9845000D85046ECFFF27-2024-12-31-en

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 2

Table of Contents


Report of the Board of Directors ..................................	4
Sustainability Statement ........................................................	18
General disclosures ...............................................................	19
Environmental information ................................................	52
Social information ..................................................................	85


Consolidated Financial Statements (IFRS) ..............	102
Consolidated statement of comprehensive income ....	102
Consolidated balance sheet ..................................................	103
Consolidated statement of changes in equity ...............	104
Consolidated statement of cash flows ..............................	106


Notes to the Consolidated Financial Statements .	107
1. General information and basis of preparation ............	107
2. Segment information and revenue ................................	109
3. Financial risk and capital management .......................	111
4. Other operating income ....................................................	116
5. Materials and services .........................................................	116
6. Employee benefit expenses ..............................................	117


7. Share-based incentive plans .............................................	118
8. Depreciation, amortisation and impairment ..............	121
9. Other operating expenses .................................................	122
10. Finance income and costs ...............................................	123
11. Income tax ..............................................................................	123
12. Property, plant and equipment ......................................	127
13. Forest assets ..........................................................................	130
14. Leases ......................................................................................	130
15. Intangible assets ..................................................................	133
16. Inventories .............................................................................	134
17. Other receivables .................................................................	134
18. Assets held for sale ..............................................................	135
19. Equity .......................................................................................	135
20. Earnings per share .............................................................	136
21. Financial assets and liabilities .........................................	137
22. Provisions ...............................................................................	141
23. Other payables .....................................................................	142
24. Group structure ...................................................................	142


25. Related party transactions ..............................................	143
26. Contingent liabilities and commitments ...................	144
27. Events after the financial period ...................................	144


Parent company’s Financial Statements (FAS) .....	146
Income statement ....................................................................	146
Balance sheet .............................................................................	147
Statement of cash flows .........................................................	149
Notes to the financial statements of parent company .......................................................................................	150


Signatures of the Report of the Board of Directors and Financial Statements ......................................................	162
Auditor’s Report ........................................................................	163
Assurance Report on the Sustainability Report ............	168
Independent Auditor’s Reasonable Assurance Report on Koskisen Oyj ESEF Financial Statements ...	170
Information for investors ........................................................	172

Report of the Board of

Directors and Sustainability

Statement

This section presents Koskisen’s

Report of the Board of Directors 2024

and a report about Koskisen Group’s

material sustainability topics.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 4

Report of the

Board of Directors

Koskisen is a Finnish wood processing company with

”

Koskisen’s ability to

create value is based

on a material-efficient

and integrated value

chain from the forest

to the end product.

more than a hundred years of history. The main raw

material used by Koskisen in its production is wood,

which Koskisen processes into sawn timber, plywood

and chipboard, among other products.

Koskisen has two business segments: Sawn Timber Industry and

Panel Industry. Sawn Timber Industry produces sawn and

processed timber, while Panel Industry produces birch plywood,

thin plywood, veneer, chipboard and interior solutions for light

and heavy-duty commercial vehicles under the Kore brand.

Koskisen’s wood procurement function is part of the Sawn Timber

Industry segment. The wood procurement function is responsible

for procuring wood for Koskisen’s own production plants,

delivering side streams from Koskisen’s own production to the

power plants owned and operated by Loimua Oy for bioenergy

production at Koskisen’s production plants and several other

power plants in the vicinity, as well as supplying raw material

(chips and pulpwood) to paper and pulp manufacturers.

Koskisen’s production plants are located in Järvelä and

Hirvensalmi, Finland, as well as in Toporów and Skwierzyna,

Poland.

The company’s shares have been listed on Nasdaq Helsinki’s

main list as of 1 December 2022.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 5

Result and financial position

Consolidated revenue increased in January–December

and amounted to EUR 282.3 (271.3) million. The increase in

revenue was mainly due to higher delivery volumes in the

Sawn Timber Industry segment than in the comparison

period and slightly higher sales prices of end products.

Adjusted EBITDA declined to EUR 24.3 (33.1) million. The

decrease in EBITDA was mainly due to reduced delivery

volumes in the Panel Industry segment and increased

costs of wood raw material.

Operating profit came to EUR 13.0 (24.4) million.

Depreciation, amortisation and impairment amounted

to EUR 11.2 (8.6) million. Profit before income tax

amounted to EUR 10.0 (24.1) million and income tax for

the period amounted to EUR 1.7 (3.8) million. The profit

for the financial period came to EUR 8.3 (20.2) million,

and earnings per share were EUR 0.36 (0.88).

Segments

The Sawn Timber Industry segment’s revenue

amounted to EUR 139.7 (122.4) million and EBITDA to

EUR 7.2 (3.3) million. The Panel Industry segment’s

revenue amounted to EUR 142.4 (148.8) million and

EBITDA to EUR 17.7 (29.3) million.

Balance sheet, cash flow and financing

At the end of the accounting period, Koskisen’s equity

ratio was 54.0 (54.8) per cent, and gearing was 15.4 (-1.8)

per cent.

Cash flow from operating activities for January–December

amounted to EUR 14.0 (14.9) million. The effect of the

change in working capital was EUR -10.5 (-11.9) million. The

most significant item in the change in working capital

was the increase in inventories, which reflects increased

sawmill volumes and increased timber prices. Trade

payables increased mainly due to the increased volume of

timber trade. Cash flow from financing activities

amounted to EUR -17.7 (-17.6) million, with the largest item

being the dividend payment in the spring. The cash flow

also reflected the start of repayments of loans related to

the financing of sawmill investments. Cash flow from

investment activities came to EUR -0.2 (-36.2) million, of

which cash flow from tangible and intangible assets was

EUR -20.2 (-16.0) million and deposits released amounted

to EUR 20.0 (-20.0) million.


EUR million	2024	2023	2022
Revenue	282.3	271.3	317.7
EBITDA	24.2	33.0	66.3
EBITDA margin, %	8.6	12.2	20.9
Adjusted EBITDA	24.3	33.1	66.6
Adjusted EBITDA margin, %	8.6	12.2	21.0
Operating profit (EBIT)	13.0	24.4	58.2
Operating profit (EBIT) margin, %	4.6	9.0	18.3
Profit for the period	8.3	20.2	46.0
Basic earnings per share, EUR	0.36	0.88	2.5
Diluted earnings per share, EUR	0.36	0.87	2.5
Gross investments	22.2	32.1	27.0
Equity per share, EUR	6.5	6.4	5.9
Return on capital employed (ROCE), %	6.1	12.1	35.7
Working capital, end of period	45.9	37.9	28.9
Net cash flow from operating activities	14.0	14.9	47.2
Equity ratio, %	54.0	54.8	52.7
Gearing, %	15.4	-1.8	-21.0

Interest-bearing liabilities at the end of the period

amounted to EUR 66.3 (63.7) million and liquid assets

totalled EUR 43.3 (66.4) million. Interest-bearing net

liabilities amounted to EUR 22.9 (-2.7) million.

Koskisen’s liquidity has remained strong. At the end of

the accounting period, available liquidity amounted to

EUR 43.3 (66.4) million, comprising cash and cash

equivalents of EUR 31.8 (35.8) million, deposits of EUR

0.0 (20.0) million and EUR 11.5 (10.6) million of current

financial assets at fair value through profit or loss, the

most significant of which was a capital redemption

contract. In addition, the company has an unused

account limit of approximately EUR 7.2 million.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 6

Investments

Gross investments in tangible and intangible assets in

January–December amounted to EUR 22.2 (32.1) million.

The investments included the construction of a new log

yard, a channel dryer, the renovation of the upstream

part of the second planing plant and a new sawmill. At

the end of the financial period, advance payments and

work in progress included EUR 13.1 million related to the

construction of the new log yard.

New log yard

In autumn 2023, Koskisen decided to invest

approximately EUR 15 million in a log yard to be built

next to the new sawmill, including a log sorting yard

and line with control room facilities and a stormwater

treatment system. The project also includes a new

entrance route to the plant area, gate area, access

control and a truck scale. The construction of the log

yard progressed as planned in 2024: the test runs of the

log yard began in December and continued in early

2025. The new log yard was fully commissioned at the

end of February 2025. Eliminating the need to transport

logs from the old log yard reduces transport costs and

carbon dioxide emissions from transportation.

Expansion of the Kore business

In summer 2024, Koskisen decided to invest

approximately EUR 3 million in the Kore business, which

manufactures interior solutions for light commercial

vehicles. The investment focuses on the machinery of

the new production unit established in Skwierzyna,

Poland, including CNC machines and their ancillary

equipment. The investment in the Kore business

proceeded as planned and the ramp-up of production

to an industrial scale began late in the year. After the

ramp-up phase, Skiwierzyna will focus on stabilising

production and optimising efficiency between the two

Polish units, Toporów and Skwierzyna.

Investment programme in the Panel

Industry segment

In December 2024, Koskisen launched a comprehensive

investment programme in the plywood production of

the Panel Industry business in Järvelä. The investment

programme extends until the end of Koskisen’s strategy

period, i.e. 2027. The first phase of the investment

programme will be carried out in 2025, and the total

value of the related investments will be approximately

EUR 12 million. The systematic investment programme

of the Panel Industry segment will enable volume

growth, streamline production and facilitate related

internal logistics. The investments to be made also

include the automation of production phases.

Value creation

Koskisen’s ability to create value is based on a material-

efficient and integrated value chain from the forest to

the end product. Koskisen’s efficient integrated

operating model enables the optimum use of wood as a

raw material at its production facilities, and Koskisen’s

wood procurement enables the availability of high-

quality wood raw material.

Koskisen’s integrated operating model is based on

interlinked processes, which form the basis of

Koskisen’s business from the forest through production

to finished products. Koskisen’s entire value chain, from

harvesting to final products, is designed around

synergetic material flows and an agile operating model,

which enables the use of raw materials from

different sources.

In Koskisen’s integrated operating model, wood

procurement procures the raw materials that are

delivered to Koskisen’s production facilities for

processing. The by-products generated early in the

production process, such as bark, are used for heat

production of the production plant processes in Järvelä

and Hirvensalmi. The by-products generated by the

Sawn Timber Industry segment and Koskisen’s birch

plywood production, such as part of the wood chips and

sawdust, are used in Koskisen’s chipboard production.

Koskisen is the only mechanical wood industry

company in Finland with the level of integration

described above.

Koskisen’s key intangible assets include the company’s

brand and reputation, its skilled and committed

personnel, a synergistic operating model that enables

resource efficiency, and strategic partnerships. These

resources provide Koskisen with a competitive

advantage and are a central part of the company’s

strategy.

Strategy

Koskisen published its specified strategic growth paths

and related measures for the strategy period 2024–2027

in May 2024. At the core of the specified strategy are 1)

creating value for customers, 2) developing current

operations and 3) taking bold steps.

Value creation for customers is created through high-

quality and customised products, customer-oriented

services and innovative solutions. The development of

current operations is closely linked to strengthening

competitiveness and differentiation, product

development and the efficient introduction of defined

initiatives. Bold steps, on the other hand, include

investments and possible acquisitions.

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The clarified strategy will support the growth leap by

the end of 2027 pursued by Koskisen, which was set

earlier. The completed comprehensive strategy work

provides the company with a clear direction for

implementing this sustainable growth.

One of the key growth drivers is the new sawmill and

the development of closely related operations. The new

sawmill is the heart of the entire integrated and

synergistic business. By increasing sawing volumes, we

ensure the availability of wood raw material also for the

needs of the Panel Industry through increasing wood

procurement volumes and side streams of the sawmill

production.

Growth in both businesses, Sawn Timber Industry and

Panel Industry, will be generated primarily through

volume increase, new wood-based products and

expanding customer relationships. Naturally, the

company will invest in the continuous development of

its own operations.

Financial objectives for 2027

Koskisen’s Board of Directors has confirmed the

following long-term financial targets extending over the

business cycle, which the company aims to achieve by

the end of 2027.

Growth: revenue of EUR 500 million for

the financial period ending on 31

December 2027, including both organic

and inorganic growth

Profitability: adjusted EBITDA margin

averaging 15 per cent over the cycle

Balance sheet: maintaining a strong

balance sheet

Dividend policy: attractive dividend of at

least one-third of the net profit each year

Key sustainability objectives for 2027

In June, Koskisen published a sustainability

programme, and its key sustainability objectives were

incorporated into the strategy. They are as follows: 1) We

implement biodiversity measures in the forest

environment, 2) We reduce CO2 emissions in our own

activities and our value chain, 3) We make wise use of

wood, down to the last particle of sawdust, 4) We

promote a safe work environment, and 5) We support

well-being at work and competence development.

More sustainable development goals have been defined

in the company’s sustainability programme. The

achievement of the targets will be monitored through

the indicators set for them.

Personnel

The Koskisen Group had an average of 948 (888)

employees in October–December 2024 and 943 (883)

employees at the end of December. The increase in the

number of personnel was mainly related to the growth

of the Panel Industry segment’s Kore business.

Wages and salaries, share-based payments and

seniority allowances paid to personnel in 2024 totalled

EUR 39.9 (38.9) million.

Incentive schemes for the management and

key personnel

Koskisen has a share-based incentive programme

2022–2026 for its key employees. The purpose of the

incentive programme is to align the objectives of the

company’s shareholders and persons participating in

the program in order to increase the value of the

company in the long term, commit the participants to

the company and offer them a competitive incentive

programme for earning and accumulating shares.

The 2022–2026 incentive programme consists of three

three-year earning periods, namely 2022–2024, 2023–

2025 and 2024–2026. The Company’s Board of Directors

determines the key persons eligible for the incentive

programme for each earning period, as well as the

earning criteria and objectives, which may be based on

financial performance, strategy or other objectives.

On 13 May 2024, the Board of Directors resolved on the

criteria and targets as well as the key employees eligible

for the incentive programme 2022–2026 for the third

earning period 2024–2026.

The Board of Directors of Koskisen Corporation decided

on 27 June 2024 to add new participants to the earning

period 2024–2026, after which the maximum number of

participants will be 25. After the change, the maximum

number of shares to be distributed for the earning

period is a total of 331,000 gross shares. In addition, the

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 8

Board of Directors decided to add one participant to the

earning period 2022–2024, after which the total number

of participants will be 7 participants. After the change,

the maximum number of shares to be distributed for

the earning period is a total of 156,000 gross shares.

Remuneration Report

Koskisen’s Remuneration Report 2024 will be published

as a separate report from the Report of the Board of

Directors.

Research and development

Koskisen’s main product groups include sawn and

processed timber in the Sawn Timber segment and

birch plywood, thin plywood, veneer, chipboard and

interior solutions for light and heavy-duty commercial

vehicles under the Kore brand in the Panel Industry

segment.

Koskisen’s product development aims to improve the

functionality and properties of products in accordance

with the principles of responsible and sustainable

development and focuses on material efficiency,

recyclability and fossil-free raw materials. Koskisen’s

product development focuses on improving long-term

use, renewability and safety, as well as on developing

new products.

The Group’s research and development expenditure

amounted to EUR 0.3 (0.5) million, or 0.1 (0.2) per cent of

revenue.

Risks and uncertainties and their

management

The Board of Directors of Koskisen Corporation has

confirmed the Group’s risk management policy and risk

management principles. All Group companies and

businesses regularly assess and report on the risks

related to their business operations and the adequacy

of the required control methods and risk management

measures. The purpose of these risk assessments is to

ensure adequate measures to manage risks. Risk

management frameworks, policies and principles are

regularly assessed and developed.

Short-term risks

The Group’s most significant short-term risks are

related to the availability of raw materials and the

management of price changes, negative changes in the

general geopolitical situation, the general weakening of

the market situation and its effect on market demand,

the solvency of customers and the purchasing power of

consumers, the delivery capability of suppliers and

service providers, the seasonality of operations, changes

in business areas and customer relationships, and the

success of the ramp-up of production at the new

sawmill.

The most significant risks related to

Koskisen’s operations

The following table provides a brief summary of the

most significant risks related to Koskisen’s operations.

Together or separately, the risks may have a positive or

negative impact on Koskisen’s operations, performance,

financial position, competitiveness and reputation. The

risks are presented in a random order in the table.

