New Forest Investments Frontiers: Interview with Björn Lyngfelt of Svenska Cellulosa Aktiebolaget (SCA).
In advance of the International Forest Business Conference on December 7-8, 2020, we interviewed a few of the event sponsors and partners to hear their perspectives on why this conference was needed and what are their expectations regarding future forest sector development, and its contribution to climate change mitigation efforts. For the second interview in our series, we sat down with Björn Lyngfelt, Senior Vice President Communications of Svenska Cellulosa Aktiebolaget SCA.
Could you tell us a little about SCA and how you fit into the forest products industry? Where do you fall in the value chain?
With 2.6 million hectares of forest in northern Sweden and 50 000 hectares of forest in Estonia and Latvia, SCA is Europe’s largest private forest owner. The forest is the core of SCA and around this unique resource, SCA has built a well invested industrial value chain with the aim to create the highest possible value in and from the forest.
The industries are located close to the forest and comprise five large and competitive sawmills, the world’s largest production line for softwood kraft pulp and two kraftliner mills. Residue streams are used for energy production, in our own mills or for external customers. Since SCA’s forest land hold plenty of good windpower sites, SCA is developing wind power projects that are executed by partners. SCA work in all links of the value chain, including the transport of raw material and forest products.
SCA is a platinum sponsor of the International Forest Business Conference, thank you for helping us make this event a reality. The conference will bring together stakeholders from across the forest sector value chain to focus on megatrends that shape forest and wood industry sectors, highlight the transformation of forest-related businesses towards a low-carbon bioeconomy, discuss tensions between sustainability and cost competitiveness, and call attention to new green innovations. Do you think that such an event is needed, especially in times of the growing importance of the forest sector in climate change mitigation efforts?
Climate change is becoming a focal point in both national and European policies. The new European Commission has put up its Green Deal, where combatting climate change is a key component, at the top of the agenda. The forest is a very important item in the debate on climate change. Some want to claim it for a carbon sink, while others want to bring out the substitution potential from the forest value chain – the renewable raw material from well-managed forests used for products that can substitute those with a higher carbon footprint, thereby keeping fossil carbon in the ground. The outcome of this debate will have a large impact on European forests and forest owners.
How SCA’s operations may combat the negative effects of climate change?
First, our growing forest sequester carbon dioxide from the atmosphere. The difference between forest growth and harvesting and natural losses brings a net reduction of carbon dioxide. Second, from what we harvest we produce products and materials that can replace those with a higher carbon footprint – wood replaces concrete and steel, paper packaging replaces plastic, biofuels replace fossil fuels. In this way, we reduce the amount of fossil carbon needed. Third, SCAs operations lead to emissions of carbon dioxide from forestry, production and transport. These emissions we strive to reduce as much as possible.
Some time ago we read that SCA disclosed its overall impact on the global climate as one of its key performance indicators within the company’s overall sustainability framework. Could you tell us a bit more about the model you used and the main results?
SCA has developed a model for calculating the climate effect from the company’s operations. This model has since then been adopted by other companies but also by countries and other stakeholders. The model comprises the three elements mentioned above. The net sequestration in the forest amounts to 5.4 million tonnes of carbon dioxide in 2019. The substitution effect amounts to 6.0 million tonnes of carbon dioxide and the emissions from our entire value chain amount to 0.9 million tonnes. The sum of these figures, the first two minus the third, make up SCA’s climate effect or climate benefit as the figure is positive. For 2019 this climate benefit was 10.5 million tonnes of carbon dioxide, corresponding to the emissions from all passenger cars in Sweden.
In the United States, in the four decades since 1980, virtually all major Vertically Integrated Forest Products Companies have sold their timberland to other institutional or individual owners. These lands are managed by Timber Investment Management Organizations (TIMOs), or were spun off their corporate lands into Real Estate Investment Trusts (REITs). However, it seems that the situation in Europe is slightly different and major wood industry players, like SCA, are still interested in continuing buying forestland domestically and abroad. Could you tell us what is the reason behind this? Do you think that Europe may take a U.S. path in the future, i.e. that wood industry will start selling their forestlands to TIMOs and will rely more on for example long-term wood purchase agreements?
We see examples of unintegrated producers of forest products and of companies owning forests but no industries. In SCA we see important synergies between the two. A forest holding without a competitive industry is low in value. We see examples even in Europe where the price of wood is low because of a lack of demand. A competitive wood consuming industry is what brings value to the forest.
On the other side of the equation, you have industries needing raw material supply. Control of the raw material source, the forest, or at least a substantial part of it, reduces the risk in industrial investments and makes possible the establishment of optimum production combines.
Do you need ownership of the full value chain? Obviously not. There are a number of successful companies that do not. But in SCA we believe that you bring the fines tune out of the orchestra by having all the instruments there. We believe that control of the whole forest value chain makes possible the highest value creation over the long term.
Björn, we want to thank you and SCA again for helping us put on the forest business conference. Is there anything else that you would like to mention about the development of your company in the Baltic Sea region?
We have grown as a forest owner in the Baltics and we have the ambition to grow even further. We see the Baltic basin as the natural wood supply region for SCA.
Thanks again for taking the time to talk with me; we are looking forward to continuing to work with you.
In addition, we look forward to your presentation on “SCA, the Forest and the Climate.” at the International Forest Business Conference 2020 (registration still open).
More information about SCA can be found here: https://www.sca.com/en/
Björn Lyngfelt, Senior Vice President Communications of Svenska Cellulosa Aktiebolaget SCA, introduces Europe’s largest forest owner. SCA has the ambition to grow its forest assets and to further develop its leading industrial position. SCA has developed a model for calculating the climate effect that embraces the effect of the forest, the impact from the value chain and the substitution effect from forest products, which combined can keep fossil coal in the ground.