UPM Annual Report 2023

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2023

CONTENTS FUTURE BEYOND FOSSILS 4

BUSINESSES 36

RESPONSIBILITY 58

UPM FIBRES - UPM PULP

38

ACTIVE DIALOGUE WITH STAKEHOLDERS

60

REVIEW BY THE PRESIDENT AND CEO

6

UPM FIBRES - UPM TIMBER

40

ENGAGING EMPLOYEES 64 DIVERSE AND INCLUSIVE WORKING CULTURE 68 SAFETY FIRST 70 ADVANCING HUMAN RIGHTS ACROSS OUR BUSINESSES 72 COMMITTED TO COMPLIANCE 74 ENSURING A RESPONSIBLE SUPPLY CHAIN 78 CONTRIBUTING TO SOCIETY THROUGH TAXES 80 CLIMATE-POSITIVE FORESTRY 82 ENHANCING BIODIVERSITY 84 COMMITTED TO CLIMATE ACTIONS 86 TOWARDS FOSSIL-FREE ENERGY 88 RESPONSIBLE WATER MANAGEMENT 92 ADVANCING A CIRCULAR BIOECONOMY 94 SUSTAINABLE PRODUCT LIFECYCLE 98 OUR SOCIETAL AND ENVIRONMENTAL IMPACTS 100 About this report This annual report provides a comprehensive overview of our performance in 2023. All material information has been integrated into this one, third-party assured entirety. The reports online PDF version for download on www.upm.com, UPM Corporate Governance Statement 2023, UPM Remuneration Report 2023, Accounts for 2023 in XBRL format, UPM GRI Content Index 2023, SASB content index 2023, UPM material balance 2023, UPM carbon inventory 2023, Interactive Analyst tool for financial figures and responsibility data. More about our responsibility agenda on www.upm.com/responsibility.

THIS IS UPM

8

UPM ENERGY

42

WHAT THE WORLD NEEDS

10

UPM RAFLATAC

44

HOW WE MAKE A POSITIVE IMPACT

12

UPM SPECIALTY PAPERS

46

KEY FIGURES 2023

14

Together with stakeholders, we create a future beyond fossils.

UPM COMMUNICATION PAPERS

48

2023 HIGHLIGHTS AND RECOGNITIONS

16

UPM PLYWOOD

50

CREATING SHAREHOLDER VALUE

18

UPM BIOREFINING - UPM BIOFUELS

52

BIOFORE STRATEGY

20

UPM BIOREFINING - UPM BIOCHEMICALS

54

ACCELERATING GROWTH

22

UPM BIOREFINING - UPM BIOMEDICALS

56

UPM PASO DE LOS TOROS

24

UPM BIOREFINING - UPM BIOCOMPOSITES

57

ENSURING PERFORMANCE

26

INNOVATING FOR THE FUTURE

28

VALUE FROM RESPONSIBILITY

30

2030 RESPONSIBILITY TARGETS

32

RISKS AND OPPORTUNITIES

34

UPM’S CORPORATE RESPONSIBILITY REPORTING IN ACCORDANCE WITH GRI STANDARDS AND AA 1000 UPM has reported in accordance with the Global Reporting Initiative’s (GRI) Standards for the period 1 January 2023 to 31 December 2023. Our GRI index document shows where the disclosures of material topics and general disclosures are addressed in the Annual Report, on UPM’s webpage or in the GRI index document itself. It also includes information on omissions, additional explanations, and disclosures on the management approach. The document is available on the UPM webpage www.upm.com/responsibility. The English version of the corporate responsibility information for 2023 has been assured by an independent third party, Pricewater houseCoopers Oy (see the Independent Assurance Report on pages

GOVERNANCE 102

ACCOUNTS FOR 2023 120

118–119) and identified in the GRI content index. Congruence between the English and Finnish version has been checked.

UPM is also committed to the principles of inclusivity, materiality, responsiveness, and impact as defined in the AA 1000 AccountAbility Principles Standard (2018). The EU's Corporate Sustainability Reporting Directive (CSRD) will significantly widen the requirements for sustainability reporting from 2024 onwards. To better prepare ourselves for the future assurance processes, the assurance for our fossil CO 2 emissions (Scope 1, Scope 2 and Scope 3’s maritime logistics) has already been changed from limited to reasonable assurance.

GROWTH STRATEGY CONTINUED

104

REPORT OF THE BOARD OF DIRECTORS

122

REMUNERATION

111

FINANCIAL STATEMENTS

163

BOARD OF DIRECTORS

114

AUDITOR’S REPORT

237

GROUP EXECUTIVE TEAM

116

OTHER FINANCIAL INFORMATION

241

ASSURANCE REPORT ON RESPONSIBILITY

118

2

3

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023