Grigeo

Environmental & Social Information • Jun 21, 2023

SUSTAINABILITY REPORT 2022 – GRIGEO GROUP

THE FUTURE IS CIRCULAR

PRESENTATION May 2023

CEO MESSAGE

Tomas Jozonis CEO of Grigeo AB

We have been dealing with unprecedented multifaceted challenges for several years now. The global pandemic of 2020 was overshadowed by the leaps in raw materials, energy, and logistics prices the year after, and last year everything was dwarfed by the war in Ukraine, which brought the prices of the resources to new heights just as it made its own adjustments to the supply chains and the market situation. And so, against all odds, placed against this background of geopolitical tensions, unprecedented inflation, and increasingly stronger signals of recession, we and our team had to remain quick and maintain our precision and focus on creating long-term value for our employees, partners, and investors.

Prior to this reporting period, we had made a commitment to our stakeholders to set a number of ambitious sustainability targets for ourselves. We did this in the area of environmental protection, social responsibility, and governance, and we followed the best international practices in doing so. Furthermore, we have clearly defined our contribution to achieving the United Nations goals of sustainable development. We are committed to showcase these indicators and the process of compliance thereto in our annual sustainability reports.

Dear members of the society, "

Environmental aspects cover a significant portion of our sustainability targets. Our industrial operations require substantial energy resources, which makes environmental indicators relevant both to ourselves and to our stakeholders. We have set ourselves ambitious goals to reduce our CO2 emissions, improve energy efficiency, reduce waste disposal by way of landfill and the amount of waste water generated by our manufacturing process, among other things.

In the area of social responsibility, we still prioritise the health and safety, personal satisfaction with work, and engagement of our employees. We have also set ourselves a goal to minimise the number of on-job incidents as well as employee turnover indicators. When it comes to governance, we have identified 10 internal policies that we agreed to update or create to achieve a synergy between the Group's strategy, sustainability requirements, and best international practices.

Next year, we will continue to consistently improve the financial, environmental, social, and governance sustainability of the Group and pursue our mission of building a circular future.

"

OUR ACTIVITIES

GROUP BUSINESS SEGMENTS

MENA

Grigeo Group is the only group in Lithuania and one of the largest paper and wood industry groups in the Baltics.

Grigeo AB TISSUE PAPER AND PAPER PRODUCTS

WOOD FIBREBOARDS

RAW MATERIAL FOR CORRUGATED BOARD AND RELATED PRODUCTS

Grigeo Baltwood UAB

Grigeo Klaipėda AB Grigeo Packaging UAB Grigeo Recycling UAB Grigeo Recycling SIA Mena Pak AT

The Group was awarded the NASDAQ Environmental, Social, and Governance (ESG) Transparency Partner Label in 2022, demonstrating the Group's commitment to market transparency and promoting ESG standards directly to investors and the general public.

SUSTAINABILITY RATINGS

MEMBERSHIP

OUR PRODUCTS

*Based on a recent independent study conducted by Graz University of Technology (Austria) in 2021

Our products are made from 98% renewable raw materials

Corrugated fibre-based packaging material can be recycled up to *

Recycled paper comprises 76%

of raw materials used for production of new corrugated boxes

ISO 14001 ENVIRONMENTAL MANAGEMENT SYSTEM

ISO 45001 OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT STANDARD

ISO 9001 QUALITY MANAGEMENT SYSTEM

AND PACKAGING

Good manufacturing practice (GMP) Management requirements

• collection of secondary raw - recycled paper as a raw material (testliner | fluting)

• corrugated cardboard packaging - honeycomb filling

CREATING A CIRCULAR FUTURE: BUSINESS STRATEGY AND MISSION

Dear members of the society,

We have been dealing with unprecedented multifaceted challenges for several years now. The global

pandemic of 2020 was overshadowed by the leaps in raw materials, energy, and logistics prices the year after,

and last year everything was dwarfed by the war in Ukraine, which brought the prices of the resources to new

heights just as it made its own adjustments to the supply chains and the market situation. And so, against all

odds, placed against this background of geopolitical tensions, unprecedented inflation, and increasingly

stronger signals of recession, we and our team had to remain quick and maintain our precision and focus on

creating long-term value for our employees, partners, and investors.

Prior to this reporting period, we had made a commitment to our stakeholders to set a number of ambitious

sustainability targets for ourselves. We did this in the area of environmental protection, social responsibility,

and governance, and we followed the best international practices in doing so. Furthermore, we have clearly

defined our contribution to achieving the United Nations goals of sustainable development. We are committed

to showcase these indicators and the process of compliance thereto in our annual sustainability reports.

