213800EC6PW5VU4J9U64-2025-12-31-en


UPM FINANCIAL REPORT 2025	117


Market environment in 2025	118
Results	119
Outlook for 2026	123
Operations	124
Sustainability Statement 2025	133
Research and development	250
Information on shares	254

UPM introduction and business model

We are a material solutions company and provide renewable alternatives

to fossil-based materials used in everyday life. Our strong business

portfolio in renewable fibres, advanced materials and decarbonization

solutions provides several attractive growth opportunities.

We will further improve competitiveness, increase capital efficiency,

and strengthen our balance sheet. We will capture focused growth

opportunities. Following recent investments, UPM has a strong asset base

to capture market growth opportunities in a capital-efficient way. We aim

to develop a portfolio of world-class businesses.

Our innovative products enable customers and consumers to make

more sustainable choices. We are committed to creating value for our

customers, using sustainable, renewable feedstocks, reducing our own

environmental footprint and enhancing our positive societal impact. Our

leading position in sustainability is based on world-leading standards,

commitment to respected global initiatives and third-party verification.

UPM builds on corporate synergies, adding value to the businesses

and stakeholders with:

• Competitive and sustainable wood sourcing, forestry and plantation

operations

• Efficient global functions

• Technology development and intellectual property rights

• Global business platform

• Disciplined and effective capital allocation

• Compliance, UPM Code of Conduct and strong UPM brand

Clear roles and responsibilities


Group	Businesses	Outcomes
Portfolio strategy Capital allocation Business targets Code of Conduct Sustainability targets	Business area strategies Commercial excellence Operational excellence Cost competitiveness Preparation and implementation of projects Innovation	World-class businesses Competitive advantage Growth Value creation Stakeholder and societal value License to operate

Our businesses in various parts of the bio and forest industry value chain

operate as separate market-driven entities, both in terms of customers

and suppliers. This enables agility in a fast-changing business

environment, higher efficiency, differentiated commercial strategies,

optimal sourcing, the right incentives, wider product development

opportunities and effective capital allocation.

The UPM Code of Conduct underlines our commitment to business

integrity and responsible business operations and manifests the

company’s guiding principles. We promote responsible practices

throughout the value chain and are active in finding sustainable solutions,

in cooperation with our customers, suppliers and partners.


UPM FINANCIAL REPORT 2025	118

Market environment in 2025

The global economy is estimated to have grown by a little over 3% in

2025. World trade in goods increased by 2.5% according to WTO. Global

inflation continued its downward trajectory from the post-pandemic

highs, settling at just over 4%.

The U.S. announced a new tariff regime in April 2025, imposing broad,

double-digit tariffs on imports, with escalations toward China, the EU, and

India. Sharp increases caused a supply shock in the U.S. and demand

shocks elsewhere, slowing trade growth and disrupting supply chains.

Uncertainty curbed investment, dampened consumption, and delayed

business decisions.

Russia-Ukraine war continued into its fourth year with no durable

resolution, sustaining energy and food price pressures and European

energy security concerns. Conflicts in the Middle East caused regional

instability, oil price volatility and concerns over shipping routes. Amid

these headwinds, AI-related capital expenditure surged, contributing

significantly to growth and preventing the worst predictions from coming

true.

The EU economy showed resilience, achieving real GDP growth of 1.4%

thanks to good early-year performance, front-loaded exports and

investment. Spain and Poland outpaced the average growth, offsetting

slower growth in Germany and Italy. Inflation eased to 2.5%, with

unemployment stable at 6%.

The U.S. economy weathered severe trade and domestic policy

tensions growing by over 2%, fuelled by solid consumer spending, robust

investment, exports and government outlays. Inflation held steady at a

moderate 2.7% year-end.

The Asia-Pacific (APAC) showed notable resilience as the world's

fastest-growing area, contributing around 60% of global growth despite

headwinds uncertainty over tariffs and subdued demand in subregions.

Growth in broader APAC held steady at around 4.5%.

The COP30 conference held in November 2025 in Belém, Brazil,

marked the tenth anniversary of the Paris Agreement. Amid geopolitical

tensions, U.S. tariffs and surging energy demand, the focus shifted from

ambition toward implementation, bridging the gap between pledges and

action, as well as balancing energy security, affordability, and

sustainability. The Belém Package focused on adaptation, finance

delivery, multilateral cooperation, and human-centered outcomes across

29 consensus decisions.

The outlook for electricity growth is strong, driven by AI data centers,

electrification, cooling, and industrialization. In 2025, clean energy

investment outpaced fossils, with solar and wind leading growth. The IEA's

World Energy Outlook stressed this as a defining shift, with renewables

expanding fast enough to meet new demand in some periods, but overall

emissions still increasing.

The year started in a positive sentiment of market recovery in most of

UPM businesses. As uncertainty in the global trade ramped up with the

introduction of tariffs, the demand for our products slowed and most

market prices decreased, most notably pulp and paper prices. Our pulp,

label material and biofuel deliveries increased year-on-year, but deliveries

of paper, plywood, timber and electricity fell. The direct impact of tariffs

was relatively minor in 2025 and impacted mainly UPM Communication

Papers.

The U.S. dollar weakened rapidly during Q2 2025 and stayed broadly

stable on a lower level vs. the euro during H2 2025. This had a negative

impact on UPM’s businesses, especially UPM Fibres and UPM

Communication Papers.

Global market shipments of BHKP pulp were up 6% year-over-year

and NBSK down slightly in the first 11 months compared with the previous

year. In the full year 2025, the average European pulp market price in

euros was 2.5% lower for NBSK and 14% lower for BHKP compared to

2024. In China, the average pulp market price in US dollars was 7% lower

for NBSK and 15% lower for BHKP year-over-year.

European demand for graphic papers decreased by 8% in 2025

compared with 2024. Market prices decreased for all grades. In October,

paper production at the UPM Kaukas mill in Finland ended permanently,

and in December, it ended at the UPM Ettringen mill in Germany. These

changes reduced UPM’s graphic paper production capacity by 13%.

The global markets for self-adhesive label materials were resilient in

Europe, market shipments growing by 2% year-over-year, but growth

slowed down in North America to 1% and were challenging in the Asia-

Pacific region. UPM’s deliveries outpaced the market growth. Label,

release liner and packaging paper markets were affected by tariff

uncertainties, resulting in lower prices and reduced deliveries. Fine paper

markets were slow but improved towards the end of the year.

Demand for spruce plywood in Europe was stable but at a relatively

low level as the construction markets remained slow. Demand for birch

plywood in panel trading and industrial end uses was good and demand

for LNG end-use birch plywood very good.

In 2025, European electricity markets saw prices slightly up from 2024,

with record solar generation. In the Nordics, high hydrological reserves

pushed prices historically low in the first half of the year, but prices

recovered in the latter part. The average Finnish area spot price was

€40.5/MWh, 11% lower than in 2024.

Markets for advanced renewable biofuels improved. The price

development of feedstock (CTO) and end products relative to each other

was favorable. Interest in UPM’s bio-based renewable functional fillers and

glycols remained strong at the same time as the targeted markets

continued their steady growth.


UPM FINANCIAL REPORT 2025	119

Key figures


	2025	2024	2023
Sales, € million	9,656	10,339	10,460
Comparable EBITDA, € million	1,311	1,734	1,573
% of sales	13.6	16.8	15.0
Operating profit, € million	749	604	608
Comparable EBIT, € million	921	1,224	1,013
% of sales	9.5	11.8	9.7
Profit before tax, € million	690	500	464
Comparable profit before tax, € million	863	1,123	934
Profit for the period, € million	491	463	394
Comparable profit for the period, € million	714	953	755
Earnings per share (EPS), €	0.91	0.82	0.73
Comparable EPS, €	1.33	1.74	1.40
Return on equity (ROE), %	4.5	4.0	3.2
Comparable ROE, %	6.5	8.3	6.2
Return on capital employed (ROCE), %	5.5	4.1	3.5
Comparable ROCE, %	6.7	8.2	6.4
Operating cash flow, € million	1,405	1,352	2,269
Operating cash flow per share, €	2.66	2.54	4.25
Equity per share at the end of period, €	18.97	20.89	20.93
Capital employed at the end of period, € million	14,129	15,452	14,916
Net debt, € million	3,004	2,869	2,432
Net debt to EBITDA	2.29	1.66	1.55
Personnel at the end of period	15,127	15,827	16,573

Refer to » Other financial information, Alternative performance measures for definitions of key figures.

Results

2025 compared with 2024

In 2025, sales were €9,656 million, 7% lower than the €10,339 million in

2024. Sales decreased due to lower sales prices and adverse changes in

currencies, only partially offset by increased delivery volumes. Sales

decreased in UPM Communication Papers, UPM Fibres, UPM Specialty

Papers, UPM Plywood and UPM Energy business areas. Sales increased

in UPM Adhesive Materials and in the Other operations reporting

segment.

Comparable EBIT decreased by 25% to €921 million, 9.5 % of sales

(1,224 million, 11.8%). Comparable EBIT decreased due to lower sales

prices and adverse changes in currencies.

Sales prices decreased in all business areas, most notably in UPM

Fibres, UPM Communication Papers and UPM Specialty Papers. Variable

costs decreased, as increases in wood costs were more than offset by

decreases in most other input cost categories. Fixed costs also remained

unchanged on the Group level.

Delivery volumes increased in UPM Fibres, UPM Adhesive Materials

and Other operations. Deliveries fell the most in UPM Communication

Papers. On the Group level, the net impact of changes in delivery volumes

was neutral to earnings.

Depreciation, amortization and impairment charges excluding items

affecting comparability, totaled €535 million (590 million) including

depreciation of leased assets totaling €90 million (85 million). The

change in the fair value of forest assets net of wood harvested was €144

million (80 million).

Operating profit totaled €749 million (604 million). Items affecting

comparability in operating profit totaled €-171 million in the period (-620

million). In 2025, items affecting comparability include €42 million

restructuring charges and €10 million impairment charges related to the

closure of Ettringen paper mill in Germany, €36 million restructuring

charges and €36 million impairment charges of fixed assets related to

the closure of Kaukas paper machine 1 in Finland, €14 million reversal of

restructuring charges related to the closure of Plattling paper mill in 2023,

€9 million restructuring charges in UPM Communication Papers to

improve mills' operations' efficiency, €4 million restructuring charges and

€4 million impairment charges resulting from the exercise of a put option

concerning the Kraftwerk Plattling power plant company in UPM

Communication Papers, €28 million restructuring charges related to the

discontinuation of label materials' production at Nancy factory in France,

€30 million restructuring charges to improve operations' competitiveness

and efficiency in UPM Adhesive Materials, €6 million addition to

impairment charges and €2 million reversal of restructuring charges

related to the closure of Kaltenkirchen factory, €2 million restructuring

charges related to discontinuation of Rotterdam refinery project, €3

million restructuring charges and €1 million impairment charges related

to the closure of the UPM Biomedicals business in Other operations, €10

million charges related to strategic review of UPM Plywood Business Area


UPM FINANCIAL REPORT 2025	120

and to the announced non-binding joint venture transaction between

Sappi and UPM in the graphic paper business, €46 million capital gain on

sale of Plattling paper mill site, and €7 million capital gain on sale of non-

current assets. Additionally, items affecting comparability include other

restructuring charges related to UPM Communication Papers, UPM

Specialty Papers, UPM Adhesive Materials, UPM Plywood, UPM Fibres

and Other operations.

In 2024, items affecting comparability included €373 million

impairment of assets in biochemicals refinery in Leuna resulting from

cost overruns and construction delays during the first-of-its-kind project.

Additionally, items affecting comparability include €5 million impairment

of UPM Biochemicals goodwill, and €113 million impairment of Pulp

operations Finland goodwill resulting from high wood costs. Other items

affecting comparability include €10 million restructuring charges and

€26 million impairment charges of fixed assets related to closure of UPM

Adhesive Materials' Kaltenkirchen factory in Germany, €40 million of

restructuring and impairment charges related to the closure of Hürth

newsprint mill in Germany, €54 million restructuring and impairment

charges related to the closure of Nordland fine paper machine 3 in

Germany, €4 million write down of inventory at the UPM Adhesive

Materials' mill, located in Western North Carolina, USA, which was

impacted by Hurricane Helene, €12 million restructuring and impairment

charges related to the closure of the UPM Biocomposites business, a €21

million capital gain on the sale of UPM-Kymmene Austria GmbH to

HEINZEL GROUP, €9 million capital gain on the sale of other non-current

assets, €12 million other restructuring costs and €8 million related to

prior capacity closures.

Net interest and other finance costs were €-102 million (-97 million).

The exchange rate and fair value gains and losses were €43 million (-7

million). Items affecting comparability in finance costs totaled €-1 million

(-3 million). Income taxes totaled €-200 million (-37 million). Items

affecting comparability in taxes totaled €-51 million (133 million).

Profit for 2025 was €491 million (463 million), and comparable profit

was €714 million (953 million).

Financing and cash flow

In 2025, the cash flow from operating activities before capital expenditure

and financing totaled €1,405 million (1,352 million in 2024). Working

capital decreased by €391 million (increased by 80 million).

Net debt was €3,004 million at the end of Q4 2025 (2,869 million at

the end of Q4 2024). The gearing ratio as of December 31, 2025 was 29%

(25%). The net debt to EBITDA ratio, based on the last 12 months' EBITDA,

was 2.29 at the end of the period (1.66).

On December 31, 2025, UPM's cash funds and unused committed

credit facilities totaled €2.7 billion. The total amount of committed credit

facilities was €2 billion of which €259 million will mature in 2027, €1.8

billion will mature in 2029 or beyond.

Between February 10 and April 8, 2025, the Group repurchased a total

of 6,000,000 own shares, with approximately €160 million in cash outflow.

For the 2024 financial year, the dividend of €1.50 per share was paid in

two equal instalments. The first instalment of €0.75 per share (totaling

€397 million) was paid on April 8, 2025, and the second instalment of

€0.75 per share was paid on November 7, 2025 (totaling €396 million)..

Capital expenditure

In 2025, capital expenditure excluding investments in shares totalled

€409 million ( 527 million), and including investment in shares €621

million, which was 6.4% of sales (550 million, 5.3% of sales in 2024).

Capital expenditure does not include additions to leased assets.

In 2026, UPM's total capital expenditure, excluding investments in

shares, is expected to be about €300 million.

In January 2020, UPM announced that it would invest in a 220,000

tonne next-generation biochemicals biorefinery in Leuna, Germany. The

total investment estimate is €1,335 million.

Personnel

In 2025, UPM had an average of 15,802 employees (16,282). At the

beginning of the year the number of employees was 15,827 and at the end

of 2025 it was 15,127.

Further information about personnel is available in » Sustainability

Statement 2025.

Planned graphic paper Joint Venture

On December 4, 2025, UPM announced it had signed a non-binding letter

of intent with Sappi Limited to form a graphic paper Joint Venture. The

Joint Venture would include the entire UPM Communication Papers

business and Sappi’s graphic paper business in Europe. The Joint Venture

would be owned 50/50 by UPM and Sappi. It would operate as an

independent company, managing its own operations, resources, and

decisions within agreed shareholder boundaries.

Securing long-term resilience and sustainability

The transaction would create a more efficient, adaptable and sustainable

graphic paper business. It would create a structurally competitive cost

base and supply security for the European and global customers.

By strategic reallocation of production volumes to the most efficient

paper machines, the Joint Venture would achieve more sustainable

capacity utilization and stronger operational performance, while

continuing to serve customers with a broad portfolio of graphic paper

products.

Overall, the Joint Venture would rationalize supply in an industry

burdened by declining demand, structural overcapacity and high energy

costs. It would contribute to a more balanced and resilient European

market, and make the industry better positioned to withstand market

challenges and increasing imports to Europe.

UPM Communication Papers has already today an ambitious climate

action roadmap to reduce product emissions by up to 70% by 2030,

supporting customers in achieving their climate targets. The Joint Venture

would further enhance these opportunities. By optimizing capacity

utilization, enhancing operational efficiencies and continuing to invest in

decarbonization, the Joint Venture could reduce its overall climate

impact, helping to advance the EU’s Clean Industrial Deal objectives.


UPM FINANCIAL REPORT 2025	121

Transaction overview and terms

The planned perimeter of the Joint Venture would include:

• The entire UPM Communication Papers business, including eight UPM

Communication Papers’ paper mills at Kymi, Rauma (including UPM

RaumaCell) and Jämsänkoski (paper line 6) in Finland; Nordland

(paper lines 1 and 4), Augsburg, Schongau in Germany; UPM

Caledonian paper mill in the UK and UPM Blandin paper mill in the

USA; and

• Sappi’s European graphic paper business, including the following four

graphic paper mills: Kirkniemi in Finland, Ehingen in Germany,

Gratkorn in Austria and Maastricht in the Netherlands.

The Joint Venture is expected to create annual synergies estimated at

about €100 million through asset optimization, product portfolio

rationalization, logistics optimizations, sourcing efficiency improvements

and operational efficiencies.

Based on the letter of intent

• UPM and Sappi would contribute their respective businesses and

assets to the Joint Venture with a combined enterprise value of €1,420

million, excluding the value of expected synergy benefits.

• UPM Communication Papers business is valued at €1,100 million

(enterprise value). UPM would receive cash proceeds of €613 million

and 50% shareholding in the Joint Venture.

• Sappi’s European business is valued at €320 million (enterprise value).

Sappi would receive cash proceeds of €139 million and 50%

shareholding in the Joint Venture.

At the closing of the transaction, the Joint Venture would raise debt to

fund the purchase prices payable to Sappi and UPM respectively. The

Joint Venture would be independently financed and to the extent it would

require additional funding in the future, it shall be without any recourse to

the shareholders.

The Joint Venture would distribute dividends to its two shareholders

according to its financial performance and standing.

The establishment of the Joint Venture would create a sustainable

standalone business that ultimately will provide divestment flexibility for

both shareholders. Three years after closing, with the Joint Venture

expected to have completed the integration and realized the synergies,

either shareholder may initiate a divestment of their shareholding.

Impact of the transaction on UPM financials

The financial benefit for UPM at closing would include the €613 million

cash payment to UPM by the Joint Venture, €406 million transfer of

pension liabilities to the Joint Venture and UPM’s share (50%) of the Joint

Venture. The valuations and financial impact of the transaction are

estimates at the time of the letter of intent, and subject to customary

adjustments.

The valuation of UPM Communication Papers business at €1.1 billion

is equal to a multiple of 4.6x EBITDA of last reported 12 months

(Q4/2024-Q3/2025).

The UPM Communication Papers assets to be transferred to the Joint

Venture represent less than 10% of UPM’s total assets.

The ownership in the Joint Venture would be accounted for using the

equity method.

The transaction is expected to have a positive impact on UPM’s

profitability margins (EBIT % of sales), balance sheet and leverage. UPM

would also achieve a more focused business portfolio operating on

growth markets and would no longer have direct sales exposure to the

declining European and North American graphic paper markets.

Transaction subject to merger control and other conditions

Negotiations regarding the details of the Joint Venture are ongoing, and

the parties expect the definitive agreements to be signed during the first

half of 2026. The definitive agreements require the completion of external

financing agreements, Sappi shareholder approval and other conditions.

The proposed transaction is subject to review by the European

Commission and the relevant merger control and approval by the

authorities in other jurisdictions such as the US, UK and China. The

parties are committed to working with the regulatory authorities

throughout the review process.

It is currently expected that the closing would take place by the end of

2026, subject to regulatory approvals and other closing conditions. The

Joint Venture would become operational upon closing.

UPM Communication Papers and Sappi’s European graphic paper

business will continue to operate as separate and independent

companies and manage their respective businesses until the closing of

the intended Joint Venture according to the satisfaction of all legal and

regulatory requirements.

Strategic review of UPM Plywood

On September 23, 2025, UPM’s Board of Directors decided to initiate a

strategic review of UPM Plywood business area to assess options for

maximizing the long-term potential of the Plywood business in an

evolving market environment. The strategic review includes a range of

possibilities, including a potential separation from UPM through for

example a divestment, partial demerger or initial public offering. The aim

is to determine the best path forward for the Plywood business, while also

benefiting the value creation for UPM’s shareholders. The review is

expected to be concluded by the end of 2026.

During the strategic review process, UPM remains fully committed to

the Plywood business and its customers.

Biochemicals refinery investment

In January 2020, UPM announced that it would invest in a 220,000 tonne

next-generation biochemicals refinery in Leuna, Germany. The

investment estimate is €1,335 million.

The start-up of the Leuna biorefinery progressed in 2025. The wood-to-

lignin-and-sugar process was successfully ramped up and the first

commercial deliveries of industrial sugars took place in Q4 2025. With the

achieved progress in the critical first part of the process and the

advanced status of corrective works in the final core processes,

production and sales of further products, lignin, renewable functional

fillers and finally glycols is expected to start in 2026.

Commercial interest in the main products and side-streams has

continued strong, with confirmed customer contracts and a sales and

customer qualification pipeline that exceeds multiple times the annual

capacity. The biorefinery is expected to reach full production and positive

EBIT during 2027.


UPM FINANCIAL REPORT 2025	122

The biorefinery will produce a range of 100% wood-based

biochemicals, which will enable a switch from fossil raw materials to

sustainable alternatives in various end-uses. The valuation of the

products is driven by their sustainability performance which enables

consumer brands to achieve market differentiation and by their superior

technical performance. The investment opens new markets for UPM, with

large growth potential for the future.

The industrial scale biorefinery will convert solid wood into next

generation biochemicals: bio-monoethylene glycol (BioMEG) and

Renewable Functional Fillers (RFF). In addition, the biorefinery will produce

bio-monopropylene glycol (BioMPG) and industrial sugars. The ROCE

target for the UPM Biochemicals business is 14%.

The combination of a sustainable wood supply, a unique technology

concept, integration into existing infrastructure at Leuna and the

proximity to customers will ensure the competitiveness of operations. The

safety and sustainability of the value chain will meet UPM’s high

standards and the strong focus on regional sourcing, especially of

feedstock supports the market valuation.

InfraLeuna GmbH, in the state of Saxony-Anhalt, offers very

competitive conditions for constructing a biorefinery with its logistics

arrangements and infrastructure for various services and utilities.

Biofuels business development

On May 27, 2025, UPM announced plans to discontinue the development

of its potential second biomass-to-fuels refinery at the Port of Rotterdam

following extended technical, commercial and strategic evaluations.

Consequently, UPM intends to halt all engineering activities related to the

investment in Rotterdam and withdraw from all associated

commitments.

Renewable fuels and renewable chemicals are the central elements of

UPM’s long-term growth in decarbonization solutions. UPM is focusing on

three targeted growth areas in its biofuels business:

• Evaluating the potential to debottleneck the Lappeenranta biorefinery

in order to capture low CAPEX expansion opportunities and further

leverage the strong market performance of CTO-derived biofuels.

• Enabling the qualification of CTO-derived UPM biofuels as sustainable

aviation fuel (SAF). This strategic direction is supported by successful

SAF trials conducted with the Austrian aircraft manufacturer Diamond

Aircraft using Austro Engine propulsion and by continued progress in

the technical acceptance process at the American Society for Testing

and Materials (ASTM). Results from these trials and stakeholder

reviews have been consistently positive.

• Continuing feedstock technology development to qualify and enable

the use of additional competitive and sustainable biomass. This will

support the cost-efficient production of high-quality biofuels for both

road and aviation applications.

Change in the composition of reportable

segments

The Group will change its reportable segments composition by moving

UPM Forest business into UPM Fibres business area as of January 1, 2026.

The vast majority of wood used by UPM in Finland is consumed within the

UPM Fibres business, and the Finnish forests are therefore considered an

integral operational and strategic part of UPM Fibres North operations. In

addition, the change improves consistency with UPM Fibres operations in

Uruguay, where forest assets have already been reported as part of the

UPM Fibres South operations. Until the end of 2025, UPM Forest was

included in Other operations.

UPM Biorefining, consisting of UPM Biochemicals and UPM Biofuels

and reported as part of Other operations, will be renamed UPM Next

Generation Renewables as of January 1, 2026.

Following these changes, Other Operations includes UPM Next

Generation Renewables, Wood sourcing, Group services and Technology

and forest assets in the US.

The change will impact KPIs of UPM Fibres reportable segment and

Other Operations. The comparative periods will be restated according to

the new reporting principles. The reporting change has no impact on

Group financial result or balance sheet. Further information » Note 10.1

Forthcoming accounting policy changes in the Financial statements.

UPM Specialty Papers will be renamed UPM Specialty Materials as of

January 1, 2026.

Events during the reporting period

On January 2, UPM announced that it has been listed as the only forest

and paper industry company in the Dow Jones World and European

Sustainability Indices 2024-2025.

On February 5, UPM updated its Disclosure Policy and changed its

method of issuing profit guidance and outlook.

On February 5, 2025, UPM announced the acquisition of Metamark, a

UK-based company to further accelerate UPM Adhesive Materials'

growth.

On February 5, UPM announced the commencement of a share buy-

back program for a maximum of 6,000,000 shares or a maximum of

€160 million.

On February 11, UPM was recognized among the top sustainability

performers by CDP and S&P Global.

On March 11, UPM announced plans to permanently close its paper

mill in Ettringen, Germany.

On March 27, UPM held its Annual General Meeting.

On April 8, UPM announced the completion of the share buy-back

program.

On May 5, UPM announced that the 6 million shares repurchased

under its buy-back program have been cancelled.

On May 27, UPM announced plans to discontinue the development of

its potential second biomass-to-fuels refinery at the Port of Rotterdam.

On June 12, UPM announced that the UPM Raflatac business area and

reporting segment will be renamed UPM Adhesive Materials and the new

reporting segment name will be in use from the Half year financial report

2025 onwards.

On July 24, UPM announced plans to end paper production at UPM

Kaukas, Finland by the end of 2025.

On July 24, UPM announced an investment in UPM Adhesive

Materials' factory in Mills River, North Carolina, to increase production

capacity in the growing advanced labels market.

On July 30, UPM received a Platinum rating from EcoVadis, placing

the company in the top 1% globally for its sustainability performance.


UPM FINANCIAL REPORT 2025	123

On August 7, UPM announced an investment in a state-of-the-art

coating line at UPM Adhesive Materials' factory in Johor Bahru, Malaysia.

On September 4, UPM announced plans to discontinue production at

UPM Adhesive Materials' factory in Nancy, France.

On September 23, UPM initiated a strategic review of the UPM

Plywood business area, possibly resulting in a separation through a

divestment, partial demerger or initial public offering.

On September 29, UPM entered into a strategic partnership with

Versowood, consisting of the sale of the UPM Korkeakoski sawmill to

Versowood, and Versowood supplying UPM with pulpwood and sawmill

by-products.

On October 7, UPM agreed to sell the former Plattling paper mill site to

Bayernhafen GmbH & Co. KG, a logistics hub and infrastructure

company.

On October 9, UPM announced that Adhesive Materials expands its

footprint in Southeast Asia with a new slitting and distribution terminal

near Hanoi, Northern Vietnam to support growth in Southeast Asia.

On December 4, UPM announced that it has signed a non-binding

letter of intent with Sappi to form a graphic paper joint venture.

On December 16, UPM signed a €1 250 million revolving credit facility

agreement.

Events after the balance sheet date

On January 2, UPM announced that the strategic partnership agreement

between UPM and Versowood has received the necessary regulatory

approvals and has entered into force on December 31, 2025.

On January 12, UPM announced that it received leadership scores in

CDP 2025 assessment for environmental efficiency and transparent

reporting on climate, forest, and water-related actions.

Profit guidance

UPM’s comparable EBIT in H1 2026 is expected to be approximately in

the range of €325-525 million (€413 million in H1 2025, and €508 million

in H2 2025).

Outlook for 2026

The business environment at the beginning of the year is showing signs of

stability, even if there continue to be significant uncertainties in geopolitics

and trade.

In H1 2026, compared with H2 2025, UPM’s performance is expected

to benefit from moderately higher sales prices and delivery volumes and

moderately lower fixed costs. Performance is expected to be held back by

continued weak communication paper markets and increased costs

during the early phase of the production ramp-up at UPM Leuna.

Currencies started the year at similar levels, compared with H2 2025.

Comparable EBIT in H2 2025 benefited from the timing of energy refunds

and increased fair value of forest assets, items that are not expected to

take place during H1 2026 in similar quantities.

In H1 2026, compared with H1 2025, UPM’s performance is expected to

benefit from lower variable costs and moderately higher delivery volumes.

Maintenance activity is expected to be lower than in the comparison

period. Performance is expected to be held back by continued weak

communication paper markets and increased costs during the early

phase of the production ramp-up at UPM Leuna. Currencies at the

beginning of the year are negative to comparable EBIT, compared with H1

2025.

Sensitivity to pulp and electricity prices

UPM’s comparable EBIT is sensitive to pulp and electricity prices. The

figures below represent Group earnings sensitivities on annual level.

UPM is a large producer and consumer of chemical pulp. A €50/

tonne change in average pulp price would impact annual comparable

EBIT by approximately €180 million (net impact: assuming no correlation

between pulp and paper prices) to approximately €270 million (gross

impact: assuming paper pricing would match changes in pulp costs).

UPM is a large producer and consumer of electricity in Finland and

separately hedges part of its electricity sales and purchases. Based on

UPM’s estimated unhedged net electricity sales position in Finland in

2026, a €10/MWh change in average electricity market price in Finland

would impact annual comparable EBIT by approximately €40 million.

Foreign exchange exposure

Fluctuations in monetary policies and economic conditions can

significantly impact the value of various currencies, which in turn may

affect UPM. Additionally, the escalation of global trade tensions could

influence currency exchange rates. These currency fluctuations could

impact UPM’s cash flow, earnings, or balance sheet, and may also affect

the relative competitiveness between different currency regions.

The Group’s policy is to hedge an average of 50% of its estimated net

currency cash flows on a rolling basis over the next 12-month period. At

the end of 2025, UPM’s estimated net currency cash flows for the next 12

months totaled approximately €1.5 billion. USD was the largest exposure

at approximately €1.3 billion, followed by UYU, GBP and JPY. In addition,

the earnings of UPM’s foreign subsidiaries are translated to euros in

reporting. UPM has significant foreign subsidiaries in Uruguay, the U.S.

and China.


UPM FINANCIAL REPORT 2025	124

UPM Fibres

UPM Energy

UPM Fibres consists of pulp and timber

businesses. UPM Pulp offers a versatile

range of responsibly-produced pulp

grades suitable for a wide range of end-

uses. UPM Timber offers certified sawn

timber. UPM has two pulp mills and

plantation operations in Uruguay (Fibres

South) as well as three pulp mills and

three sawmills in Finland (Fibres North).

UPM Energy generates cost-

competitive, zero-carbon electricity.

Operations also include physical

electricity and financial portfolio

management as well as services to

industrial electricity consumers.

UPM Energy is the second largest

electricity producer in Finland.

UPM’s power generation capacity

consists of hydropower, nuclear

power and thermal power.


	2025	2024
Sales, € million	3,407	3,728
Comparable EBITDA, € million	511	844
% of sales	15.0	22.6
Depreciation, amortization and impairment charges, € million	65	11
Share of results of associates and joint ventures, € million	2	2
Depreciation, amortization and impairment charges, € million	-295	-437
Operating profit, € million	282	419
% of sales	8.3	11.2
Items affecting comparability in operating profit, € million ¹⁾	0	-114
Comparable EBIT,€ million	283	533
% of sales	8.3	14.3
Capital employed (average), € million	6,745	7,153
Comparable ROCE, %	4.2	7.5
Pulp deliveries, 1,000 t	5,163	4,945

¹⁾ 2025 includes €1 million restructuring charges and €1 million capital gain on sale on

Korkeakoski saw mill. 2024 includes €113 million goodwill impairment related to Pulp

Finland and minor restructuring charges.

2025 compared with 2024

The comparable EBIT decreased due to significantly lower sales prices.

Variable costs were at the same level. Delivery volumes increased.

The average price in euro for UPM's pulp deliveries decreased by 15%

Market environment

• In 2025, the downward trend in chemical pulp market prices continued

until Q4 when Chinese pulp market gained some momentum.

• In 2025, the average European market price in euros was 2% lower for

NBSK and 15% lower for BHKP compared to 2024. In China, the

average market price in US dollars was 6% lower for NBSK and 16%

lower for BHKP compared to 2024.

• In 2025, European demand for sawn timber continued to be relatively

weak due to low construction activity.

Sources: FOEX, UPM


	2025	2024
Sales, € million	615	627
Comparable EBITDA, € million	158	188
% of sales	25.6	30.0
Depreciation, amortization and impairment charges, € million	-7	-7
Operating profit, € million	151	181
% of sales	24.5	28.9
Items affecting comparability in operating profit, € million ¹⁾	—	—
Comparable EBIT, € million	151	181
% of sales	24.5	28.9
Capital employed (average), € million	2,603	2,426
Comparable ROCE, %	5.8	7.5
Electricity deliveries, GWh	11,141	11,328

2025 compared with 2024

The comparable EBIT decreased due to lower sales prices and higher

production costs.

UPM’s average electricity sales price decreased by 2% to €50.3/MWh

(€51.4/MWh).

Market environment

• Both the Nordic and Finnish hydrological balance was close to the

long-term average at the end of December.

• The average Finnish area spot price on the Nordic electricity exchange

in 2025 was € 40.5/MWh, 11% lower than in 2024 (€ 45.6/MWh).

• The front-year forward electricity price for the Finnish area closed at €

40.6/MWh in December, 16% lower than at the end of Q3 2025 (€ 48.1/

MWh).

Sources: The Norwegian Water Resources and Energy Directorate, Svensk Energi, Finnish

Environment Institute, Nord Pool, NASDAQ OMX, ICE, UPM


UPM FINANCIAL REPORT 2025	125

UPM Adhesive Materials

UPM Specialty Papers

UPM Adhesive Materials offers high-

quality self-adhesive paper and film

products including label materials,

graphics solutions and removable

self-adhesive products. UPM

Adhesive Materials is the second-

largest producer of self-adhesive

label materials worldwide.

UPM Specialty Papers offers

labelling and packaging materials

as well as office and graphic papers

for labelling, commercial siliconizing,

packaging, office use and printing.

The production plants are located in

China, Finland and Germany.


	2025	2024
Sales, € million	1,655	1,562
Comparable EBITDA, € million	176	177
% of sales	10.7	11.3
Depreciation, amortization and impairment charges, € million	-61	-71
Operating profit, € million	53	88
% of sales	3.2	5.6
Items affecting comparability in operating profit, € million ¹⁾	-70	-44
Comparable EBIT, € million	124	132
% of sales	7.5	8.5
Capital employed (average), € million	860	722
Comparable ROCE, %	14.4	18.3

¹⁾ 2025 includes €30 million restructuring charges to improve operations' competitiveness

and efficiency, €28 million restructuring charges related to the discontinuation of label

materials' production at Nancy factory in France, €6 million addition to impairment

charges and €2 million reversal of restructuring charges related to the closure of

Kaltenkirchen factory, €3 million charges related to Metamark acquisition and a €1 million

addition to charges related to Adhesive Materials factory which was impacted by

Hurricane Helene and €3 million addition to prior restructuring charges. 2024 includes €11

million restructuring charges and €26 million impairment charges related to the closure of

Kaltenkirchen factory, €6 million write down of inventory and an €3 million insurance

compensation related to UPM Adhesive Materials' inventory in USA impacted by

Hurricane Helene, and €5 million relating to other restructuring measures.

2025 compared with 2024

The comparable EBIT decreased. The positive impact of higher volumes

was more than offset by the negative impacts from prices and mix, fixed

costs and currencies.

Market environment

• In 2025, global market for self-adhesive label materials continued to

recover from its 2023 lows, with growth being strongest in Europe.

APAC markets had intense competitive dynamics.

Sources: UPM, FINAT, TLMI


	2025	2024
Sales, € million	1,315	1,467
Comparable EBITDA, € million	204	208
% of sales	15.5	14.2
Depreciation, amortization and impairment charges, € million	-57	-74
Operating profit, € million	144	132
% of sales	11.0	9.0
Items affecting comparability in operating profit, € million ¹⁾	-3	-3
Comparable EBIT, € million	147	135
% of sales	11.2	9.2
Capital employed (average), € million	706	789
Comparable ROCE, %	20.9	17.1
Paper deliveries, 1000 t	1,398	1,429

¹⁾ Items affecting comparability in 2025 and in 2024 relate to restructuring measures.

2025 compared with 2024

The comparable EBIT increased, mainly due to lower depreciation. The

negative impact of lower volumes and sales prices was offset by the

positive impact of lower input costs.

Market environment

• In 2025, market demand for specialty papers was affected by tariff

uncertainties. Market prices decreased compared to 2024.

Sources: UPM, RISI, AFRY, AWA


UPM FINANCIAL REPORT 2025	126

UPM Communication Papers

UPM Plywood

UPM Communication Papers offers

an extensive product range of

sustainably produced graphic

papers for advertising and

publishing as well as home and

office uses. The business has 8

efficient paper mills in Europe and

the United States.

UPM Plywood offers high quality

WISA® plywood and veneer

products for construction, vehicle

flooring, LNG shipbuilding, parquet

manufacturing and other industrial

applications.


	2025	2024
Sales, € million	2,493	2,953
Comparable EBITDA, € million	241	344
% of sales	9.7	11.6
Share of results of associates and joint ventures, € million	0	0
Depreciation, amortization and impairment charges, € million	-109	-100
Operating profit, € million	107	190
% of sales	4.3	6.4
Items affecting comparability in operating profit, € million¹⁾	-75	-83
Comparable EBIT, € million	181	273
% of sales	7.3	9.3
Capital employed (average), € million	1,018	1,151
Comparable ROCE, %	17.8	23.8
Paper deliveries, 1000 t	2,893	3,263

¹) 2025 includes €42 million restructuring charges and €10 million impairment charges

related to the closure of Ettringen paper mill in Germany, €36 million restructuring charges

and €36 million impairment charges of fixed assets related to the closure of Kaukas paper

machine 1 in Finland, €14 million reversal of restructuring charges related to the closure of

Plattling paper mill in 2023, €9 million restructuring charges in UPM Communication

Papers to improve mills' operations' efficiency, €4 million restructuring charges and €4

million impairment charges resulting from the exercise of a put option concerning the

Kraftwerk Plattling power plant company, € 46 million capital gain on sale of Plattling

paper mill site, €7 million capital gain on sale of non-current assets and €1 million addition

to prior restructuring charges. 2024 includes €8 million addition to restructuring charges

related to the closure of Plattling mill, €40 million of restructuring and impairment charges

related to the closure of Hürth newsprint mill in Germany, €54 million restructuring and

impairment charges related to the closure of Nordland fine paper machine 3 in Germany,

€21 million capital gain on sale of UPM-Kymmene Austria GmbH and other restructuring

charges.

2025 compared with 2024

The comparable EBIT decreased. Delivery volumes and sales prices were

lower. Variable and fixed costs decreased.

The average price in euros for UPM's paper deliveries decreased by

5%.

Market environment

• In 2025, demand for graphic papers in Europe was 8% lower than in

2024. Newsprint demand decreased by 8%, magazine papers 11%, and

fine papers 6%

• Demand for magazine papers in North America in 2025 was 10% lower

than in 2024. In Q4 2025 magazine paper demand declined by -13%

compared to Q4 2024.

• The average price in North America for magazine paper grades was

stable throughout the year 2025.

Sources: PPI/RISI, Euro-Graph, PPPC


	2025	2024
Sales, € million	409	430
Comparable EBITDA, € million	55	65
% of sales	13.6	15.0
Depreciation, amortization and impairment charges, € million	-20	-23
Operating profit, € million	31	42
% of sales	7.6	9.7
Items affecting comparability in operating profit, € million¹⁾	-4	0
Comparable EBIT, € million	35	42
% of sales	8.7	9.7
Capital employed (average), € million	230	243
Comparable ROCE, %	15.4	17.1
Plywood deliveries, 1,000 m3	458	482

¹⁾ Items affecting comparability in 2025 relate to earlier restructuring measures.

2025 compared with 2024

The comparable EBIT decreased. The strikes at the Finnish mills in H1

limited volumes and wood cost was higher.

Market environment

• In 2025, demand for spruce plywood in Europe was stable but

comparatively slow as construction markets remained soft.

• In 2025, demand for birch plywood in panel trading and industrial end

uses was good.

• In 2025, demand for LNG end-use birch plywood continued at a very

good level.

Source: UPM


UPM FINANCIAL REPORT 2025	127

Other operations

Other Operations includes UPM Forest,

UPM Biofuels and UPM Biochemicals

business units as well as biofuels

development and Group services. UPM

Forest secures competitive wood and

biomass for UPM businesses and

manages UPM-owned and privately owned

forests in North Europe. In addition, UPM

Forest offers forestry services to forest

owners and forest investors. UPM Biofuels

produces wood-based renewable diesel for

all diesel engines and renewable naphtha

that can be used as a biocomponent for

gasoline or for replacing fossil raw

materials in petrochemical industry. UPM

operates one biorefinery in Finland.


	2025	2024
Sales, € million	693	623
Comparable EBITDA, € million	-25	-72
Change in fair value of forest assets and wood harvested, € million	80	68
Share of results of associated companies and joint ventures, € million	-2	-1
Depreciation, amortization and impairment charges, € million	-45	-427
Operating profit, € million	-8	-434
Items affecting comparability in operating profit, € million ¹⁾	-17	-382
Comparable EBIT, € million	9	-52
Capital employed (average), € million	3,112	3,129
Comparable ROCE, %	0.3	-1.7

¹⁾ 2025 includes €10 million charges related to strategic review of UPM Plywood Business

Area and to the announced non-binding joint venture transaction between Sappi and UPM

in the graphic paper business, €3 million restructuring charges and €1 million impairment

charges related to the closure of the UPM Biomedicals business, €1 million reversal of

restructuring charges related to the closure of UPM Biocomposites business, €2 million

restructuring charges related to discontinuation of Rotterdam refinery project and €1

million impairment of residual goodwill in Other operations.2024 includes €5 million

impairment of UPM Biochemicals goodwill and €373 million impairment on assets in

biochemicals refinery in Leuna, €12 million restructuring and impairment charges related

to the closure of the UPM Biocomposites business, and €9 million capital gain on sale of

non-current assets.

2025 compared with 2024

The comparable EBIT increased, mainly due to improved performance in

the Biofuels business. The change in the fair value of forest assets net of

wood harvested was €80 million (68 million). The change in the fair value

of forest assets was €156 million (195 million). The cost of wood harvested

from UPM forests was €77 million (126 million).

Biofuels deliveries were higher and feed cost decreased significantly,

resulting in improved margins which were supported by increasing prices

in UPM key markets.

Market environment

• In Q4 2025, demand in the European markets for advanced renewable

fuels was solid, RED III implementation in Germany progressed with

favorable regulatory scope and led to improving market prices.

• In 2025, interest in bio-based glycols and renewable functional fillers

remained strong, supported by a stable interest of brand owners and

consumers in renewable materials and the strong sustainability and

technical value proposition of UPM’s offering.

Source: UPM

Board of Directors and

the Group Executive Team

At the Annual General Meeting held on March 27, 2025, the number of

members of the Board of Directors was confirmed as nine, and Henrik

Ehrnrooth, Pia Aaltonen-Forsell, Jari Gustafsson, Piia-Noora Kauppi, Topi

Manner, Marjan Oudeman, Martin à Porta and Kim Wahl were re-elected

to the Board. Melanie Maas-Brunner was elected as a new director to the

Board. The directors’ term of office will end upon the closure of the next

AGM.

Henrik Ehrnrooth was elected as Chair, and Kim Wahl as Deputy Chair

of the Board of Directors of UPM-Kymmene Corporation at the Board of

Directors’ constitutive meeting that took place following the Annual

General Meeting.

In addition, the Board of Directors elected the chairs and other

members to the Board committees from among its members: Pia

Aaltonen-Forsell was elected to chair the Audit Committee, and Jari

Gustafsson and Marjan Oudeman were elected as other committee

members. Martin à Porta was re-elected to chair the Remuneration

Committee, and Melanie Maas-Brunner and Topi Manner were elected as

other committee members. Henrik Ehrnrooth was re-elected to chair the

Nomination and Governance Committee, and Piia-Noora Kauppi and

Kim Wahl were elected as other committee members.

Shares held by the Board of Directors and the

Group Executive Team

At the end of the year, the members of the Board of Directors owned a

total of 167,744 (146,373) UPM-Kymmene Corporation shares. These

represent 0.03% (0.03%) of the shares and 0.03% (0.03%) of the voting

rights. At the end of the year, President and CEO Massimo Reynaudo

owned 23,321 shares. At the end of the year, the other members of the

Group Executive Team owned a total of 517,226 shares.

Refer to » Note 3.2 Key management personnel, of the consolidated

financial statements 2025, for further information on remuneration and

shares held by the members of the Board and the President and CEO and

remuneration of the members of Group Executive Team.

Legal proceedings

The Group’s management is not aware of any significant litigation at the

end of 2025.

Refer to » Note 9.2 Litigation, of the consolidated financial statements

2025 for information on legal proceedings.


UPM FINANCIAL REPORT 2025	128

Risks

Risk management

UPM regards risk management as a systematic and proactive means to

analyze and manage opportunities and threats related to its business

operations. This also includes risks that can be avoided through careful

planning and evaluation of future projects and business environments.

Risk management is an integral part of UPM’s management system

as risk taking is a normal part of business operations. While executing

strategies, UPM and its business areas, functions and manufacturing

units are exposed to a number of risks and opportunities. Each business

area, function and unit is responsible for identifying, measuring and

managing of risks related to its own operations, and for reporting on risk

exposures, risk management activities and results to its

own management team and to the Risk Management function.

