UPM Annual Report 2019

Responsibility

VALUE FROM RESPONSIBILITY

Creating value for society – both as a company and through our renewable and responsible solutions – is an integral part of our strategy. The bioeconomy offers new opportunities for value creation and business growth. We promote responsible business practices throughout our value chain and we actively seek sustainable solutions in co-operation with our customers, suppliers and other stakeholders. Responsibility is integrated into our Biofore strategy as a solid foundation for long-term value creation, with emphasis on the following methods of ensuring responsible business practices: • Compliance • Responsible operations and value chain • Value-based leadership • Renewable rawmaterials, recyclable and safe products Compliance in all our activities Decision making, management and operations are guided by our values and by the UPMCode of Conduct. Responsible business practices, complemented by credible and transparent reporting, are the basis for our responsible business conduct across the whole value chain. In 2019, we renewed the UPMCode of Conduct and introduced a new training concept for all employees. By the end of the year, 96% had completed the training. The UPM Supplier and Third-Party Code was revised to reflect the changes in the Code of Conduct. It will be implemented in early 2020. In 2019, UPMwas named a Global Compact LEAD participant once again for its commitment to the UN Global Compact. We were one of only 36 global companies to receive this recognition, the only

SIGNIFICANCE • We are building a sustainable future by replacing non-renewable materials with renewable ones, using them more efficiently and creating new, responsible solutions • Responsibility is an integral part of our strategy and our operations and is seen as a source of competitive advantage TARGETS • We lead the forest-based bioindustry into a sustainable, innovation- driven and exciting future beyond fossils • We provide solutions to global challenges, while creating value for our stakeholders OUR WAY • We respect international agreements such as the UN Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, and the OECD Guidelines for Multinational Enterprises • Our Biofore strategy guides us in achieving our responsibility targets for 2030, and in contributing to the UN Sustainable Development Goals • Our Code of Conduct and Supplier and Third-Party Code provide a foundation for responsible business conduct and continuous improvement • Corporate responsibility is managed by the Board of Directors and the Group Executive Team, as well as by businesses and functions

CASE

product stewardship, we aim to ensure that our solutions respond to global challenges and that our product communication is reliable and transparent. The development of sustainable solutions continued in 2019. UPMRaflatac launched wash-off labelling materials with recycled content. UPMPlywood widened their range of fire-retardant products. Also, our joint operations and partnerships strongly supported our innovations. UPMRaflatac and UPM Biofuels joined forces to develop solutions based on renewable naphtha, which is an ideal renewable component for replacing fossil-based rawmaterials with sustainably sourced renewable feedstock. UPM also created a new wound care dressing made fromwood-based nanocellulose, in collaboration with researchers from the University of Helsinki and surgeons and nursing staff from the Helsinki Burn Centre.

us to quantify how to enhance biodiversity. Our target is to preserve and improve biodiversity in UPM’s own forests in Finland. Value-based leadership Value-based and inspiring leadership ensures high performance and continuous professional development, a safe and healthy working environment, and the wellbeing of employees and contractors. A diverse and inclusive working environment empowers people. Local commitment is crucial to this. A new Enabling Performance approach was put into action in 2018 and was expanded to cover most salaried employees in 2019. The aim is to increase employee motivation and drive better results. In 2019, we reviewed our Human Resources Rules and clarified our commitments to working conditions, labour practices and decent work, and employee’s responsibilities. We also agreed on a salient human rights issue assessment procedure at the business area level, which complements the existing human rights due diligence at UPM. The procedure was piloted at UPMRaflatac. Sustainable and safe solutions Global consumers present a large and growing demand for sustainable and safe solutions. Renewable rawmaterials and recyclable products are the essence of a circular economy. With our approach to

COMPREHENSIVE STUDY ON SDGS The UN Sustainability Development Goals (SDGs) are a set of 17 goals with 169 targets that strive to solve the most pressing global challenges by 2030. As a UN Global Compact LEAD Participant, we are strongly committed to supporting the SDGs. Our strategy guides us in achieving our ambitious responsibility targets for 2030, set in 2015, and our contributions to SDGs. In 2019, we reviewed all 17 SDGs and their 169 targets against our Biofore strategy, our 2030 responsibility targets and stakeholder expectations. We chose the most relevant SDG targets based on where we can have the greatest impact, either by minimising our negative impacts or by increasing our positive impacts on people, societies and the environment. After having analysed and evaluated the outcome with businesses, 12 targets for 6 SDGs were chosen as the focus of our work. The chosen SDGs are: SDG 6 (Clean water and sanitation), SDG 7 (Affordable and clean energy), SDG 8 (Decent work and economic growth), SDG 12 (Responsible consumption and production), SDG 13 (Climate action) and SDG 15 (Life on land). We continuously monitor the progress of our contribution to SDGs and raise the bar when targets are reached ahead of schedule or when new or more ambitious targets are needed to meet the needs of the changing world.

business. A thorough analysis of transition scenarios was carried out internally. In 2019, UPM’s businesses continued to work on detailed roadmaps on how to reach our 2030 environmental targets, and on developing environmental reporting and sharing best practices. As a result, environmental deviations reduced from 26 to 20. As an example of mill developments, the UPMKaukas paper and pulp mill significantly reduced its COD load and started to use recycled nutrients from nearby sources. We made a big step towards transparent monitoring of biodiversity in our own forests in Finland. We developed new biodiversity indicators, which help

representative of the forestry industry, and the only company fromFinland.

Responsible operations and value chain

Efficient operations not only reduce costs, but also minimise negative environmental impact. By managing our forests sustainably, we ensure the availability of wood, safeguard biodiversity and mitigate climate change. Our commitment to respecting human rights is a focal point of our responsible business practices. Climate change remained high on the agenda. The FinnishMeteorological Institute (FMI) concluded a study in 2019, helping us predict the future long-term physical impacts of climate change on our

Sustainable and safe products on page 8 Compliance on page 74 Climate actions on page 86 Sustainable forestry and land use on page 88 Lifelong product stewardship on page 82 More about responsibility throughout the Annual Report upm.com/responsibility sustainabledevelopment.un.org

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OUR STRATEGY

OUR STRATEGY

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

CONTENTS