Neste Oyj — Governance Information 2019

Mar 5, 2019

Neste Corporate Governance Statement 2018

Corporate Governance Statement 2018

Corporate Governance Statement 2018

This Corporate Governance Statement has been prepared pursuant to the 2015 Corporate Governance Code, Chapter 7, Section 7 of the Securities Markets Act, as well as Section 7 of the Ministry of Finance's Decree on the Regular Duty of Disclosure of an Issuer of a Security. The Corporate Governance Statement is issued separately from the Review by the Board of Directors and it can be found at .

Regulatory framework

Neste Corporation ("Neste" or the "Company") observes good corporate governance practices in accordance with the laws and regulations applicable to Finnish listed companies, the Company's own Articles of Association, and the Finnish 2015 Corporate Governance Code. The Corporate Governance Code can be found at cgfinland.fi/ en/. Neste also complies with the rules of Nasdaq Helsinki Ltd, where it is listed, and the rules and regulations of the Finnish Financial Supervisory Authority.

Neste's Audit Committee has reviewed the Corporate Governance Statement, and the Company's Auditors, PricewaterhouseCoopers Oy, has monitored that it has been issued and that the description of the main features of the internal control and risk management related to the financial reporting process included in the statement matches the Financial Statements.

Neste issues Consolidated Financial Statements and interim reports in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, the Securities Market Act, as well as the appropriate Financial Supervisory Authority standards, and Nasdaq Helsinki Ltd.'s rules. The Review by the Board of Directors and the Parent Company's Financial Statements are prepared in accordance with the Finnish Accounting Act and the opinions and guidelines of the Finnish Accounting Board.

Governance Bodies

The control and management of Neste is split between the Annual General Meeting of Shareholders (AGM), the Board of Directors, and the President and Chief Executive Officer. Ultimate decision-making authority lies with shareholders at the AGM which appoints the members of the Board of Directors and the Auditor. The Board of Directors is responsible for Neste's strategy and overseeing and

monitoring the Company's business. The Board of Directors appoints the President and CEO. The President and CEO, assisted by the Neste Executive Board (NEB)* and Neste Executive Management Board (NEMB), is responsible for managing the Company's business and implementing its strategic and operational targets.

Neste's headquarters are located in Espoo, Finland.

* 1 January 2019 onwards Neste Executive Board (NEB) is referred to as Executive Committee.

Neste's Governance Bodies

Annual General Meeting

Under the Finnish Companies Act, shareholders exercise their decision-making power at General Meetings of Shareholders (AGM), and attend meetings in person or through an authorized representative. Each share entitles the holder to one vote.

Shareholders at the AGM make decisions on matters including:

• the approval of the Financial Statements,
• the distribution of profit for the year detailed in the Balance Sheet,
• discharging the members of the Board of Directors and the President and CEO from liability, and
• the election and remuneration of the Chair, the Vice Chair, and the members of the Board of Directors and the Auditor.

The AGM is held annually before the end of June. An Extraordinary General Meeting of Shareholders addressing specific matters can be held, when considered necessary by the Board of Directors, or when requested in writing by the Company's Auditor or by shareholders representing at least one-tenth of all Company shares.

Under the Articles of Association, an invitation to a General Meeting of Shareholders shall be delivered to shareholders by publishing it on the Company's website no earlier than two months, and no later than three weeks prior to a meeting, but at least nine days before the record date set for the meeting under the terms of the Companies Act. In addition, the Company shall publish details on the date and location of the meeting, together with the address of the Company's website, in one or more newspapers within the same period of time.

Neste is not aware of any shareholders' agreements regarding the Company's shares.

2018

The 2018 AGM was held in Helsinki on Thursday, 5 April 2018 and adopted the Parent Company's Financial Statements and the Consolidated Financial Statements

for 2017, and discharged the Board of Directors, and the President and CEO from liability for 2017. The AGM also approved the Board of Directors' proposal regarding the distribution of the Company's profit for 2017, sanctioning payment of a dividend of EUR 1.70 per share. The dividend was paid in two installments.

The first installment of dividend, EUR 0.85 per share, was paid to shareholders registered in the shareholders' register of the Company maintained by Euroclear Finland Ltd on the record date for first dividend installment, which was Monday, 9 April 2018. The first dividend installment was on Monday, 16 April 2018.

The second installment of dividend, EUR 0.85 per share, was paid to shareholders registered in the shareholders' register of the Company maintained by Euroclear Finland Ltd on the record date for second dividend installment, which was Wednesday, 10 October 2018. The second dividend installment was paid on Wednesday, 17 October 2018.

The AGM also decided the composition of the Board of Directors and the remuneration to be paid to the members of the Board of Directors, and appointed the Auditor.

Shareholders' Nomination Board

Following the proposal by the Board of Directors, the 2013 AGM decided to establish a permanent Shareholders' Nomination Board to be responsible for drafting and presenting proposals covering the remuneration and number of members of the Company's Board of Directors and for presenting candidates as potential Chair, Vice Chair, and members at the Board to the AGM and to an Extraordinary General Meeting of Shareholders when needed. The Shareholders' Nomination Board shall also be responsible for identifying successors for existing Board Members.

The Shareholders' Nomination Board shall consist of four (4) members, three of which shall be appointed by the Company's three largest shareholders, who shall appoint one member each. The Chair of the Company's Board of Directors shall serve as the fourth member.

The Company's largest shareholders entitled to elect members to the Shareholders' Nomination Board shall be annually determined on the basis of the registered holdings in the Company's list of shareholders held by Euroclear Finland Ltd. as of the first weekday in September in the year concerned. The Chair of the Company's Board of Directors shall request each of the three largest shareholders established on this basis to nominate one member to the Shareholders' Nomination Board. In the event that a shareholder does not wish to exercise his or her right to appoint a representative, the right shall pass to the nextlargest shareholder who would not otherwise be entitled to appoint a member.

The Chair of the Board of Directors shall convene the first meeting of the Shareholders' Nomination Board, which will be responsible for electing a Chair from among its members; the Shareholders' Nomination Board's Chair shall be responsible for convening subsequent meetings. When the members of the Shareholders' Nomination Board has been appointed, the Company will issue a release to this effect.

The Shareholders' Nomination Board shall serve until further notice, unless the AGM decides otherwise. Its members shall be appointed annually and their term of office shall end when new members are appointed to replace them.

