UPM Annual Report 2023

ACCOUNTS FOR 2023

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Material non-financial topics and key performance indicators

from 2018 level by 2030. These targets were validated by the Science Based Targets initiative (SBTi) to be aligned with the 1.5° C pathway according to the Paris agreement. In 2023, fossil CO 2 emissions (Scope 1 and 2) summed up to 3.7 (4.5) million tonnes, which is a decrease of 17% compared to 2022, and a decrease of 45% compared to 2015. The Scope 3 emissions for materials and logistics summed up to 4.7 (4.8) million tonnes CO 2 , a reduction of 23% compared to 2018. Overall Scope 3 emissions were 7.6 (7.4) million tonnes. In 2023, scope, assumptions and factors used in Scope 3 calculation were reviewed and updated. Detailed information on 2023 data, methodology and assumptions is available in UPM’s GHG inventory, published on upm.com. In 2023, UPM committed to set long-term Net

Zero targets as defined by SBTi. The work will be finalised during 2024. Further targets related to climate change are climate-positive land use and developing climate-positive product portfolio. Concerning land use, forestry and product portfolio, UPM has engaged with scientific partners in order to gain credible data and approaches. UPM favours the use of renewable and other carbon-neutral energy sources. Biomass-based fuels make up 76% (65%) of fuels used by UPM worldwide. If UPM needed to buy certificates to cover its whole direct fossil CO 2 emissions, and if the price of CO 2 certificates were to rise by EUR 10 per tonne, it would mean additional costs of approximately EUR 21 million annually.

KEY PERFORMANCE INDICATOR

TOPIC

MANAGEMENT

2023 RESULTS

Governance/ Anti- corruption

Corruption related risks are identified and assessed in connection with the company’s risk management process. These risks are managed and mitigated by training, communication, due diligence procedures, audits and practical guidelines specifically targeted at anti-corruption and anti bribery. UPM Code of Conduct training is mandatory for all employees and anti-bribery training to all salaried employees.

100% coverage of participation in UPM Code of Conduct training (continuous)

98% (97%) of active employees completed the training for the UPM Code of Conduct.

Human rights UPM is committed to respecting human rights based on its Code of Conduct. UPM has a process for assessing human rights at UPM site level, including community relations and local sourcing, as well as for risk assessments and audits for suppliers.

Continuous supplier auditing based on systematic risk assessment practices

95 (121) supplier audits were conducted based on identified risks, including human rights, social and environmental topics. In addition, about 890 (360) contractor reviews with focus on working conditions were carried out. 89% (88%) of supplier spend covered by UPM Supplier and Third-Party Code.

UPM climate and nature related disclosures according to TCFD (Task Force on Climate-related Financial Disclosures) and TNFD (Task Force on Nature-related Financial Disclosures) are presented in the UPM annual report as follows:

Responsible sourcing

UPM requires its suppliers, third party intermediaries and joint venture partners to apply the same principles as in the UPM Code of Conduct. These supplier requirements are defined in the UPM Supplier and Third Party Code. UPM continuously develops leadership capabilities, management teams and working environments. UPM measures work environments, team work and leadership with an annual engagement survey. UPM’s global leadership development portfolio develops capabilities to lead oneself, lead people and lead business. Programmes address, e.g., inspiring and purposeful leadership, coaching, conversation and feedback skills, resilience and leading in complexity. UPM has a systematic process for goal setting and development planning for all employees globally to ensure high performance and continuous professional development. UPM has a comprehensive safety management system which promotes a proactive and engaging safety culture. UPM uses means such as safety audits and reporting on safety-related near misses and safety observations. UPM wants to develop organisational culture and local workplace to ensure an inclusive and diverse working environment. UPM has committed to, and promotes, diversity and inclusion in its policies. UPM reviews the diversity status of all its businesses and functions regularly. The composition of UPM key management teams and inclusiveness is discussed and development actions planned and implemented.

80% of total supplier spend covered by UPM Supplier and Third Party Code (continuous)

REQUIREMENTS

PAGES

GOVERNANCE a) The role of the Board in overseeing climate and nature-related issues

Responsible leadership

Employee engagement clearly above benchmark by 2030

In the Employee Engagement Survey average score of 70 (70). This is 5 (5) points below the global external benchmark.