Environmental aspects cover a significant portion of our sustainability targets. Our industrial operations

require substantial energy resources, which makes environmental indicators relevant both to ourselves and to

our stakeholders. We have set ourselves ambitious goals to reduce our CO2 emissions, improve energy

efficiency, reduce waste disposal by way of landfill and the amount of waste water generated by our

manufacturing process, among other things.

In the area of social responsibility, we still prioritise the health and safety, personal satisfaction with work,

and engagement of our employees. We have also set ourselves a goal to minimise the number of on-job

incidents as well as employee turnover indicators. When it comes to governance, we have identified 10

internal policies that we agreed to update or create to achieve a synergy between the Group's strategy,

sustainability requirements, and best international practices.

Next year, we will continue to consistently improve the financial, environmental, social, and governance

sustainability of the Group and pursue our mission of building a circular future.

MISSION AND VALUES

MISSION STRATEGIC DIRECTIONS FOR 2026 VALUES

Creating innovative, environmentally friendly products and solutions together

Operating ambitiously and transparently in the market, ensuring competitive returns

FOR CO-DEVELOPERS:

Involving the participants of the wood and paper ecosystem into the development of

Active participating in waste collection and recycling

Implementing a meaningful business, based on trust, ownership and

3600 RESPONSIBLE

AGILE

PROFESSIONAL

TEAMWORK

SUSTAINABILITY: DIRECTIONS AND COMMITMENTS

COMMITMENT DIRECTION

SOCIAL

Reliable supplier and partner

ENVIRONMENTAL SOCIAL	Environmental	Reducing our GHG emission intensity Improving nature- and people-friendly product properties Improving energy mix Investing in energy efficiency Promoting responsible collection of waste paper Reducing chemical compound intensity Wastewater quality management Reducing disposable waste
	Reliable supplier and partner	Responsible supply chain management Reducing virgin plastic packaging consumption
GOVERNANCE	Meaningful activities based on trust and cooperation	Accident-free workplace Training and development Consistent feedback seeking Dialogue with local communities Promoting healthier lifestyle
	Ambition and transparency in the market, ensuring competitive returns	Zero tolerance to compliance breaches Increased transparency: sustainability reporting Strong and widely accepted policies
	Reliable supplier and partner	Supply chain transparency

SUSTAINABILITY TARGETS

THE GROUP HAS COMMITTED TO PURSUE THE FOLLOWING TARGETS:

MENTAL TARGETS N VIRO EN	Reducing GHG intensity (Scope 1) Increasing energy efficiency Reducing waste that is diverted to disposal Effluent reduction Compliance with integrated pollution prevention and control requirements (IPPC) Increasing waste paper collection and sorting	kgCO /ton of production 2 MWh/ton of production kg/ton of production m3 /ton of production Number of non-compliances Thousands of tons
AL TARGETS SOCI	Reducing accidents at work Employee turnover Employee retention rate	TRI ratio (number of accidents among employees per one million hours worked) Ratio of retired employees to the average number of employees Ratio of workers employed for more than one year to total workers
ANCE TARGETS VERN O G	We have identified 10 internal policies that we will update or create to improve alignment with the Group's strategy, sustainability requirements and modern practices	The update of policies by the end of 2023

TARGETS	UNIT OF MEASUREMENT	RESULT IN 2021	INTERIM RESULT IN 2022	CHANGE	TARGET FOR 2026
Reducing GHG intensity (Scope 1)	kgCO /ton of production 2	114.1	101.5	-11.0 %*	-5.0 %
Increasing energy efficiency	MWh/ton of production	2.56	2.54	-0.8 %	-3.0 %
Reducing waste that is diverted to disposal	kg/ton of production	53.0	50.8	-4.1 %	-9.0 %
Effluent reduction	m3 /ton of production	7.1	6.8	-4 %	-17.0 %
Compliance with integrated pollution prevention and control requirements (IPPC)	Number of non-compliances	none	none	none	none
Increasing waste paper collection and sorting	Thousands of tons	53.0	60.0	+13.0 %	+50.0 %
Reducing accidents at work	TRI ratio (number of accidents among employees per one million hours worked)	17.1	11.4	-5.7	8.0
Employee turnover	Ratio of retired employees to the average number of employees	30.8 %	23.8 %	-7.0 pp	22.0 %
Employee retention rate	Ratio of workers employed for more than one year to total workers	85.7 %	87.0 %	+1.3 pp	91.0 %
We have identified 10 internal policies that we will update or create to improve alignment with the Group's strategy, sustainability requirements and modern practices	The update of policies by the end of 2023	-	5	+5	10

* To reduce Scope 1 emissions, the Group is constantly investing in new facilities. However, the main factor leading to the reduction of Scope 1 emissions in 2022 was lower consumption of natural gas, when production processes had to be temporarily stopped due to the energy crisis, thus biofuel boilers were used more intensively. This indicator should be evaluated in the context of longer term of Group's activities.

