UPM Annual Report 2025

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depletion. The calculation has been performed separately for forests growing on mineral soils and peat soils. Estimates of stand growth are based on the National Forest Inventory (VMI), which is a five-year inventory cycle. The change in soil carbon stock has been calculated using the dynamic Yasso07 soil model. Uruguay Changes in forest carbon stocks cover both the tree stock and the soil. Measurement data and mathematical modeling from LUKE have been used in the calculation. Changes in the carbon stock of the stand are calculated as the difference between annual growth and depletion, based on annual increments in volume and harvest information from UPM. The change in soil carbon stock has been calculated using the dynamic Yasso07 soil model. The U.S. Carbon sinks on UPM-owned forests in the USA were calculated as the difference in carbon stored in growing stock between two time points in five years. The calculation complied with IPCC guidelines and was based on available data on annual totals of stem volumes by age classes. The total biomass carbon stock change was based on species-specific wood densities and species group-specific biomass expansion factors. The below-ground tree biomass was calculated based on ratios between above-ground and below-ground biomasses for specific species groups Temporary carbon storage The temporary carbon storage of UPM's wood-based products is estimated based on a scientific report “Fossil carbon emission substitution and carbon storage effects of wood-based products” published in early 2022 by The Finnish Environment Institute (SYKE) and the German Institut für Energie- und Umweltforschung Heidelberg (IFEU). The study was initiated and funded by UPM. The general method to estimate the magnitude of the defined carbon (C) stock in the HWP pool in use and its net changes involves the so called “HWP in use” method (IPCC 2019). UPM calculates the annual change in carbon stock based on the company's annual production (in terms of carbon content) of sawn wood, wood-based panels, pulp, and paper products, an estimate of half-life factor (number of years it takes to lose one-half of the material currently in the pool) for the respective product and an estimate of the decay constant. IPPC factors are used to estimate half-life and decay constant. When carbon stocks of harvested wood products (HWPs) increase, the carbon is accounted as removal (negative emission). In the opposite situation, HWPs are accounted as carbon emissions. in compliance with IPCC guidelines. See » upm.com for more information.

Carbon removals and use of carbon credits

Internal carbon pricing

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Carbon sink In 2025, the annual carbon sink from UPM own forests in Finland and in the USA and UPM own and leased plantations in Uruguay has averaged -1.9 million tonnes of CO 2 equivalent over the past five years. This removal could be used to mitigate the residual emissions in UPM's net-zero pathway, presuming that carbon sinks will be accepted by credible international carbon accounting and assurance standards. Refer to » E1-4 Expected decarbonization levers Temporary carbon storage UPM's wood-based products store carbon during their lifetime. UPM is calculating the annual change in carbon stock of its sold wood-based products such as paper products, pulp, sawn timber and plywood. In 2025, the change in the annual carbon stock of wood-based products sold by UPM resulted in a carbon removal of -2.4 million tonnes of CO 2 . UPM estimates the temporary carbon storage based on a scientific report by the Finnish SYKE and the German IFEU institutes. Refer to » Reporting principles of metrics . Depending on the development of credible international carbon accounting and assurance standards, temporary carbon storage might be taken into account in UPM's net-zero pathway. Carbon credits In case UPM is offering carbon-neutral products for its customers, it is through credits from voluntary offsetting schemes, such as Gold Standard. The total amount in 2025 was less than 10,000 t CO 2 eq. The credits are used solely to offer carbon-neutral products to customers but are not contributing to UPM's CO 2 emission reduction targets. Carbon sink The Natural Resources Institute Finland (LUKE) calculates the carbon sink of UPM's own and leased forests and tree plantations in Finland, the USA, and Uruguay. The results are reported annually as a five-year average and the calculation is developed as best practice evolves. There is ongoing work to harmonize methodologies and make calculations more accurate. The previous year's figures are therefore not fully comparable. UPM aims to constantly improve the understanding of carbon balances. In 2022, a project started with LUKE to improve the soil carbon models for Uruguay with actual measurements on the ground. Field measurements in eucalyptus plantations began in 2023. An improved model for carbon calculations is used in UPM's carbon accounting since 2024. Finland Changes in forest carbon stocks cover both the tree stock and the soil. Long-term measurement data and mathematical modeling from LUKE have been used in the calculation. Changes in the carbon stock of the stand are calculated as the difference between annual growth and Reporting principles for metrics

The internal carbon price is used as input to the long-term electricity price forecast. The long-term electricity price and internal carbon price are used to value UPM's existing assets and to plan investments. The type of system is an implicit carbon price, and it is set to align with the price of the allowances under EU ETS. It is used for capital expenditure and risk and opportunity management to drive low-carbon investments, to identify and seize low-carbon opportunities, and for stress testing of investments. UPM has fundamental power market models for both the Nordic and Continental European market areas. These models are used to forecast electricity prices several decades ahead. The models consider the transformation of the energy sector with climate change mitigation. The resulting power and commodity (fuel, CO 2 ) prices are used in assessing the value of UPM's assets and in investment decisions. In addition to numerical electricity price forecasting, UPM Energy uses scenario analysis for strategic decision-making. Currently, these analyses are used up to 2045. They are also used in other businesses of UPM, such as paper businesses, as future carbon prices may have a significant impact on the profitability of current and/or planned assets. The internal carbon price is set to be in line with the EU ETS allowance price. Anticipated financial effects

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For qualitative information about the financial impact of risks and opportunities, refer to » Report of the Board of Directors, section “Climate change” in chapter Risks; Refer to » Note 1.2 Basis of preparation in the consolidated financial statements, Climate-related risks. For more information about opportunities, see » UPM Annual Report's Strategy chapters.

UPM Financial Report 2025

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UPM Financial Report 2025

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UPM Annual Report 2025

UPM Annual Report 2025