The Shareholders' Nomination Board shall forward its proposals for the AGM to the Company's Board of Directors annually by 31 January, prior to the holding of the AGM. Proposals intended for a possible Extraordinary General Meeting of Shareholders shall be forwarded to the Company's Board of Directors in time for them to be included in the invitation to the meeting sent out to shareholders.

Composition of the Shareholders' Nomination Board prior to the 2019 AGM

On 12 September 2018, the following members were appointed to Neste's Shareholders' Nomination Board: The Chair, Senior Financial Counsellor Jarmo Väisänen of the Ownership Steering Department in the Prime Minister's

Office of Finland; President and CEO Jouko Pölönen of Ilmarinen Mutual Pension Insurance Company; Executive Vice-President and Chief Investment Officer Reima Rytsölä of Varma Mutual Pension Insurance Company and Matti Kähkönen, the Chair of Neste's Board of Directors.

The Shareholders' Nomination Board convened 6 times and presented its proposal covering the members of the Board of Directors and the remuneration to be paid to them on 18 January 2019.

Activities

The Shareholders' Nomination Board drafts proposals for the next AGM on the following:

• the number of members of the Board of Directors,
• the Chair, the Vice Chair and the members of the Board of Directors, and
• the remuneration to be paid to the Chair, the Vice Chair, and the members of the Board of Directors.

The nomination process of the Shareholders' Nomination Board, its composition, and activities are detailed in its Charter.

Shareholders' Nomination Board members

Jarmo Väisänen

Lic.Pol.Sc. (Economics), Chair of the Shareholders' Nomination Board since 12 September 2018. Born in 1951.

Senior Financial Counsellor of the Ownership Steering Department in the Prime Minister's Office of Finland. Chairman of the Board of State Security Networks Ltd. Member of the Board of Gasum Ltd. Member of the Board of State Development Company VAKE Ltd. Member of the Board of Baltic Connector Ltd.

Holdings in Neste Corporation on 31 December 2018: 0 shares. 1)

Prime Minister's Office: 93,438,038 shares. 2)

Jouko Pölönen

eMBA, M.Sc. (Econ. & Bus. Adm.), Member of the Shareholders' Nomination Board.

Born in 1970.

President and CEO, Ilmarinen Mutual Pension Insurance Company. Finance Finland FFI, Member of the Board and Chairman of the Employment Pension Executive Committee. Vice Chairman of The Finnish Pension Alliance TELA. Member of the Board of The Finnish Foundation for Share Promotion.

Holdings in Neste Corporation on 31 December 2018: 0 shares. 1)

Ilmarinen Mutual Pension Insurance Company: 4,077,877 shares. 2)

Reima Rytsölä

M.Soc.Sc., CEFA, AMP, Member of the Shareholders' Nomination Board.

Born in 1969.

Executive Vice-President and Chief Investment Officer, Varma Mutual Pension Insurance Company. Member of the Board of Oy HYY-Yhtiöt Ab. Member of the Board of Kojamo Plc. Member of the Board of Nordea Funds Oy. Member of the Board of Foundation for the Finnish Cancer Institute.

Holdings in Neste Corporation on 31 December 2018: 0 shares. 1)

Varma Mutual Pension Insurance Company 3,450,486 shares. 2)

Matti Kähkönen

M.Sc. (Engineering), Member of the Shareholders' Nomination Board.

born in 1956

Senior Advisor, Metso Corporation. Chair of the Board of Neste Oyj. Member of the Board of The Research Institute of the Finnish Economy (EVA/ETLA), Chair of the TT fund of the Confederation of Finnish Industries, and Chair of the super advisory board of the Ilmarinen Mutual Pension

Insurance Company. Chair of Neste's Personnel and Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2018: 2,270 shares 1)

Holdings in Neste Corporation on 31 December 2018: 1) Own holdings and controlled entities.

2) Shareholder's holdings represented by the member of the Shareholders' Nomination Board.

The members of the Shareholders' Nomination Board appointed on 12 September 2018 attended meetings in 2018–2019 as follows:

	Attendance
Jarmo Väisänen	6/6
Jouko Pölönen	6/6
Reima Rytsölä	5/6
Matti Kähkönen	6/6

The meeting on 18 January 2019 which accepted the proposals for the 2019 AGM was attended by all members of the Shareholders' Nomination Board.

Composition of the Shareholders' Nomination Board prior to the 2018 AGM

The Shareholders' Nomination Board responsible for preparing the 2018 AGM comprised of Pekka Timonen, Director General of the Ministry of Economic Affairs and Employment; Timo Ritakallio, President and CEO of Ilmarinen Mutual Pension Insurance Company; Elli Aaltonen, Director General of Kela and Jorma Eloranta, the Chair of Neste's Board of Directors.

The Shareholders' Nomination Board convened four times and presented its proposal covering the members of the Board of Directors and the remuneration to be paid to them on 30 January 2018.

Board of Directors

In accordance with Neste's Articles of Association, the Board of Directors has between five and eight members, which are elected at the AGM for a period of office that extends to the following AGM.

Diversity of the Board of Directors

In planning the composition of a skilled, competent, experienced, and effective Board of Directors from the viewpoint of diversity, the Shareholders' Nomination Board also follows the following diversity principles defined by the Company.

A cooperative and functional Board of Directors requires diversity for it to be able to respond to the requirements set out in Neste's business and strategic objectives and to support and challenge the company's operational management in a proactive and constructive manner. Significant factors concerning the composition of the Board of Directors include a variety of competences that complement the other members of the Board, education and experience in different professional and industrial fields and in business operations and management existing in different development phases, as well as the personal qualities of each member, all of which add diversity to the Board of Directors. The diversity of the Board of Directors is also supported by experience in industrial fields and markets that are strategically significant for Neste, experience and abilities in technologies and the international operating environment, and a diverse age and gender distribution so that both genders are always adequately represented in the Board of Directors. In considering the composition of the Board of Directors, it is important to pay attention to Neste's current and evolving needs, and to ensure that the Board of Directors, as a whole, enables the current and future business development of Neste, which diversity also supports.

