UPM Annual Report 2022

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2022

tatives from business units in Europe. Our other co-operative bodies in Finland and Germany aim to promote employee partici pation and dialogue, both between the busi ness areas and country-level management and between employee representatives and employees on a national level. After the Finnish Forest Industries Federation resigned from collective bargaining in 2020, the collective labour agreements have been negotiated between forest industry companies and the unions. In April 2022, UPM signed five busi ness-specific collective labour agreements with the Paperworkers’ Union after a strike that affected pulp, paper, label and biofuels businesses in Finland. UPM Plywood and UPM Timber reached business-specific agreements in December 2021. UPM now has business-specific agree ments for all its businesses in Finland. The new agreements enhance the productivity and competitiveness of the businesses and units. They also add flexibility to shift arrangements and the use of working hours. Replacing periodical pay with hourly pay and providing clearer criteria for pay will strengthen the prerequisites for success. The agreements also provide better opportunities to reward good performance with personal bonuses. The units have launched forums for developing business-specific collective labour agreements and the work will continue in 2023. A diverse and inclusive working culture on page 68 Embedding human rights in everything we do on page 72

OUR EMPLOYEES BY REGION

UPM’s personnel by business area 2022

Other operations 5.3% UPM Plywood 11.5% UPM Fibres 15.6% UPM Specialty Papers 11.4% UPM Raflatac 19.3% UPM Energy 0.5%

6,273 Finland

UPM Communi cation Papers 36.5%

4,184 Germany

2,950 Other Europe

896 North America

1,598 China

343 Other Asia

Full time 97% Permanent 89%

Part time 3%

Rest of the world

140

852 Uruguay

17,236 Total

Fixed term 11%

ensure the required level of expertise for future employees. The programmes are typically focusing on shop-floor production or maintenance work and run together with vocational training partners. At the end of 2022, approximately 350 people participated in the programmes after completing a degree. We have extended our employer brand to new growth areas. Following our systematic efforts to develop our work environment and concrete actions to be a responsible employer, our position among students and professionals was recognised by external parties in Finland and China. Leading by example Achieving our ambitious targets requires committed input from skilled people and teams empowered by inspiring leaders. We continuously invest in developing leadership capabilities. UPM values and an Aiming Higher mindset lay the foundation for our leadership development programmes that support the three cornerstones of leadership at UPM: leading oneself, leading people and leading the business. In recent years, the key areas of development have been inspiring and purposeful leadership, coaching, self-leadership and resilience. In 2022, we continued to encourage a growth mindset and improve leadership

skills needed to enable teams’ and employ ees’ performance.

The annual incentives paid in 2022 for the 2021 STI plan amounted to EUR 63 million, and the estimated amount of annual incentives for the 2022 plan is EUR 53 mil lion. We recognise significant individual or team success with a separate Achievement Award system. It is designed to support UPM’s high-performance culture and recog nise individuals and teams for outstanding contribution, significant achievements and exceptional performance. In addition to the Short-Term Incentive scheme, we provide two long-term incentive plans: Performance Share Plan (PSP) for senior executives and Deferred Bonus Plan (DBP) for other key employees. Launched annually, the plans cover in total 477 partic ipants. Promoting co-operation We are committed to active employee partic ipation and consultation, organised in accor dance with international and national rules and regulations. We offer various forums to facilitate continuous dialogue between employees and business management. The UPM European Forum is a co-op erative body that focuses on issues related to our business environment and changes within the company. The forum organises regular meetings for employee represen

Rewarding and recognising high performance

We reward and recognise high performance. Our approach to rewarding and recognising employees consists of both tangible and intangible components. Tangible remu neration and recognition consists of base salary, benefits and incentives, which are determined by UPM’s global rules, local legislation, general agreements, local market practices, the level of the position and individual performance. Gender, age, ethnic origin and nationality play no role in determining salaries and wages. Intangible remuneration and recognition consists of, for instance, a safe and healthy working environment, interesting and mean ingful work, and good leadership and career opportunities. We have designed our reward policy to increase employee commitment to, and motivation for, high performance. Each employee belongs to a uni fied annual Short Term Incentive (STI) scheme. The scheme covers group- and business-level targets, personal and team performance targets, and individual per formance evaluation to differentiate and reward high performance.

UPM PERSONNEL IN FIGURES

2022 17,236

2021

2020 18,014

Employees

16,966

Turnover, %

14.7

14.5

10.4

Turnover, % (voluntary)

6.8

5.6

3.5

Average age

44.1

44.3

44.6

CASE

WE ARE COMMITTED TO FAIR REWARDING

assessment shows unexpected wage gaps, they are corrected. We work with an independent third party and they provide us with benchmark data on the countries and cities in which we operate. The next step is to start promoting living wages with our suppliers. We are also committed to ensuring gender pay equity to all employees. The annual review enables the monitoring of possible gender pay gaps and to make pay adjustments respectively. In 2022, we conducted the company-wide

review and implemented the pay adjustments for unexplained gaps. This commitment to fair rewarding is excep tional and shows our strong dedication to fair treatment of all employees on both a national and global scale.

We want to ensure fair, equitable and com petitive rewarding for all employees globally. Our new social responsibility focus area for fair rewarding has two targets related to living wage and gender pay equity. We are committed to ensuring that all employ ees’ pay meets at least their local living wage and that the situation is assessed annually. If the

www.upm.com/responsibility

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UPM ANNUAL REPORT 2022

UPM ANNUAL REPORT 2022