Pages 138–139, paragraph "Roles of the group management and functions in leading non-financial matters" Pages 138–139, paragraph "Roles of the group management and functions in leading non-financial matters"

b) The role of management in assessing and managing climate and nature-related issues STRATEGY a) The climate and nature-related risks and opportunities over the short, medium and long term

Learning and development

Goal setting discussions are held and development plans created for employees, completion rate 100% by 2030 No fatalities Total recordable injury frequency (TRIF) <2 by 2030, including contractors UPM is among top 10% companies by 2030 on employees’ sense of belonging at UPM

85% (83%) of employees had completed individual goal settings or annual discussions. 81% (58%) had a development plan documented. 0 (3) fatal accidents, 5 (5) serious accidents TRIF was 6.1 (6.4) for UPM workforce and 5.2 (5.9) including contractors. In the Employee Engagement Survey, question about belonging average score of 68 (68). This is 12 (12) points below the benchmark of top 10% companies.

Pages 133–137, chapter "Risks" Pages 34–35, chapter "Risks and opportunities" Pages 10–13, chapter "Beyond fossils"

Pages 34–35, chapter "Risks and opportunities" Pages 10–13, chapter "Beyond fossils" Page 135 paragraph "Climate change", 137 paragraph "Forest and plantations" Page 141, paragraphs "Environment", "Climate" and "Biodiversity and ecosystems" Pages 10–13, chapter "Beyond fossils" Page 133, paragraph "Risk management" Pages 138–139, paragraph "Roles of the group management and functions in leading non-financial matters" Page 133, paragraph "Risk management" Pages 138–139, paragraph "Roles of the group management and functions in leading non-financial matters"

b) The impact of climate and nature-related risks and opportunities on business, strategy and financial planning

Safe and healthy working environment Diversity and inclusion

c) The resilience of strategy, taking into consideration climate and nature-related scenarios

RISK MANAGEMENT a) Processes for identifying climate and nature-related risks

Fair rewarding UPM’s rewarding and recognition philosophy is to reward high performance. We aim to ensure fair, equitable and competitive rewarding for all employees. In addition to competitive, robust and performance based rewarding practices, we have yearly review processes ensuring the gender pay equity and employees’ pay meeting at least a living wage locally. UPM ensures that employees have sufficient information to understand what their rewarding comprises and how they can influence on its development.

Ensure gender pay equity for all employees by implementing yearly review process to identify and close unexplained pay gaps

Company-wide review done and pay adjustments implemented to close identified statistically significant unexplained gaps related to gender.

b) Processes for managing climate and nature-related risks

c) How processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management METRICS AND TARGETS a) Metrics used to assess climate and nature-related risks and opportunities

Page 133, paragraph "Risk management" Pages 106–110, chapter "Governance"

Pages 14–15, "Key figures 2023" and pages 32–33, "Responsibility targets"

Product stewardship

Ecolabels help customers make responsible choices and provide stakeholders with important information. Third-party verified environmental certificates and labels tell customers about the environmental performance of our products. UPM favours the use of renewable and other carbon-neutral energy sources and strives to continuously improve its energy efficiency across all its operations. Strengthened targets for scope 1 and 2 to be in line with the commitment to Science Based Targets and 1.5° pledge. UPM's goal is to minimise the impact of its operations on water resources, safeguard the natural water cycle in forests, and maintain the functioning of aquatic ecosystems.

All applicable products eligible for ecolabelling by 2030

89% (87%) of UPM sales were eligible for ecolabelling.

b) Climate: Scope 1, Scope 2 and Scope 3 emissions, and related risks

Page 141, paragraph "Climate" Page 91, graph "Sources of UPM's greenhouse gas emissions"

Nature: Positive impact on forest biodiversity and developing a monitoring system and obstacle-free streams, and related risks

Climate

Fossil CO 2 emissions from its own combustion and purchased electricity (Scope 1 and 2) reduced by 65% by 2030 (compared to 2015) Wastewater volume reduced by 30% by 2030 (compared to 2008)

Fossil CO 2 emissions reduced by 45% compared to 2015 and 17% compared to 2022.

Page 141, "Biodiversity and ecosystems" and pages 84–85 "Enhancing Biodiversity" Page 83, "Study on the biodiversity of clearcut areas", pages 84 "Landlocked salmon returning to the river" and page 85 "Setting science-based targets for nature conservation" Page 143, table "Material non–financial topics and key performance indicators" Pages 32–33, table "Responsibility targets"

Water

7% (13%) reduction in wastewater volume achieved since 2008 for the UPM average product.

c) Targets used to manage climate-related risks and opportunities and performance against targets

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023

UPM FINANCIAL REPORT 2023

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UPM FINANCIAL REPORT 2023

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