Fossil carbon emissions and
resilience to climate change

Summary for 2021 – aligned with the TCFD

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Part of the global bioeconomy, Stora Enso is a leading provider of renewable products and one of the largest private forest owners in the world. Sustainably managed forests have a positive climate impact, both as carbon sinks and through circular end products. Our goal is to provide our customers with 100% regenerative solutions by 2050. These solutions will help mitigate climate change considering all emissions and removals along the value chain.

Governance

Mitigating climate change is promoted by Stora Enso’s Board of Directors, CEO, and Group Leadership Team (GLT). The CEO has the ultimate responsibility for the successful implementation of our strategy, including combatting climate change. The work is led by the EVP of Sustainability, who reports to the CEO and is part of the GLT. The Board of Directors’ Sustainability and Ethics Committee oversees the implementation of our sustainability strategy and the ethics and compliance strategy. For more details on our governance see our Corporate Governance . The reduction of CO2 emissions has been included in Stora Enso’s long-term incentive plan.

Resilience to climate change

Resilience to climate change is guided by our Policy for Energy and Climate Change. This ensures a continuous supporting process to develop resilience to climate change for different scenarios. Our renewable solutions substitute fossil-based and other non-renewable materials. Our goal is to provide our customers with 100% regenerative solutions by 2050. These solutions will help mitigate climate change considering all emissions and removals along the value chain.

Our raw materials are renewable, recyclable, and fossil-free. Ensuring access to wood fiber from sustainably managed forests is therefore fundamental to maintaining our carbon sinks and our climate change mitigation efforts. Our strategy to future-proof supply includes active management of climate risks in our own and managed forest assets, as well as supporting our suppliers’ work in sustainable forest. For instance, diligent eucalyptus plantation planning is used to avoid frost-sensitive areas, and tree breeding and R&D programmes are applied to increase tolerance to extreme temperatures. Stora Enso maintains a diversity of forest types and structures and enforces diversification in wood sourcing to secure supplies. In addition, we have developed technical solutions to adapt wood harvesting and transportation to changing conditions, such as soft soils caused by milder winters in Northern Europe.

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 Celsius 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 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 the business impacts for 2030 according to the global transition scenario 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 as part the Group’s annual strategy work, utilising the transition risk and opportunity categories in the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Read more here about our reporting against the TCFD recommendations.

The Group’s strategy is to provide sustainable, renewable alternatives to fossil-based solutions, presenting attractive growth opportunities long term. The Group’s innovation, product development, and investments in energy and raw material efficiency help customers to reach their climate targets as well as meet consumer demands for low-carbon products.

The scenarios showed that potential new regulations and market mechanisms could impact Stora Enso’s operating costs by limiting wood harvesting volumes or forest management practices. These potential regulations and market mechanisms could also increase costs for greenhouse gas emissions and energy.

Risk and opportunity management

To sustain a climate change resilient strategy, it is crucial that we maintain a systematic, holistic and proactive approach to the management of risks and opportunities. Risk management is a core capability and an integral part of all Group activities, securing a risk-aware corporate culture that is fostered in all decision making. Through consistent application of dynamic risk analysis, we realise our competitive advantage.

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.

Stora Enso published its first TCFD-aligned reporting in the Report of Board of Directors in 2019. For more information on Stora Enso’s reporting according to TCFD recommendations, see the Annual Report 2021, page 53.

Metrics and target

Stora Enso was the first forest products company to set science-based targets to reduce its greenhouse gas (GHG) emissions in 2017. We achieved the science-based target nine years ahead of time. In 2021, we raised our ambition to align with a 1.5 degrees scenario. Our updated target is to reduce absolute scope 1 and 2 GHG emissions from operations by 50% by 2030 from the 2019 base-year. Combatting global challenges such as climate change does not happen in isolation. Value chain emissions often represent the largest portion of companies’ carbon footprint. Therefore, we are committed to the target of reducing scope 3 GHG emissions by 50% by 2030 from the 2019 base year.

A key tool in the scenario assessment and the establishment of reduction targets was Stora Enso’s internal Carbon Neutrality Roadmap, which details the reduction opportunities in our site units for the upcoming years.

Stora Enso has set targets and defined key performance indicators (KPIs) for its sustainability work. Progress is regularly monitored at Group level and via division level business reviews. Consolidated results on the Group’s performance are reported annually. See the KPIs here.

2021 highlights

  • As an average of 2019-2021, Stora Enso forests and plantations sequestered an estimated 5.0 million tonnes of CO2 annually, while the total CO2 stored in Stora Enso’s forests and plantations was estimated to amount to 283 million tonnes.
  • By the end of 2021, Stora Enso’s scope 1 and 2 emissions were 14% lower compared to the 2019 base-year. During 2021, the emissions decreased slightly, partly due to less fossil-intensive electricity purchased for sites in Finland.
  • By substituting fossil-based materials, Stora Enso’s products saved an estimated 17 million tonnes of CO2 in 2021, which is comparable to the average annual CO2 emissions of 5 million cars.
  • Our energy self-sufficiency rate was 67%2 at the end of 2021 (including fuels and electricity). The share of biomass in internal energy production was 83% (82%).
  • Our central energy and water efficiency investment fund is another important part of our work. In 2021, this fund amounted to EUR 11 million (EUR 7 million in 2020) and was earmarked for energy efficiency investment projects at our mills. We estimate that the projects generate annual energy savings of at least 163 GWh.
  • We began using sustainability criteria in the tendering phase of our sourcing process in 2018. As part of the criteria, suppliers eed to respond to a set of questions about their CO2 emissions, contributing to our science-based targets. These criteria are part of every tender, regardless of previous contracts with the same supplier.
  • Drivers for sustainable profitable growth include next-generation packaging materials and building solutions, such as CLT and LVL. These are all products which provide alternatives to fossil-based materials.

External recognition

TCFD (The Task Force on Climate-related Financial Disclosures)

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