Risks and risk management

Our approach to risk management

Risk is an integral component of business, and it is characterised by both threats and opportunities. Stora Enso is committed to ensuring that systematic, holistic and proactive management of risks and opportunities is a core capability and an integral part of all Group activities, and that a risk aware corporate culture is fostered in all decision making. Through consistent application of dynamic risk analysis, we manage risk in order to enhance opportunities and reduce threats to thus achieve our competitive advantage.

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 what an appropriate and acceptable level of risk is. The Board has established the Financial and Audit Committee to provide support to the Board in relation to the monitoring of the adequacy of the risk management process within Stora Enso, and specifically regarding the management and reporting of financial risks. 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 CFO, is responsible for the design, development and monitoring of the top-down implementation of the Group risk management framework. Each division 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

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, distributed with the annual strategy guidelines.

Business entities and functions identify the sources of risk, events including changes in circumstances and their causes and their 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 tin risk terminology. Risk appetite is determined across main risk categories on the business division level.

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 while the effectiveness of existing risk reduction is factored in to define the residual risk level. Pre-defined impact scales consider financial, people 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 treatment 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 quarterly basis.

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 risk factors

Strategic risks

Macroeconomic and foreign currency risks

Stora Enso operates in more than 30 countries and is affected by the global economy. Changes in broad economic conditions, sharp market corrections, increasing volatility in foreign exchange rates and chronic fiscal imbalances could have negative and material impact on the Group’s profit, cash flows and financial position. A prolonged global recession may materially and adversely affect Stora Enso’s performance and financial condition. A recession may also materially affect the Group’s customers, suppliers and other parties with whom it does business. Exchange rate fluctuations may have a material impact on the reported results through transaction and translation risk impact.

A significant and sustained economic downturn, or any similar event, could have a material adverse effect on the Group’s operational performance and financial condition. The Group’s reported results and reported net assets may fluctuate as the exchange rates change.

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 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, of the Consolidated financial statements.

Policy principles and mitigation measures

The Group has a diversified portfolio of businesses which mitigates exposure to any one country or product segment. We monitor the external environment continuously and our planning assumptions take account of important near- to medium-term and long-term drivers related to key macro-economic factors. We closely monitor the Board-approved risk appetite compliance for specific financial metrics and actively manage cash flow and liquidity. We hedge 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 deterioration in trading conditions. In the event of a significant economic downturn, the Group would identify and implement cost reduction measures to offset the impact on margins from deterioration in sales.

Related opportunities
  • A diverse business portfolio and geographical presence, competitive strength and resilient balance sheet reduce the Group’s risk exposures
  • Strategic opportunities in changing currency and macroeconomic environment. 

Global warming

Changes in precipitation patterns, typhoons and severe frost periods in the subtropics could cause damage to tree plantations. Increases in average temperatures could lead to changes in the tree species composition of forests. Milder winters could impact harvesting and transport of wood in northern regions and the related costs. Additional demand for biomass fuels and agricultural land may limit the availability of land for fibre production, affecting the price of biomass. The increasing global demand for water may in the long-term impact the Group’s operations through our supply chains.

Policy principles and mitigation measures

Stora Enso is committed to contributing and mitigating the effects of climate change by actively seeking opportunities to reduce the Group’s carbon footprint. Risks related to climate change are managed via activities related to finding clean, affordable and safe energy sources for production and transportation, and reducing energy consumption. Additional measures include energy efficiency initiatives, the use of carbon-neutral biomass fuels, maximising the utilisation of combined heat and power, and sequestration of carbon dioxide in forests and products. Diligent plantation planning is ensured to avoid frost sensitive areas and non-controversial tree breeding and R&D programmes are applied to increase tolerance of 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. Agroforestry concepts have been introduced to integrate the different land use forms and to mitigate the competition for land and the effects of increasing food prices.

Related opportunities
  • With regards to global warming, we believe that the opportunities outweigh risks in near term.
  • 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.