The Risk Management Committee, chaired by the CFO, is responsible

for recommending risk tolerances and profiles to the President and CEO

and the Strategy Team. The Strategy Team is responsible for aligning risk

management priorities, business and risk management strategies and

policies.

The Board of Directors, assisted by the Audit Committee, monitors

and assesses the effectiveness of the company’s risk management

systems and oversees the assessment and management of risks related

to the company’s strategy and operations. The Audit Committee

oversees that risk management activities are aligned with the Risk

Management Policy, and that risk assessments are used to guide internal

audit activities.

UPM seeks to transfer insurable risks through insurance

arrangements for any risks that exceed the defined tolerance.

UPM strives to ensure compliance with the UPM Code of Conduct and

other corporate policies. To enhance compliance and mitigate risks, UPM

performs risk assessments, training and monitoring at regular intervals.

UPM has developed and implemented a comprehensive internal

control system that covers business and financial reporting processes.

Internal control is aimed at ensuring that the company’s operations are

efficient and reliable, and in compliance with statutory requirements, and

that the company’s financial reporting is accurate and reliable, and

reflects operational results. Internal control pertaining to financial

reporting is described in the Corporate Governance Statement available

on the corporate website.

The main risk factors that can materially affect the company’s

business, financial results and non-financial performance are set out

below. They have been classified as strategic risks, operational risks, and

financial risks. Risks may also arise from legal proceedings incidental to

UPM’s operations.

Strategic risks

Uncertainties in the economic and political operating

environment

The main uncertainties in UPM’s earnings relate to sales prices and

delivery volumes of the Group's products, as well as changes to the main

input cost items and currency exchange rates. Most of these items

depend on general economic developments. Political developments are

causing uncertainties to the global economy. Such uncertainties also

affect UPM’s customers influencing the demand for UPM’s products.

Currently high uncertainty relates to the trade tensions between major

economies, particular to the tariffs introduced by the U.S. on imports from

nearly all countries in the world, and the potential countermeasures

introduced by the other countries. Changes to the tariff levels remain

possible.

The trade conflict and the related uncertainty may impact the general

economic development of various regions or have significant impacts on

inflation, economic growth, interest rates and currency exchange rates in

many economies relevant for UPM. Such developments could have

indirect impacts on UPM, for example by impacting demand and supply

of various products or raw materials, or redirecting trade flows between

countries and regions, which could impact deliveries and pricing of UPM’s

products or cost of raw materials on markets relevant for UPM.

Geopolitical tensions, including Russia's ongoing war in Ukraine, the

conflicts in the Middle East or the recent tension over Greenland, continue

to cause high uncertainty in the operating environment, which may

impact economic growth, inflation and trade. The potential escalation in

geopolitical or trade tensions may result in economic sanctions,

blockades, increased tariff levels, or other export and/or import

restrictions that could limit or prevent UPM’s business in a country or

area or cause adverse effects on energy, logistics or other main input cost

items, such as the cost and availability of wood in Finland, or on demand

for UPM's products or sales prices.

UPM is also exposed to the impacts of certain governmental

protection and trade protection measures such as import tariffs, foreign

direct investment restrictions that safeguard domestic industries and

other changes affecting international trade. Restrictions on import and

export and other measures protecting national interests may affect the

availability or cost of necessary raw materials, price competitiveness

compared to producers from other countries, demand for UPM's

products, and changes in the international trade agreements.

Fluctuations in fiscal, monetary and other policies and economic

conditions can significantly impact on the value of various currencies,

which in turn may affect UPM. Additionally, the escalation of global trade

tensions could influence currency exchange rates. These currency

changes could impact UPM's cash flow, earnings, or balance sheet, and

may also affect the competitiveness between different currency regions.

UPM is especially exposed to the economic and political conditions in

countries in which UPM has significant production operations, such as

Finland, Uruguay and Germany. UPM also has significant production

operations and sales in and to China where the lack of transparency and

predictability of the political, economic and legal systems may lead to an

increasing uncertainty and risk level when investing in or operating in the

country. UPM's subsidiary and employees in Ukraine are exposed to a

challenging and unpredictable environment stemming from Russia's

ongoing war in Ukraine.

Cyclical and highly competitive markets

In all markets UPM operates in, the price level is determined by a

combination of supply and demand and an imbalance between them

could cause the prices of UPM’s products to fluctuate significantly.

Imbalances in supply and demand may be caused by factors such as

decreases or increases in the end-use demand, changes in customer


UPM FINANCIAL REPORT 2025	129

preferences, market adjustments to Russia's ongoing war in Ukraine or

global trade tensions, or a new production capacity entering the market

or an old production capacity being closed, all of which may affect both

the demand volume and price level of UPM’s products.

Competitor behavior may also influence the market price

development. UPM may, from time to time, experience price pressures

from competitors in its main business areas and geographic market

areas as well as particularly large fluctuations in operating margins due to

this competitive environment.

The majority of UPM’s revenue comes from sales of graphic and

specialty papers, pulp and label materials, and UPM principally competes

with several large multinational paper and forest product companies as

well as with numerous regional or more specialized competitors.

Changes in consumer behavior

Demand for UPM’s products may be affected by the introduction of

substitute or alternative products. The demand for graphic papers in the

mature markets is forecast to continue to decline. This will likely increase

the pressure on UPM’s graphic paper deliveries and sales prices as well as

the scarcity of recycled fibre. Changes in demand could also cause

overcapacity in some of UPM’s products, affecting the sales prices and

deliveries of such products.

Depending on the product area, the shifts in consumer demand may

either have a positive or an adverse effect on the consumption of UPM’s

products. For example, UPM expects that there will continue to be a

growing need for renewable and recyclable solutions, which creates

various opportunities for UPM and drive demand growth for most of

UPM’s products. At the same time, digitalization and e-commerce have

changed consumer behavior and resulted in a decline in demand for

graphic papers for various end-uses.

Changes in legislation

UPM is exposed to a wide range of laws and regulations globally. The

performance of UPM’s businesses, for example the paper, energy, and

biofuels businesses, are to a high degree dependent on the regulatory

framework for these areas. Changes in regulation, direct and indirect

taxation or subsidies, aid, grants or allowances could have a direct effect

on UPM’s performance and its relative competitiveness, and structurally

restrict or exacerbate UPM’s ability to compete for raw material.

UPM also operates in industries that are subject to extensive

environmental laws and regulations governing, among others, emissions,

water quality, energy efficiency, as well as waste handling, recycling and

disposal. Environmental laws and regulations have become more

stringent and may continue to develop to be even more strict due to

various global, regional and national level regulatory initiatives. As these

environmental laws and regulations are amended or as their application or

enforcement is changed, additional costs in complying with new and more

stringent regulations or fines for their non-compliance may be imposed on

UPM.

UPM’s operations require UPM to obtain multiple environmental

permits and other licenses from relevant authorities and comply with their

terms and conditions. These permits and licenses may be subject to

modification, renewal or, subject to certain conditions, revocation by the

issuing authorities. UPM monitors regulatory changes in order to better

adapt to the effects of such changes.

Shareholdings in Pohjolan Voima Oyj

UPM is a shareholder of Pohjolan Voima Oyj (PVO), which is the majority

shareholder of Teollisuuden Voima Oyj (TVO). TVO owns and operates

three nuclear power plant units at the Olkiluoto site (OL). PVO supplies

electricity to its shareholders on a cost-price principle (so called

‘Mankala-principle’) that is widely applied in the Finnish energy industry.

Under the Mankala principle, electricity and/or heat is supplied to the

shareholders in proportion to their ownership and each shareholder is,

pursuant to the specific stipulations of the respective Articles of

Association, severally responsible for its respective share of the

production costs of the energy company concerned. The newest plant

unit, Olkiluoto 3 EPR (OL3), started regular commercial electricity

production in 2023 increased UPM’s electricity generation capacity

significantly.

In Finland, UPM indirectly owns approximately 31% of the new nuclear

power plant unit OL3, through its shareholdings in Pohjolan Voima Oyj.

Pohjolan Voima Oyj is a majority shareholder of Teollisuuden Voima Oyj

(TVO), holding 58.5% of its shares.

TVO procured OL3 as a fixed-price turnkey project from a consortium

(Plant Supplier) formed by Areva GmbH, Areva NP SAS and Siemens AG.

As stipulated in the Plant Contract, the consortium companies have joint

and several liability for the contractual obligations. According to TVO’s

financial statements from 2023, total investment in OL3 was

approximately €5.8 billion. June 2025 marked the final takeover of the

OL3 nuclear power unit, which operated smoothly in its second full year of

continuous commercial production.

TVO has announced that even though there have been few

interruptions to electricity generation at OL3 following the conclusion of

the test operation program, there are uncertainties related to the

availability of OL3 during the first operating cycles due to the possibility of

unexpected events. These uncertainties are managed by means of

systematic maintenance and monitoring of the plant unit.

According to TVO, if OL3 fails to achieve the planned load factor or

operating cost structure, the Finnish national grid limits its power level, or

the costs incurred by TVO due to grid load limitation make it unprofitable

to operate at full power, there is a risk of production costs exceeding

TVO’s target.

Climate change

UPM is exposed to a variety of risks related to climate change. Strategic

risks related to climate change include risks concerning competition,

markets, customers, products and regulation. For example, unpredictable

regulation, subsidies or EU policies and resulting national legislation in EU

countries may distort raw material, energy and final product markets and

changing costs of greenhouse gas emissions may influence UPM’s

financial performance. Policies and regulations responding to Russia’s

war in Ukraine and cutting Russian gas supply to Europe or policies of the

current U.S. government that emphasize energy supply security over

climate targets may change the trajectory of climate change or slow

down the achievement of emission reductions. UPM believes that forest,

wood-based products and low-carbon energy hold significant value

creation potential with respect to renewable and recyclable products.

Other risks related to climate change particularly concern UPM’s

supply chain as well as the availability and price of major inputs, such as

wood and electricity. Climate change may cause exceptional weather


UPM FINANCIAL REPORT 2025	130

events, such as severe storms, floods and droughts, which could, for

example, result in unpredictable hydropower availability and wood

harvesting conditions. Exceptionally mild winter conditions with a reduced

period of frozen soil in the Nordics could affect the harvesting and

transport of wood, consequently undermine the stability of raw material

supply and potentially increasing the cost of wood. These could also

increase the risk of production limitations.

Biodiversity loss

Biodiversity refers to the diversity and variation of species and

ecosystems on our planet. According to the UN, and despite ongoing

efforts, biodiversity is deteriorating worldwide. Biodiversity loss is projected

to worsen if no mitigation actions are taken. Mitigating climate change is,

in our view, the single most important action to safeguard biodiversity.

UPM’s operations are widely linked with biodiversity, and most

significant impacts on biodiversity arise from wood sourcing activities.

Biodiversity is instrumental in maintaining healthy forest growth and

ensuring that forests adapt to the changing climate. Mitigating

biodiversity loss also plays an important role in our hydropower plants

and production units where we aim to improve living conditions for local

fauna and flora with dedicated actions. Deteriorating biodiversity may

cause significant adverse effects on the availability and acceptability of

wood raw material needed to produce UPM’s products such as pulp,

paper, timber and biofuels.

Loss of major customers and industry consolidation

UPM has several major customers, and the largest customer in terms of

sales represented approximately 3% of UPM’s sales in 2025, and the ten

largest customers represented approximately 12% of such sales. Although

UPM is not dependent on any specific customer or group of customers,

the loss of its major customers, if not replaced on similar terms, could

have a material effect on UPM’s business. Also, as the size of UPM’s

customers could increase in connection with industry consolidation, such

customers could exert increased bargaining power on all of their

suppliers, including UPM. UPM is also exposed to risks related to any

deterioration of a major customer group’s financial condition.

Product development, innovation and intellectual

property rights

Research and product development are an important part of UPM’s

strategy, particularly with regard to new businesses, such as wood-based

biofuels and biochemicals. The return on investment of new or enhanced

existing products and solutions may not meet targets or improve UPM’s

competitiveness.

UPM has a broad patent portfolio that provides value creation

potential in the future; however, it also exposes UPM to risks related to the

protection and management of intellectual property, including patents

and trademarks.

Corporate acquisitions and divestments

UPM’s strategy is to grow businesses with strong long-term fundamentals

and sustainable competitive advantage. This may result in acquisitions of

new businesses or divestments of existing businesses or parts thereof.

Carrying out corporate mergers, acquisitions and divestments involves

risks relating to the successful implementation of a divestment and the

ability to integrate and manage acquired businesses, systems, culture

and personnel successfully. In addition, the cost of an acquisition may

prove high and/or the anticipated economies of scale or synergies may

not materialize. Hidden liabilities of an acquired company (e.g.,

competition law liabilities) may also constitute a significant risk in relation

to potential acquisitions.

UPM may divest operations or assets to focus on strategic areas. Any

future divestments may be affected by many factors that are beyond

UPM’s control, such as the availability of financing to potential buyers,

interest rates, acquirers’ capacity, and regulatory approval processes, and

divestments may also expose UPM to indemnity claims. Furthermore,

divestments may involve additional costs due to historical and

unaccounted liabilities. The profitability of corporate acquisitions and

divestments may differ from UPM’s expectations.

Operational risks

Fluctuations in the prices of major inputs as well as

changes in their availability

The main inputs required in the manufacturing of UPM’s products are

wood, fibre, chemicals, energy and water. The prices for many of these

major production inputs have been volatile in recent years and are

expected to remain volatile for the foreseeable future, which may have an

effect on the general profitability of the industries in which UPM operates.

Climate change may contribute to the increase in the price volatility of

UPM’s major production inputs. Also, any changes in the current forestry

practices and level of harvesting due to negative public opinion or

regulatory restrictions towards harvesting could have an effect on the raw

material supply and may increase the cost of wood.

Governmental protection and trade protection measures, amplified by

Russia's war in Ukraine and the economic sanctions imposed as a

response, could also have an effect on the price and availability of raw

materials as countries may, for example, enact further export ban policies

to protect forests or to bolster their domestic industries, which could have

a material effect on the cost and availability of raw materials for UPM. It is

also uncertain how EU energy policies may affect the availability and

costs of fibre and energy. Significant increases in the prices of UPM’s

major inputs could increase UPM’s operating expenses.

Supplier and subcontractor network and raw materials

procurement

UPM’s business operations depend on a large number of suppliers and

contractors. The majority of UPM’s need for wood is covered by suppliers,

and other production inputs, such as chemicals, fillers and recovered

paper, are fully obtained from suppliers. Disruptions in the supply of key

inputs or transportation services could have a significant effect on

manufacturing operations. This could, for example, result in interruption

or downscaling production, change in the product mix or increased costs

resulting from price increases for critical inputs or transportation services

as well as shifts in the availability and price of wood. Due to Russia's war in

Ukraine, the EU has imposed bans on wood exports and imports and

transportation operations directly applying to sourcing of wood and other

raw materials from Russia. Supplier consolidation could also limit the

number of suppliers from which UPM would be able to source its


UPM FINANCIAL REPORT 2025	131

production inputs and could materially affect the prices paid by UPM for

these inputs.

The UPM Supplier and Third-Party Code defines the minimum level of

performance that UPM requires from its suppliers and third-party

intermediaries. UPM carries out supplier risk assessments on, for

example, operational, financial, quality and responsibility perspectives.

Based on the risk assessment, selected suppliers’ activities are evaluated

in more detail through annual surveys, supplier audits and joint

development plans. If any non-conformities are discovered, the supplier is

required to take corrective measures, which UPM follows up on. Some

contracts may also be discontinued due to the seriousness of the finding

or insufficient corrective measures.

Management and execution of large investment projects

Investment projects in UPM’s businesses are often large and take one or

more years to complete. Participation in large projects involves risks, such

as cost overruns or delays, shortage of labor, financial distress of

suppliers, or accidents as well as non-achievement of the economic

targets set for the investment. Currently, UPM’s largest ongoing

investment project is the construction of a new biochemicals refinery in

Germany. This project involves the development of new business

concepts and technologies.

UPM is responsible for many projects in several of its countries of

operation at any given time. All projects involve technical and operational

risks, and projects require continuous operational planning, steering and

supervision, quality control, input procurement, scheduling as well as

resource and cost monitoring. Managing several projects requires that

UPM has sufficient resources and efficient processes. Port congestion

issues, transportation bottlenecks, accidents in transit, and rising logistics

or construction costs, all of which could be resulting from external events

or market conditions beyond the control of UPM, may have an effect on

the execution or profitability of investment projects. UPM’s transformative

biochemicals project in Germany is proceeding with commissioning and

start-up activities, but despite efforts, there are uncertainties how quickly

or whether the project will reach the targeted returns.

Unavailability of information systems as well as

cybersecurity breaches

UPM’s production and business operations depend on the availability of

supporting information systems and network services. Unplanned

interruptions in UPM's or a supplier's critical information system services,

loss of critical, financial or personal data due to reasons beyond UPM’s or

its suppliers' control, such as power cuts, geopolitically-driven service

restrictions, software or telecommunication errors or other major

disasters, such as fires or natural disasters, as well as user errors by

UPM’s own personnel or suppliers, can potentially cause major damage

to UPM’s businesses and disruptions to the continuity of operations.

UPM’s or its suppliers' information systems may be exposed to

various cybersecurity risks. Malicious cyber intrusion could cause leakage

of sensitive information, violation of data privacy regulations, theft of

intellectual property, AI-generated misinformation or disinformation,

production outages and damage to UPM’s reputation.

Litigation and compliance

UPM operates globally in a large number of jurisdictions and complex

regulatory frameworks. UPM may from time to time be involved in

litigation and other similar proceedings or it could become subject to

various claims and actions based on various grounds.

On a global scale, enforcement activities and jurisdictional reach

regarding competition issues and anti-corruption have increased. Also,

the recent development of Renewable Energy Sources Act (EEG) related

lawsuits in Germany for alleged non-payment of EEG based surcharges

may have an adverse impact on UPM, albeit UPM is not currently a party

to any such lawsuits. Russia's war in Ukraine triggered many countries to

impose several sanctions packages which may increase the risk of

investigations, litigations or claims associated with alleged sanctions

violations, or retaliatory litigation in Russia. The UPM Code of Conduct

sets the standards of responsible behavior and it covers topics relating to

legal compliance and disclosure, anti-corruption, competition law, HR

practices, human rights, responsible sourcing and environmental matters.

UPM’s environmental performance and social responsibility play a

significant role in UPM’s ability to operate and influence the long-term

success of its businesses. UPM also measures and publishes information

on its environmental, social and governance matters, for which there is an

increasing risk of investigation or litigation from activists or other

stakeholders on alleged misrepresentation. UPM has significant

manufacturing operations or sourcing in several developing countries,

some of which are perceived as highly corrupt or corrupt according to

Transparency International. In these countries, there is an increased risk

of corruption, for example in relation to interaction with government

officials and in the use of intermediaries when applying for permits and

licenses requiring governmental approval. Breaches of applicable laws

and regulations or corporate policies by UPM employees may lead to

legal processes, sanctions and fines as well as reputational damages

effecting UPM’s operations.

Industrial actions

UPM is subject to risk of industrial actions, which could disrupt its

business operations or the business operations of its stakeholders.

Uncertainty may increase in the Finnish labor market amid the

announcement of the Finnish Forest Industries Federation in autumn

2020 to transfer collective bargaining to companies. For example, in the

beginning of 2022, members of the Paperworkers’ Union, the Finnish

Electrical Workers´ Union and the Trade Union Pro started strikes at UPM

mills in Jämsänkoski, Kouvola, Lappeenranta, Pietarsaari, Rauma,

Tampere and Valkeakoski, Finland. Any strike or other industrial action in

UPM’s business operations or related sectors could have an effect on

UPM’s business operations. For example, industrial actions in the

transportation sector or among other stakeholders important to UPM,

may disrupt UPM’s operations. Additionally, public dissatisfaction with

UPM’s labor-related decisions may, in extreme cases, lead to

unanticipated boycotts or disruptions at its facilities or construction sites.

A natural disaster, fire, accident or other major disruption

at UPM’s production facilities

UPM operates a significant number of production facilities globally that

are exposed to risks related to environment, fires, natural events,

machinery breakdowns, site security and occupational health and safety


UPM FINANCIAL REPORT 2025	132

risks. If UPM’s production facilities were to experience a major accident or

were forced to shut down or curtail production due to such unforeseen

events, such as a leak or spill due to malfunction or human error, this

could cause major interruptions in UPM’s operations and result in

significant costs in order to clean up and repair any potential damages to

the production plant and the surrounding areas. Any failure to maintain

high levels of safety management could also result in physical injury,

sickness (including pandemics-related infection outbreaks) or liability to

UPM’s employees, contractors or third parties. These risks are managed

through established management procedures, health and safety

precautions and loss prevention program. UPM’s insurance program

provides coverage for insurable hazard risks, subject to insurance terms

and conditions.

Forests and plantations

UPM’s plantations and forests may be affected by the impacts of climate

change, which include more frequent and severe extreme weather

conditions such as heavy rainfall, storms, floods and drought. Climate

change is expected to have the biggest physical effect on UPM’s forest

lands in Finland, where temperatures are expected to rise more

significantly and rapidly compared with other countries where UPM owns

forest. Although forest growth will likely accelerate, particularly in Finland,

due to the longer growing season, extreme weather conditions will

intensify, presenting new risks. The increase of droughts and forest fires

are estimated to pose the most significant risks for UPM’s forests and

plantations. Also, damages caused by insects and tree diseases are

becoming increasingly common, which could have an effect on the value

of UPM’s forest assets. Should these risks materialize, they could harm

UPM’s forest and plantations resulting in production interruption and

additional costs.

Strategic partners

UPM collaborates with many partners. For example, product development

in biofuels, bioenergy or biochemicals increases the importance of

partnerships in the search for new products and businesses or higher

efficiency. Partnerships may, however, create risks to UPM's profitability,

for example, through changes occurring within the partner entity or

changes in how the partnership operates. UPM is also subject to the risk

that its strategic partners do not comply with UPM’s Code of Conduct

with anti-corruption, competition law, HR practices, human rights,

responsible sourcing and environmental matters.

Partnership arrangements may also be too rigid to enable timely

changes required, for example, in connection with changes in the market

conditions or the economy. UPM’s partners may have different targets

with respect to the business of the partnerships. As UPM may not have

sole control over strategic direction and operational output of these

entities, its partners may have the right to make certain decisions on key

business matters with which UPM does not agree. In some cases,

strategic partners may choose not to continue partnerships that they

have with UPM. Russia's ongoing war in Ukraine, geopolitical escalations

or trade tensions may cause adverse economic or operational conditions

and result in financial stress or operational hardship to a strategic partner

and trigger unexpected negotiation or other processes causing delays or

cost increases for UPM.

Intellectual property rights of third parties

Molecular bioproducts form one of UPM’s three strategic focus areas for

growth. Initiatives within this strategic focus area are technology-intensive

and require increasing investments in such technologies either through

internal development or through third-party licenses or technological

partnerships. In addition to UPM’s own IPR portfolio, UPM licenses certain

technologies developed by third parties. Evaluating the rights related to

the third-party technologies UPM uses or intends to use is increasingly

challenging. Licensing third-party technology exposes UPM to such risks

as the increase of overall licensing costs, loss of negotiation power, the

validity of such licensing arrangements and potential infringement

claims, which could restrict UPM’s ability to use certain technologies,

prevent the delivery of UPM’s products and/or result in costly and time-

consuming litigation. Risk related to IPR claims and disputes relating to

technological partnerships have been assessed to increase.

Building capabilities to growth areas

The success of UPM’s business largely depends on the ability to build and

retain the necessary new capabilities required for future growth. UPM is

continuously developing its employee experience, leadership culture,

evaluating its recruitment, compensation policies and career

development opportunities and taking measures to attract and retain

diversely skilled personnel and individuals with rare and pivotal specialist

knowledge for current and future growth areas.

Financial risks

Financial risks are described in consolidated financial statements 2025.


Type of risk	Consolidated financial statement note
Credit risk	4.6 Working capital
Liquidity and refinancing risk	5.1 Capital management
Interest rate risk	6.1 Financial risk management
Foreign exchange risk	6.1 Financial risk management
Electricity price risk	6.1 Financial risk management
Counterparty risk	6.2 Derivatives and hedge accounting

Sustainability

Statement


UPM Financial Report 2025	134


Table of contents		List of ESRS disclosure requirements	Page
General information
General information		ESRS 2 – General disclosures	137
	Basis for preparation	ESRS 2 BP-1 – General basis for preparation of the Sustainability Statement	138
	Basis for preparation	ESRS 2 BP-2 – Disclosures in relation to specific circumstances	138
	Sustainability governance	GOV-1 – The role of the administrative, management and supervisory bodies	139
		GOV-2 – Information provided to, and sustainability matters addressed by the undertaking's administrative, management and supervisory bodies	142
		GOV-3 – Integration of sustainability-related performance in incentive schemes	142
		GOV-4 – Statement on due diligence	143
		GOV-5 – Risk management and internal controls over sustainability reporting	144
	Strategy, business model and value chain	SBM-1 – Strategy, business model and value chain	144
	Stakeholders	SBM-2 – Interest and views of stakeholders	148
	Impacts, risks and opportunities	SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	148
		IRO-1 – Description of the processes to identify and assess material impacts, risks and opportunities	150
	ESRS content overview	IRO-2 - Disclosure requirements in ESRS covered by the undertaking's Sustainability Statement	153

Environmental information
Climate change		ESRS E1 – Climate change	155
	Transition plan	E1-1 – Transition plan for climate change mitigation	156
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	158
	Policies	E1-2 – Policies related to climate change mitigation and adaptation	158
	Actions	E1-3 – Actions and resources in relation to climate change policies	159
	Targets	E1-4 – Targets related to climate change mitigation and adaptation	161
	Metrics	E1-5 – Energy consumption and mix	164
		E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions	165
		E1-7 – GHG removals and GHG mitigation projects financed through carbon credits	168
		E1-8 – Internal carbon pricing	169
		E1-9 – Anticipated financial effects from material physical and transition risks and potential climate-related opportunities	169
EU Taxonomy		Disclosures pursuant to Article 8 of Regulation 2020/852	170
Pollution		ESRS E2 – Pollution	176
	Policies	E2-1 – Policies related to pollution	177
	Actions	E2-2 – Actions and resources related to pollution	178
	Targets	E2-3 – Targets related to pollution	180
	Metrics	E2-4 – Pollution of air, water and soil	181
		E2-5 – Substances of concern and substances of very high concern	182
		E2-6 – Anticipated financial effects from material pollution-related risks and opportunities	182


UPM Financial Report 2025	135


Table of contents		List of ESRS disclosure requirements	Page
Water and marine resources		ESRS E3 – Water and marine resources	183
	Policies	E3-1 – Policies related to water and marine resources	184
	Actions	E3-2 – Actions and resources related to water and marine resources	184
	Targets	E3-3 – Targets related to water and marine resources	186
	Metrics	E3-4 – Water consumption	187
Biodiversity and ecosystems		ESRS E4 – Biodiversity and ecosystems	188
	Transition plan	E4-1 – Transition plan and consideration of biodiversity and ecosystems in strategy and business model	189
	Impacts, risks and opportunities	ESRS 2 SBM 3 – Material impacts, risks and opportunities and their interaction with strategy and business model	189
	Policies	E4-2 – Policies related to biodiversity and ecosystems	190
	Actions	E4-3 – Actions and resources related to biodiversity and ecosystems	190
	Targets	E4-4 – Targets related to biodiversity and ecosystems	193
	Metrics	E4-5 – Impact metrics related to biodiversity and ecosystems change	194
	Metrics	E4-6 – Anticipated financial effects from material biodiversity and ecosystem-related risks and opportunities	198
Resource use and circular economy		ESRS E5 – Resource use and circular economy	199
	Policies	E5-1 – Policies related to resource use and circular economy	200
	Actions	E5-2 – Actions and resources related to resource use and circular economy	201
	Targets	E5-3 – Targets related to resource use and circular economy	203
	Metrics	E5-4 – Resource inflows	204
	Metrics	E5-5 – Resource outflows	206

Social information
Own workforce		ESRS S1 – Own workforce	208
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	209
	Policies	S1-1 – Policies related to own workforce	210
	Processes	S1-2 – Processes for engaging with own workforce and workers' representatives about impacts	211
	Processes	S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns	211
	Actions	S1-4 – Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions	212
	Targets	S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	215
	Metrics	S1-6 – Characteristics of the undertaking's employees	216
		S1-7 – Characteristics of non-employee workers in the undertaking's own workforce	217
		S1-8 – Collective bargaining coverage and social dialogue	218
		S1-9 – Diversity metrics	218
		S1-10 – Adequate wages	219
		S1-11 – Social protection	219
		S1-12 – Persons with disabilities	219
		S1-13 – Training and skills development metrics	219
		S1-14 – Health and safety metrics	219
		S1-16 – Compensation metrics (pay gap and total compensation)	221
		S1-17 – Incidents, complaints and severe human rights impacts	221


UPM Financial Report 2025	136


Table of contents		List of ESRS disclosure requirements	Page
Workers in the value chain		ESRS S2 – Workers in the value chain	222
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	223
	Policies	S2-1 – Policies related to value chain workers	224
	Processes	S2-2 – Processes for engaging with value chain workers about impacts	225
	Processes	S2-3 – Processes to remediate negative impacts and channels for value chain workers to raise concerns	226
	Actions	S2-4 – Taking action on material impacts on value chain workers	226
	Targets	S2-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	228
Affected communities		ESRS S3 – Affected communities	229
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	230
	Policies	S3-1 – Policies related to affected communities	231
	Processes	S3-2 – Processes for engaging with affected communities about impacts	232
	Processes	S3-3 – Processes to remediate negative impacts and channels for affected communities to raise concerns	232
	Actions	S3-4 – Taking action on material impacts on affected communities	233
	Targets	S3-5 – Targets related to managing material negative impacts and advancing positive impacts	235

Governance information
Business conduct		ESRS G1 – Business conduct	236
	Policies	G1-1 – Business conduct policies and corporate culture	237
	Responsible sourcing	G1-2 – Management of relationships with suppliers	239
	Anti-corruption and bribery	G1-3 – Prevention and detection of corruption and bribery	242
	Metrics	G1-4 – Incidents of corruption or bribery	244
		G1-5 – Political influence and lobbying activities	244
		G1-6 – Payment practices	245

Other sustainability reporting standards and frameworks
IFRS S1 and S2		Sustainability Disclosure Standards by the ISSB (International Sustainability Standards Board)	246
TCFD		Disclosures according to TCFD (Task Force on Climate-related Financial Disclosures)	248
TNFD		Disclosures according to TNFD (Task Force on Nature-related Financial Disclosures)	249


UPM Financial Report 2025	137

General information (ESRS 2)

UPM is committed to creating value for its customers by using sustainable, renewable feedstocks, reducing its

environmental footprint and enhancing its positive societal impact.




UPM updated its Code of Conduct in accordance with its three-year update plan.	Double materiality assessment reviewed	The first commercial products from the UPM Biorefinery in Leuna (December 2025)


UPM Financial Report 2025	138

Basis for preparation

ESRS 2 BP-1

This Sustainability Statement has been prepared in accordance with the

EU Corporate Sustainability Reporting Directive (CSRD) and the

underlying European Sustainability Reporting Standards (ESRS).

Scope of consolidation

This Sustainability Statement has been prepared on a consolidated basis.

All UPM subsidiaries, joint ventures, and associates that are fully

consolidated or proportionately consolidated are included in the

Sustainability Statement. In the double materiality assessment (DMA), the

entire value chain is in the scope of assessment and consolidation of

information for material impacts, risks, and opportunities.

The primary subsidiaries and joint operations included in UPM's

financial reporting are listed in the Annual Report. Refer to » Note 8.2

Principal subsidiaries and joint operations in the consolidated financial

statements. In financial reporting, UPM consolidates acquired entities

from the acquisition date, which is when UPM gains control.

For social disclosures, the same list of subsidiaries, including any non-

controlling interests, is relevant unless otherwise stated in connection with

the respective disclosure. In the case of acquisitions and divestments, the

approach to social data disclosure may vary and is detailed within the

relevant context.

For environmental disclosures, the consolidated data covers the

production units and forestry operations of the main subsidiaries. All

production units are included unless otherwise stated in the context of the

relevant disclosure. An overview of production units is available on pages

8-9 of the Annual Report. For jointly operated on-site power plants, UPM

includes fuel, air emissions and waste data corresponding to UPM's energy

supply. Environmental investments include the share corresponding to

UPM's ownership of the on-site power plant. For divestments or acquisitions,

environmental data is included from the month of acquisition or until the

month of divestment, provided the production unit has been part of UPM for

more than half the year. For new production units under construction,

environmental data is considered from the start of production. As the

production and sales of the first commercial products started mid

December 2025, the Leuna biorefinery will be included in the environmental

data from January 2026 onwards.

Figures presented in this Sustainability Statement are rounded, and

therefore the sum of individual figures might deviate from the total figure

presented.

In 2025, UPM Communication Papers permanently closed its Kaukas

paper mill in Finland and its Ettringen paper mill in Germany. UPM

Adhesive Materials transferred production from the Kaltenkirchen site in

Germany to other European sites and decided to convert the Nancy

factory in France into a slitting and distribution terminal in 2026. As part

of a long-term strategic partnership, UPM Fibres sold its Korkeakoski

sawmill in Finland to Versowood, receiving a minority shareholding in the

company in return. In 2025, UPM also exited the biomedical business. The

environmental data of these sites is included in the consolidated data

until the end of production. In February 2025, UPM Adhesive Materials

acquired Metamark, a UK-based company with a manufacturing site in

Lancaster. This site is included in the environmental disclosure from

January 2025. For the social data, information regarding exclusions is

provided with the relevant disclosures.

No information relating to intellectual property, know-how or the

results of innovation has been omitted from the Sustainability Statement.

No exemptions have been used for disclosure of impending

developments or matters in negotiation.

Coverage of the value chain

The sustainability information disclosed is based on UPM's double

materiality assessment (DMA) of impacts, risks and opportunities, which

covers both the upstream and downstream value chain. The policies,

actions and targets also cover aspects of the whole value chain,

depending on the relevance of the aspect in the different parts of the

value chain.

ESRS standard S4 “Consumers and end-users” is omitted from UPM's

disclosure. The majority of UPM's products are further processed by

UPM's customers and, consequently, UPM does not have direct control of

the products provided to consumers and end-users. Therefore, based on

the DMA, UPM's impact on consumers and end-users is not considered

material. Customer-related aspects such as product safety, ecolabels or

product-related aspects like carbon storage in products are covered by

other standards where appropriate.

ESRS 2 BP-2

Information about time horizon, estimation

and reporting errors in previous periods

The reporting period covered by the Sustainability Statement is the same

as in the Financial Statements.

For information on time horizon, refer to » ESRS 2, SBM-3, Material

impacts, risks and opportunities

For information on value chain estimation, refer to » E1-6, Reporting

principles for metrics, Scope 3

In case estimations have been used, in case there are uncertainties

related to the metrics disclosed or in case of errors in the previous year’s

reporting, this is disclosed in the context of the relevant disclosure.

Changes in the preparation of

sustainability information

For the reporting year 2025, UPM reports its sustainability information for

the second time in accordance with the requirements from the European

Sustainability Reporting Standards (ESRS). The content of the Sustainability

Statement has been subject to a limited assurance engagement. Scope 1

and 2 emissions have been subject to reasonable assurance. The assurance

reports can be found from page 350 onward..

This Sustainability Statement covers disclosures according to the

Task Force on Climate-related Financial Disclosure (TCFD), the Task


UPM Financial Report 2025	139

Force on Nature-related Financial Disclosure (TNFD), and the ISSB’s two

sustainability disclosure standards IFRS S1 (General Requirements for

Disclosure of Sustainability-related Financial Information) and S2

(Climate-related Disclosures). The respective alignment indices are

published at the end of this Sustainability Statement.

Information on how UPM reports on sustainability reporting standards

of the Global Reporting Initiative, is available on the UPM webpage.

Incorporation by reference

The following information is incorporated by reference:

• ESRS 2 SBM-1: Employees by geographical area

• E1-9: Anticipated financial effects from physical and transition risk and

potential climate-related opportunities

• E4-6: Anticipated financial effects from material biodiversity risk and

opportunities

Sustainability governance

GOV-1

UPM has a one-tier governance model consisting of the Board of

Directors and the President and CEO, in addition to the Annual General

Meeting of shareholders. All nine members of the Board of Directors are

non-executive.

To enhance the Board's decision-making process, the Board has

established three committees composed of its members: the Audit

Committee; the Remuneration Committee; and the Nomination and

Governance Committee.

The President and CEO of UPM-Kymmene Corporation leads the day-

to-day operations of the company in accordance with the instructions

and orders given by the Board of Directors. In the operational

management of the company, the President and CEO is assisted by the

Group Executive Team (GET), consisting of the executives heading the

business areas and global functions, and by the Business Area Boards

and the Strategy Team. The President and CEO chairs the GET, the

Business Area Boards and the Strategy Team.

UPM's Board of Directors does not include any representatives of the

employees.

Experience and expertise in sustainability

and business conduct matters

Members of the Board of Directors and the President and CEO have

versatile experience and skills in the field of sustainability, for example in

climate change, biodiversity, human rights, supply chain management,

stakeholder engagement and ESG in general. In addition, the President

and CEO has access to UPM's resources regarding these skills.

The Board members and the President and CEO have experience

from all sectors and products relevant to UPM such as pulp and paper,

packaging, adhesive materials (self-adhesive products, film products and

graphic solutions), forestry, energy, chemicals, biofuels, R&D as well as

finance and accounting. In addition, UPM Board members and the

President and CEO have experience from all geographies relevant to

UPM, i.e. Europe, Middle East, Asia and Americas. They also have

experience in the field of business conduct matters relevant to UPM.

The experience of the Board of Directors as described above, as well

as the experience of the President and CEO from his previous positions in

UPM, provides the relevant skills and expertise in UPM's operations and

business model and the related impacts, risks and opportunities. In

addition, the Board of Directors and the President and CEO are provided

with information on relevant and topical sustainability issues, both

regularly and as required.

Board diversity

UPM's Board of Directors comprises five nationalities (Finnish, Norwegian,

Dutch, German, Swiss). The ages of the Board members vary between 50

and 67 years. 33% of the Board members have been members of the

Board for 1-4 years, 33% have been members of the Board for 5-9 years

and 33% have been members of the Board for 10 years or more. All Board

members hold a university degree. When it comes to gender, 44% (4/9) of

UPM Board members are female and 56% are male. The President and

CEO is an Italian citizen, born in 1969, holds a Master of Science

(engineering) degree and his gender is male.

The overall aim of diversity is to ensure that the Board has a broad

range of skills, experience and perspectives, as well as knowledge of UPM

and other relevant industries, so that the Board can effectively carry out

its responsibilities, particularly those related to strategy and risk

management. The Board’s objective is to include an appropriate number

of directors of different nationalities, ages, genders, and length of service.

The Board's diversity principles are included in the Board and

Committee Charters and, more specifically, in the Board's Diversity

Policy. See » upm.com/governance.

More information about the diversity of UPM's Board of Directors,

related objectives and the results is available in the Corporate

Governance Statement 2025. See » upm.com/governance.

Board independence

100% of the Board members are independent of the company and the

company's significant shareholders as assessed by the Board with the

assistance of the Nomination and Governance Committee.

All Board members are independent of the company's significant

shareholders, as the company has no controlling shareholder, and no

shareholder of the company has announced a holding of 10% or more of

the company's shares or votes. The Board has also concluded that all

directors, including Henrik Ehrnrooth, Piia-Noora Kauppi and Kim Wahl,

who have been non-executive directors of the company for ten

consecutive years or more, are independent of the company. Based on

the Board's overall evaluation of the independence of these directors, their

long-standing service does not compromise their independence, and no

other factors or circumstances have been identified that could affect their

independence.


UPM Financial Report 2025	140

Oversight and management of impacts,

risks and opportunities

Board of Directors

The Board of Directors approves the company strategy in the annual

strategy session, oversees the Impact, Risk, and Opportunity (IRO)

management with the assistance of the Board committees, and oversees

the double materiality assessment (DMA) process with the assistance of the

Audit Committee. The Board proposes the Remuneration Policy for adoption

at the Annual General Meeting (AGM), approves the UPM Code of Conduct

and UPM Group Policies in accordance with the policy management

structure. It also approves the appointments and remuneration of members

of the Group Executive Team and some senior management

representatives, approves Group-level sustainability targets for the

remuneration of members of the Group Executive Team and some senior

management representatives, oversees key Group-level actions related to

strategy implementation and progress against key Group-level sustainability

targets, and oversees the independence of the Board.

Nomination and Governance Committee

The Nomination and Governance Committee regularly reviews

governance matters and assesses how these interact with the strategy

and business model. It prepares the Diversity Policy of the Board of

Directors for Board approval and oversees its implementation, reviews the

structure, size, composition, diversity, and successional need of the Board

as a whole and prepares proposals to the Annual General Meeting (AGM)

for director elections, and their remuneration. The committee also

prepares the succession plan and appointment of the President and CEO,

and oversees Board skills and expertise in sustainability and business

conduct matters.

Audit Committee

The Audit Committee regularly reviews material sustainability topics

(IROs) and assesses how they interact with the strategy and business

model. It assists the Board in the oversight of the DMA process, monitors

compliance with applicable legal and regulatory requirements, the UPM

Code of Conduct, and other corporate policies, monitors and assesses

the effectiveness of internal controls and audit, as well as risk

management, regularly reviews assurance matters, including risk

management, internal controls, compliance, internal and external audits,

and regularly reviews sustainability matters and information in the report

of the Board of Directors including the statutory Sustainability Statement.

In addition to undertaking the assigned matters and regular reports listed

above, the Audit Committee also reviewed reports on and discussed ESG

and cybersecurity, reviewed the Disclosure Policy amendment and the

share buyback program conducted in 2025. The Board is informed, as

part of the Audit Committee Chair’s regular reporting to the Board, of any

submissions received by the Committee from stakeholders that have a

material impact on the economy, the environment or people.

Remuneration Committee

The Remuneration Committee regularly reviews selected material social

sustainability topics (IROs) related to the company's own workforce and

assesses how they interact with the strategy and business model. It

regularly reviews how remuneration is linked to material sustainability

topics (IROs), prepares the Remuneration Policy for adoption at the AGM,

oversees procedures related to executive remuneration, reviews and

recommends sustainability targets in executive remuneration for Board

approval, and regularly reviews executive performance against

remuneration-related sustainability targets and prepares proposals for

payout.

Reflection of responsibilities in charters and

policies

Charter of the Board of Directors

The Board’s responsibilities, outlined in the Charter of the Board of

Directors, include strategic oversight, risk management, compliance and

governance. Additionally, the Board monitors and assesses the

company's financial reporting and the statutory sustainability reporting

processes, ensuring the integrity of their reporting. The Board also

oversees the assessment and management of risks related to the

company's strategy and operations, including material sustainability

risks. It monitors the company's audit and assurance related to statutory

sustainability reporting and assesses the performance and independence

of the sustainability report assurer.

Charter of the Audit Committee

The Audit Committee assists the Board in overseeing financial reporting,

statutory sustainability reporting, internal control, internal audit and risk

management. The Committee's responsibilities are detailed in the Charter

of the Audit Committee.

Charter of the Nomination and Governance Committee

The Nomination and Governance Committee is responsible for identifying

individuals qualified to serve as the President and CEO and for identifying

candidates for election or re-election to the Board. The Committee also

develops and recommends to the Board a set of corporate governance

principles and reviews overall corporate governance of the company.

These responsibilities are outlined in the Charter of the Nomination and

Governance Committee.

Charter of the Remuneration Committee

The Remuneration Committee assists the Board with responsibilities

related to the preparation of the company's remuneration principles and

practices, including remuneration schemes and plans. The Committee's

responsibilities are detailed in the Charter of the Remuneration Committee.

Policies

The UPM Code of Conduct sets out the principles that help UPM

employees make ethical decisions and maintain high standards of

integrity in UPM's daily operations. It applies to all UPM employees

globally and serves as the basis for the company's corporate

responsibility and compliance programs, policies, and procedures.

Additionally, various Group policies outline specific responsibilities and

procedures for managing risks and ensuring compliance with legal and

regulatory requirements. These policies provide guidance on, for example,

anti-corruption, risk management, and stakeholder engagement. The

UPM Sustainability Policy Statement ensures that risks and impacts on

people and the environment are considered throughout UPM's


UPM Financial Report 2025	141

operations. It requires UPM's businesses and functions to perform

sustainability-related due diligence, conducting regular assessments of

their impacts, and prioritizing the most severe issues for further focus and

action. It also defines the double materiality assessment (DMA) process

to be carried out regularly to assess UPM's sustainability-related impacts,

risks and opportunities. Refer to » G1-1 Policies

Management's role in sustainability

UPM's governance structure

Group Executive Team

The Group Executive Team (GET), led by the President and CEO, is

responsible for managing sustainability, determining course of action and

guiding development. The GET is responsible for managing impacts, risks

and opportunities at Group level and approves the Group's double

materiality assessment, the sustainability focus areas, targets and key

performance indicators, sustainability actions and sustainability-related

policies and rules. The President and CEO reports to the Board on

relevant decisions and progress.

Strategy Team

Among other matters, the Strategy Team assists the President and CEO

in integrating sustainability into the Group's strategy for the Boards'

approval. The Strategy Team prepares proposals for updating UPM's

strategy and strategic plans and is responsible for identifying and

managing UPM's key strategic risks.

