UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Sustainability Statement

Report of the Board of Directors

Financial Statements

Auditor's Report

Sustainability Assurance Reports

Intellectual property rights of third parties Molecular bioproducts form one of UPM’s three strategic focus areas for growth. Initiatives within this strategic focus area are technology-intensive and require increasing investments in such technologies either through internal development or through third-party licenses or technological partnerships. In addition to UPM’s own IPR portfolio, UPM licenses certain technologies developed by third parties. Evaluating the rights related to the third-party technologies UPM uses or intends to use is increasingly challenging. Licensing third-party technology exposes UPM to such risks as the increase of overall licensing costs, loss of negotiation power, the validity of such licensing arrangements and potential infringement claims, which could restrict UPM’s ability to use certain technologies, prevent the delivery of UPM’s products and/or result in costly and time consuming litigation. Risk related to IPR claims and disputes relating to technological partnerships have been assessed to increase. Building capabilities to growth areas The success of UPM’s business largely depends on the ability to build and retain the necessary new capabilities required for future growth. UPM is continuously developing its employee experience, leadership culture, evaluating its recruitment, compensation policies and career development opportunities and taking measures to attract and retain diversely skilled personnel and individuals with rare and pivotal specialist knowledge for current and future growth areas.

risks. If UPM’s production facilities were to experience a major accident or were forced to shut down or curtail production due to such unforeseen events, such as a leak or spill due to malfunction or human error, this could cause major interruptions in UPM’s operations and result in significant costs in order to clean up and repair any potential damages to the production plant and the surrounding areas. Any failure to maintain high levels of safety management could also result in physical injury, sickness (including pandemics-related infection outbreaks) or liability to UPM’s employees, contractors or third parties. These risks are managed through established management procedures, health and safety precautions and loss prevention program. UPM’s insurance program provides coverage for insurable hazard risks, subject to insurance terms and conditions. Forests and plantations UPM’s plantations and forests may be affected by the impacts of climate change, which include more frequent and severe extreme weather conditions such as heavy rainfall, storms, floods and drought. Climate change is expected to have the biggest physical effect on UPM’s forest lands in Finland, where temperatures are expected to rise more significantly and rapidly compared with other countries where UPM owns forest. Although forest growth will likely accelerate, particularly in Finland, due to the longer growing season, extreme weather conditions will intensify, presenting new risks. The increase of droughts and forest fires are estimated to pose the most significant risks for UPM’s forests and plantations. Also, damages caused by insects and tree diseases are becoming increasingly common, which could have an effect on the value of UPM’s forest assets. Should these risks materialize, they could harm UPM’s forest and plantations resulting in production interruption and additional costs. in biofuels, bioenergy or biochemicals increases the importance of partnerships in the search for new products and businesses or higher efficiency. Partnerships may, however, create risks to UPM's profitability, for example, through changes occurring within the partner entity or changes in how the partnership operates. UPM is also subject to the risk that its strategic partners do not comply with UPM’s Code of Conduct with anti-corruption, competition law, HR practices, human rights, responsible sourcing and environmental matters. Partnership arrangements may also be too rigid to enable timely changes required, for example, in connection with changes in the market conditions or the economy. UPM’s partners may have different targets with respect to the business of the partnerships. As UPM may not have sole control over strategic direction and operational output of these entities, its partners may have the right to make certain decisions on key business matters with which UPM does not agree. In some cases, strategic partners may choose not to continue partnerships that they have with UPM. Russia's ongoing war in Ukraine, geopolitical escalations or trade tensions may cause adverse economic or operational conditions and result in financial stress or operational hardship to a strategic partner and trigger unexpected negotiation or other processes causing delays or cost increases for UPM. Strategic partners UPM collaborates with many partners. For example, product development

Sustainability Statement

Financial risks Financial risks are described in consolidated financial statements 2025.

Type of risk

Consolidated financial statement note

Credit risk

4.6 Working capital

Liquidity and refinancing risk

5.1 Capital management

Interest rate risk

6.1 Financial risk management 6.1 Financial risk management 6.1 Financial risk management

Foreign exchange risk Electricity price risk

Counterparty risk

6.2 Derivatives and hedge accounting

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UPM Annual Report 2025