Mergers, acquisitions, divestitures and restructuring

Failure to achieve the expected benefits from any acquisition or value from assets or businesses sold can have serious financial impacts. The Group could 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. In connection with an acquisition, past practices with targets related to e.g. pollution, competition law compliance or corruption could result in additional costs for Stora Enso and cause reputational damage. Divestments may involve additional costs due to historical and unaccounted liabilities. Business restructuring may also involve reputational impacts.

Policy principles and mitigation measures

Rigorous M&A guidelines, including due diligence procedures are applied to the evaluation and execution of all acquisitions that require the approval of the Board of Directors. Structured governance and policies such as the policy for responsible rightsizing, are followed when making restructuring decisions.

Related opportunities
  • A strong balance sheet and cash flow enable value enhancing M&A, when the timing and opportunity are right.

Strategic investments

Stora Enso’s business strategy is to transform itself from a traditional paper and board producer to a customer-focused renewable materials growth company. The success of this transformation depends on the Group’s ability to understand the needs of the customer 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 have serious impacts on our financial performance. Significant, unforeseen changes in costs or an inability to sell the envisaged volumes or achieve planned price levels may prevent us from achieving our business goals.

Policy principles and mitigation measures

Risks are mitigated through profound and detailed pre-feasibility and feasibility studies which are prepared for each large investment. Group investment guidelines stipulate the process, governance, risk management and monitoring procedures for strategic projects. 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.

Related opportunities
  • Replacing fossil-based materials by innovating and developing new products and services based on wood and other renewable materials.

Competition and market demand

Continued competition and supply and demand imbalances in the raw material, energy and products market may have an impact on profitability. The paper, pulp, packaging and wood products industries are mature, capital intensive and highly competitive. Stora Enso’s principal competitors include a number of large international forest products companies and numerous regional and more specialised competitors. Customer demand for products is influenced by the general economic conditions and inventory levels, and affects product price levels. Product prices, which tend to be cyclical in this industry, 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 2017.

Operating Profit: Impact of Changes +/- 10%, EUR million
Segments Price Volume
Consumer Board 240 89
Packaging Solutions 121 51
Biomaterials 146 71
Wood Products 164 42
Paper 269 67
Policy principles and mitigation measures

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.

Related opportunities
  • Our expertise in wood and other biomass is focused on responding to customer and consumer demand in a changing world.


The digital transformation of businesses continues to alter the ways in which organisations operate. Digital capabilities penetrate all aspects of business and operating models, reshaping how companies and functions generate value. Therefore, digitalisation also involves potentially disruptive forces. Moreover, customers, regulators and other stakeholders expect companies to understand what data they have or could have, what risks it poses, and to have plans to manage it well.

Business process erosion, failure to take advantage of the upside that technology offers or inability to harvest related synergies could significantly impair Stora Enso’s competitiveness in the market place.

Policy principles and mitigation measures

Stora Enso has an extensive digitalisation programme with the aim to develop a competitive advantage by making full use of the opportunities to drive revenue growth and internal efficiency. Stora Enso has established a programme with external partners to search for technological development initiatives with a clear business purpose. With experimental and fast prototyping, these projects will help to identify and further develop initiatives that will speed up Stora Enso’s digital maturity by exploring new technologies and capabilities.

Related opportunities
  • Opportunities related to digitalisation clearly exceed related risks
  • New technologies offer significant potential for higher level of process optimisation and automatisation, new business models and enhanced value propositions for customers and consumers.

Operational risks

Sourcing and logistics

Violation of Supplier Code of Conduct could result in contractual, financial and reputational damages and loss of sales if Stora Enso were to be blacklisted by customers. Similarly poor occupational safety performance of subcontractors can be a risk to our reputation. 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 natural gas, oil and coal, and for peat and nearly half of the electricity consumed, leaves the Group susceptible to changes in energy market prices and disturbances in the supply chain.

The following table shows Stora Enso’s major cost items.

Composition of Costs in 2017
Operative Costs % of Costs % of Sales
Logistics and commissions 11 10
Manufacturing Costs
Fibre 34 31
Chemicals and fillers 9 9
Energy 7 6
Material 7 6
Personnel 14 13
Other 12 11
Depreciation 6 5
Total Costs and Sales 100 91
Total operative Costs and Sales in EUR million 9 130 10 045
Equity accounted investments (EAI), operational 89
Operational EBIT 1 004

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 fibre, chemicals and energy, and machinery and equipment in capital investment projects. 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.