Businesses and functions

The role of the Business Area Boards is to make decisions at the business

area level on, among other things, sustainability issues and to oversee the

implementation of Group-level policies, rules, guidelines and procedures

in the business area. In practice, sustainability efforts, including managing

impacts, risks and opportunities, implementing targets and actions,

reporting on progress and compliance status, and contributing to the

double materiality assessment, take place in businesses and functions.

Compliance controls and procedures

As part of the Audit Committee’s compliance review, the Committee

receives a quarterly report from the company's Chief Compliance Officer

and a report from the SVP of Internal Audit on the submissions made

through the UPM Report Misconduct channel. With the support of UPM's

Compliance Team, each business area, function and unit is responsible

for identifying and managing compliance risks related to its own


UPM Financial Report 2025	142

operations. The results of annual risk assessments are used to guide

compliance activities and risk mitigation actions in businesses and

functions. Together, the Compliance Team and the businesses update

compliance risk assessments and mitigation actions throughout the year

to respond to changes in the risk environment. Progress on mitigation

actions is reported to the Audit Committee and businesses on a quarterly

basis.

Leadership in responsible business conduct

The UPM Code of Conduct underlines UPM's commitment to business

integrity and responsible business operations and reflects the company's

guiding principles. The UPM Code of Conduct is approved by the Board of

Directors as UPM's highest governance body. It is complemented by more

detailed policy statements, policies and rules approved by the Board of

Directors, the Group Executive Team, business areas, or global functions.

The UPM Code of Conduct and UPM's values help UPM's employees

to make the right choices and guide UPM's work in a changing business

environment. This lays the foundations for long-term success. UPM

strives to ensure compliance with the Code of Conduct, policies and rules

by implementing a company-wide compliance program through the UPM

compliance system. The compliance system is embedded in the

company's governance model and is designed to bolster company

performance and a culture of integrity at all levels. The Audit Committee

receives a quarterly compliance report from the company's Chief

Compliance Officer.

Information provided and sustainability

matters addressed by the Board of

Directors and the President and CEO

GOV-2

The President and CEO, or other members of executive management,

reports to the Board or its committees at least annually on decisions and

progress made related to risks, impacts and opportunities, and their

management, as well as on targets and actions. In addition, the Audit

Committee receives a quarterly compliance report. Refer to paragraph

» Compliance controls and procedures

The President and CEO chairs the Group Executive Team, the Strategy

Team and the Business Area Boards and receives regular and detailed

information about the relevant sustainability matters at their meetings.

Sustainability is integrated into the company strategy and UPM's goal

is to ensure that sustainability-related aspects are taken into account in

strategic decision-making. UPM's Strategy Team prepares proposals for

updating UPM's strategy and strategic plans and is responsible for

identifying and managing UPM's key strategic risks.

In 2025, the Board of Directors and the Audit Committee oversaw the

company's key sustainability focus areas and targets, the company's

double materiality assessment process and the management of material

sustainability impacts, risks and opportunities. When reviewing the

Sustainability Statement draft they addressed material impacts, risks and

opportunities covered by the disclosure.

The Remuneration Committee conducted an annual review of

selected material social sustainability topics related to UPM workforce in

their December meeting.

The GET approved in their December meeting the outcome of the

double materiality assessment (DMA) and reviewed sustainability focus

areas and targets.

Integration of sustainability-related

performance in incentive schemes

GOV-3

Since 2022, the Board of Directors has included measures related to

environmental, social and governance (ESG) issues in the company's

Performance Share Plan (PSP), one of UPM's long-term incentive plans.

The PSP is targeted at the President and CEO, the Group Executive Team

and other selected members of senior management. The remuneration of

the Board of Directors and its committees is resolved by the Annual

General Meeting. The members of the Board of Directors do not belong to

the company's short- or long-term incentive plans, and their

remuneration is not linked to sustainability.

The PSP consists of annually commencing individual plans approved

by the Board with a minimum performance period of three years. The

performance measures, related targets and weightings are set annually

by the Board for each commencing plan and can vary from plan to plan

to promote the company's long-term value creation and financial growth

without encouraging excessive risk-taking. Measures may include among

the others financial, share price, and sustainability targets.

For the PSP 2023–2025, PSP 2024–2026, and PSP 2025-2027, the

Board has set absolute total shareholder return (TSR) as a performance

measure, and the weighting of this measure accounted for 80% of all

measures. The Board has also set up three separate ESG performance

measures and the total weighting of these measures accounted for 20%

of all measures. Two of the ESG performance measures are

environmental: reducing fossil CO2 emissions from UPM's on-site

combustion and purchased energy by 65% by 2030 from the 2015 level

(10% weighting); and achieving a net positive impact on biodiversity in

UPM's own forests in Finland (5% weighting). The third ESG performance

measure is a social measure: achieving gender pay equity (5% weighting).

The ESG performance measures are based on UPM's sustainability

targets for 2030.

These sustainability performance measures are covered by UPM's

Remuneration Policy in the case of the President and CEO.

The Board of Directors annually approves the commencement of new

long-term incentive plans within the company's long-term share incentive

arrangements, including the terms and conditions, performance

measures, related targets, and weightings.


UPM Financial Report 2025	143

Sustainability due diligence

GOV-4

The mapping in this table covers the core elements of a due diligence

process in accordance with the UN Guiding Principles on Business and

Human Rights and the OECD Guidelines for Multinational Enterprises, as

well as the main processes and measures of UPM's sustainability due

diligence. Details are described in the relevant disclosures of this

Sustainability Statement.


Core elements of due diligence	UPM's main due diligence processes and measures	Paragraphs in this sustainability statement
Embedding due diligence in governance, strategy and business model	• Implementation of policy documents to ensure integration throughout UPM and its value chain	G1-1 Policies S1-1 Policies E2-1 Policies
Engaging with affected stakeholders in all key steps of due diligence	• Stakeholder dialogue	ESRS2-SBM2 Interest and views of stakeholders S1-2 Processes for workforce engagement S2-2 Processes for engaging with value chain workers S3-2 Processes for engaging with communities
Identifying and assessing adverse impacts	• Business-area-specific human rights risk assessments and integration into management systems, as feasible • High sustainability risk supplier process and enhanced due diligence assessment • 24/7 counterparty screening • Environmental and social/human rights impact assessments • Corporate human rights saliency assessment	ESRS2-SBM3 Impacts, risks and opportunities S2-SBM3 Impacts, risks and opportunities S3-SBM3 Impacts, risks and opportunities G1-3 Anti-corruption and bribery
Taking actions to address these adverse impacts	• Supplier and Third-Party Code and contractual requirements • Commodity-specific supplier requirements • Forest certification • EcoVadis assessments, contractor reviews and supplier audits • ISO-certified management systems • UPM Clean Run process • Remediation where appropriate	G1-2 Responsible sourcing E2-2 Actions - UPM Clean Run concept S2-4 Actions
Tracking the effectiveness and progress of these efforts	• UPM's compliance system • Human rights workshops in business areas • UPM Report Misconduct channel and other local grievance channels	G1-1 Reporting and identifying concerns, Investigating concerns and incident handling G1-3 Risk assessments, Monitoring, Investigation S1-1 UPM and human rights
Communicating these efforts	• UPM Annual Report • EMAS reports from UPM's pulp and paper mills • UPM Human rights review report • UPM Forestal Oriental Annual Report	See pdf at hand for UPM Annual Report; See » upm.com for other reports


UPM Financial Report 2025	144

Risk management for sustainability

reporting

GOV-5

UPM's sustainability reporting at the Group level is based on its

sustainability reporting guidelines and the requirements of the ESRS.

To improve the reliability of sustainability data, UPM utilizes internal

controls tailored to its specific sustainability risks with a focus on

materiality. Development of internal controls for sustainability reporting

progressed in collaboration with the Internal Control team within the

Finance & Control function. The initial phase focused on adapting the

structure and documentation to reflect the principles of the financial

internal control framework, identifying key risks, and developing controls

to address them. UPM continues to improve its internal control

framework to minimize potential risks further.

UPM's centralized approach to sustainability reporting at Group level

allows a review of the input of quantitative and qualitative information and

to identify inconsistencies or errors in the data submitted by functions,

production sites, and forestry operations.

UPM integrates its Sustainability Statement into the disclosure

management tool used by UPM Finance, ensuring a streamlined

approach to data management. The required data is collected from

various sources such as the environmental database, the OHS reporting

tool, and the human resources data tool. UPM is committed to

continuously improving its sustainability reporting processes. Feedback

from stakeholders, internal audits, and the external assurance provider is

used to identify areas of enhancement, which are then integrated into the

company's risk management and reporting practices. Prioritization is

based on the severity and likelihood of the identified risk, as well as the

resources needed to implement the necessary actions.

The main risks identified for sustainability reporting are related to the

accuracy of information, immature measurement methodologies and, in

the case of missing information, the credibility of estimates.

The contributors to the sustainability reporting process from

businesses and functions are informed of the findings and observations

from the annual assurance process and internal controls. They contribute

to the assessment of risk, possible actions, and their prioritization as

appropriate.

The Audit Committee of the Board of Directors receives quarterly

compliance reports that include information about Group-level

sustainability reporting matters. UPM's governance structure ensures

appropriate oversight of sustainability reporting at all levels of the

organization. The Audit Committee is responsible for monitoring the

integrity of sustainability disclosures, the controls and processes needed

to consistently generate them, and related assurance.

Strategy, business model and value chain

SBM-1

This is UPM

UPM offers renewable alternatives to the fossil-based materials used in

everyday life. UPM's broad product range includes pulp, graphic and

specialty papers, self-adhesive labels, renewable wood-based

biochemicals, diesel and naphtha, CO2-free electricity, plywood, and

timber products. Many of UPM's products offer sustainable alternatives to

fossil raw materials and energy. For example, they replace fossil plastics

in consumer products, steel and cement in construction, and fossil fuels

in transportation, aviation, and electricity markets.

UPM's products are used for packaging, communication, labeling,

transportation, construction, manufacturing of bioplastics. as well as for

tissue and hygiene products.

UPM has invested in a biorefinery in Leuna in Germany, which will

produce wood-based biochemicals. The industrial-scale biorefinery will

convert solid wood into next-generation biochemicals: bio-monoethylene

glycol (BioMEG) and renewable functional fillers (RFF). In addition, the

biorefinery will produce bio-monopropylene glycol (BioMPG) and

industrial sugars. The start-up of the Leuna biorefinery progressed in 2025

and the first commercial deliveries of industrial sugars took place in Q4

2025. Production and sales of further products, lignin, renewable

functional fillers and finally glycols is expected to start in 2026.

In 2025, UPM Communication Papers permanently closed its Kaukas

paper mill in Finland and its Ettringen paper mill in Germany. UPM

Adhesive Materials transferred production from the Kaltenkirchen site in

Germany to other European sites and decided to convert the Nancy

factory in France into a slitting and distribution terminal in 2026. As part

of a long-term strategic partnership, UPM Fibres sold its Korkeakoski

sawmill in Finland to Versowood. In 2025, UPM also exited the biomedical

business.

In February 2025, UPM Adhesive Materials acquired Metamark, a UK-

based company with a manufacturing site in Lancaster.

At the end of 2025, UPM employed 15,127 people, most of whom were

based in Europe. Refer to » S1-6 for information on headcount by country

and by region.

There were no banned UPM products or services in 2025.

UPM does not have significant revenues from fossil fuel-based energy

generation. However, a small amount of fossil fuels is associated with joint

energy generation. 99% of UPM Energy's generation is CO2-free.

Refer to » Report of the Board of Directors, starting on page 124 for more

information about UPM's business areas and other operations.


UPM Financial Report 2025	145

UPM's strategy

UPM plans to increase its growth focus through streamlined business

UPM_Strategy_infograph_2026_EN_FI_3-wing graph EN.svg

portfolio. In late 2025, UPM announced two strategic portfolio projects: the

intended graphic paper Joint Venture between UPM and Sappi and the

strategic review of UPM Plywood.

Assuming the Joint Venture is formed, UPM would have a stronger

growth profile, improved margins, and lower leverage. This would mark

the beginning of a new era in the company's transformation.

Assuming the Joint Venture is formed, the future UPM would have an

attractive business portfolio focused on renewable fibres, advanced

materials, and decarbonization solutions, all of which operate in growing

markets.

Strategic portfolio projects expected to conclude in 2026

Through the graphic paper Joint Venture, UPM aims to position the UPM

Communication Papers business to create continued value for its

customers in a way that benefits UPM shareholders. The intended Joint

Venture is expected to close by the end of 2026, subject to regulatory

approvals and other closing conditions.

UPM Plywood is currently undergoing a strategic review to assess

options for maximizing the long-term potential and value creation of the

business. The review is expected to be concluded by the end of 2026.

UPM acts on three fronts

In addition to the strategic portfolio projects mentioned, UPM will further

improve competitiveness, increase capital efficiency, and strengthen the

balance sheet. UPM will capture focused growth opportunities. Following

recent investments, UPM has a strong asset base to capture market

growth opportunities in a capital-efficient way. UPM aims to develop a

portfolio of world-class businesses.

1) Improve competitiveness

• Improve performance through cost efficiency, streamlining and

commercial excellence

• Increase capital efficiency and cash flow following recent investments

• Strengthen the balance sheet

2) Focused growth

• Strong asset base enables growth with low investment needs

• Growth markets and faster-growing geographies

• Competitive production platforms

3) World-class businesses

• Portfolio of leading businesses in growing markets

• World-class performance in each business

• Planned graphic paper Joint Venture

• Strategic review of UPM Plywood

Refer to Report of the Board of Directors, section » Research and

Development, for examples of how sustainability is integrated into UPM's

research and development.

Strategy in action

Key enablers

People

UPM focuses on performance, engagement, safety, and integrity. Diversity

and inclusion, learning, responsible leadership, and respect are at the core

of the work. UPM aims for sustained excellence and continuous

professional growth.

Productivity

UPM uses advanced technologies, sustainable practices, and strategic

initiatives to improve efficiency and productivity. This ensures

competitiveness of the businesses and supports UPM's growth ambitions.

Commercial excellence

UPM optimizes commercial interfaces and processes to ensure supply

security and enhance the customer experience. This supports the

company's ongoing efforts to sustain and grow earnings.

Sustainability

The UPM Code of Conduct underlines the commitment to integrity and

responsible operations. UPM creates value from renewable and recyclable

materials, reduces its environmental footprint, and enhances its positive

societal impact.

Innovation

Sustainability, the circular economy, and the customers are at the heart

of UPM's innovation. UPM innovates new materials and solutions to help

customers’ businesses become more sustainable. UPM innovates to

make its operations and processes more efficient and also to increase

employees’ productivity.


UPM Financial Report 2025	146

Business model and value chain

*The estimate includes the use of paper, plywood, timber, and part of the pulp.

Suppliers

UPM sources its main raw materials, wood and wood-based materials,

from sustainably managed forests and transforms them into renewable

products that help customers achieve their sustainability goals.

Responsible and ethical practices create long-term value for the

company and its stakeholders. UPM does not compromise its standards

of integrity in any circumstances and expects the same from its suppliers

and third-party intermediaries.

Suppliers are an integral part of UPM's value chain. The main sourcing

categories are fibre, chemicals, other raw materials, logistics, energy, and

indirect purchases such as services. Pulp and energy suppliers account

for the largest expenditures.

The most important priorities when selecting suppliers include reliable

long-term deliveries, cost-competitiveness, product and service quality,

suppliers' financial stability, social and environmental responsibility,

product safety, and the product’s carbon footprint.

Suppliers also play an important role in UPM's business-specific

growth projects. With the required competencies and digitalization,

supplier management boosts product development and the

commercialization of new products.


UPM Financial Report 2025	147

UPM buys products, materials, and services from some 17,000 B2B

suppliers worldwide. The sourcing network includes suppliers from startup

companies to international corporations. UPM also buys wood from

around 13,000 private forest owners.

Product stewardship

UPM is actively developing solutions that consider the sustainability of the

whole product life cycle, from raw material sourcing to circularity. Based

on the material topics identified by UPM, product stewardship has been

established as a focus area with company-wide 2030 sustainability

targets and key performance indicators.

Refer to » E5-3 Resource use and circular economy, Targets

UPM ensures that its products are safe for their intended use. Most of

UPM's products are certified with widely recognized international and

regional ecolabels such as the EU Ecolabel. All UPM businesses that use

wood have FSC™ and/or PEFC chain-of-custody certification. This

verifies the origin of wood and guarantees that all wood used in UPM's

products is legally harvested from sustainably managed forests and does

not originate from controversial sources. UPM Biofuels has both ISCC EU

and ISCC PLUS certifications, and UPM Biochemicals and four UPM

Adhesive Materials factories have ISCC PLUS certification.

These sustainability-related targets and commitments cover all UPM

products, markets and customer groups, and they are implemented

based on legal requirements and expectations from customers and other

stakeholders.

Products and customers

UPM sells products directly and through distributors to approximately

10,000 b2b customers worldwide. Most of the products are intermediary

products that UPM's customers or their customers further process into

final products. UPM captures the opportunities presented by growing

consumer demand for sustainable choices and stricter regulations aimed

at mitigating climate change and related to plastic use, for example.

With higher living standards and an aging population, a growing

number of urban, middle-class people are consuming more over a longer

period. At the same time, the world still depends heavily on fossil-based

raw materials and energy sources that cause climate change.

Consumers, businesses, and regulators alike are seeking solutions that

enable a more sustainable way of life. UPM's offering meets these

challenges and opportunities today and in the future.

In 2025, the main destination countries for UPM's sales were Finland,

Germany, the United States, and China. The majority of UPM's revenue

came from sales of graphic and specialty papers to publishers, retailers,

printing houses, merchants and distributors, converters and label stock

manufacturers; sales of self-adhesive label materials to label printers and

brand owners and sales of pulp products to tissue, board, specialty and

graphic paper producers. Refer to » Note 2.1 Business areas in the

consolidated financial statements for information on sales by destination

country and » Note 2.2 Sales for information on external sales by major

products.

UPM's solutions for different industries

• Packaging and labeling: biochemicals for plastic packaging, packaging

papers, paper for label materials, label materials, pulp for packaging

and labeling

• Tissue and hygiene: pulp for tissue, fluff pulp for hygiene products

• Automotive and transportation: renewable fuels, renewable naphtha,

renewable functional fillers for rubber, renewable glycols, self-adhesive

automotive films, LNG shipbuilding, vehicle flooring

• Printing and publishing: magazines and books, newspapers, advertising

and catalogues, envelopes, home and office papers, pulp for printing

• Low-emission energy: CO2-free electricity, renewable energy

• Construction: building and construction, concrete forming, interior and

exterior design, furniture

• Apparel and textiles: renewable naphtha, bio-based monoethylene

glycols (BioMEG)

• Graphic solutions: large format printing media, protective lamination,

screen and UV offset films, sign-making films, vehicle wrapping films,

decoration films, PVC-free graphics solutions materials, CCK release

base papers

Engagement with customers

UPM's businesses offer a wide range of products and services. Each

business has its own customer relationship management process and

way of interacting with customers. A comprehensive understanding of

each market, as well as knowledge of the end uses of the products and

the needs of the customers, underpins this approach.

UPM maintains continuous dialogue with customers, and engages in

various product-related development projects with them. UPM's businesses

conduct regular customer satisfaction surveys. The surveys help identify

potential areas of improvement. In 2025, actions to mitigate climate

change remained a high priority for UPM's customers. Product safety,

sustainable forest management, biodiversity, circularity and ecolabels are

also highly valued.

Refer to » SBM-2 Interest and views of stakeholders


UPM Financial Report 2025	148

Interest and views of

stakeholders

SBM-2

Understanding the views and expectations of stakeholders is crucial to

UPM's success and the acceptance of its operations. UPM aims to

provide stakeholders with a clear picture of its future direction, strategy

implementation, and creation of long-term value for stakeholders. UPM

discloses relevant and accurate information in accordance with market

regulations. As many stakeholders primarily see UPM as an economic

operator, the main topics of discussion were financial success, stability,

good governance, outlook and growth. Many discussions also focuse d on

forests and forest use.

Stakeholder mapping, active dialogue, and the systematic collection

of feedback play an important role in UPM's stakeholder relations work.

UPM carefully analyzes feedback to understand stakeholder

expectations. These expectations are taken into account in development

work and decision-making.

UPM's strategy forms the foundation of its stakeholder dialogue.

Focus areas and activities vary locally and according to stakeholder

needs. Key stakeholders are defined based on materiality: UPM's

operations have a significant impact on stakeholders and vice versa.

Stakeholder relations are led and coordinated globally by the UPM

Marketing, Sustainability and Communications function. The EVP of this

function has the overall responsibility for stakeholder engagement

processes and development, supported by the Responsibility Team at the

Group level. The same responsibility exists at the business level, where the

VP of the function is responsible for stakeholder engagement and

continuous dialogue with customers, business partners, and local

communities within their business area. This ensures proactive and

relevant engagement across the business and geographical spectrum.

UPM's most important stakeholders are investors, customers, current

and future employees, suppliers, communities, media, governments and

regulators, NGOs, and researchers.

The company incorporated the views and insights gained through

stakeholder engagement into its business decisions and strategy in

multiple ways. These methods include, but are not limited to, regular

interviews and surveys, open dialogue, and engagement events. Function

representatives are responsible for turning the views into insights that help

develop the business, its performance, and future strategy .

The views and feedback from stakeholder dialogue are considered in

the double materiality assessment to evaluate material sustainability

topics further. The analysis is based on internal assessments, as well as

stakeholder interests and concerns. The annual double materiality

assessment also considers the interests, views, and rights of UPM's

workforce, value chain workers and affected communities. The Group

Executive Team reviews the identified material topics, and further action

is taken if considered relevant.

Measures for UPM's own workforce include the annual UPM Employee

Engagement Survey (EES), which invites all employees to evaluate various

aspects of their working environment. See » S1-2 Processes for more

information about EES.

For example, UPM and NGOs may have different views on how to

address climate change and biodiversity loss, but they share the same

goal. UPM believes that active and timely forest management maintains

carbon sinks and enhances biodiversity, while society needs to reduce its

dependence on fossil fuels and raw materials. UPM addresses

stakeholders' concerns at the local, national and international levels,

participates in public debates, and meets with NGO representatives.

In general, human rights considerations and due diligence

requirements are integrated into UPM's global processes, forming the

basis for UPM's business model.

The Board is informed through the Audit Committee Chair's regular

reports when the Audit Committee receives information about

stakeholders' views and interests that have an actual or potential material

impact on sustainability.

The Audit Committee oversees risk management and compliance

and receives regular updates on these matters.

Impacts, risks and opportunities

SBM-3

UPM's identification of sustainable impacts, risks, and opportunities is

based on continuous business processes and stakeholder engagement.

UPM continuously assesses new opportunities, risks and impacts to

achieve its strategic business objectives. As part of the double materiality

assessment, UPM has formalized the identification of impacts, risks and

opportunities in accordance with the ESRS requirements.

All identified material impacts, risks and opportunities are covered by

the ESRS Disclosure Requirements.

Disclosure of ESRS S4 Consumers and end-users is not considered

material for UPM because UPM does not sell directly to consumers.

UPM's products are mainly used as raw materials and intermediate

products, and UPM does not have visibility for the end users of the final

products. Although UPM has businesses that produce final products,

these are not considered material in the context of the overall UPM

Group. Refer to » ESRS 2 BP-1 Coverage of the value chain

The table on the next page provides an overview of the material topics

identified.


UPM Financial Report 2025	149

Overview of material impacts, risks and opportunities


Positive impact or opportunity	Negative impact or risk	Upstream	Own operations	Downstream		Short (1 year)	Medium (2–5 years)	Long (over 5 years)


Material topics	ESRS	UPM focus areas	Impacts, risks and opportunities - in short	Value chain location	Time horizon
Material topics	ESRS	UPM focus areas	Impacts, risks and opportunities - in short	Value chain location	Time horizon
Economic and governance
Renewable and circular products, and CO2-free energy	ESRS 2, E1, E5	Product stewardship	Positive impact: Renewable and circular products, as well as CO2-free energy, as alternative for fossil-based products
Renewable and circular products, and CO2-free energy	ESRS 2, E1, E5	Product stewardship	Opportunity: Increasing market demand for bio-based products and CO2-free energy
Business resiliency	ESRS 2	Profit	Potential negative impact: Threat of temporary shut-downs or closures of sites due to lack of competitive raw materials or sales market conditions causing negative impact on employment
			Risks: Dependency on a few main resources such as wood, energy, or water; Unpredictability of emerging regulation in the sustainability area
			Opportunity: Competitive advantage to increase efficiency in using main resources
Business ethics and values	G1, S2	Governance	Positive impact: Ensuring and enhancing ethical behavior in operations and value chain
Business ethics and values	G1, S2	Governance	Risk: Non-compliance with legislation or agreed practices
Responsible sourcing	G1, S2	Responsible sourcing	Potential negative impact: Human rights violations with effects on people in the supply chain
			Risk: Disruptions in UPM's supply chain
			Opportunity: Creating business value through supplier development and collaboration
Environmental
Biodiversity	E4	Biodiversity	Positive impact: Ensuring and enhancing net-positive impact on biodiversity by UPM's forest management
			Potential negative impact: Biodiversity loss in UPM's multi-tier supply chain
			Risk: Dependency on wood as main resource for production
			Opportunity: Biodiversity ensures healthy forest growth
Circular bioeconomy	E5	Waste, Product stewardship	Positive impact: Circularity in UPM's production processes and recyclability of products reducing the need for non- circular materials
Circular bioeconomy	E5	Waste, Product stewardship	Opportunity: Avoided costs for waste disposal and purchase of virgin materials
Climate change	E1	Climate	Positive impact: Climate change mitigation through climate-related effects of forests, renewable and circular products, and CO2-free energy
			Negative impact: Fossil CO2 emissions from own energy generation (Scope 1), purchased energy (Scope 2) and related to value chain (Scope 3)
			Risk: Transitional as well as physical climate-related risks, due to changes in legislation and extreme weather events
			Opportunity: Transition opportunities covered by UPM's business model focusing on bio-based products and CO2-free energy
Sustainable forestry	E4	Forestry	Potential negative impact: Deforestation in UPM's multi-tier supply chain
			Risk: Physical risks for forests due to climate change
			Opportunity: Accelerated forest growth due to climate change
Sustainable water usage	E2, E3	Water	Potential negative impact: UPM's water usage and environmental incidents may effect the environment
Sustainable water usage	E2, E3	Water	Risk: Potential operational hazards causing shutdown or curtailed production
Social
Decent work and fair rewarding	S1	Responsible leadership, Continuous learning and development, Fair rewarding	Positive impact: Providing equal and adequate wages, training, and development support
			Potential negative impact: Job losses due to closing of operations or restructuring
			Risk: Lack of skilled workforce
			Opportunity: Being the employer of choice
Diversity and inclusion	S1	Diversity and inclusion	Positive impact: Enhancement of diversity and inclusion with positive effect on workforce
Health and safety	S1, S2	Safe and healthy working environment	Positive impact: Enhanced health and safety for workforce in all UPM sites
			Negative impact: Health and safety incidents, including serious accidents and fatalities for people working at UPM sites and in the supply chain
			Risk: Potential injury of UPM's employees, contractors, or third parties
Communities	S3	Community involvement	Positive impact: Effect on local development through UPM's production sites and investments
Communities	S3	Community involvement	Potential negative impact: Environmental incidents or safety accidents can effect people in the communities around UPM sites


UPM Financial Report 2025	150

Current and anticipated effects on UPM

From an opportunity standpoint, the global shift toward green and

sustainable societies supports UPM's strategy and business objectives, as

it increases the demand for fossil-free, renewable, and circular products

and materials. These opportunities are strategic for UPM's business and

financial performance in the short, medium and long term.

From a risk perspective, UPM's main sustainability risks are climate

change, biodiversity loss, increasing sustainability-related regulation,

acceptance of forest biomass, human rights violations in the value chain,

and risks to the environment and people from potential operational

hazards.

Climate change and biodiversity loss are becoming important sources

of direct financial and operational risks to UPM's operations and raw

material sourcing. These risks are increasing droughts, heat waves, water

scarcity, and pest damage. Potential floods, tropical cyclones, severe

convective storms, and forest fires could also affect UPM's operations or its

suppliers, and their potential impact is expected to increase in the long

term. In addition, climate change has, and is expected to have, a direct

impact on global logistics and supply chains, directly affecting UPM's

operations and those of its suppliers.

UPM is investing in developing resilience in forest and supply chain

management and operations to mitigate potential negative effects. UPM

considers responsible sourcing a key measure to mitigate identified and

potential sustainability risks. UPM's forests and plantations are located in

areas with low water stress and wildfire risks. Forest management

certification schemes ensure responsible wood sourcing.

At the Group and business area level, risk management considers

sustainability risks as part of ongoing risk management processes.

UPM actively participates in developing sustainability-related

regulation at the local and EU levels to support the sustainable

transformation of the industry. While fully supporting the EU's

sustainability-related initiatives, UPM also identifies certain regulatory

changes that could directly impact operations by affecting the availability

of raw materials. These regulatory changes may impact raw material

costs while strengthening UPM's position in producing bio-based

products and materials.

UPM has identified human rights and responsible sourcing risks and

impacts in its global supply chains. UPM adheres to global human rights

and sustainability frameworks to promote responsible sourcing practices

in supply chains. However, there is potential for negative impacts in supply

chains where UPM's sustainability standards may not be met. UPM

continuously develops methods and tools to identify, assess, and mitigate

sustainability risks and impacts related to supply chains.

From an impact perspective, UPM's GHG emissions from its

operations and value chain (Scope 1–3) contribute to climate change.

Although wood sourcing can have a short-term impact on carbon

storage in forests, sustainable forest management ensures carbon sinks

in the medium and long term. These impacts are directly linked to climate

change and pose risks for UPM's business. At the same time, forest

management practices have a direct impact on the state of biodiversity

in forests. UPM recognizes this link between forest operations and

biodiversity and is constantly increasing its efforts to enhance

biodiversity.

Resilience of UPM's business model

UPM's strategy and business management are based on the continuous

assessment of potential changes in the operating environment and

market dynamics. The analysis of business resilience is based on different

scenarios, which take into account the main sustainability-related risks,

impacts, and opportunities. Key sustainability-related risks and impacts

are considered in relation to raw material and operational expenses, both

of which are monitored and forecasted as part of the regular business

steering processes.

Separate analyses of climate resilience and water scarcity risk have

been conducted in relation to environmental risks.

Refer to » ESRS 2 IRO-1 Climate-related risks, » E1 SBM-3 Climate risks

and business resilience; » E3-2 Actions, Water risk assessments

Comparison with 2024 reporting

The list of material impacts, risks and opportunities did not change

materially from the previous year's report, except for a new risk regarding

the unpredictability of emerging sustainability legislation. Other changes

focused on clarification. For example, two former product-related

material topics were combined to “Renewable and circular products, and

CO2-free energy“.

Based on the review of the double materiality assessment in 2025,

UPM omitted the quantitative disclosure on E2-5 Substances of Concern.

IRO-1

Materiality assessment process

Process in general

UPM has conducted an annual materiality assessment since 2011. Since

2023, UPM's annual materiality assessment has followed EFRAG's

guidelines for double materiality assessments.

Double materiality considers both impact materiality such as UPM's

impact on people and the environment, and financial materiality, i.e.

sustainability-related risks and opportunities that are likely to have a

financial impact on UPM. The assessment covers negative and positive,

actual and potential impacts on the economy, the environment, and

people, including the impact on human rights.

The identification of impacts, risks, and opportunities is based on

internal expertise and several internal sources, including:

• salient human rights assessments,

• supplier and contractor audits as well as supply chain ESG risk

assessments,

• occupational health and safety and environmental performance results,

• grievance mechanisms,

• company risk assessments and compliance,

• regulatory monitoring,

• sustainability-related data (e.g. emissions, resource use, and health and

safety data) and

• sustainability due diligence processes.


UPM Financial Report 2025	151

The interests and concerns of various stakeholders have been included in

the process of identifying material impacts, risks, and opportunities. The

process includes customer and local community inquiries, counterparty

and media screening, NGO concerns, investor, government, and

regulatory agendas, as well as UPM's employee engagement survey.

For the first double materiality assessment in 2023, interviews,

questionnaires and workshops with internal and external stakeholders were

also used.

The identified material topics are taken into account in the review of

UPM's sustainability focus areas and define the scope of this

Sustainability Statement.

See » table in chapter SBM-3 for an overview of the material topics and

their relation to UPM's sustainability focus areas and the ESRS standards

relevant to this Sustainability Statement.

Short-, medium- and long-term impacts are considered throughout the

value chain.

The significance of impacts is assessed according to their severity, which

is determined by their scale and scope. In case of negative impacts,

irremediability is also considered. The likelihood of potential impacts is also

assessed.

UPM's thresholds for assessing scale, scope, and irremediability follow

the principles of the global frameworks to which UPM is committed in its

operations (e.g. different thresholds for environmental versus social

impacts). Thresholds can be both quantitative and qualitative.

For example, materiality thresholds evaluate impacts against UPM's

financial performance, the number of stakeholders affected, and

geographical coverage.

UPM's Group-level risk assessment process includes an assessment

of the financial impact of sustainability-related risks and opportunities on

the company. Some of the impacts of the company's activities and

business relationships on the economy, environment, and people may

eventually become financial material issues. Financial materiality is

assessed by analyzing the probability or frequency of events and the

range of potential financial consequences to determine their effect on the

company's objectives. Risks are evaluated based on their immediate and

direct impacts (e.g. physical climate-related risks to UPM's production

sites), secondary impacts (e.g. the ability to continue operations and

generate business results), and long-term transformative impacts

resulting from demand and regulatory changes (e.g. the societal

transition to renewable and fossil-free materials).

Using thematic assessments (e.g. climate change, biodiversity, and

human rights), UPM's expert teams evaluate potential risks arising from

identified dependencies.

After analyzing the impacts, risks, and opportunities, the most

significant ones are identified as material to UPM and grouped into topics.

Internal professional judgment is also used to prioritize and group them.

This list of material impacts, risks, and opportunities is annually

reviewed by the Audit Committee of the Board of Directors and approved

by the GET.

UPM integrates the management of environmental, social, or

governance (ESG) risks into its risk management practices throughout

the organization.

Topical assessments

Impact on climate change

Based on its double materiality assessment, UPM considers the impact of

its fossil CO2 emissions on climate change to have a high negative

potential. The physical impacts of climate change include more frequent

and severe weather conditions, which may lead to societal shifts, with

increasing social inequality and working poverty. UPM can mitigate the

negative impacts through its climate-related sustainability targets and

developments.

Refer to » E1-4 for climate-related sustainability targets and follow-up;

Refer to » E1-6 for UPM's greenhouse gas emissions.

Climate-related risks

Both top-down (macro trends, expert interviews) and bottom-up

(business area, business unit input) approaches are used to manage

risks, including those related to climate change. The process includes the

assessment of strategic risks (e.g. regulation, market), operational risks

(e.g. availability and price of key inputs), and hazard risks (e.g. natural

events). Many transitional risks and some physical risks, and especially

their combinations, are considered to have a potential strategic and

significant financial impact on UPM's operations.

UPM's position and resilience in different climate scenarios have been

evaluated for the businesses and functions from both a physical and a

transition perspective using expertise from the scientific community. The

Finnish Meteorological Institute (FMI) has issued a report to predict the

future physical impacts of climate change on UPM's main operation

areas in Finland, Germany, Uruguay and China. Three greenhouse gas

scenarios are considered: the SSP1-2.6 scenario represents low, SSP2-4.5

medium and SSP5-8.5 very high future emissions. Published in December

2024, the report examines changes in weather conditions between the

years 1961–2023, and future climate projections in the aforementioned

areas. This report is an update to a wider FMI report ordered in 2019.

Observational data shows a statistically significant increase in seasonal

temperatures. Mean temperatures are expected to rise in all four regions,

although the magnitude of change varies considerably. With general

warming, hot extremes will become more frequent. Precipitation is likely to

increase in Finland during winter and to decrease in Germany during

summer. Extreme precipitation events are expected to intensify in all four

regions. In the second half of the 21^stcentury, the extent of climate change

will strongly depend on the evolution of greenhouse gas emissions. If

emissions are effectively reduced, the changes will likely be less severe.

The FMI report is publicly available on the University of Helsinki open

repository (helda.helsinki.fi) as report 2024-3; Climate change in Finland,

Germany, Uruguay and China: observed changes and future projections

derived from CMIP6 global climate models.

In general, transition impacts play a greater role in low- and medium-

emission scenarios, and UPM is well positioned, as its business portfolio

allows flexibility with respect to the identified risks and opportunities. The

main risks and opportunities related to climate change have been

identified as transitional risks: competition; markets; customers; products;

and regulation. In the high-emission scenario, physical impacts dominate,

with severe consequences not only for UPM but also for ecosystems and

societies around the world.


UPM Financial Report 2025	152

For example, distortions in the raw material (wood) market due to the

physical impacts of climate change or unpredictable regulation, subsidies

or EU policies and resulting national legislation in EU countries could have

a significant impact on UPM's financial performance. Opportunities arise

from the use of wood as a renewable raw material for UPM's products,

which are often an alternative to fossil-based materials.

Refer to » Note 1.2 Basis of preparation, section Climate-related risks

in the consolidated financial statements

Impacts and risks related to pollution, water, circularity, and

resource use

For all production sites and forestry units, deviations from permit limits

and the results of the internal Clean Run standard reviews are used to

screen for potential impacts and risks. The Clean Run reviews also help

identify best practices and opportunities. Refer to » E2-2 Actions, UPM’s

Clean Run concept

UPM has screened its pulp and paper mills based on annual

benchmarks between sites and against the best available techniques. The

pulp and paper mills are considered most relevant in terms of potential

water, air and soil pollution, and water use. Resource use and the circular

economy are material topics for UPM as a whole.

For new products and product development, screening of possible

impacts and identification of risks and opportunities throughout the

product life cycle is covered by UPM's Sustainable Product Design concept.

Refer to » E5-2 Actions, UPM’s Sustainable Product Design concept

Environmental impacts and risks related to UPM's upstream value

chain are identified as part of the regular sustainability risk salience

assessment. In addition, UPM's sourcing categories use the company's

Sustainable Supply Chain Program and a dedicated guidance document

to identify the highest priority sustainability topics in their category. Refer

to » G1-2 Responsible sourcing, UPM's Sustainable Supply Chain

Program

Water related risks are mapped and analyzed also at UPM’s

production sites. In relation to water risks, refer to » E3-2 Water risk

assessments

UPM does not use marine resources. Connections are related to the

direct discharge of treated wastewater in the case of two sites located on

the coast, the transportation of resources and products by sea, and

indirectly through discharge of treated wastewater into rivers and lakes that

end up in the sea. All these aspects have been assessed but are not

considered to have a material negative impact or to pose a material risk.

Consultation with affected communities is usually part of the

environmental permitting process. In addition, ISO 14001 and EMAS

emphasize engagement and communication with affected stakeholders.

Biodiversity-related impacts and risks

UPM continuously assesses actual and potential impacts, risks,

opportunities, and dependencies related to biodiversity as part of the

annual double materiality assessment and other regular or case-by-case

assessments.

For example, forest certification plays a crucial role in identifying and

managing biodiversity impacts and risks in both UPM's own forests and in

other wood sources. UPM participates in a project led by FSC™ to better

understand and quantify the positive impacts of forest certification on

biodiversity.

Biodiversity risks associated with UPM's upstream value chain are

identified as part of UPM's sustainability risk assessment. In addition,

UPM's sourcing categories use the company's Sustainable Supply Chain

Program and a dedicated guidance document to identify the highest

priority sustainability topics in their sourcing category. Regarding

biodiversity, the focus is on supply chains with a high risk of habitat

destruction, overexploitation, or pollution.

Possible ecosystem services of UPM's forest areas are water and

recreational value, for example. Assessments and stakeholder

information are carried out as appropriate.

UPM's main raw material is wood, so UPM depends on forest

ecosystems, and the biodiversity and ecosystem services they provide.

Industrial activities such as pulp and paper production and hydropower

generation also have an impact on biodiversity.

No systemic risks specific to UPM have been identified.

UPM recognizes the importance of dialogue and open

communication channels with internal and external stakeholders who are

or may be affected by the company's actions. For example, this is done

as part of UPM's forest management practices in accordance with FSC™

and PEFC requirements in the company's forestry operations. FSC™

requirements include measures such as identifying and analyzing

stakeholders, engaging with stakeholders via meetings or feedback

mechanisms, and involving stakeholders in the planning, implementation,

and monitoring of forest management activities. This is a continuous

process for UPM's forest operations. UPM is also engaging with

stakeholders by participating in relevant networks and organizations.

In UPM's operations, the most significant impact on biodiversity

occurs in wood sourcing. UPM is therefore committed to sustainable

forestry that provides high-quality wood, maintains and enhances

biodiversity and water protection, and protects the recreational use and

ecosystem services of forests. Biodiversity-sensitive areas are identified,

and measures are taken to avoid negative impacts on these areas in line

with the relevant legislation at national or international level.

Compliance-related impacts and risks

Refer to » G1-1 Policies, Reporting and identifying concerns, Investigating

and handling concerns

Supplier-related impacts, risks and opportunities

Refer to » G1-2 Responsible sourcing, Risk mitigation

Risks and opportunities related to anti-corruption and bribery

Refer to » G1-3 Anti-corruption and bribery, UPM's compliance system


UPM Financial Report 2025	153

IRO-2

List of disclosure requirements

The list of disclosure requirements is integrated into the table of contents

at the beginning of this Sustainability Statement.

The table below provides an overview of ESRS data points that derive

from other EU legislation and where this information can be found if

considered material. Regulation references include SFDR (Sustainable

Finance Disclosures Regulation) or Others (Pillar 3 , Benchmark

regulation, and/or EU Climate Law) as required in ESRS 1 Annex B.

Refer to » SBM-3 Impacts, risks and opportunities for the mapping of

material impacts and ESRS standards

Refer to » IRO-1 Materiality assessment process for a detailed description

of UPM's double materiality assessment process.

List of data points derived from other EU legislation


Datapoint	Page number	Regulation
ESRS 2 GOV-1 Board’s gender diversity (paragraph 21 (d) )	139	SFDR
ESRS 2 GOV-1 Percentage of Board members who are independent (paragraph 21 (e) )	139	SFDR
ESRS 2 GOV-4 Statement on due diligence (paragraph 30)	143	SFDR
ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities (paragraph 40 (d) i )	144	SFDR
ESRS 2 SBM-1 Involvement in activities related to chemical production (paragraph 40 (d) ii )	144	SFDR
ESRS 2 SBM-1 Involvement in activities related to controversial weapons (paragraph 40 (d) iii )	Not material	SFDR
ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco (paragraph 40 (d) iv )	Not material	SFDR
ESRS E1-1 Transition plan to reach climate neutrality by 2050 (paragraph 14)	156	Others
ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks (paragraph 16 (g) )	156	Others
ESRS E1-4 GHG emission reduction targets (paragraph 34)	161	SFDR, Others
ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (paragraph 38)	164	SFDR
ESRS E1-5 Energy consumption and mix (paragraph 37)	164	SFDR
ESRS E1-5 Energy intensity associated with activities in high climate impact sectors (paragraphs 40 to 43)	164	SFDR
ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions (paragraph 44)	165	SFDR, Others
ESRS E1-6 Gross GHG emissions intensity (paragraphs 53 to 55)	165	SFDR, Others
ESRS E1-7 GHG removals and carbon credits (paragraph 56)	168	Others
ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks (paragraph 66)	158	Others
ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk (paragraph 66 (a) )	Phased-in	Others
ESRS E1-9 Location of significant assets at material physical risk (paragraph 66 (c))	Phased-in	Others
ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes (paragraph 67 (c))	Phased-in	Others
ESRS E1-9 Degree of exposure of the portfolio to climate-related opportunities (paragraph 69)	Phased-in	Others
ESRS E2-4 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil (paragraph 28)	181	SFDR
ESRS E3-1 Water and marine resources (paragraph 9)	184	SFDR
ESRS E3-1 Dedicated policy (paragraph 13)	Not material	SFDR
ESRS E3-1 Sustainable oceans and seas (paragraph 14)	Not material	SFDR
ESRS E3-4 Total water recycled and reused (paragraph 28 (c) )	187	SFDR
ESRS E3-4 Total water consumption in m3 per net revenue on own operations (paragraph 29)	187	SFDR


UPM Financial Report 2025	154


Datapoint	Page number	Regulation
ESRS 2 IRO 1 E4 Biodiversity-related impacts, risks and opportunities (paragraph 16 a-c)	189	SFDR
ESRS E4-2 Sustainable land/agriculture practices or policies (paragraph 24 (b) )	190	SFDR
ESRS E4-2 Sustainable oceans/seas practices or policies (paragraph 24 (c))	Not material	SFDR
ESRS E4-2 Policies to address deforestation (paragraph 24 (d))	190	SFDR
ESRS E5-5 Non-recycled waste (paragraph 37 (d))	207	SFDR
ESRS E5-5 Hazardous waste and radioactive waste (paragraph 39)	207	SFDR
ESRS 2- SBM3 – S1 Risk of incidents of forced labor (paragraph 14 (f))	209	SFDR
ESRS 2- SBM3 – S1 Risk of incidents of child labor (paragraph 14 (g))	209	Others
ESRS S1-1 Human rights policy commitments (paragraph 20)	210	SFDR, Others
ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labour Organization Conventions 1 to 8 (paragraph 21)	210	SFDR
ESRS S1-1 Processes and measures for preventing trafficking in human beings (paragraph 22)	210	SFDR
ESRS S1-1 Workplace accident prevention policy or management system (paragraph 23)	210	SFDR
ESRS S1-3 Grievance/complaints handling mechanisms (paragraph 32 (c))	237	SFDR, Others
ESRS S1-14 Number of fatalities and number and rate of work-related accidents (paragraph 88 (b) and (c))	219	SFDR, Others
ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness (paragraph 88 (e))	219	Others
ESRS S1-16 Unadjusted gender pay gap (paragraph 97 (a))	221	Others
ESRS S1-16 Total remuneration ratio (paragraph 97 (b))	221	Others
ESRS S1-17 Incidents of discrimination (paragraph 103 (a))	221	Others
ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD (paragraph 104 (a))	221	Others
ESRS 2- SBM3 – S2 Significant risk of child labor or forced labor in the value chain (paragraph 11 (b))	223	SFDR, Others
ESRS S2-1 Human Rights Policy commitments (paragraph 17)	224	SFDR
ESRS S2-1 Policies related to value chain workers (paragraph 18)	224	SFDR
ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines (paragraph 19)	224	SFDR
ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labour Organization Conventions 1 to 8 ( paragraph 19)	224	SFDR, Others
ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain (paragraph 36)	226	SFDR, Others
ESRS S3-1 Human Rights Policy commitments (paragraph 16)	231	Others
ESRS S3-1 Non-respect of UNGPs on Business and Human Rights, ILO principles and/or OECD guidelines (paragraph 17)	231	Others
ESRS S3-4 Human rights issues and incidents (paragraph 36)	234	Others
ESRS S4-1 Policies related to consumers and end-users (paragraph 16)	Not material	Others
ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines (paragraph 17)	Not material	SFDR, Others
ESRS S4-4 Human rights issues and incidents (paragraph 35)	Not material	SFDR
ESRS G1-1 United Nations Convention against Corruption (paragraph 10 (b))	237	SFDR
ESRS G1-1 Protection of whistleblowers (paragraph 10 (d))	238	SFDR
ESRS G1-4 Fines for violation of anti-corruption and anti-bribery laws (paragraph 24 (a))	244	SFDR, Others
ESRS G1-4 Standards of anti-corruption and anti- bribery (paragraph 24 (b))	244	SFDR, Others


UPM Financial Report 2025	155

Climate change (ESRS E1)

UPM is committed to contributing to limiting global temperature rise and to science-based targets for mitigating

climate change.