Sustainability-related impacts and risks are described in

the sustainability statement.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 9

RISKS RELATED TO KOSKISEN’S OPERATING ENVIRONMENT


Description of the risk	Risk management and factors that mitigate uncertainty
Koskisen operates in cyclical sawmill and panel industry markets, and the uncertainty and unfavourable development of the economic situation may reduce the demand for Koskisen’s products or the profitability of its operations, which may have an adverse effect on Koskisen’s business operations, operating result and financial position.	Koskisen has two business segments with partially countercyclical markets. This softens the impact of cyclicality at the Group level. Koskisen operates in several markets and its customers represent several end-use segments with different demand drivers.
Fluctuations in wood prices, disturbances in wood supply and impacts on the availability of wood may cause significant costs, disturbances in production and adversely affect Koskisen’s profitability.	Koskisen has an extensive and professional wood procurement organisation with decades of experience in the industry. Wood procurement aims to proactively react to potential risks related to wood raw material.
The effects of general cost inflation on production costs and thus Koskisen’s profitability.	The procurement organisation closely monitors the development of production costs and engages in close dialogue with production and sales regarding the possible impact of costs on the pricing of final products. In accordance with its hedging policy, Koskisen uses hedging instruments to control key production factors, such as electricity price fluctuations.
Any pandemics or epidemics can disrupt Koskisen’s operations and result in significant costs.	Koskisen aims to prevent and, if necessary, minimise the impact of any pandemics or epidemics on the health and safety of personnel and ensure undisturbed supply chain with various exceptional arrangements, such as the use of different types of protective equipment or restrictions on group sizes.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 10

RISKS RELATED TO KOSKISEN’S BUSINESS


Description of the risk	Risk management and factors that mitigate uncertainty
Significant disruptions or interruptions in Koskisen’s production or deliveries, damage to, destruction or closure of Koskisen’s production facilities would materially impair Koskisen’s ability to deliver its products to customers and would have an adverse effect on its business operations and operating result.	Koskisen manages its integrated production and supply chain taking risk factors into account. Koskisen has prepared for any disruptions in production and business caused by accidents through comprehensive insurance policies.
Koskisen may lose significant customers, which may have a material adverse effect on Koskisen’s business operations and profitability.	Koskisen’s customer base is geographically diversified and spread over different industries. There are no individual customers in the customer base whose share of revenue would be significant.
Koskisen’s business operations involve risks related to environmental pollution and environmental damage.	Koskisen’s production operations require a valid environmental permit. Koskisen monitors, supervises and reports the environmental impacts of its operations systematically. Koskisen has quality, environmental and safety management certificates audited annually by a third party. Other environmental risks are described in the sustainability statement.
Koskisen’s business operations involve safety and health risks, such as accident and damage risks in its production facilities, which, if realised, could lead to Koskisen’s obligation to compensate for damages and delay or interfere with the delivery of Koskisen’s products and services.	Koskisen has comprehensive insurance policies in case of accidents and damage. The need for insurance is assessed annually and whenever necessary due to particular changed circumstance. Koskisen carries out systematic safety work and invests in modern safety equipment to minimise risks.
Failure to recruit competent management or personnel or loss of key personnel could have a materially detrimental effect on Koskisen’s ability to conduct its business.	Koskisen manages risk, for example by offering interesting work assignments, competitive reward, investments in personnel development and training. In addition, annual personnel surveys are used to survey the work community’s well-being, motivation and related development needs.
Difficulties in maintaining and updating IT infrastructure, shortcomings in IT systems and external cyber-attacks related to IT systems may have a detrimental effect on Koskisen.	Koskisen is prepared for increased cybercrime and information system disruptions. The purpose of systematic monitoring and the placement of critical systems in cloud services is to ensure that the company is able to react quickly and has the best expertise in the event of an incident.
The weakening of Koskisen’s reputation could affect its business operations.	The Code of Conduct is the foundation of Koskisen’s business operations. The company’s Code of Ethics guide to operating honestly, transparently, lawfully and ethically with all stakeholders.
Industrial action, such as strikes, can disrupt Koskisen’s business operations.	Koskisen respects the freedom of association. Koskisen maintains an open and active dialogue with different labour market parties.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 11

RISKS RELATED TO THE FINANCIAL POSITION AND FINANCING


Description of the risk	Risk management and factors that mitigate uncertainty
The covenants included in Koskisen’s financing agreements may limit Koskisen’s business operations and financial flexibility, and Koskisen may have difficulties in complying with the terms of its financing agreements, which may lead to the financing agreements falling prematurely due or increased costs.	Koskisen takes care of its solvency, sufficient and functional funding relationships and the structure of financing. Koskisen actively and proactively monitors the development of its solvency and financial position. The management of financial risks is discussed in more detail in Note 3 to the financial statements.
Exchange rate fluctuations may have a material adverse effect on Koskisen.	Koskisen uses currency hedging instruments in accordance with the hedging policy approved by the Board of Directors.
Credit losses may have a detrimental effect on the operating result of Koskisen.	In accordance with its policy, Koskisen has comprehensive credit risk insurance policies and well-functioning risk management processes.

Governance

Composition of the Board of Directors

On 31 December 2024, Koskisen Corporation’s Board of

Directors had the following six members: Pekka

Kuusniemi (Chair of the Board of Directors), Hanna

Sievinen (Vice Chair of the Board of Directors), Kari

Koskinen, Kalle Reponen, Hanna Masala and Eva

Wathén.

Corporate Governance Statement

Koskisen Corporation’s Corporate Governance

Statement 2024 will be published as a separate

statement from the Report of the Board of Directors.

Shares and ownership

Koskisen’s share capital amounts to EUR 1,512,000. On 31

December 2024, the total number of issued shares was

23,025,159 and the total number of outstanding shares

was 23,024,073. The company has one series of shares.

One share carries one vote at the general meeting. The

shares have no nominal value. The company’s shares

have been listed on Nasdaq Helsinki Oy as of

1 December 2022.

Treasury shares

On 31 December 2024, the company held 1,086 treasury

shares, which was 0.005 per cent of the total number of

shares. The shares were acquired through an over-the-

counter transaction. The share repurchases are related

to Koskisen Corporation’s personnel offering carried out

in autumn 2022. The shares have been redeemed in

accordance with the terms and conditions of the

offering from persons who left the company before

autumn 2024. The shares were redeemed at a price of

EUR 3 per share, which is the same as the subscription

price for the personnel offering.

Share price and turnover

A total of 2,026,672 of the company’s shares were traded

on the Helsinki Stock Exchange between 1 January and

31 December 2024, corresponding to 8.8 per cent of the

total number of shares. The highest share price was EUR

7.98 and the lowest EUR 5.94. The average price of the

shares traded was EUR 6.39. The share turnover was EUR

12,952,718. At the end of the review period, the market

capitalisation of the company was EUR 160,255,107.

Authorisations of the Board of Directors

On 16 May 2024, the Annual General Meeting authorised

the Board of Directors to resolve on the repurchase of

the company’s own shares. Under the authorisation, the

Board of Directors may resolve on the repurchase of a

maximum of 1,000,000 of the company’s own shares.

The repurchase authorisation is valid until 30 June 2025,

and it revokes all previous repurchase authorisations

concerning the company’s own shares.

On 16 May 2024, the Annual General Meeting authorised

the Board of Directors to resolve on issuing new shares

and/or transferring treasury shares held by the

company and/or issuing option rights and other special

rights referred to in chapter 10, section 1 of the Limited

Liability Companies Act. Under the authorisation, a

maximum of 2,000,000 new shares may be issued and/

or treasury shares held by the company or its group

company may be transferred, the amount of which also

includes any shares issued on the basis of option rights

or other special rights. The authorisations revoke all

previous authorisations concerning the issuance of

shares and the granting of special rights entitling to

shares. The Board of Directors decides on all other

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 12

matters relating to the authorisations. The

authorisations are valid until 30 June 2025.

Flagging notifications

Koskisen Corporation did not receive any flagging

notifications in 2024.

Estimate of probable development

Koskisen Group’s revenue for 2025 is expected to grow

from the level of 2024. The adjusted EBITDA margin is

expected to be 7–11 per cent.

Board of Directors’ proposal for the

distribution of profits

On 31 December 2024, the parent company’s

distributable funds were EUR 116,244,890.16, of which

the profit for the financial period constitutes EUR

2,660,561.51.

The Board of Directors proposes to the Annual General

Meeting that a dividend of EUR 0.12 be paid for each

outstanding share for the financial year 2024. Based on

the number of shares registered on 10 April 2025, the

total dividend would be EUR 2,771,333.88. The remaining

part of the distributable funds will be left in

unrestricted equity.

The Board of Directors has assessed the company’s

financial situation and liquidity before making the

proposal. The company’s financial position has not

changed significantly since 31 December 2024, the

company’s liquidity is still good and the proposed

dividend will not compromise the company’s solvency.

Events after the financial period

Koskisen Corporation communicated on 10 March 2025

that it has agreed to acquire the business operations of

Iisveden Metsä Oy. The transaction will be carried out as

a business acquisition, including, with certain limited

exceptions, the entire business of Iisveden Metsä,

including the factory property located in Suonenjoki,

Finland with machinery and equipment, as well as

inventories. The personnel of Iisveden Metsä,

approximately 50 people, will be transferred to Koskisen

as “old employees”.

The debt-free purchase price of the transaction is EUR

22.5 million and its cash part will be adjusted at the time

of the completion of the transaction by a net working

capital adjustment, which is not expected to be

significant. In addition, Koskisen will pay the seller a

maximum earnout of EUR 4 million if the conditions

specified for the payment of the earnout, mainly related

to sales price of sawn timber, are met during 2025–2027.

Iisveden Metsä’s revenue (unaudited) in 2024 was EUR

52.7 million (EUR 52.5 million in 2023, audited) and

EBITDA (unaudited) in 2024 was EUR 1.4 million (EUR

0.5 million in 2023, audited). The book value of the

balance sheet items to be transferred was

approximately EUR 24.9 million (unaudited) at the

end of 2024.

If completed, the transaction will increase Koskisen’s

revenue and EBITDA. The transaction is expected to

create synergies in raw material sourcing, especially for

birch logs, thus supporting the organic growth and

profitability of the Panel Industry. The transaction will

also have positive effects on the production efficiency

and the optimisation of market-specific concepts of

Sawn Timber Industry. The completion of

the transaction is currently not expected to have an

impact on Koskisen’s profit guidance for 2025.

The completion of the transaction requires the approval

of Finnish and Estonian competition authorities,

approval by a qualified majority at the Annual General

Meeting of Iisveden Metsä and the fulfilment of certain

other ordinary closing conditions. Koskisen expects the

transaction to be completed during the first half

of 2025.

On 21 March 2025, Koskisen Corporation’s Board of

Directors decided on a free directed share issue for the

payment of share rewards under the company’s long-

term performance-based incentive programme for

2022–2026 (earning period 2022–2024). A total of 70,376

new shares were issued free of charge in a directed

share issue to seven persons covered by the incentive

programme in accordance with the terms of the

programme. The rewards paid under the incentive

programme to each participating person were paid in

shares and cash. The cash component covers the tax

costs related to the shares. The total number of shares

in Koskisen Corporation after the registration of new

shares is 23,095,535 shares. The total of 70,376 shares

issued in the free directed share issue were registered

in the Finnish Trade Register on 4 April 2025. Koskisen

Corporation’s Board of Directors decided on the free

directed share issue on the basis of an authorisation

granted by the Annual General Meeting on 16 May 2024.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 13

Shares and shareholders

MAJOR SHAREHOLDERS ON DEC 31, 2024


	Number of shares	% of shares
Kari Koskinen	4,208,988	18.28
Markku Koskinen	3,729,988	16.20
Eva Wathén	2,148,988	9.33
Laura Paksuniemi	1,314,693	5.71
Ella Paksuniemi	1,292,993	5.62
Ester Paksuniemi	1,290,693	5.61
Varma Mutual Pension Insurance Company	1,044,332	4.54
Karoliina Koskinen	922,039	4.00
Lasse Koskinen	922,039	4.00
Elo Mutual Pension Insurance Company	814,332	3.54
Pekka Kopra	766,128	3.33
Stephen Industries Inc Oy	498,599	2.17
Ilmarinen Mutual Pension Insurance Company	485,000	2.11
Juha Koskinen	476,817	2.07
Arto Koskinen	475,130	2.06
Riitta Kokko-Parikka	375,130	1.63
Veritas Pension Insurance	143,197	0.62
Thominvest Oy	120,000	0.52
UB Metsä Global Erikoissijoitusrahasto	86,272	0.37
Sijoitusrahasto UB Suomi	74,487	0.32
20 largest, total	21,189,845	92.03

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 14

BREAKDOWN OF SHAREHOLDING BY SCALE ON DEC 31, 2024


Lower limit	Upper limit	Number of shareholders	Share of shareholders, %	Total number of shares	% of shares
1	100	2,768	53.6	156,215	0.7
101	500	1,822	35.3	393,673	1.7
501	1,000	291	5.6	226,981	1.0
1,001	5,000	221	4.3	437,799	1.9
5,001	10,000	21	0.4	149,917	0.7
10,001	50,000	16	0.3	329,910	1.4
50,001	100,000	4	0.1	301,578	1.3
100,001	500,000	7	0.1	2,573,873	11.2
500,001		11	0.2	18,455,213	80.2
Total		5,161	100	23,025,159	100

OWNERSHIP STRUCTURE BY SECTOR DEC 31, 2024


	Number of shares	% of shares
Companies	793,582	3.4
Financial and insurance institutions	218,265	0.9
Public sector	2,486,861	10.8
Households	19,354,410	84.1
Non-profit organisations	43,369	0.2
Foreign shareholders	2,404	-
Total	22,898,891	99.5
Nominee-registered	126,268	0.5
All in total	23,025,159	100

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 15

Calculation formulas for key figures

Items affecting comparability are unusual material items outside the ordinary course of

business that relate to (i) costs related to reorganisations, (ii) impairment charges, (iii)

the gain or loss from the sale of businesses or significant fixed assets and (iv) costs

related to the Listing. Items affecting comparability is presented to reflect the

underlying business performance of Koskisen and to enhance comparability between

periods. Koskisen believes that items affecting comparability provide meaningful

supplemental information by excluding items outside the ordinary course of business

that reduce comparability between periods.


Key figure	Definition		Reason for use
EBITDA	Operating profit (loss) + Depreciation, amortisation and impairments		EBITDA is an indicator used to measure Koskisen’s performance.
EBITDA margin, %	EBITDA	x 100	EBITDA margin is an indicator used to measure Koskisen’s performance.
EBITDA margin, %	Revenue	x 100
Adjusted EBITDA	EBITDA + Items affecting comparability		Adjusted EBITDA is an indicator used to measure Koskisen’s performance. Adjusted EBITDA is presented in addition to EBITDA to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBITDA provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.
Adjusted EBITDA margin, %	Adjusted EBITDA	x 100	Adjusted EBITDA margin is an indicator used to measure Koskisen’s performance. Adjusted EBITDA margin is presented in addition to EBITDA margin to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBITDA margin provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.
Adjusted EBITDA margin, %	Revenue	x 100
EBIT margin, %	Operating profit (loss)	x 100	EBIT margin is an indicator used to measure Koskisen’s performance.
EBIT margin, %	Revenue	x 100
Adjusted EBIT	Operating profit (loss) + Items affecting comparability		Adjusted EBIT is an indicator used to measure Koskisen’s performance. Adjusted EBIT is presented in addition to operating profit (loss) to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBIT provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.
Adjusted EBIT margin, %	Adjusted EBIT	x 100	Adjusted EBIT margin is an indicator used to measure Koskisen’s performance. Adjusted EBIT margin is presented in addition to EBIT margin to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBIT margin provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.
Adjusted EBIT margin, %	Revenue	x 100

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 16


Key figure	Definition		Reason for use
Basic Earnings per Share, EUR	Profit (loss) for the period attributable to owners of the parent company		Basic Earnings per Share reflects the distribution of Koskisen’s results to its shareholders.
Basic Earnings per Share, EUR	Weighted average number of ordinary Shares outstanding during the period
Diluted Earnings per Share, EUR	Profit (loss) for the period attributable to owners of the parent company		Diluted Earnings per Share reflects the distribution of Koskisen’s results to its shareholders.
Diluted Earnings per Share, EUR	Weighted average number of ordinary Shares outstanding during the period + Weighted average number of all dilutive instruments potentially to be converted into Shares
Capital employed	Total assets - Current liabilities		Capital employed reflects the capital tied to Koskisen’s operations and it is used to calculate return on capital employed.
Liquid assets	Current financial assets at fair value through profit or loss + Deposits + Cash and cash equivalents		Liquid assets reflects the amount of cash and other assets that are readily convertible to cash.
Net debt	Borrowings + Lease liabilities - Liquid assets		Net debt is an indicator used to assess Koskisen’s total external debt financing.
Net debt/EBITDA, ratio	Net debt	x 100	Net debt/EBITDA is an indicator used to assess the level of Koskisen’s financial risk and the level of Koskisen’s indebtedness.
Net debt/EBITDA, ratio	EBITDA (last 12 months)	x 100
Working capital	Inventories + Trade receivables + Other receivables - Advances received - Trade payables - Trade payables, payment system		Working capital is an indicator used to monitor the level of direct net working capital tied to Koskisen’s operations.
Equity ratio, %	Total equity	x 100	Equity ratio measures Koskisen’s solvency and ability to meet its liabilities in the long term.
Equity ratio, %	Total assets - Advances received	x 100
Gearing, %	Net debt	x 100	Gearing is a measure used to assess Koskisen’s financial leverage.
	Total equity	x 100
Return on capital employed, %	Operating profit (loss) (last 12 months)	x 100	Return on capital employed reflects the return of capital tied to Koskisen’s operations.
Return on capital employed, %	Capital employed (average for the last 12 months)	x 100

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 17

Reconciliation of alternative performance measures

The following table sets forth a reconciliation of the Alternative Performance Measures

as at the dates and for the periods indicated:


EUR thousand	1 Jan–31 Dec 2024	1 Jan–31 Dec 2023
Items affecting comparability
Costs related to reorganisations	154	326
The gain (-) or loss (+) from sale of businesses or significant fixed assets	-48	-190
Items affecting comparability	105	137

EBITDA
Operating profit (loss)	13,023	24,396
Depreciation, amortisation and impairments	11,169	8,607
EBITDA	24,193	33,003

EBITDA margin, %
EBITDA	24,193	33,003
Revenue	282,262	271,275
EBITDA margin, %	8.6%	12.2%

Adjusted EBITDA
Operating profit (loss)	13,023	24,396
Depreciation, amortisation and impairments	11,169	8,607
Items affecting comparability	105	137
Adjusted EBITDA	24,298	33,140

Adjusted EBITDA margin, %
Adjusted EBITDA	24,298	33,140
Revenue	282,262	271,275
Adjusted EBITDA margin, %	8.6%	12.2%

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 18

Sustainability

Statement

Koskisen's Sustainability Statement has been prepared

in accordance with the EU’s Corporate Sustainability

Reporting Directive. The report covers Koskisen’s

material sustainability topics for the entire Group and its

value chain.




