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FINANCIAL REPORT 2024

Report of the Board of Directors	1
Financial statements	145
Auditor's report	223
Other financial information	241
Financial information 2015-2024	243

Report of the

Board of Directors

UPM FINANCIAL REPORT 2024	2

Market environment in 2024	3
Results	4
Outlook for 2025	6
Operations	7
Sustainability Statement 2024	16
Research and development	137
Information on shares	141

UPM introduction and business model

We are a material solutions company and provide renewable

alternatives to fossil-based materials used in everyday life. We seek

profitable, sustainable growth through performance and capitalising on

our major investments. Our strong and balanced business portfolio in

renewable fibres, advanced materials and decarbonisation solutions

provides us with several attractive growth opportunities.

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 and responsible 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		Top performance Competitive advantage 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-facing 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 co-operation with our customers, suppliers and partners.

UPM FINANCIAL REPORT 2024	3

Market environment in 2024

The global economy is projected to have grown by 3.1% in 2024,

indicating a modest but steady growth trajectory despite geopolitical

tensions and economic policy shifts. The year began with inflation rates

still elevated, but a downward trajectory set in, and by the end of the

year global inflation stood at 5.8%. Global trade grew by 2.7%

according to the WTO but was still below its peak in 2022. Trade in

services was more robust than in goods, however.

Russia’s ongoing war in Ukraine continued to impact global politics.

The concerted international effort to respond to Russia's actions in

Ukraine continued. Both the number and intensity of sanctions increased,

targeting key sectors, and preventing sanctions evasion. The escalation

of the conflicts in the Middle East affected key shipping lanes, leading to

increased costs, longer transit times and supply chain disruptions. The

conflict affected the dynamics of global trade, led to volatility in energy

prices and undermined economic confidence.

In 2024, the European economy is projected to have grown by

around 1.0%, reflecting uneven growth across countries. Growth

remained weak particularly in Germany. Energy prices stabilised and

inflation declined but remained above the ECB's target.

The US economy grew robustly, with real GDP expansion surpassing

2.5%, driven by consumer spending and investment in technology and

R&D. Inflation eased toward the Fed's target, prompting interest rate

cuts. The presidential elections introduced policy uncertainty in the latter

part of the year.

The Asia-Pacific region continued to grow, albeit at a slightly slower

pace, with an average growth rate of about 4.6% through 2024.

Domestic demand in East Asia and India was resilient. In China,

consumer spending remained tepid and retail sales growth fell short of

expectations.

Energy and climate change remained in international debate, with

progress on the global transition to a low-carbon economy markedly

lacking. 2024 was confirmed to be the hottest year on record,

surpassing the previous record set in 2023. The UN Climate Change

Conference (COP29) in Baku, Azerbaijan, underscored the importance

of ambitious targets to achieve the goal of limiting global temperature

rise to 1.5°C. Nearly 200 countries pledged to transition away from

fossil fuels in energy systems.

To achieve the goal of halting and reversing biodiversity loss by

2030 and promoting nature's recovery, COP29 reaffirmed the

commitment to implement the Kunming-Montreal Global Biodiversity

Framework agreed at the UN Biodiversity Conference (COP15) in

2022. Effective implementation requires adequate financial resources as

well as robust planning, monitoring, reporting and review mechanisms.

Both COP processes have an influence on global regulations. The

European Union, for its part, formulated several significant new ESG-

related regulations in 2024 that are expected to come into force soon

and aim to promote sustainability, transparency, and accountability in

business practices.

The recovery of UPM's product markets continued in 2024, but as

the year progressed it became clear that growth would remain modest.

Market deliveries increased mainly in pulp, and more modestly in self-

adhesive labels, specialty papers and plywood. Input costs decreased,

except for Nordic wood costs. UPM reduced fixed costs and took other

measures to improve performance.

Global demand for chemical pulp was robust, and UPM's deliveries

increased significantly with the completion of the ramp-up of the Paso de

los Toros pulp mill in Uruguay. The railway from the mill to the port of

Montevideo was gradually brought to full capacity by the end of the

year. The average European market price in euros was 17% higher for

NBSK and 18% higher for BHKP compared to 2023. In China, the

average market prices increased much less, by 2% and 6% respectively

in US dollars.

In 2024, demand for sawn timber was still subdued due to low

construction activity in many areas. Prices recovered compared to 2023

but were offset by rising wood costs.

Electricity prices in Europe declined in 2024, after the highs of

previous years, with intermittent volatility due to weather, market

dynamics and geopolitical events. The average Finnish area spot price

on the Nordic electricity exchange was 19% lower than in 2023. The

Olkiluoto nuclear power plant had longer than expected maintenance

shutdowns, reducing UPM’s nuclear power volumes.

In 2024, the global market for self-adhesive label materials grew

from the low levels of 2023, particularly in Europe. Market prices

declined. Global demand for label, release liner and packaging papers

was solid throughout the year. UPM's delivery volumes increased for

specialty grades and decreased for fine grades. Market prices

decreased compared to the previous year. The fine paper markets in

China and the whole Asia-Pacific region were weak but showed slight

signs of recovery towards the end of the year.

Demand for graphic papers in Europe increased by 1% in 2024

compared with 2023. Market prices decreased for all paper grades.

Paper production at UPM Hürth ceased in August and at UPM Nordland

Papier PM 3 in December, reducing UPM’s annual capacity by

330,000 tonnes of newsprint and 280,000 tonnes of uncoated fine

paper.

Demand for spruce plywood in the panel trade and for veneer

continued to be weak. Demand for birch plywood in the panel trade

was solid, mitigating lower demand from industrial end-uses such as

automotive flooring. Demand for birch plywood for LNG end-uses was

robust.

The European market for advanced renewable fuels remained weak

as imports continued to supply the market. Germany adopted regulation

to suspend the use of surplus greenhouse gas emissions to meet its 2025

and 2026 targets. Construction and commissioning of the Leuna

biochemicals refinery in Germany continued throughout the year. Interest

in bio-based glycols and renewable functional fillers remained strong.

UPM FINANCIAL REPORT 2024	4

Key figures

	2024	2023	2022
Sales, EURm	10,339	10,460	11,720
Comparable EBITDA, EURm	1,734	1,573	2,536
% of sales	16.8	15.0	21.6
Operating profit, EURm	604	608	1,974
Comparable EBIT, EURm	1,224	1,013	2,096
% of sales	11.8	9.7	17.9
Profit before tax, EURm	500	464	1,944
Comparable profit before tax, EURm	1,123	934	2,066
Profit for the period, EURm	463	394	1,556
Comparable profit for the period, EURm	953	755	1,679
Earnings per share (EPS), EUR	0.82	0.73	2.86
Comparable EPS, EUR	1.74	1.40	3.09
Return on equity (ROE), %	4.0	3.2	13.0
Comparable ROE, %	8.3	6.2	14.0
Return on capital employed (ROE), %	4.1	3.5	12.8
Comparable ROCE, %	8.2	6.4	13.6
Operating cash flow, EURm	1,352	2,269	508
Operating cash flow per share, EUR	2.54	4.25	0.95
Equity per share at the end of period, EUR	20.89	20.93	23.44
Capital employed at the end of period, EURm	15,452	14,916	17,913
Net debt, EURm	2,869	2,432	2,374
Net debt to EBITDA	1.66	1.55	0.94
Personnel at the end of period	15,827	16,573	17,236

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

Results

2024 compared with 2023

2024 sales were EUR 10,339 million, 1% lower than the EUR 10,460

million for 2023. Sales in UPM Fibres increased significantly with the

completion of the ramp up of the Paso de los Toros pulp mill in Uruguay.

Sales decreased in UPM Communication Papers, the Other operations

reporting segment and UPM Specialty Papers.

Comparable EBIT increased by 21% to EUR 1,224 million, 11.8% of

sales (1,013 million, 9.7%), mainly driven by higher delivery volumes

and lower fixed costs. On the Group level, the change in sales prices

had a negative impact, which was more than offset by the declining

variable costs.

Delivery volumes increased in UPM Fibres, UPM Raflatac and UPM

Plywood. In 2024, fixed costs were EUR 103 million lower than in the

previous year.

Depreciation, amortisation and impairment charges excluding items

affecting comparability, totalled EUR 590 million (543 million) including

depreciation of leased assets totalling EUR 85 million (87 million). The

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

80 million (-17 million).

Operating profit totalled EUR 604 million (608 million). Items

affecting comparability in operating profit totalled EUR -620 million in

the period (-405 million). In 2024, items affecting comparability include

EUR 373 million impairment of assets in biochemicals refinery in Leuna

resulting from cost overruns and construction delays during the first-of-its-

kind project. The remaining book value of the refinery closely aligns with

the estimated cost of constructing a comparable plant in the current

economic environment. Additionally, items affecting comparability

include EUR 5 million impairment of UPM Biochemicals goodwill, and

EUR 113 million impairment of Pulp operations Finland goodwill

resulting from high wood costs. Other items affecting comparability

include EUR 10 million restructuring charges and EUR 26 million

impairment charges of fixed assets related to planned closure of UPM

Raflatac Kaltenkirchen factory in Germany, EUR 40 million of

restructuring and impairment charges related to the closure of Hürth

newsprint mill in Germany, EUR 54 million restructuring and impairment

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

Germany, EUR 4 million write down of inventory at the Raflatac mill,

located in Western North Carolina, USA, which was impacted by

Hurricane Helene, EUR 12 million restructuring and impairment charges

related to the closure of the UPM Biocomposites business, a EUR 21

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

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

current assets, EUR 12 million other restructuring costs and EUR 8 million

related to prior capacity closures. In 2023, items affecting comparability

include EUR 120 million restructuring charges and EUR 112 million

impairment charges of fixed and leased assets related to the closure of

the UPM Plattling paper mill in Germany and EUR 13 million

restructuring charges and EUR 2 million impairment charges related to

restructuring measures at the UPM Raflatac Nancy factory in France,

EUR 86 million decrease in the fair value of forest assets in Finland

resulting from changes in estimates and increase in discount rate, EUR

30 million restructuring charges relating to the closure of paper machine

6 at the UPM Schongau mill in Germany, EUR 10 million charges

UPM FINANCIAL REPORT 2024	5

related to the sale of the Steyrermühl site in Austria, EUR 23 million of

other restructuring charges, EUR 3 million charges related to Sierilä

power plant project impairment in Finland, EUR 6 million capital loss

resulting from the sale of Russian operations and EUR 5 million capital

gains on sale of other non-current assets.

Net interest and other finance costs were EUR -97 million (-70

million). The exchange rate and fair value gains and losses were EUR -7

million (-74 million). Items affecting comparability in finance costs

totalled EUR -3 million (-65 million). In 2023, items affecting

comparability in finance costs include EUR 71 million exchange rate

losses relating to the sale of Russian operations. Income  taxes totalled

EUR -37 million (-71 million). Items affecting comparability in taxes

totalled EUR 133 million (109 million).

Profit for 2024 was EUR 463 million (394 million), and comparable

profit was EUR 953 million (755 million).

Financing and cash flow

In 2024, cash flow from operating activities before capital expenditure

and financing totalled EUR 1,352 million (2,269 million). Working

capital increased by EUR 80 million (decreased by 417 million).

Net debt was EUR 2,869 million at the end of 2024 (2,432 million).

The gearing ratio as of 31 December 2024 was 25% (21%). The net

debt to EBITDA ratio, based on the last 12 months' EBITDA, was 1.66 at

the end of the period (1.55).

On 31 December 2024, UPM's cash funds and unused committed

credit facilities totalled EUR 3.2 billion. The total amount of committed

credit facilities was EUR 2.3 billion of which EUR 260 million maturing

in 2026 and EUR 2.1 billion maturing in 2027 or beyond.

On 21 August 2024, UPM issued a new EUR 600 million Green

Bond under its EMTN (Euro Medium Term Note) Programme and Green

Finance Framework.

For the 2023 financial year, the dividend of EUR 1.50 per share was

paid in two equal instalments. The first instalment of EUR 0.75 per share

(totalling EUR 400 million) was paid on 16 April 2024, and the second

instalment of EUR 0.75 per share was paid on 7 November 2024

(totalling EUR 400 million).

Capital expenditure

In 2024, capital expenditure totalled EUR 550 million, which was 5.3%

of sales (1,122 million, 10.7% of sales). Capital expenditure does not

include additions to leased assets.

In 2025, UPM's total capital expenditure, excluding investments in

shares, is expected to be about EUR 400 million.

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

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

commissioning and start-up was initiated in late 2024, and the total

investment estimate is EUR 1,275 million.

Personnel

In 2024, UPM had an average of 16,282 employees (17,109). At the

beginning of the year the number of employees was 16,573 and at the

end of 2024 it was 15,827.

Further information about personnel is available in » Sustainability

Statement 2024 .

Biochemicals refinery investment

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

tonnes next-generation biochemicals refinery in Leuna, Germany. The

investment estimate is EUR 1,275 million. 

The commissioning and start-up was initiated in late 2024 and good

progress has been made in most units. However, in the quality

assurance checks, certain corrective works required in the sugars-to-

chemicals process were identified. These works have been arranged

and will take a few months. Meanwhile, the sequential start-up in the

other units continues. The integrated commercial production of the site is

expected to start in H2 2025. The biorefinery is expected to reach full

production and positive EBIT in 2027.

Meanwhile, the overall business readiness is ensured. All teams,

business processes and systems are operational, we have secured the

required materials to start and run the refinery as well as the

infrastructure and capacity to ship our products. Commercial interest for

the products and side-streams has been confirmed with customer

contracts. We are managing a sales and customer qualification pipeline

multiple times the annual capacity.

The biorefinery is the first of its kind and the process design as well

as some of the technologies used are new to the world. We have full

confidence in the technologies used and the viability of the process.

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. The

investment opens up totally 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 be based on UPM’s high

standards.

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. In

October 2020, UPM entered into service agreements with InfraLeuna

GmbH related to wood handling, wastewater treatment and other

utilities, which will be recognised as lease assets and liabilities under

IFRS 16 Leases upon the commencement date. The total amount of such

lease assets and liabilities is estimated to be EUR 130 million.

The Leuna biorefinery is a first-of-its-kind project, which has been

implemented during a series of external crises, such as the Coronavirus

pandemic and the war in Ukraine with subsequent resource and supply

chain challenges. As the project is approaching completion, an

impairment of EUR 373 million was booked in Q4 2024 on the

biorefinery assets resulting from the cost overruns and construction

delays during the project. The book value of the refinery now reflects the

estimated cost to construct a similar plant.

UPM FINANCIAL REPORT 2024	6

Biofuels business development

In January 2021, UPM started the basic engineering phase of a next

generation biofuels refinery. The planning for the potential biorefinery in

Rotterdam, the Netherlands, is based on annual capacity of up to

500,000 tonnes of high-quality renewable fuels including advanced

biofuels and possibly sustainable jet fuels, as well as renewable

chemicals. The products would significantly reduce the carbon footprint

of road transport and aviation, as well as replace fossil raw materials

with renewable alternatives in chemicals and bioplastics.

Feedstock sourcing would focus on UPM integrated feedstocks from

the company’s own ecosystem, including various wood-based residues

and potential carbon farming.

The design for the potential biorefinery has progressed, and major

part of the basic engineering has been completed. The chosen

technology has been validated at a demonstration scale. Before the

potential investment decision, the focus will be on testing the novel,

proprietary technology at a larger scale and on flexible feedstock

options that will ensure differentiation and support the long-term

competitiveness of the business case. This work is expected to take

approximately two years, until 2026.

If all preparations are concluded successfully, UPM would initiate the

company's standard procedure of analysing and preparing an

investment decision.

Events during the reporting period

On 2 January, UPM announced that it had completed the sale of the

Steyrermühl site and all related assets to HEINZEL GROUP, thereby

closing the transaction announced in June 2022.

On 6 February, UPM announced that it had been recognised by the

CDP, receiving a double ‘A’ score for transparency on climate change

and forests.

On 4 April, UPM held its Annual General Meeting.

On 29 May, UPM announced plans to permanently close its Hürth

newsprint mill and shut down one fine paper machine at Nordland

Papier (PM 3) in Dörpen, Germany. Production at the Hürth mill ended

in August and at Nordland Papier PM3 in December.

On 18 June, UPM announced plans to discontinue the UPM

Biocomposites business and close biocomposites production units in

Lahti, Finland and in Bruchsal, Germany, by the end of 2024.

On 23 July, UPM announced the acquisition of Grafityp, a Belgian-

based company to further accelerate UPM Raflatac's growth in graphics

solutions.

On 22 August, UPM announced it was temporarily adjusting

production at the UPM Kaukas and UPM Kymi pulp mills in Finland to

meet market conditions.

On 26 August, UPM announced EcoVadis had awarded it a

platinum score based on sustainability performance in four categories:

Environment, Labour and Human Rights, Ethics and Sustainable

Procurement. Only 1% of the 130,000 global companies assessed

received a platinum rating.

On 16 October, UPM issued a profit warning on its Q3 results and

lowered its outlook for 2024 due to lower deliveries in most businesses

and decreased pulp prices.

On 27 November, UPM Raflatac announced the closure of the

Kaltenkirchen factory in Germany to improve efficiency and productivity.

The closure will take place in stages during 2025.

On 2 December, UPM Fibres announced that the change

negotiations in Finland have been completed, resulting in a maximum

reduction of 88 positions and possible temporary layoffs in the first half

of 2025.

Events after the balance sheet date

On 2 January 2025, UPM announced that it has been listed as the only

forest and paper industry company in the Dow Jones Global and

European Sustainability Indices (DJSI) for the years 2024–2025. The

indices cover environmental, social and governance aspects of

responsibility.

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

a UK-based company to further accelerate UPM Raflatac's growth in

Graphics business. The transaction will bring attractive synergies and

make UPM Raflatac a significant player in the fast-growing, high value-

added Graphics segment. The Enterprise Value of the transaction is GBP

146 million.

On 5 February 2025, the Board decided to commence UPM's first

buy-back program of UPM's own shares. The maximum number of

shares to be repurchased is 6,000,000, corresponding to

approximately 1.1% of the total number of shares. The maximum

monetary amount to be used for the program is EUR 160 million.

Profit guidance

UPM’s comparable EBIT in H1 2025 is expected to be approximately in

the range of EUR 400-625 million (EUR 515 million in H1 2024).

Outlook for 2025

UPM’s performance in H1 2025 is expected to benefit from higher

delivery volumes and lower fixed costs, but be held back by lower sales

margins, compared with H1 2024. The year 2025 starts with similar

pulp prices and lower electricity price than 2024 started.

2025 will be the first year of full production at the UPM Paso de los

Toros mill, which is expected to grow pulp deliveries. Deliveries are

expected to continue to increase for labelling materials, specialty papers

and plywood. Communication paper deliveries are expected to

decrease.

Biofuels is expected to improve its performance in H1 2025,

compared with H1 2024.

There are significant uncertainties in geopolitics and the global

business environment, which may impact the development of UPM’s

product deliveries, sales prices and various input cost factors.

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 an annual level.

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

tonne change in average pulp price would impact annual comparable

EBIT by approximately EUR 170 million (net impact: assuming no

correlation between pulp and paper prices) to approximately EUR 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

2025, a EUR 10/MWh change in average electricity market price in

Finland would impact annual comparable EBIT by approximately EUR

30 million.

UPM FINANCIAL REPORT 2024	7

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 three pulp mills in Finland, two mills and plantation operations in Uruguay and operates four sawmills in Finland.

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.

	2024	2023
Sales, EURm	3,728	3,044
Comparable EBITDA, EURm	844	407
% of sales	22.6	13.4
Change in fair value of forest assets and wood harvested, EURm	11	-20
Share of results of associates and joint ventures, EURm	2	2
Depreciation, amortisation and impairment charges, EURm	-437	-273
Operating profit, EURm	419	116
% of sales	11.2	3.8
Items affecting comparability in operating profit, EURm 1)	-114	—
Comparable EBIT, EURm	533	116
% of sales	14.3	3.8
Capital employed (average), EURm	7,153	6,839
Comparable ROCE, %	7.5	1.7
Pulp deliveries, 1,000 t	4,945	4,139

1) 2024 includes EUR 113 million goodwill impairment related to Pulp Finland

and minor restructuring charges.

2024 compared with 2023

Comparable EBIT increased significantly due to higher delivery volumes

and sales prices as well as lower variable costs. The completed ramp-up

of UPM Paso de los Toros increased delivery volumes significantly. Fixed

costs increased due to higher scheduled maintenance activities.

The average price in euro for UPM’s pulp deliveries increased by

5%.

Market environment

• In 2024, chemical pulp demand was lower in China and solid in

other main markets. Demand varied depending on end-use in all the

main markets.

• In 2024, the average European market price in euro was 17%

higher for NBSK and 18% higher for BHKP, compared with 2023. In

China, the average market price in US dollars was 2% higher for

NBSK and 6% higher for BHKP, compared with 2023.

• In 2024, demand for sawn timber was still subdued due to low

construction activity in many areas. Prices recovered compared to

2023 but were offset by strongly increasing wood costs.

Sources: FOEX, UPM

	2024	2023
Sales, EURm	627	628
Comparable EBITDA, EURm	188	189
% of sales	30.0	30.2
Depreciation, amortisation and impairment charges, EURm	-7	-7
Operating profit, EURm	181	182
% of sales	28.9	29.1
Items affecting comparability in operating profit, EURm 1)	—	—
Comparable EBIT, EURm	181	182
% of sales	28.9	29.0
Capital employed (average), EURm	2,426	3,042
Comparable ROCE, %	7.5	6.0
Electricity deliveries, GWh	11,328	12,059

1)  2023 includes EUR 3 million charges related to impairment of the Sierilä

power plant project and EUR 3 million capital gain on sale of other non-

current assets.

2024 compared with 2023

Comparable EBIT remained at the same level. Deliveries decreased,

impacted by longer than expected maintenance shutdowns at the

Olkiluoto nuclear power plant units.

UPM’s average electricity sales price increased by 4% to EUR 51.4/

MWh (49.2/MWh).

Market environment

• The Nordic hydrological balance was well above the long-term

average at the end of December. In Finland, the hydrological

situation was close to the long-term average.

• The CO2 emission daily future price of EUR 70.95/tonne at the end

of 2024 was lower than at the end of 2023 (EUR 77.25/tonne).

• The average Finnish area spot price on the Nordic electricity

exchange in 2024 was EUR 45.6/MWh, 19% lower than in 2023

(EUR 56.5/MWh).

Sources: The Norwegian Water Resources and Energy Directorate, Svensk

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

UPM FINANCIAL REPORT 2024	8

UPM Raflatac

UPM Specialty Papers

UPM Raflatac offers high-quality self- adhesive paper and film products including label materials, graphics solutions and removable self- adhesive products. UPM Raflatac is the second-largest producer of self- adhesive label materials world- wide.

UPM Specialty Papers offers labelling and packaging materials as well as office and graphic papers for labelling, commercial siliconising, packaging, office use and printing.

	2024	2023
Sales, EURm	1,562	1,485
Comparable EBITDA, EURm	177	146
% of sales	11.3	9.8
Depreciation, amortisation and impairment charges, EURm	-71	-47
Operating profit, EURm	88	81
% of sales	5.6	5.5
Items affecting comparability in operating profit, EURm 1)	-44	-22
Comparable EBIT, EURm	132	103
% of sales	8.5	7.0
Capital employed (average), EURm	722	737
Comparable ROCE, %	18.3	14.0

1) 2024 includes EUR 11 million restructuring charges and EUR 26 million

impairment charges related to the planned closure of Kaltenkirchen factory,

EUR 6 million write down of inventory and an EUR 3 million insurance

compensation related to Raflatac inventory in USA impacted by Hurricane

Helene, and EUR 5 million relating to other restructuring measures. 2023

includes EUR 13 million restructuring charges and EUR 2 million impairment

charges related to restructuring measures at the UPM Raflatac Nancy factory

in France and EUR 7 million of other restructuring costs.

2024 compared with 2023

Comparable EBIT increased mainly due to higher delivery volumes and

stable margins. Fixed costs increased.

Market environment

• In 2024, the global market for self-adhesive label materials grew

from the low level in 2023, most notably in Europe.

Sources: UPM, FINAT, TLMI

	2024	2023
Sales, EURm	1,467	1,485
Comparable EBITDA, EURm	208	172
% of sales	14.2	11.6
Depreciation, amortisation and impairment charges, EURm	-74	-74
Operating profit, EURm	132	98
% of sales	9.0	6.6
Items affecting comparability in operating profit, EURm 1)	-3	—
Comparable EBIT, EURm	135	98
% of sales	9.2	6.6
Capital employed (average), EURm	789	875
Comparable ROCE, %	17.1	11.2
Paper deliveries, 1000 t	1,429	1,407

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

2024 compared with 2023

Comparable EBIT increased. The positive impact of lower input costs

more than offset the negative impact of lower sales prices. Delivery

volumes increased for specialty grades, and decreased for fine grades.

Market environment

• In 2024 demand for label, release base and packaging papers was

solid.

• In 2024, market prices decreased compared to 2023.

Sources: UPM, RISI, AFRY, AWA

UPM FINANCIAL REPORT 2024	9

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.

UPM Plywood offers high quality WISA® plywood and veneer products for construction, vehicle flooring, LNG shipbuilding, parquet manufacturing and other industrial applications.

	2024	2023
Sales, EURm	2,953	3,598
Comparable EBITDA, EURm	344	544
% of sales	11.6	15.1
Share of results of associates and joint ventures, EURm	0	-1
Depreciation, amortisation and impairment charges, EURm	-100	-195
Operating profit, EURm	190	174
% of sales	6.4	4.8
Items affecting comparability in operating profit, EURm 1)	-83	-288
Comparable EBIT, EURm	273	462
% of sales	9.3	12.8
Capital employed (average), EURm	1,151	1,424
Comparable ROCE, %	23.8	32.4
Paper deliveries, 1000 t	3,263	3,528

1) 2024 includes EUR 8 million addition to restructuring charges related to the

closure of Plattling mill, EUR 40 million of restructuring and impairment

charges related to the closure of Hürth newsprint mill in Germany, EUR 54

million restructuring and impairment charges related to the closure of

Nordland fine paper machine 3 in Germany, EUR 21 million capital gain on

sale of UPM-Kymmene Austria GmbH and other restructuring charges. 2023

includes EUR 120 million restructuring charges and EUR 112 million

impairment charges of fixed and leased assets related to the closure of the

UPM Plattling paper mill in Germany, EUR 30 million restructuring charges

relating to the closure of paper machine 6 at the UPM Schongau mill in

Germany, EUR 10 million charges related to the sale of the Steyrermühl site in

Austria and EUR 16 million other restructuring costs.

2024 compared with 2023

Comparable EBIT decreased. Sales prices decreased more than variable

costs. Delivery volumes decreased, but this impact was more than offset

by decreased fixed costs.

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

11%.

Market environment

• In 2024, demand for graphic papers in Europe was 1% higher than

in 2023. Newsprint demand increased by 1%, magazine papers

decreased by 5% and fine papers increased by 5%.

• In 2024, publication paper prices in Europe were 12% lower and

fine paper prices 3% lower compared to 2023.

• In 2024, demand for magazine papers in North America were at the

same level compared to 2023. In 2024, the average price in US

dollars for magazine papers decreased by 3% compared to 2023.

Sources: PPI/RISI, Euro-Graph, PPPC

	2024	2023
Sales, EURm	430	422
Comparable EBITDA, EURm	65	77
% of sales	15.0	18.4
Depreciation, amortisation and impairment charges, EURm	-23	-21
Operating profit, EURm	42	50
% of sales	9.7	11.9
Items affecting comparability in operating profit, EURm 1)	—	-6
Comparable EBIT, EURm	42	56
% of sales	9.7	13.4
Capital employed (average), EURm	243	254
Comparable ROCE, %	17.1	22.2
Plywood deliveries, 1,000 m3	482	429

1) 2023 includes EUR 5 million capital loss resulting from sale of Russian

operations and EUR 1 million restructuring costs.

2024 compared with 2023

Comparable EBIT decreased. The positive impact of higher delivery

volumes was more than offset by lower sales prices.

Market environment

• In 2024, demand for spruce plywood in panel trading and veneer

continued to be slow in the soft construction markets.

• In 2024, demand for birch plywood in panel trading was solid and

mitigated lower demand from industrial end uses such as vehicle

flooring.

• Demand for LNG end-use birch plywood was robust. Market

deliveries depend on project schedules.

• EU anti-dumping investigation against Chinese hardwood plywood is

on-going.

Source: UPM

UPM FINANCIAL REPORT 2024	10

Other operations

Other Operations includes UPM Forest, UPM Biofuels, UPM Biochemicals, UPM Biomedicals and UPM Biocomposites 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.

	2024	2023
Sales, EURm	623	802
Comparable EBITDA, EURm	-72	29
Change in fair value of forest assets and wood harvested, EURm	68	-82
Share of results of associated companies and joint ventures, EURm	-1	-2
Depreciation, amortisation and impairment charges, EURm	-427	-44
Operating profit, EURm	-434	-101
Items affecting comparability in operating profit, EURm 1)	-382	-87
Comparable EBIT, EURm	-52	-14
Capital employed (average), EURm	3,129	2,922
Comparable ROCE, %	-1.7	-0.5

1) 2024 includes EUR 5 million impairment of UPM Biochemicals goodwill and

EUR 373 million impairment on assets in biochemicals refinery in Leuna, EUR

12 million restructuring and impairment charges related to the planned closure

of the UPM Biocomposites business, and EUR 9 million capital gain on sale of

non-current assets. 2023 includes EUR 86 million decrease in the fair value of

forest assets in Finland resulting from changes in estimates and increase in

discount rate and EUR 1 million capital loss resulting from sale of Russian

operations.

2024 compared with 2023

Comparable EBIT decreased. The change in the fair value of forest

assets net of wood harvested was EUR 68 million (-82 million). The

change in the fair value of forest assets was EUR 195 million (5 million)

mainly due to higher long term wood price estimates in Finland. The cost

of wood harvested from UPM forests was EUR 126 million (88 million).

Biofuels sales prices decreased significantly.

Market environment

• In 2024, interest in bio-based MEG and renewable functional fillers

continued strong. Demand for bio-based glycols and renewable

functional fillers is driven by strong consumer and brand owner

interest in more sustainable solutions.

Source: UPM

Board of Directors and

the Group Executive Team

At the Annual General Meeting held on 4 April 2024, 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 146,373 (121,283) UPM-Kymmene Corporation shares. These

represent 0.03% (0.02%) of the shares and 0.03% (0.02%) of the

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

Reynaudo owned 18,786 shares. At the end of the year, the other

members of the Group Executive Team owned a total of 590,060

shares.

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

statements 2024, 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 2024.

» Refer Note 9.2 Litigation, of the consolidated financial statements 2024

for information on legal proceedings.

UPM FINANCIAL REPORT 2024	11

Risks

Risk management

UPM regards risk management as a systematic and proactive means to

analyse 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

in 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 short-term uncertainties in UPM’s earnings relate to sales prices

and delivery volumes of its products, as well as to changes in the main

input cost items and currency exchange rates, most of which are

affected by uncertainty in the global, regional or local economic and

political conditions. Political developments are causing uncertainties to

the global economy. Such uncertainties also affect UPM’s customers

influencing the demand for UPM’s products.

Examples of such developments are the trade tensions between the

United States, the EU and China, the nature of the relationship between

the EU and the UK after its exit from the EU as well as increased

geopolitical tensions that may lead to military conflicts, such as Russia's

war in Ukraine, recent conflicts in the Middle East, or economic

sanctions, blockades, or 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. 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 or

price competitiveness compared to producers from other countries, and

changes in the international trade agreements. Changes in fiscal,

monetary and other policies taken to respond to the economic impacts

of Russia's war in Ukraine and to reduce dependency on Russian

resources may cause unintended price volatility or other adverse effects

on UPM. Economic downturn, global pandemics, or global power

struggles continue to cause high uncertainty to global trade, geopolitics

or trajectories of economies.

UPM is especially exposed to the economic and political conditions

in countries in which UPM has significant production operations and

ongoing investment projects, 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 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

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

production capacity entering the market or an old production capacity

being closed, all of which may affect both the volume and price level of

UPM’s products.

Competitor behaviour 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 specialised

competitors.

Changes in consumer behaviour

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

UPM FINANCIAL REPORT 2024	12

various opportunities for UPM and drive demand growth for most of

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

changed consumer behaviour 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 stringent 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 licences from relevant authorities and comply with

their terms and conditions. These permits and licences 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 and is expected to increase 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 EUR 5.8 billion.

According to TVO, the provisional takeover of the plant unit was

confirmed in April 2023. The final takeover of the plant unit will take

place after the conclusion of the two-year warranty period, i.e. in April

2025. Even after this, the Plant Supplier’s liabilities under the warranty

will remain in force up to a maximum of eight (8) years to a certain

extent.

A Global Settlement Agreement (GSA) was signed in March 2018

and amended in June 2021 concerning the completion of the OL3

project and related disputes. During 2023, the fund mechanism

established in accordance with the GSA and funded by the Areva

companies has been used to cover costs incurred to the Areva

companies for the completion of the OL3 project in accordance with the

GSA. Plant Supplier has still warranty period activities to be completed

at OL3 but the funds reserved for their completion in the fund mechanism

were depleted in the autumn of 2024. Areva and Siemens have made a

decision to recapitalise the fund with more than EUR 80 million.

TVO has announced that regular electricity production, which started

after the conclusion of the test operation programme in April 2023, and

commercial operation, which started in May 2023, transferred the

responsibility for OL3 to TVO. The Plant Supplier retains the

responsibilities according to the Plant Contract for warranty periods and

for the unfinished work, which has been agreed to be done later at the

Plant Supplier’s expense.

According to TVO, during 2023, several risk management measures

have been taken in relation to the OL3's warranty period that improve

the process flow during the warranty period and ensure that the

prerequisites for the warranty period under the Plant Contract are met.

TVO is closely monitoring compliance with the conditions set in the

Settlement Agreement signed in March 2018 and supplemented in June

2021, and the progress of the OL3 warranty period and ascertaining

that actions are taken in accordance with the Plant Supplier’s schedule

while ensuring financial and technical resources.

TVO has announced that even though there have been few

interruptions to electricity generation at OL3 following the conclusion of

the test operation programme, 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 new U.S. government may temporarily

emphasise energy supply security over climate targets and thus 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

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 undermining the stability of raw

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

also increase the risk of production limitations.

UPM FINANCIAL REPORT 2024	13

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 2% of UPM’s sales in 2024, and the

ten largest customers represented approximately 13% 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, biochemicals and biomedicals. 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 materialise. 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 the 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 of 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 the 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 of 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 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 labour, 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 FINANCIAL REPORT 2024	14

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,

but despite efforts, some changes to the detailed timeline of the project

may occur due to events affecting project workers, suppliers or

infrastructure.

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, 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, 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 behaviour 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

licences 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 labour 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

transport sector or among other stakeholders important to UPM, may

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

labour-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

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 programmes. UPM’s insurance

programme 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 materialise, they could

harm UPM’s forest and plantations resulting in production interruption

and additional costs.

UPM FINANCIAL REPORT 2024	15

Strategic partners

UPM collaborates with many partners. For example, product

development in the 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 war in Ukraine and the resulting adverse

economic conditions may cause financial stress 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 licences or

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

licences 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 2024.

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

Impact of Russia's war in Ukraine

In response to Russia´s attack on Ukraine, the European Union as well

as the United States, the United Kingdom, and other countries imposed

extensive sanctions on Russia, the breakaway regions of Donetsk and

Luhansk and the oblasts of Zaporizhzhia and Kherson, and Belarus.

Since 21 February 2022, these measures have included, for example

asset freezes and travel restrictions on individuals and entities, economic

sanctions targeting sectors of the Russian and Belarusian economies,

and diplomatic restrictions. Russia has also implemented several

countermeasures affecting especially foreign companies’ operations

within Russia and with Russian counterparties. While the sanctions

primarily target Russia’s ability to finance its military operations in

Ukraine and impose economic and political costs on the people

responsible for them, peaceful resolution to the war in Ukraine remains

uncertain. Economic and geopolitical uncertainty and inflation

accelerated around the world which resulted in a spike in interest rates

that moderated in 2024 but have remained higher compared to pre-

invasion levels.

Impact on UPM businesses

The economic sanctions and Russia’s countermeasures have rendered it

unviable for UPM to continue operations in Russia or trade with Russian

counterparties. UPM businesses have suspended deliveries to Russia as

well as wood sourcing in and from Russia. In Q1 2023, UPM completed

a full withdrawal of its businesses from Russia by selling all its Russian

operations, including the Chudovo plywood mill.

The potential further impacts for UPM are likely to differ for each

business and depend on the pace, scope and duration of sanctions,

market price reactions, supply chain development, and the length of the

war in Ukraine and whether there is any geographic escalation of the

war. UPM is monitoring the situation closely and preparing plans to

adjust its operations in different scenarios accordingly.

Sustainability

Statement

UPM FINANCIAL REPORT 2024	17

TABLE OF CONTENT		LIST OF ESRS DISCLOSURE REQUIREMENTS	PAGE
General information
General information		ESRS 2 – General disclosures
	Basis for preparation	ESRS 2 BP-1 – General basis for preparation of the Sustainability Statement	21
		ESRS 2 BP-2 – Disclosures in relation to specific circumstances	21
	Sustainability governance	GOV-1 – The role of the administrative, management and supervisory bodies	22
		GOV-2 – Information provided to, and sustainability matters addressed by the undertaking's administrative, management and supervisory bodies	25
		GOV-3 – Integration of sustainability-related performance in incentive schemes	25
		GOV-4 – Statement on due diligence	26
		GOV-5 – Risk management and internal controls over sustainability reporting	27
	Strategy, business model and value chain	SBM-1 – Strategy, business model and value chain	27
	Stakeholders	SBM-2 – Interest and views of stakeholders	31
	Impacts, risks and opportunities	SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	32
		IRO-1 – Description of the processes to identify and assess material impacts, risks and opportunities	34
	ESRS content overview	IRO-2 - Disclosure requirements in ESRS covered by the undertaking's Sustainability Statement	37
Environmental information
Climate change		ESRS E1 – Climate change
	Transition plan	E1-1 – Transition plan for climate change mitigation	40
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	42
	Policies	E1-2 – Policies related to climate change mitigation and adaptation	42
	Actions	E1-3 – Actions and resources in relation to climate change policies	43
	Targets	E1-4 – Targets related to climate change mitigation and adaptation	45
	Metrics	E1-5 – Energy consumption and mix	48
		E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions	49
		E1-7 – GHG removals and GHG mitigation projects financed through carbon credits	51
		E1-8 – Internal carbon pricing	52
		E1-9 – Anticipated financial effects from material physical and transition risks and potential climate-related opportunities	53
TCFD		Disclosures according to TCFD (Task Force on Climate-related Financial Disclosures)	53
EU Taxonomy		Disclosures pursuant to Article 8 of Regulation 2020/852	54
Pollution		ESRS E2 – Pollution
	Policies	E2-1 – Policies related to pollution	68
	Actions	E2-2 – Actions and resources related to pollution	69
	Targets	E2-3 – Targets related to pollution	71
	Metrics	E2-4 – Pollution of air, water and soil	72
		E2-5 – Substances of concern and substances of very high concern	73
		E2-6 – Anticipated financial effects from material pollution-related risks and opportunities	74

UPM FINANCIAL REPORT 2024	18

TABLE OF CONTENT		LIST OF ESRS DISCLOSURE REQUIREMENTS	PAGE
Water and marine resources		ESRS E3 – Water and marine resources
	Policies	E3-1 – Policies related to water and marine resources	76
	Actions	E3-2 – Actions and resources related to water and marine resources	76
	Targets	E3-3 – Targets related to water and marine resources	78
	Metrics	E3-4 – Water consumption	79
Biodiversity and ecosystems		ESRS E4 – Biodiversity and ecosystems
	Transition plan	E4-1 – Transition plan and consideration of biodiversity and ecosystems in strategy and business model	81
	Impacts, risks and opportunities	ESRS 2 SBM 3 – Material impacts, risks and opportunities and their interaction with strategy and business model	81
	Policies	E4-2 – Policies related to biodiversity and ecosystems	82
	Actions	E4-3 – Actions and resources related to biodiversity and ecosystems	82
	Targets	E4-4 – Targets related to biodiversity and ecosystems	85
	Metrics	E4-5 – Impact metrics related to biodiversity and ecosystems change	86
		E4-6 – Anticipated financial effects from material biodiversity and ecosystem-related risks and opportunities	89
TNFD		Disclosures according to TNFD (Task Force on Nature-related Financial Disclosures)	90
Resource use and circular economy		ESRS E5 – Resource use and circular economy
	Policies	E5-1 – Policies related to resource use and circular economy	92
	Actions	E5-2 – Actions and resources related to resource use and circular economy	93
	Targets	E5-3 – Targets related to resource use and circular economy	95
	Metrics	E5-4 – Resource inflows	96
		E5-5 – Resource outflows	98
Social information
Own workforce		ESRS S1 – Own workforce
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	101
	Policies	S1-1 – Policies related to own workforce	102
	Processes	S1-2 – Processes for engaging with own workforce and workers' representatives about impacts	103
		S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns	103
	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	104
	Targets	S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	107
	Metrics	S1-6 – Characteristics of the undertaking's employees	108
		S1-7 – Characteristics of non-employee workers in the undertaking's own workforce	109
		S1-8 – Collective bargaining coverage and social dialogue	110
		S1-9 – Diversity metrics	110
		S1-10 – Adequate wages	111
		S1-11 – Social protection	111
		S1-12 – Persons with disabilities	111
		S1-13 – Training and skills development metrics	111
		S1-14 – Health and safety metrics	112
		S1-16 – Compensation metrics (pay gap and total compensation)	113
		S1-17 – Incidents, complaints and severe human rights impacts	113

UPM FINANCIAL REPORT 2024	19

TABLE OF CONTENT		LIST OF ESRS DISCLOSURE REQUIREMENTS	PAGE
Workers in the value chain		ESRS S2 – Workers in the value chain
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	115
	Policies	S2-1 – Policies related to value chain workers	116
	Processes	S2-2 – Processes for engaging with value chain workers about impacts	117
		S2-3 – Processes to remediate negative impacts and channels for value chain workers to raise concerns	117
	Actions	S2-4 – Taking action on material impacts on value chain workers	118
	Targets	S2-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	119
Affected communities		ESRS S3 – Affected communities
	Impacts, risks and opportunities	ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model	121
	Policies	S3-1 – Policies related to affected communities	122
	Processes	S3-2 – Processes for engaging with affected communities about impacts	123
		S3-3 – Processes to remediate negative impacts and channels for affected communities to raise concerns	123
	Actions	S3-4 – Taking action on material impacts on affected communities	124
	Targets	S3-5 – Targets related to managing material negative impacts and advancing positive impacts	126
Governance information
Business conduct		ESRS G1 – Business conduct
	Policies	G1-1 – Business conduct policies and corporate culture	128
	Responsible sourcing	G1-2 – Management of relationships with suppliers	130
	Anti-corruption and bribery	G1-3 – Prevention and detection of corruption and bribery	133
	Metrics	G1-4 – Incidents of corruption or bribery	135
		G1-5 – Political influence and lobbying activities	135
		G1-6 – Payment practices	136

UPM FINANCIAL REPORT 2024	20

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.

ESG governance model reviewed			Double materiality analysis conducted			UPM Sustainability  Policy Statement  renewed

UPM FINANCIAL REPORT 2024	21

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.

Figures presented in this Sustainability Statement are rounded and

therefore the sum of individual figures might deviate from the presented

total figure.

In July 2024, UPM Raflatac acquired the Belgian-based company

Grafityp with a production site in Belgium and a distribution centre in

the UK. These are excluded from the environmental disclosure and partly

included in the social disclosure for 2024, such as the headcount figure,

though not in all employee-related disclosures or in OHS-related

disclosure. Information about exclusions is stated in connection with the

relevant disclosures. At the end of August 2024, UPM permanently

closed its UPM Hürth newsprint mill, and in December 2024, one paper

machine at UPM Nordland. The environmental and social data for these

sites is included in the consolidated data until the end of production. By

the end of 2024, UPM had closed its biocomposite business, which

remains in the sustainability data for 2024, but is not covered in the

qualitative information.

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 products-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 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. As

this is the first year of reporting based on the ESRS standards, UPM does

not report any changes in preparation or presentation of the

Sustainability Statement. Where metrics have been reported previously,

comparative information is presented.

Changes in the preparation of

sustainability information

The implementation of the CSRD has significantly changed UPM’s

previous approach to integrating and presenting its sustainability

information in its Annual Report. For the reporting year 2024, UPM

reports its sustainability information for the first 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 has been

subject to reasonable assurance. The assurance reports can be found on

pages 231-241.

This Sustainability Statement covers the disclosures according to the

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

Task Force on Nature-related Financial Disclosure (TNFD), which are

included in its assurance scope.

Information on how UPM reports on other sustainability reporting

standards, such as technical material issued by the International

Sustainability Standards Board or the Global Reporting Initiative, is

UPM FINANCIAL REPORT 2024	22

available on the UPM webpage and on pages 358-359 in the UPM

Annual Report.

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 sustainability reporting and assurance, including double-materiality

processes, ESG governance (including corporate governance), energy

and climate policies, labour laws, contributing to ESG-related

regulations and lobbying, human rights, diversity, green transition,

stakeholder management, supply chain management and circular

economy. In addition, the President and CEO has access to UPM's

resources regarding the aforementioned 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, forestry, energy, chemicals, 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

from the field of business conduct matters relevant to UPM. 

The previous 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 age of the Board members

vary between 49 and 66 years. 56% of the Board members have been

members of the Board for 1-4 years, 22% have been members of the

Board for 5-9 years and 22% have been members of the Board for more

than 10 years. All Board members hold a university degree. When it

comes to gender identity, 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

identity 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. Regarding other factors relevant to Board diversity,

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 www.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 2024. See www.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 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 2024	23

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 pay of the

Group Executive Team and some senior management representatives,

approves Group-level sustainability targets for the remuneration 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 they interact with the strategy and

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

for Board approval and oversees its implementation, prepares proposals

for director elections for the AGM, and their remuneration, prepares the

election of the President and CEO, prepares other major governance

matters, 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. In addition to undertaking the assigned matters

and regular reports listed above, the Audit Committee also reviewed

reports on and discussed ESG and cybersecurity and focused on the

preparation of the statutory sustainability report for the first time in such

a regulated scope in 2024. 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 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, proposes 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, and compliance

and governance. Additionally, the Board monitors and assesses the

Company's financial reporting process and the statutory sustainability

reporting process, ensuring the integrity of financial and sustainability

reporting. The Board also oversees the assessment and management of

risks related to the Company's strategy and operations, including

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 directors and preparing

proposals for their election or re-election. The Committee also develops

and recommends corporate governance principles. 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 ethically sound decisions and maintain high standards

of integrity in its daily operations. It applies to all UPM employees

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

responsibility and compliance programmes, 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 operations. It requires UPM's businesses and functions to perform

sustainability-related due diligence, conducting regular assessments of

their impacts, and prioritising 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

UPM FINANCIAL REPORT 2024	24

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 courses 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 review of 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 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 the

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 as part of the compliance review.

UPM FINANCIAL REPORT 2024	25

Leadership in 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 its values and commitments by implementing

a Company-wide compliance programme 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. As part of the Audit Committee's

compliance review, the Committee receives a quarterly 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 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 review. » Refer to paragraph “Compliance

Control and Procedures” above.

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 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 2024, the Board of Directors and the Audit Committee focused on

the implementation of the CSRD, the respective reporting and the ESG

management model. When reviewing the Sustainability Statement draft

they addressed all material impacts, risks and opportunities covered by

the disclosure.

The Remuneration Committee concentrated in their December

meeting review on fair rewarding as one of UPM's social focus areas

and 2030 sustainability targets and on new ESRS remuneration-related

disclosure elements for the company's own workforce. Also, other social

focus areas including continuous learning & development, responsible

leadership, diversity & inclusion were reviewed.

The GET approved in their December meeting, for example, the

outcome of the double materiality assessment (DMA) and the changes

for UPM's sourcing-related 2030 sustainability 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 2022–2024, PSP 2023–2025 and PSP 2024–2026, 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 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 own

combustion and purchased electricity* 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.

*The earning criteria for the earning period 2022–2024 were fossil CO2

emissions from UPM’s own combustion and purchased electricity. The earning

criteria for the earning periods 2023–2025 and 2024-2026 were reduction of

fossil CO2 emissions from UPM’s on-site combustion and purchased energy

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 2024	26

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 S1-1 E2-1
Engaging with affected stakeholders in all key steps of due diligence	• Stakeholder dialogue	ESRS2-SBM2 S1-2 S2-2 S3-2
Identifying and assessing adverse impacts	• Business-area-specific human rights risk assessments and integration into management systems • 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 S2-SBM3 S3-SBM3 G1-3
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 E2-2  S2-4
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 G1-3 S1-1
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 2024	27

Risk management for sustainability

reporting

GOV-5

UPM's sustainability reporting at Group level is based on its

sustainability reporting guidelines and the requirements of the ESRS.

To enhance the reliability of sustainability data, UPM has

implemented internal controls tailored to its specific sustainability risks

with a focus on materiality. UPM continues to enhance its internal control

framework to further minimise potential risks.

UPM's centralised 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

are used to identify areas of enhancement, which are then integrated

into the Company's risk management and reporting practices.

Prioritisation 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 prioritisation 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

organisation. 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 fossil-based materials used in

everyday life. UPM's broad product range includes pulp, graphic

papers and specialty papers, self-adhesive labels, renewable wood-

based diesel and naphtha, CO2-free electricity, and plywood and timber

products. Many of UPM's products offer sustainable alternatives to fossil

raw materials and energy, for example, by replacing fossil plastics in

consumer products, steel and cement in construction, or fossil fuels in

transport, aviation and electricity markets.

UPM's products meet the everyday needs of consumers while

addressing many global challenges such as climate change and

resource scarcity. Products are used in packaging, communication,

labelling, transport, construction, manufacturing of bioplastics as well as

tissue and hygiene end uses.

UPM has invested in a biorefinery in Leuna in Germany, which will

produce wood-based biochemicals. The commissioning and start-up of

the biorefinery was initiated in late 2024, and the ramp-up of

production is expected to proceed throughout 2025. 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.

In 2024, UPM closed its biocomposites business and reduced its

graphic paper capacity by closing two paper machines in Germany.

During 2025, the production of graphics solutions will be transferred

from UPM Raflatac's factory in Kaltenkirchen, Germany, to UPM

Raflatac's factory in Belgium.

At the end of  2024, the number of employees at UPM was 15,827,

most of them in Europe. » Refer to S1-6 for information on headcount by

country and by region.

There were no banned UPM products or services in 2024.

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, pages 7–10, for more

information about UPM's business areas and other operations.

UPM FINANCIAL REPORT 2024	28

UPM's strategy

UPM seeks profitable, sustainable growth through performance and

capitalising on the Company's major investments. UPM's strong and

balanced business portfolio in renewable fibres, advanced materials

and decarbonisation solutions will provide several attractive growth

opportunities in the coming years.

» 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.

UPM strategy: perform to grow

Key enablers

People

UPM is committed to enabling performance, engaging people and

creating a safe working environment while always acting with integrity.

Diversity and inclusion, working conditions, learning and development,

responsible leadership and respect for people are at the core of the

Company's work. UPM's long-term goal is to ensure high performance

and continuous professional development.

Productivity

UPM's focus is on leveraging advanced technologies, sustainable

practices and strategic initiatives to improve efficiency and performance

across the operations. UPM is taking active measures to improve

productivity to ensure the competitiveness of its businesses and to

support its growth ambitions.

Commercial excellence

UPM's focus is on optimising commercial interfaces and supporting

processes to ensure security of supply and an enhanced customer

experience for its customers. This is part of the Company's continuous

drive to maintain and grow earnings. UPM concentrates on recognising

growth opportunities and identifying the best means for commercial

success.

Sustainability

The UPM Code of Conduct underlines our commitment to integrity and

responsible operations. UPM's strategy guides the Company to achieve

its 2030 sustainability targets and contribute to the UN Sustainable

Development Goals (SDGs). UPM is committed to creating value from

renewable and recyclable materials, reducing the Company's

environmental footprint, and enhancing its positive societal impact.

Innovation

Sustainability, circular economy and customers are at the heart of

innovation at UPM. UPM harnesses new ideas and develops new

business and products from renewable raw materials that contribute to

the ever-growing need for more sustainable materials. UPM

innovates climate-positive products and turn them into growing

businesses.

UPM FINANCIAL REPORT 2024	29

Business model and value chain

Business model and value chain

*Including the company UPM Raflatac acquired in February 2025

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 of its suppliers

and third-party intermediaries.

Suppliers are an essential part of UPM's value chain. The main

sourcing categories are fibre, chemicals, other raw materials, logistics,

energy and indirect purchases such as services. In terms of expenditures,

pulp and energy suppliers are among the largest.

When selecting suppliers, the most important priorities 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. Supplier management, with the required competencies

and digitalisation, boosts product development and the

commercialisation of new products.

UPM buys products, materials and services from some 23,000 B2B

suppliers worldwide. The sourcing network includes suppliers from start-

UPM FINANCIAL REPORT 2024	30

up companies to international corporations. UPM also buys wood from

around 14,500 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 UPM's identified material topics, product stewardship has

been established as a focus area with Company-wide sustainability

2030 targets and key performance indicators.

» Refer to E5-3 Resource use and circular economy, Targets

UPM ensures that its products are safe for their designed use. Most of

UPM's products are certified with widely recognised international and

regional ecolabels such as the EU Ecolabel. 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.

UPM Biofuels has both ISCC EU and ISCC PLUS certification, and UPM

Biochemicals and four UPM Raflatac factories have ISCC PLUS

certification. UPM Biofuels has also had the Roundtable of Sustainable

Biofuels (RSB) certification.

These sustainability-related targets and commitments cover all UPM

products and all markets and customer groups and are implemented

based on legal requirements and expectations from customers and other

stakeholders.

Products and customers

UPM's products are sold directly and through distributors to

approximately 10,000 B2B customers worldwide. The majority of the

products are intermediary products that are further processed into final

products by UPM's customers or their customers. UPM captures the

opportunities presented by growing consumer demand for sustainable

choices and stricter regulations to mitigate climate change and related to

plastic use, for example. 

With higher living standards and an ageing 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

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 2024, 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.

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 the knowledge of the end-uses of the products

and the needs of the customers, underpins this approach.

Continuous dialogue is maintained with customers, and UPM 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. Actions to mitigate climate

change and enhance biodiversity remained the high priorities for UPM's

customers in 2024. Product safety, sustainable forest management,

recyclability, circularity and ecolabels are also highly valued.

» Refer to SBM-2 Interest and views of stakeholders

UPM's offering

	SUSTAINABLE PRODUCTS FOR EVERYDAY USE			REPLACING FOSSIL-BASED MATERIALS			LOW-EMISSION ENERGY AND FUELS
	• Fibres for hygiene and tissue products • Safe food packaging materials • Information labelling and sustainable packaging for e-commerce • Papers for communication • Personalised medicine			• Materials for various consumer products such as textiles, PET bottles, packaging, cosmetics and pharmaceuticals • Replacing fossil-based plastics • Renewable construction materials • Carbon-storing buildings			• CO2-free electricity • Renewable energy • Reliable and adjustable energy • Decarbonising traffic and aviation

UPM FINANCIAL REPORT 2024	31

INTEREST AND VIEWS OF

STAKEHOLDERS

SBM-2

Understanding the views and expectations of stakeholders plays a

crucial role in UPM's success and the acceptance of its operations. UPM

aims to give stakeholders a clear picture of the future direction, how

UPM's strategy is implemented, and how long-term value is created for

stakeholders. UPM discloses relevant and accurate information in

accordance with market regulations. Because many stakeholders see

UPM primarily as an economic operator, financial success, stability,

good governance, future outlook and growth were the main topics of

discussion. Many discussions also focused 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.

Feedback is carefully analysed to understand stakeholder expectations.

These expectations are taken into account in development work and

decision-making.

UPM's strategy forms the foundation of UPM's 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.

The stakeholder relations are led and coordinated globally by the

UPM Marketing, Sustainability and Communications function. The EVP of

the aforementioned function has the overall responsibility for the

stakeholder engagement processes and development, supported by the

Responsibility Team at the Group level. The function includes the same

responsibility at the business level, where the VP of the function is

responsible for the stakeholder engagement and continuous dialogue

with customers and business partners, as well as local communities

within and in the context of their business area. This ensures proactive

and relevant engagement across the business and geographical

spectrum.

UPM's most important stakeholders

The Company uses multiple ways to embed the views and insights gained

through the stakeholder engagements into its business decisions and

strategy. These methods include but are not limited to regular interviews

and surveys, open dialogue and engagement events. It is the responsibility

of the function representatives to turn the views into insights that help

develop the business, its performance and future strategy.

UPM FINANCIAL REPORT 2024	32

The views and feedback from the stakeholder dialogue are taken into

consideration in the double materiality assessment to further evaluate

material sustainability topics. Every year, this materiality analysis is

carried out to identify the topics on which UPM has a significant impact,

or which have a significant impact on the Company. The analysis is

based on internal assessments, as well as stakeholder interests and

concerns. The annual double materiality assessment also takes the

interests, views and rights of UPM's workforce, value chain workers and

affected communities into account. The identified material topics are

reviewed by the Group Executive Team, 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 across

the Company 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 the goal is the same.

UPM believes that active and timely forest management maintains

carbon sinks and ensures the enhancement of biodiversity, while society

needs to reduce its dependence on fossil fuels and raw materials. UPM

responds to stakeholders' concerns at local, national and international

levels, participates in public debate, and meets with NGO

representatives.

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.

The Board is informed through the Audit Committee Chair's regular

reporting to the Board 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

Material impacts, risks and opportunities

SBM-3

UPM's sustainable impact, risk and opportunity identification 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 formalised 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, as UPM does not sell directly to consumers. UPM's

products are mainly used as raw materials and intermediate products,

and UPM has no visibility to end-users of the final products. While UPM

does have businesses that produce final products, such as UPM

Biomedicals, they 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 2024	33

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
Economic and governance
Bio-based and renewable products	ESRS 2, E1, E5	Product stewardship		Positive impact: Bio-based products as alternative for fossil-based products and as temporary carbon storage
				Opportunity: Increasing market demand for bio-based products
Business resiliency	ESRS 2	Profit		Potential negative impact: Threat of temporary shut-downs or closures of sites due to lack of raw materials with negative impact on employment
				Risk: Dependency on a few main resources such as wood, energy or water
				Opportunity: Competitive advantage to address dependency for main resources
CO2-free energy	E1, E5	Product stewardship		Positive impact: Production of CO2-free energy
				Opportunity: Increasing market demand for CO2-free energy
Business ethics and values	G1, S2	Governance		Positive impact: Ensuring and enhancing ethical behaviour in operations and value chain
				Risk: Non-compliance with legislation or agreed practices
Responsible sourcing	G1	Responsible sourcing		Potential negative impact: Human rights violations with effects on people in the supply chain
				Risk: Disruptions in UPM's supply chain
Environmental
Biodiversity	E4	Biodiversity		Positive impact: Ensuring and enhancing net-positive impact on biodiversity by UPM's forest management
				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 virgin materials
				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 and bio-based products
				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 focussing 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	E3	Water		Potential negative impact: UPM's water usage and environmental incidents may effect people an the environment
				Risk: Potential operational hazards causing shut-down 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 focus on health and safety measures 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
Local engagement	S3	Community involvement		Positive impact: Effect on local development through UPM's production sites and investments
				Potential negative impact: Environmental or safety accidents can effect people or environment in the communities around UPM sites

UPM FINANCIAL REPORT 2024	34

Current and anticipated effects on UPM

From an opportunity perspective, the global transformation to green and

sustainable societies supports UPM's strategy and business objectives by

increasing market demand for fossil-free, renewable, and circular

products and raw materials. The identified 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 and

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 for UPM's operations and raw

material sourcing. These risks are increasing droughts, heatwaves, water

scarcity and pest damage. Potential floods and forest fires can also affect

UPM's operations, 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 own operations and those of its suppliers. 

UPM is increasingly investing in developing resilience in forest

management, 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 in areas with low water stress risks. Forest

management certification schemes ensure responsible wood sourcing.

Risk management at Group and business area level considers

sustainability risks as part of the ongoing risk management processes.

UPM actively participates in the development of sustainability-related

regulation at the local and EU level to support the sustainable

transformation of the industry. UPM fully supports the EU's sustainability-

related initiatives but also identifies certain regulatory changes that may

have a direct impact on operations through the availability of raw

materials. These regulatory changes may have an impact on raw

material costs while strengthening UPM's position in the production of

bio-based products and materials.

UPM has identified human rights and responsible sourcing risks and

impacts in its global supply chains. UPM follows global human rights

and sustainability frameworks to ensure and support the overall

development of responsible sourcing in all supply chains, but there are

also potential negative impacts in supply chains where UPM's

sustainability standards may not be met. UPM is continuously developing

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 (Scopes 1–3 emissions) contribute to climate

change. Wood sourcing can have a short-term impact on carbon

storages in forests, but sustainable forest management ensures carbon

sinks in the medium and long term.

