UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

SOCIAL

Risks and opportunities The operating environment exposes UPM to a number of risks and opportunities. Many of them arise from general political and economic activity and global megatrends.

Key performance indicator

Contribution to the SDGs

Focus area

2030 target

2024 result

Continuous learning and development Enabling continuous professional development for high performance, growth and future employability Responsible leadership Emphasising value-based and inspiring leadership and integrity Diversity and inclusion Developing an organisational culture and workplace to ensure a diverse and inclusive working environment for business success

85% (85%) of employees completed individual goal setting or annual discussion, 78% (81%) of employees had a development plan documented In the Employee Engagement Survey average score of 65 (64). Below global average benchmark by 7 points. In the Employee Engagement Survey average score of 70 (70). Below global average benchmark by 4 points. In the Employee Engagement Survey average score of 68 (68). Below top 10% benchmark companies by 11 points. Dialogue continued on developing inclusive behaviours. Established Employee Resource Group (BeU) on LGBTIQ+ community. Gender pay gap closed. Company-wide review done considering the threshold of typical family for local living wage. Pay adjustments implemented to close identified pay gaps related to local living wage. Company-wide review done and pay adjustments implemented to close identified, statistically significant unexplained gaps related to gender. 34.5% (32.3%)

Goal setting discussions are held and development plans are created for employees Employee perception of good opportunities to learn and grow

100% completion rate

Sensitivity to pulp and electricity prices on page 115 Risks in the report of Board of Directors on page 120 UPM’s cost structure is presented on page 272 Main currency exposures are presented on page 305

Clearly above benchmark

Employee engagement

Clearly above benchmark

CYCLICAL AND COMPETITIVE BUSINESS ENVIRONMENT

The transition to a low-carbon economy can cause policy changes and shifts in market preferences, standards, and technologies, which in turn may result in changes to cost structures or the commercial opportunities of biomass and change the competitiveness of products, raw materials, industries, and countries. The physical impacts of climate change include more frequent and severe extreme weather conditions, which can increase droughts, floods and forest fires and cause uncertainties in business op erations or damage UPM's or suppliers' production assets. Damage caused by insects and tree diseases can become increasingly common. Management: Long-term targets and science-based measures to mitigate global warming through sustainable forestry, emissions reductions and innovating novel products. Enhancing biodiversity. Opportunity: Transition opportunities include those driven by resource efficiency and the development of new technologies, CO 2 -free electricity, products and services that could bring new markets, customers, sources of funding and competitive advantage for us. Longer forest growing season in northern hemisphere. UPM’s current product offering competes in markets where there are competing alternatives for cus tomers and where the shifts in supply and demand continuously influence prices. Changes in production capacity, supply chain shifts, new product or raw material development, and competitor and consumer behaviour may impact the price levels for our products and main inputs, and cause demand fluctu ations. Rapid acceleration in digitalisation and e-commerce may expedite the decline in demand for communication papers and simultaneously increase demand for sustainable packaging products. Management: Industry-leading balance sheet. Continuous improvement in competitiveness, resource efficiency and customer offering. Responsible operations. Business portfolio development. Opportunity: Growing need and consumer preference for renewable and recyclable solutions create business opportunities and drive demand growth. Russia’s war in Ukraine, the conflict in Gaza, the continuing high interest rate environment, energy price volatility in Europe, rivalry between the US and China, policies of the new US presidential administration, as well as political uncertainties in several countries continue to cause uncertainty in trade policies, eco nomic growth and the rule of law, and challenge competitiveness and predictability for companies with international value chains and operations in several countries. The testing relationships between busi nesses, governments and society and the growing international focus on military conflicts, hybrid activi ties and a protectionist approach to trade may stress the economic and political environment and cause local challenges to our operations or influence demand, sales prices or input costs for our products. Management: Monitoring through international trade associations. Compliance. Continuous improvement in competitiveness. Continuous monitoring of geopolitical landscape. Disciplined planning and selection of investments. Business portfolio development. Opportunity: Diverse business portfolio, geographical presence and responsible business practices may present opportunities for supply chain optimisation or strategic opportunities (incl. M&A) in an economic downturn.

Employees' sense of belonging

Among the top 10% of benchmark companies

Continuous improvement in female representation in professional and managerial roles. Developing leadership and decision-making capabilities with increased diversity

40% female representation

Diversity and inclusion initiative

Continuous

Fair rewarding Ensuring fair, equitable and competitive rewarding for all employees

Employees’ pay meeting at least local living wage: implementing a yearly review

Continuous

CLIMATE CHANGE

Gender pay equity for all employees: implementing a yearly review process to identify and close unexplained pay gaps Fatalities or serious accidents in UPM operations

Continuous

Safe and healthy working environment Ensuring the safety and health of our employees, contractors and the local communities close to our operations

0 (0) fatal accidents, 3 (5) serious accidents

0 (continuous)

TRIF 6.1 (6.1) for UPM workforce and 5.1 (5.2) including contractors

Total recordable injury frequency (TRIF), including contractors

<2

Process safety gap analyses done in all business areas and roadmap actions being implemented

Process safety integrated in safety management

All sites and businesses

In the Employee Engagement Survey average score of 72 (72). Below top 10% benchmark companies by 7 points.

Employees’ sense of worklife balance

Among the top 10% of benchmark companies

4.2% (4.3%)

Absenteeism rate

<2%

GEOPOLITICAL AND ECONOMIC UNCERTAINTY

Community involvement Ensuring local commitment and positive impact on communities

Assessment of quality of community relationships and define measures at relevant sites

Continuous

A third-party Human Rights Impact Assessment conducted in Uruguay and a development plan created. A preliminary policy for community engagement established, with implementation planned for 2025. Supported local education and learning initiatives to help local communities within our operational sites and continued to provide aid to people, especially children, impacted by conflicts, wars and natural disasters, such as flooding in Poland and the USA.

Long-term initiative(s) that impact their mill communities defined in line with the UPM Share and Care programme

All businesses (continuous)

32

33

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024