains unchanged at 21 percent, while the proportion of female managers is around 22 percent. The last employee pay survey was conducted in Sweden in 2023 and showed equal remuneration levels. Our Equal Pay Index is 98.4, which is 3.2 percentage points higher than the Swedish average provided by the Swedish National Mediation Office. Diversity and gender equality are borne in mind in recruitment. When several applicants fulfil the basic requirements, we choose the under-represented gender.

Recruitment and skills development

Sustainable wood construction is attractive to applicants, while there is competition in Swedish industry to recruit employees with the right skills. The production organisation often recruits via recruitment agencies, with greater gender equality as an important element in their remit. This has resulted in more female employees.

Besides the right behaviours, Setra’s operations increasingly require technical expertise and the ability to handle complex tasks. New duties, knowledge sharing between colleagues and across departments, and job rotation are different ways to increase the know-how of our employees. There are also opportunities for external training and advice from external consultants. The annual employee appraisal involves drawing up an individual development plan, and we encourage continuous dialogue on development.

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.

All white-collar workers, agents and relevant production staff complete online training in business ethics. We also have a white book that provides guidance on business ethics dilemmas, based on real-life cases. No confirmed incidents of corruption occurred in 2024.

An external whistleblowing service for anonymous reporting was introduced in 2022, in line with current legal requirements. The reports are first reviewed by an external body and are then sent to the CEO, CFO or SVP HR.

Two cases were reported via the whistleblowing function during the year. Following assessment, they have both been dismissed as not meeting the criteria to qualify as a whistleblowing case, and they will be handled via other means.

Total sick leave

Percentage, including long and shor t-term sick leave. From 2023 onwards, sick leave at Setra’s unit in the UK is also included

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

Our transport

Smarter logistics reduce emissions

In the second half of 2024, Setra changed the transport flow of goods produced in Malå that are sold to Asia and the Middle East. Previously these goods were transported by road to Gävle, where they were packed into containers for further transport to the Port of Gothenburg by rail. Now the switch to rail happens nearer Måla, in Bastuträsk.

“Moving the transfer to rail to a closer point reduces greenhouse gas emissions from transport by more than a tonne CO2e per truck. In a year, this will mean we can cut our total climate impact by 410,651 kg CO2e, provided that volumes remain the same. Smarter logistics see us making great strides towards more sustainable transport.”

Maria Jansson, Logistics Manager

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 81 percent of the volume we produce is exported. Transport accounts for around 58 (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 using rail where possible and imposing requirements on carriers looking forward.

Governance

The transport we use should be efficient, safe and sustainable. Our requirements reflect the Swedish Forest Industries Federation’s sustainability criteria for road transport. Setra’s Code of Conduct for Suppliers is based on the UN Global Compact and relevant international conventions (ILO conventions) and 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 2024, around 3 percent of raw materials were transported by rail. For our deliveries to customers, a somewhat larger share is transported by rail, with about 15 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.

In recent years, Setra has made several important rail investments in cooperation with the Swedish Transport Administration. The railway lines have been extended at our sawmills in Hasselfors and Skinnskatteberg and there are also plans for a rail project at the sawmill in Heby. 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 agreement with a main carrier, enabling efficient and smart transport chains. 12 percent of our domestic transport uses the renewable fuel HVO 100. All trucks that transport our containers from sawmill to port or rail terminal also ran on HVO 100 in 2024. More than 49 percent of our domestic transport of cross-laminated timber ran on HVO 100 during the year.

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

Vasaskolan in Gävle

We also 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. In cooperation with our main carrier, during the year, a transport flow to a customer was switched to running entirely on HVO 100.

Principal type of transport

Proportion

Of which 15%

is transported by rail for part of the route

Setra’s transport in Sweden and the rest of Europe is mainly by road. Sea transport is used for shipments 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. The distribution between road and sea transport is unchanged compared with 2023. The proportion of container freight has fallen, however, which means that lower volumes are now transported part of the route by rail.

Setra tests and evaluates logistics solutions with our carriers. We improve energy and cost efficiency by increasing the run rate and operating on the basis of a shared goal to reduce carbon emissions from transport. Our main carrier has the same goal as Setra, fossil-free transport by 2040. This means we can plan together to reach this common goal. Setra is also working to improve the efficiency of internal transport and reduce its environmental impact, read more on page 26.

