Paper works – naturally

Sustainability Review 2010

CONTENTS

EDITORIAL

Editorial

3

Myllykoski in brief

4

Myllykoski’s Paper Cycle 2010

6

The roots of Myllykoski’s corporate responsibility work lie in family

A sustainability index for the paper industry

8

ownership, traditions and values, while the trunk is based on responsible practices, legislation, management systems and standards, and last but

Innovation in grinding technology results in a quantum leap in energy efficiency

11

not least, competent personnel. The branches grow out of resource

Myllykoski and responsibility

12

efficiency, R&D work, close co-operation with customers and other

Economic responsibility

16

Environmental responsibility

22

Page 20

stakeholders and work to meet their expectations. The activities of companies play a critical role in moving towards a more material and energy efficient society. A material efficient mode of operating

Page 22

Energy

23

Raw materials

25

Operating principles

28

Environmental impact of operations

31

Emissions and waste

33

project presented in this report is a perfect example. During 2010 Myllykoski started

Biodiversity

36

to introduce new hi-tech grinding technology at its mills with excellent results:

Responsible products

37

energy consumption fell by almost a third.

Transport

38

The sustainability of paper mills has a significant effect on the sustainability

40

of print products, and keen co-operation among all of us throughout the publication

Personnel

41

paper value chain is thus vital. I am pleased to say that once again in this report we

Occupational health and safety

44

are able to give our customers and suppliers a say, as they present their efforts on the

Social commitment

47

Research and development

48

Social responsibility

Glossary

49

GRI Application level

50

Myllykoski Sales’ offices and agents

52

is vital for global sustainable development, as it saves natural resources and the environment, helps to curb climate change and also achieves cost savings. In the decisive role is active research and development work seeking concrete solutions for improving material and ecological efficiency. The Galileo

path toward sustainability. Co-operation, learning and networking are also among the key principles of the Global Compact initiative. Myllykoski, a signatory since 2008, embraces the core values of the Global Compact presented as ten principles in the areas of human Page 27

Page 39

Page 16

rights, labour standards, the environment and anticorruption. For Myllykoski the year 2010 was a time of decision making in a challenging operational environment. The demand for graphic printing papers developed

Editor in chief Leena Hytönen

positively, but profitability deteriorated due to unsatisfactory price trends and rising

Editorial team Karsten Bode, Rüdiger Brames, Thomas Christl, Wolfgang Haase, Asta Halme, Martin Heinrich, Dan Mallett, Werner Manzinger, Catharina Månsson, Rudolf Neumüller, Johann Oberndorfer, Erkki Peltonen, Elina Saarivuori, Judith Schlumberger-Steger, Antti Surokivi, Minna Tolonen, Nicole Uebe, Bernd Weikopf, Kristiina Ylönen

Group and Rhein Papier GmbH have signed an agreement to sell the companies to

raw material costs. In December 2010 it was announced that the owners of Myllykoski UPM-Kymmene Corporation. Developments in the communication media of today are rapid and exciting. I am convinced that print products will hold a strong position co-existing with other media platforms, because paper works – naturally.

Publisher Myllykoski Corporation Graphic design People’s

Sverre Norrgård President and CEO

Photos E.ON, Mediashots, Myllykoski photo library, PVO, Timo Väre Printing H. Heenemann GmbH & CO KG, Berlin Inside pages MY VOLUME 90g/m2

2

Myllykoski Sustainability Review 2010

Myllykoski Sustainability Review 2010

3

Myllykoski in brief

Myllykoski in brief MANAGEMENT SYSTEMS

Paper works – naturally Paper works at Myllykoski–since – naturally since1892 1892 Paper is by nature a very local product. The Myllykoski papers’ main ingredients, wood fibre, water and energy, originate from local sources close to the mills in Germany, Finland and the United States. But the Myllykoski customers in over 70 countries ensure that at the end of the day paper becomes truly international. Myllykoski specialises in the development, production and marketing of high-quality publication papers. It operates seven paper mills in Plattling (Bavaria), Ettringen (Bavaria), Albbruck (Baden-Württemberg) and Hürth (North Rhine-Westphalia) in Germany, in Kouvola, Finland, and in Madison in the State of Maine in the United States. The mills have a total annual capacity of close to 3 million tonnes. Myllykoski employs 2,600 people. The Finnish roots of the familyowned parent company date back to 1892, when the brothers Claes and Fredrik Björnberg founded the company Myllykoski Träsliperi Aktiebolag.

Operations and governance The Myllykoski Group is comprised of subsidiaries and affiliate companies: among others, the mills (Lang Papier, Madison (Myllykoski 60%), Myllykoski Paper (Myllykoski 65%), MD Albbruck and MD Plattling) and the Myllykoski Sales network. The alliance partner Rhein Papier GmbH (Rhein Papier and Plattling 4

Papier) is a company that operates independently, but is owned directly by the shareholders of Myllykoski Corporation and organisationally managed by Myllykoski. Myllykoski Corporation, the Finnish parent company of the Myllykoski Group, is the holding company and parent company of the Myllykoski Group companies (excluding alliance partner Rhein Papier GmbH). It offers management services to its subsidiaries as well as to the alliance partner. Myllykoski Corporation’s headquarters is located in Kouvola, Finland, with an office in Helsinki. Myllykoski’s “MY” brand papers are a varied range of wood-containing and recovered fibre based uncoated and coated publication papers for products such as magazines, newspapers, catalogues, brochures, direct mail, school books and outdoor posters. The international sales network, with a presence in over 50 countries through its own local offices and agencies, is the key contact for publishers, printers, retailers and catalogue producers worldwide. In 2010, the net sales of the Myllykoski Group (excluding alliance part-

Myllykoski Sustainability Review 2010

ner Rhein Papier GmbH) amounted to EUR 1.1 billion.

Scope and objective of this review The Myllykoski Sustainability Review 2010 covers Myllykoski Group’s and its alliance partner Rhein Papier’s production units and other functions in operation throughout 2010. Sales offices and corporate functions are not included. The data on environmental emissions is based on the reporting practices in the country and locality concerned. The review presents Myllykoski’s business operations from the perspective of corporate responsibility, covering economic, environmental and social performance. The Global Reporting Initiative’s reporting framework and indicators (GRI/G3) have been used as a guideline, and the main structure of the review follows the division into economic, environmental and social responsibility. The review has not been externally assured, but Tofuture Oy, which specialises in corporate sustainability, has checked the publication and confirms that it con-

Mill

Country

ISO 14001

Lang Papier

Germany



Madison

USA



MD Albbruck

Germany









MD Plattling

Germany









Myllykoski Paper

Finland









Plattling Papier

Germany









Rhein Papier

Germany









Paper machines

Total annual capacity, tonnes

OHSAS 18001

EN 16001

PEFC CoC

FSC CoC













3 1)

615,000

SC, newsprint





1

220,000

SC







3

320,000

LWC







2 1)

400,000

LWC





3

600,000

SC, LWC





1

380,000

SC



1 1)

310,000

newsprint



1)

ISO 14001 EMAS ISO 9001 OHSAS 18001 EN 16001 PEFC FSC CoC SC LWC

Paper grades

EMAS

ISO 9001

Deinking plant

an international standard for environmental management European Eco-Management and Audit Scheme, relevant only within the European Union an international standard for quality management an international specification for occupational health and safety management systems Energy management system Programme for the Endorsement of Forest Certification schemes. The SFI and CSA SFM programmes are also endorsed by PEFC Forest Stewardship Council a certified Chain of Custody system that confirms the amount of wood raw material originating from certified forests Super Calendered, uncoated magazine paper Light Weight Coated magazine paper

forms to the GRI Guidelines. Adherence to GRI indicators is illustrated and explained in a separate GRI index table at www.myllykoski.com under the section Corporate responsibility. Responsible production and use of print and paper and sustainable business solutions are the common goals of the entire Graphic Communications Supply Chain, including forestry, pulp, paper, inks and chemicals, publishing and printing. This review seeks to illustrate what Myllykoski has done to ensure the sustainability of paper manufacturing and to highlight the main focal areas and activities of Myllykoski’s sustainability work. The review is published in English and German, and is also available on Myllykoski’s website at www.myllykoski.com under the section Corporate responsibility. Myllykoski has published joint Environmental and Sustainability Reports since 2002. The Myllykoski mills in Europe publish unit-specific Environmental Reports, which follow the principles of EMAS reporting. These publications can also be found on Myllykoski’s website.

Every decision counts IN OUR DAILY LIVES, WE ALL HAVE OPPORTUNITIES TO MAKE CHOICES THAT CAN HAVE A SIGNIFICANT IMPACT ON THE ENVIRONMENT AND SUSTAIN ABLE DEVELOPMENT. MYLLYKOSKI WORKS CLOSELY WITH ITS CUSTOMERS, SUPPLIERS AND PARTNERS TO FOSTER A SUSTAINABLE LIFE CYCLE FOR PRINT MEDIA. EVERY CHOICE COUNTS AND CAN MAKE A DIFFERENCE. In the Myllykoski Sustainability Review 2010, Carlos Ramos Cardenas from Televisa »page 15, Brigitte Dittrich-Krämer and Ulrich Freundschuh from BASF »page 21, Stuart Auld from PMP Limited »page 30, Joana Barata Correia and Lars Carlson from Inter IKEA Systems Media »page 35, Bernhard Gallus from Hubert Burda Media »page 39 and Ralph O´Connor from Graphic Communications »page 48 discuss how their companies strive to make a difference.

Myllykoski Sustainability Review 2010

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Myllykoski’s Paper Cycle 2010

Myllykoski’s Paper Cycle sums up the total material, energy and emission flows to and from the Myllykoski paper mills in Germany, Finland and the United States. For mill-specific data, please refer to the Environmental Reports published by the mills, available at www.myllykoski.com.

As a general rule, fibres can be re-made into new paper products five to seven times before they become too short and damaged. Tools for communicating environmental performance

MY PAPERS

ENVIRONMENTAL LABELS

LWC SC Newsprint

The Blue Angel eco-label is awarded for products of Lang Papier and Rhein Papier. Myllykoski Paper’s products have been approved for use in Nordic Swan eco-labelled print products. Paper Profile product declarations offer information on the environmental performance of products.

840,000 t 1,130,000 t 520,000 t

RECOVERED PAPER

977,000 t

Myllykoski is one of the biggest users of recovered paper among European publication paper producers. The amount of recovered paper consumption by Myllykoski corresponds to the volume of publication papers collected from the households of 18 million people.

Myllykoski’s ”MY” brand papers are a varied range of wood-containing and recovered fibre-based uncoated and coated publication papers for magazines, newspapers, catalogues, brochures, direct mail, school books and outdoor posters. Paper is based on a renewable natural raw material, stores carbon throughout its lifecycle, and is recyclable.

CARBON FOOTPRINT

LOGISTICS

WOOD

Product carbon footprint assessments are an essential part of Myllykoski’s climate change action strategies. The product carbon footprints cover the entire product life cycle, from “cradle to gate”.

The business is both local and global and applies long-haul logistics. Raw material transports constitute about 2% of a typical product carbon footprint (to mill gate). One of the main targets of logistics operations is to increase the share of rail transportation.

Myllykoski’s own wood-sourcing units supply pulpwood to the mills mainly from local forests. A certified Chain of Custody (CoC) process from forest to end use confirms the amount of wood originating from certified forests and makes it possible to trace back the origin of wood.

PAPER PRODUCTION Myllykoski’s seven mills in Germany, Finland and the United States produce high quality publication papers from fresh and recovered fibres. Total paper production

MANAGEMENT SYSTEMS All mills are covered by:

Mechanical pulp 740,000 t Fresh spruce logs are debarked and wood fibres are separated from each other by grinding or refining.