GENERAL DISCLOSURES		ENVIRONMENTAL INFORMATION

Koskisen’s strategy, business model, administrative organization and double materiality assessment as well as its results.		Material information regarding Koskisen’s energy use, biodiversity and ecosystems, and circular economy.


SOCIAL INFORMATION
Material information regarding Koskisen’s employees and contractors.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 19

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General disclosures

In the heart of Koskisen’s growth strategy are creating

value for customers, developing current operations and

taking bold steps. Koskisen’s Sustainability Statement

has been prepared on group level in accordance with

Chapter 7 of the Finnish Accounting Act (1336/1997).


ESRS 2 General disclosures ..................................................................	20

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 20

ESRS 2 General disclosures

General basis for preparation of sustainability statements

BP-1

Koskisen Corporation’s sustainability statement has been prepared at the Group level in

accordance with Chapter 7 of the Accounting Act (1336/1997). The scope of

consolidation is the same as in the company’s annual financial statements.

The sustainability statement covers the Group’s own operations and the value chain as

follows: Scope 3 greenhouse gas emissions upstream and downstream of the value

chain in accordance with the GHG protocol. At the upstream value chain, the reporting

of sustainability matters related to biodiversity covers the activities of contractors in

areas where Koskisen is responsible for felling rights.

Koskisen has not excluded any information from the reporting.

Disclosures in relation to specific circumstances

BP-2

Koskisen has not deviated from the medium- or long-term time horizons defined in

ESRS 1. The medium-term strategy period is four years and the long-term is more than

five years.

In the calculation of Scope 3 greenhouse gas emissions in the value chain, sector-

specific average emission factors have been utilised as indirect sources to estimate the

upstream and downstream emissions of the value chain. The plan is to improve the

accuracy of the calculations, for example, by requesting direct emission data from the

value chain partners whenever possible. A description of the accuracy of the

calculation, as well as the indicators, emission factors, methods and assumptions of the

Scope 3 calculation, are specified in more detail in section E1-6 of the sustainability

report Gross Scopes 1, 2, 3 and Total GHG emissions.

The quantitative results of biodiversity metrics are subject to uncertainties based on

limited sampling. The uncertainty is particularly focused on sampling-based audits, i.e.

the information is based on only a part of the management activities that have taken

place, as the sampling method of internal audit has been used in the assessment. In

the future, the reliability of the results will be improved by expanding the monitoring of

the metrics to cover a larger number of management actions and to support the

information with internal monitoring carried out on all management actions.

In the calculation of resource use and circular economy metrics, quantitative results are

subject to uncertainties related to unit conversions. Due to the variability in wood

density, cubic volume is used as the storage unit. In addition, not all primary data is

available in mass-based form.

It is possible that the metrics include uncertainties that have not been identified, as not

all data-related control points have been established during the first reporting year, and

comparative monitoring data may not be available. No measurement uncertainty is

associated with the monetary values reported.

As the reporting year is the first year of application, there are no reportable changes in

the preparation and presentation of sustainability information compared to previous

periods. Scope 3 reporting involves uncertainties and assumptions, which are described

in Gross Scopes 1, 2, 3 and Total GHG emissions section of the sustainability report E1-6.

As the reporting year is the first year of application, there are no reportable changes in

the preparation or presentation of sustainability information compared to previous

periods.

No disclosures are provided based on other legislation or sustainability reporting

frameworks

Koskisen Group relies on the ISO standards of the European standardization system in

its quality, occupational health and safety, and environmental management systems.

The above-mentioned management systems have been verified by Kiwa Inspecta as

follows: the Group’s operations in Finland have been verified to comply with

ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 and in Poland to comply with the

ISO 9001:2015 standard for Toporów’s operations.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 21

In sustainability report, the relevant certified processes are the risk management and

stakeholder processes covered by the ISO 9001 standard. They will be integrated into

the Group’s sustainability system during 2025. These processes were not reviewed for

2024 as part of the integration of sustainability issues, as the development of the

system was still in progress.

The metrics presented in the sustainability report are not verified in any other context

than in connection with the assurance of the sustainability report, unless otherwise

stated.

The role of the administrative, management

and supervisory bodies

GOV-1

Composition of the administrative, management and supervisory

bodies

Koskisen Corporation’s governance consists of the Board of Directors, the Board’s Audit

Committee and CEO, supported by the Executive Board. The company complies with

the Finnish Corporate Governance Code. The corporate governance principles are

defined in the corporate governance principles approved by the company’s Board of

Directors.

The management, monitoring and reporting of impacts, risks and opportunities related

to sustainability issues as part of the activities of the company’s administrative,

management and supervisory bodies is described below.

Board of Directors (Governing Body)

The duties and responsibilities of Koskisen’s Board of Directors are determined under

law or the Company’s Articles of Association and other applicable legislation. The Board

of Directors has rules of procedure that define the duties of the Board of Directors and

its Chair.

The Board of Directors has general authority in all matters that have not been assigned

to other governing bodies by law or the company’s Articles of Association. The general

task of the Board of Directors is to take care of Koskisen’s administration and the

appropriate organisation of its operations. The Board of Directors discusses

sustainability-related issues regularly, in accordance with its annual cycle, and is

responsible for the company’s statutory sustainability report.

In 2024, the Chair of the Board was Pekka Kuusniemi (independent). The members of

the Board were Eva Wathén (non-independent), Kari Koskinen (non-independent),

Kalle Reponen (independent), Hanna Maria Sievinen (independent), and Hanna Masala

(independent).

Audit Committee (Supervisory Body)

The Audit Committee of the Board of Directors is responsible for ensuring the

arrangement, supervision and risk management of appropriate governance in

accordance with the Finnish Companies Act. The majority of the members of the Audit

Committee must be independent of the company, and at least one member of the

Audit Committee must be independent of the company’s significant shareholders.

The members of the Audit Committee in 2024 were Hanna Sievinen, Eva Wathén and

Hanna Masala.

Executive Board (Management Body)

The CEO manages the company’s operations in accordance with the instructions and

orders issued by the Board of Directors and keeps the Board aware of the development

of the company’s business and financial situation.

The Executive Board supports the President and CEO in the implementation of the

company’s strategy and manages Koskisen’s business as a whole, including

sustainability aspects as part of the management business model. The members of

Koskisen’s Executive Management Team have extensive authority to operate within

their own areas of responsibility, and they are obliged to develop Koskisen’s business in

accordance with the objectives set by the company’s Board of Directors and the

President and CEO.

As of 31 December 2024, the Executive board consisted of Jukka Pahta (Chief Executive

Officer), Karri Louko (CFO), Tom-Peter Helenius (Director, Panel Industry), Tommi Sneck

(Director, Sawmill Industry), Joonas Ojasalo (Director, Wood Supply and Bioenergy),

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 22

Minna Luomalahti (Director, Human Resources), Sanna Väisänen (Director,

Sustainability and Corporate Communications) and Olli Nikitin (General Counsel).

In addition to the Executive Board, Koskisen’s extended Executive Board also includes

persons who coordinate other sustainability aspects (IT, quality, environment, safety,

technical, services).

As of 31 December 2024, in addition to the core members described above, the

extended Executive Board included Markku Lähteenmäki (Director of Quality,

Environment and Safety), Teemu Similä (Head of IT), and Jarkko Veck (Chief Shop

Steward).

The extended Executive Board meets four times a year. Through the representation of

the Chief Shop Steward, employees are consulted and involved in the decision-making

process within the extended Executive Board.


Composition of administrative, management and supervisory bodies	2024
Number of executive members	11
Number of non-executive members	6

Employees with employment relationship are represented in the expanded Executive

Board, which includes the Chief Shop Steward as well as the Director of Quality,

Environment and Safety. Employees are not represented on the Board of Directors or in

the Audit Committee.

When preparing the composition of the Board of Directors, the members’ educational

and professional background, gender and international experience have been taken

into account so that the Board of Directors has a broad and diverse representation of

expertise and experience that supports Koskisen’s operations. Women and men must

be equally represented on the Board of Directors, as required by applicable regulation.

In preparing its proposal, the Board has assessed that the proposed composition of the

Board includes sufficient sustainability (ESG) expertise and experience, as required by

the nature and scope of the company’s operations at the time. The relevant experience

is presented in the table below.

The members of the company’s Board of Directors and its Audit Committee have

relevant experience in the refining industry, corporate finance, international business

and target markets, as well as in strategic planning and execution of business

operations, which is relevant to the assessment of Koskisen’s operations and

sustainability impacts, risks and opportunities.

The company’s CEO, as well as the Executive Board and the Extended Executive Board,

have relevant experience in business management at the strategic level and at the

level of the company’s individual businesses, forestry, corporate finance, financing, risk

management, human resources, and sustainability and communications matters,

relevant to Koskisen’s operations and the assessment of sustainability impacts, risks

and opportunities.

The company’s Board of Directors and Executive Board have access to the

sustainability-related expertise of the company’s in-house specialists.

Koskisen’s Board of Directors has six (6) members, half (50%) of whom are women and

half (50%) men. The average ratio is 1.0.

The Executive Board consists of eight (8) members, of which two (2 persons, 25%) are

women and six (6 persons, 75%) men.

The extended Executive Board has a total of 11 members, of which two (2 persons, 18%)

are women and nine (9 persons, 82%) men.

The Audit Committee has three (3) members, all of whom (100%) are women.

In 2024, the percentage of Board members who were independent of the company

and significant shareholders was 67 per cent. The Board of Directors had four (4)

members independent of the company and significant shareholders and two (2)

members who were not independent of the company and significant shareholders.

The Audit Committee monitors the impacts, risks and opportunities related to

sustainability. The members of the Audit Committee in 2024 were Hanna Sievinen, Eva

Wathén and Hanna Masala.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 23

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 24

The responsibility of the Board of Directors, the Audit Committee and the Executive Board

for sustainability-related impacts, risks and opportunities is taken into account in the

Corporate Governance Principles, the Group’s Operating Policy and the principles derived

from it (Environmental Principles, Human Resources Principles and Risk Management

Policy). The company’s Board of Directors, Audit Committee and Executive Board play a

key role in the management, supervision and reporting of sustainability issues.

Board of Directors

• Approves long-term sustainability goals, monitors their implementation, guides the

company’s management towards the goals

• Monitors and evaluates the link between sustainability work and the strategy and

business model, as well as the performance of operations in relation to sustainability

targets

• Approves principles or policies for material sustainability impacts

Monitoring: In accordance with the Board’s annual cycle. Sustainability matters are

reviewed once a year, in November for targets and measures, and in September for

sustainability impacts, risks and opportunities. Individual areas of sustainability, related

to personnel, safety and operating principles are examined as part of the related Group

entities.

Audit committee

• Supervises the implementation and reporting of sustainability impacts

• Takes care of the risk management and internal control of sustainability impacts

• Reports to the Board of Directors

Executive Board

• Responsible for the implementation of the business strategy, taking into account

sustainability perspectives

• Responsible for implementing sustainability actions as part of the business, ensuring

sufficient resources

• Decides on the content and indicators of the Sustainability Programme based on

material sustainability impacts

• Risks and opportunities related to material sustainability impacts are part of the

corporate risk management (ERM) reported to the Executive Board, and the need for

updating the double materiality assessment is also assessed in the review

• The development of material sustainability impacts has been linked to business or

support functions and the responsibility of the director in question

• Reports to the Board of Directors

Extended Executive Board

• Monitors sustainability processes, such as short-term and long-term goals, measures

and their results on a quarterly basis

• Hearing and involving the personnel in decision-making through the representation

of the Chief Shop Steward

• Wider representation of sustainability aspects (IT, environment, quality, safety,

technical services)

• Reports to the Board of Directors

Business and support functions

• Integrating sustainability matters into business and support functions

• Developing operations in accordance with sustainability goals

• Reporting on sustainability matters to the Executive Board

• Sustainability matters are reported to the extended Executive Board and coordinated

by a core group on sustainability matters, consisting of representatives from the

business units.

The controls and procedures for managing impacts, risks and opportunities are

integrated into the business processes and operational management system, including

internal and external audits and internal control. Sustainability-related risks and

opportunities are managed as part of enterprise risk management (ERM), with

sustainability aspects also reported to the Board of Directors.

The Executive Board sets targets that are approved by the Board of Directors and

monitored by the Extended Executive Board. Progress towards the targets is reported

annually to the Board of Directors.

The sustainability-related competence and expertise needs of the company’s

administrative, management and supervisory bodies are based on a general self-

assessment conducted as part of the preparations for regulated sustainability reporting

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 25

and the related requirements to understand and manage material sustainability

impacts, risks and opportunities.

The company’s operational management is familiar with the key sustainability impacts

of the industry and has participated in defining the related risks and opportunities. The

operational management possesses expertise and understanding of sustainability

reporting and the related regulatory requirements.

When forming the Audit Committee, the members’ experience and competence

related to sustainability matters and their reporting have been taken into account. The

company’s Board of Directors possesses experience and expertise from various

industries, including the integration of corporate sustainability aspects into business

operations. The Board of Directors, the Audit Committee, and the operational

management engage in ongoing dialogue regarding sustainability impacts, the related

financial risks and opportunities, and their strategic linkage and governance through

the business model. The company also utilises external expertise, when necessary, to

strengthen internal capabilities and to support the development of sustainability

processes, reporting, and operating models.

The assessment of required competence and expertise is systematically taken into

account as part of the evaluation and selection criteria for new members of the

administrative, management and supervisory bodies.

Information provided to and sustainability matters addressed

by the undertaking’s administrative, management and

supervisory bodies

GOV-2

The administrative, management and supervisory bodies regularly address matters

related to material sustainability matters. The Board of Directors convenes 8–12 times

per year. The Director of Sustainability and Communications reports annually to the

Board on the progress of the company’s sustainability objectives and actions. The

Director of Quality, Environment and Safety reports once a year to the Board on

sustainability impacts, risks, opportunities, and stakeholder perspectives as part of the

Group’s enterprise risk management (ERM) reporting. The Board reviews the double

materiality assessment and approves the statutory sustainability statement.

The Group Executive Board meets on a monthly basis. Sustainability topics are

presented by the Director of Sustainability and Communications and are included on

the Executive Board’s agenda as needed. In the extended Executive Board,

sustainability topics compiled by the Group’s business units — including the entire Due

Diligence process — are addressed on a needs-based basis.

The Board of Directors, the CEO, and other members of management are responsible,

as part of their duty of care in decision-making, for ensuring that material sustainability

impacts, risks, and opportunities — as well as any related trade-offs — are taken into

account in strategic decisions within their scope of authority, including major

transactions and investments. The outcomes of the double materiality assessment

have been utilised in the company’s strategic planning.

The administrative, management and supervisory bodies have reviewed the results of

the double materiality assessment process, including the material impacts, risks and

opportunities. Matters related to occupational safety and personnel are addressed as

part of Group-level processes by all governance bodies. A detailed list is provided in

section SBM-3: Material impacts, risks and opportunities and their interaction with

strategy and business model.

Integration of sustainability-related performance

in incentive schemes

GOV-3

Koskisen does not have remuneration schemes that are exclusively linked to

sustainability matters. Climate-related aspects are not currently reflected in the

company’s remuneration practices.

The company has both short- and long-term incentive schemes for members of its

administrative, management and supervisory bodies, including members of the

Management Team and the extended Management Team. These schemes include

sustainability performance indicators alongside other metrics. The incentive schemes

are designed to support the company’s value creation, long-term financial success, and

implementation of its business strategy. They are based on the remuneration policy

that governs the remuneration of the CEO and the Board of Directors, which is

approved by the Board and presented at the General Meeting.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 26

In 2024, the short-term incentive programme for members of the Management Team

and the extended Management Team included sustainability-related indicators:

occupational safety (LTA1) and employee well-being (overall score and response rate of

the employee well-being survey).

The sustainability remuneration indicators of the Executive Board and the Extended

Executive Board are based on performance indicators set annually. Short-term

performance indicators, target levels and weights, including sustainability-related

indicators, are set annually by the company’s Board of Directors in accordance with the

Remuneration Policy. The long-term incentive scheme consists of performance periods

of several financial years, for each of which the Board of Directors decides separately on

an annual basis on the performance criteria and related targets.

The sustainability-related performance indicators included in the incentive scheme for

the Executive Board and the extended Executive Board form part of the Group-level

short-term targets. In 2024, their weighting was as follows: employee well-being 10%

and occupational safety 10%. Both indicators relate to sustainability topics concerning

the company’s own workforce. The remaining Group-level performance indicators were

the Group’s adjusted IFRS EBITDA (60%) and revenue (20%).

The incentive schemes are based on the remuneration policy prepared and presented

by the Board of Directors and submitted to the General Meeting for consideration. The

remuneration policy is presented to the General Meeting at least once every four years.

Statement on due diligence

GOV-4

Koskisen’s due diligence process related to sustainability matters is an integral part of

the continuous management and assessment of sustainability impacts, risks and

opportunities. The company’s processes for managing sustainability impacts have been

updated during 2023–2024 to align with the disclosure requirements of the ESRS

standards. Koskisen has identified, assessed and established procedures for managing

its sustainability impacts in relation to the topics covered by the ESRS standards. The

process is continuous and subject to annual review. This includes the annual

identification of relevant sustainability-related regulations and stakeholder

expectations, which are integrated into the company’s operations where applicable.

