Sustainability Report Setra Group
Year of Grรถnsamhet
2018
04 Setra 2018 06 CEO’s comments 08 Trends 10 Setra’s value chain 12 Setra’s sustainability work 14 Our portfolio 18 Climate smart raw material 22 Resource-efficient business 26 Culture and colleagues 32 Management 33 Financial overview 34 Managing Setra’s sustainability work 36 GRI index
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Setra 2018
A top year for Setra 2018 generated an operating profit of SEK 367 million, adjusted for non-recurring items. Below is a brief summary of what helped Setra to achieve one of its best years ever.
This is Setra
External net sales by business 2018 (SEKm)
Setra is one of Sweden’s largest wood industry companies. We process raw material from responsibly managed forests and offer climate-friendly products for construction, housing, the paper and pulp industry and energy production. We help our customers do better business in a global marketplace and contribute towards the transition to a bioeconomy.
2,944
The head office is located in Solna, with sales and administration in Gävle. The Group has eight sawmills and three wood processing units, one of which is in the UK. Setra has approximately 900 employees and annual sales in excess of SEK 4 billion. Exports to Europe, North Africa, the Middle East, Asia and Australia account for 65% of sales. Setra employs around 50 people abroad, with sales offices in the UK, Germany, Poland, Spain, Tunisia, Japan and China.
Sawn
741
590
Processed
Bioproducts
Setra is owned 50% by Sveaskog, Sweden’s largest forest owner, and 49.5% by the forest owners’ association Mellanskog. The remaining 0.5% is owned by approximately 1,400 small shareholders.
Our markets
Setra in figures (SEKm)
Sweden 35%
Sales
Net sales
Spain
Japan
Tunisia
Europe 27%
North Africa & Middle East 18%
China
Asia & Australia 20%
3,891 14 3,905
-3,746
-3,620
Depreciation according to plan
-101
-91
Operating profit
367
194
Operating expenses
Poland
4,185 29
Total income
Germany
2017
4,214
Other operating income
UK
2018
-14
-14
Profit/loss after financial items
353
180
Tax
-67
-30
Profit/loss for the year from remaining businesses
287
151
Profit/loss from discontinued operations, net after tax*
-57
-34
Profit/loss for the year
230
116
Net financial items
* The discontinued operation in this case is the closure of Rolfs Sawmill
Sustainability Report 2018 — Setra Group
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Our production units
Pine sawmills
Rolfs
Spruce sawmills Processing units
Malå
Production and employees per unit 2018 Pine sawmills
Production
Employees
Skinnskatteberg
244,000 m
3
78
Kastet
241,000 m3
67
Malå*
219,000 m3
97
Nyby
185,000 m3
69
Rolfs*
103,000 m
73
3
Färila
Kastet Skutskär
Långshyttan
Spruce sawmills
Nyby Heby
Skinnskatteberg
Hasselfors
318,000 m3
97
Heby
227,000 m3
80
Färila
171,000 m3
59
Skutskär
110,000 m3
34
Långshyttan
48,000 m
3
59
Setra Wood Products
25,000 m3
44
Hasselfors
Processing units
* Some of the sawn volume is further processed.
Setra Wood Products (UK)
Financial targets and results
2018 RETURN:
NET DEBT/EQUITY RATIO 2018:
With a total of eight sawmills and three processing units, Setra ensures that the forest’s potential reaches around the globe.
2018 DIVIDEND:
26.9 %
-8 %
50 %
Target: Sustained return on operating capital to be at least 13%.
Target: Net debt/equity ratio not to exceed 50%.
Target: Dividend to normally amount to 50% of profit after tax, taking net debt/equity ratio into account.
Result: 26.9%. Has ranged between 3% and 26.9% over a five-year period.
Result: -8%. The maximum over the past five years was 26%.
Result: 50% proposed for 2018. In 2017 the dividend was 50% due to a strong financial position.
Sustainability Report 2018 — Setra Group
“ As we take the business forward, we are expanding our opportunities to conduct business that benefits us, our customers, society and nature.�
CEO’s comments
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One of Setra’s best years – so far 2018 was a fantastic year. We achieved the best results in Setra’s history, while at the same time taking many crucial and concrete leaps forward – not least on the journey towards becoming the wood products company with the strongest sustainability profile in Europe. Our focus in 2018 was on securing our long-term competitiveness and on continuing to progress from a sawmill business to a modern industrial wood company. And throughout it all, we have maintained clear ambitions for our sustainability work, which continues to permeate our entire business. In many areas, we have already turned our words into action. With the specifics of our strategic investment decisions laid out, our customers have expressed positive expectations for the future. A telling result I am incredibly pleased to report that 2018 was one of the best years in Setra’s history. We have been able to leverage the strong economic situation and raise our delivery rate by increasing production by around 160,000 m³ sawn wood products compared with 2016. Operating profit climbed to SEK 367 million – an improvement of SEK 173 million on 2017 – and our net sales reached SEK 4,185 million. In line with our strategy, we have invested heavily in selected foreign markets, and that has paid off. Our deliveries to Asia, for example, are up 10%. Grönsamhet at the heart of Setra’s new vision As we take the business forward, we are expanding our opportunities to conduct business that benefits us, our customers, society and nature. And that is the core of our new vision. We sum it all up in the word ‘Grönsamhet’, which means ‘green profit’ and is also the name of our new communication concept. Rooted in our values of commitment, innovation and responsibility, it explains what Setra stands for, what we want to achieve and how. A shared philosophy for Setra enables us to be clearer about what we offer our customers, while also strengthening our internal work on the core values and pride in being a part of Setra.
Investments and initiatives for the future Recent years have seen us take several key strategic decisions on investments. In 2018 we began to put these into practice. These initiatives put us in a position to increase our competitiveness and meet our customers’ demands. In Hasselfors we have begun construction of a planing mill with the most modern technology on the market. In Långshyttan we are developing a new wood industry hub. Our ambitions are high and the investment will establish Setra in new markets for door and window components, plus cross-laminated timber, known as CLT. The component line is already up and running, and we have been able to deliver production samples. The factory for CLT manufacture is under construction, with progress proceeding quickly. The very best conditions are in place to create a truly competitive offering, thanks to our superb raw material from nearby sawmills and the fact that the CLT factory is right next-door to our own glulam production line. CLT is a renewable construction material that is both quick and easy to work with. The product is increasingly in demand for building apartment blocks and public buildings such as schools and sports halls. Modern CNC technology produces precision cut components that fit together perfectly. The precision and simplicity are much appreciated by carpenters. Over the year we have continued to explore the potential for producing pyrolysis oil from sawdust and we have entered into a collaboration with fuel company Preem. Together, we are investigating the feasibility of a joint production plant in Kastet. The aim of the project is to increase the value of our bioproducts while at the same time helping with the transition to a bioeconomy. Since pyrolysis oil can be refined into a replacement for fossil fuel, it is crucial to the transport industry’s ability to become fossil-free by 2045.
Our employees make all the difference The forest is all very well, but our most important resource is, and will always be, our employees. Without skilled and inquisitive people, the chances of creating sustainable wood products of the highest quality would be non-existent. In 2018, we continued our drive to create an even better and safer work environment. And as a values-based organisation, our internal culture is hugely important, not least because it forms the foundation for all the decisions that we make. We have therefore intensified our work on continuous improvement, as part of which we have introduced daily briefings at our production units. It is also important that our employees have an opportunity to develop at Setra. We have a new leadership development programme that will be launched in 2019 – because results are something we create together. Sustainability is part of our DNA There are many different aspects to sustainability and for us at Setra these include creating a safe and stimulating work environment, offering products in wood, tightening up energy efficiency, finding new and more sustainable transport solutions, and adding value to our products. Everything we do is informed by a sustainability approach rooted in economic, environmental and social aspects. We will continue on our set path in 2019, marking an exciting year as our new investments begin to take shape. We are steadily approaching our objective of becoming the wood products company with the strongest sustainability profile in Europe by 2025.
Hannele Arvonen, CEO
Sustainability Report 2018 — Setra Group
8 Trends
Forging ahead towards fossil-free and renewable Interest in sustainable construction materials and climate smart energy solutions is continuing at a solid pace, creating a stable demand for wood products and bioproducts. Following the top form of 2016 and 2017 the market has, however, softened.
Increased demand for wood Wood is the only renewable construction material and building in wood generates a significantly lower carbon footprint than using other materials such as steel and concrete. The global construction industry accounts for major emissions of greenhouse gases. Comparative lifecycle analyses show that emissions can be reduced by using wood instead of concrete, according to a study by the Swedish Construction Federation and IVL Swedish Environmental Research Institute from 2016. Demand for new housing and other buildings is rising as the world’s population grows and urbanisation increases. If the world is to meet the UN’s Sustainable Development Goals as set out in its 2030 Agenda, there will need to be a rapid transition to a more climate-friendly construction process. Structural wood products are making major inroads into the construction industry, according to statistics from the Swedish Federation of Wood and Furniture Industry (TMF). The National Board of Housing, Building and Planning calculates that Sweden needs 710,000 more homes
Sustainability Report 2018 — Setra Group
Sustainability a growing issue to be built by 2025 – and last year the government decided to promote greater use of wood in construction. Investments to add value Setra has a strategy to increase the value added to our products. We are currently on a journey from a sawmill business to a modern industrial wood company. In recent years we have taken a number of strategic decisions on investments, including a major investment in a new planing machine and integrated trim saw in Hasselfors. In Långshyttan, we are establishing a new wood industry hub that will include manufacturing of components for the door and window industry and CLT production.
