Climate Change Data

Environmental Metrics

ESG Focus Areas

• Economic responsibility
• Social responsibility
• Animal health and welfare
• Environmental responsibility

Environmental Achievements

• Reduced GHG emissions by 48% from 2014 to 2018
• Reduced waste to landfill by 99% from 2012 to 2018
• Reduced product recalls by 56% compared to 2017

Social Achievements

• Launched a new group-wide trainee program called “Inspired”
• Introduced numerous packaging innovations increasing recyclability or significantly reducing plastic use
• Supported the Pink Ribbon campaign in Denmark and Children’s Movement campaign in Finland

Governance Achievements

• Renewed Code of Conduct in 2018 to provide more detailed description of commitment to anti-corruption and human rights

Climate Goals & Targets

Environmental Challenges

• Weak financial performance
• Postponed use of responsible soy in Denmark and Baltics due to weak market demand
• Ramp-up challenges at Rauma poultry unit impacting EBIT by EUR -35.7 million

Mitigation Strategies

• Group-wide efficiency improvement program targeting EUR 40 million annual savings from 2020
• Continued monitoring of market development for responsible soy
• Efforts to stabilize Rauma unit's production and achieve targeted efficiency

Supply Chain Management

Supplier Audits: All suppliers in risk category audited

Responsible Procurement

• Supplier Guidelines signed by 100% of suppliers by 2020
• Use of responsibly produced soy (postponed in Denmark and Baltics)
• Use of RSPO certified palm oil

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather phenomena (e.g., dryness)

Reporting Standards

Frameworks Used: GRI Standards (2016)

Third-party Assurance: No external assurance

UN Sustainable Development Goals

• SDG 3
• SDG 8
• SDG 12
• SDG 13
• SDG 15

Actions related to CR themes contribute to these goals

Sustainable Products & Innovation

• Products with health aspects (13% of product launches)

Environmental Metrics

ESG Focus Areas

• Animal welfare
• Community of farmers and employees
• Wide-ranging environmental responsibility
• Sustainable and healthy food

Environmental Achievements

• Reduced greenhouse gas emissions by 51% from 2014 to 2019 (121,000 tonnes)
• Discontinued use of non-recyclable black plastic packaging in Finland and Sweden
• Renewed Rose® product packaging in Denmark using recycled materials
• 71% of electricity from renewable sources

Social Achievements

• Reduced Lost Time Injury (LTI) frequency by over 30%
• Launched Next Generation training programme for young producers in Finland
• Achieved antibiotic-free broiler rearing in Estonia
• Improved employee wellbeing and reduced absenteeism

Governance Achievements

• Successful share issue raising approximately EUR 71.9 million
• New credit agreement replacing earlier bank loans
• New Group strategy published
• New Group-wide operating model launched

Climate Goals & Targets

Environmental Challenges

• Fluctuation in the availability and prices of raw materials
• Adaptation of operations to possible changes in legislation or regulation
• Animal health and welfare-related risks (e.g., African swine fever)
• Dependence on production plants and distribution chain
• Possible product quality issues and food safety risks
• Risks related to data systems and information security
• Risks related to respect for human rights and corruption or bribery
• Reliance on skilled management and employees
• Financial and other risks (e.g., currency exchange rates, interest rates)
• Unforeseeable factors (e.g., natural disasters, fires)

Mitigation Strategies

• Active monitoring of raw material prices and availability
• Compliance with all relevant legislation and regulations
• Continuous follow-up of animal disease situation, collaboration with authorities
• Business continuity and recovery plans, preventive maintenance
• Systematic risk assessments to identify and control food safety risks
• Updates and modernisations relating to information networks, data systems
• Work safety campaigns, training, guidelines related to inappropriate treatment
• Developing wellbeing at work and alternative supply structures
• Financial risk management, hedging strategies
• Insurances

Supply Chain Management

Responsible Procurement

• Code of Conduct, Supplier Guidelines, sourcing principles for responsibly produced soy and palm oil

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather phenomena

Transition Risks

• Changes in legislation or regulation

Reporting Standards

Frameworks Used: GRI Standards (2016), GRI SRS Core level

UN Sustainable Development Goals

• SDG 3, 8, 12, 13, 15

HKScan's initiatives contribute to these goals through its focus on health, decent work, responsible consumption, climate action, and life on land.