ASSESSMENT OF KEY SUSTAINABILITY TOPICS

We analyzed the Grigeo Group's Strategic Materiality Assessment in 2022, which examined the most significant environmental, social, economic, and governance topics and impacts that were pertinent to our business and stakeholders.

The important subjects are linked to the Group's strategic objectives as well as the UN Sustainable Development Goals (SDGs).

SIGNIFICANCE FOR GRIGEO GROUP

Human resource development

Occupational safety and health Human rights Water management Circular economy GHG emissions Shareholder return

Renewable energy Quality control of raw material

LINKING SIGNIFICANT TOPICS TO SDGs

	RENEWABLE ENERGY	WATER MANAGEMENT	CIRCULAR ECONOMY	GHG EMISSIONS	WASTE MANAGEMENT	OCCUPATIONAL SAFETY AND HEALTH	HUMAN RIGHTS	EMPLOYEE WELL-BEING	FAIR COMPETITION	BIODIVERSITY	QUALITY CONTROL OF RAW MATERIAL	RETURN TO SHAREHOLDERS
GOOD HEALTH A ND WELL-BEING
GENDER EQUALITY
DECENT WORK AND ECONOMIC GROWTH
INDUSTRY, INNOVATION AND INFRASTRUCTURE
RESPONSIBLE CONSUMPTION AND PRODUCTION
CLIMATE ACTION
LIFE BELOW WATER
LIFE ON LAND

Governance

Economic topic

RELATION OF ACTIONS AND COMMITMENTS TO SDGS

GOOD HEALTH AND WELL-BEING

GENDER EQUALITY

INDUSTRY,

INNOVATION AND INFRASTRUCTURE

• Occupational safety and health (OSH) initiatives.
• Regular health checks.
• Health promotion.
• Improving the TRI indicator.
• Ensuring that all employees and applicants for management positions have equal opportunities.

• Track and disclose the percentage of women in management positions.

• Increasing the share of biofuels in the energy mix (Scope 1).

• Increase the share of renewable packaging.
• Increasing the collection of wastepaper.
• Occupational safety and health (OSH) initiatives.
• Improvement of the TRI indicator (reduction of accidents at work).
• Wastewater evaporator (Grigeo Baltwood UAB).
• Anaerobic bioreactor (Grigeo Klaipėda AB).
  -
• Reduction waste that is diverted to disposal.
• Increasing waste paper collection.
• Effluent reduction.
• Compliance with water cumulative pollution indicators
• Reduction of GHG emission intensity (Scope 1).
• Increasing the share of biofuels in the energy mix (Scope 1).
• Wastewater evaporator (Grigeo Baltwood UAB).
• Anaerobic bioreactor (Grigeo Klaipėda AB).

• No direct discharge of wastewater into water bodies.

• Control of raw materials to ensure that raw materials and biofuels are sourced from sustainably managed forests.

• Traceability of the supply chain.
• Improving energy efficiency.

OVERVIEW OF 2022: KEY IMPACTS OF SUSTAINABILITY AND ACHIEVEMENTS

THE FUTURE IS CIRCULAR: KEY NUMBERS IN 2022

TISSUE PAPER COLLECTING, SORTING AND RECYCLING OF WASTE PAPER CONTAINERBOARD

• 32% of the paper produced by Grigeo Klaipeda AB is further converted into corrugated cardboard in our packaging factories.

• 100% of our packaging is custom-made .

• Recycling of white waste paper.

• 24,599 tonnes recycled into hygienic tissue paper.
• 131,557 tonnes collected.
• 81% total waste paper to cardboard paper production.
• 99% of reclaimed all materials
• 106,958 tonnes of waste paper recycled into containerboard.

BROWN WASTE PAPER

100% RECYCLED PAPER

THIRD-PARTY PAPER

MANUFACTURERS AND RETAILERS

BIODEGRADABLE WASTE PAPER

WATER TREATMENT

PLANTS

Shop

KEY NUMBERS IN 2022

Paid taxes

Consolidated revenue

Consolidated EBITDA

Consolidated net profit

Employee remuneration fund

63.5

EUR 203.2 m

EUR 21.4 m

EUR 10.6 m

66.5

Received subsidies under programs for companies in sectors particularly affected by energy prices:

Share of purchases from

local suppliers (%)

Export share of total production (%)

IMPACT

RESOURCES

INVESTMENTS IN SUSTAINABILITY PROCESSES IN 2022

INDUSTRIAL TISSUE (SHEET) CONVERTING LINE (NEW BUSINESS SEGMENT PRODUCT).

