UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Our strategy

UPM in brief

Our businesses

Sustainability

Changes in policies, legislation and stakeholder expectations

Information technology availability and increasing cybercrime activity

The strain on natural ecosystems has intensified expectations for companies to provide economic, so cial and environmental benefits, and complement the actions of governments. Changes in regulation, taxation or subsidies may affect our performance, competitiveness, and the cost and availability of raw materials. Unpredictable and rapid changes in policies, such as those in the U.S. or EU, or local legisla tion may occur. Environmental regulations may continue to become stricter. As policies, legislation or stakeholder expectations change, or as they are applied, additional costs may be imposed on us for complying with stricter requirements or for noncompliance. Management: Responsible operations in the value chain enhance the ability to operate and influence long-term business success, including environmental management systems, sustainable forestry and compliance. Opportunity: Creating value for society through our renewable and responsible material and energy solutions is an integral part of our strategy. The bioeconomy offers new opportunities for value creation and business growth. We invest in selective strategic projects to enable profitable growth. These projects are often large and may take several years to complete. They may also involve strategic, technical and operational risks. Our biochemical refinery project in Germany utilizes new technology and opens new markets for us. The recent high inflation and interest rate environment, construction material price uncertainty, availability of skilled labor, and bottlenecks in global logistics and supply chains have introduced new challenges to large investment projects. Management: Strict and continuous operational planning, steering, supervision, quality control, input procurement, scheduling, and resource and cost monitoring. Environmental, health, safety, and social impact assessments and protocols. Stakeholder engagement. Opportunity: Carefully selected and implemented growth projects improve our earnings and returns, changing the company’s positioning. The main production inputs required for manufacturing our products are wood, fibre, chemicals, energy and water. Prices of many of these inputs have been volatile in recent years and are expected to remain so in the foreseeable future. Ongoing military conflicts, government protection, geoeconomic rivalry, climate change, supply chain disruptions, environmental policies, and other governmental actions or restrictions may cause further uncertainty regarding the prices and availability of these inputs, as well as logistics services. Management: Continuously improving resource efficiency, supply chain optimization and diversifica tion. New technologies. Long-term supply contracts and reliance on alternative suppliers. Own selected forest land and enter into long-term forest management contracts. Opportunity: The circular economy, continuous improvement in resource efficiency and supply resil ience offer a competitive advantage in the face of price fluctuations.

Our business operations depend on the availability of supporting information systems and network services. Unplanned interruptions in critical information system services may disrupt the continuity of operations. Information systems may be exposed to cyber intrusions that may result in the leakage of sensitive information, violation of data privacy regulations, theft of intellectual property, and the dissem ination of AI-generated misinformation or disinformation. Such intrusions may also lead to production outages or damage to our reputation. Management: Systematically maintaining and further developing our cybersecurity protection measures. Opportunity: Sophisticated IT systems enable efficient operations, optimized performance, new cus tomer services and data security. Our operations are exposed to environmental risks, fires, natural disasters, machinery breakdowns, site security issues, and occupational health and safety hazards. A major incident at a UPM site or a critical part of the supply chain may result in a shutdown or curtail production. Failure to maintain high safety management levels may result in physical injury, illness or liability to employees, contractors or third parties, causing a business interruption. Management: Systematically maintaining and further developing our management, safety, security and loss prevention programs, as well as our insurance protection and business continuity. Develop ment of process safety. Opportunity: Industry-leading environmental performance provides a competitive advantage. Health and safety performance strengthens engagement, efficiency and productivity. Financial risks include foreign exchange and interest rate fluctuations, refinancing challenges, coun terparty or credit risks and changes in taxes. Changes to the monetary policies of major central banks may significantly impact interest rates. Escalation of global trade tensions could influence currency exchange rates. Changes consequently could impact UPM’s cash flow, earnings or balance sheet, and may also affect the competitiveness between different currency regions. Our foreign exchange rate risk is primarily related to the U.S. dollar, British pound and Japanese yen. Management: Continuous hedging of net currency exposure. Hedging the balance sheet. Continuously improving competitiveness. Disciplined planning and selection of investments. Business portfolio development. Opportunity: A diverse business portfolio and geographical presence, focus on competitiveness and strong balance sheet may present strategic opportunities in a changing currency environment.

Operational hazards, health and safety issues and business interruption

Execution of strategic investment projects

Financial risks

Input price fluctuations on the main raw materials and services

Emerging risks

Geostrategic shifts refers to evolving sources and concentration of geopolitical power. Global rules-based order is increasingly being tested. Con frontations may cause rapid unplanned changes in the viability of our long-standing sourcing or sales destinations. Many of our businesses are op erating in global marketplaces, and major shocks to fundamental business realities could result in lost customers or suppliers in a country or region. Management and opportunity: Strong balance sheet. Diverse business portfolio and geographical presence, resilient production footprint. Biodiversity refers to the variety of species and ecosystems on our planet. Despite ongoing efforts, the UN reports that biodiversity is deteriorating worldwide. Our operations are closely linked to biodiversity, and the most significant impacts arise from wood sourcing activities. The deterioration of biodiversity may lead to slower forest growth, which may impact the availability of wood and increase its cost for UPM in the long term. Biodiver sity loss arising from wood sourcing may result in legal action against UPM or restrictions on wood use. Management and opportunity: The global 2030 Forest Action Program combines measures on climate, biodiversity, soil, water and social contri bution. Biodiversity is essential to maintaining healthy forest growth.

32

33

UPM Annual Report 2025

UPM Annual Report 2025