These impacts have direct links to climate change and risks for UPM'

business. At the same time, forest management practices have a direct

impact on the state of biodiversity in forests. UPM recognises the direct

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 continuous

assessment of potential changes in the operating environment and

market dynamics. The analysis of business resilience is based on

different scenario analyses, which also takes the main sustainability-

related risks, impacts and opportunities into account. Key sustainability-

related risks and impacts are considered to have an impact on raw

material and operational expenses, which are monitored and forecasted

as part of the regular business steering processes.

Separate climate resilience analyses and water scarcity risk

assessments 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 2023 reporting

The list of material impacts, risks and opportunities remained unchanged

compared to the previous year's report. However, changes have been

made to the disclosure of information in accordance with the

requirements of the ESRS standards.

IRO-1

Materiality assessment process

Process in general

Since 2011, UPM has carried out its materiality assessment annually.

Since 2023, UPM's annual materiality assessment has followed EFRAG's

guidelines for double materiality assessments.

Double materiality refers to the consideration of 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 analysis covers

negative and positive, actual and potential impacts on the economy, the

environment and people, including impacts on their human rights.

The identification of impacts, risks and opportunities is based on

internal expertise and several internal sources, including:

• salient human rights assessments,

• supplier audits,

• 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, OHS data)

and

• sustainability due diligence processes.

The interests and concerns of various stakeholders have also informed

the process of identifying material impacts, risks and opportunities. For

example, customer and local community enquiries, counterparty and

media screening, NGO concerns, investor, government and regulatory

agendas, and UPM's employee engagement survey are used to assess

the materiality of various issues.

In addition, external human rights expertise is used to identify salient

human rights issues at corporate level. In 2023, interviews,

questionnaires and workshops with internal and external stakeholders

were also used for the first double materiality assessment. In 2024, the

focus of the review was on impacts on people in UPM's own operations

and in the supply chain.

UPM FINANCIAL REPORT 2024	35

The material topics identified are taken into account in the review of

UPM's sustainability focus areas and define the scope of this

Sustainability Statement.

» See table on page 33 for an overview of the material topics, and how

they relate 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, scope and, in the case of negative

impacts, irremediability. The likelihood of potential impacts is also

assessed.

UPM's thresholds for assessing scale, scope and irremediability

follow the principles of global frameworks to which UPM is committed in

its operations (e.g. different thresholds for environmental impacts versus

social impacts). Thresholds can be both quantitative and qualitative.

For example, the thresholds for materiality evaluate the impacts

against UPM's financial performance, impacts on the number of

stakeholders, and their geographical coverage.

UPM's risk assessment process at Group level includes an assessment

of the financial impact of sustainability-related risks and opportunities for

the Company. Some of the impacts of the Company's activities and

business relationships on the economy, the environment and people may

eventually become financially material issues. Financial materiality is

assessed by analysing the probability or frequency of events and a

range of financial consequences to determine their potential 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 through demand and regulatory changes (e.g. societal transition

to renewable and fossil-free materials).

Based on the thematic assessments (e.g. climate change, biodiversity,

human rights), UPM's expert teams evaluate potential risks arising from

identified dependencies.

After analysing the impacts, risks and opportunities, the most

significant are identified as material for UPM and then grouped into

topics. Internal professional judgement is also used to prioritise and

group them.

This list of material impacts, risks and opportunities is reviewed

annually and approved by the GET before being reviewed by the Audit

Committee.

The management of risks related to environment, social or

governance (ESG) matters is integrated at UPM into risk management

practices throughout the organisation. The responsibility of monitoring

UPM's risks, impacts and opportunities is shared between the business

areas and assurance functions according to UPM's three lines of defence

model. The top management reviews ESG topics and UPM's business

performance management. Every business area and function is

responsible for taking ESG risks into consideration as part of their risk

management practices. The risk assessment processes are interlinked,

with continuous engagement with external stakeholders such as

suppliers, customers or local stakeholders.

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 (regulation, market), operational risks

(availability and price of key inputs) and hazard risks (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 the 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 21st

century, 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.

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 for fossil-based

materials.

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

UPM FINANCIAL REPORT 2024	36

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 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 is a material topic for UPM as a whole.

For new products and product development, screening of possible

impacts and identification of risks and opportunities throughout the

product lifecycle 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 Programme 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 Programme

In relation to water risks, UPM's production sites are also mapped

and analysed using the WWF Water Risk Filter tool for water-related risk

analysis and water scarcity identification. Pulp and paper production is

known to be UPM's most water-intensive operation. Material water-

related impacts on biodiversity were screened and prioritised during

UPM's participation in the Science-Based Targets for Nature (SBTN)

methodology pilot in 2023–2024.

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 transport 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 processes. In addition, ISO 14001 and EMAS

emphasise 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

Programme 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 recognises 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 analysing

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 organisations like

the SBTN's Corporate Engagement Programme and Initial Target

Validation Group in 2023 and 2024.

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.

UPM's approach is to establish protected areas adjacent to or even

within its forest and plantation areas, and to identify valuable habitats

that are left outside forest management. This means that 100% of forest

operations are nearby these protected or other biodiversity-sensitive

areas. UPM does not operate in global biodiversity hotspots.

Compliance-related impacts and risks

» Refer to G1-1 Policies, Reporting and identifying concerns and

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 2024	37

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.

» 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 datapoints derived from other EU legislation

DATAPOINT	PAGE NUMBER	NOT MATERIAL
ESRS 2 GOV-1 Board’s gender diversity paragraph 21 (d)	22
ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e)	22
ESRS 2 GOV-4 Statement on due diligence paragraph 30	26
ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i	27
ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii	27
ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii	-	Not material
ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv	-	Not material
ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14	40
ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g)	40
ESRS E1-4 GHG emission reduction targets paragraph 34	48
ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38	48
ESRS E1-5 Energy consumption and mix paragraph 37	48
ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43	157
ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44	49
ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55	49
ESRS E1-7 GHG removals and carbon credits paragraph 56	51
ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66	53
ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a)	-	Phased-in
ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c).	-	Phased-in
ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c).	-	Phased-in
ESRS E1-9 Degree of exposure of the portfolio to climate-related opportunities paragraph 69	-	Phased-in
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	72
ESRS E3-1 Water and marine resources paragraph 9	76
ESRS E3-1 Dedicated policy paragraph 13	-	Not material
ESRS E3-1 Sustainable oceans and seas paragraph 14	76
ESRS E3-4 Total water recycled and reused paragraph 28 (c)	79
ESRS E3-4 Total water consumption in m3 per net revenue on own operations paragraph 29	79

UPM FINANCIAL REPORT 2024	38

DATAPOINT	PAGE NUMBER	NOT MATERIAL
ESRS 2 IRO 1 E4 paragraph 16 (a) i	81
ESRS 2 IRO 1 E4 paragraph 16 (b)	81
ESRS 2 IRO 1 E4 paragraph 16 (c)	190-191
ESRS E4-2 Sustainable land/agriculture practices or policies paragraph 24 (b)	82
ESRS E4-2 Sustainable oceans/seas practices or policies paragraph 24 (c)	-	Not material
ESRS E4-2 Policies to address deforestation paragraph 24 (d)	82
ESRS E5-5 Non-recycled waste paragraph 37 (d)	98
ESRS E5-5 Hazardous waste and radioactive waste paragraph 39	98
ESRS 2- SBM3 – S1 Risk of incidents of forced labour paragraph 14 (f)	101
ESRS 2- SBM3 – S1 Risk of incidents of child labour paragraph 14 (g)	101
ESRS S1-1 Human rights policy commitments paragraph 20	102
ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labour Organisation Conventions 1 to 8, paragraph 21	102
ESRS S1-1 Processes and measures for preventing trafficking in human beings paragraph 22	102
ESRS S1-1 Workplace accident prevention policy or management system paragraph 23	102
ESRS S1-3 Grievance/complaints handling mechanisms paragraph 32 (c)	103
ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c)	112
ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e)	112
ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a)	113
ESRS S1-16 Total remuneration ratio 97 (b)	113
ESRS S1-17 Incidents of discrimination paragraph 103 (a)	113
ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a)	113
ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b)	115
ESRS S2-1 Human Rights Policy commitments paragraph 17	116
ESRS S2-1 Policies related to value chain workers paragraph 18	116
ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19	116
ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labour Organisation Conventions 1 to 8, paragraph 19	116
ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36	118
ESRS S3-1 Human Rights Policy commitments paragraph 16	122
ESRS S3-1 Non-respect of UNGPs on Business and Human Rights, ILO principles and/or OECD guidelines paragraph 17	122
ESRS S3-4 Human rights issues and incidents paragraph 36	124
ESRS S4-1 Policies related to consumers and end-users paragraph 16	-	Not material
ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17	-	Not material
ESRS S4-4 Human rights issues and incidents paragraph 35	-	Not material
ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b)	128
ESRS G1-1 Protection of whistleblowers paragraph 10 (d)	128
ESRS G1-4 Fines for violation of anti-corruption and anti-bribery laws paragraph 24 (a)	135
ESRS G1-4 Standards of anti-corruption and anti- bribery paragraph 24 (b)	135

UPM FINANCIAL REPORT 2024	39

Climate change (ESRS E1)

UPM is committed to contributing to limiting the 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
-50%			-22%			-2.1
Compared to 2015 (2030 target: -65%)			Compared to 2018 (2030 target -30%)			Mt CO2 equivalents

UPM FINANCIAL REPORT 2024	40

TRANSITION PLAN

E1-1

UPM's path to net-zero

UPM offers renewable alternatives for fossil-based materials to meet

growing global consumer demand. UPM's strategy is driving the

transformation as a frontrunner in the bioeconomy. The Company invests

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, in

October 2024, the SBTi announced that they are temporarily

suspending the use of the timber and wood fibre pathway included in

the Forest, Land and Agriculture (FLAG) Target-Setting Tool.

The Company's fossil CO2 emissions reduction targets until 2030 for

Scopes 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. » Refer to E1-4

Targets.

The setting of UPM's long-term net zero targets will proceed in 2025,

when the relevant guidelines and tools for the FLAG sector will be

available.

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. Minimising the use of fossil fuels and raw materials is the most important way to mitigate climate change. We favour renewable and other carbon-neutral energy sources and produce CO 2-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 EUR 2,517 million

(2,355 million) at the end of 2024 (» Refer to Note 4.2 Forest assets in

the consolidated financial statement ). In 2024, UPM's capitalised forest

regeneration costs amounted to EUR 53 million (54 million), including

costs related to land preparation, planting, fertilisation, leased

plantation areas and nursery operations. Corresponding OpEx

amounted to EUR 27 million (24 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 and improvements

throughout its operations. In 2024, UPM invested EUR 9 million in 

energy efficiency improvements and reducing CO2 emissions, which

mainly included investments to heat recovery systems and electric and

bio boilers. OpEx related to CO2-free nuclear power amounted to EUR

34 million (EUR 57 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

EUR 1,275 million. In 2024, investments to Biochemicals operations

amounted to EUR 309 million (385 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. The commissioning and start-up of the biorefinery was

initiated in late 2024. The integrated commercial production of the site

is expected to start in H2 2025. The start-up of the biorefinery marks a

significant milestone. A long ramp-up process is expected due to the first-

of-its-kind nature of this facility.

» Refer to EU Taxonomy disclosure activity “3.6 Manufacture of other

low-carbon technologies”.

UPM is currently investigating an opportunity to expand production of

advanced biofuels. The planning for the potential biorefinery in

Rotterdam in the Netherlands is based on an annual capacity of up to

500,000 tonnes of high-quality renewable fuels, including advanced

biofuels and possibly sustainable jet fuels, as well as renewable

UPM FINANCIAL REPORT 2024	41

chemicals. The products would significantly reduce the carbon footprint

of road transport and aviation, as well as replace fossil raw materials

with renewable alternatives in chemicals and bioplastics. Before the

potential investment decision, the focus will be on testing the new

technologies on flexible feedstock options at a larger scale and securing

the feedstock supply. The work is expected to take until 2026. The

investment would be considered under » EU Taxonomy activity “4.13

Manufacture of biogas and biofuels for use in transport”.

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, section “CapEx”, tables “CapEx of Taxonomy-

eligible activities” and “Template 2 for nuclear- and fossil-gas-related

activities”.

» See E1-3 Actions for realised and planned key actions

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.

The majority of UPM's currently eligible economic activities are in

line with the sustainability requirements as defined in the taxonomy

regulation. The potential investment in a second biorefinery for biofuels

refinery is considered eligible and is expected to be aligned.

UPM did not spend significant CapEx related to coal-, oil- or gas-

related economic activities in 2024.

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 Scopes 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. A revolving credit facility is linked to long-term sustainability

targets, including the CO2 emissions reduction target for Scopes 1 and

2.

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 five years. The

Company's business portfolio offers robust growth opportunities in

renewable fibres – namely, pulp; in advanced materials such as

adhesive materials, specialty papers and plywood; and in

decarbonisation solutions such as biochemicals, biofuels and CO₂-free

energy. Decarbonisation solutions offer innovative and sustainable

options to meet the urgent need to decarbonise society. With the launch

of the biochemicals business, the preparations for the expansion of the

biofuels business and by capturing the value of the energy market

transformation, UPM is addressing key sectors that are critical for

decarbonisation. Minimising the use of fossil fuels is the most important

way to mitigate climate change.

UPM will contribute to the decarbonisation of the electricity system by

increasing the supply of reliable and renewable CO2-free electricity. In

Biochemicals, the start-up of the UPM Leuna refinery marks a significant

milestone. In Biofuels, UPM's current plans for the potential biofuels

refinery in Rotterdam in the Netherlands are based on an annual

capacity of up to 500,000 tonnes of high-quality renewable fuels,

including advanced biofuels and possibly sustainable jet fuels, as well

as renewable chemicals.

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 realised and planned

key actions.

UPM FINANCIAL REPORT 2024	42

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 US, as well as its land areas in Uruguay, act as carbon sinks. UPM's bio-based products build a 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 energy generation and purchases 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 and wood harvesting conditions.
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 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 the

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 recognised 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

adaption 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 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 Programme 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's commitment to energy efficiency is also addressed in UPM's

Sustainability Policy Statement as a topic for continuous improvement,

with energy management systems the preferred measure.

Renewable energy targets and the phase-out of coal and peat

support and specify the policy commitments.

UPM FINANCIAL REPORT 2024	43

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,

Scopes 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 favours 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 decarbonisation 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 the operations through audits,

innovations and investments. Improvements usually also lead to

reductions in CO2 and other air emissions.

Actions in 2024

• UPM Energy announced the second-phase investment in its innovative

ultracapacitor project, which will further strengthen the ability of

hydropower to balance the grid. The new installation will be located

next to the Kuusankoski hydropower plant in Finland and is expected

to be operational by the summer of 2025.

• Solar power development is being explored in Utti in Kouvola, and

windpower in Western and Eastern Finland.

• UPM invested in electric boilers for steam generation at three mills in

Finland and Germany. The boilers secure the steam supply, provide

flexibility and enable emission reduction.

• Energy efficiency measures were carried out at several production

sites. For example, at UPM Jämsänkoski, Finland, heat recovery

capacity at one paper machine was increased using Advanced Heat

Recovery (AHR) technology. UPM Tervasaari, Finland, invested in a

beam grate at the mill's bioboiler to increase combustion efficiency.

At UPM Schongau, Germany, the heat recovery system of the mill’s

Thermo-Mechanical Pulp (TMP) line was enhanced. Energy efficiency

measures and investments in 2024 are expected to reduce fossil CO2

emissions by about 120,000 tonnes per year.

Planned actions

• UPM will continue to develop and implement energy efficiency

measures and to develop its energy portfolio to reach its 2030 targets.

• Finalisation of the ultracapacitor project at Kuusankoski hydropower

plant in Finland expected by summer 2025. » See Actions in 2024.

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 -2.1 million tonnes of CO2

equivalent (CO2eq) as the annual average over the last five years.

Actions in 2024

• Annual calculation of the carbon sink of UPM's own and leased

forests and tree plantations in Finland, the USA and Uruguay.

• In 2022, UPM began working with Natural Resources Institute

Finland to improve soil carbon models for Uruguay using field data,

and the field measurements in eucalyptus plantations continued in

2024.

Planned actions

• Annual calculation of the carbon sink of UPM's own and leased

forests and tree plantations in Finland, the USA and Uruguay

continues.

Responsible sourcing: UPM's -30 by 30

Programme

Key actions

In 2022, UPM launched the -30 by 30 Programme with the aim of

reducing CO2 emissions related to purchased materials and logistics

(Scope 3) by 30%. As part of the programme, 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 2024

• More suppliers were included to the data collection scope. In 2024,

carbon footprint data from suppliers is available for more than half of

UPM's raw material spend.

• Category-specific roadmaps to achieve a 30% CO2 reduction have

been developed for all UPM business areas.

Planned actions

• Continue and further expand the annual collection of supplier carbon

footprint data to assess development.

UPM FINANCIAL REPORT 2024	44

• 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 towards a

climate-positive product portfolio will continue in several areas to meet

the 2030 target. » Refer to E5-2 paragraph “Sustainable Product Design

concept”

Actions in 2024

• The construction works for the new biorefinery in Leuna, Germany,

were completed. The commissioning and start-up of the biorefinery

was initiated in late 2024.

• Commercial partnerships were successfully launched. For example,

the partnership with Nokian Tyres marks UPM's entry of UPM

BioMotion™ Renewable Functional Fillers (RFF) into the global tyre

market and demonstrates the versatility of replacing traditional CO2-

intensive fillers with fully renewable alternatives. Functional fillers

account for around 30% of a tyre and consist of materials such as

primarily carbon black and precipitated silica. According to an initial

test series by Nokian Tyres, replacing traditional carbon black with

renewable functional fillers enables the production of more

sustainable tyres.

• Based on UPM's Sustainable Product Design concept, UPM

Biochemicals launched UPM Solargo™, a new range of bio-based

plant stimulants with the potential to help significantly reduce demand

for classical fertilisers based on nitrogen, phosphorus and potassium

(NPK), the production and use of which is held responsible for up to

80% of CO2-emissions in crop production.

• Another focus of UPM's R&D work was on fibre-based packaging

solutions. For example, UPM Specialty Papers launched several co-

created packaging solutions such as a recyclable heat-sealable salad

pot wrapper or a recyclable high barrier packaging solution for

foods with long shelf-life.

Planned actions

• Sequential start-up 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.

• UPM's current plans for the potential biofuels refinery in Rotterdam in

the Netherlands are based on an annual capacity of up to 500,000

tonnes of high-quality renewable fuels, including advanced biofuels

and possibly jet fuels, as well as renewable chemicals. Most of the

basic engineering has been completed, and the chosen technology

has been validated at a demonstration scale. The focus is now on

testing the novel proprietary technology at a larger scale and on

flexible feedstock options. This work is expected to last until 2026.

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 EUR 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. This framework

allows UPM to use a variety of green finance instruments, including but

not limited to green bonds and green loans. 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, a revolving credit facility is linked to long-term

sustainability targets, including the climate target for Scopes 1 and 2.

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 2024, no significant capital expenditures for environment-

related new projects were announced for 2025.

UPM FINANCIAL REPORT 2024	45

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; emission 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 2024 (2023)
Responsible sourcing
Fossil CO2 emissions from materials and logistics (Scope 3)	2018	6.08 mt	-30%	-22% (-23%)
Forestry
Climate-positive land-use in UPM's own and leased forests *	Since 2019	—	Forests as carbon sink (continuous)	-2.1mt CO2eq (5-year average)
Biodiversity
Positive impact on forest biodiversity and developing a monitoring system 2)	Since 2018 (Finland), 2022 (Uruguay)	Always the previous year	Continuous improvement	Overall positive development  measured
Climate
Fossil CO2 emissions Scopes 1 and 2	2015	6.80 mt	-65%	-50% (-45%)
Coal and peat usage	2020	3.3 TWh	0 TWh	2.8 (2.7) TWh
Annual energy efficiency improvement	Since 2016	—	+1% (continuous)	Not achieved
Share of renewable fuels	2015	67%	above 70% (continuous)	80% (76%)
Product stewardship
Climate-positive product portfolio	Since 2019	—	Continuous improvement	Decarbonisation solutions: 8% of sales

* Five-year annual average carbon sink; approximate value

** 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 towards net-zero. However, methodologies

are still being developed by the GHG Protocol and the Science-Based

Target initiative (SBTi) to accurately calculate and formulate targets.

UPM's Scopes 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 decarbonisation

pathways.

In 2024, 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 9% compared to 2023 and 50%

compared to the base year 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.

Compared to 2023, the fossil CO2 emissions increased by 1% mainly

due to the increase in pulp production in 2024, and the associated

increase in purchased materials and logistics. However, the increase

would have been higher without the achievements of the -30 by 30

Programme. Refer to E1-3 Responsible sourcing: UPM's -30 by 30

Programme 

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 and

» Refer to 1-5 Metrics for share of renewable fuels.

UPM FINANCIAL REPORT 2024	46

	Reporting principles for targets

GHG emissions reduction targets (Scopes 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 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. a 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

decarbonisation 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 lifecycle.

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 2024	47

Expected decarbonisation levers

UPM's path to net-zero is expected to be based on the decarbonisation

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 forecasted 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 our value chains. External

effects such as the decarbonisation 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 neutralising any residual GHG emissions through

carbon removals on an ongoing basis. UPM's net-zero approach will be

aligned with recognised international carbon accounting and assurance

standards when these are finalised. 

UPM's pathway to net-zero (illustrative)

UPM FINANCIAL REPORT 2024	48

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 80% (76%) of the fuel

used at the 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	2024	2023
Natural gas	4,200,000	4,900,000
Oil	1,500,000	1,400,000
Coal	2,500,000	2,400,000
Peat	260,000	240,000
Fossil recovered fuel	130,000	170,000
Total fossil fuels	8,600,000	9,200,000
Electricity from nuclear sources*	3,400,000	3,000,000
Other purchased electricity and heat (non-renewable)	1,300,000	2,100,000
Total non-renewable energy consumption	13,200,000	14,200,000
Renewable fuels	34,000,000	29,700,000
Purchased electricity and heat (renewable)	1,600,000	1,400,000
Self-generated non-fuel renewable energy (hydropower)	10,000	20,000
Total renewable energy consumption	35,600,000	31,100,000
Total energy consumption	48,800,000	45,300,000
Share of non-renewable sources in total energy consumption (%)	27%	31%
Share of renewable sources in total energy consumption (%)	73%	69%

*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.

Electricity generation through own power plants and shareholdings

MWh	2024	2023
CHP at production sites, renewable	4,600,000	4,000,000
CHP at production sites, non-renewable	1,200,000	1,200,000
Hydropower	1,000,000	1,100,000
Hydropower, shareholdings	2,200,000	2,200,000
Nuclear power, shareholdings	7,600,000	8,000,000
Thermal power, renewable, shareholdings	90,000	110,000
Thermal power, non-renewable, shareholdings	10,000	20,000
Total	16,700,000	16,630,000

In addition to energy generation at UPM's production sites, UPM is

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/EURm	2024	2023	% 2024/2023
Total energy consumption (MWh) per net revenue (EURm Sales)	4,720	4,330	9%

All UPM's business activities are considered to be in high-climate impact

sectors according to the NACE classification, either as 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 2024	49

GHG emissions

E1-6

GHG emissions and 2030 target

2030 TARGET	RETROSPECTIVE					MILESTONES AND TARGET YEARS
	2015	2018	2023	2024	% 2024/ 2023	2025	2030	% 2024/ BASE YEAR
Scope 1 GHG emissions *
Gross Scope 1 GHG emissions (tCO2)	3,880,000	3,250,000	2,130,000	2,180,000	2%	2,200,000	1,360,000	-44%
Scope 1 GHG emissions from regulated emissions trading schemes (%)	2,970,000	2,730,000	1,630,000	1,660,000	2%	—	—	—
Scope 2 GHG emissions *
Gross location-based Scope 2 GHG emissions (tCO2)	—	3,020,000	1,730,000	1,640,000	-5%	—	—	—
Gross market-based Scope 2 GHG emissions (tCO2)	2,920,000	3,100,000	1,590,000	1,200,000	-24%	1,650,000	1,020,000	-59%
Scope 1 and 2 GHG emissions  *
Gross Scope 1 and market-based Scope 2 GHG emissions (tCO2)	6,800,000	6,120,000	3,720,000	3,380,000	-9%	3,850,000	2,380,000	-50%
Significant Scope 3 GHG emissions  **
Total Gross indirect (Scope 3) GHG emissions (tCO2eq)	—	9,040,000	7,680,000	8,170,000	6%	—	—	—
1 Purchased goods and services	—	4,230,000	3,070,000	2,970,000	-3%	3,540,000	2,960,000	-30%
2 Capital goods	—	50,000	210,000	160,000	-26%	—	—	—
3 Fuel- and energy-related activities	—	670,000	570,000	520,000	-9%	—	—	—
4 Upstream transportation and distribution ***	—	1,180,000	1,100,000	1,250,000	13%	990,000	830,000	5%
5 Waste generated in operations	—	50,000	47,000	54,000	14%	—	—	—
6 Business travel	—	12,000	13,000	14,000	5%	—	—	—
7 Employee commuting	—	13,000	11,000	10,000	-5%	—	—	—
10 Processing of sold products	—	2,830,000	2,660,000	3,200,000	20%	—	—	—
Total GHG emissions
Total GHG emissions (location-based) (tCO2/tCO2eq)	—	15,300,000	11,540,000	11,980,000	4%	—	—	—
Total GHG emissions (market-based) (tCO2/tCO2eq)	—	15,390,000	11,400,000	11,550,000	1%	—	—	—

* Base year 2015 for Scope 1 and Scope 2 targets for 2030

**Base year 2018 for Scope 3 target for 2030

***2023 figure increased compared to previous year's reporting by 7%

Note: Setting and SBTi application of UPM's long-term targets will proceed in 2025, when the guidelines and tools for the FLAG sector will be available.

UPM FINANCIAL REPORT 2024	50

Biogenic CO2 emissions

t BIOGENIC CO2	2024	2023
Scope 1	11,740,000	10,300,000
Scope 2	170,000	200,000
Scope 3 (Category 11 Use of sold products)	300,000	330,000

Fossil CO2 emissions by country 2024

GHG intensity

t/EURm	2024	2023	% 2024/ 2023
Total GHG emissions (location-based) per net revenue (tCO2eq/EURm Sales)	1,160	1,100	5%
Total GHG emissions (market-based) per net revenue (tCO2/EURm Sales)	1,120	1,090	3%

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 emissions which might take place after the publication of this

Statement. In case of significant differences, this will lead to a re-

statement 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 DEFRA

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 2024	51

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 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 Scopes 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 20%. UPM's -30 by 30 Programme 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 at 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-kilometres and primary emission data from

suppliers or secondary emission factors from databases (GLEC,

except UPM Raflatac's 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 30%. UPM's -30 by 30 Programme 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 inkjet

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 Raflatac's LCA from

2021. CO2eq emissions are based on assumptions and calculations

from the verified Environmental Product Declarations for the

processing of timber, plywood and biocomposites sold. 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

Carbon removals and use of carbon credits

E1-7

Carbon sink

In 2024, the annual carbon sink from UPM own forests in Finland and in

the US and UPM own and leased plantations in Uruguay has averaged

2.1 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, UPM's path to net-zero

In 2023, the reported sink was 4.8 Mt CO2eq. The main reasons for

the lower sink in 2024 are changes in methodology and higher logging

volumes in own forests in Finland and on plantations in Uruguay

following the start-up of the Paso de Los Toros pulp mill. 

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

2024, the change in the annual carbon stock of wood-based products

sold by UPM resulted in a carbon removal of 2.8 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

UPM FINANCIAL REPORT 2024	52

credible international carbon accounting and assurance standards, the

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 2024 was approximately 10,000 t

CO2eq only. 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 harmonise 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 2024

carbon accounting.

Finland

Changes in forest carbon stocks cover both the tree stock and the soil.

Long-term measurement data and mathematical modelling 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 is

based on the National Forest Inventory (VMI), which is a five-year

inventory cycle.

Uruguay

Changes in forest carbon stocks cover both the tree stock and the soil.

Measurement data and mathematical modelling 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 increment in volume and harvest information

from UPM. The change in soil carbon stock has been calculated using

the dynamic Yasso07 soil model.

USA

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

5 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

(C) stock in the HWP pool in use and its net changes involve the so-

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.

Internal carbon pricing

E1-8

The internal carbon price is used as an 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

analyses in 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.

UPM FINANCIAL REPORT 2024	53

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.

TCFD

UPM's climate-related disclosures according to TCFD (Task Force on Climate-related Financial Disclosures) are presented in this Sustainability

Statement as follows:

REQUIREMENTS	PAGE NUMBER
GOVERNANCE
a) The role of the Board in overseeing climate-related issues	22-23; 34-36
b) The role of management in assessing and managing climate-related issues	24; 34-36; 42
STRATEGY
a) The climate-related risks and opportunities over the short, medium and long term	34-36; 42; 45
b) The impact of climate-related risks and opportunities on business, strategy and financial planning	34-36; 40-42; 45
c) The resilience of strategy, taking into consideration climate-related scenarios	34; 40-42
RISK MANAGEMENT
a) Processes for identifying climate-related risks	23; 34; 42; 130
b) Processes for managing climate-related risks	23; 40-42; 130
c) How processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management	23; 34; 42; 130
METRICS AND TARGETS
a) Metrics used to assess climate-related risks and opportunities	49-51
b) Scope 1, Scope 2 and Scope 3 emissions, and related risks	emissions: 49; risks: 34; 42
c) Targets used to manage climate-related risks and opportunities and performance against targets	45

UPM FINANCIAL REPORT 2024	54

EU Taxonomy

EU Taxonomy is a sustainable finance classification system, 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 climate goals.

The first EU Disclosures Delegated Act on Climate was adopted in 2021

and it required large companies to report the proportion of their

economic activities considered Taxonomy-eligible in relation to Climate

change adaptation and Climate change mitigation objectives. In

financial reporting year 2022, companies were also required to report

the taxonomy alignment of their economic activities based on the

sustainability requirements defined in the regulation.

In June 2023, the Commission adopted the Taxonomy Environmental

Delegated Act, including a new set of EU taxonomy requirements for

economic activities making a substantial contribution to one or more of

the non-climate environmental objectives, namely: Sustainable use and

protection of water and marine resources, Transition to a circular

economy, Pollution prevention and control and Protection and

restoration of biodiversity and ecosystems. The Commission also

adopted amendments to the Taxonomy Disclosures Delegated Act and to

the Taxonomy Climate Delegated Act, covering the environmental

objectives of Climate change mitigation and adaptation. For the

financial year 2023, the KPIs covered all six environmental objectives

concerning the Taxonomy eligibility. From 2024 onwards, also

alignment shall be reported regarding all six objectives.

Assessment of Taxonomy eligibility and alignment

UPM annually conducts annually 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 in activity identification.

In 2024, UPM identified nine eligible economic activities of which six

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.

In 2024, UPM reported previously Taxonomy-aligned activities 1.1

“Afforestation” and 1.3 “Forest management” as Taxonomy-eligible.

Activities consist of UPM's afforestation operations in Uruguay and 

forest management and regeneration activities in Finland, Uruguay and

USA. UPM considers that the mentioned activities fullfill the all the

alignment requirements, apart from the third-party verification (section 4.

Audit). UPM has been searching for a partner who would be fulfilling

Taxonomy certifier requirements and 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 2024, UPM's 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 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.

4.20 “Cogeneration of heat/cool and power from bioenergy” relates

to operation of installations used for cogeneration of heat/cool and

power exclusively from biomass, biogas or bioliquids and it mainly

consists of operation of UPM's own and co-owned biomass-based

boilers in Finland and Uruguay.

UPM reports separately information on nuclear and fossil gas-related

activities according to the Complementary Delegated Act. UPM identifies

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) through its

shareholdings in Pohjolan Voima Oyj (PVO) which has direct

shareholdings in Teollisuuden Voima Oyj (TVO), » Refer to Note 4.3

Energy shareholdings in the consolidated financial statements. TVO

operates three nuclear power plants in Finland after Olkiluoto 3 started

its production phase in Q2 2023. Both nuclear activities 4.27 and 4.28

are Taxonomy-aligned based on the comprehensive assessment

conducted by Teollisuuden Voima Oyj (TVO).

In addition, UPM identified potential activities 1.2. "Manufacture of

medicinal products" for the objective Pollution prevention and control

within its Biomedicals business developing and supplying wood-based

biomedical products and 4.29. “Electricity generation from fossil

gaseous fuels”, related to the Nordland CHP plant in Germany. The

plant generates electricity mainly for UPM's internal consumption but in

case of excess production, electricity can be sold externally to the grid

operator. The reportable amounts for the activities are currently minor

and have no impact on the KPIs, hence, UPM considered to report it as

non-eligible.

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 pages:

• Commitment to international frameworks, page 102

• UPM Code of Conduct and other corporate policies, page 128

• Sustainability governance, pages 22–26

• Anti-corruption and anti-bribery, pages 133–135

• UPM and human rights, pages 102, 116, 122

• Taxation, pages in the Annual Report 82–83

UPM FINANCIAL REPORT 2024	55

UPM's Taxonomy alignment 2024 and development

compared to previous year

In 2024, UPM's total Taxonomy-aligned turnover including the nuclear

activities was EUR 774 million (995 million), 7% (10%) of total sales,

Taxonomy-aligned CapEx was EUR 324 million (460 million), 40%

(35%) of total CapEx and Taxonomy-aligned OpEx EUR 71 million (141

million), 11% (20%) of total OpEx as defined in Disclosures Delegated

Act1).  Taxonomy-aligned turnover KPI decreased by 2 percentage points

mainly due to lower biofuels sales consisting of renewable diesel and

nafta (activity 4.13) and change in economic activity 1.3 "Forest

management" alignment classification. Simultaneously, this was partly

compensated by higher co-generation of power from bioenergy in the

Paso de los Toros pulp mill, which in 2023 was still partly in a ramp up

phase. Even though the absolute value of Taxonomy-aligned CapEx KPI

decreased compared to the previous year, the relative share of

Taxonomy-aligned CapEx KPI increased by 5 percentage points, mainly

due to high proportion of Leuna biochemicals biorefinery investment out

of Total Capex. OpEx KPI decreased by 9 percentage points mainly as

economic activity 1.3. “Forest management" was reported as

Taxonomy-eligible instead of Taxonomy-aligned, in addition to lower

OpEx related to Olkiluoto1 and 2 nuclear plants (activity 4.28). 

The Taxonomy regulation is still under development and does not

cover all the 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.

1) The percentages differ from the Annex II templates presented below as

they include nuclear activities which are not presented in Annex II templates.

Nuclear activities are presented using the Annex XII templates of the

amended Disclosures Delegated Act.

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 tables Turnover of taxonomy-eligible activities, CapEx

of Taxonomy-eligible activities, OpEx of Taxonomy-eligible activities and

nuclear and fossil gas related templates.

Turnover incl. Nuclear activities

CapEx

OpEx incl. Nuclear activities

UPM FINANCIAL REPORT 2024	56

Turnover of Taxonomy-eligible activities (excluding nuclear and fossil gas related activities)

Financial year 2024

2024

Substantial contribution criteria

DNSH criteria (‘Does Not Significantly Harm’)

Economic Activities

Code

Turnover

Proporti on of Turnover year 2024

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Minimum safeguards

Proportion of Taxonomy -aligned (A.1.) or - eligible (A.2.) turnover, year 2023

Categ ory enabli ng activity

Categ ory transiti onal activity

EURm

%

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y/N

Y/N

Y/N

Y/N

Y/N

Y/N

Y/N

%

E

T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Forest management

CCM 1.3

0%

Electricity generation from hydropower

CCM 4.5

125

1%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

1%

E

Manufacture of biogas and biofuels for use in transport and of bioliquids

CCM 4.13

227

2%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

4%

E

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

125

1%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

1%

E

Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1)

477

5%

5%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

6%

Of which enabling

477

5%

5%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

6%

E

Of which transitional

—

—%

—%

Y

Y

Y

Y

Y

Y

Y

—%

T

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

Forest management

CCM 1.3

64

1%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0%

Sea and coastal freight water transport, vessels for port operations and auxiliary activities

CCM 6.10

3

0%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0%

Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

67

1%

1%

—%

—%

—%

—%

—%

0%

Turnover of Taxonomy-eligible activities (A.1 + A.2)

543

5%

5%

—%

—%

—%

—%

—%

7%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities

9,796

95%

TOTAL

10,339

100%

Turnover of Taxonomy-non-eligible activities (B) includes the eligible and aligned nuclear-related activities

UPM FINANCIAL REPORT 2024	57

CapEx of Taxonomy-eligible activities (excluding nuclear and fossil gas related activities)

Financial year 2024

2024

Substantial contribution criteria

DNSH criteria (‘Does Not Significantly Harm’)

Economic Activities

Code

CapEx

Proporti on of CapEx, year 2024

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Minimum safeguards

Proportion of Taxonomy -aligned (A.1.) or - eligible (A.2.) CapEx, year 2023

Categ ory enabli ng activity

Categ ory transiti onal activity

EURm

%

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y/N

Y/N

Y/N

Y/N

Y/N

Y/N

Y/N

%

E

T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Afforestation

CCM 1.1

0%

Forest management

CCM 1.3

4%

Manufacture of other low-carbon technologies

CCM 3.6

309

38%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

29%

E

Electricity generation from hydropower

CCM 4.5

3

0%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

0%

E

Manufacture of biogas and biofuels for use in transport and of bioliquids

CCM 4.13

6

1%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

1%

E

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

5

1%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

0%

E

CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)

324

40%

40%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

35%

Of which enabling

324

40%

40%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

35%

E

Of which transitional

—

—%

—%

Y

Y

Y

Y

Y

Y

Y

—%

T

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

Afforestation

CCM 1.1

16

2%

EL

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Forest management

CCM 1.3

53

6%

EL

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Sea and coastal freight water transport, vessels for port operations and auxiliary activities

CCM 6.10

1

0%

EL

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

3%

CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

70

9%

9%

—%

—%

—%

—%

—%

3%

CapEx of Taxonomy-eligible activities (A.1 + A.2)

393

48%

48%

—%

—%

—%

—%

—%

38%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities

420

52%

TOTAL

813

100%

CapEx of Taxonomy-non-eligible activities (B) includes the eligible and aligned nuclear-related activities

UPM FINANCIAL REPORT 2024	58

OpEx of Taxonomy-eligible activities (excluding nuclear and fossil gas related activities)

Financial year 2024

2024

Substantial contribution criteria

DNSH criteria (‘Does Not Significantly Harm’)

Economic Activities

Code

OpEx

Proporti on of OpEx, year 2024

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular economy

Biodiversity

Minimum safeguards

Proportion of Taxonomy -aligned (A.1.) or - eligible (A.2.) OpEx, year 2023

Categ ory enabli ng activity

Categ ory transiti onal activity

EURm

%

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y; N; N/EL

Y/N

Y/N

Y/N

Y/N

Y/N

Y/N

Y/N

%

E

T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Forest management

CCM 1.3

3%

Manufacture of other low carbon technologies

CCM 3.6

11

2%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

2%

E

Electricity generation from hydropower

CCM 4.5

4

1%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

1%

E

Manufacture of biogas and biofuels for use in transport and of bioliquids

CCM 4.13

13

2%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

4%

E

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

10

1%

Y

N/ EL

N/ EL

N/ EL

N/ EL

N/ EL

Y

Y

Y

Y

Y

Y

Y

2%

E

OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)

37

6%

6%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

12%

Of which enabling

37

6%

6%

—%

—%

—%

—%

—%

Y

Y

Y

Y

Y

Y

Y

12%

E

Of which transitional

—

—%

—%

Y

Y

Y

Y

Y

Y

Y

—%

T

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

EL; N/EL

Forest management

CCM 1.3

27

4%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

Sea and coastal freight water transport, vessels for port operations and auxiliary activities

CCM 6.10

0

0%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0%

OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)

27

4%

4%

—%

—%

—%

—%

—%

0%

OpEx of Taxonomy-eligible activities (A.1 + A.2)

64

10%

10%

—%

—%

—%

—%

—%

12%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities

601

90%

TOTAL

665

100%

OpEx of Taxonomy-non-eligible activities (B) includes the eligible and aligned nuclear-related activities

UPM FINANCIAL REPORT 2024	59

Nuclear and fossil gas related templates

Template 1 Nuclear and fossil gas related activities

ROW	NUCLEAR ENERGY RELATED ACTIVITIES
1.	The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.	NO
2.	The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.	YES
3.	The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.	YES
	FOSSIL GAS RELATED ACTIVITIES
4.	The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.	NO
5.	The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.	NO
6.	The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.	NO

Template 2 Taxonomy-aligned economic activities (denominator)

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies	121	1%	121	1%	—	—%
3.	4.28. Electricity generation from nuclear energy in existing installations	176	2%	176	2%	—	—%
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- aligned economic activities not referred to in the rows above in the denominator of the Turnover	477	5%	477	5%	—	—%
8.	Total Turnover	10,339	100%	10,339	100%	—	—%

UPM FINANCIAL REPORT 2024	60

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- aligned economic activities not referred to in the rows above in the denominator of the CapEx	324	40%	324	40%	—	—%
8.	Total CapEx	813	100%	813	100%	—	—%
ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies	34	5%	34	5%	—	—%
3.	4.28. Electricity generation from nuclear energy in existing installations	0	0%	0	0%	—	—%
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- aligned economic activities not referred to in the rows above in the denominator of OpEx	37	6%	37	6%	—	—%
8.	Total OpEx	665	100%	665	100%	—	—%

UPM FINANCIAL REPORT 2024	61

Template 3 Taxonomy-aligned economic activities (numerator)

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies	121	16%	121	16%	—	—%
3.	4.28. Electricity generation from nuclear energy in existing installations	176	23%	176	23%	—	—%
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy-aligned economic activities not referred above in the numerator of turnover	477	62%	477	62%	—	—%
8.	Total amount and proportion of Taxonomy- aligned economic activities in the numerator of the Turnover	774	100%	774	100%	—	—%
ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy-aligned economic activities not referred to in the rows above in the numerator of CapEx	324	100%	324	100%	—	—%
8.	Total amount and proportion of Taxonomy- aligned economic activities in the numerator of the CapEx	324	100%	324	100%	—	—%

UPM FINANCIAL REPORT 2024	62

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies	34	48%	34	48%	—	—%
3.	4.28. Electricity generation from nuclear energy in existing installations	0	0%	0	0%	—	—%
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- aligned economic activities not referred to in the rows above in the numerator of the OpEx	37	52%	37	52%	—	—%
8.	Total amount and proportion of Taxonomy- aligned economic activities in the numerator of the OpEx	71	100%	71	100%	—	—%

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy-eligible but not Taxonomy- aligned economic activities not referred above in the denominator of the Turnover	67	1%	67	1%	—	—%
8.	Total amount and proportion of Taxonomy- eligible but not Taxonomy-aligned economic activities in the denominator of the Turnover	67	1%	67	1%	—	—%

UPM FINANCIAL REPORT 2024	63

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy-eligible but not Taxonomy- aligned economic activities not referred to in the rows above in the denominator of the CapEx	70	9%	70	9%	—	—%
8.	Total amount and proportion of Taxonomy- eligible but not Taxonomy-aligned economic activities in the denominator of the CapEx	70	9%	70	9%	—	—%

ROW	ECONOMIC ACTIVITIES	AMOUNT AND PROPORTION
		CCM + CCA		CLIMATE CHANGE MITIGATION (CCM)		CLIMATE CHANGE ADAPTATION (CCA)
		AMOUNT	%	AMOUNT	%	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- eligible but not Taxonomy-aligned economic activities not referred to in the rows above in the denominator of OpEx	27	4%	27	4%	—	—%
8.	Total amount and proportion of Taxonomy- eligible but not Taxonomy-aligned economic activities in the denominator of the OpEx	27	4%	27	4%	—	—%

UPM FINANCIAL REPORT 2024	64

Template 5 Taxonomy non-eligible economic activities

ROW	ECONOMIC ACTIVITIES	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- non-eligible economic activities not referred to in the rows above in the denominator of the Turnover	9,796	95%
8.	Total amount and proportion of Taxonomy- non-eligible economic activities in the denominator of the Turnover	9,796	95%

ROW	ECONOMIC ACTIVITIES	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- non-eligible  economic activities not referred to in the rows above in the denominator of the CapEx	420	52%
8.	Total amount and proportion of Taxonomy- non-eligible economic activities in the denominator of the CapEx	420	52%

UPM FINANCIAL REPORT 2024	65

ROW	ECONOMIC ACTIVITIES	AMOUNT	%
1.	4.26. Pre-commercial stages of advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle
2.	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 technologies
3.	4.28. Electricity generation from nuclear energy in existing installations
4.	4.29. Electricity generation from fossil gaseous fuels
5.	4.30. High-efficiency co-generation of heat/cool and power from fossil gaseous fuels
6.	4.31. Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system
7.	Amount and proportion of other Taxonomy- non-eligible  economic activities not referred to in the rows above in the denominator of the OpEx	601	90%
8.	Total amount and proportion of Taxonomy- non-eligible economic activities in the denominator of the OpEx	601	90%

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

2024. 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 is not split in relation of 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 that are

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 in the course of 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 policy. Taxonomy-eligible

and -aligned turnover include only revenue from sales of products and

services generated from activities that are included in the Taxonomy.

In 2024 1), the numerator of the turnover KPI is defined as the

turnover derived from products and services associated with Taxonomy-

aligned economic activities:

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.

4.20. “Cogeneration of heat/cool and power from bioenergy”

generates turnover from the surplus sale of heat and power generated

from biomass in combined heat and power plants that is not consumed

in own production. Regarding the power plants, the portion of the fossil

fuels has been excluded from the turnover.

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 (other sources of wood excluded from the eligible

turnover), sale of forestry services to private forest owners (1.3. “Forest

management”) and sale of logistic services from leased vessels (6.10

“Sea and coastal freight water transport, vessels for port operations and

auxiliary activities”) are 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, amortisation 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 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

UPM FINANCIAL REPORT 2024	66

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

goodwill acquired in business acquisitions.

In 2024 1), 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. The

Group is reporting all CapEx related to ongoing investment in new-

generation biorefinery as Taxonomy-aligned CapEx. In 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 is not yet fully in operational stage. The commissioning

and start-up of the biorefinery was initiated in late 2024. The integrated

commercial production of the site is expected to start in H2 2025. Total

CapEx for the investment is estimated to be EUR 1,275 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.

4.20. “Co-generation of heat/cool and power from bioenergy” includes

refurbishment of related power plants.

CapEx related to investments on purchased and leased land for

afforestation (1.1. “Afforestation”), capitalised forest regeneration costs

such as planting, growing of seedlings and operation of nurseries,

(1.3. “Forest management”) and leased vessels (6.10 “Sea and coastal

freight water transport, vessels for port operations and auxiliary

activities”) is Taxonomy-eligible but not Taxonomy-aligned.

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 20241), 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.

4.20. “Co-generation of heat/cool and power from bioenergy” includes

maintenance of related power plants.

OpEx related to forestry infrastructure maintenance, forest fire

fighting, protection and environmental activities (1.3. “Forest

management”) and investments on leased vessels (6.10 “Sea and

coastal freight water transport, vessels for port operations and auxiliary

activities”) is Taxonomy-eligible but not Taxonomy-aligned.

Nuclear and gas related activities

UPM has reported separately its activities related to Nuclear and Gas as

defined in the Complementary Climate Delegated Act (2022/1214).

Taxonomy-eligible turnover from nuclear-related activities includes

UPM's electricity sales to external customers related to nuclear power

plants (Olkiluoto 3 under activity 4.27 and Olkiluoto 1and 2 under

activity 4.28). Taxonomy-eligible OpEx in activities 4.27 and 4.28

includes, as defined in the Disclosures Delegated Act, UPM's share of

day-to-day servicing costs related to property, plant and equipment in

the new and existing nuclear power plants. UPM is not reporting any

CapEx related to the nuclear activities 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 Energy shareholdings in the

consolidated financial statements. All the reported nuclear activities and

respective KPIs are both Taxonomy-eligible and Taxonomy-aligned.

1) In 2023, economic activities 1.1 "Afforestation” and 1.3. “Forest

management were reported as aligned. Apart from that, activities in the

numerators of Taxonomy-aligned turnover, CapEx and OpEx in 2023 were

equal to 2024.

UPM FINANCIAL REPORT 2024	67

Pollution (ESRS E2)

UPM pays close attention to the impact of its operations on the air, climate, water and soil and aims

to minimise any adverse effects. This means reducing emissions to air and water, avoiding emissions

to soil and minimising 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
-19%			-44%			35 environmental deviations from permit, contractual or other legal obligations 2,200 preventive observations and near misses reported
Compared to 2015 (2030 target: -20%)			Compared to 2008                                    (2030 target: -40%)

UPM FINANCIAL REPORT 2024	68

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 minimising 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 Programme » 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 minimise 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 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 minimise

any adverse effects. This means reducing emissions to air and water,

avoiding emissions to soil and minimising 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 formalises UPM's Clean Run concept.

It aims to ensure that all businesses 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 sensitising, toxic to aquatic life with chronic

effects, hazardous to the ozone layer, 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 UPM Risk Management Standard also applies to OHS &

Environment. It states: “Risks are managed at UPM using risk

assessments. No job should begin without an evaluation of risk.”

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 prioritise 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's standards are approved at UPM Function level.

UPM Incident Investigation and Reporting

Standard

The UPM Incident Investigation and Reporting Standard applies to OHS

& Environment. For example, 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 organisations. The UPM incident

investigation process starts when an incident occurs or is detected.

Immediately following an incident, the line organisation's first task is to

stabilise the situation, limit any further consequences, and make the

incident site safe and secure.

UPM FINANCIAL REPORT 2024	69

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)

• Water (with a target for use of nutrients from recycled sources);

» Refer to E5-2 and E5-3

• Product stewardship (with a target for share of ecolabelled products);

» Refer to E5-2 and E5-3

• Waste (with a target for landfill waste); » Refer to E5-2 and E5-3 

• Responsible sourcing (with targets on spend covered by UPM

Supplier and Third-Party Code); » Refer to G1-2

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 sites systematically follow up deviations, proactively

report observations and near misses, carry out environmental walks and

discussions, share best practices, and prepare detailed risk assessments.

Clean Run and long-term environmental targets reviews are conducted

regularly. Roadmaps for achieving the Group's environmental targets for

2030 are developed by the relevant production sites and business

areas, and actions are taken accordingly.

UPM continuously strives to reduce its risk exposure and improve its

performance by using tools such as certified management systems. All

production sites have a certified ISO 14001 environmental management

system, except for two UPM Raflatac sites in Germany which were

acquired at the end of 2022, one of which will be closed during 2025.

Certification of the other site is expected to be completed in 2025.

In 2024, approximately 1,900 (1,500) environmental walks were

organised, and 2,200 (2,600) preventive environmental observations

and near misses were reported. In 2024, the number of environmental

non-conformances increased to a total of 35 (28) deviations from permit,

contractual or other legal obligations. 6 cases were related to air, 23 to

water, 1 to soil, 2 to soil and water, 1 to noise and 2 to logging. 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 normalise the situation and will be

taken to prevent similar occurrences.

No major environmental incident occurred in 2024. In 2023, a

major environmental incident occurred at UPM's new Paso de los Toros

pulp mill in Uruguay. Sodium hydroxide mixed with rainwater leaked

from a stormwater basin through the soil into a nearby creek, causing

the pH level of the water in the creek to temporarily increase. The

stormwater basin was repaired. Operational and maintenance

procedures in the chemical storage area have been reviewed and

updated, and the findings have been used to review and improve other

concrete structures on the mill site. Learnings were shared internally as

part of UPM's Clean Run concept.

All the measures agreed with the authorities were taken, such as the

interception and removal of subsurface flow with trenches, the

reparation of the stormwater control basin and preventive actions in

other concrete structures of the mill. The creek has shown sustained

natural recovery since the incident in August 2023. The environmental

monitoring continues to follow up the recovery of the affected section of

the creek.

In January 2024, the Uruguayan Ministry of Environment imposed a

fine of approximately USD 188,000 on the Company for this non-

compliance with the environmental management plan for the UPM Paso

de los Toros pulp mill. The sanction was paid in 2024.

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, i.e. effluent load, 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 2024, the specific emissions of COD per tonne of paper

decreased by 10% compared to the previous year and by 33%

compared to the target base year 2008. The specific emissions of COD

per tonne of pulp decreased by 3% compared to the previous year and

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 utilised.

Actions in 2024

• Several actions focused on reducing the risk of soil or groundwater

pollution. At UPM Kymi, Finland, the bottom structure at the bark

storage area was improved. At Paso de los Toros, Uruguay,

investments were made in contention areas for emergency situations.

Improvements were also made to chemical unloading areas of

several sites (e.g. plywood mills, UPM Kaukas paper mill).

• 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. A COD reduction of 20% is expected

due to this measure, beside the improved sludge recycling options

and reduction of transports. The project will be finalised in 2025.

Planned actions

• UPM will continue to develop and implement measures to reach its

2030 targets.

• The primary clarifier at UPM Jämsänkoski paper mill in Finland will

be renewed in 2025, which is essential for the efficiency and

effectiveness of the entire wastewater treatment process.

UPM FINANCIAL REPORT 2024	70

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 operating rate of the paper machines 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 2024, the specific emissions of acidifying flue gases per tonne of

paper decreased by 12% compared to the previous year and 32%

compared to the target base year 2015. The specific emissions of

acidifying flue gases per tonne of pulp were unchanged from the

previous year and decreased by 8% compared to the target base year

2015.

» Refer to E2-3 Targets for the follow-up of the target at Group level.

Transport 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 fuelled with LNG, their CO2 emissions will be 25% lower

than those of commonly used marine gas oil. In addition, nitrogen

oxides (NOx) will be cut by about 85%, and sulphur oxides (SOx) by

approximately 99%. Emissions of soot particles will also be decreased

by 99%.

Actions in 2024

• UPM joined a 5-year research programme led by VTT and RISE

Research Institutes of Sweden on emission-free pulping. The

programme aims to significantly reduce biomass burning and

increase the product yield from wood from approximately 50% to

around 70%.

Planned actions

• UPM will continue to develop and implement measures to reach its

2030 targets.

• At UPM Kaukas pulp mill’s recovery boiler, the renewal of their four

Electrostatic Precipitators (ESPs) continues with the third ESP in 2025,

after the renewal of two ESP in 2023. This will further improve air

quality by reducing dust emissions especially.

» Refer to E5-2 Actions for actions related to waste and chemicals.

Resources

In 2024, UPM's environmental investments totalled EUR 20 million

(60 million). The significant decrease compared to the the previous year

is mainly due to investments in eight electric boilers in 2023. The largest

investment in 2024 was at UPM Kymi, where approximately EUR 2

million was spent on improvements at the bottom structure of the bark

storage area.

UPM's environmental costs, which were mainly attributable to effluent

treatment and waste management, totalled EUR 111 million (121

million), including depreciation.

During 2024, 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 2024	71

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.

SUSTAINABLITY FOCUS AREA AND KEY PERFORMANCE INDICATOR	BASE YEAR	BASE YEAR VALUE	2030 TARGET	TARGET FOLLOW-UP 2024 (2023)
Climate, including air emissions
Acidifying flue gases (NOX/SO2) for an average UPM product	2015	100% **	-20%	-19% (-17%)
Water
Chemical oxygen demand (COD) for an average UPM product *	2008	100% ***	-40%	-44% (-39%)
Waste
Process waste sent to landfills or to incineration without energy recovery	2015	122,000 dry tonnes	0 tonnes	97,000 (82,000) tonnes, 83% (87%) 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)	91% (89%)

* 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 the 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. 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 towards the Group-level targets for effluent load (COD) and

acidifying flue gases (NOX and SO2) is ahead of schedule. The 2030

target for COD is achieved in 2024 and the 2030 target for acidifying

flue gases is almost achieved.

» 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 2024	72

METRICS

E2-4

Emissions to air, water and soil

The tables below include the amount of pollutants as 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 therefore 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	2024
Carbon monoxide (CO), t	6,700
Chlorine and inorganic compounds (as HCl), t	20
Chromium and compounds (as Cr), kg	150
Polycyclic aromatic hydrocarbons (PAHs), kg	80
PCDD + PCDF (dioxins + furans) (as Teq), g	0.4
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	2024	2023
Nitrogen oxides (NOx)	8,700	7,800
Sulphur dioxide (SO2)	780	770
Particulates (total)	680	860
Non-methane volatile organic compounds (NMVOC)	400	320

Emissions to water (E-PRTR scope*)

t, kg or g	2024
Chlorides (as total Cl), t	14,600
Zinc and compounds (as Zn), kg	6,300
Copper and compounds (as Cu), kg	1,700
Nickel and compounds (as Ni), kg	590
Chromium and compounds (as Cr), kg	110
Arsenic and compounds (as As), kg	100
Lead and compounds (as Pb), kg	80
Cadmium and compounds (as Cd), kg	10
Mercury and compounds (as Hg), kg	10
PCDD + PCDF (dioxins + furans) (as Teq), g	30
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	2024	2023
Biological oxygen demand (BOD7)	5,200	5,300
Chemical oxygen demand (COD)	56,600	52,400
Total organic carbon (TOC) (as COD/3)	18,900	17,500
Halogenated organic compounds (as AOX)	280	290

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 2024	73

Microplastics

The quantification of microplastics generated and used by UPM is still

impossible. Active research is done in the area covering both incoming

material and unintentional releases. 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

centre in Lappeenranta, Finland. However, this and other

standardisation and methodology developments are still insufficient. Both

testing and development and validation work must continue to be able to

receive reliable and consistent results. UPM will continue research in this

area by joining projects, through its own method development work and

by evaluating cooperation with external laboratories, for example. In

2024, UPM participated in preparing the application for the Finnish

“Pro Water Project” which will start in 2025 when approved.

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 Raflatac, 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 the 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 the 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. Quantitative information about substances of

concern leaving UPM's production sites is still unavailable.

In 2024, UPM developed the reporting for substances of concern

contained in purchased production chemicals. Substances of concern

(SoCs) include also substances of very high concern (SVHCs). Like SoCs,

SVHCs present in production chemicals react chemically during

production. SVHCs have been found mainly in the following chemical

groups: biocides, pigments and resins. The reporting will be developed

further during the next years.

All pulp mills and the European paper mills comply with the relevant

EU Ecolabel criteria, e.g. for graphic paper, with its strict requirements

for the use of chemicals.

» Refer to E2-1 Policies for information about UPM's policies on the use

of substances of concern.

UPM FINANCIAL REPORT 2024	74

Substances of concern, including substances of very high concern

TONNES PER CHEMICAL GROUP	2024
Bleaching chemical	5,000
Biocide	900
Adhesive	100
Coating hardener	100
PVA	100
Resins	100
Washing chemical	100
Water, sludge treatment	100
Other process chemicals *	100
Total	6,700

* Includes e.g. pigments, silicones or paints

Substances of very high concern

TONNES PER CHEMICAL GROUP	2024
Biocide	30
Pigment	10
Resin	10
Other process chemicals *	10
Total	60

* Includes e.g. adhesives, silicones, coating hardeners or washing chemicals

	Reporting principles for metrics

Substances of concern are listed in UPM's global chemical database for

the majority of UPM's production sites. Only a few sites report based on

their own databases.

UPM's reporting scope are the procured process chemicals. The

information about the share of substances of concern is provided by the

chemical supplier in the material safety data sheet, usually as a range.

UPM uses the maximum of this range for its calculation, which multiplies

the share of a particular substance of concern in a chemical by the

quantity of the chemical procured. The information is consolidated at

Group level.

For 2024, due to the current complexity of the data gathering and

calculation, the reported whole year data is estimated based on the

actual data of at least the first three quarters of 2024. Data for UPM

Raflatac was estimated based on data of 7 of its 12 sites.

E2-6

Anticipated financial effects from material

pollution-related risks and opportunities

In 2024, 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 2024	75

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 resources
-16%			20 x
Compared to 2008 (2030 target: -30%)			Approximate value in pulp and paper production

UPM FINANCIAL REPORT 2024	76

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 in relation to minimising 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 programmes:

• UPM Clean Run Standard » Refer to E2-1 Policies

• UPM Sustainable Product Design concept

• UPM Sustainable Supply Chain Programme

UPM's Sustainability Policy Statement covers water management in a

specific section. UPM's production sites aim to minimise 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 a 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 optimise 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 minimise

negative impacts and support the role of forests in the hydrological

cycle.

The Statement also takes UPM's approaches to sustainable product

design and to 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 recognised water stewardship principles.

UPM's Sustainable Supply Chain Programme 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 Programme 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 transport of

materials and products by sea, and indirectly through the discharge of

treated wastewater originating in our 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 tor

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 transport 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 2024, the specific process wastewater volume per tonne of paper

decreased by 5% compared to the previous year. This decrease does

not compensate for the high increase of 23% from 2022 to 2023 which

was due to temporary market-related shut-downs of paper mills. This

means that there is still an increase of 4% compared to the target base

year 2008. The specific value per tonne of pulp decreased by 12% and

by 35% compared to the target base year 2008. » Refer to E2-3 Targets

for the follow-up of the target at Group level.

UPM FINANCIAL REPORT 2024	77

Actions in 2024

• UPM's Santana nursery in Uruguay implemented improvements to its

water recycling system. The improvements are related to increasing

the collection and recovery capacity of irrigation and rainwater and

improving sludge management.

• UPM Changshu paper mill, China, invested in the recycling of its

wastewater to be used as cooling water at the power plant, resulting

in a water reduction of 0.3 m3 per tonne of paper.

