UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

TOWARDS NET-ZERO EMISSIONS

ACTIONS FOR ENVIRONMENT

WE ACT THROUGH FORESTS

WE ACT THROUGH EMISSION REDUCTIONS (SCOPE 1, 2, 3)

WE ACT THROUGH PRODUCTS

Committed to climate action

-6.0 MtCO 2 Carbon

+3.4 MtCO 2 Scope 1 and 2 emissions

-2.8 MtCO 2 Temporary

substitution Fossil energy substitution

-2.1 MtCO 2 eq Carbon sink Carbon absorbed in trees and soil

Our strategy is driving the transition to a low-carbon economy.

carbon storage Carbon stored in wood-based products' lifetime

from own energy generation and purchased energy

Minimising the use of fossil fuels and raw materials is the most important way to mitigate climate change.

OUR COMMITMENT Limiting global temperature rise

In our strategy, forests, wood-based products, low-carbon energy and fossil CO 2 emissions reduction play a key role in mitigating cli mate change. We have set ambitious targets for all these areas as part of our Group-level sustainability targets for 2030.

We are committed to take climate action and to set science-based targets that contribute to limiting the global temperature rise and mitigat ing climate change.

BIO

OUR PRIORITIES We act through forests

+8.2 MtCO 2 eq Scope 3 emissions from value chain (purchased goods

-5.5 MtCO 2

ACTIONS IN 2024 • The FMI issued a report on the future physical impacts of climate change on our main operation areas in Fin land, Germany, Uruguay and China (on the right). • We invested in electric boilers for steam generation at three paper mills in Finland and Germany. The boilers secure the steam supply, provide flexibility and enable emissions to be reduced. • Energy efficiency measures were im plemented at several production sites • More suppliers were included in the data collection scope. Carbon foot print data from suppliers is available for more than half of UPM’s raw material spend.

Targets initiative (SBTi) to be consistent with the 1.5 °C pathway outlined in the Paris Agreement. Our position and resilience in different climate scenarios have been evaluated for our busi nesses and functions from both a physical and transitional perspective, using the expertise of the scientific community. We act through products Innovating new products that are not based on fossil raw materials is at the core of our strategy. We develop safe and sustainable products that offer alternatives to fossil materials. Many of our products are already proven to be climate positive. The key action 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 prod uct footprint well below that of fossil-based chemical products, as assessed by a third-par ty-reviewed Life Cycle Assessment (LCA). In addition, development work towards a climate positive product portfolio has been done and will continue in several areas.

Long-term carbon storage Long-term storage in trees and soils

Carbon substitution Avoided emissions by replacing fossil- based products

Forests and forest biodiversity are critical for mitigating the effects of climate change. We ensure that our forests and plantation areas continue to act as carbon sinks, remain resilient and diverse in changing climate conditions, and thrive for future generations. For our forests to remain carbon sinks, growth must exceed harvesting. The annual carbon sink of UPM-owned forests in Finland and the USA and the plantations on our own and leased land in Uruguay has averaged -2.1 million tonnes of CO 2 equivalent over the last five years. The carbon sink is calculated annu ally by Natural Resources Institute Finland, and calculation methods are updated with the latest scientific developments. We act through emission reduction Minimising the use of fossil fuels and raw materials is the most important way to mitigate climate change. We favour renewable and other carbon-neutral energy sources and produce CO 2 -free hydro and nuclear power in Finland. We are also committed to reducing the emis sions in our supply chain. Our focus is on achieving our 2030 targets, in cluding a 65% reduction in fossil CO 2 emissions (Scopes 1 and 2) from 2015 levels and a 30% reduction in fossil CO 2 emissions from sourced materials and logistics (Scope 3) from 2018 levels. Our fossil CO 2 emissions reduction targets have been validated by the Science-Based

and services, logistics, etc.)

We act through forests: Trees and soil absorb carbon and act as long-term carbon storage. This means that they bind CO 2 from the atmosphere, marking a negative in our carbon calculation. We act through emission reductions: Emissions from our own operations and those of our supply chain increase the amount of CO 2 in the atmosphere, marking a positive in our carbon calculation. We act through products: By replacing fossil-based products and fossil-based energy, we reduce emissions, marking a negative in the carbon calculation. Our products act as temporary carbon stor age over their lifetime, binding CO 2 from the atmosphere. In 2024, the annual carbon stock of our products sold increased compared to the previous year, marking a negative in the carbon calculation. We will align our net-zero approach with recognised international carbon accounting and assurance standards when they are finalised.

CASE STUDY

THE FINNISH METEOROLOGICAL INSTITUTE’S (FMI) REPORT HELPS PREDICT THE FUTURE IMPACTS OF CLIMATE CHANGE

The FMI has issued a report to help us predict the future physical impacts of climate change on our main operation areas in Finland, Germany, Uruguay and China. Published in December 2024, the report examines changes in weather conditions between 1961 and 2023 and the future climate projections in these areas. This report is an update of a wider FMI report ordered in 2019. Observational data shows a statistically significant increase in seasonal temperatures. Mean temperatures are expected to rise in all four regions, although the magnitude of

change varies considerably. With general warming, hot extremes will become more frequent. Precipitation is likely to increase in Finland during the winter and decrease in Germany during the summer. Extreme precipitation events are expected to intensify in all four regions. In the second half of the 21st century, the extent of climate change will strongly depend on the evolution of greenhouse gas emis sions. If emissions are effectively reduced, the changes will probably be less severe. The results are considered in our strategy work.

Sustainability Statement, ESRS E1 Climate change on page 148 Our 2030 sustainability targets and progress on page 30

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024