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

Stakeholder engagement UPM recognises the importance of dialogue and open communication channels with internal and external stakeholders who are or may be affected by the Company's actions. For example, this is done through forest management practices in accordance with FSC™ and PEFC certification requirements or through participation in relevant networks and organisations such as the Science Based Targets Network’s Corporate Engagement Programme and the Initial Target Validation Group in 2023 and 2024.

grabbing and maintains a respectful and mutually beneficial relationship with affected local communities. UPM's forest units and wood sourcing units carry out biodiversity activities as part of UPM's global Forest Action Programme. This covers owned, leased and managed forests and land areas. Biodiversity-sensitive areas are identified, and efforts to maintain or enhance biodiversity must be integrated into UPM's operations where relevant, from daily practices to top management decisions. To develop and implement actions to maintain and enhance biodiversity, it is important to understand and measure activities' potential negative and positive impacts. In addition, UPM's Sustainability Policy Statement addresses the importance of mitigating negative impacts on biodiversity for UPM's production sites. Oceans and seas have not been identified as material for UPM's impact on biodiversity. However, actions are being taken to reduce the nutrient load on the Baltic Sea. UPM cooperates with the Baltic Sea Action Group. UPM's Sustainability Policy Statement prohibits forest conversion to plantations or non-forest uses. In addition, all UPM suppliers are expected to map and understand the biodiversity impacts of their own operations and supply chains, and to engage in relevant biodiversity protection activities. Based on UPM's identified material topics, UPM has set the following focus areas related to biodiversity: • Forestry (with a target of 100% certified fibre) • Biodiversity (with targets for a net positive impact on forest biodiversity and obstacle-free streams) • Climate (with targets for Scopes 1 and 2 CO 2 emissions, acidifying flue gases), » Refer to E1-4 Targets and E2-3 Targets • Water (with a target for emissions to water), » Refer to E3-3 Targets • Responsible sourcing (with a target for Scope 3 GHG emissions and on UPM's spend covered by the UPM Supplier and Third-Party Code), » Refer to G1-2 Responsible Sourcing For each of these focus areas, key actions are defined. The key actions, previous year’s key actions and planned key actions are presented below. UPM Forest Action Programme UPM's global Forest Action Programme was launched in 2022. It outlines an ambitious agenda to maximise the positive impact of forestry operations by the end of the 2030. The programme takes a holistic global view of the impact of forestry, combining measures in five factors: climate; biodiversity; soil; water; and social contribution. It addresses the net positive impact on biodiversity, the role of forests for the climate commitment of 1.5 °C, the protection of water systems, the importance of healthy soils, engagement with local communities as well as safe working conditions. ACTIONS E4-3

• Emissions to water and air from UPM's pulp and paper mills • Certain sourcing categories have been identified as particularly relevant in relation to biodiversity. These are commodities derived from the production of living natural resources such as forestry or agriculture. To date, UPM has not identified any material negative impacts related to land degradation, desertification or soil sealing. UPM's measures ensure the conservation of the most sensitive environments, and that there is no degradation on a landscape scale. UPM's forest management and land use may have an impact on endangered species. The potential negative impacts are minimised through several measures, projects, joint initiatives and research in this area. » Refer to E4-3 Actions

E4-1

Assessing resilience Biodiversity refers to the diversity and variation of species and ecosystems. According to the UN, biodiversity is deteriorating worldwide despite ongoing efforts. Biodiversity loss is projected to worsen if no mitigation actions are taken. Biodiversity is instrumental for the vitality of UPM's business. Enhancing biodiversity creates opportunities and reduces risks. UPM's operations are closely linked to biodiversity, and UPM's wood sourcing and land use activities may have significant negative impacts on biodiversity. Measures such as the use of certified wood are taken to avoid potential negative impacts. UPM depends on wood as its main resource for production. Deteriorating biodiversity can have significant negative impacts on the availability and acceptability of wood as a raw material in the short, medium and long term. Other relevant impacts on biodiversity may arise from UPM's hydropower plants and production sites. Local living conditions for flora and fauna at these sites are improved by reducing emissions to air and water and in general, by removing obstacles in streams. Relation to business model and strategy Biodiversity is essential for maintaining healthy forest growth and ensuring the resilience of ecosystems and their ability to adapt to a changing climate. UPM systematically maintains and enhances biodiversity in its forests and unplanted and protected areas. Mitigating climate change is seen as one of the most important measures to safeguard biodiversity. UPM's Global Forest Action Programme combines measures on biodiversity, climate, water, soil and social contribution to ensure a net positive impact on biodiversity in UPM's own forests and land areas. With UPM's Sustainable Supply Chain Programme, this programme supports the protection and enhancement of biodiversity in the supply chain. Biodiversity protection has been identified as one of the key issues in UPM's Sustainable Supply Chain Programme. The issue is promoted in the sourcing categories where it has been identified as particularly relevant. These include commodities derived from the production of living natural resources, such as forestry or agriculture. To steer its sustainability activities, UPM has set several sustainability focus areas, including forests, biodiversity, climate, water and responsible sourcing, with targets and key performance indicators for 2030 or as continuous targets. They are reviewed every year based on the double materiality analysis. UPM's actions minimise the risk of biodiversity loss having a significant negative impact on the availability and acceptability of wood raw material for UPM's products such as pulp, paper, timber, biofuels and biochemicals.

