APSA_Non-financial_information_CSR_2023

SUSTAINABILITY

REPORT 2023

ARCTIC PAPER SA CAPITAL GROUP

disclosure on non-nancial information

We ensure sustainability from forest to paper

TABLE

OF CONTENTS

This is Arctic

Paper / 8

Company

sustainability / 26

Sustainable supply

chain for client

satisfaction / 45

Environment

and climate / 54

1.1 Company Overview / 09

1.2 Business ethics / 20

1.3 Governance structure and management

on sustainability topics / 24

2.1 Materiality assessment / 27

2.2 Our contribution to the Sustainable

Development Goals / 32

2.3 Responsible business / 34

2.4 Principal risks and their management / 35

2.5 Arctic Paper’s partnerships / 38

2.6 Key business performance indicators / 41

3.1 Responsible supply chain / 46

3.2. Environmental assessment of suppliers

and responsible sourcing / 48

3.3 Transportation / 51

3.4. Commitment to client satisfaction / 53

4.1 Management approach / 55

4.2 Energy and emissions / 59

4.3. Sustainable circular production

and waste / 65

4.4 Water / 68

4.5 Biodiversity / 70

SUSTAINABILITY REPORT 2023

People / 73 About the

report / 104

5.1 Working at Arctic Paper –

Management approach / 74

5.2 Our employees' well-being

and satisfaction / 76

5.3 Human rights / 81

5.4 Health and safety / 83

5.5 Diversity, Equity and Inclusion / 84

Taxonomy / 86

7.1 Reporting period / 105

7.2 Contact / 105

7.3 ESG fact sheet / 106

7.4 ESG fact sheet

– Rottneros Group / 112

GRI Index / 116

6.1 Taxonomy compliance

assessment process / 89

6.2 Compliance verication with

the technical screening criteria / 90

6.3 Compliance verication

with minimum safeguards / 91

6.4 Accounting principles / 94

Arctic Paper has prepared its 2023 consolidated annual nancial statement in the European Single Electronic

Format (ESEF) which is the electronic reporting format in which issuers on EU regulated markets shall prepare

their annual nancial reports from 1 January 2020 based on Commission Delegated Regulation (EU) 2019/815

of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with

regard to regulatory technical standards on the specication of a single electronic reporting format as amended.

This abbreviated PDF version of consolidated nancial statement of Arctic Paper Capital Group 2023 has been

prepared solely only for the convenience of digital reading.

Despite all the efforts devoted to the conversion of XHTML le into PDF format, certain discrepancies, omissions

or approximations may exist. In case of any differences between the PDF and the XHTML versions, the XHTML

version is the only one legally binding and shall prevail.

Arctic Paper, its representatives and employees decline all responsibility in this regard.

MANAGEMENT

FOREWORD

It is with pleasure that we present to

you Arctic Paper’s latest CSR-report,

reecting our commitment to sustain-

able practices and responsible corporate

citizenship. As we navigate a changing

business landscape, it is crucial to be

transparent about our efforts to minimize

our environmental footprint.

As part of our commitment to climate

change mitigation, we have taken

signicant steps in enhancing energy

efciency, optimizing water usage, and

increasing the share of renewable energy

in our production. Arctic Paper’s goal is

to transition to fully fossil-free energy

production, accompanied by a substan-

tial reduction in GHG emissions, aiming

for zero emissions in Scope 1 and 2 by

2035. To achive this we actively invest in

renewable energy sources.

Following the principles of the circular

economy, we are committed to deliv-

ering sustainable wood ber solutions

and renewable products. Arctic Paper’s

focus is to create business opportunities

by replacing fossil-based materials with

bio-based, renewable alternatives. It’s

our responsibility to also actively safe-

guard biodiversity in conservation areas

and regenerative forests, with focus

on supplier network. Commitment to

responsible sourcing extends beyond our

operations, to ensure a positive impact

throughout our value chain.

Collaboration is key as we work with

partners to enhance sustainability bene-

ts. To uphold the highest standards of

governance, Arctic Paper has introduced a

new Code of conduct in the value chain of

Arctic Paper Group. It’s designed to rein-

force ethical practices and ensure compli-

ance with our values. We are also actively

working to create organizational resilience

in the face of changing environments and

climate conditions.

Dedication to the development and well-

being of employees is our priority. Arctic

Paper is committed to achieving zero inju-

ries, promoting diversity and inclusion, and

increasing the proportion of women at

various management levels.

Finally, we would like to express warm

thanks to all employees in the Group

for their great efforts during the year to

achieve good results both in terms of nan-

cial and ESG performance.

Sincerely,

Michal Jarczyski

CEO of Arctic Paper SA

SUSTAINABILITY REPORT 2023

Arctic Paper’s commitment to climate

change mitigation stands rm.

THIS IS

ARCTIC

PAPER

SUSTAINABILITY REPORT 2023

1.1

COMPANY OVERVIEW

Arctic Paper SA is a leading European producer of high-quality graphic paper

listed on the stock exchanges in Warsaw (Giełda Papierów Wartościowych –

GPW) and Stockholm (NASDAQ). We produce numerous types of uncoated and

coated wood-free paper, as well as wood-containing uncoated paper for printing

houses, paper distributors, book and magazine publishing houses, the adver-

tising industry and packaging producers.

POLAND

THE PAPER MILL IN KOSTRZYN NAD ODRĄ

The mill has a production capacity of about 315,000 tonnes of paper

per year and mainly produces uncoated wood-free paper for printing

books, brochures and forms, and for producing envelopes and other

paper products.

SWEDEN

THE PAPER MILL IN MUNKEDAL

The mill has a production capacity of about 160,000 tonnes per year

and mainly produces ne uncoated wood-free paper, used primarily

for printing books and high-quality brochures.

SWEDEN

THE PAPER MILL IN GRYCKSBO

The mill has a production capacity of about 220,000 tonnes per year

and produces coated wood-free paper used for printing maps, books,

magazines, posters and advertising materials.

As of December 31, 2023, Arctic Paper employs 1223 people.

Our business activities are based on the operations

of three mills:

1. THIS IS ARCTIC PAPER

SALES OFFICES

Arctic Paper Papierhandels GmbH, Austria

Arctic Paper Benelux N.V., Belgium

Arctic Paper Danmark A/S, Denmark

Arctic Paper France SAS, France

Arctic Paper Deutschland GmbH, Germany

Arctic Paper Italia Srl, Italy

Arctic Paper Baltic States, Latvia

Arctic Paper Norge AS, Norway

Arctic Paper Polska Sp.zo.o., Poland

Arctic Paper Espana S.L., Spain

Arctic Paper Sverige AB, Sweden

Arctic Paper Schweiz AG, Switzerland

Arctic Paper UK Ltd., United Kingdom

MILLS

Arctic Paper Kostrzyn SA, Poland

Arctic Paper Munkedals AB, Sweden

Arctic Paper Grycksbo AB, Sweden

We manage sales organisations across Europe, which support

our activities and contacts with customers. The company is

registered in Kostrzyn nad Odra (Poland).

SUSTAINABILITY REPORT 2023

Arctic Paper SA is also a majority owner (in possession of 51.0 % of the shares as

of December 31. 2023) of the Rottneros group. Rottneros AB is a pulp producing

company, registered on the Nasdaq stock exchange in Stockholm. Mills owned

and operated by Rottneros AB are located in Sweden and have aggregate

production capacities of about 440,000 tonnes of pulp annually. Arctic Paper

SA has nancial control over Rottneros AB, as it holds the majority of shares,

yet operational control belongs to Rottneros AB, including responsibility for the

company’s performance and sustainability matters.

Rottneros data for 2023 is not fully available in the format presented by Arctic

Paper SA. However we present selected data in Chapter 7 ESG fact sheet.

Broader description of the impact on sustainable development and results will be

presented in a separate report of the subsidiary.

