Rethink Stora Enso 2010 Saving rainforest Find out how Veracel is helping local biodiversity in Brazil. 18 Trees, food and bombs In Laos, business meets corporate social responsibility in a concrete way. 42 A CEO’s diary It appears that leading a company like Stora Enso is far from a tidy office job. 66 A talk with a woodpecker Stora Enso’s sustainability expert Carolina Graça shares her insights. 14

Insert Stora Enso Facts & Figures 2010

Stora Enso—1

The world needs a new approach to materials. Who knows if one day renewable materials and Stora Enso nanotechnology will be used to build emission free vehicles? What we do know is that renewable materials have the power to push things forward. That is why Stora Enso has redefined itself from a European forest company to a renewable materials company operating in growth markets. Find out more about our rethinking: storaenso.com/rethink

Rethink

Stora Enso Rethink 2010 Editor in chief Lauri Peltola ­ Concept & design Miltton Oy Printing Libris Oy Cover photo Jenni-Justiina Niemi, Visuamo Oy Stora Enso Oyj P.O. Box 309, FI-00101 Helsinki, Finland Visiting address Kanavaranta 1, tel. +358 2046 131 Stora Enso AB Box 70395, SE-107 24 Stockholm, Sweden Visiting address World Trade Center, Klarabergsviadukten 70, tel. +46 1046 46000 www.storaenso.com, [email protected]

Contents Editorial Why do we and you need to rethink? 4 Phenomenon Plastic floats 6 Column The customer always has a choice! 8 R&D Responsible choices 9 Strategy The magic moment 11 Phenomenon Beekeeping in Uruguay 13 Interview A talk with a woodpecker 14

Plastic fantasies Plastic is everywhere. But what do we really know about it and its competitors? 16

S H U T T E R S T O C K / M i ltto n

Petr i artt u r i as i k a i n e n

M A RC E L O S IN G E R

Saving rainforest

Trees, food and bombs

Everybody along

Veracel is improving biodiversity in Brazil whilst producing over a million tonnes of pulp. 18

In Laos, Stora Enso is helping local communities by clearing land of bombs for both plantations and locals’ food production. 42

Stora Enso’s and Arauco’s joint venture in Uruguay benefits locals as well. 54

On business Publication­ Paper Taste for waste 24 Fine Paper Change on course 29 Packaging A new take on packaging 33 Wood Products Welcome the era of wood 37

The final shift Tough decision to shut down a paper machine. 50

Business Modern pulp production 60 Strategy Into packaging growth markets 61 Insert Stora Enso Facts & Figures 2010 Global Responsibility Global, practical, engaged 63 Straw poll How’s your recycling? 65

A CEO’s diary A few days on the heels of Stora Enso CEO as he travels the globe. 66

Phenomenon Tree gardeners 68 Column For the love of wood­ 70

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Editorial

Why do we and you need to rethink?

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J e n n i - j u st i i n a n i em i

Jouko Karvinen CEO of Stora Enso

e in Stora Enso have started a change. A change for the future. Through several challenging years in a roller coaster operating environment we have become a stronger company. So why do we need to change when we are finally on the right track? Why not just keep going? The simple answer is: because the world is changing. And we want to be part of changing the world, part of the change for the better. We want to be the pathfinder, not follow the others. Why do we call our change process Rethink? Because we want our slogan to be a call to action for every person in our company – from the CEO to the latest young trainee. And a call to action for you personally, too.

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e in the company already started in 2010. We have many brilliant examples of our excellent people challenging old traditions of looking at business, driving operations or making investments. No more “we have always done it this way”. Let me share with you a few examples of rethinking in action in Stora Enso 2010. The traditional wisdom in our industry has been to benchmark manufacturing assets based on cost charts, which are based on average cost assumptions. We have started to look at total resource costs, not so much on paper or board machine width and speed only – and using actual cost data. And that has now allowed us to be a lot more selective and to invest in, for example, three power plants in the worst economic downturn, with a very good financial return.

Rethink will become a movement inside and outside the company with an accelerating pace of ideas and concrete results.

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nother clear change is how we steer our assets in cyclical markets. Old wisdom was specialisation to the extreme both machine by machine but also by doing most everything ourselves, not only in the core paper and board manufacturing, but also for example in mill maintenance. The issue with this was that in a reduced demand situation we not only had to reduce operating rates of our machines, but also much of our costs were fixed. After rethinking the old way of “minimum cost at any cost” has been replaced with “maximum flexibility at optimum cost” – with more outsourcing to expert partners and clear priority setting where lowest cost assets will always run at highest operating rates – and maximise our returns.

Montes del Plata pulp mill investment decision ten years earlier – and create twice the value with half the cash spent. The Inpac packaging company acquisition in China and India follows exactly the same logic – we won eight to ten years of time in the fastest growing consumer packaging markets in the world. Now that I would call Rethink.

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here are already many other examples of Rethink. From the value proposition to our customers to product innovation, looking at ourselves from a customer and even from a consumer angle rather than looking from the forest out – questioning old ways of doing and thinking. What we want is that Rethink becomes a movement inside and outside of the company with an accelerating pace of ideas, and concrete results of Rethink.

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he achievements of the past three years have been tremendous – a total of 500 million euros, or five margin points, less fixed costs in 2010 than in 2007! That is a pretty good kick start for the next part of our journey. And we are only in the beginning of this journey, so we have much more to gain! Rethink is not only about flexibility and cost either. It is also about speed and time. We have for a long time had a plantation project in Uruguay, which would have at consistent investment speed given us an opportunity to build a full-size pulp mill in about 2020. Then came the opportunity to partner with Arauco and not only combine their plantations with ours but to also purchase a significant piece of additional plantations from ENCE. What that means is that we were able to make the

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e also want to invite you, the reader of our rethought Annual Report, to join our journey. Be it the stakeholder dialogue with NGOs and local governments on environmental and social issues, or making a difference to our planet through replacing plastics with recyclable and renewable fibre-based packaging, it is time for all of us, including myself, to rethink and renew. Not only for the good of Stora Enso and our shareholders – but for the good of you, every consumer in the world and our joint planet. I hope you will enjoy reading our Rethink Report as well as our Global Responsibility Report. And yes, I hope they will also make You – rethink. iS toc k photo / A n to n S ele z n e v

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Phenomenon

Plastic floats

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round 100 million tonnes of plastic is produced each year. Approximately 10 percent of it ends up in the sea, where the durable and stable nature of plastic creates a serious problem. The Trash Vortex is a gyre of marine litter in the North Pacific Ocean. In the gyre – estimated to be as large as the state of Texas – the mass of floating plastic is in parts six times greater than the mass of plankton. It has been estimated that over a million seabirds and 100 000 marine mammals and sea turtles are killed each year by ingestion of plastics, or entanglement. Some plastics in the gyre will not break down even during the lifetime of the grand­ children of the people who threw them away. Sources: Ecosystems and Biodiversity in Deep Waters and High Seas (2006), Greenpeace website (www.greenpeace.org)

C or b i s / S KOY / G ary Bell

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Stora Enso—7

R&D Many of the latest Stora Enso products are made with sustainability and responsibility in mind.

Column

The customer always has a choice!

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f a customer cannot get what he wants from us, he will always be able to get it from somebody else. This is a sobering statement that too many companies tend to ignore. In a global business environment that is changing very fast, our customers have to adapt their way of doing business. This naturally includes how they look upon their suppliers. “Old” ways of engaging with suppliers may be neither efficient nor relevant.

J e n n i - J u S t i i n a N i em i

Gunnar Brock Chairman of the Stora Enso Board of Directors

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t Stora Enso we must rethink how we engage with our customers. We have to rethink how we add value to our customers. Is our product development addressing the right issues? Are our processes and services meeting the new and added demands from our customers? As a way to rethink, Stora Enso has started to make systematic and regular customer surveys in order to better understand in what way we should change to better respond to the new requirements.

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he results from a survey conducted last autumn were generally positive, but far from perfect. Stora Enso differed in a positive way from its competitors in such areas as company reputation environmental performance quality of products quality of service quality of sales personnel. ●● ●●

Responsible choices

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s the Board of Directors of Stora Enso, it is important for us to remember we are appointed by and responsible to all our shareholders. Our duty is to represent all shareholders and to try to generate long-term shareholder value. Is there a conflict between caring for your customers and creating shareholder value? Not at all! Understanding our customers, as well as developing products and services that support their competitiveness is where it all starts and ends. By doing this we will create lasting shareholder value.

HK Ruokatalo’s cold cuts are the first to be packaged using board trays.

Recyclable board for packaging cold cuts Stora Enso’s new Primeforma board is a sustainable and mostly renewable solution developed to meet the needs of thermoformed food packaging. Products made of Primeforma board can be recycled just like any cardboard packages. The board can be used on existing packaging lines previously used for plastic packaging. The revamped range of cold cuts by HK Ruokatalo, one of Finland’s leading food manufacturers, hit the stores in September 2010. It was the first time board trays were used for packaging sliced meat.

Stora Enso Gallop provides packaging for Microsoft’s Windows 7 software.

Creative furniture design Stable, strong and good-looking – these are examples of adjectives that can be associated with the Särmä table that Stora Enso and Isku have jointly developed. The most interesting feature of this table is that it needs no frame under the top, because bending is prevented by having a cross lamination-based structure that makes the table top stronger and more stable. Furthermore, the table’s legs can be attached directly to the top. This structural feat results in a lighter-weight table, and saves both time and money in manufacturing. The beautiful appearance of the table top is achieved by making the surface layer out of Stora Enso Effex.

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he Stora Enso Board of Directors is giving Group management their full support to drive the Rethink change process. Rethinking, questioning old ways of doing things and finding new ways and solutions to satisfy customers, shareholders, employees and the society at large, is a daunting challenge. We feel that Stora Enso management is fully committed and ready to take on this task. There is a Chinese saying: “a long march starts with a first step.” Stora Enso has taken that first step!

Flexible and personalised packaging The Stora Enso Gallop powered by Xerox is a cutting-edge solution for the digital printing and die-cutting of packages. The world’s first sheet-fed integrated digital printing packaging line works inline and on demand, shortening lead times, enabling quick changeovers and providing the possibility to print individual, variable data on each package cost-effectively. Gallop also enables item-level product identification used for tracking and tracing products. The workflow based on the Gallop production line enables lower minimum orders, less waste and less storage. Microsoft chose Stora Enso Gallop for packaging its Windows 7 software. Intelligence for health monitoring Conductive printing combined with an embedded microchip was the basis for the development of Stora Enso Pharma DDSi, an intelligent pharmaceutical packaging solution. Now the same technology is used for a new purpose: in an electronic health journal, the Memori card, which a patient can use to record and report his/her condition or symptoms. The solution is a time-saver both for health professionals and the outpatient, as fewer visits to the medical centre are needed.

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Pharma DDSi helps save both doctors’ and patients’ time.

Is k u

owever, Stora Enso also received criticism. The customers said the company feels cold and distant and is not flexible and innovative enough. According to one particular comment: “This is a moment of change and you have to be reactive and caring – not so much hard-shell.” I think this statement carries two important messages for us. One is that we must be reactive, and even anticipate, the changing demands from our customers. The other is that we must care about them. Not to take them for granted, not to stop to support them, but to try to understand their particular challenges where our products are involved.

The elegant Särmä table, by Stora Enso and Isku. Stora Enso—9

The most important things grow between the trees.

Strategy

The magic moment

During the Vietnam war over two million tonnes of bombs were dropped on Laos. That is why building a Stora Enso eucalyptus plantation always starts with bomb clearing. What is left between the trees is workable farmland, safe for local farmers to grow food and commercial plants. This is not charity, but beneficial to both sides. Find out more about our eucalyptus plantations: storaenso.com/revive

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T omas W h i teho u se

Lauri Peltola Head of Group Communications and Global Responsibility at Stora Enso

e knew that sooner or later it would come out. Now that I think about it, I am sure that many of the people at Stora Enso knew it too – some perhaps unconsciously. After a few turbulent years, something new was happening at Stora Enso. There was something fresh in the air, a buzz you could feel but not quite put into words. Stora Enso was evolving. The world around us was changing, and we were moving on with it. I could see it all around me: we were thinking about our business in new ways, and the spirit of seeing things afresh had become something of a daily routine. And then – on that one morning in March 2010 – it just happened. I was thinking that it would be just another meeting with an external consultant trying to sell their high-flying ideas. After meeting tens of consultants you tend to get a bit sceptical as you realise that many a time they do not know the company, understand the business, or realise how serious companies are about their identity. On this particular day, however, everything became crystal clear. In a small meeting room, me and my team, our CEO Jouko Karvinen, and the external consultants captured all that was happening in the company, and encapsulated it in one concept. That concept is Rethink.

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ur CEO is not especially known for his patience. During presentations too long and boring he tends to start multitasking. But now, he suddenly was not reading emails from his mobile anymore. Instead, as the agency people were presenting their Rethink slides and

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animation, Jouko’s attention was undivided. He sat silent, doing his utmost not to reveal his enthusiasm. Sometimes, with certain events and projects, you can pinpoint the “magic moment”, the time when everything comes together. Here was the magic moment discovering Rethink. This was what Stora Enso was, and would be, all about! We had wanted to talk about the change within Stora Enso and drive that change forward. We had wanted to tell our stakeholders we were a different company than before. Now we had the concept to make it happen.

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o, what is it in Rethink that makes all the difference? What exactly does the concept capture? To put it in a nutshell: the world around us is going through a profound change. People around the world are rethinking – our stakeholders are rethinking. Whether it is the way the world has to be saved from financial crises, how companies have to pay serious attention to responsibility issues everywhere they operate, or consumers asking for a paper bag instead of plastic at the grocery store, we are all rethinking – reassessing the way we live our lives and treat this planet, our shared home. We at Stora Enso have been rethinking more than any company within this industry, but it is not until now that we are ready to tell about it to the outside world. An external view on Stora Enso still reflects the company we were five or ten years ago, but from the inside, things are looking very different. We are constantly questioning old ways of doing things, and not only that – we are also coming up with new solutions. Stora Enso—11

To me the beauty of our Rethink is that it is more than a mere slogan. Rethink is a change process, and at the same time a dynamic crystallisation of our corporate philosophy. Rethink challenges not only us at Stora Enso but also the world around us at any given time – also in the future.

