UPM Annual Report 2022

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2022

practise is integrated into their unit-specific management systems to ensure continuity. With this practice we aim to ensure that we identify topics that are specific to one country or unit only and identify changes in our operating environment that may impact people, particularly those in most vulnerable positions. Migrant workers, women, young workers as well as temporary and contractor workers have been identified as groups with a higher risk of potentially experiencing adverse impacts across our value chain. As a result of our 2022 assessments, we selected contractor management as one of our focus areas going forward covering all our business areas. We monitor and work to remediate adverse impacts on human rights that we become aware of and that our activities have contributed to or caused. Remediation is spec ified case-by-case based on verified impacts. Promoting decent work for contractors Every person who works in our supply chain should be treated fairly. In 2022, our work in our supply chain focused on identi fying high risk suppliers, highlighting topics such as fair terms and conditions of work, forced labour and modern slavery, environ mental impacts and land use. Overall, contractors perform a sig nificant proportion of our activities, for example in maintenance at our production units and in construction work and forestry operations. Promoting decent work and preventing any form of labour exploitation involving our contractors is particularly rel evant in our strategic investment projects. In 2022, we initiated a project to strengthen our approach to human rights due diligence and social and environmental impacts assessments required for investment and business development projects. The aim is to ensure that these impacts are compre hensively assessed for all relevant projects. In 2023, we will focus on developing our approach to contractor management. We will increase our internal capabilities to identify and mitigate any human rights-related risks in identified high-risk areas. Developing our responsibility reporting on contractors and contractor employees is an integral part of our development work. 2030 responsibility targets on page 30 Committed to compliance on page 74 Ensuring responsible supply chain on page 78

human rights in line with the UN Guiding Principles. The mandatory Code training includes several concrete cases on how to act in various difficult situations. We recognise the critical role of living wages and decent work in promoting respect for human rights and tackling inequality. As an example, our social responsibility targets, renewed in 2021, are set to ensure that living wages and gender pay equity underline our commitment to foster fair and equitable rewarding for our people (page 67). We en courage our suppliers and business partners to uphold similar standards. We participate actively as a member in several collaborative forums such as the Hu man Rights Business Learning Programme by Shift, Together for Sustainability (TfS) and UN Global Compact. In 2022, we be came a member of the UN Global Compact Think Lab on living wages and contributed to a TfS academy course on human rights. Focus on salient issues In collaboration with an external expert, we have identified our salient human rights at corporate level, i.e., rights that stand out as being most at risk. In 2022, our work focused on salient issues such as occupa tional health and safety (OHS), decent work and working conditions as well as modern slavery risks. In 2022, we initiated a review process for our salient issues to catch up with the developments in our business landscape and operational environments and to iden tify any gaps in our mitigation activities. We expect to complete our work in 2023. Identifying actual and potential impacts Human rights due diligence is a necessity for businesses to identify and manage poten tial and actual impacts. Our business areas regularly identify these risks and impacts and prioritise focus areas accordingly. This Living wages and decent work promote respect for human rights.

CASE

FOCUS ON COMMUNITY ENGAGEMENT IN URUGUAY

EMBEDDING HUMAN RIGHTS IN EVERYTHING WE DO CREATING VALUE FOR PEOPLE AND SOCIETY

Our dedicated community engagement team in Uruguay focuses on three areas: active dialogue with stakeholders and local communities, management of key risks and impacts and contribution to local develop ment. Long-term community development is supported by projects addressing the needs of local communities and funded by the UPM Foundation. In 2022, our strong focus of community activities were in Paso de los Toros, where our new pulp mill is being built. Aspects identified as potential risks during the construction phase, such as road safety and increased social unrest due to a large num ber of construction workers staying in the nearby villages, were successfully managed and monitored throughout the construction phase. Our local office in the city centre has been dealing with queries and concerns from local communities and job seekers. Towards the end of the year, we placed increased focus on managing the social impacts of transitioning from the large scale construction phase to the commis sioning phase, resulting in changes in the local dynamics on employment and small businesses.

Respect for human rights is the foundation of our social responsibility agenda and the related 2030 targets.

In an era of major geopolitical instability, respect for human rights is crucial. Social inequality and working poverty are in creasing globally as climate change and the COVID-19 pandemic underline these socie tal shifts. We must not only strive to under stand the impacts on people and changes in our business environment, but also use our leverage to respond to these shifts. Demonstrating progress transparent ly and building internal capabilities are vital in our work preventing and address ing human rights-related risks. In 2022, we renewed our Code of Conduct with a stronger emphasis on people. Our Code re-enforces our commitment to respecting

IMPACT • Provide a safe and inclusive working environment for our employees and respect the rights of the people in our value chains • Promote decent work and play our part in building a more equitable society TARGETS • We understand our business environment and impacts on people, whilst recognising the evolving nature of both • We prioritise the most severe human rights risks and impacts and take action to address them

OUR WAY • Our approach is based on the UN Guiding Principles on Business and Human Rights (UNGPs) and guided by our Code of Conduct and its associated policies, rules and guidelines • Our expectations for suppliers are set in the Supplier and Third-Party Code • We have identified our salient human rights issues at Group level and prioritise actions accordingly • We monitor and work to remediate adverse impacts on human rights • We engage with our stakeholders

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UPM ANNUAL REPORT 2022

UPM ANNUAL REPORT 2022