Reduction in fossil CO2 emissions from UPM's on-site combustion and purchased energy (Scope 1 and 2)	Reduction in CO2 emissions from materials and logistics (Scope 3)	Five-year average annual carbon sink of approximately
-58%	-22%	-1.9
Compared to 2015 (2030 target: -65%)	Compared to 2018 (2030 target -30%)	Mt CO2 equivalents


UPM Financial Report 2025	156

Transition plan

E1-1

UPM's path to net-zero

UPM offers renewable alternatives for fossil-based materials to meet the

growing global consumer demand. UPM's strategy is driving the

transformation as a frontrunner in the bioeconomy. The company is

investing in sustainable growth.

Forests, wood-based products, and low-carbon energy play a unique

role in both mitigating the effects of climate change and in UPM's

strategy. UPM has set ambitious targets in all these areas as part of its

Group-level sustainability targets for 2030.

UPM is committed to a 1.5 °C pathway as outlined in the Paris

Agreement (climate target) and to science-based measures to mitigate

climate change. As a signatory to The Climate Pledge, UPM is committed

to achieving carbon neutrality by 2040, 10 years ahead of the Paris

Agreement. As part of the UN Global Compact's Forward Faster initiative,

UPM is also committed to setting net-zero targets as defined by the

Science Based Targets initiative (SBTi). However, SBTi has temporarily

suspended the use of the timber and wood fibre pathway included in the

Forest, Land and Agriculture (FLAG) Target-Setting Tool. Therefore,

setting UPM’s long-term net-zero target can be finalized when the

relevant guidelines and tools for accounting land sector emissions and

removals will be available. This is expected to happen in 2026.

UPM has participated in consultations of the SBTi Net Zero standard

and Forest, Land and Agriculture guidance reviews.

The company's fossil CO2 emissions reduction targets until 2030 for

Scope 1, 2 and 3 have been validated by the SBTi to be aligned with the 1.5

°C pathway as outlined in the Paris Agreement.

Climate change mitigation actions

UPM acts through climate-positive forestry, reducing emissions and

innovating products:


	We act through forests. Forests and forest biodiversity are critical for mitigating the effects of climate change. We ensure that our forests continue to act as carbon sinks, remain resilient and diverse in changing climate conditions, and thrive for future generations.
	We act through emissions. Minimizing the use of fossil fuels and raw materials is the most important way to mitigate climate change. We favor renewable and other carbon-neutral energy sources and produce CO2-free hydro and nuclear power in Finland. We are also committed to reducing emissions in our supply chain.
	We act through products. Innovating new products that are not based on fossil raw materials is at the core of our strategy. We develop safe and sustainable products that offer alternatives to fossil materials.

Refer to » E1-3 Actions; Refer to » E1-4 Targets

Investments and funding

Climate change mitigation actions are integrated into UPM's investment

plans. The main investments relevant to climate change mitigation

include:

Climate-positive forestry

UPM is both a major forest owner and a purchaser of wood. The value of

forest assets, i.e. standing trees, amounted to €2,605 million (2,517

million) at the end of 2025 (Refer to » Note 4.2 Forest assets in the

consolidated financial statement). In 2025, UPM's capitalized forest

regeneration costs amounted to €64 million (53 million), including costs

related to land preparation, planting, fertilization, leased plantation areas

and nursery operations. Corresponding OpEx amounted to € 26 million

(27 million), including maintenance of forestry infrastructure, forest fire

fighting, protection, and environmental activities.

Refer to » EU Taxonomy disclosure activity “1.3 Forest management”

Reducing emissions

As part of the climate change mitigation actions related to UPM's 2030

targets, UPM is investing in energy efficiency improvements throughout

its operations. In 2025, UPM invested €4 million (9 million) in energy

efficiency improvements and reducing CO2 emissions, mainly through

improvements to heat recovery and logistics development. OpEx related

to CO2-free nuclear power amounted to €54 million (34 million) and was

related to UPM's share of ongoing maintenance costs of the property,

plant, and equipment of the new and existing nuclear power plant units

Olkiluoto 1, 2 and 3. In addition, UPM is annually allocating resources to its

hydropower operations in the form of capital expenditure and

maintenance of hydropower plants.

Refer to » EU Taxonomy disclosure activity "4.27. Construction and safe

operation of new nuclear power plants, for the generation of electricity

or heat, including for hydrogen production, using best available

techniques" and » "4.28. Electricity generation from nuclear energy in

existing installations"

Innovating products

UPM develops sustainable products that offer alternatives to fossil

materials. UPM is investing in a next-generation biochemicals refinery in

Leuna in Germany, where new technologies and products will reduce

GHG emissions. The total investment estimate for the Leuna biorefinery is

€1,335 million. In 2025, investments to Biochemicals operations

amounted to €259 million (309 million). The biorefinery will produce a

range of 100% wood-based biochemicals, which will enable a switch from

fossil raw materials to sustainable alternatives in various consumer-

driven end-uses. Production and sales of the first commercial products,

industrial sugars, started at the end of 2025. Production and sales of

further products, lignin, renewable functional fillers and finally glycols is

expected to start in 2026. The start-up of the biorefinery marks a

significant milestone for UPM.

Refer to » EU Taxonomy disclosure activity “3.6 Manufacture of other

low-carbon technologies”


UPM Financial Report 2025	157

The investment in Leuna and forest management are also included in the

proceeds of UPM's Green Bond portfolio.

Refer to line items » Capital expenditure and » Additions to forest assets

in Consolidated cash flow statement

Refer to line item » Costs and expenses in Consolidated income

statement

Refer to » Note 2.3 Operating expenses and other operating income in

the consolidated financial statements

See » EU Taxonomy, sections “CapEx” and “OpEx” and tables "CapEx"

and "OpEx"

See » E1-3 Actions for realized and planned key actions

Other climate change mitigation-related aspects

UPM does not consider its assets and sold products to have locked-in

fossil GHG emissions. Locked-in GHG emissions are considered to be

emissions which occur due to long-term investments or commitments to

assets or products generating emissions still long in the future.

All the economic activities that UPM reports under the Taxonomy

Regulation contribute to climate change mitigation (CCM). All activities,

except 1.1 Afforestation and 1.3 Forest management, are assessed as

Taxonomy‑aligned. UPM considers that these before mentioned activities

meet all alignment requirements, with the exception of third‑party

verification. UPM intends to obtain the necessary external verification

and, once completed, plans to also assess activities 1.1 Afforestation and

1.3 Forest management as Taxonomy‑aligned. Refer to » EU Taxonomy

disclosure, Assessment of Taxonomy eligibility and alignment

UPM did not spend significant CapEx related to coal-, oil-, or gas-

related economic activities in 2025.

UPM is not excluded from the EU Paris-aligned Benchmarks

according to the exclusion criteria stated in Articles 12.1 (d) to (g) and 12.2.

of the Commission Delegated Regulation (EU) 2020/1818 (Climate

Benchmark Standards Regulation).

Climate actions embedded in UPM's

strategy

Forests, wood-based products, and low-carbon energy play a unique role

in UPM's strategy and in mitigating the effects of climate change. With

UPM's target to reduce Scope 1, 2 and 3 emissions, these areas form the

basis for UPM's transition plan.

UPM's financing is linked to sustainability performance. Four green

bonds, issued since 2020, have a strong focus on climate-related

activities. In addition, UPM has credit facilities which are linked to

biodiversity and climate targets.

In accordance with its main duties and responsibilities, the UPM Board

of Directors reviewed and approved the strategic objectives and plans of

the company and its business areas. The key enablers of UPM's updated

strategy are people, productivity, commercial excellence, sustainability,

and innovation.

UPM aims to accelerate growth in the coming years. The company's

business portfolio offers robust growth opportunities in renewable fibres

such as pulp; in advanced materials such as adhesive materials and

specialty papers; and in decarbonization solutions such as biochemicals,

biofuels, and CO₂-free energy.

Decarbonization solutions offer innovative and sustainable options to

meet the urgent need to decarbonize society. Renewable fuels and

renewable chemicals are the central elements of UPM’s long-term growth

in decarbonization solutions. UPM is addressing key sectors that are

critical for decarbonization with the launch of the biochemicals business,

further development of the biofuels business, and by capturing the value

of the energy market transformation. Minimizing the use of fossil fuels is

the most important way to mitigate climate change.

UPM will contribute to the decarbonization of the electricity system by

increasing the supply of reliable and renewable CO2-free electricity. In

Biochemicals, the startup of the UPM Leuna refinery marks a significant

milestone. In Biofuels, UPM announced to discontinue the development of

its potential second biomass-to-fuels refinery at the Port of Rotterdam

following extended technical, commercial and strategic evaluations.

Renewable fuels and renewable chemicals are the central elements of

UPM’s long-term growth in decarbonization solutions. UPM is focusing on

three targeted growth areas in its biofuels business:

• Evaluating the potential to debottleneck the Lappeenranta

biorefinery in order to capture low CapEx expansion opportunities and

further leverage the strong market performance of CTO-derived biofuels.

• Enabling the qualification of CTO-derived UPM biofuels as

sustainable aviation fuel (SAF). This strategic direction is supported by

successful SAF trials conducted with the Austrian aircraft manufacturer

Diamond Aircraft using Austro Engine propulsion and by continued

progress in the technical acceptance process at the American Society for

Testing and Materials (ASTM). Results from these trials and stakeholder

reviews have been consistently positive.

• Continuing feedstock technology development to qualify and enable

the use of additional competitive and sustainable biomass. This will

support the cost-efficient production of high-quality biofuels for both road

and aviation applications.

In addition, key climate-related issues such as scenario analyses,

commitments and UPM's overall approach to forests, emissions

reductions in the production and supply chain, and climate-positive

products are reported directly to UPM's management bodies, led by the

President and CEO.

Refer to » E1-4 Targets for climate-related sustainability targets for 2030

and their follow-up and Refer to » E1-3 Actions for realized and planned

key actions.


UPM Financial Report 2025	158

Impacts, risks and opportunities

ESRS 2 SBM-3

Overview of material impacts, risks and opportunities


Impacts, risks and opportunities	Description
Positive impact: Climate change mitigation through climate-related effects of forests and bio-based products	Through its sustainable forest management practices UPM ensures that its forests in Finland and the U.S., as well as its land areas in Uruguay, act as carbon sink. UPM's bio-based products create temporary carbon storage and substitute fossil-based materials.
Negative impact: Fossil CO2 emissions from UPM's own energy generation (Scope 1), purchased energy (Scope 2), and related to value chain (Scope 3)	Despite continuous actions and achievements to reduce fossil CO2 emissions in line with the 1.5 °C target, UPM is still generating a significant amount of fossil CO2 emissions via its production sites and in the value chain. These will be reduced further in line with UPM's transition pathway to achieve net-zero.
Risk: Transitional as well as physical, climate-related risks due to changes in legislation and extreme weather events	UPM is exposed to a variety of risks related to climate change. Transitional risks are related e.g. to regulation and the price and availability of raw materials and energy. Physical risks are related e.g. to exceptional weather events which could result in unpredictable hydropower availability, wood harvesting conditions, or operational disruptions.
Opportunity: Transition opportunities covered by UPM's business model focusing on bio-based products and CO2-free energy	Opportunities driven by resource efficiency, new technologies, CO2 -free electricity, and bio-based products could bring new markets, sources of funding and competitive advantage, and a possible increase in forest growth in UPM's relevant areas.

Refer to » Report of the Board of Directors, section Risks, paragraph Climate change

Climate risks and business resilience

UPM's position and resilience in different climate scenarios have been

evaluated for the company's businesses and functions from both

physical and transitional perspectives.

A company-wide assessment of transition risks and opportunities has

been made for each of UPM's business areas according to the different

scenarios for project future energy trends and their potential impacts

used by the International Energy Agency (IEA): the New Policies Scenario

(NPS), Current Policies Scenario (CPS) and 2 °C Scenario (2DS).

The company-wide physical scenario analysis for three Shared

Socioeconomic Pathways (SSP1-2.6, SSP2-4.5 and SSP5-8.5) focused on

the impacts of projected changes in four main areas of UPM's operations:

Finland; Germany; Uruguay; and China. The analysis included impacts on

forest growth, productivity, and water availability arising from climate

change related disturbances such as changes in precipitation,

evaporation, droughts, and floods. The study was carried out by the

Finnish Meteorological Institute in 2024. Refer to » ESRS 2 IRO-1 Climate-

related risks for more information on the study results.

In general, transition impacts play a larger role in the low- and

medium-emissions scenarios, and UPM is well positioned, as its business

portfolio allows flexibility in terms of recognized risks and opportunities. In

the high-emissions scenario, physical impacts dominate, with serious

consequences not only for UPM but for ecosystems and societies around

the world.

Policies

E1-2

The UPM Code of Conduct expresses the company's respect for people,

the environment, and ethical business practices, including its

commitment to climate change mitigation and adaptation. The Code is

complemented by UPM's Sustainability Policy Statement, which

addresses the issue in more detail. The UPM Supplier and Third-Party

Code sets out minimum requirements for the value chain. Refer to » G1-1

Policies for more information about these policy documents.

UPM's high level commitment to climate change mitigation and

adaptation is included in the UPM Code of Conduct: “UPM is committed

to science-based actions to mitigate the impact of our operations on

climate and biodiversity and to adapt to climate change. On an ongoing

basis, we measure and assess the direct and indirect environmental risks

and impacts of our operations and promote the use of the best available

techniques. We expect our suppliers and business partners to share our

commitment to the environment.”

In UPM's Sustainability Policy Statement, this commitment is

specified for the CO2 reduction target to cover operations and the supply

chain in line with the science-based target and measures are introduced

for the three pillars of UPM's climate actions: climate-positive forestry;

reducing emissions; and climate-positive products.

In addition, UPM's Sustainable Supply Chain Program states that

UPM's suppliers are expected to report their carbon footprint annually,

commit to time-bound greenhouse gas emissions reduction targets, and

take appropriate actions.


UPM Financial Report 2025	159

UPM's commitment to energy efficiency is also addressed in UPM's

Sustainability Policy Statement as a topic for continuous improvement,

with energy management systems as the preferred measure.

Renewable energy targets and the phase-out of coal and peat support

and specify policy commitments.

Actions

E1-3

Based on the identified material topics, UPM has established the following

sustainability focus areas related to climate change mitigation and

adaptation:

• Climate (with targets for energy efficiency, renewable energy, Scope 1

and 2 CO2 emissions)

• Forestry (with a target on forests' carbon sink)

• Product stewardship (with a target for a climate-positive product

portfolio)

• Responsible sourcing (with a target for Scope 3 emission reduction)

• Biodiversity (with targets for forest-related biodiversity); Refer to » E4-3

Actions

For each of these focus areas, key actions are defined, and an action plan

is available to achieve the Group-level targets. Refer to » E1-4 Targets

related to climate change

The key actions, previous year's key actions, and future key actions are

presented below.

Climate: Energy-related actions

Key actions

UPM favors the use of renewable and other carbon-neutral energy

sources and strives to continuously improve energy efficiency in all its

operations. The company consistently develops its energy portfolio and

manages the CO2-free electricity generation assets in UPM Energy.

UPM contributes to the decarbonization of the electricity system by

increasing the supply of reliable CO2-free electricity. UPM Energy is the

second largest electricity supplier in Finland with assets in Finnish nuclear

power and hydropower and, to a lesser extent, thermal power.

Most of UPM's energy consumption is related to the production

processes in the paper and pulp mills, where electricity and heat are

needed for mechanical pulping, pumping, and drying. Steam and

electricity are generated through combined heat and power (CHP) plants.

In some mills, all or part of the required energy is produced by external or

co-owned power plants.

Energy efficiency is improved across operations through audits,

innovations, and investments. Improvements usually also lead to

reductions in CO2 and other air emissions.

Actions in 2025

• UPM Energy’s new ultracapacitor at the Kuusankoski hydropower plant

started up in November 2025. The investment, announced in August

2024, triples UPM’s ultracapacitor capacity and further strengthens the

ability of hydropower to balance the electricity grid.

• Solar power development was explored in Utti in Kouvola, and wind

power in Western and Eastern Finland. Environmental impact

assessments were ongoing in 2025.

Planned actions

• UPM will continue to develop and implement energy efficiency measures

and to develop its energy portfolio to reach its 2030 targets.

• UPM will install a new type of heat pump at its Augsburg paper mill in

Germany. The pump will use previously unused waste heat to generate

process steam for paper production. UPM expects this innovation to

reduce CO2 emissions in the steam generation process by 15%. The

project is scheduled for completion in 2027.

• UPM Communication Papers launched a roadmap to accelerate

climate action, for example, with long-term wind power agreements,

power-to-heat solutions, and tailored activity plans for the mills.

Forestry: Forests as carbon sink

Key actions

UPM ensures that its forests and plantation areas continue to act as

carbon sinks, remain resilient and diverse in changing climate conditions,

and grow well for future generations. For forests to continue to act as

carbon sinks, growth must exceed harvesting. The annual carbon sink of

UPM-owned forests in Finland and the USA and owned and leased

plantations in Uruguay is -1.9 million tonnes of CO2 equivalent (CO2eq) as

the annual average over the past five years.

Actions in 2025

• Annual calculation of the carbon sink of UPM's own and leased forests

and tree plantations in Finland, the USA, and Uruguay.

• UPM has worked with Natural Resources Institute Finland to improve

soil carbon models for Uruguay using field data since 2022, and the

field measurements in eucalyptus plantations continued in 2025.

• The calculations in Uruguay were switched to similar increment-drain

method that is used for Finland. According to the Natural Resources

Institute Finland, this is currently the most robust method for forest

carbon accounting but the development work continues.

Planned actions

• Annual calculation of the carbon sink of UPM's own and leased forests

and tree plantations in Finland, the USA, and Uruguay will continue.


UPM Financial Report 2025	160

Responsible sourcing: UPM's -30 by 30

Program

Key actions

In 2022, UPM launched the -30 by 30 Program with the aim of reducing

CO2 emissions related to purchased materials and logistics (Scope 3) by

30%. As part of the program, suppliers are required to provide data on the

carbon footprint of the goods and services they sell to UPM. This includes

accounting for all relevant emissions from the supplier's upstream supply

chain and operations.

Actions in 2025

• More suppliers, notably 56, were included in the data collection scope.

The share of primary data for the most relevant raw materials is 99%

for pulp, 89% for pigments and 51% for chemicals.

• Category-specific roadmaps to achieve a 30% CO2 reduction have

been implemented for all UPM business areas.

• A company-wide harmonized verification and benchmarking process

for carbon footprint data from suppliers was implemented and tested

under the -30 by 30 Program to ensure comparability and quality of

supply chain emission calculations and also to learn and develop

together with suppliers.

• UPM and its shipping partner Bore Ltd. have joined FuelEU Maritime

compliance pooling service Ahti Pool with three modern dual-fuel

vessels in May 2025. The three vessels now use bio-LNG contributing to

UPM’s target to reduce fossil CO₂ emissions from its supply chain.

Furthermore, UPM Plywood now uses renewable diesel for all its

domestic road transport of plywood in Finland.

Planned actions

• Continue and further expand the annual collection of supplier carbon

footprint data to assess development.

• Continued focus on implementing category-specific action plans to

achieve CO2 reduction.

• Internal shadow carbon pricing will be explored to better compare and

rank the carbon footprints of similar materials and suppliers.

Product stewardship: Climate-positive

product portfolio

Key actions

The key action in this area is the investment in the world's first industrial-

scale biorefinery for wood-based biochemicals in Leuna, Germany. The

renewable chemicals will have a CO2 product footprint well below that of

fossil-based chemical products, as assessed by a third-party-reviewed

Life Cycle Assessment (LCA). In addition, development work toward a

climate-positive product portfolio will continue in several areas to meet

the 2030 target. Refer to » E5-2 UPM Sustainable Product Design

concept

Actions in 2025

• The construction works for the new biorefinery in Leuna, Germany, were

completed. UPM started the production and sales of industrial sugars,

the first commercial products in December.

• UPM Specialty Papers and Orkla Suomi piloted a new paper wrapper

for Panda Milk chocolate. The new wrapper has been validated as

recyclable in existing fibre recycling streams. For further examples of

collaboration with customers refer to » E5-2 Actions.

• At the beginning of 2025, UPM Caledonian paper mill hosted a trial

carbon capture unit on site as part of Flue2Chem, a consortium of

businesses looking to demonstrate a value chain from biogenic CO2 to

finished consumer goods. The unit captured carbon from the flue gas

of the site’s CHP biomass boiler.

Planned actions

• Sequential startup and ramp-up of the production will be proceeding at

the new biorefinery in Leuna, Germany. The biorefinery is expected to

reach full production in 2027.

• Evaluation of new ways to use renewable biomaterials, e.g. for textiles,

nonwovens, hygiene products, and labels.

• Assessment of the opportunities offered by green hydrogen and

biogenic CO2 to produce synthetic fuels and chemicals.

Resources

In general, climate-related activities are included in UPM's overall

investment and resource planning. In addition, four green bonds issued

since 2020, the latest one in 2024, have a strong focus on climate-related

activities. The green bond portfolio of €2,350 million uses eligible assets

and projects from the following categories of UPM's Green Finance

Framework:

• Sustainable forest and plantation management

• Climate-positive and circular bioeconomy-adapted products and

solutions

• Renewable or CO2-free energy

The Green Finance Framework has been established in accordance with

the Green Bond Principles 2021 (with June 2022 Appendix I), and the

APLMA, LMA and LSTA Green Loan Principles 2023. Project evaluation

and selection is a key process to ensure that projects and assets financed

by green finance instruments meet the eligibility criteria set out in the Use

of Proceeds section. UPM has established a cross-company Green

Finance Committee to coordinate, validate, implement and review the

selection of eligible green projects and assets.

In addition, UPM has credit facilities which are linked to biodiversity

and climate targets.

UPM's capital and operational expenditure on most significant

climate-related activities are reported under » E1-1 Investment and

funding and in the section » EU Taxonomy in the Sustainability

Statement.

During 2025, no significant capital expenditures for environment-

related new projects were announced for 2026.


UPM Financial Report 2025	161

Targets

E1-4

Targets related to climate change

To steer its sustainability activities, UPM has set several targets and key

performance indicators for its sustainability focus areas covering the

three pillars of UPM's climate approach: forests; emissions reductions;

and products. UPM's sustainability targets are developed by UPM by

taking the views, wishes, and perspectives of external stakeholders from

UPM's constant multi-stakeholder dialogue into account.


Sustainability focus area and key performance indicator	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Responsible sourcing
Fossil CO2 emissions from materials and logistics (Scope 3)	2018	6.08 mt	-30%	-22% (-22%)
Forestry
Climate-positive land-use in UPM's own and leased forests *	Since 2019	—	Forests as carbon sink (continuous)	-1.9 (-2.1) mt CO2eq (5-year average)
Biodiversity
Net-positive impact on forest biodiversity and developing a monitoring system **	Since 2018 (Finland), 2022 (Uruguay)	Usually the previous year	Continuous improvement	Overall positive development measured
Climate
Fossil CO2 emissions Scope 1 and 2	2015	6.80 mt	-65%	-58% (-50%)
Coal and peat usage	2020	3.3 TWh	0 TWh	2.6 (2.8) TWh
Annual energy efficiency improvement	Since 2016	—	+1% (continuous)	Not achieved
Share of renewable fuels	2015	67%	above 70% (continuous)	81% (80%)
Product stewardship
Climate-positive product portfolio	Since 2019	—	Continuous improvement	Decarbonization solutions: 7% (6%) of sales***

* Five-year annual average carbon sink; approximate value *** Correction of percentage value (8%) for 2024

** Covers UPM's own forests in Finland and UPM's land in Uruguay

Targets related to climate-positive forestry and innovating products

support UPM's development toward net-zero. However, methodologies

are still being developed by the GHG Protocol and the Science Based

Targets initiative (SBTi) to accurately calculate and formulate targets.

UPM's Scope 1, 2 and 3 fossil CO2 emissions reduction targets for

2030 have been validated by the SBTi to be aligned with the 1.5 °C

pathway as outlined in the Paris Agreement. The targets have been set

using the SBTi's absolute contraction approach, so that they deliver

absolute emissions reductions in line with global decarbonization

pathways.

The baseline years for Scope 1, 2 and 3 are considered representative

for UPM‘s long-term targets on CO2 reduction. They reflect the long-term

transition from a paper company to a material solution company with a

broader product portfolio.

In 2025, UPM's combined Scope 1 and 2 target of 65% reduction in

fossil CO₂ emissions was in line with achieving the 2030 target. The

reduction of fossil CO2 emissions was -15% compared to 2024 and -58%

compared to the base year of 2015.

The Scope 3 target of a 30% reduction in fossil CO2 for purchased

materials and logistics was also in line with the 2030 target, with a -22%

reduction in fossil CO2 emissions compared to the base year 2018. Refer

to » E1-3 Responsible sourcing: UPM's -30 by 30 Program

These targets are supported by specific targets for increasing energy

efficiency, the share of renewable fuels, and ending the use of coal and

peat in UPM's power plants.

Refer to » E5-3 Targets for certified fibre target

Refer to » E4-4 Targets for biodiversity target

Refer to » G1-2 Responsible sourcing for sourcing targets

Refer to » E1-5 Metrics for share of renewable fuels


UPM Financial Report 2025	162


	Reporting principles for targets

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 CO2

emissions from combustion processes. Calculation is based on the

European Emissions Trading System, other national requirements, or

official calculation factors. Scope 2 covers fossil CO2 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

CO2 are not material and are therefore not included in the target scope.

The base year value of 6.8 million tonnes of CO2 (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 CO2eq 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 CO2eq

(including CH4 and N2O) using the global warming potential (GWP)

values provided by the International Panel on Climate Change (IPPC).

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.

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 CO2

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

CO2-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 CO2-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.


UPM Financial Report 2025	163

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 CO2 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 CO2 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.

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.

UPM's pathway to net-zero (illustrative)


UPM Financial Report 2025	164

Metrics

Energy consumption and mix

E1-5

Most of the electrical and thermal energy is used for UPM's paper and

pulp production. However, pulp mills produce more energy than they

consume. UPM generates steam and electricity from combined heat and

power (CHP) plants. Renewable fuels account for 81% ( 80%) of the fuel

used on production sites.

UPM's target is to stop using coal and peat for on-site energy

generation by 2030. Currently, coal is the main fuel used at the UPM

Changshu paper mill in China, where alternatives have been unavailable

in the past. Peat is used in Finland.

Energy consumption and mix


MWh	2025	2024
Natural gas	3,900,000	4,200,000
Oil	1,400,000	1,500,000
Coal	2,500,000	2,500,000
Peat	100,000	260,000
Fossil recovered fuel	100,000	130,000
Total fossil fuels	8,100,000	8,600,000
Electricity from nuclear sources*	3,100,000	3,400,000
Other purchased electricity and heat (non-renewable)	1,100,000	1,300,000
Total non-renewable energy consumption	12,300,000	13,200,000
Renewable fuels	35,100,000	34,000,000
Purchased electricity and heat (renewable)	1,700,000	1,600,000
Self-generated non-fuel renewable energy (hydropower)	10,000	10,000
Total renewable energy consumption	36,800,000	35,600,000
Total energy consumption	49,100,000	48,800,000
Share of non-renewable sources in total energy consumption (%)	25%	27%
Share of renewable sources in total energy consumption (%)	75%	73%

*UPM's shareholdings in nuclear power generation are included with the amount used by

UPM's production sites

Note: Sales of electricity and heat is not deducted but reported as products in E5-5

Resource outflows.

In 2025, 84% of UPM’s purchased renewable electricity consisted of

bundled contracts, while 16% consisted of unbundled electricity attribute

claims, such as Guarantees of Origin and Renewable Electricity

Certificates. Additionally, 1% of nuclear electricity used consisted of

bundled contracts, while 99% consisted of unbundled Guarantee of Origin

attributes.

Electricity generation through own power plants and shareholdings


MWh	2025	2024
CHP at production sites, renewable	5,000,000	4,600,000
CHP at production sites, non-renewable	1,200,000	1,200,000
Hydropower	800,000	1,000,000
Hydropower, shareholdings	2,200,000	2,200,000
Nuclear power, shareholdings	7,600,000	7,600,000
Thermal power, renewable, shareholdings	70,000	90,000
Thermal power, non-renewable, shareholdings	10,000	10,000
Total	16,900,000	16,700,000

In addition to energy generation on UPM's production sites, UPM is a

significant player in the Nordic electricity market with its nuclear and

hydropower holdings and, to a lesser extent, thermal power.

Energy intensity associated with activities in high climate impact

sectors


MWh/€ m	2025	2024	% 2025/2024
Total energy consumption (MWh) per net revenue (€ m sales)	5,080	4,720	8%

All UPM's business activities are considered to be in high climate impact

sectors according to the NACE classification, either manufacturing or

forestry.

Sales correspond to total sales as reported in the consolidated

financial statements. Refer to » Note 2.2. Sales in the consolidated

financial statements, Accounting policy


UPM Financial Report 2025	165

GHG emissions

E1-6

GHG emissions and 2030 target


2030 target	Retrospective					Milestones and target years
2030 target	2015	2018	2024	2025	% 2025 / 2024	2025	2030	% 2025 / base year
Scope 1 GHG emissions *
Gross Scope 1 GHG emissions (tCO2)	3,880,000	3,250,000	2,180,000	2,080,000	-5%	2,200,000	1,360,000	-46%
Scope 1 GHG emissions from regulated emissions trading schemes (%)	2,970,000	2,730,000	1,660,000	1,550,000	-7%	—	—	—
Scope 2 GHG emissions *
Gross location-based Scope 2 GHG emissions (tCO2)	—	3,020,000	1,640,000	1,540,000	-6%	—	—	—
Gross market-based Scope 2 GHG emissions (tCO2)	2,920,000	3,100,000	1,200,000	790,000	-34%	1,650,000	1,020,000	-73%
Scope 1 and 2 GHG emissions *
Gross Scope 1 and market-based Scope 2 GHG emissions (tCO2)	6,800,000	6,120,000	3,380,000	2,870,000	-15%	3,850,000	2,380,000	-58%
Significant Scope 3 GHG emissions **
Total Gross indirect (Scope 3) GHG emissions (tCO2eq)	—	9,040,000	8,170,000	7,680,000	-6%	—	—	—
1 Purchased goods and services	—	4,230,000	2,970,000	2,920,000	-2%	3,490,000	2,960,000	-31%
2 Capital goods	—	50,000	160,000	110,000	-28%	—	—	—
3 Fuel- and energy-related activities	—	670,000	520,000	460,000	-11%	550,000	470,000	-31%
4 Upstream transportation and distribution	—	1,180,000	1,250,000	1,340,000	8%	970,000	830,000	13%
5 Waste generated in operations	—	50,000	54,000	53,000	-1%	—	—	—
6 Business travel	—	12,000	14,000	11,000	-20%	—	—	—
7 Employee commuting	—	13,000	10,000	10,000	-4%	—	—	—
10 Processing of sold products	—	2,830,000	3,200,000	2,780,000	-13%	—	—	—
Total GHG emissions
Total GHG emissions (location-based) (tCO2/tCO2eq)	—	15,300,000	11,980,000	11,300,000	-6%	—	—	—
Total GHG emissions (market-based) (tCO2/tCO2eq)	—	15,390,000	11,550,000	10,560,000	-9%	—	—	—

* Base year 2015 for Scope 1 and Scope 2 targets for 2030

** Base year 2018 for Scope 3 target for 2030

Note: Setting and SBTi application of UPM's long-term targets will proceed in 2026, when the guidelines and tools for the FLAG sector will be available.


UPM Financial Report 2025	166

Biogenic CO2 emissions


t Biogenic CO2	2025	2024
Scope 1	12,140,000	11,740,000
Scope 2	150,000	170,000
Scope 3 (Category 11 Use of sold products)	390,000	300,000

Fossil CO2 emissions by country 2025

GHG intensity


t/€ m	2025	2024	% 2025/2024
Total GHG emissions (location-based) per net revenue (tCO2eq/€ m sales)	1,170	1,160	1%
Total GHG emissions (market-based) per net revenue (tCO2/€ m sales)	1,090	1,120	-2%

Sales correspond to total sales as reported in the consolidated financial

statements. Refer to » Note 2.2. Sales in the consolidated financial

statements, Accounting policies.


	Reporting principles for metrics

UPM reports data on a consolidated basis. Refer to » ESRS 2, BP-1 for

detailed information.

The share of associated companies is insignificant.

Scope 1

UPM's Scope 1 emissions include UPM's power plants, fuel used in

production processes, and a share of jointly operated on-site power

plants corresponding to UPM's energy supply. UPM does not report GHG

emissions from mobile combustion and from facilities other than

production sites and power plants. Scope 1 fossil and biogenic CO2 are

calculated based on the respective fuel consumption. The calculation is

based on the European Emissions Trading System, other national

requirements, or official calculation factors. UPM only reports CO2 for

Scope 1. Other Greenhouse Gas (GHG) emissions such as CH4 and N2O

are not material.

The European Emissions Trading Scheme and other national

schemes require additional third-party verification from accredited

auditors for Scope 1 emission. The verification might take place after the

publication of this Statement. In the event of significant differences, this

will lead to a restatement in next year's reporting.

Scope 2

For the Scope 2 calculation, UPM follows the principles and requirements

of the GHG Protocol Scope 2 Guidance.

UPM's Scope 2 emissions from purchased electricity are calculated

using both the market-based and location-based approaches. The main

method is the market-based approach, and the target follow-up is based

on this 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. The location-based calculation is based on MLC (former

GaBi) factors.

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. Scope 2

emissions from purchased heat are calculated using the market-based

approach, i.e. information from the supplier.

Scope 2 GHG emissions are only fossil CO2, as information on other

GHG emissions is not yet available from suppliers, and the share of other

GHG emissions is considered to be low for market-based electricity.

Scope 2 biogenic emissions are estimated based on location-based

factors for electricity purchased from MLC (formerly GaBi), excluding

sites using 100% nuclear electricity.

For UPM's pulp and paper mills in Europe, China, and Uruguay, the

Scope 1 and 2 CO2 emissions are verified and reported in accordance with

the EU's Eco-Management and Audit Scheme (EMAS) by EMAS-

accredited auditors.

Scope 3

UPM's Scope 3 calculation follows the principles and requirements of the

GHG Protocol Corporate Value Chain (Scope 3) Accounting and

Reporting Standard.

Information about biogenic CO2 emissions is unavailable for Scope 3

categories, except for category 11 (Use of sold products), where UPM

reports biogenic CO2 from the combustion of UPM's renewable diesel

sales. Other GHG emissions from combustion are estimated to be

insignificant.


UPM Financial Report 2025	167

Excluded categories

The following categories are excluded from UPM's inventory:

• 8 Upstream leased assets: Not a relevant category. According to

several Life Cycle Assessment (LCA) studies carried out for the paper

industry, infrastructure accounts for less than 1% of CO2 emissions for

paper industry units.

• 9 Downstream transport and distribution: UPM mainly produces

intermediate products. Due to the scarcity of reliable information, the

availability of adequate data, and UPM's influence on transport to end-

users, UPM only reports CO2 emissions related to the transport of

UPM's (intermediate) products to customers. As these transports are

purchased by UPM, their emissions are included in category 4

(Upstream transport and distribution).

• 11 Use of sold products: Not a relevant category. UPM's products do not

cause any fossil CO2 emissions during their use. As additional

information, UPM reports on biogenic CO2 from the combustion of

renewable diesel, while emissions of other greenhouse gases from

combustion are estimated to be insignificant.

• 12 End-of-life treatment of sold products: As a producer of mostly

intermediate products, reliable information, availability of adequate

data, and the company's influence on this emission category is limited.

These emissions are therefore excluded from the inventory.

• 13 Downstream leased assets: Not relevant, as covered by other

categories.

• 14 Franchises: Not applicable, as UPM does not have any franchise

activities.

• 15 Investments: Not applicable, as there are no investments with

emissions that are not included in Scope 1 and 2.

Included major categories

The following major categories are included in UPM's carbon inventory:

• 1 Purchased goods and services: If primary data from the supplier is

unavailable, secondary data from ecoinvent is used to calculate

emissions. Exceptions: IT-related emissions are evaluated using

DEFRA factors per euro spent. Material categories included in the

inventory are external pulp, wood, recovered paper, pigments and fillers,

chemicals (for pulp, paper and label production), external paper and

films. The estimated percentage of emissions calculated using data

from suppliers is 40%. UPM's -30 by 30 Program to reduce CO2

emissions related to logistics and purchased materials includes

measures to receive accurate data from more suppliers.

• 3 Fuel- and energy-related activities (not included in Scope 1 or Scope

2): This category includes emissions from the extraction, production

and transport of purchased fuels used on production sites. The figure is

calculated by multiplying consumption by fuel type with CO2eq factors

from ecoinvent or MLC (formerly GaBi) for purchased electricity.

Emissions related to the production of biogenic fuels are not included

in this category, as they are already included in the figures under other

Scope 3 categories: for example, energy wood is included in category 1

under wood. The percentage of emissions calculated using data from

suppliers is 0%.

• 4 Upstream transportation and distribution: This category includes

transport for the same raw materials reported in category 1, as well as

product deliveries from UPM sites and storage facilities to customers, as

these are under UPM's control. The calculation is based on calculated

tonne-kilometers and primary emission data from suppliers or secondary

emission factors from databases (GLEC, except UPM Adhesive Materials'

which uses GaBi factors). For raw material transport, the calculation is

based on actual quantities received and distances per mode of transport.

Updates for transport distances vary between raw material categories

and business areas. For product transport, both tonnes per transport

mode and distances are actual figures. Only chemical transports are not

calculated based on actual distances but are estimated using actual

quantities received and an average CO2eq per quantity factor for pigment

transport as a proxy. The estimated percentage of emissions calculated

using data from suppliers is 40%. UPM's -30 by 30 Program to reduce

CO2 emissions related to logistics and purchased materials includes

measures to receive accurate data from more suppliers.

• 10 Processing of sold products: This category includes all UPM

products, calculated based on production figures and various sources

of emissions related to further processing. CO2eq for tissue and

packaging paper production from pulp and industrial printing of paper

is calculated based on ecoinvent data for electricity consumption for

the respective processes and region-specific factors for electricity

generation. CO2eq for printing at home or the office is estimated as the

average electricity consumption of laser and ink jet printers and

ecoinvent's region-specific factors for electricity generation. UPM's

average CO2eq emissions from graphic paper and label production are

used to estimate external processing. The average represents different

regions. The processing of sold labels is based on assumptions and

calculations for UPM Adhesive Materials' LCA from 2021. CO2eq

emissions are based on assumptions and calculations from the

verified Environmental Product Declarations for the processing of

timber and plywood. The percentage of emissions calculated using

data from customers: 0%.

Included minor categories

The following minor categories are included in UPM's carbon inventory as

additional information:

• 2 Capital goods

• 5 Waste generated in operations

• 6 Business travel

• 7 Employee commuting


UPM Financial Report 2025	168

Carbon removals and use of carbon credits

E1-7

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 CO2 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 CO2.

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 CO2eq. The credits are

used solely to offer carbon-neutral products to customers but are not

contributing to UPM's CO2 emission reduction targets.


	Reporting principles for metrics

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

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

in compliance with IPCC guidelines.

See » upm.com for more information.

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

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.


UPM Financial Report 2025	169

Internal carbon pricing

E1-8

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, CO2) 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

E1-9

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	170

EU Taxonomy

EU Taxonomy is a sustainable finance classification system based on

Regulation (EU) 2020/852, which defines criteria for economic activities

that are considered environmentally sustainable. It represents an

important step towards achieving carbon neutrality by 2050 in line with

the EU’s climate and environmental goals.

For the reporting year 2025, the EU Taxonomy disclosure

requirements were amended to introduce a quantitative materiality

threshold for the economic activities and new simplified reporting tables

including a new summary table. Economic activities representing less

than 10% of turnover, capital expenditure (CapEx) or operating

expenditure (OpEx) may be reported as non-material. These changes aim

to reduce reporting complexity while maintaining transparency on

taxonomy-eligible and aligned activities.

Assessment of Taxonomy eligibility and alignment

UPM annually conducts a thorough evaluation of the eligibility and

alignment of activities with the requirements defined in the Taxonomy

Regulation. The assessments are coordinated by UPM's Finance and

Responsibility Teams with the support of several UPM functions and

businesses. EU NACE Classification (Statistical Classification of

Economic Activities in the European Community) is used as a reference

for activity identification.

In 2025, UPM identified seven material eligible economic activities of

which five were Taxonomy-aligned. All the activities aim at a substantial

contribution to climate change mitigation (CCM) and they meet specific

technical screening criteria including criteria for 'do no significant

harm' (DNSH) stated for each activity within the relevant Appendix to the

delegated act. For all activities contributing to climate change mitigation,

a physical climate risk assessment is needed pursuant to Appendix A to

the Climate Delegated Act. Substantial contribution and 'do no

significant harm' criteria were reviewed together with the sustainability

experts from related UPM's businesses.

UPM continues to report activities 1.1 “Afforestation” and 1.3 “Forest

management” as Taxonomy-eligible but not Taxonomy-aligned for the

reporting year 2025. These activities consist of UPM's afforestation

operations in Uruguay and forest management and regeneration

activities in Finland, Uruguay, and the USA. UPM considers that the

mentioned activities fulfil all the alignment requirements, apart from the

third-party verification (section 4. Audit). UPM has been searching for a

partner who would fulfil Taxonomy certifier requirements and is capable

of conducting the specific audit on Forest management. Until now, UPM

has not been able to find a suitable service provider from the market and,

hence reports its forest management activities as not aligned.

In 2025, UPM's material Taxonomy-aligned economic activities were the

following:

3.6 “Manufacture of other low-carbon technologies” relates to

technologies and products dedicated to the reduction of GHG emissions

and includes mainly construction of UPM's new biochemicals biorefinery

in Leuna, Germany.

4.5 “Electricity generation from hydropower” relates to the operation of

electricity generation facilities that produce electricity from hydropower

including UPM's own and co-owned hydropower plants.

4.13 “Manufacture of biogas and biofuels for use in transport and of

bioliquids” relates to manufacture of biofuels from forest biomass and

consists of UPM's biorefinery operations in Lappeenranta, Finland.

4.27 "Construction and safe operation of new nuclear power plants"

relates to nuclear power plant Olkiluoto 3 through UPM’s shareholdings in

Pohjolan Voima Oyj (PVO).

4.28 "Electricity generation from nuclear energy in existing

installations" relates to nuclear power plants Olkiluoto 1&2 through UPM’s

shareholdings in Pohjolan Voima Oyj (PVO).

The activities 4.27 "Construction and safe operation of new nuclear

power plants" (Olkiluoto 3) and 4.28 "Electricity generation from nuclear

energy in existing installations" (Olkiluoto 1&2) are identified through

UPM's shareholdings in Pohjolan Voima Oyj (PVO) which has direct

shareholdings in Teollisuuden Voima Oyj (TVO), Refer to » Note 4.3

Financial assets at FVOCI in the consolidated financial statements. TVO

operates three nuclear power plants in Finland after Olkiluoto 3 started its

production phase in 2023. Both nuclear activities 4.27 and 4.28 are

Taxonomy-aligned based on the comprehensive assessment conducted

by Teollisuuden Voima Oyj (TVO).

Until 2024 reporting, the nuclear and fossil gas-related activities have

been reported separately according to the Complementary Delegated

Act. Following the changes in EU Taxonomy reporting requirements in

2025, separate reporting templates for nuclear and fossil gas-related

activities are no longer used. These activities are now disclosed within the

common reporting templates.

