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

ACTIONS

Planned actions • Sequential start-up and ramp-up of the production will be proceeding at the new biorefinery in Leuna, Germany. The biorefinery is expected to reach full production in 2027. • Evaluation of new ways to use renewable biomaterials, e.g. for textiles, nonwovens, hygiene products and labels. • Assessment of the opportunities offered by green hydrogen and biogenic CO 2 to produce synthetic fuels and chemicals. • UPM's current plans for the potential biofuels refinery in Rotterdam in the Netherlands are based on an annual capacity of up to 500,000 tonnes of high-quality renewable fuels, including advanced biofuels and possibly jet fuels, as well as renewable chemicals. Most of the basic engineering has been completed, and the chosen technology has been validated at a demonstration scale. The focus is now on testing the novel proprietary technology at a larger scale and on flexible feedstock options. This work is expected to last until 2026. Resources In general, climate-related activities are included in UPM's overall investment and resource planning. In addition, four green bonds issued since 2020, the latest one in 2024, have a strong focus on climate related activities. The green bond portfolio of EUR 2,350 million uses eligible assets and projects from the following categories of UPM's Green Finance Framework: • Sustainable forest and plantation management • Climate-positive and circular bioeconomy-adapted products and solutions • Renewable or CO 2 -free energy The Green Finance Framework has been established in accordance with the Green Bond Principles 2021 (with June 2022 Appendix I), and the APLMA, LMA and LSTA Green Loan Principles 2023. This framework allows UPM to use a variety of green finance instruments, including but not limited to green bonds and green loans. Project evaluation and selection is a key process to ensure that projects and assets financed by green finance instruments meet the eligibility criteria set out in the Use of Proceeds section. UPM has established a cross-Company Green Finance Committee to coordinate, validate, implement and review the selection of eligible green projects and assets. In addition, a revolving credit facility is linked to long-term sustainability targets, including the climate target for Scopes 1 and 2. UPM's capital and operational expenditure on most significant climate-related activities are reported under » E1-1 Investment and funding and in the section EU Taxonomy in the Sustainability Statement. During 2024, no significant capital expenditures for environment related new projects were announced for 2025.

• Focus on implementing category-specific action plans to achieve CO 2 reduction. • Internal shadow carbon pricing will be explored to better compare and rank the carbon footprints of similar materials and suppliers. Product stewardship: Climate-positive product portfolio Key actions The key action in this area is the investment in the world's first industrial scale biorefinery for wood-based biochemicals in Leuna, Germany. The renewable chemicals will have a CO 2 product footprint well below that of fossil-based chemical products, as assessed by a third-party-reviewed Life Cycle Assessment (LCA). In addition, development work towards a climate-positive product portfolio will continue in several areas to meet the 2030 target. » Refer to E5-2 paragraph “Sustainable Product Design concept” Actions in 2024 • The construction works for the new biorefinery in Leuna, Germany, were completed. The commissioning and start-up of the biorefinery was initiated in late 2024. • Commercial partnerships were successfully launched. For example, the partnership with Nokian Tyres marks UPM's entry of UPM BioMotion™ Renewable Functional Fillers (RFF) into the global tyre market and demonstrates the versatility of replacing traditional CO 2 intensive fillers with fully renewable alternatives. Functional fillers account for around 30% of a tyre and consist of materials such as primarily carbon black and precipitated silica. According to an initial test series by Nokian Tyres, replacing traditional carbon black with renewable functional fillers enables the production of more sustainable tyres. • Based on UPM's Sustainable Product Design concept, UPM Biochemicals launched UPM Solargo™, a new range of bio-based plant stimulants with the potential to help significantly reduce demand for classical fertilisers based on nitrogen, phosphorus and potassium (NPK), the production and use of which is held responsible for up to 80% of CO 2 -emissions in crop production. • Another focus of UPM's R&D work was on fibre-based packaging solutions. For example, UPM Specialty Papers launched several co created packaging solutions such as a recyclable heat-sealable salad pot wrapper or a recyclable high barrier packaging solution for foods with long shelf-life.

