UPM Annual Report 2019

UPM in changing world

SUSTAINABLE AND SAFE SOLUTIONS

EXAMPLES OF OUR PRODUCTS THAT REPLACE FOSSIL-BASED MATERIALS PACKAGING Products made from pulp; UPM UniqueBarr™ barrier papers; UPM BioVerno renewable naphtha used in products such as milk cartons; UPM Fine paper LABELLING UPM Raflatac Forest Film™; UPM Raflatac Fossil-Free Adhesive; RAFNXT+ range; PCR (post-consumer recycled) film and paper label materials; fibre-based face papers and release liners

Our strategy on page 16 Product stewardship on page 82 Limitless opportunities of a bioeconomy on page 6 Customer collaboration on page 84 upm.com/responsibility

We actively develop new solutions for various needs and promote the sustainable use of renewable materials. We strive to mitigate climate change and drive value creation through innovating novel products. We innovate climate-positive products and turn them into growing businesses. Product design must cover the entire value chain, from rawmaterial sourcing to end products, and their recycling or disposal. Renewable and recyclable products, and innovations based on these products, are an essential part of the bioeconomy, both now and in the future. Examples of how our safe and sustainable products offer alternatives to fossil materials are shown on the right. We respond to the growth in consumer demand with recyclable products that are made of responsibly sourced, renewable raw materials.

TRANSPORTATION Low-emission UPM BioVerno diesel and naphtha; WISA plywood vehicle flooring in trailers

ELECTRIFICATION Providing zero-carbon electricity to the market

CONSTRUCTION UPM’s sawn timber and WISA Plywood; UPM ProFi composite decking material; ash from biomass-based energy generation used in the cement industry and soil stabilisation MANUFACTURING WISA BioBond gluing technology; UPM BioPiva™ lignin in resins, adhesives, polymer blends and bio-plastics; green liquor dregs from pulp mills as a desulphuring agent at power plants; ash as raw material for paper filler production MEDICATION AND MEDICAL RESEARCH FibDex ® , a wound care dressing made from nanofibrillar cellulose, and GrowDex ® , a nanocellulose hydrogels for 3D cell culture for medical research

CONSUMER PRODUCTS UPM Formi recyclable composite material

OUR ALTERNATIVES FOR FOSSIL-BASED MATERIALS

FIBRE PRODUCTS We provide responsibly produced fibre-based products that are used in packaging, hygiene and tissue products, often replacing non-renewable raw materials. We use renewable wood fibre as the main raw material for our graphic papers, specialty packaging materials, labelling materials and biocomposite products.

MOLECULAR BIOPRODUCTS Biofuels and biochemicals offer new growth opportunities beyond our current product portfolio. The fuel and chemical markets are huge, but are mainly supplied by fossil raw materials, representing a quickly increasing demand for sustainable alternatives. UPM has excellent advantages in developing its biomolecule businesses: a competitive forest industry platform, sustainable feedstocks and land use, biomass processing technologies and intellectual property rights. Growth drivers  Climate change mitigation  Sustainability  Pressure to reduce greenhouse gas emissions and tailpipe emissions in transport  Replacement of fossil raw materials with renewables

WOOD PRODUCTS Most of our wood products are used in construction. Plywood and sawn timber are also used in furniture and parquet, packaging and vehicle floors, as well as being used 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.

LOW-EMISSION ENERGY Our energy portfolio consists mostly of energy sources that do not cause fossil carbon dioxide emissions. We generate hydropower, nuclear power and biomass-based energy in the mills’ combined heat and power plants. Energy efficiency means that energy consumption and emissions are continuously reduced. Growth drivers  Electrification – electricity everywhere  Climate change mitigation  Pressure to replace fossil fuels with renewables Regulating the electricity grid as weather-dependent generation increases  Sustainable consumer choices

Growth drivers  Global demand growth of consumer goods  Growth of e-commerce  Population growth, increasing income levels  Urbanisation and demographic change  Environmental awareness  Legislation  Brands and product innovations

Growth drivers  Building and construction  The role of renewable materials in construction  Road transportation  LNG carrier and terminal investments globally

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UPM IN CHANGING WORLD

UPM IN CHANGING WORLD

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

CONTENTS