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

TNFD

Areas with conservation purposes have been identified based on outstanding biodiversity attributes and classified in the following categories: biodiversity reserves which are High Conservation Value Area (HCVA) and Conservation Area (CA), and other areas with conservation purposes which are representative sample areas and biological corridors or connectivity areas. Indicators for conservation area hectares and coverage are calculated based on FO's Oriental's forest database (FO, Forestal Oriental, is the name of UPM's company dedicated to pulpwood sourcing in Uruguay based on forest plantations), Geographic Information System (GIS) and public cartography of Uruguay's landscape units. The quality of HCVA is assessed by the conservation status index which is based on annual monitoring of several indicators covering the status of natural grasslands, native forest, flora and fauna. The invasion of exotic species is an important cause of biodiversity loss and thus important to control. All areas with exotic woody species are identified and mapped. Active areas are those in which exotic species are present, but have not yet been treated. After removal of exotic species, areas are inspected after three years to ensure that actions have been successful. Maintaining or enhancing the number of endemic and threatened species found in FO's biodiversity reserves demonstrates that the conservation efforts done by FO are mitigating the potential loss of sensitive species in the areas in which the company operates. Endemic and threatened species are defined by the Uruguayan Ministry of Environment, and the list is updated periodically. The number of such species in UPM's biodiversity reserves is followed up via a biodiversity monitoring programme, and since 1992 the results have been maintained in FO's biodiversity database. For 2024, the conservation status index calculation includes an estimate for two of the 12 biodiversity reserves. For these sites, the 2023 value is used to calculate the average of all reserves.

Reporting principles for metrics

UPM's nature-related disclosures according to TNFD (Task Force on Nature-related Financial Disclosures) are presented in this Sustainability Statement as follows:

Areas (total, certified, protected) and wood deliveries Due to its relevance for biodiversity and ecosystems, UPM reports its forest and land areas, their coverage by forest certification and the protected land areas. In addition, UPM reports the volume of wood deliveries to UPM sites by country of origin. The data is based on invoices or weighing systems for the wood deliveries and third-party audits for forest certification. Areas are documented in forest databases. All UPM forest and wood sourcing units enter their data into a common database where the data is checked and consolidated. Biodiversity indicators – Finland In Finland, the commercial forests owned by UPM can be classified as semi-natural forests that retain many of the features of natural forests throughout the regeneration cycle. The biodiversity indicators reflect how UPM retains the features that promote biodiversity, protects valuable habitats, and pursues to improve its practices. Indicators Tree species, Deadwood volumes, Forest age and Forest structure reflect how UPM retains during its forestry operations the forest features that are essential for many forest-dwelling species. Deadwood volumes are inventoried by Natural Resources Institute Finland. This inventory is a subset of the broader National Forest Inventory which is based on sampling, and conducted approximately every five years. The development in other indicators is based on UPM's own forest asset data system that in case of these indicators runs partly on estimates. Indicators Protected areas and Valuable habitats reflect what was set aside from UPM's forestry operations. Protected areas are areas where UPM does not operate at all or operate only according to instructions given by governmental authorities. Valuable habitats are distinctive sites in a landscape that is preserved during UPM's operations, such as small forest streams or nesting places. The development in these indicators is based on UPM's own forest asset data system. Indicators Habitat restoration, Species & habitat projects and Indicator development collectively reflect UPM's pursuit to promote forest biodiversity in ways that are not yet part of its regular forest management practices. In these projects, UPM develops novel practices to measure, manage, and restore biodiversity, often in collaboration with different stakeholders, such as conservation experts and scientists. A list of these projects is publicly available on upm.com . Biodiversity indicators – Uruguay In Uruguay, most plantations are established on modified natural grasslands formerly used for cattle grazing. The area's biodiversity values are assessed before the plantations are established, and valuable biodiversity hotspots and native forests are protected. UPM's work focuses on the active management of protected habitats and the control of invasive species.

REQUIREMENTS

PAGE NUMBER

GOVERNANCE a) The role of the Board in overseeing nature-related impacts, risks and opportunities 131-132; 143-145 b) The role of management in assessing and managing nature-related dependencies, impacts, risks and opportunities 133; 151; 143-145 c) Human rights policies and engagement activities, and oversight by the Board and management, with respect to Indigenous Peoples, Local Communities, affected and other stakeholders, in the organisation’s assessment of, and response to, nature related dependencies, impacts, risks and opportunities. STRATEGY a) The nature-related dependencies, impacts, risks and opportunities over the short, medium and long term b) The effect of nature-related dependencies, impacts, risks and opportunities on business model, value chain, strategy and financial planning, as well as on any transition plans or analysis in place c) The resilience of strategy, taking into consideration nature-related scenarios RISK MANAGEMENT a) Processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities b) Processes for monitoring nature-related dependencies, impacts, risks and opportunities c) How processes for identifying, assessing, prioritising and monitoring nature-related risks are integrated into and inform the overall risk management process METRICS AND TARGETS a) Metrics used to assess and manage material nature-related risks and opportunities 195-198 b) Positive impact on forest biodiversity and developing a monitoring system and obstacle-free streams, and related risks 190-192 c) Targets used to manage nature--related dependencies, impacts, risks and opportunities and performance against targets 194-195 144-145; 190-191 143-145; 190-191 143-145; 190-191 133; 143-145

131; 135; 210-212; 222; 225-227; 231; 240

131-134; 143-145; 190-191

131-134; 143-145; 190-191

Anticipated financial effects

E4-6

For qualitative information about the financial impact of biodiversity related risks, » Refer to the Report of the Board of Directors, section “Biodiversity loss” in chapter “Risks” .

UPM FINANCIAL REPORT 2024

198

UPM FINANCIAL REPORT 2024

199

198

199

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024