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Stora Enso Oyj
Financial Report 2021
Stora Enso
Salmisaarenaukio 2
P.O. Box 309
FI-00101 Helsinki, Finland
Tel: + 358 20 46 111
www.storaenso.com
Business ID 1039050-8
VAT No FI 10390508
Contents
Report of the Board of Directors (unaudited)
Stora Enso introduction
Markets and deliveries
Operational key figures, items affecting comparability and other non-IFRS measures
Financial results – Group
Financial results – Segments
Investments and capital expenditure
Innovation, research and development
Non-financial information
EU taxonomy
Environmental liabilities
Risks and risk management
Climate-related financial disclosures (TCFD)
Corporate governance
Legal proceedings
Changes in Group management
Share capital
Outlook and short-term risks
Annual General Meeting
Proposal for the distribution of dividend
Non-IFRS measures
Calculation of key figures
Consolidated financial statements (audited)
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated cash flow statement
Consolidated cash flow statement
Statement of changes in equity
Notes to the consolidated financial statements (audited)
Note 1 Accounting principles
Note 2 Critical accounting estimates and judgements
Note 3 Segment information
Note 4 Acquisitions and disposals
Note 5 Other operating income and expense
Note 6 Personnel expenses
Note 7 Board and executive remuneration
Note 8 Net financial items
Note 9 Income taxes
Note 10 Depreciation, amortisation and impairment charges
Note 11 Intangible assets and property, plant and equipment
Note 12 Forest assets
Note 13 Equity accounted investments
Note 14 Equity instruments
Note 15 Emission rights and other non-current assets
Note 16 Inventories
Note 17 Operative receivables
Note 18 Shareholders' equity
Note 19 Non-controlling interests
Note 20 Post-employment benefits
Note 21 Employee variable compensation and equity incentive schemes
Note 22 Provisions
Note 23 Operative liabilities
Note 24 Financial risk management
Note 25 Fair values
Note 26 Debt
Note 27 Derivatives
Note 28 Cumulative translation adjustment and equity hedging
Note 29 Commitments and contingencies
Note 30 Principal subsidiaries and joint operations
Note 31 Related party transactions
Note 32 Earnings per share
Parent company Stora Enso Oyj financial statements (audited)
Notes to the parent company financial statements (audited)
Signatures for the financial statements
Auditor's Report
The official audited financial statements in Finnish and an unofficial Swedish translation are available at  storaenso.com/download-centre
The audit firm PricewaterhouseCoopers Oy has provided an independent auditor’s reasonable assurance report only on Stora Enso’s ESEF Financial Statements in Finnish in
accordance with ISAE 3000 (Revised).
              2
Report of the Board of Directors
The report of the Board of Directors is unaudited.
Introduction to Stora Enso
Part of the global bioeconomy, Stora Enso is a leading provider of renewable products in packaging, biomaterials, wooden construction
and paper, and one of the largest private forest owners in the world. We believe that everything that is made from fossil-based materials
today can be made from a tree tomorrow. Sustainability and responsible business practices are deeply embedded in our strategy.
Our low-carbon, fiber-based products are renewable and recyclable. They offer solutions to climate change and promote positive
impacts on the environment, thus enabling our customers to become more eco-friendly.
Stora Enso had 23,071 employees on average during 2021. Our sales in 2021 were EUR 10.2 billion, with an operational EBIT of
EUR 1,528 million. Stora Enso shares  are listed at the Helsinki (STEAV, STERV) and Stockholm (STE A, STE R) stock exchanges. In
addition, the shares are traded in the USA as ADRs.
Markets and deliveries
The demand for cartonboard globally remained strong over the year. Even though the pandemic presented challenges for a certain
number of Stora Enso's end use segments dependent on travel and social gathering, it boosted demand in essential goods such as
pharma and food. Demand in the Asian region was stronger than the more mature European and North American markets.
In 2021, global demand for containerboard increased strongly, driven by elevated goods consumption, growth in e-commerce, the
recovery of manufacturing back to pre-pandemic levels, and inventory replenishing. Containerboard consumption increased very strongly
in North America and Europe, while it increased more moderately in Asia due to weaker growth in China. 
European corrugated demand in our main markets experienced a strong 3.7% growth mainly driven by industrial recovery and a
significant surge in e-commerce. The prices in the containerboard market were at a very high level which means there was more demand
than supply in corrugated packaging. The largest sales were in retail and e-commerce and in the home and garden sector.
During 2021, global demand for chemical market pulp declined by 2.8%, though it maintained the 2019 pre-pandemic levels. Softwood
pulp deliveries decreased by 3.4% and hardwood pulp deliveries by 3.7% compared to 2020, whereas unbleached kraft pulp (UKP)
deliveries increased by 19%. UKP continued to benefit from the OCC (old corrugated cardboard) import ban in China. Global market pulp
demand has been strong in Europe thanks to the rebound in printing and writing paper production, which has more than offset the decline
in tissue output, while demand reduced in Asia and North America. Destocking tissue and hygiene consumer inventories and the stronger
than expected slowdown in the Chinese economy combined with global logistical challenges slowed down the global pulp demand. In
2021, the global chemical market pulp capacity increased by 1.5%, the softwood capacity increased by 0.4%, hardwood capacity by
1.1% and UKP capacity 18.9%. The overall shipment-to-capacity balance stood at 89%, 4 percent points down from 2020.
By the end of 2021, softwood pulp inventories remained elevated while hardwood inventories were at the average level. During 2021
global pulp markets experienced generally strong prices.
According to UNECE forest estimate, global sawnwood consumption grew by some 8% during 2021. Reduced production in 2020 led
into price increases in North America during the latter part of 2020, and high price levels continued during the first half of 2021.
Exceptionally high price increases spread to other markets and increased  sawn goods prices to record levels during the second and
third quarters of 2021. In Europe, the market consumption increase was 8% in softwood sawnwood demand, while in North America the
increase was estimated to 8% as well, yet with a clearly weakening year end that may reduce the increase. In the USA , the single-family
market has been the main driver for the demand in sawnwood. In Japan,  inventories in the first half of 2021 were relatively low, but in the
latter part of the year increased imports improved the availability. The housing market has remained active, and in Australia the housing
demand has remained strong throughout 2021, based on strong subsidy programs with improving prices in the second half the year.
In 2021, the paper markets  continued to be turbulent. Paper demand recovered modestly from the Covid-19 demand shock of 2020.
Prices declined during the first half of the year but started to recover as a result of heavily increased costs and the improved supply
demand balance during the second half of 2021. The supply demand balance improved as a result of significant capacity closures and
conversions combined with modest demand recovery. Profitability remained challenged due to heavily increased costs, especially in
energy and Paper for Recycling. European paper demand was 1% stronger in 2021 compared to 2020, demand increased by 2% in
North America  and in Asia demand remained stable compared to 2020. In 2021, global paper consumption was 1% higher than in 2020.
Estimated consumption of board, pulp, sawn softwood, and paper in 2021
Tonnes, million
Europe
North America
Asia and Oceania
Consumer board
10.9
9.5
28.4
Containerboard
36.2
34.5
90.0
Corrugated board (billion m2)1
10.9
n/a
n/a
Chemical market pulp
17.0
7.7
35.0
Sawn softwood (million m3)
101.2
108.2
n/a
Newsprint
3.8
1.6
5.9
Uncoated magazine paper
2.4
0.8
0.1
Coated magazine paper
3.1
1.4
2.1
Coated fine paper
3.2
2.4
9.0
Uncoated fine paper2
6.1
5.8
28.4
1 European focus markets (Baltics, FI, PL, RU, SE)
2 PPPC WFU grade definition in China has been changed to include also non-wood based pulps which equals to approximately 9.0 million tons of additional demand.
Source: Afry Smart, ICCA, RISI, Numera, Euro-Graph, PPPC, EPIS, Hawkins Wright, Stora Enso, UNECE
Unaudited 3
Production and external deliveries
2021
2020
Change %
2021–2020
Board deliveries, 1,000 tonnes
4,258
3,712
14.7%
Board production, 1,000 tonnes
4,685
4,063
15.3%
Corrugated packaging European deliveries, million m2
949
902
5.2%
Corrugated packaging European production, million m2
1,049
1,004
4.4%
Market pulp deliveries, 1,000 tonnes
2,495
2,443
2.1%
Wood product deliveries, 1,000 m3
4,803
4,692
2.4%
Wood deliveries, 1,000 m3
12,091
11,469
5.4%
Paper deliveries, 1,000 tonnes
2,872
3,106
-7.5%
Paper production, 1,000 tonnes
2,776
3,034
-8.5%
The Group’s board deliveries totalled 4,258,000 tonnes, which was 546,000 tonnes, or 14.7% higher compared to a year ago. This was
due to strong board demand and ramp-up of Oulu containerboard. Corrugated packaging European deliveries increased by 47 million m2
or 5.2% to 949 million m2 mainly due to higher deliveries in Poland and Russia. Market pulp deliveries increased by 52,000 tonnes, or
2.1%, to record high 2,495,000 tonnes, mainly due to higher market pulp deliveries in Biomaterials. Wood product deliveries increased by
111,000 m3 or 2.4% to 4,803,000 m3. Wood deliveries increased 622,000 m3 or 5.4% to 12,091 m3 supported by higher deliveries in
Finland and Sweden. Paper deliveries totalled 2,776,000 tonnes, down 234,000 tonnes, or 7.5%, from 2020, mainly due to structural
changes.
Operational key figures, items affecting comparability and other non-IFRS measures
The list of Stora Enso’s non-IFRS measures and the calculation of our key figures are presented at the end of the Report of the Board of
Directors. See also the chapter Non-IFRS measures at the end of this report.
Financial results – Group
Sales increased by 18.8%, or EUR 1,611 million, to EUR 10,164 (8,553) million, mainly driven by higher delivery volumes in all divisions
and significantly higher sales prices in all divisions except Paper. Structural changes decreased sales by EUR 172 million, with the main
changes being the Veitsiluoto and Kvarnsveden paper site closures and the Oulu paper site conversion into kraftliner production.
Operational EBIT more than doubled to EUR 1,528 (650) million, up 135.1%. Clearly higher sales prices and higher total volumes
improved profitability in all other divisions except Paper. The operational EBIT margin of 15.0% was at an all-time high.
Variable costs were EUR 430 million higher, mainly due to higher wood, paper for recycling (PfR) and energy costs. Fixed costs
increased by EUR 104 million, mainly due to higher personnel costs and increased maintenance activity. The net foreign exchange rate
impact decreased operational EBIT by EUR 102 million. Capital gain from forest land sales in Hylte in Sweden increased the operational
EBIT by EUR 74 million and the impact from closed units was EUR 72 million positive.
Earnings per share increased by 102.1% to EUR 1.61 (0.79), and earnings per share excluding fair valuations increased by 165.0% to
EUR 1.19 (0.45).
The IFRS operating profit includes a positive net effect of EUR 328 (positive 412) million from IAS 41 forest valuation from
subsidiaries and joint operations. The positive impact comes mainly from the increase in fair valuation in Stora Enso owned forests in
Sweden, mainly driven by increased standing stock volume estimate as well as higher market prices. There is also a positive net effect of
EUR 84 (negative 52) million from Stora Enso’s share of net financial items, taxes and IAS 41 forest valuations of equity accounted
investments. The positive impact comes mainly from the increase in fair valuation in Stora Enso's 41% share of the equity accounted
investment Tornator's forests in Finland.
Tangible and intangible asset impairments amounted to EUR 149 (57) million and there were no impairment reversals.
The Group recorded items affecting comparability (IAC) with a negative impact of EUR 354 (negative 90) million on its IFRS operating
profit and a positive impact of EUR 58 (positive 19) million on income taxes. The IAC relate mainly to the restructuring in the Paper
division.
The IFRS operating profit was EUR 1,568 (922) million.
Segment share of operational EBIT, IAC, fair valuations and non-operational items and operating profit/loss
Year Ended 31 December
Operational EBIT
IAC, Fair Valuations and Non-
Operational items
Operating Profit/Loss
EUR million
2021
2020
2021
2020
2021
2020
Packaging Materials
556
403
-4
-12
552
391
Packaging Solutions
26
33
-3
-5
23
28
Biomaterials
495
8
11
-41
506
-32
Wood Products
364
114
-1
-3
363
111
Forest
267
162
355
360
622
522
Paper
-124
-38
-299
-20
-423
-58
Other
-48
-35
-19
-6
-67
-42
Total
1,528
650
39
272
1,568
922
Net financial items
-149
-150
Profit before Tax
1,419
773
Income tax expense
-151
-156
Net Profit
1,268
617
Operational EBIT comprises the operating profit excluding items affecting comparability (IAC) and fair valuations from the segments and Stora Enso’s share of the operating profit of
equity accounted investments (EAI), also excluding items affecting comparability and fair valuations.
IAC =Items affecting comparability are exceptional transactions that are not related to recurring business operations. The most common IAC are capital gains and losses, impairments
or impairment reversals, disposal gains and losses relating to Group companies, provisions for planned restructurings, environmental provisions, changes in depreciation due to
restructuring and penalties. Items affecting comparability are normally disclosed individually if they exceed one cent per share.
Fair valuations and non-operational items include CO2 emission rights, non-operational fair valuation changes of biological assets, adjustments for differences between fair value
and acquisition cost of forest assets upon disposal and the Group’s share of income tax and net financial items of EAI. The adjustments for differences between fair value and
acquisition cost of forest assets upon disposal are a result of the fact that the cumulative non-operational fair valuation changes of disposed forest assets were included in previous
periods in IFRS operating profit (biological assets) and other comprehensive income (forest land) and are included in operational EBIT only at the disposal date.
Unaudited                      4
Items affecting comparability, fair valuations and non-operational items
Year Ended 31 December
EUR million
2021
2020
Impairments and impairment reversals
-141
-72
Restructuring costs excluding impairments
-227
-23
Acquisitions and disposals
11
6
Other
4
0
Items affecting comparability
-354
-90
Fair valuations and non-operational items
394
362
Total
40
271
Segment share of operative assets, operative liabilities and operating capital
Year Ended 31 December
Operative Assets
Operative Liabilities
Operating Capital
EUR million
2021
2020
2021
2020
2021
2020
Packaging Materials
4,120
3,684
914
721
3,206
2,962
Packaging Solutions
422
372
176
132
245
240
Biomaterials
2,755
2,460
236
214
2,520
2,246
Wood Products
955
766
277
218
678
549
Forest
7,131
6,566
435
372
6,696
6,194
Paper
884
1,196
761
700
123
496
Other and eliminations
970
420
131
115
839
305
Total
17,237
15,464
2,930
2,471
14,307
12,993
Key figures
2021
2020
2019
Sales, EUR million
10,164
8,553
10,055
Operational EBIT, EUR million
1,528
650
1,003
Operational EBIT margin
15.0%
7.6%
10.0%
Operating profit (IFRS), EUR million
1,568
922
1,305
Operating margin (IFRS)
15.4%
10.8%
13.0%
Return on equity (ROE)
13.0%
7.6%
12.1%
Operational ROCE
12.4%
5.8%
10.3%
Operational ROCE excl. Forest division
17.8%
7.0%
12.8%
Debt/equity ratio
0.22
0.33
0.43
EPS (basic), EUR
1.61
0.79
1.12
EPS excluding FV, EUR
1.19
0.45
0.61
Dividend and distribution per share1, EUR
0.55
0.30
0.30
Payout ratio, excluding FV
46.3%
66.7%
49.2%
Payout ratio (IFRS)
34.3%
38.0%
26.8%
Dividend and distribution yield, (R share)
3.4%
1.9%
2.3%
Price/earnings (R share), excluding FV
13.60
34.78
21.23
Equity per share, EUR
13.55
11.17
9.42
Market capitalisation 31 Dec, EUR million
12,809
12,383
10,328
Closing price 31 Dec, A/R share, EUR
16.60/16.14
15.90/15.65
13.55/12.97
Average price, A/R share, EUR
16.68/15.70
12.06/11.52
12.88/11.05
Number of shares 31 Dec (thousands)
788,620
788,620
788,620
Trading volume A shares (thousands)
1,750
4,662
1,299
% of total number of A shares
1.0%
2.6%
0.7%
Trading volume R shares (thousands)
422,493
605,233
679,475
% of total number of R shares
69.0%
98.8%
111.0%
Average number of shares, basic (thousands)
788,620
788,620
788,620
Average number of shares, diluted (thousands)
789,126
789,182
789,533
1 See the Board of Directors' proposal for dividend distribution.
Net financial expenses at EUR 149 (150) million were EUR 1 million lower than a year ago. Net interest expenses, at EUR 124 million,
decreased by EUR 8 million, mainly as a result of the lower average interest expense rate on borrowings and the lower amount of gross
debt. Other net financial expenses, at EUR 22 million, were EUR 13 million higher than a year ago, mainly due to the early repayment of
interest-bearing liabilities. The net foreign exchange impact in respect of cash equivalents, interest-bearing assets and liabilities and
related foreign-currency hedges amounted to a loss of EUR 2 (loss of EUR 8) million, mainly due to a revaluation of foreign currency net
debt in subsidiaries and joint operations located in China, Brazil, Poland and Russia.
The net tax charge totalled EUR 151 (156) million, equivalent to an effective tax rate of 10.7% (20.1%), as described in more detail in
Note 9 Income taxes, of the consolidated financial statements.
The gain attributable to non-controlling interests was EUR 3 (loss EUR  9) million, leaving a profit of EUR 1,266 (626) million
attributable to Company shareholders.
Earnings per share excluding fair valuations were EUR 1.19 (0.45). Operational return on capital employed was 12.4% (5.8%).
The Group capital employed was EUR 12,976 million on 31 December 2021, an increase of EUR 1,262 million, mainly due to the
increase of the fair valuation of forest assets in Sweden and shares in Pohjolan Voima.
Unaudited                      5
Breakdown of Capital Employed change
EUR million
Capital Employed
31 December 2020
11,714
Capital expenditure excluding investments in biological assets less depreciation
18
Investments in biological assets less depletion of capitalised silviculture costs
-10
Impairments and reversal of impairments
-149
Fair valuation of forest assets
621
Unlisted securities (mainly PVO)
504
Equity accounted investments
125
Net liabilities in defined benefit plans
125
Operative working capital and other interest-free items, net
-84
Net tax liabilities
-83
Translation difference
157
Other changes
38
31 December 2021
12,976
Financing
Cash flow from operations was EUR 1,752 (1,344) million and cash flow after investing activities was EUR 1,101 (680) million. Working
capital increased by EUR 25 (decreased 195) million, inventories increased by EUR 196 million and short-term receivables by EUR 288
million. Trade payables increased by EUR 377 million and thus had a positive impact on working capital. Payments related to the
previously announced provisions were EUR 101 million.
Operative cash flow
EUR million
2021
2020
Operational EBITDA
2,184
1,270
IAC on operational EBITDA
-213
-25
Other adjustments
-194
-97
Change in working capital
-25
195
Cash Flow from Operations
1,752
1,344
Cash spent on fixed and biological assets
-645
-661
Acquisitions of equity accounted investments
-6
-2
Cash Flow after Investing Activities
1,101
680
At the end of the year, Group net interest-bearing liabilities were EUR 2,309 (2,921) million. The decrease in net interest-bearing liabilities
was mainly driven by a solid cash flow from operations after investments and dividend payments. Cash and cash equivalents net of bank
overdrafts decreased to EUR 1,480 (1,655) million. The net debt/equity ratio at 31 December 2021 decreased to 0.22 (0.33). The ratio of
net debt to the last 12 months' operational EBITDA decreased to 1.1 (2.3) due to lower net debt and higher operational EBITDA. The
average interest rate on borrowings for the full year 2021 decreased to 3.0% (3.2%) with a run-rate of 3.1% as per the end of the fourth
quarter.
In December 2021 Stora Enso successfully signed a EUR 700 million revolving credit facility linked to sustainability targets. The
committed revolving credit facility was fully undrawn at the year-end. The previous EUR 600 million revolving credit facility was cancelled
in December 2021. Additionally, Stora Enso has access to statutory pension premium loans in Finland up to EUR 1,000 (950) million.
The forest land fair valuation increased the Group’s other comprehensive income in equity by EUR 195 million. The fair valuation of
cash flow hedges and equity investments fair valued through other comprehensive income increased equity by EUR 474 (decreased by
EUR 91) million. This is due to a significantly higher fair valuation of the Group’s shareholding in Pohjolan Voima Oy (PVO), owing to
higher forward electricity prices, partly offset by net fair valuation losses from outstanding cash flow hedge derivatives recorded in other
comprehensive income.
At the end of the year, the ratings for Stora Enso’s rated bonds were as follows:
Rating agency
Long/short-term rating
Valid from
Fitch Ratings
BBB- (stable)
8 August 2018
Moody’s
Baa3 (stable) / P-3
1 November 2018
Unaudited                      6
Financial results – Segments
Packaging Materials division
The Packaging Materials division aims to lead the development of circular packaging, providing premium packaging materials based on
virgin and recycled fiber. Addressing the needs of today's eco-conscious consumers, Stora Enso helps customers replace fossil-based
materials with low-carbon, renewable and recyclable alternatives for their food and drink, pharmaceutical or transport packaging. A wide
selection of barrier coatings enables design optimisation for various demanding packaging end-uses.
EUR million
2021
2020
Sales
3,898
3,115
Operational EBITDA
846
642
Operational EBITDA margin
21.7%
20.6%
Operational EBIT
556
403
Operational EBIT margin
14.3%
12.9%
Operational ROOC
18.0%
13.9%
Cash flow from operations
807
692
Cash flow after investing activities
459
299
Board deliveries, 1,000 tonnes
4,616
4,043
Board production, 1,000 tonnes
4,685
4,063
Packaging Materials division sales at EUR 3,898 (3,115) million increased by 25% mainly due to higher sales prices in containerboard
and China as well as higher delivery volumes in all business units. Strong market demand was supported by production records in all
production units. The ramp-up of the Oulu containerboard production was successful and ahead of schedule.
Operational EBIT at EUR 556 (403) million increased by 38% despite of cost increases. Personnel costs increased fixed costs. All
variable costs increased significantly, except for wood. The Oulu conversion had a positive operational EBIT impact of EUR 9 million
compared to the previous year.
Packaging Solutions division
The Packaging Solutions division develops and sells premium fiber-based packaging products and services. Stora Enso’s high-end eco-
friendly packaging products are used by leading brands across multiple market sectors, including the retail, e-commerce and industrial
sectors. The portfolio includes converting corrugated board and cartonboard, and converting new materials such as formed fiber and
wood foams, as well as design and sustainability services, and circular and automation solutions.
EUR million
2021
2020
Sales
723
594
Operational EBITDA
56
61
Operational EBITDA margin
7.8%
10.2%
Operational EBIT
26
33
Operational EBIT margin
3.6%
5.6%
Operational ROOC
10.8%
13.9%
Cash flow from operations
56
51
Cash flow after investing activities
26
28
Corrugated packaging European deliveries, million m2
1,046
999
Corrugated packaging European production, million m2
1,049
1,004
Packaging Solutions division sales were at an all-time high of EUR 723 (594) million, up 22%, driven by strong demand and higher sales
prices. The revenue from innovation and service led businesses almost doubled during the year. Examples of these businesses are
formed fiber, circular solutions, and packaging automation.
Operational EBIT at EUR 26 (33) million decreased by 21%, mainly due to very high containerboard costs and investments in
innovation and service led businesses. Operational EBIT for traditional businesses increased. Fixed costs increased due to higher
personnel costs.
Biomaterials division
The Biomaterials division meets the growing demand for bio-based solutions to replace fossil-based and hazardous materials. Stora
Enso uses all fractions of biomass, like lignin, to develop new solutions. Our work to replace fossil-based materials includes novel
applications such as carbon for energy storage, bio-based binders and bio-based carbon fiber. Our pulp offering encompasses a wide
variety of grades to meet the demands of paper, board, tissue and hygiene product producers, as well as materials from process side
streams, such as tall oil and turpentine from biomass.
EUR million
2021
2020
Sales
1,728
1,193
Operational EBITDA
618
127
Operational EBITDA margin
35.7%
10.7%
Operational EBIT
495
8
Operational EBIT margin
28.7%
0.7%
Operational ROOC
20.8%
0.4%
Cash flow from operations
490
96
Cash flow after investing activities
391
-1
Pulp deliveries, 1,000 tonnes
2,576
2,427
Biomaterials division sales were at an all time high at EUR 1,728 (1,193) million, up 45% due to significantly higher pulp sales prices in all
grades and slightly higher delivery volumes. The market was favourable and supported by a very high operating efficiency. 
Operational EBIT, at EUR 495 (8) million increased by EUR 487 million, mainly due to significantly higher sales prices in all grades,
slightly higher delivery volumes, and lower energy and wood costs. Operational EBIT was negatively impacted by higher logistics costs.
Foreign exchange rates had a negative impact on operational EBIT.
During the first quarter of 2021, Stora Enso permanently closed its US-based Virdia operations, which were acquired in 2014 and
focused on the conversion of cellulosic biomass from sugar cane bagasse into refined sugars.
Unaudited                      7
Wood Products division
The Wood Products division is one of the largest sawnwood producers in Europe and a leading provider of sustainable wood-based
solutions for the construction industry globally. The growing Building Solutions business offers building concepts to support low-carbon
construction and eco-friendly designs. Stora Enso develops digital tools to simplify the design and construction of building projects with
wood. In addition, we offer applications for windows, doors and packaging industries, as well as pellets for sustainable heating solutions.
EUR million
2021
2020
Sales
1,872
1,386
Operational EBITDA
410
160
Operational EBITDA margin
21.9%
11.6%
Operational EBIT
364
114
Operational EBIT margin
19.5%
8.3%
Operational ROOC
59.4%
19.1%
Cash flow from operations
313
211
Cash flow after investing activities
252
181
Wood products deliveries, 1 000 m3
4,508
4,407
Wood Products division sales were strong at EUR 1,872 (1,386) million, up 35%, due to a favourable market, record high sales prices,
and improved productivity. The classic sawn market was especially good and building solutions business continued to enjoy the
favourable wood building trend.
Operational EBIT was at an all-time high at EUR 364 (114) million and increased by EUR 250 million, or 219%. Higher log prices and
higher fixed costs impacted the EBIT negatively.
Forest division
The Forest division creates value through sustainable forest management, competitive wood supply and innovation. Forests are the
foundation for Stora Enso’s renewable offerings. The division manages Stora Enso’s forest assets in Sweden and a 41% share of
Tornator, whose forest assets are mainly located in Finland. It is also responsible for wood sourcing for Stora Enso’s Nordic, Baltic and
Russian operations and B2B customers. Stora Enso is one of the biggest private forest owners in the world.
EUR million
2021
2020
Sales
2,311
2,046
Operational EBITDA
318
215
Operational EBITDA margin
13.7%
10.5%
Operational EBIT
267
162
Operational EBIT margin
11.5%
7.9%
Operational ROCE
5.1%
3.8%
Cash flow from operations
158
202
Cash flow after investing activities
112
165
Wood deliveries, 1 000 m3
39,652
37,369
Operational fair value change of biological assets
82
70
Forest division sales were EUR 2,311 (2,046) million, up 13% due to higher sales prices and deliveries.
Operational EBIT at EUR 267 (162) million increased by 65%, mainly due to the realised capital gain from a large forest area sale in
Hylte in Sweden.
Paper division
Stora Enso is one of the major paper producers in Europe, with an established customer base and a wide product portfolio for print and
office use. Customers benefit from Stora Enso's selection of paper grades made from recycled and virgin fiber, our technical and
operational expertise and sustainability know-how, and our sales and customer service centre network.
EUR million
2021
2020
Sales
1,703
1,979
Operational EBITDA
-48
66
Operational EBITDA margin
-2.8%
3.3%
Operational EBIT
-124
-38
Operational EBIT margin
-7.3%
-1.9%
Operational ROOC
-40.3%
-6.6%
Cash flow from operations
-25
110
Cash flow after investing activities
-77
36
Cash flow after investing activities to sales
-4.5%
1.8%
Paper deliveries, 1 000 tonnes
2,872
3,106
Paper production, 1 000 tonnes
2,776
3,034
Paper division sales were EUR 1,703 (1,979) million, down 14%. 2021 was a year of material restructuring of paper assets, operations
and organisation to produce positive cash flows in the future. The impact of the Veitsiluoto and Kvarnsveden site closures and the Oulu
conversion on sales deliveries was negative 458,000 tonnes and EUR 434 million compared to the previous year. Paper prices also
dropped significantly during the first half of 2021 due to Covid-19. The Sachsen site was divested in August 2021 and Stora Enso
continues to operate the mill based on the toll manufacturing agreement until January 2023.
Operational EBIT at EUR -124 (38) million declined by EUR 86 million, or 224%, due to lower delivery volumes, significantly lower
prices, and higher variable costs. In particular, energy and paper for recycling (PfR) costs were significantly higher. Fixed costs were
materially lower.
Full year cash flow after investing activities was negative EUR 77 million due to negative result and significant closure costs related to
the Kvarnsveden and Veitsiluoto sites. Cash flow from retained business turned positive in the fourth quarter of 2021.
Unaudited                      8
Other
The segment Other includes Stora Enso’s shareholding in the energy company Pohjolan Voima (PVO), and the Group’s shared services
and administration.
EUR million
2021
2020
Sales
1,092
928
Operational EBITDA
-9
-3
Operational EBITDA margin
-0.8%
-0.3%
Operational EBIT
-48
-35
Operational EBIT margin
-4.4%
-3.8%
Cash flow from operations
-48
-17
Cash flow after investing activities
-62
-27
Sales of the segment Other at EUR 1,092 (928) million increased from previous year mainly due to higher internal sales of energy and
logistics services.
Investments and capital expenditure
Additions to fixed and biological assets including internal costs capitalised in 2021 totalled EUR 666 (687) million. The total amount
includes additions in biological assets of EUR 58 (59) million.
In January, the conversion of the Oulu paper site in Finland for production of packaging board was completed. The project began in
May 2019 following a decision to invest EUR 350 million, and it was completed within the budget frame.
In June, an investment of EUR 21 million was announced to improve the competitiveness and environmental performance of the
Anjala-Ingerois paper and board production sites. The project will be completed during the third quarter of 2023. The Group is also
investing EUR 26 million in modernising the pulp production at the Nymölla site in Sweden, making the pulp production process more
competitive and sustainable for the future. The project will be completed during the third quarter of 2022.
The pilot facility for producing bio-based carbon materials from lignin began operations in July, following the EUR 10 million
investment announced in 2019. Pilot production of Lignode® by Stora Enso, wood-based carbon for batteries, is being ramped up.
Applications include electric vehicles and consumer electronics as well as large-scale energy storage systems.
In July, Stora Enso and Tetra Pak announced a partnership to provide circular solutions to significantly improve recycling of beverage
cartons in Central and Eastern Europe. Stora Enso invests EUR 17 million into a new repulping line at its Ostrołęka site in Poland that will
recover carton fibers. Tetra Pak will build another line that will separate and recover polymers and aluminium. The recycled fibers will be
integrated into Stora Enso’s recycled board, while the separated polymers and aluminium will be used in, for example, pellets and foils.
Both lines will be operational at the beginning of 2023.
In October, Stora Enso announced an investment of EUR 97 million to expand the board capacity at the Skoghall site in Sweden. The
investment will accelerate growth in strategic packaging segments and markets and is expected to be completed during the second half
of 2023. With the completion of the feasibility study, Stora Enso decided not to go ahead with the originally planned pulp capacity
expansion.
A EUR 23 million investment announced in December, will increase flexibility in production at the Varkaus packaging board mill and
enable increased use of recycled fiber. The investment will be completed by the end of 2022.
Stora Enso is conducting a pre-feasibility study regarding the conversion of the second idle former paper line at its Oulu site in Finland
into a packaging board line. The pre-feasibility study will be completed in early 2022.
The other main projects ongoing at the end of 2021 were the investment in new production line for cross laminated timber (CLT) at
Ždírec Mill in the Czech Republic and the wood handling upgrade investment at Imatra Mills in Finland
Innovation, research and development
Stora Enso’s total spend on innovation, research and development in 2021 was EUR 133 (146) million, equivalent to 1.3% (1.7%) of total
sales. Stora Enso defines innovation as the process of translating ideas into new value. Research and development work is a basic
element in the process. The company employed approximately 400 people in six R&D centres.
Stora Enso's innovation and growth focus is on the development of sustainable packaging applications to replace plastic-based
materials, bio-based barriers solutions for packaging, innovative biomaterials or high-end applications, and the development of
sustainable wooden-based materials and components in Building Solutions which store carbon and improve buildings’ energy efficiency.
Intellectual property (IP) is an important tool to protect and secure Stora Enso's development of innovative products, the way we work
and how we build our brand. During 2021, Stora Enso continued to refine its patent portfolio, with priority founding patent applications
filed. Over 430 patents were granted worldwide during the year.
For more information on Stora Enso's Innovation and R&D, please see the section Our strategy.
Non-financial information
Requirements of non-financial information reporting according to the Finnish Accounting Act are reported below. The scope of the
reporting includes those non-financial topics that relate to the Group’s key risks.
Risks and policy principles related to these topics are additionally described on pages 13–18, including Stora Enso’s reporting
according to Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
Business model
Part of the global bioeconomy, Stora Enso is a leading provider of renewable products in packaging, biomaterials, wooden construction
and paper, and one of the largest private forest owners in the world. Sustainability is deeply embedded in our business strategy and
responsible business practices. A description of Stora Enso's business model can be found at the beginning of the Report of Board of
Directors.
Stora Enso acknowledges the importance of the United Nations Sustainable Development Goals (SDGs) as part of a commonly
agreed global ambition to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere. Stora Enso
supports all seventeen SDGs, and goals 12 (Responsible consumption and production), 13 (Climate action), and 15 (Life on land) have
been identified as most relevant where the Group has the largest impact through its operations and products.
Sustainability governance
Sustainability is a key element of Stora Enso’s corporate governance, promoted by the Board of Directors, the CEO, and the Group
Leadership Team (GLT). The CEO carries the ultimate responsibility for the successful implementation of the sustainability strategy. Work
Unaudited                      9
on sustainability is led by the Executive Vice President, Sustainability, who reports directly to the CEO. The Board of Directors’
Sustainability and Ethics Committee oversees the implementation of Stora Enso’s Sustainability Strategy and Ethics and Compliance
Strategy. The Committee met four times in 2021.
Stora Enso’s Sustainability Policy describes its overall approach and governance model. At the same time, the Code of Conduct and
other policies, guidelines, and statements on specific sustainability topics all further elaborate the approach, while also guiding the
Group’s employees in their everyday work. These documents are available at storaenso.com/sustainability.
More information on Stora Enso’s approach to sustainability is included in the sections Our strategy and Sustainability reporting.
Covid-19 pandemic
The global pandemic has underscored the importance of our work on the social agenda. During the year, Stora Enso continued to
promote the health and safety of its employees and others working in its premises through various measures. The following official
recommendations and careful planning have ensured that the Group’s maintenance turnarounds during the year were successfully
executed without any serious Covid-19 escalations. To ensure that Stora Enso’s employees are well informed and to support their
wellbeing, the Group has communicated on the situation and its response to Covid-19 regularly throughout the year. In addition, remote
working has been recommended and supported for Stora Enso's employees when possible. Hybrid working has become a part of many
units’ working practices during the autumn 2021. Read more on our adaption to the global pandemic and work on social agenda in the
Sustainability reporting section, under the chapters Safety and Employees.
Environmental matters
Sustainable forestry and biodiversity
Key policy: Wood and fiber sourcing, and land management policy
Stora Enso is, as part of setting ambitious biodiversity goals and new sustainability targets in 2021, committed to achieving a net-positive
impact on biodiversity in its own forests and plantations by 2050 through active biodiversity management. Stora Enso’s comprehensive
biodiversity programme includes an action plan 2021–2030 with measures to improve biodiversity on the species, habitat and landscape
levels. The company uses its own forest in Sweden as a platform for continuously developing new biodiversity management practices to
be adapted to local conditions and implemented in different geographical areas when feasible. Measures to be developed, tested and
used in our own forests in Sweden include: application of modern digital tools to improve accuracy of planning and operations; increasing
amount of deadwood and broad-leaved trees, especially birch; continuous cover forestry in suitable areas; and increasing use of
controlled burning in forest regeneration. Stora Enso has initiated a holistic and adaptive Biodiversity Monitoring Programme, which
monitors and measures the state of biodiversity and the impact of Stora Enso’s operations on biodiversity with more than 15 science-
based indicators.
Currently, Stora Enso follows its progress in sustainable forestry with a key performance indicator (KPI) that measures the proportion
of land in wood production and harvesting owned or leased by Stora Enso that is covered by forest certification schemes. At the end of
2021, Stora Enso owned or leased lands covering a total area of 2.01 million hectares (2.02 million hectares in 2020). The majority of
Stora Enso’s owned or leased lands are located in Sweden. For more details, see the Note 12. The Group’s target is to maintain the high
level of 96%. In 2021, the certification coverage amounted to 99% (99%1 in 2020).
In 2021, the total amount of wood (including roundwood and wood chips) delivered to our mills was 37.6 million m3 (solid under bark)
(35.0 million m3 in 2020). The proportion of third-party certified wood in the Group's total wood supply was 77% (78%).
Climate change
Key policy: Energy and carbon policy
Stora Enso updated its science-based targets in 2021 to reduce absolute scope 1 and 2 greenhouse gas (GHG) emissions from
operations by 50% by 2030 from the 2019 base year, in line with the 1.5-degree scenario. In 2021, Stora Enso also committed to a target
to also reduce scope 3 GHG emissions by 50% by 2030 from the 2019 base year.
In 2021, Stora Enso’s absolute GHG emissions (scope 1 and 2) were 14% lower than the benchmark level (13% lower in 2020).
During 2021, the emissions decreased slightly, partly due to less fossil-intensive electricity purchased for sites in Finland.
Stora Enso’s estimated GHG emissions elsewhere along the value chain (scope 3) were 2% lower than the benchmark level (11%
lower in 2020). The scope 3 emissions increased partly due to recovered production during 2021.
Circularity
Key policy: Stora Enso’s Circular Design Guidelines
Stora Enso’s circular economy target outlines its commitment to transparent and circular material flows that help minimise waste and
combat climate change, and that reduces the impact on nature. The interim targets for this include achieving 100% recyclable products
by 2030. By the end of 2021, 93% of our products were recyclable.2
Water
Key policy: Stora Enso’s Environmental Guidelines
The objective of the Group’s KPIs on total water withdrawal and process water discharges is to drive a downward trend from our 2016
baseline of 59 m3 and 27 m3 per saleable tonne of product, respectively. In 2021, our total water withdrawal was 60 m3 per saleable tonne
(60 m3 in 2020) and our process water discharges amounted to 31 m3 per saleable tonne (31 m3 in 2020). During the recent years, the
normalised performance as per tonne has been affected by lower production levels in the Paper division. The amount of water required at
Stora Enso’s board, pulp and paper mills is not directly related to production volumes, and wastewater treatment, in particular, requires a
regular flow of water to function properly.
Social and employee matters
Employees
Key policies: Minimum HR requirements
On 31 December 2021, there were 22,094 (23,189) employees in the Group. The average number of employees in 2021 was 23,071,
which was 1,384 fewer than the average number of employees in 2020. The numbers include 50% of the employees at Veracel in Brazil
Unaudited                      10
1 Reporting on total land area and its forest certification coverage aligned with financial reporting on forests assets. Historical figures recalculated for comparability. For more
information, see Note 12.
2 Based on the technical recyclability of products and their production volumes consolidated as tonnes. Technical recyclability is defined by international standards and tests when
available, such as PTS and CTP, and in absence of these by Stora Enso’s own tests that prove recyclability. The reporting scope includes Stora Enso’s packaging, pulp, paper and
solid wood products as well as biochemical by-products. The recyclability of corrugated packaging is estimated in 2021 reporting and will be confirmed by further testing.
and Montes del Plata in Uruguay. In 2021, Stora Enso closed down the Kvarnsveden and Veitsiluoto sites due to structurally declining
paper market, affecting 1,100 employees in total. Read more in the chapter Employees in the Sustainability reporting section.
Personnel expenses totalled EUR 1,351 (1,270) million or 13.3% of sales. Wages and salaries were EUR 1,017 (966) million, pension
costs EUR 165 (152) million and other employer costs amounted to EUR 162 (151) million.
At the end of 2021, the Group's top four countries in respect to the number of employees were Finland, Sweden, China, and Poland.
24% (24%) of employees were women.
Personnel turnover in 2021 was 13.2% (12.7%). Illness-related absenteeism amounted to 3.8% (3.6%) of total theoretical working
hours.
The Group's wages in relation to minimum wages and approach to living wages are described in the chapter Employees.
Remuneration to the Board of Directors and key management is described in Note 7 of the consolidated financial statements.
Safety
Key policy: Health and Safety policy
In 2021, our Total Recordable Incident (TRI) rate increased to 6.2 (6.1). The milestone for 2021 was 4.0. In October 2021, Stora Enso
experienced the death of a contractor employee, due to a forklift collision at the Veracel joint operation in Brazil. The incident and the root
causes have been investigated together with the local authorities. The learnings from this tragic event will be acted upon to prevent such
accidents from recurring. The milestone for 2021 was not achieved. Even though Stora Enso’s safety performance is stable over the past
years, it is not reflecting the Group’s dedication of everybody home safe, every day.
Sustainable sourcing
Key policy: Supplier Code of Conduct (SCoC)
Stora Enso’s key performance indicator (KPI) for responsible sourcing measures the proportion of our total supplier spend covered by our
Supplier Code of Conduct (SCoC), including all categories and regions. By the end of 2021, 96% of Stora Enso’s total spend on
materials, goods, and services was duly covered (96% at the end of 2020), which exceeds our target to maintain at least the level of
95%.
Community
Key policies: Human Rights Policy, Guidelines for Social Responsibility
During 2021, Stora Enso continued to address land and natural resource rights in Guangxi, China and Bahia, Brazil.
Guangxi, China
Stora Enso leases 77,000 hectares of land in Guangxi province China, of which 53,600 hectares is leased from state-owned forest farms.
The remaining 23,400 hectares, or 30% of the total area, is social land leased from village collectives, individual households, and local
forest farms.
Parts of the land leased by Stora Enso have been occupied for up to ten years for the purpose of growing crops and trees on a small
scale. In some cases, the occupiers are claiming rights to the land based on historical land ownership documents that have been
superseded by state ownership in successive land reform processes. Recovery of occupied land continued in 2021, with 6,650 hectares
of land still under occupation at the end of the year.
Bahia, Brazil
In Bahia, Brazil, work continued on a Sustainable Settlement Initiative launched in 2012 to provide farming land and educational support
for local families in the landless people’s social movements. In 2018, Veracel signed a new agreement with the social landless
movements to complement the earlier agreed Sustainable Settlement Initiative.