Neste's 2018 Board of Directors was composed of 8 members, all of whom hold a university-level degree, and two of whom have a doctorate. All of these degrees are from different fields, with technical fields being in the majority. Each member of the Board of Directors has international work experience in different types of positions, and has worked or is working in the Board of Directors or management of listed or unlisted companies. Three

members have worked in managerial positions at major international oil companies. The Board of Directors is also diverse in terms of cultural backgrounds: its members come from five different countries and speak five different native languages. Women comprise 38% of all members of the Board of Directors. With regard to age, the members of the Board of Directors are divided evenly between 52 and 70 years of age. The duration of the terms of office of the Board members is divided as follows: four members have been on the Board of Directors for more than four years, while four members have been on the Board of Directors for less than four years.

Activities of the Board of Directors

The Board shall have at least eight regular meetings annually, all scheduled in advance, with extraordinary meetings when necessary. Extraordinary meetings, if requested by a Board Member or the President and CEO, shall be convened by the Chair, or, if the Chair is prevented from attending, by the Vice Chair, or if deemed necessary by the Chair. The Board constitutes a quorum if more than half of its members are present. The Board is responsible for preparing an operating plan for itself for its period of office between Annual General Meetings, to include a timetable of meetings and the most important matters to be addressed at each meeting. The Board evaluates its performance annually to determine whether it is functioning effectively after the end of each financial year.

Duties of the Board of Directors

The Board's responsibilities and duties are defined in detail in the board-approved Charter.

A member of the Board of Directors may not take part in decision-making in matters regarding (i) agreements between such member and any entity within the Neste Group, (ii) agreements between any entity within the Neste Group and third parties where such member has a material interest in the matter which may conflict with the interest of Neste or any other entity within the Neste Group, and (iii) agreements between any entity within the Neste Group and a legal entity which such member may represent, either

individually or together with any other person; provided however, that this point (iii) does not apply where the party contracting with Neste is a company within the Neste Group. The term 'agreement' as used here includes litigation or other legal proceedings arising from or relating to such agreements.

2018

The 2018 AGM confirmed the membership of the Board of Directors at eight members, and the following were re-elected to serve until the end of the next AGM: Ms. Martina Flöel, Mr. Matti Kähkönen, Ms. Laura Raitio, Mr. Jean-Baptiste Renard, Mr. Willem Schoeber and Mr. Marco Wirén. The following were elected as new members: Ms. Elizabeth (Elly) Burghout and Mr. Jari Rosendal. Mr. Matti Kähkönen was elected as Chair and Ms. Laura Raitio was elected as new Vice Chair.

The Board convened 13 times in 2018. The attendance rate at the meetings was 100%. The Board focused in 2018, pursuant to an agenda approved by the Board, on the development of the Company's long-term strategy and ensuring continued performance development. An important milestone was reached on 8 February 2018 when the appointment of a new President and CEO of the Company was announced as the outcome of the related successor planning which had been another important focus area of the Board and the Personnel and Remuneration Committee. The final investment decision concerning additional production capacity in Singapore was announced on 12 December 2018, and the Board has closely monitored the preparations for such decision, including also certain related initiatives, such as increase of flexibility of the renewable product material base and development of the business in various renewable product solutions, including renewable aviation fuel and renewable polymers and chemicals. In addition to such agenda and matters set out in the Board Charter, the Board has monitored the company's operational and financial performance and risk control, engaged in discussions with management on developing the business strategy and approved their base strategic approach, overseen strategy

execution and evaluated the changes in the long-term operational environment and their impact on the Company's business operations from e.g. a sustainability perspective. The Board also paid continued attention to the development of the Company's safety culture, including close monitoring of safety initiatives and indicators.

Details on the independent status of members, their role in committee work, and their attendance at meetings can be found in the following table.

Board of Directors, 31 December 2018							Attendance at meetings
	Position	Born	Education	Main Occupation	Independent of the company	Independent of major shareholders	Personnel and Remuneration Committee	Audit Committee	Board	Committees
Matti Kähkönen	Chair	1956	M.Sc. (Eng.)	Non-Executive Director	•	•	•		13/13	11/11
Elizabeth (Elly) Burghout	Member	1954	BSc (Chem.Eng.)	Non-Executive Director	•	•	•		10/10	11/11
Martina Flöel	Member	1960	PhD (Chem.)	Non-Executive Director	•	•		•	13/13	6/6
Laura Raitio	Vice Chair	1962	Lic.Tech.	Non-Executive Director	•	•	•		13/13	9/11
Jean-Baptiste Renard	Member	1961	M.Sc. (Eng.)	Non-Executive Director	•	•	•		13/13	11/11
Jari Rosendal	Member	1965	M.Sc. (Eng.)	President and CEO of Kemira		•		•	10/10	5/5
Willem Schoeber	Member	1948	Dr. (Tech.)	Non-Executive Director	•	•		•	13/13	6/6
Marco Wirén	Member	1966	M.Sc. (Econ.)	President of Wärtsilä Energy and Executive Vice President of Wärtsilä	•	•		•	13/13	6/6

The shareholdings of the members of the Board of Directors are presented next to their CVs. The remuneration paid to the members of the Board of Directors are detailed in the Remuneration Statement.

Members of the Board of Directors

7

Matti Kähkönen Elizabeth (Elly) Burghout Martina Flöel Laura Raitio

(born in 1956) M.Sc. (Engineering) Chair of the Board since 2018 Member of the Board of Directors since 2017 Independent member

Senior Advisor, Metso Corporation 2017–. President and CEO, Metso Corporation 2011–2017. Executive Vice President and Deputy to the CEO, Metso Corporation 2010–2011. President, Mining and Construction Technology, Metso Corporation 2008–2011. President, Metso Minerals 2006–2008. President, Metso Automation 2001–2006. President, Metso Automation, Field Systems Division 1999–2001. Prior to year 1999, various managerial and development positions in Neles-Jamesbury and Rauma-Repola.

Mr. Kähkönen also holds various positions of trust. He is board member of The Research Institute of the Finnish Economy (EVA/ETLA), Chair of the TT fund of the Confederation of Finnish Industries, and Chair of the super advisory board of the Ilmarinen Mutual Pension Insurance Company, among others. Chair of Neste's Personnel and Remuneration Committee.