In 2025, UPM classified the previously reported economic activities

4.20 “Cogeneration of heat/cool and power from bioenergy” related to

operation of installations used for cogeneration of heat/cool and power

exclusively from biomass, biogas or bioliquids and 6.10 “Sea and coastal

freight water transport, vessels for port operations and auxiliary activities”

which relates to the sale of logistic services from leased vessels as non-

material based on the new materiality thresholds. In addition, UPM

identified non-material activities 1.2 "Manufacture of medicinal products",

related to its discontinued Biomedicals business, as well as 4.29

“Electricity generation from fossil gaseous fuels” related to the Nordland

CHP plant in Germany. These latter two activities have also been reported

as non‑material in previous years, as they had no impact on the KPIs.

Minimum Safeguards

Requirements for Minimum Safeguards shall ensure that a company not

only supports environmental goals, but also adheres to international

social standards and guidelines. UPM evaluated the requirements to be

fulfilled by UPM's Code of Conduct and related business practices,

measures, and commitments. UPM's due diligence and remedy

processes consider social and employee matters, respect for human

rights, anti-corruption and anti-bribery. Information on Principal Adverse

Impacts (PAIs), as defined in the EU SFDR, are addressed in UPM's

reporting, if relevant. UPM's practices and assessments in relevant areas

are described in more detail in the following sections:

• Commitment to international frameworks: Refer to » S1-1

• UPM Code of Conduct and other corporate policies: Refer to

» G1-1

• Sustainability governance: Refer to » ESRS 2 GOV-1

• Anti-corruption and anti-bribery: Refer to » G1-3

• UPM and human rights: Refer to » S1-1 , » S2-1 , » S3-1


UPM Financial Report 2025	171

• Taxation: See UPM Annual Report, chapter "Contributing to society

through taxes"

UPM's Taxonomy alignment 2025 and development

compared to previous year

In 2025, UPM's total Taxonomy-aligned turnover was €689 million (€774

million), 7% (7%) of total sales, Taxonomy-aligned CapEx was €284

million (€324 million), 46% (40%) of total CapEx and Taxonomy-aligned

OpEx €88 (€71 million), 13% (11%) of total OpEx as defined in Disclosures

Delegated Act. Taxonomy-aligned turnover KPI remained unchanged in

percentage terms compared to the previous year. Taxonomy-aligned

CapEx KPI increased 6 percentage points, mainly due to a higher

proportion of Leuna biochemicals biorefinery investment out of total

CapEx. OpEx KPI increased by 2 percentage points mainly due to higher

OpEx related to the Leuna biorefinery and nuclear related OpEx

associated with the Olkiluoto 1 and 2 nuclear plants (activity 4.28).

The Taxonomy Regulation is still under development and does not

cover all sustainable economic activities. The majority of UPM´s products

and services, such as pulp, paper, timber, plywood, and label materials

contributing to the turnover, are not included in the EU Taxonomy, thus

the high proportion of Taxonomy non-eligible activities.

KPIs and accounting policies

The eligibility and aligned-related financial information to be disclosed

pursuant to Article 8 of the Taxonomy Regulation is presented in the

following pages in the tables Template 1: Proportion of turnover, CapEx,

OpEx from products or services associated with Taxonomy-eligible or

Taxonomy-aligned economic activities - disclosure covering year 2025

(summary KPIs) and Template 2: Proportion of turnover, CapEx, OpEx

from products or services associated with Taxonomy-eligible or

Taxonomy-aligned economic activities - disclosure covering year 2025

(Activity breakdown), the latter of which is duplicated for Turnover, CapEx

and OpEx KPIs separately.

Turnover

CapEx

OpEx


UPM Financial Report 2025	172

Template 1: Proportion of turnover, CapEx, OpEx from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic

activities - disclosure covering year 2025 (summary KPIs)


Financial year	2025
KPI	Total	Proportion of Taxonomy -eligible activities	Taxonomy -aligned activities	Proportion of Taxonomy -aligned activities	Breakdown by environmental objectives of Taxonomy-aligned activities						Proportion of enabling activities	Proportion of transitional activities	Not assessed activities considered non- material	Taxonomy -aligned activities in previous financial year 2024	Proportion of Taxonomy -aligned activities in previous financial year 2024
KPI	Total	Proportion of Taxonomy -eligible activities	Taxonomy -aligned activities	Proportion of Taxonomy -aligned activities	Climate Change Mitigation	Climate Change Adaptation	Water	Circular Economy	Pollution	Biodiversity	Proportion of enabling activities	Proportion of transitional activities	Not assessed activities considered non- material
	€ million	%	€ million	%	%	%	%	%	%	%	%	%	%	€ million	%
Turnover	9,656	8%	689	7%	7%						4%	3%	92%	774	7%
CapEx	621	57%	284	46%	46%						46%		43%	324	40%
OpEx	668	17%	88	13%	13%						5%	8%	83%	71	11%

Template 2: Proportion of turnover, CapEx, OpEx from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic

activities - disclosure covering year 2025 (activity breakdown)

Turnover


Reported KPI		Turnover
Financial year		2025
Economic Activities	Code	Taxonomy - eligible KPI (Proportion of Taxonomy- eligible Turnover)	Taxonomy- aligned KPI (monetary value of Turnover)	Taxonomy- aligned KPI (Proportion of Taxonomy aligned Turnover)	Environmental objectives of Taxonomy- aligned activities						Enabling activity	Transitional activity	Proportion of Taxonomy- aligned in Taxonomy- eligible
Economic Activities	Code		Taxonomy- aligned KPI (monetary value of Turnover)		Climate Change Mitigation	Climate Change Adaptation	Water	Circular Economy	Pollution	Biodiversity	Enabling activity	Transitional activity	Proportion of Taxonomy- aligned in Taxonomy- eligible
		%	€ million	%	%	%	%	%	%	%	E	T	%
Forest management	CCM 1.3	1%
Manufacture of other low- carbon technologies	CCM 3.6	0%	18	0%	0%						E		100%
Electricity generation from hydropower	CCM 4.5	1%	115	1%	1%						E		100%
Manufacture of biogas and biofuels for use in transport and of bioliquids	CCM 4.13	3%	267	3%	3%						E		100%
Construction and safe operation of new nuclear power plants, for the generation of electricity or heat, including for hydrogen production, using best-available technologies	CCM 4.27	1%	125	1%	1%							T	100%
Electricity generation from nuclear energy in existing installations	CCM 4.28	2%	164	2%	2%							T	100%
Sum of alignment per objective					7%
Total KPI (Turnover)		8%	689	7%	7%						4%	3%	92%


UPM Financial Report 2025	173

CapEx


Reported KPI		CapEx
Financial year		2025
Economic Activities	Code	Taxonomy- eligible KPI (Proportion of Taxonomy- eligible CapEx)	Taxonomy- aligned KPI (monetary value of CapEx)	Taxonomy- aligned KPI (Proportion of Taxonomy -aligned CapEx)	Environmental objectives of Taxonomy- aligned activities						Enabling activity	Transitional activity	Proportion of Taxonomy- aligned in Taxonomy- eligible
Economic Activities	Code		Taxonomy- aligned KPI (monetary value of CapEx)		Climate Change Mitigation	Climate Change Adaptation	Water	Circular Economy	Pollution	Biodiversity	Enabling activity	Transitional activity	Proportion of Taxonomy- aligned in Taxonomy- eligible
		%	€ million	%	%	%	%	%	%	%	E	T	%
Afforestation	CCM 1.1	1%
Forest management	CCM 1.3	10%
Manufacture of other low- carbon technologies	CCM 3.6	42%	259	42%	42%						E		100%
Electricity generation from hydropower	CCM 4.5	2%	11	2%	2%						E		100%
Manufacture of biogas and biofuels for use in transport and of bioliquids	CCM 4.13	2%	14	2%	2%						E		100%
Sum of alignment per objective					46%
Total KPI (CapEx)		57%	284	46%	46%						46%		81%

OpEx


Reported KPI		OpEx
Financial year		2025
Economic Activities	Code	Taxonomy- eligible KPI (Proportion of Taxonomy- eligible OpEx)	Taxonomy- aligned KPI (monetary value of OpEx)	Taxonomy- aligned KPI (Proportion of Taxonomy- aligned OpEx)	Environmental objectives of Taxonomy- aligned activities						Enabling activity	Transitional activity	Proportion of Taxonomy- aligned in Taxonomy- eligible
Economic Activities	Code		Taxonomy- aligned KPI (monetary value of OpEx)		Climate change Mitigation	Climate change Adaptation	Water	Circular Economy	Pollution	Biodiversity	Enabling activity	Transitional activity	Proportion of Taxonomy- aligned in Taxonomy- eligible
		%	€ million	%	%	%	%	%	%	%	E	T	%
Forest management	CCM 1.3	4%
Manufacture of other low- carbon technologies	CCM 3.6	3%	21	3%	3%						E		100%
Electricity generation from hydropower	CCM 4.5	1%	4	1%	1%						E		100%
Manufacture of biogas and biofuels for use in transport and of bioliquids	CCM 4.13	1%	9	1%	1%						E		100%
Construction and safe operation of new nuclear power plants, for the generation of electricity or heat, including for hydrogen production, using best-available technologies	CCM 4.27	5%	34	5%	5%							T	100%
Electricity generation from nuclear energy in existing installations	CCM 4.28	3%	20	3%	3%							T	100%
Sum of alignment per objective					13%
Total KPI (OpEx)		17%	88	13%	13%						5%	8%	77%


UPM Financial Report 2025	174

Accounting Policy

UPM consolidated financial statements are prepared in accordance with

IFRS Accounting Standards as adopted by the EU and IFRIC

Interpretations. UPM has calculated the KPIs using the financial

information presented in the Group consolidated financial statements

2025. In determining the eligible and aligned turnover, any specific

fragments of production inputs, such as the use of sustainable raw

material or energy, have not been included in the eligible turnover if the

main activity is not included in the Taxonomy. However, for activities that

are used both internally and, to some extent, to generate external

turnover, the CapEx and OpEx are not split in relation to internal and

external use but fully allocated to economic activity that leads to revenue.

The definitions of CapEx and OpEx key performance indicators are based

on definitions set out in the Disclosures Delegated Act. A clear reporting

structure prevents double counting and ensures that turnover, CapEx,

and OpEx related to assets or processes associated with Taxonomy-

aligned economic activities are counted only once. Whenever an

individual investment is considered Taxonomy-aligned, this proportion of

CapEx is not further allocated to a Taxonomy-aligned economic activity,

to avoid double counting. Similarly, OpEx related to purchased outputs

that are already considered under OpEx associated with Taxonomy-

aligned activities is not further counted. The Group has no economic

activities contributing to multiple climate or environmental objectives.

Turnover

UPM has calculated turnover, as defined in the Disclosures Delegated

Act, based on the same accounting principles that apply for revenue in

IFRS Accounting Standards, i.e., covering all amounts derived from the

sale of products and services during ordinary activities. Total turnover

corresponds to total sales as reported in the Group consolidated financial

statements. Refer to » Note 2.2. Sales in the consolidated financial

statements, Accounting policies. Taxonomy-eligible and -aligned turnover

includes only revenue from sales of products and services generated from

activities that are included in the Taxonomy.

In 2025, the numerator of the turnover KPI is defined as the turnover

derived from products and services associated with Taxonomy-aligned

economic activities:

3.6 “Manufacture of other low-carbon technologies” generates turnover

from the sale of products of the new biorefinery in Leuna, Germany, as it

started its first customer deliveries in late 2025.

4.5. “Electricity generation from hydropower” generates turnover from the

sale of electricity generated by UPM's own or co-owned hydropower plants.

4.13. “Manufacture of biogas and biofuels for use in transport” generates

turnover on sale of wood-based renewable diesel and naphtha for

transport and petrochemicals.

4.27. "Construction and safe operation of new nuclear power plants"

generates turnover from UPM's electricity sales to external customers

related to nuclear power plant Olkiluoto 3.

4.28. "Electricity generation from nuclear energy in existing installations"

generates turnover from UPM's electricity sales to external customers

related to nuclear power plant Olkiluoto 1 and 2.

Turnover from sale of wood and wood-based biomass such as logs,

pulpwood and forest residues from UPM's own and leased forests to third-

party customers and sale of forestry services to private forest owners (1.3.

“Forest management”) is Taxonomy-eligible but not Taxonomy-aligned.

CapEx

UPM has included in CapEx, as defined in the Disclosures Delegated Act,

additions to tangible and intangible assets, before any depreciation,

impairments, amortization charges, and fair valuations during the

financial year, as accounted for in accordance with IAS 16 Property, Plant

and Equipment, IAS 38 Intangible assets, IAS 41 Agriculture and IFRS 16

Leases. CapEx corresponds to cash payments to acquire fixed and forest

assets in the Consolidated cash flow statement adjusted with amounts

accrued but not paid at the end of the reporting period. CapEx includes

also acquisition of businesses and subsidiaries, excluding goodwill, and

additions to leased assets. Refer to » line items Capital expenditure,

Additions to forest assets and Acquisition of businesses and

subsidiaries, net of cash acquired in consolidated cash flow statement,

and Leases in Note 5.2. Net debt in the consolidated financial statements.

Capital expenditure presented in the UPM Annual Report under » Other

financial information differs from Taxonomy-CapEx as it excludes

additions to forest assets and leased assets and includes investments in

shares and goodwill acquired in business acquisitions.

In 2025, the numerator consists of the following categories of

Taxonomy-aligned CapEx:

3.6 “Manufacture of other low-carbon technologies” CapEx relates to

investment in the new-generation biorefinery in Leuna, Germany. UPM is

reporting all CapEx related to ongoing investment in new-generation

biorefinery as Taxonomy-aligned CapEx. In reporting year 2024, UPM

interpreted the Leuna investment as a Capex plan (1.1.2.2. (b) of Annex I)

instead of capital expenditure relating to assets or processes already

associated to environmentally sustainable economic activities, as the

Leuna biorefinery was not yet in operational stage. In 2025, the Leuna

biorefinery produced its first commercial products and thus reporting of

its Taxonomy-eligible and -aligned Turnover was initiated. Therefore, in

2025, UPM reported the Leuna investment as capital expenditure instead

of CapEx plan. The Leuna biorefinery is expected to reach full production

in 2027 and total CapEx for the investment is estimated to be €1,335

million.

4.5. “Electricity generation from hydropower” CapEx includes

refurbishment of hydropower plants.

4.13. “Manufacture of biogas and biofuels for use in transport” CapEx

includes refurbishment of Lappeenranta biorefinery.

CapEx related to investments on purchased and leased land for

afforestation (1.1. “Afforestation”), and capitalized forest regeneration

costs such as planting, growing of seedlings and operation of nurseries,

(1.3. “Forest management”) is Taxonomy-eligible but not Taxonomy-

aligned.

UPM is not reporting any CapEx related to the nuclear activities “4.27

"Construction and safe operation of new nuclear power plants" and 4.28

"Electricity generation from nuclear energy in existing installations", as

due to the nature of its shareholding ownership in PVO, investments

related to nuclear are not included in the total UPM's Capital expenditure

as presented in the UPM Annual Report, Refer to » Note 4.3 Financial

assets at FVOCI in the consolidated financial statements.


UPM Financial Report 2025	175

OpEx

UPM has included in OpEx, as defined in the Disclosures Delegated Act,

research and development costs as accounted for in accordance IAS 38

Intangible assets, short-term lease expenses as accounted for in

accordance IFRS 16 Leases, and costs of day-to-day servicing (i.e., repairs

and maintenance) of property, plant, and equipment as accounted for in

accordance IAS 16. Costs of day-to-day servicing of property, plant, and

equipment include direct salaries of maintenance personnel,

maintenance materials, and maintenance services outsourced. In

addition, as UPM owns a significant amount of forest assets, it considers

forest management and support services as day-to-day servicing of

assets as defined in the EU Disclosures Delegated Act. OpEx is included in

the consolidated income statement line item Costs and expenses, Refer

to » Note 2.3. Operating expenses and other operating income in the

consolidated financial statements.

In 2025, the numerator consists of the following categories of Taxonomy-

aligned OpEx:

3.6. “Manufacture of other low-carbon technologies” includes

maintenance and R&D costs related to biochemicals biorefinery.

4.5. “Electricity generation from hydropower” OpEx includes maintenance

costs of hydropower plants.

4.13. “Manufacture of biogas and biofuels for use in transport” OpEx

includes maintenance costs of biofuels production facility in

Lappeenranta and next generation biofuels refinery R&D costs.

4.27 "Construction and safe operation of new nuclear power plants"

includes UPM's share of day-to-day servicing costs related to property,

plant, and equipment in Olkiluoto 3.

4.28 "Electricity generation from nuclear energy in existing installations"

includes UPM's share of day-to-day servicing costs related to property,

plant, and equipment in Olkiluoto 1 and 2.

OpEx related to forestry infrastructure maintenance, forest fire

fighting, protection, and environmental activities (1.3. “Forest

management”) is Taxonomy-eligible but not Taxonomy-aligned.


UPM Financial Report 2025	176

Pollution (ESRS E2)

UPM pays close attention to the impact of its operations on the air, climate, water, and soil and aims to minimize

any adverse effects. This means reducing emissions to air and water, avoiding emissions to soil, and minimizing

both non-hazardous and hazardous waste.




Reduction in acidifying flue gases (NOX/SO2) achieved for a UPM average product	Reduction in chemical oxygen demand (COD) achieved for UPM's average product
-20%	-43%	41 environmental deviations from permit, contractual, or other legal obligations 2,100 preventive observations and near misses reported
Compared to 2015 (2030 target: -20%)	Compared to 2008 (2030 target: -40%)


UPM Financial Report 2025	177

Policies

E2-1

UPM's Code of Conduct expresses the company's respect for people, the

environment, and ethical business practices, and includes its

commitment to minimizing negative environmental impacts. The Code is

complemented by UPM's Sustainability Policy Statement, which

addresses the issue in more detail. The UPM Supplier and Third-Party

Code sets out minimum requirements for the value chain. Refer to » G1-1

Policies for more information about these policy documents.

In addition, specific aspects are addressed in the following policy

documents:

• UPM Sustainable Supply Chain Program; Refer to » G1-2 Responsible

sourcing

• UPM Clean Run Standard

• UPM Chemical Management Standard

• UPM Risk Management Standard

• UPM Incident Investigation and Reporting Standard

UPM's high-level commitment to mitigating, preventing, and controlling

negative impacts related to pollution is stated in the UPM Code of

Conduct: "We aim to minimize any direct or indirect negative impacts on

the environment or people in our sphere of influence. On an ongoing

basis, we measure and assess the direct and indirect environmental risks

and impacts of our operations and promote the use of the best available

techniques. We expect our suppliers and business partners to share our

commitment to the environment." This is complemented by UPM's

Sustainability Policy Statement: "UPM pays close attention to the impact

of its operations on the air, climate, water, and soil and aims to minimize

any adverse effects. This means reducing emissions to air and water,

avoiding emissions to soil, and minimizing both non-hazardous and

hazardous waste."

All relevant pollutants and substances from UPM's operations are

covered by UPM's policies.

The reduction targets for most material pollutants at Group level, NOX,

SO2, COD and landfill waste, are included in UPM's sustainability targets

for 2030.

UPM's commitment to the continuous improvement of environmental

impacts is specified in the UPM Sustainability Policy Statement.

UPM Clean Run Standard

The UPM Clean Run Standard formalizes UPM's Clean Run concept. It

aims to ensure that all businesses and operations of UPM implement the

processes falling under Clean Run as intended in UPM's Sustainability

Policy Statement, and to ensure continuous improvement of

environmental performance and compliance with all applicable laws and

other regulatory obligations. Refer to » E2-2 UPM Clean Run concept

UPM Chemical Management Standard

The UPM Chemical Management Standard describes the minimum

requirements for chemical risk assessment, approval, and safe handling. UPM

complies with the relevant international and national legislation applicable to

the production site and for the product. In addition, chemicals approved for

use should have minimal negative effects on human health, the environment,

and the safety of UPM's products. The least harmful alternative should be

selected. Chemicals that are classified as or contain a component that is fatal

to humans, carcinogenic, mutagenic, harmful to reproduction, toxic for single

organs, skin or respiratory sensitizing, toxic to aquatic life with chronic effects,

hazardous to the ozone layer, persistent or that are on the list of substances

of very high concern (SVHC) of the European Chemicals Agency (ECHA), or

that are considered to have endocrine disrupting properties, must not be used

if technically feasible safer alternatives are available.

UPM Risk Management Standard

The purpose of the UPM Risk Management Standard is to describe the

company's HS&E (Health and Safety & Environment) risk management

process in detail. The standard provides a systematic and standardized

approach for conducting risk assessments, which are recorded in UPM's

One Safety tool.

The standard defines that management at all UPM units (sites, mills,

offices, etc.) are expected to: 1. Identify all foreseeable hazards and

evaluate their risk levels with respect to health, safety, environment,

products, and company reputation; 2. Effectively control risks to a level as

low as reasonably practicable; 3. Effectively communicate risk

assessment findings to all relevant employees so they can work safely

and in an environmentally responsible way; 4. Review and prioritize the

risks in their area of responsibility.

Further standards such as the UPM Process Safety Standard or UPM

Management of Change Standard are also addressing aspects relevant

for the management of environmental performance.

UPM Incident Investigation and

Reporting Standard

The UPM Incident Investigation and Reporting Standard applies to HS&E.

It defines UPM's effective incident investigation process to include how to

notify, investigate, and assign preventive and corrective actions, report the

findings, and share the lessons learned with other UPM organizations. The

UPM incident investigation process starts when an incident occurs or is

detected. It follows the procedures defined in the standard according to

the severity of the incident. Immediately following an incident, the line

organization's first task is to stabilize the situation, limit any further

consequences, and make the incident site safe and secure.


UPM Financial Report 2025	178

Actions

E2-2

Based on UPM's identified material topics, UPM has set the following

focus areas and Group-level targets related to pollution:

• Climate (with a target for emissions to air – NOX and SO2)

• Water (with a target for emissions to water – COD)

• Product stewardship (with a target for share of ecolabeled products);

Refer to » E5-2 Actions and E5-3 Targets

• Waste (with a target for landfill waste); Refer to » E5-2 Actions and E5-3

Targets

• Responsible sourcing (with a target on spend covered by UPM Supplier

and Third-Party Code); Refer to » G1-2 Targets

Action plans have been established to achieve the Group-level targets, as

well as other relevant areas for continuous improvement. The key actions,

previous year's key actions, planned key actions and overarching

concepts are presented below.

UPM Clean Run concept

The company-wide Clean Run concept, which was launched in 2012 and

has since been developed to cover all operations, is a holistic

environmental management system that aims to improve UPM's

environmental performance by bringing environmental issues to the

forefront of everyday work and enabling a consistent way of working in all

operations.

All production sites have a certified ISO 14001 environmental

management system except two Adhesive Materials sites, one of which is

preparing for the certification and the other site was announced to be

closed. This is the basis for the Clean Run concept, which sets more

precise requirements for UPM's common practices than the ISO standard.

According to these requirements, all sites systematically follow up on

deviations, proactively report observations and near misses, conduct

environmental walks and discussions, share best practices, and prepare

detailed risk assessments.

UPM regularly conducts "Clean Run and long-term environmental

targets reviews" to ensure the implementation of the standard and

provide support. The relevant production sites and business areas

develop roadmaps for achieving the Group's environmental targets for

2030, and take actions accordingly.

In 2025, approximately 1,700 (1,900) environmental walks were

organized, and 2,100 (2,200) preventive environmental observations and

near misses were reported. In 2025, the number of environmental non-

conformances increased to a total of 41 (35) deviations from permit,

contractual or other legal obligations. 9 cases were related to air, 27 to

water, 3 to soil and water, and 2 to plantation operations. All deviations

from environmental permit obligations were reported to the authorities

and, where relevant, to local stakeholders. In all cases, appropriate

measures were taken to normalize the situation and will be taken to

prevent similar occurrences. No major environmental incident occurred in

2025.

Reducing emissions to water

Key action

Water is an essential resource for pulp and paper mills. All wastewater

from UPM's pulp and paper production is cleaned in both mechanical

and biological effluent treatment processes, either at an external or own

wastewater treatment plant. The purified water is usually returned to the

same watershed from which it was taken.

UPM has chosen COD (chemical oxygen demand) as the most

appropriate indicator for emissions to water from pulp and paper

production. A Group-level reduction target has been set, to be achieved

by 2030. Pulp and paper mills have respective specific plans to achieve

their reduction targets for COD in their treated wastewater by 2030.

In 2025, the specific emissions of COD per tonne of paper increased

by 5% compared to the previous year, but decreased by -30% compared

to the target base year 2008. The specific emissions of COD per tonne of

pulp increased slightly by 1% compared to the previous year, but

decreased by -53% compared to the target base year 2008.

Refer to » E2-3 Targets for the follow-up of the target at Group level

and an explanation of COD.

UPM was the first Finnish freight carrier to commit to the Ship Waste

Action Initiative of the Baltic Sea Action Group. In Finland, from the spring

of 2022 onwards, UPM has discharged ship-generated wastewater on

land where its nutrients can be utilized.

Actions in 2025

• Several actions focused on reducing the risk of soil or groundwater

pollution. At UPM Jämsänkoski, Finland, over 500 meters of wastewater

pipelines were renewed. Improvements continued at the chemical

unloading areas of several sites (e.g. Plywood mills and UPM Kaukas).

• At UPM Nordland Papier in Germany, a project to separate the

dewatering of biosludge and fibre sludge started at the site's

wastewater treatment plant in 2024. A COD reduction of 20% is

expected due to this measure, besides the improved sludge recycling

options and reduction of transportation. The project was finalized in

2025.

• Plywood Pellos site increased the capacity and reliability of the

wastewater treatment plant and updated the wastewater treatment

plant diffusers. This resulted in three tonnes of COD load reduction per

day.

• The primary clarifier at UPM Jämsänkoski, Finland, was renewed and

taken into use. This was essential for the efficiency of the entire

wastewater treatment process.

• UPM Rauma, Finland, invested in a new dissolved air flotation (DAF)

unit in the chemi-mechanical pulping area. The investment improves

material efficiency by separating a relevant amount of solids from the

wastewater, which will decrease the COD load to treatment plant.

Planned actions

• UPM will continue to develop and implement measures to reach its

2030 targets.


UPM Financial Report 2025	179

Reducing emissions to air

Key action

UPM's main source of air emissions is energy generation. The quantity

and quality of air emissions depend on the amount of energy produced at

power plants or boilers, the burning conditions, and the fuels used. The

choice of fuels, combustion technology, and flue gas purification are ways

of reducing these emissions. Boilers using biomass-based fuels, oil, and

coal are equipped with filter systems. Acidifying flue gases (NOX and SO2)

have been identified as having the most material impact, and a target to

reduce these air emissions by 2030 has been set.

In 2025, the specific emissions of acidifying flue gases per tonne of

paper increased by 7% compared to the previous year, but decreased by

-28% compared to the target base year 2015. The specific emissions of

acidifying flue gases per tonne of pulp were decreased by -2% compared

to the previous year and decreased by -10% compared to the target base

year 2015. Refer to » E2-3 Targets for the follow-up of the target at Group

level.

Transportation contributes to air emissions to a smaller extent. In

recent years, UPM has invested in seven vessels which run on dual fuels,

which means a combination of traditional marine gas oil and liquefied

natural gas (LNG). When fueled with LNG, their CO2 emissions are 25%

lower than those of commonly used marine gas oil. In addition, nitrogen

oxides (NOX) are cut by about 85%, and sulphur oxides (SOx) by

approximately 99%. Emissions of soot particles also decrease by 99%.

Actions in 2025

• UPM joined a 5-year research program led by VTT and RISE Research

Institutes of Sweden on emission-free pulping in 2024. The program

aims to significantly reduce biomass burning and increase the material

yield from wood from approximately 50% to around 70%. In 2025, UPM

joined research to better understand the structure of fiber cell wall and

to develop new ways to liberate fiber from wood matrix.

• At the UPM Kaukas pulp mill’s recovery boiler, the third of its four

electrostatic precipitators (ESPs) was renewed and taken into use in

October, after the renewal of two ESPs in 2023. This will further improve

air quality, especially by reducing dust emissions.

Planned actions

• UPM will continue to develop and implement measures to reach its

2030 targets.

Refer to » E5-2 Actions for actions related to waste and chemicals.

Resources

In 2025, UPM's environmental investments totaled €12 million

(€20 million). The largest investments in 2025 were made in improving

energy efficiency, reducing CO2 emissions, and ensuring environmental

compliance.

UPM's environmental costs, which were mainly attributable to effluent

treatment and waste management, totaled €106 million (€111 million),

including depreciation.

During 2025, no significant capital expenditures for new environment-

related projects were announced.

Refer to line item » Capital expenditure in Consolidated cash flow

statement

Refer to line item » Costs and expenses in Consolidated income

statement

Refer to » Note 2.3 Operating expenses and other operating income in

the consolidated financial statements


UPM Financial Report 2025	180

Targets

E2-3

Targets related to emissions

To manage its sustainability activities, UPM has set several targets and key

performance indicators for its sustainability focus areas covering emissions

from production sites (covered under Climate, Water, and Waste) and the

supply chain. These targets support UPM's policy objective of mitigating,

preventing and controlling negative impacts related to pollution (UPM Code

of Conduct). UPM's sustainability targets are developed taking the views,

wishes, and perspectives of external stakeholders from UPM's constant

multi-stakeholder dialogue into account.


Sustainability focus area and key performance indicator	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Climate, including air emissions
Acidifying flue gases (NOX/SO2) for an average UPM product	2015	100% **	-20%	-20% (-19%)
Water
Chemical oxygen demand (COD) for an average UPM product *	2008	100% ***	-40%	-43% (-44%)
Waste
Process waste sent to landfills or to incineration without energy recovery	2015	122,000 dry tonnes	0 tonnes	101,000 (97,000) tonnes, 82% (83%) of UPM's process waste recovered or recycled
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	86% (91%)

* Relevant for pulp and paper production

** Calculation: minus 20% target for weighted average of reductions to be achieved for specific emissions of Pulp, Paper, Plywood, Biofuels, and Timber, with base year as 100%

*** Calculation: minus 40% target for weighted average of reductions to be achieved for specific emissions of Pulp and Paper, with base year as 100%

UPM's sustainability targets for 2030 are followed up and reported at

Group level at least annually.

The target parameters chosen for emissions to air, water, and soil are

the most relevant to be followed up for UPM's main production areas.

They are evaluated and set based on historical development, known

investment projects and technology developments, and potential local

impacts. They aim to go beyond actual permit values which are set by the

authorities considering the local circumstances. If available, EU Ecolabel

criteria or the reference values of BAT (best available techniques) are also

taken into account when setting targets.

Group-level targets are broken down into business areas and sites

based on detailed allocation in the case of COD, used as an indicative

target for all business areas in case of acidifying flue gases, or are a generic

target for all sites in the case of UPM's "zero waste to landfill" target.

UPM has chosen COD (chemical oxygen demand) as the most

appropriate indicator for the effluent load from pulp and paper

production. Other units do not have significant emissions to water. The

effluent, or wastewater, of pulp and paper mills includes organic

substances which consume oxygen during biodegradation. The low

oxygen content in water can have an adverse effect on plant and animal

life. COD refers to the amount of oxygen consumed in the complete

chemical oxidation of organic compounds.

UPM's target for acidifying flue gases aims to reduce emissions of

NOX and SO2 from its energy generation and production processes.

Progress toward the Group-level targets for effluent load (COD) and

acidifying flue gases (NOX and SO2) is ahead of schedule. The 2030 target

for COD was achieved in 2024 and the 2030 target for acidifying flue

gases was achieved in 2025.

Refer to » E5-3 Targets for the waste target and Refer to » G1-2 Targets

for the sourcing target.

A potential risk for soil pollution may come from landfill areas. UPM's

target is to have zero process waste going to landfill by 2030. This is an

absolute target for all UPM's business areas. Refer to » E5 Resource Use

and Circular Economy for details on waste amounts and handling.

UPM follows the legal requirements of the EU (REACH) and other local

legislation in countries where it has production sites regarding the use of

chemicals and especially of substances of concern and high concern.

The set targets are voluntary and in addition to legal requirements.


UPM Financial Report 2025	181

Metrics

E2-4

Emissions to air, water and soil

The tables below include the amount of pollutants listed in the European

Pollutant and Transfer Register (E-PRTR; Annex II of Regulation (EC) No

166/2006) from production sites for which the applicable threshold value

is exceeded. This means that the amounts only cover these production

sites and their respective emissions.

For the most relevant parameters, UPM also reports total amounts of

the emissions considered most material for UPM, as well as common

effluent quality parameters for the pulp and paper industry that are not

listed in the E-PRTR.

Emissions to air (E-PRTR scope*)


t, kg or g	2025
Carbon monoxide (CO), t	5,500
Chlorine and inorganic compounds (as HCl), t	20
PCDD + PCDF (dioxins + furans) (as Teq), g	10
Chromium and compounds (as Cr)	—
Polycyclic aromatic hydrocarbons (PAHs)	—
Particulate matter (PM10)	—
Arsenic and compounds (as As)	—
Cadmium and compounds (as Cd)	—
Copper and compounds (as Cu)	—
Mercury and compounds (as Hg)	—
Nickel and compounds (as Ni)	—
Lead and compounds (as Pb)	—
Zinc and compounds (as Zn)	—
Polychlorinated biphenyls (PCBs)	—
Fluorine and inorganic compounds (as HF)	—

* Scope includes only UPM sites' emissions above the threshold which is specified in the EU's

E-PRTR

Emissions to air (total amount)


t	2025	2024
Nitrogen oxides (NOX)	8,800	8,700
Sulphur dioxide (SO2)	760	780
Particulates (total)	780	680
Non-methane volatile organic compounds (NMVOC)	1,000	400

Emissions to water (E-PRTR scope*)


t, kg or g	2025
Chlorides (as total Cl), t	14,600
Zinc and compounds (as Zn), kg	5,600
Copper and compounds (as Cu), kg	1,600
Nickel and compounds (as Ni), kg	570
Arsenic and compounds (as As), kg	280
Lead and compounds (as Pb), kg	130
Chromium and compounds (as Cr), kg	110
Cadmium and compounds (as Cd), kg	50
Mercury and compounds (as Hg), kg	2
PCDD + PCDF (dioxins + furans) (as Teq), g	20
Total nitrogen	—
Total phosphorous	—
Nonylphenol and Nonylphenol ethoxylates (NP/NPEs)	—
Naphthalene	—
Polycyclic aromatic hydrocarbons (PAHs)	—
Fluorides (as total F)	—
Octylphenols and Octylphenol ethoxylates	—
Benzo(g,h,i)perylene	—

* Scope includes only UPM sites' emissions above the threshold which is specified in the EU's

E-PRTR

Emissions to water (total amount)


t	2025	2024
Biological oxygen demand (BOD7)	5,300	5,200
Chemical oxygen demand (COD)	57,600	56,600
Total organic carbon (TOC) (as COD/3)	19,200	18,900
Halogenated organic compounds (as AOX)	300	280

Emissions to soil

Refer to » E5-5 table By-products and waste for information about

hazardous waste. No other pollutants to the soil are to be reported.


UPM Financial Report 2025	182

Microplastics

Active research and cooperation is done in the area covering both

process raw materials and unintentional releases from plastic articles.

From 2021 to 2023, UPM joined the “Circular economy of water in

industrial processes” project. As a result, a laboratory measurement

method for microplastics in forest industry waters was developed with

universities at UPM's research center in Lappeenranta, Finland. However,

this and other standardization and methodology developments are still

insufficient. Testing, development, and validation work must continue to

receive reliable and consistent results. UPM will continue research in this

area by joining projects, through its own method development work, and

in cooperation with external laboratories.

Changes over time

UPM has identified COD as the most relevant parameter for its

wastewater quality and acidifying flue gases (NOX and SO2) as the most

relevant parameter for air emissions. For both parameters, targets are set

for 2030 from the 2008 or 2015 level respectively, and the performance is

followed up at Group level. Refer to » E2-2 Actions for the follow-up on

relevant parameters.


	Reporting principles for metrics

Emissions to air

UPM reports the total amount of emissions to air of NOX, SO2, and

particulates as its main performance indicators. These are calculated

based on site-level data from sampling or continuous monitoring. These

indicators include the emissions from UPM's own power plants and the

respective share of jointly operated on-site power plants corresponding to

UPM's energy supply. External power plants or boilers are considered for

heat supply. In addition to energy-related air emissions, UPM reports

production-related non-methane volatile organic compound (NMVOC)

emissions from UPM Adhesive Materials, UPM Biofuels, and UPM

Plywood, which are calculated using emission factor and/or mass

balance methods.

As required by ESRS E2-4, UPM also reports on consolidated amounts

which include only the emissions from sites for which the applicable

threshold value as specified in Annex II of Regulation (EC) No 166/2006

(E-PRTR) is exceeded. For non-EU sites, the same principle is applied but

only for already measured emission parameters.

All UPM production sites enter their data into a common database

where the data is checked and consolidated.

Emissions to water

UPM reports the total amounts of COD, BOD, and AOX from its pulp and

paper mills as its main performance indicators. These are calculated

based on mill-level data from sampling or continuous monitoring. If the

wastewater is treated at municipal or external effluent treatment plants,

the values included in the total sums are the loads before effluent

treatment. These mills are excluded from the calculation of the average

load per product unit. Conversions are made in the case of different

measurement scopes: BOD7 and BOD5 (adjustment due to number of

days, either 5 or 7), COD and TOC (TOC as COD/3 in accordance with

ESRS E2-4).

As required by ESRS E2-4, UPM also reports on consolidated amounts

which include only the emissions from sites for which the applicable

threshold value as specified in Annex II of Regulation (EC) No 166/2006

(E-PRTR) is exceeded. For non-EU sites, the same principle is applied but

only for already measured emission parameters.

All UPM production sites enter their data into a common database

where the data is checked and consolidated.

In general, emissions are reported to the relevant local authorities in

accordance with the site permits. For UPM's pulp and paper mills in

Europe, China, and Uruguay, the relevant emissions are verified and

reported in accordance with the EU's Eco-Management and Audit

Scheme (EMAS) by EMAS-accredited auditors.

E2-5

Substances of concern and of very high

concern

UPM does not produce any substances of concern, nor are UPM's main

raw materials classified as such. In some cases, substances of concern

can be found as components or more often as impurities in chemical

additives used in production or in chemicals used for mill maintenance or

as laboratory agents. When present in an additive used in production,

substances of concern react chemically. This is because UPM products

are typically solid articles such as paper or plywood. However, UPM's

products may contain small amounts or impurities of substances of

concern. Small amounts may also leave the sites as emissions to water or

air. All products made in UPM pulp mills and in the European paper mills

comply with the relevant EU Ecolabel criteria, e.g. for graphic paper

including its strict requirements for use of chemicals. Refer to » E2-1

Policies for information about UPM's policies on the use of substances of

concern.

In 2025, a review of the substances of concern was conducted. This

review was based on the information and amounts of substances of

concern in purchased production chemicals gathered in 2024, as well as

the potential emissions to the environment, and potential carry-over to

products. The review concluded that there are no material impacts or

risks. Therefore, quantitative disclosure on substances of concern has

been omitted.

E2-6

Anticipated financial effects

In 2025, no major incidents happened at UPM's operations and no major

deposits were made. Thus, there were no operating and capital

expenditures in conjunction with major incidents and deposits.


UPM Financial Report 2025	183

Water and marine resources (ESRS E3)

Water plays a crucial role in UPM's operations, from sustainable forestry to logistics and production.

It is also an important source of renewable energy.




Reduction in wastewater volumes achieved for a UPM average product	Average recirculation ratio of water used to freshwater withdrawn	UPM's water-intensive operations are in areas with sufficient water availability
-17%	20 x
Compared to 2008 (2030 target: -30%)	Approximate value in pulp and paper production


UPM Financial Report 2025	184

Policies

E3-1

The UPM Code of Conduct expresses the company's respect for people,

the environment, and ethical business practices. It includes its

commitment to minimizing negative environmental impacts. The Code is

complemented by UPM's Sustainability Policy Statement, which

addresses the issue in more detail. The UPM Supplier and Third-Party

Code sets minimum requirements for the value chain. Refer to

» G1-1 Policies for more information about these policy documents.

In addition, specific aspects are covered in the following policy

documents and programs:

• UPM Clean Run Standard, Refer to » E2-1 Policies

• UPM Sustainable Product Design concept

• UPM Sustainable Supply Chain Program

UPM's Sustainability Policy Statement covers water management in a

specific section. UPM's production sites aim to minimize water use and

wastewater load. Basins where freshwater is scarce or projected to

become scarce, or where the quality of the receiving water is considered

to be poor, should be given particular attention. New water-intensive

production sites shall not be located in areas with high water risk without

appropriate measures to reduce related risks, taking future scenarios and

the needs of society and nature into account. Furthermore, UPM's

businesses are expected to design and optimize their processes for

optimal resource efficiency, using best available techniques. Refer to

» E2-1 Policies for more information about the prevention and abatement

of water pollution

UPM also manages the impact of its forestry on water resources.

UPM's sustainable forest management practices aim to minimize

negative impacts and support the role of forests in the hydrological cycle.

The Statement also takes UPM's approaches to sustainable product

design, life cycle thinking, and life cycle assessment into account. This

includes water-related issues. Refer to » E5-2 Sustainable Product Design

concept for more information

As a signatory of the UN Global Compact's CEO Water Mandate,

UPM follows recognized water stewardship principles.

UPM's Sustainable Supply Chain Program promotes supply chain

compliance and risk mitigation. Resource efficiency is considered as one

material environmental issue. UPM sources numerous commodities that

are material-, energy-, or water-intensive to produce. UPM's sourcing

professionals must identify such environmental considerations in their

sourcing categories and integrate them into their category strategies and

supplier management activities. Refer to » G1-2 Sustainable Supply

Chain Program for more information

UPM does not use marine resources. Connections with oceans or seas

are related to the direct discharge of treated wastewater in the case of two

UPM production sites located on the coast, the transportation of materials

and products by sea, and indirectly through the discharge of treated

wastewater originating in own operations into rivers and lakes ending up in

the sea. UPM has assessed all these impacts but does not consider them

to have a material negative impact or to pose a significant risk.

Actions

E3-2

Based on the identified material topics, UPM has set the following focus

areas and Group-level targets in relation to water:

• Water (with a target for the volume of wastewater)

• Responsible sourcing (with a target for spend covered by the UPM

Supplier and Third-Party Code), Refer to » G1-2 Responsible sourcing

Action plans have been developed to achieve the Group-level targets, as

well as other relevant areas for continuous improvement. The key actions,

previous year’s key actions and planned key actions are presented below.

UPM's Clean Run concept

Refer to » E2-2 Clean Run concept, for a description of UPM's means to

improve environmental performance

Water management

Key action

Pulp and paper production is UPM's most water-intensive activity. The

water used in pulp and paper mills comes from rivers, lakes, or

groundwater resources. It is used in the production processes as a dilution

and transportation medium, and as cooling water for energy generation.

Cooling water is not contaminated and can be discharged directly into

the watercourse or used in production. The water used in production is

recirculated internally, and only a small fraction eventually leaves the

process as wastewater and needs to be replaced. All wastewater is treated

in mechanical and biological effluent treatment plants before being

released into watercourses. Refer to » E2-2 Reducing emissions to water

for information about wastewater treatment

The Group-level water reduction target (with process wastewater

volume as the chosen indicator) therefore focuses on UPM's pulp and

paper mills. Each pulp and paper mill has a respective roadmap to

achieve its water reduction target by 2030. In addition, UPM's other

businesses are also reducing their water use through their own measures.

In 2025, the specific process wastewater volume per tonne of paper

increased by 2% from the previous year and 6% compared to the target

base year 2008. The specific value per tonne of pulp decreased by -3%

from the previous year and by -37% compared to the target base year

2008. Refer to » E3-3 Targets for the follow-up of the target at Group level.


UPM Financial Report 2025	185

Actions in 2025

• UPM's pulp and paper mills continued their systematic water saving

efforts. For example, UPM Tervasaari investments on the production

are expected to decrease specific water consumption and wastewater

volumes. At UPM Nordland paper mill, a multi-year project has begun

to replace pumps with high sealing water consumption to pumps

consuming less water. Many pumps applicable for this change have

been identified, and the total water savings opportunity is expected to

amount to 20 m³/h once the project is completed.

• UPM's San Francisco nursery in Uruguay implemented improvements

to its water recycling system in the hardening area. The improvements

allow the collection and recovery of irrigation excess in this part of the

nursery, aiming for a 100% water recovery rate in the whole nursery.

• A potential for water recovery was identified during a trial carbon

capture project at UPM Caledonian paper mill when condensing

moisture out of hot gas; an idea which has been shared internally in the

regular Clean Run and 2030 environmental targets sessions.

• UPM expanded its over 15-year collaboration with the Baltic Sea Action

Group (BSAG) to include forestry water protection.

• UPM's stream water program, launched in 2016, was expanded to

include UPM-owned land areas in the catchment area.

Planned actions

• UPM will continue to develop and implement measures to reach its

2030 targets.

• Further actions to improve the water recycling system at UPM's San

Francisco nursery in Uruguay will be implemented in 2026, also

focusing on improving sludge treatment.

• In UPM Tervasaari, Finland, the startup of production investments

resulting in lower specific wastewater volumes is scheduled for 2026.

Water risk assessments

Key action

UPM regularly updates its water risk assessments. The most recent

update was carried out in 2025 using the WWF Risk Filter Suite 2.0.

According to the assessment, none of UPM's main production sites are

located in basins with a current high basin physical risk. Rather, they are

located in basins with a very low to medium physical risk.

