UPM Annual Report 2022

BEYOND FOSSILS

UPM

BUSINESSES

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2022

VALUE FROM RESPONSIBILITY

TOWARDS NET-ZERO EMISSIONS

WE ACT THROUGH FORESTS

WE ACT THROUGH EMISSION REDUCTIONS (SCOPE 1, 2, 3)

WE ACT THROUGH PRODUCTS

Creating value for society, both as a responsible company and through our renewable and sustainable solutions, is an integral part of our strategy.

-2.0 MtCO 2 Carbon

+4.5 MtCO 2 Scope 1 and 2 emissions from own energy generation and purchased energy

+1.6 MtCO 2 Temporary

substitution Fossil energy substitution

Our Biofore strategy guides us in achieving our responsibility targets for 2030 and in contributing to the UN Sustainable Devel opment Goals (SDGs). We are continuing our co-operation with the UN Global Com pact (UNGC). In 2022, we joined the UN GC’s Living Wage Think Lab. A living wage is an essential component of decent work, contributing directly to several SDG’s. We have also connected our sustainabili ty performance to our financing. Our revolv ing credit facility is linked to our long-term biodiversity and climate targets, and we have issued three green bonds since 2020. Since January 2022, responsibility-relat ed measures have been included in UPM’s management remuneration. The distinct responsibility measures comprise the re duction of fossil CO 2 emissions from UPM’s on-site combustion and purchased energy, the achievement of a net positive impact on biodiversity in the UPM’s own forests in Finland and the achievement of gender pay equity globally. These measures account for 20% of all performance measures. In March 2022, we launched the UPM Forest Action programme, which will run until 2030. The global programme steers our wood sourcing operations and covers our own forests in Finland and the USA, as well as our plantations in Uruguay. The programme goes beyond current stan dard requirements and takes a holistic view of the impact of forestry, combining measures that cover five key areas: climate, biodiversity, soil, water and societal contribution. Maximising the positive impact of our forestry operations

IMPACT • Renewable raw materials and recyclable products advance the transformation to a circular bioeconomy • Our solutions respond to global challenges, such as climate change and resource scarcity TARGETS • Create value for our stakeholders • Wide set of 2030 responsibility targets

OUR WAY • We respect international agreements, such as the UN Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises • Our purpose, values, UPM Code of Conduct, and UPM Supplier and Third Party Code provide a solid foundation for decision-making, management and operations • Responsibility is managed by the Board of Directors and the Group Executive Team, as well as by businesses and functions • Responsible business conduct in all our operations

-2.3 MtCO 2 eq Carbon sink Carbon absorbed in trees and soil

carbon storage Carbon stored in wood-based products' lifetime

BIO

+5.0 MtCO 2 Scope 3 emissions from value chain (purchased goods and services, logistics, etc.)

-5.8 MtCO 2

Carbon substitution Avoided emissions by

Long-term carbon storage Long-term storage in trees and soils

replacing fossil- based products

teriorating worldwide, and this decline is projected to worsen unless extensive action is taken. Our operations are widely linked with biodiversity. Our forestry operations, hydropower plants and production can have negative impacts on biodiversity, which is why our approach covers a wide range of ac tions to mitigate possible negative impacts. In 2022, we made biodiversity into a sepa rate focus area under our 2030 responsibility targets. The new focus area will cover current and new targets and actions on enhancing biodiversity in forests, plantations, stream waters and other operating environments. We also joined the Science Based Targets Network (SBTN) Corporate Engagement Program to participate in the development and testing of tools, methodology and guid ance for setting science-based targets for the preservation of nature.

Implementing renewed social responsibility targets

We are committed to the UN’s Business Ambition for 1.5°C in a promise to pursue science-based measures to limit global temperature rise. As a signatory of The Climate Pledge, we are also committed to achieve net-zero annual carbon emissions by 2040. We act through climate-positive forestry, reducing emissions and innovating products. In 2022, we created a global, internal guideline to manage climate claims at UPM. The guideline is complemented by practical instructions and case examples on how to address climate related issues in communications and marketing in a credible manner. The package is supported by an online training and a dedicated Climate Glossary.

In spring 2022, we finalised the study on climate-related substitution and carbon storage effects of our products with the Finnish Environment Institute SYKE and the German IFEU. Based on the study we calculated our overall product-re lated impacts, including temporary carbon storage and substitution effects. The illustration above describes the situation in 2022. In autumn 2022, we joined the pilot by the GHG Protocol to test and give feedback to the Land Sector and Removals Guidance before its finalisation. As an outcome, we already discovered valuable insights about the challenging role of biogenic carbon removals and emissions in the carbon accounting. All these activities will contribute to our work towards UPM's net-zero emission approach.

All our activities on social responsibility are founded on the principle of respect for human rights. In 2021, we strengthened our social responsibility targets and the work to promote those continued in 2022. We carried out two company-wide reviews on our fair rewarding practices including gender pay equity and living wages and implemented pay adjustments to close identified pay gaps. Both reviews were verified by a third party. We were also listed in the Bloomberg Gender-Equality index for 2023 for the 5th time in a row. Our community engagement focused on local activities and dialogue in Uruguay and providing aid to Ukraine under the Biofore Share and Care programme.

Our 2030 responsibility targets and how we did in 2022 on pages 30-31 Our responsible way of operating on pages 58-99

Embedding human rights in everything we do on page 72 Examples of responsibility in different sections of the report Our Green Bond Report is available at www.upm.com/investors/

Climate-positive forestry on page 82 Enhancing biodiversity on page 84 Development of Scope 1–3 emissions on pages 86-89 Committed to compliance on page 74

upm-as-an-investment/debt www.upm.com/responsibility

Biodiversity as a new focus area According to the UN, biodiversity is de

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UPM ANNUAL REPORT 2022

UPM ANNUAL REPORT 2022