UPM Annual Report 2021

BUSINESSES

UPM

BEYOND FOSSILS

STRATEGY

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2021

in the use of paper packaging materials, tissue and hygiene papers, and specialty papers is pushing the demand for pulp. In 2021, we continued to implement our growth strategy for pulp. Construction of our new pulp mill in Uruguay proceeded intensively in all main areas (page 42). Our commercial strategy focused on fur ther strengthening our commercial capa bility and scaling our business processes to profitably serve the current and future markets with six million tonnes of pulp in 2023. At the same time, continuous improvement and the efficiency measures implemented in Finnish operations yield ed results in productivity. In terms of timber, the demand for responsible construction material is driving future growth. We are continuous ly seeking to improve our customer value creation. We are also working to develop our customers' businesses within our long-term co-operations and to improve our environmental footprint throughout the value chain. Our operating model has been revamped since 2020 to improve our internal operations so that they are even more effective. The growth and competitiveness of our business is enabled by the strong forestry operations in Finland and Uruguay (page 84). Efforts in operational excellence and productivity continued in 2021, with a specific focus on the plantation expan sion in Uruguay and cost efficiency and sustainability in Finland. Replacing fossil-based products As a sustainable, renewable, recyclable, and biodegradable raw material, pulp responds to the growing need for respon sible alternatives to replace fossil-based materials. Pulp is already being used as an alternative to plastic packaging and its uses as a textile fibre, composite material and material for the chemical industry is currently being researched. Pulp is produced in energy-efficient mills. Sustainability and circular economy are integrated in all our operations from the sustainably managed commercial forests and eucalyptus plantations to the use of residues and side streams as well as

CASE

RIGOROUS COVID HEALTH MEASURES AT CONSTRUCTION SITES IN URUGUAY The sites have been kept running normally in accordance with hygiene rules in all areas. The traffic has been distributed and differ entiated taking into account bus capacity, air conditioning and seating arrangements. Cleaning of accommodation has been intensified and accommodation capacity has been limited. Those who test positive have been accommodated in separate buildings. Contractors have assigned separate COVID coordinators to facilitate com munication. External experts assess the functionality and timeliness of the measures. Close co-operation, testing and timely communication have reduced the number of infections. The screening capacity has been devel oped so that initially all employees were provided with external testing services. Soon after we received our own testing equipment and rapid test kits and most recently our own PCR laboratory. The testing strategy covers all workers, suppliers, drivers and others who move around the sites. There are clear criteria for access. During the peak of the pandemic, the entire site was tested every two weeks and a 24-hour health service was set up. Returning from holiday requires sampling before starting work. During 2021, around 40,000 coronavirus tests were carried out in Paso de los Toros. We have also participated in a vacci nation campaign with the national health authorities to increase the number of vacci nated workers.

CASE

the recyclability of most end products in the paper and board segments. The global construction industry is estimated to account for nearly 40% of energy-related CO 2 emissions. Replacing non-renewable raw materials in construc tion with responsibly produced timber is an effective solution for emission reduc tion. All of our sawmills run with 100% renewable energy and our timber products sequester carbon throughout their lifes pan. We can offer wood products with the lowest possible carbon footprint to our customers. We also have a long track record on responsible business practices.

COLLECTIVE AGREEMENT RENEWED IN COLLABORATION WITH ALL PARTIES

UPM Timber’s business management, sawmill directors, employee representatives from each sawmill and representatives of the Industrial Union were involved in the negotiations. This allowed diverse points of view to be expressed during the discussions and made it possible to take into account the wishes of the personnel as well as the specific needs of the sawmill business. All parties will see benefits from the new agreement. The solution will ensure that employees’ purchasing power is strengthened and the collective agreement will continue to determine the minimum working conditions for employees. In turn, UPM Timber can develop its business well into the future.

UPM Timber and the Finnish Industrial Union signed a business-specific three-year collective agreement in December 2021. The new agreement enables increased flexibility to meet the needs of both employees and production. It also creates better conditions for sawmills to increase production and hire new labour on more flexible terms. The agreement also allows a faster, cost-effective response to market fluctuations with a working time range instead of a fixed number of hours, which was the case previously. UPM Timber’s payroll structures were also renewed, creating more incen tives for individuals and teams.

www.upmpasodelostoros.com

www.upmtimber.com

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021