Key Methodologies

This report sets out the sustainability-related information on a consolidated basis for Mercer International Inc. and its subsidiaries for the period ending December 31, 2024. To enhance transparency and understandability of this report, key methodologies for data included are outlined below.

• Mercer’s GHG inventory is calculated following the three standards provided by the Greenhouse Gas Protocol of the World Resources Institute and the World Business Council for Sustainable Development: the GHG Corporate Accounting and Reporting Standard, the GHG Protocol Scope 2 Guidance, and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
• Mercer reports all relevant GHG emissions, including CO₂, CH₄, and N₂O. HFCs, SF₆, NF₃, and PFCs are immaterial or not applicable to Mercer’s operations.
• Mercer uses the operational control consolidation approach. Scope 1 and 2 emissions includes all Mercer production units across the pulp mill, sawmill, and mass timber segments, including our bioservices segments harvesting, transportation, logistics). Scope 3 emissions include all pulp and sawmill production units. Corporate offices are assessed to be immaterial.
  • In 2024, Mercer improved the comprehensiveness of our scope 1 fossil fuel and biogenic emissions, and scope 2 emissions reporting boundary to include our recently acquired sawmill, mass timber, and bioservices segments. Scope 2 prior year (2023) data has been restated according to the new boundary, however, scope 1 fossil fuel and biogenic emissions have not been restated due to data availability challenges. Therefore, 2023 may not be comparable to 2024 for scope 1 fossil fuel and biogenic emissions.
• Climate Targets:
  • In 2021, Mercer set initial climate goals for our pulp mills, committing to a 35% reduction in scope 1 GHG emissions per tonne of pulp by 2030, along with a 35% absolute reduction in scope 2 and 3 emissions from a 2019 baseline. These near-term targets were validated by the Science Based Targets initiative (SBTi). During 2024, to align with a 1.5°C pathway, Mercer increased our ambition to a 50% reduction in pulp mill scope 1 GHG emissions intensity.
  • Mercer has acquired several additional businesses (e.g. sawmill and mass timber facilities) since our initial scope 2 and scope 3 climate targets were set. As a result, Mercer increased the comprehensiveness of our scope 2 and 3 absolute emissions measurements to account for acquisitions and set a revised baseline year of 2024 with a 35% reduction target.
  • As we strengthen our climate ambitions to align with a 1.5°C pathway, we recognize the SBTi requirement for land intensive industries to set near-term targets for Forest, Land, and Agriculture (FLAG) emissions. We plan to measure our FLAG emissions in 2025, update our scope 1, 2, and 3 absolute emissions reduction targets accordingly, and obtain SBTi re-validation.
• 200% growth in stored carbon in mass timbe products target: Mercer has set a target of 200% growth in stored carbon in mass timber products sold from 2024 baseline. This target is based on an expected growth rate of 20% per year in m³ sold. This calculation assume an industry standard approximate estimate of 1 tCO₂ stored per 1 m³ of wood.
• Scope 1 emissions are direct GHG emissions resulting from sources that we control, including fossil fuel (e.g. natural gas, diesel, propane, gas) energy consumption from stationary and mobile sources.
• Biogenic emissions: Biomass is burned primarily in Mercer’s recovery and power boilers which generatebiogenic emissions. With reference to the GHG Protocol and GRI 305-1, Mercer reports biogenic emission separately from fossil fuel emissions.
• Scope 2 emissions are indirect GHG emissions associate with the purchase of electricity. Location-based scope 2 emissions reflect the average emissions intensity of the grid in which energy consumption occurs. Location-base emission factors were sourced from the Government of Canada National Inventory Report, the US Environmental Protection Agency, and the European Environmental Agency. Market-based scope 2 emissions reflect emission factors from contractual instruments, which includes power purchase agreements and any energy attribute certificates bought. In the absence of supplier-specific factors, Mercer uses Green-e residual mix emission factors. If residual mix factors were not available for the region, location-based emission factors were used for scope 2 market-based emissions. The applied factors do not separate the percentage of biogenic CO₂.
  • Mercer has restated our fiscal 2023 scope 2 emissions from 28,989 tCO₂e to 46,176 tCO₂e to ensure comparability with current year reporting. Mercer modified our methodology related to Mercer Timber Products’ scope 2 emissions to align with the gross emissions calculation approach of the GHG Protocol Scope 2 Guidance, Section 5.4, rather than the mixed approach under 5.6 of the Protocol. This change is more reflective of the nature of the sawmill operation. The methodology change resulted in a 15,450 tCO₂e (53% increase) to 2023 scope 2 emissions. The remaining increase of 1,737 tCO₂e to 2023 scope 2 emissions is due to the inclusion of our mass timber facilities.
• Scope 3 emissions are indirect GHG emissions from operations in the value chain, covering both upstream and downstream.
  • Mercer reports on all significant categories of scope Mercer does not report on scope 3 categories 5 (waste generated in operations), 6 (business travel), 7 (employee commuting), 8 (upstream leased assets), 11 (use of sold products), 13 (downstream leased assets), 14 (franchises), 15 (investments). Excluded categories are either not relevant to Mercer’s business activities or have been assessed as immaterial.
  • The accounting policies for the categories in scope are further described below.
    • Category 1: upstream GHG emissions related to raw wood fiber (logs and residual chips) and non-fiber raw materials (e.g. chemicals) purchased and consumed in production by our mills. Both average-data and average-spend based methods are used.
    • Category 2: upstream GHG emissions related to the acquisition, pre-processing, production, and transportation of capital goods purchased. Average spend-based method is used.
    • Category 3: upstream GHG emissions related to extraction, production, and transportation of purchased and consumed fuels, excluding amounts already included in scope 1 and 2. Average-data method is used.
    • Category 4: upstream GHG emissions from the transportation of raw wood fiber and non-raw wood materials purchased and delivered to Mercer’s production sites. This includes logs transported both from our managed forests and those sourced externally by our mills. Distance-based method is used.
    • Category 9: downstream GHG emissions from the transportation of sold products (pulp, wood products, biofuels and byproducts) from Mercer’s mills to customers. Distance-based method is used.
    • Category 10: downstream GHG emissions from the processing of sold pulp into tissue and paper after the point of sale. Average-data method is used.
    • Category 12: downstream GHG emissions from the waste disposal and treatment of products (pulp, lumber, and pallets) at the end of their life. Sold pellets and briquettes are excluded as end-of-life treatment is combustion for energy. Average-data method is used.
  • Primary data is used where feasible to obtain. When primary data is unavailable, secondary data sources are used from sources including, but not limited to, the US Environmental Protection Agency (EPA), Athena Sustainable Materials Institute Cradle-to-Gate Life Cycle Assessments, Confederation of European Paper Industries (CEPI), UK Department of Environment, Food & Rural Affairs (DEFRA), CN Rail, and partner environmental product declarations.
  • Globally, scope 3 accounting and data availability are still emerging areas. A higher degree of measurement uncertainty is present in Scope 3 emissions. In particular, Category 10 and Category 12 are subject to a high degree of estimation as Category 10 relies on publicly available emissions intensities of our customers and Category 12 relies heavily on estimates related to the final disposal method of the products sold. Mercer anticipates that the quality of our scope 3 data will improve as regulatory sustainability reporting becomes more widespread and data availability increases.