The tool also provides scenarios for water risks related to climate

change for 2030 and 2050. The scenarios show that, with one exception,

UPM's main production sites are in areas with a low to medium future

basin physical risk. The UPM Changshu paper mill near Shanghai in

China is expected to face the highest increase in basin physical risk by

2050. However, the mill has made significant improvements in water

efficiency and treatment over the years. Measures have included water

recycling and wastewater recovery. Also the local authorities control the

river flow to minimize risks such as drought or flooding in the area.

The tool also gives several single-indicator results for country or water

basin level, the highest ones of which UPM internally ground-proofs

against actual conditions at the site.

Actions in 2025

• An annual review of UPM's water risk assessment was carried out for its

water-intensive production sites (i.e. pulp and paper mills as well as

biorefineries) with the WWF Risk Filter. The results are summarized in

this chapter.

• A new internal ground-proofing, mitigation actions, and documenting

process for WWF's tools highest physical water risk indicators per site

was piloted.

Planned actions

• Sites that score very high on the water basin physical risk on even

single quantitative or qualitative indicator level in the WWF Water Risk

Filter assessment in 2025 will finalize their site-specific risk

management analysis.

• Utilization of the new WWF water risk tool version will be piloted in the

sourcing processes.

• Continuation of participation in the Science Based Targets Network

(SBTN) Corporate Engagement Program in 2026.

Resources

In general, activities related to water management are included in UPM's

overall operational expenditures, investment, and resource planning.

Refer to » E2-2 Resources for more information on environmental costs

and investments.


UPM Financial Report 2025	186

Targets

E3-3

Targets related to water

To manage its sustainability activities, UPM has set several targets and

key performance indicators for its sustainability focus areas covering

production and supply chain. These targets support UPM's policy

objective of minimizing water use on all UPM production sites (UPM

Sustainability Policy Statement) and, for example, efficient water use of

suppliers (UPM Supplier and Third-Party Code). UPM's sustainability

targets are developed taking the views, wishes, and perspectives of

external stakeholders from UPM's constant multi-stakeholder dialogue

into account.


Sustainability focus area and key performance indicator	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Water
Wastewater volume for an average UPM product *	2008	100% **	-30%	-17% (-16%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	86% (91%)

* Relevant for pulp and paper production

** Calculation: minus 30% target for weighted average of reductions to be achieved for specific emissions of Pulp and Paper, with base year as 100%

UPM's sustainability targets for 2030 are followed up and reported at

Group level at least annually.

The target parameter chosen for water management is the

wastewater volume of UPM's pulp and paper mills, which are UPM's

water-intensive production sites. The target has been evaluated and set

based on the historical development, known investment projects and

technological developments, and potential local impacts. It aims to go

beyond actual permit values set by the authorities and to consider the

local circumstances. EU Ecolabel criteria and BAT reference values (best

available techniques) were also taken into account when setting targets.

The Group-level targets are allocated to business areas and sites.

Progress toward the Group-level 2030 target for 2030 for reducing

wastewater volume has slowed since 2022, mainly due to changed

operating conditions, particularly at paper mills.

Refer to » E3-2 Water management, Key action

Refer to » G1-2 Responsible sourcing for the sourcing-related target

UPM's main production sites are in areas with very low to medium

water basin physical risk, and one of them, the UPM Changshu paper mill

raises to high risk classification for the 2030 and 2050 scenario. Refer to

» E3-2 Water risk assessments

UPM's Group-level targets cover all pulp and paper mills for

wastewater volume and quality.

UPM's targets do not cover the management of impacts, risks, and

opportunities related to marine resources, as they are not material for

UPM. Refer to » E3-1 Policies, last paragraph

The targets are voluntary and additional to legal requirements.


UPM Financial Report 2025	187

Metrics

E3-4

Water consumption

Water withdrawal, outflow, and consumption


m³	2025	2024
Water withdrawal
Surface water	395,000,000	391,000,000
Ground water	10,000,000	12,000,000
Communal water	4,000,000	4,000,000
Total water withdrawal	410,000,000	407,000,000
Water discharge
Process wastewater	195,000,000	198,000,000
Cooling water	186,000,000	184,000,000
Total water discharge	381,000,000	382,000,000
Water consumption
Total water consumption	29,000,000	25,000,000
Total water consumption in areas at water risk	0	0

Water intensity


m³/€m	2025	2024
Total water consumption in own operations (m³) per net revenue (€m sales)	2,960	2,430

Sales correspond to total sales as reported in the consolidated financial

statements. Refer to accounting policies in the consolidated financial

statements » Note 2.2. Sales.

Water recycled and reused

Considering UPM's operations, pulp and paper production is the most

water intensive. There, only approximately 5% of the water used in

production is taken from freshwater sources and internally recirculated

multiple times. The corresponding average water reuse and recirculation

ratio R(WRR) is 20 according to ISO 59020 Annex A. 20 times the total

water withdrawal results in about 8 billion m3 of recycled and reused

water in UPM's processes.

Water storage

Water storage is not material for UPM.

Water quality and quantity in the water basins

Water quality and quantity are taken into account by the authorities when

setting the relevant permit limits. UPM follows up on water basin quality

and quantity in accordance with national arrangements.


	Reporting principles for metrics

Water consumption

All relevant production sites enter data on water withdrawal and water

outflow into a common database where the data is checked and

consolidated. If not measured, water withdrawal and cooling water

volumes are reported based on estimates. Estimates are done based on

pumps' operating times or production, for example. Wastewater volumes

are always measured. Consumption is calculated as withdrawal minus

outflow.

Water inflow and outflow are reported to the relevant local authorities

in accordance with the site permits. For UPM's pulp and paper mills in

Europe, China, and Uruguay, the data is verified and reported in

accordance with the EU’s Eco-Management and Audit Scheme (EMAS)

by EMAS-accredited auditors.

Water recycled and reused

An actual measurement of all the water that is recirculated is not made.

Internally recirculated water is an estimate, calculated by estimating how

much water would be needed for each process stage at a pulp and paper

mill, if use was completely linear. Water-use efficiency is tracked through

specific wastewater volumes.


UPM Financial Report 2025	188

Biodiversity and ecosystems (ESRS E4)

All activities that alter nature have an impact on the living conditions of local flora and fauna. UPM aims to

mitigate negative impacts, and efforts to maintain or enhance biodiversity must be integrated into UPM's

operations.




Overall positive development of forest biodiversity measured in Finland, Uruguay, and in the USA	Percentage of certified fibre	Obstacle-free streams achieved
	90%	323
	(2030 target: 100%)	(2030 target: 500 km)


UPM Financial Report 2025	189

Transition plan

E4-1

Assessing resilience

Biodiversity refers to the diversity and variation of species and

ecosystems. According to the UN, biodiversity is deteriorating worldwide

despite ongoing efforts. Biodiversity loss is projected to worsen if no

mitigation actions are taken.

Biodiversity is instrumental for the vitality of UPM's business.

Enhancing biodiversity creates opportunities and reduces risks. UPM's

operations are closely linked to biodiversity, and UPM's wood sourcing

and land use activities may have significant negative impacts on

biodiversity. Measures such as the use of certified wood are taken to avoid

potential negative impacts.

UPM depends on wood as its main resource of production.

Deteriorating biodiversity can have significant negative impacts on the

availability and acceptability of wood as a raw material in the short,

medium, and long term. Other relevant impacts on biodiversity may arise

from UPM's hydropower plants and production sites. Local living

conditions for flora and fauna at these sites are improved by reducing

emissions to air and water, and in general, by removing obstacles in

streams.

Relation to business model and strategy

Biodiversity is essential for maintaining healthy forest growth and

ensuring the resilience of ecosystems and their ability to adapt to a

changing climate. UPM systematically maintains and enhances

biodiversity in its forests and unplanted and protected areas. Mitigating

climate change is seen as one of the most important measures to

safeguard biodiversity.

UPM's Global Forest Action Program combines measures on biodiversity,

climate, water, soil, and social contribution to ensure a net positive impact on

biodiversity in UPM's own forests and land areas. UPM's Sustainable Supply

Chain Program supports the protection and enhancement of biodiversity in

the supply chain.

Biodiversity protection has been identified as one of the key issues in

UPM's Sustainable Supply Chain Program. The issue is promoted in the

sourcing categories where it has been identified as particularly relevant.

These include commodities derived from the production of living natural

resources, such as forestry or agriculture.

To steer its sustainability activities, UPM has set several sustainability

focus areas, including forests, biodiversity, climate, water, and responsible

sourcing, with targets and key performance indicators for 2030 or as

continuous targets. They are reviewed every year based on a double

materiality assessment.

UPM's actions minimize risks and negative impacts biodiversity loss

may have on the availability and acceptability of wood raw material for

UPM's products such as pulp, paper, timber, biofuels, and biochemicals.

Stakeholder engagement

UPM recognizes the importance of dialogue and open communication

channels with internal and external stakeholders who are or may be affected

by the company's actions. For example, this is done through forest

management practices in accordance with FSC™ and PEFC certification

requirements or through participation in relevant networks and

organizations. For example, UPM has participated in the SBTN's

development work since 2023 and joined the SBTN's pilot for land use

methods in November 2025.

Impacts, risks and opportunities

SBM-3

Overview


Impacts, risks and opportunities	Description
Positive impact: Ensuring and enhancing net-positive impact on biodiversity by UPM's forest management	UPM's Global Forest Action Program combines measures on biodiversity, climate, water, soil, and social contribution – with the aim of a net-positive impact on biodiversity in UPM's own forests and land areas, as well as the protection of biodiversity in the supply chain.
Potential negative impact: Biodiversity loss in UPM's multi-tier supply chain	UPM's operations are widely linked with biodiversity, and significant negative impacts may arise from UPM's wood sourcing and land use activities. Measures are taken to avoid potential negative impacts including potential deforestation, e.g. the use of certified wood.
Risk: Dependency on wood as main resource for production	Deteriorating biodiversity may cause significant adverse effects on the availability and acceptability of wood raw material needed to produce UPM's products such as pulp, paper, timber, and biochemicals
Opportunity: Biodiversity ensures healthy forest growth	Maintaining and enhancing biodiversity is essential for ensuring healthy forest growth, and that forests adapt to climate change.

Refer to » Report of the Board of Directors, section Risks, paragraph

Biodiversity loss

Identified activities with potential negative

impacts on biodiversity

In its assessment, UPM has identified the following activities and areas

with potential material impacts on biodiversity:

• UPM's forest management in Finland and the USA and UPM’s land

management in Uruguay

• UPM's hydropower plants and other obstacles such as dams in

Finland’s stream waters

• Emissions to water and air from UPM's pulp and paper mills


UPM Financial Report 2025	190

• Certain sourcing categories have been identified as particularly relevant

in relation to biodiversity. These are commodities derived from the

production of living natural resources such as forestry or agriculture.

To date, UPM has not identified any material negative impacts related to

land degradation, desertification, or soil sealing. UPM's measures ensure

the conservation of the most sensitive environments, and that there is no

degradation on a landscape scale.

UPM's forest management and land use may have an impact on

endangered species. The potential negative impacts are minimized

through several measures, projects, joint initiatives, and research in this

area. Refer to » E4-3 Actions

Policies

E4-2

The UPM Code of Conduct expresses the company's respect for people,

the environment, and ethical business practices, including its

commitment to biodiversity. The Code is complemented by UPM's

Sustainability Policy Statement, which addresses biodiversity-related

topics in more detail. The UPM Supplier and Third-Party Code sets out

minimum requirements for the supply chain. Refer to » G1-1 Policies for

more information about these policy documents.

In addition, specific issues of biodiversity are also addressed in the

following policy documents and programs:

• UPM's requirements for wood suppliers, Refer to » E5-1 Policies

• UPM's requirements for pulp suppliers, Refer to » E5-1 Policies

• UPM Sustainable Supply Chain Program, Refer to » G1-2 Responsible

sourcing

• UPM Forest Action Program, Refer to » E4-3 Actions

The relevant impact drivers of biodiversity loss are covered in UPM's

Sustainability Policy Statement through the company's commitment to

climate change mitigation and adaptation, its commitment to

sustainable forest management and zero deforestation, and measures

such as the elimination of harmful invasive species at its sites and the

reduction of emissions to air and water and avoidance of emissions to

soil.

The Policy Statement also covers UPM's areas of impact on

biodiversity: forest and land management, stream water dams, and

production sites.

Dependencies between biodiversity and living conditions for flora and

fauna are recognized. Biodiversity risks and opportunities are assessed

and documented as part of UPM's risk management process,

emphasizing that biodiversity is recognized as instrumental in

maintaining healthy forest growth.

When sourcing wood and fibre, forest certification must be used to

manage biodiversity impacts, and respective chain-of-custody

certification must be used to ensure the traceability of the material.

All UPM-owned forests and plantations are 100% certified or will be

certified if the site is new. UPM knows the origin of all wood and fibres used

in UPM's products, as all UPM wood and fibre supplies are covered by

third-party verified chain-of-custody certificates under the FSC™ (FSC

N003385) and PEFC (PEFC/02-44-41).

UPM recognizes the importance of responsible land tenure and

respect for land rights. UPM has a zero-tolerance approach to land

grabbing and maintains a respectful and mutually beneficial relationship

with affected local communities.

UPM's forest units and wood sourcing units carry out biodiversity

activities as part of UPM's global Forest Action Program. These cover

owned, leased, and managed forests and land areas. Biodiversity-sensitive

areas are identified, and efforts to maintain or enhance biodiversity must be

integrated into UPM's operations where relevant, from daily practices to top

management decisions. To develop and implement actions to maintain and

enhance biodiversity, it is important to understand and measure activities'

potential negative and positive impacts.

In addition, UPM's Sustainability Policy Statement addresses the

importance of mitigating negative impacts on biodiversity for UPM's

production sites.

Oceans and seas have not been identified as material for UPM's

impact on biodiversity. However, actions are being taken to reduce the

nutrient load on the Baltic Sea. UPM cooperates with the Baltic Sea

Action Group.

UPM's Sustainability Policy Statement prohibits forest conversion to

plantations or non-forest uses. In addition, all UPM suppliers are expected

to map and understand the biodiversity impacts of their own operations

and supply chains, and to engage in relevant biodiversity protection

activities.

Actions

E4-3

Based on UPM's identified material topics, UPM has set the following

focus areas related to biodiversity:

• Forestry (with a target of 100% certified fibre)

• Biodiversity (with targets for a net-positive impact on forest biodiversity

and obstacle-free streams)

• Climate (with targets for Scope 1 and 2 CO 2 emissions, acidifying flue

gases), Refer to » E1-4 Targets and » E2-3 Targets

• Water (with a target for emissions to water), Refer to » E3-3 Targets

• Responsible sourcing (with targets for Scope 3 GHG emissions and for

UPM's spend covered by the UPM Supplier and Third-Party Code),

Refer to » G1-2 Responsible sourcing

For each of these focus areas, key actions are defined. The key actions,

previous year’s key actions and planned key actions are presented below.

UPM Forest Action Program

UPM's global Forest Action Program was launched in 2022. It outlines an

ambitious agenda to maximize the positive impact of forestry operations

by the end of 2030. The program takes a holistic global view of the impact

of forestry, combining measures in five factors: climate; biodiversity; soil;

water; and social contribution. It addresses the net-positive impact on


UPM Financial Report 2025	191

biodiversity, the role of forests for the climate commitment of 1.5 °C, the

protection of water systems, the importance of healthy soils, engagement

with local communities, as well as safe working conditions.

Forests and biodiversity

Key actions

UPM safeguards biodiversity in its own forests and land and continues to

carry out biodiversity activities as part of the company's global Forest

Action Program.

Forest certification plays an important role in managing biodiversity,

both in UPM's own forests and plantations and in external wood sources.

This includes FSC™ and/or PEFC certification for UPM's own forests and

plantations and chain-of-custody certification, controlled wood programs

or other fibre sourcing standards for the supply chain.

UPM has set a target, with dedicated key performance indicators to

measure progress towards a net-positive impact on biodiversity in UPM's

forests. The set of indicators for Finland was launched in 2018, for

Uruguay in 2022, and for the U.S. in 2025. Development work for

measuring biodiversity is continuous. UPM has also set a target of 100%

certified fibre by 2030.

In the USA, UPM is working to improve communication and

cooperation with local indigenous communities to better integrate

indigenous knowledge and interests into forest management strategies

and biodiversity-related actions. UPM uses existing forest industry

stakeholder groups and direct communication with representatives to

exchange information.

Actions in 2025

• UPM continued participating in the global project led by FSC™ to better

understand the positive impact on biodiversity that forest certification

has. In 2025, the second stage of the project was conducted, which

included field work at selected UPM sites in Finland.

• Implementation and follow-up of the new and revised biodiversity

indicators for UPM's forests and plantations in Finland, the USA, and

Uruguay. The first ever deadwood survey was conducted in UPM’s forest

in Minnesota. This enables setting a baseline for future targets.

• The Science Based Target Network’s (SBTN) first pilot was finalized and

the work with standards continued. SBTN launched a pilot for the version

2 of Land Methods. UPM participates in the pilot with a view to setting

potential targets for forest management in Finland.

• The work regarding the UPM Habitat Restoration Program started. The

aim of the program is that by 2030 at least 3,000 hectares of peatland

habitats will be restored, and management plans will be carried out on at

least 100 other sites in UPM-owned forests in Finland. The other sites

include habitats with a high potential to support or increase biodiversity,

such as groves and esker slopes.

• In Uruguay, the project to evaluate the usefulness of environmental DNA

(eDNA) for estimating biodiversity through species detection using the

DNA metabarcoding strategy was concluded in June. The study area

covered approximately 500 hectares.

• More than 70 communities were positively impacted by the UPM

Foundation projects in Uruguay.

• UPM Uruguay received Ecosystem Service Certification (FSC®) for

maintenance of a network of conservation areas.

Planned actions

• The global UPM Forest Action Program will continue with further targets

and follow-up in all of UPM's wood production regions in Finland, the

USA, and Uruguay.

• The implementation of the Smart Forestry™ method will continue in the

USA with further measures and actions.

• Ongoing development work for measuring biodiversity with global FSC,

and through direct collaboration with institutions.

• Participation in the SBTN Land Methods pilot in 2026.

• Active collaboration with the certification schemes to further develop

the standards.

Stream waters and biodiversity

Key actions

UPM's stream water program aims to remove obstacles to fish migration,

restore fish stocks throughout Finland, and improve living conditions for

all stream fauna. The target is to open 500 kilometers of obstacle-free

streams in Finland by 2030. The target steers the activities and

monitoring of their impact on biodiversity.

Actions in 2025

• Three obstacle removal projects with UPM's participation were initiated

and carried out: Sysmä Virtaankoski (0.4 km), Kuusamo Kuusinkijoki

(12.1 km) and Rautjärvi Kurunkoski (19.7 km)

• Four restoration projects with UPM's participation were initiated and

carried out: Savonlinna Linnanvirta (0.25 km), Karkkila Rapuoja and

Kaupinoja (2.0 km), Jämsä Arvajankoski (0.1 km) and Kitee Nivunki (1.4

km)

• Studies related to eDNA continued in Finland and Uruguay. In Finland,

three research projects with UPM's participation were initiated: The EU-

funded NorthDIVeRSITY led by the Natural Resource Institute Finland

(LUKE), ARVOVESI3 Oulujoki water framework vision actions led by

Kajaani University of Applied Sciences and Sateenvarjo IV Migrating

fish development on built water courses led by the Natural Resource

Institute Finland (LUKE).

• Participation in SBTN development. See above paragraph » E4-3

Forests and biodiversity

Planned actions

• There are several dam removal projects at various stages in Finland.

UPM aims to participate in at least one dam removal or restoration

project every year as part of its Stream Water Program.

• Testing of eDNA will continue (see above)


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Production sites and biodiversity

Key actions

UPM continuously monitors its emissions to air and water and its impact

on water bodies. In addition, sites take measures to enhance local

biodiversity.

Actions in 2025

• UPM continued to reduce emissions to air and water in accordance

with its environmental targets for 2030, thus enhancing local living

conditions for flora and fauna. Refer to » E2-2 Actions

• Sites continued to manage invasive species in accordance with local

plans.

• Participation in the SBTN development. Refer to » E4-3 Forests and

biodiversity

Planned actions

• Further emissions reductions in line with UPM's environmental targets

for 2030

• The research is continuing to establish a common practice for

measuring the sites' impact on biodiversity in water courses.

Supply chain and biodiversity

Key actions

Biodiversity protection has been identified as one of the key issues in

UPM's Sustainable Supply Chain Program. The issue is promoted in those

sourcing categories where it has been identified as particularly relevant.

These include commodities derived from the production of living natural

resources, such as natural and plantation forestry or agriculture.

Actions in 2025

• Further advances were made in the supply chain collaboration

program between UPM and its direct starch suppliers, which focuses

on improving the working conditions of the farm workers in Thailand

(UPM's tier 2-3 suppliers). Building on the previous program stages of

farm auditing, identification of improvement areas, target setting, and

action planning, the program introduced Sustainable Agriculture

Initiative's (SAI) Farm Sustainability Assessment (FSA), that addresses

also biodiversity aspects.

Planned actions

• UPM continues its efforts to increase the share of certified fibre in its

wood sourcing.

Resources

In general, forest-related actions are included in UPM's overall investment

and resource planning. In addition, four green bonds issued since 2020,

the latest one in 2024, have a strong focus on climate, as well as forest-

related activities. The green bond portfolio of €2,350 million uses eligible

assets and projects from the following categories of UPM's Green Finance

Framework:

• Sustainable forestry and plantation management

• Climate-positive and circular bioeconomy-adapted products and

solutions

• Renewable or CO2-free energy

Actions for biodiversity enhancement have been integrated into

categories. Refer to » E1-3 Resources for details of UPM'’s Green Finance

Framework.

In addition, UPM has credit facilities which are linked to biodiversity

and climate targets.

Refer to » E1-1 Investment and funding, Climate-positive forestry, for key

performance indicators for both operational and capital expenditures of

the EU Taxonomy and notes to the financial statements.

During 2025, no significant capital expenditures for forest-related new

projects were announced.

Biodiversity offsets

UPM does not use biodiversity offsets.


UPM Financial Report 2025	193

Targets

E4-4

Targets related to biodiversity

To steer its sustainability activities, UPM has set several targets and key

performance indicators covering the areas of biodiversity impacts

relevant to UPM: forestry; stream waters; emissions from production sites;

and the supply chain. These targets support UPM's policy objective of

mitigating the impact of UPM's operations on biodiversity (UPM Code of

Conduct) and even enhancing biodiversity (UPM Sustainability Policy

Statement). Sustainability targets are developed by UPM by taking the

views, wishes, and perspectives of external stakeholders from UPM's

constant multi-stakeholder dialogue into account.


Sustainability focus area and key performance indicators	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Biodiversity
Net-positive impact on forest biodiversity and developing a monitoring system *	Since 2018 (Finland)/ 2022 (Uruguay)	Usually the previous year	Continuous improvement	Overall positive development measured
Obstacle-free streams **	2015	0 km	500 km	323 km (287 km)
Forestry
Share of certified fibre ***	2015	84%	100%	90% (88.5%)
Climate
Fossil CO2 emissions from UPM's own combustion and purchased electricity (Scope 1 and 2)	2015	6.80 mt	-65%	-58% (-50%)
Acidifying flue gases (NOX/SO2) for a UPM average product	2008	100%	-20%	-20% (-19%)
Water
Chemical oxygen demand (COD) for a UPM average product ****	2008	100%	-40%	-43% (-44%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	86% (91%)
CO2 emissions from materials and logistics (Scope 3)	2018	6.08 mt	-35%	-22% (-22%)

* Covers UPM's own forests in Finland since 2018 and UPM's land in Uruguay since 2022

** Relevant for Finland

*** Forest management certification

**** Relevant for pulp and paper mills

The targets are followed up and reported at least annually, both at the

relevant unit and Group level.

UPM has had a net-positive impact on biodiversity target for its own

forests in Finland since 2018 and for its land in Uruguay since 2022, with

specific key performance indicators to measure progress.

In Uruguay, most plantations grow on grasslands formerly used for

cattle grazing. The area's biodiversity values are assessed before the

plantations are established, and valuable biodiversity hotspots and native

forests are protected. UPM's work focuses on the active management of

protected habitats and the control of invasive species.

In Finland, UPM's hydropower plants and other obstacles such as

dams impact the environment by altering river and stream flows and their

ecosystems. UPM's stream water program aims to remove obstacles to

fish migration, restore fish stocks throughout Finland, and improve the

living conditions of all stream fauna.

UPM did not apply ecological thresholds and allocation of impacts

when setting its targets.

UPM targets are informed by local circumstances and legislation and

evolve to respect international frameworks such as forest certification

standards.

UPM's biodiversity-related targets and their possible sub-indicators in

the case of "net-positive impact on forest biodiversity" cover avoidance,

minimization, restoration, and rehabilitation.

Refer to » E1-4 Targets for climate target

Refer to » E2-3 Targets for air emissions and water targets

Refer to » G1-2 Responsible sourcing for sourcing targets


UPM Financial Report 2025	194


	Reporting principles for targets

Net-positive impact on forest biodiversity

UPM's approach comprises a set of biodiversity indicators contributing to

the positive development of living conditions for flora and fauna on a

specified land area. Indicators have been and new indicators are developed

in co-operation with research institutes and other stakeholders.

There is currently no scientific way to evaluate whether the total

impact on biodiversity is positive or negative. Thus, UPM proceeds

towards "net-positivity" having more indicators with positive than negative

development, with the single indicators compared to the previous year.

The annual positive development target is achieved when the majority of

the biodiversity indicators shows a positive development compared to the

previous year.

The target is followed-up separately for UPM's forest in Finland and

the USA, and UPM's land areas in Uruguay.

Refer to » E4-5, Metrics, Biodiversity indicators for information and

follow-up on the specific indicators.

Obstacle-free streams

UPM aims to release or restore 500 km of stream waters and waterway

routes by 2030. The verification and monitoring of released and restored

stream waters is based on the Finnish Environment Institute's geospatial

data, i.e. river network data ("uomaverkosto" in Finnish).

Metrics

E4-5

UPM's impact metrics focus on biodiversity; the company’s forest

operations are not related to land-use change.

Forest and land areas

Forest and land areas owned and leased by UPM


Hectares	2025	2024
Finland	522,000	522,000
Uruguay	319,000	318,000
U.S.	76,000	76,000
Total owned	917,000	916,000
Uruguay, leased	177,000	174,000
Total owned and leased	1,094,000	1,090,000

This includes forest land for Finland and the U.S., and eucalyptus

plantations, grasslands, and conservation areas for Uruguay.

In addition, UPM manages about 1,660,000 hectares of privately

owned forests in Finland.

Refer to » Note 4.2 Forest assets in the consolidated financial

statements for information about hectares of productive forest land and

forested land.

Forest certification

Certification of forest land owned by UPM


%	2025	2024
FSC™ and PEFC double certified	91.0%	90.2%
PEFC certified	8.0%	8.3%
In the process of being certified	1.0%	1.5%
Total	100.0%	100.0%

All UPM-owned forests are certified or in the process of being certified if

the site is new.

The forest area covered by UPM's FSC™ Group certification is

582,000 hectares in Finland and 9,000 hectares in Uruguay. UPM applies

the same strict sustainability standards wherever it operates. UPM also

promotes forest certification to private forest owners and other

customers. UPM has established FSC™ Group certification schemes in

Finland and in Uruguay, which support small forest owners' access to

certification.


UPM Financial Report 2025	195

UPM's own protected land areas

Globally, about 141,000 hectares (15%) of UPM's own land is protected or

in restricted use. Protected areas include valuable habitats, natural

forests, and other important areas such as wetlands or culturally

important sites.

UPM's approach is to identify and protect valuable habitats within its

forest and plantation areas. Protected habitats are not managed

commercially. This means that 100% of the forest operations are nearby

protected or other biodiversity-sensitive areas. UPM does not operate in

global biodiversity hotspots.

Wood deliveries

Wood deliveries to UPM mills


mio m³	2025	2024
Finland	15.8	16.4
Uruguay	10.7	10.4
Germany	0.5	0.5
USA	0.3	0.3
Estonia	0.2	0.2
UK	0.2	0.2
Total	27.7	28.0

Biodiversity indicators – Finland

In Finland, the target of a net-positive biodiversity impact is measured for

UPM's own forest land using nine indicators for three categories: forest

management, conservation, and projects and collaboration. Indicators

are developed in cooperation with research institutes and other

stakeholders. The baseline is set as 2019, and the assessment for most of

the indicators is done by comparing the current status with the previous

years’ figures. In 2025, an overall positive development was measured for

each indicator.

Biodiversity indicators – Finland


Indicator	Target	Metric	2025	2024
Tree species	Increase broadleaved tree species volumes	Share of broadleaved trees (%)	12.3%	11.8%
Deadwood volumes *	Increase deadwood volumes in commercial forests	Volume of deadwood per hectare (m3/ha)	7.4	7.4
Retained aspen trees *	Increase the volumes in commercial forests	Volume of large aspen (DBH>30 cm) per hectare (m3/ha)	0.74	0.74
Continuous-cover forestry	Increase the share of forests managed with continuous-cover	Share of continuous-cover forests from total commercial forest area (%)	1.8%	1.4%
Protected areas **	Improved nature conservation network	Share of protected areas from total land area (%)	17.4%	17.2%
Valuable natural habitats	Diverse protected valuable habitat network	Number of valuable habitats (#)	62,069	55,327
Habitat restoration	Improved biodiversity in restored environments	Restored peatland areas (ha)	228	10
Habitat restoration	Improved biodiversity in restored environments	Amount of other restored sites (#)	11	6
Indicator development	Complement the set of indicators and develop monitoring	Biodiversity index and indicator development	+	+
Research and collaboration	Active projects with stakeholders to further develop UPM's biodiversity program	Ongoing projects	+	+

* Data is based on National Forest Inventory data collected from sample plots located in UPM owned land and calculated by Natural Resources Institute Finland (Luke). Updated data

availability depends on the NFI rotation (~5 years).

** The protection percentage includes strictly protected forestry land and protected areas, which can be managed and used in accordance with the instructions of the authorities.


UPM Financial Report 2025	196

Indicator development

Measuring and monitoring biodiversity requires the development of

indicators. As part of the development work, UPM reviewed and updated

the indicator set with improved and concrete targets in 2024. The updates

also ensure better alignment with other indicators and targets set by UPM

Forest, such as the Habitat Restoration Program.

For the indicators relating to the structural characteristics of forests,

two changes have been implemented from 2025 onwards:

• The former “Forest age” indicator was replaced by “Retained aspen

trees”, which measures the volume of aspen with a diameter of 30+ cm

per hectare (m³/ha).

• The “Forest structure” indicator was renamed to “Continuous-cover

forestry” and the scope changed to follow-up the share of continuous-

cover forestry on UPM lands.

For indicators relating to habitats outside commercial use, two new

metrics for “Habitat restoration” were introduced:

• Restored peatland: with a target of 3,000 ha by 2030.

• Number of sites restored or managed to promote biodiversity: with a

target of at least 100 sites by 2030.

An indicator “Research and collaboration” was added for projects and

cooperation with research partners and other NGOs to develop

sustainable forest management practices that promote biodiversity.

Biodiversity indicators – Uruguay

In Uruguay, the impact on biodiversity conservation actions is measured

using five indicators as set out in the table below. Targets and metrics are

defined for each indicator.

The total area where UPM carries out some form of conservation

measure is 66,000 hectares. This includes a network of 34 biodiversity

reserves, covering more than 13,400 hectares. Each biodiversity reserve

has specific management and monitoring plans.

Biodiversity indicators – Uruguay


Indicator	Target	Metric	2025	2024
Biodiversity conservation areas in UPM's own land	Ensure that the areas with conservation purposes represent at least 20% of the land owned by UPM	Share of conservation area of total own UPM land (%)	20.7%	19.6%
Coverage of UPM's network of biodiversity reserves	Cover at least 85% of the landscape units in which UPM owns land	Share of the landscape units present in land owned by UPM, which are included in the Network of Biodiversity Reserves (%)	75%	75%
Conservation status index of UPM's biodiversity reserves *	Quality index needs to be at least 0.75 in High Conservation Value Areas	Average quality index in High Conservation Value Areas	0.76	0.77
Control of invasive exotic woody species **	Reduce by 8% per year the active area of invasive exotic woody species	Change in the active area of invasive exotic woody species between year end and start (%)	23.7%	*
Endemic and threatened species	Maintain or enhance endemic and threatened species populations	No. of endemic and threatened species recorded during the past 5 years/No. of endemic and threatened species recorded during the cumulative baseline period (%)	-5.5%	2.8%

* Correction of indicator value (0.82) for 2024

** Reporting of this indicator started in 2025. The total area of active invasions of exotic woody species at the end of 2024 was 9,400 ha. This value is the starting point for reporting the area

reduction to be achieved in 2025.


UPM Financial Report 2025	197

Biodiversity indicators – the U.S.

In the U.S., the target of a net-positive biodiversity impacts is measured

for UPM's own forest land using six indicators divided into three

categories: forest management, conservation, and projects and

collaboration.

Biodiversity indicators – the U.S.


Indicator	Target	Metric	2025	2024
Mixedwood silviculture	Increase the area that is managed with mixedwood silviculture	Area of mixedwood silviculture (ha)	13,260	13,006
Multi-aged silviculture	Increase the share of the area that is managed multi-aged	Share of the area of total UPM land (%)	11%	10%
Deadwood volumes	Maintain or increase sufficient deadwood volumes in commercial forests	Deadwood volumes per hectare (m3/ha)	22.9	*
Wetland and riparian habitat	Confirm the locations and area of wetland and riparian habitat	Locations mapped and area confirmed (ha)	24,504	*
Old-growth forests	Confirm the locations and area of old- growth forests	Locations mapped and area confirmed (ha)	**	*
Mixedwood research collaboration	Develop silvicultural practices through collaboration with research organizations	Ongoing activities	+	+

* Reporting of this indicator started in 2025. ** Mapping in progress


	Reporting principles for metrics

Areas (total, certified, protected) and wood deliveries

Due to its relevance for biodiversity and ecosystems, UPM reports on its

forest and land areas, their coverage by forest certification, and the

protected land areas. In addition, UPM reports the volume of wood

deliveries to UPM sites by country of origin.

The data is based on invoices or weighing systems for wood deliveries

and third-party audits for forest certification. Areas are documented in

forest databases.

All UPM forest and wood sourcing units enter their data into a

common database where the data is checked and consolidated.

Biodiversity indicators – Finland

In Finland, the commercial forests owned by UPM can be classified as

semi-natural forests that retain many of the features of natural forests

throughout the regeneration cycle. The biodiversity indicators reflect how

UPM retains the features that promote biodiversity, protects valuable

habitats, and pursues to improve its practices.

Indicators Tree species, Deadwood volumes, Retained aspen trees,

and Continuous-cover forestry reflect how UPM retains during its forestry

operations the forest features that are essential for many forest-dwelling

species. Deadwood and retained aspen tree volumes are inventoried by

Natural Resources Institute Finland. This inventory is a subset of the

broader National Forest Inventory which is based on sampling, and is

conducted approximately every five years. The development in other

indicators is based on UPM's own forest asset data system that, in case

of these indicators, runs partly on estimates.

Indicators Protected areas and Valuable habitats reflect what was set

aside from UPM's forestry operations. Protected areas are areas where

UPM does not operate at all or operate only according to instructions

given by governmental authorities. Valuable habitats are distinctive sites

in a landscape that are preserved during UPM's operations, such as small

forest streams or nesting places. The development in these indicators is

based on UPM's own forest asset data system.

Indicators Habitat restoration, Research and collaboration, and

Indicator development collectively reflect UPM's pursuit to promote forest

biodiversity in ways that are not yet part of its regular forest management

practices. In these projects, UPM develops novel practices to measure,

manage, and restore biodiversity, often in collaboration with different

stakeholders, such as conservation experts and scientists. A list of these

projects is publicly available on » upm.com.

Biodiversity indicators – Uruguay

In Uruguay, most plantations are established on modified natural

grasslands formerly used for cattle grazing. The area's biodiversity values

are assessed before the plantations are established, and valuable

biodiversity hotspots and native forests are protected. UPM's work

focuses on the active management of protected habitats and the control

of invasive species.

Areas with conservation purposes have been identified based on

outstanding biodiversity attributes and classified in the following

categories: biodiversity reserves which are High Conservation Value Area

(HCVA) and Conservation Area (CA), and other areas with conservation


UPM Financial Report 2025	198

purposes which are representative sample areas and biological corridors

or connectivity areas. Indicators for conservation area hectares and

coverage are calculated based on Forest Oriental's (FO) forest database

(Forest Oriental is the name of UPM's company dedicated to plantation

management and pulpwood sourcing in Uruguay based on forest

plantations), Geographic Information System (GIS), and public

cartography of Uruguay's landscape units.

The quality of HCVA is assessed by the conservation status index

which is based on annual monitoring of several indicators covering the

status of natural grasslands, native forest, flora, and fauna.

The invasion of exotic species is an important cause of biodiversity

loss and thus important to control. All areas with exotic woody species are

identified and mapped. Active areas are those in which exotic species are

present but have not yet been treated. After removal of exotic species,

areas are inspected after three years to ensure that actions have been

successful.

Maintaining or enhancing the number of endemic and threatened

species found in FO's biodiversity reserves demonstrates that the

conservation efforts done by FO are mitigating the potential loss of

sensitive species in the areas in which the company operates. Endemic

and threatened species are defined by the Uruguayan Ministry of

Environment, and the list is updated periodically. The number of such

species in UPM's biodiversity reserves is followed up via a biodiversity

monitoring program, and since 1992 the results have been maintained in

FO's biodiversity database. Variation in this indicator is expected for

example, when new biodiversity reserves are added to the baseline.

Biodiversity indicators – the U.S.

In Minnesota, the forest land owned by UPM covers 76,000 hectares.

Forest can be considered mainly as semi-natural mixed forest, with

species like aspen, pine, spruce, and fir. Most of the area is commercially

used, but still with many characteristics of natural forest. By establishing

the six biodiversity indicators UPM aims to further enhance these

characteristics.

With mixedwood and multi-aged silviculture, the aim is to increase the

number of different tree species and to create forests with enhanced

stratification. Both of these characteristics help to develop the forest to

resemble to those that were originally found in the area.

UPM is conserving the most valuable areas in its ownership. With

indicators related to old-growth forests and wetland and riparian habitats,

the locations and amount of these type ecosystems in UPM's land will be

confirmed.

Deadwood is essential for many animals, whether they are insects,

mammals, or birds. In the USA, UPM conducted the first ever deadwood

survey with an external partner to have a baseline for the deadwood

volumes, and to understand how the volumes are divided between

different species, diameters, and a state of decay.

UPM collaborates with research organizations to further develop its

practices.

Anticipated financial effects

E4-6

For qualitative information about the financial impact of biodiversity-

related risks, Refer to the » Report of the Board of Directors, section

“Biodiversity loss” in chapter “Risks”.


UPM Financial Report 2025	199

Resource use and circular economy

(ESRS E5)

Resource efficiency and a circular bioeconomy respond to resource scarcity, contribute to climate change

mitigation, and provide sustainable new solutions for customers and consumers.




Increase of process waste sent to landfills or for incineration without energy recovery	Share of applicable products eligible for ecolabeling	Nutrients used at own effluent treatment from recycled sources
4%	89%	41%
Compared to 2024 (2030 target: zero process waste to landfill or to incineration without energy recovery)	(2030 target: 100%)	(2030 target: 100%)


UPM Financial Report 2025	200

Policies

E5-1

The UPM Code of Conduct expresses the company's respect for people,

the environment, and ethical business practices, and includes its

commitment to minimize negative environmental impacts. The Code is

complemented by UPM's Sustainability Policy Statement, which

addresses topics related to resource use and the circular economy in

more detail. The UPM Supplier and Third-Party Code addresses

minimum requirements for the value chain. Refer to » G1-1 Policies for

more information about these policy documents.

In addition, specific aspects are covered in the following policy

documents, programs, and requirements:

• UPM Product Stewardship Standard

• UPM Clean Run Standard, Refer to » E2-1 Policies

• UPM's Sustainable Product Design concept, Refer to » E5-2 Actions

• UPM Sustainable Supply Chain Program, Refer to » G1-2 Responsible

sourcing

• UPM Forest Action Program, Refer to » E4-3 Actions

• UPM's requirements for wood suppliers

• UPM Pulp supplier requirements

• UPM's requirements for chemical and pigment supplier

UPM Product Stewardship Standard

The UPM Product Stewardship Standard aims to ensure that all UPM

products produced and placed on the market anywhere in the world are

safe for their intended use, compliant, and sustainable throughout their

life cycle. The standard establishes a framework for product

management, emphasizing thorough risk assessment, adherence to

good manufacturing practices, and compliance with legislation, including

detailed documentation.

UPM businesses and functions are responsible for implementing the

necessary actions and processes to meet this standard. Various

management systems, such as ISO 9001 for quality management and

ISO 22000 for food safety management, can be utilized to integrate these

practices into operations.

This standard and its processes apply to all products within UPM. It

focuses on product safety, compliance with relevant legislation,

sustainable product design and product life cycle management, as well

as clear and accurate compliance and sustainability claims.

The standard was developed in 2024, and approved by the UPM

Marketing, Sustainability and Communications function in December

2024. Relevant persons working with product management, product

development and technical customer service tasks have been trained in

relevant UPM businesses in 2025.

UPM's requirements for suppliers of wood,

pulp, chemicals and pigments

Specific requirements of UPM Sourcing for certain supplier groups are

covered in additional documents, which are available on the UPM website.

UPM's requirements for wood suppliers address legal compliance and

detailed requirements related to the origin of wood. For example, the

supplier must guarantee that all wood comes from acceptable sources,

and that wood deliveries do not contain wood that is defined as

unacceptable in the FSC™ Controlled Wood Requirements (FSC–

STD-40-005 V3-1) or that originate from illegal or controversial sources

according to PEFC chain-of-custody requirements (PEFC ST 2002:2020).

The pulp supplier requirements address environmental performance,

forestry and wood sourcing, ecolabels, and reporting and audits. For

example, UPM requires all pulp deliveries of the supplier to fulfil the latest

valid FSC™ Controlled Wood and PEFC Due Diligence System

requirements.

The requirements for chemicals and pigments address, for example,

legal compliance, ecolabel requirements, as well as reporting of relevant

information to UPM. For example, UPM requires full compliance with the

requirements of the local chemicals regulation, such as the European

Union REACH (Registration, Evaluation, Authorisation and Restriction of

Chemicals) and CLP (Classification, Labeling and Packaging)

regulations.

Use of renewable resources and responsible

sourcing

UPM offers bio-based alternatives to fossil-based materials. Refer to

» ESRS 2 SBM-1, Strategy, business model and value chain. UPM's main

raw materials are wood and wood-based materials. UPM's Sustainability

Policy Statement, specific requirements for wood and pulp suppliers, and

the UPM Forest Action Program cover forest management, wood and

fibre sourcing, and their various impacts and risks in detail.

The UPM Supplier and Third-Party Code defines the minimum level of

performance that UPM requires of all its suppliers and third parties such

as agents, advisers, joint venture partners, local partners, or distributors

acting on behalf of UPM. UPM also requires all its suppliers to promote

the same requirements in their own supply chains. Refer to » G1-1 Policies.

The UPM Sustainable Supply Chain Program promotes compliance

and risk mitigation in the supply chain and helps achieve UPM's

environmental, social, and governance-related targets in the supply chain.

Refer to » G1-2 Responsible sourcing

Circular economy

UPM's Sustainability Policy Statement states: "UPM is committed to a

circular bioeconomy by using recovered materials from production

processes and by developing recycling and utilization options for side

streams and residues. UPM promotes recyclability throughout the value

chain and the use of recycled materials in its products."


UPM Financial Report 2025	201

Actions

E5-2

Based on the identified material topics, UPM has set the following focus

areas and Group-level targets related to the circular economy and

resource use:

• Forest (with a target for the share of certified fibre)

• Waste (with a target for landfilled process waste)

• Water (with a target for the use of nutrients in UPM's own effluent

treatment plants from recycled sources)

• Product stewardship (with a target on new products contributing to the

SDGs and a target on eligible ecolabeled sales)

• Responsible sourcing (with a target for spend covered by the UPM

Supplier and Third-Party Code); Refer to » G1-2 Responsible sourcing

Action plans have been developed to achieve the Group-level targets, as

well as for other relevant areas for continuous improvement. The key

actions, previous year's actions and planned actions are presented below.

UPM Clean Run concept

Refer to » E2-2 Clean Run concept for a description of UPM's concept for

improving environmental performance, including waste reduction and

resource efficiency.

UPM Sustainable Product Design concept

UPM's Sustainable Product Design concept supports and steers product

development projects, promotes a sustainable product life cycle

approach, and ensures that each new product and service has a proven

sustainability value proposition. The concept also supports UPM's aim to

develop new products and services that contribute to the UN Sustainable

Development Goals (SDGs), as well as the development of a climate-

positive product portfolio.

The approach is divided into six life cycle steps: design; materials;

production; distribution; use; and circularity. Several tools help evaluate

the sustainability factors of each life cycle step throughout the design

process, such as Life Cycle Assessments (LCA), biodegradability and

recyclability tests, or a screening tool for mapping environmental and

social impacts and SDGs. Each step includes a variety of elements that

guide the product development process. UPM's products have different

applications, and customers are involved in different parts of the value

chain. This means that the relevance of the different life cycle steps and

their specific elements may vary from business to business.

