Valmet´s Task Force on Climate-related Financial Disclosures (TCFD) report

Global megatrends like climate change, urbanization, and the growing middle class in the emerging markets, are Valmet's long-term growth drivers. Climate change and global warming are significant challenges that are driving companies to rapidly transform and reduce their carbon dioxide emissions. Valmet believes that technology plays a key role in mitigating climate change and global warming in the transition to a carbon neutral economy. ​That is why Valmet has created a comprehensive Climate program -  Forward to a carbon neutral future, which includes ambitious CO2 emission reduction targets and concrete actions for the whole value chain. The program is aligned with the Paris Agreement 1.5°C pathway and UN Sustainable Development goals. 

In 2020, Valmet developed its climate-related financial disclosures and implemented the Task Force on Climate-related Financial Disclosures (TCFD) reporting recommendations to disclose climate-related financial risks and opportunities in annual reporting. Valmet disclosure of climate-related risks and opportunities are described below. See also the Disclosure of non-financial information in Valmet’s Financial statement 2020. 

 

Valmet’s climate-related disclosure is described around the four areas according to the TCFD recommendations:  

Governance

Strategy

Risk management

Metrics & Targets

 

 

Governance

Sustainability is at the core of Valmet's business strategy and operations. Valmet develops and supplies resource efficient clean technologies and solutions that contribute to mitigating climate change by enabling significant emission reductions through fuel changes and energy efficiency improvements. Climate change is also one of the main megatrends affecting Valmet’s business and strategy.  

The Board of Directors is responsible for the administration and the proper organization of the operations of the Company. The Board also decides on significant matters related to strategy (including climate related issues), investments, organizational and finances and ensures that the Company has established the corporate values applied to its operations.  

Valmet has a strategic approach to sustainability, and therefore sustainability including climate-related issues, are discussed as part of Valmet’s Sustainability agenda by the Board of Directors and the President and CEO and they sign off the Disclosure of non-financial information, which is included into Valmet’s Financial Statements and Information for Investors. The Board of Directors have also reviewed and approved Valmet’s Climate Program and the ambitious CO2 emission reduction targets for the whole value chain.  

The President and CEO guides and supervises the operations of Valmet and oversees the progress on targets set in Valmet’s Sustainability agenda and related Climate Program. 

At Valmet, climate-related issues are integrated into key business processes including strategy, risk management, R&D, sales, project management, HR, procurement, and operational development. Climate-related issues are part of target setting, progress monitoring and reporting including financial KPI´s.  

Climate-related issues are assessed and monitored widely by the organization management. Valmet is organized around four business lines and five geographical areas in addition to four corporate level functions (Finance, Marketing, CommunicationSustainability and Corporate Relations, Operational Development and Human resources). Climate-related issues are discussed in Executive Team as part of Valmet’s strategy and thus all Valmet’s operations. 

Valmet’s Executive Team assists the President and CEO in the preparation of matters, such as Valmet’s business plan, strategies, policies, and other operative matters of joint importance. The President and CEO acts as chairman of the Executive Team, where strategic level climate-related issues are managed. Sustainability issues, including climate-related matters, are monitored continuously by Valmet Executive Team, and reported frequently to the President and CEO and annually to the Board of Directors of Valmet.  

The highest management level of responsibility of climate related issues is on several Valmet Executive Team members:  Senior Vice President (Marketing, Communications, Sustainability and Corporate Relations), Senior Vice President (Human Resources & Operational Development (R&D, procurement and HSE)) and CFO (Finance and Strategy). Business Line Presidents and Area Presidents are assessing and managing climate-related issues in their respective responsibility areas.    

 

Strategy

Climate change and transition into low carbon economy are among the driving forces behind Valmet´s strategy. Valmet is the leading global developer and supplier of process technologies, automation and services for the pulp, paper, and energy industries. Valmet is mitigating climate change, adapting to global warming, and driving the transition of the pulp and paper industry towards a carbon neutral production by enabling  energy and resource-efficient, low-carbon pulp and paper production and carbon neutral energy production with our current biomass-based solutions already today. Also, our customers’ chemical pulp mills provided by Valmet are usually bioenergy self-sufficient already. Valmet is also developing new process technologies to enable carbon neutral pulp and paper production by 2030.  

Sustainability, including climate-related matters, has been integrated into Valmet's business strategy and is a part of a systematic strategy process.  

As Valmet sees transition to low carbon economy as an opportunity, Valmet has identified the development and expansion of low emission technologies and services as a possibility to increase revenue through demand for lower emissions products and services.  

Valmet’s systematic work on Research and Development gives a significant input to realizing this opportunity. Valmet focuses even stronger on developing environmentally efficient, low carbon products and services in the long term. Valmet's research and development focuses are: 1) Ensure advanced and competitive technologies and services; 2) Enhance raw material, water, and energy efficiency and 3) Promote renewable materials 

The development towards more resource efficient and sustainable products is seen as a growth driver in short, medium, and long-term horizon. Demand for more sustainable products and services has impacted Valmet's strategy, products, services portfolio and offering. Valmet has developed a wide energy and resource efficient product portfolio that can reduce CO2 emissions while ensuring cost-efficient, sustainable products and process solutions. Valmet continues to invest in the development of new concepts and processes that reduces the environmental impact of the entire life cycle of its products.  

