UPM Annual Report 2023

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2023

With this risk assessment practice, we identify topics that are specific to one country or unit as well as changes in our operating environment that may impact people, particularly those in the most vulnerable positions. Migrant workers, women, young workers and temporary and contractor workers have been identified as groups with a higher risk of potentially experiencing adverse impacts across our value chain. Overall, contractors perform a significant proportion of our activities, for example in maintenance at our production units, in construction work and in forestry operations. In 2023, we continued our work on contrac tor management and initiated a project to develop UPM’s model to manage contractors’ social responsibility performance. Responding to stakeholder concerns Effective management of grievances is an essential part of our due diligence to ensure respect for human rights and environ mental protection. We operate grievance mechanisms that allow our employees, stakeholders and other potentially affected individuals to raise concerns or complaints. In 2023, we strengthened our mechanisms and updated our internal procedures for managing and documenting stakeholders’ concerns regarding human rights and environmental concerns. Implementation of and training on these procedures will continue in 2024. Our operations in Uruguay and particu larly our new UPM Paso de los Toros pulp mill, have raised concerns among some of our stakeholders. In 2023, we received a communication via the UN Special Pro cedures of the UN Human Rights Council requesting information about UPM's activities and their possible connection to the water scarcity that effected the metropolitan area. Our response is publicly available and details why the allegations are considered unfounded. We continue to promote active dialogue with our stakeholders and welcome further discussion and feedback. We monitor and work to remediate adverse impacts on human rights that we become aware of and that our activities have contrib uted to or caused. Remediation is specified case-by-case based on verified impacts.

benchmarks including estimates for all our countries and cities. An external assurance partner provides verification of our results and methodology. Promoting human rights requires inter nal capacity building but also collaborative action. We continued to take part in several collaborative forums such as the Human Rights Business Learning Programme by Shift, Together for Sustainability (TfS) and the UN Global Compact (UNGC). Focus on salient issues In 2023, we reviewed our salient human rights issues in connection to our material ity analysis and the associated stakeholder input. We will continue to develop our saliency assessment and further engage the rightsholders and internal and external stakeholders. The review of our global sali ent issues will be finalised in 2024. We focused especially on assessing salient human rights issues in our supply chains and affected communities. We also strengthened our internal capabilities to identify human rights-related risks by organising workshops and trainings. Our saliency assessment highlights topics such as fair terms and conditions of work, occu pational safety, forced labour and modern slavery in global supply chains, environ mental impacts, biodiversity, land use and community safety. Across our salient issues, we acknowl edge the importance of collaboration and the continuous development of our due diligence work. In 2023, we strengthened our human rights due diligence practices in investments and business development projects. In Uruguay, we focused on com munity rail safety (on the right) and started a human rights impact assessment across our operations in collaboration with an external partner. The assessment supports our continuous due diligence activities and strengthens our ability to communicate about our human rights work. Identifying actual and potential impacts Our businesses identify human rights risks and impacts on a regular basis and priori tise focus areas accordingly. This practise is being integrated into their unit-specific management systems to ensure continuity.

SPOTLIGHT

“IF THERE’S A TRACK, THERE’S A TRAIN – STOP!”

Rebuilding the state-owned railroad from Paso de los Toros to Montevideo is one of the most significant infrastructure projects in Uruguay’s history. Along with the 273-kilo metre railway, the project also involves the construction of 246 level crossings, 66 railway bridges and 25 stations. Reviving the track requires more than just rebuilding it; it also means reactivating the dormant safety culture and coexistence with the railway. As one of the main future users of the railway, UPM collaborated with the Uruguayan Ministry of Transport and Public Works and the leading traffic safety organisation Automóvil Club del Uruguay (Automobile Club of Uruguay) on the launch of a Railway Safety Awareness Programme. In the first phase, work was done to inform and mobilise all the communities that live in proximity of the track and included rail safety workshops with local authorities and organisations related to traffic, road safety, emergency, security and health. Later, the scope was broadened to include schools and educational centres. So far, the programme has reached more than 250 authorities and key leaders, 6,000 students and teachers in 25 com munities and the total reach is even greater. On-site actions are also complemented with media campaigns. The programme will continue throughout 2024.

ADVANCING HUMAN RIGHTS ACROSS OUR BUSINESSES CREATING VALUE FOR PEOPLE AND SOCIETY

Respect for human rights is the foundation of our social responsibility agenda and the related 2030 targets.

In an era of prolonged instability, includ ing socio-economic pressures and a sense of urgency regarding the climate and biodiversity crisis, the need to accelerate progress by working together is evident. We must not only understand the impacts on people and changes in our business environment, but also use our leverage to respond to these shifts. In September, we joined the UN Global Compact Forward Faster initiative (page 30). It recognises the critical role of living wages and gender equality in promoting respect for human rights and tackling inequality. As an example, our social responsibility targets aim to increase female representa tion in professional and managerial roles to 40% by 2030 and ensure gender pay equity among all employees globally. Our living wage assessment is conducted annually in collaboration with an external partner using a proven methodology, process and

IMPACT • Provide a safe and inclusive working environment for our employees and respect the rights of the people in our value chains • Promote decent work and play our part in building a more equitable society TARGETS • We understand our business environment and impacts on people, whilst we recognise the evolving nature of both • We prioritise the most severe human rights risks and impacts and take action to address them

OUR WAY • Our approach is based on the UN Guiding Principles on Business and Human Rights (UNGPs) and guided by our Code of Conduct and its associated policies, rules and guidelines • Our expectations for suppliers are set in the Supplier and Third-Party Code • We have identified our salient human rights issues at Group level and prioritise actions accordingly • We monitor and work to remediate adverse impacts on human rights • We engage with our stakeholders

72

73

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023