Arctic Paper SA discloses information on the EU Taxonomy of environmentally

sustainable activities at consolidated level, including data from Rottneros AB.

Rottneros AB's report is available on web page:

https://www.rottneros.com/sustainability/sustainability-reporting/

Starting from the 2024 annual reporting period, Arctic Paper will include

Rottneros AB's non-nancial data to the extent required by the

new European Sustainability Reporting Standards (ESRS).

1. THIS IS ARCTIC PAPER

OUR HERITAGE AND VALUES

Arctic Paper is a company

based upon Swedish roots.

We have been manufacturing

paper with craft and dedication

since 1740. Today we run some

of the most eco-friendly mills

worldwide and are constantly

improving our sourcing,

production, sale processes

and energy management.

We try to optimise our daily

business processes to be a part

of circular bioeconomy.

Our reputation in the high-quality graphic

paper market is built on a long tradition

of exceptional work with the help of our

brands, executed by the most demanding

customers who value the proven quality of

our products.

We are clear, open-minded and follow

a long-term plan in the way we act, think

and appear. We are sensitive towards

nature and positive towards the future.

We protect natural resources and

constantly create a sound balance between

people, production and regions. We run

our business in a stable, long-term and

trustworthy manner. We are a forerunner

in the protection of nature and the devel-

opment of new products for core markets

as well as for new markets and segments.

We offer distinctive products and services

built on inventiveness and reliable quality,

crafted for the most demanding creative

ideas and using new technologies.

Our business operations are based on

well-established and trusted relation-

ships with different stakeholders. Thus,

we need to ensure that all of our busi-

ness operations are transparent – from

sustainable sourcing, the production and

delivery of our products, to the commu-

nication of our results to external stake-

holders. We are transparent and ethical

in everything we do.

Our cooperation with suppliers has been

based on Code of conduct in the value

chain of Arctic Paper Group. Our goal is

to work with suppliers who can and are

willing to assure us that they respect our

values regarding People and the Envi-

ronment. In 2021 we elaborated a new

Sustainability policy for the entire Arctic

Paper Group.

In order to face new challenges and to

address all signicant topics relevant

for our stakeholders, we implemented a

new Code of conduct for the entire value

chain of Arctic Paper Group in the begin-

ning of 2024.

SUSTAINABILITY REPORT 2023

OUR BRANDS

For decades, we have been one of the leading European

producers of premium graphic paper products, superior

packaging grades and services for the most demanding

creatives and technologies valuing the superb, reliable

and eco-friendly quality of our paper brands.

We are known for new solutions and products, as well as the continuous exten-

sion of our product ranges in step with the latest developments in printing tech-

nology for both the graphical and the packaging segments.

The graphical paper market consists of two segments: wood-free ne paper and

wood-based paper, both divided into the sub-segments of uncoated and coated

paper, while the packaging segment is served by wood-free grades. Our mills in

Munkedal and Kostrzyn produce uncoated wood-free and wood-based paper,

while the mill in Grycksbo produces coated wood-free paper.

1. THIS IS ARCTIC PAPER

KEY BRANDS

Uncoated wood-free paper, in particular – Munken Design,

Munken Book, Amber

• High-quality graphic paper with a very smooth surface, used for various kinds of

advertising and marketing materials. It is produced under the Munken brand.

• Bulky book paper, produced under the Munken brand, used primarily for

printing books.

• White offset paper, produced and distributed primarily under the Amber brand.

It’s one of the most versatile types of paper.

Uncoated wood-based paper, in particular – Munken Print

• Premium bulky book paper, produced and distributed under the Munken

brand, specially developed for colour- and monochrome-printing of books.

Coated wood-free paper, in particular – Arctic Volume, G

• Manufactured under the brand names Arctic Volume and G, used primarily

for printing books, magazines, catalogues, maps and personalised direct mail

correspondence.

Packaging paper – Munken Kraft, G-Flexmatt

The packaging paper portfolio manufactured in Munkedal, Kostrzyn and

Grycksbo has been established since 2020 in chosen markets and segments.

The combined offer from the two uncoated mills is called Munken Kraft and

covers a grammage range from 38 g/m2 to 150 g/m2 in two shades.

Since 2021, the coated packaging paper is a one-sided coated matt grade,

called G-Flexmatt.

SUSTAINABILITY REPORT 2023

OUR BRANDS AND

THE CIRCULAR ECONOMY

Arctic Paper paper grades are produced with an aim to

enhance the circular economy. We use methodologies and the

experience of third parties to create new ways to produce our

different paper ranges, based on chemical hazard identication

and qualitative exposure considerations during manufacturing,

use, and end-of-use of a product. It means that products are

made using chemicals that are as safe as possible for humans

and the environment.

Chosen Arctic Paper products, like Munken Design, Amber Graphic, G and

Arctic Volume white, have been inspected and approved to be used in for Nordic

Ecolabel certied products.

1. THIS IS ARCTIC PAPER

History of our Munken Agenda collaborations:

2019 – NABA (Nuova Accademia di Belle Arti), Milan, Italy;

2020 – École Estienne in Paris, France;

2021 – Universities in London, England;

2022 – Academy of Fine Arts in Warsaw, Poland;

2023 – Forsbergs Design and Advertising School in Stockholm, Sweden;

2024 – Kristiania University College, Oslo, Norway.

OUR BRANDS AND

THE DESIGN INDUSTRY

At Arctic Paper, we learn from students and students learn from working

with us. The Munken Agenda is our unique annual design project, which

started in 1996. For over a decade, Arctic Paper has collaborated with

different European Design Universities in creating an artistic platform for

exchanging our passion for providing high-quality products having an

eco-friendly and sustainable footprint with creativity and conceptual ideas

by artists and designers.

The Munken Agenda is perceived as an interesting design reference by art

directors, designers and agencies around Europe and the world.

SUSTAINABILITY REPORT 2023

MARKETS SERVED

AND OUR SCALE

OF OPERATIONS

99% of Arctic Paper products

are delivered to European

markets. Which, in times of

global transportation problems

and supply chain crisis, helps

us to create a relatively secure

distribution and delivery

reliability. For years our biggest

markets have been Germany,

Poland, the Nordic countries,

the Baltics, followed by France,

BeNeLux, UK and Central and

Eastern European countries.

Germany 22%

Poland 17%

UK & IE 12%

Austria and

Central Europe 10%

The Nordics 10%

France 9%

The Baltics 6%

Benelux 4%

Outside Europe 1%

Rest of Europe 9%

1. THIS IS ARCTIC PAPER

OUR MAIN ACHIEVEMENTS

AND PROJECTS IN 2023

Arctic Paper works towards business expan-

sion and revenue diversication, creating a

solid future for our stakeholders and using

natural renewable resources. We are focused

on developing our products while making a

positive contribution toward environmental

protection in our day-to-day operations.

Each year we plan and

implement innovative

and efcient solutions among

all our areas of operation.

• Joint investment of Arctic Paper and

Rottneros – conclusion of a joint-ven-

ture agreement to build a production

facility of packaging from moulded

cellulose bre.

• Kostrzyn mill was awarded with

an Employee-Friendly Employer

certicate granted by President

of Poland.

• Grycksbo mill launched a project of

pellet production installation, see Case

Study page no 62.

• Kostrzyn mill is expanding its solar

panels installation.

• Grycksbo mill switched to non-fossil

bio diesel as a fuel for internal trans-

port vehicles.

• We implemented new Code of conduct

in the value chain and

Whistleblowing policy. We also created

the Sponsorship policy.

• Grycksbo and Munkedals mills – im-

plemented Pulse meetings – short and

frequent mills’ teams meetings as an

implementation of lean methodology to

gather information about the results of

current projects.

• Munkedals mill created a ower

meadow on the mill site.

• Kostrzyn mill celebrated its 30

anni-

versary.

• Grycksbo mill celebrated its 280

anni-

versary.

SUSTAINABILITY REPORT 2023

BUSINESS MODEL

Below we present information about our business

model – key inputs and outputs, as well as business

activities and results.