Under the 2030 Agenda, the UN’s plan for sustainable development, the world’s leaders have committed to work towards achieving 17 Sustainable Development Goals (SDGs) by 2030. For the SDGs to be realised, every sector of society has to play its part: the public sector, civil society, businesses and individuals.
The 2030 Agenda our way In 2018 we reviewed the SDGs to establish where and how Setra can make the greatest positive difference. We have now outlined the areas in which Setra can contribute towards the 2030 Agenda, based on our responsibilities as an employer, supplier, partner and social actor.
Trends 9
Future built on bioeconomy Switching from finite fossil raw materials to renewable raw materials is critical for the future. Developments within the bioeconomy are therefore a vital factor in enabling Sweden to achieve its goal of being fossil-free by 2045. Sweden is already one of the world’s leading nations in forest industry research and we are capable of producing everything from clothing to packaging using wood raw material. Renewable fuels made from bioproducts are one area where production is expected to increase moving forwards.
Add extra value A wide variety of initiatives need to be taken at every level to phase out fossil raw materials and transition to a bioeconomy. In Sweden, the government has decided that we will be fossil-free by 2045. This is a challenge, not least for the transport sector, which is why several plants are being built to produce biofuel. Setra has a partnership with fuel company Preem that involves investigating the feasibility of a plant for pyrolysis oil produced from sawdust, a bioproduct at Setra’s sawmills.
Stability and good outlook, despite weaker market The market was slightly harsher in 2018 than in previous years. We noticed the effects of closures in the furniture industry and an economic slowdown in China, not to mention the pressure on prices caused by a dollar shortage in the Middle East. Key markets such as the UK, Germany, Japan and France continue to go well, however. In Sweden, the upswing of 2016 and 2017 has moderated somewhat, in part due to the turbulence in the housing market. Construction was also slow during the unusually hot summer. Nevertheless, we are still seeing stable growth in our home market, and the future remains bright. There is considerable global interest in processed wood products – thanks to the demand for energy-efficient buildings and renewable materials. This also coincides with huge demand for new housing around the world.
More efficiency and breadth to increase competitiveness In a drive to increase Setra’s competitiveness, we are continuing to optimise production efficiency at our units. At the same time, we are working on increasing the added value of our existing products, and on broadening our range in order to meet the demand created by the ever increasing call for sustainable building.
Sustainability Report 2018 — Setra Group
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Setra’s value chain
Setra’s value chain Setra’s sustainability measures involve taking responsibility for how we affect people and the environment through the entire value chain – from forest to final product. The starting point is to reduce any negative footprint and increase the value and positive impact of our operations at every stage. Here is an illustration of the value generated by Setra in 2018. The sawmills generate thermal energy using their own bioproducts.
Sawmill Sawn Wood Products
Processed Wood Products Raw material The raw material comes from local forests, ensuring short transport distances.
Setra creates jobs in rural areas.
Bioproducts
Bark
Chips Sawdust
Bioproducts from our sawmills are turned into paper, pulp or renewable energy.
Sustainability Report 2018 — Setra Group
Setra’s value chain
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Value created and distributed Customers
Sales of wood products and bioproducts
4,214 SEKm
Suppliers, raw material
Purchases of timber raw material
Suppliers, transport
Transport costs
Suppliers, other
Purchases of other goods and services -796 SEKm plus depreciation
Employees
Salaries and social security costs
Lenders
Interest -14 SEKm
State
Taxes
-2,094 SEKm -505 SEKm
-508 SEKm
-67 SEKm
Net profit
230 SEKm
Dividend to owners
115 SEKm
For CLT customers, Setra takes care of the whole chain, from planning and manufacture to delivery.
Wooden buildings store carbon dioxide.
We work to find smart logistical solutions. People living in wooden homes feel better.
Sustainability Report 2018 — Setra Group
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Setra’s sustainability work
“ Every aspect of our business must be sustainable” Say the word sustainability and most people think of the environment. A sustainable company strives to reduce emissions and to cut the use of fossil fuels. However, responsible business also involves working to combat corruption, ensuring a safe work environment and running a business that rests on healthy finances.
Stakeholder dialogue an important guide Sustainability work spans many areas and in order to prioritise and select the most important focus areas, Setra is conducting a constantly ongoing stakeholder dialogue. This means talking to shareholders, customers, employees and other stakeholders about what is most important to them in terms of sustainability. “It’s important for us to be ahead of the game on sustainability. Sometimes we’re also directly affected by what is going on in society, such as new regulations,” Charlotte Thedéen points out. One such new regulation was the new act on energy surveys which entered into force in 2014. This means that major companies have to systematically examine the energy consumption of each unit and list steps that can be taken to reduce it. The efficiency measures are then reported to the Swedish Energy Agency. “The survey is a major task and will take about four years to complete in total. It involves a large amount of resources and will give us an excellent understanding of what our energy consumption really is and how we can work to cut it.” Electricity from renewable sources Because Setra’s operations are energy- intensive, it is also important that the energy that has to be used comes from renewable sources. “Today all the electricity we buy in is renewable and heating consumption is more
than 99% based on biofuels,” says Charlotte Thedéen. Transport is another major aspect of Setra’s total climate impact. “Transport accounts for about 85% of our emissions. Our hauliers aim to run with full loads as far as possible and never return empty. We are conducting a dialogue with our partners on the timber supply and transport side and are working constantly to increase the proportion of renewables in the tank,” says Charlotte. 65% of Setra’s goods are exported, and much of this is by sea, which is the most eco-friendly means of goods transport after rail. Raw material from responsibly managed forests When Setra chooses the focus for its sustainability work, it zeroes in on areas where “Setra has a significant impact, a clear responsibility and an opportunity to contribute”. It follows therefore that the raw material, the actual forest, has a key role to play. “The fact that our raw material comes from sustainable forestry is a cornerstone of our sustainability work. Currently
around 40% of our raw material is certified by FSC® and PEFCTM. The rest of the raw material is checked against five criteria, including that it is sourced from legal forestry and that the supplier has not conducted logging in key biotopes. We want to reassure our customers that we only use raw material from responsibly managed forests.” More wooden buildings good for the climate Lobbying for wider use of wood products, for example by increasing wood construction, is also a core element of Setra’s sustainability work. “Every cubic metre of wood captures the equivalent of 800 kilos of carbon dioxide. Put like that, this may not mean much, but if I draw the parallel that our sales volume for last year has stored away carbon dioxide equating to the greenhouse gas emissions of around 135,000 Swedes, it may be easier to convey the magnitude of the figures. The government expressed an ambition to increase wood construction in its policy statement and many municipalities are working actively to encourage more wooden buildings to be built. This is a journey that Setra is naturally keen to get on board with,” says Charlotte Thedéen.
Materiality analysis The key issues for a sustainable Setra • Economic performance. • Responsible forest management. VERY HIGH
Importance for stakeholders
“If you were to sum it all up, you could say that Setra’s sustainability work is social, economic and environmental. Every aspect of our business must be sustainable,” says Charlotte Thedéen, Sustainability Manager at Setra. Ensuring that the entire business is sustainable means Setra taking responsibility for its impact on the environment and people throughout the whole value chain, from forest to end product. “The main aim is to reduce our negative footprint and increase the value and positive impact of our operations.
• Indirect economic impact on local community.
• Resource efficiency.
• Noise, local environmental impact.
• Setra’s customer offering.
•C limate impact, incl. transport. •W ork environment, occupational health and safety.
• Diversity and gender equality. • Local social engagement.
•V alues and culture, including business ethics. •S kills development and talent management.
HIGH
VERY HIGH
Importance for Setra Sustainability Report 2018 — Setra Group
“ The main aim is to reduce our negative footprint and increase the value and positive impact of our operations.” Charlotte Thedéen, Sustainability Manager at Setra
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Our portfolio
Climate smart products We are lucky to be working with climate smart products that come from renewable raw materials. Wood is part of the solution to the world’s climate issues and will play a key role in the transition to a fossil-free society.
At Setra we want our business to benefit not just us, but customers, society and nature too. When a business profits everyone, we call that ‘Grönsamhet’. Our wood products, which come from responsibly managed forests, make an important contribution towards Grönsamhet, or ‘green profit’. Wood is a renewable raw material that also stores carbon dioxide throughout its lifecycle in the form of furniture, construction products and finished buildings. Setra’s product portfolio ranges from sawn wood products to processed wood products such as decking, glulam and components for doors and windows. Demand for structural elements is growing strongly and by early 2020 we will be delivering our first tailor-made CLT panels. Bioproducts such as bark, sawdust and wood chips are also important products for our customers. Sawn wood products Sawn wood products in pine and spruce are important export products. Pine is easy to work with as it is relatively soft and is used primarily in the production of visible wood products such as flooring, furniture and doors. Pine is also used outdoors in various pressure treated products such as decking. Spruce is the dominant wood for building and construction, since it meets high strength requirements. It is also used for visible products such as cladding and glulam. Our sawn wood products customers operate mainly in the wood processing industry. Planing mills, glulam factories, housebuilders and packaging manufacturers are among our key customer categories. The largest markets are Europe, North Africa, the Middle East and Asia.