ISO 14001 and/or EMAS environmental management system ISO 9001 quality management system 1) OHSAS 18001 occupational health and safety management system 1) PEFC and/or FSC Chain of Custody EN 16001 energy management system 2)

EMISSIONS INTO AIR

BOD

310 t

CO2 fossil

1,150,000 t

COD

5,100 t

SO2

2,100 t

P

50 t

NOx

1,400 t

Particles

42 t

6

The majority of airborne emissions are formed during the combustion of fuels for energy production. Fossil carbon dioxide emissions affect climate change. Sulphur dioxide and nitrogen oxides contribute to acidification and eutrophication.

Myllykoski Sustainability Review 2010

Forests sequester CO2 from the atmosphere and store it as biomass carbon while providing raw material for the industry. Sustainable forest management ensures that forest carbon stocks remain stable.

RESPONSIBLE WOOD PROCUREMENT

Mechanical, de-inked and/or chemical pulps are made into slurry with pigments, fillers and additives. The slurry forms a paper web in the paper machine’s wire section. The paper web is pressed, dried and finally calendered and/or coated.

EMISSIONS INTO WATER

Untreated effluent contains nutrients and oxygen-demanding substances that dissolve into wastewater from wood, used chemicals and other raw materials. Biological treatment removes these harmful compounds effectively before effluent is discharged. Nutrients contribute to eutrophication.

300,000 t

FORESTS

Chemical pulp is often added to mechanical pulp to give paper greater strength and better runnability. Myllykoski purchases chemical pulp from selected pulp producers and requires that the suppliers are PEFC CoC and/or FSC CoC certified or working towards certification and that they use elemental chlorine-free bleaching.

NON-WOOD RAW MATERIALS

excl. Madison excl. Myllykoski Paper

The use of recycled materials saves the natural resource base. Paper is the most recycled product in Europe. Recovered paper sourced by Myllykoski originates from households, printers, industry and commerce.

2.4 million m3

De-inked pulp 680,000 t Recovered paper is repulped, de-inked and washed on-site.

1,2) 1)

2,490,000 t

CHEMICAL PULP

RECYCLING

Pigments and fillers 640,000 t Mineral pigments and fillers are needed to smooth the paper and improve the printing properties. A variety of chemicals are used in stock preparation, bleaching, process control and cleaning. The chemicals comply with REACH requirements. Suppliers are selected and monitored to ensure that the agreed sustainability criteria are met.

WASTE FOR UTILIZATION

WATER

Thermal reuse

296,000 t

Other reuse

81,000 t

Papermaking processes require large quantities of water as a coolant, material carrier, in steam production, and in forming hydrogen bonds to consolidate the structure of the paper web. Process water is drawn from rivers or groundwater wells and re-circulated to the maximum extent possible in the process. Wastewater is treated before being released into a watercourse. Emission levels are continuously monitored.

A large part of the solid waste generated in the process is thermally valuable organic biomass and sludge from recovered paper deinking and effluent treatment. Part of the ash is used as raw material in the concrete industry and DIPsludge in the building products industry.

ENERGY Purchased electric energy Thermal energy

Forest certification provides assurance that the wood used in products originates from sustainably managed forests. Myllykoski supports PEFC and FSC forest certification systems.

12.5 m3/t

3,600 GWh 2,850 GWh

SOLID WASTE Landfill waste

14,000 t

Hazardous waste

460 t

Paper production requires large quantities of both electricity and heat. The climate impacts of purchased electricity depend on the local circumstances and available fuels, for which the electricity user has limited control. Myllykoski’s ongoing energy projects will have a positive impact on the energy balance and CO2 emissions.

Myllykoski Sustainability Review 2010

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Sustainability index

Sustainability index

A Sustainability Index for the Paper Industry How to measure sustainability? Certificates, scorecards, and eco-labels are proliferating, but many of them offer only a narrow view of sustainability. Myllykoski, Kemira and a young talented paper engineer wanted to go further. The Sustainability Index, developed by Jarkko Kutvonen, offers a comprehensive tool for evaluating the paper industry’s sustainability. Sustainable development is an overarching goal of our societies and is increasingly being integrated into business operations and industrial processes. But, are we doing the right things and focusing on the right performance indicators? Knowing the size of the ‘footprint’ and understanding the impacts incurred over the entire life-cycle of products and services are essential elements in improving the sustainability of any business. However, the paper industry, among others, lacks appropriate tools for measuring sustainability. Myllykoski and Kemira, a company offering chemical products and integrated systems for improving energy, water, and raw material efficiency, started to look at the idea from the process control point of view. “At this point I was finishing my studies at the Aalto University School of Science and Technology and was given

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the opportunity to do my Master’s Thesis on the subject,” says Jarkko Kutvonen, describing how the project started up.

Myllykoski Sustainability Review 2010

Environmental safety Personal safety

Electricity Steam

Biodegradability

CO2

Profit

SO2

Productivity

NOX

Fibre yield

CO 56,5%

Waste

Fine particles BELOW AVERAGE

Freshwater

Fiber origin ABOVE AVERAGE

Claims

Effluent water

Accidents

COD AOX

Nitrogen Phosphorus

TSS

In the Sustainability Index circle, sustainability increases from the centre towards the outer circle. Sustainability is also indicated as an overall average in the centre.

Energy Water Quality Economy Chemicals No data Best practices

Guido Clemens, Manager R&D, Rhein Papier: “Sustainability means much more than

Sustainability goes beyond single issues The objective of the study was to develop a Sustainability Index for specific paper lines, which takes into account ecological, economic and social aspects of sustainability. The project consisted of an extensive literature search, developing components for a Sustainability Index and the mathematics related to it, interviews with a wide group of paper industry stakeholders, developing a tool for drawing a visual image of the index and calculating tentative standard index values for Myllykoski’s newsprint and SC mills. Over and above that, more than 20 interviews were con-

ducted with the Myllykoski experts at the mills to gather check-lists of ideas on how to improve the sustainability of production processes at the mills. In the case of paper and print, sustainability goes far beyond single features such as carbon footprint or recovered fibre content. Life-cycle thinking is essential. “Monitoring sustainability offers a long-term perspective and insight for efficiency improvements. Sustainability indices enable production units to identify their weak points and compare the situation with the industry averages. They offer useful baselines for investment decisions and improvements that will further sustainable development.” “Sustainability indices also add transparency and support communication. I also believe that, if properly used, sustainability indices add value to product propositions thus making them an asset in marketing,” says Jarkko, summing up the fundamental thinking and goal setting behind the Sustainability Index.

Jarkko Kutvonen graduated in 2010 from the Aalto University School of Science and Technology, majoring in Paper and Printing Technology.

just examining ‘footprints’ for water, CO2 or energy. When Jarkko presented his idea for online screening of sustainability factors, I was happy to find a 360° view that allows for monitoring a great many detailed aspects. During the interview we arrived at an interesting complete survey of our mill in terms of sustainability. We were able to see the strengths and the weaknesses of Rhein Papier outlined on a single sheet. Benchmarking with different mills using the same catalogue of questions makes it easy to define your position and future targets regarding sustainability aspects.



Myllykoski Sustainability Review 2010

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Sustainability index

Measuring is a challenge The first step in developing a Sustainability Index for paper was to select and define the indicators which were perceived as the most relevant to sustainability (Table). The next step was to develop a mathematical model that would make all the indicators capable of comparison. The values of the indicators were scaled to be between zero and 100 per cent, 100 per cent being the most sustainable case. The scaling was based on the best practice values (defined as paper industry averages) and was done using a mathematical equation so that the best practice values were set at 50 per cent. This enabled a clear and consistent visual presentation. In addition to the visual presentation, the Sustainability Index is presented as a calculated value. “Measuring sustainable development proved to be harder than I originally imagined,” Jarkko confesses, “but the hardest part was fitting all the different indicator values into one single visual illustration that would be extensive, clear and simple at the same time. Also, the results had to be comparable.” All the data required for calculating and testing the index were acquired from

Energy efficiency

Lang Papier, Rhein Papier and Plattling Papier. Four different paper machine lines were examined, two of which were newspaper lines and two SC paper lines.

A roadmap towards sustainability The study showed that the Sustainability Index enables production units to effectively identify the areas they need to improve, and it can thus be used for developing paper processes and products. An Index-type tool can also be used as a benchmarking tool within a company. “It is important to note, though, that

a comparison should be made between the same type of paper lines and paper grades, and this requires a substantial amount of data.” Jarkko is convinced that measurement of sustainability will become a standard procedure in the future. “To guarantee the needs of future generations, we need to have a solid long-term development path that is socially desirable, economically viable and ecologically supportable. Sustainability Index-type tools can surely guide us in the right direction, helping us to create a roadmap towards sustainability. The future of our planet is in our hands.”

Indicators of the Sustainability Index Energy

Water

Chemicals

Economy

Quality

• CO

• AOX

• Biodegradability

• Fibre yield

• Accidents

• Electricity

• COD

• Environmental safety

• Productivity

• Claims

• Greenhouse gases

• Effluent water

• Personal safety

• Profit

• Fibre origin

• NOx

• Fresh water

• SO2

• Nitrogen (N)

• Steam

• Phosphorus (P)

• Fine particles

• Total suspended solids

Eco-efficiency of paper products How can we further improve the environmental performance of paper products? What can players in the value chain contribute to this? In Bavaria, the two-year project “Eco-efficient Paper Products” tackled these questions. On behalf of the Bavarian State Ministry of the Environment and Public Health (StMUG), the Bifa Environmental Institute, in cooperation with 16 enterprises and four federations, analysed the comprehensive life cycles of five paper products. Lang Papier participated in this study by supplying process data. The scope of the study covered the entire life span of the paper products from the production of raw materials through paper making and conversion into paper products to final disposal. The study also covered raw and source materials, energy input, disposal of waste material and all transports. The environmental impacts were compiled in an ecology index. The most significant potentials for improving eco-efficiency were identified in the following areas: • Increasing energy efficiency • Minimising CO2 emissions from steam and electricity generation • Improving the recovery of waste heat • More efficient supply of raw materials In its conclusion, the study states unambiguously that using wood for paper production is markedly better for the environment than directly incinerating it. Wood fibre used for paper making is recycled many times as recovered paper until it is disposed of and used to generate energy. For more information, please visit http://www.ipp-bayern.de

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Myllykoski Sustainability Review 2010

• Waste

Innovation in grinding

technology results in a quantum leap in energy efficiency Mechanical pulp provides excellent printability, its production process uses very little or no chemicals, and the pulp yield and thus material efficiency are on a maximum level. However, the downside is that the process is relatively energyintensive. Myllykoski is playing a pioneering role in implementing a new grinder technology that significantly reduces energy consumption. Rising energy costs have been an important driving factor, but nowadays great emphasis is placed on solutions that improve material efficiency altogether as well as having the lowest possible environmental impact. In the pressurised groundwood system, the refining of the wood into fibres is done by grinding the logs against a revolving abrasive surface usually made of ceramic. The research focus has for a long time been searching for solutions that would produce the highest quality final product with the lowest possible energy consumption. In 2010, after many years of scientific work and pilot testing, the research project took an important step, when the mill-scale implementation phase began. The initial pioneering implementation work was carried out at Myllykoski Paper, followed by the installation at MD Albbruck and Plattling Papier.

By the end of 2011, one fourth of Myllykoski’s pressurised groundwood capacity will be using the new “Galileo” technology. The target is to accomplish the transition of Myllykoski’s pressurised groundwood mills to the new technology by the end of 2012. “The first results are very positive,” says Jukka Kejonen, Director, Product Development. “The electricity consumption of the grinding process has decreased

significantly and we expect that, with further process development, we can reduce up to one third of the specific energy consumption of the grinding process.” “Besides bringing considerable electricity savings in the production of mechanical paper grades, this new technology also gives us a significant advantage in terms of our carbon footprint as compared to the existing peer pulping methods,” Jukka Kejonen points out.

In July 2010 the “Galileo” grinding surface was installed in pressure grinder 18 at MD Albbruck. “In comparison to grinder 19 with a conventional grinding stone, the specific energy consumption decreased by 30 per cent and the production volume increased by 15 per cent,” Michael Braun explains with satisfaction. He works as Development Engineer at the mill and has been keenly involved in the project. “We are also very pleased that the quality properties of the screened groundwood pulp, such as freeness and strength, are as good as ever.”