Policy principles and mitigation measures

Input cost volatility is closely monitored on the business unit, divisional and Group level. The Group applies consistent long-term energy risk management. 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. The Group hedges price risks in raw material and end-product markets, and supports the development of financial hedging markets. The Group uses a wide range of suppliers and monitors them 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, and their weak sustainability performance could harm Stora Enso and its reputation. Stora Enso’s sustainability requirements for suppliers and audit schemes cover its 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.

Environmental and social responsibility in wood procurement and forest management is a prime requirement of stakeholders. Failing to ensure that the origin of wood used by the Group is acceptable could have serious consequences in the markets. Stora Enso manages this risk through its policies of sustainable sourcing of wood and fibre, and land management, which set the basic requirements for all Stora Enso wood procurement operations. Traceability systems are used to document that all wood and fibre come from legal and acceptable sources.

Related opportunities
  • Add value and bring innovation to our business globally by building strong and measurable relationships with the best suppliers.
  • Enforce harmonised sourcing processes to increase capabilities, increase tender quality to reduce cost, and develop sustainable suppliers to reduce risk.

Product safety

Some of our products are used to 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.

Policy principles and mitigation measures

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, all Stora Enso mills have certified ISO quality management systems. Furthermore, contractual liability limitation and insurance protection are used to limit the risk exposure to Stora Enso.

Related opportunities
  • Differentiation and value creation through superior product quality and the highest level of product conformity.

Community relations and social responsibility

Social risks may harm existing operations and the execution of investments, especially in growth markets. Failure to successfully manage relationships with local communities and non-governmental organisations (NGOs) could disrupt our operations and adversely affect the Group’s reputation. The Group operates in certain countries, where land and resource ownership rights remain unclear and where related disputes may arise.

Potential impacts include reputational impacts and negative media coverage, harm to communities and rights holders, disruption of operations, and loss of the licence to operate.

Policy principles and mitigation measures

Stora Enso strives to identify and minimise risks related to social issues in good time, in order to guide decision-making in its investment processes as well as in its ongoing operations. Tools such as sustainability risk assessment, human rights due diligence and Environmental and Social Impact Assessments (ESIA) help ensure that no unsustainable projects are initiated and all related risks and opportunities are fully understood in all operations. These tool also enable project plans and operating practices to be adapted to suit local circumstances. Furthermore, dialogue with NGOs is a part of the Group’s stakeholder engagement. More information on community engagement is presented in Stora Enso’s Sustainability Report.

Related opportunities
  • Ensuring that the communities around our operations thrive economically, socially, and environmentally is crucial for the success and sustainability of Stora Enso.
  • Clear business benefits to Stora Enso through a strong focus on social responsibility, as customers, business partners, investors and potential employees become more and more attracted to socially responsible companies.

Occupational health and safety

Failure to maintain high levels of safety management can result in harm to the Group’s employees or 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, impairment of the Group’s reputation, or inability to attract and retain skilled employees. Government authorities could additionally enforce the closure of our operations on a temporary basis.

Personnel 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, travel, work and living in countries with security or crime concerns. Focusing on the security of key personnel is also important from a business continuity perspective.

Policy principles and mitigation measures

Stora Enso measures its performance in health and safety through lag indicators on accidents and near-misses, and lead indicators on safety observations. The target in safety is to achieve zero accidents, but demanding milestones have also been set for accident and incident rates. Stora Enso has adopted a common model for safety management, establishing a set of safety tools that all units must implement in their operations. Implementation of the tools is followed up and reported internally on a quarterly basis, and support is offered to units through training, coaching and the sharing of best-practice. The main responsibility for identifying and managing safety risks remains with the units. At the mill level, safety and health risks are assessed jointly, in co-operation with the occupational health service providers. Global health and safety risks are monitored and assessed by the Group’s Occupational Health and Safety unit.

Stora Enso carries out constant monitoring of risks related to the security and safety of the personnel, including health issues, and information available on the Intranet is delivered directly to travelling employees. An external service provider takes care of action in medical or security crises, under guidance from Stora Enso’s crisis management team.