At the end of 2021, 111 hectares or 0.1% of productive land owned by Veracel remained occupied by movements not involved in the
agreements.
At the end of 2021, the total land area owned by Veracel was 211,000 hectares, of which 82,000 hectares are used for growing
eucalyptus for pulp production. Approximately half of Veracel's lands are dedicated to protecting local biodiversity by restoring and
conserving the natural Atlantic rainforest.
Respect for human rights
Key policy: Human Rights policy
Stora Enso’s commitment to respect human rights covers all our operations, including our employees, contractors, suppliers, and
neighbouring communities. In addition to our commitment to the UN Guiding Principles on Business and Human Rights, Stora Enso’s
annual Slavery and Human Trafficking Statement is available at storaenso.com/sustainability.
Human rights are embedded in the day-to-day business activities. While Stora Enso considers all human rights to be important, and
respects them, the human rights identified as having the highest priority remain the primary focus of work: 
Health and safety
Fair labour (fair employment conditions, forced labour, freedom of association, non-discrimination and non-harassment)
Land and natural resource rights acquisition and management
Grievance mechanisms
Children’s rights (relevant to the forest sector).
In 2019 Stora Enso identified 24 human rights-related development actions in Group function processes. Twenty-two of the actions were
completed in 2020, and the two remaining actions were completed in 2021. In preparation for the upcoming EU directive on mandatory
human rights due diligence Stora Enso carried out a number of initiatives, including a workshop with key employees  across the company
and an external law firm, and initiated a working group to help bring the organisation into compliance.
Anti-corruption and bribery matters
Key policies: Business practice policy, the Stora Enso Code (Code of Conduct)
A total of 117 (86 in 2020) potential non-compliance cases were reported in 2021. In recent years there has been a steady increase in the
number of reported cases, most likely due to more focus on ethical conduct, compliance and whistleblowing, both internally and
externally. A total of 98 (84)3 investigations of potential non-compliance were completed, which also included open cases from previous
years. Proven cases leading to disciplinary action, legal action and/or process improvements were identified in 26 (34)3 of the
investigations. Based on the Group’s categorisation, 9 (10) of the proven cases were related to corruption and/or fraud, resulting in
employee dismissal or a disciplinary process.
Furthermore, 11 (11) of the proven cases were related to discrimination, harassment and/or bullying. Remediation plans have been or
are being implemented together with relevant management representatives.
Unaudited                      11
3 Restated
EU Taxonomy 
The European Commission presented a new growth strategy in 2019, the European Green Deal with the aim to reduce net greenhouse
gas emissions to zero by 2050 and to support economic growth through the most efficient and sustainable use of natural resources.
Regulation (EU) 2020/852 of the European Parliament and Council (the ‘Taxonomy Regulation’) was introduced for a common
classification system for sustainable economic activities. The aim is to scale up sustainable investments and redirect capital flows
towards technologies and businesses considered sustainable.
Stora Enso supports the ambitious goals set by the EU Taxonomy. The current legislation focuses on economic activities with a
substantial contribution to climate change mitigation and adaption. When it comes to the forest-based value chain, the current scope of
the climate taxonomy has its focus on forest management and long-lived wood products as part of the construction industry.
Consequently, Stora Enso’s own forest management in the Nordics and manufacturing of certain energy efficient building components
are eligible within the climate taxonomy criteria.
The EU Taxonomy is still developing, and it is important to note that the current legislation does not cover all sustainable activities on
the market. In driving the transition to zero carbon emissions, the emphasis is on the most carbon intensive industries, as well as on
green energy and innovations. As a forest company, Stora Enso is, not at the core of the current legislation and therefore only has few
relevant economic activity categories to report on. Since the forest industry and its main products are largely out of the scope of the EU
Taxonomy, the Taxonomy eligible KPI figures are low.
Stora Enso’s Annual Report 2021 provides extensive information on the Group’s sustainability performance, including details on
Greenhouse Gas (GHG) emissions and the climate impacts beyond legislative requirements of the climate taxonomy and the EU
Taxonomy in general. As the legislation is still developing and is expected to expand into other areas relevant to our products and
operations, going forward we will update our taxonomy reporting accordingly.
During 2021, Stora Enso established an internal working group for EU Taxonomy, led by Group Finance and consisting of members
from Group Sustainability, Public Affairs, Investor Relations, and the Forest division. The reporting preparation was overseen by a
steering group, consisting of the Chief Financial Officer (CFO), Executive Vice President (EVP) for Sustainability, and the Senior Vice
Presidents (SVP’s) for Public Affairs, Group Controlling and Investor Relations.
Accounting principles
In the supplementing EU Regulation (EU) 2020/852 (published 6.7.2021) Article 10 states that non-financial undertakings shall only
disclose the proportion of the Taxonomy eligible and Taxonomy non-eligible economic activities in their total turnover, capital and
operational expenditure and the relevant qualitative information for fiscal year 2021 reporting.
One of the main goals of EU Taxonomy is to prevent 'green washing'. Stora Enso respects this and has taken a conservative
approach when reporting the taxonomy-eligible figures, thus not including items that are not specifically mentioned in the taxonomy.
Although the 2021 figures are reported based on eligibility, the alignment criteria are already considered in cases where the assessment
based on the economic activity description has been unclear.
EU Taxonomy requires companies to comment on how double counting has been avoided in the taxonomy-eligible economic activities
(numerator), i.e. allocation of turnover, capital expenditure and operating expenditure. Stora Enso has made allocations based on cost
structures and ensured that the cost elements are separate for each activity.
Turnover 
Turnover includes the external sales of taxonomy eligible activities. The denominator is Stora Enso Group’s total sales and rental income 
in 2021, which respectively include the IFRS15 and the IFRS16 income, according to the EU Taxonomy definition of turnover. Taxonomy
eligible turnover (numerator) includes the sales of roundwood from forests owned by Stora Enso to third-parties, seedling sales from
Nordic forest nurseries, external sales of bio-based electricity and heat, turnover from certain wooden elements and components for
buildings (LVL, CLT, construction beam, industrial components and classic planed), turnover generated from waste water treatment.
Capital expenditure 
Eligible capital expenditure relates to turnover generating and taxonomy eligible assets and economic activities, or projects where
turnover is expected within the next five years, or the activity supports climate change mitigation or adaptation by reducing greenhouse
gas emissions. The denominator is the Group’s total capital expenditure in 2021, as presented in the line additions, excluding goodwill
additions, in the Note 11 Intangible assets, property, plant and equipment and right of use assets, and the Note 12 Forest assets.
Taxonomy eligible capital expenditure allocations (numerator) are determined based on the external turnover generation. The energy
related capital expenditure is allocated in proportion to the external distribution of total energy generation. All investments related to
granulated lignin and hard carbon, which can be used as a battery component, are included. See the Investments and capital
expenditure section for further details about Stora Enso's capital expenditure.
Operating expenditure
Eligible operating expenditure relates to turnover generating and taxonomy eligible assets and economic activities, and includes all direct
non-capitalised costs to operate the asset that were possible to single out. The salary costs of employees who perform repairs,
maintenance and services of eligible fixed assets are excluded. The denominator amount includes the Group’s total short-term leases
(according to IFRS 16), R&D costs, maintenance materials and services, and Nordic silviculture costs. Taxonomy eligible operating
expenditure allocations (numerator) are determined based on the external turnover generation. The energy related operating expenditure
is allocated in proportion to the external distribution of total energy generation.
Taxonomy eligible activities
The Group’s economic activities were assessed, and the following Taxonomy-eligible economic activities generating external turnover
were recognised and included in numerators:
1.3. Forest management
Forest management activities and silviculture services in Stora Enso’s own forests. External turnover, capital expenditure and
operating expenditure related to wood sourced from Stora Enso’s own forests and seedling sales from Stora Enso's Nordic forest
nurseries.
1.4. Conservation forestry
Rainforest restoration direct operating expenditure in Veracel joint operations (50%), Brazil.
3.4. Manufacture of batteries
Capital expenditure related to granulated lignin and hard carbon. External turnover expected within the next few years.
3.5. Manufacture of energy efficiency equipment for buildings
Unaudited                      12
External turnover, capital expenditure, and operating expenditure related to manufacturing of door, window, and roofing
components (LVL, CLT, construction beam, industrial components and classic planed).
4.15. District heating/cooling distribution
Capital expenditure related to building a connection to municipal district heating network. External turnover expected within the
next few years.
4.20. Cogeneration of heat/cool and power from bioenergy
External turnover from electricity and heat sales, and related capital expenditure and operating expenditure.
5.3. Construction, extension, and operation of wastewater collection and treatment
External turnover related to wastewater treatment.
Proportion of taxonomy eligible activities
Total 
Taxonomy eligible
Taxonomy non-eligible
  
EUR million 
% 
EUR million
% 
EUR million
Turnover1
10,177
5%
483
95%
9,694
CAPEX
666
4%
27
96%
639
OPEX
619
6%
38
94%
581
1 In the taxonomy, turnover includes also rental income, therefore the figure differs slightly from the Group sales.
Environmental investments and liabilities
In 2021 Stora Enso’s environmental investments amounted to EUR 50 (91) million. These investments were mainly to improve the quality
of air and water, to enhance resource and energy efficiency, and to minimise the risk of accidental spills.
Stora Enso’s environmental costs in 2021 excluding interest and including depreciation totalled EUR 207 (195) million. These costs
include taxes, fees, refunds, permit-related costs, and repair and maintenance costs, as well as wastewater treatment chemicals and
certain other materials.
Provisions for environmental remediation amounted to EUR 75 (91) million at 31 December 2021, details of which are in Note 22,
Other Provisions, of the consolidated financial statements. There are currently no active or pending legal claims concerning
environmental issues that could have a material adverse effect on Stora Enso’s financial position. Payments related to environmental
remediation measures amounted to EUR 29 (18) million.
Risks and risk management
Our approach to risk management
Risk is an integral element of business and corporate governance, and it is characterised by both threats and opportunities, which may
have an impact on future performance and the financial results of Stora Enso, as well as on its ability to meet certain social and
environmental objectives. Stora Enso is committed to ensuring that systematic, holistic and proactive management of risks and
opportunities is among its organisational core capabilities, and that a culture is fostered where both are carefully considered in all
business decisions. Through consistent application of dynamic risk analysis and scenario planning, we enhance opportunities and
manage risk in order to reduce threats which may prevent us from reaching our business goals.
Risk governance
Stora Enso defines risk as the effect of uncertainty on our ability to meet organisational values, objectives and goals. The Group Risk and
Internal Control Policy, which is approved by the Board of Directors, sets out the overall approach to governance and the management of
risks in accordance with the COSO (Committee of Sponsoring Organizations) framework and in line with the ISO 31000 standard. The
Board retains the ultimate responsibility for the overall risk management process and for determining predominantly through Group
policies the appropriate and acceptable level of risk.
The Board has established a Financial and Audit Committee to provide support to the Board in monitoring the adequacy of the risk
management process within Stora Enso, and specifically regarding the management and reporting of financial risks. This oversight scope
includes also monitoring of the cybersecurity risk. The Sustainability and Ethics Committee is responsible for overseeing the company’s
sustainability and ethical business conduct, its strive to be a responsible corporate citizen, and its contribution to sustainable
development.
The head of Enterprise Risk Management, reporting to the Chief Strategy and Innovation Officer, is responsible for the design,
development and monitoring of the top-down implementation of the Group risk management framework. Each division and Group
function head, together with their respective management teams, are responsible for process execution and cascading the framework
and guidelines further down in the organisation. The Internal Audit unit evaluates the effectiveness and efficiency of the Stora Enso risk
management process.
Risk management process
Risk management is embedded in all decision-making processes, with holistic risk assessments conducted also as part of all significant
investment decisions. In connection with the annual strategy process, business divisions and group service and support functions
conduct a holistic baseline risk assessment, linked to their key objectives. Specific guidance regarding the risk management process is
outlined in the enterprise risk management instructions.
Business entities and functions identify the sources of risk events including changes in circumstances and their causes and potential
consequences. Stora Enso’s risk model outlines the overall risk universe which is used to support holistic risk identification and risk
consolidation, while also providing taxonomy as well as consistency in risk terminology.
Risk analysis involves developing an understanding of the risk to provide an input for risk evaluation. The purpose of risk evaluation is
to determine the risk priorities and to support decision making to determine which risks require treatment/actions. Risks are assessed in
terms of their impact and likelihood of occurrence, often based on specific risk scenarios. The effectiveness of existing risk reduction is
factored in to define the residual risk level. Pre-defined impact scales consider financial, safety and reputational impacts, on both a
quantitative and qualitative basis.
Risk treatment involves selecting one or more risk management option, such as avoidance, reduction, sharing or retention. Additional
risk mitigation actions are determined for risks which exceed the perceived risk tolerance incorporating the assignment of responsibility,
schedule and timetable of the risk response actions.
Following the annual baseline assessment, prioritised and emerging risks, as well as the corresponding risk mitigation and business
continuity plans related to those risks, are reviewed in divisional business review meetings on a semi-annual basis.
Unaudited                      13
Despite the measures taken to manage risks and mitigate the impact of risks, and while some of the risks remain beyond the direct
control of the management, there can be no absolute assurance that risks, if they occur, will not have a materially adverse effect on Stora
Enso’s business, financial condition, operating profit or ability to meet financial obligations.
Main risks
Macroeconomy, geopolitics, and currency rates
Stora Enso operates in more than 30 countries and changes in global economic conditions, such as sharp market corrections and foreign
exchange volatility, could, therefore, have a negative and material impact on its profit, cash flows and financial position. In 2021, the
global economy has been returning to more normal market conditions following the economic shock triggered by the Covid-19 pandemic.
However, the risk of setbacks or delays remain, due to new virus variants and possible vaccine hesitancy.
Stora Enso is exposed to several financial market risks that the Group is responsible for managing under policies approved by the
Board of Directors. The objective is to achieve cost-effective funding in Group companies and manage financial risks by using financial
instruments to reduce earnings volatility. The main exposures for the Group, besides currency risk, are interest rate risk, funding risk,
commodity price risk and credit risk.
Financial risks are discussed in detail in Note 24, Financial risk management.
Mitigation measures and opportunities
Stora Enso has a diversified portfolio of businesses which mitigates exposure to any one country or product segment. The external
environment is continuously monitored and planning assumptions take account of important near- to medium-term and long-term drivers
and risks related to key macro-economic factors. The compliance to the Board-approved risk appetite is closely monitored and cash flow
and liquidity are actively managed. Stora Enso hedges 15–50% of the highly probable 12-month net foreign exchange flows in main
currency pairs. Currency translation risk is reduced by funding assets, whenever economically possible, in the same currency as the
asset. The divisions regularly monitor their order flows and other leading indicators, where available, so that they may respond quickly to
a deterioration in trading conditions. In the event of a significant deterioration in general economic condition and in main leading
economic indicators, the Group has a possibility to implement cost reduction measures to offset the impact on margins from deterioration
in sales.
Competition and market demand
The packaging, pulp, paper and wood products industries are mature, capital intensive and highly competitive. Stora Enso’s principal
competitors include several large international forest products companies and numerous regional and more specialised competitors.
Customer demand is influenced by the general economic conditions and inventory levels and affects product price levels. Product prices,
which tend to be cyclical, are affected by capacity utilisation, which decreases in times of economic slowdowns. Changes in prices differ
between products and geographic regions.
The following table shows the operating profit sensitivity to a +/- 10% change in either price or volume for different segments based on
figures for 2021.
Operating profit: Impact of changes +/- 10%, EUR million
Segments
Price
Volume
Packaging Materials
364
130
Packaging Solutions
70
21
Biomaterials
157
76
Wood Products
184
63
Forest
228
16
Paper
157
29
Mitigation measures and opportunities
The ability to respond to changes in product demand and consumer preferences and to develop new products on a competitive and
economic basis calls for innovation, continuous capacity management and structural development. The risks related to factors such as
demand, price, competition and customers are regularly monitored by each division and unit as a routine part of business management.
These risks are also continuously monitored and evaluated on a Group level to gain a perspective of the Group’s total asset portfolio and
overall long-term profitability potential.
  Stora Enso, as one of the biggest private forest owners in the world, also benefits from a strategic renewable resource base. The
Group's expertise in wood and wood based renewable materials is focused on responding to changing customer and consumer
preferences, driven by climate change. Products based on renewable materials with a low carbon footprint help customers and society at
large to reduce CO2 emissions by providing an alternative to solutions based on fossil fuels or other non-renewable materials.
Sourcing
Increasing input costs or availability of materials, goods and services may adversely affect Stora Enso’s profitability. Securing access to
reliable low-cost supplies and proactively managing costs and productivity are of key importance. Reliance on outside suppliers for
energy also makes Stora Enso susceptible to changes in energy market prices. There is also an increased risk of disturbances in the
supply chain due to cyber incidents, pandemic related lockdown measures, political instability and other drivers related to global trade.
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The following table shows Stora Enso’s major cost items.
Composition of costs in 2021
Operative costs
% of costs
% of sales
Logistics and commissions
11%
10%
Manufacturing costs
Fiber
37%
31%
Chemicals and fillers
9%
7%
Energy
7%
6%
Material
6%
5%
Personnel
15%
13%
Other
9%
8%
Depreciation
6%
6%
Total costs and sales
100%
86%
Total operative costs and sales in EUR million
8,695
10,164
Equity accounted investments (EAI), operational
59
Operational EBIT (EUR million)
1,528
In many areas Stora Enso is dependent on suppliers and their ability to deliver a product or a service at the right time and of the right
quality. The most important products are fiber, chemicals and energy, and machinery and equipment in capital investment projects.
Increased demand for carbon neutral primary and secondary biomass fuels may increase energy costs. The most important services are
transport and various outsourced business support services. For some of these inputs, the limited number of suppliers is a risk.
Mitigation measures and opportunities
Input cost volatility is closely monitored at the business unit, divisional and group level and a consistent long-term energy risk
management is applied. The price and supply risks are mitigated through increased own generation, shareholding in competitive power
assets such as PVO/TVO, physical long-term contracts and financial derivatives. Stora Enso hedges price risks in raw material and end-
product markets and supports the development of financial hedging markets. A wide range of suppliers are used and monitored to avoid
situations that might jeopardise continued production, business transactions or development projects.
Suppliers and subcontractors must also comply with Stora Enso’s sustainability requirements as they are part of Stora Enso’s value
chain. The sustainability requirements for suppliers and audit schemes cover raw materials, and other goods and services procured.
Suppliers are assessed for risks related to their environmental, social and business practices through self-assessment questionnaires
and supplier audits. Findings from such assessments are continuously followed up and progressive blacklisting procedures are applied,
as necessary.
  Stora Enso also has an opportunity to add value and bring innovation to its business globally by building strong and measurable
relationships with the best suppliers as well as enforcing harmonised sourcing processes to increase capabilities, increase tender quality
to reduce cost, and develop sustainable suppliers.
Regulatory changes
Stora Enso's businesses may be affected by political or regulatory developments in any of the countries and jurisdictions where it
operates, including changes to forest, biodiversity, environmental, fiscal, tax  or other regulatory regimes. Potential impacts include higher
costs and capital expenditure to meet new requirements, the expropriation of assets, imposition of royalties or other taxes targeted at the
industry, and requirements for local ownership or beneficiation.
The EU Green Deal and its climate targets for 2030 and 2050 have resulted in a proliferation of future legislation which have been
further advanced in 2021 and may impact Stora Enso's future operations. The policy initiatives from the European Commission will
include policies and legislation on areas such as EU Forest and Biodiversity strategies, the Renewable Energy Directive, EU Emission
Trading System (ETS), Sustainable products initiative, Packaging and Packaging waste revision as well as EU taxonomy.
The EU taxonomy regulation progressed during 2021, but uncertainty remains on how much Stora Enso’s economic activities are
within the taxonomy’s scope, as the regulation develops further. Good management of financial and sustainability related risks and
opportunities, as well as disclosure thereof, will improve the likelihood of a favourable perception by the capital markets and thus the cost
of capital.
Political decisions driven by increasingly polarised public debate on forest resources, could limit the availability of wood, increase
costs and reduce investment opportunities.
Stora Enso has been granted various investment subsidies and has given certain investment commitments in different countries e.g.
Finland, China and Sweden. If committed planning conditions are not met, local officials may pursue administrative measures to reclaim
some of the formerly granted investment subsidies or to impose penalties on Stora Enso, and the outcome of such a process could result
in a negative financial impact on Stora Enso.
Mitigation measures and opportunities
Active monitoring of regulatory and political developments in the countries where Stora Enso operates as well as participation in policy
development mainly through industry associations and other partnership programmes are important risk mitigation regarding regulatory
changes. Regulatory changes can also bring significant opportunities by driving market growth for sustainable products and create
competitive advantage through resource efficiency and renewability.
Climate change - physical impacts
Long-term (25–30 years) changes in precipitation patterns, periods of drought, frequent extreme weather events and higher average
temperatures that increase the risk of forest fires and insect outbreaks, could cause damage to operations, forests and tree plantations,
affecting forests asset values and regional wood prices. Milder winters could also have an impact on the harvesting and transport of
wood and related costs in northern regions. More frequent extreme weather events also increase the risk of disruptions in the production,
logistics and supply of raw materials and energy.
Mitigation measures and opportunities
Physical risks are to a great extent subject to risk transfer and thereby within the cover of Stora Enso's property and business interruption
insurance programs. With regards to forest and plantation assets, Stora Enso benefits from strategic resilience through geographical
diversification within the asset portfolio. Diligent plantation planning is ensured to avoid frost sensitive areas and R&D programmes are
Unaudited                      15
applied to increase tolerance to extreme temperatures. Stora Enso maintains a diversity of forest types and structures and enforces
diversification in wood sourcing. Wood harvesting in soft soils involves the implementation of best practices guidelines.
Nordic forests in Finland and Sweden could also benefit from increased heat summation and longer growing seasons, leading to
acceleration in forest growth with direct positive impact on the value of own forest assets and an indirect impact related to market wood
availability and costs.
People and capabilities
Competition for personnel is intense and Stora Enso may, in the long term, not be successful in attracting or retaining qualified personnel. 
The loss of key employees, the inability to attract new or adequately trained employees, or a delay in hiring key personnel could seriously
harm Stora Enso’s business and impede reaching the Group's strategic objectives. Labour market disruptions and strikes, especially in
times of restructuring and redundancies due to divestments and mill closures or during labour market negotiations, could also have
adverse material effects on Stora Enso's business, financial position and profitability.
Mitigation measures and opportunities
Stora Enso manages the risks and loss of key talents through a combination of different actions. Some of the activities aim towards
making the Stora Enso employer brand better known both internally and externally, globalising some of the remuneration practices and
intensifying the efforts to identify and develop talents. Finally, the Group actively focuses on talent and management assessments,
including succession planning for key positions. The majority of employees are represented by labour unions under several collective
agreements in different countries where Stora Enso operates, thus relations with unions are of high importance to manage labour
disruption risks.
Stora Enso recognises the opportunity of skilled and dedicated employees being essential for success. Engaged high performing
people enable the implementation of transformation strategy and commercial success.
Personal safety – employees and wider workforce
Failure to maintain high levels of safety management can result in harm to Stora Enso’s employees and contractors, and also to
communities near our operations and the environment. Impacts in addition to physical injury, health effects and environmental damage
could include liability to employees or third parties, damage to reputation, or an inability to attract and retain skilled employees.
Government authorities could additionally enforce the closure of our operations on a temporary basis.
Personnel safety and security can never be compromised and, thus, Stora Enso must be aware of potential safety risks and provide
adequate guidelines to people for managing risks related to, for example, travelling, working and living in countries with security or crime
concerns. Focusing on the security of key personnel is also important from a business continuity perspective.
Mitigation measures and opportunities
Stora Enso’s goal is to provide an accident-free workplace. Encouraging a company-wide safety culture means that everyone is
responsible for making every workday healthy and safe - from top management and throughout the company. The approach to safety
extends to contractors, suppliers, and on-site visitors. Everyone is encouraged to give feedback and provide ideas on how to further
improve safety. Additionally, safety is promoted among contractors and suppliers through a dedicated e-learning. The Group also
emphasise the importance of safety by asking suppliers for information on their safety performance in the tendering process.
Stora Enso’s Health and Safety Policy defines the objectives for safety management, as well as a governance model on how to
manage health and safety topics in practice and how to integrate them into annual planning and reporting.
Leading health and safety performance can potentially strengthen the brand as an employer, as well as improved engagement,
efficiency and productivity.
Physical assets
The installed capacity of Stora Enso's production facilities have an inherent risk of potential for failure or off-specification operations,
which could result in poor product quality, unplanned production downtime, lower output or increased production costs. It may also impact
the company's ability to meet delivery commitments and the business plan. In some instances, the risks are the result of inherent design
deficiencies, failures in the mode of operation or operating practices. The most significant asset risks lie predominantly in integrated pulp
and board production and related energy generation.
Mitigation measures and opportunities
Protecting production assets and business results is a high priority for Stora Enso. This is achieved through structured methods of
identifying, measuring and controlling different types of process risk and exposure. Divisional risk specialists manage this process
together with insurance companies and other loss prevention specialists. Each year a number of technical risk inspections are carried out
at production units. Risk improvement programmes and cost-benefit analyses of proposed investments are managed via internal
reporting and risk assessment tools. Internal and external property loss prevention guidelines, fire loss control assessments, key
machinery risk assessments and specific loss prevention programmes are also utilised. Planned stoppages for maintenance and other
work are important to keep machinery in good order. Preventive maintenance programmes and spare part criticality analyses are utilized
to secure the high availability and efficiency of key machinery.
Product safety and compliance
Some of our products are used for package liquids and food consumer products, so any defects could affect health or packaging
functions and result in costly product recalls. Wood products are incorporated into buildings, and this may involve product liability
resulting from failures in structural design, product selection or installation. Failure to ensure product safety could result in product recalls
involving significant costs including compensation for indirect costs of customers, and reputational damage.
Mitigation measures and opportunities
The mills producing food and drink contact products have established certified hygiene management systems based on risk and hazard
analysis. To ensure the safety of its products, Stora Enso actively participates in CEPI (Confederation of European Paper Industry)
working groups on chemical and product safety. In addition, Stora Enso mills have certified relevant ISO quality management systems.
Furthermore, contractual liability limitation and insurance protection are used to limit the risk exposure to Stora Enso.
  The Group recognises the opportunity of differentiation and value creation through superior product quality and the highest level of
product conformity.
Information technology, security, and digitalisation
Stora Enso is dependent on IT systems for both internal and external communications and for the day-to-day management of its
operations. Information systems, personnel and facilities are subject to cyber security risk, such as ransomware. In addition, accidental
disclosure of confidential information due to a failure to follow information handling guidelines or due to an accident or criminal act may
result in financial damage, penalties, disrupted or delayed launch of new lines of business or ventures, loss of customer and market
confidence, loss of research secrets, breach of data privacy regulation and other business critical information.
Unaudited                      16
Mitigation measures and opportunities
The management of risks is actively pursued in the Information Risk Management System and best practice change management and
project methodologies are applied. We actively work to prevent cybercrime. A number of security controls have been implemented to
strengthen the protection of confidential information and to facilitate compliance with international regulations.
  Opportunities may arise from efficient operations, performance optimisation, innovative product offerings, and new customer services
through digitisation and sophisticated IT systems, as well as new technologies offering significant potential for higher level of process
optimisation and automatisation, generating new business and enhanced value propositions for customers and consumers.
Strategic investments
To succeed with the implementation of its strategy, Stora Enso has to understand the needs of its customers and find the best way to
serve them with the right offering and with the right production asset portfolio. Failure to complete strategic projects in accordance with
the agreed schedule, budget or specifications can, therefore, have serious impacts on the company's financial performance. Significant,
unforeseen changes in costs or an inability to sell the envisaged volumes or achieve planned price levels may prevent Stora Enso from
achieving its business goals.
Mitigation measures and opportunities
Risks are mitigated through profound and detailed pre-feasibility and feasibility studies which are prepared for each large investment.
Investment guidelines stipulate the process, governance, risk assessment, management and monitoring procedures for strategic
projects, including climate related risk factors. The guidelines also require that the calculation of potential cost and income for CO2
emissions as part of the investment proposal, Environmental and Social Impact Assessments (ESIAs) are conducted for all new projects
that could cause significant adverse effects in local communities. Post completion audits are carried out for all significant investments.
Mergers, acquisitions, and divestments
Failure to realise the expected benefits from an acquisition of a company or asset can have serious financial impacts on Stora Enso. The
Group can also find itself liable for past acts or omissions of the acquired business, without any adequate right of redress. Failure to
achieve expected values from the sales of assets or deliveries beyond the expected receipt of funds may also impact the Group's
financial position. Divestments or business restructuring may involve additional costs due to historical and unaccounted liabilities as well
as reputational impacts.
Mitigation measures and opportunities
Rigorous M&A guidelines, including due diligence procedures are applied to the evaluation and execution of all acquisitions. Structured
governance and policies such as the policy for responsible right-sizing, are followed when making restructuring decisions. A strong
balance sheet and cash flow enable value enhancing M&A, when the timing and opportunity are right.
Ethics and compliance
Stora Enso operates in a highly regulated business area and is, thereby, exposed to risks related to breach of applicable laws and
regulations associated to e.g. capital markets regulation, company and tax laws, customs, environment, human rights, and safety, as well
as areas covered by policies such as the Stora Enso Code and Business Practice Policy, e.g. fraud, anti-trust, corruption, conflict of
interests and other misconduct. Breaches may lead to high compliance and remediation costs including prosecution costs, fines,
penalties, and contractual, financial and reputational damage.
Mitigation measures and opportunities
Stora Enso’s Ethics and Compliance Programme, which includes policy setting, promoting values, training, knowledge sharing and
grievance mechanisms, is continuously updated and developed. Other compliance mechanisms include Stora Enso Group’s internal
control system and Internal Audit assurance, as well as Supplier Code of Conduct in supplier contracts, risk assessments, trainings,
audits and black-listing procedures. In response to capital markets regulations, Stora Enso’s Disclosure Policy emphasises the
importance of transparency, credibility, responsibility, proactivity and interaction.
Environmental risks are minimised through environmental management systems and environmental due diligence for acquisitions and
divestments, and indemnification agreements where effective and appropriate remediation projects are required. Special remediation
projects related to discontinued activities and mill closures are executed based on risk assessments.
Focus on ethics in a wider sense, not mere compliance with laws and regulations, promotes a value-driven and more successful
business, fosters accountability and enhances corporate reputation.
Climate-related financial disclosures (TCFD)
The Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) recommends a framework for
disclosing climate-related risks and opportunities that goes beyond current practices. In the online index table, we list our disclosures with
reference to TCFD recommendations, and refer to those locations where these issues are addressed in our annual reporting. The
location references are complemented in the index with additional information, as necessary. 
Scenario analysis in 2021
The TCFD recommendations encourage companies to use a scenario analysis to help ensure that their strategies are resilient to climate
change in a range of possible future states. Leading practice shows that this is best approached by breaking down the full scope of
scenario analysis into a set of smaller scopes considering asset type and geography, and to apply prioritisation in conducting the full
scenario analysis.
In 2020, Stora Enso developed a scenario analysis with the qualitative assessment of the physical climate impacts on the Nordic
forests and the Group's business until 2050. This work was based on the Business-As-Usual scenario by the International Panel for
Climate Change (RCP 8.5 scenario) that would deliver a temperature increase of 4–5 degrees by the end of the century. The climate
change attributes considered are pests, diseases, droughts, wildfires, floods, periods of frost, water scarcity, changes to precipitation
patterns, rise in sea level and changing temperatures. In 2021, the work with physical climate impacts continued by a deeper analysis of
measures improving resiliency of the forests against the negative impacts of global warming. Results show that sustainable forest
management practices as well as possibilities to monitor and to react to events such as forest fires and diseases, play an important role
in mitigating the negative impacts of climate change.
During 2021, Stora Enso assessed a business impact scenario for 2030 according to the global transition required to limit the global
average temperature increase in line with the Paris agreement of 1.5 degrees (RCP 1.9). The assessment was done based on the TCFD
transition categories as part of the Group's annual strategy process.
The work concluded that the overall transition to a low carbon, circular bioeconomy is well aligned with Stora Enso’s strategy. The
Group's strategy is to provide sustainable, renewable alternatives to fossil-based solutions, presenting attractive growth opportunities
Unaudited                      17
going forward. The Group's innovation, product development and investments in energy and raw material efficiency also help customers
to reach their climate targets as well as meet consumer demands for low-carbon products.
The scenario work also showed that potential new regulations and market mechanisms motivated by the ambitions to limit climate
change and its effects on the society and environment could impact Stora Enso’s operating costs by limiting wood harvesting volumes or
forest management practices as well as increasing greenhouse gas emission costs and energy prices. Sustainable product initiatives and
requirements may also have an impact on the Group's future market access, product demand growth and product development
requirements.
During 2022, Stora Enso plans to further integrate TCFD recommendations into the strategy and enterprise risk management
processes.
Corporate governance in Stora Enso
Stora Enso complies with the Finnish Corporate Governance Code 2020 issued by the Securities Market Association (the “Code”). The
Code is available at cgfinland.fi. Stora Enso also complies with the Swedish Corporate Governance Code (“Swedish Code”), with the
exception of the deviations listed in Appendix 1 of the Corporate Governance part of this report. The deviations are due to differences
between Swedish and Finnish legislation, governance code rules and practices, and in these cases Stora Enso follows the practice in its
domicile. The Swedish Code is issued by the Swedish Corporate Governance Board and is available at corporategovernanceboard.se. 
Legal proceedings
Contingent liabilities
Stora Enso has undertaken significant restructuring actions in recent years which have included the divestment of companies, sale of
assets and mill closures. These transactions include a risk of possible environmental or other obligations the existence of which would be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Stora Enso is party to legal proceedings that arise in the ordinary course of business and which primarily involve claims arising out of
commercial law. The management does not consider that liabilities related to such proceedings before insurance recoveries, if any, are
likely to be material to the Group’s financial condition or results of operations.
European Commission inspection
As announced in Stora Enso’s stock exchange release on 12 October 2021, the European Commission has conducted unannounced
inspections in locations at several member states at the premises of companies active in the wood pulp sector. Stora Enso was included
in the European Commission’s inspection at its headquarters in Kanavaranta, Finland.
Stora Enso is cooperating fully with the authorities. As stated by the Commission, the fact that they carry out such inspections does
not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.
Stora Enso is under strict confidentiality rules regarding the details of the ongoing European Commission investigation and cannot
pre-empt or speculate regarding the next steps or eventual outcome of the investigation.
Legal proceedings in South America
Veracel
On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision claiming that the permits issued by the State
of Bahia for the operations of Stora Enso’s joint operations company Veracel were not valid. The judge also ordered Veracel to take
certain actions, including reforestation with native trees on part of Veracel’s plantations and a possible fine of, at the time of the decision,
BRL 20 (EUR 3) million. Veracel disputes the decision and has filed an appeal against it. Veracel operates in full compliance with all
Brazilian laws and has obtained all the necessary environmental and operating licences for its industrial and forestry activities from the
relevant authorities. In November 2008, a Federal Court suspended the effects of the decision. No provisions have been recorded in
Veracel’s or Stora Enso’s accounts for the reforestation or the possible fine.
Changes in Group management
René Hansen was appointed EVP, Brand and Communications and a member of the Group Leadership Team. He joins Stora Enso from
a position as Vice President, Head of Brand Management at Yara International. He started in February 2022. He succeeds Ulrika Lilja,
EVP, Communications and Marketing, who left her position at Stora Enso in September.
Johanna Hagelberg, previously EVP, Sourcing and Logistics, was appointed EVP Biomaterials division. The previous EVP Biomaterial
division, Markus Mannström, left his position at Stora Enso in December.
Share capital
Stora Enso Oyj’s shares are divided into A and R shares. The A and R shares entitle holders to the same dividend but different voting
rights. Each A share and each ten R shares carry one vote at a shareholders’ meeting. However, each shareholder has at least one vote.
During 2021, a total of 10,366 A shares converted into R shares were recorded in the Finnish Trade Register. On 31 December 2021,
Stora Enso had 176,244,049 A shares and 612,375,938 R shares in issue. The company did not hold its own shares. The total number of
Stora Enso shares in issue was 788,619,987 and the total number votes at least 237,481,642.
Board of Directors is authorised to decide on the repurchase and on the issuance of Stora Enso R shares. The amount of shares to be
issued or repurchased shall not exceed a total of 2 000 000 R shares, corresponding to approximately 0.25% of all shares and 0.33% of
all R shares.
Unaudited                      18
Major shareholders as of 31 December 2021
By voting power
A shares
R shares
% of shares
% of votes
1 Solidium Oy1
62,655,036
21,792,540
10.7%
27.3%
2 FAM AB2
63,123,386
17,000,000
10.2%
27.3%
3 Social Insurance Institution of Finland
23,825,086
3.0%
10.0%
4 Ilmarinen Mutual Pension Insurance Company
4,172,492
17,749,856
2.8%
2.5%
5 Varma Mutual Pension Insurance Company
5,163,018
1,140,874
0.8%
2.2%
6 MP-Bolagen i Vetlanda AB
4,885,000
1,000,000
0.7%
2.1%
7 Elo Mutual Pension Insurance Company
2,000,000
7,441,225
1.2%
1.2%
8 Erik Johan Ljungberg's Education Foundation
1,780,540
2,336,224
0.5%
0.8%
9 SEB Investment Management
9,919,387
1.3%
0.4%
10 Bergslaget's Healthcare Foundation
626,269
1,609,483
0.3%
0.3%
11 The State Pension Fund
5,000,000
0.6%
0.2%
12 Unionen (Swedish trade union)
3,332,750
0.4%
0.1%
13 The Society of Swedish Literature in Finland
3,000,000
0.4%
0.1%
14 Avanza Pension Insurance
146,151
1,324,521
0.2%
0.1%
15 SEB AB, Luxembourg Branch
2,177
2,071,635
0.3%
0.1%
Total
168,379,155
94,718,495
33.4%
74.9%
Nominee-registered shares3
75,090,688
483,768,342
70.9%
52.0%
1 Entirely owned by the Finnish State.
2 As confirmed to Stora Enso.
3 According to Euroclear Finland.
The list has been compiled by the Company on the basis of shareholder information obtained from Euroclear Finland, Euroclear Sweden and a database managed by Citibank, N.A
(Citi). This information includes only directly registered holdings, thus certain holdings (which may be substantial) of shares held in nominee or brokerage accounts cannot be
included. The list is therefore incomplete.
Share distribution as at 31 December 2021
By size of holding, A share
Shareholders
% of shareholders
Shares
% of shares
1–100
6,068
57.00%
244,818
0.10%
101–1,000
3,994
37.50%
1,418,159
0.80%
1,001–10,000
543
5.10%
1,248,051
0.70%
10,001–100,000
26
0.20%
525,222
0.30%
100,001–1,000,000
1
134,144
0.10%
1,000,001–
7
0.10%
172,673,655
98.00%
Total
10,639
100.00%
176,244,049
100.00%
By size of holding, R share
Shareholders
% of shareholders
Shares
% of shares
1–100
14,206
34.30%
707,943
0.10%
101–1,000
20,948
50.60%
8,508,098
1.40%
1,001–10,000
5,689
13.80%
15,163,846
2.50%
10,001–100,000
442
1.10%
11,968,082
2.00%
100,001–1,000,000
66
0.20%
20,903,216
3.40%
1,000,001–
23
0.10%
555,124,753
90.70%
Total
41,374
100.00%
612,375,938
100.00%
According to Euroclear Finland.
This list includes only directly registered shares in Euroclear Finland. E.g. Stora Enso's Swedish shareholders are listed under their nominee bank in this list.
Ownership distribution as at 31 December 2021
% of shares
% of votes
Solidium Oy1
10.7%
27.3%
FAM AB2
10.2%
27.3%
Social Insurance Institution of Finland (KELA)
3.0%
10.0%
Finnish institutions (excl. Solidium and KELA)
11.3%
8.2%
Swedish institutions (excl. FAM)
5.5%
4.8%
Finnish private shareholders
3.8%
2.3%
Swedish private shareholders
4.2%
2.7%
ADR holders
1.8%
0.6%
Under nominee names (non-Finnish/non-Swedish shareholders)
49.6%
16.7%
1 Entirely owned by the Finnish State.
2 As confirmed to Stora Enso.
Outlook
Global megatrends such as an increased eco awareness, an accelerated focus on combatting climate change, and digitalisation underpin
Stora Enso’s business strategy and the demand for its renewable and eco-friendly products, both short and long term.
The general macroeconomic environment and the pandemic are persisting uncertainties. However, the market demand for Stora
Enso’s products across all divisions is supporting sustained commercial momentum. Measures such as pricing, flexibility in sourcing and
logistics, as well as hedging are in place to manage volatility.
Guidance
Stora Enso's full year 2022 operational EBIT is estimated to be approximately in line with the full year operational EBIT for 2021 (EUR
1,528 million).
Unaudited                      19
Short-term risks and uncertainties
Covid-19 and its economic and societal consequences continue to pose a critical threat to the world and Stora Enso’s business
environment. Global vaccine inequality and new lockdowns and restrictions in many countries to contain the spread of new virus
mutations risk compounding social fractures and slow the economic recovery and demand.
While growing geopolitical tensions and divergence may slow economic growth and dampen consumer sentiments, the boundaries of
international law and cooperation in tense geopolitical areas, such as the Russia-Ukraine border and the Taiwan strait, are also
increasingly being tested and the risk of large-scale conflicts and serious market disruptions have increased short term.
Commodity, energy, and logistics prices and availability of transportation are likely to remain volatile going forward as a result of
continued supply chain disturbances, growing tensions between Europe and Russia, China’s energy shortage, and transition challenges
from disinvestment in fossil fuel reserves. This could have a material impact on Stora Enso, since the Group's operational and financial
performance is susceptible to rapid changes in the cost or availability of raw materials such as roundwood and paper for recycling, and in
energy and transport costs.
Moreover, sharp market corrections, increasing volatility in foreign exchange rates and deteriorating economic conditions in the main
markets could all affect Stora Enso’s profits, cash flow and financial position. Many of these risks are increasing as inflation has
accelerated in many countries because of pandemic-related disruptions to supply chains combined with resurgent consumer demand and
higher commodity prices.
Sensitivity analysis
Energy sensitivity analysis: the direct effect of a 10% increase in electricity and fossil fuel market prices would have a negative impact of
approximately EUR 32 million on operational EBIT for the next 12 months.
Wood sensitivity analysis: the direct effect of a 10% increase in wood prices would have a negative impact of approximately EUR 201
million on operational EBIT for the next 12 months.
Pulp sensitivity analysis: the direct effect of a 10% increase in pulp market prices would have a positive impact of approximately EUR
150 million on operational EBIT for the next 12 months.
Chemical and filler sensitivity analysis: the direct effect of a 10% increase in chemical and filler prices would have a negative impact of
approximately EUR 36 million on operational EBIT for the next 12 months.
