UPM Annual Report 2025

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We are UPM

Governance

Accounts and performance

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

Litigation and compliance UPM operates globally in a large number of jurisdictions and complex regulatory frameworks. UPM may from time to time be involved in litigation and other similar proceedings or it could become subject to various claims and actions based on various grounds. On a global scale, enforcement activities and jurisdictional reach regarding competition issues and anti-corruption have increased. Also, the recent development of Renewable Energy Sources Act (EEG) related lawsuits in Germany for alleged non-payment of EEG based surcharges may have an adverse impact on UPM, albeit UPM is not currently a party to any such lawsuits. Russia's war in Ukraine triggered many countries to impose several sanctions packages which may increase the risk of investigations, litigations or claims associated with alleged sanctions violations, or retaliatory litigation in Russia. The UPM Code of Conduct sets the standards of responsible behavior and it covers topics relating to legal compliance and disclosure, anti-corruption, competition law, HR practices, human rights, responsible sourcing and environmental matters. UPM’s environmental performance and social responsibility play a significant role in UPM’s ability to operate and influence the long-term success of its businesses. UPM also measures and publishes information on its environmental, social and governance matters, for which there is an increasing risk of investigation or litigation from activists or other stakeholders on alleged misrepresentation. UPM has significant manufacturing operations or sourcing in several developing countries, some of which are perceived as highly corrupt or corrupt according to Transparency International. In these countries, there is an increased risk of corruption, for example in relation to interaction with government officials and in the use of intermediaries when applying for permits and licenses requiring governmental approval. Breaches of applicable laws and regulations or corporate policies by UPM employees may lead to legal processes, sanctions and fines as well as reputational damages effecting UPM’s operations. Industrial actions UPM is subject to risk of industrial actions, which could disrupt its business operations or the business operations of its stakeholders. Uncertainty may increase in the Finnish labor market amid the announcement of the Finnish Forest Industries Federation in autumn 2020 to transfer collective bargaining to companies. For example, in the beginning of 2022, members of the Paperworkers’ Union, the Finnish Electrical Workers´ Union and the Trade Union Pro started strikes at UPM mills in Jämsänkoski, Kouvola, Lappeenranta, Pietarsaari, Rauma, Tampere and Valkeakoski, Finland. Any strike or other industrial action in UPM’s business operations or related sectors could have an effect on UPM’s business operations. For example, industrial actions in the transportation sector or among other stakeholders important to UPM, may disrupt UPM’s operations. Additionally, public dissatisfaction with UPM’s labor-related decisions may, in extreme cases, lead to unanticipated boycotts or disruptions at its facilities or construction sites. A natural disaster, fire, accident or other major disruption at UPM’s production facilities UPM operates a significant number of production facilities globally that are exposed to risks related to environment, fires, natural events, machinery breakdowns, site security and occupational health and safety

events, such as severe storms, floods and droughts, which could, for example, result in unpredictable hydropower availability and wood harvesting conditions. Exceptionally mild winter conditions with a reduced period of frozen soil in the Nordics could affect the harvesting and transport of wood, consequently undermine the stability of raw material supply and potentially increasing the cost of wood. These could also increase the risk of production limitations. Biodiversity loss Biodiversity refers to the diversity and variation of species and ecosystems on our planet. According to the UN, and despite ongoing efforts, biodiversity is deteriorating worldwide. Biodiversity loss is projected to worsen if no mitigation actions are taken. Mitigating climate change is, in our view, the single most important action to safeguard biodiversity. UPM’s operations are widely linked with biodiversity, and most significant impacts on biodiversity arise from wood sourcing activities. Biodiversity is instrumental in maintaining healthy forest growth and ensuring that forests adapt to the changing climate. Mitigating biodiversity loss also plays an important role in our hydropower plants and production units where we aim to improve living conditions for local fauna and flora with dedicated actions. Deteriorating biodiversity may cause significant adverse effects on the availability and acceptability of wood raw material needed to produce UPM’s products such as pulp, paper, timber and biofuels. Loss of major customers and industry consolidation UPM has several major customers, and the largest customer in terms of sales represented approximately 3% of UPM’s sales in 2025, and the ten largest customers represented approximately 12% of such sales. Although UPM is not dependent on any specific customer or group of customers, the loss of its major customers, if not replaced on similar terms, could have a material effect on UPM’s business. Also, as the size of UPM’s customers could increase in connection with industry consolidation, such customers could exert increased bargaining power on all of their suppliers, including UPM. UPM is also exposed to risks related to any deterioration of a major customer group’s financial condition. Product development, innovation and intellectual property rights Research and product development are an important part of UPM’s strategy, particularly with regard to new businesses, such as wood-based biofuels and biochemicals. The return on investment of new or enhanced existing products and solutions may not meet targets or improve UPM’s competitiveness. UPM has a broad patent portfolio that provides value creation potential in the future; however, it also exposes UPM to risks related to the protection and management of intellectual property, including patents and trademarks. Corporate acquisitions and divestments UPM’s strategy is to grow businesses with strong long-term fundamentals and sustainable competitive advantage. This may result in acquisitions of new businesses or divestments of existing businesses or parts thereof. Carrying out corporate mergers, acquisitions and divestments involves risks relating to the successful implementation of a divestment and the