INTERNAL LOGISTICS SYSTEM

INVESTMENT	IMPACT
INDUSTRIAL TISSUE (SHEET) CONVERTING LINE (NEW BUSINESS SEGMENT PRODUCT). The value of the project is EUR 3.8 m	The automatic line replaced the former semi-automatic production line. Waste paper and cellulose processing capacity increased by 4,200 t per year. Operating at full load avoids at least 182 t of CO equivalent emissions 2 from transport.
	The concentration of dust in the air has decreased.
CENTRALIZED WASTE COLLECTION SYSTEM	Works automatically, thus reducing the amount of unnecessary or suboptimal operations. Eliminated the need to transport scraps.
The value of the project is EUR 0.7 m	The scraps are automatically pressed. It improved work safety and saved additional space in the workplace.
	The fully automated system has replaced liquefied petroleum gas (LPG) powered forklifts.
INTERNAL LOGISTICS SYSTEM	100% increase in lifting capacity has halved transport distances.
The value of the project is EUR 0.85 m	100% electric system will significantly reduce CO emissions. 2
EVAPORATOR OF WASTEWATER	Up to 2% of organic material is returned to the production cycle.
The value of the project is EUR 2 m	Wastewater treatment efficiency >95%.

The value of the project is EUR 3.8 m

The value of the project is EUR 0.7 m

The value of the project is EUR 2 m

INVESTMENTS IN SUSTAINABILITY PROCESSES IN 2023

INVESTMENT IMPACT

Klaipėda ANAEROBIC BIOREACTOR

3 MWH ROOFTOP SOLAR POWER STATION

CO2 emissions are expected to be reduced by 24 tons per year.

The aim is to reduce technical heat losses by 50%.

Annual electricity generation is expected to reach 2,900 MWh.

CONDENSING ECONOMISER The value of the project is EUR 2 m

About 2% of the Group's electricity needs would be in-house generated.

COD/BOD7 reduction at waste water approximately 80%.

Biogas from the anaerobic processes will be used for energy by reducing natural gas at boiler house up to 8%.

Odor control.

The value of the project is EUR 2.1 m

The value of the project is EUR 2.65 m

TO REDUCE THE SATURATION OF ORGANIC MATTER IN THE WASTEWATER GENERATED IN FIBREBOARD PRODUCTION PROCESS.

GRIGEO BALTWOOD UAB EVAPORATOR OF WASTEWATER

FIRST RESULTS

GOAL

CIRCULATING

Water usage reduced by 50 %

The concentration of organic materials allows us to return them to fibreboard production process.

The efficiency of this wastewater treatment is higher than 95 %

BEFORE TREATMENT

AFTER TREATMENT WITH CONCENTRATED ORGANIC MATTER, RETURNING TO THE PRODUCTION PROCESS

CHALLENGE

It is estimated that up to 3% of fiber material processed by Grigeo Baltwood UAB end up in wastewater. This is due to the production technology where the finer fibers are washed out together with the effluent. These micron-sized fibers join with resin from softwood used in the production, become sticky and therefore cannot be effectively filtered. High temperature of the waste water further complicates the cleaning process.

SOLUTION - EVAPORATOR OF WASTEWATER

~ 80% reduction of BOD7 / COD wastewater pollution.

ANAEROBIC BIOREACTOR GRIGEO KLAIPĖDA AB

The use of biogas in the production process will reduce the use of natural gas by up to 8%. Accordingly, it would affect the reduction of CO2 emissions in scope 1.

EXPECTED IMPACT

More effective management of the dispersion of the resulting odors.

ANAEROBIC BIOREACTOR IS ONE OF THE MOST INNOVATIVE INDUSTRIAL WASTEWATER TREATMENT TECHNOLOGIES WHICH IS WIDELY USED IN THE PAPER INDUSTRY

Grigeo Klaipėda AB boiler room

CUTTING OF REEDS IS AN EFFICIENT WAY OF REMOVING BIOGENIC POLLUTANTS (MOSTLY NITROGEN AND PHOSPHORUS) FROM BODIES OF WATER.

Cutting and removal of reed biomass would result in the restoration of the specific to the Curonian lagoon sandy coasts as well as habitats for rare animal and plant species, and the reduction of organic matter accumulating in the Curonian lagoon, which altogether would alleviate negative effects of eutrophication. Having restored open bays and having formed branches, the processes of waterlogging of the coasts of the Curonian lagoon would be eliminated, as well as recreational space and views to the Curonian lagoon would open, which would increase the biodiversity and recreational potential of the region.

THE EFFECT OF CUTTING OF REEDS ON THE ENVIRONMENT

Removal of cyanobacteria from the Curonian lagoon In 2022, a trilateral cooperation agreement was

concluded between Klaipėda City Municipality, Klaipėdos vanduo AB and Grigeo Klaipėda AB, in which the parties agreed to prepare and implement the construction and operation program of Klaipėdos vanduo AB surface wastewater treatment facilities.