A decrease of energy, wood, pulp or chemical and filler prices would have the opposite impact.
Foreign exchange rates transaction risk sensitivity analysis for the next twelve months: the direct effect on operational EBIT of a 10%
strengthening in the value of the US dollar, Swedish krona and British pound would be approximately positive EUR 171 million, negative
EUR 19 million and positive EUR 35 million annual impact, respectively. Weakening of the currencies would have the opposite impact.
These numbers are before the effect of hedges and assuming no changes occur other than a single currency exchange rate movement
in an exposure currency.
The Group's consolidated income statement on operational EBIT level is exposed to a foreign-currency translation risk worth
approximately EUR 111 million expense exposure in Brazilian real (BRL) and approximately EUR 83 million income exposure in Chinese
Renminbi (CNY). These exposures are arising from the foreign subsidiaries and joint-operations located in Brazil and China, respectively.
For these exposures a 10% strengthening in the value of a foreign currency would have a negative EUR 11 million and a positive EUR 8
million impact on operational EBIT, respectively.
Annual General Meeting
Stora Enso Oyj's Annual General Meeting (AGM) will be held on Tuesday 15 March 2022. The Annual General Meeting 2022 will be held
with exceptional procedures based on the temporary legislative act to limit the spread of the Covid-19 pandemic approved by the Finnish
Parliament. This means that the shareholders of the Company and their proxy representatives may participate in the meeting and
exercise their rights as shareholders only through voting in advance as well as by making counterproposals and presenting questions in
advance. More information is available at storaenso.com/agm
Proposal for the distribution of dividend
The Board of Directors proposes to the AGM that a dividend of EUR 0.55 per share be distributed on the basis of the balance sheet
adopted for the year 2021. The Board of Directors has assessed the Company’s financial situation and liquidity before making the
proposal. There have been no material changes in the parent company’s financial position since 31 December 2021, the liquidity of the
parent company remains good and the proposed dividend does not risk the solvency of the company. Stora Enso's policy is to distribute
50% of earnings per share (EPS) excluding fair valuation over the cycle. In 2021, EPS excluding fair valuation was EUR 1.19.
The Parent Company distributable shareholders’ equity on 31 December 2021 amounted to EUR 1,982,524,873.43, including the
profit for the period of EUR 637,203,729.97. The Board of Directors proposes to the Annual General Meeting of the Company that the
distributable funds be used as follows:
A dividend of EUR 0.55 per share from the distributable shareholders’ equity to be distributed on 788,619,987 shares, not to exceed
EUR 433,740,992.85, which would leave EUR 1,548,783,880.58 in distributable shareholders’ equity.
The dividend would be paid to shareholders who on the record date of the dividend payment, 17 March 2022, are recorded in the
shareholders’ register maintained by Euroclear Finland Oy or in the separate register of shareholders maintained by Euroclear Sweden
AB for Euroclear Sweden registered shares. Dividends payable to Euroclear Sweden registered shares will be forwarded by Euroclear
Sweden AB and paid in Swedish crowns. Dividends payable to ADR holders will be forwarded by Citibank N.A. and paid in US dollars. 
The Board of Directors proposes to the AGM that the dividend be paid on or about 24 March 2022.
Non-IFRS measures
The Group’s key non-IFRS performance metric is operational EBIT, which is used to evaluate the performance of its operating segments
and to steer allocation of resources to them. Operational EBIT comprises the operating profit excluding items affecting comparability
(IAC) and fair valuations from the segments and Stora Enso’s share of the operating profit of equity accounted investments (EAI), also
excluding items affecting comparability and fair valuations.
Items affecting comparability are exceptional transactions that are not related to recurring business operations. The most common
IAC are capital gains and losses, impairments or impairment reversals, disposal gains and losses relating to Group companies,
provisions for planned restructurings, environmental provisions, changes in depreciation due to restructuring and penalties. Items
affecting comparability are normally disclosed individually if they exceed one cent per share.
Fair valuations and non-operational items include CO2 emission rights, non-operational fair valuation changes of biological assets,
adjustments for differences between fair value and acquisition cost of forest assets upon disposal and the Group’s share of income tax
and net financial items of EAI. The adjustments for differences between fair value and acquisition cost of forest assets upon disposal are
a result of the fact that the cumulative non-operational fair valuation changes of disposed forest assets were included in previous periods
Unaudited                      20
in IFRS operating profit (biological assets) and other comprehensive income (forest land) and are included in operational EBIT only at the
disposal date.
Cash flow from operations (non-IFRS) is a Group specific way to present operative cash flow starting from operational EBITDA
instead of operating profit.
Cash flow after investing activities (non-IFRS) is calculated as follows: cash flow from operations (non-IFRS) excluding cash spent on
intangible assets, property, plant and equipment, and biological assets and acquisitions of EAIs.
The full list of the non-IFRS measures is presented at the end of this report.
Calculation of key figures
Operational return on capital employed,
operational ROCE (%)
100  x
Annualised operational EBIT
Capital employed1, 2
Operational return on operating capital,
operational ROOC (%)
100  x
Annualised operational EBIT
Operating capital 2
Return on equity, ROE (%)
100  x
Net profit/loss for the period
Total equity 2
Net interest-bearing liabilities
Interest-bearing liabilities – interest-bearing assets
Net debt/equity ratio
Net interest-bearing liabilities
Equity3
Earnings per share (EPS)
Net profit/loss for the period3
Average number of shares
Payout ratio, excl. FV, %
100  x
Dividend distribution / share
EPS excl. FV
Dividend and distribution yield, %
100  x
Dividend distribution / share
Closing price of share
Price/earnings ratio (P/E), excl. FV
Closing price of share
EPS excl. FV
Operational EBIT
Operating profit/loss excluding items affecting comparability (IAC) and fair valuations (FV)
of the segments and Stora Enso’s share of operating profit/loss excluding IAC and fair
valuations of its equity accounted investments (EAI)
Operational EBITDA
Operating profit/loss excluding silviculture costs and damage to forests, fixed asset
depreciation and impairment, IACs and fair valuations. The definition includes the
respective items of subsidiaries, joint arrangements and equity accounted investments.
Net debt/last 12 months’ operational EBITDA
ratio
Net interest-bearing liabilities
LTM operational EBITDA
Fixed costs
Maintenance, personnel and other administrative type of costs, excluding IAC and fair
valuations
Last 12 months (LTM)
12 months prior to the end of reporting period
TRI rate
Total recordable incident rate = number of incidents per one million hours worked
1 Capital employed = Operating capital – Net tax liabilities
2 Average for the financial period
3 Attributable to owners of the Parent
List of non-IFRS measures
Operational EBITDA
Operational EBITDA margin
Operational EBIT
Operational EBIT margin
Profit before tax excl. IAC and FV
Capital expenditure
Capital expenditure excl. investments in biological
assets
Capital employed
Depreciation and impairment charges excl. IAC
Operational ROCE
Earnings per share (EPS), excl. FV
Fixed costs to sales
Operational ROOC
Net debt/last 12 months' operational EBITDA ratio
Cash flow from operations
Cash flow after investing activities
Unaudited                      21
Consolidated financial statements
Consolidated income statement
Year ended 31 December
EUR million
Note
2021
2020
Sales
3
10,164
8,553
Other operating income
5
345
147
Changes in inventories of finished goods and work in progress
122
-84
Materials and services
-5,936
-5,043
Freight and sales commissions
-939
-806
Personnel expenses
6
-1,351
-1,270
Other operating expenses
5
-610
-394
Share of results of equity accounted investments
13
143
-1
Change in net value of biological assets
12
328
428
Depreciation, amortisation and impairment charges
10
-697
-609
Operating profit
3
1,568
922
Financial income
8
42
19
Financial expense
8
-190
-168
Profit before Tax
1,419
773
Income tax
9
-151
-156
Net profit for the year
1,268
617
Attributable to
Owners of the Parent
18
1,266
626
Non-controlling Interests
19
3
-9
Net profit for the year
1,268
617
Earnings per share
Basic earnings per share, EUR
32
1.61
0.79
Diluted earnings per share, EUR
32
1.60
0.79
22
Consolidated statement of comprehensive income
Year ended 31 December
EUR million
Note
2021
2020
Net profit for the year
1,268
617
Other Comprehensive Income (OCI)
Items that will not be reclassified to profit and loss
Equity instruments at fair value through OCI
14
501
-136
Actuarial gains and losses on defined benefit plans
20
126
20
Revaluation of forest land
12
225
1,504
Share of OCI of equity accounted investments (EAI)
13
16
12
Income tax relating to items that will not be reclassified
9
-68
-315
800
1,086
Items that may be reclassified subsequently to profit and loss
Cumulative translation adjustment (CTA)
28
56
-143
Net investment hedges and loans
28
14
16
Cash flow hedges and cost of hedging
27
-35
54
Share of OCI of non-controlling interests (NCI)
19
-3
1
Income tax relating to items that may be reclassified
9
9
-15
42
-87
Total comprehensive income
2,110
1,616
Attributable to
Owners of the Parent
2,110
1,625
Non-controlling interests
19
0
-9
Total comprehensive income
2,110
1,616
The accompanying Notes are an integral part of these consolidated financial statements.
23
Consolidated statement of financial position
As at 31 December
EUR million
Note
2021
2020
Assets
Goodwill
O
11
282
281
Other intangible assets
O
11
124
134
Property, plant and equipment
O
11
5,060
5,007
Right-of-use assets
O
11
441
452
11
5,907
5,874
Forest assets
O
12
6,747
6,256
Biological assets
O
12
4,547
4,250
Forest land
O
12
2,201
2,005
Emission rights
O
15
137
36
Equity accounted investments
O
13
580
456
Listed securities
I
14
13
16
Unlisted securities
O
14
905
401
Non-current interest-bearing receivables
I
26
51
93
Deferred tax assets
T
9
143
117
Other non-current assets
O
15
34
28
Non-current assets
14,517
13,276
Inventories
O
16
1,478
1,270
Tax receivables
T
17
14
Operative receivables
O
17
1,449
1,145
Interest-bearing receivables
I
26
84
66
Cash and cash equivalents
I
1,481
1,661
Current assets
4,509
4,155
Total assets
19,026
17,431
Equity and liabilities
Share capital
18
1,342
1,342
Share premium
77
77
Fair value reserve
2,175
1,506
Cumulative translation adjustment
28
-195
-267
Invested non-restricted equity fund
633
633
Retained earnings
5,385
4,891
Net profit for the year
1,266
626
Equity attributable to owners of the Parent
10,683
8,809
Non-controlling Interests
19
-16
-16
Total equity
10,666
8,793
Post-employment benefit obligations
O
20
347
473
Provisions
O
22
91
102
Deferred tax liabilities
T
9
1,430
1,332
Non-current interest-bearing liabilities
I
26
3,313
3,822
Non-current operative liabilities
O
23
13
13
Non-current liabilities
5,195
5,743
Current portion of non-current debt
I
26
180
472
Interest-bearing liabilities
I
26
444
456
Bank overdrafts
I
26
1
6
Provisions
O
22
139
46
Operative liabilities
O
23
2,339
1,837
Tax liabilities
T
9
61
78
Current liabilities
3,165
2,895
Total liabilities
8,360
8,637
Total equity and liabilities
19,026
17,431
Items designated "O" comprise Operating Capital, items designated "I" comprise Interest-bearing Net Liabilities, items designated "T" comprise Net Tax Liabilities.
The accompanying Notes are an integral part of these consolidated financial statements.
24
Consolidated cash flow statement
Year ended 31 December
EUR million
Note
2021
2020
Cash flow from operating activities
Net profit for the year
1,268
617
Adjustments and reversal of non-cash items:
  Taxes
9
151
156
  Depreciation and impairment charges
10
697
609
  Change in value of biological assets
12
-328
-428
  Change in fair value of share awards
3
-4
  Share of results of equity accounted investments
13
-143
1
  CTA and profits and losses on sale of fixed assets and investments1
5
-54
-2
  Net financial items
8
149
150
  Other adjustments
17
15
Dividends received from equity accounted investments
13
16
36
Interest received
2
2
Interest paid
-123
-122
Other financial items, net
-19
-13
Income taxes paid
9
-136
-82
Change in net working capital, net of businesses acquired or sold
-25
195
Net cash provided by operating activities
1,476
1,128
Cash flow from investing activities
Acquisition of shares in equity accounted investments
13
-6
-2
Acquisition of unlisted securities
14
-1
-14
Cash flow on disposal of subsidiary shares and business operations, net of disposed cash
4
55
-3
Cash flow on disposal of shares in equity accounted investments
13
47
0
Cash flow on disposal of unlisted securities
14
0
1
Cash flow on disposal of intangible assets and property, plant and equipment
11
105
17
Capital expenditure
3, 11
-565
-582
Investment in biological assets
12
-79
-79
Proceeds from/payment of non-current receivables, net
-4
-18
Net cash used in investing activities
-449
-681
Cash flow from financing activities
Proceeds from issue of new long-term debt
26
19
1,081
Repayment of long-term debt and lease liabilities
26
-940
-399
Change in short-term borrowings
26
-59
-99
Dividends paid
-237
-223
Purchase of own shares
-3
-6
Net cash used in financing activities
-1,220
354
Net change in cash and cash equivalents
-193
801
Translation adjustment
18
-9
Net cash and cash equivalents at beginning of year
1,655
863
Net cash and cash equivalents at year end
1,480
1,655
Cash and cash equivalents at year end2
1,481
1,661
Bank overdrafts at year end
-1
-6
Net cash and cash equivalents at year end
1,480
1,655
1 CTA = Cumulative Translation Adjustment
2 Cash and cash equivalents comprise cash-in-hand, deposits held at call with banks and other liquid investments with original maturity of less than three months. Bank overdrafts
are included in current liabilities.
The accompanying Notes are an integral part of these consolidated financial statements.
25
Consolidated cash flow statement
Supplemental cash flow information
Year ended 31 December
EUR million
Note
2021
2020
Change in net working capital consists of:
Change in inventories
-196
101
Change in interest-free receivables:
Current
-305
118
Non-current
-7
0
Change in interest-free liabilities:
Current
491
-25
Non-current
-7
0
Change in net working capital, net of businesses acquired or sold
-25
195
Cash and cash equivalents consist of:
Cash on hand and at banks
946
828
Cash equivalents
535
833
Cash and cash equivalents
1,481
1,661
Non-cash investing activities
Total capital expenditure excluding right-of-use assets
576
589
Amounts paid
-565
-582
Non-cash part of additions to intangible assets and property, plant and equipment
11
8
Cash flow on disposals of subsidiaries and business operations
Cash part of the consideration
4
67
-1
Cash and cash equivalents in divested companies
4
-12
-2
Net cash flow from disposal
55
-3
The accompanying Notes are an integral part of these consolidated financial statements.
26
Statement of changes in equity
Fair Value Reserve
EUR million
Share
Capital
Share
Premium
and Reserve
Fund
Invested
Non-
Restricted
Equity Fund
Treasury
Shares
Step 
Acquisition
Revaluation
Surplus
Equity
instruments
through OCI
Cash flow
hedges
Revaluation
reserve
OCI of
Equity
Accounted
Investments
CTA and Net
Investment
Hedges and
Loans
Retained
Earnings
Attributable
to Owners of
the Parent
Non-
controlling
Interests
Total
Balance at 1 January
2020
1,342
77
633
4
413
-20
-136
5,116
7,429
-7
7,423
Net profit for the year
626
626
-9
617
OCI before tax
-136
54
1,504
12
-127
20
1,328
1
1,329
Income tax relating to
OCI
-1
-11
-310
-4
-5
-330
-330
Total Comprehensive
Income
-137
43
1,195
12
-131
642
1,625
-9
1,616
Dividend
-237
-237
-237
Acquisitions and
disposals
-4
4
Purchase of treasury
shares
-6
-6
-6
Share-based payments
6
-8
-3
-3
Balance at 31
December 2020
1,342
77
633
277
23
1,195
12
-267
5,518
8,809
-16
8,793
Net profit for the year
1,266
1,266
3
1,268
OCI before tax
501
-35
225
16
70
126
903
-3
900
Income tax relating to
OCI
1
8
-46
2
-22
-59
-59
Total Comprehensive
Income
501
-27
179
16
72
1,369
2,110
2,110
Dividend
-237
-237
-237
Acquisitions and
disposals
Purchase of treasury
shares
-3
-3
-3
Share-based payments
3
3
3
Balance at 31
December 2021
1,342
77
633
778
-4
1,373
29
-195
6,650
10,683
-16
10,666
CTA = Cumulative Translation Adjustment, NCI = Non-controlling Interests, OCI = Other Comprehensive Income, EAI = Equity Accounted Investments 
27
Notes to the consolidated financial
statements
Note 1 Accounting principles
Principal activities
Stora Enso Oyj (“the Company”) is a Finnish public limited liability company organised under the laws of the Republic of Finland and with
its registered address at Salmisaarenaukio 2, 00180 Helsinki. Its shares are currently listed on Nasdaq Helsinki and Stockholm. The
operations of Stora Enso Oyj and its subsidiaries (together “Stora Enso” or “the Group”) are organised into the following reportable
segments: Packaging Materials, Packaging Solutions, Biomaterials, Wood Products, Forest, Paper and segment Other. The Group’s
main market is Europe, with an expanding presence in Asia and South America.
The Financial Statements were authorised for issue by the Board of Directors on 27 January 2022.
Basis of preparation
The consolidated financial statements of Stora Enso Oyj have been prepared in accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union, including International Accounting Standards (IAS) and interpretations issued by
the IFRS Interpretations Committee (IFRIC). The consolidated financial statements of Stora Enso Oyj have been prepared according to
the historical cost convention, except as disclosed in the accounting policies. The detailed accounting principles are explained in the
related notes with a few exceptions where the accounting principles are presented in this note. The consolidated financial statements are
presented in euros, which is the parent company’s functional currency.
All figures in this Annual Report have been rounded to the nearest million, unless otherwise stated. Therefore, figures in this report
may not add up precisely to the totals presented and may vary from previously published financial information.
New and amended standards and interpretations adopted in 2021
The Group has applied the following new and amended standards and interpretations which are effective from 1 January 2021:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2. The amendments
relate to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and
disclosure requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting. The effective
date is 1 January 2021. The amendments do not have a significant impact on the Group.
Amendments to IFRS 16 Leases: Covid-19 Related Rent Concessions. The amendment provide lessees with an exemption
from assessing whether a COVID-19-related rent concession is a lease modification. The effective date is annual reporting periods
beginning on or after 1 June 2020. The amendments do not have a significant impact on the Group.
Other standards  standard amendments and interpretations do not have any significant impact on the Group's consolidated
financial statements or disclosures.
Changes in accounting principles
Cloud computing arrangement costs
Stora Enso has changed its accounting principles to comply with Agenda decision 2 related to IAS 38 Intangible Assets: Configuration or
Customisation Costs in a Cloud Computing Arrangement. The second agenda decision addresses how a customer should account for
the costs of configuring or customising the supplier’s application software in a SaaS arrangement. It includes guidelines when
configuration and customisation costs result in the recognition of an intangible asset, when expensed and when considered as a
prepayment. The changes in accounting principles do not have any material impact on Stora Enso's consolidated financial statements or
disclosures for the current or previous reporting periods.
Changes in segment reporting
Stora Enso has changed the presentation of certain consolidation adjustments in the segment reporting from 1 January 2021
onwards. When Stora Enso companies sell materials and finished products to other companies within the Group and part of the
sold items remain in the receiving company's inventory at the end of the reporting period, the related internal profit is eliminated
from the consolidated figures. Under previous presentation principles this internal profit has been fully eliminated at the
segment level.
From 1 January 2021 onwards, this internal profit is eliminated from the segment figures only to the extent that the profit is fully
internal to a single segment. Internal inventory profits from transactions between segments are not eliminated from the segment
figures and instead such elimination is done only at the Group level. The new presentation is considered to be more reflective of the
division specific performance. The comparative figures have been restated accordingly. The new presentation does not affect
the Group's total figures.
Consolidation principles
The consolidated financial statements include the parent company, Stora Enso Oyj, and all companies controlled by the Group. Control is
defined as when the Group:
has power over the investee,
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
If facts and circumstances indicate that there are changes to the three elements of control listed above the Group reassess whether or
not it controls an investee. Acquired companies are accounted for under the acquisition method whereby they are included in the
consolidated financial statements from the date the control over the subsidiary is obtained, whereas, conversely, disposed companies are
included up to the date when the control is lost. The subsidiaries and joint operations are listed in Note 30 Group companies.
All intercompany transactions, receivables, liabilities and unrealised profits, as well as intragroup profit distributions, are eliminated.
Accounting policies for subsidiaries, joint arrangements and equity accounted investments are adjusted where necessary to ensure
consistency with the policies adopted by Stora Enso.
Associated companies over which Stora Enso exercises significant influence are accounted for by using the equity method. These
companies are investments in which the Group has significant influence, but which it does not control. Significant influence means the
28
power to participate in the financial and operating policy decisions of the company without control or joint control over those policies.
More detailed information is presented in Note 13 Equity accounted investments.
Joint control is the contractually agreed sharing of control of the joint arrangement, which exists only when decisions on relevant
activities require the unanimous consent of the parties sharing control. Joint operations are joint arrangements, whereby the partners who
have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint
ventures are joint arrangements, whereby the partners who have joint control of the arrangement have rights to the net assets of the joint
arrangement.
The Group has two joint operations, Veracel and Montes del Plata. In both companies, Stora Enso’s ownership is 50%. The
arrangements are based on shareholders’ agreements, which give Stora Enso rights to a share of returns and make the Group indirectly
liable for the liabilities, as its ability to pay for the pulp is used to finance debts. In relation to its interest in joint operations, the Group
recognises its share of assets, liabilities, revenues, expenses and cash flows of the joint operation. The share is determined based on
rights to the assets and obligations for the liabilities of each joint operator.
Veracel is a jointly owned company of Stora Enso and Suzano located in Brazil. The pulp mill produces 1.2 million tonnes of
bleached eucalyptus hard wood pulp per year and both owners are entitled to half of the mill’s output. The eucalyptus is sourced mostly
from the company’s own forestry plantations. The mill commenced production in May 2005.
Montes del Plata is a jointly owned company of Stora Enso and Arauco located in Uruguay. The Montes del Plata Pulp Mill’s
annual capacity is 1.4 million tonnes of bleached eucalyptus hard wood pulp and Stora Enso’s part, 0.7 million tonnes, is sold entirely as
market pulp. The eucalyptus is sourced mostly from the company’s own forestry plantations. The mill commenced production in June
2014.
Revenue recognition
Sales comprise products, raw materials and services less indirect sales tax and discounts, and are adjusted for exchange differences on
sales in foreign currencies. Sales are recognised after Stora Enso has transferred the control of goods and services to a customer and
the Group retains neither a continuing right to dispose of the goods, nor effective control of those goods; usually, this means that sales
are recorded upon the delivery of goods to customers in accordance with the agreed terms of delivery.
Stora Enso’s terms of delivery are based on Incoterms 2020, which are the official rules for the interpretation of trade terms as issued
by the International Chamber of Commerce (ICC). The main categories of the terms covering Group sales are:
“D” terms, under which the group is obliged to deliver the goods to the buyer at the agreed place in the manner specified in the
chosen rule, in which case the Point of Sale is the moment of delivery to the buyer.
“C” terms, whereby the Group arranges and pays for the external carriage and certain other costs, though the Group ceases to
be responsible for the goods once they have been handed over to the carrier in accordance with the relevant term. The Point of Sale is
thus the handing over of the goods to the carrier contracted by the seller for the carriage to the agreed destination.
“F” terms, being where the buyer arranges and pays for the carriage, thus the Point of Sale is the handing over of the goods to
the carrier contracted by the buyer at the agreed point.
Where local rules may result in invoices being raised in advance of the above, the effect of this revenue advancement is quantified,
and an adjustment is made accordingly.Stora Enso’s sales mainly comprise sales of products and the revenue is typically recognised at a
point in time when Stora Enso transfers control of these products to a customer. Revenues from services are recognised over time once
the service has been performed. More detailed information regarding Stora Enso's principal activities from which the Group generates its
revenue and disaggregation of revenue is presented in Note 3 Segment information.
Foreign currency transactions
Transactions in foreign currencies are recorded at the rate of exchange prevailing at the transaction date, but at the end of the month
foreign-currency-denominated receivables and liabilities are translated using the month-end exchange rate. Foreign exchange
differences for operating items are presented in the appropriate income statement line in the operating profit, and, for financial assets and
liabilities, they are presented in the financial items in the consolidated income statement, except when deferred in equity as qualifying
cash flow hedges, net investment hedges or net investment loans. Translation differences on non-monetary financial assets, such as
equities classified at fair value through other comprehensive income (FVTOCI), are included in equity.
Foreign currency translations
The income statements of Group companies with functional and presentational currencies other than the euro are translated into the
Group reporting currency using the average exchange rates of the year, whereas the statements of the financial position of these
companies are translated using the exchange rates at the reporting date. The Group is exposed to currency risks arising from exchange
rate fluctuations on the value of its net investment in non-euro area foreign entities. Exchange differences arising from the retranslation of
net investments in foreign entities that are non-euro foreign subsidiaries, joint operations or equity accounted investments, and of
financial instruments that are designated to hedge such investments, are recorded directly in equity as cumulative translation adjustment
(CTA). See Note 28 Cumulative translation adjustments and equity hedging for more details.
Future standard changes endorsed by the EU but not yet effective in 2021
Amendments to IFRS 3 Business Combinations, IAS 16 Property, Plant and Equipment, IAS 37 Provisions, Contingent
Liabilities and Contingent Assets and Annual Improvements 2018-2020. The amendments to IFRS 3 include minor updates to the
standard. The amendments to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from
selling items produced while the entity is preparing the asset for its intended use. The amendment to IAS 37 clarifies that the direct costs
of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling
contracts. Annual Improvements to IFRS Standards 2018–2020 include minor amendments to IFRS 9, IFRS 16 and IAS 41 standards.
The effective date is 1 January 2022. The Group is assessing the impact of the amendments.
No other published standards, standard amendments or interpretations which would be expected to have any significant impact
on the Group’s consolidated financial statements or disclosures.
Future standard changes not yet effective and not yet endorsed by the EU in 2021
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as current or non-current. The
amendments clarify how to classify debt and other liabilities as current or non-current. The effective date is 1 January 2023. The Group is
evaluating the impact of the amendments.
Amendments to IAS 1 Presentation of Financial Statements: Disclosure of Accounting policies. The amendment requires
entities to disclose their material accounting policy information rather than their significant accounting policies. The effective date is
1 January 2023. The Group is evaluating the impact of the amendments.
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates.
The amendments introduce the definition of accounting estimates and includes other amendments to IAS 8 to help entities distinguish
changes in accounting estimates from changes in accounting policies. The effective date is 1 January 2023. The Group is evaluating the
impact of the amendments.
29
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The
amendments clarify how entities account for deferred tax on transactions such as leases and decommissioning obligations. The main
change is related to the initial recognition exemption and in accordance with the amendment, the initial recognition exemption does not
apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The effective
date is 1 January 2023. The Group is evaluating the impact of the amendments.
Other published standards, standard amendments or interpretations are not expected to have any significant on the Group’s
consolidated financial statements or disclosures.
Note 2 Critical accounting estimates and judgements
The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates, judgements and
assumptions that affect the reported assets and liabilities, as well as the disclosure of contingent assets and liabilities at the reporting
date and the reported revenues and expenses during the period. These estimates, judgments and assumptions might
have a significant impact on the amounts recognised in the consolidated financial statements. The estimates are based on historical
experience and various other assumptions that are believed to be reasonable and reflect management's best estimates, though actual
results and timings could differ from these. The estimates, judgements and assumptions are reviewed regularly and updated if there are
changes in circumstances or as a result of new information. The accounting items presented below represent those matters which
include the most estimation uncertainty and exercise of judgement.
Property, plant and equipment, intangible assets and right-of-use assets
The carrying amounts of property, plant and equipment and intangible assets and right-of-use assets are assessed at each reporting date
to determine whether there is any indication that an asset may be impaired. If an indicator of impairment exists, the asset's recoverable
amount is determined and compared with its carrying amount. The recoverable amount of an asset is estimated as the higher of fair
value less the cost of disposal and the value in use, and an impairment charge is recognised whenever the carrying amount exceeds the
recoverable amount. The value in use is calculated using a discounted cash flow method which is most sensitive to the discount rate as
well as the expected future cash flows. The key assumptions used in the impairment testing, are explained further in Note 10
Depreciation, amortisation and impairment charges.
Management believes that the assigned values and useful lives, as well as the underlying assumptions, are reasonable, though
different assumptions and assigned useful lives could have a significant impact on the reported amounts. For material intangible assets
and property, plant and equipment in an acquisition, an external advisor makes a fair valuation of the acquired intangible assets and
property, plant and equipment and assists in determining their remaining useful life.
Goodwill
Goodwill is tested per Cash Generating Unit (CGU) or by a group of CGUs at least on an annual basis and recoverable amount is
calculated using the discounted cash flow method (value in use). Impairment charge is recognised if the carrying amount exceeds the
recoverable amount. The discounted cash flow method uses future projections of cash flows from each of the reporting units in a CGU or
a group of CGUs and includes, among other estimates, projections of future product pricing, production levels, product costs, market
supply and demand, projected capital expenditures and an assumption of the weighted average cost of capital. The discount rates used
for the net present value calculation of projected cash flows reflect the best estimate of the weighted average cost of capital.
The Group has evaluated the most sensitive estimates, which, when changed, could have a material impact on the valuation of the
assets or goodwill and, therefore, could lead to an impairment. These estimates are expected sales prices, expected operating costs and
discount rate. The key assumptions used in the impairment testing are presented in Note 10 Depreciation, amortisation and impairment
charges.
Biological assets
The Group has biological assets in subsidiaries, joint operations and associated company. Biological assets, in the form of standing
trees, are accounted in accordance with the IAS 41 Agriculture standard, which requires that the assets are measured at fair value less
the costs to sell. Fair value is determined by using discounted cash flows from continuous operations based on sustainable forest
management plans taking into account the growth potential of one cycle. These discounted cash flows require estimates of growth,
harvesting, sales price, costs and discount rate. In determining the value of biological assets, the management needs to make
appropriate estimates of future price levels and trends for sales and costs, and to undertake regular surveys of the forest to establish the
volumes of wood available for harvesting and their current growth rates.
See next chapter for estimates and judgement applied in valuation of Swedish forest assets and Note 12 Forest assets for more
detailed information about Nordic and plantation forest assets.
Swedish forest assets
The fair value of forest assets in Sweden is determined using a market approach method, which is based on the forest market
transactions in the areas where Stora Enso’s forests are located. Market prices between areas vary significantly and judgement is
applied to define relevant areas for market transactions used in valuation. The valuation of the forest assets is based on detailed
transaction data and price statistics as provided by different market data suppliers. Market transaction data is adjusted to consider
characteristics and nature of Stora Enso's forest assets and to exclude certain non-forest assets and transactions considered as outliers
compared to other transactions. The valuation takes into account where the forest land is located, price levels and volume of standing
stock. The value of the forest assets will be affected by changes in transaction prices and by how the volume of standing stock develops.
Stora Enso is applying weighted three-year average market transaction prices and this is considered to include a sufficient amount of
transactions and estimated to represent market conditions at the reporting date.
The value of the forest assets is allocated to biological assets and forest land. Allocation of the combined fair value of forest assets is
based on the income approach where separate present values of expected net cash flows are calculated for both biological assets and
forest land. The discount rate is determined as the rate at which the valuation based on market transaction prices matches the total forest
assets combined cash flows for biological assets and forest land. The total net cash flows for each of the components include estimates
in respect of future harvesting volumes, sales price levels, and cost development. See Note 12 Forest assets for more information.
Fair value of financial instruments
Where the fair value of financial assets and liabilities cannot be derived directly from publicly quoted market prices, other valuation
techniques, such as discounted cash flow models, transaction multiples, the Black and Scholes model and the Gordon model, are
applied. The key judgements include future cash flows, credit risk, volatility and changes in assumptions about these factors which could
affect the reported fair value of the financial instruments. Investments in debt and equity instruments of unlisted entities, such as Pohjolan
30
Voima Oy (PVO), represent a significant portion of the Group’s assets and require management judgement, as explained in more detail in
Notes 14 Equity instruments and 24 Financial risk management.
Income taxes
Tax assets and liabilities are reviewed on a periodic basis and balances are adjusted appropriately. The deferred tax assets, whether
arising from temporary differences or from tax losses, are recognised only to the extent that it is probable that future taxable profits will be
available against which the assets can be utilised. Management considers that adequate provision has been made for future tax
consequences based on the current facts, circumstances and tax laws. However, should any tax positions be challenged and not prevail,
different outcomes could result and have a significant impact on the amounts reported in the consolidated financial statements.
See Note 9 Income taxes for more detailed information.
Post-retirement benefits
The determination of the Group pension obligation and expense is subject to the selection of certain assumptions used by actuaries in
calculating such amounts, including, among others, the discount rate, the annual rate of increase in future compensation levels and
estimated lifespans. Amounts charged in the Income statement are determined by independent actuaries; however, where actual results
differ from the initial estimates, together with the effect of any change in assumptions or other factors, these differences are recognised
directly in equity, as disclosed in the statement of comprehensive income. See Note 20 Post-employment benefit obligations for detailed
information on the assumptions used in the pension obligation calculations.
Provisions
The Group has recognised provisions for known environmental, restructuring and other obligations, where legal or constructive obligation
exist as a result of past events. The amounts recognised as provisions are based on the management’s best estimate of the costs
required to settle the obligation. Due to uncertainty regarding the timing and amount of these costs, the actual costs might differ
significantly from the original estimate. The carrying amounts of provisions are reviewed regularly and adjusted when needed to consider
changes in cost estimates, regulations, applied technologies and conditions. See Note 22 Provisions for more detailed information.
Accounting implications of the effects of Covid-19
The Group has continued to assess the potential accounting implications of Covid-19 pandemic. The Group has also assessed the
impact on significant accounting estimates and management judgement and identified certain items, which have been evaluated in more
detail. The review of significant estimates and judgements resulted in asset impairments in 2021. See Note 10 Depreciation, amortisation
and impairment charges for more details about impairment charges. Otherwise, the review did not result in any material adjustments to
the carrying amounts of assets and liabilities or amounts recognised in the consolidated income statement.
The IAS 36 Impairment of Assets standard requires non-financial assets to be tested for impairment whenever there is an indication
that those assets might be impaired. The uncertainty in the economic environment may decrease the reliability of long-term forecasts
used in the impairment testing models. See Note 10 for more details about impairment testing.
Trade receivables and related expected credit losses are under constant review and the credit risk may increase if the current trading
conditions deteriorate further. See Note 17 Operative Receivables for more details. Also the valuation of slow moving and obsolete
finished goods and spare parts are under constant review. See Note 16 Inventories for more details.
The Group's units in certain countries have received various forms of assistance from the authorities intended to support employment
or temporarily improve cash flows. The savings in income statement or cash flow improvements from the obtained relief measures were
not significant for the Group in 2021.
Note 3 Segment information
Accounting principles
Stora Enso’s reportable segments are Packaging Materials, Packaging Solutions, Biomaterials, Wood Products, Forest, and Paper and
the segment Other. Operating segments reflect the Group’s management structure and the way financial information is regularly
reviewed by Stora Enso’s President and CEO who is responsible for allocating resources and assessing the performance of the
operating segments. Costs, revenues, assets and liabilities are allocated to business segments on a consistent basis. Transactions
between operating segments are based on arm’s length terms, and they are eliminated on consolidation. See Note 1 Accounting
principles for details related to changes in segment reporting. The activities of the reportable segments are:
Packaging Materials
The Packaging Materials division aims to lead the development of circular packaging, providing premium packaging materials based on
virgin and recycled fiber. Addressing the needs of today's eco-conscious consumers, Stora Enso helps customers replace fossil-based
materials with low-carbon, renewable and recyclable alternatives for their food and drink, pharmaceutical or transport packaging. A wide
selection of barrier coatings enables design optimisation for various demanding packaging end-uses.
Packaging Solutions
The Packaging Solutions division develops and sells premium fiber-based packaging products and services. Stora Enso’s high-end eco-
friendly packaging products are used by leading brands across multiple market sectors, including the retail, e-commerce and industrial
sectors. The portfolio includes converting corrugated board and cartonboard, and converting new materials such as formed fiber and
wood foams, as well as design and sustainability services, and circular and automation solutions.
Biomaterials
The Biomaterials division meets the growing demand for bio-based solutions to replace fossil-based and hazardous materials. Stora
Enso uses all fractions of biomass, like lignin, to develop new solutions. Our work to replace fossil-based materials includes novel
applications such as carbon for energy storage, bio-based binders and bio-based carbon fiber. Our pulp offering encompasses a wide
variety of grades to meet the demands of paper, board, tissue and hygiene product producers, as well as materials from process side
streams, such as tall oil and turpentine from biomass.
Wood Products
The Wood Products division is one of the largest sawnwood producers in Europe and a leading provider of sustainable wood-based
solutions for the construction industry globally. The growing Building Solutions business offers building concepts to support low-carbon
31
construction and eco-friendly designs. Stora Enso develops digital tools to simplify the design and construction of building projects with
wood. In addition, we offer applications for windows, doors and packaging industries, as well as pellets for sustainable heating solutions.
Forest
The Forest division creates value through sustainable forest management, competitive wood supply and innovation. Forests are the
foundation for Stora Enso’s renewable offerings. The division manages Stora Enso’s forest assets in Sweden and a 41% share of
Tornator, whose forest assets are mainly located in Finland. It is also responsible for wood sourcing for Stora Enso’s Nordic, Baltic and
Russian operations and B2B customers. Stora Enso is one of the biggest private forest owners in the world.
Paper
Stora Enso is one of the major paper producers in Europe, with an established customer base and a wide product portfolio for print and
office use. Customers benefit from Stora Enso's selection of paper grades made from recycled and virgin fiber, our technical and
operational expertise and sustainability know-how, and our sales and customer service centre network.
Segment Other
The segment Other includes Stora Enso’s shareholding in the energy company Pohjolan Voima (PVO), and the Group’s shared services
and administration.
Sales by segment
External
Internal
Total
External
Internal
Total
EUR million
2021
2020
Packaging Materials
3,715
183
3,898
2,999
116
3,115
Packaging Solutions
704
19
723
578
16
594
Biomaterials
1,499
229
1,728
1,025
168
1,193
Wood Products
1,766
106
1,872
1,295
91
1,386
Forest
781
1,530
2,311
698
1,348
2,046
Paper
1,644
59
1,703
1,931
48
1,979
Other
55
1,037
1,092
27
901
928
Elimination of internal sales
-3,163
-3,163
-2,687
-2,687
Total
10,164
0
10,164
8,553
0
8,553
Disaggregation of revenue
EUR million
2021
2020
Product sales
10,047
8,460
Service sales
117
93
Total
10,164
8,553
Segment share of operating profit/loss
Year Ended 31 December
Operating Profit/Loss
EUR million
2021
2020
Packaging Materials
552
391
Packaging Solutions
23
28
Biomaterials
506
-32
Wood Products
363
111
Forest
622
522
Paper
-423
-58
Other
-67
-42
Eliminations
-8
3
Total
1,568
922
Net financial items
-149
-150
Profit before Tax
1,419
773
Income tax expense
-151
-156
Net Profit
1,268
617
Operating Capital, depreciation, impairments and impairment reversals, disposal gains and losses, and capital expenditure by
segment
Year Ended 31 December
Operating Capital
Depreciation/Impairments/
Impairment reversals/
Disposal gains and losses
Capital Expenditure1
EUR million
2021
2020
2021
2020
2021
2020
Packaging Materials
3,206
2,962
255
205
330
378
Packaging Solutions
245
240
32
30
34
23
Biomaterials
2,520
2,246
99
145
88
80
Wood Products
678
549
46
46
66
34
Forest
6,696
6,194
20
21
25
20
Paper
123
496
207
122
55
80
Other
860
318
37
40
11
13
Eliminations
-21
-13
0
0
0
0
Total
14,307
12,993
697
609
609
628
1 Excluding bioasset capex
Operating Capital (“O” items) is designated thus in the Balance Sheet and represents the sum of Intangible Asset and Property, Plant and Equipment, right-of-use assets, forest assets,
emission rights, unlisted shares, other non-current assets, inventories, current operative receivables and liabilities, provisions and other non-current operative liabilities.
32
Goodwill by segment
Year Ended 31 December
Goodwill
EUR million
2021
2020
Packaging Materials
25
26
Packaging Solutions
6
6
Biomaterials
45
43
Wood Products
116
112
Forest
0
0
Paper
90
95
Other
0
0
Total
282
281
See Note 10 Depreciation, amortisation and impairment charges for more details related to recognised impairments and impairment
testing.
Average personnel
Year Ended 31 December
Segment
2021
2020
Packaging Materials
5,801
5,557
Packaging Solutions
4,361
5,094
Biomaterials
1,865
1,822
Wood Products
4,177
4,026
Forest
1,476
1,520
Paper
3,292
4,356
Other
2,098
2,080
Total
23,071
24,455
Year Ended 31 December
Location
2021
2020
Austria
1,028
1,014
Baltic States
1,459
1,410
Belgium
506
527
Czech Republic
1,039
992
Finland
6,003
6,317
Germany
734
882
Poland
1,976
2,074
Russia
1,132
1,130
Sweden
5,023
5,139
Other Europe
236
262
Total Europe
19,137
19,747
Brazil
477
423
China (incl. Hong Kong)
3,006
3,729
USA
43
94
Uruguay
310
313
Other countries
98
148
Total
23,071
24,455
As at 31 December
2021
2020
Year-End Personnel
22,094
23,189
33
External sales by destination
Sales by Destination
EUR million
2021
2020
Austria
403
292
Baltic States
315
232
Belgium
102
87
Czech Republic
188
153
Denmark
108
90
Finland
610
510
France
357
357
Germany
1,049
1,053
Italy
450
339
Netherlands
207
210
Poland
548
419
Russia
307
248
Spain
246
195
Sweden
975
912
UK
395
331
Other Europe
837
738
Total Europe
7,096
6,166
Australia / New Zealand
146
129
Brazil
41
53
China (incl. Hong Kong)
1,183
860
Japan
316
242
Middle East
252
220
Uruguay
28
27
USA
320
252
Other countries
782
606
Total
10,164
8,553
Reconciliation of operating capital to total asset
As at 31 December
EUR million
2021
2020
Operating Capital
14,307
12,993
Operative liabilities
2,930
2,471
Interest-bearing receivables
1,629
1,834
Tax receivables
160
131
Total Assets
19,026
17,431
Operating Capital, non-current assets and capital expenditure by location
Year Ended 31 December
Operating Capital
Non-current assets 1
Capital Expenditure2
EUR million
2021
2020
2021
2020
2021
2020
Austria
107
111
120
121
8
7
Baltic States
151
110
72
73
9
15
Belgium
123
133
153
160
21
15
Czech Republic
162
120
158
117
39
8
Finland
3,358
2,647
2,382
2,103
296
360
Germany
-68
4
216
278
5
22
Poland
406
404
378
377
36
20
Russia
112
89
73
63
12
10
Sweden
6,777
6,447
6,951
6,623
129
124
Other Europe
92
66
6
8
1
0
Total Europe
11,219
10,130
10,508
9,923
556
580
Brazil
261
254
231
226
16
15
China (incl. Hong Kong)
1,173
1,104
1,116
1,045
18
10
Uruguay
1,636
1,485
1,514
1,415
18
19
USA
47
3
30
28
0
3
Other countries
-29
16
6
12
1
1
Total
14,307
12,993
13,405
12,649
609
628
1 Non-current assets excluding financial instruments and deferred tax assets.
2 Excluding bioasset capex
Note 4 Acquisitions and disposals
Accounting principles
Acquired companies are accounted in accordance with the acquisition method whereby they are included in the consolidated financial
statements from the date the control over the company is obtained. Accordingly, the consideration transferred (including contingent
34
consideration) and the acquired company's identifiable net assets are measured at fair value at the date of the acquisition. Transaction
costs related to acquisition are expensed as incurred. The measurement type of non-controlling interest is decided separately for each
acquisition, and measured either at fair value or non-controlling interest's proportionate share of the net assets. The excess of the
consideration transferred, non-controlling interest and possible previously held equity interest over the fair value of net assets of the
acquired company is recognised as goodwill, which is tested for impairment at least annually.
