UPM Annual Report 2021

STRATEGY

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2021

VALUE FROM RESPONSIBILITY

TOWARDS NET-ZERO EMISSIONS

Creating value for society—both as a responsible company and through our renewable and sustainable solutions—is an integral part of our strategy.

WE ACT THROUGH FORESTS

WE ACT THROUGH EMISSIONS (SCOPE 1, 2, 3)

WE ACT THROUGH PRODUCTS

Our Biofore strategy guides us in achieving our responsibility targets for 2030 and in contributing to the UN Sustainable Development Goals (SDG). We have connected our sustainability performance also to our financing. Our revolving credit facility is tied to our long term biodiversity and climate targets, and we have also issued two green bonds in 2020 and in 2021 respectively. As of January 2022, responsibility-re lated measures are included in UPM’s long-term incentive plan. The distinct performance measures are based on the company’s targets for fossil CO 2 emission reduction, positive impact on biodiversity and ensuring gender pay equity. Our 2030 social responsibility targets renewed We have strengthened our commitments to ensure fair, equitable and competitive rewarding for employees and introduced new targets for living wage and gender pay equity. Our new target on diversity further demon strates our drive in building diversity and inclusion into the workplace. Empowering our people with continuous professional development and ensuring future employability remains one of our pri orities. Consequently, our work continues towards having development plans in place for all our employees by 2030 and reaching a perception of good opportunities to learn and grow at UPM. We continue to focus on achieving a level of employee engagement that is clearly above the benchmark by 2030 and driving responsible leadership that is value-based and inspiring. All our targets for social responsibility are founded on the principle of respect for

0.9 MtCO 2 Carbon

OUR WAY • We respect international agreements such as the UN Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises • Our Biofore strategy guides us in achieving our 2030 responsibility targets and in contributing to the UN SDGs and the UN Business Ambition for 1.5° C • Our purpose, values, UPM Code of Conduct as well as the UPM Supplier and Third-Party Code provide a solid foundation for decision-making, management and operations • Responsibility is managed by the Board of Directors and the Group Executive Team, as well as by businesses and functions • Responsible business conduct in all our operations • Focus on 2030 responsibility targets 2021, we raised the bar with a new global forest responsibility programme that will be launched in 2022 and reaches until 2030. The new programme covers not only climate and biodiversity targets but also sustainability criteria related to water, soil and economical and social contribution. All these areas will be developed in our own forests and plantations, but also pro moted throughout our wood supply chain. Local characteristics will be taken into account to maximise the positive impact.

IMPACT • Renewable raw materials and recyclable products advance transforming to a circular bioeconomy • Our solutions respond to global challenges such as climate change and resource scarcity TARGETS • We create value for our stakeholders • We mitigate climate change through innovating novel products, committing to a 65% CO 2 emission reduction and by practising sustainable forestry

5.0 MtCO 2 Scope 1 and 2 emissions from own energy generation and purchased energy

substitution Fossil energy substitution

Carbon storage Carbon stored in wood-based products' lifetime

3.8 MtCO 2 e Carbon sink Carbon absorbed in trees and soil

BIO

6.3 MtCO 2 Scope 3 emissions from value chain (purchased goods and services, logistics, etc.)

Carbon substitution Avoided emissons by

replacing fossil- based products

Carbon storage Long-term storage in trees and soils

human rights. We constantly strive for better understanding of our impacts across our operations and business relationships andwe prioritise our efforts accordingly. We monitor and work to remediate adverse impacts on human rights that we are aware of and that our activities have caused or contributed to. Remediation is specified case-by-case based on verified impacts. A global forest responsibility programme will be launched We continuously develop our industry leading practices in sustainable forestry. In

We are committed to the UN’s Business Ambition for 1.5° C in a promise to pursue science-based measures to limit global temperature rise. We act through climate-positive forestry, reducing emissions and innovating products. In 2021, we developed a method to measure soil carbon in Uruguay and a tool that en ables us to steer CO 2 emissions on a monthly basis. A study on climate-related substitution and the carbon storage effects of our products continued with two research institutes, the German IFEU and the Finnish SYKE. In 2021, we also set a new target to stop using coal and peat in our on-site energy generation by 2030. There’s currently no science-based calculation system to combine all climate related impacts of UPM, but we are contributing to the method develop ment and working towards net-zero emissions.

Our 2030 responsibility targets and how we did in 2021 on pages 32-33 Our responsible way of operating on pages 62-99 Sustainable forestry on page 84 Development of Scope 1-3 emissions on page 92

Examples of responsibility in different sections of the report Our Green Bond Report 2021 is available on www.upm.com/investors/

upm-as-an-investment/debt/ www.upm.com/responsibility

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021