UPM annual report 2015

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UPM Annual Report 2015 9
contents
IN BRIEF STRATEGY BUSINESSES GOVERNANCE STAKEHOLDERS ACCOUNTS
UPM’s materiality analysis 2015
Importance to stakeholders
Significance of current or potential impacts on UPM
Biofore strategy
Transparency
Social
People development
& talent attraction
Responsible restructuring
Local commitment
Biofore strategy
Innovation
Portfolio development and
value creation (direct/indirect)
Growth
Performance (economic, social,
environmental)
Economic
Ethics and values
Profitability, cost
competitiveness and
shareholder return
Responsible sourcing
and selling
Environmental
Responsible forest management
(incl. biodiversity)
Product stewardship
(ecodesign, product safety,
ecolabels)
Resource efficiency and
environmental performance
Social
Health and safety
Employee engagement
Human rights
Diversity
Biofore strategy
Good governance
Biofore brand
Reliability to customers
Economic
Anti-corruption
Risk and opportunity
management
Taxation
Regulatory
environment
Environmental
Sustainable land use
Renewable and
low-emission energy
Third-party verified
management systems
Social
Rewarding
Environmental
Logistics’ emissions
Packaging
materials
GMO positioning
Economic
Value offering
and collaboration
with customers
Security (IT, data)
The materiality analysis of the company’s responsibility issues (above) covers topics that directly or indirectly influence
the ability to create, maintain or acquire economic, environmental or social value for UPM, stakeholders and society.
UPM’s responsibility thinking (below) starts from risk management and extends to stakeholder involvement.
When all steps are included, we can achieve third-party recognition.
More with Biofore: Responsibility
as a source of competitive advantage
Anticipating and managing risks
Code of Conduct
Environmental performance
Responsible sourcing and forestry
Creating competitive
advantage and long-term value
High performing people
Resource efficiency
Ecolabels and certification
New business
opportunities with ecodesign
Biofuels
Biocomposites
Biochemicals
Value creation with stakeholders
Dialogue, feedback and
engagement
REN
EW
ABILITY
AN
D
RECYCLABILI TY
INN
OVATION
Em
plo
yee
en
gagementand safety
third-party
recog
nition
Corporate responsibility is an integral
part of all our operations and is seen
as a source of competitive advantage.
UPM is strongly committed to
continuous improvement in economic,
social and environmental performance.
UPM promotes responsible practices
throughout the value chain and is
active in finding sustainable solutions
in co-operation with its customers,
suppliers and partners.
All UPM activities comply with local laws and regulations. The company respects
international human rights agreements and agreements concerning labour rights,
including the UNDeclaration of Human Rights, the ILO Declaration on Fundamental
Principles and Rights at Work, and the OECD Guidelines for Multinational Enter-
prises. The company is also one of the participants in the UN Global Compact initiative
whose ten universal principles are derived from international agreements in the areas
of human rights, labour standards, the environment and anti-corruption. UPM also
takes into account the sustainable development goals (SDG) of the UN Agenda 2030.
In 2015, UPMwas invited to join the UN Global Compact LEAD group intended for
global sustainability leaders. The company has promoted global forest industry
partnership projects in the World Business Council for Sustainable Development
(WBCSD), The Forest Dialogue (TFD), and with other ethically-driven organisations,
such as the WorldWildlife Fund For Nature (WWF). UPMhas also participated in local
projects through its co-operation with several expert organisations.
Strengthening ethical business conduct The company’s Biofore strategy and
the Code of Conduct approved by the Board lay the foundations for responsible busi-
ness operations and continuous improvement.
During the year 2015, UPM renewed its Code of Conduct and drafted new long term
targets. The project involved interviewing approximately 200 UPM representatives,
including the Group Executive Team, the members of business and function manage-
ment teams and other key personnel. UPM also involved external parties in the process
through a third-party stakeholder survey.
The company’s updated Code of Conduct discusses our commitment to ethical
business conduct, respecting human rights, ensuring occupational safety and environ-
mentally sound practices. The Code of Conduct is complemented by more detailed
policies, rules and guidelines. Code of Conduct training is mandatory to all employees.
Comprehensive training programme introducing the renewed Code of Conduct will be
launched in 2016.
By the end of 2015, more than 90% of all UPM employees in active employment had
attended training covering the previous Code of Conduct. The target set for the cover-
age of training was achieved as planned.
Group Executive Team in charge of managing corporate
responsibility The Group Executive Team, headed by the President and CEO, is in
charge of managing corporate responsibility, determining the course of action and
guiding development work. The day-to-day work has been integrated into the com-
pany’s business operations, and group-level corporate responsibility is managed by an
environment and responsibility team that coordinates the projects being carried out in
businesses and functions.
UPMcontinually strives to improve its environmental and health and safety perfor-
mance by using various tools, such as certifiedmanagement systems. The company is
committed tomonitoring and assessing its anti-corruption and anti-bribery activities.
UPM’s Ethics Advisory Committee monitors UPM’s compliance with rules, and reports
to the Board of Directors’ Audit Committee at regular intervals.
Several focus areas In 2015, the main focus of UPM’s responsibility activities was
the previously mentioned renewal of the company’s Code of Conduct and responsibil-
ity targets. The safety of employees and contractors also remained an important focus
area. The planning of the new One Safety system began in 2015, and the systemwill be
brought into use in 2016. The system covers the anticipatory observation and reporting
of both occupational safety and environmental issues.
Progress was made in the renewal of the management systems used at the com-
pany’s pulp and paper mills, for instance, the role of product safety was reinforced.
Investments in the further development of responsible sourcing continued. The devel-
opment work performed was based on the human rights assessment completed in 2013.
The assessment was founded on the UN Protect, Respect and Remedy Framework, the
UN Guiding Principles on Business and Human Rights, and a more comprehensive risk
analysis than before.
UPM Annual Report 2015 10
MANAGING THE WATER CHALLENGE
UPM is among the investments of Norges Bank
Investment Management (NBIM), one of the biggest
investors in the world. In 2015, NBIM published
a revised version of the “Water Management –
Expectations to companies” guidance. The purpose of
the guidance is to express how NBIM, as a financial
investor, expects companies to manage the challenges
and opportunities surrounding water resources.
UPM was consulted by NBIM for input and
discussions in the development of the guidance, as
UPM has been one of the top performers in NBIM’s
framework assessing water disclosures in companies’
reporting. This co-operation is a good example of
how the investor community and companies have
started to promote best practices in sustainability
topics. Integrating the issue of responsibility more
thoroughly into investment decisions improves
understanding of risks and opportunities and brings
added value to the company and to the society.
Water risk analysis is relevant to UPM’s business
strategy and operational footprint. The company
reports several water-related investment programmes
to improve energy and water efficiency. UPM’s
most water-intensive production plants are located
in areas where there is sufficient water available.
High-quality fresh water is a precondition for
high-quality paper products, for example.
As an example, UPM has mapped all pulp and paper
mills on the Water Stress Index (WSI) maps, and
reports water stress risk exposure per mill. UPM
reports on water-related risks in its supply chain.
UPM discloses several water performance indicators
at corporate and mill levels. The indicators include
volume of process wastewater, as well as emissions
to the water courses.
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Responsibility is good business 1 performance 2 growth 3 PORTFOLIO 4 innovation
Read more:
UPM’s responsibility focus areas
and 2030 targets are on page 36