UPM Annual Report 2022

ACCOUNTS FOR 2022

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

R&D’s role in different businesses BUSINESS AREA DESCRIPTION UPM Fibres

their response to different treatments. The ultimate goal is to print organs or tissues that could, in the future, be transplanted into patients. In 2022, we continued to supply nanocellulose to Cellink. In the clinical field, many Finnish healthcare professionals and hospitals already use our CE-marked FibDex® wound dressings. The products are also being piloted in selected university hospitals in the Nordic countries and in Germany. In 2022, we launched a new clinical investigation for superficial dermal burns led by experienced plastic surgeons in the university hospitals of Uppsala and Linköping in Sweden. UPM Biocomposites - the best in class UPM Biocomposites is creating circular economy solutions through the manufacture of innovative composite materials and decking products. The materials are based on our own research and development. UPM ProFi utilises European post-consumer plastic waste and post industrial label waste to manufacture high quality composite decking. The label production side streams come from UPM Raflatac and its customers, with the waste collected and delivered to Germany where the composite decking is manufactured. We also utilise recycled plastic from European post-consumer waste in the manufacturing process.

The UPM ProFi Piazza product range is made with up to 75% recycled materials and offers best-in-class performance. We are a member of the EU Circular Plastics Alliance, which aims to increase the EU market for recycled plastics to 10 million tonnes by 2025. In 2022, the end of the COVID-19 pandemic lockdowns and the uncertainty surrounding construction, as well as continued consumer uncertainty, were reflected in UPM ProFi’s sales. However, we managed to increase market shares in Central Europe, where we stand out thanks to the responsibility and recyclability of our locally produced products. The UPM ProFi Piazza product range was expanded. UPM Formi creates and manufactures wood-based biocomposites, enabling a reduction in the carbon footprint of the end product by up to 80% when compared to similar products made from fossil-based materials. The composite materials are suitable for various end uses, including kitchenware, personal care and acoustic devices. Products comply with food safety standards and other similar quality requirements. Business growth continued in 2022 with our customers launching new products on the market, from storage boxes to design objects. Together with new and existing customers, we developed and piloted new end-use areas for the material. Commercial interest was reflected in the strong demand for almost 100% biobased UPM Formi EcoAce.

In 2022, UPM saw a clear benefit of having research expertise in several continents. Our global R&D presence in Asia, Europe and the Americas, enabled us to work faster and better with our customers and partners to find and implement required solutions. By having a local presence at a global scale we were able to implement solutions even during the exceptional COVID-19 pandemic. Several developments were made to improve operational reliability, safety and environmental performance at our pulp mills. To further strengthen our strategy and commitment to developing sustainable and high-quality eucalyptus plantations for pulp production, we opened a new forestry research centre in Paysandú, Uruguay. The centre’s research work focuses mainly on developing genetic materials with high productivity, improved wood quality and good tolerance to the main pests and diseases that can affect plantation operations. After a period of solution development stage for our second state-of-the-art eucalyptus pulp mill scheduled to start operating in Uruguay by the end of the Q1 2023, more emphasis was placed on developing and piloting the first stages of our next fibre based and by-products growth concepts for our pulp mills. In doing so, we saw clear synergies and advantages in having in-house businesses that focus on replacing fossil materials with renewable solutions. It allows us to make our customers more successful faster by designing and implementing solutions based on our by-products in a range of industries and applications. The focus was on improving the cost-competitiveness and environmental performance of hydropower production assets and on developing competencies and business operations related to the optimisation of industrial energy consumption and demand-side flexibility. UPM Energy participated in several research programmes and undertook development work with the aim of improving UPM’s power generation and consumption operations in a changing electricity market, as well as developing means to mitigate the impact of hydro power operations on rivers and migratory fish. UPM Raflatac product development in Strategic Business Units and in Global R&D continues to support UPM’s sustainable development goals and commitments in self-adhesive label materials. Packaging recyclability, reduction of raw materials and new renewable raw materials are core elements in all UPM Raflatac’s R&D projects supporting UPM’s beyond fossils strategy. Limited availability of raw materials has been a challenge in recent years and this has been offset by approving alternative solutions. Continuous improvements in quality and cost efficiency remain essential to product and process development. The AMC acquisition brings new technologies and products which will further strengthen the technical competencies in self-adhesive materials. This will enable new opportunities for future product development. R&D and product development initiatives aim to enable high performance and efficiency in the value chain and to develop fibre-based alternatives for non-renewable materials. These initiatives also support growth targets by driving the innovation of products for new applications. We added a new heat-sealable barrier paper to our portfolio. Looking towards the future, we continue to focus on co-creating sustainable packaging papers for increasingly demanding end-uses, together with the packaging value network; we currently have several ongoing co creation initiatives supported by our excellent R&D infrastructure including Northern European and Asian R&D centres. For example, together with machine manufacturer BOBST and specialty chemicals manufacturer Michelman, we launched a ground-breaking packaging solution for foods with long shelf life. UPM Specialty Papers continues to develop release liner base papers to further improve efficiency and minimise the environmental impact of the value chain. For example, our downgauging initiatives support our customers’ material efficiency targets. We are also driving an industry wide design-for-recycling approach across the label and tape value chains by harmonising release liner shades. The Research & Development Centre in Lappeenranta, Finland and the Central European Support Team in Augsburg, Germany continued to focus on investigating fibre concepts for various paper grades. The teams have been optimising recovered paper (RCP) supply by quality studies and development of a quality simulation model. UPM Communication Papers participated in projects and association activities to keep RCP recyclable, e. g. in the 4evergreen project and in the INGEDE. Furthermore, our R&D teams provided support to optimise the deinking process with the aim of minimising material losses, and reducing energy and the water consumption. Product portfolio development focused on the needs of key customer groups, as well as broadening the approach to address new and profitable end uses. In the area of energy, the focus was on technological innovations that help minimise energy needs at the production sites. Paper mills also developed further intelligent operations to enable increasing demand-side management towards the electricity markets and networks to support system stability and decrease emissions at peak times. In terms of operations efficiency, our R&D efforts concentrated on improving the efficiency of several mills for pinpointed efficiency supporting actions as well as safety-improving areas. Digital solutions were developed, built and tested to optimise RCF delivery flows and machine performance measurement, as well as improve order information machine reading. Contributions from the R&D teams contributed to meeting the 2030 targets in the areas of energy, water consumption, effluent treatment and resource efficiency. UPM Plywood product management and development provides competitive products within selected end-use areas in collaboration with our customers, superior technical expertise and support for customers, and support for the commercialisation of newly developed products and applications. An example would be further expanding the use of lignin-based WISA BioBond gluing solution to new product lines. Collaboration for the development of new applications for renewable plastics based on UPM BioVerno naphtha continued. Piloting, research and process development continued to take place at the UPM Biorefinery Development Centre (BrDC) and with external partners. UPM also studied and tested the use of several new innovative feedstocks that meet sustainability criteria, such as wood residues and feedstocks from carbon farming for our possible growth plans.

UPM Energy

UPM Raflatac

UPM Specialty Papers

UPM Communication Papers

UPM Plywood

Other operations UPM Biofuels

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