UPM Annual Report 2022

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2022

as an energy intensive consumer and as an energy producer, we have been reminding decision-makers of the importance of func tioning energy markets (pages 43 and 86). Climate change mitigation and our com mitment to the UN’s 1.5-degree agenda con tinued to garner a lot of interest among our stakeholders. Discussions were carried out with environmental organisations, certifica tion bodies, authorities and decision-makers. The climate impact on forests is linked to policies on land use, land-use change and for estry (LULUCF). We have highlighted the im portance of sustainable forest management and manufacturing products from renewable raw materials that replace fossils as effective ways to mitigate climate change. The EU’s Fit for 55 package was published in 2021 and in 2022 both the European Parliament and the EU member

states have taken a position on several of the initiatives to update the EU climate and energy legislation so that it is in line with the EU’s climate targets. The process for finalising the proposals in EU institutions is expected to continue also in 2023. We actively promote the cost-com petitive and consistent implementation of climate change policies. UPM calls for predictable regulations that enable green growth investments and further trans formation beyond fossils. Therefore, EU policies must ensure sustainable forest use and the availability of wood as a key resource for the circular bioeconomy and green growth. New Forest Action programme In August, EcoVadis recognised UPM as being on a Platinum level based on the

company’s sustainability performance. We received our all-time high EcoVadis score thanks to our renewed social responsibility agenda. In December, UPM was listed as the forest and paper industry leader in the Dow Jones European and World Sustainabili ty Indices for 2022–2023. We continued active participation in the UN Global Com pact initiatives and also chaired the Global Compact Finland Network. We continued our co-operation with dif ferent stakeholders on responsibility issues on a voluntary basis, addressing themes such as ecolabels, fish migration, living wag es, fair rewarding and nature conservation. In March, we published a new Forest Action Programme, which will run until 2030. The global programme goes beyond current standard requirements and its measures have a positive impact on the

mill visits, and our Kymi, Kaukas and Stey rermühl mills have their own forums for local dialogue. We also co-operate with local schools and education networks, organ ising events and excursions, for example. In addition, it is crucial for us to engage in active dialogue with local forest owners, neighbours of harvesting sites and other individuals involved in forest management. Our EMAS (EU Eco-Management and Audit Scheme) statements cover societal impacts in addition to environmental performance, providing more detailed in formation on the local impacts of our pulp and paper mills. The EMAS statements also include information on co-operation with local stakeholders, such as sponsorship of local organisations or co-operation with educational institutions. These mill-specific statements complement UPM’s corporate EMAS reporting. They are compiled an nually and published on the UPM website www.upm.com/responsibility. The year 2022 marked the 150th an niversary of the beginning of UPM on the riverbanks in Kuusankoski, Valkeakoski, Pori and Verla in Finland. The anniversary celebrations for employees and stakehold ers included visits to museum exhibitions, cultural events, seminars and publishing history books of the mills. The Biofore Share and Care programme continues UPM’s Biofore Share and Care programme demonstrates our dedication to responsi

fundamental aspects of sustainable for estry: climate, biodiversity, soil, water and societal contribution. As part of the pro gramme, we collaborated with the Finnish Osprey Foundation and Vida Silvestre in Uruguay. (page 82) We were an active international stake holder member of the PEFC (Programme for the Endorsement of Forest Certification, PEFC/02-44-41) and participated in the development of the PEFC forest certifica tion system, reflecting our aim to promote sustainable forest management globally. In Finland, we participated in updating the forest management standards in both the FSC™ (Forest Stewardship Council™, FSC N003385) and the PEFC schemes. Responsibility issues were also raised in customer enquiries, with product safety, sustainable forest management and climate change as key themes. Globally, we contin ued active co-operation with local permit authorities. Our mills in Europe, China and Uruguay have the potential to be some of the biggest employers and taxpayers in the locations where they operate. In Uruguay, we have been building a second pulp mill since 2019. Stakeholder engagement around the project has been active (page 73). We aim for engagement and open dia logue with local communities. For example, the UPM Fray Bentos mill arranges regular Emphasis on local communities and impacts

bility and local community involvement through sponsorships, donations and employee voluntary work. We share our resources with causes that respect sustain able development and work in line with our purpose and values. In 2022, we provided aid to Ukraine through various organisations and arranged a global fundraising campaign for our employees together with the Red Cross (below). We continued to support projects with a focus on reading and learning, Beyond Fos sils initiatives and community engagement. For example, we collaborated closely with the Guides and Scouts of Finland (page 61). UPM does not financially support political parties or individual candidates. The local sponsorships and other contri butions amounted to approximately EUR 0.9 million (EUR 0.8 million) within the Biofore Share and Care programme. The figure includes support for the Uruguay an UPM Foundation, which continued with a contribution of USD 400,000 (USD 400,000). The foundation supports and encourages training, entrepreneurship, em ployment, healthy living and entertainment in local communities in the Uruguayan countryside. All in all, EUR 499,800 (EUR 498,700) was donated to charities or other non-prof it causes such as the Red Cross, Unicef, Ukraine Foundation, Save the Children Fin land, The Children and Youth Foundation as well as the Baltic Sea Action Group.

UPM’S MATERIALITY ANALYSIS 2022

A materiality analysis is carried out annually. The results highlight the topics UPM has a significant impact on or which have a signifi cant impact on the company. The analysis covers both negative and positive as well as current and potential impacts on economy, envi ronment and people, including impacts on their human rights. Impacts are identified through internal assessments, audits and reviews, as well as by follow-up of interests and concerns of various stakeholder groups; communities, employees, NGOs, customers, sup pliers, government and regulators, investors, researchers and media.

The significance of impacts is assessed by the severity and likelihood. Severity of the impact is determined based on its scale, scope and irremediability. After prioritising the impacts, the most significant ones are selected as material to UPM and then grouped into topics. This list (below) of material economic, environmental and social topics determines our responsibility-related focus areas and our reporting.

UPM MATERIAL TOPICS 2022

CASE

RUSSIA'S WAR IN UKRAINE BROUGHT UPM'ERS TOGETHER TO ACT

of material support to Ukraine for the repair of the damaged buildings. In April, we arranged an internal, global fundraising campaign togeth er with the Red Cross. The company tripled the donation amount to EUR 188,980 following a decision of the Board of Directors. There have also been many volunteering ac tivities. In Poland, employees organised charity events, coordinated the distribution of groceries to those in need and accommodated and assist

ed their Ukrainian colleagues in many everyday tasks. In Finland, employees volunteered as street collectors for the Finnish Red Cross. In Spain, volunteers helped to coordinate refugee activities. In Germany, vacant employee housing was equipped for Ukrainian refugees. Altogeth er UPM donated more than EUR 300,000 to support people suffering from the war.

ECONOMIC AND GOVERNANCE

SOCIAL

ENVIRONMENTAL

• Business ethics and values • Competitiveness • Regulatory environment • Responsible sourcing

• Decent work and fair rewarding • Diversity and inclusion • Employee engagement

• Biodiversity • Circular bioeconomy • Climate change • Product stewardship • Responsible forestry

UPMers worldwide have been actively helping people suffering from the war in Ukraine. In the spring, we decided to allocate most of the annual donation funds to support Ukraine and therefore several donations were made to various charitable causes. In addition, UPM Plywood and UPM Timber delivered truckloads

• Health and safety • Local engagement

www.upm.com/responsibility

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UPM ANNUAL REPORT 2022

UPM ANNUAL REPORT 2022