Actions related to product stewardship

Key actions

For UPM, product stewardship comprises several areas, such as life cycle

thinking, chemical management, product safety, product-related

statements or compliance declarations, or the use of environmental labels

such as the EU Ecolabel or forest certification labels such as FSC™ (FSC

N003385) or PEFC (PEFC/02-44-41). UPM's Sustainable Product Design is

the overarching concept in the development of products and services.

LCAs are used to calculate potential environmental impacts of new

raw materials or new products. They support decision-making in product

development and provide evidence to support environmental claims for

products entering or already available on the market.

The ISO 9001 and ISO 22000 quality and food safety management

systems provide a framework for continuous improvement of UPM's

performance. All UPM's production sites are ISO 9001-certified. The relevant

sites are ISO 22000-certified, which allows UPM to offer several products that

are designed and produced to meet the requirements of food packaging.

UPM's Chemical Management Standard requires careful assessment

of the hazard properties of chemicals. All chemicals selected for use must

have the lowest possible negative impact on human health, the

environment, and the safety of UPM's products. The list of restricted

substances includes substances with selected hazard classifications.

Product safety requirements are communicated to customers and

suppliers of chemicals and raw materials. A harmonized questionnaire

and a common tool (PP-VIS) enable UPM to ensure that sourced

chemicals comply with laws and requirements such as the EU Ecolabel

criteria. To support customer communications, UPM provides product

safety profiles and statements of chemical substances that are not used

in products.

Most of UPM's products are certified with widely recognized

international and regional ecolabels such as the EU Ecolabel. UPM

Biofuels has both ISCC EU and ISCC PLUS certification, and UPM

Biochemicals and four UPM Adhesive Materials factories have ISCC

PLUS certification. All UPM businesses which are using wood have FSC™

and/or PEFC chain-of-custody certification. This verifies the origin of

wood and guarantees that all wood used in UPM's products is legally

harvested from sustainably managed forests and does not originate from

controversial sources.

Actions in 2025

• The new UPM Product Stewardship Standard was implemented in all

relevant business areas. Refer to » E5-1 Policies for information about

the standard.

• In the last couple of years, UPM has improved and streamlined the

management of chemical inventories and approval processes in UPM

production units and implemented a supporting IT system. The system

was extended to stepwise cover also Adhesive Materials factories.

• UPM Specialty Papers has collaborated, e.g., with EvoPak to support

Walkers Chocolates' transition from a plastic wrapper to recyclable

paper-based packaging and with Royal Vaassen to support the

development of several recyclable and food-safe barrier paper

solutions for a variety of end-use applications replacing plastic and

aluminum.

• UPM launched UPM Circular Renewable Black^TM, the first bio-based,

NIR-detectable pigment, thus supporting plastic recycling processes.

• UPM’s new biorefinery in Leuna, Germany, achieved ISCC PLUS, PEFC,

and FSC™ chain-of-custody certifications.

Planned actions

• UPM is taking action to ensure that its products and packaging will

comply with the requirements of the EU Packaging and Packaging


UPM Financial Report 2025	202

Waste Regulation (PPWR), which will be implemented gradually

starting in August 2026.

• Continued Sustainable Product Design concept implementation in

various UPM businesses, including life cycle assessment work related

to respective projects.

Making use of residues, side streams, and

recovered materials

Key actions

UPM's goal is to make efficient use of all material streams and to

implement a circular bioeconomy: renew; reduce; reuse; recycle; and

recover. UPM's target is to neither send process waste to landfill nor to

incinerate it without recovering the energy by 2030. UPM's other circularity

target is to use only nutrients from recycled sources in its own effluent

treatment plants by 2030. Refer to » E5-3 Targets

Best practices, research results, and ideas are shared throughout the

company. Internal working groups focus on issues such as using side

streams and recycling nutrients. Some of UPM's products are made of

recovered materials, residues, or side streams, thus supporting circular

economy.

Most of UPM's organic production residues such as bark, wood residues,

and fibre-containing sludges from deinking and effluent treatment, are used

to generate energy for mill sites. Some fibrous residues are used in brick

manufacturing, as soil amendment materials, or as a raw material in board

manufacturing. Ash from biomass-based energy generation represents a

large share of waste and by-products. In 2025, 85% (83%) of the ash was

used in various applications such as for soil stabilization, fertilizer, in the

cement industry, as a raw material for the production of paper fillers, or

internally to replace caustic soda.

Lime is a side stream from pulp production that is used as a liming

agent in agriculture or for pH adjustment, for example. Green liquor dregs,

another side stream from pulp production, are one of UPM's most

challenging process wastes to utilize. UPM is working hard to find

utilization options for green liquor dregs.

UPM BioVerno renewable diesel and naphtha are produced from

crude tall oil, a residue from chemical pulp production. For lignin, a side

stream from pulp production, examples of existing solutions include

WISA BioBond gluing technology, which uses lignin to replace part of the

fossil-based phenol used in plywood production, and the UPM Solargo

product family, which comprises lignin-based biostimulants that improve

crop quality and soil performance. UPM has also developed a range of

lignin-based renewable functional filler products that will be produced in

UPM’s first-of-its-kind biorefinery in Leuna.

UPM is also actively improving the circularity of its product life cycle.

UPM Adhesive Materials collects label waste from 350 partners worldwide

and recycles it through its RafCycle® service. The service takes self-

adhesive label waste and gives it a new life as a resource for pulp, paper,

and other fibre-based products or PET products. UPM also has a long

history of using recovered paper to produce new graphic paper.

Actions in 2025

• UPM continued to follow-up the ISO and CEN standardization of

circular economy.

• Further mills tested new sources of recycled nutrients and expanded or

started the use of recycled nutrients. For example, the UPM Changshu

paper mill in China started to use recycled phosphorus and recycled

nitrogen was taken into use at UPM Nordland Papier in Germany.

• Several mills implemented new sludge utilization concepts. Separate

dewatering of biosludge and primary sludge was taken into use at UPM

Nordland Papier, enabling the utilization of biosludge in biogas

production and primary sludge in board manufacturing. A

collaboration between UPM Kaukas and a partner was started to

compost a part of the site's effluent treatment sludges. The resulting

material is utilized as soil improver in agriculture. Similarly, UPM

Rauma started a collaboration with a partner that stabilizes a part of

the site’s effluent treatment sludges with lime and uses it in agriculture

• In Uruguay, a dust-based liming agent "Microcal" was productized and

the utilization in agriculture started. An environmental permit was

granted for a pilot construction of a wood yard utilizing ash as

construction material, and the construction project was started. A

collaboration project studying the utilization possibilities of ash and

green liquor dregs in cement production was started with a local

university.

• Also at UPM pulp mills in Finland, further work was done to find

utilization options for green liquor dregs.

Planned actions

• In 2026, UPM will continue its participation in the Finnish UUMA5

program together with the Pohjolan Voima company to enhance the

utilization of secondary raw materials in earth construction.

• The pulp mills in Uruguay will continue to research and test waste

utilization possibilities which were identified in their 2030 Zero Solid

Process Waste to Landfill roadmap.

• Development work will continue for the recycled nutrient target and

zero solid process waste to landfill target at several sites.

Refer to » E3-2 Actions for water-related efficiency

Refer to » G1-2 Responsible sourcing for UPM's Sustainable Supply Chain

Program, which addresses resource use

Resources

In general, activities related to product stewardship, circular economy,

and waste management are included in UPM's overall operational

expenditures, investment, and resource planning. Refer to » E1-1

Investments and funding, Innovation products for significant actions and

resources related to products. Refer to » E2-2 Resources for more

information on environmental costs and investments.


UPM Financial Report 2025	203

Targets

E5-3

To manage its sustainability activities, UPM has set several targets and

key performance indicators for its sustainability focus areas covering its

own operations (covered under Forest, Water, Waste, Product

Stewardship) and the supply chain. These targets support UPM's policy

objective for the responsible use of resources and the circular

bioeconomy (UPM Sustainability Policy Statement). UPM's sustainability

targets are developed by taking the views, wishes, and perspectives of

external stakeholders from UPM's constant multi-stakeholder dialogue

into account.

Targets related to circular economy and resource use


Sustainability focus area and key performance indicator	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Forest
Share of certified fibre	2015	84%	100%	90% (88.5%)
Water
Nutrients used for effluent treatment from recycled sources *	2017	17%	100%	41% (33%)
Waste
Process waste sent to landfills or to incineration without energy recovery	2015	122,000 tonnes	0 tonnes	101,000 (97,000) tonnes; 82% (83%) of UPM's process waste recovered or recycled
Product stewardship
Climate-positive product portfolio	Since 2019	-	Continuous improvement	Decarbonization solutions: 7% (6%) of sales**
Development of new products and services with contribution to SDGs	Since 2019	-	continuous	Development of UPM Circular Renewable Black^TM and collaboration for paper-based product packaging solutions
Share of applicable products eligible for ecolabeling out of total UPM sales	2015	77%	100%	89% (89%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	86% (91%)

* Relevant for pulp and paper production ** Correction of percentage value (8%) for 2024

UPM's sustainability targets for 2030 are followed up and reported at

Group level at least annually. The target parameters chosen cover

different aspects of resource use and circular economy (see the following

paragraphs). The targets are evaluated and set based on their potential

positive impact and the minimization of any negative impact.

Most of the targets related to resource use and the circular economy

are on track. However, the total amount of process waste sent to landfills

increased because, for example, some of the earlier recycling options

were discontinued. Measures are taken to achieve UPM's zero process

waste to landfill target. Refer to » E5-2 Actions, Making use of residues,

side streams and recovered materials

Refer to » G1-2 Responsible sourcing for more information about the

sourcing target.

UPM's targets related to resource inflows and outflows specifically

address the following aspects.


	Reporting principles for targets

Share of applicable products eligible for ecolabeling out of

total UPM sales

The share is calculated based on UPM's overall sales of paper, chemical

pulp, plywood, label material, and timber products and the sales which

has been eligible for ecolabeling in accordance with FSC, PEFC, EU

Ecolabel, or national ecolabels such as the Blauer Engel in Germany.

Products with multiple ecolabels are counted only once.


UPM Financial Report 2025	204

Circular product design

Product stewardship is one of UPM's sustainability focus areas. It includes

three product-related targets that are linked to circularity and

recyclability:

• Circularity has the potential to support UPM’s target of achieving a

climate-positive product portfolio, especially if the use of materials with

a high carbon footprint is reduced;

• Circularity is an aspect of UPM's Sustainable Product Design concept

and contributes positively to SDG 12 "Responsible consumption and

production";

• The EU Ecolabel for graphic paper includes criteria for recyclability.

Use of renewable resources

Wood is a renewable resource and is UPM's main raw material. UPM's

target of 100% certified fibre by 2030 underlines the importance of forest

certification for wood-based resources, even though chain-of-custody

certification for non-certified forest areas already ensures the origin of

wood, legal harvesting, and sourcing of wood from non-controversial

sources. Forest certification also plays a crucial role in maintaining and

enhancing biodiversity. Refer to » E4-3 Actions, Forests and biodiversity

Circular material use and minimization of

primary raw material

UPM is committed to continuous improvement of resource efficiency and

to a circular bioeconomy approach. The company uses materials

recovered from production processes and develops recycling and

utilization options for side streams and residues from production

processes, as stated in UPM's Sustainability Policy Statement. UPM has

also dedicated targets for zero process waste to landfill and 100% use of

nutrients from recycled sources in UPM's effluent treatment plants.

Responsible sourcing

Responsible sourcing is one of UPM's sustainability focus areas and

includes targets and key performance indicators. Resources and

circularity are also addressed as relevant environmental issues in UPM's

Sustainable Supply Chain Program. Refer to » G1-2 Responsible sourcing

Waste management

By 2030, zero process waste will be sent to landfills or to incineration

without energy recovery. This means all UPM's non-hazardous process

waste must be recycled or recovered. Waste management supports

achieving this target through proper sorting of waste and research into

waste recycling options, for example.

UPM's targets can contribute to waste prevention, waste recycling, or

energy recovery from waste.

The targets are voluntary and additional to legal requirements.

Metrics

Resource inflows

E5-4

Wood and fibre-based products are the basis of UPM's operations.

Certified chain-of-custody systems and forest certification ensure that

wood and other fibre-based materials are sourced from sustainably

managed forests. UPM's main sourcing categories are fibres (wood and

fibre-based materials), other raw materials (including pigments and

chemicals), indirect materials, and services, logistics and energy.

Suppliers are an essential part of UPM's value chain. Materials and

services are purchased from approximately 17,000 B2B suppliers globally.

The sourcing network includes suppliers from startup companies to

international corporations. In addition, wood is purchased from about

13,000 private forest owners.

Refer to » E1 for energy and » E3 for water


UPM Financial Report 2025	205

Raw materials


Tonnes (incl. moisture)	2025	2024
Wood	24,200,000	23,300,000
Market pulp	1,300,000	1,300,000
Recovered paper	470,000	700,000
Purchased paper for converting	350,000	310,000
Minerals	1,700,000	1,800,000
Chemicals	940,000	930,000
Plastics, adhesives, resins, films	170,000	160,000
Total	29,200,000	28,600,000

Percentage of biological material


%	2025	2024
Wood share in total raw materials	83%	81%

UPM considers only wood a biological material. Its share of total raw

materials is calculated based on data in the Raw materials table. Other

wood-based raw materials such as pulp, paper, and recovered paper are

considered a result of a technical production process.

Both wood and wood-based side streams and residues are used where

they create the most value.

Wood certification


%	2025	2024
FSC certified	16.4%	18.3%
PEFC certified	39.2%	38.3%
PEFC and FSC certified	34.2%	32.0%
Total certified wood	89.8%	88.5%
Wood complying with FSC Controlled Wood or PEFC Due Diligence requirements	10.2%	11.5%
Total biological material	100.0%	100.0%

All wood-based raw materials are either FSC™ (FSC N003385) and PEFC

(PEFC/02-44-41) certified or minimum FSC Controlled Wood or PEFC

Controlled Sources. The certification ensures that all UPM's wood, pulp,

paper, and recovered paper suppliers are continuously assessed for their

environmental and social responsibility and their involvement with local

communities.

Secondary material


Recovered paper	2025	2024
Tonnes (incl. moisture)	470,000	700,000
% of total raw materials	2%	2%

Efficient paper recycling depends on local infrastructure for national

collection and recovery systems. Recovered graphic paper is sourced

from Europe, where the most significant suppliers are waste management

companies, printing houses, and local authorities. Recovered paper is

used as a raw material in UPM's graphic paper production and

accounted for 12% (15%) of fibre materials used in UPM's paper

production in 2025.


	Reporting principles for metrics

Raw materials

Wood is usually measured in cubic meters. Refer to » E4-5 Wood

deliveries. Conversion to tonnes is calculated using factors based on

measurements and/or literature. The average moisture content of wood is

estimated to be 50%. Market pulp and recovered paper are purchased as

air dry tonnes with a dry solid content of approximately 90% and 94%

respectively. The moisture content of other raw materials may vary, but

the relevant delivery quantities are available in UPM's sourcing systems.

UPM's Group-level reporting focuses on the company's use of fibre and

other raw materials. Information about material use is aggregated data

from UPM's sourcing units.

Percentage of biological material

Only wood is considered biological material in the calculation. UPM

considers other wood-based materials, such as pulp, to be the result of a

technical production process. In accordance with ESRS E5-4, the

denominator for the percentage indicator is the total weight of raw

materials in their original state, i.e., including moisture.

Secondary material

Recovered paper from external sources is included in the calculation of

secondary material. Internal recovery is not included. In accordance with

ESRS E5-4, the denominator for the percentage indicator is the total

weight of raw materials in their original state, i.e., including moisture.


UPM Financial Report 2025	206

Resource outflows

E5-5

Products


	Unit	2025	2024
Paper	t	4,300,000	4,600,000
Chemical pulp	t	5,200,000	5,000,000
Converting materials	t	500,000	460,000
Plywood and veneer	m3	470,000	480,000
Sawn timber	m3	1,100,000	1,200,000
Heat	GWh	800	900
Electricity	GWh	13,200	13,400

Designed according to circular principles

Some of UPM's products are made from side streams and residues or

from materials recovered after product use, thus supporting a circular

bioeconomy.

For use of side streams and production residues, refer to » E5-2

Making use of residues, side streams and recovered materials

For use of recovered paper in paper production, refer to » E5-4

Secondary material

Durability

The majority of UPM's products are business-to-business mass products

such as pulp, paper, labels, timber, plywood, biofuels, and naphtha. For

such products, durability is usually not the relevant requirement, but

recyclability or biodegradability. However, durability is relevant in the case

of plywood used for construction or in vehicles or timber when used for log

houses or for building in general, for example. The lifespan of UPM

plywood can be as long as 100 years. The durability and performance of

timber and plywood in construction applications is proven by CE marking.

Durability is also required of paper used for archiving or other long-term

purposes or labels for specific end uses.

Repairability

Repairability is not a relevant requirement for UPM's product range.

Recyclable content

The majority of UPM's products are recyclable, depending on how they

are further processed.

Paper: UPM's paper grades that are mainly used for printing or

packaging are fully recyclable if the further processing does not affect

recyclability. Paper recycling systems are well established in most

countries. Efficient paper recycling depends on the local infrastructure for

national collection and recovery systems. PE laminated kraft liner is

mainly used for packaging. It can be recycled when appropriate collection

and sorting are organized.

Pulp: Pulp is 100% recyclable and biodegradable. However, pulp is at

the beginning of the processing chain and can be processed into different

paper grades (including hygiene papers) or other pulp-based products. A

reasonable estimate of the recyclability of the final product is therefore

impossible. Pulp bales are packed with steel wires and sometimes

wrapped in pulp sheets, both of which are recyclable.

Converting materials: The label release liner, the thin layer of paper or

plastic that protects the adhesive side of the label, is often discarded after

use. This is why UPM Adhesive Materials has developed the RafCycle™

circular solution, a recycling service that enables customers to turn their

label liner waste into new raw materials. The actual label used on products

can theoretically also be recycled, but this depends on the packaging

design. A reasonable estimate of the recyclability of the final product is

therefore impossible. Usually, label stock sheets and reels are placed on

pallets and wrapped with monomaterial plastic film. Or, reels are packed

with PE-laminated kraft liner.

Plywood and veneer: Plywood is a 100% recyclable material when

repurposed as raw material for secondary products or reused as such, e.g.

in construction, after its initial use. Plywood can also be used as a fuel

source in energy production after its first life cycle.

Sawn timber: Sawn timber is 100% recyclable. However, it is at the

beginning of the value chain and can be processed into multiple end-use

products. Therefore, it is not possible to estimate the potential for reuse

and recycling of end products. Typically, sawn timber is used as a fuel in

energy production at the end of its life cycle, replacing fossil fuel sources.

For packaging of plywood, veneer and sawn timber, corrugated board,

monomaterial plastic, and wood are used, and all of these materials are

recyclable.


UPM Financial Report 2025	207

By-products and waste


Tonnes (dry weight), except hazardous waste	By-products	Non-hazardous process waste	Other non- hazardous waste	Hazardous waste	Total	Total
	2025	2025	2025	2025	2025	2024
Recycling	65,000	258,400	7,800	1,900	333,100	352,000
Composting	80	7,700	0	0	7,800	9,100
Energy recovery	5,700	209,100	1,200	500	216,400	235,000
Temporary storage	1,400	15,800	9,200	0	26,500	25,000
Landfilling	0	96,800	2,100	0	98,900	95,000
Incineration without energy recovery	0	4,600	0	2,700	7,400	5,800
Other disposal	0	0	0	1,900	1,900	400
Total	72,000	592,000	20,000	7,000	692,000	723,000
Total amount of non-recycled waste *					135,000	127,000
Percentage of non-recycled waste					19%	18%

* Includes waste sent to landfilling and incineration without energy recovery as well as waste and by-products sent to a temporary storage

Main waste and by-product streams


%	2025	2024
Fibrous residues	47%	50%
Ash	28%	26%
Green liquor dregs	8%	8%

Ash is the residue from UPM's own and co-owned energy generation

processes. Fibrous residues are bark, other wood waste, or sludges from

recovered paper processing and effluent treatment. Green liquor dregs

are residues from chemical pulp production. Refer to » E5-2 Making use

of residues, side streams, and recovered materials

In addition to waste and by-product streams, production residues are

used internally as fuels: mainly black liquor from pulp production but also

bark, other wood waste, or sludges from recovered paper processing and

effluent treatment. This quantity is reported as fuel.


	Reporting principles for metrics

Products

The quantities of paper, pulp, and converting materials include packaging

and moisture. Plywood, veneer, and sawn timber are sold and reported in

cubic meters, heat and electricity in GWh. Total paper and chemical pulp

production and total electricity sales are reported including internal sales

of paper, chemical pulp, and electricity.

Waste and by-products

UPM reports the sum of non‐hazardous process waste and by‐products

divided into recycling, composting, energy recovery, landfilling,

incineration without energy recovery, and temporary storage. The sum of

hazardous waste is divided into recycling, energy recovery, incineration

without energy recovery, and other disposal. The disposal method is

determined by both direct information from the sites and by information

provided by waste contractors.

Depending on local circumstances, a waste fraction, e.g. ash, can be a

by-product or waste. UPM has decided not to exclude these by-products

from its waste reporting but to report on both.

Waste and by-product data are reported in bone dry tonnes, except

for hazardous waste. The data are based on weighing results or invoicing

data. At the site level, data is collected continuously and reported to the

authorities as required by law. Consolidation at Group level is done

annually in UPM's common database.

Internal use of side streams and residues for energy generation is

reported as fuels. Refer to » E1-5 Energy consumption and mix.

Waste data is reported to the relevant local authorities in accordance

with the site permits. For UPM's pulp and paper mills in Europe, China,

and Uruguay, both waste and by-product data is verified and reported in

accordance with the EU’s Eco-Management and Audit Scheme (EMAS)

by EMAS-accredited auditors.


UPM Financial Report 2025	208

Own workforce (ESRS S1)

UPM is committed to being a responsible and attractive employer, now and in the future. Promoting diversity and

inclusion is a prerequisite for UPM's business success and a healthy working environment. UPM's safety work is

based on long-term planning, effective communication, and leadership.




Engagement score in the Employee Engagement Survey	Percentage of employees completed individual goal setting or annual discussion to enable continuous professional development		Total recordable injury frequency (TRIF)
67		86%	5.0
8 points below the global average benchmark			for UPM's own workforce


UPM Financial Report 2025	209

Impacts, risks and opportunities

ESRS 2 SBM-3

UPM is committed to being a responsible and attractive employer now

and in the future. UPM wants to strengthen its employees’ sense of

belonging and the feeling that they are doing meaningful work. This

promotes productivity, engagement, and well-being.

UPM's values are the foundation of who we are. Building a culture of

Aiming Higher is essential to UPM's success in today’s rapidly changing

world. Cultural ambition includes being accountable, performance-driven,

human centric, and eager to learn and grow. UPM's aim is to further

increase employee motivation and make growth opportunities more

visible and accessible.

In an increasingly complex business environment, enhancing

employees' skills and well-being is important for both business success

and sustained employability. UPM's long-term goal is to ensure high

performance and continuous professional development.

Description of UPM's own workforce

UPM's own workforce consists of the following groups:

• Own employees: people directly employed by UPM

• Non-employees, further divided into two sub-groups

• Agency hires: persons employed by employment agencies or labor

providers working at UPM's sites under the direct supervision of

UPM. Agency employees are not directly employed by UPM.

• Independent contractors: self-employed individuals who provide

services or labor to UPM and are bound by a direct contractual

arrangement other than a contract of employment. The number of

such independent contractors is currently estimated to be so small

that reporting on them is not material for UPM.

All people in UPM's own workforce who could be materially affected by

UPM are included in the scope of disclosure. None of the identified

material risks and opportunities relate to a specific group within own

workforce but concern all groups equally.

Overview of material impacts, risks and opportunities


Material topics	Impacts, risks and opportunities	Description
Decent work and fair rewarding	Positive impact: Ensuring equal and adequate pay, training, and development	UPM ensures equal and adequate pay through its third-party verified annual review process and correction of identified gaps. UPM is continuously developing its employee experience and leadership culture, evaluating its recruitment, compensation policies, and career development opportunities.
	Potential negative impact*: Job losses due to closing of operations or restructuring	Changes in the business environment and market demand may lead to restructuring measures to ensure UPM’s cost-competitiveness. Active measures are taken to mitigate the effects on employees, e.g. by promoting employment and retraining.
	Risk: Lack of skilled workforce	The success of UPM's businesses depends largely on the ability to build and maintain the necessary new capabilities required for future growth.
	Opportunity: Being the employer of choice	UPM continuously develops its employee experience and leadership culture, evaluates its recruitment, compensation policies and career development opportunities, and takes measures to attract and retain diversely skilled personnel and individuals with rare and critical specialist knowledge for current and future growth areas.
Diversity and inclusion	Positive impact: Enhancing diversity and inclusion with a positive impact on the workforce	In addition to UPM's targets for female representation in management and equal pay, UPM’s commitment to inclusion and diversity is underlined by active training, dialogue, and cooperation. The latest example is UPM's global and employee-led BeU network.
Health and safety	Positive impact: Increased focus on health and safety measures for people working at all UPM sites	UPM continuously improves health and safety practices across all business areas and sites for example by systematic risk assessments, audits, trainings, development projects and best practice sharing, and ensuring the progress by monitoring both leading and lagging KPIs as well as by employee surveys.
	Negative impact*: Health and safety incidents, including serious accidents and fatalities for UPM workforce	Although several measures are taken to prevent injuries and accidents to employees and contractors on UPM's production sites, a risk remains. The importance of health and safety is also discussed and followed up with suppliers, but negative impacts can occur. These negative impacts are related to individual incidents.
	Risk: Potential injury to UPM workforce	Failure to maintain a high level of safety management could result in injury, illness or liability to UPM's employees, contractors, or third parties. These risks are managed through established management procedures, health and safety precautions, and loss prevention programs.

*UPM's identified material negative impacts are not seen as widespread or systemic but are related to potential individual incidents.

No risks of forced or compulsory labor or child labor has been identified

for UPM's own operations.

As part of UPM's ongoing human rights due diligence, the company has

identified groups who are at higher risk of experiencing potential adverse

human rights impacts. Based on UPM's assessments and dialogue with

various stakeholders, UPM has defined migrant workers, women, young

workers, and temporary and contractor workers as groups with a higher risk

of potential adverse human rights impacts across UPM's value chain.


UPM Financial Report 2025	210

Policies

S1-1

UPM's decision-making, management and operations are guided by UPM's

values and the UPM Code of Conduct. Compliance with the laws and

responsible practices are the basis of all UPM's operations and create long-

term value for both UPM and its stakeholders. The UPM Code of Conduct

underlines UPM's commitment to business integrity and responsible

business operations and reflects the company's guiding principles.

UPM works to ensure that human rights are respected by all UPM

employees throughout the operations and business relationships and

expects its suppliers and business partners to do the same. UPM wants to

ensure that all raw materials and services are purchased from responsible

sources. Refer to » G1-1 Policies

UPM's Human Resources and Safety Rules

UPM's human resources management is based on the company's values

and is an important part of UPM's corporate social responsibility. The

UPM HR (Human Resources) Rules complement the UPM Code of

Conduct by defining in more detail the principles of working conditions,

labor practices, and decent work as described by the International Labour

Organization (ILO), what UPM is committed to, and what is expected of its

employees. The UPM HR Rules are owned by UPM's Human Resources

function and approved by the Group Executive Team. The UPM HR Rules

apply to all UPM's employees and executives. The UPM HR Rules do not

apply directly to suppliers and other third parties and their

representatives, as they are bound by similar principles by the UPM

Supplier and Third-Party Code.

UPM complies with international, national, and local safety laws,

regulations, and rules. UPM does this by implementing and complying

with UPM's safety standards and local procedures.

UPM promotes fair working conditions and respects the right of

employees to form and join associations, bargain collectively, and

assemble peacefully. UPM does not tolerate modern slavery, child labor,

forced labor, or human trafficking in any form in its operations or in any

part of its value chain.

UPM Safety Rules set and communicate clear safety expectations

and targets at all levels of UPM's organizations.The UPM Safety Rules are

owned by UPM's Human Resources function and approved by the Group

Executive Team. UPM's occupational health and safety management

systems ensure that the targets are met. This is reinforced by UPM's

safety standards, in particular the safety standard on roles and

responsibilities, which also defines the business line organization's

responsibility for ensuring the safety standards are implemented.

All UPM employees apply UPM's Safety Rules in a disciplined manner.

In addition, UPM's business partners and their employees at UPM's sites

are required to adopt safe working practices and comply with UPM's

Safety Rules and standards. If a safety violation is detected, UPM

intervenes and takes the necessary measures in a timely manner. UPM

has an internal health and safety (H&S) audit program for each business

area to monitor and check compliance with UPM's safety standards. This

highlights good practices, as well as any shortcomings or actions needed

to meet UPM's H&S expectations.

The UPM Code of Conduct, UPM HR Rules, and UPM Safety Rules

apply to all UPM's own workforce.

UPM and human rights

Commitments

UPM is committed to respecting human rights in line with the United

Nations Guiding Principles on Business and Human Rights. UPM

respects the UN Universal Declaration of Human Rights, the ILO

Declaration on Fundamental Principles and Rights at Work, and the

OECD Guidelines for Multinational Enterprises. UPM also promotes the

human-rights-related principles of the UN Global Compact.

The UPM Code of Conduct, the UPM Sustainability Policy Statement,

and the UPM Supplier and Third-Party Code are aligned with these

internationally recognized standards.

Compliance system

UPM's compliance system is the risk management system used to

manage UPM's human rights and environmental risks. UPM's compliance

system is embedded in its governance model and is designed to strengthen

corporate performance and a culture of integrity at all levels.

Risk analysis

UPM regularly assesses human rights risks at business area, function,

and corporate level. This includes identifying actual and potential risks

and impacts, evaluating their severity and likelihood, and prioritizing the

most significant issues for action. Refer to » G1-2 Responsible sourcing

Business areas and functions are responsible for identifying risks

within their own operations and activities. The prioritization and

determination of the materiality of the risks are assessed in connection

with UPM’s corporate salient human rights assessment. The procedure is

integrated into existing management systems to the extent possible and

applied in investment processes.

Training and engagement

UPM's Code of Conduct training is mandatory for all UPM employees,

and participation is measured and reported annually. The training covers

the protection of human rights and the environment, and the

identification of human rights and environmental risks. In addition, there is

a separate e-learning course on the requirements of the UPM Supplier

and Third-Party Code for UPM's employees who deal with suppliers. The

link between human rights violations and corruption is also covered in

UPM's anti-corruption training, which is mandatory for all salaried

employees.

UPM's Sourcing function organizes additional training for its

employees on sustainability principles and supplier requirements.

Remediation

UPM monitors and works to remedy adverse impacts on human rights of

which it is aware, and which its activities have caused or contributed to. In

the event of a violation of a human rights or environmental obligation,

UPM determines the necessary and appropriate remedy measures on a


UPM Financial Report 2025	211

case-by-case basis, based on verified impacts. See » G1-1 Policies for

more information about handling concerns.

Diversity and inclusion

All UPM employees are responsible for creating a diverse and inclusive

working environment. It is important to employ people with different

competences, backgrounds, and experience, as well as different genders,

ages, and nationalities, to bring together different views and improve

decision-making and business success. All UPM employees are expected

to build and encourage a culture that allows for different views, and where

everyone has the opportunity to contribute. UPM is committed to a

European-wide diversity charter initiative to develop a diverse and

inclusive workplace.

UPM promotes equal opportunities and does not tolerate direct or

indirect discrimination against anyone based on gender, age, ethnicity,

race, nationality, family ties, religion, sexual orientation, disability, political

opinion, trade union affiliation, or any other similar aspect related to a

person.

There shall be no direct or indirect discrimination in relation to

selection criteria in resourcing. In personnel planning and recruitment, the

selection criteria will be based on a person’s skills and competences.

Application and recruitment processes shall be open and transparent

when applicable. The working environment and facilities shall be

developed so that they do not prevent equality between employees. All

employees shall have a chance to develop in their work. Employees are

given equal career opportunities based on their qualifications and

business needs.

Sexual or other forms of harassment – whether verbal, physical, or

visual -, harsh or inhuman treatment, is not tolerated. UPM does not

engage in behavior that could be characterized as offensive, intimidating,

threatening, malicious, or insulting.

The UPM Code of Conduct, UPM's values, and the UPM HR Rules

address these topics.

Processes

Processes for workforce engagement

S1-2

Every year, UPM's Employee Engagement Survey (EES) is available for all

employees across the company to evaluate various aspects of their

working environment. It is an important way of measuring the company's

success in developing as an employer and progress in achieving the

social responsibility targets that are important to UPM, such as safety,

diversity and inclusion, learning and growth, and leadership. The EES

provides an opportunity to monitor long-term trends and progress on

agreed development activities annually. This progress is followed up and

evaluated to enable continuous development of the workplace at both

organizational and team levels.

To complement the EES, a UPM Health and Well-being pulse survey

has been conducted for the last four years. The pulse focuses on the main

elements of the UPM's health and well-being approach.

UPM aims to empower and engage employees at all levels through

responsible leadership, with different forums to facilitate continuous

dialogue between employees and business management, for example.

UPM engages in both formal and informal consultations with trade

unions and actively promotes employee participation and consultation in

accordance with international and national rules and regulations. To

promote employee participation, consultation and dialogue between UPM's

business areas and country management, and employee representatives

and employees at national level, UPM's countries have cooperative bodies

that operate based on country-specific rules, regulations, and UPM's

practices. In addition, to promote an open international dialogue between

management and employee representatives, UPM has a cooperative body,

the UPM European Forum, which focuses on issues related to changes in

the company and the business environment in general. The Forum

organizes regular meetings for employee representatives from business

units operating in Europe.

The Human Resources function and the Executive Vice President of

Human Resources have operational responsibility for ensuring that

employee engagement takes place.

The effectiveness of UPM's engagement with its own employees is

assessed through the EES and individual target setting and follow-up

discussions.

Processes for raising and handling

concerns

S1-3

UPM has implemented processes for reporting, identifying, and

investigating concerns and for handling incidents, including remediation

and protection against retaliation. These processes cover all

stakeholders, including UPM's own workforce.

Refer to » G1-1 Reporting and identifying concerns, Investigating

concerns and incident handling for detailed information.

UPM does not yet systematically gather feedback from employees on

their level of trust in, or awareness of, the company’s grievance

mechanisms. However, the perception of the management on these

topics is gathered annually. UPM also regularly gathers feedback on the

Code of Conduct training, and a dedicated Code of Conduct Helpline is in

place to support employees and address questions related to the Code,

including the use of our grievance channels. In addition, the annual

Employee Engagement Survey includes questions related to company

ethics, providing further insight into employees’ perceptions of the

company's ethical culture.


UPM Financial Report 2025	212

Actions

S1-4

UPM's identified material topics have been defined as a result of a double

materiality assessment, considering impacts, risks and opportunities

related to its own workforce. Based on these material topics, the following

focus areas related to UPM's own workforce have been developed:

• Responsible leadership

• Continuous learning and development

• Diversity and inclusion

• Fair rewarding

• Safe and healthy working environment

For each focus area, the key actions, previous year's key actions, and

planned key actions are presented below. UPM monitors the effectiveness

of its actions to manage material impacts by tracking and reporting on

the progress of its sustainability targets for 2030. Refer to » S1-5 Targets

related to UPM's workforce.

Responsible leadership

Key actions

UPM continuously develops leadership capabilities and management

teams, as well as the working environment. UPM provides leaders with

tools for receiving feedback to develop their leadership and teams. They

receive relevant and timely employee engagement data about their

teams and organization.

UPM also provides a leadership development program portfolio that

supports the three cornerstones of leadership at UPM: leading oneself;

leading people; and leading business.

Leadership development focus areas and solutions are continuously

reviewed and renewed. UPM focuses on improving the performance and

motivation of people through feedback, development planning, agile goal

setting, and regular one-to-one discussions.

Actions in 2025

• New programs on business acumen and impactful communication in

UPM’s global leadership development portfolio

• AI upskilling and "Let's talk AI" team discussions

• Implementation of a new 360 leadership assessment tool

Planned actions

• Continuous renewal of the program portfolio to ensure relevant

leadership capabilities for any business situation

• People manager development solutions to strengthen leadership which

enables everyone to grow, perform, and achieve business results

• Encouraging experimentation to promote creativity, testing of ideas,

and data-driven decisions

• AI upskilling continues

Learning and development

Key actions

UPM encourages its employees to pursue professional growth and

supports them in learning and developing their skills further. Ensuring high

performance for business success and continuous professional

development of employees are UPM's long-term targets and an

important focus area for its work in social responsibility.

UPM invests in the growth of its employees and expects individuals to

be eager to learn and develop. All employees are encouraged to create an

individual development plan and keep it up to date. UPM applies the

70-20-10 learning and development framework: 70% of the learning takes

place on the job; 20% comes from sharing with and learning from

colleagues; and 10% comes from training. Expert communities play an

important role in sharing and learning across the company. The learning

impact is measured by evaluating the degree to which participants apply

what they have learned during training when they are back on the job.

UPM continuously introduces new digital learning content and online

programs to develop skills in commerce, sourcing, finance, compliance,

safety, leadership, and design thinking, for example. New digital solutions

to enhance operator experience were created and tested successfully on

some production sites and promoted to others. In the longer run,

shopfloor employees will be able to access relevant digital learning

content in the flow of work more easily.

UPM encourages and enables employees to contribute to projects

such as gigs and expert communities. These are good ways to contribute,

learn new skills and network. UPM has developed a project approach to

support the project way of working and enable success in different

development projects.

Actions in 2025

• Continued to promote digi-enabled operator experience

• Created a development concept for shopfloor employees

• Implemented microlearning creation tools

• Implemented an AI-assisted corporate chatbot for finding information

and learning from the company’s content

• Created new digital learning program concepts on business acumen

development available to all employees

• Reviewed the current state and created a vision for the Learning end-

to-end process

• Created an AI learning hub and started AI upskilling across the

company

Planned actions

• Make growth support visible through feedback, development planning,

renewed shopfloor discussions, and promotion of job rotation

• Provide relevant digital learning for shopfloor employees and programs

to build business acumen

• Use AI to improve onboarding, enable personal productivity, and

enhance learning experiences

• Pilot AI-assisted tools and chatbots to create and deliver learning

content efficiently

• Maintain and expand learning content in the AI learning hub


UPM Financial Report 2025	213

Diversity and inclusion

Key actions

Developing a diverse and inclusive workplace starts with three things:

committing to diversity and inclusion; monitoring data and processes

regularly; and developing leadership and working culture. UPM's approach

to promoting diversity and inclusion is also enshrined in its Code of

Conduct and other company policies, its social responsibility targets,

inclusive leadership, and transparent recruitment.

UPM regularly reviews its diversity status and data. UPM's

management teams conduct self-assessments that address diversity

and inclusion. Managers and HR have dashboards with diversity data.

Processes such as rewarding and recruitment are followed up regularly.

UPM also regularly reports progress in several external indices. UPM's

internal analysis confirm that men and women have equal opportunities

for professional growth at UPM. UPM has set a target for female

representation in professional and management roles.

Actions in 2025

• Diversity and inclusion discussions continued in businesses and

functions

• BeU Employee Resource Group for LGBTIQ+ remained active and

contributed to the implementation of the BeU Safe Contacts concept

• Emerged gender pay gap closed

Planned actions

• Continue benchmarking – learning from other companies that have

successfully implemented LGBTIQ+ initiatives

• Embed BeU Safe Contacts concept in UPM and have a network of safe

contacts available for employees to discuss workplace inclusion and

LGBTIQ+ related topics

• Continue implementing female leadership target setting-related action

plans

• Review of HR-related guidelines from D&I point of view

Fair rewarding

Key actions

In accordance with the UN's Sustainable Development Goals, UPM has

set clear focus areas and targets for its work on social responsibility. UPM

wants to ensure fair, equitable, and competitive rewarding for all UPM

employees globally. UPM is committed to gender pay equity and to

paying at least the living wage to all its employees. UPM's commitment to

fair rewarding is stated in UPM's Code of Conduct and further specified in

its policies and rules on rewarding. UPM's commitment to fair rewarding is

included in its 2030 social responsibility targets, where UPM has two

specific initiatives: first, ensuring all UPM employees’ pay meets at least

the local living wage; second, ensuring gender pay equity for all

employees. For both these initiatives, UPM is committed to conducting

annual reviews and to close any identified gaps in pay.

UPM has been monitoring and paying a living wage to all UPM

employees since 2019. UPM's commitment to pay the living wage covers

all countries where it operates and applies to both salaried and shopfloor

employees. UPM conducts an annual living wage assessment in

collaboration with an external partner, using a proven methodology,

process and benchmarks. UPM's partner helps define the baseline and

provides living wage estimates for all countries and cities where UPM

operates.

UPM has also carried out an annual gender pay gap review and

corrected unexplained pay gaps since 2021. UPM's commitment to

gender pay equity covers all countries where UPM operates and applies to

both salaried and shopfloor employees. UPM's gender pay equity review

seeks to identify possible gender pay gaps that cannot be explained by

such factors as job performance, work experience, job grade, or location,

or any other legitimate factors that typically determine pay and its

development.

In 2023, UPM joined the UN Global Compact Forward Faster Initiative

with 138 other companies. The goal of this initiative is to accelerate

progress towards the 2030 Sustainable Development Goals. By joining

the Gender Equality area of action, UPM commits to advance equal

representation, participation, and leadership across all levels of

management and equal pay for work of equal value. UPM's commitment

in particular encompasses two focus areas: promoting gender equality

and ensuring living wages.

Actions in 2025

• Annual review conducted successfully for both gender pay equity and

living wage review, and identified gaps have been closed

• Continuous and proactive training and coaching for managers and

business HRs conducted to support them in pay determining

situations. In addition, a tool is offered to support business HRs in pay

equity in pay determining situations.

• Continuous focus on robust people processes and reliable and

comprehensive data

Planned actions

• Continue to develop methodology and process for both gender pay

equity and living wage annual reviews, in collaboration with established

external partners, to gain further potential and drive progress in fair

rewarding focus areas

• Continue to discuss these topics with various stakeholders across the

organization and continue the training

• Preparations for the implementation of the EU Pay Transparency

Directive to ensure compliance with new requirements coming into

effect in 2026

Safe and healthy working environment

Key actions

UPM's safety work is based on long-term planning, effective

communications, and leadership. Safety is integrated into all UPM's daily

operations, and in new and ongoing projects, proactive safety is an

integral part of project plans and site practices.

UPM's H&S management systems are based on the principle of

continuous improvement and include extensive internal and external

audits and management reviews. The systems cover 100% of UPM's units

and all their employees, as well as all contractors working on site. Annual

safety audits are an integral part of UPM's H&S management system.

Cross-functional audits provide valuable feedback on selected H&S


UPM Financial Report 2025	214

processes and daily activities. UPM's safety standards cover procedures

such as risk assessment, permits to work, safe contractor work, safety

reporting, etc.

All accidents, near-misses, and other incidents are documented and

evaluated in UPM's global safety tool. UPM also documents incidents

involving contractors' employees. All employees and contractors have

access to the tool and are encouraged to report deviations and also

positive safety observations. UPM aims to have an accident-free

workplace. All accidents are thoroughly investigated in close cooperation

with the authorities and contractors. Corrective and preventive actions

are initiated, and the key learning points are shared across all operations

to prevent similar accidents in the future. The thorough investigation of

incidents and effective risk management play an important role in

making UPM's operations safer. UPM recognizes exemplary safety

performance with company-wide awards.

The safety training needs of UPM's employees are assessed based on

the employee's role and needed safety-related skills and competence and

input from safety committees, suggestions from employees or

management, results of audits and incident investigations, changes in

legislation, changes in processes, etc. A training plan is then drafted, and

relevant trainers are identified. Trainers can be internal experts or external

specialists. Safety training can take the form of e-learning, classroom

sessions, hands-on training, or a combination of these.

Actions in 2025

• The company-wide Safety project aiming to improve safety-related

processes and tools from employees’ perspective was completed. The

focus areas of the project covered various topics from improving the

safety onboarding and training to more user-friendly digital tools and

systems and improving the efficiency of the safety audits to boosting

the safety culture and leadership.

• UPM continued to systematically develop process safety–related

competencies, with the number of completed process safety trainings

increasing by approximately 70% compared to the previous year. The

current state analysis of process safety continued in operations

including the definition of the business area specific development plans

for the coming years. Process safety development items were executed

according to the business area or mill specific plans. Process safety

aspects were reviewed as part of the loss prevention surveys conducted

by an external partner at the mills.

• UPM continued to implement the UPM Health and Well-being concept.

The health and well-being pulse survey was conducted in May. In general,

scores were the same or slightly better than in 2024 pulse survey.

Planned actions

• Implementation of the improved safety processes developed in the

company-wide Safety project will continue in 2026.

• Safety development projects will continue focusing on the digital tools

and systems.

• UPM will continue to organize process safety related targeted trainings.

The business areas will continue to implement their own process safety

action plans.

• The development of a global concept for occupational health will

continue.

Resources

In general, workforce-related activities are included in UPM's overall

investment and resource planning.