Myllykoski Sustainability Review 2010

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Myllykoski and responsibility

Myllykoski and responsibility

Sustainability the answer to a global challenge Dr. Karsten Bode has been Myllykoski’s Director of Sustainability since October 2010. He explains how sustainability translates into action at Myllykoski and what kind of strategies are being developed.

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Myllykoski Sustainability Review 2010

Mr. Bode, since 2009 you have been involved in elaborating a comprehensive strategy process. How were sustainability issues integrated into this process?

What are the key aspects of the new sustainability strategy?

Could you give us some concrete examples?

We took the opportunity to develop our corporate strategy, sustainability strategy and energy strategy virtually simultaneously and consistently in terms of content. This enabled us to incorporate sustainability issues into our strategy process in the best possible way, so as to underline our approach, that sustainability is an integral part of all our business.

The key aspects remain the three dimensions of sustainability: the environment, social responsibility and the economic basis. When revising our strategy we concentrated on addressing the key factors for successful sustainability, which, in our view, are management, concrete actions and the definition and monitoring of quantitative metrics.

In the future one of the crucial issues will be to define, record, monitor and communicate even more quantitative targets than now. In each of the three dimensions of sustainability there are still a few more key figures to be defined and reviewed, in order to improve the monitoring of the set goals and the communication of progress.

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Myllykoski and responsibility

Let’s have a look at social responsibility: in this area we have been successful in terms of occupational health and safety and a lot has been achieved in the fields of metrics and continuous improvement. However, there are also issues such as performance monitoring, management culture, training and advanced training that need to be developed further in this direction. Another aspect is our international commitments, for example, our participation in the Global Compact. The commitment to the Global Compact is justified. Looking at the traceability of our actions or omissions, we can, however, still improve verifiability and documentation. Another field of action is the way we generally deal with communities and our stakeholders. In this area company-wide, consistent policies need to be defined and implemented.

Let’s get down to the environmental dimension of sustainability. Which are the relevant issues in this area? Climate protection and resources conservation have already directed our efforts towards an improvement of our CO2 balance, and we are also working on the implementation of the 20-20-20 targets set up by the European Commission. The paper industry already has a long track record of thrifty usage of that vital natural resource, water. In a global context this issue will, however, certainly gain even more importance. In the future we will not only be talking about the carbon footprint, but also about the water footprint of an enterprise or product. 14

A global commitment to sustainability

During the strategy process you have extensively addressed global mega trends. What were your conclusions with respect to sustainability? There is one major aspect: sustainability with all its dimensions used to be among the top issues on the agenda in advanced industrial societies only and forced people there to take corresponding actions. Since for some time already sustainability issues have been gaining increasing importance in emerging countries, too, enterprises will in the long run face almost the same conditions worldwide in this respect. This provides a basis for fair competition and – more importantly – a shared path to sustainable development.

Myllykoski has been a signatory company of the United Nations Global Compact initiative since 2008. The Global Compact is a global network of businesses and other stakeholders from around the world committed to sustainability and responsible business practices. The core values of the Global Compact are presented as ten principles in the areas of human rights, labour standards, the environment and anti-corruption. It aims to mainstream the ten principles in business activities around the world and to catalyse actions in support of broader UN goals, including the Millennium Development Goals. A comparison between Myllykoski’s reporting and the Global Reporting Initiative’s (GRI) guidelines and the Global Compact principles is presented in the GRI index at http://www.myllykoski.com under the section Corporate Responsibility.

The Ten Principles of the UN Global Compact HUMAN RIGHTS

LABOUR STANDARDS Dr. Karsten Bode heads Myllykoski’s sustainability work since October 2010.

ENVIRONMENT

Myllykoski´s Sustainability Functional Core Network OPERATIONS SUPPORT & SALES FUNCTIONS

What other areas of activity are addressed by the new sustainability strategy?

Myllykoski and responsibility

SUSTAINABILITY FUNCTION Sourcing

Energy

Human Resources

Myllykoski mills

ANTI-CORRUPTION Corporate Communications

Legal.. Affairs.

Businesses should: 1. support and respect the protection of internationally proclaimed human rights; and 2. make sure that they are not complicit in human rights abuses. Businesses should uphold: 3. the freedom of association and the effective recognition of the right to collective bargaining; 4. the elimination of all forms of forced and compulsory labour; 5. the effective abolition of child labour; and 6. the elimination of discrimination in employment and occupation. Businesses should: 7. support a precautionary approach to environmental challenges; 8. undertake initiatives to promote greater environmental responsibility; and 9. encourage the development and diffusion of environmentally friendly technologies. Businesses should: 10. work against corruption in all its forms, including extortion and bribery.

Sales and Marketing

Carlos Ramos Cardenas, Director of Corporate Social Development, Televisa, Mexico “Televisa is the largest media company in the Spanish-

Corporate Responsibility at Myllykoski Together with a team, Dr. Karsten Bode, Director Sustainability, has the management responsibility for sustainability work at the company. The work is being coordinated in the different mills with the support of the Sustainability Core Group and several work groups. Generally Myllykoski’s sustainability work is steered by the Executive Board. The Corporate Responsibility Committee, a body headed by the Executive Vice President Technology and with representatives of the top management, advises the Executive Board and the Sustainability Team. Ultimately the President and CEO of the Myllykoski Corporation is responsible for issues concerning Corporate Responsibility.

Myllykoski Sustainability Review 2010

speaking world and the magazine publisher with the highest paper consumption in Latin America. Our most relevant sustainability issues are therefore related to our paper consumption. To improve the sustainability performance of our operations, we are committed to buy only paper whose wood fibre originates from sustainably managed forests. The quality properties and price of the paper are obviously important, too, but sustainability is a paramount prerequisite. In our own operations we promote efficient recycling, for example, of returned magazines. We have

switched to lower grammages and we give consideration to the size of print runs. In our corporate offices and TV production sites we encourage meticulous sorting of waste and other residues in compliance with the environmental law requirements of the Clean Industry regulations. Televisa puts a lot of effort into Social Responsibility and community projects. We have recently published the second edition of ‘Mi Libro Verde’ (My Green Book), a book intended for children about biodiversity and human impacts on nature. It attempts to educate children about sustainable actions, and the underlying message is that we all count.



Myllykoski Sustainability Review 2010

15

Economic responsibility

Economic responsibility

2010 – A year of 2010 TITLE XXXXXX challenges Financial performance and profit-improving activities

Economic responsibility

16

Myllykoski Sustainability Review 2010

The global economy recovered considerably in 2010 after a severe recession. In the paper industry this was seen as an increase in paper demand since spring 2010. As a consequence, paper machine operating rates improved towards the end of the year. Price development in publication papers was negative at the beginning of the year. Newsprint paper prices declined by as much as one fifth. There were some price increases during the second half of the year, but the price level of publication paper remained low. Prices for fibre increased heavily and remained on a high level. As a consequence, the

Myllykoski Group’s profitability fell in 2010 compared to 2009. The operative cash flow was negative. Adequate profitability being a prerequisite for all sustainability in business, Myllykoski continued to further develop its organisation and processes. There were several projects aimed at optimising processes and increasing efficiency. The Net Working Capital Reduction Project was carried out with the goal of reducing working capital sustainably at Myllykoski entities, considering all levers of Working Capital. Operations were reorganised at the Group’s mills to enhance competitiveness. At MD Plattling negotiations to reduce the workforce by approximately 80 positions were concluded during the first quarter of the year.

At Lang Papier and Myllykoski Paper negotiations were started on personnel reductions during the last quarter of 2010. The Myllykoski Group publishes a separate Annual Report, which provides a review on the company’s financial results. The alliance partner Rhein Papier is not included in the figures.

Ownership of the Group On 21 December 2010 Myllykoski’s owners announced the sale of Myllykoski Corporation to UPM-Kymmene Corporation. The transaction is subject to the approval of the competition authorities, among others. The target is to close the transaction during the third quarter of 2011.

Myllykoski Sustainability Review 2010

17

Economic Responsibility Economic responsibility

Economic responsibility

MYLLYKOSKI GROUP *) NET SALES EUR million

MYLLYKOSKI GROUP *) PRODUCTION 1,000 tonnes

MYLLYKOSKI GROUP *) NUMBER OF PERSONNEL, AVERAGE

1,600 1,400 1,200 1,000 800 600 400 200 0

2,500

4,000

2,000

3,000

1,500 2,000 1,000

0 06

07

08

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09

MYLLYKOSKI GROUP *) NET SALES BY DESTINATION 2010 (EUR 1,123 million)

Germany 35% France 7% UK 7% Finland 2% Other EU 24% Other Europe 3% North America 13% Other 9%

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08

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Myllykoski’s operations have an economic impact on the local and national communities where the Group operates. Myllykoski is a family-owned company that sells a varied range of wood-containing and recovered fibre based uncoated and coated publication papers to publishers, printers and retailers in over 70 countries, as well as buying materials and services from its suppliers. Myllykoski pays salaries to local employees and taxes that benefit local communities and economies, both directly and indirectly.

Myllykoski mainly serves business-tobusiness customers through its international marketing and sales network. Most of the Group’s mills are situated in Central Europe, close to the customers. In 2010, the total sales of the Myllykoski Group amounted to EUR 1,123.0 (EUR 1,212.0) million. Deliveries to Europe accounted for 78 per cent of Group sales, and to North America for 13 per cent.

Suppliers Magazine 88% Newsprint 12% *) The alliance partner Rhein Papier is not included in these figures.

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Economic impact

Customers

MYLLYKOSKI GROUP *) PRODUCTION BY PAPER GRADE 2010 %

Public sector

1,000

500

Myllykoski provides a reliable source of income and plays an important role in the success of many contractors and supplier companies. Many functions, such as maintenance and IT, have been fully or partly outsourced to external partners, which in turn offer job oppor-

operations. Pension plan arrangements are made according to local regulations and practice. The Myllykoski Group has defined benefit plans in Germany and in the United States. In 2010 there were defined benefit plans for 3,200 present and former employees. The defined benefit plans covered 59.5 per cent of present employees at the end of the year 2010.

tunities. In 2010, the Myllykoski Group acquired materials and services amounting to EUR 966 (EUR 936) million. The total investments of the Myllykoski Group were EUR 18 (EUR 35) million, including EUR 9 million worth of investments in property, plant and equipment in 2010.

Employees The Myllykoski Group has 2,400 employees in Europe and in the United States. The salaries paid by the Myllykoski Group directly affect the employees’ purchasing power, and consequently also the economic vitality of the local community or region. Most of the Myllykoski paper mills are situated in regions where Myllykoski plays a central role as one of the biggest private employers in the area. In 2010, personnel expenses totalled EUR 161.9 (EUR 180.5) million, EUR 127.6 million of which was paid in wages and salaries (EUR 139.2 million), including incentive bonuses based on achievement of key targets. The wages and salaries paid in Europe totalled EUR 112.1 (EUR 116.9) million, while the corresponding figure for North America was EUR 15.6 (EUR 22.3) million. The decrease in personnel expenses was mainly due to the sale of the Alsip and Utzenstorf paper mills in 2009. The Myllykoski Group has established a number of pension plans for its

Corporate taxes are a major source of income for local and national communities. In 2010, net taxes paid by the Myllykoski Group to governments totalled EUR 2.9 (EUR 5.1) million.

Economic sustainability as a part of sustainability strategy The economic success of Myllykoski is reflected in the Group’s economic responsibilities to its stakeholders, including customers, personnel, owners, suppliers, neighbouring communities etc. Myllykoski observes its ethical values and Code of Conduct in all relationships with its stakeholders. Until the transaction with UPM has been closed, Myllykoski’s responsibility is to continue business normally and to achieve the targets set for the year 2011. Myllykoski

is carrying on operations according to plan and proceeding with the planned projects. Economic sustainability requires a long-term, far-sighted business orientation in all decision making and presupposes investment in businesses with future profitability potential. Innovation, adequate product and service quality and efficient use of resources are essential factors for sustainable development. Furthermore, active business risk management plays a crucial role in all processes.