The management of sustainability impacts covers action plans, indicators, targets,

results, and the evaluation of effectiveness and resourcing in relation to the

sustainability impacts identified through the double materiality assessment. These are

reported annually in accordance with the ESRS standards.


CORE ELEMENTS OF DUE DILIGENCE	PARAGRAPHS IN THE SUSTAINABILITY STATEMENT
a) Embedding due diligence in governance, strategy and business model	ESRS 2 GOV-1 The role of the administrative, management and supervisory bodies. SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model.
b) Engaging with affected stakeholders in all key steps of the due diligence	ESRS 2 SBM-2 Interests and views of stakeholders. E1-2 Policies related to climate change mitigation and adaptation. ESRS E4-2 Policies related to biodiversity and ecosystems ESRS E5-1. Policies related to resource use and circular economy and ESRS S1-1 Policies related to own workforce.
c) Identifying and assessing adverse impacts	ESRS 2 GOV-5 Risk management and internal controls over sustainability reporting. IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities.
d) Taking actions to address those adverse impacts	ESRS E1-3 Actions and resources in relation to climate change policies. E4-3 Actions and resources related to biodiversity and ecosystems. ESRS E5-2 Actions and resources in relation to resource use and circular economy. ESRS S1-4 Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions.
e) Tracking the effectiveness of these efforts and communicating	ESRS 2 GOV-1 The role of the administrative, management and supervisory bodies. E1-4 Targets related to climate change mitigation and adaptation. ESRS E4-4 Targets related to biodiversity and ecosystems. ESRS E5-3 Targets related to resource use and circular. ESRS S1-4 Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions.

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Risk management and internal controls over

sustainability reporting

GOV-5

Sustainability reporting complies with the Group-level principles and processes of

statutory reporting, risk management and internal control. The internal control of

sustainability reporting is based on the identification, analysis and targeting of control

to the most material identified risks.

Risks in sustainability reporting are part of Group-level corporate risks (ERMs).

The effectiveness of sustainability reporting controls is reviewed once a year as part of

internal monitoring. The results are monitored as part of the Group’s continuous

improvement, which is reported to the Group Executive Board. The effectiveness of

internal control is monitored as part of management reviews.

Koskisen’s risk management process follows the principles of the ISO 31000 standard

and the indicative process. The Ministry of Social Affairs and Health’s 2015 risk model,

which has been integrated into the continuous development tool, is utilised in the

assessment of work-related risks.

The main identified risks in sustainability reporting are the accuracy of the reported

information and the adequacy of resources and expertise in a small organisation. To

ensure the accuracy of the reported data and the sufficiency of resources, the

organisation has established a model that defines the roles and responsibilities for

sustainability reporting. The processes required for producing reportable data have

been integrated into the business processes of the respective units.

To ensure the accuracy and timeliness of data reported from the company’s own

operations and value chain, internal controls will be implemented during 2025. These

controls will be part of the common business processes, and their systematic

monitoring will be defined and developed in cooperation during 2025 between

Finance, Sustainability and Communications, and the business units responsible for

producing the data. Some elements of the internal control processes are already being

applied to the 2024 data.

During the first reporting year, risks related to sustainability reporting have been

identified and addressed as part of the reporting process in cooperation between the

Audit Committee and the persons responsible for sustainability reporting.

Risk assessments and internal control observations related to sustainability reporting

are addressed within the enterprise risk management (ERM) system, which includes

the description of risks, the potential impact and likelihood of their occurrence,

mitigation measures, and designated responsible persons.

Risks related to sustainability reporting are reported to the administrative,

management and supervisory bodies as part of enterprise risk management (ERM). For

the year 2024, sustainability reporting risks have not yet been addressed

comprehensively within the ERM framework; instead, they have been identified and

discussed as part of the ongoing sustainability process.

Strategy, business model and value chain

SBM-1

Koskisen processes wood raw material into sawn timber, plywood and chipboard

(circular economy, climate). Wood Procurement mainly buys wood raw material from

private landowners and offers forest management and regeneration services

(biodiversity). There have been no changes in the business model. The company’s

strategy has been updated in 2024 and it is tied to key sustainability issues.

Koskisen’s customers are mainly direct customers in the logistics, construction,

automotive, die-cutting, furniture, interior decoration, packaging and chemical forest

industries, among others. In addition, a smaller proportion of Koskisen’s products are

sold to wholesalers and distributors. Koskisen sells a limited number of thin plywood

and veneer products directly to consumers through its own online store. The Kore

brand’s customers operate mainly in the automotive industry, to which Koskisen

supplies floor, wall and roof panel sets, wheel arches and accessories.

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Headcount of employees by geographical areas


	2024
Finland	796
Poland	131
Other	16
Headcount of employees in total	943

Revenue by ESRS topic and segment


Revenue, EUR	2024
Revenue	282,262,482.57

Koskisen is not active in the sectors related to fossil fuels, chemical production,

controversial weapons, or tobacco cultivation and production, and there is no income

from these industries.


Revenue from activities related to the following sectors		Revenue
Fossil fuels	No	-
Chemical production	No	-
Controversial weapons	No	-
Tobacco cultivation and production	No	-


Koskisen’s sustainability goals by 2027	Perspectice
We are reducing our own and our value chain’s CO₂ emissions compared to the year 2022: Scope 1 and 2 emissions by 50%, and Scope 3 emissions by 20%.	All product groups, all customer segments, and all geographical regions.
Taking into account operations-supporting ecosystem services – 88% certified wood raw material	All product groups, all customer segments, and all geographical regions.
Efficient and optimised use of wood raw material – Wood raw material efficiency for long-lasting wood products 60%	All product groups, all customer segments, and all geographical regions.
Reduction of accidents – Accident frequency rate LTA1 < 5	Relations with own workforce
We support employee well-being and competence development. The employee well-being survey score 4,0/5,0.	Relations with own workforce

Koskisen’s operations are based solely on the sustainable sourcing and processing of

wood into carbon-sequestering wood products for different product categories,

customer categories and markets. Because the procurement, processing, storage and

transport of wood have an impact on the climate and the biodiversity of the forest

environment, Koskisen has set sustainability targets for its operations, especially related

to the reduction of greenhouse gas emissions and biodiversity.

From the perspective of sustainability, Koskisen has defined wood wisdom as the basis

of its strategy for 2024–2027, which means that the forest, the people connected to

Koskisen’s operations, and society are considered partners in operations. The growth

sought in the strategy takes place by creating value for the customer, developing

current operations and taking bold steps.

Value is created for customers by helping them mitigate climate change and adapt to

the future through their products and services. From the perspective of sustainability,

the development of current operations means, in particular, the promotion of a safe

working environment and the improvement of well-being at work and competence.

Koskisen is not based in an EU Member State that would allow an exemption from the

disclosure of information referred to in Article 18(1)(a) of Directive 2013/34/EU22.

Koskisen is a Finnish wood processing company whose value chain extends from wood

procurement to the customer use of wood-based products. The main raw material is

wood, which Koskisen processes into sawn timber, panel products and wood products

with high added value, among other things. Wood wisdom is at the core of sustainable

business. The entire value chain from wood harvesting to end products is designed

around synergistic and sustainable material flows.

Koskisen procures mainly certified wood as raw material from Finnish private forest

owners in accordance with the principles of wood procurement.

Koskisen’s own industrial operations focus on the manufacture of sawn timber, panel

products and other products with high added value. The Panel Industry offers

customized high-quality panel solutions. The Panel Industry’s net sales consist of the

sale of plywood, chipboard, thin plywood and veneer, as well as optimised van interior

solutions. The Sawmill Industry offers sawn timber and further processed products

made from high-quality wood raw material. The Sawmill Industry’s net sales consist of

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the sale of sawn timber and further processed timber, as well as by-products of wood

procurement for the pulp and paper industry and bioenergy for several power plants.

As an investment, Koskisen operates in the mechanical wood processing industry with

a unique integrated operating model. This model, along with its synergistic functions,

enables high material and overall efficiency, thereby supporting profitable growth.

Operations at the upstream of the value chain are intrinsically linked to forest

management operations. Cooperation with forest owners and subcontractors offering

management services is key. Wood procurement complies with the requirements set

by the PEFC or FSC chain of custody certificates, which ensures that the wood is

harvested in accordance with forest certification requirements that take biodiversity

into account. In addition, a chain of custody system that enables the traceability of

wood is used in all procurements.

Koskisen’s ability to create value is based on a material-efficient and integrated value

chain from forest to end product. An integrated operating model is based on

interconnected processes that form a business model from wood procurement

through production to finished products. The entire value chain is designed around

synergistic material flows and an agile operating model, which enables the use of raw

materials from different sources.

Koskisen’s production facilities are located in Järvelä and Hirvensalmi in Finland and in

Skwierzyna and Toporów in Poland. The Group’s main market area is Finland and the

rest of the EU. Koskisen’s customers include operators in the logistics, construction,

automotive, stamping, furniture, interior decoration, packaging and chemical forest

industries. The company exports to a total of about 70 countries.

Potential sustainability-related impacts, risks and opportunities in relation to the

business model and value chain are described in table SBM-3: Material impacts, risks

and opportunities and their interaction with strategy and business model.

Financial information related to the business segments is presented in notes to the

consolidated financial statements in Note 2 Segment information and revenue.

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Interests and views of stakeholders

SBM-2

Koskisen engages in dialogue with its key stakeholders and develops its operations,

strategy and business model based on stakeholder feedback and expectations. The

interests, perspectives and rights of Koskisen’s employees are an integral part of the

company’s strategy and business model. Koskisen aims to be a sustainable growth-

oriented employer, with related goals including being the best employer in the sector

and region, fostering meaningful work, promoting employee well-being and

competence, supporting diversity and equality, and offering the opportunity to own

shares in the company. Koskisen’s key stakeholders, the purpose, forms and content of

stakeholder dialogue, and how this dialogue is taken into account in the company’s

operations are presented in the following table.


Stakeholder	Stakeholder interaction	Purpose of interaction	Relevant themes	Impact on operations, business model, and strategy
Nature and NGOs acting on its behalf	Identification of impacts. Ongoing dialogue with organisations, monitoring of activities, and engagement with diverse viewpoints through different events and platforms.	Minimising adverse effects on forest ecosystems and promoting positive impacts on biodiversity.	Safeguarding diverse forest environments and the ecosystem services they provide in the future. Environmental impacts: – Greenhouse gas emissions – Wastewater treatment – Stormwater collection systems – Waste management (further utilisation of waste fractions as raw materials or for energy) Increasing biodiversity-enhancing actions, including measures that go beyond certification requirements and are based on scientific research.	Wood is sourced as certified, and all operations are carried out in accordance with defined minimum requirements.
Own workforce	Dialogue, consultation, information sharing, and communication	Collaboration and development	Balanced and continuous workload across economic cycles, occupational safety and well-being, fair compensation, competence development, and good working conditions	Securing the availability of workforce and preserving jobs. Goal-oriented development of safety culture and employee well-being.
Local communities	Information sharing, and communication	Collaboration and development	Employment, local reputation/recognition, and environmental factors (nature, noise, pollution). Employment impact, sense of well-being and safety for local residents, tax revenue, and purchasing power. Impacts on employment and competence in factory locations. Small-scale support for local clubs and associations. Environmental impacts are considered both in industrial operations and wood sourcing. Pollution prevention and landscape impact management are also taken into account.	Local communities are taken into account and their voices are heard in decision-making.
Customers and end-users	Collaboration, partnership	Providing high-quality products and advancing both operations and product development.	Long-lasting, carbon-binding products made from renewable raw materials that are traceable and have a known origin. The products must be safe and of high quality, suitable for their intended use, fossil-free, recyclable, competitively priced, and compliant with all applicable requirements. Supply chain audits, certifications, and other systems are used to ensure responsibility and sustainability throughout the value chain. Material efficiency, circular economy principles, and high value-added processing are key. Transparent product information about impacts and raising customer awareness through environmental labelling are essential. Koskisen brand (products).	Carbon footprint, product information, reducing the product-specific carbon footprint, circular economy, material efficiency, and recyclability.

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Stakeholder	Stakeholder interaction	Purpose of interaction	Relevant themes	Impact on operations, business model, and strategy
Researchers, academic institutions, and students	Co-operation, assimilation of research-based knowledge	Learning and innovation	Innovation and development work, especially in the field of circular economy, with a focus on increasing the degree of processing through innovation. Creating job opportunities for graduates, and raising awareness among students about working life and its demands. Two-way dialogue – bringing students’ perspectives to employers. Collaboration to develop the industry, and sharing knowledge for research purposes.	Innovation of new circular economy products in partnership with others. Collaborative efforts also help secure workforce availability for positions where formal training does not yet exist.
Forest owners	Information sharing, communication, customer relations, and meetings	Sourcing of raw materials, advising forest owners towards sustainable forestry practices, and providing support when needed — for example, in conservation measures.	Responsible sourcing of raw materials (including consideration for biodiversity and prevention of environmental degradation). Ensuring the growth and regeneration of future forests. Knowledge of diverse forest management practices and a wide range of expert services to support the goals of forest owners.	Safeguarding the long-term supply of raw materials
Shareholders and financial institutions	Meetings and communication	Securing and developing operations while creating shareholder value.	Success in ESG themes and integration of sustainability impacts into financing conditions. Risk management from a sustainability perspective. Development of shareholder value, continuity, predictability, transparent communication, and continuous improvement.	Profitability and transparency as the foundation for operations and continuous development.
Advocacy and industry associations	Co-operation	Promoting the development and resilience of the industry	Impacts on the vitality of forestry sector, influencing regulation through collaboration, ensuring and strengthening consistent practices across the industry, and sharing knowledge.	Securing the conditions for continued business operations in a changing operating environment.
Subcontractors, suppliers, and service providers	Collaboration, supply chain management, and meetings	Mutual collaboration to ensure stable operations and advance product development, particularly in terms of sustainability	Predictability and continuity of work, fair practices (improving the overall image of the industry), open communication. Margins are often small, creating the risk of exploitation within the supply chain – ensuring sufficient margins is essential. Providing information, support, and training when needed to promote responsible practices. Collaboration in areas such as equipment procurement or supporting the development of new solutions.	Securing the prerequisites for long-term business continuity through cooperation. Advancing circular economy practices and low-carbon development.

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Understanding of stakeholder perspectives

The views of stakeholders were utilised in Koskisen’s double materiality assessment

carried out in 2023, on the basis of which Koskisen defined the sustainability matters

that are material to the company’s operations. The most significant sustainability

matters were related to the procurement of raw materials.

Stakeholder feedback that emerged in the double materiality analysis:

• Biodiversity protection was considered the most material topic. Stakeholders

encouraged the company to recommend more biodiversity-conscious forest

management and harvesting services to its wood procurement customers, i.e.

forest owners.

• Forest damage and EU regulation were identified as the most significant future

drivers of increasing raw material prices – highlighting the need to increase the value

generated from end products.

• The Zero furniture board was highlighted as an example of an innovative product,

and stakeholders expressed the need for more such solutions in the future. From a

sustainability perspective, the Zero board stands out for its recyclability and low VOC

indoor emissions. In sawn timber products, key focus areas include forest certification

and supply chain audits.

• Circular economy innovations were also brought up; stakeholders expressed a desire

to find higher value-added applications for by-products, rather than using them

solely for bioenergy.

• The new sawmill was viewed positively also from a sustainability perspective: it

enables material efficiency gains by allowing the processing of smaller logs. Other

investments improving material efficiency, such as the new log sorting line and the

barkless veneer lathe, were also mentioned as positive developments.

• The company’s role as the most significant industrial employer in Kärkölä and the

surrounding areas was seen as having a clear and positive local impact, which was

unanimously acknowledged by the interviewed stakeholders.

Further information on the double materiality assessment is provided in the Material

impacts, risks and opportunities and their interaction with strategy and business

model section.

The stakeholder perspectives of nature, customers, owners and its own workforce have

contributed to strengthening the company’s perceptions of the forces of change and

opportunities in the operating environment and have influenced Koskisen’s strategic

planning for the period 2024–2027. A comprehensive analysis of the operating

environment, including stakeholders, is part of Koskisen’s normal strategic planning

practice, and the company has not made any stakeholder-centric changes to its

strategy or operating model based on the double materiality assessment.

Stakeholder perspectives and interests regarding the company’s sustainability impacts

are taken into account as part of the materiality assessment, which is approved by the

company’s administrative, management and supervisory bodies. Stakeholders are also

considered annually as part of an ongoing process within Koskisen’s

management system.