UPM Financial Report 2025	215

Targets

S1-5

Targets related to UPM's workforce

To manage its sustainability activities, UPM has set several targets and

key performance indicators for its workforce-related sustainability focus

areas. UPM's sustainability targets are developed internally by UPM by

taking the views, wishes, and perspectives of external stakeholders from

UPM's constant multi-stakeholder dialogue into account. The targets are

approved by the GET. Refer to » ESRS 2 GOV-1 Oversight and

management of impacts, risks and opportunities


Sustainability focus area and key performance indicator	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Continuous learning and development
Goal setting discussions are held, and development plans are created for employees	2021	88% and 70%	100% completion rate	86% (85%) of employees completed individual goal setting or annual discussion, 81% (78%) of employees had a development plan documented
Employee perception of good opportunities to learn and grow, as evaluated in the Employee Engagement Survey	2021	Below benchmark	Clearly above benchmark	Average score of 65 (65). Below global average benchmark by 8 points.
Responsible leadership
Employee engagement, as evaluated in the Employee Engagement Survey	2021	Below benchmark	Clearly above benchmark	Average score of 67 (70). Below global average benchmark by 8 points.
Diversity and inclusion
Employees' sense of belonging as evaluated in the Employee Engagement Survey	2021	Below benchmark	Among the top 10% of benchmark companies	Average score of 67 (68). Below top 10% benchmark companies by 13 points.
Continuous improvement in female representation in professional and managerial roles. Developing leadership and decision-making capabilities with increased diversity	2022	30.7%	40% female representation	35.4% (34.5%)
Diversity and inclusion initiative	Since 2021	-	Continuous	Dialogue continued on developing inclusive behaviors. Implemented Safe Contact concept. Gender pay gap closed.
Fair rewarding
Employees' pay meeting at least local living wage: implementing an annual review	Since 2021	-	Continuous	Company-wide review done considering the threshold of typical family for local living wage. Pay adjustments implemented to close identified pay gaps related to local living wage.
Gender pay equity for all employees: implementing an annual review process to identify and close unexplained pay gaps	Since 2021	-	Continuous	Company-wide review done, and pay adjustments implemented to close identified statistically significant unexplained gaps related to gender.
Safe and healthy working environment
Fatalities or serious accidents in UPM operations	Since 2015	-	0 (continuous)	0 (0) fatal accidents, 2 (3) serious accidents
Total recordable injury frequency (TRIF), including contractors	2017	8.5	<2	TRIF 6.4 (6.1) for UPM workforce and 5.0 (5.1), including contractors
Process safety integrated in safety management	Since 2021	-	All sites and businesses	Process safety action plan implementation and competence development continued in all business areas
Employees' sense of work-life balance, as evaluated in the Employee Engagement Survey	2022	Below benchmark	Among the top 10% of benchmark companies	Average score of 73 (72). Below top 10% benchmark companies by 7 points
Absenteeism rate, UPM employees	2015	3.7%	<2%	4.2% (4.2%)

UPM regularly measures progress. For example, the results of the annual

Employee Engagement Survey (EES) are used as key performance

indicators for several of the targets. The high participation rate of 78%

(76%) indicates that UPM's employees are interested in improving their

workplace. For other targets, key performance indicators are also followed

up at least annually at Group level. H&S indicators such as TRIF are


UPM Financial Report 2025	216

followed up monthly. Benchmark comparisons are used for specific

indicators, referring to the survey provider’s Global Benchmark, which is

based on survey data compiled from all of the provider’s customers. The

targets “among the top 10% of benchmark companies” refer to the survey

provider’s Global High Performing Benchmark, representing the top 10th

percentile.

Metrics

Characteristics of UPM's employees

S1-6

Headcount by gender


Gender	Number of employees (headcount) 2025	Number of employees (headcount) 2024
Male*	11,441	11,989
Female*	3,673	3,835
Not disclosed*	2	3
Not reported**	11	0
Total employees	15,127	15,827

*Gender as reported by the employee. At UPM, employees can choose the gender they

report. UPM does not have visibility of the legal gender of its employees.

** Employee-related data is not yet maintained in UPM systems

Headcount by country (with more than 50 employees)


Gender	Number of employees (headcount) 2025	Number of employees (headcount) 2024
Finland	5,866	6,222
Germany	3,134	3,390
United Kingdom	582	445
Poland	1,268	1,270
France	165	197
Austria	6	7
Estonia	260	263
Spain	64	64
China	1,371	1,513
United States	719	745
Uruguay	887	874
Malaysia	163	162
South Africa	30	39
Mexico	124	133

Refer to » Report of the Board of Directors, Key figures: personnel at the

end of period.

Headcount by gender and contract type


	Female*	Male*	Not disclosed*	Not reported	Total
Number of employees (headcount)	3,673	11,441	2	11	15,127
Number of permanent employees (headcount)	3,338	10,612	2	—	13,952
Number of temporary employees (headcount)	335	829	0	—	1,164
Number of non-guaranteed hours employees (headcount)**	9	29	0	—	38
Number of full-time employees (headcount)	3,429	11,182	2	—	14,613
Number of part-time employees (headcount)	244	259	0	—	503

*Gender as reported by the employee. At UPM, employees can choose the gender they report. UPM does not have visibility of the legal gender of its employees.

**Of all the countries in which UPM operates, only Finland currently uses the term 'non-guaranteed hours employees'. UPM is currently collecting information about whether such employees

exist in other countries. For Finland, the number of such employees is very small, and reporting the number is therefore not considered material.


UPM Financial Report 2025	217

Headcount by region


	Americas	Asia	Europe	Rest of the world	Total
Number of employees (headcount)	1,775	1,697	11,578	77	15,127
Number of permanent employees (headcount)	1,754	1,384	10,739	75	13,952
Number of temporary employees (headcount)	18	309	835	2	1,164
Number of non-guaranteed hours employees (headcount)*	0	0	38	0	38
Number of full-time employees (headcount)	1,742	1,692	11,104	75	14,613
Number of part-time employees (headcount)	30	1	470	2	503

*Of all the countries in which UPM operates, only Finland currently uses the term 'non-guaranteed hours employees'. UPM is currently collecting information about whether such employees

exist in other countries. For Finland, the number of such employees is very small, and reporting on these employees is therefore not considered material.

Employee turnover


	2025	2024
Total number of employees who left UPM	1,980	2,148
Rate of employee turnover	13.1%	13.6%


	Reporting principles for metrics

Employee figures are based on UPM's global total headcount definition,

including employees classified as active and inactive, and are calculated

as heads unless otherwise stated. Headcount is calculated at the end of

the reporting period.

All types of contracts are divided into two categories: permanent and

temporary ("fixed-term" in GRI and UPM terminology). Permanent

contracts include all contracts valid until further notice, as well as

employees not covered by employment contracts, such as in the U.S.,

where all employees are classified as "Employment at Will".

Turnover is calculated based on the number of all types of

terminations, whether voluntary or involuntary (number of persons leaving

Jan. 1–Dec. 31/Total headcount Dec. 31).

Contextual information

In 2025, UPM Communication Papers closed its Kaukas paper mill in

Finland and its Ettringen paper mill in Germany. UPM Adhesive Materials

transferred production from the Kaltenkirchen site in Germany to other

European sites and decided to convert the Nancy factory in France into a

slitting and distribution terminal in 2026. As part of a long-term strategic

partnership, UPM Fibres sold its Korkeakoski sawmill in Finland to

Versowood. In 2025, UPM also exited the biomedical business. In February

2025, UPM Adhesive Materials acquired Metamark, a UK-based

company with a manufacturing site in Lancaster.

UPM's total headcount figure includes 11 employees for whom the

employee-related data is not yet maintained in UPM systems. These

employees are included in the total headcount and the headcount by

country but are otherwise defined as "not reported".

Characteristics of non-employees in UPM's

own workforce

S1-7

Headcount of non-employees


	2025	2024
Total number of non-employees (agency-hires) in UPM's own workforce	409	344

The number of agency hires has been fairly stable throughout the year

and over the years.


	Reporting principles for metrics

UPM's non-employees consist of two categories: independent

contractors; and agency hires. Independent contractors are self-

employed individuals who provide services or labor to UPM and are

bound by a direct contractual arrangement other than a contract of

employment. UPM currently estimates that the number of such

independent contractors in UPM is very small and therefore not material

to report. Agency hires are individuals employed by employment agencies

or labor contractors to work at UPM's sites under UPM's direct

supervision. Agency hires are not directly employed by UPM.

The most common type of non-employees are agency-hired

employees, who are provided to UPM by companies whose main activity

is employment. Agency-hired employees do not have an employment

contract with UPM and are not included in UPM's official employee

figures. Examples of the types of work they perform are: production

operators; mechanical technicians; automation technicians; forklift truck

operators; quality operators; and converting department operators;

finishing department operators; coating department operators; or

administration and finance specialists.

UPM has made an internal survey across all sites to gather information

about the number of independent contractors. The number of

independent contractors is very small, thus they are not material to report.


UPM Financial Report 2025	218

Collective bargaining coverage and

social dialogue

S1-8

The percentage of total employees covered by collective bargaining

agreements was 48% (49%) in 2025.


	Collective bargaining coverage		Social dialogue
Coverage rate	Employees – EEA* (for countries with >50 empl. representing >10% total empl.**)	Employees – non-EEA* (estimate for regions with >50 empl. representing >10% total empl.)	Workplace representation (EEA* only) (for countries with >50 empl. representing >10% total empl.)
0–19%	—	Asia	—
20–39%	—	—	—
40–59%	Finland	Americas	—
60–79%	Germany	—	—
80–100%	—	—	Finland, Germany

*European Economic Area

**For UPM operating countries, only Finland and Germany fulfil these criteria

Since 2010, UPM has had its own European Forum agreement, which is an

agreement provided for the European Works Council (EWC) Directive and

covers UPM employees in EEA.

Diversity metrics

S1-9

Gender distribution of top management


Gender	Top management*
Gender	Number	Percentage
Female	30	36%
Male	54	64%

* Two levels below the President and CEO, excluding assistants

Employees by age group


Age group	Number of employees (headcount) 2025	Number of employees (headcount) 2024
Under 30	1,875	2,071
30–50	7,844	8,188
Over 50	5,397	5,568
Not reported	11	0
Total	15,127	15,827


UPM Financial Report 2025	219

Adequate wages

S1-10

All UPM own employees are paid at least an adequate wage in line with

applicable benchmarks in the disclosure requirements. UPM is using the

living wage concept to review this annually. The living wage is an

equivalent concept to adequate wages, which provides a more specific

cost of local living as a benchmark. UPM's living wage review is conducted

annually in cooperation with an established external partner using a

proven methodology, process and benchmark, including local living wage

threshold values of typical family for all UPM's operating countries and

cities. If any pay gaps are identified, adjustments to pay are made

annually.

UPM's living wage review is global by default, applies to both salaried

and shopfloor employees in UPM operating countries, and includes those

workforce segments where salaries can be reasonably and fairly adjusted.

If the global assessment shows unexpected wage gaps, they are

corrected. In the review, an employee’s total annual salary is assessed

against the local living wage threshold. Total annual salary includes pay

elements which are qualified as regular and guaranteed pay, e.g. base

salary, regular shift pay, and fixed cash allowances. All unexpected living

wage gaps are vetted by appropriate human resource personnel. Local

information is utilized to validate the proposed adjustments to make sure

that all contextual factors are taken into account. These control

mechanisms ensure that living wage adjustments are also locally justified

and enable UPM to correct living wage gaps.

Social protection

S1-11

For 2025, UPM’s disclosure covers its ten largest operating countries:

Finland, Germany, Uruguay, China, Poland, the U.S, the UK, Estonia,

France, and Malaysia. These countries account for approximately 95% of

UPM’s employees. Employees in these countries are covered against

sickness, unemployment, injury and disability, parental leave, and

retirement. In the U.S., the parental leave coverage includes only maternity

leave. In the UK, the injury and disability coverage applies after five years

of service.

Persons with disabilities

S1-12

Due to legal restrictions, UPM cannot require its employees to report their

disabilities. This information can only be collected on a voluntary basis,

and UPM does not currently collect such information.

Training and skills development

S1-13

In 2025, 81% (78%) of employees had documented development plans,

and 86% (85%) had completed individual goal setting or annual

discussion.

Participation in regular performance and career development reviews


	Development plan documented	Individual goal setting or annual discussion completed
Female	74%	82%
Male	83%	87%
Not disclosed	—	—
Total	81%	86%

Average number of training hours per employee


	2025	2024
Female	8	8
Male	9	9
Not disclosed	—	—
Total	9	9

Health and safety

S1-14

Percentage of employees covered by H&S management systems


	2025	2024
UPM's H&S management system	100%	100%
Third-party certified H&S management system	74%	74%

All UPM's employees are covered by UPM's Health and Safety (H&S)

management system. The majority of UPM's production units have the

ISO 45001 Occupational Health and Safety management system

certification. In 2025, certified systems were in place in 43 units with a total

of 11,200 employees, which covers 74% of all UPM employees.

The number of non-employees in UPM's own workforce (agency hires)

is so small that it would not affect the overall percentage, so the

breakdown is not disclosed.


UPM Financial Report 2025	220

Health and Safety (H&S) metrics for UPM workforce


UPM workforce	2025	2024
Total injuries per one million hours worked, TRIF *	6.4	6.1
Lost-time accidents per one million hours worked, LTAF	4.0	3.4
Number of accidents *	164	166
Number of serious accidents	1	2
Number of fatalities **	0	0
Number of days lost due to work-related injuries *	4,300	3,200
Absenteeism %	4.2	4.2
Number of work-related ill-health cases ***	12	4

*The number of non-employees in UPM's own workforce (agency hires) is so small that a

breakdown is not material.

**No non-employees fatalities – breakdown therefore not disclosed.

***No work-related illnesses involving non-employees – breakdown therefore not disclosed.

Health and Safety (H&S) metrics for UPM workforce and contractors


UPM workforce including contractors	2025	2024
Total injuries per one million hours worked, TRIF	5.0	5.1
Lost-time accidents per one million hours worked, LTAF	3.2	3.2
Number of accidents	225	253
Number of serious accidents	2	3
Number of fatalities	0	0


	Reporting principles for metrics

Lost-time accident frequency

Lost-time accidents per million hours worked. The calculation is as

follows: ('Lost Time Accidents'+'Serious Accidents'+'Fatal accidents')/

(Actual hours worked)*1,000,000. Lost time accident – an accident at work

which resulted in one or more days of absence or disability. Lost-time

accident type excludes modified duties, medical treatment, and first aid

cases but includes serious and fatal accidents. UPM reports separately

for workforce (including UPM employees and supervised workers) and

contractors. Disclosure is based on the following annual data: incidents

occurring from January to December; and actual hours worked from

December to November.

Total Recordable Injury Frequency

Recordable injuries per million hours worked. The calculation is as follows:

('Lost Time Accidents'+'Serious Accidents'+'Fatal accidents'+'Modified

duty'+'Medical treatment')/'Actual hours worked (UPM)'*1,000,000. Total

Recordable Injury type excludes first aid cases. UPM reports separately

for workforce (including UPM employees and supervised workers) and

contractors. Disclosure is based on the following annual data: incidents

occurring from January to December; and actual hours worked from

December to November.

Contractors and contractor working hours

A contractor is a person or organization which provides services to UPM

as agreed. Contractor personnel are not directly employed by UPM.

Contractors' actual working time consists of all hours contractors have

worked in UPM premises or under UPM supervision. Contractor working

hours are used to calculate lost-time accident frequency and total

recordable injury frequency. If working hours are not collected based on a

time attendance system, an estimate is used. UPM has defined and

published the method for calculating contractor working hours if the

exact number is unavailable. Estimates are based on the number of

workers or on contract monetary value.

Absenteeism %

Absence percentage due to illness and accidents at work. Illness includes

Absence hours due to illness, Absences due to accidents during travel to/

from work and Absence hours due to accidents during time off work.

Accidents at work include Absences due to accidents at work and

Absences due to occupational diseases and illnesses. These figures are

added and then divided by Theoretical working time and then multiplied

by 100. All hours of absence from work due to accidents at work are

included (including the hours of the day when the accident occurred).

Number of occupational diseases

(= Work-related ill health)

The number of new cases which have been officially diagnosed and

reported as occupational diseases during the reporting year. The

reporting year is the last year, except for Germany, where cases are

reported for the penultimate year.

Serious occupational accidents

(= High-consequence work-related injuries)

Accidents at work causing: Life-threatening injury requiring intervention of

emergency response personnel to provide life sustaining support; Life-

altering injury/Permanent disability: An injury resulting in permanent or

long-term impairment or loss of use of an external organ, body function,

or body part.


UPM Financial Report 2025	221

Remuneration metrics

S1-16

Gender pay gap

From 2021, UPM has carried out on a voluntary basis an annual

company-wide process to review and close any possibly identified

unexplained pay gap between the genders. The review applies to all UPM's

operating countries and includes both salaried and shopfloor employees.

This commitment is in alignment with the company’s disclosed 2030

social responsibility targets in the fair rewarding focus area. For this

annual review, UPM applies a framework of an adjusted pay gap concept,

which takes the typical legitimate drivers of pay and pay development

into account – for example, the type and level of the job performed, the

country and the location of the job, the individual’s performance and work

experience, etc. These drivers are included in the review using a statistical

model. If any unexplained pay gaps are identified between men and

women performing the same type of job with equal value, the company is

committed to close them on an annual basis. In 2025, UPM continued

monitoring the situation through the established process, and pay

adjustments were implemented to close identified statistically significant

unexplained gaps related to gender. The company's initiative is

exceptional among its peer companies. Further details on the statistical

methodology can be found in the UPM GRI content index.

The raw pay gap, as defined by the standard S1-16 and its disclosure

requirements, is calculated purely by dividing the difference of average

gross hourly pay of all male and all female employees by the average

gross hourly pay of all male employees. In contrast with the adjusted

gender pay gap framework, this raw pay gap framework and calculation

does not take into account, for example, the number and distribution of

the company's male and female employees in different countries and

locations or the different types and levels of jobs performed by the

company's male and female employees, or the experience and

performance of the employees and the varying labor market conditions,

all of which are considered legitimate factors typically driving pay and pay

development decisions. Consequently, as the legitimate factors affecting

pay in real life are not captured in the calculation methodology, the

calculated pay gap value is purely artificial and not a representation of

real equal pay practices in the company's countries of operation. The

company's voluntary commitment to an annual review of gender pay

equity status via the adjusted pay gap framework takes these legitimate

factors into account as described above.

In 2025, the UPM global raw pay gap, calculated in accordance with

disclosure requirements as of December 31, 2025, was 9.7%.

Total remuneration ratio

The annual total remuneration ratio of the highest paid individual to the

median paid employee at UPM is 24.9. The total annual remuneration

includes the following elements: salaries, allowances, bonuses and share-

based payments. The pay ratio is calculated by dividing the remuneration

of UPM's highest paid individual with the remuneration of UPM median

paid employee.

Incidents, complaints and severe human

rights impacts

S1-17

No severe human rights incidents connected to UPM's workforce were

reported during the reporting period. The severity of incidents is assessed

based on the UN Guiding Principles on Business and Human Rights.

47 (57) cases, which were reported by employees and other

stakeholders through UPM’s misconduct channel, were falling under the

category of “Respect people and human rights” in 2025. More specifically,

these related to e.g., alleged discrimination or harassment, inappropriate

behavior, breach of safety rules, and alleged breach of labor laws in

connection with recruitment or termination of employment. The number

of alleged discrimination or harassment cases was 7 in 2025. Only a

minority relate to gender-based discrimination, with a few reported cases

each year.

UPM's employees have multiple ways to raise concerns: they can

discuss them with their manager, discuss them with a representative of

UPM's Legal and Compliance, Human Resources or Internal Audit

functions, or they can use the UPM Report Misconduct channel (available

anonymously). Refer to » G1-1, Reporting and identifying concerns


UPM Financial Report 2025	222

Workers in the value chain (ESRS S2)

UPM's human rights due diligence process includes various actions to gain an insight into the perspective of

workers. These include forest certification systems and related audits and worker engagement, supplier audits, and

contractor reviews, including respective worker interviews and continuous dialogue with suppliers.




Supplier audits conducted based on identified sustainability-related risks	Contractor reviews with focus on working conditions in Uruguay	Training for employees and suppliers on the renewed UPM Supplier and Third-Party Code
80	2,000


UPM Financial Report 2025	223

Impacts, risks and opportunities

ESRS 2 SBM-3

Overview of material impacts, risks and opportunities


Material topics	Impacts, risks and opportunities	Description
Sourcing	Potential negative impact*: Human rights violations affecting people in the supply chain	There is a risk in UPM's multi-tier supply chain related to labor exploitation, forced labor, health and safety, and environmental incidents, for example. UPM's sourcing practices aim to minimize the risk and any potential negative impacts to people or the environment.
	Opportunity: Creating business value through supplier development and collaboration	UPM seizes sustainability-related opportunities to create business value through supplier development and collaboration. UPM's sourcing targets focus on selected environmental, social and governance issues. UPM uses joint development and innovation projects with its suppliers and various sustainability initiatives to promote sustainability in selected areas.
	Risk: Disruptions in UPM's supply chain	A lack of skilled workforce is a risk for UPM's supply chains and sourcing. Traditional blue- collar jobs may not attract new skilled employees e.g. in forest harvesting or traditional manufacturing jobs.
Health and safety at UPM sites and forestry operations	Positive impact: Increased focus on health and safety measures for contractors working at UPM's operations	Contractor safety is a Group-wide focus area for the company. All contractor workers receive a general safety induction and detailed safety training focusing on specific risks at their workplace.
	Negative impact*: Health and safety incidents, including serious accidents and fatalities for contractors working at UPM's operations	Although several measures are taken to prevent injuries and accidents to employees and contractors on UPM's production sites and forestry operations, a risk remains. The importance of health and safety is also addressed and followed up with contractors, but negative impacts can occur. These negative impacts are related to individual incidents.
	Risk: Potential injury to UPM's contractors or third parties working at UPM’s operations	Failure to maintain a high level of safety management could result in physical injury, illness, or liability to UPM's contractors or third parties. These risks are managed through established management procedures, health and safety precautions, and loss prevention programs.

* UPM's identified material potential negative impacts are not seen as widespread or systemic but are related to potential individual incidents.

Relation to UPM's business model and

strategy

Suppliers are an essential part of UPM's value chain. They also play an

important role in UPM's business-specific growth projects. Supplier

management, with the required competencies and digitalization, boosts

product development and the commercialization of new products. Refer

to » ESRS 2 SBM-1, Suppliers

UPM buys products, materials, and services from some 17,000 B2B

suppliers worldwide. Approximately 51,000 contractors' workers provided

services, such as maintenance, construction, and logging on UPM's

production sites and forestry operations during 2025.

Description of value chain workers in UPM's

reporting scope

The following categories of value chain workers could be materially

impacted by UPM and are included in the scope of UPM's disclosure:

• Workers working on the undertaking site but who are not part of UPM's

own workforce: Contractors and their workers or subcontractors who

work on UPM's production sites and forestry operations. The workers are

controlled by the contractor and perform services such as technical and

maintenance services, construction services and forestry services,

facility services like cleaning, catering or security, IT services, etc.

• Workers working for entities in the undertaking's upstream value chain:

Workers and contractors working for UPM's suppliers such as suppliers

of raw materials or services.

• Workers working for entities in the undertaking’s downstream value

chain: Workers and contractors working for UPM's service suppliers

such as suppliers for outbound logistics.

• Particularly vulnerable workers: UPM recognizes young workers,

migrant workers, women, indigenous peoples, and temporary and

contractor workers as having a higher risk of potentially experiencing

adverse human rights impacts.


UPM Financial Report 2025	224

Country- and commodity- and industry-specific risks are assessed and

mitigated within the scope of UPM's high sustainability risk supplier

framework. These risks may occur beyond the second tier of UPM's

supply chains and are commonly linked to primary production (such as

agriculture, forestry, and mining) and/or countries' contexts where the rule

of law is weaker.

Results of UPM's human rights due

diligence

As part of UPM's ongoing human rights due diligence, UPM has identified

groups who are at higher risk of experiencing potential adverse human

rights impacts. Based on UPM's assessments and dialogue with various

stakeholders, UPM has defined migrant workers, women, young workers,

and temporary and contractor workers as groups with a higher risk of

potential adverse human rights impacts across UPM's value chain. UPM

also recognizes that indigenous people are often among the most

marginalized and vulnerable populations.

UPM has identified its salient human rights issues, i.e. human rights

that are at risk of the most severe negative impact from UPM's

operations or business relationships. UPM regularly analyzes the saliency

of its human rights impacts based on severity and likelihood, recognizing

that UPM's impacts on people continue to evolve as its business changes,

and its approach to due diligence develops.

UPM has identified forced labor and labor exploitation as a salient

human rights risk in some of UPM's contracted services and global

supply chains and recognizes migrants as a particularly vulnerable group

of workers. In the latest saliency assessment, the risk rating of certain on-

site and forestry services was updated, and particular attention was paid

to various business development projects and their assessment of

human rights risks.

UPM does not use or tolerate the use of forced labor in any form in its

own operations or in its supply chains.

Human rights due diligence is part of UPM's overall sustainability due

diligence processes. Refer to » ESRS 2 GOV- 4 Sustainability due

diligence

Policies

S2-1

The UPM Code of Conduct expresses the Company's respect for people

and human rights, the environment, and ethical business practices. The

Code is complemented by UPM's Sustainability Policy Statement, which

addresses the topic and related processes in more detail. The UPM

Supplier and Third-Party Code sets out minimum requirements for the

value chain. Refer to » G1-1 Policies

In addition, specific aspects are covered in the following policy

documents, programs and supplier requirements:

• Supplier Assessment Criteria

• UPM Sustainable Supply Chain Program, Refer to » G1-2 Sustainable

Supply Chain Program

• Category-specific requirements, e.g. for wood suppliers, pulp,

chemicals, on-site contractors, or logistics

• UPM Forest Action Program

• UPM Safety Rules, Refer to » S1-1 UPM’s Human Resources & Safety

Rules

• UPM Safety requirements for contractors

• UPM Standard for Community Engagement and the Share and Care

Program

The UPM Supplier and Third-Party Code covers all suppliers and third

parties (e.g. agents, advisers, representatives, joint ventures, joint venture

partners, local partners, and distributors) acting on behalf of UPM.

Suppliers are also covered by UPM's Sustainable Supply Chain Program,

which addresses social topics, as well as environment and governance. In

addition, wood suppliers and forest contractors are covered by the UPM

requirements for wood suppliers and the UPM Forest Action Program.

UPM's Safety Rules cover UPM's own workforce, as well as UPM's

business partners and their employees, i.e. contractors, working on UPM's

production sites and forest operations. These Rules are specified in more

detail in UPM's Safety requirements for contractors.

UPM's human rights policy commitments

UPM is committed to respecting human rights in line with the United

Nations Guiding Principles on Business and Human Rights. UPM

respects the UN Universal Declaration of Human Rights, the ILO

Declaration on Fundamental Principles and Rights at Work, and the

OECD Guidelines for Multinational Enterprises. UPM also promotes the

human-rights-related principles of the UN Global Compact. UPM expects

a similar commitment from its suppliers, third parties, and joint venture

partners, as set out in the UPM Supplier and Third-Party Code.


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Respect for human rights

The UPM Supplier and Third-Party Code states that UPM's suppliers and

third parties must:

• Treat people (e.g., own employees, employees of contractors and other

suppliers, and stakeholders) with dignity.

• Respect universal human rights such as access to clean and healthy

environment, freedom of thought, opinion, expression, religion, and

freedom from any discrimination based on e.g., race, age, nationality,

gender or sexual orientation, political or union affiliation, or freedom

from any form of harassment.

• Identify, prevent, and mitigate adverse human rights impacts in its

operations and activities.

• Provide adequate wages and respect local laws and applicable industry

standards on working time and compensation, freedom of association,

and right to collective bargaining.

• Respect children's rights and not use or tolerate the use of child labor.

Follow the minimum age set by local laws or the International Labour

Organization’s (ILO) definition of minimum age of 15 years, whichever is

higher. Ensure that special protections are in place for young workers

(those below the age of 18 and above the legal minimum working age).

• Ensure no form of forced labor (including, but not limited to, modern

slavery and human trafficking) is used or tolerated in any of its

operations or activities directly or indirectly.

• Ensure the health, safety, and security of its employees, other people

working on its sites and premises (e.g. employees of contractors),

visitors as well as other people impacted by its operations.

• Comply with UPM's safety requirements when working at or visiting

UPM sites and carry out necessary safety training. Ensure that the

rights and title to property and land of the individual, indigenous people,

and local communities are respected.

UPM strives to ensure compliance with its values and commitments by

implementing a company-wide compliance program through the UPM

compliance system. The compliance system is embedded in UPM's

governance model and is designed to enhance company performance

and a culture of integrity at all levels. Risk assessments, including human

rights-related risks, are part of the UPM compliance system.

Refer to » G1-3 UPM Compliance system

UPM has ongoing due diligence processes to identify, prevent,

mitigate, and account for how UPM addresses its adverse impacts on

people or the environment. In terms of human rights and environmental

due diligence in its supply chain, UPM uses a risk-based approach that

consists of various elements applied before and during the onboarding of

new suppliers and monitoring of business partners. These elements

include counterparty screening, enhanced due diligence and Know Your

Supplier screenings, forest and other certification systems, third-party

sustainability assessments by EcoVadis, and the high sustainability risk

supplier framework and model. We also conduct regular supplier audits

and contractor reviews.

In 2025, UPM carried out 80 (97) supplier audits and reviews globally.

In addition, subcontractor workers were interviewed on their terms and

conditions of work during the pulp mill maintenance shutdowns in

Finland. In Uruguay, about 2000 contractor reviews focusing on working

conditions were carried out.

Refer to » G1-2 Supplier audits and reviews

For processes related to engagement with value chain workers and

measures to provide and/or enable remedy for human rights, refer to

» S2-2 and » S2-3.

Processes

Processes for engaging with

value chain workers

S2-2

Stakeholder engagement is an essential part of UPM's business

operations and activities and is implemented as appropriate to the topic

and the nature and scale of the activities.

Occupational health and safety is one of UPM's salient human rights

issues in the supply chain. UPM's internal H&S audit program includes

engagement with contractors’ employees. Contractors and their

employees on UPM's sites are required to adopt UPM's safe working

practices and to comply with the rules and standards established by

UPM. UPM also expects them to participate in hazard identification and

proactive safety reporting. Before entering a UPM production site,

contractors are required to attend UPM's safety induction and training,

which covers the company's safety requirements.

In UPM's wood sourcing and forestry operations a continuous

dialogue with stakeholders is also essential. The FSC Controlled Wood

requirements are the minimum requirements that UPM applies to all its

sourced wood (100% coverage). The requirements include a wide range of

criteria related to the legality of the wood, respect for traditional and civil

rights (including the rights of indigenous and tribal people), protection of

areas of high conservation values, maintaining or improving the social

and economic well-being of workers, and stakeholder engagement and

dialogue. Processes are in place for providing feedback or submitting

concerns to UPM. Refer to » S2-3 Processes for raising and handling

concerns. Feedback and concerns are handled promptly in accordance

with the chain-of-custody, forest certification and ISO 14001

environmental management systems. Stakeholders are informed of the

actions taken by UPM in response to their feedback.

There is also an annual stakeholder consultation process related to

UPM's FSC forest management certificates. The focus of the consultation

process is to identify forests with high conservation values and the

actions required to maintain them. During the consultation process,

stakeholders are also invited to express their other views on forest

certification.

In general, UPM's human rights due diligence processes include steps

and measures to gain insight into the perspective of workers. These

include forest certification systems and related audits and worker

engagement, supplier audits, and contractor reviews, including respective

worker interviews and continuous dialogue with suppliers by UPM

sourcing professionals or through collaboration forums such as the

Together for Sustainability (TfS) initiative or UN Global Compact. In

Uruguay, UPM conducts social monitoring involving contractor workers.

UPM also promotes local and global grievance mechanisms.


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The Senior Vice President of the Sourcing function and the Executive

Vice Presidents of the business areas have the operational responsibility

for ensuring engagement with value chain workers.

Processes for raising and handling

concerns

S2-3

UPM monitors and works to remediate negative human rights impacts of

which it becomes aware, and which the company's activities have

contributed to or caused. Remediation is specified case by case, based

on verified impacts.

UPM establishes channels for reporting concerns, reviews reports

carefully, handles personal data appropriately, ensures protection against

retaliation, and treats all reports in strict confidence. Investigations are

conducted by designated people with the necessary competences. If a

report is substantiated, UPM takes appropriate disciplinary and/or legal

action, and lessons are learned. Refer to » G1-1 Reporting and identifying

concerns

Local stakeholders can report their concerns directly to UPM

representatives at the mills and other sites and through locally provided

channels such as email and telephone. In addition, UPM has other local

grievance channels for specific business contexts and local needs such

as the “how am I driving” solution in Uruguay, which focuses on road

safety.

UPM Report Misconduct channel SpeakUp® is communicated to the

suppliers as part of the UPM Supplier and Third-Party Code. Suppliers

are also informed about the existing grievance mechanisms, e.g. during

supplier audits and other interactions such as contractor safety

induction. The forest certification systems also have existing grievance

mechanisms.

Actions

S2-4

UPM's identified material topics have been defined as a result of a double

materiality assessment, including UPM's Corporate Human Rights

Saliency Assessment, considering impacts, risks, and opportunities

related to workers in the value chain. The following UPM focus areas are

relevant for workers in the value chain:

• Responsible sourcing (with a target on spend covered by UPM Supplier

and Third-Party Code);

• Forestry (with a target for certified fibre share)

• Safe and healthy working environment (with targets for fatalities,

serious accidents and injury frequency)

Action plans have been established to achieve the Group-level targets, as

well as other relevant areas for continuous improvement. The key actions,

previous year's key actions, planned key actions and overarching

concepts are presented below.

UPM monitors the effectiveness of its actions to manage material

impacts by tracking and reporting on the progress of its sustainability

targets for 2030. Refer to » S2-5 Targets. Furthermore, UPM reviews the

effectiveness of its risk management procedures quarterly through its

Compliance system. Refer to » G1-3 UPM compliance system

Responsible sourcing

Key action

UPM's responsible sourcing practices and priorities are formulated in the

cohesive overarching Sustainable Supply Chain Program. Refer to

» G1-2 Sustainable Supply Chain Program for a general description of the

program and the risk mitigation approach.

The program defines prioritized ESG topics. In the social area, these

are labor and human rights, as well as health and safety. Based on

systematic risk assessment, UPM engages in informed risk mitigation

activities. UPM sourcing professionals promote respect for people and

human rights among their suppliers. This means understanding the

relevant risks associated with their sourcing categories, integrating these

considerations into category strategies, and planning and implementing

appropriate management activities. These activities can entail further

supplier assessments, audits, and relevant corrective actions.

Actions in 2025

• Refer to » G1-2 Supplier audits and reviews

• UPM continued its efforts in contractor management, focusing on

contractors operating at UPM's production sites and in forestry.

Limitations on the use of subcontractors were introduced, and the

contractual requirements related to social responsibility and labor

rights, specifically for on-site work, were strengthened. Furthermore, the

subcontractor approval and due diligence processes were developed

and internal trainings were organized to identify and address social

responsibility risks in subcontracting chains.


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• During pulp mill maintenance shutdowns in Finland, UPM interviewed

subcontractor employees to assess their working conditions. These

interviews were followed by feedback sessions with contractors.

• UPM introduced training for its renewed Supplier and Third-Party Code

both for its employees and suppliers.

• Further advances were made in the supply chain collaboration

program between UPM and its direct starch suppliers, which focuses

on improving the working conditions of the farm workers in Thailand

(UPM's tier 2-3 suppliers). Building on the previous program stages of

farm auditing, identification of improvement areas, target setting and

action planning, the program introduced Sustainable Agriculture

Initiative's (SAI) Farm Sustainability Assessment (FSA) as a means of

establishing and verifying adequate labor conditions at farms.

• A Corporate Human Rights Saliency Assessment was carried out.

• Implementation of the Sustainable Supply Chain Program continued.

Planned actions

• Continue development work and actions to achieve the targets set for

2030.

• Continue the contractor management project in 2026. Refer to » S2-4

Responsible sourcing, Actions in 2025

• Drive the implementation of the sustainable supply chain program in

sourcing categories: The most relevant program themes for each

sourcing category will be identified and integrated into category plans

and strategies to guide everyday supplier management activities.

Health and safety of contractors working

on UPM sites and forest operations

UPM's safety work is based on long-term planning, effective

communication, and leadership. Safety is integrated into all daily

operations, and measures and standards cover UPM's own workforce, as

well as contractors working on UPM's production sites and forest

operations. For more information on key actions, actions in 2025 and

planned actions, Refer to » S1-4 Safe and healthy working environment

UPM's actions, » S2-4 Actions, and targets, » S2-5 Targets, address

the material risk which UPM identified related to workers in the value

chain, » S2-1 Overview. The effectiveness of actions is tracked by a regular

follow-up of targets. At the same time, the actions support the identified

material opportunity by creating business value through supplier

development and collaboration. Refer to » S2-1 Overview

Incidents and remediation

In 2025, no severe human rights incidents were reported in connection

with UPM's value chain that were caused or contributed to by UPM's

activities.

UPM monitors and works to remedy adverse human rights impacts of

which it is aware, and which its activities have caused or contributed to.

Remediation is specified case by case, based on verified impacts. The

UPM compliance system covers remedy practices and ensures the

adequacy of the process.

Resources

In general, activities related to workers in the value chain are included in

UPM's investment and resource planning.


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Targets

S2-5

Targets related to UPM's value chain

workers

To manage its sustainability activities, UPM has set a number of targets

and key performance indicators for its sustainability focus areas covering

the supply chain (forestry, responsible sourcing) and suppliers working on

site in UPM's premises (health and safety). UPM's sustainability targets

are developed internally by UPM by taking the views, wishes, and

perspectives of external stakeholders from UPM's constant multi-

stakeholder dialogue into account. The targets are approved by the GET.

Refer to » ESRS 2 GOV-1 Oversight and management of impacts, risks

and opportunities


Sustainability focus area and key performance indicator	Base year	Base year value	2030 target	Target follow-up 2025 (2024)
Forestry
Share of certified fibre *	2015	84%	100%	90% (88.5%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	86% (91%)
Safe and healthy working environment
Fatalities or serious accidents in UPM operations	Since 2015	-	0 (continuous)	0 (0) fatal accidents, 2 (3) serious accidents
Total recordable injury frequency (TRIF), including contractors	2017	8.5	<2	TRIF 5.0 (5.1), including contractors

*Forest management certification

UPM's sustainability target-setting is based on an annually updated

double materiality assessment, which includes the interests and concerns

of various stakeholders. Refer to » ESRS 2 IRO-1 Materiality assessment

process

UPM's sustainability targets are followed up at Group level at least

annually.

In addition to setting targets, UPM continuously strives to improve its

processes and performance, including in relation to workers in the value

chain. The improvement areas are identified in various supplier

assessments. Supplier audits and reviews form the basis for supplier

development activities and collaboration, which drive improvement in the

suppliers' performance. Corrective action plans and follow-up

assessments and audits are utilized to confirm that identified

improvement areas are addressed. For example, UPM's health and safety

management systems are based on the principle of continuous

improvement. Refer to » S1-4 Safe and healthy working environment for

information about UPM's key actions in this area. Refer to » S1-14 Health

and Safety for information about reporting principles for metrics such as

TRIF.


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Affected communities (ESRS S3)

UPM aims to be a good neighbor and trusted partner to all people, economies, and environments that are directly

or indirectly affected by its operations. This means active engagement and dialogue with local communities.




A new UPM standard for community engagement and the Share and Care Program	Supported local youth, education, and environmental initiatives in the mill communities, and global humanitarian organizations that provide aid to children suffering from conflicts	Under the Share and Care Program local support and charitable donations amounted to approximately
		1.7
		€ million


UPM Financial Report 2025	230

Impacts, risks and opportunities

ESRS 2 SBM-3

Overview of material impacts, risks and opportunities


Material topics	Impacts, risks and opportunities	Description
Local engagement	Positive impact: Impact on local development through UPM’s production sites and investments	UPM promotes positive impacts in local communities in various ways, for example, through the development of infrastructure. Surrounding communities also benefit from tax payments and employment opportunities. Measures also include apprenticeship programs in Finland, Germany, and Uruguay, and collaboration with educational institutions to contribute to science and research and increase the social capital and skills. UPM's Share and Care Program shares resources with causes that promote the vitality and well-being of communities where UPM operates. In Uruguay, the UPM Foundation (Fundación UPM) promotes education and entrepreneurship through cooperation with social organizations and local representatives.
Local engagement	Potential negative impact*: Environmental incidents or safety incidents, as well as restructuring situations, may affect people in the communities surrounding UPM's sites and forestry operations	Potential material negative impacts can occur as a result of safety incidents in transportation to and from UPM's paper mills, pulp mills, biorefineries, and forestry operations, environmental incidents in UPM’s operations, or a decrease in employment and taxes because of UPM's restructuring measures, for example. UPM manages these for example by certified environmental and safety management systems, internal standards and other locally defined measures.

*UPM's identified material potential negative impacts are not seen as widespread or systemic but are related to potential individual incidents.

Relation to UPM's business model and

strategy

Building and maintaining good relations with and supporting the vitality of

local communities close to UPM's operations is essential for the

acceptability of operations and identifying the challenges, key risks, and

opportunities in the operating context. Active and open dialogue with

communities supports the management of the impacts of UPM's

operations and activities, and contributes to the sustainable development

of surrounding communities. In general, human rights considerations and

due diligence requirements are integrated into UPM's global processes,

which form the basis for UPM's business model.

UPM identified its material positive and potential negative impacts for

communities during its double materiality assessment, including the

Corporate Human Rights Saliency Assessment. However, none of these

material impacts is considered as resulting in a material financial risk or

opportunity. Refer to » ESRS 2 IRO-1 Materiality assessment process

Description of communities affected by

UPM's operations

The following types of communities could be materially impacted by UPM

and are included in the scope of UPM's disclosure:

• Communities living or working around the undertaking’s operating

sites: UPM considers the local communities close to its pulp mills,

paper mills, biorefineries, and forestry operations as those who are

potentially materially impacted by its operations. The main production

units are UPM's pulp mills, paper mills, and biorefineries, which are

located in China, Finland, Germany, the UK, Uruguay, and the U.S.

UPM's own forest areas are located in Finland, Uruguay, and the U.S.

They are considered particularly relevant due to their importance for

local communities. The focus of UPM's reporting is on its operational

countries with significant landholdings such as forestry or plantations

operations.

• For example, UPM Forestal Oriental in Uruguay operates in five regions

in the departments of Cerro Largo, Colonia, Durazno, Flores, Florida,

Lavalleja, Paysandú, Río Negro, Rivera, Rocha, Salto, Soriano,

Tacuarembó and Treinta y Tres. In every region, UPM identifies and

works with affected communities. UPM reviews the planning of

operations annually (including planting, harvesting, loading, and

transportation), identifying the areas that will be affected, and the

activities that will be carried out with the communities to prevent,

mitigate, and accommodate such activities.

• Communities along the undertaking's value chain: UPM's wood and

other applicable wood-based raw material sourcing complies with

forest certification requirements on responsible land tenure and

securing the land-use rights of indigenous peoples.

• Communities of indigenous people: UPM recognizes that the most

marginalized and vulnerable populations (e.g. indigenous and tribal

peoples) may be disproportionally affected by land acquisition and/or

use of wood and other natural resources and therefore require special

safeguards. UPM recognizes that its landholdings and wood sourcing

in the U.S. may have potential impacts on indigenous communities.

Forest certification systems and other safeguards are established to

avoid potential negative impacts, so this is not considered a potential

material negative impact.


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Understanding potential impacts on

communities

The material impacts, risks and opportunities related to affected

communities have been identified in UPM's double materiality

assessment and in UPM's Corporate Human Rights Saliency

Assessment. In accordance with the UN Guiding Principles on Business

and Human Rights (UNGPS), UPM pays particular attention to

individuals or groups who may be at higher risk of negative human rights

impacts due to their vulnerability or marginalization, such as women,

young workers, migrant workers, and indigenous peoples. Active and open

dialogue with local communities is key to understanding these potential

and actual impacts in different operating contexts.

All UPM sites that may have a significant impact on local

communities identify and map their stakeholders and engage with them

according to their stakeholder engagement plan. This process allows

them to identify and understand their potential impacts on local

communities, build community dialogue, and support the planning of

long-term initiatives.

In Uruguay, UPM regularly conducts social monitoring surveys

through an external provider to gather public opinion on its forestry

operations, nurseries, and pulp mills. The surveys include interviews with

local community members and contractor employees, focusing on their

perceptions, knowledge, and expectations regarding UPM’s activities.

Topics include plantation forestry, mill operations, environmental

protection, certification, protected areas, job satisfaction, income, safety,

and access to training.

Because of their size and nature of their operations, UPM's pulp mills,

paper mills, biorefineries, and forest operations are considered relevant for

actual and potential material impacts on local communities such as

community safety and land rights, for example. In recent years, there has

been a special focus on pulp production and forest operations in Uruguay

because of the construction and startup of a new pulp mill.

Policies

S3-1

The UPM Code of Conduct expresses the company's respect for people

and human rights, the environment, and ethical business practices. The

Code is complemented by UPM's Sustainability Policy Statement, which

addresses the engagement with stakeholders and society and company

processes, e.g. related to sustainability due diligence. The UPM Supplier

and Third-Party Code sets out minimum requirements for suppliers and

other third parties. Refer to » G1-1 Policies

In addition, specific aspects are covered in the following policy

documents, programs and requirements:

• UPM Standard for community engagement and the UPM Share and

Care Program

• UPM Sustainable Supply Chain Program, Refer to » G1-2 Sustainable

Supply Chain Program

• UPM Requirements for wood suppliers

• UPM Forest Action Program

The policy documents cover communities in UPM's area of influence and/

or communities in suppliers’ area of influence. There is a special focus on

communities with potential impacts from forest management and

harvesting via UPM's requirements for wood suppliers and the UPM

Forest Action Program.

Human rights in the affected communities