Sustainability Report 2018 — Setra Group
Processed wood products Setra’s range of processed wood products includes glulam, laminated wood panel, interior and exterior cladding, solid wood flooring, decking, joists and construction timber. Industrially painted façade cladding, finger jointed products and a large number of pressure treated products also form part of the range. The main customers are builders’ merchants in Scandinavia and various industrial customers. Glulam is also available in custom solutions. Bioproducts The highest possible saw yield must be extracted from every log that Setra processes. Saw yield means the proportion of the log that is turned into planks and boards. This is vital from both a resource and an economic perspective. Around 50% of a log is turned into boards and planks, and 50% becomes bioproducts such as bark, chips and sawdust. These bioproducts are sold on to our customers as cellulose chips, biofuel or animal bedding. The process thus makes full use of the log for the ultimate in resource efficiency.
Our business concept The future is built on wood. With a raw material that originates from responsibly managed forests, we create refined climate smart products and solutions for construction, housing, pulp and paper manufacture and energy production. We thereby help our customers do better business in a global marketplace and are part of the solution in the transition to a bioeconomy.
Right chip quality Skinnskatteberg
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Right chip quality for the paper and pulp mills
Where Setra’s bioproducts go (volume m3)
42.6% HEATING AND POWER PLANTS
48.7% PULP AND PAPER MILLS
6.8% PELLET INDUSTRY 1.9% OTHER
“ Wood is a renewable raw material that stores carbon dioxide throughout its lifecycle.”
What are cellulose chips used for? “Sawing logs produces cellulose chips, which are a key raw material for paper and pulp mills. They need a relatively homogenous raw material in order to maintain a consistently high production rate. The cellulose chips that we produce during sawing fall into various categories, but the mills are primarily only interested in some of them.” What have you done to meet the demand from the mills? “In order to supply the mills with cellulose chips of the right quality – and so to increase Setra’s cellulose chip revenue – we’ve set up an internal project group with participants from each sawmill. The aim is to increase knowledge of and commitment to cellulose chip quality – and to improve our work in this area. “As part of the project we have, for example, conducted an inventory of the sawmills’ machinery. A customer has also visited us to give a talk on how important the quality is.” What results have you seen? “The project is still ongoing, but we’ve already seen results in the form of greater understanding and a greater commitment to cellulose chips at our sawmills. This new knowledge will drive up our quality in the eyes of the customer.”
1,727 GWh In 2018, Setra produced 1,727 GWh of bioenergy. That is enough to heat around 200,000 apartments.
What’s the next step? “We’ve planned customer visits so the project group can gain an even better understanding of how important the quality requirements are for the mills’ production. “By the end of the project in May 2019, we’ll know what improvements and new procedures we need to introduce.”
Hanna Lindberg, Bioproducts Coordinator.
Sustainability Report 2018 — Setra Group
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Our portfolio
New wood industry hub emerging in Långshyttan In Långshyttan, Setra is creating a wood industry hub with more processed wood products. Axel Sternö and Anna-Lena Gull, who are managing Setra’s projects here, have long experience of component manufacture and CLT manufacture respectively.
The move is based on Setra’s desire to meet the demand for processed wood products such as components for the door and window industry and the structural elements in cross-laminated timber (CLT) that are used to build housing, schools and industrial premises. People had almost lost hope of a new business ever moving into the Kloster industrial site after Outokumpu shut down its steelmaking operation four years ago. But at the start of the year, the news came that Setra had signed an agreement to buy the whole site in Långshyttan, all six football pitches’ worth. The purchase means that Setra now has plenty of space to develop its business in the direction of more processed products. Component manufacture for the door and window industry The first phase is the component factory that became operational this autumn. It makes components for doors and windows as well as other processed wood products used by door and window manufacturers. Phase two is a CLT factory that will also be housed on the Kloster site. CLT is prefabricated solid panels made up of planed timber that is glued together in alternating layers for increased dimensional stability. The technique is ideal for structures that require a high degree of strength and load-bearing capacity while being fire-resistant and relatively light. Axel Sternö is responsible for the construction of Setra’s new component factory. “The fact that Setra already has a successful production facility for glulam manufacture in Långshyttan is, of course, a help. The plant is a beacon of forward thinking and innovation, and over the past few years they’ve worked on every detail to
Sustainability Report 2018 — Setra Group
make their working practices optimal and efficient. In addition to knowledge of finger jointing and glueing, they’re accustomed to working with short lead times and fast deliveries.” The absence of internal columns in the Kloster building was a major advantage, since the machinery takes up a lot of space. The finger jointing line at the heart of the operation is 75 metres long and 50 metres wide. Finger jointing involves milling the ends of the wood into 10 or 15 millimetre long ‘fingers’ that enable separate elements to be joined together. Before the milling, defects such as knots are cut away. Once the parts have been bonded together using glue and pressure, the result is a wood product with practically invisible joints. The technique releases many of the tensions in the wood, making it straighter, with greater torsional rigidity and dimensional stability. Since windows and doors are exposed to difficult conditions, it has always been known that they require carefully selected timber. The concept in Långshyttan is based around raw material with a large proportion of heartwood from the sawmill in Skinnskatteberg. To find the parts of the log that have a high share of heartwood, each log is x-rayed before being sawn. “To start with, we have four employees in the component factory. The idea is that production will gradually be ramped up over the next two years. In time, we expect to be able to run a full three shifts, which will require us to triple the workforce,” says Axel Sternö. Good prospects for CLT Alongside Axel Sternö, Anna-Lena Gull is working on establishing the CLT operation. She has a slightly longer time frame, with
Watch the film from Långshyttan setragroup.com/ tra-tar-over the CLT factory in Långshyttan planned for completion in early 2020. The complex organisation requires many resources to be in place before the start button can be pressed. “Demand for CLT has really taken off in recent years and now there is a growing interest in using the material for apartment blocks and industrial buildings. Locating the CLT factory in Långshyttan, close to the glulam production site, is good for Setra as the products have several commercial synergies,” explains Anna-Lena Gull. The structure of CLT is as simple as it is ingenious. The prefabricated solid panels are made up of planed timber that is glued together in alternating layers for increased dimensional stability. The result is a structural component that is both strong and stiff in relation to its own weight. Its strength and dimensional stability allow for flexible architectural solutions. Using precision CNC technology, a great deal can be prepared in advance at the factory. Holes for doors, windows and power sockets can be cut, for example, to reduce the amount of work required at the construction site. “Building with CLT is quick and easy, but it is also a sustainable and climate smart material that additionally helps to create a good work environment for the construction workers,” says Anna-Lena Gull. CLT manufacturing takes a large sheet and then cuts it down into smaller units. Modern CNC technology produces precision cut components that fit together perfectly. Building with CLT is an entirely different approach that gives complete control from idea to completion. Logistics, delivery and installation are all planned in advance, resulting in fewer decisions and thus fewer errors. The sheer speed of assembly also makes the process cost-effective.
170,000 m3 Setra’s new factories will produce up to 50,000 m3 of wood components and 120,000 m3 of CLT.
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Climate smart raw material
Raw material from responsibly managed forests Our business begins in the forest. The raw material for our production comes from responsibly managed forests. Sweden has a long tradition of sustainable forest management. This means developing the economic, ecological and social values of the forest in balance. Sustainable forestry is a crucial issue for Setra’s owners, Sveaskog and Mellanskog.
Sustainable forestry – the Swedish model As well as long-held traditions, Sweden also has forest conservation legislation. The Swedish Forestry Act sets out how we are to manage and nurture our forests. The purpose of the act is to ensure that the forests provide a good return while also preserving biodiversity. In Sweden, at least two new trees are planted for every one that is harvested. Reforestation of the land must commence within three years of harvesting, by planting, sowing seed or using seed tree stands. New trees must have appeared within five years. Thanks to the Swedish Forestry Act and its reforestation commitment, we now have twice as much forest as we did a hundred years ago. Growth in the Swedish forests is greater than the amount harvested and this has been the case throughout the twentieth century. Approximately 90 million cubic metres of the approximately 120 million cubic metres of forest growth are harvested every year. In other words, the amount of forest in Sweden is constantly growing year on year and the total wood stock amounts to more than three billion cubic metres of forest. Today approximately 70% of Sweden’s land area is covered with forest and approximately 1% is harvested every year. Active forestry is climate smart. As the trees grow, they absorb carbon dioxide, with the young growing trees taking up more than the older ones. This is why managing the forest produces a major benefit for the climate. When we then produce wood products, we help to lock the climate benefit into houses and other buildings.
