UPM Annual Report 2019

UPM climate related disclosures according to TCFD (Task Force on Climate-related Financial Disclosures) is integrated to this report as follows:

of selfadhesive label materials. Furthermore, residues are used in external products, e.g. ash is used in applications ranging from landscaping to road building. Regulatory changes can have an impact on the options for waste or residue use, thus causing higher costs for alternative solutions. In 2019, UPM’s environmental investments totalled EUR 17 million (16 million). The single largest investment was at UPM Jämsä River Mills, where a urea feeding system was installed to two boilers to reduce NOx emissions. UPM’s environmental costs, which were mainly attributable to effluent treatment and waste management, totalled EUR 123 million (124 million), including depreciation. There has been a significant decrease in the number of environmental non-conformances since UPM’s internal Clean Run programme was launched in 2012. No major environmental incidents occurred at UPM production plants in 2019. However, a total of 20 (26) temporary deviations from permit limits or limits set by UPM occurred over the course of the year. Approximately 2,900 (2,600) preventive environmental observations and near misses were reported in 2019. The goal of the Clean Run programme and the related reporting is to improve environmental performance and awareness and to share best practices. In 2019, UPM’s environmental performance improved compared to 2018 with a 2% reduction of waste sent to landfills. Our fossil CO 2 emissions (scopes 1 and 2) summed up to 5.8 million tonnes in 2019, which is a decrease of 6% compared to 2018.

higher in performance and ensuring growth of our people. In 2019, UPM continued the enabling performance approach by creating feedback culture, setting goals in an agile manner and having better one-to-one conversations. Development programs to support skills of asking and giving feedback, high quality conversations and coaching have been continued. UPM has started a dialogue on diversity and inclusion in its key management teams during 2019. The proactive safety of employees and contractors has remained an important focus area. UPM key business and operations leaders gathered to a discuss how to leading safety and raise the bar. Product stewardship Majority of UPM’s products are made from renewable raw materials and are recyclable. Product stewardship covers the entire lifecycle of all UPM products from the development phase to the end-use and beyond. Ecodesign and product safety measures, such as UPM’s Restricted Substance List, ensure that impacts on products and the environment are considered and minimised. UPM provides product declarations to provide customers with easy access to information concerning the responsibility of products and the supply chain. UPM is the world’s largest producer of EU ecolabelled newsprint, graphic and office papers. All the European sites of UPM Raflatac and UPM Specialty Papers' mills and our pulp mills have implemented ISO 22000 food management systems and the respective products are designed and produced to meet food packaging requirements. In 2019, UPM participated in a Pulp & Paper Value Chain Information System development project with several chemical suppliers. The aim is to enhance transparency in the supply chain and speed up the exchange of information. Environment and climate change UPM’s responsibility focus areas in environmental matters are forests and biodiversity, climate, water-use and waste. UPM uses raw materials, water, energy and other resources in a responsible manner and continuously improves its energy, resource and cost efficiency. UPM is committed to sustainable forestry, and the company uses third-party-verified FSC ® and PEFC™ chain of custody certification to ensure that the wood it procures is legally sourced from sustainably managed forests. All UPM owned forests are certified. Sustainable forest management and land use play a key role both in mitigating and adapting to climate change. In 2019, UPM continued to implement its work aimed at positive impact on biodiversity in company forests in Finland. This biodiversity programme is implemented through biodiversity guidelines for operational forestry work, forest protection and cooperation with stakeholders. The development of indicators and monitoring methods have been key in 2019. UPM favours the use of renewable and other carbon-neutral energy sources. Biomass-based fuels make up 70% (70%) of fuels used by UPM worldwide. If UPM needed to buy certificates to cover its whole direct fossil CO 2 emissions, and if the price of CO 2 certificates were to rise by EUR 5 per tonne, it would mean additional costs of approximately EUR 14 million annually. All of UPM’s largest production plants are located in areas where there is sufficient water available. The water used by UPM plants comes from rivers, lakes or groundwater resources. UPM uses water responsibly in terms of the company’s water consumption and effluent quality. If the price of raw water were to increase by EUR 0.01 per cubic metre, it would mean additional water costs of approximately EUR 4 million annually. UPM has developed innovative ways to reduce its own waste and to recycle waste or residues with new products such as UPM BioVerno, UPM’s renewable diesel and naphtha, as well as UPM ProFi composite, which partly utilises waste from the production

REQUIREMENTS

PAGE

GOVERNANCE

a) The role of the Board in overseeing climate-related issues

Page 132, paragraph "Roles of the group management and functions in leading non-financial matters"

b) The role of management in assessing and managing climate-related issues Page 132, paragraph "Roles of the group management and functions in leading non-financial matters"

STRATEGY

a) The climate related risks and opportunities over the short, medium and long term

Pages 129–130, paragraph "Risk management" and table "Strategic risks" Pages 26–29, chapters "Megatrends", "Risks and opportunities"

b) The impact of climate-related risks and opportunities on business, strategy and financial planning

Pages 26–29, chapters "Megatrends", "Risks and opportunities" Page 130, table "Strategic risks"

c) The resilience of strategy, taking into consideration climate-related scenarios Page 134, paragraph "Environment and climate change" Pages 86–87, chapter "Committed to climate actions"

RISK MANAGEMENT

a) Processes for identifying climate-related risks

Page 129, paragraph "Risk management" Page 132, paragraph "Roles of the group management and functions in leading non-financial matters" Page 129, paragraph "Risk management" Page 132, paragraph "Roles of the group management and functions in leading non-financial matters"

b) Processes for managing climate-related risks

c) How processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management

Page 129, paragraph "Risk management" Pages 105–107, chapter "Governance"

METRICS AND TARGETS

a) Metrics used to assess climate-related risks and opportunities

Pages 10–11, "Key performance indicators"

b) Scope 1, Scope 2 and Scope 3 emissions, and related risks

Page 134, paragraph "Environment and climate change" Page 220, graph "Sources of UPM's greenhouse gas emissions"

c) Targets used to manage climate-related risks and opportunities and performance against targets

Page 136, table "Material non-financial topics and key performance indicators" Pages 60–61, table "UPM Responsibility targets"

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UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

CONTENTS

ACCOUNTS

REPORT OF THE BOARD OF DIRECTORS

REPORT OF THE BOARD OF DIRECTORS