We strive to support the sustainable development of the societies where we operate. Building and maintaining good relations with and supporting the vitality of local communities close to our operations is essential for us and our business success. Being a global company with local impacts, we have significant financial and social impact on many communities.
Committed to community involvement
In co-operation with communities
Our engagement with communities is founded on decades of close co-operation. In many cases, communities have grown around our operations over the years. We aim to be a good neighbour and a trusted partner to the people living close to our operations.
We are committed to maintaining an active dialogue with the communities around us. Understanding the impact that we have is an essential component of our business success. In many locations, we are a significant employer, taxpayer and partner to local entrepreneurs, making positive contributions to the local economy. We apply several precautionary measures to mitigate and remedy potential adverse environmental and social impacts on our surrounding communities.
- Environmental Impact Assessments with regard to new investments
- Human rights due diligence in our own operations and supply chain
- Environmental Management Systems, such as ISO 14001 for production units
- Sustainable forest management certification of our own forestry operations and suppliers
- Restructuring processes planned in co-operation with local authorities
We create value as a company and through our products
We promote responsible practices throughout the value chain and actively seek sustainable solutions in co-operation with our customers, suppliers and partners. Creating value for society both as a company and through our products is an essential element of our Biofore strategy.
Our activities and products have an impact on society as a whole. We constantly aim to better understand and communicate our added value. We disclose our direct and indirect value creation as part of our Annual Reporting.
In our extended pulp and paper mills’ EMAS statements (EU Eco-Management and Audit Scheme), we strive to address our local societal impact as well as traditional environmental issues. As part of these reports, we provide verified concrete information on, for example, our contribution to employment, our tax revenue and purchasing power, and our co-operation with communities.
In 2017, we carried out a pilot study on the monetary value of our key environmental and social impacts in selected areas. Impacts were calculated when possible and relevant, showing qualitative and quantitative indicators. The methodologies used were the Social Capital Protocol and the Natural Capital Protocol of the World Business Council for Sustainable Development (WBCSD). The study included five evaluation cases.
The pilot cases were:
- Climate change
- Treated waste water
- Waste
- Citizen wellbeing
- Employee wellbeing
UPM’s economic impact is significant in the surrounding communities. The company’s operations contribute to local, regional and national economies by generating economic benefits for different stakeholder groups. The related direct monetary flows below indicate the extent of added value globally in 2018 (EUR million).
| Direct economic value created | |
| Sales | 10,483 |
| Income from sale of assets | 33 |
| Income from financial investments | 4 |
| Other income | 38 |
| 10,558 |
| Economic value distributed | |
| Operating costs | -7,515 |
| Employee wages and benefits | -1,193 |
| Payments to providers of loans | -35 |
| Dividend distribution | -613 |
| Corporate income taxes paid and property taxes | -283 |
| Donations | -0 |
| -9,639 |
- Economic value retained: 919 EUR million
Employment multiplies when taking into account our suppliers’ indirect impact
At the end of 2018, we had around 19,000 employees working in 46 countries. In addition, thousands of people were employed by the companies providing materials and services to us.
We have over 24,000 material and service suppliers globally. Our sourcing network includes suppliers ranging from private forest owners to international corporations. For example, harvesting, logistics and forestry operations are handled by a network of local entrepreneurs. There were over 6,000 harvester and forwarder drivers and more than 5,000 truck drivers working for those entrepreneurs in 2018. UPM Wood Sourcing and Forestry creates employment opportunities for thousands of people living in rural areas within our wood sourcing spheres.
We pay corporate income taxes where added value is created and where profit is generated. Taxes are paid in accordance with the local tax legislation and regulations of the country in question. Our consistently positive financial performance also generates higher corporate income tax revenues. Due to our corporate and operational structure, we mainly report and pay our corporate income taxes in the countries of production and in the countries where innovations are being developed.
In addition to the taxes we pay on income, our various production inputs and outputs are also subject to taxation. These are typically local taxes in the countries of production (for example, energy taxes, real estate/land and property taxes) or in the countries where our customers are located (for example, value added taxes, customs and duties and various excise taxes). These taxes may either be paid or collected by UPM for further remittance to tax authorities. In addition to these taxes, our local impact is augmented by the taxes paid in local communities by our employees and by those indirectly employed by us.
There are four major principles in our tax policy:
- Compliance with relevant statutory legislation and rules
- Management of tax risks, both financial and non-financial
- Transparency of tax issues and an overall requirement of commercial rationale concerning tax-related transactions
- Continuous enhancement of shareholder value by aiming for efficient, optimum and cost-effective tax processes, business transactions and structures
In restructuring situations, we work in close co-operation with various authorities and other external parties, and provide financial support for retraining and re-employment, new business launches and relocation. In these situations, we follow local labour laws.
In addition to mandatory obligations, we run extensive re-employment programmes for employees affected by a permanent closure of our operations or by restructuring. The key elements of our re-structuring programme are retraining, re-employment and relocation within the company, support for entrepreneurship and severance payments. We also offer different kinds of outplacement programmes that provide guidance for people within the scope of re-structuring. Active measures promoting employment and retraining are carried out in close co-operation with various authorities and other third parties.
In Finland, the employer’s minimum notice period is determined in the Finnish Employment Contract Act and collective agreements, based on the length of employment: for employment of less than 12 years, the notice period varies between 14 days and four months, and for employment exceeding 12 years it is six months. Similarly, in Germany the minimum notice period is determined by the German Civil Code and adhered to by collective agreements. It is calculated based on the length of employment: from zero up to 20 years, the notice period varies accordingly from four weeks to seven months. In China, the minimum notice period is 30 days and is defined in local legislation.
