UPM Annual Report 2020

OUR EMPLOYEES BY REGION

UPMclosed two paper mills and a plywoodmill during the year. UPMalso streamlined activities in several businesses and global functions. The closures, reorganising and streamlining of businesses and functions decreased the number of personnel by 1,312 in total. To alleviate the effects caused by employee reductions related to the closing

of the Finnish mills, we re-launched our “From Job to Job” programme. Imple mented in cooperation with the local authorities and partners, the programme includes active measures that promote employment and retraining. We imple mented several voluntary measures in addi tion to our statutory obligations, including training, a business start-up allowance or support for temporary housing.

and meaningful work and good leader ship and career opportunities. UPM has designed its reward policy to increase employee commitment to and motivation for high performance. Each employee belongs to a unified annual Short-Term Incentive (STI) scheme. The STI scheme covers group and business-level targets, personal and team performance targets and individual performance evaluation, to differentiate and reward high performance. The annual incentives paid in 2020 for the 2019 STI plan were EUR 51 million and the estimated amount of annual incentives for the 2020 STI plan is EUR 56 million. We recognise significant individual or team success with a separate Achievement Award system. It is designed to support UPM’s high-performance culture and recognise individuals and teams for outstanding contribution, significant achievements and exceptional performance. In addition to the Short-Term Incen tive scheme, UPM provides two long-term incentive plans: Performance Share Plan (PSP) for senior executives and Deferred Bonus Plan (DBP) for other key employees. Launched annually, the plans cover approx imately 400 employees.

To further develop inclusive leadership and culture, we started a dialogue with management teams in 2019, and this work continued in 2020. Nearly 1,200 people par ticipated in the dialogue by the end of 2020. We regularly review our diversity status. Our management teams regularly conduct self-assessments that include diversity and inclusion. We welcome the talent of people with different competencies, backgrounds and experiences, as well as genders, ages and nationalities. This contributes to a richness of views, thereby improving decision-making and business success. Inclusive behaviours are integrated into UPM leadership development programmes and emphasised in UPM Code of Conduct training. UPM rewards and recognises high perfor mance. Our approach to total rewarding and recognition consists of both tangible and intangible components. Tangible remuneration and recognition consists of base salary, benefits and incentives, which are determined by UPM’s global rules, local legislation, general agreements, local market practices, the level of the position and individual performance. Gender, age, ethnic origin and nationality play no role in determining salaries and wages. Intangible remuneration and recog nition consists of, for instance, a safe and healthy working environment, interesting Rewarding and recognising high performance

6,803 Finland

3,879 Germany

3,709 Other Europe

877 North America

1,618 China

311 Other Asia

Rest of the world

143

674 Uruguay

18,014 Total

UPM PERSONNEL IN FIGURES

2020

2019

2018

Turnover, %

10.4

9.2

8.9

Turnover, % (voluntary)

3.5

4.0

4.1

Average age of personnel

44.6

44.3

44.0

leading business. Dealing with complexity, improving coaching capabilities and pro moting inspiring leadership have been the key areas of development in recent years. This year, additions to these areas include strengthening resilience and self-leader ship. In 2020, leadership development focused on front-line and middle managers, as they lead most of our employees. We continued to foster a growth mindset and improve the skills needed to enable perfor mance, such as conversation and feedback skills. By the end of 2020, approximately one third of UPMmanagers had completed the programme on achieving quality con versation skills and improved feedback.

To support teams and individuals in this changing world, we also renewed our approach to change. The aim is to facilitate human-centred change in everyday life and in different projects. The train the trainermodel was established to train change experts. We value diversity and strive for an inclu sive culture. We respect the privacy of our employees and promote equal opportunities and objectivity in employment and career development. In addition to building a cul ture of Aiming Higher, we are committed to developing local conditions that ensure an inclusive and diverse working environment. Developing a diverse and inclusive work environment

People development Average training hours/employee OHS figures, UPM workforce Lost-time accident frequency

7

12

12

2.8

2.9

2.7

Total recordable injury frequency

5.3

7.1

6.9

3.9

4.0

3.9

Absenteeism, % 1)

1

6

6

Number of occupational diseases 1)

OHS figures, contractors Lost-time accident frequency

4.7

4.2

3.3

Restructuring to ensure cost competitiveness

Total recordable injury frequency

7.7

6.2

5.8

The uncertainty in UPM’s market environ ment continued in 2020. The weakened economic outlook led to restructuring.

1) Reflects own employees

CASE

CASE

PROMOTING LIVING WAGE THROUGH COLLABORATION

our social responsibility. Our commitment to fair compensation is also stated in our Code of Con duct and further specified in our respective policies and rules on compensation and benefits. In 2019, we initiated an internal global process to review the salaries and wages of all employees against local living wage benchmarks in all 46 countries in which we operate. The analysis shows that all our employees’ salaries and wages are considered to be above the local threshold. This work and analysis will continue to ensure that we have identified the best available benchmarks and to develop the assessment further.

Working hours aren’t really a concern for drivers, as the regulations regarding working hours are followed and monitored scrupulously. The most pressing concerns turned out to be road safety, long waiting times in loading and delivery and the crowdedness of lay-bys or motorway parking areas. It is important that the workers in our logistics chain are content and do their work in good and safe conditions. With the survey, we can hear about it from the workers themselves. Similar surveys will be conducted when the COVID-19 situation improves.

accounted for a living wage are food, water, housing, education, health care, transportation, clothing and other essential needs, such as provi sion for unexpected events. We are part of the UN Global Compact working group for promoting living wage within compa nies. By participating, we can build on capabilities and enhance collaboration between companies and other stakeholders in promoting the concept and facilitating consistency in implementation. En suring decent working conditions, fair employment and fair compensation for all employees is also an integral part of our work dedicated to developing

We asked truck drivers about their working con ditions at the UPM Schongau paper mill in Ger many. The voluntary survey was available in nine languages and was presented to all truck drivers arriving at the site over the course of a single day. The aim of the survey was to paint a concrete pic ture of the drivers’ routine work process. About two-thirds of drivers responded to the survey. Of those, 65% said they are either satisfied or very satisfied with their working conditions, and three A SURVEY FOUND OUT THE WORKING CONDITIONS OF TRUCK DRIVERS

Salaries and wages are considered as one of the most important aspects of decent work, and the concept of a living wage underpins several SDGs. Today, living wage as a concept is not yet universally defined and the approach for its calculation varies. However, the concept is based on the general notion that work should provide an employee with a decent standard of living, according to local standards. Elements that are commonly

quarters of respondents said they maintain a working week of under 49 hours.

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020