UPM Annual Report 2018

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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

RESPONSIBLE WATER USE

29% Reduction in effluent load (COD) since 2008

TARGETS 2030

UPM SUPPORTS RESTORATION OF MIGRATING FISH STOCKS The UPM migratory fish programme aims to dismantle migration barriers and test new ways to restore fish stocks all around Finland. The programme is based on collaboration with stakeholders. UPM and ELY Centre for Central Finland have dismantled migration barriers in Central Finland to turn the river into a functioning reproduction area for trout between two lakes. The natural reproduction of the highly endangered landlocked freshwater salmon of Saimaa is promoted in North-eastern Finland. In the project, Kuurnan Voima is building a small power plant on the flood dam, which will keep the water level high enough for the salmon. A network of channels and bars is planned to mitigate the effects of fluctuating water levels on the fish habitat. A dedicated five-hectare area in the Pielisjoki River has been reserved exclusively for spawning. The effectiveness of the measures will be monitored for several years. The fish migration programme has received significant financial support from UPM’s Biofore Share and Care programme.

Water flows through every part of our business. It flows in and out of our production processes, it passes through our forests which help to purify and regulate its movement, and we even leverage its flow to create an important source of renewable energy.

Driven by our ambitious 2030 responsibility targets, we constantly strive to improve our perfor- mance. As a signatory to UN Global Compact’s CEOWater Mandate, we follow recognised princi- ples of water stewardship, continually seeking to use water in a way that is environmentally sus- tainable, socially equitable and economically beneficial. To further promote our approach, we joined the FinnishWater Stewardship commitment in 2018. UPM signed the WBSCD’s WASH Pledge for Access to Safe Water, Sanitation and Hygiene back in 2014, and is today globally compli- ant with the required standards. Continuous improvement in water management The water used in pulp and paper production processes is circulated as much as possible, with only a small proportion of the water ultimately leaving the process as effluent and replaced with fresh water. Using less water also means using less electricity, fewer chemicals and less thermal energy. All of UPM’s pulp and paper mills run both mechanical and biological effluent treatment processes. To ensure the best possible treatment results and share best practices, UPM operates a global water specialist network. UPM continues to work towards its 2030 targets for water: reducing effluent load (COD) and wastewater volume and using 100% recycled nutrients for effluent treatment. In 2018, several potential recycled nutrient sources were tested, and testing will continue in 2019 at the UPM Kaukas, UPMKaipola and UPMEttringen paper mills, for example. In summer 2018, UPMNordland paper mill implemented new water purification technology at its wastewater treatment plant and took a further step towards closing its on-site water circulation system. The quality of the purified water is very good, making it suitable for reuse instead of using fresh water. Optimisation continues at UPMNordland; today approximately 15% of the effluent volume is reused and the aim is to increase the use of purified wastewater to 25% in 2019. Thanks to the UPMKymi pulp mill expansion,the mill's COD load per tonne of pulp has decreased by 38% compared to 2017. At UPMChangshu, the More with Biofore in China programme continued with several pilot trials to recycle effluent water back into the process reducing fresh water intake. The company is also investigating opportunities for some partners in the surrounding area to use part of our effluent after purification. The decision was also taken in 2018 to invest in membrane technology in order to clean paper machine process water and the new equipment will be put into operation in 2019. UPMwas recognised as a Water Efficiency Frontrunner in China, in one of the key initiatives launched by the government to reduce industrial emissions. In 2018 UPM focused on discovering new ways of working, new technologies and new partner- ships with potential chemical and machinery suppliers. Some of these technologies are currently being piloted and this work will continue in 2019. Collaboration with stakeholders UPM’s responsible water use highlights the importance of water resources and good water man- agement all over the world. For example, UPMRaflatac collaborates withWWF Poland in the “Riv- ers for Life” project and is working with the China Women’s Development Foundation to address a shortage of safe drinking water, as well acting as co-partner in a reforestation project at the Jaguari River in Brazil. In Finland, UPM co-operates actively with the Baltic Sea Action Group in order to promote its 2030 responsibility target to use only recycled nutrients in its wastewater treatment plants. Minimising the impacts of hydropower facilities UPMhas been a hydropower producer for over one hundred years, and UPMEnergy is the second-largest electricity producer in Finland. While hydropower represents a cost-effective, renewable and CO 2 -free means of generating electricity, it can also have an adverse impact on watercourses and their habitats. In order to minimise these impacts, we work closely with authorities and other stakeholders (Read more about our migratory fish programme on the right).

SIGNIFICANCE • Water resources around the world are scarce and each watershed is therefore unique • Forests have a crucial role in the water cycle • Water is an essential resource in pulp and paper production TARGET • To use water responsibly • Minimise the negative impact of operations on water resources OUR WAY • Operations in areas with sufficient water resources • Efficient water use with appropriate recycling techniques • Treatment of used water according to the BAT (Best Available Techniques) • Water always returned to original watersheds, where possible • Co-operation with local stakeholders to minimise negative impact and ensure water availability to all • Focus on 2030 responsibility targets