Related opportunities
  • Leading health and safety performance strengthens the brand as an employer.
  • Improved engagement, efficiency and productivity.

People and empowerment

Recruiting, retaining and developing a competent workforce and managing key talent throughout Stora Enso’s global organisation are crucial to success. Competition for personnel is intense and the Group may not be successful in attracting or retaining qualified personnel. A significant portion of Stora Enso employees are members of labour unions and there is a risk that the Group may face labour market disruptions especially in a time of restructuring and redundancies due to divestments and mill closures.

The loss of key employees, the Group’s inability to attract new or adequately trained employees, or a delay in hiring key personnel could seriously harm the Group’s business and impede the Group and its business divisions from reaching their strategic objectives. Labour market disruptions and strikes could have adverse material effects on the business, financial conditions and profitability.

Policy principles and mitigation measures

Stora Enso manages the risks and loss of key talents through a combination of different actions. Some of the activities aim at providing a better overview of the workforce of the whole Group, 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.

Related opportunities
  • Skilled and dedicated employees are essential for success.
  • Engaged high performing people enable the implementation of transformation strategy and commercial success.

Information technology and information security

The Group is dependent on IT systems for both internal and external communications and for the day-to-day management of its operations. The Group’s information systems, personnel and facilities are subject to cyber security risk. Failure to capitalise on digitalisation and cognitive technologies could impair Stora Enso’s competitiveness. Other IT related risks relate to the potential unavailability of IT services due to human error in operations, damaged hardware in data rooms and data centres, network connection issues and the failure of suppliers to follow service level agreements.

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 and other business critical information. Further risks involve the loss of backup media and violation of data privacy regulations.

Policy principles and mitigation measures

The management of risks is actively pursued in the Information Risk Management System and best practice change management and project methodologies are applied. A number of security controls have been implemented to strengthen the protection of confidential information and to facilitate compliance with international regulations. Specific measures include a thorough RfP process in supplier selection for business-critical services, supplier audits, annual controls and audit, data centres located in low-risk areas, backup connections for critical services, disaster recovery plans, targeted scanning and investigation activities, encryption of communication, information and devices, remote management of security on devices and information security awareness training.

Related opportunities
  • Efficient operations, performance optimisation, innovative product offerings, and new customer services through digitisation and sophisticated IT systems.

Physical assets and business disruption

The physical assets that comprise the installed capacity of the production facilities have inherent risks or the potential for failure, and also involve the potential for off-specification operation that could result in poor product quality, lower output or increased production costs. In addition to the inherent risks of catastrophic failure, the management must also consider the relative importance, e.g. criticality, of each asset on the plant’s ability to meet delivery commitments and the business plan. In some instances the risks are the result of inherent design deficiencies, mode of operation or operating practices. In Stora Enso the significant asset risks lie predominantly in integrated (but also non-integrated) pulp and related energy production.

Policy principles and mitigation measures

Protecting production assets and business results is a high priority for Stora Enso to achieve the target of avoiding any unplanned production stoppages. This is achieved through structured methods of identifying, measuring and controlling different types of 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 programs are also utilised.

Planned stoppages for maintenance and other work are important to keep machinery in good order. Preventive maintenance programs and spare part criticality analyses are utilized to secure the high availability and efficiency of key machinery. Striking a balance between accepting risks and avoiding, treating or sharing risks is a high priority.

Related opportunities
  • Optimised maintenance and well controlled loss prevention programmes
  • Potential for competitive advantage through improved productivity and overall efficiency

Natural catastrophe risks

Stora Enso has to acknowledge that natural catastrophes such as storms, flooding, earthquakes or volcanic activity may affect the Group’s premises and operations. However, most of the Group’s assets are located in areas where the probability of flooding, earthquakes and volcanic activity is low.

Policy principles and mitigation measures

The outcome of such catastrophes can be reduced by emergency and business continuity plans that have been proactively designed together with the relevant authorities.

