SCA Sustainability Report 2012

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SCA Sustainability Report

2012


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Recognition

Contents

SCA was named one o the worlds mostethical companies by the Ethisphere

Institute.

SCA is included in the Dow JonesSustainability Index, one o the

worlds most prestigious sustain-

ability indexes.

SCA is included in the CarbonDisclosure Leadership Index.

SCA has been listed on the FTSE4Good globalsustainability index since 2001.

SCA is on the Fortune Most Admired

Companies list, ranked third in the

Forestry and Paper class, and number

one in this class or social responsibility.

SCA became a UN Global

Compact member in 2008.

SCA is a member o the World

Business Council or Sustainable

Development (wbcsd).

In WWFs Environmental Paper Company

Index 2011 SCA had the highest score in both

in the tissue and packaging categories.

SCA is listed on the Global Challenges

Index.

SCA is a constituent o ECPI

indices.

SCA is included in the indexes

OMX GES Sustainability Nordic and

OMX GES Sustainability Sweden.

SCA was awarded or Best Sustainability

Report 2011 by FAR (the proessional institute

or authorized public accountants in Sweden.

Introduction

SCA at a glance ............................................................ ap

CEOs message ................................................................ 2

The SCA sustainability eect ....................................... 4

Drivers and trends ....................................................... 6

Stakeholder dialog ....................................................... 8 Materiality analysis ................................................... 12

Strategy ....................................................................... 14

Targets and outcome ................................................ 16

Value chain ...................................................................... 18

Economic value creation

Economic value creation .............................................. 20

Stakeholders .................................................................. 22

Shareholders .................................................................. 23

Sustainable business ................................................... 24

Sustainable innovations ............................................... 26

Value or natureValue or nature .............................................................. 30

Climate and energy ....................................................... 32

Biouel and wind power.................................................. 34

Fiber sourcing ................................................................. 36

Biodiversity ....................................................................... 38

Water usage .................................................................... 39

Waste ................................................................................ 40

Product saety ................................................................ 41

Value or people

Value or people ............................................................. 42

Code o Conduct ........................................................... 46

Supply chain ................................................................... 50

Health and saety ........................................................... 52

Employee relations ........................................................ 56Community involvement .............................................. 58

Control and assurance

Sustainable governance .............................................. 60

Environmental data ....................................................... 62

Social data ....................................................................... 70

About this report ............................................................ 71

Assurance report ........................................................... 72

Global Compact Report ............................................... 73

GRI Index ......................................................................... 74

Glossary ........................................................................... 76

Addresses

About this report

SCA publishes a separate sustainability report each year.

The report describes the environmental, social and economic

perspectives o SCAs sustainability initiatives, and is aimed at

specialist audiences with an interest in SCAs sustainability

perormance, including analysts, investors and NGOs. As o

2008, SCA is a signatory to the UN Global Compact. The

sustainability report represents the Groups Communication

on Progress, describing SCAs work to address the Global

Compacts ten principles on human rights, working conditions,

the environment and anticorruption. The Global Reporting

Initiative guidelines, level A+, are applied in this report, and the

GRI content index (pages 7475) provides a cross-reerence to

the indicators included in the report. The entire report has been

reviewed by PwC. All data in this report has been collected

over the 2012 calendar year, and covers the SCA Group,

including wholly and majority-owned subsidiaries. For urther

inormation regarding the sustainability report and its reporting

principles, see page 71.


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Tissue, 49 %

Forest Products, 21 %

Total Group: SEK 85,408m

Personal Care, 30%

Tissue, 50 %

Forest Products, 15 %

Personal Care, 35 %

Total Group: SEK 8,646m

Excluding items affecting comparability.

Share o net sales (share o Group)

Share o operating proft (share o Group)

Business areas

SCA is a lead

that de

I believe that people and nature are meantto co-exist. We have a responsibility to take

care of nature so nature can take care of us.

Even before it became popular for com-

panies to be green, SCA was committed

to raising the awareness and importance

of creating value from nature.

Bernice Cator, Lbotoy eg

Phldlph, usa

Europe (including Arica) 2012 20111) Employee age distribution

nt l, seKm 62,538 57,013 % 40

avg o. o mploy 22,149 20,357 30

Wom, % 25 26 20

sl2), seKm 9,303 8,271 10

socl cty cot, seKm 2,705 2,301 0

60+5160415031402130020

Americas 2012 20111) Employee age distribution

nt l, seKm 17,870 16,130 % 40

avg o. o mploy 8,446 8,038 30

Wom, % 30 32 20sl2), seKm 2,312 2,258 10

socl cty cot, seKm 696 620 0

60+5160415031402130020

Asia3) 2012 20111) Employee age distribution

nt l, seKm 5,000 4,113 % 40

avg o. o mploy 2,531 1,862 30

Wom, % 60 60 20

sl2), seKm 359 282 10

socl cty cot, seKm 46 43 0

60+5160415031402130020

SCA Group total 2012 20111) Employee age distribution

nt l, seKm 85,408 81,337 % 40

avg o. o mploy 33,775 31,646 30

Wom, % 29 29 20sl2), seKm 12,241 11,850 10

socl cty cot, seKm 3,446 3,094 0

60+5160415031402130020


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Personal CareThe business area comprises three

product segments: incontinence products,

baby diapers and eminine care. Produc-

tion is conducted at 30 acilities in 25

countries.

TissueThe business area comprises two product

segments: consumer tissue and Away-

From-Home (AFH) tissue. Production is

conducted at 55 acilities in 23 countries.

Forest ProductsThe business area comprises fve product

segments: publication papers, kratliner

(packaging papers), pulp, solid-wood

products and renewable energy. Produc-

tion is conducted at 20 acilities. Products

are mainly sold in Europe, but also in Asia,

North Arica and North America.

global hygiene and forest products company

ps and produces sustainable personal care,

tissue and f orest products.

A symbolic journey with the brand in ocusSCA has decided to participate in the 20142015 edition o the Volvo Ocean

Race. Participation in the event aims to promote the SCA brand and the

Groups product brands.

The Volvo Ocean Race is the most demanding sailing competi-

tion in the world, while it also provides a unique global marketingplatorm. Just like in business, qualities such as interper-

sonal skills, leadership and the ability to defne a success-

ul strategy are decisive actors or the outcome. One o

SCAs sustainability ambitions is to support wom-

ens rights to live their lives on their own terms,

which is one o the reasons why the Group has

chosen to participate with an all-emale

crew. The Volvo Ocean Race is a symbol

or the journey o change that SCA is under-

going in cultural, organizational and

commercial terms.

36,000 employees

Annual sales o SEK85billion

SCA has sales in about100 countries

Many strong brands


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Highlights 2012 AcquiredGeorgia-PacicsEuropeantissue

operation.

Divestedpackagingbusiness,excludingthetwo

kratliner mill in sweden.

LaunchednewsustainabilitytargetsforSCA.

DecidedtoinvestinabiofuellimekilnatMunksund

kratliner mill in sweden.

SCAandE.ONsignedanagreementtoestablish

a wind power cooperation. Contruction commenced

on the frt wind arm a part o the statkratcollaboration.

SCAachieved100%controloftheoriginsof

reh fber-baed material.

RolledourglobalCodeofConductawareness

campaign.

AllmajorSCAfacilitiesreportedintheSedex

ethical databae.

SCA Sustainabil ity Report 2012


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Sustainability part o

our business modelstblty ot oly om tgl pt o sCa opto, t lo pt

ofourbusinessmodel.Oursustainabilityprogramisbasedonnancial,environ-

mentalandsocialvaluecreationallofwhichholdequalimportanceinefforts

to ct ccl compy. Fthmo, th b modl d-

pd by o ttgc pot: ccy, ovto d gowth.

Delivering value and return to our shareholders,

both in the long and short term, is undamental

or SCA. To ensure the companys relevance in

the uture, it is important to understand the link

between fnancial return and value creation or

people and the environment. Global macro

trends, such as population growth, an aging

population, higher standards o living, shortage

o resources and climate change, are altering the

conditions or our business operations.

Addressing these opportunities and challenges

using a sustainable business model creates new

opportunities or efciency enhancements,

innovation and growth.

Business value

When we use our resources efciently, wereduce our environmental ootprint and our

costs. In 2012, or example, we decided to invest

SEK 490m in a lime kiln at the kratliner mill in

Munksund, resulting in annual cost savings o

approximately SEK 50m and a 75% reduction in

ossil carbon emissions.