The disposed companies are included in the consolidated financial statements up to the date when the control is lost. The gain or loss
on disposal together with cumulative translation adjustments (CTA) related to disposed companies are recognised in the consolidated
income statement at the date control is lost.
Acquisition of Group companies
EUR million
2021
2020
Net assets acquired
Property, plant and equipment and Intangible assets
0
3
Biological assets
0
22
Tax assets and liabilities
0
-5
Fair value of net assets acquired
0
20
Total purchase consideration
0
0
Fair value of net assets acquired
0
-20
Goodwill
0
-20
Cash flow on acquisition, net of acquired cash
0
0
Amounts presented in 2020 are related to Bergvik Skog AB restructuring measurement period adjustments.
Disposal of Group companies
Year Ended 31 December
EUR million
2021
2020
Net Assets Sold
Cash and cash equivalents
12
2
Property, plant and equipment and Intangible assets
32
3
Working capital
10
2
Tax assets and liabilities
9
0
Interest-bearing assets and liabilities
-1
-5
Non-controlling interest
0
0
Net assets in disposed companies
62
1
Total disposal consideration
67
-1
CTA release
1
0
Transaction costs
-2
0
Total net gain/loss
4
-2
Attributable to the owners of the parent
4
-2
Attributable to the non-controlling interest
0
0
In September 2021, Stora Enso divested its 100% shareholdings in Stora Enso Laos Plantation AB and Stora Enso Lao Co Ltd to
SilviCarbon. Stora Enso operated plantations in Laos since 2007, with approximately 3 800 hectares of land use rights. After the
transaction, Stora Enso does not own any forest assets in Laos. The sold companies were part of the Forest division. The transaction did
not have a significant impact on the Group.
In September 2021, Stora Enso divested its ECO RFID technology business to Group CCRR. The sold business was part of the
segment Other. The transaction did not have a significant impact on the Group.
In May 2021, Stora Enso signed an agreement to divest its 100% shareholding in the Sachsen Mill to Model Group. The mill is located
in Eilenburg, Germany and has an annual production capacity of 310 000 tonnes of newsprint specialty paper based on recycled paper.
The disposal was completed in August 2021 and Stora Enso will continue to sell and distribute Sachsen’s products under a contract
manufacturing agreement for a period of 18 months after the closing. During the second quarter of 2021, the Group recognised asset
impairments of EUR 20 million related to the transaction. The consideration received by Stora Enso for the divestment of the shares was
EUR 53 million. The final disposal loss was not significant. Sachsen Mill was part of the Paper division.
In March and June 2021, Stora Enso divested its 100% shareholdings in several wind turbine project and real estate related
companies. These companies were mainly acquired in May 2019 in connection to Bergvik Skog AB restructuring. The sold companies
were part of Forest division. The transactions did not have a significant impact on the Group.
In March 2020, Stora Enso divested 100% of shares of its subsidiary consisting of sawn construction timber mill at Pfarrkirchen in
Germany, to the fund LEO II. – VV1 GmbH. The sold company was part of the Wood Products division. The transaction did not have a
significant impact on the Group.
Note 5 Other operating income and expense
Accounting principles
Research and development
Research costs are expensed as incurred in other operating expenses in the consolidated income statement. Development costs are
also expensed as incurred unless they meet the criteria to be recognised as intangible assets in accordance with IAS 38, in which case
they are capitalised as intangible assets and depreciated over their expected useful lives.
35
Government grants
Government grants relating to the purchase of property, plant and equipment are deducted from the carrying value of the asset, while the
net cost is capitalised. Other government grants are recognised as income on a systematic basis over the periods necessary to match
them with the related costs which they were intended to compensate.
Green certificates
Stora Enso is part of the local green energy production system which entitles selected mills in Europe to receive green certificates based
on megawatt hours of green energy produced. Green certificates represent the environmental value of renewable energy generated and
validate that the electricity has been produced from renewable sources. The certificates are typically received free of charge and can be
traded to offset part of the production costs.
These certificates received are recognised at grant date market value only in the balance sheet. As such, fluctuation in market prices
does not have an impact on the income statement and the income is recognised only when certificates are sold.
Other operating income and expense
Year Ended 31 December
EUR million
2021
2020
Other operating income
Emission rights allocated and disposal gains
154
49
Sale of green certificates
20
24
Capital gains on sale of intangible assets and property, plant and equipment
31
3
Gains on disposal of Group company shares and business operations
36
0
Dividend and gain on sale of unlisted shares
0
1
Insurance compensation
7
5
Rent and other
83
42
Government grants
14
22
Total
345
147
Other operating expenses include
Lease expenses
38
39
Research and development
82
100
Credit losses, net of reversals
3
4
CTA release
16
0
Materials and services include
Emissions rights to be delivered
99
31
The Group has recorded an other operating income of EUR 154 (EUR 49) million related to emission rights. Under materials and services
an expense of EUR 99 (EUR 31) million has been booked related to the cost of CO2 emissions from production. Actual realised profits
amounted to EUR 22 (EUR 16) million on the disposal of surplus rights. See Note 15 Emission rights and other non-current assets for
more details related to emission rights. The income from the sale of green certificates amounted to EUR 20 (EUR 24) million.
Lease expenses include expenses relating to short-term leases of EUR 10 (EUR 10) million, low-value assets of EUR 20 (EUR 22)
million and variable lease payments not included in the measurement of lease liabilities of EUR 3 (EUR 3) million. Lease expenses also
include service payments included in lease contracts, which are not included in the measurement of lease liabilities.
Auditor's fees and services
Year Ended 31 December
EUR million
2021
2020
Audit fees
4
4
Audit-related
0
0
Tax fees
0
0
Other fees
0
0
Total
4
4
Aggregate fees for professional services rendered to the Group principal auditor PwC amounted to EUR 4 (EUR 4) million. Audit fees
relate to the auditing of the annual financial statements or ancillary services normally provided in connection with statutory and regulatory
filings. Audit-related fees are incurred for assurance and associated services that are reasonably related to the performance of the audit
or for the review of financial statements. 
Note 6 Personnel expenses
Personnel expenses
Year Ended 31 December
EUR million
2021
2020
Wages and salaries
1,017
966
Pensions (see below)
165
152
Share-based remuneration (Note 21)
7
1
Other statutory employer costs
143
134
Other voluntary costs
19
17
Total
1,351
1,270
36
Pensions
Year Ended 31 December
EUR million
2021
2020
Defined benefit plans
12
16
Defined contribution plans
153
136
Total
165
152
The average number of employees in 2021 amounted to 23,071 compared with 24,455 in 2020. Pension costs are discussed further in
Note 20 Post-employment benefit obligations .
In 2021, the expense of the share-based remuneration was EUR 7 (EUR 1) million. Share-based remuneration comprising of share
awards and related hedges are described in more detail in Note 21 Employee variable compensation and equity incentive schemes.
Remuneration of the Group Leadership Team and Board are described in Note 7 Board and executive remuneration.
Note 7 Board and executive remuneration
Board and committee remuneration
Year Ended 31 December
2021
2020
EUR thousand (before taxes)
Cash
Value of
shares1
Total4
Total
Committee memberships
Board members at 31 December 2021
Antti Mäkinen, Chair
129
79
208
82
Remuneration, Nomination2,3
Håkan Buskhe, Vice Chair
74
45
118
82
Remuneration, Nomination2,3
Elisabeth Fleuriot
60
30
91
91
Financial and Audit
Hock Goh
60
30
91
91
Financial and Audit
Helena Hedblom
52
30
82
Sustainability and Ethics
Mikko Helander
52
30
82
82
Sustainability and Ethics
Christiane Kuehne
56
30
87
87
Sustainability and Ethics
Richard Nilsson
67
30
97
97
Financial and Audit
Hans Sohlström
52
30
82
Remuneration
Former Board members
Jorma Eloranta (until 19 March, 2021)
0
0
0
222
Hans Stråberg (until 19 March, 2021)
0
0
0
118
Total remuneration as Directors1
602
336
939
953
1 40% of the Board remuneration, excluding Committee remuneration, in 2021 was paid in Stora Enso R shares purchased from the market and distributed as follows: to Chair 4 746
R shares, Vice Chair 2 698 R shares, and members 1 831 R shares each. The Company has no formal policy requirements for the Board members to retain shares received as
remuneration.
2 Stora Enso’s Shareholders’ Nomination Board has been appointed by the AGM in 2016 to exist until otherwise decided. The Shareholders’ Nomination Board according to its
Charter as approved by the AGM comprises of four members: the Chair and Vice Chair of the Board of Directors, as well as two members appointed by the two largest shareholders
(one each) as of 31 August each year. No separate remuneration is paid to members of the Nomination Board.
3 Marcus Wallenberg, appointed by FAM AB, is Chair of the Nomination Board. Harri Sailas is the member of the Shareholders’ Nomination Board appointed by Solidium Oy. Antti
Mäkinen and Håkan Buskhe were appointed as members of the Shareholders’ Nomination Board in their roles as Chair and Vice Chair of the Board of Directors.
4 The Company additionally pays the transfer tax for share purchases for each member, in line with AGM decision, which amount is considered also taxable income for each
member.
Shareholders at the Annual General Meeting (AGM) have established a Shareholders’ Nomination Board to exist until otherwise decided
and to annually prepare proposals for the AGM's approval concerning the number of members of the Board of Directors, the Chair, Vice
Chair and other members of the Board, as well as the remuneration for the Chair, Vice Chair and members of the Board and its
committees.
Board share interests at 31 December 2021
Shares held
R
Board members at 31 December 2021
Antti Mäkinen, Chair
12,244
Håkan Buskhe, Vice Chair
5,479
Elisabeth Fleuriot
28,343
Hock Goh
33,096
Helena Hedblom
1,831
Mikko Helander
8,910
Christiane Kuehne
12,904
Richard Nilsson
25,446
Hans Sohlström1
11,831
Total shares held
140,084
1 Spouse holds 179 of the shares
The following Board members also served in 2021
Shares held when Board
membership ended
Effective date of Board
membership ending
Jorma Eloranta1
35,435
19 March 2021
Hans Stråberg
45,389
19 March 2021
1 Held 1 150 A shares of total amount of shares
Group Leadership Team (GLT) remuneration and share interests
37
The table below includes the remuneration earned by GLT members during the year, including those shares with performance conditions
that have ended and are due to vest in the coming year. The company recommends and expects the CEO and GLT members to hold
Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are
therefore recommended not to be sold until this level has been reached.
The aggregate cost of earned remuneration for GLT in 2021 amounted to EUR 11 (EUR 9) million. The total number of GLT members
was thirteen (fifteen) at the year end in 2021.
In accordance with their respective pension arrangements, GLT members may retire at sixty-five years of age with pensions
consistent with local practices in their respective home countries. Contracts of employment provide for six months’ notice prior to
termination with severance compensation of twelve months basic salary if the termination is at the Company’s request.
The outcome of the financial targets relating to the Short term incentive programmes for the performance year 2021, and Long term
incentive programmes for the performance years 2019 to 2021 were reviewed and confirmed by the Remuneration Committee, and
approved by the Board of Directors in January 2022.
Note 21 Employee variable compensation and equity incentive schemes includes details of incentive schemes and share opportunity
programmes for the management and staff of Stora Enso.
Group Leadership Team remuneration
Year Ended 31 December
2021
2020
EUR thousand
CEO
Others2,5
GLT Total
CEO
Others
GLT Total
Remuneration1,4
Annual salary
981
4,695
5,676
894
3,667
4,561
Local housing (actual costs)
0
1
1
0
0
0
Other benefits
33
342
375
29
393
422
Termination benefits
0
0
0
0
0
0
Short Term Incentive programme3
672
2,053
2,725
171
710
881
Long Term Incentive programme3
0
137
137
189
1,212
1,401
1,686
7,228
8,914
1,283
5,982
7,265
Pension Costs
Mandatory plans
341
1,226
1,567
284
904
1,188
Stora Enso voluntary plans
0
735
735
0
590
590
341
1,961
2,302
284
1,494
1,778
Total Compensation
2,027
9,189
11,216
1,567
7,476
9,043
1 The Finnish Corporate Governance code requires companies to report remuneration that is paid or due, and due to this the figures presented in the above table do
not directly reconcile with the amounts recognised as personnel expenses in the Income statement as presented in the below table Group Leadership Team
remuneration in Income statement.
2 Include earnings related to Ulrika Lilja until September 15, 2021 and Markus Mannström until December 13, 2021.
3 Relate to amounts due at year end, which will be paid in 2022. LTI value is calculated using the December 30, 2021 closing price of EUR 16.14. The final value of
the vested shares will depend on the share price on vesting date March 1, 2022.
4 Remuneration for executives is disclosed only for the period during which they were GLT members.
5 Remuneration of GLT members increased in 2021 compared to 2020 mainly due to the fact that the number of GLT members increased, from an average of 10.96
in 2020 to an average of 13.66 in 2021.
Group Leadership Team remuneration in Income statement
Year ended 31 December
2021
2020
EUR thousand
CEO
Others
GLT Total
CEO
Others
GLT Total
Salaries and other short-term employee benefits
1,686
7,091
8,777
1,094
4,770
5,864
Long Term Incentive programme1
685
2,595
3,280
58
237
294
Post-employment benefits
341
1,961
2,302
284
1,494
1,778
Total recognised in Income statement
2,712
11,647
14,359
1,436
6,501
7,936
1 The costs of long-term incentive (LTI) programmes are recognised as costs over the three year vesting period based on the share price at grant date and the
estimate of equity instruments that will eventually vest.
Executives other than CEO
Short term incentive (STI) programmes for management
In 2021, GLT members have STI programmes with up to a maximum of 50% or 60% of their annual fixed salary, payable the year after
the performance period. 70% of the STI for 2021 was based on financial measures and 30% on individual key targets.
Long term incentive (LTI) programmes for management
The 2019 and 2020 LTI programmes have three-year performance periods, while the 2021 programme have three one year performance
periods which are accumulated after three years. All three programmes will be settled in only one portion after three years, and the
absolute maximum vesting level is 100% of the number of shares granted. The 2019 programme is related to performance period
2019-2021, the 2020 programme is related to performance period 2020-2022 and the 2021 programme is related to performance periods
2021-2023. The opportunity under the programmes is in Performance Shares, where the shares are vested in accordance with
performance criteria proposed by the Remuneration Committee and approved by the Board of Directors.
During the year the 2021 programme was launched, in which the GLT members (in GLT at year end) can potentially receive a value
corresponding to 199,456 shares before taxes, assuming the maximum vesting level during the three-year vesting period (2021-2023) is
achieved. The total number of shares actually transferred will be lower because a portion of shares corresponding to the tax obligation
will be withheld to cover income tax.
The fair value of employee services received in exchange for share-based compensation payments is accounted for in a manner that
is consistent with the method of settlement and is either cash or equity settled as described in more detail in Note 21. For the equity
settled part, it is possible that the actual cash cost does not agree with the accounting charges because the share price is not updated at
38
the time of the vesting. The figures in the Group Leadership Team Remuneration table refer to individuals who were executives at year
end.
At the end of the year, the performance period for the 2019 programme ended, and will be settled in one portion after three years in
March 2022, dependent on Economic Value Added (EVA) for the Stora Enso Group and Earnings Per Share (EPS) for the Stora Enso
Group. The Performance Share programme resulted in a 0% performance outcome. Some GLT members participated in the Restricted
Shares programme that ended in 2021 prior to becoming GLT members and those shares are due to be paid 2022.The number of shares
due for executives (GLT members at year end) from programmes that ended during 2021 amounted to 8 258 shares. The total number of
shares actually transferred will be lower because a portion of shares corresponding to the tax obligation will be withheld to cover income
tax.
President & Chief Executive Officer – Annica Bresky
The CEO has been employed by Stora Enso since 1 May 2017 and assumed the position as CEO on 1 December 2019. She has a
notice period of six months with a severance payment of twelve months salary on termination by the company but with no contractual
payments on any change of control. The CEO’s benefits include pension provisions. The CEO’s pension plan has contributions equal to
the collectively agreed pension plan in Sweden (ITP1), with a pensionable salary consisting of annual base salary, vacation pay, and
actual paid STI. The retirement age is sixty-five years.
Short term incentive (STI) programme for CEO
In 2021, the CEO is entitled to an STI programme decided by the Board each year giving a maximum of 75% of the annual fixed salary.
The STI for 2021 was 70% based on financial measures, and 30% based on individual key targets.
Long term incentive (LTI) programmes for CEO
The CEO participates in 2019, 2020 and 2021 share based LTI programmes. The 2019 and 2020 programmes have three-year
performance periods, while the 2021 programme have three one year performance periods which are accumulated after three years. All
three programmes will be settled in only one portion after three years. The 2019 programme is related to performance period 2019-2021,
the 2020 programme is related to performance period 2020-2022 and the 2021 programme is related to performance periods 2021-2023.
The opportunity in the programmes is in performance shares, where shares vest in accordance with performance criteria proposed by the
Remuneration Committee and approved by the Board of Directors.
During the year the 2021 LTI programme was launched in which the CEO has the potential to receive a value corresponding to a
maximum of 57,387 shares before taxes. The grant value of EUR 947,000 is based on the share price at the grant date, assuming a
maximum vesting level during the three-year vesting period (2021-2023) is achieved. The total number of shares actually transferred will
be lower because a portion of shares corresponding to the tax obligation will be withheld to cover income tax.
At the end of the year, the performance period for the 2019 programme ended and will be settled in one portion after three years in
March 2022, dependent on Economic Value Added (EVA) and Earnings Per Share (EPS) for the Stora Enso Group. No shares are due
for the CEO from Performance Share programmes that ended during 2021 due to a 0% performance outcome.
Group Leadership Team share interests
Executives in office at the year end
R shares held1
Shares due 20222
Performance share
opportunity 2023–
20245
Restricted
share opportunity
2023–20245
Annica Bresky
19,763
132,467
Seppo Parvi
50,924
43,854
Tobias Bäärnman
1,207
1,752
15,029
1,300
David Ekberg
625
1,442
33,371
Johanna Hagelberg
28,146
30,993
Kati ter Horst
61,996
59,156
Hannu Kasurinen
37,189
2,467
52,096
Katariina Kravi
34,938
Per Lyrvall3
73,383
39,059
Teemu Salmi
9,034
2,597
19,480
2,335
Annette Stube
32,621
Jari Suominen
53,168
44,781
Lars Völkel
47,473
Total, serving officers4
335,435
8,258
585,318
3,635
1 None of the GLT members holds A shares.
2 Shares due to GLT member are gross of taxes for the LTI programmes with performance periods that ended in 2021 and are due to be paid 2022. The Performance Share
programme resulted in a 0% performance outcome due to be paid in 2022. Some GLT members participated in the Restricted Shares programme that ended in 2021 prior to
becoming GLT members and those shares are due to be paid 2022.
3 Spouse holds 1 257 of the shares.
4 The Company recommends and expects GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as
remuneration are therefore recommended not to be sold until this level has been reached.
5 Potential shares to GLT members are gross of taxes for LTI programmes with performance periods that end in 2022-2023 and are due to be paid 2023-2024
The following Executive Officers also served in 2021
R shares held when
GLT membership
ended
Performance Share
Awards when GLT
Membership Ended
Restricted Share
Awards When GLT
Membership Ended
Effective date of
GLT membership
ending
Markus Mannström1
29,472
61,221
13 December 2021
Ulrika Lilja2
22,981
42,684
15 September 2021
1 These shares are forfeited at end of employment, except for the shares with performance period ending end of 2021, which have been earned at the time employment ended and
vest at the normal vesting date in March 2022.
2 These shares are forfeited at end of employment
39
Note 8 Net financial items
Accounting principles
Net financial items comprise net interest expenses, foreign exchange gains and losses and other financial income and expenses mainly
arising from interest-bearing assets and liabilities.
Financial income and expense
Year Ended 31 December
EUR million
2021
2020
Net financial expense in the income statement
Financial income
42
19
Financial expense
-190
-168
Total
-149
-150
Represented by
Interest expense
Interest expense from borrowings measured at amortised cost
-95
-106
Net interest from interest rate derivatives measured at fair value through OCI
-15
-14
Interest expense on leases
-17
-19
Interest capitalised
1
5
Interest income on loans and receivables measured at amortised cost
2
2
Net interest expense
-124
-132
Foreign exchange gains and losses
Currency derivatives
-39
14
Borrowings, cash equivalents and lease liabilities
37
-22
Net foreign exchange gains and losses
-2
-8
Other financial income
1
3
Other financial expense
Financial fees
-17
-8
Fair valuation losses
-3
0
Net interest on net defined benefit liabilities
-3
-5
Net other financial expense
-22
-10
Total
-149
-150
Gains and losses on derivative financial instruments are shown in Note 27 Derivatives.
In 2021, the net interest expense decreased mainly as a result of lower average interest expense rate on borrowings and lower amount
of gross debt. The amount of interest costs capitalised during the year amounted to EUR 1 (EUR 5) million , which were mainly related to
Oulu site conversion project in Finland. The conversion project was completed in January 2021 and the average interest rate used for
capitalisation was 3.0% (3.3%). Costs on long-term debt issues capitalised as part of non-current debt amounted to EUR 7 (EUR 11)
million in the statement of financial position. During the year, EUR 4 (EUR 4) million was amortised through interest expense by using the
effective interest rate method.
Exchange gains and losses for currency derivatives mainly relate to non-hedge accounted instruments fair valued in the income
statement. The amount reported as other financial income mainly consists of fair valuation gains, while other financial expense in the
table above mainly relates to net financial fees for unused committed credit facilities, guarantees, negative interest on deposits and early
repayment of interest bearing-liabilities.
Note 9 Income taxes
Accounting principles
The Group income tax expense/benefit includes taxes of group companies based on taxable profit/loss for the period, together with tax
adjustments for previous periods and the change in deferred income taxes. Tax assets and liabilities reflect uncertainty related to income
taxes, if any.
Deferred income taxes are provided using the liability method, as measured with enacted, or substantially enacted, tax rates, to reflect
the net tax effects of all temporary differences between the tax bases and the accounting bases of assets and liabilities. No deferred tax
is recognised for the initial recognition of goodwill and the initial recognition of an asset or liability in a transaction which is not a business
combination, and at the time of the transaction this affects neither accounting profit nor taxable profit. Deferred tax assets reduce income
taxes payable on taxable income in future years. The deferred tax assets, whether arising from temporary differences or from tax losses,
are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. 
Tax expense
Year Ended 31 December
EUR million
2021
2020
Current Tax
-118
-109
Deferred Tax
-34
-46
Total Income Tax
-151
-156
40
Income tax rate reconciliation
Year Ended 31 December
EUR million
2021
2020
Profit before tax
1,419
773
Tax at statutory rates applicable to profits in the country concerned1
-263
-165
Non-deductible expenses and tax exempt income2
49
0
Valuation of deferred tax assets
-7
10
Taxes from prior years
39
-4
Changes in tax rates and tax laws
1
4
Profits from equity accounted investments
29
0
Other
1
1
Total income taxes
-151
-156
Effective tax rate
10.7%
20.1%
Statutory tax rate (blended)
18.5%
21.4%
1 Includes a EUR 37 million impact from countries with tax holidays and tax benefits in 2021 and a EUR 0 million impact from tax holidays and other tax benefits in 2020.
2 The tax value of non-deductible expenses of EUR 26 million has been netted against tax exempt income of EUR 75 million in 2021, and tax value of non-deductible expenses of
EUR 12 million has been netted against tax exempt income of EUR 12 million in 2020.
The statutory tax rate is a weighted average of the statutory tax rates prevailing in jurisdictions where Stora Enso operates.
Change in deferred taxes in 2021
EUR million
Value at
1 Jan 2021
Income
Statement
OCI
Acquisitions/
disposals
Translation
difference
Value at
31 Dec 2021
Forest assets
-1,175
-70
-40
0
16
-1,268
Fixed assets
-173
75
0
-8
3
-103
Financial instruments
-11
3
8
0
1
1
Untaxed reserves
-39
-43
0
0
2
-80
Pensions and provisions
56
27
-23
0
-2
58
Tax losses and tax credits carried
forward
104
1
0
0
2
107
Other deferred taxes
23
-26
0
-1
2
-2
Total
-1,215
-33
-55
-9
24
-1,287
Equity hedges (CTA)
-4
4
Net investment loans
2
-2
Change in deferred tax
-35
-53
-9
24
Assets1
117
143
Liabilities1
-1,332
1,430
1 Deferred tax assets and liabilities have been offset in accordance with IAS 12.
OCI = Other Comprehensive income, CTA = Cumulative Translation Adjustment
Change in deferred taxes in 2020
EUR million
Value at
1 Jan 2020
Income
Statement
OCI
Acquisitions/
disposals
Translation
difference
Value at
31 Dec 2020
Forest assets1
-722
-105
-310
-5
-33
-1,175
Fixed assets
-195
26
0
0
-4
-173
Financial instruments
1
0
-12
0
0
-11
Untaxed reserves
-24
-12
0
0
-3
-39
Pensions and provisions
69
-8
-3
0
-2
56
Tax losses and tax credits carried
forward
84
22
0
0
-2
104
Other deferred taxes
-7
28
0
0
2
23
Total
-794
-49
-325
-5
-42
-1,215
Equity hedges (CTA)
5
-5
Net investment loans
-1
1
Change in deferred tax
-45
-329
-5
-42
Assets2
81
117
Liabilities2
-875
-1,332
1 Previously forest assets presented on same line as other property, plant and equipment items and to minor extent within untaxed reserves. Opening balances restated.
2 Deferred tax assets and liabilities have been offset in accordance with IAS 12.
OCI = Other Comprehensive income, CTA = Cumulative Translation Adjustment
The recognition of deferred tax assets is based on the Group’s estimations of future taxable profits available against which the group can
utilise the benefits.
41
Tax losses
As at 31 December
Tax losses carried forward
Recognised tax values
Unrecognised tax values
EUR million
2021
2020
2021
2020
2021
2020
Expiry within five years
417
607
7
35
79
88
Expiry after five years
343
239
60
52
11
0
No expiry
1,137
1,131
38
15
210
221
Total
1,897
1,977
106
102
300
309
Tax losses of EUR 274 (EUR 329) million relate to Finland. A deferred tax asset of EUR 55 (EUR 66) million has been recognized relating
to these tax losses, as it is evident considering the recent history of profit in Finland, the outlook and tax planning opportunities that the
full amount of tax losses in Finland will be utilized before its expiration.
Non-recognised deferred tax assets on deductible temporary differences amounted to EUR 38 (EUR 25) million. There is no expiry
date for these differences. Taxable temporary differences in respect of investments in subsidiaries, branches and associates and
interests in joint operations, for which deferred tax liabilities have not been recognised amounted to EUR 339 (EUR 323) million.
Uncertain tax positions
At balance sheet date there were on-going tax audits in several jurisdictions. It is not expected that any significant additional taxes in
excess of those already recorded for will arise as a result of these audits.
Tax liabilities included amount of EUR 37 million in 2020 related to uncertain tax position in Sweden due to disputes concerning the
deduction of interest expense. In 2021 all disputes ended successfully, and Stora Enso has consequently released the tax risk provision.
Note 10 Depreciation, amortisation and impairment charges
Accounting principles
Depreciation, amortisation and impairment charges
Depreciation or amortisation of an asset begins when it is available for use in the location and condition necessary for it to be operated in
the manner intended by management. Depreciation or amortisation ceases when the asset is derecognised or classified as held for sale
in accordance with IFRS 5. Depreciation or amortisation does not cease when the asset becomes idle. Tangible and intangible assets are
depreciated and amortised on a straight-line basis during their useful lives. Useful lives are reviewed periodically. If an asset is disposed
of, proceeds exceeding the carrying value of the asset up to its historical cost are netted against depreciation, amortisation and
impairment charges. Only disposal proceeds exceeding the historical cost of an asset are presented as other operating income (Note 5).
If the asset’s book value is higher than the disposal proceeds, the difference is recognised as an impairment in the period when reliable
estimate of disposal loss is available, at the latest when a binding sales contract is signed. Right-of-use (ROU) assets are depreciated
using the straight line method from the commencement date of the contract to the earlier of the end of the lease term or the end of the
useful life of the ROU assets.
The carrying amounts of intangible assets, property, plant and equipment and ROU assets are reviewed at each reporting date to
determine whether there is any indication of impairment, whereas goodwill is tested annually. If any such indication exists, the
recoverable amount is estimated as the higher of the fair value less costs of disposal and the value in use, with an impairment loss being
recognised whenever the carrying amount exceeds the recoverable amount.
A previously recognised impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount, however, not to an extent higher than the carrying amount that would have existed had no impairment loss been recognised in
prior years. For goodwill, however, a recognised impairment loss is not reversed.
Whilst intangible assets, property, plant and equipment and ROU assets are subject to impairment testing at the cash generating unit
(CGU) level, goodwill is subject to impairment testing at the CGU level for groups of CGUs, which represents the lowest level within the
Group at which goodwill is monitored for internal management purposes.
Depreciation, amortisation and impairment charges
Year ended 31 December
EUR million
2021
2020
Depreciation and amortisation
Intangible assets
26
30
Buildings and structures
79
84
Plant and equipment
373
370
Right-of-use assets
62
66
Other tangible assets
9
9
Total
549
559
Impairment
Goodwill
4
0
Intangible assets
7
19
Buildings and structures
10
13
Plant and equipment
126
21
Right-of-use assets
1
2
Other tangible assets
2
2
Total
149
57
Disposal gains/losses
Gain on sale of assets
-4
-10
Loss on sale of assets
3
3
Total
0
-7
Depreciation, amortisation and impairment charges
697
609
42
Impairment testing
The recoverable amount for the cash generating units (CGUs) has been determined based on a value in use calculation using cash flow
projections from financial estimates approved by the Board of Directors and management. The pre-tax discount rates are calculated for
each CGU taking into account the business environment of the CGU and the tax and risk profile of the country in which the cash flow is
generated. The table in the goodwill impairment testing section below sets out the pre-tax discount rates used for goodwill impairment
testing, which are similar to those used in the impairment testing of other intangible assets, property, plant and equipment, and ROU
assets.
Impairments were tested using a value in use method for each CGU based on the following main assumptions:
Sales price estimates in accordance with internal and external specialist analysis
Cash flows and discount rates were prepared in nominal terms
Current cost structure to remain unchanged
For goodwill testing, a five-year future period was used, after which the perpetuity value was determined using inflation based
growth rates, except for Paper division for which the testing period used was the remaining expected economic life
For intangible assets, property, plant and equipment, and ROU assets testing period was the remaining expected economic life
of the assets.
Property, plant and equipment, other intangible assets and ROU assets impairments
The total impairment charges on property, plant and equipment, other intangible assets and ROU assets in 2021 amounted to EUR 149
(EUR 57) million and resulted from business restructuring, Group company disposals and impairment testing. In 2021, mainly due to
restructuring, Group company disposal, impairment testing and further deterioration of certain paper-grade market due to Covid-19
pandemic, total impairment charge of EUR 127 million was recognised in News, Uncoated Mechanical and Office CGUs in the Paper
division. In 2020, certain assets in Nordic and Innovation CGU in the Biomaterials division were tested for fixed asset impairment and an
impairment charge of EUR 42 million was recognised.
Goodwill impairment testing
In 2021 or 2020, the Goodwill testing did not result in any impairment. In 2021 and due to Sachsen Mill disposal, goodwill impairment of
EUR 4 million was recognised in Paper - News CGU.
The most material groups of cash generating units containing goodwill
Year ended 31 December
2021
2020
EUR million
Goodwill
at year
end
Pre-tax
discount
rate
Goodwill
at year
end
Pre-tax
discount
rate
Wood Products - Central Europe
109
8.7%
106
6.8%
Paper - Book Paper 1
28
7.2%
28
8.2%
Paper - Uncoated Mechanical
40
7.2%
40
6.8%
Biomaterials - Nordic and Innovation
45
7.2%
43
6.8%
Other CGUs 2
60
64
Total
282
281
1 CGU structure of Paper division has been changed in 2021 separating Book Paper and News Paper to their own CGUs.
2 Other CGUs line is including Packaging Solutions - Europe, Packaging Materials operations in Sweden, Packaging Materials - Containerboards, Wood Products - Northern Europe,
Paper - News and Paper - Office cash generating units.
The calculation of value in use is highly sensitive to discount rates, sales prices and costs. The Sensitivity analysis table below
summarises amounts by which the value assigned to the key assumption must change in order for the unit’s recoverable amount to be
equal to its carrying amount for the CGUs and for which a reasonably possible change in an assumption could result in an impairment. In
2021 the recoverable amount for the Biomaterials - Nordic and Innovation CGU amounted to EUR 418 million compared with the carrying
amount of EUR 379 million. In 2021, the recoverable amount for the Paper - News CGU amounted to EUR 161 million compared with the
carrying amount of EUR 134 million. In Paper - News CGU any reasonably possible change in discount rate would not cause carrying
amount to exceed its recoverable amount.
Goodwill impairment testing sensitivity analysis
EUR million
Biomaterials -
Nordic and
Innovation
Paper - News
Increase in the discount rate (percentage points)
0.6%
n/a
Annual decrease in the sales prices
-0.2%
-0.6%
Annual increase in the costs
0.2%
0.6%
Summary of impairments and impairment reversals per division
Year ended 31 December
EUR million
2021
2020
Packaging Materials
10
0
Packaging Solutions
2
3
Biomaterials
0
42
Wood Products
0
0
Forest
1
0
Paper
131
3
Other
4
9
Total (impairment +) / (Impairment reversal -)
149
57
43
Note 11 Intangible assets, property, plant and equipment and right-of-use assets
Accounting principles
Computer software development costs
The cost of development or acquisition of new software clearly associated with an identifiable and unique product that will be controlled
by the Group and has a probable benefit exceeding its cost beyond one year is recognised as an intangible asset and will be amortised
over the expected useful life of the software between 3 to 10 years. Website costs are expensed as incurred.
Goodwill
Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately
recognised by the Group on an acquisition. Goodwill is computed as the excess of the cost of an acquisition over the fair value of the
Group’s share of the fair value of net assets of the acquired subsidiary at the acquisition date, and is allocated to those groups of cash
generating units expected to benefit from the acquisition for the purpose of impairment testing. In compliance with IFRS 3, the cost of an
acquisition is equal to the sum of the consideration transferred, the value of the non-controlling interest in the acquisition, and the fair
value of the previously held interest in the acquired subsidiary. Goodwill arising on the acquisition of non-euro foreign entities is treated
as an asset of the foreign entity denominated in the local currency and translated at the closing rate.
Goodwill is not amortised but tested for impairment on an annual basis, or more frequently if there is an indication of impairment.
Gains and losses on the disposal of a Group entity include any goodwill relating to the entity sold.
Goodwill arising from the acquisition of an equity accounted investment or joint arrangement is included in the carrying amount of the
investment and is assessed for impairment as part of that investment. Any excess of the Group’s share of the net fair value over the cost
of the acquisition, after reassessment, is recognised immediately in the income statement.
Intangible assets
Intangible assets are stated at their historical cost and amortised on a straight-line basis over their expected useful lives, which usually
varies from 3 to 10 years and up to 20 years for patents. An adjustment is made for any impairment. Intangible items acquired must be
recognised as assets separately from goodwill if they meet the definition of an asset, are either separable or arise from contractual or
other legal rights, and their fair value can be measured reliably.
Intangible assets recognised separately from goodwill in acquisitions consist of marketing and customer-related or contract and
technology-based intangible assets. Typical marketing and customer-related assets include trademarks, trade names, service marks,
collective marks, certification marks, customer lists, order or production backlogs, customer contracts and the related customer
relationships. Contract and technology-based intangible assets are normally licensing and royalty agreements or patented technology
and trade secrets, such as confidential formulas, processes or recipes. The fair value determination of customer contracts and related
relationships is derived from expected retention rates and cash flow over the customers’ remaining estimated lifetime. The value of
trademarks is derived from a discounted cash flow analysis using the relief from royalty method.
Property, plant and equipment
Property, plant and equipment acquired by Group companies are stated at their historical cost, which are augmented where appropriate
by asset retirement costs. Assets arising on the acquisition of a new subsidiary are stated at fair value at the date of acquisition.
Depreciation is computed on a straight-line basis, and adjusted for any impairment and disposal charges. The consolidated statement of
financial position value represents the cost deducted by received grants and subsidies and less the accumulated depreciation and any
impairment charges. Interest costs on borrowings to finance the construction of these assets are capitalised as part of the cost during the
construction period when the requirements are fulfilled.
Land and water areas are not depreciated, as these are deemed to have an indefinite life, but otherwise depreciation is based on the
following expected useful lives:
Asset class
Depreciation years
Buildings, industrial
10-50
Buildings, office & residential
20-50
Groundwood mills
15-20
Hydroelectric power
40
Paper, board and pulp mills, main machines
20-30
Heavy machinery
10-20
Converting factories
10-15
Sawmills
10-15
Computers
3-5
Vehicles
5
Office equipment
3-5
Railway, harbours
20-25
Forest roads
10-15
Roads, fields, bridges
15-20
 
Ordinary maintenance and repair charges are written as expensed when incurred, but the costs of significant renewals and
improvements are capitalised and depreciated over the remaining useful lives of the related assets. Retirements, sales and disposals of
property, plant and equipment are recorded by deducting the cost and accumulated depreciation from the accounting records with any
resulting terminal depreciation adjustments reflected in impairment charges in the consolidated income statement. Capital gains are
shown in other operating income.
Spare parts are accounted for as property, plant and equipment if they are major and used over more than one period, or if they are
used only in connection with an item of property, plant and equipment. In all other cases, spare parts are carried as part of the inventory
and recognised in profit or loss as consumed items.
Right-of-use (ROU) assets
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. ROU assets are initially
measured at cost, which comprises the initial amount of the lease liability adjusted mainly for lease payments made at or before the
commencement date. The Group allocates the consideration in the contract to each lease component and will separate non-lease
components if these are identifiable. Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions.
The ROU assets are subsequently depreciated using the straight line method from the commencement date to the earlier of the end
of the lease term or the end of the useful life of the ROU asset. In addition, the ROU asset is adjusted for certain remeasurements of the
lease liability. ROU assets are tested for impairment in accordance with IAS 36.
The Group has elected not to recognise ROU assets for short-term leases that have a lease term of 12 months or less and leases of
low value assets. Leases of low value assets mainly include IT and office equipment, certain vehicles and machinery and other low value
items. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term
(Note 5).
Intangible assets
Year ended 31 December
EUR million
Computer 
software
Other intangible
assets
Assets in
progress
Goodwill
Total
Acquisition cost
At 1 January 2020
236
102
29
1,253
1,620
Translation difference
-2
-3
-1
-4
-9
Reclassifications
17
5
-19
0
2
Additions
3
1
9
-20
-7
Disposals1
-20
-8
0
-535
-562
At 31 December 2020
233
98
17
695
1,044
Translation difference
2
6
0
8
16
Reclassifications
8
12
-16
0
4
Additions
6
5
6
0
17
Disposals1
-23
-19
0
-171
-213
At 31 December 2021
226
103
7
532
867
Accumulated amortisation and impairment
At 1 January 2020
170
27
0
951
1,148
Translation difference
-2
-3
0
-2
-6
Disposals1
-20
-8
0
-535
-562
Amortisation
18
12
0
0
30
Impairment
9
9
0
0
19
At 31 December 2020
176
38
0
414
629
Translation difference
1
4
0
3
8
Disposals1
-22
-19
0
-171
-212
Amortisation
18
9
0
0
26
Impairment
5
2
0
4
11
At 31 December 2021
178
34
0
250
462
Net Book Value at 31 December 2021
48
69
7
282
405
Net Book Value at 31 December 2020
57
60
17
281
415
1 Company disposals are included in Disposals line. Company disposals are discussed in more detail in Note 4 Acquisitions and disposals.
45
Property, plant and equipment
Year ended 31 December
EUR million
Land and water
Buildings and
structures
Plant and
equipment
Other tangible
assets
Assets in
progress
Total
Acquisition cost
At 1 January 2020
129
3,376
13,438
459
345
17,746
Translation difference
-1
-84
-79
-1
-2
-167
Reclassifications
0
19
166
4
-192
-2
Reclassifications to biological assets
0
-2
-1
0
0
-4
Additions
0
16
157
4
399
576
Disposals1
0
-23
-424
-11
-1
-460
At 31 December 2020
128
3,301
13,256
455
549
17,690
Translation difference
0
64
48
0
1
114
Reclassifications
2
58
405
11
-480
-4
Reclassifications to biological assets
0
-1
-1
0
0
-2
Additions
0
15
214
1
328
558
Disposals1
-13
-82
-503
-19
-4
-620
At 31 December 2021
117
3,355
13,421
448
394
17,735
Accumulated depreciation and impairment
At 1 January 2020
4
2,044
10,201
386
11
12,645
Translation difference
0
-21
12
0
0
-9
Disposals1
0
-22
-419
-11
-1
-453
Depreciation
0
82
370
11
0
464
Impairments and reversals
0
13
21
0
2
36
At 31 December 2020
3
2,096
10,186
386
11
12,683
Translation difference
0
9
-30
0
1
-20
Disposals1
-1
-79
-487
-19
0
-586
Depreciation
0
77
373
11
0
461
Impairments and reversals
0
10
125
2
0
137
At 31 December 2021
3
2,113
10,164
380
14
12,674
Net Book Value at 31 December 2021
114
1,242
3,256
68
380
5,060
Net Book Value at 31 December 2020
124
1,205
3,071
69
538
5,007
1 Company disposals are included in the Disposals line. Company disposals are discussed in more detail in Note 4 Acquisitions and disposals.