In addition, we see that circular economy is an integral part of mitigating climate change. The fundamental idea of a circular economy is embedded in our mission: Converting renewable resources into sustainable results. We are constantly improving our processes to increase resource efficiency and aim to maximize the use of recycled materials in our technology offering. 

The successful management of climate-related risks and opportunities is a key element in the delivery of our strategy. Valmet has identified climate-related transition and physical risks and opportunities which are shown in a table below (see also Sustainability risks and opportunities). 

Valmet will publish its climate scenario analysis in June 2021. 

 

Climate-related risks

 Transitional risks 

Financial impact

Time horizon 

 Regulation

Stricter climate-related regulation and initiatives may change the availability and use of biomass, and increase the cost of raw materials and energy, result in new taxes and tariffs, and change our stakeholder’s attitudes, which could impact Valmet’s and its customers’ operations and business environments. 

 

High

 

Long

 Technology 

If Valmet technologies are not seen as sustainable, access to capital might deteriorate and the cost of capital might increase in the long term.  

Weakened capital environment can lead to decrease in R&D investments and our possibilities to offer our customers low carbon technologies. Inability to meet customer requirements threatens business continuity in the long term.  

 

High

 

Long

 Market

Changes in the business environment e.g., related to the use of biomass, can pose risks to Valmet.   

 

Medium

 

Long

 Reputation

Poor climate related performance or negative perception by stakeholders  may have adverse impact on Valmet´s overall brand image globally and also to net sales. 

 

Medium

 

Long

 Physical risks 

Financial impact

Time horizon

 Acute  

Climate change increases the amount and severity of weather extremes globally that may impact Valmet's own production sites e.g. in India, China and North America potentially by leading to production shutdowns and having a financial impact. 

 

Low

 

Short

 Chronic 

Longer-term shifts in climate patterns causing sea level rise would pose a risk to Valmet's operations e.g. in China and Indonesia. Also access to raw materials in supply chain may be impacted by chronic changes in the environment. 

 

Intermediate

 

Long

Climate-related opportunities

 Transitional opportunities 

Financial impact 

Time horizon

 Resource efficiency 

Valmet´s energy and resource efficient product offering may lead to increased revenues and company valuation and enhanced access in capital in the long term. 

 

High

 

 

Long

 

 

Improving resource efficiency in our own operations may decrease operational costs. 

 

Low

 

Short

 Products/ 
 Services 

Valmet assesses that around 95% of the environmental impacts of Valmet’s entire value chain take place during customer use phase, and therefore by developing low carbon technology, Valmet can enable significant CO2 emission reduction for its customers through its technology.  

 

High

 

Medium

 

Valmet invests on research and development of new low-carbon solutions, which can improve competitive position and capitalize on shifting consumer preferences.

 

Medium

 

Long

 Energy Source 

Valmet offers carbon neutral heat and power production with its biomass-based energy solutions which attractiveness highly increasing. 

 

Medium

 

Short, medium, and long 

 Market 

Valmet is actively seeking opportunities to position itself in the low carbon market and to increase Valmet’s valuation in the long term.  

 

High

 

Long

 Resilience 

Valmet is developing its resilience by improving efficiency, designing new production processes, and developing new products. 

 

High

 

Long

Risk management

Valmet has a continuous multi-disciplinary company-wide risk management process, where climate-related issues are integrated. Valmet has a systematic method to identify, assess and manage the probability and impact of climate related risks at all the stages of the value chain on a Group level and also within each reporting segments on a regular basis in short, medium and long-term.  


Climate-related risks related to direct operations, as well as the up/downstream are identified, assessed and responded with the same risk assessment process as other types of risks in the Group Valmet risk management. Risks management covers strategic, financial, operational and hazard risks, which includes climate-related physical and transition risks. 


The assessed risks are based on the Valmet’s risk profile in which the company risks are listed on the headline level and covers all operations. 

Valmet’s risk process promotes opportunities. Furthermore, it aspires to minimize the adverse impacts of strategic, financial, and operational risks and to remove or mitigate hazard risks. The line management of Valmet’s businesses is operatively accountable for managing risks as part of its daily activities. Climate change and environmental risks are assessed once a year on a Group-level by Valmet´s Risk Management function.  

 

Metrics & Targets

Valmet has defined targets and key performance indicators for climate-related risks and opportunities in line with its strategy and risk management process.

 

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Valmet’s greenhouse gas emissions are defined and reported according to the Greenhouse Gas (GHG) Protocol guidelines. For a more comprehensive summary of Valmet’s emissions and calculation methodology, see GRI Supplement 2020 p. 25 and CO2 emissions. 

 

Other environmental metrics  

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More information, see Environmental data and GRI supplement, p. 24-26. 

 

Orders Received of new products and services 

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Valmet´s new products and services reduce CO2 emissions, water and raw material consumption, reduce waste and increase energy efficiency. Valmet follows the market demand for more environmental efficient technologies by monitoring the share of orders received of new products and services . Valmet's target is to maintain the orders received of new products and services >25 percent until the end of the current action plan period 2021. More information see Non-financial information statement. p.11 

 

Targets 

Valmet’s has set ambitious CO2 reduction targets and concrete actions for 2030 for the entire value chain. More about the climate targets and actions, see Valmet’s Climate program. 

 

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Valmet has also in place a dedicated Environmental Efficiency Program, which sets targets for energy consumption, CO2 emissions, water consumption and waste.

  

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Updated; May 10, 2021