In September we published our commitment to the UN Global Compact’s Forward Faster Initiative. The goal of this initiative is to accelerate progress towards the 2030 Sustainable Development Goals. According to the UN, globally only 15% of the SDGs are on track, which necessitates a call for further action.
These five areas have been identified as the fields where the private sector can collectively make the most powerful impact by 2030. Companies committed to this Initiative will annually report on their progress to the UN Global Compact. The first official year of reporting is 2025, but we at UPM already today report our progress as part of our Annual Report.
A total of 138 companies have joined – In Finland UPM and Kemira among the early movers
UPM has been an active member of UN Global Compact for 20 years already and thanks to that we were invited to join the initiative as one of the early movers. Global Compact is the world’s largest corporate sustainability initiative that calls companies to align their strategies and operations with universal principles on human rights, labour, environment, and anti-corruption, and to take actions that advance societal goals.
“All areas of action were discussed internally, but strategically we saw Living Wage, Gender Equality and Climate Action as the most important themes for us,” says Sami Lundgren, VP, UPM Responsibility. “Joining these three areas was natural because we already have ambitious long-term targets and action plans for these fields, but we still have a lot of potential to drive progress and do more,” Sami tells.
All these themes are also multidimensional and systemic, which is why we can best speed up progress by working with Global Compact, and also with other well-established organisations whose operations are based on collaboration, solid benchmarking and science. ”It goes without saying that being vocal and openminded is a must for a constructive and forward-looking discussion to take place.”
“As for the targets in the other two focus areas – Water Resilience and Finance & Investment – we would like to see more specific definitions from Global Compact. There is existing justification for us to join both these areas as well, as we have been a member of UN CEO Water Mandate since 2009 and we are investing in projects such as our biochemicals refinery in Leuna, Germany, which directly promotes climate related SDGs.”
By joining the Gender Equality area of action, UPM commits to taking action to advance equal representation, participation and leadership across all levels of management and equal pay for work of equal value.
Promoting diversity, inclusion and fair rewarding is important to UPM
UPM’s social responsibility targets place a strong focus on diversity, inclusion and fair rewarding, all being important means to tackle inequality. Global Compact also gives credit to UPM being one of the frontrunners globally to speak up on these critical social responsibility topics.
“It is a fact that in many companies women are still under-represented in managerial and leadership positions and, depending on the field, on all levels of operations. They also tend to be paid less than men,” notes Kaisa Ventelä-Nilsson, VP, HR Strategic Development.
One of our targets is to increase female representation in professional and managerial roles up to 40 % by 2030. We are also committed to ensuring gender pay equity among all employees and that every employee’s pay at the very least meets the local living wage on an annual basis.
What practical actions will ensure that we are aligned with our commitments and reach our targets?
“If we start with the living wage, we should first establish what the term means. Quite often people think that a living wage is the same thing as minimum wage. While they both have the same objective – ensuring that people earn enough to provide a decent living —minimum wage is stipulated by law and companies like UPM naturally comply with this law in every country in which we operate,” Riikka Ahola, VP, HR Rewards says.
The living wage is a voluntary construct and typically offers higher quality of life than the minimum wage. It is a remuneration received in a particular place sufficient to afford a decent standard of living for a worker and his or her family. Elements required for a decent standard of living include food, water, housing, education, healthcare, transport, clothing, and other essential needs, including provision for unexpected events.
UPM has been monitoring and paying a living wage to all UPM employees for several years
Our commitment to pay living wage covers all countries where we operate and applies to both salaried and shopfloor employees. If the global assessment shows unexpected wage gaps, they are corrected.
“We conduct a living wage assessment annually in collaboration with an external partner with a proven methodology, process and living wage benchmarks in place. Our partner helps us in defining the baseline and provides living wage estimates for all countries and cities. Since 2022 our results and our methodology have also been verified by an external assurance partner as a part of our annual reporting,” Riikka explains.
Unexplained gender pay gaps to be addressed in annual reviews.
UPM has carried out a thorough global pay gap review and corrected unexplained pay gaps since 2021. The review is carried out annually in all countries where we operate and includes all employee segments where gender pay gaps could potentially emerge.
UPM’s pay equity reviews seek to identify gender pay gaps that cannot be explained by such factors as job performance, work experience, job grade or location, or any other factors that typically determine salaries.
“Typically, if unexplained pay gaps between genders are found, they are quite often related to lower starting salaries of women. Such gaps are difficult to catch up, even if a person receives normal salary increases during her career,” Riikka explains.
It is particularly important to tackle this issue, as women often ask for less salary than male candidates for the same job. “To ensure that this situation is avoided in the future, we are also actively training our Business HRs and managers”, Riikka tells.
“On the other hand, it’s worth noticing that UPM’s merit and promotion related salary increases and short-term incentives are fully equitable between the genders,” Riikka highlights.
What must each of us do to reach these important targets?
“The simple answer lies in robust people processes and reliable and comprehensive data. Driving change requires courage to discuss these topics, but we cannot underestimate the importance of consistent follow-up of progress and training of our own people and stakeholders. And last but not least, strong management commitment is also crucial,” Kaisa states.
Our HR plays a key role in facilitating various diversity and inclusion dialogues and in promoting learning opportunities. They also coach leaders to learn more about inclusiveness and diverse recruitment.
Climate Action – Hard work towards net-zero position
By joining the Climate Action initiative, UPM commits to setting science-based net-zero emission reduction targets in line with a 1.5°C pathway, with the goal of halving global emissions by 2030 and reaching net-zero by 2050 at the latest.
“We announced our commitment to the United Nations Global Compact’s Business Ambition for 1.5°C already in 2020, followed in 2021 by our commitment to The Climate Pledge. For us, it’s not only about cutting our own emissions and those of our supply chain, but also about committing widely to climate-positive forestry and innovating products and materials that can replace fossil-based ones. This is the next logical step in getting all those goals aligned and balanced in the bigger picture,” affirms Sami Lundgren.
UPM’s climate agenda is multidimensional and therefore challenging. In our carbon counting we cannot focus only on emission reductions – we also need to give our input in methodology development to more accurately calculate the climate impacts of our forests, plantations and products. As there is no standard scientific methodology available yet, we have been actively involved in piloting the Land Sector and Removals Guidance launched by the GHG Protocol. We have also published a white paper for carbon dioxide removal.
“We are confident that by having greater methodological clarity, we can calculate our climate impact more holistically. It will help us in setting a science-based target that goes beyond our existing 2030 targets and guides us towards net-zero status, which means that our emissions and carbon removals will be in balance”.
UPM represented in Finland’s official delegation at the UN General Assembly in New York
The Forward Faster initiative was officially launched at the UN Private Sector Forum organised under the 78th session of the UN General Assembly in New York. Sami represented UPM and Finland as a part of the official UN delegation of the Finnish Ministry for Foreign Affairs led by President Sauli Niinistö. The importance of corporate input was highlighted by the large number of Finnish companies represented in the UN Global Compact Finland delegation. Alongside UPM, they included Alko, Posti Group, Fiskars, Fortum, K Group, Nokia, Outokumpu, S Group and VTT Technical Research Centre of Finland, to name some.
“I had the opportunity to join many interesting events and met many people during my stay in New York. We don’t often toot our own horn in these matters, but our panel discussion ‘Making living wage a reality’ hosted together with representatives from L’Oréal and Unilever shows that our work is really of a world class level. UPM turned out to be surprisingly well-known among many of the participants, and the fact that we joined the Climate Action group spurred further curiosity. Our emission-free electricity generation, biogenic CO2 emissions and special biorefinery knowhow may make us a very interesting partner in the future,” Sami concludes.