(born in 1954) BSc, Chemical Engineering Member of the Board since 2018 Independent member

Senior Director of Global Technology and Innovation, Specialties at Sabic in 2016–2017. Various General Manager positions at Sabic in 2007–2016. Various managerial positions at GE Plastics in 1996–2007. Prior to year 1996, various managerial and specialist positions in different organizations. Member of the Board of Sabic Petrochemicals BV, 2010–2014. Member of the Board of Sabic Fibre Reinforced Thermoplastics, 2014–2017. Member of Neste's Personnel and Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2018: 0 shares 1)

(born in 1960) M.Sc. (Chemistry), PhD (Chemistry) Member of the Board of Directors since 2017 Independent member

CEO of Oxea 2007–2016. Managing Director and EVP, Europe of European Oxo in 2003–2007. Vice President Oxo Chemicals, Celanese Chemicals 2000–2003. Plant Manager Böhlen, Celanese Chemicals 1998–2000. Prior to year 1998, various managerial and directorial positions in the Hoechst Group. Independent member of the Sasol Board of Directors 2018-. Member of Neste's Audit Committee.

Holdings in Neste Corporation on 31 Dec 2018: 0 shares 1)

(born in 1962) M.Sc. (Chem. Eng.), Lic. Tech. (forest products technology) Vice Chair of the Board since 2018 Member of the Board of Directors since 2011 Independent member

CEO of Diacor Medical Services 2014–2017. Executive Vice President, Building and Energy 2009–2014 and Member of the Executive Management Team 2006–2014, Ahlstrom. Ahlstrom's Senior Vice President, Marketing (sales network, human resources, communications and marketing) 2006–2008. Ahlstrom's Vice President and General Manager for Wallpaper & Poster, Pre-impregnated Decor, Abrasive Base in Osnabrück, Germany 2002–2005. Managing Director of Ahlstrom Kauttua 2001–2002. Several managerial positions within Ahlstrom's specialty paper business since 1990. Member of the Board of Suominen Corporation and Raute Corporation and Chair of the Board of Helsinki Deaconess Institute. Member of Neste's Personnel and Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2018: 1,500 shares 1)

1) Holdings in Neste Corporation: own holdings and controlled entities.

Holdings in Neste Corporation on 31 Dec 2018: 2,270 shares 1)

Jean-Baptiste Renard Jari Rosendal

Willem Schoeber

Marco Wirén

(born in 1961) M.Sc. (Eng) and an engineering diploma in petroleum economics from the French Petroleum Institute (IFP) Member of the Board of Directors since 2014

Independent member

Founder and CEO, 2PR Consulting, independent energy expert and consultant. Several positions at BP 1986–2010; Regional Group Vice President for Europe and Southern Africa BP Plc 2006–2010, Group Vice President, Business Marketing and New Markets, and member of Downstream Executive Committee BP Plc 2003–2006. Non-Executive Director of Masana Petroleum Solutions (South-Africa); Non-Executive Director of IFP Training (France); Non-Executive Director of CLH (Spain); pro bono consulting for social entrepreneurs. Supervisory Board Member of Entreprendre&+. Advisory Board Member of IFP School; Member of Neste's Personnel and Remuneration Committee.

Holdings in Neste Corporation on 31 Dec 2018: 7,650 shares 1)

(born in 1965) M.Sc. (Eng.) Member of the Board of Directors since 2018 Independent of major shareholders. Not independent of the company based on an interlocking control relationship set out in Recommendation 10.f of the Finnish Corporate Governance Code: Jari Rosendal is the President and CEO of Kemira Corporation, and Kaisa Hietala is a member of the Board of Directors of Kemira Corporation, member of the Neste Executive Board and Executive Vice President, Renewable Products

President and CEO at Kemira since 2014. Various President and directorial positions, including as Member of the Executive Board, at Outotec Oyj in 2003–2014. Various managerial and expert positions in the Outokumpu's Technology Group in Finland and the United States 1989–2003. Member of the Board of Directors and Audit Committee, Uponor Oyj, 2012–2018. Member of the Board of Directors since 2015– and Chairman of the Board of Directors, Chemical Industry Federation of Finland, 2017–2018. Member of the Board of Directors, CEFIC, 2014–. Member of the Board of Directors, Confederation of Finnish Industries (EK), 2017–2018. Member of the Board of Directors, 2011– and Chairman of the Board of Directors, Finnish Association of Mining and Metallurgical Engineers, 2017–. Member of Neste's Audit Committee.

Holdings in Neste Corporation on 31 Dec 2018: 0 shares 1)

(born in 1948) Dr. (Chem. Eng.) Member of the Board of Directors since 2013 Independent member

Independent business consultant. Chair of the Boards of Directors of EWE Turkey Holding AŞ, Bursagaz AŞ and Kayserigaz AŞ 2010–2015. Member of the Management Board of EWE AG, responsible for power generation and international business (Turkey and Poland) 2010–2013. Chair of the Management Board at swb AG (Bremen) 2007–2011. Several positions at Royal Dutch Shell Group's companies 1977–2007, in particular in oil refining. Member of the Supervisory Board of Gasunie N.V. (Groningen) since 2013 and Member of the Board of Directors of Societatea Energetica "Electrica" S.A. (Bucharest) since 2016. Member of Neste's Audit Committee.

Holdings in Neste Corporation on 31 Dec 2018: 2,000 shares 1)

(born in 1966) M.Sc (Econ.) Member of the Board of Directors since 2015 Independent member

President, Wärtsilä Energy & Executive Vice President, Wärtsilä Corporation, since October 2018. Wärtsilä Corporation, Executive Vice President and Chief Financial Officer Wärtsilä 2013–2018. SSAB, Executive Vice President and CFO 2008–2013; SSAB, Vice President Business control 2007–2008; Eltel Networks, CFO and Vice President Business Development 2002–2007; NCC, Vice President Business Development and Group Controller 1995–2001. Member of the Board of Management of Wärtsilä Corporation since 2013. Chair of Neste's Audit Committee.

Holdings in Neste Corporation on 31 Dec 2018: 1,000 shares 1)

1) Holdings in Neste Corporation: own holdings and controlled entities.

Board Committees

The Board has established an Audit Committee, which has four members, and a Personnel and Remuneration Committee, which has four members. A quorum exists when more than two members, including the Chair, are present. All members are elected from amongst the members of the Board for a one-year term. The tasks and responsibilities of each committee are defined in their Charters, which are approved by the Board. The schedule and frequency of committee meetings are determined by the Chair and committee members.

