Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Commissioned a 3.0 MW thermal energy plant in 2008 at Alajärvi factory, using sawmill by-products for energy recovery.
• Developed Honka Säästö™ energy-saving concept for holiday homes, significantly reducing energy costs.
• Streamlined log range to better fit customer demand and future energy restrictions.
• Designed production process for high precision, minimizing wood waste and utilizing waste wood for by-products and thermal energy.

Social Achievements

• Implemented a two-year profit improvement program resulting in improved financial position and earning power.
• Continued personnel training program focusing on cooperation between different functions and securing direct information and innovation channels.
• Implemented temporary layoffs throughout the workforce.

Governance Achievements

• Abides by the Finnish Limited Liabilities Companies Act and the Finnish Corporate Governance Code.
• Established a new Executive Group bonus scheme with long-term management shareholdings.

Climate Goals & Targets

Environmental Challenges

• Significant reduction in new signed deals from mid-May 2011 due to economic recession.
• Significant decrease in sales from July 2011 due to the global economic crisis.
• Reduction in net sales in Finland, almost entirely in the holiday home segment.
• Disappointing net sales from the West market area for the second year in a row, mostly in the German market.
• Japan's natural disaster in March 2011 affected sales in the Far East.
• One significant distributor dealer whose sales make up over 15% of the Group’s total net sales.
• Significant credit risk concentration regarding sales receivables from one particular importer.

Mitigation Strategies

• Implemented a two-year profit improvement program.
• Organized sales training related to the Honka Fusion™ concept for importers in the West market area.
• Launched new holiday home models (Saariston Tähti range, Lokki model).
• Launched the Honka Jewels™ range of models in the premium segment in the East market area.
• Renewed existing product ranges in the Far East in response to customer needs.
• Added triple-paned windows as a standard accessory for all house shipments to Japan.
• Streamlined log range to better fit customer demand and future energy restrictions.
• Signed a payment plan contract with the significant importer regarding sales receivables.

Supply Chain Management

Responsible Procurement

• Principle of multiple suppliers for critical raw materials and subcontracted products.
• Careful use of all wood raw materials; sustainable, versatile forestry; strict compliance with laws and regulations when buying raw wood.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Certifications: ETA certification and the right to use the CE mark

Sustainable Products & Innovation

• Honka Säästö™ energy-saving concept
• Honka Fusion™ concept
• Honka Jewels™ range

Awards & Recognition

• Lokki model elected Log House of the Year

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Honkarakenne uses sawmilling by-products as packaging material, converts log ends, second-grade timber and waste wood into wood chips for energy recovery, and recycles other waste materials.
• The associated company Puulaakson Energia Oy produces thermal energy for the Karstula factory using by-products from the factory.
• Honkarakenne has PEFC certification for sustainable forestry practices.

Social Achievements

• Honkarakenne model won Finland's best detached house competition for the second year in a row.
• Honkarakenne signed over 60% more deals for detached homes than in the previous year.
• Job rotation program implemented to improve employee understanding of company operations.

Governance Achievements

• Honkarakenne Oyj abides by the Finnish Limited Liabilities Companies Act and the Finnish Corporate Governance Code.
• The company streamlined its management during the third quarter.

Climate Goals & Targets

Environmental Challenges

• 14% decrease in net sales compared to 2014, with a significant decline in Finland and Russia.
• Difficult market situation in Finland and Russia due to economic factors and the Ukrainian crisis.
• Difficulty acquiring funding from financial markets, with some loans carrying a 30% equity ratio covenant term.

Mitigation Strategies

• Boosting efficiency of goods flow, adjusting personnel headcount, boosting marketing efforts, closing unprofitable locations, changing prices, and enhancing operational efficiency.
• Negotiations on new loan financing with banks and potential financiers.
• Implementation of efficiency actions including temporary lay-offs.

Supply Chain Management

Responsible Procurement

• Relies on multiple suppliers for critical raw materials.

Climate-Related Risks & Opportunities

Awards & Recognition

• Honkarakenne model voted Finland's best detached house (2014, 2015)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Careful and economical use of raw materials, saving energy, making use of byproducts and recycling waste for further use.
• Use of sawmilling byproducts as packaging material.
• Conversion of log ends, second-grade timber and waste wood into wood chips for energy recovery.
• Recycling of plastic packaging films and plastic-based binding strips.
• All recyclable materials sent out for further processing.
• Thermal energy for Karstula factory drying plants produced by associated company Puulaakson Energia Oy, using byproducts from the factory.

Social Achievements

• Enlarged domestic sales network and further developed sales operating models.
• Introduced overhauled processes for both the order-delivery chain and sales.
• Developed the monitoring of customer experience and linked it more closely to management.
• Codetermination negotiations in preparation for seasonal variations, resulting in shorter work weeks and potential lay-offs for clerical and managerial employees.

Governance Achievements

• Strengthened Executive Group by appointing Sanna Huovinen as Vice President, Marketing.
• Compliance with the Finnish Limited Liability Companies Act and the Corporate Governance Code 2015.