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his is what we promise our stakeholders: Stora Enso is the global rethinker of the packaging, paper and wood products industry. We always rethink the old and expand to the new to offer our customers innovative solutions based on renewable materials. The exciting thing about this is that it is real. It is not a publicity gimmick, but happening throughout the Stora Enso organisation, in the different businesses, all over the world. It is an unstoppable change process, which, in the end, will carve a totally new identity for the company. At the same time, all this ties in perfectly with our vision, mission and values – things that we are dead serious about. Our vision: Today we as a company, people and planet face new challenges never before seen. The world needs a new approach to materials. Our mission: We will win with solutions based on renewable materials. ●●

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Phenomenon

Our values: • Create: Creativity is the engine that drives us to reinvent ourselves and achieve business success. • Renew: Every day we build our future in a sustainable way. • Trust: We recognise the talents of our people with the opportunity to learn and the responsibility to succeed.

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s we wanted to signal the change also visually, we decided to go for a new symbol and logo. Also visually we wanted to achieve something real, something true to our business and thinking. The designer of our new logo, Creative Director Brian Kaszonyi from N2, dove into our business and got familiar with our raw materials, production processes, end products, as well as sustainability cycles. He came across the cycle shape in different forms, again and again. Finally he had a closer look at how pulp was made and found his inspiration in the eucalyptus tree and its flower. Looking at our new visual identity, you realise it is not made up or artificial. It is truly about us and who we are, and it has a story behind it. We are quite excited about it. And this is what catches the magic of Rethink. We at Stora Enso are excited about pretty much everything that is happening here right now.

Visual identity The new logo symbolises Stora Enso’s commitment to creating a sustainable future for our planet by developing innovative solutions based on renewable materials. The design of the logo reflects the shapes related to Stora Enso’s business and products, the unending cycles of nature and, most importantly, the eucalyptus flower.

Beekeeping in Uruguay

The unusual, petalless eucalyptus flower symbolises a sustainable raw material, the eucalyptus tree, which has a growing importance in Stora Enso’s global pulp production.

sh u tterstoc k

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ocal honey-producers have rented suitable land from Montes del Plata, a joint venture of Stora Enso and Arauco in Uruguay. Utilising surrounding eucalyptus plantations as a protective “storage” for beehives is one form of co-operation between agriculture and forest industry in the country. In addition to the piloting beekeeping project, major co-operation projects on company land take place with local beef and milk producers.

ga b r i el Pere i ra

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Interview

A talk with

a woodpecker

Brazilian Carolina Graça, 33, is one of the sustainability experts at Stora Enso. We invited her for an interview in a damp Nordic forest during her work trip to Finland last autumn. Text Joni Mäkitalo Photo Jenni-Justiina Niemi, Visuamo Oy

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hen Carolina Graça studied Agriculture Engineering at the University of São Paulo, the students used to refer to Forestry Engineering students as “woodpeckers”. “Nowadays, I’m much closer to a ‘woodpecker’ than many of them,” she says, smiling. The forestry sustainability professional and mother of Nicolas, soon four years old, joined Stora Enso Latin America last June. Her work days, either at the São Paulo office or in the field, revolve around Stora Enso’s global responsibility issues in Brazil and Uruguay. How do you yourself maintain a sustainable lifestyle? Believe it or not, I try to adopt industry best practices also in my daily life outside of work. For instance, I recycle, and live in a way that consumes energy wisely. I also discuss sustainable living habits with my family.

Sharing knowledge “In an ideal situation, the whole company ‘breathes’ sustainability,” says Carolina Graça, Sustainability, Stora Enso Latin America.

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What do you think about the Nordic forests? In addition to the Brazilian forests, I have been to forests in France, Germany, Canada and USA, but this is my first visit to forest in Scandinavia. What especially caught my attention is the scale: in Central Europe, the forests are more fragmented than here in Scandinavia. I was travelling by train from Helsinki city to Imatra city, and the forest in between felt endless, as rows of trees kept rolling past on both sides. In addition to the native forests, South America has fast-growing tree plantations on former pasture land. How would you describe the people’s relationship with the forests? That depends a lot on the region. In the regions where you have native forests, the relationship

is something similar to yours here in Scandinavia. There are Brazilians who go in the natural forests to collect fruit and seeds, for example. More typically people go for leisure activities in forest parks, if there is one near the city. However, I have to say that unfortunately in the past many Brazilians did not know how to utilise forests in a sustainable manner. Luckily, know-how and attitudes have improved a lot. Also, when it comes to the Brazilians’ relationship with the fast-growing tree plantations, it’s good to remember that they cover less than one percent of the national territory. In your opinion, what makes a sustainable company? The most sustainable company is not necessarily the one with the largest sustainability department. In an ideal situation, the whole company “breathes” sustainability. However, it can’t be just a feeling, either. You need tools and techniques to manage all of your projects, and to create new ideas for and ways of continuous improvement. I think Stora Enso’s success in international indexes measuring sustainability performance shows that we do a lot of things right. There is naturally a lot to do and many aspects where we can improve, but I believe there is the right sustainability attitude in the company. This is a good foundation to build on. What led you to come over to Scandinavia? This trip is part of our top-talent training programme in Latin America in which I am participating. The programme includes working periods at the headquarters and in different business units. The idea behind the programme is for local professionals to gain knowledge on Stora Enso’s corporate culture, way of doing business, challenges faced, and Group strategy. What new elements has Stora Enso’s Scandinavian background brought to sustainability work in South America? One of the main benefits of being an international company is that you can learn from organisations in other countries, as best practices can be shared globally throughout the Group. Stora Enso brings the latest European sustainability trends and practices to South America, while also learning from South America. It’s a vice versa transaction. For example, Stora Enso’s Arapoti Paper Mill in Brazil is frequently visited by people from other units due to Arapoti’s exemplary employee safety performance. Stora Enso—15

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Plastic fantasies We are surrounded by a material called plastic. But what do we really know about it?

t home, taking out the everyday garbage of an average Finnish household, I realise that much of what I am carrying will once again end up at the landfill. This is mostly because of the high amount of plastic among the trash, as there are few possibilities for recycling the material in my neighbourhood. Hence, just like the two before, also the third plastic bag of the week gets thrown into the largest of the waste containers, the one for mixed waste. If recycling plastic is complicated, expensive, or, as in many countries, simply not organised at all, is the only way to reduce the amount of plastic waste to stop using plastic altogether? This is exactly what the British-Finnish movie director John Webster and his family did. The Websters went to the extreme, and tried to live without oil for a year. As oil is used in its production, plastic was also on the family’s list of banned materials. Many of the moments Webster captures on film turn into tragicomedy as the family desperately seeks alternatives to plastic packaging for the most mundane of items such as fish or toilet paper. The family actually ended up making their own toothpaste.

Text Jussi Palmén

Why not wood?

S H U T T E R S T O C K / M I LT T O N

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We have come to regard plastic as the standard material used in a multitude of things around us. Is there really no alternative? Let’s ask someone who knows. We spoke to Jurkka Kuusipalo, professor of paper converting and packaging technology at the Tampere University of Technology, Finland. The institute is known for strong capabilities in studying plastics. “If we look at data on the materials used in the manufacture of consumer packaging over the last couple of years, a visible trend of increasing use of renewable raw materials emerges,” says Kuusipalo. This means that packages for CD cases or ready-made food are more and more commonly made of paperboard and other wood-based materials. This is not revolutionary or unheard of as such, but what could be, is the way the share of renewable materials in packaging might grow in the future. “Particularly the young are well aware of the many different aspects of responsible consumption. There are signs indicating that in the future the demand for sustainable and recyclable packaging will grow, especially in Europe and the United States where the level

of environmental awareness among youngsters is already high. It’s easy, however, to introduce these ideas in other geographical areas, as well,” notes Kuusipalo. According to the professor, people usually choose a particular type of package based on its price. Thus far, consumers have had to pay slightly more for packaging made from renewable materials compared to their plastic alternatives. Kuusipalo believes pricing is mostly a question of volume: as the demand for renewable and sustainable packaging grows, prices will fall.

A compostable plastic However, giving up plastic completely sounds somewhat utopian. In some ways, plastic is still unbeatable as a material. For example, a paperboard package containing liquids or food has to be coated with a thin layer of plastic to protect the contents against damage from light, oxygen, humidity, grease or heat. But, as it turns out, plastic can also be made from something else besides petroleum. “Biopolymer is compostable and biodegradable and it is used, for example, to coat paper cups or packaging for frozen foods. Biopolymer can also be manufactured from renewable materials. When combining this with paperboard, you have a product made entirely of renewable materials,” Kuusipalo explains. Accoding to Kuusipalo, traditional plastic still has a slightly better water and water vapour transmission than biopolymer. However, biopolymer can already surpass traditional plastic in some critical properties, such as the ability to withstand greasy substances. For all its current uses the properties of biopolymer are outstanding. And through technological advancement, these can still be improved upon, the professor believes. “Biopolymer-coated products can already be produced using the same machinery as products coated with traditional plastic. There is no big difference regarding production. In the packaging industry, interest in biomaterials has been growing of late, and I believe it will continue to do so.” When it comes to recycling, bioplastics have one significant advantage over traditional ones: thanks to being compostable and biodegradable, bioplastics can be recycled together with food waste.

A cupful of innovation Stora Enso has recently expanded its selection of biopolymer-coated packaging boards in order to meet growing demand. As a result of many years of research and development work, biodegradable coating options are now available for a number of Stora Enso board grades used in cups, plates, trays and cartons. One of the company’s innovations is a paperboard cup that has more to it than first meets the eye.

100% biode­gradable Breaks down naturally to humus and carbon dioxide when recycled properly Renewable wood fibre as primary raw material Coated with biopolymer Provides enduring shelter for the liquid inside Used for serving beverages at the Finnish pavilion at the 2010 World Expo in Shanghai ●●

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Saving rainforest Veracel is helping local biodiversity in Brazil while producing over a million tonnes of pulp from plantation trees each year. At Veracel, we see how environmental, economic and social benefits can all come together in modern pulp production. Text Joni Mäkitalo Photos Eduardo Moody

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rekking along a path in the rainforest, we push aside a leafy branch, and one of the oldest trees in the region comes into view. A chorus of birds chirps rather cautiously in the surrounding humid forest. “It takes ten people standing hand in hand to cover this tree’s circumference,” notes Gildevânio Pinheiro, our guide, leaning against the leafy giant. We are at the Veracel Station, a rainforest conservation area of more than 6 000 hectares in the state of Bahia, Brazil. The Veracel Pulp Mill, a joint venture between Stora Enso and Fibria, owns and maintains the reserve as part of the joint venture’s rainforest protection and regeneration programme. Pinheiro, together with his team of seven, is in charge of supervising the area, which still faces many environmental challenges, such as poaching of endangered species. “What is really important is that we talk and spread information about the environment in

Bahia, Brazil The location of Stora Enso’s and Fibria’s joint rainforest initiative.

Rainforest conservation Guided tour at Veracel Station introduces to the region’s biodiversity.

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Veracel Pulp Mill Favourable climate conditions help to make this mill the best pulp mill in the world.

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local communities,” says Pinheiro, who has lived in the region for more than twenty years. “Younger generations better understand the importance of protecting biodiversity, and are able to teach their elders about it. People are all the time becoming more and more aware of the need to protect the environment.”

Forests that once were The Veracel Mill is located in the southern part of Bahia, in the cities of Eunápolis and Belmonte, 50 kilometres inland from the Atlantic shore. Eucalyptus plantations for the mill spread across ten municipalities. This is where the raw material for the annual production of over a million tonnes of pulp is grown. In the past century, the coast of Brazil has witnessed a loss of rainforest to accommodate

From seeds to dense forest The forest’s oldest trees are of bewildering proportions.

the growth of cities, industries and agriculture. For the most part, however, rainforests in the region remained intact up until the 1950s when saw mill companies started to show up. The region’s economy was born around this industry, and an additional economic boost came with the completion of a new highway, constructed through the region’s rainforests in the 1970s. The new road improved logistics and made it easier for people to move in the area in search of work opportunities. “At that time, the region lived solely from wood,” says Gelton F. de Freitas Jr., Secretary of the Environment for the city of Eunápolis. “In the past, environmental preoccupations were not a high priority.” Large-scale saw mill industry in the region started to decline when the rainforests began to run out. By the end of the 1980s, almost all

tracts of native forest in southern Bahia had been clear-cut, as had happened in so many other parts of coastal Brazil before. Originally, the Atlantic rainforest biome reached all the way to northern Argentina and eastern Paraguay, forming a wide stretch of rainforest along the Brazilian coast. Today, only seven percent of Brazil’s Atlantic rainforests remain. These tracts are conserved by public and private initiatives. After so much of the rainforest had been clear-cut, the region’s economic situation became dire. “Cocoa plantations used to be an important employer, but they were hit by a plague which nearly destroyed the region’s whole economy,” says Sergio Murillo, Secretary of the Environment for Itagimirim, a city where Veracel now grows eucalyptus.

“Unemployment became a severe problem. To many, the arrival of Veracel was a sign of renewed hope for the local economy. And the people living here have indeed benefitted in many ways.”

Pastoral eucalyptus Landowners in the region converted their deforested land properties to other uses, especially cattle ranching. To this day, pasture remains a dominant land use form in southern Bahia. Eucalyptus planting began here at the end of the 1980s, supported by governmental incentives. Veracel started to buy pasture land and experiment with planting trees on it in 1991. Results from the experiments soon indicated

Secretary of the Environment Sergio Murillo works for the city of Itagimirim, where Veracel grows eucalyptus.

Rainforest regeneration at Veracel takes place at a rate of 400 hectares planted per year.

20—Rethink

Stora Enso—21

that the area possesses exceptional qualities making it ideal for wood production. According to Otávio Pontes, Vice President, Stora Enso Latin America, steady rainfall is one of the reasons for high plantation productivity in the region. Most agricultural crops require a regular dry season for high yields, but eucalyptus trees flourish thanks to the steady rainfall. “The fact that it rains here all around the year fits perfectly to tree farming. Another important factor is the temperature, which also remains stable throughout the year.” The construction of the mill started in 2003, with pulp production beginning two years later in 2005. Stora Enso considers the Veracel Mill currently the best pulp mill in the world. This is in large part thanks to the climate conditions which make the area especially well suited to growing eucalyptus. The environmental laws of Brazil set strict requirements for landowners in the state of Bahia; one-fifth of every land property must be reserved for conservation. The Veracel Mill, however, conserves more than half of its land for environmental, social and agricultural reasons. When construction on the mill began, the company noticed that the hilly landscape and regional climate conditions allow conservation exceeding legal requirements. “Veracel decided to plant eucalyptus only on plateaus, where planting and harvesting can be done most efficiently,” Pontes says. All valleys, riversides, slopes and other especially contoured areas are conserved. The decision to do so has resulted in a mosaic landscape on the company lands, with the area of environmental reserves exceeding that of eucalyptus plantations.

