Untitled

Annual Report

2022

CHANGE RUNS ON

RENEWABLES

Non-ofcial version

Strategy GovernanceSustainability Review by the Board of Directors Financials

2022 in brief 3

CEO’s review 4

Strategy 7

Innovation 10

Our businesses 12

Key events 2022 17

Key gures 2022 and nancial targets 20

Information for investors 22

Sustainability 24

Sustainability highlights 25

Sustainability at Neste 26

Material sustainability topics 29

Sustainable Development Goals (SDGs) 31

Material sustainability KPIs 35

Stakeholder engagement 40

Value creation 47

Sustainability governance 48

Compliance 50

Our people 51

Safety 55

Content

Climate 58

Our climate commitments 58

Carbon handprint 61

Carbon footprint 66

Biodiversity 74

Building a foundation for our biodiversity work 76

Environmental monitoring 81

Human Rights 81

Embedding human rights due diligence 82

Supply chain and raw materials 86

Supply chain 87

Renewable raw materials 91

Recycled raw materials 95

Future raw materials 96

Performance and reporting 98

Performance in gures 100

GRI Content Index and UN Global Compact 104

TCFD Index 111

SASB Index 112

UNGP Reporting Framework Index 114

Principles for calculating the key indicators 115

Independent Assurance Report 117

Governance 119

Corporate Governance Statement 120

Risk management 136

Remuneration report 140

Review by the Board of Directors 147

Review by the Board of Directors 148

Key gures 172

Calculation of key gures 174

Financial statements 177

Consolidated nancial statements 178

Parent company nancial statements 240

Proposal for the distribution of earnings and

signing of the

Review by the Board of Directors

and the Financial Statements 257

Auditor’s Report 258

Strategy GovernanceSustainability Review by the Board of Directors Financials

Revenue

25,707 MEUR

Comparable EBITDA

3,537 MEUR

Our maximum total dividend

proposal for 2023

per share

1.52 EUR

Comparable return on average

capital employed

after tax (ROACE)

30.1%

Leverage ratio

13.9%

Neste creates solutions for combating climate change

and accelerating a shift to a circular economy. We refine

waste, residues and innovative raw materials into renew-

able fuels and more sustainable feedstock for polymers

and chemicals.

The world has seen a volatile business environment

throughout 2022. Neste’s strategy reflects an under-

standing and mindset that we can be in charge of the

changes to serve our purpose: to create a healthier

planet for our children.

Read more about key events in 2022 on page 17

and sustainability highlights on page 25.

Watch this video to discover

the highlights of the year.

Investments

2,218 MEUR

Our renewable products

helped reduce greenhouse

gas emissions

11.1 Mt CO

The share of waste and residues

of Neste’s total renewable raw

material inputs globally

95%

Safe days

314

Average number

of personnel

5,244

in brief

Neste Annual Report 2022 | Year 2022 in brief

Strategy GovernanceSustainability Review by the Board of Directors Financials

The geopolitical and macroeconomic events that

occurred in 2022 created challenges for many people,

businesses and communities around the world. In a

turbulent environment, we at Neste have continued to

work diligently on our renewables growth strategy and

transformation, creating solutions that aim at combat-

ing climate change to build a better future. In the pro-

cess, Neste’s people have demonstrated resilience,

once again proving their ability to adapt to changes in

the environment as well as to navigate volatile market

dynamics. Thanks to this resilience, the year brought

many significant advances for Neste. We celebrated a

number of accomplishments, including new partner-

ships and acquisitions, the widening of our feedstock

sourcing platform and good progress in the execution

of our strategic initiatives.

Progress in investments and

acquisitions

Growing in renewable and circular solutions is the

core element of our strategy. In 2022, we continued

to grow our production capacity and to strengthen

and expand our renewable feedstock supply. We exe-

cuted on three landmark initiatives that will see our

global renewables production capacity – 3.3 million

tons annually in 2022 – more than double by the end

of 2026.

Taking charge of change

Our joint operation with Marathon Petroleum for

the production of renewable diesel in Martinez, Cal-

ifornia was closed in 2022 and is set to commence

operations in early 2023. The joint operation, Martinez

Renewables, will boost Neste’s renewable products

capacity by over 1 million tons annually after a phased

startup during 2023.

The expansion of Neste’s Singapore refinery, mean-

while, is on track to begin commercial operations in

2023. The expansion, which is the result of a EUR

1.65 billion investment, will also add more than 1 mil-

lion tons per annum to Neste’s global renewables pro-

duction capacity.

An additional investment decision was finalized in

2022 for the expansion of Neste’s renewable refin-

ery in Rotterdam. The approximately EUR 1.9 billion

investment will see the refinery’s capacity increase by

1.3 million tons annually and growing its total produc-

tion capacity to 2.7 million tons per year, of which 1.2

million tons can be produced as sustainable aviation

fuel (SAF).

Neste Annual Report 2022 | CEO’s review

Strategy GovernanceSustainability Review by the Board of Directors Financials

We developed new partnerships to add new volumes

of oil and fat wastes and residues supply, supported also

through inorganic growth transactions. The acquisitions

included Walco Foods, a leading animal fat and by-prod-

ucts trading company in Ireland, and a US-based used

cooking oil (UCO) collection and aggregation business

acquired from Crimson Renewable Energy Holdings.

With great excitement, Neste also launched a strate-

gic study in 2022 regarding the long-term transition of

our Porvoo refinery to a leading renewable and circular

solutions site, with the ultimate target of replacing fully

crude oil with renewable feedstocks.

All of these investments and transactions significantly

strengthen Neste’s position as a global leader in renew-

able and circular solutions, helping to ensure future com-

petitiveness and execution of the company’s growth

strategy.

Growth in new and

existing partnerships

We continued to develop new partnerships in our Renew-

able Road Transportation business. Since January 2022,

Neste MY Renewable Diesel has been used by Coca-

Cola Europacific Partners Netherlands on up to 50,000

transport routes. We also partnered with Bosch, which

has committed to using Neste MY Renewable Diesel

on internal logistics routes between German produc-

tion plants in the company’s Powertrain Solutions divi-

sion. Neste and Rolls-Royce Power Systems agreed to

embark on a strategic partnership to promote the use of

renewable diesel, and Neste signed an additional part-

nership contract with MAN and Altens to promote biofu-

els in France.

In the Renewable Polymers and Chemicals busi-

ness, we also announced several important partner-

ships. These included a collaboration with coffee-maker

Tchibo and its partner Berry Global to provide Neste

RE, a renewable feedstock for chemicals and polymers,

for Tchibo’s Qbo line of products. A similar partnership

involving Neste, MAM Baby and Borealis brought a new

infant pacifier to market, made with renewably sourced

feedstock. Forming partnerships like these with brand

owners who share our agenda of creating more sus-

tainable solutions remains a foundational element of our

strategy.

Neste also celebrated numerous key accomplish-

ments in the aviation business during 2022, announcing

several concurrent partnerships and making substan-

tial inroads into the supply networks of major airports.

These include:

• A purchase agreement with Air France-KLM

Group to supply more than 1,000,000 tons of SAF

beginning in 2023 – the largest such agreement so

far in the aviation industry;

• A collaboration with ITOCHU and Fuji Oil Company

on a project to demonstrate local blending of SAF in

Japan;

• A delivery of SAF to Los Angeles International Airport

(LAX) in cooperation with LAXFUEL;

• A partnership with CIM, part of NOVEN Group

in France, to enable the supply of Neste MY

Sustainable Aviation Fuel in France; and

• A partnership between Neste and Airbus to drive

the development and uptake of SAF, stimulating

the creation of a commercially viable market for

renewable aviation fuels.

We continue to work tirelessly on ramping up produc-

tion of Neste MY Sustainable Aviation Fuel because we

firmly believe that renewable fuels are one of the most

important near-term decarbonization solutions for the

aviation industry.

Neste Annual Report 2022 | CEO’s review

Strategy GovernanceSustainability Review by the Board of Directors Financials

Safety and values

at the core of our culture

As we do every year, in 2022 we focused on safety, which

requires constant focus and improvements. We want to

lead the way in creating a more sustainable future, and

we can only do that if we put the safety of our peo-

ple first. Simultaneously, we worked on maturing busi-

ness processes and further driving their digitalization to

enhance efficiency.

Reflecting on the year’s activities and accomplish-

ments, it is clear to see how commitment to our val-

ues – we care, we have courage, and we cooperate –

has supported our transformation towards a truly global

company. Our investments and partnerships represent

bold optimism for the future of both Neste and the world,

as they seek to identify and capitalize on opportunities to

drive business in more innovative and sustainable ways.

Sustainability guides our path forward

Our sustainability vision continues to guide us on our

journey of growth and transformation. We are leading

the transformation towards a carbon neutral value chain,

and we have set ourselves aspirational targets for bio-

diversity, human rights and our supply chain and raw

materials.

Reaching carbon neutral production by 2035 (scope

1 & 2) and reducing our customers’ GHG emissions

by at least 20 million tons CO

e annually by 2030 are

among our ambitious goals. We have concrete tar-

gets to reducing the use phase emission intensity of

sold products and work with our suppliers and partners

to reduce the indirect GHG emissions from our entire

value chain (scope 3) and are aiming for a carbon neu-

tral and nature positive value chain by 2040. Thanks to

a continued focus on cooperation and innovation, we

remained on track to reach these targets during 2022.

We are extremely proud to have been recognized in

2022 for the 16th consecutive year as a global sustain-

ability leader in both the Dow Jones Sustainability World

and Europe Indices, while in the beginning of 2023, Cor-

porate Knights Global 100 Index named Neste the 29th

most sustainable company in the world, and first among

industry peers. Our climate actions achieved Leadership

level recognition for the sixth consecutive year by the

CDP and were recognized by the CDP’s Forests and

Water Security assessments.

I would like to thank our employees and partners for

their dedication to our goal of becoming a global leader

in renewable and circular solutions. As we celebrate the

momentous achievements of 2022, we look forward to

the years to come. In 2023, we celebrate Neste’s 75th

anniversary and a great story of successful transforma-

tion. I am confident that Neste will continue to serve its

stakeholders passionately while working towards its pur-

pose to create a healthier planet for our children.

Neste Annual Report 2022 | CEO’s review

We celebrated a number of

significant accomplishments,

including new partnerships

and acquisitions.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Strategy 8

Innovation 10

Our businesses 12

Key events 2022 17

Key figures 2022 and financial targets 20

Information for investors 22

Our growth and

transformation are

rooted in innovation

and technology.

Strategy

Neste Annual Report 2022 | Strategy

Strategy GovernanceSustainability Review by the Board of Directors Financials

We are continuing our growth and

transformation as the world’s leading

producer of sustainable aviation fuel and

renewable diesel and a forerunner as a

producer of more sustainable raw material

solutions for the polymers and chemicals

industry. Our aim is to be a global leader

in renewable and circular solutions.

Our strategy and four core themes

define our focus in the rapidly

changing business environment.

Strategy

Neste Annual Report 2022 | Strategy

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Strategy

We help our customers improve their sustainability. To

achieve this, we are developing and providing solu-

tions to combat climate change and accelerate circular

economy.

We are seeing increasing demand for renewable and

circular solutions, with a strong long-term demand out-

look both from businesses and consumers in different

market segments. With our strategy, we are responding

and adapting to the volatile business environment and

increasing competition.

Neste’s strategy reflects an understanding and mind-

set that we can be in charge of these changes to serve

our purpose: to create a healthier planet for our children.

Our strategy is built around four core themes:

• Grow renewable and circular solutions;

• Create new markets to drive long-term growth;

• Drive sustainable differentiation and value creation;

and

• Strengthening the foundation.

With our strategy, values-led culture and talented employ-

ees, we will not only navigate through the changes but

lead the way.

Grow renewable

and circular solutions

We continue to serve existing and new custom-

ers in the road transport, aviation and polymers

and chemicals markets on our journey to create

a healthier planet for our children. We will further

grow our production capacity and continue to pro-

actively develop and pilot new sustainable solu-

tions. We will strengthen and expand our renew-

able and recycled raw material supply.

Create new markets

to drive long-term growth

We innovate and commercialize new scalable

renewable and circular solutions for the next

phases of growth. We tap into new raw material

sources and open up new avenues of growth for

Neste. We continue having a strong presence in

our key markets globally, while creating opportu-

nities also in new markets, to serve our customers.

Drive differentiation

and value creation

We continue to drive differentiation by develop-

ing our ability to source and process a wide vari-

ety of raw materials. We will develop next-gener-

ation technologies and solutions according to our

vision of leading the way towards a sustainable

future together. We will also develop our custom-

er-facing activities for creating superior value for

our customers.

Strengthen our foundation

We will further drive long-term competitiveness

by ensuring scalability of our processes and effi-

ciency of our operations. We will intensify efforts

to ensure consistently safe operations, and we

will drive our digital capabilities. We continue

to ensure high standards in sustainability and

strive towards our sustainability vision. Safety

remains at the heart of our operations – every

day, everywhere.

Our growth strategy drives

value for our customers,

shareholders and the planet.

Core themes of Neste strategy

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Innovation

Our core approach is to convert low quality raw materials into

high-quality solutions. We are continuously working towards increas-

ing the availability of renewable and recycled raw materials, while

also developing technologies to diversify our current raw material

portfolio. Our long-term business development and innovation take

place on several fronts:

• Lignocellulose – Forestry and agricultural waste and residues;

• Algae – Cultivation of carbon dioxide absorbing microalgae;

• Municipal solid waste – Various fractions of municipal

solid waste that currently cannot be or are not recycled;

• Renewable hydrogen – Renewable (green) hydrogen

from electrolysis, which reduces refinery GHG emissions; and

• Power-to-X – PtX technology combines renewable

electricity and captured carbon dioxide to produce

sustainable fuels and materials.

Innovation is in Neste’s DNA. Innovation has enabled our

transformation towards global leadership in renewable

and circular solutions, and it is the driving force of our

strategy to ensure the future success of Neste.

Innovation

Strategy GovernanceSustainability Review by the Board of Directors Financials

We are targeting industrial-scale operations in at least

one platform by 2030. These globally scalable raw mate-

rial pools, together with related technologies, will play an

important role in further reducing dependence on crude

oil and tackling climate change. Read more about future

raw materials.

In addition to exploring new growth opportunities, we

constantly develop, test and analyze our existing renew-

able and circular solutions. Approximately 25% of our per-

sonnel work with topics related to innovation, research,

product development and engineering. We have ded-

icated teams exploring and developing our Innovation

business platforms towards commercialization.

We invest the majority of our annual R&D expendi-

ture in innovation, research and development, and test-

ing raw materials and the technologies that could enable

their use. In 2022, our R&D expenditure was EUR 85

million.

Strengthening innovation

to create new business

We are focusing on scalable, sustainable raw materials

and required technologies for their conversion to fuels,

polymers and chemicals. Our twofold aim is to ensure

the growth of our current businesses and to build new

growth platforms for renewable and circular solutions.

To further strengthen our R&D and innovation capabil-

ities globally, we established an Innovation Center in Sin-

gapore. Operational since early 2023, the center drives

collaboration with partners in the Asia-Pacific region,

especially in Singapore. Neste’s Technology Center in

Porvoo, Finland continues to serve as an R&D facility

focusing both on existing and future raw materials.

Our engineering arm, Engineering Solutions plays a

key role in enabling Neste’s strategy implementation by

participating in research and development programs

with technology development, modeling and simulation,

and scaling up process engineering expertise. Through

the merger in 2022, all Engineering Solutions personnel

in Finland transferred to the Neste Corporation.

Demonstrating renewable hydrogen production at

our Rotterdam refinery in the Netherlands within the

MultiPLHY project is one of the initiatives enabling us

to further drive the development of new sustainable

technologies. Another renewable hydrogen project of

the company, SHARC, focuses on investing in produc-

tion capacity of renewable hydrogen and reducing GHG

emissions from hydrogen production at the Porvoo refin-

ery in Finland.

In July 2022, Neste became the first Finnish company

to receive IPCEI (Important Project of Common Euro-

pean Interest) status from the European Commission for

its hydrogen projects. In December 2022, Business Fin-

land awarded Neste EUR 27.7 million of public fund-

ing for its renewable hydrogen projects at the Porvoo

refinery.

We also received a positive grant decision from the EU

Innovation Fund for the company’s project to build chem-

ical recycling capacities at the Porvoo refinery in Finland

within project PULSE (Pretreatment and Upgrading of

Liquefied waste plastic to Scale up circular Economy).

Extensive collaboration network

Innovation requires partnering and cooperation. Neste is

already collaborating with a network of 25 leading univer-

sities and research institutes and we continue to expand

and intensify our cooperation with them. We work with

technology companies, startups and value chain part-

ners to introduce innovations in renewable and circu-

lar solutions to global-scale businesses. We have also

established corporate venture activities to invest in tech-

nology startups.

In 2022, Neste made an equity investment into Neth-

erlands-based Circularise, a supply chain traceability

and transparency startup. We also continued to collabo-

rate with technology companies we have made minority

investments in: technology company Alterra Energy

related to developing chemical recycling, as well as Sun-

fire GmbH related to renewable hydrogen demonstra-

tion (project MultiPLHY).

In Neste Veturi program, we aim to develop sustainable,

globally scalable raw materials and technology solutions

for transportation, and the production of chemicals and

polymers. The Veturi ecosystem gathers over 90 Finnish

companies, startups, universities and research institutes

to jointly build the future capabilities needed to establish

new technologies and value chains in renewable and cir-

cular solutions. The development work is supported by

Business Finland.

The ecosystem was strengthened further during 2022.

One example of a successful joint Veturi project is the

E-fuel research project developing high temperature

electrolysis, CO

capture and hydrocarbon synthesis

technologies. In 2022, VTT and Neste agreed to build a

technology demonstration facility at VTT Bioruukki Pilot

Centre, Espoo, Finland. We also celebrated the achieve-

ments of joint development and built new initiatives in

the Neste Veturi event with a large number of partners.

Lignocellulose,

algae, municipal

solid waste,

renewable hydrogen

and Power-to-X

are our promising

growth platforms

for new business.

Neste Annual Report 2022 | Innovation

Strategy GovernanceSustainability Review by the Board of Directors Financials

We are the world’s leading producer of sustainable avia-

tion fuel, renewable diesel and renewable feedstock solu-

tions for various polymers and chemicals industry uses.

We are also developing chemical recycling technologies

and capacity to combat plastic waste challenge.

Neste refines waste, residues and

innovative raw materials into renewable

fuels and renewable and recycled

feedstock for polymers and chemicals.

Our businesses

Neste Annual Report 2022 | Our businesses

Strategy GovernanceSustainability Review by the Board of Directors Financials

We produce renewable products at our refineries in

Finland, the Netherlands and Singapore entirely from

renewable raw materials with a current annual name-

plate capacity of approximately 3.3 million tons. Neste’s

Singapore refinery expansion and our joint operation,

Martinez Renewables, with Marathon Petroleum in Mar-

tinez, California, will increase Neste’s total production

capacity of renewable products to 5.5 million tons by

the end of 2023. When completed, Neste’s Rotterdam

refinery capacity expansion project will further increase

the company’s total production capacity of renewable

products to 6.8 million tons by the end of 2026. This

will help us meet the increasing global demand for low-

er-emission products.

We are also a technologically advanced refiner of

high-quality oil products with a commitment to reach

carbon neutral production by 2035. We are introducing

renewable and recycled raw materials such as liquefied

waste plastic into our oil refinery in Porvoo, Finland. We

have launched a strategic study on transforming Porvoo

refinery to a renewable and circular site with 2-4 million

tons annual capacity and ending of crude oil refining by

the middle of 2030’s.

Our own fueling station network of nearly 1,000 sta-

tions covers four countries in the Baltic Sea region:

Finland, Estonia, Latvia and Lithuania.

Neste MY Renewable Diesel™ is also sold at more

than 500 stations via channel partners in Sweden, Bel-

gium, the Netherlands and the US.

We invest heavily in researching, testing and deploy-

ing new raw materials and technologies. Our engineering

arm, Engineering Solutions delivers high-quality technol-

ogy and engineering services for the group and its exter-

nal customers.

Neste’s businesses are grouped into four reporting segments:

Oil Products Marketing & Services Others

Renewables Platform

Renewable

Road Transportation

Renewable Polymers

and Chemicals

Renewable Products

Renewable

Aviation

Neste Annual Report 2022 | Our businesses

Strategy GovernanceSustainability Review by the Board of Directors Financials

Renewable Products

Renewable Aviation offers Neste MY Sustainable

Aviation Fuel™, which in its neat form reduces green-

house gas (GHG) emissions by up to 80% over the fuel’s

life cycle, compared to using fossil jet fuel (calculation

method: CORSIA). The fuel provides an immediate solu-

tion for reducing the GHG emissions of air travel. We are

actively working with partners through the aviation sup-

ply chain to grow the availability of Sustainable Aviation

Fuel (SAF) for the aviation industry globally.

Renewable Polymers and Chemicals offers Neste

RE™, a drop-in solution made entirely out of renewable

and recycled raw materials to replace fossil feedstock

in the production of polymers and chemicals. Neste RE

produced from 100% renewable raw materials has a

more than 85% smaller carbon footprint over its life cycle

compared with conventional fossil raw materials for poly-

mers and chemicals production (Life cycle assessment

of environmental impacts of Neste RE, June 2021). The

business unit is also developing chemical recycling tech-

nologies and capacity together with value chain part-

ners to combat plastic waste pollution and enable higher

recycling rates.

Renewable Road Transportation offers Neste MY

Renewable Diesel™, enabling its customers to reduce

their GHG emissions by as much as 75–95% compared

to fossil diesel over the fuel’s life cycle. The GHG emis-

sion reduction varies depending on the region-specific

legislation that provides the methodology for the calcu-

lations (e.g. EU RED II 2018/2001/EU for Europe and

US California LCFS for the US), and the raw material

mix used to manufacture the product for each market.

Neste MY Renewable Diesel is a drop-in solution, which

means that it can be used in the existing diesel vehicles

and fuel infrastructures as such or in a fuel blend.

Renewables Platform enables Neste’s global renew-

ables production, renewable raw material sourcing and

transporting of our renewable products to our global

customer base. We currently use a wide variety of glob-

ally-sourced renewable raw materials, and waste and

residues account for over 90% of our global renewable

raw material inputs. The capacity expansion in Singa-

pore and our joint operation, Martinez Renewables, with

Marathon Petroleum in Martinez, California, will increase

the total production capacity of renewable products to

5.5 million tons by the end of 2023.

Market position:

Neste is the world’s leading producer of sustainable

aviation fuel, renewable diesel and renewable feed-

stock solutions for various polymers and chemicals

industry uses. We are also developing chemical

recycling to combat plastic waste pollution.

Main competitors:

Other renewable diesel and sustainable aviation

fuel producers, as well as producers of conven-

tional biodiesel. Other providers of renewable and

circular solutions for the polymers and chemicals

sectors.

Nameplate capacity:

Ca. 3.3 million tons of renewable products annually,

increasing to 6.8 million tons by the end of 2026.

Main market areas:

Europe and North America, expanding in the

Asia-Pacific region.

Customers:

Retailers, wholesale customers such as transport

service companies, municipalities and other fleet

owners or operators, airports, airlines, aviation fuel

suppliers and corporate business travelers, as well

as polymers and chemicals producers.

Main demand factors:

• Governments are increasingly introducing

renewable energy requirements - or emission

reduction targets – for the transport sector.

This is especially the case in the European Union,

where SAF will be mandated;

• Leading companies and brands want

to reduce their own emissions and provide

customers with more sustainable products based

on renewable and circular solutions; and

• There is increasing societal pressure from

consumers who want to see a reduction in

fossil fuels and use products made of recycled

materials. This is particularly related to the global

plastic waste challenge.

Strengths:

• High-quality renewable diesel, sustainable

aviation fuel, renewable feedstock for the

polymers and chemicals industry, as well as other

renewable products as solutions to significantly

reduce greenhouse gas emissions through

reducing reliance on fossil-based alternatives;

• An extensive global supply network for a wide

variety of renewable raw materials, waste and

residues accounting for 95% (92%) of Neste’s

renewable raw materials inputs globally in 2022;

• Capability to pretreat low-quality waste and

residue raw materials to enable their use in the

production of high-quality products;

• Global customer base extending over multiple

sectors; and

• Capability to establish value chain partnerships

to develop chemical recycling of hard-to-recycle

plastic and to enable production of new high-

quality polymers and chemicals from waste

plastic.

Neste Annual Report 2022 | Our businesses

Strategy GovernanceSustainability Review by the Board of Directors Financials

Oil Products

Our offering includes high-quality oil products and related

services for the road transportation, non-road uses, avi-

ation and marine sectors, as well as products for the oil

and petrochemical industries.

Neste has an ambition to make Porvoo the most sus-

tainable refinery in Europe aiming to reach carbon neu-

tral production by 2035. We have launched a strategic

study on transforming Porvoo refinery to a renewable

and circular site with 2–4 million tons annual capacity

and ending of crude oil refining by the middle of 2030s.

Market position:

Strong position in the Baltic Sea area wholesale

markets.

Main competitors:

Refineries in Northwest Europe and market partici-

pants importing oil products to Northwest Europe.

Refining capacity:

Crude oil refining capacity ca. 10 million tons

annually, total refining capacity ca. 12 million tons

annually.

Main market areas:

Baltic Sea area, Europe and North America.

Customers:

Retailers and distributors, oil majors and trading

companies, petrochemicals companies and com-

panies marketing lubricants and solvents.

Main demand factors:

• Increasing demand for solutions containing both

fossil and renewable products;

• Customers’ requirements for flexibility in the

supply chain; and

• Supply security in turbulent market conditions.

Strengths:

• Extensive selection of high-quality fossil and

renewable solutions;

• Technologically advanced refinery enabling high

value product yield; and

• Capability to pilot and scale-up the use of new

technologies and innovative raw materials, such

as liquefied waste plastic, in refining.

Neste Annual Report 2022 | Our businesses

Strategy GovernanceSustainability Review by the Board of Directors Financials

Marketing & Services

Marketing & Services offers sustainable, low-emission

and digital solutions for the needs of consumers, com-

panies and partners in Finland and in the Baltic countries.

We seek to develop a diverse range of services aiming

to provide the most convenient customer experience.

Market position:

Leading market position in Finland. Among the

leading operators in Estonia, Latvia and Lithuania.

Main competitors:

Other large retailers in Finland and in

the Baltic countries.

Main market areas:

Finland, Estonia, Latvia and Lithuania. Station net-

work consists of 720 stations in Finland and 222

stations in the Baltic countries. In Finland, Neste

MY Renewable Diesel™ is available at 184 stations

and in the Baltics at 30 stations.

Customers:

Consumers, transport service, customers in the avi-

ation, shipping, industrial and agricultural sectors,

municipalities, heating customers and distributors.

Main demand factors:

• Developments in traffic and transportation

volumes;

• Customers’ growing expectations of services and

more sustainable solutions; and

• Requirements by municipalities, cities, and

industry for more sustainable energy solutions.

Strengths:

• Best customer experience with digitalization and

new innovations;

• High-quality and sustainable solutions: Neste

MY Renewable Diesel™, Neste MY Non-Road

Diesel™ and Neste MY Sustainable Aviation

Fuel™ as customers’ preferred choices;

• Extensive electric vehicle charging solutions

in Finland; B2B electric vehicles charging, a

workplace charging solution and a public high

power charging solution for light and medium-duty

electric vehicles;

• Strong brand and extensive station network in

Finland and in the Baltic countries; and

• Solutions like Neste Charge and Neste MY Carbon

Footprint service that create additional value for

B2B customers.

Neste Annual Report 2022 | Our businesses

Strategy GovernanceSustainability Review by the Board of Directors Financials

Key events 2022

Reducing transport emissions with our partners

We continued and started partnerships with several global compa-

nies, like Rolls-Royce, Bolloré, Coca-Cola Europacific Partners,

Liebherr, Marr Contracting and LCL, to help them and their cus-

tomers reduce their greenhouse gas emissions by replacing fossil

fuels with Neste MY Renewable Diesel™.

We enabled the first-ever transport of renewable diesel by pipe-

line in France, marking the first of such transports in Europe.

We additionally gained two new partners, EDi Energie-Direkt

Hohenlohe GmbH and TOOL-FUEL Services GmbH, to sell Neste

MY Renewable Diesel in Germany.

Partnering actively for a more sustainable aviation industry

Our Neste MY Sustainable Aviation Fuel™ (SAF) business continued to grow globally through numer-

ous partnerships and collaborations with leading airlines, like Air France-KLM, Malaysia Airlines, Eti-

had Airways, United Airlines, Viva Aerobus and Air New Zealand, as well as other partners such as

Airbus, DHL Express, ITOCHU, World Fuel Services, HELLENIC PETROLEUM, CIM, Victor, Cargo

Ai, Sunweb and Nippon Cargo Airlines. We delivered the aviation industry’s first ever CORSIA-certi-

fied SAF to American Airlines and piloted the delivery of SAF using existing petroleum pipelines from

Texas to New York. In addition, we enabled the first-ever flight with 100% SAF on a regional commer-

cial aircraft and the first helicopter flights using SAF in Southeast Asia and Finland.

Expanded Neste RE™

supply to new partners

Neste started several collaborations aimed at

replacing fossil feedstocks with more sustain-

able ones in the production of polymers and

chemicals.

We started cooperating with Covestro

and SK geo centric to create a value chain

for renewable MDI in APAC. Neste, Idemitsu

Kosan, CHIMEI and Mitsubishi Corporation

agreed to build a renewable plastics supply

chain utilizing Neste RE.

MAM launched MAM Original Pure soother

and its packaging which are composed of

renewable polyolefins, manufactured with our

Neste RE produced entirely from renewable

raw materials.

Bugaboo’s, DSM Engineering Materials’,

Fibrant’s and Neste’s partnership enabled the

launch of an entire Bugaboo stroller portfolio

with plastic made with bio-based materials.

Enabling traceability

along polymers and

chemicals value chains

We started a partnership with

Netherlands-based startup Circu-

larise to bring its blockchain-based

traceability software into polymers

and chemicals supply chains. The

aim is to increase traceability of

renewable and recycled mate-

rial flows to provide transparency

along the value chain. We also

invested a combined EUR 11 mil-

lion investment into Circularise

with three other investors.

Introducing new type

of co-processed marine fuel

We started piloting a new Neste Marine™ 0.1 Co-processed

marine fuel together with Nordic Marine Oil to help the mar-

itime sector reduce greenhouse gas emissions. ESL Ship-

ping became the world’s first shipping company to start uti-

lizing this new marine fuel.

Launching electric charging

In Finland, we introduced our first ded-

icated charging service for logistics

companies to charge their fleet, as well

as the vehicles of their subcontractors,

at their own depot. We also introduced

public high power charging (HPC) at our

service stations in Finland for light and

medium-duty electric vehicles.

Neste Annual Report 2022 | Key events 2022

Photo: Circularise

Photo: Bugaboo

Strategy GovernanceSustainability Review by the Board of Directors Financials

Key events 2022

Neste Annual Report 2022 | Key events 2022

Projects on chemical recycling of

waste plastic proceeding successfully

Our work on commercializing chemical recycling of

waste plastic in Porvoo, Finland continued. The goal

is to scale up capabilities to process liquefied waste

plastic by implementing proprietary pretreatment and

upgrading technologies and integrating the technol-

ogies into the refinery operations. Neste’s project

PULSE received a positive grant decision for up to

EUR 135 million from the EU Innovation Fund in July.

In addition, Neste acquired European rights to Alterra

Energy’s thermochemical liquefaction technology.

IPCEI status for Porvoo refinery hydrogen

projects from European Commission

Neste was the first Finnish company to be granted IPCEI (Import-

ant Project of Common European Interest) status by the European

Commission, enabling national public funding for our renewable

hydrogen projects at Porvoo refinery. The projects develop solu-

tions for the production and utilization of renewable hydrogen in

our refinery processes.

In December 2022, Business Finland awarded Neste with a pub-

lic funding of EUR 27.7 million for its green hydrogen projects at the

Porvoo refinery.

Strategic study

on ending crude oil

refining in the mid-

2030s in Porvoo

We launched a strategic study

on transitioning our refinery in

Porvoo, Finland to non-crude oil

refining and into a globally lead-

ing renewable and circular solu-

tions site. The transformation

under study of both renewable

and circular raw materials could

continue with retrofits of exist-

ing units at a later stage, with a

long-term capacity potential of

2 to 4 million tons per year.

Building an integrated Power-to-Liquids (e-fuels)

demonstration facility together with VTT

Neste agreed with VTT to build a technology demonstration facility at

VTT Bioruukki Pilot Centre in Espoo, Finland. This is a continuation of

the Business Finland funded Veturi E-fuel research project developing

high temperature electrolysis, CO

capture, and hydrocarbon synthesis

technologies.

Replaced Russian crude oil

with other qualities

At the start of the war, Neste decided to stop using Russian

crude oil entirely and started replacing it with other qualities.

The last of the crude oil cargoes from Russian origin arrived

at the Porvoo refinery in July 2022 and the supply contracts

ended. Supply contracts for other fossil feedstocks from Rus-

sia ended at the end of 2022. Neste condemns Russia’s inva-

sion of Ukraine, and we have witnessed strong support for

Ukraine among Neste employees, our customers and the

international community.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Key events 2022

Neste Annual Report 2022 | Key events 2022

Matti Lehmus became Neste’s new President and CEO

Matti Lehmus started as President and CEO as of 1 May 2022. He holds a M. Sc. in chemical

engineering and an eMBA. He joined Neste in 1998, and has held several key leadership posi-

tions during his career in both the oil products and renewables businesses.

Neste’s first credit rating

Moody’s Investors Service assigned an A3 long-

term issuer rating and a baseline credit assess-

ment (bca) of baa1 with stable outlook to Neste.

Published our very first

Green Finance Report

We published our inaugural Green Finance

Report following the establishment of our Green

Finance Framework in 2021 to further integrate

the company’s sustainability ambitions into our

financing. We also signed a EUR 500 million

green term loan agreement to finance Eligi-

ble Assets and Projects in accordance with the

framework.

Major investments to increase our

renewables production capacity

While our ongoing Singapore refinery expansion stayed on track to completion by the

end of the first quarter in 2023, we made the final investment decision to also expand

renewables production capacity in Rotterdam by 1.3 million tons. The investment

of approximately EUR 1.9 billion will bring the total renewable product capacity at

our Rotterdam refinery to 2.7 million tons annually. Our target is to start up the new

production unit during the first half of 2026.

We established a 50/50 joint operation, Martinez Renewables, for production of renew-

able fuels with Marathon Petroleum in the US. By the end of 2023, it is expected to increase

our renewables production capacity by slightly over 1 million tons annually.

Strengthening our global raw materials sourcing

We agreed to acquire used cooking oil collection and aggregation business from Crimson

Renewable Energy Holdings, LLC in the US. The acquisition was closed in January 2023. We

also acquired Walco Foods, an Irish trader of animal fats, renamed as Neste Walco Limited.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Key figures 2022

Revenue, EUR million

EBITDA, EUR million

Comparable EBITDA,

EUR million

GHG reduction achieved with

Neste’s renewable products,

million tons CO

Compared to crude oil-based fuel.

Personnel, on average

Financial targets

Leverage ratio, %

Dividend per share, €

Financial

target:

50% of

comparable

net profit

Board’s proposal the AGM. Consists of an ordinary dividend of EUR 1.02 per share, an extraordinary

dividend of EUR 0.25 per share, and a discretionary second extraordinary dividend of EUR 0.25 per share.

The Comparable ROACE calculation

formula has been adjusted in 2022 by

excluding assets under construction

average from the capital employed

average. Comparison numbers have

been restated accordingly.

202120202019

10.9

9.6

10.0

2022

11.1

6,000

5,000

4,000

3,000

2,000

1,000

2021

4,872

2019

5,474

2020

4,833

2022

5,244

Comparable return on

average capital employed

after tax (ROACE), %

Financial target: ROACE

of at least 15% annually

202120202019

18.3

28.2

19.8

2022

30.1

Financial target: A leverage

ratio of below 40%

2021

–5

20202019

0.6

–3.3

-4.7

2022

13.9

1.0

1.5

2.5

2.0

3.0

0.5

2019 2020 2021

2.04

1.60

1.54

1.02

0.80

0.82

2022

3.04

Neste Annual Report 2022 | Key figures 2022

Our dividend policy is to

distribute at least 50% of

our comparable net

prot as dividend

20202019 2021

2,500

2,000

1,500

1,000

500

2,607

2,731

1,508

2022

3,048

3,000

2021

20,000

15,000

10,000

5,000

20202019

15,148

15,840

11,751

2022

25,707

25,000

1.52

20202019 2021

2,000

3,000

3,500

1,500

2,500

1,000

500

1,920

2,452

1,929

2022

3,537

Strategy GovernanceSustainability Review by the Board of Directors Financials

2022 2021 Change,%

Income statement

Revenue, MEUR 25,707 15,148 70%

EBITDA, MEUR 3,048 2,607 17%

Operating profit, MEUR 2,410 2,023 19%

Profit before income taxes, MEUR 2,279 1,962 16%

Profit for the period, MEUR 1,891 1,774 7%

Comparable EBITDA, MEUR 3,537 1,920 84%

Comparable net profit, MEUR 2,336 1,179 98%

Profitability,%

Return on equity (ROE),% 25.1 28.5 -12%

Comparable return on average capital employed after tax

(ROACE),%

30.1 18.3 64%

Financing and financial position

Total equity, MEUR 8,327 6,985 19%

Interest-bearing net debt, MEUR 1,344 41 -

Leverage ratio,% 13.9 0.6 -

Equity-to-assets ratio,% 56.3 56.6 -1%

Net debt to EBITDA,% 0.4 0 -

Net cash generated from operating activities, MEUR 1,197 1,994 -40%

Other indicators

Capital employed, MEUR 10,942 8,742 25%

Net working capital in days outstanding 35.4 33.3 6%

Capital expenditure and investment in shares, MEUR 2,218 1,535 45%

Research and development expenditure, MEUR 85 67 27%

Average number of personnel 5,244 4,872 8%

Total refining margin, USD/bbl 23.42 8.99 161%

Total Recordable Injury Frequency

per million hours worked (TRIF) 2.0 1.4 43%

Process Safety Events Rate (PSER) 1.4 1.4 0%

The Comparable ROACE calculation formula has been adjusted in 2022 by excluding assets under construction average

from the capital employed average. 2021 comparison numbers have been restated accordingly.

Board of Directors proposal to the Annual General Meeting. 2022 key figures include an ordinary dividend of

EUR 1.02 per share, an extraordinary dividend of EUR 0.25 per share, and a discretionary second extraordinary dividend of

EUR 0.25 per share.

Share-related indicators

Earnings per share (EPS), EUR 2.46 2.31 6%

Comparable earnings per share, EUR 3.04 1.54 98%

Equity per share, EUR 10.83 9.09 19%

Cash flow per share, EUR 1.56 2.60 -40%

Price / earnings ratio (P/E) 17.50 18.79 -7%

Dividend per share, EUR 1.52

0.82 85%

Dividend payout ratio,% 61.8

35.5 74%

Dividend yield,% 3.5

1.9 87%

Dividend per comparable earnings per share,% 50.00 53.4 -6%

Share price at the end of the period, EUR 43.02 43.36 -1%

Average share price, EUR 42.26 50.99 -17%

Lowest share price, EUR 30.81 41.17 -25%

Highest share price, EUR 52.18 64.74 -19%

Market capitalization at the end of the period, MEUR 33,063 33,353 -1%

2022 2021 Change,%

Key figures 2022

)

Annual greenhouse gas (GHG) reduction achieved with Neste’s renewable products compared to 100% crude oil based fuel.

Calculation method complies with the EU Renewable Energy Directive II (EU) 2018/2001 and the California LCFS methodology,

which has been applied in the GHG reporting for volumes sold in the US since the beginning of 2022.

)

Market-based emissions for scope 2

)

Use phase emission intensity of sold fuel products is calculated by dividing the GHG emissions from the use of fuel products produced

and sold by Neste with the total amount of energy released upon the use of those fuel products (gCO

e/MJ)

2022 2021 Change,%

GHG indicators

Avoided GHG emissions by Neste customers

with Neste's products (compared to fossil fuel) in MtCO

11.1 10.9 2%

Neste’s absolute GHG emissions in scope 1 and 2

(production) (tCO

2.5 2.3 6%

Use phase emission intensity of sold fuel products

(gCO

e/MJ)

57 55 4%

Neste Annual Report 2022 | Key figures 2022

Strategy GovernanceSustainability Review by the Board of Directors Financials

Capital Markets Day

Neste is hosting a Capital Markets Day on 20 June

2023 in London. The event can be followed also online

as a webcast at neste.com/investors.

Annual General meeting

Neste Corporation’s Annual General Meeting will be

held on Tuesday, 28 March 2023 at 10 a.m. EET at

Messukeskus at Messuaukio 1, Helsinki. Registration

and the distribution of voting papers will begin at 9

a.m. Shareholders wishing to participate in the Annual

General Meeting should inform the company by 4 p.m.

EET on 20 March 2023 at the latest by:

• visiting neste.com and following the instructions

given there.

• calling by phone +358 (0)20 770 6862

(Monday–Friday, 9 a.m.–4 p.m. EET).

• writing to Neste Corporation, Annual General

Meeting, P.O. Box 95, FI-00095 Neste.

Holders of proxies are requested to forward them

when stating their wish to participate, ensuring that

they reach the company by 4 p.m. EET on 20 March

2023 at the latest.

The AGM can also be followed via live webcast.

Neste shares are listed on NASDAQ Helsinki under the trading code NESTE.

The company had 118,906 (107,087) shareholders at the end of 2022.

Information for investors

The Board of Directors proposes to the AGM that an

ordinary dividend of EUR 1.02 per share be paid on

the basis of the approved balance sheet for 2022 plus

an extraordinary dividend of EUR 0.25 per share, i.e.,

EUR 1.27 per share in total. The ordinary dividend

shall be paid in two installments. The Board further-

more proposes that the AGM would authorize the

Board to decide, in its discretion, on the payment of a

second extraordinary dividend of EUR 0.25 per share,

by 31 October 2023. The Board expects that this dis-

cretionary second extraordinary dividend will be paid,

unless there is a significant deterioration in the busi-

ness environment during 2023.

Dividend payment in 2023

• 16 March 2023: AGM record date.

• 30 March 2023: Dividend payment record date for

the first instalment.

• 6 April 2023: Dividend payable for the first

instalment.

• 29 September 2023: Dividend payment record

date for the second instalment.

• 6 October 2023: Dividend payable for the second

instalment.

Interim reports in 2023

Neste Corporation will publish financial reports

in 2023 as follows:

• Interim Report January–March 2023:

28 April 2023

• Half Year Financial Report January–June 2023:

27 July 2023

• Interim Report January–September 2023:

26 October 2023

The Interim Reports are published in Finnish

and English and can be downloaded at

neste.com/investors.

Contact information

Investor Relations:

Martti Ala-Härkönen, CFO

Tel. +358 40 737 6633

martti.ala-harkonen@neste.com

Anssi Tammilehto, Vice President,

Investor Relations

Tel. +358 50 458 8436

anssi.tammilehto@neste.com

Debt Investor and

Banking Relations:

Katariina Perkkiö, Vice President,

Group Treasury

Tel. +358 50 458 1492

katariina.perkkio@neste.com

Neste’s general e-mail

address for investors:

investors@neste.com

Neste Annual Report 2022 | Information for investors

Strategy GovernanceSustainability Review by the Board of Directors Financials



Neste share’s trading volumes in 2022, %

Total shareholder return, %

Non-Finnish shareholders 39.7% (39.6%)

Finnish State 35.9% (35.9%)

Finnish institutions 16.8% (17.0%)

Households 7.6% (7.5%)



Shareholder structure on 31 December 2022, %

NASDAQ Helsinki 66.8% (71.3%)

CBOE Europe 29.3% (24.0%)

Chi-X Europe 0.0% (0.1%)

BATS Europe 0.1% (0.2%)

Turquoise 3.8% (4.4%)

Earnings per share and

dividend per share, EUR

Earnings per share

Comparable earnings per share

Dividend per share

2022: Board’s proposal to Annual General Meeting

20202019

2021

2.5

3.5

2.0

3.0

1.5

1.0

0.5

2.33

2.04

1.02

0.93

1.60

0.80

2.31

1.54

0.82

2022

2.46

3.04

1.52

100

-30

-20

-10

-25.4

41.5

94.0

20202019 2021

1.1

2022

Neste Annual Report 2022 | Information for investors

Neste’s share performance 2018–2022, EUR

2020 2021 202220192018

Shareholders’ total return, indexed

300

100

200

400

2020 2021 202220192018

Neste Stoxx Nordic

Strategy GovernanceSustainability Review by the Board of Directors Financials

Sustainability highlights 25

Sustainability at Neste 26

Material sustainability topics 29

Sustainable Development Goals (SDGs) 31

Material sustainability KPIs 35

Stakeholder engagement 40

Value creation 47

Sustainability governance 48

Compliance 50

Our people 51

Safety 55

Climate 58

Our climate commitments 58

Carbon handprint 61

Carbon footprint 66

Biodiversity 74

Building a foundation for our biodiversity work 76

Environmental impact 77

Human Rights 81

Embedding human rights due diligence 82

Supply chain and raw materials 86

Supply chain 87

Renewable raw materials 91

Recycled raw materials 95

Future raw materials 96

Performance and reporting 98

Performance in figures 100

GRI Content Index and UN Global Compact 104

TCFD Index 111

SASB Index 112

UNGP Reporting Framework Index 114

Principles for calculating the key indicators 115

Independent Assurance Report 117

Sustainability

Our guiding principle:

9+ billion people living

well, within planetary

boundaries, by 2050.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Sustainability highlights 2022

of our renewable raw

material suppliers have

committed to Neste

Supplier Code of Conduct.

99%

The scope and methodology

for net positive biodiversity

impact for direct operations

dened in 2022.

1,390

hours used for training employees

on human rights policies and topics

relevant to Neste’s business.

Biodiversity baseline dened for

1,270

hectares of our operational

sites, covering Porvoo and

Naantali renery areas.

The rst time in aviation history a CORSIA

certied batch of sustainable aviation fuel (SAF)

was delivered to a commercial airline.

safe days

(2021: 306)

of our employees understand

how their work contributes to

Neste's success.

314

80%

external recruitments

(2021: 955)

1,409

Plan to reduce the share of

conventional palm oil to

of our global renewable

raw material inputs by

the end of 2023.

Source: World Bank

2020

10.0Mt

2022

11.1Mt

2021

10.9Mt

Target 2030 20Mt

2019

9.6Mt

Equaling the

annual emissions

from 4.0 million

passenger cars

or the annual

carbon footprint of

1.8 million average

EU citizens

11.1Mt

The amount of greenhouse

gas emissions our customers

reduced with our renewable

products in 2022:

5.5Mt

expected annual

renewables production

capacity by the end of 2023.

Supply chain

and raw materials

Biodiversity

Climate

Human rights

OUR SUSTAINABILITY VISION

Neste Annual Report 2022 | Sustainability at Neste

Strategy GovernanceSustainability Review by the Board of Directors Financials

We create solutions for combating climate change and

accelerating a shift to a circular economy. We refine

waste, residues and other innovative raw materials into

renewable fuels and more sustainable feedstocks for

plastics and other materials. We are the world’s lead-

ing producer of sustainable aviation fuel and renewable

diesel and develop chemical recycling technologies and

capacity to combat the plastic waste challenge.

Setting high standards for sustainability enables our growth and purpose:

Creating a healthier planet for our children. It continues to be the

cornerstone of our strategy.

Neste Annual Report 2022 | Sustainability at Neste

Today, we are operating in a complex business envi-

ronment. In addition to the growing sustainability expec-

tations of our stakeholders and demand for concrete

actions, climate change and biodiversity loss are accel-

erating and the market situation is volatile around the

world.

Sustainability at Neste

Strategy GovernanceSustainability Review by the Board of Directors Financials

Our success is built on

collaboration and innovation

Together with our partners, we are scaling up our

renewable and circular solutions, increasing innovation

through extensive research and value chain partners,

and establishing mutually beneficial partnerships com-

mitted to sustainability. While acting against the global

climate challenge, we also acknowledge our social and

economic role regionally and locally. We have an impact

on people and environment within our own operations,

but also throughout our value chain. We care for our

own employees’ health, safety and wellbeing, while also

paying close attention to diversity, equity and inclusion,

and to the welfare of the most vulnerable groups of indi-

viduals in our supply chain.

Economic responsibility; ethics, compliance and cor-

porate governance; as well as supply chain and raw

material sustainability are the cornerstones of everything

we do. We have identified several environmental, social

and governance topics as relevant for our business and

our everyday sustainability work, relating also to the UN

Sustainable Development Goals.

Neste sustainability vision

Our sustainability vision, with four key focus areas,

pushes our strategic actions forward. It is crucial espe-

cially in a world where issues are increasingly interlinked.

Since the launch of our broadened sustainability vision in

2021, we have made progress on many fronts, and we

continue to take concrete actions persistently.

We continue to pay attention to the increasing sus-

tainability expectations from our stakeholders and strive

to ensure that our performance meets and exceeds

expectations.

We are committed to

• reduce our customers’ greenhouse

gas emissions by at least 20 million

tons annually by 2030 with our

renewable and circular solutions.

• reduce emissions in our own

production (scope 1 & 2) by 50% by

2030 compared to 2019 level, and

reach carbon neutral production by

2035.

• reduce the use phase emission

intensity of sold products by 50% by

2040 compared to 2020 levels.

• work with our suppliers and partners

to reduce emissions across the entire

value chain (scope 3).

• aim at creating net positive impacts

(NPI) for biodiversity from new own

activities from 2025 onwards.

• target no net loss (NNL) of biodiversity

from all ongoing own activities

by 2035.

• commit to paying all of our employees

at least a living wage, take action

to promote living wages in Neste’s

supply chains, and require strategic

contractors and suppliers to pay their

employees a living wage by 2030.

• commit to and promote the Employer

Pays Principle, with implementation

in high-risk areas by 2030, to ensure

that no worker pays for a job and the

costs of recruitment are paid for by

the employer, not the worker.

• work together with our stakeholders

to increase children’s access to

education by 2030, and promote

respect for children’s rights by actively

supporting and participating in

initiatives aimed at keeping children

in school.

• reduce inequalities across the value

chain and address the root causes

of systemic human rights issues

by 2030.

• require 100% of suppliers and other

business partners to be committed

to Neste Supplier Code of Conduct

and have the best-in-class grievance

processes.

• include human rights, biodiversity

and climate targets as key criteria for

suppliers as we drive diversification

and increased availability of

sustainable raw materials.

Neste Annual Report 2022 | Sustainability at Neste

Neste sustainability vision

Supply chain & raw materials

Neste drives safe and healthy

workplace, fair labor practices and

increased sustainability commitment

across the supply chain.

Biodiversity

Our vision is to drive a positive impact

on biodiversity and achieve a nature

positive

value chain by 2040.

Climate

Neste leads transformation

towards a carbon neutral

value chain by 2040.

Human rights

Neste strives to create a more

equitable and inclusive value chain

by 2030 in which everyone

works with dignity.

Nature positive aims at halting and

reversing nature loss, positive impacts

outweighing the adverse impacts.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability at Neste

In 2022,

we conducted

a total of 118

sustainability audits on

our raw material suppliers,

terminals

and contractors.

Sustainability milestones in 2022

We reached our target of 100% renewable

electricity in Porvoo in January 2022.

We continued the biodiversity

methodology development and conducted

materiality analysis on biodiversity for our

own operations.

In September 2022, we

launched a strategic study

on transitioning our refinery in

Porvoo, Finland to a renewable

and circular site and ending

crude oil refining in the

mid-2030s.

We conducted a major review and

update of the Neste Human Rights

Principle, following extensive

consultation with both internal and

external stakeholders.

We developed our donation

management process throughout

the organization, and allocated

donations according to three themes:

Innovation and education, Climate

and environment and Diversity and

inclusion.

We conducted sustainability materiality

assessment, following the ‘double materiality’

approach, which combines impact materiality

and financial materiality.

Strategy GovernanceSustainability Review by the Board of Directors Financials

The 2022 materiality assessment was conducted fol-

lowing the ‘double materiality’ approach, which com-

bines impact materiality and financial materiality. The

most material topics identified for Neste are based

on their business and stakeholder influence, outward

impact on economy, environment and people, as well

as the estimated magnitude of their impacts. Our

materiality assessment process is built on four stages:

identification, evaluation, prioritization and integration

of the most material sustainability topics.

Identify

the sustainability

issues significant

to Neste’s business

and stakeholders

Evaluate

the potential

sustainability impacts,

as well as key risks

and opportunities

Prioritize

the sustainability topics

based on the importance

to stakeholders and also

Neste’s business

Integrate

the material

sustainability

topics into Neste’s

sustainability work

Understanding the views and expectations of our

stakeholders is crucial to the success of our company and

the acceptability of our operations. In order to identify what

topics we should particularly focus on in our sustainability

efforts, we conduct a materiality assessment once every two

years and engage our key stakeholders in the process.

Neste Annual Report 2022 | Material sustainability topics

Material sustainability topics

Strategy GovernanceSustainability Review by the Board of Directors Financials

sustainability report provide further descriptions for topic

specific material risks and opportunities, impacts, poli-

cies and commitments.

The material topics reflect Neste’s business opera-

tions, as well as strategic ambitions in combating cli-

mate change and creating a healthier planet for our

children. The material topics represent different sus-

tainability aspects, and they are relevant throughout our

value chain. Supply chain sustainability and raw mate-

rials, economic responsibility, as well as ethics, compli-

ance and corporate governance are not seen as individ-

ual material topics but as underlying themes that need

to be taken into account when considering each of the

eleven topics. These themes are the cornerstones of our

sustainability agenda.

The materiality assessment results were presented to

the Neste Advisory Council on Sustainability and New

Markets in order to gain an objective round of external

expert views for final evaluation. The renewed materiality

topics and matrix were approved by the Neste Execu-

tive Committee.

A key element for the integration of the ESG factors

throughout our value chain is by defining material indica-

tors, which guide our operations and business decisions.

Neste is committed to measuring its performance on

ESG issues in order to refine objectives underlying our

strategy.

In addition to the materiality assessment, we conduct

an annual Neste Brand Health Research study into the

key trends and perceptions of the main global players

in renewable and circular solutions, as well as on our

sustainability topics, across Asia, Europe and the Ameri-

cas representing a wide range of organizations. Findings

from the research support the views stated in the mate-

riality assessment and provide insight on our progress

against our goals.

Materiality Matrix 2022

Signicance of Neste’s impacts on

environment, economy and people

Signicant

Crucial

Signicant

Crucial

Signicance of impacts on environment, economy and people to Neste business

Carbon handprint

Carbon footprint

Protecting biodiversity, air, water and soil

Stakeholder engagement,

communication and transparency

Innovation

Partnerships

Sustainable products

and services

Safety, health and wellbeing

Modern slavery

Diversity, equity and inclusion

Engaged and talented workforce

Supply chain and

raw material sustainability

Economic

responsibility

Ethics, compliance and

corporate governance

The cornerstones for everything we do

Neste Annual Report 2022 | Material sustainability topics

Materiality assessment 2022

In the 2022 assessment, we reviewed and updated our

material topics to account for impacts of immediate and

future challenges arising from emerging trends, which

influence the environmental, social and corporate gov-

ernance (ESG) dimensions of sustainable development.

The assessment used industry-specific aspects, exter-

nal trends, stakeholder interviews, sustainability frame-

works and standards, regulatory requirements as well as

Neste’s strategy and sustainability vision to review the

identified material topics from the 2020 assessment.

Material topics were refined by identifying ESG aspects

that are relevant to our business, as well as to our stake-

holders. The topics were then evaluated based on actual

and potential sustainability impacts and business-related

key risks and opportunities. Topic owners were involved

to sharpen the topics to fit for Neste’s own operations.

Stakeholders involved in the materiality assessment

process were grouped into categories (listed on page

41) and represent a large variety of key interest groups.

Several people from different Neste departments are

involved in the biannual process to update and identify

key stakeholders. Both internal and external stakehold-

ers were involved through interviews and surveys. The

identified material topics were validated through an eval-

uation of stakeholder expectations with an online sur-

vey. The survey was also open for public input via our

web channels. More in-depth interviews with several of

our key stakeholders were conducted by our external

partner.

Input both from the interviews and the survey enabled

the evaluation of main current and future ESG risks and

opportunities in order to obtain understanding of impact

materiality and financial materiality. Based on the results,

topic owners and subject matter experts participated in

a workshop to provide final input to the results.

Based on the results from the assessment process,

eleven material topics were prioritized. They are pre-

sented in the materiality matrix on this page. The hor-

izontal axis represents the significance of financial

materiality and the vertical axis displays the signifi-

cance of impact materiality. Topic disclosures of Neste’s

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Our priority SDGs

are linked to our material

sustainability topics

Neste Annual Report 2022 | Material sustainability topics

Sustainable Development Goals

The UN Sustainable Development Goals (SDGs) are

a collection of 17 interconnected global goals to help

achieve a better and more sustainable future for all. They

represent an action plan for the planet and society to

thrive by 2030, and explicitly call on businesses to help

lead this transformation. We recognize the strategic

importance of the SDGs to our business and the world

and are committed to helping achieve them.

We have identified nine priority (highlighted on the

right) SDGs as the goals we most significantly contribute

to and have used the SDG Compass to determine them.

To understand and prioritize the most relevant SDGs for

Neste, we have worked with external experts to assess

both the positive and negative impacts our business has

on the SDGs throughout our value chains. Our prioriti-

zation process is based on our sustainability materiality

assessment, impact evaluation study, an external review

as well as an internal expert analysis.

Our most relevant SDGs form a strong basis for our

sustainability work. By identifying material sustainabil-

ity topics and the relevant SDGs, we position Neste as

part of society as well as part of the global sustainabil-

ity framework. Based on the identified material topics,

we have formed relevant sustainability KPIs. This helps

us integrate the renewed materiality assessment in our

sustainability vision and to continue our sustainability

work in a consistent and forward-looking way. We mon-

itor, measure and follow up how our actions affect the

broader context.

The sustainability KPIs can be found in the table on

pages 35–39.

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How Neste contributes to the SDGs?

Decent work and

economic growth

• We actively take steps to protect labor rights

and promote safe and secure working

environments for all workers,

with special attention to vulnerable groups.

• The implementation of the new Safety

Leadership Principle and updating the team

safety commitments were key focuses in

Neste’s safety leadership and culture in

2022.

• Neste followed the Covid-19 pandemic

situation globally by the Crisis Management

team closely until summer 2022. The

number of Covid-19 cases among Neste

personnel and the effect on the operations

were low.

• In 2022, more than 750 employees

participated in company-wide development

programs, such as the Neste leadership

program, the Neste Reverse Mentoring

Program and the Mission Possible program

• Neste is committed to implementing effective

measures to eradicate forced labor, modern

slavery, and child labor.

• Neste respects and supports children’s

rights and provides good-quality

employment, education and training for

young people. In 2022, we hired 405

summer trainees to work across different

functions at Neste.

Industry, innovation

and infrastructure

• Neste’s growth and transformation is

rooted in innovation and technology.

We invest the majority of our annual

R&D expenditure in research and

testing future raw materials and

technologies.

• Neste and the Climate, Infrastructure

and Environment Executive Agency

(CINEA) of the European Commission

signed the EU Innovation Fund’s grant

agreement for the green hydrogen

project ‘SHARC’ in Porvoo.

• Neste received a positive grant

decision from the EU Innovation Fund

for the PULSE project focusing on

chemical recycling of waste plastic in

Porvoo.

• Neste was awarded with public

funding for Porvoo refinery hydrogen

projects by Business Finland. The

funding was made possible by the

IPCEI status granted to Neste earlier

the same year by the European

Commission.

• VTT and Neste agreed on building

an integrated Power-to-Liquids

(e-fuels) demonstration facility at

VTT Bioruukki Pilot Centre for CO

capture, green hydrogen and e-fuels

production.

Neste Annual Report 2022 | Material sustainability topics

Clean energy

• Neste increases the share of renewable energy

in the global energy mix by producing and selling

low-emission renewable fuels for example for road

transportation and aviation.

» Starting in 2023, Neste will supply the Air France-

KLM Group with more than 1 million tons of Neste

MY Sustainable Aviation Fuel™ over a period of

8 years.

» Neste’s partnership with Fly Victor allows Victor’s

customers to replace fossil fuel by purchasing Neste

MY Sustainable Aviation Fuel for every private jet

booking globally.

» In the next five years, Neste will supply DHL

with approximately 320,000 tons of Neste MY

Sustainable Aviation Fuel.

» Neste and Rolls-Royce agreed to build a strategic

partnership on accelerating the use of renewable

diesel as a lower-emission solution for diesel

engines.

» Neste partnered with EDi Energie-Direkt Hohenlohe

GmbH and TOOL-FUEL Services GmbH to sell

Neste MY Renewable Diesel in Germany.

» Neste introduced co-processed marine fuel in

partnership with Nordic Marine Oil – a new solution

for the maritime sector enabling up to 80% GHG

emission reduction.

• Neste aims for 100% renewable electricity use globally

by 2023. This target was achieved ahead of schedule

in Finland with the new hydropower agreement with

Vattenfall. Neste has wind power agreements in place

with Fortum, Ilmatar and Statkraft.

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Responsible consumption

and production

• Neste creates solutions for combating

climate change and accelerating a shift to a

circular economy. We refine waste, residues

and innovative raw materials into renewable

fuels and more sustainable feedstock for

polymers and chemicals.

• Neste is conducting a feasibility study to

examine technologies to pretreat and

upgrade liquefied waste plastic at its

refinery in Porvoo, Finland.

• The Rotterdam refinery expansion

investment of approximately EUR 1.9 billion

will expand Neste’s overall renewable

product capacity by 1.3 million tons per

annum.

• Neste finalized a transaction to establish a

joint operation for production of renewable

fuels with Marathon Petroleum in the United

States.

• Neste teamed up with Circularise to

increase visibility along circular polymer and

chemical value chains.

• Neste acquired European rights to Alterra

Energy’s thermochemical liquefaction

technology.

Sustainable cities and communities

• Neste creates value for the society and

helps customers to reduce greenhouse

gas emissions by offering lower-emission

renewable fuels to aviation and road

transportation. Neste’s renewable products

may also help reducing transportation-

related local emissions and improving local

air quality in urban areas.

» Neste’s renewable diesel is used to

power the fleets of major Californian

cities, e.g. Twin Rivers Unified School

District.

• Neste's sustainable aviation fuel was

introduced at two of the largest Japanese

international airports; Tokyo Haneda and

Narita.

• Neste introduces public high power

charging (HPC) at its service stations in

Finland for light and medium-duty electric

vehicles.

• Neste participated in the nationwide energy

saving campaign ‘Down a Degree’ in

Finland by reducing energy consumption at

its facilities.

• The Finnish Ham Trick encourages

households in Finland to recycle Christmas

waste fats into renewable diesel.

Neste Annual Report 2022 | Material sustainability topics

Reducing inequalities

• Neste views inequality as a systemic risk that requires urgent action

from business, and is taking actions to address inequality by creating a

diverse, equitable and inclusive workplace and value chain, preparing our

employees for the future of work, providing safe and secure employment,

and paying and promoting living wages.

• Neste is an active member of the WBCSD Business Commission to

Tackle Inequality (BCTI), a multi-stakeholder coalition of organizations

who put addressing inequality at the heart of the business agenda for

sustainable growth.

• Neste’s human rights ambition for 2030 is to create a more equitable and

inclusive value chain, in which everyone works with dignity. This includes

reducing inequalities across the value chain, paying a living wage to our

own employees and requiring strategic contractors and suppliers to do

the same, advancing responsible recruitment practices to ensure that no

worker pays for a job, and increasing children’s access to education.

• In 2022, Neste completed a living wage gap assessment for its own

employees in Finland, using data provided by the Fair Wage Network.

The results of this assessment enabled Neste to verify that all its

employees working in Finland receive compensation above the local living

wage benchmark. Neste also started using living wage data in sustainability

audits for raw materials suppliers.

• In 2022, Neste partnered with Work Ahead to launch the use of a worker

voice tool in Neste’s supply chains. The worker voice tool is an audio-visual

survey that enables direct and anonymous engagement with workers using

mobile devices.

• Neste completed a major update of its Human Rights Principle in 2022,

which covers a number of topics critical to addressing inequality.

• Neste is a signatory to the UN Women’s Empowerment Principles (WEPs)

and conducts an annual WEPs gender gap analysis.

• Neste has signed two Unilever Partner Promises – the Supplier Equity,

Diversity and Inclusion Promise and the Living Wage/Living

Income Promise.

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Climate action

• Neste's climate vision is to lead

transformation towards carbon neutral

value chain by 2040. Our climate

commitments cover the entire value

chain (scopes 1, 2 & 3). Read more

about our commitments.

• In 2022, Neste launched a strategic

study on transitioning its Porvoo

refinery to a renewable and circular

site and ending crude oil refining in the

mid-2030s.

• Neste includes its climate commitments

into long-term incentives for Neste’s key

personnel and its climate impact into the

investment criteria.

• Neste uses internal carbon price as

a strategic tool to support its climate

commitments.

• Neste and Ajotunti.fi challenge driving

schools to make climate-conscious

driving a larger part of their instruction.

• Neste collaborated with Coldplay

to support the band achieve a 50%

emission reduction during their 2022

world tour.

Life on land

• Neste is committed to protecting biodiversity with

a vision to drive a positive impact on biodiversity

and achieve a nature positive

value chain by

2040. We aim to create net positive impacts for

biodiversity from new activities from 2025 onwards.

• Neste is committed to preventing deforestation

and requires the same from its suppliers.

• In 2022, Neste joined the Consumer Goods Forum

(CGF) Forest Positive Coalition to strengthen our

collaboration on preventing deforestation. We also

initiated a project that focuses on deforestation

prevention in the animal fat waste supply chain.

• Biodiversity and climate topics are key when

assessing potential raw materials. Neste’s raw

material sourcing for renewable fuels is regulated

by strict biodiversity criteria as outlined in the EU

RED II ((EU) 2018/2001).

• Neste engages in ongoing local activities to protect

biodiversity, e.g. continuous environmental

monitoring in the vicinity of the Porvoo refinery and

Naantali terminal.

• Neste works closely with NGOs and research

partners who have a strong understanding on

biodiversity, e.g. with Fauna & Flora International.

• Neste joined the Science Based Targets Network's

(SBTN) Corporate Engagement Program to

develop and set science-based targets for nature.

Nature positive: aims at halting and reversing nature loss,

positive impacts outweighing the adverse impacts

Partnerships for the goals

• Partnerships are at the core of the SDGs and we see

them as the key to advancing sustainable business.

Recent examples of our partnerships, in addition to

the aforementioned include:

» Neste made the aviation industry’s first ever

CORSIA certified sustainable aviation fuel

delivery to American Airlines.

» Neste collaborated with ATR and Braathens

to enable the first flight in history with 100%

sustainable aviation fuel on a regional commercial

aircraft.

» ISCC and Circularise piloted blockchain

technology with 10 companies including Neste, to

complement mass balance certification.

» Neste to support research on the Baltic Sea and

climate change at the CoastClim research center.

» Neste, Bugaboo, DSM Engineering Materials,

and Fibrant partnered up to enable industry-

first stroller portfolio with plastics made from bio-

based materials.

» Collaboration between Neste, Borealis and MAM

to bring new soother made with renewably-

sourced feedstock to market.

» Neste, Idemitsu Kosan, CHIMEI Corporation and

Mitsubishi Corporation joined forces to create a

renewable plastics supply chain.

» Neste, Covestro and SK geo centric launched

cooperation to create a value chain for renewable

attributed MDI in APAC.

• Read more about our engagement and

commitments as well as the work we do with our

stakeholders on pages 40–46.

Neste Annual Report 2022 | Material sustainability topics

Strategy GovernanceSustainability Review by the Board of Directors Financials

Carbon handprint Helping our customers to reduce

their GHG emissions

Avoided GHG emissions by Neste customers with

Neste's products (compared to fossil diesel) in

MtCO

20 MtCO

e annually by 2030 11.1 MtCO

e (10.9 MtCO

Carbon footprint Leading transformation towards

carbon neutral value chain and

reaching carbon neutral production

Absolute GHG emissions in our own production

(scopes 1 & 2)

50% reduction by 2030 in comparison to

2019 baseline 3.4 MtCO

2.5 MtCO

e (2.3 MtCO

)

28% reduction compared to baseline

Indirect value chain emissions (scope 3): Use phase

emission intensity of sold fuel products (gCO

e/MJ)

50% reduction by 2040 in comparison to

2020 baseline of 58 gCO

e/MJ

57 gCO

e/MJ (55 gCO

e/MJ)

2% reduction compared to baseline

Energy consumption savings achieved during

reporting year (GWh) and cumulative energy

consumption savings during 2017–2025 compared to

500 GWh target (%)

2017–2025 target: 500 GWh Energy consumption savings during reporting year 42.6 GWh

(95.8 GWh) Cumulative savings 2017–2022 compared to target:

49% (41%) achieved

Share of renewable electricity of total purchased

electricity (%)

- scope 2 (market-based) measures (%)

- additional measures

(%)

Aiming for 100% renewable electricity by 2023 93.8% (36.5%) scope 2 (market-based) measures

5.9% additional measures

Protecting

biodiversity, air,

water and soil

Driving a positive impact on

biodiversity and achieve a nature

positive value chain by 2040

Management of biodiversity impacts Creating net positive impacts (NPI) for

biodiversity from own direct new activities

from 2025 onwards, and no net loss (NNL)

of biodiversity from all own direct ongoing

activities by 2035

Net positive and net loss impact methodology developed;

Baseline evaluation in two of Neste largest sites in Porvoo and

Naantali completed

Direct driver for biodiversity change:

Freshwater use and effluents

Introducing own direct water impacts into the

nature positive roadmap

Freshwater use and effluents defined as main pressures on nature

from own direct operations within scope studied

Availability of pollution prevention technology 100% availability of pollution prevention

technology at refineries and terminals

Availability of pollution prevention technology on average 98%

(94%) at refineries and terminals

Number of permit violations Zero permit violations for Oil Products (OP)

and Renewable Products (RP)

Permit violations: 3 (2), of which 2 (2) in OP and 1 (0) in RP

Material topic Objective Key performance indicator Target Performance in 2022 SDG link

Neste Annual Report 2022 | Material sustainability topics

Material sustainability KPIs

SDG10: Reducing inequalities

SDG15: Life on land

SDG7: Clean energy

SDG11: Sustainable cities and communities SDG13: Climate action

SDG9: Industry, innovation and infrastructureSDG8: Decent work and economic growth

SDG12: Responsible consumption and production SDG17: Partnerships for the goals

Annual greenhouse gas (GHG) reduction achieved with Neste’s renewable products compared to 100% crude oil based fuel. Calculation method complies with the EU Renewable Energy Directive II (EU) 2018/2001 and the California LCFS methodology,

which has been applied in the GHG reporting for volumes sold in the US since the beginning of 2022.

Additional measures include available market-based renewable electricity instruments, e.g. i-RECs in APAC/Singapore, which are not currently eligible for scope 2 market-based accounting

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Neste Annual Report 2022 | Material sustainability topics

Safety, health

and wellbeing

Ensuring the health and safety of

employees and contractors in all

Neste locations and supply chain

Total Recordable Incident Frequency (TRIF)

1.5 for 2022, long-term target: Zero accidents TRIF 2.0 (1.4)

Process Safety Event Rate (PSER)

1.5 for 2022, long-term target: Zero accidents PSER 1.4 (1.4)

Safe days (including environmental permit violations) 318 for 2022, long-term target: Continuously

increasing the number of Safe Days

314 (306) Safe Days

Strengthening Neste culture that

supports the physical and mental

wellbeing of our employees

Wellbeing index from employee engagement survey

(Forward Survey) consisting of elements and scores in

engagement, wellbeing, change adaptation

Baseline 2021 results: Engagement 66,

wellbeing 59, change adaptation 60

Target is to maintain results on a good level

Engagement 66 (66), wellbeing 61 (59), change adaptation 62

(60)

Modern slavery Managing modern slavery risks

in Neste operations and supply

chains

Number of Neste employees who have received

training on modern slavery

To increase the number of employees who

have received training on modern slavery,

prioritizing those involved in supply chains and

procurement

Training on forced labor and vulnerable groups carried out for

2,689 (3,381) employees as part of Neste's Code of Conduct

e-learning

Human Rights Due Diligence (HRDD)

carried out for

key business areas/functions

To strengthen Neste’s capacity to identify,

assess, and address human rights risks in our

operations and supply chains

Four major assessments/initiatives undertaken in 2022:

1) Company-wide assessment to review Neste’s salient issues

and their mitigation

2) Human Rights Risk Assessments completed for

Neste indirect procurement

3) Living wage gap assessment completed for Neste’s

own employees in Finland

4) CGF human rights due diligence assessments completed

for production (Singapore) and shipping

Improve HRDD maturity level for Neste own opera-

tions using the Consumer Goods Forum HRC assess-

ment framework and KPIs.

Achieve CGF Leadership Level for 100% of

own operations by 2025

75% of the "launched" maturity level achieved in 2022

Material topic Objective Key performance indicator Target Performance in 2022 SDG link

SDG10: Reducing inequalities

SDG15: Life on land

SDG7: Clean energy

SDG11: Sustainable cities and communities SDG13: Climate action

SDG9: Industry, innovation and infrastructureSDG8: Decent work and economic growth

SDG12: Responsible consumption and production SDG17: Partnerships for the goals

Number of cases per million hours worked. Includes both Neste’s and contractors’ personnel, except for Mahoney operations and Singapore expansion which have been internally reported and followed-up separately in 2022.

Number of cases per million hours worked.

Demeter and Mahoney not included.

HRDD refers to any activities carried out to identify, assess, address, prevent or mitigate forced labor risks, such as developing internal processes, carrying out impact assessments, risk mapping, gap assessments, etc

The Consumer Goods Forum HRDD maturity assessments for own operations have three achievement levels: Launched, Established, and Leadership.

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Neste Annual Report 2022 | Material sustainability topics

Diversity,

equity

and inclusion

Fostering a diverse and an

inclusive workplace that ensures

fair treatment and development

of the skills base and innovation

power needed for the company

growth

Multi-country teams (%) Increasing trend 15% (16%) are multi-country teams

Women in staff (%), female representation in line

manager positions (%) and senior management (%)

To increase women's representation in line

manager positions and senior management

close to the representation of females in staff

(%)

Women in staff 32.2% (31.5%)

30.7% (29.8%) women in line manager positions

27.4% (25.8%) women in senior management

Response rate to employee engagement survey (%) Maintain a high response rate of 80% or

above

80% (81%)

Engaged

and talented

workforce

Ensuring engaged, well led

and competent employees

Strengthening Neste culture

that supports strong sense of

belonging and versatile growth

opportunities

Employee engagement score from employee

engagement survey (Forward Survey)

Maintain a good level of employee

engagement

Employee engagement score

66 (66), which was in line with

global benchmark result. Majority of employees thought favorably

of working at Neste and would recommend Neste as a workplace.

66% (65%) felt happy working at Neste, 80% (78%) understood

how own work contributes to company’s success, 75% (70%)

thought Neste acts in a responsible way, 76% (79%) saw safety

as a priority for Neste.

Leadership score from employee engagement survey

(Forward Survey) indicating the support received from

the line manager

To maintain or exceed previous year’s level Manager support score 74 (75)

Training hours per employee To maintain or exceed previous year’s level 20.8 hours (17.8)

The external turnover for the year To retain employees. Target is to keep the

exits lower than the external benchmark level

Leaving rate of permanent employees 10.2% (13.0%)

Hiring rate of permanent employees 18.3% (12.1%)

Material topic Objective Key performance indicator Target Performance in 2022 SDG link

SDG10: Reducing inequalities

SDG15: Life on land

SDG7: Clean energy

SDG11: Sustainable cities and communities SDG13: Climate action

SDG9: Industry, innovation and infrastructureSDG8: Decent work and economic growth

SDG12: Responsible consumption and production SDG17: Partnerships for the goals

Demeter and Mahoney not included.

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Neste Annual Report 2022 | Material sustainability topics

Stakeholder

engagement,

communication

and transparency

Ensuring the appropriate scope

and quality of information

disclosure related to own

operations and business practices

in the supply chain and ensuring

an ongoing, meaningful process of

interaction and dialogue with our

stakeholders

Monthly supply chain grievance log updates To roll out 12x yearly updated supply chain

grievance logs

12 (12) monthly logs

Regular Supply Chain Transparency via Traceability

Dashboard (Palm & PFAD)

To publish information twice yearly 2 (2) publications

Innovation Fostering innovative solutions for

sustainable development

Research and development expenditure Fostering innovative solutions for sustainable

development

85 EUR million (67 EUR million)

Number of granted patents

Number of pending patent applications

An increasing trend 2,073 granted patents

683 pending patent applications

Partnerships Initiating and fostering partnerships

between Neste and its partners

to address the challenges of and

innovate solutions for sustainable

development

Collaborations with research institutions and

universities

Initiating and fostering partnerships between

Neste and its partners

35 collaboration partnerships

Sustainable

products

and services

Ensuring that sustainability is

integrated into Neste’s product

and service portfolio

Volume of liquefied waste plastic processed (t/a) To process more than 1 Mt of liquefied waste

plastics from 2030 onwards to increase

circularity of plastics and to reduce crude oil

dependence in refining and petrochemical

processes

1,400 (400) tons of liquefied waste plastic

Production of Neste Renewable Diesel and SAF,

1,000 ton

Increasing trend 2,988 (3,043) tons

Share of Clean Revenue from Group revenue, %; and

Share of investments consisting of Clean CAPEX,

Clean R&D and Clean M&A (Clean Investments), %

To maintain the annual share compared to

previous year

Clean Revenue 38.9% (39.3%)

Clean Investments 88.3% (68.5%)

Material topic Objective Key performance indicator Target Performance in 2022 SDG link

SDG10: Reducing inequalities

SDG15: Life on land

SDG7: Clean energy

SDG11: Sustainable cities and communities SDG13: Climate action

SDG9: Industry, innovation and infrastructureSDG8: Decent work and economic growth

SDG12: Responsible consumption and production SDG17: Partnerships for the goals

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Neste Annual Report 2022 | Material sustainability topics

Supply chain

and raw material

sustainability

Ensuring sustainability of Neste

suppliers and business partners

and raw materials' sustainability

Percentage of business partners who have committed

to Neste’s minimum sustainability requirements in the

Supplier Code of Conduct (%)

100% of business partners committed 99%

(99%) of the renewable raw material volumes, 84% (88%)

of the crude oil and fossil raw materials volumes, and 73% of

overall indirect contracted spend (87% of all indirect procurement

supplier contracts commencing in 2022) were covered by Neste

Supplier Code of Conduct or equivalent

The number of renewable raw material supplier’s

sustainability assessments and their outcome

To assess all new renewable raw material

suppliers against sustainability criteria

Total: 325 (223), New approved suppliers: 223 (171), All

approved: 236 (186), Pending: 74 (33), Rejected: 15 (4)

The percentage of new Oil Products suppliers

undergone Sustainability Desktop Review

To assess all new Oil Products suppliers

against sustainability criteria

100% (100%) of the new OP suppliers assessed

A total of sustainability audits conducted To increase the number of sustainability audits

conducted, prioritizing through a risk-based

approach

118 (27) sustainability audits

Share of waste and residues of global renewable raw

material inputs (%)

Growing the sourcing of waste and residue

raw materials globally

10)

95% (92%)

Ethics,

compliance

and corporate

governance

Ensuring good corporate

governance practices in

accordance with the laws and

regulations applicable as well as

to operate in an ethical way in the

society

A total of suspected misconducts reported in person

or via the whistleblowing line to the Investigations

Group

To further encourage employees and external

stakeholders to report observed or suspected

misconduct

A total of 14 (18) suspected misconducts were reported in

person or via the whistleblowing line to the Investigations Group

in the following categories: HR 2 (4) reports, discrimination and

harassment 2 (2), conflict of interest 0 (3), bribery, corruption

and facilitation payment 1 (2) fraud 4 (0), theft, asset misuse

& embezzlement 3 (0), supplier/business partner misconduct/

unethical behavior 1 (0) and 1 (7) reports which fell outside of

these categories in Other

Code of Conduct training rate All Neste employees completed the training 95% have completed the Neste Code of Conduct e-learning.

11)

Corporate governance reporting in the Corporate

Governance Statement

Economic

responsibility

Reporting in the Financial Statements

Material topic Objective Key performance indicator Target Performance in 2022 SDG link

Agri Trading excluded.

Figures include existing suppliers, which undergo a sustainability assessment process every 3-5 years. Supplier data includes only main contractual parties, excluding sub-suppliers.

10)

The share of waste and residue raw materials of Neste’s renewable raw material inputs globally is expected to stay above 90% in the coming years, while in the longer term, the growth in novel vegetable oils’ availability may increase the share of sustainably produced vegetable oils

11)

2021 and 2022 completions included as the training was launched in 2021 to office workers and in 2022 to blue-collars

SDG10: Reducing inequalities

SDG15: Life on land

SDG7: Clean energy

SDG11: Sustainable cities and communities SDG13: Climate action

SDG9: Industry, innovation and infrastructureSDG8: Decent work and economic growth

SDG12: Responsible consumption and production SDG17: Partnerships for the goals

11 15

Strategy GovernanceSustainability Review by the Board of Directors Financials

Our key stakeholders are

• Corporate customers and consumers

• Analysts and shareholders

• Policymakers, authorities and legislators

• Suppliers of goods, raw materials and services

• Non-governmental organizations, industry

associations and cooperation bodies

We aim for continuous, active and open dialogue with our

stakeholders and regularly seek external views on our operations.

Neste Annual Report 2022 | Stakeholder engagement

• Universities, think tanks

and research organizations

• Local communities

• Media

• Our own employees

and management

We follow the business environment actively and engage with relevant stakeholder

groups. We also involve our stakeholders in our materiality assessment process to

seek their views on sustainability topics. Active engagement is essential through-

out our value chain and in the collaboration with suppliers and non-governmental

organizations.

Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

B2B customers

• Engaging through face-to-face and online meetings, newsletters and technical,

marketing and sustainability-related training sessions

• Engaging at leadership level to drive sustainable actions across organizations

• Arranging and participating in webinars and events

• Gathering insight and managing satisfaction through surveys

• Developing joint communications and co-branding

• Arranging refinery site visits

• Accelerating greenhouse gas emissions

reduction with the use of renewable and

circular solutions, vision and solutions for zero

emission future, circular economy, waste plastic

recycling, sustainability vision and climate

commitments, sustainable and high-quality

products and services, supply reliability, safety,

timely distribution, customer relationships and

cooperation, innovation and R&D, local operations

e.g. at Neste refinery sites

• Forming partnerships which reduce customers' carbon footprints

through renewable and circular solutions

• Co-creating new services, building brand value and interacting with our

customers and their stakeholders

• Ongoing dialogue

• Arranging site visits for customers

• Supplying our renewable and circular solutions

Consumers

• Gathering insight through consumer surveys

• Providing fact sheets, press releases and news to our consumers regularly to best

serve them with their needs

• Working together with local distributors to provide information to customers

• Doing advertising campaigns to create awareness

• Responding to questions via customer service or via social media

• Product, service and operations sustainability and

quality, customer relationships and cooperation,

innovation and R&D

• General information about products, pricing, raw

materials and the value the products provide

• Communicating proactively

• Responding promptly to questions and concerns via phone, email,

social media and Neste website

Investors and equity

analysts

• Regular engagement through regulatory financial communications (financial reporting,

stock exchange releases), conference calls, roadshows, individual or group meetings,

and annual Capital Markets Day

• Climate change mitigation as business opportunity

and challenge, sustainability of raw materials

and supply chain, availability of raw materials for

renewables growth strategy

• Communicating about climate commitments, sustainability vision,

sourcing and raw materials

• Transparent and regular reporting and disclosure

• Responding to questionnaires by rating companies and investors

Governmental

organizations

• Sharing views on policies, laws and regulations with officials and legislators through

public consultations, meetings, as well as part of a larger stakeholder dialogue with

policymakers

• Arranging site visits

• Climate and emission reduction targets,

renewable fuels in transport, renewable and

recycled materials, plastics recycling, circular

economy, sustainable finance

• Replying to public consultations and providing insights and analysis to

government officials and politicians

• Participating in the work of industry associations

• Arranging site visits

Key stakeholder How we engage Key topics of interest How we respond

Neste Annual Report 2022 | Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

Suppliers and

contractors

• Counterparty compliance screening focused on economic sanctions and similar

compliance issues alongside an extensive sustainability assessment

• Collecting information on our climate change impact annually

• Conducting both external and internal audits. Helping partners to perform corrective

actions in cases of non-compliances

• Arranging annual supplier sustainability workshops, trainings and seminars to share

information and support capacity building of the suppliers

• Collaborating closely with our contractors and suppliers to ensure high level of safety,

efficiency and quality

• Regular meetings with our suppliers to, besides the regular commercial aspects,

enhance collaboration, find common development avenues and monitor performance

• Sufficient volumes of raw materials, as well as

other products and services, for Neste needs

• Sustainability of supply chains and suppliers,

commitment to sustainability including areas of

governance (e.g. ethical business practices), labor

and human rights (e.g. forced labor and freedom

of association), health & safety, environment and

biodiversity protection

• Potential avenues for enhanced collaboration and

alignment on Neste and supplier performance on

multiple dimensions

• Contracts only with and sourcing only from those suppliers and

contractors who meet our requirements (e.g. Neste Supplier Code of

Conduct)

• Supplier Code of Conduct (SCoC) trainings and workshops for suppliers

and contractors

• Practical SCoC information guide for suppliers and other business

partners

• Providing health, safety and work wellbeing related information and

instructions for contractors, suppliers and partners

• Continuous search for new renewable raw material suppliers

• Sustainability evaluation on our raw material suppliers

• Collaboration to enhance sustainability performance

• Monitoring sustainability performance of our suppliers and contractors

through audits. The number of sustainability audits increased in 2022.

• Share information with contractors at Neste sites through regular

meetings, info sessions, trainings and newsletters

NGOs

• Continuous dialogue with NGOs, e.g. on biodversity and human rights

• Collaboration in joint projects (e.g. projects aiming for transformative sustainability

improvements regionally and to support the smallholders in improving their

sustainability performance and certification)

• Ongoing dialogue e.g. transparent reporting on sustainability performance, including

the status and progress of sustainability-related grievances linked to Neste's raw

material sourcing

• Ongoing dialogue with the Neste Advisory Council on Sustainability and New Markets

• Climate change mitigation, sustainability, human

rights, biodiversity, sustainable sourcing (e.g. palm

oil & PFAD), circularity and recycling aspects

• Sustainability of supply chains and suppliers, commitment to

sustainability, protecting biodiversity (e.g. preventing deforestation), and

respecting human rights (e.g. forced labor and freedom of association)

Industry associations

• Engaging in dialogue and working with and as members of industry associations

• Providing insight, analysis and our views on different topics

• Taking part in events and seminars

• Climate change mitigation, transport emission

reductions, circular economy, plastics recycling,

industry competitiveness, sustainability

• Memberships in relevant organizations, e.g. Renewable Carbon Initiative

(RCI), FuelsEurope, European Biodiesel Board, and Advanced Biofuels

Association (US)

• The complete list of Neste's memberships is available on neste.com

Cooperation bodies

• Engaging in dialogue with cooperation bodies and supporting initiatives

• Participating in working groups for developing industry related matters within initiatives

• Ensuring the sustainability of our supply chain with certifications

• Sustainability, renewable products, plastics

recycling, climate change mitigation, resource

efficiency, circular economy, biodiversity, human

rights, innovation, climate commitments, emission

reduction

• Cooperating with, e.g. Task Force on Climate-Related Financial

Disclosures (TCFD), Nordic Business Network for Human Rights, UN

Global Compact, World Business Council for Sustainable Development

(WBCSD), International Sustainability & Carbon Certification (ISCC)

• The complete list of Neste's commitments and engagements is

available on neste.com

Key stakeholder How we engage Key topics of interest How we respond

Neste Annual Report 2022 | Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

Universities and

research organizations

• Neste works closely with universities and research centers

• Engaging in dialogue with local and global universities, different research organizations

as well as researchers all over the world

• Innovation and R&D, renewable and circular

solutions, green hydrogen, e-fuels, industrial

chemistry, catalyses, artificial intelligence, among

others

• Strategic cooperation with, e.g. Aalto University, Åbo Akademi and

VTT (The Technical Research Centre Finland) and international partners

mainly in Europe and in the US

• To further strengthen its global innovation and R&D capabilities, Neste

established an Innovation center in Singapore (operational in 2023)

• Neste has established a competence ecosystem in renewable and

circular solutions by building a portfolio of R&D&I projects in cooperation

with universities, research institutes and companies in Finland

Local communities

• Engaging in dialogue and collaboration with local communities and production site

neighbors via newsletters, meetings, regional website and social media

• Arranging site tours for various interest groups

• Engaging and collaborating with local authorities and city representatives

• Volunteer initiatives from employees at local level (e.g. Food Bank, beach cleaning)

• Employment and cooperation opportunities,

safety and environmental concerns, site

investments and development as well as impacts

on the community and neighbors

• Acting sustainably, since our environmental and safety performance

affects the local communities

• Maintaining an open dialogue with local communities

• Engaging with specific local authorities on local matters of concern

• Employees volunteering for local charitable events

• At the Porvoo refinery, Neste conducts a stakeholder study bi-annually

to assess the local community and authority perspectives on the refinery

environmental and safety image and communications. The next study

will be carried out in 2023

Media

• Maintaining and developing relations with media globally, regionally and locally

• Regular distribution and proactive sharing of releases, news and topics to the media

• Actively responding to media inquiries

• Arranging interviews and media events

• Proactively sharing Neste news and topics to the media

• Announcements, interim results and company

news, mergers and acquisitions activities, different

projects, customer stories and cooperations,

societal and economic topics, innovation,

research and development, sustainability topics,

fuel taxing and pricing, oil price fluctuations,

renewable and circular products and solutions

(renewable fuels, renewable polymers and

chemicals)

• Press releases and other materials as well as company information

materials

• Following and responding to media inquiries through media service by

Neste's communications

• Connecting the media with the correct spokespersons at Neste

• Actively working together with media to best serve them

Employees

• Promoting cooperation by emphasizing the importance of social interaction and

sharing thoughts and ideas

• Ensuring regular discussions around development, values and wellbeing through

Forward Discussion process

• Employee engagement through several measures, e.g employee feedback through

regular pulse surveys, team and individual discussions, town hall meetings and team

days

• Systematic support for health, safety and wellbeing of Neste personnel

• Active communication, dialogue and cooperation with internal stakeholders, including

employees, line managers and employee representatives

• Neste strategy and values, sustainability, climate

commitments, health, safety and wellbeing,

learning & development, business ethics & code

of conduct, diversity, equity and inclusion

• Proactive and systematic communication and training regarding topics

of interest, responsive communication and dialogue on topics raised by

employees

• Individual development discussions, development tools and programs

• Flexible ways of working and tools to support, e.g. Smart Work

• Fit for purpose leadership development, e.g. tailored leadership program

WeLead

• Team discussions on different topics, e.g. safety and employee survey

results

• Support for leading ourselves and others through challenging times,

ie. support material for people leaders, coaching

Key stakeholder How we engage Key topics of interest How we respond

We believe in collaboration and want to be actively involved in developing a more sustainable future. We participate in the development of our industry, relevant associations, NGOs and aim to actively engage in open dialogue with all our stakeholders.