Sustainability Report 2018 — Setra Group
Setra’s owners are also our biggest raw material suppliers Sustainable forestry is a crucial issue for Setra’s owners, Sveaskog and Mellanskog. It is about securing the benefits of the forest for everyone, now and in the future. State-owned Sveaskog is Sweden’s largest forest owner, and the company’s entire forest holding is FSC certified. Sveaskog has set aside 20% of its productive forest land below the tree line for nature conservation. That is a total of over 600,000 hectares, or 840,000 football pitches. The ambition is to be the leading forest company and a model of sustainable enterprise. This means combining responsibility and profitability to secure diversity, competitiveness and increased value for future
generations. It also means maintaining and strengthening the climate benefit and social assets of the forests. Mellanskog is an association owned by 26,000 private forest owners, which buys its members’ wood and then sells it on to industrial customers such as Setra. The association lobbies for the members’ right to own forest and for free, profitable and responsible forestry. Over a third of Mellanskog’s members’ forest land is PEFC certified and the trend is growing. This means that Mellanskog’s certified members have set aside around 44,000 hectares for nature conservation purposes, which equates to around 7.5% of the forest land that members have had certified or have a conservation plan for.
The Setra Group’s owners Sveaskog
Mellanskog
Business: Forest plus sales of logs, pulpwood and biofuel.
Business: Forestry services, sales of members’ wood and lobbying work on business policy.
Owner: Swedish state
Owner: 26,000 private forest owners
Turnover: 6,971 SEKm (2018)
Turnover: 3,180 SEKm (2018)
Certification: All Sveaskog’s forest land is FSC certified.
Certification: Over a third of members’ forest land is PEFC certified.
Fire-damaged logs Setra Färila
19
Setra Färila saves firedamaged logs How come you’re sawing fire-damaged logs? “A huge amount of value has been or risks being lost due to the forest fires of 2018. Naturally, we want to help our owners Sveaskog and Mellanskog save as much as possible, which is why we’re sawing fire-damaged logs from the local area.”
3,600,000 The number of cubic metres of raw timber purchased by Setra in 2018 to produce planks, boards and more processed construction products.
98 %
The proportion of raw material purchased by Setra from Swedish suppliers. Setra’s timber normally comes from within a radius of about 100 kilometres from the sawmill.
How are the burned logs being dealt with? “It takes careful planning of logistics, storage, product sorting and decontamination. We began accepting fire-damaged logs in mid-September and started sawing in early December. The work is expected to continue until March or April 2019. We can’t saw any fresh logs during this period, as the fire-damaged stock has to be processed separately. Once we’re done, we’ll need to decontaminate the whole plant, as we can’t have any soot in the cellulose chips that we sell to paper manufacturers. We’re selling the chips from the burned logs to thermal energy plants.” How does having timber from fire-damaged logs in their delivery affect customers? “They’re helping to use up wood that would otherwise have been wasted. In terms of quality there’s no difference – we have the same high standards as when we saw fresh logs.
Mattias Forslund, Setra Mill Manager, Färila.
Sustainability Report 2018 — Setra Group
20
Climate smart raw material
Controlled and certified raw material Pine and spruce are the raw material in Setra’s production. All the wood is controlled and can be traced back to the harvesting site. A large proportion is certified. Setra’s raw material coordinators check that the timber meets these requirements, for example via visits to suppliers and follow-up of harvesting.
The raw material used in Setra’s production is spruce and pine, which is further processed into various wood products and bioproducts at our sawmills and processing units. From a sustainability perspective, it is important for us at Setra that the raw material comes from responsibly managed forests. Setra has no forests of its own and buys in all its raw material from around 20 suppliers. 98% of the raw material comes from Swedish suppliers, with Setra’s owners Sveaskog and Mellanskog accounting for the largest proportions. A small amount comes from Finland and Norway. For Setra, it is important to have long-term relationships with suppliers in order to ensure quality and deliveries. The aim is to deliver the right log to the right saw at the right time. The cutting is tailored to customer wishes already in the forest. In 2018, Setra purchased 3.6 million cubic metres of raw material, often of local or regional origin. The catchment area is normally within a radius of about 100 kilometres from the sawmill. The majority of the raw material is delivered to the sawmills by truck. Some plants with their own track can accept rail deliveries, which makes longer and more efficient transport possible. A little under 5% of the volume is delivered by rail. Certified and controlled wood The raw material that Setra buys in is either certified or controlled. Certification is carried out in line with FSC® and PEFC™, the world’s largest forest certification systems. The timber that is not certified is controlled and meets the requirements for FSC Controlled Wood and PEFC Controlled
Sustainability Report 2018 — Setra Group
Sources. It also meets the requirements in the European Timber Regulation. In addition, Setra’s sawmills and processing units are certified according to FSC’s Controlled Wood and Chain-of-Custody standards. The minimum requirement for wood supplied to Setra is that the origins are traceable and meet five basic criteria. Setra does not accept: • Illegally harvested wood • Wood from forests with serious social conflict. • Wood harvested in forests in which high conservation values (HCVs) are threatened. • Wood from forests worthy of conservation. • Wood from forests in which genetically modified trees are planted. Setra’s raw material coordinators check that the timber meets these requirements, for example via visits to suppliers and follow-up of harvesting. If the timber comes from a supplier who is certified, the
Certified raw material
100 % All of the wood purchased by Setra is traceable, and meets requirements on controlled raw materials.
supplier conducts these checks itself. Setra pays a premium for certified raw material. The amount of certified timber bought in is primarily steered by customer demand. In 2018, 40% of Setra’s sold wood products were FSC® or PEFC™ certified, which is a rise compared with 2017. At the same time, 22% (18%) of the cellulose chips and 16% (10%) of the biofuel was sold as certified. Interest in certification is also on the rise for these products.
PEFC, Programme for the Endorsement of Forest Certification, is an independent umbrella organisation that works for sustainable private forestry through certification by an independent third party. In Sweden approximately 11.5 million hectares of forest land are PEFC certified.
FSC, Forest Stewardship Council, is a nonprofit, international, independent organisation of its members that offers a voluntary certification system for responsible forest management. Approximately half of the productive forest land in Sweden is FSC certified.
Spruce 41%
Pine 59%
Raw material purchasing Setra buys in pine and spruce from around 20 suppliers.
Sales of sawn wood products – proportion certified and controlled 100%
Controlled Proportion PEFC
16%
19%
19%
19%
20%
21%
19%
17%
18 %
20%
2014
2015
2016
2017
2018
Proportion FSC
“ Responsible forestry is a crucial issue for Setra’s owners, Sveaskog and Mellanskog. It’s about securing the benefits of the forest for everyone, now and in the future.”
22
Resource-efficient business
Resource-efficient business Setra works systematically to cut the environmental impact of its production. Key issues are noise, energy consumption and resource efficiency, as well as greenhouse gas emissions throughout the value chain.
Electricity consumption 2010–2018 Setra’s sawmills and processing units are certified according to the environmental management standard ISO 14001. Since autumn 2017, the certificate has also included an energy survey element. Setra’s main environmental impacts are energy consumption, noise, emissions to air from internal transport and biofuel boilers and chemicals management at the units where Setra carries out pressure treatment. The whole sawlog is used At Setra, utilising the entire sawlog goes without saying and leads to high resource efficiency. How Setra makes optimal use of the raw material is a key issue, in terms of both profit and sustainability. The company strives to attain a high saw yield, i.e. a high volume of sawn product in relation to the volume of incoming raw material. The saw yield is affected by the dimensions of the log, the sawing technology and the choice of saw pattern. The material in the sawmill that does not become boards and planks becomes cellulose chips, biofuel or animal bedding. The quality of the bioproducts is important; they are an important raw material or fuel in the customer’s processes. Noise is a priority environmental issue Setra’s units are often close to local communities and as these grow, new homes have been built increasingly close to the production facilities. Much of the operational activity takes place outdoors and neighbours can find it disruptive. Noise assessments are carried out in conjunction with new investments and changes to operations. Examples include the new component and CLT factory in Långshyttan. Noise assessments are being carried out there to assess how these new operations
Sustainability Report 2018 — Setra Group
Diesel consumption 2010–2018
(kWh/m3 sawn timber) (kWh/m3 sawn timber) 17,6
71,1 70
65
63,1
62,4
60
Targets 2020: 15.0 kWh/m3 (-15% compared with 2010)
15,1
14
Targets 2020: 56.9 kWh/m3 12 (-20% compared with 2010)
55
50
16,0
15,9
16
66,7
2010
2016
2017
2018
will affect local residents and how the plant should be designed to avoid unnecessary noise disruption. Electricity-intensive operations Setra’s operations are electricity-intensive. Many elements of the sawmill process consume large amounts of energy. The single largest consumption of heat and electricity takes place during wood drying. The heat for drying is produced in the boiler, which is fuelled with bark and sawdust from Setra’s own production. 99% of Setra’s thermal energy is produced using renewable fuel. Total energy consumption amounted to 669 GWh in 2018. Thermal energy accounted for 78%, electrical energy just under 18% and fuel consumption just over 4%. In 2016 work began on an energy audit of all units. Setra is covered by the Act on energy audits in large enterprises. This will be complete by 2019. An energy audit shows how much energy is brought in and used to run the company’s operations each year. It shows how the energy is distributed through operations and how much it costs. The results guide Setra in determining the measures that are most profitable from an
10
2010
2016
2017
2018
energy saving standpoint. Our assessment is that the greatest potential lies in improving the efficiency of wood drying. Investment in new energy-efficient equipment or finding new ways of working and procedures can also lead to savings. Six units have been audited so far with three remaining. Setra has an overarching goal to reduce energy consumption. Fuel consumption is to be down 15% per cubic metre of sawn timber by 2020 compared with 2010. Electricity consumption is to fall by 20% in the same period. Fuel consumption fell by 11% between 2010 and 2018. However, consumption has increased somewhat compared with 2017. One reason for the increase is that we now have more forklift trucks. Electricity consumption fell by 15% in the same period. One important reason is that production has increased, which has a positive impact on this specific consumption. At the same time, energy saving measures have been put in place at several plants. Examples include replacing lighting with LED fittings, time-controlled machinery and conveyors to reduce idling, and night inspections to catch ‘energy thieves’.