Myllykoski Group Financial facts and figures 2010 • Net sales of the Myllykoski Group in 2010 were EUR 1,123 million, which is 7.3 per cent less than in 2009 (EUR 1,212 million). • Operating loss for 2010 was EUR 49 million (loss of EUR 18 million). Operating loss without non-recurring items was EUR 63 million (profit of EUR 10 million). • Operating loss for October - December 2010 was EUR 34 million (loss of EUR 55 million). Operating loss without non-recurring items for October - December 2010 was EUR 29 million (loss of EUR 11 million). • The loss for the year 2010 was EUR 113 million (loss of EUR 68 million). The loss without non-recurring items was EUR 70 million (loss of EUR 7 million). • Operating cash flow in 2010 was EUR -22 million (EUR 153 million). • Low paper prices and high fibre prices affected profitability negatively. • On 21 December 2010 Myllykoski’s owners announced the sale of Myllykoski Corporation to UPM-Kymmene Corporation. The transaction is subject to the approval, among others, of the competition authorities. The target is to close the transaction during the third quarter of 2011. The Myllykoski Group publishes a separate Annual Report that provides a review of the company’s financial results. The alliance partner Rhein Papier is not included in the figures.

.

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Myllykoski Sustainability Review 2010

Myllykoski Sustainability Review 2010

19

Economic responsibility

Economic responsibility

Two Sides gaining ground

In May 2010, E.ON’s new gas and steam turbine power station for the Plattling mills went on stream, giving new economic impetus to the whole region. For District Administrator Christian Bernreiter (left) the new power plant is a future-oriented investment that sets an example for others. In addition to Christian Bernreiter, the photo taken at the power plant’s topping out ceremony, shows Siegfried Ramsauer, Mayor of Stephansposching, Monika Weinl, Vice President of the Regional Council, Bernhard Fischer, CEO of E.ON Generation and Erich Schmid, Mayor of Plattling. (Photo: E.ON)

Two Sides is an initiative launched by companies in the graphic communications supply chain, including forestry, pulp, paper, inks and chemicals, pre-press, press, finishing, publishing and printing. The common goal of the initiative is to promote the responsible production and use of print and paper, to discuss paper’s sustainability credentials, and in particular to show how, in a world of scarce resources, print and paper’s unique recyclable and renewable qualities are fundamentally valuable. It offers a forum for the industry to work together and share experiences, improve standards and practices, and strengthen consumer confidence in paper products.

inal The origs wireles nication. commu Print an Myths ad Paper nd Facts

ation imagin tch our . lity to stre er medium can es. the abi teri oth Paper has ity as no requires no bat Print and te our creativ table and ula tion, por and stim informa a! Europe It’s full of that a great ide In al. t teri ble ma Now isn’ vested recycla are har able and ry year than d mass every a renew eve ope’s lan 1950. It’s also s are planted e re of Eur more tree covering mo than 30% sinc sts, re s and fore grown by mo nication e l commu sing year, hav erfu erti also a pow wn that adv yield Paper is e sho t can Print and UK studies hav il and interne ma medium. combining se rate. respon gns campai itional 25% add an l. up to Powerfu ble and e, Recycla Renewabl

r d Pape Print an great have a ntal me environ to tell ry sto

Print and Paper have a environ great menta story to l tell

In 2010, the initiative, which originated in the UK, started to become truly pan-European as it was launched in seven new countries with national networks and local information material. Two Sides is closely connected with Print Power, a campaign to promote the effectiveness of print media. It has

a wide membership across all sectors of the graphic communications supply chain. Myllykoski has been a participant since 2009.

For more information, please visit www.twosides.info

Dr. Brigitte Dittrich-Krämer, Senior Manager Viable infrastructure for rural areas Heading east from Munich towards the county town of Deggendorf you will agree with District Administrator Christian Bernreiter’s description of his native region: “This is a place to live and work, where others spend their holidays.” On the horizon you can see the mountains of the Bavarian Forest, which together with the adjacent Bohemian Forest form Central Europe’s largest coherent forest area. A treasure which not only makes the region attractive for thousands of tourists but which is especially valuable for another reason: today the wood resources of the Bavarian Forest are very much in demand since wood is a sustainable alternative to fossil fuels, a sustainable building material and a renewable resource for the paper industry. For Myllykoski’s Plattling mill, too, the site’s proximity to this unique natural landscape in the heart of Europe has been an advantage since the very beginning. Due to the mill’s location, the wood needed today to produce 800,000 t/a of printing papers can be supplied without having to be transported long distances. However, the competition for wood resources that has arisen between the traditional wood converting industry and

20 20

new buyers, mainly in the energy sector, is a concern shared by Christian Bernreiter: “Of course we understand the company’s worries in this respect. Our dialogue with the company also includes issues like this. And the dialogue is very important to us, because it’s the only way to learn where and how we can help to optimise the business environment.” “Building the Plattling green field site in 1982 was an important milestone in the area’s development,” explains Christian Bernreiter. The locating of the Myllykoski Alliance Partner Rhein Papier’s new paper mill in the area 25 years later was seen as a new economic opening. Industry experts were surprised at how quickly and cooperatively local and regional officials responded to the 500 million euro project. “It was probably helpful that in the years before, Myllykoski had become an established enterprise in the region,” Christian Bernreiter points out. Of course, the District Administrator knows that there is no industrial production without environmental impact: “Myllykoski’s planning for the Plattling mill has been thorough and transparent right from the start, and the company has been very cooperative. To take an example, we

Myllykoski Sustainability Review 2010

had numerous constructive discussions, and measures were swiftly taken to improve noise protection to levels far beyond the legal obligations.” Over the years the Plattling mills have invested continuously, and not only in machinery and technologies. For Christian Bernreiter it is also very significant that the company can offer attractive apprenticeships for young people. “Demographic trends make training vacancies in this region particularly important. If young people don’t have positive prospects in this vicinity, they will migrate to the big cities and the rural areas will ’bleed dry’. ” Today, the Plattling Mills offer, directly and indirectly, some 700 jobs thus contributing, together with an extensive variety of small and medium-sized enterprises, to a healthy structure in the area. Christian Bernreiter is impressed by the new gas fired power plant for combined heat and power generation, the latest investment at Plattling, but not only because of its enormous dimensions. “This future-oriented project sets an example for many other companies and sectors. The project shows that the paper industry is an innovative sector that has a future and will make a future for many people.”

Sustainability, Sustainability Center and Ulrich Freundschuh, Key Account Manager, Paper Chemicals Division, BASF SE, Germany “Sustainability is firmly rooted in our company, both strategically and organisationally. As an inte-

gral part of BASF’s value based management, it helps us to minimise risks, enhance the existing business and create new business opportunities. BASF is also a founding member of the United Nations Global Compact initiative. We have recently conducted an extensive stakeholder and corporate survey to identify which sustainability issues are most important for society and thus most relevant for BASF. Through the identification of key sustainability issues, we develop solutions which will help to meet future societal needs. The focus is now on energy, resources, climate change, water availability and quality, product stewardship, health care and human rights. The most important tool for evaluating sustainability performance is our eco-efficiency analysis, which looks at environmental impact in proportion to a product’s cost-effectiveness. It helps us, our customers and customers’ customers to decide which products are the best choice, both ecologically and economically. We want to build a sustainable relationship with our business partners and therefore we choose suppliers, carriers and service providers who perform well in the fields of environmental and social responsibility. Risk matrices help us to identify potential high-risk suppliers. BASF was the first company in the chemical industry to publish a corporate carbon footprint in 2008. Climate protection is of strategic importance. We are continually optimising our production processes to reduce emissions. Furthermore, innovative technology solutions and chemical products developed by BASF, e.g. for the paper manufacturing process, help to reduce water use and pollution, to save energy and to support the entire process of recycling paper. Our chemicals make it possible for the consumer to read newspapers and books and to use carrier bags produced from recovered paper.



Myllykoski Sustainability Review 2010

21

Environmental responsibility

Environmental responsibility

ENERGY

Environmental responsibility Material and energy efficiency are an integral part of Myllykoski’s strategy aiming to reduce the ecological footprint of its operations. The highest standards of environmental performance, including responsible wood sourcing from sustainably managed forests are key elements for ensuring a reduced impact on the planet.

Combating climate change: focus on energy efficiency and conservation Energy efficiency and climate change issues are key elements of Myllykoski’s new Energy Strategy, which was approved in 2010. In terms of the environment, the Energy Strategy’s main targets stem from commitment to the EU’s 20-20-20 target for 2020: • Energy efficiency will improve by 20 per cent over the 2005 level. The indicator used is energy consumption per paper tonne produced. • Carbon dioxide emissions attributable to paper production will be reduced by 20 per cent from the 1990 level by 2020. • In 2020, 20 per cent of the energy used will be produced from renewable sources. 22

Myllykoski Sustainability Review 2010

The EU’s 2020 targets are challenging, and the means for achieving them are not yet within sight. Myllykoski’s Energy Working Group, which drew up the Energy Strategy, believes that the targets are achievable by participating in the development of new energy efficiency tools. The single most challenging target is the boosting of energy efficiency. This will require Myllykoski to take a pioneering role in developing and implementing new technology and methods. Myllykoski has already done a lot to restrict carbon dioxide emissions, for example, when power plants are rebuilt. One problem will be the increase in the costs of production resources caused by the indirect effects of emissions trading. The constantly rising prices of both elec-

tricity and low-emission fuels have given cause for concern. The proportion of renewable energy is already significant, and the general trend in energy production will further increase it. The agreed targets are to be divided into mill-specific targets. The mills are all different, and their ages also differ, which means that the development potential varies due both to the external and the internal conditions of the mills. New technologies will be utilized as extensively as possible in order to improve energy efficiency. In 2010, Myllykoski Paper, together with Aalto University and Motiva Oy, an affiliated government agency specialising in energy and material efficiency, conducted a

Myllykoski Sustainability Review 2010

23

Environmental responsibility

Environmental responsibility

RAW MATERIALS “The new fresh fibre grinding technology brings considerable energy savings.” Thomas Christl, Management Systems, MD Albbruck

pilot project to analyse the mill’s steam and condensate systems. The project brought good results, and on their basis a national recommendation for the analysis of steam and condensate systems is currently being drawn up. This collaboration project built on an earlier project carried out a few years ago, where the heating and cooling systems were analysed with a view to optimising them. Groundwood pulp has long been manufactured by traditional methods in grinders. In 2010 Myllykoski introduced a new technology for the grinding phase. By participating in the development of new, pioneering technologies and bringing them into use at an early stage, the continuous improvement of the mills’

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energy efficiency can be ensured well into the future. An important energy project in 2010 was the completion of test runs at Plattling’s new power plant and the start-up of commercial operation in the first half of the year. The new natural gas powered CCHP power plant marks a major improvement in the mill’s carbon footprint and, owing to the low emissions and high efficiency of the combined heat and electricity production, it serves as a reference for the targets set for energy production. The ultra-modern gas turbine power plant produces all the heat required by both Plattling Papier and MD Plattling as well as two thirds of their electricity requirements.

