UPM Annual Report 2019

Operations

CASE

FROM THE BOTTOM OF A SOAKING POND TO A COMMERCIAL SOIL CONDITIONER UPM Plywood together with ProAgria and the Natural Resources Institute Finland, Luke in Southern Savonia, have developed a new organic soil conditioner that can be used to improve the growth conditions of arable land. The soil conditioner is made of impure bark which is generated during the soaking of logs at the bottom of the soaking pond at UPM Plywood in Pellos, Finland. UPM has been seeking sustainable use for impure bark for a long time. The bark and soil materials have been used in field tests as they are and as different mixtures containing crushed impure bark and bottom ash from the Järvi-Suomen Voima power plant and the calcareous slag, a side stream from the Voikoski gas plant. There was nothing out of the ordinary in terms of crop yield or quality. However, in the long term, adding organic material improved the soil’s nutrient retention capacity and looseness. Using bark waste as a soil conditioner can also boost carbon absorption in agricultural areas, which is one way to mitigate the effects of climate change. In addition, an essential benefit is that growth of the roots of plants and crops above ground increases as the nutrient content and quality of the soil improves. The first batch of the product was launched in summer 2019. It is suitable for field farming and landscaping and it has been approved by the Finnish Food Authority. WASTEWATER TREATMENT PLANT UPM’s goal is to use only recycled nutrients such as nitrogen and phosphorus in its biological wastewater treatment by 2030. The industrial production of nitrogen requires a lot of energy, while phosphorus is a depleting resource and would be put to better use in fertilisers, for example. In 2019, UPM Kaukas in Lappeenranta, Finland took a significant step towards this goal by utilising all reject water from the Kekkilä Recycling composting facility in Joutseno. This sidestream replaces approximately 3.7 tonnes of nitrogen each month, and thus reduces the load going to the municipal wastewater treatment plant. The idea of utilising Kekkilä’s sidestream as nutrient was presented in 2018. After a brief laboratory testing — which yielded excellent results — there was an industrial-scale trial run before taking the nutrient into continuous use. The recycled nutrient, sourced from only 15 kilometres from the mill, replaced approximately one third of the nutrients used at UPM Kaukas in 2019. SIDESTREAM FROM KEKKILÄ’S COMPOST AS NUTRIENT AT

CIRCULAR ECONOMY Many of our products are made from side streams, residues and waste. We actively develop new solutions in order to accelerate the transition to a circular economy, in response to climate change and resource scarcity. Recycling is a part of a circular economy We have developed innovative ways to reduce and recover waste and to use side streams. Examples of our efforts to promote a circular economy include the following: Making use of our side streams and by-products • UPMBioVerno renewable diesel and naphtha are produced from crude tall oil, a residue from chemical pulp production. • Lignin, a by-product of pulp production, is used inWISA BioBond gluing technology, replacing fossil phenol used in plywoodmanufacturing. • Ash frombiomass-based energy generation is used in a wide variety of applications, in soil stabilisation and cement industry, or internally to replace caustic soda or as rawmaterial for paper filler production, for example. SIGNIFICANCE • Circular economy addresses two key global challenges: resource scarcity and climate change • There is growing demand and competition for raw materials • A circular economy ensures materials are used more efficiently and creates a competitive advantage TARGET • Promote the efficient use of all material streams and the implementation of circular economy – reduce, reuse and recycle OUR WAY • Circular economy thinking • Cross-industry collaboration • Reuse materials and products several times, and create value through smart solutions • Recycle and reuse production waste and utilise by-products • Focus on 2030 responsibility targets

Limitless opportunities of a bioeconomy on page 6 Sustainable and safe products on page 8 Climate actions on page 86 Innovating for growth on page 22 and 52

fibrous residues that are not incinerated are utilised in areas such as brick manufacturing, earthwork or as soil improvement materials (readmore on the right).

Making use of recovered materials • UPM is the world’s largest consumer of recovered paper for the production of its graphic papers. In 2019, the company used 2.3 million tonnes of recovered paper. This means that approximately 30% of the fibre rawmaterials used in UPM’s paper production are from recycled sources. • UPMProFi biocomposite utilises the cellulose fibres and plastic polymers generated as manufacturing surplus from self-adhesive label material production. In 2019, 33% of plastic polymers used in UPMProFi were made from recycledmaterials, and this percentage is set to increase. • Collected release liners are desiliconised in a unique process and used to produce new release liner base papers by UPM Specialty Papers. • There is a steady increase in the use of recycled nutrients at UPM’s effluent treatment plants (readmore on the right). Enhancing recycling • UPMRaflatac collects label waste from its 150 customers and partners based in 16 countries, and recycles it using a variety of RafCycle® recycling solutions, including UPM ProFi and glassine liner with recycled content. • UPMRaflatac has developed a range of innovative solutions to promote a circular plastics economy, including thin film materials, wash-off adhesives and label materials containing recycled content. • Our state-of-the-art Materials Recovery Facility at UPM Shotton sorts collected householdmaterials into re-usable waste fractions, including recovered paper that is utilised in our own paper production.

Our zero solid process waste to landfill target By 2030, UPMwill not deposit any process waste at landfill sites, and no process waste will be incinerated without recovering the energy. On average in 2019, 89% (90%) of our process waste was recycled or recovered, and 62% of our production sites have already achieved 100% share of utilisation. We share best practices, research results and ideas throughout UPM. Green liquor dregs are one of the most challenging residues from pulp production, and we are currently developing several innovative processes for utilising this material in Finland and Uruguay. Overall, ash originating from bioenergy production makes up the largest proportion of our solid waste, 93% of which is recycled into a variety of applications. Most organic production residues, such as bark, wood residues and fibre- containing solids from deinking and effluent treatment, are used to generate energy for mill sites. The

Process waste to landfills 1,000 t

150

120

90

60

30

0

Target

15

16

17 18

19

TARGETS 2030 No process waste to

landfills or to incineration without energy recovery

89%

recycling or recovery achieved for our total process waste

96

97

OUR WAY

OUR WAY

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

CONTENTS