production inputs and could materially affect the prices paid by UPM for these inputs. The UPM Supplier and Third-Party Code defines the minimum level of performance that UPM requires from its suppliers and third-party intermediaries. UPM carries out supplier risk assessments on, for example, operational, financial, quality and responsibility perspectives. Based on the risk assessment, selected suppliers’ activities are evaluated in more detail through annual surveys, supplier audits and joint development plans. If any non-conformities are discovered, the supplier is required to take corrective measures, which UPM follows up on. Some contracts may also be discontinued due to the seriousness of the finding or insufficient corrective measures. Management and execution of large investment projects Investment projects in UPM’s businesses are often large and take one or more years to complete. Participation in large projects involves risks, such as cost overruns or delays, shortage of labor, financial distress of suppliers, or accidents as well as non-achievement of the economic targets set for the investment. Currently, UPM’s largest ongoing investment project is the construction of a new biochemicals refinery in Germany. This project involves the development of new business concepts and technologies. UPM is responsible for many projects in several of its countries of operation at any given time. All projects involve technical and operational risks, and projects require continuous operational planning, steering and supervision, quality control, input procurement, scheduling as well as resource and cost monitoring. Managing several projects requires that UPM has sufficient resources and efficient processes. Port congestion issues, transportation bottlenecks, accidents in transit, and rising logistics or construction costs, all of which could be resulting from external events or market conditions beyond the control of UPM, may have an effect on the execution or profitability of investment projects. UPM’s transformative biochemicals project in Germany is proceeding with commissioning and start-up activities, but despite efforts, there are uncertainties how quickly or whether the project will reach the targeted returns. UPM’s production and business operations depend on the availability of supporting information systems and network services. Unplanned interruptions in UPM's or a supplier's critical information system services, loss of critical, financial or personal data due to reasons beyond UPM’s or its suppliers' control, such as power cuts, geopolitically-driven service restrictions, software or telecommunication errors or other major disasters, such as fires or natural disasters, as well as user errors by UPM’s own personnel or suppliers, can potentially cause major damage to UPM’s businesses and disruptions to the continuity of operations. UPM’s or its suppliers' information systems may be exposed to various cybersecurity risks. Malicious cyber intrusion could cause leakage of sensitive information, violation of data privacy regulations, theft of intellectual property, AI-generated misinformation or disinformation, production outages and damage to UPM’s reputation. Unavailability of information systems as well as cybersecurity breaches

ability to integrate and manage acquired businesses, systems, culture and personnel successfully. In addition, the cost of an acquisition may prove high and/or the anticipated economies of scale or synergies may not materialize. Hidden liabilities of an acquired company (e.g., competition law liabilities) may also constitute a significant risk in relation to potential acquisitions. UPM may divest operations or assets to focus on strategic areas. Any future divestments may be affected by many factors that are beyond UPM’s control, such as the availability of financing to potential buyers, interest rates, acquirers’ capacity, and regulatory approval processes, and divestments may also expose UPM to indemnity claims. Furthermore, divestments may involve additional costs due to historical and unaccounted liabilities. The profitability of corporate acquisitions and divestments may differ from UPM’s expectations. The main inputs required in the manufacturing of UPM’s products are wood, fibre, chemicals, energy and water. The prices for many of these major production inputs have been volatile in recent years and are expected to remain volatile for the foreseeable future, which may have an effect on the general profitability of the industries in which UPM operates. Climate change may contribute to the increase in the price volatility of UPM’s major production inputs. Also, any changes in the current forestry practices and level of harvesting due to negative public opinion or regulatory restrictions towards harvesting could have an effect on the raw material supply and may increase the cost of wood. Governmental protection and trade protection measures, amplified by Russia's war in Ukraine and the economic sanctions imposed as a response, could also have an effect on the price and availability of raw materials as countries may, for example, enact further export ban policies to protect forests or to bolster their domestic industries, which could have a material effect on the cost and availability of raw materials for UPM. It is also uncertain how EU energy policies may affect the availability and costs of fibre and energy. Significant increases in the prices of UPM’s major inputs could increase UPM’s operating expenses. Operational risks Fluctuations in the prices of major inputs as well as changes in their availability Supplier and subcontractor network and raw materials procurement UPM’s business operations depend on a large number of suppliers and contractors. The majority of UPM’s need for wood is covered by suppliers, and other production inputs, such as chemicals, fillers and recovered paper, are fully obtained from suppliers. Disruptions in the supply of key inputs or transportation services could have a significant effect on manufacturing operations. This could, for example, result in interruption or downscaling production, change in the product mix or increased costs resulting from price increases for critical inputs or transportation services as well as shifts in the availability and price of wood. Due to Russia's war in Ukraine, the EU has imposed bans on wood exports and imports and transportation operations directly applying to sourcing of wood and other raw materials from Russia. Supplier consolidation could also limit the number of suppliers from which UPM would be able to source its