This measure would reduce the entry of oil products, floating substances, and organic matter into the Klaipėda Strait. This would have a positive impact on reducing the eutrophication of the Curonian Lagoon.

The approximate value of the project is EUR 2m., which will be financed free of charge by Grigeo Klaipėda AB.

GRIGEO KLAIPĖDA AB SOLUTIONS TO RESTORE THE ENVIRONMENT*

Creation of wetlands in the Minija basin area

MODERNIZATION OF SURFACE WASTEWATER TREATMENT FACILITIES (PREVENTIVE MEASURE)

OTHER AREAS OF OUR RESEARCH

Growth of Dreissenidae (mollusks)

Grigeo Klaipėda AB plans and projects of ecological restoration designed to achieve a sustainable change due to the environmental incident in 2020, when it was concluded that Grigeo Klaipėda AB released only partially biologically treated wastewater through the treated wastewater collector of municipal company Klaipėdos vanduo AB. *

Grigeo Klaipėda AB industrial wastewaters contained such pollutants (which could have affected the Curonian lagoon) as nitrogen, phosphorus, and BOD7 (biological oxygen demand). In 2021, Grigeo Klaipėda AB with the help of Lithuanian and foreign scientists as well as environmental experts assessed various feasible alternatives for the removal of pollutants from the natural environment and/or environmental restoration to improve the quality of water in the Curonian lagoon.

Grigeo Klaipėda AB assumed responsibility for this incident, conducted internal inspections and commissioned international scientific expertise to establish the fact and the scale of possible environmental damage.

AROUND 5 THOUSAND HA REED BEDS STRETCH ALONG THE CURONIAN LAGOON AND ITS COASTS. THEY UNRESTRICTEDLY SPREAD DUE TO AGRICULTURAL POLLUTION AS WELL AS DOMESTIC AND INDUSTRIAL WASTEWATER*.

Intensive growth of reed beds and their spread is a consequence of the excess of pollutants (mostly phosphorus and nitrogen) in the water. Conducted research concludes that 1 sq. m. of reeds accumulate 7.2 g of phosphorus and 87.3 g of nitrogen of during the season.

Grigeo Klaipėda AB, removing reeds on their own initiative and at their own expense, seeks to remove pollutants from the Curonian lagoon and implement environmental restoration measures. The measure used to remove reed biomass has been initiated and presented to the Environmental Protection Department based on the EU regulations in the sphere of environmental protection.

CUTTING OF REEDS: PILOT PROJECT *

* Overview of the status of the Curonian lagoon (in Lithuanian). www.grigeoklaipeda.lt/poveikis-aplinkai/kursiu-mariu-tarsos-incidentas/ ** The absolute dry weight of reed biomass is given.

JUODKRANTĖ

NIDA

IN 2021, 15,5 T OF REEDS WERE HARVESTED**

0.07 t of nitrogen

11.63 t of BOD7 matter

0.02 t of phosphorus

Amounts of pollutants were removed from the Curonian Lagoon (results based on the laboratory):

IN 2022, 165,4 T OF REEDS WERE HARVESTED**

0.4 t of nitrogen

148.11 t of BOD7 matter

0.05 t of phosphorus

Amounts of pollutants were removed from the Curonian Lagoon (results based on the laboratory):

Pilot project period: 22.11.2021 – 26.11.2021.

Pilot project period: 24.03.2022 – 14.04.2022.

FOR ROOFING New product is being developed, whose longevity is approx. 50 years

THE RESULTS OF CUTTING OF REEDS PILOT MEASURE *

FOR BIOFUEL Helps reduce the demand for fossil fuels, biogenic CO2 is released

THE HARVESTED REEDS ARE USED IN SUSTAINABLE WAYS, IN SUCH ORDER OF PRIORITY:

FOR COMPOST As green waste returned to the environment

IN 2021-2022, GRIGEO KLAIPĖDA AB IMPLEMENTED TWO PILOT PROJECTS FOCUSED ON CUTTING OF REEDS. THE RESULTS OF THESE PROJECTS WERE VERIFIED BY LABORATORY TESTS:

INVESTMENTS IN ENVIRONMENTAL PROTECTION RESEARCH

The creation and implementation of monitoring system of air pollution (industrial and from transportation, as well as volatile organic compounds) in the city of Klaipėda.

The application of advanced treatment technologies for the containment and disposal of hazardous organic micro-pollutants in urban wastewater treatment plants.

The provision of support for bachelor's and master's study projects in the preparation of graduation papers.