INPUTS BUSINESS ACTIVITIES OUTPUTS RESULTS

HUMAN CAPITAL:

∙ 1,223 employees

all over Europe

MANUFACTURING

CAPITAL:

∙ One mill in Poland

and two mills in Sweden

∙ Total production capacity

of over 700,000 tonnes

of paper per year

NATURAL CAPITAL:

∙ Pulp

∙ Pigments

∙ Chemical additives

∙ Water

∙ Energy

FINANCIAL CAPITAL:

∙ Cash

PURCHASING:

∙ Sustainable and

ethical sourcing

∙ Compliance with

the Code of conduct

in the value chain

INNOVATION:

∙ Eco-friendly products,

innovative and efcient

production processes

PRODUCTION:

∙ Responsibility for

the health and safety of

employees, the environ-

ment and product quality

SALES:

∙ Compliance with

the Code of conduct

TRANSPORTATION

AND LOGISTICS:

∙ Sustainability and lower

footprint in deliveries

RECYCLABLE AND

DEGRADABLE PRODUCTS:

∙ Sheets and reels

∙ Coated and uncoated,

wood-free and wood-

based paper

SERVICE OFFER:

∙ Availability of standard

products

∙ Production on demand

(adjustable time frame,

quality, quantity)

∙ Delivery

∙ Product-specic training for

customers and suppliers

EMISSIONS AND WASTE:

∙ Affecting air,

water and land

ENERGY:

∙ The mill in Kostrzyn

sells heat and electricity

∙ Solar power plant

in Kostrzyn, Grycksbo

and Munkedals

∙ Hydropower plant

in Munkedals

∙ Continued investments

and working on develop-

ment of energy efciency

and independence

CUSTOMER:

∙ Customer satisfaction

∙ Brand loyalty

∙ Few customer complaints

EMPLOYEES:

∙ Stable employment and

safe working conditions

∙ Equal opportunities

to grow within the

organisation

∙ Few accidents

∙ Good relationship

with trade unions

∙ Low employee turnover

SOCIETY:

∙ Taxes from employees

and company

∙ Provision of local

employment

∙ Participation in and

support for local initiatives

∙ Commitment into

health programmes

and initiatives to support

employees, their families

and local communities

FINANCERS

AND SHAREHOLDERS:

∙ Interest and dividends

1. THIS IS ARCTIC PAPER

1.2

BUSINESS ETHICS

We value transparency in internal

and external relations, as any

unethical behaviour may expose

us to risks of reputational damage

and nancial loss. Our new

Code of conduct in the value

chain contains clear guidelines

regarding the business behaviour

of our employees and other

stakeholders, including zero-

tolerance for bribes, corruption

and other unethical acts.

We are aware of the fact that

our sales ofces and purchasing

and logistics departments are

where the risks of corruption

and bribery exposure are most

signicant. Our approach to

anti-corruption measures in these

areas is structurally embedded in

our processes.

We have a 7-step approach to procure-

ment, which limits the scope for unethical

behaviour. First, we divide item purchases

into sourcing groups. Then, we gather

information about the sourcing groups

and the market. Subsequently, we create

a portfolio of potential suppliers and

choose a strategy for each sourcing

group. We then negotiate with a selection

of suppliers and integrate further with our

chosen suppliers. Lastly, we continuously

monitor the procurement market to make

sure our contracts remain competitive.

As all decisions made during this process

are never dependent on one person, the

risk of bribery or corruption is reduced.

For large investment projects, decisions

regarding investment purchases are

made by a dedicated committee, and we

are considering extending this practice

to other large purchases. The logistics

department has a similar purchasing

system in place.

Our price lists, approved by our manage-

ment, are communicated to members of

our sales teams. Bonuses to members of

the sales teams are not tied exclusively

to their individual sales performance, but

also to the overall nancial performance

of the company. We offer bonuses to

our clients on a semi-annual and annual

basis; however, these are linked to sales

volumes, e.g., through sales volume

brackets, which are strictly monitored.

Arctic Paper does not offer other bonuses

(for example in-kind) to clients.

To us, business ethics is very much a ques-

tion of awareness. A part of the induction

programme for new employees includes

topics such as laws and regulations, anti-

bribery and anti-corruption measures,

human rights and environmental responsi-

bility. Since 2018, the programme covers

all units within the group. Thus, our key

performance indicator in this respect is

the number of our employees who have

attended such training.

SUSTAINABILITY REPORT 2023

KEY PERFORMANCE INDICATOR 2023

Number of employees who participated in the Business ethics training programme (per year) 81

LEGAL AND REGULATORY COMPLIANCE

Arctic Paper SA is a publicly listed company, which obliges us to comply with the

rules set out in the document “Best Practice of GPW Listed Companies 2021”.

A statement on current compliance with the corporate governance principles

of GPW is published on the Arctic Paper corporate webpage. We comply with

and adhere to all applicable laws and regulations in the European Union coun-

tries where we operate. Although a large part of them is uniform throughout the

Union, we are sensitive to any differences between individual countries.

Legal and regulatory compliance is a business necessity, but also a way for us to

ensure the sustainability of our operations.

We monitor the number of open legal cases where Arctic

Paper was found guilty of a breach of law or regulation.

We separate them into business and non-business related, as

well as into nes bigger and smaller than PLN 2 million.

With regards to legal and regulatory compliance, our target

is to minimise risk of lawsuit.

*Business related legal cases are from customers. All others are dened as non-business.

KEY PERFORMANCE INDICATOR BUSINESS RELATED* NON-BUSINESS RELATED*

2023

Fine bigger than PLN 2M 0 0

Fine smaller than PLN 2M 0 0

We aim for our employees to sign declarations that they have familiarised them-

selves with our Code of conduct. Our employees are participating in nano-learning

in the area of business ethics, which mainly covers corruption and bribery topics.

In 2023 all new employees received training during the onboarding process.

1. THIS IS ARCTIC PAPER

TRANSPARENCY

AND COMMUNICATION

ARCTIC PAPER GROUP IS OPEN AND TRANSPARENT IN DECISIONS AND

ACTIVITIES THAT HAVE AN IMPACT ON SOCIETY AND THE ENVIRONMENT.

• We are accountable for our actions.

• We always comply with applicable laws and regulations, and we respect,

consider and respond to the needs of our stakeholders.

• We behave ethically and actively promote ethical behaviour based in the values

of honesty, equity and integrity.

• We believe in fair and free trade. We shall refrain from any kind of bribes

and corrupt business

• All employees of Arctic Paper, regardless of their functions, are obliged to apply

the ethical principles and rules of conduct collected in the Code of conduct

in the value chain of Arctic Paper Group. It is a set of key principles and values

reecting the organizational culture of the Arctic Paper Group, the purpose

of which is to build trust and lasting loyalty of employees, customers,

shareholders and local communities

• Members of the corporate bodies of Arctic Paper should refrain from profes-

sional or other activities which might cause a conict of interest or adversely

affect their reputation as members of the corporate body, and where a conict

of interest arises, they should immediately disclose it.

SUSTAINABILITY REPORT 2023

CUSTOMERS EMPLOYEES SUPPLIERS SHAREHOLDERS

Environment

and Climate

∙ EMAS report

∙ “Paper Proles”

∙ Sustainability policy

∙ EMAS report

∙ Sustainability policy

∙ EMAS report

∙ Code of conduct in

the value chain and

Sustainability policy

∙ “Paper Proles”

∙ EMAS report

∙ “Paper Proles”

∙ Sustainability policy

People ∙ Direct communication

through sales ofces

∙ Code of conduct in

the value chain and

Sustainability policy

∙ Whistleblowing

reporting system

∙ Intranet, widely acces-

sible to all employees

∙ Meetings, both

one-on-one

and in groups

∙ Training and

education

∙ Whistleblowing

reporting system

∙ Diversity policy

∙ Direct communication

through purchasing

departments

∙ Code of conduct in

the value chain and

Sustainability policy

∙ Whistleblowing

reporting system

∙ Code of conduct in

the value chain and

Sustainability policy

∙ Whistleblowing

reporting system

∙ Sponsorship policy

Business

operations

∙ Direct communication

through sales ofces

∙ Press releases

∙ Meetings

∙ Periodic

and annual reports

∙ Annual meetings and

investors meetings

∙ Press releases

∙ Code of conduct in

the value chain and

Sustainability policy

We strive to maintain a transparent busi-

ness climate and a high level of business

ethics. A number of policies, internal

requirements, laws, rules and routines

governs the operations of Arctic Paper.

