UPM annual report 2015

UPM Annual Report 2015

contents

IN BRIEF

STRATEGY

BUSINESSES

STAKEHOLDERS

GOVERNANCE

ACCOUNTS

Responsible sourcing

throughout the entire

supply chain

Sourcing operations play a significant role in

ensuring the efficiency and profitability of UPM.

The objective of UPM’s sourcing operations is to

enhance a supplier base that is capable of

delivering material and service solutions that

are cost competitive, produced in a responsible

way and innovative to UPM businesses globally.

complete lifecycle of products is continuously

enhanced, and the social and environmental

performance of UPMproducts is further

improved.

Transparent supplier requirements

are the basis for responsible sourcing

The current business environment calls for a

transparent and responsible supply chain.

Transparent and systematic supplier require-

ments are the basis for UPM’s supplier selection

process and supplier performance evaluation.

UPM requires its suppliers to apply the

principles of the Code of Conduct and to fulfil

the criteria concerning social and environmen-

tal responsibility. These supplier requirements

are defined in the UPM Supplier Code. UPM

expects its suppliers to expose the same

requirements in their upstream supply chain.

In 2015, 79% (67%) of supplier spend was

qualified against the Supplier Code. Additional

specific requirements are in place for areas such

as wood, chemicals, safety, logistics, pulp and

packaging.

UPM’s supplier risk assessment covers

financial, quality, delivery, environmental,

social and economic risks. Based on the risk

assessments UPM selects the suppliers whose

performance is studied more closely by annual

questionnaires, joint development plans and

supplier audits.

All UPM’s suppliers of primary rawmaterials

– wood, pulp and recovered paper – have been

screened using environmental, labour practices

and human rights criteria and criteria for

The share of certified fibre supplied

to UPM’s mills increased to 84% (83%).

UPM’s target is to get all fibre certified

by 2030.

15 14 13 12 11 10 09 08 07 06

100

Certified wood supplied to mills

from forest plantations that have been estab-

lished by converting rainforests. UPM does not

operate in areas where the rights of indigenous

peoples are threatened or endangered. In 2015,

UPM received recognition from the Food and

Agriculture Organization of the United Nations

(FAO) for its exemplary forest management

practices in Uruguay. The recognition was

conferred by the local forestry authorities.

Own forests essential for research

and development

UPMhas systematically developed new ways of

securing biodiversity in commercial forests for

over two decades. A good example of this work

is provided by a joint project aimed at promot-

ing the wellbeing of the endangered white-

backed woodpecker in commercial forestry. The

project was carried out by UPM, WWF Finland,

The Finnish Environment Institute (SYKE) and

Metsähallitus (Finland’s forest administration).

During the past 20 years, the population of the

white-backed woodpecker has multiplied as a

result of the conservation and management of

its natural habitat.

During the year, UPMparticipated in the

CBD Business and Biodiversity Forum 2015

held in Helsinki. The CBD Business and Biodi-

versity Forum is part of the UN’s Convention on

Biological Diversity initiative. Recognising

ecosystem services offers plenty of opportuni-

ties from the bioeconomy point of view, and

UPM and the Finnish Environment Institute

(SYKE) published a joint study on ecosystem

services that can be derived from forests along-

side the production of wood. The study pro-

vided more insight into the environmental

impacts of wood-based products. UPM and the

FinnishMinistry of the Environment also

agreed on the establishment of several private

conservation areas in different parts of Finland

in 2015.

The sourcing of all necessary products and

services represents a significant cost element

for UPM business. Cost efficiency is the lead-

ing principle in UPM sourcing.

Besides cost, UPM sets requirements for

the reliability of deliveries in the long term as

well as the quality of the products and services.

In addition, requirements are also set for

financial stability of the supplier, the environ-

mental management of operations, social

responsibility, occupational health and safety

and product safety.

UPM aims to be a professional partner to

its suppliers and to develop supplier relation-

ships in a responsible manner that deliver

long-term benefits to both parties.

Wide range of suppliers

– targeted co-operation

Suppliers are an important stakeholder group

for UPM. The company’s sourcing network

consists of suppliers ranging from private

forest owners and local companies to large

international corporations. Over 25,000

suppliers around the world deliver a variety of

rawmaterials, products and services to UPM.

UPM continuously evaluates the perfor-

mance of its suppliers and seeks to develop

key supplier relationships. We have estab-

lished long-term plans with some 400 suppli-

ers in order to ensure systematic performance

and quality development.

Internal stakeholders’ satisfaction with the

responsibility of key suppliers is measured

annually. As a result, our understanding of the

Read more how larger loads

improve efficiency and

benefit the environment:

www.upmbiofore.com

Photo: Orpe Kuljetus