UPM Annual Report 2022

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ACCOUNTS FOR 2022

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Turnover of taxonomy-eligible activities (excluding nuclear and fossil gas related activities)

EU Taxonomy In 2020, the European Union’s Sustainable Finance Classification System (EU Taxonomy Regulation, 2020/852) was published. In 2021, the European Commission adopted the related EU Disclosures Delegated Act, which requires large financial and non-financial companies to provide information to investors about the environmental performance of their assets and economic activities. In annual reports published in 2022, large companies were required to report the proportion of their economic activities that are considered as Taxonomy-eligible. An eligible economic activity is an activity that is described in the delegated acts adopted pursuant to the Taxonomy Regulation. In 2023, large companies are required to report also activities that are considered as Taxonomy-aligned, i.e. activities that comply with the requirements for environmentally sustainable economic activities. In the beginning the focus is on activities contributing to climate objectives, climate change mitigation and adaptation, according to the EU Climate Delegated Act. In addition, in March 2022, the Commission adopted a Complementary Climate Delegated Act including, under strict conditions, specific nuclear and gas energy activities in the list of economic activities covered by the EU taxonomy. It was published in July 2022 and applies as of January 2023. In 2021, UPM carried out its first assessment to identify the economic activities which would be eligible i. e. included in the scope of EU Taxonomy. In 2022, UPM conducted a thorough evaluation of the alignment of activities with the sustainability requirements defined in the regulation. After further investigation, UPM also re-evaluated some of the previous identified eligible activities. The assessments were carried out with the support of several UPM functions and businesses coordinated by UPM’s finance and responsibility teams. EU NACE Classification (Statistical Classification of Economic Activities in the European Community) was used as a reference in activity identification. The identified eligible activities focus on the climate change mitigation objective. The assessment and its results are based on the current knowledge and available interpretation of the regulation and cover the substantial contribution criteria and the criteria for ‘do not significant harm’ for the respective activities. In addition, the fulfillment of the minimum social safeguard has been evaluated.

Regarding the nuclear and fossil gas related activities, UPM identified the activities in nuclear power through its shareholdings in Pohjolan Voima Oyj (PVO) which has direct shareholdings in Teollisuuden Voima Oyj (TVO) . TVO operates two nuclear power plants (Olkiluoto 1 and Olkiluoto 2) and is constructing one new nuclear power plant in Olkiluoto (Olkiluoto 3), Finland. Olkiluoto 3 has proceeded to its test production phase. UPM did not recognise any fossil gas related activities as defined in the Disclosures and Complementary Climate Delegated Act. UPM has re-evaluated Taxonomy-eligible activities and made following changes to the eligible scope compared to 2021: • UPM reports all sales of co-generated energy from bioenergy within activity 4.20 as eligible, not separately within activities 4.15, 4.19 and 4.20. • UPM reclassified activity for its investment in the biochemical refinery from 3.14 to 3.6 that includes activities related to manufacture of new developed carbon-low technology. • The paper production from mostly recycled content and biocomposites business was reclassified from eligible under 5.9 to non-eligible, due to the EU Commission Notice on the interpretation for the Delegated Act (2022/C 385/01) regarding the integrated value chains. Non-financial undertakings falling under the scope of the Non Financial Reporting Directive are required to disclose the KPIs, the turnover, CapEx (capital expenditure) and OpEx (operating expenses) in relation to economic activities which are Taxonomy-eligible and aligned as defined in Disclosures Delegated Act. The eligibility and aligned related financial information to be disclosed pursuant to Article 8 of the Taxonomy Regulation is presented in the following tables. The group has ensured that activities are accounted only once when calculating KPIs. In 2022, UPM's total Taxonomy-aligned turnover including the nuclear activities was EUR 896 million, 8% of total sales, Taxonomy aligned CapEx was EUR 424 million, 26% of total CapEx and Taxonomy-aligned OpEx EUR 109 million, 17% of total OpEx as defined in Disclosures Delegated Act.

Substantial contribution criteria

DNSH criteria (‘Does Not Significantly Harm’)

Water and marine resources Circular economy Pollution

Climate change adaptation

Bioversity and ecosystems Minimum safeguards Taxon omy aligne d

Bioversity and ecosystems

Climate change mitigation

Taxono my aligne d proport ion of turnove r, year 2021

Proportion of turnover %

Cate gory ‘(tran sition al activi ty'= T)

Absolute turnover

Categ ory (enabli ng activit y = E)

Code(s)

propor tion of turnov er, year 2022

Economic activities

A. TAXONOMY-ELIGIBLE ACTIVITIES

EURm % %

Y/N Y/N Y/N Y/N Y/N Y/N Y/N %

A.1. Environmentally sustainable activities (Taxonomy-aligned)

A2.1, A2.2, A2.3

1.3. Forest management

0% 100%

YYYYYYY100%

D35.1. 1

4.5. Electricity generation from hydropower

164

1% 100%

YYYYYYY100%

4.13. Manufacture of biogas and biofuels for use in transport

D35.2. 1 D35.1. 1, D35.3

322

3% 100%

YYYYYYY100%

4.20. Cogeneration of heat/cool and power from bioenergy Turnover of environmentally sustainable activities (Taxonomy aligned) (A.1) A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

1% 100%

YYYYYYY100%

597

5% 100%

YYYYYYY100%

1.3. Forest management

A2.40 24

6.10 Sea and coastal freight water transport, vessels for port operations and auxiliary activities Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

H50.2 5

—%

Total (A.1 + A.2)

626

95%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities (B)

11,094 95%

Total (A + B)

11,720 100%

Turnover of Taxonomy-non-eligible activities (B) includes the eligible and aligned nuclear related activities