UPM Annual Report 2018

First page Table of contents Previous page 48-49 Next page Last page

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

Understanding the views and expectations of our stakeholders is key to our success and the acceptability of our operations. Long-term engagement and open dialogue with our stakeholders increases external understanding of our transformation and brings predictability to our operations. STABILITY THROUGH STAKEHOLDER ENGAGEMENT

Customers

OUR MOST IMPORTANT STAKEHOLDERS

Communities

Our Biofore strategy forms the foundation of our stakeholder dialogue. The key focus areas and activities vary locally and according to stakeholder needs.

Media

Employees

Researchers

Investors

NGOs

Governments and regulators

Suppliers

IMPORTANCE • Stakeholder engagement provides UPM with predictability and a competitive advantage • Dialogue with stakeholders helps in the identification of risks and improves understanding of key challenges and opportunities in the operating environment TARGET • We aim to understand stakeholder-specific expectations and needs for information and consider them in strategic development and decision-making processes

OUR WAY • We engage in dialogue with our stakeholders to discuss UPM’s operations and targets • The UPM Code of Conduct sets the standards for responsible behaviour towards stakeholders • Every year, UPM updates a materiality analysis that highlights the most important responsibility issues for UPM and its stakeholders • Stakeholder engagement is measured by several indicators • Stakeholder relations are coordinated globally at the Group level while UPM’s businesses are responsible for local engagement activities • Focus on 2030 responsibility target on community involvement

The impact of UPM’s operations extends from the local level to society at large. That is why it is important that we engage in active and continuous dialogue with our stakeholders. UPM’s most important stakeholders are customers, investors and financiers, employees, suppliers, local communities, authorities and decision makers, the media, non-governmental organisations, and researchers and universities. The approach for each stakeholder varies depending on business focus, region and specific stakeholder needs. As stakeholders view UPMprimarily as an economic operator, financial success, stability, good governance, future outlook and growth are key themes for most stakeholders. Environmental matters, social responsibility and our role in society are also key to the acceptability of our operations and the long-term success of our businesses. We aim to provide a balanced view of the economic, environmental and social aspects of our business activities, recognising, however, that expectations vary between stakeholders. The UPMCode of Conduct sets the standards for responsible behaviour towards our stakeholders. The standards cover topics relating to legal compliance and disclosure, conflicts of interest, anti-corruption and anti-bribery, HR practices, human rights questions and environmental matters. Careful analysis of stakeholder feedback Stakeholder mapping is an essential part of stakeholder relations, along with the systematic gathering of feedback and views from different sources. We analyse the feedback carefully to understand the expectations of our stakeholders and take them into consideration in strategic development and decision-making processes. The level of stakeholder engagement is measured by several indicators, such as customer enquiries, contacts with the mills, investor relations and wood sourcing and forestry as well as number of job applications. Every year, we conduct a materiality analysis that highlights the most important responsibility issues for UPM and its stakeholders. The analysis is based on several surveys, customer enquiries and feedback from an open web-based tool (see page 51). A clear picture of UPM’s direction and value creation for investors UPM discloses relevant and accurate information in a timely manner and non-selectively in accordance with market regulations to all participants in the market. Our aim is to provide a clear picture of how we create long-term value for our shareholders, what our future course is and how we implement our Biofore strategy in practice. At the end of May, we presented our value creation and earnings growth opportunities at UPM’s Capital Markets Day in London. During the year, we also arranged investor events, participated in industry conferences and met widely with investors in all our main markets in Europe, North America and Asia. Investors were especially interested in UPM’s strategy implementation and capital allocation and the resulting outlook for long-term earnings growth. Interest towards megatrends and responsible products and solutions by UPM to address them also continued to grow.

SUPPLY CHAIN RESPONSIBILITY BOOSTED BY COLLABORATION UPM joined the Together for Sustainability (TfS) initiative in 2018. Companies belonging to TfS promote sustainability practises within their supply chains and comprehensively share the sustain ability information they have on their suppliers. Global supply chains today are complex and with collaboration everyone has access to information on the suppliers’ sustainability performance. The TfS cooperation improves transparency in our supply chains and the efficiency of UPM sustainability assessments. TfS has a standardised process to assess and develop the sustainability performance of suppliers. The assessment covers company environmental impacts, health and safety, labour and human rights and company management and governance. ”The supplier provides the necessary sustainability information on an online service platform. The answers are analysed and the documents verified. Information on the strong points as well as the areas for improvement are also provided. The TfS assessments are available for all member companies through the online service,” says General Manager Gabriele Unger from TfS. Besides document-based online assessments TfS executes on-site audits. The scope of these audits is the same as the audits executed by the companies themselves, or third parties. If necessary, a corrective action plan is created after the audit.