By eectively managing our business and

supply chain, we save money and reduce the

risk o corruption and health and saety viola-

tions. We do this by continuously educating

people in our Code o Conduct and expanding

our review o compliance. In 2012, audits were

carried out in Russia, the US, Sweden and

Poland. Our plans or 2013 include increasing

the number o audits and continuing our report-

ing in the global Sedex ethical database, both in

SCAs own operations and in our supply chain.

Being recognized as a sustainable company

makes SCA an attractive employer and instills

employees with a sense o pride. The sustaina-

bility requirements o investors regarding the

companies in which they invest are becoming

more stringent. Customers and consumers are

requesting sustainable products and services

and we use our sustainability program to help our

customers strengthen their market positions and

ulfll their own sustainability targets. The Empire

State Building in the US is one such customer;

SCAs Tork products played a par t in the environ-

mental certifcation o the building (LEED).

Our sustainability initiatives not only

strengthen the SCA brand, they also play a

vital role or our product brands, such as Tork,

TENA, Libero, Libresse and Lotus. Our innova-

tion work is governed by sustainability criteria

and our eorts to attain various types o certif-

cation to acilitate the choice o brand or the

consumer.

New ambitious sustainability targets

Our ambition is to improve hygiene standardsacross the globe and to minimize our environ-

mental impact. Through our hygiene and orest

products operations, we have a unique opportu-

nity to make a real dierence or people and the

environment. We do this through our products

and oerings, and also via comprehensive edu-

cation initiatives to raise knowledge o hygienes

signifcance or health and well-being as well as

breaking taboos surrounding conditions such as

incontinence.

To urther raise ambitions in the sustainability

area and to cascade these ambitions into meas-

urable milestones, we launched a number o

new sustainability targets last year. We have

selected the targets on the basis o what is most

relevant or SCAs business and our stakehold-

ers. Measurable targets make it easier to under-

stand how sustainability contributes to busi-

ness. The targets have a value in themselves

i something is measured, it gets done! and

they are by no means static; the related eorts

will be concluded when the targets have been

achieved and new targets will be added as the

need arises.

A company in transition a journey

into the uture

In 2012, SCA completed two historically impor-

tant corporate transactions: the acquisition o

Georgia-Pacifcs European tissue operation

and the divestment o our packaging business,

excluding the two kratliner mills in Sweden. We

purchased the Asian hygiene company Ever-

beauty and sold our paper mill in Aylesord in the

UK. We also signed an agreement to sell the

Austrian publiation paper mill in Laakirchen. Theend result is an SCA that is somewhat smaller

than beore in terms o sales and number o

employees, but with ull ocus on hygiene and

orest products.

During the year, the hygiene business carried

out a major reorganization at the same time as

we launched comprehensive efciency-

enhancement and savings programs in both the

hygiene and the orest products operations.

These major restructuring eorts will acili-

tate continued and uture growth and proftabil-

ity, but will also naturally entail a considerable

strain on our employees and our organization.

I have been impressed with the ability o employ-ees to continuously put the interests o the cus-

tomer and consumers frst, to ocus on innova-

tion and to act as proessionally as always.

There is a great inherent sense o pride and

strength in our corporate culture and this is

something we at SCA continously build on!

Standing up or who we are

At SCA, it has always been our belie that we

should be as transparent as possible. By provid-

ing a clear picture o the direction we are taking,

we enable our stakeholders to better under-

stand our business and we orm the basis or

establishing the stakeholder dialog that is so

important or our continued development as acompany.

We know that, in essence, there are only a

ew unique ideas. What sets high-perorming

companies apart rom average ones is the exe-

cution itsel doing the right things, doing the

right things, surpassing customer and consumer

expectations, and being innovative and quick.

These insights are the reason why we are

increasingly ocusing on using open innovation

SCA Sustainability Report 2012

Introduction | CEOs message


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through collaboration with external parties to

develop our oerings. Such par tnerships make

us stronger and enable us to intelligently use

resources.

In 2008, SCA signed the UN Global Compact

and, in 2012, we became a member o the World

Business Council or Sustainable Development,

WBCSD, which urther confrms our commitment

to sustainability.

Proo that we are doing the right things

We are continuously reminded that we are

leading the way in the sustainability area. For

the sixth consecutive year, we were named

one o the worlds most ethical companies by

the US think tank Ethisphere Institute and we

were once again included in the prestigious

Dow Jones Sustainability Indexes. The Swedish

Organisation o Certifed Public Accountants

(FAR) named our 2011 sustainabi lity repor t as

the best in Sweden. We endeavor to do the

right things, surpass the expectations o our

stakeholders and work to achieve continuous

improvements with clear and measurable goals.Combined with an in-depth understanding

o global trends, I am convinced that we will

urther strengthen our market positions and

continue to provide opportunities or growth

and value creation.

Jan Johansson, President and CEO

SCA Susta inabil ity Report 2012

CEOs message | Introduction


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The SCA sustainability eect

Drivers

1Population growth, higher standards o living, shortages oresources and climate change are the macro trends that arerapidly altering the conditions or SCAs business operations.

By analyzing the external environment and trends, we capitalize

on these drivers to create long-term sustainable growth.

page 6

Dialog withexternal players

Millions o people across the globe have an impact on and an interest in our

business. SCA believes that an active and constructive dialog with our stake-

holders improves the way we ormulate and implement our business strategy

and helps us understand the needs and expectations that exist in the com-

munities in which we operate.

page 8

Care and respect or people and nature are absolutely

central to SCAs way o working.

This is the lens we use to look at the world

rom the big picture right down to the fner

points o harvesting a orest, testing a new

innovation or designing a new diaper. It

means we constantly challenge our-

selves to deliver solutions that make

a dierence to everyday lie. And wehave ound that it is amazing what

you can achieve when living our

values o respect, excellence and

responsibility.

Economy

PeopleNature

2


Introduction | The SCA sustainability eect


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Target and results

5

In 2012, we launched a number o new sustainability targets that were chosen

on the basis o what is most relevant to SCAs business and our stakeholders.

Ambitious and clear targets serve as an excellent means to drive and guide

operations. Measureable targets also make it easier or those outside the

company to understand how sustainability contributes to the business.

page 14

Our choiceo direction 3Our materiality analysis highlights the issues that are signifcant

to the company and orms the basis or SCAs sustainabili ty

program. The 2012 analysis lists the actors that are most

important to stakeholders in combination with our own percep-

tion o the relevance o the area or our business strategy.

page 10

Strategy4SCAs sustainability strategy is an integral part o our business strat-

egy, based on economic, environmental and social value creation.

Our ambitions or people and nature describe what we want to achieve

in the long term.

page 12


The SCA sustainability eect | Introduction


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Driving orces a changing worldoers new opportunitiesGlobalmacrotrends,frompopulationincreasesandhigherlivingstandards,toresourceshortagesandclimate

chg, pdly chg th codto o sCa b opto. By lyzg th xtl vomt

d td, sCa c lvg th dv, th blg th cto o log-tm tbl gowth.

MORE AND OLDER

When SCA was ounded in 1929, the worlds population was about

2 billion. Today, we are 7 billion. According to fgures rom the UN, the

global population will reach 9 billion by 2050. We are also getting older.

Over the coming decade, the number o people over the age o 65 will

increase by 33%. This generates demand or incontinence products and

other hygiene products.

HIGHER STANDARD OF LIVING

Improved economic conditions around the world mean new

opportunities or consumers, especially in emerging markets such

as Asia, Latin America and Eastern Europe. Those who do not

have the same fnancial possibilities nonetheless want to have

access to the same hygiene products, reedom to choose and the

right to the same degree o well-being as those who live in coun-

tries with a more developed market. SCA sees opportunities to

generate growth and proftability with new business models and

relevant oerings or consumers with limited resources.

HEALTH AND HYGIENE

As healthcare services struggle to meet

the increasing demands rom a growing

and aging population, it becomes even

more important to improve standards and

products in health and hygiene. Poor or

no access to hygiene and sanitation is

one o the greatest global challenges to

be resolved. Here, hygiene products are

an important part o the solution.


Introduction | Drivers


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FOREST MANAGEMENT

Every year, seven million hectares or 0.2% o all

orest areas globally is deorested. Illegal log-

ging and timber rom controversial sources

threaten the orests o the world and biological

diversit y. Checking the origin o the wood raw

material is thereore extremely important. Sus-

tainably managed orests are one o the worlds

ew renewable resources. Growing orests also

absorb carbon dioxide and counteract climate

changes. SCA has goals or both preservation o

biological diversity and responsible use o wood

raw material. SCAs orests have an annual net

growth o 1% and are FSC and PEFC certifed.