Our aim is to act with transparency and

we want our employees and other stake-

holders to experience participation in

the business. The Whistleblower system

gives anyone the opportunity to report

suspected serious misconduct that is

inconsistent with the Code of conduct and

Arctic Paper's values.

This service is intended for all our internal

and external stakeholders and publicly

available on-line. It is worth remembering

that using it can have a huge impact on

the entire organization or the life and

health of a specic person.

Apart from transparency in inter-

nal and external relations, we

value constant and transparent

communication with our stake-

holders, as explained in our Sus-

tainability policy. Our communi-

cation matrix shows that we use

different communication channels

which help us to communicate

issues regarding our material

themes to different stakeholders.

We understand that different

topics have varying degrees of

importance to our stakeholders.

A commonly used communication channel

in Arctic Paper is our Investors Relations

mailbox. Upon receiving a query, the

message is forwarded to the person most

competent to answer it.

1. THIS IS ARCTIC PAPER

Management Board

Sustainability Team

Group Executive Team

Managing Director

Arctic Paper

Munkedals AB

Managing Director

Arctic Paper

Grycksbo AB

Managing Director

Arctic Paper

Kostrzyn SA

Managing Director

Sales Ofces

Managers Managers Managers Managers

Supervisory Board

1.3

GOVERNANCE STRUCTURE

AND MANAGEMENT ON

SUSTAINABILITY TOPICS

SUSTAINABILITY REPORT 2023

Engagement of the Management Board and the Supervisory

Board in the economic, environmental, and social topics

• Arctic Paper Group strives in its operations to

promote environmental protection, an effi-

cient utilisation of resources and energy, and

sustainable development.

• The Arctic Paper Management Board together

with the Supervisory Board and its Risk

Committee are responsible for overseeing the

process of identifying and managing risks in

each country where Arctic Paper operates. The

Management Board is supported and advised

by the Managing Directors of the mills and

Managing Directors of sales units.

• The Group Executive Team consists of exec-

utive vice presidents responsible for various

areas of activity, including strategy and sustain-

able development, procurement, human

resources, sales and marketing.

• The Supervisory Board is composed of five

members elected by the Shareholders Meeting

for a joint three-year term of office. Two of the

members are independent.

• The Management Board is composed of three

members elected by the Supervisory Board for

a joint three-year term of office.

• The Sustainability Team, consisting of

employees representing various functions and

positions within Arctic Paper, holds an advi-

sory role in the process.

• At least every two years Arctic Paper conducts

a materiality assessment, which defines the

most important topics it should contribute to.

• The demands we place on ourselves, we pass

on to our suppliers. As far as possible, our

environmental principles should also apply

outside our company. Every step in the chain,

from sourcing of raw materials to suppliers,

must live up to our high demands.

• Each company in the Arctic Paper Group

must work to maintain a friendly internal and

external environment. Paper mills are required

to make continuous efforts in this area - of

course, within what is technically and economi-

cally justified.

• At each stage of the process, from the

purchase of raw materials for manufacturing,

through quality development, marketing and

distribution to end customers, we try to mini-

mise our environmental impact on water, air,

climate, ground and noise levels.

• Before a decision is made as to new invest-

ments or major changes in the manufacturing

process, issues relating to the working envi-

ronment and the external environment must

be assessed in the form of an environmental

impact analysis, including energy consumption

and evaluated in collaboration with manage-

ment, authorities and employees. Environ-

mental factors are taken into consideration

when marketing the Group’s products.

• Arctic Paper Group undertakes long-term

environmental planning and monitors devel-

opment in these matters, both in Sweden and

Poland and on an international scale, as well

as monitoring and participating in research

projects in this area. Arctic Paper Group must

have an open, objective approach to internal

and external environment information.

1. THIS IS ARCTIC PAPER

COMPANY

SUSTAINABILITY

SUSTAINABILITY REPORT 2023

2.1

MATERIALITY

ASSESSMENT

Arctic Paper’s key focus is sustainable develop-

ment in all areas where our business activities

have a signicant impact. This means that we

aim to create value for shareholders, but not at

the expense of opportunities for future genera-

tions. In sustainability reporting, materiality is the

principle that determines which relevant topics

are so important that it is essential to report

on them. Not all material topics are of equal

importance, and the emphasis within a report is

expected to reect their relative priority. Thus,

the reporting organization should conduct a

materiality assessment.

Our three key sustainability aspects are: the

Environment, People and Business Operations

We constantly review and internally validate the

list of material aspects, from which we arrived at

our materiality mix. The materiality mix continues

to be the basis of Arctic Paper's sustainability

work and reporting structure.

At the end of 2020, we conducted a survey

in which we asked our stakeholders to

share their opinions and recommendations

regarding our future CSR activities and

areas of involvement. Three main groups of

our stakeholders took part in it: employees

(491 respondents), customers (24 respond-

ents) and other stakeholders (20 respond-

ents), including:

• suppliers,

• NGO representatives,

• authorities,

• local communities,

• universities,

• schools and representatives

of creative industries.

All topics were assessed against the following criteria: importance to

the company and importance to the stakeholders, using a scale from

1 (low importance) to 20 (high importance). Their opinions help us

to decide which aspects of our responsibilities should be our priority

for the future. We have analysed the results and prepared new

Arctic Paper Materiality Matrix based on environmental, social and

governance (ESG) criteria.

2. COMPANY SUSTAINABILITY

ARCTIC PAPER MATERIALITY MATRIX

The results of the stakeholder survey and management valuation of sustainability

factors are shown in condensed form in the materiality matrix below.

11 12 13 14

10 15 16 17 18 19 20

7 TOP MATERIAL ESG TOPICS

Health and safety

of the employees

S2 Customer satisfaction 39

E1 Climate change 38

Water consumption manage-

ment and minimising water

pollution

Sustainable circular

production system

and waste management

Working conditions and

employee satisfaction

Business ethics: legal

& regulatory compliance,

anti-corruption measures,

transparency

OTHER ESG TOPICS

Training and development

possibilities

Human rights protection in

the workplace and in the

supply chain

Inuence of COVID-19

pandemic on business –

company resilience

Offering more eco-friendly,

certied products

S6 Diversity and inclusion 30

S5 S4

E3 E2

E4 G2

IMPORTANCE AND IMPACT ON STAKEHOLDERS

IMPORTANCE AND IMPACT ON ARCTIC PAPER

SUSTAINABILITY REPORT 2023

KEY FINDINGS

The fact that Arctic Paper engages in sustainable development activities is impor-

tant or very important for stakeholders.

All groups stated that Arctic Paper has made progress regarding sustainable

development.

According to more than half of Arctic Paper's clients, the company is one of the

leaders in sustainable development.

Almost 80% of clients state that Arctic Paper cares about customer satisfac-

tion, and as research shows, this topic should be one of the most crucial for

Arctic Paper.

Reducing the impact on climate change should be a priority for the next 3 years

according to stakeholders.

85% of representatives of the group of "other stakeholders" declared that it

is important to them and their organisation to understand the goals and plans

of Arctic Paper.