Neste Annual Report 2022 | Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

Global increase in efforts

to combat climate change

Neste’s commitment to limiting global warming by accel-

erating a shift to a circular economy means we engage

actively with policymakers, regulators and the wider

stakeholder community to drive and implement change.

Main policy and legislative

developments in Europe

The European Commission’s Fit for 55 package aims

to reduce greenhouse gas emissions by 55% by 2030

(compared to 1990 levels). Neste continued to work with

all three European institutions throughout 2022 as the

European Parliament and Council debated the Commis-

sion’s proposals. The legislative package is part of the

European Green Deal, which aims to make the Euro-

pean Union climate neutral by 2050.

Neste supported the process by meeting with policy-

makers to discuss technical aspects of the regulations,

as well as how to support the rollout of climate technol-

ogies through legislation. In particular, Neste called for

higher ambition in the Fit for 55 package with regards to

decarbonizing the transport sector.

In September 2022, trilogue negotiations started for

the ReFuelEU Aviation regulation proposal, which aims

to increase production and use of sustainable aviation

fuels (SAF) to lower greenhouse gas emissions in the

aviation sector. Currently, the proposal puts obligations

on fuel suppliers to distribute SAF at EU airports, and

states that all flights departing from EU airports must

carry a minimum amount of SAF – an amount that will

increase periodically until 2050. As the world’s leading

producer of SAF Neste is committed to achieving an

EU-wide obligation.

The revision of the Renewable Energy Directive (so

called RED III) advanced to trilogue negotiations in Octo-

ber 2022. Under RED III, the EU would be obliged to

ensure that at least 40% of its energy consumption

comes from renewable energy sources by 2030. During

the legislative process both the European Parliament and

the Council have recognized the need to increase the

ambition for the transport sector. The negotiations have

also been characterized by the demand for stricter sus-

tainability criteria in the production of renewable energy.

Prompted by the war in Ukraine, in May 2022, the

European Commission published its ‘REPowerEU’ plan

outlining the EU’s path to energy independence from

Russian fossil fuels by 2027. The plan includes a 66% cut

in Russian gas consumption by the end of 2022. Con-

sequently the EU is accelerating its transition to renew-

able energy sources. As part of the REPowerEU plan the

Commission proposes to further raise the EU’s renew-

able energy target to 45% share by 2030. The combi-

nation of sustainability priorities and EU energy security

and competitiveness agendas represents a significant

moment for the shaping of EU policy.

Neste recognizes and supports the need to diversify

renewable energy sources in order to substitute conven-

tional fossil fuel imports, thereby establishing a future-

proof energy system.

Although in the long term, the ambition to reduce the

transport sector’s emissions is increasing at EU level,

concerns over high fuel prices led some Member States

to review their renewable fuels obligation in 2022. The

Finnish government decided to decrease the national

distribution obligation of renewable transport fuels by

7.5% points in 2022 and 2023. The emission reductions

lost in 2022–2023 will be compensated for by raising the

distribution obligation between 2024–2030, with a tar-

get of 34% by 2030.

Other EU Member States raised their ambitions. Italy

has included biofuels as part of its decarbonization strat-

egy and been an active player in the Fit for 55 negotia-

tions. Italy has promoted ambitious domestic policies,

such as the forthcoming “neat” biofuel submandate,

which is likely to foster a robust demand for biofuels

across the market, contributing to a higher GHG emis-

sion reduction in road transportation.

There is an unprecedented and politically ambitious

push to produce legislation, particularly as 2023 will

be the final year of the current European Commission’s

mandate.

Multiple initiatives under the Green Deal that pro-

vide the legal framework for Renewable Polymers and

Chemicals have been proposed, with different timelines

for implementation:

• Mandatory requirements on recycled plastic content

for key products such as packaging (2022). This will

be followed by construction materials and vehicles

(2023).

• A policy framework for bio-based plastics and

biodegradable or compostable plastics (2022).

• A Regulation on substantiating environmental claims

using the product/organization environmental

footprint methods (2023).

• A Regulation on ecodesign for sustainable products,

which will outline EU rules for regulating a number

of goods and products in the coming years,

including rules for recycled content, sustainability

requirements, traceability and transparency (2023 for

finalization and entry into force).

Other EU policies and legislative proposals include, but

are not limited to, the Corporate Sustainability Due Dili-

gence Directive, the Deforestation Regulation, and dele-

gated acts under the Taxonomy Regulation.

Neste Annual Report 2022 | Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

Main policy and legislative

developments in North America

In the United States, climate initiatives were mostly

implemented through the federal Inflation Reduction

Act. This included an extension of the current Blend-

ers Tax Credit for biofuels through 2024 and created a

new Sustainable Aviation Fuel credit, also through 2024.

Neste liaised closely with policymakers on the creation

of this credit, which marks the first time the significance

of SAF is recognized in federal climate policy. A Clean

Fuels Production Credit was created for both road and

aviation fuels that will be active from 2025. However it

links the biofuel value to CI score and requires domestic

US production. This narrowed eligibility is controversial

and may be revisited by the new congress.

The Biden Administration launched the ‘SAF Grand

Challenge’ and released its plans to promote the use of

SAF to reduce emissions in aviation. Its three primary

goals include achieving a minimum 50% reduction in the

life cycle GHG emissions compared to conventional fuel;

producing three billion gallons of SAF per year by 2030;

and supplying sufficient SAF to meet 100% of aviation

fuel demand by 2050.

The US Environmental Protection Agency finalized the

renewable volume obligations (RVOs) for years 2020,

2021, and 2022, as well as denied 69 pending Small

Refinery Exemptions (SREs). A draft of the Renewable

Fuel Standard program “set rule” is expected in Novem-

ber 2022, which will establish future RVOs based on six

statutory factors.

The states of California and Oregon are in the pro-

cess of revising their Low Carbon Fuel Standard pro-

grams. The state of Washington is scheduled to finalize

the rules to complement its Clean Fuel Standard in time

for a January 2023 start date. California has declared

a state policy of achieving net zero emissions no later

than 2045 (AB 4279) and to achieve and maintain net

negative GHG emissions thereafter. Its target is state-

wide anthropogenic GHG emissions reduced to at least

85% below the 1990 levels by 2045. While the California

Governor vetoed a bill that would set goals for intrastate

SAF use, the proposal may be considered administra-

tively by California Air Resources Board.

Canada adopted a federal Clean Fuel Standard (CFS)

after several years of deliberation. Its targets include

reducing the carbon intensity of Canada’s fuel pool by

15% by 2030 from 2016 levels. Renewable fuels used in

aviation (SAF) are allowed to contribute to the CFS via an

opt-in provision. Federal credits can be earned, in addi-

tion to any credits earned from provincial programs. The

government also released a federal Emissions Reduc-

tion Plan to reduce overall greenhouse gas emissions

by 40–45% by 2030. Progress reports are required in

2023, 2025 and 2027, with additional targets and plans

for 2035 to 2050. British Columbia is revising its Low

Carbon Fuels Act and is now expected to finalize it in the

first half of 2023.

This year Canada announced a nation-wide ban on

select single use plastic items applicable from Decem-

ber 2022. It will be enforced incrementally up to 2025.

Main policy and legislative

developments in Asia-Pacific

Having announced a net zero emissions goal by 2050,

New Zealand continues to take action to decarbonize

road, marine and aviation transport. The government

proposed the introduction of a Sustainable Biofuels Obli-

gation for road transport and separately for marine. From

1 April 2024 onwards, fuel wholesalers are expected to

reach a starting emissions reduction target of 2.4% and

3.5% in 2025.

Australia’s first Bioenergy Roadmap was published in

November 2021. Australian Renewable Energy Agency’s

(ARENA) modeling shows that biofuels could account for

about 10% of the total diesel market by 2050. The gov-

ernment’s Climate Change Bill, which passed in August

2022, will enshrine into law an emissions reduction tar-

get of 43% from 2005 levels by 2030 and net zero emis-

sions by 2050.

In April 2021, Japan announced plans to raise its GHG

emission reduction target for 2030 from 26% to 46%

(compared to 2013 levels) to meet the overall target of

carbon neutrality by 2050. The Ministry of Land Infrastruc-

ture Transport and Tourism (MLIT) has also announced a

10% target for SAF blending by 2030 as well as a draft

Basic Policy for Promoting Decarbonization of Aviation

which aims for a 16% reduction of CO

emissions for

domestic flights by 2030 and carbon neutrality by 2050.

A key policy development will be the planned revision of

the 3rd Ordinance on Biofuels (2023–2027).

Singapore, a forerunner in policy and regulatory devel-

opment in the Asian region, has raised its national cli-

mate target to achieve net zero emissions by 2050, and

will also reduce emissions to around 60 million tonnes of

carbon dioxide equivalent (MtCO

e) from 65 MtCO

e as

part of its revised 2030 Nationally Determined Contribu-

tion. The reduction of aviation and maritime emissions

from travel and trade are part of its Green Plan 2030. An

International Advisory Panel (IAP), which Neste was part

of, has produced a report with a series of recommen-

dations including the use of SAF which will feed into a

government blueprint to make Singapore a Sustainable

Air Hub.

South Korea plans to expand domestic biofuel use

through the adoption of a marine biofuel mandate by

2025, a SAF mandate by 2026 and by raising its 2030

biofuels blending mandate in its diesel pool to increase

its biofuels blending mandate to 8% (5% FAME and 3%

HVO) by 2030 as part of its Eco-Friendly Biofuel Devel-

opment Measures. The government has pledged car-

bon neutrality by 2050 and has some of the strongest

restrictions on plastics in the Asian region, including a

ban on single-use plastics and fines for not meeting gov-

ernment mandated plastic use targets.

Neste Annual Report 2022 | Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

Research cooperation

In 2022, we continued to strengthen our cooperation

with companies, startups, universities and research

institutions:

• Neste’s Veturi ecosystem brings together Finnish

companies, startups, universities and research

institutes to jointly build the future capabilities

needed to establish new value chains in renewable

and circular solutions.

• Strategic cooperation with VTT, which fosters the

joint use and development of research infrastructures

in Finland.

• Strategic cooperation with Aalto University and Åbo

Akademi University with the aim of improving the

competitiveness of parties while increasing Finnish

chemical industry expertise, including in such fields

as chemical and process engineering, bioeconomy,

digitalization and circular economy.

• Neste, together with UPM and Borealis Polymers, is

supporting a chemistry professorship specializing in

circular economy at the University of Helsinki.

• A five-year sponsorship for Helsinki University’s

Centre for Coastal Ecosystem and Climate Change

Research (CoastClim) was established, to further

understand how the condition of the seas and

climate change are linked.

• The cooperation also continued, for example, in our

projects related to green hydrogen in Rotterdarm and

Porvoo.

In addition, we actively engage in dialogue with sev-

eral universities and research institutes on collaboration

opportunities.

Read more about our research cooperation.

The Advisory Council on Sustainability and New Markets

The Advisory Council on Sustainability and New Markets, established in 2019, is an independent external council consist-

ing of a group of carefully selected experts able to provide strategic insight, guidance and assistance on our sustainability

work. They are committed to helping accelerate Neste’s transformation and broadening its sustainability leadership activ-

ities. The council convenes three times a year and is chaired by John Elkington, one of the pioneers of the global sustain-

ability movement.

From left to right:

Geoffrey Weston, Senior Partner and Global Head of Bain & Company’s Global Airlines, Logistics and Transportation sector, Bain

Bernice Lee, Executive Director of the Hoffman Centre for Sustainable Resource Economy, Chatham House

James Cameron, Senior Adviser to Pollination Group and Adviser to COP26 Presidency

Vanessa Perez Cirera, Global Director for Economics at World Resources Institute

John Elkington, Founder & Chief Pollinator, Volans

Louise Kjellerup Roper, CEO, Volans

Marcius Extavour, EVP of Climate & Energy & Chief Scientist, XPRIZE

External recognitions in 2022

• Dow Jones Sustainability Indices

• CDP Climate Change and Forests

Assessment Leadership level, A–

• Corporate Knights Global 100: among the

100 most sustainable companies in the world

for the 17th consecutive time

• MSCI ESG Rating Index, AAA

• Ecovadis Platinum rating

• S&P Global Sustainability Yearbook

• The European Chamber of Commerce in

Singapore Travel & Transport category winner

• The best sustainability reporting in 2021

in two categories: Human rights and

Stakeholders’ Favorite by the Finnish

Association of Authorized Public Accountants

Sustainability Reporting competition

• German Sustainability Award finalist

Neste Annual Report 2022 | Stakeholder engagement

Strategy GovernanceSustainability Review by the Board of Directors Financials

Value creation

Input

Indirect upstream

Direct upstream

Indirect downstream

Outcome

Impact

Output

Direct downstream

• Number of suppliers in

» Renewable Products 557

» Oil Products 85

» Indirect procurement 6,816

• Operations in 15 countries

• Production in 4 countries

• Total equity 8,327 MEUR

• R&D expenditure 85 MEUR

• Interest-bearing net debt 1,344 MEUR

• Material and services 21,648 MEUR

• Other expenses 522 MEUR

• Renewable raw material inputs 3.6 Mt

• Sourced crude oil and fossil feedstock

12.7 Mt

• Indirect procurement spend

4,177 MEUR

• Cash-out investments 1,757 MEUR

• Market cap 33,063 MEUR (at the end of 2022)

• Comparable EBITDA 3,537 MEUR

• Comparable ROACE 30.1%

• Dividends 1,167 MEUR from 2022

• Revenue 25,707 MEUR

• Share of Clean Revenue 38.9%

• Share of Clean Investments 88.3%

• Economic value retained 1,319 MEUR

• Neste MY Renewable Diesel sales 0.8 Mt

• Sales from in-house production, Oil Products 11.3 Mt

• 945 service stations in 4 countries

• Oil Products and Renewable Products in the wholesale

market sold in 43 countries to approx. 237 customers

• 2,073 granted patents and 683 pending patent applications

• Increase in the value of the shares

and dividends

• New business opportunities

• Renewables help customers to reduce

GHG emissions, reduce their reliance on

fossil resources, and support UN SDGs

• Helping end users to avoid infrastructure

and other investments with drop-in

solutions

• M&S B2B Customer satisfaction: Net

Promoter Score (NPS) 51%

• Taxes and tax-like fees paid and

remitted by Neste EUR 4.6 billion

• Creating new jobs and supporting the existing

ones in the company’s value chains

• Redirecting consumer expenditure towards

sustainable solutions

• Supporting the development of customers’

brand value and brand awareness

Economic/Governance

• 100% of our palm oil

use is certified

and traceable to plantations

• 100% of our PFAD

supply chain is

mapped for palm oil mills and 86%

to plantations

• 99%

10)

of the renewable raw material

volumes, 84% of the crude oil and

fossil raw materials volumes and 73%

of overall indirect contracted spend in

2022 were covered by Neste Supplier

Code of Conduct or equivalent.

• Scope 2

and 3 emissions from

upstream value chain 6.3 Mt CO

• Use of waste and residues of

global renewable raw material

inputs 3.4 Mt, 95% of the total

renewable feed

11)

• Water intake 8,604,000 m

• Energy consumption 10.9

TWh of which 17.8 %

renewable energy.

• Energy saving measures 42.6 GWh

• Waste generated 294,000 t of which 13%

recycled

• Wastewater 7,899,000 m

• Scope 1, direct CO

emissions 2.1 Mt CO

• Scope 3 emissions from downstream value

chain 35.7 Mt CO

• GHG emission reduction achieved with

Neste’s renewable products 11.1 Mt

12)

• Neste MY Renewable Diesel enables on

average 90% lower GHG emissions over

the fuel’s life cycle compared to fossil

diesel

12)

• Help fight the plastic waste challenge

through developing chemical recycling to

increase plastics recycling and circularity

of materials

• Mitigating climate change

• Replacing fossil raw materials use with more

sustainable alternatives

• Improving air quality

• Preventing deforestation

• Contributing to circular economy

• Influencing operating environment and

regulation

View Neste’s tax footprint report on our website

Read more about Neste's value creation on our website

Environment

• 99% of Neste’s

renewable raw material

suppliers screened

using social criteria

• Highly skilled employees

» Number of employees 5,244

» Hiring rate of permanent

employees 18.3%

» Leaving rate of permanent

employees 10.2%

» Recorded average training

hours per FTE 20.8

• Wages and salaries 449 MEUR

• Other personnel expenses 95 MEUR including

training costs 5 MEUR

• 67.8% men and 32.2% women

• 3/9 members of the Board of Directors and

3/12 members of the Executive Committee

are women

• Employee safety TRIF 0.8

• Safe days 314

• Contractor TRIF 3.7

• Charity work and sponsorship 1.9 MEUR

• Number of Neste employees, who

participated in volunteer work 356

• Supporting social development and the services

societies provide in countries of operation

• Enhancing competitiveness of employees

in the labor market

• Wellbeing and safety of employees and

suppliers

• Reducing transportation-related emissions

in cities and communities

• Securing human and labor rights

• Improving gender equality

Social

Includes natural gas and industrial gas suppliers.

See Principles for calculating the key indicators.

Customers supplied with Base Oils in 2022 before the effective sale of Base Oil business are excluded

Annual average number of employees.

Full-time equivalent (FTE).

Total Recordable Injury Frequency

A day without a TRI accident, process safety events, fire or ignition, breach of environmental

permit, or traffic accident.

Contains the use of conventional palm oil that we have processed into renewable products and sold to market.

Palm fatty acid distillate

10)

Agri Trading excluded

11)

The volumes

are presented in millions of tons. The share of the volumes are calculated from exact figures and consequently the rounded figures presented may deviate from the share of volumes disclosed.

12)

Compared

to crude oil-based fuel. Calculation principles can be found on page 115.

Neste Annual Report 2022 | Value creation

Neste’s

business model

We provide value for society

by developing renewable, low-

emission and circular solutions

for the aviation, chemical

and plastics industries,

transport sector and cities.

We do this by taking the lead to

transform towards a carbon

neutral value chain by 2040, and

setting ourselves aspirational

targets for biodiversity, human

rights, supply chain and raw

materials.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability governance

The Executive Committee approves our sustainability

priorities. Responsibility for individual corporate sus-

tainability targets is shared between the members of

the Executive Committee. The Vice President, Sustain-

ability, is responsible for ensuring that relevant man-

agement processes and impact assessments relating

to material corporate sustainability topics are being

developed and implemented as part of our strategy.

The relevant business units and functions will reserve

the needed resources within their scope to imple-

ment the actions commonly agreed in the Executive

Committee.

Neste’s sustainability work described in this

report is managed by the Sustainability,

Human Resources, and Health, Safety and

Environment (HSSEQ) organizations.

Sustainability

governance

Strategy GovernanceSustainability Review by the Board of Directors Financials

The Sustainability Leadership Team, chaired by the VP,

Sustainability, has members from different functions, e.g.

Climate Change and Circular Economy, Supply Chain

Sustainability, Human Rights, Sustainability Reporting

and Engagement, HSSEQ, Innovation and Communi-

cations. It prepares the sustainability priorities and pro-

posals to be taken to the Executive Committee by EVP,

Sustainability and Corporate Affairs, together with the

relevant sustainability experts.

Sustainability vision is part of the Neste strategy and

goes through the same Neste Executive Committee and

Board review as any other strategic priority. The Board

approves the long-term ambition and targets for the sus-

tainability vision, based on the proposal from the Execu-

tive Committee and the Sustainability function, and reg-

ularly reviews the sustainability performance.

Significant factors concerning the composition of the

Board of Directors include that the members should

possess a variety of competences that complement

the other members of the Board: education and expe-

rience in different professional and industrial fields, and

in business operations and management, all of which

include competencies on sustainability-related issues.

Sustainability risk management

The most significant sustainability risks are identified

and assessed as a part of the annual risk management

cycle facilitated by Neste’s risk management team. The

risk management team monitors the level of risks and

ensures that the risks are identified and mitigated appro-

priately by Neste’s business units, functions and coun-

try units. Our risk-based approach and our sustainability

risks are further described in our Non-Financial Infor-

mation (NFI) Statement.

Our sustainability impacts are reviewed and moni-

tored frequently at many levels of the company in addi-

tion to the Board of Directors. Sustainability related

work, including climate change-related work, is steered

by the company’s Executive Vice President, Sustainabil-

ity and Corporate Affairs, who is a member of the Exec-

utive Committee and reports to the President and CEO.

Neste Annual Report 2022 | Sustainability governance

Our sustainability

impacts are reviewed

and monitored

frequently at

many levels.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Compliance

Neste’s Code of Conduct sets the framework for our

company’s global business operations and establishes

the ethical practices to guide every Neste employee in

their day-to-day business tasks. We also require our

suppliers and other business partners to comply with

applicable laws and expect them to follow equivalent

ethical business standards as stated in the Code of

Conduct, as further described in our Supplier Code of

Conduct.

Raising awareness of and training in the Code of

Conduct and its topics are central elements of Neste

compliance program. We regularly internally com-

municate on compliance-related topics and train our

employees both through e-learning courses and face-

to-face trainings.

In connection with the Code of Conduct renewal in

2021, we also renewed the Code of Conduct e-learn-

ing. The e-learning, mandatory for all Neste employ-

ees, was first issued to all office workers in 2021 and

to the rest of the organisation in 2022. It achieved a

completion rate of 95%.

We constantly develop our compliance program

with special efforts in the defined key focus areas:

competition law compliance, anti-corruption, trade

We are committed to high ethical standards and conduct our

business and operate in compliance with applicable laws and

regulations. That means acting transparently, responsibly,

with integrity and in accordance with our values.

Compliance

sanctions, privacy and anti-money laundering. In

2022, we further strengthened our trade sanctions

compliance program and launched a new Basics of

Trade Sanctions Compliance e-learning to support

our training in the topic. The e-learning was issued to

targeted employees in the end of 2022. As part of the

regular compliance training efforts, we also re-issued

the Anti-Corruption e-learning to all office workers

in 2022.

Neste’s Compliance Function is regularly issuing

compliance newsletters on various compliance top-

ics. In 2022, topics included, among others, the Code

of Conduct, anti-corruption, gifts & hospitality, privacy

and trade sanctions. Neste also has an Anti-Corrup-

tion Principle that provides more detailed guidance

on responsible business practices and the prevention

of corruption. More information on Neste’s grievance

process and the related Misconduct Investigation

Standard is available in the Corporate Governance

Statement and in the Report of the Board of Directors.

Neste’s compliance program and function is

described in more detail as part of Neste’s Corporate

Governance Statement and in the Report of the Board

of Directors.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Our people

We encourage everyone to be the driver of their own

personal growth. As an employer, we want to offer a

meaningful place to work for highly competent talents

who share our values and are eager to join our journey

towards a carbon neutral world.

We lead the way to accelerate both business and

cultural transformation while driving high safety excel-

lence. We want our work at Neste to feel good and do

good. At Neste, we all have opportunity to contribute

to our success and take part in driving Neste forward.

At Neste, it is the people who make

the strategy happen. To carry out our

strategy and business growth, our

values-led culture guides our work and

the decisions and choices we make.

Our people

Strategy GovernanceSustainability Review by the Board of Directors Financials

Transformation and growth

offer new possibilities

In 2022, the average number of Neste personnel was

5,244 and about 1,400 employees were hired globally

by the end of 2022. About 30% of the recruits were tem-

porary. We set a lot of focus on onboarding and induc-

tion of the new joiners and people in new roles. Accord-

ing to the new joiner survey, 90% of new employees

feel happy working at Neste. Company’s transformation

and growth offered our people many career opportuni-

ties and personal growth possibilities in new projects.

Approximately 140 employees were working as expats

in 8 different countries.

To support the company's transformation journey, we

arranged a leadership summit and multiple other strat-

egy events during the autumn 2022 to ensure clarity

towards our strategic goals and to strengthen engage-

ment and the feeling of belonging of our people. We lead

the way with our strategy, values-led culture and talented

employees.

We continue investing in sustainable refining and cir-

cular solutions. The planned transition of our Porvoo

refinery into a renewable and circular site in the mid-

2030s will provide new opportunities and learning possi-

bilities to Oil Products personnel and also for many other

Neste employees. One of the focus areas of the trans-

formation is to ensure that people are capable of per-

forming and adapting to changes.

In 2022, Neste Engineering Solutions (NES) in Fin-

land was merged to Neste Corporation. The merger

supports executing Neste’s growth strategy to become

a global leader in renewable and circular solutions, in

which Engineering Solutions plays a key role. The entire

NES personnel in Finland, approximately 800 profes-

sionals, transferred to Neste Corporation.

Having a strong focus on commercial and innovation

capabilities is one of our keys to success at Neste. To

support our innovation capabilities in the Asia-Pacific

region, the new innovation center in Singapore is start-

ing operations in 2023.

During 2022, we reorganized our HR operating model.

A new talent acquisition hub was created to provide

centralized recruitment consultancy. After a pilot phase

it was expanded to serve recruitments in Finland, and

later on there will be a scale up to offer global support.

In addition, we launched a new people promise ‘We are

the creators of change’ to support our employer brand-

ing work.

405 summer trainees were

equipped with skills for the future

We recognize the importance of developing and

supporting young people’s growth for the skills

they will need for the future. In 2022, we recruited

405 summer trainees of which approximately 47%

continued with us. At Neste, summer trainees are

paid employees, and we invest in their training and

development to promote future employability under

the transition to a carbon neutral society. We offer

the summer trainees a program during the summer

so they can network, get to know Neste as a com-

pany and learn about our business units, regard-

less of where in our organization they work during

the summer. 81% of our summer trainees would

recommend Neste as a great place to work.

Read more about summer traineeships.

Neste Annual Report 2022 | Our people

According to

new joiner survey

90%

of new employees

feel happy working

at Neste

1,400

employees

were hired globally

by the end of

2022.

Altogether about

Strategy GovernanceSustainability Review by the Board of Directors Financials

Developing capabilities to deliver

excellent customer experience

During 2022, we broadened our approach in develop-

ing commercial capabilities in the Renewables busi-

ness units. The joint capability development has two

approaches: extending the existing capabilities devel-

oped by Renewable Road Transportation to Renewable

Aviation and Renewable Polymers and Chemicals, and

building completely new capabilities for all three custom-

er-centric business units.

The prioritized development capabilities are strongly

related to Neste’s ambition and strategy to be more cus-

tomer-centric in the future. During 2022, in close coop-

eration with business leaders, we have created a com-

petence framework for our commercial organization,

defined competence expectations for Renewables’ com-

mercial roles, piloted and implemented individual-level

development planning for the strategic and role-based

commercial competences, and are currently integrat-

ing the competencies into talent acquisition, recruitment

and assessment and designing learning solutions for tal-

ent development.

Driving a values-led culture

and developing leadership

Leadership is one of the most important elements to

drive company culture. Our leadership model is built

around our values – it describes how we want to lead

and how we should behave to be able to deliver upon

our strategy and to ensure work at Neste does good

and feels good. We believe that supporting our employ-

ees’ individual development goals, developing our talent

to meet business targets, and preparing our workforce

for the growing and changing demands of future work

makes working at Neste meaningful and inspiring. Line

managers and employees have regular Forward discus-

sions where development and career plans are annually

updated.

We offer company-wide development programs and

tools to support the needed strategic capabilities in the

company. In addition, there are several development ini-

tiatives designed in the business units and functions.

During 2022, our tailored leadership development pro-

grams gained a lot of interest: more than 750 employees

participated in company-wide development programs

and the average feedback from the programs was 4.3

(on a scale of 1–5). We offer the Neste leadership pro-

gram We Lead both for line managers as well as for our

experts. In 2022 we designed and launched a new proj-

ect leadership program and offered development pro-

grams aimed especially for young talents to further build

their strategic thinking and leadership skills, such as the

Neste Reverse Mentoring Program and the Mission Pos-

sible program.

We engage with our employees in various ways,

including a broader annual employee survey comple-

mented with shorter pulses and other targeted employee

surveys. The survey results are regularly discussed and

measures agreed within teams at each level of the orga-

nization. Other forms of engagement include team and

individual discussions, surveys gathering onboarding

and offboarding experiences, internal info sessions, and

town hall meetings. Topics include for example the Neste

strategy and values, sustainability and climate commit-

ments, health, safety and wellbeing.

Wellbeing is a key to success

Wellbeing at work is a critical factor for us to succeed. At

Neste, health, safety and wellbeing at work are interre-

lated. Neste’s occupational healthcare aims at creating

a healthy and safe working environment and a well-func-

tioning work community. Occupational healthcare aims

to promote employees’ health, maintain work ability and

functional capacity as well as prevent risk of occupa-

tional illnesses. In 2022, Neste’s occupational healthcare

organized, for instance, expert webinars for employees

about mental wellbeing, ergonomics, nutrition, sleep

and recovery skill.

To align the quality of our health services, we follow the

Neste Occupational Health Principle in the whole orga-

nization, subject to local legislation and requirements.

Work-life balance has a significant effect on wellbe-

ing at work. Depending on the job description, flexible

working hours and remote working opportunities make

work more meaningful. Smart Work is our common way

of working that ensures we can succeed, and we believe

teams know best how to get the job done most pro-

ductively, together. In 2022, Neste also enabled remote

work abroad to meet employee expectations, enable

agile and flexible working and to support employees’

wellbeing.

We offered development programs aimed especially

for young talents to further build their strategic

thinking and leadership skills.

Neste Annual Report 2022 | Our people

Strategy GovernanceSustainability Review by the Board of Directors Financials

Advancing diversity,

equity and inclusion

Diversity, equity and inclusion (DEI) form a key part of

Neste’s values-led culture, human rights work and sus-

tainability vision. They are embedded in our values – we

care, we have courage & we cooperate – as well as in

our policies and principles such as our Code of Con-

duct, People Policy and Human Rights Principle.

We are committed to developing a values-led culture

that leverages the benefits of diversity and inclusiveness,

one in which all Neste employees are given equal oppor-

tunities to pursue and thrive in their career, and where

everyone feels safe, respected and encouraged to be

their unique true selves.

We believe that advancing diversity, equity and inclu-

sion is essential for our business. We need different per-

spectives, backgrounds and insights in order to per-

form, innovate and execute our strategy while building

new business opportunities globally. It also plays a cru-

cial role in the wellbeing of our people and attracting and

retaining the right talent.

Our DEI priorities for years 2022–2023 include:

• Building awareness and understanding of diversity,

equity and inclusion across Neste

• Developing inclusive leadership both among our line

managers and subject matter experts

• Embedding DEI further into our people practices

In 2022, key activities included developing a framework

and priorities for diversity, equity and inclusion at Neste

with the support of external experts. We also carried out

preparations for a company-wide training initiative – to

be cascaded in 2023 – to drive continuous learning and

dialogue on DEI within all our teams and among senior

management. The preparations during 2022 included

training sessions, HR capability building, and a pilot pro-

gram with selected teams.

Our Executive Committee follows the progress of our

development work and efforts within the diversity, equity

and inclusion on a quarterly basis, and the theme is also

regularly discussed with the Board of Directors. As a

signatory to the UN Women’s Empowerment Principles,

Neste’s President and CEO Matti Lehmus participated

in the UN Women Finland Diversity Roundtable together

with other leaders from Finnish corporations and univer-

sities, discussing initiatives on advancing diversity and

inclusion in Finland.

Donations and voluntary work

We engage positively with all the communities close to our

operations. Our goal is to have a positive impact through char-

itable donations to causes that align with our purpose, values

and strategy. We make donations in line with three key themes:

innovation and education; climate and environment; and diver-

sity and inclusion.

In 2022, we made donations to Save the Children, WIRES

and Food Bank Houston, among others. In 2022, Neste was

one of key partners of John Nurminen Foundation which aims

to save the Baltic Sea and its heritage for future generations.

During 2022, we witnessed strong support for Ukraine among

our employees, our customers and the international commu-

nity. We have provided humanitarian support by donating to

two organizations, The Red Cross and UNICEF. Many of our

employees have also chosen to use their dedicated time for vol-

untary work to support Ukrainian refugees.

We offer our employees a dedicated paid full day for volun-

tary work as we believe volunteering activities are a way to build

closer ties to our society. In 2022, many of our employees opted

to dedicate their time to charitable endeavors, including rais-

ing money for charity through sponsored sports challenges and

waste collection. The number of Neste employees who partici-

pated in volunteer work increased to 356 volunteers (2021: 145).

Read more about our donations.

Diversity, equity and inclusion form a key

part of Neste’s values-led culture, human

rights work and sustainability vision.

Neste Annual Report 2022 | Our people

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Safety

For us, safety means excellence in risk management and

being in full compliance with regulatory requirements at

all times. It is about the existence and effectiveness of

all safety barriers that help to manage risks, prevent inci-

dents and mitigate adverse consequences.

We are determined to protect people and the environ-

ment as well as our operations, assets, information and

brand from any harm and negative impacts. We believe

that this can be achieved when everyone is truly commit-

ted to managing and improving safety. We understand

all hazards related to our operations and have excellent

ways to evaluate and manage risks.

Safety is at the core of everything

we do. By improving safety and operational

excellence we are able to achieve our

strategic targets. With cooperation and

commitment, we will achieve our safety

vision of ‘No harm. Together.’

Safety

Our safety vision:

No harm. Together.

Safety

at Neste

Understand

hazards and risks

Manage

risks and

opportunities

Learn from

experience

Commitment to

operational excellence

Assets

Environment

People

Information

Operations

Brand

Strategy GovernanceSustainability Review by the Board of Directors Financials

Driving safety excellence through

Neste Operations Excellence

Management System

The foundations for the safety excellence and continual

improvement are defined by Neste’s Operations Excel-

lence Policy and Operations Excellence Management

System (OEMS), which includes Operations Excellence

Principles and supplementary detailed standards. The

requirements of OEMS apply not only to own employees

but also to external contractors.

In 2022, we continued to clarify and simplify the

OEMS implementation process. The deployment of the

new process started in 2022 and continues in 2023. The

systematic OEMS self-assessments and audits contin-

ued in 2022 in order to ensure that the requirements are

fulfilled. During 2022, altogether 16 OEMS audits were

done.

In 2022, one of the safety priority areas was to improve

the timely closure of the actions defined due to incidents,

near-misses and audit findings. During the year, clear

improvement was achieved. The topic was followed up

monthly by the Neste Executive Committee.

As Neste operates in a safety critical business, one

foundational driver for our safety management is to

eliminate High Potential (HiPo) events in our operations.

Focus on the reduction of HiPo events continued actively

in our operations. The awareness was improved, but

due to more systematic reporting, the number of cases

remained on the same level as in 2021.

Safety leadership and culture

The group and local level implementation of the new

Safety Leadership Principle and updating the team safety

commitments continued to be key issues when devel-

oping Neste’s safety leadership and culture during 2022.

The 2022 global safety awareness activities included

the launch of a new safety video, update of the safety

visuals, new common safety communication channel

and increased communication to the line managers.

In 2022, we restarted our face-to-face ‘I Act Safe’

learning workshops which were put on hold due to

Covid-19. The workshops attracted a large number of

participants, and for example in Finland and the Baltic

states, all truck drivers participated in learning work-

shops focusing on personal safety leadership, aware-

ness, and management.

Due to the unsatisfactory safety performance and in

order to enhance the safety leadership, a safety engage-

ment and communication program was initiated by the

Neste President and CEO in the latter part of 2022. The

purpose was to highlight the sense of urgency, to fur-

ther improve visible leadership actions, and to drive con-

crete actions to meet the desired safety performance.

The program will continue in 2023.

Process safety

Process safety activities in 2022 included the improve-

ment of the effectiveness of the Process Hazard Anal-

ysis (PHA) implementation, the utilization of the HSE

design guideline for investments, the definition of the

process safety design guidelines for new technologies in

the Renewable Products business and Innovation units,

and the first deployment of the new storage tank safety

standard.

We started to define Neste Process Safety Funda-

mentals providing a set of basic principles for front-line

workers, line managers, and managers that summarize

the practices to prevent fatalities from Process Safety

Events. The implementation of these fundamentals will

start in 2023. In December 2022, the Rotterdam refin-

ery was shut down due to a fire in a refinery unit. Inju-

ries were avoided and the incident had no effect on the

expansion project, however, the fire indicated the need

to further improve the process safety performance.

Contractor safety

In addition to our own employees, contractors who are

not employed by Neste work at our sites. The types of

work they perform include construction, maintenance,

and electrical work, among others. All contractors are

required to complete a site safety training prior to access-

ing the site.

We aim to continuously improve contractor safety

performance with our contractors through audit-

ing and thorough selection process, regular perfor-

mance evaluation, mutual feedback and with higher

focus on subcontracting. In 2022, the deployment of

the contractor safety management model continued.

Neste Annual Report 2022 | Safety

Approximately 2,200 contractor HSSEQ performance

assessments and over 50 contractor safety manage-

ment audits provided valuable information for the perfor-

mance improvement.

Strategy GovernanceSustainability Review by the Board of Directors Financials

In local organizations, activities continued to drive

improvements in the targeted areas. Effective incident

investigations, verification of the defined actions and the

learning from incidents continued as a key activity. The

process was further improved and the responsibilities

better defined. Oil Products initiated a three-year ‘No

harm. Together’ safety development program focus-

ing on safety leadership, management of change, asset

integrity and reliability, contractor HSE management,

and operational safety. Short-term activities included

the full deployment of the integrated safe system of

work (ISSOW), a comprehensive work risk management

practice.

Neste Renewables Platform focused on safety in

turnarounds and in investments, as well as on improv-

ing safety in new acquisitions. Marketing & Services

focused on process safety and change management in

terminals, road safety and safety of loading and unload-

ing sites, ‘I Act Safe’ trainings and on the new safety

e-learning training.

Product and chemical safety

Following chemical legislation and changing regulation,

adapting to them and ensuring compliance requires con-

tinuous focus in all countries of our operations. Provid-

ing the required registrations and notifications and care-

fully compiled safety data sheets in local languages is

the core to product safety at Neste. In 2022, we estab-

lished a new internal Chemical Regulatory Affairs net-

work to ensure information flow and competence in this

area. We also renewed the Safety Data Sheet Register,

covering all safety data sheets.

Occupational hygiene surveys have been conducted

on Neste’s sites since 1977. In 2022, approximately 30

surveys for chemical agents, noise and other occupa-

tional exposure agents were carried out in the Finnish

operations. One highlight of 2022 was the continuing

exposure assessment survey of liquefied waste plastic

(LWP). Knowing the levels of hazardous substances in

the working environment is key to ensuring the safety of

our own employees. This is especially important when a

new raw material is taken into use. Occupational hygiene

surveys are conducted as an integral part of the risk

assessments and Personal Protective Equipment (PPE)

guidance.

Performance in the

key projects during 2022

One of the focus areas of 2022 continued to be ensuring

safety in different projects, such as investments, change

projects and turnarounds. The Singapore expansion

project continued at a good safety level. The project’s

Total Recordable Injury Frequency (TRIF) was well within

our target and high-consequence work-related injuries

were avoided. During the year, the project reached an

accident free period of 12 million working hours. Key

success factors in the project were active site observa-

tion reporting combined with fast corrective actions, sys-

tematic work management, and dedicated action focus-

ing on the contractors who needed the most support.

During 2022, turnaround works in Singapore, Rot-

terdam and Porvoo were mostly completed with the

targeted safety performance and no serious incidents

occurred. The major investment projects at the Rotter-

dam refinery and the Neste terminal in the Netherlands

continued within the targeted safety performance.

The biggest safety challenges were experienced in an

Engineering Solutions project to an external customer,

where several TRI accidents occurred. Several actions

were done during the project but the overall perfor-

mance remained worse than targeted. A thorough proj-

ect post-evaluation was done, and key improvements

and actions were defined. Actions will be done and ver-

ified before the next similar project, and the relevant

learnings will also be implemented in the Neste internal

projects.

Neste Renewables Platform business unit focused

on ensuring safety in the turnarounds and investments,

TRIF own employees TRIF contractors TRIF total

Total recordable injury frequency (TRIF)

2.0

4.0

1.0

3.0

2022

0.8

3.7

2.0

2019

1.1

2.7

1.7

2020

1.1

1.6

1.3

2021

1.1

1.6

1.4

Neste Annual Report 2022 | Safety

and also integration of the new acquisition Bunge pre-

treatment plant in the Netherlands. Moreover, the focus

was on improving the safety performance of Mahoney

Environmental and its further integration to Neste safety

and OEMS practices. A long-term safety roadmap was

defined for Mahoney. Focus areas for Mahoney in 2022

were improved leadership training, improvement inci-

dent management, effective safety meetings and HSE

inspections and introduction of the Stop Work Authority

practice.

Covid-19 pandemic management

In 2022, Neste Crisis Management team continued to

follow the global pandemic situation closely. Personnel

and contractors working on sites were informed about

the situation with regular info sessions and instruction

updates. The number of Covid-19 cases among Neste

personnel and the effect on the operations were low.

Safety performance in 2022

In 2022, Neste’s occupational safety performance rate

(TRIF, or rate of accidents requiring medical treatment

per million hours worked, including contractors) did not

reach the target level (1.5) and was 2.0 (2021: 1.4). Big-

gest challenges were experienced in contractor safety

where TRIF was 3.7.

The process safety performance rate (PSER, or the

rate of process safety events per million hours worked)

was in 2022 1.4 (1.4), which was in the 2022 target level

(1.5).

We also measure the number of safe days, i.e. days

without occupational accidents, process safety events,

other fires and leaks, environmental non-compliances,

marine safety incidents and traffic accidents. In 2022,

the number of safe days was 314 (306), and the number

of incidents was 56 (67).

Process safety event rate (PSER)

2022

PSER1 PSER2

2019

0.6 0.6

1.4 1.4

0.9 0.9

2020

1.6

1.0

0.6

2021

1.4

0.6

0.8

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Climate

As our growth strategy and transformation story continues, we remain

highly committed to our sustainability targets and vision to become a

global leader in renewable and circular solutions. Climate commitments

are an integral part of the corporate strategy and sustainability vision.

Climate

Climate change is already affecting every

country on every continent, and the responsibility

for taking action is shared by us all. Climate

science is clear: global warming should be limited

to 1.5°C by the end of the century to mitigate the

risk of the most severe consequences to human

and natural systems

. Prompt actions to reduce

greenhouse gas emissions (GHG) globally are

needed. Our vision is to lead the transformation

towards a carbon neutral value chain.

Source: The Sixth Assessement Report by

the International Panel of Climate Change (IPCC).

Our vision is to lead transformation towards a carbon neutral value chain by 2040.

Footprint:

Reducing the GHG

emissions across

our value chain

(scope 1–3)

Reduce emissions in our own

production (scope 1 & 2) by 50%

by 2030 and reach carbon

neutral production by 2035

Reduce the use phase

emission intensity

of sold

products by 50% by 2040

compared to 2020 levels

(scope 3)

Work with our suppliers

and partners to reduce

emissions across our

value chain (scope 3)

Handprint:

Helping our customers to

reduce their GHG emissions

with our renewable

and circular products

Offer solutions that help our customers reduce their

emissions by at least 20 MtCO

e annually by 2030

and meet their climate targets

Use phase emission intensity is calculated by dividing the emissions from the use of products sold by Neste (part of scope 3) with the total amount of sold energy (gCO

e/MJ).

Strategy GovernanceSustainability Review by the Board of Directors Financials

We enable our customers to reduce their greenhouse

gas (GHG) emissions by offering renewable and circu-

lar products to replace fossil products. Our target is to

help our customers reduce their GHG emissions by at

least 20 million tons of CO

e annually by 2030. Our stra-

tegic initiatives are key driver to increasing our carbon

handprint.

At the same time, we need to reduce our own car-

bon footprint. We are committed to reducing the GHG

emissions from our production (scopes 1 & 2) and reach

carbon neutral production by 2035. We are also com-

mitted to reducing the use phase emission intensity of

sold products and work with our suppliers and partners

to reduce the indirect GHG emissions from our entire

value chain (scope 3). We have identified various mea-

sures to reach the targets, some of which are already

well underway. We follow the progress regularly across

the organization.

Neste Annual Report 2022 | Climate

Climate scenarios supporting Neste’s

strategy development

Climate change poses both business risks and opportu-

nities to Neste. Therefore, Neste is committed to apply-

ing the Task Force for Climate-related Financial Disclo-

sures (TCFD) reporting framework to understand and

evaluate the potential implications of climate change.

Neste uses scenario analysis to assess the resilience

and adaptability of Neste’s strategy to climate change.

We base our scenario analysis on the internationally

acknowledged climate pathways that represent objective

and well-established benchmarks for the energy indus-

try, for example published by the International Energy

Agency (IEA). We complement our scenarios by internal

analysis and identification of trends and factors relevant

to our business. In 2022, we analyzed the implications

on Neste under three climate scenarios: Net Zero World

2050, which is in line with the 1.5°C pathways; Net Zero

EU and North America by 2050, consistent with a 2°C

trajectory; and Compromised climate targets, reflecting

global warming of 3°C or more by the end of the century.

We have identified and estimated the impact of the risks

and opportunities to Neste in each scenario according

to the TCFD framework.

Climate commitments are an integral

part of our corporate strategy and

sustainability vision.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Net Zero World

2050

Net Zero EU and North

America by 2050

Compromised climate

targets

Description

Rapid and radical emission reductions

globally to meet Net Zero emissions by

2050 and limit global warming to

1.5°C, building on the IEA Net Zero

2050 Scenario.

Advanced economies demonstrating

strong climate action while developing

economies follow slower, consistent

with a 2°C trajectory, building on the IEA

Announced Pledges Scenario.

Failure to take climate action leads to

the continuation of the current trends,

causing global warming of 3°C or more

by the end of the century. Scenario

is building on the IEA Stated Policies

Scenario.

Opportunities

The accelerated global demand for

renewable and circular products

provides Neste opportunities to leverage

global reach, expand to new markets,

optimize across feedstocks, countries

and customer sectors.

Continued demand growth in renewable

and circular solutions; regulatory

markets supported by voluntary climate

ambitions.

Modest demand growth in renewable

products due to less favorable regulatory

framework gives room for differentiation

and serving selected voluntary markets

efficiently.

Risks

Accelerated global demand for

renewable and circular products

and supportive regulatory landscape

may present transition risks related

to stringent competition of key raw

materials and in entering new markets.

Identified transition risks relate to

regulation limiting the competitiveness

of renewable fuels or narrowing the

eligibility of key raw materials.

A steep decline of fossil fuel demand

could also be seen as a transition risk for

Neste’s current business. Risks related

to accelerated alternative technology

development have also been identified.

Transition risks include downscaled

regulatory drivers, slowing down the

demand growth for renewable products.

In the long-term, physical risks related

to chronic and acute climate change

impacts can have significant negative

effects on raw materials availability,

supply chains and assets.

Indicative financial

impact to Neste

Positive Base case Slightly negative

Neste Annual Report 2022 | Climate

The focus in Neste’s strategic planning is the next 10

years, with emphasis on transport, petrochemicals and

refining sectors. In the scenario work, a time horizon until

2050 is used as the effects of climate change become

more imminent in the longer term. Climate change,

and actions to mitigate and adapt to climate change,

pose both transition and physical risks and opportuni-

ties to companies. In the climate-context, topics such

as energy transition, regulation, competition and cus-

tomer preferences are relevant for Neste’s business.

Impact potential of such drivers on Neste are evaluated

on short-, medium- and long-term time horizons, with

varying degree of certainty.

Neste will continue to build on its climate actions so

that they are in line with the 1.5°C emission scenarios

but refers to the “most likely” scenario reflecting a tra-

jectory of 2°C global warming by the end of the century

as the base case. We calculate the impacts and test

Neste’s strategy resilience against the scenarios by for

example estimating the impact on Neste’s profitability

compared to the base case. This is to ensure key driv-

ers underlying our strategy are robust under the varying

assumptions across the pathways.

Results of the scenario assessment provide valuable

information on the adaptability and resilience of Neste’s

strategy. Results are used to support Neste’s strategy

development and financial planning. Identified climate

risks are included in our Enterprise Risk Management

(ERM) process and risk mitigation plans are implemented

where appropriate.

The full TCFD recommendations set out eleven rec-

ommended disclosures around four core areas for com-

panies to report material climate-related information to

the market. You can navigate to all Neste disclosures in

the annual report via the TCFD index.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon handprint

The idea behind product carbon handprint

is to offer solutions to our customers

that decrease their carbon footprint. The bigger the handprint, the better.

We are able to increase our company handprint

and achieve the 2030 commit-

ment through our strategy of growing the production capacity for renewable and

circular solutions, while ensuring the GHG emissions caused by our products are

as low as possible.

The change we enable

– our carbon handprint

We are committed to help our customers reduce their greenhouse

gas (GHG) emissions by at least 20 million tons per year by 2030.

In 2022, we enabled our customers to reduce GHG emissions by 11.1

million tons. We are able to achieve the commitment through our

strategy of growing the production capacity for renewable and

circular solutions.

GHG emission reduction of a product compared to fossil reference product

The combined GHG emission reduction impacts of products Neste has produced and sold over the reporting year

Strategy GovernanceSustainability Review by the Board of Directors Financials

Strategic investments to

achieve our handprint target

Growing our renewable and circular solutions is a core

theme of the Neste strategy. According to our strategic

investments, our production capacity of renewable and

circular solutions will expand significantly in the coming

years. The expansion of our Singapore refinery will be

Neste Annual Report 2022 | Carbon handprint

Our renewable

and circular

solutions

enable our

customers

to reduce GHG

emissions

across

industries

Neste MY

Sustainable

Aviation Fuel

(SAF)

Neste MY

Renewable

Diesel

Neste RE,

feedstock for

plastics production

made out of

renewable and

recycled raw

materials

Neste Marine

0.1 Co-processed

for marine, and

also possible other

solutions to new

sectors

Science-based partnerships to develop handprint

methodology

• Since 2016, we have been developing the world’s first science-based

method for environmental handprint calculation and communication

with the VTT Technical Research Centre of Finland and LUT University.

• Neste continues the handprint methodology development in a

research project “The carbon neutrality empowered by handprint”

with VTT, LUT University, Business Finland and other companies.

• The two-year project, started in September 2021, is developing

an unambiguous and internationally-approved concept of carbon

neutrality and reliable indication of the environmental benefits

(handprint) of circular economy solutions.

Read more about the project.

completed in 2023, which will bring the refinery’s renew-

able product capacity to 2.6 million tons per annum. In

2022, we announced our final investment decision to

invest into new renewable products production capacity

in Rotterdam, which will expand our overall renewable

product capacity by another 1.3 million tons per annum,

bringing the total renewable product capacity in Rotter-

dam to 2.7 million tons annually by 2026.

In addition to the Rotterdam and Singapore expan-

sions, we will expand our production capacity through

a joint operation with US-based Marathon Petroleum

(Marathon). In 2022, we established Martinez Renew-

ables that will produce renewable diesel following a

conversion project of Marathon’s refinery in Martinez,

California. The facility is expected to be capable of pro-

ducing 2.1 million tons of renewable diesel per annum by

the end of 2023. Through Martinez Renewables, Neste

obtains a 50% interest in the Martinez Renewable Fuels

project. Therefore upon completion, Martinez Renew-

ables is expected to increase Neste’s renewable prod-

ucts capacity by slightly over 1 million tons per annum.

We are also exploring future options in Finland. In

2022, we launched a strategic study on transitioning

our Porvoo refinery to a renewable and circular site and

ending crude oil refining in the mid-2030s. The transfor-

mation under study includes a long-term renewable and

circular production capacity potential of 2 to 4 million

tonnes per year. Read more about the Porvoo transfor-

mation study.

Growing our capacity for renewable and circular prod-

ucts is a key driver towards our carbon handprint target.

At the same time, we need to ensure that our renew-

able and circular products have as low GHG emissions

across their life cycle as possible. This requires for exam-

ple careful GHG impact evaluation of the renewable raw

materials we use, optimizing our supply chains, and

ensuring that the GHG emissions caused by refining are

minimized. Read more about minimizing our emissions

across our value chain in the carbon footprint section.

Achieving our carbon handprint target by growing

our renewable and circular solutions

Our strategic investments drive our growth in renewable and circular solutions

– a key driver for reaching our handprint target.

We aim to help our customers reduce their GHG emissions

by at least 20 million tons per year by 2030

20Mt

2030

11.1Mt

2022

Singapore refinery expansion

Transition of Porvoo refinery to

a renewable and circular site.

Rotterdam refinery expansion

Martinez Renewables

Strategy GovernanceSustainability Review by the Board of Directors Financials

Calculating the GHG emission

reductions achieved with our

renewable products

Our renewable and circular products have significantly

lower GHG emissions over the life cycle compared to

fossil alternatives, which helps our customers reduce

their GHG emissions and reach their climate targets.

We calculate the GHG emissions of our products over

their entire life cycle: from the production of their raw

materials to the end use of the final product. For renew-

able fuels, the life cycle ends in the use phase, and for

other (non-fuel) products such as renewable feedstock

for new polymers and chemicals, the life cycle ends in

the end-of-life treatment and potential recycling.

The methodologies we use for calculating life cycle

emissions and emissions reduction comply with e.g. the

European Union’s Renewable Energy Directive II ((EU)

2018/2001), CORSIA or ISO 14040, ISO 14044, ISO

14067, and the California LCFS methodology, which

has been applied in the GHG reporting for volumes sold

in the US since the beginning of 2022.

Neste’s renewable products, such as Neste MY

Renewable Diesel, Neste MY Sustainable Aviation Fuel,

as well as Neste RE, our renewable feedstock for poly-

mers and chemicals production, have 50-95% less GHG

emissions over the life cycle compared to similar 100 %

fossil products. When calculating Neste’s handprint, we

compare the life cycle emissions of our renewable prod-

ucts to the fossil comparator emission values as defined

in the relevant regulation (e.g. EU RED II, LCFS) to eval-

uate the achieved GHG reductions for our customers.

Solutions to reduce

GHG emissions in aviation

Neste continues to help the aviation industry achieve its

ambitious net zero carbon emissions by 2050 goal by pro-

viding an immediate solution for reducing the emissions

from air travel. Neste MY Sustainable Aviation Fuel™ is

made from sustainably sourced, 100% renewable waste

Neste Annual Report 2022 | Carbon handprint

Progress in establishing Neste

as a partner or supplier to

airlines and cargo carriers

• Air France-KLM Group

• Virgin Atlantic

• All Nippon Airways

(ANA)

• United Airlines

• WestJet

• Etihad Airways

• Air New Zealand

• Ryanair

• DHL Express

Expanding partnerships along

the supply chain to grow the

availability of SAF

• ITOCHU

• Airbus

• Signature Flight

Support

• World Fuel Services

• Fuel distributors

Expanding into the voluntary

market with new partnerships

• Victor

• CargoAi

• Sunweb

Examples of other

achievements

• First 100% SAF flight on a regional commercial aircraft with ATR and Braathens

• SAF delivery through the Colonial and Buckeye pipeline systems into New York (US)

• Aviation industry’s first ever CORSIA certified sustainable aviation fuel delivery

to American Airlines

and residue raw materials, such as used cooking oil and

animal fat waste. In its neat form, Neste MY SAF reduces

greenhouse gas emissions by up to 80% over the fuel’s

life cycle, compared to using fossil jet fuels (calculation

method: CORSIA).

Neste MY SAF also significantly lowers non-CO

emis-

sions compared to fossil jet fuel use. The fuel can be

used as a drop-in fuel as it is compatible with existing

aircraft engines and airport infrastructure, requiring no

extra investment into these.

Our current annual SAF production capacity is

100,000 tons. With the ongoing expansion of our Singa-

pore refinery and modification of our Rotterdam refinery,

we will have an annual SAF production capacity of 1.5

million tons in the beginning of 2024. Furthermore, the

upcoming Rotterdam refinery expansion will increase

the capacity to over 2 million tons by the end of 2026.

In 2022, we started many new partnerships in aviation and continued developing the existing ones.

Examples include:

Aviation industry’s first ever

CORSIA certified sustainable

aviation fuel delivery to

American Airlines

In 2022, for the first time in aviation history a

CORSIA certified batch of sustainable aviation

fuel (SAF) was delivered to a commercial air-

line. Neste delivered a batch of its Neste MY

Sustainable Aviation Fuel to American Airlines

at San Francisco International Airport. This

was part of a pilot to certify SAF as a CORSIA

eligible fuel that can be used by an airline to

meet its emissions obligation under CORSIA.

The Carbon Offsetting and Reduction

Scheme for International Aviation (“COR-

SIA”) is a carbon offset and carbon reduction

scheme to lower CO

emissions for interna-

tional flights, to curb the aviation impact on

climate change. It was developed by the Inter-

national Civil Aviation Organization (ICAO).

Read more about the

delivery of CORSIA certified SAF.

We are actively working with partners in aviation’s sup-

ply chain to grow the availability of SAF globally. The fuel

is already used by leading commercial airlines in Europe,

North America and Asia including Lufthansa, KLM, IAG,

Finnair, American Airlines, United Airlines and cargo car-

riers such as DP-DHL, Cargolux and Amazon PrimeAir.

It is available at an increasing number of major airports,

including San Francisco International Airport, Dallas Fort

Worth International Airport, Amsterdam Airport, Frank-

furt Airport and Narita International Airport.

In addition, we offer businesses a tailored service to

help them directly reduce the greenhouse gas emis-

sions of their air travel by buying SAF; Neste MY SAF for

Business. This solution delivers real and credible emis-

sion reductions that can be used to meet science-based

targets.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon handprint

Expanding the availability of renewable

solutions for road transportation

Neste MY Renewable Diesel™ is a drop-in solution for

all diesel-powered vehicles, and its use does not require

any changes to the existing engines or logistics. The use

of our Neste MY Renewable Diesel helps reduce green-

house gas emissions by as much as 50–95% compared

to fossil diesel over the fuel’s life cycle. The GHG emis-

sion reduction varies depending on the region-specific

legislation that provides the methodology for the calcu-

lations (e.g. EU RED II (EU)2018/2001 for Europe and

US California LCFS for the US), and the raw material mix

used to manufacture the product for each market.

In 2022, we continued to expand the availability of

renewable diesel by bringing it to new markets and by

growing the station network. In Finland, we expanded

the availability of Neste MY Renewable Diesel from 152

stations to 168 stations. In Estonia, Latvia, and Lithua-

nia the number of stations selling the fuel grew with 17

stations, totalling 24. In Sweden, Neste MY Renewable

Diesel was sold at almost 400 stations by the end of the

year.

In Germany, we partnered with two channel partners

to jointly enable the supply of Neste MY Renewable Die-

sel and contribute to reducing greenhouse gas emission

in the transport sector. EDi Energie-Direkt Hohenlohe

GmbH and TOOL-FUEL Services GmbH will distribute

and sell the fuel in Germany, while Neste will ensure suf-

ficient volumes of the fuel.

In March 2022, we enabled together with our partners

Altens and TRAPIL the first-ever transport of renew-

able diesel by pipeline in Europe to help reduce emis-

sions from fuel transports. Altogether 3.5 million liters of

Neste-produced renewable diesel was transported by

TRAPIL via the pipeline from Le Havre, located in north-

western France, to Gennevilliers, close to Paris.

Neste and Rolls-Royce partner to accelerate

the shift from fossil to renewable fuels

Neste and Rolls-Royce agreed to build a strategic partnership on accel-

erating the use of renewable diesel as a lower-emission solution for diesel

engines. Both parties share a common vision of renewable fuels playing a

key role in reducing greenhouse gas emissions in off-highway applications,

such as construction and power generation.

Read more about the partnership.

Reduced emissions with Neste MY Renewable Diesel™

Comparing 100% fossil diesel to 100% Neste MY Renewable Diesel results on average 90% lower

greenhouse gas emissions when evaluating the emissions over the fuels’ life cycle.

Total GHG

emissions

Raw

material

Transportation Fuel

refining

Fuel

transportation

Fuel use

Calculation method complies with the EU Renewable Energy Directive ((EU)2018/2001).

90%

GHG, gCO

e/MJ

Carbon emissions from the use of renewable diesel amount to zero, as the amount of bio-based carbon

dioxide released upon combustion equals the amount that the renewable raw material has absorbed earlier.

less GHG

emissions

100% fossil diesel from crude oil

Neste MY Renewable Diesel

from 100% renewable raw materials

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon handprint

Sustainable solutions for marine

More than 90% of the world’s trade is carried by sea,

making maritime transport essential to the global econ-

omy. Neste helps shipping companies to reduce their

emissions and respond to the tightening regulations

on sulphur dioxide emissions with low-sulphur fuels. In

addition, we provide solutions that enable GHG emission

reductions in maritime, such as co-processed marine

fuel, renewable diesel and drop-in bio-components for

marine blending. We aim to develop new complemen-

tary solutions in order to widen Neste’s low-emission

offering for the maritime industry.

Renewable and circular solutions for

the polymers and chemicals industries

Neste provides the polymers and chemicals industries

with renewable and circular solutions that help miti-

gate climate change, combat waste plastic pollution

and reduce dependency on crude oil. Neste is already

delivering renewable feedstock to be used as sustain-

able, drop-in raw solutions in the polymers and chem-

icals industries. It is made from renewable raw materi-

als, primarily waste and residue oils and fats, such as

used cooking oil. With our feedstock, the polymers and

chemicals producers as well as global brands can man-

ufacture lower carbon footprint products and reduce

the use of fossil resources. We are also committed to

becoming a solution provider for chemical recycling of

waste plastic. Read more about chemical recycling on

page 95.

Our renewable polymers and chemicals business is

built on partnerships and collaboration across the value

chain. Downstream partners turn our renewable and cir-

cular hydrocarbons, sold under the brand Neste RE™,

into high quality products. Neste RE can be used for

plastics and chemicals in a wide range of applications

such as toys, sports equipment and clothing, food and

beverage packaging, home and personal care and med-

ical devices. Neste RE is a drop-in solution that can be

Piloting new low-emission marine fuel

In 2022, to help shipping companies and their customers to reduce the

GHG emissions in their supply chain we introduced as the first company in

the world the Neste Marine™ 0.1 Co-processed marine fuel. The solution

enables up to 80%

GHG emission reduction over the life cycle compared

to fossil fuels without compromising the product quality and performance.

Together with our partner Nordic Marine Oil, we are piloting the Neste Marine

0.1 Co-processed marine fuel in Scandinavia. During the pilot phase, Finn-

ish shipping company ESL Shipping became the world’s first shipping com-

pany to start utilizing Neste Marine 0.1 Co-processed marine fuel in its ves-

sels in Finland and Sweden.

Read more about Neste Marine™ 0.1 Co-processed marine fuel.

The method used to calculate life cycle emissions and emission reduction

is guided by the EU Renewable Energy Directive II (EU)2018/2001.

The methodology for calculating life cycle emissions and emissions reduction is based on ISO 14040/44/67 standards.

Neste provides renewable and circular

solutions that help mitigate climate change,

combat waste plastic pollution and reduce

dependency on crude oil.

used on its own or in a blend to manufacture products

of identical quality to those made out of conventional

feedstock based on virgin fossil resources. When 100%

renewable Neste RE is used to replace conventional fos-

sil feedstock in the chemical and polymers industry, it

shows a GHG emission reduction of at least 85%

over

the life cycle. The LCA study has been critically reviewed

by a third party panel and results published in Journal of

Cleaner Production.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon footprint

Neste’s climate vision is to lead transformation towards a

carbon neutral value chain. Reaching this ambition requires

reducing greenhouse gas emissions (GHG) in Neste's oper-

ations and across our value chain — our carbon footprint

work. We have set targets that cover both direct and indirect

emissions from our production and value chain, referred to

as scopes 1, 2 and 3 as defined by the GHG Protocol.

Our commitment to reduce the climate

impact in our own production, as well as

across the value chain, is integrated into

our corporate strategy and sustainability

vision. The target is ambitious, but we are

well on track to achieve it.

The change we make

– our carbon footprint

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon footprint

Firstly, our main focus remains unchanged: significantly

reducing the greenhouse gas emissions from our pro-

duction (scopes 1 & 2) through various means. We are

committed to reducing our production emissions by

50% by 2030, and reaching carbon neutral production

by 2035. In 2022, we continued to identify and imple-

ment emission reduction measures across all of our pro-

duction sites.

Secondly, we have set a concrete target to reduce the

use phase emission intensity of sold products (part of

scope 3 emissions) by 50% by 2040 compared to 2020.

The main driver to meet, and exceed, this target is to

continue our transformation towards renewable and cir-

cular solutions.

Finally, we are committed to work with our suppli-

ers and partners to reduce the indirect GHG emissions

across our entire value chain (scope 3). We want to lead

the transformation towards a carbon neutral value chain,

and that requires actions beyond our own production

and products.

Through our climate commitments to reduce the GHG

emissions from our production, sold products as well as

throughout the value chain, we want to show leadership

and determination to do our part in limiting global warm-

ing to 1.5°C compared to pre-industrial levels and meet-

ing the objectives of the Paris Agreement. We will con-

tinue to develop our climate commitments and actions

to ensure that they are aligned with the 1.5°C emission

scenarios.

Reduce GHG emissions in our

own production (scopes 1 & 2) by

50% by 2030 and reach carbon

neutral production by 2035

Reduce the use phase emission

intensity

of sold products by

50% by 2040 compared to

2020 levels (scope 3)

Work with our suppliers and

partners to reduce GHG emissions

across our value chain

(scope 3)

Use phase emission intensity is calculated by

dividing the emissions from the use of products

sold by Neste (part of scope 3) with the total

amount of sold energy (gCO

e/MJ).

Our vision is to lead

transformation towards a carbon

neutral value chain by 2040

Our footprint: Neste’s value chain GHG emissions

Reported GHG emissions in 2022, MtCO

Scope 1 accounting and reporting based on CO

Includes Use of sold products and End-of-life treatment of sold products.

Including Purchased services, Waste generated in operations, and Fuel- and energy-related activities.

Use phase emission intensity is calculated by dividing the emissions from the use of fuel products sold.

by Neste (part of scope 3) with the total amount of sold energy (gCO

e/MJ)

We use the scope framework defined in the Corporate Standard by GHG

Protocol to assess the GHG emissions across our value chain. scope 1 and

scope 2 cover the emissions related to our own production. scope 3 includes

all other relevant emissions throughout our value chain.

Scope 1

Direct

emissions

from refining

Scope 2

Indirect

emissions

from

purchased

energy

Scope 3

Other indirect

emissions

from value

chain

1.1

Other

4.3 0.70.9 34.7

Purchased

goods

Product

transport

Raw

material

transport

Use of

products

2.1

Rening

0.4

Purchased

energy

57 gCO

e/MJ

Use phase emission

intensity of sold

fuel products

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon footprint

Progress & highlights of

the climate roadmap in 2022

Our commitment to reduce our climate impact remains

strongly integrated into our corporate strategy. Neste is

investing into growing its renewable and circular solu-

tions, which means that we also need to understand the

climate impact of our growth. In 2022, we made sev-

eral strategic investment decisions, such as expanding

our Rotterdam refinery and establishing a joint operation

to produce renewable diesel in the US. In all of these

cases, climate impact evaluation was part of the deci-

sion process, with focus on minimizing the impact on

our production footprint.

In 2022, we focused on driving the implementation

of the short-term actions on our climate roadmap for

production, and we for example reached a significantly

higher share of renewable electricity compared to year

2021. We have also progressed with the initiatives related

to renewable hydrogen, which is a critical topic in the

longer term. We also continued to make progress with

scope 3 emissions through developing plans as well as

Since 2020, we have evaluated the GHG emission

impact of every investment decision. Our investment

criteria aims to make the GHG emission impact of all

investments more transparent, and align our invest-

ment decisions with our climate commitments. In the

investment evaluation process, the estimated GHG

emission impact needs to be presented for the project

to proceed towards the final investment decision. Fur-

thermore, with growth investments, the possibilities to

minimize the impact on production footprint need to

be evaluated and integrated into the project plan.

To further align our investment we use our internal

carbon price as a strategic tool to support reaching

our climate commitments. Neste applies the internal

carbon price in investment calculations, business case

evaluations as well as in strategic planning. The devel-

opment of Neste’s internal carbon price is based on

several external drivers and references, to reflect the

development in our operating environment. The refer-

ences for our internal carbon price, for example the

EU ETS allowance price, indicate that higher than pre-

viously expected carbon prices will be implemented

already during this decade. In 2022, Neste’s internal

carbon price was 80 EUR/tCO

e, and it will increase to

above 120 EUR/tCO

e by 2030. We review our inter-

nal carbon price regularly as part of our strategic plan-

ning process.

To support our internal carbon price, we see that

effective, robust, reliable and fit for purpose carbon

pricing instruments are important to facilitate cost-

efficient investment paths to reach global climate

ambitions. Such pricing instruments also create a sta-

ble and predictable investment environment for com-

panies like Neste, who are committed to fighting the

climate crisis. Therefore, Neste is also a signatory of

the the global Call on Carbon initiative.

GHG emission impact evaluated in every investment decision

with Neste internal carbon pricing

Call on Carbon is an initiative by Climate Leadership Coalition, Haga Initiative and Skift to support ramping up

climate investments and carbon pricing.

concrete actions. As an example of work done in 2022,

we implemented tools to constantly monitor GHG emis-

sions from marine logistics. We also continued with our

Neste Flies with SAF commitment to cover our employee

business flights with Sustainable Aviation Fuel (SAF).

As an important step, we launched a strategic study

on transitioning our Porvoo refinery to a renewable and

circular site and ending crude oil refining in the mid-

2030s. The targeted transformation would contribute

significantly to meeting Neste’s climate commitments.

Through this study, Neste shows an example of what

leading the transformation towards a carbon neutral

value chain could mean in practice.

In addition, we continued to increase the awareness

and commitment across the company: our climate com-

mitments are a performance measure in long-term incen-

tives (LTIs) for Neste’s key personnel. We also actively

advocate for supportive policies needed to advance

more innovative solutions to reduce emissions in our

production and across the value chain.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon footprint

In September 2022, Neste launched a strategic study on

transitioning its Porvoo refinery in Finland to a renewable

and circular site and ending crude oil refining in the mid-

2030s. If implemented, the transformation will increase

Neste’s raw material flexibility and capacity of renewable

and circular solutions, while also driving company profit-

ability through asset optimization and new investments.

The targeted transformation would strongly contribute

to reaching Neste’s climate commitments across pro-

duction, sold products and the entire value chain, thus

driving Neste towards the vision of leading the transfor-

mation towards a carbon neutral value chain by 2040.

As part of the study, Neste will continue to maximize the

opportunities of renewable hydrogen and focus on build-

ing larger electrolyser capacity for the hydrogen produc-

tion at the Porvoo refinery. Renewable hydrogen is a key

element in the climate roadmap towards carbon neutral

production by 2035. In addition, a change from fossil to

renewable and circular raw materials would significantly

reduce the GHG emissions caused by the refining pro-

cess itself.

Discontinuation of crude oil refining at the Porvoo

refinery would also have a significant impact on Neste’s

scope 3 GHG emissions. For Neste, the use phase emis-

sions in scope 3 are caused mainly by the use of the fos-

sil fuels produced and sold by Neste. Discontinuation

Transitioning Porvoo refinery to a renewable and circular site and ending crude oil refining

would have a significant climate impact

of crude oil refining would lead to Neste not producing

fossil fuel products itself. This would then lead to signifi-

cant reduction of both the use phase emission intensity

as well as the absolute emissions caused by the use of

products produced and sold by Neste. Furthermore, the

targeted Porvoo refinery transformation would have an

impact on the other scope 3 categories for Neste. The

main impact would likely be on the emissions related to

the purchased goods, where the production of the crude

oil currently purchased by Neste is one of the main emis-

sion sources.

Neste shows

an example of

what leading the

transformation

towards a carbon

neutral value chain

could mean

in practice.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Our pathway to carbon neutral

production by 2035

Our target is to reduce production (scopes 1 & 2) emis-

sions by 50% by 2030 compared to 2019, and reach

carbon neutral production by 2035. We believe that

these commitments are in line with global climate ambi-

tions and the Paris Agreement. We are well on track to

reach our targets as in 2022, our production (scopes 1 &

2) emissions totalled to 2.5 MtCO

, which is 28% smaller

than in 2019, which is our baseline year. The production

footprint in 2022 was slightly higher than in 2021, as we

performed the major turnaround at our Porvoo refinery

in 2021, which had a one-off impact on our production

emissions.

Neste Annual Report 2022 | Carbon footprint

We have identified over 100 measures to reduce our

production GHG emissions. In 2022, we continued prog-

ress with the short-term actions on our production cli-

mate roadmap, such as increasing the share of renew-

able electricity. In 2022, the share of renewable electricity

was 93.8%, significantly higher than in 2021 (36.5%). In

the short to medium term, we will also push towards

a higher share of renewable steam with our partners.

These measures focus on purchased energy (scope

2) and are estimated to have a reduction potential of

around 20% by 2030 compared to our 2019 baseline.

Also in the medium term, the focus will be on con-

tinuous energy efficiency improvement and electrifica-

tion measures. Many of these measures are in imple-

mentation planning, for example as part of the refinery

turnarounds. Due to the exceptional market situation in

2022, energy efficiency improvements, especially related

to reducing the use of natural gas, have been strongly

highlighted. Many of the over 100 measures relate to

energy efficiency, with an estimated emissions reduction

potential of approximately 10% by 2030 compared to

the 2019 baseline.

Longer term actions on our climate roadmap include

scaling up new technologies and innovations. The focus

is still clear: renewable hydrogen. The GHG emissions

caused by the hydrogen production are the largest sin-

gle source of production emissions in the fuel refining

sector. Renewable hydrogen is one of Neste’s main

innovation topics, and we have been building partner-

ships to advance the commercialization of the technol-

ogy. Renewable hydrogen and other new technologies

are estimated to have a reduction potential of 20% or

more by 2030 compared to 2019 baseline.

Towards carbon neutral production by 2035

Our climate roadmap to reduce our production (scopes 1 & 2) emissions by 50% by 2030 and reach carbon neutral production by 2035.

Short-term measures

For example, Neste’s aims for 100%

share of renewable electricity by 2023

Long-term measures

Scaling up lower emission technologies

and innovations with focus on renewable hydrogen

Compensation

Any residual production emis-

sions that cannot be mitigated

will be compensated through

credible methods to reach

carbon neutral production

Medium-term measures

For example, continuous energy efficiency improvements,

electrification investments, and working with suppliers

to leverage renewable energy for heat & steam

MtCO

2.0

0.0

3.0

1.0

3.5

1.5

2.5

0.5

2019 2021 2022 2025 2030 20352020

>50%

reduction in

scopes 1 & 2

by 2030

1.7

3.4

2.9

2.3

2.5

Carbon

neutral

production

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon footprint

Increasing the share of renewable electricity has been

and still is one of the most important short-term actions

on Neste’s climate roadmap to reduce our production

emissions. We aim for 100% renewable electricity use

globally by 2023, and have made significant progress

during the past years towards this ambition. In 2022,

93.8% of electricity purchased and used globally by

Neste was of renewable origin with market-based mea-

sures (eligible for scope 2).

We have already achieved a share of 100% renewable

electricity in Finland during 2022. This was enabled by

Neste has ongoing renewable hydrogen projects at its

refineries in Porvoo, Finland and Rotterdam, the Neth-

erlands. The projects are essential in Neste’s efforts to

reduce scope 1 & 2 emissions and to reach carbon neu-

tral production by 2035.

At the Porvoo refinery, Neste’s SHARC project focuses

on developing the green hydrogen solutions for enabling

a significant reduction of the refinery's greenhouse gas

emissions. The project is in the feasibility phase with the

planned start of the operations around the mid-2020s.

The SHARC project aims to reduce Neste’s production

footprint by more than 4 MtCO

e during the first 10 years

of operation, approximately 0.4 MtCO

e per year.

At our Rotterdam refinery, we are demonstrating

renewable hydrogen production in the MultiPLHY project,

which aims at the installation and integration of an elec-

trolyser demonstration unit into the refinery. We expect

to reach the commissioning and the startup stage in the

project in 2023.

Read more about our hydrogen projects on

the innovation section and raw materials section.

wind power deliveries from our partners Statkraft, Ilmatar

and Fortum, as well as hydropower agreement with Vat-

tenfall. For our operations in the Netherlands (including

Rotterdam refinery), we were able to reach a share of

99% in 2022 through the use of Guarantees-of-Origin.

In Singapore, the availability of renewable electric-

ity in the local grid remains challenging, and we have

engaged in additional measures to contribute to the use

of renewable energy to produce electricity in South-East

Asia. Through these measures, we covered an additional

5.9% of Neste’s total purchased electricity.

Aiming for 100% renewable electricity use globally by 2023

Renewable hydrogen projects ongoing

in Finland and the Netherlands

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Carbon footprint

Reducing the use phase emission

intensity of sold products

The most relevant scope 3 emission category for Neste

is the use phase emissions of the products produced

and sold by Neste. These are the GHG emissions gener-

ated when the products that we sell are used – for fuels,

this means combustion. The key performance indicator

in this area is the use phase emission intensity of sold

products – the total GHG emissions from the combus-

tion of the products divided by the amount of energy in

those products (gCO

e/MJ).

In 2022, the use phase emission intensity of fuel prod-

ucts was 57 gCO

e/MJ, which is 2% lower than the

2020 baseline (58 gCO

e/MJ). The reduction is mainly

caused by the decision to end refining operations at

Naantali in 2021, which has decreased our fossil prod-

ucts sales, and the increased sales of renewable prod-

ucts. The absolute GHG emissions related to the use of

sold products in scope 3 were 33.6 MtCO

e in 2022,

which is 13% lower than in 2020 (38.7 MtCO

e).

We have a target to reduce the use phase emission

intensity of sold products by 50% by 2040 compared

to 2020. To meet the target, we will further increase the

share of renewable and circular products in our prod-

uct portfolio. Carbon emissions from the use of renew-

able fuel amount to zero, as the amount of bio-based

carbon dioxide released upon combustion equals the

amount that the renewable raw material has absorbed

earlier. Thus, no new carbon is added into the atmo-

sphere by the combustion of biofuels. Read more about

the accounting of the climate benefits of biofuels, such

as Neste MY Renewable Diesel.

During this decade, a key driver for the reduction of the

use phase emission intensity of sold products will be the

increased sales of renewable products enabled by Sin-

gapore Expansion, Martinez Renewables and Rotterdam

Expansion projects. In addition, we are already working

to replace a part of the fossil raw materials at the Por-

voo refinery with renewable raw materials before 2030.

With these initiatives, we estimate to be able to reduce

the use phase emission intensity by over 30% already by

2030 compared to 2020.

Beyond 2030, the reduction of use phase emission

intensity is driven by transitioning our Porvoo refinery

to a renewable and circular site and ending crude oil

refining by the mid-2030s. This is supported by our fur-

ther growth in renewable solutions, such as utilizing new

innovative raw materials.

Working with suppliers and

partners to reduce GHG emissions

across the value chain

For other scope 3 areas, emissions related to purchased

goods, such as raw materials, purchased services, trans-

portation and logistics are important topics for Neste’s

value chain emissions.

Related to raw materials, Neste’s strategic ambitions

support the scope 3 ambitions as well. For example, we

continue focusing on waste and residue in our renew-

able raw material sourcing, and plan to reduce the share

of conventional palm oil to 0% of its global renewable

raw material inputs by the end of 2023. We are innovat-

ing new types of raw materials, and are aiming to replace

some of the crude oil used at our Porvoo refinery with

renewable and recycled raw materials through co-pro-

cessing. In addition, we will work even more closely with

our suppliers to reduce emissions related to our raw

materials. We have also carried out an assessment to

enhance our understanding of the sustainability impacts

and risks in Neste’s indirect procurement supply chains.

Transportation of the raw materials and products

is another key area. We are continuously looking for

opportunities to optimize our logistics network and gain

more visibility to logistics emissions. Our ambition is to

scale up the use of low-emission solutions and increase

fuel efficiency with our logistics partners. As concrete

examples, Neste’s product distribution logistics in Fin-

land has used almost entirely Neste MY Renewable Die-

sel since 2021. With our shipping assets and contracts,

Neste has already renewed four vessels to more ener-

gy-efficient ones. Also, we explore opportunities to part-

ner with ship owners to venture towards future fuels with

next generation low carbon vessels.

In 2022, we also continued our Neste Flies with SAF

commitment. In 2020, we made a forerunner commit-

ment to mitigate GHG emissions from our employee

business flights through the use of Neste MY SAF in

collaboration with our partner airlines. The first partner-

ship was announced with Finnair and since we have also

partnered with KLM Corporate SAF Program, Lufthansa

Compensaid and Norwegian.

We recognize that leading the transformation across

the entire value chain is a long-term ambition. There-

fore, in 2022, we have worked with internal and external

stakeholders to build understanding on scope 3 emis-

sions baseline and hotspots, drivers affecting scope 3

emissions and developing action plans across different

work streams to enable moving from scope 3 ambition

to action. We will continue to strengthen our capabili-

ties across the organization and build our action plan for

scope 3 together with our suppliers and partners.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Indirect procurement supplier assessment

to strengthen understanding on scope 3 emissions

In 2022, we carried out an assessment to enhance our

understanding of the sustainability impacts and risks in

Neste’s indirect procurement supply chains. Desktop

assessments were carried out for 50 key suppliers to

evaluate climate- and human rights related topics, prac-

tices and risks. This assessment provides valuable input

for developing Neste’s ambition and actions for its scope

3 emissions. Read more about the assessment from the

Supply chain & raw material section.

Raising awareness on scope 3 emissions

People take Neste’s climate commitments from ambi-

tion to action. Therefore, in 2022 we have focused on

offering training and education for different teams. Our

aim has been to increase Neste’s employees' under-

standing on scope 3 emissions, their measuring and

the drivers impacting Neste's scope 3 emissions. In

the beginning of the year, we organized a compa-

ny-wide sustainability seminar on scope 3 emissions.

Event compensation standard

In addition to absolute emission reductions in Neste's

production (scopes 1 & 2) and across the value chain

(scope 3), we also want to make concrete climate

actions an element in everything we do. Neste Event

Compensation Standard is the first area to pilot vol-

untary carbon compensation.

With Neste Event Compensation Standard, we

commit to estimating, and minimizing GHG emissions

in Neste's internal and external events.

To evaluate the GHG emissions of events, we use

a third party developed calculator tool. Actions taken

during the event planning include choices around

energy consumption, responsible menu options, and

using renewable fuels for transport. The remaining

emissions will be compensated with compensation

projects that meet best available quality criteria. The

estimated GHG emissions covered by the event com-

pensation standard in 2022 was 38 tCO

e (estimated

with a third party calculator).

In 2022, we partnered with SouthPole, to invest in

their projects Vichada and Rimba Raya Biodiversity

Reserve. These projects include forest conservation

and reforestation for sustainable timber production,

while promoting biodiversity protection and ecosys-

tem restoration.

Neste's event partner retired compensation cred-

its on our behalf from these projects for 134 tCO

While the amount is small in the scale of Neste's cli-

mate commitments, we believe these are important

actions to embed climate considerations across our

operations and gain understanding of the voluntary

carbon market mechanisms.

Our carbon compensation approach

Neste develops its climate commitments and roadmap

by closely following the latest climate science and lead-

ing practice for corporate climate targets

. Therefore,

ambitious emission reductions in own production and

across the value chain are the primary lever for achieving

Neste’s climate ambition.

However, there is an acknowledged need for com-

panies to contribute in emission mitigation beyond their

own value chains to counterbalance the impact of any

remaining emissions

. Any residual production emis-

sions that cannot be mitigated will be compensated

through credible methods. Therefore, to reach carbon

neutral production, different compensation methods will

be the final lever on our climate roadmap. In 2022, we

continued developing and detailing our compensation

approach to ensure projects we invest in lead to impact-

ful additional climate benefits. We have followed the

development of voluntary carbon compensation meth-

odologies and markets through participation in the World

Business Council for Sustainable Development Nature-

Based Solutions works stream, continuous dialogue

with leading compensation project developers and stan-

dard setters. We see that our compensation approach

development has a potential to also support other areas

of Neste’s sustainability vision, for example Biodiversity.

Science-Based Targets initiative, Corporate Net Zero

Standard, Version 1.0, October 2021.

Traditionally, this refers to companies procuring ‘carbon

credits’ from projects in e.g. reforestation, land conservation

or renewable energy investments. Carbon credits are traded

on voluntary carbon markets, which are expected to grow

exponentially over the next decade.

Concrete actions to reduce scope 3 emissions

We have developed an internal handbook on scope 3

accounting methodology and data, and throughout the

year presented scope 3 to relevant teams in e.g. Procure-

ment, Innovation and Logistics.

Data and digitalization supporting logistics

emissions monitoring and management

Digitalization and data are necessary enablers in man-

aging GHG emissions across Neste’s value chain. As an

example of work done in 2022, we have tools to con-

stantly monitor Neste marine logistics GHG emissions.

This gives us a base to take actions and monitor the

effectiveness of optimization of GHG emissions from

shipping operations. These types of digital fleet optimi-

zation tools have made significant progress in the reduc-

tion of GHG. In 2022, a GHG emission reduction of

9 000 tCO

e was achieved by digitalisation of just-in-time

arrivals. Development towards further automatized fleet

usage optimization will further reduce the environmental

impact of logistics.

Neste Annual Report 2022 | Carbon footprint

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Biodiversity

Our business is dependent on natural resources. For our

planet and our business to thrive and be resilient, the pre-

requisite is restoring and protecting healthy ecosystems.

Biodiversity is one of the cornerstones of Neste’s sustain-

ability vision and we aim to drive a positive impact on bio-

diversity and achieve a nature positive value chain by 2040.

Biodiversity loss is the third most severe risk on

a global scale over the next ten years

. Natural

ecosystems are impacted by effects of climate

change, unsustainable water use, forestry and

farming practices resulting in resource depletion.

Biodiversity

the World Economic Forum’s 2022 Global Risks Report

Strategy GovernanceSustainability Review by the Board of Directors Financials

Aligned with our purpose of creating a healthier planet

for our children, we wanted to set an ambitious biodiver-

sity vision, launched in 2021. We aim to achieve a nature

positive value chain by 2040, meaning that the positive

biodiversity impacts outweigh the negative ones.

We have also set the ambition level to support the vision:

• We aim at creating net positive impacts (NPI) for

biodiversity from new activities from 2025 onwards.

• We target no net loss (NNL) of biodiversity from all

ongoing activities by 2035.

Biodiversity neutral value chain means that the impacts

to biodiversity are minimized and the caused negative

impacts are compensated either in the direct value chain

or elsewhere.

Nature positive business means that the overall busi-

ness creates more benefits than causes adverse impacts

to nature.

Net positive impacts

Aim at creating net positive impacts (NPI)

for biodiversity from new activities from

2025 onwards

Nature positive

Neste drives a positive impact on

biodiversity and achieves a nature positive

value chain by 2040.

Nature positive value chain means that

throughout our value chain we are creating

more positive impacts to nature than causing

adverse ones.

No net loss

Target no net loss (NNL) of biodiversity

from all ongoing activities by 2035

The scope of ‘Net positive impact’ (NPI) and ‘No net loss’ (NNL) goals is set

to Neste’s own direct operations. ‘Direct’ means activities where Neste owns

the land or is owning the operations or activity. NPI and NNL aim to address

impacts by avoiding and minimizing losses, by restoring affected areas and

finally by compensating the residual impacts, so that no biodiversity loss

remains or positive impact is created.

2025

Neste Annual Report 2022 | Biodiversity

2040

Building the means and roadmap to achieve our biodiversity vision

2035

In 2022, we defined the scope and developed

methodology for net positive biodiversity impact

for direct operations. Piloting and integration to

processes will start in 2023.

No net loss means net zero impact on biodiversity.

It is required from all Neste own direct operations by 2035.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Building a strong foundation

for our biodiversity work

At Neste, we have started the development of a sys-

tematic, in-depth approach to building our biodiversity

framework and roadmap towards our vision. Much more

work is still needed to understand our impacts on nature

as well as dependencies between climate, social and

biodiversity topics.

In 2022, the biodiversity work focused on develop-

ing our understanding of our current impacts. We con-

ducted materiality analysis for our direct operations

(scope 1) and biodiversity inventory projects in Porvoo

and Naantali operational areas in Finland to define the

focus areas in our own operations. We concluded the

water aspects to be significant in regards to biodiversity

and nature. We also continued value chain materiality

analysis, which we aim to complete in 2023 for selected

raw materials.

We created definitions on Net Positive impact for

Neste and created a net positive impact (NPI) methodol-

ogy for biodiversity to guide our work towards our vision.

We will pilot the methodology in 2023 with chosen new

initiatives.

In the longer term, we are looking for potential new

renewable raw materials to turn into renewable hydro-

carbons and fuels. We are currently assessing raw

materials like algae, lignocellulosic waste and residues

and novel vegetable oils. In studying the new raw mate-

rial opportunities and innovations, biodiversity has been

integrated into criteria from the beginning. For example,

with novel vegetable oils, Neste is exploring regenera-

tive agriculture practices, such as intermediate crop-

ping, that maximize greenhouse gas savings while pro-

moting soil health, sustainable water and land use and

biodiversity.

Neste’s raw material sourcing for renewable fuels is

strictly regulated by the sustainability criteria of, e.g.,

the EU Renewable Energy Directive. It defines no-go

areas and restricts the use of materials originating from

land with high biodiversity value. Similar restrictions are

applied in the US and other markets as well, ensuring

that raw material sourcing for renewables is environmen-

tally sound. Read more about our supply chain and raw

materials.

We acknowledge that by actively listening to stake-

holders, following the work of the key organisations and

collaborating with top specialists, we are able to develop

a systematic approach and metrics to take into account

the biodiversity, soil and water issues related to our busi-

ness. The backbone of our biodiversity work in 2022 has

been our partnership with Fauna & Flora International.

Currently, internationally recognized methodologies for

biodiversity impact mitigation across value and supply

chains are only just under development. Similarly, disclo-

sure frameworks are updating their biodiversity require-

ments. We are closely following the development of

these methodologies and frameworks to help build a

roadmap towards our vision.

Biodiversity risks

Biodiversity loss including a destruction of natural cap-

ital, ranging from reductions in the genetic diversity to

the collapse of entire ecosystems, is mainly the result of

human activities causing deforestation and soil degra-

dation. Biodiversity loss is a global concern that has an

effect also on Neste’s stable and secure operations and

supply of raw materials.

The risk could materialize on raw material accept-

ability by the stakeholders or regulatory limitations that

lead to lack of sufficient volumes of raw materials. Future

requirements for e.g. restoring and protecting biodiver-

sity may also have impacts towards our operations and

value chains.

We gain more understanding on biodiversity related

risks and opportunities when we finalize the holistic

materiality analysis including our direct operations and

the value chain impacts. During 2022, we conducted

a materiality analysis for our own operations (scope 1),

and water was highlighted as a key topic. There are risks

related to freshwater ecosystems, water scarcity and

marine ecosystems that we might impact through our

freshwater withdrawal and release of effluents.