• UPM Jämsänkoski paper mill, Finland, managed to reduce the

freshwater usage of one of their paper machines by 20 litres per

second by utilising a separate filtering process of save-all super clear

filtrate.

Planned actions

• Also in 2025, UPM will continue to develop and implement measures

to reach its 2030 targets.

• The primary clarifier at UPM Jämsänkoski paper mill in Finland will

be renewed in 2025, which is essential for the efficiency and

effectiveness of the entire wastewater treatment process

• Improvements to the water recycling system at UPM's San Francisco

nursery in Uruguay will be implemented in 2025.

Water risk assessments

Key action

UPM has carried out a water risk assessment study using the WWF

Water Risk Filter tool. According to the assessment, none of UPM's

production sites is located in areas of high physical water risk, but in

areas of low or medium water scarcity.

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 risk. The UPM Changshu paper mill near Shanghai

in China is expected to face the highest increase in water risk by 2050.

However, the mill has made significant improvements in water efficiency

in recent years, leading to a 15% reduction of process wastewater

volume over the last five years. Measures have included wastewater

recovery and reuse. » Refer to ESRS 2 IRO-1 Materiality assessment

process for more information about the water risk assessment.

Actions in 2024

• Annual review of UPM's water risk assessment for its production sites

with the WWF Water Risk Filter version 1.0. Results are incorporated

in this chapter.

• UPM participated in the Science Based Targets Network (SBTN)

Corporate Engagement Programme to develop methods, tools and

guidelines for setting science-based targets for maintaining and

enhancing biodiversity. Fresh-water-related biodiversity pressures

were assessed and target-setting tested according to the Initial Target

Validation Pilot methodology.

Planned actions

• Water risk evaluation with the new version 2.0 of the WWF Water

Risk Filter which was published in October 2024, and evaluation of

water risks with alternative tools in 2025.

• Continuation of participations in the Science Based Targets Network

(SBTN) Corporate Engagement Programme (see Actions in 2024) in

2025.

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 2024	78

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 the supply chain. These targets support UPM's policy

objective of minimising water use at 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 2024 (2023)
Water
Wastewater volume for an average UPM product *	2008	100% **	-30%	-16% (-7%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	91% (89%)

* 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 towards the Group-level target for 2030 on wastewater

volume is behind the schedule since 2022, but 2024 shows good

developments for pulp and 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 low to medium basin

risk, with one exception, the UPM Changshu paper mill for the 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. However, UPM Changshu mill is

making extra efforts to reduce its water use and wastewater load to

minimise any potential long-term risk.

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 2024	79

METRICS

E3-4

Water consumption

Water withdrawal, outflow and consumption

m3	2024	2023
Water withdrawal
Surface water	391,000,000	378,000,000
Ground water	12,000,000	13,000,000
Communal water	4,000,000	4,000,000
Total water withdrawal	407,000,000	395,000,000
Water discharge
Process wastewater	198,000,000	197,000,000
Cooling water	184,000,000	173,000,000
Total water discharge	382,000,000	370,000,000
Water consumption
Total water consumption	25,000,000	25,000,000
Total water consumption in areas at water risk	0	0

Water intensity

m3/EURm	2024	2023
Total water consumption in own operations (m3) per net revenue (EURm sales)	2,430	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, the 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 is 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 2024	80

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 and in Uruguay			Percentage of certified fibre			Obstacle-free streams achieved
			88.5%			287 km
			(2030 target: 100%)			(2030 target: 500 km)

UPM FINANCIAL REPORT 2024	81

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 for 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 Programme 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. With

UPM's Sustainable Supply Chain Programme, this programme 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 Programme. 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

the double materiality analysis.

UPM's actions minimise the risk of biodiversity loss having a

significant negative impact on the availability and acceptability of wood

raw material for UPM's products such as pulp, paper, timber, biofuels

and biochemicals.

Stakeholder engagement

UPM recognises 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 organisations such as the Science Based Targets Network’s

Corporate Engagement Programme and the Initial Target Validation

Group in 2023 and 2024.

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 Programme 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.
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 instrumental to ensuring healthy forest growth, and that forests adapt to climate change.

» Refer to Report of 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

UPM FINANCIAL REPORT 2024	82

• Emissions to water and air from UPM's pulp and paper mills

• 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 minimised

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 programmes:

• 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 Programme » Refer to G1-2

Responsible Sourcing

• UPM Forest Action Programme » 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 recognised. Biodiversity risks and opportunities are

assessed and documented as part of UPM's risk management process,

emphasising that biodiversity is recognised 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 recognises 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 Programme. This covers

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 Scopes 1 and 2 CO2 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 a target for Scope 3 GHG emissions and

on 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 Programme

UPM's global Forest Action Programme was launched in 2022. It

outlines an ambitious agenda to maximise the positive impact of forestry

operations by the end of the 2030. The programme 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 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.

UPM FINANCIAL REPORT 2024	83

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 Programme.

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

programmes 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 target for Finland was set in 2018, for Uruguay in 2022,

and the target for the USA is planned to be launched in 2025.

Development work for measuring biodiversity is ongoing. 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 2024

• In Finland, UPM continued to participate in a project led by FSC™ to

better understand and quantify the positive impact of forest

certification on biodiversity.

• In the USA, UPM implemented its Smart Forestry™ method, which uses

plant communities and ecological principles as the basis for silvicultural

practices and maintaining biodiversity. Using ecological classification

as a guide, forest complexity and diversity are promoted along with

quality and value. For example, this means that harvesting sites are

managed to keep deadwood at a sustainable level.

• UPM participated in the Science Based Targets Network (SBTN)

Corporate Engagement Programme to develop methods, tools and

guidelines for setting science-based targets for maintaining and

enhancing biodiversity.

• As part of its Forest Action Programme, UPM launched the UPM

Habitat Restoration Programme in February. 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.

• A new spider species was discovered on UPM land in Uruguay as

part of a biodiversity research project sponsored by UPM.

• About 800 people visited UPM's largest Biodiversity Reserve in

Uruguay (EARU), taking advantage of the visitors centre inaugerated

at the end of 2023. This confirms the public's interest in UPM's

biodiversity conservation activities.

Planned actions

• The global UPM Forest Action Programme will continue with further

measures and actions.

• The implementation of the Smart Forestry™ method will continue in

the USA with further measures and actions.

• Implementation of new and revised biodiversity indicators for UPM's

forests in Finland which were developed during 2024. » Refer to

E4-5 Metrics, Biodiversity indicators - Finland

• Ongoing development work for measuring biodiversity.

Stream waters and biodiversity

Key actions

UPM's stream water programme 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 kilometres of

obstacle-free streams in Finland by 2030. The target steers the activities

and monitoring of their impact on biodiversity.

Actions in 2024

• Two obstacle removal projects with UPM's participation were initiated

and carried out: Rutajoki Seinäkoski (25 km) and Kelvänjoki (44 km).

• Studies related to eDNA started in Finland and Uruguay. In Finland,

UPM joined the EU-funded NorthDIVeRSITY led by the Natural

Resource Institute Finland (LUKE). In Uruguay, a pilot project using

eDNA technique was launched through an agreement with the

Clemente Estable Institute in aquatic ecosystems at UPM's EARU

Biodiversity Reserve.

• Participation in SBTN development. » See above paragraph “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 programme.

• Testing of eDNA continues (see above)

UPM FINANCIAL REPORT 2024	84

Production sites and biodiversity

Key actions

UPM continuously monitors its emissions to air and water and its impact

on waterbodies. Baseline studies are carried out for investment projects.

In addition, sites take measures to enhance local biodiversity.

Actions in 2024

• 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 Action

• Measures were taken at the creek impacted by the accidental spill in

UPM Paso de los Toros in Uruguay, resulting in sustained natural

recovery since the incident in August 2023.

• Sites continued their efforts to manage invasive species in

accordance with local plans.

• Participation in SBTN development. » See above paragraph “Forests

and biodiversity”

Planned actions

• Further emissions reductions in line with UPM's environmental targets

for 2030

• Development of means to measure enhancement of biodiversity on

production sites

Supply chain and biodiversity

Key actions

Biodiversity protection has been identified as one of the key issues in

UPM's Sustainable Supply Chain Programme. 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 2024

• In the spring, UPM Forest launched a new service package, UPM

Nature Management Services, to provide Finnish forest owners with

more options to enhance biodiversity.

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 EUR 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, a revolving credit facility is linked to long-term

sustainability targets, including the target for UPM's forests in Finland to

have a positive impact on biodiversity.

» 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 2024, no significant capital expenditures for forest-related new

projects were announced.

Biodiversity offsets

UPM does not use biodiversity offsets.

UPM FINANCIAL REPORT 2024	85

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 of 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 2024 (2023)
Biodiversity
Net-positive impact on forest biodiversity and developing a monitoring system *	Since 2018 (Finland)/ 2022 (Uruguay)	Always the previous year	Continuous improvement	Overall positive development measured
Obstacle-free streams **	2015	0 km	500 km	287 km (263 km)
Forestry
Share of certified fibre ***	2015	84%	100%	88% (87%)
Climate
Fossil CO2 emissions from UPM's own combustion and purchased electricity (Scopes 1 and 2)	2015	6.80 mt	-65%	-50% (-45%)
Acidifying flue gases (NOx/SO2) for a UPM average product	2008	100%	-20%	-19% (-17%)
Water
Chemical oxygen demand (COD) for a UPM average product ****	2008	100%	-40%	-44% (-39%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	91% (89%)
CO2 emissions from materials and logistics (Scope 3)	2018	6.08 mt	-35%	-22% (-23%)

* 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's target is to have a net-positive impact on biodiversity in its

own forests in Finland since 2018, and on 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 programme 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,

minimisation, restoration and rehabilitation.

» Refer to E1-4 Targets for climate target,

» Refer to E2-3 Targets for air emissions and water targets, and

» Refer to G1-2 Responsible sourcing for sourcing targets.

UPM FINANCIAL REPORT 2024	86

	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

UPM's land areas in Uruguay.

» Refer to E4-5, Metrics, Biodiversity indicators for information and

follow-up on the specific indicators for Finland and Uruguay.

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).

In 2024, the monitoring of the target was improved and adjusted.

Firstly, another dataset called Jokiviiva10 has been included in the

monitoring to better capture the number of streams in Finland. This has

let to a higher number of kilometres being counted in the target follow-

up. Secondly, UPM's funding share of the projects was added to the

calculation of kilometres which lowered the amount of kilometres.

Consequently, the achieved kilometres for 2023 had to be adjusted

to 263 km, rather than the earlier reported figure of 186 km in the UPM

Annual Report 2023.

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	2024	2023
Finland	522,000	523,000
Uruguay	318,000	304,000
USA	76,000	76,000
Total owned	916,000	903,000
Uruguay, leased	174,000	170,000
Total owned and leased	1,090,000	1,073,000

This includes forest land for Finland and the USA, and eucalyptus

plantations, grasslands and conservation areas for Uruguay.

In addition, UPM manages about 1,600,000 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

%	2024	2023
FSC™ and PEFC double certified	90.2%	91.4%
PEFC certified	8.3%	8.4%
In the process of being certified	1.5%	0.2%
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

approximately 570,000 hectares in Finland and over 14,000 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 2024	87

UPM's own protected land areas

Globally, about 135,000 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 donate and create protected areas adjacent to

or even within its forest and plantation areas, and to identify valuable

habitats that are not managed. 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	2024	2023
Finland	16.4	16.1
Uruguay	10.4	7.8
Germany	0.5	0.6
USA	0.3	0.5
Estonia	0.2	0.2
UK	0.2	0.2
Austria	-	0.1
Total	28.0	25.5

Biodiversity indicators – Finland

In Finland, the target of a net-positive biodiversity impact is measured for

UPM's own forest land using nine indicators: tree species; forest age;

forest structure; deadwood; indicator development; protected areas;

valuable habitats; habitat restoration; species and habitat projects.

Indicators are developed in cooperation with research institutes

and other stakeholders. The baseline is set as 2019, and the assessment

of each indicator is done by comparing the current status with the

previous years’ figures. In 2024, an overall positive development was

measured for each indicator.

Biodiversity indicators – Finland

INDICATOR	TARGET	METRIC	2024	2023
Tree species	Increase broadleaved tree species volumes	Share of broadleaved trees	11.8%	11.3%
Deadwood volumes *	Increase deadwood volumes in commercial forests	Volume of deadwood per hectare	7,4 m3/ha	5,5 m3/ha
Forest age	Maintain diverse forest age structure	Maintain different age groups	+	+
Forest structure	Maintain and increase diverse forest structure	Share of alternative regeneration methods	+	+
Protected areas **	Improved nature conservation network	Nature conservation areas (protected areas/total hectares)	17.2%	16.8%
Valuable habitats	Diverse protected valuable habitat network	Number of valuable habitats	55,327	47,841
Habitat restoration	Improved biodiversity in restored environments	Existence of habitat restoration projects	+	+
Species & habitat projects	More joint stakeholder projects to protect biodiversity	Existence of species and habitat projects	+	+
Indicator development	Complement the set of indicators and develop monitoring with researchers	Biodiversity index and indicator development with external experts	+	+

* The baseline for a new indicator, deadwood volumes, was set in 2022. 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 latest data is

from NFI 12 (2014–2018). New NFI data is available in 2024.

** 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 2024	88

Indicator development

Measuring and monitoring biodiversity requires the development of

indicators. As part of the development work, UPM has reviewed and

updated the indicator set with improved and concrete targets also during

2024. The updates  also ensure better alignment with other indicators

and targets set by UPM Forest, such as the Habitat Restoration

Programme.

For the indicators relating to the structural characteristics of forests,

there will be two changes that will be implemented from 2025 onwards:

• The current “Forest age” indicator will be replaced by “Retained

aspen trees”, which measures the volume of aspen with a diameter of

30+ cm per hectare (m3/ha). At the end of 2024, the amount was

0.78 m3/ha, based on the latest National Forest Inventory data

(2019-2023).

• The “Forest structure” indicator will be 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, there will be

two new metrics for “Habitat restoration”:

• Restored peatland: with a target of 3,000 ha by 2030. For 2024, it

was 10 ha.

• Number of sites restored or managed to promote biodiversity: with a

target of at least 100 sites by 2030. In 2024, the number of sites

was 6.

An indicator “Research and co-operation” will be added for projects

and co-operation 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 62,100 hectares. This includes a network of 31 biodiversity

reserves, covering more than 12,800 hectares. Each biodiversity reserve

has specific management and monitoring plans.

Biodiversity indicators – Uruguay

INDICATOR	TARGET	METRIC	2024	2023
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	% of the conservation area of total own land	19.6%	19.3%
Endemic and threatened species	Maintain or enhance endemic and threatened species populations	No. of endemic and threatened species recorded during the last (rolling) 5 years/No. of endemic and threatened species recorded during the cumulative baseline period (i.e. since 1992)	2.8%	9.2%
Control of invasive exotic woody species	Reduce by 8% per year the active area of invasive exotic woody species	Variation of the active area of invasive exotic woody species between year end and year start	*	*
Coverage of UPM's network of biodiversity reserves	Cover at least 85% of the landscape units in which UPM owns land	Percentage 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	>0,75	Average conservation index for the biodiversity reserves on High Conservation Value Area (HCVA)	0.82	0.74

* This indicator will start to be reported by 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 2024	89

	Reporting principles for metrics

Areas (total, certified, protected) and wood deliveries

Due to its relevance for biodiversity and ecosystems, UPM reports 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 the 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, Forest age and Forest

structure reflect how UPM retains during its forestry operations the forest

features that are essential for many forest-dwelling species. Deadwood

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 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 is 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, Species & habitat projects 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 purposes which are representative sample areas and

biological corridors or connectivity areas.

Indicators for conservation area hectares and coverage are

calculated based on FO's Oriental's forest database (FO, Forestal

Oriental, is the name of UPM's company dedicated to 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 programme, and since 1992 the results have been

maintained in FO's biodiversity database.

For 2024, the conservation status index calculation includes an

estimate for two of the 12 biodiversity reserves. For these sites, the 2023

value is used to calculate the average of all reserves.

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 2024	90

TNFD

UPM's nature-related disclosures according to TNFD (Task Force on Nature-related Financial Disclosures) are presented in this Sustainability Statement

as follows:

REQUIREMENTS	PAGE NUMBER
GOVERNANCE
a) The role of the Board in overseeing nature-related impacts, risks and opportunities	22-23; 34-36
b) The role of management in assessing and managing nature-related dependencies, impacts, risks and opportunities	24; 42; 34-36
c) Human rights policies and engagement activities, and oversight by the Board and management, with respect to Indigenous Peoples, Local Communities, affected and other stakeholders, in the organisation’s assessment of, and response to, nature- related dependencies, impacts, risks and opportunities.	22; 26; 101-103; 113; 116-118; 122; 131
STRATEGY
a) The nature-related dependencies, impacts, risks and opportunities over the short, medium and long term	33-36; 81-82
b) The effect of nature-related dependencies, impacts, risks and opportunities on business model, value chain, strategy and financial planning, as well as on any transition plans or analysis in place	33-36; 81-82
c) The resilience of strategy, taking into consideration nature-related scenarios	33-36; 81-82
RISK MANAGEMENT
a) Processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities	22-25; 34-36; 81-82
b) Processes for monitoring nature-related dependencies, impacts, risks and opportunities	22-25; 34-36; 81-82
c) How processes for identifying, assessing, prioritising and monitoring nature-related risks are integrated into and inform the overall risk management process	22; 34-36
METRICS AND TARGETS
a) Metrics used to assess and manage material nature-related risks and opportunities	86-89
b) Positive impact on forest biodiversity and developing a monitoring system and obstacle-free streams, and related risks	81-83
c) Targets used to manage nature--related dependencies, impacts, risks and opportunities and performance against targets	85-86

UPM FINANCIAL REPORT 2024	91

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 ecolabelling			Nutrients used at effluent treatment from recycled sources
18%			89%			33%
Compared to 2023 (2030 target: zero process waste)			(2030 target: 100%)			(2030 target: 100%)

UPM FINANCIAL REPORT 2024	92

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 minimise 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, programmes 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 Programme » Refer to G1-2

Responsible Sourcing

• UPM Forest Action Programme » 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

lifecycle. The standard establishes a framework for product

management, emphasising 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 utilised to integrate

these practices to 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 lifecycle management and 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. It will be trained in 2025 to relevant persons working with

product management, product development and technical customer

service tasks in all UPM businesses.

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

webpage.

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 originate from 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, Labelling 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 Programme 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 Programme 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 utilisation 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 2024	93

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 ecolabelled 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 key actions and planned key 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 lifecycle

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 lifecycle steps: design; materials;

production; distribution; use; and circularity. Several tools help evaluate

the sustainability factors of each lifecycle 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 lifecycle 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 lifecycle

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

chemicals includes substances with selected hazard classifications.

Product safety requirements are communicated to customers and

suppliers of chemicals and raw materials. UPM has cooperated with

several paper and chemical companies to increase transparency in the

supply chain and accelerate the exchange of information. As a result of

this cooperation, a harmonised questionnaire and a common tool (PP-

VIS) enable UPM to ensure that sourced products 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 recognised

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 Raflatac factories have ISCC PLUS

certification. UPM Biofuels has also the Roundtable of Sustainable

Biofuels (RSB) 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 2024

• The EU Packaging and Packaging Waste Regulation (PPWR) is

expected to be implemented from Q3/2026. PPWR requires all

packaging to be recyclable. Plastic packaging that is brought to

market in EU member states has to be recyclable. Plastic packaging

must contain recycled material. In addition, PPWR will introduce

changes to the responsibilities of packaging producers and fees, for

example. UPM has started to assess the practical actions that need to

be taken. 

• At the end of 2023, the UPM Sustainability Claims guideline was

published. Related support material such as a practical guide and

glossary, as well as training, was created and implemented in 2024.

The guideline was adopted in all UPM businesses.

• The UPM Product Stewardship Standard was developed and

approved at year end.

• In the last couple of years, UPM has improved and streamlined the

management of chemical inventories and approval processes in UPM

production units and developed a supporting IT system. Raflatac

factories, sawmills and Biochemicals operations were not included in

the first round, but in 2024, the system was extended to four Raflatac

factories. 

• Product launches such as the UPM Biochemicals and Nokian Tyres

joint project to develop a concept tyre partly based on UPM

BioMotion™ Renewable Functional Fillers. » Refer to E1-3 Actions,

Product stewardship: Climate-positive product portfolio

UPM FINANCIAL REPORT 2024	94

Planned actions

• During 2025, UPM continues to develop and harmonise product

stewardship and product-related regulatory monitoring processes in

UPM to meet the needs of customers, the requirements of rapidly

evolving product regulations and UPM's growing product portfolio.

• In 2025, the new UPM Product Stewardship Standard is being

implemented in all business areas to clarify roles and responsibilities

and to ensure that UPM develops products that not only comply with

rapidly evolving product regulations but also support the UN

Sustainable Development Goals.

• Continued Sustainable Product Design concept implementation in

various UPM businesses, including lifecycle 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. By 2030, UPM will not send process waste to landfill, and

process waste will not be incinerated without recovering the energy.

UPM's other circularity target is to use 100% of nutrients from recycled

sources in its own effluent treatment plants by 2030. » Refer to E5-3

Targets for follow-up on these targets.

Best practices, research results and ideas are shared throughout the

Company, and internal working groups focus on issues such as the use

of side streams and nutrient recycling. Green liquor dregs are a side

stream from pulp production and one of the most difficult types of

process waste to reuse.

UPM uses its own side streams and residues, as well as materials

recovered after product use, thus supporting the circular economy.

Furthermore, 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 or as soil amendment

materials. Ash from biomass-based energy generation represents a large

share of waste and by-products respectively. In 2024, 83% (93%) of the

ash was used in various applications such as for soil stabilisation, 

fertiliser, in the cement industry or as a raw material for the production

of paper fillers, and to replace caustic soda.

UPM BioVerno renewable diesel and naphtha are produced from

crude tall oil, a residue from chemical pulp production. For decades,

UPM has been researching innovative uses for lignin, a side stream from

pulp production. A good example is the WISA BioBond gluing

technology, which uses lignin to replace part of the fossil-based phenol

used in plywood production. Lime is a side stream from pulp production

and can be used as a liming agent or for pH adjustment.

UPM is also actively improving the circularity of its product lifecycle

by using recovered materials. UPM Raflatac collects label waste from

more than 440 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 2024

• UPM continued to follow-up the ISO and CEN standardisation of

circular economy and tested the application of some of ISO’s

circularity indicators.

• Trials were conducted at several mills to test recycled nutrients in

effluent treatment. If successful, the recycled nutrients will be brought

into use – for example, at UPM Nordland Papier in Germany.

• WISA birch plywood started to be wrapped and shipped in

packaging material made of 30% post-industrial plastic.

• Work started at UPM Ettringen and UPM Nordland Papier for

separate sludge dewatering of biosludge and primary sludge. This

will improve the utilisation options of these sludges.

• In Uruguay, recycling options have been developed for lime kiln

electrostatic precipitator dust, and environmental permitting for

certain ash utilisation options is ongoing. In UPM Fray Bentos pulp

mill, the sludge drying system was further modified allowing to

increase the share of treated phosphorous sludge for utilisation from

50% to 80%.

• Further work was done to find a solution for green liquor dregs

recycling at UPM pulp mills in Uruguay and Finland. For example, in

Uruguay, green liquor dried dregs were successfully trialed in cement

production.

Planned actions

• In 2025, UPM continues its participation in the Finnish UUMA5

programme to enhance the utilisation of secondary raw materials in

earth construction together with the Pohjolan Voima company.

• The pulp mills in Uruguay continue to research and test waste

utilisation possibilities which were identified in their 2030 Zero Solid

Process Waste to Landfill roadmap.

• In general, 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 Programme, 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 2024	95

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 2024 (2023)
Forest
Share of certified fibre	2015	84%	100%	88.5% (87.0%)
Water
Nutrients used for effluent treatment from recycled sources *	2017	17%	100%	33% (33%)
Waste
Process waste sent to landfills or to incineration without energy recovery	2015	122,000 tonnes	0 tonnes	97,000 (82,000) tonnes; 83% (87%) of UPM's process waste recovered or recycled
Product stewardship
Climate-positive product portfolio	Since 2019	-	Continuous improvement	Decarbonisation solutions: 8% of sales
Development of new products and services with contribution to SDGs	Since 2019	-	continuous	For example, UPM SolargoTM, a new range of bio-based plant stimulants
Share of ecolabelled products	2015	77%	100%	89% (89%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80%    (continuous)	91% (89%)

*Relevant for pulp and paper production

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 are evaluated and set based on their

potential positive impact and the minimisation of any negative impact.

Some of the targets related to resource use and circular economy

show progress towards the Group-level targets. However, the total

amount of process waste to landfills increased in 2023 and in 2024 due

to the ramp-up of the Paso de los Toros pulp mill in Uruguay. Measures

are taken to achieve UPM's zero process waste to landfill target. The

share of recycled nutrients in effluent treatment remained at the same

level in 2024, but the results of trials in 2024 should be visible in the

coming years. » 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.

UPM FINANCIAL REPORT 2024	96

Circular product design

Product stewardship is one of UPM's sustainability focus areas. It

includes three product-related targets (see table above) that are linked to

circularity and recyclability:

• Circularity usually has a positive impact on the carbon footprint of

products, thus supporting UPM's target of a climate-positive product

portfolio;

• 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.

Circular material use and minimisation 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

utilisation 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.

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

Sustainable 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 Programme. » 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 the

achievement of this target, e.g. through proper sorting of waste and

research into waste recycling options.

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 23,000 B2B suppliers

globally. The sourcing network includes suppliers from startup

companies to international corporations. In addition, wood is purchased

from about 14,500 private forest owners.

» Refer to E1 for energy and E3 for water.

UPM FINANCIAL REPORT 2024	97

Raw materials

TONNES (INCL. MOISTURE)	2024	2023
Wood	23,300,000	21,800,000
Market pulp	1,300,000	1,300,000
Recovered paper	700,000	760,000
Purchased paper for converting	310,000	280,000
Minerals	1,800,000	1,900,000
Chemicals	930,000	950,000
Plastics, adhesives, resins, films	160,000	130,000
Total	28,600,000	27,100,000

Percentage of biological material 

%	2024	2023
Wood share in total raw materials	81%	80%

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 most value.

Wood certification

%	2024	2023
FSC certified	18.3%	14.4%
PEFC certified	38.3%	42.0%
PEFC and FSC certified	32.0%	30.6%
Total certified wood	88.5%	87.0%
Wood complying with FSC Controlled Wood or PEFC Due Diligence requirements	11.5%	13.0%
Total biological material	100.0%	100.0%

All wood-based raw materials, including wood, are either FSC™

(N003385) and PEFC (PEFC/02-44-41) certified or comply with the

FSC Controlled Wood standard or Due Diligence requirements for PEFC.

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	2024	2023
Tonnes (incl. moisture)	700,000	760,000
% of total raw materials	2%	3%

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 15% (17%) of fibre materials used in

UPM's paper production in 2024.

	Reporting principles for metrics

Raw materials

Wood is usually measured in cubic metres. » 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.

Note: In the UPM Annual Report 2023, the amount of pigments was

reported in dry tonnes.

Percentage of biological material

Only wood is considered biological material in the calculation. UPM

considers other wood-based materials 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 as

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 2024	98

Resource outflows

E5-5

Products

	UNIT	2024	2023
Paper	t	4,600,000	4,700,000
Chemical pulp	t	5,000,000	4,200,000
Converting materials	t	500,000	400,000
Plywood and veneer	m3	500,000	400,000
Sawn timber	m3	1,200,000	1,500,000
Heat	GWh	1,000	1,000
Electriciy	GWh	13,000	14,000

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 and biofuels. 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 100% 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.

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.

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 Raflatac 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.

Plywood and veneer: Plywood is a 100% recyclable material when

repurposed as a 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 for end products. Typically, sawn timber is used as a fuel

in energy production at the end of its life cycle, replacing fossil fuel

sources.

UPM FINANCIAL REPORT 2024	99

By-products and waste

TONNES (DRY WEIGHT), EXCEPT HAZARDOUS WASTE	BY-PRODUCTS	NON- HAZARDOUS PROCESS WASTE	OTHER NON- HAZARDOUS WASTE	HAZARDOUS WASTE	TOTAL	TOTAL
	2024	2024	2024	2024	2024	2023
Recycling	63,000	268,000	16,000	3,500	352,000	408,000
Composting	0	8,700	0	0	9,100	9,000
Energy recovery	7,800	226,000	1,400	500	235,000	215,000
Temporary storage	900	22,000	2,500	0	25,000	20,000
Landfilling	0	94,000	1,300	0	95,000	85,000
Incineration without energy recovery	0	3,100	0	2,600	5,800	7,000
Other disposal	0	0	0	400	400	2,000
Total	72,000	622,000	22,000	7,000	723,000	745,000
Total amount of non-recycled waste *	—	—	—	—	127,000	113,000
Percentage of non-recycled waste	—	—	—	—	18%	15%

* 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

%	2024	2023
Fibrous residues	50%	48%
Ash	26%	31%
Green liquor dregs	8%	7%

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 metres, 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 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 2024	100

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)
70			85%			6.1
4 points below the global average benchmark						for UPM's own workforce

UPM FINANCIAL REPORT 2024	101

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 wellbeing.

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. UPM's employees are 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 wellbeing 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

labour 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 labour 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 employees 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's Group-wide safety project aims to give a new boost to UPM's safety culture and address the changes needed throughout the organisation. The aim is to empower employees and teams and give them a mandate to improve safety.
	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 at 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 programmes.

*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 labour or child labour 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 2024	102

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,

labour 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

labour, forced labour 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 organisations.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 achieved. This is

reinforced by UPM's safety standards, in particular the safety standard

on roles and responsibilities, which also defines the business line

organisation'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 to 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 occupational health and safety (OHS) audit

programme 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 OHS 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. We also promote 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 recognised 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

To assess human rights risks in its own operations, UPM has adopted a

procedure that is regularly applied at the business area or unit level. The

procedure aims to ensure an analysis of actual and potential human

rights risks and impacts specific to the business area and/or operating

context, and recognises that risks may change over time.

In practice, this means that UPM's business areas regularly identify

human rights risks and impacts, assess the severity and likelihood of

these risks and impacts, and prioritise the most severe issues for further

focus and action. » Refer to G1-2 Responsible Sourcing

The human rights risk assessment and management process is

integrated into UPM's existing guidelines and management systems. In

addition to the business-area-specific risk assessment procedure

described above, human rights considerations and due diligence

requirements are integrated into UPM's global processes, e.g. those

related to investments and the corporate salient human rights

assessment.

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 organises additional training for its

employees on responsibility 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 measures on a case-by-

UPM FINANCIAL REPORT 2024	103

case basis. Remediation is determined case by case, based on verified

impacts. » See G1-1 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 experiences, 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 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 criterial will be based on a person’s skills and

competences. Application and recruitment processes shall be open and

transparent whenever 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 the 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 behaviour that could be characterised 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 organisational and team levels.

To complement the EES, a UPM Health and Wellbeing pulse survey

has been conducted for the last three years. The pulse focuses on the

main elements of the UPM's health and wellbeing 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 organises 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 for

detailed information.

UPM FINANCIAL REPORT 2024	104

ACTIONS

S1-4

UPM's identified material topics have been defined as a result of a

double materiality analysis, 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

future 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.

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 organisation.

UPM also provides a leadership development programme 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 2024

• Update of management team development concept

• Organisational Health Index survey

• Renewal of UPM's leadership frame and assessment tools

• Update of UPM's global leadership development portfolio, e.g.

human-centric leadership, senior leadership programmes

• Awareness building and experimenting of AI

Planned actions

• Continuous renewal of the programme 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

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

programmes 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 for 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 goods 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 2024

• Continued with the Career Experience campaign

• Promoted digi-enabled operator experience

• Brought new learning methods, e.g. microlearning creation

• Copilot learning solutions and piloting

Future actions

• Support for development and growth visible in management

practices, e.g. feedback, development planning

• Renewal of shopfloor annual discussions

• Enabling relevant digital learning for shopfloor employees

• Learning to integrate AI for personal productivity

• Encouraging rotation as a way to learn and develop

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 FINANCIAL REPORT 2024	105

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 2024

• Diversity and Inclusion discussions continued in businesses and

functions

• BeU Employee Resource Group for LGBTIQ+ continued after

established in 2023

• Management Team diversity reviewed and diversity KPIs reviewed

• Emerged gender pay gap closed

Planned actions

• Continue benchmarking – learning from other companies that have

successfully implemented LGBTIQ+ initiatives

• Continue to develop and implement the BeU Safe Contacts concept,

recruit and train the contacts

• Continue the implementation of 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 conduct 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 a living wage assessment annually

in collaboration with an external partner, with a proven methodology,

process and living wage benchmarks in place. 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 taking

action 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 2024

• Annual review for 2024 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.

• 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

organisation and continue the training.

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 OHS 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 OHS management

system. Cross-functional audits provide valuable feedback on selected

OHS 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. 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 future. Thorough

investigation of incidents and effective risk management play an

important role in making UPM's operations safer. UPM recognises

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.

UPM FINANCIAL REPORT 2024	106

Actions in 2024

• The main focus was on the Company-wide Safety project aiming to

improve safety-related processes and tools from employees’

perspective. The development areas of safety were identified by

employee dialogues in more than 50 production and office sites. The

focus areas of the project cover various topics from improving the

safety on-boarding 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

competences by producing a new, global e-learning for process

safety. The current state analysis of process safety continued in

operations including the definition of the business area specific

development plans for the coming years. The key process safety

elements were integrated into the project management manual.

Process safety aspects were reviewed as part of the loss prevention

surveys conducted by an external partner at our mills.

• UPM continued to implement the UPM Health and Wellbeing concept.

The health and wellbeing pulse survey was conducted in May. The

survey included more questions on Health and Wellbeing than earlier,

based on the feedback from Employee dialogue discussions. In

general, the scores slightly decreased compared to the 2023 survey. 

• During the year, several virtual health and wellbeing campaigns, as

well as local activities, were organised. UPM also organised targeted

virtual support services for mental wellbeing at selected sites.

Planned actions

• The Safety project continues in 2025 focusing on the digital tools

and systems, and the visibility of safety in daily operations. Also, the

Behavioural safety leadership training programme continues in

2025.

• UPM will continue to organise process safety related targeted

trainings. The business areas continue to implement their own process

safety action plans.

• A global concept for occupational health will be developed during

2025.

Resources

In general, workforce-related activities are included in UPM's overall

investment and resource planning.

UPM FINANCIAL REPORT 2024	107

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 2024 (2023)
Continuous learning and development
Goal setting discussions are held, and development plans are created for employees	2021	88% and 70%	100% completion rate	85% (85) of employees completed individual goal setting or annual discussion, 78% (81%) 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 (64). Below global average benchmark by 7 points.
Responsible leadership
Employee engagement, as evaluated in the Employee Engagement Survey	2021	Below benchmark	Clearly above benchmark	Average score of 70 (70). Below global average benchmark by 4 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 68 (68). Below top 10% benchmark companies by 11 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	34.5% (32.3%)
Diversity and inclusion initiative	Since 2021	-	Continuous	Dialogue continued on developing inclusive behaviours. Established Employee Resource Group (BeU) on LGBTIQ+ community. 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, 3 (5) serious accidents
Total recordable injury frequency (TRIF), including contractors	2017	8.5	<2	TRIF 6.1 (6.1) for UPM workforce and 5.1 (5.2), including contractors
Process safety integrated in safety management	Since 2021	-	All sites and businesses	Process safety gap analyses done in all business areas and roadmap actions being implemented.
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 72 (72). Below top 10% benchmark companies by 7 points
Absenteeism rate, UPM employees	2015	3.7%	<2%	4.2% (4.3%)

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 76%

(81%) 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. OHS indicators such as

TRIF are followed up monthly.

UPM FINANCIAL REPORT 2024	108

METRICS

Characteristics of UPM's employees

S1-6

Headcount by gender

GENDER	NUMBER OF EMPLOYEES (HEADCOUNT) 2024	NUMBER OF EMPLOYEES (HEADCOUNT) 2023
Male	11,989	12,797
Female	3,835	3,771
Other	3	1
Not reported	0	4
Total employees	15,827	16,573

*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.

Headcount by country (with more than 50 employees)

COUNTRY	NUMBER OF EMPLOYEES (HEADCOUNT) 2024	NUMBER OF EMPLOYEES (HEADCOUNT) 2023
Finland	6,222	6,281
Germany	3,390	3,918
United Kingdom	445	424
Poland	1,270	1,183
France	197	216
Austria	7	290
Estonia	263	262
Spain	64	74
China	1,513	1,572
United States	745	735
Uruguay	874	872
Malaysia	162	158
South Africa	39	50
Mexico	133	115

» Refer to Report of the Board of Directors, Key figures: personnel at the

end of period. 

Headcount by gender and contract type

	FEMALE*	MALE*	OTHER*	NOT REPORTED	TOTAL
Number of employees (headcount)	3,835	11,989	3	0	15,827
Number of permanent employees (headcount)	3,449	11,150	2	0	14,601
Number of temporary employees (headcount)	386	839	1	0	1,226
Number of non-guaranteed hours employees (headcount)**	9	33	0	0	42
Number of full-time employees (headcount)	3,592	11,709	3	0	15,304
Number of part-time employees (headcount)	243	280	0	0	523

*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 2024	109

Headcount by region

	AMERICAS	ASIA	EUROPE	REST OF THE WORLD	TOTAL
Number of employees (headcount)	1,797	1,844	12,100	86	15,827
Number of permanent employees (headcount)	1,780	1,498	11,239	84	14,601
Number of temporary employees (headcount)	17	346	861	2	1,226
Number of non-guaranteed hours employees (headcount)*	0	0	42	0	42
Number of full-time employees (headcount)	1,767	1,843	11,610	84	15,304
Number of part-time employees (headcount)	30	1	490	2	523

*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

	2024	2023
Total number of employees who left UPM	2,148	1,846
Rate of employee turnover	13.6%	11.1%

	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 USA,

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 1 Jan–31 Dec/Total headcount 31 Dec).

Contextual information

In 2024, UPM permanently closed its UPM Hürth paper mill in

Germany, one paper machine at UPM Nordland in Germay and its

biocomposite business. UPM Raflatac acquired the Belgian-based

company Grafityp with a production site in Belgium and a distribution

centre in the UK. 

Characteristics of non-employees in

UPM's own workforce

S1-7

Headcount of non-employees

	2024	2023
Total number of non-employees (agency hires) in UPM's own workforce	344	168

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 labour 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 labour 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; or coating department

operators.

UPM initiated an internal survey across all sites to gather information

about the number of independent contractors hired during 2023. As the

results indicated that the number was very small, they are not material to

report.

UPM FINANCIAL REPORT 2024	110

Collective bargaining coverage and

social dialogue

S1-8

The percentage of total employees covered by collective bargaining

agreements was 49% (52%) in 2024.

	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%	—	—	—
20–39%	—	—	—
40–59%	Finland (57%)	—	—
60–79%	Germany (75%)	—	—
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*
	NUMBER	PERCENTAGE
Female	25	31%
Male	55	69%

* Two levels below the President and CEO, excluding assistants

Employees by age group

AGE GROUP	NUMBER OF EMPLOYEES (HEADCOUNT) 2024	NUMBER OF EMPLOYEES (HEADCOUNT) 2023
Under 30	2,071	2,136
30–50	8,188	8,612
Over 50	5,568	5,821
Not reported	0	4
Total	15,827	16,573

UPM FINANCIAL REPORT 2024	111

Adequate wages

S1-10

All UPM 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 utilised 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 2024, UPM's disclosure covers its seven largest operating countries,

Finland, Germany, Uruguay, China, Poland, the USA and the UK,

accounting for approximately 91% of UPM's employees.

EEMPLOYEES COVERED AGAINST	FINLAND	GERMANY	URUGUAY	CHINA	POLAND	USA	UK
Sickness	yes	yes	yes	yes	yes	yes	yes
Unemployment	yes	yes	yes	yes	yes	yes	yes
Injury and disability	yes	yes	yes	yes	yes	yes	no**
Parental leave	yes	yes	yes	yes	yes	yes*	yes
Retirement	yes	yes	yes	yes	yes	yes	yes

*Maternity leave only

** Employees without 5 years of service not covered

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 2024, 78% (81%) of employees had documented development plans,

and 85% (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	70%	82%
Male	80%	85%
Other	n/a	n/a
Total	78%	85%

Average number of training hours per employee

	2024	2023
Female	8	10
Male	9	10
Other	n/a	n/a
Total	9	10

UPM FINANCIAL REPORT 2024	112

Health and safety

S1-14

Percentage of employees covered by OHS management systems

	2024
UPM's OHS management system	100%
Third-party certified OHS management system	74%

All UPM's employees are covered by UPM's OHS management system.

The majority of UPM's production units have the ISO 45001

Occupational Health and Safety management system certification. In

2024, certified systems were in place in 43 units with a total of 11,800

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.

Occupational Health and Safety (OHS) metrics for UPM workforce

UPM WORKFORCE	2024	2023
Total injuries per one million hours worked, TRIF *	6.1	6.1
Lost-time accidents per one million hours worked, LTAF	3.4	3.7
Number of accident *	166	168
Number of serious accidents	2	4
Number of fatalities **	0	0
Number of days lost due to work-related injuries ***	3,200	3,200
Absenteeism %	4.2	4.3
Number of work-related ill-health cases ****	4	5

*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.

***The number of non-employees in UPM's own workforce (agency hires) is so

small that a breakdown is not material.

****No work-related illnesses involving non-employees – breakdown therefore

not disclosed.

Occupational Health and Safety (OHS) metrics for UPM workforce

and contractors

UPM WORKFORCE INCLUDING CONTRACTORS	2024	2023
Total injuries per one million hours worked, TRIF	5.1	5.2
Lost-time accidents per one million hours worked, LTAF	3.2	3.4
Number of accidents	253	267
Number of serious accidents	3	5
Number of fatalities	0	0

	Reporting policies 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 organisation which provides services to UPM

as agreed. Contractor personnel are not directly employed by UPM.

Contractor 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).

In 2023, the data from a few sites was incomplete. These sites

account for around 3% of the total theoretical working time and have no

significant impact on the results.

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.

UPM FINANCIAL REPORT 2024	113

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.

Remuneration metrics

S1-16

Gender pay gap

Since 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 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 2024, 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 labour

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 2024, the UPM global raw pay gap, calculated in accordance

with disclosure requirements as of 1st of October 2024, was 6.5%. Raw

pay gap is calculated with the same effective date and data as the UPM

adjusted gender pay equity review is conducted.

Total remuneration ratio

The annual total remuneration ratio of the highest paid individual to the

average annual total remuneration for all employees at UPM is 23.6.

The pay ratio is calculated using the UPM average annual total

remuneration (without CEO) published in the Company's remuneration

report for governing bodies. » See Remuneration report at upm.com.

UPM discloses annually the CEO's total remuneration and UPM

average employee remuneration for the past 5 years, based on the

applicable legislation and the Finnish Corporate Governance Code. The

average annual total remuneration for UPM employee is calculated by

dividing the disclosed financial statement value of employee costs with

the number of personnel at the end of the financial year (excluding the

CEO remuneration), both published in the financial statements. UPM

average employee remuneration includes the following elements of

employee costs: salaries and fees, and share-based payments. The

chosen methodology is in line with the figures published in the

remuneration report and annual report regarding the employee costs

and the remuneration of the highest paid individual. 

Incidents, complaints and severe human

rights impacts

S1-17

No severe human rights incidents connected to UPM's workforce have

been reported during the reporting period. The severity of incidents is

assessed based on the UN Guiding Principles on Business and Human

Rights.

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 2024	114

Workers in the value chain (ESRS S2)

In general, 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			Renewal of the UPM Supplier and Third-Party Code
97			3,200

UPM FINANCIAL REPORT 2024	115

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 labour exploitation, forced labour, health and safety, and environmental incidents, for example. UPM's sourcing practices aim to minimise 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 the selected areas.
	Risk: Disruptions in UPM's supply chain	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. UPM's Group-wide safety project aims to give a new boost to UPM's safety culture and address the changes needed throughout the organisation.
	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 at 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 programmes.

* 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 digitalisation, boosts

product development and the commercialisation of new products. »

Refer to ESRS 2 SBM-1, Suppliers.

UPM buys products, materials and services from some 23,000 B2B

suppliers worldwide. Approximately 53,000 contractors' workers

provide services, such as maintenance, construction, and logging at

UPM's production sites and forestry operations every year.

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 sub-

contractors who work at 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 recognises young workers,

migrant workers, women, indigenous peoples, and temporary and

contractor workers as having a higher risk of potentially experiencing

adverse human rights impacts.

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 our 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.

UPM FINANCIAL REPORT 2024	116

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 recognises that indigenous people

are often among the most marginalised and vulnerable populations.

With an external expert, 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

analyses the saliency of its human rights impacts based on severity and

likelihood, recognising that UPM's impacts on people continue to evolve

as its business changes, and its approach to due diligence develops.

UPM has identified forced labour as a salient human rights risk in

some of UPM's contracted services and global supply chains and

recognises migrants as a particularly vulnerable group of workers. UPM

does not use or tolerate the use of forced labour 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, programmes and supplier requirements:

• Supplier Assessment Criteria

• UPM Sustainable Supply Chain Programme » Refer to G1-2

Sustainable Supply Chain Programme

• Category-specific requirements, e.g. for wood suppliers, pulp,

chemicals or logistics

• UPM Forest Action Programme

• UPM Safety Rules » Refer to S1-1 UPM’s Human Resources & Safety

Rules

• UPM Safety requirements for contractors

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

Programme, 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 Programme. 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.

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

labour. Follow 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 legal minimum

working age).

• Ensure no form of forced labour (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 programme 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

UPM FINANCIAL REPORT 2024	117

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 2024, UPM carried out 97 (95) supplier

audits and reviews globally. In addition, about 3,200 contractor reviews

focusing on working conditions were carried out in Uruguay.

» Refer to G1-2 Extensive 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, chapter Processes below.

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 OHS audit programme

includes engagement with contractors’ employees. In general,

contractors and their employees at 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 wellbeing 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 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 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. 

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 persons 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.

Furthermore, suppliers are 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.

UPM FINANCIAL REPORT 2024	118

ACTIONS

S2-4

UPM's identified material topics have been defined as a result of a

double materiality analysis, 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 targets on spend covered by UPM

Supplier and Third-Party Code and supplier audits);

• 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 Programme. » Refer to

G1-2 Sustainable Supply Chain Programme for a general description of

the programme and the risk mitigation approach.

The programme defines prioritised ESG topics. In the social area,

these are labour 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 2024

• » Refer to G1-2 Extensive supplier audits and reviews

• UPM continued its work on contractor management, which focuses

on contractors working on UPM's production sites and forest

operations. A project was initiated to develop a verification model to

manage and develop contractors’ social responsibility performance.

This complements the contractor safety work. 

• UPM renewed its Supplier and Third-Party Code.

• UPM initiated a supply chain collaboration programme with its direct

starch suppliers to improve the working conditions of farm workers in

Thailand (UPM's tier 2–3 suppliers). Based on previously conducted

farm audits, improvement areas were identified, and working

conditions on the farms were integrated as a key consideration into

the category strategy of UPM's starch sourcing. Furthermore, UPM's

starch suppliers were required to establish specific targets and action

plans for improving working conditions at each of the farms

supplying them with starch.

• A Corporate Human Rights Saliency Assessment was carried out.

• A Human Rights Impacts Assessment was carried out in Uruguay. It

included a review of supply chain management.

• The implementation of the Sustainable Supply Chain Programme after

its launch in 2023.

Planned actions

• UPM will continue to develop and implement measures to reach its

2030 targets.

• Continuation of the contractor management project. » See Actions in

2024

• Implementation and training of the new UPM Supplier and Third-Party

Code during 2025

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. UPM's Group-wide safety project aims to give a new boost

to UPM's safety culture and address the changes needed throughout the

organisation. For more information on key actions, actions in 2024 and

planned actions, » Refer to S1-4 Safe and healthy working environment.

UPM's actions » Refer to S2-4 Actions and targets » Refer to S2-5

Targets address the material risk which UPM identified related to

workers in the value chain » Overview Refer to 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 2024, no incidents of serious human rights violations occurred in

UPM's value chain where UPM's activities would have caused or

contributed to the harm.

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. 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.

UPM FINANCIAL REPORT 2024	119

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 2024 (2023)
Forestry
Share of certified fibre *	2015	84%	100%	88.5% (87.0%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	91% (89%)
Safe and healthy working environment
Fatalities or serious accidents in UPM operations	Since 2015	-	0 (continuous)	0 (0) fatal accidents, 3 (5) serious accidents
Total recordable injury frequency (TRIF), including contractors	2017	8.5	<2	TRIF 5.1 (5.2), 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 set targets, UPM continuously strives to improve its

processes and its 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 utilised to confirm that identified

improvement areas are addressed. For example, UPM's occupational

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.

UPM FINANCIAL REPORT 2024	120

Affected communities (ESRS S3)

UPM aims to be a good neighbour and trusted partner to all people, economies and environments

affected, both directly and indirectly. For UPM's business and forestry operations, this means active

engagement and dialogue with local communities.

Human Rights Impact Assessment conducted in Uruguay by an external party			Supported local learning and education initiatives in our mill communities and provided aid to people suffering from natural disasters and conflicts			Local support and charitable donations under the Share and Care programme amounted to approximately
						1.7
						EUR million

UPM FINANCIAL REPORT 2024	121

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 development of infrastructure. Surrounding communities also benefit from tax payments and employment opportunities. Measures also include apprenticeship programmes 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 Programme shares resources with causes that promote the vitality and wellbeing of communities where we operate. In Uruguay, the UPM Foundation (Fundación UPM) promotes education and entrepreneurship through co-operation with social organisations and local representatives.
Local engagement	Potential negative impact*: Environmental or safety incidents, as well as restructuring situations, may affect people or the environment in the communities surrounding UPM's sites and forestry operations	Potential material negative impacts can occur as a result of safety risks in transport to and from UPM's paper mills, pulp mills, biorefineries and forestry operations, or a decrease in employment and taxes because of UPM's restructuring measures, for example.

*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' pulp mills, paper mills and biorefineries,

which are located in China, Finland, Germany, the UK, Uruguay and

the USA. UPM's own forest areas are located in Finland, Uruguay

and the USA. 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 transport), 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 recognises that the most

marginalised 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 recognises that its landholdings and wood

sourcing in the US 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.

UPM FINANCIAL REPORT 2024	122

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 marginalisation, 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.

In Uruguay, UPM conducts regular social monitoring surveys at

UPM's forestry operations and nurseries through an external service

provider by interviewing affected community members and contractors’

employees. The surveys cover respondents' perceptions, knowledge and

future expectations of UPM in topics such as plantation forestry activities,

environmental protection, certification, protected areas, job satisfaction,

income, safety measures and access to training. In 2024, a Human

Rights Impact Assessment was carried out in UPM's operations in

Uruguay, contributing to UPM's human rights due diligence and

community engagement development locally and globally. The

assessment confirmed that robust environmental and social management

systems and stakeholder engagement activities are in place in Uruguay.

However, it also highlighted development areas and sets a benchmark

against international best practices for UPM's investment and business

development projects in the future. 

» Refer to S3-4 Actions for more information on the findings of the

assessment.

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 start 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, programmes and requirements:

• UPM Rules for Donations, Sponsorships and Employee volunteering

• UPM Sustainable Supply Chain Programme » Refer to G1-2

Sustainable Supply Chain Programme

• UPM Requirements for wood suppliers

• UPM Forest Action Programme

 

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 Programme.

Human rights in the affected communities

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.

The UPM Code of Conduct, the UPM Sustainability Policy Statement,

and the UPM Supplier and Third-Party Code are aligned with these

internationally recognised standards.

UPM's Sustainability Policy Statement specifies topics such as land

use and engagement with communities, as well as grievance

mechanisms, incident handling and remediation:

• UPM recognises the importance of responsible land tenure and

respect for land rights. UPM is committed to ensuring that the land

tenure and resource rights of individuals and communities, including

indigenous people, are respected and promoted. UPM adheres to the

community engagement practices embedded in forest certification

requirements, including Free, Prior, and Informed Consent (FPIC),

where applicable.

• UPM has a zero-tolerance approach to land grabbing and maintains

a respectful and mutually beneficial relationship with local

communities in UPM's area of influence.

• UPM recognises the importance of dialogue and open

communication channels with internal and external stakeholders who

are or may be affected by UPM's actions. UPM acknowledges the

need for a clear and consistent approach to local community

consultation and social monitoring. UPM pays particular attention to

individuals or groups who may be at greater risk of negative human

rights impacts due to their vulnerability or marginalisation, such as

women, young workers, migrant workers and indigenous peoples.

• UPM monitors and works to remediate negative human rights impacts

of which it is aware, and which its activities have caused or

contributed to. Access to UPM's Report Misconduct channel is

ensured for all stakeholders. 

In 2024, no severe human rights incidents related to affected

communities have been reported. However, in August 2023, an

environmental incident occurred at the UPM Paso de los Toros pulp mill

in Uruguay that had a temporary impact on a local creek. According to

UPM's assessment, the incident did not cause or contribute to negative

human rights impacts, but still required corrective measures. UPM

implemented all necessary corrective actions and notified the

environmental authorities and the local community about the incident.

These measures aimed to prevent further harm and mitigate the impact

on the environment and local communities. » Refer to E2-2 UPM's Clean

Run concept for more information about the incident.

UPM FINANCIAL REPORT 2024	123

PROCESSES

Processes for engaging with affected

communities about impacts

S3-2

UPM engages with a wide range of stakeholders, including customers,

investors, employees, suppliers, the authorities, NGOs and local

communities. Each group has different needs and expectations, which

UPM takes into account depending on the business focus, region and

individual context. The Executive Vice President (EVP) of UPM's

Marketing, Sustainability and Communications function has operational

responsibility for local engagement. The function coordinates

stakeholder relations at Group level, while businesses are responsible

for continuous dialogue with local communities. For example, the UPM

Kaukas and UPM Kymi mills in Finland have their own local dialogue

forums to engage directly with local stakeholders. In Uruguay, there is a

specific team responsible for local community engagement. Engagement

occurs directly with local people and affected communities are

consulted. Engagement takes the form of visiting communities, keeping

them informed on potential impacts of our operations, managing

concerns and enquiries, and establishing projects with key stakeholders.

In general, stakeholder mapping, active dialogue and systematic

collection of feedback play an essential role in UPM's stakeholder

relations work, and the Company applies several measures and

safeguards to identify and mitigate its environmental and social impacts

on surrounding communities, including:

• Environmental and social impact assessments

• Continuous human rights due diligence in UPM's own operations and

supply chain

• Third-party certified management systems such as ISO 14001

(Environmental management) and 45001 (Occupational Health and

Safety management) for production units

• Sustainable forest management certification (FSC and/or PEFC) of

UPM-owned forestry operations and suppliers

• Restructuring processes planned in cooperation with employees, their

organisations, the local authorities and other relevant stakeholders.

UPM's processes vary due to different operational contexts and

stakeholder expectations. UPM continued to review its processes and

policies, and reporting practices in 2024. » Refer to S3-4 Emphasis on

local communities and impacts, Actions 2024

UPM carefully analyses stakeholder feedback to understand its

stakeholders’ expectations and to take them into consideration in its

development work and decision-making. UPM received approximately

350 (350) enquiries or concerns from the general public in 2024.

UPM’s engagement with local communities is historically based on

decades of close cooperation. Many communities have grown around

UPM's operations over the years, especially in Finland, Germany and

Uruguay. At UPM's forestry operations and nurseries in Uruguay,

regular social monitoring surveys are conducted by an external service

provider by interviewing affected community members and contractors'

employees. Public opinion surveys are also regularly conducted by a

third-party service provider on UPM's operations in Uruguay, including

the UPM Fray Bentos and UPM Paso de los Toros pulp mills.

All UPM-owned forests are certified or in the process of being

certified if the site is new. In Finland, UPM-owned forests are certified by

PEFC and FSC® and in the USA (Minnesota) by the Sustainable Forestry

Initiative (SFI), which is endorsed by PEFC. UPM's eucalyptus plantations

in Uruguay are certified by both FSC and PEFC. Certification systems set

internationally recognised standards for sustainable forest management,

including clear principles and criteria relevant to communities and

indigenous peoples.

In the USA, UPM Blandin's landholdings in the state of Minnesota are

situated on the traditional and ancestral lands of Indigenous Peoples.

UPM acknowledges that the region holds significant cultural, historical

and personal significance for native peoples. Indigenous Peoples have

been the traditional stewards of these lands, and the Company

recognises the value of that stewardship.

UPM Blandin recognises that existing legal, customary and traditional

rights are recognised through declarations, laws and treaties governing

interactions with Indigenous Peoples. UPM Blandin fully respects the

rights of Indigenous Peoples and strives to balance forest management

objectives with these rights, the preservation of cultural heritage and

traditional ecological knowledge. Continual improvement in these areas

is essential, and Blandin is committed to supporting efforts to improve

staff knowledge, outreach and cooperation.

Processes for raising and handling

concerns

S3-3

 

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 has established channels for reporting misconduct, reports of

misconduct are carefully reviewed, personal data is handled

appropriately, protection against retaliation is ensured, and all reports are

treated in strict confidence. Investigations are conducted by designated

persons with the necessary competences. If a report is substantiated,

appropriate disciplinary and/or legal action is taken, and lessons are

learned. » Refer to G1-1 Reporting and identifying concerns

All members of affected communities can report concerns

anonymously online via the UPM Report Misconduct channel –

SpeakUp® » Refer to G1-1 Reporting and identifying concerns

In addition, 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. Typical concerns relate

to odours, traffic and noise, and all grievances are followed up as part

of UPM's management systems. Feedback and concerns are handled in

accordance with the PEFC and/or FSC Chain of Custody requirement,

forest certification standards, ISO 14001 environmental management

systems and other standards as relevant. Stakeholders are informed of

the actions taken by UPM in response to their feedback.

» Refer to S2-3 Processes for raising and handling concerns

The UPM Report Misconduct channel is available on UPM's webpage

and promoted in the value chain via UPM's Supplier and Third-Party

Code and in contractors' safety induction, for example.

UPM evaluates the awareness and trust of affected communities in

connection with the ISO management systems and processes through

stakeholder surveys and feedback mechanisms. For example, regular

social monitoring surveys at UPM's forestry operations and nurseries in

UPM FINANCIAL REPORT 2024	124

Uruguay are conducted by an external service provider by interviewing

affected community members and contractor employees.

UPM business areas are responsible for assessing the awareness and

trust of their local communities at their mill sites and in forestry

operations respectively. They evaluate the awareness and trust of their

local communities through forest certification systems, regular feedback

gatherings and community meetings, and mill/unit open days ensuring

that local communities are informed about how to raise their concerns or

needs and trust that they will be addressed effectively.

UPM is committed to fostering open communication and ensuring the

protection of individuals who raise concerns about its operations. To

support this, local community members can report concerns

anonymously online via the UPM Report Misconduct channel. By

providing this secure and anonymous channel, UPM aims to encourage

transparency and trust, ensuring that all grievances are addressed

promptly and effectively. The effectiveness of the Company's grievance

channels is assessed in connection with UPM's compliance programme.

ACTIONS

S3-4

UPM's identified material topics have been defined as a result of a

double materiality analysis including UPM's Corporate Human Rights

Saliency Assessment, which considers impacts, risks and opportunities

related to affected communities. The following UPM focus areas are

relevant for communities:

• Local engagement (with targets on quality of community relationships

and long-term initiatives with positive impact communities)

• Forestry (with a target for certified fibre share)

• Responsible sourcing (with targets on spend covered by UPM

Supplier and Third-Party Code and supplier audits) » Refer to G1-2

Sustainable Supply Chain Programme

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 S3-5 Targets. Furthermore, UPM reviews the

effectiveness of its risk management procedures quarterly through its

Compliance system. » Refer to G1-3 UPM compliance system

Emphasis on local communities and

impacts

Key actions

UPM aims to be a good neighbour and trusted partner to all people,

economies and environments affected, both directly and indirectly. For

UPM's business and forestry operations, this means active engagement

and dialogue with local communities. This includes assessment of social

and human rights impacts, as well as collaboration forums, cooperation

with local schools and education networks, and dialogue with local

forest owners and neighbours of harvesting sites, and other individuals

impacted by forest management.

UPM mills in Europe, the USA and Uruguay have the potential to create

significant societal impact through employment and tax generation in the

locations where they operate. UPM's EMAS (EU Eco-Management and

Audit Scheme) statements publicly disclose societal impacts in addition to

environmental performance, providing detailed information about the local

impacts of UPM's pulp and paper mills. For the supply chain, UPM's

Sustainable Supply Chain Programme and Forest Action Programme cover

aspects such as local engagement or social contribution.

Actions in 2024

• A Human Rights Impact Assessment of UPM's operations in Uruguay

was conducted by an independent consultant. Actual and potential

human rights impacts on local communities were assessed, with a 

focus on the aggregate and cumulative impacts of all UPM's activities in

Uruguay (plantations, nurseries, pulp mills, logistics and biofuels). The

assessment indicated strong management systems for environmental

and social risk management and mitigation, and comprehensive

stakeholder engagement processes. The assessment set a benchmark

against international best practices and proposed a number of

development actions for the Company's human right due diligence.

