UPM Annual Report 2021

RESPONSIBILITY

BEYOND FOSSILS

STRATEGY

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2021

UPM

CREATING VALUE WITH PEOPLE

Our Biofore strategy forms the foundation of our stakeholder dialogue. The key focus areas and activities vary locally and according to stakeholder needs. OUR MOST IMPORTANT STAKEHOLDERS

policies on land use, land-use change and forestry (LULUCF). We have highlight ed the importance of sustainable forest management and manufacturing products from renewable raw materials that replace fossils as effective ways to mitigate climate change. In July the EU Commission published the Fit for 55 package, which includes sev eral initiatives to update the EU climate and energy legislation to be in line with EU’s climate targets. The process for finalising the proposals in EU institutions is expected to take a few years. We actively promote the cost-com petitive and consistent implementation of climate change policies. UPM calls for predictable regulation that enables green growth investments and further transfor mation beyond fossils. Therefore, EU pol icies, as well as the upcoming negotiations between the European Parliament and the EUmember states, must ensure sustainable forest use and the availability of wood as a key resource for the circular bioeconomy and green growth. Decarbonising traffic through renewable energy and biofuel policies continued. For us, it is very important to get recognition for advanced and residue-based biofuels with high GHG reduction.

ACTIVE STAKEHOLDER ENGAGEMENT Understanding the views and expectations of our stakeholders plays a crucial role in the success of our company and the acceptability of our operations.

Customers

Communities

Current and future employees

Media

The impact of UPM’s operations extends from the local level to wider society. We aim to provide a fact-based, balanced view of the economic, environmental and social aspects of our business activities. Active and open dialogue with our stakeholders provides valuable input for our develop ment efforts. Continuous dialogue with stakeholders Our goal is to provide our stakeholders with a clear picture of what our future course is, how we implement our Biofore strategy and how we create long term value for our stakeholders. We disclose relevant and accurate information in accordance with market regulations. In 2021, many stakeholder events were organised virtually. As many of our stake holders view UPM primarily as an econom ic operator, financial success, stability, good governance, future outlook and growth were the key themes discussed. Stakeholder mapping, active dialogue and the systematic gathering of feedback play an essential role in our stakeholder relations work. We analyse the feedback carefully to understand the expectations of our stakeholders. Then, we take these expectations into consideration during our development work and decision-mak ing. We received approximately 400 (350) enquiries or concerns from general public in 2021. Every year, we conduct a materiality analysis (page 66) that highlights the most important responsibility issues for us and our stakeholders. The analysis is based on several surveys, customer enquiries and stakeholders' concerns.

Researchers

IMPACT • Stakeholder engagement provides predict ability and a competitive advantage • Continuous dialogue improves the un derstanding of key risks, challenges and opportunities in the operating environment TARGETS • We understand the stakeholders’ needs for information and expectations for UPM, and consider them in strategic development and decision-making processes

OUR WAY • We engage in active dialogue with our stakeholders to discuss our operations and targets • The UPM Code of Conduct sets the standards for responsible behaviour and collaboration • Stakeholder engagement is measured by several indicators • Stakeholder relations are coordinated globally at Group level, while businesses are responsible for continuous dialogue with customers and business partners, as well as the local communities For decision-makers and politicians, 2021 continued to be challenging because of the COVID-19 pandemic and the resulting lockdowns. Despite the need to prioritise measures related to the global pandemic, there was significant progress in several policy fields with impacts for UPM. We were active in discussions on the Finnish operating environment. We emphasised competitiveness, predictability, innovations and climate change solutions. Climate change mitigation and our commitment to the UN’s 1.5-degree agenda garnered a lot of interest among our stake holders. Discussions were carried out with environmental organisations, certification bodies, authorities and decision-makers. The climate impact of forests is linked to

Investors

NGOs

Governments and regulators

Suppliers

CASE

Green recovery high on the policy agenda Through public affairs work, we aim to fos ter the necessary prerequisites for our op erations, particularly in Finland, Uruguay, Germany and China. Active influencing at the EU level is also important. We co-operate with a number of trade associations, the most important being the Finnish Forest Industries Federation (FFIF) and the Confederation of Europe an Paper Industries (CEPI). As we enter new businesses, we also need to find new ways and forums for co-operation. For example, UPM is a founding member of the Advanced Biofuels Coalition in the EU and also a member of the European Chemical Industry Council (CEFIC).

TOWARDS BUSINESS-SPECIFIC COLLECTIVE AGREEMENTS IN FINLAND

in many respects, and they apply to all personnel in Finland regardless of the personnel group or col lective labour agreement. They also ensure safety in varying life situations. As of 2022, the salaried employees' terms of employment will be organised in the same way as for senior salaried employees. UPM Plywood and UPM Timber signed a business-specific collective labour agreement in December 2021. The Paperworkers’ Union is the contractual party for five businesses. Since spring the businesses sought to enter business-specific collective bargaining with the union on terms of employment. The Paperworkers’ Union has required one company-specific collective labour agreement. On 1 January 2022, the union began a strike in the businesses where it is the contracting party.

After the Finnish Forest Industries Federation resigned from collective bargaining, the terms of employment are agreed between forest products companies and trade unions. Our aim was to sign new business-specific agreements for the shopfloor employees before the previous agree ments ended on 31 December 2021. For each UPM business, the products, markets and operating environment differ significantly. The best result can be achieved for everyone by agree ing on ways of organising work, working hours and salaries, as well as competence development within businesses. We offer benefits that surpass the stan dards set in law and collective labour agreements

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021