2. COMPANY SUSTAINABILITY

BASIS FOR SELECTION IMPORTANT SUBJECTS ARCTIC PAPER ACTIONS

Customers

Main source of value creation ∙ Environmental impact of produc-

tion and ways of improving its

efciency

∙ Preventing deforestation:

pulp sourced from sustainably

managed forests

∙ Compliance with laws and

regulations

∙ Meeting sustainability goals while

offering competitive prices

∙ Offering more ecofriendly,

certied products and packaging

solutions

∙ Customer satisfaction and

managing consumer complaints

∙ Effective transport and logistics

∙ Workplace ethics and principles

∙ Communication with customers

regarding sustainable develop-

ment activities

∙ Support and education for clients

and end-users

∙ Transparent presentation of envi-

ronmental performance, such as

in the EMAS-report

∙ Using pulp manufactured from

suppliers certied by FSC

PEFC™

∙ Development of new sustainable

and renewable products and

services

∙ Effective claim handling system

∙ Reduction of the share of trans-

port with the use of engines with

standards lower than EURO 5

∙ Business ethics training for

employees

∙ Meetings with customers, trial

printing new products

Employees

Key capital for our ability

to produce and sell our products

∙ Environmental impact of produc-

tion and ways of improving its

efciency

∙ Initiatives to improve the well-

being of employees

∙ Health and safety

∙ Training and development possi-

bilities within organisation

∙ Communication with employees

∙ Human rights protection in the

workplace

∙ Company involvement in local

communities

∙ Mill-specic action plans

for health and safety

∙ Training programmes

∙ Remuneration routines

∙ Financial participation in health

and well-being initiatives and

activities, supporting employees

and their families

∙ Partnerships and sponsorships

with local cultural and sports

associations

Suppliers

Signicant impact on

our production capabilities

∙ Responsible approach

towards our supply chain

∙ Business ethics

∙ Human rights protection

in the supply chain

∙ Audit of a major pulp supplier

using a detailed form

∙ Following the Arctic Paper

Code of conduct for suppliers

∙ Looking for more efcient

and sustainable ways

of transportation

SUSTAINABILITY REPORT 2023

BASIS FOR SELECTION IMPORTANT SUBJECTS ARCTIC PAPER ACTIONS

Authorities / NGO’s /

Local communities

Compliance with legal obligations ∙ Compliance with

legal requirements

∙ Minimising the negative impact

of business operations

∙ Human rights protection

in the supply chain

∙ Human rights protection

in the work place

∙ Transparent reporting and

communication both for nancial

and non-nancial performance

∙ Active participation

in sectoral initiatives

∙ Following Arctic Paper’s Code

of conduct and Diversity policy

Shareholders

Expectations of return on

investments

∙ Support for Arctic Paper’s

sustainability work

∙ Potential business risks related

to sustainability issues

∙ Sustainable circular production

system and waste management

∙ Providing information

regarding its approach

to environmental issues

∙ Transparent reporting and

communication, both for nancial

and non-nancial performance

∙ Strategy publication

∙ Meetings and dialogue

with investors

In 2023, there were no changes to the busi-

ness model of the Arctic Paper Group, nor

were there any events in the environment

that would signicantly affect this model

and the nature and scale of the social, envi-

ronmental or economic impact of Arctic

Paper Group.

The above-described aspects are the

subject of a broader annual discussion

within our organization, which aim to

better understand the current and future

nature of relations with the environment in

the context of possible changes, including

regulatory, and observed social trends.

As a result, it allows us to understand the

current and future nature of our impact.

The internal verication of the assess-

ment of the signicance of the impact of

individual areas and the prioritization of

important aspects carried out in recent

years led to the conclusion that there have

been no signicant changes in this respect

compared to the previous year. As a result,

they became the starting point for deter-

mining the current content of the report.

In the last quarter of 2023, we conducted

another edition of our stakeholder survey.

We have started the process of double

materiality assessment related to the new

European Sustainability Reporting Stand-

ards - ESRS, which are applicable to the

Arctic Paper Group from the reporting year

2024. The study results will allow us to revisit

important topics and estimate the impact of

our activities. The results of the dual mate-

riality assessment will be presented in our

2024 Sustainability Report.

2. COMPANY SUSTAINABILITY

PEOPLE

2.2

OUR CONTRIBUTION

TO THE SUSTAINABLE

DEVELOPMENT GOALS

In 2015, the United Nations published a comprehensive list of 17 Sustainable

Development Goals (SDGs). As sustainability is deeply integrated into the daily

operations of Arctic Paper, we decided to match the material themes described

above with the SDGs. We have identied eleven SDGs that we nd are the most

relevant to our operations and to which Arctic Paper can best contribute.

• Systematic approach to health and safety at each mill

• Annually approved action plans for health and safety

• Occupational healthcare service at all sites

• Rehabilitation services on offer

• Keeping a register for analysis and prevention

of accidents

• Whistleblowing system and interactive training for

employees across the entire organisation

• Diversity policy - workshops and launch of development

work of an action plan and education program in the eld

of diversity and inclusion

• Regular performance audits for employees (salary

mapping)

• Cooperation with local and international schools and

universities in Europe

• Regular IT trainings

WHAT ARCTIC PAPER IS DOING

% IMPACT ON ARCTIC PAPER'S

CORE OPERATIONS

% IMPACT ON ARCTIC PAPER'S

VALUE CHAIN

SUSTAINABILITY REPORT 2023

ENVIRONMENT

• State-of-the-art water treatment facilities at all sites

• Plans in place to improve water efciency

• Measurement and monitoring of indicators of water inow

and outow

• Employee education with regards to environmental

behaviours

• Improvements in energy efciency

• Measurement and monitoring of emission indicators

• All mills are ISO14001 certied and full EU EMAS

regulations

• Grycksbo mill is ISO 50001 certied (Energy management

system) and certcation of mill in Munkedal is completed

• Measurement and monitoring of waste management

indicators

• Restoring sh breeding habitat in the Munkedal river

WHAT ARCTIC PAPER IS DOING

BUSINESS

OPERATIONS

• Responsible supply chain practices

4P Strategy – Power, Paper, Pulp, Packaging

• Strong focus on measuring and minimising the

environmental impact of our business operations

• Cooperation with local communities, industry

associations

• Sharing knowledge and experience with institutional

partners

WHAT ARCTIC PAPER IS DOING

% IMPACT ON ARCTIC PAPER'S

CORE OPERATIONS

% IMPACT ON ARCTIC PAPER'S

VALUE CHAIN

% IMPACT ON ARCTIC PAPER'S

CORE OPERATIONS

% IMPACT ON ARCTIC PAPER'S

VALUE CHAIN

2. COMPANY SUSTAINABILITY

2.3

RESPONSIBLE BUSINESS

For Arctic Paper Group, sustainability is the foun-

dation of our business: we believe that you can't

run a business without considering the organi-

sation’s impact on the environment and society.

We want to leave the smallest possible footprint,

while having the greatest possible positive

impact on our stakeholders. This is our respon-

sibility as a company which employs more than

thousand employees around Europe, supplies

its products to customers around the world, and

whose production process is based on the use

of renewable raw materials. This is manifested in

our Sustainability policy which we implemented

at the end of 2021.

Our approach to sustainable development

is based on ESG (Environmental, Social and

Corporate Governance) factors, and therefore

focuses on three pillars: Environment, Social and

Corporate Governance. Thanks to it, we make

a positive contribution to the implementation of

the UN Sustainable Development Goals.

Our Sustainability policy aims to dene the

general principles of approach to ESG issues

and sustainable development. Sets out the

framework for managing these topics within the

Arctic Paper Group.

The policy recognizes the importance of topics

related to sustainable development for the Arctic

Paper Group, its business model, long-term

goals and daily operations. The principles of

managing ESG issues, which include the Sustain-

ability policy, are the basis for implementing

a sustainable development approach that

supports the goals of our company policy has an

educational dimension.

In Arctic Paper Group, we make every effort

to ensure that everyone knows the rules and

follows them in everyday work. To this end, we

put emphasis on educating managers and top

management.