ENERGY CONSUMPTION

Access to energy has become a strategic issue in most countries in the world. The Inter-

national Energy Agency (IEA) predicts that the need or energy will increase by 36% up to

2035, which will probably entail higher costs and shortages in some cases. Since SCA is a

large energy consumer, it is important or the company and its competitiveness to con-

stantly work to streamline energy use. SCA conducts development in renewable energy,

such as wind power and biouels, in order to secure access to sustainable energy and

reduce the risk o higher costs.

CHANGED CONSUMER BEHAVIOR

The planets limited resources, political prioritizations and more knowl-

edgeable and aware customers and consumers increase demand or

sustainable products and services. This drives SCAs innovation o prod-

ucts, services and business models to meet the growing demand or

sustainable consumption.

WATER SHORTAGE

The UN predicts that two-thirds o the

worlds population may live in areas with

water shortages in 2025. Access to water is

critical or people, industries, agriculture and

ood production. A large proportion o SCAs

production processes are dependent on

access to water. A great deal o ocus is

thereby placed on eective water consump-

tion and puriying processes. Special ocus

is placed on reducing water consumption in

the mills that are located in water-stressed

areas.

CHANGED MARKET BALANCE

Emerging markets are accounting or an increasing share o the global

economy in pace with the development o the economies in these

regions. In recent years, SCA has strengthened its presence in emerging

markets where a growing share o the Groups uture expansion will take

place.

CLIMATE CHANGES

The climate issue is one o the most serious

environmental and social problems acing the

world. Authorities are setting targets to reduce

carbon dioxide emissions and the private sector

is expected to contribute. SCA has the target o

reducing its carbon dioxide emissions by 20%

by 2020.

Every year, the Groups orest holdings net

absorb 2.6 million tons o carbon dioxide, which

exceeds the emissions rom SCAs production.

1


Drivers | Introduction


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Stakeholder dialog stake in the groundHvg voc th pblc dbt d ggg bod dlog ccl

o sCa ot oly wy to h ght d xpt bt lo

oppotty to dvoct o olto to th globl chllg hd by sCa

d t tkhold.

Roberto S. WaackCEO Amata S.A. , Brazil

The Amata partnership with SCA relating to

the Velvet Three Trees Program brought a new

perspective on tropical orests to Brazil.

Recovering degraded lands by planting native

trees gave us the opportunity to involve dier-

ent sources o knowledge on how to plant and

maintain tropical trees and enable them to take

back their ormer terr itory. 2012 marked the

ourth year o the partnership in which close to

fve million trees have been planted and tens o

millions o trees have been protected. SCA and

Amata worked together to identi y traditional

knowledge on seed collection and germina-

tion. The project attracted the attention o

research institutions and civil society organi-

zations that joined the eort to plant and main-

tain more than 15 Amazonian species o trees.

Traditional cattle ranchers also participated in

the initiative. We were impressed by SCAs

commitment to accessing and developing

know-how in the various areas. We were able

to explore the opportunities presented by sus-

tainability with the assistance o local people,

workers, scientists, oresters, fnancial spe-

cialists, auditors, certifers (all operations are

FSC certifed), civil society activists and mar-

keting proessionals. This is the way we believe

the global sustainability challenge should be

tackled; creating new possibilities in the real

world, eet on the ground, hands on, relevant

scale, sharing knowledge, admitting mistakes,

putting our brains together to solve something

that can make a real dierence or the planet

and or people, while also making it economi-

cally attractive. The potential o the program is

immense and it has uses throughout the trop-

ics, but also in the Northern hemisphere o our

planet. We learned a lot rom SCA on how to

access risks and leverage the opportunities

generated by such an innovative venture. We

are very proud o the project and so too is the

Brazilian orest community. There is a long way

to go and we are very pleased that together

with SCA the prospects are extensive.

For more information on the Velvet Three Trees

Program, see page 35.

Nadine Viel LamareAnalyst, Sustainable Investments,

First Swedish National Pension Fund

I have been monitoring SCA or a number o

years now and I have always had a positive view

o the companys sustainabili ty work. I have also

seen that in recent years it has expanded its

sustainability ocus outside the companys own

operations to also encompass the supplier

stage. SCA is active in an industry that not only

has considerable sustainability challenges, but

also business opportunities, which SCA has

taken to heart. It is positive that sustainability is

not regarded as something that is done outsideo normal business operations, but rather is

viewed as a tool to achieve long-term fnancial

growth, while there is also an ambition to make a

positive contribution to the environment and the

communities in which the company operates. It

is worth noting that SCAs customers also view

sustainability work as an important parameter

when making purchasing decisions.

For me as an investor, transparency and clar-

ity play an essential role in enabling me to eec-

tively assess a companys actual risks and what

is being done to address these. It is obvious that

the structured stakeholder dialog that SCA con-

ducts with various groups has not only impactedthe way it approaches and works with sustaina-

bility, but also its method o repor ting on the sub-

ject. SCAs transparent reporting on risks, stake-

holders perceptions o the company, targets

and target ulfllment not only creates credibility

or its sustainability eorts, but also increases

the internal understanding o the companys

chosen areas.

Jacqueline MacalisterSustainable Supply, McDonalds Europe

Our ambition at McDonalds is to source all our

ood and packaging sustainably. Achieving this

goal requires a strong commitment rom and

strategic partnerships with our suppliers. SCA is

a business that understands the sustainability

agenda and has demonstrated its willingness to

incorporate it into their core business. SCA is a

key partner supporting McDonalds to source

sustainable wood fber thats recycled or rom

sustainable orests, partnering on initiatives to

drive down our paper consumption, optimizing

the supply chain to reduce transportation dis-

tances and working with us to test closed loop

recycling. Their engagement with us is vital to

being able to achieve our sustainability goals in

all o these areas.


Introduction | Stakeholder dialog


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Stakeholder group 2012 activities Key areas How do we address the issues (page number)

Customers Ctom vy

sm

Cbo ootpt

ecolbllg

Hm ght complc

Fb ocg

L Cycl amt (26)

CO2 tgt (32)

socg tgt (36)

FsC ctcto (36, 38)

Cod o Codct dt (47)

B Pctc rv w (47)

implmtto o ppl tdd (50)

Consumers Com vy

Com ch

impct o podct o popl d

t, o xmpl, cbo oot-

pt, colbllg

LCa cldg cbo ootpt (26)

eco cto (www.lbo./co-cto, www.lb.com,

www.t.com)

Podct ty (41)

Chmcl (41)

Employees Tg

Fdbck

Tlt mgmt

Pomc mgmt

Wokoc plg

Compto d bt

Copto

Hlth d sty

Cod o Codct tg (49)

OHSAS18001certication(52)

all mploy vy (56)

Diversitysurvey(57)

GlobalPerformanceManagementSystem(57)

Investors SRIquestionnairesOne-on-onemeetings

Tlbg

alyt tvw

rodhow

Fld vt

ESGintegrationintobusinessttgy

egy ccy

rk mgmt

iclo tbl ty d d dx (23)CO2 tgt (32)

esaVe (32)

Cod o Codct dt d B Pctc rv w (47)

rk ly (ar 56)

Suppliers sppl dt

Supplierquestionnaires

rw mtl ocg socg tgt (36)

sppl gdl d tdd (50)

spply ch c (50)

sdx potg (50)

NGOs Ongoingdialog Fot mgmt

CO2 mo

egy tlzto

Wt pply

FsC commtmt (10)

DialogwithNGOs,suchasWWFandtheSwedishSociety

o nt Covto (11)

Society Ptcpto dty ttv

d tddto bod

Ongoingdialog

Commty volvmt

sCa dlog wth octy

Commty volvmt

Pblc (10)

stkhold dlog (10)

Mmbhp ogzto (11)

Commty lto ttv (58)

2As a leading global hygiene and orest products company. SCA considers

it important to tackle shared global challenges in dialog with a wide variety

o stakeholders. This includes employees, customers and consumers,

governments and regulatory bodies, non-governmental organizations

(NGOs), trade associations and other networks and alliances. The com-

pany is actively engaged in a number o issues and seeks to conduct all

such interactions in a spirit o openness and transparency.

>


Stakeholder dialog | Introduction


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In 2012, SCA developed a more systematic and coherent approach

to public aairs and stakeholder engagement, conducting a risk

mapping and prioritization o key public policy issues and challenges

likely to impact the SCA Group over the next fve years. The results

are used to support uture strategy development and related advo-

cacy. SCA has a dedicated global public aairs unction across all

business units. Its aim is to monitor policy and legislative develop-

ments and identiy opportunities to engage in ways that can lead to

a successul outcome or all relevant stakeholders.