Neste Annual Report 2022 | Biodiversity

Strategy GovernanceSustainability Review by the Board of Directors Financials

Materiality analysis

In 2022, we continued the materiality analysis of the key

aspects related to biodiversity and nature in our value

chain (scope 3) and conducted an analysis for our direct

(scope 1) aspects including sites that are owned or oper-

ated by Neste. The analysis was conducted according

to the current draft methodology by Science Based Tar-

gets Network (SBTN) that recognizes the same biodiver-

sity pressures as The Intergovernmental Science-Pol-

icy Platform on Biodiversity and Ecosystem Services

(IPBES).

The methodology is still under development by SBTN

and the application of the draft methodology remains

limited. This has an impact on the first results achieved

with the methodology. Neste closely follows the meth-

odology and its applicability.

Progress and highlights in 2022

The initial results for our direct impacts indicated that

fresh water use and water pollutants are among the most

material impacts we have on biodiversity and nature.

Our Porvoo refinery is the major user of fresh water. In

each of our locations we are closely monitoring and mit-

igating the effluents release to avoid impacts on marine

ecosystems.

For our value chain, we continued the work to better

understand our impacts on biodiversity from raw mate-

rials to end products. We find that our supply chain is a

key asset especially for our renewable businesses, and

having an impact and taking care of biodiversity in our

supply chain is highly important.

In 2023, we will continue the work with defining mate-

riality for the selected raw materials (scope 3).

Defining positive impact

In 2022, we focused on building the means and road-

map towards our biodiversity vision. We defined the

scope and methodology for creating no net loss (NNL)

and net positive impact (NPI) for biodiversity in our direct

operations together with Fauna & Flora International’s

experts.

Neste is aiming to create net positive impacts (NPI) for

biodiversity from new activities from 2025 onwards and

no net loss (NNL) of biodiversity from all ongoing activ-

ities by 2035. The scope of these targets are our own

direct operations.

Both NPI and NNL aim to address impacts through the

mitigation hierarchy by avoiding and minimizing losses,

by restoring affected areas and finally by compensating

the residual impacts, so that no biodiversity loss remains

or positive impact is created.

We are planning to start to pilot the NPI methodol-

ogy in selected new activities in 2023. Through pilots we

gain more understanding to further develop the frame-

work to be implemented in all new activities from 2025

forward. We also initiated the integration of the meth-

odology to the investment process and criteria to bet-

ter guide investment planning from a biodiversity impact

perspective.

The work done during 2022 helped us to gain further

understanding of the collaborations needed to be able

to mitigate the negative impacts and create the posi-

tive ones for biodiversity. The work will further continue

in 2023 by creating an approach and framework dedi-

cated to the value chain.

Neste Annual Report 2022 | Biodiversity

Strategy GovernanceSustainability Review by the Board of Directors Financials

Developing a conservation

stewardship program

Neste’s Mahoney Environmental site in Mendota, Illinois,

US is developing a conservation stewardship program to

manage their land in order to protect Illinois’ limited envi-

ronmental resources. As part of the process a wetland

to handle storm water runoff and provide increased nat-

ural habitat has been completed. Wetlands are among

the most productive ecosystems in the world, compa-

rable to rainforests and coral reefs. Wetlands protect

and improve water quality, providing wildlife habitats,

storing floodwaters and maintaining surface water flow

during dry periods. In addition, wetlands help to moder-

ate global climate conditions because they store carbon

within their plant communities and soil instead of releas-

ing it to the atmosphere as carbon dioxide.

A next step in the process is to create a pollinator hab-

itat. Pollinators are vital to creating and maintaining the

habitats and ecosystems that many animals rely on for

food and shelter. Worldwide, over half the diet of fats and

oils comes from crops pollinated by animals. More than

3,500 species of native bees help increase crop yields.

Biodiversity inventory project

We began piloting practical methods for measuring bio-

diversity and better understanding our opportunities to

protect biodiversity. We carried out a biodiversity inven-

tory project at our Porvoo and Naantali sites in Finland.

We utilized a specific Biodiversity Metric method for biodi-

versity baseline assessment and comparison purposes.

Porvoo and Naantali refinery areas were chosen for

the assessment as both locations are large and include

natural areas, such as forest. Information on the current

biodiversity state helps us in identifying opportunities and

forms a baseline for the sites to reach our biodiversity

vision and understand impact of any land use change.

Results indicated that we have some vulnerable spe-

cies and habitats to protect within our lands in Porvoo

and Naantali, even though the lands are mainly not con-

sidered as areas of high biodiversity value. Within the

Naantali refinery area we have some areas that we have

protected in the past. The area is forest voluntarily pro-

tected under national legislation. The protected area is

three hectares of the total 300 hectares. Other opera-

tional sites we own are located in more industrial areas,

with a lower likelihood of impacting areas of high biodi-

versity value.

The results serve as a baseline for biodiversity status

in Porvoo and Naantali refinery areas and will be utilized

in piloting the newly-created NPI methodology and in

assessing the most impactful mitigation actions for bio-

diversity in our direct operations.

Going forward we are looking for ways to improve

the biodiversity around our direct operations (scope 1)

aligned with the Net Positive and No Net Loss method-

ologies currently under development.

Established collaborations

• Fauna & Flora International: Neste is

partnering with Fauna & Flora International to

develop a biodiversity approach for Neste and

a roadmap towards our biodiversity vision.

The collaboration was established in 2021.

• Science Based Targets Network (SBTN):

Neste joined the Corporate Engagement

Programme in 2021 to take part in the

development of methods and guidance for

science-based targets for nature. Programme

will continue in 2023.

• World Business Council for Sustainable

Development (WBCSD): Neste participates

in the WBCSD’s Nature Positive project to

follow the global development of nature and

biodiversity related corporate frameworks

and policy development. The project aims

for consistent and credible Nature-Positive

business actions such as nature-based

climate solutions.

• Consumer Goods Forum (CGF): In 2022,

Neste joined the CGF’s Forest Positive

Coalition to strengthen our collaboration

on preventing deforestation and creating

common metrics and definitions to disclose

supply chain related biodiversity impacts.

Neste Annual Report 2022 | Biodiversity

Strategy GovernanceSustainability Review by the Board of Directors Financials

Even though we acknowledge that we are at the begin-

ning of the biodiversity journey, we have a long history

of working with other areas of environmental protection.

Below we highlight some of our key activities in different

Neste locations.

Biological indicators show

decreased impacts on nature

Neste has conducted continuous ambient air quality

monitoring in the vicinity of the Porvoo refinery since

1970. We have three automatic ambient air quality mea-

surement stations in Porvoo residential areas. The gen-

erated air quality data is part of the national data, which

is verified and published by the Finnish Meteorological

Institute on its air quality portal website, open to all. The

air quality monitoring has demonstrated that sulphur

dioxide and nitrogen oxides emissions to the air have

significantly declined over the past decades. Reduced

sulphur dioxide and nitrogen oxides emissions are due

to successful pollution control investments and refining

technology improvements since the 1980s and 1990s,

respectively.

In addition, Neste has been monitoring biologi-

cal indicators since the 1980s. According to the mon-

itoring results, Porvoo refinery impacts to nature have

decreased. For example, the radius from the refinery to

lichens impacted by air pollution has reduced from 10

kilometers to less than 3 kilometers. Currently, tree nee-

dle nutrient levels are at the same level as in natural for-

ests, and tree growth has not been significantly influ-

enced by refinery emissions.

Preventing deforestation

in our supply chains

Neste is committed to preventing deforestation and

avoiding the conversion of habitats with valuable biodi-

versity for biomass production, while requiring the same

from its suppliers globally. We source renewable raw

materials only from known sources providing us with vis-

ibility into the raw material supply chain. Raw material

traceability helps us ensure that raw material produc-

tion does not infringe human rights or put forests, car-

bon-rich areas or biodiversity at risk.

In 2022, we joined the Consumer Goods Forum (CGF)

Forest Positive Coalition to strengthen our collaboration

on preventing deforestation. We also initiated a project

that focuses on deforestation prevention in our existing

animal fat waste supply chain. Read more about how

Neste combats deforestation.

Material and energy efficiency

Our aim is to use energy, as well as other utilities, as

efficiently as possible. Energy efficiency plays a key role

particularly in our production and logistics.

In Finland, we have made a commitment to the

national voluntary energy efficiency agreement scheme.

During the agreement period 2017–2025, we aim to save

500 GWh compared to the 2014 level. In 2022, our

energy saving measures totaled 42.6 (95.8) GWh.

Neste is continuously developing ways to use mate-

rials more effectively and finding solutions to minimize

the amount of waste and recover the waste generated.

Reducing the amount of waste and improved material

efficiency also has an impact on our climate performance.

We are using mainly waste and residue raw materials

in our renewable products. Waste and residue raw mate-

rials are more difficult to refine in the process than pure

vegetable oils and they need specific pretreatment pro-

cesses. This also has an impact on the amount of waste

and wastewater generated. To respond to increasing

production volumes, we have invested in new waste-

water treatment plants in our Rotterdam and Singapore

refineries.

Waste in our own operation is handled by contracted

third parties locally and our waste reporting is based on

data provided by them. We are following the local waste

regulations and legislations in our operations and are as

well continuously looking for new opportunities to mini-

mize the waste sent to landfill and finding new solutions

to recover waste.

Neste Annual Report 2022 | Biodiversity

Supporting pollination in

the area of Neste headquarters

As we aim at creating net positive impacts (NPI) for bio-

diversity from new activities from 2025 onwards, we

believe that smaller concrete actions can also have a

notable effect at raising awareness and work as a call to

action for many individuals. One example is supporting

the pollinators that have a crucial role in the growth of a

diverse nature globally.

At Neste headquarters in Espoo, Finland we have

four beehives that accommodate approximately 50,000

bees each, creating a positive impact on the surround-

ing environment locally. The beehives were provided by

Korpikuusikko Honey.

Pollinators contribute to the growth of a diverse nature

and at the same time secure the food production, as var-

ious species of bees pollinate about 80% of the world’s

plants.

Examples of long-term and ongoing

biodiversity projects in the locations

where Neste operates

Strategy GovernanceSustainability Review by the Board of Directors Financials

Environmental monitoring

Continuous ambient air quality monitoring and other

environmental programs, like marine and groundwater

monitoring, continued in the vicinity of the Porvoo refin-

ery and Naantali terminal.

In 2022, an odour assessment was conducted at the

Porvoo refinery by engaging closest surrounding inhab-

itants to odour monitoring. This qualitative survey clar-

ified further that refinery related odour nuisance has

decreased during the past decades.

Furthermore, according to the long-term ambient air

quality monitoring stations results, we expect to meet

even the most stringent air quality guideline values by

the WHO (2021) in the vicinity of the Porvoo refinery

under normal operations. The EU is currently revising the

Ambient Air Quality Directive’s limit values in which the

long-term ambition is to meet the WHO (2021) guideline

values as a part of the zero pollution vision for 2050.

Water

Water is essential for life, and people and nature are

dependent on fresh water. Humanity depletes the avail-

able freshwater supply at a rate that is not sustainable.

According to the World Economic Forum, water crises

have been among the top five global risks in the last

seven years. Climate change is also directly linked to

water scarcity.

Neste relies on water and we recognize our role in

working to protect freshwater ecosystems and improve

water access and efficiency. We believe that by imple-

menting water stewardship, we can also build more

resilient operations.

In 2022, we conducted a biodiversity materiality

assessment for our own operations and water related

aspects have been identified as a material topic for us.

Based on the results, we initiated the work to update

our approach to water and related targets to comple-

ment our vision towards the nature positive value chain

by 2040.

Majority of Neste’s Porvoo refinery operations in Fin-

land use water mainly for cooling the refining processes.

Cooling water is withdrawn from the sea. Most of the water

used for cooling is brackish water. Cooling water is cir-

culated back to the source in a similar condition as when

withdrawn, only at a slightly elevated temperature. Neste

does not currently have water withdrawal from ground

water. New wastewater treatment units were installed in

Porvoo in 2019 and similar investments are under con-

struction in Singapore and Rotterdam and are expected

to be completed by the end of 2023. In Singapore, major-

ity of used process water is discharged into a public

sewer system for purposes of purification and further

re-use.

Water risks

We follow the current water risk status with several tools.

The most recent water risk evaluation of our operational

sites was done in 2022, based on the WWF water risk

filter tool that enables both a site-specific and global

review of the water risks at the physical, regulatory and

reputational levels.

Neste Annual Report 2022 | Biodiversity

Neste has been evaluating the water stress status of

our own sites with a conservative approach. The results

indicate that there are several separate risk indicators

related to Neste locations that are at an elevated level.

These indicators include risks such as flooding, water

quality, ecosystem services and biodiversity importance.

However, the physical risks are at a low or moderate

level in all Neste locations.

The risks related to operations have been assessed

to be low, but the potential pressure caused in pricing

of water resources, both water intake and wastewater

treatment, has been taken into consideration in opera-

tional financial planning in the long term.

According to our company-wide environmental prin-

ciple, all investment projects include an Environmental

Compliance Analysis and a compliance review in case of

building new production capacity or increasing the cur-

rent capacity. Water risk assessment is included in the

investment projects.

In Neste’s supply chain water is mostly used in raw

material extraction and cultivation and in raw material

processing. On top of the operational site evaluations,

the water risk evaluations covered the raw material sup-

ply chains when water risks were included in the biodi-

versity impact evaluations that were started in 2021.

Environmental permit related incidents

In 2022, we had 3 minor environmental permit-related

incidents in our operations. In the Rotterdam refinery,

we identified elevated H

S concentration in one of the

air emission outlets. NOx and SO

emission at one of

the energy production boilers in the Porvoo refinery

exceeded an allowed daily average limit.

Regarding the timeline for installation of an off gas treat-

ment system in Rotterdam, the environmental authority

has confirmed an order to have the system installed and

taken into use, subject to a threatened penalty payment.

To solve the installation timeline issue and to reduce air

emissions, an off-gas treatment system was taken into

use in November 2022 at the site.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Human rights

In line with the United Nations Guiding Principles on

Business and Human Rights, our Human Rights Prin-

ciple, updated in 2022, sets the path and standards

for a rights-based approach in all of Neste’s business

decisions.

We expect all of our suppliers and business partners

to respect internationally-recognized human rights, and

to comply with the minimum human rights requirements

set out in Neste’s Supplier Code of Conduct.

Our vision for a sustainable future

One of the cornerstones of Neste’s sustainability vision

is our human rights ambition to create a more equita-

ble and inclusive value chain by 2030, in which every-

one works with dignity. The four priority areas for action

under this ambition are:

Human rights

Reducing inequality

By 2030, reduce inequalities across the value chain and address the root causes of systemic human rights issues.

Responsible recruitment

Commit to and promote the Employer Pays

Principle, with implementation in high risk

areas by 2030, to ensure that no worker pays

for a job and the costs of recruitment are paid

for by the employer, not the worker.

Children & education

Work together with our stakeholders to

increase children’s access to education

by 2030, and promote respect for children’s

rights by actively supporting and participating

in initiatives aimed at keeping children in school.

Living wages

Pay all of our employees at least a living

wage, take action to promote living wages in

Neste’s supply chains, and require strategic

contractors and suppliers to pay their

employees a living wage by 2030.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Identify actual & potential impacts

• Ongoing practice of reviewing Neste’s salient issues

and understanding the gaps in our mitigation activities.

• Human Rights Impact Assessments, Gap Assessments

and/or Risk Assessments integrated into the early phases

of all major business development and investment projects.

• Collaboration with independent third parties.

• Country and sector risk assessments.

• Supplier Sustainability Portal used for supplier management and

traceability throughout the business relationship, supported by regular

and ongoing desktop audits and direct supplier engagement.

Example: In 2022, we carried out a detailed human rights risk assessment for

Neste’s indirect procurement. In the first stage, we assessed the risks associated

with different sourcing categories and sourcing countries. In the second stage,

we evaluated the human rights practices of suppliers selected based on risk and

spend, taking into consideration the results from the first assessment. Read more

about the indirect procurement assessments on page 90.

Prevent & mitigate adverse impacts

• Supplier Code of Conduct approval by suppliers and business partners

• Counterparty pre-screening for potential business partners,

escalated to manual review if any issues are found.

• Supplier Sustainability Survey and desktop audit for

all new renewable raw material suppliers.

• Regular personnel surveys for all Neste employees.

• Human rights training included in e-learning rolled out globally to all employees,

with targeted in-person training for specific teams and functions.

• Dedicated human rights specialists stationed on the ground

for high-risk projects.

• Capacity building with suppliers in high-risk geographies and supply chains.

• Sustainability audits with strong human rights criteria.

• Multi-stakeholder collaboration and partnerships

to jointly address root causes and systemic issues.

Example: In 2022, Neste partnered with the The European Institute for Crime

Prevention and Control (HEUNI) as a third-party expert to host two seminars for

training Neste employees on modern slavery and to raise awareness on the risks

accross Neste’s own operations globally. Read more on page 85.

Policy commitment

• Neste Code of Conduct

• Neste Human Rights Principle, supported

by operational policies and procedures

Example: Our Neste Human Rights Principle applies to the entire Neste

Group. It describes how Neste meets its responsibilities to respect

human rights and conduct human rights due diligence. The Human

Rights Principle was updated in 2022, with extensive input from inter-

nal and external stakeholders and recognized subject matter experts.

Remedy adverse impacts

• Anyone can file a report through our company-wide grievance

mechanism, Ethics Online, which is accessible to all of our

employees, internal and external stakeholders,

and the general public via Neste’s website.

• Operational-level complaints mechanisms

designed for individual sites and projects.

Example: In 2022, we set up an operational-level local complaints and

feedback mechanism at our Singapore refinery, providing a channel for

all onsite workers, including contractors’ employees, to be able to raise

local complaints directly to Neste and access effective remedy.

Human rights due diligence:

a people-first approach

In recognizing that our human rights impacts may

change over time as our operations and value

chains continue to evolve, we are committed to

embedding human rights due diligence across our

business as an ongoing, iterative process.

We achieve this by building human rights due

diligence into our existing systems and processes,

and creating new processes when needed.

When assessing human rights risks, we engage

with affected stakeholders and pay special atten-

tion to vulnerable groups such as women, chil-

dren, migrant workers and Indigenous peoples.

In all cases, we consider our rights-holders

and

ensure a people-first approach.

Remedy adverse impacts Prevent & miti

Identify actual

Policy commitment

Embedding human rights

due diligence at Neste

Neste has put in place ongoing management processes to identify, prevent,

mitigate and remedy adverse human rights impacts. We continuously monitor

and track the effectiveness of our response, with transparent reporting and

communication on how impacts are addressed.

Rights-holders are all the individuals or social groups

whose human rights may be impacted or affected

by Neste’s business activities, operations, products

or services.

Neste Annual Report 2022 | Human rights

Strategy GovernanceSustainability Review by the Board of Directors Financials

Embedding respect for

human rights across the business

In order to meet our responsibility to respect human

rights, we implement an ongoing process of human rights

due diligence to identify, prevent, mitigate and account

for how we address adverse human rights impacts. We

ensure that respect for human rights is driven across

our organization by expecting all our personnel to be

aware of Neste’s human rights commitments and under-

stand the implications for how they act and conduct

their work. Below we highlight some of our key activities

and engagements to advance respect for human rights

throughout 2022.

Focusing on salient issues

Our Human Rights Principle outlines seven priority areas

for human rights at Neste: Fair employment, Health &

safety, Equity, diversity & non-discrimination, Children

& young workers, Modern slavery, Fair treatment, and

Economic, social & cultural rights. These are Neste’s

salient human rights issues, that is, those issues that are

at risk of the most severe negative impacts through our

activities or business relationships.

Economic, social

& cultural

rights

Fair

treatment

Fair

employment

Children

& young

workers

Modern

slavery

Equity,

diversity &

non-discrimination

Health &

safety

Our most

salient human

rights issues

The Neste Human Rights Principle was first published in 2017, following Neste’s 2015 Human Rights Commitment to respect human rights in accordance with the UN Guiding Principles on Business and Human Rights.

We regularly analyze the saliency of our human rights

impacts based on severity and likelihood. This enables

us to actively monitor our progress in addressing our

salient human rights issues, and to account for any

new risks resulting from changes in our business. It also

ensures that we accurately focus and prioritize our work

to address human rights risks. In 2022, we expanded

our saliency assessments to evaluate the effectiveness

of the measures we have in place to address our salient

issues. This encompassed determining which adverse

impacts Neste could cause, contribute or be directly

linked to, and evaluating whether our existing practices

are adequate in scale and complexity to address these.

The results of this assessment were taken into account

for our 2022 Human Rights Principle update.

Human Rights Principle update

Understanding that our impacts on human rights have

evolved with changes in our business and the world

around us, in 2022 we conducted a major review and

update of the Neste Human Rights Principle

, informed

by extensive consultation with both internal and exter-

nal stakeholders. Key updates to the principle include

a new section on respecting the rights of human rights

defenders, a greater focus on the importance of stake-

holder engagement, and enhanced clarity on how we

act to implement the principle in practice.

During the external consultation process, we received

recommendations for improvements to the principle

from a range of recognized topic experts, including

human rights NGOs, government representatives and

trade union experts. Our internal consultations at Neste

included discussion and feedback from multiple teams,

such as Sustainability, Human Resources, Health &

Safety (HSSEQ), Public Affairs, Compliance and Legal.

As part of the update process, we also incorporated

the results of our annual human rights saliency assess-

ment and reviewed current industry-leading practices

and expected requirements under upcoming human

rights due diligence legislation in various countries and

at the EU level.

The Human Rights Principle received final review and

approval by Neste’s President and CEO, based on the

endorsement of the Neste Executive Committee. It forms

part of Neste’s Management System (NMS) and is pub-

licly available on our website.

Impact assessments and social audits

We are committed to assessing and monitoring our human

rights impacts in both our own operations and our sup-

ply chains. Neste Supplier Code of Conduct defines min-

imum human rights requirements for all of our suppliers

and business partners, who are also required to undergo

a robust human rights assessment before they can part-

ner with Neste. Our sustainability audits have a strong

human rights focus and prioritize assessing impacts on

people. In 2022, we also integrated these human rights

criteria into the audits we conduct for our raw material

and end product terminals. Read more about the audits

carried out in 2022, including a summary of results and

key findings on human rights topics on page 88.

We continue to use human rights criteria and assess-

ments to inform decision making on strategic business

development, investments and innovation projects. In

2022, we strengthened our ability to identify and assess

human rights risks in the early stages of these projects,

by developing a new framework for integrating a human

rights approach into our stakeholder engagement activ-

ities, to ensure that we evaluate how our business may

impact local people and communities.

Neste Annual Report 2022 | Human rights

Strategy GovernanceSustainability Review by the Board of Directors Financials

We actively monitor and assess risks to people work-

ing onsite at our refineries. In 2022, we focused on

strengthening our ability to understand, assess and mit-

igate human rights risks during refinery turnarounds. We

also began planning contractor audits and key actions

to ensure we will be able to hear worker voices during

our Rotterdam refinery expansion, for example, imple-

menting a local complaints mechanism and carrying out

worker voice surveys.

Living wages

In 2022, we initiated an internal living wage gap assess-

ment for Neste’s own employees in Finland, using data

provided by the Fair Wage Network. The results of this

assessment enabled us to verify that all Neste employ-

ees working in Finland receive compensation above

the local living wage benchmark. In May 2022, The Fair

Wage Network provided living wage training sessions

for relevant specialists on our Sustainability and Human

Resources teams. We also started using living wage

data in sustainability audits for raw material suppliers,

with the dual aim of gaining a better understanding of

our supplier wage practices and raising awareness to

build supplier knowledge on this topic. In 2023, we plan

to expand and complete the living wage gap assess-

ments for our own employees across our global loca-

tions and take further steps to promote living wages in

our supply chains.

Modern slavery

Neste supports the elimination of all forms of modern

slavery. We recognize that modern slavery is a growing

global issue from which no industry is immune, and we

are committed to taking the appropriate steps to identify

vulnerable workers and mitigate modern slavery risks in

our operations and supply chains. Read more about the

steps we are taking to address modern slavery risks in

our annual Modern Slavery Statement.

Children & youth

We are committed to respecting and supporting chil-

dren’s rights, and to implementing the Children’s Rights

and Business Principles throughout our business and

value chains. At the end of 2022, we started a partner-

ship with SOS Children’s Villages for a three year project

to support children in high-risk communities where Neste

has supply chains. Read more about our broader activ-

ities to advance respect for children’s rights throughout

our business on our website.

Neste Annual Report 2022 | Human rights

Worker voice

As Neste’s global business continues to grow, so does the reach of our

supply chains and the number of workers impacted by our business activ-

ities worldwide. This means that we also need to grow our ability to cap-

ture these workers’ voices in a systematic manner. For this reason, in

2022, we partnered with Work Ahead to launch the use of a worker voice

tool in Neste’s supply chains. The worker voice tool is an audiovisual sur-

vey that enables direct and anonymous engagement with workers using

mobile devices. In May 2022, we piloted the tool with a Neste raw material

supplier in Asia, and will roll this out for wider use in 2023.

The survey will provide insights on various topics impacting workers in

Neste’s supply chains, for example, inequality, living wages, recruitment

fees and children’s access to education – priority areas of focus under our

human rights ambition for 2030. It will be used to complement, but not

replace, worker interviews during Neste sustainability audits, as a way to

scale up the number of workers we engage with and improve our overall

understanding of workers’ experiences.

In 2022, we initiated an internal living wage

gap assessment for Neste’s own employees

in Finland, using data provided by the Fair

Wage Network.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Training and capacity building

Understanding that impact assessments and social

audits alone are not sufficient for tackling human rights

risks, we are also committed to training our employ-

ees on our policies, and engage in training and capacity

building with suppliers.

In 2022, we completed the roll out of our new Code

of Conduct e-learning to all Neste employees, which

includes topics on advancing respect for human and

labor rights, and highlights our basic expectation for all

employees to be aware of how their work impacts the

human rights of people in our operations, value chain

and communities. Human rights trainings, including top-

ics related to modern slavery, are also integrated into our

global induction for all new employees who join Neste,

as well as our Supplier Code of Conduct e-learning.

In line with our KPI to increase the number of Neste

employees who have received training on modern slav-

ery, in 2022 we carried out customized training for our

Indirect procurement team on the minimum human

rights requirements in our Supplier Code of Conduct.

The training highlighted specific risks to be aware of in

different procurement categories, with recommendations

for complying with minimum requirements and advanc-

ing best practices with suppliers. Read more about the

category risk assessments for indirect procurement on

page 90.

In 2022, we also enhanced our understanding of

modern slavery and labor exploitation risks by partner-

ing with the The European Institute for Crime Prevention

and Control (HEUNI). HEUNI trained Neste employees

on the prevalence of modern slavery in all countries and

sectors around the world, and shared information on the

occurrence of labor exploitation in the regions and sec-

tors connected to our business and value chains. HEUNI

also provided bespoke training for members of our pro-

duction, supply and procurement teams with practical

guidance on how to identify, prevent and mitigate risks

of labor exploitation.

In 2022, we organized a seminar with all of Neste’s con-

tractors audited during the Singapore Expansion project

to share information on best practices and our overall

learnings from the audits, with the aim of promoting the

continued uptake of positive human rights practices in

the wider construction industry beyond Neste’s opera-

tions. The seminar covered topics such as forced labor,

responsible recruitment and living wages. Read more

about the seminar here.

We host annual sustainability workshops for our palm

oil and PFAD suppliers to advance capacity building on

human rights topics and engage in open dialogue on

prevailing sustainability issues in the supply chain. Read

more about the sustainability workshops on page 93.

In 2022, we also carried out global online human rights

capacity building training for our medium and high risk

renewable raw materials suppliers and sub-suppliers

across Asia, Oceania, Americas, and the EMEA region.

Topics covered in the workshops included human rights

due diligence, forced labor, recruitment fees, children’s

rights, living wages and more. Read more about the

workshops on page 89.

Collaborating to advance business

respect for human rights

We believe that human rights are best advanced through

collaboration. We actively seek out opportunities to work

with our stakeholders to collaboratively advance posi-

tive systemic change and together enhance our lever-

age to address the root causes of adverse human rights

impacts. Below you can find examples of our key collab-

orative engagements in 2022:

Neste is an active member of the Nordic Business Net-

work for Human Rights (NBNHR), a professional net-

work of global companies who work with human rights

impacts in their organizations or supply chains, chaired

by the Danish Institute for Human Rights. In 2022, Neste

continued to participate in the network meetings, which

enable us to stay updated on the most recent knowledge

and trends in business and human rights, and provide

us with a space to share various dilemmas with experts

and peers.

We are a member of the Consumer Goods Forum’s

(CGF) Human Rights Coalition on Working to End

Forced Labour. Members of the coalition are committed

to helping achieve fair and decent working conditions

worldwide by driving individual and collective action in

their own operations and supply chains. In 2022, as part

of our work under the coalition we carried out human

rights due diligence assessments for two selected areas

within our own operations: production and shipping, fol-

lowing the CGF Maturity Journey Framework. We also

worked collectively through the coalition to advance

positive human rights practices in palm supply chains

and on the publication of a guide on the repayment of

recruitment fees.

Read more about our initiatives to promote social sus-

tainability and respect for human rights in the palm sec-

tor on page 93.

At Neste, we view inequality as a systemic risk that

requires urgent action from business. In 2021, we joined

the World Business Council for Sustainable Development

(WBCSD) Business Commission to Tackle Inequality

(BCTI), a cross-sector, multi-stakeholder coalition repre-

senting business, civil society, intergovernmental institu-

tions, academia, the labor movement, and the investor

community. In 2022, Neste actively contributed to BCTI

working groups focused on defining the actions that busi-

nesses should take to reduce inequality, as published in

the BCTI Introductory Report. Moving into 2023, we

plan to continue contributing to the work under the BCTI

and its associated workstreams.

Reporting

Since 2021, we have been reporting in accordance with

the United Nations Guiding Principles on Business and

Human Rights (UNGP) Reporting Framework. Read more

about the framework index for 2022 on page 114.

We believe that human rights are best

advanced through collaboration.

Neste Annual Report 2022 | Human rights

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

We continue to require all our suppliers to be committed to Neste Supplier

Code of Conduct with criteria on human and labor rights, occupational health

and safety, climate, environment and ethical business conduct. All our raw

material suppliers are subject to additional sustainability due diligence.

Our vision is to drive a safe and healthy workplace,

fair labor practices and increased commitment to

sustainability across the supply chain.

Supply chain and

raw materials

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Ensuring sustainable supply chain

Ensuring responsible and ethical business depend not

only on our own actions but also upon forming rela-

tionships with business partners who are committed

to our sustainability criteria. We expect all our business

partners and suppliers to uphold Neste’s policies and

principles, including our Supplier Code of Conduct, a

key element in Neste’s supplier management system.

Additionally, our renewable raw material suppliers are

expected to meet the requirements of Neste’s Respon-

sible Sourcing Principle.

Neste Supplier Code of Conduct

Neste Supplier Code of Conduct, updated and imple-

mented in 2020, outlines the basic requirements Neste

expects its suppliers and their own first tier suppliers,

contractors and business partners to adhere to and

implement throughout their businesses.

The Supplier Code of Conduct is included in the terms

of contracts with all suppliers, contractors and other

business partners participating in the delivery of any raw

materials, products, components, materials or services

to Neste, covering both direct and indirect procurement.

Companies consolidated through mergers and acqui-

sitions are also expected to implement Neste Supplier

Code of Conduct in their sourcing.

To support the implementation of the Neste Supplier

Code of Conduct, we carry out training and provide a

guide with practical recommendations to help our sup-

pliers meet their obligations to comply with the Supplier

Code of Conduct. The guide for suppliers was updated

in 2022. In addition, we further enhanced internal guid-

ance on supply chain sustainability. We also carried out a

training to support the implementation of Supplier Code

of Conduct in Neste’s Indirect Procurement function.

We have an e-learning for our employees outlining

the main elements of the Supplier Code of Conduct and

describing how to report potential violations.

In 2022, 99% (99%)

of the renewable raw mate-

rial volumes, 84% (88%) of the crude oil and fossil raw

materials volumes and 73% of overall indirect contracted

spend were covered by Neste Supplier Code of Con-

duct or equivalent.

Sustainability risk assessment

in our supply chain

Identifying and selecting good partners are crucial to the

sustainability of supply chains. Ensuring sustainability of

Neste’s supply chains begins before agreements have

been signed or raw materials, products, components,

materials or services are delivered.

Neste’s suppliers and business partners are expected to comply

with requirements set by Supplier Code of Conduct for five elements:

Compliance

with laws and

regulations

Business

conduct

Occupational

health, safety

and security

Environmental

impact and climate

change

Human and

labor rights

Neste has undertaken several initiatives to identify

and understand the risks that may be present in our

operations and supply chains. To ensure our suppliers’

compliance with the Supplier Code of Conduct, Neste

has implemented systematic controls for counterparty

screening and monitoring during which potential busi-

ness partners undergo automated screening, escalated

to a manual review if any issues are found or the coun-

terparty’s business case matches predefined criteria.

While the screening is predominantly focused on eco-

nomic sanctions and similar compliance issues, coun-

terparties are also screened for selected ethical concern

categories in third-party enforcement databases and

major news outlet sources.

Agri Trading excluded

In certain situations Neste may, after the assessment of the supplier’s or business partner’s own policies and principles, agree that compliance with their own

code of conduct is sufficient for the purpose of complying with the Neste Supplier Code of Conduct.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Sustainability due diligence for renewable

raw material suppliers

Assessing country risk is a key element contributing to

our understanding of sustainability risks in our renewable

raw material supply chains. We use a bespoke, industry

leading country risk assessment methodology to map

sustainability risks for the countries in which we operate

and have supply chains. Our categorization also includes

a list of no-go countries and regions based on consid-

erations including trade sanctions, conflicts and sustain-

ability risks. In addition to assessing country risks, our

risk assessment includes mapping of supply chains and

operations, desk-based research, supplier self-assess-

ment questionnaires, supplier engagement and discus-

sions with expert stakeholders.

Our renewable products’ raw material suppliers are

subject to rigorous sustainability due diligence as part

of our supplier sustainability approval process under the

Neste Principle on Renewable Products Supplier Sus-

tainability Approval. The Principle applies worldwide to

any Neste company which is establishing a business

relationship with a supplier of renewable raw material for

Neste’s renewable products. It sets the minimum sus-

tainability requirements for approving suppliers through

a five-step sustainability due diligence process.

The sustainability review encompasses a comprehen-

sive range of topics that include governance, labor stan-

dards and practices, human rights, environment as well

as health and safety.

We continue commercial negotiations only with

approved parties that meet our sustainability require-

ments, and all partners must continue to meet these

criteria and commit to developing their operations in

the future. Our overall approach to advancing sustain-

ability due diligence throughout the supplier relation-

ship is to work with our suppliers to drive positive prac-

tices and mutually enhance sustainability performance

through continuous engagement, collaboration, and

improvement.

The validity period of the sustainability approval for a

supplier is three or five years depending on e.g. country

risk, raw material volumes supplied to Neste, and the

outcome of the sustainability review. Once the validity

period expires, the supplier will undergo a new review.

In addition to understanding the sustainability perfor-

mance of our direct suppliers, we also want to gain vis-

ibility in practices throughout the entire renewable raw

material supply chain, including our second-tier sup-

pliers. During the supplier onboarding, we require our

renewable raw material suppliers to disclose their supply

chain actors and locations as determined by market

requirements – and even go beyond that in some cases.

For palm oil we, for example, need to know the exact

coordinates of the plantations.

Neste’s sustainability due diligence process is mainly

managed on Neste’s Supplier Sustainability Portal (SSP),

a digital platform that is used to facilitate our evaluation

of potential and existing renewable raw material suppli-

ers, to support performance monitoring and to enable

active supplier engagement. The portal was brought fully

into use in 2020. In 2022, the total number of renewable

raw material suppliers onboarded against sustainability

criteria was 325. In 2022, we started to develop SSP

to support a more risk-based approach. This work will

continue in 2023.

Sustainability audits

Neste carries out sustainability audits to mitigate the

risks in the supply chain. When selecting suppliers to

be audited, we pay special attention to raw materials

or countries with the highest sustainability risks. Based

on the supplier risk assessment, we are better able to

prioritize sustainability audits, conducted either by our

own local sustainability specialists or a third-party audi-

tor. The purpose of Neste sustainability audits is to ver-

ify that our suppliers comply with Neste Supplier Code

of Conduct and local regulatory requirements. After the

audit, we follow up cases of non-compliance and require

our suppliers to remediate significant open issues within

a specified timeframe. The Neste Sustainability Audit

Standard, which was published in 2021, sets out the

overall requirements for sustainability audits at Neste.

In 2022, we conducted a total of 118 sustainability

audits: 26 on renewable and recycled raw materials, 35

on terminals, and 57 contractor audits. Out of the total

number 24 audits were carried out for renewable raw

material suppliers, of which 8 were onsite, 7 were virtual

and 9 were third party audits. Where possible, we also

Raw material

evaluation

Country and

raw material

risk assessment

Counterparty

screening

(incl. financial risk

assessment)

Sustainability

review

Sustainability

audits

Sustainability due diligence process for renewable raw material suppliers

conduct audits on our second-tier suppliers. In 2022, 19

audits were conducted to our direct and 5 to our sec-

ond-tier renewable raw material suppliers. The majority

of the audit findings recorded in renewable raw material

supplier audits in 2022 were related to health & safety.

In 2023, we aim to strengthen our due diligence prac-

tices by increasing the number of third party sustainabil-

ity audits with the key focus on high-risk suppliers and

countries.

Ethical Business Practices 6%

Human and Labor Rights 28%

Health & Safety 53%

Environment 12%



Audit findings – different

sustainability categories,

renewable raw material suppliers, %

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Supplier engagement

Understanding that risk assessments and sustainability

audits alone are not sufficient for tackling sustainability

issues, we are also committed to training our employees

on our policies and organizing capacity building train-

ing for our suppliers operating in high-risk sectors and

geographies.

In 2022, we conducted capacity building training on

implementing human rights due diligence for our renew-

able raw material suppliers in Asia, Oceania, Americas

and EMEA region. Direct suppliers and certain sec-

ond-tier suppliers were invited for the training from coun-

tries having a medium or high risk for violating human

rights and labor standards.

Read more about our engagement with the palm oil

and PFAD suppliers on page 93.

Neste’s grievance process

We take all allegations of suspected sustainability vio-

lations and shortcomings seriously and investigate the

cases.

Upon learning about serious allegations concerning

our suppliers, we put all further purchases from those

suppliers or supply chains on hold. If the sustainability

criteria and requirements included in our contracts have

been verifiably breached, the nature of these is consid-

ered serious and progress to resolve those issues is not

made in a reasonable time, we terminate our contract

with the supplier in question. We publish monthly griev-

ance log updates on our website, and track and pub-

licly disclose the number and type of grievances that

have been raised in person or via our whistleblowing

channel.

Engagement and cooperation with our suppliers are

the primary ways of action to address any shortcomings.

Ending purchases does not necessarily solve the prob-

lem, while by working together with our suppliers we can

work towards improvements. We have a proven track

record of collaborating with our suppliers and exter-

nal sustainability organizations, such as locally operat-

ing NGOs, to make a positive sustainability impact in

the supply chain. We engage regularly with our suppli-

ers on sustainability policy development, due diligence,

traceability, training and workshops as well as grievance

management, among others.

We address shortcomings once we become aware of

them by:

• Requiring the supplier to report the situation as part

of Neste’s grievance mechanism.

• Engaging and cooperating with suppliers. This is our

primary way of action.

• Providing an assessment and, if necessary,

conducting supply chain audits by our own local

sustainability specialists or a third-party auditor.

• Requiring a detailed plan with a timeline for corrective

actions from the supplier.

• Cooperating with the supplier and other stakeholders

to help develop operations and perform necessary

corrective actions.

• Monitoring and reporting on the progress online.

• Ending purchases if we do not see adequate

progress or if the supplier loses relevant

certifications.

• Reviewing, improving and adjusting our processes

where needed.

Read more about our renewable

raw material grievances.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Crude oil and other fossil

raw material suppliers

As we are transforming from a traditional oil refiner into

a provider of renewable and circular solutions, we con-

tinue to produce high-quality oil products from crude oil

and condensates. We are committed to make our Por-

voo refinery the most sustainable refinery in Europe by

2030 and to reach carbon neutral production by 2035.

In 2022, we announced a strategic study on transi-

tioning our Porvoo refinery to a renewable and circu-

lar site and ending crude oil refining in the mid-2030s.

Read more about the Porvoo refinery transformation on

page 69.

Neste is purely a buyer of crude oil; we do not own

shares in any company producing crude oil, nor are we

engaged in oil exploration or drilling. Additionally, we

do not purchase crude oil from Arctic sea areas, sanc-

tioned countries or conflict areas. At the start of the war

in Ukraine, Neste decided to stop using Russian crude

oil entirely and started replacing it with other qualities.

The last crude oil cargo with Russian origin was supplied

to Neste in July 2022 and the supply contracts ended.

Supply contracts for other fossil raw materials from Rus-

sia ended at the end of 2022.

The due diligence process for our crude oil and other

fossil raw material suppliers includes a country risk

assessment and counterparty risk assessment. We

also assess all new suppliers based on publicly avail-

able information regarding topics such as governance,

labor standards and practices, human rights, environ-

ment, health and safety as well as crude oil production

specific issues, such as flaring. This sustainability review

was developed in 2021 to complement the existing due

diligence process for our fossil raw material suppliers.

In 2022, a total of 24 such suppliers were assessed.

Crude oil and fossil feedstock

sources by region, million tons

2022

12.7

2020

14.0

Other countries

USA

Norway

Russia

The sustainability review is renewed every three years

for fossil raw material suppliers. In 2023, we will focus

on further improving the sustainability due diligence pro-

cess and are committed to continue assessing all new

suppliers. Read more about Neste’s sustainability due

diligence on page 88.

In 2022, we also decided to adopt more stringent

onboarding requirements for ethanol suppliers from

higher risk countries as we seek supplies from new

areas. The process includes evaluating production plant

details and raw material origins, and draws inspiration

from the renewable raw material supplier onboarding.

As we have noted increasing focus and efforts in the

oil industry on decarbonizing the upstream sector, we

have started to monitor the carbon intensity (CI) of dif-

ferent crude oils we purchase. We will monitor how the

data becomes more transparent and reliable, for exam-

ple with industry analysts developing independent valu-

ation methods, and how crude oil carbon intensity can

be a factor in evaluating different crude oils.

Indirect procurement

Neste’s indirect procurement covers purchasing of

goods and services that are not included in the sourcing

and delivery of refined crude oil or renewable and recy-

cled raw materials. It is responsible for sourcing, con-

tract management, purchasing and supplier manage-

ment. Prior to a commercial relationship with a supplier,

Neste carries out an initial analysis, including ensuring

approval of the Neste Supplier Code of Conduct, as

well as counterparty screening and the supplier’s finan-

cial status check. Sustainability, security, safety, quality,

reliability, technical, financial and legal aspects are core

requirements and used as criteria in supplier selection.

In 2022, we carried out two assessments to enhance

our understanding of the sustainability risks in Neste’s

indirect procurement supply chains.

In the first assessment, we completed a comprehen-

sive study of all the products and services purchased

as indirect procurement from 2019–2022, and used this

to establish a country/sector human rights risk level for

each of our procurement categories, identifying priority

areas of focus for enhanced human rights due diligence.

In total, the assessment covered 152 different types

of products and services across our nine procurement

categories: chemicals, professional services, logistics,

IT, research & development, technical services, techni-

cal materials, utilities and real-estate management. This

built on the findings from category risk assessments

completed for indirect procurement at the end of 2020.

In the second assessment, we designed and piloted a

new framework for evaluating the human rights and cli-

mate-related practices of Neste’s indirect procurement

suppliers. The goal of the assessment was to enhance

visibility on supplier practices and improve our overall

understanding of the sustainability risks in indirect pro-

curement supply chains. Desktop assessments were

carried out for 50 key suppliers. The suppliers selected

for assessments were chosen based on risk and spend,

taking into consideration the results from the first assess-

ment. We are incorporating lessons learned and consid-

ering options for carrying these assessments forward at

scale. For example, the assessment provides valuable

input for developing Neste’s ambition and actions for its

scope 3 emissions.

2021

10.1

At the start of the war in Ukraine, Neste decided to stop

using Russian crude oil entirely and started replacing it

with other qualities. The last crude oil cargo with Russian

origin was supplied to Neste in July 2022 and the supply

contracts ended. Supply contracts for other fossil raw

materials from Russia ended at the end of 2022.

2019

15.6

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Renewable raw materials

Neste uses a wide variety of sustainably-produced renew-

able raw materials each year to produce our renewable

products, such as renewable fuels for aviation and road

transportation, as well as feedstock for the production of

renewable polymers and chemicals. In 2022, the share

of waste and residues was 95% of Neste’s total renew-

able raw material inputs globally.

Extensive portfolio provides flexibility

Animal fat from food industry waste, used cooking oil

and various wastes and residues from vegetable oils

processing represent the top three waste and residue

raw material categories we use, based on their current

and estimated shares of Neste’s total annual renewable

raw material inputs. Proportions of individual raw mate-

rials in Neste’s refining, however, vary from year to year,

depending on their availability, price and specific mar-

ket requirements, for example. Other waste and residue

raw materials we have in our portfolio include fish fat

from fish processing waste, tall-oil-based raw materi-

als, technical corn oil (TCO) and acid oils. In addition to

waste and residues, Neste also uses small amounts of

sustainably-produced vegetable oils as renewable raw

materials. The share of vegetable oils of our renewable

material inputs in 2022 was 5%, with palm oil represent-

ing around 4%.

An extensive portfolio of globally-sourced renewable

raw materials provides flexibility and allows us to respond

to the needs of different markets and customers. None

of the raw materials in our portfolio individually represent

the majority share of the total annual inputs.

Altogether we used 3.6 million tons of renewable raw

materials, with a continued focus on developing new

sources of raw materials and technologies enabling the

use of these new types of raw materials, while grow-

ing the existing raw material pool towards lower-quality

grades.

Strengthening our sourcing capability

We source renewable raw materials globally for our

renewables refineries located in Finland, the Netherlands

and Singapore. One of our competitive advantages is

our capability to efficiently source, transport and flexibly

use various mixes of renewable raw materials to produce

a wide range of high-quality renewable products with

our proprietary NEXBTL™ refining technology. Another

advantage is our unique capability to pretreat low-qual-

ity raw materials to remove impurities. This enables us to

use primarily waste and residue raw materials.

Neste’s renewable raw material supply was substan-

tially strengthened in 2022, despite the uncertainties

caused by the volatile raw material market. We continued

to expand our renewable raw material sourcing capabil-

ity in our existing markets and new markets, such as in

Eastern Europe and South America. We are focusing on

waste and residue raw materials in these markets, such

as animal fat waste and used cooking oil.

In 2022, Neste engaged in acquisitions and partner-

ships to ensure growth and increasing availability of raw

materials in our existing sourcing markets. For example,

we acquired Walco Foods, an Irish trader of animal fats,

nowadays known as Neste Walco Limited.

We also announced an agreement to acquire the used

cooking oil collection and aggregation business from

Crimson Renewable Energy in the United States. In addi-

tion, the successful integration and continuous expan-

sion of activities of Mahoney Environmental, a leading

collector and recycler of used cooking oil, and Agri Trad-

ing, one of the largest independent renewable waste

and residue fat and oil traders in the United States, both

acquired by Neste in 2021, has helped us gain access

to a substantial volume of used cooking oil and grow our

raw material supply chain in North America.

In 2022, we established a 50/50 joint operation for

production of renewable fuels with Marathon Petroleum

in the United States. The joint operation called Martinez

NEXBTL

technology

patent received 25 years ago

2022 marked two key anniversaries at Neste: 25

years since receiving the patent for our proprietary

NEXBTL technology and 15 years since the inau-

guration of the first NEXBTL unit at our Porvoo

refinery.

NEXBTL, which stands for “next generation bio-

mass to liquid”, is Neste’s unique technology that

allows us to convert a wide range of renewable raw

materials into premium-quality renewable products.

It has been the backbone of Neste’s transformation

enabling customers and partners across the globe

to switch to renewable products with a lower car-

bon footprint.

Read more about used cooking oil.

In 2022, the share of waste and residues

was 95% of Neste’s total renewable raw

material inputs globally.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Sustainability criteria for our renewable raw materials

• We select our renewable raw material suppliers carefully, based on our sustainability due diligence

process. We source only sustainably-produced renewable raw materials from suppliers who meet

our strict criteria for sustainability. These criteria are embedded into our policies and principles, as

well as the regulatory requirements in our key markets.

• We only accept renewable raw materials that are traceable to the point of origin.

• All the renewable raw materials we use meet the sustainability criteria defined in the EU RED II

(EU) 2018/2001 for the European markets or Renewable Fuel Standard (RFS), California/Oregon/

BC Low Carbon Fuel Standard (LCFS) requirements, as applicable, for North America. The raw

material mixes used for products in specific markets additionally meet local market-specific and/or

industry-specific regulatory requirements.

• We are committed to avoiding conversion of habitats with valuable biodiversity for biomass

production. We ensure that the production of our raw materials has not caused deforestation and

that human rights have been respected.

• We ensure that the renewable raw materials that we use in refining enable us to produce

renewable fuels that always provide the required greenhouse gas emissions savings - at least 50%

reduction as per EU RED II (EU) 2018/2001 over the fuels’ life cycle compared to similar emissions

from 100% fossil alternatives.

• All the renewable raw materials we use are either certified or their compliance with

applicable laws and regulations is verified according to the legislation of the country

to which the end product will be supplied.

Engaging with the palm oil

and PFAD suppliers

We participate in collaborative efforts to advance posi-

tive social and environmental impacts in the palm sector.

Neste is a member of the Palm Oil Collaboration Group

(POCG) and has participated in its Social Issues Work-

ing Group (SIWG) since the initiative was launched in

2020. In 2022, Neste continued to participate in SIWG

subgroups advancing action on Responsible Recruit-

ment in Malaysia, and Human Rights Due Diligence in

Supplier Management Systems.

We cooperate particularly with palm oil producing

smallholders to support the development of their sus-

tainability awareness and expertise. The adoption of

sustainable practices enables smallholders to achieve a

certification. Neste requires a commitment to certifica-

tion from all its palm oil suppliers.

Neste continues to collaborate with the Siak gov-

ernment, Daemeter and Proforest, along with global

brands, in the Siak Pelalawan Landscape Programme, a

private-sector driven initiative in the districts of Siak and

Pelalawan in the Riau province of Indonesia. Through

this collaborative effort at a landscape level, Neste aims

to ensure positive sustainability impact in the region by

addressing environmental and social issues, such as

tackling deforestation, maintaining and enhancing key

conservation areas, preventing exploitation, and improv-

ing smallholder livelihoods beyond palm oil production,

and also for multiple commodities such as rubber and

pineapple. The Village Support Programme in 2022

focused on involving all types of village stakeholders to

boost ecosystem conservation and improve commu-

nity livelihoods by working towards nature-positive and

socially inclusive solutions. Improved engagement at

the mill level supported them in fulfilling their No Defor-

estation, Peat and Exploitation (NDPE) commitments.

Increased engagement at both the village and mill level

in the program has not only helped in forest and biodi-

versity conservation, but also trained the farming com-

munity on good and sustainable management practices.

Read more about the program.

In November 2022, we also organized an annual sus-

tainability workshop for our palm oil and PFAD suppliers.

The workshop was curated especially for our suppliers

with the objective of raising awareness and advancing

on topics such as human rights due diligence and strat-

egies to achieve 100% traceability to plantation (TTP).

New topics, such as greenhouse gas emissions tackling

scope 3, were also introduced and discussed during the

workshop. 35 participants from 16 existing and new sup-

plier companies attended the workshop. Sustainability

workshops are crucial to ensuring our suppliers’ active

involvement in improving sustainability in their own oper-

ations and the whole supply chain.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Traceability to plantations

Our aim is to develop a commonly accepted

and adopted approach to tracing palm oil-

based waste and residues, such as PFAD.

For this, we have continued to develop the

“Traceability to plantations” (TTP) approach.

Building industry-wide acceptance for the

TTP approach could significantly improve

the overall transparency of palm oil supply

chains for all industries.

The TTP approach gathers data from sup-

pliers and prioritizes those sourcing raw

materials in higher-risk areas, such as those

in close proximity to forests, uncultivated

peat and protected areas. We have engaged

with palm oil and PFAD suppliers to intro-

duce the approach and promote alignment

within the industry, and continue the same

with new suppliers.

Progress in PFAD

supply chain traceability

Within the European Union, biofuel producers are required

by law to use only raw materials that are traceable to

the point of origin. We meet the traceability requirements

among other legal sustainability requirements in all of the

markets where our products are sold. This also means

that if PFAD is classified as a residue within a specific

market for example, we ensure traceability to the palm

oil refineries where PFAD is removed during production

of food-grade palm oil. If PFAD is classified as a co-prod-

uct, traceability is ensured to the palm oil plantations.

Since 2017, we have been working towards a tar-

get of developing traceability for our entire PFAD sup-

ply chain to palm oil plantations. Working towards the

target has required us to map large parts of previously

unmapped palm oil supply chains and we have made

significant progress.

During 2022, we were able to independently map and

validate 100% (100%) of our PFAD supply chain to the

supplying palm oil mills and 86% (85%) all the way to

plantations. This significantly surpasses the fuel indus-

try’s current regulatory requirement for residue raw mate-

rials, or in the case of PFAD, traceability to the palm oil

refinery. When mapping the supply chain to the planta-

tions, publicly available data (e.g. on RSPO, ISCC, ISPO

certifications) and supplier reporting have been used.

2017

Neste sets a new public target to

map its entire PFAD supply chain

to oil palm plantations.

Based on Risk-calibrated Traceable to Plantation approach. Figures are weighted by refinery volumes supplied to Neste.

% of Neste's PFAD supply traceable to plantation

2018

2019 2020 2021 2022

86%

85%85%

71%

44%

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Recycled raw materials

Neste is advancing chemical recycling, also known as

advanced recycling, to speed up the transition to a circu-

lar economy for plastics. Neste’s development of chemi-

cal recycling technologies and capacity with value chain

partners supports Neste’s strategic target of becoming

a global leader in circular solutions, while also support-

ing Neste’s ambition to replace its fossil raw materials

with alternative, more sustainable renewable and recy-

cled raw materials at its refinery in Porvoo, Finland. It is

also aligned with our aim of reducing GHG emissions

and reducing crude oil dependency in the society. Read

more about our renewable and circular solutions for the

polymers and chemicals industries on page 65.

Accelerating circular economy

through chemical recycling

Chemical recycling complements mechanical recycling

by transforming waste plastic back into a raw mate-

rial similar to crude oil. Through chemical recycling,

hard-to-recycle plastic waste such as colored, multi-

layer and mixed-material plastics can be turned into

high-quality feedstock for polymers and chemicals that

can be used even for demanding applications.

The development of chemical recycling is crucial to

enabling a circular economy for polymers and increas-

ing recycling rates for waste plastic. It thereby also helps

tackle the plastic waste pollution challenge and reduces

the need for virgin fossil resources.

Progress with strategic partners

Neste has developed several partnerships to collect,

sort and process plastic waste, as well as to develop

chemical recycling technologies to enable their com-

mercialization and to speed up their adoption. One of

these partnerships is with Ravago, with which we aim to

establish a joint operation to build an industrial facility for

chemical recycling in North Sea Port in Vlissingen, the

Netherlands. In 2022, we acquired the European rights

to US-based Alterra Energy’s liquefaction technology,

which would also be the technology of choice for the

joint operation with Ravago.

We aim to increase the volumes of liquefied waste

plastic processing gradually to continue learning and

developing the value chains and processing technolo-

gies. Neste’s ambitious goal is to process over one mil-

lion tons of plastic waste annually from 2030 onwards.

To achieve that goal, we have announced a feasibility

study to build pretreatment and upgrading capacities

for liquefied waste plastic at our Porvoo refinery (Project

PULSE). The project received a positive grant decision

by the EU Innovation Fund for up to 135 million euros in

July 2022. Investment decision readiness is targeted for

2023 and gradual implementation is expected to start in

2024. The targeted processing capacity of this project is

400,000 tons of liquefied waste plastic per year.

Sustainability criteria for

liquefied waste plastics

In 2022, we continued defining the sustainability criteria

for our liquefied waste plastic suppliers, and conducted

our first pilot audit on one of the suppliers.

In addition to requiring our liquefied waste plastic sup-

pliers to fulfil the requirements in Neste Supplier Code of

Conduct, policies and principles, we only accept lique-

fied waste plastic that is traceable and complies with the

ISCC Plus certificate requirements. Read more about

Neste’s supplier requirements on page 88.

Liquefied waste plastic processed

at the Porvoo refinery

Neste successfully continued its processing runs with liq-

uefied waste plastic at industrial scale at its Porvoo refin-

ery in Finland in 2022. In the course of the runs, Neste

was able to upgrade gradually increasing volumes of liq-

uefied waste plastic into drop-in raw materials for plastic

production and develop related processing capabilities

at industrial scale.

Neste’s renewable and circular

solutions helped to replace 3.1Mt of

non-renewable resource in transport,

aviation and polymers and chemicals

sectors in 2022.

With the latest runs in Porvoo, we are laying the foun-

dation for replacing crude oil based raw materials with

liquefied waste plastic and accelerating the transition to

a circular economy for plastics together with our cus-

tomers. Our decades of experience in oil refining, com-

bined with refining expertise in upgrading low-quality

raw materials, provide a solid foundation for the rapid

demonstration and scaling up of chemical recycling.

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Supply chain and raw materials

Future raw materials

We continue to work towards increasing the availabil-

ity of renewable and recycled raw materials while also

developing technologies to diversify our current portfolio

with new scalable raw materials. This will help us ensure

access to sufficient volumes of raw materials to support

our growing production capacity, which enables us to

maximize our positive carbon handprint.

We continuously search for even lower-quality wastes

and residues to be used in the production of fuels,

chemicals and materials. In the short to mid-term, we

aim at increasing the availability of emerging lower-qual-

ity waste and residues such as acid oils, palm oil mill

effluent (POME), wastewater-derived grease (i.e. “brown

grease”) and liquefied waste plastic. We are also explor-

ing novel vegetable oils from advanced agricultural con-

cepts. In the long term, renewable hydrogen, lignocel-

lulosic waste and residues, algae, and municipal solid

waste are all viable sustainable raw material alternatives.

Short to mid-term Long-term

Future raw materials and technologies

Renewable

hydrogen

Used for polymers and chemicals industry only

Novel

vegetable oils

Acid oils Brown grease

Palm oil mill

effluent (POME)

Liquified

waste plastic

Algae Lignocellulose

Municipal

solid waste

Power-to-X

Strategy GovernanceSustainability Review by the Board of Directors Financials

Lignocellulose

Waste and residue streams from agriculture and

forestry practices provide viable and sustainable

solutions for renewable chemicals, fuels and mate-

rials. Our focus is on resources that are currently

underutilized, including waste and residue streams

from forestry, the forest industry or agriculture.

Neste has a development project aimed at con-

verting forestry-based waste and residue raw mate-

rials into advanced biofuels at our Porvoo refinery

in Finland. We are also exploring other site loca-

tions to fully develop the potential of producing

advanced biofuels from locally-sourced forestry

waste. In 2022, we also started to develop internal

sustainability criteria for lignocellulose-based raw

materials.

Read more about microalgae.

Novel vegetable oils (NVO) from

advanced agricultural concepts

As part of our renewable raw material development

efforts, we have been exploring advanced, sustain-

able agricultural concepts, with the objective of ful-

filling increasing demand for sustainable renewable

raw materials while not competing with food pro-

duction. These concepts, such as silvopasture or

intermediate cropping, strive to maximize green-

house gas savings and carbon sequestration, can

improve soil health and biodiversity and create alter-

native income to farmers. They do not create addi-

tional demand for agricultural land. With these con-

cepts, the existing crops are not replaced and the

indirect land use change (ILUC) risk is minimized.

These novel cultivation methods aim at provid-

ing additional new volumes of vegetable oils from

Renewable hydrogen

Renewable hydrogen made with electrolysis

makes it possible to reduce the refinery green-

house gas (GHG) emissions.

Neste is a minority owner of Sunfire, a technol-

ogy developer and producer of alkaline and solid

oxide electrolyzers (SOEC). We are demonstrat-

ing green hydrogen production based on SOEC

technology at our Rotterdam refinery with CEA,

Sunfire, Paul Wurth and Engie in a project called

MultiPLHY. The project aims to install and inte-

grate the world’s first multi-MW high-temperature

electrolyser demonstration unit into the refinery.

We are also developing large-scale green

hydrogen supply to our Porvoo refinery. The proj-

ect SHARC focuses on investing in production

capacity of renewable hydrogen, reducing GHG

emissions from hydrogen production and provid-

ing even more sustainable refinery products. The

project is currently in the feasibility phase and

the target is to start the first phase of operations

(120 MW) around mid 2020s.

In the long term, Neste’s hydrogen projects will

also build a foundation for the use of Power-to-X

(PtX) technologies, which aim at utilizing carbon

dioxide emissions together with green hydrogen

to produce fuels and raw materials for the petro-

chemical industry.

Read more about novel vegetable oils.

Neste Annual Report 2022 | Supply chain and raw materials

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

An independent third party, KPMG Oy Ab, has assured the topic-spe-

cific GRI disclosures for economic, social, and environmental indica-

tors as well as General GRI disclosures 2–7 and 2–30. Also information

presented on the Sustainability highlights, Material sustainability KPIs,

Neste creates value, and Performance in figures pages of the report

have been assured. In our report, we have aimed to focus on the most

essential, based on our materiality assessment conducted biannually,

latest in 2022. Our Sustainability Report is published only in English.

Our 2022 Sustainability Report has been prepared in accordance with

the GRI (Global Reporting Initiative). We use the GRI Universal Standards

2021, GRI Sector Standards for Oil and Gas Sector 2021, as well as Topic

Standards with Standard versions indicated in the GRI Index.

Sustainability

reporting in 2022

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

We are committed to the UN Global Compact (UNGC),

United Nations Guiding Principles on Human Rights

(UNGP) and the International Labor Organization (ILO)

Declaration on Fundamental Principles and Rights at

Work. Neste follows the OECD Guidelines for Multina-

tional Enterprises and guidelines for good governance.

Neste has been a signatory of the UNGC Principles since

2014. Our Annual Report includes information corre-

sponding to the reporting requirements as we are com-

mitted to complying to the Ten Principles in each of the

UNGC areas for human rights, labor, environment, and

anti-corruption. Our Communication of Progress with

Global Compact Principles for 2022 information will be

reported via the new UNGC portal.

Neste is committed to apply the Task Force on Cli-

mate-related Financial Disclosures (TCFD) report-

ing principles from 2019, in order to disclose climate-

related financial risks and opportunities in the reporting.

In addition to the Sustainability Report, part of our TCFD

reporting takes place within Non-Financial Information

Statement in the Review by the Board of Directors. Our

Sustainability Report includes the TCFD index for navi-

gation purposes between these sections in the Annual

Report. Our intention is to extend our reporting within

the recommended TCFD implementation time frame.

We are actively following various sustainability report-

ing framework developments, especially with the global

sustainability reporting standardization in the EU, such as

the Corporate Sustainability Reporting Directive (CSRD)

and the European Sustainability Reporting Standards

(ESRS), as well as with the coming standards from the

International Sustainability Standards Board (ISSB), in

order to keep our reporting methodologies up to date

proactively. In addition to GRI, in the 2022 Sustainability

Report we report according to SASB Oil & Gas Refining

and Marketing Standards where applicable, as Neste is

categorised under this sector standard by SASB. How-

ever, we aim at reporting also according to SASB Biofu-

els Standards in the future as we see that being an even

more relevant sector standard for Neste.

We support the principles of World Economic Forum’s

(WEF) Stakeholder Capitalism. Our reporting based on

GRI, SASB and TCFD fulfils the requirements for most of

the WEF Stakeholder Capitalism Metrics (SCM). Hence,

we are continuing reporting with the GRI supported by

SASB and TCFD, yet paying close attention to any addi-

tional SCM requirements.

Our reporting meets the requirements of the EU Direc-

tive on disclosure of non-financial and diversity informa-

tion and the Finnish Accounting Act as well as the infor-

mation in accord with the current requirements of EU

Taxonomy regulation. The information is disclosed in the

Non-financial Information Statement. The required non-

financial information is disclosed in the Corporate Gover-

nance Statement and the Review by the Board of Direc-

tors, whereas in our Sustainability Report, we respond

to broader stakeholder expectations and respond to

many requirements of international indices. The Board

reviews and approves the sustainability reporting before

it is published. We published our 2021 Annual Report

and the included Sustainability Report on March 4, 2022

in PDF format on our website.

Reporting principles and guidelines

Our financial reporting complies with the international

IFRS accounting standards, and governance-related

reporting complies with the legislation on listed compa-

nies and the Finnish Corporate Governance Code. The

disclosure of environmental costs and liabilities is based

on the Finnish Accounting Act. The reported financial

indicators are based on audited information. The gen-

eral guideline issued by the Accounting Board on the

preparation of review by the Board of Directors is fol-

lowed in calculating the personnel-related figures. Calcu-

lations related to safety-related accident frequency rates

comply with the calculation principles of Concawe (the

oil companies’ European association for environment,

health and safety in refining and distribution). Changes

to information disclosed in previous years or calcula-

tion principles are communicated in connection with

the relevant indicators. In case restatements of informa-

tion were made, these are communicated in connection

with the relevant indicators. The definitions, calculation

principles, and formulas of reported indicators are pre-

sented separately under “Principles for calculating the

key indicators”.

Scope of the report

Similarly to the Annual Report, the reporting period of the

Sustainability Report is our financial reporting year, Jan-

uary 1–December 31, 2022. The Sustainability Report is

published annually. The safety and environmental report-

ing for 2022 covers the refineries in Finland and abroad

in which the company has a holding of 50% or more.

In addition, safety and environmental reporting covers

the company’s terminals, offices, and country-specific

retail companies in alignment with the financial reporting

scope. The company does not report environmental infor-

mation on sites in which the company only has a minor

part of the premises of an office building in its use. The

reporting of safety information also covers service pro-

viders and contractors. The average number of person-

nel includes all operations and acquisitions. Except for

that, the reporting indicators do not cover Walco Foods

due to ongoing integration process. Currently some of

the employee indicators only partly cover Mahoney and

Neste Demeter B.V. Individual exceptions are communi-

cated in connection with the relevant indicators.

Reporting systems

Neste collects environmental and safety information

with the HSEQ reporting tool, which supports Neste’s

monthly and annual reporting. Personnel-related indi-

cators are derived from the HR systems. The company

also has other reporting tools for collecting information

required for sustainability reporting.

100

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

2022 2021 2020

Emission limits and overruns:

Deviations from environmental permits 3 2 2

Emissions into the air, tons

Direct CO

emissions (scope 1) 2,075,000 1,828,000 2,149,000

Indirect GHG emissions (scope 2, location-based) 427,000 519,000 625,000

Indirect GHG emissions (scope 2, market-based) 391,000 509,000 736,000

Other indirect GHG emissions (scope 3) 42,000,000 35,000,000 48,000,000

Purchased goods and services 5,000,000 4,900,000 5,900,000

Fuel- and energy-related activities

<50,000 100,000 100,000

Upstream transportation and distribution

900,000 700,000 700,000

Waste generated in operations 400,000 200,000 100,000

Downstream transportation and distribution

700,000 500,000 700,000

Use of sold products 33,600,000 27,600,000 38,700,000

End-of-life treatment of sold products 1,100,000 1,300,000 1,600,000

VOC 3,160 3,170 3,430

NOX 1,150 1,090 1,410

2,430 2,850 3,470

Particulate matter 78 64 90

Energy use

Total energy consumption, TWh 10.9 10.1 12.2

Fuels and natural gas, % 72.7 72.0 72.9

Purchased electricity, % 12.9 13.1 11.8

Purchased heat, % 14.3 14.9 15.3

Share of renewable energy of total energy consumption, % 17.8 11.6 7.2

Energy efciency, energy saving measures, GWh 42.6 95.8 33

Energy intensity, total energy consumption per revenue,

GWh/MEUR

0.4 0.7 1.0

Water, m

Total water withdrawal by source 8,604,000 9,263,000 8,557,000

Process water & other water use

Surface water 7,839,000 7,927,000 8,283,000

Third-party water (municipal) 765,000 1,336,000 274,000

Total water discharge by destination 7,899,000 8,522,000 8,880,000

Surface water 141,000

Seawater 7,241,000

Third-party water (municipal) 517,000

Efuents to water, tons

Efuents of oil to water 0.5 0.6 1

Chemical oxygen demand 348 240 240

Efuents of nitrogen to water 19 31 68

Efuents of phosphorus to water 1 1.0 1.4

Waste generated, tons

Non-hazardous

35,000 23,900 36,352

Preparation for reuse 150 - -

Recycling 3,000 - -

Other recovery operations 23,000 - -

Incineration (with energy recovery) 2,000 - -

Incineration (without energy recovery) 550 - -

Landll 4,300 - -

Other discposal operations 2,000 - -

Hazardous

259,000 160,600 75,610

Preparation for reuse 160 - -

Recycling 7,300 - -

Other recovery operations 4,500 - -

Incineration (with energy recovery) 70,700 - -

Incineration (without energy recovery) 3,000 - -

Landll 11,500 - -

Other disposal operations 162,000 - -

Number and magnitude of signicant releases 3 pc/1146 m

3 pc/45m

+ 10 tons

Carbon dioxide recovered, tons 126,600 130,400 134,200

Washing lye sold, tons 11,100 7,900 7,500

2022 2021 2020

Performance in figures Climate and the environment

Scope 1 emissions reporting covers CO

emissions. Scope 2 and 3 emissions reporting covers GHG emissions and is reported as CO

Only natural gas related emissions included.

Part of upstream transportation emissions are accounted in other categories.

Part of downstream transportation emissions are accounted in category 4.

Waste data is not fully comparable to last year’s data as categories are updated to latest GRI standard. Total amount of waste increased due to amount

of demolition waste from our Naantali site.

Calculation principles can be found on page 115.

101

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

Supply chain and raw materials

Use of global renewable raw material inputs, million tons

3.6 3.7 3.7

Share and use of waste and residues of global renewable

raw material inputs

95%

3.4 Mt

92%

3.4 Mt

83%

3.1 Mt

GHG emission reduction achieved with Neste's renewable products

compared to crude oil-based diesel, million tons

7) 8)

11.1 10.9 10

GHG emission reduction with Neste's renewable diesel

compared to crude oil-based diesel

7) 8)

50–95% 50–90% 50–90%

Number of all renewable raw material suppliers 557 389 405

Share and use of certied palm oil from all palm oil use

100%

135kt

100%

236 kt

100%

454 kt

The number of CPO smallholders

10)

0 13 227 14 403

The number of palm oil suppliers 4 6 6

The number of plantations 28 69 110

The number of palm oil mills 12 29 38

Average GHG emission reduction of palm oil based products

80% 80% 77%

The number of renewable raw material suppliers'

sustainability assessments and their outcome

11)

Total: 325

New approved suppliers: 223

All approved: 236

Pending: 74

Rejected: 15

Total: 223

New approved suppliers: 171

All approved: 186

Pending: 33

Rejected: 4

Total: 219

New approved suppliers: 120

All approved: 133

Pending: 65

Rejected: 21

Crude oil and fossil feedstock sources by region, million tons 12.7 10.1 14.0

Norway 7.1 1.3 1.7

Russia

12)

3.1 7.8 9.5

USA 0.6 0.04 0.2

Other countries 1.9 1.0 2.6

2022 2021 2020

Performance in figures Climate and the environment

The volumes are presented in millions of tons. The share of the volumes are calculated from exact figures and consequently the rounded figures presented may deviate from the share of volumes disclosed.

Calculation principle changed in 2022.

beginning of 2022.

Contains the use of conventional palm oil that we have processed into renewable products and sold to market.

10)

As we move towards our target of reducing the share of palm oil down to zero of our global renewable raw material input, there were no crude palm oil smallholders in our supply chain in 2022.

11)

Figures include existing suppliers, which undergo a sustainability assessment process every 3–5 years. Supplier data includes only main contractual parties, excluding second-tier suppliers.

12)

At the start of the war in Ukraine, Neste decided to stop using Russian crude oil entirely and started replacing it with other qualities. The last crude oil cargo with Russian origin was supplied to Neste in July 2022 and the supply contracts ended. Supply contracts for other fossil raw materials from Russia ended at the end of 2022.

Calculation principles can be found on page 115.

102

Strategy GovernanceSustainability Review by the Board of Directors Financials

Personnel by segment

as of 31 December 2022, %

Renewable Products 28.7% (28.9%)

Oil Products 22.0% (18.9%)

Marketing & Services 6.8% (9.0%)

Neste Engineering Solutions 15.4% (16.7%)

Innovation 8.2% (7.9%)

Other functions 18.9% (18.7%)

󰏬

Personnel by personnel group

as of 31 December 2022, %

Blue-collar

24.6% (24.7%)

White-collar and

senior management

75.5% (75.3%)

󰌱

Personnel by country

as of 31 December 2022, %

Finland 66.7% (70.6%)

The USA 12.9% (9.4%)

Singapore 7.8% (7.3%)

The Netherlands 6.7% (5.7%)

Other countries 5.9% (7.0%)



Employment length of employees

as of 31 December 2022, %

20212022

1–4

years

32.0

34.2

5–9

years

16.0

17.3

Less than

1 year

13.0

20.3

10–19

years

19.1

20.3

20–29

years

6.8

7.5

30–

years

5.9

7.8

Employee breakdown by age

as of 31 December 2022, %

20212022

< 30

years

11.5

10.4

30–39

years

33.0

33.6

40–49

years

29.2 29.2

50–59

years

20.9

21.7

5.4

60–

years

5.3

Neste Personnel and Contractor

Safety Performance as of 31 December 2022

2022 2021 2020

Total recordable injury

frequency (TRIF) total

2.0 1.4 1.3

- TRIF own employees 0.8 1.1 1.1

- TRIF contractors 3.7 1.6 1.6

Lost workday injury

frequency (LWIF) total

1.9 1.0 1.2

- LWIF own employees 0.7 1.1 1.0

- LWIF contractors 3.6 0.7 1.6

Process safety event rate

(PSER) total

1.4 1.4 1.6

- PSER 1 0.6 0.6 1.0

- PSER 2 0.9 0.8 0.6

Safe Days

314 306 325

Fatalities

0 0 0

Average

number of

personnel

(4,872)

5,244

Performance in figures People

Neste Annual Report 2022 | Sustainability reporting in 2022

Average training hours per

employee as of 31 December 2022

Women Men

All employees

15.2 22.6

Blue-collar 36.8 35.1

White-collar and

senior management 14.3

16.1

Managers

22.2 20.9

Senior managers 5.8 10.3

Permanent 15.3 22.7

Temporary

13.5 20.5

ull-time 15.3 22.6

Part-time 12.9 27.1

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Performance in figures People

Information on employees and governance bodies

by gender ratio as of 31 December 2022, %

Women Men

2022 2021 2022 2021

All employees

32.2 31.5 67.8 68.5

Blue-collar 1.3 1.2 23.3 23.6

White-collar and senior management 30.9 30.3 44.5 45.0

Managers 31.1 30.3 68.9 69.7

Senior managers 27.7 25.9 72.3 74.1

Neste Executive Committee 25.0 25.0 75.0 75.0

Board of Directors 33.3 25.0 66.7 75.0

Permanent 31.5 30.6 66.4 67.0

Temporary 0.8 0.9 1.4 1.6

Full-time 30.9 30.1 67.0 67.7

Part-time 1.4 1.3 0.7 0.9

Total Finland USA Singapore The Netherlands Other countries

Women Men Women Men Women Men Women Men Women Men Women Men

All employees 32.2 67.8 34.7 65.3 24.3 75.8 27.8 72.2 17.7 82.3 44.1 55.9

- under 30 4.2 7.3 4.6 7.3 3.1 9.8 4.7 5.7 1.7 8.3 4.7 2.8

- 30–50 19.9 42.3 20.9 40.5 14.7 43.7 19.5 53.4 11.9 47.2 28.4 39.4

- over 50 8.2 18.2 9.2 17.5 6.4 22.3 3.5 13.2 4.1 26.8 10.9 13.8

Hiring rate of permanent employees, all 20.5 17.33 15.4 10.8 47 39.8 35 21.6 34.9 26.2 14 11.8

Proportion of permanent hires 35.9 64.1 43.1 56.9 27.2 72.8 38.7 61.3 22.2 77.8 47.5 52.5

- under 30 3.8 6.7 4.1 6.4 3.2 9.9 4.8 5.7 1.7 8.4 4.1 2.9

- 30–50 20.1 42.8 21.3 41.1 14.6 43.7 19.9 53.8 11.8 47.1 28.3 39.8

- over 50 8.3 18.4 9.4 17.8 6.3 22.4 3.4 12.4 4.2 26.9 10.8 14

Leaving rate of permanent employees, all 9.7 10.5 8.8 8.2 15.5 23.2 6.8 9.6 7.9 6.1 14 10.7

Proportion of permanent leavers 30.4 69.6 36.3 63.7 17.5 82.6 21.6 78.4 21.7 78.3 50 50

- under 30 3.7 8.1 4.1 3.7 3.4 17.5 5.4 8.1 0 8.7 2.6 5.3

- 30–50 17.9 42.1 21 39.3 8.1 43 13.5 62.2 17.4 65.2 36.8 26.3

- over 50 8.9 19.4 11.2 20.7 6 22.2 2.7 8.1 4.4 4.4 10.5 18.4

Permanent employees 31.5 66.4 33.8 63.6 24 75.6 27.5 70.8 17.4 81.2 42.5 55.6

Temporary employees 0.8 1.4 0.9 1.7 0.3 0.1 0.2 1.4 0.3 1.1 1.6 0.3

Full-time employees 30.9 67 33.3 64.6 23.8 75.3 27.8 72 14.1 79.3 42.2 55.6

Part-time employees 1.4 0.7 1.4 0.7 0.4 0.4 0 0.2 3.6 3 1.9 0.3

Employee distribution and turnover as of 31 December 2022, %

Neste Annual Report 2022 | Sustainability reporting in 2022

104

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GRI 1 Foundation

GRI 11 Oil & Gas Sector Standard

GRI 2: General Disclosures 2021

1. The organization and its reporting practices

2-1 Organizational details

22–23

HQ in Espoo, Finland. Countries of operations: Finland, Australia, Belgium, China, Estonia, Germany, Ireland, Italy, Latvia,

Lithuania, the Netherlands, Singapore, Sweden, Switzerland, the USA (R)

2-2 Entities included in the organization’s sustainability

reporting

98–99

2-3 Reporting period, frequency and contact point

98–99

Sustainability, Safety and Environment contacts

2-4 Restatements of information

98–99

2-5 External assurance

117–118

2. Activities and workers

2-6 Activities, value chain and other business relationships

8–9, 86–97, 155–158

In 2022 Neste acquired Walco Foods. Neste now holds all their shares. Neste's wholly-owned subsidiary Neste Engineering

Solutions Oy was merged into Neste Corporation. The transaction to establish a joint operation with Marathon Petroleum in the

United States was finalized. The divestment of Neste's base oils business to Chevron was completed. (R)

2-7 Employees

102–103, 116

Neste reports only total number of employees. (O)

2-8 Workers who are not employees

The consolidation of worker information is being reviewed. (O)

3. Governance

2-9 Governance structure and composition

48–49, 120–127,

131–134

2-10 Nomination and selection of the highest governance body

120–123

2-11 Chair of the highest governance body

124, 125

2-12 Role of the highest governance body in overseeing the

management of impacts

48–49

2-13 Delegation of responsibility for managing impacts

48–49, 157

2-14 Role of the highest governance body in sustainability

reporting

48–49, 157

The Sustainability Report is reviewed by the senior executives and the highest governance body. Sustainability information,

including the material topics, are also disclosed in the Board Review's Non-Financial Information statement. (R)

2-15 Conflicts of interest

120–123

2-16 Communication of critical concerns

39, 50, 170

2-17 Collective knowledge of the highest governance body

48–49, 106

2-18 Evaluation of the performance of the highest governance

body

123

2-19 Remuneration policies

140–146

2-20 Process to determine remuneration

140–146

2-21 Annual total compensation ratio

146

GRI Content Index

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

Neste Oyj has reported in accordance with the GRI Standards for the period 1 January–31 December 2022.

Neste Annual Report 2022 | Sustainability reporting in 2022

105

Strategy GovernanceSustainability Review by the Board of Directors Financials

4. Strategy, policies and practices

2-22 Statement on sustainable development strategy

4–6

2-23 Policy commitments

48–49, 81–85, 86–97,

98–99, 157–170,

Neste Policies and

Principles

2-24 Embedding policy commitments

48–49, 81–85, 86–97,

98–99, 157–170,

Neste Policies and

Principles

2-25 Processes to remediate negative impacts

81–85, 157–170

2-26 Mechanisms for seeking advice and raising concerns

50, 82, 89, 131–132,

167, 170

2-27 Compliance with laws and regulations No significant instances. (R)

2-28 Membership associations

41–43, Involvement in

organizations and joint

projects

5. Stakeholder engagement

2-29 Approach to stakeholder engagement

29–30, 40–46

2-30 Collective bargaining agreements 3,743 persons, 69% (R)

GRI 3: Material Topics 2021

3-1 Process to determine material topics

29–30

3-2 List of material topics

29–34

3-3 Management of material topics

40–46, 48–49, 50,

51–54, 55–57, 61–65,

66–73, 74–80, 81–85,

86–97,165

11.1.1, 11.2.1, 11.3.1, 11.4.1, 11.5.1, 11.6.1,

11.7.1, 11.8.1, 11.9.1, 11.10.1, 1.11.1, 11.12.1,

11.13.1, 11.14.1, 11.15.1, 11.16.1, 11.17.1,

11.18.1, 11.19.1, 11.20.1, 11.21.1, 11.22.1

GRI 200: Economic

GRI 201: Economic Performance 2016

201-1 Direct economic value generated and distributed

47, Value creation

11.14.2 &

11.21.2

201-2 Financial implications and other risks and opportunities

due to climate change

58–73, 165–166,

182–183

11.2.2

201-4 Financial assistance received from government

153, 200

11.21.3

GRI 202: Market Presence 2016

202-2 Proportion of senior management hired from the local

community

Neste is currently assessing the materiality of this indicator. Neste provides equal employment opportunities for all applicants and

employees. This applies to all areas of employment. (O)

11.11.2 &

11.14.3

GRI 203: Indirect Economic Impacts 2016

203-1 Infrastructure investments and services supported

32, 46, 47, 208–209

11.14.4

203-2 Significant indirect economic impacts

11.4.5

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

Neste Annual Report 2022 | Sustainability reporting in 2022

106

Strategy GovernanceSustainability Review by the Board of Directors Financials

GRI 204: Procurement practices 2016

204-1 Proportion of spending on local suppliers Data undisclosed due to business sensitivity. Neste is committed to operating with integrity towards its suppliers and treating

them fairly, and equally, always based on objective factors and excluding personal preferences or interest. Neste aims for long-

term and mutually beneficial business relationships with our key suppliers. Neste welcomes innovations and are always open for

feedback from suppliers. (O)

11.14.6

GRI 205: Anti-corruption 2016

205-1 Operations assessed for risks related to corruption

170

Neste regularly assesses its operations' risks including ia. risks of corruption and bribery. Numeric data not applicable. (R/O)

205-2 Communication and training about anti-corruption

policies and procedures

50, 87–88, 170

Neste Board Audit Committee receives regular updates on Neste compliance program and compliance activities, including such

related to anti-corruption. In 2022, all members of Neste Board of Directors completed the Code of Conduct (CoC) e-learning.

Neste´s Anti-corruption Principle and related guidance is available in Neste´s global intranet and further communicated and

trained via anti-corruption e-learning issued to all office workers, and regular newsletters. Neste ExCo members and targeted

employees are required to complete an Annual Compliance Acknowledgement confirming their compliance with i.a. the CoC

and Anti-corruption Principle. In connection with the CoC renewal in 2021, we also renewed the CoC e-learning. The e-learning,

mandatory for all Neste employees, was first issued to all office workers in 2021 and to the rest of the organization in 2022. It

achieved a completion rate of 95% by the end of 2022. The CoC e-learning is part of global induction training and therefore, the

completion fluctuates. We also require our suppliers and other business partners to comply with applicable laws and expect them

to follow equivalent ethical business standards as stated in the CoC (including zero tolerance to corruption), as further described

in our Supplier Code of Conduct. We are continuously developing our anti-corruption training processes and aspire to extend the

reporting with the remaining indicator requirements related to training when applicable. (R/O)

11.20.3

205-3 Confirmed incidents of corruption and actions taken

39, 50,170

No confirmed incidents during the reporting period. (R) 11.20.4

GRI 206: Anti-competitive Behaviour 2016

206-1 Legal actions for anticompetitive behavior, anti-trust, and

monopoly practices

No cases during the reporting period. (R) 11.19.2

GRI 207: Tax 2019

207-1 Approach to tax

Neste's tax footprint

11.21.4

207-2 Tax governance, control, and risk management

Neste’s tax footprint

11.21.5

207-3 Stakeholder engagement and management of concerns

related to tax

Neste’s tax footprint

11.21.6

207-4 Country-by-country reporting

Neste’s tax footprint

Neste discloses tax information for countries representing 90% of the external revenue of the group. (O) 11.21.7

GRI 300: Environmental

GRI 301: Materials

Neste

indicator

Volume of liquefied waste plastic processed (t/a)

38, 95

GRI 302: Energy 2016

302-1 Energy consumption within the organization

35, 79, 100, 115

11.1.2

302-2 Energy consumption outside of the organization Neste is assessing potential relevant energy consumptions in the value chain. Across Neste's value chain, the majority of energy

use outside the organization is estimated to occur through the use of products sold by Neste. (R/O)

11.1.3

302-3 Energy intensity

100, 115

11.1.4

302-4 Reduction of energy consumption

35, 79, 100, 115

Energy savings consist of different initiatives in our production covering steam and cooling. (R)

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

Neste Annual Report 2022 | Sustainability reporting in 2022

107

Strategy GovernanceSustainability Review by the Board of Directors Financials

GRI 303: Water and effluents 2018

303-1 Interactions with water as a shared resource

11.6.2

303-2 Management of water discharge-related impacts

80, 115

11.6.3

303-3 Water withdrawal

80, 100, 115

Neste is reviewing the GRI reporting on water categories including certain amount of total dissolved solids (O). 11.6.4

303-4 Water discharge

80, 100, 115

11.6.5

303-5 Water consumption

80, 100, 115

11.6.6

GRI 304: Biodiversity 2016

304-1 Operational sites owned, leased, managed in, or adjacent

to, protected areas and areas of high biodiversity value

outside protected areas

25, 74–79

Protected areas owned within Naantali production area in Finland. The protected area is 3 hectares of high biodiversity value. (R) 11.4.2

304-2 Significant impacts of activities, products, and services

on biodiversity

74–79

Neste is developing its biodiversity work consistently, and will be proceeding with the company's biodiversity vision in the

following years. Details in accordance with the indicator requirements will be reported as the work is progressing and impacts are

further mapped. (O)

11.4.3

304-3 Habitats protected or restored

25, 74–79

11.4.4

304-4 IUCN Red List species and national conservation list

species with habitats in areas affected by operations

74–79

The information on species not disclosed due to ongoing review of the reporting requirements globally. (O) 11.4.5

GRI 305: Emissions 2016

305-1 Direct (scope 1) GHG emissions

35, 98–99, 100, 115

11.1.5

305-2 Energy indirect (scope 2) GHG emissions

35, 98–99, 100, 115

11.1.6

305-3 Other indirect (scope 3) GHG emissions

100, 115

11.1.7

305-4 GHG emissions intensity

35, 72

Emissions used in the calculation: scope 3 Use of sold products. (R) 11.1.8

305-5 Reduction of GHG emissions

35, 58–73

11.2.3

305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other

significant air emissions

100, 115

Neste considers the reported emissions as significant. (R/O) 11.3.2

GRI 306: Effluents and Waste 2016

306-3 Significant spills

80, 100

No significant environmental impacts identified. (R) 11.8.2

GRI 306: Waste 2020

306-1 Waste generation and significant waste-related impacts

11.5.2

306-2 Management of significant waste-related impacts

79, 95, 100

11.5.3

306-3 Waste generated

100, 115

11.5.4

306-4 Waste diverted from disposal

100

11.5.5

306-5 Waste directed to disposal

100

11.5.6

GRI 308: Supplier Environmental Assessment 2016

308-1 New suppliers that were screened using environmental

criteria

86–90

99.4 % of Neste's renewable raw material suppliers and all oil product suppliers screened using environmental criteria. Indirect

procurement proportions reporting development proceeding. More on their screening processes in the report. (R/O)

GRI 400: Social

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

Neste Annual Report 2022 | Sustainability reporting in 2022Neste Annual Report 2022 | Sustainability reporting in 2022

108

Strategy GovernanceSustainability Review by the Board of Directors Financials

GRI 401: Employment 2016

401-1 New employee hires and employee turnover

37, 47, 52, 103

11.10.2

401-2 Benefits provided to full-time employees that are not

provided to temporary or part-time employees

Neste's temporary and part-time employees are not excluded from the benefits that are provided to the full-time employees

in Finland. Reporting will be extended to other significant locations in the coming years. Neste complies with minimum local

regulations and with local variations most often beyond. (R/O)

11.10.3

401-3 Parental leave All Neste employees are entitled to parental leave at a minimum according to the local legislation. All together 268 employees took

parental leave in 2022. Other data not disclosed due to developing the data needs for the new indicator. (R/O)

11.10.4 &

11.11.3

GRI 402: Labor/Management Relations 2016

402-1 Minimum notice periods regarding operational changes Neste follows the local laws and when applicable, bargaining agreements regarding operational changes. (R) 11.7.2 &

11.10.5

GRI 403: Occupational Health and Safety 2018

403-1 Occupational health and safety management system

55–57

11.9.2

403-2 Hazard identification, risk assessment, and incident

investigation

55–57

Neste Hazard Identification and Risk Assessment Principle includes processes and policies for workers to report hazardous

situations and also instructions how to remove themselves from these types of situations. The principle describes minimum safety

requirements for operating and maintenance procedures as well as safe work practises. Key common requirements include the

Process Hazard analysis standard consisting of standards for process risk classification, process safety information and work risk

management. (R)

11.9.3

403-3 Occupational health services

55–57

11.9.4

403-4 Worker participation, consultation, and communication on

occupational health and safety

OEMS Safety Leadership Principle sets requirements for Businesses to engage workforce for Health and Safety issues in various

groups, development of work practices, investigation of incidents and risk assessments throughout Neste globally. Practices

and fulfilling of requirements are followed through OEMS audit practices. In addition to to Safety Leadership Principle the local

statutory requirements are identified and followed to engage personnel in Health and Safety issues. (R)

11.9.5

403-5 Worker training on occupational health and safety

55–57

11.9.6

403-6 Promotion of worker health

41–43, 53

11.9.7

403-7 Prevention and mitigation of occupational health and

safety impacts directly linked by business relationships

55–57

11.9.8

403-8 Workers covered by an occupational health and safety

management system

11.9.9

403-9 Work-related injuries

56, 102, 115–116

We have defined our Life Saving Rules based on the high-risk activities which have caused fatalities and serious injuries at Neste

and in the Industries. The purpose of the Life Saving Rules (Working at heights, Confined spaces, Equipment isolation, Work

permit and Traffic hazards) is to help save lives and prevent serious injuries. In addition to Life Saving Rules related injuries we

monitor comprehensively factors related injuries such as lenght of absence, injury types etc.