Transport by sea

In many cases, we are dependent on cargo ships to reach our export markets. Sea transport generates lower emissions per tonne kilometre than road transport. Because Setra exports a significant proportion of its production volume outside the Nordic region, shipping accounts for a larger proportion of Setra’s total climate emissions.

Our ability to influence sea transport is limited, which means policy instruments will be crucial 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. During the year, Setra has seen an increase in costs, and in the years ahead further costs are anticipated due to increased requirements. 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.

In 2023, we launched efforts to develop new system support which enables us to better monitor the load factor in our transport. The project continued in 2024 and the new system is now in place. 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 fossil-free domestic transport by 2040.

Climate report

Our Climate report accounts for the climate impact of our operations in a standardised way. It also provides important data for setting targets and deciding measures to reduce emissions even further. We report both direct and indirect emissions.

Visitor centre, Siljansnäs in Dalarna

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. 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.

During the year, Setra has produced new overarching climate goals that support the Future Agenda of the Swedish Forest Industries Federation. We see both challenges and opportunities in reaching the climate goals. What we know for certain is that achieving these goals will take policy instruments, cooperation and our own efforts. As in previous years, this year’s Climate report also shows that the highest emissions occur in the transport sector in Scope 3, the area over which we have the least control. Our transport is by road, rail and sea. Switching to sustainable transport is one of Setra’s biggest challenges on the journey towards fossil-free domestic transport by 2040.

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. 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 includes the emissions that occur ‘inside the gates’ at Setra, in other words, in our own operations. Scope 1 accounts for six percent of total emissions and includes emissions from machinery, drying and heating, and business travel. Scope 2 covers the emissions generated in producing the energy that Setra buys in. Setra decided to switch from renewable electricity to fossil-free electricity in 2024. Besides this item enabling us to continue to keep emission values at very low levels, the switch has also brought cost savings for Setra. Emissions in Scope 2 are very low, almost zero.

*Source:

1.2

million tonnes CO2

The amount of carbon dioxide stored as carbon in the wood products Setra sold in 2024 (1.5 million m3).

This sequestration equates to the greenhouse gas emissions of around 151,000 Swedes.*

Swedish Environmental Protection Agency, Consumption-based greenhouse gas emissions per person per year.

Scope 3 covers emissions upstream and downstream in Setra’s value chain, which account for 94 percent of total emissions. Upstream emissions include emissions from forestry and the transport of timber, but also emissions from the production of fuels for machinery and the manufacture of other raw materials. Downstream emissions include emissions from transport to the customer. Emissions from both incoming and outgoing transport to and from Setra’s operations account for 58 percent of the total climate footprint.

Reducing the climate footprint in general along our entire value chain, and specifically in Scope 3, is both challenging and complex. 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 work together and help each other to get our joint greenhouse gas emissions down. This year’s Climate report gains a new category in Scope 3 in line with the GHG Protocol, namely ‘use of sold products’. This category includes emissions of methane and nitrous oxide from incineration of by-products. Furthermore, emission factors for purchased wood and other purchased goods have been updated and the adjusted reduction obligation has had a significant impact on emission levels in general. We have also applied a significant change to the methodology for calculating outward transport. The data has been improved and now takes biofuel blend and capacity utilisation into account for several of our carriers. As in the previous year, the Climate report includes GHG emissions from the whole Setra Group.

Wood has a positive effect on the climate

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 746 kg of carbon dioxide per cubic metre of sawn timber.

* 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 Forestry Research Institute of Sweden, IVL Swedish Environmental Research Institute and Swedish Wood.

This means that emissions from our UK operations, Setra Wood Products (SWP), and 50 percent of emissions from Pyrocell – which is 50 percent owned by Setra and 50 percent by Preem – are included unless otherwise stated. Read more in Setra’s full Climate report at setragroup.com

The GHG Protocol is currently being expanded to cover Land Sector and Removals Guidance (LSRG), which incorporates 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 and overall analysis of the climate footprint for the year

In 2024, we revised our climate goal to bring us more into line with the forest industry’s Future Agenda. Read more about this in the section on Grönsamhet. Our climate goals for 2040 are:

• Setra’s production will be fossil-free.

• Setra’s transport within Sweden will be fossil-free.