Understanding stakeholder concerns

SCA has a broad product porto lio and a diverse range o customers,

both end consumers and customers, such as retailers, companies,

distributors, printing houses and healthcare institutions. With such

a varied customer base, relationships are managed by the business

units, with suppor t rom the Group. SCA seeks to meet or exceedcustomers expectations and to gain insight into the issues that are

important to them. In order to gauge customers assessments o

SCA, customer satisaction surveys are conducted and ollowed up

by all business units . Two relevant examples include a customer sat-

isaction survey in Italy with pharmacies and homes or the elderly on

incontinence care, and SCA Timber customer surveys in the UK.

In-depth consumer insight reveals issues o concern. SCA also

conducts quantitative market research and consumer visits in peo-

ples homes to learn about their lives and interests. In North America,

SCA completed a survey in which 53% o consumers surveyed said

they preer recycled napkins in restaurants. SCAs numerous con-

sumer hot lines and its complaint-handling procedures also provide

valuable input or the companys operations.

To reach out to other key stakeholder groups, both internally and

externally, SCA continuously engages in dialog with non-govern-

mental organizations (NGOs), regularly meets with investors and

analysts, and conducts employee satisaction surveys. In addition,

the company holds discussions with other groups and individuals on

matters that impact both broader societal challenges and local com-munities, or instance, with the Sami communities that utilize parts o

SCAs orestland in northern Sweden or reindeer husbandry.

Hygiene and healthcare

A key ocus o SCAs engagement with societyconcerns hygiene and health and SCAs related

products and services. The ocus is on reaching

out to key opinion leaders in healthcare, in par-

ticular elderly care, SCA works to support the

development o sustainable incontinence care

and hygiene promotion programs.

The World Health Organization (WHO) has clas-

sifed incontinence as a set o diseases. The

classifcation entails that incontinence care

products can be prescribed at a subsidized price

or ree o charge, signiying major improvements

in countries where such aids were previously not

oered, or example, in certain Eastern European

countries and the Asia Pacifc Region.

As governments are important customersand stakeholders or SCA, the global public

healthcare debate is o primary concern to the

company, particularly as patient-centered care,

community care and other healthcare models

that beneft patients and reduce healthcare

costs are urther developed. SCA works to

actively communicate with decision makers in

countries where new structures are being built.

For instance, SCA is working to strengthen rela-

tionships with the Chinese Ministry o Health as

new service models or elderly care are urther

developed (see p. 24). Similar outreach occursglobally, with activities initiated in 2012 in South

Korea and many European countries acing the

challenges o an aging population.

SCA takes its responsibility in the feld o

care or people suering rom incontinence as a

major priori ty. The company is committed to

raising the awareness o incontinence and creat-

ing better provisions or people with this condi-

tion, within the health and socia l care systems o

the dierent countr ies. One o the ways o

achieving this is SCAs support to the Global

Forum on Incontinence (GFI). The GFI is a plat-

orm or education and debate around inconti-

nence care or stakeholders in the incontinence

care arena, including medical experts, policy-makers and sponsors.

In April 2012, SCA hosted the 4th Global

Forum on Incontinence in Copenhagen. This

event was attended by more than 450 people

rom around the world, including governmental

representatives, policymakers, health insurance

companies, leading clinicians, patient and care

organizations, and other stakeholders. A aculty

o world opinion leaders rom globally recog-

nized centers o excellence presented the latest

data, trends and opinions around the agenda

Strategies through lie an integrated approachto incontinence care.

Forests at the center o debate

As Europes largest private orest owner, SCA

considers that it has an important role to play in

engaging with stakeholders on a variety o

issues, such as illegal logging, orest certifca-

tion, and related environmental policy and legis-

lation. With Europe as SCAs main market, and

the European Unions leading role in developing

environmental regulation with global impacts,

many o the companys eorts are directed

towards EU institutions.

With SCA being one o the largest provider o

FSC-certifed (Forest Stewardship Council) or-est products globally, fber sourcing policies and

orest certifcation programs are a critical issue.

SCA seeks to have a prominent voice on these

issues and, in 2012, SCA Sustainability Director

Hans Djurberg was named as a member o the

board o FSC International. FSC is regarded by

many as one o the leading platorms or certif-

cation, both globally and nationally.

In 2012, SCA joined the World Business

Council or Sustainable Development, WBCSD,


Introduction | Stakeholder dialog


15/82

and is a member o their Forest Solutions Group.

The group is engaged in multi-stakeholder dia-logs driving a broad spectrum o sustainability

initiatives at all stages o the orest product sup-

ply chain. Increasing competition or ood, uel,

fber, orests and resh water pose critical chal-

lenges to the orest sector. Sustainable orest

management is essential to meet uture

demands or orest-based products while pre-

serving biodiversity and orest ecosystems and

guaranteeing the continuous provision o their

services.

As a member o the Royal Institute o Interna-

tional Aairs, Chatham House, SCA has been

involved in discussions around steps to prevent

illegal logging and the implementation o the EU

Timber Regulation, due to come into orce in2013. It prohibits operators rom placing illegally

harvested timber and timber products on the

European market.

For issues o specifc importance to the com-

pany, SCA works directly in cooperation with

regulatory and public bodies. Examples o this

are the wind power projects in northern Sweden

and the substantial biouels business.

With its growing orest-based biouels busi-

ness, SCA is involved in discussions and stake-

holder dialog in the broader energy policy

debate and supports the move towards a bio-economy. SCA recently joined the European

Bio-based Industries Public-Private Partner-

ship. Its aim is to spur sustainable growth and

boost Europes competitiveness by building new

value chains based on the development o sus-

tainable biomass collection and supply systems.

Every year, SCA also holds dialogs with envi-

ronmental NGOs that share concerns or the

sustainable management o orests and other

environmental issues. These include the Swed-

ish Society or Nature Conservation, and the

World Wide Fund or Nature (WWF).

Other environmental concernsClimate change is high on the agenda o

SCA stakeholders and the company

closely ollows developments. SCA par-

ticipates in the EU Emissions Trading

System and tracks developments and

emerging policies within the climate

debate. Sustainable consumption and

production are also rising concerns or

both SCA and society.

As a major consumer goods com-

pany working with many fber-based

products, global recovery and recycling

policies are o importance to the com-

pany. In addition, with increasing global

consumption o paper and tissue-based

products, post-consumer waste is an

issue that SCA considers to be o

importance in the coming years.

SCA is engaging in multi-stake-

holder solutions to address the issue

(see p. 40).

Memberships

SCA is a member o a large number o asso-ciations, organizations and networks that

discuss issues material to the Groups busi-

ness. These include:

TheWorldBusinessCouncilforSustain-

able Development (WBCSD)

TheUNGlobalCompactandGlobal

Compact Nordic Network

ForestStewardshipCouncil(FSC)Inter-

national and the Swedish branch o FSC

ConfederationofEuropeanPaperIndus-

tries (CEPI)

TheSwedishForestIndustriesFedera-

tion (SFIF)

ProgrammefortheEndorsementofFor-

est Certifcation International (PEFC)

EuropeanDisposablesandNonwovens

Association (EDANA)

EuropeanTissueSymposium(ETS)

InternationalWaterAssociation ConsumerGoodsForum(CGF)

EuropeanBrandedGoodsTrade

Association (AIM)

Europeanorganisationformedical

devices (EUCOMED)

TheHumanRightsnetworkinSweden

SCA is also active through the appropriate

trade associations in standardization activi-

ties in ISO (International Organization or

Standardization), and CEN (European Com-

mittee or Standardization).

2

SCA supports the Global Forum on Incontinence, a plat-

form for education and debate around incontinence care.


Stakeholder dialog | Introduction


16/82


17/82

3Emissions to air and water was ranked

second highest by stakeholders in terms

o importance. SCA has worked system-

atically with these issues or many years

and has established targets or reduc-

tions in carbon dioxide emissions and

water usage as well as or wastewater

treatment.

Active stakeholder dialog is not as

highly ranked by our stakeholders as it is

by SCA. SCA considers a systematic

stakeholder dialog crucial to understand-

ing and predicting the expectations o the

external environment and customers,

which is vital to ensure uture growth and

proftability.

Stakeholders placedProduct quality and saetyin third position. SCA has also

assigned this high priority, particularly as many o the companys products come into

close contact with peoples skin.

Use o hazardous chemicals in manu-

acturing is considered very important

by stakeholders. SCA ranks this arealower than its stakeholders since the most

dangerous chemicals are not used in

SCAs operations and a well-developed

system is in place to ensure the sae

handling o chemicals.