Smart watering Setra Heby
23
Smart log watering at Setra Heby
Energy consumption 2018
515,932 MWh Bioenergy district heating or own boiler
In total, consumption reached 669,389 MWh 20,029 MWh Internal transport (diesel)
10,226 MWh Internal transport (biodiesel) 117,656 MWh Electrical energy
5,545 MWh Heating oil district heating or own boiler
Setra Heby has started sprinkling its logs with wastewater. How did that come about? “The rivers where we get the water for watering start to run dry in early May so it’s quite an unreliable water source. And a water shortage means problems for us. There’s a risk the wood will be damaged. So finding a smart way to water the wood was extremely important. The idea actually came from the technical department of the municipality here in Heby. Initially, we discussed the possibility of drilling and pumping up the water, which would naturally have been a much more demanding option.” How did you actually solve the problem? “We met with the municipality and set up a schedule with the aim of getting started as quickly as possible, to safeguard access to water. The municipality made sure that the water reaches the sawmill and our timber yard via a hose from the treatment plant. Our job was to find a tank to store the water. That came from Setra’s new industrial property Kloster in Långshyttan. Everything was connected up and fine-tuned to be up and running by the summer holiday period.” What are the benefits of this approach? “There are lots of benefits! We’ve got a reliable and cost-effective watering system now. This means less damage and fewer quality defects, which mean higher income. And it’s much better to make use of the water that already exists rather than drilling for new water.”
Jan-Erik Johansson-Vik, Mill Manager Setra Heby.
Sustainability Report 2018 — Setra Group
24
Resource-efficient business
Greater use of wood means positive effects for the climate The majority of Setra’s greenhouse gas emissions originate at the transport stage. But wood binds carbon and the benefit of using wood in construction and housing far exceeds emissions from the production of the products seen from a lifecycle perspective, even though transport distances to the customer are sometimes long.
The climate report shows emissions from a lifecycle perspective Every year Setra produces a climate report for its operations. The climate report shows emissions from a lifecycle perspective from planting spruce or pine seedlings to delivering processed products to customers. Setra’s greenhouse gas emissions from its own operations (Scope 1) accounted for 5% of total emissions in 2018. Emissions from Setra’s own operations are from heating boilers, machines and business travel. Indirect emissions from purchased energy (Scope 2) accounted for less than 1% of emissions. Since 1 January 2018 Setra has purchased ecolabelled electricity produced using hydro power, wind power and bio energy. This has resulted in a considerable decrease in emissions in Scope 2. Emissions in Scope 3, which covers transport, raw materials, waste, etc. finally account for 95% of emissions. Transport is by far the largest source of greenhouse gas emissions. How are we cutting our greenhouse gas emissions? Setra has the goal of reducing greenhouse gas emissions by 6 kg per cubic metre of sawn timber by 2020, calculated from the base year 2011 when emissions were calculated as 48 kg per cubic metre of sawn timber excluding transport. In 2018 emissions were 25 kg. The emissions target was met by a wide margin due to key measures such as buying in renewable electricity, increasing the proportion of renewable diesel in machinery and reducing energy consumption. In 2019 a plan will be drawn
Sustainability Report 2018 — Setra Group
46 %
46% of the total volume sold is transported by road and 54% by sea. 5.4% of all incoming timber was transported by rail.
up for how Setra is to become carbon neutral. The target for reduced greenhouse gas emissions and climate neutrality can be attained through: • Continued energy audits and implementing savings measures. • Setting criteria and conducting a dialogue with hauliers. Here it is crucial to use as much of the load capacity as possible and to minimise the distance that the vehicle drives unloaded. • Creating opportunities for deliveries of timber and finished products by rail. • Participating in developing renewable fuels, e.g. through investment in pyrolysis fuel.
Wood binds carbon Calculations show that wood binds the equivalent of 800 kg of carbon dioxide per cubic metre of sawn timber. At the same time, the carbon emissions from a life cycle perspective from planting to delivery to an average customer in Sweden are 35 kg. Using wood for construction and housing produces a carbon sequestration effect of 765 kg carbon per cubic metre of sawn timber. Marketing and increasing the sales of wood products is in other words Setra’s most important task in reducing our negative climate impact and that of society. 1 The climate report is reported under the guidelines of the Greenhouse Gas Protocol. The Greenhouse Gas Protocol is an international calculation standard.
Carbon emissions Emissions from Setra’s operations (tonnes). 2018
2017
2016
2015
Scope 1
8,979
8,119
9,880
10,354
Scope 2
231
37,657
43,032
41,069
Scope 3, including transport
191,089
194,945
151,855
148,577
Scope 3, excluding transport
(23,282)
(20,858)
(24,076)
(24,597)
200,299
240,721
204,767
200,000
Total: Scope 1
Direct emissions from operations.
Scope 2 Indirect emissions from purchased energy. When Setra buys in electricity, district heating and district cooling, the emissions do not occur inside the gates but at the site of the energy production. Scope 3 Indirect emissions from purchased transport, hired machinery and the climate impact of purchased products, for example.
Greenhouse gases Greenhouse gas emissions per activity, 2018 2.4% Energy
3.3% Machines
0.3% Business travel
10.9% Timber transport 0% Waste 0.3% Employee commuting 10% Raw materials and materials
72.9% Outbound deliveries
Wood from a climate perspective
1,366,000 Wood binds the equivalent of 800 kg of carbon dioxide per cubic metre of sawn timber. The volume of wood products Setra produced and sold in 2018 (1,708 million cubic metres) has thus captured in the region of 1,366 million tonnes of carbon dioxide. That equates to the greenhouse gas emissions of around 135,000 people in Sweden.
Emissions and respective carbon sequestration in kg CO2/m3 sawn timber for different types of destination. Emissions are calculated based on a lifecycle perspective from planting to transport of finished goods to the customer. 231 Japan 69 35 Germany Sweden 25 60 UK
Excluding outbound deliveries
-800
Including transport to an average customer in a typical destination Amount of carbon bound in wood recalculated as CO2
26
Culture and colleagues
Committed employees are key Setra’s most important resource is its people. It is their expertise, drive and commitment that takes Setra forwards. We are working to develop a high-performance, valuesbased organisation that shares a common approach. This is vital to increasing our competitiveness.
Employee motivation index, EMI 65
69
70
71
70
2012
2013
2016
2017
2018
The SetraRingen employee survey shows that motivation is continuing to grow within the company. EMI is a measure of how motivated employees are in their day-to-day work and with Setra as an employer. The employee survey has been carried out every year since 2016 and Setra’s aim is for EMI to improve year on year. The results remain stable.
Management by objectives and constant improvement. Setra embraces values-driven leadership in which the values of commitment, innovation and responsibility are brought to life every day. A healthy company is a company in which the employees feel valued, feel they can take initiative, be listened to and understand their own role in attaining the company’s overarching goals. Setra’s approximately 900 employees are the organisation’s most important resource. The challenge is that the units span many different locations across Sweden and around the world, with different responsibilities and duties. To attain the overarching strategy and business plan, since 2016 Setra has been working in line with a management by objectives model in which the overarching goal is made clear and broken down to all functions, units and employees. The model is based on managers and leaders passing on their expectations and employees setting the targets. The idea is to make the most of every employee’s commitment and for each person to see their part in Setra’s results and development. Management by objectives helps the organisation to make the most of the skills, potential and
personal drive of its employees. In our operations we strive to systematically improve our results. We want to increase safety, quality, delivery reliability and productivity. An important part of the work is our meeting structure, with what we term briefings, in which we follow up on our targets and improve ourselves where we fall short. Some production units have been working on daily management and systematic improvement work for several years while others are beginners. Operations outside the production side have also been inspired to adopt the same approach. Leadership and entrepreneurship To improve Setra’s development, we need to develop our skills and leadership in the company. We will be surveying and defining skills and leadership. This involves both the technical aspects relating to the job and the actual behaviours we are looking to see. One goal is to find new ways for employees to continue learning and developing. This can include internal mobility or development projects which do not require changing location. In the long term we are going to need more technical expertise,
which will open up new opportunities for existing employees and new talent. During the year we started work on a new leadership programme with an external partner. The programme will start and be evaluated in 2019. We are planning to clearly define Setra’s leadership profile hand in hand with the roll-out. We will also be producing a more systematic means of identifying and developing Setra’s leaders of the future. Performance reviews in dialogue between manager and employee are an important tool for discussing further development. SetraRingen, Setra’s annual employee survey, is another tool we use. This year’s survey shows that the employee motivation index (EMI) remains at the same level as in previous years, 70 (71). The result is stable and in line with comparable industries. We are convinced that employees who enjoy their work perform better. This is why it is important to analyse the results and reinforce and develop leadership, working methods, behaviours and health and safety. The aim is for EMI to increase year on year. Responsibility for strengthening and improving health and safety rests with employees and managers. >
Sustainability Report 2018 — Setra Group
2 %
Total employee turnover in 2018 was 2%.