46
Right-of-use assets
Year ended 31 December
EUR million
Land and water
Forest land
Buildings and
structures
Plant and
equipment and
other
Total
Acquisition cost
At 1 January 2020
104
249
89
138
579
Translation difference
-2
-9
0
-2
-14
Reclassifications
0
0
-1
0
0
Reclassifications to biological assets
0
-12
0
0
-12
Additions
3
6
9
21
39
Disposals
-5
0
-3
-7
-15
Other changes
0
0
2
-1
1
At 31 December 2020
99
233
97
148
577
Translation difference
9
26
1
1
37
Reclassifications to biological assets
0
-15
0
0
-15
Additions
0
9
9
15
33
Disposals
-1
0
-4
-37
-42
Other changes
0
0
1
0
1
At 31 December 2021
107
253
104
127
591
Accumulated depreciation and impairment
At 1 January 2020
6
7
20
38
71
Disposals
-3
0
-2
-7
-13
Depreciation
3
5
21
37
66
Impairment
1
0
0
1
2
Other changes
0
0
0
0
-1
At 31 December 2020
6
12
38
70
125
Translation difference
1
2
1
0
3
Disposals
-1
0
-4
-36
-41
Depreciation
3
5
20
34
62
Impairment
0
0
0
1
1
At 31 December 2021
8
18
55
69
150
Net Book Value at 31 December 2021
99
235
49
59
441
Net Book Value at 31 December 2020
93
221
59
79
452
Stora Enso’s most material right-of-use assets capitalised consist of land areas used in forestry and industrial operations, various
machinery and equipment leases including operative machinery, vessels and other logistic equipment and properties including offices,
warehouses and other operative properties. Some of the leases contain renewal options and extension options that are considered in the
lease term if the Group is reasonably certain to exercise the option.
Intangible assets and property, plant and equipment, and right-of-use asset additions 
The total capital expenditure excluding investments in biological assets for the year amounted to EUR 609 (EUR 628) million. Details of
ongoing projects and future plans are discussed in more detail in the Report of the Board of Directors.
Note 12 Forest assets
Accounting principles
The forest assets of Stora Enso are defined as standing growing trees, classified as biological assets, and related forest land. The
biological assets of Stora Enso consist of standing trees to be used as raw material in pulp and mechanical wood production and as
biofuels.
Forest asset valuation is based on continuous operations and sustainable forest management, also taking into consideration
environmental restrictions and other reservations. Biological assets are recognised and valued in accordance with the IAS 41 Agriculture
standard at fair value and forest land assets are recognised in accordance with the IAS 16 Property, plant and equipment standard.
Leased forest land assets are presented as part of right-of-use assets in Note 11 Intangible assets, property, plant and equipment, and
right-of-use assets.
Nordic and plantation forest assets are classified as different classes of assets due to different nature, usage and characteristics of
the assets. The main difference is the short-term growing cycle of 6-12 years in plantations versus the long-term growing cycle of 60-100
years in Nordic forests. There are also differences in regeneration methods, forest management, and the use of the assets for other
purposes.
Nordic forest assets include holdings in Sweden and Finland (also including minor forest asset holdings in Estonia and Romania) and
plantation forest assets include holdings in China, Brazil and Uruguay. Accounting policies for the different class of forest assets are
presented separately below. The Group has forest assets in its own subsidiaries in Sweden and China as well as in joint operations in
Brazil and Uruguay, and in equity accounted investment in Finland. Stora Enso also ensures that the Group’s share of the valuation of
forest holdings in equity accounted investments and joint operations are consistent with Group accounting policies. At harvesting,
biological assets are transferred to the inventory.
Nordic forest assets
Forest assets in Sweden are recognised at fair value and valued by using a market approach method on the basis of the forest market
transactions in the areas where Stora Enso’s forests are located. Stora Enso’s forest assets create value by securing wood supply, 
47
increasing long-term yield, optimising land use and securing financial flexibility. They play an important role in mitigating climate change
impacts, as growing trees absorb CO2. The forests also offer opportunities for future value streams, such as wind power.
The total forest assets value is calculated with verified inventory data and regional standing stock prices, considering among others:
regional market transaction data based on the forest assets' geographical locations,
standing stock prices by forest cubic meter (m3 fo) combined from traded forest estates and
regional standing stock inventory.
Information relating to forest asset transactions are available from several market sources. The market transaction information can be
viewed as market-corroborated inputs. Certain adjustments are made to refine the market-corroborated inputs using unobservable inputs,
therefore inputs are categorised to fair value hierarchy measurement level 3. The judgements are further explained in Note 2 Critical
accounting estimates and judgements.
The total value of the forest assets in Sweden is allocated across biological assets and forest land. Allocation of the combined fair
value of forest assets is based on the income approach where separate present values of expected net cash flows are calculated for both
biological assets and forest land. The discount rate is determined as the rate at which the valuation based on market transaction prices
matches the total forest assets combined cash flows for biological assets and forest land. The discount rate is estimated to be the same
for biological assets and forest land as the nature and timing of the cash flows are similar.
Biological assets are measured at fair value in accordance IAS 41. The fair value is based on the income approach and the
discounted cash flow method whereby the fair value of the biological assets is calculated using cash flows from continuous operations,
taking into account the growth potential of one cycle. Forest land is measured at fair value using the revaluation method as defined in the
IAS 16 standard. Fair value of forest land is measured based on income approach, including net cash flows related to trees to-be-planted
in the future as well as other land related income, such as hunting rights, wind power leases and soil material sales.
Other Nordic forest assets, owned mainly in Finland through Group’s 41% shareholding in the equity accounted investment Tornator,
are recognised at fair value using the income approach. The valuation of biological assets is based on the discounted cash flow method
calculated using cash flows from continuous operations, taking into account the growth potential of one cycle. The forest land is
measured at fair value using the revaluation method as defined in IAS 16. The forest land fair value measurement is based on the
income approach and the discounted cash flow method, including cash flows from trees to-be-planted in the future as well as other
related income. The discount rate applied for both biological assets and forest land is determined using the weighted average cost of
capital method.
Changes in the fair value of biological assets are recognised in the income statement. Changes in the fair value of forest land, net of
deferred taxes, are recognised in other comprehensive income (OCI) and accumulated in a revaluation reserve in equity. Revaluation
reserve is not recycled to the income statement upon disposal. If the fair value of forest land were to be less than cost, the difference
would be recognised in the income statement as an impairment loss.
Plantation forest assets
In plantation forest areas, biological assets are recognised at fair value in accordance with the IAS 41 standard and based on the income
approach in those areas where the Group has forest land. Fair value measurement is based on fair value hierarchy measurement level 3.
Forest land is measured initially and subsequently at cost, using the cost model as defined in IAS 16 standard.
The valuation of biological assets is based on the discounted cash flow method calculated using cash flows from continuous
operations and based on sustainable forest management, taking into account growth potential of one cycle. The fair value of the
biological assets is based on the productive forest land. The yearly harvest from the forecasted tree growth is multiplied by wood prices
and the cost of silviculture and harvesting is then deducted. The fair value of the biological assets is measured as the present value of
the harvest from one growth cycle, taking into consideration environmental restrictions and other reservations. The discount rate applied
is determined using the weighted average cost of capital method.
Young standing timber less than two years old (less than three years in Montes del Plata) is considered to be an immature asset and
accounted at cost. Fair value is deemed to approximate the cost when little biological transformation has taken place or the impact of the
transformation on the price is not expected to be significant, which varies according to the location and species of the assets.
Changes in the fair value of biological assets are recognised in the income statement. The forest land is measured at cost and not
depreciated.
The value of forest assets disclosed in the consolidated statement of financial position from subsidiary companies and joint operations
amounts to EUR 6,747 (EUR 6,256) million as shown below. The Group’s indirect share of forest assets held by associated companies
amounts to EUR 985 (EUR 837) million. The total forest asset value amounts to EUR 7,732 (EUR 7,093) million.
48
Forest assets
Biological assets
Forest land3
Forest assets total
Year Ended 31 December
Year Ended 31 December
Year Ended 31 December
EUR million
2021
2020
2021
2020
2021
2020
Subsidiaries and joint operations
Value at 1 January
4,250
3,627
2,005
509
6,256
4,136
Translation differences
-43
99
-26
-12
-68
88
Unrealized change in fair value1 2
471
560
225
1,504
696
2,065
Additions
58
81
1
3
59
84
Disposals
-64
0
-5
0
-69
0
Change due to harvesting1
-127
-128
0
0
-127
-128
Other operative changes1
-17
-4
0
0
-17
-4
Reclassification from PPE
17
16
0
0
17
16
Value at 31 December
4,547
4,250
2,201
2,005
6,747
6,256
Associated companies
Tornator Oyj (41%)
906
769
78
56
985
825
Arauco Florestal Arapoti S.A. (20%)
0
8
0
4
0
12
Value at 31 December
906
778
78
60
985
837
Total
5,453
5,028
2,279
2,065
7,732
7,093
1 For biological assets, changes are presented  in the profit and loss. For forest land, changes in fair value are recognised directly in equity.
2 The impact in 2020 is mainly due to valuation and accounting principle changes for Swedish forests.
3 Not including leased forest land.
Valuation and standing stock of forest assets in subsidiaries, joint operations and associate company
As at
31 December 2021
Swedish
forests
Guangxi
Veracel
(50%)
MdP
(50%)
Tornator
(41%)
Total
Total area
ha
1,389,000
77,000
113,000
136,000
295,000
2,009,000
- of which owned
ha
1,389,000
106,000
95,000
295,000
1,884,000
- of which leased
ha
77,000
7,000
41,000
125,000
Productive area
ha
1,141,000
68,000
47,000
90,000
271,000
1,617,000
Total area
Standing stock
million m3 fo.1
152.6
5.0
5.0
13.9
33.0
209.5
Productive area
Standing stock
million m3 fo.1
150.5
4.9
5.0
13.9
32.7
207.1
Estimated growth
million m3 fo.1
5.8
1.6
1.8
2.6
1.4
13.2
Harvesting
million m3 fo.1
4.4
1.3
1.2
1.6
1.3
9.9
Other changes
million m3 fo.1
6.2
0.4
0.0
-0.1
1.2
7.7
Harvesting
million m3 u.b.2
3.7
1.0
1.0
1.3
1.2
8.2
Biological assets
EUR million
4,005
200
81
260
906
5,453
Biological assets
Productive area
EUR/ha
3,511
2,950
1,713
2,900
3,342
3,372
Forest land
EUR million
2,012
26
163
78
2,279
Total forest assets
EUR million
6,017
200
107
423
985
7,732
Leased forest land
EUR million
187
2
45
235
1Forest cubic meters
2Solid under bark (sub) cubic meters
As at
31 December 2020
Swedish
forests
Guangxi
Veracel
(50%)
MdP
(50%)4
Tornator
(41%)
Total3 4
Total area
ha
1,398,000
81,000
112,000
135,000
291,000
2,017,000
- of which owned
ha
1,398,000
107,000
95,000
291,000
1,891,000
- of which leased
ha
81,000
5,000
39,000
126,000
Productive area
ha
1,145,000
75,000
47,000
89,000
269,000
1,623,000
Total area
Standing stock
million m3 fo.1
145.0
4.3
4.4
13.0
31.8
198.5
Productive area
Standing stock
million m3 fo.1
143.0
4.2
4.4
13.0
31.4
195.9
Estimated growth
million m3 fo.1
6.1
1.3
1.7
3.0
1.4
13.5
Harvesting
million m3 fo.1
4.6
1.2
1.0
1.2
1.3
9.4
Other changes
million m3 fo.1
-1.7
-0.1
0.0
0.0
0.7
-1.1
Harvesting
million m3 u.b.2
3.8
1.0
0.8
1.0
1.2
7.8
Biological assets
EUR million
3,774
176
66
230
769
5,016
Biological assets
Productive area
EUR/ha
3,298
2,359
1,412
2,597
2,860
3,089
Forest land
EUR million
1,829
26
150
56
2,061
Total forest assets
EUR million
5,603
176
92
380
825
7,077
Leased forest land
EUR million
183
1
37
221
1Forest cubic meters
2Solid under bark (sub) cubic meters
3Total figures exclude minor forest ownerships in Laos and equity accounted investment Arauco Florestal Arapoti S.A. in Brazil
4MdP productive area (ha) and biological assets per productive ha recalculated based on information received after 2020 reporting
49
Subsidiaries and joint operations
On 31 December 2021, forest assets (excluding leases) were located by value, in Sweden 89% (90%), China 3% (3%), Brazil 2% (1%)
and Uruguay 6% (6%). The total area amounts to 1,715 (1,726) thousand hectares of which 7% (7%) is leased and under 1% (1%) is
restricted. From Stora Enso's total forest holdings 1,346 (1,356) thousand hectares is productive forest area. The Montes del Plata and
Veracel amounts take into account the ownership share.
Swedish forests
At the end of 2021, the value of the biological assets in Swedish forests amounted to EUR 4,005 (EUR 3,774) million, related forest land
amounted to EUR 2,012 (EUR 1,829) million and the total forest assets amounted to EUR 6,017 (EUR 5,603) million. The increase of
EUR 414 million in the forest assets value is mainly driven by increased standing stock volume estimate especially for the retention forest
areas as a significant portion of the forest areas were subject to laser scanning and improved inventory data as well as higher market
prices. Foreign exchange impact and disposals decreased the value. Deferred tax liabilities related to forest assets amounted to EUR
1,237 (EUR 1,153) million. The discount rate of 3.5% (3.6%) was applied in the valuation.
The productive area in Swedish forests amounted to 1,141 (1,145) thousand hectares with a standing stock of 150.5 (143.0) million
forest m3. The weighted three-year average market transaction price applied in the valuation for Swedish forests assets in 2021 is EUR
40 (EUR 39) per forest m3. The forest asset value corresponds to an average of EUR 5,270 (EUR 4,900) per ha of productive forest area.
The valuation of the forest assets is based on detailed transaction data and price statistics as provided by different market data
suppliers. Market transaction data is adjusted to consider the characteristics and nature of Stora Enso's forest assets and to exclude
certain non-forest assets and outliers. The valuation takes into account where the forest land is located, price levels and volume of
standing stock. Market prices between areas varies significantly. Future changes in value of Swedish forest assets are impacted by
changes in market transaction prices and changes in volume of standing stock, considering growth and other changes. See also Note 2
for information related estimates and judgment applied in the valuation.
Forest asset location and volume
2021
North
Middle
South
Total
Productive area
ha
191,000
950,000
0
1,141,000
Percentage of total
%
17%
83%
0%
100%
Standing stock
million m3 fo.
17.1
133.3
0.0
150.5
Percentage of total
%
11%
89%
0%
100%
2020
North
Middle
South
Total
Productive area
ha
191,000
949,000
5,000
1,145,000
Percentage of total
%
17%
83%
0%
100%
Standing stock
million m3 fo.
16.2
125.9
0.8
143.0
Percentage of total
%
11%
88%
1%
100%
Guangxi
At the end of 2021, the value of the biological assets in Guangxi, China, amounted to EUR 200 (EUR 176) million. All the forest land in
China is leased. The value increase is mainly driven by foreign exchange impact and increased volume, whereas higher costs and
discount rate decreased the value. The biological assets included young standing timber with a value of EUR 33 (EUR 33) million. The
discount rate of 8.6% (8.4%) used in the discounted cash flows (DCF) increased slightly in 2021. The productive forest area in Guangxi
totals to 68 (75) thousand hectares with a standing stock of 4.9 (4.2) million forest m3.
Veracel
Veracel Celulose S.A. (Veracel) is a 50% joint operation in Brazil. Stora Enso’s share of the biological assets was EUR 81 (EUR 66)
million. The movement is mainly driven by increased prices, volume and growth and lower discount rate. The biological assets included
young standing timber with a value of EUR 21 (EUR 22) million. The discount rate of 6.9% (8.8%) used in the DCF decreased in 2021.
The related forest land is measured at cost. Stora Enso’s share of the productive forest area totals to 47 (47) thousand hectares with a
standing stock of 5.0 (4.4) million forest m3.
Montes del Plata
Montes del Plata (MdP) is a 50% joint operation in Uruguay. Stora Enso’s share of the biological assets was EUR 260 (EUR 230) million.
The movement is mainly driven by foreign exchange impact. The biological assets included young standing timber with a value of EUR
46 (EUR 46) million. The discount rate of 6.5% (6.5%) used in the DCF remained the same in 2021. The related forest land is measured
at cost. Stora Enso’s share of the productive forest area totals to 90 (89) thousand hectares with a standing stock of 13.9 (13.0) million
forest m3.
Associated companies
Tornator
Tornator Oyj (Tornator) is a 41% owned Finnish associated company. Stora Enso’s share of the biological assets was EUR 906 (EUR
769) million and the share of the forest land was EUR 78 (EUR 56) million. The increase in the fair value of biological assets is mainly
driven by new growth models applied in the valuation, which are indicating that increase in the stem volume of the trees is faster than in
the previous estimate as well as acquisitions, increased volume and prices. The movement in the value of forest land is mainly due to
increase in other forest land related income and increase in cash flows from subsequent growth cycles. Stora Enso’s share of the
productive forest area totals to 271 (269) thousand hectares with a standing stock of 32.7 (31.4) million forest m3.
Arauco Florestal Arapoti
Stora Enso's 20% ownership in Arauco Florestal Arapoti S.A. was disposed in 2021. Stora Enso's share of the forest assets was not
significant.
50
Biological asset valuation sensitivities of significant assumptions of a +/- 10% movement
EUR million
Wood market prices
Growth rate
Discount rate
Guangxi
+/-36
+/-1
+/-3
Veracel
+/-9
+/-9
+/-2
Montes del Plata
+/-28
+/-28
+8/-7
Swedish forest asset valuation is sensitive for changes in market transaction prices and volume of standing stock. A change in the
average market price of forest assets of EUR 1 per forest m3 would impact the value of forest assets by EUR 150 (EUR 143) million. A
change in the volume of standing stock of 1 million forest m3 would impact the value of forest assets by EUR 40 (EUR 39) million.
Note 13 Equity accounted investments
Accounting principles
Associated companies over which Stora Enso exercises significant influence are accounted for using the equity method. Stora Enso does
not control associate companies alone or jointly with other parties, but has significant influence. The Group’s share of the equity
accounted investment profit or loss is recognised in the consolidated income statement. The Group’s interest in an associated company
is carried in the consolidated statement of financial position at an amount that reflects its share of the net assets of the associate together
with any goodwill. When the Group share of losses exceeds the carrying amount of an investment, the carrying amount is reduced to
zero and any recognition of further losses ceases unless the Group is obliged to satisfy obligations of the investee that it has guaranteed
or which it is otherwise committed to. There is no material goodwill in the carrying amount of equity accounted investments.
The Group’s share of results in equity accounted investments is reported in the operating profit to reflect the operational nature of
these investments. Similarly, dividends received from equity accounted investments are presented in the net cash provided by operating
activities in the consolidated cash flow statement.
Principal equity accounted investments
As at 31 December
Ownership interest %
EUR million
Company
Reportable
segment
Domicile and
principal place of
operations
2021
2020
2021
2020
Tornator Oyj
Forest
Finland
41.00
41.00
545
402
Others
35
54
Carrying Value at 31 December
580
456
Stora Enso's 20% ownership in Arauco Florestal Arapoti S.A. was divested in 2021. The transaction did not have a material impact on the
Group. Bergvik Skog AB was liquidated in 2021, there were no operations remaining in the company after Bergvik Skog AB restructuring
in 2019.
Group share of equity accounted investments income statements
Year Ended 31 December
EUR million
2021
2020
Sales
142
131
Net operating expenses
-97
-93
Biological assets valuation
120
13
Operating Profit
166
50
Net financial items
10
-42
Net Profit before Tax
176
8
Income tax
-34
-9
Net Profit for the Year
143
-1
The average number of personnel in the equity accounted investments was 1,193 in 2021, compared with 1,575 in 2020.
A summary of the financial information, prepared in accordance IFRS, in respect of the Group’s material associate, Tornator Oy,j is set
out below. The Group’s share of Tornator Oyj is reported in the Forest division and covers the majority of the Group’s total carrying
amount of equity accounted investments.
51
Tornator Oyj
EUR million
2021
2020
Current assets
53
79
Non-current assets
2,440
2,040
Current liabilities
43
52
Non-current liabilities
821
850
Tax liabilities
300
236
Sales
155
141
Net profit for the year
349
52
Other comprehensive income
39
30
Total comprehensive income
388
82
Dividends received during the financial year
16
12
Net assets of the associate
1,329
980
Ownership interest
41.00%
41.00%
Carrying amount of the Group's interest in Tornator Oyj
545
402
Stora Enso’s Finnish forest holdings were divested into an equity accounted investment, Tornator, in 2002. The Group’s current 41%
ownership is valued at EUR 545 (EUR 402) million at the year-end of 2021. The Group’s share of Tornator’s net profit was EUR 143
(EUR 21) million, including a biological asset valuation gain net of taxes of EUR 96 (EUR 11) million.
Aggregate information of equity accounted investments that are not individually material1
As at 31 December
EUR million
2021
2020
Current assets
22
34
Non-current assets
30
36
Current liabilities
15
13
Non-current liabilities
2
1
Tax liabilities
0
2
Sales
78
73
Net profit for the year
0
-22
Dividends received during the financial year
0
23
Equity in the Group statement of financial position
35
54
Equity Accounting Value
35
54
Equity Accounting Value for Tornator Oyj
545
402
Total Equity Accounting Value
580
456
1Includes Bergvik Skog AB that was reported separately in 2020. Comparative figures restated accordingly.
Equity accounted investment company balances
As at 31 December
EUR million
2021
2020
Receivables from Equity Accounted Investments
Non-current loan receivables
2
2
Trade receivables
1
0
Other receivables
10
0
Liabilities due to Equity Accounted Investments
Trade payables
55
41
Total loans including interest receivable from equity accounted investments at the year-end 2021 amounted to EUR 2 (EUR 2) million.
Equity accounted investment transactions
Year Ended 31 December
EUR million
2021
2020
Sales to equity accounted investments
19
17
Interest on loan receivables from equity accounted investments
1
Purchases from equity accounted investments1
109
130
1Purchases for 2020 restated.
The Group engages in transactions with equity accounted investments such as sales and purchases of wood. All agreements are
negotiated at arm’s length and are conducted on terms that the Group considers customary in the industry and generally no less
favourable than would be available from independent third parties.
52
Note 14 Equity instruments
Accounting principles
The Group has elected to classify its equity investments in Pohjolan Voima shares and certain listed shares held by the Group at fair
value through other comprehensive income (FVTOCI) under IFRS 9 by applying the irrevocable election for equity instruments under the
standard due to the long-term nature of the ownership. The gains and losses resulting from changes in the fair value of equity
investments under FVTOCI are not recycled to the Income Statement upon impairment or disposal, only the dividend income is
recognised in the income statement. In addition, the Group also has certain equity investments in unlisted securities that are classified as
fair value through income statement.
Summary of values
Year Ended 31 December
EUR million
2021
2020
Acquisition cost at 1 January
Listed securities
3
3
Unlisted securities
135
120
Investments classified as equity instruments
138
123
OCI in opening balance
279
415
Equity Instruments at 1 January
417
538
Translation difference
0
1
Additions
1
15
Change in fair values accounted for as OCI
501
-136
Disposals
0
-1
Income Statement - gains and losses
0
1
Carrying Amount at 31 December
918
417
Unrealised gains and losses on listed and unlisted securities
Year Ended 31 December
EUR million
2021
2020
Net unrealised holding gains (OCI)
780
279
Cost
139
138
Fair Value
918
417
Net unrealised holding gains (OCI)
780
279
Deferred tax
-2
-3
Net Unrealised Holding Gains Shown in Equity as OCI
778
277
Change in Net Unrealised Holding Gains Shown in Equity as OCI
501
-136
PVO shares
The Group holds a 15.6% (15.6%) interest in Pohjolan Voima Oy (PVO), a privately-owned group of companies in the energy sector that
produces electricity and heat for its shareholders in Finland. Each subsidiary of the PVO group has its own class of shares that entitle the
shareholder to the energy produced in proportion to its ownership of that class of share. The shareholders then have an obligation to
cover the costs of production, which are generally lower than market prices. Stora Enso did not receive actual dividend payments from
PVO during 2021. The holding is fair valued quarterly using an average of two methods: the discounted cash flow model and trading
multiples. The valuation is categorised at level 3 in the fair value hierarchy according to IFRS 13; levels are explained in Note 25 Fair
values.
The electricity prices in the model are based on Nord Pool prices. Liquid future derivative prices are used for the available years in the
model and thereafter increased by an inflation factor. The historical financial statements provide the basis for the cost structure for each
of the power assets, which are adjusted by the inflation factor in future years. The discount rate of 3.84% used in the valuation model is
determined using the weighted average cost of capital method. A +/- 5% change in the electricity price used in the DCF would change the
valuation by EUR +119 million and -119 million, respectively. A +/- percentage point change in the discount rate would change the
valuation by EUR -155 million and +98 million, respectively. The increased electricity market prices at the end of 2021 have led to
decreased trading volumes in the Nord Pool electricity exchange, which may indicate a higher risk of price fluctuations in the future.
In December 2021 Teollisuuden Voima Oyj (TVO) announced that the previously delayed Olkiluoto 3 plant unit has been started up.
According to TVO, electricity production at limited power level is expected to start at the end of January 2022, while the regular electricity
production is expected to start in June 2022. This updated schedule has been taken into account in the year-end PVO valuation. Stora
Enso’s indirect share of the capacity of Olkiluoto 3 is approximately 8.9%, through its PVO B2 shares.
PVO shareholding on 31 December 2021
EUR million
Share Series
% Holding
Asset Category
Fair Value 2021
Fair Value 2020
PVO-Vesivoima Oy
A
20.6
Hydro
302
132
Teollisuuden Voima Oyj
B
15.7
Nuclear
540
257
Teollisuuden Voima Oyj
B2
14.8
Nuclear
54
0
Other
C,C2,V,M
Various
Various
4
4
Total
900
394
The valuation in 2021 amounted to EUR 900 (EUR 394) million against a cost value of EUR 130 (EUR 117) million, with the revaluation of
EUR 770 (EUR 277) million being taken to other comprehensive income. The change in PVO’s value is mainly caused by the increase in
53
electricity market prices during the year. No deferred tax is recognized, as under Finnish tax regulations holdings above 10% are exempt
from tax on disposal proceeds.
Principal equity instruments
31 December 2021
EUR million
Holding %
Number of Shares
Acquisition Cost
Fair Value
Packages Ltd, Pakistan - listed shares
6.0
5,396,650
3
13
Total Listed Securities
3
13
Pohjolan Voima Oy - unlisted shares
15.6
5,073,972
130
900
Others - unlisted securities
5
5
Total Unlisted Securities
135
905
Total Equity instruments at 31 December 2021
139
918
Total Equity Instruments at 31 December 2020
138
417
Note 15 Emission rights and other non-current assets
Accounting principles
The Group participates in the European Emissions Trading Scheme, with the aim of reducing greenhouse gas emissions. The Group has
been allocated allowances to emit a fixed tonnage of carbon dioxide (CO2) over a fixed period of time, which are recognised as intangible
assets, government grants and as liabilities for the obligation to deliver allowances equal to those emissions that have been made during
the compliance period.
Intangible assets related to emission allowances are measured at level 1 fair value at the date of initial recognition. The liabilities to
deliver allowances are recognised based on actual emissions and are settled using allowances on hand and measured at the carrying
amount of those allowances. At the reporting date, if the market value for the emission allowances is less than the carrying amount, any
surplus allowances that are not required to cover emissions made are impaired to the market value.
The Group expenses emissions made at the grant date fair value, under materials and services, together with purchased emission
rights at their purchase price. Such costs will be offset under other operating income by the income from the original rights used at their
grant date fair value. The consolidated income statement will, thus, be neutral in respect to all the rights consumed that were within the
original grant of rights. Sales of excess emission allowances are recognised as income on the delivery date. Any net effect represents the
costs of purchasing additional rights to cover excess emissions, or the sale of unused rights in case that the realised emissions are below
the allowances received free of charge or the impairment of allowances that are not required for own use.
Emission rights
Year Ended 31 December
EUR million
2021
2020
Value on 1 January
36
37
Emission allowances allocated
167
46
Sales
-35
-13
Settlement with the government
-31
-33
Value on 31 December
137
36
The liability to deliver allowances is presented in the consolidated statement of financial position in line other operative liabilities. As of 31
December 2021, the liability to deliver allowances amounted to EUR 99 (EUR 31) million as presented in Note 23 Other liabilities. The
excess emission rights held at the year end were valued at EUR 38 (EUR 5) million. The emission rights have increased in 2021 due to
the change in the market price of emission allowances. At the end of the financial period the market price of the emission rights was EUR
79.96 (EUR 32.54) per tonne.
Other non-current assets
As at 31 December
EUR million
2021
2020
Prepaid expenses and accrued income
15
15
Tax credit
3
4
Other non-current operative assets
15
9
Total
34
28
Note 16 Inventories
Accounting principles 
Inventories are reported at lower of cost and net realisable value with the cost determined by the first-in first-out (FIFO) method or,
alternatively, by the weighted average cost where it approximates FIFO. The cost of finished goods and work in progress comprises raw
material, direct labour, depreciation, other direct costs and related production overheads, but excludes interest expenses. Net realisable
value is the estimated selling price in the ordinary course of business, less the costs of completion and sale.
Where market conditions result in the manufacturing costs of a product exceeding its net realisable value, a valuation allowance is
made. Valuation allowances are also made for old, slow moving and obsolete finished goods and spare parts. Such valuation allowances
are deducted from the carrying value of the inventories in the consolidated statement of financial position.
54
As at 31 December
EUR million
2021
2020
Materials and supplies
422
331
Work in progress
97
65
Finished goods
689
597
Spare parts and consumables
331
329
Other inventories
23
13
Advance payments and cutting rights
55
64
Obsolescence allowance - spare parts and consumables
-125
-109
Obsolescence allowance - finished goods
-9
-12
Net realisable value allowance
-5
-8
Total
1,478
1,270
EUR 4,586 (EUR 3,844) million of inventories have been expensed during the year, which are included in the materials and supplies line
and relate to materials. EUR 29 (EUR 22) million of inventory write-downs have been recognised as an expense. EUR 16 (EUR 16)
million have been recognised as a reversal of previous write-downs.
55
Note 17 Operative receivables
Accounting principles
Trade receivables
Trade receivables are recognised initially at fair value and subsequently at their anticipated realisable value with an estimate made for
loss allowance on expected credit losses based on a forward-looking and objective review of all outstanding amounts at period end. A
simplified approach under IFRS 9 has been implemented for trade receivables and loss allowances are recognised based on expected
lifetime credit losses in the consolidated income statement within other operating expenses. For non-defaulted receivables, expected
credit losses are estimated based on externally generated customer level probability of default data that is used in the forward-looking
loss allowance calculation model. The loss allowance model for non-defaulted receivables also takes into account a macroeconomic
indicator that considers the macroeconomic developments and further incorporates forward-looking data to the calculation model. The
rebuttable presumption that default does not occur later than when a financial asset is 90 days past due has been applied in the
calculation model and a default is normally estimated to occur when trade receivables are at least 90 days overdue or there is otherwise
objective evidence supporting the conclusion that a default has occurred. Trade receivables are presented in current assets under
Operative receivables in the consolidated statement of financial position.
Trade receivables under factoring arrangements
Stora Enso uses factoring arrangements as one of the working capital management tools. Sold trade receivables are derecognised once
significant related risks and rewards of ownership have been transferred to the buyer. Outstanding balances for trade receivables that
were not yet sold at period end but qualify to be sold under factoring programs in the next period, are classified as trade receivables fair
valued through other comprehensive income in accordance with the business model and contractual cash flow characteristics tests under
IFRS 9. Please refer to Note 25 Fair values for further details.
Current operative receivables
As at 31 December
EUR million
2021
2020
Trade receivables - gross carrying amount
1,175
893
Loss allowance
-26
-35
Prepaid expenses and accrued income
82
96
Other receivables
218
190
Total
1,449
1,145
Age analysis of trade receivables
As at 31 December
EUR million
2021
2020
Not overdue
1,093
819
Less than 30 days overdue
38
26
31 to 60 days overdue
7
0
61 to 90 days overdue
0
1
91 to 180 days overdue
0
0
Over 180 days overdue
37
46
Total
1,175
893
As at 31 December 2021, a gross amount of EUR 82 (EUR 74) million of trade receivables were overdue. These relate to a number of
countries and unrelated customers that have no recent history of default. At 31 December 2021, lifetime expected credit losses for trade
receivables amounted to EUR 26 (EUR 35) million. Loss allowances for trade receivables are estimated on an individual basis based on
a forward-looking model where estimated probabilities of customer default are used in the calculation model. If the Group has concerns
regarding the financial status of a customer, an advance payment or an irrevocable letter of credit drawn from a bank is required. At the
year end, the letters of credit awaiting maturity totalled EUR 90 (EUR 39) million. Please refer to Note 24 Financial risk management for
details of customer credit risk management.
Age analysis of loss allowance
As at 31 December
EUR million
2021
2020
Not overdue and less than 90 days overdue
1
1
More than 90 days overdue
25
33
Total
26
35
Reconciliation of loss allowance
As at 31 December
EUR million
2021
2020
Opening balance at 1 January
35
38
Change in loss allowance booked through Income Statement
3
4
Write-downs
-12
-7
Closing Balance at 31 December
26
35
The actual credit losses during 2021 amounted to EUR 12 (EUR 7) million of trade receivables being written-off from the Group's balance
sheet.
Stora Enso has entered into factoring agreements to sell trade receivables in order to accelerate cash conversion. These agreements
resulted in full derecognition of trade receivables amounting to a nominal value of EUR 184 (EUR 155) million at the end of the year. The
56
continuing involvement of Stora Enso in the sold receivables was estimated as being insignificant due to the non-recourse nature of the
factoring arrangements involved.
Note 18 Shareholders' equity
Accounting principles
Dividend and capital repayments
Any dividend or capital repayment proposed by the Board is not deducted from distributable shareholders’ equity until approved by the
shareholders at the Annual General Meeting.
At 31 December 2021, shareholders’ equity amounted to EUR 10,683 (EUR 8,809) million, compared to the market capitalisation on
Nasdaq Helsinki of EUR 12,809 (EUR 12,383) million. The market values of the shares were EUR 16.60 (EUR 15.90) for A shares and
EUR 16.14 (EUR 15.65) for R shares.
The A shares entitle the holder to one vote per share, whereas R shares entitle the holder to one vote per ten shares with a minimum
of one vote, though the accountable par of both shares is the same. A shares may be converted into R shares at any time at the request
of a shareholder. At 31 December 2021, the company’s fully paid-up share capital, as entered in the Finnish Trade Register, was EUR
1,342 million (EUR 1,342 million). The current accountable par of each issued share is EUR 1.70 (EUR 1.70). 
At 31 December 2021, Directors and Group Leadership Team members owned 0 (1,150) A shares and 475,519 (537,921) R shares
representing 0.02% of the total voting rights of the company. Full details of Director and Executive interests are shown in Note 7 Board
and executive remuneration. A full description of company share award programmes is shown in Note 21 Employee variable
compensation and equity incentive schemes. However, none of these have any impact on the issued share capital.
Change in share capital and number of shares
A shares
R shares
Total
At 1 January 2020
176,256,834
612,363,153
788,619,987
Conversion of A shares to R shares
-2,419
2,419
At 31 December 2020
176,254,415
612,365,572
788,619,987
Conversion of A shares to R shares
-10,366
10,366
At 31 December 2021
176,244,049
612,375,938
788,619,987
Number of votes as at 31 December 20211
176,244,049
61,237,594
237,481,643
Share Capital at 31 December 2021, EUR million
300
1,042
1,342
Share Capital at 31 December 2020, EUR million
300
1,042
1,342
1 R share votes are calculated by dividing the number of R shares by 10.
The issued shares by 3 March 2022 will represent the total shares eligible to vote at the forthcoming Annual General Meeting.
Note 19 Non-controlling interests
Accounting principles
Non-controlling interests are presented as a separate component within the equity of the Group in the consolidated statement of financial
position. The proportionate shares of profit or loss attributable to non-controlling interests and to owners of the parent company are
presented in the consolidated income statement after the profit for the period. Transactions between non-controlling interests and Group
shareholders are transactions within equity and are thus shown in the statement of changes in equity. The measurement type of non-
controlling interest is decided separately for each acquisition.
57
Non-controlling interests
Year Ended 31 December
EUR million
2021
2020
At 1 January
-16
-7
Acquisitions
0
0
Disposals
0
0
Share of profit for the period
3
-9
Share of other comprehensive income
-3
1
Dividends
0
0
At 31 December
-16
-16
Principal non-controlling interests
As at 31 December
2021
2021
2020
Company
Principal Place of
Business
Proportion of
Ownership Interests
Held by Non-controlling
Interests, %
EUR million
Stora Enso Pulp and Paper Asia AB Group
Sweden and China
See separate table below
-18
-18
Others
-
1
2
Total
-16
-16
Non-controlling interests in Stora Enso Pulp and Paper Asia AB Group
31 December 2021
31 December 2020
Company
Principal Place
of Business
Direct-% of
NCI
Indirect-% of
NCI
Total-% of NCI
Direct-% of
NCI
Indirect-% of
NCI
Total-% of
NCI
Stora Enso Pulp and Paper Asia
AB
Sweden and
China
5.79
5.79
5.79
5.79
Guangxi Stora Enso Forestry Co
Ltd
China
5.00
5.50
10.50
5.00
5.50
10.50
Stora Enso (Guangxi) Packaging
Company Ltd
China
15.00
4.92
19.92
15.00
4.92
19.92
Stora Enso (Guangxi) Forestry
Company Ltd
China
15.00
4.92
19.92
15.00
4.92
19.92
Summarised financial information in respect of the subsidiaries that have material non-controlling interests is set out below.
Stora Enso Pulp and Paper Asia AB Group
EUR million
2021
2020
Assets
1,282
1,167
Equity attributable to the owners of the parent
-115
-114
Non-controlling interests1
-18
-18
Total Equity
-133
-132
Liabilities
1,414
1,298
Net profit or loss for the period
7
-54
Attributable to
Owners of the parent
4
-44
Non-controlling interests
3
-10
Net profit or loss for the period
7
-54
Net cash flow from operating activities
90
45
Net cash flow from investing activities
-37
-36
Net cash flow from financing activities
-26
10
Net cash flow
27
19
1 No dividends were paid to non-controlling interests in 2021 or 2020.
Note 20 Post-employment benefit obligations
Accounting principles
Employee benefits
The Group operates a number of defined benefit and contribution plans throughout the world, the assets of which are generally held in
separate trustee administered funds. Such pension and post-retirement plans are generally funded by payments from employees and by
the relevant Group companies, taking into account the recommendations of independent qualified actuaries. Employer contributions to
the defined contribution pension plans are charged to the consolidated income statement in the year they relate to.
For defined benefit plans, accounting values are assessed using the projected unit credit method. Under this method, the cost of
providing pensions is charged to the consolidated income statement to spread the regular cost over the service lives of employees in
58
accordance with the advice of qualified actuaries who carry out a full valuation of the plan every year in all major pension countries. The
pension obligation is measured as the present value of the estimated future cash outflows using interest rates of highly rated corporate
bonds or government securities, as appropriate, that match the currency and expected duration of the related liability.
The Group immediately recognises all actuarial gains and losses arising from defined benefit plans directly in equity, as disclosed in
its consolidated statement of comprehensive income. Past service costs are identified at the time of any amendments to the plans and
are recognised immediately in the consolidated income statement regardless of vesting requirements. In the Group’s consolidated
statement of financial position, the full liability for all plan deficits is recorded. 
The Group's pension and other benefit plans amounted to EUR 165 (EUR 152) million in 2021, as shown in Note 6 Personnel
expenses. The majority of the plans are defined contribution schemes for which the charge amounted to EUR 153 (EUR 136) million.
Total defined benefit obligations for current and former members of staff amounted to EUR 1,108 (EUR 1,210) million, though assets of
EUR 762 (EUR 737) million have been put aside in various pension schemes to cover these liabilities. The net funding position of the
defined benefit plans is shown in full in the statement of financial position and amounted to EUR 347 (EUR 473) million in 2021. Interest
costs are entered under financial costs. The 2021 defined benefit expense in the income statement amounts to EUR 15 (EUR 20) million
and the actuarial gains recorded in other comprehensive income amount to EUR 126 (EUR 21) million. In 2022, contributions of EUR 17
million are expected to be paid.
The Group policy for funding deficits is intended to satisfy local statutory funding requirements for tax deductible contributions together
with adjusting the discount factors used in the actuarial calculations for market rates. However, the emphasis of the Group is to provide
defined contribution schemes for its post-employment benefits, thus all aspects of the provision and accounting for defined benefit
schemes are evaluated. The net liability in the Group statement of financial position reflects the actual deficits in the defined benefit
plans. Details of the pension arrangements, assets and investment policies in the Group’s main operating countries are shown below.
Finland
The Group funds its Finnish pension obligations mainly through defined contribution schemes, the charge in the income statement being
EUR 71 (EUR 56) million. By contrast, the remaining obligations covered by defined benefit schemes resulted in a charge of
EUR 1 (EUR 0) million excluding finance costs. Pension cover since 2001 has been organised entirely through local insurance
companies. As statutory pensions in Finland provide by far the greatest proportion of pensions, Group liabilities are proportionately much
smaller than in comparable countries.
Plan assets in Finland are managed by insurance companies. Details of the exact structure and investment strategy surrounding plan
assets are not available to participating employers, as the assets actually belong to the insurance companies themselves. The assets are
managed in accordance with EU regulations, and also national requirements, under which there is an obligation to pay guaranteed
benefits irrespective of market conditions.
Germany
German pension costs amounted to EUR 7 (EUR 8) million, of which EUR 6 (EUR 7) million related to defined contribution schemes and
EUR 1 (EUR 1) million to defined benefits excluding finance costs. The net defined benefit liability amounted to EUR 225 (EUR 250)
million. The decrease in net liability arose mainly from benefit payments and changes in actuarial assumptions. Defined benefit pension
plans are mainly accounted for in the statement of financial position through book reserves with some minor plans using insurance
companies or independent trustees. Retirement benefits are based on years worked and salaries received during the pensionable
service and the commencement of pension payments are linked to the national pension scheme’s retirement age. Pensions are paid
directly by the companies themselves to their former employees, the security for the pensioners is provided by the legal requirement that
the book reserves held in the statement of financial position are insured up to certain limits.