We are a responsible organization,

which is why we undertake numerous

activities contributing to sustainable

development.

Arctic Paper SA regularly conducts a materiality

assessment dening the most important topics it

should positively contribute to.

The Sustainability policy is

supplemented by the following

policies in place at Arctic

Paper Group:

• Code of conduct in the value chain of Arctic

Paper Group,

• Diversity policy,

• Sponsorship policy,

• Whistleblowing policy.

The implementation of policies is supported by

guidelines and instructions from the management,

which help everyone within the organisation to

understand their impact and obligations.

SUSTAINABILITY REPORT 2023

2.4

PRINCIPAL RISKS

AND THEIR MANAGEMENT

In order to sustainably create value over the short and long-term,

we periodically identify, analyse and mitigate the risks facing

our organisation. In our business model we have to take into

consideration a number of risks, dependencies and opportunities

in the whole value chain, from raw material to transportation of

our products to the customers. Increasingly important is to value

the risks and opportunities related to climate.

Since 2019, we have expanded our report by reporting CO

emissions not only

from our own mills, but also from our major suppliers of raw materials, energy and

transportation companies.

We describe the potential threats related to climate change, which represent an

opportunity for our company, as we can contribute to solving these problems by

offering products based on renewable sources that can replace products based on

fossil fuels.

Since 2020, the COVID-19 pandemic has become a major public health emer-

gency and has created a new kind of global risk factor for the business environment

around the world. We assessed and managed the risks as a possible serious threat

to our daily business operations, which may have a signicant impact on the nan-

cial condition of the Arctic Paper Group. Both currently and in the future.

2022 was an unprecedented year due to the outbreak of the war in Ukraine. Mili-

tary conicts have devastating effects, mainly from a social perspective. Such

events are unpredictable and affect larger groups of companies, societies and the

entire economy. The war in Ukraine forced the acceleration of development and

the transition to renewable, safe and stable energy sources.

At Arctic Paper, we pay attention to the development of the conict in Ukraine, also

due to possible disruptions in the supply chain that could affect the continuation of

production. We haven't noticed that kind of disruptions so far.

2. COMPANY SUSTAINABILITY2. COMPANY SUSTAINABILITY

Our principal risks are explained in the table below, together

with an overview of actions taken to mitigate them. More detailed

information with regards to specic mitigation plans can be found

in later sections of the report, categorised by theme.

RISK IMPLICATIONS MITIGATING ACTIONS TAKEN

Environment and climate

Not meeting national or EU-wide

legal requirements with regards to

environmental standards

∙ Fines from authorities

∙ Reputational damage

∙ Possible personal responsibility

∙ Disruptions in operations

∙ Careful monitoring of environ-

mental standards and indicators

∙ Early reaction system

to changes in regulation

∙ Introducing efciency-improving

technologies

Unintentional damage

to the environment

∙ Careful monitoring of environ-

mental standards and indicators

∙ Compliance with regulations

and procedures

The impact of climate change

on the physical conditions

of production

Disruptions in operations due to:

∙ Drought

∙ Flooding

∙ Landslide

∙ Malfunction in electrical

equipment

∙ Reputational damage

∙ Raw materials sourcing

∙ Energy sourcing

∙ Reducing water consumption

∙ Increasing water by-pass capacity

∙ Improving drainage

∙ Plans for supply allocation

∙ Increasing of cooling capacity

for sensitive electric equipment

∙ Allocation of raw materials

to core products and markets

∙ Reducing specic energy

consumption

∙ Investing in renewable

energy sources

People

Lack of competent employees

(e.g., due to competition or dif-

culties in nding new employees

to replace an ageing workforce)

∙ Disruptions in operations

(insufcient quantity or quality

of products)

∙ Financial loss – money

invested in training is lost

∙ Creating an attractive and ethical

workplace to attract and retain

employees

∙ Training and talent accquisition

Accidents at work ∙ Disruptions in operations

∙ Departure of qualied personnel

∙ Need for new investments at

production sites if the damage

is extensive

∙ Fines from authorities

∙ Health and safety training

performed on a regular basis

∙ Detailed analysis of all incidents –

from risk observation to injuries

∙ Improvement plans in place

for all our mills

∙ Dedication to a zero-injury

environment

SUSTAINABILITY REPORT 2023

RISK IMPLICATIONS MITIGATING ACTIONS TAKEN

People and Business operations

Limited visibility over suppliers

and their human rights practices

∙

Disruptions in operations

∙

Disruptions in value chain

∙

Reputational damage

∙

Financial loss

∙

Raw materials and energy

sourcing limitations

∙

Scrutiny over actions of suppliers

in the form of signed declarations

∙

Implementation Code

of conduct in the value chain

∙

Implementation of policies,

building awareness and routines

throughout the entire organi

sation in order to protect our

employees and operations

∙

Keeping and promoting high

health standards among

employees and contractors

Global pandemic (i.e., COVID-19)

Outbreak of war

Environment and Business Operations

Shortage of pulp on the market,

inability to buy certied pulp

∙

Disruptions in operations

∙

Financial loss

∙

Loss of customer credibility

∙

Careful monitoring of the market

∙

Building long-term relationships

with qualied suppliers

∙

Diversication of sources

of energy, seeking new

energy investments

Disruptions in the energy market

(e.g., lack of energy access or

poor fuel quality)

∙

Continuity plans developed

for mills

∙

Careful monitoring of world

affairs of the global business

environment

∙

Building long-term relationships

with qualied suppliers

Poor weather conditions

(e.g., ooding) (see also “climate”)

∙

Country-specic risks – linked

to the supply chain, production,

and distribution

∙

Risk due to climate change

∙

Disruptions in operations

∙

Financial loss

∙

Increased regulatory burden

∙

Reputational damage

∙

Raw materials sourcing

∙

Energy sourcing

2. COMPANY SUSTAINABILITY

At Arctic Paper we value our partnerships with

external partners and we see the positive impact

of such cooperations on our company and our

employees. We are eager to share our experience

and knowledge as a business partner, as well as

want to learn from and support our partners.

We cooperate with local communities and

organisations, as well as industry organisations.

2.5

ARCTIC PAPER’S

PARTNERSHIPS

SUSTAINABILITY REPORT 2023

SOME OF OUR PARTNERSHIPS

• The Munkedals mill has established

a very close and long-term (20-year)

cooperation with a high school focusing

on the technology of the production

process. The school is located on the

premises of our mill, so we can offer

students easy access to the work prac-

tice.The mill sponsors one teaching

post with extensive knowledge in paper

manufacturing. In return, the school is

one of the mill’s most important recruit-

ment sources. Each year, Arctic Paper

Munkedals also grants a scholarship to

the student with the best exam result.

• The paper mill in Kostrzyn cooperates

with vocational schools and supports

future printing students. School students

visit the factory and thus expand their

knowledge of paper production technol-

ogy for printing applications.

• Arctic Paper Grycksbo and Arctic Paper

Munkedals are members of the Swedish

Forest Industry Association (Skogsindus-

trierna), which acts as a forest industry

employer association working with

labour unions and other authorities. It

also acts as a technical institution with

a focus on supporting the industry by

sharing knowledge within such areas as

the environment, energy product safety,

standardisation and forestry manage-

ment; presenting this knowledge and

the industrial perspective to politicians

and authorities.

We actively participate in the work of

the association. In 2023, Arctic Paper

was represented in three committees:

energy, environment and products.

Arctic Paper has served as chairman of

the environmental committee for over

a decade.

• In Poland, Arctic Paper Kostrzyn is an

active member of The Association of

Polish Papermakers - an organisation

of scientic, technical and managerial

qualities with individual and corpo-

rate members, whose activities are

connected with the paper and paper

converting industries.

2. COMPANY SUSTAINABILITY

• Dalarna Science Park in Sweden –

a non-prot regional organization

supporting local enterprises and

innovations projects with the mission

to promote regional growth and

development.