In addition, the Board of Directors can appoint committees as needed, for instance, for significant investment projects or other special tasks.

Committees meet at least twice a year. Each committee reports regularly on its meetings to the Board. Reports include a summary of the matters addressed and the measures undertaken. Each committee conducts an annual self-evaluation of its performance and submits a report to the Board.

Audit Committee

Under its Charter, the Audit Committee shall consist of a minimum of three Board members that are independent of the Company and its subsidiaries, and at least one of whom shall be independent of Neste's major shareholders. Members are required to have sufficient knowledge of accounting practices and the preparation of financial statements and other qualifications that the Board deems necessary. The Audit Committee is permitted to use external consultants and experts when deemed necessary.

Duties

The responsibilities and duties of the Audit Committee are defined in detail in the Charter approved by the Board.

2018

Starting from 5 April 2018, the Audit Committee comprises Marco Wirén (Chair), Martina Flöel, Jari Rosendal and Willem Schoeber.

The Audit Committee convened 6 times, and the attendance rate was 100%. In addition to the tasks specified in its Charter, the Audit Committee focused on financial reporting and risk management, including in relation to market risks and certain other risk areas, such as IT systems, segregation of duties, privacy regulation and cyber security. In such context, the Company's program for reforming its ERP system continued to be a specific focus area of the Audit Committee. Moreover, the Audit Committee also monitored the introduction of non-financial reporting as well as compliance matters.

Personnel and Remuneration Committee

The Personnel and Remuneration Committee consists of the Chair of the Board and at least two non-executive members of the Board.

Duties

The responsibilities and duties of the Personnel and Remuneration Committee are defined in detail in the Charter approved by the Board.

2018

Starting from 5 April 2018, the Personnel and Remuneration Committee comprises Matti Kähkönen (Chair), Elly Burghout, Laura Raitio and Jean-Baptiste Renard.

The Personnel and Remuneration Committee convened 11 times in 2018, and the attendance rate was 95%. The Personnel and Remuneration Committee focused during 2018 on reviewing and updating Neste's long-term incentive program for 2019 and onwards to strengthen the alignment with long-term shareholder value creation, simplify overall plan structure and introduce additional flexibility. In line with duties coming from its Charter, the Personnel and Remuneration Committee also followed the functioning of short- and long-term incentive plans to ensure that they supported the achievement of the objectives and helped improve the Company's performance. Both the follow-up the ongoing performance period and outcomes of the rewarding based on 2017 results were in the scope. In addition, the Committee focused on talent management and organisational development of the Company.

President and CEO

Neste's President and CEO since 1 November 2018, Peter Vanacker (b.1966, MSc, Chemical Engineering, Polymers Engineering), manages the Company's business operations in accordance with the Finnish Companies Act and instructions issued by the Board of Directors. The President and CEO shall oversee the executive management of the company in accordance with instructions and orders given by the Board of Directors, and is responsible for ensuring that the Company's accounts are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

Neste's former President and CEO (2008–2018) Matti Lievonen (b.1958, B.Sc. (Eng.), eMBA) retired as Vanacker started in his position as Neste's President and CEO.

The President and CEO is appointed by the Board of Directors, which evaluates the performance of the President and CEO annually and approves his remuneration on the basis of a proposal by the Personnel and Remuneration Committee. Information on the remuneration of the President and CEO can be found in the 2018 Remuneration Statement.

Neste Executive Board

The Neste Executive Board (NEB) assists the President and CEO in managing the Company and in the deployment of the Company's strategic and operational goals. Members are appointed by the Board of Directors. The NEB meets regularly, on average once a month. Information on the remuneration of the members of the NEB can be found in the 2018 Remuneration Statement.

2018

The Neste Executive Board comprised eleven members during the months of January to August, and nine members during the months of September to December. The NEB had 13 meetings during 2018, and also met outside such meetings in relation to specific themes. Peter Vanacker was appointed President and CEO of the Company on 8 February 2018 and assumed such duties as of 1 November 2018. He joined Neste in September 2018 as a Senior Executive and since then familiarized himself with Neste's business and operations. In addition to supporting the President and CEO in the fulfillment of his general duties, the NEB focused on the implementation of the strategy by advancing the company's growth program for renewable products, including preparations for the final investment decision concerning additional production capacity in

Singapore, which was announced on 12 December 2018, as well as initiatives to develop the flexibility of the renewable raw material base and renewable solutions, such as renewable aviation fuels and renewable polymers and chemicals. Alongside with strategy execution, the NEB also continued its work to improve the Company's financial performance and operational excellence. In addition, safety development, cyber security matters, R&D matters, development of investment processes as well as the program for reforming the Company's ERP system were given special attention during the year.

Members of the Neste Executive Board 2018

Peter Vanacker Kaisa Hietala2)

11

Matti Lehmus

Panu Kopra

(born 1966) President and CEO, Chair of the Neste Executive Board MSc, Chemical Engineering, Polymers Engineering President and CEO since 1 November 2018

Joined the company in 2018. Served as CEO of the CABB Group GmbH 2015–2018 as well as CEO of the Treofan Group GmbH 2012–2015. Worked as Executive Vice President and Member of the Executive Board of Bayer MaterialScience (today Covestro AG) 2003–2012 with responsibility for the global Polyurethanes business and as Chief Marketing and Innovation Officer. Before that had several directorial and managerial positions in Belgium, Brazil, US and Germany at Bayer since 1990.

Holdings in Neste Corporation on 31 Dec 2018: 0 shares. 1)

(born 1971) Executive Vice President, Renewable Products M.Sc. (Physics), Finland and M.Phil. (Env.Sc.), UK Member of the Neste Executive Board since 2014

Joined the company in 1998. Responsible for the Renewable Products business area. Served in several positions at Neste, most recently as Vice President of the Renewable Fuels business 2011–2014, Vice President of Supply and Commercial Director in Singapore 2008–2011 and Feedstock Manager in the Renewable Fuels Business operations 2006–2008. Member of the Board of Kemira Oyj. Member of Sustainability Supervisory Board of Aalto University and Supervisory Board of Oulu University.