IMPACTS, RISKS AND OPPORTUNITIES

POLICIES

SBM-3

E4-2

Overview

The UPM Code of Conduct expresses the Company's respect for people, the environment and ethical business practices, including its commitment to biodiversity. The Code is complemented by UPM's Sustainability Policy Statement, which addresses biodiversity-related topics in more detail. The UPM Supplier and Third-Party Code sets out minimum requirements for the supply chain. » Refer to G1-1 Policies for more information about these policy documents. In addition, specific issues of biodiversity are also addressed in the following policy documents and programmes: • UPM's requirements for wood suppliers » Refer to E5-1 Policies • UPM's requirements for pulp suppliers » Refer to E5-1 Policies • UPM Sustainable Supply Chain Programme » Refer to G1-2 Responsible Sourcing • UPM Forest Action Programme » Refer to E4-3 Actions The relevant impact drivers of biodiversity loss are covered in UPM's Sustainability Policy Statement through the Company's commitment to climate change mitigation and adaptation, its commitment to sustainable forest management and zero deforestation and measures such as the elimination of harmful invasive species at its sites and the reduction of emissions to air and water and avoidance of emissions to soil. The Policy Statement also covers UPM's areas of impact on biodiversity: forest and land management, stream water dams, and production sites. Dependencies between biodiversity and living conditions for flora and fauna are recognised. Biodiversity risks and opportunities are assessed and documented as part of UPM's risk management process, emphasising that biodiversity is recognised as instrumental in maintaining healthy forest growth. When sourcing wood and fibre, forest certification must be used to manage biodiversity impacts, and respective Chain-of-Custody certification must be used to ensure the traceability of the material. All UPM-owned forests and plantations are 100% certified or will be certified if the site is new. UPM knows the origin of all wood and fibres used in UPM's products, as all UPM wood and fibre supplies are covered by third-party verified Chain-of-Custody certificates under the FSC™ (FSC N003385) and PEFC (PEFC/02-44-41). UPM recognises the importance of responsible land tenure and respect for land rights. UPM has a zero-tolerance approach to land

IMPACTS, RISKS AND OPPORTUNITIES Positive impact: Ensuring and enhancing net-positive impact on biodiversity by UPM's forest management Negative impact: Biodiversity loss in UPM's multi-tier supply chain

Description

UPM's Global Forest Action Programme combines measures on biodiversity, climate, water, soil and social contribution – with the aim of a net-positive impact on biodiversity in UPM's own forests and land areas, as well as the protection of biodiversity in the supply chain. UPM's operations are widely linked with biodiversity, and significant negative impacts may arise from UPM's wood sourcing and land use activities. Measures are taken to avoid potential negative impacts including potential deforestation, e.g. the use of certified wood. Deteriorating biodiversity may cause significant adverse effects on the availability and acceptability of wood raw material needed to produce UPM's products such as pulp, paper, timber and biochemicals Maintaining and enhancing biodiversity is instrumental to ensuring healthy forest growth, and that forests adapt to climate change.

Risk: Dependency on wood as main resource for production

Opportunity: Biodiversity ensures healthy forest growth

» Refer to Report of Board of Directors, section Risks, paragraph Biodiversity loss

Identified activities with potential negative impacts on biodiversity

In its assessment, UPM has identified the following activities and areas with potential material impacts on biodiversity: • UPM's forest management in Finland and the USA and UPM’s land management in Uruguay • UPM's hydropower plants and other obstacles such as dams in Finland’s stream waters

UPM FINANCIAL REPORT 2024

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UPM FINANCIAL REPORT 2024

191

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024