Biodiversity reinforcement Life on the company’s 105 000 hectares of conservation area is varied. Most of the protected areas are rainforests that are recovering from logging activity in the region’s past. Intact, primary forests can also be found, especially in the area’s deep valleys. A part of the company’s protected land is former pasture. In these areas the company is attempting to restore the former rainforest. Veracel takes part in a governmental effort in Brazil that aims to connect coastal forest remnants with rainforest corridors. By connecting tracts of rainforest, the aim is to help flora and fauna move from one forest remnant to another, and thereby both 22—Rethink

expand their living habitat and increase overall biodiversity. “The best method of forest restoration is natural regeneration: you put up fences around an identified area and simply allow the rainforest to return,” says Eliane Anjos, Sustainability Manager at Veracel. The method is effective as long as existing rainforest and seed nests can be found sufficiently close for the seeds to be carried by wind and animals to the area being revived. “However, this is often not the case, and then the only remaining option is to plant the rainforest,” notes Anjos. Veracel replants rainforests with 80 different tree species per hectare. Before the actual planting, seeds must be collected and nursed, and the seedlings transported to the area. In all, the ongoing process of transforming pastures to rainforests employs 60 people. “As in all our operations, we support local companies in rainforest regeneration, and thus stimulate the local economy,” says Anjos. By the end of 2010, the company had already planted 4 000 hectares of rainforest, with the annual rate of replanting being 400 hectares. Anjos says that, from one perspective, the company’s work for the rainforests and biodiversity is a way of ensuring public approval for the pulp mill. Additionally, rainforests bring direct benefits to eucalyptus plantations. They balance out the ecosystem and provide other environmental services, as well. Otávio Pontes from Stora Enso says that, solely from a farming point of view, a rainforest

“The best method of forest restoration is natural regeneration: you put up fences around an identified area and simply allow the rainforest to return.” -Eliane Anjos

can be seen as a large biological shield. The forest works as a buffer zone keeping fires and plant diseases away from plantations. Forests also reduce the need for pesticides, because eucalyptus pests’ natural enemies live in the rainforest and thus help thwart the problem. The existing Atlantic rainforests play a significant role also in maintaining the hydrological balance of coastal Brazil by, for example, protecting springs.

Sustainable income Steady rainfall “The fact that it rains all year round here fits tree farming perfectly,” says Otávio Pontes, Vice President at Stora Enso Latin America. School visits help to spread the message of conservation in the community. Taking a stroll Sustainability manager Eliane Anjos tries to help local people to benefit from forest conservation.

Fruit juice made from local produce at the Veracel Station’s visitor centre is a heavenly source of refreshment after trekking in the rainforest, which in itself acts as a buffer against the day’s heat. The station is frequently visited by groups from local schools and communities that participate in varied rainforest activities with an educational twist. “We are trying to make it possible for local people to rebuild their relationship with the rainforest,” states Anjos. The station also supports academic work. In addition to directly financing research, the station offers guide and logistics services for research purposes in the rainforests. Veracel is also involved in an ongoing camera trap survey of the region’s mediumsized and large mammals, such as pumas and jaguars. Other projects for increasing biodiversity include an attempt to revitalise the region’s harpy eagle population, which has almost vanished in the region. In addition to environmental benefits, Veracel’s rainforest restoration efforts try to meet cultural and social needs. “When local people are able to benefit from forest conservation, they are also better able to give practical value to biodiversity, and even turn it into a business opportunity for themselves,” Anjos notes. As an example, she mentions a local community that has built a sustainable crafts business based on a rediscovered traditional material, piaçava. “Historically, the thinking in the region was guided by the notion that you cannot combine economic development with environmental protection. Veracel has shown that you can and that, in fact, it is the only way.” Please visit www.storaenso.com/rethink to view a short film on the subject.

Stora Enso—23

Do you see sustainability in business as just the latest passing fad? Take a trip to Langerbrugge Mill, where recycling of local paper waste and using bioenergy have seen the business through difficult times. Text Eeva Taimisto Photos Teemu Kuusimurto

Taste

for waste

ON BUSINESS Publication Paper

T

he waste paper mountains loom grey and violet in the back of a mill shed. Their silhouette imitates the Pyrenees so well that you could imagine being on a French ski holiday. Walking closer, the headlines become visible: Weather forecast for Belgium: cold. Footballer’s secret girlfriend apologises. The mountains are stored at Stora Enso’s Langerbrugge Mill in Belgium, on the outskirts of the city of Ghent. The mill produces newsprint and uncoated magazine paper by using solely recycled paper as raw material. This strategy, along with the mill’s other sustainability efforts, has been a recipe for success even in the most difficult of times. And times, they have been hard. Oversupply, escalation of costs with shrinking prices and declining customer demand have taken their toll on the whole publication paper industry. Layoffs and mill closures in Europe have become frequent news, and the future remains uncertain. Mills thriving in this kind of an environment attract curiosity. At Langerbrugge, profitable business has been built on sustainability, recycling community waste, and producing bioenergy. For sceptics who find eco-friendliness to be a mere marketing strategy for companies enjoying good times, Langerbrugge Mill presents a tough call.

The perfect spot

One man’s garbage is another’s raw material, as the Langerbrugge Mill demonstrates.

24—Rethink

Great business, however, did not come without change. Back in 1997 when the mill still used wood as raw material, things did not look promising. It was only after rethinking the whole idea of the mill that it became truly profitable. In Langerbrugge, change started from raw materials. Looking at the sheer size of the waste paper piles, it makes perfect sense the mill decided to stop using wood. The waste paper smells slightly, a truck has just dropped it in the warehouse. A magazine is lying on the floor, with dry ketchup stains on the cover as if to remind that only a few weeks ago it belonged to somebody. That somebody lives nearby. Within 300 kilometres from the mill gates reside about 80 million people and 70% of the purchase power of Europe. Inside this same radius are the big cities of Europe: Paris, London, Amsterdam and Brussels, along with the Ruhr area in Germany Stora Enso—25

Urban forestry “We get the fibre we need by collecting old household paper. There is no need to use wood,” says Chris De Hollander, manager of Langerbrugge Mill.

and the whole of Holland. For Langerbrugge Mill, this is more than convenient. As long as people in Europe read newspapers, there will be raw material just around the corner. For Langerbrugge’s business, location makes all the difference. Using a cost-efficient material that does not require long-haul transportation has been critical for the mill’s sustained competitiveness. Transporting logs from forests of northern Europe or the eucalyptus plantations of South America would come with a noticeable price tag. In turbulent times, keeping costs down has been a winning strategy. And then there is the environment to consider. Recycling waste paper close to the community where it comes from is the ecological thing to do. For Langerbrugge, responsible use of resources is not just a catchword. The whole concept of the mill is based on recycling local waste.

Energy from waste The manager of Langerbrugge Mill, Chris De Hollander, sits in his office, facing a green field of grass that grows in the middle of the mill site. He leans forward in his chair and says: “We call it an urban forest. We get the fibre we need by collecting old paper from the households. There is no need to use wood.” But paper is not the only material the mill recycles. It produces significant amounts of energy out of industrial waste. “We do not

use gas or coal, we use waste,” explains De Hollander. The mill has invested in a bioenergy plant that started running in June 2010. The power plant comes with a highly efficient multi-fuel boiler that is capable of using all kinds of industrial waste for bioenergy production. Such waste includes demolished waste wood from construction sites, along with other waste from the community that would otherwise end up in a landfill. Yet it is clear that the benefits of bioenergy go beyond sustainability. Both power plants provide 100% of the steam and 50–70% of all electricity used at Langerbrugge Mill. With rising energy costs, this is a great asset for the mill. De Hollander is content about this and does not hesitate to show it. “The paper industry with its heavy energy costs?” he asks, grinning, “Not at Langerbrugge.”

From trash to quality product Making products and energy out of trash may sound easy, but it is hard to imagine how a pile of trash is transformed into brand new paper rolls of premium quality. Ulrik Paulsen, the manager of mill operations at Langerbrugge, knows the process by heart. He explains that waste paper is collected directly from people’s homes and has to be sorted first. For this purpose Langerbrugge Mill has set up a sorting plant; an automatic operation that separates cardboard from

newspapers and magazines and also picks out plastics and other non-fibre materials. Newspapers and magazines then enter the first step of the production process where other impurities are separated out of the paper. This carefully sorted paper then enters the de-inking process, where the ink is washed out of it. After the fibres have been thoroughly washed, the pulp enters the paper machine. New paper appears from the machine in just a few seconds. “This paper is wound up, cut to customersized reels, wrapped and ready to be shipped to the customer,” concludes Paulsen. “Nothing is wasted and almost no waste leaves the mill. If you think about the environment, this is something quite unique.” When asked about how easy the process really is, he puts on a friendly smile and then thinks for a while. “Technically speaking, it is a very complex process,” he says, “It requires a robust team with the right knowledge base and right equipment to make it happen, and we have it. We are quite proud of it, too, I must say”. The end products, shiny white paper rolls in different sizes tower in the mill’s warehouse, ready to be shipped to customers. They include famous European newspapers such as The Daily Mirror, Het Laatste Nieuws and Le Figaro. The paper is set to travel back to the reader. “What most consumers don’t know is that our process is fast,” says Mr Paulsen, “If you put your newspaper in a recycling bin today,

you may be reading the same newspaper again in a couple of weeks.”

Langerbrugge Mill Ghent, Belgium

The future is in your hands

Products Standard newsprint, Uncoated magazine paper Raw material 700 000 tonnes recycled paper Power Plant 55 MWth Biomass CHP plant (BFB) 125 MWth Multifuel CHP plant (CFB) Paper machines PM 3: width 6 m, maximum speed 1 200 m/min PM 4: width 10.4 m, maximum speed 2 000 m/min Personnel 400 employees

As the future of publication papers remains uncertain, Langerbrugge may have to keep on reinventing itself for years to come. One important trend for the future is sustainability. Consumers are increasingly interested in their ecological impact and aware of the choices they make. Compared to digital media, newspapers still hold their place as the ecological option, if recycled and produced with a high share of bioenergy. Recycling rates in Europe are on the rise, with a gentle push from the European Union. And even in the age of growing digital media, newspapers and magazines have not gone anywhere. But mill manager Chris De Hollander is not willing to speculate the future. “Being profitable is and will be our number one target,” he says firmly, and adds, “But if the community around us keeps reading papers, and as long as we keep developing the mill, we are safe.” Langerbrugge certainly has all the right ingredients for future success. “The way we make newspaper is the most cost-efficient way to produce newsprint for our main markets,” De Hollander says, holding a copy of Le Figaro in his hand. “I actually pity the competitor.” Please visit www.storaenso.com/rethink to view a short film on the subject.

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From waste to fresh news Langerbrugge supplies paper stock for newspapers like The Daily Mirror, Het Laatste Nieuws and Le Figaro.

r i i tta s u pper i

26—Rethink

Stora Enso—27

On Business Fine Paper

On Business Publication Paper

Change on course

Steady on

T

J e n n i - J u S t i i n a N i em i

Juha Vanhainen Head of Stora Enso Publication Paper

he concepts of cost efficiency and active steering of customer relationships and the business sum up well the year 2010 in the Publication Paper Business Area. As we have stressed in many contexts in recent years, we continue to focus on matters we can influence ourselves, and are not relying on outside help. In 2010 alone, we permanently closed down nearly 500 000 tonnes of newsprint capacity in Europe, i.e. a total of three paper machines – concrete proof of our commitment to improving our cost structure and profitability.

I

n our main market area in Europe, paper consumption started to decline in 2008, and there is no indication that it will pick up in the future, either. Digital media are taking a bigger and bigger role as news channel, and challenging paper’s role in advertising in our home market, Europe. However, global consumption growth as a whole is next to zero; in practice this means Europe’s loss is the rest of the world’s gain, thanks to emerging markets such as India and China.

T

he situation is challenging, but manageable. Many businesses in the world have made, and continue to make, money in a similar situation. It is just that the rules of the game in today’s world are completely different. In shrinking markets, companies cannot survive following the same rules that apply to growing markets. Cost efficiency and productivity matter. We cannot raise our stock levels in anticipation of good times, running our machines non-stop in the belief that when things pick up, stocks will empty again. Nowadays, the pace is set by price, not volume.

I

n terms of availability of raw material for newsprint and magazine paper, recovered paper plays a key role. For us Europeans, it is not enough that the markets are shrinking but on top of that paper raw material, critical for our future operations, is being shipped from Europe to China. A major share of China’s paper and board machines’ production is based on recovered paper imported from Europe and America. Nearly 10 million tonnes of paper and board collected from households

28—Rethink

is shipped overseas every year. The situation is nearly impossible to fully comprehend – and not just because it poses a challenge to raw material availability for us, but also from an environmental sustainability point of view, as raw material is being transported to the other side of the world. The matter requires serious discussion locally, regionally and on the European level, and I hope the reality of the situation will open the eyes of as many Europeans as possible – and soon.

Is it the rebounding market alone that has helped improve business results since the financial crisis? For Stora Enso Fine Paper, the answer is no. Fine Paper has shown that their own actions are mostly responsible for improved results. Text Päivi Kauhanen Photos Ernst Tobisch

M

ay 2009. The world had fallen into the deepest global recession since World War II. Demand for almost all industrial products had fallen in a way no one could have foreseen only a year before. Demand collapsed also for office paper in all its end uses. Stora Enso Fine Paper was facing the most serious of challenges. “We were deep in the red and our uncoated fine paper business was in critical shape. The message from the CEO was clear: ‘you must

A

good example of our capability to renew ourselves and find new game tactics is Stora Enso’s Langerbrugge Mill in Belgium. Just over ten years ago the mill used only pulpwood as its raw material. Securing the availability of cost-efficient pulpwood was a critical factor in determining the mill’s future. From the raw material supply point of view, the Langerbrugge Mill’s location was anything but optimal. Today the mill lives from waste, and its location could not be better. Langerbrugge procures its raw material from within a 300-kilometre radius, in an area containing 70 percent of the purchasing power in Europe, and also generates all the energy it requires from waste. And most importantly, the mill’s operations are profitable.

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fully admit that year 2010 was challenging, but we got through it well. I would like to thank our excellent people who were ready to do all the hard work needed, and had the patience to develop our operations still further, every day. Working hard every day, every week, we will succeed also in the future. It won’t be easy, and many challenges lie ahead. Hard work is needed in the near future, as well. But, as I already pointed out, guided by our new way of thinking of our business operations, we will create our own success. The name of the game is responsible business operations and continued cost efficiency, rather than growth.

Stora Enso—29

stop the “bleeding” and, in the long run, rebuild business value’,” says Head of Stora Enso Fine Paper Hannu Alalauri, looking back.

