UPM Annual Report 2021












ECONOMIC Profit Creating value to shareholders

UPM’s Biofore strategy guides us in achieving our responsibility targets for 2030 and contrib utes positively to achieving the UN Sustainable Development Goals (SDGs). We have selected six goals and, thereun der, 12 targets that are the most relevant for us based on where we can have the greatest effect, either by minimising our negative impacts or by increasing our positive impacts on people, soci eties and the environment. There are others that are also relevant to us, but to a lesser extent. In 2021, we reviewed and renewed our social responsibility targets (see pages 30, 74, 77). We also replaced the earlier target on business benefits from GHG claims with a new target on ending the use of coal and peat.

•Comparable EBIT increased by 55% to EUR 1,471 million (948 million) •Comparable ROE was 11.7% (7.5%) •Net debt/EBITDA was 0.35 times (0.04)

•Comparable EBIT growth through focused top-line growth and margin expansion •Comparable ROE 10% •Net debt/EBITDA 2 times or less

Governance Ensuring accountability and compliance

•100% participation to UPM Code of Conduct training (continuous)

•98% (99%) of active employees completed the UPM Code of Conduct training

Responsible sourcing Adding value through responsible business practices

•86% (84%) of supplier spend covered by the UPM Supplier and Third Party Code •96% (96%) of raw material spend covered by the UPM Supplier and Third Party Code •124 supplier audits based on identified risks. 300 contractor reviews with focus on working conditions. •C lose co-operation with suppliers to develop CO 2 emission reporting •88% (82%) of employees had completed individual goal setting or annual discussion. 70% (63%) of employees had a development plan documented. •Average score of 62 on Employee Engagement Survey question about learning and growth at UPM. This is 9 points below the global average benchmark. •Average score of 67 on Employee Engagement Survey question about belonging. This is 13 points below the benchmark of top 10% companies. •New target •UPM continued a dialogue on developing inclusive behaviours. Implemented a gender pay equity review process. •New target •Company-wide review done and pay adjustments implemented to close identified, statistically significant and unexplained gaps related to gender. •Employee engagement average score 68. This is 9 points below the global average benchmark.

•80% of UPM spend covered by UPM Supplier and Third-Party Code (continuous) •100% of UPM raw material spend covered by UPM Supplier and Third-Party Code by 2030 1) •Supplier auditing based on systematic risk assessment practices (continuous) •30% reduction of CO 2 emissions from materials and logistics (Scope 3) 2)

SOCIAL Continuous learning and development Enabling continuous professional development for high performance, growth and future employability Responsible leadership Emphasis on value-based and inspiring leadership and integrity Diversity and inclusion Developing an organisational culture and workplace to ensure a diverse and inclusive working environment for business success.

•Goal setting discussions are held, and development plans are created for employees: completion rate 100% by 2030 •Employees perceive good opportunities to learn and grow clearly above benchmark by 2030

•Employee engagement is clearly above benchmark by 2030

•UPM is among the top 10% of companies on employees’ sense of belonging by 2030 •Continuous improvement in the female representation in professional and managerial roles, 40% by 2030. Developing leadership and decision-making capabilities with increased diversity •Diversity and inclusion initiative (continuous) •Ensure that employees’ pay meets at least local living wage by implementing a yearly review •Ensure gender pay equity for all employees by implementing a yearly review process to identify and close unexplained pay gaps •Process safety development programme implemented at all UPM sites and businesses by 2030 •UPM is among top 10% companies on employees’ sense of worklife balance by 2030 •Absenteeism rate <2% by 2030 •Assess quality of community relationships and define measures at relevant sites (continuous) •All businesses define long-term initiative(s) that impact their mill communities in line with the Biofore Share and Care programme (continuous) •Climate-positive land use (continuous) •100% of fibre certified by 2030 3) •Positive impact on biodiversity: implementing biodiversity programme and developing monitoring system (continuous) 4) •65% reduction of fossil CO 2 emissions from our own combustion and purchased electricity by 2030 (Scope 1 and 2) 5) •No coal and peat usage in on-site energy generation by 2030 •1% annual energy efficiency improvement (continuous) •70% share of renewable fuels (continuous) •20% reduction of acidifying flue gases by 2030 (NO X /SO 2 ) 5) •40% reduction of effluent load (COD) by 2030 6) •30% reduction of wastewater volume by 2030 6) •100% of nutrients used at effluent treatment from recycled sources by 2030 6) •No fatalities or serious accidents •Total recordable injury frequency (TRIF) <2 by 2030, including contractors

Fair rewarding Ensuring fair, equitable and competitive rewarding for all employees

Goal 6: Clean water and sanitation (Target: 6.3) Goal 7: Affordable and clean energy (Targets: 7.2 and 7.3)

Safe and healthy working environment Ensuring the safety and health of our employees, contractors and the local communities close to our operations

•No (no) fatal accidents, 3(2) serious accidents •TRIF 6.3 (5.3) for UPM workforce and 7.2 (6.2) including contractors

•New target •New target •The absenteeism rate was 4.1% (3.9%)

Community involvement Ensuring local commitment and positive impact on communities

•New target •New target

Goal 8: Decent work and economic growth (Targets: 8.2, 8.5 and 8.8) Goal 12 : Responsible consumption and production (Targets: 12.2, 12.4 and 12.5)

ENVIRONMENTAL Forests and biodiversity Ensuring sustainable land use and keeping forests full of life

•Five-year annual average carbon sink of UPM’s own amd leased forests was approx. 3.8 m tonnes of CO 2 equivalents •84% (83%) of all wood used by UPM is sourced from certified forests. •Overall positive development measured, 6 positive and 2 negative subindicators •Fossil CO 2 emissions reduced by 27% compared to 2015 and by 8% compared to 2020 •New target •Achieved •70% (72%) share reached in the use of renewable fuels •27% reduction of acidifying flue gases since 2015 for the UPM average product

Climate Creating climate solutions and working towards carbon neutrality

Goal 13: Climate action (Target: 13.1)

Goal 15: Life on land (Targets: 15.2 and 15.5)

Water Using water responsibly

•38% reduction in effluent load since 2008 for the UPM average product •18% reduction in wastewater volume since 2008 for the UPM average product •35% (28%) of nutrients from recycled resources

Waste Promoting material efficiency and circular economy – reduce, reuse and recycle

•89% (89%) of all UPM’s process waste was recovered and recycled. The total amount of process waste to landfills decreased by 3% compared to 2020.

•No process waste sent to landfills or to incineration without energy recovery by 2030

1) Covers all raw material spend including wood and wood-based biomass sourcing and excluding energy 2) From 2018 level 3) Forest management certification 4) Covers UPM own forests in Finland 5) From 2015 level 6) From 2008 level, relevant for pulp and paper production

Product stewardship Taking care of the entire lifecycle

•Scientific study on substitution and storage effect continued •Piloting of the Sustainable Product Design concept continued •84% (82%) of UPM sales were eligible for ecolabelling

•Climate-positive product portfolio (continuous) •Development of new products and services with contribution to the UN SDGs (continuous) •100% of applicable products eligible for ecolabelling





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