Myllykoski Sustainability Review 2010

Managing sustainability throughout the supply chain

ENERGY EFFICIENCY DEVELOPMENT AND TARGET Specific energy MWh/t Target (-1.5%/a) MWh/t

2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2.0 // // 0 2005

2010

2015 2020

Wood procurement In 2010, the amount of roundwood delivered to the Myllykoski mills totalled 2.4 million cubic metres (solid o.b.) of spruce and fir pulpwood. The mills in Germany consumed about 1.4 million cubic metres, Myllykoski Paper in Finland about 650,000 cubic metres and Madison in the United States about 372,000 cubic metres. Myllykoski’s wood-sourcing teams in Germany and the United States are responsible for wood procurement. In Finland, Myllykoski Paper’s wood sourcing is handled by Harvestia Oy, a joint venture company owned by Myllykoski Corporation and Powerflute Oy, and since December 2010 also by Vapo Oy. Vapo Oy is a Finnish sawmill and energy company, and through the new shareholder, Harvestia will expand its operations, particularly in the procurement of logs and energy wood. All the Myllykoski mills are certified according to the PEFC and/or FSC CoC standards. Madison was awarded SFI/PEFC CoC certification in January 2011. The German mills transferred from single-site PEFC and FSC certifications to integrated multi-site chain of custody certification as of the beginning of 2011. In 2010, about 60 per cent of pulpwood supplied to the mills in Germany originated from PEFC and/or FSC certified forests, while in Finland the share was 87 per cent. At the Madison mill in Maine, United States, 34 per cent of the pulpwood came from PEFC (incl. SFI, ATFS, CSA) and/or FSC certified forests. The average haul distance for the mills in Germany was 200 kilometres, in Finland 135, and in the United States

some 145 kilometres. At the Plattling site the share of incoming roundwood transported by rail was as high as 55 per cent.

Recovered paper Myllykoski is one of the biggest users of recovered paper among European producers of wood-containing publication papers. Recovered paper consumption at Lang Papier, Rhein Papier, Madison and the Plattling mills totalled 977,000 tonnes in 2010. Myllykoski uses recovered paper mainly in the form of collected or sorted newspaper and magazine paper. The recovered paper grades purchased by Myllykoski originate mainly from sorting sites that process paper from municipalbased household collection. The rest are sourced directly from printers and unsold newsprint and magazine paper from retailers. National and EU-level initiatives are important in diverting more paper from landfill to separate collection for recycling. In Lang Papier’s newsprint and SC paper grades, the average recovered fibre content remained on a high level at 91 per cent. Several grades are produced with 100 per cent recovered fibre con-

tent. At Rhein Papier, the fibre base is 100 per cent graphic recovered paper. At MD Plattling, the use of post-consumer recovered paper was increased. Plattling’s DIP plant is one of the few special facilities in Europe that can process and recycle the fibres of wet-strength labels from the beverage industry. At Plattling Papier’s line 1 the deinked pulp content could also be increased.

Chemical pulp Chemical pulp is purchased from selected pulp producers under long-term contracts in Europe and North America. In 2010, purchases from regional chemical pulp producers increased. Myllykoski requires its chemical pulp suppliers to comply with Myllykoski’s Sustainability Policy and they must be either PEFC and/or FSC Chain of Custody certified or committed to working towards certification. In addition to the origin of wood and Chain of Custody information, the chemical pulp suppliers are monitored on the basis of their environmental performance. In 2010, PEFC and FSC certified chemical pulp deliveries were substantially increased at all mills.

Staff trained in GHS: one chemical, one label Currently many different countries have their own standards for chemical hazard classification. The United Nation’s GHS (Globally Harmonised System of Classification and Labelling of Chemicals) is intended to replace these multiple systems with one uniform system. GHS is a common and consistent approach to defining and classifying hazards, and communicating hazard information on labels and safety data sheets (SDS). MD Albbruck, Rhein Papier, MD Plattling and Plattling Papier trained their personnel in GHS in 2010.

Myllykoski Sustainability Review 2010

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Environmental responsibility

Environmental responsibility

Chemicals Chemical safety is constantly monitored as part of the environmental and quality management systems. Safety information and training are provided for all those who handle the chemicals. Suppliers of chemicals go through a detailed assessment process with regard to environmental, safety and social issues. The industry is responsible for assessing and managing the risks posed by chemicals, as regulated in the EU by REACH (Registration, Evaluation, Authorization and Restriction of Chemicals). Myllykoski confirms that it complies with the requirements set out in the REACH Regulation, and no chemicals

from REACH’s list of Substances of Very High Concern (SVHC) are used in paper making processes at the mills. According to REACH, manufacturers of substances are required to register the substances of which they manufacture more than one tonne per year. Myllykoski Paper has registered dithionite, which is used in mechanical pulp bleaching, and MD Albbruck is registering the ash generated in energy production. Madison in the United States is committed to minimising the use of toxic chemicals in its production processes as part of its ISO 14001 programme.

DOWNWARD TREND IN CHEMICAL USAGE AT RHEIN PAPIER

kg/t 50 40

Main freshwater sources and treated effluent destinations

30 20 10 0

06

07

08

09

10

Rhein Papier has steadily reduced the use of process chemicals, especially in the deinking process. Good progress has been achieved by chemical optimisation and continuous process operation adjustments.

KUVA?

“A big step forward in reducing water consumption has been made.” Martin Heinrich, Management Systems, Lang Papier

Mill

Location

Water source

Treated effluent destination

Lang Papier

Ettringen, Bavaria, Germany

69% River Wertach 31% groundwater

River Wertach

• Groundwater levels are continuously monitored.

Madison

Madison, Maine, United States

100% River Kennebec

River Kennebec

• Withdrawal is minimal compared to the typical flow of 140 m3/s of the River Kennebec.

MD Albbruck

Albbruck, Germany

88% River Alb 12% groundwater

River Rhein

• Groundwater levels are continuously monitored.

MD Plattling, Plattling Papier

Plattling, Bavaria, Germany

99% River Isar 1% groundwater

River Isar

• Withdrawal is minimal compared to the typical flow of 174 m3/s of the River Isar

Myllykoski Paper

Kouvola, Finland

100% River Kymi

River Kymi

• Withdrawal is minimal compared to the typical flow of 291 m3/s of the River Kymi.

Rhein Papier

Hürth, North Rhine– Westphalia, Germany

100% groundwater sourced from GbR Wasserwerk Dirmerzheim

River Rhein

• Filtrates replace the use of freshwater completely in the de-inking process and partly in the paper machine.

PROCESS WATER m3/t 20 15 10

Note

5

Water Water is an essential prerequisite for life on earth. Human activity, climate change and other processes in nature have caused increasing concern about regional deprivation of clean freshwater. Industrial and agricultural processes are dependent on the availability of fresh water and are at the same time large consumers of water. Sparing use of water is important to Myllykoski in spite of the fact that the mills are not located in high water stress areas. Ample supplies of surface water are available for most of the mills. Only the Rhein Papier facility in Hürth, Germany, is fully dependent on ground water. Myllykoski mills have been successful in the long-term work to reduce the fresh water demand of their processes and have carried out improvements to optimise water use. Water is recycled within the mills many times over. In 2010, Myl-

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lykoski nominated a joint internal task group for developing water management and water strategies further. Topical issues include freshwater and wastewater related performance and efficiency, permits and risk management, as well as water profiles and footprint calculations. In 2010, the total withdrawal of process water was 31 million m3. In six years, the specific usage of process water has decreased by 32 per cent.

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In 2010, good progress has continued in reducing the specific process water consumption of the mills. Myllykoski Paper’s water consumption decreased by 4 m3/t after the repair of a disc filter on a paper machine. The current average process water demand of the Myllykoski mills is 12.5 m3/t. Rhein Papier’s newsprint production is leading the way with a water requirement of less than 8 m3/t.

Lang Papier exceeded its goals in reducing water consumption The year 2010 brought an almost 10 per cent decrease in specific water usage at Lang Papier. Specific wastewater volume is now less than 8 m3/t, including all facilities at the mill site. The results were achieved by increasing effluent recycling and improving the deinking process.

Myllykoski Sustainability Review 2010

Water footprint The water footprint and water profile are attempts to illustrate the impact of the user on freshwater resources and the environment at large. For paper manufacturing processes, forests are the sources of fresh fibre. The complex forest water system challenges attempts to calculate water balances. Trees use rainfall water and tap into groundwater resources simultaneously. In addition, the evapotranspiration of growing trees must be taken into account. Paper manufacturing uses surface or groundwater in the processes and for cooling purposes and releases it back into the water system as wastewater and as steam into the air. Myllykoski, as part of the pulp and paper industry, recognises its responsibility to further develop the sustainable use of freshwater. In accordance with the need for resource conservation, new ways to cut down water consumption at the mills are being sought. Myllykoski also participates in the development of water footprint methodology and standardisation through national paper industry associations and the Confederation of the European Paper Industry, CEPI. Currently the associations are preparing the European Pulp and Paper Industry Water Profile. Myllykoski is also participating in studies related to forest water footprint methodology as a partner in the Finnish Forest Cluster EffFibre project.

Myllykoski Sustainability Review 2010

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Environmental responsibility

Environmental responsibility

OPERATING PRINCIPLES Complying with legislation and best environmental practices Continuous improvement Myllykoski’s environmental work is based on the principle of continuous improvement. The Myllykoski Sustainability Policy defines the framework and prerequisites for the work. Company-wide goals define the focus areas, and at mill level each mill sets the individual targets for managing material environmental issues such as the lean use of energy, water and materials, and responsible sourcing of wood raw material. The mills are committed to minimising environmental impacts through target-setting and are responsible for ensuring that their production processes are in compliance with environmental permits and national and local regulations.

• Quality management systems have been certified according to ISO 9001 at the European mills. • Occupational health and safety management systems certified according to OHSAS 18001 are in use at all European facilities. • Energy management systems were certified according to EN 16001 at all German mills in 2010. In Finland, Myllykoski Paper has the Finnish Energy Efficiency Agreement System in place. • PEFC and/or FSC Chain of Custody standards are applied at all Myllykoski mills. The German mills transferred from single-site certificates to crosscountry multi-site chain of custody certification as of the beginning of 2011.

Management systems and chain of custody

Environmental risk management

Continuous improvement is supported by the implementation of certified management systems. The management systems are assessed regularly by means of external and internal audits. • Environmental management systems certified according to ISO 14001 cover all Myllykoski mills and, apart from Plattling Papier, EMAS is in place in the European facilities. EMAS audits in 2010 were carried out according to the new version of EMAS III, which emphasises climate change issues and more sustainable procurement and product application.

The most significant environmental risks in paper production are connected with chemical handling and process malfunctions. All Myllykoski mills have identified and weighted the site-specific environmental risks that are involved in daily operations. In 2010, the Plattling mills improved their environmental risk management by training personnel in soil and water protection and in chemicals classification and labelling. Lang Papier issued updated guidelines for its staff for cases of emergency. The guidelines for oil spillage occurrences were revised at Myllykoski Paper.

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Myllykoski Sustainability Review 2010

Myllykoski environmental responsibility goals and achievements 2010 Goals for 2010

Environmental expenditures The mills are working on a number of environmental protection initiatives and improvement projects. In 2010, activities focused on the energy efficiency of the fresh fibre based grinding process. The new grinding technology implemented at the MD Albbruck mill will bring considerable energy savings and thus reduce the carbon footprint compared to the existing main pulping methods used. Another major environmental investment was made at Lang Papier to enable switching to low-emission fuels in energy production. In addition, several small-scale measures were carried out to improve wastewater treatment plant operations (MD Plattling, Lang Papier, Myllykoski Paper) and heat recovery from bleaching filtrates (Plattling Papier).

Develop responsible use of natural resources with special attention to fibre certification, water use and recycling

Achievements DMadison developed a Sustainable Forestry Policy, increased the use of FSC certified fibre and developed an SFI/PEFC CoC and controlled wood programme and SFI certified fibre sourcing programme, which were endorsed in January 2011. DThe specific water use of Myllykoski mills was reduced by 8 per cent as compared to 2009. • At Myllykoski Paper the water consumption of a paper machine was reduced by 4 m3/t DPlattling Papier increased the deinked pulp content in its products DThe specific carbon dioxide emissions of Myllykoski were reduced by 12 per cent as compared to 2009. At Madison, the site GHG emissions were reduced by 18 per cent from 2009.