The need for new concept Back to May 2009. Fine Paper was facing two major challenges. First, the ”bleeding” had to be stopped. Second, it was necessary to find ways to rebuild business value. A new business plan had to be ready by the end of August 2009. “How did we get so deep in the red? The recession and the sharp decline in demand were the biggest reasons, of course. And then we had the weak U.S. dollar, as well as the expensive wood of which we had bought too much, as we were not able to foresee the drastic decline in the market early enough,” says Alalauri, listing some of the factors behind the economic situation. The dilemma was that out of its six uncoated fine paper machines Stora Enso was able to run only two at full capacity while four of the paper machines and two of the three pulp mills had to take heavy curtailments. Why so? “We had rebuilt the paper machines and dedicated them to run specific end products. Unfortunately, the collapse in demand hit all of the end uses. Therefore only Nymölla, which was our most competitive mill and capable of serving several end uses, was used to capacity.” It was time to rethink the business concept. The decision to adapt capacity to demand and move from product-specific office paper machines to multipurpose ones was wellfounded. It was a brave decision as well, as it meant relocating the production of several products which had been subject to relocation only a few years earlier.

A tough call Tough decisions were needed, as in many other Stora Enso businesses during the past few years. In light of the demand forecast for uncoated wood free paper, it became evident that there was an overcapacity of at least one paper machine – even if demand were to rebound. Plans were therefore devised to shut one machine down permanently. “We also realised that we cannot operate our assets in the longer run by having specialist machines serving focused end uses. Instead we need to build in flexibility so that, in case of demand decline, we can run the vast majority of our assets at full capacity and thereby limit 30—Rethink

Rethought business concept To adapt capacity to demand and move from productspecific office paper machines to multipurpose ones was a brave decision. Office paper Resurgent demand and favourable currency rates have reduced costs and improved profits.

the need of curtailment to as few assets as possible,” says Alalauri.

Pulling through

m i k a k asa n e n

Commitment “We were able to convince everybody that this is the way to rebuild our cost competitiveness, without risking customer service,” says Pasi Piiparinen, SVP, sales and marketing.

By the first quarter of 2010 all the necessary product swaps had been made. Since then, the mind-set at the mills and in sales has been clear: let’s focus on issues we can impact and not wait for others to solve our problems. Two of the mills, Nymölla and Veitsiluoto, are now running with a flexible mix of sheets and reels, while Varkaus is running a reel mix. One paper machine, Imatra PM 8, with an annual capacity of 210 000, was closed on 4 March 2010. “It was a tough decision, especially on those people who lost their jobs, but we had to face reality. We simply had too much capacity to meet future demand,” Alalauri stresses. And what is best – the big change worked. “We have had a huge improvement in profit in our Office Paper business. Of course we have got some help from the rebounding demand and more favourable currency rates, but the mix of improvement in profit and reduction in costs is our own achievement. Furthermore, the total efficiencies of the paper machines have improved as a result of the product swaps. This would not have been possible without the decisiveness of our good people!” says Alalauri, a lot of pride audible in his voice.

Customer voices Sounds like a real success story. Machines are running almost at full capacity and profitability is getting better and better. But how about those who normally have the final word in business – what did the customers think? Was Fine Paper able to get the customers on board with the change? How did they like the idea of the – once again – changing production concept? “The customers’ initial response showed some surprise, and some questions were raised. Some said: Your current quality and service set-up is working well, why change?” Pasi Piiparinen, SVP, sales and marketing, describes the feedback. It was not the easiest starting point for Fine Paper sales people. “To increase the challenge further, the whole Fine Paper sales network was rebuilt at the same time. The traditional country-based sales office network was developed into area-based Customer Service Centres. This was not done solely in the name of reducing costs, but was

much more a reflection of our current customer structure and the new way of running the mills.” Easy or not, the fact is that Fine Paper has not lost a single customer due to this change. How come? “I would give three main reasons for our success in customer retention: a feasible plan and its communication, long-term customer relationships, and professional project management by dedicated people,” Piiparinen summarises. The plan and the needed change was communicated, explained and justified to our own people, and to customers, at all the necessary touchpoints. “They understood that we cannot keep going on as we had. We were able to convince everybody that this is the way to rebuild our cost competitiveness, without risking our level of customer service. “And we should not forget that our joint history with many key customers involved goes back decades. While some were sceptical at the beginning, they trusted us to go forward – even if this was the second time their products were moved within three years,” Piiparinen continues.

Dedicated people Last, but definitely not least, comes professional project management by dedicated people. “This kind of production concept change really requires a lot of hard work. Our customers had seen us do this exercise before. They had been shown that we could manage to control the many variables – three mills involved, four main products, 100 customers to keep informed in Europe alone, trials at the mills and on customers’ premises, system updates and production planning changes, to name but a few. The dedication and professionalism of the people working on this project was nothing short of amazing – without good team work all this would not have been possible,” Alalauri confirms, before moving on to the moral of the story: “We do not believe our business is perfect, nor that it will become perfect if we lay back and relax. We have to keep ourselves fit for the future and rethink our processes and operations continuously. We have to keep our focus on the things we can control ourselves. It hasn’t been an easy route and it will not be easy in the future, either, but we can make it.”

Stora Enso—31

On Business Packaging

On Business Fine Paper

Statement of vision

Clever packaging solutions can add far more value than they cost. But how do bright ideas turn into actual consumer packages?

A new take on packaging Text Jonas Nordlund

J e n n i - J u S t i i n a N i em i

Hannu Alalauri Head of Stora Enso Fine Paper

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hat a tough, yet rewarding, year 2010 was for our Business Area. The plan we made in late 2009 was fully implemented, with excellent results. This is thanks to the changes we made – especially in Office Paper – and to demand rebounding from the deep recession. What next? Can we lay back and relax now? Absolutely not! In the Fine Paper Business Area, we have started to shift our view to 2015 and beyond. We all know that major changes are taking place in the world of media. But possible avenues are many, and it is hard to forecast their impact on different end uses, and hence, on paper demand. We will do our best to analyse the markets and we will be prepared for the changes, while at the same time keeping our focus on controllable actions. Those actions we ourselves can impact, fast.

things complicated – on the contrary. However, to achieve sustainable improvement and be “wanted” by customers, our own employees, owners, suppliers and other stakeholders at the same time is not easy. In the short term, there are conflicting interests, and we have to accept that often there are no easy solutions. Nevertheless, we really need to change old practices and processes to gain improvements. There are no shortcuts to sustainable success. This means that we will keep ourselves fit for the future and we will work together with our customers to build rewarding relationships on paper. We have a new route to go and we are to redesign our offering. It is most important that we together with our customers and suppliers keep print media cost-efficient and attractive, and that together we build and improve its reputation.

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n 2010 we worked out a short vision statement for 2015: We are wanted – for our own merits. Not because we are “easy” – but because we can. What do we mean by this? First of all, we want to build rewarding relationships with our customers who want to work with us on a longterm basis. We are ready to make changes, and we will not wait for the positive economic cycle to save and reward us. Our own merits refer to our initiative and active contribution to solve challenges and win together with our customers.

S 32—Rethink

o, what do we mean by saying we are not “easy”? First of all, we do not want to make

ur starting fundamentals are on a solid basis. According to our mission statement we win with sustainable and renewable paper solutions for print media and office use. At the end of the day, our success depends on all the good people working for us. Developing our people and their individual excellence towards team excellence is high on our agenda. The world is not ready and we are not ready. That is why we as the Fine Paper team are open to new ideas and committed to redesign our business and future success.

No k i a

Stora Enso—33

A

lot has changed in the last decade. Consumers are well informed, news as well as rumours spread fast around the world, and consumers are becoming increasingly demanding by the day – and those same demands travel through the entire supply chain. Mats Nordlander, Head of Stora Enso Packaging, is well aware of the trend and warmly welcomes it. “Our customers are demanding and they expect innovations, which is good news to us. Now more than ever, we must learn to develop innovations also jointly with customers. Innovation for us is a source of competitive advantage – a way to add value. In order to add value, we have to have the right products that fit into our strategy. And in order to have the products, we also have to have the right supply chain and competencies to enable such a strategy.” Stora Enso promotes creative thinking and innovation as an engine to drive the business forward and achieve success. The Packaging Business Area’s operations in research and development and packaging design capabilities are world-class. Future growth depends on being able to develop innovative packaging materials and solutions to meet customer needs.

No k i a

Well wrapped “We continue to improve our packaging, and to be successful we need to work closely with our suppliers, such as Stora Enso,” says Ulla Uimonen, Head of packaging design at Nokia.

Sustainable packaging So, what are then the customer needs? To spend time with customers to fully understand their needs is really a key issue. For one of Stora Enso’s customers, Nokia, a leading provider of mobile solutions, a mobile phone’s packaging should send customers a clear message about product image. Also, it should complete the product’s user experience. “The package is important not only for protecting the product but also for supporting and building the brand,” says Ulla Uimonen, Head of packaging design at Nokia. Her job is to make sure Nokia has an optimal packaging portfolio to suit the entire product range. “Nokia produces hundreds of millions of phones delivered in consumer packaging. For us it is important to minimise the packaging’s environmental impact. We continue to improve our packaging, and to be successful we need to work closely with our suppliers, such as Stora Enso,” she says. A lot has already been done. Nokia has increased the use of renewable, paper-based materials in its packaging to over 95 percent, and all packaging is 100 percent recyclable. 34—Rethink

Needs first “There is room to give our customers more value if we truly understand their needs,” says Mats Nordlander, Head of Stora Enso Packaging.

lasse ar v i d so n

Boxing clever Nokia has increased the use of renewable, paper-based materials in its packaging to over 95 percent.

The sales packages of all new devices are smaller than earlier equivalents, and these reductions are to continue. “Smaller and lighter packaging has also reduced transportation loads. All these factors add up to environmental benefits as well as big cost savings,” reminds Uimonen. Sustainability is integrated into all of Nokia’s operations, and sustainability-related opportunities are systematically analysed. Environmental work at Nokia is based on life cycle thinking. “This means that we aim to minimise the environmental impact of our products at every stage of our operations, beginning with the extraction of raw materials and ending with recycling. We achieve this by better product design, close control of the production processes, and greater reuse and recycling of materials,” says Uimonen.

A shared objective In an ideal world, mobile phones would not need a package at all. However, they need to be protected for storage and transportation. With proper design and material choices the environmental impact of packaging can be reduced significantly. At the same time, it is possible to promote the product effectively since packaging is an integral part of brand building. There are several players, setting various requirements and participating in package design. Designers, product managers, package automation, sourcing and logistics as well as package suppliers all set requirements for packaging. “However, I see no contradiction between beautiful design and environmental issues,” says Uimonen. “The general goal for design is simplicity, which can be achieved also for instance through compact packaging during transportation and storage. Furthermore, simplicity usually means eco-efficiency as well. Environmentally sound materials are also beautiful and have a pleasing feel to them.” Stora Enso’s Mika Sjöqvist, responsible for the Nokia account at Stora Enso, is nodding; he obviously shares Uimonen’s view. “Clever packaging solutions can be a little bit more expensive, but they save far more than they cost – both in money and in carbon footprint. The ideal way is for us to come in as early as possible and influence the packaging solutions, e.g. materials and constructions chosen. During the past years, we have jointly been working on packaging solutions in which the draft angles are eliminated allowing for the

boxes to be packed all the way to the edges, thus enabling a reduction in package size.” Mats Nordlander takes an even broader view. He is a big fan of fibre-based packaging and is convinced that Stora Enso and the renewable materials industry have an important role to play on the planet. “We need a new approach to materials,” he says. And by “we” he means the whole world. Nordlander sees that packaging as an industry has huge potential, and that fibrebased packaging will gain market share due to sustainability trends. “There is room to give our customers more value if we truly understand their needs. At Stora Enso, we are convinced that we will win by giving customers and consumers a superior product experience. We want to be the premium brand in our industry. By rethinking our processes in accordance with our strategy – ‘The Packaging Way’ – we can deliver value to our customers. In the end, this is what grants us our licence to operate,” concludes Nordlander. Read more on packaging R&D innovations on page 9 and Packaging strategy on page 61 of this publication. Please visit www.storaenso.com/rethink to view a short film on the subject.

No k i a

Stora Enso—35

On Business Wood Products

On Business Packaging

2010 – Competent, strong and different!

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J e n n i - J u S t i i n a N i em i

Mats Nordlander Head of Stora Enso Packaging

n 2010, the effects of the early actions we have taken started to show in our operational result. We also started on the journey towards building an even more focussed and stronger Packaging Business Area with proof points such as the acquisition of Inpac International, the divestment of Laminating Papers and investments in key assets. As our Nokia customer story shows there is a growing need for sustainable and efficient packaging solutions, especially in a society where renewable materials and environmental concerns play an ever increasing role. But we also know that a great majority of the future growth of fibre-based packaging will come from growth markets. The acquisition of Inpac will enable us to expand our presence in two such markets, China and India. The strategy of Packaging is focussed on growth in Consumer Board and Corrugated Packaging and built around three operational cornerstones: Customer Focus, Innovation and an Industry Leading Supply Chain.

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ustomer Focus: We are continuously working on improving our customer loyalty and fostering mutually valuable relationships by analysing customer feedback and future trends, as well as the needs of all parties in the value chain. During 2010 we implemented Net Promoter Score, a customer-driven quality system. Derived insights will drive a continuous improvement of our offering, better pricing quality and a more focussed innovation process. In order to get closer to customers as well as to clarify roles, responsibilities and improve efficiencies, we have reorganised our sales organisation in Consumer Board and Industrial Packaging. The changes allow us to increase focus on customer segment-specific needs.

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nnovation and Customer Experience: I think we as a company have a great opportunity to differentiate through innovation. To achieve this, we launched a new platform for research and development (R&D) within our Business Area. During 2010 we launched several product improvements, such as the new Ensocoat board with a new recipe that provides

36—Rethink

improved whiteness, brightness, smoothness and unique printability. We also launched some new packaging solutions such as Stora Enso DeLight. Our packaging designers have won the Nordic Scanstar packaging award for a clever packaging solution, made of corrugated board, to protect a toilet seat’s porcelain cistern during transportation. We also inaugurated our process of recycling plastics and aluminium from used beverage cartons in our Barcelona Mill. This is profitable recycling: we get oil and gas for further use in the mill, we can sell the aluminium, and less waste ends up at the landfill and at the same time we get more recycled fibre for making recycled cartonboard.

Cross-laminated timber has enormous potential in urban construction. From 140-metre wind turbine towers to high-rise residential buildings, it is indeed raw material for the future.

