UPM Annual Report 2020

CIRCULAR ECONOMY AND RESOURCE EFFICIENCY We are using materials in an efficient manner and many of our products are made from side streams, residues or waste. In response to climate change, we actively develop new solutions in order to accelerate the transition to a circular economy and aim to continuously reduce our environmental impact.

ners globally and recycles it in its Rafcycle® service. The service takes the self-adhesive label waste and gives them new life as paper liner, magazine paper or composite mate- rial. UPM Specialty Papers has developed UPM LinerLoop™, a unique concept where collected release liners are desiliconised and used to produce new high-performance release liner base papers. We also have a long history of using recovered paper to produce new graphic paper. In 2020, we used approximately 1.8 (2.3) million tonnes of recovered paper. Recycled fibre accounted 26 (28) % of all fibre materials used in UPM’s paper production. For example, we are amember of INGEDE (International Association of the Deinking Industry), and a shareholder of CLIC Innova- tion Ltd., a Finnish open innovation cluster with an aim for breakthrough solutions in bioeconomy, circular economy and cleantech. UPMRaflatac is an active member of the Ellen MacArthur Foundation, the global thought leader of the transition towards a circular economy. In 2020, UPM also tested its circularity with the Circulytics tool developed by the Ellen McArthur Founda- tion and received B+ as an overall score. In 2020, UPM Specialty Papers and UPM Raflatac joined CELAB-Europe, to further Active operator in circular economy networks

SIGNIFICANCE • Global megatrends such as population growth lead to resource scarcity and competition for natural resources • Resource efficiency and circular economy ease the pressure on resources and the environment and bring competitive advantages TARGETS • Promote the efficient use of all material streams and the implementation of circular economy - reduce, reuse and recycle OUR WAY • Circular economy thinking • Recycle and reuse production waste and utilise by-products • Cross-industry collaboration • Focus on 2030 responsibility targets Towards a future beyond fossils on page 16 From forests to sustainable products on page 18 Sustainable forestry on page 86 Responsible product lifecycle on page 82 Reducing energy use and emissions to air on page 88 Responsible water use on page 92 Report of the Board of Directors on page 118 The tests determined whether that amount was sufficient to protect the paper from moisture. The tests revealed that the amount of polyethylene could not be further reduced without risk. The measures are calculated to reduce the amount of polyethylene by about 400 tonnes per year, which corresponds to about 15–20 truckloads. The project aims to optimise material usage and reduce CO 2 emissions. At the same time, we must ensure that the paper reels are not damaged during transport, because that is a far bigger waste of material and damage to the environment. Our long-term target is to find alternatives with which we can fully eliminate conventional plastic from our packaging.

tion are one of our most challenging residues to utilise, and we are putting a lot of emphasis on developing ways to use thematerial. Most organic production residues, such as bark, wood residues and fibre-con- taining solids from deinking and effluent treatment, are used to generate energy for mill sites. The fibrous residues that are not incinerated are utilised in brick manufac- turing, earthwork or as soil improvement materials. Overall, ash originating from biomass-based energy generation makes up the largest share of our solid waste. In 2020, 92% of the ash was utilised in various applications, such as in soil stabilisation and the cement industry, or internally to replace caustic soda or as raw material for paper filler production. Our other circular economy target is the use of 100% nutrients from recycled sources in our effluent treatment plants by 2030. In 2020, 28% was achieved. (Read more on page 92.) Many of our products are made from side streams. We actively develop new solutions to accelerate the transition to a circular economy, in response to climate change and resource scarcity. For example, UPM BioVerno renewable diesel and naphtha are produced from crude tall oil, a residue Making use of side streams and recovered materials

We see the circular economy as the cor- nerstone of a sustainable future. Lifelong product stewardship covers the entire value chain from the procurement of rawmateri- als to end products and their afterlife. Open and transparent product communication complements our activities. Environmental targets for 2030 ensure resource efficiency in production and contribute to the UN SDGs. Our goal is tominimise waste andmaximise recycling and create added value through smart solutions. We are actively looking for partners to co-create circular innovations linked to side streamutilisation, product development and supply chain efficiency. Our targets on circular economy By 2030, we will not deposit any process waste at landfill sites, and no process waste will be incinerated without recovering the energy. On average in 2020, 89% (89%) of our process waste was recycled or recovered, of which 19% is energy recovery. 64% of our production sites have already achieved 100%waste utilisation. However, the total amount of waste to landfills increased by 3% compared to 2019 because of lacking utilisa- tion possibilities at certain locations. We share best practices, research results and ideas throughout the company, and have several internal working groups focusing on the usage of waste and by-products. Green liquor dregs originating frompulp produc-

Process waste to landfills 1,000 t

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promote the development of a circular business model in the self-adhesive label industry. We also continued to participate in the Finnish UUMA3 programme to enhance the use of recovered materials in earth construction and took part in several other research projects related to the use of our side streams.

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Target

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CASE

No process waste to landfills or to incineration without energy recovery by 2030 89% recycling or recovery achieved for our total process waste

TARGETS 2030

CONFRONTING THE REEL PACKAGING PLASTIC CHALLENGE

UPM has been initiating projects alongside its value chain partners, such as packaging company Walki Group, to develop innovative solutions to reduce plastics in packaging. The latest collaborative project set the goal of reduc- ing the amount of fossil-based polyethylene (PE) in paper in reel wrapping laminate without com- promising the moisture protection for the reels. We started the project in few paper mills by test- ing material that replaced standard fossil-based PE with polymers based on crude tall oil—a res- idue of pulp production from UPM. Testing took three months to get results and feedback from the

from chemical pulp production. Lignin, a by-product of pulp production, is used in WISA BioBond gluing technology, replac- ing fossil-based phenol used in plywood manufacturing. We are also active in enhancing circular- ity over the product lifecycle. UPMRaflatac collects label waste from nearly 180 part-

whole supply chain. Based on the tests, there are not any major technical differences in the quality of the materials. The amount of polyethylene in the reels de- creased by a quarter from 20 g/m 2 to 15 g/m 2 .

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020

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