46 The average age of Setra’s employees is 46.
28
Culture and colleagues
White collar 23%
Proportion blue collar and white collar respectively
Outside Sweden 7%
Proportion of employees in Sweden and in other countries, respectively In Sweden 93%
Blue collar 77%
Workplace accidents 2.8
2.7
2.9 2.5 2.0
2014
2015
2016
2017
2018
The number of risk observations has increased compared with 2017.
Workplace accidents with sick leave per 100 employees. Unfortunately there were more accidents in 2018 than in the previous year.
Health and safety In historical terms, the wood industry has been an accident-prone industry. Setra has a fundamental zero vision. No-one is to suffer harm at work. A good safety culture, based on knowledge, is essential in achieving that. All employees are trained in working safely. Safety training is now part of Setra’s compulsory introduction for new employees. Since 2016, virtually all employees have undergone SSG’s safety training, an established training concept in Swedish industry. Equivalent requirements are made of the contractors who carry out work in our units. Setra has also made a major investment in the Swedish health and safety training Bättre Arbetsmiljö, BAM. Mangers, leaders and safety representatives have completed training with the aim of establishing systematic work to improve the physical
and psychosocial work environment. 35 people attended the training in 2018. During the year, mill managers, health and safety coordinators, safety representatives and Group management came together at a conference with a focus on safety. The purpose was to increase awareness of good safety culture and to produce proposals for Setra’s work to improve safety. Setra has invested heavily in perimeter protection. All the unit’s saw lines and trim saws are protected by barriers and safety guards that turn off the current if someone gets too close to the machinery. One interim target on the way towards zero is to keep the figure below 1.0 accidents with sick leave per 100 employees by 2020. In 2018 there were 20 accidents leading to sick leave, typically slips and crush injuries. This is equivalent to 2.5 (2.0) and unfortunately means an increase
compared with 2017. Health and safety is at the top of the agenda in our new daily management approach. We are seeing a constant increase in the number of risk observations and reports of near misses and the idea is for this preventive work to lead to better safety and fewer accidents long term. Setra uses SIA, the common system of the sawmill industry for reporting work-related injuries, to handle near misses and accidents. Mental illness In 2018 all managers and employees were offered training in alcohol and drug testing. Random testing will begin in early 2019. This is an important health and safety issue. Setra has entered into an agreement with a company which will help us with >
Sustainability Report 2018 — Setra Group
2020
the number of accidents leading to sick leave is to be less than 1.0 per 100 employees. And the ultimate target is zero.
30
Culture and colleagues
Key figures, employees Average number of employees
Proportion of women
2018
861
17%
2017
849
14%
2016
855
14%
2015
938
14%
2014
931
13%
hidden mental illness such as stress, alcohol, drugs and gambling addiction. The agreement also gives all employees an opportunity to ask anonymous questions about mental health, both work-related and private. Sick leave Happily, sick leave fell in 2018. Sick leave was 4.5% (5.1). This figure includes shortterm and long-term sick leave. We have seen a gradual reduction in sick leave since 2015 when the level was considerably higher at 5.7%. It is natural for people to be ill from time to time. But we are also aware that there are many factors, such as job satisfaction, leadership and health and safety, also affect how often and how long we are absent. Business ethics Business ethics is an important part of values-based leadership. Setra strives to uphold high ethics in all our business relations and to treat our customers, suppliers and partners with responsibility and integrity. Setra’s business ethics guidelines include compliance with competition legislation, gifts and entertaining as well as a code of conduct for suppliers. We surveyed our business risks during the year. This work culminated in a white
Sustainability Report 2018 — Setra Group
paper in which we reported on business ethics dilemmas, Setra’s approach and expected conduct. In conjunction with this, we produced an online training course which will be introduced in early 2019. In 2017, Setra started imposing sustainability requirements in the purchasing chain. Setra developed a code of conduct for suppliers based on the principles of the UN Global Compact and relevant international conventions. It is intended for suppliers of goods and services as well as partners, both in Sweden and abroad. Setra’s largest and most important purchasing category is naturally wood and here we require that the raw material is controlled and certified. However, the company also makes other major purchases, including transport, plastic wrap, stickers and contracting services. A risk analysis of suppliers that deliver products and services worth more than SEK 1 million annually was therefore carried out. The overall risk analysis has been carried out by country, industry sector, product and supplier. The company is now working on ensuring that suppliers sign the code of conduct. For suppliers with an element of risk, we will send out self-assessment forms, via which we collect information so that we can make a more accurate supplier assessment.
Total sick leave 5.1%
5.7%
5.3%
5.1% 4.5%
4.0%
2013
2014
2015
2016
Sick leave continues to fall.
2017
2018
4.5%
We have seen a gradual reduction in sick leave from 2015 when we were at a considerably higher level, 5.7%.
32 Management
Setra’s management President and Group CEO
Finance Director
Hannele Arvonen
Johanna Gydingsgård
Born: 1966 Employed since: 2013 Education: MSc Forestry Science. BA International Relations
Born: 1974 Employed since: 2018 Education: Masters’ in business economics
Market Director
Bioproducts & Raw Material Director
Olle Berg
Klas Flygare
Born: 1965 Employed since: 2013 Education: MSc Econ.
Born: 1965 Employed since: 2012 Education: MSc Forestry Science
Enterprise Risk Manager
CTO
Pontus Friberg
Andreas Hörnfeldt
Born: 1962 Employed since: 1993 Education: MSc Forestry Science
Born: 1969 Employed since: 2016 Education: MSc Eng.
Production Director
HR Director
Anna Rasmuson
Joakim Nyqvist
Born: 1969 Employed since: 2017 Education:: MSc Eng.
Born: 1971 Employed since: 2018 Education: Bachelor’s degree in education
Senior Advisor
Anders Nordmark Born: 1961 Employed since: 2017 Education: MSc Eng.
Setra’s organisation
CEO
FINANCE AND ACCOUNTS TECHNOLOGY Purchasing and IT
SUSTAINABILITY Communications and Environment ENTERPRISE RISK MANAGEMENT
HR / PAYROLL
MARKETING
Sustainability Report 2018 — Setra Group
RAW MATERIAL AND BIOPRODUCTS
PRODUCTION
Financial overview
33
Five-year report SEK million
2018
2017
2016
2015
2014
Sales growth Change in net sales compared with previous year, expressed as a percentage.
4,185
3,891
4,043
4,218
4,194
29
14
85
6
41
Operating margin Operating profit expressed as a percentage of net sales.
Income statement Net sales Other operating income Total income Operating expenses Depreciation according to plan Items affecting comparability Operating profit Net financial items
4,214
3,905
4,123
4,224
4,235
-3,746
-3,620
-3,913
-4,049
-3,919
-101
-91
-100
-109
-115
-
-
38
-19
-
367
194
153
47
201
-14
-14
-18
-21
-31
353
180
135
26
170
Tax
-67
-30
-32
-6
-37
Profit/loss for the year from remaining businesses
287
151
103
20
133
Profit/loss from discontinued operations, net after tax
-57
-34
-
-
-
230
116
103
20
133
Profit/loss after financial items
Profit/loss for the year
Balance sheet Intangible assets
126
126
126
144
144
Tangible assets
790
620
668
662
702
Financial assets
25
30
1
1
1
Deferred tax assets
44
49
46
83
97
1,392
1,222
1,285
1,264
1,305
546
501
310
324
363
Total assets
2,923
2,548
2,436
2,487
2,612
Equity
1,580
1,372
1,347
1,264
1,274
54
35
1
2
–
458
445
459
571
739
Current assets Cash and cash equivalents
Deferred tax liabilities Financial liabilities and interest-bearing provisions Operating liabilities
831
696
629
650
599
2,923
2,548
2,436
2,487
2,612
Sales growth, %
7.6
-3.8
-4.1
0.6
3.1
Operating margin, %
8.8
5.0
3.8
1.1
4.8
Total equity and liabilities
Key indicators Net margin, %
5.5
3.0
2.5
0.5
3.2
Operating capital, SEK million
1,415
1,314
1,471
1,467
1,669
Return on operating capital, %
26.9
13.9
10.4
3.0
12.4
Return on equity, %
15.6
8.5
7.6
1.6
10.9
Equity ratio, %
53.9
53.9
55.3
50.8
48.8
Financial net debt, SEK million
-121
-28
115
213
344
-8
-2
9
17
26
Interest cover, multiple
21.7
13.9
11.9
8.3
6.0
Earnings per share, SEK
4.46
2.25
2.00
0.39
2.59
Cash flow from operating activities
388
347
185
269
113
Investments in tangible assets
297
86
108
78
63
Net debt/equity ratio, %
Net margin Profit/loss for the year expressed as a percentage of net sales. Operating capital Balance sheet total less cash and cash equivalents, financial assets and non-interest bearing liabilities and provisions. Return on operating capital Operating profit expressed as a percentage of average operating capital (based on the opening and closing balances for the period). Return on equity Profit/loss for the year expressed as a percentage of average equity (based on the opening and closing balances for the period). Equity ratio Equity expressed as a percentage of total assets. Financial net debt Interest-bearing liabilities and provisions minus cash and cash equivalents and short-term investments. Net debt/equity ratio Financial net debt divided by equity. Interest cover Operating profit plus financial income divided by financial expenses. Earnings per share Profit/loss for the year divided by the average number of shares during the year.