Sustainable Products & Innovation

• Omega-3 pork, plant-based protein products

Environmental Metrics

ESG Focus Areas

• Nature
• People

Environmental Achievements

• Reduced CO2e emissions from own production (Scope 1 and 2) to 55,000 tCO2e; carbon intensity remained at 0.09 tCO2e/sold product tonne.
• Reduced packaging plastic by 16 tonnes in the Baltics.
• Introduced new biogas trucks in Sweden and Finland, resulting in up to 90% lower emissions.
• 70% of packaging was recyclable.
• Kariniemen minced meat packaging with 74% less plastic.
• Scan Falukorv in recyclable packaging made from renewable materials, reducing climate impacts by more than 200 tonnes of CO2e.
• Heat recovery in Rakvere reduced climate emissions by 420 tCO2e.
• Lighting renewal in Forssa reduced energy consumption by almost 500,000 kWh.
• New logistics centre in the Baltics reduced CO2 emissions from transport by approximately 400,000 kilometers per year and reduced energy emissions by about 30% through solar panels.

Social Achievements

• Launched restaurant-level fresh meals of the Vietävä concept in Finnish retail.
• Expanded offering in Sweden to include fish through Gårdsfisk collaboration.
• Next Generation training programme for 70 young contract farmers in Finland and Sweden continued.
• Improved employee commitment and satisfaction with supervisory work based on Voice employee surveys.
• Launched a range of Rakvere ready meals in the Baltics.
• Launched new HK and Kariniemen casseroles and several snack products in Finland.
• Expanded product range in Denmark to focus on fresh and ready-to-eat poultry products.
• Reduced salt in Rakvere sausages, hams, and Tallegg cold cuts in the Baltics.
• Expanded range of low-fat products in the Baltics.

Governance Achievements

• Code of Conduct training completed by 74% of all employees and 96% of white-collar employees.
• Established a hybrid working model combining remote and office work.

Climate Goals & Targets

Environmental Challenges

• Weak profit development in the Baltics due to overproduction of pork in Europe and increased feed and energy prices.
• Weak financial situation of meat-producing farms due to surplus in the European pork market, sharp price increases in feeds and other production inputs, and scarcity of grain harvests.
• Accelerating cost inflation and increased energy, feed, and other production input prices.
• Unstable geopolitical situation creating upward pressure on prices.

Mitigation Strategies

• Increased producer prices to secure the profitability of meat production and the availability of meat raw material.
• Focus on improving the competitiveness and profitability of core business and strengthening the balance sheet.
• Decisive action on sales pricing and other commercial measures to increase net sales and strengthen profitability.
• Significant improvement in cost efficiency and productivity in industrial operations.
• Expanding and diversifying business through partnerships and new product categories.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Guidelines commitment from 100% of raw material suppliers (excluding animal procurement).
• Commitment to using 100% responsible soy by 2025.
• Requirement for certified palm oil.

Climate-Related Risks & Opportunities

Physical Risks

• Impact of animal and plant diseases becoming more common.
• Impact of extreme weather events on crop yields and the availability and prices of raw materials.

Transition Risks

• Possible impact of national and EU legislative developments related to climate change on food production.
• Increasing regulation of carbon emissions.
• Rise in energy costs.
• Growing demand for lower emission technologies.
• Impact of changes in consumer behaviour on meat demand.
• Impact of the meat value chain carbon footprint on customer and consumer attitudes and potential impact on demand and sales.
• Impact of the carbon footprint of the meat value chain on the company's attractiveness as an employer and investment. Impact of the carbon footprint on the price of financing.

Opportunities

• Strategic growth into a versatile food company.
• Consumer-driven value creation through the promotion and commercialisation of responsible food production.
• Commercialisation of responsibly produced meat.
• Expansion into new raw materials and categories.
• Using data and digitalisation in responsible meat production and consumer engagement.
• Goal-oriented work to achieve carbon neutrality.
• More climate friendly feed production and promotion of carbon sequestration in fields.
• Northern Europe's good conditions for food production in environmental terms.
• More efficient use of production side streams.
• Increasing the use of renewable energy.