• Setra will increase its climate benefit through greater sales of wood products that bind carbon and substitute fossil-intensive alternatives.

In 2025, Setra will draw up an action plan with milestones towards achieving our climate goals. The action plan will be an important tool, enabling us to take sustainable investment decisions and drive work on emission reduction methods forwards. We continue to focus on reducing emissions where we can have the greatest impact. The priority is our own operations and our Swedish timber

purchases and other transport in Sweden. This year Setra’s total emissions (Scopes 1–3) amount to 177,148 (177,112) tonnes of carbon dioxide. Our carbon footprint remains roughly the same as last year, despite the addition of a new category in Scope 3 – use of sold products – which contributes relatively high emissions. However, this is weighed against an increase in emissions from inbound transport of timber and a reduction in emissions from transport to customers compared with the previous year. About 6 percent of the total emissions come from our own operations and the remaining 94 percent from other parts of the value chain. Setra’s ambition is to reduce emissions as far as possible, both in our own operations and in other parts of the value chain. Our long-term goal is to reach net zero emissions and we believe that Setra’s goals focused on 2040 will be a powerful contributing factor in doing so.

Setra is also working to a previously set interim target to reduce the total carbon footprint by at least 35 percent by 2025, compared with the base year of 2015. This is equivalent to 82,500 tonnes of carbon. The outcome up to 2024 came in at a reduction of 58,500 tonnes of carbon dioxide, equivalent to a cut of 25 percent compared with the base year.

In a tough financial climate, we continue to work where we can to improve our sustainability performance. When the action plan for Setra’s climate goals is complete, we hope to be able to implement activities and achieve milestones along the way. We believe in the potential of our wood products to contribute to increased climate benefits and a circular society and that we can help to reach the EU’s shared climate goals.

Since Setra’s rst complete Climate report was produced in 2014, total emissions excluding transpor t to customers have been reduced by 15 percent, calculated per cubic metre of sawn timber. Signi cant measures have included purchasing renewable electricity, making our production more energy ef cient and choosing renewable fuels. As we process more of the products, emissions per cubic metre produced will

Total climate footprint 2021–2024

Over the past three years, Setra has reduced its total footprint by 12% (25,000 tonnes CO2e). Compared with the previous year, we remain at the same level.

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.

SPECIFIC ENVIRONMENTAL AND CLIMATE MEASURES

In 2024, the focus has been on carrying out several investments at our production units. These investments are helping to improve the efficiency of wood flows, increase yield and process more sustainable wood products with a broad range of uses in society. We have also continued to work further on energy efficiency improvements in our production facilities and launched attractive collaborations with actors in the construction industry regarding joint initiatives to build a sustainable society. We look forward to developing and learning more from these projects in 2025.

Modern technology for the wood processing of the future

As stated above in the sections Setra 2024 and CEO’s comments, during the year we have implemented and seen excellent results from our investments. We are working with determination to be better equipped in the wood industry. Our investments in new saw lines, for example, mean that we can use the whole forest raw material more effectively and convert it more quickly into products that bring about major climate benefits. The investments will also help to increase production capacity at the facilities, which is an important factor in making us better prepared for the future.

Energy efficiency

Drying wood is the most energy-intensive process in Setra’s production. In 2023, Setra made the decision to invest in a modern control system, Valmatics 4.0, for our drying kilns. The new system has identified several areas for improvement, including electricity and energy savings, improved capacity and adaptive control. In 2024, 99 drying kilns at our facilities had Valmatics 4.0 installed. Setra’s drying forum, which brings together representatives of our sawmills, has continued to work on analysing and exchanging experiences to optimise the drying process and to follow up the installation of the new control system.

and real estate 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 arising in the manufacture of building materials and products and from energy use in buildings.

We have also started a boiler forum to understand and improve our knowledge of fuel boilers. The purpose of the forum is to exchange experiences between production units, coordinate maintenance, improve efficiency and optimise fuel, investigate health and safety and risks, and monitor technological developments. We carry out annual energy surveys at our units and are working on several different measures to improve energy efficiency.

Circular business models

Setra wants to be as resource efficient as possible and we are working to increase the degree that our products are processed. To this end, we engage in investigations and dialogues on innovative, future and circular partnership projects. Our pellet production plant at our wood industry hub in Långshyttan will be commissioned in 2025, and will use sawdust, chips and offcuts – residual streams from production in other words – as its raw materials. We are also looking at other potential innovation projects with partners where we think more value can be added to our wood products and/or residual streams, so they can play their part in the green transition.