Welcome the era of wood Text Heli Pessala

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ndustry Leading Supply Chain: We made some important decisions already back in 2008 and 2009 that helped improve efficiency in the supply chain in 2010. The closing of the Baienfurt Mill and Varkaus core board machine, and the development plans for Imatra and Ostrołe¸ka were the most important steps. The new power plant in Ostrołe¸ka will use clearly more than 50% biofuels and significantly reduce the mill’s energy costs in 2011. Also in January 2011, we announced that we plan to build a new containerboard machine at the Ostrołe¸ka Mill. The investment, together with the new power plant, will make Ostrołe¸ka the European cost leader in containerboard supply. In addition, we have reviewed all processes and fixed-cost elements in order to improve efficiency. Today, our sales are back on the 2007 level with fewer assets and less employees, resulting in improved efficiency and margins. I would say that Stora Enso Packaging is well on its way to rethinking the business to become more competent, stronger and increasingly different. These characteristics are useful as building a profitable and sustainable future for Stora Enso.

The sky’s the limit The eight-storey residential building Bridport House is under construction in the heart of London.

Kara k u se v i c C arso n A rch i tects / Pau l Kara k u se v i c

Stora Enso—37

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he sight is fascinating yet familiar, and getting ever more common: enormous steel towers standing next to each other with their threeblade rotors spinning and humming, generating wind energy to meet consumers’ ever-growing needs. And, the sight gets even more fascinating when constructing the wind turbine towers out of wood. Wooden windmills are not just sympathetic reminders of country living in past centuries but complex and highly engineered innovations, making a strong comeback. German company TimberTower has been designing and producing wooden towers for modern wind energy turbines since 2006. “Before entering the industry, I didn’t expect that you could use wood in so many ways – it was truly amazing to realise just what you can do with it. Personally, I think wood shares all the beneficial characteristics of concrete as a raw material in construction,” explains Holger Giebel, Managing Director of TimberTower. A wind turbine tower requires extreme material strength bearing the load of an up to 300-tonne turbine. And the weight of the turbine is not the only crucial factor to be considered. Turbine material has to endure the highly dynamic and static powers it is exposed to as well as the rotation of the motor, not to forget the ever-changing and increasingly demanding weather conditions. To meet the high criteria for tower construction, TimberTower has settled on using cross-laminated timber (CLT) in its tower solutions. Due to its highly engineered production process, CLT has – in addition to being a sustainable and renewable raw material – several technical and logistical advantages as well in the CO²-intensive construction business. “CLT boards are produced by bonding and glueing single boards together as lamellas which are then pressed and glued together crosswise to achieve a structure that is as airtight and strong as possible,” explains Gernot Weiss, Stora Enso CLT Sales Director. The outcome of the process is impressive: enormous wooden boards – up to 3 per 16 metres in area and 40 centimetres thick – in ready-cut forms according to customer requests. Logistics for the enormous wind turbine towers has been a major concern for the industry. Now, with the easy-to-transport CLT elements the problem of transport has been solved. “High steel towers cannot be transported very easily, as in Central Europe four metres is the maximum load to go under 38—Rethink

bridges. Until now, wind turbine towers couldn’t have been shipped to new markets abroad either,” explains Giebel. The first 140-metre wind turbine tower made from Stora Enso CLT is planned to be constructed in Petzen, southern Austria. Construction should take place in 2011, after a building licence has been granted by the authorities.

Petr i A rtt u r i as i k a i n e n

Sustainable “By avoiding the use of concrete, you are also reducing your carbon footprint,” explains Gernot Weiss, Stora Enso CLT Sales Director. Safe as houses CLT is a particularly good choice for buildings located in earthquake zones.

Assembly on site A single-family house can be put together in just one day from prepared CLT elements.

Eight storeys on thirty trucks CLT is a newcomer to the field of wood construction. Stora Enso began CLT production at Bad St. Leonhard in Austria in 2008. A second CLT unit will begin operating at the Ybbs Sawmill at the end of 2012. The first CLT solutions were used in the construction of single-family houses. Now, the use of CLT is moving increasingly towards urban construction – high-rise buildings, towers, bridges. CLT’s properties make it highly suitable for such uses. CLT elements’ vacuum characteristics lead to a stable and durable end product; no swelling or shrinkage occurs during its entire life cycle. This makes CLT an especially safe choice for building in earthquake zones. In addition, the prefabricated elements minimise the time needed for assembly at the site; the elements of a single-family house, for example, fit on one truck, and the house can be erected in a day. The first step into this new direction of urban CLT construction has been taken in the heart of London, where an 8-storey, 41-unit residential building, Bridport House, was assembled early 2011, and the building is expected to be ready late this year.

CLT Facts Kiln-dried, planed lamellas formed out of 3, 5, 7 or more cross-layers Elements available in large formats up to 2.95m x 16m x 0.40m, custom structures available on request Easy and fast assembly Raw material spruce (pine or larch on request) Airtight and windproof Highly suitable for use in earthquake zones Formaldehyde-free adhesives Manufactured at the Bad St. Leonhard Sawmill in Austria since 2008, with the annual capacity of 60 000 m³ Stora Enso’s second CLT production unit, with the annual capacity of 63 500 m³ of crosslaminated timber, is scheduled to begin operating at the Ybbs Sawmill at the end of 2012 ●●

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“However, eight storeys is by no means the limit. According to research done at the University of Vienna, CLT houses can be built as high as twenty storeys, or more,” says Weiss. The CLT elements needed for Bridport House were delivered to the construction site on the back of 30 trucks, and the building was assembled in an impressive ten weeks. With its 1 100 CLT element pieces, Bridport House acts as an enormous carbon sink by accumulating some 1 150 tonnes of carbon dioxide from the air – roughly the same amount of CO² emissions as when a person takes 850 flights back and forth between London and New York. “And it is not only about storing the carbon in the finished building. Manufacturing concrete generates enormous CO² emissions. By avoiding the use of concrete, you are also reducing your carbon footprint,” explains Weiss. But what about the fire resistance of wood constructions? “The fire resistance of a wooden tower is actually much higher than that of a steel tower,” reminds Holger Giebel. “Steel quickly loses capacity when heated. A wooden tower would burn on the surface but the structures would remain intact.” Also Gernot Weiss is convinced: “Yes, we know wood burns, but also that it burns two centimetres in 30 minutes. Knowledge of the rate of burning makes it easy to calculate how to build in a safe way.”

Layer upon layer Planed lamellas are pressed and glued crosswise into massive airtight construction elements.

Living in the concrete jungle As a raw material, wood seems to have all the qualities a constructor could dream of. But as you take a look around at modern urban architecture, we appear to be mainly surrounded by steel and concrete rather than wood solutions. Why so? “The main reason is the long tradition of using concrete and steel in urban construction. The concrete industry has been developing the multi-storey building system and standards since the early 1960s. Simulta­ neously, the steel industry has been developing the system for high-rise buildings,” explains Matti Mikkola, Head of Building Solutions and Solid Biofuels, Stora Enso Wood Products. “Now for the first time, the wood working industry is jointly presenting the fact-based case for using wood in urban construction. Furthermore, the industry is developing new standards and systems for industrialised wood construction.” 40—Rethink

The biggest hurdle is fire regulation which is decided upon on a local level in most cases, and often prevents the construction of wooden high-rises. In Finland, for instance, wooden buildings can only be built up to four storeys high. However, public discussion on alleviating the strict legislation is presently going on in the country. “The fact that wood burns is a big psychological hurdle for people when it comes to wood construction. It’s sometimes also difficult to realise the fact that in a fire, concrete loses its strength faster than wood. Stora Enso has to act in these matters, and educate local planners, designers and even fire brigades to understand the suitability of wood for construction,” Mikkola says. Joint actions are also taken on a European level in communicating the properties and possibilities of wood construction in urban environments to politicians, legislators and consumers. “The 20th century was definitely the era of concrete and steel,” ponders Gernot Weiss. “As people are getting more and more familiar with the principles of sustainable construction, I’m absolutely convinced that the 21st century will be the era of renewable materials. And when we speak of renewable materials, it is definitely cross-laminated timber that first comes to my mind.” Please visit www.storaenso.com/rethink to view a short film on the subject.

On Business Wood Products

A reorganised outlook

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J e n n i - J u S t i i n a N i em i

Hannu Kasurinen Head of Stora Enso Wood Products

uring 2010, after an especially tough two years, we finally enjoyed better market conditions, and clearly improving financial results. We were able to utilise our global reach and redirect our business to overseas markets to a greater extent, while at the same time reducing our exposure to some Western European markets. Despite the improving market conditions, however, we are still clearly below the pre-crisis demand levels, as recovery has proven to be a slow process. Still, we should be able to see a normalising of operating rates also this year, both in our customers’ and our own operations.

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e have set a target to clearly improve our profitability from current levels. This target we will reach by increased focus on those businesses where we have clear competitive advantages and possibilities to differentiate ourselves from the competition, and by making consequent choices in our business and asset portfolios. We derive our decisions from what we believe are the key drivers in our end-use industries and from the way that our customers’ needs are developing. We will then adjust our assets and raw material supply accordingly, and not vice versa, as has by and large been the industry practice in the past. Reaching customer satisfaction and end-use excellence is a long process that we will pursue with patience. This is one proof point of how we are rethinking our traditional saw milling business.

based multi-storey solutions. Investment into a second CLT unit in Ybbs, Austria, is a logical expansion of the successful starting up of our CLT business, where bulky sawn goods are converted into high-value CLT elements.

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big thanks for the improved outlook belongs to our customers for their support during the difficult times. It has been great to witness how well most of our customers have been able to navigate the storm and come out even stronger. I would also like to thank our own employees for their hard work and flexibility during these volatile times of curtailments and downsizings. Even though very unfortunate for the affected employees, these measures have been all-important in getting us through these tough times. Increasing flexibility to convert fixed costs into variable ones whenever needed will become a key competitive advantage for us in the future.

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lobal sustainability trends and their very positive impact on wood as a building material are known to us all. However, it is up to each company to be able to develop concepts that will be competitive both financially and technically; our strong sustainability credentials will come as an additional benefit. Used both in building and as raw material in decorative products, wood has wonderful possibilities, and the opportunity to win an increased share of the future market from competing materials.

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STOR a ENSO

s one part of our strategic refocussing, we have distinguished three businesses, Solid Biofuels, Building Solutions and Industrial Components, and turned them into more independent and accountable business units. These businesses require new and businessspecific competencies that only partly exist in our company today. We were able to expand our Solid Biofuels portfolio by starting to build a new pellet mill in Imavere, Estonia in late 2010. The Building Solutions business took two major steps forward in turn of the year 2010: the acquisition of Eridomic Oy in Finland offers us direct access to the construction industry value chain, and a platform to expand into CLTStora Enso—41

In the peaceful landscape of the Ta Oy district in Southern Laos, Stora Enso has found a model of cooperation with the locals that truly benefits both. The company is clearing the land of unexploded bombs to plant eucalyptus, while also reserving some of the safe land for the locals’ rice fields. In Ta Oy, business sense meets social responsibility in a concrete way. Text Eeva Taimisto Photos Petri Artturi Asikainen

Trees, food and bombs

Content villagers Clearing unexploded bombs provides safe space for the locals to produce food. 42—Rethink

Savannakhet and Saravane provinces The site of Stora Enso’s plantation laboratory in Laos.

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ravelling to the district of Ta Oy in Southern Laos is not for the weak of heart. The dirt roads that lead to the area are muddy all through the rainy season, making the roads treacherous and the ride bumpy. Few cars even try to make it. When you finally arrive in Ta Oy village, exhausted and covered in mud, you realise getting there was well worth the trouble. Ta Oy district is located in one of the most picturesque parts of the country, between mountains and waterfalls and close to the Vietnamese border. And right here, in what feels like the middle of tropical nowhere, stands Stora Enso’s plantation laboratory. It is a trial plantation project; a venture established in 2006 to test growing eucalyptus and acacia trees in the Saravane and Savannakhet provinces of Laos. Peter Fogde, the Chief Operating Officer of Stora Enso Laos, has mud in his hair. He unloads a dirty truck next to Stora Enso’s small office in Ta Oy, looking more like a jungle guerrilla than a senior business executive. He has spent the day at the plantations and he is excited. “Today was a great day,” he declares, “the trees are growing fast and with the new truck, we only got stuck three times!” It is no wonder that the trees flourish. Laos has the ideal climate for growing eucalyptus: humid and warm. Stora Enso’s trial project is small in size – about 400 hectares – but the Group is planning to expand to 2 000 hectares. The project is not producing trees yet, but it definitely seems like an interesting test ground. Stora Enso—43

Great opportunities seldom come without challenges. In Southern Laos, the challenges are like nowhere else.

In many ways, Laos offers an attractive environment for setting up plantations. There is plenty of degraded land suitable for planting trees and the Laos Government has a strategy to increase the surface area of plantations to 500 000 hectares before the year 2020. And for companies, having 300 million consumers within reach outside the national borders of Laos, is an added incentive to be interested in the country.

A challenging scene Great opportunities seldom come without challenges. In Southern Laos, the challenges are like nowhere else. Ta Oy, along with the other districts where Stora Enso operates, is located in the heart of the Ho Chi Minh Trail – an area with a long history of warfare and hardship. Local communities are still suffering from the aftereffects of the Vietnam War. “During the war, more than two million tonnes of bombs were dropped over Laos. A big part of those bombs fell over the area where we are sitting right now, and where we are working,” Fogde says. Many of those bombs never exploded. As a result, the area is dangerous up to this day. Bombs and cluster bombs from the war still explode around Laos each year, killing and injuring local villagers. But bombs are not just a safety hazard – they also cause malnutrition. Local farmers practice shifting cultivation to grow rice and other food crops, but this method is dangerous, and does not provide enough rice to feed the villages. In places, digging for roots

Learning process Engaging the local community takes time, but is ultimately rewarding.

44—Rethink

Extreme challenges A history of warfare is still present in the landscape.

Stora Enso—45

and cutting bamboo in the forest is the only way to find sustenance for most of the year. The areas where Stora Enso plants trees are among the poorest in Laos. According to the United Nations Development Program (UNDP), poverty in the provinces where Stora Enso operates is higher than the national poverty rate. The majority of households in these areas earn less than 36 dollars per year. The World Food Program (WFP) describes the districts as highly vulnerable to food security. In this kind of environment, conducting responsible business requires more than sweet talk. Stora Enso has come up with a unique model which promotes community development while enabling business. “We set up plantations that produce both trees and food,” says Fogde. “We do this by

clearing away bombs, making space for food production and employing and training the local villagers. In Laos, this model is totally unique.”

