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 commitment to energy efficiency is also addressed in UPM's Sustainability Policy Statement as a topic for continuous improvement, with energy management systems as the preferred measure. Renewable energy targets and the phase-out of coal and peat support and specify policy commitments. Actions

2024, triples UPM’s ultracapacitor capacity and further strengthens the ability of hydropower to balance the electricity grid. • Solar power development was explored in Utti in Kouvola, and wind power in Western and Eastern Finland. Environmental impact assessments were ongoing in 2025. Planned actions • UPM will continue to develop and implement energy efficiency measures and to develop its energy portfolio to reach its 2030 targets. • UPM will install a new type of heat pump at its Augsburg paper mill in Germany. The pump will use previously unused waste heat to generate process steam for paper production. UPM expects this innovation to reduce CO 2 emissions in the steam generation process by 15%. The project is scheduled for completion in 2027. • UPM Communication Papers launched a roadmap to accelerate climate action, for example, with long-term wind power agreements, power-to-heat solutions, and tailored activity plans for the mills. UPM ensures that its forests and plantation areas continue to act as carbon sinks, remain resilient and diverse in changing climate conditions, and grow well for future generations. For forests to continue to act as carbon sinks, growth must exceed harvesting. The annual carbon sink of UPM-owned forests in Finland and the USA and owned and leased plantations in Uruguay is -1.9 million tonnes of CO 2 equivalent (CO 2 eq) as the annual average over the past five years. Actions in 2025 • Annual calculation of the carbon sink of UPM's own and leased forests and tree plantations in Finland, the USA, and Uruguay. • UPM has worked with Natural Resources Institute Finland to improve soil carbon models for Uruguay using field data since 2022, and the field measurements in eucalyptus plantations continued in 2025. • The calculations in Uruguay were switched to similar increment-drain method that is used for Finland. According to the Natural Resources Institute Finland, this is currently the most robust method for forest carbon accounting but the development work continues. Planned actions • Annual calculation of the carbon sink of UPM's own and leased forests and tree plantations in Finland, the USA, and Uruguay will continue. Forestry: Forests as carbon sink Key actions

Impacts, risks and opportunities

ESRS 2 SBM-3

Overview of material impacts, risks and opportunities

Impacts, risks and opportunities

Description

E1-3

Positive impact: Climate change mitigation through climate-related effects of forests and bio-based products Negative impact: Fossil CO 2 emissions from UPM's own energy generation (Scope 1), purchased energy (Scope 2), and related to value chain (Scope 3) Risk: Transitional as well as physical, climate-related risks due to changes in legislation and extreme weather events

Through its sustainable forest management practices UPM ensures that its forests in Finland and the U.S., as well as its land areas in Uruguay, act as carbon sink. UPM's bio-based products create temporary carbon storage and substitute fossil-based materials. Despite continuous actions and achievements to reduce fossil CO 2 emissions in line with the 1.5 °C target, UPM is still generating a significant amount of fossil CO 2 emissions via its production sites and in the value chain. These will be reduced further in line with UPM's transition pathway to achieve net-zero. UPM is exposed to a variety of risks related to climate change. Transitional risks are related e.g. to regulation and the price and availability of raw materials and energy. Physical risks are related e.g. to exceptional weather events which could result in unpredictable hydropower availability, wood harvesting conditions, or operational disruptions. Opportunities driven by resource efficiency, new technologies, CO 2 -free electricity, and bio-based products could bring new markets, sources of funding and competitive advantage, and a possible increase in forest growth in UPM's relevant areas.