In 2022 we had TRIF 2.0 which was way above our target. Majority (23 of 30) of injuries happened to contractors. In 2022 we

did not have any injury that would have resulted permanent effect on health. All together we had four cases which resulted in

long absences from work. Main injury types slips, strips and falls, cuts and scratches or overextertions caused by single straining

motion at work, are the same both in employees and contractors. Total amount of working hours was circa 8 600 000 hours for

employees and 6 170 000 hours for contractors. (R)

11.9.10

403-10 Work-related ill health

56, 102, 115–116

Neste records all work-related injuries. Occupational diseases are recorded separately.

Neste has defined and implements practices in the Operations Excellence Management System (OEMS) to minimize hazards and

to mitigate risks relating to any work-related ill health or injuries. (R/O)

11.9.11

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

Neste Annual Report 2022 | Sustainability reporting in 2022

109

Strategy GovernanceSustainability Review by the Board of Directors Financials

GRI 404: Training and Education 2016

404-1 Average hours of training per year per employee

102

11.10.6 &

11.11.7

404-2 Programs for upgrading employee skills and transition

assistance programs

41–43, 47, 52–53

11.7.3 &

11.10.7

GRI 405: Diversity and Equal Opportunity 2016

405-1 Diversity of governance bodies and employees

37, 47, 54, 103, 123

11.11.4

405-2 Ratio of basic salary and remuneration of women to men Women's mean basic salary in relation to men's by pay grade and employee category in Finland: blue-collars 92%-100% and

whitecollars 86%-103%. Finland is reported as it is significant with over 67% weight of employees in total personnel. (R)

11.11.5

GRI 406: Non-discrimination 2016

406-1 Incidents of discrimination and corrective actions taken

39, 170

11.11.6

GRI 407: Freedom of Association and Collective Bargaining 2016

407-1 Operations and suppliers in which the right to freedom of

association and collective bargaining may be at risk

Neste Human Rights

Commitment

Human Rights Principle

Neste Supplier Code of

Conduct

Neste Modern Slavery

Statement

We have put in place a firm policy to mitigate this potential impact in our global operations and supply chains and the policy is

implemented through our due diligence processes. We use a bespoke, industry leading, country risk assessment methodology

from Verisk Maplecroft to identify countries or geographic areas with the highest risks to freedom of association and collective

bargaining. The Neste Supplier Code of Conduct includes a minimum requirement to recognise and respect employees’ right to

organize freely and bargain collectively. Specific operations and geographic areas not disclosed publicly. (R)

11.13.2

GRI 408: Child Labor 2016

408-1 Operations and suppliers at significant risk of incidents of

child labor

81–85

Neste Human Rights

Commitment

Human Rights Principle

Neste Supplier Code of

Conduct

Neste Modern Slavery

Statement

We have put in place a firm policy to mitigate this potential impact in our global operations and supply chains and the policy is

implemented through our due diligence processes. We use a bespoke, industry leading, country risk assessment methodology

from Verisk Maplecroft to identify countries or geographic areas with the highest risks of child labor. The Neste Supplier Code

of Conduct includes minimum requirements regarding child labor. Further details regarding management approach, high risk

operations and supply chains, and measures taken by Neste to assess and address child labor risks available in Neste's annual

Modern Slavery Statement. (R)

GRI 409: Forced or Compulsory Labor 2016

409-1 Operations and suppliers at significant risk of incidents of

forced or compulsory labor

81–85

Neste Human Rights

Commitment

Human Rights Principle

Neste Supplier Code of

Conduct

Neste Modern Slavery

Statement

We have put in place a firm policy to mitigate this potential impact in our global operations and supply chains and the policy is

implemented through our due diligence processes. We use a bespoke, industry leading, country risk assessment methodology

from Verisk Maplecroft to identify countries or geographic areas with the highest risks of forced labor. The Neste Supplier Code

of Conduct includes minimum requirements regarding forced and compulsory labor. Further details regarding management

approach, high risk operations and supply chains, and measures taken by Neste to assess and address forced labor risks

available in Neste's annual Modern Slavery Statement. (R)

11.12.2

GRI 410: Security Practices 2016

410-1 Security personnel trained in human rights policies or

procedures

100% of Neste group security personnel have received formal training on Neste human rights policies through Neste's Code of

Conduct e-learning. (R)

11.11.6

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

Neste Annual Report 2022 | Sustainability reporting in 2022

110

Strategy GovernanceSustainability Review by the Board of Directors Financials

GRI 411: Rights of Indigenous Peoples 2016

411-1 Incidents of violations involving rights of indigenous

peoples

Neste respects the rights of Indigenous Peoples set out in the United Nations Declaration on the Rights of Indigenous Peoples

(UNDRIP), and carries out due diligence to avoid infringing on human rights. In 2022, there were 0 incidents of violations involving

the rights of Indigenous peoples reported via Neste’s available reporting channels, including Ethics Online. (R)

11.17.2

GRI 412: Human Rights Assessment 2016

(412-1) Operations that have been subject to human rights

reviews or impact assessments

All Neste operations reviewed as part of our 2022 corporate-wide human rights saliency assessments to evaluate the risk of Neste

being associated with or complicit in adverse human rights impacts. We assess country risk using a bespoke, industry leading,

country risk assessment methodology from Maplecroft to map sustainability risks for the countries in which we operate and have

supply chains. (R)

(412-2) Employee training on human rights policies or procedures In 2022, 1,390 (1,076) hours were used for training on human rights policies and processes relevant to Neste’s business

operations and supply chains. 51% (77%) of Neste employees were trained on topics related to Neste’s human rights policies and

processes during 2022. 86% of the new employees hired in 2022 were trained on topics related to Neste’s human rights policies

and processes. (R)

GRI 204: Procurement Practices 2016

413-1 Operations with local community engagement, impact

assessments, and development programs

43, 75–80, 81–85

Human Rights Principle

Neste is developing its community impact and engagement mechanisms in line with commitments set out in our Human Rights

Principle. Details in accordance with the indicator requirements will be reported as the work progresses. (O)

11.15.2

413-2 Operations with significant actual and potential negative

impacts on local communities

43, 75–80, 81–85

Human Rights Principle

Neste is developing its community impact and engagement mechanisms in line with commitments set out in our Human Rights

Principle. Details in accordance with the indicator requirements will be reported as the work progresses. (O)

11.15.3

GRI 414: Supplier Social Assessment 2016

414-1 New suppliers that were screened using social criteria

47, 86–90

99.4 % of Neste's renewable raw material suppliers and all oil product suppliers screened using social criteria. Indirect

procurement proportions reporting development proceeding. More on their screening processes in the report. (R/O)

11.10.6 &

11.12.3

414-2 Negative social impacts in the supply chain and actions

taken

102 actions initiated to advance supply chain workers’ human and labor rights in Neste raw material supplier sustainability audits.

(R)

11.10.9

GRI 415: Public Policy 2016

415-1 Political contributions Neste does not make political contributions. (R) 11.22.2

GRI 416: Customer Health and Safety 2016

416-1 Assessment of the health and safety impacts of product

and service categories

Neste has assessed all (100%) of its products according to health and environmental impacts. This is a regulatory requirement

for chemicals. Results of these assessments are documented in eg. the chemical safety data sheet that is supplied to customers.

Also the feedstock used in manufacturing of Neste products are assessed for health and safety impacts. (R)

11.3.3

416-2 Incidents of non-compliance concerning the health and

safety impacts of products and services

No incidents of non-compliance with the indicator requirements (R)

GRI 417: Marketing and Labeling 2016

417-3 Incidents of non-compliance concerning marketing

communications

Four legal actions in Lithuania of which two were closed during 2022 and resulted in no fines. The remaining two cases have been

responded to and are pending. A RCC complaint in the Netherlands was dismissed by the Advertising Code Committee during

2022. (R)

Innovation and Partnerships

Neste

indicator

Research and development expenditure

38, 172

11.22.2

Neste

indicator

Number of granted patents and pending patent

applications

38, 47

Neste

indicator

Collaborations with research institutions and universities

GRI Standards Disclosure

Location in the report

or our webpage Reporting (R) / Omission (O)

Oil&Gas Sector

Standard REF #

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Strategy GovernanceSustainability Review by the Board of Directors Financials

TCFD Recommendations Disclosure Location in the report

Governance

Disclose the organization’s

governance around climate-

related risks and opportunities.

a) Describe the board’s oversight of climate related risks and opportunities.

48–50, 137,157

b) Describe management’s role in assessing and managing climate related risks and opportunities.

48–50, 137,157

Strategy

Disclose the actual and potential

impacts of climate-related risks

and opportunities on the

organization’s businesses,

strategy, and nancial planning

where such information is

material.

a) Describe the climate-related risks and opportunities the organization has identied over the short, medium, and long term.

58–60, 138–139,

165–166, 182–183

b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and nancial planning.

8–9, 12–16, 47, 58–60,

165–166, 182–183

c) Describe the resilience of the organization’s strategy, taking into consideration different climate related scenarios, including a 2°C or lower scenario.

58–60, 165–166,

182–183

Risk Management

Disclose how the organization

identies, assesses, and manages

climate-related risks.

a) Describe the organization’s processes for identifying and assessing climate-related risks.

49, 136–139, 157,

165–166

b) Describe the organization’s processes for managing climate-related risks.

49, 136–139, 157,

165–166

c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.

49, 136–139, 157,

165–166

Metrics and Targets

Disclose the metrics and targets

used to assess and manage

relevant climate-related risks and

opportunities where such

information is material.

a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

25, 35–39, 47, 58–73,

79–80, 100–101,

115–116, 140, 158–164

b) Disclose scope 1, scope 2, and, if appropriate, scope 3 greenhouse gas (GHG) emissions, and the related risks.

100, 35, 66–73,115–116

c) Describe the targets used by the organization to manage climate related risks and opportunities and performance against targets.

25, 35–39, 47, 58–73,

79–80

TCFD Recommendations Disclosure

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Strategy GovernanceSustainability Review by the Board of Directors Financials

SASB Content Index

Neste disclosure of SASB Sustainability Accounting Standards for Oil and Gas Refining and Marketing

GHG Emissions

EM-RM-110a.1 Gross global scope 1 emissions, percentage covered under emissions-limiting

regulations

Metric tons (t) CO

Percentage (%)

100, 115 98% covered under EU ETS. (R)

EM-RM-110a.2 Discussion of long-term and short-term strategy or plan to manage scope 1

emissions, emissions reduction targets, and an analysis of performance against those

targets

n/a

35, 58–73

Air Quality

EM-RM-120a.1 Air emissions of the following pollutants: (1) NOx (excluding N

O), (2) SOx, (3)

particulate matter (PM10), (4) H2S, and (5) volatile organic compounds (VOCs)

Metric tons (t) 100, 115

EM-RM-120a.2 Number of refineries in or near areas of dense population Number All 3 Neste refineries in 2022 located in near areas (within 49km) of an urbanized area.

(R)

Water management

EM-RM-140a.1 (1) Total fresh water withdrawn, (2) percentage recycled, (3) percentage in regions with

High or Extremely High Baseline Water Stress

Thousand cubic meters

(m³), Percentage (%)

100, 115 Neste’s water withdrawal from areas with water stress is not significant and seen as

not material. Percentage for recycled water is not calculated separately, as most of the

water withdrawn for cooling is discharged back to the source in similar condition as

when withdrawn. (R)

EM-RM-140a.2 Number of incidents of non-compliance associated with water quality permits,

standards, and regulations

Number

80 No incidents of non-compliance associated with water quality permits, standards, and

regulations.

Hazardous Materials Management

EM-RM-150a.1 Amount of hazardous waste generated, percentage recycled Metric tons (t),

Percentage (%)

100 259,000 metric tons (t), recycled 5% (R)

EM-RM-150a.2 (1) Number of underground storage tanks (USTs), (2) number of UST releases requiring

cleanup, and (3) percentage in states with UST financial assurance funds

Number,

Percentage (%)

25 underground storage tanks for petroleum products. No UST releases.

Reporting based on Neste's environmental permits. (R)

Workforce Health and safety

EM-RM-320a.1 (1) Total recordable incident rate (TRIR), (2) fatality rate, and (3) near miss frequency

rate (NMFR) for (a) full-time employees and (b) contract employees

Rate

57, 102, 115–116 (1) and (2) Neste reports the most relevant OHS performance figures in its own

operations (TRIF, LWIF, PSER, Safe Days, Fatalities). (3) NMFR 127. (R)

EM-RM-320a.2 Discussion of management systems used to integrate a culture of safety n/a

55–57, 108

Product Specifications & Clean Fuel Blends

EM-RM-410a.1 Percentage of Renewable Volume Obligation (RVO) met through: (1) production of

renewable fuels, (2) purchase of separated renewable identification numbers (RIN)

Percentage (%) (1) 0%, (2) 100%. (R)

EM-RM-410a.2 Total addressable market and share of market for advanced biofuels and associated

infrastructure

Reporting currency,

Percentage (%)

14, 150

Pricing Integrity & Transparency

Code Accounting metric Unit of measure

Location in

the report or

our webpage Additional SASB reporting information Reporting (R) / Omission (O)

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EM-RM-520a.1 Total amount of monetary losses as a result of llegal proceedings associated with

price fixing or price manipulation

Reporting currency,

Percentage (%)

No legal proceedings.

Management of the Legal & Regulatory Environment

EM-RM-530a.1 Discussion of corporate positions related to government regulations and/or policy

proposals that address environmental and social factors affecting the industry

n/a

44–45, 60, 65,

66–73, 81–85,

92–93, 114,

138, 157,

165–166, position

statement

Critical Incident Risk Management

EM-RM-540a.1 Process Safety Event (PSE) rates for Loss of Primary Containment (LOPC) of greater

consequence (Tier 1) and lesser consequence (Tier 2)

Rate

102, 115–116 Neste reports PSER1 and PSER2 rates as described in Principles for calculating the

key indicators

EM-RM-540a.2 Challenges to Safety Systems indicator rate (Tier 3) Rate Rate 71.2. Tier 3 Challenges to Safety Systems indicator are included in Neste's PSE3

that we report. (R)

EM-RM-540a.3 Discussion of measurement of Operating Discipline and Management System

Performance through Tier 4 Indicators

n/a

55–57 Process safety management system weaknesses that may cause in the future PSE1 or

PSE2 events. They are reported as part of PSE4 indicator at Neste.

Code Activity metrics Unit of measure

Location in the

report or our

webpage Additional SASB reporting information

EM-RM-000.A Refining throughput of crude oil and other feedstocks Barrels of oil equivalent

(BOE)

Oil Products 88 MMBOE (R)

EM-RM-000.B Refining operating capacity Million barrels per

calendar day (MBPD)

15 Oil Products 0.25 MBPD (R)

Code Accounting metric Unit of measure

Location in

the report or

our webpage Additional SASB reporting information Reporting (R) / Omission (O)

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PART C: Management of Salient Human Rights Issues

C1 Specific Policies

C1 Neste Human Rights Principle, Code of Conduct, Supplier Code of Conduct,

Sustainability Policy, Sustainability Principle, Responsible Sourcing Principle,

People Policy, Equality and Non–Discrimination Principle, Misconduct

Investigation Standard, Neste Life Saving Rules, Operations Excellence Policy,

Operational Safety Principle, Occupational Health Principle, Reproductive

Health Standard, Privacy Principle, Cyber Security Principle

p.7–9

C1.1

p. 53–54, 56–57, 82–85 p. 17–18

C2 Stakeholder Engagement

p. 29–30, 40–43, 46, 53, 56, 82–85, 93 Neste Human Rights Principle (p.11) p. 16, 19–21

C2.1

p. 29–30, 40–43, 46, 53, 56, 82–85, 93 Neste Human Rights Principle (p.11) p. 16, 19–21

C2.2

p. 29–30, 40–43, 46, 53, 56, 82–85, 93 p. 16, 19–21

C2.3

p. 29–30, 37, 40–43, 46, 53, 56, 82–85, 93 p. 10–11, 16,

19–21

C3 Assessing Impacts

p. 36–39, 56–57, 82–85, 88–89, 90, 131 p. 8, 10–14, 21

C3.1

p. 36–39, 56–57, 82–85, 88–89 p. 14, 16

C3.2

p. 39, Renewable Raw Material Grievance Log

C4 Integrating Findings and Taking Action

p. 82 p. 10–16

C4.1

Cross–functional collaboration e.g. 48–49, 54, 81–85 p. 7, 11

C4.2

p. 82, 89, Neste Human Rights Principle sec.5.7.1 (p .8) p. 11,15

C4.3

p. 56, 81–91 p. 7–21

C5 Tracking Performance

p. 36–39, 56–57, 81–85, 88–89, 90 p. 14, 16, 21

C5.1

p. 36–39, 56–57, 81–85, 88–89, 90 p. 14, 16, 21

C6 Remediation

p. 82, 84, 89, 131–132, Neste Human Rights Principle (p. 7) p. 9, 15, 16, 21

C6.1

p. 82, 84, 89, 131–132 p. 9, 15, 16, 21

C6.2

p. 39, Singapore Expansion, Renewable Raw Material Grievance Log p. 16, 21

C6.3

p. 39, 82, 89, 131–132 Grievance Process; Singapore Expansion, Renewable

Raw Material Grievance Log, Neste Human Rights Principle (p. 7)

p. 9, 15, 16, 21

C6.4

p. 39, Renewable Raw Material Grievance Log p. 16

C6.5

p. 39, Renewable Raw Material Grievance Log p. 16

Section of

the Framework

Location in annual report

or website

Page location in 2021

Modern Slavery Statement

PART A: Governance of Respect for Human Rights

A1 Policy Commitment

p. 81–83; Neste Human Rights Principle. 7

A1.1

p. 83; In 2022 we conducted a major review and update of the

Neste Human Rights Principle, informed by extensive consultation

with both internal and external stakeholders. It received final review

and approval by Neste’s CEO, based on the endorsement of the

Neste Executive Committee.

A1.2

All of Neste's rights–holders as defined on p.13 of the Neste

Human Rights Principle

A1.3

p. 36, 85; 87; 89; 110; Neste Human Rights Principle is published

on our company website and internally accessible on the Neste

intranet. It is communicated to employees via e–learnings, and

to business partners via Neste's Supplier Code of Conduct

Guidance and capacity building workshops.

9, 17, 18

A2 Embedding Respect for Human Rights

p. 27, 48–49, 81–85, NBNHR Joint Statement, Neste Human

Rights Principle (p.9–10)

3, 7, 19, 20

A2.1

Described under section 6.1 of the Neste Human Rights Principle

(p.9–10)

A2.2

p. 48–49, 83, Neste Human Rights Principle (p. 9–10) 22

A2.3

p. 85, 87, 89, Neste Code of Conduct (p. 7) 7, 9, 16–18

A2.4

p. 81–85, 87–90, Neste’s Supplier Code of Conduct Guidance

(p. 13–21)

9, 12–15, 17–18

A2.5

p. 81–85, 88, 90 p. 7–9, 11–12, 14, 16–19,

21–22

PART B: Defining the Focus of Reporting

B1 Statement of salient issues

p. 83; Neste Human Rights Principle (p. 2–9) p. 8

B2 Determination of salient issues

p. 83 p. 8

B3 Geographical focus N/A p. 10–11

B4 Additional severe impacts N/A N/A

Section of

the Framework

Location in annual report

or website

Page location in 2021

Modern Slavery Statement

Page numbers provided for 2021 Modern Slavery Statement, as the 2022 statement will only be published in Q2, 2023.

UN Guiding Principles Reporting Framework Index

The UN Guiding Principles Reporting Framework provides comprehensive guidance for companies to report on human rights issues

in line with their responsibility to respect human rights. For full details on the framework, please visit www.ungpreporting.org

UN Guiding Principles Reporting Framework Index

Neste Annual Report 2022 | Sustainability reporting in 2022

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

Principles for calculating the key indicators

General disclaimer

The figures in the sustainability report may be subject to

rounding, which may cause some differences in aggre-

gate totals calculated from exact figures.

Environment

Energy: The energy consumption figures cover Neste’s

refineries, terminals, offices, the company’s own sta-

tion business and time-chartered ships. The figures are

based on the data provided by these units. Consump-

tion is calculated based on invoicing and meters. Stan-

dard conversion factors are used (SI). Neste follows

the Energy Efficiency Agreement for Industries which is

an agreement between the Government and industrial

associations on the efficient use of energy, providing also

guiding methodology for energy efficiency calculations.

Energy intensity is calculated as the ratio of total energy

consumption to Neste’s revenue.

Carbon dioxide (CO

) or Greenhouse gas emis-

sions (GHG): Neste applies a financial control approach

for consolidating the CO

or GHG emission indicators.

For the scope 1 emissions, the emission factors com-

pliant with the fuel classification published by Statistics

Finland were used in addition to Neste’s in-house lab-

oratory measurement data. scope 2 covers emissions

from indirect purchased electricity, steam and heat pro-

duction. Market-based scope 2 emissions are based

on energy supplier-specific or residual grid mix emis-

sion factors. Location-based scope 2 emissions are

based on country-specific emission factors (e.g. IEA,

Motiva). scope 1 accounting and reporting is based on

, scope 2 includes other GHGs where available (the

estimated share of other GHG is negligible compared

to CO

Scope 3 calculation is based on the principles of the

GHG protocol. The calculation of scope 3 emissions is

based on internal data sources (e.g. sales and supply

data), information available from public sources (e.g.

Renewable Energy Directive) and Neste’s accredited

in-house calculation data have been used as the emis-

sion factors. scope 3 emissions reporting covers GHG

emissions and is reported as CO

e. Only relevant scope

3 categories are included in the report.

GHG emission reduction calculation method

complies with the EU Renewable Energy Directive II

(EU) 2018/2001 and the California LCFS methodol-

ogy, which has been applied in the GHG reporting for

volumes sold in the US since the beginning of 2022.

Neste regularly updates its GHG emission factors in line with

the updates in legislation and the certification schemes.

Average GHG emission reduction of sourced palm oil

contains the use of conventional palm oil that we have

sold within the year 2022.

VOC, NOx, SO

, PM: Other emissions to air (exclud-

ing CO

) are measured with direct measurements (on-line

or periodic) or with indirect monitoring methods. On-line

measurement is typically done on major emission points.

Both direct measurements and indirect monitoring is

based on the site environmental permit or other local

environmental regulation. Relevant process parame-

ters linked to pollutant emissions are monitored too. All

emission monitoring is done in accordance with stan-

dards. If EN standards are not available, ISO, national or

other international standard/method is used to ensure

the provision of data of high scientific quality.

Water withdrawal: The water withdrawal volumes

are based on the company’s own measurements or on

invoicing. Neste's water risk assessment is based on

WWF Water Risk Filter. Neste annually updates the risk

assessment.

Wastewater discharges: Neste reports the waste-

water volumes, chemical oxygen consumption, as well

as the oil, nitrogen, and phosphorus releases. The figures

are calculated on the basis of refinery- or terminal-spe-

cific data based on sampling or continuous metering.

The figures do not include the loading values of waste-

water treated in municipal or other external wastewater

treatment plants. Neste operates according to local dis-

charge permits and requirements. Our process waters

are always treated to meet the requirements before they

are safely discharged.

Waste generated: The waste volumes are based on

the invoicing data.

Non-renewable resource use: The amount of

non-renewable resource use that Neste’s renewable

and circular solutions helped replace in transport, avia-

tion and polymers and chemicals sectors. Calculations

include fossil resource usage over renewable and circu-

lar production life cycles. An energy-based comparison

is made with relevant fossil references. The difference is

expressed as the energy content of crude oil.

Safety

Total Recordable Injury Frequency (TRIF): Acci-

dents at work resulting in absence from work, restriction

to work, or medical treatment are included in the acci-

dent frequency figures. The formula for calculating acci-

dent frequency (number of accidents at work per mil-

lion working hours): total number of accidents at work

× 1,000,000 / hours worked. The calculation includes

in-house personnel, contractors and service providers

working at Neste’s sites.

Workplace accidents: Accidents that occur at work/

while performing work duties.

Safe Day: A day without a TRI accident, process

safety events, fire or ignition, breach of environmental

permit, or traffic accident.

Hours worked: The hours worked by the whole per-

sonnel and the service providers during the period under

review. When recording the working hours of service pro-

viders, an estimate (e.g. accounting hours) can be used

if the accurate number of hours is not known. Workplace

accidents: Accidents that occur at work/while perform-

ing work duties.

TRI (Total Recordable Injuries): All recorded acci-

dents at work: the number of accidents at work result-

ing in absence from work, restriction to work or medical

treatment.

LWIF (Lost Workday injury frequency): The num-

ber of accidents at work resulting in lost workdays, rela-

tive to a million hours worked.

Process safety event rate (PSER): Rate of process

safety events per million hours worked.

PSE1 (Process Safety Event): An unplanned and

uncontrolled release of any material, including nontoxic

and non-flammable materials from a process, resulting

in consequences according to the PSE1 classification.

116

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

Possible consequences:

• Workplace accident leading to absence (LWI, RWI)

or fatality.

• Fires or explosions with direct expenses (excluding

loss of production) higher than EUR 25,000.

• Evacuation or taking cover indoors.

• A leak exceeding the reporting threshold during a

certain period, threshold according to Concawe

(European Oil Company Organisation for

Environment, Health and Safety).

• A pressure relief device (PRD) discharge with

above-mentioned consequences.

The Group-level performance indicators include the par-

ent company and companies where the parent company

holds more than 50% of shares. The associate compa-

nies are not included in the calculations.

PSE2 (Process Safety Event): An unplanned and

uncontrolled release of any material, including nontoxic

and non-flammable materials from a process, resulting

in consequences according to the PSE2 classification.

Possible consequences:

• Workplace accident requiring medical treatment

(MTC).

• Fires or explosions with direct expenses (excluding

loss of production) higher than EUR 2,500.

• A leak exceeding the reporting threshold during a

certain period, threshold according to Concawe.

• A pressure relief device (PRD) discharge with above-

mentioned consequences.

HSEQ: Health, safety, environment and quality.

Personnel

Reporting of personnel numbers: The personnel

numbers are calculated as numbers of employees, and

include, as a rule, all personnel with active contracts of

employment or employees on leave. Hourly paid employ-

ees are not included as their numbers of working hours

vary greatly, and their number in proportion to other

employees is very small. Unless otherwise specified, the

personnel numbers are reported as at December 31.

Number of permanent employees leaving the

company: The number of employees leaving a perma-

nent contract of employment from Jan 1 to Dec 31/the

number of permanent employees on Dec 31 (including

all reasons for ending the employment).

Number of permanent employees joining the

company: The number of employees entering a per-

manent contract of employment from Jan 1 to Dec 31/

the number of permanent employees on Dec 31.

Training costs: The training costs include exter-

nal training-related costs, such as the fees of external

trainers, and the participation fees for external training

events, but not, for example, the salaries of participants

or the company’s own trainers

Innovation

Clean revenue means revenue from all goods and ser-

vices which have a clear environmental and/or social

benefits. Clean investments are investments in such

benefits consisting of Clean CAPEX, Clean R&D and

Clean M&A. Clean Revenue and Clean Investments

include for example revenue from, and investments in,

clean transition as well as low-carbon and circular econ-

omy solutions.

Clean Investments (%): Clean CAPEX+Clean R&D+-

Clean Acquisitions/Total CAPEX+R&D+Acquisitions.

Clean Revenue (%): Clean Revenue/Total Revenue.

117

Strategy GovernanceSustainability Review by the Board of Directors Financials

Independent Assurance Report

Neste Annual Report 2022 | Sustainability reporting in 2022

To the Management of Neste Corporation

We have been engaged by the Management of Neste

Corporation (hereafter “Neste”) to provide limited assur-

ance on selected numerical sustainability disclosures pre-

sented in the “Sustainability section” of Neste’s Annual

Report 2022 (hereafter “Selected Numerical Sustainabil-

ity Information”) for the year ended 31 Dec 2022.

The Selected Numerical Sustainability Information

consists of selected economic, social and environmen-

tal sustainability closures listed within the Topic-Spe-

cific Disclosures and General Disclosures 2–7 and 2–30

as well as information presented in the “Sustainability

highlights 2022”, “Sustainability KPIs”, “Value creation”,

and “Performance in figures” sections in Neste’s Annual

Report 2022.

Management’s responsibilities

The Management of Neste is responsible for the prepa-

ration and presentation of the Selected Numerical Sus-

tainability Information in accordance with the reporting

criteria, i.e. GRI Sustainability Reporting Standards, and

the information and assertions contained within it. The

Management is also responsible for determining Neste’s

objectives with regard to sustainable development per-

formance and reporting, including the identification of

stakeholders and material issues, and for establishing

and maintaining appropriate performance management

and internal control systems from which the reported

performance information is derived.

Our responsibilities

Our responsibility is to carry out a limited assurance

engagement and to express a conclusion based on the

work performed. We conducted our limited assurance

engagement on the Selected Numerical Sustainability

Information in accordance with International Standard

on Assurance Engagements (ISAE) 3000 (Revised),

Assurance Engagements other than Audits or Reviews

of Historical Financial Information, issued by the Interna-

tional Auditing and Assurance Standards Board IAASB.

That Standard requires that we plan and perform the

engagement to obtain limited assurance about whether

the Selected Numerical Sustainability Information is free

from material misstatement.

KPMG Oy Ab applies International Standard on Qual-

ity Control ISQC 1 and accordingly maintains a compre-

hensive system of quality control including documented

policies and procedures regarding compliance with ethi-

cal requirements, professional standards and applicable

legal and regulatory requirements.

We have complied with the independence and other

ethical requirements of the Code of Ethics for Profes-

sional Accountants issued by the International Eth-

ics Standards Board for Accountants IESBA, which is

founded on fundamental principles of integrity, objectiv-

ity, professional competence and due care, confidential-

ity and professional behavior.

Our multi-disciplinary team of sustainability and assur-

ance specialists possesses the needed skills and expe-

rience within financial and non-financial assurance,

sustainability strategy and management, social and envi-

ronmental issues, as well as the relevant industry knowl-

edge, to undertake this assurance engagement.

Procedures performed

A limited assurance engagement on Selected Numerical

Sustainability Information consists of making inquiries,

primarily of persons responsible for the preparation of

information presented in the Selected Numerical Sus-

tainability Information, and applying analytical and other

evidence gathering procedures, as appropriate. In the

engagement, we have performed the following proce-

dures, among others:

• Interviewed the members of Neste’s senior

management and relevant staff responsible for

providing the Selected Numerical Sustainability

Information;

• Assessed the application of the GRI Sustainability

Reporting Standards reporting principles in the

presentation of the Selected Numerical Sustainability

Information;

• Assessed data management processes, information

collecting and working methods used to gather and

consolidate the Selected Numerical Sustainability

Information;

• Reviewed the presented Selected Numerical

Sustainability Information and assessed its quality

and reporting boundary definitions and;

• Assessed of the Selected Numerical Sustainability

Information’s data accuracy and completeness

through a review of the original documents and

systems on a sample basis.

118

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Sustainability reporting in 2022

The procedures performed in a limited assurance

engagement vary in nature and timing from, and are less

in extent than for, a reasonable assurance engagement.

Consequently, the level of assurance obtained in a lim-

ited assurance engagement is substantially lower than

the assurance that would have been obtained had a

reasonable assurance engagement been performed.

Inherent limitations

Due to the inherent limitations of any internal control

structure, it is possible that errors or irregularities in the

information presented in the Report may occur and not

be detected. Our engagement is not designed to detect

all weaknesses in the internal controls over the prepa-

ration and presentation of the Selected Numerical Sus-

tainability Information, as the engagement has not been

performed continuously throughout the period and the

procedures performed were undertaken on a test basis.

Conclusion

Our conclusion has been formed on the basis of, and is

subject to, the matters outlined in this report.

We believe that the evidence we have obtained is sufficient

and appropriate to provide a basis for our conclusions.

Based on the procedures performed and the evidence

obtained, as described above, nothing has come to our

attention that causes us to believe that the information

subject to the limited assurance engagement is not pre-

sented, in all material respects, in accordance with the

GRI Sustainability Reporting Standards.

In accordance with the terms of our engagement, this

independent limited assurance report on the Selected

Numerical Sustainability Information has been prepared

for Neste Corporation in connect with reporting to Neste

Corporation and for no other purpose or in any other

context.

Restriction of use of our report

Our report should not be regarded as suitable to be used

or relied on by any party wishing to acquire rights against

us other than Neste Corporation for any purpose or in

any other context. Any party other than Neste Corpora-

tion who obtains access to our report or a copy thereof

and chooses to rely on our report (or any part thereof)

will do so at its own risk. To the fullest extent permitted

by law, we accept or assume no responsibility and deny

any liability to any party other than Neste Corporation for

our work, for this independent assurance report, or for

the conclusions we have reached.

Our report is released to Neste Corporation on the

basis that it shall not be copied, referred to or disclosed,

in whole (save for Neste Corporation’s own internal pur-

poses) or in part, without our prior written consent.

Helsinki, 2 March 2023

KPMG Oy Ab

Leenakaisa Winberg Tomas Otterström

Authorised Public Partner, Advisory

Accountant, KHT

119

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Governance

Corporate Governance Statement 120

Risk management 136

Remuneration report 140

Governance

We are committed to high ethical standards

and conduct our business and operate in

compliance with applicable laws, regulations

and generally accepted practices

for good corporate governance.

120

Strategy GovernanceSustainability Review by the Board of Directors Financials

Corporate Governance Statement 2022

This Corporate Governance Statement has been pre-

pared pursuant to the 2020 Corporate Governance

Code, Chapter 7, Section 7 of the Securities Markets

Act, as well as Section 7 of the Ministry of Finance’s

Decree on the Regular Duty of Disclosure of an Issuer

of a Security. The Corporate Governance Statement

is issued separately from the Review by the Board of

Directors and it can be found, in addition to the Annual

Report, at neste.com/investors.

Regulatory framework

Neste Corporation (“Neste” or the “Company”) observes

good corporate governance practices in accordance

with the laws and regulations applicable to Finnish

listed companies, the Company’s own Articles of Asso-

ciation, and the Finnish 2020 Corporate Governance

Code. The Corporate Governance Code can be found

at cgfinland.fi/en/. Neste also complies with the rules of

Nasdaq Helsinki Ltd, where it is listed, and the rules and

regulations of the Finnish Financial Supervisory Authority.

Neste’s Audit Committee has reviewed the Corpo-

rate Governance Statement, and the Company’s Audi-

tor, KPMG Oy Ab, has monitored that it has been issued

and that the description of the main features of the inter-

nal control and risk management related to the financial

reporting process included in the statement matches

the Financial Statements.

Neste issues Consolidated Financial Statements and

interim reports in accordance with the International

Financial Reporting Standards (IFRS), as adopted by the

EU, the Securities Market Act, as well as the appropriate

Financial Supervisory Authority standards, and Nasdaq

Helsinki Ltd’s rules. The Review by the Board of Direc-

tors and the Parent Company’s Financial Statements are

prepared in accordance with the Finnish Accounting Act

and the opinions and guidelines of the Finnish Account-

ing Board.

Governance Bodies

The control and management of Neste is split between

the Annual General Meeting of Shareholders (AGM), the

Board of Directors, and the President and Chief Execu-

tive Officer (President and CEO). Ultimate decision-mak-

ing authority lies with shareholders at the AGM which

appoints the members of the Board of Directors and the

Auditor. The Board of Directors is responsible for Neste’s

strategy and overseeing and monitoring the Company’s

business. The Board of Directors appoints the President

and CEO. The President and CEO, assisted by the Exec-

utive Committee (ExCo), is responsible for managing the

Company’s business and implementing its strategic and

operational targets.

Neste’s headquarters are located in Espoo, Finland.

Neste Annual Report 2022 | Corporate Governance Statement

Neste’s businesses are grouped into four reporting segments: Renewable Products, Oil Products, Marketing & Services, and Others.

Shareholders / Annual General Meeting

Board of Directors

Audit Committee Personnel and Remuneration Committee

Shareholders’ Nomination Board

President & CEO

Assurance Functions

Executive Committee

Risk Management Compliance Internal Control

Renewable ProductsOil Products Marketing & Services Innovation Functions

Engineering

Solutions

Renewable

Aviation

Renewable Polymers

and Chemicals

Renewables Platform

Neste’s Governance Bodies

Finance

Human Resources,

HSSEQ and Procurement

Sustainability and

Corporate Affairs

Legal

External

Audit

Internal

Audit

Renewable

Road Transportation

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Annual General Meeting

Under the Finnish Companies Act, shareholders exer-

cise their decision-making power at General Meetings of

Shareholders, and attend meetings in person or through

an authorized representative. Each share entitles the

holder to one vote.

Shareholders at the AGM make decisions on matters

including:

• the approval of the Financial Statements;

• the distribution of profit for the year detailed in the

Balance Sheet;

• discharging the members of the Board of Directors

and the President and CEO from liability;

• if necessary, the approval of the Remuneration

Policy;

• the approval of the Remuneration Report; and

• the election and remuneration of the Chair, the Vice

Chair, and the members of the Board of Directors

and the Auditor.

The AGM is held annually before the end of June. An

Extraordinary General Meeting of Shareholders address-

ing specific matters can be held, when considered nec-

essary by the Board of Directors, or when requested in

writing by the Company’s Auditor or by shareholders

representing at least one-tenth of all Company shares.

Under the Articles of Association, an invitation to a

General Meeting of Shareholders shall be delivered to

shareholders by publishing it on the Company’s web-

site neste.com no earlier than two months, and no later

than three weeks prior to a meeting, but at least nine

days before the record date set for the meeting under

the terms of the Companies Act. In addition, the Com-

pany may, if the Board of Directors decides so, publish

details on the date and time and location of the meeting,

together with the address of the Company’s website, in

one or more newspapers.

Neste is not aware of any shareholders’ agreements

regarding the Company’s shares.

2022

Neste’s Annual General Meeting (AGM) was held

30 March 2022 under special arrangement at the

Company’s headquarters in Espoo. In order to pre-

vent the spread of the Covid-19 pandemic, the AGM

was held without shareholders’ or their proxy repre-

sentatives’ presence at the venue of the meeting.

Shareholders and their proxy representatives had

the possibility to participate in the meeting and exer-

cise their shareholder rights by voting in advance

and by making counter-proposals and presenting

questions in advance.

The AGM supported all the proposals presented

to the meeting and approved the remuneration

report. The AGM adopted the company’s Financial

Statements and Consolidated Financial Statements

for 2021 and discharged the Board of Directors and

the President & CEO from liability for 2021.

The AGM approved the Board of Directors’ pro-

posal that a dividend of EUR 0.82 per share will be

paid on the basis of the approved balance sheet for

2021. The dividend was paid in two installments.

The first installment of dividend, EUR 0.41 per

share, was paid to a shareholder registered in the

shareholders’ register of the Company maintained

by Euroclear Finland Ltd on the record date for the

first dividend installment, which was 1 April 2022.

The first dividend installment was paid on 8 April

2022.

The second installment of dividend, EUR 0.41 per

share, was paid to a shareholder registered in the

shareholders’ register of the Company maintained

by Euroclear Finland Ltd on the record date for the

second dividend installment, which was 30 Sep-

tember 2022. The second dividend installment was

paid on 7 October 2022.

In accordance with the proposal made by the

Shareholders’ Nomination Board, the AGM con-

firmed the number of members of the Board of

Directors at nine. The AGM decided the composi-

tion of the Board of Directors and the remuneration

to be paid to the members of the Board of Directors,

and appointed the Auditor. The AGM also approved

the Board’s proposals to the AGM.

Shareholders’ Nomination Board

Following the proposal by the Board of Directors, the

2013 AGM decided to establish a permanent Share-

holders’ Nomination Board to be responsible for draft-

ing and presenting proposals covering the remunera-

tion and number of members of the Company’s Board

of Directors and for presenting candidates as potential

Chair, Vice Chair, and members at the Board to the AGM

and to an Extraordinary General Meeting of Sharehold-

ers when needed. The Shareholders’ Nomination Board

shall also be responsible for identifying successors for

existing Board Members.

The Shareholders’ Nomination Board shall consist

of four members, three of which shall be appointed by

the Company’s three largest shareholders, who shall

appoint one member each. The Chair of the Company’s

Board of Directors shall serve as the fourth member. The

Shareholders’ Nomination Board elects a Chair among

its members.

The Company’s largest shareholders entitled to elect

members to the Shareholders’ Nomination Board shall

be annually determined on the basis of the registered

holdings in the Company’s list of shareholders held by

Euroclear Finland Ltd as of the first weekday in Septem-

ber in the year concerned. The Chair of the Company’s

Board of Directors shall request each of the three largest

shareholders established on this basis to nominate one

member to the Shareholders’ Nomination Board. In the

event that a shareholder does not wish to exercise his or

her right to appoint a representative, the right shall pass

to the next-largest shareholder who would not other-

wise be entitled to appoint a member.

The Shareholders’ Nomination Board shall serve until

further notice, unless a General Meeting of Sharehold-

ers decides otherwise. Its members shall be appointed

annually and their term of office shall end when new

members are appointed to replace them.

The Shareholders’ Nomination Board shall forward its

proposals for the AGM to the Company’s Board of Direc-

tors annually by 31 January, prior to the holding of the

AGM. Proposals intended for a possible Extraordinary

General Meeting of Shareholders shall be forwarded to

the Company’s Board of Directors in time for them to

be included in the invitation to the meeting sent out to

shareholders.

Neste Annual Report 2022 | Corporate Governance Statement

122

Strategy GovernanceSustainability Review by the Board of Directors Financials

Composition of the Shareholders’ Nomination

Board prior to the 2023 AGM

On 6 September 2022, the following members were

appointed to Neste’s Shareholders’ Nomination Board:

The Chair, Director General Kimmo Viertola of the Own-

ership Steering Department in the Prime Minister’s Office

of Finland; Timo Sallinen, Senior Vice President, Invest-

ments of Varma Mutual Pension Insurance Company;

President and CEO Jouko Pölönen of Ilmarinen Mutual

Pension Insurance Company and Matti Kähkönen, the

Chair of Neste’s Board of Directors. As of 23 December

2022, Senior Ministerial Adviser, Financial Affairs Maija

Strandberg of the Ownership Steering Department in

the Prime Minister’s Office of Finland, was appointed as

the Chair.

Activities

The Shareholders’ Nomination Board makes proposals

for the next AGM on the following:

• the number of members of the Board of Directors;

• the Chair, the Vice Chair and the members of the

Board of Directors; and

• the remuneration to be paid to the Chair, the Vice

Chair, and the members of the Board of Directors.

The nomination process of the Shareholders’ Nomina-

tion Board, its composition, and activities are detailed in

its Charter.

Shareholders’ Nomination Board members

Maija Strandberg

M.Sc. (Econ.), Chair of the Shareholders’

Nomination Board, as of 23 December 2022.

Born in 1969

Senior Ministerial Adviser, Financial Affairs of the Own-

ership Steering Department in the Prime Minister’s

Office of Finland. Member of the Board and Audit Com-

mittee of SSAB Ab. Member of the Board and People

and Remuneration Committee of Finnair Oyj. Chair of

the Nomination Committee of Fortum Oyj. Member of

the Nomination Committee of Kuntarahoitus Oyj.

Holdings in Neste Corporation on 31 December 2022:

no holdings.

Prime Minister’s Office: 276,213,495 shares.

Kimmo Viertola

Chair of the Shareholders’ Nomination Board

between 18 September 2019 and 22 December 2022.

Director General of the Ownership Steering Depart-

ment at the Prime Minister’s Office of Finland.

Holdings in Neste Corporation on 31 December 2022:

no holdings.

Timo Sallinen

M.Sc. (Econ.), Member of the Shareholders’

Nomination Board.

Born in 1970

Senior Vice President, Investments of Varma Mutual

Pension Insurance Company. Member of the Share-

holders’ Nomination Board of Nokian Renkaat, Alma

Media, Finnair, Atria, Raisio, Robit and Componenta.

Holdings in Neste Corporation on 31 December 2022:

no holdings.

Varma Mutual Pension Insurance Company

10,918,435 shares.

Jouko Pölönen

eMBA, M.Sc. (Econ. & Bus. Adm.),

Member of the Shareholders’ Nomination Board

Born in 1970

President and CEO, Ilmarinen Mutual Pension Insur-

ance Company. Member of the Board of Directors of

Nokian Tyres plc. Chair of the Board of Directors of the

Finnish Pension Alliance TELA. Chair of the Board of

The Finnish Foundation for Share Promotion. Member

of the Board of Directors of Excellence Finland Ltd.

Member of the Employment Pension Executive Com-

mittee, Finance Finland FFI.

Holdings in Neste Corporation on 31 December 2022:

2,400 shares.

Ilmarinen Mutual Pension Insurance Company

6,611,500 shares.

Matti Kähkönen

M.Sc. (Engineering), Member of the

Shareholders’ Nomination Board.

Born in 1956

Senior Advisor, Metso Corporation 2017–2019. Chair

of the Board of Neste Oyj. Chair of the Board of Direc-

tors at Kemira. Chair of the Board of Directors at the

Finnish Fair Corporation. Chair of Neste’s Personnel

and Remuneration Committee.

Holdings in Neste Corporation on 31 December 2022:

13,080 shares.

Holdings in Neste Corporation on 31 December 2022:

Own holdings and controlled entities.

Shareholder’s holdings represented by the member

of the Shareholders’ Nomination Board.

The Shareholders’ Nomination Board convened 10 times

between 31 January 2022 and 31 January 2023, and

the members of the Shareholders’ Nomination Board

attended such meetings as follows:

Composition of the Shareholders’ Nomination

Board prior to the 2022 AGM

On 20 September 2021, the following members were

appointed to Neste’s Shareholders’ Nomination Board:

The Chair, Director General Kimmo Viertola of the Own-

ership Steering Department in the Prime Minister’s Office

of Finland; Deputy CEO, Investments Reima Rytsölä of

Varma Mutual Pension Insurance Company; Director

General Outi Antila of The Social Insurance Institution of

Finland and Matti Kähkönen, the Chair of Neste’s Board

of Directors. The Shareholders’ Nomination Board con-

vened nine times between the 2021 AGM and 31 Jan-

uary 2022. The Shareholders’ Nomination Board pre-

sented its proposal covering the members of the Board

of Directors on 28 January 2022.

Attendance

Maija Strandberg 2/2

Timo Sallinen 7/7

Jouko Pölönen 6/6

Matti Kähkönen 10/10

Kimmo Viertola 8/8

Outi Antila 4/4

Reima Rytsölä 3/3

Decisions on the proposals for the 2023 AGM were made

by the members of the Shareholders’ Nomination Board in a

manner set out in more detail in the stock exchange release

published on 27 January 2023.

Neste Annual Report 2022 | Corporate Governance Statement

123

Strategy GovernanceSustainability Review by the Board of Directors Financials

Board of Directors

In accordance with Neste’s Articles of Association, the

Board of Directors has between five and ten members,

who are elected at the AGM for a period of office that

extends to the following AGM.

Diversity of the Board of Directors

In planning the composition of a skilled, competent, expe-

rienced, and effective Board of Directors, the Sharehold-

ers’ Nomination Board also follows the following diver-

sity principles defined by the Company. A cooperative

and functional Board of Directors requires diversity for

it to be able to respond to the requirements set out in

Neste’s business and strategic objectives and to sup-

port and challenge the company’s operational manage-

ment in a proactive and constructive manner.

Significant factors concerning the composition of the

Board of Directors include a variety of competences that

complement the other members of the Board, educa-

tion and experience in different professional and indus-

trial fields and in business operations and management

existing in different development phases, as well as the

personal qualities of each member, all of which add diver-

sity to the Board of Directors. The diversity of the Board

of Directors is also supported by experience in industrial

fields and markets that are strategically significant for

Neste, experience and abilities in technologies and the

international operating environment, and a diverse age

and gender distribution so that both genders are always

adequately represented in the Board of Directors. In con-

sidering the composition of the Board of Directors, it is

important to pay attention to Neste’s current and evolv-

ing needs, and to ensure that the Board of Directors, as

a whole, enables the current and future business devel-

opment of Neste, which diversity also supports.

Neste’s Board of Directors was composed of nine

members after the 2022 AGM, all of whom hold a uni-

versity-level degree, and two of whom have a doctorate.

These degrees are from different fields, with technical

fields being in the majority. Each member of the Board of

Directors has international work experience in different

types of positions, and has worked or is working in the

Board of Directors or management of listed or unlisted

companies. Three members have worked in managerial

positions at major international petrochemical compa-

nies. The Board of Directors is also diverse in terms of

cultural backgrounds: its members come from five differ-

ent countries and speak five different native languages.

Women comprise 33% of all members of the Board of

Directors. With regard to age, the members of the Board

of Directors are divided evenly between 49 and 66 years

of age. The duration of the terms of office of the Board

members is divided as follows: four members have been

on the Board of Directors for more than four years, while

five members have been on the Board of Directors for

less than four years.

Activities of the Board of Directors

The Board shall have at least eight regular meetings

annually, all scheduled in advance, with extraordinary

meetings when necessary. Extraordinary meetings, if

requested by a Board Member or the President and

CEO, shall be convened by the Chair, or, if the Chair is

prevented from attending, by the Vice Chair, or if deemed

necessary by the Chair. The Board constitutes a quorum

if more than half of its members are present. The Board

is responsible for preparing an operating plan for itself

for its period of office between Annual General Meet-

ings, to include a timetable of meetings and the most

important matters to be addressed at each meeting.

The Board evaluates its performance annually to deter-

mine whether it is functioning effectively after the end of

each financial year.

Duties of the Board of Directors

The Board’s responsibilities and duties are defined in detail

in the Charter approved by the Board. A member of the

Board of Directors may not take part in decision-making

in matters regarding (i) agreements between such mem-

ber and any entity within the Neste Group, (ii) agree-

ments between any entity within the Neste Group and

third parties where such member has a material inter-

est in the matter which may conflict with the interest of

Neste or any other entity within the Neste Group, and (iii)

agreements between any entity within the Neste Group

and a legal entity which such member may represent,

either individually or together with any other person; pro-

vided however, that this point (iii) does not apply where

the party contracting with Neste is a company within

the Neste Group. The term ’agreement’ as used here

includes litigation or other legal proceedings arising from

or relating to such agreements.

2022

The 2022 AGM confirmed the membership of the

Board of Directors at nine members, and the follow-

ing were re-elected to serve until the end of the next

AGM: Mr. Matti Kähkönen, Mr. John Abbott, Mr. Nick

Elmslie, Ms. Martina Flöel, Mr. Jari Rosendal, Ms.

Johanna Söderström and Mr. Marco Wirén. Mr. Just

Jansz and Ms. Eeva Sipilä were elected as new mem-

bers. Mr. Matti Kähkönen was re-elected as Chair and

Mr. Marco Wirén was re-elected as Vice Chair.

The Board convened 16 times in 2022. The atten-

dance rate at the meetings was 99.2%. In addi-

tion to the process resulting in Matti Lehmus being

appointed as the President and CEO of the Company

as of 1 May 2022, the Board focused in 2022 on the

Company’s long-term strategy by means of e.g. the

continued scale-up of the Company’s renewables

businesses as well as the expansion of the Compa-

ny’s renewables feedstock platform and production

capabilities, including the decision to establish the

Martinez Renewables joint operation in the US, the

final investment decision concerning the Rotterdam

expansion project and continuous monitoring of the

on-going Singapore expansion project. Feedstock

growth related M&A and other investment topics were

also on the Board agenda in 2022. In addition to the

above and matters set out in the Board Charter, the

Board further supervised strategy execution as well

as evaluated the changes in the long-term operational

environment and their impact on the Company’s busi-

ness operations from e.g. a sustainability perspec-

tive. Leadership matters, including changes in senior

management announced during 2022, and talent

management were also dealt with by the Board. The

Board continuously monitored the Company’s safety,

financial and operational performance as well as risk

management.

Neste Annual Report 2022 | Corporate Governance Statement

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Strategy GovernanceSustainability Review by the Board of Directors Financials

The shareholdings of the members of the Board of Directors are presented below their CVs. The remuneration paid to the members of the Board of Directors is detailed in the Remuneration Report.

Board of Directors, 31 December 2022

Position Born Education Main Occupation

Independent

of the company

Independent

of major

shareholders

Personnel and

Remuneration

Committee

Audit

Committee

Attendance at

meetings

Board Committees

Matti Kähkönen Chair 1956 M.Sc. (Eng.) Non-Executive Director • • • 16/16 8/8

John Abbott Member 1960 B.Sc. (Chem. eng.) Non-Executive Director • • • 16/16 8/8

Nick Elmslie Member 1957 B.Sc. (Chem.) Non-Executive Director • • • 16/16 7/7

Martina Flöel Member 1960 Ph.D. (Chem.) Non-Executive Director • •

•

16/16 8/8

Just Jansz Member 1957

Ph.D.

(Chemical Metallurgy)

Independent board member

and advisor, Managing Director of

Expertise Beyond Borders

• • • 11/11 6/6

Jari Rosendal Member 1965 M.Sc. (Eng.) President and CEO of Kemira • •

•

16/16 7/7

Eeva Sipilä Member 1973 M.Sc. (Econ.), CEFA

Chief Financial Officer, Deputy to CEO,

Metso Outotec Corporation

• • • 10/11 6/6

Johanna Söderström Member 1971 M.Sc. (Econ.)

EVP, Chief Human Resources Officer

at Tyson Foods Inc

• • • 16/16 8/8

Marco Wirén Member 1966 M.Sc. (Econ.)

Chief Financial Officer

at Nokia Corporation

• • • 16/16 7/7

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Members of the Board of Directors

Holdings in Neste Corporation: own holdings and controlled entities.

Matti Kähkönen (born in 1956)

M.Sc. (Engineering)

Chair of the Board since 2018

Member of the Board since 2017

Independent member

Senior Advisor, Metso Corporation 2017–2019.

President and CEO, Metso Corporation 2011–

2017. Executive Vice President and Deputy

to the CEO, Metso Corporation 2010–2011.

President, Mining and Construction Technology,

Metso Corporation 2008–2011. President,

Metso Minerals 2006–2008. President, Metso

Automation, 2001–2006. President, Metso

Automation, Field Systems Division, 1999–

2001. Prior to 1999, various managerial and

development positions in Neles-Jamesbury and

Rauma-Repola. Chair of the Board of Directors

at Kemira, 3/2022–. Vice Chair of the Board

of Directors at Kemira 2021–3/2022. Chair

of the Board of Directors at the Finnish Fair

Corporation 2020–. Chair of Neste’s Personnel

and Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2022:

13,080 shares.

John Abbott (born in 1960)

B.Sc. First Class Honours, Chemical Engineering

Member of the Board since 2021

Independent member

Downstream Director and a Member of the

Executive Committee of Royal Dutch Shell plc,

2013–2019. Executive Vice President of Global

Manufacturing at Shell, 2012–2013. Executive

Vice President of Shell’s Upstream Americas

Heavy Oil business, based in Calgary, Canada,

2008–2012. Vice President Manufacturing

(Refining and Chemicals) Excellence and Support

at Shell based in Houston, USA, 2006–2008.

Various positions at Shell in the UK, Singapore,

Thailand, the Netherlands, Canada, and the USA,

predominantly in the areas of Global Manufacturing

(Refining and Chemicals) as well as Supply, Trading

and Distribution, 1981–2006. (In 1994, he was

also seconded to the British Government for a

short assignment). Non Executive Director of the

Intercontinental Exchange (ICE) Futures Europe

2021–. Advisor and participant at Mobility Impact

Partners (MIP) 2020–. Mentor in the FTSE 100

cross-company mentoring foundation 2013–.

Member of Neste’s Personnel and Remuneration

Committee.

Holdings in Neste Corporation on 31 Dec 2022:

374 shares.

Nick Elmslie (born in 1957)

B.Sc. (Chemistry)

Member of the Board since 2020

Independent member

Chief Executive, BP Global Petrochemicals based

in Shanghai 2011–2015. Controller, Head of

Finance Function, BP Downstream 2006–2011.

Various directorial positions at BP plc., including

Chief Executive, Acetyls Business and Business

Unit Leader, Head of Chemicals Strategy and

CFO, Polymers & Olefins 1992–2006. Various

positions at BP plc 1978–1992. Member of the

Board and Investor at 3fbio Ltd 2017–. Member

of the Supervisory Board of OTI Greentech AG

2017–. Member of the Board of Fosroc Group

Holdings Limited 2009–. Chair of i-Keg Ltd

2021–. Member of Neste’s Audit Committee.

Holdings in Neste Corporation on 31 Dec 2022:

2,374 shares.

Martina Flöel (born in 1960)

M.Sc. (Chemistry), Ph.D. (Chemistry)

Member of the Board since 2017

Independent member

CEO of Oxea 2007–2016. Managing Director

and EVP, Europe of European Oxo in 2003–

2007. Vice President Oxo Chemicals, Celanese

Chemicals 2000–2003. Plant Manager Böhlen,

Celanese Chemicals 1998–2000. Prior to 1998,

various managerial and directorial positions in the

Hoechst Group. Member of the Board of Directors

of Sasol 2018–. Member of Neste’s Personnel

and Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2022:

374 shares.

Just Jansz (born in 1957)

Ph.D. (Chemical Metallurgy), M.Sc.

(Mineral Engineering)

Member of the Board since 2022

Independent member

Independent board member and advisor 2011–.

Managing Director of Expertise Beyond Borders

2011–. President Technology Business, Basell /

LyondellBasell 2004–2010. Senior Vice President,

Advanced Polyolefins, Basell 2001–2004. Various

managerial positions at Shell affiliate companies

1989–2000. Member of the Board at Circular

Plastics NL (Dutch National Growth Fund) 2022–.

Member of Neste’s Audit Committee.

Holdings in Neste Corporation on 31 Dec 2022

374 shares.

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Members of the Board of Directors

Holdings in Neste Corporation: own holdings and controlled entities.

Jari Rosendal (born in 1965)

M.Sc. (Eng.)

Member of the Board since 2018

Independent member

President and CEO at Kemira since 2014. Various

divisional President and Directorial positions,

including Member of the Executive Board, at

Outotec Oyj in 2001–2014. Various managerial

and expert positions in the Outokumpu Group

in Finland and the United States 1989–2001.

Member of the Board of Directors of Chemical

Industry Federation of Finland 2015–, Chair of the

Board of Directors 2017–2018 and Vice Chair of

the Board of Directors 2019–2020. Member of the

Board of Directors of CEFIC, 2014–. Member of

Neste’s Audit Committee.

Holdings in Neste Corporation on 31 Dec 2022:

374 shares.

Eeva Sipilä (born in 1973)

M.Sc. (Econ.), CEFA

Member of the Board since 2022

Independent member

Chief Financial Officer, Deputy to CEO, Metso

Outotec Corporation 2020–. Chief Financial

Officer, Deputy to CEO, Metso Corporation 2016–

2020. Executive Vice President, Chief Financial

Officer, Cargotec Corporation 2008–2016.

Senior Vice President, Communications and

Investor Relations, Cargotec Corporation 2005–

2008. Various positions at Metso Corporation,

Mandatum Stockbrokers part of Sampo Group

and Arkwright AB 1997–2005. Supervisory

Board Member, Varma, 2021–. Board Member,

Outokumpu Corporation, 2017–2022, Vice Chair

of Board 2020–2022, Chair of Audit Committee

2019–2022. Member of Neste’s Audit Committee.

Holdings in Neste Corporation on 31 Dec 2022:

1,354 shares.

Johanna Söderström (born in 1971)

M.Sc. (Econ.)

Member of the Board since 2020

Independent member

Executive Vice President, Chief People Officer at

Tyson Foods Inc. 2020–. Senior Vice President,

Chief Human Resources Officer at the Dow

Chemical Company 2014–2019. Vice President,

Center of Expertise Human Resources at the

Dow Chemical Company 2012–2014. Various

directorial HR positions at Dow Chemical

Company, Dow Europe GmbH and Dow Chemical

Handels- und Vertriebsgesellschaft mbH 2007–

2012. Head of Global Compensation & Benefits

at Huhtamäki Oyj 2006–2007. Various specialist

and managerial positions at Dow Europe GmbH,

Dow Chemical Handels- und Vertriebsgesellschaft

mbH and Dow Suomi Oy 1999–2006. Prior to

1999, various specialist positions at Oy L M

Ericsson Ab. Member of Neste’s Personnel and

Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2022:

3,374 shares.

Marco Wirén (born in 1966)

M.Sc. (Econ.)

Vice Chair of the Board since 2019

Member of the Board since 2015

Independent member

Chief Financial Officer, Nokia Corporation 2020–.

President, Wärtsilä Energy & Executive Vice

President, Wärtsilä Corporation 2018–2020.

Executive Vice President and Chief Financial

Officer Wärtsilä 2013–2018. SSAB, Executive Vice

President and CFO 2008– 2013. SSAB,

Vice President Business control 2007–2008.

Eltel Networks, CFO and Vice President Business

Development 2002–2007; NCC, Vice President

Business Development and Group Controller

1995–2001. Chair of Neste’s Audit Committee.

Holdings in Neste Corporation on 31 Dec 2022:

3,537 shares.

Jean-Baptiste Renard

(born in 1961)

M.Sc. (Eng.) and an engineering diploma

in petroleum economics from the French

Petroleum Institute (IFP)

Member of the Board since 2014

Independent member

– Member of the Board until 30 March 2022

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Board Committees

The Board has established an Audit Committee, which

has five members, and a Personnel and Remuneration

Committee, which has four members. A quorum exists

when more than two members, including the Chair, are

present. All members are elected from amongst the

members of the Board for a one-year term. The tasks

and responsibilities of each committee are defined in

their Charters, which are approved by the Board. The

schedule and frequency of committee meetings are

determined by the Chair and committee members. In

addition, the Board of Directors can appoint committees

as needed, for instance, for significant investment proj-

ects or other special tasks. Committees meet at least

twice a year. Each committee reports regularly on its

meetings to the Board. Reports include a summary of

the matters addressed and the measures undertaken.

Each committee conducts an annual self-evaluation of

its performance and submits a report to the Board.

Audit Committee

Under its Charter, the Audit Committee shall consist of a

minimum of three Board members that are independent

of the Company and its subsidiaries, and at least one of

whom shall be independent of Neste’s major sharehold-

ers. Members are required to have sufficient knowledge

of accounting practices and the preparation of finan-

cial statements and other qualifications that the Board

deems necessary. The Audit Committee is permitted

to use external consultants and experts when deemed

necessary.

Duties

The responsibilities and duties of the Audit Commit-

tee are defined in detail in the Charter approved by the

Board.

2022

Starting from 30 March 2022, the Audit Committee

comprised Marco Wirén (Chair), Nick Elmslie, Just

Jansz, Jari Rosendal and Eeva Sipilä. In 2022, the

Audit Committee convened 7 times, and the atten-

dance rate was 100.0%. As part of the tasks spec-

ified in its Charter, the Audit Committee supervised

and reviewed external and internal audit activities,

and the Company's financial and other reporting.

The Audit Committee also focused on risk and com-

pliance management, including in relation to finan-

cial, market and geopolitical risks but also certain

other risk areas, such as IT systems, segregation of

duties and cyber security. Moreover, the Audit Com-

mittee also monitored e.g. legal and tax matters.

Personnel and Remuneration Committee

The Personnel and Remuneration Committee consists

of the Chair of the Board and at least two non-executive

members of the Board.

Duties

The responsibilities and duties of the Personnel and

Remuneration Committee are defined in detail in the

Charter approved by the Board.

2022

Starting from 30 March 2022, the Personnel and

Remuneration Committee comprises Matti Käh-

könen (Chair), John Abbott, Martina Flöel and

Johanna Söderström. The Personnel and Remu-

neration Committee convened 8 times in 2022, and

the attendance rate was 100.0%. During 2022, the

Personnel and Remuneration Committee contin-

ued to focus on reviewing and developing Neste’s

total remuneration and talent management and

development to support the Company’s operational

and strategic targets. In line with duties coming from

its Charter, the Personnel and Remuneration Com-

mittee also followed up the ongoing performance

period 2022 and outcomes of the rewarding based

on 2021 results. To further ensure the implementa-

tion of our strategy, international growth and lead-

ership in sustainability the Committee led the spe-

cial project on developing both short-term-incentive

(STI) and long-term incentive (LTI) at Neste. In addi-

tion, the Personnel and Remuneration Committee

has followed up the personnel engagement level

based on the Company’s Forward survey and Pulse

survey results.

President and CEO

Neste’s President and CEO since 1 May 2022, Matti

Lehmus (b. 1974, eMBA, M.Sc., Chemical Technology

and Polymer Technology), manages the Company’s

business operations in accordance with the Finnish

Companies Act and instructions issued by the Board

of Directors. The President and CEO shall oversee the

executive management of the company in accordance

with instructions and orders given by the Board of Direc-

tors, and is responsible for ensuring that the Compa-

ny’s accounts are in compliance with the law and that its

financial affairs have been arranged in a reliable manner.

Neste’s former President and CEO (2018–2022) Peter

Vanacker (b. 1966, M.Sc., Chemical Engineering, Poly-

mers Engineering) resigned from the company as of 30

April 2022 to continue his career outside Neste.

The President and CEO is appointed by the Board of

Directors, which evaluates the performance of the Pres-

ident and CEO annually and approves his remuneration

on the basis of a proposal by the Personnel and Remu-

neration Committee. Information on the remuneration of

the President and CEO can be found in the 2022 Remu-

neration report.

Executive Committee

The Executive Committee assists the President and CEO

in managing the company and in the deployment of the

Company’s strategic and operational goals. Members

are appointed by the Board of Directors. The Executive

Committee meets regularly, on average once a month.

Information on the remuneration of the members of the

Executive Committee can be found at neste.com.

2022

Matti Lehmus was appointed President and CEO

of the Company as of 1 May 2022. The Executive

Committee had 11 meetings during the year, and

also met regularly outside such meetings in relation

to specific themes. In addition to supporting the

President and CEO in the fulfillment of his general

duties, the Executive Committee continued during

2022 to work with the development and execution

of the Company’s strategy aiming at global lead-

ership in renewable and circular solutions. In such

context, the strategic focus areas included, among

others, the continued scale-up of the Company’s

renewables businesses as well as the expansion

of the Company’s renewables feedstock platform

and production capabilities, including the Martinez

Renewables joint operation in the US, the Rotter-

dam expansion project and the Singapore expan-

sion project. The Company’s M&A and investment

activities as well as development of the Company’s

innovation business platforms were also closely fol-

lowed by the Executive Committee. In addition, a

number of other matters were given special atten-

tion during the year, including geopolitical and other

risks, the ongoing Porvoo transformation study as

well as IT and cybersecurity matters. The Compa-

ny’s safety, financial and operational performance as

well as sustainability and compliance matters were

regularly monitored by the Executive Committee.

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Members of the Executive Committee

Matti Lehmus (born 1974)

President and CEO,

Chair of the Executive Committee

eMBA, M.Sc. (Chemical Technology

and Polymer Technology)

President and CEO since 2022

Joined the company in 1998. Previously

responsible for the Renewables Platform 2019–

2022 and for the Oil Products business area

2014–2019. Has also served as Executive Vice

President of the Oil Products and Renewables

business area 2011–2014, Executive Vice

President of the Oil Products business area 2009–

2010, Vice President of the Base Oils business in

the Specialty Products Division 2007–2009, Vice

President of Oil Refining Business Development in

2007 and Gasoline Exports and Trading Manager

2004–2007 in the Oil Refining Division. Member of

the National Emergency Supply Council 2018–.

Holdings in Neste Corporation on 31 Dec 2022:

21,471 shares.

Martti Ala-Härkönen (born 1965)

Executive Vice President

, Chief Financial Officer,

Strategy and IT

Dr.Sc. (Econ.), Lic.Sc. (Tech.)

Member of the Executive Committee since 2022

Joined the company in 2022. Served previously

as Executive Vice President, Chief Financial

Officer (Finance, M&A and IT) at Caverion

Corporation 2016–2022, Chief Financial Officer

(Finance & Development) at Cramo Plc 2006–

2016, Senior Vice President, Finance and

Administration (CFO) at WM-data Ltd 2004–2006,

Chief Financial Officer (Finance & Development)

and Senior Vice President Business Development

at Novo Group Plc 1998–2004 and as Finance

Manager and Corporate Finance Manager at

Postipankki Plc 1995–1998. Member of the

Supervisory Board of Mutual Pension Insurance

Company Ilmarinen 2022–. Member of the Board

of Directors of Digia Plc 2016–. Member of the

Board of Martinez Renewables 2022–.

Holdings in Neste Corporation on 31 Dec 2022:

2,000 shares.

Mercedes Alonso (born 1966)

Executive Vice President,

Renewable Polymers and Chemicals

M.Sc. (Chem)

Member of the Executive Committee since 2019

Joined the company in 2019. Responsible

for the Renewable Polymers and Chemicals

business unit. Previously served as Marketing

Director Advanced Polymer Solutions Europe in

LyondellBasell in 2019, Managing Director Eng.

Composites Europe 2016–2019, and Global

Director Corporate Marketing in A. Schulman

Inc. 2013–2016, as well as Global Business

Excellence Leader, Advanced Materials in Dow

Chemical Inc. Europe GmbH 2010–2013. Member

of the Executive Board and Executive Committee

2020– and Chair of the Sustainability Advisory

Forum 2022– at CEFIC. Member of the Board of

Directors and member of the Human Resources

Committee of Huhtamäki Oyj 2022–.

Holdings in Neste Corporation on 31 Dec 2022:

4,187 shares.

Panu Kopra (born 1972)

Executive Vice President,

Marketing & Services

BBA, MBA

Member of the Executive Committee since 2016

Joined the company in 1996. Responsible for the

Marketing & Services business unit. Previously

served as Vice President in Oil Retail Sales in

Finland and Baltic Rim 2014–2015, Vice President

in Oil Retail Russia and Baltic Rim 2010–2014,

General Manager in St. Petersburg Russia

in 2009, Business Development Manager in

Renewable Products 2007–2008, Sales Director

in 2006, General Manager in Latvia 2003–2005

and in several other positions in the company.

Holdings in Neste Corporation on 31 Dec 2022:

13,555 shares.

Markku Korvenranta (born 1966)

Executive Vice President,

Oil Products

M.Sc. (Eng)

Member of the Executive Committee

since December 2021

Joined the company in December 2021.

Responsible for the Oil Products business

unit. Served previously as SVP, Group Portfolio

Development at Marquard & Bahls, in Germany,

2019–2021. EVP, Base Chemicals & Member of

Executive Board at Borealis in Austria, 2010–

2018. Before that had several directorial and

managerial roles at Borealis in Austria, Finland,

Denmark and Belgium 1994–2010. Has also

served in various roles at Neste Chemicals in

Finland, 1990–1994. Member of the Board of

Directors of Oiltanking in Germany, 2021–.

Holdings in Neste Corporation on 31 Dec 2022:

0 shares.

Holdings in Neste Corporation: own holdings and controlled entities.

The titles of the functions’ leaders have been changed to Executive Vice President as of 1 January 2023.

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Thorsten Lange (born 1963)

Executive Vice President, Renewable Aviation

M.Sc. (Banking and Auditing)

Member of the Executive Committee since 2020

Joined the company in 2020. Responsible for

the Renewable Aviation business unit. Previously

served as Head of Fuel Procurement (global) at

Lufthansa Group 2001–2019. Has also served

as Product Manager, Automotive Lubricants

at FUCHS DEA Schmierstoffe GmbH&Co KG

1999–2001, Director Industry Lubricants at DEA

Mineraloel AG 1998–1999 as well as Marketing

Manager and Pricing Groundfuels at DEA

Mineraloel AG 1992–1997. Member of the IATA

Fuel Steering Group.

Holdings in Neste Corporation on 31 Dec 2022:

2,585 shares.

Carl Nyberg (born 1979)

Executive Vice President, Renewables Platform

M.Sc. (Economics and Business Administration)

Member of the Executive Committee since 2019

Joined the company in 2005. Responsible for the

Renewables Platform unit. Previously responsible

for the Renewable Road Transportation business

unit 2019–2022. Served in various positions

at Neste, most recently as Vice President of

Sales Scandinavia of the Renewable Products

business area 2016–2019, Vice President,

Supply, Oil Products at Neste Geneva 2014–2016

and Trading Manager, Crude Oil 2013–2014.

Managing Director of Neste AB 2017–2019.

Member of the Board of eFuel Alliance e.V. 2021–

. Member of the Board of Martinez Renewables

2022–.

Holdings in Neste Corporation on 31 Dec 2022:

8,597 shares.

Katja Wodjereck (born 1976)

Executive Vice President, Renewable Road

Transportation, as of 1 April 2023

eMBA, M.Sc. (Business Administration,

European Business Management)

Member of the Executive Committee

as of 1 April 2023

Will join the company 1 April 2023 as Executive

Vice President, Renewable Road Transportation.

Served previously as the President D/A/CH, Italy

& Commercial Director, Industrial Solutions EMEAI

2022–, Commercial Director EMEAI, Industrial

Solutions 2018–2021, and Commercial Director

EMEAI, Energy and Microbial Technologies,

Dow Europe GmbH, Switzerland 2017–2018,

Sales Director Northern Europe, Packaging

& Specialty, Belgium 2015–2017, Product

Manager - Packaging & Specialties Plastics

EMEA, Switzerland 2012–2015, Asset Manager

Polyethylene (LDPE, LLDPE) for Latin America,

Brazil 2011–2012, and several managerial

positions in Dow Chemical 2002–2010. Member

of the Board of American Chamber of Germany

(Amcham), Member of the Board of EPCA The

European Petrochemical Association.

Minna Aila (born 1966)

Executive Vice President

Sustainability and Corporate Affairs

LL.M.

Member of the Executive Committee since 2020

Joined the company in 2020. Responsible for

Sustainability and Corporate Affairs. Served

previously as the EVP Marketing & Corporate

Affairs at Konecranes 2018–2020, VP, Corporate

Affairs at Nokia 2015–2018, SVP, Marketing,

Communications & Corporate Responsibility

at Outotec 2012–2015 as well as Head of

Communications, Federation of Finnish Financial

Services 2010–2012. Various roles in global

communications, investor relations, corporate

responsibility and government relations at

Elcoteq 2004–2009. Various roles at European

Commission 1992–2004. Chair of the EU and

Trade Policy Committee at the Confederation of

Finnish Industries EK. Vice Chair of the Business

at OECD Trade Committee. Member of the Board

at National Defense Course Association and

Savonlinna Opera Festival. Member of the Board

of Directors and member of the Nomination and

Remuneration Committees at DFDS A/S 2022–.

Holdings in Neste Corporation on 31 Dec 2022:

4,502 shares.

Hannele Jakosuo-Jansson (born 1966)

Executive Vice President, Human Resources

and HSSEQ

M.Sc. (Eng.)

Member of the Executive Committee since 2006

Joined the company in 1990. Responsible for Human

Resources and HSSEQ. Previously responsible for the

Group’s Procurement, Human Resources and Safety

corporate functions. Served as Vice President, Human

Resources at Oil Refining 2004–2005 and Laboratory

and Research Manager at the Technology Center

1998–2004. Chair of the Skills and Competence

Committee of the Chemical Industry Federation

of Finland. Vice Chair of the Skilled workforce

Committee at the Confederation of Finnish Industries

EK. Member of the Board of Directors of Finnair, Chair

of the People and Remuneration Committee of the

Finnair Board Plc 2021–.

Holdings in Neste Corporation on 31 Dec 2022:

34,979 shares.

Members of the Executive Committee

Holdings in Neste Corporation: own holdings and controlled entities.

The titles of the functions’ leaders have been changed to Executive Vice President as of 1 January 2023.

As of 1 January 2023, Senior Vice President of Human Resources, HSSEQ and Procurement until 31 December 2022.

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Bart Leenders (born 1969)

Executive Vice President, Investment Management

and Execution, as of 1 January 2023

M.Sc. (Mechanical Engineering)

Member of the Executive Committee

starting 1 January 2023

Joined the company in 2010. Responsible for

Investment Management and Execution function,

including Engineering Solutions, and procurement

as of 1 January 2023. Served previously as

Vice President, Global Production, Renewable

Platform 2015–2022, Interim Managing Director,

Neste Singapore 2015, Managing Director, Neste

Netherlands, Renewables Business unit 2010–

2015 and Manufacturing Manager Downstream

Operations, Huntsman 2005–2010. Member of

the Circular Task Force of the Economic Board

Zuid-Holland, Member of Executing Committee

national Climate Agreement Mobility and Executing

Committee national Aviation Agreement, Chair of

the Dutch Association for Sustainable Biofuels

(NVDB), and Board member of Deltalinqs,

Enterprise Association for Mainport Rotterdam,

representing Renewables and Chair of the safety

domain.

Lars Peter Lindfors (born 1964)

Executive Vice President

, Innovation

Ph.D. (Tech.), MBA

Member of the Executive Committee since 2009

Re-joined the company in 2007. Responsible

for Innovation, including research, development

and technology as well as new business

platforms. Previously responsible also for

Investment Management, Information Technology,

Procurement, Business Processes and Strategy.

Served previously as Senior Vice President,

Technology 2013–2019, Senior Vice President

Technology and Strategy 2009–2012, and Vice

President for the company’s Research and

Technology unit 2007–2009. Previously served

as Executive Vice President, Renewal and

Development and Member of the Executive Team

at Perstorp Group 2001–2007. Prior to that has

served as R&D Manager and in various other

positions at Neste 1989–2001. Chair of the Board

of the Fortum and Neste Foundation.

Holdings in Neste Corporation on 31 Dec 2022:

19,406 shares.

Christian Ståhlberg (born 1974)

General Counsel

LL.M.

Member of the Executive Committee since 2017

Joined the company in 2017. Responsible for the

Group’s legal affairs and compliance. Secretary

to the Executive Committee, the Board of

Directors, the Audit Committee, the Shareholders’

Nomination Board and to the Stakeholder

Advisory Panel. Served previously as General

Counsel of Rettig Group Ltd 2015–2017, Director,

Legal in Pohjola Bank plc 2011–2014, Senior

Legal Counsel in Neste Oil Corporation 2007–

2011 and Senior Associate in Roschier Attorneys

Ltd 1998–2007.

Holdings in Neste Corporation on 31 Dec 2022:

4,401 shares.

Members of the Executive Committee

Holdings in Neste Corporation: own holdings and controlled entities.

The titles of the functions’ leaders have been changed to Executive Vice President as of 1 January 2023.

Peter Vanacker

(born 1966)

M.Sc. (Chemical Engineering, Polymers

Engineering)

President and CEO, Chair of the Executive

Committee from 2018 until 30 April 2022.

- resigned from the company as of 30 April 2022

to continue his career outside Neste.

Jyrki Mäki-Kala

(born 1961)

M.Sc. (Econ.)

Chief Financial Officer, Strategy and IT

Member of the Executive Committee from 2013

until May 2022

- retired in May 2022

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Company Auditor

The AGM elects the Auditor annually. The Auditor’s

term of office ends at the end of the next AGM following

election.

The Auditor is responsible for auditing the Company’s

accounts, its financial statements, and Neste’s admin-

istration. The Auditor’s Report covers the Consolidated

Financial Statements and the Parent Company’s Finan-

cial Statements, and can be found in the Financial State-

ments section of the Annual Report.

2022

The 2022 AGM elected KPMG Oy Ab as the Com-

pany’s auditor, and Authorized Public Accountant

Leenakaisa Winberg acted as the auditor with prin-

cipal responsibility.

The statutory audit fees in 2022 were EUR 1.6

million, and other fees charged amounted to EUR

0.9 million.

Internal Audit

Neste’s Internal Audit provides independent and objec-

tive assurance and advisory services designed to add

value and improve the operations of Neste. As a com-

ponent in the corporate governance process, it supports

the organization by bringing a systematic approach to

evaluating and improving the effectiveness of risk man-

agement and control and governance processes.

Internal Audit’s activities encompass objective exam-

inations for the purpose of providing assessments to

the Neste’s Board Audit Committee and management

on the adequacy and effectiveness of governance,

risk management and control processes at Neste. The

scope of Internal Audit assessments include, among

others, evaluating that risk management practices are

in place, significant risks are appropriately identified and

managed, key policies and guidelines exist and are doc-

umented and effectively implemented, organizational

structures and governance models enable efficient deci-

sion making and steering system, roles and responsibil-

ities are clear, and results of operations and programs

are consistent with established goals and objectives.

Internal Audit work is carried out based on an annual

Internal Audit Plan. Neste’s strategic objectives, key

projects and identified risks are key elements in the audit

planning process. The Vice President of Internal Audit

reports periodically to the senior management and the

Board Audit Committee Internal Audit’s activities relative

to the annual plan, including audit recommendations

and action plans established by organizations aiming for

the continuous improvement and mitigation of risks.

Internal Audit is also responsible for conducting spe-

cial assignments on behalf of management or the Board

Audit Committee. As a member of Neste’s Investiga-

tion Group, the Vice President of Internal Audit partici-

pates in the investigation of suspected misconduct and

breaches of Neste’s policies, principles and applicable

laws and regulations. To assure an effective, efficient and

value adding process, Internal Audit cooperates actively

with other Neste’s assurance service functions (Corpo-

rate Risk Management, Internal Control and Compli-

ance) and top management and shares best practices

from a process and governance point of view.

Internal Audit follows the mandatory elements of

The Institute of Internal Auditors’ International Profes-

sional Practices Framework, including the Professional

Practice of Internal Auditing. The Internal Audit reports

directly to the Board of Directors’ Audit Committee and

administratively to the President and CEO. The Board of

Directors is responsible for approving the Internal Audit

Charter and the annual Internal Audit Plan. Internal Audit

Charter includes the determination regarding Internal

Audit position, operational model, process and report-

ing lines. Internal Audit has at least annually a non-exec-

utive meeting with the Audit Committee members and

the Audit Committee Chair. The Vice President of Inter-

nal Audit is responsible for the internal audit activities

specified in the Internal Audit Charter.

2022

Internal Audit performed internal audits set out in

the Internal Audit Plan 2022, and reported audit

results to the senior management and the Board

Audit Committee. The Internal Audit function con-

tinued to strengthen cooperation with other Neste

assurance functions such as compliance, risk man-

agement and internal controls with an aim to inte-

grate activities and reporting to the management.

Neste’s strategic investments, top risks and key

business processes were in focus during the year

2022, including for example the Rotterdam Capac-

ity Growth Project, credit management process and

cyber attack preparedness.

Compliance function

Neste is committed to high ethical standards and con-

ducts its business and operates in compliance with

applicable laws, regulations and generally accepted

practices for good corporate governance. Neste’s Code

of Conduct sets the framework for Neste’s global busi-

ness operations, and establishes the ethical practices

to guide Neste employees in their day-to-day business

activities and decisions. Neste also requires suppliers

and other business partners to comply with applica-

ble laws and expects them to follow equivalent ethical

business standards as stated in the Code of Conduct,

as further described in our Supplier Code of Conduct.

More info on Neste’s Code of Conduct in Neste’s Sus-

tainability Report and on Neste’s external web pages.

The purpose of Neste’s Compliance function is

to develop, establish, facilitate and oversee compli-

ance procedures and programs aimed at ensuring that

Neste’s global organizations have effective systems and

processes in place for identifying, preventing, detect-

ing and correcting non-compliance with applicable

laws, regulations and Neste’s internal rules. The func-

tion supports Neste’s management in their responsibil-

ity for overall compliance risk management, as well as

Neste’s organizational unit management in their respon-

sibilities to identify and manage compliance risks related

to their operations. The compliance function works in

close collaboration with Neste’s business units, func-

tions and other internal assurance organizations, in par-

ticular the Risk Management, Internal Control and Inter-

nal Audit functions. The compliance function is headed

by the Chief Compliance Officer (CCO), who reports to

Neste’s General Counsel. The CCO reports on compli-

ance activities on a regular basis to the ExCo and to the

Board of Directors’ Audit Committee. Neste also has an

Ethics and Compliance Committee, which oversees and

steers the management of the ethics and compliance

program in Neste. Reports on suspected misconducts

received via the company’s externally operated and via

other reporting channels are investigated in accordance

with applicable laws and Neste’s internal Misconduct

Investigation Standard.

In addition to other reporting channels, Neste also has

an externally operated misconduct reporting system,

Ethics Online, available to all Neste’s internal and exter-

nal stakeholders, including various actors in its supply

chains. Ethics Online serves as a grievance mechanism

and enables Neste’s stakeholders to raise concerns

related to alleged misconduct in Neste’s practices.

Neste’s Investigation Group is responsible for evaluating

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Strategy GovernanceSustainability Review by the Board of Directors Financials

and investigating such reported cases. Neste has a

non-retaliation policy for concerns reported in good faith.

Neste’s main principles and policy followed in internal

misconduct investigations is described in the company’s

internal Misconduct Investigation Standard. The possi-

ble irregularities or misconducts are reported regularly to

the Board of Directors’ Audit Committee.

Insider administration procedures

Neste complies with the EU Market Abuse Regulation

(596/2014), including related regulation, as well as Nas-

daq Helsinki Ltd’s Insider Guideline as a minimum stan-

dard on insider matters. In addition, the Board of Direc-

tors has approved the Company’s own Guidelines for

Insiders.

The Company’s General Counsel is responsible for the

coordination and supervision of insider matters, along

with the insider register manager, the insider communi-

cation manager and individuals responsible as heads of

project-specific registers. All the above individuals have

their own deputies. In addition, the head of each organi-

zational unit is responsible for supervising insider matters

within his or her organization. The Company arranges

training related to the insider guidelines.

The creation and maintenance of a project-specific

insider register is the responsibility of the head of such

insider register.

The Company has defined, as persons discharging

managerial responsibilities, the members of the Board

of Directors and its secretary, the President and CEO, as

well as the members of the ExCo and its secretary. These

managerial persons and their closely associated persons

must report their own transactions conducted with the

Company’s financial instruments or financial derivatives

to the Company and the Financial Supervisory Authority

without delay, and no more than three business days

of completing the business transaction. Reports to the

Company and the Financial Supervisory Authority can

be made by following the instructions on neste.com/

trading.

The Company has also named certain other persons

as core persons as they have better or more information

about the Company than the market. These individuals

are typically those who prepare the Company’s Interim

Reports and Financial Statements, persons responsi-

ble for the Company’s finances, financial reporting or

communication, or persons who have access to said

information, as well as certain individuals in executive

positions.

Persons discharging managerial responsibilities and

core persons may not trade with or conduct business

with the Company’s financial instruments for themselves

or a third party, directly or indirectly during the period

from the closing date of an interim or annual accounting

period to the date of publication of the interim report or

financial statements for that period. The minimum period

concerned is always a minimum period of 30 days prior

to the date of publication of the interim report or the

financial statements, including the date of publication

(’closed window’).

The Company also maintains a project- or event-spe-

cific list of insiders for all individuals that have access

to insider information and that are employed by the

Company or otherwise perform tasks that provide them

access to insider information. Individuals who partici-

pate in the development and preparation of projects or

events that involve insider information, such as mergers

and acquisitions, are considered project- or event-spe-

cific insiders. Project-specific insiders may not trade or

conduct other business using the Company’s financial

instruments during the project.

Related party transactions

Neste has identified its related parties and it is regu-

larly engaged in transactions with some of these par-

ties. These transactions relate to the Company’s normal

business operations and shall be in line with the pur-

pose of the company and executed on market or mar-

ket equivalent terms and practices generally observed

and accepted within the industry in question.

The related party transactions are monitored in coop-

eration with Finance and Legal functions as a part of the

Company’s normal reporting and control procedures.

The Board of Directors is responsible for overseeing

the processes established for monitoring related party

transactions. Information on material transactions con-

cluded between the Company and its related parties is

disclosed annually in the notes on the Company’s con-

solidated financial statements. When required under the

applicable laws and regulations, material transactions

conducted with related parties are also published via

stock exchange release.

Controls over Financial Reporting

Objectives

The objective of internal controls at Neste is to provide a

reasonable assurance with regard to the financial report-

ing and the preparation of financial statements in accor-

dance with the applicable laws and regulations and the

internal requirements. Additionally, internal controls sup-

port the business in the achievement of its operational

and strategic objectives by acting as performance accel-

erators in business processes.

The system of internal controls at Neste is based on

the framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO).

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Management sets its level of risk appetite by defining

the Group-level control objectives. Control objectives

state the Group’s minimum control requirements for the

control activities in financial and business processes in

order to mitigate the underlying key risks and estab-

lish the desired level of assurance for correct financial

reporting, adherence with the regulations and policies,

and prevention of fraud. Group level control objectives

are endorsed by the Executive Committee and Audit

Committee and reflect the top management guidelines,

auditor reports, policies and regulations Neste complies

with. Neste internal control requirements are defined

in Neste Internal Control Principle, Neste Access Risk

Management Principle and standards on Controls over

Financial Reporting (COFR), Segregation of Duties, etc.

Control environment

Under the Finnish Companies Act, the Board of Direc-

tors is responsible for ensuring that there is adequate

control over the Company’s accounts and finances.

Responsibility for arranging this control is delegated to

the President and CEO, who is required to ensure that

the Company’s accounts are in compliance with the law

and that its financial management has been arranged in

a reliable manner.

The internal control at Neste is based on the corpo-

rate structure whereby the operations are organized into

organizational units. The heads of business units and

finance function are responsible for establishing and

maintaining appropriate, up-to-date, effective and ade-

quate controls over financial reporting. Operational man-

agement owns the risks and controls and is responsible

that controls and deficiency related corrective actions

are implemented.

In order to provide additional assurance, Neste

has established an Internal Control function, which is

responsible for coordinating the Group-wide internal

control development and monitoring. The Head of Inter-

nal Control reports on its activities on a regular basis to

the Executive Committee and to the Board of Directors’

Audit Committee which monitors the effectiveness of

the Company’s Internal Control. Internal Control follows

up and verifies that actions are taken by the respective

operational management.

Internal Control Principle emphasizes the importance

of internal controls and clarifies the responsibilities of the

Three Lines for establishing effective controls in business

processes. Neste’s values and management system

containing the formal Code of Conduct are the founda-

tion of the control environment. The President and CEO

and corporate management are responsible for empha-

sizing the importance of ethical principles and correct

financial reporting.

Risk assessment

As a prerequisite for risk assessment, the organization’s

objectives need to be established. With respect to finan-

cial reporting, the general objective is to have reliable

reporting and ensure that transactions are recorded and

reported completely and correctly. The assessment of

risk includes risks related to fraud.

Additional information on risk management princi-

ples is available in the Risk Management section of the

Annual Report.