Reporting Standards

Frameworks Used: GRI Standards (2016) Core level, TCFD

Certifications: FSSC 22000, IFS, BRC

Third-party Assurance: No external assurance

UN Sustainable Development Goals

• SDG 3
• SDG 5
• SDG 8
• SDG 12
• SDG 13
• SDG 15

The company's responsibility work contributes to these goals through various initiatives related to health and well-being, gender equality, decent work, responsible consumption and production, climate action, and life on land.

Sustainable Products & Innovation

• Vietävä fresh meals
• Kariniemen minced meat in new packaging
• Scan Falukorv in recyclable packaging
• HK Maakarit and Kariniemen BBQ sausages in Woodly plastic packaging

Awards & Recognition

• Europe’s Climate Leaders by Financial Times

Environmental Metrics

ESG Focus Areas

• Climate change
• Sustainable packaging
• Biodiversity
• Safety at work
• Wellbeing at work
• Farmer community
• Animal welfare
• Safe food

Environmental Achievements

• Reduced lost-time accidents by 25% in continuing operations.
• Increased safety observations by 94%.

Social Achievements

• Launched High Five Rewards programme to recognize team achievements.
• Improved results in independent annual ESG ratings (ISS and Sustainalytics).

Governance Achievements

• Updated responsibility programme with clarified roles and responsibilities.
• No serious breaches of data security involving personal data.

Climate Goals & Targets

Environmental Challenges

• High cost inflation (energy and logistics costs).
• Rising housing and interest costs impacting consumer spending and demand.
• Geopolitical instability impacting supply chains and increasing energy costs on farms.

Mitigation Strategies

• Increased sales prices in all home markets.
• Improved cost efficiency of operations.
• Divestment of Baltic business to improve profitability and strengthen balance sheet.
• Investments in energy efficiency and heat recovery.
• Shifting to renewable energy sources.
• Increased flexibility of energy solutions.

Supply Chain Management

Supplier Audits: 100% of raw material suppliers (excluding animal procurement)

Responsible Procurement

• Supplier Guidelines covering 100% of raw material suppliers (excluding animal procurement); promoting responsibility through farmer collaboration; focus on traceability, impact assessment, verifiable data and practices; use of certified soy.

Climate-Related Risks & Opportunities

Physical Risks

• Impact of animal and plant diseases becoming more common on supply chain and exports.
• Impact of extreme weather events on crop yields and availability/prices of raw materials.

Transition Risks

• Impact of national and EU legislative developments on food production.
• Increasing regulation of carbon emissions.
• Rise in energy costs.
• Growing demand for lower emission technologies.
• Impact of changes in consumer behaviour on meat demand.
• Impact of meat value chain carbon footprint on customer/consumer attitudes and demand/sales.
• Impact of carbon footprint on company attractiveness as employer and investment, and price of financing.

Opportunities

• Strategic growth into a versatile food company.
• Consumer-driven value creation through responsible food production.
• Commercialisation of responsibly produced meat.
• Expansion into new raw materials and categories.
• Using data and digitalisation in responsible meat production and consumer engagement.
• Goal-oriented work to achieve carbon neutrality.
• More climate-friendly feed production and promotion of carbon sequestration.
• More efficient use of production side streams.
• Increasing the use of renewable energy.

Reporting Standards

Frameworks Used: GRI Standards

Certifications: FSSC 22000, IFS, BRC (food safety)

Third-party Assurance: No external assurance

UN Sustainable Development Goals

• SDG 3
• SDG 5
• SDG 8
• SDG 12
• SDG 13
• SDG 15

The report details how various initiatives contribute to these goals.

Sustainable Products & Innovation

• Via Kasvimaa plant-based products (Finland)
• Plant-based Scan products (Sweden)
• Rose Godhjertet products (Denmark)

Awards & Recognition

• Danish Occupational Health Award 2022

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainable Packaging
• Biodiversity
• Employee Wellbeing and Safety
• Animal Welfare
• Responsible Procurement
• Food Safety

Environmental Achievements

• SBTi approved near-term and land-based climate targets.
• 77% of packaging recyclable (continuing operations)
• 58% of packaging materials renewable or recycled (continuing operations)
• First Finnish food company to sign a voluntary Green Deal commitment to reduce single-use plastic packaging.