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Material impacts, risks and opportunities and their interaction with strategy and business model

SBM-3


E1 CLIMATE CHANGE
Impacts	Type of impact	Time horizon	Value chain	Description
Climate change mitigation
Emissions from vehicles involved throughout the value chain (including transport of finished products)	Negative impact	All time horizons	Entire value chain	Diesel-powered forestry machinery, along with truck, rail, and maritime transport related to logistics, generate greenhouse gas emissions (Scope 3). In the longer term, fleets based on electricity, biofuels, and synthetic fuels have the potential to reduce these impacts. Additionally, the production processes of both synthetic and wood-based fertilizers used in forestry may also contribute to emissions.
Lifecycle emissions from panel products, adhesives and coatings, plastics and metal raw materials	Negative impact	All time horizons	Upstream	Traditional binders and coatings are traditionally fossil-based and thus cause greenhouse gas emissions. During the production of plastic and metal raw materials, emissions are also generated (Scope 3).
Direct greenhouse gas emissions from production facilities	Negative impact	All time horizons	Own operations	The power plants owned by Loimua, the power plants in Järvelä, the chipboard mill’s chip dryer, and other similar instances (with wheel loaders and forklifts) cause greenhouse gas emissions (Scope 1).
Reduction of forest carbon stocks and soil carbon sinks due to harvesting and forest management activities	Negative impact	All time horizons	Upstream	Koskisen’s operations, positioned at the upstream end of the value chain, are closely linked to harvesting and forest management activities (including potential ditch network maintenance). These activities result in changes to land cover (such as tree stands and other vegetation), which can temporarily reduce the natural carbon sink capacity of forest areas. The extent of this impact varies significantly depending on the site type and forest management methods applied.
The carbon sequestered by forests is stored long-term in Koskisen’s wood products.	Positive impact	All time horizons	Own operations	Koskisen’s long-lasting wood products act as carbon sinks by storing biogenic carbon, temporarily removing it from the atmosphere and mitigating its climate warming effect. This includes production side streams like sawdust and chips used in furniture panel manufacturing.
Positive impacts of forest management practices on natural carbon sinks	Positive impact	All time horizons	Upstream	Koskisen offers forest management services to forest owners to promote carbon sequestration and encourages forest regeneration. A well-managed forest – with carefully timed and planned thinning and final felling operations (adapted to site conditions, rotation periods, and carbon sequestration potential) – improves forest growth and health, thereby enhancing its capacity to sequester carbon.
Development of low-emission products that enable emission reductions for the customer	Positive impact	All time horizons	Downstream	When a customer chooses the Zero particleboard or a comparable product in which bio-based binders replace more carbon-intensive fossil-based alternatives, a Scope 3 emission reduction is achieved compared to traditional products.
Energy
Indirect greenhouse gas emissions from purchased electricity (Scope 2)	Negative impact	All time horizons	Upstream	Approximately 81% (in 2022) of the operational carbon footprint originates from the consumption of grid electricity. The emission intensity of grid electricity depends on the energy mix used in its production. As the share of renewable energy sources increases, this impact could be significantly reduced in the future.
Emission reductions achieved through renewable energy production	Positive impact	All time horizons	Own operations	In 2022, 96% of the heat energy used by Koskisen was already from renewable sources. An investment in a solar power plant will further increase the share of renewable electricity consumption in the future.
Emission reductions through energy savings – improving energy efficiency in own operations	Positive impact	All time horizons	Own operations	Koskisen joined the Energy Efficiency Agreement for Industries, coordinated by the Confederation of Finnish Industries, in 2016. The company is committed to the energy-intensive industry action plan for the period 2017–2025. To date, energy efficiency measures have included, for example, switching to LED lighting, avoiding unnecessary idling of production machinery, and applying energy efficiency criteria in equipment procurement. All energy-saving actions reduce the overall need for energy, which in turn leads to lower greenhouse gas emissions from energy production.

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Risks and opportunities	Risk / opportunity	Time horizon	Value chain	Description
Climate change mitigation
Opportunities related to the transition to a low-carbon society – growth in demand for wood construction and wood-based products	Financial opportunity	Medium term	Downstream	If the construction industry begins to shift away from more emission-intensive concrete structures toward wood construction—driven by changes in customer behavior or regulatory reforms—demand for Koskisen’s products may increase. This growing demand would likely have a positive impact on cash flows, both for Koskisen and the broader sector, and as future prospects improve, it may also enhance access to financing as well as influence its cost and terms. However, the most long-lasting products are not always the most profitable option under shifting market conditions, which can make it challenging to set clear targets and plan production accordingly.
Regulatory risks related to the preservation of carbon sinks (transition risks) – harvesting restrictions	Financial risk	Medium term	Upstream	Koskisen’s manufacturing operations (panel and sawmill industries) are highly dependent on wood raw material. EU and national legislation is expected to impose long-term restrictions on harvesting (e.g., to meet the climate targets set out in Finland’s Climate Act). Any disruptions in the availability, price, or quality of wood raw material would likely have a broad impact on operational cash flows and the value of assets. In a deteriorating market outlook, these factors could also affect the availability, cost, and terms of financing.
Climate change adaptation
Risks related to the physical impacts of climate change may disrupt the availability of raw materials	Financial risk	Medium term	Upstream	Koskisen’s manufacturing operations (panel and sawmill industries) are highly dependent on wood raw material. Climate change may have adverse effects on forest growth and health due to rising average temperatures. These effects may include forest damage, wildfires, storms, compacted snow, reduced forest growth, warmer winters, and increased vulnerabilities. Disruptions in the availability, price, or quality of wood raw material would likely have wide-ranging impacts on operational cash flows and asset values. In the event of a weaker market outlook, such disruptions could also negatively affect the availability, cost, and terms of financing.
Energy
Opportunities for energy self- sufficiency achieved through own energy production	Financial opportunity	All time horizons	Own operations	Because e.g. it is possible to produce electricity in connection with heat production, energy self- sufficiency can improve. Energy self-sufficiency increases the buffer against future energy supply disruptions. Also a positive impact on profitability from the perspective of utilising energy subsidies.
Energy efficiency opportunities	Financial opportunity	All time horizons	Own operations	If the reduction in energy use can be achieved by improving energy efficiency per cubic metre produced, cost savings will be achieved that improve margins

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E4 BIODIVERSITY AND ECOSYSTEMS
Impacts	Type of impact	Time horizon	Value chain	Description
Impacts on the extent and condition of ecosystems
Negative impacts on biodiversity caused by land cover changes related to forest management and harvesting operations	Negative impact	All time horizons	Upstream	Koskisen’s operations, positioned at the upstream end of the value chain, are closely linked to harvesting and forest management activities. These activities result in changes to land cover (including tree stands, other vegetation, and the condition of water bodies) and reduce the connectivity of species and ecological values. Such impacts broadly affect the natural capacity of terrestrial and aquatic ecosystems to maintain biodiversity.
Risks and opportunities	Risk / opportunity	Time horizon	Value chain	Description
Impacts on the extent and condition of ecosystems
Regulatory risks related to biodiversity preservation (transition risks) – restrictions on the use of natural resources	Financial risk	Medium term	Upstream	Koskisen’s manufacturing operations (panel and sawmill industries) are highly dependent on wood raw material. The decline in biodiversity may lead to regulatory restrictions at the EU or national level regarding the use of natural resources. Disruptions in the availability, price, or quality of wood raw material would likely have broad impacts on the company’s cash flows and asset values. In the event of a weakening market outlook, such disruptions could also affect access to financing as well as its cost and terms.
Voluntary biodiversity conservation measures that may reduce the availability of wood raw material (transition risks)	Financial risk	Medium term	Upstream	Koskisen’s manufacturing operations (panel and sawmill industries) are highly dependent on wood raw material. The decline in biodiversity may lead to regulatory restrictions at the EU or national level regarding the use of natural resources. Disruptions in the availability, price, or quality of wood raw material would likely have broad impacts on the company’s cash flows and asset values. In the event of a weakening market outlook, such disruptions could also affect access to financing as well as its cost and terms.
Direct impact drivers of biodiversity loss (invasive alien species, others)
Physical risks to raw material availability caused by negative biodiversity impacts	Financial risk	Medium term	Upstream	The decline in biodiversity negatively affects forest health, making forests more vulnerable to damage and reducing the availability of wood. For example, the absence of natural predators of harmful insects or the dominance of a single tree species can increase susceptibility to pests and other forest disturbances. This can lead to reduced wood supply and, consequently, higher raw material prices.

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E5 CIRCULAR ECONOMY
Impacts	Type of impact	Time horizon	Value chain	Description
Resources inflows, including resource use
Reducing natural resource depletion and advancing circular economy principles through the use of production side streams in product development	Positive impact	All time horizons	Own operations	Various side streams from sawing and forest management (such as sawdust, logging residues, etc.) are utilized in panel industry, helping to slow down the depletion of primary resources and natural raw materials.
Reducing natural resource depletion through the use of production side streams in energy and heat production	Positive impact	All time horizons	Own operations	Various side streams from sawing and forest management (such as sawdust, logging residues, etc.) are used in heat production, reducing the need for external or fossil fuels in the process.
Reducing natural resource depletion and advancing circular economy through recycling	Positive impact	All time horizons	Own operations	For example, new uses are identified for offcuts from sawn timber and other recyclable waste materials. Recyclability and sustainability are also considered in procurement processes.
Risks and opportunities	Risk / opportunity	Time horizon	Value chain	Description
Resources inflows, including resource use
Improved profitability through increased utilisation of side streams and recycled materials, as well as enhanced material efficiency	Financial opportunity	All time horizons	Own operations	From a material efficiency perspective, reducing the material input-to-output ratio improves cost- efficiency. Identifying new applications and opportunities for utilizing side streams or by-products in higher value-added products can have a positive impact on revenue and profitability. Similarly, the use of recycled materials in new (panel) products may also contribute positively to both revenue and profitability.
Transition risks associated with the circular economy – uncertainty around the legal classification of industrial side streams	Financial risk	Medium term	Own operations	The relative difficulty of utilising Koskisen’s side streams (e.g., in particleboards) may increase if future legislation begins to prioritize recycled materials over industrial side streams.
Resource depletion risks concerning critical inputs, such as wood, water, adhesives, coatings, metals, and plastics	Financial risk	All time horizons	Upstream	Koskisen’s manufacturing operations (panel, sawmill, and housing industries) are highly dependent on wood raw material and a range of other resources. Over the long term, resource depletion may lead to the scarcity of certain inputs, which in turn can affect both prices and availability. This may result in a permanently higher cost level, and if outlooks weaken, it could also lead to more limited access to financing or less favorable financing terms.
Resource outflows related to products and services
Circular economy transition opportunities – increased demand for renewable, wood-based products	Financial opportunity	Medium term	Downstream	Various EU or national level regulations related to material efficiency and recycling requirements – as well as changes in customer behavior – may increase demand for wood-based products suitable for reuse. This could lead to higher revenue and improve the market value of the company’s shares as future prospects strengthen.

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S1 OWN WORKFORCE
Impacts	Type of impact	Time horizon	Value chain	Description
Working conditions – health and safety
Negative effects on employee health	Negative impact	All time horizons	Own operations	Various work-related hazards, accidents and work-related health problems: physical (accidents, heat, noise), ergonomic (poorly adjusted workstations, difficult trajectories) and chemical and particulate matter (exposure to substances hazardous to health, e.g. birch wood dust if inhaled, carcinogenic + other chemicals harmful to health, production consumables) negative effects on workers’ health.
Positive impacts on employee health and well-being	Positive impact	All time horizons	Own operations	Various health promoting aspects: well-organised occupational safety and safety development measures, access to occupational health care, various counselling services.
Own workforce
Positive impacts related to Koskisen’s position as a significant industrial employer in the surrounding area	Positive impact	All time horizons	Own operations	Koskisen is one of the largest employers in the Päijät-Häme region, creating/supporting the well- being and purchasing power of employees living in nearby areas. In addition, the work generates tax revenue, which in turn supports not only the residents and livelihoods of the local area, but also the well-being of employees and their close friends.
Risks and opportunities	Risk / opportunity	Time horizon	Value chain	Description
Working conditions – health and safety
Risks related to negative effects on safety and health	Financial risk	All time horizons	Own operations	If realised, accident and damage risks at production facilities could lead to Koskisen’s obligation to compensate for damages and delay or disrupt the delivery of Koskisen’s products and services. Judgments/fines related to possible negligence.
Own workforce
Opportunities for a positive employer image	Financial opportunity	All time horizons	Own operations	Koskisen’s ability to produce results depends on the availability and retention of skilled and motivated personnel. A positive employer reputation can promote recruitment and retention, improving operational stability and thus financial predictability, reducing the risk of loss of income due to labour shortages.
Freedom of association
Risks posed by industrial action, such as strikes	Financial risk	All time horizons	Own operations	Koskisen’s ability to make a profit depends on the work input of its skilled personnel. In the event of a strike or other industrial action, operations may come to a complete standstill, causing delays in deliveries and loss of income

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 38

Material impacts, risks and opportunities in relation to Koskisen’s strategy, business

model and value chain have been discussed as part of the company’s double

materiality assessment.

Koskisen’s most material sustainability matters are directly related to Koskisen’s

strategic choices, value chain and business model. Climate change mitigation and

adaptation, safeguarding biodiversity, transitioning to a circular economy, and topics

related to the working conditions and safety of its own workforce are part of Koskisen’s

strategic planning. Changes in these themes are identified in the due diligence process

and, if necessary, implemented in the Group’s strategic planning in a proportionate

manner based on their significance. This will ensure Koskisen’s ability to react to the

impacts that may result from changes in material sustainability topics.

According to the company’s understanding, its strategy for the period 2024–2027,

which is based on wood wisdom, its business model and value chain, take into account

material sustainability topics and related impacts, risks and opportunities. The

sustainability topics identified and confirmed in the strategy were already taken into

account in the preparation of Koskisen’s strategy before the double materiality

assessment, and no changes have been made to the strategy or business model based

on them, and there are no plans to anticipate or significantly respond to the impacts by

adjusting the business model or strategy.

Sustainability impacts affect people through own workforce (S1). The positive effects

include effects on employees' health and well-being as well as on employment in

Koskisen’s production locations. The negative effects focus on occupational safety and

health. Sustainability impacts affect nature through climate change (E1), biodiversity

and ecosystem services (E4) and the circular economy (E5).

From the perspective of climate change, the positive effects include the storage of

carbon sequestered by forests in Koskisen’s wood products, emission reductions

achieved through renewable energy production, emission reductions through energy

savings, improving energy efficiency in our own operations, the positive effects of forest

management measures on natural carbon sinks, and the development of products

with lower emissions that enable the customer’s emission reductions. Negative

impacts include emissions from vehicles related to wood procurement and transport

throughout the value chain (including the transport of finished products), direct

greenhouse gas emissions from production facilities, lifecycle emissions from adhesives

and coatings for flat products, plastic and metal raw materials, indirect greenhouse gas

emissions from the production of purchased electricity (Scope 2), and the reduction of

forest carbon stocks and soil carbon sinks in harvesting and forestry.

From the perspective of biodiversity and ecosystem services, the negative impacts are

based on changes in land cover related to forest management and harvesting

activities.

From the perspective of the circular economy, the positive effects include slowing

down the depletion of natural resources and promoting the circular economy by

utilising production side streams in products and in heat production as well as

through recycling.

Koskisen’s material positive and negative sustainability impacts are directly linked to

Koskisen’s strategy and business model. The impacts come from Koskisen’s own

operations and direct business relationships in the value chain of wood procurement

and the processing wood products industry.

The current financial effects of Koskisen’s material opportunities relate to potential

revenues or cost savings — and ultimately to cash flows — associated with increasing

self-sufficiency in renewable energy production, improving energy efficiency,

enhancing material efficiency and the utilisation rate of recycled materials, as well as

the positive employer image contributing to easier recruitment and lower employee

turnover. Koskisen is not aware of any material sustainability-related risks or

opportunities during the reporting period that would, if realised, affect the company’s

balance sheet value in the 2024 financial year.

The company applies the transitional provision regarding the anticipated financial

effects of material risks and opportunities on its financial position, financial

performance, and cash flows in the short, medium, and long term, including the

reasonably expected time horizons of such effects, by disclosing only qualitative

information.

In the short term (1 year), Koskisen may invest in energy efficiency and renewable

energy, improving its ability to adapt quickly to rising energy prices and potential

energy supply disruptions. Ongoing efforts to enhance biodiversity also support the

management of future risks related to raw material availability. In the short term, the

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 39

company is prepared to respond to regulatory changes, such as climate change

mitigation targets. Koskisen can also leverage opportunities related to circular

economy and material efficiency in the near future. Efficient use of by-products and

investments in new wood-based solutions can generate added value and revenue

already within the year.

In the medium term (1–5 years), the company will strengthen the flexibility of its supply

chain and its ability to react to changes in the market and regulation. Investments in

new production capacity and energy self-sufficiency increase the resilience of the

business. The company must adapt to the long-term effects of climate change, such as

the decline in biodiversity and the availability of raw materials. In the medium term,

Koskisen can take advantage of opportunities, such as the anticipated growth in

demand for wood construction and products, especially due to changes in legislation

and customer behavior. The use of recycled and circular economy materials saves costs

and improves profitability, while strengthening the company’s market position.

In the long term (more than 5 years), the company’s strategy and business model make

it even more flexible and less dependent on raw material price fluctuations and

environmental risks. Long-term investments in new technologies and expansion into

the global market strengthen the company’s resilience. Koskisen is preparing

sustainable practices in line with its strategy to help adapt to global environmental

risks, such as the challenges of climate change and the depletion of natural resources.

In the long term, the company can also benefits from global megatrends such as the

green transition and the circular bioeconomy. The use of wood raw material and

products may increase, especially due to the demand for long-lasting and more

sustainable solutions, which will bring significant growth opportunities for the

company. New innovations and expansions can also open up new business areas and

revenue growth.

Koskisen’s strategy and business model support the preparation for short-, medium-

and long-term challenges and opportunities, and they support the company’s

resilience to environmental, market and regulatory changes. 

Information will be provided only on the impacts, risks and opportunities covered by

the ESRS reporting requirements, and no information will be provided on the impacts,

risks and opportunities that would be covered by the use of other entity-specific

reporting requirements.

Description of the processes to identify and assess material

impacts, risks and opportunities

IRO-1

The Double Materiality Assessment (DMA) is a formally required method for

determining which sustainability matters Koskisen must prioritise in its strategy and

operations, and which topics are to be reported in the sustainability statement in

accordance with the CSRD.