Control activities

Neste control activities include instructions, guidelines

and procedures to ensure that the actions identified by

management to address the relevant risks are carried

out effectively. The most important guidelines related

to financial reporting systems and practices are docu-

mented in Neste Internal Control Principle, Access Risk

Management Principles, the Controls over Financial

Reporting standard (COFR), Process charts, month end

workflows and detailed Finance Instructions.

Key control activities are documented in a global con-

trol catalog covering each business or financial process.

Group-level policies and guidelines are documented in

the Neste Management System.

Communication

Neste corporate-level communication practices support

the completeness and correctness of financial reporting.

Neste personnel have access to adequate information

and communication regarding accounting and report-

ing principles and guidelines. The main means of com-

municating the relevant matters for appropriate finan-

cial reporting consist of internal control training, detailed

Finance Instructions containing accounting principles

and guidelines for forecasting and reporting, info ses-

sions, on-the-job training, process walk-throughs, and

postings on internal channels and pages.

Neste business units prepare regular financial and man-

agement reports for the management review, including

analysis and comments of financial performance. The

Executive Committee and the Board of Directors receive

financial reports monthly. Interim Reports and Financial

Statements are reviewed in Audit Committee meetings,

and thereafter by the Board of Directors.

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Training and communication

Clarify Control Requirements and tools. Support operational management and

process owners in deploying controls in the organization. Perform an active role in

communication with both personnel and stakeholders on important updates.

Remediation

Internal Control follows up and supports

the implementation of management

actions identified by its own

testing or auditor findings and

that relate to strengthening

the control environment.

Scope

Defined based on Regulatory

environment, Strategic Objectives,

Assessment of Risks, Audit Committee

priorities, change programs and

Remediation actions.

Monitoring,

testing and

reporting

Internal Control

employs tools, such

as RPA, Celonis and

SAP GRC, and it conducts

separate tests to assess the

performance of the internal

controls and detect gaps

and areas for improvement.

Findings are reported to

relevant stakeholders.

Control development

In partnership with business

and process owners, define

and enhance the controls.

Increase control automation

and monitoring capabilities.

Keep up-to-date control

catalogs. Create and update

requirements and guidelines.

Internal

Control activity

Focus on controls over nancial

reporting and prevention of fraud

and nancial losses

Building effective Internal Control is an ongoing process

driven by strategy and control objectives

Monitoring

Management regularly monitors the effectiveness of

the controls, as a control that was initially effective can

become ineffective due to changes in the operating envi-

ronment. Changes can also take place in the controls

due to changed processes, IT systems or personnel.

The Board of Directors and the Audit Committee regu-

larly review the financial performance including reviewing

whether there is an adequate level of process to eval-

uate the risks and effectiveness of controls related to

the financial reporting process at all levels of the orga-

nization. The Audit Committee oversees the Company’s

finances, financial reporting, risk management, as well as

the Internal Control and Internal Audit functions, as part

of the Company’s corporate governance. Internal con-

trol deficiencies are communicated in a timely manner

to those parties responsible for taking corrective action,

and to management and the Board’s Audit Committee

as appropriate.

Corporate Internal Audit assesses annually the opera-

tional model and practices of internal control over Neste’s

financial reporting as part of business and process-level

audits.

The Internal Control function also conducts separate

tests to assess the adequacy of internal controls in busi-

ness processes, recommends corrections and reports

the gaps to the respective management teams.

2022

In 2022, the internal control activity focus has been

on three key areas:

First, establishing a renewal business remedia-

tion program under direct supervision of the renew-

able business EVPs and with the aim at addressing

control improvements that not only mitigate risks,

but also bring advancement in business processes.

Concrete improvements have been made in pricing

accuracy of contracts with customers.

The second focus area has been on bringing all

core business process controls to the internal con-

trol platform, consisting of SAP GRC Process Con-

trol (PC) and GRC Access Control (AC) modules.

A significant number of automated controls have

been built and are functioning. Continuous Control

Monitoring is used also for mitigating residual SoD

risks, when needed.

The third focus area has been on revising and

identifying control improvements in the ESG areas,

mainly relating to Bio Compliance. Plan is to cover

the majority of operations by the end of 2023.

The Executive Committee is monitoring closely

the status of internal controls company-wide.

Deep dives and cooperation with the exter-

nal auditor, KPMG, have been performed and

analysis results are being followed up by the

Audit Committee.

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Performance Management Process

Neste’s Performance Management Process plays an

essential role in helping the Group attain its strategic

goals and reinforcing its performance-driven mindset.

Neste has taken a step change in developing its perfor-

mance leadership towards a more agile model support-

ing daily operations.

Performance management comprises daily leader-

ship, through which individuals, teams, units and the

Company can achieve selected strategic priorities and

develop organizational capability. Performance lead-

ership is used to ensure that everyone knows the val-

ues and objectives of the Company, and their short and

long-term objectives, and what kind of competence is

needed and developed to achieve these objectives.

Individual and team objectives are based on Neste’s

strategy and way of working. There is a clear link between

wellbeing at work and good leadership performance.

The key elements in the Neste daily performance lead-

ership approach are:

• setting challenging objectives and following them

through;

• supporting the achievement of objectives with up-to-

date feedback;

• evaluating one’s own performance and results;

• developing ways of working and taking responsibility

for one’s own competence development; and

• holding regular personal development discussions

and check-in discussions that support day-to-day

work.

From a financial outlook and reporting point of view,

the Neste Performance Management Process consists

of long-term financial projections based on the strat-

egy and Performance Planning covering the midterm (3

years) outlook. During the year, performance is evaluated

in weekly Management Reporting, the monthly Business

Review, and the bi-annual Common Functions Review.

Financials and KPIs related information is evaluated

against the strategic goals and business plans, and

required actions are steered and followed throughout

the year.

Leading performance in daily work

Target setting discussion

One-on-one

uraging

Forward discussionCaring and intervening

am members – current topics

Mission

Vision

Strategy

Value

creation

programs

Continuous development, rewarding

Value creation

Results Wellbeing

at work

Renewal

Performance Management Process

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Risk management

objectives and scope

Neste recognizes risk management as an integral part of

sound management practice and an essential element

of good corporate governance. Risk as an element of

uncertainty (opportunity or threat) is an inevitable com-

ponent of running the business. Systematic risk man-

agement practices are the means to ensure that Neste

is successful in achieving the set strategic goals and

business objectives and is able to maintain continuous

operations in a changing business environment.

Neste’s risk management practices can be character-

ized by the following statements:

• The company emphasizes risk aware culture and

proactive management of risks;

• Risk management is a continuous process that is

subject to improvement to reflect changes in the

external and internal environment;

• The purpose of risk management is to analyze

and manage all opportunities and threats that the

company may encounter. By exploiting opportunities

and reducing threats, Neste gains a competitive

advantage;

• Risks are managed as an integrated part of planning,

decision making, and operational processes with a

defined structure of roles and responsibilities; and

• Sufficiency of risk treatment actions and controls is

monitored systematically.

Risk management

Risk management framework

and principles

Framework and principles for risk management have

been defined in the Neste Corporate risk management

policy, which has been approved by the Board of Direc-

tors. The policy is supplemented by risk management

principles, guidelines, and instructions for specific risk

disciplines.

Neste’s risk management framework and processes

are aligned with the internationally recognized best prac-

tices for risk management (COSO: Enterprise Risk Man-

agement – Integrating with Strategy and Performance;

and ISO 31000:2009 standard).

In Neste’s risk model, risks are classified into exter-

nal, strategic, and preventable risks that are more oper-

ational in nature.

• External risks are exposures that cannot be fully

influenced or controlled by Neste. The main risk

classes are changes in the external environment and

risks in the extended enterprise;

• Strategic risks relate to strategic choices,

strategy implementation and risks in the planning

and execution of major projects (e.g. refinery

turnarounds). Strategic risks are not inherently

undesirable as they typically contain both upside and

downside risk potential; and

• The third category of risks, preventable risks,

consists of various risk classes that arise within the

organization and are mostly controllable. In general,

Neste does not gain strategic benefits from taking

these risks.

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Strategy GovernanceSustainability Review by the Board of Directors Financials

President and CEO and

Executive Committee

Risk champions

1st Line of Defense

Ownership for risk taking

and risk treatment

2nd Line of Defense

Risk management support, facilitation,

and consultation

Ethics and Compliance

Committee, CFO

Internal

Control

Risk coordination team,

CRO

Risk

management

Internal Audit

3rd Line of Defense

Independent assurance

Risk governance

Business Units

Renewables Platform

Functions

Innovation

Engineering Solutions

Board of Directors

Audit Committee

Compliance

Risk governance

The Neste Board of Directors has the ultimate account-

ability for risk oversight. Among other duties the Board is

in this role responsible for setting the Group’s risk appe-

tite and for approving the Risk Management Policy.

The practical implementation, development and mon-

itoring of risk management processes is based on the

three lines of defense model. The model distinguishes

between:

1st Line of Defense

The first line of defense is responsible for setting the

objectives, managing day-to-day performance and rein-

forcing risk responses in order to achieve the set targets.

At Neste, the first-line actors include Business Units and

Functions in their first-line roles. As a part of the first line

of defense, Neste’s President and CEO and the Neste

Executive Committee have the overall accountability for

appropriate risk management practices.

In practice, Business Units and Functions own and

manage risks with the help of a dedicated network of

risk champions and coordinators. The role of the risk

champions/coordinators is to represent different risk dis-

ciplines and to ensure that risk discussions are embed-

ded in everyday management routines.

2nd Line of Defense

The role of the actors in the second line of defense is

to provide guidance, support, facilitation and consulta-

tion for risk management. The second line of defense

needs to have some degree of independence from the

first line of defense in order to be able to challenge the

first line in managing performance and making risk-in-

formed decisions.

At Neste, the second line of defense includes Func-

tions in their second-line roles and specialist teams (cor-

porate risk management, compliance and internal con-

trols). In addition, Neste has established a separate

Ethics and Compliance Committee that aims at increas-

ing management oversight of compliance- and eth-

ics-related issues within the Group. The Committee also

ascertains the adequacy of mitigation actions in higher

risk compliance areas.

The corporate risk management team has the overall

responsibility to confirm that risk management activities

are carried out consistently throughout Neste Group and

all risk classes. Corporate risk management also drives

the overall development of risk management practices

and tools. The team is supported by the network of risk

champions and coordinators.

3rd Line of Defense

Internal Audit as an independent team evaluates the

effectiveness and efficiency of the corporate-level risk

governance model and related risk management pro-

cesses, including the effectiveness of internal controls

and other risk treatment actions in the scope of each

audit. Internal Audit also provides recommendations for

improvement areas.

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Risk reporting

Risk reporting aims at the transparent, consistent, and

comprehensive communication of risk status in different

areas. As a result of risk reporting, the Company’s risk

profile can be compared with the defined risk appetite

and it can be concluded whether additional risk treat-

ment actions are needed.

Communication regarding the most important risk

issues takes place along the strategic planning and per-

formance management cycle.

Formal risk reporting is directed to the Business Unit

and Function management teams, the Neste Exec-

utive Committee, the Audit Committee and the Board

of Directors. The Corporate risk management team is

responsible for aggregating risk information for reporting

to different internal and external audiences.

Risks relating to Neste’s business

In the pursuit of its objectives and targets, Neste is

exposed to different risk factors that stem from the

external environment, internal decision making, operat-

ing processes and systems in use. The most significant

risk factors relate to the areas mentioned below. Any one

of the risks, either singly or in the aggregate, may have

a material adverse effect on Neste’s business, financial

condition, operating results and future prospects.

External risks – Economic conditions,

Geopolitics, Pandemic

Year 2022 was marked with slowing economic growth

and several crises - war in Ukraine, rising inflation and

exceptional price hikes in the energy market. Following

the war in Ukraine, major European refiners not con-

nected to the Druzhba pipeline shifted away from using

Russian crudes. This combined with the OPEC+ supply

control measures has strongly supported non-Russian

crude prices this year. Russia will likely curtail its crude

production upon the introduction of the G7 price cap

and the EU’s embargo on Russian oil trading. Especially

if the price cap is set at a too low level, additional cuts

to Russian crude oil production are expected. Mean-

while, China’s Covid policies and economic fundamen-

tals could cast uncertainties towards the other direction.

Oil refining margins in 2022 were impacted by a hike in

operating costs. This is due to a combination of overall

heightened oil supply risks, and the significant increase

in refineries’ utility costs. The latter was primarily driven

by skyrocketing natural gas prices in Europe caused by

Russia’s substantial reduction of natural gas exports to

Europe.

With an embargo on Russian oil products coming

into force in the EU in early February 2023, uncertain-

ties related to the oil product availability, subsequent

cost development for natural gas in Europe and macro-

economic developments impacting demand make the

exact direction for refining margins going forward diffi-

cult to predict.

The renewable fuel market in 2022 was also impacted

by the war in Ukraine, in two major ways. Firstly, by driv-

ing up prices for vegetable oils, and in turn other waste

and residue feedstocks, in the months after the start of

the war. Price levels have meanwhile declined substan-

tially from their peak in early summer. Secondly, through

driving up the cost of fossil transport fuels, which led a

few EU member states, including Finland and Sweden,

to freeze or even lower their biofuel blending obligations

in 2022 and the following years. However, the impact on

biofuel demand was overall limited, as demand contin-

ued to grow in many markets in the EU, North America

and around the world.

External risks – Environment

Neste’s strategic ambition is to be the global leader in

renewable and circular solutions. Growing pressure to

combat climate change and reduce greenhouse gas

emissions is therefore primarily a positive driver for

Neste’s business. However, political and societal focus

on the low-carbon transition and the energy sector’s

carbon footprint also create risks. Indirect economic

and political consequences of climate change may con-

tribute to the general uncertainty in the business envi-

ronment and hence have an adverse effect on Neste’s

business. In addition, changes in carbon emission trad-

ing schemes or similar initiatives on EU-, US- or individ-

ual Member State-level may have a significant effect on

Neste’s business.

External risks – Laws and regulation

Changing regulation presents both an opportunity and

a threat to Neste’s business. Neste’s refining operations

and products are subject to extensive regulation (incl.

environmental, health and safety, sustainability). General

regulatory requirements in areas like commodity trading

and data protection have also contributed to the formal-

ization of operating procedures.

Neste’s business units mainly benefit from increased

support for biofuels and renewable fuels (for example

requirements that relate to renewable content in diesel

and gasoline). However, changes in regulation especially

in the European Union and the United States also cre-

ate uncertainties as these may influence the speed at

which the demand for renewable products develops,

and new raw materials sources are brought into use. For

the renewable products, a significant source of uncer-

tainty is fragmented regulation around the acceptability

and use of waste and residue feedstock.

Risks relating to strategic choices

and strategy implementation

The majority of strategic risks relate to the viability of

strategic choices and risks in strategy implementation.

Opportunities and threats may arise from changes in the

competitive landscape or from internal decision making

and use of technology.

Neste’s competitive position in the selected key mar-

kets is good. Neste’s proprietary NEXBTL produc-

tion technology is a proven technology for producing

high-quality diesel from renewable raw materials. How-

ever, there is no assurance that this competitive posi-

tion will continue as new players enter the market, cur-

rent competitors develop their technologies or customer

preferences for clean mobility change. In addition to

the development of alternative feedstocks and produc-

tion technologies for liquid fuels, the evolution of engine

technologies and introduction of alternative powertrains

can be faster than expected.

Staying ahead of competition requires continuous

improvement, the ability to challenge current business

models and a strong focus on innovations such as new

production technology and feedstock platforms. In addi-

tion, Neste’s products and services must continuously

meet customer requirements relating e.g. to product

quality and sustainability. Evolving customer require-

ments together with more complex sourcing and logis-

tics networks and production methods increase the

exposure to quality risks that need to be managed well

in order to maintain the high-quality brand image. As

risk mitigation, Neste has implemented systematic qual-

ity management measures both in its own operations

and in partner networks.

Strong governance practices and the continued con-

tributions of Neste’s senior management, personnel and

partners are vital for the company’s success. Due to

fierce competition for talent, there is a risk that Neste

may not be able to recruit and retain the highly skilled

employees that are needed for strategy deployment and

successful operations in the future. There is also a risk

that Neste will not be able to build and manage strategic

partnerships that contribute to future success.

Neste Annual Report 2022 | Risk management

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Project risks

Successful projects play a key role in Neste’s strategy

deployment, operational development and the digitiza-

tion of processes. Significant delays in project planning

or execution may reduce operational efficiency or impair

Neste’s ability to secure its competitive position.

Business continuity risks

During the last few years, widespread implications from

Covid-19 pandemic have pushed many industries and

companies towards more systematic continuity man-

agement practices. While the pandemic still continues to

restrict economic activity in some areas, more significant

pressures for contingency planning during 2022 have

come from geopolitical tensions, energy market volatility

and high inflation rates. While governments have shifted

attention towards mitigation of higher cost of living, the

market has seen temporary reductions in climate ambi-

tion and targets as well as slowed down implementa-

tion of climate policies that would also support demand

for Neste’s solutions. Neste has continued implemen-

tation of strategic and operational business continuity

measures. On the company level also scenario work has

played an important role.

On the operational level Neste’s business performance

is very much dependent on the continuous reliability

of refining activities in Finland (Porvoo), Singapore and

the Netherlands (Rotterdam). In addition to the planned

maintenance turnarounds, for example disruptions in

the supply of utilities or breakdown of critical machinery

could cause unexpected shutdowns that would affect

Neste’s ability to fulfill demand for end products.

The vessels chartered to Neste or owned by Neste are

subject to inherent risks like maritime disaster, damage

to the environment and loss of or damage to cargo and

property. Such events can be caused by multiple fac-

tors, such as adverse weather conditions or mechanical

failures.

Neste has insurance in place to reduce the financial

impact of property damage, business interruption, and

maritime disasters. However, insurance does not cover

all potential losses and Neste could therefore be seri-

ously harmed by operational catastrophes or deliberate

sabotage.

Market risks

In 2022, the oil and energy market as a whole expe-

rienced unforeseen hikes in energy and utility prices.

Despite market stabilization there is a continuing risk of

market volatility and increasing prices. This could have

direct impacts on Neste’s operating and project costs. In

addition, high inflation could also have an indirect impact

on the demand for Neste’s products as governments

try to balance the cost of climate actions with the need

to manage the generally increased cost of living. On the

feedstock side, it is expected that the high demand and

high pricing for different waste and residue feedstock

streams continues as competitors are increasing their

production capacity for renewable products.

The financial results of Neste are primarily affected by

the price differential, or margin, between refined petro-

leum and renewable product prices; and the prices for

crude oil, different vegetable oils and other feedstock

used. Historically, refining margins have been volatile

and they are likely to continue to be so in the future. The

main factors that may affect the refining margins include:

• Changes in aggregate demand for and

supply of raw materials and products;

• Changes in demand for and supply of

specific raw materials and products;

• Raw materials and product price fluctuations; and

• Evolution of worldwide refining capacity, and in

particular development of refining capacity that

relates to petroleum and renewable products similar

to Neste.

As a part of risk management, Neste uses derivative

instruments to protect its position against fluctuations in

commodity prices.

Neste is exposed to foreign exchange risks because

most of the sales are denominated in US dollars, whereas

operating expenses (except the purchase of raw materi-

als) are recorded in euros. Neste limits the uncertainties

relating to changes in foreign exchange rates by hedg-

ing its currency risks in contracted and forecasted cash

flows and balance sheet exposures.

More information on market risks can be found in

the Financial Statements Note 3 section of the Annual

Report.

Counterparty and credit risk

Counterparty risk arises from all business relationships,

where Neste is exposed to the counterparty’s failure to

perform according to Neste’s requirements and contrac-

tual commitments. The extent of counterparty risk has

increased along the continued diversification of Neste’s

supply base and customer segments. In order to man-

age the risk, Neste has implemented systematic con-

trols for counterparty screening and monitoring.

Especially on the sales side, Neste is also exposed

to credit risk i.e. the potential failure of a counterparty

to meet its contractual payment obligations. Risk mag-

nitude is dependent on the size of the exposure con-

cerned and counterparty’s creditworthiness, which is

assessed systematically both during onboarding and

during the relationship.

Sustainability risks

The most significant sustainability risks that relate to

Neste’s own operations or to the extended enterprise

have been reported in line with the requirements of the

Non-Financial Reporting Directive as a part of the review

by the Board of Directors.

ICT and cyber risks

Digitalization and emerging technologies (for example

the use of artificial intelligence and robotics) offer oppor-

tunities to automate dangerous or error-prone tasks

and increase the efficiency of operations. At the same

time, the increasing sophistication of cyber threats and

generally rising frequency of attacks targeted at oil and

gas companies is also a concern for Neste. Cyber risks

multiply the impact of other risks and as individual risks

could also have a major negative impact on Neste’s rep-

utation or continuity of business operations.

The reliability of the key IT systems and partnerships is

essential for continuous business operations. Prolonged

disruption in the availability of the key systems, data or

interfaces could limit Neste’s ability to conduct its busi-

ness operations in a profitable, efficient and controlled

manner.

Risk management focus in 2022

In 2022, special risk management initiatives focused on

risk support for major investments, M&A transactions

and business model changes. Also implementation of

business continuity plans continued.

Neste Annual Report 2022 | Risk management

140

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Remuneration Report 2022

Dear Shareholder,

On behalf of Neste’s Personnel and Remuneration Com-

mittee (the ‘Committee’) I am pleased to present our

2022 Remuneration Report outlining the remuneration

of the members of the Board of Directors and the Pres-

ident and CEO (the CEO) for the financial year of 2022

and describing how the Remuneration Policy approved

by the 2020 Annual General Meeting of Shareholders

(AGM) has been implemented in practice. This Remu-

neration Report has been prepared in accordance with

the Finnish Corporate Governance Code 2020, and the

requirements set forth in the Finnish Limited Liability

Companies Act, the Finnish Securities Markets Act and

the Decree of the Ministry of Finance. The report will be

presented at the 2023 AGM of Neste for an advisory

shareholder vote.

Our approach to remuneration

and link to sustainability

Our purpose as a Personnel and Remuneration Com-

mittee is to ensure that remuneration programs at

Neste reflect our longstanding remuneration principles

of supporting the business strategy, paying for perfor-

mance, encouraging value-based behavior and individ-

ual accountability and paying competitively and fairly.

Based on our remuneration principles we have

designed our remuneration policies, practices and pro-

cesses to ensure that we are able to compete and retain

the best workforce, talents and senior management in

the diverse markets in which we operate. We believe

that our performance-based remuneration programs

together with selecting the right individuals for key posi-

tions, versatile career progression, proactive succession

planning and appropriate market competitive rewarding

are key to our success also in the future.

Neste’s safety culture has been developed systemat-

ically for several years and the measures related to the

improvement in both process and personnel safety con-

stitute 20% of the short-term incentives’ measures. Sim-

ilarly, Neste’s commitment to our strategic sustainability

targets is also reflected in our long-term incentives plan

where 20% of measures are based on our combined

Greenhouse Gas impact.

Our remuneration structure aims to reinforce and sup-

port our key strategic target to become a global leader

in renewable and circular solutions, which will support

sustainable, long-term value creation for all stakehold-

ers. For our President and CEO a significant proportion

of remuneration is derived from variable pay to ensure

that there is strong alignment between sustainable value

creation for shareholders, company performance and

reward. The Board of Directors sets the targets for both

short- and long-term incentives and the variable payouts

are directly linked to both operational, ESG and strategic

measures.

Neste performance in 2022

The challenges and turbulency in the world have had

significant impacts on global energy markets, and

energy prices have risen to high levels. However, Neste

was able to deliver a comparable EBITDA of EUR 3,537

million and take important steps in executing its growth

strategy.

The performance measure for Performance Share

Plan (PSP) 2020–2022 has been relative Total Share-

holder Return (relative TSR) of Neste share compared to

the STOXX Europe 600 index between 2020 and 2022.

Neste Total Shareholder Return was at the 84.9

per-

centile compared to the index.

Application of the

Remuneration Policy in 2022

The remuneration for the Board of Directors and the CEO

during the financial year 2022 was executed in accor-

dance with the 2020 Remuneration Policy. No devia-

tions from the Remuneration Policy have been made

and no remuneration of the Board of Directors or the

CEO has been reclaimed or restated during the financial

year 2022.

Advisory Shareholder vote regarding

the Remuneration Report 2021 and

shareholder engagement

At the Annual General meeting in 2022, 95.82% of the

Neste Shareholders supported the Neste Remuneration

Report 2021.

Looking ahead to 2023

During 2022, the Personnel and Remuneration Com-

mittee of Neste focused on the renewal of both long-

term incentive (LTI) and short-term incentive (STI) plans

to strengthen our pay for performance approach on total

remuneration and to ensure the competitiveness and

attractiveness as an employer in the international mar-

kets where Neste operates. Neste President and CEO

Peter Vanacker stepped down in April 2022 and Matti

Lehmus started as a President and CEO in May 2022.

The remunerations of the new and the outgoing Pres-

ident and CEO are in accordance with the Remunera-

tion Policy 2020 adopted by shareholders at the Annual

General meeting in 2020.

Matti Kähkönen

Chair of the Personnel and Remuneration Committee

Neste Personnel and

Remuneration Committee

Matti Kähkönen

Chair of the Personnel and Remuneration

Committee

Committee members during 2022:

• John Abbott from 30 March 2022

• Martina Flöel

• Jean-Baptiste Renard until 30 March 2022

• Johanna Söderström

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Strategy GovernanceSustainability Review by the Board of Directors Financials

The Annual General Meeting decides on the remuner-

ation to the members of the Board, based on the pro-

posal of the Shareholders’ Nomination Board, for one

period at a time until the closure of the next AGM. On

30 March 2022, the 2022 AGM confirmed the following

annual fees for the members of the Board of Directors.

98.89% of the votes cast were in favor of the proposal

of the Shareholders’ Nomination Board.

If he or she does not simultaneously act

as Chair or Vice Chair of the Board

Remuneration of the Board of Directors

for the previous financial year

Neste Annual Report 2022 | Neste Remuneration Report

Chair 78,100 EUR per annum

Vice Chair 54,400 EUR per annum

Member 37,900 EUR per annum

Chair of Audit Committee

54,400 EUR per annum

The AGM confirmed that 40% of the annual fixed fee will

be paid in the form of Neste shares and the remainder

in cash.

In addition, the AGM decided that the following fixed

annual committee fees are paid:

• Member of the Audit Committee EUR 3,000;

• Chair of the Personnel and Remuneration

Committee EUR 5,000 and Member of the Personnel

and Remuneration Committee EUR 2,000; and

• the Chair of another committee established based

on Board decision will, for such position, be paid

EUR 5,000, and its members will, for such position,

be paid EUR 2,000.

Following meeting fees were paid based on attendance,

plus compensation for expenses in accordance with the

Company’s travel guidelines:

• Meeting held in the member’s home country

EUR 800;

• Meeting held in the same continent as the

member’s home country EUR 1,600; and

• Meeting held outside the same continent

as the member’s home country EUR 2,400.

The meeting fee for meetings held over the telephone or

through other means of data communication was paid

according to the fee payable for meetings held in each

member’s home country. The meeting attendance fees

include meeting fees paid due to special tasks set by the

Board of Directors, but not travel expenses.

Details of the shareholdings of the Board of Directors

are shown in the web pages. These shares are person-

ally acquired.

142

Strategy GovernanceSustainability Review by the Board of Directors Financials

Annual fee for the

period

1–3/2022 in cash

(EUR)

Annual fee for the

period

4/2022–3/2023

(EUR)

Committee and

meeting fees

(EUR)

Total

(EUR)

Matti Kähkönen, Chair 16,975 78,100 29,200 124,275

Marco Wirén, Vice Chair 12,400 54,400 27,600 94,400

John Abbott 8,925 37,900 27,800 74,625

Nick Elmslie 8,925 37,900 29,000 75,825

Martina Flöel 8,925 37,900 28,600 75,425

Just Janz

- 37,900 21,400 59,300

Jean-Baptiste Renard

8,925 - 4,800 13,725

Jari Rosendal 8,925 37,900 22,600 69,425

Eeva Sipilä

- 37,900 17,400 55,300

Johanna Söderström 8,925 37,900 36,000 82,825

The total annual fee for the Board membership 2022–2023 was paid in May 2022 and 40% of the annual fee was paid in shares

and 60% in cash. Neste has paid the transfer tax for share purchase and it has been handled as a taxable income for each member.

Meeting fees include annual committee fee and fees based on attendance.

Member of Board since 30 March, 2022

Member of the Board until 30 March, 2022

Remuneration has been paid from the parent company.

Remuneration paid to the members

of the Board in 2022

In 2022, the remuneration of the members of the Board

exceptionally consisted of two separate Board annual

membership fees (three month fee of the Board mem-

bership 2021–2022 and the full annual fee of the Board

membership 2022–2023), due to the structural change

of the fee payments for the membership 2022–2023

decided by the AGM 2022. The AGM 2022 decided that

40% of the fixed annual fee is to be paid in the form of

shares and the remainder in cash. The shares were pur-

chased directly on behalf of the Board members within

two weeks after the publication of the interim report for

the period 1 January to 31 March 2022 from the market

at a price formed in public trading. The Company has

paid all costs and transfer tax related to the purchase

of Company shares. The total cash part of the annual

Board fee and committee fees for the Board member-

ship period 2022–2023 were paid in May 2022. Meeting

fees were paid during the year after the meetings.

Neste Annual Report 2022 | Neste Remuneration Report

143

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste’s Board of Directors decides on the remuneration of the President and CEO based on the proposal by the Board’s Personnel and Remuneration Committee. The available remuneration elements are

defined in the Neste’s Remuneration Policy and aligned with market practices. The remuneration of the CEO consists of fixed annual remuneration, such as base salary and fringe benefits and variable remu-

neration, such as short- and long-term incentives plans and supplementary pension.

President and CEO Matti Lehmus did not receive any share-based payments during his CEO period, starting from May 2022 onwards. As previous President and CEO Peter Vanacker had given notice of

his resignation from the company in December 2021, the share allocation to him was canceled.

The supplementary pension of the President and CEO is a defined contribution plan with an annual contribution of 16% of the fixed annual salary and retirement age of 62 years. This supplementary pension

benefit is originally based on his previous positions and a member of Neste Executive Committee. For those Executive Committee members who have started in their position after 1 January 2009 but before

31 August 2018, are eligible for a defined contribution (DC) pension scheme (based on retirement age of 62, 63 or as prescribed under Finnish pension legislation). No other financial benefits were paid to the

President and CEO in 2022.

The table below includes the taxable value of the remuneration:

Remuneration of the President and CEO in 2022

Fixed Annual

Remuneration

Variable Remuneration

Total

Remuneration

Proportion of

fixed and variable

remuneration

Fixed

Annual Salary

Short-term

incentive plan

Long-term incentive plans

Supplementary

pension

Total Annual

Compensation

Cash Shares

Matti

Lehmus

(from 5/2022)

Paid during 2022

(based on nancial

year 2021 performance) 636,773.98 - - - 94,666.67 731,440.65 100% and 0%

Peter

Vanacker

(until 4/2022)

Paid during 2022

(based on nancial

year 2021 performance) 443,285.70

261,179.08 - - - 704,464.78 63% and 37%

Benefits and vacation pay included in fixed remuneration.

This includes vacation compensation of EUR 106,303.92 paid at the end of employment.

Remuneration has been paid from the parent company.

Neste Annual Report 2022 | Neste Remuneration Report

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Strategy GovernanceSustainability Review by the Board of Directors Financials

Short-term incentives

The President and CEO’s short-term incentives, including the terms and conditions for these plans, are determined by Neste’s Board of Directors. The Board of Directors annually sets and evaluates targets for

the President and CEO. The maximum short-term incentive for the President and CEO was 40% of annual base salary in 2021 and 80% of annual base salary in 2022. The President and CEO’s Peter Vanack-

er’s achievement ratio for the short-term incentives for the year 2021 paid in March 2022 was 26.6%.

Details of the short-term incentive plan award for the President and CEO, Peter Vanacker for 2021 paid in March 2022:

The achievement ratio for the year 2022 to be paid in 2023 is 61.6% and the incentive payment of EUR 369,219 (prorated to CEO time 5–12/2022) will be paid in March 2023.

Comparable ROACE was introduced into measures to measure how efficiently Neste uses its capital to generate profits from its current active operations.

Details of the short-term incentive plan award for the President and CEO; Matti Lehmus for May–December 2022 to be paid in March 2023:

Details of the short-term incentive plan award for the President and CEO for 2023, potential reward payment in March 2024:

President and CEO 2021 STI 2021 results

Weighting Measures Level of achievement

60% Group comparable EBIT Between threshold and target

20% Free Cash Flow At maximum

10% Group Safety (TRIF) At maximum

10% Group Process Safety (PSER) At maximum

Total Between target and maximum

President and CEO 2022 STI 2022 results

Weighting Measures Level of achievement

50% Group comparable EBITDA At maximum

20% Free Cash Flow Between target and maximum

10% Comparable ROACE At maximum

10% Group Safety (TRIF) Below threshold

10% Group Process Safety (PSER) Between target and maximum

Total Between target and maximum

President and CEO 2023 STI

Weighting Measures

50% Group comparable EBITDA

20% Free Cash Flow

10% Comparable ROACE

10% Group Safety (TRIF)

10% Group Process Safety (PSER)

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Long-term incentives

The Board of Directors decides on and implements Neste’s long-term incentive plans and the earning opportunity for the President and CEO. The purpose of these plans is to drive Neste’s long-term

performance and success. As previous President and CEO Peter Vanacker had given notice of his resignation from the company, the share allocation to him has been canceled and no shares were

delivered.

President and CEO Matti Lehmus is entitled to following long-term incentive plans:

Based on Matti Lehmus’ previous role as Executive Vice President, Renewables Platform he is also entitled to PSP 2020–2022 and PSP 2021–2023 share plans which will vest in 2023 and in 2024.

Performance

Share Plan Measure Weight Grant date

Number of shares

originally granted Vesting date

PSP 2022–2024 Relative Total Shareholder

Return (TSR) compared to

the STOXX Europe 600 Index

80% 9 Feb. 2022 26,400 31 Mar. 2025

Combined Greenhouse Gas

Impact 2022–2024

20%

PSP 2023–2025 Relative Total Shareholder

Return (TSR) compared to

the STOXX Europe 600 Index

80% 13 Dec. 2022 23,600 31 Mar. 2026

Combined Greenhouse Gas

Impact 2023–2025

20%

Neste Annual Report 2022 | Neste Remuneration Report

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Average compensation of members of the Board includes all fees paid to the members (annual board fees, meeting fees, committee fees).

Average Neste employee includes all wages and salaries incl. incentive payments (LTI based on accounting value) without indirect employee costs

(social security costs, pension costs, other costs) divided by the average number of personnel during the year.

Cost provision for personnel arrangements relating to the Naantali refinery closure of EUR 22 million has been eliminated from wages and salaries before calculating the average.

The unused amount of cost provision reversal for personnel arrangements relating to the Naantali refinery closure of EUR 11 million has been eliminated from wages & salaries before calculating

the average. The average compensation between 2019 and 2020 has increased partly due to the divestment of Neste operations in Russia in 2019 covering 1,133 employees, and between 2020

and 2021 due to personnel decreases related to the closure of Naantali refinery. Simultaneously, strategic headcount increase has focused on white collar and higher employee cost markets.

The unused amount of cost provision reversal for personnel arrangements relating to the Naantali refinery closure of EUR 500,000 has been eliminated from wages & salaries before calculating

the average. The average compensation has increased partly due to strategic headcount increase on higher employee cost markets. Simultaneously, short-term incentive provision

is higher than in previous year.

Remuneration and company performance

over the last five financial years

Average compensation, EUR 2018 2019 2020 2021 2022

Average compensation of Members of the Board

53,283 50,272 44,386 51,368 72,512

President and CEO

(taxable value of the remuneration in each year)

Matti Lievonen

(until 10/2018) 2,497,774 - - - -

Peter Vanacker

(from 11/2018 until 4/2022) 150,040 2,131,983 1,804,816 2,046,357 704,465

Matti Lehmus

(from 5/2022) - - - - 731,441

Average compensation of Neste employee

57,258 57,906 70,751

77,529

86,367

Company performance

Comparable EBITDA (MEUR) 1,838 2,452 1,929 1,920 3,537

Neste Annual Report 2022 | Neste Remuneration Report

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Review by the Board of Directors 2022 148

Key figures 172

Calculation of key figures 174

Review by

the Board of

Directors

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Neste Annual Report 2022 | Review by the Board of Directors

Review by the Board of Directors 2022

Neste ended the year 2022 with a strong performance in all its business units. The war in Ukraine had a significant impact on

international energy markets in 2022. In the exceptional market environment, the full year comparable EBITDA reached an all-

time high EUR 3,537 million compared to EUR 1,920 million in the previous year. All businesses improved their performance in

2022. Despite the higher feedstock costs and increasing production costs, Renewable Products was able to further increase

its comparable sales margin. In Oil Products, the main product margins improved significantly during the year and the rising

production costs were successfully mitigated by optimizing the supply and use of utilities. Also, Marketing & Services was able

to improve its performance compared to the previous year. As to the Group’s financial targets, Neste reached a Comparable

ROACE of 30.1% over the last 12 months and a leverage ratio of 13.9% at the end of the year, both clearly meeting the

financial target levels. Cash flow before financing activities was at EUR -390 million in a year of significant investments and

M&A transactions. The solid financial position enables the continued implementation of our growth strategy going forward.

During the year Neste continued to execute its growth strategy in our three renewables businesses – Aviation, Polymers

and Chemicals and Road Transportation. A strategic decision was made to invest into new renewable products’ production

capacity in Rotterdam. The Rotterdam refinery expansion investment of approx. EUR 1.9 billion will expand Neste’s overall

renewable product capacity by 1.3 million tons per annum, bringing the total renewable product capacity in Rotterdam to

2.7 million tons annually, of which sustainable aviation fuel (SAF) production capability will be 1.2 million tons. Neste also

established a 50/50 joint operation with US-based Marathon Petroleum. The joint operation will produce renewable diesel

following a conversion project of Marathon’s refinery in Martinez, California. Neste’s total investment will amount to approx.

EUR 0.9 billion (USD 1.0 billion). The project is expected to increase Neste’s renewable products capacity by slightly over

1 million tons per annum by the end of 2023. Our Singapore renewables capacity expansion investment project reached

mechanical completion at the end of 2022 and is currently on schedule for start-up by the end of the first quarter 2023.

At the same time, Neste continued to implement its sustainability vision in the fields of climate, biodiversity, human rights,

our supply chain and raw materials. All these actions support the strategic transformation. Neste is making good progress in

its journey to become a global leader in renewable and circular solutions. Board of Directors proposes a maximum dividend

of EUR 1.52 per share (0.82 per share), consisting of an ordinary dividend of EUR 1.02 per share, an extraordinary dividend

of EUR 0.25 per share and a discretionary second extraordinary dividend of EUR 0.25 per share, totaling a maximum of

EUR 1,167 million (EUR 630 million).

Figures in parentheses refer to the financial statements for 2021, unless otherwise noted.

The Group’s results for 2022

Neste’s revenue in 2022 totaled EUR 25,707 million (15,148 million). The growth in revenue resulted from higher market and

sales prices, which had a positive impact of approx. EUR 7.5 billion, and higher sales volumes which had a positive impact

of approx. EUR 2.1 billion on the revenue. Additionally, a stronger US dollar had a positive impact of approx. EUR 1.2 billion

on the revenue. Also, the revenue was negatively impacted by lower trading volumes and the divestment of the Base Oils

business, total impact approx. EUR -0.2 billion.

The Group’s comparable EBITDA was EUR 3,537 million (1,920 million). Renewable Products’ comparable EBITDA was

EUR 1,762 million (1,460 million), higher than in 2021, mainly due to a higher sales margin and stronger US dollar offsetting

higher fixed costs. Oil Products reached a comparable EBITDA of EUR 1,654 million (353 million) in the improved refining

market and with increased sales volumes. Marketing & Services’ comparable EBITDA was EUR 126 million (103 million) as a

result of higher sales volumes and unit margins. The Others segment’s comparable EBITDA was EUR -4 million (11 million).

The Group’s EBITDA was EUR 3,048 million (2,607 million), which was impacted by inventory valuation losses of

EUR 352 million (gains of 573 million) and changes in the fair value of open commodity and currency derivatives totaling

EUR -131 million (106 million). Profit before income taxes was EUR 2,279 million (1,962 million), and net profit EUR 1,891

million (1,774 million). Comparable earnings per share were EUR 3.04 (1.54), and earnings per share EUR 2.46 (2.31).

Group key figures, MEUR 2022 2021

Comparable EBITDA 3,537 1,920

- inventory valuation gains/losses -352 573

- changes in the fair value of open commodity and currency derivatives -131 106

- capital gains/losses 10 3

- other adjustments -16 5

EBITDA 3,048 2,607

Revenue 2022 2021

Renewable Products 9,905 5,895

Oil Products 14,596 7,810

Marketing & Services 5,876 3,803

Others 147 170

Eliminations -4,816 -2,530

Total 25,707 15,148

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Comparable EBITDA 2022 2021

Renewable Products 1,762 1,460

Oil Products 1,654 353

Marketing & Services 126 103

Others -4 11

Eliminations -1 -6

Total 3,537 1,920

Operating profit 2022 2021

Renewable Products 1,046 1,723

Oil Products 1,337 263

Marketing & Services 98 77

Others -70 -34

Eliminations -1 -6

Total 2,410 2,023

31 Dec 2022 31 Dec 2021

Comparable return on average capital employed after tax (ROACE)

, % 30.1 18.3

Leverage ratio (net debt to capital), % 13.9 0.6

Last 12 months. Calculation formula adjusted effective 1 January 2022; figures for 2021 restated.

2022 2021

EBITDA 3,048 2,607

Capital gains/losses 0 0

Other adjustments -55 -118

Change in net working capital -1,357 -362

Finance cost, net -42 -39

Income taxes paid -398 -95

Net cash generated from operating activities 1,197 1,994

Capital expenditure -1,757 -1,298

Other investing activities 170 -186

Free cash flow (Cash flow before financing activities) -390 511

Financial targets

Comparable return on average capital employed after tax (Comparable ROACE) and leverage ratio are Neste’s key financial

targets. The company’s long-term Comparable ROACE target is 15%, and the leverage ratio target is below 40%. At the

end of December 2022, Comparable ROACE calculated over the last 12 months was 30.1%, and leverage ratio remained

well within the targeted area at 13.9%.

Cash flow, investments, and financing

The Group’s net cash generated from operating activities totaled EUR 1,197 million (1,994 million) in 2022 reflecting the

increase in net working capital. Cash flow before financing activities was EUR -390 million (511 million), mainly due to the

higher capital expenditure compared to 2021. The Group’s net working capital in days outstanding was 35.4 days

(33.3 days) on a rolling 12-month basis at the end of 2022.

Cash-out investments excluding M&A and asset acquisitions were EUR 990 million (976 million), and totaled EUR 1,757

(1,298 million) including M&A and asset acquisitions in 2022. Maintenance investments accounted for EUR 249 million

(411 million) and productivity and strategic investments for EUR 1,509 million (888 million). Renewable Products’ total

investments were EUR 1,553 million (877 million), mainly related to the Singapore refinery capacity expansion project, and

the asset acquisitions made in the segment. Oil Products’ investments amounted to EUR 130 million (380 million). Marketing

& Services’ investments totaled EUR 21 million (13 million). Investments in the Others segment were EUR 55 million

(29 million), concentrating on Innovation and business IT infrastructure upgrades.

Interest-bearing net debt was EUR 1,344 million at the end of December 2022, compared to EUR 41 million at the

end of 2021. The average interest rate of borrowing at the end of December was 2.3% (1.2%) and the average maturity

2.5 (3.7) years. At the end of the year the Net debt to EBITDA ratio was 0.4 (0.0).

The leverage ratio was 13.9% at the end of December 2022 (31 Dec 2021: 0.6%). The Group’s strong financial position

enables Neste to continue with the implementation of its growth strategy going forward while maintaining a healthy dividend

distribution.

The Group’s liquid funds and committed, unutilized credit facilities amounted to EUR 2,871 million at the end of December

2022 (31 Dec 2021: 3,066 million). There are no financial covenants in the Group companies’ existing loan agreements.

In accordance with the hedging policy, Neste hedges a large part of its net foreign currency exposure for the next 12 months,

mainly using forward contracts and currency options. The most important hedged currency is the US dollar. At the end of

December 2022, the Group’s foreign currency hedging ratio was approx. 55% of the sales margin for the next 12 months.

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Production 2022 2021

Renewable Diesel and SAF, 1,000 ton 2,988 3,043

Other products, 1,000 ton 249 247

Utilization rate, % 91 95

Sales 2022 2021

Renewable Diesel and SAF, 1,000 ton 3,032 3,021

Share of sales volumes to Europe, % 67 65

Share of sales volumes to North America, % 33 35

Key financials 2022 2021

Revenue, MEUR 9,905 5,895

EBITDA, MEUR 1,328 1,950

Comparable EBITDA, MEUR 1,762 1,460

Operating profit, MEUR 1,046 1,723

Net assets, MEUR 6,433 4,748

Return on net assets

, % 18.6 40.9

Comparable return on net assets

, % 26.6 29.4

Last 12 months

Key drivers 2022 2021

Comparable sales margin, USD/ton 804 715

Biomass-based diesel (D4) RIN, USD/gal 1.69 1.50

California LCFS Credit, USD/ton 99 178

Palm oil price

, USD/ton 1,116 999

Waste and residues’ share of total feedstock, % 95 92

CPO BMD 3

, Crude Palm Oil Bursa Malaysia Derivatives 3

month futures price

Segment reviews

Neste’s businesses are grouped into four reporting segments: Renewable Products, Oil Products, Marketing & Services, and

Others.

Renewable Products

The feedstock market was highly volatile in 2022. Vegetable oil prices increased significantly in the beginning of the year due

to the war in Ukraine. Especially rapeseed oil (RSO) and sunflower oil (SFO) experienced severe shortages and the low palm

oil (PO) production especially in Malaysia increased prices. Also, Indonesia was restricting exports from March 2022, and

this further tightened the market. Prices remained unusually high until May but towards the end of the year 2022 vegetable

oil prices decreased. A further decrease was seen particularly at the end of the fourth quarter as a response to the US

Environmental Protection Agency’s (EPA) blending mandate proposal.

Waste and residue feedstock prices followed the same pattern as vegetable oil prices. However, animal fat (AF) still

showed a yearly net gain particularly in the US due to the strong pull from growing Renewable Diesel sector. While Australian

AF price also showed a strong increase, European AF prices increased less as certain sectors switched to less costly

feedstocks. In contrast, Used Cooking Oil (UCO) ended up lower than end of 2021 particularly in the EU which received

large imports especially from China in the latter part of the year.

The Renewable Identification Number (RIN) D4 price first increased but dropped significantly in December in response

to the EPA blending mandate proposal. The California Low Carbon Fuel Standard (LCFS) credit price has been gradually

decreasing from 148 USD/ton to the level of approx. 67 USD/ton, which reflects an increasing supply of renewables

solutions to the Californian market.

Renewable Products’ full-year comparable EBITDA was EUR 1,762 million (EUR 1,460 million). The comparable sales

margin was USD 804/ton (715/ton), supported by a successful sales performance. The higher sales margin had a positive

impact of EUR 195 million on the comparable EBITDA year-on-year. The BTC contribution was EUR 312 million (295 million)

in 2022. Sales volumes were 3.03 million tons in 2022 (3.02). Higher sales volumes had a positive impact of EUR 4 million

on the comparable EBITDA compared to 2021. During 2022 approx. 67% (65%) of sales volume went to Europe and 33%

(35%) to North America. The share of 100% renewable diesel delivered to end-users was 28% (27%) of total volumes in full-

year 2022. The feedstock mix optimization continued, and the average proportion of waste and residue inputs increased

to 95% (92%). A stronger USD had a positive impact of EUR 286 million on the segment’s comparable EBITDA compared

to 2021. In 2022, the fixed costs in Renewable Products were EUR 183 million higher than in the previous year, as Neste

continued to build up its capabilities for future growth.

US dollar exchange rate 2022 2021

EUR/USD, market rate 1.05 1.18

EUR/USD, effective rate

1.11 1.18

The effective rate includes the impact of currency hedges.

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Production 2022 2021

Refinery

Production, 1,000 ton 11,176 9,504

Utilization rate, % 85 72

Refinery production costs, USD/bbl 7.5 6.8

Sales from in-house production, by product category (1,000t) 2022 % 2021 %

Middle distillates

5,403 48 4,823 48

Light distillates

4,438 39 3,420 34

Heavy fuel oil 930 8 1,000 10

Base oils 296 3 386 4

Other products 244 2 421 4

Total 11,310 100 10,051 100

Diesel, jet fuel, heating oil, low sulphur marine fuels

Motor gasoline, gasoline components, LPG

Sales from in-house production, by market area (1,000t) 2022 % 2021 %

Baltic Sea area

6,843 61 6,264 62

Other Europe 2,897 26 2,485 25

North America 943 8 864 9

Other areas 627 6 438 4

Finland, Sweden, Estonia, Latvia, Lithuania, Poland, Denmark

Key financials 2022 2021

Revenue, MEUR 14,596 7,810

EBITDA, MEUR 1,619 546

Comparable EBITDA, MEUR 1,654 353

Operating profit, MEUR 1,337 263

Net assets, MEUR 2,652 2,045

Return on net assets

, % 46.6 11.9

Comparable return on net assets

, % 48.0 3.2

Last 12 months

Key drivers 2022 2021

Total refining margin, USD/bbl 23.42 8.99

Urals-Brent price differential, USD/bbl -25.28 -1.87

Urals' share of total refinery input, % 18 65

Oil Products

Crude oil prices were extremely volatile during 2022, and Brent dated traded between USD 76/bbl and USD 138/bbl.

The war in Ukraine caused a rapid increase to the crude price during the first months of the war to 138 USD/bbl level. By

summer however, the global recession fears, central banks’ monetary tightening and high fuel pump prices started to drive

weaker demand outlook for crude oil and the year ended at USD 81/bbl – close to the level where the year started.

Overall, the European refining margins were volatile but strong during 2022. Margins were still lower in the first quarter

of the year but increased sharply after the Ukraine war started as many of the refineries changed their supply away from

Russia. High natural gas prices impacted negatively on the refinery utilization and drove product margins higher. At the same

time global demand for fuels was still healthy as economic recovery from Covid-19 had only begun and especially middle

distillate inventories were tight.

Gasoline cracks were exceptionally good during the summer driving season but came down clearly towards the end

of the year as high pump prices started to impact demand. Diesel margins remained strong throughout the year as the

availability of diesel was tight in Europe and the shift to diesel away from natural gas in power generation and industrial use

created extra demand. Strikes in France in November tightened them further and drove diesel margins temporarily to all-

time high levels. High utility and hydrogen prices pressured refining economics in Europe for refineries dependent on natural

gas.

Oil Products’ full-year comparable EBITDA was EUR 1,654 million (353 million). The total refining margin averaged USD

23.4/bbl (9.0/bbl) in 2022. The higher total refining margin had a positive impact of EUR 1,237 million on the comparable

EBITDA year-on-year. Due to the Porvoo refinery major turnaround in 2021, our sales volumes were higher in 2022.

The higher sales volumes had a positive impact of EUR 62 million on the comparable EBITDA year-on-year. Stronger

USD exchange rate had a positive impact of EUR 60 million on the EBITDA compared to 2021. During the year 2022

the segment’s fixed costs were EUR 10 million higher than in the previous year due to an increase in personnel and

development costs. The divestment of Base Oils business has a negative impact on comparable EBITDA year-over-year.

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Sales volumes by main product categories, million liters 2022 2021

Gasoline, station sales 600 612

Diesel, station sales 1,620 1,629

Heating oil 907 663

Net sales by market area, MEUR 2022 2021

Finland 4,601 2,896

Baltic countries 1,275 908

Key financials 2022 2021

Revenue, MEUR 5,876 3,803

EBITDA, MEUR 127 106

Comparable EBITDA, MEUR 126 103

Operating profit, MEUR 98 77

Net assets, MEUR 227 212

Return on net assets

, % 40.8 38.1

Comparable return on net assets

, % 40.5 36.6

Last 12 months

Key financials 2022 2021

Comparable EBITDA, MEUR -4 11

Operating profit, MEUR -70 -34

Marketing & Services Others

Marketing & Services segment’s full-year comparable EBITDA was EUR 126 million (103 million). The road transportation fuel

demand followed a normal seasonality pattern during the year. Aviation fuel demand remained below 2019 levels. Our sales

volumes were slightly higher than in the year 2021, which had a positive impact of EUR 3 million on the comparable EBITDA.

Average unit margins were supported by inventory gains and the higher margins had a positive impact of EUR 32 million year-

on-year. The segments’ fixed costs were EUR 11 million higher, reflecting a more normal level of activity.

The Others segment consists of Neste’s Engineering Solutions, and common corporate costs. The full-year comparable

EBITDA of the Others segment totaled EUR -4 million (11 million), due to increased costs related to strategy execution.

Shares, share trading, and ownership

Neste’s shares are listed at NASDAQ Helsinki Ltd. The share price closed the year at EUR 43.02, down by 0.8% compared

to the end of 2021. The total shareholder return (TSR) was 1.1% (-25.4%) in 2022. At its highest during 2022, the share price

reached EUR 52.18, while the lowest price was EUR 30.81. Market capitalization was EUR 33.1 billion as of 31 December

2022. An average of 1.01 million shares were traded daily, representing 0.1% of the company’s shares.

At the end of December 2022, Neste held 1,127,888 treasury shares. Neste’s share capital registered with the Trade Register

totaled EUR 40 million, and the total number of shares was 769,211,058.

The Board of Directors has no authorization to issue convertible bonds or share options.

As of 31 December 2022, the State of Finland owned directly 35.9% (35.9% at the end of 2021) of outstanding shares,

foreign institutions 39.7% (39.6%), Finnish institutions 16.8% (17.0%), and households 7.6% (7.5%).

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Largest shareholders as of 31 December 2022 Breakdown of share ownership as of 31 December 2022

Shareholder Shares % of shares

State of Finland / Prime Minister's Office 276,213,495 35.91%

The Finnish Climate Fund 63,894,123 8.31%

Varma Mutual Pension Insurance Company 10,918,435 1.42%

Ilmarinen Mutual Pension Insurance Company 6,611,500 0.86%

The Finnish Social Insurance Institution 6,100,272 0.79%

City of Kurikka 4,652,625 0.60%

Elo Mutual Pension Insurance Company 3,437,000 0.45%

The State Pension Fund 2,400,000 0.31%

OP-Finland 1,759,902 0.23%

Danske Invest Finnish Equity Fund 1,284,187 0.17%

Neste Corporation 1,127,888 0.15%

Nordea Pro Finland Fund 954,040 0.12%

Stiftelsen för Åbo Akademi 912,514 0.12%

Samfundet Folkhälsan i Svenska Finland 911,300 0.12%

Nordea Nordic Fund 910,157 0.12%

Seligson & Co OMX Helsinki 25 Exchange Traded Fund (ETF) 850,146 0.11%

Alhopuro Eero Sakari 732,150 0.10%

Evli Finland Select Fund 714,922 0.09%

OP-Henkivakuutus Ltd. 711,967 0.09%

Säästöpankki Kotimaa Mutual Fund 671,370 0.09%

20 largest shareholders total 385,767,993 50.15%

Nominee registered 304,780,690 39.62%

Others 78,662,375 10.23%

Number of shares, total 769,211,058 100.00%

No. of shares

No. of

shareholders

% of

shareholders

Total no.

of shares

% of

1–100 60,170 50.6 2,151,057 0.3

101–500 34,255 28.8 8,858,305 1.2

501–1,000 10,858 9.1 7,934,962 1.0

1,001–5,000 11,509 9.7 23,890,137 3.1

5,001–10,000 1,299 1.1 8,840,486 1.1

10,001–50,000 685 0.6 12,645,731 1.6

50,001–100,000 61 0.1 4,348,561 0.6

100,001–500,000 40 0.0 8,380,938 1.1

500,001– 29 0.0 692,160,881 90.0

Total 107,087 100.0% 769,211,058 100.0%

of which nominee registered 12 304,780,690 39.6%

By the owner sector % of shares

Central government

44.2%

Non-Finnish shareholders 39.7%

Households 7.6%

General government 4.5%

Financial and insurance companies 1.6%

Corporations 1.0%

Non-profit organizations 1.3%

Total 100.0%

Includes both State of Finland and The Finnish Climate Fund.

By the number of shares owned

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Corporate governance

The control and management of Neste Corporation is divided between shareholders, the Board of Directors, and the

President and Chief Executive Officer (CEO). The General Meeting of Shareholders appoints the Board of Directors based on

a proposal made by the Shareholders’ Nomination Board. The term of office of the Board of Directors will expire at the end

of the next Annual General Meeting of Shareholders (AGM) following its election. Neste’s President and CEO is appointed

and expelled by the Board of Directors.

Changes to the company’s Articles of Association can be made at the General Meeting of Shareholders based on a

proposal by the Board of Directors.

Neste Corporation’s Annual General Meeting (AGM) was held on 30 March 2022 under special arrangement at

the Company’s headquarters in Espoo. In order to prevent the spread of the Covid-19 pandemic, the AGM was held

without shareholders’ or their proxy representatives’ presence at the venue of the meeting. Shareholders and their proxy

representatives had the possibility to participate in the meeting and exercise their shareholder rights by voting in advance

and by making counter-proposals and presenting questions in advance.

The AGM supported all the proposals presented to the meeting and approved the remuneration report. The AGM adopted

the company’s Financial Statements and Consolidated Financial Statements for 2021 and discharged the Board of Directors

and the President & CEO from liability for 2021.

Dividend of EUR 0.82 per share paid in two instalments

The AGM approved the Board of Directors’ proposal that a dividend of EUR 0.82 per share will be paid on the basis of the

approved balance sheet for 2021. The dividend was paid in two instalments.

The first instalment of dividend, EUR 0.41 per share, was paid to a shareholder registered in the shareholders’ register

of the Company maintained by Euroclear Finland Ltd on the record date for the first dividend instalment, which was 1 April

2022. The first dividend instalment was paid on 8 April 2022.

The second instalment of dividend, EUR 0.41 per share, was paid to a shareholder registered in the shareholders’ register

of the Company maintained by Euroclear Finland Ltd on the record date for the second dividend instalment, which was 30

September 2022. The second dividend instalment was paid on 7 October 2022.

Composition and remuneration of the Board of Directors

In accordance with the proposal made by the Shareholders’ Nomination Board, the AGM confirmed the number of members

of the Board of Directors at nine.

The AGM decided that the following were re-elected to serve until the end of the next AGM: Mr. Matti Kähkönen, Mr. John

Abbott, Mr. Nick Elmslie, Ms. Martina Flöel, Mr. Jari Rosendal, Ms. Johanna Söderström and Mr. Marco Wirén. Mr. Just

Jansz and Ms. Eeva Sipilä were elected as new members.

Mr. Matti Kähkönen was re-elected as Chair and Mr. Marco Wirén was re-elected as Vice Chair. Board member

introductions can be found at the company’s web site.

Convening right after the AGM, Neste’s Board of Directors elected the members of its two Committees. Matti Kähkönen

was elected as Chair and John Abbott, Martina Flöel and Johanna Söderström as members of the Personnel and

Remuneration Committee. Marco Wirén was elected as Chair and Nick Elmslie, Just Jansz, Jari Rosendal and Eeva Sipilä

as members of the Audit Committee.

The AGM decided on the remuneration to the Board as follows:

• Chair: EUR 78,100 per annum

• Vice Chair: EUR 54,400 per annum

• Member: EUR 37,900 per annum

• Chair of Audit Committee: EUR 54,400 per annum if he or she does not simultaneously act

as Chair or Vice Chair of the Board

The AGM decided on the remuneration for committee work as follows:

• other members of the Audit Committee than its Chair will, for such position, be paid EUR 3,000

• the Chair of the Personnel and Remuneration Committee will, for such position, be paid EUR 5,000,

and its members will, for such position, be paid EUR 2,000

• the Chair of another committee established based on Board decision will, for such position, be paid EUR 5,000,

and its members will, for such position, be paid EUR 2,000.

In addition to the annual fee, members of the Board of Directors receive a meeting fee of EUR 800 for each meeting held in the

member’s home country, EUR 1,600 for meetings held in the same continent as the member’s home country, and EUR 2,400

for meetings held outside the same continent as the member’s home country plus compensation for expenses pertaining

to the Company’s travel guidelines. The meeting fee for meetings held over the telephone or through other means of data

communication is paid according to the fee payable for meetings held in each member’s home country.

The AGM decided that a portion of 40% of the fixed annual fee will be paid in the form of shares and the remainder

in cash. Committee and meeting fees will be paid in cash. The shares will be purchased directly on behalf of the Board

members within two weeks after the publication of the interim report for the period 1 January to 31 March 2022. If the

shares are not purchased and/or delivered based on a reason pertaining to the Company or the Board member, the fee will

be in cash in its entirety. The Company is responsible for any transfer tax potentially levied on the purchase.

Company Auditor

In accordance with a proposal by the Board of Directors, KPMG Oy Ab, Authorized Public Accountants, were appointed as

the company’s Auditor, with Authorized Public Accountant Leenakaisa Winberg as the principally responsible auditor for Neste

Corporation, until the end of the next AGM. Payment for their services shall be made in accordance with their invoice approved

by the Company.

Authorizing the Board of Directors to decide the buyback of Company shares

The AGM approved the authorization, under which the Board is authorized to decide the purchase of and/or take as security a

maximum of 23,000,000 Company shares using the Company’s unrestricted equity. The number of shares shall be equivalent

to approximately 2.99% of the Company’s total shares.

Shares may be purchased in one or more lots. The purchase price shall be at least the lowest price paid for Company

shares in regulated trading at the time of purchase and no more than the highest price paid for Company shares in

regulated trading at the time of purchase. In connection with the buyback of Company shares, derivative, share lending,

or other agreements that are normal within the framework of capital markets may take place in accordance with legislative

and regulatory requirements and at a price determined by the market. The authorization shall allow the Board to decide to

purchase shares otherwise than in proportion to shareholders’ current holdings (directed buyback).

Shares so purchased can be used as consideration in possible acquisitions or in other arrangements that are part of the

Company’s business, to finance investments, as part of the Company’s incentive program, or be retained, conveyed, or

cancelled by the Company.

The Board of Directors shall decide the other terms related to the buyback of Company shares. The buyback

authorization shall remain in force for eighteen (18) months from the decision taken by the AGM. The authorization shall

revoke the buyback authorization granted to the Board of Directors by the AGM on 30 March 2021.

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Innovation

Neste’s innovation expenditure totaled EUR 85 million (67 million) in 2022. The growth was largely driven by further boosting

efforts in developing Innovation business platforms for new sustainable and scalable feedstock pools and by higher R&D

investments to support the renewables growth. In 2022 the establishment of a new APAC Innovation center in Singapore

progressed as planned, achieving readiness to operate.

In spring 2022 the R&D organization also supported the major change in the Porvoo refinery crude oil portfolio to stop and

entirely replace the use of Russian crude oil with other crude oils.

Developing co-operations and preparing for technology demonstrations for scalable sustainable feedstock sources

continued in the Innovation business platforms, focusing on feedstock pools such as lignocellulosic feedstocks, algae,

municipal waste, carbon dioxide and renewable electricity utilization for green hydrogen production. The MultiPLHY project

at the renewable products refinery in Rotterdam completed during 2022 installations with the intention to integrate and

operate the world’s first high-temperature electrolyzer system to demonstrate production of green hydrogen for the refinery’s

processes. Another project for introducing a large electrolyzer for green hydrogen production at Porvoo refinery entered

the feasibility study phase. In 2022 Neste received IPCEI (Important Project of Common European Interest) status for its

hydrogen projects, including a Business Finland award of EUR 27.7 million.

Expanding the use of renewable waste and residue feedstock continued in 2022, and about 3.5 million tons (3.3 million)

of waste and residue feedstock was used during the year. Development of advanced technology for feedstock pretreatment

progressed well, with continued focus on Renewable Energy Directive (RED) II Annex IX A and other challenging waste

and residue feedstock. In addition to increased feedstock flexibility, development efforts were also targeted at the growing

product portfolio, supporting growth of sustainable aviation fuels as well as renewable polymer and chemicals businesses

from a technical and sustainability assessment perspective.

Neste announced a study on the long-term transformation of its Porvoo refinery to renewable and circular feedstocks. In

summer 2022 Neste received a EUR 135 million grant from the Innovation Fund for an investment at its Porvoo refinery into

pretreating and upgrading liquefied waste plastic into high-quality petrochemical feedstock. R&D work for substituting fossil

crude oil with renewable and circular feeds made significant progress in 2022 both in laboratory and at commercial scale.

Both biofeeds and liquefied waste plastic feeds were studied extensively.

Research cooperation was conducted with several universities and research institutes in Europe, USA and Asia. In

Finland, strategic cooperation continued particularly with Aalto University, Åbo Akademi and VTT, the Technical Research

Centre of Finland, with joint research activities. Overall, Neste continued to grow competences in the area of novel

sustainable and scalable solutions both internally and with partners, also through building Business Finland funded

ecosystems in this field.

Main events published during 2022

On 28 January, Neste announced that the Shareholders’ Nomination Board had forwarded to the Board of Directors of the

Company its proposals to the 2022 AGM. The Nomination Board proposed that Matti Kähkönen be re-elected as the Chair of

the Board of Directors. In addition, the current members of the Board, John Abbott, Nick Elmslie, Martina Flöel, Jari Rosendal,

Johanna Söderström and Marco Wirén were proposed to be re-elected for a further term of office. The Nomination Board

proposed that Marco Wirén shall be re-elected as the Vice Chair of the Board. Further, the Nomination Board proposed that

the Board shall have nine members and that Just Jansz and Eeva Sipilä shall be elected as new members.

On 16 February, Neste announced that Neste and ITOCHU Corporation have expanded their partnership to grow the

availability of Sustainable Aviation Fuel (SAF) in Japan. In the expanded partnership, ITOCHU acts as the branded distributor

of Neste MY Sustainable Aviation Fuel™ in Japan making Neste MY Sustainable Aviation Fuel available first at the two

largest Japanese international airports; Tokyo Haneda and Narita.

On 1 March, Neste announced that it had signed definitive agreements for the establishment of a 50/50 joint venture with

US-based Marathon Petroleum. The joint venture will produce renewable diesel following a conversion project of Marathon’s

refinery in Martinez, California. The closing of the joint venture is subject to customary closing conditions and regulatory

approvals, including obtaining the necessary permits, which depend upon certification of a final Environmental Impact

Report. Neste’s total investment will amount to approx. EUR 0.9 billion (USD 1.0 billion), inclusive of half of the total project

development costs projected through the completion of the project. The project is expected to increase Neste’s renewable

products capacity by slightly over 1 million tons per annum. Production of renewable diesel is expected to come online in

the second half of 2022. The facility is planned to reach its full annual nameplate capacity of 2.1 million tons by the end of

2023.

On 21 March, Neste and DHL Express announced a significant step towards decarbonizing aviation logistics by

expanding their existing cooperation with a new strategic collaboration. In the next five years, Neste will supply DHL with

approx. 320,000 tons of Neste MY Sustainable Aviation Fuel. The agreement is Neste’s largest for Sustainable Aviation Fuel

to date and one of the largest SAF agreements in the aviation industry. Neste and DHL have been working together since

2020 making Neste MY Sustainable Aviation Fuel available for DHL’s operations.

On 23 March, Neste announced that Neste Corporation’s Board of Directors had appointed Matti Lehmus (born 1974)

as President and CEO as of 1 May 2022. He succeeds Peter Vanacker, who will hold the position until 30 April 2022. Matti

Lehmus holds a M. Sc. in chemical engineering and an eMBA. He joined Neste in 1998, and has held several key leadership

positions during his career in both the oil products business and renewables. He has been a member of the Neste Executive

Committee since 2009, and currently serves as Executive Vice President, Renewables Platform.

On 29 March, Neste announced that to proceed on the target of commercializing chemical recycling of waste plastic, it is

conducting a feasibility study to examine investing in capacity for processing liquefied waste plastic at its refinery in Porvoo,

Finland. The goal is to scale up processing capabilities for liquefied waste plastic by implementing proprietary technologies

to pretreat and upgrade liquefied waste plastic and integrating the technologies into the refinery operations. The targeted

pretreatment and upgrading capacity of this first step is 400,000 tons per year. This development would be a major step

towards Neste’s target to process over 1 million tons of waste plastic per year from 2030 onwards. To develop and build

up the capabilities at its Porvoo refinery, Neste will evaluate possible options for innovation funding and work together

closely with local authorities supervising environmental aspects of the investment. Following the feasibility study, investment

decision readiness is targeted for 2023 and the gradual implementation is expected to start in 2024.

On 1 April, Neste announced that the divestment of its base oils business to Chevron had been completed. The

transaction includes the NEXBASE™ brand, associated qualifications and approvals, and related sales and marketing

business. As part of the divestment, the parties also agreed on a long-term offtake for Neste’s base oils supply from Porvoo,

Finland. The transaction had been approved by regulatory authorities, and was completed on 1 April 2022. Neste also

completed the exit of its base oils joint venture with Bahrain Petroleum Company and Nogaholding.

On 29 April, Neste announced that Neste’s Board of Directors had approved a merger plan according to which the

company’s wholly-owned subsidiary Neste Engineering Solutions Oy will be merged into Neste Corporation. The merger is

expected to take place on 30 September 2022 and it will only affect the Finnish operations.

On 10 May, Neste announced that Neste and United Airlines had signed a new purchase agreement that provides United

the right to buy up to 160,000 metric tons of Neste MY Sustainable Aviation Fuel™ over the next three years to fuel United

flights at Amsterdam Airport Schiphol, and potentially other airports, as well.

On 17 May, Neste announced that Neste introduces co-processed marine fuel in partnership with Nordic Marine Oil – a

new solution for the maritime sector enabling up to 80% GHG emission reduction. Neste Marine 0.1 Co-processed marine

fuel is produced at Neste’s refinery in Porvoo, Finland, where renewable raw materials are co-processed with fossil raw

materials in the conventional refining process. The drop-in fuel can be taken in use without any fleet modifications as it has a

similar composition to conventional bunker fuels.

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On 31 May, Neste announced that Carl Nyberg, M.Sc. (Economics and Business Administration), had been nominated

as Executive Vice President, Renewables Platform and member of the Neste Executive Committee. He started in this

position on 1 June 2022, and reports to President and CEO Matti Lehmus. In this role he succeeds Matti Lehmus, who was

appointed as Neste’s President and CEO as of 1 May 2022.

On 1 June, Neste announced about a change in the composition of Neste’s Shareholders’ Nomination Board. The

following members were appointed on 20 September 2021 to the Shareholders’ Nomination Board of Neste Corporation:

The Chair, Director General Kimmo Viertola of the Ownership Steering Department in the Prime Minister’s Office of Finland;

Deputy CEO, Investments Reima Rytsölä of Varma Mutual Pension Insurance Company; Director General Outi Antila of

The Social Insurance Institution of Finland and Matti Kähkönen, the Chair of Neste’s Board of Directors. As Mr. Rytsölä will

assume duties for a new employer, Timo Sallinen, Senior Vice President, Investments of Varma Mutual Pension Insurance

Company, has been appointed as member of the Nomination Board as of 1 June 2022.

On 3 June, Neste announced that it had signed a EUR 500 million green term loan agreement. The proceeds of the loan

will be used to finance Eligible Assets and Projects in accordance with Neste’s Green Finance Framework. The loan has a

tenor of 3 years with two 1-year extension options. Danske Bank A/S and OP Corporate Bank plc acted as coordinating

mandated lead arrangers and bookrunners of the loan.

On 14 June, Neste announced that it raises its second quarter 2022 outlook. While the oil markets have been very

volatile, impacted by the war in Ukraine, the Northwest European gasoline and diesel margins have increased to

exceptionally high levels. In addition, Neste’s successful mitigation actions to replace Russian crude oil and natural gas have

enabled the company to retain high utilization rates at its Porvoo refinery. Oil Products’ second-quarter total refining margin

is expected to more than double from the level seen in the first quarter of 2022. Previously, the company estimated Oil

Products’ second-quarter total refining margin to be at a roughly similar level as in the first quarter of 2022 (USD 10.3/bbl).

The increase in the total refining margin is expected to improve the Group’s and Oil Products’ second-quarter comparable

EBITDA significantly compared to the first quarter.

On 27 June, Neste announced that it had made the final investment decision to invest into new renewable products

production capacity in Rotterdam. The decision is based on demand for renewable products growing substantially with

customers’ higher climate ambitions. Neste’s current 1.4 million ton capacity for renewable products in Rotterdam is the

largest in Europe. The Rotterdam refinery expansion investment of approx. EUR 1.9 billion will expand Neste’s overall

renewable product capacity by 1.3 million tons per annum, bringing the total renewable product capacity in Rotterdam to

2.7 million tons annually, of which sustainable aviation fuel (SAF) production capability will be 1.2 million tons. The company’s

target is to start up the new production unit during the first half of 2026.

On 13 July, Neste announced that it had received a positive grant decision for up to EUR 135 million from the EU

Innovation Fund for the company’s project to build chemical recycling capacities at its Porvoo refinery in Finland. The PUS

project aims to implement Neste’s proprietary technologies to pretreat and upgrade liquefied waste plastic and integrate the

technologies into the refinery operations. The project targets pretreatment and upgrading capacities of 400,000 tons per

year, contributing to Neste’s goal of processing over 1 million tons of waste plastic per year from 2030 onwards. A feasibility

study evaluating the investments related to PUS was announced in March 2022. Investment decision readiness is targeted

for 2023 and gradual implementation is expected to start in 2024.

On 26 July, Neste announced that it had agreed to acquire 100% of Walco Foods, an Irish trader of animal fats. Walco

Foods was established in 1996 as a family-run business. The in-depth knowledge and market understanding developed

over the years has helped Walco Foods become a leading animal fat and by-products trading company in Ireland. Together

with the previously announced acquisitions of IH Demeter, Bunge Loders Croklaan and Count Terminal in the Netherlands,

and Mahoney Environmental and Agri Trading in the United States, Walco Foods will enhance Neste’s supply of global waste

and residue raw materials. The transaction was subject to the fulfillment of customary closing conditions and regulatory

approval, and it was closed on 1 September.

On 6 September, Neste announced that the following members had been appointed to Neste’s Shareholders’ Nomination

Board: The Chair, Director General Kimmo Viertola of the Ownership Steering Department in the Prime Minister’s Office of

Finland; Timo Sallinen, Senior Vice President, Investments of Varma Mutual Pension Insurance Company; President and

CEO Jouko Pölönen of Ilmarinen Mutual Pension Insurance Company and Matti Kähkönen, the Chair of Neste’s Board of

Directors.

On 19 September, Neste announced that it launches a strategic study on transitioning its Porvoo refinery to a renewable

and circular site and ending crude oil refining in the mid-2030s. Through co-processing and retrofitting of units, and

benefiting from available refining assets, experience and know-how, Neste targets to significantly grow its renewables

and circular production in Porvoo long term. The transformation under study would start with the co-processing of both

renewable and circular feedstock and could continue with retrofits of existing units at a later stage, with a long-term capacity

potential of 2 to 4 million tons per year. The targeted transformation would lead to a discontinuation of crude oil refining in

Porvoo in the mid-2030s. Neste will also continue to actively study opportunities of green hydrogen at its Porvoo refinery.

These developments would significantly contribute to the realization of Neste’s climate commitments, and make Neste a

global frontrunner in the transformation of the fossil fuel industry.

On 21 September, Neste announced that it had finalized the transaction to establish a joint venture for production

of renewable fuels with Marathon Petroleum in the United States. On 1 March 2022, Neste and Marathon Petroleum

Corporation announced an agreement to establish a 50/50 joint venture to produce renewable diesel following a conversion

project of Marathon’s refinery in Martinez, California. All required closing conditions have been met, and Neste and

Marathon have closed the transaction for the establishment of the joint venture to be called Martinez Renewables. Martinez

Renewables is expected to commence production in early 2023. Pretreatment capabilities are expected to come online in

the second half of 2023 and the facility is expected to be capable of producing 2.1 million tons per year by the end of 2023.

On 25 October, Neste announced that it has agreed to supply the Air France-KLM Group with more than 1,000,000

tons (approx. 1.26 billion liters) of Neste MY Sustainable Aviation Fuel™ over a period of 8 years starting in 2023. This SAF

agreement is one of the largest of its kind in the aviation industry and supports the Air France-KLM Group’s commitment to

a more sustainable aviation sector. Using Neste MY Sustainable Aviation Fuel™ reduces greenhouse gas emissions by up to

80%* over the fuel’s life cycle compared to using fossil jet fuel.

On 17 November, Neste announced that it has agreed to acquire the used cooking oil (UCO) collection and aggregation

business and related assets in the United States from Crimson Renewable Energy Holdings, LLC. The transaction includes

shares in SeQuential Environmental Services, LLC, and Pure, LLC, as well as a UCO processing plant in Salem, Oregon.

Together with the previous acquisitions of Mahoney Environmental and Agri Trading in the United States, IH Demeter in

the Netherlands, and Walco Foods in Ireland, the transaction continues to enhance Neste’s global raw materials sourcing

platform. The transaction is subject to the fulfillment of customary closing conditions and regulatory approval.

On 22 November, Neste announced that it delivered over 500,000 gallons (1,500 metric tons) of Neste MY Sustainable

Aviation Fuel™ to Los Angeles International Airport (LAX). This SAF delivery was made possible by a close cooperation with

LAXFUEL, the consortium of the airlines operating at LAX providing the jet fuel supply infrastructure for the planes at the

airport. It is the first time SAF is delivered into LAXFUEL’s supply infrastructure using barges for transport.

On 23 November, Neste announced that Moody’s Investors Service has assigned an A3 long term issuer rating and a

baseline credit assessment (bca) of baa1 to Neste Corporation. Neste’s outlook is stable. Moody’s rating rationale highlights

Neste’s strong business profile with high profitability as a global producer of renewable products, the competitive advantage

in sourcing waste and residues as main feedstock, and growing end market demand for renewable fuels and renewable raw

materials for polymers and chemicals supported by both mandated and voluntary demand in Europe and North America.

On 8 December Neste announced that it has appointed Katja Wodjereck Executive Vice President, Renewable Road

Transportation and a member of Neste Executive Committee. She will report to President and CEO Matti Lehmus, and take

up the position on 1 April 2023. Katja will transfer to Neste from Dow. She will be following Carl Nyberg in this role as he

was appointed EVP, Renewable Platform earlier this year. Neste also announced that in parallel, a new Executive Committee

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role is established to lead Neste’s Investment Management and Execution and Bart Leenders has been appointed Executive

Vice President, Investment Management and Execution and a member of Neste’s Executive Committee. He will report to

President and CEO Matti Lehmus, and take up the position on 1 January 2023. Bart Leenders currently holds the position of

Vice President, Production at Neste.

On 22 December Neste announced that the Chair of the Shareholders’ Nomination Board of Neste Corporation changes.

Director General Kimmo Viertola of the Ownership Steering Department in the Prime Minister’s Office of Finland has been

the Chair until 22 December 2022 and as of 23 December 2022, the Chair will be Senior Ministerial Adviser, Financial Affairs

Maija Strandberg of the Ownership Steering Department in the Prime Minister’s Office of Finland. In line with the stock

exchange release published on 6 September 2022, the other members of the Shareholders’ Nomination Board are: Timo

Sallinen, Senior Vice President, Investments of Varma Mutual Pension Insurance Company; President and CEO Jouko

Pölönen of Ilmarinen Mutual Pension Insurance Company and Matti Kähkönen, the Chair of Neste’s Board of Directors.

Events published after the reporting period

On 13 January 2023, Neste announced that its earlier announced acquisition of used cooking oil collection and aggregation

business from Crimson Renewable Energy in the United States is completed. The acquisition has been approved by regulatory

authorities, and the transaction has been closed.

On 27 January 2023, Neste announced that the Shareholders’ Nomination Board had forwarded to the Board of Directors

of the Company its proposals to the 2023 AGM. The Nomination Board proposes that Matti Kähkönen shall be re-elected

as the Chair of the Board of Directors. In addition, the current members of the Board, John Abbott, Nick Elmslie, Martina

Flöel, Just Jansz, Jari Rosendal, Eeva Sipilä and Johanna Söderström are proposed to be re-elected for a further term

of office. The Nomination Board proposes that Eeva Sipilä shall be elected as the Vice Chair of the Board. Further, the

Nomination Board proposes that the Board shall have ten members and that Heikki Malinen and Kimmo Viertola shall be

elected as new members.

Risk Management

Neste considers risk management an integral part of daily management processes and good corporate governance. Systematic

risk management practices are the means to ensure that Neste is successful in achieving its set strategic targets and business

objectives and can maintain continuous operations in the changing business environment. Neste’s risk management framework

and processes are aligned with internationally recognized best practices: the COSO Enterprise Risk Management framework;

and the International Standard for risk management, ISO 31000:2009.

Neste’s risk management framework and risk management principles have been defined in the Corporate Risk

Management Policy which has been approved by the Board of Directors. The Risk Management Policy is supplemented

by risk management principles, guidelines and instructions for specific risk disciplines. Communication regarding the most

important risk issues takes place during the strategic planning and performance management cycle. Formal risk reporting

is directed to the business management and function management teams, the Neste Executive Committee, the Audit

Committee, and the Board of Directors.

Risks related to Neste’s business

Neste’s growth and financial performance may be impacted by macroeconomic and political uncertainties, which include

exceptional inflation in Europe and the US, high interest rates, tightening central bank measures, the continuing war in Ukraine

and regulatory changes at the European Union or individual member state level or in North America. Other risks potentially

affecting Neste’s financial results in the next 12 months include regulatory risks, changes in market prices and the competitive

situation, counterparty risks, any scheduled or unexpected shutdowns at Neste’s refineries, potential strikes, cyber and

IT-related risks, and the outcome of legal proceedings.

Sustainability risks

The Neste Corporate Risk Management Policy and supporting principles, requirements and processes also apply to sustainability

risks, which are managed as a specific risk category in quarterly risk reviews. The assessment considers short-, medium- and

long-term perspectives. In addition to the more regular sustainability risks, the assessment also takes into account emerging

topics like inequality and just transition; as well as land use and biodiversity, which are discussed in the related sections below.

Sustainability risks, including risks related to climate change, are identified and assessed twice a year to determine which

risks and opportunities could have a substantive financial, strategic or reputational impact. Communication regarding the

most important sustainability risk issues takes place during the strategic planning and performance management cycle.

For more detailed information on Neste’s risks and risk management, please refer to Risk Management in the Annual

Report’s Governance chapter and the Notes to the Financial Statements. For more information on Neste’s sustainability

risks, please see risk chapters in the following Non-Financial Information Statement below.

Non-Financial Information Statement

Neste fulfills the requirements of the EU Directive on the disclosure of non-financial and diversity information, and the changes

made in the Finnish Accounting Act. Information in accordance with the current requirements of the EU Taxonomy Regulation

is disclosed in this non-financial information statement. In addition, Neste 2022 Sustainability Report has been prepared in

accordance with the GRI (Global Reporting Initiative) and includes SASB Oil & Gas Refining and Marketing indicators where

applicable. Neste is committed to applying the Task Force on Climate-Related Financial Disclosures (TCFD) reporting principles

in disclosing climate-related financial risks and opportunities in the reporting. Part of Neste’s TCFD reporting takes place

within this Non-Financial Information (NFI) Statement in addition to the Sustainability Report, which also includes the TCFD

index for navigation purposes between these sections. Neste’s Sustainability Report information is assured by a third-party

in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements

other than Audits or Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards

Board, IAASB. For more on Neste’s sustainability, see Neste’s Sustainability Report and Neste’s website.

Business model

Neste employed an average of 5,244 (4,872) employees during 2022, of whom 1,642 (1,309) were based outside Finland. At

the end of December, the company had 5,428 (4,845) employees, of whom 1,810 (1,461) were based outside Finland.

Neste is the world’s largest producer of sustainable aviation fuel and renewable diesel refined from waste and

residues. The company is also introducing renewable solutions to the polymers and chemical industries. Neste is also a

technologically advanced refiner of high-quality oil products, exploring ways to start using waste plastics as a raw material to

produce new plastics, and developing chemical recycling to combat the plastic waste challenge.

Neste’s businesses are grouped into four reporting segments: Renewable Products (RP), Oil Products (OP), Marketing

& Services (M&S), and Others. The renewables businesses are Renewable Aviation, Renewable Polymers and Chemicals,

and Renewable Road Transportation. Neste has integrated sustainability into its business strategy to secure the long-term

success of its business.

The Renewable Products segment produces, markets, and sells renewable diesel, sustainable aviation fuel, renewable

solvents, and feedstock for bioplastics to domestic and international wholesale markets. Neste’s renewable products’

refineries in Finland, the Netherlands, and Singapore produce renewable products entirely from renewable raw materials.

The raw material supply chains for Neste’s renewable products are extensive and global. Neste procure raw materials from

suppliers across Europe, North America, South America, Asia, Africa, and Australia.

The Oil Products segment produces, markets, and sells high-quality oil products and related services for the road

transportation, non-road uses, aviation and marine sectors, as well as products for the oil and petrochemical industries.

The product range includes diesel, gasoline, aviation and marine fuels, light and heavy fuel oils, gasoline components, and

special fuels such as small engine gasoline, solvents, liquid gases and bitumens. Neste’s oil products are refined in Neste’s

Neste Annual Report 2022 | Review by the Board of Directors

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refinery in Porvoo, Finland. Neste Shipping chartering operations are included in the Oil Products segment. The company’s

major crude oil and fossil feedstock sources have been Russia, Norway, and Kazakhstan. At the start of the war in Ukraine,

Neste decided to stop using Russian crude oil entirely and started replacing it with other qualities. The last crude oil cargo

with Russian origin was supplied to Neste in July 2022 and the supply contracts ended. Supply contracts for other fossil

raw materials from Russia ended at the end of 2022.

Marketing & Services offers sustainable solutions for the needs of consumers via its station network and a wide variety

of B2B customers and partners. Neste seeks to develop a diverse range of services as part of the offering and to be where

the customers are – in the mobile sphere. The Marketing & Services segment markets and sells petroleum products and

associated services directly to end-users predominantly private motorists, industry, transport companies, farmers, and

heating oil customers. Traffic fuels are marketed through Neste’s own service station network and direct sales.

Neste’s purpose is to create a healthier planet for our children, with a vision to lead the way towards a sustainable future

together. At Neste, we set high standards for sustainability. The company’s broadened sustainability vision is an integral part

of the new wave of Neste’s transformation: we lead the transformation towards a carbon neutral value chain, and have set

aspirational targets for biodiversity, human rights, supply chain and raw materials.

Sustainably-produced solutions are Neste’s most significant contribution to the implementation of the Paris Agreement, as

well as the United Nations’ Sustainable Development Goals (SDG). Neste is also developing chemical recycling to combat

the plastic waste challenge. The company is introducing renewable and recycled raw materials such as liquefied waste

plastic as refinery raw materials. Neste has an ambition to make its Porvoo refinery the most sustainable refinery in Europe

aiming to reach carbon neutral production by 2035. A strategic study has been launched on transforming Porvoo refinery to

a renewable and circular site with 2–4 million tons annual capacity and ending of crude oil refining by the middle of 2030s.

Neste creates value for society by helping its customers reduce greenhouse gas emissions by sustainably developing

lower-emission solutions for road transportation, aviation, and marine uses, as well as renewable and circular solutions

for the chemical and plastics industries. Neste’s NEXBTL refining technology enables the flexible use of various renewable

raw materials, including low-quality waste and residue oils and fats. Renewable waste and residue fats and oils will be

indispensable in delivering greenhouse gas emission reductions in the near future and over the longer term. Novel vegetable

oils (such as cover crops cultivated on existing agricultural land during the off-season) will be an increasingly important

source of raw material for further scaling up solutions such as renewable diesel, as well as sustainable aviation fuel

production. In addition, new conversion technologies will enable the use of currently untapped raw material pools such as

municipal solid waste and lignocellulosic biomass. In the long term, fuel produced from electricity and waste CO2, so-called

e-fuels (or power-to-liquids), will also increasingly play a role. The potential of these technologies could be substantial if

innovation activities successfully enhance technology maturity and bring down costs. Securing the supply of renewable

raw materials is considered essential for the success of Neste’s growth strategy. Neste also focuses on providing excellent

customer service, as well as flexible and reliable customer solutions.

Neste’s value creation is also based on its high-quality products, a global business model for raw material sourcing and

product sales, in-depth knowledge of regulations and global customer requirements for both renewable and fossil products,

and continuous innovation and development of products and solutions. In 2022, we had refineries in Porvoo, Rotterdam

and Singapore. Non-financial assets, e.g. production, sales and sourcing expertise, are an essential part of Neste’s value

creation. A substantial effort is made to maintain and develop the skills base within the company. Neste is investing in

developing corporate culture to deeply ingrain customer satisfaction, safety, and operational efficiency to the day-to-day

operations. Please see Neste’s value creation map in the Sustainability Report.

See also: Outlook

EU Taxonomy

Proportion of taxonomy-aligned economic activities

The EU taxonomy is a classification system for sustainable economic activities. It aims to provide robust definitions and

transparent reporting to support increased finance for activities that substantially contribute to solving the climate and

environmental crisis.

Large undertakings such as Neste that are required to publish non-financial information pursuant to the Non-Financial

Reporting Directive (NFRD) are required to disclose information about how and to what extent business activities are

associated with environmentally sustainable economic activities as defined in the taxonomy regulation. The EU taxonomy is

reported in financial terms as the proportion of economic activities that are determined non-eligible, eligible and aligned in

turnover, Capital Expenditure (CapEx) and Operating Expenditure (OpEx).

Taxonomy eligibility for an activity is determined by the activity description in Annex I of the climate delegated act related

to climate change mitigation in the taxonomy regulation. Taxonomy alignment for an activity is evaluated by the technical

screening criteria for substantial contribution and “do no significant harm” (DNSH) as set out in Annex I. An activity is

taxonomy-aligned when it substantially contributes to at least one environmental objective while doing no significant harm to

the other environmental objectives as set out by the technical screening criteria. Additionally, an entity needs to comply with

the minimum safeguards.

The taxonomy Regulation is not complete as only the technical screening criteria for the two climate-related objectives

are in force so far. The technical screening criteria for the remaining four environmental objectives will be published in the

second delegated act. Neste’s figures therefore represent taxonomy alignment solely in that respect and will be re-evaluated

simultaneously with the legislative development. Neste is committed to the transformation towards a carbon neutral value

chain and contributes substantially to the stabilization of greenhouse gas concentrations in the atmosphere at a level which

prevents dangerous anthropogenic interference with the climate system, consistent with the Paris Agreement’s long-term

temperature goal. Neste has operations that contribute towards the climate change mitigation objective.

Assessment of compliance with the taxonomy regulation

Neste has carried out an internal assessment to identify the activities within the scope of the taxonomy. The assessment was

coordinated by the Sustainability Reporting and Finance teams and was supported by several functions in the organization.

