UPM Annual Report 2023

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2023

equality, living wages and the ambitious net-zero emissions target (page 30). We continued our co-operation with dif ferent stakeholders on responsibility issues on a voluntary basis, addressing themes such as ecolabels, fish migration, living wag es, fair rewarding and nature conservation. We also received criticism of our operations in Finland and Uruguay from some stake holders (page 31). Our Forest Action Programme, pub lished in 2022, will run until 2030 (page 82). As part of the programme, we collabo rated with the Finnish Osprey Foundation and Vida Silvestre in Uruguay. We were an active international stake holder member of the PEFC (Programme for the Endorsement of Forest Certifica tion, PEFC/02-44-41) and participated in the development of the PEFC forest certification system, reflecting our aim to promote sustainable forest management globally. In Finland, we participated in updating the forest management standards in both the FSC™ (Forest Stewardship Council™, FSC™ N003385) and the PEFC schemes. Responsibility issues were also raised in customer enquiries, with product safety, sustainable forest management and climate change as key themes. Globally, we contin ued active co-operation with local permit authorities.

EUR 0.9 million (EUR 0.9 million). The figure includes support for the Uruguay an UPM Foundation, which continued with a contribution of USD 400,000 (USD 400,000). The foundation supports and encourages training, entrepreneurship, employment, healthy living and entertain ment in local communities in the Uru guayan countryside. In total, EUR 533,800 (EUR 499,800) was donated to charities or other non-profit causes such as Aalto Univer sity, LUT University, Nanjing University Research Institute, UNICEF, Helsinki Mu sic Centre Foundation and CMI – Martti Ahtisaari Peace Foundation. Employee volunteering emphasises local commitment and impact. UPM’s

necessary infrastructure to develop further housing projects. In Uruguay, we increased safety aware ness in cooperation with the government of Uruguay, in preparation for railway opera tions due to begin in 2024 (page 73). Our EMAS (EU Eco-Management and Audit Scheme) statements cover societal impacts in addition to environmental performance, providing more detailed in formation on the local impacts of our pulp and paper mills. The EMAS statements also include information on coopera tion with local stakeholders, such as the sponsorship of local organisations and the cooperation with educational institutions. These mill-specific statements comple ment UPM’s corporate EMAS reporting. They are compiled annually and published on the UPM website www.upm.com/re sponsibility. 2023 marked the 150th anniversary of the beginning of UPM operations in Kau kas, Finland. The anniversary celebrations included events for both employees and stakeholders, as well as the publication of a book on the history of the mills. In 2023, we assessed our local commu nity engagement practices. The results indicate that we would benefit from a clarified and more consistent approach to local community consultation and social monitoring. We will continue to update our company policies and reporting prac tices in 2024.

salaried employees can spend up to eight hours per year on local volunteering work during their working hours. In 2023, UPMers engaged in various volunteering initiatives in many of our operating coun tries including Finland, Poland, Germany, China, Malaysia and the United States. The activities included house-building projects for those in need, visiting elderly residents in retirement homes and pro viding Christmas gifts to children in need. Furthermore, multiple UPM sites took part in environmental clean-up activi ties. For example, in Malaysia, 112 UPM Raflatac employees participated in a local beach clean-up alongside other impactful volunteering projects.

Emphasis on local communities and impacts Our mills in Europe, the US and Uruguay have the potential to be some of the biggest employers and taxpayers in the locations where they operate. In Uruguay, we built a second pulp mill in 2019–2023. The UPM Paso de los Toros pulp mill began its operations in central Uruguay in mid-April and the mill opening ceremony, attended by many stakeholders, took place in June 2023. Stakeholder engagement around the project has been active throughout the entire project. We aim to engage and hold open dia logue with local communities. For example, the UPM Fray Bentos mill arranges regular visits of the mill, and our Kymi and Kaukas mills have their own forums for local dia logue. We also cooperate with local schools and education networks, organising events and excursions, for example. In addition, it is crucial for us to engage in active dialogue with local forest owners, neighbours of har vesting sites and other individuals involved in forest management. In Uruguay, UPM transferred 60 family houses used as temporary housing during the Paso de los Toros mill construction phase to the Ministry of Housing and Terri torial Planning. The houses were awarded by the authorities to families in the area. In addition, UPM transferred 640 housing modules that will be converted into 132 per manent houses and two properties with the to new alternative learning environments where children can have fun and learn together. Ronda’s 13 modules are designed for a variety of uses, from workstations and traditional seating to climb ing areas and a specially designed quiet space for children. The soft shapes and colours aim to create a warm and comfortable environment. The modules are currently installed in four schools in Paso de los Toros, with a total of 650 pupils and 46 teachers. The project promotes ed ucational inclusion and diversity and encourages teachers and students to move from traditional classrooms to a space where each child can choose their way of interacting and learning.

The Biofore Share and Care programme continues UPM’s Biofore Share and Care programme demonstrates our dedication to respon sibility and local community involve ment through sponsorships, donations and employee voluntary work. We share our resources with causes that respect sustainable development and work in line with our purpose and values. We continued to support projects with a focus on reading and learning, Beyond Fossils initiatives and community engage ment. UPM does not financially support political parties or individual candidates. Local sponsorships and other contri butions within the Biofore Share and Care programme amounted to approximately

UPM’S MATERIALITY ANALYSIS 2023

A materiality analysis is carried out annually. In 2023, we changed our approach to a double-materiality assessment to prepare for the upcoming EU CSRD regulation. Double refers to considering both impact materiality, such as UPM’s impacts on people and environment and financial materiality, i.e. sustainability-related risks and opportunities likely to have financial impli cations to UPM. The analysis covers negative and positive as well as actual and potential impacts on economy, environment and people, including impacts on their human rights. Impacts are identified through internal assessments, audits and reviews, as well as by following up the interests and concerns of various stakeholder

groups; communities, employees, NGOs, customers, suppliers, government and regulators, investors, researchers and media. In 2023, interviews, ques tionnaires and workshops were also used for the assessment. The significance of impacts is assessed by their severity, which is de termined by their scale, scope and irremediability. For potential impacts, likelihood is also assessed. For financial materiality, likelihood and scale is assessed. After prioritising the impacts, the most significant ones are selected as material to UPM and then grouped into topics. The material topics shown below determine our responsibility-related focus areas and our reporting.

LOW HIGH

HIGH IMPACT AND MEDIUM FINANCIAL MATERIALITY

HIGH IMPACT AND HIGH FINANCIAL MATERIALITY

IN ACTION

SOCIAL • Diversity and inclusion • Local engagement

ECONOMIC AND GOVERNANCE • Bio-based and renewable products • Business resiliency • Business ethics and values • CO 2 -free energy

SUPPORT FOR EDUCATION IN URUGUAY

The UPM Foundation provides training scholar ships for teachers. By the end of 2023, 1,366 teachers in the inner agricultural areas of Uru guay had received training in a project support ed by the Foundation that began in 2015. The courses are organised by partner organisations such as the Catholic University of Uruguay, the University of Montevideo and various organisa tions and foundations. The UPM Foundation has also supported the Ronda project in Paso de los Toros. Ronda refers

ENVIRONMENT • Circular bioeconomy • Product stewardship • Sustainable water usage

SOCIAL • Decent work and fair rewarding • Health and safety

ECONOMIC AND GOVERNANCE • Responsible sourcing

ENVIRONMENT • Biodiversity • Climate change • Sustainable forestry

Impact materiality

www.upm.uy/fundacion/(esp)

LOW

HIGH

Financial materiality

62

63

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023