UPM Annual Report 2020

ACTIVE STAKEHOLDER ENGAGEMENT Understanding the views and expectations of our stakeholders plays a crucial role in the success of our company and the acceptability of our operations. Active and open dialogue with our stakeholders provides valuable input for our development efforts.

World-class commitment to corporate responsibility

In November, UPMwas listed as the forest and paper industry leader in the Dow Jones European and World Sustainability Indices for 2020–2021. In September, the UN recognised UPM as the only forest industry representative and also the only Finnish company among the 41 LEAD participants. UPM continued active participation in the UN Global Compact initiatives. UPM also chaired the Global Compact Finland Network, bringing together all Finnish companies and organisations committed to the Global Compact. We continued our cooperation with dif ferent stakeholders on responsibility issues on a voluntary basis, addressing themes such as ecolabels, fish migration and nature conservation. We became an international stakeholder member of PEFC (the Pro gramme for the Endorsement of Forest Cer tification), reflecting our aim to promote sustainable forest management globally. As a member of both PEFC and FSC® (Forest Stewardship Council), we engaged in active dialogue on updates to forest management standards in both schemes. We also con tinued our cooperation with WWF Finland and Birdlife Finland. Responsibility issues were also raised in customer enquiries, with product safety, forest certification and the origin of wood as key themes. Globally, we continued active cooperation with local

The impact of UPM’s operations extends from the local level to wider society. We aim to provide a fact-based, balanced view of the economic, environmental and social aspects of our business activities. Continuous dialogue with stakeholders Our goal is to provide our stakeholders with a clear picture of what our future course is, how we implement our Biofore strategy and how we create long-term value for our stakeholders. We disclose relevant and accurate information in accordance with market regulations. In 2020, we arranged a Capital Markets Day, participated in industry conferences and met widely with international investors. As many of our stakeholders view UPM primarily as an economic operator, finan

cial success, stability, good governance, future outlook and growth were key themes discussed. Stakeholder mapping, active dialogue and the systematic gathering of feedback play an essential role in our stakehold er-relations work. We analyse the feedback carefully to understand the expectations of our stakeholders. Then, we take these expectations into consideration during our development work and decision-making. We received 350 enquiries or concerns from general public in 2020. Every year, we conduct a materiality analysis that highlights the most important responsibility issues for us and our stake holders. The analysis is based on several surveys, customer enquiries and feedback from an open web-based tool.

Green recovery high on the policy agenda

Laura Remes, General Manager of UPM Tervasaari handing over face masks to be used at services for the elderly.

Through public affairs work, we aim to foster the necessary prerequisites for our operations, particularly in Finland, Uruguay, Germany and China. Active influencing at the EU-level is also important. We co-operate with a number of trade associations, themost important being the Finnish Forest Indus tries Federation (FFIF) and the Confedera tion of European Paper Industries (CEPI). As we enter new businesses, we also need to find newways and forums for cooperation. For example, UPM is a foundingmember of Leaders of Sustainable Biofuels (LSB) in the EU and also a newmember in the European Chemical Industry Council (CEFIC). For decision-makers and politicians, 2020 was challenging because of the

COVID-19 pandemic and the resulting lockdowns. Despite the need to prioritise measures related to the global pandemic, there was significant progress in several policy fields with impacts for UPM. We were active in discussions on the Finnish operat ing environment and the focus areas of the government. We emphasised competitive ness, predictability, innovations and climate change solutions (read more on page 68). Climate change mitigation and our commitment to the UN’s 1.5-degree agenda garnered a lot of interest among our stake holders (page 16). Discussions were carried out with environmental organisations, certification bodies, authorities and deci sion-makers. The climate impact of forests is linked to policies on land use, land-use change and forestry (LULUCF). We have highlighted the importance of sustainable forest management and manufacturing products from renewable rawmaterials that replace fossils as effective ways to mitigate climate change. The EUCommission launched a com prehensive Green Deal initiative, which includes a proposal for more ambitious cli mate and environment policies. The Green Deal includes a variety of new legislative proposals that will be rolled out over the next few years. We actively promote the cost-compet itive and consistent implementation of climate change policies. The EU Emission Trading Scheme’s third trading period

ended in 2020, and we have been engaged in the EU preparations for the new trad ing period starting in 2021. While the mechanism is still limited to covering only activities within the EU, so-called “carbon leakage” measures must be put in place to ensure both efficiency in mitigating emis sions and the competitiveness of industrial players in global competition. Decarbonising traffic through renewable energy and biofuels policies continued. For us, it is very important to get recognition for advanced and residue-based biofuels with high GHG reduction.

CASE

SIGNIFICANCE • Stakeholder engagement provides predictability and a competitive advantage • Continuous dialogue improves understanding of key risks, challenges and opportunities in the operating environment TARGETS • We aim to understand stakeholders’ needs for information and expectations for UPM, and aim to consider them in strategic development and decision-making processes OUR WAY • We engage in active dialogue with our stakeholders to discuss our operations and targets • The UPM Code of Conduct sets the standards for responsible behaviour and collaboration • Stakeholder engagement is measured by several indicators • Stakeholder relations are co-ordinated globally at Group level, while businesses are responsible for continuous dialogue with customers and business partners, as well as the local communities

Purchasing the masks was an apt decision for the Biofore Share and Care programme, as its overall aim is to support local communities and their vitality. A good example of voluntary work was the expertise support, which our Sourcing func tion offered pro bono to National Emergency Supply Agency in Finland to help them acquire face masks from China. We identified the mask suppliers, audited them, organised a tender and negotiated terms of delivery. The Agency them selves then signed the purchase agreements with the suppliers.

LOCAL SUPPORT IN GLOBAL CRISIS

The rocketing demand for face masks due to the COVID-19 pandemic resulted in a shortage over spring and summer this year. We decided to help the communities where we operate and acquired half a million masks to be given out to local operators. Each site could choose the recipient of the support. Altogether 35 sites in nine countries gave out face masks to 65 recipients. Masks were given to hospitals, health centres, schools and homes for the elderly. Masks were also delivered to day care centres, services for the disabled and other social care operators.

We also gave 40,000 face masks Finnish universities to be used in classes. We wanted to support students and to enable them to continue with face-to-face learning in these exceptional circumstances.

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020