UPM annual report 2014

UPM Annual Report 2014

CONTENTS

STAKEHOLDERS 31–44

Solid and future-oriented partner and

transparent supplier requirements

Supplier collaboration projects and the

improvement of contractor safety

Cost efficiency, value creation and

compliance with Supplier code

Proactive and

responsive

communications

Clear and reliable

disclosure, active

interaction with

media

Fact-based media

coverage

Total shareholder value

Clear and reliable disclosure

and communications,

investor meetings and events

Attractive investment

Reliable partner, service consistency,

product safety and quality,

product profiles and ecolabels

Collaboration, customer satisfaction

surveys, co-operation on environmental

credentials of products

Business success and Biofore opportunities

High level of environmental and

social responsibility performance

Dialogue, transparency and

co-operation with relevant NGO’s

Collaboration, common projects

Safe and motivating

working environment

Step Change in Safety

initiative

Employee engagement

Compliance with laws,

tax transparency

Co-operation with trade

associations, discussions

with decision-makers of

different levels, co-operation

with tax authorities

Ensuring competitiveness

and a fair operating

environment as well as

consistent energy and

climate policy regulation

Reliable, safe neighbour, employment

opportunities, dialogue on local topics

and responsible restructuring

Community forums, sponsorship and

local community projects, responsible

restructuring

Acceptance and good collaboration

UPM’s Biofore strategy forms the foundation of UPM’s

stakeholder dialogue. The key focus areas and

activities vary locally and according to stakeholder

needs. Find out more about our activities in 2014 in

this picture.

THE FOCUS OF UPM’S STAKEHOLDER

ENGAGEMENT WORK

PROMOTING ADVANCED BIOFUELS

The European Union is aiming to increase the use of

renewable fuels in transport by the year 2020. In 2014,

the EU decision-making bodies discussed the draft directive

on Indirect Land Use Change (ILUC) aiming to minimise

the changes in land use by favouring certain renewable

raw materials, such as wood-based residues.

Legislation regarding renewable transport fuels will have

an impact on the development of the UPM Biofuels

business. UPM is developing high quality, residue-based

renewable fuels that will not cause changes in land use

or compete with food production.

UPM has established the Leaders of Sustainable Biofuels

(LSB) coalition together with other European companies

that produce and develop advanced biofuels.

The purpose of the coalition is to communicate with other

organisations and stakeholders about the development

and opportunities of advanced biofuels and technologies,

and to define the preconditions for advancing investments

in the field.

This is achieved, for example, by arranging joint meetings

and open expert seminars. Expert assessments are also

used to increase awareness of the challenges and

possibilities relating to biofuels.

Read more:

www.sustainablebiofuelsleaders.com

Stakeholders’ main concerns

and expectations

Key engagement activities

UPM’s target

Change in consumer behaviour, climate change, demographic change,

digitalisation, material scarcity, political and financial instability

UPM’S MATERIALITY ANALYSIS 2014

Increasing Importance to stakeholders

High

Increasing Significance of current or potential impacts on UPM High

Market presence

Supplier reliability

Information availability

and materiality

Transparency

Value offering and collab-

oration with customers

Taxation

Transport

Land management

Compliance & certification

Non-discrimination

Rewarding

Focus on health

Biofore brand

Stakeholder expectations

& investor attractiveness

Public policy & regulation

Risk management

Anti-corruption

Cost competition

Risk management

Forest management

& origin of wood

Biodiversity

Responsible restructuring

People development &

talent attraction

Local commitment

Value creation (direct/indirect)

Business portfolio development &

new Biofore products

Biofore opportunities in the changing

business environment

Profitability

Good governance & business ethics

Growth

Environmental performance:

raw materials, water, climate, waste

Product stewardship: ecodesign,

qualification and product safety

Responsible sourcing

Employee engagement

OHS

Responsible sourcing

Biofore strategy Economic Environmental Social

Government

and

regulators

NGOs

Investors

Employees

Customers

Suppliers

Media

Communities

Read more on malodorous gas emissions at UPM

Kaukas (p. 52), co-operation with Vida Silvestre

(p. 53) and UPM Biofore Concept Car (p. 32).

