UPM Annual Report 2020

GLOBAL MEGATRENDS DRIVE DEMAND

ers. Regulation may drive further markets for sustainable products, such as cleaner traffic fuels. Growing e-commerce increases demand for labelling, packaging, pulp and transport. UPM can play a role in producing and using low-carbon energy, offering and innovating sustainable products as well as designing products and processes to mini mise waste, maximise efficiency, and achieve circularity in production and consumption. While global megatrends offer signif icant long-term opportunities for UPM,

change on our business operations and committed to UN Business Ambition for 1.5°C and to science-based measures to limit global warming. Climate-positive forestry also safeguards the availability of our own wood. The opportunities and the challenge With our versatile product portfolio, we are well positioned to meet the growth in con sumer demand as well as to enable sustain able choices for our customers and consum

they are also associated with risks, such as unpredictable regulation or protectionism. Inequality, resource scarcity or the severe impacts of climate change may distort mar kets or lead to political instability. Changes in the forest ecosystem could have negative impacts on the company’s rawmaterial base. Digitalisation has different impacts for different businesses. UPM continuously analyses megatrends and the development of its operating environment to identify both opportunities and challenges.

Global consumer demand is strongly influenced by the needs of the growing middle class. At the same time, it is essential to address the challenges posed by climate change and resource scarcity.

GLOBAL MEGATRENDS

As a result of population growth and other demographic changes, global consumer demand is increasing significantly. In 2020, an estimated two billion Asians were categorised as part of the middle class, and that number is set to increase to 3.5 billion by 2030. With higher living standards and ageing populations, people are consuming more and for longer. According to the UN, 70% of the world’s population will live in cities by 2050, enjoying greater access to higher income and many services from healthcare to e-commerce. Currently, 70% of global energy use and up to 85% of economic activ ity takes place in cities and urban areas.

become irreversible if the temperature rise exceeds a threshold of 2.5°C. Climate change affects countries in different regions in different ways, impacting for example rising sea-levels, severe weather events, droughts, climbing temperatures, insect infestations and water scarcity, as well as damage to ecosystems and the services they provide. The solution The most efficient way to mitigate cli mate change is to eliminate the use of raw materials from fossil sources. This provides UPMwith a strong competitive advantage as we focus on renewable, wood-based rawmaterials and low-carbon energy. We have studied the various impacts of climate

In recent decades, we have seen the twin pressures of growing populations and growing economies both escalating demand for energy, food andmaterial goods, as well as the resources to produce them. The need for solutions that improve efficiency and provide alternatives to scarce resources has never been greater. Underlying these trends is the persistent increase in global emissions. In many parts of the world, water quality and soil contam ination have worsened significantly. Marine litter associated with plastic pollution remains one of the most difficult waste and resource management challenges. Sustaina ble packaging and better recycling practices are part of the solution. Climate change mitigation Global temperatures reached approxi mately 1°C above pre-industrial levels in 2017. Climate change has now become an independent driver of changes in natural systems, exacerbating other drivers. Scientists project the damage to

GROWING MIDDLE CLASS

RESOURCE SCARCITY

CLIMATE CHANGE

DRIVERS FOR DEMAND

CHANGING CONSUMER BEHAVIOUR

HIGHER LIVING STANDARDS

DIGITALISATION & E-COMMERCE

URBANISATION & MOBILITY

TIGHTENING REGULATION

OUR SUSTAINABLE SOLUTIONS

RENEWABLE RAW MATERIALS

LOW CARBON ENERGY

CLIMATE-POSITIVE FORESTRY​

CLEANER TRAFFIC FUELS​

CIRCULARITY

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020