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

TRANSITION PLAN

Investments and funding Climate change mitigation actions are integrated into UPM's investment plans. The main investments relevant to climate change mitigation include: Climate-positive forestry UPM is both a major forest owner and a purchaser of wood. The value of forest assets, i.e. standing trees, amounted to EUR 2,517 million (2,355 million) at the end of 2024 ( » Refer to Note 4.2 Forest assets in the consolidated financial statement ). In 2024, UPM's capitalised forest regeneration costs amounted to EUR 53 million (54 million), including costs related to land preparation, planting, fertilisation, leased plantation areas and nursery operations. Corresponding OpEx amounted to EUR 27 million (24 million), including maintenance of forestry infrastructure, forest fire fighting, protection and environmental activities. » Refer to EU Taxonomy disclosure activity “1.3 Forest management”. Reducing emissions As part of the climate change mitigation actions related to UPM's 2030 targets, UPM is investing in energy efficiency and improvements throughout its operations. In 2024, UPM invested EUR 9 million in energy efficiency improvements and reducing CO 2 emissions, which mainly included investments to heat recovery systems and electric and bio boilers. OpEx related to CO 2 -free nuclear power amounted to EUR 34 million (EUR 57 million) and was related to UPM's share of ongoing maintenance costs of the property, plant and equipment of the new and existing nuclear power plant units Olkiluoto 1, 2 and 3. In addition, UPM is annually allocating resources to its hydropower operations in the form of capital expenditure and maintenance of hydropower plants. » Refer to EU Taxonomy disclosure activity "4.27. Construction and safe operation of new nuclear power plants, for the generation of electricity or heat, including for hydrogen production, using best-available techniques" and "4.28. Electricity generation from nuclear energy in existing installations". Innovating products UPM develops sustainable products that offer alternatives to fossil materials. UPM is investing in a next-generation biochemicals refinery in Leuna in Germany, where new technologies and products will reduce GHG emissions. The total investment estimate for the Leuna biorefinery is EUR 1,275 million. In 2024, investments to Biochemicals operations amounted to EUR 309 million (385 million). The biorefinery will produce a range of 100% wood-based biochemicals, which will enable a switch from fossil raw materials to sustainable alternatives in various consumer driven end-uses. The commissioning and start-up of the biorefinery was initiated in late 2024. The integrated commercial production of the site is expected to start in H2 2025. The start-up of the biorefinery marks a significant milestone. A long ramp-up process is expected due to the first of-its-kind nature of this facility. » Refer to EU Taxonomy disclosure activity “3.6 Manufacture of other low-carbon technologies”. UPM is currently investigating an opportunity to expand production of advanced biofuels. The planning for the potential biorefinery in Rotterdam in the Netherlands is based on an annual capacity of up to 500,000 tonnes of high-quality renewable fuels, including advanced biofuels and possibly sustainable jet fuels, as well as renewable

E1-1

UPM's path to net-zero UPM offers renewable alternatives for fossil-based materials to meet growing global consumer demand. UPM's strategy is driving the transformation as a frontrunner in the bioeconomy. The Company invests in sustainable growth. Forests, wood-based products and low-carbon energy play a unique role in both mitigating the effects of climate change and in UPM's strategy. UPM has set ambitious targets in all these areas as part of its Group-level sustainability targets for 2030. UPM is committed to a 1.5 °C pathway as outlined in the Paris Agreement (climate target) and to science-based measures to mitigate climate change. As a signatory to The Climate Pledge, UPM is committed to achieving carbon neutrality by 2040, 10 years ahead of the Paris Agreement. As part of the UN Global Compact's Forward Faster initiative, UPM is also committed to setting net-zero targets as defined by the Science-Based Targets initiative (SBTi). However, in October 2024, the SBTi announced that they are temporarily suspending the use of the timber and wood fibre pathway included in the Forest, Land and Agriculture (FLAG) Target-Setting Tool. The Company's fossil CO 2 emissions reduction targets until 2030 for Scopes 1, 2 and 3 have been validated by the SBTi to be aligned with the 1.5 °C pathway as outlined in the Paris Agreement. » Refer to E1-4 Targets. The setting of UPM's long-term net zero targets will proceed in 2025, when the relevant guidelines and tools for the FLAG sector will be available. Climate change mitigation actions UPM acts through climate-positive forestry, reducing emissions and innovating products: 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. 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 emissions in our supply chain. We act through products . Innovating new products that are not based on fossil raw materials is at the core of our strategy. We develop safe and sustainable products that offer alternatives to fossil materials.

Climate change (ESRS E1) UPM is committed to contributing to limiting the global temperature rise and to science-based targets for mitigating climate change.

Reduction in fossil CO 2 emissions from UPM's on-site combustion and purchased energy (Scope 1 and 2) Five-year average annual carbon sink of approximately -50% -22% -2.1 Reduction in CO 2 emissions from materials and logistics (Scope 3)

Compared to 2015 (2030 target: -65%)

Mt CO 2 equivalents

Compared to 2018 (2030 target -30%)

» Refer to E1-3 Actions; Refer to E1-4 Targets

UPM FINANCIAL REPORT 2024

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UPM FINANCIAL REPORT 2024

149

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149

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024