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

strategy are people, productivity, commercial excellence, sustainability, and innovation. UPM aims to accelerate growth in the coming years. The company's business portfolio offers robust growth opportunities in renewable fibres such as pulp; in advanced materials such as adhesive materials and specialty papers; and in decarbonization solutions such as biochemicals, biofuels, and CO₂-free energy. Decarbonization solutions offer innovative and sustainable options to meet the urgent need to decarbonize society. Renewable fuels and renewable chemicals are the central elements of UPM’s long-term growth in decarbonization solutions. UPM is addressing key sectors that are critical for decarbonization with the launch of the biochemicals business, further development of the biofuels business, and by capturing the value of the energy market transformation. Minimizing the use of fossil fuels is the most important way to mitigate climate change. UPM will contribute to the decarbonization of the electricity system by increasing the supply of reliable and renewable CO 2 -free electricity. In Biochemicals, the startup of the UPM Leuna refinery marks a significant milestone. In Biofuels, UPM announced to discontinue the development of its potential second biomass-to-fuels refinery at the Port of Rotterdam following extended technical, commercial and strategic evaluations. Renewable fuels and renewable chemicals are the central elements of UPM’s long-term growth in decarbonization solutions. UPM is focusing on three targeted growth areas in its biofuels business: • Evaluating the potential to debottleneck the Lappeenranta biorefinery in order to capture low CapEx expansion opportunities and further leverage the strong market performance of CTO-derived biofuels. • Enabling the qualification of CTO-derived UPM biofuels as sustainable aviation fuel (SAF). This strategic direction is supported by successful SAF trials conducted with the Austrian aircraft manufacturer Diamond Aircraft using Austro Engine propulsion and by continued progress in the technical acceptance process at the American Society for Testing and Materials (ASTM). Results from these trials and stakeholder reviews have been consistently positive. • Continuing feedstock technology development to qualify and enable the use of additional competitive and sustainable biomass. This will support the cost-efficient production of high-quality biofuels for both road and aviation applications. In addition, key climate-related issues such as scenario analyses, commitments and UPM's overall approach to forests, emissions reductions in the production and supply chain, and climate-positive products are reported directly to UPM's management bodies, led by the President and CEO. Refer to » E1-4 Targets for climate-related sustainability targets for 2030 and their follow-up and Refer to » E1-3 Actions for realized and planned key actions.

The investment in Leuna and forest management are also included in the proceeds of UPM's Green Bond portfolio.

Investments and funding Climate change mitigation actions are integrated into UPM's investment plans. The main investments relevant to climate change mitigation include: Climate-positive forestry UPM is both a major forest owner and a purchaser of wood. The value of forest assets, i.e. standing trees, amounted to €2,605 million (2,517 million) at the end of 2025 (Refer to » Note 4.2 Forest assets in the consolidated financial statement). In 2025, UPM's capitalized forest regeneration costs amounted to €64 million (53 million), including costs related to land preparation, planting, fertilization, leased plantation areas and nursery operations. Corresponding OpEx amounted to €26 million (27 million), including maintenance of forestry infrastructure, forest fire fighting, protection, and environmental activities. Reducing emissions As part of the climate change mitigation actions related to UPM's 2030 targets, UPM is investing in energy efficiency improvements throughout its operations. In 2025, UPM invested €4 million (9 million) in energy efficiency improvements and reducing CO 2 emissions, mainly through improvements to heat recovery and logistics development. OpEx related to CO 2 -free nuclear power amounted to €54 million (34 million) and was related to UPM's share of ongoing maintenance costs of the property, plant, and equipment of the new and existing nuclear power plant units Olkiluoto 1, 2 and 3. In addition, UPM is annually allocating resources to its hydropower operations in the form of capital expenditure and maintenance of hydropower plants. Refer to » EU Taxonomy disclosure activity “1.3 Forest management” Refer to » EU Taxonomy disclosure activity "4.27. Construction and safe operation of new nuclear power plants, for the generation of electricity or heat, including for hydrogen production, using best available techniques" and » " 4.28. Electricity generation from nuclear energy in existing installations" Innovating products UPM develops sustainable products that offer alternatives to fossil materials. UPM is investing in a next-generation biochemicals refinery in Leuna in Germany, where new technologies and products will reduce GHG emissions. The total investment estimate for the Leuna biorefinery is €1,335 million. In 2025, investments to Biochemicals operations amounted to €259 million (309 million). The biorefinery will produce a range of 100% wood-based biochemicals, which will enable a switch from fossil raw materials to sustainable alternatives in various consumer driven end-uses. Production and sales of the first commercial products, industrial sugars, started at the end of 2025. Production and sales of further products, lignin, renewable functional fillers and finally glycols is expected to start in 2026. The start-up of the biorefinery marks a significant milestone for UPM.

