UPM Annual Report 2021

RESPONSIBILITY

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2021

RESPONSIBLE FOUNDATION OF OUR BUSINESS

For customer communications, we have created Product Safety Profiles and updat ed Non-Use Warranty documents. In 2021, we updated the chemicals management standard. In 2022, we will modernise our chemical database to improve access to advanced reporting and control features. We offer product declarations and environ mental data for most of our products. They tell our customers about the environmen tal performance of our products and help themmake sustainable choices. Most of our products are certified with widely recognised ecolabels, such as the EU Ecolabel and national ecolabels for graphic paper, RSB (Roundtable on Sustainable Biomaterials) certification for biofuels or ISCC (International Sustainability and Car bon Certification) for UPMBiofuels, UPM Formi and four UPMRaflatac production sites. In 2021, UPM Raflatac’s label range RAFNXT+ was the world’s first Carbon Neutral® certified label material to help mitigate climate change (page 47). All UPM businesses have FSC and PEFC chain of custody certification (page 85). It verifies the origin of the wood and guaran tees that all wood used in our products is Ecolabels and product declarations increase transparency

legally harvested from sustainably man aged forests and does not originate from controversial sources.

our customers. Actions tomitigate climate change and enhance biodiversity have be comemore important than ever before. New lifecycle approach We can contribute to environmental and so cietal sustainability of our products by use of our new Sustainable Product Design concept. All the elements of the lifecycle need to be considered in the design phase so that the new product or service supports UN SDGs (left). In 2021, we further developed our Sus tainable Product Design concept (below). Life Cycle Assessments (LCAs) are an important part of the sustainable product design toolbox. We use LCAs to provide reliable, documented information on the environmental impacts of ourmaterials and production processes. In 2021, UPMPulp started a comprehensive project to develop a generic LCAmodel that will be in linewith the EU’s Product Environmental Footprint (PEF) method. To further improve the data quality of themodel, the aim is to use primary data for used chemicals instead of generic datasets. Product safety requirements renewed The ISO 9001 Quality and ISO 22000 Food Safety management systems provide a framework for continuously improving our performance. All our production sites are ISO 9001 certified. All our pulp mills, UPM Raflatac sites and UPM Specialty Papers production lines in Europe have a certi fied ISO 22000 Food Safety management system. UPMChangshu paper machine 3 has both a certified ISO 22000 Food Safety management system and a certified FSSC 22000 Food Safety management system. This allows us to offer a number of products that are designed and produced to meet food packaging requirements. We have developed the way in which we communicate our product safety require ments to our chemical and raw material suppliers, as well as to our customers. Together with a number of paper and chemical companies, we have increased transparency in the supply chain and accelerated the exchange of information. A new questionnaire enables us to pre-as sess the chemicals used in products and to ensure the compliance of our products with legal requirements and additional commitments, such as ecolabel criteria.

SUSTAINABLE PRODUCT LIFECYCLE Our products help to mitigate climate change by replacing fossil-based products with renewable alternatives.

Innovation for the future on page 28 Responsible sourcing on page 82 Sustainable forestry on page 84 Circular bioeconomy on page 88

Products eligible for ecolabelling %

100

90

The products store carbon for the entire duration of their lifecycle, especially when recycled multiple times. We actively devel op solutions based on the circular bioecon omy model. Our target is also to provide solutions and concepts that improve our custom ers’ business processes and performance, creating mutual benefit and societal value. Our innovative and sustainable wood-based biomedical products, as well as our pharma ceutical and healthcare labelling solutions, are examples of where we create direct soci etal impact. Many of our products are made from side streams and residues or from materials recovered after product use, thus supporting circular bioeconomy (page 88). Continuous dialogue and collaboration with customers UPM’s businesses offer a variety of products and services. Each business has its own customer relationship management process and way of interacting with customers. A comprehensive understanding of each market, as well as knowledge of the end uses of products and the needs of our customers, underpins our approach to customers. We have a continuous dialogue with our customers and also engage in various prod uct-related development projects with them. Our businesses conduct regular customer satisfaction surveys. Based on these results, overall satisfaction with UPMas a supplier is 86% (86%). They also help us to define our areas of improvement. Product safety, sustainable forest management, recyclability, circularity and other environmental topics, such as ecolabels and carbon footprints, are some of themost important factors for

80

IMPACT • Bio-based and recyclable raw materials and products reduce the world’s depen dency on fossil-based raw materials and contribute to climate change mitigation • We offer sustainable everyday products to consumers TARGETS • Creating innovative renewable and respon sible solutions for a future beyond fossils • Taking care of the entire lifecycle • Enabling consumers to make more sustain able choices

OUR WAY • Use of a sustainable product design concept in product development • Improved chemical management to enhance product safety • Strong commitment to long-term customer relationships • Co-operation across the value chain • Open and transparent product communication supported by ecolabels, certificates and product declarations • Focus on 2030 responsibility targets

70

60

50

17

18

19

20

21

Target

TARGETS 2030 100% of applicable products eligible fo ecolabelling 84% achieved

SUSTAINABLE PRODUCT LIFECYCLE

CASE INTRODUCING NEW TOOLS FOR SUSTAINABLE PRODUCT DESIGN With our new sustainable product design concept we ensure that all elements of the life cycle are considered and that the new product has a proven sustainability value proposition and it supports the SDGs. The concept was first tested with lignin products and in 2021 testing continued with packaging and biocomposites. We applied various design thinking models that follow a holistic approach to the product lifecycle. Life Cycle Assessments (LCA) have already improved production efficiency and the logis tics chain. By incorporating the variables of our new lifecycle approach, we can improve

circularity, material efficiency and social aspects. We want to begin collaboration with the customer already in the design phase to find optimal solutions to their sustainability challenges. We will continue to explore the concept to develop novel flexible packag ing solutions and sustainable fibre-based materials that can be used in nonwovens and hygiene products, for example. The new sustainable product design concept and the complementing toolbox help businesses in their product development process and support collaboration with customers.

Regulation Trends Markets People

Future Beyond Fossils

UPM supports the Sustainable Development Goals

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021