Climate Goals & Targets

Environmental Challenges

• Difficult situation in Russia & CIS, with weaker than expected net sales.
• Challenging competitive situation in Finland.
• Industrial action halting work at Karstula factory, causing delayed deliveries.
• Uncertainty in the market due to the spread of coronavirus.
• Instability in the Russian market due to sanctions and general economic situation.
• Potential impairment of deferred tax assets if earnings do not develop as expected.

Mitigation Strategies

• Cost-savings programme to improve profitability in Finland.
• Investments in production line upgrades at Karstula factory to improve efficiency and capacity.
• Focus on projects and area development projects in Russia.
• Sales campaign to promote sales of new models in Russia.
• Honka House Day Road Show in Russia and Kazakhstan.
• Reorganisation of operations in Central Europe to boost sales efficiency.
• Good cost management.

Supply Chain Management

Responsible Procurement

• Relying on multiple suppliers for critical raw materials and subcontracted products.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Certifications: ISO 9001, ISO 14001

Third-party Assurance: Ernst & Young Oy

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Parent company uses 100% renewable energy (0 g/kWh CO2 emissions) in all its locations.
• Careful utilization of wood raw material, energy saving, recycling waste and using recyclables.
• Uses low-quality sawn timber for packaging, and wooden recyclable packaging materials are stamped in accordance with the EU standard.
• Some cut-off, second-quality and waste timber is used chipped for energy production.
• Honkarakenne's cutter chips are delivered for further utilization as bedding for agricultural needs, and surplus log chips are processed into chip wool.
• Sorts and pre-processes packaging plastic films and plastic-based binding materials. Recycled materials are delivered for further processing.

Social Achievements

• Number of work accidents decreased by half compared to the previous year (3 accidents).
• Occupational well-being survey had 90% response rate, eNPS was 28.0.
• Joint personnel day held to promote team building and Honka spirit.

Governance Achievements

• Complied with the Finnish Limited Liability Companies Act and the Securities Market Association's Corporate Governance Code 2020.

Climate Goals & Targets

Environmental Challenges

• Challenging operating environment throughout the financial year due to high interest rate levels and recession.
• Net sales fell 37% short of the previous year.
• Decrease in export turnover due to loss of sales to Russia and lower turnover in the Japanese market.
• Order book fell 35% short of the previous year's level.
• Production profitability weakened due to decreased production volumes and increased unit price costs.
• Uncertainty in the market and potential negative effects of a prolonged recession.
• Uncertainty regarding the impact of the war in Ukraine.
• Freight deliveries to Asian regions had to be moved to longer routes due to regional instability, resulting in longer delivery times and rising freight costs.

Mitigation Strategies

• Continued temporary lay-off and adjustment measures initiated in the previous financial year.
• Change negotiations leading to 22 redundancies.
• Focus on promoting and implementing development projects to improve project profitability and customer experience.
• Emphasis on developing sales and retail network and acquiring new customers in export focus markets.
• Opened a new Honka sales office in Stockholm and strengthened the Japanese organization with in-house architectural expertise.
• Comprehensive strategy work completed in the Japanese subsidiary.

Supply Chain Management

Responsible Procurement

• Uses multiple suppliers for critical raw materials to ensure uninterrupted operations.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Certifications: ISO 9001, ISO 14001

Third-party Assurance: Ernst & Young Oy

Sustainable Products & Innovation

• Honka MultiStorey™ concept for multistorey log buildings.

Environmental Metrics

ESG Focus Areas

• Sustainability
• Health and Safety
• Responsible Purchasing
• Eco-friendly Production

Environmental Achievements

• Parent company uses 100% renewable energy electricity at all its own sites (0 g/kWh CO2 emissions)
• Launched Honka Säästö solution for recreational buildings, saving energy and housing costs (water and heat shutoff)

Social Achievements

• Employee fund bonuses paid based on good safety performance in 2023
• Launched share-based incentive program for 2024-2026 for key employees
• Customer 360 project progressed, improving customer experience

Governance Achievements

• Complied with the Finnish Corporate Governance Code for listed companies

Climate Goals & Targets

Environmental Challenges

• Weak sales and foreign exchange losses
• Low order book at the beginning of the year
• Challenging economic climate in Europe, particularly in Germany
• Uncertainty about the development of the economic situation, current interest rates and the reduced availability of financing
• Uncertainty of the military aggression initiated by Russia and all its effects on business
• Instability in the Middle East contributing to longer delivery times and higher freight costs

Mitigation Strategies

• Lay-off and redundancy measures
• Focus on increasing sales and projects that improve profitability
• Customer experience for profitable growth transformation programme
• Strategic work to develop and clarify activities in export markets
• Replacement investments in Karstula plant (gluer, laminated timber plane, non-settling logs production line)
• Developing sales and distribution network, supporting sales activities and acquiring new customers

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Responsible purchasing

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: IAS 34

Certifications: ISO 9001, ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Honka MultiStorey™ log house
• Rock and Star range of landscape cabins
• Honka Säästö solution

Awards & Recognition

• Not disclosed