Decrease specific carbon dioxide emissions and increase energy efficiency as well as the share of renewable energy in accordance with the EU climate policy

DSeveral projects were carried out to improve energy efficiency, e.g. • Investments in energy efficient groundwood technology at MD Albbruck, Myllykoski Paper and the Plattling mills • New whitewater heat exchanger at Madison • Lighting systems replaced with energy efficient fixtures and lamps at Madison and Lang Papier • EN 16001 energy management system certificates for all German mills DMyllykoski Paper will be able to purchase more hydroelectricity in 2012 due to the decision of the hydropower provider to renew a turbine

Reduce noise emissions at mill sites

DMyllykoski Paper drew up a noise reduction plan DMadison implemented process modifications and installed a new silencer at power plant

Compliance No serious deviations from the environmental permit conditions took place in the Myllykoski mills in 2010. Temporary deviations were reported as presented in the table.

Permit activities All Myllykoski mills have valid environmental permits. Lang Papier was granted a permit by the District Administration for the conversion of a fuel oil boiler to a gas-fired boiler, and a first partial permit for the planned new power plant. Myllykoski Paper was granted a three-year delay on the enforcement of the tighter wastewater emission limits stipulated by the Eastern Finland Permit Authority in the environmental permit.

Key figures for the Myllykoski Group’s *) environmental activities 2008

2009

2010

Environmental expenditure, incl. depreciation, EUR million

38.5

33.9

25.6

% of net sales

2.6

2.8

2.3

Environmental investments, EUR million

21.8

2.9

2.9

Environmental provisions, EUR million

13.0

11.8

11.2

Environmental expenditures include costs for wastewater treatment, waste management, environmental administration and training. Environmental investments include investment costs related to emission treatment and prevention, e.g. new equipment. Environmental provisions are made to provide for the possible costs of emission trading and discontinued use of industrial landfills in the future. *) The alliance partner Rhein Papier is not included in these figures.

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Environmental responsibility

Environmental responsibility

ENVIRONMENTAL IMPACT OF OPERATIONS Compliance with the environmental permits in 2010 Mill

Status

Lang Papier

COD limit for effluent exceeded on one occasion.

DCorrective measures taken.

Madison

BOD limit exceeded due to high load in the effluent.

DSource identified. No further violations measured.

MD Albbruck

No deviations.

MD Plattling

COD limit for effluent exceeded due to technical problems with nutrient dosage and high binder content in the effluent.

DR&D activities focused on lowering the COD load of effluent and pre-treatment of high COD loaded wastewater streams.

Noise levels partly exceeded.

DSources identified and corrective measures in progress.

Two minor oil leakages to river from heat-oil exchanger.

DTask group for oil management and pollution response continued its work.

COD limit for effluent exceeded due to high COD load and technical problems with nutrient dosage and aeration.

DFocus on R&D activities, see MD Plattling above.

AOX limit exceeded once.

DNo further violations measured.

Myllykoski Paper

Plattling Papier

Rhein Papier

Note

Improving resource efficiency is a top priority Paper making affects the environment in many ways. Myllykoski takes into account the impacts throughout the entire supply chain, from raw material procurement to the end use. The environmental impacts of Myllykoski have been gradually reduced due to the company’s longterm commitment to e.g. energy and material efficiency, modern technologies and responsible sourcing.

Aspect

Derives from…

…and has this impact

Wood procurement

Use of managed forests (biodiversity, products and services from forest ecosystems, land use aspects)

DChain of Custody verification, adherence to forest and nature conservation legislation and sustainable forestry guidelines, chemical pulp suppliers monitored.

Supplier’s activities

Environmental impacts related to raw material production (use of energy, natural resources etc.)

DHigh standards for partners in accordance with Myllykoski Sustainability Policy, supplier audits, selection of sustainable raw materials.

Air emissions

Energy production

Climate change (fossil CO2, CH4), acidification (SO2, NOx), eutrophication (NOx), dust (particles)

DImproved energy efficiency, use of best available techniques, increased use of renewable fuels.

Water emissions

Paper production

Oxygen demand (COD, BOD) and eutrophication (N, P)

DOptimised processes, efficient effluent treatment, reduced use and maximised recirculation of process water.

Solid waste

Paper production, energy production

Disposal at landfills, risk of soil and groundwater contamination

DMaterial efficient processes, re-use of byproducts and waste.

Noise

Paper production, energy production

Nuisance locally

DBest available techniques, noise control measures and monitoring.

Odour

Anaerobic microbial activity in e.g. effluent treatment or sludge handling

Nuisance locally

DProcess optimisation at effluent treatment plant and paper mill, oxidative treatments as necessary.

Logistics

Rail, truck and ship transports of raw materials and products

Air emissions, noise

DOptimisation of the use of transport capacity, use of modern equipment, high standards for logistics partners.

Accidental spills, use of landfills

Risk of soil and groundwater contamination

DBest practices in storage and handling of chemicals, compliance with landfill permits and legislation (landfill insulation, gas collection and treatment, leachate water treatment).

Wood raw material

Stuart Auld, Group Sustainability Manager, PMP Limited, Australia ingly important consideration throughout our procurement process. A review of the carbon footprint of all paper grades is a mandatory part of PMP’s procurement procedures. To minimise our impact on the environment, PMP has engaged in a number of investment projects in recent years, including quick bake ovens, high efficiency RTOs, compressor upgrades and installation of energy efficient lighting. We’re also rolling out FSC, PEFC and ISO 14001 certification across our print facilities. Aside from the direct actions taken to reduce greenhouse gas emissions, water consumption and waste to landfill across our sites, PMP is working with customers and suppliers to help reduce greenhouse gas emissions. We have recently developed a carbon footprint calculator which enables customers to accurately determine the emissions attributed to the publication of their product. The paper and printing industry faces a growing

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Myllykoski Sustainability Review 2010

In 2010, Lang Papier converted one of the existing fuel oil boilers to a gas-fired boiler. Boiler conversion is a transition solution until the plan to construct a new combined heat and power plant is realised. The main advantage of using gas instead of fuel oil is the substantially lower level of emissions. The daily mean limit values of nitrogen oxide emissions will be cut by two-thirds and for sulphur oxides by up to 98 per cent. Also CO2 emissions will be reduced. In addition, the amount of traffic decreases as oil no longer needs to be hauled in and fly ash out.

Environmental impacts of Myllykoski’s operations

No deviations.

“Sustainability is an increas-

Reducing dependence on fuel oil

challenge of proving its environmental credibility. This needs to be combated on two levels: firstly by improving public sentiment towards paper, and secondly by growing the share of FSC and PEFC accredited forests and raising their public profile. It is important for the industry as a whole to be sending out a clear, concise, consistent and factually supported positive message. PMP works closely with a number of industry bodies including the Australasian Paper Industry Association (APIA) on a number of campaigns aimed at informing consumers and improving environmental perception. Raising the profile and coverage of FSC and PEFC accredited forests will provide both environmental benefits and enhance public perception of paper as a renewable and environmentally friendly communication medium. As consumers become more educated about sustainable forestry, the share of certified forests will need to rise to meet the demand. By nurturing this cycle, we can make a positive change for the environment, as well as embedding the linkage between print and sustainability in the public mindset.



Non-wood raw materials

Soil pollution

Measures to reduce the impact

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Environmental Responsibility

Environmental responsibility

EMISSIONS AND WASTE CO2 t (fossil)/t 0.6

SO2 kg/t 1.5

0.4

1.0

Making progress in environmental performance

NOX kg/t 0.8 0.6 0.4

0.2

0.5

0

0 06

07

08

09

10

Since the beginning of the EU emission trading scheme in 2005, Myllykoski’s specific fossil CO2 emissions per tonne of produced paper have fallen by 23 per cent. For more information about the company’s achievements in reducing fossil CO2 emissions, please see page 29.

0.2

Water emissions

0 06

07

08

09

06

10

The company’s specific emissions of sulphur dioxide have declined by 25 per cent since 2006. In 2010, fuel oil consumption was discontinued at Lang Papier and reduced at Madison, which contributed to the fall in emissions.

07

08

09

10

Long-term energy conservation projects and the switch to cleaner fuels have resulted in a reduction of 21 per cent in the company’s specific nitrogen oxide emissions between 2006 and 2010.

PARTICLES kg/t

COD kg/t

BOD kg/t

0.08

2.5

0.20

0.06

2.0

0.15

“Air emissions continue to be reduced due to the energy conservation projects.” Dan Mallett, Manager of Sustainability, Madison

1.5 0.04

0.10

1.0

0.02

0.05

0.5 0

0 06

07

08

09

06

10

In 2010, good progress was continued in reducing particles emissions. The 73 per cent reduction over the five year period is due to the combustion of fuels with lower particles emissions, and also to energy conservation projects.

07

08

09

10

Slight progress is to be seen in the company’s specific COD discharges after the 2008 increase caused by the increasing number of higher value added products in production. In 2010, the Plattling mills had occasional problems in complying with the COD limit and are currently focused on improving the effluent treatment plant’s capacity.

0 06

07

08

09

10

Over the period 2006-2010, BOD discharges have declined by 20 per cent. Biological treatment removes the oxygen-demanding substances effectively.

P kg/t 0.025 0.020 0.015 0.010 0.005 0 06

32

07

08

09

10

In 2010, specific phosphorus emissions deteriorated at the Madison mill. Although the overall P load going from the mill to the publicly owned wastewater treatment plant (POTW) remained similar to that of previous years, P discharges into the receiving water increased. Factors that contributed to this increase included reduced BOD releases from the mill to the treatment plant and an overall change in the treatment plant operating system, which resulted in adjusting the treatment capacity to meet the parameters, such as incoming BOD. The POTW has no total P limit on its effluents. Even if the overall emission load increased, some mills have reduced phosphorus emissions significantly. Lang Papier and MD Plattling attained the lowest specific P emissions in their records.

Myllykoski Sustainability Review 2010

Air emissions Air emissions are mainly caused by fuels burned in energy production. Major changes have been made in energy management over the past years. The share of combined heat and power generation has been increased, and energy efficiency improved. Where suitable, fuels have been switched from coal and oil to biofuels and natural gas. All of the German mills have obtained EN 16001 energy management certificates, which were introduced to support the mills in improving their energy efficiency and reducing greenhouse gas emissions. Madison developed and implemented the Mandatory Reporting of Greenhouse Gas Monitoring Plan as stipulated by the United States Environmental Protection Agency (EPA). The plan describes how the mill will quantify its greenhouse gas emissions during the year in preparation for reporting in 2011.

The mills’ effluents are purified in biological wastewater treatment plants. Myllykoski Paper, Lang Papier and MD Albbruck operate their own treatment plants, whereas MD Plattling, Plattling Papier, Madison Paper and Rhein Papier have outsourced the function to external operators. The effects of treated effluent on the recipient water course are monitored according to environmental permits and reviewed internally and by relevant environmental authorities. MD Plattling, Plattling Papier and Lang Papier monitor the impacts by using a bioaccumulation pool with a population of carp. In 2010, a slight copper accumulation was observed at the Plattling mills, however the sources remain unclear, as copper-containing chemicals are not in use at the mills.

Storm water control and soil protection Storm water management continues to be a major focus at the Madison mill. Best management practices were devel-

oped to control erosion and contamination in the log storage area. Refinements in the surface water collection system improved stormwater quality notably, and helped to prevent the carryover of floatable chips and sawdust into the Kennebec River. Plattling Papier improved stormwater subsurface percolation, which reduced the load on the effluent treatment plant.

Waste The key objective of waste management at all mills is to reduce the amount of waste that is generated. An efficient way of reducing waste is to improve the material efficiency of the processes. During the past few years Rhein Papier has managed to reduce the recovered paper utilisation factor successfully. This means that for a tonne of finished paper, 5.4 per cent less recovered paper is needed than before. The work continues, and another filter for fibre recovery in pulp preparation will be installed. In 2010, Lang Papier reduced the specific amount of waste by 12 per cent by optimising deinking plant processes and stock screening.