Sweden
In Sweden, all blue-collar staff and part of white-collar staff are covered by defined contribution schemes, the charge in the Income
statement being EUR 56 (EUR 55) million. Defined benefit schemes are covering the remaining of white-collar staff and resulted in a
charge of EUR 8 (EUR 10) million excluding finance costs. The net defined benefit liability amounted to EUR 55 (EUR 159) million.
Decrease in net liability arose mainly from changes in actuarial assumptions,mostly from an increase in discount rate, and an increase in
fair value of plan assets. Stora Enso has undertaken to pay all local legal pension liabilities for the main ITP scheme to the foundation,
thus the remaining liability relates to other small schemes. The long-term investment return target for the foundation is a 3% real return
after tax.
Other countries
The net defined benefit liability in the remaining countries amounted to EUR 37 (EUR 51) million. The most material change in liability
was recognised for United Kingdom. The decrease in net liability arose mainly from changes in actuarial assumptions.
59
Net defined benefit obligation reconciliation
Defined Benefit Obligation
Fair Value of Plan Assets
Net Defined benefit liability /
(asset)
EUR million
2021
2020
2021
2020
2021
2020
Defined benefit obligation at 1 January
1,210
1,219
-737
-761
473
458
Current service cost
14
15
14
15
Past service cost
-2
2
0
-2
-2
1
Settlements
-5
0
5
0
0
0
Interest expense(+) income (-)
9
12
-6
-7
3
5
Total included in Income Statement
17
29
-1
-9
15
20
Actuarial gains and losses arising from changes in
demographic assumptions
3
0
3
0
Actuarial gains and losses arising from changes in
financial assumptions
-21
26
-21
26
Actuarial gains and losses arising from experience
adjustments
-42
-19
-42
-19
Return on plan assets, excluding amounts included in
interest expense(+) income (-)
-65
-28
-65
-28
Total remeasurement gains (-) / losses (+) included
in Other Comprehensive Income
-61
8
-65
-28
-126
-21
Benefit payments
-58
-55
44
40
-14
-15
Employer contributions and refunds
1
24
1
24
Translation difference
1
9
-3
-3
-3
6
Defined benefit obligation at 31 December
1,108
1,210
-762
-737
347
473
Defined benefit plans: Country assumptions used in calculating benefit obligations
Year ended 31 December
Finland
Germany
Sweden
2021
2020
2021
2020
2021
2020
Discount rate %
0.7
0.2
0.8
0.4
1.7
1.1
Future salary increase %
3.2
2.1
2.5
2.5
2.9
2.7
Future pension increase %
2.3
1.2
1.8
1.5
2.0
1.8
Average current retirement age
64.3
64.2
65.0
65.0
65.0
65.0
Weighted average life expectancy
87.4
87.0
87.7
87.7
88.6
88.5
Duration of pension plans
10.0
10.0
13.0
13.2
16.5
17.1
Sensitivity of the defined benefit pension obligation
Impact on defined benefit obligation
Change in assumption
Increase in assumption
Decrease in assumption
Discount rate
0.50%
Decrease by 7.0%
Increase by 7.9%
Salary  growth rate
0.50%
Increase by 1.9%
Decrease by 1.7%
Pension growth rate
0.50%
Increase by 5.6%
Decrease by 5.2%
Life expectancy
1 year
Increase by 4.7%
Decrease by 4.6%
Interest rate risk: The obligations are assessed using market rates of high-quality corporate or government bonds to discount the
obligations and are therefore subject to any volatility in the movement of the market rate. The net interest income or expense recognised
in profit and loss are also calculated using the market rate of interest.
Mortality risk: In the event that members live longer than assumed, the obligations may be understated originally and a deficit may
emerge if funding has not adequately provided for the increased life expectancy.
Defined benefit plan summary by country as at 31 December 2021
31 December 2021
EUR million
Finland
Germany
Sweden
Other
Total
Present value of funded obligations
238
5
359
236
838
Present value of unfunded obligations
0
224
20
27
270
Defined benefit obligations (DBO)
238
229
379
263
1,108
Fair value of plan assets
-208
-4
-324
-226
-762
Net liability in the Balance Sheet
29
225
55
37
347
Represented by
Defined benefit pension plans
29
225
55
12
321
Other post-employment benefits
0
0
0
25
25
Net liability in the Balance Sheet
29
225
55
37
347
60
Defined benefit plan summary by country as at 31 December 2020
31 December 2020
EUR million
Finland
Germany
Sweden
Other
Total
Present value of funded obligations
266
27
412
230
936
Present value of unfunded obligations
0
226
22
26
274
Defined benefit obligations (DBO)
266
254
434
256
1,210
Fair value of plan assets
-254
-4
-275
-205
-737
Net liability in the Balance Sheet
13
250
159
51
473
Represented by
Defined benefit pension plans
13
250
159
27
449
Other post-employment benefits
0
0
0
24
24
Net liability in the Balance Sheet
13
250
159
51
473
Plan assets
As at 31 December
2021
2020
EUR million
Quoted
Unquoted
Total
% of total
Quoted
Unquoted
Total
% of total
Equity
122
37
159
21%
97
33
130
18%
Debt
58
55
112
15%
72
31
103
14%
Property
0
50
50
7%
0
40
40
5%
Cash
25
0
25
3%
31
0
31
4%
Assets held by insurance companies
0
308
308
40%
0
322
322
44%
Others
7
101
108
14%
13
98
111
15%
Total pension fund assets
211
551
762
100%
213
525
737
100%
Plan assets do not include any real estate or other assets occupied by the Group or the Company's own financial instruments.
The two main financial factors affecting Group's pension liabilities are changes in interest rates and inflation expectations. The aim of
asset investment allocations is to neutralise these effects, secure solvency for benefit payments and maximise returns.
Note 21 Employee variable compensation and equity incentive schemes
Accounting principles
Share awards
The costs of all employee-related share-based payments are charged to the consolidated income statement as personnel expenses over
the vesting period.
All share-based payment transactions are classified as equity-settled share awards. The equity-settled share awards (net of tax), are
measured at the fair value of the equity instruments on the grant date, and are adjusted for the present value of expected dividends. The
fair value of the equity-settled share-based payments determined on the grant date is expensed on a straight-line basis over the vesting
period, based on the estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
Short term incentive (STI) programmes
Salaries for senior management are negotiated individually. Stora Enso has incentive plans that take into account the performance,
development and results of both business units and individual employees. This performance-based variable compensation system is
based on profitability as well as on attaining key business targets.
Group Executives, as well as division and business unit management have STI programmes in which the payment is calculated as a
percentage of the annual base salary with a maximum level ranging from 8% to 75%. Non-management employees participate in an STI
programme with a maximum incentive level of 7%. All incentives are discretionary. These performance-based programmes cover most
employees globally, where allowed by local practice and regulations. For the performance year 2021, the annual incentive programmes
were based on financial measures as well as individual targets. The financial success metrics in the STI programme 2021 is Operating
Cash Flow.
Long term incentive (LTI) programmes
Since 2005, new share based programmes for executives have been launched every year. The 2019 programme, with performance
measures that ended in 2021 and will be settled in 2022, as well as the 2020 programme have three year performance periods, while the
2021 programme have three one year performance periods which are accumulated after three years. All outstanding programmes will be
settled in one portion after three years.
For the vast majority of awarded employees, three quarters (75%) of the opportunity under the programmes are in performance
shares, where shares will vest in accordance with performance criteria proposed by the Remuneration Committee and approved by the
Board of Directors. The financial success metric is 3-year Economic Value Added (EVA) and Earnings Per Share (EPS)  for the Stora
Enso Group. One quarter (25%) of the opportunity under the programmes are in Restricted Shares, for which vesting is only subject to
continued employment. Members of the GLT have been awarded  performance shares only.
Outstanding restricted and performance share opportunities before taxes are shown in the table below. The total number of shares
actually transferred will be less than that shown below because a portion of shares corresponding to employees' tax obligation will be
withheld to cover income tax.
61
Share awards at 31 December 2021
Outstanding restricted and performance share awards at year end
Number of shares
2022
2023
2024
Total
2019 programme
768,000
768,000
2020 programme
1,028,799
1,028,799
2021 programme
818,902
818,902
Total
768,000
1,028,799
818,902
2,615,701
The costs of the Stora Enso share-based programmes are recognised as costs over the vesting period, which is the period between the
grant and vesting. The total impact of share-based programmes in the Income statement amounted to an expense of EUR 7 (EUR 1)
million, all of which were related to restricted and performance share awards.
Note 22 Provisions
Accounting principles
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that
an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are measured at the management’s best estimate and there is some uncertainty regarding the timing and amount of the costs.
Provisions for obligations to dismantle, remove or restore assets after their use are added to the carrying amount of the assets at
acquisition date and depreciated over the useful life of the asset. Provisions are discounted to their current net present value if the effect
of the time value of money is material.
Environmental provisions
Environmental expenditures resulting from the remediation of an existing condition caused by past operations, and which do not
contribute to current or future revenues, are recognised as provisions. Environmental liabilities are recorded when it is probable, based
on current interpretations of environmental laws and regulations, that a present obligation has arisen and the amount of such liability can
be reliably estimated.
Restructuring provisions
A restructuring provision is recognised in the period in which the Group becomes legally or constructively committed to the plan. The
relevant costs are those that are incremental to, or incurred as a direct result of, the exit plan, or are the result of a continuing contractual
obligation with no ongoing economic benefit, or represent a penalty incurred to cancel the obligation. 
Other provisions
Other provisions are recognised regarding different legal or constructive obligations, such as onerous contracts, guarantees to
customers, ongoing lawsuits, claims, or similar.
Provisions
EUR million
Environmental
provisions
Restructuring
provisions
Other
provisions
Total provisions
Carrying Value at 1 January 2020
97
41
26
165
Translation difference
2
1
-1
2
Charge in Income Statement
  New provisions
13
17
14
45
  Increase in existing provisions
5
0
2
7
  Reversal of existing provisions
-8
-15
0
-22
Payments
-18
-17
-11
-47
Carrying Value at 31 December 2020
91
28
30
149
Translation difference
0
-1
0
-1
Charge in Income Statement
  New provisions
6
107
72
185
  Increase in existing provisions
13
1
0
14
  Reversal of existing provisions
-6
-4
-5
-15
Payments
-29
-44
-29
-101
At 31 December 2021
75
88
67
231
Allocation between current and non-current provisions
Current provisions: Payable within 12 months
6
84
49
139
Non-current provisions: Payable after 12 months
70
4
18
91
Total at 31 December 2021
75
88
67
231
Provisions for environmental remediation amounted to EUR 75 (91) million at 31 December 2021. The most material environmental
provision is based on an agreement between Stora Enso and the City of Falun that obligates the Group to purify runoff from the
Kopparberg mine before releasing the water into the environment. The provision at year end amounted to EUR 37 (EUR 36) million.
The Group has undergone major restructuring in recent years, from divestments to mill closures and administrative cost-saving
programmes. The obligation at the end of 2021 amounted to EUR 88 (EUR 28) million for restructuring provisions and EUR 67 (EUR 30)
million with respect to other provisions. The increase in restructuring and other provisions is mainly related to restructuring, divestments
and other cases in Paper division. In April 2021, Stora Enso announced that it is permanently closing down pulp and paper production at
Kvarnsveden Mill in Sweden and Veitsiluoto Mill in Finland. The restructuring provision related to these closures amounted to EUR 67
million on 31 December 2021.
62
.
Note 23 Operative liabilities
Non-current operative liabilities
As at 31 December
EUR million
2021
2020
Post-employment benefit obligations
347
473
Provisions
91
102
Share-based payments
1
1
Other payables
12
12
Total
451
588
Current operative liabilities
As at 31 December
EUR million
2021
2020
Trade payables
1,704
1,314
Payroll and staff-related accruals
256
233
Accrued liabilities and deferred income
155
144
Emission liabilities
99
31
Current portion of provisions
139
46
Advances received
18
26
Other payables
107
89
Total
2,479
1,883
63
Note 24 Financial risk management
Risk management principles and process
Stora Enso is exposed to several financial market risks that the Group is managing under the policies approved by the Board of
Directors. The objective is to ensure cost-effective funding of Group companies and manage financial risks effectively. The Stora Enso
Group Financial Risk Policy governs all financial transactions in Stora Enso. This policy and any future amendments take effect once they
are approved by the Board of Directors and all policies covering the use of financial instruments must comply with it. The Group’s joint
operations companies operate under their own financial risk policies, which may not be fully similar to the Group’s policies.
The major financial market risks are detailed below with the main exposures for the Group being interest rate risk, foreign exchange risk,
liquidity and refinancing risk, and commodity price risk, especially for fiber, pulp, and energy.
Interest rate risk
The Group is exposed to an interest rate risk that is the risk of fluctuating interest rates affecting the interest expense of the Group and
value of its assets and liabilities. Stora Enso is exposed to the interest rate risk through interest-bearing assets and liabilities, such as
loans, financial instruments and lease liabilities, but also through commercial agreements and operative assets and liabilities such as
biological assets. The Group’s aim is to keep interest costs stable. The Group’s aggregate duration should not exceed the average loan
maturity, but should aim towards a long duration. A duration above the average loan maturity is approved by the Board of Directors.
  The Group may use interest-rate swaps and cross-currency swaps to manage the interest-rate risk by synthetically converting floating-
rate loans into fixed-rate loans through the use of derivatives. The Group's floating and fixed rate interest-rate position as per the year-
end is presented in the following table:
Floating and fixed interest-rate position
As at
31 December 2021
As at
31 December 2020
EUR million
Floating rate
Fixed rate
Floating rate
Fixed rate
Non-current interest-bearing receivables1
5
40
1
90
Current interest-bearing receivables
0
49
0
0
Cash and cash equivalents
1,481
1,661
0
Interest-bearing liabilities2
-974
-2,863
-1,642
-3,050
Interest-bearing assets and liabilities excluding
derivatives
512
-2,774
19
-2,959
Interest-rate and cross-currency swaps
682
-682
894
-894
Interest-bearing assets and liabilities, net of
derivatives
1,194
-3,456
913
-3,853
1 Excluding interest receivable and listed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                     
2 Non-current interest-bearing liabilities, current portion of non-current debt, short-term interest bearing liabilities and bank overdrafts excluding derivative liabilities and interest
payable
The average interest reset period for the Group's net interest-bearing liabilities, including all interest rate derivatives but excluding
cash and cash equivalents, is 4.6 (4.6) years.
As of 31 December 2021, one percentage point increase in interest rates would increase annual net interest expenses by
approximately EUR 2 (EUR 5) million and a similar decrease in interest rates would decrease net interest expenses by EUR 1 (EUR 3)
million. This assumes that the duration and the funding structure of the Group remain constant throughout the year. This simulation
calculates the interest effect of a 100 basis point parallel shift in interest rates on all floating rate instruments excluding cash equivalents
from their next reset date to the end of the year. In addition, all short-term loans maturing during the year are assumed to be rolled over
on maturity to year end using the new higher or lower interest rate.
A one percentage point parallel change up or down in interest rates would also result in fair valuation gains or losses of EUR 16 (EUR
28) million before taxes in the cash flow hedge reserve in OCI regarding interest rate swaps under cash flow hedge accounting. A one
percentage point parallel change up or down in interest rate would result in fair valuation gains or losses of EUR 3 million in net financial
items related to cross currency swaps fair valued through profit and loss. Note 27 Derivatives summarises the nominal and fair values of
the outstanding interest rate derivative contracts.
Foreign exchange risk - transaction risk
The Group operates globally and is exposed to a foreign-currency transaction risk arising from exchange rate fluctuations. Foreign
exchange transaction risk exposure comprises both the geographical location of Stora Enso production facilities around the world,
sourcing of raw materials and sales of end products in foreign currencies, mainly denominated in US dollars, British pounds and Swedish
crowns. Stora Enso Group companies with functional currency other than euro are also exposed to a foreign-currency transaction risk
arising from EUR denominated net cash flows in their local currencies. These EUR exposures mainly arise from Stora Enso subsidiaries
located in Sweden, Czech Republic and Poland.
    The currency transaction risk is the impact of exchange rate fluctuations on the Group's Income statement, which is the effect of
currency rates on expected future cash flows and subsequent trade receivables or payables. The Group's standard policy to mitigate the
risk is to hedge 15–60% of the highly probable forecast cash flows in major currencies for the next 12 months by using derivative
financial instruments, such as foreign exchange forwards and currency options. The Group may also hedge periods between 12 months
and 36 months, or change the above mentioned hedging ratio for the next 12 months upon the discretion of the Group's management.
For operative receivables and payables in foreign currencies, the objective is to hedge 50–100% of the outstanding net receivable
balance in major currency pairs.
The table below presents the estimated net operative foreign currency transaction risk exposures for the main currencies for the next
12 months and the related foreign-currency hedges in place as at 31 December, retranslated using year end exchange rates. The net
operative receivables and payable exposures, representing the balances as at 31 December, include foreign currency exposures
generated by external and intercompany transactions in line with the requirements of IFRS 7. A positive amount of exposure in the table
below represents an estimated future inflow or receivable of a foreign currency amount.
64
Operative foreign currency transaction risk exposure
As at
31 December 2021
As at
31 December 2020
EUR million
EUR
SEK
USD
GBP
AUD
UYU
EUR
SEK
USD
GBP
AUD
UYU
Estimated annual net cash flow
exposure in hedged foreign-
currency flows1
995
-191
1,712
346
138
-41
920
-197
1,330
222
46
-40
Cash flow hedges for the next 12
months
-553
89
-740
-78
-38
23
-433
94
-629
-97
-21
22
Estimated annual net cash flow
exposure, net of hedges
442
-101
971
268
100
-18
488
-104
700
125
24
-18
Hedging percentage as at 31
December for next 12 months
56%
47%
43%
22%
27%
57%
47%
48%
47%
44%
46%
54%
Weighted-average hedged rate
against EUR2
10.21
1.20
0.85
1.60
52.63
10.40
1.18
0.90
1.63
55.61
Operative receivables and
payables net exposure
-42
5
233
32
58
-2
-8
6
192
20
26
-5
Net receivable currency hedges
16
0
-200
-26
-26
0
-10
0
-126
-14
-15
0
Net operative receivables
exposure, net of hedges
-26
5
34
5
31
-2
-18
6
66
5
11
-5
Estimated annual net transaction
risk exposure after hedges
416
-97
1,005
274
131
-20
470
-98
766
130
36
-24
1 Cash flows are forecasted highly probable net operating foreign-currency cash flows in hedged currencies. The exposure presented in the EUR column relates to
operative transaction risk exposure from EUR denominated cash flows in Group companies located in Sweden, Czech Republic and Poland with functional currency
other than EUR.
2 The weighted-average exchange rate against EUR is calculated based on bought leg of option collar structure and forward contracts' forward rate and therefore
represents the weighted-average hedged rate based on the least favourable hedged rate from the Group's point-of-view.
The following table includes the estimated effect on the annual operating profit of a currency weakening of an exposure currency against
the functional currencies of exposed subsidiaries. The sensitivities have been calculated based on a 5% movement in EUR, SEK, USD,
GBP and  AUD while 10% movement in UYU. These changes are estimated as reasonably possible changes in exchange rates,
measured against year-end closing rates. A corresponding strengthening of the exposure currency would have an approximately equal
opposite impact. A negative amount in the table reflects a potential net loss in the income statement or equity and, conversely, a positive
amount reflects a potential net gain. In practice, the actual foreign currency results may differ from the sensitivity analysis presented
below, since the income statements of subsidiaries with functional currencies other than the euro are translated into the Group reporting
currency using the average exchange rates for the year, whereas the statements of the financial position of such subsidiaries, including
currency hedges, trade receivables and payable, are translated using the exchange rates at the reporting date. The translation risk
exposures are discussed more in detail under the Translation risk chapter below.
The calculation includes currency hedges and assumes that there are no changes in other underlying currencies. The currency effects
are based on estimated operative foreign currency flows for the next twelve months, hedging levels at the year end, and the assumption
that the currency cash flow hedging levels and all other variables will remain constant during the next twelve months. Hedging
instruments include foreign exchange forward contracts and foreign exchange options. Indirect currency effects with an impact on prices
and product flows, such as a product becoming cheaper to produce in a different geographical location, have not been considered in this
calculation.
Sensitivity analysis of operative foreign currency transaction risk exposure
As at
31 December 2021
As at
31 December 2020
EUR million
EUR
SEK
USD
GBP
AUD
UYU
EUR
SEK
USD
GBP
AUD
UYU
Exposure currency change by1
-5%
-5%
-5%
-5%
-5%
-10%
-5%
-5%
-5%
-5%
-5%
-10%
Effect on estimated annual net cash flows
in hedged flows
-50
10
-86
-17
-7
4
-46
10
-66
-11
-2
4
Effect on cash flow hedging OCI reserve
before taxes as at year end2
28
-4
37
4
2
-2
22
-5
31
5
1
-2
Effect on net operative receivables and
payables after hedges3
1
0
-2
0
-2
0
1
0
-3
0
-1
1
Estimated annual EBIT impact4
-21
5
-50
-14
-7
2
-23
5
-38
-6
-2
3
1 The sensitivity analysis for EUR denominated annual net cash flows, operative net receivables and related hedges refer to the EUR denominated transaction risk arising
from EUR denominated foreign-currency cash flows in Sweden, Czech Republic and Poland with functional currency other than EUR.                                                                                                 
2 The effect on OCI cash flow hedging reserve before taxes at year end is related to the fair value change in derivative contracts qualifying as cash flow hedges of highly
probable forecast transactions under IFRS 9. Amount effecting OCI will be recycled to operative result when the transaction realises.
3 Currency effect related to net operative receivables or payables and related hedges.                                                                                                                                       
4 The estimated annual EBIT impact includes currency effects in respect of operative exposures in the Statement of Financial Position, forecast cash flows and the related
hedges.
The following table presents the financial foreign currency exposure and the related hedges in place as at 31 December for the main
currencies. Net debt includes foreign-currency external loan payables and receivables, foreign-currency internal loan payables and loan
receivables and cash equivalents. Loans designated as net investment loans under IAS 21 are excluded from the table as they reduce
the foreign-currency exposures on a Group level. The currency derivatives mainly hedge financial exposures in the statement of financial
position. A negative amount of exposure in the table represents a net payable of a foreign currency amount.
Additionally, the table includes the estimated effect on the income statement of a currency weakening of an exposure currency against
EUR. The sensitivities have been calculated based on a 5% movement in SEK, USD, CNY, and PLN. These changes are estimated as
reasonably possible changes in exchange rates, measured against year-end closing rates. A corresponding strengthening of the
exposure currency  would have an approximately equal opposite impact. A negative amount in the table reflects a potential net loss in the
Income statement and, conversely, a positive amount reflects a net potential gain. In practice, the actual foreign currency results may
differ from the sensitivity analysis below as the exposure amounts may change during the year.
65
Financial foreign currency exposure and estimated currency effects in income statement
As at
31 December 2021
As at
31 December 2020
EUR million
SEK
USD
CNY
PLN
SEK
USD
CNY
PLN
Foreign-currency net debt1
-30
-95
462
-1
-156
-108
410
51
Currency hedges
7
-31
-272
-16
135
-33
-244
-21
Net exposure after hedges
-23
-125
190
-18
-21
-140
166
30
Exposure currency change by
-5%
-5%
-5%
-5%
-5%
-5%
-5%
-5%
Effect in the Income Statement2
1
6
-10
1
1
7
-8
-2
1 The Group has designated certain internal loans to Chinese subsidiaries as net investment loans under IAS 21. The loans are denominated in EUR, USD, and CNY. The
underlying foreign currency gain or loss will be posted as part of CTA in Equity. The nominal amount of net investment loans amounted to EUR 348 (EUR 286) million as per the
year end and reduces the currency exposure for relevant currencies in the above table.
2 Gains and losses are recognised as part of Net financial items in the Income Statement
Foreign exchange risk - translation risk
Translation risk results from fluctuations in exchange rates affecting the value of Stora Enso’s consolidated net foreign currency
denominated assets, liabilities, and income. Translation risk is reduced by funding assets, whenever economically possible, in the same
currency as the asset itself. The Group may also enter into foreign exchange forwards, foreign exchange options or foreign currency
denominated loans to hedge its net investments in foreign entities with different functional currencies than the Group.
The balance sheets of foreign subsidiaries, equity accounted investments and foreign currency denominated equity instruments in the
scope of IFRS 9 are translated into euros using exchange rates prevailing on the reporting date, thus exposing consolidated Group equity
to fluctuations in currency rates. The resulting translation differences, along with other movements such as the translation rate difference
in the income statement, are recorded directly in shareholders’ equity. These cumulative differences materialise through the Income
statement on the disposal, in whole or in part, of the foreign entity.
    The following table presents the translation risk exposure in the Group's Income statement arising from the translation of subsidiaries'
and joint operations' foreign-currency income statements into the presentation currency of the Group in the consolidated financial
statements.
Translation exposure in Income statement
As at
31 December 2021
As at
31 December 2020
EUR million
SEK
USD
GBP
BRL
CZK
CNY
SEK
USD
GBP
BRL
CZK
CNY
Translation exposure in Income
Statement
-196
-129
298
-111
11
83
38
-165
81
-120
-7
28
Exposure currency change by
-5%
-5%
-5%
-10%
-5%
-5%
-5%
-5%
-5%
-10%
-5%
-5%
Effect on EBIT from translation
risk exposure
10
6
-15
11
-1
-4
-2
8
-4
12
0
-1
The next table presents the translation exposure for geographical areas for which the Group has applied net investment hedging
techniques to reduce the foreign-currency translation exposure in the consolidated equity. In practise, the Group also incurs material
unhedged translation risk exposures in other geographical areas such as Sweden and China. The exposures used in the calculations are
based on the foreign currency denominated equity and the hedging levels as at 31 December. Full details of actual CTA movements and
hedging results are given in Note 28 Cumulative translation adjustment and equity hedging. The sensitivity analysis includes the effects
of currency hedges of net investments in foreign entities and assumes that no changes take place other than a single currency exchange
rate movement on 31 December each year.
Hedged translation exposure in Equity
As at 31 December
EUR million
2021
2020
Translation exposure on equity in USD area1
1,502
1,323
EUR/USD equity hedges2
-265
-244
Translation exposure after hedges
1,237
1,079
Sensitivity before hedges - EUR strengthening 5%
-75
-66
Sensitivity after hedges - EUR strengthening 5%
-62
-54
1 Includes the joint operation Montes del Plata in Uruguay, which has USD as its functional
currency.
2 USD denominated bonds classified as hedges of net investments in foreign assets.
Liquidity and refinancing risk 
Funding risk arises from the difficulty of obtaining finance for operations at a given point in time. Stora Enso’s funding policy states that
the average maturity of outstanding loans and committed credit facilities covering short-term borrowings should be at least four years.
The policy further states that the Group must have cash equivalents and undrawn committed credit facilities to cover all debt maturing
within the next 12 months, including supply chain financing and factoring. At 31 December 2021, unused committed credit facilities were
at EUR 700 (EUR 600) million. The EUR 700 million committed credit facility agreement with a syndicate of 12 banks has a maturity of 
five years with two one-year extensions and is used as a backup for general corporate purposes. Additionally, Stora Enso has access to
various additional long-term sources of funding up to EUR 1,000 (EUR 950) million. These mainly relate to available funding sources from
Finnish pension funds.
Refinancing risk, or the risk that maturing debt is not refinanced in the markets, is mitigated by Stora Enso’s target of maintaining an
even maturity profile of outstanding debt. The table below shows maturity analysis for the Group's contractual financial liabilities classified
under principal headings based on the remaining period to contractual maturity at the reporting date. Forward interest rates as at the
year-end were used for estimating contractual finance charges for the upcoming years.
66
Contractual maturity repayments of financial liabilities, settlement net: 2021
EUR million
2022
2023
2024
2025
2026
2027+
Total
Bond loans
0
300
293
427
98
1,390
2,508
Loans from credit institutions
117
253
41
165
4
0
578
Lease liabilities
64
50
43
35
31
165
387
Other non-current financial liabilities
0
4
0
0
0
0
4
Non-current borrowings including current portion
180
606
376
627
132
1,555
3,476
Estimated contractual finance charges
89
87
76
66
50
279
647
Contractual repayments on non-current borrowings
269
693
452
693
182
1,834
4,123
Current borrowings, carrying amounts
372
0
0
0
0
0
372
Gross-settled derivative liabilities - receipts
-1,797
0
0
0
0
0
-1,797
Gross-settled derivative liabilities - payments
1,769
0
0
0
0
0
1,769
Net-settled derivative liabilities
16
10
1
0
0
0
27
Trade payables
1,705
0
0
0
0
0
1,705
Bank overdrafts
1
0
0
0
0
0
1
Estimated contractual finance charges
5
0
0
0
0
0
5
Total Contractual Repayments at 31 December 2021
2,339
703
453
693
182
1,834
6,205
Contractual maturity repayments of financial liabilities, settlement net: 2020
EUR million
2021
2022
2023
2024
2025
2026+
Total
Bond loans
299
0
300
299
434
1,469
2,801
Loans from credit institutions
93
404
397
35
150
4
1,083
Lease liabilities
80
66
45
37
30
138
397
Other non-current financial liabilities
0
5
0
0
0
0
5
Non-current borrowings including current portion
471
475
742
371
614
1,612
4,285
Estimated contractual finance charges
98
92
79
67
59
311
706
Contractual repayments on non-current borrowings
570
566
822
439
673
1,922
4,991
Short-term borrowings, carrying amounts
413
0
0
0
0
0
413
Gross-settled derivative liabilities - receipts
-1,796
0
0
0
0
0
-1,796
Gross-settled derivative liabilities - payments
1,743
0
0
0
0
0
1,743
Net-settled derivative liabilities
27
15
11
2
1
1
58
Trade payables
1,314
0
0
0
0
0
1,314
Bank overdrafts
6
0
0
0
0
0
6
Estimated contractual finance charges
7
0
0
0
0
0
7
Total Contractual Repayments at 31 December 2020
2,283
582
833
441
674
1,923
6,736
Financial transactions counterparty credit risk
Financial counterparty risk is the risk of fluctuations in the value of the Group’s assets as a result of counterparties being unable to meet
their obligations arising from financial contracts. The exposure to a financial counterparty risk is measured as the maximum loss that
Stora Enso can suffer directly in the event of a single counterparty’s credit default. This risk is minimised by:
entering into transactions only with leading financial institutions and with industrial companies that have a good credit rating;
only investing in liquid funds and deposits with financial institutions or companies that have a minimum credit rating of BBB-.
at least the higher of 50% of cash equivalents, or EUR 150 million, of cash equivalents to be held at counterparties with a
minimum rating of A- or equivalent using credit ratings from main rating agencies;
investing at least EUR 75 million of the Group's cash and cash equivalents at counterparties other than the counterparty at
which most of Stora Enso's cash and cash equivalents are held;
requiring parent company guarantees when dealing with any subsidiary of a rated company. 
The Group Financial Risk Policy defines the limits for accepted counterparty risk, based on the tenor of financial contract and
counterparty’s credit rating.
At the year end 2021, there were no significant concentrations of risk with respect to counterparties of derivative contracts, with the
highest counterparty mark-to-market exposure being at EUR 22 (EUR 18) million and credit rating of A+ (BBB+) using Standard and
Poor’s credit rating symbols.
Customer credit risk
Customer credit risk is Stora Enso’s exposure to contracts arising from deterioration in the financial health of its customers. The Group
uses various measures to reduce customer credit risks, including, but not limited to, letters of credit, prepayments and bank guarantees.
The Group has also obtained export guarantees, covering both political and commercial risks, which are used in connection with
individual customers outside the OECD area. Management considers that no significant concentration of credit risk with any individual
customer, counterparty or geographical region exists for Stora Enso. The ageing information of trade receivables and related loss
allowances are given in Note 17 Operative receivables.
67
Commodity price risk
Outstanding commodity hedges
As at
31 December 2021
31 December 2020
Underlying
amount of
commodity
hedged
Average
hedged
commodity
price
Nominal
amount
hedged in
EUR million
Fair value
EUR million
Underlying
amount of
commodity
hedged
Average
hedged
commodity
price
Nominal
amount
hedged in
EUR 
million
Fair value
EUR million
Electricity purchases
  - Nordic region
438 000
MWh
EUR 29.02
13
15
1 095 000
MWh
EUR 30.39
33
2
  - Central Europe
87 600 MWh
EUR 43.06
4
12
201 480
MWh
EUR 42.26
9
1
Oil purchases
189 808
barrels
USD 58.06
10
2
219 516
barrels
USD 52.55
10
0
The Group is exposed to commodity and energy price volatility that will have an impact on the Group's profitability. Electricity, natural gas
and oil hedge derivatives are part of energy price risk management in the Group, whilst other commodity risks are measured and hedged
if economically possible. The Group hedged natural gas during the year, no hedges were outstanding at year end. In addition to electricity
hedge derivatives, the Group also manages energy price risk by entering into long-term physical fixed price purchase agreements, and
by holding a 15.6% stake in Pohjolan Voima Oy (PVO), which is a privately owned Group of companies in the energy sector in Finland.
The fair value of the shares amounted to EUR 900 (EUR 394) million as per the year-end. The fair value of these shares is dependent on
electricity market prices and discussed in more detail in Note 14 Equity instruments.
  A 10% movement in energy and raw material prices would result in a EUR 6 (EUR 5) million change in the fair value of commodity
financial hedges described in the above table. The majority of these fair value changes, after taxes, are recorded directly in Equity under
Hedging Reserves, until the contracts mature and the result is entered in the Income statement. These estimates only represent the
sensitivity of commodity financial instruments to market risk and not the Group's full exposure to raw material and energy price risks as a
whole, since the actual underlying purchases are not financial instruments within the scope of the IFRS 7 standard. At the end of 2021,
the maturities of the energy and commodity contracts, including both financial hedges and fixed-price physical purchase agreements,
ranged between 2022 and 2024. In 2020, the maturities ranged between 2021 and 2024.
In an effort to mitigate other commodity price risk exposures in relation to wood fiber price risk, the Group is a significant owner of
forest assets in the Nordic region. In Sweden the Group owns 1.4 million hectares of forest land. In addition, Stora Enso holds 41%
share in Tornator Oyj, which is a significant forest owner in Finland. The Group's share in Tornator is reported as an equity accounted
investment and discussed in more detail in Note 13 Equity accounted investments. The Group's forest assets are discussed in more
detail in Note 12 Forest assets.
Equity price risk
The Group has certain investments in publicly traded securities. Currently these relate to Packages Ltd shares in Pakistan. The market
value of these equity investments was EUR 13 (EUR 16) million at the year end. Market value changes in these investments are
recorded, after taxes, directly under Shareholders’ Equity in the Equity instruments through OCI reserve. Detailed discussion regarding
the publicly traded securities can be found from Note 14 Equity instruments.
Capital risk management
Stora Enso’s debt structure is focused on capital markets and commercial banks. Group objectives when managing capital are to
safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, as
well as to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group
may, subject to shareholder approval as appropriate, vary the dividends paid to shareholders, buy its own shares on financial markets,
return capital to shareholders, issue new shares or sell assets to reduce debt. The Group strives to pay stable dividends linked to the
long-term performance with the aim of distributing 50% of Earnings per share (EPS) excluding fair valuations over the cycle.
The Group monitors its capital on the basis of a target net debt-to-equity ratio of 0.60 or less, and aiming that the Net-debt-to-
Operational EBITDA ratio remains below 2.0, indicating a solid financial position, and financial flexibility.
Capital structure
As at 31 December
EUR million
2021
2020
Interest-bearing liabilities
3,938
4,756
Interest-bearing assets
1,629
1,836
Net debt
2,309
2,921
Equity attributable to owners of the parent
10,683
8,809
Operational EBITDA1
2,184
1,270
Net debt to equity ratio
0.22
0.33
Net debt to operational EBITDA
1.06
2.30
1 Operational EBITDA definition is included in the "Non-IFRS measures" chapter in the Report of the Board of Directors.
Montes del Plata, a joint operation of Stora Enso, and the Group's subsidiary Stora Enso (Guangxi) Packaging Company Ltd have
complied with financial covenants related to debt-to-assets ratio during the reported periods.
Note 25 Fair values
Accounting principles
Financial assets
The Group classifies its financial assets into three categories, which are amortised cost, fair value through other comprehensive income
and fair value through profit and loss. The classification is made according to the IFRS 9 standard and management determines the
classification of investments at the time of initial recognition.
With investments in debt instruments, the classification is made based on the business model and contractual cash flow
characteristics of debt instruments. Investments in debt instruments, for which the business model objective is to hold the financial
68
instruments to collect contractual cash flows and those cash flows are solely payments of principal and interest, are classified as
amortised cost and presented under current or non-current assets in the consolidated statement of financial position. Investments in debt
instruments, for which the business model objective is to hold the financial instruments for both to collect contractual cash flows and sell
financial instruments and the cash flows are solely payments of principal and interest, are classified as fair value through other
comprehensive income and presented under current or non-current assets in the consolidated statement of financial position.
The Group's investments into equity instruments, such as listed and unlisted securities, are classified as fair value through profit and
loss unless the Group has at inception decided to apply the irrevocable election under IFRS 9 to classify the investments as fair value
through other comprehensive income with only dividend income from the investments being recognised in the income statement.
Investments that are not measured at amortised cost or at fair value through other comprehensive income are classified as fair value
through profit and loss and are therefore fair valued through the consolidated income statement and presented under current or non-
current assets in the consolidated statement of financial position.
Financial liabilities
The Group's financial liabilities are classified into amortised cost or fair value through profit and loss categories. Financial liabilities are
measured at amortised cost unless the Group has decided to apply a fair value option to designate a financial liability to be measured at
fair value through profit and loss.
Derivatives
Derivative financial assets and liabilities are measured at fair value and classified as fair value through profit and loss or, if the Group has
applied hedge accounting, at fair value through other comprehensive income according to the IFRS 9 standard. Derivative financial
instruments and hedge accounting are discussed in more detail in Note 27 Derivatives.
Fair value of financial instruments
The fair values of publicly traded derivatives and listed securities, are based on quoted market prices at the reporting date; the fair values
of interest rate swaps are calculated as the present value of the estimated future cash flows, and the fair values of foreign exchange
forward contracts are determined using forward exchange rates at the reporting date. The valuation principles for derivative financial
instruments have been described in more detail in Note 27 Derivatives. 
In assessing the fair values of non-traded derivatives and other financial instruments, the Group uses a variety of methods and makes
assumptions based on the market conditions at each reporting date. Quoted market prices or dealer quotes for identical or similar
instruments are used for non-current debt. Other techniques, such as option pricing models and estimated discounted value of future
cash flows, are used to determine fair values for the remaining financial instruments. The face values, less any estimated credit
adjustments, for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values. The fair
values of financial liabilities for disclosure purposes are estimated by discounting the future contractual cash flows at the current market
interest rates available to the Group for similar financial instruments.
Purchases and sales of financial instruments are recognised based on trade date accounting, which is the date on which the Group
commits to purchasing or selling the financial instrument. Financial instruments are derecognised when the rights to receive or the cash
flows from the financial instruments have expired or have been transferred and the Group has substantially transferred all risks, rewards
and obligations of the ownership of the financial asset or liability.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques, for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair values that are not based on
observable market data.
The Group evaluates the categorisation of its fair value measurements within the fair value hierarchy on a regular basis at the end of the
reporting period. There were no transfers recognised in the fair value hierarchy between Levels 1 and 2 and no transfers into or out of
Level 3 fair value measurements during 2021 and 2020. See Note 14 Equity instruments for more information on Level 3 fair value
measurement of listed and unlisted securities.
69
Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2021
Fair value
Fair value
through
Total
Fair value hierarchy
Amortised
through
income
carrying
EUR million
cost
OCI
statement
amount
Fair value
Level 1
Level 2
Level 3
Note
Financial assets
Listed securities
13
13
13
13
14
Unlisted securities
900
5
905
905
905
14
Non-current interest-bearing receivables
45
6
51
51
6
26
Derivative assets
6
6
6
6
Loan receivables
45
45
45
Trade and other operative receivables
1,110
39
1,149
1,149
39
17
Current interest-bearing receivables
52
31
1
84
84
32
26
Derivative assets
31
1
32
32
32
Other short-term receivables
52
52
52
Cash and cash equivalents
1,481
1,481
1,481
Total
2,687
990
6
3,683
3,683
13
77
905
Fair value
Fair value
through
Total
Fair value hierarchy
Amortised
through
income
carrying
EUR million
cost
OCI
statement
amount
Fair value
Level 1
Level 2
Level 3
Note
Financial liabilities
Non-current interest-bearing liabilities
3,284
7
23
3,313
3,618
30
26
Derivative liabilities
7
23
30
30
30
Non-current debt
3,284
3,284
3,589
Current portion of non-current debt
180
180
180
26
Current interest-bearing liabilities
403
35
7
444
444
42
26
Derivative liabilities
35
7
42
42
42
Current debt
403
403
403
Trade and other operative payables
1,960
1,960
1,960
23
Bank overdrafts
1
1
1
Total
5,827
42
29
5,899
6,204
71
In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted
derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion.
70
Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2020
Fair value
Fair value
through
Total
Fair value hierarchy
Amortised
through
income
carrying
EUR million
cost
OCI
statement
amount
Fair value
Level 1
Level 2
Level 3
Note
Financial assets
Listed securities
16
16
16
16
14
Unlisted securities
394
7
401
401
401
14
Non-current interest-bearing receivables
91
2
93
93
2
26
Derivative assets
2
2
2
2
Loan receivables
91
91
91
Trade and other operative receivables
814
44
858
858
44
17
Current interest-bearing receivables
1
60
6
66
66
65
26
Derivative assets
60
6
65
65
65
Other short-term receivables
1
1
1
Cash and cash equivalents
1,661
1,661
1,661
Total
2,566
515
13
3,094
3,094
16
111
401
Fair value
Fair value
through
Total
Fair value hierarchy
Amortised
through
income
carrying
EUR million
cost
OCI
statement
amount
Fair value
Level 1
Level 2
Level 3
Note
Financial liabilities
Non-current interest-bearing liabilities
3,801
19
2
3,822
4,233
21
26
Derivative liabilities
19
2
21
21
21
Non-current debt
3,801
3,801
4,212
Current portion of non-current debt
472
472
472
26
Current interest-bearing liabilities
444
11
1
456
456
12
26
Derivative liabilities
11
1
12
12
12
Current debt
444
444
444
Trade and other operative payables
1,547
1,547
1,547
23
Bank overdrafts
6
6
6
Total
6,270
30
3
6,303
6,715
33
In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted
derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion.
