UPM annual report 2014

1 2 3 Well-functioning stakeholder engagement is considered to bring competitive advantage to the company. UPM’s materiality analysis highlights the most important issues for UPM and its stakeholders.

THE POTENTIAL OF UPM’S BIOMATERIALS PRESENTED

In 2014, the three most important issues were Biofore value creation and opportunities in the changing business environment, product stewardship and occupational health and safety.

The Biofore Concept Car – showcased at the International Geneva Motor Show in March – demonstrates the innovative use of biomaterials in the car industry. Most of the parts traditionally made from plastic have been replaced with high quality biomaterials, UPM Formi and UPM Grada, and the vehicle runs on UPM’s renewable wood-based diesel, UPM BioVerno. Following the successful premiere, the car has appeared at dozens of events, including UPM’s Annual General Meeting, WWF Living Planet Report 2014 seminar, the CEPI European Paperweek and the International Day of Forests at the UN’s Palais des Nations in Geneva, Switzerland. During 2014, the car received wide publicity all over the world. The vehicle was designed and manufactured by some 50 industrial design students from the Helsinki Metropolia University of Applied Sciences. Building the car took four years and approximately 50,000 work hours.

The analysis uses feedback from different stakeholder enquiries and the company’s risk mapping based on which the importance and potential impact of different issues or activities on UPM’s operations are assessed.

STAKEHOLDERS 31–44

Creating added value through stakeholder engagement

To deliver true stakeholder value, UPM focuses on ensuring good co-operation, regular discussion and interaction at all levels. These tools and channels enhance knowledge and understanding of the company’s activities and targets, as well as building long-term trust with its key stakeholder groups.

suppliers, authorities and key decision- makers, the media, non-governmental organisations and local communities. The approach to each varies based on busi- ness focus, region and individual stake-

UPM conducted a materiality analysis that highlighted the most important issues for UPM and its stakeholders. The analysis uses feedback from different stakeholder enquiries, the com- pany’s risk mapping and other information sources based on which the importance and potential impact of different issues or activities on UPM’s operations was assessed. During 2014, UPM was able to respond to stakeholders’ expectations reasonably well. UPM was not involved in any major stakehold- er conflicts. This creates good opportunities to further develop stakeholder relations in the future. The majority of direct feedback from stake- holders focused on the local effects of UPM’s operations, such as noise, odour or logging practices. The single largest topic of feedback relates to the problems caused by malodorous gas emissions at the UPM Kaukas pulp mill. Customer enquiries focused on topics such as product safety, ecolabels and the origin of raw materials. UPM actively participated in the debate and sought to increase stakeholder information of the situation. Competitiveness at the forefront of public affairs Through public affairs activity, the company aimed to foster the necessary prerequisites for investment, particularly in China, Finland and Uruguay. Within the EU, UPM promoted competitive and consistent energy and climate policy regulation. UPM co-operated with a number of trade associations on these topics. In Finland, UPM highlighted the economic footprint of its existing operations. In addition, the company defined six critical topic areas within the Finnish operating envi- ronment that impact the competitiveness of the forest industry in Finland and discussed these topic areas with several Finnish decision- makers.

Read more: www.bioforeconceptcar.upm.com

To ensure long-term engagement, UPM con- tinuously works with its diverse range of stake- holders to understand their specific needs and expectations. It is equally important to commu- nicate and discuss the company’s targets, oper- ating principles, values and the challenges it faces within the business environment. As UPM is primarily viewed as an economic operator, financial success, stability, future outlook and growth are fundamental themes for most stakeholders. In addition, UPM’s environmental performance and social respon- sibility play a significant role in UPM’s ability to operate and affect the long-term success of its businesses. To address these different needs, and in recognising the differing emphases of different stakeholders, UPM aims to provide a balanced view of the economic, environmental and social aspects of its business activities. Stakeholder engagement is part of the strategy process Regular stakeholder mapping in all businesses is an essential part of stakeholder relations, along with the systematic gathering of feed- back and views from different sources. This way, UPM aims to ensure that sufficient consid- eration is given to stakeholder needs during the strategic development and decision-making processes. UPM’s most important stakeholders are customers, investors and financiers, employees,

holder groups. The UPM Code of Conduct sets the stand- ards of responsible behaviour towards these stakeholders for each and every UPM employee globally. The standards cover topics relating to legal compliance and disclosure, conflicts of interest, gifts and bribes, HR practices, human rights questions and environmental matters. In 2015, the Code of Conduct will be reviewed. The level of stakeholder engagement is measured by several key performance indica- tors. Feedback from stakeholders adds real value by contributing to risk management and mitigation, as well as the development of com- petitive advantage and continuous innovation. It also helps third parties to understand key challenges and opportunities in the company’s operating environment. Should stakeholders have concerns or sus- pect misconduct, they are encouraged to con- tact UPM’s Stakeholder Relations function or use the UPM Report Misconduct channel accessible via the company website. A claim can be made confidentially and anonymously. The company has agreed internal procedures on how to address possible misconduct. Activity in 2014 At the beginning of the year, a new Stakeholder Relations function was formed. Globally, the function operates at Group Executive Team level with UPM’s businesses responsible for local activity.

The Biofore Concept Car premiered at the International Geneva Motor Show in March.

CONTENTS

UPM Annual Report 2014 31

32 UPM Annual Report 2014