• Steps were taken to enhance community rail safety in Uruguay. UPM

collaborated with the Uruguayan Ministry of Transport and Public

Works and the Automóvil Club del Uruguay to run a Railway Safety

Awareness Programme. This initiative aims to revive the safety culture

and ensure communities' coexistence with the rebuilt state-owned

railway from Paso de los Toros to Montevideo, marking one of

Uruguay's most significant infrastructure projects.

• In the USA, UPM continued co-operation with local indigenous

peoples’ communities to learn more about their approach to forest

management

• In 2024, UPM initiated the development of a policy related to local

community engagement after the Company assessed its local

community engagement practices in 2023. This policy guides UPM's

operations in identifying their local stakeholders, and particularly

those in the most vulnerable position, and maintaining active

dialogue with affected communities, ensuring that their primary

concerns are effectively addressed.

• Targets and key performance indicators for local engagement under

Forest Action programme were renewed for UPM's wood sourcing

regions.

Planned actions

• Addressing the development needs drawn from the Uruguay Human

Rights Impact Assessment, focusing on Company-wide capacity

building on business and human rights, developing stakeholder

engagement practices, grievance mechanisms and remedy measures.

• Implementing a policy for local community engagement striving to

enhance UPM's relationships with its local communities, gain insights

into community needs, and track progress of its engagement activities

• Further assessing the potential impacts on Indigenous Peoples across

UPM Blandin operational region, including methods for increased

coordination, recognising that building relationships requires

ongoing communication.

• Implementing of updated targets under Forest Action programme to

create positive impact on local communities. Monitoring of

development by following key performance indicators.

UPM FINANCIAL REPORT 2024	125

UPM's Share and Care Programme

Key actions

UPM's Share and Care Programme focuses on delivering positive

impacts for communities through various initiatives. The programme

demonstrates UPM's dedication to responsibility and local community

involvement through sponsorships, donations and employee voluntary

work.

Actions in 2024

• In 2024, local sponsorships and other contributions under the Share

and Care Programme amounted to approximately EUR 800,000 

(EUR 900,000). A total of EUR 920,000 (EUR 533,800) was

donated to charities or other non-profit causes such as Aalto

University, University of Helsinki, Save the Children Finland, Junior

Achievement (JA) Finland and American Red Cross.

• In 2024, UPM initiated development of a policy related to local

community engagement including the internal Company rules

concerning donations, sponsorships, and employee volunteering. This

was followed by a review of the focus areas of the Share and Care

Programme and local practices. 

• UPM Foundation in Uruguay continued to support initiatives to

promote education and entrepreneurship in rural areas.

Planned actions

• Implementing a policy for local community engagement striving to

enhance UPM's relationships with its local communities, gain insights

into community needs, and track progress of its engagement

activities, including the implementation of renewed internal Company

rules concerning donations, sponsorships, and employee

volunteering.

• Continue supporting and engaging with the communities where we

operate, in alignment with the Share and Care programme.

Incidents and remediation

In 2024, no severe human rights incidents related to affected

communities have been reported. » Refer to S3-1 Human rights in the

affected communities

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. The UPM compliance system covers remediation

and ensures the adequacy of the process.

Resources

In general, activities related to affected communities are included in

UPM's investment and resource planning.

UPM FINANCIAL REPORT 2024	126

TARGETS

S3-5

Targets related to local communities

To manage its sustainability activities, UPM has set several targets and

key performance indicators for its sustainability focus areas covering the

supply chain (Forestry, Responsible sourcing) and UPM's own operations

(Community involvement). 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 2024 (2023)
Community involvement
Assessment of quality of community relationships and define actions at relevant sites	Since 2021	-	Continuous	A Human Rights Impact Assessment conducted in Uruguay by an external party and a development plan created. A preliminary policy for community engagement established, with implementation planned for 2025
Long-term initiative(s) that impact their mill communities defined in line with the Share and Care Programme	Since 2021	-	All businesses (continuous)	Supported local education and learning initiatives  to help local communities within our operational sites, and continued to provide aid to people, especially children, impacted by conflicts, wars and natural disasters, such as flooding in Poland and the USA.
Forestry
Share of certified fibre *	2015	84%	100%	88.5% (87.0%)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	91% (89%)

*Forest management certification

UPM's process of setting its sustainability targets 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.

UPM FINANCIAL REPORT 2024	127

Business conduct (ESRS G1)

Regardless of the location, circumstances or people involved, UPM is committed to complying with applicable laws and

regulation and the UPM Code of Conduct.

Percentage of active employees* completed the UPM Code of Conduct training						Percentage of UPM's total spend covered by the UPM Supplier and Third-Party Code
99%			At the end of 2024, UPM adopted the updated UPM Supplier and Third-Party Code and the renewed  UPM Sustainability Policy Statement.			91%
(Continuous target: 100%)						(Continuous target: >80%)
*excluding UPM Raflatac companies acquired in 2024

UPM FINANCIAL REPORT 2024	128

POLICIES

G1-1

UPM Code of Conduct

UPM's decision-making, management and operations are guided by

UPM's values and the UPM Code of Conduct. Compliance with the law

and responsible practices are the foundation 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 manifests the Company's guiding

principles.

The Code addresses UPM's material impacts, risks and opportunities.

First, it includes UPM's commitment to integrity, which is seen as a

general opportunity for success and growth: “Integrity is fundamental to

all our business operations and provides the foundation for our

continued success and growth.” Furthermore, the Code opens up what

to do, and how to behave to minimise the negative impacts and

potential risks of UPM's material sustainability topics in its chapters on

Respect people and human rights, Addressing environmental impact and

product safety, Zero tolerance for corruption and bribery, Know with

whom you trade, and Engaging with stakeholders and society. The

Code also focuses on governance-related topics such as Avoid conflicts

of interest, Compliance with competition laws, and Protect assets and

information. The last chapter, "Compliance involves everyone", includes

the multiple ways to raise concerns for both UPMers and other

stakeholders.

To ensure implementation of UPM's commitments, UPM has

established a Company-wide compliance system. » Refer to G1-3 UPM’s

compliance system

The UPM Code of Conduct is approved by the Board of Directors,

UPM's highest governance body. The Group Executive Team (GET), led

by the President and CEO, is responsible for managing corporate

responsibility, including implementation of the Code of Conduct. The

document is shared internally via the intranet and paper copies, and is

available for external stakeholders on the Company webpage.

The Code 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. These policy

statements, policies and rules cover areas such as treasury, taxes,

disclosures, insider matters, anti-corruption, competition law,

confidentiality, human resources, sustainability, forestry, information

security and data protection, environment, safety, international

sanctions, and business partner risk management.

The UPM Code of Conduct was last updated in 2022.

UPM Supplier and Third-Party Code

UPM expects its suppliers and third-party intermediaries (e.g. agents,

advisers, representatives, joint ventures, joint venture partners, local

partners, and distributors) to apply the same principles as in the UPM

Code of Conduct and to meet social and environmental responsibility

criteria. These requirements are defined in the UPM Supplier and Third-

Party Code, the latest update of which was adopted at the end of 2024.

The practical guide which summarises the framework of the Code and

UPM's position and provides examples and good practices for

implementation will be updated in 2025. During 2025, the updated

Code, the practical guide and training for UPM's own personnel will be

available to cover UPM's broad supplier base.

UPM Sustainability Policy Statement

The Sustainability Policy Statement complements the UPM Code of

Conduct, with a particular focus on the chapters Respect people and

human rights, Addressing environmental impact and product safety, and

Engaging with stakeholders and society. The purpose of the Policy

Statement is to describe UPM's responsible business conduct regarding

the above issues in more detail, and to define principles and

commitments such as:

• UPM is committed to contribute to science-based climate targets in

line with the 1.5°C pathway;

• ISO 14001 environmental management system certification is

required for all UPM production sites;

• All UPM-owned forests and plantations are 100% certified or will be

certified if the site is new.

The Policy Statement applies to all activities of UPM. The management of

each business and function is responsible for ensuring that these

principles and commitments are complied with. It is developed taking

the views and perspectives of external stakeholders based on UPM's

constant multi-stakeholder dialogue into account.

The Policy Statement was approved by the Group Executive Team at

the end of 2024. Implementation and trainings are planned for 2025.

UPM's values

UPM is determined to be a responsible and attractive employer now and

in the future. UPM wants to strengthen its employees’ sense of belonging

and the feeling that their work is meaningful. This promotes productivity,

engagement and wellbeing. UPM's values – Trust and be trusted,

Achieve together, and Renew with courage – guide the way.

» Refer to S1-4 on actions to establish, develop and promote UPM's

values.

Progress is regularly measured through the annual Employee

Engagement Survey (EES), which started in 2007 and invites all

employees to evaluate different aspects of their work.

Reporting and identifying concerns

At UPM, all employees share responsibility for maintaining integrity and

ethical standards. If misconduct is suspected, everyone is obligated to

speak up and report it and to listen to the concerns of others. Practices

aimed at preventing reporting are prohibited and are in themselves

considered misconduct. UPM employees are encouraged to report their

concerns to their manager, UPM Legal and Compliance, UPM HR, or

UPM Internal Audit or to use the UPM Report Misconduct channel.

Stakeholders play a crucial role in maintaining UPM's standards of

integrity. One of the most important ways to contribute is to report any

suspected or observed unethical behaviour. Speaking up enables UPM

to address and correct issues in a timely manner and to prevent them

from recurring in the same place or elsewhere in the organisation. It also

contributes to a culture in which people feel comfortable speaking up,

are trusted and treated fairly.

External stakeholders are encouraged to make a report to their UPM

contact person, the UPM Report Misconduct channel or local contact

UPM FINANCIAL REPORT 2024	129

points. External stakeholders include employees and representatives of

UPM's business partners and their suppliers and sub-suppliers, people in

the affected local communities, and job applicants.

The platform for the UPM Report Misconduct channel SpeakUp® is

provided by an external service supplier. It allows anyone to raise

concerns confidentially and anonymously if they wish. Reports can be

made in more than 40 languages, and concerns can also be raised by

telephone.

Concerns about unlawful behaviour or behaviour that is in conflict

with the UPM Code of Conduct or other Company policies may also be

identified based on UPM's compliance monitoring activities (e.g.

reviews, audits and counterparty screening procedures).

Investigating concerns and incident

handling

UPM has established procedures to investigate business conduct

incidents, including suspected corruption and bribery, in a timely,

independent and objective manner.

UPM's Senior Vice President of Internal Audit (“SVP of Internal

Audit”) and the Chief Compliance Officer ensure that all cases reported

through the UPM Report Misconduct channel are properly investigated

and documented. The SVP of Internal Audit is responsible for the UPM

Report Misconduct channel and its correct operation. Members of the

Internal Audit Team and the Compliance Team, including the SVP of

Internal Audit and the Chief Compliance Officer, as well as the

appointed local person(s), are responsible for handling reports in

accordance with the EU directive (EU) 2019/1937 (EU Whistleblowing

Directive) as implemented at national level. The responsibility for

handling each report is determined on a case-by-case basis by the SVP

of Internal Audit and the Chief Compliance Officer. The persons

handling the reports receive appropriate training.

The person(s) responsible for handling the reports take the necessary

actions in response to the report, such as verifying the report’s validity,

forwarding the case to a competent authority, conducting or overseeing

the investigation, and informing the person who made the report of the

action taken.

All reports and related information are treated with strict

confidentiality. No one will be considered liable for the alleged

misconduct before a report has been thoroughly investigated.

Protection against retaliation

The identity of the person who made the report and any person

mentioned in the report is strictly confidential. During the investigation,

the investigator(s) must protect the reputation of all parties involved

(those reporting and those being reported) by restricting access to

information related to the allegations and the investigation to those who

have a legitimate need to know.

UPM also has a strict policy of non-retaliation. UPM does not tolerate

retaliation against anyone who in good faith reports suspected

misconduct or participates in an investigation to resolve suspected

misconduct. Retaliation or tolerating retaliation is in itself considered

misconduct and must be reported promptly.

Among other things, UPM's Code of Conduct e-learning course,

which is mandatory for all employees, covers how to raise concerns and

UPM's non-retaliation policy. In addition, regular communication on the

topic is provided to employees.

UPM is subject to legal requirements under national law transposing

EU Whistleblowing Directive on the protection of persons who report

breaches.

Training on business conduct policies

Policies and procedures are implemented through training and

communication. Available compliance e-learning courses with the target

group and completion rates are as follows:

COMPLIANCE TRAINING FOR SPECIFIC TARGET GROUPS	COMPLETION RATES AS OF 31 DEC 2024	SIZE OF TARGET GROUP
Code of Conduct e-learning	99%	15,100
Personal data protection e-learning	98%	6,700
Anti-Corruption e-learning	98%	6,700
Confidentiality e-learning	99%	6,700
Competition law e-learning	97%	2,900
Insider Policy e-learning	99%	160
Association participation e-learning	97%	1,000
Cybersecurity e-learning	99%	6,700

UPM's e-learning modules are available on a global UPM e-learning

platform and are easily accessible to all employees. Completion of

mandatory e-learning courses is a prerequisite for short-term incentive

payments. The e-learning courses are valid for three years, except for

cybersecurity, which is valid for one year.

UPM has a Group-level target of 100% participation in training on

the UPM Code of Conduct. By the end of 2024, 99% (98%) of active

employees completed the training, excluding UPM Raflatac companies

acquired in 2024.

UPM also offers compliance e-learning courses to employees of

business partners working for UPM. This ensures that they are committed

to the same standards of integrity.

UPM complements the e-learning modules with in-person and virtual

compliance training for specific target groups. The target groups are

determined based on risk assessments. Compliance training is

complemented by regular communication activities to maintain

awareness among employees.

UPM has identified its salaried employees as the most exposed to

corruption and bribery, as they have financial and other decision-

making power that can make them more susceptible to corruption and

bribery compared to shopfloor employees. Anti-corruption training is

provided to all salaried employees.

UPM FINANCIAL REPORT 2024	130

RESPONSIBLE SOURCING

G1-2

Suppliers are an essential part of UPM's value chain. UPM buys

products, materials and services from around 23,000 B2B suppliers

globally. The sourcing network includes suppliers from start-up

companies to international corporations. The Company also buys wood

from around 14,500 private forest owners.

The main sourcing categories are fibre, chemicals, other raw

materials, logistics, energy and indirect purchases such as services.

When selecting suppliers, UPM's most important priorities 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. Supplier management, with the required competencies

and digitalisation, boosts product development and the

commercialisation of new products.

UPM's responsible sourcing targets for

2030

Responsible sourcing has been identified as one of UPM's focus areas.

The following targets for 2030 have been defined and are followed up

regularly. These targets support UPM's policy objective for responsible

sourcing practices (UPM Code of Conduct). 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 2024 (2023)
Responsible sourcing
UPM total spend covered by UPM Supplier and Third-Party Code	2015	79%	>80% (continuous)	91% (89%)
Strategic, critical and high sustainability risk supplier spend covered by an EcoVadis assessment indicating low sustainability risk	2025	Value to be defined in 2025	100%	New target, see information below the table
CO2 emissions from materials and logistics (Scope 3)	2018	6.08 mt CO2eq	-30%	-22% (-23%)

Following the launch of the Sustainable Supply Chain Programme in

2023 (next page), UPM aligned its Group-level disclosure of sourcing-

related 2030 targets. The targets on raw material spend covered by the

UPM Supplier and Third-Party Code and on continuous supplier auditing

were replaced with a new target: by 2030, 100% of UPM's strategic,

critical and high sustainability risk supplier spend will be covered by an

EcoVadis assessment indicating a low sustainability risk.

In 2024, the focus of the new target was on the evaluation of the

status for critical and high sustainability risk suppliers which resulted in a

percentage of 80% of suppliers with a score indicating a low

sustainability risk by spend. UPM has identified approximately 120 Tier

1 suppliers in the high sustainability risk and critical suppliers range,

which correlates to an average spend of EUR 1.2 billion. In 2025, the

status of strategic suppliers will be evaluated and the common baseline

value for the three supplier groups defined.

The progress of the other Group-level targets for sourcing is in line

with the planned development.

» Refer to E1-4 for details on the CO2 target for Scope 3.

» Refer to G1-2 for details on supplier auditing.

Contractual payment terms

UPM follows the contractual payment terms as defined by UPM or, in

some cases, by the supplier. The due date determines the payment

schedule. The invoice processing schedule is defined for invoice verifiers

and approvers and is monitored daily. In the event of delays,

notifications are sent, and processes can be escalated. There are no

special procedures for SMEs.

UPM FINANCIAL REPORT 2024	131

Sustainable Supply Chain Programme

UPM's responsible sourcing practices and priorities are formulated in the

cohesive, overarching Sustainable Supply Chain Programme. Each

element contains clear instructions regarding the relevant sourcing and

supply chain management practices and impacts at UPM, as well as

tangible guidelines, requirements and expectations for UPM's suppliers.

Effective implementation is managed and tracked through UPM's 2030

sustainability targets, performance indicators and capacity building

programmes.

Risk mitigation

UPM identifies suppliers with the greatest business relevance and supply

chains with a high risk of potential negative environmental and social

impacts. Risk management contingency plans have been created for

identified high sustainability risk suppliers. The evaluation is based on

the country of origin, the sourced material or service, and the UPM

supply chain ESG risk register, which includes country-, commodity- and

sector-specific sustainability risk insights. The UPM Sourcing Risk

Management Steering Group evaluates the development of all sourcing

and supply chain risks and oversees the implementation of risk

management strategies and actions 

EcoVadis and other assessments, supplier audits and reviews, and

joint development plans are used to conduct more detailed evaluations

of suppliers' activities. All suppliers are regularly screened using a

counterparty risk management tool.

If non-conformities are identified, the supplier is required to take

corrective measures. UPM monitors the implementation of these

measures and provides support to improve the suppliers' operations if

necessary. Some contracts may have to be terminated due to insufficient

measures or the seriousness of UPM's findings.

Extensive supplier audits and reviews

Supplier audits and reviews are defined based on, but not limited to,

identified risks related to social and environmental topics, including

human rights.

In 2024, UPM carried out 97 (95) supplier audits and reviews

globally. 62 were conducted by UPM's own trained auditors and 35

were carried out by external auditors from independent accredited

auditing bodies. 549 (125) findings were identified in these audits. In

2024, none of the findings were considered critical with regard to

actual or potential significant environmental or social impacts. All

findings are followed up with corrective potential further audits in close

collaboration with the suppliers.

In addition, about 3,200 contractor reviews focusing on working

conditions were carried out in Uruguay. UPM has an extensive

contractor assurance system in Uruguay. Assurance consists of

compliance reviews covering labour and other document audits and

field audits focusing on security, safety and working standards. The

information gathered in field audits is cross-examined against the pre-

existing data.

621 (540) of UPM's suppliers completed and have valid

sustainability assessments through EcoVadis in 2024. The results of the

assessment show that 95% of UPM's suppliers assessed with EcoVadis

have a low sustainability risk by supplier count. All suppliers that do not

UPM FINANCIAL REPORT 2024	132

meet the low sustainability risk requirements are supported in developing

their practices. Suppliers and UPM are able to monitor and benchmark

suppliers' sustainability performance against industry averages through

EcoVadis.

Supplier compliance

UPM is committed to responsible sourcing practices in accordance with

the UPM Code of Conduct. The minimum requirements for suppliers are

defined in the UPM Supplier and Third-Party Code. UPM requires the

suppliers to ensure that their suppliers and contractors providing

products or services connected to the agreement between the supplier

and UPM comply with the UPM Supplier and Third-Party Code or similar

standards. In 2024, 91% (89%) of UPM's total spend was with suppliers

who are committed to the Supplier and Third-Party Code.

Additional category-specific requirements apply to wood, chemicals,

pulp, packaging materials and logistics, for example. The requirements

cover environmental performance, social responsibility and reporting.

Contractors working at UPM's production sites must comply with UPM's

safety requirements.

UPM seizes sustainability-related opportunities to create business

value through supplier development and collaboration. UPM actively

participates in various development and innovation projects with

suppliers and joins different sustainability initiatives when feasible. 

Sourcing objectives focus on selected environmental, social and

governance issues (illustrated above).

In 2024, UPM updated the UPM Supplier and Third-Party Code

» Refer G1-1, Supplier and Third-Party Code. UPM also continued to

work closely with Together for Sustainability (TfS).

-30 by 30 Programme for CO2 reduction

The Group-wide -30 by 30 Programme to reduce CO2 emissions in the

supply chain focuses on cooperation in climate actions. » Refer to E1-3,

Responsible sourcing – the -30 by 30 Programme, for more information.

Communication and training

UPM offers its employees and suppliers capacity building sessions on its

Sustainable Supply Chain Programme. In 2024, a total of 23 internal

training and awareness-raising sessions on supplier engagement and

status were held. Around 300 participants attended the sessions. In

addition, 200 UPM employees completed e-learning training related to

the Sustainable Supply Chain Programme. Individual supplier meetings

were held during the year to support and raise awareness of the

programme's expectations and means of collaboration with suppliers.

For 2025, both internal and external capacity building sessions will

continue with an increased focus on external stakeholder engagement.

In connection with the -30 by 30 Programme for CO2 reduction in

the supply chain, UPM provides capacity building programmes for its

employees and suppliers. In 2024, a total of 41 individual supplier

meetings were held to ensure awareness of climate actions related to

UPM's Scope 3 CO2 emissions, support on product carbon footprint

calculation methodology and collaboration on decarbonisation. UPM

also organised two logistics-related climate webinars with more than

200 internal and external participants on the –30 by 30 Programme,

climate-related requirements and sharing best practices on supplier

engagement. Internal training on how to engage with suppliers in

climate actions was offered in three sessions with 49 participants.

Training on product carbon footprints was launched via an e-learning

solution and completed by 95 employees in 2024.

UPM FINANCIAL REPORT 2024	133

ANTI-CORRUPTION AND ANTI-BRIBERY

G1-3

Covered by the UPM Compliance System

The UPM Code of Conduct underlines the Company's zero-tolerance

attitude towards corruption and bribery in any form. UPM's Anti-

Corruption Rules, with the latest update in 2024, explain in more detail

what is prohibited conduct, and what ethical behaviour is expected.

UPM strives to ensure compliance with its values and commitments by

implementing a Company-wide compliance programme, including anti-

corruption and anti-bribery, 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

UPM regularly performs anti-corruption risk assessments. The 2024

compliance risk-assessment process included a top-down risk discussion

(including corruption) with the management of each business area. All

UPM entities were also assessed based on country risk and the

complexity of operations. UPM operates globally and has significant

manufacturing operations in several countries in emerging markets. Such

operations require several permits and other licences from the relevant

authorities. Some of the countries where UPM operates (such as Mexico,

Türkiye, Indonesia, Thailand, Argentina, India, South Africa and

Vietnam) are perceived as highly corrupt or corrupt according to

UPM FINANCIAL REPORT 2024	134

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

of corruption in relation to interaction with government officials and in

the use of intermediaries when applying for permits and licences

requiring governmental approval, for example.

The due diligence of suppliers and third parties with whom UPM

does business is an essential part of UPM's anti-corruption compliance

programme. UPM requires that due diligence is performed before

entering into or renewing any contract with a third party that meets

specified criteria. UPM requires anti-bribery contract terms to be

included in agreements with such third parties outlining the third-party's

commitment to compliance with applicable anti-bribery laws and UPM's

right to audit the third party to verify compliance with these terms. UPM

also has corresponding due diligence procedures for joint ventures,

mergers and acquisitions.

Monitoring

UPM aims to ensure compliance at all levels of the organisation through

monitoring. Monitoring activities are based on a Group company risk

matrix which takes the country risk and complexity and scope of UPM's

operations in each country into account. UPM's Compliance Team has a

three-year monitoring plan for its unit-specific compliance reviews that

are based on this matrix. In addition to these general reviews, which

cover all business integrity issues, risk-based reviews are conducted on

specific issues such as anti-corruption. The key findings and

recommendations of the compliance review are reported to the Audit

Committee of the Board of Directors and to businesses. These

recommendations are then implemented in collaboration with the

businesses concerned. Another example of UPM's monitoring activities is

the counterparty screening procedures, which also cover anti-corruption

and anti-bribery.

UPM FINANCIAL REPORT 2024	135

Investigation

Allegations or incidents of corruption and bribery can be reported by

employees or external stakeholders through the UPM Report Misconduct

channel. Such allegations or incidents are investigated in accordance

with the UPM Misconduct Investigation Protocol and the UPM

Misconduct Investigation Procedure. » Refer to G1-1

Investigation of allegations or incidents of corruption and bribery are

carried out under the supervision of UPM's Internal Audit or UPM Legal

and Compliance by parties separate from the management chain

involved in the matter.

The Chief Compliance Officer and SVP of Internal Audit provide

reports on the outcome of the investigations to the Ethics Advisory

Committee and the Board’s Audit Committee on a quarterly basis.

Communication and training

Anti-corruption is one of the topics in the UPM Code of Conduct. The

Code is distributed to all employees. In addition, UPM has more

detailed internal rules on anti-bribery and anti-corruption. Policies and

procedures are implemented through training and communication.

99% of active UPM employees (excluding UPM Raflatac companies

acquired in 2024) completed the Code of Conduct training, including

anti-corruption training at the end of 2024. » Refer to G1-1, table.

In addition, all salaried employees must complete UPM's anti-

corruption e-learning course, which includes a commitment to comply

with UPM's Anti-Corruption Rules. UPM has identified its salaried

employees as the most at risk of corruption and bribery as they have

financial and other decision-making power that can make them more

susceptible to corruption and bribery compared to shopfloor employees.

The completion rate of the UPM Anti-Corruption e-learning course, last

renewed in 2024, was 98% at the end of 2024. » Refer to G1-1, table.

UPM complements the e-learning modules with in-person and virtual

compliance training for specific target groups. The target groups are

determined based on risk assessments. In 2024, the Company

organised tailored anti-corruption training for selected target groups

across the Company. 

Compliance training is complemented by regular communication

activities to maintain awareness among all employees.

Members of the Group Executive Team are included in the target

groups for anti-corruption training described above. Anti-corruption

training is also provided to the Board of Directors on a regular basis. In

addition, each new member of the Board of Directors receives training

on the Company's Code of Conduct and other Group policies, including

anti-corruption, as part of their onboarding programme.

UPM has built a platform to provide training to employees of

business partners working for UPM. This ensures that they are committed

to the same standards of integrity.

The UPM Supplier and Third-Party Code was revised in 2024. It is

communicated to suppliers as part of the business contract. In 2024,

91% of UPM's supplier spend was covered by the Code. Suppliers

represent the majority of relevant business partners regarding the UPM

Supplier and Third-Party Code. » Refer to G 1-2 Responsible sourcing

METRICS

G1-4

Incidents of corruption or bribery

	2024	2023
Number of convictions	0	0
Amount of fines (EUR)	0	0

In response to violations of UPM's anti-corruption policies and

procedures, UPM conducted investigations and monitoring activities and

took action to improve its control environment. Disciplinary measures

were taken against the employees concerned, and training was

provided to identified risk groups.

In 2024, two cases of alleged violations of UPM's anti-corruption

policies and procedures, including those related to gifts and hospitality,

were investigated. In both cases, violations of UPM's policies were

substantiated, and the employees concerned were disciplined.

There were no confirmed cases of contracts with business partners

being terminated or not renewed due to violations related to corruption

or bribery in 2024.

No cases of corruption or bribery were brought against the

Company or its own employees during the reporting period.

G1-5

Political influence and lobbying activities

Through public affairs work, UPM aims to promote the necessary

prerequisites for its operations, particularly in its main operating

countries Finland, Uruguay, Germany and China. Active influencing at

EU level is also important.

Public affairs activities are based on UPM's strategy. They are also in

line with the Paris Agreement. UPM also has topic-specific steering

groups that guide public affairs activities, and the Group Executive Team

regularly reviews these topics.

UPM co-operates with several trade associations, the most important

being the Finnish Forest Industries Federation (FFIF) and the

Confederation of European Paper Industries (Cepi). As UPM enters into

new businesses, it is necessary to find new ways and forums for co-

operation. For example, UPM is a founding member of the Advanced

Biofuels Coalition in the EU and is also a member of the European

Chemical Industry Council (CEFIC). UPM is also represented in the

decision-making bodies of these trade associations, so that the Company

can influence and monitor their positions to ensure that they are in line

with UPM's strategy. The basic requirement for membership of any trade

association is the principal alignment with UPM's strategic positions.

As UPM is an active participant in the energy market, both as an

energy-intensive consumer and as an energy producer, UPM reminded

decision-makers of the importance of functioning energy markets.

Climate change and UPM's commitment to the UN’s 1.5 °C agenda

continued to be of great interest to stakeholders. Discussions were held

with environmental organisations, certification bodies, authorities and

decision-makers. Forests' impact on climate are linked to policies on

UPM FINANCIAL REPORT 2024	136

land use, land use change and forestry (LULUCF). UPM highlighted the

importance of sustainable forest management and wood-based products

replacing fossils as effective ways to mitigate climate change.

The EU's "Fit for 55" package proposal, initially published in 2021,

has seen significant progress. By 2024, both the European Parliament

and the EU member states will have finalised almost all the necessary

changes to align the EU's climate and energy legislation with the EU's

climate targets. This comprehensive package aims to reduce net

greenhouse gas emissions by at least 55% by 2030, setting the EU on a

clear path towards climate neutrality by 2050.

UPM actively promotes the cost-competitive and consistent

implementation of climate-related policies. UPM calls for predictable

regulations that enable investments in the circular bioeconomy. EU

policies must therefore ensure the sustainable use of forests and the

availability of wood as a key resource for green growth.

UPM's main advocacy topics are publicly presented on UPM's

website.

UPM's Public Affairs Team is led by the EVP, Marketing,

Sustainability and Communication, who is a member of the Group

Executive Team. UPM also has topic-specific steering groups that steer

public affairs activities, and these topics are regularly reviewed by the

Group Executive Team.

In accordance with the UPM Code of Conduct, UPM does not

support political parties or individual candidates financially and in kind.

UPM is transparent in its dialogue and engagement with governments

and regulators. UPM's identification number in the EU's Transparency

Register is 861194311863-31. UPM is also registered in the German

Lobby Register and, as of 2024, the new Finnish Transparency Register.

One Board member has held a position in public administration two

years preceding his appointment to the Board of Directors, i.e. Mr Jari

Gustafsson acted as the Finnish Ambassador for Greece and Albania

until 31 August 2024. The President and CEO has not held position in

public administration in the two years preceding his appointment to his

current position.

Actions 2024

• UPM published its main advocacy themes on the Company's website

• UPM registered for the Finnish Transparency register and filed the

first disclosures

• Organising a UPM event "Green growth through bio-based

innovations" in Brussels for EU regulators and decision-makers

G1-6

Payment practices

The average number of days it takes to pay an invoice after the due

date determined in the payment schedule is not followed up by UPM as

a payment-related performance indicator. Also, UPM is not gathering

statistics on the number of legal proceedings currently outstanding for

late payments. The development of the reporting will start in 2025.

On average, UPM applies payment terms of 14-60 days in its

contracts with suppliers and, as standard, payments are made

according to the due date. Individual contracts and respective payment

terms may vary between countries and businesses, reflecting the

characteristics of the business.

» Refer to G1-2 Contractual payment terms

UPM FINANCIAL REPORT 2024	137

Research and development

Innovating for the future

Innovation and R&D programmes are essential in the development of

new products and technologies. Research and development expenses

cover the development of new technologies, businesses and processes.

In 2024, UPM spent EUR 488 million (EUR 538) million) on research

and development, which accounted for 36.1% (23.7%) of the operating

cash flow. In addition to direct R&D expenditure of EUR 70 (66) million,

the figure includes negative operating cash flow and capital expenditure

in developing businesses, transformative business prospects and

digitalisation projects.

The patents, trademarks and rights protecting UPM's innovations

support the journey from innovation to business. The company has more

than 3,700 patents and patent applications, and more than 1,900

trademarks globally. The licensing of innovations and technologies

provides an excellent basis for value creation with customers and

technology partners.

Extensive partner network

UPM's close-knit global partner network includes customers, universities,

research organisations, suppliers and start-up companies. Collaboration

speeds up the development and launch of new business solutions.

The company's network includes the Circular Bio-based Europe Joint

Undertaking (CBE JU), the European Chemical Industry Council (Cefic)

and the Renewable Carbon Initiative (RCI). UPM is a member of the

4evergreen alliance, an initiative created by the Confederation of

European Paper Industries (Cepi) to raise the overall recycling rate of

fibre-based packaging to 90% by 2030. UPM is also a member of

EUROPEN, the European association that strives towards achieving

carbon neutrality in the packaging value chain.

UPM wants to take part in the developments that reduce greenhouse

gas and CO₂ emissions. In 2024, the company participated in

Hydrogen Cluster Finland in order to create new technologies, business

opportunities and climate benefits throughout the network. It also joined

a 5-year research programme led by VTT and RISE Research Institutes of

Sweden on emission free pulping. The programme aims to significantly

reduce biomass burning and increase the product yield from wood from

approximately 50% to around 70%.

Expanding R&D infrastructure

UPM’s three research centres in Finland, China and Germany accelerate

the development of bio-based products. The centres focus on research,

piloting and analytics, enabling seamless collaboration with customers,

value chain partners and research organisations such as universities.

They work closely with UPM’s mills, businesses and business-specific

research centres in various countries.

In Germany, UPM has intensified biochemical R&D and piloting in

several of its laboratories in connection with the biochemicals refinery. In

Finland, the company's research centre in Lappeenranta concentrates on

developing biomolecular businesses and advanced materials. In

Uruguay, the focus is on piloting future pulp end-uses in close

collaboration with UPM's forestry research centre specialising in

eucalyptus plantations.

Developing R&D competencies

R&D supports UPM's growth and sustainability targets globally,

enhances technology-triggered business opportunities and protects

company's performance in existing businesses. UPM places a strong

focus on the growth businesses and close collaboration with customers

and production.

UPM continuously develops its competences for the future needs of its

businesses. Competence development is essential for the entire

organisation, including both technical capabilities and ways of working.

UPM focuses especially on chemical safety and behavioural safety at

work, noting both safe and at-risk behaviours. The company's R&D and

piloting teams have also become more international thanks to successful

recruitments and onboarding. In addition to internal competence

development, UPM collaborates with universities and vocational schools

in order to enhance mutual learning.

In recent years, UPM has significantly enhanced its chemical

expertise, leading to substantial advancements in chemical processing.

This progress has also paved the way for the successful

commercialisation of future products. By continuously raising the bar, the

company is well-positioned to innovate and bring cutting-edge

biochemical solutions to the market.

UPM's focus in 2024

Innovating climate-positive products

Decarbonisation solutions offer innovative and sustainable options to

meet the urgent need to decarbonise society. With the launch of the

biochemicals business, UPM's customers will become able to switch from

fossil raw materials to wood-based alternatives in textiles, plastics, PET

bottles, packaging and pharma.

To accelerate product development, UPM Biochemicals announced

several commercial partnerships in 2024. UPM Biochemicals and

Nokian Tyres, a leading developer and manufacturer of premium tires,

introduced the industry-first concept tire partly based on UPM

BioMotion™ Renewable Functional Fillers (RFF). The partnership will

launch UPM’s CO₂-negative RFFs into a new market segment and

highlights the possibilities to use a lighter weight, 100% renewable

alternative to traditional CO₂-intensive fillers.

Another commercial partnership announced in 2024 is the

cooperation between UPM Biochemicals, Selenis and Bormioli Pharma.

The companies have partnered to produce the world’s first

pharmaceutical bottles made of partially wood-based PET. Since the

high regulatory and performance requirements for pharmaceutical

packaging may limit the use of new or recycled materials, this bottle

uses standard PET which is made with UPM BioPura™, UPM’s world first

wood-based BioMEG.

Sustainable packaging

The demand for sustainable packaging continues to grow rapidly. In

food packaging, barrier protection is one of the key features that

ensures that food reaches the consumer in perfect condition.

Traditionally, plastic packaging has been widely used to provide this

protection.

Packaging requirements vary greatly, depending on a number of

factors: the characteristics of the food itself, the surrounding climate

conditions, the size and format of the package – and the logistics route

used. For example, sugar-coated confectionery, dark chocolate and

cereals are well preserved with lower barrier protection. UPM's existing

barrier paper portfolio is well-suited for these types of end-uses.

However, the majority of packaging end-uses require much higher

barrier protection. Through co-creation with its partners in the packaging

value chain, UPM Specialty Papers aims to enhance the performance of

fibre-based packaging and enable brand owners and converters to

make the transition to fibre-based packaging.

UPM's barrier papers are also optimal for further converting, and co-

creation projects have resulted in innovative packaging solutions that

combine high barrier properties, sealability and runnability on high-

speed packaging machines. These solutions are typically designed for

UPM FINANCIAL REPORT 2024	138

demanding end-uses, including food packaging for items such as coffee,

chocolate and confectionery, thus offering recyclable alternatives to

traditional plastic packaging.

Shifting gears in AI

AI is expected to transform the global economy, leading to productivity

gains and a faster discovery of new ideas. UPM has launched an AI

programme to develop a comprehensive AI strategy and implement the

selected transformations. The programme assesses opportunities, sets

directions and accelerates AI adoption and learning across the

company. It provides clear, agile governance to ensure that AI delivers

value. The AI strategy has been developed with contributions from more

than 150 employees across multiple businesses and functions.

The strategy identifies high-impact AI transformations such as

increased sales, optimised supply chains and improved processes. AI

principles include ensuring the ethical, secure and transparent use of AI,

with human oversight and the consideration of cybersecurity, privacy

and data quality. AI is expected to significantly increase efficiency and

streamline workflows. UPM is working to bring the benefits to its

customers, employees and business development.

Implementing sustainable product design concept

The UPM Sustainable Product Design concept supports and steers

company's product development projects, promotes a sustainable

product lifecycle approach and ensures that every new product and

service the company designs has a proven sustainability value

proposition. The concept also ensures that UPM supports the UN

Sustainable Development Goals (SDGs).

The concept is used in the early stages of new product development,

using a tool that UPM has developed to map its impact on the SDGs. As

key tools in the concept, the company have also used Life Cycle

Assessment (LCA) and carbon footprint to provide credible

environmental data over the lifecycle. The concept has been used in

existing business areas, and in the development of lignin and fibre-

based products. Joint workshops were held to support the

implementation of the concept in all business areas.

As a result of sustainable product design, UPM Biochemicals

launched UPM Solargo™, a new range of bio-based plant stimulants.

They support plant growth by improving the quality of the soil

microbiome and increase drought stress tolerance of the plants. UPM

has entered the large agrochemical market with an innovative,

sustainable alternative to fossil-based products. 

UPM Biochemicals - Ramping up new business

Global brands deepen their sustainability promises to consumers and

market CO₂-optimised products while embracing increased supply chain

sustainability. UPM Biochemicals will be well-positioned to provide

renewable chemicals made from sustainable wood with a CO₂ product

footprint that is considerably below that of fossil-based chemical

products and credibly documented by the third-party-reviewed LCA.

UPM's proposition to help brands defossilise its products has gained

further traction in the market and has triggered wide-spread support

across the key markets.

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

tonnes next-generation biochemicals refinery in Leuna, Germany. The

estimated investment is EUR 1,275 million. The commissioning and start-

up was initiated in late 2024, and good progress has been made in

most units. However, in the quality assurance checks, certain corrective

works required in the sugars-to-chemicals process were identified. These

works have been arranged and will take a few months. Meanwhile, the

sequential start-up in the other units continues. The integrated

commercial production of the site is expected to start in H2 2025. The

biorefinery is expected to reach full production and positive EBIT in

2027.

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. The

investment opens up totally 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 also

produce bio-monopropylene glycol (BioMPG) and industrial sugars.

The overall business readiness is ensured

All teams, business processes and systems are operational. UPM has

secured the required materials to start and run the refinery as well as the

infrastructure and capacity to ship its products. The biorefinery is the first

of its kind and the process design as well as some of the technologies

used are new to the world.

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 be based on UPM’s high

standards.

Markets are responding very positively to company's new products

as it has further stepped up our sales and marketing. This is visible in

proactive endorsements through global consumer brands and a series of

development partnerships in globally leading markets for sustainable

chemicals. UPM has made strong progress in qualifying its products for

key end-uses and has successfully launched commercial partnerships

both for UPM BioMotion™ Renewable Functional Fillers (RFF) products

and UPM BioPura™ renewable bio-monoethylene glycols (BioMEG).

UPM Biofuels - Growth with advanced biofuels 

UPM’s renewable and sustainable biofuels help to mitigate climate

change. Advanced biofuels reduce greenhouse gas emissions by more

than 80% when compared to fossil fuels. In addition to decarbonising

road transportation, UPM helps to defossilise various other industries by

offering wood-based naphtha. Naphtha is the major raw material for

most chemicals and plastics. UPM BioVerno™ naphtha is a drop-in

solution for replacing fossil-based naphtha, thus allowing the production

of sustainable chemicals and plastics. UPM's strategy is based on

proprietary technology and UPM’s integrated feedstocks.

Green growth opportunities

UPM aims to become a major European player in the production of

advanced biofuels. Markets continue to grow and be driven by climate

targets. According to estimates, around 30% of fossil-derived fuels used

for transportation in the EU could be replaced with advanced biofuels by

2050.

Further growth in advanced biofuels plays an important role in UPM’s

strategy. In January 2021, UPM started the basic engineering phase of

a next-generation biofuels refinery. The planning for the potential

biorefinery in Rotterdam, the Netherlands, is based on an annual

capacity of up to 500,000 tonnes of high-quality renewable fuels

including advanced biofuels and, possibly, sustainable jet fuels, as well

as renewable chemicals. The products would significantly reduce the

carbon footprint of road transport and aviation, as well as replace fossil

raw materials with renewable alternatives in chemicals and bioplastics.

UPM Biofuels initiated proceedings to qualify its renewable fuel as

sustainable aviation fuel in 2023. The certification proceedings

continued in 2024.

UPM FINANCIAL REPORT 2024	139

The current feedstock for biofuels in the UPM Lappeenranta

Biorefinery is crude tall oil, which is a residue from pulp production. In

the plans to increase production of advanced biofuels, UPM is also

considering other residue streams and by-products of the forest industry.

Feedstock sourcing would focus on UPM integrated feedstocks from the

company’s own ecosystem, including various wood-based residues and

potential carbon farming.

The design for the potential biorefinery has progressed, and a major

part of the basic engineering has been completed. The chosen

technology has been validated at a demonstration scale. Before the

potential investment decision, the focus will be on testing the novel,

proprietary technology on a larger scale and on flexible feedstock

options that will ensure differentiation and support the long-term

competitiveness of the business case. This work is expected to take

approximately two years, until 2026.

In the future, the path to defossilisation in different transport sectors

will increasingly rely on renewable synthetic fuels. UPM’s extensive

know-how and experience in biorefinery operations not only gives a

competitive edge but also opens up growth opportunities in the realm of

green hydrogen solutions.

Towards 2030

UPM’s advanced biofuels belong to the most demanding sustainability

category of the Renewable Energy Directive (RED II and RED III), which

includes residues from agricultural and forestry activities. The UPM

Lappeenranta Biorefinery, with an annual capacity of 130,000 tonnes,

is the largest advanced biofuels-only refinery in the EU.

The RED III Directive includes an increased target for advanced

biofuels in the transport energy mix in Europe by 2030, reflecting a

considerable increase on today’s production capacity and creating

significant opportunities for new investments.

UPM FINANCIAL REPORT 2024	140

R&D’s role in different businesses

BUSINESS AREA	DESCRIPTION
UPM Fibres	UPM's global R&D presence continued to enable the company to work faster and better with our customers and partners to find and implement the required and fit for purpose solutions. Several developments were made to improve the operational reliability, safety and environmental performance of our pulp mills. UPM's commitment to developing sustainable and high-quality eucalyptus plantations for pulp production remains at the core of our operations in Uruguay. The new Forestry R&D Centre and the third tree nursery were fully operational, turning company's long-term R&D into high quality seedlings for new plantations and supporting the operations of the company's two pulp mills. In Uruguay, UPM was also able to capitalise on long-term R&D into circular economy solutions for the pulp mill waste materials. The company has established a continuous supply of a dried mix of biosludge and lime sludge to a local cement factory, reducing landfill waste at the UPM Fray Bentos pulp mill and replacing fossil CO₂ energy sources at the cement factory with a renewable biofuel. UPM also made further progress in the development of agricultural liming agents made from recycled alkaline waste materials. The first material was productised into a liming agent and commercial development began. At UPM’s pilot plant in Lappeenranta, more emphasis was placed on developing and piloting the first stages of the next fibre-based and bio- streams growth concepts for the pulp mills in co-operation with research institutes. UPM sees clear synergies and advantages in having in-house businesses focused on replacing fossil materials with renewable solutions. This allows the company to make its customers more successful faster by designing and implementing solutions based on the bio-steams in different industries and applications. UPM is exploring options for the further use of its biogenic CO₂ sidestream. The options being explored include the creation of negative emissions by storing the biogenic CO₂ emitted by the pulp mills, as well as the use in, for example, carbon-neutral synthetic fuels and chemicals. UPM has published a white paper on its views on how to scale up the negative emissions value chain.
UPM Energy	The focus was on improving the cost-competitiveness and environmental performance of hydropower production assets and on developing competencies and business operations related to the optimisation of industrial energy consumption and demand-side flexibility. UPM Energy participated in several research programmes and undertook development work with the aim of improving UPM’s power generation and consumption operations in a changing electricity market, as well as developing the means to mitigate the impact of hydropower operations on rivers and migratory fish as a part of UPM’s Stream water programme.
UPM Raflatac	UPM Raflatac’s Product Development (PD) & Innovation organisation plays a key role in maintaining UPM Raflatac’s competitiveness in a rapidly evolving market. Innovation is the cornerstone of the entire organisation, enabling the company to not only meet but exceed the customers’ expectations and support sustainable growth. With a deep end-use understanding, UPM's regional and global development experts anticipate market needs and translate them into actionable innovations. Company's global network of experts enables to deliver region-specific solutions while leveraging collective expertise on a global scale. Sustainability is at the core of UPM's efforts. The company continues to drive product portfolio towards innovative, scalable solutions that have a positive impact on climate and circularity to meet growing customer and regulatory needs.
UPM Specialty Papers	R&D and product development initiatives aim to enable high performance and efficiency in the value chain and to develop fibre-based alternatives for non-renewable materials. These initiatives also support growth targets by driving the innovation of products for new applications.  UPM continues to focus on co-creating sustainable paper-based packaging solutions for various end-uses with the packaging value network. The company has currently several ongoing co-creation initiatives supported by its excellent R&D infrastructure including Northern European and Asian R&D centres. UPM Specialty Papers continues to develop release liner base papers to further improve efficiency and minimise the environmental impact of the value chain. The company also supports industry-wide design-for-recycling approach across the label and tape value chains.
UPM Communication Papers	In the area of energy, UPM has finished the electrification of our heat and steam generation and invested considerably in power-to-heat boilers at its paper mills to enable reliable heat supply in the event of gas or other fuel supply disruptions, to improve its cost competitiveness and to reduce CO₂ emissions in an increasingly volatile electricity system. All boilers are installed and operational. There has also been a focus on technological innovations that help minimise energy needs at the production sites. The paper mills also developed further intelligent operations to enable increasing demand-side management of electricity markets and grids to support system stability and reduce emissions at peak times. The Research & Development Centre in Lappeenranta, Finland, and the Central European Support Team in Augsburg, Germany, continued to focus on investigating fibre concepts for various paper grades. UPM Communication Papers continued to participate in projects and association activities to keep RCP recyclable. UPM's R&D teams also supported the optimisation of the deinking process to minimise material losses and reduce energy and the water consumption. Product portfolio development focused on the needs of key customer groups. In terms of operational efficiency, the R&D efforts focused on improving the efficiency of several mills in order to identify both efficiency- enhancing and safety-improving areas. Contributions from the R&D teams helped to achieve the 2030 targets in the areas of energy, water consumption, effluent treatment and resource efficiency.
UPM Plywood	UPM Plywood product management and development provides competitive products within selected end-use areas in collaboration with the customers, superior technical expertise and support for customers, and support for the commercialisation of newly developed products and applications. An example would be further expanding the use of lignin-based WISA BioBond gluing solution to new product lines.
Other operations UPM Biofuels	Development of new applications for renewable plastics based on UPM BioVerno naphtha continued. Piloting, research and process development continued to take place at the UPM Biorefinery Development Centre (BrDC) and with external partners. UPM also studied and tested the use of several new innovative feedstocks that meet sustainability criteria, such as forest industry residues for its possible growth plans.   In Q4 2023, UPM Biofuels started the registration process for tall oil-based biofuels for jet engine use with ASTM (American Society for Testing and Materials) – a necessary step to enter into the production of sustainable aviation fuels which is one of the potential products of potential next biofuels refinery. The registration process and discussions with technical partners in the aviation space are ongoing.

UPM FINANCIAL REPORT 2024	141

Information on shares

Shares

UPM has one class of shares. Each share entitles the holder to one

vote at the General Meeting of UPM.

On 31 December 2024, the total number of UPM shares was

533,735,699. Through the issuance authorisation described below, the

number of shares may increase to a maximum of 558,735,699. On 31

December 2024, UPM held 411,653 treasury shares, representing

approximately 0.08% of the total number of UPM shares and voting

rights. There are no specific terms related to the shares.

In 2024, UPM shares worth a total of EUR 7,936 million ( 8,752

million) were traded on the Nasdaq Helsinki stock exchange. This is

estimated to represent approximately 70% of the total trading volume in

UPM shares. The highest listing was EUR 35.77 in May and the lowest

was EUR 24.78 in November.

Authorisations held by the Board of Directors

The Annual General Meeting held on 4 April 2024, authorised the

Board of Directors to decide on the repurchase of a maximum of

50,000,000 of the Company’s own shares. The authorisation will be

valid for 18 months from the date of the AGM resolution.

The Annual General Meeting held on 4 April 2024, authorised the

Board of Directors to decide on the issuance of new shares, the transfer

of treasury shares and the issuance of special rights entitling to shares in

proportion to the shareholders’ existing holdings in the Company, or in

a directed share issue, deviating from the shareholder’s pre-emptive

subscription right. The Board of Directors may also decide on a share

issue without payment to the Company itself. The aggregate maximum

number of new shares that may be issued and treasury shares that may

be transferred is 25,000,000, including the number of shares that can

be received on the basis of special rights. The authorisation will be valid

for 18 months from the date of the AGM resolution.

Aside from the above, the Board of Directors has no current

authorisation to issue shares, convertible bonds or share options.

Changes in number of shares

	2024	2023	2022	2021	2020
Number of shares 1 January	533,735,699	533,735,699	533,735,699	533,735,699	533,735,699
Number of shares at 31 December	533,735,699	533,735,699	533,735,699	533,735,699	533,735,699

Major shareholders at 31 December 2024

	NUMBER OF SHARES	HOLDING %
Varma Mutual Pension Insurance Company	12,999,564	2.44
Ilmarinen Mutual Pension Insurance Company	12,164,214	2.28
ELO Mutual Pension Insurance Company	6,483,000	1.21
The State Pension Fund	3,500,000	0.66
Nordea Bank ABP	2,804,413	0.53
Svenska Kulturfonden	1,859,271	0.35
Holding Manutas Oy	1,800,000	0.34
Kymin Osakeyhtiön 100-vuotissäätiö	1,696,360	0.32
Investment fund Seligson & Co	1,654,521	0.31
Security Trading Oy	1,650,000	0.31
Nominees & Registered foreign owners	345,546,627	64.74
Others	141,577,729	26.53
Total	533,735,699	100.00

UPM FINANCIAL REPORT 2024	142

Shareholders by category at 31 December, %

	2024	2023	2022	2021	2020
Companies	2.9	2.6	2.6	2.9	2.7
Financial institutions and insurance companies	4.4	3.8	3.6	3.7	3.8
Public bodies	7.2	5.3	5.3	5.8	6.0
Non-profit organisations	4.0	4.4	4.5	4.6	4.7
Households	16.9	16.4	16.0	15.8	15.6
Non-Finnish nationals	64.7	67.6	68.1	67.2	67.1
Total	100.0	100.0	100.0	100.0	100.0

Share distribution at 31 December 2024

SIZE OF SHAREHOLDINGS	NUMBER OF SHARE- HOLDERS	% OF SHARE- HOLDERS	NUMBER OF SHARES, MILLION	% OF SHARES
1 – 100	63,083	43.13	2.7	0.5
101 – 1,000	64,335	43.99	24.2	4.5
1,001 – 10,000	17,415	11.91	45.9	8.6
10,001 – 100,000	1,296	0.89	31.5	5.9
100,001 –	129	0.09	86.6	16.2
Total	146,258	100.00	190.9	35.8
Nominee-registered			342.9	64.2
Not registered as book entry units			—	0.0
Total			533.7	100.0

Under the provisions of the Securities Markets Act, changes in holdings must be disclosed when the holding reaches, exceeds or falls below 5, 10, 15, 20, 25, 30,

50 or 66.7 (2/3) per cent of the voting rights or the number of shares of the company. The stock exchange releases on notifications of changes in holdings pursuant

to Chapter 9, Section 5 of the Securities Market Act are available in UPM website upm.com/investors .

UPM FINANCIAL REPORT 2024	143

Adjusted share related indicators

	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Earnings per share (EPS), EUR	0.82	0.73	2.86	2.41	1.05	1.99	2.80	1.82	1.65	1.72
Comparable EPS, EUR	1.74	1.40	3.09	2.22	1.37	2.07	2.24	1.88	1.65	1.38
Equity per share, EUR	20.89	20.93	23.44	20.34	17.53	18.87	18.36	16.24	15.43	14.89
Dividend per share, EUR 1)	1.50	1.50	1.50	1.30	1.30	1.30	1.30	1.15	0.95	0.75
Dividend to earnings ratio, %	183.6	206.2	52.4	53.9	123.7	65.4	46.4	63.0	57.6	43.6
Dividend to operating cash flow, %	59	35	158	55	69	38	52	42	30	34
Dividend to comparable EPS, %	86	107	49	59	95	63	58	61	58	54
Effective dividend yield, %	5.6	4.4	4.3	3.9	4.3	4.2	5.9	4.4	4.1	4.4
P/E ratio	32.5	46.8	12.2	13.9	29.0	15.5	7.9	14.2	14.1	10.0
Operating cash flow per share, EUR	2.54	4.25	0.95	2.34	1.89	3.46	2.49	2.74	3.16	2.22
Dividend distribution, EURm 1)	800	800	800	693	693	693	693	613	507	400
Share price at 31 Dec., EUR	26.56	34.06	34.93	33.46	30.47	30.91	22.15	25.91	23.34	17.23
Lowest quotation, EUR	24.78	26.62	24.85	29.11	20.31	21.10	21.69	20.82	13.71	13.19
Highest quotation, EUR	35.77	35.99	37.14	35.37	31.50	31.49	34.70	26.69	23.41	19.26
Average quotation for the period, EUR	30.16	31.33	32.50	32.15	26.09	25.73	28.86	23.89	17.51	16.37
Market capitalisation, EURm	14,165	18,165	18,629	17,845	16,250	16,485	11,813	13,818	12,452	9,192
Shares traded, EURm 2)	7,936	8,752	9,680	8,435	9,921	9,695	9,980	8,460	6,749	7,469
Shares traded (1,000)	263,124	279,371	297,879	262,377	380,237	376,801	345,822	354,053	385,355	456,168
Shares traded, % of all shares	49.3	52.4	55.9	49.2	71.3	70.7	64.8	66.4	72.2	85.5
Number of shares, average (1,000)	533,324	533,324	533,324	533,324	533,324	533,324	533,324	533,415	533,505	533,505
Number of shares at the end of period (1,000)	533,736	533,736	533,736	533,736	533,736	533,736	533,736	533,736	533,736	533,736
of which treasury shares (1,000)	412	412	412	412	412	412	412	412	231	231

1) 2024 proposal

2) Trading on the Nasdaq Helsinki Main Market. Treasury shares bought by the company are included in shares traded.

The definitions of adjusted share related indicators are described below

SHARE RELATED INDICATORS	DEFINITION
Earnings per share (EPS), EUR	Profit for the period attributable to owners of the parent company divided by adjusted average number of shares during the period excluding treasury shares.
Comparable EPS, EUR	Earnings per share calculated in accordance with IFRS excluding items affecting comparability and their tax impact.
Equity per share, EUR	Equity attributable to the owners of the parent company in relation to the adjusted number of shares at the end of period.
Dividend per share, EUR	Dividend distribution divided by adjusted number of shares at the end of period.
Dividend to earnings ratio, %	Dividend per share as a percentage of earnings per share.
Dividend to operating cash flow, %	Dividend per share as a percentage of operating cash flow per share.
Dividend to comparable EPS, %	Dividend per share as a percentage of comparable earnings per share
Effective dividend yield, %	Adjusted dividend per share as a percentage of adjusted share price at 31 December
P/E ratio	Adjusted share price in relation to the earnings per share.
Operating cash flow per share, EUR	Operating cash flow divided by adjusted average number of shares during the period excluding treasury shares.
Market capitalisation, EURm	Total number of shares (excluding those held as treasury shares) multiplied by the share price at the end of period.
Adjusted share price at the end of period	Share price at the end of period in relation to share issue coefficient.
Adjusted average share price	Total value of shares traded in relation to adjusted number of shares traded during the period.

UPM FINANCIAL REPORT 2024	144

Board of Directors´ proposal for the

distribution of profit

The Board of Directors proposes to the Annual General Meeting of UPM-

Kymmene Corporation to be held on 27 March 2025,  that an

aggregate dividend of EUR 1.50 per share be paid based on the

balance sheet to be adopted for the financial year ending 31 December

2024, and that the remaining portion of the distributable funds be

retained in the Company’s unrestricted shareholders’ equity. The Board

proposes that the dividend be paid in two instalments.

The first dividend instalment, EUR 0.75 per share, is proposed to be

paid to shareholders registered in the Company’s register of

shareholders maintained by Euroclear Finland Oy on the record date for

the first dividend instalment 31 March 2025. The Board proposes that

the payment date for the first dividend instalment would be on 8 April

2025.

The second dividend instalment, EUR 0.75 per share, is proposed to

be paid to shareholders registered in the Company's register of

shareholders maintained by Euroclear Finland Oy on the record date for

the second dividend instalment 31 October 2025. The Board proposes

that the payment date for the second dividend instalment would be on 7

November 2025.

If the payment of the dividend is prevented due to applicable law, 

regulation or unexpected circumstances, the Board will resolve, as soon 

as practically possible, on a new record date and payment date.

On the date of the dividend proposal, 5 February 2025, the 

registered number of the Company’s shares is 533,735,699.

The aforementioned number of shares includes 411,653 treasury shares

which are not entitled to dividend. As a result, the proposed dividend

would total EUR 800.0 million.

On 31 December 2024, the distributable funds of the

parent company were EUR 2,870,807,659.79. The profit of the parent

company for the period was EUR 381,913,739.95. No material

changes have taken place in respect of the Company's financial position

after the balance sheet date. In the opinion of the Board Of Directors,

the proposed distribution of profits does not risk the solvency of the

Company.

Signatures of the annual accounts

and the report of the Board of

Directors for the year 2024

The financial statements have been prepared in accordance with the

applicable accounting standards and they give a true and fair view of

the assets, obligations, financial position and profit or loss of both the

company and the group of companies included in the consolidated

financial statements. The Board of Directors' report includes a truthful

description of the development and results of the business of both the

company and the group of companies included in the consolidated

financial statements and a description of the most significant risks and

uncertainties and other state of the company. The Sustainability

Statement included in the Board of Director's report has been prepared

in accordance with the reporting standards indicated in the Accounting

Act chapter 7 and Article 8 of the Taxonomy Regulation.

