UPM Annual Report 2023

BEYOND FOSSILS

UPM

BUSINESSES

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2023

OUR RESPONSIBILITY TARGETS FOR 2030

Focus area

Key performance indicator

2030 target

2023 result

Responsibility focus area Key performance indicator

2030 target

2023 result

ECONOMIC Profit Creating value to shareholders

SOCIAL Continuous learning and development Enabling continuous professional development for high performance, growth and future employability Responsible leadership Emphasising value-based and inspiring leadership and integrity Diversity and inclusion Developing an organisational culture and workplace to ensure a diverse and inclusive working environment for business success

• 52% decrease to EUR 1,013 million (2,096 million)

• 100% completion rate

• 85% (83%) of employees completed individual goal setting or annual discussion, 81% (58%) of employees had a development plan documented • In the Employee Engagement Survey average score of 64 (64). Below global average benchmark by 8 points. • In the Employee Engagement Survey average score of 70 (70). Below global average benchmark by 5 points. • In the Employee Engagement Survey average score of 68 (68). Below top 10% benchmark companies by 12 points. • 32.3% (31.4%) • Continued dialogue on developing inclusive behaviours. Launched an Employee Resource Group (BeU) on the LGBTIQ+ community. Implemented gender pay equity review process . •Company-wide review done and pay adjustments implemented to close identified pay gaps related to local living wage • Company-wide review done and pay adjustments implemented to close identified, statistically significant and unexplained gaps related to gender • TRIF 6.1 (6.4) for UPM workforce and 5.2 (5.9) including contractors • Process safety standard training and gap analysis conducted at the mills • In the Employee Engagement Survey average score of 72 (70). Below top 10% benchmark companies by 7 points. • 4.3% (4.5%) • Assessment model developed and piloted in three business areas • Supported learning and education initiatives in various mill communities and continued to support people affected by the war in Ukraine • 0 (3) fatal accidents, 5 (5) serious accidents

• Comparable EBIT growth through focused top-line growth and margin expansion (continuous) • 10% (continuous) • 2 times or less (continuous)

• Goal setting discussions are held and development plans are created for employees • Employee perception of good opportunities to learn and grow

• Comparable EBIT

• Clearly above benchmark

• 6.2% (14.0%) • 1.55 times (0.94)

• Comparable ROE • Net debt/EBITDA

Governance Ensuring accountability and compliance

• Participation in UPM Code of Conduct training

• 100% (continuous)

• Employee engagement

• Clearly above benchmark

• 98% (97%) of active employees completed the training

Responsible sourcing Adding value through responsible business practices

• UPM spend covered by UPM Supplier and Third-Party Code • UPM raw material spend covered by UPM Supplier and Third-Party Code 1) • Supplier auditing based on systematic risk assessment practices • CO 2 emissions from materials and logistics (Scope 3), compared to 2018 • Climate-positive land use in UPM's own and leased forests • Share of certified fibre 2) • Positive impact on forest biodiversity and developing a monitoring system 4) • Obstacle-free streams 5) • Fossil CO 2 emissions from UPM's on-site combustion and purchased energy (Scope 1 and 2), compared to 2015 • Coal and peat usage in on-site energy generation • Annual energy efficiency improvement • Share of renewable fuels • Acidifying flue gases (NO X /SO 2 ) for a UPM average product, compared to 2015 •Chemical oxygen demand (COD) for a UPM average product, compared to 2008 3) • Wastewater volume for a UPM average product, compared to 2008 3) • Nutrients used at effluent treatment from recycled sources 3) • Process waste sent to landfills or to incineration without energy recovery

• 80% (continuous)

• 89% (88%)

• Employees' sense of belonging

• Among the top 10% of benchmark companies

• 100%

• 98% (96%)

• 40% female representation

• Continuous improvement in female representation in professional and managerial roles. Developing leadership and decision making capabilities with increased diversity • Diversity and inclusion initiative

• Continuous

• 95 (121) supplier audits based on identified risks. 890 (360) contractor reviews with focus on working conditions • -23% compared to 2018

• -30%

• Continuous

ENVIRONMENTAL Forestry Ensuring sustainable land use

• Five-year annual average carbon sink was approx. -4.8 Mt of CO 2 equivalents • 87% (86%) • Overall positive development measured in Finland and in Uruguay • 186 km (174 km) reached • -45% compared to 2015 and -17% compared to 2022 • 29% of total fossil fuel usage, -13% compared to 2022 • Not achieved • 76% (65%) • -17% (-28%)

• Forests as carbon sinks (continuous) • 100% • Positive development (continuous) • 500 km

Fair rewarding Ensuring fair, equitable and competitive rewarding for all employees

• Continuous

• Employees’ pay meeting at least local living wage: implementing a yearly review • Gender pay equity for all employees: implementing a yearly review process to identify and close unexplained pay gaps • Fatalities or serious accidents in UPM operations • Total recordable injury frequency (TRIF), including contractors • Process safety integrated in safety management • Employees’ sense of worklife balance

Biodiversity Enhancing biodiversity

• Continuous

Climate Creating climate solutions and working towards carbon neutrality

• -65%

Safe and healthy working environment Ensuring the safety and health of our employees, contractors and the local communities close to our operations

• 0 (continuous)

• 0

• <2

• 1% (continuous) • 70% (continuous) • -20%

• All sites and businesses

• Among the top 10% of benchmark companies

Water Using water responsibly

• -40%

• -39% (-39%)

• Absenteeism rate

• <2%

Community involvement Ensuring local commitment and positive impact on communities

• Continuous

• Assessment of quality of community relationships and define measures at relevant sites • Long-term initiative(s) that impact their mill communities defined in line with the Biofore Share and Care programme

• -30%

• -7% (-13%)

• 100%

• 33% (33%)

• All businesses (continuous)

Waste Promoting material efficiency and circular bioeconomy – reduce, renew, reuse, recycle and recover Product stewardship Taking care of the entire lifecycle

• 0

• 50% increase compared to 2022, 87% (90%) of UPM’s process waste recovered or recycled

• Continuous

• Climate-positive product portfolio

• Participation in GHG protocol pilot project for land-use guidance • Sustainable product design concept used in several projects, tools developed further • 89% (87%)

Goal 12 : Responsible consumption and production (Targets: 12.2, 12.4 and 12.5)

The Biofore strategy guides us in achieving our respon sibility targets for 2030 and contributes positively to achieving the UN Sustainable Development Goals (SDGs). We have selected six goals and, thereunder, 12 targets that are the most relevant for us based on where we can have the greatest effect, either by minimising our negative impacts or by increasing our positive impacts on people, societies and the environ ment. There are others that are also relevant to us, but to a lesser extent.

Goal 6: Clean water and sanitation (Target: 6.3) Goal 7: Affordable and clean energy (Targets: 7.2 and 7.3)

• Continuous

• Development of new products and services with contribution to the SDGs • Share of applicable products eligible for ecolabelling out of UPM sales

• 100%

Goal 13: Climate action (Target: 13.1)

1) Covers all raw material spend including wood and wood-based biomass sourcing and excluding energy 2) Forest management certification 3) Relevant for pulp and paper production

4) Covers UPM's own forests in Finland and UPM's land in Uruguay 5) Relevant for Finland, based on year 2015

Goal 8: Decent work and economic growth (Targets: 8.2, 8.5 and 8.8)

Goal 15: Life on land (Targets: 15.2 and 15.5)

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023