Metsä Group – cooperatively owned Finnish forest company

Finland is the most forested country in Europe and forests account for three quarters of Finland's surface. The forest industry is a major contributor to wellbeing in Finland.

The sector accounts for over 20 per cent of Finland’s export revenue and it is a major employer, especially in regional areas. In addition to traditional products such as paper, board, pulp, lumber and plywood, the forest industry produces energy, biofuels and bioproducts. With new products such as nanocellulose and textile fiber, the added value can be increased.

 

Responsible forest industry group

Finland has three major forest industry companies: Metsä Group, Stora Enso and UPM. Metsä Group is the only cooperatively owned forest industry group. It has 103 000 owner-members around the country and about one in three Finnish forest owners is a member of Metsäliitto Cooperative. They own about half of Finnish private forests.

Metsä Group consists of Metsäliitto Cooperative, its two businesses Metsä Wood and Metsä Forest, and its subsidiaries Metsä Tissue, Metsä Board and Metsä Fibre. Metsäliitto Cooperative is the parent company of Metsä Group. Metsä in the Finnish language means forest.

In 2018, Metsä Group paid forest owners EUR 640 million in timber sales. It was once again Finland's largest wood purchaser. In addition, owner-members received EUR 74 million in interest income. The Group employs an average of 9 500 people.

Metsä Group has a solid base for investing and growing. In 2018, the Group had the best return on investment and operating margin in comparison with other Finnish forest groups. Revenue growth of 13% was also staggering compared to its competitors' 5%. Of course, UPM and Stora Enso are twice as big in volume.

 

Investing in Finland

A broad cooperative ownership-base is a good foundation for Metsä Group's billion-euro investments. The voice of the members is heard through the governance structure, and that voice counts before the launch of any major projects.

The € 1.2 billion Äänekoski bioproduct mill has been running at full capacity for over a year. A mill of similar size is planned in Kemi as well as the construction of a new pine sawmill in Rauma. Other forest industry companies have also done or are planning major investments.

Not all expansion investments planned by the forest industry can be realized because the limits for harvesting domestic wood must be respected. Nor can one rely too much on imported wood. Imports of raw wood into Finland has grown. From an environmental point of view, it would be desirable that not all major mill plans be realized in the next few years at least.

Metsä Group's good performance has also boosted its owner-members interested in participating in the Group's governance. In the 2019 Metsäliitto Cooperative Representative Council elections, the turnout was the highest in history. This provides a solid foundation for the work of the elected officials and for the development of Metsä Group. 

 

Forest Network and Virtual Forest

Digitalization has also come to the fore in forestry. Metsä Group has a “Virtual Forest” that can illustrate forest management methods and their impact on income digitally.
Their free “Forest Network” service provides information on what kind of management the forest needs. The service also provides forest cover and area information, as well as suggestions for management and harvesting work for each plot. The tool also provides information on, for example, the amount of cooperative investments and bonuses accrued from wood sales.

The share of electronic transactions in Metsä Group's wood trade and sales of forest services is close to 50 percent. Digitalisation is also an important part of the interaction between the member and cooperative. Feedback from members comes through electronic channels more quickly, and so the organization is also more agile in its development activities. Digital tools have been well received by members.

 

The sustainable future of forest industry

Metsä Group is committed to sustainable forest management that promotes biodiversity. They promote environmental sustainability issues to members and provide them with information on sustainable forest management and conservation measures.

The Group strives to meet the goals of sustainable development. There is a global pressure to find sustainable alternatives to non-renewable synthetic fibers. Partly also cotton, as cotton fields are needed for cultivating food crops.

Metsä Group built a pilot plant in Äänekoski that will produce new type of wood-based textile fiber. The product is being developed by Metsä Spring Ltd which is seeking and designing new business concepts based on sustainable forestry and the circular economy.

Metsä Group also wants to increase the resource efficiency of its mills by utilizing all by-product production streams and reducing process water use by 25% by 2030.

The transition from the fossil economy to the bioeconomy is currently characterized by the activities of all three major forest companies. Stora Enso develops, for example, biocomposites for plastics, smart packaging, biodegradable juice straws, caps and closures - and even ten-story wooden apartment buildings.

 

Climate change and Nordic forestry

If the average global temperature increase can be curtailed to 1.5 degrees Celsius, in Northern Finland it could mean up to 3-4-degree rise. This means that mild and watery winters and hot summers are becoming more common.

Global warming also means faster growth of forest in Finland. One can think that we will be the winners in climate change if we can only seize the opportunities that are offered. On the other hand, challenges include storm and pest risks. In addition, shortening of frost times can make winter harvesting difficult, especially on soft terrain.

 

Finland <3 forest

No other country in the world manages forests better than Finland - apart from Sweden and Norway. Forest regeneration is required by law here. We plant an average of four saplings on each felled tree. An alternative for forest owners is also to provide natural insemination with insemination trees. It is a method of regeneration that takes a few years longer than planting saplings.

After logging, it takes 15 to 20 years for the planted forest to absorb more carbon dioxide than the old forest left to grow. However, continuously well managed commercial forests are efficient carbon sinks. Finland also has areas that are sensitive in their natural conditions, such as the northernmost Lapland and the rugged outer islands of the archipelago, where there is a legitimate reason to restrict or even ban logging.

Only about a tenth of the world's forests are certified. Finland is the most advanced and Sweden is a good second. Last year Metsä Group had the highest degree of certification: 88 per cent.

Text:
RIKU-MATTI AKKANEN,
MAUNO-MARKUS KARJALAINEN,
YRJÖ KOTISALO
HANNA MUUKKA