Koskisen has identified and assessed its resources and operations to determine actual

and potential impacts, risks, and opportunities in its own operations as well as in the

upstream and downstream parts of its value chain. The identification and assessment

process was conducted primarily at a general level, and the company has not

separately screened its operations and plans to identify actual or potential future

sources of greenhouse gas emissions. Koskisen’s impacts on climate change in terms of

greenhouse gas emissions are described in the sustainability statement under

disclosure requirement E1-6. To support the identification and assessment of climate-

related impacts, risks, and opportunities, Koskisen also utilised climate roadmaps

developed for the sawmill and forest industry, based on studies and scenarios prepared

by organisations such as LUKE, VTT, and ETLA. These roadmaps were particularly used

to identify different types of greenhouse gas emissions, physical climate risks affecting

the availability of wood raw material, and transition risks and opportunities influencing,

for example, the demand for wood construction, also providing direction for evaluating

the relative materiality of these factors.

Koskisen carried out its double materiality assessment process for the first time during

2023–2024. The methodology used in the process combined research based on public

and selected internal sources, stakeholder interviews, individual technical materiality

assessments, and dedicated working group meetings.

The double-materiality assessment process was carried out in three main steps:

1 Understanding the context – reviewing internal materials (operations and business

relationships, business model and value chain), other contextual information

(sectoral framework, relevant EU sustainability regulation, peer review) and

understanding stakeholder views and interests, including stakeholder interviews.

2 Identification of actual and potential impacts, risks and opportunities (IROs) related

to sustainability issues – with reference to classification in European sustainability

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 40

reporting standards (ESRS 1, paragraph AR16). Koskisen's internal project team was

responsible for the phase.

3 Assessment and determination of material impacts, risks and opportunities related

to sustainability issues – a consolidated result of both materiality and financial

materiality, which is mainly based on Koskisen's internal assessment, observations

from stakeholder analysis and workshop work by the Executive Board.

The prioritisation and mutual materiality of the identified impacts, risks and

opportunities were assessed with Koskisen's internal project team in a browser-based

assessment tool called Inclus in accordance with the principles of ESRS 1 chapter 3 for

assessing materiality and economic materiality. The outcome of the assessment is a list

of sustainability issues that are material to Koskisen. During the process, the internal

control and risk management principles confirmed by Koskisen's Board of Directors

were followed.

The starting assumption for the impacts, risks and opportunities to be assessed was the

sustainability topics related to the business model and strategy that Koskisen had

already identified and reported. The findings were supplemented in the background

analysis phase of the process based on the topic recommendations of the most similar

established, science-based sector-specific sustainability standards, as well as

observations from the review of the reporting practices of peer companies. Based on

the background analysis, the most significant sustainability topics in the sector were

related to climate change mitigation and adaptation, the preservation of biodiversity,

the transition to a circular economy, and issues related to the working conditions of the

company's own workforce.

To support the identification and assessment of climate impacts, risks and

opportunities, the sawmill and forest industries' Climate roadmaps based on studies

and scenarios by Luke, VTT Technical Research Centre of Finland and Etla. The

roadmaps were used especially to identify different types of greenhouse gas emissions,

physical climate risks affecting the availability of wood raw material and, for example.

identifying transition risks and opportunities affecting the demand for wood

construction, and also providing guidelines for assessing their mutual materiality.

Koskisen's double materiality assessment process was carried out for the first time in

2023. The process was based on a combination of research based on public and certain

internal sources, stakeholder interviews, personal technical materiality assessments

and working group meetings.

Assessment of materiality of impacts

In the process of identifying and assessing material actual and potential impacts,

Koskisen’s own operations and the main features of the value chain were mapped. This

was done in order to identify activities, business relationships, geographic locations or

other factors that contribute to material sustainability impacts related to the

environment or people. At the beginning of Koskisen’s value chain, there are actions

that cannot completely exclude the risk of potential human rights violations, such as in

the collection and manufacture of raw materials for key production inputs. In the

assessment of the identified potential negative social impacts associated with these

measures, emphasis was placed on the severity value in relation to the likelihood of

their realisation.

Although the identification process was mainly carried out on a general level, the

assessment of Koskisen’s own operations focused on sawn timber, plywood and

chipboard operations, business relationships with similar customers and, in a

geographical sense, on Koskisen’s production plant in the municipality of Kärkölä and

its surrounding areas. Many of the identified impacts were found to be linked to

financial risks, e.g. as a result of different compensation obligations and reputational

damage. The links between different degrees of resource dependencies, such as the

availability of wood raw material and skilled labour, were also found to be associated

with potential risks.

The impacts of biodiversity-sensitive areas mainly occur on the lands of private

landowners, on which Koskisen has felling rights, which can thus be equated with site

audits. The assessment and management will focus on the impact of the actions taken

in these areas.

The assessment identified a number of negative and positive impacts on people, the

climate and the environment in which Koskisen potentially or actually participates

through its own operations or business relationships (e.g. suppliers, customers and

project contractors). The location of impacts in the value chain is described in

Koskisen’s table of material sustainability impacts, risks and opportunities.

In connection with the review, the key stakeholder representatives (e.g. Koskisen’s sawn

timber, plywood and chipboard customers, forest owners, personnel representatives

and municipal decision-makers) as well as the views of the users of the so-called

sustainability reviews (owners and financiers). The views of the impacted stakeholders

were used to identify, formulate and assess biodiversity-related impacts, risks and

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 41

opportunities. Various circular economy issues, especially related to the utilisation of

recycled materials, were emphasised in chipboard customer’ views.

The materiality of the identified sustainability impacts was assessed in accordance with

the principles of the standards (ESRS 1, chapter 3). The assessment examined potential

or actual negative and positive impacts, as well as their scale, scope and, in the case of

negative impacts, the irreparable character of the impact. The severity of the negative

and positive impacts and the likelihood of their realisation were each assessed on a

scale of 1 to 5.

The materiality of the impacts was formed as the product of separate severity and

likelihood averages. As a result of the assessments, the mutual order of importance of

all identified impacts, risks and opportunities was determined on the basis of

materiality values, with the calculated median (11.1) serving as a quantitative threshold

for materiality.

Finally, the results were also reviewed qualitatively. Minor adjustments and

reweightings were made by consensus, based on stakeholder insights and in cases

where certain topics were judged to be unrealistically weighted in relation to Koskisen’s

overall sustainability profile. The sustainability matters considered material for

reporting purposes were determined based on the material impacts, risks, and

opportunities grouped under each topic.

The severity of the negative and positive impacts (taking into account the scale, scope

and, in the case of negative impacts, pois the irremediable character of the impact), the

magnitude of the economic impacts of the risks and opportunities, and the likelihood

of their realisation were each assessed on a scale of 1–5.

Materiality of financial impacts

The materiality of the financial impacts related to sustainability risks and opportunities

was assessed in the process of determining double materiality by examining their

magnitude and likelihood of realisation.

The assessment of sustainability-related risks and opportunities was carried out for the

first time as a separate entity from Koskisen’s assessment process for other types of risks.

The process took into account the links between material sustainability impacts and

financial risks and opportunities. The prioritisation and mutual materiality of the

identified impacts, risks and opportunities were assessed with Koskisen’s internal

project team in a browser-based assessment tool called Inclus in accordance with the

principles of ESRS 1 chapter 3 for assessing materiality and financial materiality.

The financial materiality of the risks and opportunities was estimated as the product of

the averages of the magnitude and likelihood assessments of the related financial

impacts. As a result of the assessments, the mutual order of importance of all identified

impacts, risks and opportunities was determined on the basis of materiality values, with

the imputed median acting as a quantitative threshold for materiality.

The magnitude and likelihood of financial impacts were estimated from low to high (5–

point scale). Actual or very likely financial impacts were given a value of 5 (90–100%

likelihood) and any short-, medium- or long-term financial impacts were assessed on a

five-point scale between 0% and 100%.

Finally, the results were also reviewed qualitatively. Minor adjustments and

reweightings were made by consensus, based on stakeholder insights and in cases

where certain topics were judged to be unrealistically weighted in relation to Koskisen’s

overall sustainability profile. the results were also reviewed qualitatively. Minor

adjustments and reweightings were made by consensus, based on stakeholder insights

and in cases where certain topics were judged to be unrealistically weighted in relation

to Koskisen’s overall sustainability profile.

The materiality assessment is carried out as a separate process, after which the risks are

treated as part of corporate risk management (ERM) and prioritised by applying their

materiality level in the scaling of risks as described above.

Decision-making related to the assessment of sustainability impacts, risks and

opportunities is the responsibility of the company’s Executive Board under the

leadership of the CEO. The process complies with Koskisen’s normal management

system and the internal control and risk management principles approved by the

company’s Board of Directors.

The process of identifying and assessing material sustainability impacts, risks and

opportunities required by the European Sustainability Reporting Standards (ESRS) was

carried out at Koskisen for the first time in June–November 2023.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 42

The need for materiality assessment is reviewed annually. The impacts and risks

identified in the materiality process are included in corporate risk management (ERM).

When the need for materiality assessment is identified, existing information on the

corporate risk process is used as initial data.

The process of identifying, assessing and managing opportunities is carried out as part

of the stakeholder and risk management process, the results of which are reported to

the Management Team.

The sustainability topics linked to the business model and strategy, previously

identified and reported by Koskisen, were used as the starting point for the impacts,

risks and opportunities to be assessed.

The findings were supplemented in the background analysis phase of the process

based on the topic recommendations of the most similar established, science-based

and sector-specific sustainability standards, as well as observations from the review of

the reporting practices of peer companies.

To support the identification and assessment of climate impacts, risks and

opportunities, the sawmill and forest industries’ climate roadmaps based on studies

and scenarios by Luke, VTT Technical Research Centre of Finland and Etla.

The roadmaps were used especially to identify different types of greenhouse gas

emissions, physical climate risks affecting the availability of wood raw material and, for

example, identifying transition risks and opportunities affecting the demand for wood

construction, and also providing guidelines for assessing their mutual materiality.

The identified impacts, risks and opportunities were assessed in a browser-based tool

called Inclus in accordance with the principles of ESRS 1 chapter 3. In this way, the

starting point for the quantitative materiality assessment was achieved, which was

supplemented on the basis of stakeholder views.

Disclosure requirements in ESRS covered by the

undertaking’s sustainability statement

IRO-2

IRO-1 Information related to double materiality assessment on non-

material topics

ESRS E2 Pollution

Non-material topic. Due diligence and preventive measures related to pollution are

part of the everyday operations of production plants subject to environmental permits,

which involve regular cooperation and reporting by the authorities. Koskisen has not

carried out a detailed screening of the locations of its sites and its business operations

to identify the actual and potential impacts, risks and opportunities of soil, air or other

emissions to the environment in its own operations or upstream and downstream

value chain. The topic was excluded from a more detailed assessment at an early stage

in the double materiality analysis. Therefore, no screening methods, assumptions or

tools have been defined. Based on the low materiality of the topic, the company has

not organised separate consultations on pollution and has not engaged in stakeholder

discussions, especially with the affected communities.

ESRS E3 Water and marine resources

Non-material topic. The double materiality assessment did not include a detailed

survey of Koskisen’s assets and operations in order to identify impacts, risks and

opportunities related to water and marine resources in Koskisen’s own operations or

upstream and downstream value chain. The topic was excluded from a more detailed

assessment at an early stage of the process. Based on the low relevance of the topic, no

stakeholder consultations related to water and marine resources were conducted.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 43

ESRS G1 Business Conduct

Non-material topic. The double materiality assessment was based on an examination of

unethical activities, such as anti-corruption and anti-bribery practices, as well as the

treatment of suppliers and service providers. Ethical business operations and acting in

accordance with them are the foundation of Koskisen’s business operations and part of

its normal operations. The location, activity, sector or structure of a particular

transaction were not assessed separately.


Disclosure Requirement and related datapoint	SFDR reference	Pillar reference	Benchmark Regulation reference	EU Climate Law (11) reference	Page number
ESRS 2 GOV-1 Board’s gender diversity paragraph 21 (d)	Indicator number 13 of Table #1 of Annex I		Commission Delegated Regulation (EU) 2020/1816, Annex II		22
ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e)			Delegated Regulation (EU) 2020/1816, Annex II		21
ESRS 2 GOV-4 Statement on due diligence paragraph 30	Indicator number 10 Table #3 of Annex I				26
ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i	Indicators number 4 Table #1 of Annex I	Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk	Delegated Regulation (EU) 2020/1816, Annex II		Not material, information reported p. 28
ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii	Indicator number 9 Table #2 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii	Indicator number 14 Table #1 of Annex I		Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv			Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14				Regulation (EU) 2021/1119, Article 2(1)	60

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 44


Disclosure Requirement and related datapoint	SFDR reference	Pillar reference	Benchmark Regulation reference	EU Climate Law (11) reference	Page number
ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g)		Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity	Delegated Regulation (EU) 2020/1818, Article12.1 (d) to (g), and Article 12.2		Not material
ESRS E1-4 GHG emission reduction targets paragraph 34	Indicator number 4 Table #2 of Annex I	Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics	Delegated Regulation (EU) 2020/1818, Article 6		65
ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38	Indicator number 5 Table #1 and Indicator n. 5 Table #2 of Annex I				66
ESRS E1-5 Energy consumption and mix paragraph 37	Indicator number 5 Table #1 of Annex I				66
ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43	Indicator number 6 Table #1 of Annex I				66
ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44	Indicators number 1 and 2 Table #1 of Annex I	Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity	Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1)		69

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 45


Disclosure Requirement and related datapoint	SFDR reference	Pillar reference	Benchmark Regulation reference	EU Climate Law (11) reference	Page number
ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55	Indicators number 3 Table #1 of Annex I	Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics	Delegated Regulation (EU) 2020/1818, Article 8(1)		70
ESRS E1-7 GHG removals and carbon credits paragraph 56				Regulation (EU) 2021/1119, Article 2(1)	72
ESRS E1-9 Exposure of the benchmark portfolio to climate- related physical risks paragraph 66			Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c)		Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk.			Not material
ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c)		Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34; Template 2:Banking book - Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral			Not material
ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities paragraph 69			Delegated Regulation (EU) 2020/1818, Annex II		Not material
ESRS E2-4 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil paragraph 28	Indicator number 8 Table #1 of Annex I, Indicator number 2 Table #2 of Annex I, Indicator number 1 Table #2 of Annex I, Indicator number 3 Table #2 of Annex I				Not material

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 46


Disclosure Requirement and related datapoint	SFDR reference	Pillar reference	Benchmark Regulation reference	EU Climate Law (11) reference	Page number
ESRS E3-1 Water and marine resources paragraph 9	Indicator number 7 Table #2 of Annex I				Not material
ESRS E3-1 Dedicated policy paragraph 13	Indicator number 8 Table 2 of Annex I				Not material
ESRS E3-1 Sustainable oceans and seas paragraph 14	Indicator number 12 Table #2 of Annex I				Not material
ESRS E3-4 Total water recycled and reused paragraph 28 (c)	Indicator number 6.2 Table #2 of Annex I				Not material
ESRS E3-4 Total water consumption in m3 per net revenue on own operations paragraph 29	Indicator number 6.1 Table #2 of Annex I				Not material
ESRS 2 – IRO-1 – E4 paragraph 16 (a) i	Indicator number 7 Table #1 of Annex I				74
ESRS 2 – IRO-1 – E4 paragraph 16 (b)	Indicator number 10 Table #2 of Annex I				74
ESRS 2 – IRO-1 – E4 paragraph 16 (c)	Indicator number 14 Table #2 of Annex I				74
ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b)	Indicator number 11 Table #2 of Annex I				75
ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c)	Indicator number 12 Table #2 of Annex I				75
ESRS E4-2 Policies to address deforestation paragraph 24 (d)	Indicator number 15 Table #2 of Annex I				75
ESRS E5-5 Non-recycled waste paragraph 37 (d)	Indicator number 13 Table #2 of Annex I				84
ESRS E5-5 Hazardous waste and radioactive waste paragraph 39	Indicator number 9 Table #1 of Annex I				84
ESRS 2 – SBM-3 – S1 Risk of incidents of forced labour paragraph 14 (f)	Indicator number 13 Table #3 of Annex I				86
ESRS 2 – SBM-3 – S1 Risk of incidents of child labour paragraph 14 (g)	Indicator number 12 Table #3 of Annex I				86
ESRS S1-1 Human rights policy commitments paragraph 20	Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex I				87
ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 paragraph 21			Delegated Regulation (EU) 2020/1816, Annex II		87
ESRS S1-1 Processes and measures for preventing trafficking in human beings paragraph 22	Indicator number 11 Table #3 of Annex I				87
ESRS S1-1 Workplace accident prevention policy or management system paragraph 23	Indicator number 1 Table #3 of Annex I				87

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 47


Disclosure Requirement and related datapoint	SFDR reference	Pillar reference	Benchmark Regulation reference	EU Climate Law (11) reference	Page number
ESRS S1-3 Grievance/complaints handling mechanisms paragraph 32 (c)	Indicator number 5 Table #3 of Annex I				89
ESRS S1-14 Number of fatalities and number and rate of work-related paragraph 88 (b) and (c)	Indicator number 2 Table #3 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II		98
ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e)	Indicator number 3 Table #3 of Annex I				98
ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a)	Indicator number 12 Table #1 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b)	Indicator number 8 Table #3 of Annex I				Not material
ESRS S1-17 Incidents of discrimination paragraph 103 (a)	Indicator number 7 Table #3 of Annex I				99
ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a)	Indicator number 10 Table #1 and Indicator n. 14 Table #3 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818 Art 12 (1)		99
ESRS 2 – SBM-3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b)	Indicators number 12 and n. 13 Table #3 of Annex I				Not material
ESRS S2-1 Human rights policy commitments paragraph 17	Indicator number 9 Table #3 and Indicator n. 11 Table #1 of Annex I				Not material
ESRS S2-1 Policies related to value chain workers paragraph 18	Indicator number 11 and n. 4 Table #3 of Annex I				Not material
ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19	Indicator number 10 Table #1 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)		Not material
ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 paragraph 19			Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36	Indicator number 14 Table #3 of Annex I				Not material
ESRS S3-1 Human rights policy commitments paragraph 16	Indicator number 9 Table #3 of Annex 1 and Indicator number 11 Table #1 of Annex I				Not material

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 48


Disclosure Requirement and related datapoint	SFDR reference	Pillar reference	Benchmark Regulation reference	EU Climate Law (11) reference	Page number
ESRS S3-1 Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17	Indicator number 10 Table #1 Annex I		Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)		Not material
ESRS S3-4 Human rights issues and incidents paragraph 36	Indicator number 14 Table #3 of Annex I				Not material
ESRS S4-1 Policies related to consumers and end-users paragraph 16	Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex I				Not material
ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17	Indicator number 10 Table #1 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II DelegatedRegulation (EU)2020/1818, Art 12 (1)		Not material
ESRS S4-4 Human rights issues and incidents paragraph 35	Indicator number 14 Table #3 of Annex I				Not material
ESRS G1-1 United Nations Convention against corruption paragraph 10 (b)	Indicator number 15 Table #3 of Annex I				Not material
ESRS G1-1 Protection of whistle-blowers paragraph 10 (d)	Indicator number 6 Table #3 of Annex I				Not material
ESRS G1-4 Fines for violation of anti-corruption and anti- bribery laws paragraph 24 (a)	Indicator number 17 Table #3 of Annex I		Delegated Regulation (EU) 2020/1816, Annex II		Not material
ESRS G1-4 Standards of anti-corruption and anti-bribery paragraph 24 (b)	Indicator number 16 Table #3 of Annex I				Not material

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 49

The table below provides a list of sustainability reporting disclosure requirements, including references to the relevant page numbers.


