UPM Annual Report 2016

Stakeholders

In brief

Strategy

Businesses

Governance

Accounts

UPM businesses actively engage with stakeholders

Extensive and assured information UPMuses the G4 reporting guidelines published by the Global Reporting Initiative to measure and report on corporate responsibility at Group level. UPM’s corporate responsibility reporting for the year 2016 has been compiled in compliance with the “In accordance” – Core option of the GRI G4 Guidelines. The core responsibility information for 2016 in English, which has been marked as assured in the GRI content index, has been assured by an inde­ pendent third party, PricewaterhouseCoopers Oy (see the Independent Assurance Report on page 88), and congruence between the English and Finnish versions has been checked. A shortened version of the GRI content index can be found on pages 86–87. The entire GRI content index, including detailed descriptions of the scope of the reporting and data collection techniques, is available in English at www.upm.com/responsibility. Stakeholder engagement and sustainability are important to UPM. The company is committed to the principles of inclusivity, materiality and responsiveness as defined in the AA1000 AccountAbility Principles Standard (2008). UPMprovides comprehensive environmental information, verified by third parties, from corporate level to the mills and individual products. Ecolabelled products, product declarations and certified operations show­ case the stakeholders about company’s sustainability, transparency and risk management (read more about UPM’s product stewardship on page 56).

In addition to the group-wide UPM Code of Conduct revision and related trainings, UPM’s businesses had their additional focus areas in stakeholder dialogue in 2016. Customer collab­ oration is presented on pages 52-53, employee activities on pages 40-45.

INNOVATION EVENTS RESULTED IN NEW CONNECTIONS AND SOLUTIONS Innovation is a major part of UPM’s Biofore strategy. New products and processes are developed both in house and in collaboration with research institutes, universities and partner companies, and increasingly often with start-ups and growth companies. Collaborating brings new ideas and makes the innovation process agile and flexible. It helps bring new innovations to the market more cost effectively and at a quick pace. The collaboration benefits both parties and UPM is pleased to be a part of smaller companies’ growth and supporting students. In the autumn of 2016, UPM took part in three major innovation events in Finland: Junction hackathon, Accenture Digital Innovation Challenge (ADIC) and Slush. The target was to find new collaborative partners and solutions to some concrete challenges.

GOVERNMENT AND REGULATORS Discussions with the Government of Uruguay regarding the development of logistics infrastructure. CARU results and 10-year fish monitoring results published in Uruguay (p.65).

BUSINESS

COMMUNITIES

SUPPLIERS

NGOS

MEDIA

UPM PULP

Finland: Inauguration of the UPM Kymi mill expansion. Logistics in Pietarsaari. Tree planting events, Local waters project and Me & My City co-oper­ ation. Recruitment events for students. Uruguay: Regional technical university, UPM Foundation activities. CPA report on UPM’s socio-economic impact. Co-operation with universities and research institutes (VTT, LUT), associations (Association for Finnish Work) and certification bodies & auditors (ISCC). Participation in seminars and conferences. Active participation in local events e.g. Lappee-Jukola orienteering event. Forest owner visits at the sawmills. Inauguration of a new hydropower unit in Harjavalta. Participation in Energia 2016 congress to raise UPM Energy’s profile in the Finnish energy industry. Local community and responsibility programmes: Green Future in China and local waters school project in Finland. Tree planting days in Finland and in China. Mini Library Project continued and My Heaven My Water Article Competition in China. Participation in the Junction hackathon in Finland and Reading together — Living together project in Germany. Recruitment events in mill communities for students. Search for new industrial use for empty mill premises. Zero Solid Waste programme in Finland. Local sponsorships. Inauguration of Otepää mill expansion in Estonia, open doors at several mills, international student conference on sustainability in Moscow. Apprentice- ship programme at the mills. Local events to demonstrate modern forestry methods and to discuss sustainable forestry topics (Ärjänsaari p. 48). Dialogue with communities on logging plans. Co-operation with the Guides and Scouts of Finland. Tree planting events. Forest Fair in Finland. Local sponsorships e.g. Icehearts in Finland and river clean-up in North Carolina, USA.

Safety trainings with contractors.

Finland: Sustainable plantations seminar in Helsinki. Uruguay: Aves Uruguay, BioUruguay, DESEM, Vida Silvestre Co-operation with the below50 coali- tion, Roundtable on Sustainable Bio- materials and WWF Finland.

Communications on mill events, mill visits.

UPM BIOFUELS

Visits to biorefinery, interviews.