The assessment included all Neste’s business units and innovation platforms. Eligible activities were identified based on the

description of the activity in the annex of the climate delegated act of the taxonomy regulation. The substantial contribution

and do no significant harm criteria were evaluated for each activity identified according to the technical screening criteria laid

out after the description of the relevant economic activity, to recognize the share of taxonomy-aligned economic activities.

The identified economic activities have been evaluated based on their contribution to the climate change mitigation objective

set out in the Climate Delegated Act. Based on this process, the following activities in the taxonomy have been identified as

relevant for Neste:

4.13 Manufacture of biogas and biofuels for use in transport and of bioliquids

• Manufacture of renewable fuels

• Bio co-processing of fuels

6.15 Infrastructure enabling low-carbon road transport and public transport

• Electric vehicle charging services

9.1 Close to market research, development and innovation

• R&D activities in Neste’s innovation business platforms, such as renewable hydrogen, Power-to-X and municipal

solid waste

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Neste also has economic activities that are currently not covered by the EU taxonomy. For example, Neste provides circular

economy solutions, for which the criteria are currently under development by the Commission and hence are not yet covered

by the EU taxonomy. Moreover, the activities covered in the climate delegated act do not yet accommodate all operations that

contribute to significant emission savings. Since the regulation is under development, the resulting figures do not represent the

absolute value of our taxonomy-aligned activities. Neste is engaged in further developing the taxonomy framework and supports

its role in enabling the transition to a climate neutral and circular economy. As the EU taxonomy continues to develop, Neste

will also continuously re-evaluate whether its activities have a substantial contribution to the other environmental objectives

under the taxonomy.

Substantial contribution of our core business

The EU taxonomy refers to the manufacture of biofuels for use in transport as a sustainable activity, and we have assessed

Neste’s manufacturing of renewable fuels for the road transport and aviation sectors, as well as the bio co-processing of fuels to

be taxonomy-relevant economic activities based on the climate delegated act of the regulation. Renewable Road Transportation

and Renewable Aviation businesses offer renewable fuels for the road transport and aviation sectors. Renewables Platform

enables Neste’s renewable raw materials sourcing, global renewables production and delivery of renewables to our global

customer base. Bio co-processing is aimed at replacing crude oil input in the production of fuels used in various transport

sectors. Our taxonomy-relevant activities represent climate change mitigation solutions and are well in line with our ambitious

climate commitments.

The EU taxonomy technical screening criteria for the climate Delegated Act including climate change mitigation

establishes criteria for the “Manufacture of biogas or biofuels for use in transport and of bioliquids’’ activity. The recognized

activities, manufacturing biofuels and bio co-processing of fuels, make a substantial contribution to climate change

mitigation. The substantial contribution criteria sets the threshold for greenhouse gas (GHG) emission savings from the

manufacture of biofuels and biogas for use in transport to at least 65% in relation to the GHG emission saving methodology

and the relative fossil fuel comparator in accordance with Directive (EU) 2018/2001. Additionally, the criteria requires that

no food and feed crops are used in the manufacturing. The share of manufacturing from waste and residue raw materials is

therefore included in our alignment figures for this activity. The alignment figures for biofuel sales outside the EU are reported

separately because the GHG emission calculation and verification methodologies differ. Neste complies with local legislation

and the sales of biofuels meet the GHG emission saving and other sustainability requirements for each market, such as the

Low Carbon Fuel Standard in California, US.

The activity “Infrastructure enabling low-carbon road transport and public transport” includes our electric vehicle charging

services. The electric charging stations serve both companies and consumers, and are another solution in Neste’s portfolio

to support the transition to low-emission transport. The figures for the activity are reported as eligible for the taxonomy, as

the evaluation of the relevant “Do no significant harm” criteria is ongoing.

Neste’s Innovation unit is focused on scalable, sustainable raw materials and required technologies for their conversion

to fuels, polymers and chemicals. The R&D activities reported under the “Close to market research, development and

innovation” activity meet the activity specific taxonomy alignment criteria and include projects in our portfolio related to

renewable hydrogen, Power to X and municipal solid waste. Innovations and R&D which support our taxonomy-eligible and

-aligned activities are accounted for in the taxonomy figures of the activity which they support. Neste’s innovation portfolio

contains several projects that are developing towards economic activities relevant to the taxonomy.

The relevant activity-specific “Do no significant harm” criteria from Annex I have been evaluated for each taxonomy-

aligned economic activity. Neste has established and implemented procedures to minimize any adverse impacts of our

operations on the environment and complies with all relevant environmental requirements applicable to our operations.

Neste complies with the minimum safeguards as determined in our Code of Conduct, which includes the topics of human

rights, including workers’ rights, bribery and corruption, taxation and fair competition. We respect internationally recognized

human rights as set out in the International Bill of Human Rights and the principles concerning fundamental rights set out in

the ILO Declaration on Fundamental Principles and Rights at Work. Neste implements an ongoing process of human rights

due diligence to identify, prevent, mitigate and account for how it addresses adverse human rights impacts on people in

accordance with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines

for Multinational Enterprises.

Accounting policy

The definitions of taxonomy key performance indicators (KPIs) are based on Neste’s interpretation of the disclosure

delegated act, which supplements the taxonomy regulation and follows requirements that apply for the disclosures

under Article 8(2) of Regulation (EU) 2020/852. The taxonomy reporting scope covers Neste’s global operations and

calculations follow general materiality principles. Taxonomy KPIs are calculated using financial information presented in

Notes to the Consolidated Financial Statements in Neste’s annual report 2022. To avoid double counting in the reported

figures, allocations were made for each activity separately based on reporting structures and a reconciliation has been

carried out for the final figures.

Based on Neste’s taxonomy alignment evaluation in 2022, previous taxonomy reporting for 2021 is specified, and

changes in figures are largely due to a more in-depth assessment of taxonomy-relevant activities both within and outside

the Renewable Products segment.

Turnover

In calculating the proportion of turnover from products associated with taxonomy-eligible and -aligned economic activities,

Neste includes revenue from goods and services which have a clear relationship with the identified economic activities.

Turnover for the manufacture of biofuels and co-processing includes sales of bio-based fuels, biofuel credits related to the

physical product, and exchange rate hedges. Turnover for infrastructure enabling low-carbon road transport activity includes

sales from electric charging services. The denominator is Neste’s total sales and it covers revenue recognised pursuant to

International Accounting Standard (IAS) 1 and refers to Note 5 Revenue in the consolidated financial statements.

Based on the taxonomy alignment evaluation in 2022, changes in the eligibility turnover reporting for 2021 excludes

figures such as the production of renewable and recycled products for material uses and third-party raw material trading.

Changes also include addition of taxonomy-eligible renewable fuels, which had not been accounted for previously. The

restated taxonomy-eligible turnover for 2021 is 36%.

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Proportion of turnover

SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA

Minimun safeguards

Taxonomy-aligned proportion

of turnover in 2022

Taxonomy-aligned proportion

of turnover in 2021

Category (enabling activity)

Category (transitional activity)

Codes

Absolute turnover

Proportion of turnover

Climate change mitigation

Climate change adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Climate change mitigation

Climate change adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Economic activities MEUR % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 4,758 19 100 0 - - - - - Y Y Y Y Y Y 19 19 - -

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 2,817 11 100 0 - - - - - Y Y Y Y Y Y 11 14 - -

Turnover of environmentally sustainable activities

(Taxonomy-aligned)

7,575 29 100 0 - - - - - Y Y Y Y Y Y 29 32 - -

A.2. Taxonomy-Eligible but not environmentally sustainable

activities (not Taxonomy-aligned activities)

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 672 3

Infrastructure enabling low-carbon

road transport and public transport

6.15 0 0

Turnover of Taxonomy-eligible but not

environmentally sustainable activities

(not Taxonomy-aligned activities)

673 3 3 3

Total (A.1 + A.2)

8,248 32 32 36

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities

17,459 68

Total (A+B)

25,707 100

Share of waste & residue based renewable fuels sold outside of the EU

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Breakdown of the CapEx KPI

Taxonomy-aligned activities

(A.1)

Taxonomy-eligible but not

taxonomy-aligned activities

(A.2)

Additions to property, plant and equipment 1,419 192

Additions to intangible assets 1 1

Additions to capitalized right-of-use assets 227 30

Additions related to acquisitions

4 0

Total CapEx (A.1 + A.2) 1,651 223

Goodwill excluded 30 MEUR

Capital Expenditure

The Capital Expenditure (CapEx) includes investments related to activities identified as taxonomy-eligible or -aligned. The

CapEx figures consist mainly of investments enabling Neste’s renewable production capacity growth. To provide an accurate

allocation of CapEx for taxonomy-aligned activities, Neste has used the share of taxonomy-aligned production volumes to

allocate the proportion to the CapEx alignment figures. For example, allocations for the manufacture of biofuels activity are

made based on production volumes which fulfill the GHG emission savings and raw material criteria outlined in the technical

screening criteria for the activity.

The breakdown of the CapEx figures is based on the disclosure delegated act and includes taxonomy-eligible and

-aligned CapEx. These taxonomy CapEx figures refer to additions in Note 13 Intangible assets (IAS38) and Note 14

Property, plant and equipment (IAS16) and Right-of-use assets refer to Note 30 Leases (IFRS16) in the consolidated

financial statements. However, the taxonomy figures only include the proportion of the investments which are within the

scope of the EU taxonomy regulation and thus cannot be directly derived from the Notes. CapEx also covers additions to

tangible and intangible assets resulting from business combinations. According to the current interpretation of the taxonomy

regulation, goodwill is excluded from the CapEx calculations. The CapEx eligibility figure for 2021 has also been restated to

reflect this interpretation. The restated taxonomy-eligible CapEx for 2021 is 61%.

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Proportion of CapEx

SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA

Minimun safeguards

Taxonomy-aligned proportion

of CapEx in 2022

Taxonomy-aligned proportion

of CapEx in 2021

Category (enabling activity)

Category (transitional activity)

Codes

Absolute CapEx

Proportion of CapEx

Climate change mitigation

Climate change adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Climate change mitigation

Climate change adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Economic activities MEUR % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 528 24 100 0 % - - - - - Y Y Y Y Y Y 24 29 - -

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 1,122 51 100 0 % - - - - - Y Y Y Y Y Y 51 25 - -

CapEx of environmentally sustainable activities

(Taxonomy-aligned)

1,651 75 100 0 % - - - - - Y Y Y Y Y Y 75 54 - -

A.2. Taxonomy-Eligible but not environmentally sustainable

activities (not Taxonomy-aligned activities)

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 223 10

Infrastructure enabling low-carbon road transport

and public transport

6.15 1 0

CapEx of Taxonomy-eligible but

not environmentally sustainable activities

(not Taxonomy-aligned activities)

223 10 10 7

Total (A.1 + A.2)

1,874 85 85 61

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities

318 15

Total (A+B)

2,192 100

Share of waste & residue based renewable fuels sold outside of the EU

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Operating Expenses

The taxonomy-eligible and -aligned Operating Expenses (OpEx) cover direct non-capitalized expenses related to research and

development, short-term leases (IFRS 16) and maintenance and repair. OpEx figures also include costs related to personnel,

identified as other direct expenses relating to the day-to-day servicing required to maintain tangible fixed assets. The allocation

of OpEx for activities that are partially taxonomy-aligned follows the same methodology as Neste uses in the taxonomy CapEx

calculation and the expenses are thus allocated by using the share of taxonomy-aligned production volumes.

Neste’s taxonomy OpEx figures include expenses presented in Note 9 Other expenses, although the figures only include the

proportion of expenses which are within the scope of the EU taxonomy regulation. Changes in the OpEx eligibility figure for

2021 are mostly due to certain R&D activities being excluded as they cannot be directly allocated to a specific taxonomy-

activity. The restated taxonomy-eligible OpEx for 2021 is 29%.

Breakdown of the OpEx KPI

Taxonomy-aligned activities

(A.1)

Taxonomy-eligible but not

taxonomy-aligned activities

(A.2)

Costs of R&D 37 6

Costs of short-term leases 5 1

Costs of maintenance and repair 38 5

Total OpEx (A.1 + A.2) 80 12

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Proportion of OpEx

SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA

Minimun safeguards

Taxonomy-aligned proportion

of OpEx in 2022

Taxonomy-aligned proportion

of OpEx in 2021

Category (enabling activity)

Category (transitional activity)

Codes

Absolute OpEx

Proportion of OpEx

Climate change mitigation

Climate change adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Climate change mitigation

Climate change adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Economic activities MEUR % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 48 17 100 0 - - - - - Y Y Y Y Y Y 17 15 - -

Manufacture of biogas and biofuels

for use in transport and of bioliquids

4.13 22 8 100 0 - - - - - Y Y Y Y Y Y 8 9 - -

Close to market research,

development and innovation

9.1 10 4 100 0 - - - - - Y Y Y Y Y Y 4 2 E -

OpEx of environmentally sustainable activities

(Taxonomy-aligned)

80 28 100 0 - - - - - Y Y Y Y Y Y 28 26 - -

A.2. Taxonomy-Eligible but not environmentally sustainable

activities (not Taxonomy-aligned activities)

Manufacture of biogas and biofuels f

or use in transport and of bioliquids

4.13 12 4

Infrastructure enabling low-carbon road transport

and public transport

6.15 0 0

OpEx of Taxonomy-eligible but

not environmentally sustainable activities

(not Taxonomy-aligned activities)

12 4 4 3

Total (A.1 + A.2)

92 32 32 29

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities

194 68

Total (A+B)

285 100

Share of waste & residue based renewable fuels sold outside of the EU

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Materiality

This NFI Statement focuses on the most material sustainability topics for Neste and its stakeholders in relation to value creation

and risk management. Neste conducts a materiality assessment once every two years. The most recent assessment was

conducted in 2022. The materiality assessment was conducted following the “double materiality” approach, which combines

impact materiality and financial materiality. The most material topics identified for Neste are based on their business and

stakeholder influence, outward impact on the economy, environment and people, as well as the estimated magnitude of their

impacts. The materiality assessment identified eleven material topics that provide the framework for Neste’s sustainability

agenda. The eleven topics are: Carbon handprint; Carbon footprint; Protecting biodiversity, air, water and soil; Stakeholder

engagement, communication and transparency; Innovation; Partnerships; Sustainable products and services; Safety, health

and wellbeing; Modern slavery; Diversity, equity and inclusion; and Engaged and talented workforce. Several of the material

topics are relevant in both our own operations, and in our value chain. Hence, the supply chain and raw material sustainability

are seen as an underlying theme that needs to be considered for each of the eleven topics’ impacts. Similar underlying themes

are economic responsibility and ethics, compliance and corporate governance. These three themes are the cornerstones of

our sustainability agenda. Our materiality matrix describes the significance of sustainability topics from the perspective of our

business operations and stakeholders.

Neste’s eleven material topics are related to all four themes in non-financial reporting requirements: environmental matters;

social and employee matters; respect for human rights; and anti-corruption and anti-bribery.

Neste’s sustainability policies and principles apply to the company as a whole and guide all its operations. In addition,

international conventions and commitments underlie Neste’s work. In 2022, Neste was included in the Dow Jones Sustainability

Index for the 16th consecutive time. Neste was included in both the DJSI World and DJSI Europe. The industry’s best scores

in materiality, environmental and social reporting, human rights and human capital development contributed to the company’s

inclusion among the top performers. Neste achieved an AAA rating in 2022 in the MSCI ESG Rating Index measuring companies’

resilience to long-term ESG risks. In the 2022 CDP Climate Change and Forests assessments, Neste achieved the Leadership

level, with an A- rating and for Water Security, Neste received a B rating.

Climate and Environment

Policies and principles

Neste’s climate commitments are a key part of the company strategy. They are discussed at the Executive Committee at

least twice a year and by the Board of Directors at least once a year. The decision to strengthen the governance with regular

reviews was made by the Neste Executive Committee in 2019. Key risks related to climate change are presented to the Audit

Committee in connection with the risk reviews. Responsibility for climate issue management belongs to the EVP Sustainability

and Corporate Affairs, who is responsible for managing climate-related risks and opportunities and presenting them to the

Board as part of the meetings, together with the sustainability organization.

Climate and biodiversity are two of the cornerstones of Neste’s sustainability vision. Our key policies and principles concerning

environmental matters related to our own operations are our Sustainability Policy and Sustainability Principle. All Neste’s refineries

and the company-managed security stockpiles have been certified in accordance with the requirements of the ISO 9001, ISO

14001 and ISO 45001 standards. All Neste’s renewable product refineries have EU-compliant International Sustainability and

Carbon Certification (ISCC) certificates. In the United States, the sustainability of Neste’s renewable fuels is monitored based

on the Environmental Protection Agency’s (EPA) sustainability requirements. We have committed to preventing deforestation

in our supply chains, and to avoiding the conversion of habitats with valuable biodiversity for biomass production. We require

the same from all our suppliers.

We have reported relevant climate- and environment-related metrics in the 2022 Sustainability Report. For climate, the

metrics include GHG emission reduction by our customers with our renewable products, scopes 1, 2, and 3 GHG emissions

and the use phase emission intensity of sold products. For biodiversity, the reporting is aligned with our vision to achieve a

nature positive value chain by 2040 and the shorter term ambition levels to develop net positive impacts (NPI) and no net loss

(NNL) for our own operations. In addition, metrics include more specific environmental topics like the availability of pollution

prevention technology, and the number of permit violations.

Climate-related risks and opportunities

Climate change poses both business risks and opportunities to Neste. Neste is therefore committed to applying the Task Force

for Climate-Related Financial Disclosures (TCFD) reporting framework to understand and evaluate the potential implications

of climate change.

Neste uses scenario analysis to assess the resilience and adaptability of Neste’s strategy to climate change. We base

our scenario analysis on the internationally acknowledged climate pathways that represent objective and well-established

benchmarks for the energy industry, for example published by the International Energy Agency (IEA). We complement our

scenarios by internal analysis and identification of trends and factors relevant to our business. In 2022, we analyzed the

implications for Neste in three climate scenarios: Net Zero World 2050, which is in line with the 1.5°C pathways; Net Zero EU

and North America by 2050, consistent with a 2 °C trajectory; and Compromised climate targets, reflecting global warming of

3 °C or more by the end of the century.

The focus in Neste’s strategic planning is the next 10 years, with an emphasis on the transportation, petrochemicals,

and refining sectors. In the scenario work, a time horizon until 2050 is used as the effects of climate change become more

imminent in the longer term. Climate change and actions to mitigate and adapt to it, pose both transition and physical risks

and opportunities to companies. In the climate context, topics such as energy transition, regulation, competition and customer

preferences are relevant for Neste’s business. The impact potential of such drivers on Neste are evaluated on short-, medium-

and long-term time horizons, with a varying degree of certainty.

Neste will continue to build on its climate actions so that they are in line with the 1.5°C emission scenarios but refers to the

“most likely” scenario reflecting a trajectory of 2°C global warming by the end of the century as the base case. For example,

we calculate the impacts and test Neste’s strategy resilience against the scenarios by estimating the impact on Neste’s

profitability compared to the base case. This is to ensure the key drivers underlying our strategy are robust under the varying

assumptions across the pathways.

Risks associated with the transition to a lower-carbon economy may entail changes for Neste to address. Policy and legal

risks include for example unfavorable development of greenhouse gas emissions pricing or unforeseen regulatory development

for GHG reductions, or the acceptability of reduction technologies. Technology risks include for example lower than expected

availability or higher than expected cost for key GHG reduction technologies. Market risks such as stakeholder and customer

attitudes moving in a less favorable direction, shifts in our products’ supply and demand and services and raw materials,

increased raw material or utilities costs, or scarcity of renewable raw materials are seen as relevant risks. Both acute physical

risks, such as extreme weather events, or chronic physical risks, such as changes in precipitation patterns or rises in sea level,

may cause disruptions in our supply chain and the availability of different raw materials, as well as operating issues or damages

to Neste’s sites. The identification of physical risks like extreme weather events also takes the long-term scenario into account,

with different probabilities evaluated for different climate scenarios.

The adaptability and resilience of Neste’s strategy to climate change also creates opportunities by contributing to the

transition to a lower-carbon economy. Our strategy has been influenced by opportunities related to renewable and circular

products, and we see that increasing global climate ambitions and related regulations continue to increase the demand for our

renewable and circular products.

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Results of the scenario assessment provide valuable information on the adaptability and resilience of Neste’s strategy.

Results are used to support Neste’s strategy development and financial planning. Identified climate risks are included in our

Enterprise Risk Management (ERM) process, and risk mitigation plans are implemented where appropriate.

Biodiversity- and environment-related risks and opportunities

Biodiversity loss including a destruction of natural capital, ranging from reductions in the genetic diversity to the collapse of

entire ecosystems, is mainly the result of human activities like deforestation and soil degradation. Biodiversity loss is a global

concern that also effects on Neste’s stable and secure operations and supply of raw materials. The risk could be materialized

in feedstock acceptability by the stakeholders or regulatory limitations that lead to lack of sufficient volumes of feedstock.

There could also be an impact on our operations with potentially increasingly high requirements for biodiversity. During 2022,

we conducted a biodiversity materiality analysis for our own operations, and water was highlighted as a key biodiversity topic.

Risk is related to freshwater ecosystems and marine ecosystems that we might impact through our freshwater withdrawal and

release of effluents. We are in the process of mapping the main potential adverse impacts relating to biodiversity in our value

chain.

Neste is subject to a wide array of laws and regulations targeting safe operations and reduced environmental impact. In

addition, transitioning to a lower-carbon economy entails additional requirements that affect Neste’s approach to managing

refining assets and place more emphasis on the efficient use of different utilities such as water and energy. To ensure continuous

compliance with the applicable laws and regulations, Neste has implemented certified management systems that reflect the

international standards issued by the ISO. During 2022, a comprehensive set of leading environmental performance indicators

was in use in business units to reduce the risk of environmental permit violations or emissions and incidents.

Due to their nature, Neste’s operations carry an inherent risk of fires, explosions, leaks and releases of hazardous materials

or other hazards that can result in soil, groundwater, air, or seawater contamination. At worst, maritime accidents would have a

catastrophic impact on the surrounding environment. Neste has implemented systematic risk management actions to minimize

the probability of chemical hazards. Actions taken include ship vetting, systematic safety procedures, partner selection and

performance management, and training in Neste’s own operations.

Outcomes and key performance indicators

We are well on track with our commitment to help our customers reduce their greenhouse gas emissions by at least 20 million

tons of CO

e annually by 2030. Neste’s performance against this target is reported in the table below. Neste is committed to

reduce its production (scopes 1 & 2) emissions by 50 % by 2030 (compared to 2019) and reach carbon neutral production by

2035. As part of this commitment, Neste aims for 100% renewable electricity use globally by 2023.

These two climate performance indicators’ GHG emission reduction achieved by our customers with our renewable products

(“GHG handprint”) and our scopes 1 & 2 emissions (“production GHG footprint”) are included in the long-term incentives for

Neste’s key personnel.

Neste has also set a concrete target for scope 3 emissions to reduce the use phase emission intensity of sold products by

50% by 2040 compared to 2020 levels. The main driver for reducing the use phase emission intensity of sold products for

Neste is to continue increasing the share of renewable products in our portfolio through strategic investments.

We are also committed to work with suppliers and partners to reduce the GHG emissions across our entire value chain

(scope 3). We are in the process of building action plans across the relevant scope 3 categories, including raw materials and

logistics.

Emissions from operations at Neste’s refineries were in substantial compliance at all sites in 2022. A total of 3 minor non-

compliance cases occurred in Neste’s operations, with very limited local environmental impact.

Regarding the timeline for the installation of an off gas treatment system in Rotterdam, the environmental authority has

confirmed an order to have the system installed and taken into use, subject to a threatened penalty payment. To solve the

installation timeline issue and reduce exhaust emissions, an off gas treatment system was taken into use at the site.

Other climate-related metrics for GHG emissions (scopes 1, 2, and 3 emissions, as well as the use phase of the emission

intensity of sold products) are reported in the 2022 Sustainability Report, and their associated risks are discussed in the

climate-related risks above.

Neste’s biodiversity vision was launched a year ago: We aim to achieve a nature positive value chain by 2040, meaning that

the positive biodiversity impacts outweigh the negative ones. We have also set the ambition level to support the vision: We aim

at creating net positive impacts (NPI) for biodiversity from new activities from 2025 onwards and we target no net loss (NNL)

of biodiversity from all ongoing activities by 2035.

In 2022 the biodiversity work focused on developing our understanding of our current impacts. We conducted materiality

analysis for our direct operations (scope 1) and biodiversity inventory projects in Porvoo and Naantali to define the focus

areas. We concluded the water aspects to be significant regarding biodiversity and moving forward we will develop our water

approach and set targets. We also continued value chain materiality analysis, which we aim to complete in 2023 for selected

feedstocks. We created definitions of net positive impact for Neste and created a net positive impact (NPI) methodology for

biodiversity to guide our work towards our vision. We will pilot the methodology next year with chosen new initiatives.

Sustainable Supply Chain

Policies and principles

We expect all our business partners and suppliers to uphold Neste’s policies and principles, including our Supplier Code

of Conduct, a key element in Neste’s supplier management system. Neste’s Supplier Code of Conduct was updated and

implemented in 2020. The Supplier Code of Conduct is included in the terms of contract with all suppliers, contractors and

other business partners participating in the delivery of products, components, materials or services to Neste, covering both

direct and indirect procurement. Additionally, our renewable raw material suppliers are expected to meet the requirements of

Neste’s Responsible Sourcing Principle.

Neste has undertaken several initiatives to identify and understand how risks may be present in our operations and supply

chains. To ensure our suppliers’ compliance with the Supplier Code of Conduct, Neste has implemented systematic controls

for counterparty screening and monitoring in which potential business partners undergo automated pre-screening. A key

Key figures 2022 2021

Energy efficiency, energy saving measures

GWh. Target: Reduce Neste’s energy

consumption by 500 GWh during

2017–2025

42.6 GWh 95.8 GWh

GHG emissions reduction achieved with

Neste’s renewable fuels compared to

crude oil based diesel, million tons

Target: 20 MtCO

e annually by 2030.

11.1 MtCO

10.9 MtCO

Emission limits and overruns: All deviations

from environmental permits

Long-term target for OP and RP: zero

permit violations

Permit violations:

3, of which 2 in OP

and 1 in RP

Permit violations:

3, of which 2 in OP

and 1 in RP

Annual greenhouse gas (GHG) reduction achieved with Neste’s renewable products compared to 100% crude oil based fuel.

Calculation method complies with the EU Renewable Energy Directive II (EU) 2018/2001 and the California LCFS methodology,

which has been applied in the GHG reporting for volumes sold in the US since the beginning of 2022.

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element in understanding sustainability risks in our renewable raw materials supply chains is assessing country risk. Our

overall approach to sustainability due diligence is to work with our suppliers to drive positive practices and mutually enhance

sustainability performance through continuous engagement, collaboration and improvement.

Our renewable products’ raw material suppliers are subject to rigorous sustainability due diligence as part of our supplier

sustainability approval process under the Neste Principle on Renewable Products Supplier Sustainability Approval. The Principle

applies worldwide to any Neste company which is establishing a business relationship with a supplier of renewable raw

material for Neste’s renewable products. It sets the minimum sustainability requirements for approving suppliers. We continue

commercial negotiations only with approved parties who meet our sustainability requirements, and all partners must continue

to meet these criteria and commit to developing their operations in the future.

The due diligence process for our crude oil and other fossil raw material suppliers includes a country risk assessment and

counterparty risk assessment. We also assess all new suppliers based on publicly available information regarding environmental,

social and governance (ESG) topics that include governance, labor standards and practices, human rights, environment,

health and safety and crude oil production-specific issues, such as flaring. This sustainability review was developed in 2021 to

complement the existing due diligence process for our fossil raw material suppliers.

Neste’s key policies and principles concerning environmental matters related to the sourcing of renewable raw materials are

the Neste Supplier Code of Conduct, Sustainability Principle, and Responsible Sourcing Principle. All Neste’s palm oil suppliers

are committed to No-Deforestation policies. Since 2015, this has also been extended to cover their third-party suppliers. All

the palm oil we have used has been fully traceable to the plantation level since 2007 and 100% certified since 2013.

Supply chain risks

The main raw materials used in Neste’s refineries include animal fats, used cooking oils, and wastes and residues from

vegetable oil processing, as well as some vegetable oils and crude oils. In recent years, the use of palm oil has created a

reputational risk, as the sustainability of palm oil sourcing has given rise to public discussion and concerns from NGOs and

customers, for example. Neste is committed to ensuring sustainable palm oil sourcing and has implemented several measures

to improve transparency in its supply chain, as described above in Climate and Environmental matters. Neste plans to reduce

the share of conventional palm oil to zero of its global renewable raw material inputs by the end of 2023.

We assess and monitor our human rights impacts in both our own operations and our supply chains. To effectively prioritize

our activities, our risk assessment includes the mapping of supply chains and operations, country risk assessments, desk-

based research, supplier self-assessment questionnaires, supplier engagement, and discussions with expert stakeholders.

Our Sustainability Audits have a strong human rights focus and prioritize the assessment of impacts on people. Read more in

the Human Rights section below.

Outcomes and key performance indicators

Neste continues to focus on waste and residues and the share of waste and residue raw materials is expected to stay above

90% of Neste’s global renewable raw material inputs globally in the coming years, while in the longer term, the growth in novel

vegetable oils availability may increase the share of sustainably produced vegetable oils.

In 2022, we updated our Neste Traceability Dashboard to provide the latest data regarding our palm and palm fatty acid

distillate (PFAD) supply chains. By the end of 2022, we had mapped our PFAD supply chain to the palm oil mills supplying

the palm oil refineries where PFAD is extracted during vegetable oil refining. In 2022, we continued our PFAD supply chain

mapping efforts in collaboration with palm oil suppliers and sustainability specialists from the Consortium of Resource Experts

(CORE). With CORE, we continued to conduct risk assessments of palm oil mills supplying palm oil to refineries and engaged

with suppliers to further enhance their No-Deforestation, Peat and Exploitation (NDPE) pledge. We continued to develop our

Supplier Sustainability Portal to digitalize renewable raw material supplier evaluation, monitoring and engagement.

Recognizing the need for sustainable raw materials in the supply chain, Neste has improved its procedures for tracking and

processing grievances. This includes establishment of a cross-functional team to ensure speed and consistency in how we

manage grievance cases and maintaining a publicly available log of grievances raised in our raw materials supply chains on our

website. The grievance log is updated on a monthly basis to include new grievances, as well as to provide status updates on

the remediation of existing grievances, and how they are being addressed or monitored by Neste. These raw material supply

chain-related external grievances are reported separately by the Sustainability team on the Neste website. Today, these are

mostly palm oil industry-related cases but the system is one that Neste uses for all renewable raw materials.

Safety and our employees

Policies and principles

Safety is integral to our values. Improving safety and more broadly operational excellence covering occupational health and

safety, process and marine safety, environment management, chemical compliance, quality, security, productivity, reliability,

and efficiency enables us to achieve our strategic targets. For us, safety means excellence in risk management. This concerns

the existence and effectiveness of every safety barrier that helps manage risks, prevent incidents and mitigate adverse

consequences. We are determined to protect people and the environment, as well as our operations, assets, information and

brand, from any harm. We believe this can be achieved when everyone working for and with us is truly committed to managing

and improving safety, understands every hazard related to our operations and has excellent ways of evaluating and managing

risks. Moreover, we strive to learn from experience and continuously improve our capabilities of understanding and managing

hazards.

The foundations for the safety excellence and continuous improvement are defined by Neste’s Operations Excellence Policy

and Operations Excellence Management System (OEMS), which includes Operations Excellence Principles and supplementary

detailed standards. The requirements of OEMS apply not only to Neste’s own employees but also to external contractors. In

2022, we continued to clarify and simplify the OEMS implementation process. The deployment of the new process started

in 2022 and continues in 2023. The systematic OEMS self-assessments and audits continued in 2022 to ensure that the

requirements were fulfilled.

In 2022, one of the safety priority areas was to improve the timely closure of the actions defined due to incidents, near-

misses and audit findings. A significant improvement was achieved during the year. The Neste Executive Committee followed

up the topic every month.

Other focus areas in 2022 were ensuring safety in investment projects and turnarounds with a high focus on contractor

safety. Most of the projects were done with targeted safety levels. If the targets were not met, a systematic analysis was

made and improvement activities were defined. We aim to continuously improve contractor safety performance with our

contractors through auditing, regular performance evaluation, mutual feedback and great focus on subcontracting. In 2022,

the implementation of the contractor safety management model continued.

Key figures 2022 2021

The number of renewable raw material

supplier’s sustainability assessment and

their outcome

Total: 325

New approved suppliers: 223

All approved: 236

Pending: 74

Rejected: 15

Total: 223

New approved suppliers: 171

All approved: 186

Pending: 33

Rejected: 4

Figures include existing suppliers, which undergo a sustainability assessment process every 3–5 years. Supplier data includes only

main contractual parties, excluding second-tier suppliers.

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The integration of the new acquisitions with Mahoney Environmental, Agri Trading and Neste’s Rotterdam terminal continued

and was partly completed. Part of the activities will continue in the coming years, for example the full implementation of the

Mahoney safety roadmap.

Neste’s key principles concerning social and employee matters are included in our People Policy. All the human resources

(HR) principles and standards meet the Neste Management System (NMS) requirements, as well as the needs of the changing

business environment, international growth and employment compliance. NMS combines unified policies, principles, standards

and work procedures in one transparent structure. Globally, Neste now has one HR policy, ten HR principles and 17 HR

standards in use.

The key principles included in the People Policy are: emphasizing the importance of the continuous development of leadership

and corporate culture; acting in line with the company’s values and underlining everyone’s responsibility for their professional

development as a means of achieving excellent results; guaranteeing equal rights and opportunities regardless of gender, ethnic

origin, age, religion, political convictions, and other similar issues; promoting a workplace in which everyone understands the

importance of their work in achieving common goals; and providing equal and fair compensation based on individual and team

performance. One of Neste’s central principles is to abide by all laws, statutes and official regulations wherever the company

operates and in all aspects of its operations, and to follow clear ethical standards and good practices.

Diversity, equity, and inclusion form a key part of Neste’s values-led culture, human rights work and sustainability vision.

We are committed to developing an inclusive workplace that fully leverages the benefits of diversity, one in which all Neste

employees are given equal opportunities to pursue and thrive in their careers.

Risk of safety incidents and social matters

In process safety, Neste has implemented and is continuously developing comprehensive safety rules, procedures and practices

covering leadership, competence development, performance management and learning from experience. Considerable

investments are carried out annually to improve the process safety of Nestes’ assets. In 2022, the focus was on the effectiveness

of the Process Hazard Analysis (PHA) implementation and utilization of the HSE design guideline in the investments and, the

definition of the process safety design guidelines for new technologies.

Rising inequality is a systemic issue that creates risks for business and the climate transition goals. It threatens the social

and economic stability on which business depends to operate, innovate and grow. It erodes trust in political and economic

systems, fuels civil and political unrest, limits economic growth and undermines companies’ collective capacity to tackle

complex global challenges. Diversity, equity, and inclusion form a key part of Neste’s values-led culture, human rights work

and sustainability vision. Neste is committed to reducing inequalities across the value chain and addressing the root causes

of systemic human rights issues eg. by paying and promoting living wages, preparing people for the future of work, providing

safe and secure employment, and creating an equitable and inclusive workplace and value chain

Outcomes and key performance indicators

In 2022, Neste’s occupational safety performance (TRIF, or rate of accidents requiring medical treatment per million hours

worked, including contractors) was 2.0 (1.4 in 2021) which did not meet the target for 2022 (1.5) and was worse than in 2021.

The reason for the poorer performance was the higher number of contractor accidents. Several actions were taken in the

projects and operations, and also improvements were defined for the Neste contractor safety management process. In 2022,

process safety performance (PSER, or the rate of process safety events per million hours worked) was 1.4 (1.4 in 2021) which

was better than the 2022 target level (1.5) and in the same level as in 2021.

Safety is a foundation in everything we do in Neste. Achieving a significantly better safety performance remains a top priority.

The focus areas will be safety commitment and leadership, safety competence, process safety, contractor safety and safety

in each operational activity. The key process safety items are investments in asset integrity, ensuring comprehensive and

effective process hazard analysis and mitigation actions in all operations, continuous development of safety-critical operations

and further improvement of process safety competence.

Neste fosters diversity as the business grows globally. Neste drives equality and non-discrimination and provides career

and development opportunities to the employees who are most qualified without allowing any personal attribute to play any

part in decision making. To benefit from increasing diversity and make people feel valued and supported, Neste pursues the

development of inclusive leadership and a values-led culture.

We measure our employee engagement in various ways. In addition to a broader employee engagement survey conducted

at the beginning of the year, we measure change through shorter pulse surveys and other surveys targeted at specific groups.

Our employee engagement index score increased to 69 according to the Pulse survey conducted in October 2022.

Other forms of engagement include many types of development programs, team and individual discussions, surveys

gathering onboarding and offboarding experiences, internal info sessions, and town hall meetings. Topics include the Neste

strategy and values, sustainability and climate commitments, and health, safety and wellbeing.

See also: Diversity of the Board of Directors

Human Rights

Policies and principles

Neste has made a commitment to respect human rights and remediate adverse human rights impacts throughout its business

operations and value chains. Neste demonstrates and meets this commitment by implementing, and acting in accordance

with, the United Nations Guiding Principles on Business and Human Rights (UNGPs) and OECD Guidelines for Multinational

Enterprises.

Key figures 2022 2021

TRIF

2.0 1.4

Process safety event rate

PSER

1.4 1.4

New employee hires

and employee turnover

Leaving rate of permanent employees

10.2%. Hiring rate of permanent

employees 18.3%.

Leaving rate of permanent employees

13.0%. Hiring rate of permanent

employees 12.1%.

Employee engagement

Target: Maintain a

good level of employee

engagement.

According to the employee engagement

survey conducted early 2022, the

employee engagement index score

was 66. Majority of employees thought

favorably of working at Neste and would

recommend Neste as a workplace.

66% felt happy working at Neste, 80%

understood how own work contributes to

company’s success, 75% thought Neste

acts in a responsible way, 76% felt safety

is never compromised at Neste.

According to the engagement survey

conducted in early 2021, the employee

engagement index score was 66. Majority

of employees thought favorably of

working at Neste and would recommend

Neste as a workplace.

65% felt happy working at Neste, 78%

understood how own work contributes to

company’s success, 70% thought Neste

acts in a responsible way, 79% saw

safety as a priority for Neste.

Total Recordable Incident Frequency, number of cases per million hours worked. Includes both Neste’s and contractors’ personnel,

except for Mahoney operations and Singapore expansion which have been internally reported and followed-up separately in 2022.

Process Safety Event Rate, number of cases per million hours worked. The figure includes all operations in Neste’s facilities.

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The Neste Human Rights Principle applies to the entire Neste Group. It describes how Neste meets its responsibilities to

respect human rights and conduct ongoing human rights due diligence. It outlines seven priority areas for human rights at

Neste: Fair Employment, Health & Safety, Equity, Diversity & Non-Discrimination, Children & Young Workers, Modern Slavery,

Fair Treatment, and Economic, Social & Cultural Rights – including respect for the rights of minority groups and Indigenous

Peoples. These are Neste’s salient human rights issues, that is, those issues that are at risk of the most severe negative

impacts through our activities or business relationships.

In 2022, we conducted a major review and update of the Neste Human Rights Principle, informed by extensive consultation

with both internal and external stakeholders. The Human Rights Principle received final review and approval by Neste’s CEO,

based on the endorsement of the Neste Executive Committee. It forms part of Neste’s Management System (NMS) and is

publicly available on our website.

The minimum human rights requirements for Neste’s business partners including suppliers, contractors and service providers,

are set out in the Neste Supplier Code of Conduct. Neste encourages and supports its business partners to continuously

improve and develop beyond the minimum, to reach the human rights standards and expectations set out in the Neste Human

Rights Principle.

The Neste Code of Conduct applies to the entire Neste Group and contains key human rights requirements and expectations

with which all Neste employees are to comply in their daily work. For example, all employees are expected to be aware of

how their work impacts the human rights of people in Neste’s operations, value chain and communities, understand how to

recognize potential human rights risks in their daily work and decision making, and know how to recognize and report signs

of modern slavery.

Neste supports the elimination of all forms of modern slavery. We recognize that modern slavery is a growing global issue

from which no industry is immune, and we are committed to taking the appropriate steps to identify vulnerable groups and

mitigate modern slavery risks in our operations and supply chains. Our Modern Slavery Statement, updated annually, details

the actions we are taking to prevent modern slavery and human trafficking in our businesses.

We are committed to respecting and supporting children’s rights, and to implementing the Children’s Rights and Business

Principles throughout our business and value chains, including in our workplace, marketplace and communities. More

information on specific measures we take and the projects in which we are involved is available on our website.

Risk of adverse human rights impacts

Neste has undertaken several initiatives to ensure the proper management of human rights related risks across our business.

To embed respect for human rights throughout our business operations and value chains, we carry out ongoing human rights

due diligence to identify and assess risks to human rights, take action to prevent and mitigate them, track the effectiveness of

our measures, and provide a remedy when required. In assessing human rights risks, we engage with affected stakeholders

and pay special attention to vulnerable groups such as women, children, migrant workers and Indigenous People.

We regularly assess the saliency of our human rights impacts based on severity and likelihood. This enables us to actively

monitor our progress in addressing our salient human rights issues, and to account for any new risks resulting from changes

in our business. It also ensures that we accurately focus and prioritize our work to address human rights risks. In 2022, we

expanded our saliency assessments to evaluate the effectiveness of the measures we have in place to address our salient

issues.

In 2022, we carried out a detailed human rights risk assessment for Neste’s indirect procurement. In the first stage, we

assessed the risks associated with different sourcing categories and sourcing countries. In the second stage, we evaluated

the human rights practices of suppliers selected based on risk and spend, taking into consideration the results from the first

assessment.

In 2022, as part of our work under the Consumer Goods Forum’s (CGF) Human Rights Coalition we carried out human rights

due diligence assessments for two selected areas within our own operations: production and shipping, following the CGF

Maturity Journey Framework. We also worked collectively through the coalition to advance positive human rights practices in

palm supply chains and on the publication of a guide on the repayment of recruitment fees.

We actively monitor and assess risks to people working onsite at our refineries. In 2022, we began to plan contractor audits

and key actions to ensure we will be able to hear worker voices during our upcoming 2023 Rotterdam refinery expansion, for

example, implementing a local complaints mechanism and carrying out worker voice surveys.

Human rights topics are integrated into our global induction for all new employees who join Neste, as well as our Code

of Conduct and Supplier Code of Conduct e-learning courses. In 2022, we organized for the European Institute for Crime

Prevention and Control (HEUNI) to train Neste employees on modern slavery and labor exploitation in the regions and sectors

connected to our business and value chains. In 2022, we also carried out customized training for our Indirect procurement

team on the minimum human rights requirements in our Supplier Code of Conduct.

We engage in capacity building with suppliers and contractors in high-risk sectors and geographies to drive positive human

rights impacts throughout the supply chain.

Outcomes and key performance indicators

In recognizing that our human rights impacts may change over time as our operations and value chains continue to evolve,

we are committed to embedding human rights due diligence across our business as an ongoing, iterative process. This year,

we continued to conduct human rights due diligence within our supply chains and operations to prevent, mitigate and where

necessary, remediate adverse human rights impacts.

Key figures 2022 2021

Human Rights Due

Diligence carried out

for key business areas/

functions.

Target: To strengthen

Neste’s capacity to

identify, assess, and

address human rights

risks in our operations

and supply chains.

Four major assessments/initiatives

undertaken in 2022:

1) Corporate-wide assessment to review

Neste’s salient issues and their mitigation.

2) Human Rights Risk Assessments

completed for Neste Indirect

Procurement.

3) Living wage gap assessment

completed for Neste’s own employees in

Finland.

4) CGF human rights due diligence

assessments completed for Production

(Singapore) and Shipping.

Four major assessments/initiatives

undertaken in 2021:

1) Corporate-wide assessment to review

Neste’s salient issues and understand

gaps in mitigation activities.

2) Human Rights Risk Assessment

completed for potential Rotterdam

Refinery Expansion Project

3) Human rights risk assessments

completed for Lignocellulose and Algae

Innovation platforms

4) Development and implementation of

a new channel for all onsite workers to

raise grievances and access effective

remedy during the 2021 Turnarounds.

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Anti-Corruption

Policies and principles

Neste and its management are committed to conducting the company’s global operations ethically and with integrity. As stated

in the company’s Code of Conduct, Neste has zero tolerance of corruption of any kind in connection with Neste’s operations,

whether committed by Neste employees or third parties acting on behalf of Neste. Neste also requires that its external business

partners acting for or on behalf of the company to be aware of and share the commitment to zero tolerance of corruption.

Neste’s key policies and principles concerning anti-corruption and anti-bribery are the Code of Conduct, Anti-Corruption

Principle, and Supplier Code of Conduct. More information on the Code of Conduct can be found in the Sustainability Report.

Risk of corruption and bribery

Risks of corruption and bribery are typically treated as inherent risks in the oil and gas sector due to its global nature, contractual

relationships with local governments, and involvement in complex networks with various suppliers and contractors. Neste

regularly assesses its operations’ risks including ia. risks of corruption and bribery. Neste has zero tolerance of any form of

corruption and bribery. As a preventive measure, Neste has developed a compliance program which includes policy statements

(Code of Conduct, Anti-Corruption Principle), dedicated eLearning packages, annual compliance acknowledgement, regular

communication, and Ethics Online for the reporting of suspected misconduct. Neste’s counterparties are required to comply

with the Supplier Code of Conduct and/or their own equivalent principles and undergo a compliance clearance and counterparty

risk assessment. As stated in the Code of Conduct, Neste has processes in place to carry out due diligence on its business

partners. The Compliance clearance and counterparty risk assessment covers the following risks: trade sanctions, politically

exposed persons, money laundering, corruption and bribery.

Outcomes and key performance indicators

In addition to the Code of Conduct, Neste has an Anti-Corruption Principle, which sets the rules for preventing corruption in

connection with Neste’s business operations and providing more detailed guidance on responsible business practices. Anti-

Corruption topics are regularly communicated to and trained for in the organization, including an Anti-Corruption e-learning

course re-issued to office workers in 2022 as further described in the Sustainability Report’s Compliance chapter. The e-learning

course also includes a requirement for employees to report observed or suspected violations of Neste’s Anti-Corruption

Principle to their own manager, Neste’s HR, and the Compliance or Internal Audit functions. Employees may also report their

concerns anonymously via Neste’s externally operated misconduct reporting system, Ethics Online, which can be used by

phone or via the website. Ethics Online is available for both employees and external stakeholders. More information on Neste’s

grievance process and the related Misconduct Investigation Standard is available in the Corporate Governance Statement.

Neste has also issued an Anti-Money Laundering and Counter-Terrorist Financing (CTF) Standard detailing Neste’s guidance

and process in relation to preventing money laundering risks.

Neste renewed its Code of Conduct in 2021. A related Code of Conduct e-learning course was issued as a first step for all

office workers in 2021, and the course was issued to the rest of the organization in 2022. The e-learning course also covers

anti-corruption topics and how to report observed or suspected violations of Neste’s Code of Conduct. The e-learning course

is included in the training package for all new employees.

A total of 14 suspected misconduct incidents was reported during 2022, and 6 of these reports came via the EthicsOnline

system. Confirmed misconduct by Neste employees was identified in 2 of the completed investigations, and misconduct by

third parties in Neste’s supply chain was confirmed in one investigation, all leading to further action and process improvements.

No confirmed misconduct was related to corruption or bribery. Furthermore, no misconduct was found in 7 completed

investigations. Four investigations are pending. Neste’s Investigation Group investigated the received reports and reported

the number of reported cases per category to the Board of Directors’ Audit Committee and to the Ethics and Compliance

Committee, consisting of Neste Executive Committee members, the Chief Compliance Officer, and the VP, Internal Audit. In

five investigations in 2022, the Neste Investigation Group retained independent external forensic and/or legal expertise to

conduct the investigation.

Targeted training on anti-corruption, anti-money laundering, competition law compliance, trade sanction compliance and

privacy was conducted with defined target groups.

Key figures 2022 2021

Number of suspected

misconducts reported

in person or via the

whistleblowing system to

the Investigations Group.

Target: To further

encourage employees

and external stakeholders

to report observed or

suspected misconducts.

Number of suspected misconducts

reported in person or via the available

reporting channels including EthicsOnline

to the Investigation Group was in total

14 of which employment matters 2

reports, discrimination and harrassment

2, fraud 4, bribery, corruption and

facilitation payment 1, theft, asset misuse

& embezzlement 3, supplier/business

partner misconduct/unethical behavior

1 and 1 report belongs to category

“other”. Misconduct by Neste employees

confirmed in 2 cases, related to manager

conduct, substance abuse and/or

inappropriate behavior. Misconduct by a

third party confirmed in 1 case, related

to attempted fraud. All leading to further

actions and process improvements.

Four investigations are pending. The

confirmed cases of misconduct were

not related to corruption, bribery or

facilitation payments. Renewable raw

material Supply chain related external

grievances are reported separately by the

Sustainability team on the Neste website.

Number of suspected misconducts

reported in person or via the available

reporting channels including EthicsOnline

to the Investigation Group was in total

18 of which HR 4 reports, discrimination

and harrassment 2, conflict of interest

3, bribery, corruption and facilitation

payment 2, and 7 reports belong

to category “other”. Two reported

suspected misconducts linked,

leading to a total of 17 investigations.

Misconduct by Neste employees

confirmed in 3 cases, related to asset

misuse, manager conduct, substance

abuse and/or inappropriate behavior.

Misconduct by a third party confirmed

in 3 cases, related to inappropriate,

discriminative and/or non-professional

behaviour. All leading to further actions

and process improvements. One

investigation was pending during the

reporting and resolved after that. The

confirmed cases of misconduct were

not related to corruption, bribery or

facilitation payments. Renewable raw

material Supply chain related external

grievances are reported separately by the

Sustainability team on the Neste website.

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Outlook

Visibility in the global economy continues to be low due to high inflation, reduced economic growth expectations and continued

geopolitical uncertainty. The war in Ukraine has had significant impacts on the global energy markets, and energy prices have

risen to a high level. We expect volatility in the oil products and renewable feedstock markets to remain high, making the

forecasting of margins challenging in both Renewable Products and Oil Products.

Renewable Products’ first-quarter sales volumes are expected to be lower than in the previous quarter as sales volume is

affected by a one-month shutdown at the Rotterdam refinery due to an occurrence of a fire in a process unit in late December.

The expected sales volume also includes first volumes from our joint operation company Martinez Renewables in the USA.

Waste and residue markets are anticipated to remain tight and volatile as demand continues to be robust. Our first-quarter

comparable sales margin is currently expected to be within the range USD 825–925/ton, supported by attractive waste and

residue prices in the beginning of the year. The segment’s first-quarter fixed costs are expected to be approx. EUR 10 million

higher than in the previous quarter, driven by the build-up of capabilities related to the upcoming start-up of our growth projects.

The utilization rates of our renewables production facilities are forecasted to remain high, except for the one-month shutdown

at Rotterdam. The Rotterdam shutdown is expected to have a negative impact of approx. EUR 85 million on the segments’

full-year comparable EBITDA based on the estimated production losses and repair costs, mainly affecting the first quarter.

The market in Oil Products remains volatile and impacted by the war in Ukraine. Based on the current forward market, our

first-quarter total refining margin is expected to remain solid, but somewhat lower compared to the fourth quarter of 2022. The

first-quarter sales volumes are forecasted to be at approximately the same level as in the previous quarter.

In Marketing & Services the sales volumes and unit margins are expected to follow the previous years’ seasonality pattern

in the first quarter. The slowing economy is expected to have some negative impact on the overall demand.

Based on our current estimates and a hedging rate of approx. 85%, Neste’s effective EUR/US dollar rate is expected to be

within the range of 1.05–1.07 in the first quarter of 2023.

Neste estimates the Group’s full-year 2023 cash-out capital expenditure to be approx. EUR 1.8 billion. Possible M&A is

excluded from the figure.

Dividend distribution proposal

Neste’s dividend policy is to distribute at least 50% of its comparable net profit in the form of a dividend. The parent company’s

distributable funds as of 31 December 2022 amounted to EUR 3,824 million, and there have been no material changes in the

company’s financial position since the end of the financial year.

The Board of Directors proposes to the AGM that an ordinary dividend of EUR 1.02 per share be paid on the basis of the

approved balance sheet for 2022 plus an extraordinary dividend of EUR 0.25 per share, i.e. EUR 1.27 per share in total. The

ordinary dividend shall be paid in two instalments. The Board furthermore proposes that the AGM would authorize the Board

to decide, in its discretion, on the payment of a second extraordinary dividend of EUR 0.25 per share, by 31 October 2023.

The Board expects that this discretionary second extraordinary dividend will be paid, unless there is a significant deterioration

in the business environment during 2023.

The first instalment of the ordinary dividend, EUR 0.51 per share, and the extraordinary dividend of EUR 0.25 per share, i.e.

altogether EUR 0.76 per share, will be paid to shareholders registered in the shareholders’ register of the Company maintained

by Euroclear Finland Ltd on the record date for the dividend payment, which shall be Thursday, 30 March 2023. The Board

proposes to the AGM that the first instalment of the ordinary dividend and the extraordinary dividend would be paid on

Thursday, 6 April 2023.

The second instalment of the ordinary dividend, EUR 0.51 per share, will be paid to shareholders registered in the shareholders’

dividend, which shall be Friday, 29 September 2023. The Board proposes to the AGM that the second instalment of the

ordinary dividend would be paid on Friday, 6 October 2023. The Board of Directors is authorized to set a new dividend record

date and payment date for the second instalment of the ordinary dividend, in case the rules and regulations on the Finnish

book-entry system would be changed, or otherwise so require.

The Board notes to the AGM that if the Board decides to pay the second extraordinary dividend by virtue of the authorization,

the intention of the Board is to set the record date and payment date for the second extraordinary dividend payable on the

basis of the authorization so that the dates are the same as for the second instalment of the ordinary dividend.

The proposed maximum total dividend of EUR 1.52 per share represents a yield of 3.5% (at year-end 2022 share price

of EUR 43.02) and 50% of Neste’s comparable earnings per share in 2022. The proposed maximum total dividend in 2023

amounts to approximately EUR 1,167 million. In the event the discretionary second extraordinary dividend of EUR 0.25 per

share is not paid, the dividend totals EUR 1.27 per share and represents a yield of 3.0% (at year-end 2022 share price of EUR

43.02) and 42% of Neste’s comparable earnings per share in 2022, totaling approximately EUR 975 million.

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Key figures

Income statement 2022 2021 2020

Revenue EUR million 25,707 15,148 11,751

EBITDA EUR million 3,048 2,607 1,508

- of revenue % 11.9 17.2 12.8

Operating profit EUR million 2,410 2,023 828

- of revenue % 9.4 13.4 7.0

Profit before income taxes EUR million 2,279 1,962 786

- of revenue % 8.9 13.0 6.7

Profit for the period EUR million 1,891 1,774 714

- of revenue % 7.4 11.7 6.1

Comparable EBITDA EUR million 3,537 1,920 1,929

Comparable net profit EUR million 2,336 1,179 1,229

Profitability

Return on equity (ROE) % 25.1 28.5 11.8

Comparable return on average capital

employed, after tax (ROACE) % 30.1 18.3 19.8

Financing and financial position

Interest-bearing net debt EUR million 1,344 41 -265

Leverage ratio % 13.9 0.6 -4.7

Equity-to-assets ratio % 56.3 56.6 61.1

Net Debt to EBITDA % 0.4 0.0 -0.2

Other indicators

Capital employed EUR million 10,942 8,742 7,236

Net working capital in days outstanding 35.4 33.3 35.0

Capital expenditure and investments in shares EUR million 2,218 1,535 1,197

- of revenue % 8.6 10.1 10.2

Research and development expenditure EUR million 85 67 61

- of revenue % 0.3 0.4 0.5

Average number of personnel 5,244 4,872 4,833

Share prices

Closing price EUR 43.02 43.36 59.16

Average price EUR 42.26 50.99 37.49

Lowest price EUR 30.81 41.17 20.37

Highest price EUR 52.18 64.74 60.14

Market capitalization EUR million 33,063 33,353 45,507

Trading volumes

Number of shares traded 1,000 270,643 246,647 340,904

- of weighted average number of shares % 35 32 44

Weighted average number of

shares outstanding 768,060,103 767,643,112 767,370,423

Number of shares outstanding

at the end of the period 768,083,170 767,969,396 767,836,640

Board of Directors’ proposal to the Annual General Meeting. 2022 key figures include an ordinary dividend of EUR 1.02 per share,

an extraordinary dividend of EUR 0.25 per share, and a discretionary second extraordinary dividend of EUR 0.25 per share.

Share-related indicators 2022 2021 2020

Earnings per share (EPS) EUR 2.46 2.31 0.93

Comparable earnings per share EUR 3.04 1.54 1.60

Equity per share EUR 10.83 9.09 7.72

Cash flow per share EUR 1.56 2.60 2.68

Price / earnings ratio (P/E) 17.50 18.79 63.75

Dividend per share EUR 1.52

0.82 0.80

Dividend payout ratio % 61.8

35.5 86.2

Dividend yield % 3.5

1.9 1.4

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Reconciliation of key figures to IFRS Financial Statements

Reconciliation between comparable EBITDA, EBITDA and operating profit is presented in Note 4, Segment information.

EUR million 2022 2021 2020

Comparable EBITDA 3,537 1,920 1,929

Depreciation, amortization and impairments -638 -584 -680

Items in depreciation, amortization and impairments

affecting comparability 27 5 167

Total financial income and expenses -131 -61 -41

Income tax expense -388 -188 -72

Non-controlling interests -3 -2 -2

Tax on items affecting comparability -68 89 -71

Comparable net profit 2,336 1,179 1,229

Reconciliation of comparable return on average capital employed, after tax (ROACE), %

EUR million 2022 2021 2020

Comparable EBITDA, last 12 months 3,537 1,920 1,929

Depreciation, amortization and impairments -638 -584 -680

Items in depreciation, amortization and impairments affecting

comparability 27 5 167

Financial income 9 4 4

Exchange rate and fair value gains and losses -80 -10 0

Income tax expense -388 -188 -72

Tax on other items affecting comparable ROACE -76 82 -77

Comparable net profit, net of tax 2,391 1,229 1,271

Capital employed average 9,823 7,952 7,326

Assets under construction average -1,880 -1,250 -898

Return on comparable average capital employed,

after tax (ROACE), %

30.1 18.3 19.8

The comparable ROACE calculation formula has been adjusted in 2022 by excluding assets under construction

average from the capital employed average. Comparison numbers have been restated accordingly.

Reconciliation of equity-to-assets ratio, %

EUR million 2022 2021 2020

BS Total equity 8,327 6,985 5,929

BS Total assets 14,917 12,417 9,815

Advances received -138 -86 -104

Equity-to-assets ratio, % 56.3 56.6 61.1

Reconciliation of net working capital in days outstanding

EUR million 2022 2021 2020

Operative receivables 1,902 1,561 1,179

BS Inventories 3,648 2,618 1,829

Operative liabilities -3,057 -2,795 -1,883

Net working capital 2,494 1,384 1,125

IS Revenue 25,707 15,148 11,751

Net working capital in days outstanding 35.4 33.3 35.0

Reconciliation between comparable EBITDA and comparable net profit

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Calculation of key figures

Neste presents Alternative Performance Measures to enhance comparability between financial periods as well as to reflect operational performance and financial risk level. These indicators should be examined together with the IFRS-compliant performance

indicators.

Key figure Calculation Reason for use

EBITDA = Operating profit + depreciation, amortization and impairments

EBITDA is an indicator to measure the operational performance and cash flow

generation.

Comparable EBITDA =

EBITDA -/+ inventory valuation gains/losses -/+ changes in the fair value of open commodity

and currency derivatives -/+ capital gains/losses - insurance and other compensations -/+

other adjustments

Comparable EBITDA describes underlying operational performance and cash flow

generation.

Items affecting comparability =

Inventory valuation gains/losses, changes in the fair value of open commodity and currency

derivatives, capital gains/losses, insurance and other compensations, impairments and

other adjustments

Items affecting comparability are linked to unpredictability events of a significant nature

that do not form part of normal day-to-day business.

Comparable net profit =

Comparable EBITDA - depreciation, amortizations and impairments -/+ items in

depreciation, amortization and impairments affecting comparability - total financial income

and expense - income tax expense - non-controlling interests - tax on items affecting

comparability

Comparable net profit is the basis for Neste's dividend policy. Dividend distribution is

one element in the company's cash allocation.

Return on equity (ROE), % = 100 x

Profit before income taxes - income tax expense, last 12 months

Return on equity provides additional information on the profitability of operations.

Total equity average, 5 quarters end values

Comparable return on average

capital employed, after-tax (ROACE), %

= 100 x

Comparable EBITDA - depreciation, amortizations and impairments -/+ items in

depreciation, amortization and impairments affecting comparability + financial income +

exchange rate and fair value gains and losses - income tax expense - tax on other items

affecting comparable ROACE, last 12 months

Comparable return on average capital employed after-tax (ROACE) is one of Neste’s

key financial targets. It is a long-term over the cycle indicator measuring Neste’s

profitability and efficiency of capital usage.

Capital employed average - assets under construction average, 5 quarters end values

Capital employed = Total equity + interest bearing liabilities

Capital employed is primarily used to determine the comparable return on average

capital employed (ROACE) which is Neste’s key financial target.

Interest-bearing net debt = Interest-bearing liabilities - cash and cash equivalents - current investments Interest-bearing net debt is an indicator to measure the total external debt financing.

Leverage ratio, % = 100 x

Interest-bearing net debt

Leverage ratio is one of Neste’s key financial targets. It provides useful information

regarding Neste’s capital structure and financial risk level.

Interest bearing net debt + total equity

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Equity-to-assets ratio, % = 100 x

Total equity

Equity-to-assets ratio provides useful information regarding financial risk level.

Total assets - advances received

Net working capital in days outstanding = 365 x

Net working capital

Net working capital in days outstanding measures efficiency in turning net working

capital into revenue.

Revenue, last 12 months

Net Debt to EBITDA =

Interest-bearing net debt

Net debt to EBITDA measures capital structure and ability to cover debt.

EBITDA, last 12 months

Return on net assets, % = 100 x

Segment operating profit, last 12 months

Neste uses return on net assets to follow the operational performance of its operating

segments.

Average segment net assets, 5 quarters end values

Comparable return on net assets, % = 100 x

Segment comparable EBITDA, last 12 months - depreciation, amortization and impairments

+/- items in depreciation, amortization and impairments affecting comparability

Neste uses comparable return on net assets to follow the underlying operational

performance of its operating segments.

Average segment net assets, 5 quarters end values

Segment net assets =

Property, plant and equipment + intangible assets + investments in associates and joint

ventures + inventories + interest-free receivables and liabilities - provisions - pension

liabilities allocated to the business segment

Segment net assets are primarily used to determine the return on net assets and

comparable return on net assets.

Calculation of share-related indicators

Earnings per share (EPS) =

Profit for the period attributable to the owners of the parent

Weighted average number of shares outstanding during the period

Comparable earnings per share =

Comparable net profit

Weighted average number of shares outstanding during the period

Equity per share =

Shareholder's equity attributable to the owners of the parent

Number of shares outstanding at the end of the period

Cash flow per share =

Net cash generated from operating activities

Weighted average number of shares outstanding during the period

Price / earnings ratio (P/E) =

Share price at the end of the period

Earnings per share

Key figure Calculation Reason for use

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Dividend payout ratio, % = 100 x

Dividend per share

Earnings per share

Dividend yield, % = 100 x

Dividend per share

Share price at the end of the period

Average share price =

Amount traded in euros during the period

Number of shares traded during the period

Market capitalization = Number of shares at the end of the period x share price at the end of the period

Calculation of key drivers

Oil Products total refining margin (USD/bbl) =

Comparable sales margin x average EUR/USD exchange rate

for the period x standard refinery yield

Oil Products total refining margin measures the segment's comparable sales margin

per refined unit sold. USD/bbl is a standard unit used in the oil industry.

Refined sales volume x standard barrels per ton

Renewable Products comparable sales

margin (USD/ton)

Comparable sales margin

Renewable Products comparable sales margin measures the sales margin per unit

sold.

Renewable diesel sales volume

In the business environment where Neste operates, commodity prices and foreign exchange rates are volatile and can cause significant fluctuations in inventory values and operating profit. Comparable EBITDA eliminates both the inventory valuation gains/losses generated by

the volatility in raw material prices and changes in open derivatives, and better reflects the company’s underlying operational performance. Also, it reflects Neste’s operational cash flow, where the change in operating profit caused by inventory valuation is mostly compensated

by changing net working capital. Items affecting comparability are linked to unpredictability events of a significant nature that do not form part of normal day-to-day business. They include among others impairment losses and reversals, gains and losses associated with the

combination or termination of businesses, restructuring costs, and gains and losses on the sales of assets. Only items having an impact of more than EUR 1 million on Neste’s result will be classified as items affecting comparability.

Key figure Calculation Reason for use

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Consolidated Statement of Income 178

Consolidated Statement of Comprehensive Income 178

Consolidated Statement of Financial Position 179

Consolidated Cash Flow Statement 180

Consolidated Statement of Changes in Equity 181

Notes to the Consolidated Financial Statements 182

Parent company Income Statement 240

Parent company Balance Sheet 240

Parent company Cash Flow Statement 241

Parent company Notes to the Financial Statements 242

Proposal for the distribution of earnings and

signing of the Review by the Board of Directors

and the Financial Statements 257

Auditor’s Report 258

Financial

Statements

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Neste Annual Report 2022 | Financial statements

EUR million Note 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

Revenue 4, 5 25,707 15,148

Other income 6 54 48

Share of profit (loss) of associates and joint ventures 15 2 -3

Materials and services 7 -21,648 -11,751

Employee benefit costs 8 -545 -431

Depreciation, amortization and impairments 4 -638 -584

Other expenses 9 -522 -403

Operating profit 2,410 2,023

Financial income and expenses 10

Financial income 9 4

Financial expenses -60 -55

Exchange rate and fair value gains and losses -80 -10

Total financial income and expenses -131 -61

Profit before income taxes 2,279 1,962

Income tax expense 11 -388 -188

Profit for the period 1,891 1,774

Profit attributable to

Owners of the parent 1,888 1,771

Non-controlling interests 3 2

1,891 1,774

Earnings per share from profit attributable to

owners of the parent (in euro per share) 12

Basic earnings per share 2.46 2.31

Diluted earnings per share 2.46 2.30

EUR million 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

Profit for the period 1,891 1,774

Other comprehensive income net of tax

Items that will not be reclassified to profit or loss

Remeasurements on defined benefit plans 18 -30

Net change of other investments at fair value -5 11

Total 13 -19

Items that may be reclassified subsequently

to profit or loss

Translation differences -56 24

Cash flow hedges

recorded in equity 19 -99

transferred to income statement 90 -9

Share of other comprehensive income of investments

accounted for using the equity method 17 4

Total 70 -80

Other comprehensive income for the period, net of tax 82 -98

Total comprehensive income for the period 1,973 1,675

Total comprehensive income attributable to:

Owners of the parent 1,970 1,673

Non-controlling interests 3 2

1,973 1,675

The notes are an integral part of these consolidated financial statements.

Consolidated Statement of Income Consolidated Statement

of Comprehensive Income

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179

EUR million Note 31 Dec 2022 31 Dec 2021

ASSETS

Non-current assets

Intangible assets 13 570 516

Property, plant and equipment 14 6,570 5,152

Investments in associates and joint ventures 15 63 60

Non-current receivables 17 103 63

Deferred tax assets 11 59 45

Derivative financial instruments 16, 19 5 11

Other financial assets 17 44 48

Total non-current assets 7,413 5,894

Current assets

Inventories 18 3,648 2,618

Trade and other receivables 17 2,178 1,677

Derivative financial instruments 16, 19 406 243

Current investments 17 0 135

Cash and cash equivalents 17 1,271 1,581

Total current assets 7,504 6,253

Assets classified as held for sale 28 0 270

Total assets 14,917 12,417

Consolidated Statement of Financial Position

EQUITY

Capital and reserves attributable

to the owners of the parent 20

Share capital 40 40

Other equity 8,282 6,941

Total 8,322 6,981

Non-controlling interests 5 4

Total equity 8,327 6,985

LIABILITIES

Non-current liabilities

Interest-bearing liabilities 21 1,964 1,378

Deferred tax liabilities 11 336 309

Provisions 22 200 210

Pension liabilities 23 119 146

Derivative financial instruments 16, 19 12 1

Other non-current liabilities 21 43 43

Total non-current liabilities 2,674 2,087

Current liabilities

Interest-bearing liabilities 21 651 379

Current tax liabilities 43 12

Derivative financial instruments 16, 19 200 161

Trade and other payables 21 3,022 2,761

Total current liabilities 3,916 3,313

Liabilities related to assets held for sale 28 0 32

Total liabilities 6,590 5,432

Total equity and liabilities 14,917 12,417

The notes are an integral part of these consolidated financial statements.

EUR million Note 31 Dec 2022 31 Dec 2021

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EUR million Note 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

Cash flows from operating activities

Profit before income taxes 2,279 1,962

Adjustments for

Share of profit (loss) of associates and joint ventures 4, 15 -2 3

Depreciation, amortization and impairments 4 638 584

Other non-cash income and expenses -53 -121

Financial expenses - net 10 131 61

Profit / loss from disposal of fixed assets and shares 0 0

Cash flow before change in net working capital 2,994 2,490

Change in net working capital

Decrease (+) / increase (-) in trade and other receivables -322 -401

Decrease (+) / increase (-) in inventories -1,037 -795

Decrease (-) / increase (+) in trade and other payables 2 835

Change in net working capital -1,357 -362

Cash generated from operations 1,637 2,127

Interest and other finance cost paid -59 -52

Interest income received 6 1

Realized foreign exchange gains and losses 11 12

Income taxes paid -398 -95

Finance cost and income taxes paid -440 -133

Net cash generated from operating activities 1,197 1,994

Consolidated Cash Flow Statement

Cash flows from investing activities

Purchases of property, plant and equipment -1,670 -929

Purchases of intangible assets 13 -73 -48

Acquisitions of subsidiaries -14 -322

Proceeds from sales of shares in subsidiaries, joint

arrangements and business operations 157 8

Proceeds from capital repayments in joint arrangements 15 13 0

Proceeds from sales of property, plant and equipment 30 6

Changes in long-term receivables and other investments -31 -200

Cash flows from investing activities -1,588 -1,483

Cash flow before financing activities -390 511

Cash flows from financing activities

Payment of (-) / proceeds from (+) current interest-bearing

liabilities 260 111

Proceeds from non-current interest-bearing liabilities 899 618

Repayments of non-current interest-bearing liabilities -407 -345

Repayments of lease liabilities -157 -144

Dividends paid to the owners of the parent -630 -614

Dividends paid to non-controlling interests -2 -2

Cash flows from financing activities -37 -377

Net decrease (-) / increase (+) in cash

and cash equivalents -427 134

Cash and cash equivalents at beginning of the period 1,696 1,552

Exchange gains (+) / losses (-) on cash and cash equivalents 3 9

Cash and cash equivalents at end of the period 17 1,271 1,696

EUR million Note 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

The notes are an integral part of these consolidated financial statements.

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181

EUR million Note

capital

Reserve

fund

Reserve

of invested

unrestricted

equity

Treasury

Fair value

and other

reserves

Actuarial

gains and

losses

Translation

differences

Retained

earnings

Owners of

the parent

Non-

controlling

interests

Total

equity

Total equity at 1 January 2022 40 19 16 -6 -22 -96 -10 7,040 6,981 4 6,985

Profit for the period 1,888 1,888 3 1,891

Other comprehensive income for the period, net of tax 120 18 -56 82 0 82

Total comprehensive income for the period 0 0 0 0 120 18 -56 1,888 1,970 3 1,973

Transactions with the owners in their capacity as owners

Dividend decision -630 -630 -2 -632

Share-based compensation 1 -1 0 0

Transfer from retained earnings -12 0 12 0 0

Total equity at 31 December 2022 20 40 7 16 -5 98 -78 -66 8,309 8,322 5 8,327

EUR million Note

capital

Reserve

fund

Reserve

of invested

unrestricted

equity

Treasury

Fair value

and other

reserves

Actuarial

gains and

losses

Translation

differences

Retained

earnings

Owners of

the parent

Non-

controlling

interests

Total

equity

Total equity at 1 January 2021 40 20 16 -7 71 -66 -35 5,886 5,925 4 5,929

Profit for the period 1,771 1,771 2 1,774

Other comprehensive income for the period, net of tax -93 -30 24 -98 0 -98

Total comprehensive income for the period 0 0 0 0 -93 -30 24 1,771 1,673 2 1,675

Transactions with the owners in their capacity as owners

Dividend decision -614 -614 -2 -617

Share-based compensation 1 -4 -3 -3

Transfer from retained earnings 0 0 0 0

Total equity at 31 December 2021 20 40 19 16 -6 -22 -96 -10 7,040 6,981 4 6,985

The notes are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

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OCI

Notes to the Consolidated Financial Statements

1 General information

Neste Corporation is a Finnish public limited liability company domiciled in Espoo, Finland. Neste Corporation is listed on the

NASDAQ Helsinki Oy. The address of its registered office is Keilaranta 21, P.O. Box 95, 00095 Neste, Finland.

Neste Corporation and its subsidiaries (together referred to as Neste) create sustainable solutions for transport, business,

and consumer needs. Neste’s wide range of renewable and circular solutions enable its customers to reduce climate emissions.

Neste is the world’s largest producer of renewable diesel and sustainable aviation fuel refined from waste and residue, developing

chemical recycling to combat the plastic waste challenge. Sustainably-produced solutions are Neste’s most significant contribution

to the implementation of the Paris Agreement, as well as the United Nations’ Sustainable Development Goals (SDG). Neste is also

a technologically advanced refiner of high-quality oil products. Neste wants to be a reliable partner with widely valued expertise,

research, and sustainable operations.

Neste’s customers benefit not only from the high-quality products, but also from the comprehensive supply and logistics

services that Neste can provide in Finland and abroad. Neste’s refineries are located in Finland, the Netherlands and Singapore.

Additionally, during 2022 Neste has established a joint operation together with Marathon Petroleum to produce renewable diesel

following a conversion project of Marathon’s refinery in the United States. Neste has a network of service stations and other retail

outlets in Finland and the Baltic countries.

The Board of Directors has approved these consolidated financial statements for issue on 7

of February 2023.

2 Accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These

policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards

(IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations applicable to companies reporting under IFRS as adopted

by the European Union. The consolidated financial statements also include compliance with Finnish accounting and corporate

legislation. The consolidated financial statements have been prepared under the historical cost convention unless otherwise

stated in the Neste’s accounting policies.

The consolidated financial statements are presented in million euros unless otherwise stated. The figures in the tables are

subject to rounding, which may cause some rounding inaccuracies in aggregate column and row totals.

Neste discloses its accounting policies in conjunction with each note to provide enhanced understanding of each accounting

area. The following symbols IS, OCI, BS, and CF are used to show which amounts in the notes can be reconciled to

consolidated statement of income (IS), consolidated statement of comprehensive income (OCI), consolidated statement of

financial position (BS) or consolidated cash flow statement (CF).

New standards, significant amendments and interpretations adopted by Neste

Neste applied, for the first time, certain standards and amendments, which are effective for annual periods beginning on or

after 1 January 2022. These amendments did not have a material impact on the consolidated financial statements of Neste.

Neste has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The following new standards and amendments became effective as of 1 January 2022 (unless otherwise stated):

• Onerous Contracts: Costs of Fulfilling a Contract – Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent

Assets.

• Annual Improvements to IFRS Standards 2018–2020: the annual improvements process provides a mechanism for minor

and non-urgent amendments to IFRSs to be grouped together and issued in one package annually. The amendments clarify

among others IFRS 9 and IFRS 16 Standards.

• Proceeds before Intended Use: Amendments to IAS 16 Property, Plant and Equipment.

• Reference to the Conceptual Framework: Amendments to IFRS 3 Business Combinations.

New standards, amendments and interpretations not yet adopted

Certain new interpretations, amendments to existing standards or new standards have been published. Neste intends to adopt

these standards when they become effective.

There are no IFRS or IFRIC interpretations that are not yet effective and that would be expected to have a material impact on Neste.

Estimates and judgements requiring management estimation

The preparation of consolidated financial statements in conformity with the International Accounting Standard requires Neste’s

management to make estimates and assumptions which have an impact on reported assets and liabilities, the disclosure of

contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income

and expenses during the reporting period. In addition, management judgement may be required in applying the accounting

principles, for example, classifying assets as held for sale.

These estimates, assumptions and judgements are based on management’s historical experience and other factors,

including expectations of future events that are believed to be reasonable under the circumstances. The actual amounts may

differ significantly from the estimates used in the financial statements.

Neste follows the changes in estimates, assumptions and the factors affecting them by using multiple internal and external

sources of information. Possible changes in estimates and assumptions are recognized in the financial period the estimate or

assumption is changed.

The sources of uncertainty which have been identified as most significant estimates by Neste are presented in connection to

the items considered to be affected.

Visibility in the global economy continues to be low due to high inflation, reduced economic growth expectations and

continued geopolitical uncertainty. The war in Ukraine has had significant impacts on the global energy markets, and energy

prices have risen to high levels. We expect volatility in the oil products and renewable feedstock markets to remain high. Neste

has assessed the impacts of war in Ukraine by reviewing the carrying values of the balance sheet items, which did not indicate

a need for asset impairments. Neste does not have fixed assets in Russia nor in Ukraine. Neste’s financial position remained

strong. Changes in the macroeconomic environment have been taken into account by updating the interest rate, discount

rate and inflation assumptions to reflect the current situation. More information can be found in the notes 3 Financial risk

management, 13 Intangible assets and 23 Employee benefit obligations.

Climate related topics

Climate commitments are part of Neste’s corporate strategy. We have a two-pronged approach to combating climate change:

on the one hand we enable change, a carbon handprint, with our renewable and recycled products. On the other hand, we

ourselves make a change by reducing our own carbon footprint. These two climate performance indicators are included in the

long-term incentives for Neste’s key personnel. More information in Note 24 Share-based payments.

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The financial impacts of the climate-related matters have been booked in the financial statements in accordance with

accounting policies. For example investments to the Renewable Products segment are mainly EU taxonomy aligned capital

expenditure.

Climate change poses both business risks and opportunities to Neste.

Risks associated with the transition to a lower-carbon economy include for example unfavorable development of greenhouse

gas emissions pricing or unforeseen regulatory development for GHG reductions, or the acceptability of reduction technologies.

Market risks are also seen as relevant risks.

The adaptability and resilience of Neste’s strategy to climate change also creates opportunities by contributing to the

transition to a lower-carbon economy. Our strategy has been influenced by opportunities related to renewable and circular

products, and we see that increasing global climate ambitions and related regulations continue to increase the demand for our

renewable and circular products.

The risks and opportunities described above have been taken into account in the goodwill impairment testing of the

Renewable Products Cash Generating Unit. More information in Note 13 Intangible assets.

Climate-related matters do not have material impact on provisions. More information in Note 22 Provisions.

Consolidation

Subsidiaries

The consolidated financial statements cover the parent company, Neste Corporation, and all those companies over which

Neste has control. Neste controls an entity when Neste is exposed to, or has rights to, variable returns from its involvement

with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated

from the date on which control is transferred to Neste, and are no longer consolidated when this control ceases.

Acquired or established subsidiaries are accounted for by using the acquisition method. The consideration transferred and

the identifiable assets acquired and liabilities assumed in the acquired company are measured at their fair value on their date

of acquisition. The consideration transferred includes any assets transferred by the acquirer, liabilities incurred by the acquirer

to former owners of the acquiree and the equity interests issued by the acquirer. Any contingent consideration related to the

business combination is measured at fair value on their acquisition date and it is classified as either liability or equity. Contingent

consideration classified as liability is re-measured at its fair value at the end of each reporting period and the subsequent changes

to fair value are recognized in profit or loss. Contingent consideration classified as equity is not subsequently re-measured. The

consideration transferred does not include any transactions accounted for separately from the acquisition. Acquisition-related

costs are expensed as incurred.

All intra-group transactions, receivables, liabilities and unrealized margins, as well as distribution of profits within Neste, are

eliminated in the preparation of consolidated financial statements.

The result for the period and items recognized in other comprehensive income are allocated to the equity holders of the company

and non-controlling interests and presented in the statement of income and statement of other comprehensive income. Non-

controlling interests are presented separately from the equity allocated to the equity holders of the company. Other comprehensive

income is allocated to the equity holders of the company and to non-controlling interests even in situations where the allocation

would result in the non-controlling interests’ share being negative, unless non-controlling interests have an exemption not to

meet obligations which exceed the non-controlling interests’ investment in the company.

When Neste ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control

is lost, with the change in the carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the

purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any

amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if Neste had directly

disposed of the related assets or liabilities.

Joint arrangements

A joint arrangement is an arrangement in which two or more parties have joint control, and in which the sharing of control has

been contractually agreed between the parties. Joint control exists only when decisions about the relevant activities require the

unanimous consent of the parties sharing control. Joint arrangements are classified as either joint operations or joint ventures,

depending on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.

Neste has assessed the nature of its joint arrangements and determined them to be either joint ventures or joint operations.

Joint operation is a joint arrangement, whereby the parties that have joint control of the arrangement have rights to the assets,

and obligations for the liabilities relating to the arrangement. Joint venture is a joint arrangement whereby the parties that have

joint control of the arrangement have rights to the net assets of the arrangement.

During 2022 Neste finalized a transaction to establish a joint arrangement, called Martinez Renewables, for production

of renewable fuels together with Marathon Petroleum. Through the transaction, Neste obtained a 50% interest in Martinez

Renewables. Production is expected to commence in early 2023 following a conversion project of Marathon’s refinery in Martinez,

California. Pretreatment capabilities are expected to come online in the second half of 2023 and the facility is expected to be

capable of producing 2.1 million tons per year by the end of 2023. As a result, Martinez Renewables is expected to increase

Neste’s renewable products capacity by slightly over 1 million tons per annum.

At the time of making the investment, Neste made the interpretation to treat the establishment and initial investment into the

joint arrangement as an asset acquisition. After the initial investment, Neste classified the joint arrangement as a joint operation

as Neste and Marathon Petroleum have a joint control over the arrangement’s relevant activities, and the production output will

be divided evenly between Neste and Marathon Petroleum. As a result of the joint operation classification, Neste recognises its

50% share of Martinez Renewables’ assets, liabilities, revenues and expenses.

The investments into Martinez Renewables in 2022 resulted in EUR 753 million capital expenditure in investing cash flow. The

impact to Neste’s balance sheet at year-end 2022 is presented in note 14 Property, plant and equipment, note 18 Inventories

and note 30 Leases. Martinez Renewables did not have other material impacts to Neste’s balance sheet or income statement.

Joint ventures are accounted for using the equity method. Joint operations are consolidated for its share of the assets, liabilities,

revenues, expenses and cash flow on a line-by-line basis. Under the equity method of accounting, interests in joint ventures

are initially recognized at cost and adjusted thereafter to recognize Neste’s share of the post-acquisition profits or losses and

movements in other comprehensive income. When Neste’s share of losses in a joint venture equals or exceeds its interests in the

joint ventures (which includes any long-term interests that, in substance, form part of Neste’s net investment in the joint ventures),

Neste does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealized gains on transactions between Neste and its joint arrangements are eliminated to the extent of Neste’s interest in

the joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset

being transferred.

Associates

Associated companies are entities over which Neste has significant influence but not control, and generally involve a shareholding

of between 20% and 50% of the voting rights. Investments in associates are accounted for by using the equity method as

described above in the “Joint arrangements” paragraph.

Structured entities

Neste engages in business activities with structured entities which are designed to achieve a specific business purpose. A

structured entity is one that has been set up so that voting rights or similar rights are not the dominant factor in deciding who

controls the entity. An example is when voting rights relate only to administrative tasks and the relevant activities are directed by

contractual arrangements.

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Structured entities are consolidated when the substance of the relationship between Neste and the structured entities indicate

that the structured entities are controlled by Neste. The extent of Neste’s interests in unconsolidated structured entities will vary

depending on the type of structured entities. Entities are not consolidated because Neste does not control them through voting

rights, contract, funding agreements, or other means.

Management uses judgement when determining the accounting treatment of the structured entities. In addition to the voting

rights or similar rights, the management considers other factors such as the nature of the arrangement, contractual arrangements

and level of influence with the structured entities.

Foreign currency translation

(a) Presentation currency

Items included in the financial statements of each of Neste’s entities are measured using the currency of the primary economic

environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in euros,

which is the company’s presentation currency.

(b) Transactions in foreign currencies

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of

the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of

such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign

currencies, are recognized in the income statement, except when deferred in other comprehensive income as qualifying cash

flow hedges and qualifying net investment hedges.

The results and financial position of all Neste entities (none of which uses a hyperinflationary economy currency) that have a

functional currency different from the presentation currency are translated into the presentation currency as follows:

• Assets and liabilities are translated at the closing rate quoted on the relevant balance sheet date;

• Income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of

the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at

the dates of the transactions);

• All resulting exchange differences are recognized in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities and currency instruments

designated as hedges of such investments, are recognized in other comprehensive income. When a foreign operation is partially

disposed of, sold, or liquidated, translation differences accrued in equity are recognized in the income statement as part of the

gain or loss on the sale/liquidation. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated

as assets and liabilities of the entity in question and translated at the closing rate.

3 Financial risk management

Financial risk management principles

The Neste Board of Directors has approved the Corporate risk management policy. This policy together with the related

principles and instructions defines the framework for financial risk management within Neste. Mandates and limits that are

applicable to financial risks have been defined in the risk management policy.

For more information regarding Neste’s risk management principles and key risk areas, please refer to the risk management

section in the annual report.

Market risks

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance

of a business. For Neste, the main types of market risks are commodity price risk, foreign exchange risk and interest rate risk.

These are specified in more detail in the following sections. In accordance with the Corporate risk management policy, various

derivatives transactions are executed to mitigate exposure to risk. The positions are monitored and managed on a daily basis.

1. Commodity price risks

The main commodity price risks Neste faces in its businesses are related to market prices for crude oil, renewable feedstocks,

and other feedstocks, as well as refined petroleum and renewable products. These prices are subject to significant fluctuations

resulting from a periodic over-supply and supply tightness in various regional markets, coupled with fluctuations in demand.

Neste’s results of operations in any given period are principally driven by the demand for and prices of renewable and oil

products relative to the supply and cost of raw materials. These factors, combined with Neste’s own consumption of raw

materials and output of refined products, drive operational performance and cash flows in Renewable Products and Oil

Products, which are Neste’s largest segments in terms of revenue, profits and net assets.

Neste divides the commodity price risks affecting Neste’s revenue, profits and net assets into two main categories: inventory

price risk and refining margin risk.

Inventory price risk

From a price risk management perspective, Neste’s refinery inventory consists of two components. The first and largest

component remains relatively constant over time and is referred to as the ‘base inventory’. The second and daily fluctuating

component is the amount of inventories differing from the base inventory level and at Neste it is called ‘transaction position’.

The base inventory is the minimum level that can reasonably assure the continuous operation of the refineries and prevent

deliveries from being compromised. It comprises inventories at the refineries and within the supply chain. The base inventory

includes the minimum level of stocks that Neste is required to maintain under Finnish laws and regulations.

The base inventory creates a risk in Neste’s income statement and balance sheet since Neste applies the weighted average

method for measuring the cost of goods sold, raw materials and inventories. Hedging operations related to price risk do not

target the base inventory. Instead, Neste’s inventory risk management policies target the ‘transaction position’ in as much as

these stocks create cash flow risks depending on the relationships between feedstock purchases, refinery production and

refined petroleum product sales over any given period. According to the Neste risk management policy, any open exposures of

the transaction position are hedged without delay when the underlying pricing-in or pricing-out occurs.

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In hedging the transaction position, derivative financial instruments are used. Because of the differences between the quality

of the underlying feedstocks or end products for which derivative financial instruments can be sold and purchased and the

actual quality of Neste’s feedstocks and end products, the business will remain exposed to some degree of basis risk. Basis

risk is typically higher in the Renewables business compared to the fossil fuel refining due to the nature of the feedstock pool

and limited availability of hedging instruments.

If crude or oil product markets are in contango where current forward prices are higher than current spot prices, Neste has

the capability to build physical contango storages from time to time. These storages are excluded from the transaction position

and are hedged separately.

Refining margin risk

Neste is exposed to a greater margin volatility in the Renewable Products segment compared to that of fossil fuel refining.

In the Renewables business, the refining margin is mainly an outcome of the renewable product sale price received and

the cost of feedstocks used. The underlying indices used in renewable diesel pricing are primarily related to oil products.

Premiums over pricing indices fluctuate regionally depending on the nature of bio mandates and incentives, local supply

and demand, and fossil fuel prices. In North America, Soy Methyl Ester (SME) is an important price driver through its link to

Renewable Identification Number (RIN) prices. The cost of feedstocks depends on feedstock selection and is typically derived

from different vegetable oils and fats. Feedstock prices are mainly driven by supply and demand balances, crop forecasts

and regional weather. In Renewable Products segment, operational activities and margin hedges are the primary means of

mitigating margin volatility.

Refining margin is an important determinant of Oil Products segment’s earnings. Its fluctuations constitute a significant risk.

The refining margin risk is a result of the revenue from sold petroleum products and the cost of raw materials together with

other costs. Neste’s exposure to low refining margins in traditional oil refining is partly offset by its high-conversion refinery

capacity.

With the aim of securing its margin and cash flow, Neste has defined margin hedging principles for its main refining

businesses. In the Renewable Products segment, the targeted hedge ratios are typically higher and can be expected to

fluctuate over time. In the fossil fuel business, the hedge ratios are typically moderate.

Both Oil and Renewable Product segments’ margins are also exposed to utility price risk that mainly arises from

consumption of electricity and natural gas. Neste has also defined principles for hedging these exposures. In hedging the

refining margin and utility price risks, commodity derivatives are used. Just as in transaction hedging, also when hedging

the refining margin and utility risks, the business will remain exposed to a certain degree of basis risk that comes from the

differences between actual qualities of feedstocks and products and qualities of available hedging arrangements.

The exposure to open positions of commodity derivative contracts is summarized in Note 19 Derivative financial instruments.

Neste does not apply IFRS hedge accounting for commodity hedging positions.

2. Foreign exchange risk

As the underlying currency of Neste’s main markets is the US dollar, and Neste operates and reports in Euro, this factor is one

that exposes Neste’s business to currency risk. The objective of foreign exchange risk management in Neste is to limit the

uncertainty created by changes in foreign exchange rates on the future value of cash flows and earnings, and in the balance

sheet. Generally, foreign exchange risk can be managed by hedging currency risks in contracted and forecast cash flows and

balance sheet exposures (referred to as transaction exposure) as well as the equity of non-euro-based subsidiaries (referred to

as translation exposure).

