UPM Annual Report 2021

BUSINESSES

UPM

BEYOND FOSSILS

STRATEGY

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2021

HOWWE EXECUTE OUR STRATEGY

UPM FOREST

GROUP AND ALL BUSINESSES

UPM FIBRES

UPM PLYWOOD

Actions 2021 Continuous improvement programmes Actions to secure business continuity and construction of transformative projects Study on climate-related substitution and the storage effects of products, joining The Climate Pledge EUR 500 million Green Bond issued Work to strengthen the engaging safety culture and global health concept Diversity and inclusion work Social responsibility targets revised Closing the unexplained gender pay gap Internal dialogue on purpose and values started UPM Experience programme initiated Development of the sustainable product design concept

Actions planned for 2022 * ) Pursue continuous improvement programmes Disciplined and effective capital allocation Work towards climate neutrality Renew the Code of Conduct Strengthen the safety culture with special focus on process safety Continue diversity and inclusion work Implement UPM Experience programme incl. future ways of working, wellbeing and digital capabilities

Actions 2021 Construction of the pulp mill in Paso de los Toros and in the port of Montevideo Construction of a third nursery in Uruguay

Actions 2021 Operational excellence and improved product offering Increased offering of WISA® BioBond to replace fossil-based phenol Further enhanced effective raw material usage and agile supply chain capabilities Actions to reduce our environmental impact New 3-year collective labour agreement signed

Actions 2021 Efforts in operational excellence and productivity, focus on the plantation expansion in Uruguay and cost efficiency and sustainability in Finland Enhanced activity in private wood trade Begin implementation of the new global forest programme Study on availability and quality of competitive wood for UPM’s growth projects Study on decaying wood to improve biodiversity started Actions planned for 2022 * ) Ensure availability and quality of competitive wood for UPM’s mills and growth projects Enhance activity in private wood trade Further develop digital platform Increase broad-leaved trees in Finnish forests Study on decaying wood to improve biodiversity continues

Implementation of an upgraded biodiversity strategy in Uruguay Actions to improve operational efficiency in Finnish pulp mills

Actions to improve efficiency and environmental footprint for sawn timber UPM announcement that its sawmills are powered entirely by renewable energy A 3-year collective labour agreement signed at UPM Timber Actions planned for 2022 * ) Continue the construction of the pulp mill site in Paso de los Toros and in the port of Montevideo Increase organisational capabilities to respond to increasing sales Finalise the construction of a third nursery in Uruguay Continue actions to improve operational efficiency in Finnish pulp mills Continue actions to improve efficiency and environmental footprint for sawn timber

Actions planned for 2022 * ) Focus on operational excellence Strengthen position in new end-uses and markets Continue to develop new products and assess growth opportunities Further enhance effective raw material usage and agile supply chain capabilities Investment in the competitiveness of the UPM Joensuu plywood mill

UPM ENERGY

UPM RAFLATAC

UPM BIOFUELS

UPM BIOCHEMICALS

Actions 2021 Continued development of the service offering for industrial-scale electricity consumers Continued refurbishment of the Kuusankoski hydropower plant Commissioning of OL3 Ultracapacitator introduced for hydropower plants

Actions 2021 The basic engineering phase of a next-generation biorefinery Continued evaluation of growth opportunities and new sustainable feedstocks in biofuels

Actions 2021 Construction of biochemicals refinery producing 100% wood-based biochemicals in Leuna, Germany Commercial preparations for entering the market

Actions 2021 Investment to scale up the linerless labelstock business with a new production line in Poland Growth opportunities captured and product portfolio developed, commercial excellence and digitalisation Continued development of new concepts in sustainability and the circular bioeconomy Three-year productivity programme progressed as planned Introduced RAFNXT+ as the world’s first CarbonNeutral® certified labelling material Actions planned for 2022 * ) Capture growth opportunities and develop product portfolio and service offering New concepts in sustainability and the circular bioeconomy continue Continue to improve productivity

Collaboration with The Coca-Cola Company introduced UPM BioMotion™ renewable functional fillers launched

Actions planned for 2022 * ) Basic engineering and permitting continue in Rotterdam Assess the growth opportunities and new sustainable feedstocks

Actions planned for 2022 * ) Construct the biorefinery at Leuna, Germany Planning business readiness for entering the market Assess the growth opportunities

Actions planned for 2022 * ) Continue the refurbishment of the Kuusankoski hydropower plant Start up of regular electricity production of OL3

UPM SPECIALTY PAPERS

UPM COMMUNICATION PAPERS

UPM BIOMEDICALS

UPM BIOCOMPOSITES

Actions 2021 Output of new capacity increased Growth in specialty grades thanks to product portfolio development and co-creation initiatives Actions to improve cost competitiveness and operational excellence Continuous improvement of safety and environmental performance

Actions 2021 Closed a total of 970,000 tonnes of graphic paper capacity in Finland and in the UK after the closure of the UPM Kaipola mill and the sale of the UPM Shotton mill Actions to streamline organisation

Actions 2021 Strategy development towards regenerative medicine and scale-up of business Increased sales of OEM product range Collaboration in 3D bioprinting and screening of 3D cell cultures Strengthened product distribution

Actions 2021 Focus on operating efficiency and marketing capabilities Strengthened UPM ProFi market position and growth with renewed product portfolio Growth in new end-use areas in UPM Formi Actions to reduce carbon footprint

Focus on customer interface and digitalisation Continued to reduce our environmental impact

Actions planned for 2022 * ) Continue strategy development towards regenerative medicine and scale-up of business

Actions planned for 2022 * ) Continue to focus on operating efficiency and marketing capabilities Grow with renewed product portfolio in UPM ProFi

Actions planned for 2022 * ) Achieve targeted commercial success and prepare for future growth Co-create product portfolio and leverage flexible production platform Improve safety, cost competitiveness and efficiency

Actions planned for 2022 * ) Continue improvements in cost efficiency Focus on customer interface and digitalisation Continue to reduce our environmental impact

Grow in new end-use areas in UPM Formi Continue actions to reduce carbon footprint

* ) not a complete list

60

61

UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021