Discussions with Finnish and EU politicians and authorities on future biofuel policies.

Safety trainings with contractors.

UPM TIMBER

Active co-operation with local authorities on logistics, traffic and permits. Sawmill visits. Discussions with Finnish politicians and authorities on energy policy development. Collaboration with local authorities on new hatching facility for migrant fish in Harjavalta, Finland. Active co-operation with local authorities regarding environmental investment in Changshu, China.

Induction and trainings for maintenance and logistic companies.

Seikku sawmill media event: the new log sorting line and wood trade situation. Inauguration of the new hydropower unit in Harjavalta, Finland.

Read more: www.upm.com/innovations

UPM ENERGY

Close collaboration related to hydropower.

Discussions on fish migration with NGOs

THE FOCUS OF UPM’S STAKEHOLDER ENGAGEMENT WORK

UPM RAFLATAC

Factory visits, press conferences on main events.

Label Life Awards for suppliers, supplier audits, joint projects and workshops.

Sustainability partnerships with WWF Poland and WWF South Africa. Reforestation project of Jaguari River in Brazil. Joint programmes on sustainable forest management and sustainable paper with the China Sustainable Paper Alliance (CSPA) and China Green Foundation (CGF). Local sponsorship with WWF Finland.

1 Reliable partner, service offering, product safety and quality, product profiles and ecolabels, environmental and supply chain performance 2 Mutual business success and Biofore opportunities 3 Collaboration, strengthened customer focus, regular customer satisfaction surveys, best practice sharing

UPM’s Biofore strategy forms the foundation of UPM’s stakeholder dialogue. The key focus areas and activities vary locally and according to stake­ holder needs. Find out more about our activities in 2016 in this picture. The table on the right describes the activities in UPM’s businesses in more detail.

1 Responsible, safe neighbour, employment opportunities, dialogue on local topics 2 Legitimacy and good collaboration 3 Open door events, stakeholder visits, sponsorship and local community projects

UPM SPECIALTY PAPERS

Inauguration of the third paper machine at UPM Changshu, China. High Tech status of the Changshu mill. My Heaven My Water article competition in co-operation

Trainings on compliance, responsibility and safety.

Press conferences regarding the paper machine inauguration and sustainability, media roundtable, mill visits and social media development. Mill visits and back- ground meetings, active dialogue around various topics incl. restructuring. Responsible Fibre concept (p. 35). Media visit to Otepää mill. Background meetings and brief- ings e.g. on mill shift systems. Press conferences and background discussions on new products and services and wood market.

1 Stakeholders’ main concerns and expectations 2 UPM’s target 3 Key engagement activities

Customers

with Suzhou Water Resources Bureau.

Communities

1 Safe and motivating working environment 2 Employee engagement 3 Continuous development of safety culture and leadership capabilities

UPM PAPER ENA

Continuous dialogue and development of co-operation based on annual supplier survey and audits.

Dicussions on Finnish operating environment and competitiveness of the forest industry, discussions with local authorities in the US on the Madison mill closure and energy-related topics in Germany. Active participation in the industry associations’ work. Hosting policy maker visits to the various mills. Discussions with EU and Finnish politicians and author- ities on forest and biomass policies. Discussion with Finnish authorities on sustainable forestry, voluntary forest protection and active forest ownership promotion.

1 Publish interesting content 2 UPM messaging incorporated in content 3 Proactive media outreach

Employees

Media

UPM PLYWOOD

Government and regulators

Investors

WOOD SOURCING AND FORESTRY

Joint projects with WWF Finland, BirdLife and Osprey Foundation. Meetings and forest visits.

Development of mobile solutions to forest owners. Supplier audits. Joint UPM Safety Team. Management training programme for con- tractors. Nature management card trainings.

NGOs

1 Total shareholder value 2 Increasing long-term shareholder value 3 Clear and reliable disclosure and communications, investor meetings and events

1 Fulfil regulatory

requirements, employment and competitiveness

Suppliers

1 High level of environmental and social responsibility performance 2 Understanding expectations to development of performance, partnerships 3 Dialogue, transparency and co-operation in human rights and climate-related topics in particular

2 Ensure competitiveness and a fair operating environment 3 Network to ensure UPM view is heard

1 Future-oriented, trusted partner with clear requirements and expectations 2 Competitive advantage through cost leadership, innovativeness with continuous development and compliance with supplier requirements 3 Strengthened supplier governance, supplier collaboration projects and responsible sourcing practices

CONTENTS

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UPM Annual Report 2016

UPM Annual Report 2016