Increasing modern wood construction

Wooden building materials and renewable energy are important for the construction

and update them on an ongoing basis as our operations and the market change.

Setra is carrying out several initiatives to promote building in wood, including helping to spread information about wood construction and conducting a dialogue with researchers to develop the sector. We have a modern wood industry hub in Långshyttan, where our experts with years of experience are constantly improving their expertise in tune with customers’ needs and demands. Besides working with wood, which itself is renewable, climate positive and binds carbon dioxide, we are also focusing on delivering the right wood material to the right place at the right time. During the year, we continued to contribute our expertise to the promotion of industrial wood construction, with the aim of further standardising construction processes. Building frames in wood produces a lower climate impact, shorter construction times, simpler assembly, quieter workplaces and a better indoor environment. During the year, we also completed a showroom in Långshyttan, the first of its kind in Sweden. The purpose of our showroom is to support our customers, especially planners building apartment blocks. Here they can see full-size examples of the most common construction solutions and how these affect CLT frames.

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

Setra contributes expert knowledge and financing to various research projects. One example is our collaboration with Linnaeus University, where we are investigating how the resource efficiency, performance and cost-effectiveness of wood-based products can be improved. Other important partners in research and development are Swedish Wood, RISE, Wood City Sweden, the construction sector charity Byggdialog Dalarna and Dalarna University.

Collaboration with suppliers

A very high proportion of our greenhouse gas emissions are indirect, for example when purchasing wood and transporting our wood products to customers. We work actively to influence and collaborate with our carriers to set requirements and find more efficient solutions. Read more about this in the section on Our transport on pages 32–34. We hope to be able to set higher requirements and drive collaborations that bring us closer to fossil-free domestic transport in the action plan for the 2040 climate goals and its milestones. The choice of fuel of our carriers is a key question for us. Our ability to optimise the load factor, empty running rate and route planning also affects Setra’s climate footprint. The entire transport sector depends on policy instruments to enable innovation, technology and infrastructure. We carefully monitor developments in electrification, for example, in order to switch over to electric vehicles in our own production once the technology and investment costs have matured.

*Source: Swedish National Board of Housing, Building and Planning (Boverket)

Executive Management

Marcus Westdahl

President and CEO, and acting

Born: 1974 Employed since: 2023

Education: Bachelor’s degree in

Jonas Gustavsson

EVP Production

Born: 1973 Employed since: 2020

Education: MSc Eng.

Lotta Olsson

CIO

Born: 1967 Employed since: 2022

Education: BSc in Wood

Olle Berg

EVP Market and Business Development

Born: 1965 Employed since: 2013

Education: MSc Econ.

Pontus Friberg

SVP Enterprise Risk Management

Born: 1962 Employed since: 1993

Education: MSc Forestry Science

Anders Nordmark

EVP Supply Chain / CTO

Born: 1961 Employed since: 2017

Education: MSc Eng.

Joakim Nyqvist

SVP HR

Born: 1971 Employed since: 2018

Education: BSc in Education

Johanna Lindén CFO

Born: 1979 Employed since: 2024

Education: BSc. Finance

Melanie Sjögren

EVP Sustainability and Communications

Born: 1978 Employed since: 2021

Education: MSc. in Chemical Engineering

specialising in industrial ecology

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

Per Olof Nyman

Director since May 2024.

Main occupation: Director of Swedbank and Mellanskog. Former CEO of Lantmännen with directorships including HKScan and LRF Konsult.

Born: 1956

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

Governance of Setra’s sustainability work

We work with a climate-smart and sustainable product, and sustainability is part of our 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 work day to day.

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 positive and negative 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. Setra will review and update the materiality analysis in conjunction with the introduction of the new Corporate Sustainability Reporting Directive (CSRD).

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, Renewable raw material and Our transport. The sustainability report sets out what we consider important in each area, how we work, our 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. We identify and draw attention to negative risks and potential complaints, work together to tackle them and document them to enable us to follow up and rectify non-conformities. A new or updated stakeholder dialogue is conducted approximately every three years. The EVP Sustainability and Communications 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 from a sustainability perspective. Preparations ahead of the implementation of the new regulations are being 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 have a responsibility to make a contribution within the remit 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 and/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.

