UPM Annual Report 2023

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ACCOUNTS FOR 2023

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Turnover of taxonomy-eligible activities (excluding nuclear and fossil gas related activities)

Minimum Safeguards Requirements for Minimum Safeguards shall ensure that a company not only supports environmental goals, but also adheres to international social standards and guidelines. UPM evaluated the requirements to be fulfilled by UPM’s Code of Conduct and related business practices, measures and commitments. UPM’s due diligence and remedy processes consider social and employee matters, respect for human rights, anti-corruption and anti-bribery. Information on Principal Adverse Impacts (PAIs), as defined in the EU SFDR, are addressed in UPM’s reporting, if relevant. Our practices and assessments in relevant areas are described in more detail in this report in following paragraphs: • Based on international frameworks and commitments, page 138 • UPM Code of Conduct and other corporate policies, page 138 • Management of non-financial matters, page 139 UPM’s Taxonomy alignment 2023 and development compared to previous year In 2023, UPM's total Taxonomy-aligned turnover including the nuclear activities was EUR 995 million (896 million), 10% (8%) of total sales, Taxonomy-aligned CapEx was EUR 460 million (424 million), 35% (26%) of total CapEx and Taxonomy-aligned OpEx EUR 141 million (109 million), 20% (17%) of total OpEx as defined in Disclosures Delegated Act 1) . All the aligned activities in financial year 2022 were also aligned in 2023 based on the executed annual alignment assessment. Taxonomy aligned turnover KPI increased by 2 percentage points mainly due to higher biofuels sales consisting of renewable diesel and nafta (activity 4.13). In addition, electricity sales volumes related to nuclear power increased compared to previous year due to start of the operational phase of Olkiluoto 3. Simultaneously, this was partly offset by decreased electricity prices (activity 4.27). CapEx KPI increased by 9 percentage points and was notable higher than in previous year due to higher proportion of Leuna biochemicals biorefinery investment out of Total Capex as well as additions to intangible rights (IPR) related to UPM Biochemicals' SunCoal Industries GmbH acquisition (activity 3.6). OpEx KPI increased by 3 percentage points mainly due to planned maintenance work at the biofuels biorefinery in Lappeenranta (activity 4.13) and higher OpEx related to Olkiluoto 3 nuclear plant due to started operations (activity 4.27). The Taxonomy regulation is still under development and does not cover all the sustainable economic activities. The majority of UPM´s products and services, such as pulp, paper, timber, plywood and label materials contributing to the turnover, are not included in the EU Taxonomy, thus the high proportion of Taxonomy non-eligible activities. 1) The percentages differ from the Annex II templates presented below as they include nuclear activities which are not presented in Annex II templates. Nuclear activities are presented using the Annex XII templates of the amended Disclosures Delegated Act. KPIs and accounting policies The eligibility and aligned-related financial information to be disclosed pursuant to Article 8 of the Taxonomy Regulation is presented in the following pages in tables Turnover of taxonomy-eligible activities, CapEx of taxonomy-eligible activities, OpEx of taxonomy-eligible activities and Nuclear and fossil gas related templates. • Committed to anti-corruption, page 139 • Respect for human rights, pages 72–73 • Taxation, pages 80–81

Turnover incl. Nuclear activities

DNSH criteria (‘Does Not Significantly Harm’)

Fiscal year 2023

2023

Substantial contribution criteria

100%

90%

92%

Proporti on of Taxono my aligned (A.1.) or - eligible (A.2.) turnover

Climate change adaptation

Climate change mitigation

Minimum safeguards

Circular economy Biodiversity

Categ ory enabli ng activit y

Cate gory transi tional activi ty

Proport ion of turnove r %, year 2023

Pollution

Water

Economic activities

Code Turnover

10%

—%

2023

2022

, year 2022

Taxonomy-aligned activities Taxonomy-eligible but not Taxonomy-aligned activities Taxonomy-non-eligible activities

Y; N; N/EL

EURm %

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

CCM 1.3

N/ EL

Forest management

0% Y

YYYYYYY 0% E

CapEx

CCM 4.5

N/ EL

Electricity generation from hydropower

136

1% Y

YYYYYYY 1% E

100%

62%

71%

Manufacture of biogas and biofuels for use in transport

CCM 4.13

N/ EL

414

4% Y

YYYYYYY 3% E

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

N/ EL

1% Y

YYYYYYY 1% E

35%

26%

Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1)

660

6% 6% —%—%—%—%—% Y Y Y Y Y Y Y 5%

—%

2023

2022

Of which Enabling

660

6% 6% —%—%—%—%—% Y Y Y Y Y Y Y 5% E

Taxonomy-aligned activities Taxonomy-eligible but not Taxonomy-aligned activities Taxonomy-non-eligible activities

Of which Transitional

— — —%

Y Y Y Y Y Y Y —%

A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

CCM 1.3

Forest management

0% EL N/EL N/EL N/EL N/EL N/EL

Sea and coastal freight water transport, vessels for port operations and auxiliary activities Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) Turnover of Taxonomy-eligible activities (A.1 + A.2)

OpEx incl. Nuclear activities

CCM 6.10

0% EL N/EL N/EL N/EL N/EL N/EL

100%

80%

83%

0% 0% —% —% —% —% —%

691

7% 7% —% —% —% —% —%

20%

17%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

—%

2023

2022

Turnover of Taxonomy-non-eligible activities

9,769 93%

Taxonomy-aligned activities Taxonomy-eligible but not Taxonomy-aligned activities Taxonomy-non-eligible activities

TOTAL

10,460 100%

Turnover of Taxonomy-non-eligible activities (B) includes the eligible and aligned nuclear related activities

146

147

UPM ANNUAL REPORT 2023

UPM FINANCIAL REPORT 2023

146

UPM FINANCIAL REPORT 2023

147

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