• Our energy is primarily generated from renewable carbon neutral sources, such as black liquor and wood waste. Our mills produce all of our electrical energy requirements and generate excess energy which we sell to third-party utilities and to regional electrical markets. We utilize fossil fuels, such as natural gas, primarily in our lime kilns and we use a limited amount for start-up and shut-down operations. Additionally, from time to time, mill process disruptions occur and we consume small quantities of purchased electricity and fossil fuels to maintain operations.
• In line with GRI, net energy consumption reported is calculated as:
  • Non-renewable and renewable fuels consumed (energy content of the fuel) + electricity purchased – electricity sold.
  • Electrical energy generation produced via our cogeneration plants is reported separately.
• The scope of energy metrics reported is consistent with scope 1 and 2 emissions.
• In the prior year (2023), energy consumption figures were reported using higher heating values (HHV). To align with anticipated future reporting requirements under CSRD, Mercer has updated its methodology to utilize lower heating values (LHV) and changed presentation from GJ to MWh. Appropriate industry publication conversion factors were used to convert HHV to LHV where necessary. Reporting using HHV or LHV is permitted by GRI.
  • Pulp mill fiscal 2023 Energy Consumption From Fuels has been restated from 37.9 GJ/ADMT (equivalent to 19,195,049 MWh on an absolute basis) to 25 GJ/ADMT (equivalent to 12,680,712 MWh on an absolute basis) according to the new methodology resulting in a -6,514,338 MWh, 34% decrease in Energy Consumption From Fuels. As a result, pulp mill fiscal 2023 Energy Consumption From Renewable Fuels has been restated from 87.2% to 82.0% (5.2% decrease) and Energy Consumption From Non-Renewable Fuels has been restated from 12.8% to 18.0% (5.2% increase).