IN JUNE 2020, GRIGEO KLAIPĖDA AB SIGNED A SUPPORT AGREEMENT WITH THE KLAIPĖDA UNIVERSITY REGARDING THE PROVISION OF TARGETED SUPPORT OF EUR 500 THOUSAND FOR THE DEVELOPMENT OF ENVIRONMENTAL POLLUTION REDUCTION SOLUTIONS IN THE KLAIPĖDA REGION AND TRAINING OF ENVIRONMENTAL SPECIALISTS.

• Conducted a scientific literature review on the possibilities of utilization of neural networks for assessment of ship emissions
• Based on the conducted analysis, the article on possible assessment methods of ship emissions with the help of direct measurement instruments and using mathematical models was published
• Based on the analysis, the artificial neural network modelling software license was selected and purchased.
• AIS (Automatic identification system) of data processing algorithm was created
• Using the methods of neural networks, the first prototype of a forecasting model for ship emissions in Klaipėda port was created

II PROGRAM

III PROGRAM

• The program is in progress and its results will be announced in forthcoming reports.

3 environmental protection programs

Long-term solutions

2022 RESULTS

I PROGRAM

5 years EUR 500 thousand

• The program is in progress and its results will be announced in forthcoming reports.

PROTECTION OF THE ENVIRONMENT

ENERGY

PAPER PRODUCTION IS A RESOURCE AND ENERGY IMPACTIVE INDUSTRY.

The economic and environmental performance of our production facilities is largely determined by their energy efficiency. Energy efficiency investments will continue to be a strategic priority of our investments.

Our consumption of electricity amounted to 117GWh in 2022. It is the second-largest source of energy used in our manufacturing. 1% of Lithuania's total electricity was used by the Group.

In 2022, the Group decided to invest in renewable energy generation capacity rather than green certificates, the price of which had skyrocketed on the market. More than 3 MWh solar power facility in Grigiškės is scheduled to begin operations in 2024.

USE OF RENEWABLE ENERGY

78% certified renewable energy in the Group biofuel and electricity

Reduction in energy consumption per produced tonne (from 2 556 KWh to 2 536 KWh) - 0,8%

CLIMATE CHANGE: OUR IMPACT

The GHG emissions from the Group's and Group companies' activities are calculated in compliance with the GHG Protocol standard. A Corporative Accounting and Reporting Standard.

We have committed to reduce our GHG (kgCO2 e emissions) intensity by 5% per tonne of production in Scope 1 by 2026

STRATEGIC DIRECTIONS:

Increasing the share of biofuels in the energy mix

Group investments in new installations

In 2021, almost all of our Group's electricity consumption was generated from renewable sources (virtually no GHG emissions).

Scope 2 emissions in 2022 increased by 94% compared to 2021.

In 2022, the Group decided to invest in renewable energy generation capacity, abandoning green certificates, whose price, on the purchase market, had risen drastically.

CLIMATE CHANGE: GHG EMISSION CATEGORIES

SCOPE 3 EMISSIONS

accounted for 70% of total emissions in 2022 (73% in 2021).

Transport (sale of products, purchase of raw materials, as well as transport of intermediate products and raw materials between Group companies) accounts for a significant share of emissions (16% in 2022 and 18% in 2021).

AVERAGE GHG EMISSIONS KG CO2 e TONS OF PRODUCT (Scope 1 and 2)

Tissue paper Fibreboard Containerboard and packaging

Transportation of raw materials

Purchased raw materials

SCOPE 2 EMISSIONS

CLIMATE CHANGE RISKS AND POTENTIAL IMPACTS

We used the TCFD (Task Force on Climate – Related Financial Disclosures) reporting principles to analyse the potential impacts of climate change on the Group's activities.

	SHORT- AND LONG-TERM IMPACTS OF CLIMATE CHANGE	ILLUSTRATIVE IMPACT ON THE VALUE CHAIN	GUIDELINES FOR OUR ACTIVITIES
Y T KE G O TS R OL A F M HI N D H S C N TE A	• Policies and investments to build a low-carbon economy.	• Increased demand for energy-efficient and low-carbon products. • New technologies that are transforming traditional industries.	• Shifting to renewable energy to eliminate scope 2 GHG emissions. • Increasing energy consumption efficiency. • Refurbishing of machinery. • Diligent monitoring of performance.
N O ATI T U P RE	• Increasing awareness of climate change. • Rising expectations for responsible manufacturing. • Public attention to deforestation. • Concerns about manufactoring waste. • Concerns about water consumption.	• Growing concern and public pressure. • Opportunity to improve reputation and brand value. • Opportunity for consistent communication with stakeholders.	• Improving transparency. • Assessing and measuring our impact. • Updating our procurement policy. • Active engagement with stakeholders. • Regular reporting. • Increased contribution to other environmental objectives, e.g. circular economy.
D N AL A Y G C LE OLI P	• Increasing requirements. • Regulatory changes at national and EU level.	• Stricter permitting procedures. • Increased operating costs. • Rising taxes. • Concerns about corporate liability.	• Monitoring and anticipating changes in legislation directly affecting our operations. • Tracking regulatory changes through the supply chain.
KS S AL RI C YSI H P	• Increased intensity and duration of extreme weather events such as heat waves, storms and floods. • Increased evaporation of surface water. • Increased mineral content of surface water. • Rising sea levels. • Rising air temperatures. • Increase in the risk of fires. • Changes in the seasons.	• Increased supply chain disruptions. • Production disruptions. • Impaired reliability of material supply. • Unpredictable asset values and insurance claims. • Increased cost of capital. • Volatility of share price. • Increase in CAPEX	• Intensive monitoring. • Climate Change Adaptation Plans. • Continuous engagement with suppliers. • Improving climate change scenario analysis. • Regular review of climate change scenarios.

