UPM Annual Report 2024

First page Table of contents Previous page 232-233 Next page Last page

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

PROCESSES Processes for engaging with affected communities about impacts

PEFC and FSC® and in the USA (Minnesota) by the Sustainable Forestry Initiative (SFI), which is endorsed by PEFC. UPM's eucalyptus plantations in Uruguay are certified by both FSC and PEFC. Certification systems set internationally recognised standards for sustainable forest management, including clear principles and criteria relevant to communities and indigenous peoples. In the USA, UPM Blandin's landholdings in the state of Minnesota are situated on the traditional and ancestral lands of Indigenous Peoples. UPM acknowledges that the region holds significant cultural, historical and personal significance for native peoples. Indigenous Peoples have been the traditional stewards of these lands, and the Company recognises the value of that stewardship. UPM Blandin recognises that existing legal, customary and traditional rights are recognised through declarations, laws and treaties governing interactions with Indigenous Peoples. UPM Blandin fully respects the rights of Indigenous Peoples and strives to balance forest management objectives with these rights, the preservation of cultural heritage and traditional ecological knowledge. Continual improvement in these areas is essential, and Blandin is committed to supporting efforts to improve staff knowledge, outreach and cooperation. Processes for raising and handling concerns UPM monitors and works to remediate negative human rights impacts of which it becomes aware, and which the Company's activities have contributed to or caused. Remediation is specified case by case, based on verified impacts. UPM has established channels for reporting misconduct, reports of misconduct are carefully reviewed, personal data is handled appropriately, protection against retaliation is ensured, and all reports are treated in strict confidence. Investigations are conducted by designated persons with the necessary competences. If a report is substantiated, appropriate disciplinary and/or legal action is taken, and lessons are learned. » Refer to G1-1 Reporting and identifying concerns All members of affected communities can report concerns anonymously online via the UPM Report Misconduct channel – SpeakUp® » Refer to G1-1 Reporting and identifying concerns In addition, local stakeholders can report their concerns directly to UPM representatives at the mills and other sites and through locally provided channels such as email and telephone. Typical concerns relate to odours, traffic and noise, and all grievances are followed up as part of UPM's management systems. Feedback and concerns are handled in accordance with the PEFC and/or FSC Chain of Custody requirement, forest certification standards, ISO 14001 environmental management systems and other standards as relevant. Stakeholders are informed of the actions taken by UPM in response to their feedback. » Refer to S2-3 Processes for raising and handling concerns The UPM Report Misconduct channel is available on UPM's webpage and promoted in the value chain via UPM's Supplier and Third-Party Code and in contractors' safety induction, for example. UPM evaluates the awareness and trust of affected communities in connection with the ISO management systems and processes through stakeholder surveys and feedback mechanisms. For example, regular social monitoring surveys at UPM's forestry operations and nurseries in S3-3

Uruguay are conducted by an external service provider by interviewing affected community members and contractor employees. UPM business areas are responsible for assessing the awareness and trust of their local communities at their mill sites and in forestry operations respectively. They evaluate the awareness and trust of their local communities through forest certification systems, regular feedback gatherings and community meetings, and mill/unit open days ensuring that local communities are informed about how to raise their concerns or needs and trust that they will be addressed effectively. UPM is committed to fostering open communication and ensuring the protection of individuals who raise concerns about its operations. To support this, local community members can report concerns anonymously online via the UPM Report Misconduct channel. By providing this secure and anonymous channel, UPM aims to encourage transparency and trust, ensuring that all grievances are addressed promptly and effectively. The effectiveness of the Company's grievance channels is assessed in connection with UPM's compliance programme. UPM's identified material topics have been defined as a result of a double materiality analysis including UPM's Corporate Human Rights Saliency Assessment, which considers impacts, risks and opportunities related to affected communities. The following UPM focus areas are relevant for communities: • Local engagement (with targets on quality of community relationships and long-term initiatives with positive impact communities) • Forestry (with a target for certified fibre share) • Responsible sourcing (with targets on spend covered by UPM Supplier and Third-Party Code and supplier audits) » Refer to G1-2 Sustainable Supply Chain Programme Action plans have been established to achieve the Group-level targets, as well as other relevant areas for continuous improvement. The key actions, previous year's key actions, planned key actions and overarching concepts are presented below. UPM monitors the effectiveness of its actions to manage material impacts by tracking and reporting on the progress of its sustainability targets for 2030. » Refer to S3-5 Targets . Furthermore, UPM reviews the effectiveness of its risk management procedures quarterly through its Compliance system. » Refer to G1-3 UPM compliance system Emphasis on local communities and impacts Key actions UPM aims to be a good neighbour and trusted partner to all people, economies and environments affected, both directly and indirectly. For UPM's business and forestry operations, this means active engagement and dialogue with local communities. This includes assessment of social and human rights impacts, as well as collaboration forums, cooperation with local schools and education networks, and dialogue with local forest owners and neighbours of harvesting sites, and other individuals impacted by forest management. ACTIONS S3-4