ESRS 2 General disclosures	Page
BP-1 General basis for preparation of sustainability statements	20
BP-2 Disclosures in relation to specific circumstances	20
GOV-1 The role of the administrative, management and supervisory bodies	21
GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies	25
GOV-3 Integration of sustainability-related performance in incentive schemes	25
GOV-4 Statement on due diligence	26
GOV-5 Risk management and internal controls over sustainability reporting	27
SBM-1 Strategy, business model and value chain	27
SBM-2 Interests and views of stakeholders	30
SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model	33
IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities	39
IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement	42

ESRS E1 Climate change	Page
ESRS 2 / GOV-3 Integration of sustainability-related performance in incentive schemes	25
E1-1 Transition plan for climate change mitigation	60
ESRS 2 / SBM-3 Material impacts, risks and opportunities and their interaction with the strategy and business model	60
ESRS 2 / IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities	61
E1-2 Policies related to climate change mitigation and adaptation	63
E1-3 Actions and resources in relation to climate change policies	64
E1-4 Targets related to climate change mitigation and adaptation	65
E1-5 Energy consumption and mix	66
E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions	67
E1-7 GHG removals and GHG mitigation projects financed through carbon credits	72
E1-8 Internal carbon pricing	72


ESRS E4 Biodiversity and ecosystems	Page
E4-1 Description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities	74
ESRS 2 / SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model	73
ESRS 2 / IRO-1 Description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities	73
E4-2 Policies related to biodiversity and ecosystems	75
E4-3 Actions and resources related to biodiversity and ecosystems	76
E4-4 Targets related to biodiversity and ecosystems	78
E4-5 Impact metrics related to biodiversity and ecosystems change	78

ESRS E5 Resource use and circular economy	Page
ESRS 2 / IRO-1 Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities	80
E5-1 Policies related to resource use and circular economy	80
E5-2 Actions and resources related to resource use and circular economy	81
E5-3 Targets related to resource use and circular economy	82
E5-4 Resource inflows	83
E5-5 Resource outflows	84

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 50


ESRS S1 Own workforce	Page
ESRS 2 / SBM-3 Material impacts, risks and opportunities and their interaction with the strategy and business model	86
S1-1 Policies related to own workforce	86
S1-2 Processes for engaging with own workers and workers’ representatives about impacts	88
S1-3 Processes to remedy the negative impacts and channels for own workers to raise concerns	89
S1-4 Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions	90
S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	93
S1-6 Characteristics of the company’s employees	94
S1-8 Collective bargaining coverage and social dialogue	96
S1-9 Collective bargaining coverage and social dialogue	97
S1-10 Adequate wages	97
S1-11 Social protection	97
S1-13 Training and skills development metrics	97
S1-14 Health and safety metrics	98
S1-15 Work-life balance metrics	99
S1-17 Incidents, complaints and severe human rights impacts	99

Definition of material information

The material information to be disclosed in the sustainability statement regarding

impacts, risks, and opportunities has been defined through the double materiality

assessment process, applying a defined materiality threshold.

The materiality of the identified impacts, risks, and opportunities was assessed in line

with the principles set out in the standards (ESRS 1, Chapter 3). The severity of negative

and positive impacts was evaluated based on scale, scope, and, in the case of negative

impacts, also the irremediable character. The financial magnitude of risks and

opportunities, as well as the likelihood of their realisation, were assessed on a scale

from 1 to 5.

Impact materiality was calculated as the product of the average scores for severity and

likelihood. Similarly, the financial materiality of risks and opportunities was determined

based on the magnitude and probability of their financial effects.

The results of these evaluations provided a ranking of all identified impacts, risks, and

opportunities based on their materiality scores, with a quantitative materiality

threshold defined by the calculated median value (11.1). The results were also reviewed

qualitatively. Minor adjustments and reweightings were made by consensus, based on

stakeholder insights and in cases where certain topics were judged to be unrealistically

weighted in relation to Koskisen’s overall sustainability profile.

The sustainability matters considered material for reporting purposes were determined

based on the material impacts, risks, and opportunities grouped under each topic and

are presented in the table below.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 51

Impacts, risks, and opportunities categorized by sustainability topic


Climate change	Biodiversity and ecosystems	Resource use and circular economy	Own workforce
Impacts	Impacts	Impacts	Impacts
The carbon sequestered by forests is stored long-term in Koskisen’s wood products	Negative impacts on biodiversity caused by land cover changes related to forest management and harvesting operations	Reducing natural resource depletion and advancing circular economy principles through the use of production side streams in product development	Positive impacts related to Koskisen’s position as a significant industrial employer in the surrounding area
Emissions from vehicles involved throughout the value chain (including transport of finished products)		Reducing natural resource depletion through the use of production side streams in energy and heat production	Positive impacts on employee health and well-being
Lifecycle emissions from panel products, adhesives and coatings, plastics and metal raw materials		Reducing natural resource depletion and advancing circular economy through recycling	Negative effects on employee health
Emission reductions achieved through renewable energy production
Indirect greenhouse gas emissions from purchased electricity (Scope 2)
Direct greenhouse gas emissions from production facilities
Positive impacts of forest management practices on natural carbon sinks
Emission reductions through energy savings – improving energy efficiency in own operations
Development of low-emission products that enable emission reductions for the customer
Reduction of forest carbon stocks and soil carbon sinks due to harvesting and forest management activities.
Risks and opportunities	Risks and opportunities	Risks and opportunities	Risks and opportunities
Risks related to the physical impacts of climate change may disrupt the availability of raw materials	Physical risks to raw material availability caused by negative biodiversity impacts	Improved profitability through increased utilization of side streams and recycled materials, as well as enhanced material efficiency	Risks posed by industrial action, such as strikes
Regulatory risks related to the preservation of carbon sinks (transition risks) – harvesting restrictions	Regulatory risks related to biodiversity preservation (transition risks) – restrictions on the use of natural resources	Transition risks associated with the circular economy – uncertainty around the legal classification of industrial side streams	Opportunities for a positive employer image
Opportunities related to the transition to a low-carbon society – growth in demand for wood construction and wood-based products	Voluntary biodiversity conservation measures that may reduce the availability of wood raw material (transition risks)	Resource depletion risks concerning critical inputs such as wood, water, adhesives, coatings, metals, and plastics
Opportunities for energy self-sufficiency achieved through own energy production		Circular economy transition opportunities – increased demand for renewable, wood-based products
Energy efficiency opportunities

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 52

Environmental

information

Koskisen creates value for its customers by helping

them mitigate climate change and adapt to the future

with products and services. Koskisen has committed to

continuously minimize the impact of its operations,

value chain and the full lifecycle of its products on soil,

water, climate and the ecosystems.


EU Taxonomy Report .............................................................................	53
ESRS E1 Climate change .......................................................................	60
ESRS E4 Biodiversity and ecosystems .............................................	73
ESRS E5 Resource use and circular economy ...............................	80

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 53

EU Taxonomy Report

Information pursuant to Article 8 of Regulation (EU) 2020/852

(Taxonomy Regulation)

The EU Taxonomy is a classification system for sustainable economic activities as

defined in Regulation (EU) 2020/852 of the European Parliament and of the Council

(Taxonomy Regulation) that entered into force in 2020, aiming to enhance the

transparency of sustainable investment and reorient capital flows towards technologies

and business considered sustainable. The Taxonomy Regulation has been gradually

supplemented by delegated acts over the years.

In practice, the EU Taxonomy is a list of economic activities identified by the taxonomy

with technical sustainability criteria that are considered to play a key role in achieving

the EU’s six environmental objectives:

1. Climate change mitigation

2. Climate change adaptation

3. Sustainable use and protection of water and marine resources

4. Transition to a circular economy

5. Pollution prevention

6. Protection and restoration of biodiversity and ecosystems

In addition to taxonomy eligibility (the proportion of own activities that correspond to

the activities listed in the taxonomy), companies with disclosure obligations must also

report on taxonomy alignment, i.e. the extent to which taxonomy-eligible activities

meet the technical criteria for a) substantially contributing to at least one

environmental objective, b) avoiding significant harm to the achievement of other

environmental objectives (Do No Significant Harm, DNSH), and c) the sufficiency of the

Minimum Safeguards aimed at preventing social violations in own operations and

supply chain.

For the time being, the majority of Koskisen’s product portfolio (timber, plywood and

panel products) results from activities that are not identified in the taxonomy and are

therefore not taxonomy-eligible. However, this does not mean that Koskisen’s product

portfolio is unsustainable from the point of view of the EU taxonomy, but that the

operations concerned are not currently considered to be among the activities with

which the EU considers that it will achieve the most immediate and significant

environmental benefits in its economic area. Koskisen’s activities related to forest

management services, energy efficiency and production investments in production

plants and properties, forest biomass-based energy production, various restoration

measures and certain low-emission products can be considered to be taxonomy-

eligible, i.e. activities identified in the taxonomy. For many taxonomy-eligible activities,

meeting the criteria for taxonomy alignment would require detailed investigations and

often also their independent verification.

Accounting principle

Koskisen’s consolidated financial statements have been prepared in accordance with

the accounting standards (IFRS) approved for use in the EU (for more information, see

the “Basis of preparation” note to the financial statements). The taxonomy percentages

have been calculated by allocating the financial figures presented in the consolidated

financial statements (net revenue, CapEx and certain operating expenses (OpEx)) to

businesses that have been interpreted as taxonomy-eligible in accordance with the

Delegated Act on the disclosure format of the Taxonomy Regulation. CapEx and OpEx

were defined as taxonomy-eligible if they relate to Koskisen’s own taxonomy-eligible

activities or are related to a taxonomy-eligible service or product procured from a third

party. The minimum safeguards aimed at preventing social violations were assessed by

comparing the activities with the interpretation guidelines of the Commission Notice

(2024/C 211/01). There were no significant changes in the definition of financial ratios

during the financial year with regard to the interpretation of the taxonomy eligibility of

operations or the criteria for determining numerator items.

Taxonomy assessment

Taxonomy eligibility and taxonomy alignment were determined by comparing the

activities that generated revenue and were the subject of investments during

Koskisen’s financial year 2024 with the descriptions of economic activities listed in the

taxonomy and their technical criteria. As a large part of Koskisen’s product portfolio is

currently outside the scope of the taxonomy, the taxonomy assessment is limited to the

following taxonomy-eligible economic activities:

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 54

CCM 1.3. Forest management

Forest management services provided to forest owners include activities such as soil

preparation, planting of seedlings and seeds, early weeding, tending of seedling stands

and preclearing. Koskisen’s timber harvesting operations also generate revenue, the

share of which can be broken down from invoicing in connection with the sale of

timber on behalf of forest owners. The activities cannot yet be considered to be in line

with the taxonomy, as formal climate benefit estimates in accordance with the

requirements are not yet available in the forest management plans of the forest parcels

concerned by the activities.

PPC 2.4. Remediation of contaminated sites and areas

Operating expenditure (OpEx) used for groundwater treatment operations in Järvelä is

considered taxonomy-eligible. The contamination of groundwater was caused in 1976

by the fire extinguishing water of Koskisen’s sawmill with a chlorophenol-containing

wood preservative for sawn timber (KY-5). Groundwater treatment operations were

started independently in 2012 using a method developed in cooperation with Afry

Finland Oy.

CE 3.2. Renovation of existing buildings

In 2024, Koskisen implemented maintenance measures for factory and office buildings

that are taxonomy-eligible. The largest investments were the repair of the plywood and

chipboard roof and the reinforcement of the steel structures of warehouse halls 1 and 2.

Maintenance activities do not yet meet all of the criteria for substantially contributing

to the transition to a circular economy, as the Global Warming Potential (GWP) is not

yet calculated for all building renovations.

CCM 3.5. Manufacture of energy efficiency equipment for buildings

The exterior cladding panels, logs, external wall frame parts and battens and panel

products used for doors manufactured by Koskisen from wood were considered to be a

key part of the insulation of the building concerned and thus of its energy efficiency.

For the time being, these are not taxonomy aligned, as the thermal conductivity (W/

mK) of the material exceeds the limit value of the technical criterion for substantially

contributing to climate change mitigation.

CCM 3.6. Manufacture of other low carbon technologies

During the financial year 2024, Koskisen prepared the start of commercial production

of Zero furniture panel. In the Zero furniture panel, wood-based lignin replaces the

fossil-based binder conventionally used in similar products, being a lower-emission

alternative to ordinary furniture panels, and therefore it has been interpreted to

correspond to the manufacture of other low-carbon technologies referred to in the

taxonomy. In addition, Koskisen has invested in a lignin adhesive tank at the chipboard

factory. Not all verification data required by taxonomy are available yet.

CCM 4.1. Electricity generation using solar photovoltaic technology

There is a solar power field at Koskisen’s Tehdastie factory area. The maintenance of the

solar power field has resulted in taxonomy-eligible expenditure. Not all verification data

required by taxonomy are available yet.

CCM 4.24. Production of heat/cool from bioenergy

The Sermet and BIO8 boiler plants at Koskisen’s Mäntsäläntie plant area produce

district heat for the plant’s own needs from 100% wood biomass, utilising the by-

products of its own process. Not all the required data concerning the source of the

wood biomass are currently available, so it is not yet possible to verify that the activities

are taxonomy-aligned.

CCM 4.20. Cogeneration of heat/cool and power from bioenergy

The Koskipower boiler plant at Koskisen’s Tehdastie plant area produces heat and

electricity from 97.3% wood biomass. In special cases (e.g. during maintenance work),

the boiler plant may also fire fossil fuels, but this proportion has not been calculated in

the taxonomy eligibility ratio. Not all the required data concerning the source of the

wood biomass are currently available, so it is not yet possible to verify that the activities

are taxonomy-aligned.

CCM 5.1. Construction, expansion and operation of water collection,

treatment and supply systems

During the financial year 2024, a significant investment was made in the stormwater

system of the new log yard. In addition, investments have been made in emergency

showers at the plywood and chipboard factories. The technical energy consumption

data required to prove taxonomy alignment were not yet available.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 55

CCM 7.3. Installation, maintenance and repair of energy efficiency

equipment

Koskisen’s properties and outdoor areas have seen Investments in the installation of

more energy-efficient LED lights, among other things. In addition, the electricity

metering and analysis system has been updated. For the time being, in the absence of

the required data, it has not been possible to demonstrate all of the technical screening

criteria for avoiding sustainability harm.

CE 4.1. Provision of IT/OT data-driven solutions

During the year under review, Koskisen invested in a thickness gauge for plywood

sanding and quality control camera for coated panels, renewed the logic of the drying

chambers and updated the bevel camera, making it possible to improve resource

efficiency and thus contribute to the goals of the transition to a circular economy.

Incomplete investments in the AI modernisation of the strip sealing camera at the

Panel Industry Järvelä plants have also been considered to be compatible with this

taxonomy-eligible activity category. Not all of the validation data required for the

taxonomy-alignment of data-driven IT/OT solutions promoting the transition to a

circular economy are yet available.

CCM 7.7. Acquisition and ownership of buildings

During the year under review, Koskisen purchased a residential property in the noise

area affected by the Järvelä production plant. The building lacks the energy efficiency

data required for taxonomy alignment.

The EU taxonomy requires companies to disclose how they have avoided duplicate

accounting when allocating the shares of turnover, capital expenditure (CapEx) and

certain operating expenses (OpEx) to economic activities (numerator items) that are

taxonomically eligible (and aligned). The activities listed above correspond to the cost

and income items of the business areas that are separately monitored in Koskisen’s

accounting, which makes it possible to allocate financial figures to parts of operations

that are considered taxonomy eligible. If an activity can be considered to be taxonomy-

eligible from the perspective of promoting more than one environmental objective, the

environmental objective perspective that best corresponds to the nature of the activity

has been selected from the criteria and the numerator item of the applicable financial

ratio has been allocated to the activity in question as a whole.