RAW MATERIALS

98% OF OUR RAW MATERIALS ARE RENEWABLE

CONSUMED RAW MATERIALS

• 43%
• Wood Non-renewable materials
• Renewable packaging
• Waste paper
• Cellulose
• Other renewable materials

97% 99% 99% TISSUE PAPER FIBREBOARD CONTAINERBOARD

AND PACKAGING

WE STRIVE TO ENSURE SUSTAINABLE AND RESPONSIBLE SOURCING OF RAW MATERIALS AND SUPPLIES.

All fibre (cellulose, wood) produced and purchased is FSC® Chain of Custody certified.

Responsible sourcing is also ensured by the Group's Procurement Policy, which sets out key principles and guidelines for procurement.

The policy is available on the Grigeo Group website

www.grigeo.lt/en/policies

RATIONAL USE OF WATER AND WASTEWATER QUALITY – OUR PRIORITY

The composition of water discharged from our facilities is mostly influenced by the materials used in our manufacturing process. Water is used at virtually every stage of paper (hygienic, containerboard, and fiberboard) production.

The quality of waste streams from paper, containerboard, or hardboard manufacturing is typically measured as Biological Oxygen Demand (BOD), the amount of phosphorus and solid

particles.

As per our agreements with third-party water treatment providers, we monitor wastewater pollution regularly.

131 thousand tonnes waste paper was recycled.

OUR WATER-RELATED DATA ARE ACCESSED HERE:

GRIGEO AB monitoring platform GRIGEO KLAIPĖDA AB monitoring platform >

During the treatment, various particles (adhesive labels, plastic, polysterene, etc.) are removed, which become waste and affect wastewater.

PROGRESS

WE ARE CONTINUOUSLY IMPROVING THE RECYCLING CYCLE DURING PRODUCTION TO REUSE WATER. THE FREQUENCY OF REUSE VARIES DEPENDING ON PRODUCT SPECIFICATIONS.

WASTEWATER TONS OF PRODUCT PRODUCED, m3

In 2022,

• 17% We have committed to reduce wastewater m3 per tonne of production by 2026

Wastewater per m3 tonne of production decreases by 4% in 2022 (compared to 2021) -4%

the amount collected -

of the water used for production processes.

0,5%

In 2022, Grigeo AB implemented a project to collect rainwater from the roofs of buildings.

management.

Improved operation of Grigeo Klaipėda's AB wastepaper handling facilities and raw material control process.

Waste from the thermal processes of Grigeo Klaipėda AB – the ash from the biofuel boiler house, is not sent to landfill, but composted by the waste manager and used to produce another product (organic fertiliser and compost).

Grigeo AB has a centralised waste collection system.

• 2,2% The amount of waste diverted to disposal per tonne of production has been reduced from 53.0 kg/t in 2021 to 50.8 kg/t

INCINERATION WITH We strive to continuously improve our waste paper handling facilities and quality control processes for the raw ENERGY RECOVERY materials we collect. It is important for us to contribute to public education on waste sorting. The high quality of the raw materials ensures that what we collect for recycling is actually recyclable.

EMPLOYEES AND SOCIAL RESPONSIBILITY

OCCUPATIONAL SAFETY AND HEALTH (OSH)

Our employees are encouraged to report potentially dangerous breaches or risks in the internal E-REGISTER, which allows consolidating a zero-tolerance policy to breaches of occupational safety.

In the Group of the companies, OSH committees are established, consisting of employer and employee representatives.

The Group takes care of the health of its employees by providing ADDITIONAL HEALTH INSURANCE.

Our occupational health and safety management processes ensure:

ISO 45001 OCCUPATIONAL HEALTH AND SAFETY management standard

WITHIN THE GROUP

2022 2021

In Group companies in 2022 there has not been a single recorded case of serious injury, either among our employees or outsourced contractors.