UPM mills in Europe, the USA and Uruguay have the potential to create significant societal impact through employment and tax generation in the locations where they operate. UPM's EMAS (EU Eco-Management and Audit Scheme) statements publicly disclose societal impacts in addition to environmental performance, providing detailed information about the local impacts of UPM's pulp and paper mills. For the supply chain, UPM's Sustainable Supply Chain Programme and Forest Action Programme cover aspects such as local engagement or social contribution. Actions in 2024 • A Human Rights Impact Assessment of UPM's operations in Uruguay was conducted by an independent consultant. Actual and potential human rights impacts on local communities were assessed, with a focus on the aggregate and cumulative impacts of all UPM's activities in Uruguay (plantations, nurseries, pulp mills, logistics and biofuels). The assessment indicated strong management systems for environmental and social risk management and mitigation, and comprehensive stakeholder engagement processes. The assessment set a benchmark against international best practices and proposed a number of development actions for the Company's human right due diligence. • Steps were taken to enhance community rail safety in Uruguay. UPM collaborated with the Uruguayan Ministry of Transport and Public Works and the Automóvil Club del Uruguay to run a Railway Safety Awareness Programme. This initiative aims to revive the safety culture and ensure communities' coexistence with the rebuilt state-owned railway from Paso de los Toros to Montevideo, marking one of Uruguay's most significant infrastructure projects. • In the USA, UPM continued co-operation with local indigenous peoples’ communities to learn more about their approach to forest management • In 2024, UPM initiated the development of a policy related to local community engagement after the Company assessed its local community engagement practices in 2023. This policy guides UPM's operations in identifying their local stakeholders, and particularly those in the most vulnerable position, and maintaining active dialogue with affected communities, ensuring that their primary concerns are effectively addressed. • Targets and key performance indicators for local engagement under Forest Action programme were renewed for UPM's wood sourcing regions. Planned actions • Addressing the development needs drawn from the Uruguay Human Rights Impact Assessment, focusing on Company-wide capacity building on business and human rights, developing stakeholder engagement practices, grievance mechanisms and remedy measures. • Implementing a policy for local community engagement striving to enhance UPM's relationships with its local communities, gain insights into community needs, and track progress of its engagement activities • Further assessing the potential impacts on Indigenous Peoples across UPM Blandin operational region, including methods for increased coordination, recognising that building relationships requires ongoing communication. • Implementing of updated targets under Forest Action programme to create positive impact on local communities. Monitoring of development by following key performance indicators.

S3-2

UPM engages with a wide range of stakeholders, including customers, investors, employees, suppliers, the authorities, NGOs and local communities. Each group has different needs and expectations, which UPM takes into account depending on the business focus, region and individual context. The Executive Vice President (EVP) of UPM's Marketing, Sustainability and Communications function has operational responsibility for local engagement. The function coordinates stakeholder relations at Group level, while businesses are responsible for continuous dialogue with local communities. For example, the UPM Kaukas and UPM Kymi mills in Finland have their own local dialogue forums to engage directly with local stakeholders. In Uruguay, there is a specific team responsible for local community engagement. Engagement occurs directly with local people and affected communities are consulted. Engagement takes the form of visiting communities, keeping them informed on potential impacts of our operations, managing concerns and enquiries, and establishing projects with key stakeholders. In general, stakeholder mapping, active dialogue and systematic collection of feedback play an essential role in UPM's stakeholder relations work, and the Company applies several measures and safeguards to identify and mitigate its environmental and social impacts on surrounding communities, including: • Environmental and social impact assessments • Continuous human rights due diligence in UPM's own operations and supply chain • Third-party certified management systems such as ISO 14001 (Environmental management) and 45001 (Occupational Health and Safety management) for production units • Sustainable forest management certification (FSC and/or PEFC) of UPM-owned forestry operations and suppliers • Restructuring processes planned in cooperation with employees, their organisations, the local authorities and other relevant stakeholders. UPM's processes vary due to different operational contexts and stakeholder expectations. UPM continued to review its processes and policies, and reporting practices in 2024. » Refer to S3-4 Emphasis on local communities and impacts, Actions 2024 UPM carefully analyses stakeholder feedback to understand its stakeholders’ expectations and to take them into consideration in its development work and decision-making. UPM received approximately 350 (350) enquiries or concerns from the general public in 2024. UPM’s engagement with local communities is historically based on decades of close cooperation. Many communities have grown around UPM's operations over the years, especially in Finland, Germany and Uruguay. At UPM's forestry operations and nurseries in Uruguay, regular social monitoring surveys are conducted by an external service provider by interviewing affected community members and contractors' employees. Public opinion surveys are also regularly conducted by a third-party service provider on UPM's operations in Uruguay, including the UPM Fray Bentos and UPM Paso de los Toros pulp mills. All UPM-owned forests are certified or in the process of being certified if the site is new. In Finland, UPM-owned forests are certified by