Hygiene and sanitation are deemed to

be o lesser importance by stakeholders.

The subject is broad, making it difcult to

assess, but because 80% o SCAs busi-ness comprises hygiene products, it is o

the highest importance or the companys

uture development.

A total o 450 customers, suppliers, inves-

tors, media, NGOs and SCA employees par-

ticipated. Survey respondents were asked to

assess the importance o various sustaina-bility issues.

In the 2008 and 2010 materiality analyses,

SCA presented external and internal stake-

holders on the x and y axes, respectively.

This years results have been amalgamated

into a single axis what stakeholders con-

sider important. This result has been com-

bined with SCAs own assessment o how

important the area is or the companys busi-

ness strategy and expressed as coordinates

in the materiality analysis.

The reason or the change is because

earlier surveys have shown that the opinions

o internal and external stakeholders largely

coincided, which was also the case in the

2012 survey the greatest dierences o

opinion could be noted or Use o hazardous

chemicals in manuacturing, Management o

production waste and Energy and raw mate-

rial consumption, which internal stakeholders

believed were more important than external

stakeholders, while external stakeholders

thought that Corruption and bribery was more

important than their internal counterparts.

However, the results did not always coin-

cide with what is o material or strategic

importance or SCA. For example, child labor

is an area to which both internal and externalstakeholders attach great importance. SCA

naturally strongly distances itsel rom child

labor, but because the risk o child labor in

operations is considered small, SCA has

assigned it a lower ranking. SCA has pro-

cesses in place to monitor its own and its

suppliers operations.

The results rom this study seem reason-

able and relevant and have provided SCA

with support in its work to prioritize the con-

tent o the sustainability report and its uture

sustainability initiatives.

30

24

2 3

4


Materiality analysis | Introduction


18/82

Strategy

Strategy

SCA is a leading global hygiene and orest products company. SCAs

strategy is based on a sustainable business model where value crea-

tion or people and nature is equivocated with growth and proftability

to ensure a successul company in both the short and long term. A

continuous stakeholder dialog and a comprehensive risk analysis lay

the oundation or the strategic priorities. Three strategic priorities are

in ocus to deliver on the strategy: efciency, innovation and growth.

Efcient processes are a part o SCAs endeavor to reduce costs,

improve capital efciency and increase cash ow. A higher pace o

innovation, based on customer and consumer insight, improves SCAs

competitiveness and strengthens and dierentiates the oering. SCA

has the ambition o growing in both mature and emerging markets.

Increasing the hygiene business share o the SCA Group is a stra-

tegic direction to reduce sensitivity to economic uctuations and

thereby ensure a more long-term stable level o proftability and

growth. In 2012, SCA acquired Georgia-Pacifcs European tissue

operations and the Asian hygiene business Everbeauty. The Group

divested its packaging business, excluding the two kratliner mills in

Sweden. In addition, the 50% holding in the newsprint mill in Ayles-

ord, UK, was divested and an agreement was signed regarding the

sale o the publication paper mill in Laakirchen, Austria.

eccy

SCA operates in an intensely competitive

market and a continuous ocus on cost ef-

ciency is vital to ensure continued competi-

tiveness. Reducing costs and increasing cap-

ital efciency is important to improve cash

ow and value creation.

Enhanced capital efciency, lower costs

and strengthened cash ow are achieved

through restructuring, efciency enhance-

ment, savings measures and optimization ocapital employed in all parts o the Group.

More efcient production provides lower

costs and in most cases positive environmen-

tal eects. One example o this is the 1,700

small-scale energy-saving activities carried

out by the Group in recent years, resulting in a

reduction in carbon dioxide emissions and

annual savings o about SEK 700m.

SCA leverages synergies between opera-

tions and improves productivity and the sup-

ply chain, while it also discontinues non-com-

petitive units.

Global unctions in the hygiene operations

relating to, among other areas, innovation and

brand activities, as well as production, gener-

ate cost synergies and enable efcient

resource allocation.

During the year, SCA launched an ef-

ciency program in hygiene and orest prod-

ucts operations.

iovto

SCAs presence in some 100 countries com-

bined with local innovation centers around

the world, orm the basis or innovation activi-

ties that are ounded on extensive insight into

customer and consumer needs today and in

the uture. Innovation is a means o develop-

ing and dierentiating SCAs products and

services, retaining and strengthening market

positions, building strong brands, driving

growth and proftability by expanding theoering to existing customers in existing mar-

kets, and attracting new customers in new

markets. Sustainability aspects and product

saety are high on the agenda o customers

and consumers and, consequently, so is the

development o new products and services.

Innovation work is an important tool or devel-

oping sustainability programs and helps to

satisy the growing demand or sustainable

and sae products. Special ocus is also

reserved or identiying new and more cost-

efcient and sustainable production solutions

and processes. New innovations enable

improved resource utilization and reduced

environmental ootprint.

For the hygiene operations, the strategic

direction is to increase the pace o innovation,

capitalize on global economies o scale and

ensure that all segments have a competitive

and balanced portolio o innovations. Partic-

ular ocus is given to exploring the possibili-

ties o broadening the product portolio.

In Forest Products, the strategic ocus is

to increase the value or customers and iden-

tiy new alternative felds o application or

existing products.

Growth

SCA has strong leading positions in Europe,

North America, Latin America and Asia.

Through strong global and regional market

positions and brands, innovation, efcient

production and world-leading sustainability

work, SCA is well positioned to leverage the

growth potential existing in both mature and

emerging markets. SCAs competitiveness is

also supported by the Groups broad product

portolio, with strong brands and raw materialintegration.

SCA aims to be the leading company in

the markets that it serves. All operations in

mature markets, such as Western Europe and

North America, will continue to strengthen

their positions. In addition to deending and

reinorcing its position in mature markets, the

aim is to advance positions in emerging mar-

kets, primarily in regions where SCA already

has representation.

While growth will mainly be organic in old

and new segments, acquisition-driven growth

will also be pursued. In existing markets, the

aim is to continue growing by, or example,

broadening the oering o product catego-

ries, product ranges and services. A strategic

priority is also to increase the number o

global brand platorms. During the year, SCA

strengthened its market positions in Europe

and Asia through the acquisitions o Georgia-

Pacifcs European tissue operations and the

Asian hygiene company Everbeauty.


Introduction | Strategy


19/82

4S U S T A I N A B I L I T Y

EFFICIENCY INNOVATION GROWTH

People ambitions

We build our position as one o the most trusted companies in the

world, delivering sustainable growth and value or our stakeholders.

We improve hygiene standards worldwide with our hygiene solutions.

For the millions o existing users o our products and services, and or the

billions o people in emerging markets, we develop innovative solutions

that make it easier to live healthy, sustainable lives.

We support womens empowerment and their reedom to participate

ully in society socially, educationally and proessionally across the

world by giving them access to and education about hygiene solutions.

Nature ambitions

We deliver sustainable solutions with added value or our customers

based on sae, resource-efcient and environmentally sound sourcing,

production and development.

We combat climate change and minimise our impact on the environ-

ment through a combination o new innovations and technologies, ef-

ciency gains, consumer initiatives and carbon sequestering in our orests.

We care or the orests with all o their biodiversityand we are commit-

ted to managing and utilizing them responsibly. We aim to maximize the

benefts our orest have on our ecosystem, climate, customers and soci-

ety, through a combination o innovation, efciency gains and wise and

long-term management.

SCAs people and nature ambitions

i 2012, sCa ptd mb o w tblty mbto d tgt bd o th cto tht th compy

blv mot lvt to sCa d t tkhold. Whl th mbto dcb th log-tm vo, th tgt

mo pcc d mbl d comp tp log th pth towd chvg th ttd mbto. Th mbto

o popl d t pt lvg tool to dv dvlopmt owd d th ght dcto. nw ccmtc

mayrequirenewtargetsand,asthesearefullled,theywillbeclosedorreplacedwithnewones.


Strategy | Introduction


20/82

Targets and outcome

stbl

ovto

Hyg

olto

Cod o

Codct

employ

Health&Safety

TARGET

2. W wll dlv btt, d

vomtlly od olto to

o ctom. W tv to co-

toly mpov oc -

ccy d vomtl po-

mc codg th whol l-

cycl o w ovto.

OUTCOME 2012

Wedenedcriteriaforsustaina -

bl podct d vc ov-

to.

Anumberofinnovationswere

vltd ccodc wth

th ct.

Welaunchedseveralsustainable

ovto, cldg Tena

solto, Tok ey Hdlg,

andGraphoInvent.

stt:

pages 26-29

TARGET

1. W wll mk o kowldg

bot hyg vlbl to c-

tom d com d

cc to odbl, -

tbl hyg olto to hlp

thm ld hlthy d dgd

l. i mkt whch w optw wll:

Provideinformationonhygiene

mtt od o podct d

vc.