Total Recordable Incident Rate (TRIR). Total number of accidents per 1 000,000 hours worked. Until 2026 we are committed to reducing the number of accidents at work.

PROGRESS

Compared to 2021 TRIR indicator -5,7%

ENSURING A SAFE WORKING ENVIRONMENT - The Group's strategic priority. We constantly improve occupational safety areas and processes, and invest in ensuring and preventing OSH.

DIALOGUE AND FEEDBACK

SHARE OF EMPLOYEES RECEIVING ANNUAL PERFORMANCE REVIEW

The form of providing feedback is a DISCUSSION OF PERFORMANCE RESULTS, which aims to review the performance results of employees, career prospects and development expectations, strengthening the motivation of employees to actively pursue new goals, thereby contributing to the Group's good performance.

In the Group, feedback interviews are held with employees at all levels and are always based on gender equality and other non-discrimination grounds.

Men Women

EMPLOYEE ENGAGEMENT

RESULTS OF THE ANNUAL SURVEY

Our long-term success is determined by engaged and motivated people with whom we seek to grow together.

The Group places great emphasis on employee experience management. We conduct an annual survey to determine the current level of employee engagement. The results of the engagement survey are presented and discussed with the employees.

It helps Group's companies to strengthen organizational culture, positive employee experience, physical work environment and technology.

Compared to 2021 increased rate of engaged employees +3%

EMPLOYEE RETENTION AND TURNOVER

EMPLOYEE TURNOVER AND RETENTION RATES

Until 2026 we are committed to reducing employee turnover*

and increase employee retention**

* The ratio of employees with whom the employment relationship was terminated to the average number of employees ** Ratio of employees working for more than one year to all employees

The Group pays special attention to employee retention and talent attraction.

Employee turnover

Employee retention

Competitive salary Interesting and meaningful work Competence development Involvement in ongoing projects Evaluation of employees for achieved results

PROGRESS

INVESTMENTS IN GROWTH

Work in paper industry means running powerful, complex, and oftentimes potentially dangerous equipment.

Only highly qualified professionals can control and manage such machinery.

Our professional training programs are designed to maximize the potential of all employees and provide them with growth opportunities.

PREPARATION OF UNIQUE INDUSTRY PROFESSIONALS

67 hours

Formal training per employee, including in-house training

52 thousand hours of formal training in 2022.

Eur101 thousand Training budget, 2022

Training programs for production workers

Professional growth programs for specialists

Need-based professional improvement training for management

132 Eur Formal training fund per employee

PAYROLL SYSTEM

PRINCIPLES OF PAYROLL SYSTEM

The Group strives to constantly motivate its employess and provide the opportunity to use additional benefits.

POSITIONS IN GROUP COMPANIES ARE DIVIDED INTO THREE MAIN GROUPS OF POSITIONS:

Additional monetary incentive systems are applied to all groups of positions or certain individual positions.

Women Men

EUR 23.4 m.

General Group remuneration

KEY PRINCIPLES

THE GENDER PAY GAP RATIO

KEY REMUNERATION NUMBERS

6 % Annual Remuneration Fund Growth

8.6

The ratio of the annual remuneration of the president of Grigeo AB compared to the median remuneration of all employees

GENDER EQUALITY

FAIR AND EQUITABLE COMPENSATION

TRANSPARENCY

MERIT – BASED BONUS SYSTEM

SKILLS DEVELOPMENT AND CAREER OPPORTUNITIES

SUPPORT TO COMMUNITIES

We seek to find the best ways to foster open dialogue with employees, neighbor communities, and other interested parties.

FOSTERING DIALOGUE WITH LOCAL COMMUNITIES

One of our most important commitments for society –

EUR196 thousand Support of environmental and social projects and initiatives of external organizations for implementation.

EUR 95 thousand

Support for Ukraine

GRIGEO GROUP SUPPORT IN 2022

EUR 291 thousand

Group's companies provide financial support for the implementation of environmental and social projects and initiatives of various external organizations. Since the beginning of the war in Ukraine, the Group has been supporting Ukraine by providing humanitarian and financial support to charity and support organizations. In 2022 the implementation of the support agreement between Grigeo Klaipėda AB and Klaipėda University was continued in order to create solutions for reducing environmental pollution in the Klaipėda region.

WE OPERATE ETHICALLY AND RESPONSIBLY: PRINCIPLES OF GOVERNANCE

TRANSPARENCY, FAIRNESS AND ANTI-CORRUPTION

RESPECT FOR HUMAN RIGHTS AND FREEDOMS

OUR FULL REPORT CAN BE ACCESSED HERE: