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

UPM's strategy UPM plans to increase its growth focus through streamlined business portfolio. In late 2025, UPM announced two strategic portfolio projects: the intended graphic paper Joint Venture between UPM and Sappi and the strategic review of UPM Plywood. Assuming the Joint Venture is formed, UPM would have a stronger growth profile, improved margins, and lower leverage. This would mark the beginning of a new era in the company's transformation. Assuming the Joint Venture is formed, the future UPM would have an attractive business portfolio focused on renewable fibres, advanced materials, and decarbonization solutions, all of which operate in growing markets. Strategic portfolio projects expected to conclude in 2026 Through the graphic paper Joint Venture, UPM aims to position the UPM Communication Papers business to create continued value for its customers in a way that benefits UPM shareholders. The intended Joint Venture is expected to close by the end of 2026, subject to regulatory approvals and other closing conditions. UPM Plywood is currently undergoing a strategic review to assess options for maximizing the long-term potential and value creation of the business. The review is expected to be concluded by the end of 2026. UPM acts on three fronts In addition to the strategic portfolio projects mentioned, UPM will further improve competitiveness, increase capital efficiency, and strengthen the balance sheet. UPM will capture focused growth opportunities. Following recent investments, UPM has a strong asset base to capture market growth opportunities in a capital-efficient way. UPM aims to develop a portfolio of world-class businesses. 1) Improve competitiveness • Improve performance through cost efficiency, streamlining and commercial excellence • Increase capital efficiency and cash flow following recent investments • Strengthen the balance sheet 2) Focused growth • Strong asset base enables growth with low investment needs • Growth markets and faster-growing geographies • Competitive production platforms

Strategy in action

Risk management for sustainability reporting

Strategy, business model and value chain

SBM-1

GOV-5

This is UPM UPM offers renewable alternatives to the fossil-based materials used in everyday life. UPM's broad product range includes pulp, graphic and specialty papers, self-adhesive labels, renewable wood-based biochemicals, diesel and naphtha, CO 2 -free electricity, plywood, and timber products. Many of UPM's products offer sustainable alternatives to fossil raw materials and energy. For example, they replace fossil plastics in consumer products, steel and cement in construction, and fossil fuels in transportation, aviation, and electricity markets. UPM's products are used for packaging, communication, labeling, transportation, construction, manufacturing of bioplastics. as well as for tissue and hygiene products. UPM has invested in a biorefinery in Leuna in Germany, which will produce wood-based biochemicals. The industrial-scale biorefinery will convert solid wood into next-generation biochemicals: bio-monoethylene glycol (BioMEG) and renewable functional fillers (RFF). In addition, the biorefinery will produce bio-monopropylene glycol (BioMPG) and industrial sugars. The start-up of the Leuna biorefinery progressed in 2025 and the first commercial deliveries of industrial sugars took place in Q4 2025. Production and sales of further products, lignin, renewable functional fillers and finally glycols is expected to start in 2026. In 2025, UPM Communication Papers permanently closed its Kaukas paper mill in Finland and its Ettringen paper mill in Germany. UPM Adhesive Materials transferred production from the Kaltenkirchen site in Germany to other European sites and decided to convert the Nancy factory in France into a slitting and distribution terminal in 2026. As part of a long-term strategic partnership, UPM Fibres sold its Korkeakoski sawmill in Finland to Versowood. In 2025, UPM also exited the biomedical business. In February 2025, UPM Adhesive Materials acquired Metamark, a UK based company with a manufacturing site in Lancaster. At the end of 2025, UPM employed 15,127 people, most of whom were based in Europe. Refer to » S1-6 for information on headcount by country and by region. There were no banned UPM products or services in 2025. UPM does not have significant revenues from fossil fuel-based energy generation. However, a small amount of fossil fuels is associated with joint energy generation. 99% of UPM Energy's generation is CO 2 -free. Refer to » Report of the Board of Directors, starting on page 124 for more information about UPM's business areas and other operations.

UPM's sustainability reporting at the Group level is based on its sustainability reporting guidelines and the requirements of the ESRS. To improve the reliability of sustainability data, UPM utilizes internal controls tailored to its specific sustainability risks with a focus on materiality. Development of internal controls for sustainability reporting progressed in collaboration with the Internal Control team within the Finance & Control function. The initial phase focused on adapting the structure and documentation to reflect the principles of the financial internal control framework, identifying key risks, and developing controls to address them. UPM continues to improve its internal control framework to minimize potential risks further. UPM's centralized approach to sustainability reporting at Group level allows a review of the input of quantitative and qualitative information and to identify inconsistencies or errors in the data submitted by functions, production sites, and forestry operations. UPM integrates its Sustainability Statement into the disclosure management tool used by UPM Finance, ensuring a streamlined approach to data management. The required data is collected from various sources such as the environmental database, the OHS reporting tool, and the human resources data tool. UPM is committed to continuously improving its sustainability reporting processes. Feedback from stakeholders, internal audits, and the external assurance provider is used to identify areas of enhancement, which are then integrated into the company's risk management and reporting practices. Prioritization is based on the severity and likelihood of the identified risk, as well as the resources needed to implement the necessary actions. The main risks identified for sustainability reporting are related to the accuracy of information, immature measurement methodologies and, in the case of missing information, the credibility of estimates. The contributors to the sustainability reporting process from businesses and functions are informed of the findings and observations from the annual assurance process and internal controls. They contribute to the assessment of risk, possible actions, and their prioritization as appropriate. The Audit Committee of the Board of Directors receives quarterly compliance reports that include information about Group-level sustainability reporting matters. UPM's governance structure ensures appropriate oversight of sustainability reporting at all levels of the organization. The Audit Committee is responsible for monitoring the integrity of sustainability disclosures, the controls and processes needed to consistently generate them, and related assurance.

Key enablers

People UPM focuses on performance, engagement, safety, and integrity. Diversity and inclusion, learning, responsible leadership, and respect are at the core of the work. UPM aims for sustained excellence and continuous professional growth. Productivity UPM uses advanced technologies, sustainable practices, and strategic initiatives to improve efficiency and productivity. This ensures competitiveness of the businesses and supports UPM's growth ambitions. Commercial excellence UPM optimizes commercial interfaces and processes to ensure supply security and enhance the customer experience. This supports the company's ongoing efforts to sustain and grow earnings. Sustainability The UPM Code of Conduct underlines the commitment to integrity and responsible operations. UPM creates value from renewable and recyclable materials, reduces its environmental footprint, and enhances its positive societal impact. Innovation Sustainability, the circular economy, and the customers are at the heart of UPM's innovation. UPM innovates new materials and solutions to help customers’ businesses become more sustainable. UPM innovates to make its operations and processes more efficient and also to increase employees’ productivity.

3) World-class businesses • Portfolio of leading businesses in growing markets • World-class performance in each business • Planned graphic paper Joint Venture • Strategic review of UPM Plywood

Refer to Report of the Board of Directors, section » Research and Development, for examples of how sustainability is integrated into UPM's research and development.

UPM Financial Report 2025

144

UPM Financial Report 2025

145

144

145

UPM Annual Report 2025

UPM Annual Report 2025