Minimum safeguards

By minimum safeguards, the Taxonomy Regulation refers to a company’s procedures

to ensure that its operations and supply chain comply with a) OECD Guidelines for

Multinational Enterprises, b) UN Guiding Principles on Business and Human Rights

(UNGP), c) the declaration on Fundamental Principles and Rights at Work of the

International Labour Organisation (ILO) and d) the United Nations Universal

Declaration on Human Rights.

In practice, adherence to the above principles requires the company to have in place

administrative processes for a) the realisation of human rights and good working

conditions, combatting corruption and bribery, safeguarding fair competition and the

payment of taxes to avoid violations, and that the company or its management has not

been convicted of illegal activity in relation to the topics.

Koskisen has no illegal violations against the aforementioned matters and the Group’s

current governance structures, practices and controls are designed to avoid negative

impacts and, if necessary, remedy them. Koskisen invests in many ways in its social

responsibility priorities: occupational safety, employee well-being and maintaining

good and fair partnerships with customers and forest owners. The aim is to prevent

negative impacts through various policies, guidelines and risk assessments. Various

indicators of occupational safety and customer satisfaction are monitored and the

results are reported on an annual basis. Koskisen also has a Whistleblowing channel on

its website, which can be used to anonymously report any violations. For more

information, see section GOV-4 Statement on due diligence of the Sustainability

Statement.

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 56

PROPORTION OF TURNOVER FROM PRODUCTS OR SERVICES ASSOCIATED

WITH TAXONOMY-ALIGNED ECONOMIC ACTIVITIES


				Substantial contribution criteria						DNSH criteria (Does Not Significantly Harm)
Economic activities	Code(s)	Absolute turnover	Proportion of turnover, 2024	Climate change mitigation	Climate change adaptation	Water and marine resources	Pollution	Circular economy	Biodiversity and ecosystems	Climate change mitigation	Climate change adaptation	Water and marine resources	Pollution	Circular economy	Biodiversity and ecosystems	Minimum safeguards	Proportion of turnover, 2023	Category (enabling activity)	Category (transitional activity)
		MEUR	%	%	%	%	%	%	%	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T
TAXONOMY-ELIGIBLE ACTIVITIES
Environmentally sustainable activities (Taxonomy-aligned)
Turnover of environmentally sustainable activities (Taxonomy- aligned)		-	-%	-%	-%	-%	-%	-%	-%	Y	Y	Y	Y	Y	Y	Y	-%	-%	-%
Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Forest management	CCM 1.3.	19.6	7.0%														6.6%
Manufacture of energy efficiency equipment for buildings	CCM 3.5.	7.5	2.6%														3.3%
Manufacture of other low-carbon technologies	CCM 3.6.	0.1	-%														-%
Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)		27.1	9.6%														9.9%
Turnover of taxonomy eligible activities		27.1	9.6%														9.9%

TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities		255.2	90.4%
TOTAL		282.3	100%

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 57

PROPORTION OF CAPEX FROM PRODUCTS OR SERVICES ASSOCIATED WITH

TAXONOMY-ALIGNED ECONOMIC ACTIVITIES


				Substantial contribution criteria						DNSH criteria (Does Not Significantly Harm)
Economic activities	Code(s)	Capital expenditure	Share of capital expenditure, 2024	Climate change mitigation	Climate change adaptation	Water and marine resources	Pollution	Circular economy	Biodiversity and ecosystems	Climate change mitigation	Climate change adaptation	Water and marine resources	Pollution	Circular economy	Biodiversity and ecosystems	Minimum safeguards	Share of capital expenditure, 2023	Category (enabling activity)	Category (transitional activity)
		MEUR	%	%	%	%	%	%	%	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T
TAXONOMY-ELIGIBLE ACTIVITIES
Environmentally sustainable activities (Taxonomy-aligned)
Electricity generation using solar photovoltaic technology	CCM 4.1.	-	-%	100%	-%	-%	-%	-%	-%	Y	Y	Y	Y	Y	Y	Y	4.0%
CapEx of environmentally sustainable activities (Taxonomy-aligned)		-	-%	-%	-%	-%	-%	-%	-%	Y	Y	Y	Y	Y	Y	Y	4.0%	-%	-%
Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Renovation of existing buildings	CE 3.2.	1.0	2.9%														4.0%
Construction, extension and operation of water collection, treatment and supply systems	CCM 7.3.	0.5	1.5%														0.1%
Acquisition and ownership of buildings	CCM 1.3.	0.4	1.1%														-%
Installation, maintenance and repair of energy efficiency equipment		0.1	0.4%														1.1%
Manufacture of other low-carbon technologies	CE 4.1.	0.1	0.3%														-%
Provision of IT/OT data-driven solutions	CCM 5.1.	0.1	0.3%														0.5%
Forest management	CCM 4.24.	-	-%														0.8%
CapEx of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)		2.2	6.6%														6.5%
CapEx of Taxonomy eligible activities		2.2	6.6%														10.5%

TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy eligible activities		30.7	93.4%
TOTAL		32.9	100%

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 58

PROPORTION OF OPEX FROM PRODUCTS OR SERVICES ASSOCIATED WITH

TAXONOMY-ALIGNED ECONOMIC ACTIVITIES


				Substantial contribution criteria						DNSH criteria (Does Not Significantly Harm)
Economic activities	Code(s)	Operating expenditure	Share of operating expenditure, 2024	Climate change mitigation	Climate change adaptation	Water and marine resources	Pollution	Circular economy	Biodiversity and ecosystems	Climate change mitigation	Climate change adaptation	Water and marine resources	Pollution	Circular economy	Biodiversity and ecosystems	Minimum safeguards	Share of operating expenditure, 2023	Category (enabling activity)	Category (transitional activity)
		MEUR	%	%	%	%	%	%	%	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T
TAXONOMY-ELIGIBLE ACTIVITIES
Environmentally sustainable activities (Taxonomy-aligned)
OpEx of environmentally sustainable activities (Taxonomy- aligned)		-	-%	-%	-%	-%	-%	-%	-%	Y	Y	Y	Y	Y	Y	Y	-%	-%	-%
Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Cogeneration of heat/cool and power from bioenergy	CCM 4.20.	1.4	10.5%														8.1%
Production of heat/cool from bioenergy	CCM 4.24.	1.4	10.3%														10.1%
Renovation of existing buildings	CE 3.2.	0.2	1.3%														1.1%
Forest management	CCM 1.3.	0.1	0.5%														0.5%
Remediation of contaminated sites and areas	PPC 2.4.	0.1	0.5%														0.3%
Construction, extension and operation of water collection, treatment and supply systems	CCM 5.1.	-	0.3%														-%
Manufacture of other low-carbon technologies	CCM 3.6.	-	0.1%														0.1%
Electricity generation using solar photovoltaic technology	CCM 4.1.	-	-%														-%
OpEx of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)		3.2	23.5%														20.2%
OpEx of Taxonomy eligible activities		3.2	23.5%														20.2%

TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non eligible activities		10.4	76.5%
TOTAL		13.6	100%

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 59

Additional information about taxonomy ratios

Absolute turnover

The taxonomy-eligible turnover for the 2024 financial period consisted of invoicing in

accordance with customer agreements for products and services deemed taxonomy-

eligible described above, making up the numerator item of the financial ratio. The

denominator of the ratio is the Group’s total revenue for 2024. For more information,

see the financial statements Note 2. Segment information and revenue.

Capital expenditure

The taxonomy-eligible CapEx capital expenditure (CapEx ratio numerator) consists of

capitalised increases in tangible and intangible capital related to activities assessed as

taxonomy eligible during the financial period before depreciation, impairment and

remeasurement. The denominator part of the ratio includes the corresponding capital

expenditure for the financial year in its entirety. During the financial year, Koskisen did

not have a formal CapEx plan aimed at aligning its operations with the taxonomy in the

future. For more information, see financial statements Notes 12. Property, plant and

equipment, 14. Lease agreements and 15. Intangible assets.

Operating expenditure

The taxonomy eligible proportion of the OpEx operating expenses referred to in the

Delegated Act on the reporting format supplementing the EU Taxonomy Regulation

has been calculated in terms of the uncapitalised costs essential for the continuity of

operations assessed as taxonomy-eligible connected to maintenance and repairs of

buildings, machinery and equipment, short-term leasing contracts and research and

development expenses. The denominator part of the ratio includes the corresponding

capital expenditure referred to in the Taxonomy Regulation for the financial year in

its entirety.

Koskisen had no direct links to nuclear or fossil gas-based energy production within the

meaning of Delegated Regulation (EU) 2022/1214.

ACTIVITIES IN THE FOSSIL GAS AND NUCLEAR ENERGY SECTORS


Line	Nuclear energy-related activities
1	The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.	NO
2	The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.	NO
3	The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.	NO


Line	Fossil gas-related activities
4	The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.	NO
5	The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.	NO
6	The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cooling using fossil gaseous fuels.	NO

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ESRS E1 Climate change

Transition plan for climate change mitigation

E1-1

Koskisen has started to prepare a transition plan for climate change mitigation and

plans to deploy it by the end of 2025.

During the preparation process, Koskisen has discussed the areas required by the

transition plan and the related disclosure requirements in detail.

The strategy and sustainability programme approved by the company’s Board of

Directors in 2024 includes measurable targets for mitigating climate change, but does

not yet include target values for reducing greenhouse gas emissions in accordance

with the Paris Agreement for 2030 and 2050.

Material impacts, risks and opportunities and their

interaction with the strategy and business model

ESRS 2 / SBM-3

Koskisen has carried out a climate change resilience analysis to assess the exposure of

business operations and assets to the impacts of climate change. The climate change

resilience analysis carried out aims to take into account all relevant functions

throughout the value chain and no material physical or transition risks have been

excluded.

The identification of risks related to climate change began in autumn 2023, and the

work on the scenario and resilience analysis continued in autumn 2024. The resilience

analysis has been carried out by the Group sustainability team. With regard to the

identified physical risks and transition opportunities and risks, activities and assets

affected by them have been specified and risk mitigation measures have been

described.

The transition to a lower-carbon economic system is a macroeconomic megatrend that

strongly supports Koskisen’s strategy, as it increases the demand for renewable low-

carbon materials in Koskisen’s customer segments. The increase in the production

volumes of low-carbon products increases absolute energy consumption, but

correspondingly, relative energy efficiency improves, enabled by existing and future

technology investments. Most of the energy used by Koskisen is based on the use of

renewable wood-based fuel generated as a side stream of its own production.

The time horizons used in the resilience and scenario analysis are short term (< 1 year),

medium term (1–5 years) and long term (> 5 years). The time horizons are similar to

those for the assessment of climate-related physical and transition-related risks, but

differ from the target year 2027 of the emission reduction targets set in Koskisen’s

sustainability programme.

The mitigation measures have been reviewed in relation to the results of the double

materiality analysis, but no review of resources has been carried out for individual

measures.

The resilience analysis does not include any significant uncertainties, and the activities

do not include any assets or business activities at risk that would have been specifically

taken into account in defining the company’s strategy, investment decisions and

current and planned mitigation measures.

Koskisen’s business model and strategy are structurally well positioned to adapt to

climate change in the short, medium and long term. High adaptability is based on

three key factors: an integrated operating model and its continuous development

through investments, a renewable main raw material and its sustainable sourcing, and

low-carbon end products. Koskisen also has long-term expertise and know-how in its

own operations and value chain, which is actively utilised as the operating

environment changes.

The integrated operating model covers the value chain from forest management to

final products. This enables flexible adaptation to changing conditions and efficient use

of resources. The renewable main raw material, wood, provides a sustainable basis for

business. Koskisen invests in product development and new innovation in the field of

low-carbon solutions, actively develops forest management methods and strengthens

cooperation with forest owners.

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From the point of view of the continuity of operations, it is essential to ensure

sustainable wood procurement to secure the supply of raw materials in the future. The

most significant uncertainties related to strategy and business adaptation are related

to significant changes in the political operating environment and regulation.

Description of the processes to identify and assess material

climate-related impacts, risks and opportunities

ESRS 2 / IRO-1

Climate-related scenario analysis

Koskisen carried out an assessment of climate-related threats, risks and opportunities

as a scenario analysis in accordance with the TCFD framework in 2023. Key people from

the sustainability and communications team and finance, as well as people who have

expertise in carbon footprint calculation and resource circulation participated in the

implementation of the analysis. The inputs used in the process included the

assessment pursuant to the TCFD framework and the company’s assessment of

environmental impacts and international definitions of climate work. The scenario

analysis covered all of the Group’s operations, short-term, medium-term and long-term

reviews, Koskisen’s business and assets, as well as activities throughout the value chain.

The time horizon of the scenario analysis extends to 2050.

Scenarios used

SSP1-2.6: Highly effective measures to limit emissions. Global CO2 emissions should turn

to a clear decline already in the 2020s and be even slightly negative by the end of the

century. After the middle of the century, the CO2 concentration will peak at around 470

ppm, but then slowly begin to decrease. The IPCC report estimates that by the end of

this century, the global average temperature would have increased by 1.8°C

(uncertainty range 1.3–2.4°C) compared to the pre-industrial period.

SSP2-4.5: Semi-successful climate policy. CO2 emissions will initially increase slightly,

but will decline from 2040. By the end of the century, the increase in concentration in

the atmosphere will reverse and the concentration will be approximately twice as high

as the pre-industrial level. The estimated average global temperature rise at the end of

this century will be 2.7°C (2.1–3.5°C).

SSP5-8.5: Efforts to limit emissions fail completely. CO2 emissions grow rapidly, more

than tripling before the end of the century. The CO2 concentration would then increase

and even quadruple compared to the pre-industrial period, and the strong growth

would continue from 2100 onwards. The average global temperature rise at the end of

this century is 4.4°C (3.3–5.7°C).

Physical risks

The physical climate-related risks faced by Koskisen are mainly related to the

procurement of wood and the availability of wood raw material. These represent a risk

to business in the upstream value chain.

The impacts of the IPCC’s climate scenario SSP5-8.5 have been taken into account in

the assessment process of physical risks related to climate change so that the global

temperature rise would be 4.4°C. This high-risk climate scenario is a science-based

scenario that is commonly used to assess the physical risks of climate change. All

physical risks have been assessed in relation to different scenarios.

Climate-related hazards that affect the company’s operations have been identified in

accordance with the classification of climate-related hazards in Commission Delegated

Regulation (EU) 2021/2139 and the exposure of various assets and business operations to

these hazards has been assessed in the short (< 1 year), medium (1–5 years) or long term

(>5 years). Physical risks mainly concern raw material procurement, which affects the

entire business.

Koskisen’s most significant short-term physical risks are related to sudden weather-

related events and their effects on the availability of wood raw material. Acute climate

change-related events can reduce the duration of the soil frost period and make

harvesting more difficult. This has a direct impact on the availability of wood and

increases costs. In addition, extreme weather events such as storms and floods can

cause significant disruptions to production volumes. Risks related to power outages are

also acute and can lead to production stops and reduced production volumes, which

has a direct impact on the business.

In the medium term, the chronic physical changes caused by climate change are

emphasised. High temperatures and drought cause slow growth and forest damage,

which affects the availability and quality of wood. These factors increase the price of

wood raw material and reduce profitability. In addition, the loss of biodiversity

Koskisen Corporation Report of the Board of Directors and Financial Statements 2024 | 62

accelerated by climate change affects the natural ability of forests to fight diseases and

pests, which can lead to a reduction in the amount of wood.

In the long term, extreme weather events such as storms, cyclones and floods, which

affect the availability and price of wood raw material, emerge as the most significant

risk. These events can have a significant impact on costs and profitability over the

longer term.

Transition risks and opportunities

Koskisen has not identified any assets or businesses that would not be aligned with the

carbon neutrality target in the light of the transition events.

The process of assessing transition risks and opportunities related to climate change

takes into account the impacts of the IPCC climate scenario SSP1-2.6 so that the global

temperature rise would be 1.8°C. This scenario is based on the assumption of successful

climate action and constitutes the lowest temperature rise scenario of the IPCC climate

scenarios. Transition risks have been identified in the short (<1 year), medium (1–5 years)

or long term (>5 years) and their effects on Koskisen’s business and assets have

been assessed.

Risks related to transition events

In the short term, immediate cost effects are particularly emphasised. Rising prices of

fossil fuels and energy, as well as taxes and fees related to these, directly increase

operational costs. The high price of biofuels also affects operational costs. At the same

time, the company faces challenges related to financing, as the availability of financing

can decline and its price increase.

In the medium term, the changes required for adaptation are emphasised. The

transition to renewable energy requires significant investments, especially in transport

and harvesting equipment. Regulatory changes at EU and national level in the

transition to a fossil-free society affect the requirements for the use of chemicals in

production and increase costs. At the same time, climate change mitigation and the

protection of biodiversity are becoming increasingly important themes in forest

management, which can affect the willingness of forest owners to sell timber and thus

weaken the availability of raw materials.

Long-term risks are related to fundamental changes in the operating environment. EU

and national policy changes can significantly limit the supply of wood and lead to a

decrease in production volumes. Tighter regulation of carbon dioxide emissions will

increase costs throughout the value chain. The rapid development of technology

creates uncertainty in investment decisions, as there is a risk of committing to

technology that does not prove optimum in the long term.