Helsinki, 5 February 2025

Henrik Ehrnrooth Chair	Kim Wahl	Pia Aaltonen-Forsell
Jari Gustafsson	Piia-Noora Kauppi	Melanie Maas-Brunner
Topi Manner	Marjan Oudeman	Martin à Porta
Massimo Reynaudo President and CEO

Financial

Statements 2024

UPM FINANCIAL REPORT 2024	146

Consolidated income statement and statement of comprehensive income	147
Consolidated balance sheet	148
Consolidated statement of changes in equity	149
Consolidated cash flow statement	150
Notes to the consolidated financial statements	152

	1.  Basis for reporting	153	5.  Capital structure	183
	1.1 Corporate information	153	5.1 Capital management	183
	1.2 Basis of preparation	153	5.2 Net debt	186
	1.3 Consolidation principles	154	5.3 Financial assets and liabilities by category	191
	1.4 Foreign currency translation	154	5.4 Financial income and expenses	194
	1.5 Changes in accounting policies	155	5.5 Share capital and reserves	194
	2.  Business performance	156	6.  Risk management	196
	2.1 Business areas	156	6.1 Financial risk management	196
	2.2 Sales	161	6.2 Derivatives and hedge accounting	198
	2.3 Operating expenses and other operating income	162
	2.4 Earnings per share and dividend	164	7.  Income tax	202
			7.1 Tax on profit for the year	202
	3.  Employee rewards	165	7.2 Deferred tax	203
	3.1 Employee costs	165
	3.2 Key management personnel	165	8.  Group structure	205
	3.3 Share-based payments	167	8.1 Business acquisitions and disposals	205
	3.4 Retirement benefit obligations	169	8.2 Principal subsidiaries and joint operations	206
			8.3 Related party transactions	208
	4.  Capital employed	172	8.4 Assets held for sale	208
	4.1 Property, plant and equipment	173
	4.2 Forest assets	175	9.  Unrecognised items	209
	4.3 Energy shareholdings	175	9.1 Commitments and contingencies	209
	4.4 Goodwill and other intangible assets	177	9.2 Litigation	209
	4.5 Provisions	179	9.3 Events after balance sheet date	209
	4.6 Working capital	180
			10.  Other notes	210
			10.1 Forthcoming new standards, amendments         and accounting policy changes	210

Parent company accounts	211

UPM FINANCIAL REPORT 2024	147

Consolidated financial statements

Consolidated income statement

EURm	NOTE	2024	2023
Sales	2.1, 2.2	10,339	10,460
Other operating income	2.3	130	228
Costs and expenses	2.3	-8,806	-9,316
Change in fair value of forest assets and wood harvested	4.2	80	-103
Share of results of associated companies and joint ventures		1	-1
Depreciation, amortisation and impairment charges	2.3, 4.1, 4.4, 5.2	-1,139	-660
Operating profit		604	608
Exchange rate and fair value gains and losses	5.4	-7	-74
Interest and other finance costs, net	5.4	-97	-70
Profit before tax		500	464
Income taxes	7.1	-37	-71
Profit for the period		463	394
Attributable to:
Owners of the parent company		436	388
Non-controlling interests	8.1	27	6
		463	394
Earnings per share for profit attributable to owners of the parent company
Basic earnings per share, EUR	2.4	0.82	0.73
Diluted earnings per share, EUR	2.4	0.82	0.73

Consolidated statement of comprehensive income

EURm	NOTE	2024	2023
Profit for the period		463	394
Other comprehensive income for the period, net of tax
Items that will not be reclassified to income statement:
Actuarial gains and losses on defined benefit plans		4	-10
Changes in fair value of energy shareholdings		-47	-1,351
Items that may be reclassified subsequently to income statement:
Translation differences		346	-120
Net investment hedge		-13	6
Cash flow hedges		78	539
Other comprehensive income for the period, net of tax	7.2	368	-936
Total comprehensive income for the period		831	-542
Attributable to:
Owners of the parent company		781	-536
Non-controlling interests		50	-7
		831	-542

The notes are integral part of these consolidated financial statements.

UPM FINANCIAL REPORT 2024	148

Consolidated balance sheet

EURm	NOTE	2024	2023
ASSETS
Goodwill	4.4	174	283
Other intangible assets	4.4	580	715
Property, plant and equipment	4.1	7,085	7,053
Leased assets	5.2	847	683
Forest assets	4.2	2,517	2,355
Energy shareholdings	4.3	2,247	2,283
Other non-current financial assets	5.3	44	60
Deferred tax assets	7.2	526	431
Net retirement benefit assets	3.4	1	1
Investments in associates and joint ventures		20	23
Other non-current assets		21	26
Non-current assets		14,062	13,913
Inventories	4.6	2,104	1,948
Trade and other receivables	4.6, 5.3	1,929	1,782
Other current financial assets	5.3	69	64
Income tax receivables		40	27
Cash and cash equivalents	5.1, 5.3	892	632
Current assets		5,034	4,454
Assets classified as held for sale	8.4	—	106
Assets		19,096	18,473
EURm	NOTE	2024	2023
EQUITY AND LIABILITIES
Share capital	5.5	890	890
Treasury shares		-2	-2
Translation reserve		657	347
Other reserves	5.5	1,678	1,655
Reserve for invested non-restricted equity	5.5	1,273	1,273
Retained earnings		6,644	6,998
Equity attributable to owners of the parent company		11,139	11,161
Non-controlling interests	8.1	401	370
Equity		11,540	11,531
Deferred tax liabilities	7.2	673	616
Net retirement benefit liabilities	3.4	496	502
Provisions	4.5	89	170
Non-current debt	5.2, 5.3	3,747	3,056
Other non-current financial liabilities	5.3	158	157
Non-current liabilities		5,162	4,501
Current debt	5.2, 5.3	166	327
Trade and other payables	4.6, 5.3	1,938	1,883
Provisions	4.5	165	96
Other current financial liabilities	5.3	108	51
Income tax payables		18	28
Current liabilities		2,395	2,385
Liabilities related to assets classified as held for sale	8.4	—	56
Liabilities		7,556	6,942
Equity and liabilities		19,096	18,473

The notes are integral part of these consolidated financial statements.

UPM FINANCIAL REPORT 2024	149

Consolidated statement of changes in equity

EURm	SHARE CAPITAL	TREASURY SHARES	TRANS- LATION RESERVE	OTHER RESERVES	RESERVE FOR INVESTED NON- RESTRICTED EQUITY	RETAINED EARNINGS	EQUITY ATTRIBU- TABLE TO OWNERS OF THE PARENT COMPANY	NON- CONTROLLING INTERESTS	TOTAL EQUITY
Value at 1 January 2024	890	-2	347	1,655	1,273	6,998	11,161	370	11,531
Profit for the period	—	—	—	—	—	436	436	27	463
Translation differences	—	—	322	—	—	—	322	23	346
Cash flow hedges - reclassified to income statement, net of tax	—	—	—	6	—	—	6	—	6
Cash flow hedges - reclassified to PPE, net of tax	—	—	—	—	—	—	—	—	—
Cash flow hedges - change in fair value, net of tax	—	—	—	72	—	—	72	—	72
Net investment hedge, net of tax	—	—	-13	—	—	—	-13	—	-13
Energy shareholdings - changes in fair value, net of tax	—	—	—	-51	—	4	-47	—	-47
Actuarial gains and losses on defined benefit plans, net of tax	—	—	—	—	—	4	4	—	4
Total comprehensive income  for the period	—	—	309	27	—	444	781	50	831
Share-based payments, net of tax	—	—	—	-4	—	2	-2	—	-2
Dividend distribution	—	—	—	—	—	-800	-800	-19	-819
Other items	—	—	—	—	—	-1	-1	—	-1
Total transactions with owners for the period	—	—	—	-4	—	-799	-803	-19	-822
Total equity at 31 December 2024	890	-2	657	1,678	1,273	6,644	11,139	401	11,540
Value at 1 January 2023	890	-2	449	2,460	1,273	7,433	12,502	376	12,879
Profit for the period	—	—	—	—	—	388	388	6	394
Translation differences	—	—	-108	—	—	—	-108	-13	-120
Cash flow hedges - reclassified to income statement, net of tax	—	—	—	94	—	—	94	—	94
Cash flow hedges - reclassified to PPE, net of tax	—	—	—	1	—	—	1	—	1
Cash flow hedges - change in fair value, net of tax	—	—	—	444	—	—	444	—	444
Net investment hedge, net of tax	—	—	6	—	—	—	6	—	6
Energy shareholdings - changes in fair value, net of tax	—	—	—	-1,350	—	-1	-1,351	—	-1,351
Actuarial gains and losses on defined benefit plans, net of tax	—	—	—	—	—	-10	-10	—	-10
Total comprehensive income for the period	—	—	-102	-811	—	377	-536	-7	-542
Share-based payments, net of tax	—	—	—	6	—	-11	-5	—	-5
Dividend distribution	—	—	—	—	—	-800	-800	-35	-835
Contributions by non-controlling interests	—	—	—	—	—	—	—	35	35
Total transactions with owners for the period	—	—	—	6	—	-811	-805	—	-805
Total equity at 31 December 2023	890	-2	347	1,655	1,273	6,998	11,161	370	11,531

» Refer Note 5.5 Share capital and reserves, for further information.

UPM FINANCIAL REPORT 2024	150

Consolidated cash flow statement

EURm	2024	2023
Cash flows from operating activities
Profit for the period	463	394
Adjustments 1)	1,223	1,760
Interest received	31	37
Interest paid	-133	-116
Dividends received	4	3
Other financial items, net	-13	-44
Income taxes paid 3)	-144	-181
Change in working capital 2)	-80	417
Operating cash flow	1,352	2,269
Cash flows from investing activities
Capital expenditure	-543	-1,026
Additions to forest assets	-53	-54
Acquisition of businesses and subsidiaries, net of cash acquired	-28	-20
Proceeds from sale of property, plant and equipment and intangible assets, net of tax 3)	10	7
Proceeds from sale of forest assets, net of tax 3)	19	10
Proceeds from disposal of businesses and subsidiaries and advances received	16	1
Proceeds from disposal of shares in associates and joint ventures	1	1
Proceeds from disposal of energy shareholdings	5	0
Net cash flows from net investment hedges	-1	10
Change in other non-current assets	-10	-5
Investing cash flow	-586	-1,076
Cash flows from financing activities
Proceeds from non-current debt	600	100
Payments of non-current debt	-23	-1,506
Lease repayments	-105	-99
Change in current liabilities	-182	-260
Net cash flows from derivatives	-5	6
Dividends paid to owners of the parent company	-801	-799
Dividends paid to non-controlling interests	-19	-36
Contributions paid by non-controlling interests	0	35
Other financing cash flow	-10	-14
Financing cash flow	-544	-2,573
Change in cash and cash equivalents	222	-1,379
Cash and cash equivalents at the beginning of the period	632	2,067
Exchange rate effect on cash and cash equivalents	-2	-16
Change in cash and cash equivalents	222	-1,379
Cash and cash equivalents classified as held for sale (Note 8.1)	39	-39
Cash and cash equivalents at the end of the period	892	632

1) Adjustments

UPM FINANCIAL REPORT 2024	151

EURm	2024	2023
Change in fair value of forest assets and wood harvested	-80	103
Share of results of associated companies and joint ventures	-1	1
Depreciation, amortisation and impairment charges	1,139	660
Capital gains and losses on sale of non-current assets	-31	-2
Financial income and expenses	104	144
Income taxes	37	71
Utilised provisions	-121	-42
Non-cash changes in provisions	101	179
Other adjustments	74	646
Total	1,223	1,760

2) Change in working capital

EURm	2024	2023
Inventories	-94	293
Receivables included in working capital	-81	854
Liabilities included in working capital	95	-731
Total	-80	417

3) Total income taxes paid in 2024 amounted to EUR 145 million (181 million). Income taxes paid related to investing activities are presented in investing cash flow.

UPM FINANCIAL REPORT 2024	152

Notes to the consolidated

financial statements

The notes to the consolidated financial statements are grouped into sections based on their

nature. The notes contain the relevant financial information as well as a description of accounting

policy and key estimates and judgements applied for the topics of the individual notes. All

amounts are shown in millions of euros unless otherwise stated.

Items marked with this symbol describe the accounting principle by UPM to specific financial statement area.			Items marked with this symbol indicate that the accounting area involves estimates and judgement which are described separately.			Risks related to disclosures, whether they are financial, actuarial, credit or counterparty in nature, can be found in sections marked with this symbol.

UPM FINANCIAL REPORT 2024	153

1.Basis for reporting

1.1Corporate information

UPM-Kymmene Corporation (“the parent company” or “the company”)

together with its consolidated subsidiaries (“UPM” or “the group”) is a

global forest-based bioindustry group. UPM´s large product range covers

pulp, graphic and specialty papers, self-adhesive labels, wood-based

renewable diesel, electricity, as well as plywood and timber products.

UPM-Kymmene Corporation is a Finnish limited liability company,

domiciled in Helsinki in the Republic of Finland. The address of the

company’s registered office is Alvar Aallon katu 1, 00100 Helsinki ,

where a copy of the consolidated financial statements can be obtained.

The parent company’s shares are publicly traded on the Nasdaq

Helsinki Main Market.

These group consolidated financial statements were authorised

for issue by the Board of Directors on 5 February 2025. According

to the Finnish Companies Act, the General Meeting of Shareholders

is entitled to decide on the adoption of the company’s financial

statements.

1.2Basis of preparation

UPM’s consolidated financial statements are prepared in accordance

with International Financial Reporting Standards as issued by the

International Accounting Standards Board and as adopted by the EU

(IFRS as issued by the IASB and as adopted by the European Union) and

IFRIC Interpretations.

The consolidated financial statements have been prepared under

the historical cost convention, except for forest assets, energy

shareholdings and certain other financial assets and financial liabilities,

defined benefit plan assets and obligations and share-based payment

arrangements which are measured at fair value.

The consolidated financial statements are presented in millions of

euros, which is the functional and presentation currency of the parent

company. Items included in the financial statements of each group

subsidiary are measured using the currency of the primary economic

environment in which the subsidiary operates (“the functional currency”).

The amounts within parentheses refer to the preceding year, 2023.

Figures presented in these financial statements are rounded and

therefore the sum of individual figures might deviate from the presented

total figure.

In accordance with the European Single Electronic Format (ESEF)

reporting requirements, UPM has published the Board of Directors' report

and the financial statements as an XHTML file as its official financial

statements. In line with the ESEF requirements, the primary statements of

the consolidated financial statements and notes have been labelled with

XBRL tags. The group has also voluntarily published its financial

statements in a PDF format. The consolidated financial statements have

been prepared in two languages, of which the Finnish version is official

and the English translation is unofficial.

	Accounting policies

The accounting policies applied to the consolidated financial statements

as a whole are described in this section, while the remaining accounting

policies are described in the notes to which they relate as UPM aims to

provide enhanced understanding of each financial statement area.

Further, to provide a better understanding, the accounting choices made

within the framework of the prevailing IFRS Accounting Standards are

described together with the policy.

	Key estimates and judgements

In the process of applying the group’s accounting policies, management

has made a number of judgements and applied estimates of future events

that affect the reported amounts of assets and liabilities, the disclosure of

contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenues and expenses during the reporting

periods. Although these estimates are based on management’s best

knowledge, actual results and timing may ultimately differ from

previously made estimates.

Key estimates and judgements which are material to the reported

results and financial position are presented in the following notes.

KEY ESTIMATES AND JUDGEMENTS	NOTE
Valuation of forest assets	4.2 Forest assets
Fair value determination of energy shareholdings	4.3 Energy shareholdings
Impairment of property, plant and equipment	4.1 Property, plant and equipment
Impairment of goodwill and other intangible assets	4.4 Goodwill and other intangible assets
Pension and other post-employment benefits	3.4 Retirement benefit obligations
Income taxes	7. Income tax
Environmental provisions	4.5 Provisions
Legal contingencies	9.2 Litigation

	Financial risks

UPM is exposed to a variety of financial risks as a result of its business

activities including currency risk, interest rate risk, commodity price risk,

credit risk, capital risk and liquidity risk. Risk management related to

financial activities is carried out by UPM’s central treasury department,

Treasury and Risk Management, under policies approved by the Board

of Directors. Financial risks are described in the relevant notes as

described below

FINANCIAL RISK	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
Financial counterparty risk	6.2 Derivatives and hedge accounting

UPM FINANCIAL REPORT 2024	154

	Climate-related risks

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. 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. » Refer note 2.3 Operating

expenses and other operating income and note 4.2 Forest assets for

information on items exposed to climate-related risks

1.3Consolidation principles

Subsidiaries

UPM’s consolidated financial statements include the financial statements

of the parent company, UPM-Kymmene Corporation, and subsidiaries

controlled by UPM. All group entities consistently apply UPM’s

accounting policies. All inter-company transactions, receivables,

liabilities and unrealised profits, as well as intragroup profit distributions,

are eliminated. Unrealised losses are also eliminated unless the

transaction provides evidence of an impairment of the transferred asset.

Joint operations

A joint operation is a joint arrangement whereby the parties that have

joint control of the arrangement have rights to the assets, and

obligations for the liabilities, relating to the arrangement. Joint control is

a contractually agreed sharing of control of an arrangement, which

exists only when decisions about the relevant activities require the

unanimous consent of the parties sharing control.

UPM’s share in joint operations is recognised in the consolidated

balance sheet through recognition of the group’s own assets and

liabilities and revenues and expenses in the arrangement together

with UPM’s proportionate share in the joint assets, liabilities and joint

income and expenses. The proportionate share of realised and

unrealised gains and losses arising from intragroup transactions between

UPM and its joint operations is eliminated.

Associates and joint ventures

Associates are entities over which the group has significant influence but

no control. Significant influence is the power to participate in the

financial and operating policy decisions without the power to control or

jointly control those policies. Joint ventures are joint arrangements where

the Group has joint control with other parties and the parties have rights

to the arrangement’s net assets.

Interests in associates and joint ventures are accounted for using

the equity method of accounting and are initially recognised at cost.

Associates and joint ventures follow the group accounting policies for

consolidation purpose.

Non-controlling interests

The profit or loss attributable to owners of the parent company and non-

controlling interests is presented on the face of the income statement.

Non-controlling interests are presented in the consolidated balance sheet

within equity, separately from equity attributable to owners of the parent

company.

Transactions with non-controlling interests are treated as transactions

with equity owners of the group. For purchases from non-controlling

interests, the difference between consideration paid and the acquired

share of the carrying value of the subsidiary’s net assets is recorded in

equity. Gains or losses of disposals to non-controlling interests are also

recorded in equity, net of transaction costs.

1.4Foreign currency translation

Foreign currency transactions are translated into the functional currency

using the exchange rate prevailing at the date of transaction. Receivables

and liabilities denominated in foreign currencies outstanding on the

balance sheet date are translated into the functional currency using the

balance sheet date exchange rate. Foreign exchange gains and losses

resulting from the settlement of such transactions and from the translation

at year-end exchange rates of monetary assets and liabilities

denominated in foreign currencies are recognised in the income

statement, except when recognised in other comprehensive income as

qualifying cash flow hedges and qualifying net investment hedges.

UPM records foreign exchange differences relating to ordinary

business operations within the appropriate line items above operating

profit and those relating to financial items are presented separately as a

net amount in finance costs.

Income and expenses of subsidiaries that have a functional currency

different from euro are translated into euros at monthly average

exchange rates. Assets and liabilities of subsidiaries are translated at the

closing rate at the balance sheet date. All resulting translation differences

are recognised as a separate component in other comprehensive

income. On consolidation, exchange differences arising from the

translation of net investment in foreign operations and other currency

instruments designated as hedges of such investments, are recognised in

other comprehensive income. When a foreign entity is partially disposed

of, sold or liquidated, translation differences accrued in equity are

recognised in the income statement as part of the gain or loss on sale/

liquidation.

UPM FINANCIAL REPORT 2024	155

1.5Changes in accounting policies

The group has reviewed IFRS Accounting Standard amendments effective

on periods starting 1 January 2024.

Classification of liabilities

As of 1 January 2024, the group has adopted the amendments to IAS 1.

According to the amendments, for a liability to be classified as non-

current, an entity must have the right to defer settlement of the liability for

at least twelve months after the reporting period. The right must have

substance and exist at the end of the reporting period and the

classification of the liability must be unaffected by the likelihood that the

company will exercise that right. The amendment did not have any

impact on the group's financial statements.

Other interpretations and amendments effective as of 1 January 2024,

did not have any impact on group's financial statements.

Income tax – OECD Pillar Two model rules

The group is in the scope of the OECD Pillar Two model rules. Pillar Two

legislation was enacted in Finland in 2023, the jurisdiction in which

UPM is incorporated, and came into effect from 1 January 2024. The

group applies the IAS 12 exception to recognising and disclosing

information about deferred tax assets and liabilities related to Pillar Two

income taxes. The entities in scope will be liable to pay a top-up tax for

the difference between their GloBe effective tax rate per jurisdiction and

the 15% minimum rate. The Pillar Two legislation had no impact on

income taxes for the current reporting period. » Refer note 7.1 Tax on

profit for the year

UPM FINANCIAL REPORT 2024	156

2.Business performance

	Sales				Comparable EBIT				Comparable ROE
	EUR	10,339	m		EUR	1,224	m		8.3	%
	(EUR 10,460m)				(EUR 1,013m)				(6.2%)

2.1Business areas

UPM business portfolio consist of six competitive businesses with strong

market positions. UPM reports financial information for the following

business areas (segments): UPM Fibres, UPM Energy, UPM Raflatac,

UPM Specialty Papers, UPM Communication Papers, UPM Plywood and

Other operations. UPM has production plants in 11 countries. The

group’s most important markets are Europe, North America and Asia.

	Accounting policies

UPM business areas are reported consistently, with the internal reporting

provided to UPM’s President and CEO who is responsible for allocating

resources and assessing performance of the business areas. Internal

reporting is prepared under the same basis as the consolidated

accounts. Costs, revenues, assets and liabilities are allocated to business

areas on a consistent basis. The sales transactions between business

areas are based on market prices, and they are eliminated on

consolidation.

UPM FINANCIAL REPORT 2024	157

The goods and services included in sales revenue of each business area are presented in below table:

BUSINESS AREA	DESCRIPTION AND PRODUCTS
UPM Fibres	UPM Fibres consists of UPM Pulp and UPM Timber business units. UPM Pulp offers a versatile range of responsibly-produced pulp grades suitable for a wide range of end-uses such as tissue, specialty and packaging papers, graphic papers and board. UPM Timber offers certified sawn timber for joinery, packaging, furniture, planing and construction end-use segments.
UPM Energy	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 and producers.
UPM Raflatac	UPM Raflatac offers innovative and sustainable self-adhesive label materials for branding and promotion, information and functional labelling in the food, beverage, personal care, pharmaceutical and logistics segments, for example.
UPM Specialty Papers	UPM Specialty Papers offers labelling and packaging materials as well as office and graphic papers for labelling, commercial siliconising, packaging, office use and printing.
UPM Communication Papers	UPM Communication Papers offers an extensive product range of sustainably produced graphic papers for advertising and publishing as well as home and office uses.
UPM Plywood	UPM Plywood offers high quality WISA® plywood and veneer products for construction, vehicle flooring, LNG shipbuilding, parquet manufacturing and other industrial applications.
Other operations	Other operations include UPM Forest, UPM Biofuels, UPM Biochemicals-, UPM Biomedicals- business units 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 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 the petrochemical industry. UPM Biochemicals offers innovative wood-based biochemicals for replacing fossil-based raw materials in various applications such as textiles, PET bottles, packaging, cosmetics, pharmaceuticals, detergents, rubbers and resins.  UPM Biomedicals is the forerunner in producing nanofibrillar cellulose for clinical and life science applications in the field of drug screening, personalised medicine, advanced cell therapies, 3D bioprinting, tissue engineering and wound care. UPM Biocomposites is a pioneer in circular economy offering composite decking materials based on both recycled consumer and industrial waste. The product range also includes composite materials made from renewable fibres and polymers to replace fossil-based plastics.

Key performance indicators and financial targets

UPM aims to grow its comparable EBIT over the long term. The group

has a portfolio of five businesses that operate on growing markets and

one business that faces declining demand. All of UPM's businesses are

competitive and have strong market positions. Financial target setting,

follow up and allocation of resources in the group’s performance

management process is mainly based on the business area comparable

EBIT and comparable ROCE.

UPM presents comparable performance measures to reflect the

underlying business performance and to enhance comparability

from period to period. However, the comparable performance measures

used by management should not be considered in isolation as a

substitute for measures of performance in accordance with IFRS.

Business area information including description of items affecting

comparability is presented below.

UPM FINANCIAL REPORT 2024	158

Business area information for the year ended 31 December 2024

EURm, OR AS INDICATED	UPM FIBRES	UPM ENERGY	UPM RAFLATAC	UPM SPECIALTY PAPERS	UPM COM PAPERS	UPM PLYWOOD	OTHER OPE- RATIONS	ELIMINATI- ONS AND RECONCILI -ATIONS 2)	GROUP
External sales	3,108	487	1,562	1,272	2,920	409	582	-1	10,339
Internal sales	621	139	—	195	33	21	40	-1,049	—
Total sales	3,728	627	1,562	1,467	2,953	430	623	-1,051	10,339
Comparable EBIT	533	181	132	135	273	42	-52	-20	1,224
Items affecting comparability in operating profit	-114	—	-44	-3	-83	—	-382	7	-620
Operating profit	419	181	88	132	190	42	-434	-13	604
Finance costs, net									-104
Income taxes									-37
Profit for the period									463
Operating assets 1)	7,772	2,562	862	1,036	1,500	275	3,331	-332	17,005
Deferred tax assets									526
Other non-operating assets									62
Other financial assets									1,502
Total assets									19,096
Operating liabilities 1)	422	34	149	274	376	34	394	-308	1,375
Deferred tax liabilities									673
Other liabilities									603
Other financial liabilities									4,906
Total liabilities									7,556
Other items
Change in fair value of forest assets and wood harvested	11	—	—	—	—	—	68	—	80
Share of results of associates and joint ventures	2	—	—	—	—	—	-1	—	1
Depreciation and amortisation	-316	-7	-45	-71	-68	-23	-47	—	-576
Impairment charges	-121	—	-26	-2	-32	—	-380	—	-562
Capital employed, 31 December	7,350	2,527	713	762	1,125	241	2,937	-201	15,452
Average capital employed	7,153	2,426	722	789	1,151	243	3,129	-428	15,184
Capital expenditure	93	4	46	19	37	16	335	—	550
Capital expenditure, excluding acquisitions and shares	93	4	23	19	37	16	335	—	527
Comparable ROCE, %	7.5	7.5	18.3	17.1	23.8	17.1	-1.7	—	8.2
Personnel, 31 December	2,740	91	3,224	1,945	5,190	1,598	1,039	—	15,827

1) Business area’s operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in

associates and joint ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received.

2) Eliminations and reconciliations include the elimination of internal sales and internal inventory margin and the changes in fair value of unrealised cash flow and

commodity hedges that are not allocated to segments.

» Refer Other financial information on Alternative performance measures, for definitions of key figures and reconciliation to measures presented in the

consolidated income statement and balance sheet prepared in accordance with IFRS Accounting Standards.

UPM FINANCIAL REPORT 2024	159

Business area information for the year ended 31 December 2023

EURm, OR AS INDICATED	UPM FIBRES	UPM ENERGY	UPM RAFLATAC	UPM SPECIALTY PAPERS	UPM COM PAPERS	UPM PLYWOOD	OTHER OPE- RATIONS	ELIMINATI- ONS AND RECONCILI -ATIONS 2)	GROUP
External sales	2,452	486	1,485	1,300	3,570	402	768	-3	10,460
Internal sales	592	141	—	185	28	20	34	-1,000	—
Total sales	3,044	628	1,485	1,485	3,598	422	802	-1,003	10,460
Comparable EBIT	116	182	103	98	462	56	-14	8	1,013
Items affecting comparability in operating profit	—	—	-22	—	-288	-6	-87	-2	-405
Operating profit	116	182	81	98	174	50	-101	6	608
Finance costs, net									-144
Income taxes									-71
Profit for the period									394
Operating assets 1)	7,314	2,624	831	1,022	1,619	276	3,374	-411	16,648
Deferred tax assets									431
Other non-operating assets									62
Other financial assets									1,332
Total assets									18,473
Operating liabilities 1)	419	116	144	219	377	29	431	-408	1,328
Deferred tax liabilities									616
Other liabilities									832
Other financial liabilities									4,166
Total liabilities									6,942
Other items
Change in fair value of forest assets and wood harvested	-20	—	—	—	—	—	-82	—	-103
Share of results of associates and joint ventures	2	—	—	—	-1	—	-2	—	-1
Depreciation and amortisation	-270	-7	-43	-74	-78	-21	-44	—	-538
Impairment charges	-2	—	-4	—	-117	—	—	—	-123
Capital employed, 31 December	6,895	2,508	687	803	1,242	246	2,943	-408	14,916
Average capital employed	6,839	3,042	737	875	1,424	254	2,922	321	16,414
Capital expenditure	616	3	26	23	50	15	388	—	1,122
Capital expenditure, excluding acquisitions and shares	616	3	26	23	50	15	361	—	1,094
Comparable ROCE, %	1.7	6.0	14.0	11.2	32.4	22.2	-0.5	—	6.4
Personnel, 31 December	2,775	81	3,100	1,963	6,005	1,634	1,015	—	16,573

1) Business area’s operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in

associates and joint ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received.

2) Eliminations and reconciliations include the elimination of internal sales and the changes in fair value of unrealised cash flow and commodity hedges that are not

allocated to segments.

» Refer Other financial information on Alternative performance measures, for definitions of key figures and reconciliation to measures presented in the

consolidated income statement and balance sheet prepared in accordance with IFRS Accounting Standards.

UPM FINANCIAL REPORT 2024	160

Items affecting comparability

EURm	2024	2023
In operating profit
Impairment charges	-549	-117
Restructuring charges	-103	-199
Change in fair value of unrealised cash flow and commodity hedges	7	-2
Capital gains and losses on sale of non-current assets	29	—
Fair value changes of forest assets	—	-86
Other non-operational items	-4	—
Total	-620	-405
In finance costs	-3	-65
Total in profit before tax	-623	-470
In income taxes
Taxes related to items affecting comparability	133	107
Tax provisions	—	2
Total	133	109
Total in profit for the period	-490	-361

In 2024, items affecting comparability include EUR 373 million

impairment on assets in Biochemicals refinery in Leuna, EUR 5 million

impairment of UPM Biochemicals goodwill, and EUR 113 million

impairment of Pulp operations Finland goodwill. Other items affecting

comparability include EUR 10 million restructuring charges and EUR 26

million impairment charges of fixed assets related to planned closure of

UPM Raflatac Kaltenkirchen factory in Germany, EUR 40 million of

restructuring and impairment charges related to the closure of Hürth

newsprint mill in Germany, EUR 54 million restructuring and impairment

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

Germany, EUR 4 million write down of inventory at the Raflatac mill,

located in Western North Carolina, USA, which was impacted by

Hurricane Helene, EUR 12 million restructuring and impairment charges

related to the closure of the UPM Biocomposites business, a EUR 21

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

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

current assets, EUR 12 million other restructuring costs and EUR 8 million

restructuring costs related to prior capacity closures.

In 2023, items affecting comparability include EUR 120 million

restructuring charges and EUR 112 million impairment charges related to

the closure of the UPM Plattling paper mill in Germany, EUR 30 million

restructuring charges relating to the closure of paper machine 6 at the

UPM Schongau mill in Germany and EUR 15 million restructuring and

impairment charges related to restructuring measures at the UPM

Raflatac Nancy factory in France, EUR 86 million decrease in the fair

value of forest assets in Finland and EUR 10 million charges related to

the sale of the Steyrermühl site in Austria. Items affecting comparability in

finance costs include EUR 71 million exchange rate losses related to the

sale of Russian subsidiaries.

	Accounting policies

Certain non-operational or non-cash valuation transactions with

significant income statement impact are considered as items affecting

comparability and reported separately to reflect the underlying business

performance and to enhance comparability from period to period. The

group applies relevant IFRS Accounting Standards to such transactions.

Effective retrospectively from the start of the year 2024, UPM has

changed its accounting policy related to the materiality thresholds in

items affecting comparability by aligning one threshold to be used in all

business areas. Transactions (incomes or expenses) are considered to be

significant, hence reported as items affecting comparability, in all

business areas if the impact exceeds EUR 1 million pre-tax. In addition,

business acquisition costs  are classified as items affecting comparability

regardless of amount. The change did not have any impact on prior year

figures.

Total assets and capital expenditure by country

	Assets		Capital expenditure
EURm	2024	2023	2024	2023
Finland	8,776	8,633	100	153
Germany	2,128	2,139	335	358
Uruguay	6,213	5,817	58	581
China	603	572	6	4
United States	554	463	16	12
United Kingdom	111	103	3	4
Austria	—	106	—	—
Poland	135	145	2	4
Estonia	51	47	4	1
France	20	27	—	2
Other EU countries	93	54	24	—
Other European countries	36	32	—	—
Rest of world	377	335	2	1
Total	19,096	18,473	550	1,122

Sales by destination country

EURm	2024	2023
Finland	1,306	1,267
Germany	1,073	1,469
United States	1,803	1,366
United Kingdom	513	548
China	1,744	1,533
France	386	435
Uruguay	100	66
Poland	304	301
Austria	110	160
Other EU countries	1,468	1,594
Other European countries	402	306
Rest of world	1,132	1,415
Total	10,339	10,460

UPM FINANCIAL REPORT 2024	161

2.2Sales

UPM generates revenue mainly from the sale of goods, i.e. several types

of products.

The majority of UPM’s revenue comes 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.

The revenue comprises also sales of energy, biofuels, sawn timber and

plywood products and a very limited amount of services not related to

sale of goods.

UPM sells a proportion of its products to several major customers.

The largest customer in terms of sales represented approximately 2%

(2%) of UPM’s sales and the ten largest customers represented

approximately 13% (13%) of such sales.

The group disaggregates its external sales by business area, because

this depicts how the nature, amount, timing and uncertainty of revenue

and cash flows are affected by economic factors. Sales by UPM

business areas are reported consistently, with the internal reporting

provided to UPM’s President and CEO who is responsible for allocating

resources and assessing performance of the business areas. The goods

and services included in sales revenue of each business area are

presented in below tables.

» Refer Note 2.1 Business areas for information on UPM products.

Sales by business area

EURm	2024	2023	CHANGE %
UPM Fibres	3,728	3,044	22 %
UPM Energy	627	628	— %
UPM Raflatac	1,562	1,485	5 %
UPM Specialty Papers	1,467	1,485	-1 %
UPM Communication Papers	2,953	3,598	-18 %
UPM Plywood	430	422	2 %
Other operations	623	802	-22 %
Eliminations	-1,051	-1,003	—
Total	10,339	10,460	-1 %

External sales by major products

BUSINESS AREA	BUSINESS	2024	2023
EUR million
UPM Fibres	UPM Pulp, UPM Timber	3,108	2,452
UPM Energy	UPM Energy	487	486
UPM Raflatac	UPM Raflatac	1,562	1,485
UPM Specialty Papers	UPM Specialty Papers	1,272	1,300
UPM Communication Papers	UPM Communication Papers	2,920	3,570
UPM Plywood	UPM Plywood	409	402
Other operations	UPM Forest, UPM Biofuels, UPM Biochemicals, UPM Biomedicals, UPM Biocomposites	582	768
Eliminations and reconciliations		-1	-3
Total		10,339	10,460

BUSINESS	PRODUCT RANGE
UPM Pulp	Softwood, birch and eucalyptus pulp
UPM Timber	Standard and special sawn timber
UPM Energy	Electricity and related services
UPM Raflatac	Self-adhesive paper and film label stock
UPM Specialty Papers	Labelling materials, release base papers, flexible packaging materials, office papers, graphic papers
UPM Communication Papers	Graphic papers for various end uses
UPM Plywood	Plywood and veneer products
UPM Forest	Wood and wood-based biomass (logs, pulpwood, chips, forest residues etc.), full forestry service offering
UPM Biofuels	Wood-based renewable diesel for transport and renewable naphtha for transport and petrochemicals
UPM Biochemicals	Lignin products for industrial use
UPM Biomedicals	Wood-based products for biomedical applications
UPM Biocomposites	UPM ProFi decking products and UPM Formi granules

UPM FINANCIAL REPORT 2024	162

	Accounting policies

Sales of goods

UPM’s performance obligation in the contracts with customers consists of

providing the goods specified in the contracts. Revenue from UPM’s

product sales is recognised when performance obligation is satisfied,

which takes place at a point in time when control of the good has been

transferred to the customer. In UPM’s customer contracts the transfer of

control and thus timing of revenue recognition is largely dependent on

delivery terms. Group terms of delivery are based on Incoterms 2020,

the official rules for interpretation of trade terms issued by the

International Chamber of Commerce. A major part of the sales contracts

is on delivery terms basis, whereby delivery is not a promised service to

the customer, as the control of a good does not transfer to the customer

before shipment. Revenue and the corresponding receivable are

recorded at the point in time when the product is delivered to the

destination point for terms designated Delivered Duty Paid (“DDP”) or

Delivered at Place (“DAP”). For sales transactions designated free of

carriage (FCA), revenue is recorded at the time of shipment. For sales

transactions designated as Carriage paid to (CPT) or Carriage and

Insurance Paid to (CIP), the portion of revenue relating to goods is

recorded at the time of loading and the portion of revenue relating to

delivery services over time when the service has been performed.

UPM sells energy to NordPool electricity market. Revenue is

recognised when electricity is transmissed over time.

Sales of services

UPM provides forest expertise and contracting services to woodland and

forestry owners and freight services (free space on group’s vessels sold

as freight services). Revenues from services are recorded over time when

the service has been performed. Sales of services is very limited and thus

the group does not report it separately.

Revenue recognition

The group recognises revenue as an amount equal to the price specified

in the customer contract net of any sales taxes, cash flow hedging results

of sales in foreign currency, hedges of energy sales and variable

consideration, when applicable. Variable consideration is defined as

any variability that may occur between the sales price and the amount

UPM expects to receive. The variable consideration includes mainly cash

discounts and volume rebates that encourage the customer to take

specific volumes in a given timescale. In addition, the group gives the

customers the right for purchase price refund in case the products do not

meet the quality as specified in the agreement. The amount of variable

consideration is recognised as a refund liability when some of the

amount received is expected to be refunded to the customer. Customer

rebates payable to customers in relation to sales made until the end of

the reporting period and expected quality claims are estimated using the

expected value method, and revenue is only recognised to the extent that

it is highly probable that a significant reversal will not occur. A refund

liability is included in trade and other payables.

Receivables are recognised when the goods are delivered, and the

consideration is unconditional except for the passage of time. For most of

UPM’s customer contracts the period between the transfer of goods or

services to customers and the receipt of payment is less than 12 months.

For these contracts the group has elected to use the practical expedient

not to adjust revenue for the effect of financing components.

Advance payments received from customers are recognised as

contract liability. UPM does not have any contract assets arising from

contracts with customers.

» Refer Note 4.6 Working capital for information on contract liabilities and

refund liabilities.

2.3Operating expenses and

other operating income

Operating expenses

Operating expenses excluding forest assets fair value change, wood

harvested and share of results of associates and joint ventures are

presented below.

EURm	2024	2023
Costs and expenses
Raw materials, consumables and goods	4,472	6,000
Employee costs 1)	1,179	1,287
Other operating costs and expenses 2)	1,083	1,143
Delivery costs and other external charges	2,072	886
Total	8,806	9,316

1) » Refer Note 3 Employee rewards, for further information.

2) Distribution of other operating costs and expenses

EURm	2024	2023
Rents and lease expenses	21	23
Emission expenses 1)	64	18
Losses on sale of non-current assets	0	6
Credit losses	10	4
Maintenance and other operating expenses 2)	988	1,092
Total	1,083	1,143

1) Emission expenses include gains on sales of emission rights EUR 2 million (EUR

49 million).

2) Other operating expenses include, among others, energy as well as expenses

related to services and group’s administration.

UPM FINANCIAL REPORT 2024	163

Auditor’s fees

EURm	2024*	2023*
Audit fee	4.5	4.4
Audit related services	0.6	0.2
Tax services	0.6	0.3
Other services	0.1	0.1
Total	5.8	5.0

*) In 2024 auditor's fees were paid to Ernst & Young and in 2023 auditor's

fees were paid to PricewaterhouseCoopers.

In 2024, auditor's fees include EUR 0.6 million related to audit related services,

EUR 0.4 million related to tax services and EUR 0.0 million related to other

services paid to Ernst & Young Oy. The assurance fee EUR 0.3 million related to

sustainability reporting is presented as a part of audit related services. The

respective fees in 2023 were EUR 0.2 million, EUR 0.3 million and EUR 0.1

million paid to PricewaterhouseCoopers Oy.

Research and development costs

The research and development costs included in operating expenses

were EUR 70 million (66 million) in 2024. The focus was on new

technologies and developing businesses.

Government grants

In 2024, government grants recognised as deduction of operating

expenses totalled to EUR 31 million (16 million) of which EUR 31 million

(16 million) relates to Finland. In addition, the group received emission

rights from governments amounting to EUR 92 million (154 million) of

which EUR 40 million (65 million) relates to Finland, EUR 40 million

(79 million) to Germany, EUR 10 million (0 million) to China and EUR 2

million (4 million) to UK.

In addition, the company receives electricity price compensation in

Germany and Finland. The group considers that the conditions related to

subsidies have been met. Accordingly, the subsidies have been recorded

as income for the period when the subsidy has been received. The

authorities monitor the use of subsidies afterwards.

Other operating income

EURm	2024	2023
Gains on sale of non-current assets	31	8
Rental income	9	10
Emission rights received	92	154
Derivatives, non-qualifying hedges	-25	4
Exchange rate gains and losses	-9	-35
Other	31	88
Total	130	228

Emission rights

The group has recognised EUR 92 million (154 million) of income in

Other operating income and EUR 64 million of expense (18 million)

under Other operating costs and expenses relating to CO2 emissions.

The liability to cover the obligation to return emission rights amounted to

EUR 66 million (56 million) and is recognised in provisions. The emission

rights recognised in intangible assets are specified below:

EURm	2024	2023
Carrying value, at 1 January	256	235
Emission rights received and purchased	96	159
Deliveries and disposals	-84	-134
Impairment	-5	-3
Reclassifications to assets held for sale	—	-1
Carrying value, at 31 December	264	256
Accumulated costs	272	260
Accumulated impairments	-8	-4
Carrying value, at 31 December	264	256

	Accounting policies

Research and development costs

Research and development costs are expensed as incurred, except for

certain development costs, which are capitalised as they generate future

economic benefits, and UPM can the measure the cost reliably.

Capitalised development costs are amortised on a systematic basis over

their expected useful lives, usually not exceeding five years.

UPM FINANCIAL REPORT 2024	164

Government grants

Government grants are recognised at fair value where there is a

reasonable assurance that the grant will be received and the group will

comply with the attached conditions. Government grants relating to the

purchase of property, plant and equipment are deducted from the

acquisition cost of the asset and accordingly directly reduce the annual

depreciation of the underlying asset. Other government grants are

recognised in the income statement in the period necessary to match

them with the costs they are intended to compensate. A government

grant can also become receivable by the group as compensation for

expenses incurred in a previous period. Such a grant is recognised in

profit or loss of the period in which it becomes receivable.

Other operating income

Other operating income mainly includes gains on the disposal of non-

current assets and rental income. Further, other operating income

includes foreign exchange gains and losses in respect of UPM’s normal

business activities. Gains and losses on derivatives not qualifying hedge

accounting are also recognised in other operating income.

Emission rights

The group participates in the European Emissions Trading Scheme aimed

at reducing greenhouse gas emissions. In addition, the group

participates in the Chinese national emissions trading scheme. Emission

rights received from governments free of charge to emit a fixed tonnage

of carbon dioxide in a fixed period of time give rise to an intangible

asset for the emission rights, a government grant and a liability for the

obligation to deliver emission rights equal to the emissions that have

been made during the compliance period.

Emission rights are initially recognised as intangible assets based on

market value at the date of initial recognition. Emission rights are not

amortised. If the market price of emissions rights at the balance sheet

date is less than the recognised costs, any surplus emission rights that are

not required to cover actual and estimated emissions during the financial

year, are impaired to the market price.

Government grants are recognised as deferred income in the balance

sheet at the same time as emission rights and are recognised in other

operating income in the income statement, systematically, over the

compliance period to which the corresponding emission rights relate.

The liability to deliver emission rights is recognised based on actual

emissions. The emissions realised are expensed under other operating

costs and expenses in the income statement and presented as a provision

in the balance sheet. The liability is settled using emission rights on hand,

measured at the carrying amount of those emission rights. Emission rights

and associated provisions are derecognised when disposed. Any profit

or loss represents the costs of purchasing additional rights to cover

excess emissions, the sale of unused rights in the case realised emission

are under emission rights received free of charge or the impairment of

unused emission rights.

2.4Earnings per share and dividend

According to UPM dividend policy, the company aims to pay attractive

dividends, targeting at least half of the comparable earnings per share

over time.

The dividend paid in 2024 was EUR 800 million (EUR 1.50 per

share) which is 35% of the operating cash flow per share and in 2023

EUR 800 million (EUR 1.50 per share). The Board of Directors proposes

to the Annual General Meeting that a dividend of EUR 800 million, EUR

1.50 per share, will be paid in respect of 2024. The proposed dividend

represents 86% of UPM's comparable earnings per share for the year

2024.

Earnings per share

EURm	2024	2023
Profit attributable to owners of the parent company, EURm	436	388
Weighted average no. of shares (1,000)	533,324	533,324
Basic earnings per share, EUR	0.82	0.73
Diluted earnings per share, EUR	0.82	0.73

	Accounting policies

Earnings per share

Earnings per share (EPS) is the amount of profit for the period

attributable to each share. The basic earnings per share are computed

using the weighted average number of shares outstanding during the

period. Diluted earnings per share are computed using the weighted

average number of shares outstanding during the period plus the dilutive

effect of share options. The group did not have share-option schemes at

the end of 2024 and 2023.

Dividend

Dividend distribution to the owners of the parent company is recognised

as a liability in the Group’s consolidated financial statements in the

period in which the dividends are approved by the parent company’s

shareholders.

UPM FINANCIAL REPORT 2024	165

3.Employee rewards

3.1Employee costs

EURm	2024	2023
Salaries and fees	937	1,039
Share-based payments	16	15
Pension and other post-employment benefits, defined benefit plans	19	21
Pension costs, defined contribution plans	101	101
Other indirect employee costs 1)	106	111
Total	1,179	1,287

1) Other indirect employee expenses primarily include other statutory social

expenses, excluding pension expenses.

3.2Key management personnel

The remuneration of the Chair of the Board of Directors was resolved to

be raised so that the Chair of the Board was paid an annual base fee of

EUR 231,000, the Deputy Chair of the Board EUR 145,000 and the

other members of the Board EUR 120,000.

The annual base fee was paid in company shares and cash so that

approximately 40% of the fee was paid in the company shares

purchased on the Board members’ behalf, and the rest in cash. The

company paid any costs and transfer tax related to the purchase of the

company shares.

The remuneration of the Audit Committee was resolved to be raised

and other annual committee fees remained unchanged. The Chair of

Audit Committee received annual committee fee of EUR 45,000, the

Chair of Nomination and Governance Committee EUR 20,000 and the

Chair of Remuneration Committee EUR 27,500. The members of the

Audit Committee received an annual committee fee of EUR 25,000 and

members of other committees EUR 10,000. The annual committee fees

were paid in cash.

In 2024, 2,816 (3,027) company shares were purchased to the

Chair, 1,767 (2,013) to the Deputy Chair and 1,462 (1,666) to other

members of the Board.

Shareholdings (no. of shares) and fees of the Board of Directors

	Shareholdings 31 December		Annual base fee (EUR 1,000)		Annual committee fee (EUR 1,000)
	2024	2023	2024	2023	2024	2023
Board members
Henrik Ehrnrooth, Chair	30,304	17,488	231	218	20	20
Kim Wahl, Deputy Chair	29,729	27,962	145	145	10	35
Pia Aaltonen-Forsell	3,128	1,666	120	120	45	15
Melanie Maas-Brunner 1)	1,462	—	120	—	10	—
Jari Gustafsson	5,964	4,502	120	120	25	10
Piia-Noora Kauppi	27,163	25,701	120	120	10	10
Topi Manner	7,929	3,097	120	120	10	10
Marjan Oudeman	12,722	11,260	120	120	25	15
Martin à Porta	27,972	26,510	120	120	28	28
Emma FitzGerald 2)	—	3,097	—	120	—	10
Total	146,373	121,283	1,216	1,203	183	153

1) Melanie Maas-Brunner, was elected as a new director to the Board in 2024

2) Emma FitzGerald, member of the Board of Directors until 4 April 2024

UPM FINANCIAL REPORT 2024	166

Salaries and benefits paid to the President and CEO and the Group Executive Team

	President and CEO 1)		Other members of Group Executive Team2)
EUR 1,000	2024	2023	2024	2023
Salaries	894	1,161	3,736	3,950
Short-term incentives	363	1,473	996	2,973
Share rewards	125	2,902	2,871	9,242
Benefits	36	24	146	139
Total	1,418	5,561	7,748	16,304

1) Massimo Reynaudo was appointed as President and CEO of UPM-Kymmene Corporation as of 1 January 2024. Jussi Pesonen continued as the President and CEO

until 31 December 2023.

2) Group Execurive Team was composed of 10-11 members in addition to CEO during 2024 and 2023.

In October 2023, Massimo Reynaudo was appointed as President and

CEO of UPM-Kymmene Corporation as of 1 January 2024. Jussi

Pesonen continued as the President and CEO until 31 December 2023,

after which he worked as an advisor to the Company and its

management until he retired from UPM on 30 April, 2024.

In 2024, costs under the Finnish statutory pension scheme for the

President and CEO amounted to EUR 220,000 (469,000) and

payments under the voluntary pension plan amounted to EUR 190,000

(911,000).

In 2024 , costs under the Finnish and German statutory pension

schemes for Group Executive Team (GET) members (excluding the

President and CEO) amounted to EUR 731,000 (881,000) and

payments under the voluntary pension plan amounted to EUR 671,000

(994,000).

The remuneration of the President and CEO and other members of

the Group Executive Team consists of the base salary and benefits, short-

term incentive and long-term share-based incentive.

In 2024 and 2023, the short-term incentives were based on the

company's Short-Term Incentive Plan and they are paid annually in cash.

The amount of the incentive is linked to the executive's position and

achievement of annually set targets. The maximum incentives amount to

a total of 110% of the annual base salary to the Business Area

Executives and to a total of 90% of annual base salary to the other

members of the Group Executive Team. For the President and CEO, the

maximum annual incentive amounts to 150% of the annual base salary.

The expenses recognised in income statement in respect of share-

based payments for the Group Executive Team were EUR 2.8 million

(4.3 million).

The UPM’s President and CEO Massimo Reynaudo's retirement age

is 65 years. He has a voluntary pension benefit to supplement the

Finnish statutory pension scheme (TyEL). The voluntary pension benefit is

arranged through a defined contribution plan. Should the company give

notice of termination of the President and CEO Massimo Reynaudo's

service agreement, severance pay of 12 months base salary will be

paid in addition to the salary for the 12-month notice period. Should the

President and CEO give notice of termination to the company, no

severance pay will be paid in addition to the salary for the notice

period.

The former President and CEO Jussi Pesonen had a voluntary pension

benefit in addition to the Finnish statutory pension scheme. This voluntary

pension benefit was arranged through a defined benefit plan until the

end of November 2020. The last contribution to the defined benefit plan

was made in 2020. Under the defined benefit plan, the target pension

was 60% of the average indexed earnings from the last ten full calendar

years of employment calculated according to the Finnish statutory

pension scheme. The income of the former President and CEO Jussi

Pesonen’s defined benefit pension plan in 2024 was EUR 0.9 million

(0.7 million). In 2024, the pension plan was fully settled, reducing both

plan assets (EUR 10.4 million in 2023) and obligations (EUR 9.7 million

in 2023) to EUR 0 million. As of December 2020, the voluntary pension

benefit was arranged through a defined contribution plan for the former

President and CEO.

The retirement age of other members of the Group Executive Team is

65 or 63 for executives who have become Group Executive Team

members before December 2023. They are covered by the statutory

pension plan in the country of residence, supplemented by voluntary

defined contribution pension plans. For other GET members, the period

for severance pay is 12 months, in addition to the six months’ salary for

the notice period, unless notice is given for reasons that are solely

attributable to the executive. Should a GET member give notice of

termination to the company, no severance pay will be paid in addition

to the salary for the notice period.

If there is a change of control in the company, the President and

CEO may terminate his service agreement within three months and each

GET member within one month from closing the takeover and shall

receive compensation equivalent to 24 months' base salary.

UPM FINANCIAL REPORT 2024	167

3.3Share-based payments

UPM offers rewards and recognition with an emphasis on high

performance. All UPM’s employees belong to a unified annual Short-

Term Incentive (STI) scheme. In addition, in 2024 UPM had three long-

term incentive schemes: the Performance Share Plan (PSP) for senior

executives, the Deferred Bonus Plan (DBP) for other key employees and

Restricted Share Plan (RSP) for individually selected participants in

specific recruitment and retention situations. In 2023, UPM had two

long-term incentive schemes as the Restricted Share Plan was established

in 2023 and the first plan was approved for the period 2024–2027.

Performance Share Plan

The Performance Share Plan (PSP) is targeted at the President and CEO

and other Group Executive Team (GET) members as well as other

selected members of the management. Under the PSP 2021–2023 UPM

shares are awarded based on total shareholder return during a three-

year earning period. Total shareholder return takes into account share

price appreciation and paid dividends. The performance measures for

the PSP 2022–2024, PSP 2023–2025 and PSP 2024-2026 comprise

the total shareholder return (80% weighting) and selected environmental,

social and governance related (ESG) measures. In all plans, the earned

shares are delivered after the earning period has ended.

PERFORMANCE SHARE PLANS	PSP 2021-2023	PSP 2022-2024	PSP 2023-2025	PSP 2024-2026
No. of participants at 31 December 2024	21	17	17	25
Actual achievement	34.62%	—	—	—
Max no. of shares to be delivered 1)
to the President and CEO	28,829	30,000	29,000	72,952
to other members of GET	89,562	150,500	146,000	204,000
to other selected members of management	42,272	105,500	93,500	158,000
Total max no. of shares to be delivered	160,663	286,000	268,500	434,952
Share delivery (year)	2024	2025	2026	2027
Earning criteria (weighting)	Total shareholder return (100%)	Total shareholder return (80%) ESG (20%) 2)	Total shareholder return (80%) ESG (20%) 3)	Total shareholder return (80%) ESG (20%) 4)

1) For PSP 2021–2023, the gross number of shares actually earned.

2) ESG measures are reduction of fossil CO₂ emissions from UPM’s own combustion and purchased electricity by 65% by 2030 from 2015 level (10% weighting),

achievement of a net positive impact on biodiversity in the company’s own forests in Finland (5% weighting) and achievement of gender pay equity (5% weighting).

3) ESG measures are reduction of fossil CO2 emissions from UPM’s on-site combustion and purchased energy by 65% by 2030 from 2015 level (10% weighting),

achievement of a net positive impact on biodiversity in the company’s own forests in Finland (5% weighting) and achievement of gender pay equity (5% weighting).

4) ESG measures are reduction of fossil CO₂ emissions from UPM’s on-site combustion and purchased energy, the achievement of a net positive impact on biodiversity

in the Company’s own forests in Finland and the achievement of gender pay equity globally.

Deferred Bonus Plan

The Deferred Bonus Plan (DBP) is targeted at other selected key

employees and it consists of annually commencing plans. Each plan

consists of a one-year earning period and a two-year restriction period.

UPM shares are awarded based on achievement of group or group and

business area EBITDA targets. Prior to share delivery, the share rewards

earned are adjusted with dividends and other capital distributions, if

any, paid to all shareholders during the restriction period.

DEFERRED BONUS PLANS	DBP 2021	DBP 2022	DBP 2023	DBP 2024
No. of participants (at grant)	428	451	446	453
No. of participants (at 31 December 2024)	350	369	120	436
Max no. of shares to be delivered (at grant)	459,912	487,130	477,052	571,338
Estimated no. of shares to be delivered at 31 December 2024 1)	355,032	382,038	57,876	191,209
Share delivery (year)	2024	2025	2026	2027
Earning criteria	Group/Business Area EBITDA	Group/Business Area EBITDA	Group/Business Area EBITDA	Group/Business Area EBITDA

1) For DBP 2021, the gross number of shares actually earned

UPM FINANCIAL REPORT 2024	168

Restricted Share Plan

The Restricted Share Plan (RSP) is used as a commitment instrument for

individually selected participants in specific recruitment and retention

situations. The Restricted Share Plan is targeted at the President and

CEO, the other Group Executive Team members and the other selected

members of the senior management. The President and CEO is not

eligible to receive a reward from this Plan for retention purposes. Each

plan consists of a one-year grant period and a three-year vesting period

during which share rewards are delivered in instalments to the

participants. The first instalment of the reward shall be delivered no

earlier than one year after the date the participant was nominated to the

Plan. No earning criteria is applied to the Restricted Share Plan and the

delivery of the share reward is subject to the continuation of the

employment or service.

RESTRICTED SHARE PLAN	RSP 2024-2027
No. of participants (at 31 December 2024)	11
Estimated no. of shares to be delivered at 31 December 2024 1)	238,340
Share delivery (year)	2025, 2026, 2027*

1) Share delivery in annual instalments

The indicated actuals and estimates of the share rewards under the

Performance Share Plan, the Deferred Bonus Plan and the Restricted

Share Plan represent the gross amount of the rewards of which the

applicable taxes will be deducted before the shares are delivered to the

participants.

	Accounting policies

The group’s long-term share incentive plans are recognised as equity-

settled or cash-settled share-based payment transactions depending on

the settlement. The group classifies the transactions with net settlement

features for tax obligations as equity-settled in its entirety. Shares are

valued using the market rate on the grant date. The settlement is a

combination of shares and cash. The group may obtain the necessary

shares by using its treasury shares or may purchase shares from the

market. Share deliveries are executed by using already existing shares

and the plans, therefore, have no dilutive effect.

UPM FINANCIAL REPORT 2024	169

3.4Retirement benefit obligations

The group operates various pension schemes in accordance with local

conditions and practices in the countries of operations. Retirement

benefits are employee benefits that are payable usually after the

termination of employment, such as pensions and post-employment

medical care.

The pension plans are generally funded through payments to

insurance companies or to trustee-administered funds or foundations and

classified as defined contribution plans or defined benefit plans.

Defined benefit assets and liabilities recognised in the balance sheet

are presented below:

	2024					2023
EURm	FINLAND	UK	GERMANY	OTHER COUN- TRIES	TOTAL	FINLAND	UK	GERMANY	OTHER COUN- TRIES	TOTAL
Present value of funded obligations	14	305	—	2	321	26	320	30	2	377
Fair value of plan assets	-15	-275	-2	-2	-293	-26	-297	-2	-2	-327
Deficit (+)/surplus (–)	0	30	-2	0	28	0	23	27	0	50
Present value of unfunded obligations	—	—	431	15	446	—	—	417	16	434
Net defined benefit liability (+)/ asset (–)	0	30	429	15	474	0	23	445	16	484
Net retirement benefit asset in the balance sheet	-1	—	—	—	-1	-1	—	—	—	-1
Net retirement benefit liability in the balance sheet 1)	0	30	429	15	475	0	23	445	16	485

1) Net retirement benefit liability in the balance sheet includes other long-term employee benefits of EUR 22 million (17 million) in 2024.

UPM's most significant defined benefit arrangements are in the UK and

in Germany. The group has defined benefit obligations also in Finland,

the Netherlands, France, Canada and in the US. In 2024, one defined

benefit plan in Finland was fully settled reducing both plan assets (EUR

10.4 million in 2023) and obligations (EUR 9.7 million in 2023) to EUR

0 million. In 2023, net retirement benefit liability of EUR 36 million of

UPM-Kymmene Austria GmbH was presented in liabilities related to

assets held for sale, and consisted of unfunded obligations.

Finland

In Finland, employers are obliged to insure their employees for statutory

benefits, as determined in Employee’s Pension Act (TyEL). TyEL provides

the employee with insurance protection for old age, disability and death.

The group's Finnish employees are mainly insured with an insurance

company and these arrangements qualify as defined contributions plans. 

UK

In the UK, the group operates a legacy defined benefit scheme providing

benefits that are linked to the salary level near retirement age or an

earlier date of leaving service. The scheme is closed both for new

members and future accrual for old members. Part of the scheme is a

defined contribution plan and is open to all current employees. The UK

pension scheme operates under a single trust which is independent from

the group.

Germany

In Germany, employees within defined benefit arrangements are entitled

to annual pensions on retirement based on their service and final salary.

All significant defined benefit plans are closed for new employees.

UPM FINANCIAL REPORT 2024	170

Present value of obligation and fair value of plan assets

	Pension and other post-employment benefits 2024			Pension and other post-employment benefits 2023
EURm	PRESENT VALUE OF OBLIGATION	FAIR VALUE OF PLAN ASSETS	NET DEFINED BENEFIT LIABILITY/ (ASSET)	PRESENT VALUE OF OBLIGATION	FAIR VALUE OF PLAN ASSETS	NET DEFINED BENEFIT LIABILITY/ (ASSET)
Carrying value, at 1 January	810	-327	484	850	-340	510
Current service cost	4	—	4	5	—	5
Past service cost	—	—	—	-1	—	-1
Gains and losses arising from settlements	-1	—	-1	—	—	—
Interest expense (+) income (–)	30	-14	16	32	-15	17
Total included in employee costs (Note 3.1)	33	-14	19	36	-15	21
Actuarial gains and losses arising from changes in demographic assumptions	-1	—	-1	-13	—	-13
Actuarial gains and losses arising from changes in financial assumptions	-28	—	-28	9	—	9
Actuarial gains and losses arising from experience adjustments	-12	—	-12	12	—	12
Return on plan assets, excluding amounts included in interest expense (+) income (–)	—	34	34	—	6	6
Total remeasurement gains (–) and losses (+) included in other comprehensive income	-41	34	-7	7	6	14
Benefits paid	-52	52	—	-44	44	—
Settlements paid	—	—	—	-9	9	—
Contributions by the employer	—	-24	-24	—	-25	-25
Translation differences	16	-15	1	6	-6	—
Liabilities classified as held for sale (Note 8.4)	—	—	—	-36	—	-36
Carrying value, at 31 December	767	-293	474	810	-327	484

	Actuarial risks

Defined benefit plans typically expose the group to the following

actuarial risks:

Investment risk (asset volatility)

The group is exposed to changes of assets’ values especially in the UK.

The asset values of UK arrangements constitute 94% of total asset values

in defined benefit plans within group.

Interest risk

Discount rates used in calculations are based on high-quality corporate

bond yield curves in currency in which the benefits are paid. A decrease

in the discount rate would increase the plan liabilities. The maturities of

yields are reflecting the durations of the underlying obligations. The

weighted average duration of group’s defined benefit obligation is 13

years (14 years) at the end of 2024.