Safety first Stora Enso’s responsibility model in Laos is built from the ground up. Before planting any trees, the Group clears all unexploded bombs from the plantation area. As other plantation companies in Laos are not yet doing this, Stora Enso is a real pioneer in establishing safe territories. Doug McInnes, Stora Enso’s Battle Area Clearance Officer, has an impressive title and a job to match. His job is to supervise the clearing of the soil, to make sure that areas where the Group plants are safe. He stands

Making it safe Battle Area Clearance specialists Doug McInnes and Songka Latpho discuss the boundary of the area that will be cleared of unexploded munitions. Another team member listens.

next to a plantation site in Ta Oy and watches the Lao clearance company SBH set up their equipment. “We have two reasons for clearing away the bombs,” he says. “The first is to keep our workers safe, and the second is to create a safe place for the villagers to plant their rice.” McInnes pulls a scanner out of his car. “Let me walk you through this,” he says. “We start by marking and mapping the areas within the site that should not be cleared. Those include local spirit forests which are not be touched, and watercourses that might become eroded,” he explains. “Then we cut down the bush in close cooperation with the villagers who have good knowledge of the area, and know if there still are bombs on the ground. After that, we lay roped boxes over

“We have two reasons for clearing away the bombs. The first is to keep our workers safe, and the second is to create a safe place for the villagers to plant their rice.” -Doug McInnes

46—Rethink

Close cooperation Driving on the muddy roads, you sometimes need a little help to keep going. Local expertise Planning eucalyptus plantations starts by mapping areas which should not be touched together with local villagers.

the areas to be cleared so that we can search effectively and without missing patches. If we find unexploded ordnance, we destroy it.” McInnes starts scanning the ground with his magnetometer, which instantly starts to beep. “It might just be scrap metal,” he says, “we can investigate that later.” He appears calm despite the fact that there can actually be an unexploded bomb only some centimetres in the ground under his feet. “That is the reality around here,” he explains. “It could be anything.”

Growing food When the soil has been cleared from bombs and it is safe to use the land again, trees can be planted. At Stora Enso’s plantations in Laos, the tree rows are planted a relatively long distance from each other. “We use wide spacing between the trees,” Peter Fogde explains, and walks closer to the eucalyptus. “The space between tree rows is nine metres while the space between trees in the row is less than one meter. This system allows the villagers to grow rice at the same time as we grow our trees.” For the local villagers, the plantations offer the possibility to grow food safely. But it has other benefits, too. Compared to the traditional shifting cultivation, the rice yields are better. And there is also nature to consider – if the locals have a safe place to grow food, they do no longer have to burn native forest, and thereby harm local biodiversity. UNDP Laos has also noticed the positive impacts on crop production among the families in the area. According to UNDP, some villagers Stora Enso—47

have noted that they even find planting rice through Stora Enso’s model easier than their traditional shifting cultivation. “Look how well it is growing,” Fogde says, pointing at the rice. The rice crops that grow between the trees are high; you can barely see the foreheads of the local villagers harvesting in the rice field. Each rice field between two rows of trees belongs to one family, and the families look busy working, laughing and talking. Mr. Choycheek, a serious man with a sharp gaze wants to have a chat with Fogde. He works as a watchman for Stora Enso, making sure that no wood or rice is stolen. His family also plants rice in the plantations. “Compared to shifting cultivation, planting here gives more rice,” he says. “We do not have to depend on the rain like before.”

Choycheek, as well as most of the families working on the plantations, are residents of the nearby Lapeung village. It is one of the first villages that Stora Enso approached back in 2006 when planning to set up the first plantations in the area. Since then, the villagers and the Group have been in continuous contact. Besides growing food crops, many of the villagers are salaried employees of Stora Enso – some permanently, others occasionally. Mr. Amveun, the head of the Lapeung village, knows Stora Enso and the benefits the cooperation has brought. “Before, we made a living by going to the forest to collect bamboo shoots and vegetables, and search for food. During the times when we had no rice we had to go to the forest to dig roots which we had to eat for days,” he says.

“We set up plantations that produce both trees and food. In Laos, this model is totally unique.” -Peter Fogde

48—Rethink

“The good thing is that since the company came here, life has changed. Now we don’t have to go to the forest and dig for roots anymore.“ But according to Amveun, the Group could still do more. “The thing I would still ask from Stora Enso is that it would clear more soil for us to grow food.”

People as assets Peter Fogde appreciates this kind of feedback. “We always take suggestions from the local people seriously,” he says. “We cannot fulfil every need, but listening to the villagers is crucial as it is the only way to understand what their needs are.” But communications are not always as straightforward as this. When going to a new village, the locals do not always understand Stora Enso’s ideas. Group staff have been explaining the plantation model in many villages many times, but convincing locals about new ideas is not always easy. “You need to talk about it with the farmers over and over again,” Fogde says. “When you explain it for the first time, they just don’t buy it. And I understand them. I would not sign up for something that I have not seen proof of, either.” Fogde and his team, however, do not give up easily. “What we do when we go to a new area is organise farmer-to-farmer excursions where the new villagers learn from those who already participate in our model. What usually happens is that once they see with their own eyes, and hear from fellow villagers, how great the rice harvest is, they want to join us.” “Building trust takes time. And it goes both ways. When we meet new villagers, both need to learn from each other. It takes patience but it works,” he says. It is not self-evident that a business should want to invest time and resources in work like this. Many international companies talk about stakeholder engagement, but making the effort to actually understand and be understood in foreign communities with foreign habits requires hard work. And for many the question still remains: Does it make business sense? “I have been thinking about it a lot,” Peter Fogde says. “For us, the business case is that we see people as assets rather than liabilities. By that I mean both the villagers and our staff,” he says. “When you see people as assets, anything becomes possible. Anything.” According to UNDP, Stora Enso’s transparent efforts to social development could be a best practice of foreign direct investment in Laos. UNDP regards domestic and foreign

Continuous discussion Mr. Amveun, head of the Lapeung village, appreciates the benefits Stora Enso has brought to his community, and would like to see more soil cleared for food production.

investment in the private sector to be a vehicle for development in Laos over the next few years. Investments that come with job creation, technology diffusion and knowledge transfer boost development in a fast and efficient way. But it is also a question of standing the test of time. As Stora Enso’s plantation project is still a trial, one may wonder what will happen in the villages if the company one day decides to discontinue the project. However, the Group has already made a lasting impression on the area by cultivating skills, sharing know-how and clearing agricultural land of explosives. None of this can be taken away. Please visit www.storaenso.com/rethink to view a short film on the subject.

Local benefits For the local villagers, the plantations offer the possibility to grow food safely. Stora Enso—49

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The final shift The last newsprint machine at Varkaus stopped running at the end of September 2010. The personnel at the mill had a hard time understanding why. Throughout the autumn and winter, however, most of the paper workers found new opportunities through new jobs, retirement or training. Text Jarno Forssell Photos Petri Juntunen

Varkaus, Finland

ar plugs are hardly enough to block out the sound of the paper machine echoing through the massive hall. A reel of more than 80 kilometres of paper is being rolled up at the end of the machine, which itself measures tens of metres in length. It will soon be time to change the reel. With a few minutes remaining in his shift, papermaker Jari Tarkiainen sits behind the glass wall of the control room. The next shift’s team begins to arrive, and Tarkiainen gives them a rundown of the situation. The bulletin boards in the control room are covered with notices and newspaper clippings. The headline of the most recent bulletin reads: “Checklist for laid-off employees – matters you should take care of now.” Next to that are a few articles from the local newspaper Warkauden lehti which mention Stora Enso’s CEO, Jouko Karvinen. Hand-written comments complete the board. It is September 2010. Paper machine four, PM 4, is in its last days of operation. The other newsprint machine at Varkaus was already curtailed in the spring. That is where Tarkiainen worked before switching to PM 4. “In the summer I felt sure that PM 4 would remain in production. It was a sad day when I was handed my notice of termination in July. Most of us believed we would work here until retirement,” says Tarkiainen, who has worked at the mill for 31 years. The 50-year-old Tarkiainen has several years to go before retirement, but how and where he will spend those years is still completely up in the air. “I have no idea. In a couple of weeks I’ll be heading to the employment office to see what’s available,” he says.

New jobs found nearby 175 employees were handed termination notices in the summer. Reino Panula, General Manager of the Varkaus Mill and himself also now retiree, estimates that by the time the machine was shut down, a positive solution – a new job, retirement, self-employment or training – was found for half of those who were laid off. In spring 2011 situation is ever rosier. Almost 70 percent have found a new direction. “This active group of people all deserve to find a good workplace as soon as possible. They have the right attitude,” praises Panula. According to him, Stora Enso offered replacement positions at the fine paper machine at Varkaus, and at mills in Imatra, Oulu, 50—Rethink

Heinola and Uimaharju. The employer also set up various support measures, such as assistance for those interested in moving away from the area, training and self-­employment. Jari Mujunen, who worked the fourth shift on PM 4, has worked at the paper mill for 25 years – his entire adult life. He began looking for a new workplace as soon as he heard about the layoffs, and, after filing an internal application, found one at Stora Enso’s Heinola Mill. “You have to do what you can to get the bills paid,” Mujunen says. “I didn’t want to just wait around for a replacement job to be offered. I want to continue working in the industry that I was trained for, even if it means working in another district.” Development Engineer Pertti Kiesiläinen says many of his colleagues started applying for jobs in September, and some were successful. Kiesiläinen found a new workplace nearby, at the Varkaus Pulp Mill. He admits that looking for work at the age of 47 was a daunting experience, even in terms of filling in all the required documents. “Stora Enso really focussed on keeping us informed and on giving us job application training. In that respect, the company did the right thing. I don’t know what they could have done better,” he says.

“We didn’t skim from the top” A disappointed woman sits in the office building next to the paper machine hall. Nina Reijonen, who holds a Master’s Degree in Engineering, has worked at the mill for nine years as R&D Manager, in charge of the mill’s technical customer service. “This was such a big shock that I still have not been able to think about the future or finding new work. I never would have believed this could happen,” she says. Reijonen, who is working until the end of January at the Wäläkky new enterprise centre, does not want to leave Varkaus, as this is where her home, spouse, extended family, friends and hobbies are. It would take a lot for her to leave the district. The decision to cease the production of newsprint came as a shock to Reijonen, because initially Varkaus claimed fine paper, not newsprint, had low profitability. “We thought that even if things got so bad that fine paper production at Varkaus was to be discontinued, we would do just fine with newsprint. As far as I know, at no point did we skim from the top. We produced speciality products tailored to our customers’ specifications. Stora Stora Enso—51

Enso can no longer produce such products, so the customers will switch to our competitors,” sneers Reijonen. At one end of the paper machine hall, Chief Shop Steward Kai Pärnänen and OHS delegate Jukka Voutilainen can not figure out why it is not profitable to produce paper at Varkaus, even though it fulfils all the conditions for a good paper mill location: good transportation routes, forests and competent people. “Something about this simply does not add up. Since Karvinen started, Finland has been pushed to the sidelines. Is the goal to kill the paper industry here and move production to Sweden?” asks Voutilainen. They feel they have not received proper answers from Stora Enso management about why a profitable paper mill is being shut down. They question talk of releasing overcapacity, since shutting down Varkaus is not the solution to that problem.

“We just have to live with it” “Sometimes things are not as they appear. In situations like this, people try to find meaning in every word, spoken or unspoken, and they might understand things differently than how they were intended,” ponders Reino Panula.

Panula has been in a conflict situation ever since Stora Enso announced it was considering shutting down all of Varkaus. In addition to representing management to the employees, he also represented the district to Helsinki. As General Manager of the mill, Panula says he fought his own emotional battle and tried to influence Stora Enso management for as long as it was possible. But once the decision was made, he had no choice but to live with it. “Reino’s entire team is behind him,” says Reijonen. “I believe he feels just as bad as everyone else here.” Panula admits the decision to close down the paper machine was a hard pill for him to swallow too. Corporate management, however, saw things differently and reacted to the development of the market situation. “It seems that the importance of newsprint is declining. It’s just a matter of how quickly consumption will drop; I believe we will be surprised at how fast it happens. We are becoming increasingly impatient with the news,” says Panula. Paper worker Jari Mujunen has come to his own conclusion as a consumer. After being given notice, he cancelled all of his newspaper subscriptions. “If paper is no longer being made in Finland, there’s no point using it anymore. I guess we

should learn to read the paper using an electronic device, like Karvinen does,” he says.

“The right attitude”

Readjustment It would take a lot to convince Nina Reijonen, R&D manager, to leave this area, where her extended family, friends, and everyday life are located.

Looking on “This active group of people all deserve to find a good workplace as soon as possible. They have the right attitude,” says Reino Panula, General Manager of the Varkaus Mill.

Moving forward Chief Shop Steward Kai Pärnänen and OHS delegate Jukka Voutilainen encourage everyone to follow up on available jobs and be active.

In the control room, Mujunen pours himself a cup of coffee and recalls the day back in August 2009 when Stora Enso management announced that the company was considering shutting down the Varkaus mills altogether. The paper worker, born and raised “at the roots of the smokestack”, confesses the news was like a knife through the heart. Another difficult day for Mujunen came last summer, when the notices of termination were handed out. Some of the employees had a complete nervous breakdown and never showed up for work again. The paper machine was shut down for a week, but since then production continued until September without stops. “Some people even interrupted their summer holidays to start up the machine. You have to admire the backbone of that bunch of people,” says Nina Reijonen. According to OHS delegate Jukka Voutilainen, the professional pride of paper workers is so intense that they will carry out their work to the bitter end. Being permanently laid off, however, hits hard. “When the decision was announced, the workers came to me and said, with a lump in their throat, that it doesn’t matter. But it does matter. The average age of paper machine personnel is slightly over 50. They are not yet eligible for retirement, but are no longer valued on the labour market – despite the fact that

The world is getting digital

E

uropean newsprint demand took a dramatic hit during 2009 and has yet to recover. Many people think the market will never again be as it used to be. “We predict that the long-term demand trend on the European market is declining. We have a

52—Rethink

very clear example in what has happened in the US: digital media is increasingly pushing traditional paper media aside, both in communications and advertising,” says Juha Vanhainen, Head of Stora Enso Publication Paper. The most cost-efficient paper mills close to the customers and raw material sources will survive the battle, but Varkaus – and Finland in general – has the

they are highly competent,” says Voutilainen. Chief Shop Steward Kai Pärnänen estimates that around a third of those laid off will handle the loss well, a third will have mixed emotions, and a third will get depressed. It is that last group that concerns him most. “Support and other services are available,” Pärnänen says, “but some people will shut everyone out. I hope people will support one another and seek help – including for those close to them, if necessary.” Pärnänen encourages everyone who has not yet found a solution to actively follow up on available jobs and take part in the employment activities offered. “The worst thing,” he says, “would be to become passive.”