Transition plan

Refer to line items » Capital expenditure and » Additions to forest assets in Consolidated cash flow statement Refer to line item » Costs and expenses in Consolidated income statement Refer to » Note 2.3 Operating expenses and other operating income in the consolidated financial statements See » EU Taxonomy, sections “CapEx” and “OpEx” and tables "CapEx" and "OpEx" See » E1-3 Actions for realized and planned key actions Other climate change mitigation-related aspects UPM does not consider its assets and sold products to have locked-in fossil GHG emissions. Locked-in GHG emissions are considered to be emissions which occur due to long-term investments or commitments to assets or products generating emissions still long in the future. All the economic activities that UPM reports under the Taxonomy Regulation contribute to climate change mitigation (CCM). All activities, except 1.1 Afforestation and 1.3 Forest management, are assessed as Taxonomy - aligned. UPM considers that these before mentioned activities meet all alignment requirements, with the exception of third - party verification. UPM intends to obtain the necessary external verification and, once completed, plans to also assess activities 1.1 Afforestation and 1.3 Forest management as Taxonomy - aligned. Refer to » EU Taxonomy disclosure, Assessment of Taxonomy eligibility and alignment UPM did not spend significant CapEx related to coal-, oil-, or gas related economic activities in 2025. UPM is not excluded from the EU Paris-aligned Benchmarks according to the exclusion criteria stated in Articles 12.1 (d) to (g) and 12.2. of the Commission Delegated Regulation (EU) 2020/1818 (Climate Benchmark Standards Regulation). Climate actions embedded in UPM's strategy Forests, wood-based products, and low-carbon energy play a unique role in UPM's strategy and in mitigating the effects of climate change. With UPM's target to reduce Scope 1, 2 and 3 emissions, these areas form the basis for UPM's transition plan. UPM's financing is linked to sustainability performance. Four green bonds, issued since 2020, have a strong focus on climate-related activities. In addition, UPM has credit facilities which are linked to biodiversity and climate targets. In accordance with its main duties and responsibilities, the UPM Board of Directors reviewed and approved the strategic objectives and plans of the company and its business areas. The key enablers of UPM's updated

E1-1

UPM's path to net-zero

UPM offers renewable alternatives for fossil-based materials to meet the growing global consumer demand. UPM's strategy is driving the transformation as a frontrunner in the bioeconomy. The company is investing in sustainable growth. Forests, wood-based products, and low-carbon energy play a unique role in both mitigating the effects of climate change and in UPM's strategy. UPM has set ambitious targets in all these areas as part of its Group-level sustainability targets for 2030. UPM is committed to a 1.5 °C pathway as outlined in the Paris Agreement (climate target) and to science-based measures to mitigate climate change. As a signatory to The Climate Pledge, UPM is committed to achieving carbon neutrality by 2040, 10 years ahead of the Paris Agreement. As part of the UN Global Compact's Forward Faster initiative, UPM is also committed to setting net-zero targets as defined by the Science Based Targets initiative (SBTi). However, SBTi has temporarily suspended the use of the timber and wood fibre pathway included in the Forest, Land and Agriculture (FLAG) Target-Setting Tool. Therefore, setting UPM’s long-term net-zero target can be finalized when the relevant guidelines and tools for accounting land sector emissions and removals will be available. This is expected to happen in 2026. UPM has participated in consultations of the SBTi Net Zero standard and Forest, Land and Agriculture guidance reviews. The company's fossil CO 2 emissions reduction targets until 2030 for Scope 1, 2 and 3 have been validated by the SBTi to be aligned with the 1.5 °C pathway as outlined in the Paris Agreement. Climate change mitigation actions UPM acts through climate-positive forestry, reducing emissions and innovating products: We act through forests . Forests and forest biodiversity are critical for mitigating the effects of climate change. We ensure that our forests continue to act as carbon sinks, remain resilient and diverse in changing climate conditions, and thrive for future generations. We act through emissions . Minimizing the use of fossil fuels and raw materials is the most important way to mitigate climate change. We favor renewable and other carbon-neutral energy sources and produce CO 2 -free hydro and nuclear power in Finland. We are also committed to reducing emissions in our supply chain. 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.

Refer to » EU Taxonomy disclosure activity “3.6 Manufacture of other low-carbon technologies”

Refer to » E1-3 Actions; Refer to » E1-4 Targets

UPM Financial Report 2025

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UPM Financial Report 2025

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UPM Annual Report 2025

UPM Annual Report 2025