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To: President Ursula von der Leyen
Commissioner McGuinness
Cc: Commissioner Jutta Urpilainen
Commissioner Ylva Johansson
31 March 2021
Dear President von der Leyen and Commissioner McGuinness,
Re: Forest Taxonomy Criteria
As a leading renewable materials company, with 18 000 employees in the EU, Stora Enso fully supports the
Green Deal ambition: we welcome and support both the 55% by 2030 target and the EU Biodiversity Strategy. We
also support the European Commission’s overarching sustainable finance objective: a well-calibrated Taxonomy
framework will be a powerful vehicle through which to incentivise the changes needed to meet the EU’s Green
Deal targets. Yet, we fear that the draft criteria from March 2021 will not enable the green transition if sustainable
forestry is not recognised sufficiently for the climate benefits it brings.
To ensure that the Taxonomy builds on today’s sustainable forest management practices, and that the Green
Deal’s ambition is met, we would welcome the following changes to the draft from March 2021:
x
Removal of concepts that are not clearly defined, such as “close-to-nature forestry.” Unclear concepts,
of which there are many, leave the criteria open to wide interpretation. This increases legal uncertainty and
risks excluding sustainably managed forestry activity from the Taxonomy. It is unclear who ultimately
interprets and decides on these definitions.
x
Simplify the Climate Benefit Analysis and ensure it does not lead to an unlevel playing field. The latest
draft criteria contradict the Taxonomy Regulation, which states that all economic activities within a specific
sector should be treated equally. In addition to establishing an unlevel playing field, this section is complex
and creates unnecessary administrative burden.
Legal uncertainty and unlevel playing field created
We recognise that the draft criteria have been much improved. It is good that it is acknowledged that forest
management should be defined by national law and match the applicable national definition or the Forest Europe
definition, as forests and practises vary considerably between Member States. We also welcome that our
concerns around “improved forest management” and the additionality criteria have been taken on board.
Nonetheless, we remain concerned over the ambiguous formulations and the risk of uncertainty in interpreting the
criteria. We present below a few examples of several identified issues.
1. Unclear concepts, such as “biodiversity-friendly practices promoting close-to-nature forestry or similar
national concepts adapted to the local conditions.” This criterion is included in the Do No Significant Harm
(DNSH) section which requires further clarification and definitions. Stora Enso, for example, already manages its
forest by including deciduous trees in the landscape and leaving deadwood and retaining old trees during
harvesting, which are often considered part of close-to-nature practices. The range of interpretations for both
close-to-nature forestry as well as how a company should “promote” this is wide. Several other undefined
concepts exist throughout the DNSH section, such “high-biodiverse” and “less biodiverse” ecosystems. Depending
on the interpretation, several aspects of biodiversity could be used in defining these concepts, for example
species number, abundance, taxonomic diversity, functional diversity, or combinations of these. Another important
area where there is a lack of clear definition is “wood sourcing area”. As a large forest industry company, we make
contracts with different forest owners every year, which results in continuous changes in the wood sourcing area
of the company. This must be taken into account in reporting on carbon accounting. A final example to illustrate
how ambiguous the criteria can be is that it states that fertilisers should be “minimised”. In Nordic forestry,
fertilisation with nitrogen increase carbon sequestration into forest biomass and soils. Fertilisers are an extra cost,
Stora Enso
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Stora Enso
31/3/2021
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so most actors already minimise its use. The lack of detail on the definition and interpretation of this criteria and
others will create confusion, inconsistency and legal uncertainty. As there are no commonly agreed definitions for
many of the DNSH criteria,
we propose that the Commission reconsider including any criteria that is not
clearly defined in order to avoid legal uncertainty.
2. Climate Benefit Analysis: We strongly agree on the importance of ensuring forests’ climate benefit in the
(global) carbon balance. Sustainable forest management in the Nordics has for the last century strongly promoted
forests’ carbon sequestration. It ensures the vitality and thus, the carbon uptake capacity, of forests. Scientifically
based measures can further strengthen the carbon uptake by enhancing tree growth, while at the same time
enriching the biodiversity of forest landscapes. We acknowledge the Taxonomy’s ambition to consolidate the role
of forests as carbon sinks, but we are concerned about the ambiguous formulation of the technical screening
criteria 2.1 and 2.2 when it is not clear who will interpret them and how.
The Climate Benefit Analysis states that forest management should result in an improved greenhouse gas (GHG)
balance vs. business as usual (BAU). It is not clear how a third-party auditor could determine what the BAU would
have been. Determining BAU at the on-set of the 30-year period will be very difficult with a time perspective of
decades. We also worry that if we, as a multinational global company find it difficult to analyse this section, it
would be even more complicated for most small forest owners in Finland and Sweden, where the average holding
size is much larger than the Commission’s 25 hectare limit for exclusion from the process.
Perhaps a more
constructive method would be to ask for a process of continuous improvement regarding the company’s
total GHG balance, i.e. include substitution effects of the company’s products in the GHG balance. A forest used
to make wood-based products plays a larger role in society’s overall GHG balance than a forest absorbing and
periodically storing GHGs.
In addition, the Climate Benefit Analysis contradicts Article 19.1(j) of the Taxonomy Regulation which states that
the criteria shall
cover all activities equally if they contribute equally towards the environmental objectives.
Companies that do not have the same high standard as Stora Enso, i.e. a low standard of BAU – for example, a
negative GHG balance – would easily be able to fulfil this criterion. Considerably more effort and finance would
have to be put in for companies who continually maintain or improve their climate benefit.
We propose that the
Commission revise the new “Climate Benefit Analysis” to reduce complexity and ensure a level playing
field across the EU. If this has been inserted as a version of additionality criteria, we would be pleased to make a
constructive proposal on how it could be developed in an alternative way.
Stora Enso believe that sustainable forest management and wood-based products are part of the solution to
climate change and biodiversity loss. Our products substitute fossil-based alternatives and save approximately 18
million tonnes of CO2 entering the atmosphere (2019). At the same time, growing trees absorb CO2 from the
atmosphere and store carbon, and measures to enhance biodiversity are integrated into daily operations and
constantly improved.
As the President and CEO of Stora Enso, I can assure you that we want to show leadership and be a constructive
partner for the Commission in the pursuit of the Green Deal’s vision. We believe our expertise in sustainable
forestry, where biodiversity concerns are high on the agenda, can be an inspiration to others – without claiming
we have all the answers already today. We would be more than happy to contribute with constructive solutions if
possible. If so, perhaps you could let me know through
@storaenso.com.
Yours
Yours sincer
sincerely
el ,