On the environmental front, the most

important influencing activity was the updating

of the EU Best Available Techniques (BAT

BREF) reference document. The document

sets the basis for European pulp and paper

mill permits.

Co-operation on environment

provides prerequisites for trust

Globally, UPM continued its active co-opera-

tion with local permit authorities. For environ-

mental and responsibility issues, UPM’s stake-

holder engagement activity aimed to maintain

consistent quality in operations and products,

along with securing the prerequisites for future

activities.

Co-operation also continued on a voluntary

basis with a wide range of stakeholders relating

to ecolabels, standards and standardisation

frameworks, as well as nature conservation.

Regarding environmental issues, co-opera-

tion continued with WWF, IUCN and the

Uruguayan Vida Silvestre, for example. As to

ecolabels and standardisation issues, UPM

collaborated with FSC, PEFC, the German

Blue Angel, the Swan label and the EU Ecola-

bel.

Global sustainable development projects

have been developed alongside WBCSD (World

Business Council for Sustainable Development)

and “The Forest Dialogue” organisation.

Biofore strategy communicated

through versatile channels

During 2014, UPM’s Biofore strategy and its

progress were regularly communicated to key

stakeholder groups. The constant transforma-

tion of the company, growth projects and

innovations continued to generate significant

interest about UPM.

According to a brand tracking study carried

out at the end of 2014, UPM’s stakeholders

give the company very positive scores in future

orientation, sustainability and innovation. In

the growing Asian markets, these features were

estimated to have a specific weight in the future.

Since UPM opened its new head office in

Helsinki, more than 22,000 visitors have visited

the Biofore House and heard about UPM’s

transformation. In Lappeenranta, Finland,

UPM has opened a dedicated visitor centre

for its renewable diesel biorefinery.

UPM’s Biofore Concept Car, launched at

the Geneva Motor Show, showcased the oppor-

tunities for renewable materials to an extensive

international audience. The car was manufac-

tured in co-operation with students from the

Metropolia School of Applied Sciences.

The company also engaged in several joint

initiatives with different parties: for example,

together with VR, the Finnish state railways,

rail yard safety risks on wood transportation

were assessed. UPM also initiated co-operation

with WWF Finland to promote the sustainabil-

ity of economic forests and the sustainability of

wood-based liquid biofuels.

Sponsorships revisited

UPM focuses on sponsorship initiatives that

are future oriented and appropriate for an inno-

vative bio-forest industry company with sus-

tainable values. To better align with UPM’s

strategy, the company’s guidelines for sponsor-

ships and donations were revised in late 2013.

New targets and focus areas for 2014-2016 were

defined.

The focus of the local sponsorship was to

support the vitality of UPM production loca-

tions. UPM spent approximately EUR 490,000

on local sponsorships and donations. For

commercial sponsorships, UPM spent approxi-

mately EUR 750,000.

UPM’s support for its Uruguayan UPM

Foundation continued with EUR 530,000. The

foundation supports and encourages training,

entrepreneurship, employment and healthy

living and entertainment in local communities

in the Uruguayan countryside.

UPM does not financially support political

parties or individual candidates.

Approximately EUR 225,000 was donated

to charities or other non-profit purposes,

targeting the health and wellbeing of children

and the young, as well as universities.

Continuous development with

corrective actions

UPM does not tolerate any violations of the

UPM Code of Conduct or the rules and guide-

lines that accompany it.

In 2014, a total of 16 concerns were report-

ed through the UPM Report Misconduct

channel. UPM took corrective actions consid-

ered appropriate to the circumstances.

The complaints related mainly to suspected

cases of fraud and suspected failures to adhere

to the company’s HR Rules or compliance

procedures. Some of the cases involved miscon-

duct and led to disciplinary action including

terminations of employment.