Strivetoimplementeducation

pogm o gl, wom d

cgv.

Strivetoofferthebestvaluefor

com mkg hyg ol-

to odbl to vyo.

OUTCOME 2012

SCAholdsthenumberoneor

two poto t lt o

hyg podct ctgoy ly 80 cot.

Weconducthygienetraining

pogm ll podct ctgo-

o ll cott.

SCAoffersabroadportfolioof

podct gg om th p-

mm gmt to th coomy

gmt.

Ourproductsaredistributedto

both mjo copot ctom

andtosmalllocalstores.Our14

Tena ol to xmpl

o how th compy wok to

mk o podct mo

ccbl.

stt:

pages 24-25and 58-59

TARGET

3.OurSCAsupplierstandardwill

b d to dv hd vl d

pot thogh o pply ch.

W wll t ll o pply ch

cotct by 2015.

4. W wll mt complc

wth o sCa Cod o Codct. all

mploy wll cv gl

tg th cod.

OUTCOME 2012

3. a totl o 73% o sCa globl

hyg ppl b d 65% o

t ot podct ppl b

hd commttd to dh to th

SCAGlobalSupplierStandard.

stt:

4. 87% o mploy hd cvd

Cod o Codct tg.

stt:

pages 46-51

TARGET

5.Ouraimiszeroworkplace

ccdt, d w wll dc

ouraccidentfrequencyrateby

25% btw 20112016.

6.OHSAS18001willbeimple-

mtd t ll m t by 2016.

OUTCOME 2012

5.Theaccidentfrequencyrate,

includingacquiredsites,amounted

to 8.5% (7.1).

stt:

6. By th d o 2012, 28% o

sCa m t w ctd

accordingtoOHSAS18001.

stt:

pages 52-55Status:

=Offplan

=Offplan,actionsidentied

=Onplan


Introduction | Targets and outcome


21/82

Climate&

gy

Fb ocg

&biodiversity

Wt Fcl

tgt

TARGET

1.WewillreduceCO2 mo

om ol l d om p-

chd lctcty d htg by

20% by 2020, wth 2005

c y.

2. W wll tpl o podcto o

bol om o ot by 2020,

wth 2010 c y.

3.Th podcto o wd pow

o sCa ot ld wll c to

5 TWh by 2020, wth 2010

c y.

OUTCOME 2012

1.Byyear-end2012,CO2 m-

o hd dcld by 10.4%

lto to th podcto lvl.

stt:

2. egy podcto om sCa

ot-bd bol 2012 w

approximately890GWh(870GWh

2010).

stt:

3. 0.4 TWh o wd gy om

sCa ot ld w dlvd to

th gd. Th t tb om th

sttkt sCa jot vt ssVaB

w tblhd th y.

stt:

pages 32-35

TARGET

4. W wll chv d mt

o tgt o zo h b-bd

mtl om cotovl

oc*, cldg plp.

5. W wll pv th bodvty

o o ot. a mmm o 5% o

o podctv ot ld wll b

t d om oty o co-

logcl ldcp pl d -

th 5% wll b t d pt o

o codto o t o

mgd ot.

OUTCOME 2012

4. all dlv o plp to sCa

facilitiesmettheGrouptarget.All

o sCa wood-comg t

vwd by dpdt d-

torsandmeettherequirementsof

theGrouptarget.

stt:

5. nly 7% o sCa podctvotld t d om oty

cologcl ldcp pl.

Fthmo, 12% o th 18,500

hct pld o hvtg

w t d o pvto.

stt:

pages 36-38

TARGET

6. W m to chv wt -

tblty d w wll dc o

wt g wt-td

go by 10% by 2015, wth

2010 c y.

7.all sCa plp d pp mll wll

mploy mchcl d bologcl

wt ttmt plt by 2015.

OUTCOME 2012

6. By y-d 2012, wt g

wt-td go dcld

by 3.4%.

stt:

7.OftheGroups40pulpand

pp mll, mchcl d bo-

logcl ft ttmt

tlld, o th poc o bg

tlld, 39 plt.

stt:

page 39

TARGET

Th tgt o t o cptl

mployd 13% ov b

cycl. Fo Pol C, th t-

gt 30%, o T, th tgt

15% d o Fot Podct, th

targetisintheupperquartileofthe

dty.

OUTCOME 2012

Th ovll t o cptl

mployd w 10%. Fo Pol

C, t motd to 28%, o

T to 13% d o Fot

Podct to 4%.

pages 8-9in the Annual Report

5

* Cotovl oc dd : illglly loggd tmb. Tmb om ot wth hgh covto

vl. Tmb om wh hm ght o

tdtol ght o dgo popl bgvoltd.


Targets and outcome | Introduction


22/82

SCAs value chainsCa tlz vl-ch ppctv to dty d

dd th mot lvt vomtl, ocl d co-

omc . Th ppoch povd ovvw o sCa

mpct, wh t d t t gtt d th m

whch th vo ct ch oth. i th wy, w

betterunderstandtheimplicationsoftheGroupsimpacts

d th mpotc o ggg dlog wth tkhold

to btt dd lvt . Th hlp tblh

Water management

SCA uses water to transport fber during the paper production process and as

cooling water, with the breakdown between the two being 60 40. SCAs goal

is to reduce water use in acilities located in regions that suer rom

water shortages. Read more on page 39.

Climate change and carbon emissions

The Groups use o ossil uels together with emissions rom pur-

chased electricity are the major sources o its carbon dioxide

emissions, ollowed by transport activities. Most o SCAs

emissions rom its ossil uel usage derives rom its tissue

production while a smaller proportion (below 10%) is

derived rom production o publication papers, pulp and

sawn timber. SCAs personal care plants account or

less than 1% o the companys carbon ootprint. The

majority o the climate impact in the production o

tissue and orest products is generated in SCAs

own production processes, while or personal

care products, this occurs mainly in the rawmaterial phase, meaning at suppliers. SCA works

continuously to reduce emissions in its own man-

uacturing and in cooperation with raw material

suppliers, to minimize its climate impact. Read

more on page 32.

Sustainable orestry

SCA is Europes largest private orest owner with 2.6

million hectares o orest land. Nearly 7% o this area

has been reserved in ecological landscape plans to pre-

serve the biological diversi ty o the Groups orests, and at

least a urther 5% is set aside in conjunction with harvesting.

The orests have a net growth o 1% per year, corresponding to

carbon sequestration o 2.6 million tons annually. This is higher than

the carbon emissions generated by SCAs combined operations. About

50% o the wood raw material used by SCA is der ived rom the Groups

own orests and is thus under the direct contro l o the company. SCA works

along the entire supply chain to guarantee 100% responsible raw material

sourcing. Read more on pages 36 and 38.

Brand activities

Through our strong

brands, we engage with

customers, consumers

and distributers.Read more on page 10

in the Annual Report.


Introduction | Value chain


23/82

pot o tht w mmz o vomtl mpct d

mxmz th potv vl o hhold.

Th vl ch o pol c, t d ot

productsvaryinanumberofrespects,requiringthecom-

py to oc o dt wth th vo b-

. Th dmd to b o ptcl g-

cc to th vl ch dcbd h.

Respect or human rights and business ethics

Honesty and integrity in relationships with customers, suppliers, employees and organizations, in addi-

tion to respect or human rights, are undamental parts o SCAs entire business. By assessing

compliance with the Code o Conduct and business ethics, the Group monitors its own

operations. Through the supplier standard and supplier audits, SCA unequivocally

shows the demands and expectations it has in relation to its suppliers,

thereby gaining the trust o its customers. It is essential to minimize the

risks throughout the value chain. Read more on page 46.

Health and saety

The provision o a healthy and sae workplace has been assigned high prior-

ity at SCA and is in line with the expectations o customers and consum-

ers. By having employees who eel sae and are well trained in health

and saety procedures, SCA enhances productivity and reduces the

number o workplace accidents. Read more on page 42.

Innovation and product managementInnovation is one o SCAs strategic priori ties and is relevant to all parts

o the Groups value chain. Dialog with customers and consumers

helps SCA to better understand user needs and to deliver more insight-

ul innovations. Sustainability, product quality and product saety are

actors o major signifcance or SCAs customers and consumers and

are thus decisive drivers in SCAs innovation activities. Using the

Groups liecycle perspective as the starting point, SCA strives to achieve

resource efciency and reduced environmental impact, as well as contrib-

uting to peoples quality o lie. Read more on page 26.