In the previous tables, the fair value is estimated to be equal to the carrying amount for current financial assets and financial liabilities,
such as trade receivables and payables due to their short time to maturity and limited credit risk. The fair value of non-derivative interest-
bearing liabilities, considered as a level 2 fair value measurement, is estimated based on a discounted cash flow analysis in which the
yield curves observable at commonly quoted intervals are used as a discount factor in the model.
Reconciliation of level 3 fair value measurement of financial assets and liabilities
EUR million
2021
2020
Financial assets
Opening balance at 1 January
401
526
Gains/losses recognised in income statement
0
1
Gains/losses recognised in other comprehensive income
504
-140
Additions
1
15
Disposals
0
-1
Closing balance at 31 December
905
401
EUR million
2021
2020
Financial liabilities
Opening balance at 1 January
0
-25
Deductions
0
25
Closing balance at 31 December
0
0
Note 26 Interest-bearing assets and liabilities
Accounting principles
Interest-bearing assets - loan receivables
Loan receivables are debt instruments with fixed or determinable payments that are not quoted on an active market. They are recorded
initially at fair value and subsequently measured at an amortised cost. Loss allowance for expected credit losses is calculated based on
the general approach under IFRS 9, where loss allowance is recognised based on 12-month expected credit losses if there has not been
a significant increase in credit risk since the initial recognition. A significant increase in the credit risk will be evaluated based on a
comparison of the risk of a default occurring on the financial instrument as at the reporting date with the risk of default occurring on the
financial instrument as at the date of initial recognition. The Group may use, for example, rates of credit default swaps (CDS) observable
on financial markets to produce the risk assessment.
Interest income on loan receivables is included in financial income and expense. Loan receivables with a maturity less than 12 months
are included in current assets under interest-bearing receivables, and those with maturities greater than 12 months, in non-current
interest-bearing receivables.
71
Interest-bearing liabilities
Interest-bearing liabilities are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, interest-bearing
liabilities are measured at amortised cost using the effective interest method. Any difference between the proceeds net of transaction
costs and redemption value is recognised in the consolidated income statement over the maturity period of the borrowings. Interest
expenses are accrued for and recorded in the consolidated Income statement for each period.
Interest-bearing liabilities with an original maturity greater than 12 months are classified as non-current interest-bearing liabilities in the
consolidated statement of financial position, though repayments falling due within 12 months are presented in current liabilities under the
current portion of non-current debt. Short-term commercial paper, bank and other interest-bearing liabilities, for which the original maturity
is less than 12 months, are presented in current liabilities under interest-bearing liabilities.
Lease liabilities
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease liabilities are initially
capitalised at the commencement of the lease and measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the Group’s incremental borrowing rate. The lease term applied corresponds to the non-
cancellable period except in cases where the Group is reasonably certain to exercise renewal option or prolong the contract. The Group
allocates the consideration in the contract to each lease component and separates non-lease components if these are identifiable.  Lease
terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
The lease liabilities are subsequently measured at amortised cost using the effective interest method. Lease payment is allocated
between the capital liability and finance charges to achieve a constant interest rate on the outstanding liability balance. Lease liabilities
are remeasured mainly when there is a change in future lease payments arising from a change in an index or rate, or if there is a change
in the Group’s assessment whether it will exercise an extension option. When lease liability is remeasured, a corresponding adjustment is
generally made to the carrying amount of the right-of-use asset.
The Group has elected not to recognise lease liabilities for short-term leases that have a lease term of 12 months or less and leases
of low value assets. Leases of low value assets mainly include IT and office equipment, certain vehicles and machinery and other low
value items. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the
lease term.
Managing Interest Rate Benchmark Reform and associated risks
A global reform on interest reference rates is underway as existing IBOR reference rates are being replaced by alternative risk-free rates.
The impact of the transition is expected to be limited for the Group's external contracts. The Group has exposure to IBORs on its financial
instruments that will be replaced or reformed as part of these market-wide initiatives. The Group's main IBOR exposure at 31 December
2021 was indexed to US dollar LIBOR and related amount of interest bearing liabilities outstanding at 31 December 2021 was EUR 189
million. The publication of USD LIBORs will cease after June 2023.
The Group monitors the process of transition from IBORs to new benchmark rates by reviewing the total amounts of contracts that
have yet to transition to an alternative benchmark rate. The expected impact is limited and relates mainly to external long-term debt. The
Group's financial instruments are mainly indexed to Euribor and Stibor reference rates and these are expected to continue to exist for
now.
Interest-bearing assets
As at 31 December
EUR million
2021
2020
Listed securities
13
16
Long-term derivative assets
6
2
Long-term deposits
42
87
Long-term loans to equity accounted investments
2
2
Other long-term loan receivables
1
2
Total non-current interest-bearing assets
64
109
Short-term derivative assets
32
65
Short-term deposits
49
0
Other short-term loan receivables
3
1
Cash and cash equivalents
1,481
1,661
Total current interest-bearing assets
1,565
1,726
Total interest-bearing assets
1,629
1,836
The annual average interest income rate for deposits and loan receivables during 2021 was approximately 0.1% (0.2%). Current
interest-bearing receivables included EUR 3 million accrued interest at 31 December 2021. The Group has evaluated that there has not
been a significant increase in credit risk related to interest-bearing receivables after the initial recognition. Accordingly, they are
considered to have a low credit risk and loss allowance is recognised based on 12-month expected credit losses.
72
Interest-bearing liabilities
As at 31 December
EUR million
2021
2020
Bond loans
2,497
2,789
Loans from credit institutions
577
1,083
Lease liabilities
387
397
Long-term derivative financial liabilities (see Note 25)
30
21
Other non-current liabilities
4
5
Non-current interest-bearing liabilities including current portion
3,493
4,294
Short-term borrowings
372
413
Interest payable
34
35
Short-term derivative financial liabilities (see Note 25)
38
9
Bank overdrafts
1
6
Total Interest-bearing Liabilities
3,938
4,756
EUR million
2021
2020
Carrying value at 1 January
4,756
4,192
Proceeds of new long-term debt
19
1,081
Additions in lease liabilities
33
39
Repayment of long-term debt
-870
-333
Repayment of lease liabilities and interest
-88
-85
Change in short-term borrowings and interest payable
-42
-101
Change in derivative financial liabilities
38
-17
Translation differences and other
92
-20
Total Interest-bearing Liabilities
3,938
4,756
Events during 2021 and 2020
In December 2021, Stora Enso signed a new EUR 700 million Revolving Credit Facility (RCF) with 12 commercial banks. The maturity of
the facility is five years with two one-year extensions. The pricing is partly linked to meeting emission targets on Scope 1&2 and Scope 3.
Simultaneously, the existing EUR 600 million RCF with original maturity in 2023 was cancelled.
In April 2020, Stora Enso successfully issued a SEK 1,700 million green bond under its EMTN (Euro Medium Term Note) programme
and Stora Enso’s Green Bond Framework. The bond matures in April 2025. In June 2020, Stora Enso successfully tapped the above
mentioned 2025 SEK Green Bond issued in April 2020 with an additional nominal of SEK 1,400 million. The bond consist of fixed and
floating tranches and pays a floating coupon of STIBOR +2.20% and a fixed coupon of 2.375%.
Stora Enso has a Green Bond Framework as part of its Sustainable Finance approach. The ambition is to offer a loan-format to
support sustainability-focused fixed income investors and to report the direct environmental impacts of some investments and business
activities .
During 2021, Stora Enso repaid multiple credit institution loans ahead of final maturity, the total repayments of loans and bond notes
amounted to a nominal of EUR 911 million. This resulted in a EUR 7 million initial modification net loss being recognised in the Income
Statement.
Interest-bearing liabilities - maturities, interest rates and currency breakdown
Stora Enso's borrowings maturities range from 2022 to the longest borrowing maturing in 2036. Borrowings have either fixed or floating
interest rates ranging from 0.5% (0.5%) to 7.3% (7.3%). The average interest rate on borrowings for the full year amounted to 3.0%
(3.2%) with a run-rate of 3.1% as per the year end. Part of Stora Enso's borrowings have been fixed through floating-to-fixed interest rate
swaps and cross-currency swaps. The majority of Group loans are denominated in euros, US dollars, Swedish crowns or Chinese
renminbis. Detailed maturity analysis of the Group's borrowings are set out in Note 24 Financial risk management.
Net debt
In 2021 net interest-bearing liabilities decreased by EUR 611 (decreased by EUR 288) million to EUR 2,309 (EUR 2,921) million. Net
interest-bearing liabilities are equal to total interest-bearing liabilities less total interest-bearing assets such as cash equivalents and
deposits. Cash and cash equivalents net of overdrafts decreased by EUR 175 (increased by EUR 792) million to EUR 1,480 (EUR 1,655)
million as at 31 December 2021. In 2021, the total cash outflow for leases was EUR 88 (EUR 85) million including interest component of
EUR 17 (EUR 19) million.
The ratio of net debt to the last 12 months' operational EBITDA was 1.1 (2.3). The net debt/equity ratio was 0.22 (0.33) as per the
year-end.
73
Bond loans
Issue/ Maturity Dates
Description of Bond
Interest Rate
%
Currency of
Bond
Nominal
Value
Issued
Outstanding As at   
31 December
Carrying Value As at
31 December
2021
2020
2021
2020
All Liabilities are Held by the Parent Company
Currency million
EUR million
Fixed Rate
2006-2036
Global 7.250% Notes
2036
7.25
USD
300
300
300
262
242
2016-2023
Euro Medium Term Note
2.125
EUR
300
300
300
300
299
2017-2027
Euro Medium Term Note
2.5
EUR
300
300
300
299
299
2018-2028
Euro Medium Term Note
2.5
EUR
300
300
300
298
298
2019-2024
Euro Medium Term Note
(Green Bond)
1.875
SEK
1,750
1,750
1,750
171
174
2020-2025
Euro Medium Term Note
(Green Bond)
2.375
SEK
1,550
1,550
1,550
152
155
2020-2030
Euro Medium Term Note
(Green Bond)
0.625
EUR
500
500
500
495
494
Total Fixed Rate Bond Loans
1,976
1,962
Floating Rate
2015-2025
Euro Medium Term Note
Euribor+2.25
EUR
125
125
125
125
125
2015-2027
Euro Medium Term Note
Euribor+2.35
EUR
25
25
25
25
25
2019-2021
Euro Medium Term Note
(Green Bond)
Stibor+0.85
SEK
3,000
0
3,000
0
299
2019-2024
Euro Medium Term Note
(Green Bond)
Stibor+1.45
SEK
1,250
1,250
1,250
122
124
2019-2026
Euro Medium Term Note
(Green Bond)
Stibor+1.60
SEK
1,000
1,000
1,000
97
99
2020-2025
Euro Medium Term Note
(Green Bond)
Stibor+2.20
SEK
1,550
1,550
1,550
152
155
Total Floating Rate Bond Loans
521
827
Total Bond Loans
2,497
2,789
Note 27 Derivatives
Accounting principles
Derivative financial instruments and hedge accounting
Derivative financial instruments are initially recognised in the consolidated statement of financial position at fair value and subsequently
measured at their fair value at each reporting date according to valuation methods described in this note. Derivative contracts with
maturity greater than 12 months are classified as non-current interest-bearing receivables and liabilities, and contracts maturing within 12
months are presented under current interest-bearing receivables and liabilities.
When derivative contracts are entered into, the Group designates them as either hedges of highly probable forecast transactions or
firm commitments (cash flow hedges), hedges of the exposure to changes in the fair value of recognised assets or liabilities (fair value
hedges), hedges of net investments in foreign entities, or derivative financial instruments not meeting the hedge accounting criteria in
accordance with IFRS 9. The method of recognising the resulting gains or losses on derivative instruments is dependent on the nature of
the item being hedged.
At the inception of a hedge, the Group documents the relationship between the hedging instrument and the hedged item, as well as its
risk management objective and strategy for undertaking various hedging transactions. This process includes linking all financial
instruments designated under hedge accounting to specific assets and liabilities or to specific firm commitments or highly probable
forecast transactions in order to verify and document the hedge relationship between the hedged item and the hedging instrument as
required by IFRS 9. The Group also documents its qualitative prospective assessment at the hedge inception of whether the derivatives
used in a hedge relationship are highly effective in offsetting changes in fair value or cash flows of hedged items. Hedge effectiveness will
be assessed in accordance with IFRS 9 requirements.
The hedge ratio used for hedging relationships is usually 1:1. For currency and commodity hedging purposes, the Group uses a
hedge designation where the critical terms of the hedging instrument and the hedged item will coincide in terms of the notional amount
and timing. In respect of interest rate hedging, the interest rate basis between swap contracts and underlying debt will coincide. Since the
critical terms of the hedges and underlying risks match, the hedging instruments are considered to offset any changes related to the
anticipated transactions.
Potential sources of ineffectiveness that may be expected to occur in relation to currency and commodity hedges are mainly related to
the forecasted transaction not occurring in the amount or at the time expected. For interest rate hedges, cross-currency basis spread or
initial fair value of the hedging instrument at the date of hedge designation may result in ineffectiveness being recognised in the income
statement. Potential sources of ineffectiveness for all the aforementioned hedges also include possible effects of credit risk dominating
fair value changes arising from the hedging instrument and the hedged item designated under the hedging relationship.
Cash flow hedges
Derivatives used in currency cash flow hedges are mainly forward contracts and options, with swaps mainly used for commodity and
interest rate hedging purposes. In respect of commodity hedges, the Group may also use risk component hedging to hedge highly
probable forecast purchases of natural gas. These purchases create natural gas price exposure which translates as a natural gas price
index component and pricing margin. Natural gas risk component can be hedged by using natural gas price linked swaps, which are
expected to fully offset changes in the market value of the hedged risk components. Natural gas price index risk component is separately
identifiable and reliably measurable due to the pricing formula being specified in the natural gas purchase agreement.
During 2021, the Group did not enter into new interest rate swap contracts. In 2020, the Group entered into new interest rate swap
contracts with a total nominal value of SEK 1,250 million. The interest rate swaps have been designated as cash flow hedges of SEK
denominated floating-rate green bond and related tap issue maturing in 2025.
74
Changes in the fair value of derivatives designated and qualifying as cash flow hedges, and which are effective, are recognised in a
separate equity category of OCI cash flow hedges reserve, the movements of which are disclosed in the consolidated statement of
comprehensive income. For currency forwards, both the spot element and forward points have been included to the hedge designation.
In case of currency options, the time value of an option is excluded from the hedge designation and only the intrinsic value component of
an option is designated as the hedging instrument. The changes in option time value are recognised in a cost of hedging reserve within
OCI. The cumulative gain or loss of a derivative deferred in equity is transferred to the consolidated income statement and classified as
an income or expense in the same period in which the hedged item affects the consolidated income statement. The unrealised gains and
losses related to cash flow hedges are expected to be recycled through the income statement within one to six years with the longest
hedging contract maturing in 2027 (2027). However, the majority of the contracts are expected to mature in 2022.
Realised results of hedge accounted derivative instruments hedging foreign currency sales transactions or purchases are booked as
adjustments to sales or materials and services, depending on the nature of the underlying hedged item. In respect of hedges of
exposures to foreign currency risk of future transactions resulting in the recognition of non-financial assets, the gains and losses deferred
to the cash flow hedges reserve within OCI are transferred from equity to be included in the initial acquisition cost of the non-financial
asset at the time of recognition. The Group may hedge foreign-currency risk of external or internal foreign-currency purchases where the
underlying amount purchased in a foreign-currency impacts the value of inventory in a local currency. In such cases the gains and losses
are initially booked as an adjustment to raw material inventory and recycled further to finished goods inventory with being ultimately
recognised in the consolidated income statement at the time when the hedged items are sold to an external customer. In case of non-
current assets, the deferred amounts are ultimately recognised in the income statement through depreciation over the lifetime of the non-
financial assets.
When a hedging instrument expires or is sold, terminated or exercised or no longer meets the hedge accounting criteria under IFRS 9,
any cumulative gain or loss deferred in equity at that time remains in equity and is accounted for as an adjustment to income or expense
when the committed or forecast transaction is ultimately recognised in the consolidated income statement. However, if the underlying
forecasted transaction is no longer expected to occur, the cumulative gain or loss reported in equity from the period when the hedge was
effective is immediately recognised in the consolidated income statement.
Fair value hedges
In case of fair value hedges, the Group uses either derivatives or borrowings as a hedging instrument to manage the risk associated with
the fair value of a hedged item. The gains and losses on hedging instruments designated and qualifying as fair value hedges, and which
are highly effective, are recorded in the consolidated income statement, along with any changes in the fair value of the hedged assets or
liabilities attributable to the hedged risk. As at the end of 2021, the Group did not have fair value hedges.
Net investment hedges
For hedges of net investments in foreign entities, the Group uses either derivatives or foreign-currency borrowings for this purpose. If the
hedging instrument is a derivative, any gain or loss thereon relating to the effective portion of the hedge is recognised in equity in CTA as
disclosed in the consolidated statement of comprehensive income; the gain or loss relating to the ineffective portion is immediately
recognised in the consolidated income statement. In addition, exchange gains and losses arising on the translation of a foreign-currency
borrowing that hedges net investment in a foreign operation are also recognised in CTA, with any ineffective portion being immediately
recognised in the consolidated income statement. The gains and losses recognised in CTA are recycled from equity to the consolidated
income statement at the time when the underlying hedged net investment is disposed.
Non-hedge accounted derivatives
Certain derivative transactions, while providing effective economic hedges under Group risk management policies, do not qualify for
hedge accounting under the specific rules in IFRS 9 and therefore changes in the fair value of such non-qualifying hedges are accounted
for at fair value in the consolidated income statement. For non-hedge accounted derivatives economically hedging foreign-currency risk
of net of operative receivables and payables, the fair value changes are recognised in operating profit under other operating income and
expense. For other non-hedge accounted derivatives, the fair value changes are recognised in the consolidated income statement under
financial income and expense.
Valuation of derivatives
Derivative financial instruments are recorded in the statement of financial position at their fair values defined as the amount at which the
instrument could be exchanged in an orderly transaction between market participants at the measurement date. The fair values of such
financial items have been estimated on the following basis:
Currency forward contract fair values are calculated using forward exchange rates at the reporting date. 
Currency option contract fair values are calculated using reporting date market rates together with common option pricing
models.
Commodity contract fair values are computed with reference to quoted market prices on futures exchanges or other reliable
market sources.
Interest rate swaps fair values are calculated using a discounted cash flow method.
Cross-currency swaps fair values are calculated by using a discounted cash flow method with the exchange of notional also 
included in the valuation model.
Total foreign exchange gains and losses in the income statement excluding hedges
Year ended 31 December
EUR million
2021
2020
Other operating income
31
-19
Other operating expense
-14
9
Borrowings, cash equivalents and lease liabilities
37
-22
Total
54
-32
75
Hedge gains and losses in operating profit
Year ended 31 December
EUR million
2021
2020
Cash flow hedge accounted derivatives
Currency hedges
9
-2
Commodity hedges
34
-23
Total
43
-24
As adjustments to sales
6
-1
As adjustments to materials and services
37
-23
Realised from OCI through income statement
43
-24
Currency hedges ineffectiveness
-1
0
Commodity hedges ineffectiveness
0
-1
Net losses from cash flow hedges
42
-25
Non-hedge accounted derivatives
Net receivable hedges
-17
10
Net gains/losses on non-hedge accounted derivatives
-17
10
Net hedge losses in operating profit
26
-16
In 2021, certain forecasted future transactions were no longer expected to occur, and due to this hedge accounting was ceased for those
transactions. This resulted in a loss of EUR 1 (EUR 1) million being booked in the Group's operating profit and the loss being presented
in the table above as ineffectiveness from cash flow hedges.
Hedge gains and losses in financial items
Year ended 31 December
EUR million
2021
2020
Cash flow hedge accounted derivatives
Interest rate hedges ineffectiveness
-2
2
Net gains/losses from cash flow hedges
-2
2
Non-hedge accounted derivatives
Currency derivatives
-40
14
Net gains on non-hedge accounted derivatives
-40
14
Net gains/losses in financial items
-42
16
Nominal and fair values of derivative instruments
As at 31 December
EUR million
Nominal
values
Positive
fair values
Negative
fair values
Net fair
values
Nominal
values
Positive
fair values
Negative
fair values
Net fair
values
2021
2020
Currency derivatives
Forwards: Operational cash flow
hedging
1,104
4
-19
-16
1,041
40
-2
37
Options: Operational cash flow
hedging
980
2
-13
-10
645
14
-1
13
Total cash flow hedge accounted
2,084
6
-32
-26
1,686
53
-3
50
Forwards: Trade and loan receivables
hedging
469
1
-6
-5
436
6
-1
4
Total non-hedge accounted
469
1
-6
-5
436
6
-1
4
Total currency derivatives
2,553
7
-38
-32
2,122
59
-5
54
Commodity derivatives
Electricity swaps: Costs hedging
16
27
0
27
42
8
-4
3
Oil swaps: Costs hedging
10
3
0
2
10
1
-1
0
Total cash flow hedge accounted
27
29
0
29
52
8
-5
3
Total commodity derivatives
27
29
0
29
52
8
-5
3
Interest rate derivatives
Interest rate swaps: Financial
expenses hedging
482
1
-8
-7
694
0
-17
-17
Cross-currency swaps: Financial
expenses hedging
0
0
0
0
200
0
-6
-6
Total cash flow hedge accounted
482
1
-8
-7
894
0
-23
-23
Cross-currency swaps: Financial
expenses hedging
200
0
-25
-25
0
0
0
0
Total non-hedge accounted
200
0
-25
-25
0
0
0
0
Total interest rate derivatives
682
1
-32
-31
894
0
-23
-23
Total cash flow hedge accounted
2,593
36
-40
-4
2,631
62
-32
30
Total non-hedge accounted
669
1
-31
-30
436
6
-1
4
Total derivatives
3,261
37
-71
-34
3,068
67
-33
34
Positive and negative fair values of financial derivative instruments are shown under interest-bearing receivables and liabilities, and non-
current interest-bearing receivables and liabilities. The presented fair values in the table include accrued interest and option premiums.
76
Changes in fair values of hedged items and hedging instruments 2021
EUR million
Change in value of
hedged item to
determine hedge
effectiveness
Change in value of
outstanding hedging
instruments
Ineffectiveness
Foreign exchange risk - Forward and option contracts (excluding
option time value)1
65
-66
-1
Foreign exchange risk - Net investment hedges
21
-21
0
Commodity price risk - Commodity swaps
-60
60
0
Interest rate risk - Interest rate swaps
-11
11
0
Interest rate and foreign exchange risk - Cross-currency swaps2, 3
15
-18
-3
1 Ineffectiveness booked in Operating profit.
2 Ineffectiveness booked in Net financial items.
3 Cross-currency swaps are hedge accounted until the end of November 2021.
Changes in fair values of hedged items and hedging instruments 2020
EUR million
Change in value of
hedged item to
determine hedge
effectiveness
Change in value of
outstanding hedging
instruments
Ineffectiveness
Foreign exchange risk - Forward and option contracts (excluding
option time value)
-51
51
0
Foreign exchange risk - Net investment hedges
-23
23
0
Commodity price risk - Commodity swaps1
17
-18
-1
Interest rate risk - Interest rate swaps
6
-6
0
Interest rate and foreign exchange risk - Cross-currency swaps2
-7
9
2
1 Ineffectiveness booked in Operating profit.
2 Ineffectiveness booked in Net financial items.
Breakdown of cash flow hedging reserve and net investment hedges in equity 2021
EUR million
At 1 Jan 2021
Change in fair
value recognised
in OCI/CTA
Reclassified from
OCI to profit and
loss
Tax impact
At 31 Dec 2021
Foreign exchange risk - Operational cash flow
hedging
39
-66
-10
15
-21
Commodity price risk - Commodity swaps
3
60
-34
-6
23
Interest rate risk - Interest rate swaps
-13
11
0
-2
-4
Interest rate and foreign exchange risk - Cross-
currency swaps
-9
33
-25
0
-1
Cost of hedging reserve
0
-2
0
0
-1
Total cash flow hedge reserve in OCI
20
37
-69
8
-4
Foreign exchange risk - Net investment hedges
30
-20
0
4
14
Total net investment hedges in CTA
30
-20
0
4
14
Total hedging reserves
51
17
-69
12
10
Breakdown of cash flow hedging reserve and net investment hedges in equity 2020
EUR million
At 1 Jan 2020
Change in fair
value recognised
in OCI/CTA
Reclassified from
OCI to profit and
loss
Tax impact
At 31 Dec 2020
Foreign exchange risk - Operational cash flow
hedging
-2
50
2
-10
39
Commodity price risk - Commodity swaps
-2
-17
24
-2
3
Interest rate risk - Interest rate swaps
-8
-6
0
1
-13
Interest rate and foreign exchange risk - Cross-
currency swaps
-11
9
-7
0
-9
Cost of hedging reserve
1
0
0
0
0
Total cash flow hedge reserve in OCI
-22
35
18
-11
20
Foreign exchange risk - Net investment hedges
12
23
0
-5
30
Total net investment hedges in CTA
12
23
0
-5
30
Total hedging reserves
-10
58
18
-15
51
Financial impact of netting for instruments subject to an enforceable master netting agreement 2021
Not offset in the statement of financial position
EUR million
Gross amount of
recognised financial
instruments
Related liabilities (-) or
assets (+) subject to
master netting
agreements
Collateral received (-)
or given (+)
Net exposure
Derivative assets
38
-16
0
22
Derivative liabilities
-71
16
0
-56
77
Financial impact of netting for instruments subject to an enforceable master netting agreement 2020
Not offset in the statement of financial position
EUR million
Gross amount of
recognised financial
instruments
Related liabilities (-) or
assets (+) subject to
master netting
agreements
Collateral received (-)
or given (+)
Net exposure
Derivative assets
67
-25
0
42
Derivative liabilities
-33
25
0
-8
The Group enters into derivative transactions under master netting agreements agreed with each counterparty. In case of an unlikely
credit event, such as default, all outstanding transactions under the agreements are terminated, and only a single net amount per
counterparty is payable for settlement of all transactions. The agreements do not meet the criteria for offsetting in the statement of
financial position, because offsetting is enforceable only in the occurrence of certain future events.
78
Note 28 Cumulative translation adjustment and equity hedging
Accounting principles
The Group operates internationally and is thus exposed to currency risks arising from exchange rate fluctuations on the value of its net
investment in non-euro area foreign subsidiaries, joint operations and equity accounted investments. Exchange rate differences arising
from the retranslation of net investments in foreign entities that are non-euro foreign subsidiaries, joint operations or equity accounted
investments, and of financial instruments that are designated as and are hedges of such investments, are recognised directly in equity in
the cumulative translation adjustment (CTA). Movements in CTA (including related hedges) are shown in the consolidated statement of
comprehensive income.
The cumulative translation adjustments related to disposed and liquidated entities are combined with their gain or loss on disposal.
The CTA is recycled in the consolidated income statement upon disposal and liquidation.
The Group policy for translation risk exposure is to minimise this by funding assets whenever possible and economically viable in the
same currency, but if matching the assets and liabilities in the same currency is not possible, hedging of the remaining translation risk
may take place. The gains and losses net of tax on all financial liabilities and instruments used for hedging purposes are offset in CTA
against the respective currency movements arising from the restatement of the net investments at current exchange rates on the
reporting date. The Group has also applied net investment loan accounting under IAS 21 for certain intragroup loans.
Cumulative translation adjustment - movement
Year ended 31 December
EUR million
2021
2020
At 1 January
CTA on net investments
-292
-148
Net investment hedges and loans
34
18
Income tax related to hedges and loans
-10
-6
Net CTA in Equity
-267
-136
CTA movement OCI
CTA movement
42
-143
CTA release through Income Statement
14
0
Net investment hedges and loans
14
16
Income tax related to hedges and loans
2
-4
CTA movement OCI total
72
-131
At 31 December
CTA on net investments
-235
-292
Net investment hedges and loans
48
34
Income tax related to hedges and loans
-8
-10
Net CTA in Equity
-195
-267
In 2021 the release of cumulative translation adjustments to the income statement amounted to a loss of EUR 14 (EUR 0) million and
was mainly related to the divestment of 20% ownership in Arauco Florestal Arapoti S.A.
Cumulative translation adjustment - financial position
As at 31 December
Cumulative Translation
Adjustments (CTA)
Net Investment Hedges and
Loans
Net CTA in the Statement of
Financial Position
EUR million
2021
2020
2021
2020
2021
2020
Brazil
-281
-299
-281
-299
China
83
74
28
-6
111
67
Czech Republic
38
29
-9
-9
29
20
Poland
-52
-49
17
17
-35
-32
Russia
-81
-91
-81
-91
Sweden
-97
6
47
47
-50
52
Uruguay (USD)
154
43
-34
-14
119
29
USA
4
-1
4
-1
Others
-3
-4
-3
-4
CTA before Tax
-235
-292
48
34
-187
-258
Taxes
0
0
-8
-10
-8
-10
Net CTA in Equity
-235
-292
40
25
-195
-267
The main movements in CTA in 2021 were a gain of EUR 116 (loss of EUR 122) million related to the US dollar, a loss of EUR 103 (gain
of EUR 134) million related to the Swedish crown and a gain of EUR 19 (loss of EUR 90) million related to Brazilian Real.
The net amount of hedging gain included in the CTA during the period amounted to EUR 16 (EUR 13) million. At December 2021 the total
amount of net investment hedges and loans amounted to a gain of EUR 40 (EUR 25) million.
79
Hedging instruments and unrealised hedge losses
As at 31 December
Nominal amount
(Currency)
Nominal amount (EUR)
Unrealised Losses (EUR)
EUR million
2021
2020
2021
2020
2021
2020
Borrowings
USD area
300
300
265
244
-28
-11
Total Hedging
265
244
-28
-11
The Group is currently only hedging its equity exposure to the US dollar arising from its joint operation located in Uruguay with USD
functional currency.
Net Investment loans
At 31 December 2021 Net investment loans had a positive impact of EUR 27 (negative of EUR 5) million on CTA in Equity.
'
80
Note 29 Commitments and contingencies
Accounting principles
Guarantees
The guarantees entered into with financial institutions and other credit guarantors generally oblige the group to make payment in the
event of default by the borrower. The guarantees have an off-balance sheet credit risk representing the accounting loss that would be
recognised at the reporting date if the counterparties fail to perform completely as contracted. The credit risk amounts are equal to the
contract sums, assuming the amounts are not paid in full and are irrecoverable from other parties.
Commitments
As at 31 December
EUR million
2021
2020
On own behalf
Other commitments
15
14
On behalf of equity accounted investments
Guarantees
0
2
On behalf of others
Guarantees
6
6
Other commitments
36
36
Total
57
58
Guarantees
6
8
Other commitments
51
50
Total
57
58
In 2021, the Group’s commitments amounted to EUR 57 (EUR 58) million. In addition, the parent company Stora Enso Oyj has
guaranteed the liabilities of many of its subsidiaries and joint operations up to 1,126 EUR (EUR 1,219) million as of 31 December 2021.
Capital commitments
As at 31 December
EUR million
2021
2020
Total
220
207
Capital expenditure commitments are not recognised in the balance sheet and these include the Group’s share of direct capital
expenditure contracts in joint operations. The largest commitments in relation to capital expenditure relate to the board production
expansion at the Skoghall site in Sweden and the CLT production expansion at the Ždírec sawmill in Czech Republic.
Contingent liabilities
Stora Enso has undertaken significant restructuring actions in recent years which have included the divestment of companies, sale of
assets and mill closures. These transactions include a risk of possible environmental or other obligations the existence of which would be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A
provision has been recognised for obligations for which the related amount can be estimated reliably and for which the related future cost
is considered to be at least probable.
Stora Enso has been granted various investment subsidies and has given certain investment commitments in different countries e.g.
Finland, China and Sweden. If committed planning conditions are not met, local officials may pursue administrative measures to reclaim
some of the formerly granted investment subsidies or to impose penalties on Stora Enso, and the outcome of such a process could result
in a negative financial impact on Stora Enso.
Stora Enso is party to legal proceedings that arise in the ordinary course of business and which primarily involve claims arising out of
commercial law. The management does not consider that liabilities related to such proceedings before insurance recoveries, if any, are
likely to be material to the Group’s financial condition or results of operations.
Legal proceedings in South America
Veracel
On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision claiming that the permits issued by the State
of Bahia for the operations of Stora Enso’s joint operations company Veracel were not valid. The judge also ordered Veracel to take
certain actions, including reforestation with native trees on part of Veracel’s plantations and a possible fine of, at the time of the decision,
BRL 20 (EUR 3) million. Veracel disputes the decision and has filed an appeal against it. Veracel operates in full compliance with all
Brazilian laws and has obtained all the necessary environmental and operating licences for its industrial and forestry activities from the
relevant authorities. In November 2008, a Federal Court suspended the effects of the decision. No provisions have been recorded in
Veracel’s or Stora Enso’s accounts for the reforestation or the possible fine.
81
Note 30 Group companies
Group ownership, %
Group ownership, %
Subsidiaries
Country
2021
2020
A/O Ladenso
Russia
100.00
100.00
AB Stabergsvikens tomter
Sweden
0.00
100.00
Anjala Fiber & Energy Oy
Finland
100.00
100.00
AO Stora Enso
Russia
100.00
100.00
AS Stora Enso Latvija
Latvia
100.00
100.00
Bergnät 1 AB
Sweden
100.00
100.00
Bergnät 2 AB
Sweden
0.00
100.00
Box Inc AB
Sweden
100.00
100.00
Cellutech AB
Sweden
100.00
100.00
Centrum Dystrybucji i Obróbki Drewna Sp. z.o.o.
Poland
100.00
100.00
Changzhou Stora Enso Packaging Technology Co. Ltd.
China
100.00
100.00
DanFiber A/S
Denmark
51.00
51.00
Dongguan Stora Enso Inpac Packaging Co. Ltd.
China
100.00
100.00
Efora Oy
Finland
100.00
100.00
Enso Alueverkko Oy
Finland
100.00
100.00
Euro - Timber, spol. s.r.o.
Slovak Republic
100.00
100.00
FPB Holding GmbH & Co. KG
Germany
99.98
99.98
Guangxi Stora Enso Forestry Co. Ltd.
China
89.50
89.50
Herman Andersson Oy
Finland
100.00
100.00
HESPOL Sp. z.o.o.
Poland
100.00
100.00
Hälsingeskogen vind AB
Sweden
0.00
100.00
Jiashan Stora Enso Inpac Packaging Co. Ltd.
China
100.00
100.00
Lumipaper Ltd
UK
100.00
100.00
Lumipaper NV
Belgium
100.00
100.00
Mena Wood Oy Ltd
Finland
100.00
100.00
OAO Olonetsles
Russia
99.48
99.48
OOO Setles
Russia
100.00
100.00
OOO Setnovo
Russia
100.00
100.00
OOO Stora Enso Forest West
Russia
100.00
100.00
OOO Stora Enso Packaging BB
Russia
100.00
100.00
OOO Stora Transport
Russia
100.00
100.00
OOO Terminal
Russia
100.00
100.00
Primaskog 1 AB
Sweden
0.00
100.00
Primaskog 2 AB
Sweden
0.00
100.00
Primaskog 3 AB
Sweden
0.00
100.00
Primaskog 4 AB
Sweden
0.00
100.00
Primaskog 5 AB
Sweden
0.00
100.00
Primaskog 6 AB
Sweden
0.00
100.00
Primaskog 7 AB
Sweden
0.00
100.00
Primaskog 8 AB
Sweden
0.00
100.00
Primaskog 9 AB
Sweden
100.00
100.00
Selfly Store Oy
Finland
100.00
0.00
Skogsutveckling Syd AB
Sweden
66.67
66.67
Stora Enso China Packaging (HK) Co., Limited
Hong Kong
100.00
100.00
Stora Enso (Guangxi) Forestry Company Ltd.
China
80.08
80.08
Stora Enso (Guangxi) Packaging Company Ltd.
China
80.08
80.08
Stora Enso (HK) Ltd
Hong Kong
100.00
100.00
Stora Enso (Southern Africa) (Pty) Ltd
South Africa
100.00
100.00
Stora Enso AB
Sweden
100.00
100.00
Stora Enso Amsterdam B.V.
Netherlands
100.00
100.00
Stora Enso Arapoti Holding Florestal S.A.
Brazil
100.00
100.00
Stora Enso Australia Pty Ltd
Australia
100.00
100.00
Stora Enso Austria GmbH
Austria
100.00
100.00
Stora Enso Belgium NV
Belgium
100.00
100.00
Stora Enso Bergskog 1 AB
Sweden
0.00
100.00
Stora Enso Bergskog 2 AB
Sweden
100.00
100.00
Stora Enso Bioenergi AB
Sweden
100.00
100.00
Stora Enso Bois SAS
France
100.00
100.00
Stora Enso Brasil Ltda
Brazil
100.00
100.00
Stora Enso China Co., Ltd
China
100.00
100.00
Stora Enso China Holdings AB
Sweden
100.00
100.00
Stora Enso Corbehem SAS
France
100.00
100.00
Stora Enso Danmark A/S
Denmark
100.00
100.00
Stora Enso Eesti AS
Estonia
100.00
100.00
Stora Enso Espana S.A.U
Spain
100.00
100.00
Stora Enso Fors AB
Sweden
100.00
100.00
Stora Enso France SAS
France
100.00
100.00
Stora Enso Germany GmbH
Germany
100.00
100.00
Stora Enso Holding France SAS
France
100.00
100.00
82
Stora Enso Holdings UK Ltd
UK
100.00
100.00
Stora Enso Ingerois Oy
Finland
100.00
100.00
Stora Enso Inpac Corrugated Packaging (Hebei) Company Limited
China
100.00
100.00
Stora Enso Inpac Hebei Protective Packaging Co., Ltd.
China
100.00
100.00
Stora Enso Inpac Packaging Co. Ltd
China
100.00
100.00
Stora Enso International Oy
Finland
100.00
100.00
Stora Enso Italia Srl
Italy
100.00
100.00
Stora Enso Japan K.K.
Japan
100.00
100.00
Stora Enso Kabel GmbH
Germany
99.98
99.98
Stora Enso Kvarnsveden Industriutveckling AB
Sweden
100.00
0.00
Stora Enso Langerbrugge NV
Belgium
100.00
100.00
Stora Enso Lao Co. Ltd
Laos
0.00
100.00
Stora Enso Laos Plantation AB
Sweden
0.00
100.00
Stora Enso LLC
Ukraine
100.00
100.00
Stora Enso Maxau GmbH
Germany
100.00
100.00
Stora Enso Mexico S.A.
Mexico
100.00
100.00
Stora Enso Middle East DMCC
United Arab Emirates
100.00
100.00
Stora Enso Narew Sp.z.o.o.
Poland
100.00
100.00
Stora Enso North American Sales, Inc.
USA
100.00
100.00
Stora Enso Oulu Holding Oy
Finland
0.00
100.00
Stora Enso Oulu Oy
Finland
100.00
100.00
Stora Enso Packaging AB
Sweden
100.00
100.00
Stora Enso Packaging AS
Estonia
100.00
100.00
Stora Enso Packaging Oy
Finland
100.00
100.00
Stora Enso Packaging SIA
Latvia
100.00
100.00
Stora Enso Packaging UAB
Lithuania
100.00
100.00
Stora Enso Paper AB
Sweden
100.00
100.00
Stora Enso Paper France SAS
France
100.00
100.00
Stora Enso Paper GmbH
Germany
100.00
100.00
Stora Enso Paper Oy
Finland
100.00
100.00
Stora Enso Paper UK Ltd
UK
100.00
100.00
Stora Enso Pension Trust Ltd.
UK
100.00
100.00
Stora Enso Plantor AB
Sweden
100.00
100.00
Stora Enso Poland S.A.
Poland
100.00
100.00
Stora Enso Polska Sp.z.o.o.
Poland
100.00
100.00
Stora Enso Portugal Lda
Portugal
100.00
100.00
Stora Enso Praha s.r.o.
Czech Republic
100.00
100.00
Stora Enso Publication Papers Oy Ltd
Finland
100.00
100.00
Stora Enso Pulp AB
Sweden
100.00
100.00
Stora Enso Pulp and Paper Asia AB
Sweden
94.21
94.21
Stora Enso Sachsen GmbH
Germany
0.00
100.00
Stora Enso Skog AB
Sweden
100.00
100.00
Stora Enso Skog AS
Norway
100.00
100.00
Stora Enso Skog och Mark AB
Sweden
100.00
100.00
Stora Enso South East Asia Pte Ltd
Singapore
100.00
100.00
Stora Enso Timber AB
Sweden
100.00
100.00
Stora Enso Timber DIY Products B.V.
Netherlands
100.00
100.00
Stora Enso Treasury Stockholm AB
Sweden
100.00
100.00
Stora Enso UK Limited
UK
100.00
100.00
Stora Enso US Inc.
USA
100.00
100.00
Stora Enso Veitsiluoto Oy
Finland
100.00
100.00
Stora Enso Verwaltungs GmbH
Germany
100.00
100.00
Stora Enso Wood Products d.o.o. Koper
Slovenia
100.00
100.00
Stora Enso Wood Products GmbH
Austria
100.00
100.00
Stora Enso Wood Products Japan K.K.
Japan
100.00
100.00
Stora Enso Wood Products Oy Ltd
Finland
0.00
100.00
Stora Enso Wood Products Planá s.r.o.
Czech Republic
100.00
100.00
Stora Enso Wood Products Sp.z.o.o.
Poland
100.00
100.00
Stora Enso Wood Products Zdirec s.r.o.
Czech Republic
100.00
100.00
Stora Enso WP Bad St. Leonhard GmbH
Austria
100.00
100.00
Stora Enso WP HV s.r.o.
Czech Republic
100.00
100.00
Stora Kopparbergs Bergslags AB
Sweden
100.00
100.00
Sydved AB
Sweden
66.67
66.67
UAB Stora Enso Lietuva
Lithuania
100.00
100.00
Virdia B2X, LLC
USA
100.00
100.00
Virdia LLC
USA
100.00
100.00
Virdia Ltd
Israel
100.00
100.00
VLAR Papier NV
Belgium
100.00
100.00
Group ownership, %
Group ownership, %
Associated companies
Country
2021
2020
Arauco Florestal Arapoti S.A.
Brazil
0.00
20.00
Bergvik Skog AB
Sweden
0.00
49.79
Encore Ympäristöpalvelut Oy
Finland
30.41
30.41
83
Honkalahden Teollisuuslaituri Oy
Finland
50.00
50.00
Kemi Shipping Oy
Finland
0.00
50.00
Kemira Cell Sp.z.o.o.