Holdings in Neste Corporation on 31 Dec 2018: 5,543 shares. 1)

(born 1974) Executive Vice President, Oil Products M.Sc. (Eng.), eMBA Member of the Neste Executive Board since 2009

Joined the company in 1997. Responsible for the Oil Products business area. Previously served as Executive Vice President of the Oil Products and Renewables business area 2011–2014, Executive Vice President of the Oil Products business area 2009–2010, Vice President of the Base Oils business in the Specialty Products Division 2007–2009, Vice President of Oil Refining Business Development (2007) and Gasoline Exports and Trading Manager 2004–2007 in the Oil Refining Division. Chair of the Board of Chemical Industry Federation of Finland. Member of Confederation of Finnish Industries.

Holdings in Neste Corporation on 31 Dec 2018: 11,922 shares. 1)

(born 1972) Executive Vice President, Marketing & Services BBA, MBA Member of the Neste Executive Board since 2016

Joined the company in 1996. Responsible for Marketing & Services business area. Previously served as Vice President in Oil Retail, Sales in Finland and Baltic Rim 2014–2015, Vice President in Oil Retail Russia and Baltic Rim 2010–2014, General Manager in St. Petersburg Russia 2009, Business Development Manager in Renewable Products 2007–2008, Sales Director 2006, General Manager in Latvia 2003–2005 and in several other positions in the company.

Holdings in Neste Corporation on 31 Dec 2018: 3,989 shares. 1)

1) Holdings in Neste Corporation: own holdings and controlled entities. 2) Left the company 19 February 2019

Simo Honkanen

Hannele Jakosuo-Jansson

Lars Peter Lindfors

Jyrki Mäki-Kala

(born 1958) Senior Vice President, Sustainability and Public Affairs M.Sc. (Econ.) Member of the Neste Executive Board since 2009

Joined the company in 2006. Responsible for the Sustainability and Public Affairs activities. Served previously as Vice President, Marketing, Stakeholder Relations and Raw Material Procurement in the Renewable Fuels division 2008–2009, Vice President, New Ventures in the Components Division 2006–2007. Prior to that various positions in Finland and abroad in Shell. Member of the Board of the Smart & Clean Foundation, Member of the Board of Maj and Tor Nessling Foundation.

Holdings in Neste Corporation on 31 Dec 2018: 9,586 shares. 1)

(born 1966) Senior Vice President, Human Resources and Safety M.Sc. (Eng.) Member of the Neste Executive Board since 2006

Joined the company in 1990. Responsible for the Group's Human Resources and Safety corporate functions. Served as Vice President, Human Resources at Oil Refining 2004–2005 and Laboratory and Research Manager at the Technology Center 1998–2004. Member of the Board of Directors of Ahlstrom-Munksjö, Neste Engineering Solutions (NES), Nynas, and LUKE (Natural Resources Institute Finland).

Holdings in Neste Corporation on 31 Dec 2018: 13,193 shares. 1)

(born 1964) Senior Vice President, Technology Ph.D. (Tech.), MBA Member of the Neste Executive Board since 2009

Joined the company in 2007. Responsible for Research & Development, Information Technology, Procurement, and Business Processes. Served previously as Senior Vice President, Technology and Strategy 2009–2012, Vice President for the company's Research and Technology unit 2007–2009, Executive Vice President, Renewal and Development at Perstorp Group 2004–2007, Executive Vice President, R&T&D at Perstorp Group 2001–2004, and prior to that at Neste as R&D Manager and various other positions. Member of the Board of the Fortum Foundation, Finnish Foundation for Technology Promotion, Svenska Tekniska Vetenskapsakademin, Treesearch and Neste Engineering Solutions.

Holdings in Neste Corporation on 31 Dec 2018: 9,663 shares. 1)

(born 1961) Chief Financial Officer M.Sc. (Econ.) Member of the Neste Executive Board since 2013

Joined the company in 2013. Responsible for the Group's strategy, financial management, investor relations, and risk management. Served in various business and corporate financial positions at Kemira 2005–2013. Previously worked for Finnish Chemicals 1988–2005. Member of the Supervisory Board of Ilmarinen Mutual Pension Insurance Company. Member of Board of Nynas AB.

Holdings in Neste Corporation on 31 Dec 2018: 11,000 shares. 1)

1) Holdings in Neste Corporation: own holdings and controlled entities.

Christian Ståhlberg

(born 1974) General Counsel LL.M. Member of the Neste Executive Board since 2017

Joined the company in 2017. Responsible for the Group's legal affairs. Secretary to the Neste Executive Board, the Board of Directors, the Audit Committee, the Shareholders' Nomination Board and to the Stakeholder Advisory Panel. Served previously as General Counsel of Rettig Group Ltd 2015–2017, Director, Legal in Pohjola Bank plc 2011–2014, Senior Legal Counsel in Neste Oil Corporation 2007–2011 and Senior Associate in Roschier Attorneys Ltd 1998–2007.

Holdings in Neste Corporation on 31 Dec 2018: 0 shares. 1)

Matti Lievonen

– retired 31 December 2018

(born 1958) President and CEO, Chair of the Neste Executive Board until the end of October 2018 B.Sc. (Eng.), eMBA D.Sc. (Tech.) h.c. President and CEO between 2008–2018

Osmo Kammonen

– retired in August 2018

(born 1959)

Senior Vice President, Communications and Brand Marketing until August 2018 M.Sc. (Laws) Member of the Neste Executive Board between 2004–2018

Tuomas Hyyryläinen

– moved to another company after August 2018

(born 1977)

Senior Vice President, Emerging Businesses business unit until August 2018 M.Sc. (Econ.) Member of the Neste Executive Board between 2012–2018

Neste Executive Management Board

The Neste Executive Management Board (NEMB) is responsible for leading and setting operational business targets and monitoring progress on achieving them.

2018

The Neste Executive Management Board comprised the President & CEO, business area Executive Vice Presidents, the CFO and the Senior Vice President, Emerging Businesses business unit. The NEMB met 10 times in 2018.

Company Auditor

The AGM elects the Auditor annually. The Auditor's term of office ends at the end of the next AGM following election.

The Auditor is responsible for auditing the Company's accounts, its financial statements, and Neste's administration. The Auditor's Report covers the Consolidated Financial Statements and the Parent Company's Financial Statements, and can be found in the Financial Statements section of the Annual Report.