Transport activities

Transport activi ties account or approximately hal o SCAs

carbon dioxide emissions. More efcient and coordinated reight,more compact packaging and eco-driving are some o the methods

used by SCA to reduce its environmental impact. Read more on page 33.

Waste and recycling

SCA has worked or some time now to reduce its production waste. About

two-thirds o the waste is recycled either into new products as a raw material or

other industries or is used to generate energy. As much as 70% o European

newspapers are currently recycled. Diapers are an example o a product that is

best recycled by being incinerated. SCA is par ticipating in projects aimed at

identi ying new ways to reduce consumer waste. Read more on page 40.


Value chain | Introduction


24/82

Economic

value creationFor SCA, sustainability is central in the work to generate economic value. Our

contribution to economic development is measured by both the direct and indi-

rect economic impacts of our business on all of our stakeholders.

Read about our economic value creation:

Hygienesolutions

Financialtargets

Sustainableinnovations

pages26-29pages24

-25 pages8

-

9in the Annual Report

SCA provides hygiene and orest products to its

customers and consumers, air pay and other

benets to employees, tax revenue to govern-ments and municipalities, payment or delivered

goods and services to suppliers, and dividends

and share price appreciation to shareholders.

SCA contributes to the economic prosperity o

society in its capacity as a major employer in

many regions and through its community

involvement.

Sustainability activities enhance SCAs com-

petitiveness and contribute to healthy and long-

term business relationships. Our cost-ecienthygiene solutions improve the quality o lie o

millions o people around the world, thereby

entailing reduced costs or healthcare systems.

SCA shares its know-how in the area o hygiene

because it knows that improved hygiene results

in healthier human beings.

Incorporating a sustainability perspective

into innovation activities contributes to resource

eciency, which in turn leads to reduced costsand a smaller environmental ootprint. Mean-

while, customer and consumer demands or

better, sae and environmentally compatible

products are driving development toward sus-

tainable innovations.


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For me, creating value is what makes the difference. We

produce products that put the smile back on the faces of

the elderly and the people who care for them. The prod-

ucts we produce come from sustainable forests that help

to combat global warming. This creates value for people

and nature.

Wesley Chiu,

General Counsel, China


Econoic ale


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Mapping economic impact across the value chain

SCA affects a broad range of stakeholders. We have an economic impact on

society and create opportunities for customers, suppliers, employees and society.

Spply chain

Maintaining transparent and long-term relation-

ships with suppliers is essential to ensure high

quality and nancial stability or both parties.

Sourcing represents the single largest

expenditure item or SCA corresponding to 65%

(71) o sales. In 2012, the Group purchased raw

materials and services or some SEK 55,540m

(77,197). Many input goods, such as paper pulp,

electricity and chemicals, are global commodities

and are largely purchased centrally, with the aim

o achieving economies o scale.

Wood-based raw materials are goods that

are almost exclusively purchased locally. Nearlyall o the resh ber acquired and used in the

Swedish mills are purchased rom local suppli-

ers. This provides substantial economic contri-

butions to local suppliers and the local economy.

Enhancing suppliers skill sets also adds

value. SCA trains and supports suppliers in

hygiene operations and provides orest contrac-

tors with guidance in such areas as quali ty,

saety, environmental perormance and Code o

Conduct.

Inesting in people

SCA generates value or its employees through

the wages it pays and competence development

opportunities it provides.

In 2012, employee salar ies totalled SEK

12,241m (15,046), and social security costs

amounted to SEK 3,446m (4,297). As a principle,

the Group pays competitive remuneration to its

employees and ollows local wage structures,

assuming that these terms are not below inter-

nationally established rules or minimum salaries

and reasonable compensation. In all the report-

ing countries, SCA pays above the legislated

minimum pay. The company may pay minimumwages in certain individual circumstances, or

example, in connection with summer jobs, stu-

dent pay, and so orth.

The Group also contributes to pension plans.

SCA has both dened-contribution and dened-

benet pension plans. The most signicant

dened-benet plans are based on the period o

employment and employee salaries at, or just

prior to, retirement. The total net cost or pen-

sions in 2012 amounted to SEK 428m (358). For

urther inormation, see Note 26 in the SCA 2012

Annual Report.

Value created by stakeholder in 2012

* Current expenditures, restructuring costs, strategic investments and acquisitions.** Raw materials, transport and distribution, energy and other cost of goods sold.

Interest paid to creditors, 2% (SEK 1,264m)

Dividend to shareholders, 4% (SEK 2,997m)

Employee social security costs, 4 % (SEK 3,446m)

Remaining in the company, 10 %* (SEK 8,727m)

Employee salaries, 14 % (SEK 12,241m)

Suppliers, 65 %** (SEK 55,540m)

Taxes paid, 1% (SEK 1,193m)

With local production, SCA creates work

opportunities or many people. In 2012, 11,509

(12,339) were employed by SCA in Eastern

Europe, Asia and Latin America, receiving SEK

1,430m (1,563) in salaries.

SCA oten chooses to enter an emerging

market through joint ventures. The combination

o deep market knowledge, retaining local man-

agement and SCAs technological know-how,

economics o scale, etc. has a generally avora-

ble impact.

Raising cstoer ale

SCA has a range o customers rom end-con-

sumers o SCA products to business-to-busi-

ness customers that include retailers, distribu-

tors, printing houses, and healthcare institu-

tions. SCAs practices and products help busi-ness-to-business customers reduce their risks

and add value to their brand. By jointly pursuing

product eciency and innovation targets, SCA

and its customers deliver high-quality products

that ull and exceed consumers needs and

expectations.

Contribtions to national econoies

SCA also contributes to local communities by

paying taxes and employing people in the coun-

tries in which the company is active. In 2012,

SCA paid SEK 1,193m (961) in income taxes

globally. In addition, SCA pays property taxes,

payroll overheads, pension taxes, customs

duties, energy taxes and indirect taxes.


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Sustainability builds shareholder value

As investors increasingly make the connection between sustainability and long-term value creation,

SCA is well positioned to deliver on expectations for sustainable growth for its shareholders.

Sustainability is a core part o SCAs business

strategy and investors are taking notice. SRI

investors (Socially Responsible Investment)

have long taken Environmental, Social and Gov-

ernance (ESG) indicators into account when

assessing SCAs value but today, a growing

number o mainstream investors are also looking

more closely at these perormance aspects.

Sustainability has a strong role in a protable

business; or example, in the orm o a product

porto lio that makes SCAs customers achieve

their sustainability targets and makes consum-

ers eel secure in their choice. The growing

demand rom customers or FSC-certied prod-ucts is one such example. SCAs ocus on

reduced energy consumption to reach its cli-

mate and energy target also benets the bottom

line. Strong sustainability perormance gener-

ates growth opportunities in emerging markets,

such as SCAs dialog and collaboration in China

on improving elderly and incontinence care.

Investors in particular recognize that sustaina-

bility spurs innovation and strengthens the

brand.

There was a large amount o interest in our

sustainabil ity programs rom investors in 2012.

SCA regularly holds meetings, attends coner-

ences, and organizes roadshows to maintain

contact with investors, including SRI investors.

Sustainabil ity is integrated into investor presen-

tations.

Yet there is a need or more quantiable and

comparable data to measure not only the envi-

ronmental but also the more elusive social and

governance indicators and their impact on eco-

nomic perormance. Organizations such as the

GRI and the International Integrated Reporting

Council (IIRC) are looking at developing new

reporting systems. As a member o the World

Business Council or Sustainable Development,

SCA is involved in discussions on developing

integrated reporting.

Major institutional investors (such as certain

pension unds) oten add environmental and

social parameters to their risk analyses, while a

number o sustainability unds have a strategy o

only investing in companies that are among the

best rom an environmental, social and eco-

nomic perspective. SCA is included in 96 (83)

European sustainability unds, making it one othe most requently occurring companies in

these unds.

Shareholer acts & fgres

SCA generates value or shareholders through

dividends and share price appreciation. Nor-

mally, about one-third o cash fow rom current

operations, ater interest expenses and taxes,

over a business cycle is used or dividends. Over

the past ten years, the dividend has increased

by an average o 3.5% annually. The Board has

proposed a dividend o SEK 4.50 (4.20) or 2012.

The 2012 closing price on the Nasdaq OMX

Stockholm or SCAs B share was SEK 141. This

corresponds to a market capitalisation o SEK

99bn. Since the beginning o 2012, the share

price rose 38%, while the Nasdaq OMX Stock-

holm rose 12% during the same period.

