UPM Annual Report 2019

Production

SIGNIFICANCE • Water resources around the world are scarce and each watershed is unique • Forests play a crucial role in the water cycle • Water is an essential resource in pulp and paper production TARGETS • Use water responsibly • Minimise the negative impact of our 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) • When possible, water is returned to its original watershed • Co-operation with local stakeholders to minimise negative impacts and ensure the availability of water for everyone • Focus on 2030 responsibility targets

RESPONSIBLE WATER USE Water has a crucial role in our business from sustainable forestry to production. It is also an important source of renewable energy.

40% reduction in effluent load (COD) from 2008 level

TARGETS 2030

31% reduction achieved for the UPM average product

As a signatory of the UN Global Compact’s CEOWater Mandate, we follow recognised principles in water stewardship. We aim to use water in a way that is environmentally sustainable, socially equitable and economically beneficial. UPM signed the WBCSD’s WASH Pledge for Access to Safe Water, Sanitation and Hygiene back in 2014. Today, we are globally compliant with the standards of the WASH Pledge. CDP recognised UPM as one of the only six Triple A List companies globally for its significant actions to enhance water stewardship. The water we need for our pulp and paper production processes is circulated and re-used as much as possible. Only a small proportion eventually leaves the process as effluent and needs to be replaced with fresh water. Using less water also means using less electricity, fewer chemicals and less thermal energy. All of our pulp and paper mills’ effluents are cleaned in both mechanical and biological effluent treatment processes. We operate a global water specialist network to share best practices and get the best possible treatment results. In 2019, we continued testing several potential sources of recycled nutrients and mapping opportunities for co-operation across all UPM sites. From the beginning of 2019, approximately one third of the nutrients used by UPM Kaukas mill’s biological water treatment plant have been replaced by Kekkilä Recycling composting plant’s side stream. Testing will continue in 2020 at several mills in Finland and Germany. As far as water reduction and effluent Continuous improvement in water management

load are concerned, all sites have been preparing a road map for reaching 2030 targets, and some actions are already being implemented. For example, UPM Kaukas paper mill improved the quality and quantity of clear filtrates after employing an additional disc filter, which has reduced the volume of fresh water used and wastewater produced by 20%. At UPMChangshu, the More with Biofore in China programme continued with several pilot trials to reduce fresh water intake by recycling and reusing effluent water. In 2019, we finalised the technical specifications for recycling effluent water and explored opportunities for partners in the surrounding area to use part of the effluent after its purification. Newmembrane technology for cleaning paper machine process water has been in operation since autumn 2019, with promising results. In Uruguay, several improvements were carried out in effluent treatment units of the UPM Fray Bentos mill, including the installation of a fibre filter in pulp bleaching area to reduce product losses into the wastewater streams. UPM continued to explore new ways of working, new technologies and new partnerships with potential chemical and machinery suppliers. Some of these technologies have been piloted during 2019 and this work will continue in 2020. Collaboration with stakeholders UPM’s responsible water use highlights the importance of water resources and good water management all over the world. For example, UPMRaflatac collaborates with WWF Poland in the Rivers for Life project. In Finland, UPM actively co-operates with the Baltic Sea Action Group to find new sources of recycled nutrients. This collaboration promotes our 2030 responsibility target

to use only recycled nutrients in our wastewater treatment plants.

Minimising the impact of hydropower facilities

UPM has been a hydropower producer for over one hundred years, and UPMEnergy is the second-largest electricity producer in Finland. While hydropower is a cost- effective, renewable and CO 2 -free way to generate electricity, it can also have an adverse impact on watercourses and their surroundings. In order to minimise these impacts, we work closely with authorities and other stakeholders.

upm.com/responsibility UPM Energy on page 42 Circular economy on page 96

Process wastewater volumes m 3 /t

50

40

30

CASE

20

MITIGATING WATER SCARCITY RISKS In 2019, we updated our water risk assessment by using the Water Risk Filter, an online tool developed by the WWF and the German finance institution DEG. The assessment confirmed that none of our most water- intensive mills (20 pulp and paper mills) are located in areas with a high or very high risk of water scarcity. The assessment, however, pointed out a certain level of risk at four of these mills, where we had a close look at possible impacts and risk-reduction measures. The UPM Changshu paper mill near Shanghai takes water from the Yangtze River. Even though the mill has already reduced its water consumption by 60% per tonne of paper over the last ten years, there is still potential for improvement, and this is currently being explored.

10

UPM Nordland paper mill uses groundwater as a water source. The mill consumes less water than any other UPM paper mill and also invested in its wastewater treatment plant in 2018, in order to replace part of its water withdrawal with treated wastewater. Today, approximately 20% of the effluent volume is reused, and the aim is to increase the use of purified wastewater to 25% in 2020. The water withdrawal from the river Seine for UPM Chapelle Darblay and from the river Isar for UPM Plattling is insignificant compared with the typical flow of these rivers. Reduction in the volume of process wastewater, and thus also reduction in water withdrawal, is one of UPM’s 2030 responsibility targets and a continuous improvement target at all mills.

0

08

15

16

17 18

19

Target

Per tonne of paper Per tonne chemical pulp

TARGETS 2030 30% reduction from 2008 level

10% reduction achieved for the UPM average product

94

95

OUR WAY

OUR WAY

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

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