UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

UPM'S MATERIALITY ANALYSIS 2024

changes to align the EU’s climate and energy legislation with the EU’s climate targets. This comprehensive package aims to reduce net greenhouse gas emissions by at least 55% by 2030, setting the EU on a clear path towards climate neutrality by 2050. We actively promote the cost-competitive and consistent implementation of forest and climate-related policies. UPM calls for pre dictable regulations that enable investments in the circular bioeconomy. EU policies must therefore ensure the sustainable use of forests and the availability of wood as a key resource for green growth. Focus on local community impacts Building and maintaining good relations with the local communities close to UPM’s opera tions and supporting their vitality are essen tial for the acceptance of operations and for understanding the challenges, key risks and opportunities in the operating environment. We take several measures to identify and mitigate our environmental and social impacts on surrounding communities, including environmental and social impact assessments, collaboration forums, coop eration with local schools and education networks, and dialogue with local forest owners, the neighbours of harvesting sites, and other people impacted by forest management. Our mills in Europe, the USA and Uruguay have the potential to create a significant local societal impact through employment and tax generation. We promote positive impacts in local communities – for example, by develop ing infrastructure. Other activities include apprenticeship programmes in Finland and Germany, and cooperation with education al institutions to contribute to science and research. In Uruguay, the UPM Foundation promotes education and entrepreneurship through cooperation with local organisations. Our EMAS statements disclose the societal and environmental impacts of our pulp and paper mills and cooperation with local stake holders These statements complement UPM’s corporate EMAS report and are published annually on our website www.upm.com/ sustainability.

OUR MOST IMPORTANT STAKEHOLDERS

Every year, we conduct a materiality analysis to identify the topics on which UPM has a significant impact, or which have a significant impact on the company. The analysis is based on internal assessments, as well as stake holder interests and concerns. The annual double materiality assessment (DMA) takes the interests, views and rights of UPM’s workforce, value chain workers and affected communities into account.

We use multiple ways to embed the views and insights gained from stakeholder engagement into our business decisions and strategy. These methods include regular interviews and surveys, open dialogue, and en gagement events.

Our strategy forms the foundation of our stakeholder dialogue. The key focus areas and activities vary locally and according to stakeholder needs. Key stakeholders are defined on the basis of materiality: UPM's operations have a significant impact on stake holders and/or vice versa. • Investors • Customers • Current and future employees • Suppliers • Communities • Media • Governments and regulators • NGOs • Researchers

LOW HIGH

SOCIAL • Diversity and inclusion • Local engagement HIGH IMPACT AND MEDIUM FINANCIAL MATERIALITY

HIGH IMPACT AND HIGH FINANCIAL MATERIALITY

CASE STUDY

ECONOMIC AND GOVERNANCE • Bio-based and renewable products • Business resiliency • Business ethics and values • CO 2 -free energy

TRANSPARENT INFLUENCING

CHALLENGE Demands for decision-making trans parency have increased. Sustainability reporting also emphasises the need to disclose the principles of influencing. ACTION We are open in our dialogue with governments and regulators. Our ID number in the EU Transparency Register is 861194311863-31. We are also registered in the German Lobby Register and the Finnish Transparen cy Register. Every UPM representative submits their own disclosures to the new internal reporting tool. Employees have also received training on the topic. IMPACT Our role is to ensure that decision- makers understand the impact of laws and decisions being prepared on our business. At the same time, we gain an understanding of the deci sion-making process and the views of different stakeholders. The Transpar ency Register helps us communicate more widely about our influencing work, its principles, and why we see certain issues as important. At its best, increased transparency will help others understand how business suc cess benefits society as a whole.

ENVIRONMENT • Circular bioeconomy • Product stewardship • Sustainable water usage

ENVIRONMENT • Biodiversity • Climate change • Sustainable forestry

SOCIAL • Decent work and fair rewarding • Health and safety

ECONOMIC AND GOVERNANCE • Responsible sourcing

Impact materiality

ations, so that we can influence and monitor their positions to ensure that they are in line with our strategy. The basic requirement for membership of any trade association is the principal alignment with UPM’s strategic positions. As UPM is an active participant in the energy market, both as an energy-intensive consumer and as an energy producer, we regularly remind decision-makers of the importance of functioning energy markets. Climate change and our commitment to the UN’s 1.5-degree agenda continue to be of great interest to our stakeholders. We hold discussions with environmental organisa tions, certification bodies, the authorities and decision-makers. Forests’ impact on climate are linked to policies on land use, land-use change and forestry (LULUCF). We have highlighted the importance of sustain able forest management and wood-based products replacing fossils as effective ways to mitigate climate change. The EU’s Fit for 55 package proposal, initially published in 2021, has seen signif icant progress. By 2024, both the European Parliament and the EU member states will have finalised almost all the necessary

Financial materiality

LOW

HIGH

SPONSORSHIPS, DONATIONS AND VOLUNTARY WORK

The UPM Share and Care programme focuses on delivering positive impacts for communities through various initiatives. The programme demonstrates our commitment to responsibility and local community involvement through sponsorships, donations and employee volunteering. We support projects focusing on reading and learning, Beyond fossils initiatives, and community engagement. UPM does not support political parties or individual candidates. Local sponsorships and other contributions within the programme amounted to approximately EUR 0.8 million. This figure includes support for the Uruguayan UPM Foundation, which continued with a contribu tion of USD 400,000. The foundation supports and promotes education, entrepreneurship, employment, healthy living and entertainment in local communities in rural Uruguay. In 2024, we donated a total of EUR 920,000 to charities or other non-prof it organisations such as Aalto University, University of Helsinki, Save the Children Finland, Junior Achievement (JA) Finland and American Red Cross.

Following the floods in Poland and the USA, we provided financial support to the communities for humanitarian aid and the reconstruction of the affected areas, as well as funding projects to prevent future flood damage. Employee volunteering underlines local commitment and impact. UPM’s employees can volunteer for up to eight hours a year during working hours. In 2024, more than 400 UPMers participated in voluntary initiatives in many of our operating countries, including Finland, Poland, Germany, China, Malaysia and the USA. Activities included for example stream resto ration, tree planting, helping children and young people. Several UPM sites participated in environmental clean-up activities. In September, floods brought destruction and hardship to communities in Poland and the USA, both of which are home to many UPMers. In Poland, UPM’s employees organised a collection of daily goods for flood victims. In the USA, a team set up a food and water distribution centre at the Mills River factory to provide these essentials to employees and their families.

Sustainability Statement, ESRS 2 General information on page 129

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024