Poland
45.00
45.00
Metsäteho Oy
Finland
23.95
23.95
Oy Keskuslaboratorio - Centrallaboratorium Ab
Finland
32.24
32.24
Perkaus Oy
Finland
33.33
33.33
Pressretur AB
Sweden
50.00
33.33
Puhoksen Satama Oy
Finland
0.00
50.00
SELF Logistika SIA
Latvia
50.00
50.00
Steveco Oy
Finland
34.39
34.39
Suomen Keräyspaperi Tuottajayhteisö Oy
Finland
40.09
40.09
SweTree Technologies AB
Sweden
23.83
23.83
Tornator Oyj
Finland
41.00
41.00
Trätåg AB
Sweden
50.00
50.00
TreeToTextile AB
Sweden
27.96
25.75
ZMP GMBH
Austria
30.00
30.00
Österbergs Förpackningsmaskiner AB
Sweden
50.00
50.00
Group ownership, %
Group ownership, %
Other companies
Country
2021
2020
AMEXCI AB
Sweden
9.10
9.10
Arevo AB
Sweden
7.89
7.89
Clic Innovation Oy
Finland
9.87
9.87
Combient AB
Sweden
5.40
5.40
East Office of Finnish Industries Oy
Finland
4.00
4.00
Packages Limited
Pakistan
6.40
6.40
Pohjolan Voima Oy
Finland
15.61
15.61
Radioskog AB
Sweden
10.00
10.00
RK Returkartong AB
Sweden
8.40
8.40
SSG Standard Solutions Group AB
Sweden
14.29
14.29
Sölvesborgs Stuveri & Hamn AB
Sweden
7.36
7.36
Union Developement Récup. Pap.
France
10.70
10.70
Group ownership, %
Group ownership, %
Joint operations
Country
2021
2020
Celulosa y Energia Punta Pereira S.A.
Uruguay
50.00
50.00
El Esparragal Asociación Agraria de Responsabilidad Limitada
Uruguay
50.00
50.00
Eufores S.A.
Uruguay
50.00
50.00
Forestal Cono Sur S.A.
Uruguay
50.00
50.00
Ongar S.A.
Uruguay
50.00
50.00
Stora Enso Uruguay S/A
Uruguay
50.00
50.00
Terminal Logística e Industrial M`Bopocuá S.A.
Uruguay
50.00
50.00
Veracel Celulose SA
Brazil
50.00
50.00
Zona Franca Punta Pereira S.A.
Uruguay
50.00
50.00
84
Note 31 Related party transactions
Balances and transactions between Stora Enso and its subsidiaries and joint operations have been eliminated on consolidation and are
not disclosed in this note. For the other entities which are classified as the Group's related parties and disclosed in this note, their
subsidiary companies are also considered as related parties.
The Group has classified Solidium Oy as a related party. This is entirely owned by the State of Finland, and owned 10.7% of Stora
Enso shares and 27.3% of all votes on 31 December 2021. The group has applied an exemption, as stated in IAS 24 paragraph 25, not
to disclose transactions and outstanding balances with government-related entities.
The Group has classified FAM AB as a related party. FAM AB owned 10.2% of Stora Enso shares and 27.3% of all votes on 31
December 2021. In July 2021, the Group received a notification that Wallenberg Investments AB has acquired all shares of FAM AB. Due
to the indirect holding of 10.2% of Stora Enso shares and 27.3% of all votes on 31 December 2021, Wallenberg Investments AB is also
classified as a related party of the Group. FAM AB remains the direct owner of the shares in Stora Enso Oyj.
The key management personnel of the Group are the members of the Group Leadership Team and the Board of Directors. The
compensation of key management personnel is presented in Note 7 Board and executive remuneration.
In the ordinary course of business, the Group engages in transactions on commercial terms with equity accounted investments and
other related parties that are not any more favourable than those that would be available to other third parties – with the exception of
Veracel. Stora Enso intends to continue with transactions on a similar basis with its equity accounted investments, further details of which
are shown in Note 13 Equity accounted investments.
Group companies, including subsidiary companies and joint operations, are listed in Note 30 Group companies.
Paper for recycling
The Group owns non-controlling interests in several paper recyclers, from which paper for recycling is purchased at market prices.
Forest assets and wood procurement
The Group has a 41.0% interest in Tornator with the remaining 59.0% being held mainly by Finnish institutional investors. Stora Enso has
long-term purchase contracts with the Tornator Group for approximately 2 million cubic metres of wood annually at market prices, and in
2021 purchases of 2 (2) million cubic metres came to EUR 82 (73) million.
The Group procures wood at market prices from Kopparfors Fastigheter AB, a fully owned subsidiary of Kopparfors Skogar AB, which
is completely owned by FAM AB. In 2021 the purchases from the related party amounted to EUR 29 (21) million and the sales of services
by Stora Enso to the said related party amounted to EUR 0 (0) million. At the end of 2021 the Group had EUR 3 (3) million of open
payables to and EUR 0 (0) million of open receivables from the related party.
Stevedoring
The Group owns 34.4% of shares in Steveco Oy, a Finnish company engaged in loading and unloading vessels. The other shareholders
in Steveco are UPM-Kymmene, Finnlines and Ahlström Capital. The stevedoring services are provided by Steveco at market prices and
in 2021 amounted to EUR 26 (23) million.
Note 32 Earnings per share
Accounting principles
Basic earnings per share, attributable to the owners of the parent company, are calculated by dividing the net profit attributable to
shareholders by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the
group and held as treasury shares. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary
shares plus the diluted effect of all potential dilutive ordinary shares, such as shares from share-based payments.
Earnings per share
Year Ended 31 December
2021
2020
Net profit for the period attributable to the owners of the parent, EUR million
1,266
626
Total comprehensive income attributable to the owners of the parent, EUR million
2,110
1,625
Weighted average number of A and R shares
788,619,987
788,619,987
Weighted average number of share awards
505,705
561,769
Weighted diluted number of shares
789,125,692
789,181,756
Basic Earnings per Share, EUR
1.61
0.79
Diluted Earnings per Share, EUR
1.60
0.79
Total Comprehensive Income Attributable to the Owners of the Parent per Share, EUR
2.67
2.06
85
Parent company Stora Enso Oyj
financial statements
Parent company income statement
Year ended 31 December
EUR million
Note
2021
2020
Sales
2
2,822
2,190
Changes in inventories of finished goods and work in progress + / -
16
1
Production for own use
1
1
Other operating income
3
308
187
Materials and services
4
-1,864
-1,587
Personnel expenses
5
-259
-217
Depreciation and impairment
6
-129
-127
Other operating expenses
7
-490
-442
2,417
2,185
Operating profit
405
5
Financial income and expenses
9
351
356
Profit before Appropriations
and Taxes
756
360
Appropriations
10
-119
146
Income tax expense
11
0
-1
Profit for the period
637
506
86
Parent company statement of financial position
As at 31 December
EUR million
Note
2021
2020
Assets
Non-current assets
Intangible assets
13
49
60
Tangible assets
13
987
876
Investments
14
8,234
8,275
Non-current assets total
9,270
9,211
Current assets
Inventories
15
387
310
Short-term receivables
16
1,314
668
Financial securities
17
607
1,275
Cash in hand and at bank
744
678
Total current assets
3,051
2,930
Total assets
12,322
12,141
Equity and liabilities
Equity
18
Share capital
1,342
1,342
Share premium
3,639
3,639
Fair value reserve
-6
-6
Invested non-restricted equity fund
633
633
Retained earnings
719
449
Profit for the period
637
506
Total equity
6,964
6,563
Accumulated appropriations
19
234
167
Obligatory provisions
20
12
23
Liabilities
Non-current liabilities
22
2,513
2,915
Current liabilities
23
2,599
2,473
Total liabilities
5,113
5,387
Total equity and liabilities
12,322
12,141
87
Parent company cash flow statement
Year ended 31 December
EUR million
2021
2020
Cash provided by operating activities
Profit for the period
637
506
Adjustments and reversal of non-cash items:
Direct taxes
0
1
Appropriations
119
-146
Depreciation according to plan and impairment
129
127
Unrealised foreign exchange gains and losses
10
-38
Other non-cash items
-84
-2
Financial income and expenses
-351
-356
Change in working capital:
Increase(-)/decrease(+)
in current non-interest-bearing receivables
-108
18
Increase(-)/decrease(+) in inventories
-42
-14
Increase(+)/decrease(-)
in current non-interest-bearing liabilities
159
14
Cash flow from operating activities before financial items and taxes
471
110
Interest received from operating activities
41
41
Interest paid from operating activities
-74
-66
Dividends received from operating activities
502
370
Other financial items, net
-46
13
Direct taxes paid
-2
-2
Cash provided by operating activities
892
466
Net cash provided by investing activities
Investments in tangible and intangible assets
-140
-102
Capital gains from sale of tangible and intangible assets
3
1
Investments in other financial assets
-13
0
Investments in subsidiary shares and other capital contributions
-138
-262
Proceeds from disposal of subsidiary shares and other repayment of capital
-98
16
Proceeds from disposal of other investments
0
1
Payments of non-current loan receivables
-706
-500
Proceeds from non-current loan receivables
120
803
Net cash provided by investing activities
-972
-43
Cash flow from financing activities
Proceeds from (issue of) long-term liabilities
1,040
1,040
Proceeds from (payment of) long-term liabilities
-1,431
-340
Proceeds from (issue of) short-term liabilities
722
892
Proceeds from (payment of) short-term liabilities
-570
-640
Dividends paid
-250
-223
Group contributions received
-14
1
Cash flow from financing activities
-503
729
Net change in cash and cash equivalents
-584
1,153
Translation differences
-18
19
Cash and cash equivalents at start of year
1,953
782
Cash and cash equivalents at year end
1,350
1,953
Cash and cash equivalents at year end includes:
Financial securities
607
1,275
Cash in hand and at bank
744
678
Cash and cash equivalents total
1,350
1,953
88
Notes to the parent company financial
statements
Note 1 Accounting principles
The financial statements of Stora Enso Oyj have been prepared in accordance with the Finnish Accounting Act and other current rules
and regulations concerning financial statements in Finland.
Derivative contracts
Stora Enso is exposed to several financial market risks that the Group is responsible for managing under policies approved by the Board
of Directors. The objective is to have cost-effective funding in Group companies and to manage financial risks using financial instruments
in order to decrease earnings volatility. The main exposures for the Group are interest rate risk, currency risk, funding risk and commodity
price risk, especially for fiber and energy. The parent company manages these risks centrally in the Group. The Group’s risk
management principles are presented in more detail in Note 24 Financial Risk Management to the consolidated financial statements.
Derivative contracts are measured at fair value on the balance sheet. Derivatives with external counterparties that are subject to hedge
accounting are recognised as financial assets and liabilities at fair value through the income statement in the same manner as the parent
company’s derivatives with other Group companies as counterparties. The parent company’s derivative contracts that are used to hedge
the parent company’s own cash flow are measured at fair value, and the change in fair value (effective part) is recognised, in line with
hedge accounting principles, in the fair value reserve in equity on the balance sheet, while the ineffective part is recognised in the parent
company’s income statement. The fair value of derivatives not included in hedge accounting is entered immediately in the income
statement.
Interest income and expenses related to derivatives that are used to manage the interest rate risk are allocated over the contract
period and are used to adjust interest expenses related to hedged loans. Option premiums are recognised as advance payments until the
options mature.
With regard to derivatives, more information about the measurement principles, fair values and changes in fair value is provided in
Note 25.
Equity incentive schemes
The employees covered by the scope of Stora Enso Oyj’s share-based incentive schemes are awarded with shares in the company.  The
awarded shares and the costs of the schemes are recognised in the income statement once the shares have been earned. The principles
of the Group’s share opportunity programmes are presented in more detail in Note 21 (Employee variable compensation and equity
incentive schemes) to the consolidated financial statements.
Pensions
Statutory pension security is arranged through employment pension insurance companies outside the Group. Some employees have
additional pension security through life insurance companies outside the Group. Pension contributions are allocated in accordance with
performance-based salaries and wages for the financial period.
Intangible and tangible assets and depreciation 
The balance sheet value of intangible and tangible assets is their direct acquisition cost less depreciation according to plan and any
impairment. Depreciation according to plan is recognised for intangible and tangible assets, based on their expected useful lives.
Depreciation is based on the following useful lives:
Buildings and structures
10–50 years
Production machinery and equipment
10–20 years
Light machinery and equipment
3–5 years
Intellectual property rights
3–20 years
No depreciation is recognised for land and water areas.
Inventories
Inventories are measured at acquisition cost or at net realisable value if lower. Acquisition cost is determined using the FIFO method or
the weighted average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour, depreciation
and other direct costs, as well as the related production overhead. Net realisable value is the estimated selling price less the costs of
completion and sale.
Leasing
Leasing payments are recognised in other operating expenses. The remaining leasing payments under leasing agreements are
presented in Note 24 Commitments and Contingencies.
Expenditure on research and development
Expenditure on research and development is recognised as an expense for the financial period.
Income taxes
The tax expense on the income statement includes income taxes based on the taxable profit for the financial period and tax adjustments
for previous periods. The parent company does not recognise deferred tax assets and liabilities, excluding derivatives, in its financial
statements. Deferred tax assets and liabilities that can be recognised on the balance sheet are presented in Note 21.
Obligatory provisions
Future costs and losses that no longer generate corresponding income, to which the company is committed or by which the company is
obligated, are recognised in the income statement according to their nature and in obligatory provisions on the balance sheet.
89
Emission rights
During 2021, 0,5 million tonnes of free emission allowances in accordance with the EU Emissions Trading Directive were allocated to the
company. Emission allowances are recognised through a net cash cost basis, meaning that the difference between the actual emissions
and the emission allowances received is recognised through profit or loss if the actual emissions are larger than the emission allowances
received. During the financial period, the emissions emitted were estimated at 0.5 million tonnes. The emission rights purchased during
the financial period are recognised in other operating expenses, and the emission rights sold during the financial period are recognised in
other operating income.
At the end of the financial period, the market value of the emission rights was EUR 79.96 per tonne.
Comparability of the information for the financial period
Stora Enso Wood Products Oy merged with the parent company Stora Enso Oyj as of 31 October 2021. The merged company’s share of
the net sales during the financial period was EUR 51,2 million. The merger included the transfer of tangible assets totalling EUR 60.8
million and 391 employees. The merger profit of EUR 69 million is presented in Note 3 Other operating income.  In addition, Stora Enso
Oulu Holding Oy merged with the parent company Stora Enso Oyj on 1 October 2021. The merger did not have an impact on the
receiving company’s result.
The derivative accounts intended to hedge trade receivables and the accounts for the exchange rate differences of sales related to
these hedges were transferred from net sales to other operating income during the 2021 financial period. The comparative figures in Note
2 have been changed in this respect.
The accounts for the exchange rate differences of purchases were transferred from purchases to other operating expenses during the
financial period. The comparative figures in Note 4 and Note 7 have been changed in this respect.
Note 2 Net sales by division and market area
Year ended 31 December
EUR million
2021
2020
By division
Packaging Materials
1,567
1,319
Packaging Solutions
1
4
Biomaterials
329
140
Forest
759
667
Wood Products
38
0
Other
128
60
Total
2,822
2,190
Distribution by region
Finland
1,330
978
Other Europe
995
814
North and South America
158
119
Asia and Oceania
227
209
Africa
32
25
Others
80
43
Total
2,822
2,190
Note 3 Other operating income
Year ended 31 December
EUR million
2021
2020
Rent and equivalents
3
4
Gains on sale of fixed assets
1
1
Production and maintenance services
4
2
Subsidies, grants and equivalents
1
1
Administration services
177
145
Proceeds from sales of emission rights
21
16
Other operating income
32
18
Merger profit
69
0
Total
308
187
Note 4 Materials and services
Year ended 31 December
EUR million
2021
2020
Materials and supplies
Purchases during the period
1,366
1,113
Change in inventories +/-
-30
8
External services
527
466
Total Materials and Services
1,864
1,587
90
Note 5 Personnel expenses and average number of employees
Year ended 31 December
EUR million
2021
2020
Salaries and fees
211
184
Statutory employer costs
Pensions
38
27
Other personnel costs
9
6
Total
259
217
Remuneration for the CEO and the members of the Board of Directors
Remuneration for the CEO and the members of the Board of Directors is presented in Note 7 to the consolidated financial statements.
Pension liabilities for the CEO
Pension liabilities for the CEO are presented in Note 7 to the consolidated financial statements.
Receivables from management
There were no loan receivables from the company’s management.
Average number of employees
2021
2020
Number of employees during the financial period
3,057
2,827
Note 6 Depreciation and impairment
Year ended 31 December
EUR million
2021
2020
Depreciation according to plan
124
118
Impairment of fixed assets
5
9
Total
129
127
Depreciation and amortisation on each item in the statement of financial position is included under intangible and tangible assets.
Note 7 Other operating expenses
Year ended 31 December
EUR million
2021
2020
Product freight
168
135
Sales commissions
39
34
Rental costs
15
15
Administration and office services
213
202
Insurance premiums
9
8
Other personnel expenses
10
10
Public and other relations
3
3
Emission rights expenses
20
16
Other operating expenses
13
13
Merger loss
0
5
Total
490
442
Note 8 Auditors’ fees
Year ended 31 December
EUR million
2021
2020
Audit fees
1
1
Total
1
1
91
Note 9 Financial income and expenses
Year ended 31 December
EUR million
2021
2020
Dividend income
From Group companies
486
358
From equity accounted investments
16
12
Total
503
370
Interest income from non-current investments
From Group companies
41
37
From equity accounted investments
1
0
Total
42
37
Other interest and financial income
From Group companies
-1
6
From others
10
12
Total
9
18
Total financial income
553
426
Interest and other financial expenses
To Group companies
-1
0
Other financial expenses
-103
-71
Total
-104
-71
Impairment on investments
Impairment on investments in non-current assets
-98
1
Total financial expenses
-202
-70
Total financial income and expenses
351
356
The item “Financial Income and Expenses” includes exchange rate gains/losses (net)
-27
24
Note 10 Appropriations
Year ended 31 December
EUR million
2021
2020
Difference between depreciation according to plan and depreciation recognised in
taxation
-46
87
Group contributions received
0
59
Group contributions paid
-73
0
Total appropriations
-119
146
Note 11 Income tax expense
Year ended 31 December
EUR million
2021
2020
Income taxes from primary operations for the period
0
-1
Total income tax
0
-1
92
Note 12 Environmental expenses
Year ended 31 December
EUR million
2021
2020
Materials and services
36
33
Personnel expenses
3
2
Depreciation and impairment
12
11
Total
50
46
Air quality protection
9
11
Wastewater treatment
19
20
Waste management
12
9
Soil and groundwater protection
1
0
Other environmental protection measures
9
4
Total
50
46
Note 13 Intangible and tangible assets
Intangible assets
EUR million
Intellectual property
rights
Other non-current
expenditure
Advance payments
and acquisitions in
progress
Total
Acquisition cost 1 Jan
174
12
7
193
Increases
5
0
4
9
Increases merger
3
6
0
9
Decreases
-17
4
0
-13
Reclassification
7
0
-7
1
Acquisition cost 31 Dec
172
22
5
198
Accumulated depreciation and impairment 1 Jan
-125
-8
0
-133
Accumulated depreciation merger
-2
-6
0
-8
Accumulated depreciation on decreases and
reclassifications
17
-4
0
13
Depreciation for the period
-15
-2
0
-17
Impairments
-5
0
0
-5
Accumulated depreciation 31 Dec
-130
-20
0
-150
Book value on 31 December 2021
42
2
5
49
Book value on 31 December 2020
49
3
7
60
Tangible assets
EUR million
Land and water
areas
Buildings and
structures
Plant and
equipment
Other tangible
assets
Advance
payments and
acquisitions in
progress
Total
Acquisition cost 1 Jan
18
530
2,476
163
63
3,251
Increases
0
1
32
0
128
161
Increases merger
0
57
225
10
2
295
Decreases
0
-4
-44
-4
0
-52
Reclassification
0
2
37
4
-45
-1
Acquisition cost 31 Dec
18
586
2,726
174
149
3,654
Accumulated depreciation and
impairment 1 Jan
0
-372
-1,856
-150
0
-2,377
Accumulated depreciation merger
0
-47
-176
-10
0
-234
Accumulated depreciation on
decreases and reclassifications
0
4
42
3
0
50
Depreciation for the period
0
-13
-91
-3
0
-107
Impairment for the period
0
0
0
0
0
0
Accumulated depreciation 31 Dec
0
-428
-2,082
-159
0
-2,668
Increase in value 1 Jan
2
0
0
0
0
2
Increase in value 31 Dec
2
0
0
0
0
2
Book value on 31 December 2021
20
158
644
15
149
987
Book value on 31 December 2020
20
159
620
13
63
876
Production plant and equipment
Book value on 31 December 2021
624
Book value on 31 December 2020
601
Tangible assets includes capitalized interest costs EUR 2 million (EUR 2 million in 2020).
Advance payments and acquisitions in progress
EUR million
Intangible assets
Buildings and
structures
Plant and
equipment
Other tangible
assets
Total
Acquisition cost 1 Jan
7
0
63
0
71
Increases
4
1
127
0
132
Increases merger
0
0
2
0
3
Reclassification
-7
0
-44
0
-51
Acquisition cost 31 Dec
5
1
148
0
154
93
Tangible assets
Capitalised environmental
expenditure
2021
EUR million
Land and water
areas
Buildings and
structures
Plant and
equipment
Other tangible
assets
Advance
payments and
acquisitions in
progress
Total
Acquisition cost 1 Jan
4
26
51
5
3
89
Increases
0
0
7
0
8
16
Increases
merger
0
0
0
0
0
1
Depreciations for the period
0
-3
-7
-1
0
-11
Book value on 31 December 2021
4
24
51
4
11
95
Air quality protection
1
9
28
0
5
43
Wastewater treatment
0
2
21
1
4
27
Waste management
3
0
1
2
1
7
Soil and groundwater protection
0
13
2
0
2
17
Noise and vibration prevention
0
0
0
1
0
1
4
24
51
4
11
95
2020
EUR million
Land and water
areas
Buildings and
structures
Plant and
equipment
Other tangible
assets
Advance
payments and
acquisitions in
progress
Total
Acquisition cost 1 Jan
4
21
57
6
0
87
Increases
0
7
2
0
3
13
Depreciations for the period
0
-2
-8
-1
0
-11
Book value on 31 December 2020
4
26
51
5
3
89
Air quality protection
1
10
36
0
3
49
Wastewater treatment
3
2
13
1
1
20
Waste management
0
1
1
2
0
4
Soil and groundwater protection
0
14
0
1
0
15
Noise and vibration prevention
0
0
0
1
0
1
4
26
51
5
3
89
In 2021 and 2020, no environmentally based fines, charges or compensation were paid, and no subsidies or grants were received for environmental protection.
Note 14 Non-current investments in shares and loan receivables
EUR million
Shares in
Group
companies
Loan
receivables
from Group
companies
Shares in
associated
companies
Loan
receivables
from
associated
companies
Other shares
Other
receivables
Total
investments
Acquisition cost 1 Jan
6,473
1,520
37
2
180
103
8,314
Increases
765
945
0
0
13
75
1,798
Decreases
-724
-887
0
0
0
-130
-1,740
Acquisition cost 31 Dec
6,514
1,578
37
2
193
48
8,372
Impairments 1 Jan
-38
0
0
0
-1
0
-39
Increases
-98
0
0
0
0
0
-98
Impairments 31 Dec
-136
0
0
0
-1
0
-138
Book value on 31 December
2021
6,378
1,578
37
2
191
48
8,234
Book value on 31 December 2020
6,435
1,520
37
2
178
103
8,275
Note 15 Inventories
As at 31 December
EUR million
2021
2020
Materials and supplies
183
145
Work in progress
14
6
Finished goods
158
123
Prepayments
31
35
Total
386
310
94
Note 16 Short-term receivables
As at 31 December
EUR million
2021
2020
Short-term loan receivables
Receivables from Group companies
Loan receivables
764
240
Commodity derivative receivables
0
4
Interest receivables
42
20
Total
806
263
Receivables from others
Loan receivables
49
0
Commodity derivative receivables
23
6
Other receivables
5
52
Interest receivables
4
6
Total
82
64
Total current interest-bearing receivables
887
327
Current non-interest-bearing receivables
Receivables from Group companies
Trade receivables
112
100
Other receivables
60
60
Commodity derivative receivables
0
2
Total
172
162
Receivables from others
Trade receivables
200
119
Deferred tax assets
2
3
Other receivables
23
24
Accrued income
29
32
Total
254
178
Stora Enso may enter into factoring agreements to sell trade receivables in order to accelerate cash conversion. Nominally, such agreements led to the nominal derecognition of EUR
34.3 million (EUR 32.4 million in 2020) by the end of the financial period. The continuing involvement of Stora Enso in the sold receivables was estimated as being insignificant due to
the non-recourse nature of the factoring arrangements involved.
As at 31 December
EUR million
2021
2020
Total current non-interest-bearing receivables
427
341
Total current receivables
1,314
668
Significant accruals
Tax-equivalent receivables
3
14
Advances paid
7
7
Other accruals
19
11
Total
29
33
Note 17 Financial securities
As at 31 December
EUR million
2021
2020
From Group companies
72
442
From others
535
833
Total
607
1,275
95
Note 18 Shareholders' equity
As at 31 December
EUR million
2021
2020
Restricted shareholders' equity
Share capital 1 Jan
1,342
1,342
Share capital 31 Dec
1,342
1,342
Share premium fund 1 Jan
3,639
3,639
Share premium fund 31 Dec
3,639
3,639
Fair value reserve 1 Jan
-6
-10
Increase (-) / Decrease (+)
0
4
Fair value reserve 31 Dec
-6
-6
Total restricted equity
4,975
4,975
Change in share capital and number of shares are presented in Note 18 to the consolidated financial
statements.
Non-restricted shareholders' equity
Invested unrestricted equity reserve 1 Jan
633
633
Invested unrestricted equity reserve 31 Dec
633
633
Retained earnings 1 Jan
955
686
Dividend distribution
-237
-237
Retained earnings 31 Dec
719
449
Profit for the period
637
506
Total non-restricted equity
1,989
1,588
Total shareholders' equity
6,964
6,563
Calculation of distributable equity 31 Dec
Fair value reserve 31 Dec
-6
-6
Invested unrestricted equity reserve 31 Dec
633
633
Retained earnings 31 Dec
719
449
Profit for the period
637
506
Total
1,983
1,582
Note 19 Accumulated appropriations
As at 31 December
EUR million
2021
2020
Depreciation difference
Intellectual property rights
-3
2
Goodwill
-1
0
Other non-current expenditure
0
-1
Buildings and structures
33
26
Plant and equipment
205
141
Total
234
167
Note 20 Obligatory provisions
As at 31 December
EUR million
2021
2020
Restructuring provisions
3
3
Environmental provisions
7
14
Pension provisions
1
0
Other provisions
0
4
Total
11
22
Note 21 Deferred tax liabilities and receivables
As at 31 December
EUR million
2021
2020
Deferred tax liability due to depreciation difference
-30
-18
Deferred tax receivable due to derivatives
2
3
Deferred tax receivable due to loss
0
32
Deferred tax receivable due to provisions
3
4
Deferred tax receivables and liabilities due to other temporary differences
-1
-9
Total deferred tax receivable
-27
12
Deferred tax liabilities and receivables excluding derivatives have not been recognised on the balance sheet.
96
Note 22 Non-current liabilities
As at 31 December
EUR million
2021
2020
Non-current liabilities
Bonds
2,502
2,497
Loans from credit institutions
7
416
Other non-current liabilities to group companies
4
2
Total
2,513
2,915
Liabilities with maturities later than five years
Bonds
1,383
1,462
Other non-current liabilities
4
0
Total
1,387
1,462
Specifications of Bond loans are presented in Note 26 Interest-bearing liabilities in consolidated
financial statements.
Note 23 Current liabilities
As at 31 December
EUR million
2021
2020
Current interest-bearing liabilities
Liabilities to Group companies
Other loans
1,677
1,491
Commodity derivative liabilities
23
6
Total
1,700
1,497
Liabilities to others
Other loans
161
180
Commodity derivative liabilities
0
4
Interest due
27
28
Bonds
0
299
Loans from credit institutions
0
3
Total
187
514
Total current interest-bearing liabilities
1,888
2,011
Current non-interest-bearing liabilities
Liabilities to Group companies
Trade payables
83
71
Other loans
73
0
Commodity derivative liabilities
10
1
Accrued liabilities and deferred income
1
1
Total
166
73
Liabilities to equity accounted investments
Trade payables
54
40
Total
54
40
Liabilities to others
Advances received
5
3
Trade payables
375
244
Other loans
17
30
Accrued liabilities and deferred income
95
72
Total
491
349
Total current non-interest-bearing liabilities
712
462
Total current liabilities
2,599
2,473
Substantial accrued liabilities and deferred income
Payroll payments accrued
58
41
Annual discounts
21
17
Other accrued liabilities and deferred income
17
14
Total
96
73
97
Note 24 Commitments and contingencies
As at 31 December
EUR million
2021
2020
For Group debt
Guarantees
1,044
1,096
For joint venture debt
Guarantees
82
123
On behalf of Associated companies
Guarantees
0
2
On behalf of others
Other commitments
36
36
Other commitments, own
Leasing commitments, in next 12 months
6
8
Leasing commitments, after next 12 months
10
7
Lease commitments
5
6
Other commitments
13
12
Total
1,196
1,289
Guarantees
1,126
1,221
Leasing commitments
16
15
Lease commitments
5
6
Other commitments
48
47
Total
1,196
1,289
Contingent liabilities
Stora Enso Oyj has implemented significant restructuring measures in recent years. These measures have included divestments of
business operations and production units, as well as mill closures. These transactions include a risk of possible environmental or other
obligations, the existence of which would be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group. A provision has been recognised for obligations for which the related amount can be estimated
reliably and the occurrence of which is considered likely.
Stora Enso Oyj is party to legal proceedings that arise in the ordinary course of business and primarily involve claims arising out of
commercial law. The company management does not believe that such processes as a whole, before any insurance compensation,
would have significant impacts on the company’s financial position or profit from operations. Some of the most significant legal
proceedings are described in Note 29 to the consolidated financial statements.
Note 25 Financial instruments
Valuation of derivatives
The fair value is defined as the amount at which a derivative instrument could be exchanged in an orderly transaction between market
participants at the measurement date. The fair values of such instruments are determined on the following basis:
Currency forward contract fair values are calculated using forward exchange rates on the reporting date.
Currency option contract fair values are calculated using reporting date market rates together with common option pricing
models.
Commodity contract fair values are computed with reference to quoted market prices on futures exchanges or other reliable
market sources.
Interest rate swaps fair values are calculated using a discounted cash flow method.
Fair value hierarchy
Stora Enso uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques, for which all inputs that have a significant effect on the recorded fair value are observable, either
directly or indirectly;
Level 3: techniques which use inputs that have a significant effect on the recorded fair values that are not based on observable
market data.
The parent company's derivatives are classified as Level 2 in the fair value hierarchy.
98
Nominal and fair values of derivative instruments
As at 31 December 2021
EUR million
Nominal values
Positive fair
values
Negative fair
values
Fair values, Net
Cash flow hedges entered on behalf of the
parent company and its subsidiaries, for which
hedge accounting is applied in target companies
Currency forwards
2,007
20
-22
-2
Currency options
1,811
13
-15
-1
Commodity contracts
33
27
-27
0
Interest rate swaps
467
1
-7
-6
Non-hedge accounted derivatives
Currency forwards
702
2
-2
0
Total
5,020
63
-72
-9
of which against subsidiaries
2,091
29
-33
-4
of which against external parties
2,930
34
-40
-5
As at 31 December 2020
EUR million
Nominal values
Positive fair
values
Negative fair
values
Fair values, Net
Cash flow hedges entered on behalf of the
parent company and its subsidiaries, for which
hedge accounting is applied in target companies
Currency forwards
1,861
40
-34
5
Currency options
1,200
15
-12
2
Commodity contracts
84
12
-12
0
Interest rate swaps
673
0
-17
-17
Non-hedge accounted derivatives
Currency forwards
570
6
-3
4
Total
4,387
72
-78
-5
of which against subsidiaries
1,638
7
-53
-46
of which against external parties
2,749
65
-24
40
Fair value reserve
The net amount of the parent company's unrealised cash flow hedge losses in the fair value reserve was EUR 6.4 million, which was
related to currency and interest rate derivatives. Currency and interest rate derivatives also include a loss of EUR 0.1 million related to
the time value of options. These unrealised losses are recognised in the income statement upon the maturity of the hedging contracts.
The longest hedging contract will mature in 2027. However, the majority of the contracts are expected to mature during 2022. The
ineffective portions of hedges are recognised as adjustments to financial items, revenue or materials and services according to the
hedged item. During 2021, there were no material ineffectiveness related to hedges recognised in the income statement. Derivatives
used in currency cash flow hedges are mainly forward contracts and options. Swaps are mainly used in commodity hedges and interest
rate cash flow hedges.
Hedge gains and losses in operating profit
Year ended 31 December
EUR million
2021
2020
Cash flow hedge accounted derivatives
Currency hedges
-2
-1
Commodity hedges
3
-1
Total
1
-3
As adjustments to sales
-2
-1
As adjustments to materials and services
3
-1
Items realised from the fair value reserve
that are recognised in the income statement
1
-3
Net losses from cash flow hedges
1
-3
Non-hedge accounted derivatives
Currency derivatives
-4
3
Net gains on non-hedge accounted derivatives
-4
3
Net hedge gains/losses in operating profit
-3
1
Hedge gains and losses in financial items
Year ended 31 December
EUR million
2021
2020
Non-hedge accounted derivatives
Currency derivatives
-11
8
Net gains/losses in financial items
-11
8
99
Sensitivity of currency derivatives to strengthening of EUR
31 December 2021
EUR million
SEK
USD
GBP
Currency change against EUR
-5.0%
-5.0%
-5.0%
Nominals of currency derivatives hedging next 12 months cash flow in EUR
0
-146
-20
Estimated effect on fair value reserve in EUR (net of taxes)
0
6
1
Sensitivity of commodity derivatives to price risk
There were no outstanding commodity derivatives related to parent company's cash flows at the end of reporting period.
More detailed information about financial instruments are presented in Note 24 Financial risk management, Note 25 Fair values and Note
27 Derivatives to the consolidated financial statements.
Note 26 Related party transactions
31 December
EUR million
2021
2020
Related party transactions with associated companies and joint
ventures:
Purchase of materials and supplies during the year 1
88
77
Interest income on non-current loan receivables
1
0
Non-current loan receivables at year end
2
2
Trade payables at year end
54
40
The Group's principles for related party transactions are presented in Note 31 to the consolidated financial statements.
1 2020 comparative information corrected
100
Signatures for the financial statements
 
There have been no material changes in the Parent Company’s financial position since 31 December 2021. The liquidity of the Parent
Company remains good and the proposed dividend does not risk the solvency of the Company.
 
28 January 2022
Antti Mäkinen
Håkan Buskhe
Chair
Vice Chair
Elisabeth Fleuriot
Hock Goh
Helena Hedblom
Mikko Helander
Christiane Kuehne
Richard Nilsson
Hans Sohlström
Annica Bresky
President and CEO
101
Auditor’s Report (Translation of the
Finnish Original)
To the Annual General Meeting of Stora Enso Oyj
Report on the Audit of the Financial Statements
Opinion
In our opinion
the consolidated financial statements give a true and fair view of the group’s financial position and financial performance and cash
flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU
the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance
with the laws and regulations governing the preparation of the financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report to the Audit Committee.
What we have audited
We have audited the financial statements of Stora Enso Oyj (business identity code 1039050-8) for the year ended 31 December 2021. The
financial statements comprise:
the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in
equity, cash flow statement and notes, including a summary of accounting principles
the parent company’s statement of financial position, income statement, cash flow statement and notes.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in
Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, the non-audit services that we have provided to the parent company and to the group companies are
in accordance with the applicable law and regulations in Finland and we have not provided non-audit services that are prohibited under Article
5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note 5 to the Financial Statements.
Our Audit Approach
Overview
We have applied an overall group materiality of EUR 52 million.
We performed audit procedures at 26 reporting components in 11 countries that are considered
significant based on our overall risk assessment and materiality.
Valuation of forest assets
Provisions and contingent liabilities
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In
particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that
involved making assumptions and considering future events that are inherently uncertain.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the
financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the
financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for
the consolidated financial statements as set out in the table below. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial
statements as a whole.
Overall group materiality
EUR 52 million
How we determined it
Based on operating profit and total assets
Rationale for the materiality benchmark applied
We chose operating profit and total assets as the benchmarks because, in our view, they are relevant
benchmarks against which the performance of the group is commonly measured by users of the
financial statements.
How we tailored our group audit scope
We tailored the scope of our audit, taking into account the structure of the group, the accounting processes and controls, and the industry in
which the group operates.
The Group operates in a significant number of legal entities or “reporting components” globally. We determined the nature, timing and extent
of audit work that needed to be performed at reporting components by us, as the group engagement team, or component auditors operating
under our instruction. Where the work was performed by component auditors, we issued specific instructions to those auditors which included
our risk analysis, materiality and global audit approach. We performed audit procedures at 26 reporting components in 11 countries that are
considered significant based on our overall risk assessment and materiality. We have considered that the remaining reporting components do
not present a reasonable risk of material misstatement for consolidated financial statements and thus our procedures related to these
reporting components have been limited to targeted audit procedures over significant balances and to analytical procedures performed at
group level.
By performing the procedures above at reporting components, combined with additional procedures at the group level, we have obtained
sufficient and appropriate evidence regarding the financial information of the group as a whole to provide a basis for our opinion on the
consolidated financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Key audit matter in the audit of the group
How our audit addressed the key audit matter
Valuation of forest assets
Refer to Note 1, Note 2 and Note 12 in the consolidated financial
statements for the related disclosures.
Forest assets comprise of forest land and biological assets excluding
leased forest land assets. As of December 31, 2021 the fair value of
the Group’s forest assets owned through subsidiaries, joint operations
and associated companies was EUR 7 732 million. The fair value of
EUR 5 453 million was related to biological assets and EUR 2 279
million was related to forest land.
Forest assets in Sweden are valued by using a market approach
method based on forest market transactions and volume of standing
trees in those areas where the Group’s forests are located. Market
prices between areas vary significantly and judgement is applied to
define relevant areas for market transactions used in the valuation. In
addition, market transaction data is adjusted to consider
characteristics and nature of the Group’s forest assets and to exclude
certain non-forest assets and transactions considered as outliers
compared to other transactions. Biological asset valuation is
computed based on a discounted cash flow (DCF) method in
accordance with IAS 41 Agriculture. For forest land the revaluation
method is applied as defined in IAS 16 Property, plant and equipment.
Forest land is revalued using a DCF method based on estimated
future net cash flow streams related to trees to-be-planted in the
future as well as other income, such as hunting rights, wind power
leases and soil material sales. Total value of biological assets and
forest land agrees to the market transaction based value of forest
assets as a discount rate implied by the market transactions is used in
the DCF method to value these assets.
The value of biological assets outside Sweden is determined using
discounted cash flows based on sustainable forest management plans
taking into account the growth potential of one cycle. The one cycle
varies depending on the geographic location and species.
Determining the discounted cash flows require estimates of growth,
harvest, sales price and costs.
The other Nordic forest lands are revalued by using a DCF method
based on its estimated future net cash flow streams related to trees
to-be-planted in the future as well as other non-forest related income.
The forest land for the plantations is accounted at cost.
Due to the level of judgment involved in the valuation of forest
assets as well as the significance of forest assets to the Group's
financial position, this is considered to be a key audit matter.
We obtained an understanding of management’s forest assets
valuation process, evaluated the design and tested the operating
effectiveness of internal controls related to directly and indirectly
owned forest assets.
Our audit procedures over valuation of directly owned forest asset
included:
Evaluation of the methodology adopted by management
for the valuation;
Testing the mathematical accuracy of the model used for
valuation;
Assessment of the discount rates applied in the valuation;
Assessment of the other key valuation assumptions; and
Validation of key inputs and data used in the valuation
model including sales price assumptions, growth assumptions and
cost assumptions.
In addition, specific to the market transaction based valuation in
Sweden our audit procedures included:
Assessment of the definition of relevant areas for market
transactions used in the valuation;
Assessment of the adjustments made to the market
transaction data; and
Validation of key inputs and data used in the valuation
model including market transaction data and volume of standing
trees.
We involved valuation specialists in the audit work over valuation of
directly owned forest assets.
Related to indirectly owned forest assets we have communicated
with the auditors of the three largest associates and joint operations.
As part of the communication, among other things, we have
evaluated the key audit procedures performed related to valuation of
forest assets.
Lastly, we assessed the appropriateness of disclosures related to
forest assets.
Provisions and contingent liabilities
Refer to Note 2, Note 22 and Note 29 in the consolidated financial
statements for the related disclosures.
As of 31 December 2021, the Group had environmental, restructuring
and other provisions totaling EUR 231 million.
In addition, the Group has disclosed significant open legal cases and
other contingent liabilities in Note 29.
The assessment of the existence of the present legal or constructive
obligation, the analysis of the probability of the outflow of future
economic benefits, and making a reliable estimate, require
management’s judgement to ensure appropriate accounting and
disclosures.
Due to the level of judgement relating to recognition, valuation and
presentation of provisions and contingent liabilities, this is considered
to be a key audit matter.
We obtained an understanding of management’s process to identify
new obligations and changes in existing obligations.
We analysed significant changes in material provisions from prior
periods and obtained a detailed understanding of these changes and
assumptions applied.
Our audit procedures related to material provisions recognized
included:
Assessment of the recognition criteria for the liability;
Evaluation of the methodology adopted by management
for the measurement of the liability;
Testing of the mathematical accuracy of the measurement
calculation;
Assessment of the discount rates applied in the
measurement; and
Assessment of the other key measurement assumptions
and inputs.
We obtained legal letters on the main outstanding legal cases.
We reviewed minutes of the board meetings including sub
committees.
We assessed the appropriateness of the presentation of the most
significant contingent liabilities in the consolidated financial
statements.
We have no key audit matters to report with respect to our audit of the parent company financial statements.
There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the
consolidated financial statements or the parent company financial statements.
Responsibilities of the Board of Directors and the Managing Director for the Financial 
Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and
fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a
true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with
statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent
company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an
intention to liquidate the parent company or the group or to cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the parent company or the group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group
to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit
of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Other Reporting Requirements
Appointment
We were first appointed as auditors by the annual general meeting on 28 March 2018.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the
Board of Directors.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering
whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion
the information in the report of the Board of Directors is consistent with the information in the financial statements
the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed, we conclude that there is a material misstatement of the report of the Board of Directors, we are
required to report that fact. We have nothing to report in this regard.
Other Statements
We support the proposal that the financial statements are adopted. The proposal by the Board of Directors regarding the distribution of profits
is in compliance with the Limited Liability Companies Act. We support that the Board of Directors and the Managing Director of the parent
company should be discharged from liability for the financial period audited by us.
Helsinki 10 February 2022
PricewaterhouseCoopers Oy
Authorised Public Accountants
Samuli Perälä
Authorised Public Accountant (KHT)