Compliance risks

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 (e.g. capital markets regulation, company and tax laws, customs regulation and safety regulation) and breaches of group policies such as the Code of Conduct, Supplier Code of Conduct and Business Practice Policy regarding fraud, anti-trust, corruption, conflict of interests and other misconduct. Stora Enso may face high compliance and remediation costs under environmental laws and regulations. See also Information systems and information security. Potential impacts include prosecution, fines, penalties, and contractual, financial and reputational damage.

Policy principles and mitigation measures          

Stora Enso’s Ethics and Compliance Programme, including policy setting, value promotion, training and knowledge sharing and grievance mechanisms are kept continuously up to date and developed. Other compliance mechanisms include Stora Enso Group’s internal control system and Internal Audit assurance, the Supplier Code of Conduct in supplier contracts, supplier risk assessments, supplier trainings, supplier 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.

Related opportunities
  • Focusing on wider ethical topics rather than mere compliance with regulations will lead to successful business, foster accountability and enhance corporate reputation.

Forest and land use

Wood is our most important raw material. Adverse changes in growing conditions and natural hazards, caused by climate change, for example, could result in significant financial loss to Stora Enso. Failure to meet stakeholder expectations or to ensure the chain of custody and economically, socially and environmentally sustainable forest and land management practices throughout our wood procurement and plantation operations could also result in significant reputational and financial loss to Stora Enso. Furthermore, global challenges such as population growth, increasing demand for agricultural land, and the widening gap between the supply and demand for wood, all require us to use natural resources even more efficiently.

Policy principles and mitigation measures

Our Policy for Wood and Fibre Sourcing, and Land Management, robust traceability systems and our active promotion of forest certification all help to ensure that no wood or fibre from unacceptable sources enters our supply chain. In addition, when sourcing logging residues and other forest biomass for energy use, we follow the specific guidelines developed for the harvesting of forest energy, which include strict environmental considerations.

Related opportunities

As trees absorb carbon dioxide (CO2) from the atmosphere and – together with wood-based products – act as carbon sinks, wood from sustainably managed forests represents a carbon neutral, renewable alternative to many non-renewable materials. If forests and plantations are managed sustainably, new generations of trees will replace those that are logged, sequestering more CO2 from the atmosphere. Well-managed forests can make entire ecosystems more resilient to negative impacts, and benefit from positive ones.


The international nature of the Group’s operations exposes it to the potential for litigation from third parties. Material levels of litigation may arise from many of the Group’s activities. Significant levels of litigation in our industry sector have in the past related mainly to major contracts and shareholder agreements. Acquisitions and disposals and the restructuring of under-performing businesses may also give rise to litigation. For more information on specific litigation and legal cases affecting the Group, see Note 29, Commitments and contingencies, of the Consolidated financial statements.

Policy principles and mitigation measures

Levels of litigation are actively monitored. A periodic report of potential exposures and current litigation is submitted by all businesses and reviewed by the Group General Counsel. Contracting procedures are continuously reviewed and improved against a framework used by all Stora Enso business units.
See also Product safety risk.

Related opportunities
  • Determining cohesive litigation strategies case-by-case to pursue desired litigation outcomes may result in significant financial redemptions and cost recovery.

Regulatory changes and political risks

The Group’s businesses may be affected by political or regulatory developments in any of the countries and jurisdictions in which the Group operates, including changes to fiscal, tax, environmental or other regulatory regimes. Potential impacts include higher costs and capex to meet new environmental requirements, expropriation of assets, imposition of royalties or other taxes targeted at our industry, and requirements for local ownership or beneficiation. In particular, the EU energy and carbon policies may impact upon the availability and price of wood fibre. Additionally, political instability may result in civil unrest, nullification of existing agreements, harvesting permits or land leases. Unpredicted changes in forest certification schemes could limit the availability of certified raw materials.

Policy principles and mitigation measures
  • Active monitoring of regulatory and political developments in the countries where the Group operates
  • Participation in policy development mainly through industry associations
Related opportunities

Regulatory changes involve market growth potential for sustainable products. Resource efficiency, the circular economy and renewability are increasingly important sources of competitive advantage.

Corporate governance in Stora Enso

Stora Enso complies with the Finnish Corporate Governance Code 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 Report. The deviations are due to differences between the 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

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