“Permit conditions have not been exceeded since 2001, even though the limits have been tightened several times over the past few years.” Minna Tolonen, Environmental Engineer, Myllykoski Paper

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Environmental responsibility All waste cannot be re-utilised. Residual solid waste, mainly ash or wastewater treatment plant sludge, is disposed of at landfills operated by external operators (Madison, MD Albbruck) or by the mills themselves (Myllykoski Paper). Myllykoski Paper is affected by the Finnish Waste Tax Act, which will extend waste taxation to industrial landfills in 2011. Lang Papier and MD Albbruck have closed their landfills. At Madison, two-thirds of the sludge landfill’s surface area has been closed. All landfills, both operative and closed, are being monitored for environmental impacts in accordance with permits and regulations issued by the relevant authorities. Local commercial or municipal landfills are utilised to dispose of normal municipal solid waste.

“The amount of waste per tonne of finished paper has been reduced by 20 per cent over the past five years.” Bernd Weikopf, Management Systems, Rhein Papier

Improved raw material recovery at Albbruck MD Albbruck has increased material efficiency by introducing a microfilter on its bleaching lines. Valuable fibre raw material is recovered and returned back to the process from the filter. The resulting reduced solids load going to the effluent treatment plant also reduces the volume of high water content sludge that needs to be deposited, compressed and disposed of.

34

Environmental responsibility

“Open meetings with the local residents and administration to discuss noise reduction were arranged.” Wolfgang Haase, Management Systems, Plattling mills

Marked growth in sales of certified papers The demand for certified papers continued to grow in 2010. Lang Papier and the Plattling mills, for example, tripled and doubled their sales of PEFC certified papers, respectively, compared with the previous year.

Noise and odour mitigation Environmental permits set limits for the noise emitted by production facilities during both day and night time. Compliance is monitored through regular noise level measurements. All mills have made investments over the last years to combat noise. Myllykoski Paper compiled a noise reduction plan to mitigate noise from sludge handling, from pressurised air production and from the blowers at a paper machine. Noise from wood chipping operations was studied and found to be within the permit limits. Noise can have an adverse effect on the neighbourhood. In 2010, Madison received noise complaints from local residents and implemented process modifications, installing a new silencer at the

power plant. The Plattling mills arranged information exchange meetings with the local administrators and residents. Myllykoski Paper and MD Albbruck have also received complaints about noise. For odours, there are no set limit values in the environmental permits. Occasional odour problems in the vicinities of some of the mills are caused by anaerobic microbial activity releasing malodorous compounds, such as reduced sulphuric compounds. Notifications by local residents regarding unpleasant odours are taken seriously. Processes are optimised continuously in order to manage incidental odours, and oxidative treatments of wastewaters are carried out as necessary. In 2010, Plattling and Myllykoski Paper received complaints from local residents concerning odour.

Most of the by-products and waste generated at the Myllykoski mills are re-utilised. Developing re-utilisation plays an important role in waste management at the mills. Means of treatment

Share 2010

Thermal utilisation • Effluent sludge • Fibre sludge from de-inking • Bark

75%

Other utilisation • Soil/land construction (effluent sludge, ash from power plant) • Composting (effluent sludge) • Raw material for building products industry (fibre sludge from ddeinking) • Raw material for concrete industry (ash from power plant) • Raw material for composting factories and mulch producers (bark)

21%

Waste to landfill Hazardous waste

Myllykoski Sustainability Review 2010

4%

Myllykoski supports and promotes both PEFC and FSC forest certification systems, which are international, non-profit, nongovernmental organisations dedicated to promoting legal and sustainable forest management through independent third-party certification, to ensure that timber is produced with respect for the highest ecological, social and ethical standards. All of Myllykoski’s mills are certified under the PEFC and/or FSC CoC standards. PEFC is the predominant forest certification system within the wood procurement areas of the Myllykoski mills. In Germany, over 90 per cent of the certified forests are certified under the PEFC standard. The main wood procurement areas in Germany are the forest-rich states of Bavaria and Baden-Württemberg, which are PEFC certified to 76 and 82 per cent, respectively.

Joana Barata Correia, Sustainability Affairs and Lars Carlson, Senior Advisor, Inter IKEA Systems Media “At IKEA, we believe that by integrating the environmental, social and

economic dimensions in all our activities we can actively contribute to o having a positive impact on both people and the environment. This is a continuontinuous and never-ending process, but we are on the way. Rather than focusing on one specific sustainability issue, we aim m at taking a holistic approach, both when evaluating the suppliers that collaborate ollaborate with us and when, for example, assessing the sustainability impact of the printed media products that are distributed in all the countries where IKEA is present. Since the beginning of our work, most of the focus has been, and still is, on collaborating with our suppliers, in order to ensure that they produce our products with the minimum possible environmental and social impact. For paper purchasing decisions, we do a detailed evaluation of the supplying company, the paper mill and the paper grade in particular, before we purchase any paper. This allows us to take the actual sustainability profile of the supplier and the product into consideration when making purchase decisions. IKEA has a set of Sustainability Requirements that all our suppliers have to comply with. They cover a wide range of sustainability-related topics, from the environmental to the social aspects. By developing our specific sustainability requirements further, we have constantly been promoting the continuous environmental and social improvement of both our own and our suppliers’ operations. To minimise our impact on climate change, we try to print as locally and close to the final markets as possible in order to avoid excess transportation and we optimise our printed products, making them as efficient as possible – by working on the layouts and maximising communication to the consumers, and by minimising waste. We also encourage our suppliers to implement actions that minimise their impact on climate change.



~0.1%

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35

Environmental responsibility

Environmental responsibility

BIODIVERSITY

“The importance of biological diversity to human society is hard to overstate. An estimated 40 per cent of the global economy is based on biological products and processes.”

RESPONSIBLE

“Few things in life are as versatile, reliable and practical as paper.”

PRODUCTS

Confederation of European Paper Industries (CEPI)

United Nations Environment Programme on the thematic area of biodiversity (www.unep.org)

Sustaining our lives The United Nations declared 2010 the International Year of Biodiversity. Biodiversity forms the foundation for the forest industry’s activities: the industry depends on wood raw material. Attention to biodiversity is an inherent part of forest industry companies operations and sustainable forestry. Wood fibre is Myllykoski’s most important raw material. The spruce and

fir pulpwood used to produce groundwood pulp is purchased from private forest owners as well as from communities and state-owned forests. Rigorous forest certification schemes and standards under the auspices of the PEFC and FSC guarantee that the wood raw material originates from legal and sustainable sources.

Myllykoski Paper shares site with nature’s diversity The beautiful silver flanked salmon (Salmo salar), making their way up the River Kymi are living proof of the vitality of the river that flows past Myllykoski Paper’s mill in South-Eastern Finland. Salmon reproduction in the River Kymi stopped in the middle of the last century due to industrial pollution, dredging and dams. Challenges still remain in the form of polluted sediments, but the recreational use of the river has improved substantially. Improved water quality, the building of fish passes and fish stocking have revived the river’s salmon stock. Salmon is a sea fish and only migrates to rivers to breed. Many Myllykoski Paper employees fish in the river; here you see Mikko Lindqvist and the salmon he caught. The quality of the river water close to Myllykoski Paper’s wastewater treatment plant is also inspected by an otter (Lutra lutra). The otter is listed in the 2010 Red List of Finnish Species and classified as Near Threatened. This particular otter has chosen the area around the hydropower plant and wastewater treatment plant as one of its homes. Otters lead a relaxed ‘bachelor’ lifestyle, fishing and playing.

36

Myllykoski Sustainability Review 2010

Fish continue their journey upriver at MD Albbruck In 2010, MD Albbruck installed a fish ladder beside the existing hydropower plant. It is a structure that facilitates the fish’s natural migration. Fish can now bypass the hydropower plant by swimming up a series of relatively low steps into the waters on the other side.

Renewable and traceable raw materials. Certified production. Recyclable, labelled and safe products. Product safety

Recycling

All the purchased raw materials have an impact on the quality of the end product. Likewise, they have an impact on the environmental aspects and safety of the product. Myllykoski’s wood-containing and recovered fibre-based products are based on natural raw materials. Manufacturing conforms to established technology and involves the use of approved chemicals. No substances of very high concern (SVHC as defined by REACH) are used in manufacturing. The chemical pulp is ECF (Elemental Chlorine Free) or TCF (Totally Chlorine Free), which means that no chlorine gas is used in bleaching. Myllykoski products are used for publication papers, including newsprint, in which the effects on human health are not significant.

Myllykoski products are well suited for recycling. Paper is the most recycled product in Europe, with a recycling rate of 72.2 per cent (2009). The paper industry has played an important role in achieving this high level. Recovered fibre is a major fibre raw material for Myllykoski, one of Europe’s largest users of recovered paper among publication paper producers.

Environmental labels and product declarations The Blue Angel eco-label is awarded for the products of Rhein Papier and Lang Papier. Myllykoski Paper’s products have been approved for use in Nordic Swan eco-labelled print products. Both are voluntary, third-party-verified environ-

mental labels that set strict environmental and sustainability criteria for paper producers and promote environmentally sound products. Myllykoski continued using Paper Profile environmental product declarations with updated datasheets to communicate the environmental performance of its main MY-grades. Madison continued to participate in EPAT, a paper assessment tool to determine the environmental impacts of the manufacturing operations involved in making paper. The Myllykoski mills are covered by ISO14001 environmental management systems, and all mills apply either PEFC or FSC certified chain of custody systems, or both.

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37

Environmental responsibility

Environmental responsibility

TRANSPORT Improving the environmental sustainability of the transportation networks In 2010 Myllykoski shipped more than 2.5 million tonnes of paper products worldwide. The amount of greenhouse gases generated could be reduced thanks to new distribution concepts and the consistently high share of transport by rail.

Distribution logistics In 2010 Myllykoski Logistics focused once again on distribution logistics. On the one hand, Myllykoski strives to offer its customers the best possible service at acceptable costs, and on the other, the group wants to offer and utilise as many environmentally sustainable transportation concepts as possible. Another contribution to improving the environmental record was Myllykoski’s adoption of Combined Traffic Concepts. Already during its first year, combined mill deliveries from Plattling and Ettringen reduced the CO2 emissions by 300 tonnes. The biggest advantage of this concept is that the average payload exceeds the normal utilisation rate of a truck by at least 4 tonnes, and besides that, the majority of transports are by rail. All Myllykoski mills (except Myllykoski Paper) have excellent railway sidings that enable deliveries and unloading of important raw materials by rail, and paper can also be loaded onto the wagons. An intelligent combination of incoming and outgoing traffic considerably reduces costs and – by avoiding empty runs – also the environmental load. In 2010, rail transports accounted for more than 20 per cent of all outgoing transport. In order to enable just-in-time deliveries to the customers, most of the rail transports have to be arranged via in38

termediate storage facilities. The consistently high percentage of rail transport ensured savings of 2800 tonnes of CO2 for Myllykoski in 2010. Madison achieved an exceptionally high proportion with 70 per cent of all outgoing traffic carried by rail. From the German mills more than 75 per cent of all transports are by truck, whose top speed is limited to 85 km/h. As a result of this measure, fuel consumption was reduced by 350,000 litres of diesel in 2010. Thanks to the good average utilization rate of the trucks, Myllykoski can show excellent figures for the different mills in 2010. Especially at Lang Papier and Rhein Papier the average payload was close to the theoretical optimum. Another positive result was the optimal load size of transports from Myllykoski Paper to the ports of shipment. When selecting potential logistics, partners and hauling companies, Myllykoski expects them to be able to present relevant certifications. Myllykoski also prefers to co-operate with companies operating with appropriate modern equipment, and EURO V trucks have been used in 80 per cent of all transports within Europe.

Inbound Logistics Plattling Paper showed an exceptionally good trend in wood deliveries by rail, almost 55 per cent of the wood being delivered by rail. MD Plattling, too, was able to increase the share of rail transports to 10 per cent. Pulp is being delivered to the mills almost exclusively by rail, and the wagons are reloaded with paper after the pulp has been discharged.

Myllykoski Sustainability Review 2010

MODAL SPLIT 2010 Shares of truck/rail transports in outbound logistics % 100 80 60 40 20 0 Myllykoski Europe*)

Myllykoski North America Rail Truck

*) Myllykoski Paper, ex Lübeck, Antwerp Myllykoski Paper ships some 300,000 tonnes of publication papers via the Hamina harbour.