Getting by with less The roof of the power plant offers an impressive view over Stora Enso’s mill area and the town of Varkaus. Sunlight reflects off the water in the bay behind the paper machine hall. Taking in the view from up here, it becomes clear how the entire town has grown around the mill. But there is less smoke emanating from the mill now. Fine paper machine PM 3, a pulp mill, sawmill and biodiesel pilot plant still remain. Panula believes they stand a good chance of succeeding with those in the future, even though the integrated mill is now smaller. In spring 2011 almost 70 percent have found a new direction. Nina Reijonen has already found a new job. Jari Tarkiainen is still looking for new challenges.

geographical disadvantage of being far away from the big Central European publishing houses. “None of us wants to close down paper machines, but when there are five reels of paper coming out of production and there is a buyer for only four, we do not really have a choice. The least efficient production unit has to go, and in our case the numbers were indis-

putable: the profitability of Varkaus machines was poor,” Vanhainen recaps the background of the decision. Finland is a nation of five million people producing paper and cartonboard for almost 100 million people. Therefore the global market trends hit Finland hard, and it is crucial that the operational environment for mills is kept at least on an even level with competing countries.

Stora Enso—53

Tree plantations in the Uruguayan countryside present new possibilities for seeking synergy between the forest industry and local businesses. Text Joni Mäkitalo Montes del Plata, Uruguay

Everybody along

Home on the range Most of Uruguay’s native landscape is flat grassland, typically used for pasture.

A

s we drive along a meandering country road through the picturesque scenery of rural Uruguay, our destination – a family farmhouse – stands out all the more clearly from the pastoral landscape. When we arrive, Claudia Perez, who owns the house and the surrounding five hectares of land together with her husband Juan Alberto Ferreira, steps out to the yard to welcome her visitors. The family’s children, Cecilia, Federico and Agustín, have already returned from school and accompany us. The family is one of the stakeholders in Montes del Plata, a joint venture set up in Uruguay by Stora Enso and the Chilebased forest company Arauco. The family produces milk for a nearby dairy while leasing additional pasture land for their cattle from Montes del Plata.

stora e n so / M o n tes d el Plata

54—Rethink

Stora Enso—55

“Earlier it was very complicated for us to find land,” Ferreira says. Around ten years ago, back when times were tough, they began their milk production with a few cows. Back then, the children were too young for school, and travelled with their mother to sell milk from door to door in Durazno, a nearby town. Today the family owns 30 cows, and their daily milk production has risen to 150 litres. “We bought a milking machine already some time ago,” Perez says and passes the mate tea – a tradition, both drink and ritual, in the country.

The business of trees Stora Enso and Arauco formed Montes del Plata at the end of 2009. The joint venture brought together the lands and tree plantations

the two companies had previously owned in Uruguay. In addition, Stora Enso and Arauco jointly acquired the Uruguayan assets of the Spanish company Ence. Montes del Plata will build a new state-ofthe-art 1.3 million tonnes per year pulp mill. The new mill is expected to be operational by the end of the first quarter of 2013. Ever since starting its plantation project in Uruguay in 2005, Stora Enso has continuously emphasised corporate social responsibility in its daily operations in the country. “Our aim is to actively maintain good relationships with our neighbours in areas where we operate. Integration of tree planting with other rural activities has been the most important form of co-operation within the community,” explains Kaisa Tarna-Mani, Sustainability Manager, Montes del Plata.

Integration “Our aim is to actively maintain good relationships with our neighbours in areas where we operate,” says Sustainability Manager Kaisa Tarna-Mani. Dairy living The Perez-Ferreira family managed to multiply their milk production thanks to the new initiative.

marcelo s i n ger

In spring 2011 she has moved on to a new position in Stora Enso’s Technology & Strategy organisation. The forest industry is relatively new to the country, and local people do have their questions and concerns about it. In discussions with them, job and other opportunities for co-operation also play a role. “All in all, the public opinion towards the forest industry is positive and supportive,” Tarna-Mani says. Land use in Uruguay is based on a nationwide soil type classification system where soil is put into categories according to typespecific characteristics. Of special importance is the soil’s suitability for cattle ranching, which is both the most important source of livelihood and a fundamental facet of local culture. By classifying the soil in this way, the government both regulates production priori-

Family affair Agustín, the youngest of the family, helps his parents at the farm after his school duties.

Caption Head is lorem ipsum As sim solorum doluptiurMagniatur si tem vit, officid el eium vendis

marcelo s i n ger

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The forest industry is relatively new to the country, and local people do have their questions and concerns about it. marcelo s i n ger

Stora Enso—57

ties for land as well as points out where the productive potential for each type of land lies. It is common for one administrative property to comprise several soil types – and thus productive priorities. In addition to tree plantations – covering 138 000 hectares altogether – the lands owned by Montes del Plata are used for cattle grazing by local farmers. Today, more than 100 000 hectares of company land is used for this purpose. Montes del Plata rents out land suitable for grazing to local meat and milk producers, like the Perez–Ferreira family. In all, contracts like these have been made with around 200 producers. “The sustainability work carried out by Montes del Plata is pioneering. The company truly understands that it will do well when the

surrounding society does well,” says Professor Oscar D. Licandro from the Catholic University in Montevideo. He heads a corporate social responsibility research project including a study of the milk producer families in the Durazno department. Some of the families have quadrupled their milk production thanks to the new support, restructuring and pasture access. Montes del Plata makes land available on an accessible market price basis, and limits the area rented to a single producer. Instead of maximising rent revenues, the company aims to promote equitable sharing of opportunities in the local community. This approach involves public–private partnerships. Projects have been planned and carried out together with local institutions. Project meetings bring together national and

Trees provide shelter for the cows on windy, cold winter days. As the cows eat competing vegetation, also the trees benefit. G a b r i el Pere i ra

58—Rethink

marcelo s i n ger

Employment boost “When the social aspects are taken into account, tree plantations offer family farmers new ways of earning a livelihood,” says Oscar D. Licandro, Professor at Catholic University in Montevideo.

At pasture Renting for various farming purposes helps get the best possible yield from different land types.

local-level authorities, as well as involved associations and Montes del Plata. “When the social aspects of the approach are taken into account, tree plantations offer family farmers new ways of earning a livelihood,” professor Licandro notes. The main business of Montes del Plata is growing trees and producing short-fibre pulp in the future mill, but corporate social responsibility is in fact also a cornerstone of strategy. “Promoting socially sustainable development through responsible policies for renting land helps us to be a well-accepted and integrated partner in Uruguayan society,” notes Tarna-Mani.

Soil defines In addition to pasture renting, another important form of co-operation between Montes del Plata and the local communities is outsourcing wood production. With the arrival of the forest industry, growing trees has become an additional source of income and a complementary use of their land for Uruguayan landowners. Especially sandy or rocky areas, not well suited to cattle ranching, are used for planting trees. The traditional South American cattle ranching method requires vast stretches of land. Daniel García Otero is a rancher and farmer cultivating an area of 3 000 hectares. He is taking us on a tour of his property by car. “I am somewhere between a large and a very large producer in Uruguay,” García Otero notes. In Uruguay, landowners with less than 500 hectares of land are defined as family producers. In addition to his own pastures, García Otero rents grazing land for his cattle from Montes del Plata. Pastures differ on qualities, and animals are transported from one pasture to another during their lifetime to optimise the use of the land. In addition to renting pasture land from Montes del Plata, García Otero also cultivates eucalyptus for the forest company, on land where the soil is suitable. “We find the best possible use for each soil type,” he explains. Two-way co-operation is common practice between local producers and Montes del Plata. There is also governmental support behind it. Everyone wins, including the national output, when soil is put to the most suitable use. In addition to the complementary eucalyptus cultivation, García Otero also farms soya beans and animal feed. The pulp industry has introduced largescale tree plantations but not tree planting

in Uruguay, where by far most of the native landscape is flat grassland, converted into pastures. The Uruguayans have traditionally utilised eucalyptus as material in constructing fences, and to make their cattle more comfortable. Trees provide shelter for the cows on windy, cold winter days, as well as shade for cooling down during the scorching hot summer. This added comfort results in healthier and more productive cattle. The trees also benefit, as the cows eat competing vegetation. In addition to the surrounding pastures, it is also possible for cattle to graze on the tree plantations, after the trees have reached the age of two. On average in Uruguay, eucalyptus trees grown for pulp production are harvested ten years after planting. “Besides our large grazing and wood production co-operation programmes, we are now piloting honey-producing beekeeping projects in suitable areas,” says Alfredo Fossali, Forest Business Assistant Manager, Montes del Plata.

On local terms The cows graze with a calm pace suited to their languid nature. Claudia Perez speaks in a low voice to one of them while walking it to a nearby building to be milked by the machine. Perez and Ferreira both have full-time jobs outside the farm. Claudia Perez works at the dairy and Juan Ferreira at a wool factory, also nearby. They employ a friend to help out at the farm while they themselves work elsewhere. Perez and Ferreira belong to an association of small-scale milk producers. In addition to pasture access, association members receive support from the authorities and Montes del Plata in the form of sanitation, veterinarian and technical services, and training. However, all improvements ultimately stem from the producers’ own will. “I won’t go back to selling milk in the streets anymore,” Perez says. “If one wants, one can, and you make things well,” she believes. While we speak, Agustín, the youngest of the family, tries to grab our attention by riding a pony in the yard, showing off his budding cowboy skills. Read more on Stora Enso’s Montes del Plata joint venture on the next page.

Stora Enso—59

Business

Strategy

Modern pulp production

M Montes del Plata A view of the forthcoming mill, to become operational in 2013.

ontes del Plata, a joint venture set up in Uruguay by Stora Enso and Latin American Arauco, announced an upcoming pulp mill investment in January 2011. The capacity of the new mill will be 1.3 million tonnes of eucalyptus pulp per year, of which Stora Enso’s share will be 50 percent. The mill is expected to be operational by the end of the first quarter of 2013. Once in operation, it will be the biggest one-line pulp mill in the world. In addition to the mill, the project includes a deepwater port and a power generation unit which uses renewable resources. The new mill will be the largest-ever privately executed investment in Uruguay. The total investment is estimated to be approximately USD 1.9 billion (EUR 1.4 billion). For the most part, the eucalyptus pulpwood for the mill will be sourced from Montes

Into packaging growth markets

C

del Plata’s own plantations. The company currently owns 254 000 hectares of forestland in Uruguay, of which 138 000 hectares are planted, about 100 000 hectares are protected and a further 16 000 hectares are suitable for planting. The new state-of-the-art mill will be constructed in Punta Pereira, a district in Conchillas village in the department of Colonia. Altogether 121 000 people live in the Colonia department, approximately four percent of Uruguay’s population of 3.5 million. Despite being a single investment, the mill makes a significant contribution to the national economy. The mill is forecast to contribute to Uruguay’s GDP by 0.8 percent during the construction period and by 2 percent when in operation. During the construction period, the mill will employ a maximum 6 000 people, and around 500 once operational.

hina and India. The two most populous countries in the world, altogether about 2.5 billion people. These immense countries are also the world’s fastest growing consumer packaging markets. The potential is huge: in 2015 the consumer packaging market of the entire Asia Pacific region is expected to total 121 billion US dollars. Timing is a critical factor when entering these strategic growth markets.

Significant step Europe USD 153 billion

North Am erica USD 115 billion

Asia-Pac ific USD 121 billion

Africa & Middle Ea s USD 30 b t illion m i ltto

S tora E n so / M o n tes d el plata

60—Rethink

n

Consumption in 2015* The growth of consumer packaging is fastest in Asia Pacific.

In October 2010, Stora Enso took a significant step in China and India by signing an agreement to acquire 51 percent of a Chinese packaging company Inpac International. Stora Enso and Hebei Inpac will be the only two shareholders of the new company. Inpac is employing approximately 3 100 people. The company has production operations in China and India, and service operations in Korea. Inpac specialises in the production of consumer packaging – especially for global manufacturers of mobile phones and other consumer goods. In addition to corrugated consumer packaging, Inpac’s other main products include corrugated transport packaging, folding cartons, labels and printed manuals. Gaining a majority hold on Inpac is strategically significant to Stora Enso, despite the acquisition’s fairly modest size. It supports

Latin Am eri USD 22 b ca illion Australas ia USD 8 bill ion

*forecast, constant 2009 prices and constant exchange rates at 30 June 2009. Source: The Future of Packaging – Long-term Scenarios to 2020. Published by Pira International.

Stora Enso—61

Stora Enso’s strategy of producing fibre-based packaging in key growth markets, as well as demonstrates the company’s commitment to implementing its Packaging growth strategy and to engaging in active key customer service. In addition, acquiring an already established company rather than building operations from scratch gives Stora Enso a major advantage. The time saved by acquisition may come to mean a lot in the rapidly growing markets of the Asia Pacific region.

Stronger position and synergies One of the key elements of Packaging strategy is to build a stronger position in fast-growing markets. The future joint venture gives Stora Enso access to the world’s two fastest growing consumer packaging markets, China and India. “The agreement also supports our effort to become a market and consumer need-driven renewable materials company,” says Stora Enso CEO Jouko Karvinen. What customers demand is fast, flexible and reliable service from packaging suppliers located near to them. Good personal contacts are also important. Consequently, Stora Enso expects the joint venture to enable finding strong synergies with its existing consumer packaging businesses in Europe. “We can strengthen our existing relationships with international and European customers and brand owners as they are establishing their operations in China and India.

Most importantly now we can supply packaging directly to them both in Europe and in the Asia Pacific region,” says Mats Nordlander, Stora Enso Executive Vice President, Packaging and Asia Pacific.

Global Responsibility

Global, practical, engaged

Ambitious growth targets Stora Enso and Hebei Inpac have started planning joint integration and the acquisition is expected to be closed during the first half of 2011. The target is to build an even stronger future together, on a solid platform and by finding synergies in customer service. The future joint venture is named as Stora Enso Inpac Packaging and it will continue to strive for very ambitious growth and profitability targets based on a wider customer and segment base. “By bringing together strengths and capabilities of the two companies, Stora Enso Inpac Packaging can further improve upon their customer service and operational efficiency, as well as develop an offering of innovative products,” Nordlander summarises.

Stora Enso has taken a new approach to corporate responsibility. Learning to understand all stakeholders and having an open dialogue with them play a pivotal role here. Text Heidi Puusa

About Inpac International Produces both corrugated consumer and transport packaging, with a focus on serving the global manufacturers of mobile phones and other consumer goods Established in 1998 3 100 employees Main production plants are located at Qian’an in northern China, Dongguan in southern China and Chennai in India ●●

T

he responsibility work of forest industry companies has traditionally focussed on the environmental activities of mills and sustainable forestry, areas in which many European companies are industry forerunners. In the 2000s, the debate on global climate change boosted corporate responsibility work. Globalisation has brought about more and more public debate on human rights and land ownership issues. “All of this has naturally resulted in companies taking a new approach to responsibility activities,” says Terhi Koipijärvi, Head of Global Responsibility, established in October 2010. Stora Enso sets high goals for itself regarding responsibility. The company does not simply carry out solid sustainability work, but rather speaks of global responsibility. Stora

Enso’s website on the topic (www.storaenso. com/globalresponsibility) won the prestigious European Excellence Award. The site features discussions on global responsibility issues with, among others, CEO Jouko Karvinen.