At year-end 2012, SCA had 78,854 registered

shareholders. The largest owners are Indus-

trivrden AB, Handelsbanken and Norges Bank

Investment Management.

Consolidated net sales or 2012 amounted to

SEK 85,408m (81,337), up 5% (11% excluding

exchange rate eects and divestments). The

Hygiene operation grew by 15% while Forest

Products sales declined by 8%.

Operating prot, excluding items aecting

comparability, increased by 12% (17% excluding

exchange rate eects and divestments) to SEK

8,646m (7,738). Operating prot (excluding

exchange rate eects, divestments and items

aecting comparability) or Personal Care and

Tissue rose by 28% and 50%, respectively, while

Forest Products declined by 46%. The Groups

operating cash fow improved by just over SEK2bn and amounted to SEK 9,644m.

In the rankings

SCA is assessed annually by several ranking

institutes and in 2012 was included in:

TheDowJonesSustainabilityIndexes

(DJSI),whichtrackthenancialper-

formance of the leading sustainability-drivencompanies worldwide.

TheEthisphereInstituteslistoftheworlds

most ethical companies.

TheFTSE4Good,anindexmeasuringearn-

ings and performance among companies

that meet globally recognised norms for

corporate respons ibility. SCA was included

asasupersectorleaderintheFTSE4Good

ESGratings,withasupersector-relative

score of 99 out of 100.

TheCarbonDisclosureLeadershipIndex,

which recognizes companies with the best

carbon reporting practices and perfor-

mance to tackle climate change.

SCArankedthirdintheFortunelistofthe

worldsmostadmiredforestandpaper

companies.

TheGermanGlobalChallenges.

EPCIEuroEthicalEquityandEPCIGlobal

EthicalEquity.

EthibelSustainabilityIndexExcellence

Europe.

TheOMXGESSustainabilityNordicand

OMXGESSustainabilitySwedenindexes.

Largest shareholers

% o otes % o shares

Industrivrden 29.7 10.0

Handelsbanken* 14.6 4.5

NorgesBankInvestmentManagement 8.1 7.5

Skandia 2.0 0.5

Swedbank Robur funds 1.1 2.5

AMFInsuranceandFunds 1.1 2.5

SEBFunds&SEBTrygglife insurance 1.0 1.4

Capital Group funds 0.8 1.7

SCAEmployeeFoundati on 0. 6 0.1

Skagen funds 0.5 1.1

**Includingfundsandfoundations. Source:SIS

Nber o Eropean sstainability ns with

inestents in SCA shares%

0

20

40

60

80

100

20112010200920082007200620052004


Shareholders | Econoic ale


28/82

A shared value proposition

SCA seeks to create economic value for the company in a way that also creates

shared value for people and nature by addressing key social and environmental

needs. Customers, consumers, suppliers and others in the SCA value chain allbenetfromthisholistic,long-termperspective.

Economic value creation derives rom exceeding

customer expectations and helping customers

meet their own targets. Customers increasingly

demand sae products with no hazardous ingre-

dients, produced saely and under decent work-

ing conditions and that have minimal impact on

the environment. Consumers expect companies

to have insight into and appreciation or their

needs and priorities. Society, including govern-

ments and other decision makers, expect the

private sector to help address larger social chal-

lenges. Engaging on all ronts, with sustainabil-ity as the engine o economic value creation,

builds condence in the Groups consumer

brands, its thought leadership and ability to

bring positive solutions to the table.

A primary way in which SCA works towards

solutions is in the area o hygiene, which repre-

sents 80% o its business. The company has set

a target to make its knowledge about hygiene

available to customers and consumers and

ensure access to aordable, sustainable

hygiene solutions to help them lead a healthy

and dignied lie. This means providing inorma-

tion on hygiene matters around SCA products

and services, implementing education programsor girls, women, children and caregivers, and

oering the best value or consumers by making

hygiene solutions more aordable. Read more

about SCAs hygiene programs on page 58.

An aging poplation

Many developed and emerging countries are

acing rapidly aging populations. The problem o

incontinence and other health issues related to

aging will only increase. According to the UN,

the elderly population (>60 years) is expected to

swell by 200 million within ten years, past the

one billion mark and soar to two billion by 2050.

This presents signicant challenges to welare,

pension and health care systems.An aging population, along with increased

disposable income rom a growing middle class,

creates growth opportunities or SCA. At the

same time, its products and services add value

by enabling people with chronic and aging con-

ditions to stay at home instead o in nursing or

other residential homes, respecting dignity and

quality o lie. Another aspect o shared value o

SCAs incontinence products and services is the

signicantly lower cost to society o caring or

incontinence at home compared to in nursing

homes or institutions.

With its TENA Solutions oering, SCA pro-

vides customers with a beore and ater analysis

o their institution or home through a compre-

hensive benchmarking process o their inconti-

nence care, including such actors as products

used, routines and costs. The benets include

improved well-being or care recipients, a better

work environment and less waste and use o

resources as well as a lower total cost.

Training caregiers in China

In China, citizens aged over 60 years account or

13% o the total population, a number expected

to grow by 3% each year. China will ace chal-

lenges in meeting economic and health burden.

Eective nursing is one o the ways to better

address incontinence and other elderly health

issues, which is why SCA has trained some

6,500 nurses in 12 Chinese cities since 2009.

SCA decided in 2012 to broaden the scope o

the training program in China and about 1,000

caregivers and 1,000 nursing home managers

were trained about elderly peoples hygieneneeds.

Expaning new bsiness oel in Asia

The homecare model is taking root in Asia. In

2012, SCA teamed up with two major Singapore

hospitals Ren Ci Hospital and Tan Tock Seng

Hospital to support the general public and car-

egivers in their care o loved ones in a home

environment. This is the rst healthcare collabo-

ration between an acute hospital, a community

hospital and a corporate partner to develop and

provide a dedicated homecare training platorm

or Singaporeans.

SCA continues to pilot-test door-to-door

home nursingservices in Shanghai, which wereinitiated together with the Singaporean com-

pany ECON Healthcare in January 2012. While it

was started as a joint venture, SCA has taken

over ull leadership. Initial customer eedback is

promising, however scaling up the service

requires increased government support. In

2013, various subpilots in local communities will

be tested to urther rene the business model

beore a roll out can be considered.

Aorable, accessible an green

Oering the best value or consumers to make

hygiene solutions aordable or everyone means

understanding the needs o diverse groups. In

the US, more than 43 million people trace their

origins to Mexico. The Saba brand o eminine

care products, already successul in Mexico and

Central America, is being introduced to Mexican

Americans in southwestern US.

The shared value proposition is growing in

parallel with SCAs continued expansion in

emerging markets, both through recent acquisi-tions and organic growth in these markets gen-

erally. SCA acquired hygiene operations in Tur-

key and Brazil in 2011, and acquired or extended

investments in China, Taiwan and Chile in 2012.

There is a growing movement within green

purchasing to encourage public authorities to

procure goods and services with a reduced

environmental impact, which is particularly rele-

vant or SCAs B2B areas o incontinence care

TARGET

Hygiene soltions

We will make our knowledge abouthygiene available to customers and consumers

and ensure access to aordable, sustainable

hygiene solutions to help them lead a healthy

and dignied lie. In markets in which we operate

we will:

Provideinformationonhygienematters

around our products and services;

Strivetoimplementeducationprogramsfor

girls, women and caregivers;

Strivetoofferthebestvalueforconsumers,

making hygiene solutions aordable to

everyone.

OuTCOmE 2012

SCAholdsthenumberoneortwopositionin

at least one hygiene product category in

nearly 80 counties.

Weconducthygienetrainingprogramsinall

product categories on all continents.

SCAoffersabroadportfolioofproducts

ranging rom the premium segment to the

economy segment.

Ourproductsaredistributedtobothmajor

corporate customers and to small local

stores. Our 14 TENA online stores are

examples o how the company works to

make our products more accessible.


Econoic ale | Sustainable business


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Econoic iplications of climate change

SCA participates in the EU Emission Trading Scheme (EU ETS), the rst

international trading system or carbon dioxide (CO2) emissions, and a

mainstay o EU Climate Policy. Launched in 2005, ETS caps carbon emis-

sions on actories and plants across the European Union, orcing emitters

to buy carbon permits i they exceed limits. The rst phase lasted unti l 2007.The ETS systems second phase began in 2008, and ended in Decem-

ber 2012. During that time, a surplus o emission allocations has accumu-

lated. The next phase will run or eight years, rom 20132020. 38 Euro-

pean-based SCA sites participate in the ETS. SCAs average surplus o

Documents

SCA Sustainability Report 2012