Fees charged by the statutory auditor

EUR 1,000	2018	2017
Audit fees	1,310	1,326
Other	594	419
Total	1,904	1,745

2018

Audit Firm PricewaterhouseCoopers Oy served as Neste's Auditor until 5 April 2018, with Authorized Public Accountant Mr. Markku Katajisto as the principally responsible auditor. The AGM re-elected PricewaterhouseCoopers Oy as the Audit Firm on 5 April 2018, with Authorized Public Accountant Mr. Markku Katajisto continuing to serve as the principally responsible auditor, until the end of the next AGM.

1) Holdings in Neste Corporation: own holdings and controlled entities.

Internal Audit

Neste's Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve the operations of Neste. As a component in the corporate governance process, it supports the organization by systematic risk and assurance based approach to evaluate and improve the effectiveness of risk management and control and governance processes.

Internal Audit evaluates the actualization of objectives, financial effectiveness, safeguarding of assets and compliance of laws and regulations. In the scope of each audit project Internal Audit assures also that the organizational structure and governance model enable efficient decision-making and steering system including clear roles and responsibilities and key policies and guidelines. In addition, the adequate monitoring systems and reporting practices are in the scope of audit.

Internal Audit is responsible of creating and executing the annual audit plan, proposing findings, recommendations and continuous improvement actions that adds value for Neste and mitigate risks in its operations. Neste's strategic and operative objectives and risks of businesses related to them are the key elements of audit planning and execution. To assure effective, and efficient and value adding process, Internal Audit co-operates actively with other Neste's assurance service functions and top management and shares best practices from a process and governance point of view.

Internal Audit is also responsible for conducting special assignments on behalf of management or the Board of Directors' Audit Committee. As part of audits, Internal Audit assesses that the values and Code of Conduct determined by Neste top management are complied with. Neste has on its website a new whistle-blowing system to all Neste's internal and external stakeholders, including various actors in its supply chains. Ethics Online serves as a grievance mechanism and enables Neste's stakeholders to raise possible concerns on Neste's practices without fear of reprisals. Internal Audit and Compliance function is responsible for evaluating and investigating cases. The possible

irregularities or misconducts are investigated and reported regularly to the Board of Directors' Audit Committee.

Internal Audit follows the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors. Internal Audit reports directly to Board of Directors' Audit Committee and administratively to the President and CEO. The Board of Directors is responsible for approving Internal Audit Charter and annual audit plan. Internal Audit Charter includes the determination regarding Internal Audit position, operational model, process and reporting lines. Internal Audit has at least annually a non-executive meeting with the Audit Committee members and the Audit Committee Chairman. Neste's Head of Internal Audit is responsible for the internal audit operations, and manages in-house internal audit resources and operates as the coordinator towards outsourced service providers.

2018

Internal Audit function continued cooperation with other Neste assurance functions such as compliance, risk management and internal controls to create and enhance risk and compliance based audit activities.

Internal Audit continued operating with co-sourcing model using audit resources and experts effectively in order to achieve audit related objectives. Neste's key business processes, locations, projects and risk areas were focus areas during the year 2018, including for example supply and sales processes, major turnarounds, IT projects (ongoing ERP project) and other investment projects. In all process audits and in SAP review the SoD (segregation of duties) aspect was part of the audit.

Compliance function

Neste conducts its business and operates in compliance with applicable laws, regulations and generally accepted practices for good corporate governance. Neste's Code of Conduct sets the framework for Neste's global business operations, and establishes core principles to guide Neste employees in their day-to-day business activities and decisions in the areas of ethical business practices,

sustainable operations and protecting people's health and safety. Neste requires commitment to these principles from its suppliers and business partners, as expressed in the Neste Supplier Code of Conduct.

The purpose of Neste's Compliance function is to develop, establish, facilitate and oversee compliance procedures and programs aimed to ensure that Neste's global organisations have effective systems and processes in place for identifying, preventing, detecting and correcting non-compliance with applicable laws, regulations and Neste's internal rules. The function supports Neste's management in their responsibility for overall compliance risk management, as well as Neste's business area and function management in their responsibilities to identify and manage compliance risks related to their operations. Compliance function works in close collaboration with Neste's business areas, common functions and other internal assurance organizations, in particular the Risk Management, Internal Controls and Internal Audit functions.

Compliance function is headed by the Chief Compliance Officer (CCO), who reports to Neste's General Counsel. The CCO reports on compliance activities on a regular basis to Neste Executive Board and to the Audit Committee. Neste has also an Ethics and Compliance Committee, which oversees and steers the management of the ethics and compliance program in Neste. Reports on suspected misconducts received via company's whistleblowing and other channels are investigated in Neste's Investigation Group.

Insider administration procedures

Neste complies with the EU Market Abuse Regulation (596/2014), including related regulation, as well as Nasdaq Helsinki Ltd's Insider Guideline as a minimum standard on insider matters. In addition, the Board of Directors has approved the Company's own Guidelines for Insiders on 9 June 2016.

The Company's General Counsel is responsible for the coordination and supervision of insider matters, along with the insider register manager, the insider communication manager and individuals responsible as heads of

project-specific registers. All the above individuals have their own deputies. In addition, the head of each common function or business area is responsible for supervising insider matters within his or her organization. The Company arranges training related to the insider guidelines.

The creation and maintenance of a project-specific insider register is the responsibility of the head of such register, who is named in the relevant project-specific insider register.

The Company has defined, as persons discharging managerial responsibilities, the members of the Board of Directors and its secretary, the President and CEO, as well as the members of the Neste Executive Board and its secretary. These managerial persons and their closely associated persons must report their own transactions conducted with the Company's financial instruments or financial derivatives to the Company and the Financial Supervisory Authority without delay, and no more than three business days of completing the business transaction. Reports to the Company and the Financial Supervisory Authority can be made by following the instructions on www.neste.com/trading.

The Company has also named certain other persons as core persons as they have better or more information about the Company than the market. These individuals are typically ones that prepare the company's Interim Reports and Financial Statements, persons responsible for the Company's finances, financial reporting or communication, or persons that have access to said information, as well as certain individuals in executive positions.

Persons discharging managerial responsibilities and core persons may not trade with or conduct business with the company's financial instruments for themselves or a third party, directly or indirectly during the period from the closing date of an interim or annual accounting period to the date of publication of the interim report or financial statements for that period. The minimum period concerned is always a minimum period of 30 days prior to the date of publication of the interim report or the financial statements, including the date of publication ('closed window').

