UPM annual report 2015

growth

PORTFOLIO

innovation

Develop new businesses in biofuels (outside

food value chain), biocomposites and

biochemicals

Value added product and service

development in current businesses

Expertise in renewable materials and energy

Product stewardship

Recycling and reuse of production waste

Collaboration and partnerships in R&D

Intellectual property rights

Business portfolio development organi-

cally and potentially through M&A

Businesses with best development

and/or value potential for UPM

Growth in competitive pulp, label,

packaging and release materials,

self-adhesive labels, office papers

in APAC

Plywood solutions for transport and

LNG shipping

Commercialise new business in

biofuels (outside food value chain),

biocomposites and biochemicals

Focus on competitive, low-emission

energy sources

Talent attraction

Opportunities

for UPM

challenges

for UPM

The global population is

growing and its purchasing

power and living standards

are expected to increase.

By 2030, there may be

3 billion more middle-

class consumers, mainly

in the developing countries.

Digitalisation is already

impacting most businesses

today. This concept will

continue to change consumer

preferences, as well as the

ways in which business or

work are being conducted.

Climate change is a major

challenge for the world.

In the coming years, it is

likely to have an increasing

impact on businesses, both

directly as well as through

various policy responses.

Both regulation and demand

for transparency are

increasing.

These developments

represent many long term

opportunities and challenges

for UPM. They are also

driving demand for

sustainable solutions and

responsible business

practices.

Population growth –

Urbanisation and EXPANDING middle class in emerging markets

Demographic change

Digitalisation

Climate change

Responsibility and compliance

Global consumption growth

Economic power shift to emerging markets

Higher living standards

Changing consumer behaviour and preferences

Increasing interest for sustainable solutions and supply chains

Resource scarcity, competition for natural resources

Changing consumer preferences — from

print to screen

Growing e-commerce

Changing work

Disruptive business models and technologies

Policies to limit and mitigate climate change

Replacing fossil energy and oil-based

materials

Direct and indirect impacts of

climate change

Increasing regulation, subsidies

Requirements for transparency

Global trade and businesses, local impacts

Focus on human rights, pollution, biodiversity

Attractive growth outlook for pulp, tissue, packaging, hygiene products, labelling

materials, self-adhesive labelstock and wood products globally

Attractive growth outlook for renewable materials and renewable energy

Growing demand for safe and sustainable products

New business opportunities with ecodesign

Resource efficiency and circular economy offer competitive advantage

Cost efficient and responsible supply chains

Healthy forests and safeguarded wood availability

Different demand trends for different paper

end uses and geographical areas

UPM’s paper production platform provides

continuous optimisation opportunities

Online shopping drives demand for labelling,

packaging and pulp

Increasing efficiency, productivity and

change agility

Industrial internet, big data, automation

Sustainability offers competitive advantage

and growth opportunities

Preferential treatment of low-emission

and renewable energy

Growing demand for safe and

sustainable products

New business opportunities with

ecodesign

Forests as carbon sinks

Increased forest growth in Scandinavia

Responsibility and sustainability offer competi-

tive advantage and growth opportunities

Regulation may drive markets for sustainable

products

New business opportunities with ecodesign

Transparency as competitive advantage

Cost efficient and responsible supply chains

Engaged and diverse workforce

Fit of UPM’s product mix and geographical presence to future growth outlook

Unpredictable raw material costs and availability

Competition for renewable raw materials

Unpredictable regulation and subsidies may distort markets

Declining graphic paper consumption

Fit of UPM’s product mix and geographical

presence to future growth outlook

Changing needs for skills and competencies

Cyber security

Unpredictable regulation and subsidies may

distort markets

Cost for greenhouse gas emissions

Political instability

Increasingly common and more severe storms,

floods, draughts, natural disasters

Unpredictable wood harvesting conditions

Reputation and financial risks in case

of non-compliance

Unpredictable regulation and subsidies

may distort markets

Trade barriers, protectionism, sanctions

Expressions

Megatrends

IN BRIEF

STRATEGY

BUSINESSES

GOVERNANCE

STAKEHOLDERS

ACCOUNTS

UPM Annual Report 2015

Changing operating environment

performance

Continuous improvement in cost efficiency, competitiveness and productivity

Efficient use of renewable materials and energy

UPM Code of Conduct, compliance, transparency

Responsible sourcing, UPM Supplier Code

Continuous improvement in health and safety, employee engagement and

human capital development

Industry leading environmental performance, Best Available Techniques (BAT)

Sustainable forest management, UPM’s global biodiversity programme

Water strategy, production in water abundant areas

Local commitment

Robust and safe IT systems

Read more:

UPM’s responsibility focus areas

and 2030 targets are on page 36

UPM’s Biofore strategy fits well into the changing world

contents