• These non-GHG air emissions are primarily generated from pulp mill production processes related to our boilers and lime kilns. Air emissions are measured through frequent sample testing or continuous emissions monitoring systems. Samples are analyzed in certified internal or third-party labs.
• SO₂: As part of the chemical recovery process, black liquor is burned in the recovery boiler, releasing SO₂ as a byproduct of the reaction between the sulfur compounds in the black liquor and oxygen in the air.
• NO_x: air emissions from our pulp mills predominantly originate from burning fuels in our boilers.
• Particulate matter: a mixture of solid and liquid particles that can be released into the atmosphere during various stages of our kraft pulp mill processes.

• Effluent emission concentrations are measured through frequent sample testing. Samples are analyzed in certified internal or third-party labs.
• AO_x (Absorbable Organic Halogens): a measure of halogens bound to the organic compounds present in the effluent discharged from a mill.
• BOD (Biochemical Oxygen Demand): a measure of the amount of oxygen required by microorganisms to break down organic matter in water. At Mercer, we use it to assess the amount of organic matter present in the effluent discharged from our mills and the short-term impact on the oxygen levels of the receiving water.
• COD (Chemical Oxygen Demand): a measure of the amount of organic compounds that can be oxidized by a strong oxidizing agent under acidic conditions. At Mercer, we use it to assess the amount of organic matter present in the effluent discharged from the mills.
• TSS (Total Suspended Solids): a measure of the amount of suspended solids in the effluent discharged from the mills.

• Water data is primarily sourced from flow meters. It is estimated that 87% of water consumption is derived from direct measurements. Following an assessment of materiality, the scope of water metrics include all pulp mills.
• Water withdrawal: includes the withdrawal of process and cooling water.
• Treated effluent discharge: water that has been used in the pulping process that requires treatment in the mill’s effluent treatment plant through a mechanical and biological process prior to discharge.
• Water discharge: includes treated effluent and cooling water discharged to the environment.
• Water consumption: calculated as total volume of water withdrawn less total water discharged.
• Water consumption in areas of high water stress: includes water consumption for areas of high water stress as identified by conducting a detailed water risk assessment using the World Wildlife Fund Water Risk Filter and World Resources Institute Aqueduct Water Risk Atlas. The most recent assessment was conducted in 2024. Results indicate Mercer Rosenthal pulp mill is in an area of high water stress.

• Waste to landfill: includes all material sources of process waste (wood ash, recausticizing dregs, and lime waste) generated at pulp mills deposited in Mercer landfills.
  • Key estimates: Dry tonnes are estimated by applying conversion factors based on sampling to account for moisture content in waste.
  • Hazardous waste is immaterial for Mercer’s operations.

• Percentage of certified fiber: fiber that has been certified through a third-party assessment (PEFC, SFI, FSC) that the forest management practices used to produce it meet specific environmental, social, and economic standards.
  • Excludes certified logs that are purchased and sold and do not enter production.
• Responsibly sourced fiber: defined as fiber that is:
  • Certified forest fiber; or
  • Controlled wood:
    • Not from illegally harvested or traded wood
    • Not from wood harvested in violation of traditional and human rights
    • Not from wood harvested in forests where high conservation and ecological values are threatened by management activities
    • Not from wood harvested in forests being converted to plantations or non-forest use
    • Not from wood from forests in which genetically modified trees are planted
  • Refer to Mercer’s Wood and Fibre Procurement Policy here.
• Chemical utilization rate: calculated as the weight of primary chemicals purchased in the reporting year divided by pulp production.
• Fiber utilization rate: calculated as the weight of wood chips consumed in the reporting year divided by pulp production.

• Percentage of women in top management: Top management is defined as executive leadership, managing directors, general managers, and employees that report directly to managing directors, excluding the Board of Directors.
• Inclusion index score percentile: A score as measured by a third-party administered employee survey to measure the extent to which employees feel included and belong at work as benchmarked against other manufacturing companies.
• Engagement survey response rate: The portion of employees responding to Mercer’s third-party administered annual engagement survey.
• Total Recordable Incident Rate (TRIR): calculated as the number of recordable incidents multiplied by 200,000 hours divided by total number of hours worked by all employees. Recordable incidents and TRIR reporting boundary does not include the 50% joint venture interest in the Cariboo Pulp & Paper Company (“CPP”) that Mercer disposed of in March 2024.
• Severity rate: calculated as the total number of lost work days multiplied by 200,000 divided by the total number of hours worked by all employees.