UPM Annual Report 2018

UPM AT A GLANCE

STRATEGY

BUSINESSES

SOCIETY AND ENVIRONMENT

GOVERNANCE AND COMPLIANCE

REPORT OF THE BOARD OF DIRECTORS

FINANCIAL STATEMENTS

AUDITOR’S REPORT

OTHER FINANCIAL INFORMATION

Sustainable and safe solutions for global consumer demand

2030

2020

Innovation

Responsible operations and value chain

A FUTURE BEYOND FOSSILS

Circular economy

FROM FOSSILS TO BIOECONOMY

High performing people

Sustainable forestry

Our products provide sustainable solutions that meet the challenges and opportunities presented by global megatrends. We are developing new innovative and high-quality products as well as renewable and recyclable materials from wood-based biomass. Wood fibre, biomolecules, residues and side streams are becoming increasingly important as the raw materials of the future.

SUSTAINABLE RETURNS FROM FORESTRY

PLANTATION

FOREST

ALTERNATIVES FOR FOSSIL-BASED MATERIALS

Sustainable plantations have been planted as a renewable raw material for our products.

FIBRE PRODUCTS

MOLECULAR BIOPRODUCTS

WOOD PRODUCTS

LOW-EMISSION ENERGY

Well-managed forests grow more. Only part of the annual growth is used.

WE RESPOND TO growth in consumer demand with sustainable and safe products. We can replace non-renewable raw materials with sustainably produced fibre- based products that are used in packaging, hygiene and tissue. We also use renewable wood fibre as the main raw material for graphic papers, specialty packaging materials, labelling materials and biocomposite products.

BIOFUELS AND BIOCHEMICALS offer new

MOST OF OUR WOOD products are used in construction. UPM’s wood products, such as plywood and sawn timber, are also used in furniture and parquet, packaging and vehicle floors and as insulation in carriers used for liquefied natural gas. Wood products offer a solution that is healthy, safe and mitigates climate change. Our wood-based products retain the carbon bound in wood throughout their lifecycle.

OUR ENERGY PORTFOLIO consists mostly of energy sources that do not cause fossil carbon dioxide emissions. We produce hydropower, nuclear power and biomass-based energy (combined heat and power, CHP) in the mills. Energy efficiency means that energy consumption and emissions are reduced.

growth opportunities beyond our current product portfolio. The fuels and chemicals markets are huge, supported by increasing demand for sustainable alternatives. UPM enjoys excellent advantages in developing its biomolecule businesses: competitive forest industry platform, sustainable feedstocks and land use, biomass processing technologies and intellectual property rights.

SUSTAINABLE PLANTATIONS were established in Uruguay in the 1990s to replace the impoverished pastures. Plantations now cover one million hectares of land; of this land, UPM owns 258,000 hectares. Approximately 60% of the area consists of eucalyptus plantations. The rest is made up of natural pastures, conservation areas, roads and other infrastructures. UPM's plantations in Uruguay constitute a carbon sink of approximately 24 million tonnes that did not exist 30 years ago.

FINNISH FOREST RESOURCES are growing at a record pace. The reason for this is good forestry. Growing forests bind carbon from the atmosphere that is stored in wood, creating a carbon sink. The annual growth rate of trees in Finnish forests has increased from 50 million m 3 in the 1960s to 107 million m 3 per year. Only about 72 million m 3 (3% of the carbon storage) of the growth is used for industrial and other uses, so trees and the stored carbon dioxide increase every year. This increased growth of Finnish forests has created an annual carbon sink of 27 million tonnes.

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UPM ANNUAL REPORT 2018

UPM ANNUAL REPORT 2018