In May 2024, Setra implemented an organisational change affecting the Sustainability and Communications departments. The departments were merged and elevated to Setra’s Executive Management. Before the change, Sustainability reported to the Production and Sustainability department and Communications reported directly to the CEO. Neither function was part of Setra’s Executive Management. Today, the Sustainability and Communications department reports directly to the CEO and is part of the Executive Management team.

The Sustainability and Communications department has overall responsibility for driving sustainability efforts forward, in close dialogue with the CEO and Setra’s Executive Management. The EVP Sustainability and Communications and their team will lead, pursue and develop work going forward, provide expertise and

Governance and follow-up of sustainability work

support the organisation and the CEO on sustainability-related issues. Alongside the company’s budget process, we 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, and in forums, joint 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 year with the SVP Enterprise Risk Management and other members of the Executive Management team. A major review of risks and opportunities is being carried out in preparation for the CSRD and double materiality analysis. Our work on risks 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. The EVP Sustainability and Communications reports to the CEO and the Executive Management monthly and otherwise where necessary. The CEO and the Board are also responsible for reviewing and approving the annual sustainability report.

Sustainability strategy

In line with our vision, overall commercial goal and our sustainability policy, we have established four strategic objectives. These set out the direction 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.

• Setra’s climate goals by 2040.

• Increased level of processing and value of our products.

• Attractive employer that sustainably develops internal expertise.

Certified management systems

All Swedish operations are environmentally certified under ISO 14001. In addition, the operations in Långshyttan are certified under ISO 9001. Setra’s management system also includes the management of OHAS and fire safety, and it is checked regularly through internal audits and insurance inspections. These elements have not been externally certified.

Setra’s sawmills and processing units are certified in accordance with FSC and PEFC Chain of Custody standards and the FSC standard for Controlled Wood. The certification demonstrates that the company has a system in place for tracking the raw wood material and ensuring that it originates from a responsibly managed forest. 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 internal work environment management, safety and fire protection. Internal audits of health and safety, environment, quality, 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 conducted at Nyby, Kastet, Skinnskatteberg and Head Office in Solna, along with an external quality audit at Långshyttan, plus an external audit of FSC/PEFC at Nyby, Kastet, the Hemsta office in Gävle 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 24 minor non-compliances and seven improvement measures. All non-compliances have been addressed, reported and resolved. This year’s external FSC and PEFC audit resulted in five minor non-compliances and one observation. These will be addressed in 2025, before the next audit period. Overall, the verdict of the external auditors is that Setra works on continuous improvements and fulfils the requirements of the standards.

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. 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 more wide-ranging 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. In 2024, we discovered that carbon monoxide levels had been exceeded on certain days at the sawmills in Nyby, Skinnskatteberg and Hasselfors. At one point in Heby, the noise levels were a few decibels over the guideline value. Furthermore, the value for dust and the noise requirements for the new saw at the Hasselfors sawmill

have exceeded the threshold value. We are working actively to address all requirements, rules and legislation and are in good dialogue with the relevant authorities.

Several of Setra’s production units have previously worked with wood treatment products 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 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 comply with the Code of Conduct. 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 2024 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 cooperation. See also the sections on Renewable raw material (page 18) and Our transport (page 32). 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 53. 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. In the upcoming CSRD double materiality analysis, Setra will identify financial risks and opportunities from a sustainability perspective.

Sustainability risks

Setra’s work on sustainability risks involves identifying, managing and following up on risk mitigation measures. We do this internally and with the stakeholders concerned. We document in a non-compliance management system and follow up in audits and internal improvement measures. Our processes apply due diligence and/or the precautionary principle. The greatest potential risks are shown below based on a major risk assessment exercise. Sustainability risks are part of Setra’s overarching risk management. Risk management is followed up every year.

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. 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.

Accidents at work are also a health risk for our employees in production, 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.

Changed/uncertain business climate

Geopolitical tensions, conflicts, polarisation, political instability, etc.

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

• Setra runs the Employee Pulse survey three times a year and a leadership survey once a year, measuring 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 potential measures are taken. The same applies to allergens. Chemicals are managed via Setra’s purchasing process and are risk-assessed via our chemicals management system.

• Internal systematic health and safety with internal audits.