Inflation risk

In the UK, the pensions in payment are tied to Retail Price Index whilst

being tied to Consumer Price Index during deferment. An increase of

0.5% in indexes will increase the liabilities by approximately EUR 11

million. In Germany the pensions have to be adjusted in accordance with

the Consumer Price Index.

Salary risk

The present value of the net retirement benefit assets and liabilities is

calculated by reference to the expected future salaries of plan

participants. An increase in the salary of the plan participants would

increase the plan liabilities. In the UK, the changes in salary levels have

no impact on the funding position as all defined benefit arrangements in

the UK are closed to future accrual. In Germany, an increase of 0.5% in

expected future salaries would increase the obligation by EUR 5 million.

Life expectancy

Adjustments in mortality assumption have an impact on group’s defined

benefit obligation. An increase in life expectancy by one year will

increase the obligation in the UK by EUR 11 million and in Germany by

EUR 16 million.

UPM FINANCIAL REPORT 2024	171

	Key estimates and judgements

Several actuarial assumptions are used in calculating the expense

and liability related to the defined benefit plans. Statistical information

used may differ materially from actual results due to, among others,

changing market and economic conditions, or changes in service period

of plan participants. Significant differences in actual experience or

significant changes in assumptions may affect the future amounts of the

defined benefit obligation and future expense.

Actuarial assumptions

The weighted average principal assumptions used in the valuations of the defined benefit obligations are detailed below:

	FINLAND		UK		GERMANY		OTHER COUNTRIES
	2024	2023	2024	2023	2024	2023	2024	2023
Discount rate %	2.85	3.11	5.45	4.55	3.22	3.26	4.30	4.16
Inflation rate %	1.90	2.13	3.20	3.10	2.00	2.00	2.02	2.28
Rate of salary increase %	1.89	1.89	—	—	2.31	2.50	2.50	2.50
Rate of pension increase %	—	1.44	3.10	3.00	2.31	2.00	2.50	2.50
Expected average remaining working years of participants	0.0	1.0	8.3	8.8	7.8	8.1	8.6	11.5

EURm	0.5% INCREASE		0.5% DECREASE
	2024	2023	2024	2023
Discount rate %	-46	-50	50	54
Rate of salary increase %	5	6	-5	-6
Rate of pension increase %	33	40	-32	-37
Life expectancy +1 year	28	29	—	—

A negative change indicates a decrease in the defined benefit obligation.

A positive change indicates an increase in the defined benefit obligation.

Plan assets by categories at 31 December

EURm	2024		2023
	Quoted	Unquoted	Quoted	Unquoted
Money market	49	—	49	2
Debt instruments	131	9	129	32
Equity instruments	50	—	3	45
Property	—	21	—	21
Assets held by insurance companies	—	14	—	30
Other assets	—	19	—	15
Total	230	63	182	145

In 2024, plan assets include the company's ordinary shares with a fair value of

EUR 0 million (0 million).

In 2025, contributions of EUR 25 million are expected to be paid to

group’s defined benefit plans. In 2024, contributions of EUR 23 million

were paid to group’s defined benefit plans.

Sensitivity analysis of defined benefit obligations

The sensitivity analysis shows the effect of the change in assumption. The

analysis assume that all other assumptions remain unchanged.

The projected unit credit method has been applied when calculating

the obligation as well as these sensitivities.

UPM FINANCIAL REPORT 2024	172

	Accounting policies

Defined benefit pension plans

Plan benefits depend on salary and length of service. The defined benefit

obligations are calculated annually by independent actuaries using the

projected unit credit method. The present value of the defined benefit

obligation is determined by discounting the estimated future cash

outflows using interest rates of high-quality corporate bonds that are

denominated in the currency in which the benefits will be paid and that

have terms to maturity approximating the term of the related pension

liability. The liability recognised in the balance sheet in respect of

defined benefit pension plans is the present value of the defined benefit

obligation at the balance sheet date less the fair value of plan assets.

The cost of providing pensions is charged to the income statement as

employee costs so as to spread the cost over the service lives of

employees. Changes in actuarial assumptions and actuarial gains and

losses arising from experience adjustments are charged or credited in

other comprehensive income in the period in which they arise. Past

service costs and gains or losses on settlement are recognised

immediately in income when they occur.

Defined contribution plans

For defined contribution plans, contributions are paid to pension

insurance companies. Once the contributions have been paid, there are

no further payment obligations. Contributions to defined contribution

plans are charged to the income statement in the period to which the

contributions relate.

Other post-employment obligations

Some group companies provide post-employment medical and other

benefits to their retirees. The entitlement to healthcare benefits is usually

conditional on the employee remaining in service up to retirement age

and the completion of a minimum service period. The expected costs of

these benefits are accrued over the period of employment, using an

accounting methodology similar to that for defined benefit pension plans.

Valuations of these obligations are carried out by independent qualified

actuaries.

4.Capital employed

UPM’s capital employed primarily relates to its production facilities and

both forest and energy assets. UPM aims to capture growth opportunities

in its existing business portfolio and invest in projects with attractive and

sustainable returns.

Capital employed

EURm	2024	2023
Property, plant and equipment	7,085	7,053
Leased assets	847	683
Forest assets	2,517	2,355
Energy shareholdings	2,247	2,283
Goodwill and other intangible assets	754	998
Operating working capital	2,161	1,883
Provisions	-253	-266
Net retirement benefit assets and liabilities	-496	-501
Cash and cash equivalents	892	632
Other assets and liabilities	-154	-69
Net deferred tax assets and liabilities	-146	-185
Assets classified as held for sale, net	0	50
Total	15,452	14,916

UPM FINANCIAL REPORT 2024	173

4.1Property, plant and equipment

EURm	LAND AND WATER AREAS	BUILDINGS	MACHINERY AND EQUIPMENT	OTHER TANGIBLE ASSETS	CONSTRUC- TION IN PROGRESS	TOTAL
2024
Accumulated costs	954	4,699	14,693	821	1,224	22,390
Accumulated depreciation and impairments	—	-2,601	-11,688	-642	-373	-15,305
Carrying value, at 31 December	954	2,098	3,005	178	850	7,085
Carrying value, at 1 January	861	2,073	3,019	175	925	7,053
Additions	44	—	3	—	462	508
Companies acquired	7	6	2	1	—	16
Disposals	-2	—	-1	—	—	-3
Depreciation	—	-101	-339	-21	—	-461
Impairment	—	-32	-28	-1	-373	-435
Reclassifications 1)	1	55	230	16	-167	136
Translation differences and other changes	43	98	119	8	4	272
Carrying value, at 31 December	954	2,098	3,005	178	850	7,085
2023
Accumulated costs	862	4,766	14,771	891	925	22,216
Accumulated depreciation and impairments	-2	-2,693	-11,752	-716	—	-15,163
Carrying value, at 31 December	861	2,073	3,019	175	925	7,053
Carrying value, at 1 January	900	1,054	1,638	148	2,993	6,733
Additions	2	—	5	—	1,067	1,074
Companies acquired	—	—	—	—	—	1
Disposals	—	-1	—	—	—	-2
Depreciation	—	-92	-310	-19	—	-422
Impairment	—	-3	-15	-3	—	-20
Reclassifications 1)	—	1,135	1,723	53	-3,052	-141
Reclassifications to assets held for sale 2)	-17	-1	-1	-1	—	-21
Translation differences an other changes	-23	-19	-20	-3	-84	-149
Carrying value, at 31 December	861	2,073	3,019	175	925	7,053

1) Reclassifications in 2024 and 2023 relate to final classification of assets in the Uruguay pulp mill investment. » Refer note 4.4 Goodwill and other intangible assets.

2) Reclassification to assets held for sale in 2023 relates to agreement to sell 100% of the shares of the Austrian subsidiary UPM-Kymmene Austria GmbH.

Capital expenditure

Capital expenditure, excluding acquisitions and shares, amounted to

EUR 527 million (1,094 million) in 2024.

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

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

commissioning and start-up was initiated in late 2024, and the total

investment estimate is EUR 1,275 million.

Capitalised borrowing costs

In 2024, the borrowing costs capitalised as part of non-current assets

amounted to EUR 29 million (38 million). Amortisation of capitalised

borrowing costs was EUR 1 million (2 million) and the average interest

rate used 3.04% (3.00%), which represents the average costs to finance

the projects. In 2024, capitalised borrowing costs were related to the

construction of the biochemicals biorefinery in Germany. In 2023,

capitalised borrowing costs were related to the construction of the pulp

mill in Uruguay and biochemicals biorefinery in Germany.

Government grants

In 2024, government grants recognised as deduction of non-current

assets totalled to EUR 3 million (7 million).

Major capital commitments at 31 December

EURm	2024	2023
New biorefinery / Germany	177	363

Impairment losses

In 2024, impairment charges relate to the closure of UPM Hürth mill,

closure of paper machine 3 at Nordland in Germany, planned closure of

Kaltenkirchen factory in Germany and property, plant and equipment of

Leuna biorefinery. In December 2024, the group conducted the

impairment test of UPM Biochemicals CGU resulting to impairment of the

entire goodwill of EUR 5 million and impairment of EUR 373 million of

property, plant and equipment. Refer Note 4.4 Goodwill and other

intangible assets.

UPM FINANCIAL REPORT 2024	174

In 2023, impairment charges mainly relate to the closure of UPM

Plattling mill in Germany.

	Accounting policies

Property, plant and equipment

Property, plant and equipment is stated at historical cost. Costs of assets

of acquired in business combinations are determined at fair value at the

acquisition date. Depreciation is calculated on a straightline basis and

the carrying value is adjusted for impairment charges, if any. The

carrying value of property, plant and equipment on the balance sheet

represents the cost less accumulated depreciation and any impairment

charges.

Borrowing costs incurred for the construction of any qualifying assets

are capitalised during the period of time required to complete and

prepare the asset for its intended use. Other borrowing costs are

expensed.

Major renovations are capitalised and depreciated over the useful

lives of the related asset. Ordinary expenses for repairs and

maintenance are expensed as incurred.

Gains and losses on disposals are determined by comparing the

disposal proceeds with the carrying amount and are included in other

operating income and other operating expenses, respectively.

ASSESSED USEFUL LIVES	NUMBER OF YEARS
Land, not subject to depreciation	-
Buildings	20-50
Power plants	20-30
Heavy machinery	15-20
Light machinery	10-15
Equipment	5

Impairment testing

Carrying values of individual items included in property, plant and

equipment are reviewed at each closing date to determine whether there

is any indication of impairment. The carrying value is written down

immediately to the asset’s recoverable amount if the carrying value

exceeds the estimated recoverable amount. Assets that have an indefinite

useful life are not subject to amortisation and are tested annually for

impairment. The recoverable amount is determined as the higher of an

asset’s fair value less costs to sell and its value in use. Value in use is

determined by discounting future cash flows expected to be generated

by the asset. For the purposes of assessing impairment, assets are

grouped at the lowest levels for which there are separately identifiable

cash flows (cash-generating units).

Non-financial assets, other than goodwill, that have suffered

impairment are reviewed for possible reversal of the impairment at each

reporting date. Where an impairment loss is subsequently reversed, the

carrying amount of the asset is increased to the revised estimate of its

recoverable amount, but the increased carrying amount will not exceed

the carrying amount that would have been determined had no

impairment loss been recognised for the asset in prior years.

	Key estimates and judgements

The estimations of useful lives, residual value as well as depreciation and

amortisation methods require significant management judgement and are

reviewed annually. Management makes estimates on the future cash

flows expected to result from the use of the asset and its eventual

disposal. While management believes that estimates of future cash flows

are reasonable, different assumptions regarding such cash flows could

materially affect valuations.

The long useful lives of assets, changes in estimated future sales

prices of products, changes in product costs and changes in the discount

rates used could lead to significant impairment charges.

Estimates are also made in an acquisition when determining the fair

values and remaining useful lives of acquired intangible and tangible

assets.

UPM FINANCIAL REPORT 2024	175

4.2Forest assets

UPM is both a major forest owner and a purchaser of wood. The value

of forest assets, i.e. standing trees, amounted to EUR 2,517 million

(2,355 million) at the end of 2024.

EURm	2024	2023
Carrying value, at 1 January	2,355	2,442
Additions	54	50
Disposals	-21	-10
Wood harvested	-218	-184
Net change in fair value	299	81
Translation differences	48	-25
Carrying value, at 31 December	2,517	2,355

Change in fair value, change due to harvesting and gains or losses on

sale of forest assets are recognised in the income statement as a net

amount amounting to EUR 80 million (-103 million) in 2024. In 2024,

the fair value of forest assets in Finland was impacted by higher long

term stumpage price estimates. In 2023, the change in fair value of

forest assets in Finland was impacted by higher discount rate which was

partly offset by higher stumpage price estimates.

Forest assets

EURm	2024	2023
Forest assets in Finland	1,695	1,621
Forest assets in Uruguay	807	720
Forest assets in United States	15	13
Carrying value, at 31 December	2,517	2,355

Forest land

Forest land is included in land and water areas within property, plant

and equipment. » Refer Note 4.1 Property, Plant and equipment. At the

end of 2024, carrying value of own forest land amounted to EUR 801

million (EUR 715 million) and leased forest land EUR 249 million (EUR

231 million).

UPM's own and leased forest land areas are summarised in below

table.

1,000 ha	FOREST LAND	PRO-DUCTIVE FOREST LAND	FORESTED LAND
Finland	522	428	416
Uruguay	318	189	178
Uruguay, leased land	174	140	130
United States	76	55	55
Total	1,090	812	779

	Accounting policies

The group divides all its forest assets for accounting purposes into

growing forests, which are recognised as forest assets at fair value less

costs to sell, and land. The group applies IAS 41 to account its forest

assets. Own land is stated at cost whereas leased land is valued at cost

less accumulated depreciation.

Any changes in the fair value of the growing forests are recognised in

the operating profit in the income statement. The fair value is calculated

on the basis of discounted future expected cash flows considering

existing, sustainable harvesting plans and assessments regarding growth,

timber prices, harvesting and silviculture costs and selling expenses.

Forest renewal costs are capitalised during the growth cycle as part of

the forest assets value. The fair value of forest assets is a level 3 measure

in terms of the fair value measurement hierarchy.

	Key estimates and judgements

Fair valuation

The valuation process of forest assets is complex and requires

management estimates and judgement on assumptions that have a

significant impact on the valuation of the group’s forest assets.

Main factors used in the fair valuation of forest assets are estimates

for growth and wood harvested, stumpage prices and discount rates.

Stumpage price forecasts are based on the current prices adjusted by the

management’s estimates for the full remaining productive lives of the

trees, up to 150 years or until next regeneration cutting for forests in

Finland and in the US and up to 10 years for plantations in Uruguay.

The cash flows are adjusted by selling costs and costs related to future

risks. Felling revenues and maintenance costs are estimated on the basis

of actual costs and prices, taking into account the group’s projection of

future price and costs development. In addition, calculations take into

account future forest growth and environmental restrictions.

The pre-tax discount rate used to determine the fair value of the

Finnish forests in 2024 was 9.7% (9.5%) and for Uruguayan plantations

11.2% (11.5%). A decrease (increase) of one percentage point in

discount rate would increase (decrease) the fair value of forest assets by

approximately EUR 221 million (214 million).

4.3Energy shareholdings

UPM is both a significant purchaser and producer of energy. The

majority of electrical and thermal energy is consumed at the group’s pulp

and paper production. The production is mainly carried out by energy

companies in which UPM has energy shareholdings. Energy

shareholdings are unlisted equity investments. Based on the shareholder

agreements, UPM does not have control or joint control of or significant

influence in the said energy companies.

The value of energy shareholdings amounted to EUR 2,247 million

(2,283 million) at the end of 2024 . These energy companies supply

electricity or both electricity and heat to their shareholders on a cost-

price principle (Mankala-principle) which 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.

In 2020, UPM issued a shareholder loan of EUR 47 million without a

maturity date to PVO. Embedded into the loan terms is a right to issue

new shares in the PVO B2 series against the remaining, unpaid nominal

of the loan starting from 2021. The loan is valued at fair value and is

taken into account as a part of the total fair valuation of the PVO B2

series valuation.

UPM FINANCIAL REPORT 2024	176

Energy shareholdings

	Number of shares	Group holding %	Carrying value, EURm
			2024	2023
Pohjolan Voima Oyj, A series	8,176,191	61.24	543	507
Pohjolan Voima Oyj, B series	4,140,132	58.11	1,151	1,302
Pohjolan Voima Oyj, B2 series	2,869,819	51.22	0	0
Kemijoki Oy	179,189	7.33	426	345
Länsi-Suomen Voima Oy	10,220	51.10	123	124
Other	—	—	4	5
Carrying value, at 31 December			2,247	2,283

PVO’s share capital is divided into different series of shares. The B

and B2 series relate to PVO’s shareholdings in Teollisuuden Voima Oyj

(TVO). UPM has no direct shareholdings in TVO. TVO operates three

nuclear power plants (Olkiluoto 1, Olkiluoto 2 and Olkiluoto 3) in

Finland. The operation of a nuclear power plant is governed by

international, European Union and local nuclear regulatory regimes.

Pursuant to the Finnish Nuclear Liability Act, the operator of a nuclear

facility has a strict third-party liability in relation to nuclear accidents.

Shareholders of power companies that own and operate nuclear power

plants are not subject to the liability under the Nuclear Liability Act. In

Finland, the future costs of conditioning, storage and final disposal of

spent fuel, management of low and intermediate level radioactive waste

as well as nuclear power plant decommissioning are provided for by a

state established fund (the Finnish State Nuclear Waste Management

Fund). The contributions to the Fund are intended to be sufficient to cover

estimated future costs. These contributions have been taken into

consideration in the fair value of the related energy shareholdings.

Changes in energy shareholdings

EURm	2024	2023
Carrying value, at 1 January	2,283	3,652
Disposals	-4	—
Changes in fair value recognised in other comprehensive income	-32	-1,369
Carrying value, at 31 December	2,247	2,283

	Accounting policies

The group has made an irrevocable election to designate its energy

shareholdings as equity instruments where changes in fair value are

recognised through OCI. The shareholdings are not held for trading as

the group has an intention to hold the investments for the long term.

Purchases of energy shareholdings are initially and subsequently

measured at fair value through other comprehensive income, net of tax if

applicable, with only dividend income recognised through profit and

loss. Initial fair value is acquisition cost including transaction costs. Upon

disposal of the investment, the accumulated fair value changes in equity

are not recycled to the income statement but instead, are reclassified

from the fair value reserve to retained earnings.

The fair value of energy shareholdings is a level 3 measure in the fair

value measurement hierarchy.

	Key estimates and judgements

Fair valuation and sensitivity

Valuation of energy shareholdings requires management’s assumptions

and estimates of a number of factors that may differ from the actual

outcome which could lead to significant adjustment to the carrying

amount of the asset. Fair value is determined on a discounted cash flow

basis and the main factors impacting the future cash flows include future

electricity prices, price trends and discount rates. Changes in regulatory

environment or taxation may also have an impact on the value of the

energy generating assets. The valuation process is carried out by UPM

Energy and the results are reviewed by management.

The electricity price estimate is based on future electricity forward

prices and a simulation of the Finnish area electricity price. A change of

5% in the electricity price used in the model would change the total value

of the assets by EUR 250 (180) million. The discount rate of 8.07%

(8.01%) used in the valuation model is determined using the weighted

average cost of capital method. A change of 0.5% percentage points in

the discount rate would change the estimated fair value of the assets by

approximately EUR 180 (100) million.

One of the main factors in the decrease in fair value during reporting

period was the decrease in electricity forward market prices.

Additionally, market price volatility’s impact on the value of hydropower

assets has been updated, increasing the fair value of hydropower assets.

UPM FINANCIAL REPORT 2024	177

4.4Goodwill and other intangible assets

The group’s goodwill in 2024 mainly relates to pulp operations in

Uruguay belonging to the UPM Fibres business area. In 2024, the group

impaired the entire goodwill of Pulp operations in Finland CGU, 

amounting to EUR 113 million and entire goodwill of UPM Biochemicals

CGU, amounting to EUR 5 million. Companies acquired in 2024, relate

to the acquisition of Grafityp in UPM Raflatac business area. Refer note

8.1. Business acquisitions and disposals for further information.

In 2023, the group's goodwill and other intangible assets increased

mainly as a result of the company acquisition of SunCoal Industries

GmbH in UPM Biochemicals under Other Operations.

Goodwill by business area

EURm	2024	2023
Pulp operations Uruguay	111	105
Pulp operations Finland	—	113
UPM Raflatac	48	46
UPM Plywood	13	13
Other operations	1	6
Total	174	283

Goodwill

EURm	2024	2023
Carrying value, at 1 January	283	282
Companies acquired	3	5
Translation differences	7	-4
Impairment charges	-118	—
Carrying value, at 31 December	174	283

Other intangible assets

EURm	INTANGIBLE RIGHTS	SOFTWARE AND OTHER INTANGIBLE ASSETS	TOTAL
2024
Accumulated costs	434	587	1,021
Accumulated amortisation and impairments	-222	-482	-705
Carrying value, at 31 December	212	104	316
Carrying value, at 1 January	214	245	459
Additions	3	16	18
Companies acquired	—	5	5
Amortisation	-5	-26	-30
Impairment	—	-5	-5
Reclassifications 2)	—	-136	-135
Translation differences	—	4	4
Carrying value, at 31 December	212	104	316
Emission rights, carrying value 1)			264
Carrying value including emission rights, at 31 December			580
2023
Accumulated costs	463	765	1,228
Accumulated amortisation and impairments	-249	-520	-769
Carrying value, at 31 December	214	245	459
Carrying value, at 1 January	198	120	317
Additions	2	6	8
Companies acquired	18	4	22
Amortisation	-4	-25	-29
Reclassifications 2)	—	140	140
Carrying value, at 31 December	214	245	459
Emission rights, carrying value 1)			256
Carrying value including emission rights, at 31 December			715

1) » Refer Note 2.3 Operating expenses and other operating income, for further information on emission rights.

2) Reclassifications in 2024 and 2023 relate to final classification of assets in the Uruguay pulp mill investment. » Refer note 4.1 Property, plant and equipment.

UPM FINANCIAL REPORT 2024	178

Impairment testing

Impairment tests for goodwill and water rights with indefinite life were

carried out in the fourth quarter 2024.

Water rights of hydropower plants bel onging to UPM Energy and

reported in intangible rights amounted EUR 189 million at the end of

2024 and 2023. The values of water rights were tested based on

expected future cash flows of each separate hydro power plant. The

impairment test of water rights did not result in a recognition of any

impairment in 2024 and 2023.

Goodwill impairment tests were carried out for pulp operations in

Finland and Uruguay, belonging to the UPM Fibres business area, UPM

Raflatac business area, UPM Plywood business area and UPM

Biochemicals business in Other operations.

In 2024, the weakened pulp market and high wood costs have

negatively affected the performance outlook of Pulp operations in

Finland compared to previous estimates. As a result of the impairment

test calculation, UPM impaired the entire goodwill of EUR 113 million.

No other assets than goodwill was impaired.

UPM Biochemicals CGU includes assets of Leuna biorefinery, which

is the first of its kind new technology-based plant. The increased costs

from the initial investment estimate and the construction delays indicated

that the carrying amount of CGU may no longer be fully recoverable. As

a result of the impairment test calculation conducted in December 2024,

UPM impaired the entire goodwill of EUR 5 million and EUR 373 million

of other assets. The remaining book value of the refinery closely aligns

with the estimated cost of constructing a comparable plant in the current

economic environment. Refer Note 4.1 Property, Plant and Equipment.

The recoverable amount of CGUs was estimated based on value in

use calculations.

The basis for valuation and key assumptions used in goodwill impairment testing are summarised in the below table:

CASH GENERATING UNIT	BASIS OF VALUATION	PERIOD OF FORECAST	PRE-TAX DISCOUNT RATE	KEY ASSUMPTIONS
Pulp operations Finland	Value in use	10 years + terminal value	10.55 % (2023: 10.68%)	Pulp price, wood costs
Pulp operations Uruguay	Value in use	10 years + terminal value	9.12% (2023: 9.61%)	Pulp price, wood costs
UPM Raflatac	Value in use	10 years + terminal value	10.59% (2023: 10.05%)	Product prices, cost development
UPM Plywood	Value in use	10 years + terminal value	11.12% (2023: 12.06%)	Product prices, cost development
UPM Biochemicals	Value in use	5 years + terminal value	9.69% (2023: 10.20%)	Product prices, cost development

Sensitivity analyses

The sensitivity analyses of goodwill impairment tests indicate that no

reasonable change in key assumptions would result in recognition of

impairment loss against goodwill. In pulp operations Uruguay, the

recoverable amount is most sensitive to pulp sales prices.

	Key estimates and judgements

The group’s assessment of the carrying value of goodwill and indefinite

life assets requires significant judgement.

While management believes that estimates of future cash flows are

reasonable, different assumptions are subject to change as a result of

changing economic and operational conditions. Actual cash flows could

therefore vary from estimated discounted future cash flows and could

result in changes in the recognition of impairment charges in future

periods.

Future cash flows

The review of recoverable amount for goodwill and indefinite life assets

is based on a calculation of value in use, using management projections

of future cash flows. The most important assessments and assumptions

needed in calculations are forecasts for future growth rates for the

business in question, product prices, cost development and the discount

rates applied. The group is using mainly ten-year forecasts

in calculations as the nature of the group’s business is long term, due

to its capital intensity, and is exposed to cyclical changes. For UPM

Biochemicals, the group used five-year forecasts in calculations due to

different maturity level of the business. In estimates of product prices and

cost development, forecasts prepared by management for the next three

years and estimates made for the following two to seven years are taken

into consideration. In addition, consideration is given to the investment

decisions made by the group as well as the profitability programmes

that the group has implemented and the views of knowledgeable

industry experts on the long-term development of demand and prices. In

the projection of cash flows UPM uses EBITDA adjusted with cash flows

not captured within EBITDA, including working capital movements and

capital expenditures. An assumed terminal value is based on a EBITDA

multiples six times, except for UPM Biochemicals for which perpetuity

value is determined using inflation based 2% growth rate.

Discount rate

The discount rate is estimated using the weighted average cost of capital

(WACC) on the calculation date adjusted for risks specific to the

business in question. The adjusted after-tax discount rate is translated to

a pre-tax rate for each cash generating unit (CGU) based on the specific

tax rate applicable to where the CGU operates.

	Accounting policies

Goodwill

Goodwill arises in connection with business combinations where the

consideration transferred exceeds the fair value of the acquired net

assets. Goodwill is recognised at cost less accumulated impairment and

is an intangible asset with an indefinite useful life. Goodwill is allocated

to the cash generating units that are expected to benefit from the

synergies from the business combination.

Intangible rights

Intangible rights include water rights of hydropower plants, patents,

licences, intellectual property and similar rights. Water rights are

deemed to have an indefinite useful life as the company has a

contractual right to exploit water resources in the energy production

of power plants.

UPM FINANCIAL REPORT 2024	179

The values of water rights are tested annually for impairment based

on expected future cash flows of each separate hydropower plant. Other

intangible rights are recognised at cost less accumulated amortisation

and impairment. Amortisation is calculated using the straight-line method

over their estimated useful lives ranging from 5 to 10 years.

Software and other intangible assets

Research expenditure is recognised as an expense as incurred.

Costs incurred in acquiring software that will contribute to future

period financial benefit are capitalised to software and systems. Other

intangible assets are recognised at cost less accumulated amortisation

and impairment. Amortisation is calculated using the straight-line method

over their estimated useful lives ranging from 3 to 5 years.

Impairment testing

Goodwill and other intangible assets that are deemed to have an

indefinite life are tested at least annually for impairment. For goodwill

impairment testing purposes the group identifies its cash-generating units

(CGUs), which is the smallest identifiable group of assets that generate

cash inflows largely independent of the cash inflows of other assets or

other groups of assets. Each CGU is no larger than a business area. The

carrying amount for the CGU includes goodwill, non-current assets and

working capital. If the balance sheet carrying amount of the CGU unit

exceeds its recoverable amount, an impairment loss is recognised.

Impairment loss is allocated first to reduce the carrying amount of any

goodwill allocated to the unit and then to other assets of the unit. An

impairment loss recognised for goodwill is not reversed in a subsequent

period.

Other intangible assets with indefinite useful lives are impaired if the

recoverable amount of the asset is less than the carrying amount. The

carrying amount of the asset is then reduced to the recoverable amount

which is the higher of the asset’s net selling price and its value in use.

4.5Provisions

EURm	RESTRUCTURING	TERMINATION	ENVIRON- MENTAL	EMISSIONS	OTHER	TOTAL
2024
Provisions at 1 January	59	117	27	56	6	266
Provisions made during the year	27	58	—	78	26	189
Provisions utilised during the year	-29	-90	-1	-68	-1	-189
Unused provisions reversed	-4	-5	-1	-1	-3	-14
Reclassifications	1	-1	—	—	—	—
Translation differences	—	—	—	—	—	1
Provisions at 31 December	55	79	26	66	28	253
Non-current						89
Current						165
Total						253
2023
Provisions at 1 January	14	22	29	53	15	134
Provisions made during the year	53	129	2	69	5	258
Provisions utilised during the year	-6	-30	-3	-65	-12	-116
Unused provisions reversed	-1	-4	-2	—	-2	-10
Reclassifications	-1	—	1	-1	—	-1
Provisions at 31 December	59	117	27	56	6	266
Non-current						170
Current						96
Total						266

UPM has undergone several restructuring programmes in recent years

including mill closures and profit improvement programmes.

Restructuring provisions recognised include various restructuring

activities including dismantling costs. Termination provisions include

severance payments, unemployment compensations or other

arrangements for employees leaving the company. In Finland,

termination provisions include also unemployment arrangements and

disability pensions. Unemployment provisions in Finland are recognised

2–3 years before the granting and settlement of the compensation.

At 31 December 2024 and 2023, restructuring and termination

provisions relate mainly to capacity closures and optimisation of

operations in UPM Communication Papers business area. In 2024,

additions to restructuring and termination provisions of EUR 71 million

relate to closures of Hürth newsprint mill and Nordland fine paper

machine 3 and the planned closure of Raflatac Kaltenkirchen factory.

In 2023, additions to restructuring and termination provisions of EUR

143 million relate to the closure of UPM Plattling paper mill and paper

machine 6 at UPM Schongau paper mill.

The group recognises provisions for normal environmental

remediation costs expected to be incurred in a future period upon a

removal of non-current assets and restoring industrial landfills where a

legal or constructive obligation exists.

Other provisions mainly include other short-term obligations related to

emission rights.

UPM FINANCIAL REPORT 2024	180

Provisions for emissions include liability to cover the obligation to

return emission rights. The group possesses emission rights amounting to

EUR 264 million (256 million) as intangible assets.

» Refer Note 2.3 Operating expenses and other operating income, for

further information on emission rights.

	Accounting policies

A provision is recognised when a present legal or constructive

obligation exists as a result of a past event and it is probable that an

outflow of resources will be required to settle the obligation and the

amount can be reliably estimated. Provisions are split between amounts

expected to be settled within 12 months of the balance sheet date

(current) and amounts expected to be settled later (non-current).

Restructuring and termination provisions

A restructuring provisions is recognised when a detailed plan for the

implementation of the measures is complete and when the plan has been

communicated to those who are affected. Employee termination

provisions are recognised when the group has communicated the plan

to the employees.

Environmental provisions

Environmental expenditures that relate to an existing condition

caused by past operations that do not contribute to future earnings are

expensed. The recognition of environmental provisions is based on

current interpretations of environmental laws and regulations. Such

provisions are recognised when the group has an obligation to

dismantle and remove a facility or an item of plant and to restore the site

on which it is located. The amount recognised is the present value of the

estimated future expenditure determined in accordance with

local conditions and requirements. A corresponding item of property,

plant and equipment of an amount equivalent to the provision is also

recognised and subsequently depreciated as part of the asset. Provisions

do not include any third-party recoveries.

Emission provisions

Emission obligations are recognised in provisions based on realised

emissions. The provision is measured at the carrying amounts of the

corresponding emission rights held, which are recognised as intangible

assets. In case of deficit in emission rights, the shortage is valued at

the market value at the balance sheet date.

	Key estimates and judgements

Environmental provisions

The estimates used in determining the provisions are based on the

expenses incurred for similar activities in the current reporting period

taking into account the effect of inflation, cost-base development and

discounting. Because actual outflows can differ from estimates due to

changes in laws, regulations, public expectations, technology, prices

and conditions, and can take place many years in the future, the

carrying amounts of provisions are regularly reviewed and adjusted

to take into account of any such changes. The discount rate applied

is reviewed annually.

The group aims to operate in compliance with regulations related to

the treatment of waste water, air emissions and landfill sites. However,

expected events during production processes and waste treatment could

cause material losses and additional costs in the group’s operations.

Legal contingencies

Management judgement is required in measurement and recognition of

provisions related to pending litigation. Provisions are recorded when

the group has a present legal or constructive obligation as a result of

past event, an unfavourable outcome is probable and the amount of loss

can be reasonably estimated. Due to inherent uncertain nature of

litigation, the actual losses may differ significantly from the originally

estimated provision.

» Refer Note 9.2 Litigation for details of legal contingencies.

4.6Working capital

The group defines operating working capital as inventories, trade

receivables, trade payables and advances received which are presented

separately below. The performance obligations related to advances

received are typically fulfilled within 12 months of receipt of the

advance. UPM is focusing on working capital efficiency and targeting a

sustainable and permanent reduction in operating working capital.

Operating working capital

EURm	2024	2023
Inventories	2,104	1,948
Trade receivables	1,432	1,254
Trade payables	-1,369	-1,297
Advances received	-6	-22
Total	2,161	1,883

Inventories

EURm	2024	2023
Raw materials and consumables	1,149	1,027
Work in progress	6	6
Finished products and goods	915	885
Advance payments	35	31
Total	2,104	1,948

UPM FINANCIAL REPORT 2024	181

Trade and other receivables

EURm	2024	2023
Trade receivables
Trade receivables	1,458	1,284
Loss allowance provision	-26	-30
Total trade receivables	1,432	1,254
Prepayments and accrued income
Personnel expenses	3	2
Interest income	0	1
Energy and other excise taxes	8	11
Other items	164	118
Total prepayments and accrued income	176	133
Other receivables
VAT and other indirect taxes receivable	169	155
Cash collaterals	110	187
Other receivables	43	53
Total other receivables	322	395
Total	1,929	1,782

Trade receivables ageing

	2024			2023
EURm	TRADE RECEIVABLES	LOSS ALLOWANCE PROVISION	TRADE RECEIVABLES, NET OF PROVISION	TRADE RECEIVABLES	LOSS ALLOWANCE PROVISION	TRADE RECEIVABLES, NET OF PROVISION
Undue	1,347	-3	1,345	1,165	-4	1,161
Past due up to 30 days	63	-1	62	82	-2	80
Past due 31–90 days	14	-2	12	8	-1	7
Past due over 90 days	34	-21	13	30	-23	6
Total	1,458	-26	1,432	1,284	-30	1,254

Trade and other payables

EURm	2024	2023
Accrued expenses and deferred income
Personnel expenses	186	181
Interest expenses	30	22
Indirect taxes	16	16
Customer rebates	114	94
Customer claims	6	6
Other items	109	148
Total accrued expenses and deferred income	462	467
Advances received	6	22
Trade payables	1,369	1,297
Other current liabilities	101	97
Total	1,938	1,883

	Operational credit risk

Operational credit risk is defined as the risk where UPM is not able to

collect the payments for its receivables. The group has a credit policy in

place and the exposure to credit risk is monitored on an ongoing basis.

Outstanding trade receivables, days of sales outstanding (DSO) and

overdue trade receivables are followed on monthly basis. Potential

concentrations of credit risk with respect to trade and other receivables

are limited due to the large number and the geographic dispersion of

customers. Customer credit limits are established and monitored, and

ongoing evaluations of their financial condition is performed. The group

has trade credit insurances to protect accounts receivables from

significant credit losses. In certain market areas, including Asia and

Northern Africa, measures to reduce credit risks include letters of credit,

prepayments and bank guarantees. Maximum exposure to credit risk,

without taking into account any credit enhancements, is the carrying

amount of trade and other receivables.

UPM does not have significant concentration of customer credit risk.

The ten largest customers accounted for approximately 20% (19%) of

the trade receivables as at 31 December 2024 – i.e., approximately

EUR 288 million (239 million).

UPM FINANCIAL REPORT 2024	182

In 2024, trade receivables amounting to EUR 15 million (5 million)

were subject to permanent write-off and the loss was recognised under

other costs and expenses. In accordance with the group’s accounting

policy, trade receivables are permanently written off when there is no

reasonable expectation of recovery.

	Accounting policies

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost

is determined by the method most appropriate to the particular nature of

inventory, the first-in, first-out (FIFO) or weighted average cost. The cost

of finished goods and work in progress comprises raw materials, direct

labour, other direct costs and related production overheads (based on

normal operating capacity) but excludes borrowing costs. Net realisable

value is the estimated selling price in the ordinary course of business,

less the costs of completion and selling expenses. If the net realisable

value is lower than cost, a valuation allowance is established for

inventory obsolescence.

Trade and other receivables

Trade receivables arising from selling goods and services in the normal

course of business are recognised initially at transaction price and

subsequently at amortised cost less loss allowance provision. No element

of financing is deemed present as the sales are made with a credit term

of 14–60 days, which is consistent with market practice.

The group applies the IFRS 9 simplified approach to measuring

expected credit losses which uses a lifetime expected loss allowance for

all trade receivables. The group has recognised two types of provisions

for trade receivables – a general provision for lifetime expected credit

losses and a provision for specified individual trade receivables, both of

which are charged to the income statement. The group uses a provision

matrix for estimating lifetime expected credit losses where trade

receivables are segregated by businesses. The provision matrix is based

on historical observed default rates, adjusted by forward looking

information. It takes into account trade credit insurances, payment

profile of customers and the factor that as debts get older they are more

likely not to be paid. Additionally, the group recognises a provision

individually for outstanding trade receivables where specific debtor

information is available. In these cases there must be objective evidence

that the group will not be able to collect all amounts due according to

the original terms of the receivables.

Trade receivables are permanently written off when there is no

reasonable expectation of recovery. The customer entering into

bankruptcy or liquidation proceedings or finalising such proceedings, or

entering into debt-restructuring are considered indicators that the trade

receivables are no longer expected to be recovered. Subsequent

recoveries of amounts previously written off are credited to the income

statement. The carrying amount of trade receivables approximates to

their fair value due to the short-term nature of the receivables.

Other receivables consist mainly of cash collaterals pledged for

commodity contracts and interest rate futures. The fair value equals to

the amount of cash pledged as collateral. The cash collaterals cover the

counterparties' losses in case UPM is unable to meet its obligations.

Trade and other payables

Trade payables arise from purchase of inventories, fixed assets and

goods and services in the ordinary course of business from UPM’s

suppliers. Trade and other payables are classified as current liabilities if

they are due to be settled within the normal operating cycle of the

business or within 12 months from the balance sheet date. Trade

payables are recognised initially at fair value and subsequently at

amortised cost using the effective interest method. The carrying amount

of trade payables approximates to their fair value due to the short-term

nature of the payables.

The group is recognising refund liability for expected volume and

other discounts arising from contracts with customers. Customer rebates

include mainly volume discounts and are recognised as equal to an

amount which is most likely to be paid to the customer. The carrying

amount of expected customer rebates is updated at each reporting date,

using the latest forecast data available.

Customer claims relating to quality complaints are accounted for as

revenue-related refund liability. Expected customer claims are estimated

based on historical data and the amount of refund liability is updated at

each reporting date. Customer claims and customer rebates are typically

expected to realise within the next 12 months.

Advances received are recognised as contract liability until the

performance obligation is fulfilled.

UPM FINANCIAL REPORT 2024	183

5.Capital structure

UPM has a strong cash flow and industry-leading balance sheet that mitigates risks and enables value-enhancing strategic actions.

	Net debt				Free cash flow
	EUR	2,869	m		EUR	766	m
	(EUR 2,432m)				(EUR 1,193m)

5.1Capital management

UPM’s objective for managing capital comprising of net debt and total

equity is to ensure maintenance of flexible capital structure to enable the

ability to operate in capital markets and maintain optimal returns to

shareholders. The group manages its financing activities, debt portfolio

and financial resources via various policies that are designed to ensure

optimum financing arrangements minimising simultaneously financial

expenses and refinancing risk and optimising liquidity. Borrowing

activities are centralised to the parent to the extent possible and cash

resources are distributed within the group by the central treasury

department.

UPM targets a net debt to EBITDA ratio of approximately 2 times or less.

UPM’s capital

EURm	2024	2023
Equity attributable to owners of the parent company	11,139	11,161
Non-controlling interest	401	370
Total equity	11,540	11,531
Non-current debt	3,747	3,056
Current debt	166	327
Debt held for sale	—	2
Total debt	3,913	3,385
Total capitalisation	15,452	14,916
Total debt	3,913	3,385
Less: Interest-bearing financial assets and investment funds	1,044	906
Less: Interest-bearing financial assets held for sale	—	47
Net debt	2,869	2,432
Gearing ratio, % 1)	25	21
Net debt to EBITDA 1)	1.66	1.55

1) Refer » Other financial information on Alternative performance measures.

	Liquidity and refinancing risk

Under all circumstances, UPM seeks to maintain adequate liquidity,

which depends on a number of factors, such as the availability of cash

flows from operations and access to additional debt and equity

financing. UPM aims to ensure sufficient liquidity by means of efficient

cash management and restricting financial investments to investment

types that can readily be converted into cash and by keeping a sufficient

amount of unused committed credit lines or cash as a reserve. UPM aims

to minimise refinancing risks by ensuring a balanced loan portfolio

maturing schedule and sufficiently long maturities. The average loan

maturity at 31 December 2024 was 5.5 years (5.1 years).

Liquidity and refinancing

EURm	2024	2023
Cash at bank	849	613
Cash equivalents	42	19
Cash classified as assets held for sale	—	39
Investment funds	1	1
Committed credit lines	2,310	2,909
of which used	0	—
Loan commitments	—	—
Used uncommitted credit lines	-1	-182
Long-term loan repayment cash flow	-151	-114
Debt held for sale	—	-2
Liquidity	3,050	3,284

Cash and cash equivalents comprise cash in hand, deposits held at

banks and with original maturities of three months or less. Investment

funds comprise fund investments with a redemption period of less than

12 months. Commercial papers and utilised bank overdrafts are

included in used uncommitted credit lines and presented within current

debt in the balance sheet. In 2024 or 2023 , no material impairment

and no expected credit losses were recognised in profit or loss for loan

receivables or cash and cash equivalents.

UPM FINANCIAL REPORT 2024	184

Maturity table of debt at the end of 2024

EURm	2025	2026	2027	2028	2029	2030+	Total
Bonds	—	—	361	750	500	1,100	2,711
Loans from financial institutions	34	31	31	31	31	31	188
Lease liabilities	115	81	69	63	55	451	832
Other loans	2	—	—	—	129	—	131
Current loans and debt held for sale	1	—	—	—	—	—	1
Principal payments	152	112	461	844	714	1,581	3,863
Interest payments	102	93	91	63	56	215	620

The difference between the above nominal values and carrying value of total debt arise from fair value adjustments decreasing carrying value

by EUR 26 million and other non-cash adjustments decreasing carrying value by EUR 23 million.

Maturity table of debt at the end of 2023

EURm	2024	2025	2026	2027	2028	2029+	Total
Bonds	—	—	—	339	750	1,000	2,089
Loans from financial institutions	20	34	31	31	31	62	208
Lease liabilities	94	97	64	53	50	348	706
Other loans	—	2	—	—	—	135	137
Current loans and debt held for sale	183	—	—	—	—	—	183
Principal payments	297	133	95	423	830	1,545	3,323
Interest payments	75	66	62	61	34	111	409

The difference between the above nominal values and carrying value of total debt arise from fair value adjustments decreasing carrying value

by EUR 45 million and other non-cash adjustments decreasing carrying value by EUR 20 million.

UPM FINANCIAL REPORT 2024	185

Maturity table of derivatives included in net debt and guarantees at the end of 2024

EURm	2025	2026	2027	2028	2029	2030+	Total
Net settled interest rate swaps
Net inflow	5	8	9	1	1	—	25
Net outflow	-23	-17	-18	-19	—	—	-79
Gross settled derivatives
Gross currency swaps
Total inflow	8	8	8	8	133	—	163
Total outflow	-5	-5	-5	-5	-168	—	-189
Forward foreign exchange contracts
Total inflow	741	—	—	—	—	—	741
Total outflow	-750	—	—	—	—	—	-750
Guarantees	—	—	—	—	—	—	—

Maturity table of derivatives included in net debt and guarantees at the end of 2023

EURm	2024	2025	2026	2027	2028	2029+	Total
Net settled interest rate swaps
Net inflow	3	7	9	9	—	—	27
Net outflow	-30	-19	-17	-18	-19	—	-104
Gross settled derivatives
Gross currency swaps
Total inflow	7	7	7	7	7	138	173
Total outflow	-7	-5	-5	-5	-5	-168	-195
Forward foreign exchange contracts
Total inflow	1,000	9	—	—	—	—	1,009
Total outflow	-989	-9	—	—	—	—	-999
Guarantees	—	—	—	—	—	—	—

UPM FINANCIAL REPORT 2024	186

5.2Net debt

Net debt is defined as the total of current and non-current debt less cash

and cash equivalents and interest-bearing current and non-current

financial assets. In 2024, net debt increased by EUR 437 million. Net

debt totalled EUR 2,869 million (2,432 million) at the end of 2024.

UPM has a EUR 5 billion Euro Medium Term Note (EMTN)

programme and a Green Finance Framework that aligns with the

International Capital Markets Association (ICMA) Green Bond

Principles. The framework has a second party opinion from S&P Global

ratings with the highest "Dark green" overall shading. 

In August 2024, UPM successfully issued its fourth Green Bond under

its EMTN programme and Green Finance Framework. The EUR 600

million bond matures in August 2034, and pays a fixed coupon of

3.375%. UPM has issued four Green Bonds, totalling EUR 2,350

million.

The proceeds from the Green Bonds will be allocated in accordance

with the Green Finance Framework to eligible green projects and assets.

The following framework categories have been used for the previously

issued three Green Bonds: sustainable forest management, climate-

positive products and solutions, and hydropower. The bonds do not

have any financial covenants and all issued euro bonds are listed on the

Irish Stock Exchange plc, trading as Euronext Dublin.

Net debt

EURm	2024	2023
Bonds	2,642	2,002
Loans from financial institutions	154	188
Lease liabilities	717	612
Derivatives	84	94
Other loans	149	160
Non-current debt	3,747	3,056
Repayments of non-current debt	36	20
Repayments of lease liabilities	115	94
Derivatives	14	33
Other liabilities	1	180
Current debt	166	327
Debt held for sale	0	2
Total debt	3,913	3,385
Loan receivables	2	4
Derivatives	21	51
Other receivables	15	17
Non-current interest-bearing assets	38	71
Loan receivables	1	1
Derivatives	2	14
Other receivables	110	187
Investment funds	1	1
Cash and cash equivalents	892	632
Current interest-bearing assets	1,006	835
Interest-bearing assets held for sale	0	47
Total interest-bearing assets	1,044	953
Net debt	2,869	2,432

	Accounting policies

Debt

Debt comprising of bonds, bank and pension loans, lease liabilities and

other loans is recognised initially at fair value, net of transaction costs

and subsequently measured at amortised cost using the effective interest

method. Any difference between proceeds (net of transaction costs) and

the redemption value is recognised in the income statement over the

estimated life of the borrowing. UPM classifies debt as non-current unless

due for settlement within a year. Most of the debt is hedged in a fair

value hedge relationship as described in » Note 6.1 Financial risk

management.

UPM FINANCIAL REPORT 2024	187

Change in net debt 2024

	Reported in financing activities in cash flow statement
EURm	NON- CURRENT LOANS INCL. REPAYMENTS	LEASE LIABI- LITIES	CURRENT LOANS	NET DERIVA- TIVES	INVEST- MENT FUNDS	DEBT HELD FOR SALE	OTHER FINANCIAL ASSETS	CASH AND CASH EQUIVA- LENTS	FINANCIAL ASSETS HELD FOR SALE	NET DEBT
Carrying value, at 1 January	2371	706	180	63	-1	2	-208	-632	-47	2,432
Change in net debt, cash
Proceeds from non-current debt	600	—	—	—	—	—	—	—	—	600
Payments of non-current debt	-23	—	—	—	—	—	—	—	—	-23
Lease repayments	—	-105	—	—	—	—	—	—	—	-105
Change in current liabilities	—	—	-182	—	—	—	—	—	—	-182
Net cash flows from derivatives	—	—	—	-5	—	—	—	—	—	-5
Transaction costs and discounts in operating cash flow	-7	—	—	—	—	—	—	—	—	-7
Change in other financial assets in operating cash flow	—	—	—	—	—	—	79	—	—	79
Change in other financial assets in investing cash flow	—	—	—	—	—	—	—	—	—	—
Change in investment funds	—	—	—	—	—	—	—	—	—	—
Change in cash and cash equivalents 1)	—	—	—	—	—	—	—	-261	39	-222
	570	-105	-182	-5	—	—	79	-261	39	135
Change in net debt, non-cash
Companies acquired	1	—	3	—	—	—	—	—	—	4
Companies disposed	—	—	—	—	—	-2	2	—	9	9
New contracts and subsequent additions	—	202	—	—	—	—	—	—	—	202
Lease liability reassessments	—	5	—	—	—	—	—	—	—	5
Fair value gains and losses	17	—	—	18	—	—	—	—	—	35
Exchange gains and losses	17	24	—	—	—	—	—	2	—	43
Effective interest rate adjustment	4	—	—	—	—	—	—	—	—	4
	40	231	3	18	—	-2	1	2	9	302
Carrying value, at 31 December	2,981	832	1	76	-1	—	-128	-892	—	2,869

1) The difference between the change in cash and cash equivalents in the consolidated cash flow statement, amounting to EUR 222 million and the change in

cash and cash equivalents here, amounting to EUR 261 million, is due to cash and cash equivalents classified as held for sale as of 31.12.2023,

amounting to EUR 39 million. Cash and cash equivalents classified as held for sale were disposed in 2024 as a part of the sale of 100% of the shares of

Austrian subsidiary UPM Kymmene-Austria GmbH to the HEINZEL GROUP.

UPM FINANCIAL REPORT 2024	188

Change in net debt 2023

	Reported in financing activities in cash flow statement
EURm	NON- CURRENT LOANS INCL. REPAY- MENTS	LEASE LIABILITIES	CURRENT LOANS	NET DERIVA- TIVES	INVEST- MENT FUNDS	DEBT HELD FOR SALE	OTHER FINANCIAL ASSETS	CASH AND CASH EQUIVAL ENTS	FINANCIAL ASSETS HELD FOR SALE	NET DEBT
Carrying value, at 1 January	3,766	668	441	90	-1	—	-523	-2,067	—	2,374
Change in net debt, cash
Proceeds from non-current debt	100	—	—	—	—	—	—	—	—	100
Payments of non-current debt	-1,506	—	—	—	—	—	—	—	—	-1,506
Lease repayments	—	-99	—	—	—	—	—	—	—	-99
Change in current liabilities	—	—	-260	—	—	—	—	—	—	-260
Net cash flows from derivatives	—	—	—	6	—	—	—	—	—	6
Change in other financial assets in operating cash flow	—	—	—	—	—	—	311	—	—	311
Change in other financial assets in investing cash flow	—	—	—	—	—	—	-5	—	—	-5
Change in investment funds	—	—	—	—	—	—	—	—	—	—
Change in cash and cash equivalents	—	—	—	—	—	—	—	1,379	—	1,379
	-1,406	-99	-260	6	—	—	306	1,379	—	-74
Change in net debt, non-cash
Companies acquired	2	—	—	—	—	—	—	—	—	2
Companies disposed	—	-2	—	—	—	—	—	—	—	-2
New contracts and subsequent additions	—	149	—	—	—	—	—	—	—	149
Lease liability reassessments	—	2	—	—	—	—	—	—	—	2
Fair value gains and losses	33	—	—	-34	—	—	—	—	—	-1
Exchange gains and losses	-27	-11	—	—	—	—	—	16	—	-22
Effective interest rate adjustment	4	—	—	—	—	—	—	—	—	4
Reclassifications to assets and liabilities held for sale	-1	-1	—	—	—	2	9	39	-47	—
	11	137	—	-34	—	2	8	55	-47	131
Carrying value, at 31 December	2,371	706	180	63	-1	2	-208	-632	-47	2,432

UPM FINANCIAL REPORT 2024	189

Free cash flow

Free cash flow is primarily a liquidity measure. It is an important

indicator of UPM’s overall operational performance as it reflects the

cash generated from operations after investing activities.

EURm	2024	2023
Operating cash flow	1,352	2,269
Investing cash flow	-586	-1,076
Free cash flow	766	1,193
Dividends paid to owners of the parent company	-801	-799
Dividends paid to non-controlling interests	-19	-36
Contributions paid by non-controlling interests	0	35
Other financing cash flow	-10	-14
Transaction costs and discounts in operating cash flow	7	0
Change in other financial assets in operating cash flow	-79	-311
Change in other financial assets in investing cash flow	0	5
Change in net debt, cash	135	-74
Change in net debt, non-cash	302	131
Change in net debt	437	58
Opening net debt	2,432	2,374
Closing net debt	2,869	2,432

Bonds

FIXED RATE PERIOD	INTEREST RATE, %	CURRENCY	NOMINAL VALUE ISSUED, MILLION	CARRYING VALUE 2024 EURm	CARRYING VALUE 2023 EURm
1997-2027	7.450	USD	375	375	361
2020-2028	0.125	EUR	750	675	650
2021-2031	0.500	EUR	500	496	495
2022-2029	2.250	EUR	500	497	496
2024-2034	3.375	EUR	600	599	—
Value, at 31 December				2,642	2,002
Current portion				—	—
Non-current portion				2,642	2,002

Leases

Leases of property, plant and equipment where UPM, as a lessee,

obtains substantially all of the economic benefits from the use of the

identified asset and where UPM has the right to direct the use of the

identified asset, are classified as leases. Approximately 29% (34%) of

leased assets recognised on the balance sheet consists of land areas in

Uruguay, which the group uses for eucalyptus plantations. 

Approximately 8% (11%) of leased assets on the balance sheet consists

of vessels for sea transportation in Europe. Approximately 6% (9%) of

the leased assets on the balance sheet consist of five power plants. UPM

uses the energy generated by these plants for its own production. In

2023, the decrease in carrying value is mainly attributable to the EUR

100 million impairment charge of a leased power plant related to the

closure of UPM Plattling paper mill in Germany. In addition, the group

has leased one waste water treatment plant as well as several

warehouses, terminals, offices and railcars. UPM also leases some

production machinery and equipment like forklifts and vehicles that are

insignificant to the total leased assets portfolio.

In 2024, additions to leased assets mainly relate to Uruguay railway

service agreement, which is approximately 24% of leased assets on the

balance sheet. In 2023, additions to leased assets mainly relate to

biochemicals refinery utilities in Leuna and new vessels for sea

transportation in Europe. Impairment charges in 2023 relate to the

closure of the UPM Plattling paper mill.

In 2024, the total cash outflow for leased assets was EUR 105 (99)

million. The expenses related to short-term leases recognised in the

income statement in 2024 were not material. The group did not have

significant variable lease payments in 2024.

The lease commitments for leases not commenced at year-end

31 December 2024 totalled approximately EUR 24 (176) million, which

is mostly related to a service agreement related waste water treatment in

Leuna, Germany.

UPM FINANCIAL REPORT 2024	190

Changes in leased assets

	LAND AREAS	BUILDINGS	MACHINERY AND EQUIPMENT	OTHER LEASED ASSETS	ADVANCE PAYMENTS 1)	TOTAL
2024
Carrying value, at 1 January	272	161	226	1	24	683
New contracts and subsequent additions	19	3	181	1	9	213
Reassessments and disposals	1	4	-1	—	—	4
Depreciation	-18	-24	-43	—	—	-85
Reclassifications	—	—	33	—	-33	—
Translation differences	16	—	15	—	—	32
Carrying value, at 31 December	291	144	411	1	—	847
2023
Carrying value, at 1 January	283	247	169	1	13	713
New contracts and subsequent additions	9	40	95	4	13	161
Reassessments and disposals	7	4	-2	—	—	9
Depreciation	-17	-31	-39	—	—	-87
Impairments	—	-100	—	—	—	-100
Reclassifications	—	2	4	-4	-2	—
Reclassifications held for sale	—	—	—	—	—	-1
Translation differences	-10	-1	-1	—	—	-11
Carrying value, at 31 December	272	161	226	1	24	683

1) Advance payments for leases not commenced at the year end reporting date 31 December.

	Accounting policies

Leases

The group as a lessee

UPM assesses whether a contract is or contains a lease at inception of

the contract. This assessment involves the exercise of judgment about

whether it depends on a specified asset, whether UPM obtains

substantially all the economic benefits from the use of that asset, and

whether UPM has the right to direct the use of the asset.

The group recognises a leased asset and a lease liability at the lease

commencement date, except for short-term leases. UPM applies this to all

asset classes. Short-term leases are leases that, at the commencement

date, have a lease term of 12 months or less. A lease that contains a

purchase option is not a short-term lease. UPM recognises lease

payments of short-term leases as an expense on a straight-line basis over

the lease term.

The lease term is determined as the non-cancellable period of the

lease taking into consideration the options to extend and terminate if it is

reasonably certain that the group will exercise the extension option or

will not exercise the termination option. If the contract is for an indefinite

period of time and the group and the lessor both have a right to

terminate the contract within a short notice period (12 months or less)

without a significant economic penalties and termination cash payments,

the contract is considered to be a short-term contract.

The lease liability is recognised at the commencement date and

measured at the present value of the lease payments to be paid during

the lease term. The group uses, as a basis, discount rate implicit in the

lease and if that rate cannot be readily determined, UPM uses

incremental borrowing rate which comprises of currency and lease term-

based reference rate and specific credit spread as well as other specific

terms and conditions of a lease. Lease payments can include fixed

payments, variable payments that depend on an index or rate and

extension option payments or purchase options if it is reasonably certain

that the group will exercise them. The lease liability is subsequently

measured at amortised cost using the effective interest rate method and

remeasured (with corresponding adjustment to the related leased asset)

when there is a change in future lease payments due to renegotiation,

changes of an index or rate or reassessment of options.

Leased asset comprises the initial lease liability, initial direct costs

and the obligations to refurbish the asset, less any incentives granted by

the lessors. The leased asset is subsequently valued at cost less

accumulated depreciation and impairment losses. Remeasurement takes

place in case lease liability is remeasured and change in cash flows is

based on contract terms that have been included in the original contract.

The leased asset is depreciated over the shorter of the asset’s useful life

and the lease term. The leased asset is subject to testing for impairment

if there is an indicator for impairment, as for own assets.

The group has elected to separate non-lease components such as

service components and other variable components and account them

for as expenses, if they can be separated from the leased asset.

However, the group does not separate non-lease components from the

lease contracts of company cars.

The group does not apply portfolio approach of leases with similar

characteristics.

Leased assets are presented in the balance sheet as a separate

financial statement line item. Lease liabilities are presented as part of

non-current debt and current debt line items in the balance sheet. Lease

liabilities are part of net debt calculation of the group. Short-term lease

payments are reported as rents and lease expenses. Variable lease

payments are recognised within the operating costs and expenses based

on the nature of the payment. The interest expense on the lease liability

is recognised as a component of finance costs in income statement. In

cash flow statement, payments for the principal portion of the lease

liability are recognised as financing cash flow while payments for

interest portion of lease liability, short-term leases, and variable amounts

not included in the measurement of the lease liability, are classified

within operating cash flow.

UPM FINANCIAL REPORT 2024	191

The group as a lessor

At inception of a lease contract, the group makes an assessment whether

the lease is a finance lease or an operating lease. If the lease transfers

substantially all of the risks and rewards incidental to ownership of the

asset, it is considered to be a finance lease; if not, the lease is

considered to be an operating lease. The group has only a minor

amount of operating lease contracts, whereby the lease payments are

recognised on a straight-line basis over the term of the lease.

5.3Financial assets and liabilities by category

Financial assets and liabilities recognised in the balance sheet include

cash and cash equivalents, loans and other financial receivables,

investments in securities, trade receivables, trade payables, loans, bank

overdrafts and derivatives.

Classification of financial assets into different measurement

categories depends on the contractual cash flow characteristics and the

business model for managing the financial asset. The measurement

category of each financial asset is determined at inception. Financial

assets and liabilities are offset and the net amount reported in the

balance sheet when there is a legally enforceable right in all

circumstances to offset the recognised amounts and there is an intention

to settle on a net basis or realise the asset and settle the liability

simultaneously. Financial assets are derecognised when the rights to

receive cash flows from the financial assets have expired or have been

transferred, and the group has transferred substantially all the risks and

rewards of ownership.

