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Sustainability

By focusing on cartonboard and paper products, a responsible circular economy is a central part of our business. Our products are mainly made from renewable raw materials and are characterized by their high recyclability. 

The following information corresponds to the consolidated non-financial report 2021, from which further details can be obtained.

The MM Group is essentially a sustainability company. Producing innovative, recyclable packaging and paper products made from renewable raw materials, we are at the forefront of avoiding plastic waste. Due to its roots in the field of forestry since the foundation in 1888, the idea of sustainability has always been present at MM.

This is based on our conviction that we can be even more competitive and successful in the long term through documented sustainability and our progress in it, as well as our continuous stakeholder dialogue. This requires experienced central management, additional resources and harmonized systems, tools and standards, in which we have recently made significant investments.

he recent upgrade of our climate rating from C to A- and thus to "leadership status" by the renowned CDP (Disclosure Insight Action) was a first great success. In particular, this sends a signal to our customers that they prefer MM as their supplier. However, we also place a focus on improving our water, energy and accident statistics. After all, sustainability is increasingly becoming a distinguishing feature. In this context, the topic of "avoiding plastic waste" is particularly important to us. By providing adequate cartonboard solutions, we have the opportunity to show our customers that you can achieve the same functions and the same comfort without plastic.

The concept of circular economy has long been an intrinsic part of our business due to our focus on cartonboard and paper products, which are mainly produced using renewable raw materials and are fully recycled after use. Despite all efforts to increase recyclability, plastic will never be recycled to the same extent as cartonboard. Therefore, we strive to offer new opportunities for the substitution of plastics and create an attractive potential for MM in the current discussion about packaging materials through increased innovation and sustainable investment activities in the group, striving to offer competitive cartonboard and paper solutions.

However, we are also aware that we cannot achieve systemic change on our own and can only make the value chain even more sustainable in cooperation with our customers and partners. Therefore, we are a member of the United Nations Global Compact and are committed to the Sustainable Development Goals (SDGs) of the United Nations. We also base this report on the standards of the Global Reporting Initiative (GRI Standards Option "Core"). In the reporting year 2021, MM also joined the global initiative "Business Ambition for 1.5°C" in order to contribute to limiting global warming to 1.5 degrees by 2050 through appropriate measures. To this end, we set ourselves ambitious, science-based targets. 

The fact that the MM Group is continuously making progress in economic, ecological, social and societal terms is due to the high sense of responsibility and performance of the entire MM team, for which we would like to thank in particular our employees.

The MM Group is Europe's leading producer of cartonboard and folding cartons with an attractive range of kraft papers and uncoated fine papers. Offering innovative, recyclable packaging and paper products made from renewable, fiberbased raw materials, we are at the forefront of avoiding plastic waste as a sustainability company.

The Group has an integrated structure with two divisions, MM Board & Paper and MM Packaging, which trade with each other at arm's length. Cartonboard is the most important raw material for folding cartons, which are mainly used for packaging everyday consumer goods. Around 12,500 employees in the Group produce approximately 2.0 million tons of cartonboard, 260,000 tons of kraft papers and 390,000 tons of uncoated fine papers per year and process around 850,000 tons of cartonboard and paper. In 2021, the MM Group achieved sales revenues of approximately EUR 3.1 billion, including recent acquisitions. MM has 6 cartonboard and paper mills, 43 packaging sites and one fiber mill in 21 countries and sells its products to around 140 countries worldwide, with Europe as the main market.

The wide range of products and services includes cartonboard grades for a variety of consumer goods industries in the food & specialties and premium sectors. Papers are used for packaging solutions and technical applications as well as for products in the office sector. In line with the product portfolio, around 57 % virgin fibers and 43 % recycled fibers are used as raw materials. In addition to fibers, the most important input factors are energy, which is mainly obtained from natural gas, and coating chemicals for cartonboard surfaces. As already described in the introduction, cartonboard is mainly used in the packaging production. All MM Board & Paper's cartonboard and paper products are produced using renewable fibers and are both recyclable and biodegradable. MM Board & Paper's customers are folding carton producers, consumer goods manufacturers as well as traders.

MM Packaging is one of the leading producers of folding carton packaging in Europe with a leading position also in several non-European countries. The focus is on the production of packaging for everyday consumer goods in the Food & Specialties and Premium segments. While the first segment serves a broad spectrum of food and non-food applications, the premium business comprises highly specialized packaging markets such as pharmaceuticals, beauty & personal care and cigarettes. Recycled and virgin fiber cartonboard is used in roughly equal parts as raw materials. In addition to cartonboard and paper, mainly inks, varnishes and die-cutting tools are significant input factors in the packaging production that is more labor-intensive but energy-extensive compared to cartonboard and paper production. MM Packaging's customers are both multinational and local consumer goods producers.

Responsible recycling management has long been an integral part of our business, as our business is focused on cartonboard and paper products that are predominantly produced using renewable raw materials and are fully recycled after use. Therefore, we strive to offer new possibilities for the substitution of plastics and create an attractive potential in the current discussion on packaging materials by developing innovative and competitive cartonboard and paper solutions.

The basis for the sustainable focus of the MM Group is our strategic positioning as market leader based on cost and innovation leadership as well as the rules of our Code of Conduct, which also include the universal principles of the UN Global Compact in the areas of labor standards, human rights, environmental protection and anti-corruption. Our ongoing objectives and resource allocations in the Group are based on this focus.

Sustainable value added and growth in the core business

Our strategy focuses on the sustainable generation of value added and growth along the supply chain with a focus on the two core business areas MM Board & Paper and MM Packaging. To achieve this, we focus on excellent industrial performance with a claim to cost, innovation and technology leadership and best practice opportunities related to many sustainability topics such as: resource consumption, circular economy, safety and development of our human resources, diversity, respect for human rights as well as the sustainable fight against corruption and bribery. By implementing a Group-wide sustainability management, the aim is to systematically develop MM's attractiveness as a sustainable company and to respond even better to our customers' expectations in this area.