Conflicts, polarisation and external security threats mean that we need to rethink our short and medium-term strategies and objectives, and prioritise investments. 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 longterm 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 slower acceleration towards the green transition, due to a weaker global economic situation.

Risk category

Workplace accidents We work in an industry where there is a risk of injuries, such as falls, pinching, lacerations, slips, etc., due to non-compliance with procedures and/or negligence.

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

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

• Risk, accident and near miss reporting in SIA (the industry’s system for reporting non-conformities in the working environment) plus root cause reporting of accidents, which from 2023 includes analysis of behaviour-based causes. 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 OHAS issues for all managers and employees.

• Internal systematic health and safety with internal audits.

Risk category Description of risk Risk management

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.

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.

Quality shortfalls in responsible forestry.

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

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.

• 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 contribute to the green transition.

Natural disasters, impacts of climate change.

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

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.

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.

Risk category Description of risk Risk management

Non-compliance with environmental and OHAS laws and regulations.

Unplanned emissions to the soil, air and/or water.

Soil pollution.

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

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

• Riskinsurance and environmental responsibility inspections. • Maintenance of facilities. • Environmental reporting and reporting of major incidents/events to authorities, dialogue with authorities and supervision and follow-up.

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 2024, the European Parliament and EU Member States approved the Corporate Sustainability Due Diligence Directive. This sets out rules integrating human rights and environmental impact in corporate governance.

In 2023, Setra produced its 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

Executive Management. Information on a change of ownership was also published in December 2024, see the CEO’s comments on page 5 and the Annual Report page 92. During the year, we have also worked to revise our climate goals. Read more on pages 7 and 35.

2-5 External assurance 48, 52, 100

2-6 Activities, value chain and other business relationships 3, 10, 15–21, 33–34, 44

2-7 Employees 3, 27–31

2-8 Workers who are not employees 30

2-9 Governance structure and composition 40–41, 97

2-10 Nomination and election to the highest governance body 97–99

2-11 Chair of the highest governance body 41, 97

2-12 Role of the highest governance body in overseeing the management of impacts 42–43

2-13 Delegation of responsibility for managing impacts 43

2-14 Role of the highest governance body in sustainability reporting 28–31, 42–44, 53–54

2-15 Conflicts of interest 99

2-16 Communication of critical concerns 28–31, 42–44, 53–54

Total number of critical cases is not reported as there is no aggregate data available. In the Annual Report, the corporate governance section states what is communicated between the company’s CEO and the Board of Directors and how this is done. This includes which important areas and topics are addressed, and the communication of critical cases. Critical cases are also raised at every monthly meeting and at weekly briefings of the company’s Executive Management.

2-18 Evaluation of the performance of the highest governance body 98

2-19 Remuneration policies 52, 74–75, 99

Deviation 2-19 b: The remuneration policy is not fully in relation to 2-19 b. We describe remuneration to the Board of Directors and Executive Management in terms of money and how this compares with the average pay in the company, see pages 74–75.

2-20 Process to determine remuneration

2-21 Annual total compensation ratio 75

74–75, 99

2-22 Statement on sustainable development strategy 5, 7

2-23 Policy commitments 7,19, 31, 33, 42, 46 Deviation 2-23 b: The company has not completed the sustainability risk matrix on page 45 with stakeholders/ risk groups or vulnerable groups that the organisation gives particular attention to in its commitments. However, in certain cases we state the stakeholder group(s) the risk concerns.

2-24 Embedding policy commitments 43–44

2-25 Processes to remediate negative impacts 7, 13–15, 19–21, 23–26, 28–31, 33–34, 42–46, 53–54

2-26 Mechanisms for seeking advice and raising concerns 7, 28–31, 42–46

2-27 Compliance with laws and regulations 44

2-28 Membership associations 17, 34

2-29 Approach to stakeholder engagement 7, 15, 42, 44

2-30 Collective bargaining 30

GRI 3: Material topics 2024 3-1 Process to determine material topics 42–44

3-2 List of material topics 13, 42

Based on the principles of the UN Global Compact, due diligence and the precautionary principle.