Financial assets and liabilities by category at the end of 2024

EURm	FAIR VALUE THROUGH PROFIT AND LOSS	EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OCI	DERIVATIVES UNDER HEDGE ACCOUNTING	FINANCIAL ASSETS AND LIABILITIES AT AMORTISED COST	TOTAL
Energy shareholdings	—	2,247	—	—	2,247
Other non-current financial assets
Loans and receivables	—	—	—	16	16
Derivatives	1	—	27	—	28
	1	—	27	16	44
Trade and other receivables	—	—	—	1,929	1,929
Other current financial assets
Loans and receivables	—	—	—	1	1
Derivatives	9	—	58	—	67
Investment funds	1	—	—	—	1
	10	—	58	1	69
Financial assets classified as held for sale	—	—	—	—	—
Cash and cash equivalents	—	—	—	892	892
Total financial assets	11	2,247	85	2,838	5,181
Non-current debt
Interest-bearing liabilities	—	—	—	3,662	3,662
Derivatives	—	—	84	—	84
	—	—	84	3,662	3,747
Other non-current financial liabilities
Other liabilities 1)	—	—	—	153	153
Derivatives	—	—	5	—	5
	—	—	5	153	158
Current debt
Interest-bearing liabilities	—	—	—	152	152
Derivatives	10	—	5	—	14
	10	—	5	152	166
Trade and other payables	—	—	—	1,938	1,938
Other current financial liabilities
Derivatives	7	—	101	—	108
	7	—	101	—	108
Financial liabilities classified as held for sale	—	—	—	—	—
Total financial liabilities	17	—	195	5,905	6,116

1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months.

UPM FINANCIAL REPORT 2024	192

Financial assets and liabilities by category at the end of 2023

EURm	FAIR VALUE THROUGH PROFIT AND LOSS	EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OCI	DERIVATIVES UNDER HEDGE ACCOUNTING	FINANCIAL ASSETS AND LIABILITIES AT AMORTISED COST	TOTAL
Energy shareholdings	—	2,283	—	—	2,283
Other non-current financial assets
Loans and receivables	—	—	—	8	8
Derivatives	—	—	52	—	52
	—	—	52	8	60
Trade and other receivables	—	—	—	1,782	1,782
Other current financial assets
Loans and receivables	—	—	—	1	1
Derivatives	19	—	43	—	62
Investment funds	1	—	—	—	1
	20	—	43	1	64
Financial assets classified as held for sale 2)	—	—	—	63	63
Cash and cash equivalents	—	—	—	632	632
Total financial assets	20	2,283	95	2,486	4,884
Non-current debt
Interest-bearing liabilities	—	—	—	2,962	2,962
Derivatives	—	—	94	—	94
	—	—	94	2,962	3,056
Other non-current financial liabilities
Other liabilities 1)	—	—	—	155	155
Derivatives	—	—	2	—	2
	—	—	2	155	157
Current debt
Loans	—	—	—	294	294
Derivatives	33	—	—	—	33
	33	—	—	294	327
Trade and other payables	—	—	—	1,883	1,883
Other current financial liabilities
Derivatives	13	—	38	—	51
	13	—	38	—	51
Financial liabilities classified as held for sale 2)	—	—	—	20	20
Total financial liabilities	46	—	134	5,314	5,494

1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months.

2) Financial assets and liabilities classified as held for sale relate to agreement to sell 100% of the shares the of the Austrian subsidiary UPM-Kymmene Austria GmbH.

The carrying amounts of financial assets and financial liabilities

approximate their fair value except for interest-bearing liabilities in non-

current debt. Their fair value amounted to EUR 2,898 million

(2,873 million) at the end of 2024. For quoted bonds, the fair values

are based on the quoted market value as of 31 December. At the end of

2024 , all bonds were quoted.

For other non-current debt in interest-bearing liabilities fair values are

estimated using the expected contractual future payments discounted at

market interest rates and are categorised within level 2 of the fair value

hierarchy.

» Refer Note 5.2 Net debt, for further information on net debt and bonds.

UPM FINANCIAL REPORT 2024	193

Fair value measurement hierarchy for financial assets and liabilities

EURm	2024				2023
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Financial assets
Investment funds	—	1	—	1	—	1	—	1
Derivatives, non-qualifying hedges	—	10	—	10	—	19	—	19
Derivatives under hedge accounting	1	85	—	85	4	91	—	95
Energy shareholdings	—	—	2,247	2,247	—	—	2,283	2,283
Total	1	96	2,247	2,343	4	111	2,283	2,398
Financial liabilities
Derivatives, non-qualifying hedges	—	17	—	17	—	46	—	46
Derivatives under hedge accounting	—	195	—	195	6	128	—	134
Total	—	211	—	211	6	174	—	180

There have been no transfers between levels in 2024 and 2023.

	Accounting policies

Fair value through profit or loss

This category includes derivatives that do not qualify for hedge

accounting and investments funds. They are measured at fair value and

any gains or losses from subsequent measurement are recognised in the

income statement.

Equity instruments at fair value through OCI

This category includes mainly UPM’s energy shareholdings. These assets

are measured at fair value through other comprehensive income. » Refer

Note 4.3 Energy shareholdings.

Financial assets at amortised cost

This category comprises loan receivables with fixed or determinable

payments that are not quoted in an active market, as well as trade and

other receivables, and cash and cash equivalents. They are included in

non-current assets unless they mature within 12 months of the balance sheet

date. Cash and cash equivalents are always classified as current assets.

Loan receivables that have a fixed maturity are measured at amortised cost

using the effective interest method. Loan receivables without fixed maturity

date are measured at amortised cost. As soon as a loan receivables or

cash and cash equivalents are originated or purchased, a loss allowance

for 12-month expected credit losses are recognised in profit or loss. If credit

risk increases significantly, full lifetime expected credit losses are

recognised in profit or loss. The credit loss model applied to trade

receivables is described in » Note 4.6 Working capital.

Derivatives under hedge accounting

All derivatives are initially and continuously recognised at fair value in the

balance sheet. Gains and losses on remeasurement of derivatives used for

hedging purposes are recognised in accordance with the accounting

principles described in » Note 6.2 Derivatives and hedge accounting.

Financial liabilities measured at amortised cost

This category includes debt, trade payables and other financial

liabilities. » Refer Note 5.2 Net debt, for further information.

The different levels of fair value hierarchy used in fair value estimation

are defined as follows:

Fair values under level 1

Quoted prices (unadjusted) traded in active markets for identical assets

or liabilities. Derivatives include futures and commodity forwards traded

in exchange.

Fair values under level 2

Observable inputs are used as basis for fair value calculations either

directly (prices) or indirectly (derived from prices). If all significant inputs

required to fair value an instrument are observable, the instrument is

included in level 2. For investment funds, the valuation is based on

quoted prices (unadjusted) for identical assets in markets that are not

active. For derivatives, level 2 include OTC derivatives like forward

foreign exchange contracts, foreign currency options, interest and

currency swaps and commodity swaps. Specific valuation techniques

used to value financial instruments at level 2 include the following

methods:

Interest forward rate agreements (FRA) are fair valued based

on quoted market rates on the balance sheet date. Forward foreign

exchange contracts are fair valued based on the contract forward rates

at the balance sheet date. Foreign currency options are fair valued

based on quoted market rates and market volatility rates on the balance

sheet date by using the Black&Scholes option valuation model. Interest

and currency swap instruments are fair valued as present value of the

estimated future cash flows based on observable yield curves.

Commodity swaps are fair valued based on quoted forward prices on

the balance sheet date.

An embedded derivative that is by nature a foreign currency forward

contract is valuated at market forward exchange rates and is included in

level 2. Embedded derivatives are monitored by the group and the fair

value changes are reported in other operating income in the income

statement.

Fair values under level 3

Financial assets or liabilities of which fair values are not based on

observable market data (that is, unobservable inputs) are classified

under level 3. This category include UPM’s energy shareholdings and

forest assets. Fair valuations are performed at least quarterly by

respective business areas or functions. Fair valuations are reviewed by

the group finance management and overseen by the Audit Committee.

» Refer Note 4.3 Energy shareholdings and » Note 4.2 Forest assets.

UPM FINANCIAL REPORT 2024	194

5.4Financial income and expenses

EURm	2024	2023
Exchange rate gains and losses
Derivatives	-31	4
Exchange gains and losses on financial liabilities measured at amortised costs	-11	29
Exchange gains and losses on financial assets measured at amortised costs	37	-32
Other exchange rate gains and losses 1)	0	-73
	-6	-72
Fair value changes
Fair value gains and losses on derivatives designated as fair value hedges	16	32
Fair value adjustment of debt attributable to interest rate risk	-17	-33
	-1	-2
Total	-7	-74
Interest and other finance income and costs, net
Interest expense on lease liabilities	-24	-21
Interest expense on other financial liabilities measured at amortised cost	-47	-38
Interest income (expense) on derivatives	-40	-28
Interest income on loans, receivables and cash	31	37
Dividend income from energy shareholdings	2	0
Impairment charges of associates and joint ventures	-2	0
Other financial income and expenses, net	-17	-20
	-97	-70
Total	-104	-144

1) Other exchange rate gains and losses include EUR 71 million exchange rate losses relating to the sale of Russian subsidiaries in 2023.

Net gains and losses on derivatives included in the operating profit

EURm	2024	2023
Cash flow hedges reclassified from hedging reserve	-7	-117
Non-qualifying hedges	-25	4
Total	-33	-113

Foreign exchange gains and losses in the operating profit excluding non-qualifying hedges

EURm	2024	2023
Sales	-5	61
Other operating income	-9	-35
Total	-14	26

5.5Share capital and reserves

The company has one series of shares and each share carries one vote.

There are no specific terms related to the shares. At 31 December

2024 , the number of the company’s shares was 533,735,699. The

shares do not have any nominal counter value. The shares are included

within the book entry system for securities.

Share capital

	2024	2023
Number of shares (1,000)	533,736	533,736
Share capital, EURm	890	890

UPM FINANCIAL REPORT 2024	195

Treasury shares

At 31 December 2024, the company held 411,653 (411,653) of its

own shares, 0.08% (0.08%) of the total number of shares.

Reserves

EURm	2024	2023
Fair value reserve	1,661	1,713
Hedging reserve	-10	-88
Share-based payments reserve	26	31
Total other reserves	1,678	1,655
Reserve for invested non-restricted equity	1,273	1,273
Translation reserve	657	347
Total reserves	3,608	3,276

Fair value reserve

This reserve represents the cumulative net change in the fair value of

investments in equity securities comprising mainly of the fair value

change of the energy shareholdings. Amounts are recycled only within

equity upon the disposal of the asset.

Hedging reserve

This reserve comprises the cumulative net change in the fair value of the

effective portion of cash flow hedging instruments related to hedged

transactions that have not yet occurred and the cost of hedging when

recognised in OCI. Amounts are recognised in profit or loss when the

associated hedged transactions affect profit or loss or as part of the

acquisition cost of property, plant and equipment.

Share-based payments reserve

The share-based payments reserve is used to recognise the fair value at

the grant date of the share incentive plans, Performance Share Plan,

Restricted Share Plan and Deferred Bonus Plan, over their vesting

period.

Reserve for invested non-restricted equity

Reserve for invested non-restricted equity includes, under the Companies’

Act, the exercise value of shareholders’ investments in the company

unless otherwise decided by the company.

Translation reserve

This reserve includes the foreign currency differences arising from the

translation of foreign operations, and the effective result of transactions

that hedge the group’s net investments in foreign operations. There were

no reclassifications from the translation reserve to profit or loss during

the period resulting from inefficiency of net investment hedges.

	Accounting policies

Transaction costs directly relating to the issue of new shares or share

options are recognised, net of tax, in equity as a reduction in the

proceeds. Where any group company purchases the parent company’s

shares (treasury shares), the consideration paid, including any directly

attributable incremental costs (net of tax), is deducted from equity

attributable to the owners of the parent company until the shares are

cancelled or reissued. Where such shares are subsequently reissued,

any consideration received, net of any directly attributable incremental

transaction costs and the related income tax effects, is included in equity

attributable to the owners of the parent company.

Hedging reserve

EURm	CURRENCY CASH FLOW HEDGES	ELECTRICITY PURCHASE AND SALES HEDGES	COST OF HEDGING	TAX	TOTAL
2024
Hedging reserve, at 1 January	13	-120	-3	21	-88
Amounts reclassified to profit and loss	2	2	3	-1	6
Amounts reclassified to acquisition cost of a fixed assets	—	—	—	—	—
Change in fair value of hedging instruments recognised in OCI	-55	146	-1	-18	72
Hedging reserve, at 31 December	-40	29	0	2	-10

EURm	CURRENCY CASH FLOW HEDGES	ELECTRICITY PURCHASE AND SALES HEDGES	COST OF HEDGING	TAX	TOTAL
2023
Hedging reserve, at 1 January	42	-814	-11	155	-627
Amounts reclassified to profit and loss	-74	178	13	-23	94
Amounts reclassified to acquisition cost of a fixed assets	—	—	1	—	1
Change in fair value of hedging instruments recognised in OCI	44	516	-5	-111	444
Hedging reserve, at 31 December	13	-120	-3	21	-88

UPM FINANCIAL REPORT 2024	196

6.Risk management

6.1Financial risk management

The objective of financial risk management is to protect the group

from unfavourable changes in financial markets and thus help to

secure profitability. The objectives and limits for financing activities

are defined in the Group Treasury Policy approved by the Board of

Directors. In financial risk management various financial instruments are

used within the limits specified in the Group Treasury Policy. Only such

instruments which market value and risk profile can be continuously and

reliably monitored are used for this purpose.

Financing services are provided to the group entities and financial

risk management carried out by the central treasury department,

Treasury and Risk Management.

	Foreign exchange risk

As a consequence of the global nature of its business, UPM is exposed

to risks associated with changes in exchange rates, primarily with

respect to USD, UYU, GBP and CNY. Foreign exchange risk arises from

contracted and expected commercial future payment flows (transaction

exposure), changes in value of recognised assets and liabilities

denominated in foreign currency and changes in the value of assets and

liabilities in foreign subsidiaries (translation exposure). The objective of

foreign exchange risk management is to limit the uncertainty created by

changes in foreign exchange rates on the future value of cash flows

earnings and in the group’s balance sheet. Changing exchange rates

can also have indirect effects, such as change in relative competitiveness

between currency regions.

Transaction exposure

The group hedges transaction exposure related to highly probable future

commercial foreign currency cash flows on a rolling basis over the next

12-month period based on forecasts by the respective business areas.

Transaction risk arises from the changes in currency rates of highly

probable transactions, which are expected to take place in currencies

other than the functional currency of the entity. The group’s policy is to

hedge an average of 50% of its estimated net risk currency cash flow.

Some highly probable cash flows have been hedged for longer than 12

months ahead while deviating from the risk neutral hedging level at the

same time. At 31 December 2024, 52% (53%) of the forecast 12-month

currency flow was hedged.

The group enters into external forward contracts, which are

designated at group level as hedges of foreign exchange risk of specific

future foreign currency flows. Cash flow hedge accounting is applied

when possible. If hedge accounting is not possible, fair value changes of

the hedging instrument are recognised through profit and loss

immediately.

At the end of 2024, UPM’s estimated net risk currency flow for the

next 12 months was EUR 1,815 million (1,875 million).

The weighted hedging rate by currency against EUR were USD 1.08,

UYU 44.22 and GBP 0.86.

In addition to commercial foreign currency flow, the group has

hedged risk currency flow related to investments. Cash flow hedge

accounting is applied. At the end of 2024, the hedged net risk currency

flow was EUR 2 million (EUR 1 million).

Translation exposure

The group has several currency denominated assets and liabilities on its

balance sheet such as foreign currency bonds, loans and deposits,

group internal loans and cash in other currencies than functional

currencies. UPM aims to fully hedge this balance sheet translation

exposure, however, UPM might have unhedged balance sheet

exposures within the limits set in group Treasury Policy.

At 31 December 2024, the unhedged balance sheet exposures in net

of interest-bearing assets and liabilities amounted to EUR 7 million (9

million). Hedge accounting is not applied and all fair value changes of

hedging instruments are recognised through profit and loss immediately.

The group has also accounts receivable and payable balances

denominated in foreign currencies and UPM aims to fully hedge the net

exposure in main currencies. The nominal values of the hedging

instruments in net of accounts payable and receivable hedging were

EUR 333 million (323 million). Hedge accounting is not applied and all

fair value changes of hedging instruments are recognised through profit

and loss immediately.

UPM's net investments in foreign subsidiaries are also subject to

foreign currency translation differences. The exchange rate differences

arising from translation of foreign subsidiaries are accumulated as a

separate component of equity in the translation reserve relate mainly to

USD, CNY and GBP. Currency exposure arising from the net investment

in foreign subsidiaries is generally not hedged. However, at

31 December 2024, part of the foreign exchange risk associated with

the net investments was hedged, major ones in China and Uruguay, and

UPM FINANCIAL REPORT 2024	197

net investment hedge accounting has been applied. The average

weighted hedging rate of these hedges against EUR were China CNY

7.68 and Uruguay USD 1.10.

Derivatives used for hedging translation risks are external forward

contracts, cross currency swaps and currency options.

Foreign exchange risk sensitivity

The following table illustrates the effect to profit before tax due to

recognised balance sheet items in foreign currency and the effect to

equity arising mainly from foreign currency forwards used to hedge

foreign currency flows.

	Profit before tax		Equity
EURm	2024	2023	2024	2023
EUR strengthens by 10%
USD	1	2	102	89
GBP	—	—	-14	-14
UYU	—	—	12	13
CNY	1	1	13	10
EUR weakens by 10%
USD	-1	-2	-102	-89
GBP	—	—	14	14
UYU	—	—	-12	-13
CNY	-1	-1	-13	-10

The following assumptions were made when calculating the sensitivity to

changes in the foreign exchange risk:

• A major part of non-derivative financial instruments (such as cash

and cash equivalents, trade receivables, debt and trade payables)

are either directly denominated in the functional currency or are

transferred to the functional currency through the use of derivatives

i.e. the balance sheet position is close to zero. Exchange rate

fluctuations have therefore minor or no effects on profit or loss.

• The table includes effect of foreign currency forward contracts that

hedge commercial flows or investments or net investments in foreign

subsidiaries, and which have an effective hedge relationship.

• The table includes also effect of foreign currency forward contracts

that are not part of the effective cash flow hedge having an effect on

profit.

• The table excludes effect of foreign currency denominated future cash

flows.

	Interest rate risk

The interest-bearing liabilities and assets expose the group to interest

rate risk, namely repricing and fair value interest rate risk caused by

interest rate movements. According to the Group Treasury Policy the

interest rate exposure is defined as the difference in interest rate

sensitivity between assets and liabilities compared to a benchmark

portfolio with a 6-month duration. The total interest rate exposure is a net

debt portfolio which includes all interest bearing assets and liabilities

and derivatives that are used to hedge the aforementioned balance

sheet items. The policy sets risk limits and allowed deviation from 6-

month benchmark net debt duration level. UPM has decided to deviate

from its policy benchmark and extend the duration of net debt. At 31

December 2024 the duration of net debt was 30 (40) months. The

group uses interest rate derivatives, such as interest rate swaps, interest

rate futures and cross currency swaps, to change net debt duration.

The table below shows the nominal value of interest rate position

exposed to interest rate risk in each significant currency. The position

includes all cash balances, investment funds, interest bearing assets and

liabilities and derivatives used to hedge these items. The positive/

negative position indicates a net liability/asset position by currency and

that the group is exposed to repricing and/or fair value interest risk by

interest rate movements in that currency. Table excludes leasing

transactions.

Nominal values of the group’s net debt by currency including

derivatives

EURbn	2024	2023
EUR	1.7	1.3
USD	0.8	0.9
CNY	-0.3	-0.2
Others	-0.2	-0.2
Total	2.1	1.8

Most of the interest rate derivatives hedging interest on long-term debt

meet the requirement of fair value hedge accounting.

Interest rate risk sensitivity

The following table illustrates the effect to profit before tax mainly as

a result of changes in interest expense on floating rate debt.

	Profit before tax
EURm	2024	2023
Interest rate of net debt 100 basis points higher	-12	-8
Interest rate of net debt 100 basis points lower	12	8

The following assumptions were made when calculating the sensitivity to

changes in interest rates:

• The variation of interest rate is assumed to be 100 basis points

parallel shift in applicable interest rate curves.

• In the case of fair value hedges designated for hedging interest rate

risk, the changes in the fair values of the hedged items and the

hedging instruments attributable to the interest rate movements

balance out almost completely in the income statement in the same

period. However, the possible ineffectiveness has an effect on the

profit of the year.

• Cash balances are excluded.

• Investment funds are excluded.

• Leasing transactions are excluded.

• Fixed rate debt that is measured at amortised cost and is not

designated to fair value hedge relationship is not subject to interest

rate risk sensitivity.

• Floating rate debt that are measured at amortised cost and not

designated as hedged items are included in interest rate sensitivity

analysis.

• Changes in the market interest rate of interest rate derivatives (interest

rate futures, swaps and cross currency swaps) that are not

designated as hedging instruments in hedge accounting affect the

financial income or expenses (net gains or losses from

remeasurement of the financial assets and liabilities to fair value) and

are therefore included in the income-related sensitivity analysis.

UPM FINANCIAL REPORT 2024	198

	Electricity price risk

UPM is hedging the price of electricity consumption and production.

Electricity prices rely on weather, fossil fuel and emissions allowance

prices as well as the balance of supply and demand. The group’s

sensitivity to electricity market price is dependent on the electricity

production and consumption levels and the hedging levels. The inherent

price risks arise from the daily sales and purchases of electricity from the

power market with spot prices, and the hedging objective is to reduce

the earnings volatility that arises from electricity prices.

UPM considers Nordic system and electricity price area differential

(EPAD) for Finland products perfect hedges for corresponding electricity

price risk components in Finland. The components of electricity price risk

in the Nordic power market are hedged by entering into System and

EPAD electricity derivative contracts, mostly Nasdaq Commodities

futures and bilateral forwards. System and EPAD prices are considered

as separately identifiable and reliably measurable risk components in

electricity sales and purchase contracts as well as in the hedging

instruments, as a quoted price is available. Fair value changes of

designated system and EPAD derivatives are offsetting electricity sales

and purchase price changes. The share of system component covers

approximately 80-90% and the share of EPAD component covers

10-20% of the changes in electricity sales and purchase prices.

The electricity price risk in the Central European power market is

hedged by entering into European Electricity Exchange futures. Products

used for hedging hedge the entire price risk for the underlying price

area.

The time frame hedged has historically been approximately rolling 5

years. Hedging level has been typically higher for the nearest years and

lower for the latter years. Hedging level for a certain year has

historically varied between 0-80%. UPM constantly updates its electricity

production and consumption forecasts. Hedging level is calculated

based on the most recent available information about the electricity

production and consumption forecast.

The group applies cash flow hedge accounting for the hedging

relationships when it hedges its electricity price risk. In small amounts,

the group is also trading electricity forwards and futures. As well as

hedging, proprietary trading risks are monitored on a daily basis. Value-

At-Risk levels are set to limit the maximum risk at any given time.

Cumulative maximum loss is limited by stop-loss limits.

Electricity derivatives price sensitivity

Sensitivity analysis for financial electricity derivatives is based on

position at the end of financial year. Sensitivities change over time

as the overall hedging and trading positions change. Underlying

physical positions are not included in the sensitivity analysis. Sensitivity

analysis is calculated separately for the hedge accounted and non-

hedge accounted volumes. In the analysis it is assumed that forward

quotation for Nasdaq Commodities, EEX and bilateral derivatives would

change EUR 5/ MWh throughout the period UPM has derivatives.

EURm	EFFECT	2024	2023
+/– EUR 5/MWh in electricity forward quotations
Effect on profit before tax	+/-	0.0	0.1
Effect on equity	+/-	31.0	34.8

6.2Derivatives and hedge accounting

The group uses financial derivatives to manage currency, interest rate

and commodity price risks.

» Refer Note 6.1 Financial risk management.

	Accounting policies

All derivatives are initially and continuously recognised at fair value in

the balance sheet. The fair value gain or loss is recognised through the

income statement or other comprehensive income depending on whether

the derivative is designated as a hedging instrument, and on the nature

of the item being hedged. Certain derivatives are designated at

inception either hedges of the fair value of recognised assets or liabilities

(fair value hedge), hedges of highly probable forecasted transactions

(cash flow hedge), or hedges of net investments in foreign subsidiaries

with other than the EUR as their functional currency (net investment

hedge). Derivative fair values on the balance sheet are classified as non-

current when the remaining maturity is more than 12 months and

as current when the remaining maturity is less than 12 months.

For hedge accounting purposes, UPM documents the relationship

between the hedging instruments and hedged items, as well as the risk

management objective and strategy for undertaking various hedge

transactions at the inception date. This process includes linking all

derivatives designated as hedges to specific assets and liabilities or

forecast transactions. The group also documents its assessment, both at

the hedge inception and on an on-going basis, as to whether the hedge

is highly effective in offsetting changes in fair values or cash flows of the

hedged items.

Certain derivatives, while considered to be economical hedges for

UPM’s financial risk management purposes, do not qualify for hedge

accounting. Such derivatives are recognised at fair value through the

income statement in other operating income or under financial items.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are

designated and qualify as cash flow hedges is recognised in other

comprehensive income. Cost of hedging, meaning forward points of

derivative forward contracts accounted as cash flow hedges, is

recognised as a part of the hedging reserve. Amounts deferred in equity

are transferred to the income statement and classified as income or

expense in the same period as that in which the hedged item affects the

income statement (for example, when the forecast external sale to the

group that is hedged takes place).

When the forecasted transaction that is hedged results in the

recognition of a fixed asset, gains and losses previously deferred in

equity are transferred from equity and included in the initial

measurement of the acquisition cost and depreciated over the useful lives

of the assets.

When a hedging instrument expires or is sold, or when a hedge no

longer meets hedge accounting criteria, any cumulative gain or loss

existing in equity at that time remains in equity and is recognised when

the committed or forecasted transaction is ultimately recognised in the

income statement. However, if a forecasted transaction is no longer

expected to occur, the cumulative gain or loss that was reported in

equity is immediately recognised to the income statement.

In currency cash flow hedging, the hedging instrument is made in the

same currency as the hedged item and hence the fair value change of

the hedging instrument are expected to effectively offset the fair value

UPM FINANCIAL REPORT 2024	199

changes generated by the hedged items. Thereby the hedge ratio

between the instrument and the cash flow is 1:1. Hedge accounting

ceases in the case that the forecasted cash flows are no longer expected

to occur. The group has not recognised significant sources of

ineffectiveness that can reasonably be expected to take place.

Also in electricity price hedges, hedge accounting ceases in the case

that the forecasted cash flows are no longer expected to occur.

Hedges of net investments in foreign subsidiaries

The fair value changes of forward exchange contracts used in hedging

net investments that reflect the change in spot exchange rates are

recognised in other comprehensive income within translation reserve.

Any gain or loss relating to the interest portion of forward exchange

contracts is recognised immediately in the income statement under

financial items. Gains and losses accumulated in equity are included in

the income statement when the foreign operation is partially disposed of

or sold.

The hedging instrument is always made in the same currency as the

hedged investment, hence the hedge ratio in net investment hedging is

1:1. For hedging of net investments, hedge accounting ceases in the

situation where the hedged item is disposed or sold during the duration

of the hedging instrument.

Fair value hedges

The group applies fair value hedge accounting for hedging fixed interest

risk on debt. Changes in the fair value of derivatives that are designated

and qualify as fair value hedges and that are prospectively highly

effective are recorded in the income statement under financial items,

along with any changes in the fair value of the hedged asset or liabilities

that are attributable to the hedged risk. The carrying amounts of hedged

items and the fair values of hedging instruments are included in interest-

bearing assets or liabilities.

Derivatives that are designated and qualify as fair value hedges

mature at the same time as hedged items. If the hedge no longer meets

the criteria for hedge accounting, the adjustment to the carrying amount

of a hedged item for which the effective interest method is used is

amortised to profit or loss over the expected period to maturity.

Hedge accounting ceases in fair value hedge of fixed interest risk in

case of early redemption of such debt, which is hedged under fair value

hedge accounting. The group has not recognised significant sources of

ineffectiveness that can reasonably be expected to take place.

	Financial counterparty risk

The financial instruments the group has agreed with banks and financial

institutions contain an element of risk of the counterparties being unable

to meet their obligations. According to the Group Treasury Policy,

derivative instruments and investments of cash funds may be made only

with counterparties meeting certain creditworthiness criteria. The group

minimises counterparty risk also by using a number of major banks and

financial institutions. Creditworthiness of counterparties is constantly

monitored by Treasury and Risk Management. Due to the tight

counterparty criteria, credit risk does not dominate the fair valuation of

financial instruments.

Effects of IBOR reform

The main effect of the IBOR reform was limited to fair value hedge

accounting of long-term fixed-rate debt for changes in fair value

attributable to USD LIBOR, that was used as the benchmark interest rate

as long as USD LIBOR rates were published. UPM adhered to ISDA

2020 IBOR Fallback Protocol in 2023, and fallback terms stated in the

protocol were followed to convert USD LIBOR based transactions SOFR

based transactions. In the fair value hedging relationships where IBOR

reform had an effect, fair value for both the hedged item and hedging

instrument is calculated with identical valuation curve. Therefore no

ineffectiveness was recorded.

UPM FINANCIAL REPORT 2024	200

Net fair values of derivatives

	Positive fair values	Negative fair values	Net fair values	Positive fair values	Negative fair values	Net fair values
EURm	2024			2023
Foreign exchange risk
Forward foreign exchange contracts
Cash flow hedges	16	-54	-38	25	-12	13
Net investment hedge	9	-25	-16	3	-2	1
Non-qualifying hedges	10	-17	-7	19	-5	14
Cross currency swaps
Non-qualifying hedges	—	—	—	—	-31	-31
Derivatives hedging foreign exchange risk	35	-96	-61	47	-50	-3
Interest rate risk
Interest rate swaps
Fair value hedges	21	-74	-53	24	-94	-69
Non-qualifying hedges	—	—	—	—	-4	-4
Cross currency swaps
Fair value hedges	—	-15	-15	27	—	27
Non-qualifying hedges	—	—	—	—	—	—
Derivatives hedging interest risk	21	-89	-68	51	-97	-46
Commodity risk
Electricity sales
Cash flow hedges	18	-26	-8	12	-26	-14
Non-qualifying hedges	—	—	—	—	—	—
Electricity purchase
Cash flow hedges	—	—	—	4	—	4
Other commodities
Cash flow hedges	21	—	21
Non-qualifying hedges	0	—	—	—	-6	-6
Derivatives hedging commodity risk	39	-26	13	16	-32	-16
Total	95	-211	-116	114	-180	-66

No derivatives are subject to offsetting in the group’s financial statements. All derivatives are under ISDA or similar master netting agreement, which are

applied on conditional terms, such as case of breach of contract or bankruptcy. The values of derivatives are recognised as gross on the balance sheet and a

breakdown by category of instruments is presented in » Note 5.3 Financial assets and liabilities by category.

Nominal amounts of derivatives

EURm	2024	2023
Interest rate futures	1,134	1,691
Interest rate swaps	1,711	1,089
Forward foreign exchange contracts	3,617	3,308
Currency options	—	—
Cross currency swaps	129	134
Commodity contracts	551	591

Cash collaterals pledged mainly for exchange traded contracts totalled

EUR 108 (185) million of which EUR 107 (184) million relate to

commodity contracts and EUR 1 (1) million to interest rate futures. The

open market value of exchange traded contracts on the balance sheet is

minor. Cash collaterals are included in Other receivables. » Refer Note

4.6 Working capital.

Net fair values of derivatives calculated by counterparty

EURm	POSITIVE FAIR VALUES	NEGATIVE FAIR VALUES	NET FAIR VALUES
2024	43	-159	-116
2023	55	-121	-66

UPM FINANCIAL REPORT 2024	201

Timing of nominal amounts of derivatives 2024	Within 1 year	Between 1–5 years	Later than 5 years	Total
EURm	2024
Foreign exchange risk
Forward foreign exchange contracts
Cash flow hedges	1,679	11	—	1,690
Net investment hedge	783	—	—	783
Non-qualifying hedges	1,099	46	—	1,145
Cross currency swaps
Non-qualifying hedges	—	129	—	129
Interest rate risk
Interest rate swaps
Fair value hedges	—	1,111	600	1,711
Cross currency swaps
Fair value hedges	—	129	—	129
Interest rate futures
Non-qualifying hedges	1,134	—	—	1,134
Commodity risk
Electricity sales
Cash flow hedges	285	69	—	354
Electricity purchase
Cash flow hedges	68	30	—	98
Non-qualifying hedges	—	—	—	—
Other commodities
Cash flow hedges	56	17	—	73
Non-qualifying hedges	26	—	—	26

Timing of nominal amounts of derivatives 2023	Within 1 year	Between 1–5 years	Later than 5 years	Total
EURm	2023
Foreign exchange risk
Forward foreign exchange contracts
Cash flow hedges	1,735	8	—	1,743
Net investment hedge	287	—	—	287
Non-qualifying hedges	1,263	15	—	1,278
Cross currency swaps
Non-qualifying hedges	—	—	134	134
Interest rate risk
Interest rate swaps
Fair value hedges	—	1,089	—	1,089
Cross currency swaps
Fair value hedges	—	—	134	134
Interest rate futures
Non-qualifying hedges	1,691	—	—	1,691
Commodity risk
Electricity sales
Cash flow hedges	381	60	—	442
Non-qualifying hedges	—	—	—	—
Electricity purchase
Cash flow hedges	35	2	—	37
Non-qualifying hedges	1	—	—	1
Other commodities
Non-qualifying hedges	111	—	—	111

The nominals of cross currency swaps are included in both foreign exchange risk and interest rate risk.

UPM FINANCIAL REPORT 2024	202

7.Income tax

7.1Tax on profit for the year

Income tax

In 2024, tax on profit for the year amounted to EUR 37 million (71

million). The effective tax rate was 7.4% (15.2%). In 2024 and 2023,

the effective tax rate was affected by the income not subject to tax from

subsidiaries operating in tax free zone in Uruguay and German tax rate

that is higher than in Finland. In 2024, effective tax rate was

significantly impacted by the impairment on assets in biochemicals

refinery in Leuna, Germany, and restructuring charges and impairment

charges related to the closure of Hürth newsprint mill, the closure of

Nordland fine paper machine 3 and the planned closure of

Kaltenkirchen factory in Germany.

Income tax

EURm	2024	2023
Current tax expense	122	161
Change in deferred taxes	-85	-90
Total	37	71

Tax rate reconciliation

EURm	2024	2023
Profit before tax	500	464
Computed tax at Finnish statutory rate of 20%	100	93
Difference between Finnish and foreign rates	-6	-28
Tax-exempt income	-91	-51
Non-deductible expenses	37	28
Withholding taxes	2	2
Tax loss with no tax benefit	8	45
Results of associates	0	0
Change in tax legislation	—	—
Change in recoverability of deferred tax assets	—	-5
Utilisation of previously unrecognised tax losses	-1	-3
Other items	-13	-9
Total income taxes	37	71
Effective tax rate, %	7.4%	15.2%

	Accounting policies

The group’s income tax expense comprises current tax and deferred tax.

Current tax is calculated on the taxable result for the period based on

the tax rules prevailing in the countries where the group operates and

includes tax adjustments for previous periods and withholding taxes

deducted at source on intra-group transactions. Tax expense is

recognised in the income statement, unless it relates to items that have

been recognised in equity or as part of other comprehensive income. In

these instances, the related tax expense is also recognised in equity or

other comprehensive income, respectively.

	Key estimates and judgements

The group is subject to income taxes in numerous jurisdictions and

the calculation of the group’s tax expense and income tax liabilities

involves a degree of estimation and judgement. Tax balances reflect

a current understanding and interpretation of existing tax laws.

Management periodically evaluates positions taken in tax returns with

respect of situations in which applicable tax regulation is subject to

interpretation and adjusts income tax liabilities where appropriate.

The group is within the scope of the OECD Pillar Two model rules.

Pillar Two legislation was enacted in Finland in 2023, the jurisdiction in

which UPM is incorporated, and came into effect from 1 January 2024.

The group applies the IAS 12 exception to recognising and disclosing

information about deferred tax assets and liabilities related to Pillar Two

income taxes. The entities in scope will be liable to pay a top-up tax for

the difference between their GloBE effective tax rate per jurisdiction and

the 15% minimum rate.

The group has performed an assessment of its potential exposure to

Pillar Two income taxes for year 2024 based on the 2024 financial

information for the constituent entities in the Group. The jurisdictions in

which the group operates are expected to be either within the

transitional safe harbours or to have jurisdictional GloBE effective tax

rates above 15%. The Pillar Two legislation had no impact on income

taxes for the current reporting period. The assessment is based on

currently available information and analysis regarding the interpretation

of the rules, for which additional guidance is still being developed by

the OECD.

The group expects that the main jurisdiction for possible exposure to

additional Pillar Two income taxes in the future is Uruguay. The financial

impact will depend on the results of the Uruguay subsidiaries and the

decrease in the substance based income exclusion in accordance with

the OECD Pillar Two model rules in subsequent years.

UPM FINANCIAL REPORT 2024	203

7.2Deferred tax

EURm	2024	2023	2022
Deferred tax assets
Intangible assets and property, plant and equipment	134	66	86
Inventories	72	77	86
Retirement benefit liabilities and provisions	95	94	88
Other temporary differences	192	175	475
Tax losses and tax credits carried forward	276	242	167
Offset against liabilities	-243	-224	-417
Total	526	431	485
Deferred tax liabilities
Intangible assets and property, plant and equipment	-330	-265	-335
Forest assets	-440	-412	-423
Retirement benefit assets	—	—	-2
Other temporary differences	-145	-163	-294
Offset against assets	243	224	417
Total	-673	-616	-636
Net deferred tax assets (liabilities)	-146	-185	-151

Movements in deferred tax assets and liabilities

EURm	2024	2023
Carrying value, at 1 January	-185	-151
Charged to income statement	85	90
Charged to other comprehensive income	-35	-113
Companies acquired	-4	-5
Classified as held for sale	—	-13
Exchange rate adjustments	-8	7
Net deferred tax assets (liabilities)	-146	-185

Deferred income tax assets and liabilities are offset when there is a

legally enforceable right to offset current tax assets against current tax

liabilities and when the deferred income taxes relate to the same fiscal

authority.

Tax charge to other comprehensive income

	Before tax	Tax	After tax	Before tax	Tax	After tax
EURm	2024			2023
Actuarial gains and losses on defined benefit plans	7	-2	4	-14	4	-10
Energy shareholdings	-31	-16	-47	-1,370	19	-1,351
Translation differences	346	—	346	-120	—	-120
Cash flow hedges	98	-20	78	673	-134	539
Net investment hedges	-16	3	-13	8	-2	6
Total	403	-35	368	-823	-113	-936

	Key estimates and judgements

Recognised deferred tax assets

The recognition of deferred tax assets requires management judgement

as to whether it is probable that such balances will be utilised and/or

reversed in the foreseeable future. At 31 December 2024, net operating

loss carry-forwards for which the group has recognised a deferred tax

asset amounted to EUR 904 million (841 million in 2023 and EUR 584

in 2022), of which EUR 865 million (772 million in 2023 and EUR 514

in 2022) was attributable to German subsidiaries. These losses primarily

relate to restructuring activities and mill closures, as well as profit

improvement programs implemented in recent years. In Germany net

operating loss carry-forwards do not expire. The group expects sufficient

future taxable income to be available for the utilisation of deferred tax

assets. In other countries net operating loss carry-forwards expire at

various dates and in varying amounts. Based on profit forecasts, it is

probable that there will be sufficient future taxable profits available

against which the tax losses and tax credits can be utilised.

The assumptions regarding future realisation of tax benefits, and

therefore the recognition of deferred tax assets, may change due to

future operating performance of the group, as well as other factors,

some of which are outside of the control of the group.

Unrecognised deferred tax assets and liabilities

The net operating loss carry-forwards for which no deferred tax is

recognised due to uncertainty of their utilisation amounted to EUR 844

million (902 million) in 2024. These net operating loss carry-forwards

are mainly attributable to certain German and French subsidiaries and

do not expire, as well as to certain Uruguayan subsidiaries which expire

at different times by the end of 2029.

In addition, the group has not recognised deferred tax assets on loss

carry-forwards relating to closed Miramichi paper mill in Canada. These

loss carry-forwards expire at different times and the majority of the loss

carry-forwards expire by the end of 2028.

In Uruguay, tax credits amounting to EUR 151 million (155 million)

have not been recognised due to uncertainty of their utilisation.

The group has not recognised deferred tax liability in respect of

undistributed earnings of non-Finnish subsidiaries to the extent that it is

probable that the temporary differences will not reverse in the foreseeable

future. In addition, the group has not recognised deferred tax liability for

the undistributed earnings of Finnish subsidiaries and associates as such

earnings can be distributed without any tax consequences.

UPM FINANCIAL REPORT 2024	204

	Accounting policies

Deferred tax is calculated based on temporary differences between the

carrying amounts and the taxable values of assets and liabilities and for

tax loss carry-forwards to the extent that it is probable that these can be

utilised against future taxable profits.

Deferred income tax is determined using tax rates (and laws) that

have been enacted or substantially enacted by the balance sheet date

and are expected to apply when the related deferred income tax asset is

realised or the deferred income tax liability is settled.

Deferred income tax is provided on temporary differences arising on

investments in subsidiaries, associates and joint ventures, except where

the timing of the reversal of the temporary difference is controlled by the

group and it is probable that the temporary difference will not reverse in

the foreseeable future. Deferred tax assets and liabilities are recognised

net where there is a legal right to set-off and an intention to settle on a

net basis.

UPM FINANCIAL REPORT 2024	205

8.Group structure

8.1Business acquisitions and disposals

In 2024, UPM completed the sale of UPM Kymmene-Austria GmbH. The

transaction comprises the UPM Steyrermühl site and the Steyrermühl

sawmill operations. UPM Communication Papers ended the newspaper

production at Steyrermühl paper mill in June 2023. The group also sold

its 50.00% holding in joint venture ASD Altpapier Sortierung Dachau

GmbH. UPM made also several minor sales of equity investments

accounted at fair value through OCI.

In 2023, UPM sold all its business operations in Russia to Gungnir

Wooden Products Trading. The group also sold its holding in ASK

Altpapier Sortierung Kinsau GmbH and its 20.00% holding in the

associated company Northern SC Paper Corporation. UPM made also

several minor investments and sales of equity investments accounted at

fair value through OCI.

Reconciliation of gain on sale and net cash arising from the

disposal of UPM Kymmene-Austria GmbH

EURm	Q1-Q4/2024
Reconciliation of gain on sale
Consideration paid in advance	15
Consideration paid in cash	56
Net assets sold	-50
Transaction and other costs, net	0
Gain on disposal	21
Consideration paid in cash	56
Cash in company disposed	-39
Net cash arising from disposal	17

Business combinations

On 23 July 2024, it was announced that UPM Raflatac has acquired

Grafityp, a Belgian-based company to further accelarate its growth in

graphics solutions. Merging UPM Raflatac’s existing Graphics business

with Grafityp will strengthen UPM Raflatac’s overall competitive

positioning in this attractive product segment, expand its portfolio and

give access to high-value new technologies.

If the transaction had occurred on 1 January 2024, UPM’s sales for

January–December 2024 would have been EUR 10,356 million and

profit for the period EUR 461 million. These amounts have been

calculated using the group’s accounting policies and by adjusting the

results of the subsidiaries to reflect the depreciation and amortisation

that would have been charged assuming application of fair value

adjustments to other intangible assets, property plant and equipment

and inventories from 1 January 2024, together with the consequential

tax effects.

Details of the purchase consideration, the net assets acquired and

goodwill are as follows:

EURm
Cash paid	29
Deferred consideration	0
Total purchase consideration	29

EURm	23 JUL 2024
Other intangible assets	5
Property, plant and equipment	16
Leased assets	0
Inventories	14
Trade and other receivables	5
Cash and cash equivalents	1
Total assets	42
Deferred tax liabilities	4
Non-current debt	2
Current debt	3
Trade and other payables	6
Income tax payables	0
Total liabilities	15
Net identifiable assets acquired	27
Goodwill arising from acquisition	3

The fair value of trade and other receivables included trade receivables

with a fair value of EUR 5 million. At the date of acquisition, the gross

contractual amount for trade receivables was EUR 5 million, of which

EUR 0 million was expected to be uncollectible.

Acquisition-related costs of EUR 1 million are included in other

operating expenses and are reported as items affecting comparability in

UPM Raflatac business area.

Information on the amounts of revenue and profit or loss of the

acquiree since the acquisition date included in the consolidated income

statement for the reporting period is not disclosed because it would be

impracticable. The acquired business has been included in the group

since 23 July 2024, and the effects of the revenues and profit or loss

thereof are not considered material for disclosure purposes.

The fair values of net identifiable assets acquired are provisional and

dependent on final fair valuations.

Transactions with non-controlling interests

In 2024 and 2023, UPM did not have any change in its non-controlling

interests.

	Accounting policies

UPM consolidates acquired entities at the acquisition date which is when

it gains control using the acquisition method. Consideration transferred

is determined as the fair value of the assets transferred, the liabilities

incurred and equity instruments issued including the fair value of a

contingent consideration. Acquisition-related transaction costs are

UPM FINANCIAL REPORT 2024	206

expensed as incurred. Identifiable assets acquired and liabilities and

contingent liabilities assumed are measured initially at their fair values at

the acquisition date. The group measures any non-controlling interest in

the acquiree either at fair value or at the non-controlling interest’s

proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-

controlling interest in the acquiree and the acquisition-date fair value of

any previous equity interest in the acquiree over the fair value of the

identifiable net assets of the subsidiary acquired is recorded as

goodwill.

The assets, liabilities, income and expenses of subsidiaries with non-

controlling interests are consolidated line by line into the UPM

consolidated financial statements. The proportion of the profit for the

period, as well as the accumulated share of total equity belonging to

non-controlling interests are presented separately in the consolidated

income statement and consolidated balance sheet.

8.2Principal subsidiaries and joint operations

SUBSIDIARIES	COUNTRY OF INCORPORATION	HOLDING %      2024	HOLDING %      2023
Blandin Paper Company	US	100.00	100.00
Blanvira S.A.	UY	91.00	91.00
Cuecar S.A.	UY	91.00	91.00
Forestal Oriental S.A.	UY	100.00	100.00
Gebr. Lang GmbH Papierfabrik	DE	100.00	100.00
Grafityp (UK) Limited1)	GB	100.00	—
Grafityp Engineering Europe NV1)	BE	100.00	—
Grafityp Selfadhesive Products NV1)	BE	100.00	—
LLC UPM Ukraine	UA	100.00	100.00
Myllykoski Oyj	FI	100.00	100.00
Nordland Papier GmbH	DE	100.00	100.00
NorService GmbH	DE	100.00	100.00
Nortrans Speditionsgesellschaft mbH	DE	100.00	100.00
Print Inform Japan K.K.	JP	80.00	80.00
PT UPM Raflatac Indonesia	ID	100.00	100.00
Rhein Papier GmbH	DE	100.00	100.00
Steyrermühl Sägewerksgesellschaft m.b.H. Nfg KG2)	AT	—	100.00
Tebetur S.A.	UY	91.00	91.00
Tile Forestal S.A.	UY	91.00	91.00
UPM (China) Co. Ltd	CN	100.00	100.00
UPM (Vietnam) Limited	VN	100.00	100.00
UPM Asia Pacific Pte. Ltd.	SG	100.00	100.00
UPM Biochemicals GmbH	DE	100.00	100.00
UPM Biochemicals Sales GmbH	DE	100.00	100.00
UPM Biofuels S.A.	UY	100.00	100.00
UPM Communication Papers Oy	FI	100.00	100.00
UPM Energy Oy	FI	100.00	100.00
UPM GmbH	DE	100.00	100.00
UPM NV	BE	100.00	100.00
UPM OÜ	EE	100.00	100.00
UPM Plywood Oy	FI	100.00	100.00
UPM Pulp Sales Oy	FI	100.00	100.00
UPM Pulp, Inc.	US	100.00	100.00
UPM Raflatac (China) Co., Ltd.	CN	100.00	100.00
UPM Raflatac (S) Pte Ltd	SG	100.00	100.00
UPM Raflatac (UK) Ltd.	GB	100.00	100.00
UPM Raflatac Canada Holdings Inc.	CA	100.00	100.00
UPM Raflatac Chile SpA	CL	100.00	100.00
UPM Raflatac Co. Ltd.	TH	100.00	100.00

UPM FINANCIAL REPORT 2024	207

SUBSIDIARIES	COUNTRY OF INCORPORATION	HOLDING %      2024	HOLDING %      2023
UPM Raflatac GmbH	DE	100.00	100.00
UPM Raflatac Iberica S.A.	ES	100.00	100.00
UPM Raflatac Inc.	US	100.00	100.00
UPM Raflatac Mexico S.A. de C.V.	MX	100.00	100.00
UPM Raflatac NZ Limited	NZ	100.00	100.00
UPM Raflatac Oy	FI	100.00	100.00
UPM Raflatac Pty Ltd	AU	100.00	100.00
UPM Raflatac S.r.l.	AR	100.00	100.00
UPM Raflatac SAS	FR	100.00	100.00
UPM Raflatac Sdn.Bhd.	MY	100.00	100.00
UPM Raflatac South Africa (Pty) Ltd	ZA	100.00	100.00
UPM Raflatac Sp. z o .o.	PL	100.00	100.00
UPM S.A.	UY	91.00	91.00
UPM Sähkönsiirto Oy	FI	100.00	100.00
UPM Sales GmbH	DE	100.00	100.00
UPM Sales Oy	FI	100.00	100.00
UPM Specialty Papers Oy	FI	100.00	100.00
UPM Trading (Shanghai) Co	CN	100.00	100.00
UPM-Kymmene (Korea) Ltd	KO	100.00	100.00
UPM-Kymmene (UK) Ltd	GB	100.00	100.00
UPM-Kymmene Austria GmbH2)	AT	—	100.00
UPM-Kymmene Inc.	US	100.00	100.00
UPM-Kymmene India Private Limited	IN	100.00	100.00
UPM-Kymmene Japan K.K.	JP	100.00	100.00
UPM-Kymmene Kagit Urunleri Sanayi ve Ticared Ltd. Sti.	TR	100.00	100.00
UPM-Kymmene Otepää OÜ	EE	100.00	100.00
UPM-Kymmene S.r.l.	IT	100.00	100.00
UPM-Kymmene Seven Seas Oy	FI	100.00	100.00
UPM-Kymmene Sp.z o.o.	PL	100.00	100.00
Uruwood S.A.	UY	93.55	93.55
Werla Insurance Company Ltd	MT	100.00	100.00

Above list includes UPM's principal subsidiaries.

1) In 2024, UPM acquired Grafityp. » Refer to note 8.1. Business acquisitions and disposals.

2) Steyrermühl Sägewerksgesellschaft m.b.H. Nfg KG. and UPM-Kymmene Austria GmbH sold in 2024.  » Refer to note 8.1. Business acquisitions and disposals.

JOINT OPERATIONS	COUNTRY OF INCORPORATION	HOLDING %      2024	HOLDING %      2023
Oy Alholmens Kraft Ab (Pohjolan Voima Oy, G series and direct ownership)	FI	50.00	50.00
EEVG Entsorgungs- und Energieverwertungsgesellschaft m.b.H.1)	AT	—	50.00
Järvi-Suomen Voima Oy	FI	50.00	50.00
Kaukaan Voima Oy (Pohjolan Voima Oy, G9 series)	FI	54.00	54.00
Kymin Voima Oy (Pohjolan Voima Oy, G2 series)	FI	76.00	76.00
Rauman Biovoima Oy (Pohjolan Voima Oy, G4 series)	FI	71.95	71.95
Phyla UPM JVCO Limited2)	GB	50.00	—

1) EEVG Entsorgungs- und Energieverwertungsgesellschaft m.b.H. sold in 2024 as part of sales of Steyrermühl mill and sawmill operations.

2) In 2024, UPM established a joint operation Phyla UPM JVCO Limited.

UPM FINANCIAL REPORT 2024	208

Non-controlling interests

UPM has non-controlling interests mainly in Uruguay companies.

Summarised financial information of Uruguay subsidiaries that have non-

controlling interests is presented in the following table. The amounts

disclosed are before inter-company eliminations.

EURm	2024	2023
Profit for the period	298	60
Other comprehensive income for the period	—	3
Total comprehensive income for the period	298	63
Share of non-controlling interests	27	6
Non-current assets	3,632	3,449
Current assets	965	712
Non-current liabilities	270	121
Current liabilities	132	188
Net assets	4,195	3,852
Share of non-controlling interests	378	347

8.3Related party transactions

The Board of Directors and the Group Executive Team

There have not been any material transactions between UPM and its

members of the Board of Directors or the Group Executive Team (key

management personnel) or persons closely associated with these

members or organisations in which these individuals have control or

significant influence. There are no loans granted to any members of the

Board of Directors or the Group Executive Team at 31 December 2024

or 2023.

For information concerning shares held by members of the Board of

Directors as well as remuneration to members of the Board of Directors and

the Group Executive Team are disclosed in » Note 3.2. Key management

personnel.

Associates and joint ventures

Transactions with associates and joint ventures are presented in the table

below. The group has no individually material associates or joint

ventures.

EURm	2024	2023
Dividends received	2	2
Purchases of raw materials and services	28	37
Loan receivables	13	5
Trade and other receivables	1	—
Trade and other payables	4	5

Subsidiaries and joint operations

» Refer Note 8.2 Principal subsidiaries and joint operations.

Pension Funds

In the UK, the single UPM Pension Scheme operates under a Trust which

is independent from the group. The Trust consists of various defined

benefit sections, all of which are closed to future accrual and one

common defined contribution section which is open to all UPM

employees in the UK. The group made contributions of EUR 0 million (0

million) to the defined benefit sections of the Scheme in 2024. The fair

value of the UK defined benefit fund assets at 31 December 2024 was

EUR 274 million (297 million), of which 18% was invested in equity

instruments, 51% in debt instruments, 8% in property, 18% money

market and 5% in other investments.

8.4Assets held for sale

No assets or liabilities were classified as held for sale at the end of

2024.

Assets and liabilities classified as held for sale as at 31 December 2023

relate to agreement to sell 100% of the shares of Austrian subsidiary

UPM-Kymmene Austria GmbH to the HEINZEL GROUP as announced in

June 2022. The transaction comprises the UPM Steyrermühl site and the

Steyrermühl sawmill operations. UPM Communication Papers ended the

newspaper production at Steyrermühl paper mill in June 2023. On 2

January 2024, UPM announced that it has completed the sale.

	Accounting policies

Non-current assets (or disposal groups) are classified as assets held for

sale and stated at the lower of carrying amount and fair value less costs

to sell, if UPM will recover their carrying amount through a sale

transaction which is considered highly probable. Non-current assets

classified as held for sale, or included within a disposal group that is

classified as held for sale, are not depreciated after the classification.

UPM FINANCIAL REPORT 2024	209

9.Unrecognised items

9.1Commitments and contingencies

In the normal course of business, UPM enters into various agreements

providing financial or performance assurance to third parties. The

maximum amounts of future payments for which UPM is liable is

disclosed in the table below under “Other commitments”. Property under

mortgages given as collateral for own commitments include property,

plant and equipment, industrial estates and forest land.

EURm	2024	2023
Other own commitments
Leasing commitments for the next 12 months in accordance with IFRS 16	1	2
Other commitments	106	99
Total	107	101

The lease commitments for leases not commenced at the end of 2024

amounted to EUR 24 million (EUR 176 million at the end of 2023). The

decrease during the reporting period is due to the commencement of the

Uruguay railway lease in 2024. The 2023 commitments relate to a

railway service agreement in Uruguay and a service agreement related

to wastewater treatment in Leuna, Germany.

9.2Litigation

Contingent liabilities

The group is defendant or plaintiff in a number of legal proceedings

incidental to its operations. These lawsuits primarily involve claims

arising from commercial law issues.

Group companies

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

end of 2024.

9.3Events after the balance sheet date

On 2 January 2025, UPM announced that it has been listed as the only

forest and paper industry company in the Dow Jones Global and

European Sustainability Indices (DJSI) for the years 2024–2025. The

indices cover environmental, social and governance aspects of

responsibility.

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

a UK-based company to further accelerate UPM Raflatac's growth in

Graphics business. The transaction will bring attractive synergies and

make UPM Raflatac a significant player in the fast-growing, high value-

added Graphics segment. The Enterprise Value of the transaction is GBP

146 million.

On 5 February 2025, the Board decided to commence UPM's first

buy-back program of UPM's own shares. The maximum number of

shares to be repurchased is 6,000,000, corresponding to

approximately 1.1% of the total number of shares. The maximum

monetary amount to be used for the program is EUR 160 million.

UPM FINANCIAL REPORT 2024	210

10.Other notes

10.1Forthcoming new standards, amendments

and accounting policy changes

Certain new accounting standard amendments and interpretations have

been published that come into effect only after the reporting period

started on 1 January 2024. These standards and amendments are not

expected to have a material impact on the group in the current or future

reporting periods and on foreseeable future transactions and have not

been early adopted.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 will replace IAS 1 Presentation of financial statements,

introducing new requirements that will help to achieve comparability of

the financial performance of similar entities and provide more relevant

information and transparency to users. IFRS 18 will not impact the

recognition or measurement of items in the financial statements, but its

impacts on presentation and disclosure are expected to be pervasive, in

particular those related to the statement of financial performance and

providing management-defined performance measures within the

financial statements.

Management is currently assessing the detailed implications of

applying the new standard on the group’s consolidated financial

statements. Although the adoption of IFRS 18 will have no impact on the

group’s net profit, the group expects that grouping items of income and

expenses in the statement of profit or loss into the new categories will

impact how operating profit is calculated and reported. From the high-

level impact assessment that the group has performed, the following

items might potentially impact operating profit:

• The group currently recognises some foreign exchange gains or

losses in operating profit and others in financial income and

expenses. There might be a change to where these gains or losses

are recognised, and the group is currently evaluating the need for

change.

• The group currently recognises some derivative gains or losses in

operating profit and others in financial income and expenses. There

might be a change to where these gains or losses are recognised,

and the group is currently evaluating the need for change.

The line items presented on the primary financial statements might

change as a result of the application of the concept of ‘useful structured

summary’ and the enhanced principles on aggregation and

disaggregation.

The group does not expect there to be a significant change in the

information that is currently disclosed in the notes because the

requirement to disclose material information remains unchanged;

however, the way in which the information is grouped might change as

a result of the aggregation/disaggregation principles. In addition, there

will be new disclosures required for management-defined performance

measures.

There will also be changes to how interest received and interest paid

are presented in the consolidated cash flow statement. Interest paid will

be presented as financing cash flows and interest received as investing

cash flows, which is a change from current presentation as part of

operating cash flows.

The group will apply the new standard from its mandatory effective

date of 1 January 2027. Retrospective application is required, and the

comparative information for the financial year ending 31 December

2026 will be restated in accordance with IFRS 18. For the first annual

period of application of IFRS 18, a reconciliation for each line item in

the statement of profit or loss between the restated amounts presented by

applying IFRS 18 and the amounts previously presented applying IAS 1

is required. 