Based on the identified material topics, UPM has established the following sustainability focus areas related to climate change mitigation and adaptation: • Climate (with targets for energy efficiency, renewable energy, Scope 1 and 2 CO 2 emissions) • Forestry (with a target on forests' carbon sink) • Product stewardship (with a target for a climate-positive product portfolio) • Responsible sourcing (with a target for Scope 3 emission reduction) • Biodiversity (with targets for forest-related biodiversity); Refer to » E4-3 Actions For each of these focus areas, key actions are defined, and an action plan is available to achieve the Group-level targets. Refer to » E1-4 Targets related to climate change The key actions, previous year's key actions, and future key actions are presented below. Climate: Energy-related actions Key actions UPM favors the use of renewable and other carbon-neutral energy sources and strives to continuously improve energy efficiency in all its operations. The company consistently develops its energy portfolio and manages the CO 2 -free electricity generation assets in UPM Energy. UPM contributes to the decarbonization of the electricity system by increasing the supply of reliable CO 2 -free electricity. UPM Energy is the second largest electricity supplier in Finland with assets in Finnish nuclear power and hydropower and, to a lesser extent, thermal power. Most of UPM's energy consumption is related to the production processes in the paper and pulp mills, where electricity and heat are needed for mechanical pulping, pumping, and drying. Steam and electricity are generated through combined heat and power (CHP) plants. In some mills, all or part of the required energy is produced by external or co-owned power plants. Energy efficiency is improved across operations through audits, innovations, and investments. Improvements usually also lead to reductions in CO 2 and other air emissions. Actions in 2025 • UPM Energy’s new ultracapacitor at the Kuusankoski hydropower plant started up in November 2025. The investment, announced in August

Opportunity: Transition opportunities covered by UPM's business model focusing on bio-based products and CO 2 -free energy

Refer to » Report of the Board of Directors, section Risks, paragraph Climate change

Climate risks and business resilience UPM's position and resilience in different climate scenarios have been evaluated for the company's businesses and functions from both physical and transitional perspectives. A company-wide assessment of transition risks and opportunities has been made for each of UPM's business areas according to the different scenarios for project future energy trends and their potential impacts used by the International Energy Agency (IEA): the New Policies Scenario (NPS), Current Policies Scenario (CPS) and 2 °C Scenario (2DS). The company-wide physical scenario analysis for three Shared Socioeconomic Pathways (SSP1-2.6, SSP2-4.5 and SSP5-8.5) focused on the impacts of projected changes in four main areas of UPM's operations: Finland; Germany; Uruguay; and China. The analysis included impacts on forest growth, productivity, and water availability arising from climate change related disturbances such as changes in precipitation, evaporation, droughts, and floods. The study was carried out by the Finnish Meteorological Institute in 2024. Refer to » ESRS 2 IRO-1 Climate related risks for more information on the study results. In general, transition impacts play a larger role in the low- and medium-emissions scenarios, and UPM is well positioned, as its business portfolio allows flexibility in terms of recognized risks and opportunities. In the high-emissions scenario, physical impacts dominate, with serious consequences not only for UPM but for ecosystems and societies around the world.

Policies

E1-2

The UPM Code of Conduct expresses the company's respect for people, the environment, and ethical business practices, including its commitment to climate change mitigation and adaptation. The Code is complemented by UPM's Sustainability Policy Statement, which addresses the issue in more detail. The UPM Supplier and Third-Party Code sets out minimum requirements for the value chain. Refer to » G1-1 Policies for more information about these policy documents. UPM's high level commitment to climate change mitigation and adaptation is included in the UPM Code of Conduct: “UPM is committed to science-based actions to mitigate the impact of our operations on climate and biodiversity and to adapt to climate change. On an ongoing basis, we measure and assess the direct and indirect environmental risks and impacts of our operations and promote the use of the best available techniques. We expect our suppliers and business partners to share our commitment to the environment.” In UPM's Sustainability Policy Statement, this commitment is specified for the CO 2 reduction target to cover operations and the supply chain in line with the science-based target and measures are introduced for the three pillars of UPM's climate actions: climate-positive forestry; reducing emissions; and climate-positive products. In addition, UPM's Sustainable Supply Chain Program states that UPM's suppliers are expected to report their carbon footprint annually, commit to time-bound greenhouse gas emissions reduction targets, and take appropriate actions.

UPM Financial Report 2025

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UPM Financial Report 2025

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UPM Annual Report 2025

UPM Annual Report 2025