• UTIPULP – Group of European Market

Pulp Users, a non-prot association

created in 1979. UTIPULP brings

together consumers of market pulp,

whose members are formally national

associations. In the case of Poland, it is

The Association of Polish Papermakers,

which freely shapes its representation in

the structures of UTIPULP. Arctic Paper,

as the initiator of this membership,

actively participates in the work of the

association through its representatives.

UTIPULP's task are: developing a

common position and represent the

interests of customers of market pulp,

standardization, certication of trade,

arbitration, ensuring the security of

the entire supply chain. UTIPULP also

gathers its members around oppor-

tunities to inuence the shape of EU

legislation and responds to challenges

related to the transformation of the

economy towards climate neutrality, an

environmentally sustainable develop-

ment model and economical manage-

ment of raw materials. Additionally, it

strengthens the negotiating position of

European partners and improves the

quality of pulp available on the market,

thanks to the dissemination of certica-

tion systems: FSC, PEFC, ISO, EUTR.

• Our paper mills are also members

of regional chambers of commerce,

which allows us to establish contacts

with professionals from other indus-

tries. Thus, both individual and entire

companies develop fruitful partnerships

through informal learning and exchange

of experiences.

• Arctic Paper supports local communities.

We sponsor activities for sport and

cultural events, including: uni-hokey

team, a football team, oorball team

and a table tennis team. We donate an

annual supply of free scrap paper to

schools, kindergartens and clinics in the

vicinity of the city of Kostrzyn nad Odrą.

SUSTAINABILITY REPORT 2023

2.6

KEY BUSINESS

PERFORMANCE

INDICATORS

Arctic Paper’s approach to corporate responsibility is centred on sustainability of op-

erations, in particular with regard to the mills. We have therefore established a set of

key business performance indicators, which are periodically measured and reported to

management. These indicators allow us to better understand our impact on the en-

vironment and our employees, as well as better understand our business operations.

Following this assessment, we can react accordingly.

Arctic Paper reviewes its main key business

performance indicators on a regular basis.

Below we present some examples of KPI we measure. More detailed KPI’s are shown in

the following chapters and historical data are included in tables at the end of the report.

During 2024, Arctic Paper will review and update all KPIs and set a new time perspec-

tive for the targets after nishing double materiality assessment process according to

the ESRS - European Sustainability Reporting Standards.

ENVIRONMENT

& CLIMATE

Energy consumption: Total net energy consumption

(MWh/tonne of paper)

We are committed to improving the energy efciency of our operations. Investments in

this area will have a positive effect on the environment, due to decreased emissions of

pollutants, and on our nancial performance.

2. COMPANY SUSTAINABILITY

2023 turned out to be a difcult year due to high volatility in energy prices

and availability. The graphic paper market was subject to equally strong uc-

tuations, with short order lead times and a large number of changes in the

types of paper produced, and consequently scattered production with many

starts and stops of paper machines, resulting in lower energy efciency and

higher specic energy consumption.

TOTAL NET ENERGY CONSUMPTION*

(MWh/tonnes of paper)

Target 2025 2023

1.9

2.5

OF WHICH FROM INTERNAL

ENERGY PRODUCTION BASED

ON RENEWABLE SOURCES**

(MWh/tonnes of paper)

Target 2025 2023

1.1

0.33

TONNES OF PAPER PRODUCED Target 2025 2023

695,000

423,817

*Energy sold to external partners not included. Target of 2025 and gures for 2016-2020 are recal-

culated by including purchased heat.

**Biomass and hydropower

SUSTAINABILITY REPORT 2023

SHARE OF PULP SUPPLIERS

WHO ARE FSC

AND/OR PEFC™ CERTIFIED

Target 2025 2023

100%

ENVIRONMENT

& BUSINESS OPERATIONS

Value chain: % of pulp suppliers who are FSC

and/or PEFC™ certied

We are aware of the fact that the environmental integrity of our business relies in part

on our suppliers. As we source pulp for our production from a number of suppliers, we

expect them to share our values with respect to environmental sustainability. Our aim is

to be sourced by responsible and sustainable pulp suppliers who possess FSC

and/or

PEFC™ certications.

PEOPLE

Injuries per million work hours

We have a systematic approach to safety. We train our employees on an annual basis

and ensure that our management is well-equipped to handle safety emergencies. We

also have programmes for risk assessment. When problems are identied during the

production process, targeted continuous action plans are put into place. In addition,

we have trained rescue teams at all of our mills. We are committed to minimising the

number of injuries at our workplaces.

2. COMPANY SUSTAINABILITY

BUSINESS

OPERATIONS

Value of complaints as share of annual turnover

We want our customers to be satised with our approach to sustainability and our

products. All complaints are carefully categorised and evaluated by our sales team

and management. We aim to minimise the cost of claims, keeping in mind that not all

complaints may be substantiated.

LOST TIME INJURIES

PER MILLION WORK HOURS

Target 2025 2023

9.2

VALUE OF COMPLAINTS

AS SHARE (%) OF SALES REVENUE

SALES REVENUE (IN PLN M) 2,460

Target 2025 2023

0.50

0.41

In 2023, the number of injuries unfortunately increased. We have imple-

mented safety procedures and expanded cooperation between production

units with common experience and knowledge and need to pay more atten-

tion to changing the work culture. Injuries occur mainly as a result of human

errors. Therefore, it is very important to change behavior and create a culture

of a safe workplace and build employee awareness of possible threats at

production positions.

SUSTAINABILITY REPORT 2023

SUSTAINABLE

SUPPLY CHAIN

FOR CLIENT

SATISFACTION

3. SUSTAINABLE SUPPLY CHAIN FOR CLIENT SATISFACTION

Our business operations are based on well-established and

trusted relationships with different stakeholders. Therefore,

we need to ensure that all our business operations are

transparent – from sustainable sourcing, production and

delivery of our products, to the communication of our results

to external stakeholders.

Arctic Paper cooperates with a wide network of suppliers from around the world.

They provide us with raw materials, chemicals, energy, logistics and other services

that enable us to serve our customers. Aside from the sustainability of our oper-

ations, it is crucial that we consider the approach taken by suppliers. We aim to

choose suppliers who can and are willing to assure that they respect our values

with regards to People and the Environment. Our suppliers have to follow the

Code of conduct in the value chain of Arctic Paper.

In addition, we want to be transparent and ethical in everything we do. We have

established and follow a Code of conduct and Sustainability policy. However, we

are aware of the need to raise awareness of these topics among our employees.

3.1

RESPONSIBLE

SUPPLY CHAIN

Arctic Paper is deeply integrated into the global value chain. We have over

200 suppliers of materials, 30 of whom cover more than 90 percent of the

purchased value and are considered core suppliers.

In our paper mills, we have procedures to help us produce paper with the

smallest possible direct impact in terms of pollutants to water, air and land

(waste). As the environment has no borders, the impact of our suppliers is of high

importance, hence we gather information regarding their environmental perfor-

mance so that we may make informed purchase decisions based on product

specications and environmental performance.

SUSTAINABILITY REPORT 2023

To ensure that our core suppliers take a responsible approach to their business,

they are required to provide us with the environmental declarations in a form

of specic written reports documenting their environmental performance with

regards to energy consumption, pollutants to air, water and raw materials – in

particular wood. Information from these reports helps us to perform a life-cycle

analysis for our products. We also ask the core suppliers for information as to

whether a code of conduct and a sustainability policy are in place. At the same

time, we expect them to take note of our Code of conduct and Sustainability

policy. We wish to follow a similar approach towards the rest of our suppliers.

Arctic Paper expects its suppliers to comply with the high

standards and values represented by our organisation.

Since 2019 we started a procedure by which all our suppliers

are required to comply with our Code of conduct either

by signing our Code or by the supplier providing us with

an equivalent document.