The Company also maintains a project or event-specific list of insiders for all individuals that have access to insider information and that are employed by the Company or otherwise perform tasks that provide them access to insider information. Individuals who participate in the development and preparation of projects or events that involve insider information, such as mergers and acquisitions, are considered project or event-specific insiders. Project-specific insiders may not trade or conduct other business using the Company's financial instruments during the project.

Main features of internal control and risk management systems pertaining

to the financial reporting process

Objectives

16

The objective of internal control over financial reporting at Neste is to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement in accordance with applicable laws and regulations and internal requirements of control activities.

The system of internal control at Neste Corporation is based on the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Control environment

Under the Finnish Companies Act, the Board of Directors is responsible for ensuring that there is adequate control over the Company's accounts and finances.

Responsibility for arranging this control is delegated to the President and CEO, who is required to ensure that the Company's accounts are in compliance with the law and that its financial management has been arranged in a reliable manner.

The internal control at Neste is based on the corporate structure whereby the operations are organized into business areas and common functions. The heads of business areas and finance function are responsible for establishing and maintaining appropriate, up-to-date, effective and adequate internal control over financial reporting. To ensure sufficient control in business areas, the Neste controllers' network and process owners have a key role in developing an internal control system and reporting practices. In some key areas, the Corporate Finance function has centralized control responsibility. Neste has established an Internal Control function to drive the development and implementation of the internal controls

corporate wide. Neste has prepared and established its own Internal Controls Principles in accordance with COSO framework which emphasize the importance of the internal controls and clarify the responsibilities for establishing effective controls in business processes.

Neste's values and management system containing formal Code of Conduct are the foundation of the control environment. President and CEO and corporate management are responsible for emphasizing the importance of ethical principles and correct financial reporting. The structure of the organization and the resources allocated within it are designed to provide effective control over financial reporting and segregation of duties.

Risk assessment

As a prerequisite for risk assessment, the organization's objectives need to be established. With respect to financial reporting, the general objective is to have reliable reporting and ensure that transactions are recorded and reported completely and correctly. The assessment of risk includes risks related to fraud.

Additional information on risk management principles is available in the Risk Management section of the Annual Report on pages 88–92.

Control activities

Neste's control activities include instructions, guidelines and procedures to ensure that the actions identified by management to address the relevant risks are carried out effectively. The most important guidelines related to financial reporting systems and practices are documented in the Finance Instructions.

Neste's control activities with respect to reliable financial reporting are described in the Internal Controls Principles statement and in Principle and Instruction for Control over Financial Reporting documentation. These establish the minimum control requirements covering also control activities related to transactions in relevant processes as well as controls carried out as part of the monthly reporting process. The other key risk and process level policies and guidelines are documented in Neste's management system.

Communications

Neste corporate level communication practices support completeness and correctness of financial reporting. Neste personnel has access to adequate information and communication regarding accounting and reporting principles and guidelines. The main means of communicating the relevant matters for appropriate financial reporting is the Finance Instructions containing accounting principles and guidelines for forecasting and reporting. To increase the transparency of the processes, both business and finance processes are described by using a tool where Neste personnel has access. Both Finance Instructions and process documentation work will continue in 2019. Neste Controllers' network has regular meetings and trainings to ensure up-to-date knowledge.

Neste's business areas make regular financial and management reports to the management review, including analysis and comments of financial performance.

Neste Executive Board receives financial reports monthly. Interim Reports are reviewed in Audit Committee meetings, and thereafter by the Board of Directors.

Monitoring

Management regularly monitors the effectiveness of the controls, as a control that was initially effective can become ineffective due to changes in the operating environment. Changes can also take place in the controls due to changed processes, IT systems or personnel.

The Board of Directors and the Audit Committee regularly review the financial performance including reviewing whether there is an adequate level of process to evaluate the risks and effectiveness of controls related to financial reporting process at all levels of the organization. The Audit Committee oversees the Company's finances, financial reporting, risk management, as well as the Internal Controls and Internal Audit functions, as part of the Company's corporate governance. Internal control deficiencies are communicated in a timely manner to those parties responsible for taking corrective action, and to management and the Board as appropriate.

Corporate Internal Audit assesses annually the operational model and practices of internal control over financial reporting of Neste as part of business and process level audits.

2018

Neste Corporation further strengthened its focus on internal controls by establishing a dedicated Internal Controls team that will lead the development of the internal controls corporate wide. Neste Executive Board established the Internal Control Principles that clarify the roles and responsibilities related to the components of internal control framework.

During 2018, development of effective controls in business processes run in SAP has been the focal point of internal control development, as the roll out of SAP ERP was deployed for Neste Oyj in May and it was extended to Sales and Supply operations of two additional units, Neste Suisse and Neste Shipping, in November.

Deployment of SAP embedded Smart Close for finance enhanced and modernized the financial closing process, hence making the close more efficient and transparent.

Internal control over financial reporting

The company's internal control is maintained and developed in cooperation with business areas and finance function. Focus areas to be developed are reviewed annually.

Performance Management Process

The Neste Performance Management Process plays an essential role in helping the Group attain its strategic goals and reinforcing its performance-driven mindset. Neste has taken a step change in developing its performance leadership towards a more agile model supporting daily operations.

Performance management comprises daily leadership, through which individuals, teams, units and the Company can reach selected strategic priorities and develop organizational capability. Performance leadership is used to ensure that everyone knows the values and objectives of the Company, and their short and long-term objectives, and what kind of competence is needed to reach these objectives.

Individual and team objectives are based on Neste's strategy and way of working. There is a clear link between well-being at work and good leadership performance.

The key elements in the Neste daily performance leadership approach are:

• setting challenging objectives and following them through
• supporting the achievement of objectives with up-to-date feedback
• evaluating one's own performance and results
• developing ways of working and taking responsibility of own competence development
• holding personal development discussions and discussions that support day-to-day work.

Leading performance in daily work

From a financial reporting point of view, Neste Performance Management Process consists of monthly Management Reporting, quarterly Business Review, and biannual Common Functions Review.

Results, information in management reporting, and performance reviews are compared to strategic goals and business plans, and to analyses and planned corrective actions throughout the year.

Business areas and common functions follow a similar approach, but emphasize a more detailed analysis and definition of corrective actions, as well as continuous improvement and prioritization of actions and development projects.