Transaction exposure

In general, all reporting segments hedge their transaction exposure related to highly probable future cash flows. Net foreign

currency cash flows are forecast over a 12-month period on a rolling basis and hedged on average 70% for the first six months

and 30% of the next six months for the Renewable business and on average 80% for the first six months and 40% for the

following six months for the fossil fuel businesses. Deviations from the benchmark position are allowed in line with the limits

set by treasury principles. The most important hedged currency is the US dollar. Other currencies to which Neste is exposed

are the Swedish crown (SEK), the Chinese renminbi (CNY), the Singapore dollar (SGD), the Australian dollar (AUD) and the

Malaysian ringgit (MYR). Neste’s net exposure is managed through the use of forward contracts and options. All transactions

are made for hedging purposes and the majority is also hedge-accounted for according to IFRS. Segments are responsible for

forecasting net foreign currency cash flows, while Group Treasury & Risk Management is responsible for implementing hedging

transactions. In addition to the above mentioned foreign currency hedging programs Neste has continued to hedge the

Singapore expansion project related currency exposures until the end of the investment. Both currency forwards and currency

options can be used in order to manage this position.

Neste has several currency-denominated assets and liabilities in its balance sheet, such as foreign currency loans, deposits,

net working capital and cash in other currencies than home currency. The principle is to hedge this balance sheet exposure

fully using forward contracts. Similarly to commodity price risk management, the foreign exchange transaction hedging targets

inventories in excess of the base inventory. Open exposures are allowed based on risk limits set by treasury principles. The

largest and most volatile item in terms of balance sheet exposure is net working capital. Since many of the Neste’s business

transactions, sales of products and services and purchases of crude oil and other feedstock are linked to the US dollar, the

daily exposure of net working capital is hedged as part of the balance sheet hedge in order to neutralize the effect of volatility

in EUR/USD exchange rate. During 2022, the daily balance sheet exposure fluctuated between approximately USD 1,346

million and 3,429 million (2021: USD 1,209 million and 2,274 million). Group Treasury & Risk Management is responsible for

consolidating various balance sheet items and carrying out hedging transactions.

The exposure to open positions of foreign exchange derivative contracts is summarized in Note 19 Derivative financial

instruments.

Translation exposure

Group Treasury & Risk Management is responsible for managing Neste’s translation exposure. This consists of net investments

in foreign subsidiaries and joint ventures. Although the main principle is to leave translation exposure unhedged, Neste may

seek to reduce the volatility in equity in the consolidated balance sheet through hedging transactions. Any hedging decisions

are made by Group Treasury & Risk Management. At the end of 2022, the most important translation exposures were: US

dollar EUR 2,747 million and Swedish Crown EUR 89 million (2021: US dollar EUR 571 million, Swedish Crown EUR 76

million). Neste has not hedged the exposures in 2022 or 2021.

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3. Interest rate risk

Neste is exposed to interest rate risk mainly through its interest-bearing net debt. The objective of the interest rate risk

management is to limit the volatility of interest expenses in the income statement. The benchmark duration for the debt

portfolio is 12 months, and the duration can vary between six and 96 months. As of 31 December 2022, the duration was 29

months (2021: 44 months). In addition to duration, Neste has defined a flow risk limitation.

Interest rate derivatives are used to adjust the duration of the debt portfolio. Neste’s interest rate risk management is handled

by Group Treasury & Risk Management. Neste has not used interest rate derivatives in 2022 or 2021.

4. Key sensitivities to market risks

Sensitivity of operating profit to market risks arising from the Group's operations

Due to the nature of its operations, Neste’s financial performance is sensitive to the market risks described above. The following

table details the approximate impact that movements in the Neste’s key price and currency exposures would have on its operating

profit for 2023 (2022), assuming normal market and operating conditions and with following assumptions on sensitivities:

• Hedging transactions are excluded

• The sensitivity of each factor in the table is individual, assuming other factors to remain constant, i.e., the ceteris paribus

principle

• The sensitivity in the EUR/USD exchange rate is based on exposure forecast

• The sensitivity in the Oil Product totals refining margin is based on forecast volumes, representing an impact from change of

1 USD/barrel

• The sensitivity in the Oil Products crude oil price is based on impacts through inventory gains / losses and changes in utility

and freight costs

• The sensitivity in the Renewable Products raw material price is based on impacts through inventory gains / losses

• The sensitivity in the Renewable Products refining margin is based on nameplate capacity at end of 2022, representing an

impact from a change of 50 USD/ton

The re-pricing period of interest-bearing

debt occurs 2022

Within

1 year

1 year–

5 years > 5 years Total

Financial instruments with floating interest rate

Loans from financial institutions 776 0 0 776

Other loans 34 0 0 34

Financial instruments with fixed interest rate

Bonds 0 400 495 895

Commercial paper liabilities 346 0 0 346

Lease liabilities 111 135 289 535

Other loans 0 30 0 30

1,266 565 784 2,616

The re-pricing period of interest-bearing

debt occurs 2021

Within

1 year

1 year–

5 years > 5 years Total

Financial instruments with floating interest rate

Loans from financial institutions 258 0 0 258

Other loans 131 0 0 131

Financial instruments with fixed interest rate

Bonds 0 399 494 893

Lease liabilities 111 141 192 444

Other loans 0 30 0 30

501 570 686 1,757

Approximate impact on operating profit, excluding hedges 2022 2021

+/- 10% in the EUR/USD exchange rate EUR million -534/+653 -289/+353

+/- USD 1.00/barrel in Oil Products total refining margin USD million +/-90 +/-90

+/- USD 10/barrel in crude oil price for Oil Products

USD million +/-115 +/-85

+/- USD 100/t in Renewable Products raw material price

USD million +/-180 +/-150

+/- USD 50/t in Renewable Products refining margin

USD million +/-170 +/-160

Inventory gains/losses excluded from comparable EBITDA

Based on name-plate capacity

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Sensitivity to market risks arising from financial instruments as required by IFRS 7

The following analysis, required by IFRS 7, is intended to illustrate the sensitivity of Neste’s profit for the period and equity

to changes in oil prices, the EUR/USD exchange rate, and interest rates, resulting from financial instruments, such as

financial assets and liabilities and derivative financial instruments, as defined by IFRS, included in the balance sheet as of 31

December 2022 (2021). Financial instruments affected by the above market risks include net working capital items, such as

trade and other receivables and trade and other payables, interest-bearing liabilities, deposits, liquid funds, and derivative

financial instruments. When cash flow hedge accounting is applied, the change in the fair value of derivative financial

instruments is assumed to be recorded fully in equity.

The following assumptions were made when calculating the sensitivity to the change in oil prices:

• The flat price variation for oil derivative contracts of crude oil, refined oil products and vegetable oil is assumed to be

+/- 20%

• The sensitivity related to oil derivative contracts held for hedging refinery oil inventory position is included; the underlying

physical oil inventory position is excluded from the calculation, since inventory is not a financial instrument

• The sensitivity related to oil derivative contracts held for hedging expected future refining margin is included; the underlying

expected refining margin position is excluded from the calculation

The following assumptions were made when calculating the sensitivity to changes in the EUR/USD exchange rate:

• The variation in the EUR/USD-rate is assumed to be +/- 10%

• The position includes USD-denominated financial assets and liabilities, such as interest-bearing liabilities, deposits, trade

and other receivables, trade and other payables, and liquid funds, as well as derivative financial instruments

• The position excludes USD-denominated future cash flows

The following assumptions were applied when calculating the sensitivity to changes in interest rates:

• The variation of interest rate is assumed to be a 1% parallel shift in the interest rate curve

• The interest rate risk position includes interest-bearing liabilities (excluding leases), interest-bearing receivables, and interest

rate swaps, however liquid funds are excluded

• The income statement is affected by changes in the interest rates of floating-rate financial instruments except derivative

financial instruments that are designated as and qualifying for cash flow hedges, which are recorded directly in equity

The sensitivity analysis presented in the following table may not be representative, since the Neste’s exposure to market risks

also arises from balance sheet items other than financial instruments, such as inventories. As the sensitivity analysis does

not take into account future cash flows, which Neste hedges in significant volumes, it only reflects the change in fair value

of hedging instruments. In addition, the size of the exposure sensitive to changes in the EUR/USD exchange rate varies

significantly, so the position on the balance sheet date may not be representative for the financial period on average. Equity in

the following table includes items which are recorded directly in equity. Items affecting the income statement are not included

in equity.

Liquidity and refinancing risks

Liquidity risk is defined as financial distress or extraordinarily high financing costs arising due to a shortage of liquid funds in a

situation where business conditions unexpectedly deteriorate and require financing. The objective of liquidity risk management

is to maintain sufficient liquidity and to ensure that it is available fast enough to avoid uncertainty related to financial distress at

all times.

Neste’s principal source of liquidity is expected to be cash generated from operations. In addition, Neste seeks to reduce

liquidity and refinancing risks by maintaining a diversified maturity profile in its loan portfolio. Certain other limits have also been

set to minimize liquidity and refinancing risks. The amount of short-term financing is limited to the greater of the following: EUR

500 million or 30% of total interest-bearing liabilities. Unused committed credit facilities together with cash must always be at a

minimum EUR 700 million and sufficient to cover all forecasted negative free cash flows and interest bearing liabilities maturing

within the next 12-month period.

The average loan maturity as of 31 December 2022 was 2.5 years (2021: 3.7 years). The most important financing programs

in place are committed revolving multicurrency credit facility of EUR 1,200 million, committed single currency revolving credit

agreement of EUR 250 million, committed overdraft facilities of EUR 150 million and uncommitted domestic commercial paper

program of EUR 400 million.

2022 2021

Sensitivity to market risk arising from

financial instruments as required by IFRS 7

Income

statement Equity

Income

statement Equity

+/- 20% change in oil price

EUR million -/+27 +/-0 -/+2 +/-0

+/- 10% change in EUR/USD exchange rate EUR million +175/-214 +219/-218 +100/-122 +132/-138

+/- 1% parallel shift in interest rates EUR million -/+6 +/-0 -/+2 +/-0

Includes crude oil, refined oil products and vegetable oil derivatives

Liquid funds and committed unutilized credit facilities 31 Dec 2022 31 Dec 2021

Liquid funds 1,271 1,716

Overdraft facilities, expiring within one year 150 150

Revolving credit facility, expiring beyond one year

1,450 1,200

Total 2,871 3,066

In addition: unused commercial paper program (uncommitted) 54 400

EUR 1,200 million revolving credit facility dated 18 December, 2019 for general corporate purposes. The facility has tenor of

five years with two one-year extension options. The margin under the facility will be adjusted based on Neste’s progress to meet its

greenhouse gas emission reduction target. EUR 250 million single currency revolving credit agreement dated 23 December 2022 for

general corporate purposes with a tenor of three years and two one-year extension options.

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Maturity profile of financial liabilities based on contractual payments 31 Dec 2022 2023 2024 2025 2026 2027 2028– Total

Trade payables and other liabilities 2,879 13 13 1 1 14 2,922

Interest-bearing liabilities

Bonds

0 400 0 0 0 500 900

Loans from financial institutions 162 6 506 6 98 0 777

Commercial paper liabilities 346 0 0 0 0 0 346

Lease liabilities

111 72 37 16 10 289 535

Other loans 34 30 0 0 0 0 64

Interest of lease liabilities 30 27 24 22 21 282 405

Interest of other liabilities 36 32 14 7 7 4 99

Total 3,597 580 594 52 136 1,089 6,048

Commodities 157 12 0 0 0 0 169

Gross settled forward foreign exchange contracts

- inflow (-) -7,014 -3 0 0 0 0 -7,017

- outflow 6,837 3 0 0 0 0 6,840

Derivatives total -20 12 0 0 0 0 -8

Maturity profile of financial liabilities based on contractual payments 31 Dec 2021 2022 2023 2024 2025 2026 2027– Total

Trade payables and other liabilities 2,656 9 9 9 1 16 2,699

Interest-bearing liabilities

Bonds

0 0 400 0 0 500 900

Loans from financial institutions 137 6 6 6 6 98 258

Lease liabilities

111 62 39 27 13 192 444

Other loans 131 0 30 0 0 0 161

Interest of lease liabilities 22 20 18 16 14 204 293

Interest of other liabilities 15 12 13 5 5 8 57

Total 3,073 109 514 62 39 1,018 4,814

Commodities 85 1 0 0 0 0 86

Gross settled forward foreign exchange contracts

- inflow (-) -3,909 -10 0 0 0 0 -3,919

- outflow 3,947 10 0 0 0 0 3,957

Derivatives total 123 1 0 0 0 0 124

Refer to Note 21 Financial liabilities for further information

Refer to Note 30 Leases for further information

Refer to Note 21 Financial liabilities for further information

Refer to Note 30 Leases for further information

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Credit and counterparty risk

Counterparty risk arises from all business relationships, where Neste is exposed to the counterparty’s failure to perform according to

Neste’s requirements and contractual commitments. The risk arises especially from sales, supply, hedging and trading transactions

as well as from cash investments. Risk magnitude depends on the size of the business exposure and creditworthiness of the

counterparty. The objective of counterparty and credit risk management is to prevent and minimize the losses incurred as a result

of a counterparty not fulfilling its obligations. Limits, mandates and management principles for counterparty and credit risk are

covered in the Corporate risk management policy and separate principle and instruction-level documents. Credit risk limits are

set at the Group level, designated by different levels of authorization and delegated to Neste’s reporting segments, which are

responsible for counterparty risk management within these limits.

When determining the credit lines for sales contracts, counterparties are screened and evaluated vis-à-vis their

creditworthiness to decide whether an open credit line is acceptable or collateral, for example, a letter of credit, bank

guarantee or parent company guarantee has to be posted. In the event that collateral is required credit risk is evaluated based

on a financial evaluation of the party posting the collateral. If appropriate in terms of the potential credit risk associated with

a specific customer, advance payment is required before delivery of products or services. In addition, Neste may reduce its

counterparty risks by selling trade receivables to a third party, e.g., the bank.

Neste risk management policy divides credit lines for counterparties into following categories according to contract type:

physical sales contracts, derivative contracts and financial transactions. In each of the categories counterparty credit limits

and decision making mandates are determined separately for counterparties rated by general rating agencies and unrated

counterparties. For OTC (over-the-counter) derivative financial instrument contracts, Neste has negotiated framework

agreements in the form of the ISDA (International Swaps and Derivatives Association) master agreement with the main

counterparties concerning commodity, emission allowance, currency and interest rate derivative financial instruments.

These contracts permit netting and allow for termination of the contract on the occurrence of certain events of defaults and

termination events. Some of these agreements include Credit Support Annexes (CSA) with the aim of reducing credit and

counterparty risk by requiring margin call deposits in the form of cash or letter of credit for balances exceeding the mutually

agreed limit. At the end of December 2022, Neste had received EUR 34 million in cash collateral (2021: EUR 120 million) and

EUR 0 million letter of credit (2021: EUR 0 million) due to CSA agreements. Neste had issued EUR 27 million in cash collateral

(2021: EUR 0 million) and EUR 0 million letter of credit (2021: EUR 0 million) due to CSA agreements.

Financial impact of netting for instruments subject to an

enforceable master netting agreement (or similar)

31 Dec 2022 31 Dec 2021

Financial assets Financial liabilities Financial assets Financial liabilities

Derivatives Trade receivables Derivatives Trade payables Derivatives Trade receivables Derivatives Trade payables

Gross amount of recognized financial instruments 411 51 211 8 254 30 162 2

Related liabilities or assets subject to master netting agreements 165 0 165 0 98 0 98 0

CSA agreements 34 0 27 0 120 0 0 0

Net exposure 212 51 19 8 36 30 64 2

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Neste subsidiaries are required to deposit their excess cash balances with the Group Treasury on an ongoing basis in order to

provide sufficient visibility and management of Neste’s cash balance and risks associated with it.

As for counterparty risk management, the minimum credit rating requirement for companies providing insurance for Neste

Group is defined in the insurance principles.

Neste has a large number of different international counterparties. As to the range of counterparties, the most significant types

are primarily large international oil companies and financial institutions. Neste’s exposure to unexpected credit losses within one

reporting segment may increase with the concentration of credit risk through a number of counterparties operating in the same

industry sector or geographical area, which may be adversely affected by changes in economic, political or other conditions.

These risks are reduced by taking concentration risks into consideration in credit decisions.

Counterparties to contracts comprising derivative financial instruments exposure on 31 December 2022: over 85 % of the

counterparties or their parent companies related to commodity derivative contracts have investment-grade rating from an

established international credit rating agency. Respectively, Group Treasury & Risk Management had an exposure for currency

and interest rate derivative contracts as of 31 December 2022 with banks, of which all have investment-grade rating at a

minimum. Commodity derivative transactions are also done through exchange, which reduces credit risk.

Neste assesses expected credit losses and calculates impairment loss from trade receivables based on historical credit loss

experience combined with current conditions and forward-looking macroeconomic analysis. Analysis is conducted utilizing industry

outlook and economic forecasts from various data sources. Neste has chosen a cautious expected credit loss calculation as

indicated by the low level of actual historical credit losses compared to the loan loss provision. The receivables have been divided

in aging buckets and segments depending on business area and geographic region, in addition to which they are assessed case

by case. Impairment loss from trade receivables for the period is EUR 12 million (2021: EUR 9 million). Recognized credit loss of

trade receivables amounts to EUR 8 million (2021: EUR 1 million).

Financial assets are written off when there is no reasonable expectation of recovery. Indications that there is no reasonable

expectation of recovery may be, e.g., a debtor failing to engage in a repayment plan with the company, or a debtor failing to

make contractual payments more than 180 days past due. However, the write-offs are interpreted case by case and thus if

there is a high probability that the receivable is still paid, no write-off is made. For all bankruptcies and debt restructurings,

Neste makes an immediate write off. Where loans or receivables have been written off, the company continues to engage in

enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or

loss.

Of the trade receivables portfolio exposure, 38% (2021: 56%) is from counterparties or their parent companies having

an investment-grade credit rating; 62% (2021: 44%) consists of trade receivables from counterparties that do not have an

investment-grade credit rating, most of it comprising from a large number of corporate and private customers.

Analysis of trade receivables by age 31 Dec 2022

Probability of

Credit Loss, % 31 Dec 2021

Probability of

Credit Loss, %

not past due 1,552 0–0.04% 1,253 0–0.04%

1–30 days overdue 89 0.01–4% 76 0.01–4%

31–60 days overdue 6 5–43% 4 5–43%

61–90 days overdue 3 10–55% 1 10–55%

91–180 days overdue 8 25–100% 3 25–100%

more than 180 days overdue

31 100% 74 100%

Trade receivables total 1,688 1,412

Impairment loss -12 -9

Trade receivables – Net 1,675 1,403

Blender’s Tax Credit receivables from the US tax authorities on 31.12.2022 were total EUR 53 million, of which EUR 17 million

more than 180 days overdue. Due to the low risk nature, no credit loss is recognized on these receivables

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Capital risk management

Neste’s objective when managing capital is to secure a capital structure that ensures access to capital markets at all times

despite the business cycle of the industry in which Neste operates. Neste seeks to maintain a capital structure equivalent to a

strong investment-grade rating. The capital structure of Neste is reviewed by the Board of Directors on a regular basis.

Neste monitors its capital on the basis of leverage ratio, the ratio of interest-bearing net debt to interest-bearing net debt

plus total equity. Interest-bearing net debt is calculated as interest-bearing liabilities less liquid funds. Over the cycle, Neste’s

leverage ratio is likely to fluctuate, and it is Neste’s objective to maintain the leverage ratio below 40%.

The leverage ratio 31 Dec 2022 31 Dec 2021

Total interest-bearing liabilities 2,615 1,757

Liquid funds 1,271 1,716

Interest-bearing net debt 1,344 41

Total equity 8,327 6,985

Interest-bearing net debt and total equity 9,671 7,026

Leverage ratio 13.9% 0.6%

Reconciliation of interest-bearing net debt Cash and cash equivalents Liquid investments Lease liabilities Borrowings Total

Net debt as at 1 January 2022 -1,581 -135 444 1,313 41

Cash flows 440 135 -157 754 1,173

New lease liabilities 0 0 253 0 253

Acquisitions and disposals -2 0 0 6 3

Foreign exchange differences -14 0 12 8 6

Other non-cash movements

-115 0 -17 0 -132

Net debt as at 31 December 2022 -1,271 0 535 2,080 1,344

Reconciliation of interest-bearing net debt Cash and cash equivalents Liquid investments Lease liabilities Borrowings Total

Net debt as at 1 January 2021 -1,552 -20 403 904 -265

Cash flows -117 -115 -144 397 22

New lease liabilities 0 0 141 0 141

Acquisitions and disposals -5 0 22 22 38

Foreign exchange differences -22 0 12 -10 -19

Other non-cash movements

114 0 10 0 125

Net debt as at 31 December 2021 -1,581 -135 444 1,313 41

Refer to Note 28 Assets held for sale for further information.

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4 Segment information

Accounting policy

Neste’s operations are divided into four operating segments: Renewable Products, Oil Products, Marketing & Services, and

Others. The performance of the reporting segments are reviewed regularly by the chief operating decision-maker, Neste’s

President & CEO, to assess performance and to decide on allocation of resources. Operating segments are reported in a

manner consistent with the internal reporting provided to the chief operating decision-maker.

The segments’ operating results are measured based on comparable EBITDA and comparable return on net assets. The

accounting policies applicable to the segment reporting are the same as those used for establishing the Neste consolidated

financial statements. All inter-segment transactions are on an arm’s length basis and are eliminated in consolidation.

Segment operating profit includes realized gains and losses from foreign currency and commodity derivative contracts

hedging cash flows of commercial sales and purchases that have been recycled in the consolidated statement of income.

Segment operating assets and liabilities consist of assets and liabilities utilized in the segments’ business operations.

Assets consist primarily of property, plant and equipment, intangible assets, investments in associates and joint ventures,

inventories and operative receivables. They exclude deferred taxes, interest-bearing receivables, and derivative financial

instruments designated as hedges of forecasted future cash flows. Segment operative liabilities consist of operative liabilities,

pension liabilities, short-term and long-term lease liabilities and provisions; and exclude items such as current and deferred

taxes, interest-bearing liabilities, and derivative financial instruments designated as hedges of forecasted future cash flows.

Neste's business structure

Neste’s operations are built around three business areas and six common functions. The business areas act as profit centers and

are responsible for their customers, products, and business development. Business areas are: Renewable Products, Oil Products,

and Marketing & Services. The common functions are: Finance, Human Resources, HSSEQ and Procurement, Sustainability

and Corporate Affairs, Innovation, Legal, and Engineering Solutions. The common functions are responsible for supporting

business areas and other organizations, and ensure their cost efficiency, transparency, and harmonization of procedures across

the company, and for overseeing the use and sufficiency of Neste’s resources.

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Operating segments

Operating segments are engaged in the following key business

activities:

The Renewable Products segment produces, markets

and sells renewable diesel, renewable jet fuels and solutions,

renewable solvents as well as raw material for bioplastics

based on Neste’s proprietary technology to domestic and

international wholesale markets. Renewable diesel is currently

produced at the Porvoo, Singapore, and Rotterdam refineries,

which have a combined capacity of 3.3 million tons per year.

Upon completion, Martinez Renewables is expected to

increase Neste’s renewable products capacity by slightly over

1 million tons per annum. The Renewable Products segment is

assessed to contain taxonomy-eligible and -aligned economic

activities based on the climate delegated act of the taxonomy

regulation. These Taxonomy-relevant activities represent

solutions for climate change mitigation and are well in line with

Neste’s ambitious climate commitments.

Neste’s calculations for climate related key indicators and the

EU Taxonomy eligibility and aligment figures are mainly based

on Renewable Products segment figures. More information

about sustainability in Neste including climate related matters

can be found both in Sustainability report and Non-Financial

Information Statement in Review by the Board of Directors.

The Oil Products segment produces, markets and sells

an extensive range of low-carbon solutions that are based

on high-quality oil products and related services to a global

customer base. The product range includes diesel fuel,

gasoline, aviation and marine fuels, light and heavy fuel oils,

gasoline components, special fuels, such as small-engine

gasoline, solvents, liquid gases, and bitumens. Oil products

are refined at the Neste Finland Refinery in Porvoo. Crude oil

refining capacity is ca. 10 million tons per year. Neste has

an ambition to make its Porvoo refinery the most sustainable

refinery in Europe aiming to reach carbon neutral production

by 2035. A strategic study has been launched on transforming

Porvoo refinery to a renewable and circular site with 2–4 million

tons annual capacity and ending of crude oil refining by the

middle of 2030s. Neste Shipping’s chartering operations are

included in the Oil Products segment.

The Marketing & Services segment markets and sells

cleaner fuels and oil products and associated services

directly to end-users, of which the most important are private

motorists, industry, transport companies, farmers, and heating

oil customers. Traffic fuels are marketed through Neste’s own

service station network and direct sales.

The Others segment consists of the Engineering Solutions

and common corporate costs.

The operating segments presented above do not include

any segments which are formed by aggregating two or more

smaller segments.

The ‘other expenses’ included in the consolidated statement

of income for each business segment includes the following

major items:

Renewable Products: repairs and maintenance, planning

and consulting services, rents and other property costs,

travel-, HSE- and marketing costs, and insurance premiums.

Oil Products: repairs and maintenance, planning and

consulting services, rents and other property costs, travel-

and HSE costs and insurance premiums.

Marketing & Services: repairs and maintenance, rents and

other property costs and marketing costs.

Neste’s customer structure in 2022 and 2021 did not result

in any major concentration in any given geographical area or

operating segment.

Renewable

Products

Oil

Products

Marketing &

Services

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2022

Renewable

Products

Oil

Products

Marketing &

Services Others Eliminations Group Note

IS External revenue 9,640 10,223 5,818 26 0 25,707

Internal revenue 265 4,373 58 120 -4,816 0

IS Total revenue 9,905 14,596 5,876 147 -4,816 25,707 5

IS Other income 14 21 5 32 -19 54 6

IS, CF Share of profit (loss) of associates and joint ventures -5 6 0 0 0 2 15

IS Materials and services -8,025 -12,657 -5,651 -48 4,733 -21,648 7

IS Employee benefit costs -200 -125 -29 -193 2 -545 8

IS, CF Depreciation, amortization and impairments -282 -282 -29 -46 0 -638

IS Other expenses -362 -222 -75 38 98 -522 9

IS Operating profit

1,046 1,337 98 -70 -1 2,410

IS Financial income and expense -131 10

IS Profit before income taxes 2,279

IS Income tax expense -388 11

IS Profit for the period 1,891

Comparable EBITDA 1,762 1,654 126 -4 -1 3,537

inventory valuation gains/losses -299 -53 0 0 0 -352

changes in the fair value of open commodity and currency derivatives -135 4 0 0 0 -131

capital gains and losses 0 10 0 0 0 10

other adjustments 0 4 1 -20 0 -16

EBITDA 1,328 1,619 127 -24 -1 3,048

IS, CF Depreciation, amortization and impairments -282 -282 -29 -46 0 -638

IS Operating profit 1,046 1,337 98 -70 -1 2,410

The US Blender’s Tax Credit (BTC) contribution was EUR 312 million on the Renewable Products’ operating profit in 2022.

Information about Neste’s operating segments as of and for the years ended December 31, 2022 and 2021 is presented in the following tables:

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2022

Renewable

Products

Oil

Products

Marketing &

Services Others Eliminations Group Note

Capital expenditure and investments in shares 1,952 180 24 62 0 2,218

Segment operating assets 7,856 4,469 704 351 -458 12,922

BS Investments in associates and joint ventures 38 25 0 0 0 63 15

BS Deferred tax assets 59 11

Unallocated assets 1,873

BS Total assets 7,894 4,493 704 351 -458 14,917

Segment operating liabilities 1,909 1,866 529 221 -444 4,081

BS Deferred tax liabilities 336 11

Unallocated liabilities 2,174

BS Total liabilities 1,909 1,866 529 221 -444 6,590

Segment net assets 6,433 2,652 227 141 -14 9,440

Return on net assets, % 18.6 46.6 40.8 55.2

Comparable return on net assets, % 26.6 48.0 40.5 39.0

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2021

Renewable

Products

Oil

Products

Marketing &

Services Others Eliminations Group Note

IS External revenue 5,658 5,690 3,772 28 0 15,148

Internal revenue 237 2,120 31 142 -2,530 0

IS Total revenue 5,895 7,810 3,803 170 -2,530 15,148 5

IS Other income 10 18 9 31 -20 48 6

IS, CF Share of profit (loss) of associates and joint ventures -3 0 0 0 0 -3 15

IS Materials and services -3,576 -6,948 -3,616 -53 2,442 -11,751 7

IS Employee benefit costs -132 -103 -25 -174 3 -431 8

IS, CF Depreciation, amortization and impairments -227 -283 -29 -46 0 -584

IS Other expenses -243 -232 -66 37 100 -403 9

IS Operating profit

1,723 263 77 -34 -6 2,023

IS Financial income and expense -61 10

IS Profit before income taxes 1,962

IS Income tax expense -188 11

IS Profit for the period 1,774

Comparable EBITDA 1,460 353 103 11 -6 1,920

inventory valuation gains/losses 409 164 0 0 0 573

changes in the fair value of open commodity and currency derivatives 81 25 0 0 0 106

capital gains and losses 0 -2 5 0 0 3

other adjustments 0 6 -2 1 0 5

EBITDA 1,950 546 106 12 -6 2,607

IS, CF Depreciation, amortization and impairments -227 -283 -29 -46 0 -584

IS Operating profit 1,723 263 77 -34 -6 2,023

The US Blender’s Tax Credit (BTC) contribution was EUR 295 million on the Renewable Products’ operating profit in 2021.

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2021

Renewable

Products

Oil

Products

Marketing &

Services Others Eliminations Group Note

Capital expenditure and investments in shares 1,023 451 22 39 0 1,535

Segment operating assets 5,689 3,967 588 350 -328 10,266

BS Investments in associates and joint ventures 35 25 0 0 0 60 15

BS Deferred tax assets 45 11

Unallocated assets 2,045

BS Total assets 5,724 3,992 588 350 -328 12,417

Segment operating liabilities 1,327 1,990 429 281 -315 3,712

BS Deferred tax liabilities 309 11

Unallocated liabilities 1,411

BS Total liabilities 1,327 1,990 429 281 -315 5,432

Segment net assets 4,748 2,045 212 78 -13 7,069

Return on net assets, % 40.9 11.9 38.1 29.6

Comparable return on net assets, % 29.4 3.2 36.6 30.1

2022 Finland

Other

Nordic countries Baltic rim

Other

European countries

North and

South America

Other

countries Group

IS Revenue by destination 8,459 4,348 1,850 5,131 5,685 234 25,707

Non-current assets 2,504 0 79 1,360 1,353 1,906 7,203

Capital expenditure 239 0 9 424 1,077 468 2,218

2021 Finland

Other

Nordic countries Baltic rim

Other

European countries

North and

South America

Other

countries Group

IS Revenue by destination 4,877 2,603 1,155 3,122 3,230 162 15,148

Non-current assets 2,666 2 78 1,027 371 1,583 5,727

Capital expenditure 828 2 7 115 142 441 1,535

Geographical information

Neste operates production facilities in Finland, Singapore and the Netherlands and its retail sales network in Finland, Estonia, Latvia and Lithuania. The following table provides information on Neste’s revenue, which is allocated based on the country of

destination, irrespective of the origin of the goods or services, and non-current assets and capital expenditure, which are allocated based on where the assets are located.

Non-current assets consist of intangible assets, property, plant and equipment and investments in associates and joint ventures. ‘Other Nordic countries’ includes Sweden, Norway, Denmark and Iceland. ‘Baltic rim’ includes Estonia, Latvia, Lithuania,

Russia and Poland. Neste’s activities in this geographical area consists mainly of retail activities in the aforementioned countries.

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5 Revenue

Accounting policy

Revenue from contracts with customers is recognized when or as Neste satisfies a performance obligation by transferring

control of a promised good or service to a customer. A customer obtains control when it has the ability to direct the use

of and obtain the benefits from the good or service, either over time or at a point in time. Neste principally satisfies its

performance obligations at a point in time. The amounts of revenue recognized relating to performance obligations satisfied

over time are not significant.

When, or as, a performance obligation is satisfied, Neste recognizes as revenue the amount of the transaction price that

is allocated to that performance obligation. The transaction price is the amount of consideration to which Neste expects

to be entitled in exchange for the promised goods or services. The transaction price is allocated to the performance

obligations in the contract based on the standalone selling prices of the goods or services promised.

Timing for revenue recognized at a point in time is typically when control has been transferred based on the delivery

terms used. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is

unconditional because only the passage of time is required before the payment is due.

Revenue recognized over time is measured in accordance with the input method (progress measured based on costs

incurred) when the outcome of the contract can be estimated reliably. Neste uses an input method in measuring progress

of the services because there is a direct relationship between Neste’s effort and the transfer of service to the customer.

When the outcome cannot be reliably determined, the costs arising are expensed in the same financial period in which

they occur, but the revenue is recorded only to the extent that the company will receive an amount corresponding to actual

costs. Any losses are expensed immediately.

Some of Neste’s contracts may involve elements of variable considerations, such as rebates, bonuses or penalties. The

variable consideration is estimated by using either the expected value or the most likely amount -method, depending on

the type of variable element and related contractual terms and conditions. Amount of variable consideration is included in

the transaction price only to the extent that it is highly probable that a significant reversal of revenue does not occur later.

Neste provides its customers with standard payment terms. If extended payment terms exceeding one year are offered

to customers, the invoiced amount is discounted to its present value and interest income is recognized over the credit term.

Revenue is presented net of indirect sales taxes such as value added tax and statutory stockpiling fees, penalties and

discounts.

Low Carbon Fuels Standard credits (LCFS) and Renewable Identification Numbers (RINs) are recognized in revenue.

Blender’s Tax Credit (BTC) impacts Revenue and Materials and services and is recognized if the Government of the United

States decide to grant it. The decision is made annually. Blender’s Tax Credit is an incentive given to fuel blenders to use

more renewable fuel by making the bio mandates less costly to achieve. In case Neste’s customers are blenders, all or

some of the BTC credit value is included in the sale price and recognized in revenue. The Blender’s Tax Credit received

directly from the US tax authorities are recognized as deduction of costs in materials and services.

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Timing of revenue recognition 2022 2021

External revenue

Renewable

Products Oil Products

Marketing &

Services Others Total

Renewable

Products Oil Products

Marketing &

Services Others Total

Goods transferred at point in time 9,637 10,143 5,809 0 25,589 5,658 5,649 3,764 0 15,070

Services transferred at point in time 4 80 9 1 93 0 41 9 1 51

Services transferred over time 0 0 0 25 25 0 0 0 27 27

IS Total 9,640 10,223 5,818 26 25,707 5,658 5,690 3,772 28 15,148

Revenue by operating segment 2022 Renewable Products Oil Products Marketing & Services Others Eliminations Total

External revenue 9,640 10,223 5,818 26 0 25,707

Internal revenue 265 4,373 58 120 -4,816 0

IS Total revenue 9,905 14,596 5,876 147 -4,816 25,707

Revenue by operating segment 2021 Renewable Products Oil Products Marketing & Services Others Eliminations Total

External revenue 5,658 5,690 3,772 28 0 15,148

Internal revenue 237 2,120 31 142 -2,530 0

IS Total revenue 5,895 7,810 3,803 170 -2,530 15,148

Fuels category includes product sales from the Neste’s own refineries, other production facilities and retail stations as well as other sale of petroleum products, feedstock, raw materials and oil trading. Excise taxes included in the retail selling price of finished oil

products amounting to EUR 1,575 million (2021: EUR 1,517 million) are included in the Middle distillates amount. The corresponding amount is included in the purchase price of petroleum products and included in Materials and Services, in Note 7.

Oil trading included in the Fuels category comprise of revenue from physical trading activities conducted on international and regional markets by taking delivery of and selling petroleum products and raw materials within a short period of time for the purpose

of generating a profit from short-term fluctuations in product and raw material prices and margins.

Net gains/losses on financial instruments related to sales designated as cash flow hedges are included in revenue amounting to EUR -250 million (2021: EUR 6 million).

Revenue from services mainly comprises revenue from the chartering services and Engineering Solutions, which is included in the Others segment.

Revenue by category 2022 2021

External revenue

Renewable

Products Oil Products

Marketing &

Services Others Total

Renewable

Products Oil Products

Marketing &

Services Others Total

Fuels

8,629 9,570 5,679 0 23,879 5,517 4,882 3,667 0 14,065

Light distillates 162 4,736 1,116 0 6,013 138 2,325 876 0 3,339

Middle distillates 8,467 3,899 4,559 0 16,925 5,379 2,090 2,786 0 10,255

Heavy fuel oil 0 936 5 0 941 0 467 5 0 471

Other products 1,008 573 129 0 1,710 141 767 97 0 1,005

Other services 4 80 9 26 119 0 41 9 28 78

IS Total 9,640 10,223 5,818 26 25,707 5,658 5,690 3,772 28 15,148

Light distillates comprise motor gasoline, gasoline components, LPG, renewable naphtha, and biopropane. Middle distillates comprise diesel, jet fuels, low sulphur marine fuels, heating oil, renewable fuels, and renewable jet fuels. RINs (Renewable Identification Number), LCFS

(Low Carbon Fuels Standard) credits, and BTCs (Blender’s Tax Credits) are included in the corresponding fuel categories in the Renewable Products segment.

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6 Other income 7 Materials and services

Accounting policy

Revenue from activities outside normal operations is reported in other income. This includes items such as capital gains on

disposal of other non-current assets and rental income.

Accounting policy

Blender’s Tax Credit (BTC) impacts revenue, and materials and services and is recognized if the Government of the United

States decide to grant it. The decision is made annually. Blender’s Tax Credit is an incentive given to fuel blenders to use

more renewable fuel by making the bio mandates less costly to achieve. In case Neste’s customers are blenders, all or

some of the BTC credit value is included in sales price and recognized in Revenue. The Blender’s Tax Credit received

directly from the US tax authorities are recognized as deduction of costs in Materials and services.

2022 2021

Gain on sale of subsidiaries and business operations 9 5

Capital gains on disposal of other non-current assets 2 0

Rental income 14 13

Government grants 16 8

Insurance compensations 0 8

Other 13 14

IS Other income 54 48

2022 2021

Materials and supplies 22,530 12,491

Change in inventories -963 -820

External services 81 80

IS Materials and services 21,648 11,751

Government grants relate mainly to innovation subsidies, and grants to shipping operations, which are entitled to apply for certain

grants based on Finnish legislation. More information on sales of subsidiaries, joint arrangements and business operations is

presented in Note 27 Acquisitions and disposals.

Materials and supplies include excise taxes included in the retail selling price of petroleum products amounting to EUR 1,575

million (2021: EUR 1,517 million). The corresponding amount is included in Revenue in Note 5.

The net result of non-hedge accounted commodity and foreign exchange derivatives amounted to EUR -581 million

(2021: EUR 66 million). Net gains/losses on derivative instruments related to purchases designated as cash flow hedges

amounted to EUR 0 million (2021: EUR 0 million). Both above-mentioned items are included in Materials and supplies.

Materials and supplies also include EUR 38 million (2021: 11 million) of expenses related to lease contracts which are accounted

for as an expense on a straight-line basis over the lease term. Refer to Note 30 Leases for further information.

Revenue by operating destination 2022 2021

External revenue

Renewable

Products Oil Products

Marketing &

Services Others Total

Renewable

Products Oil Products

Marketing &

Services Others Total

Finland 352 3,547 4,536 24 8,459 402 1,604 2,848 22 4,877

Other Nordic countries 2,930 1,416 2 0 4,348 1,723 878 2 0 2,603

Baltic Rim 73 500 1,278 0 1,850 44 190 921 0 1,155

Other European countries 2,399 2,729 2 1 5,131 1,329 1,789 2 2 3,122

North and South America 3,685 2,000 0 1 5,685 2,111 1,115 0 4 3,230

Other countries 202 31 0 1 234 48 114 0 0 162

IS Total 9,640 10,223 5,818 26 25,707 5,658 5,690 3,772 28 15,148

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8 Employee benefit costs 9 Other expenses

2022 2021

Wages and salaries

449 365

Social security costs 24 21

Share-based payments 5 4

Pension costs - defined contribution plans 60 49

Pension costs - defined benefit plans 5 6

Wages and salaries capitalized in fixed assets -15 -23

Other costs 17 9

IS Employee benefit costs 545 431

2022 2021

Repairs and maintenance 130 127

Services 201 145

Rents and other property costs 39 30

Insurances 36 32

Other 117 69

IS Other expenses 522 403

Fees charged by the statutory auditor 2022 2021

Authorised Public Accountants KPMG KPMG

Auditor's fees 1.6 1.3

Tax advisory 0.4 0.6

Other advisory services 0.5 0.4

2.5 2.3

Number of personnel (average) 2022 2021

Renewable Products 1,528 1,245

Oil Products 1,217 1,328

Marketing & Services 398 392

Others 2,101 1,907

5,244 4,872

Wages, salaries and other compensation for key management are presented in Note 25 Related party transactions. Share-based

payments are described in Note 24 Share-based payments and defined benefit plans in Note 23 Employee benefit obligations.

Includes reversed unused provision EUR 11 million in 2021 relating to the Naantali refinery closure.

Services include planning and consulting services, IT services, research and lab services and other services. Rents and other

property costs include EUR 27 million (2021: EUR 9 million) of expenses related to lease contracts which are accounted for as

an expense on a straight-line basis over the lease term. Refer to Note 30 Leases for further information. Other expenses include

travel expenses, HSE and advertising costs. Research expenditure is recognized as an expense as incurred and included in other

expenses in the consolidated statement of income.

The statutory audit fees of KPMG Oy Ab included fees of 638 thousand euros for audit and 43 thousand euros for auditor’s

statements. Non-audit services to entities of Neste Group were 935 thousand euros (2021: 835 thousand euros) in total during

the financial year 2022. These services included 410 thousand euros (2021: 486 thousand euros) of tax advisory and 526

thousand euros (2021: 349 thousand euros) of other advisory services.

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10 Financial income and expenses

2022 2021

Financial income

Income from financial assets at fair value through profit or loss 0 0

Interest income from financial assets at amortized cost 9 3

9 4

Financial expenses

Interest expenses for financial liabilities/receivables at amortized cost

Lease liabilities -24 -21

Other liabilities -29 -26

Write-downs of loan receivables -3 -4

Other financial expenses -4 -4

-60 -55

Exchange rate and fair value gains and losses

Financial instruments at amortized cost -8 11

Financial instruments at fair value through profit or loss -72 -21

-80 -10

IS Total financial income and expenses -131 -61

Net gains/losses on financial instruments

included in operating profit and fixed assets 2022 2021

Foreign exchange derivatives, hedge accounted

Included in revenue -250 6

Included in materials and services 0 0

Included in fixed assets 118 3

Foreign exchange derivatives, non-hedge accounted

Included in materials and services -84 -68

Commodity derivatives, non-hedge accounted

Included in materials and services -495 134

-711 76

The recognized ineffectiveness was EUR 0.9 million due to Singapore expansion (2021: EUR 0.2 million).

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The major components of income tax expense 2022 2021

Current tax 405 94

Adjustments recognized for current tax for prior periods -1 0

Change in deferred taxes -16 94

IS Income tax expense 388 188

The reconciliation of income taxes 2022 2021

IS Profit before income taxes 2,279 1,962

Hypothetical income tax calculated at Finnish tax rate 20% -456 -392

Differences in tax rates in other countries 71 195

Non-deductible expenses and other permanent differences -3 -1

Tax exempt income 0 2

Tax on undistributed earnings -1 0

Taxes for prior periods 1 0

Net results of joint ventures 0 -1

Realisability of deferred tax assets 0 11

Other -1 -1

IS Income tax expense -388 -188

Effective tax rate, % 17 10

Neste’s effective tax rate was lower than the Finnish statutory tax rate (20%) mainly due to lower taxation in Estonia, Lithuania,

Singapore and Switzerland, where Neste has business operations. The most significant portion of the lower tax rate relates to

Singapore and the Renewable Products’ profitability. Neste’s manufacturing investment in Renewable Products during 2008–

2010 in Singapore is subject to tax exemption for 2010–2023 under the applicable Singapore legislation. In 2021 the realisability

of deferred taxes includes EUR 9 million impact of tax losses utilized in Bahrain, of which deferred tax asset has not been

previously booked. In 2022 Neste divested base oils business, including all operations in Bahrain.

11 Income taxes

Accounting policy

Neste’s income tax expenses include taxes of group companies calculated on the basis of the taxable profit for the period,

with adjustments for previous periods, as well as the change in deferred income taxes. In respect of the deferred tax

liability on undistributed foreign earnings, the amount recorded is based on expected circumstances and management

expectations regarding the profit distribution. For items recognized directly in equity or other comprehensive income, the

income tax effect is similarly recognized.

If adjustments regarding uncertain tax positions (IFRIC 23) are made in situations where it is not likely that the tax authority

and/or the court would accept a certain tax treatment, Neste will choose a method of recording the liability that better

describes the realization of the uncertainty.

Deferred income taxes are stated using the balance sheet liability method, to reflect the net tax effect of temporary

differences between the financial reporting and tax bases of assets and liabilities. Deferred income tax assets are recognized

to the extent that it is probable that future taxable profit will be available against which the temporary differences can be

utilized. Deferred income tax is determined using tax rates that are in force on the balance sheet date and are expected to

apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred income taxes relate to the same fiscal authority. Deferred tax assets are

recognized for tax loss carryforwards and other unused tax credits to the extent that the utilization of the related tax benefit

through future taxable profits is probable.

Estimates and judgements requiring management estimation

Liabilities and assets are recognised with respect to income tax amounts when management is expecting to pay and

recover, respectively. Management has chosen not to discount non-current tax balances.

Neste has deferred tax assets and liabilities which are expected to be realized through the income statement over extended

periods of time in the future. Neste management has made certain assumptions regarding future tax consequences and

used certain estimates when calculating differences between carrying amounts of assets and liabilities and their tax bases.

Key assumptions underlying tax calculations include e.g. likelihood that recoverability periods for tax loss carryforwards

will not change, and that existing tax laws and rates remain unchanged into the foreseeable future. At each balance sheet

date deferred tax assets are assessed for recoverability and when circumstances indicate that it is no longer probable that

deferred tax assets can be recovered, balances are reduced to their recoverable amounts.

The Council of the European Union has confirmed the adoption of a Pillar Two directive concerning minimum taxes.

The directive will have to be transposed into member states’ national law by the end of 2023. Neste follows the legislative

development and its impact on tax compliance accordingly.

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Changes in deferred tax assets and liabilities 2022 On 1 Jan 2022

Charged to

Income Statement

Charged in Other

comprehensive income Acquisitions / Disposals

Exchange rate differences, assets

held for sale and other changes On 31 Dec 2022

Tax loss carried forward 5 55 0 0 0 61

Provisions 35 -2 0 0 0 33

Pensions 30 -1 -4 0 0 24

Fixed assets 14 5 0 0 0 19

Derivative financial instruments 8 1 -8 0 0 2

Other temporary differences 13 12 0 0 0 25

Total deferred tax assets 105 70 -12 0 0 162

Netting against liabilities -60 -44 0 0 0 -103

BS Deferred tax assets 45 26 -12 0 0 59

Tax on undistributed earnings 9 0 0 0 0 9

Fixed assets 341 15 0 0 0 356

Derivative financial instruments 15 -13 16 0 0 17

Investments in partnerships 0 50 0 0 0 50

Other temporary differences 4 1 0 2 0 7

Total deferred tax liabilities 369 53 16 2 0 439

Netting against assets -60 -44 0 0 0 -103

BS Deferred tax liabilities 309 9 16 2 0 336

Changes in deferred tax assets and liabilities 2021 On 1 Jan 2021

Charged to

Income Statement

Charged in Other

comprehensive income Acquisitions / Disposals

Exchange rate differences, assets

held for sale and other changes On 31 Dec 2021

Tax loss carried forward 1 5 0 0 0 5

Provisions 44 -9 0 0 0 35

Pensions 22 0 8 0 0 30

Fixed assets 13 1 0 0 0 14

Derivative financial instruments 1 0 8 0 0 8

Other temporary differences 9 5 0 0 -2 13

Total deferred tax assets 90 1 16 0 -2 105

Netting against liabilities -55 -5 0 0 0 -60

BS Deferred tax assets 35 -4 16 0 -2 45

Tax on undistributed earnings 9 0 0 0 0 9

Fixed assets 249 81 0 11 0 341

Derivative financial instruments 16 15 -16 0 0 15

Other temporary differences 3 -1 3 0 -1 4

Total deferred tax liabilities 277 95 -13 11 -1 369

Netting against assets -55 -5 0 0 0 -60

BS Deferred tax liabilities 222 90 -13 11 -1 309

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There are in total EUR 26 million (2021: EUR 84 million) of tax loss carryforwards and other unused tax credits for which no

deferred tax asset is recognized. Expiry dates are between 2022 and 2026 for EUR 2 million (2021: EUR 3 million) and no expiry

for EUR 24 million (2021: EUR 81 million). The decrease in tax losses for which no deferred tax asset is recognized relates mainly

to divestment of Base Oils business in Bahrain.

The increase in tax losses, where deferred tax asset is recognized, relates mainly to start-up phase of Martinez Renewable

Fuels Joint Operations and its accelated tax depreciations. Investments in partnerships includes temporary differences in Martinez

Renewable Fuels Joint Operations.

A deferred tax liability has been recognized for undistributed earnings of subsidiaries where income taxes would be payable

upon distribution.

Deferred tax recognized relating to components of other comprehensive income:

Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to owners of the parent by the weighted

average number of shares outstanding during the year. The dilutive effect of equity settled share-based payments is included in

the computation of diluted earnings per share.

Dividend per share

The dividends paid in 2022 were EUR 0.82 per share, totaling EUR 630 million (2021: EUR 0.80 per share, totaling EUR 614

million). A ordinary dividend of EUR 1.02 per share, totaling approximately EUR 783 million and an extraordinary dividend of

EUR 0.25 per share, totaling approximately EUR 192 million are proposed at the Annual General Meeting on 28 March 2023. In

addition, the Board proposes that the AGM would authorize the Board to decide, in its discretion, on the payment of a second

extraordinary dividend instalment of EUR 0.25 per share totaling approximately EUR 192 million by 31 October 2023. The

proposed maximum total dividend in 2023 amounts to approximately EUR 1,167 million. This dividend is not reflected in the

financial statements.

2022

Before tax

Tax (charge)

/ credit After tax

OCI Remeasurements of defined benefit plans 22 -4 18

OCI Net change of other investments at fair value -5 0 -5

OCI Translation differences -56 0 -56

Cash flow hedges

OCI recorded in equity 1 18 19

OCI transferred to income statement 131 -41 90

OCI Share of other comprehensive income of

investments accounted for using the equity method 17 0 17

OCI Other comprehensive income 110 -28 82

2021

Before tax

Tax (charge)

/ credit After tax

OCI Remeasurements of defined benefit plans -37 7 -30

OCI Net change of other investments at fair value 14 -3 11

OCI Translation differences 24 0 24

Cash flow hedges

OCI recorded in equity -122 23 -99

OCI transferred to income statement -10 1 -9

OCI Share of other comprehensive income of

investments accounted for using the equity method 4 0 4

OCI Other comprehensive income -127 29 -98

12 Earnings per share

and dividend per share

2022 2021

IS Profit for the period attributable to owners of the parent, EUR million 1,888 1,771

Weighted average number of shares outstanding during the year (thousands) 768,060 767,643

IS Basic earnings per share (euro per share) 2.46 2.31

Effect of share-based incentive plans (thousands) 486 890

Diluted weighted average number of shares during the year (thousands) 768,546 768,533

IS Diluted earnings per share (euro per share) 2.46 2.30

OCI

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13 Intangible assets

Accounting policy

Intangible assets, except goodwill, are stated at historical cost and amortized in a straight-line method over expected

useful lives. Intangible assets comprise the following:

Computer software

Computer software licenses are capitalized on the basis of the costs incurred to acquire and introduce the software in

question. The costs include the software development employee costs and professional fees arising directly bringing the

asset to its working condition. Capitalization also depends on the technology used, e.g., cloud services are not capitalized.

Costs are amortized over their estimated useful lives (three to five years). Costs associated with updates or maintaining

computer software programs are recognized as an expense.

Trademarks and licenses

Trademarks and licenses have a definite useful life and are carried at cost less accumulated amortization. They are amortized

over their estimated useful lives (three to ten years).

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of Neste’s share of the net identifiable

assets of the acquired business, subsidiary, associate or joint venture at the date of acquisition. Goodwill on acquisition of

subsidiaries is included in intangible assets. Separately recognized goodwill is tested for impairment and carried at cost,

less accumulated impairment losses. Impairment testing is done annually and whenever there is an indication that the asset

may be impaired. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include

the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of

impairment testing, using those cash-generating units or groups of cash-generating units that are expected to benefit from

the business combination in which the goodwill arose.

The discount rates used in impairment testing of goodwill represent the WACC specified for the business area in question

after tax, which is adjusted by tax effects in connection with the test. The WACC formula inputs are risk-free rate of return,

market risk premium, industry-specific beta factor, target capital structure, borrowing cost and country risks. WACC rates

are specified for each of the cash generating units separately. WACC% and growth rate are used purely for the impairment

testing.

The key assumption used for the estimated cash flows in Renewable Products is sales margin.

Emission allowances

Emission allowances, which are purchased to cover future periods deficit, are recorded in intangible assets and measured

at cost, and emission allowances received free of charge are recorded in their nominal value, i.e., at zero.

A provision is recognized to cover the obligation to buy emission allowances if emission allowances received free of

charge and purchased emission allowances intended to cover the deficit do not cover actual emissions. The provision is

measured at its probable settlement amount. The difference between emissions made and emission allowances received,

as well as any change in the probable amount of the provision, are reflected in the operating profit.

Estimates and judgements requiring management estimation

Intangible assets as well as property, plant and equipment are always tested for impairment, when there is any indication

that an asset may be impaired. When the recoverable amount of an asset is less than the carrying amount, an impairment

loss is recognized as an expense immediately and the carrying amount is reduced to the asset’s recoverable amount.

The amounts recoverable from cash-generating units’ operating activities are determined based on value in use calculations.

These calculations are based on estimated future cash flows approved by Neste’s management, covering a period of three

years. Preparation of these estimates requires management to make assumptions relating to future expectations. The main

assumptions used relate to the sales margin and discount rates.

The climate related assumptions in the calculations include the demand increase in the Renewable Products, which is

positively affecting the sales margin and nominal growth rate assumptions.

Impairment of non-financial assets

Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortization and

are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized in

the consolidated statement of income to the extent that the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Non-financial assets other than

goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

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2022 Goodwill

Other

intangible

assets Total

Gross carrying amount on 1 January 362 410 772

Exchange rate differences 11 2 14

Acquisitions 7 4 10

CF Additions 22 51 73

Disposals 0 -9 -9

Reclassifications 1 13 14

Gross carrying amount on 31 December 402 470 873

Accumulated amortization and impairment losses on 1 January 0 256 256

Exchange rate differences 0 0 0

Disposals 0 -5 -5

Reclassifications 0 0 0

Amortization and impairments for the period 2 50 52

Accumulated amortization and impairment losses on 31 December 2 301 303

BS Carrying amount on 1 January 2022 362 154 516

BS Carrying amount on 31 December 2022 401 169 570

2021 Goodwill

Other

intangible

assets Total

Gross carrying amount on 1 January 120 363 483

Exchange rate differences 10 2 12

Acquisitions 206 24 230

CF Additions 25 23 48

Disposals 0 -1 -1

Reclassifications 0 0 0

Gross carrying amount on 31 December 362 410 772

Accumulated amortization and impairment losses on 1 January 0 219 219

Exchange rate differences 0 0 0

Disposals 0 -1 -1

Reclassifications 0 0 0

Amortization for the period 0 39 39

Accumulated amortization and impairment losses on 31 December 0 256 256

BS Carrying amount on 1 January 2021 120 144 264

BS Carrying amount on 31 December 2021 362 154 516

WACC% 2022 2021

Renewable Products 7.6 401 359

Oil Products 0 2

401 362

Impairment test of goodwill

Goodwill is allocated to Neste’s cash-generating units (CGUs). From identified CGU’s goodwill is allocated to the Renewable Products cash-generating unit which is equal with the Renewable Products segment. Goodwill of Oil Products segment was disposed

in 2022.

A segment-level summary of the goodwill allocation is presented below:

A decrease of 20% in sales margin or 3%-points increase in the discount rate would not create a situation in which the carrying amounts of the cash-generating units would exceed their recoverable amounts. Cash flows beyond the three-year period

are extrapolated by using 2.5% nominal growth rate.

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14 Property, plant and equipment

Accounting policy

Property, plant, and equipment mainly comprise oil refineries and other production plants and storage tanks, marine fleet,

and retail station network infrastructure and equipment. Neste owns station network infrastructure with the exception of

dealer stations. Property, plant, and equipment are stated at historical cost in the balance sheet, less depreciation and any

accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the

items in question and the initial estimate of the costs of dismantling and removing the item and restoring the site on which

it is located. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges related to

foreign currency purchases of property, plant, and equipment. Assets acquired through the acquisition of a new subsidiary

are stated at their fair value on the date of acquisition.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only

when it is probable that future economic benefits associated with the item will flow to Neste and the cost of the item can

be measured reliably. Costs for major periodic overhauls at oil refineries and other production plants on a 3–5 year cycle

are capitalized when they occur and then depreciated during the shutdown cycle, i.e., the time between shutdowns. All

other repairs and maintenance are charged to the consolidated statement of income during the financial period in which

they are incurred.

Land areas are not depreciated. The bottom of crude oil rock inventory and precious metals in catalysts used in production

process are included in other tangible assets and are depreciated according to possible usage. Depreciation on tangible

assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful

lives as follows:

The residual values and useful lives of assets are reviewed and adjusted where appropriate at each balance sheet date.

The carrying amount of an asset is written down immediately to its recoverable amount if the former amount is greater than

its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying

amounts. These are included in ‘Other income’ or ‘Other expenses’ in the consolidated statement of income.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, a major

initial investment, such as a new production facility, form part of the cost of that asset. Other borrowing costs are recognized

as an expense.

Buildings and structures, including terminals 20–40 years

Machinery and equipment:

Production machinery and equipment 15–20 years

Marine fleet 15–20 years

Retail station network infrastructure and equipment 5–15 years

Other equipment and vehicles 3–15 years

Other tangible assets 20–40 years

Expenditure on development activities is capitalized only when it fulfills strict criteria e.g., development relates to new

products that are both technically and commercially feasible. The majority of Neste’s development expenditure does not

meet the criteria for capitalization and are recognized as expenses as incurred.

Leases

Neste assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right

to control the use of an identified asset for a period of time in exchange for consideration.

As a lessee, Neste recognizes the right-of-use asset on the balance sheet as property, plant and equipment at a value

equivalent to the initial measurement of the lease liability adjusted for lease prepayments, lease incentives, initial direct

costs and any restoration obligations at the commencement date of the lease.

Right-of-use assets are depreciated on a straight-line basis over the lease term of the assets. Right-of-use assets are

assessed for impairment in line with the accounting policy for impairment of property, plant and equipment, intangible

assets, and goodwill (see Note 13 Intangible assets).

Refer to Note 30 Leases for further information.

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2022 Land

Buildings

and constructions

Machinery and

equipment

Other

tangible assets

Assets under

construction Total

Gross carrying amount on 1 January 287 2,679 5,593 518 1,310 10,387

Exchange rate differences 0 1 -31 5 -36 -62

Additions 91 32 264 100 1,654 2,141

Acquisitions 0 0 0 0 0 0

Disposals -15 -80 -594 -89 -4 -780

Reclassifications 0 22 304 1 -328 -2

Assets held for sale 0 0 21 31 0 52

Gross carrying amount on 31 December 363 2,654 5,557 567 2,595 11,736

Accumulated depreciation and impairment losses on 1 January 38 1,287 3,715 186 10 5,235

Exchange rate differences 0 0 0 2 0 3

Disposals -7 -85 -564 -38 0 -694

Reclassifications 3 2 3 0 0 8

Depreciation and write downs for the period 12 96 367 89 22 586

Assets held for sale 0 0 6 22 0 28

Accumulated depreciation and impairment losses on 31 December 46 1,300 3,527 262 32 5,166

BS Carrying amount on 1 January 2022 249 1,392 1,879 332 1,300 5,152

BS Carrying amount on 31 December 2022 318 1,354 2,030 305 2,563 6,570

Property, plant and equipment includes an increase of EUR 853 million from joint operation Martinez Renewables on 31 December 2022 and it mainly included assets under construction and machinery and equipment. The carrying amount of assets under

construction included additionally mainly assets related to the ongoing Singapore and Netherlands expansion projects. Property, plant and equipment include right-of-use (ROU) assets where Neste is a lessee as specified in Note 30 Leases.

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2021 Land

Buildings

and constructions

Machinery and

equipment

Other

tangible assets

Assets under

construction Total

Gross carrying amount on 1 January 280 2,529 4,971 453 1,166 9,399

Exchange rate differences 0 1 3 9 1 14

Additions 7 33 443 183 499 1,164

Acquisitions 8 66 58 4 1 136

Disposals -7 -7 -195 -99 -7 -315

Reclassifications 0 57 303 0 -350 11

Assets held for sale 0 0 10 -31 0 -22

Gross carrying amount on 31 December 287 2,679 5,593 518 1,310 10,387

Accumulated depreciation and impairment losses on 1 January 28 1,205 3,523 162 4 4,922

Exchange rate differences 0 0 1 4 0 5

Disposals -4 -6 -184 -43 0 -237

Reclassifications 2 2 7 0 0 11

Depreciation and write downs for the period 12 85 358 85 6 545

Assets held for sale 0 0 11 -22 0 -12

Accumulated depreciation and impairment losses on 31 December 38 1,287 3,715 186 10 5,235

BS Carrying amount on 1 January 2021 252 1,324 1,448 291 1,162 4,477

BS Carrying amount on 31 December 2021 249 1,392 1,879 332 1,300 5,152

Property, plant and equipment include right-of-use (ROU) assets where Neste is a lessee as specified in Note 30 Leases.

Capitalized borrowing costs

During 2022 borrowing costs amounting to EUR 2.8 million (2021: EUR 1.9 million) were capitalized related to the Singapore and Netherlands expansion projects. They are included in property, plant and equipment. Neste’s average interest rate of borrowings

for each month was applied as the capitalization rate, which resulted in average capitalization rate of 1.3% (2021: 1.5%).

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15 Investments in associates and joint ventures

Carrying amount 2022 2021

On 1 January 60 56

IS, CF Share of profit (loss) of associates and joint ventures 2 -3

OCI Share of other comprehensive income of investments accounted

for using the equity method 17 4

Translation differences 1 4

CF Capital repayments -13 0

Dividends -15 0

Investments 12 0

Other changes -1 0

BS On 31 December 63 60

2022 2021

Country of

incorporation

Nature of the

relationship

% interest

held

% interest

held

Alterra Energy LLC USA Note 1 40.00 40.00

Glacia Limited Bermuda Note 2 0.00 50.00

Kilpilahti Power Plant Ltd Finland Note 3 40.00 40.00

Neste’s interest in its principle associates and joint ventures at 31 December, all of which are unlisted, are listed in the

following table:

Note 1: Alterra Energy LLC is a US-based, chemical recycling technology company. The cooperation between Neste and Alterra

includes joint technology development and commercialization of the technology.

Management has classified Alterra as an associated company due to the considerable influence that Neste has in the company.

Note 2: Glacia Limited was a joint venture company owned on a 50/50 basis by Neste and Stena Maritime AG (part of the Stena

Group). The company owned an Aframax-size crude tanker, which joined the Neste fleet in January 2007. The company was

liquidated in 2022. The liquidation did not have a material impact on Neste’s financials.

Note 3: Kilpilahti Power Plant Ltd is a joint venture company that produces and supplies steam and other utilities to Neste´s

refinery and Borealis’ petrochemical plant in Porvoo, Finland. The joint venture is owned 40% each by Neste and Veolia and 20%

by Borealis.

Management has classified this ownership as a joint venture because the arrangement is structured through a separate vehicle,

the legal form of which separates its assets and liabilities of its shareholders and it is directed so that the relevant activities of

the company require unanimous consent from all parties sharing control. The new power plant’s capacity is also meant to serve

external customers in addition to Neste and Borealis and thus optimize the returns of all shareholders in form of net profit.

Management has also taken into account that Kilpilahti Power Plant Ltd plans and executes the power plant operations as its

own business decisions which are operated by Veolia.

Associates and joint ventures have been consolidated using the equity method.

The Martinez Renewables joint arrangement together with Marathon Petroleum has been classified as a joint operation, and

more information has been presented in note 2 Accounting Policies, note 14 Property, plant and equipment, note 18 Inventories

and note 30 Leases.

OCI

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Alterra Energy LLC Glacia Limited Kilpilahti Power Plant Ltd

2022 2021 2022 2021 2022 2021

Non-current assets 37 29 0 15 518 471

Current assets

Cash and cash equivalents 10 2 0 29 23 38

Other current assets

(excl. cash and cash equivalents) 0 1 0 0 116 150

Total current assets 10 3 0 29 139 188

Non-current liabilities

Non-current financial liabilities

(excl. trade payables and provisions) 7 0 0 0 500 444

Other non-current liabilities 0 0 0 0 17 14

Total non-current liabilities 7 0 0 0 517 458

Current liabilities

Current financial liabilities

(excl. trade payables and provisions) 0 0 0 0 31 31

Other current liabilities 2 1 0 1 92 141

Total current liabilities 2 1 0 1 123 171

Net assets 38 31 0 43 17 29

Revenue 34 1 2 5 458 257

Depreciation, amortization and impairments 2 2 1 3 8 8

Interest income 0 0 0 0 0 0

Interest expense 0 0 0 0 8 6

Income tax expense 0 0 0 0 0 92

Profit/loss -20 -8 0 -2 -6 -4

Summarized financial information in respect of Neste's associates and joint ventures are set out in the following table:

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Alterra Energy LLC Glacia Limited Kilpilahti Power Plant Ltd

2022 2021 2022 2021 2022 2021

Opening net assets 1 January 86 87 43 41 10 0

Investment in associate/joint venture 30 0 0 0 0 0

Profit for the period -11 -8 6 -2 9 2

Other comprehensive income 6 7 -3 2 43 9

Capital repayments -15 0 -15 0 0 0

Dividends 0 0 -30 0 0 0

Other changes 0 0 0 0 -1 -1

Closing net assets 31 December 96 86 0 43 61 10

Interest in joint venture 38 35 0 21 24 4

Carrying value 38 35 0 21 24 4

The share of profits of associates and joint ventures are consolidated based on the companys’ preliminary results for the financial period.

Transactions carried out with associates and joint ventures are disclosed in Note 25 Related party transactions. Contingent liabilities relating to the Neste’s interest in the associates and joint venturess are disclosed in Note 29 Contingencies and commitments.

Reconciliation of summarized financial information

Reconciliation of the summarized financial information presented to the carrying amount of its interest in the associates and joint ventures.

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16 Financial assets and liabilities by measurement categories

Neste classifies financial assets and liabilities according to IFRS 9. Accounting policies, classification criterias and other information relating to financial assets and liabilities can be found in Notes 17 Financial assets and 21 Financial liabilities.

Derivative financial instruments under Fair value through OCI -category meet criteria for hedge accounting. Derivative financial instruments are initially recognized at fair value on the trade date and are subsequently re-measured at their fair value on the balance

sheet date. The fair values of the foreign exchange forward and the interest rate swap contracts are calculated as the present values of the future cash flows and the fair values of foreign exchange options by using the Black and Scholes option pricing model. The

fair value of the exchange traded commodity derivatives is based on exchange market quotations and the fair value of over-the-counter commodity derivative contracts is based on the net present value of cash flows. The fair value of all derivatives is calculated

using the observable market inputs for currency and interest rates, volatilities and commodity price quotations on the closing date. Derivative contracts are included in current assets or liabilities, except derivatives maturities greater than 12 months after the

balance sheet date, which are classified as non-current assets or liabilities. More information relating to derivative financial instruments can be found in Note 19 Derivative financial instruments.

31 Dec 2022

Balance sheet item Fair value through OCI

Fair value through

profit or loss Amortized cost Carrying amount Fair value Level 1 Level 2 Level 3

Non-current financial assets

BS Non-current receivables 103 103 103

BS Derivative financial instruments 5 5 5 5

BS Other financial assets 37 7 44 44 44

Current financial assets

Trade and other receivables

2,101 2,101 2,101

BS Derivative financial instruments 120 287 406 406 17 389

BS Current investments 0 0 0

BS Cash and cash equivalents 1,271 1,271 1,271

Financial assets 157 298 3,475 3,930 3,930

Non-current financial liabilities

BS Interest-bearing liabilities 1,964 1,964 1,880 811 1,070

BS Derivative financial instruments 0 12 12 12 12

Other non-current liabilities

43 43 43

Current financial liabilities

BS Interest-bearing liabilities 651 651 651 651

BS Derivative financial instruments 29 170 200 200 41 159

Trade and other payables

2,879 2,879 2,879

Financial liabilities 29 182 5,537 5,749 5,665

Excluding non-financial items

Interest-bearing liabilities at level 1 consist of listed bonds. Derivative financial instruments at level 1 consist of commodity derivatives which are directly valued based on exchange quatations. Other financial assets in fair value through profit and loss category

include unlisted other investments of EUR 7 million. Other financial assets in fair value through other comprehensive income category include unlisted shares of EUR 37 million. Fair values are determined in accordance of IFRS 13. During the year 2022 there

were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

Financial instruments that are measured at fair value in the balance sheet and the interest-bearing liabilities are presented according to fair value measurement hierarchy:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: inputs for the assets or liability that is not based on observable market data.

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31 Dec 2021

Balance sheet item Fair value through OCI

Fair value through

profit or loss Amortized cost Carrying amount Fair value Level 1 Level 2 Level 3

Non-current financial assets

BS Non-current receivables 2 60 63 63

BS Derivative financial instruments 0 11 11 11 11

BS Other financial assets 42 6 48 48 48

Current financial assets

Trade and other receivables

1,664 1,664 1,664

BS Derivative financial instruments 20 224 243 243 1 242

BS Current investments 135 135 135

BS Cash and cash equivalents 1,581 1,581 1,581

Financial assets 62 243 3,440 3,744 3,744

Non-current financial liabilities

BS Interest-bearing liabilities 1,378 1,378 1,393 909 484

BS Derivative financial instruments 1 1 1 1

Other non-current liabilities

43 43 43

Current financial liabilities

BS Interest-bearing liabilities 379 379 379 379

BS Derivative financial instruments 59 102 161 161 25 136

Trade and other payables

2,656 2,656 2,656

Financial liabilities 59 103 4,456 4,618 4,634

Excluding non-financial items

During the year 2021 there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

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17 Financial assets

Accounting policy

Financial assets are classified in the following measurement categories: amortized cost, fair value through other comprehensive

income and fair value through profit or loss. The classification depends on used business model for managing the financial

assets and the contractual terms of the cash flows. Assets are classified as current assets, except for maturities over 12

months after balance sheet date, which are classified as non-current assets. Purchases and sales of financial assets are

recognized on the settlement date (excluding derivatives, Note 19 Derivative financial instruments). Financial assets are

derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the

Group has transferred substantially all risks and rewards of ownership.

Amortized cost category consists of liquid funds, trade receivables and loan receivables where the business model is

to hold the asset to collect the contractual cash flows which represent only payments of principal and interest. Financial

assets recognized at amortized cost are valued using the effective interest method.

Assets at fair value through profit or loss consists of equity investments (and derivatives which do not meet the criteria

for hedge accounting). The investments in unlisted companies are measured at their fair value according to IFRS 13. Gains

or losses of the equity investments are included in financial income and expenses.

Other financial assets in fair value through other comprehensive income category include unlisted shares which are not

held for trading. These are strategic investments and Neste considers this classification to be more relevant.

Liquid funds

Liquid funds consists of cash and cash equivalents and current investments. Cash and cash equivalents includes cash in

hand, deposits held at banks, and other highly liquid investments with original maturities of three months or less. Current

investments includes deposits held at banks and other liquid investments with original maturities from 3 to 12 months.

Impairment

The general expected credit loss model is used for debt instruments carried at amortized cost and the impairment is

recognized through profit or loss. The credit loss is recognized based on individual assessment of receivable. The simplified

expected credit loss model is applied for trade receivables according to IFRS 9. Every business area uses a specific provision

matrix for the trade receivables due to the different nature of the businesses. The business area impairment process is

based on historical credit loss experience combined with current conditions and forward looking macroeconomic analysis.

The impairment or credit loss is recognized in the consolidated statement of income within other expenses.

Liquid funds 2022 2021

BS Current investments 0 135

BS, CF Cash and cash equivalents 1,271 1,696

Classified as assets held for sale 0 -115

Liquid Funds 1,271 1,716

Trade and other receivables 2022 2021

Trade receivables 1,675 1,403

Other receivables 422 294

Advances paid 4 1

Accrued income and prepaid expenses 77 43

Classified as assets held for sale 0 -64

BS Trade and other receivables 2,178 1,677

Trade and other receivables excluding non-financial items 2,101 1,664

Non-current financial assets 2022 2021

Non-current interest-bearing receivables 82 40

Other non-current receivables 20 23

BS Non-current receivables 103 63

BS Other financial assets 44 48

The maximum exposure to credit risk is the carrying amount of the liquid funds. Note 3 Financial risk management sets out more

information about credit risk. The impairment of liquid funds has not been recognized because the amount is immaterial.

Due to the nature of short-term trade and other receivables their carrying amount is expected to be equal to their fair value.

The maximum exposure to credit risk is the carrying amount of the trade and other receivables. Analysis of trade receivables by

age, information about the impairment and credit losses are presented in Note 3 Financial risk management, section ‘credit and

counterparty risk’.

The fair value of non-current financial receivables is not materially different from the carrying amount which is also the maximum

exposure to credit risk. No impairment losses have been recognized as there are no significant credit risks associated with the

receivables. Other financial assets consist of unlisted shares.

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18 Inventories 19 Derivative financial instruments

Accounting policy

Inventories are stated at either cost or net realizable value, whichever is the lowest. Cost is determined using the weighted

average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs,

and related production overheads (based on normal operating capacity). Net realizable value is the estimated selling price

in the ordinary course of business, less applicable variable selling expenses. Inventories held for trading purposes are

measured at fair value less selling expenses. Standard spare parts are carried as inventory and recognized in profit or loss

as consumed. RIN (Renewable Identification Number) and LCFS (Low Carbon Fuels Standard) credits are accounted for as

government grants upon receipt of the product inventory in the USA and are accounted for as inventory. RINs and LCFSs

are included in Finished products and goods -category.

Accounting policy

The derivative instruments are mainly held for economic hedging purposes although most of the derivatives do not qualify

for hedge accounting. Changes in the fair value of derivatives, for which hedge accounting is not applied, are recognized

in the income statement either in operating profit or financial income and expenses, depending on the underlying hedged

item. Impact to the income statement from the derivatives is presented in Note 10 Financial income and expenses.

When hedge accounting is applied to the derivative contracts, the method of recognizing any resulting gain or loss

depends on the nature of the item being hedged. Neste designates certain derivative financial instruments as either hedges

of highly probable forecast transactions (cash flow hedges); or hedges of the fair value of recognized assets or liabilities or

a firm commitment (fair value hedges); or hedges of net investments in foreign operations.

The effective portion of the changes in the fair value of derivative financial instruments that are designated and qualified

as cash flow hedges are recognized in equity. Amounts accumulated in equity hedging future sales are recorded within

revenue, or in case of capital expenditure as part of acquisition cost, when future cash flows of the hedged item occur.

Forward points in currency forwards and time value of options are transaction related and thus recognized in equity and

reclassified either to the income statement or adjusting the hedged item according to hedging relationship. In cash flow

hedges the critical terms in hedged item and hedging instruments are the same and hedge ratio is 1:1. Any potential gain

or loss relating to the ineffective portion is recognized immediately in the income statement. Accured interest of interest rate

swaps hedging floating rate interest-bearing liabilities is recognized in the income statement within financial expenses. If a

forecast transaction is no longer expected to occur, the cumulative gain or loss reported in equity is immediately transferred

to the income statement.

Certain interest rate swaps are designated as fair value hedges. Changes in the fair value of interest rate swaps that

are designated and qualified as fair value hedges are recorded in the income statement in financial income and expenses,

together with any changes in the fair value of the hedged asset or liability attributable to the hedged risk compensating the

effect. Any gain or loss relating to the ineffective portion is recognized immediately in the income statement.

Neste documents at the inception of the transaction the relationship between hedging instrument and hedged items, as

well as its risk management objective and strategy for undertaking various hedge transactions. Neste also documents its

assessment, both at hedge inception and on an ongoing basis quarterly, of whether the derivatives that are used in hedging

transactions are effective in offsetting changes in fair values or cash flows of hedged items.

Estimates and judgements requiring management estimation

Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made.

These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the

period to the extent that such events confirm conditions existing at the end of the period.

2022 2021

Materials and supplies 1,560 1,044

Finished products and goods 2,085 1,637

Other inventories 3 1

Classified as assets held for sale 0 -64

BS Inventories 3,648 2,618

Additions to inventories included EUR 48 million from joint operation Martinez Renewables on 31 Dec 2022.

Write-downs included the inventories at the end of the period were EUR 245 million (2021: EUR 80 million).

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31 Dec 2022 31 Dec 2021

Nominal value by maturity Fair Value Nominal value by maturity Fair Value

< 1 year > 1 year Positive Negative Net < 1 year > 1 year Positive Negative Net

Foreign exchange rate derivatives

Foreign exchange derivatives, forwards 3,754 3 115 29 86 2,216 10 20 55 -35

Foreign exchange options

Purchased 84 0 5 0 5 159 0 0 0 0

Written 84 0 0 0 0 159 0 0 5 -5

Derivatives designated as cash flow hedges 3,922 3 120 29 90 2,534 10 20 59 -39

Foreign exchange derivatives, forwards 3,083 0 104 13 91 1,730 0 14 17 -3

Non-hedge accounting derivatives 3,083 0 104 13 91 1,730 0 14 17 -3

Commodity derivatives

Oil and vegetable oil derivatives

Sold forwards, million bbl 25 0 65 67 -2 23 0 29 57 -29

Purchased forwards, million bbl 19 0 59 67 -8 19 0 100 15 86

Electricity and gas derivatives

Sold forwards, GWh 18 0 2 0 2

Purchased forwards, GWh 1,996 620 62 36 26 2,966 940 91 14 77

Non-hedge accounting derivatives 188 169 18 220 86 134

Derivatives Total 411 211 200 254 162 92

of which

BS Non-current derivative financial instruments 5 12 -7 11 1 10

BS Current derivative financial instruments 406 200 207 243 161 82

Neste uses foreign exchange, interest rate and commodity derivatives to manage market risks (Note 3 Financial risk management). Hedge accounting is not applied to commodity derivatives, although these are mainly held for economic hedging purposes.

Commodity derivatives include oil, vegetable oil, freight, electricity and gas contracts. Neste uses forwards as hedging instruments for commodities.

Neste has designated certain foreign currency and interest rate derivatives as hedges of future transactions i.e., as cash flow hedges. Such contracts are, e.g., foreign exchange derivatives hedging USD- and SEK-sales for the next twelve months according

to the Corporate risk management policy or hedging investment costs in Singapore refinery (Note 3 Financial risk management). On 31 December 2022, there were no interest rate swaps.

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20 Equity

Share capital

The Parent Company’s share capital registered with the Trade Register as of 31 December 2022 totalled EUR 40,000,000, divided into 769,211,058 shares of equal value. Neste Oyj has one class of shares and each share entitles a shareholder to one vote at

the Annual General Meeting. The nominal value of one share is not determined. The share capital is fully paid. There have been no changes in share capital in 2022 or 2021.

Treasury shares

On 15 March 2022 a total of 113,774 treasury shares of Neste Corporation has been conveyed without consideration to the key

persons participating in the Performance Share Plan 2019–2021 and in the Restricted Share Plan 2019–2021 of the share-based

incentive program 2019 in accordance with the terms and conditions of the program. The directed share issue without payment

is based on the authorization granted by the Annual General Meeting of Shareholders on 18 May 2020. The number of treasury

shares after the directed share issue is 1,127,888 shares.

On 15 March 2021 a total of 132,756 treasury shares of Neste Corporation has been conveyed without consideration to the

key persons participating in the earning period 2018–2020 of the share-based incentive program 2016 according to the terms

and conditions of the program. The directed share issue without payment is based on the authorization granted by the Annual

General Meeting of Shareholders on 18 May 2020. The number of treasury shares after the directed share issue is 1,241,662

shares.

Number of shares, 1,000 Treasury shares, 1,000 Outstanding shares, 1,000

1 January 2022 769,211 -1,242 767,969

Transfer of treasury shares 0 114 114

31 December 2022 769,211 -1,128 768,083

1 January 2021 769,211 -1,374 767,837

Transfer of treasury shares 0 133 133

31 December 2021 769,211 -1,242 767,969

Other reserves

Reserve fund comprises of restricted reserves other than share capital.

The reserve of invested unrestricted equity includes other equity-related investments and that part of the share subscription

price that has not specifically been allocated to share capital.

Fair value and other reserves include the effective portion of the change in fair value of derivative financial instruments that are

designated as and qualify for cash flow hedges, amounts recognized directly in equity concerning other financial assets, and

concerning equity settled share based payments, the amount corresponding to the expense recognized in the consolidated

statement of income.

Actuarial gains and losses includes the remeasurements of defined benefit plans and net change of other investments at fair

value, which are recognised in other comprehensive income.

Translation differences include exchange differences arising from the translation of the net investment in foreign entities on

consolidation, change in the fair value of currency instruments designated as hedges of the net investment, and exchange

differences resulting from the translation of income statement of foreign entities at the average exchange rates and balance sheet

at the closing rates.

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21 Financial liabilities

Accounting policy

Financial liabilities are classified at amortized cost (except derivative financial liabilities whose accounting policy is presented

at Note 19 Derivative financial instruments). Financial liabilities measured at amortized cost are recognized initially at fair

value, net of transaction costs and subsequently measured at amortized cost using the effective interest method. Liabilities

are recognised on the date when the entity becomes a party to the contractual provisions of the instrument. Any difference

between net proceeds and nominal amount is recognized as interest cost over the period of the borrowing using the

effective interest method. Financial liabilities are included in non-current liabilities, except for items with maturities less than

12 months after the balance sheet date, which are included in current liabilities. A financial liability is derecognized when

the related obligation is discharged, cancelled or expires.

Bank overdrafts are recorded in current liabilities on the balance sheet. Fees of revolving credit facility are capitalized and

amortized over the period of the facility.

The fair values of the listed bonds are driven from market quotations. The fair values of other interest-bearing liabilities at

amortized cost are determined by using the discounted cash flow method employing market interest rates at the balance

sheet date.

Non-current financial liabilities 2022 2021

Bonds

895 893

Loans from financial institutions

615 121

Lease liabilities

425 333

Other loans 30 30

Other non-current liabilities 43 43

Total 2,007 1,420

BS of which interest-bearing 1,964 1,378

Other non-financial items included to other non-current liabilities 0 1

Issued/Maturity

Interest

basis

Interest

rate, % Currency

Nominal

amount

Carrying

amount

2017/2024 Fixed 1.50 EUR 400 400

2021/2028 Fixed 0.75 EUR 500 495

Total 900 895

Current financial liabilities 2022 2021

Loans from financial institutions 161 137

Commercial paper liabilities 346 0

Lease liabilities

110 111

Other loans 34 131

Advances received 119 67

Trade payables 2,021 1,829

Other current liabilities 738 760

Total 3,530 3,036

BS of which interest-bearing 651 379

Other non-financial items included to trade and other payables 144 105

Neste issued a EUR 500 million green bond in March 2021. The 7-year bond carries a coupon of 0.75 per cent. The bond represents the

first issuance under the Green Finance Framework established in February 2021. The proceeds from the issue are allocated in accordance

with the Green Finance Framework to investments into the development, operations, maintenance and expansion of the renewable and

circular solutions with the objective to mitigate climate change globally by reducing greenhouse gas emissions.

Neste has signed a EUR 500 million green term loan agreement in June 2022. The proceeds of the loan will be used to finance Eligible

Assets and Projects in accordance with Neste’s Green Finance Framework. The loan has a tenor of 3 years with two 1-year extension options.

Refer to Note 30 Leases.

The fair values of financial liabilities can be found in Note 16. Re-pricing periods of interest-bearing liabilities are disclosed in Note

3, Financial risk management, section ‘Market risk’.

Listed bond issues

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22 Provisions

Accounting policy

The nature of certain Neste’s businesses exposes Neste to risks of environmental costs and potential contingent liabilities.

The risks arise from the manufacture, use, storage, disposal and maritime and inland transport as well as sale of materials

that may be considered to be contaminants when released into the environment. Liability may also arise through the

acquisition, ownership or operation of properties or businesses.

A provision is recognized in the consolidated statement of financial position when Neste has a present legal or constructive

obligation as a result of a past event, and it is probable that the obligation will result in payment, and the amount of payment

can be estimated reliably. Provisions can arise from environmental risks, litigation, restructuring plans or onerous contracts.

Environmental provisions are recorded based on current interpretations of environmental laws and regulations when the

conditions referred to above are met. Neste has asset retirement obligations recorded in the consolidated statement of

financial position.

Where there are a number of similar obligations, the likelihood that an outflow of resources will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow

with respect to any one item in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using

a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

The increase in the provision due to passage of time is recognized as an interest expense.

Estimates and judgements requiring management estimation

The existence of criteria for recognizing provisions and the amounts of provisions are determined based on estimates. The

amount to be recorded is the best estimate of the cost required to settle the obligation at the reporting date or transfer

to a third party. The estimate of the financial impact of the past event requires management judgement, which is based

on similar events occurred in the past, and where applicable, the opinion of external experts. Estimates may differ from

the actual future amount of the obligation and with respect to the existence of the obligation. In addition to the provisions

recognized, there are some off-balance-sheet contingent liabilities for which the future potential outcome (timing, costs)

cannot be estimated reliably.

The most significant provisions in the consolidated statement of financial position relate to environmental liabilities.

Environmental provisions are based on management’s best estimate of remediation costs. The restructuring provision is

recognized when Neste has prepared a detailed restructuring plan and published it.

Environmental

provisions

Restructuring

provisions

Provision to

return emission

allowances

Other

provisions Total

BS On 1 January 2022 199 2 0 9 210

Additions 5 0 57 9 71

Amounts used during the period -7 -1 -58 -2 -68

Reversed unused provisions -1 -1 2 -3 -3

Changes in the discount rate

and inflation assumption -10 0 0 0 -10

BS On 31 December 2022 187 0 0 13 200

Environmental

provisions

Restructuring

provisions

Provision to

return emission

allowances

Other

provisions Total

BS On 1 January 2021 204 23 0 5 232

Additions 5 0 17 5 27

Amounts used during the period -7 -10 -17 -1 -35

Reversed unused provisions -1 -11 -1 0 -12

Changes in the discount rate

and inflation assumption -3 0 0 0 -3

BS On 31 December 2021 199 2 0 9 210

Environmental provisions consists mostly of Neste’s asset retirement obligations (ARO) that are related to retail stations and

refineries. In the next five years is expected EUR 105 million of ARO obligations to be realised and the rest of the obligations are

mainly expected to be realised in 30–50 years. Neste recognizes a provision for the decommissioning costs of an oil installation

to the extent that Neste is obliged to rectify damage already caused. The provisions are to be discounted, where the effect of the

time value of money is material.

The exchange rate difference relating to Neste’s provisions is immaterial.

Emission allowances

Neste Finland Refinery in Porvoo comes under the European Union’s greenhouse gas emission trading system, and was granted

a total of 2.0 million tons emission allowances for 2022. In addition to refinery operations Neste purchases allowances to cover

certain emissions of the local partners who provide utility services to Neste. A provision is recognized to cover the obligation

to buy emission allowances if emission allowances received free of charge and purchased emission allowances intended to

cover the deficit do not cover actual emissions. Emission allowances, which are purchased to cover future periods deficit are

accounted for as intangible assets and measured at cost, and emission allowances received free of charge are accounted for at

nominal value, i.e. at zero.

As at 31 December 2022 there was no obligation to purchase emission allowances in the balance sheet of Neste (31.12.2021

EUR 0 million). The actual amount of CO

emissions in 2022 were 2.8 million tons (2021: 2.6 million tons). Neste has

traded emission allowances for net amount of 0.7 million tons during the financial period ended 31 December 2022 (2021:

0.4 million tons).

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23 Employee benefit obligations

Accounting policy

Neste has pension arrangements in different countries, which are generally funded through insurance companies. Pension

cover is based on the legislation and agreement in force in each country. Pension schemes consist of both defined

benefit and defined contribution plans. Finnish statutory pensions are accounted for as a defined contribution plan in the

consolidated financial statements.

Contributions to the defined contribution plans are charged directly to the statement of income in the year to which these

contributions relate. In defined contribution plans, Neste has no legal or contractive obligations to pay further contributions

in case the payment recipient is unable to pay the retirement benefits. All arrangements that do not fulfill these conditions

are considered defined benefit plans.

In defined benefit plans, after Neste has paid the amount for the period, an excess or deficit may result. The defined benefit

obligation represents the present value of future cash flows from payable benefits, which are calculated for by using the

projected unit credit method. The discount rate assumed in calculating the present value of the pension obligation is based

on the market yield of high-quality corporate bonds (AA-rated) with appropriate maturities. Pension costs are recognized in

the consolidated statement of income so as to spread the current service cost over the service lives of employees based

on actuarial calculations. The net interest is included as part of the finance cost in the consolidated statement of income.

The liability (or asset) recognized in the consolidated statement of financial position is the pension obligation at the

closing date less the fair value of plan assets. Actuarial gains and losses arising from experience adjustments and changes

in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

Actuarial valuations for Neste’s defined benefit pension plans are performed annually.

Estimates and judgements requiring management estimation

Accounting for defined benefit pensions and other long-term employee benefits involves making significant estimates

when measuring Neste’s pension expenses and obligations. The assumptions that are the most significant to the amounts

reported are the discount rate, the rate of salary increase and future benefit increase. Changes in these assumptions could

result in significant changes to the carrying amount of Neste’s pension liability and future pension expenses.

Neste has defined benefit pension plans in Finland, Switzerland and the Netherlands. The largest plans are in Finland, which

account for 95% (2021: 95%) of Neste’s total defined benefit pension obligation and 94% (2021: 96%) of Neste’s total plan

assets. The voluntary pension plan in Finland accounting for most of this has been closed since 1 January 1994. The insured

supplementary pension scheme consists of defined benefit group pension insurances, which are very similar in structure, with

the exception of retirement age and pension accrual rules.

Other long-term employee benefits are long-service remunerations, which are accounted for as an unfunded defined benefit

plan in accordance to IAS 19.

Characteristics of the post-employment defined benefit plans in Finland

In Finland, Neste has a voluntary pension plan for a certain group of employees to fulfill an aggregated benefit after retirement.

The voluntary pension plan is managed in an insurance company.

The voluntary plan’s benefit is based on the aggregated benefits determined by the insurance contract. The voluntary benefit is

the difference between aggregated benefits and compulsory benefits calculated at the age 63 in the old age plan. The aggregated

benefits are at most 60% or 66% of the supplementary pension salary depending on the plan. The supplementary pension salary

is calculated based on the last 10 years’ salaries prior to the pension event adjusted by the index level. The benefits in the plans

are old age and disability pensions, survivors’ pensions for widows and children, and funeral grants. Old-age pension ages are

60, 62 and 65 years. In some pension schemes the pension cover also includes the right to early old-age pension retirement

ages.

The insurance company collects premiums on a yearly basis from the employer. The future premiums are adjusted so that

the old-age pension will be fully funded until retirement. The disability and survivor’s pension are also financed by risk premiums

collected during the employment period. The premiums with fixed discount rate 1.5% are based on the last known salary without

any assumptions on future salary increases. The insurance company guarantees the same interest yield to the assets in the plan,

as the one they have used in calculating the premiums.

The employer finances the index-linkage by paying an additional premium covering the index increase during the year.

Discretionary bonuses from the insurance company will lower the index premium. The insurance company decides the amount

of the bonus annually.

Neste has insured the benefits index increases each year as the benefits have been increased. If the insurance company’s

granted bonus index does not cover the annual index increase, the insurance company collects a premium from the employer

to cover the increase. The insurance company’s bonus index varies on yearly basis.

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Risks associated with defined benefit plans

Through its defined benefit pension plans Neste is exposed to a number of risks. The employer´s defined benefit obligations

pension liability depends on the discount rate which is determined to a yield of corporate bonds as at the reporting date. A

decrease in used discount rates increase the defined benefits obligations. However, a decrease in the used discount rate yield

also increases the fair value of the assets partially offsetting the total impact of change in yield on the net defined benefit pension

liability.

The benefit of the plans is tied to the future benefit increase, which depends on inflation and common salary index. Higher

inflation increases the benefit increase, which leads to an increase in liabilities and annual payments to the insurance company.

If the active employee’s salary increases more than the common salary index, the amount of promised benefit and the benefit

obligation increases together with annual payments to life insurance company.

The longevity risk is borne by the insurance company in case the actual mortality differs from the assumed. Possible adjustments

in mortality assumption have an effect on the employer’s liability according to IFRS. The insurance company completely bears the

mortality risk on accrued benefits. The employers have a mortality risk only if the insurance company will raise its future benefit

accruals premiums because of mortality adjustment.

Defined benefit plans

Cost of defined benefit plans 2022 2021

Service cost 5 6

Net interest (+expense/-income) 1 0

Remeasurements related to other long-term remunerations 0 0

Defined benefit cost recognized in the consolidated statement of income 6 6

Remeasurements of defined benefit plans 2022 2021

Actuarial gains/losses

Changes in demographic assumptions -3 0

Changes in financial assumptions 105 -17

Return on plan assets, excluding amounts included in net interest expense -70 -25

Experience adjustments -11 4

Total remeasurements recognized in other comprehensive income 22 -38

Amounts recognized in the consolidated statement of financial position 2022 2021

Present value of funded defined benefit obligations 385 488

Present value of unfunded defined benefit obligations 7 8

Fair value of plan assets -273 -350

BS Net defined benefit liability 119 146

Changes in fair value of plan assets 2022 2021

January 1 350 388

Interest income 3 1

Return on plan assets (excluding amounts included in net interest expense) -71 -25

Employer contributions 11 8

Benefits paid -20 -19

Assets held for sale 0 -3

December 31 273 350

The assets are the responsibility of the insurance company and a part of the insurance company’s investment assets.

The distribution within categories is not possible to provide.

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Changes in the present value

of the defined benefit obligation

2022 2021

Funded Unfunded Funded Unfunded

January 1 488 8 492 7

Current service cost 4 1 5 1

Interest cost 4 0 1 0

Actuarial gains (-)/ losses (+) -92 -1 12 1

Settlements 0 0 0 0

Benefits paid -18 -1 -18 -1

Liabilities related to assets held for sale 0 0 -5 0

December 31 385 7 488 8

Significant actuarial assumptions (presented as weighted average) 2022 2021

Discount rate, %

Finland 3.20% 0.80%

Other countries 1.83% 0.31%

Future salary increase, %

Finland 3.74% 3.45%

Other countries 1.11% 1.11%

Future benefit increase, %

Finland 2.78% 2.26%

Other countries 0.00% 0.00%

Impact on the defined benefit

pension obligation

Assumptions Change in assumption 2022 2021

Discount rate

0.50% increase EUR million -20 -34

0.50% decrease EUR million 22 38

Future salary increase

0.50% increase EUR million 1 3

0.50% decrease EUR million -1 -3

Future benefit increase

0.50% increase EUR million 20 31

0.50% decrease EUR million -19 -28

The expected contributions to be paid to the defined benefit plans in 2023 are EUR 12 million.

Sensitivity analysis of significant actuarial assumptions

Reasonably possible changes at the reporting date to one of the weighted principal assumptions, while holding all other

assumptions constant, would have affected the defined benefit obligation as shown below:

- 0.50% increase /decrease in the discount rate would lead to a decrease /increase of 5.1% /5.7% in the defined

benefit obligation.

- 0.50% increase /decrease in the rate of salary increase would lead to a increase /decrease of 0.4% /0.4% in the defined

benefit obligation.

- 0.50% increase /decrease in the rate of pension index would lead to a increase /decrease of 5.2% /4.7% in the defined

benefit obligation.

The above sensitivity analysis may not be representative of the actual impact of change. If more than one assumption is changed

simultaneously, the combined impact of changes would not necessarily be the same as the sum of the individual change. If the

assumptions change to a different level compared to that presented above, the effect on the defined benefit obligation may not

be linear.

Maturity profile of the undiscounted defined benefit obligation 2022

Within the next 12 months 23

Between 1 and 5 years 95

Between 5 and 10 years 108

Beyond 10 years 390

Total 616

The average duration of the defined benefit pension obligation at the end of the reporting period is 12 years.

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24 Share-based payments

Accounting policy

Neste’s share-based incentive plans include a net settlement feature, i.e., share-based payments are settled net in shares

after withholding taxes, and thus they are accounted for as fully equity settled plans. The compensation expense for the

shares is recognized as an employee benefit expense evenly during the required service period whereas the compensation

expense resulting from the cash portion is recognized as an employee benefit expense on accrual basis between grant and

payment date. The entire transaction is measured at fair value prevailing on the grant date of the share-based incentive plan

and the amounts recognized in the consolidated statement of income are accumulated in equity. The difference realized

upon the settlement date is also accounted for against equity.

The purpose of Neste’s share-based long-term incentive plans is to drive long-term sustainable growth and align the interests of

executives with shareholders. The Board annually selects the members of Neste’s senior management and other key employees

to participate in the long-term incentive plans.

Neste applies a share ownership policy to the members of the Neste Executive Committee (ExCo). According to the policy,

each member of the ExCo is expected to retain in his/her ownership at least half of the shares received under the share-based

incentive programs of Neste until the value of his/her share ownership in Neste corresponds to at least his/her annual gross base

salary.

The amount of rewards payable to participants based on Neste’s long-term incentive scheme is limited by a share price

development-based pay cap, the level of which the Board of Directors sets. The level of the pay cap in the ongoing plans is two

times the share price which prevailed at the beginning of the plan period. If Neste share price more than doubles during the plan,

the exceeding value of the payable rewards will not be paid to the plan participants.

Share-based incentive plan as of 1 January 2022

The Board of Directors of Neste Corporation decided on 9 February 2022 to establish a new share-based long-term incentive

scheme for selected members of Neste’s management and key employees. The decision includes a Performance Share Plan

(also “PSP”) as the main structure and a Restricted Share Plan (also “RSP”) as a complementary structure for specific situations.

The Performance Share Plan consists of three annually commencing individual performance share plans, each with a three-

year performance period, followed by the payment of the potential share reward. The three plans commence as of the beginning

of the years 2022, 2023 and 2024. The commencement of each individual plan is, however, subject to a separate Board approval

in each case.

The plan PSP 2022–2024 commences effective as of the beginning of 2022 and the potential share reward thereunder will

be paid during H1 2025. The payment of the reward is conditional on the achievement of the performance targets the Board

of Directors has set for the plan. The potential reward will be paid in listed shares of Neste Corporation (deducted with the

applicable payroll tax). The performance targets based on which the potential share reward under PSP 2022–2024 will be paid

are the Relative Total Shareholder Return relative to the STOXX Europe 600 index and Combined Greenhouse Gas Impact.

The plan RSP 2022–2024 within the Restricted Share Plan scheme commences effective as of the beginning of 2022 and

the potential share reward thereunder will be paid during H1 2025 at the latest. The Restricted Share Plan consists of annually

commencing individual restricted share plans, each comprising a restriction period with an overall length of three years. The

company may during the plan period grant fixed share rewards to individually selected key employees. The rewards are paid at

the latest after the end of the restriction period during H1 of the fourth year of the individual plan. The rewards are paid in listed

shares of Neste Corporation (deducted with the applicable payroll tax). A precondition for the payment of the share reward based

on the Restricted Share Plan is that the employment or service of the individual with Neste continues until the payment date of

the reward.

Share-based incentive plan as of 1 January 2019

The Board of Directors of Neste Corporation decided on 12 December 2018 to establish a new share-based long-term incentive

scheme for selected members of Neste’s management and key employees. The decision included a Performance Share Plan as

the main structure and a Restricted Share Plan as a complementary structure for specific situations.

The Performance Share Plan consists of three annually commencing individual performance share plans, each with a three-

year performance period, followed by the payment of the potential share reward. The three plans commence in the years 2019,

2020 and 2021. The commencement of each individual plan is, however, subject to a separate Board approval.

The potential reward will be paid in shares of Neste (deducted with the applicable payroll tax), provided that the performance

target set by the Board of Directors is achieved. For award plan cycles commenced in 2019 (PSP 2019–2021) and 2020 (PSP

2020–2022), relative total shareholder return of Neste’s share compared to STOXX Europe 600 index is set as a performance

measure. In the PSP 2021–2023 plan, in addition to the relative total shareholder return of Neste’s share, Neste’s combined

greenhouse gas (GHG) impact is also set as a performance measure. The combined GHG impact includes GHG emission

reductions achieved with Neste renewable products by customers and GHG emissions from Neste production.

The Restricted Share Plan consists of annually commencing individual restricted share plans, each with a three-year retention

period after which the share rewards granted within the plan will be paid to the participants in shares of Neste (deducted with

the applicable payroll tax). The commencement of each individual plan is subject to a separate Board approval. A precondition

for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of the individual

participant with Neste continues until the payment date of the reward.

The first plan (RSP 2019–2021) within the Restricted Share Plan started in the beginning of 2019 and the share reward

thereunder was paid in the spring 2022. The second plan (RSP 2021–2023) started in the beginning of 2021 and the potential

share reward thereunder will be paid in the spring 2024.

For the 2019–2021 LTI plan cycle a gross reward of 246,390 shares equaling EUR 9.8 million were awarded to the participants

of the plan. The net amount of shares delivered totalled 113,774 shares and the rest of the reward was paid in cash to cover

taxes. The fair value of the share as at delivery date was 39.76 euros (15.3.2022). The members of Neste’s Executive Committee

received a gross reward equaling to 62,515 shares.

Share-based incentive plan as of 1 January 2016

The Board of Directors of Neste Corporation decided on 14 December 2015 to establish a new long-term share-based incentive

plan for Neste’s senior management and nominated key personnel. The plan included three individual share plans, each with a

three-year earning period. The plans began in 2016, 2017 and 2018, respectively.

The earning criteria for the earning periods 2016–2018, 2017–2019 and 2018–2020 were Neste’s cumulative comparable free

cash flow (75%) and total return by Neste’s share compared to STOXX Europe 600 index (25%). In plan 2016–2018 the target

long-term incentive for the President & CEO and the other members of the Neste Executive Committee (ExCo) was around 40%

of individuals’ annual fixed salary. In plans 2017–2019 and 2018–2020 the target long-term incentive for the President & CEO

and the other members of the ExCo was around 30% of individuals’ annual fixed salary. The maximum long-term incentive for

the President & CEO was 100% of his annual fixed salary and 80% for the other members of the ExCo. The combined amount

of incentives paid based on earnings under the long-term incentive program together with the incentive paid on the annual short-

term program, could not exceed 120% of participants’ annual fixed salary in any given year.

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Participants were not entitled to sell or transfer the shares they received as incentives during a restriction period following the end of the earning period. The lenght of this period was three years in the 2016–2018 plan. In 2017–2019 and 2018-2020 plans the

restriction period was one year.

For the 2016–2018 LTI plan cycle the net amount of shares were delivered in 2019 while simultaneously the rest of the reward was paid in cash to cover taxes. For the 2017–2019 LTI plan cycle the net amount of shares were delivered in 2020 while simultaneously

the rest of the reward was paid in cash to cover taxes.

For the 2018–2020 LTI plan cycle, the maximum target set in December 2017 for Neste’s cumulative comparable free cash flow were exceeded and Neste generated a total shareholder return clearly out performing the Europe Stoxx 600 Market Index. A gross

reward of 273,079 shares equaling EUR 14.7 million were awarded to the participants of the plan. The net amount of shares delivered totalled 132,756 shares and the rest of the reward was paid in cash to cover taxes. The fair value of the share as at delivery

date was 53.8 euros (15.3.2021). The members of Neste’s Executive Committee received a gross reward equaling to 50,879 shares.

More specific information on the share-based incentive plans is presented in the following tables.

Plan Long-Term Incentive Plan 2022 Long-Term Incentive Plan 2019 Long-Term Incentive Plan 2016

Type Share allocation Share allocation Share allocation

Instrument PSP 2022–2024 RSP 2022–2024 PSP 2021–2023 RSP 2021–2023 PSP 2020–2022 PSP 2019–2021 RSP 2019–2021 PSP 2018–2020 PSP 2016–2018

Grant dates 11 Feb 2022 11 May 2022 13 Jan 2021 21 Jan 2021 20 Feb 2020 6 May 2019 26 Jun 2019 11 Jan 2018 1 Feb 2016

Grant prices, euros 35.14 36.58 57.81 59.82 35.72 26.70 27.98 16.87 8.70

Share price as at grant date, euros 37.97 39.40 60.94 62.64 38.91 28.94 30.08 18.82 9.58

Beginning of earnings period 1 Jan 2022 1 Jan 2022 1 Jan 2021 1 Jan 2021 1 Jan 2020 1 Jan 2019 1 Jan 2019 1 Jan 2018 1 Jan 2016

End of earnings period 31 Dec 2024 31 Mar 2025 31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2021 31 Dec 2021 31 Dec 2020 31 Dec 2018

End of restriction period 31 Mar 2025 31 Mar 2025 31 Mar 2024 31 Mar 2024 31 Mar 2023 31 Mar 2022 31 Mar 2022 31 Mar 2022 30 Apr 2022

Changes during the period,

share allocation Shares Shares Shares Shares Shares Shares Shares Shares Shares

Outstanding at the beginning of the

reporting period, pcs 0 0 222,454 12,500 288,825 342,352 10,100 239,037 316,252

Granted during the period 357,570 89,500 1,216 8,500 9,600 0 0 0 0

Forfeited during the period 11,300 0 26,636 0 44,608 104,596 1,466 15,961 0

Excercised during the period 0 0 0 0 0 237,756 8,634 223,076 316,252

Outstanding at the end of the period, pcs 346,270 89,500 197,034 21,000 253,817 0 0 0 0

Number of persons at the end of the

reporting year 132 49 122 10 107 0 0 0 0

Share price at the end of the reporting

period, euros 43.02 43.02 43.02 43.02 43.02 39.76 39.76 53.77 31.61

Estimated rate of realization of the

earnings criteria, % 35% 100% 41% 100% 61% 57% 100% 100% 100%

Estimated termination rate before the end

of the restriction period, % 10% 10% 10% 0% 10% 0% 0% 0% 0%

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Fair value determination

The fair value of share-based incentives have been determined at grant date and the fair value is expensed until vesting. The

grant price, i.e., fair value as of the grant date, has been determined as follows: grant price equals the share price as at grant

date deducted by expected dividends payable during the earning period. For plans under the Long-Term Incentive Plan 2019

and 2022, which include market based criteria, the fair value estimation is calculated using the Monte Carlo simulation with

Geometric Brownian Motion. The simulation requires some parameters, such as volatility and the risk-free rate to be estimated.

The expense included in the income statement is specified in the following table:

2022 2021

Expense arising from equity-settled share-based payment transactions 5 4

Total expense arising from share-based payment transactions 5 4

At the end of the period the estimated future cash payments to be paid to the tax authorities from share-based payments are

EUR 10 million (2021: EUR 11 million).

25 Related party transactions

Neste is controlled by the State of Finland, which owns 44.2% of the company’s shares. The remaining 55.8% of shares are

widely held.

Neste has a related party relationship with its subsidiaries, associates, joint arrangements and the entities controlled by Neste’s

controlling shareholder, the State of Finland. Related parties also include the members of the Board of Directors, the President

and CEO and other members of the Neste Executive Committee (key management persons), close members of the families of

the mentioned key management persons and entities controlled or jointly controlled by the mentioned key management persons

or close members of those persons’ families.

Subsidiaries, associates and joint arrangements are presented in Note 26 Group companies.

Parent company of Neste is Neste Corporation. The transactions between Neste, its subsidiaries and joint operations, which

are related parties of the company, have been eliminated during consolidation and are not disclosed in this note. Details of

transactions between Neste and other related parties are disclosed below. All transactions between Neste and other companies

controlled by the State of Finland are on an arm’s length basis.

2022

Sales of

goods and

services

Purchases of

goods and

services

Financial

income and

expense Receivables Liabilities

Joint ventures 314 260 3 158 22

Other related parties 116 243 0 3 0

430 503 3 160 22

2021

Sales of

goods and

services

Purchases of

goods and

services

Financial

income and

expense Receivables Liabilities

Joint ventures 189 121 2 159 17

Other related parties 40 50 0 3 0

229 171 2 162 17

Transactions carried out with related parties

There were no material transactions with key management persons or entities controlled by them.

The major part of business between Neste and its joint ventures was with Kilpilahti Power Plant Ltd. Neste’s transactions with

Kilpilahti Power Plant Ltd consisted mainly of steam purchases and sales of heavy fuel oil, water and asphaltene. The steam

supply agreement includes a fixed annual fee of EUR 45 million until 2037.

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Board of Directors and key management compensation Compensation to the Board of Directors

EUR thousand 2022 2021

Salaries and other short-term employee benefits 5,259 5,346

Statutory pensions 819 745

Supplementary pensions 416 416

Share-based payments 1,961 2,736

Total (Including statutory pensions) 8,455 9,243

EUR thousand 2022 2021

Board of Directors at 31 December 2022

Matti Kähkönen 124 80

John Abbott, since 30 March 2021 75 40

Nick Elmslie 76 51

Martina Flöel 75 53

Just Jansz, since 30 March 2022 59 0

Jari Rosendal 69 47

Eeva Sipilä, since 30 March 2022 55 0

Johanna Söderström 83 48

Marco Wirén 94 63

Former Board members

Sonat Burman-Olsson, until 21 July 2021 0 27

Jean-Baptiste Renard, until 30 March 2022 14 52

Board of Directors, all members total 725 462

President

and CEO

Members

of the Neste

Executive Committee

EUR thousand

Matti

Lehmus

Peter

Vanacker

Total

2022 2021 2022 2021

Annual remuneration

Base salary 626 443 1,069 972 2,892 2,788

Taxable benefits 11 0 11 0 110 130

Annual incentive (STI plan) 0 261 261 216 826 778

Total annual remuneration 637 704 1,341 1,188 3,829 3,696

Vested long term remuneration 0

Supplementary pension

(insurance contributions) 95 0 95 0 416 416

Share-based incentive plan 0 0 0 858 1,961 1,878

Total remuneration 731 704 1,436 2,046 6,205 5,990

Key management consists of President and CEO and other members of the Neste Executive Committee. There were no

outstanding loan receivables from key management on 31 December 2022 or 31 December 2021.

Compensation to President and CEO and members of the Neste Executive Committee

Compensation to the Board of Directors include annual remuneration and meeting fee paid to each member of the Board for

each meeting attended as well as for any meetings of the Board committees attended. Board members are not covered by

the company’s remuneration systems and do not receive any performance or share related payments. Compensation to the

Board of Directors in 2022 includes three months of annual remuneration related to Board membership 2021–2022 and entire

annual remuneration for Board membership 2022–2023. Hence, the compensation in 2022 is not completely comparable to the

compensation in 2021.

The CEO’s notice of termination period is 6 months on both sides. Should the company decide to give notice of termination,

the President & CEO shall be entitled to his salary during the 6 months period of notice, together with a severance payment

equivalent to 6 months’ salary. The supplementary pension of the President and CEO is a defined contribution (DC) plan with an

annual contribution of 16% of the annual fixed salary and retirement age of 62 years.

Net liability of defined benefit plans of former Presidents and CEOs on 31 December 2022 were EUR 1,692 thousand (2021:

EUR 1,757 thousand).

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Subsidiaries Group holding % Country of incorporation

Agri Trading Fats & Oils, LLC 100.00% USA

B J B, LLC 100.00% USA

B J B, Properties of Hutchinson, LLC 100.00% USA

Kiinteistö Oy Espoon Keilaranta 21 100.00% Finland

Mahoney Environmental Solutions, LLC 100.00% USA

Mahoney Transportation Services LLC 100.00% USA

Navidom Oy 50.00% Finland

Neste (Shanghai) Trading Company Limited 100.00% China

Neste (Suisse) S.A. 100.00% Switzerland

Neste AB 100.00% Sweden

Neste Affiliate B.V. 100.00% The Netherlands

Neste Asia Pacific Pte. Ltd 100.00% Singapore

Neste Australia Pty Ltd 100.00% Australia

Neste Belgium NV 100.00% Belgium

Neste Canada Inc. 100.00% Canada

Neste Components B.V. 100.00% The Netherlands

Neste Demeter B.V. 51.00% The Netherlands

Neste Eesti AS 100.00% Estonia

Neste Engineering Solutions B.V. 100.00% The Netherlands

Neste Engineering Solutions Pte. Ltd. 100.00% Singapore

Neste Germany GmbH 100.00% Germany

Neste Insurance Limited 100.00% Guernsey

Neste Italy S.R.L. 100.00% Italy

Neste Markkinointi Oy 100.00% Finland

Neste Netherlands B.V. 100.00% The Netherlands

Neste Pretreatment Rotterdam B.V. 100.00% The Netherlands

Neste Renewable Products Inc. (new) 100.00% USA

Neste Renewable Solutions US, Inc. 100.00% USA

Neste RPC Solutions US, Inc. 100.00% USA

Neste Shipping Oy 100.00% Finland

Neste Singapore Pte. Ltd. 100.00% Singapore

Neste Spain S.L. (new) 100.00% Spain

Neste Terminal Rotterdam B.V. 100.00% The Netherlands

26 Group companies

Subsidiaries Group holding % Country of incorporation

Neste US, Inc. 100.00% USA

Neste USA, L.L.C. 100.00% USA

Neste Walco Limited (new) 100.00% Ireland

SIA Neste Latvija 100.00% Latvia

Sterling Logistics, LLC 100.00% USA

UAB Neste Lietuva 100.00% Lithuania

Associates Group holding % Country of incorporation

Alterra Energy LLC 40.00% USA

Neste Arabia Co. Ltd. (inactive) 48.00% Saudi Arabia

Joint arrangements Group holding % Classification

Country of

incorporation

A/B Svartså Vattenverk - Mustijoen Vesilaitos O/Y 40.00% Joint Operation Finland

Kilpilahti Power Plant Ltd 40.00% Joint Venture Finland

Martinez Renewables LLC (new) 50.00% Joint Operation USA

Tahkoluodon Polttoöljy Oy 31.50% Joint Operation Finland

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Neste Demeter B.V. Navidom Oy

2022 2021 2022 2021

Proportion of shares held by non-controlling interests 49.00% 49.00% 50.00% 50.00%

Current assets 209 155 0 0

Non-current assets 0 0 0 0

Current liabilities 199 147 0 0

Non-current liabilities 0 0 0 0

Revenue 1,281 868 1 1

Profit for the period 7 5 0 0

Dividends paid to non-controlling interests -2 -2 0 0

Cash flows from operating activities 8 9 0 0

Cash flows from investing activities -1 -6 0 0

Cash flows from financing activities -5 -4 0 0

Specification of financial information on subsidiaries with material non-controlling interests Unconsolidated structured entities

In 2015, Neste sold its shares of Aurora Kilpilahti Oy (former Kilpilahden Sähkönsiirto Oy). After the sale Neste does not have direct

or indirect investment in the company. Aurora Kilpilahti Oy is responsible for high- and medium-voltage electricity distribution

in the Kilpilahti industrial area where Neste Finland Refinery in Porvoo is situated. In addition to Neste, Aurora Kilpilahti Oy’s

customers include other companies operating in the area.

Under the contractual arrangements with Aurora Kilpilahti Oy Neste has been supplying small and decreasing part of the

operating services needed in electricity distribution. It can be considered that Neste has the possibility to influence only limited

development investments made by Aurora Kilpilahti Oy. Aurora Kilpilahti Oy distributes electricity to Neste and Neste remains to

be the main user of the capacity of the electricity distribution network. Aurora Kilpilahti Oy operates on land leased from Neste for

30 years with an option to extend the lease. Neste has not provided any financial support or other significant support to Aurora

Kilpilahti Oy without contractual obligation.

Based on the factors described above Neste has determined that it has limited influence though no control over Aurora

Kilpilahti Oy and treats the company as unconsolidated structured entity in its consolidated financial statements. Management

has assessed the company’s exposure to losses by considering the nature of Neste’s involvement in Aurora Kilpilahti Oy, and

the company’s significance to Neste from an operative perspective. Neste’s exposure is mainly dependent upon the efficient

operation of the distribution network.

Consolidated structured entities

Since 2014, Neste has treated the sold vessels’ long-term agreements made with Ilmarinen Mutual Pension Insurance Company

and Finland’s National Emergency Supply Agency as structured entities. As a part of these arrangements, Neste guarantees the

vessels’ residual value and certain return on the investors’ investments.

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27 Acquisitions and disposals

Acquisitions

2022

No major acquisitions took place in financial period 2022.

Other business combinations

In year 2022 Neste has made smaller business combinations that are immaterial individually. These business combinations also

include the previously published acquisition of Walco Foods in 2022. The collective fair values of the acquired net assets are

presented in the table below. Based on purchase price allocations, a portion of the purchase price was allocated to supplier

and customer relations that have been recognized as intangible assets. The recognized goodwill is deductible for income tax

purposes, and represents the value of acquired business knowledge and synergies. The business combinations do not have a

material impact to Neste’s revenue nor result. The purchase prices were paid fully in cash.

Values of acquired assets and liabilities at time of acquisition Fair value

Intangible assets 13

Property, plant and equipment 3

Inventories 0

Trade and other receivables 14

Cash and cash equivalents 2

Total assets 33

Interest-bearing liabilities 6

Provisions 0

Trade and other payables 4

Total liabilities 11

Fair value of acquired net assets 22

Consideration transferred 51

Fair value of contingent consideration 0

Fair value of acquired net assets -22

Goodwill 30

Cash flows of acquisition 2022

Consideration, paid in cash -51

Transaction costs of the acquisition 0

Net cash flow on acquisition -51

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2021

Bunge Loders Croklaan’s refinery plant

On 1 March 2021 Neste acquired Bunge Loders Croklaan’s refinery plant located in Rotterdam, the Netherlands. The refinery

plant is located next to Neste’s existing biorefinery and it consists of a pretreatment facility, tank farm, jetties, and has a pipeline

connection to Neste’s site. The name of the acquired company was changed from Bunge Loders Croklaan Oils B.V. to Neste

Pretreatment Rotterdam B.V. The transition of operations and employees will be implemented in phases with the refinery plant’s full

and modified pretreatment capacity available for processing Neste’s feedstock by the end of 2024. The acquisition is consolidated

into the Renewable Products segment.

The acquisition of the refinery plant supports Neste’s global growth strategy in renewables. It allows Neste to accelerate the

scaling up of renewable raw material pretreatment capacity, which is an important driver for expanding the use of waste and

residue feedstocks and increasing Neste’s feedstock flexibility.

The fair values of the acquired net assets are presented in the table below. Based on the purchase price allocation, a portion of

the purchase price was allocated to property, plant & equipment. Goodwill represents synergies arising from expanding the use

of waste and residue feedstocks, increasing feedstock flexibility, and the plant’s location next to Neste’s existing refinery. Goodwill

is not deductible in taxation.

The transaction costs of the acquisition are included in other expenses in the consolidated statement of income. The acquisition

does not have a material impact on the Group´s revenue nor profit. The purchase price was paid fully in cash and material

adjustments to purchase price are not expected.

Values of acquired assets and liabilities at time of acquisition Fair value

Intangible assets 1

Property, plant and equipment 104

Inventories 1

Total assets 107

Interest-bearing liabilities 10

Deferred tax liabilities 11

Current tax liabilities 3

Trade and other payables 1

Total liabilities 25

Fair value of acquired net assets 81

Consideration transferred 255

Fair value of acquired net assets -81

Goodwill 173

Cash flows of acquisition 2021

Consideration, paid in cash -255

Transaction costs of the acquisition -2

Net cash flow on acquisition -257

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Agri Trading

On 1 November 2021 Neste acquired 100% of Agri Trading, one of the largest independent renewable waste and residue fat and

oil traders in the United States. The acquisition is consolidated into the Renewable Products segment.

Neste’s feedstock strategy is focusing on waste and residues growth and the development of new feedstock sources. Agri

Trading is an important partner for Neste as an industry leader in trading animal fat waste, used cooking oil, technical corn oil,

and other vegetable oils in North America. The completion of this transaction is an important step forward in delivering on Neste’s

growth strategy in renewables and in strengthening our global renewable raw material platform. Additionally, Agri Trading’s

established logistics networks and assets will enable Neste to source and transport raw material efficiently with a lower carbon

footprint and, ultimately, enable Neste to maintain its leadership position in the global raw material market.

The fair value of acquired net assets, based on preliminary assessment, are presented in the table below. Based on preliminary

purchase price allocation, a portion of the purchase price was allocated to supplier and customer relations that have been

recognized as intangible assets. The recognized goodwill is deductible for income tax purposes, and represents the value of

acquired business knowledge and synergies. Transactions costs of the acquisition have been recognized as other expenses in

the consolidated statement of income. Agri Trading contributed revenue of EUR 103 million to Neste’s revenue during the two

months under Neste’s ownership during 2021. If the acquisition had occurred on 1 January 2021, the management estimates

that consolidated revenue would have been EUR 415 millions more in 2021. The acquisition does not have a material impact on

Neste’s result.

Purchase price was paid fully in cash and as part of the purchase agreement with the previous owners of Agri Trading, a

contingent consideration has been agreed. There will be additional cash payments to the previous owners if they meet certain

predefined financial targets for 2022–2024. The additional cash payments will be paid during 2023–2025. As at the acquisition

date, the fair value of the contingent consideration was estimated to be EUR 23 million. The future changes in the fair value of

contingent consideration are recognized through profit or loss. The purchase price was also adjusted by net working capital and

other provisional adjustments amounting to EUR 3 million, which Neste received during 2022. In connection with the closing of

the acquisition, the interest bearing liabilities of the acquiree were paid off, and the related cash flow impact is presented in cash

flows from financing activities.

Values of acquired assets and liabilities at time of acquisition Fair value

Intangible assets 23

Property, plant and equipment 32

Inventories 28

Trade and other receivables 27

Cash and cash equivalents 5

Total assets 115

Interest-bearing liabilities 33

Provisions 1

Trade and other payables 23

Total liabilities 56

Fair value of acquired net assets 59

Consideration transferred 72

Adjustment to consideration in 2022 -3

Fair value of contingent consideration 23

Fair value of acquired net assets -59

Goodwill 33

Cash flows of acquisition 2021

Consideration, paid in cash -72

Cash and cash equivalents in acquiree 5

Acquiree's liabilities paid off at closing -21

Transaction costs of the acquisition -4

Net cash flow on acquisition -91

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Other business combinations

In year 2021 Neste has made smaller business combinations that are immaterial individually. The collective fair values of the

acquired net assets are presented in the table below. Based on purchase price allocations, a portion of the purchase price

was allocated to supplier and customer relations that have been recognized as intangible assets. The recognized goodwill is

deductible for income tax purposes, and represents the value of acquired business knowledge and synergies. The business

combinations do not have a material impact to Neste’s revenue nor result. The purchase prices were paid fully in cash.

Values of acquired assets and liabilities at time of acquisition Fair value

Intangible assets 4

Property, plant and equipment 3

Inventories 0

Trade and other receivables 0

Total assets 7

Fair value of acquired net assets 7

Consideration transferred 30

Fair value of contingent consideration 2

Fair value of acquired net assets -7

Goodwill 26

Cash flows of acquisition 2021

Consideration, paid in cash -30

Transaction costs of the acquisition 0

Net cash flow on acquisition -31

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2021

On 15 January 2021 Neste sold its liquefied petroleum gas (LPG ) cylinder business and its 50 percent shareholding in the bottling

plant Oy Innogas Ab to Oy Linde Gas Ab (formerly AGA). Liquefied petroleum gas (LPG) cylinder business and Oy Innogas Ab

were part of the Marketing & Services segment. The divestment does not have a material impact on the Group’s revenue nor

profit.

Sale of LPG cylinder business and stake in Oy Innogas Ab Recognized values

Total consideration 9

Sold net assets -4

Gain on sale 5

Cash consideration received 9

Cash and cash equivalents disposed of -1

Net cash flow of the disposal 8

Disposals

2022

On 1 April 2022 Neste sold its existing base oils business to Chevron Global Energy Inc., a wholly owned subsidiary of Chevron

Corporation. The transaction includes the NEXBASE™ brand, associated qualifications and approvals, and related sales and

marketing business. As part of the divestment, the parties also agreed on a long-term offtake for Neste’s base oils supply from

Porvoo, Finland. In connection with the divestment, Neste has also completed the exit of its base oils joint arrangement with

Bahrain Petroleum Company and Nogaholding. Base oils business was consolidated as part of the Oil Products segment.

Assets and liabilities Recognized values

Property, plant and equipment 9

Deferred tax assets 2

Inventories 83

Trade and other receivables 70

Cash and cash equivalents 21

Total assets 185

Deferred tax liabilities 1

Pension liabilities 2

Interest-bearing liabilities 8

Current tax liabilities 3

Trade and other payables 3

Total liabilities 18

Sold net assets 167

Total consideration

176

Sold net assets -167

Gain on sale 9

Cash consideration received 176

Cash and cash equivalents disposed of -21

Net cash flow 156

Transaction costs are included in total consideration

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28 Assets held for sale

Accounting policy

Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and

fair value, less costs to sell, if their carrying amount is recovered principally through a sale transaction rather than through

continuing use and sale is considered highly probable. For this to be the case, the asset must be available for immediate

sale in its present condition subject only to terms that are usual and customary for sales of such assets.

The assets are not depreciated after being classified as held for sale.

2022

There were no assets classified as held for sale on 31 December 2022.

2021

Futura and Mastera tankers

The assets classified as held for sale as of 31 Dec 2021 related to the sale of the tankers Futura and Mastera. The vessels were

consolidated into the Oil Products segment.

Base oils business

The assets held for sale at 31 Dec 2021 related to an agreement to sell its existing base oils business to Chevron Corporation. As

part of the divestment, the parties agreed on a long-term offtake for Neste’s base oils supply from Porvoo, Finland. In connection

with the divestment, Neste signed an agreement to exit its base oils joint arrangement with Bahrain Petroleum Company and

Nogaholding. Base oils business was consolidated as part of the Oil Products segment.

Futura and Mastera vessels

Assets classified as held for sale 2021

Property, plant and equipment 15

Total 15

Base Oils business

Assets classified as held for sale 2021

Property, plant and equipment 9

Deferred tax assets 2

Inventories 64

Trade and other receivables 64

Cash and cash equivalents 115

Total 255

Liabilities related to assets held for sale 2021

Non-current interest-bearing liabilities 3

Deferred tax liabilities 1

Pension liabilities 2

Current interest-bearing liabilities 7

Trade and other payables 18

Total 32

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Commitments 2022 2021

Commitments for purchase of property, plant and equipment and intangible assets 810 289

Other commitments 8 9

Total 818 298

Value of collateral Value of collateral

Contingent liabilities 2022 2021

On own behalf for commitments

Real estate mortgages 26 26

Other contingent liabilities 49 59

Total 75 85

On behalf of joint arrangements

Pledged assets 89 44

Total 89 44

On behalf of others

Guarantees 1 1

Total 1 1

164 130

29 Contingencies and commitments

The pledged assets on behalf of joint arrangements are granted to the secured creditors as continuing security for due and

punctual payment, discharge and performance of all or any part of the secured obligations of Kilpilahti Power Plant Ltd. The

pledged assets mean all shareholder loan receivables, all contribution loan receivables and the shares of Kilpilahti Power Plant

Ltd. The security period ends on the date on which all the secured obligations have been unconditionally and irrevocably paid

and discharged in full.

Capital commitments are mainly related to the expansion projects in Netherlands, USA and Singapore which will extend Neste’s

renewable products overall capacity.

Take-or-pay contracts

Neste has long-term supply agreements related to hydrogen, nitrogen, steam, natural gas and electricity. These agreements are

generally take-or-pay by nature. In addition to minimum purchase obligations, agreements normally include termination fees if

the contract is being terminated early. The probability of such circumstances is cosidered to be low.

30 Leases

Accounting policy

Neste assesses at contract inception whether a contract is, or contains, a lease, i.e., if the contract conveys the right to

control the use of an identified asset for a period of time in exchange for consideration.

Neste as a lessee

Neste has lease contracts for various land areas, vessels, tanks, containers, facilities and other equipment used in its

operations. Lease contracts are made for fixed periods of 1 to 60 years. Some leases include an option to extend the lease

for an additional period after the end of the contract term or terminate the contract during the lease term.

Neste recognises a leased asset and a lease liability at the lease commencement date, except for short-term leases and

leases of low-value assets.

i) Right-of-use assets

Neste recognises right-of-use assets on the commencement date of the lease (i.e., the date the underlying asset is

available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses,

and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease

liabilities recognised, initial direct costs incurred, any restoration obligations and lease payments made at or before the

commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over

the lease term. If ownership of the leased asset transfers to Neste at the end of the lease term or the cost reflects the

exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets

are also subject to impairment.

Neste’s right-of-use assets are included in Property, plant and equipment (see Note 14 Property plant and equipment).

ii) Lease liabilities

At the commencement date of the lease, Neste recognises lease liabilities measured at the present value of lease payments

to be made over the lease term. The lease payments include fixed payments (including insubstance fixed payments) less

any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to

be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option that is

reasonably certain to be exercised by Neste and payments of penalties for terminating the lease, if the lease term reflects

Neste exercising the option to terminate.

Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the

event or condition that triggers the payment occurs.

In calculating the present value of lease payments, Neste uses interest rate implicit in the lease if readily determinable

and if not, Neste uses its incremental borrowing rate at the lease commencement date. After the commencement date,

the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In

addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change

in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such

lease payments) or a change in the assessment of an option to purchase the underlying asset.

Neste’s lease liabilities are included in Interest-bearing liabilities (see Note 21 Financial liabilities).

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Right-of-use assets Note 2022 2021

Land 249 183

Buildings and constructions 45 22

Machinery and equipment 152 102

Other tangible assets 108 127

Total assets included in property, plant and equipment 14 553 434

Lease liabilities

Non-current interest-bearing liabilities 425 333

Current interest-bearing liabilities 110 111

Total liabilities included in interest-bearing liabilities 21 535 444

Depreciation charge of right-of-use assets Note 2022 2021

Land 14 14

Buildings and constructions 13 9

Machinery and equipment 48 47

Other tangible assets 87 81

14 163 151

Interest expense (included in finance cost) 10 24 21

Expense relating to short-term leases (included in materials and services) 7 38 11

Expense relating to short-term leases (included in other expenses) 9 5 5

Expense relating to leases of low-value assets (included in other expenses) 9 0 0

Variable lease payments not included in lease liabilities

(included in materials and services) 7 0 1

Variable lease payments not included in lease liabilities

(included in other expenses) 9 21 4

iii) Short-term leases and leases of low-value assets

Neste applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term

of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-

value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases

and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Neste as a lessor

At inception of a lease contract, Neste makes an assessment whether the lease is a finance lease or an operating lease. If

the lease substantially transfers all the risks and rewards incidental to ownership of the asset, it is considered to be a finance

lease; if not, the lease is considered to be an operating lease. Neste has a minor amount of operating lease contracts,

whereby the lease payments are recognised on a straight-line basis over the lease term and is included in revenue in the

statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating

lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental

income.

Estimates and judgements requiring management estimation

Neste determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option

to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if

it is reasonably certain not to be exercised.

Neste has several lease contracts that include extension and termination options. Neste’s management applies judgement

in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That

is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.

After the commencement date, Neste’s management reassesses the lease term if there is a significant event or change in

circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

Neste’s management applies judgement also for estimating the term of lease agreements in effect until further notice.

The management’s estimates are based on the company’s strategic situation and market conditions, as well the costs that

would incur if the leased asset would be replaced by another asset.

Additions to the right-of-use assets during the 2022 financial year were EUR 300 million (2021: EUR 213 million) and it included

EUR 111 million from joint operation Martinez Renewables on 31 December 2022.

The maturity analysis of lease liabilities is disclosed in Note 3 Financial risk management.

Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:

The total cash outflow for leases in 2022 was EUR 157 million (2021: EUR 144 million) which is presented in the line item

‘Repayments of lease liabilities’ under the cash flows from financing activities in the consolidated cash flow statement.

Amounts recognized in the balance sheet

The balance sheet shows the following amounts relating to leases:

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31 Disputes and potential litigations

32 Events after the balance sheet date

Neste is involved in legal proceedings and disputes incidental to its business. In management’s opinion, the outcome of these

cases is difficult to predict but not likely to have material effect on the Neste’s financial position.

Acquisition

The acquisition of shares in SeQuential Environmental Services, LLC, and Pure, LLC, as well as a UCO processing plant in Salem,

Oregon has been approved by regulatory authorities, and the transaction has been closed 13.1.2023. Through the transaction,

Neste acquired a leading used cooking oil (UCO) collection and recycling business and related assets on the US West Coast

from Crimson Renewable Energy Holdings, LLC.

The preliminary estimate of the acquisition is presented in the table below. Based on the preliminary purchase price allocation,

a portion of the purchase price was allocated to customer and supplier relations that have been recognized as intangible assets.

The goodwill represents the value of acquired business knowledge and synergies, and goodwill’s depreciations of the recognized

goodwill are deductible for income tax purposes.

The purchase price was paid fully in cash. Consideration transferred includes approx. 18 million euros of contingent consideration.

The final amount depends on how certain targets are achieved during 2023. The transaction costs of the acquisition will be

included in other expenses in the consolidated statement of income. The acquisition does not have a material impact on the

Group’s revenue nor profit.

Values of acquired assets and liabilities at time of acquisition Estimated value

Intangible assets 32

Property, plant and equipment 31

Inventories 2

Trade and other receivables 1

Cash and cash equivalents 0

Total assets 67

Interest-bearing liabilities 7

Trade and other payables 9

Total liabilities 16

Fair value of acquired net assets 51

Consideration transferred 164

Fair value of acquired net assets -51

Goodwill 113

Cash flows of acquisition 2022

Consideration, paid in cash -164

Cash and cash equivalents in acquiree 0

Acquiree's liabilities paid off at closing -1

Transaction costs of the acquisition -1

Net cash flow on acquisition -166

No other significant events took place in Neste after the balance sheet date.

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Neste Annual Report 2022 | Parent Company Financial Statements

EUR million Note 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

Revenue 2 19,231 10,021

Change in product inventories 367 233

Other operating income 3 28 27

Materials and services 4 -17,075 -8,948

Personnel expenses 5 -275 -220

Depreciation, amortization and write-downs 6 -248 -236

Other operating expenses 7 -445 -511

Operating profit/loss 1,583 365

Financial income and expenses 385 534

Financial income and expenses total 8 385 534

Profit/loss before appropriations and taxes 1,967 898

Appropriations 9 -49 -54

Income tax expenses 10 -291 -52

Profit for the year 1,628 792

Parent company income statement Parent company balance sheet

EUR million Note 31 Dec 2022 31 Dec 2021

ASSETS

Fixed assets and other long-term investments 11, 12

Intangible assets 123 103

Tangible assets 1,886 1,976

Other long-term investments 3,404 2,251

5,413 4,329

Current assets

Inventories 13 1,914 1,300

Long-term receivables 14 43 66

Short-term receivables 15 3,349 2,552

Cash and cash equivalents 806 1,492

6,113 5,410

Total assets 11,526 9,739

SHAREHOLDERS' EQUITY AND LIABILITIES

Shareholders' equity 16

Share capital 40 40

Other funds and reserves

Invested non-restricted equity fund 19 19

Fair value reserve 69 -32

Other funds and reverses total 88 -13

Retained earnings 2,189 2,027

Profit for the year 1,628 792

3,945 2,846

Accumulated appropriations 17 1,140 1,092

Provisions for liabilities and charges 18 117 115

Liabilities 19

Long-term liabilities 1,969 1,134

Short-term liabilities 4,355 4,552

6,324 5,686

Total equity and liabilities 11,526 9,739

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EUR million 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

Cash flows from operating activities

Profit/loss before approriations and taxes 1,967 898

Depreciation, amortization and write-downs 248 236

Other non-cash income and expenses -99 -67

Financial income and expenses -385 -534

Divesting activities, net -13 0

Operating cash flow before change in working capital 1,719 534

Change in working capital

Decrease (+)/increase (-) in interest-free receivables -824 -616

Decrease (+)/increase (-) in inventories -615 -379

Decrease (-)/increase (+) in interest-free liabilities -49 1,072

Change in working capital -1,487 77

Cash generated from operations 232 611

Interest and other financial expenses paid, net -16 -11

Dividends received 420 547

Income taxes paid -306 -52

Realized foreign exchange gains and losses, net -33 2

Net cash from operating activities 297 1,097

Parent company cash ﬂow statement

Cash flows from investing activities

Capital expenditure -184 -250

Proceeds from sale of fixed assets 0 0

Investments in shares in subsidiaries -1,014 -427

Investments in shares in other shares -1 -1

Proceeds from shares in subsidiaries 17 0

Proceeds from other shares 0 0

Change in other investments, increase (-)/decrease (+) 13 -318

Net cash used in investing activities -1,170 -996

Cash flow before financing activities -873 101

Cash flows from financing activities

Proceeds from long-term liabilities 899 583

Payments of long-term liabilities -491 -322

Change in other long-term liabilities 0 121

Change in short-term liabilities 248 104

Dividends paid -630 -614

Group contributions, net 128 76

Cash flow from financing activities 155 -52

Net increase (+)/decrease (-) in cash and cash equivalents -719 49

Cash and cash equivalents at the beginning of the period 1,492 1,443

Cash and cash equivalent increases from merger 33 0

Cash and cash equivalents at the end of the period 806 1,492

Net increase (+)/decrease (-) in cash and cash equivalents -719 49

EUR million 1 Jan–31 Dec 2022 1 Jan–31 Dec 2021

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Buildings and structures 20–40 years

Production machinery and equipment, including special spare parts 15–20 years

Other equipment and vehicles 3–15 years

Other tangible assets 20–40 years

Intangible assets

3–10 years

1 Accounting policies

The financial statements of Neste Corporation (Parent company) are prepared in accordance with Finnish GAAP. The financial

statements are presented in millions of euros unless otherwise stated. The figures in the tables are exact figures and consequently

the sum of individual figures may deviate from the sum presented.

Subsidiary Neste Engineering Solutions Oy has been merged to Neste Oy and Neste Engineering Solutions Oy’s business

continued as a part of Neste Oy since 1st of October 2022. The board executed the final decision of the merger on the 28th

of April 2022 according to the 6th of May 2022 registrated merger plan. Merger was executed according to OYL 16 2 § as a

subsidiary merger. Merger was executed in order to clarify corporate structure and policies. The gain on merger is presented in

the financial items when the gain can be compared to financial income. The gain on merger equals to Neste Engineering Solutions

Oy retained earnings (profit and loss from previous periods and profit/loss of the period) which states that the corresponding

dividend distribution would have been treated as financial income in parent company Neste Oyj under Finnish Accounting

Standards.

Neste Oyj is preparing separate natural gas sale and network financial statements that are audited. This is regulated by natural

gas market act.

Visibility in the global economy continues to be low due to high inflation, reduced economic growth expectations and continued

geopolitical uncertainty. The war in Ukraine has had significant impacts on the global energy markets, and energy prices have

risen to high levels. We expect volatility in the oil products and renewable feedstock markets to remain high.

Neste Oyj does not have subsidiaries in Russia nor in Ukraine. Neste Oyj’s financial position remained strong.

Revenue

Revenue include sales revenues from actual operations less discounts, indirect taxes such as value added tax and excise tax

payable by the manufacturer and statutory stockpiling fees. Revenue is recognised on accrual accounting basis.

Other operating income

Other operating income includes gains on the sales of fixed assets and contributions received as well as all other operating

income not related to the sales of products or services, such as rents.

Foreign currency items

Transactions denominated in foreign currencies have been valued using the exchange rate at the date of the transaction.

Receivables and liabilities denominated in foreign currencies outstanding on the balance sheet date have been valued using the

exchange rate quoted on the balance sheet date. Exchange rate gains and losses related to operative items are recognized as

adjustments to operative income and expenses in the income statement. Net exchange rate differences related to financial items

are reported under financial income and expenses.

Financial assets and liabilities

Derivative financial instruments are initially recognised at fair value on the trade date and are subsequently re-measured at their

fair value on the balance sheet date. Other financial assets and liabilities are measured at amortized cost and recognized initially

at fair value on the settlement date.

Loans and receivables consist of cash and cash equivalents, loans granted together with trade and other receivables. Other

financial liabilities include interest-bearing liabilities together with trade and other payables. Due to the nature of short-term trade

and other receivables their carrying amount is expected to be equal to their fair value.

Changes in the fair value of derivatives, for which hedge accounting is not applied, are recognized in the income statement.

The effective portion of the changes in the fair value of derivative financial instruments that are designated and qualified as cash

flow hedges are recognized in equity.

Derivative financial instruments

The company uses derivative financial instruments mainly to hedge commodity price, foreign exchange and interest rate exposures.

Derivatives not qualified for hedge accounting are recognized in the income statement either in operating profit or financial income

and expenses, depending on the underlying hedged item.

Current investments

Current investments includes deposits held at banks and other liquid investments with original maturities from three months to

12 months.

Hedge accounting

The company applies hedge accounting on certain forward foreign exchange contracts, options and interest rate derivatives.

Fair value hedges

The company applies fair value hedge accounting to reduce exposure to fair value fluctuations of interest-bearing liabilities due

to changes in interest rates. Changes in fair value of derivatives designated and qualifying as fair value hedges, together with any

changes in the fair value of hedged liabilities attiributable to the hedged risk, are recognized in financial income and expenses.

Cash flow hedges

The company applies cash flow hedge accounting to reduce exposure of currency and interest rates fluctuations. The result of

foreign currency derivative contracts hedging future cash flows and qualifying for hedge accounting is recognized once matured

and when the hedged item affects the income statement. Gains or losses for interest rate swaps used to hedge the interest rate

risk exposure are accrued over the period to maturity and are recognized as an adjustment to the interest income or expense of

the underlying liabilities.

Fixed assets and other long-term investments

The balance sheet value of fixed assets consists of historical costs less depreciation according to plan and other possible write-

offs, plus revaluation permitted by local regulations. Fixed assets are depreciated using straight-line depreciation based on the

expected useful life of the asset. Land areas are not depreciated. The depreciation is based on the following expected useful

lives:

Capitalized development expenditure in intangible assets consists of capitalized patents and license fees.

Investments in subsidiaries and other companies are measured at acquisition cost, or fair value in case the fair value is lower

than cost.

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2 Revenue

3 Other operating income

Inventories

Inventories are stated at either cost or net realizable value, whichever is the lowest. Cost is determined using the weighted

average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs,

and related production overheads (based on normal operating capacity). Net realizable value is the estimated selling price in the

ordinary course of business, less applicable variable selling expenses. Inventories held for trading purposes are measured at fair

value less selling expenses. Standard spare parts are carried as inventory and recognized in profit or loss as consumed.

Research and development

Research expenditure is recognized as an expense as incurred and included in other operating expences in the income statement.

Expenditure on development activities is capitalized only when it fulfills tight criteria e.g. development relates to new products that

are techincally and commercially feasible. The majority of the company’s development expenditure does not meet the criteria for

capitalization and are recognized as expenses as incurred.

Cash pool receivables/liabilities

Cash pool items are presented as short-term receivables or liabilities.

Pension expenses

An external pension insurance company manages the pension plan.The pension expenses are booked to income statement

during the year they occur.

Appropriations

Appropriations consist of received or given group contributions from or to Neste Group companies and depreciation above the

plan.

Deferred taxes

Deferred taxes are determined on the basis of temporary differences between the financial statement and tax bases of assets

and liabilities. Deferred income tax is determined using tax rates that have been enacted at the balance sheet date and are

expected to apply.

Provisions

Foreseeable future expenses and losses that have no corresponding revenue and which Neste Corporation is committed or

obliged to settle, and whose monetary value can reasonably be assessed, are entered as expenses in the income statement

and included as provisions in the balance sheet. These items include expenses relating to the pension liabilities, guarantee

obligations, restructuring provisions, expenses relating to the future clean-up of proven environmental damage and obligation to

return emission allowances. Provisions are recorded based on management estimates of the future obligation.

Revenue by segment 2022 2021

Renewable Products 5,918 3,656

Oil Products 13,149 6,255

Marketing & Services -2 8

Other 165 103

19,231 10,021

2022 2021

Rental income 5 6

Gain on sale of intangible and tangible assets 0 0

Gain on sale of subsidiary shares 13 0

Insurance compensations 0 8

Government grants 7 3

Other 4 9

Other operating income total 28 27

Revenue by market area 2022 2021

Finland 5,813 3,301

Other Nordic countries 3,859 2,195

Baltic Rim 1,846 856

Other European countries 5,843 2,914

North and South America 1,202 554

Other countries 669 201

19,231 10,021

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2022 2021

Depreciation according to plan 216 232

Write-offs 32 4

Write-downs of Naantali refining operations closure 0 0

Depreciations, amortization and write-downs total 248 236

2022 2021

Operating leases and other property costs 26 23

Repairs and maintenance 102 265

Planning and consulting services 58 46

IT services 105 71

Other 155 106

Other operating expenses total 445 511

EUR thousands 2022 2021

Authorised Public Accountants KPMG KPMG

Auditor's fees 604 553

Tax advisory 1 42

Other advisory services 141 62

746 657

4 Materials and services 6 Depreciation, amortization and write-downs

7 Other operating expenses

5 Personnel expenses

2022 2021

Materials and supplies

Purchases during the period 16,800 8,733

Change in inventories -247 -146

16,552 8,587

External services 523 361

Materials and services total 17,075 8,948

2022 2021

Wages, salaries and remunerations 221 200

Restructuring provisions related to Naantali refining operations closure

-1 -11

Indirect employee costs

Pension costs 49 36

Other indirect employee costs 9 9

Wages and salaries capitalized in fixed assets -4 -15

Personnel expenses total 274 220

Average number of employees 2022 2021

White-collar 2,081 1,740

Blue-collar 729 699

2,810 2,439

Salaries and remuneration

Key management compensations are presented in Note 25 in the Neste Group consolidated financial statements.

Fees charged by the statutory auditor

Includes reversed unused provision of Naantali refinery closure in 2022 and 2021.

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2022 2021

Dividend income

From Group companies 420 547

From associated companies 0 0

Dividend income total 420 547

Interest income from long-term loans and receivables

From Group companies 7 10

From others 4 2

Interest income from long-term loans and receivables total 11 12

Other interest and financial income

From Group companies 3 1

Other 5 0

Gain on merger 0 0

Other interest and financial income total 7 1

Write-downs on long-term investments

Write-downs on long-term investments (receivables) -3 -4

Return of write-downs on long-term investments

45 17

Write-drowns of other long-term investments -5 0

Write-downs on long-term investments total 37 13

Interest expenses and other financial expenses

To Group companies -10 -1

Other -22 -24

Interest expenses and other financial expenses total -33 -25

Exchange rate differences -58 -15

Financial income and expenses total 385 534

Total interest income and expenses 2022 2021

Interest income 18 13

Interest expenses -29 -22

Net interest expenses -11 -9

2022 2021

Change in depreciation difference

Difference between depreciation according to plan

and depreciation in taxation -49 -182

Group contributions

Group contributions received 0 128

Appropriations total -49 -54

2022 2021

Income taxes on regular business operations 291 52

Taxes for prior periods 0 0

Change in deferred tax assets 0 0

Income tax expense total 291 52

8 Financial income and expenses 9 Appropriations

10 Income tax expense

Consists of Neste Bahrain’s loan receivables repayment

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Intangible assets Goodwill Other intangible assets Total

Acquisition cost as of 1 January 2022 1 303 304

Increases 0 52 52

Decreases 0 -6 -6

Transfers between items 0 5 5

Increases from merger 0 4 4

Acquisition cost as of 31 December 2022 1 358 359

Accumulated amortization and write-downs as of 1 January 2022 1 200 201

Amortization for the period 0 31 31

Amortization for the period from merger 0 4 4

Accumulated amortization and write-downs as of 31 December 2022 1 235 236

Balance sheet value as of 31 December 2022 0 123 123

Intangible assets Goodwill Other intangible assets Total

Acquisition cost as of 1 January 2021 1 287 288

Increases 0 18 18

Decreases 0 -2 -2

Transfers between items 0 0 0

Acquisition cost as of 31 December 2021 1 303 304

Accumulated amortization and write-downs as of 1 January 2021 1 169 170

Amortization for the period 0 31 31

Accumulated amortization and write-downs as of 31 December 2021 1 200 201

Balance sheet value as of 31 December 2021 0 103 103

11 Fixed assets and long-term investments

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Tangible assets Land areas

Buildings

and structures

Machinery

and equipment

Other

tangible assets

Advances paid and

construction in progress Total

Acquisition cost as of 1 January 2022 26 1,487 3,676 102 109 5,400

Increases 0 1 18 0 106 125

Decreases 0 -37 -392 -22 -22 -472

Transfers between items 0 3 18 22 -26 17

Increases from merger 0 0 3 0 0 3

Acquisition cost as of 31 December 2022 26 1,453 3,323 102 167 5,072

Accumulated depreciation and write-downs as of 1 January 2022 0 835 2,567 48 0 3,451

Accumulated depreciation and write-downs of decreases and transfers 0 -34 -391 0 0 -425

Depreciation and write downs for the period 0 39 144 2 0 185

Depreciation and write-downs for the period due to the merger 0 0 3 0 0 3

Write-downs of Naantali refining operations closure 0 0 0 0 0 0

Accumulated depreciation and write-downs as of 31 December 2022 0 840 2,323 50 0 3,213

Revaluations 6 21 0 0 0 27

Balance sheet value as of 31 December 2022 32 634 1,000 53 167 1,886

Balance sheet value of machinery and equipments used in production 736

Tangible assets Land areas

Buildings

and structures

Machinery

and equipment

Other

tangible assets

Advances paid and

construction in progress Total

Acquisition cost as of 1 January 2021 26 1,418 3,218 102 415 5,178

Increases 0 11 202 0 14 227

Decreases 0 0 -3 0 -2 -6

Transfers between items 0 58 259 0 -318 0

Acquisition cost as of 31 December 2021 26 1,487 3,676 102 109 5,400

Accumulated depreciation and write-downs as of 1 January 2021 0 797 2,410 46 0 3,253

Accumulated depreciation and write-downs of decreases and transfers 0 -2 -3 0 0 -4

Depreciation and write downs for the period 0 38 160 2 0 200

Write-downs of Naantali refining operations closure 0 1 0 0 0 2

Accumulated depreciation and write-downs as of 31 December 2021 0 835 2,567 48 0 3,451

Revaluations 6 21 0 0 0 27

Balance sheet value as of 31 December 2021 32 672 1,108 55 109 1,976

Balance sheet value of machinery and equipments used in production 1,108

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Other long-term investments

Shares in

group companies

Receivables from

group companies

Shares in

associated

companies

Receivables

from associated

companies

Other shares

and holdings

Other

receivables Total

Acquisition cost as of 1 January 2022 2,145 39 7 37 20 2 2,251

Increases 1,306 284 0 69 2 2 1,663

Decreases -322 -153 0 -24 0 -1 -501

Acquisition cost as of 31 December 2022 3,130 170 7 82 21 3 3,413

Accumulated depreciation and write-downs as of 1 January 2022 0 0 0 0 0 0 0

Decrease 0 0 0 0 5 3 8

Accumulated depreciation and write-downs as of 31 December 2022 0 0 0 0 0 3 8

Balance sheet value as of 31 December 2022 3,130 170 7 82 16 0 3,404

Other long-term investments

Shares in

group companies

Receivables from

group companies

Shares in

associated

companies

Receivables

from associated

companies

Other shares

and holdings

Other

receivables Total

Acquisition cost as of 1 January 2021 1,719 58 7 35 19 0 1,837

Increases 427 260 0 38 1 12 738

Decreases 0 -279 0 -36 0 -6 -321

Acquisition cost as of 31 December 2021 2,145 39 7 37 20 6 2,254

Accumulated depreciation and write-downs as of 1 January 2021 0 0 0 0 0 0 0

Decrease 0 0 0 0 0 4 4

Accumulated depreciation and write-downs as of 31 December 2021 0 0 0 0 0 4 4

Balance sheet value as of 31 December 2021 2,145 39 7 37 20 2 2,251

Interest-bearing and interest-free receivables 2022 2021

Interest-bearing receivables 252 79

Interest-free receivables 0 0

252 79

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12 Revaluations

13 Inventories

14 Long-term receivables

15 Short-term receivables

Revaluations

as of

Jan 1 2022 Increases Decreases

Revaluations

as of

Dec 31 2022

Land areas 6 0 0 6

Buildings 21 0 0 21

Revaluations total 27 0 0 27

2022 2021

Raw materials and supplies 848 601

Products/finished goods 1,066 698

Advance payments on inventories 1 0

Inventories total 1,914 1,300

Replacement value of inventories 1,968 1,490

Book value of inventories 1,914 1,300

Difference 54 191

2022 2021

Long-term receivables from others

Long-term advance payments 19 22

Other receivables 17 12

Deferred tax assets 7 32

Long-term receivables total 43 66

Short-term accrued income and prepaid expenses 2022 2021

Accrued interest 0 0

Derivative financial instruments 521 318

Current investments 0 135

Other 47 28

Total 568 481

2022 2021

Receivables from Group companies

Trade receivables 998 703

Loan receivables 4 139

Other receivables 667 342

Accrued income and prepaid expenses 120 73

Total 1,789 1,257

Receivables from associated companies

Trade receivables 51 69

Other receivables 0 0

Total 51 69

Receivables from others

Trade receivables 773 636

Loan receivables 0 0

Other receivables 287 181

Accrued income and prepaid expenses 448 408

Total 1,509 1,225

Short-term receivables total 3,349 2,552

Policies and principles for revaluations and evaluation methods

The revaluations are based on fair values at the moment of revaluation.

Deferred taxes have not been booked on revaluations.

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16 Changes in shareholders' equity 17 Accumulated appropriations

18 Provisions for liabilities and charges

2022 2021

Share capital at 1 January 40 40

Share capital at 31 December 40 40

Fair value reserve at 1 January -32 64

Increases 5,100 1,692

Decreases -5,000 -1,788

Fair value reserve at 31 December 69 -32

Restricted shareholders equity 109 8

Invested non-restricted equity fund at 1 January 19 19

Invested non-restricted equity fund at 31 December 19 19

Retained earnings at 1 January 2,819 2,641

Dividends paid -630 -614

Profit for the year 1,628 792

Retained earnings at 31 December 3,817 2,819

Non-restricted shareholders equity 3,836 2,838

Capitalized development expenditure 12 6

Distributable equity 3,824 2,800

2022 2021

Depreciation difference 1,140 1,092

2022 2021

at 1 Jan Increase Decrease at 31 Dec at 1 Jan Increase Decrease at 31 Dec

Restructuring provisions 2 0 1 0 23 0 21 2

Provision for environment 1 0 0 1 1 0 0 1

Provision for environment for Naantali refining operations closure 112 4 5 111 117 2 6 112

Other provisions 0 4 0 4 0 1 1 0

Total 115 8 6 117 141 3 29 115

The amount of own shares is presented in the group’s consolidated financial statements in note 20.

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19 Liabilities

Long-term liabilities 2022 2021

Bonds 895 893

Loans from financial institutions 615 0

Advanced payments 18 19

Liabilities to Group companies

Other long-term liabilities 429 99

Other long-term liabilities 0 121

Accruals and deferred income 12 1

Long-term liabilities total 1,969 1,134

Interest-bearing liabilities due after five years 2022 2021

Loans from financial institutions 94 98

Bonds 495 494

589 592

Short-term liabilities 2022 2021

Loans from financial institututions 5 0

Advances received 25 36

Trade payables 890 890

Liabilities to Group companies

Advances received 0 0

Trade payables 661 736

Other short-term liabilities 1,317 1,718

Accruals and deferred income 119 140

Total 2,097 2,594

Liabilities to associated companies

Trade payables 22 17

Total 22 17

Other short-term liabilities 1,014 779

Accruals and deferred income 301 236

Short-term liabilities total 4,355 4,552

Short-term accruals and deferred income 2022 2021

Salaries and indirect employee costs 90 57

Accrued interests 9 8

Derivative financial instruments 317 307

Other short-term accruals and deferred income 4 3

420 376

Interest-bearing and interest-free liabilities 2022 2021

Long-term liabilities

Interest-bearing liabilities 1,936 1,105

Interest-free liabilities 33 29

1,969 1,134

Short-term liabilities

Interest-bearing liabilities 1,695 1,838

Interest-free liabilities 2,660 2,714

4,355 4,552

Issued/Maturity

Interest

basis

Interest

rate, % Currency

Nominal,

million

Carrying

amount,

EUR million

2017/2024 Fixed 1.5000 EUR 400 400

2021/2028 Fixed 0.7500 EUR 500 495

Total outstanding carrying amount 31 December 2022 895

Listed bond issues

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20 Contingent liabilities

Contingent liabilities 2022 2021

Contingent liabilities given on own behalf

Real estate mortgages 26 26

Pledged assets 0 0

Other contingent liabilities 27 23

Total 52 49

Contingent liabilities given on behalf of Group companies

Guarantees 409 278

Total 409 278

Contingent liabilities given on behalf of associated companies

Pledged assets 89 44

Total 89 44

Contingent liabilities given on behalf of others

Guarantees 1 1

Total 1 1

Other contingent liabilities

The Company is obliged to adjust VAT deductions made from real estate investments on 2008 or after if the taxable utilization of

real estate will decrease during a 10 years control period.

Operating lease liabilities 2022 2021

Due within a year 22 16

Due after a year 19 14

Total 41 31

Capital commitments 2022 2021

Commitments for purchase of property,

plant and equipment and intangible assets 38 17

Other commitments 8 9

Total 46 25

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31 Dec 2022 31 Dec 2021

Nominal value by maturity Fair Value Nominal value by maturity Fair Value

< 1 year > 1 year Positive Negative Net < 1 year > 1 year Positive Negative Net

Foreign exchange derivatives

Foreign exchange derivatives, forwards 2,984 0 99 18 81 1,604 10 8 45 -37

Foreign exchange options

Purchased 84 0 5 0 5 124 0 0 0 0

Written 84 0 0 0 0 124 0 0 3 -3

Derivatives designated as cash flow hedges 3,153 0 104 18 86 1,851 0 8 48 -40

Foreign exchange derivatives, forwards 3,853 3 119 24 96 2,343 0 26 27 -1

Intra-group forward foreign exchange contracts 1,551 3 24 20 4 950 0 13 23 -10

Currency options

Purchased 0 0 0 0 0 35 0 0 0 0

Written 0 0 0 0 0 35 0 0 1 -1

Intra-group currency options

Purchased 0 0 0 0 0 35 0 0 0 0

Written 0 0 0 0 0 35 0 1 0 1

Non-hedge accounting 5,404 6 143 43 100 3,434 0 41 51 -11

21 Derivative financial instruments

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31 Dec 2022 31 Dec 2021

Nominal value by maturity Fair Value Nominal value by maturity Fair Value

< 1 year > 1 year Positive Negative Net < 1 year > 1 year Positive Negative Net

Commodity derivatives

Oil and vegetable oil derivatives

Sold forwards, million bbl 25 0 65 66 -1 26 0 29 71 -42

Purchased forwards, million bbl 18 0 59 67 -8 21 0 107 15 92

Intra-group oil and vegetable oil derivatives

Sold forwards, million bbl 11 0 32 36 -4 9 0 7 48 -41

Purchased forwards, million bbl 12 0 37 27 10 13 0 45 11 34

Electricity and gas derivatives

Sold forwards, GWh 18 0 2 0 2 0 0 0 0 0

Purchased forwards, GWh 1,996 620 62 36 26 2,966 940 91 14 77

Intra-group electricity and gas derivatives

Sold forwards, GWh 1,328 489 34 38 -4 1,236 590 3 60 -57

Non-hedge accounting 3,408 1,109 291 270 21 4,270 1,530 281 218 63

Derivatives Total 538 332 206 330 318 12

of which

Current derivative financial instruments 521 -317 838 318 307 10

Non-current derivative financial instruments 17 -15 32 12 10 2

Commodity derivative contracts with non-hedge accounting status include oil, vegetable oil, electricity and gas derivative contracts. They consist of trading derivative contracts and cash flow hedges without hedge accounting status.

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Fair value hierarchy of derivatives 2022 2021

Financial assets Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Non-current derivative financial instruments

Currency derivatives 0 0 0 0 0 0 0 0

Commodity derivatives 0 17 0 17 0 12 0 12

Other financial assets 0 0 0 0 0 0 0 0

Current derivative financial instruments

Currency derivatives 0 247 0 247 0 48 0 48

Commodity derivatives 32 242 0 274 3 266 0 269

Financial liabilities

Non-current derivative financial instruments

Currency derivatives 0 0 0 0 0 0 0 0

Commodity derivatives 0 15 0 15 0 10 0 10

Current derivative financial instruments

Currency derivatives 0 62 0 62 0 99 0 99

Commodity derivatives 54 201 0 255 3 205 0 208

Financial instruments that are measured in the balance sheet at fair value are presented according to following fair value measurement hierachy:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted price included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e derived from prices)

Level 3: inputs for the assets or liablity that is not based on obervable market data (unobservable inputs).

Fair value estimations

Derivative financial instruments are initially recognized and subsequently re-measured at their fair values i.e.the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participant and the measurement

date. The fair value of exchange traded commodity futures and option contracts is determined using the forward exchange market quotations as per last business day of financial year. The fair value of over-the-counter derivative contracts is calculated using the

net present value of the forward derivative contracts quoted market prices as per last business day of financial year.

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Country of

incorporation No of shares Holding -%

Subsidiary shares

Kiinteistö Oy Espoon Keilaranta 21 Finland 16,000 100.00

Navidom Oy Finland 50 50.00

Neste (Suisse) S.A. Switzerland 200 100.00

Neste AB Sweden 2,000,000 100.00

Neste Affliliate B.V. Netherlands 26,090 100.00

Neste Belgium NV Belgium 615 100.00

Neste Canada Canada 30,000 100.00

Neste Components B.V. Netherlands 40 100.00

Neste Eesti AS Estonia 10,000 100.00

Neste Engineering Solutions B.V. Netherlands 1 100.00

Neste Engineering Solutions Pte. Ltd. Singapore 1 100.00

Neste Germany GmbH Germany 25,000 100.00

Neste Insurance Limited Guernsey 7,000,000 100.00

Neste Italy S.R.L. Italy 1 100.00

Neste Markkinointi Oy Finland 210,560 100.00

Neste Netherlands B.V. Netherlands 18,000 100.00

Neste Pretreatment Rotterdam B.V. Netherlands 18,000 100.00

Neste Renewable Products Inc USA 5,000 100.00

Neste Renewable Solutions US, Inc. USA 1,000 100.00

Neste RPC Solutions US, Inc. USA 1,000 100.00

Neste Shipping Oy Finland 101 100.00

Neste Singapore Pte. Ltd. Singapore 1,727,535,875 100.00

Neste US, Inc. USA 1,000 100.00

Associated companies

A/B Svartså Vattenverk - Mustijoen Vesilaitos O/Y Finland 14 40.00

Kilpilahti Powerplant Ltd. Finland 20,000 40.00

Neste Arabia Co. Ltd. Saudi Arabia 480 48.00

Tahkoluodon Polttoöljy Oy Finland 630 31.50

22 Shares and holdings

23 Disputes and potential litigations

Other shares and holdings

Circularise B.V. Netherlands 9,586

CLEEN Oy Finland 100

Kiinteistö Oy Anttilankaari 8 Finland 51

Kiinteistö Oy Himoksen Aurinkopaikka Finland 51

Kiinteistö Oy Katinkullan Hiekkaniemi Finland 102

Kiinteistö Oy Katinkultaniemi Finland 51

Kiinteistö Oy Kotkan Klubi Finland 30

Kiinteistö Oy Kuusamon Tähti 1 Finland 51

Kiinteistö Oy Laavutieva Finland 51

Kiinteistö Oy Lapinniemi & Osakeyhtiö Lapinniemi Finland 24

Posintra Oy Finland 190

Recycling Technologies Ltd. United Kingdom 3,122,666

St Laurence Golf Oy, B-osake Finland 3

Sunfire GmbH Germany 264,121

Telephone shares

Elisa Oyj Finland 1

Osuuskunta PPO Finland 1

Pietarsaaren Seudun Puhelin Oy Finland 3

Savonlinnan Puhelinosuuskunta SPY Finland 1

Country of

incorporation No of shares

Neste Corporation is involved in legal proceedings and disputes incidental to its business. In management’s opinion, the outcome

of these cases is difficult to predict but not likely to have material effect on the Neste’s financial position.

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Neste Annual Report 2022 | Signature of the review by the Board of Directors and the Financial Statements

Proposal for the distribution of earnings and signing

of the Review by the Board of Directors and the Financial Statements

Espoo, 7 February 2023

Matti Kähkönen Marco Wirén

Martina Flöel Jari Rosendal

John Abbott Nick Elmslie

Johanna Söderström Just Jansz

Eeva Sipilä Matti Lehmus

President and CEO

The Parent company’s distributable funds as of 31 December 2022 stood at EUR 3,824 million. The Board of Directors

proposes to the Annual General Meeting that Neste Corporation pays an ordinary dividend of EUR 1.02 per share for

2022, totaling approximately EUR 783 million, and an extraordinary dividend of EUR 0.25 per share, totaling approximately

EUR 192 million. In addition, the Board proposes that the AGM would authorize the Board to decide, in its discretion, on

the payment of a second extraordinary dividend instalment in an amount of EUR 0.25 per share, totaling approximately

EUR 192 million by 31 October 2023. The Board expects that this discretionary second extraordinary dividend will be paid,

unless there is a significant deterioration in the business environment during 2023. The proposed maximum total dividend in

2023 amounts to approximately EUR 1,167 million. Any remaining distributable funds will be allocated to retained earnings.

The Board of Directors will also propose that the annual dividend and extraordinary dividend shall be paid in two instalments.

The Auditor’s Note

A report on the audit performed has been issued today.

Helsinki, 7 February 2023

KPMG Oy Ab

Authorised Public Accountants

Leenakaisa Winberg

Authorized Public Accountant

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Neste Annual Report 2022 | Auditor’s Report

This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Neste Corporation

(business identity code 1852302-9) for the year ended

December 31, 2022. The financial statements comprise

the consolidated statement of financial position, income

statement, statement of comprehensive income, statement

of changes in equity, statement of cash flows and notes,

including a summary of significant accounting policies, as well

as the parent company’s balance sheet, income statement,

statement of cash flows and notes.

In our opinion

• the consolidated financial statements give a true and fair

view of the group’s financial position, financial performance

and cash flows in accordance with International Financial

Reporting Standards (IFRS) as adopted by the EU

• the financial statements give a true and fair view of the

parent company’s financial performance and financial

position in accordance with the laws and regulations

governing the preparation of financial statements in Finland

and comply with statutory requirements.

Our opinion is consistent with the additional report submitted

to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with good auditing

practice in Finland. Our responsibilities under good auditing

practice are further described in the Auditor’s Responsibilities

for the Audit of the Financial Statements section of our report.

We are independent of the parent company and of the group

companies in accordance with the ethical requirements that

are applicable in Finland and are relevant to our audit, and we

have fulfilled our other ethical responsibilities in accordance

with these requirements.

In our best knowledge and understanding, the non-audit

services that we have provided to the parent company and

group companies are in compliance with laws and regulations

applicable in Finland regarding these services, and we have

not provided any prohibited non-audit services referred to in

Article 5(1) of regulation (EU) 537/2014. The non-audit services

that we have provided have been disclosed in note 9 to the

consolidated financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Materiality

The scope of our audit was influenced by our application

of materiality. The materiality is determined based on our

professional judgement and is used to determine the nature,

timing and extent of our audit procedures and to evaluate the

effect of identified misstatements on the financial statements

as a whole. The level of materiality we set is based on

our assessment of the magnitude of misstatements that,

individually or in aggregate, could reasonably be expected

to have influence on the economic decisions of the users of

the financial statements. We have also taken into account

misstatements and/or possible misstatements that in our

opinion are material for qualitative reasons for the users of the

financial statements.

Auditor’s Report

To the Annual General Meeting of Neste Corporation

Key Audit Matters

Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the

financial statements of the current period. These matters

were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

The significant risks of material misstatement referred to in

the EU Regulation No 537/2014 point (c) of Article 10(2) are

included in the description of key audit matters below.

We have also addressed the risk of management override of

internal controls. This includes consideration of whether there

was evidence of management bias that represented a risk of

material misstatement due to fraud.

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THE KEY AUDIT MATTER

Biofuel credits

(reference to notes 5 and 18 in the

consolidated nancial statements)

Renewable Products revenue includes income deriving

from biofuel credits which Neste earns its sales operations

especially in the USA. Neste’s biofuel credits relate to

the import and sale of renewable fuels in the USA in

the form of Renewable Identification Number (RINs) and

Low Carbon Fuel Standard (LCFSs) and Blenders Tax

Credits (BTC).

RINs and LCFSs are accounted for as government

grants upon receipt of the product inventory in the USA

and are recognized as a revenue when biofuel credits are

sold to a third party. RINs and LCFSs are accounted for

as inventory to the extent they have been separated from

the physical goods, which happens when renewable fuel

is blended with fossil fuel.

As there is a risk relating to accuracy of biofuel credits

it has been considered as a key audit matter.

HOW THE MATTER WAS ADDRESSED

IN THE AUDIT

Our audit procedures related to biofuel credits included:

• Evaluating the appropriateness of the accounting

policies applied when recording biofuel credits in

relation to underlying IFRS principles.

• Evaluation of the process for registering biofuel credits

and for reconciling balances to the eligible credits.

• Comparing of the registered balances against the

systems administered by the Environmental Protection

Agency (EPA) in the USA.

In addition, our test of details included the following

procedures to confirm accuracy of biofuel credits:

• Testing of revenue recognition on a sample basis

based on the sales agreements and system generated

documents.

• Comparing the valuation of RINs and LCFSs accounted

for as inventory to quoted market prices.

• Comparing of the value of the BTC to that confirmed

by the authorities in the USA.

THE KEY AUDIT MATTER

Martinez Renewables

Joint Arrangement

(reference to the note 2: accounting

policies and notes 14, 18 and 30 in

the consolidated nancial statements)

During 2022 Neste finalized a transaction to establish a

joint arrangement (Martinez Renewables) for production

of renewable fuels together with Marathon Petroleum.

At the time of making the investment, Neste made

the interpretation to treat the establishment and initial

investment into the joint arrangement as an asset

acquisition. After the initial investment, Neste classified

the joint arrangement as a joint operation reflecting that

Neste and Marathon Petroleum have a joint control

over the arrangement’s relevant activities, and that the

production output will be divided evenly between Neste

and Marathon Petroleum.

As a result of the joint operation classification, Neste

recognizes its 50% share of Martinez Renewables’

assets, liabilities, revenues and expenses.

Neste capital expenditure into Martinez Renewables

impacting in 2022 cash flow was 753 M€. The impact

to Neste’s property, plant and equipment at the year end

was 853 M€.

Due to the nature of unusual transaction as well as its’

monetary significance, joint arrangement is considered

as a key audit matter.

HOW THE MATTER WAS ADDRESSED

IN THE AUDIT

Our audit procedures related to Martinez Renewables joint

arrangement included:

• Evaluating the structure of the transaction and

the accounting policies applied in relation to the

IFRS-standards.

• Involving our valuation specialists to assist us in

evaluating methodologies and underlying assumptions

applied by the management in the purchase price

calculation.

• Providing instructions to the auditors of joint operation

to carry out appropriate controls testing and substantive

procedures relating to property, plant and equipment.

• Evaluating the findings reported by the auditors of joint

operation including discussion with the auditors.

In addition, we have assessed the appropriateness

of the Group’s disclosures in respect of the

transaction and the joint arrangement.

Neste Annual Report 2022 | Auditor’s Report

260

Strategy GovernanceSustainability Review by the Board of Directors Financials

Responsibilities of the Board of Directors

and the Managing Director for the Financial

Statements

The Board of Directors and the Managing Director are

responsible for the preparation of consolidated financial

statements that give a true and fair view in accordance with

International Financial Reporting Standards (IFRS) as adopted

by the EU, and of financial statements that give a true and fair

view in accordance with the laws and regulations governing

the preparation of financial statements in Finland and comply

with statutory requirements. The Board of Directors and the

Managing Director are also responsible for such internal control

as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the Board of Directors

and the Managing Director are responsible for assessing the

parent company’s and the group’s ability to continue as a going

concern, disclosing, as applicable, matters relating to going

concern and using the going concern basis of accounting.

The financial statements are prepared using the going concern

basis of accounting unless there is an intention to liquidate the

parent company or the group or cease operations, or there is

no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of

the Financial Statements

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to

issue an auditor’s report that includes our opinion. Reasonable

assurance is a high level of assurance but is not a guarantee

that an audit conducted in accordance with good auditing

practice will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions

of users taken on the basis of the financial statements.

As part of an audit in accordance with good auditing practice,

we exercise professional judgment and maintain professional

scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of

the financial statements, whether due to fraud or error,

design and perform audit procedures responsive to

those risks, and obtain audit evidence that is sufficient

and appropriate to provide a basis for our opinion. The

risk of not detecting a material misstatement resulting

from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal

control.

• Obtain an understanding of internal control relevant

to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of

the parent company’s or the group’s internal control.

• Evaluate the appropriateness of accounting policies

used and the reasonableness of accounting estimates

and related disclosures made by management.

THE KEY AUDIT MATTER

Valuation of inventories

(reference to note 18 in the consolidated

nancial statements)

The company has significant inventory balances both in

the Renewable Products and Oil Products segments.

The inventory is valued at the lower of cost or net

realizable value. The cost of inventory in the Renewable

Products segment reflects purchase prices, which are

impacted by the market prices of different feedstocks as

well as the mix of feedstocks purchased.

Inventory management, stocktaking routines and

costing of inventories are underlying key factors in

determining the value of inventories.

Due to complexity of the inventory valuation calculations

for Renewable Products the valuation of inventories in

Renewable Product segment is considered as a key

audit matter.

HOW THE MATTER WAS ADDRESSED

IN THE AUDIT

Our audit procedures related to valuation of Renewable

Products’ inventories included:

• Evaluating the appropriateness of the accounting

policies applied in relation to IFRS standards.

• Testing of controls over inventory management and

valuation.

• Performing substantive audit procedures in order to

test the accuracy of inventory valuation at the lower of

cost or net realization value at reporting date by testing

on a sample basis accuracy of relevant components

related to valuation.

In addition, we have assessed the appropriateness of the

Group’s disclosures in respect of inventory valuation.

Neste Annual Report 2022 | Auditor’s Report

261

Strategy GovernanceSustainability Review by the Board of Directors Financials

In our opinion, the information in the report of the Board

of Directors is consistent with the information in the financial

statements and the report of the Board of Directors has

been prepared in accordance with the applicable laws and

regulations.

If, based on the work we have performed on the other

information that we obtained prior to the date of this auditor’s

report, we conclude that there is a material misstatement of

this other information, we are required to report that fact. We

have nothing to report in this regard.

Other Statements

We support that the financial statements and the consolidated

financial statements should be adopted. The proposal by the

Board of Directors regarding the use of the profit shown in

the balance sheet is in compliance with the Limited Liability

Companies Act. We support that the Members of the Board

of Directors and the Managing Director of the parent company

should be discharged from liability for the financial period

audited by us.

Helsinki February 7, 2023

KPMG OY AB

Leenakaisa Winberg

Authorised Public Accountant, KHT

• Conclude on the appropriateness of the Board of

Directors’ and the Managing Director’s use of the going

concern basis of accounting and based on the audit

evidence obtained, whether a material uncertainty exists

related to events or conditions that may cast significant

doubt on the parent company’s or the group’s ability

to continue as a going concern. If we conclude that

a material uncertainty exists, we are required to draw

attention in our auditor’s report to the related disclosures

in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions

are based on the audit evidence obtained up to the

date of our auditor’s report. However, future events or

conditions may cause the parent company or the group

to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content

of the financial statements, including the disclosures,

and whether the financial statements represent the

underlying transactions and events so that the financial

statements give a true and fair view.

• Obtain sufficient appropriate audit evidence regarding

the financial information of the entities or business

activities within the group to express an opinion on the

consolidated financial statements. We are responsible

for the direction, supervision and performance of the

group audit. We remain solely responsible for our audit

opinion.

We communicate with those charged with governance

regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including

any significant deficiencies in internal control that we identify

during our audit.

We also provide those charged with governance with

a statement that we have complied with relevant ethical

requirements regarding independence and communicate with

them all relationships and other matters that may reasonably be

thought to bear on our independence, and where applicable,

related safeguards.

From the matters communicated with those charged with

governance, we determine those matters that were of most

significance in the audit of the financial statements of the

current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that a

matter should not be communicated in our report because

the adverse consequences of doing so would reasonably

be expected to outweigh the public interest benefits of such

communication.

Other Reporting Requirements

Information on our audit engagement

We were first appointed as auditors by the Annual General

Meeting on March 30, 2021 and our appointment represents

a total period of uninterrupted engagement of 2 years.

Other Information

The Board of Directors and the Managing Director are

responsible for the other information. The other information

comprises the report of the Board of Directors and the

information included in the Annual Report but does not include

the financial statements and our auditor’s report thereon. We

have obtained the report of the Board of Directors prior to the

date of this auditor’s report, and the Annual Report is expected

to be made available to us after that date. Our opinion on the

financial statements does not cover the other information.

In connection with our audit of the financial statements, our

responsibility is to read the other information identified above

and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our

knowledge obtained in the audit, or otherwise appears to be

materially misstated. With respect to the report of the Board of

Directors, our responsibility also includes considering whether

the report of the Board of Directors has been prepared in

accordance with the applicable laws and regulations.

Neste Annual Report 2022 | Auditor’s Report

262

Strategy GovernanceSustainability Review by the Board of Directors Financials

Neste Annual Report 2022 | Assurance Report

Independent Auditor’s Reasonable Assurance Report on Neste Corporation’s

ESEF Financial Statements

We have undertaken a reasonable assurance engagement

in respect of whether the consolidated financial statements

for the year ended 31 December, 2022 included in the digital

financial statements 5493009GY1X8GQ66AM14-2022-12-

31-en.zip of Neste Corporation (Business ID 1852302-9) have

been marked up with iXBRL markups in accordance with the

requirements of Article 4 of EU Delegated Regulation 2018/815

(ESEF RTS).

The Responsibility of the Board of Directors

and Managing Director

The Board of Directors and Managing Director are responsible

for preparing the report of the Board of Directors and financial

statements (ESEF financial statements) that comply with the

requirements of ESEF RTS. This responsibility includes:

• preparation of ESEF financial statements in XHTML format

in accordance with Article 3 of the ESEF RTS

• marking up the primary statements and the notes to the

consolidated financial statements, and the company iden-

tification data included in the ESEF financial statements

with iXBRL tags in accordance with Article 4 of the ESEF

RTS; and

• ensuring consistency between ESEF financial statements

and audited financial statements.

The Board of Directors and the Managing Director are also

responsible for such internal control as they deem necessary

to prepare the ESEF financial statements in accordance with

the requirements of the ESEF RTS.

Auditor’s Independence and

Quality Management

We are independent of the company in accordance with the

ethical requirements applicable in Finland, which apply to the

engagement we have performed, and we have fulfilled our other

ethical responsibilities in accordance with these requirements.

The auditor applies International Standard on Quality

Management ISQM 1, which requires the firm to design, imple-

ment and operate a system of quality management includ-

ing policies or procedures regarding compliance with ethical

requirements, professional standards and applicable legal and

regulations requirements.

Auditor’s Responsibility

In accordance with the Engagement Letter our responsibil-

ity is to express an opinion on whether the marking up of the

consolidated financial statements included in the ESEF finan-

cial statements comply in all material respects with the Article

4 of the ESEF RTS. We conducted our reasonable assurance

engagement in accordance with International Standard on

Assurance Engagements 3000.

The engagement involves procedures to obtain evidence

whether;

• the primary statements of the consolidated financial state-

ments included in the ESEF financial statements are, in all

material respects, marked up with iXBRL tags in accor-

dance with Article 4 of the ESEF RTS, and;

• whether the notes to the consolidated financial statements

and the company identification data included in the ESEF

financial statements data, have been marked up, in all

material respects, with iXBRL tags in accordance with

Article 4 of the ESEF RTS; and

• whether the ESEF financial statements and the audited

financial statements are consistent with each other.

The nature, timing and the extent of procedures selected

depend on practitioner’s judgement. This includes the assess-

ment of the risks of material departures from the requirements

set out in the ESEF RTS, whether due to fraud or error.

We believe that the evidence we have obtained is sufficient

and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the primary statements of the consolidated

financial statements, the notes to the consolidated financial

statements and the company identification data included in

the ESEF financial statements of Neste Corporation identified

as 5493009GY1X8GQ66AM14-2022-12-31-en.zip for the

year ended 31 December, 2022 are, in all material respects,

marked up in compliance with the ESEF Regulatory Technical

Standard.

Our audit opinion on the audit of the consolidated finan-

cial statements of Neste Corporation for the year ended 31

December, 2022 is set out in our Auditor’s Report dated 7

February, 2023. In this report, we do not express any audit

opinion or other assurance conclusion on the consolidated

financial statements.

Helsinki 2 March, 2023

KPMG OY AB

Leenakaisa Winberg

Authorised Public Accountant, KHT

To the Board of Directors of Neste Corporation