UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

Leadership in business conduct The UPM Code of Conduct underlines UPM's commitment to business integrity and responsible business operations and reflects the Company's guiding principles. The UPM Code of Conduct is approved by the Board of Directors as UPM's highest governance body. It is complemented by more detailed policy statements, policies and rules approved by the Board of Directors, the Group Executive Team, business areas or global functions. The UPM Code of Conduct and UPM's values help UPM's employees to make the right choices and guide UPM's work in a changing business environment. This lays the foundations for long-term success. UPM strives to ensure compliance with its values and commitments by implementing a Company-wide compliance programme through the UPM compliance system. The compliance system is embedded in the Company's governance model and is designed to bolster Company performance and a culture of integrity at all levels. As part of the Audit Committee's compliance review, the Committee receives a quarterly report from the Company's Chief Compliance Officer. Information provided and sustainability matters addressed by the Board of Directors and the President and CEO The President and CEO, or other members of executive management, reports to the Board at least annually on decisions and progress made related to risks, impacts and opportunities, and their management, as well as on targets and actions. In addition, the Audit Committee receives a quarterly compliance review. » Refer to paragraph “Compliance Control and Procedures” above. The President and CEO chairs the Group Executive Team, the Strategy Team and the Business Area Boards and receives regular and detailed information about the relevant sustainability matters at their meetings. Sustainability is integrated into the Company strategy and UPM's goal to ensure that sustainability-related aspects are taken into account in strategic decision-making. UPM's Strategy Team prepares proposals for updating UPM's strategy and strategic plans and is responsible for identifying and managing UPM's key strategic risks. In 2024, the Board of Directors and the Audit Committee focused on the implementation of the CSRD, the respective reporting and the ESG management model. When reviewing the Sustainability Statement draft they addressed all material impacts, risks and opportunities covered by the disclosure. The Remuneration Committee concentrated in their December meeting review on fair rewarding as one of UPM's social focus areas and 2030 sustainability targets and on new ESRS remuneration-related disclosure elements for the company's own workforce. Also, other social focus areas including continuous learning & development, responsible leadership, diversity & inclusion were reviewed. The GET approved in their December meeting, for example, the outcome of the double materiality assessment (DMA) and the changes for UPM's sourcing-related 2030 sustainability targets. GOV-2

Integration of sustainability-related performance in incentive schemes

Sustainability due diligence

GOV-4

GOV-3

The mapping in this table covers the core elements of a due diligence process in accordance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, as well as the main processes and measures of UPM's sustainability due diligence. Details are described in the relevant disclosures of this Sustainability Statement.

Since 2022, the Board of Directors has included measures related to environmental, social and governance (ESG) issues in the Company's Performance Share Plan (PSP), one of UPM's long-term incentive plans. The PSP is targeted at the President and CEO, the Group Executive Team and other selected members of senior management. The remuneration of the Board of Directors and its committees is resolved by the Annual General Meeting. The members of the Board of Directors do not belong to the Company's short- or long-term incentive plans, and their remuneration is not linked to sustainability. The PSP consists of annually commencing individual plans approved by the Board with a minimum performance period of three years. The performance measures, related targets and weightings are set annually by the Board for each commencing plan and can vary from plan to plan to promote the Company's long-term value creation and financial growth without encouraging excessive risk-taking. Measures may include among the others financial, share price and sustainability targets For the PSP 2022–2024, PSP 2023–2025 and PSP 2024–2026, the Board has set absolute total shareholder return (TSR) as a performance measure, and the weighting of this measure accounted for 80% of all measures. The Board has also set three separate ESG performance measures and the total weighting of these measures accounted for 20% of all measures. Two of the ESG performance measures are environmental: reducing fossil CO 2 emissions from UPM's own combustion and purchased electricity* by 65% by 2030 from the 2015 level (10% weighting); and achieving a net positive impact on biodiversity in UPM's own forests in Finland (5% weighting). The third ESG performance measure is a social measure: achieving gender pay equity (5% weighting). The ESG performance measures are based on UPM's sustainability targets for 2030. *The earning criteria for the earning period 2022–2024 were fossil CO2 emissions from UPM’s own combustion and purchased electricity. The earning criteria for the earning periods 2023–2025 and 2024-2026 were reduction of fossil CO2 emissions from UPM’s on-site combustion and purchased energy These sustainability performance measures are covered by UPM's Remuneration Policy in the case of the President and CEO. The Board of Directors annually approves the commencement of new long-term incentive plans within the Company's long-term share incentive arrangements, including the terms and conditions, performance measures, related targets, and weightings.

UPM'S MAIN DUE DILIGENCE PROCESSES AND MEASURES • Implementation of policy documents to ensure integration throughout UPM and its value chain

PARAGRAPHS IN THIS SUSTAINABILITY STATEMENT

CORE ELEMENTS OF DUE DILIGENCE Embedding due diligence in governance, strategy and business model

G1-1 (page 237-238) S1-1 (page 211-212) E2-1 (page 177)

ESRS2-SBM2 (page 140-141) S1-2 (page 212) S2-2 (page 226) S3-2 (page 232) ESRS2-SBM3 (page 141-143) S2-SBM3 (page 224-225) S3-SBM3 (page 230-231) G1-3 (page 242-244)

Engaging with affected stakeholders in all key steps of due diligence

• Stakeholder dialogue

Identifying and assessing adverse impacts

• Business-area-specific human rights risk assessments and integration into management systems • High sustainability risk supplier process and enhanced due diligence assessment • 24/7 counterparty screening • Environmental and social/human rights impact assessments • Corporate human rights saliency assessment • Supplier and Third-Party Code and contractual requirements • Commodity-specific supplier requirements • Forest certification • EcoVadis assessments, contractor reviews and supplier audits • ISO-certified management systems • UPM Clean Run process • Remediation where appropriate • UPM's compliance system • Human rights workshops in business areas • UPM Report Misconduct channel and other local grievance channels • UPM Annual Report • EMAS reports from UPM's pulp and paper mills • UPM Human rights review report • UPM Forestal Oriental Annual Report

G1-2 (page 240-241) E2-2 (page 178-179) S2-4 (page 227)

Taking actions to address these adverse impacts

G1-1 (page 237-238) G1-3 (page 242-244) S1-1 (page 211-212)

Tracking the effectiveness and progress of these efforts

See pdf at hand for UPM Annual Report; See upm.com for other reports

Communicating these efforts

UPM FINANCIAL REPORT 2024

134

UPM FINANCIAL REPORT 2024

135

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135

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024