UPM Annual Report 2023

BEYOND FOSSILS

UPM

BUSINESSES

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2023

VALUE FROM RESPONSIBILITY

OUR FOCUS IN 2023

The EU’s Corporate Sustainability Reporting Directive (CSRD) will broaden the requirements for sustainability reporting. In order to be well prepared, we launched a cross-functional project to improve reporting controls and data availability, for example. UPM’s reporting framework was com prehensive even before the new directive. We have used integrated corporate reporting since 2007 and limited assurance since 2011, according to the GRI; our pulp and paper mills have been registered with the EU’s EMAS since the 1990s and we have We continued to develop our human rights risk assessment approach related to our supply chains and investments and reviewed our corporate salient human rights issues in connection to our materiality assessment. As part of our human rights due diligence development work, we started a forward-looking hu man rights impact assessment related to our operations in Uruguay with an external partner (page 72). We launched a global safety project with the aim to develop safety practices further and engage people more in safety. We also continued our work to Our collaboration continued with the Science Based Targets Network (SBTN) (page 85). We also explored the potential of utilising environmental DNA methodology through several pilot projects, to assess its suitability for biodiversity measurement and reporting. All quantitative indicators showed a positive trend in relation to our target of net-positive impact on biodiversity in our own forests in Finland. This was also the case in Uruguay with the chosen key performance indicators. We received criticism of our operations in Finland and Uruguay from some stakeholders. The discussion in Finland was primarily about harvesting levels, the use of pulp in single-use products and pulp colonial ism in Uruguay. There have been calls for significant restrictions in logging volumes to preserve carbon sinks and protect biodiversity. Some stakeholders were concerned about UPM's operations in Uruguay and their possible link to the water scarcity in the Mon tevideo region in the summer and the sodium hydroxide leak at the pulp mill (page 93).

DIALOGUE WITH STAKEHOLDERS

made product level information readily available. As part of the development, the assurance for our fossil CO 2 emissions (Scope 1 and 2) was changed from limited to reasonable assurance. We started a project to re-evaluate our way of managing ESG matters and the scope of related policies to clarify our approach and ensure better alignment with future requirements. In 2023, we included the Taskforce for Nature-re lated Financial Disclosure (TNFD) in the reporting framework (page 142). develop process safety and implemented a UPM-wide process safety standard that sets minimum require ments for process safety (page 70). We are committed to developing an organisational culture and local conditions that ensure a diverse and inclusive working environment. In 2023, we introduced our first Employee Resource Group, BeU, which is specifically focused on creating a welcoming and inclusive workplace for members of the LGBTIQ+ community worldwide (page 69). carried out a feasibility study to deepen our un derstanding of the Science Based Target initiative’s (SBTi) Net-Zero methodology. We also committed to setting a net-zero target based on the SBTi (page 86). We also reviewed and updated our Scope 3 reporting (page 91). We continued the – 30 by 30 programme to reduce CO 2 emissions of purchased goods and services and logistics. UPM and NGOs have different views on how to address climate change and loss of biodiversity, but the goal is the same. We think that active and timely forest management maintains carbon sinks and ensures the positive development of biodiversity while society needs to reduce its reliance on fossil fuels and raw materials. We responded to stakeholders’ concerns at local, national and international level, participated in the public debate and met with representatives of NGOs. We tested the Greenhouse Gas Protocol Land Sector and Removals Guidance documentation and

Creating value for society, both as a responsible company and through our renewable and sustainable solutions, is an integral part of our strategy.

Our Biofore strategy guides us in achieving our responsibility targets for 2030 and in contributing to the UN Sustainable Devel opment Goals (SDGs). We are committed to creating value from renewable and recycla ble materials, reducing our environmental footprint, and enhancing our positive social impact. We have linked our financing to our sustainability performance. Our revolving credit facility is linked to our long-term biodiversity and climate targets, and we have issued three green bonds since 2020. In 2023, we updated our Green Finance Framework, which received the highest rating of “Dark Green” from S&P Global Ratings, in line with the framework we established in 2020. Responsibility-related measures are included in our management remunera tion. They cover the reduction of fossil CO 2 emissions from our on-site combustion and purchased energy, the achievement of a net positive impact on biodiversity in our own forests in Finland, and the achievement of gender pay equity globally. These meas ures account for 20% of all performance measures. Our responsibility targets and how we did in 2023 on pages 32 – 33 Our responsible way of operating on pages 58 – 101

IMPACT • Renewable raw materials and recyclable products advance the transformation to a circular bioeconomy • Our solutions respond to global challenges, such as climate change and resource scarcity TARGETS • Create value for our stakeholders • Wide set of 2030 responsibility targets

OUR WAY • We respect international agreements, such as the UN Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises • Our purpose, values, UPM Code of Conduct, and UPM Supplier and Third Party Code provide a solid foundation for decision-making, management and operations • Responsibility is managed by the Board of Directors and the Group Executive Team, as well as by businesses and functions • Responsible business conduct in all our operations

ENHANCING BIODIVERSITY AND CLIMATE ACTIONS

STRENGTHENING SOCIAL RESPONSIBILITY AND HUMAN RIGHTS WORK

SPOTLIGHT

FORWARD FASTER – TOWARDS GENDER EQUALITY, LIVING WAGES AND NET-ZERO EMISSIONS In September, we joined the UN Global Compact Forward Faster Initiative together with 138 other companies. This ambitious undertaking calls for global business leaders to take tangible actions to accelerate the pro gress of the UN’s Sustainable Development Goals (SDGs). Our commitment encom passes three focus areas: promoting gender equality, ensuring living wages and aligning our operations with an ambitious net-zero emission target. Our pledge on gender equality signifies our commitment to fostering equal gender

representation, participation and leadership at all levels of management by 2030 and to guaranteeing equal pay for equal work for all our employees. Companies committed to the living wage must ensure that their employees earn a living wage by 2030. The climate commitment challenges companies to set a science-based net-zero emissions target in line with the 1.5°C pathway and to achieve it by 2050 at the latest. Companies in this initiative will report on their progress to the Global Compact annu ally. The first official year of reporting year is 2025, but the relevant topics are already covered in our public reports.

DEVELOPING REPORTING AND GOVERNANCE

Committed to compliance on page 74 Managing responsibility on page 138 www.upm.com/responsibility

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023