UPM Annual Report 2023

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2023

TOWARDS NET-ZERO EMISSIONS

COMMITTED TO CLIMATE ACTIONS ACTIONS FOR ENVIRONMENT

WE ACT THROUGH FORESTS

WE ACT THROUGH EMISSION REDUCTIONS (SCOPE 1, 2, 3)

WE ACT THROUGH PRODUCTS

-5.4 MtCO 2 Carbon

+3.7 MtCO 2 Scope 1 and 2 emissions from own energy generation and purchased energy

+1.5 MtCO 2 Temporary

substitution Fossil energy substitution

Our Biofore strategy drives the transition to a low-carbon economy.

-4.8 MtCO 2 eq Carbon sink Carbon absorbed in trees and soil

carbon storage Carbon stored in wood-based products' lifetime

BIO

+7.6 MtCO 2 eq Scope 3 emissions from value chain (purchased goods and services, logistics, etc.)

-5.2 MtCO 2

Long-term carbon storage Long-term storage in trees and soils

Carbon substitution Avoided emissions by

replacing fossil- based products

Our Biofore strategy drives our transfor mation as a bioeconomy frontrunner. Our purpose is to create a future beyond fossils. Forests, wood-based products and low-car bon energy play a unique role, both in mit igating the effects of climate change and in our strategy. We have set ambitious targets for all these areas as part of our Group-level responsibility targets for 2030. Towards net zero emissions We are committed to the UN’s Business Ambition for 1.5°C in a promise to pursue science-based measures to limit global temperature rise. Our fossil CO 2 emissions reduction targets have been validated by the Sci ence-Based Targets initiative (SBTi) to be aligned with the 1.5°C pathway as outlined in the Paris Agreement: 65% reduction in fossil CO 2 emissions (Scopes 1 and 2) from 2015 levels and 30% reduction of fossil CO 2 emissions from sourced materials and logistics (Scope 3) from 2018 levels by 2030.

We also have targets for climate-positive land use and developing a climate-positive product portfolio. As a signatory to The Climate Pledge, we are committed to achieving net-zero annual carbon emissions by 2040. In 2023, as part of the UN Global Compact’s For ward Faster initiative, we also committed to setting net-zero targets as defined by the SBTi. At the end of 2022, we joined the GHG Protocol’s pilot to test and provide feedback on its guidance for the forest and land use sector. Among other things, this guidance aims to define how to include biogenic carbon emissions and removals related to land use, as well as biogenic product-relat ed and technological carbon removals. In 2023, we continued to conduct a feasibility study on our actual steps towards net-zero emissions and setting corresponding SBTi net-zero targets. The net-zero target setting process and the respective transition plan are expected to be completed in 2024.

We act through products: Innovating novel products beyond fossils is the core of our Biofore strategy. We develop safe and sustainable products that offer alternatives to fossil materials. Many of our products are already proven to be climate-positive.

We act through forests: Forests and forest biodiversity are critical for mitigating the effects of climate change. We ensure that our forests continue to act as carbon sinks, remain resilient and diverse in changing climate conditions and thrive for future generations.

so that they act as carbon sinks. We also adapt to the changing climate and develop a climate-positive product portfolio. Our targets and actions focus on ensuring these positive developments. Our position and resilience in different climate scenarios have been evaluated for our businesses and functions from both physical and transitional angles, with the expertise of the scientific community. Generally, in low- and medium-emis sion scenarios the transition impacts play a bigger role and we are well positioned as our business portfolio allows for flexibility re We act through emissions: Minimising the use of fossil fuels and raw materials is the most important way to mitigate climate change. We favour renewable and other carbon-neutral energy sources and produce CO 2 -free hydro and nuclear power in Finland. We are also committed to reducing the emission levels of our supply chain.

IMPACT • Support the transition to a low-carbon economy TARGETS • Create climate solutions and innovate for a future beyond fossils • Help limit the global temperature rise to 1.5°C OUR WAY • Ensure wood supply comes from sustainably managed forests and ensure a positive impact on land use • Use energy efficiently and increase the share of renewable and low-emission energy • Use and develop renewable and recyclable products, materials and solutions that replace fossil-based ones • Focus on 2030 responsibility targets

garding recognised risks and opportunities. In the high-emission scenario physical impacts dominate with severe consequenc es not only for UPM but for the ecosystems and societies across the globe. Innovating climate-positive products on page 29 Our 2030 responsibility targets on page 32 Climate-positive forestry on page 82 Development of Scope 1 – 3 emissions on page 90 How we manage climate-related risks on pages 141–142

Climate-related impacts, risks and opportunities The physical impacts of climate change include more frequent and severe weather conditions which can increase droughts and forest fires. Climate change can lead to soci etal shifts with increasing social inequality and working poverty. Emissions from our operations and supply chain are contribut ing to climate change. But we also make a positive impact. For example, we are reducing our fossil CO 2 emissions in our own operations and in the supply chain and manage our forests

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023