Cash flow and investments
Sustainability Report 2018 — Setra Group
34
Managing Setra’s sustainability work
Managing Setra’s sustainability work Setra’s aim is that a sustainability perspective will be an integral part of everything we do. Our values of commitment, innovation and responsibility govern how we act in a sustainable and ethical way in our work every day.
Governance Most important sustainability issues Setra conducts a dialogue with customers, employees, owners, suppliers and logistics providers. We work to develop this communication, since it is through this interaction that we discover ideas for cooperation and improvement. Interaction with our stakeholders, coupled with our own analysis, has given us a good picture of Setra’s key sustainability aspects. The materiality analysis conducted in 2014 and updated in 2018 shows that Setra’s most important sustainability issues according to stakeholders and Setra are: •E conomic performance •R esponsible forest management •R esource efficiency •C limate impact •C ustomer portfolio •W orking environment, occupational health and safety Setra also prioritises the following issues: • Values and culture • Business ethics •S kills development and talent management Managing Setra’s sustainability work Setra’s sustainability policy is one of the most important steering documents for sustainability work. The policy highlights the focus areas of business ethics, employees, health and safety, and environment and climate. Sustainability is an integrated part of Setra’s vision and business concept. Sustainability organisation Setra has a sustainability function which includes the environment and communications departments. The work of the sustainability function is headed by the Group’s Sustainability Manager and seeks
Sustainability Report 2018 — Setra Group
Environmental risks
Handling/action
Breaches of environmental legislation
Training Procedures and audits in line with ISO 14001 Expert function
Unplanned emissions to land, air and/or water
Training Maintenance of plants
Fire
Training Systematic fire safety work Installations to limit injury, e.g. alarms and sprinklers
Soil pollution
Dialogue with supervisory authorities Investigation Remediation
Natural disasters, impacts
Overarching and unit-specific risk assessments
to develop work on sustainability, act as an expert function and support the business. The HR unit also plays an important role in work on sustainability. Responsibility for risk management is delegated from the CEO to the person responsible for risk management. During the year, Setra established a new risk management process. The operational work on managing environmental, health and safety, and employee issues takes place in the business units, as does the work relating to business ethics. Management system makes work systematic Setra’s Swedish business operations are environmentally certified under ISO 14001. There has also been an energy audit element since autumn 2017. The management system includes governance of health and safety and fire safety measures. However, these elements are not externally audited. Setra’s sawmills and processing units are certified under FSC and PEFC’s Chain-of-Custody standards and FSC’s
standard for Controlled Wood. Certification shows that the company has a system for tracing wood raw material and ensuring that it comes from responsible forestry. Documentation for this is also linked to the central management system. There are currently four overall sustainability goals for the business: climate performance, energy use, occupational safety/ accidents and sick leave. Local sustainability goals are also defined for each unit. Transparency and reporting Transparency is a prerequisite for creating confidence in and commitment to our sustainability efforts, which is why Setra chooses to publish the results of our work in a sustainability report. The most important sustainability issues are the backbone of the structure and content of Setra’s Sustainability Report. We apply GRI’s¹ guidelines and have also adapted the content to the requirements for corporate reporting governing sustainability and diver-
1 Global Reporting Initiative 2 Greenhouse Gas Protocol
Managing Setra’s sustainability work 35
Social risks
Handling/action
Discrimination against own employees
Policies and guidelines Training Performance reviews Employee survey
Workplace accidents
Perimeter protection such as barriers and safety guards Training in safety and the organisational and social work environment. Daily control and reporting of deviations. Development programme for managers Dialogue with employees, including with the support of employee surveys
Human rights breaches
FSC and PEFC certification Code of conduct for suppliers Risk analysis Supplier assessment
Corruption/bribery
There are special guidelines for compliance with competition legislation, as well as for gifts, benefits and entertainment and meals provided by other parties. Training for relevant employee categories Code of conduct for suppliers
sity policies. Setra also publishes an annual climate report, which documents our emissions and the carbon footprint of our products. Climate change is one of Setra’s most prioritised issues, and it is important both internally and externally to have insight into our climate-related performance. The annual climate report is drawn up based on the guidelines of the GHG² protocol.
Sustainability risks Environment All of Setra’s production units are subject to permit requirements or reporting requirements under the Environmental Code. The main environmental impact of production derives from energy consump-
tion, noise, waste, chemicals management and emissions to air and water. Pressure treatment and/or the use of different wood protection materials has taken place at several of Setra’s production plants, which may have led to soil pollution. However, other processes and activities may also have contributed to pollution. In addition, there are about fifteen currently identified sites where the Group carried out operations in the past. The environmental authorities have demanded investigations and sometimes remediation at some of these sites, and additional requirements may be imposed in the future.
safety. Setra has policies and guidelines on discrimination, gender equality, sick leave and rehabilitation, alcohol and drugs, recruitment and pay setting. All employees are covered by occupational healthcare. Anti-corruption and human rights Setra has special guidelines for compliance with competition legislation, as well as for gifts, benefits and entertainment and meals provided by other parties. Relevant groups of employees have undergone training on the guidelines. Setra developed a code of conduct for suppliers based on the principles of the UN Global Compact and relevant international conventions. Important areas in the code of conduct are business ethics, human rights, labour law, discrimination, health and safety and the environment. The code of conduct is intended for suppliers of goods, services and work, and for partners, both in Sweden and abroad. The company’s most important purchase category, timber, is covered by the third-party certification FSC, which includes protection of human rights at the production level. Most of the timber comes from Setra’s Swedish owner companies and is therefore covered by Swedish labour legislation. For the UK, there are special requirements regarding the reporting of risks. The UK Modern Slavery Act was introduced in 2015. This act requires all companies with operations in the UK to report risks and risk management relating to slavery and human trafficking in the supply chain.
Employees and social factors Swedish legislation requires systematic work environment management. Setra’s management system includes management of health and safety and fire
Sustainability Report 2018 — Setra Group
36
GRI index
GRI index General information GRI indicator
Description
This publication is the Setra Group’s Sustainability Report for the financial year 2018, i.e. the company’s sustainability report in line with GRI Standards (Core level) and a statutory sustainability report. The Setra Group publishes a sustainability report every year and the latest report was published in March 2018. The Sustainability Report covers the whole Setra Group unless stated otherwise. Setra tackles and reports the areas in which the company has a significant influence and the opportunity to contribute to sustainable
development, as well as issues that are especially important to Setra’s stakeholders. Information on the Setra Group’s important sustainability issues is provided on page 12. The GRI index below shows where the respective GRI information is provided. The auditors’ statement on the statutory Sustainability Report is on page 81 in Setraś Annual- and Sustainability Report, which is published at setragroup.com. The Sustainability Report has not been the subject of additional external audits.
Page
Comment
Setra Group AB, corp. ID no. 556034-8483
Organisational profile 102-1
Name of the organisation
39
102-2
Activities, brands, products and services
4–5, 10–11, 14–17, 18–21, 24
102-3
Location of headquarters
4, 39
102-4
Location of operations
4–5, 9, 39
102-5
Ownership and legal form
4
102-6
Markets served
4–5, 9, 14–17, 39
102-7
Scale of the organisation
4–5, 10–11, 33
102-8
Information on employees and other workers, broken down 4–5, 26–32 by employment type, employment contract, region and gender
Setra’s business operations are mainly conducted by the company’s own employees, with the majority of these being full-time, permanent employees. The average number of employees at Setra in 2018 was 861, of which 56 were based outside Sweden (UK 46, Poland 2, Germany 1, Spain 2, Austria 1, Tunisia 1, China 3 and Japan 2).
102-9
Supply chain
10–11, 18–21, 30, 35–37
The organisation’s suppliers can be divided into three main groups: Suppliers of timber raw material, suppliers of logistics services and other suppliers. Procurement procedures for timber raw material and transport services include sustainability requirements. In 2017, work began on imposing sustainability requirements on other suppliers.
102-10
Significant changes to the organisation and its supply chain
See comment
A decision to shut down the sawmill in Rolfs, Kalix in 2019 was made in 2018.
102-11
Precautionary Principle or approach
12–13, 22–25, 34–35
The Precautionary Principle is applied in the event of changes being made to business operations, for example the installation of new machines or choice of chemicals.
102-12
18–21 Externally developed economic, environmental and social charters, principles or other initiatives to which the organisation subscribes or which it endorses
ISO 14001; PEFC™, Programme for the Endorsement of Forest Certification; FSC®, Forest Stewardship Council.
102-13
Main memberships of industry or other associations and national or international advocacy organisations
See comment
Setra is a member of the Swedish Forest Industries Federation.