Slow steaming Due to high fuel costs and the global economic crisis in 2009 the “Slow Steaming Concept” has increasingly become a standard for sea container transport. Equipped with modern propulsion systems, vessels can nowadays reach top speeds of up to 27 knots (50 km/h). Though vessels are – in terms of C02 emissions – the least polluting of all transport carriers, there is still potential to reduce ecologically harmful greenhouse gases even further. A speed reduction from 25 to 22 knots, for instance, can cut the fuel consumption of a vessel by approximately 30 per cent. Being well aware of its environmental responsibility, Myllykoski prefers, where possible, to co-operate with shipping companies offering “Slow Steaming”. The mills in Germany in particular were able to apply this principle on a large scale in their container transports, and 55 per cent of all shipments could be arranged by slowsteaming traffic.

Bernhard Gallus, Director, Environment, Hubert Burda Media GmbH, Germany “Our commitment to Climate

Protection is strong. Together with seven other leading members of the German business community we have signed the position paper ‘2 Degrees – German Entrepreneurs for Climate Protection’ in support of the efforts to establish a global climate protection agenda and to limit global warming to two degrees above the pre-industrial level. Burda Media was one of the first printing and publishing houses to be certified under the EMAS regulations in 1996. We control the environmental impact and energy efficiency of our production sites on the basis of key figures and benchmarks of the entire printing industry. In our new printing house we have been able to halve energy consumption and therefore also to halve CO2 emissions. In our magazines we also inform our readers about climate change; we give advice on saving energy, en-

ergy friendly products and efficient house construction. Our My Life web site is designed for people who are interested in a healthy and sustainable lifestyle. Sustainable paper production is essential for the acceptance of magazines. The protection of old growth forests and safeguarding biodiversity in forestry are important aspects of this. Together with my colleagues in other German publishing houses, the VDZ-compiled position paper ‘Printing products and ecology’ still forms the basis for paper procurement by Hubert Burda Media. I find that we still need more transparency regarding environmental and social aspects within the paper chain. Credible chain of custody certifications facilitate the communication of environmental aspects to the customers, and FSC and PEFC are increasing in popularity among the public. Our printing plants have been certified under the FSC and PEFC regulations since 2007. However, the amount of certified paper on the market is still very low. It would certainly be desirable to see more certified paper on the market and – in the long term - a standard for printing magazines and catalogues.



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39

Social responsibility

Social responsibility

Social responsibility Myllykoski incorporates a diversity of structures and cultures. The company interacts with a number of different stakeholder groups, and this necessitates action and dialogue that go beyond the scope of internal business operations.

Personnel The difficult market situation was a particularly serious challenge for HR management in 2010. Employees both at the corporate level and at the mills have been affected by the necessary economic measures. At the same time, Myllykoski has continued to develop its HR management in line with its strategy, with the focus on giving support to managers and employees alike during the necessary change processes. In addition to Myllykoski’s Code of Conduct and other internal guidelines, the company’s HR policy is based on the principles of the UN’s Global Compact and the applicable laws and regulations. In 2010, Myllykoski had an average headcount of 2,711, which was four per cent less than in the previous year. This decline resulted primarily from measures to adjust the personnel structure. The Phoenix project, aimed at making the Plattling site fit for the future, was started in 2009. Among other measures, it led to a reduction of 82 jobs. In March 2010, a reconciliation of interests and the redundancy programme was negotiated locally with the Works Council on the basis of the collective agreements in force and the right of co-determination. Careful HR planning allowed the downsizing of

40

Myllykoski Sustainability Review 2010

personnel to be carried out in a socially sustainable manner. Some employees were employed by partner companies within outsourcing schemes. Despite the implementation of early retirement and interim pension schemes and fixed-term contracts, lay-offs could not completely be avoided. At Ettringen, a project called Trendbreaker was started in autumn 2010 to secure the future of the location. It will also involve negotiations with the Works Council aimed at adjusting the personnel structure, with a total of 85 jobs at stake. The market situation and raw material supply were to some extent very challenging, and resulted in several machine

shut-downs of short duration. Flexible working hour arrangements and the implementation of training, education and general qualification schemes minimised the impact on the employees concerned and the need for reduced working hours. Plattling’s PM 10, which had been shut down temporarily, could be restarted in March, which was earlier than expected. At the end of 2010, Myllykoski Paper was forced to close down PM 6 at its Finnish mill on a temporary basis as a result of the market situation. Temporary lay-offs of a total of 80 employees were agreed on within the Co-Determination Procedure.

Myllykoski Code of Conduct Myllykoski is committed to the highest standards of ethical conduct in its business operations. The Myllykoski Code of Conduct defines the ethical principles for all of the company’s activities and its employees in terms of compliance with laws and regulations, competition rules, preventing bribery, human rights and recognition of the general principles of equality of opportunity and fairness. All suppliers must comply with the principles of the Myllykoski Code of Conduct. Myllykoski regularly reviews the contents of the Code of Conduct and makes any necessary amendments. During the period under review, no amendments were necessary. The Myllykoski Code of Conduct is available on the internet at www.myllykoski.com.

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Social responsibility

Myllykoski social responsibility goals and achievements 2010 Goals for 2010

PERSONNEL GENDER DISTRIBUTION 2010

< 20 years 21 - 30 years 31 - 40 years 41 - 50 years 51 - 60 years > 60 years

Male salaried 20% Male hourly 67% Female salaried 10% Female hourly 3%

TRAINING DAYS AND COSTS

*)

2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0

600 500 400 300 200 100 2006 2007

2008 2009

Germany 69% Finland 18% United States and Canada 10% Other Europe 3%

2010

1 - 5 years 6 - 10 years 11 - 20 years 21 - 30 years > 30 years 0

100

200

300

400

500

600

700

salaried hourly total

*)

10 8 6 4 *)

Alsip, Dachau and Utzenstorf Papier are not included.

2 0

42

2007

Myllykoski Sustainability Review 2010

+ Best frequency and severity results achieved since the Health and Safety process started in 2005. + Health and Safety leadership and culture programmes implemented at Myllykoski Paper, Lang Papier and MD Albbruck. – Further development of safety Key Performance Indicators not achieved.

Select and retain the best people for Myllykoski by promoting an attractive work environment

+ Coordinated efforts made to attract and recruit young professionals. + MY College leadership programme continued. + Development of skills and competencies within the new tasks and roles after organisational changes (partly achieved).

Strengthen and make the best use of individual and collective performance and the ability to change

+ Support provided for organisational restructuring efforts. + Common metrics developed and utilised. – Further development of performance management not achieved.

Implement the Myllykoski Code of Conduct in all operations

+ Code of Conduct training made part of the basic training programme within the Myllykoski Sales Network. – Group-wide training scheduled for 2010 postponed.

Investing in further education

% 12

2006

Encourage and sustain a culture of safety and health

< 1 year

Training costs / person Training days / person

PERSONNEL TURNOVER

3% 10% 20% 36% 26% 5%

PERSONNEL BY YEARS OF SERVICE 2010

EUR 700

0

PERSONNEL BY COUNTRY 2010

PERSONNEL AGE PROFILE 2010

Achievements

2008

2009

2010

800

The focus of HR development in 2010 was on providing employees with the skills needed for the change processes that had been initiated. Overall, in 2010 Myllykoski employees participated in training sessions amounting to some 2,700 days, 1,500 days fewer than in the previous year. An average of EUR 372 per employee was invested in further education, which is EUR 117 less than in 2009. Over and above that, several measures were carried out to implement and develop the leadership culture, and in addition a series of training courses was arranged in the areas of occupational safety, quality, environmental protection and communication, which will be continued in 2011. In 2010, Myllykoski continued its commitment to vocational training, encouraging employees to participate in advanced master’s and technical training courses to acquire further qualifications. In 2010, more than 40 young people participated in vocational training at the Myllykoski mills in Germany, bringing the proportion of Myllykoski trainees in all the mills providing training to 2.5 per cent. As part of the training concept, the trainees are introduced to co-operation across the mills. For this purpose, an introduction week, including a workshop lasting several days, is organised annually

for all new trainees of the German mills. In 2010, they numbered 22. Myllykoski also actively promotes local co-operation with schools, technical colleges and universities. For example, in 2010, a total of 45 students completed their practical training at the MD Albbruck mill. The trainees benefit from highly skilled vocational support and fair employment conditions in accordance with the initiative “We are a fair company”. Madison and MD Albbruck also encourage paper engineering students by granting them scholarships. At all the mills efforts are being made to increase efficiency and add value. Projects started in this area at the mills in Plattling, Ettringen and Myllykoski, for example, strive to make these efforts more systematic and to integrate all the areas involved. The projects include continuous development of initiative

systems. The idea management system was re-organised at the Plattling mills in 2010. This measure soon proved to be successful, and the number of initiatives assessed and rewarded went up.

Human rights Myllykoski has operations in Europe and the United States. Compliance with human rights, prevention of discrimination of any kind and the non-use of forced labour and child labour are guaranteed by legislation and extensive regulations and guidelines in place at Myllykoski. The Myllykoski mills guarantee freedom of association and collective bargaining and have comprehensive regulations concerning the protection of employees. Adherence to these regulations is a matter of course for Myllykoski. A specific section is included in contracts to inform partners and suppliers expressly

MY College Myllykoski’s HR strategy aims at supporting current and future managers internally. This is achieved, for example, through the corporate-wide managerial training programme MY College. In 2010, 19 employees took part in the programme. The first module focused on leadership, which was handled from many different perspectives and in relation to Myllykoski’s field of operations. The themes of the other modules were business understanding and financial management. The programme was rounded off in February 2011 with the module Creative and Innovative Corporate Culture.

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of this obligation and to commit them to guarantee compliance with the regulations.

Constructive dialogue Myllykoski implements industrial co-determination processes in its companies in compliance with the laws and regulations in force. Employees’ co-determination is the responsibility of the Works Council bodies created at all mills. Considering the difficult market environment and the company’s position, it was a great challenge to reach an understanding on solutions to the company change processes and necessary adjustments through constructive dialogue. On the European level, the European Works Council (EWC) has been representing the interests of Myllykoski employees for already 15 years. It serves as a forum for cross-border communication and co-operation in accordance

Social responsibility

with the EU Directive 94/45/EC of 22 September 1994. In 2010, representatives of the employees of the Finnish and German mills met the company’s management in Myllykoski in Finland. In December 2010 the EWC held an extraordinary meeting in Unterschleißheim to give information about and discuss the owners’ announcement that they will sell Myllykoski Group and Rhein Papier GmbH to UPMKymmene Corporation.

Outlook The print business today is undergoing major changes, placing particular demands on companies operating in the paper industry and their employees. Developing the employees’ skills and adjusting existing structures to the new operating environment are key challenges facing HR management.

Building knowledge to strengthen profitability The Myllykoski Sales HR organisation focused in 2010 on strengthening employees in their role as brand ambassadors. With this in mind, an interactive training programme was developed to provide in-depth knowledge on the company, sales, products, communications, finances and controlling. The participants could complete the training in the form of self-study courses and have their learning evaluated by taking tests.

It’s people that count

Occupational health and safety An important element of Myllykoski’s HR strategy is to create and maintain a culture of occupational health and safety. Ensuring a safe working environment and promoting the health of employees are both inherent parts of a company’s responsibility. In this spirit Myllykoski is working towards the goal that every person returns home safely every day. In keeping with this goal, Myllykoski has established occupational safety systems at the mills to control the quality of safety measures and to ensure the transparency and traceability of the procedures in place. These also ensure legal compliance in this area. Following the certification of Plattling Papier in spring

44

2010, all the mills in Europe now have an occupational health and safety management system certified under OHSAS 18001 in place.

Fewer accidents In 2010, the number of accidents continued to decline. Over seven months, Myllykoski recorded an accident frequency of less than 25 per million worked hours. In the best month, the figure went down to only 12. The yearly average is around 24.44 (