A global goal “Global responsibility means doing things the right way. When entering new and unfamiliar operating areas, an even more open and bold approach to responsibility issues must be taken. However, this does not mean that we should try to solve all of the world’s problems. Rather that we approach matters from a local perspective in the areas where we are present – together with the local people, always with respect for different cultures,” explains Koipijärvi.

●● ●● ●●

Inpac locations Acquiring a majority share of Inpac will support Stora Enso’s strategy of producing fibrebased packaging in key growth markets.

North China 2 400 employees Qian’an, Hebei Beijing

Production Distribution center

South China 300 employees Gaobu, Dongguan Liaobu, Dongguan India 470 employees Chennai, Tamil Nadu 62—Rethink

S h u tterstoc k / M i ltto n

Stora Enso—63

Acting locally does not simply mean ‘when in Rome do as the Romans do’. “That may be a good general guideline to follow, but it cannot be the starting point for the responsibility efforts of a global company. Stora Enso only has one set of values and one Code of Conduct that are applied wherever we operate.”

In terms of what will be done in China, Stora Enso admits that the company is still in a learning phase. “China, with its unique cultural background and operating models, represents an operating environment very different from what we are accustomed to here in Europe. From us, this requires humility and a willingness to learn together with the local people,” says Koipijärvi.

Giving people a voice Alongside the company’s new approach to responsibility, a new kind of operating model for sustainability activities is also actively being sought at Stora Enso. Having a strong sustainability platform is no longer enough: the goal must be to gain a better understanding of the stakeholder groups that are affected by the company’s operations, as well as to know which stakeholder groups have the greatest impact on the company’s business. “From a European perspective, investors, customers and personnel are obviously important stakeholders for us, but it is entirely possible that in our new operating areas in Brazil, Uruguay and China, we have not even identified all of our key stakeholder groups.” According to Koipijärvi, once methodical mapping of the stakeholder groups has been carried out, the intention is to find the most suitable co-operation models with each group. Stora Enso takes an ambitious approach to stakeholder dialogue, and is determined to engage in open and honest discussion with interested stakeholders – not shying away even from difficult topics. “In our line of work, attention is easily focussed on those groups who have the opportunity to be seen and heard in the media. It is just as important, however, to find our silent stakeholder groups who may not have the same opportunity to voice their concerns. They should also be heard,” Koipijärvi stresses.

petr i artt u r i A s i k a i n e n

Hands on “Practical responsibility work is increasingly about concrete, down-toearth efforts,” says Terhi Koipijärvi, Head of Global Responsibility.

Straw poll Take a tour around the globe, and hear what six different people have to say about their recycling habits.

How’s your recycling?

Challenges at home market As a result of the challenging market situation of recent years, Stora Enso’s responsibility efforts in its established European home market have really been put to the test after closing down mills and paper machines. Koipijärvi believes, however, that European mills remain important in leading the way in practical responsibility work. “At Stora Enso, good means of supporting those who have lost their jobs, as well as their families, have been found, and in my opinion that work has succeeded in many locations. I’m sure some mistakes were made along the way, but the most important thing is that we learn from those mistakes.” Koipijärvi remains solidly optimistic about the future. “I strongly believe that as a big player we have the opportunity to make a change for the better. We don’t run from our responsibilities; we genuinely wish to be responsible everywhere we operate and thereby build Stora Enso into a company in which sustainability is an integral part of our corporate image – and part of every employee’s daily activities.”

64—Rethink

“Actually, I do not recycle. The street where I live we don’t have a system for it. However, I know a woman who collects trash and separates all reusable materials from it. She then sells those materials on so they can be used again.”

Barbara Demol 35, Ghent, Belgium

Edilzon Alves da Silva 32, São Paulo, Brazil

T eem u K u u s i m u rto

J o n i M ä k i talo

“At the moment, I am recycling an old barn. Tourists are carrying parts of the barn home with them in the frames I make, so the barn will end up all over the world. There is no system for recycling in my house. However, I do take old newspapers and magazines to a designated collection point – unless I burn them in the fireplace.”

“The lack of recycling facilities is in fact a big problem in Russia. And as we have no system for it, nobody really recycles. The state, however, has plans for recycling. This is a good idea, and I personally would like to take part in recycling efforts.” Tatiana Kachalova 32, Saint Petersburg, Russia

Veijo Kurko 53, Vantaa, Finland

Local solutions Stakeholder dialogue can sometimes be challenging for a global company. In fact, Stora Enso has encountered situations, for example, in Brazil and China, where land ownership and human rights issues have spurred vehement reactions among NGOs and rural communities. “It is crucial to find solutions that benefit both sides, also in the long term. A good example of this is our tree farming initiative in Brazil; local farmers can boost their business by farming eucalyptus trees to be used by the Veracel Pulp Mill.”

“I recycle paper, plastic and glass. Recycling is made easy in Belgium; the garbage bags in front of houses are colour-coded to clearly mark the type of trash they’re for. Yellow, blue and black all signify a type of waste.”

“Stora Enso only has one set of values and one Code of Conduct that are applied wherever we operate.” -Terhi Koipijärvi

N i i n a S tre n g

N i i n a S tre n g

“I recycle paper, cans and plastic bottles. It’s the street vendors here who frequently recycle the waste paper, cans and bottles local families have discarded. Other than that, trash is not classified before it is sent on to a dump.”

“About once a month I take paper, like old newspapers and packages, to a nearby recycling station. The nearest station is only 100 metres away from my front door. Aluminium cans and PET bottles I take back to the store and collect the deposit.”

Jiachao Zhu 26, Shanghai, China

Martin Lindgren 36, Stockholm, Sweden

Y ua nj i a L u

Stora Enso—65

Jouko Karvinen’s office is where he and his mobile phone are. These photos and captions were taken and written by Jouko on his two business trips in November 2010.

continue on the improvement path. Structural changes and lots of rethinking needed. Now need to prepare for meeting our new partners at Inpac, their customers, public officials and the media. Two busy days before returning home, and the weekend. :) Gate F62, Air China 912. ⑤

Sweden–China

It appears being the CEO in a company like Stora Enso is far from a tidy office job.

After returning home Saturday night, out the door again 5.30 am on Monday morning. On the road back to the airport, a long week ahead. ①

Text and photos Jouko Karvinen

A CEO’s diary

6 am terminal 5 at Heathrow. Boarding, 7 am. Yak. ②

①

Heading to the Stockholm office. ④

②

③

④

Foggy Beijing in November  2010

66—Rethink

Turbulent landing! Arrived in Stockholm at 10.30 am local time, next the Arlanda Express to the Stockholm office, and from there to a lunch presentation. ③

⑤

A busy couple of days up ahead: first, a SEB lunch presentation in Stockholm on Monday, and a day-and-a-half Group Executive Management Meeting. Then off to China to the signing of the Inpac acquisition, and to meet the media. Back Friday night. Good constructive dialogue at SEB. We get credit for what we have done... Lots of work ahead to make us more dependent on what we do, and less on external economic factors. Monday, close to midnight. First part of the Group Executive Team (GET) meeting done, critical we keep running all the way to the end of the year to make this a really good one, relatively at least. Other important stuff today was a review of capital expenditure plans for 2011, as well as incentives for the upcoming year for board review in December. Then, a hamburger and a beer plus one hour of bowling with the whole team. Talked to the family. Now, lights out. At the gate to fly to China on Tuesday. Long day with the team. Good momentum to drive the fourth quarter of 2010 and beyond; I don’t need to ask, great. Lots of work to better integrate some of the Group functions into businesses to

day ahead, good that I got some sleep on the way even if turbulence did wake me up a few times. ⑩

⑥

Landed in Beijing 9 am, 1 am UK time. Hotel, shower, team lunch and then an Inpac customer visit. Heading, after lunch, to visit a strategic customer in China, an important one! Good to be back in China, so much going on and so much positive energy!

⑦

After the visit, off to Qian’an for dinner with the partner’s people. Official ceremonies and media tomorrow. :) ⑥ At Beijing airport, on my way home. ⑦ Going home after a very good, if long, week. Very good meetings with the partner and local authorities. We even show up on the front page of China Daily’s business section! This country is so full of positive energy and enthusiasm! Good to be home for the weekend before my Monday take-off to São Paulo, Brazil. ⑧ Summary November 15th 5.36 am to November 19th 5.11 pm. 18 123 kilometres; 4 days, 11 hours; London– Stockholm–Beijing–Qian’an–Beijing–London

Brazil

⑧

⑨

Arrival in São Paulo on Tuesday at 6.15 am, an hour early. Hope driver will be there. Long

6.50, in the car going to the hotel. Will have time to study the Montes del Plata board material some more. Very intense board meeting with Arauco and Montes del Plata. Brilliant team work in the Montes del Plata board. Great challenges ahead but there is also a great winning spirit. Not easy, but we are one strong team in a country that welcomes us, and wants us to show we are there not only for the good of the companies, but for the good of this brave young nation. Very encouraging. ⑪ On my second day, a dense 3-hour Veracel board meeting. The new, young CFO from Stora Enso is excellent, one of the best I have seen on my long journey. Lots of work on productivity improvement, forestry, sustainability etc. Now these guys need to focus on max performance for the rest of the year, as we all do. Great challenge to be the team running the lowest-cost pulp mill in the world! Back in London on Thursday before sunrise, 3 degrees Celsius. ⑫ And on my way home and to the shower.

⑩

Here I go again, early on a Monday evening. After a day of conference calls and going through the mail, back to the airport and on to São Paulo. ⑨ What I am in for this week: Monday, overnight to Brazil. Veracel board after showering, quite a few afternoon meetings and then straight to dinner with the Montes del Plata team and Arauco. Next, Montes del Plata board meeting and a few interviews...and back to London overnight. Well, one night out of three in a real bed till Thursday is not so bad, is it? Important days for both Montes del Plata and Veracel.

That’s what you get for arriving an hour early... no driver.

Summary From 22 November 6.17 pm to 25 November 7.57 am. 19 002 kilometres; 2 days, 14 hours; London–São Paulo–London During his two trips, Jouko flew altogether 37 125 kilometres, totalling 4 000 kg in CO² emissions. It takes the biomass of six fullgrown eucalyptus trees to absorb this amount of carbon dioxide from the air.

⑪

⑫ Stora Enso—67

Phenomenon

Tree gardeners

E

ucalyptus seedlings at Veracel’s nursery are the best in their class. The clone selection follows local climate and soil criteria for achieving optimal pulp productivity – and quality. Shoots of the best eucalyptus clone are carefully collected, and cuttings are placed in plastic tubes with a mix of burned rice husks, vermiculate (a mineral) and fertiliser. Before being adapted for plantation, they still undergo the stages of shading and growth. The eucalyptus nursery of Veracel, a joint venture company of Stora Enso and Fibria in Southern Bahia in Brazil, has an annual production capacity of 24 000 000 seedlings.

e d uar d o moo dy

68—Rethink

Stora Enso—69

Column

For the love of wood

I

lau r i ola n d er

Tuija Seipell is a writer for respected blogs and print publications, a speaker, and a communication and customer-experience consultant to businesses.

love trees and wood. One reason for this is completely selfish. After all, my name, Tuija, comes from Thuja Plicata, the Latin name for Western Red Cedar. Another reason for my love of wood is the Alvar Aalto influence under which all of us Finns seem to be. There is no denying that Aalto sparked a new respect for wood with his technical experimentation and his ability to create practical visual beauty with it. His interiors and furniture are now architecture and design classics, yet just as “modern” today as they were in the 1930s.

M

y love of trees has grown even stronger in the past two decades when I have lived in Vancouver. Here, massive 500–800-year-old Western Red Cedars have provided the native tribes with the material for everything from clothes and canoes to longhouses and totem poles for thousands of years. So when, as the senior writer for The Cool Hunter, I see yet another variation of the architecture-du-jour – white concrete boxes

Above the eyes Wooden ceiling construction is beautifully displayed at the Richmond Olympic Oval.

stacked on top of each other at odd angles – I really miss wood. I am not talking about dark log houses or alpine architecture. I am talking about the incredible lightness and elegance, the play of light and shadow, the countless tones of colour that can be achieved with skilful use of wood, both structurally and decoratively. I’m thinking of Finnish and Japanese architecture – both old and contemporary – at their wooden finest. I’m thinking of the Italian Renzo Piano’s brilliant use of wood slats at Jean Marie Tjibaou Cultural Center in New Caledonia (1998). Or just recently, RDAI Architects’ use of wood-slat “huts” as departments in the Paris Hermès store built inside an old hotel swimming pool. I’m also thinking of the ingenious use of pine beetle-infested wood as a massive component in the roof of the Richmond Olympic Oval, the long-track speed skating venue for the 2010 Vancouver Winter Olympics.

W

ood’s inherent value as material is in the time it takes for a tree to mature. A tree carries with it not just the life experience of the tree – whatever it may have seen and endured in its lifetime – but also the character of the climate, the soil, even the pests. Every growth ring tells a story, every crosscut reveals a calendar. Wood is not trendy. It is a demanding, noble, ancient, living material that perhaps only the finest marble can match. Yet even marble lacks the tactile variety, the visual diversity or the aroma of wood. It certainly lacks the almost personal way in which each type of wood ages in its specific surroundings. In wood, the architect, designer and builder face the exhilarating challenge of the sculptor – to reveal the character of the specific species, the specific tree. I hope more will aspire to meet that challenge. For more information, visit www.tuijaseipell.com, www.thecoolhunter.net

r i chmo n d olympi c oval

70—Rethink

It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similar expressions, are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties, which may cause actual results to materially differ from those expressed in such forwardlooking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the Group’s targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group’s patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group’s products and the pricing pressures thereto, price fluctuations in raw materials, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group’s principal geographic markets or fluctuations in exchange and interest rates.

Cover stock LumiArt 170 g/m² Stora Enso, Oulu Mill (ISO 14001 certified) Text stock LumiArt 115 g/m² Stora Enso, Oulu Mill (ISO 14001 certified)

This is not garbage, this is raw material. Our mill in Langerbrugge, Belgium makes its business from what some would consider waste. Only recovered paper is used as raw material. The mill produces its own bioenergy and even the ashes left from the process are reused as raw material for the building industry. Valuable business can be grown from things some deemed worthless. Sometimes it pays to rethink your approach. Find out more about Langerbrugge: storaenso.com/recycle