beam grate at the mill's bioboiler to increase combustion efficiency. At UPM Schongau, Germany, the heat recovery system of the mill’s Thermo-Mechanical Pulp (TMP) line was enhanced. Energy efficiency measures and investments in 2024 are expected to reduce fossil CO 2 emissions by about 120,000 tonnes per year. Planned actions • UPM will continue to develop and implement energy efficiency measures and to develop its energy portfolio to reach its 2030 targets. • Finalisation of the ultracapacitor project at Kuusankoski hydropower plant in Finland expected by summer 2025. » See Actions in 2024 . Forestry: Forests as carbon sink Key actions UPM ensures that its forests and plantation areas continue to act as carbon sinks, remain resilient and diverse in changing climate conditions, and grow well for future generations. For forests to continue to act as carbon sinks, growth must exceed harvesting. The annual carbon sink of UPM-owned forests in Finland and the USA and owned and leased plantations in Uruguay is -2.1 million tonnes of CO 2 equivalent (CO 2 eq) as the annual average over the last five years. Actions in 2024 • Annual calculation of the carbon sink of UPM's own and leased forests and tree plantations in Finland, the USA and Uruguay. • In 2022, UPM began working with Natural Resources Institute Finland to improve soil carbon models for Uruguay using field data, and the field measurements in eucalyptus plantations continued in 2024. Planned actions • Annual calculation of the carbon sink of UPM's own and leased forests and tree plantations in Finland, the USA and Uruguay continues. Responsible sourcing: UPM's -30 by 30 Programme Key actions In 2022, UPM launched the -30 by 30 Programme with the aim of reducing CO 2 emissions related to purchased materials and logistics (Scope 3) by 30%. As part of the programme, suppliers are required to provide data on the carbon footprint of the goods and services they sell to UPM. This includes accounting for all relevant emissions from the supplier's upstream supply chain and operations. Actions in 2024 • More suppliers were included to the data collection scope. In 2024, carbon footprint data from suppliers is available for more than half of UPM's raw material spend. • Category-specific roadmaps to achieve a 30% CO 2 reduction have been developed for all UPM business areas. Planned actions • Continue and further expand the annual collection of supplier carbon footprint data to assess development.

E1-3

Based on the identified material topics, UPM has established the following sustainability focus areas related to climate change mitigation and adaptation: • Climate (with targets for energy efficiency, renewable energy, Scopes 1 and 2 CO 2 emissions) • Forestry (with a target on forests' carbon sink) • Product stewardship (with a target for a climate-positive product portfolio) • Responsible sourcing (with a target for Scope 3 emission reduction) • Biodiversity (with targets for forest-related biodiversity); » Refer to E4-3 Actions For each of these focus areas, key actions are defined, and an action plan is available to achieve the Group-level targets. » Refer to E1-4 Targets related to climate change. The key actions, previous year's key actions and future key actions are presented below. Climate: Energy-related actions Key actions UPM favours the use of renewable and other carbon-neutral energy sources and strives to continuously improve energy efficiency in all its operations. The Company consistently develops its energy portfolio and manages the CO 2 -free electricity generation assets in UPM Energy. UPM contributes to the decarbonisation of the electricity system by increasing the supply of reliable CO 2 -free electricity. UPM Energy is the second largest electricity supplier in Finland with assets in Finnish nuclear power and hydropower and, to a lesser extent, thermal power. Most of UPM's energy consumption is related to the production processes in the paper and pulp mills, where electricity and heat are needed for mechanical pulping, pumping and drying. Steam and electricity are generated through combined heat and power (CHP) plants. In some mills, all or part of the required energy is produced by external or co-owned power plants. Energy efficiency is improved across the operations through audits, innovations and investments. Improvements usually also lead to reductions in CO 2 and other air emissions. Actions in 2024 • UPM Energy announced the second-phase investment in its innovative ultracapacitor project, which will further strengthen the ability of hydropower to balance the grid. The new installation will be located next to the Kuusankoski hydropower plant in Finland and is expected to be operational by the summer of 2025. • Solar power development is being explored in Utti in Kouvola, and windpower in Western and Eastern Finland. • UPM invested in electric boilers for steam generation at three mills in Finland and Germany. The boilers secure the steam supply, provide flexibility and enable emission reduction. • Energy efficiency measures were carried out at several production sites. For example, at UPM Jämsänkoski, Finland, heat recovery capacity at one paper machine was increased using Advanced Heat Recovery (AHR) technology. UPM Tervasaari, Finland, invested in a

UPM FINANCIAL REPORT 2024

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UPM FINANCIAL REPORT 2024

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024