Our Code of conduct in the value chain of Arctic Paper covers the most important

areas: Laws and Regulations, Human and Labour Law, Corruption and Bribery, the

Environment. This document is attached to each contract and is expected to be

signed alongside the contract. Suppliers are also expected to follow the require-

ments set forth in this document. The Code of conduct applies to all Arctic Paper

suppliers as well as all third parties contracted by our suppliers.

Those suppliers who have their own Code of conduct or sustainability policy which

are compatible with the Arctic Paper values described in our Code of conduct in the

value chain, are asked to provide us with a copy of the appropriate documentation.

This is equivalent to signing the Arctic Paper Code of conduct.

3. SUSTAINABLE SUPPLY CHAIN FOR CLIENT SATISFACTION

3.2 ENVIRONMENTAL

ASSESSMENT OF SUPPLIERS

AND RESPONSIBLE SOURCING

Due to the nature of our business, we

devote special attention to our pulp

suppliers. We additionally expect them

to full the demands of the FSC

and

PEFC™ certication, and hence be

audited by a third party in relation to forest

management.

If we believe that our partner

does not comply with our

ethical requirements, we aim to

confront and challenge them to

change their behaviour, whereby

Arctic Paper may offer guidance

specifying which issues need

to be improved. The supplier is

then expected to take corrective

actions, within a reasonable

time, in order to meet the

requirements in question. In the

event that we are unsuccessful,

we are prepared to end the

cooperation.

We nd it important to verify the state-

ments of our pulp suppliers, which is why

products delivered by our suppliers are

subject to a three-step verication proce-

dure. First, we ask our suppliers to submit

an environmental declaration, safety data

sheets (following REACH EU Regulation)

and the technical parameters of their

products. Second, we test small samples

of the products in our laboratories, to

see if they possess the stated properties.

Third, we conduct mill trials to see how

the products behave in the production

environment. Similar procedures are used

for other suppliers. We also perform yearly

checks into the validity of certicates

possessed by our suppliers. In this way,

we are able to certify the quality of our

products. In this spirit, we also perform

audits of our suppliers, to conrm their

compliance with our Code of conduct in

the value chain of Arctic Paper Group.

SUSTAINABILITY REPORT 2023

SHARE OF CORE SUPPLIERS

PROVIDING EXISTING SIGNED

ENVIRONMENTAL DECLARATIONS

Target 2025 2023

100%

90%

SHARE OF CORE SUPPLIERS WHO

SIGNED OUR CODE OF CONDUCT

OR HAVE THEIR OWN CODE OF CONDUCT

Target 2025 2023

90%

NUMBER OF SUPPLIERS WHO ARE SUBJECT

TO AUDITS PERFORMED BY ARCTIC PAPER

TO CONFIRM COMPLIANCE WITH THE

CODE OF CONDUCT

Target 2025 2023

3. SUSTAINABLE SUPPLY CHAIN FOR CLIENT SATISFACTION

Since 2019, in cooperation with the Book

Chain Project, we have been evaluating

Arctic Paper Kostrzyn’s processes for

responsible sourcing. The outcome of the

evaluation helps us to improve our shared

best practices and processes at the mill and

see the new opportunities and challenges

which we face when managing responsible

sourcing. We demonstrate a deep under-

standing for the sourcing countries of raw

materials and the sustainability issues at

forest level and have put strong, formal

processes in place to keep up to date with

new developments relating to forest chal-

lenges. We follow industry analysts from

Brian McClay, Hawkins Wright and Fast

Markets RISI. We also work with NEPCon,

who share information and suggestions on

sourcing countries. Each time we request

a written report on environmental perfor-

mance from our suppliers, and gather exten-

sive data on energy, air and water pollutants

and raw materials.

Arctic Paper Munkedals and Grycksbo are

also sharing their data with Book Chain

database.

Arctic Paper’s purchasing policy includes

requirements to establish bre traceability,

to ensure no product contains controversial

sources dened as:

• Illegally harvested forest, or harvesting

not approved by the authority in

question;

• Wood harvested in opposition to tradi-

tional or citizen’s rights;

• Wood from high conservation-value

forests;

• Wood harvested in areas being changed

from naturally occurring forest into

plantations;

• Wood harvested in an area where geneti-

cally modied trees have been planted;

• Wood harvested in violation of ILO prin-

ciples (International Labour Conference

1998 – ILO Declaration on Fundamental

Principles and Rights at Work)

We believe that the strength of our supply chain is based on

reliable, long-term relationships with our suppliers. We make

changes in our supplier portfolio to improve standards in all respects

– economic, ethical and environmental. If a correction is necessary,

we are open to re-establish relations with previous suppliers.

SUSTAINABILITY REPORT 2023

3.3

TRANSPORTATION

Effective and sustainable transport was one of the subjects

underlined by our stakeholders as a result of Arctic Paper’s

stakeholders survey. The impact of transport on pollution

and the overall condition of our environment is undeniable.

When deciding on which companies we can entrust with

transporting our products, we announce bids for particular

routes. Factors we take into consideration when deciding on

transportation services are the quality of the documentation

provided, the price offered and the impact a given transport

operator has on the environment.

Transport operations cause noise, emissions to air and consumption of fuels

(mainly fossil fuels). Truck engines are divided into various EURO classes, in which

higher gures represent engines with lower emissions, especially of nitrogen

oxides and carbon monoxide. We keep track of transportation statistics, which

cover the transport of ready goods from our mills to their places of destination.

We are focused on increasing the percentage shares of operations of EURO 5

and EURO 6 classes.

3. SUSTAINABLE SUPPLY CHAIN FOR CLIENT SATISFACTION

The large transportation companies that are our main suppliers of transportation

services are focused on high transportation efciency combined with an envi-

ronmental prole, thus they are continuously renewing their vehicle eets, which

moves the density point towards the higher EURO classes.

Understanding the huge environmental effect of transportation, we want to

increase the efciency of our transport chain while reducing CO

emissions by

implementing intermodal transport into our logistics process.

Since 2020, around 39% of deliveries to our customers have

been transported as multimodal transport. We intend to

develop intermodal transport share in the future, however

high energy prices, accuracy and issues of timely delivery of

intermodal scheme are still challenging.

SHARE OF EURO 5 ENGINE CLASS

Target 2025 2023

13%

30%

SHARE OF EURO 6 ENGINE CLASS

Target 2025 2023

87%

70%

OUR TARGET FOR THE FOLLOWING

YEARS IS TO EMPLOY ONLY TRUCKS

WITH ENGINE CLASS EURO 5 AND

ABOVE.

SUSTAINABILITY REPORT 2023

3.4

COMMITMENT TO

CLIENT SATISFACTION

Our customers are among the main stakeholders of Arctic Paper. Customer satis-

faction is one of the top material aspects of maintaining the integrity of our oper-

ations. We want to be sure that our customers are satised with the way we carry

out business and with the products and services we provide to them. We know that

our customers pay attention to our efforts to manage Arctic Paper as sustainable

business and their feedback is of high importance to us. This way we can grow and

evolve while meeting their expectations and needs. Our customers value high-

quality products and innovative attitude when providing new eco-friendly products

and solutions. For this reason, we carefully monitor all customer complaints and

listen to their opinions about our products and operations.

We categorise and evaluate all submitted complaints.

Evaluation is primarily done by our sales teams and, when

necessary, by management. We make sure that every

complaint is addressed and resolved. Our goal is to minimize

the value of complaints, but we realize that not all of them

are justied.

Actions are continuously taken to diminish the risk of complaints. Our tech-

nical teams from three mills work based on common procedures and General

Recommendations for handling and accepting complaints. We aim to create,

a predictable, consistent, time- and cost-efcient process.

VALUE OF COMPLAINTS

AS SHARE (%) OF SALES REVENUE

SALES REVENUE (IN PLN M) 2,460

Target 2025 2023

0.41

0.50

KEY PERFORMANCE INDICATOR

3. SUSTAINABLE SUPPLY CHAIN FOR CLIENT SATISFACTION