UPM Annual Report 2020

ACTIONS FOR FUTURE GROWTH

BUSINESS AREA

STRATEGIC TARGETS

ACTIONS 2020

ACTIONS PLANNED FOR 2021 *)

Continuous improvement of financial, social and environmental performance Maintain strong balance sheet and capability for future opportunities Develop an “Aiming higher” culture for business success

Continuous improvement programmes Commitment to UN 1.5 degree pledge Actions to secure business continuity amid COVID-19 Actions to improve cost competitiveness in businesses and functions EUR 750 million Green Bond issued and Green Finance Framework prepared Strengthen engaging safety culture and global health concept Renewal of UPM Report Misconduct channel Implementation of the revised UPM Supplier and Third-Party Code Continue diversity and inclusion work Construction of the pulp mill in Paso de los Toros and in Montevideo port advanced Construction of a third nursery in Central Uruguay begins Achieved fossil-free sawn timber production Continued evaluation of growth opportunities and new sustainable feedstocks in biofuels

Continuous improvement programmes Disciplined and effective capital allocation Study on climate-related substitution and storage effects of products Continue diversity and inclusion work Strengthen engaging safety culture and global health concept Continue diversity and inclusion work Construction of the pulp mill site in Paso de los Toros and in Montevideo port continues Evaluation of growth opportunities and new sustainable feedstocks in biofuels continues, basic engineering phase of a potential biorefinery Refurbishment of the Kuusankoski hydropower plant continues Commissioning of OL3 Capture growth opportunities and develop product portfolio and service offering Continue to develop new concepts Continue three-year productivity programme Growth in selected applications Further increase output of new capacity Continue to innovate alternatives for fossil-based materials Continue cost efficiency improvement Capture opportunities in additional end-uses and segments Further explore digitalisation opportunities, focusing on customer interface Continue to reduce the environmental impact

Group and all businesses

Compliance with laws and regulation Mitigate risks and capture opportunities

During 2020, our focus was clear: ensure the safety of our employees and contractors and ensure the performance of the company while implementing our strategic growth projects. This work will continue in 2021.

To grow as a trusted and responsible pulp supplier Provide sustainable, advanced biofuels and biomaterials Enhance profitability through efficient wood supply, integrated full-production and focused commercial strategy

UPM Biorefining

Profitable growth in zero-carbon electricity generation Solutions for industrial energy excellence Embrace the decarbonisation of society

Continued developing the service offering to industrial-scale electricity consumers Continued refurbishing the Kuusankoski hydropower plant

UPM Energy

Continued commissioning tests of OL3 Sold UPM’s share in Kainuun Voima Restoration efforts of migratory fish stocks

Profitable organic growth, potentially complemented by acquisitions Expand customer reach through commercial excellence Widen product portfolio for value-added and sustainable products Innovating in productivity

Captured growth opportunities and developed product portfolio and commercial excellence Continued to develop new concepts in sustainability and circular economy Three-year productivity programme progressed as planned

UPM Raflatac

Global leader in labelling materials The preferred fine paper supplier in Asia-Pacific Growth in selected flexible packaging applications

Growth in selected applications Ramp-up and commercialisation of new capacity in China and Germany Continued strengthening our brands and customer excellence Continued to innovate alternatives for fossil-based materials and more demanding end-uses Continuous improvement of environmental performance Closed a total of 960,000 tonnes of graphic paper capacity in France and Finland Plan to sell the UPM Shotton mill in the UK Increased effectiveness of supply chain Strengthened customer interface by building new digital channels Continued to reduce environmental impact Long-term wind power purchase agreement in Germany Continued ramp-up of growth investment at the UPM Chudovo mill in Russia Closed UPM Jyväskylä plywood mill In Finland Differentiation from competition with “Responsibility made easy” promise Increased the availability of FSC® certified birch plywood Further enhanced effective raw material usage and agile supply chain capabilities Development of strategic forest assets Study availability and quality of competitive wood for UPM’s growth projects Development of indicators and monitoring methods of biodiversity

UPM Specialty Papers

Maintain a profitable leading market position whilst actively managing capacity in line with market developments Increase operational efficiency and ensure the consistent quality of our portfolio Drive digitalisation by focusing on operational and supply chain optimisation and enhancing digital solutions at the customer interface Increase focus on sustainability and our carbon footprint Profitable growth through superior customer experience and operational excellence A strengthened market position through increasing value and service offerings

UPM Communication Papers

Operational excellence Further enhance effective raw material usage and agile supply chain capabilities

UPM Plywood

Sustainably secure competitive wood supply Ensure sustainable land use and forestry by increasing biodiversity and carbon sinks

Ensure availability and quality of competitive wood for UPM’s mills and growth projects Enhance activity in private wood trade Further development of digital platform Increase broad-leaved trees in Finnish forests Construction of biorefinery at Leuna, Germany Commercial preparations for entering into market Strategy development towards regenerative medicine and scale-up of business Launch of OEM product range

UPM Forest

Development of forest carbon calculations Actions to improve cost competitiveness

Enter the wood-based biochemicals market Opening new markets commercially

Investment in a biochemical refinery producing 100% wood-based biochemicals in Leuna, Germany

UPM Biochemicals

Further commercialisation of GrowDex® products, launch of new products, marketing digitalisation

Launched new biomedical product family: GrowInk™ for 3D bioprinting Signed first distribution agreement for FibDex® wound dressing and delivered first orders

UPM Biomedicals

Focused business growth

Streamlining of UPM ProFi businesss Launched new Piazza product family Commercialising of bio-based UPM Formi EcoAce

Strengthen UPM ProFi market position Upgrade product portfolio Multiply commercial success of UPM Formi

UPM Biocomposites

*) Not a complete list

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020

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