GRI 303: Emissions to air

3-3 Management of material topics 42–44

305-1 Direct (Scope 1) GHG emissions 37

305-2 Energy indirect (Scope 2) GHG emissions 37

305-3 Other indirect (Scope 3) GHG emissions 37

305-4 GHG emissions intensity 37–38

GRI 307: Environmental compliance 2016

3-3 Management of material topics 23, 44, 46

307-1 Non-compliance with environmental laws and regulations 44

GRI 308: Supplier environmental assessment 2016

3-3 Management of material topics 19–21, 42–44, 46 Definition forest raw material.

308-1 New suppliers that were screened using environmental criteria 44

GRI 403: Occupational Health and Safety 2018

3-3 Management of material topics 28–31, 43, 45–46

403-1 Occupational health and safety management system 28–31, 45–46

403-2 Hazard identification, risk assessment and incident investigation 28–31, 45

403-3 Occupational health services 28–31, 45

403-4 Worker participation, consultation and communication on occupational health and safety 28–31, 45

403-5 Worker training on occupational health and safety 28–31, 45

403-6 Promotion of worker health 28–31, 45

403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 28–31, 45

403-8 Workers covered by an occupational health and safety management system 28-31, 45 100%

403-9 Work-related injuries 28–29

the future.

404-3 Percentage of employees receiving regular performance and career development reviews 28

About the report

This publication constitutes the Setra Group’s consolidated Sustainability Report for the 2024 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, GRI 1: Foundation 2021. We have also adapted the content of our Annual Report to the requirements of the Swedish Annual Accounts Act on sustainability reporting.

The auditors’ statement on the statutory Sustainability Report is on page 100 of Setra’s

Annual Report and Sustainability Report. The requirements against GRI standards have been audited by an external sustainability consultancy. Setra also publishes an annual Climate report, which documents our emissions and the climate footprint of our products. This too is audited and quality assured by external calculation consultants. The annual Climate report is drawn up based on the guidelines of the GHG Protocol and published in full at setragroup.com.

Contact details

Head Office

Setra Group AB Box 3027 169 03 SOLNA

Street address: Råsundavägen 12 169 67 Solna

Phone: +46 08-705 03 00

E-mail: info@setragroup.com

More contact details are available at setragroup.com

Sales, Customer Service & Logistics

Wood Products

Setra Trävaror AB Box 223 801 04 Gävle

Street and delivery address

Setra Trävaror AB Skolgången 13 802 57 Gävle

Building Solutions and Components

Setra Långshyttan Amungsvägen 17 776 72 Långshyttan

Bygglösningar Norr

Setra

Storgatan 93 903 33 Umeå

Get in touch!

Telesales and Customer Service +46 8 705 03 00

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

Johanna Lindén

CFO

johanna.linden@setragroup.com +46 70 705 03 03

Melanie Sjögren

EVP Sustainability and Communications

melanie.sjogren@setragroup.com +46 8 705 03 15

Production units

Sawmills

Setra Färila

Snasbäcken

827 63 Färila

Phone: +46 651 76 81 00

Setra Hasselfors

Edevägen

695 85 Hasselfors

Phone: +46 585 485 00

Setra Heby

Claes Wikströms väg 3

744 32 Heby

Phone: +46 224 368 00

Setra Kastet

Box 430

801 05 Gävle

Phone: +46 26 54 80 00

Setra Malå

Storgatan 92 939 32 Malå

Phone: +46 953 414 00

Setra Nyby

Nybyvägen 8

743 63 Björklinge

Phone: +46 18 56 08 00

Setra Skinnskatteberg

Box 100

739 22 Skinnskatteberg

Phone: +46 222 452 00

Processing units

Setra Långshyttan

Setra Glulam

Amungsvägen 17 776 72 Långshyttan

Phone: +46 225 635 00

Setra Building Solutions and Components Hagabergsvägen 3 776 72 Långshyttan

Phone: +46 225 635 00

Setra Wood Products Ltd

Estuary Road

King’s Lynn Norfolk PE30 2HJ, United Kingdom

Phone: +44 1553 76 00 71

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 87 00 35

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., Ltd Room 2708, Teem Tower No 208 Tianhe Road, Tianhe District, CN-Guangzhou 510 620

Phone: +86 20 2868 5862

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.

Photography: AdobeStock, Anders Alm, Archus, Måns Berg, Malin Grönborg, Ola Högberg, Magnus Laupa, C.F. Møller Architects, Jansin & Hammarling, Kicki Nilsson, Shutterstock, Klas Sjöberg.