UPM Annual Report 2023

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2023

Sakari Röyskö / Helsinki Music Centre Foundation

ACTIVE DIALOGUE WITH STAKEHOLDERS CREATING VALUE FOR PEOPLE AND SOCIETY

during the autumn of 2022 led to decisions on temporary market measures, which were implemented in 2023. As UPM is an active energy market participant, both as an energy intensive consumer and as an en ergy producer, we reminded decision-mak ers of the importance of functioning energy markets. Climate change mitigation and our com mitment to the UN’s 1.5-degree agenda con tinued to garner a lot of interest among our stakeholders. Discussions were held with environmental organisations, certification bodies, authorities and decision-makers. The climate impact on forests is linked to policies on land use, land-use change and forestry (LULUCF). We have highlighted the importance of sustainable forest man agement and manufacturing products from renewable raw materials that replace fossils as effective ways to mitigate climate change. The EU’s Fit for 55 package proposal was published in 2021 and during 2023 both the European Parliament and the EU member states continued to finalise the

changes to ensure that the EU climate and energy legislation is in line with the EU’s climate targets. We actively promote the cost-com petitive and consistent implementation of climate change policies. UPM calls for predictable regulations that enable green growth investments and further transfor mation beyond fossils. Therefore, EU poli cies must ensure sustainable forest use and the availability of wood as a key resource for the circular bioeconomy and green growth. Responsibility at the core Our steadfast commitment to sustainability was recognised with the highest possible platinum score in the EcoVadis responsibil ity assessment. We continued active partici pation in the UN Global Compact initiatives and also chaired the Global Compact Fin land Network. We also joined the UN Global Compact Forward Faster initiative which aims to accelerate the progress of UN’s Sus tainable Development Goals. UPM’s Faster Forward commitment is related to gender

Understanding the views and expectations of our stakeholders plays a crucial role in the success of our company and the acceptability of our operations.

The impact of UPM’s operations extends from the local level to wider society. We aim to provide a fact-based, balanced view of the economic, environmental and social aspects of our business activities. Active and open dialogue with our stakeholders provides valuable input for our development efforts. Providing stakeholders with a clear picture of our future Our goal is to provide our stakeholders with a clear picture of what our future course is, how we implement our Biofore strategy and how we create long-term value for our stakeholders. We disclose relevant and accurate information in accordance with market regulations. Many stakeholder events were organised in 2023. Because many of our stakehold ers view UPM primarily as an economic operator, financial success, stability, good governance, future outlook and growth were the key themes discussed. Numerous discussions were focused on forests and the current energy crisis in Europe. Stakeholder mapping, active dialogue and the systematic gathering of feedback play an essential role in our stakehold er relations work. We analyse feedback carefully to understand the expectations of our stakeholders. We then take these expectations into consideration during our development work and decision-making. We received approximately 350 (300) en quiries or concerns from the general public in 2023. Every year, we conduct a materiality analysis (page 63) that highlights the topics on which UPM has a significant impact or which have a significant impact on the

TARGET • We understand stakeholders’ need for information and expectations for UPM, and consider stakeholders in strategic development and decision-making processes IMPACT • Stakeholder engagement provides predictability and a competitive advantage • Continuous dialogue improves the understanding of key risks, challenges and opportunities in the operating environment company. The analysis is based on internal assessments as well as the interests and concerns of stakeholders. Green transition high on the policy agenda Through public affairs work, we aim to fos ter the necessary prerequisites for our oper ations, particularly in our main operating countries Finland, Uruguay, Germany and China. Active influencing at the EU level is also important. Our public affairs activities are based on our Biofore strategy and complement our Beyond fossils purpose. They are also aligned with the Paris Agreement. Public af fairs are led by EVP, Stakeholder relations, who is a member of the Group Executive Team. We also have topic specific steering groups where our public affairs activities are steered, and these topics are reviewed in the Group Executive Team regularly.

OUR WAY • We engage in active dialogue with our stakeholders to discuss our operations and targets • The UPM Code of Conduct sets the standards for responsible behaviour and collaboration • We measure stakeholder engagement by several indicators • Stakeholder relations are coordinated globally at Group level, while businesses are responsible for continuous dialogue with customers and business partners, as well as local communities We cooperate with a number of trade associations, the most important being the Finnish Forest Industries Federation (FFIF) and the Confederation of European Paper Industries (Cepi). As we enter into new businesses, we also need to find new ways and forums for co operation. For example, UPM is a founding member of the Advanced Biofuels Coalition in the EU and also a member of the Europe an Chemical Industry Council (CEFIC). Our company is also represented in several trade associations decision-making bodies, so we can influence and monitor the positions for being aligned with our strategy. Basic requirement for member ship in any trade association is the principal alignment with UPM’s strategic positions. 2023 continued to be challenging for decision-makers and politicians as a result of Russia’s war in Ukraine. The impact on the supply and price of energy especially

SPOTLIGHT

A NEW ORGAN AT THE HELSINKI MUSIC CENTRE

In autumn 2023, the Helsinki Music Centre concert hall received a new modern organ, one of the largest in the world. The hand built Rieger concert hall organ weighs 40 tonnes and consists of around 10,000 handmade metal and wooden pipes. Some of the wind lines that traditionally run inside the organ have been made visible. The curved elements of the façade consist of both sounding pipes and wind lines. The facade’s sounding pipes and wind lines are made of wood-based UPM Formi 3D biocomposite. The material developed by UPM is suitable for end-use applications that require acoustic, sound-absorbing properties. Altogether, the organ has some 260 metres of 3D biocomposite pipes. The project, which began in 2021, was also funded through a fundraising campaign by the Helsinki Music Centre Foundation. UPM is one of the donors through the company’s Biofore Share and Care programme. The money from the campaign will be used to produce organ music, organ rep ertoires and events. The instrument, which cost EUR 4.4 million, was inaugurated at a celebration concert on 1 January 2024.

Our Biofore strategy forms the foundation of our stakeholder dialogue. The key focus areas and activities vary locally and according to stakeholder needs. Key stakeholders are defined on the basis of materiality: UPM's operations have a significant impact on stakeholders and/or vice versa. OUR MOST IMPORTANT STAKEHOLDERS

Customers

Communities

Current and future employees

Media

Researchers

Investors

NGOs

Governments and regulators

Suppliers

60

61

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023