UPM Annual Report 2023

RESPONSIBILITY

UPM

BEYOND FOSSILS

BUSINESSES

GOVERNANCE

ACCOUNTS FOR 2023

SUSTAINABLE PRODUCT LIFECYCLE ACTIONS FOR ENVIRONMENT

of product development using a tool which we developed for mapping impacts on the UN Sustainable Development Goals (SDGs). Based on the feedback, we con tinued to develop the tool with revision and adaptation of the included questions. The concept was also tested to investigate product reuse with UPM Biocomposites and UPM Raflatac. Life Cycle Assessment (LCA) and carbon footprint are key tools in our concept. We use LCA for calculating potential environ mental impacts of new raw materials or new products. Using LCA supports deci sion-making in the product development and provides evidence of substantiation for the environmental claims related to products entering or already available on the markets. Carbon footprint had an important role in the development of lignin-based resin used in the Wisa BioBond adhesive tech nology, which is used in all WISA spruce plywood products. Other tools used in our concept include biodegradability and recy clability testing. Product safety requirements The ISO 9001 and ISO 22000 quality and food safety management systems provide a framework for continuously improving our performance. All our production sites are ISO 9001 certified, except for our new UPM Paso de los Toros pulp mill in Uruguay which started production in April 2023 and for which the standard application is still in process. UPM Raflatac sites (excluding two new sites), UPM Specialty Papers production lines in Europe, UPM Kymi paper mill and all UPM pulp mills are ISO 22000 certified, except for the UPM Paso de los Toros pulp mill in Uruguay for which the standard application is still in process. The UPM Changshu paper machine 3 in China has both a ISO 22000 certified food safety management system and a FSSC 22000 certified food safety management system. This allows us to offer several products that are designed and produced to meet food packaging requirements. In 2023, we communicated our product safety requirements to customers and to suppliers of chemicals and raw materials. We worked with several paper and chem ical companies to increase supply chain

HELPING BUSINESSES IMPLEMENT THEIR SUSTAINABILITY CLAIMS The EU and many other countries are gradually implementing stricter regulations on sustainability-related marketing and communications. The aim is to protect consumers with reliable and transparent sustainability claims made by companies. To prepare us for future requirements, we have created the UPM Sustainability Claims Guideline with accompanying practical instructions. These will ensure that claims and related marketing and communication materials comply with legislation and do not risk our brand or reputation. The global instructions are designed to be used in all businesses and functions. Moreover, businesses need to familiarise themselves with and comply with national legislation and frameworks. We are also developing an internal Sustainability Claims Glossary to provide additional guidance on the use of accurate terminology. The mandatory training for selected internal stakeholders and external key business partners will begin in 2024. Most of our products are certified with widely recognised international and re gional ecolabels, such as EU Ecolabel. UPM Biofuels, UPM Formi and UPM pulps also have ISCC (International Sustainability and Carbon Certification) and four UPM Raflatac factories have ISCC PLUS certifi cation. UPM Biofuels also has Roundtable of Sustainable Biofuels (RSB) certification. All our businesses have FSC™ and/ or PEFC chain of custody certification. It verifies the origin of wood and guarantees that all wood used in our products is legally harvested from sustainably managed for ests and does not originate from controver sial sources. In 2023, we created internal guidelines on how to communicate our sustainability claims (below). Innovation for the future on page 28 Ensuring responsible supply chain on page 78 Climate-positive forestry on page 82 IN ACTION

Products eligible for ecolabelling %

100

90

80

70

Our products help to mitigate climate change by replacing fossil-based products and materials with renewable alternatives.

60

50

19

20 21

22 23

Target

We actively develop solutions where the sustainability of the whole product lifecy cle from raw material sourcing to circular ity is considered. Our target is to provide products that improve our customers’ busi ness processes and performance, creating mutual benefit and societal value. Our innovative and sustainable wood based biomedical products, as well as our pharmaceutical and healthcare labelling solutions, are examples of where we create direct societal impact. In the future, our wood-based biochemicals will offer renewable alternatives for many consumer products in packaging, automotive, textiles and various industrial segments. Many of our products are made from side streams and residues or from materials recovered after product use, thus supporting a circular bioeconomy.

IMPACT • Bio-based and recyclable raw materials and products reduce the world’s dependency on fossil-based raw materials and contribute to climate change mitigation • We offer sustainable everyday products to customers and consumers TARGETS • Creating innovative renewable and responsible solutions for a future beyond fossils • Taking care of the entire lifecycle

OUR WAY • Use of a sustainable product design concept in product development • Improved chemical management to enhance product safety • Strong commitment to long-term customer relationships • Cooperation across the value chain • Open and transparent product communication supported by ecolabels, certificates and product declarations • Focus on 2030 responsibility targets and way of interacting with customers. A comprehensive understanding of each mar ket, as well as the knowledge of the end uses of products and the needs of our customers, underpins our approach. We maintain a continuous dialogue with our customers and we engage in various product-related development projects with them. Our businesses conduct regular cus tomer-satisfaction surveys. The surveys also help us to define our areas of improvement. Based on these results, overall satisfaction with UPM as a supplier is 85% (84%). Actions to mitigate climate change and enhance bio diversity remain the highest priorities of our customers. Product safety, sustainable forest management, recyclability, circularity and ecolabels are also highly valued. Sustainable product design Our Sustainable Product Design concept implementation continued in 2023. We carried out screenings in the early stages

TARGETS 2030 100% of applicable products eligible for ecolabelling achieved 89%

transparency and speed up information exchange. The harmonised questionnaire and the tool as a result of this coopera tion allows us to ensure that our products comply with laws and requirements, such as EU ecolabel criteria. To support customer communications, we provide product safety profiles and statements of chemical sub stances that aren’t used in our products. UPM's Chemical Management Standard requires a careful assessment of the chemi cal hazard properties. All chemicals select ed for use are required to have the lowest possible adverse effects on human health, the environment and the safety of UPM's products. The list of restricted chemical substances includes substances with select ed hazard classifications, substances on the European Chemicals Agency's (ECHA) list of substances of very high concern (SVHC) or substances with endocrine disrupting effects. At UPM, a similar list has been in place since 2010. Ecolabels and product declarations increase transparency We provide environmental data and product declarations for most of our products to help customers to make sustainable choices.

Continuous dialogue and collaboration with customers UPM’s businesses offer a variety of prod ucts and services. Each business has its own customer relationship management process

SPOTLIGHT

CIRCULAR ECONOMY AND FUNCTIONALITY AT ITS BEST

to manufacture new trays. The wood-based biocomposite also significantly reduces the product’s carbon footprint compared with virgin plastics. The mass balance approach is used to determine the use of bio-based feed stock in the plastic used for the composite. The new trays also have a groove where, for example, users can conveniently place their mobile phone while they take a break.

New serving trays made of UPM Formi composite are being brought into use at ABC service stations in Finland. The material is made from renewable raw materials and forest industry side streams. When the trays reach the end of their lifecycle, they will be washed and crushed into recycled pellets that will then be reused

98

99

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023