UPM Annual Report 2020

Fossil CO 2 emissions

In early 2020, we set a target to reduce the fossil CO 2 emission levels of our supply chain by 30% by 2030. Our focus is on reducing emissions from logistics and most relevant rawmaterials such as pulp, pigments, chemicals and paper. We also aim to increase industry collaboration to create standardised ways of reporting emissions from purchased products, rawmaterials and transportation. In 2020, we started a comprehensive project on Scope 3 emis sions. Towards a future beyond fossils on page 16 Responsible sourcing on page 80 Report of the Board of Directors on page 118

three-year project started in 2019 (read more on page 48). TVO’s Olkiluoto 3 EPR type nuclear power plant unit in Finland is scheduled to commence regular electricity production in February 2022. Collaboration with supply chain to reduce CO 2 emissions Beside fossil CO 2 emissions fromour own energy generation (Scope 1) and purchased electricity (Scope 2), we also evaluate the emissions fromother indirect sources (Scope 3) such as purchasedmaterials, transporta tion or processing of sold products. Accord ing to our evaluation, 47%of our overall CO 2 emissions are directly related to our energy use and 53% to Scope 3.

mio t

8

6

4

2

CASE

0

18

Target

19 20

17

16

UPM has set a target of reducing its supply chain emissions by 30% by 2030. We need exhaustive information on how suppliers are performing to meet this target. There is currently, however, no comparable way to report emissions from sourced products and raw materials, and the emissions that come from their transportation. Supply chain emissions are largely calculat ed using secondary data from different da tabases and the general coefficients drawn up from this data. We can only reduce our emissions if we know the level at which they really are and can choose the best partners based on this information. Due to the complexity of global supply chains, collaboration between various parties is necessary. The chemical industry’s Together for Sustainability (TfS) initiative is a great example of efforts to develop the sustaina bility practices of supply chains and share comprehensive information about suppliers. In maritime transport, for example, there are big operators that can provide data about their actual emissions online. However, even the suppliers that are not yet able to report their emissions in a precise way have been very committed to the development work. We have already had discussions with suppliers that belong to certain supply chain categories about their readiness to report their emissions. The key areas, in addition to chemicals, are logistics, pulp and pigments at a minimum. For example, common prac tices would greatly facilitate the emissions calculations for supply chain materials such as chemicals, as well as fillers and binders used in paper production. WORKING TOGETHER TOWARDS MORE RESPONSIBLE SUPPLY CHAINS

CO 2 from purchased electricity CO 2 from on-site energy generation

TARGETS 2030

65% reduction of UPM’s total CO 2 emissions (Scope 1 and 2) from 2015 levels by 2030 20% reduction achieved for UPM’s total CO 2 emissions (Scope 1 and 2)

CAPACITY TO GENERATE POWER THROUGH OWN POWER PLANTS AND SHAREHOLDINGS

ELECTRICITY GENERATION THROUGH OWN POWER PLANTS AND SHAREHOLDINGS TWh

2,200 companies and it has set a national CO 2 trading quota and allocation plan for the power sector for the years 2019-2020. The system defines the free allowances and the emission reduction targets for each company. Being one of the companies in this system, UPMChangshu has taken the required actions to report submission and verify the data during the year.

In Joensuu, Finland, UPMPlywood’s new biomass-based boiler plant uses by-products of plywood production as its energy source and, thanks to the new plant, the mill is more energy efficient and generates fewer emissions. UPMEnergy is currently running an extensive renovation and modernisation project at its hydro power plant in Kuusankoski, Finland. The

Nominal MW

2020 2019

Hydropower Nuclear power Thermal power

720 588

Mill CHP

5.2 3.5 4.9 0.1

5.7 2.8 4.9 0.2

Hydropower Nuclear power Thermal power

TARGETS 2030

20% reduction of acidifying flue gases from 2015 level by 2030 19% achieved for the

97

UPM Energy in total Mill site combined heat and power (CHP) Mill site hydropower Mill site power generation in total

1,405

Total

13.7 13.6

1,339

UPM average product

7

1,346

Total UPM

2,751

CASE

Sources of UPM’s fossil CO  emissions

FUELS USED FOR HEAT GENERATION TWh

SAWMILLS RUNNING ON RENEWABLE ENERGY

of sawmill’s side streams from the power plant of Pori Energia. Pulp mills are enormous production plants of renewable energy and they generate such an abundance of energy that some of it can be directed to the sawmills. The sawmills at the Pietarsaari and Lappeenranta mill integrates have been fully running on renewable energy produced by pulp mills since early 2020. UPM Timber has co-operated closely with UPM Pulp to guarantee the origin of all the electric ener gy consumed by the mills. Fingrid Oyj, a company that certifies electricity produced domestically using renewable energy sources, has issued UPM Timber a certificate of origin, which proves that UPM Timber’s electrical energy is emission-free.

2020 2019

On-site energy generation 24%, 2.73 million t

19.4

19.4

Black liquor

UPM Timber is the first business within the company to use only renewable energy in its production. Our timber production has been fossil-free since the start of 2020. This continued improvement regarding responsible operations is helping us to reach our target for emission reduction. All the logs are sawn up, and the by-products of this process (i.e. chips and sawdust) are utilised in pulp production. In addition, we use the bark to produce renewable energy. All four of our sawmills use both heat energy and electricity. The Korkeakoski sawmill has produced its own energy from bark and dry wood chips

6.7

7.6

Bark and other biomass Heat recovered from TMP production Renewable fuels total

Purchased electricity 23%, 2.69 million t

1.1

1.3

Other indirect sources* 53%

27.2 28.3

Peat

0.6 0.3 6.4 0.6 2.7

1.1 1.3 7.1 0.6 2.8

Purchased heat

Natural gas

*Other indirect sources such as purchased materials, transportation or processing of sold products 53%, 6.16 million t

Oil

Coal Total

37.8 41.2

for years using its biomass-based heating plant. Meanwhile, the sawmill has completely abandoned the use of oil for fuel. In Pori, the Seikku sawmill receives renewable energy made

90

91

UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020