Social Achievements

• Launched Group-wide Better Together program for employee wellbeing.
• Launched Safety First program for workplace safety.
• Improved Employee Net Promoter Score (eNPS) to 0 from -3 in 2021.
• HKScan Denmark awarded CSR People Prize 2023 for diversity and inclusion.

Governance Achievements

• Completed human rights impact assessment for employees.
• Revised Supplier Code of Conduct.
• Prepared for EU Sustainability Reporting Directive (CSRD).

Climate Goals & Targets

Environmental Challenges

• High cost inflation impacting consumer behavior.
• Shift in consumer demand towards more affordable options and poultry meat.
• Need to improve profitability.

Mitigation Strategies

• Cost efficiency measures and cost savings.
• Investments in commercial activities.
• Divestment of Baltic and Swedish businesses to strengthen balance sheet and focus on core business.
• Optimising product portfolio to meet changing consumer demand.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct
• Use of certified soy and palm oil
• Focus on traceability and transparency

Climate-Related Risks & Opportunities

Physical Risks

• Impact of animal and plant diseases on supply chain.
• Impact of extreme weather events on crop yields.

Transition Risks

• Impact of legislation on food production.
• Increased regulation of carbon emissions.
• Rise in energy costs.
• Changes in consumer behavior.
• Impact of carbon footprint on investment attractiveness.

Opportunities

• Strategic growth to become a versatile food company.
• Consumer-driven value creation through responsible food production.
• Commercialization of responsibly produced meat.
• Expansion into new raw materials and categories.
• Using data and digitalization in responsible meat production.
• Goal-oriented work to achieve carbon neutrality.

Reporting Standards

Frameworks Used: GRI Standards, SBTi

Certifications: FSSC 22000, IFS, BRC

UN Sustainable Development Goals

• SDG 3
• SDG 8
• SDG 12
• SDG 13
• SDG 15

The report mentions alignment with several SDGs throughout the text.

Awards & Recognition

• CSR People Prize 2023 (Denmark)
• Financial Times’ European Climate Leaders list (2021, 2022, 2023)

Environmental Metrics

ESG Focus Areas

• Climate change
• Employee wellbeing and safety

Environmental Achievements

• Revised climate target to reach net zero for all greenhouse gas emissions by 2050.
• Reduced greenhouse gas emissions by up to 38 tCO2e per year at the Danish business unit's Vinderup wastewater treatment plant.
• Replacing black packaging boxes with recyclable green boxes.

Social Achievements

• Continued to promote employee wellbeing through the Group-wide Better Together programme.
• Inclusion chosen as the theme for 2024, developed with the Inclusion Starts With Me project.
• Offered jobs within the company to 19 persons in Eura whose jobs were affected by centralization of poultry packing activities.

Governance Achievements

• Updated the climate emissions calculation, climate target and timeline of its responsibility programme to better align with international climate work guidelines, calculations guidance and reporting standards.
• Annual General Meeting approved the change of the company name from HKScan Corporation (HKScan Oyj) to HKFoods Plc (HKFoods Oyj).

Climate Goals & Targets

Environmental Challenges

• High cost levels between January and March.
• Political strikes in March negatively impacted exports.
• Uncertainty about the availability and price of inputs.
• Possible weakening of consumer demand due to high lending rates and economic uncertainty.
• Risk of impairment losses if financial performance does not improve as planned.
• Risk of animal diseases (African Swine fever and avian flu).
• High risk of cyber-attacks.
• Weakened global logistics chains posing risks to investment execution.

Mitigation Strategies

• Tightly managing costs, improving production efficiency, optimizing product portfolio, and carrying out commercial efforts.
• Contingency arrangements to prepare for disruptions caused by political strikes and secure customer deliveries.
• Negotiations to refinance debt maturing in January–March 2025.
• Sale of Baltic, Swedish, and Danish businesses to strengthen the balance sheet.
• Investments in Forssa and Rauma to generate annual cost savings of around EUR 6 million.
• Investment in Eura unit for ready-to-eat products to improve profitability and competitiveness.
• Centralizing poultry packaging activities from Eura to Rauma and Forssa to achieve annual savings of around EUR 1 million.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: EU Sustainability Reporting Directive (CSRD), GHG Protocol, Land Sector and Removals Guidance, Science Based Targets initiative (SBTi)

Sustainable Products & Innovation

• Ready-to-eat products