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

Risk management for sustainability reporting

Strategy, business model and value chain

UPM's strategy UPM seeks profitable, sustainable growth through performance and capitalising on the Company's major investments. UPM's strong and balanced business portfolio in renewable fibres, advanced materials and decarbonisation solutions will provide several attractive growth opportunities in the coming years.

» Refer to Report of the Board of Directors, section Research and Development, for examples of how sustainability is integrated into UPM's research and development.

SBM-1

GOV-5

This is UPM UPM offers renewable alternatives to fossil-based materials used in everyday life. UPM's broad product range includes pulp, graphic papers and specialty papers, self-adhesive labels, renewable wood based diesel and naphtha, CO 2 -free electricity, and plywood and timber products. Many of UPM's products offer sustainable alternatives to fossil raw materials and energy, for example, by replacing fossil plastics in consumer products, steel and cement in construction, or fossil fuels in transport, aviation and electricity markets. UPM's products meet the everyday needs of consumers while addressing many global challenges such as climate change and resource scarcity. Products are used in packaging, communication, labelling, transport, construction, manufacturing of bioplastics as well as tissue and hygiene end uses. UPM has invested in a biorefinery in Leuna in Germany, which will produce wood-based biochemicals. The commissioning and start-up of the biorefinery was initiated in late 2024, and the ramp-up of production is expected to proceed throughout 2025. The industrial-scale biorefinery will convert solid wood into next-generation biochemicals: bio-monoethylene glycol (BioMEG) and renewable functional fillers (RFF). In addition, the biorefinery will produce bio-monopropylene glycol (BioMPG) and industrial sugars. In 2024, UPM closed its biocomposites business and reduced its graphic paper capacity by closing two paper machines in Germany. During 2025, the production of graphics solutions will be transferred from UPM Raflatac's factory in Kaltenkirchen, Germany, to UPM Raflatac's factory in Belgium. At the end of 2024, the number of employees at UPM was 15,827, most of them in Europe. » Refer to S1-6 for information on headcount by country and by region. There were no banned UPM products or services in 2024. UPM does not have significant revenues from fossil fuel-based energy generation. However, a small amount of fossil fuels is associated with joint energy generation. 99% of UPM Energy's generation is CO 2 -free. » Refer to Report of the Board of Directors, pages 116–119 in the Annual Report , for more information about UPM's business areas and other operations.

UPM strategy: perform to grow

UPM's sustainability reporting at Group level is based on its sustainability reporting guidelines and the requirements of the ESRS. To enhance the reliability of sustainability data, UPM has implemented internal controls tailored to its specific sustainability risks with a focus on materiality. UPM continues to enhance its internal control framework to further minimise potential risks. UPM's centralised approach to sustainability reporting at Group level allows a review of the input of quantitative and qualitative information and to identify inconsistencies or errors in the data submitted by functions, production sites and forestry operations. UPM integrates its Sustainability Statement into the disclosure management tool used by UPM Finance, ensuring a streamlined approach to data management. The required data is collected from various sources such as the environmental database, the OHS reporting tool and the human resources data tool. UPM is committed to continuously improving its sustainability reporting processes. Feedback from stakeholders, internal audits and the external assurance provider are used to identify areas of enhancement, which are then integrated into the Company's risk management and reporting practices. Prioritisation is based on the severity and likelihood of the identified risk, as well as the resources needed to implement the necessary actions. The main risks identified for sustainability reporting are related to the accuracy of information, immature measurement methodologies and, in the case of missing information, the credibility of estimates. The contributors to the sustainability reporting process from businesses and functions are informed of the findings and observations from the annual assurance process and internal controls. They contribute to the assessment of risk, possible actions and their prioritisation as appropriate. The Audit Committee of the Board of Directors receives quarterly compliance reports that include information about Group-level sustainability reporting matters. UPM's governance structure ensures appropriate oversight of sustainability reporting at all levels of the organisation. The Audit Committee is responsible for monitoring the integrity of sustainability disclosures, the controls and processes needed to consistently generate them, and related assurance.

Key enablers

People UPM is committed to enabling performance, engaging people and creating a safe working environment while always acting with integrity. Diversity and inclusion, working conditions, learning and development, responsible leadership and respect for people are at the core of the Company's work. UPM's long-term goal is to ensure high performance and continuous professional development. Productivity UPM's focus is on leveraging advanced technologies, sustainable practices and strategic initiatives to improve efficiency and performance across the operations. UPM is taking active measures to improve productivity to ensure the competitiveness of its businesses and to support its growth ambitions. Commercial excellence UPM's focus is on optimising commercial interfaces and supporting processes to ensure security of supply and an enhanced customer experience for its customers. This is part of the Company's continuous drive to maintain and grow earnings. UPM concentrates on recognising growth opportunities and identifying the best means for commercial success.

Sustainability The UPM Code of Conduct underlines our commitment to integrity and responsible operations. UPM's strategy guides the Company to achieve its 2030 sustainability targets and contribute to the UN Sustainable Development Goals (SDGs). UPM is committed to creating value from renewable and recyclable materials, reducing the Company's environmental footprint, and enhancing its positive societal impact. Innovation Sustainability, circular economy and customers are at the heart of innovation at UPM. UPM harnesses new ideas and develops new business and products from renewable raw materials that contribute to the ever-growing need for more sustainable materials. UPM innovates climate-positive products and turn them into growing businesses.

UPM FINANCIAL REPORT 2024

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UPM FINANCIAL REPORT 2024

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024