UPM FINANCIAL REPORT 2024	211

Parent company accounts

(Finnish Accounting Standards, FAS)

Income statement

EURm	NOTE	2024	2023
Sales	1	2,599	2,585
Change in inventories of finished goods and work in progress		-10	10
Production for own use		3	1
Other operating income	2	79	103
Materials and services
Raw materials and consumables purchased		-1,956	-1,935
Change in inventories		26	-43
External charges		-9	-8
		-1,938	-1,987
Personnel expenses
Salaries and fees		-206	-198
Indirect employee costs
Pension costs		-35	-36
Other indirect employee costs		-5	-7
	3	-247	-241
Depreciation, amortisation and impairment charges
Depreciation and amortisation		-103	-112
	4	-103	-112
Other operating expenses	5	-287	-349
Operating profit (loss)		96	10
Financial income and expenses
Income from non-current assets
Dividend income from group companies		479	738
Interest income from group companies		8	5
Other interest and financial income
Other interest income from group companies		144	150
Other interest income from other companies		24	30
Other financial income from group companies		39	1
Other financial income from other companies		130	974
Impairment charges and reversals on investments		-226	9
Interest and other financial expenses
Interest expenses to group companies		-156	-133
Interest expenses to other companies		-102	-93
Other financial expenses to group companies		0	-32
Other financial expenses to other companies		-112	-17
		228	1,632
Profit (loss) before closing entries and tax		323	1,642
Closing entries
Depreciation difference		20	31
Group contributions received		57	37
Group contributions granted		-7	-37
		70	31
Income taxes	6	-12	1
Profit (Loss) for the period		382	1,675

UPM FINANCIAL REPORT 2024	212

Balance sheet

EURm	NOTE	2024	2023
ASSETS
Non-current assets
Intangible assets
Intangible rights		5	5
Other intangible assets		21	27
Advance payments		41	26
	7	67	58
Tangible assets
Land and water areas		747	748
Buildings		158	166
Machinery and equipment		386	414
Other tangible assets		18	18
Advance payments and construction in progress		17	26
	8	1,326	1,372
Investments
Holdings in group companies		6,968	6,587
Holdings in participating interest companies		5	5
Other shares and holdings		3	3
Receivables from group companies		950	993
Receivables from participating interest companies		13	3
	9	7,939	7,590
Total non-current assets		9,331	9,019
Current assets
Inventories
Raw materials and consumables		256	229
Finished products and goods		32	43
Advance payments		33	30
		321	302
Receivables
Current receivables
Trade receivables		48	37
Receivables from group companies		1,714	1,786
Receivables from participating interest companies		12	13
Other current receivables		112	182
Prepayments and accrued income		15	12
	10	1,900	2,029
Other current financial assets		1	1
Cash and cash equivalents		729	500
Total current assets		2,952	2,832
Assets		12,283	11,852

UPM FINANCIAL REPORT 2024	213

EURm	NOTE	2024	2023
EQUITY AND LIABILITIES
Equity
Share capital		890	890
Revaluation reserve		140	140
Reserve for invested non-restricted equity		1,273	1,273
Retained earnings		1,216	342
Profit (Loss) for the period		382	1,675
Total equity	11	3,900	4,319
Accumulated depreciation difference		347	367
Provisions
Termination provisions		4	1
Other provisions		196	166
	12	200	167
LIABILITIES
Non-current liabilities
Bonds		2,711	2,089
Loans from financial institutions		154	185
Payables to group companies		321	285
Other non-current liabilities		129	134
	13	3,315	2,693
Current liabilities
Loans from financial institutions		31	15
Trade payables		357	341
Payables to group companies		3,990	3,654
Payables to participating interest companies		3	6
Other current liabilities		50	201
Accrued expenses and deferred income		91	88
	14	4,521	4,305
Total liabilities		7,836	6,998
Equity and liabilities		12,283	11,852

UPM FINANCIAL REPORT 2024	214

Cash flow statement

EURm	2024	2023
Cash flows from operating activities
Profit before closing entries and tax	323	1,642
Financial income and expenses	-228	-1,632
Adjustments to operating profit 1)	279	48
Change in working capital 2)	291	983
Interest received	172	185
Interest paid	-250	-228
Dividends received	479	738
Other financial items	-128	861
Income taxes paid 3)	-7	8
Operating cash flow	931	2,605
Cash flows from investing activities
Investments in tangible and intangible assets	-70	-69
Investments in shares and holdings	-611	-812
Proceeds from sale of intangible and tangible assets	13	12
Proceeds from disposal of shares and holdings	4	68
Change in other non-current receivables	33	-63
Investing cash flow	-632	-865
Cash flows from financing activities
Proceeds from non-current liabilities	650	325
Payments of non-current liabilities	-29	-1,578
Change in current liabilities	60	-1,004
Dividends paid	-800	-800
Group contributions, net	50	-24
Other items	-1	-1
Financing cash flow	-70	-3,081
Cash and cash equivalents at beginning of period	500	1,840
Change in cash and cash equivalents	230	-1,340
Cash and cash equivalents at end of period	729	500

Notes to cash flow statement

1) Adjustments to operating profit

EURm	2024	2023
Depreciation, amortisation and impairment charges	102	113
Capital gains and losses on sale of non-current assets	216	-14
Change in provisions	-39	-51
Total	279	48

2) Change in working capital

EURm	2024	2023
Inventories	-19	34
Current receivables	314	1,133
Current non-interest-bearing liabilities	-4	-184
Total	291	983

3) Income taxes related to sale of assets are presented in investing cash flow.

UPM FINANCIAL REPORT 2024	215

Notes to the parent company financial statements

	Accounting policies

The financial statements of the parent company are prepared in

accordance with Finnish Accounting Standards, FAS. The main

differences in accounting policies of the group and the parent company

relate to the measurement of financial derivatives and forest assets and

recognition of defined benefit obligations, share-based payments, lease

agreements and deferred income taxes.

The financial statements are presented in millions of euros and

rounded and therefore the sum of individual figures might deviate from

the presented total figure.

Foreign currency translation

Receivables and liabilities denominated in foreign currencies

outstanding on the balance sheet date and other commitments are

translated into euro currency using the balance sheet date exchange

rate. Exchange rate differences arising from the valuation of trade

receivables are recognised in sales and exchange rate differences on

trade payables in purchases. Exchange differences arising from the

measurement of other receivables and liabilities are recognised in

financial items.

Tangible and intangible assets

Tangible and intangible assets are stated at cost less accumulated

depreciation and amortisation according to plan and impairments.

Emission rights are recognised using net approach. Depreciation and

amortisation according to plan is recorded on a straight-line basis over

the expected useful lives of the assets as follows:

Land and water areas, no depreciation
Intangible assets	5–10 years
Buildings	20–50 years
Light machinery and equipment	5–10 years
Heavy machinery	15–20 years
Power plants	20–30 years
Other tangible assets	5–20 years

Forest assets are recognised as tangible assets within land and water

areas at historical cost and revaluation. No systematic depreciation or

changes in value due to felling is recognised.

Investments

Investments are stated at cost less impairments.

Inventories

Inventories are stated at cost or the lower of replacement cost and

probable selling price. Costs are measured using FIFO-method. In

addition to variable costs, the cost of inventories includes a portion of

the fixed costs of acquisition and manufacturing.

Revaluations

The balance sheet value of land includes revaluations. No new

revaluations are made and the balance sheet value of land is

considered to be below their fair value.

Leases

Lease payments of lease contracts are recognised in other operating

expenses over the lease term. Lease payments due in future years under

lease contracts are presented as off-balance sheet items.

Provisions

Provisions include foreseeable future expenses and losses to which the

company is committed, the realisation of which is probable and the

amount can be reliably estimated, e.g. pension and environmental

liabilities and termination and restructuring costs. Changes in provisions

are recognised in income statement within particular cost items.

Sales

Sales include sales revenue from actual operations less indirect taxes,

discounts, claims and exchange rate differences on trade receivables.

Research and development costs

Research and development costs are expensed in the year in which they

are incurred.

Pensions

In Finland, employers are obliged to insure their employees for statutory

benefits, as determined in Employee’s Pension Act (TyEL). The mandatory

pensions are arranged through pension insurance companies.

Contributions to pension insurance companies are charged to the

income statement in the period to which the contributions relate.

Share-based payments

Share based compensation is recognised as an expense in the income

statement over the earnings period or in the year of award and the

related liability is booked to the balance sheet.

Closing entries

Parent company closing entries consists of the change in the

depreciation difference and group contributions granted to group

companies. The accumulated depreciation difference in the parent

company has not been divided into equity and deferred tax liability.

Income taxes

Income taxes presented in the income statement consist of accrued taxes

for the financial year and tax adjustments for prior years. The parent

company has not recognised deferred tax assets and liabilities in the

balance sheet, but presents the information in the notes.

Derivatives

Realised results of derivative contracts and negative fair value of open

derivative contracts are recognised in the income statement. Negative

fair value of open derivative contracts that are not settled in cash is

recognised as a provision in the balance sheet. Hedge accounting is not

applied. Income and expenses of balance sheet hedging and forward

foreign exchange contracts hedging commercial foreign currency flow of

all group companies are recognised in financial items. Income and

expenses of commodity derivatives are recognised in operating profit.

Income and expenses of commodity derivative contracts of group

companies are recognised in financial items.

The majority of financial derivative contracts of the group are made

by the parent company. All contracts are made with external

UPM FINANCIAL REPORT 2024	216

counterparties except internal derivatives which are used to manage

foreign currency and interest rate exposure.

Financial risks, fair values and maturities of the group external derivatives

are disclosed in » Note 6.1 Financial risk management and in » Note 6.2

Derivatives and hedge accounting.

1. Sales

Sales by business area

EURm	2024	2023
UPM Fibres	2,043	2,075
Other operations	556	509
Total	2,599	2,585

Sales by destination

EURm	2024	2023
Finland	2,545	2,515
Other EU countries	34	45
Other countries	20	24
Total	2,599	2,585

2. Other operating income

EURm	2024	2023
Gains on sale of non-current assets	10	5
Rental income	7	6
Other	62	92
Total	79	103

3. Personnel expenses

EURm	2024	2023
Salaries and fees of the President and CEO, and members of the Board of Directors 1)	3	7
Other salaries and fees	203	191
Pension costs	35	36
Other indirect employee costs	5	7
Total	247	241

1) » Refer Note 3.2 Key management personnel

Personnel

	2024	2023
Total average	2,933	2,932

4. Depreciation, amortisation and impairment

charges

EURm	2024	2023
Intangible rights	2	2
Other intangible assets	15	13
Buildings	14	16
Machinery and equipment	70	79
Other tangible assets	2	3
Total	103	112

5. Other operating expenses

EURm	2024	2023
Rents and lease expenses	14	15
Maintenance expenses	91	146
Other operating expenses 1)	181	188
Total	287	349

1) The research and development costs in operating expenses were EUR 28

million (32 million) and auditor’s fee EUR 2.6 million (3.2 million). In

personnel expenses the research and development costs were EUR 20 million

(16 million).

6. Income taxes

EURm	2024	2023
Tax expense for the period	9	9
Tax expense for the previous periods	3	-10
Total	12	-1

Deferred tax assets and liabilities 1)

EURm	2024	2023
Deferred tax assets
Provisions	40	33
Share-based payments	1	2
Other temporary differences	2	24
Total	43	60
Deferred tax liabilities
Accumulated depreciation difference	69	73
Revaluations of land areas	60	60
Total	129	133

1) The parent company has not recognised deferred tax assets and liabilities in

the balance sheet. Deferred tax assets and liabilities are calculated based on

temporary differences between the carrying and taxable values of assets and

liabilities.

UPM FINANCIAL REPORT 2024	217

7.Intangible assets

EURm	INTANGIBLE RIGHTS	OTHER INTANGIBLE ASSETS	ADVANCE PAYMENTS	TOTAL
2024
Accumulated costs	23	302	41	367
Accumulated amortisation and impairments	-19	-281	—	-300
Carrying value, at 31 December	5	21	41	67
Carrying value, at 1 January	5	27	26	58
Additions	2	3	21	27
Amortisation	-2	-15	—	-17
Reclassifications	—	7	-7	—
Carrying value, at 31 December	5	21	41	67
2023
Accumulated costs	22	300	26	348
Accumulated amortisation and impairments	-18	-273	—	-291
Carrying value, at 31 December	5	27	26	58
Carrying value, at 1 January	5	32	22	60
Additions	2	8	8	18
Disposals	—	-5	—	-5
Amortisation	-2	-13	—	-15
Reclassifications	—	4	-4	—
Carrying value, at 31 December	5	27	26	58

8.Tangible assets

EURm	LAND AND WATER AREAS	BUILDINGS	MACHINERY AND EQUIPMENT	OTHER TANGIBLE ASSETS	ADVANCE PAYMENTS AND CONSTRUCTION IN PROGRESS	TOTAL
2024
Accumulated costs	449	577	2,299	141	17	3,483
Accumulated depreciation and impairments	—	-419	-1,913	-122	—	-2,454
Revaluations	298	—	—	—	—	298
Carrying value, at 31 December	747	158	386	18	17	1,326
Carrying value, at 1 January	748	166	414	18	26	1,372
Additions	1	1	24	2	14	43
Disposals	-2	—	—	—	—	-3
Depreciation	—	-14	-70	-2	—	-86
Reclassifications	—	5	18	—	-23	—
Carrying value, at 31 December	747	158	386	18	17	1,326
2023
Accumulated costs	450	574	2,268	138	26	3,456
Accumulated depreciation and impairments	—	-408	-1,854	-120	—	-2,382
Revaluations	298	—	—	—	—	298
Carrying value, at 31 December	748	166	414	18	26	1,372
Carrying value, at 1 January	746	178	453	19	21	1,418
Additions	2	1	24	2	23	52
Disposals	—	—	—	—	—	-1
Depreciation	—	-16	-79	-3	—	-97
Reclassifications	—	2	15	—	-17	—
Carrying value, at 31 December	748	166	414	18	26	1,372

UPM FINANCIAL REPORT 2024	218

9.Other non-current assets

EURm	HOLDINGS IN GROUP COMPANIES	HOLDINGS IN PARTICIPATING INTEREST COMPANIES	OTHER SHARES AND HOLDINGS	RECEIVABLES FROM GROUP COMPANIES	RECEIVABLES FROM PARTICIPATING INTEREST COMPANIES	TOTAL
2024
Accumulated costs	8,662	5	3	950	13	9,632
Accumulated value adjustments	-1,693	—	—	—	—	-1,693
Carrying value, at 31 December	6,968	5	3	950	13	7,939
Carrying value, at 1 January	6,587	5	3	993	3	7,590
Additions	611	—	—	1	10	623
Disposals	-4	—	—	-44	—	-48
Value adjustments 1)	-226	—	—	—	—	-226
Carrying value, at 31 December	6,968	5	3	950	13	7,939
2023
Accumulated costs	8,054	5	3	993	3	9,057
Accumulated value adjustments	-1,467	—	—	—	—	-1,467
Carrying value, at 31 December	6,587	5	3	993	3	7,590
Carrying value, at 1 January	5,834	5	3	930	3	6,774
Additions	812	—	—	164	—	976
Disposals	-68	—	—	-102	—	-169
Value adjustments 1)	9	—	—	—	—	9
Carrying value, at 31 December	6,587	5	3	993	3	7,590

1) Value adjustments are shown in financial expenses

10.Current receivables

EURm	RECEIVABLES FROM GROUP COMPANIES	RECEIVABLES FROM PARTICIPATING INTEREST COMPANIES	RECEIVABLES FROM OTHERS	TOTAL
2024
Trade receivables	462	12	48	521
Loan receivables 1)	1,195	—	—	1,195
Prepayments and accrued income 2)	1	—	15	16
Other current receivables	57	—	112	168
Carrying value, at 31 December	1,714	12	174	1,900
2023
Trade receivables	478	13	37	528
Loan receivables 1)	1,269	—	—	1,269
Prepayments and accrued income 2)	3	—	12	14
Other current receivables	37	—	182	219
Carrying value, at 31 December	1,786	13	231	2,029

1) There were no loans granted to the company’s President and CEO and members of the Board of Directors at 31 December 2024 and 2023 .

2) Prepayments and accrued income

EURm	2024	2023
Interest income	12	9
Income taxes	—	2
Other items	4	3
Carrying value, at 31 December	16	14

UPM FINANCIAL REPORT 2024	219

11.Equity

EURm	SHARE CAPITAL	REVALUATION RESERVE	RESERVE FOR INVESTED NON- RESTRICTED EQUITY	RETAINED EARNINGS	PROFIT/LOSS FOR THE PERIOD	TOTAL SHARE- HOLDER’S EQUITY
2024
Carrying value, at 1 January	890	140	1,273	342	1,675	4,319
Transfer of profit from previous year	—	—	—	1,675	-1,675	—
Profit for period	—	—	—	—	382	382
Dividend distribution	—	—	—	-800	—	-800
Other changes	—	—	—	-1	—	-1
Carrying value, at 31 December	890	140	1,273	1,216	382	3,900
2023
Carrying value, at 1 January	890	140	1,273	1,333	-190	3,445
Transfer of profit from previous year	—	—	—	-190	190	—
Profit for period	—	—	—	—	1,675	1,675
Dividend distribution	—	—	—	-800	—	-800
Other changes	—	—	—	-1	—	-1
Carrying value, at 31 December	890	140	1,273	342	1,675	4,319

EURm	2024	2023
Distributable funds
Reserve for invested non-restricted equity	1,273	1,273
Retained earnings from previous years	1,216	342
Profit (Loss) for the period	382	1,675
Total distributable funds at 31 December	2,871	3,290

UPM FINANCIAL REPORT 2024	220

12.Provisions

EURm	RESTRUCTURING	TERMINATION	ENVIRONMENTAL	OTHER 1)	TOTAL
2024
Provisions at 1 January	2	1	9	155	167
Provisions made during the year	—	3	—	59	63
Provisions utilised during the year	—	-1	—	-23	-24
Unused provisions reversed	-2	—	-1	-3	-6
Carrying value, at 31 December	—	4	8	188	200
2023
Provisions at 1 January	3	2	8	286	299
Provisions made during the year	—	—	1	—	1
Provisions utilised during the year	—	—	—	-129	-130
Unused provisions reversed	—	-1	—	-2	-3
Carrying value, at 31 December	2	1	9	155	167

1) Other provisions are attributable to onerous contracts and negative fair values of financial derivatives. At the end of 2024, the negative fair value in other provisions

of EUR 5 million (8 million) is attributable to one group internal cross currency swap. Group internal foreign currency forwards expired by the end of 2024 (the

negative fair value included in other provisions at the end of 2023 EUR 0.3 million).

13.Non-current liabilities

EURm	2024	2023
Bonds	2,711	2,089
Loans from financial institutions	154	185
Payables to group companies	321	285
Other non-current liabilities	129	134
Carrying value, at 31 December	3,315	2,693

Maturity in 2030 (in 2029) or later

EURm	2024	2023
Bonds	1,100	1,000
Loans from financial institutions	31	62
Other non-current liabilities	—	134
Total	1,131	1,196

Bonds

FIXED RATE PERIOD	INTEREST RATE, %	CURRENCY	NOMINAL VALUE ISSUED, MILLION	CARRYING VALUE	CARRYING VALUE
				2024	2023
				EURm	EURm
1997-2027	7.450	USD	375	361	339
2020-2028	0.125	EUR	750	750	750
2021-2031	0.500	EUR	500	500	500
2022-2029	2.250	EUR	500	500	500
2024-2034	3.375	EUR	600	600	—
Carrying value, at 31 December				2,711	2,089
Non-current portion				2,711	2,089

UPM FINANCIAL REPORT 2024	221

14.Current liabilities

EURm	PAYABLES TO GROUP COMPANIES	PAYABLES TO PARTICIPATING INTEREST COMPANIES	PAYABLES TO OTHERS	TOTAL
2024
Loans from financial institutions	—	—	31	31
Trade payables	81	3	357	440
Accrued expenses and deferred income 1)	—	—	91	91
Other current liabilities	3,909	—	50	3,958
Carrying value, at 31 December	3,990	3	529	4,521
2023
Loans from financial institutions	—	—	15	15
Trade payables	104	6	341	451
Accrued expenses and deferred income 1)	1	—	88	88
Other current liabilities	3,549	—	201	3,750
Carrying value, at 31 December	3,654	6	645	4,305

1) Accrued expenses and deferred income

EURm	2024	2023
Personnel expenses	70	73
Interest expenses	20	15
Income taxes	1	—
Other items	—	1
Carrying value, at 31 December	91	88

15.Commitments

EURm	2024	2023
Guarantees
Other guarantees on behalf of group companies	23	25
Other commitments
Leasing commitments, due within 12 months	25	24
Leasing commitments, due after 12 months	95	115
Other commitments	52	47
Total	196	212

In addition, the parent company acts as a guarantor on behalf of other

companies belonging to the group. The majority of such commitments

relate to major investment projects and can end up payable by the

parent company in case group companies are unable to manage their

obligations. » Refer Note 4.1 Property, plant and equipment for information

about major investment projects.

Pension commitments of the President and CEO and the

members of the Group Executive Team

» Refer Note 3.2 Key management personnel.

Related party transactions

» Refer Note 8.3 Related party transactions.

16.Shares and holdings owned by parent company

SUBSIDIARIES	COUNTRY OF INCORPORATION	HOLDING %
Myllykoski Oyj	FI	100.00
Repola Investment Oy	FI	100.00
Suurijärven Huolto Oy	FI	65.44
Unicarta Oy	FI	100.00
UPM (Vietnam) Limited	VN	100.00
UPM AG	CH	100.00
UPM Asia Pacific Pte. Ltd.	SG	100.00
UPM B.V.	NL	100.00

UPM FINANCIAL REPORT 2024	222

SUBSIDIARIES	COUNTRY OF INCORPORATION	HOLDING %
UPM Biochemicals GmbH	DE	100.00
UPM Biorefining Holding Oy	FI	100.00
UPM Communication Papers Oy	FI	100.00
UPM Energy Oy	FI	100.00
UPM Kft.	HU	100.00
UPM Manufatura e Comércio de Produtos Florestais Ltda.	BR	100.00
UPM NV	BE	100.00
UPM OÜ	EE	100.00
UPM Plywood Oy	FI	100.00
UPM Pulp Holding Oy	FI	100.00
UPM Pulp Oy	FI	100.00
UPM Pulp Sales Oy	FI	100.00
UPM Raflatac Canada Holdings Inc.	CA	100.00
UPM Raflatac NZ Limited	NZ	100.00
UPM Raflatac Oy	FI	100.00
UPM Raflatac S.r.l.	AR	27.80
UPM Romania S.R.L	RO	100.00
UPM Silvesta Oy	FI	100.00
UPM Specialty Papers Oy	FI	100.00
UPM Wood Materials (UK) Ltd	UK	100.00
UPM Wood Materials Austria GmbH	AT	100.00
UPM-Kymmene (HK) Ltd.	CN/HK	100.00
UPM-Kymmene (Korea) Ltd	KR	100.00
UPM-Kymmene (UK) Holdings Limited	UK	100.00
UPM-Kymmene A/S	DK	100.00
UPM-Kymmene AB	SE	100.00
UPM-Kymmene B.V.	NL	100.00
UPM-Kymmene Beteiligungs GmbH	DE	100.00
UPM-Kymmene d.o.o.	SI	100.00
UPM-Kymmene Groupe S.A.	FR	100.00
UPM-Kymmene Grundstücksverwaltung GmbH	DE	100.00
UPM-Kymmene Hellas Ltd	GR	100.00
UPM-Kymmene India Private Limited	IN	100.00
UPM-Kymmene Investment Inc.	US	100.00
UPM-Kymmene Japan K.K.	JP	100.00
UPM-Kymmene Pty Limited	AU	100.00
UPM-Kymmene S.A.	ES	100.00
UPM-Kymmene S.r.l.	IT	100.00
UPM-Kymmene s.r.o.	CZ	100.00
UPM-Kymmene Seven Seas Oy	FI	100.00
UPM-Kymmene Slovakia s.r.o.	SK	100.00
Werla Insurance Company Ltd	MT	100.00

PARTICIPATING INTEREST COMPANIES	COUNTRY OF INCORPORATION	HOLDING %
Kiinteistö Oy Joutsan Rantatie 3	FI	25.43
Metsäteho Oy	FI	23.95
Novimus Oy (Oy Keskuslaboratorio - Centrallaboratorium Ab)	FI	38.65
Perkaus Oy	FI	33.33
Rönnäsin Kiinteistöhuolto Oy	FI	28.41
Steveco Oy	FI	34.32

Group subsidiaries and joint operations are disclosed in » Note 8.2.

UPM FINANCIAL REPORT 2024	223

AUDITOR’S REPORT (Translation of the Finnish original)

To the Annual General Meeting of UPM-Kymmene Oyj

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of UPM-Kymmene Corporation (business identity code 1041090-0) for the year ended 31

December, 2024. The financial statements comprise the consolidated balance sheet, income statement, statement of

comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy

information, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes.

In our opinion

• the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash

flows in accordance with IFRS Accounting Standards as adopted by the EU.

• the financial statements give a true and fair view of the parent company’s financial performance and financial position in

accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory

requirements.

Our opinion is consistent with the additional report submitted to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are

further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We are independent of the parent company and of the group companies in accordance with the ethical requirements that are

applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these

requirements.

In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group

companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided

any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have

provided have been disclosed in note 2.3 to the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial

statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of

our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to

respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures,

UPM FINANCIAL REPORT 2024	224

including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying

financial statements.

We have also addressed the risk of management override of internal controls. This includes consideration of whether there was

evidence of management bias that represented a risk of material misstatement due to fraud.

Key Audit Matter	How our audit addressed the Key Audit Matter
Valuation of forest assets We refer to the note 4.2 Forest assets in the consolidated financial statements The value of forest assets at the balance sheet date 31.12.2024 amounted to 2 517 million euros representing 13 % of total assets and 22 % of total equity. Valuation of forest assets was a key audit matter because • the valuation process is complex, • the fair value measurement requires significant management judgement and is based on assumptions that are affected by expected market or economic conditions, and • the value of forest assets is material to the financial statements. The fair value of forest assets is calculated based on discounted future expected cash flows. Main factors used in the fair value calculations are estimates for growth and wood harvested, stumpage prices and discount rates. Fair values of forest assets may vary significantly when above mentioned assumptions are changed. Fair value measurement of forest assets was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10 (2).	Our audit procedures to address the risk of material misstatement in respect of valuation of forest assets included among others: • Involvement of EY valuation specialists to assist us in evaluating appropriateness of methodologies, fair value calculations and underlying assumptions applied by the management. • Testing of mathematical accuracy of the fair value calculations. • Comparing the key assumptions made by management to estimates of tree growth assumptions, wood harvested and stumpage prices available in external sources; and assessing the used discount rate for reasonableness and consistency. In addition, we assessed the overall reasonableness of management’s judgments. We also assessed the sufficiency and appropriateness of the disclosures regarding the forest assets.
Valuation of energy shareholdings We refer to the note 4.3 Energy shareholdings in the consolidated financial statements The value of energy shareholdings at the balance sheet date 31.12.2024 amounted to 2 247 million euros representing 12 % of total assets and 19 % of total equity. Valuation of energy shareholdings was a key audit matter because • the valuation process is complex	Our audit procedures to address the risk of material misstatement in respect of valuation of energy shareholdings included among others: • Involvement of EY valuation specialists to assist us in evaluating appropriateness of methodologies, fair value calculations and underlying assumptions applied by the management. • Testing of mathematical accuracy of the fair value calculations.

UPM FINANCIAL REPORT 2024	225

• the fair value measurement requires significant management judgement and is based on assumptions that are affected by expected market or economic conditions, and • the value of energy shareholdings is material to the financial statements. The fair value of energy shareholdings is calculated based on discounted future expected cash flows. In determining the fair value of energy shareholdings, management must make among other things an assessment regarding future electricity market prices, future electricity production costs and volumes, and discount rate applied on discounting the cashflows. Fair values of energy shareholdings may vary significantly when above mentioned assumptions are changed. Fair value measurement of energy shareholdings was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10 (2).

• Comparing the key assumptions made by management to estimates of future electricity market prices available on external sources, estimates of future electricity production costs and volumes available on external sources, and assessing the used discount rate for reasonableness and consistency. In addition, we assessed the overall reasonableness of management’s judgments. We also assessed the sufficiency and appropriateness of the disclosures regarding the energy shareholdings.

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give

a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and of financial statements that give a

true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and

comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control

as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether

due to fraud or error.

In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent

company’s and the group’s ability to continue as going concern, disclosing, as applicable, matters relating to going concern and

using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting

unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but

to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect

a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial

statements.

As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and

perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a

UPM FINANCIAL REPORT 2024	226

basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s

internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by management.

• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of

accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial

statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group

to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the

financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities

or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for

the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible

for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit

and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements

regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear

on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance

in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in

our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,

we determine that a matter should not be communicated in our report because the adverse consequences of doing so would

reasonably be expected to outweigh the public interest benefits of such communication.

Other Reporting Requirements

Information on our audit engagement

We were first appointed as auditors by the Annual General Meeting on 12.4.2023 for the year ended 31 December, 2024.

Other information

The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the

report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements

and our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report, and

the Annual Report is expected to be made available to us after that date.

Our opinion on the financial statements does not cover the other information.

UPM FINANCIAL REPORT 2024	227

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in

doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained

in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also

includes considering whether the report of the Board of Directors has been prepared in compliance with the applicable provisions,

excluding the sustainability report information on which there are provisions in Chapter 7 of the Accounting Act and in the

sustainability reporting standards.

In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements

and the report of the Board of Directors has been prepared in compliance with the applicable provisions. Our opinion does not

cover the sustainability report information on which there are provisions in Chapter 7 of the Accounting Act and in the sustainability

reporting standards.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we

conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to

report in this regard. 

Other opinions on assignment of the Board of Directors

We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit

shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of

Directors of the parent company and the Managing Director should be discharged from liability for the financial period audited by

us.

Helsinki 13.2.2025

Ernst & Young Oy

Authorized Public Accountant Firm

Heikki Ilkka

Authorized Public Accountant

UPM FINANCIAL REPORT 2024	228

(Translation of the Finnish original)

Independent Auditor’s Report on the ESEF Consolidated Financial Statements of UPM-

Kymmene Oyj

To the Board of Directors of UPM-Kymmene Oyj

We have performed a reasonable assurance engagement on the financial statements 213800ec6pw5vu4j9u64-2024-12-31-fi.zip of

UPM-Kymmene Oyj (y-identifier: 1041090-0) that have been prepared in accordance with the Commission’s regulatory technical

standard for the financial year ended 31.12.2024.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the company’s report of Board of Directors

and financial statements (the ESEF financial statements) in such a way that they comply with the requirements of the

Commission’s regulatory technical standard. This responsibility includes:

• preparing the ESEF financial statements in XHTML format in accordance with Article 3 of the Commission’s regulatory technical

standard

• tagging the primary financial statements, notes and company’s identification data in the consolidated financial statements that

are included in the ESEF financial statements with iXBRL tags in accordance with Article 4 of the Commission’s regulatory

technical standard and

• ensuring the consistency between the ESEF financial statements and the audited financial statements

The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to

enable the preparation of ESEF financial statements in accordance the requirements of the Commission’s regulatory technical

standard.

Auditor’s Independence and Quality Management

We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to

the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

The firm applies International Standard on Quality Management (ISQM) 1, which requires the firm to design, implement and

operate a system of quality management including policies or procedures regarding compliance with ethical requirements,

professional standards and applicable legal and regulatory requirements

Auditor’s Responsibilities

Our responsibility is to, in accordance with Chapter 7, Section 8 of the Securities Markets Act, provide assurance on the financial

statements that have been prepared in accordance with the Commission’s technical regulatory standard.  We express an opinion

on whether the consolidated financial statements that are included in the ESEF financial statements have been tagged, in all

material respects, in accordance with the requirements of Article 4 of the Commission's regulatory technical standard.

Our responsibility is to indicate in our opinion to what extent the assurance has been provided. We conducted a reasonable

assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000.

The engagement includes procedures to obtain evidence on:

UPM FINANCIAL REPORT 2024	229

• whether the primary financial statements in the consolidated financial statements that are included in the ESEF financial

statements have been tagged, in all material respects, with iXBRL tags in accordance with the requirements of Article 4 of the

Commission's regulatory technical standard and

• whether the notes and company's identification data in the consolidated financial statements that are included in the ESEF

financial statements have been tagged, in all material respects, with iXBRL tags in accordance with the requirements of Article 4

of the Commission's regulatory technical standard and

• whether there is consistency between the ESEF financial statements and the audited financial statements.

The nature, timing and extent of the selected procedures depend on the auditor’s judgement. This includes an assessment of the

risk of material deviations due to fraud or error from the requirements of the Commission’s technical regulatory standard.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

Our opinion pursuant to Chapter 7, Section 8 of the Securities Markets Act is that the primary financial statements, notes and

company's identification data in the consolidated financial statements that are included in the ESEF financial statements of UPM-

Kymmene Oyj 213800ec6pw5vu4j9u64-2024-12-31-fi.zip for the financial year ended 31.12.2024 have been tagged, in all material

respects, in accordance with the requirements of the Commission's regulatory technical standard.

Our opinion on the audit of the consolidated financial statements of UPM-Kymmene Oyj for the financial year ended 31.12.2024

has been expressed in our auditor's report 13.2.2025. With this report we do not express an opinion on the audit of the

consolidated financial statements nor express another assurance conclusion.

Helsinki 4.3.2025

Ernst & Young Oy

Authorized Public Accountant Firm

Heikki Ilkka

Authorized Public Accountant

UPM FINANCIAL REPORT 2024	230

ASSURANCE REPORT ON THE SUSTAINABILITY STATEMENT

(Translation of the Finnish original)

To the Annual General Meeting of UPM-Kymmene Oyj

We have performed a limited assurance engagement on the group sustainability statement of UPM-Kymmene Oyj

(1041090-0) that is referred to in Chapter 7 of the Accounting Act and that is included in the report of the Board of Directors

for the financial year 1.1.–31.12.2024.

Opinion

Based on the procedures we have performed and the evidence we have obtained, nothing has come to our

attention that causes us to believe that the group sustainability statement does not comply, in all material

respects, with

1) the requirements laid down in Chapter 7 of the Accounting Act and the sustainability reporting standards (ESRS);

2) the requirements laid down in Article 8 of the Regulation (EU) 2020/852 of the European Parliament and of the

Council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU)

2019/2088 (EU Taxonomy).

Point 1 above also contains the process in which UPM-Kymmene Oyj has identified the information for reporting in

accordance with the sustainability reporting standards (double materiality assessment) and the tagging of information as

referred to in Chapter 7, Section 22 of the Accounting Act.

Our opinion does not cover the tagging of the group sustainability statement with digital XBRL sustainability tags in

accordance with Chapter 7, Section 22, Subsection 1(2), of the Accounting Act, because sustainability reporting companies

have not had the possibility to comply with that provision in the absence of the ESEF regulation or other European Union

legislation.

Basis for Opinion

We performed the assurance of the group sustainability statement as a limited assurance engagement in compliance with

good assurance practice in Finland and with the International Standard on Assurance Engagements (ISAE) 3000 (Revised)

Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

Our responsibilities under this standard are further described in the Responsibilities of the Group Sustainability Auditor

section of our report.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

UPM FINANCIAL REPORT 2024	231

Other Matter

We draw attention to the fact that the group sustainability statement of UPM-Kymmene Oyj that is referred to in Chapter 7 of

the Accounting Act has been prepared and assurance has been provided for it for the first time for the financial year 1.1.–

31.12.2024. Our opinion does not cover the comparative information that has been presented in the group sustainability

statement. Our opinion is not modified in respect of this matter.

Group sustainability auditor's Independence and Quality Management

We are independent of the parent company and of the group companies in accordance with the ethical requirements that

are applicable in Finland and are relevant to our engagement, and we have fulfilled our other ethical responsibilities in

accordance with these requirements.

The group sustainability auditor applies International Standard on Quality Management ISQM 1, which requires the

sustainability audit firm to design, implement and operate a system of quality management including policies or procedures

regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director of UPM-Kymmene Oyj are responsible for:

• the group sustainability statement and for its preparation and presentation in accordance with the provisions of Chapter 7

of the Accounting Act, including the process that has been defined in the sustainability reporting standards and in which

the information for reporting in accordance with the sustainability reporting standards has been identified as well as the

tagging of information as referred to in Chapter 7, Section 22 of the Accounting Act and

• the compliance of the group sustainability statement with the requirements laid down in Article 8 of he Regulation (EU)

2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable

investment, and amending Regulation (EU) 2019/2088;

• such internal control as the Board of Directors and the Managing Director determine is necessary to enable the

preparation of a group sustainability statement that is free from material misstatement, whether due to fraud or error.

Inherent Limitations in the Preparation of a Sustainability Statement

The preparation of the group sustainability statement requires a materiality assessment from the company in order to

identify relevant disclosures. This significantly involves management judgment and choices. Group sustainability reporting is

also characterized by estimates and assumptions, as well as measurement and estimation uncertainty.

The determination of greenhouse gases is subject to inherent uncertainty due to the incomplete scientific data used to

determine the emission factors and the numerical values needed to combine emissions of different gases.

In addition, when reporting forward-looking information, the company must make assumptions about possible future events

and disclose the company's possible future actions in relation to these events. The actual outcome may be different

because predicted events do not always occur as expected.

UPM FINANCIAL REPORT 2024	232

Responsibilities of the Group Sustainability Auditor

Our responsibility is to perform an assurance engagement to obtain limited assurance about whether the group

sustainability statement is free from material misstatement, whether due to fraud or error, and to issue a limited assurance

report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of the group

sustainability statement.

Compliance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) requires that we exercise

professional judgment and maintain professional skepticism throughout the engagement. We also:

• Identify and assess the risks of material misstatement of the group sustainability statement, whether due to fraud or error,

and obtain an understanding of internal control relevant to the engagement in order to design assurance procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent

company’s or the group’s internal control.

• Design and perform assurance procedures responsive to those risks to obtain evidence that is sufficient and appropriate

to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

Description of the Procedures That Have Been Performed

The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than

for, a reasonable assurance engagement. The nature, timing and extent of assurance procedures selected depend on

professional judgment, including the assessment of risks of material misstatement, whether due to fraud or error.

Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance

that would have been obtained had a reasonable assurance engagement been performed.

Our procedures included for ex. the following:

• We have interviewed the key persons responsible for collecting and reporting the information included in the group

sustainability statement.

• Through interviews, we gained an understanding of the group's control environment related to the group sustainability

reporting process.

• We evaluated the implementation of the company's double materiality assessment process against the requirements of

ESRS standards and the compliance of the information provided for the double materiality assessment with ESRS

standards.

UPM FINANCIAL REPORT 2024	233

• We assessed whether the group sustainability statement in material respect meets the requirements of ESRS standards

for material sustainability topics:

– We have tested the accuracy of the information presented in the group sustainability statement by comparing the

information on a sample basis with supporting company documentation.

– We have on a sample basis performed analytical assurance procedures and related inquiries, recalculation and

inspected documentation, as well as tested data aggregation to assess the accuracy of the group sustainability

statement.

• We gained an understanding of the process by which a company has defined taxonomy-eligible and taxonomy-aligned

economic activities and evaluate the regulatory compliance of the information provided.

Helsinki 13.2.2025

Ernst & Young Oy

Authorized Sustainability Audit Firm

Heikki Ilkka

Authorized Sustainability Auditor

UPM FINANCIAL REPORT 2024	234

ASSURANCE REPORT ON THE SUSTAINABILITY STATEMENT

(Translation of the Finnish original)

To the Annual General Meeting of UPM-Kymmene Oyj

We have performed a reasonable assurance engagement of Scope 1 and Scope 2 GHG emissions (the “GHG emissions”)

contained in the group sustainability statement of UPM-Kymmene Oyj (1041090-0) that is referred to in Chapter 7 of the

Accounting Act and the sustainability reporting standards (ESRS) (the “Criteria”) and that is included in the report of the

Board of Directors for the financial year 1.1.–31.12.2024.

Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform

reasonable assurance procedures on the remaining information included in the group sustainability statement and

accordingly, we do not express an opinion on this information.

Opinion

In our opinion, Scope 1 and Scope 2 GHG emissions for the financial year 1.1-31.12.2024 are presented, in all material

respects, in accordance with the requirements laid down in Chapter 7 of the Accounting Act and the sustainability reporting

standards (ESRS).

Our opinion does not cover the tagging of the group sustainability statement with digital XBRL sustainability tags in

accordance with Chapter 7, Section 22, Subsection 1(2), of the Accounting Act, because sustainability reporting companies

have not had the possibility to comply with that provision in the absence of the ESEF regulation or other European Union

legislation.

Basis for Opinion

We performed the assurance of the group sustainability statement as a reasonable assurance engagement in compliance

with good assurance practice in Finland and with the International Standard on Assurance Engagements (ISAE) 3000

(Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

Our responsibilities under this standard are further described in the Responsibilities of the Group Sustainability Auditor

section of our report.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

We draw attention to the fact that the group sustainability statement of UPM-Kymmene Oyj that is referred to in Chapter 7 of

the Accounting Act has been prepared and assurance has been provided for it for the first time for the financial year 1.1.–

31.12.2024. Our opinion does not cover the comparative information that has been presented in the group sustainability

statement. Our opinion is not modified in respect of this matter.

UPM FINANCIAL REPORT 2024	235

Group sustainability auditor's Independence and Quality Management

We are independent of the parent company and of the group companies in accordance with the ethical

requirements that are applicable in Finland and are relevant to our engagement, and we have fulfilled our

other ethical responsibilities in accordance with these requirements.

The group sustainability auditor applies International Standard on Quality Management ISQM 1, which requires the

sustainability audit firm to design, implement and operate a system of quality management including policies or procedures

regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director of UPM-Kymmene Oyj are responsible for:

• the group sustainability statement and for its preparation and presentation in accordance with the provisions of Chapter 7

of the Accounting Act, including the process that has been defined in the sustainability reporting standards and in which

the information for reporting in accordance with the sustainability reporting standards has been identified

• such internal control as the Board of Directors and the Managing Director determine is necessary to enable the

preparation of a group sustainability statement that is free from material misstatement, whether due to fraud or error. 

Inherent Limitations in the Preparation of a Sustainability Statement

Sustainability reporting is characterized by estimates and assumptions, as well as measurement and estimation uncertainty.

The determination of greenhouse gases is subject to inherent uncertainty due to the incomplete scientific data used to

determine the emission factors and the numerical values needed to combine emissions of different gases. 

Responsibilities of the Group Sustainability Auditor

Our responsibility is to express an opinion on the presentation of the GHG emissions based on the evidence we have

obtained. We conducted our engagement in accordance with the International Standard for Assurance Engagements (ISAE)

3000 (Revised) Other Than Audits or Reviews of Historical Financial Information. Those standards require that we plan and

perform our engagement to obtain reasonable assurance about whether, in all material respects, the GHG emissions are

presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures selected

depend on our judgment, including an assessment of the risk of material misstatement, whether due to fraud or error.

Description of the Procedures That Have Been Performed

As part of our assurance procedures we, for example:

• Conducted interviews with relevant personnel to understand the business and reporting process, including the

sustainability strategy, principles and management

• Conducted interviews with key personnel to understand the sustainability reporting system during the reporting period,

including the process for collecting, collating and reporting the GHG emissions

• Checked that the calculation criteria have been correctly applied in accordance with the methodologies outlined in the

Criteria

UPM FINANCIAL REPORT 2024	236

• Undertook analytical review procedures to support the reasonableness of the data

• Identified and testing assumptions supporting calculations

• Tested, on a sample basis, underlying source information to check the accuracy of the data

• Inspected relevant documentation of the systems and processes for compiling, analysing, and aggregating data in the

reporting period and testing such documentation on a sample basis

• Performed physical and online site visits to performed inquiries and inspect documents on a sample basis.

• Read and reviewed selected material qualitative statements in applicable sections of the report for plausibility and

consistency

Helsinki 13.2.2025

Ernst & Young Oy

Authorized Sustainability Audit Firm

Heikki Ilkka

Authorized Sustainability Auditor

UPM FINANCIAL REPORT 2024	237

I

Independent practitioner’s assurance report – AA1000

(Translated from the original Finnish report)

To the Management of UPM-Kymmene Oyj

Scope

We have been engaged by UPM-Kymmene Oyj (hereafter UPM) to perform a ‘limited assurance engagement,’ as defined

by International Standards on Assurance Engagements, and by AA1000AS v3 Standard (limited assurance according to the

AA1000AS standard, moderate assurance), hereafter referred to as the engagement, to report on sustainability information

in UPM’s Sustainability Statement and Annual Report 2024 (the “Subject Matter”) for the period 1.1.-31.12.2024. The

assignment corresponds to the type 2 assignment of the AA1000AS standard, where the assurance assignment includes

not only the AA Principles but also the verification of the reliability and quality of the information.

Criteria applied by UPM

In preparing the Subject Matter, UPM applied the AA1000 standards (the “Criteria”). As a result, the Subject Matter

information may not be suitable for another purpose.

UPM’s responsibilities

UPM’s management is responsible for selecting the Criteria, and for presenting the Subject Matter in accordance with that

Criteria, in all material respects. This responsibility includes establishing and maintaining internal controls, maintaining

adequate records and making estimates that are relevant to the preparation of the Subject Matter, such that it is free from

material misstatement, whether due to fraud or error.

Ernst & Young’s responsibilities

Our responsibility is to express a conclusion on the presentation of the Subject Matter based on the evidence we have

obtained.

We conducted our engagement in accordance with the International Standard for Assurance Engagements Other Than

Audits or Reviews of Historical Financial Information (‘ISAE 3000’), and in accordance with AccountAbility's assurance

standard (AA1000AS v3), and the terms of reference for this engagement as agreed with UPM on 25.6.2024. ISAE 3000

standard require that we plan and perform our engagement to express a conclusion on whether we are aware of any

material modifications that need to be made to the Subject Matter in order for it to be in accordance with the Criteria, and to

issue a report. The AA1000AS standard requires the planning and execution of the assurance engagement performed in a

way that it provides limited assurance as to whether the corporate responsibility information complies with AccountAbility's

reporting principles (AA1000) and whether the information is reliable and of high quality. The nature, timing, and extent of

the procedures selected depend on our judgment, including an assessment of the risk of material misstatement, whether

due to fraud or error.

We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusions

UPM FINANCIAL REPORT 2024	238

Our Independence and Quality Control

We have maintained our independence and confirm that we have met the requirements of the Code of Ethics for

Professional Accountants issued by the International Ethics Standards Board for Accountants, and have the required

competencies and experience to conduct this assurance engagement.

Ernst & Young also applies International Standard on Quality Management 1, Quality Management for Firms that Perform

Audits or Reviews of Financial Statements, or Other Assurance or Related Services engagements, which requires that we

design, implement and operate a system of quality management including policies or procedures regarding compliance with

ethical requirements, professional standards and applicable legal and regulatory requirements.

Description of procedures performed

Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for a

reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is

substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been

performed. Our procedures were designed to obtain a limited level of assurance on which to base our conclusion and do not

provide all the evidence that would be required to provide a reasonable level of assurance

Although we considered the effectiveness of management’s internal controls when determining the nature and extent of our

procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not

include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems.

A limited assurance engagement consists of making inquiries, primarily of persons responsible for the Subject Matter, and

applying analytical and other appropriate procedures.

      Our procedures included:

a) To develop the knowledge and understanding of UPM's material sustainability topics, organization and activities,

b) Interviews with senior management to understand UPM's sustainability management related to the Subject

Matter,

c) Interviews with personnel responsible for gathering and consolidation of the Subject Matter to understand the

systems, processes and controls related to gathering and consolidating the information,

d) Assessing sustainability data from internal and external sources and checking the data to reporting information

on a sample basis to check the accuracy of the data,

e) Assessing AccountAbility (AA1000) Principles (participation of stakeholders, determination of relevant topics of

corporate responsibility, meeting the expectations of stakeholders and impact assessment) as part of the evaluation

of the implementation of the aforementioned measures.

We also performed such other procedures as we considered necessary in the circumstances.

UPM FINANCIAL REPORT 2024	239

Limitation of the Assignment

In a limited assurance assignment, the methods of obtaining evidence are more limited than in a reasonable assurance

assignment, which is why more limited assurance is obtained than in a reasonable assurance assignment.

We have designed and performed the engagement in such a way that we obtain enough evidence for limited assurance on

which to base our conclusions, and thus it does not provide all of the evidence required to obtain reasonable assurance.

The scope of the assignment covers the Subject Matter for the reporting period 1 January 2024 – 31 December 2024 and

does not include sustainability information from previous reporting periods. The assurance covers the Subject Matter

previously defined in the section Scope, and the assurance does not apply to other information published in the Annual

Report.

Conclusion

Based on our procedures and the evidence obtained, we are not aware of any material modifications that should be made to

the Subject Matter for the period 1.1-31.12.2024, in order for it to be in accordance with the Criteria.

Applying AccountAbility (AA1000) principles of corporate responsibility:

► Involvement of stakeholders: Based on the assurance work done and the evidence we have obtained, we have not

come across any facts, based on which it would be reasonable to assume that essential stakeholders were not taken into

account in the measures related to the participation of stakeholders or that the principle of the participation of stakeholders

was not taken into account in the development of corporate responsibility procedures. In its disclosures, UPM has identified

its key stakeholders, set goals related to the involvement of stakeholders and reported on measures to involve stakeholders.

Stakeholder group work is monitored regularly at the management team and board level.

► Determining the essential topics of corporate responsibility: Based on the assurance work done and the evidence

we have obtained, we have not come across any facts, based on which there is reason to assume that the determination of

UPM's materiality topics of corporate responsibility does not give a fair picture of the material topics regarding corporate

responsibility. UPM has carried out a materiality analysis to identify key impacts and published its results in its Sustainability

Statement and Annual Report 2024. The materiality topics have been prioritized based on the significance of the effects of

UPM's operations and the views of stakeholders. UPM regularly monitors stakeholders' views by conducting stakeholder

surveys.Goals have been set for each relevant topic, which are monitored and reported on using appropriate metrics.

► Responding to stakeholders' expectations: Based on the assurance work done and the evidence we have obtained,

we have not come across any facts that would give a reason to assume that UPM has not applied the principle of

responding to stakeholders' expectations with regard to the topics to be reported. UPM has identified the expectations of

various stakeholders and described the measures taken to meet them.

► Assessment of impacts: Based on the assurance work done and the evidence we have obtained, we have not come

across any facts that would make it reasonable to assume that UPM has not measured, monitored and evaluated its

impacts on the ecosystems surrounding the company. UPM's essential impacts, indicators and goal monitoring are

described in the annual report for each area of corporate responsibility.

UPM FINANCIAL REPORT 2024	240

Quality and reliability of corporate responsibility data

Based on the assurance work done and the evidence we have obtained, we have not come across any facts that would give

a reason to assume that the presented corporate responsibility information is not reliable and high-quality in essential parts

based on the reporting criteria, or does not give an adequate and correct picture of UPM's corporate responsibility in

essential parts.

Recommendations

Based on the assurance work we have done and the evidence we have obtained, we are not aware of any significant

changes or additions that should be made to the Subject Matter in order for it to meet the requirements of the Criteria.

• Implementing a more structured process for local community and social engagement practices across all locations,

irrespective of scale of operations

• More emphasis can be placed on measuring and monitoring of metrics on stakeholder engagements especially related to

affected communities. Standardizing or categorizing the metrics would allow for continuous monitoring of the

effectiveness of stakeholder engagement and its associated actions.

Helsinki, 13 February 2025

Ernst & Young Oy

Authorized Public Accountant Firm

Heikki Ilkka

Authorized Public Accountant

UPM FINANCIAL REPORT 2024	241

Other financial information

Alternative performance measures

UPM presents certain performance measures of historical performance, financial position and cash flows, which in accordance with the “Alternative

Performance Measures” guidance issued by the European Securities and Markets Authority (ESMA) are not accounting measures defined or specified

in IFRS Accounting Standards and are therefore considered as alternative performance measures. These alternative performance measures are

described below:

ALTERNATIVE PERFORMANCE MEASURE	DEFINITION
Operating profit	Profit before income tax expense, finance expenses and finance income and net gains on sale of energy shareholdings as presented on the face of the IFRS income statement. Gains on sale of energy shareholdings are not recorded to the income statement from 2018 onwards.
Comparable EBIT	Operating profit adjusted for items affecting comparability.
Comparable EBITDA	Operating profit before depreciation, amortisation and impairments, change in fair value of forest assets and wood harvested, share of results of associates and joint ventures and items affecting comparability.
Comparable profit before tax	Profit before income tax expense excluding items affecting comparability.
Comparable profit for the period	Profit for the period excluding items affecting comparability and their tax impact.
Comparable EPS, EUR	Earnings per share calculated in accordance with IFRS excluding items affecting comparability and their tax impact.
Net debt	Total of current and non-current debt less cash and cash equivalents and interest-bearing current and non-current financial assets.
Items affecting comparability	Certain non-operational or non-cash valuation transactions with significant income statement impact are considered as items affecting comparability, if they arise from asset impairments, restructuring measures, asset sales, fair value changes of forest assets resulting from changes in valuation parameters or estimates or changes in legislation or legal proceedings. In addition, the changes in fair value of unrealised cash flow and commodity hedges and business acquisition costs  are classified as items affecting comparability. Numerical threshold for items to be considered as significant is EUR 1 million pre-tax in all business areas.
Free cash flow	Cash generated from operations after cash used for investing activities.
Return on equity (ROE), %	Profit for the period as a percentage of average equity.
Comparable ROE, %	Return on equity (ROE) excluding items affecting comparability.
Return on capital employed (ROCE), %	Profit before taxes, interest expenses and other financial expenses as a percentage of average capital employed.
Comparable ROCE, %	Return on capital employed (ROCE) excluding items affecting comparability.
Capital employed	Group total equity and total debt.
Business area’s comparable ROCE, %	Business area’s operating profit adjusted for items affecting comparability as a percentage of business area’s average capital employed.
Business area’s capital employed	Business area’s operating assets less its operating liabilities. Operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in associates and joint-ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received.
Capital expenditure	Capitalised investments in property, plant and equipment, intangible assets including goodwill arising from business combinations, energy shareholdings and other shares, associates and joint ventures.
Capital expenditure excluding acquisitions and shares	Capital expenditure excluding investments in shares and participations.
Operating cash flow per share, EUR	Operating cash flow divided by adjusted average number of shares during the period excluding treasury shares.
Gearing ratio, %	Net debt as a percentage of total equity
Net debt to EBITDA	Net debt divided by comparable EBITDA
Equity to assets ratio, %	Equity expressed as a percentage of total assets less advances received.

UPM FINANCIAL REPORT 2024	242

Reconciliation of key figures to IFRS (Quarterly key figures are unaudited)

EURm, OR AS INDICATED	Q4/24	Q3/24	Q2/24	Q1/24	Q4/23	Q3/23	Q2/23	Q1/23	Q1– Q4/24	Q1– Q4/23
Items affecting comparability
Impairment charges	-516	11	-44	0	-1	-113	-2	-1	-549	-117
Restructuring charges	-18	-3	-83	2	-15	-132	-15	-37	-103	-199
Change in fair value of unrealised cash flow and commodity hedges	8	12	-10	-3	-10	-5	8	5	7	-2
Capital gains and losses on sale of non-current assets	1	0	5	22	0	2	3	-6	29	0
Fair value changes of forest assets	0	0	0	0	-86	0	0	0	0	-86
Other non-operational items	3	-6	0	0	0	0	0	0	-4	0
Total items affecting comparability in operating profit	-523	14	-132	21	-113	-249	-5	-38	-620	-405
Items affecting comparability in financial items	0	0	-3	0	0	1	1	-67	-3	-65
Items affecting comparability in taxes	100	-3	37	0	26	71	4	8	133	109
Items affecting comparability, total	-423	11	-98	21	-87	-177	0	-97	-490	-361
Comparable EBITDA
Operating profit (loss)	-105	305	50	354	211	-29	108	318	604	608
Depreciation, amortisation and impairment charges excluding items affecting comparability	147	144	151	147	152	152	125	114	590	543
Change in fair value of forest assets and wood harvested excluding items affecting comparability	-130	16	27	8	-10	5	16	5	-80	17
Share of result of associates and joint ventures	0	-1	-1	1	0	0	0	1	-1	1
Items affecting comparability in operating profit	523	-14	132	-21	113	249	5	38	620	405
Comparable EBITDA	436	450	359	489	465	376	255	477	1,734	1,573
% of sales	16.5	17.9	14.1	18.5	18.4	14.6	10.0	17.1	16.8	15.0
Comparable EBIT
Operating profit (loss)	-105	305	50	354	211	-29	108	318	604	608
Items affecting comparability in operating profit	523	-14	132	-21	113	249	5	38	620	405
Comparable EBIT	418	291	182	333	323	220	114	356	1,224	1,013
% of sales	15.9	11.5	7.2	12.6	12.8	8.5	4.5	12.8	11.8	9.7
Comparable profit before tax
Profit (loss) before tax	-131	271	28	332	180	-52	96	239	500	464
Items affecting comparability in operating profit	523	-14	132	-21	113	249	5	38	620	405
Items affecting comparability in financial items	0	0	3	—	—	-1	-1	67	3	65
Comparable profit before tax	392	257	163	311	293	196	101	344	1,123	934
Comparable ROCE, %
Comparable profit before tax	392	257	163	311	293	196	101	344	1,123	934
Interest expenses and other financial expenses	31	37	29	28	40	33	22	17	126	112
	423	294	192	339	333	229	123	361	1,249	1,046
Capital employed, average	15,262	14,831	14,809	14,972	15,044	15,246	15,900	17,196	15,184	16,414
Comparable ROCE, %	11.1	7.9	5.2	9.1	8.9	6.0	3.1	8.4	8.2	6.4
Comparable profit for the period
Profit (loss) for the period	-95	246	33	279	161	-28	77	183	463	394
Items affecting comparability, total	423	-11	98	-21	87	177	—	97	490	361
Comparable profit for the period	328	236	131	258	248	149	77	281	953	755
Comparable EPS, EUR
Comparable profit for the period	328	236	131	258	248	149	77	281	953	755
Profit attributable to non-controlling interest	-4	-10	-6	-7	-1	2	1	-7	-27	-6
	324	226	125	251	246	151	78	273	926	749
Average number of shares basic (1,000)	533,324	533,324	533,324	533,324	533,324	533,324	533,324	533,324	533,324	533,324
Comparable EPS, EUR	0.61	0.42	0.23	0.47	0.46	0.28	0.15	0.51	1.74	1.40
Comparable profit for the period	328	236	131	258	248	149	77	281	953	755
Total equity, average	11,356	11,134	11,451	11,669	11,670	11,751	12,290	12,883	11,535	12,205
Comparable ROE, %	11.5	8.5	4.6	8.9	8.5	5.1	2.5	8.7	8.3	6.2

UPM FINANCIAL REPORT 2024	243

Financial information 2015–2024

EURm, OR AS INDICATED	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Income statement
Sales	10,339	10,460	11,720	9,814	8,580	10,238	10,483	10,010	9,812	10,138
Comparable EBITDA	1,734	1,573	2,536	1,821	1,442	1,851	1,868	1,677	1,560	1,350
% of sales	16.8	15.0	21.6	18.6	16.8	18.1	17.8	16.8	15.9	13.3
Operating profit	604	608	1,974	1,562	761	1,344	1,895	1,259	1,135	1,142
% of sales	5.8	5.8	16.8	15.9	8.9	13.1	18.1	12.6	11.6	11.3
Comparable EBIT	1,224	1,013	2,096	1,471	948	1,404	1,513	1,292	1,143	916
% of sales	11.8	9.7	17.9	15.0	11.1	13.7	14.4	12.9	11.6	9.0
Profit before tax	500	464	1,944	1,548	737	1,307	1,839	1,186	1,080	1,075
% of sales	4.8	4.4	16.6	15.8	8.6	12.8	17.5	11.9	11.0	10.6
Comparable profit before tax	1,123	934	2,066	1,457	924	1,367	1,457	1,218	1,089	849
% of sales	10.9	8.9	17.6	14.8	10.8	13.4	13.9	12.2	11.1	8.4
Profit for the period	463	394	1,556	1,307	568	1,073	1,496	974	880	916
% of sales	4.5	3.8	13.3	13.3	6.6	10.5	14.3	9.7	9.0	9.0
Comparable profit for the period	953	755	1,679	1,204	737	1,119	1,194	1,004	879	734
% of sales	9.2	7.2	14.3	12.3	8.6	10.9	11.4	10.0	9.0	7.2
Balance sheet
Non-current assets	14,062	13,913	14,977	12,420	10,149	10,140	9,501	9,144	9,715	10,259
Inventories	2,104	1,948	2,289	1,594	1,285	1,367	1,642	1,311	1,346	1,376
Other current assets	2,930	2,612	4,941	3,662	3,424	3,215	2,853	2,612	2,850	2,558
Total assets	19,096	18,473	22,207	17,676	14,858	14,722	13,996	13,067	13,911	14,193
Total equity	11,540	11,531	12,879	11,106	9,513	10,175	9,797	8,663	8,237	7,944
Non-current liabilities	5,162	4,501	5,807	4,102	3,606	2,730	2,194	2,254	3,364	4,328
Current liabilities	2,395	2,441	3,522	2,468	1,740	1,818	2,005	2,150	2,309	1,921
Total equity and liabilities	19,096	18,473	22,207	17,676	14,858	14,722	13,996	13,067	13,911	14,193
Capital employed at year end	15,452	14,916	17,913	13,759	11,555	11,474	10,575	9,777	10,657	11,010
Capital expenditure	550	1,122	1,555	1,483	903	378	303	329	325	520
% of sales	5.3	10.7	13.3	15.1	10.5	3.7	2.9	3.3	3.3	5.1
Capital expenditure excluding acquisitions and shares	527	1,094	1,399	1,477	902	378	303	303	325	486
% of sales	5.1	10.5	11.9	15.1	10.5	3.7	2.9	3.0	3.3	4.8
Cash flow and net debt
Operating cash flow	1,352	2,269	508	1,250	1,005	1,847	1,330	1,460	1,686	1,185
Free cash flow	766	1,193	-1,077	-74	126	1,432	1,131	1,336	1,424	750
Net debt	2,869	2,432	2,374	647	56	-453	-311	174	1,131	2,100
Key figures
Return on capital employed (ROCE), %	4.1	3.5	12.8	12.4	6.7	12.3	18.4	12.5	10.5	10.3
Comparable ROCE, %	8.2	6.4	13.6	11.7	8.3	12.8	14.6	12.8	10.6	8.3
Return on equity (ROE), %	4.0	3.2	13.0	12.7	5.8	10.7	16.2	11.5	10.9	11.9
Comparable ROE, %	8.3	6.2	14.0	11.7	7.5	11.2	12.9	11.9	10.9	9.5
Gearing ratio, %	25	21	18	6	1	-4	-3	2	14	26
Net debt to EBITDA	1.66	1.55	0.94	0.35	0.04	-0.24	-0.17	0.10	0.73	1.56
Equity to assets ratio, %	60.5	62.5	58.1	62.9	64.1	69.2	70.1	66.6	59.4	56.1
Personnel
Personnel at year end	15,827	16,573	17,236	16,966	18,014	18,742	18,978	19,111	19,310	19,578
Deliveries
Pulp (1,000 t)	4,945	4,139	2,761	3,724	3,664	3,715	3,468	3,595	3,419	3,224
Electricity (GWh)	11,328	12,059	9,442	9,300	9,168	8,619	8,608	8,127	8,782	8,966
Papers, total (1,000 t)	4,692	4,935	6,135	7,486	7,062	8,326	8,996	9,430	9,613	9,771
Plywood (1,000 m3)	482	429	616	738	683	739	791	811	764	740
Sawn timber (1,000 m3)	1,202	1,524	1,538	1,610	1,604	1,741	1,719	1,728	1,751	1,731