UPM Annual Report 2025

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The positive impact has to be proven by monitoring and measuring the carbon balance and by maintaining the carbon sink. The Natural Resources Institute Finland (LUKE) calculates UPM's carbon sink based on the latest scientific knowledge and methodologies aligned with the International Panel on Climate Change (IPCC) requirements for national accounting for the land use, land use change and forestry (LULUCF) sector. Both trees and soil carbon are taken into account. Fossil CO 2 emissions caused by forest management activities (e.g. nurseries, planting, harvesting) shall be lower than the sink. The five-year average of UPM's carbon sink has to be a negative value, i.e. carbon removal, to achieve UPM's target of climate-positive forestry. This is a UPM-specific term and definition as long as no international standard provides a commonly accepted definition. Climate-positive product portfolio Starting from 2024, UPM reports on this target based on the share of its decarbonization solutions out of total sales: biofuels; biochemicals; and CO 2 -free energy. Overall, UPM considers the following of its current products to have a positive impact on the climate: • Products that have a lower carbon footprint compared to fossil-based alternatives – such as biofuels and biochemicals, • Products that substitute fossil-based energy - such as CO 2 -free nuclear energy and hydropower, • Products that avoid greenhouse gas emissions by replacing fossil based products – such as biochemicals and timber, or • Products that act as temporary carbon storage – such as pulp, paper, plywood and timber over their life cycle. The positive impact has to be proven by means such as life cycle analysis, availability of Guarantees of Origin, calculation of substitution and storage effects based on a study initiated by UPM and carried out by the SYKE and IFEU institutes (Fossil carbon emissions substitution and carbon storage effects of wood-based products, Reports of the Finnish Environment Institute, 22/2022). A pre-condition for the storage effect is the wood supply from sustainably managed forests which ensures a sustainable biogenic carbon cycle between land carbon storage and product storage. This is a UPM-specific term and definition as long as no international standard provides a commonly accepted definition.

Expected decarbonization levers UPM's path to net-zero is expected to be based on the decarbonization levers shown in the graph below as an indicative roadmap. UPM's long- term target setting baseline year is 2018. UPM's fossil CO 2 emissions are forecast to be reduced mainly through actions to improve energy efficiency, switch from fossil fuels to biogenic fuels or hydrogen, electrification of heat generation and other production processes, strategic investments and activities, as well as activities to reduce the CO 2 emissions in the value chains. External effects such as the decarbonization of the electricity grid and economies as a whole, as well as general market developments, are also considered to play an important role.

Reporting principles for targets

The remaining residual emissions could be more than balanced by the potential carbon sinks of UPM's forests, product-related impacts like temporary carbon storage, or other carbon removal options. According to the SBTi, net-zero means reducing GHG emissions by at least 90% and neutralizing any residual GHG emissions through carbon removals on an ongoing basis. UPM's net-zero approach will be aligned with recognized international carbon accounting and assurance standards when these are finalized.

GHG emissions reduction targets (Scope 1, 2 and 3) in detail UPM's target for Scope 1 and Scope 2 emissions is a combined reduction of 65% from 2015 levels. Scope 1 includes UPM's on-site fossil CO 2 emissions from combustion processes. Calculation is based on the European Emissions Trading System, other national requirements, or official calculation factors. Scope 2 covers fossil CO 2 emissions related to purchased electricity and steam. Electricity and steam purchases are calculated based on supplier information (market-based method). If the market-based data is unavailable, the residual mix is used, and if the residual mix is unavailable, regional or national grid factors are used. In cases where UPM has sold greenhouse gas claims (such as Guarantees of Origin) for energy used by UPM, the corresponding amount has been calculated using the national residual mix. GHG emissions other than CO 2 are not material and are therefore not included in the target scope. The base year value of 6.8 million tonnes of CO 2 (Scope 1: 57%, Scope 2: 43%) for 2015 has been chosen as representative to follow up on the target during UPM's transition phase. UPM's Scope 3 target covers materials and logistics, which accounted for 67% of total Scope 3 emissions in the base year 2018. The base year value of 6.08 million tonnes CO 2 eq is calculated based on secondary data for emission factors. In recent years, the values are calculated based on data availability, using either secondary emission factors or the previous year's primary emission factors. Emissions are reported as CO 2 eq (including CH4 and N 2 O) using the global warming potential (GWP) values provided by the International Panel on Climate Change (IPPC).

UPM's pathway to net-zero (illustrative)

Refer to » E1-6 Metrics, Reporting principles for metrics for further information on Scope 1, 2 and 3

Climate-positive land-use in UPM own and leased forests UPM defines climate-positive forestry as the act of managing forests or plantations to ensure that trees grow more than they are harvested, as well as working to improve forests' growth and to ensure the ability of forests to absorb more carbon and to adapt to the changing climate. Climate-positive forestry is not only about sinks but also about enhancing biodiversity as a means to adapt.

UPM Financial Report 2025

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UPM Financial Report 2025

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UPM Annual Report 2025

UPM Annual Report 2025