Statement from senior decision-maker
6–7
Strategy 102-14
Ethics and integrity 102-16
Description of the organisation’s values, principles, standards and norms of behaviour
2, 6–7, 10, 12–13, 18–21, 26–31, 34–35
Setra’s vision is to create a sustainable world. Setra embraces values-based leadership and our values are commitment, innovation and responsibility. The focus areas of the sustainability policy are business ethics, employees, health and safety, environment and climate.
Governance structure
See comment
The corporate governance report is available on pages 79–81 of Setra’s Annual Report.
Governance 102-18
Stakeholder engagement 102-40
List of stakeholder groups engaged by the organisation
12–13, 34
102-41
Percentage of total employees covered by collective bargaining agreements
32
102-42
Identifying and selecting stakeholders
12–13, 34
102-43
Approach to stakeholder engagement
12–13, 34
102-44
Key topics and concerns raised through stakeholder engagement
12–13, 34
100% of Setra’s employees in Sweden are covered by collective bargaining agreements.
Setra conducted a staff survey, a customer survey and conducted a dialogue with Setra’s shareholders during the year.
Reporting practice 102-45
Entities included in the consolidated financial statements
See comment
102-46
Process for defining the report content and the topic boundaries
12–13, 34
102-47
List of the material topics identified in the process for defining report content
12–13, 34
102-48
Effect of any restatements of information given in previous reports
See comment
The 2017 Sustainability Report incorrectly stated the number of employees. The figure did not include employees posted outside Sweden.
102-49
Significant changes from previous reporting periods in the list of material topics and topic boundaries
See comment
No significant changes in scope or aspect boundaries.
102-50
Reporting period
See comment
The report covers 2018.
102-51
Date of most recent report
See comment
March 2018.
102-52
Reporting cycle
See comment
Calendar year, annual.
102-53
Contact point for questions regarding the report
39
102-54
Claims of reporting in accordance with the GRI Standards
See comment
102-55
GRI index
36–37
102-56
External assurance
See comment
Sustainability Report 2018 — Setra GroupSustainability Report 2018 — Setra Group
Facts and key financial figures in the report refer to all of the group’s entities (parent company and subsidiaries). The business operations of Setra Wood Products are not included in the sections on production, annual climate report and employees.
The report has been prepared in accordance with Global Reporting Initiatives Standards for sustainability reporting at the Core level.
The report has not been externally audited
GRI index
37
Subject-specific indicators GRI indicator
Description
Page
Comment
GRI 200 / Economic impact 201 Economic performance 103-1 103-2 103-3
Governance
5
201-1
Direct economic value generated and distributed
11, 33
103-1 103-2 103-3
Governance
30–31, 34–35
Anti-corruption measures promote sound and informed business decisions and form a key part of being a responsible and ethical company. In 2015 the Board adopted a sustainability policy for Setra, in which business ethics are an important element. There are special guidelines for compliance with competition legislation, as well as for gifts, benefits and entertainment and meals provided by other parties. Implementation of the governing documents is currently ongoing and is conducted via training.
205-2
Communication and training about anti-corruption policies and procedures
30–31, 34–35
In 2018, an inventory was made of business ethical risks, including corruption. The guidelines have been updated and an online training course developed in accordance with the updated guidelines. The training course will be launched in early 2019.
205-3
Confirmed incidents of corruption and actions taken
See comment
No incidents reported.
Governance Environment
18–25, 34–35
Aspects that are managed: materials/responsible forest management, energy emissions, products and services, and legal compliance. Environmental work is managed on the basis of ISO 14001. Responsibility is delegated from the CEO to site managers. The Sustainability Manager is responsible for the management system, etc., and is the designated expert. Legal compliance is among the issues monitored in internal and external environmental audits. The whole annual climate report is published at setragroup.com.
Amount of material used in production, weight or volume
19
302-1
Energy consumption within the organisation
22–25
302-4
Reduction of energy consumption
22–25
305-1
Direct (Scope 1) GHG emissions
24–25
305-2
Energy indirect (Scope 2) GHG emissions
24–25
305-3
Other indirect (Scope 3) GHG emissions
24–25
305-4
Greenhouse gas intensity
24–25
205 Anti-corruption
GRI 300 / Environmental impact 103-1 103-2 103-3
301 Material 301-1 302 Energy Setra has bought in ecolabelled electricity since 1 January 2018.
305 Emissions
307 Environmental compliance 307-1
Breaches of environmental legislation
See comment
In 2018 Setra Rolfs received a corporate fine of SEK 100,000 for storing timber exceeding the volume for which it had a permit.
26–31, 34–35
The following aspects are governed: health and safety, training and skills development.
GRI 400 / Social impact 103-1 103-2 103-3
Governance social impact
403 Occupational health and safety 403-1
403-2
Workers representation in formal joint management-work- See comment er health and safety committees
100% of employees in Sweden are represented by a safety officer and occupational health and safety committees. Systematic health and safety measures at Setra are carried out locally by our units. The site management, safety officers and employees take part in such measures. A group-wide Health and Safety Council headed by Setra’s Sustainability Manager supports overall work with communications, training and exchanging of experiences. The council includes safety officers, managers and HR. The Health and Safety Council was dormant in 2018.
Types of injury and rates of injury, and number of days of absence due to illness
In 2018, there were 20 accidents that resulted in sick leave being taken and 169 accidents that did not lead to sick leave being taken. The number of days of absence resulting from work-related injuries amounted to approximately 230 days. Typical injuries include crush injuries, wounds and sprains. We record, manage and follow up work-related accidents and near-misses using SIA, the sawmill industry’s common system for reporting industrial injuries.
28–29
404 Training and education 404-3
Annual performance and career development reviews
26–27
Being a significant employer is also about showing consideration for the global world. As part of this, Setra is a proud sponsor of SOS Children’s Villages.
Sustainability Report 2018 — Setra Group
Addresses Head Office
Sales & Administration
Production units
Setra Group AB Box 3027 SE-169 03 SOLNA
Setra Customer Service Box 223 SE-801 04 GÄVLE
Sawmills
Street address: Gårdsvägen 18 Phone: +46 8 705 03 00 Fax: +46 8 705 03 20 E-mail: info@setragroup.com
Street and delivery address Setra Trävaror Skolgången 13 802 57 GÄVLE Sawn wood products Phone: +46 8 705 03 00
Get in touch!
Processed wood products Phone: 026-14 78 30
Setra Färila Snasbäcken SE-820 41 FÄRILA Phone: +46 651 76 81 00 Setra Hasselfors SE-695 85 HASSELFORS Phone: +46 585 485 00 Setra Heby SE-744 32 HEBY Phone: +46 224 368 00 Setra Kastet Box 430 SE-801 05 GÄVLE Phone: +46 26-54 80 00
Would you like more information about our sustainability measures or this report? Feel free to contact us
Setra Malå Storgatan 75 SE-939 32 MALÅ Phone: +46 953 414 00
Johanna Gydingsgård CFO johanna.gydingsgard@setragroup.com +46 8 705 03 03
Setra Nyby Nybyvägen 8 SE-743 63 BJÖRKLINGE Phone: +46 18 56 08 00
Charlotte Thedéen Sustainability Manager charlotte.thedeen@setragroup.com +46 8 705 03 22
Setra Rolfs Box 10154 SE-952 27 KALIX Phone: +46 923 732 00
Production: Setra Group AB with Hilanders AB. Paper: Munken Kristall. An FSC-certified paper manufactured in Munkedal, Sweden. Printing: Åtta45.
Setra Skinnskatteberg Box 100 SE-739 22 SKINNSKATTEBERG Phone: +46 222 452 00
Processing units Setra Långshyttan Amungsvägen 17 SE-776 72 LÅNGSHYTTAN Phone: +46 225 635 00 Setra Skutskär Box 37 SE-814 31 SKUTSKÄR Phone: +46 26 14 78 00 Setra Wood Products Estuary Road King’s Lynn NORFOLK PE30 2HJ, UK Phone: +44 1553 76 00 71
Sales offices outside Sweden UK Setra Wood Products 11 St Mary’s Court North Bar Within, Beverley EAST YORKSHIRE HU17 8DG, UK Phone: +44 1482 87 00 35 Germany Setra Sales Germany Reichenberger str 5 DE-912 07 LAUF Phone: +49 170 921 1121 Poland Setra Poland Ul. Staromiejska 17 E PL-84-300 LEBORK Phone: +48 695 19 86 86 Spain Setra Sales Spain C/ Colombia 63, 4 B ES-28016 MADRID Phone: +34 91 353 39 20 Japan Setra Sales Japan 4th Floor, 32 Shiba-Koen Building 4-30, Shibakoen 3-chome Minato-ku, TOKYO Phone: +81 3 5404 7560 China Setra Wood (Guangzhou) Co Toom 1305-1306, Teem Tower No 208 Tianche Road, Tianhe District, GUANGZHOU, 510620 Phone: +86 20 2826 1820 North Africa/Tunisia Setra Group c/o Mehdi Daldoul 17 Rue Ibnarfa El Manzah 8 2037 Ariana, TUNIS Phone: +21 6 708 33 975
Setra Group AB Box 3027 SE-169 03 Solna Tel: +46 8 705 03 00 info@setragroup.com www.setragroup.com