We focus on the development and optimization of recyclable packaging solutions made of cartonboard and paper, as we are convinced that we can meet the expectations of the market in the long term and achieve success with products that are produced sustainably and add value. In doing so, we open up new sales areas and penetrate existing markets with highly competitive and innovative products and processes. We strive for both, organic growth and growth through acquisitions.

 

Non-financial topics and their connection to business development. The strategic examination of non-financial issues in connection with business development enables comprehensive risk and opportunity management. For the MM Group, the areas of "Planet" (environment), "People" (employees) and "Prosperity" (society) are various cost and turnover and sales drivers that have or can have an impact on the company’s current and future business success.

A relevant sales driver is the focus on sustainable packaging solutions, a demand which we aim to meet through the ongoing adjustment of our offer and innovations to changing market and consumer preferences. The human capital of our employees is a key value driver and the motor for ongoing necessary changes and adjustments. The MM Group's multilayered training and development programs as well as employee retention and recruitment measures help to ensure that the Group has a sustainable supply of qualified employees to secure its position, further development and growth.

Costs in connection with non-financial matters arise in particular with regard to personnel, energy requirements, water consumption, and waste generation of the MM Group. Future cost drivers could result primarily from regulatory changes such as an increase in the cost of CO2 certificates as well as changes and tightening of guidelines and requirements, at national or EU level.

Broad social developments, on the other hand, represent potential future opportunities for the MM Group's business model. The progress of digitalization and automation will further increase efficiency in production processes and thus allow for cost savings. Developments in the transport and logistics sector could contribute to fuel or personnel cost savings. The trend towards urbanization and smaller households as well as growing private consumption in emerging countries could contribute to sales increases in the future, e.g. through an increased demand for smaller product units.

As in the previous year, the current business development of the MM Group in 2021 was characterized by a high level of resilience to the Corona pandemic and a high degree of continuity compared to the previous year. In addition, significant acquisition and investment decisions as well as necessary structural adjustment measures were taken. The effects of nonfinancial issues and the correlation of related key performance indicators (KPIs) with the annual financial statements, however, did not show any significant changes or special features, taking into account the structural adjustments. We consider the measures taken within the framework of sustainability management to be effective in terms of minimizing risks and optimizing opportunities in the Group when viewed from an overall perspective of non-financial and financial aspects. 

Achieving the goals of the EU Green Deal, such as climate neutrality in Europe, is only possible if money flows increasingly result in sustainable investments. For this purpose, the EU Commission has elaborated the Taxonomy Regulation, which will make sustainability financially measurable and comparable, leading to increased transparency regarding sustainability activities. In the year 2021, the environmental objectives "climate protection" and "adaptation to climate change" were published. Further environmental targets will follow in 2022, including in connection with the topic of the circular economy. As a listed company, the MM Group is obliged to disclose its activities in accordance with the Taxonomy Regulation.

The MM Group has reviewed the economic activities published by the EU Commission for the environmental goals "climate protection" and "sustainable development". We have also reviewed "adaptation to climate change" with regard to the goal’s relevance for our own economic activities. Due to the dynamic regulatory developments in the area of EU taxonomy, the delegated acts and the relevant annexes
were used for the Group’s reporting. The economic activities described therein are not in line with the substantive activities of the MM Group, as no activities are included that reflect the activities of the paper and board industry as well as the production of fiber-based packaging. Therefore, it is not possible for the MM Group to report taxonomy-compliant activities for the financial year 2021.

The EU Commission has announced the publication of further environmental targets for 2022. These include an environmental target related to the circular economy; the packaging industry and the recyclability of packaging solutions are to receive special attention therein.

In connection with the environmental goal in connection with the circular economy, the MM Group expects the economic activities contained therein to be well applicable to the core business of the company. Internal processes have already been introduced and analyses were carried out in the financial year 2021, which will allow for a taxonomy-compliant presentation as of the financial year 2022. This includes detailed life cycle analyses of products, verification of the recyclability of packaging solutions, as well as the availability, collection and evaluation of relevant data.

This should enable the MM Group to report on taxonomy capability according to the key figures of sales, capex and opex as of the financial year 2022. 

In the reporting year 2021, the Covid-19 pandemic continued to have far-reaching effects on the MM Group's non-financial concerns and business model. The supply chain was kept intact despite continuous challenges. There were no significant immediate changes in environmental issues due to the continued operation of the plants. In addition, the limited travel activities within the Group has resulted in lower emissions. From a social point of view, the systemic relevance of cartonboard and cartonboard packaging for the supply of people with everyday goods continued to present itself as an opportunity.

In contrast, situations of high stockpiling in the supply chain and demand resulted in massive increases in input costs. Changes in working conditions resulted in particular from the maintenance of higher hygiene standards to reduce the risk of infection, the need for greater flexibility and new requirements in connection with remote work. Influences on fundamental rights or changes in susceptibility to corruption and bribery could not be identified in connection with business activities under pandemic conditions.

The objective of our pandemic management concepts is to ensure the safety of employees at all times in the best possible way and to maintain operations. With a view to maintaining the supply chain, broad-based monitoring of goods and logistics flows as well as flexible planning in and between the plants is used in close coordination with business partners. Control measures are cascaded at both the plant and divisional levels. A steering committee set up at the Group level also monitors ongoing developments and makes decisions on overarching guidelines and measures in the Group as well as on provisions at the Group’s headquarters. Hygiene management is the responsibility of the individual subsidiaries; there are general minimum standards, however. 

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