UPM Annual Report 2016

102-103 / 176

ACCOUNTS
UPM Annual Report 2016 UPM Annual Report 2016 102 103
In brief Strategy Businesses Stakeholders Governance Accounts
CONTENTS
IMPACT MANAGEMENT
Prioritising product stewardship UPM’s products are made from renewable, biodegradable and recyclable raw materials. Product
stewardship covers the entire lifecycle for all UPM products from the development phase to the end-use
and beyond. Ecodesign and product safety measures ensure that impacts on products and the environ­
ment are considered and minimised. UPM provides product declarations to grant customers easy access
to relevant information. UPM is the largest producer of EU ecolabelled newsprint, graphic and office
papers.
Reducing waste is part of circular economy Today, approximately 89% of all UPM’s production waste is recovered and recycled. UPM has developed
innovative ways to reduce its own waste and to recycle waste or residues in new products such as UPM
BioVerno, UPM’s renewable diesel and UPM ProFi composite which utilises partly waste from the
production of self-adhesive label materials.
UPM is also the world’s largest user of recovered paper for the production of graphic papers,
consuming 2.8 million tonnes of paper for recycling in 2016. The total amount of solid waste sent to
landfill has slightly increased with 3% compared to the previous year.
Sustainable forestry All of UPM’s own forests and eucalyptus plantations are certified according to the FSC and/or PEFC
certification schemes. All of UPM’s wood supplies are covered by third-party-verified chains of custody.
84% (84%) of all wood used by UPM is sourced from certified forests. The aim of UPM’s global
biodiversity programme is to maintain biodiversity in forests, to promote best practices in sustainable
forestry and to emphasize the role of ecosystem services.
In 2016, the CDP Forest Program listed UPM as one of the global leaders on the 2016 Forest A List for
timber and timber-based products.
Climate actions and energy efficiency Since 1990, specific direct CO 2 (fossil carbon dioxide) emissions per tonne of paper have been reduced
by approximately 23%. UPM has a wide range of energy sources and it maximises the use of carbon-
neutral energy. Biomass-based fuels make up 85% of the fuels used by UPM in Finland and 69% of those
used worldwide. UPM is the second largest generator of biomass-based electricity in Europe. If UPM
would need to buy certificates to cover its whole fossil CO2 emissions, and the price of CO2 certificates
would rise by EUR 5 per tonne, it would mean additional costs of approximately EUR 20 million annually.
As the use of weather-dependent energy sources increases, the need for balancing power in energy
systems will also grow. UPM is investing in hydropower, the most effective and sustainable method of
producing balancing power. In 2016, the new unit of the Harjavalta hydropower plant was completed.
UPM strives to continuously improve its energy efficiency across all its operations. During the last 20
years, the energy efficiency of production has significantly improved due to energy audits, innovations
and internal campaigns.
Water plays an increasingly important role All of UPM’s pulp and paper mills are required to have both a mechanical and a biological wastewater
treatment. In order to ensure the best possible treatment result and share best practice, UPM’s wastewater
treatment facility team has continued its work. The results have been good and the number of incidents
has decreased further in 2016.
UPM has reduced wastewater volumes per tonne of paper by 11% and per tonne of chemical pulp
by 22% over the last ten years. The COD load has decreased by 23% per tonne of paper, and by 40%
per tonne of pulp, over the last ten years. If the price for raw water would increase by 0.01 Euro per m³,
it would mean additional water costs of approximately EUR 5 million annually.
UPM’s efforts for responsible water use were acknowledged by the CDP Water Program which has
rated UPM with A-, a leadership position in the ranking.
Corporate Governance Statement
UPM presents the Corporate Governance Statement as a separate report which is available on the UPM website:
Responsibility
Responsibility is good business
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.
In 2016, the main focus of UPM’s responsibility activities was on the
internal Code of Conduct training and on extending its effects to UPM’s
suppliers and third party intermediaries. The safety of employees and
contractors remained an important focus area. UPM took part in the
UN Global Compact LEAD forum as the first representative of the forest
industry and also as the first Finnish participant.
Environmental performance
In 2016, UPM’s environmental investments totalled EUR 22 million
(28 million). The largest being the investment to Schongau power plant
retrofit to achieve lower air emissions. UPM’s environmental costs, which
were mainly attributable to effluent treatment and waste management,
totalled EUR 120 million (129 million), including depreciation.
No major environmental incidents occurred in 2016. However,
several minor temporary deviations from permit limits did arise. These
deviations were reported to the relevant authorities immediately, and
corrective and preventive measures were taken. These measures are part
of UPM’s internal Clean Run campaign that aims to improve the company’s
environmental performance further, sharing best practices and promoting
and maintaining environmental awareness.
The majority of UPM’s production sites, as well as its forestry
operations, are covered by environmental, quality and health and safety
systems, which are certified in accordance with the ISO 9001, ISO 14001
and OHSAS 18001 standards respectively. In addition, several sites have
an ISO 22000 food safety management system or an energy management
system according to ISO 50001 or the Finnish ETJ+ system. UPM has
certified all its European pulp and paper mills, the UPM Fray Bentos pulp
mill in Uruguay and UPM Changshu paper mill in China in accordance
with the voluntary EU Eco-Management and Audit Scheme (EMAS).
In 2016, UPM Pulp developed a joint integrated management system
for its four pulp mills. A similar project has started for UPM’s paper mills
in Finland.
Board of Director’s proposal for
the distribution of profits
The Board of Directors proposes to the Annual General Meeting
of UPM-Kymmene Corporation to be held on 29 March 2017 that a
dividend of EUR 0.95 per share be paid based on the balance sheet
to be adopted for the financial year ending 31 December 2016 and
that the remaining portion of the distributable funds be retained in
the Company’s unrestricted shareholders’ equity.
The dividend will be paid to a shareholder who is registered in
the Company’s shareholders’ register held by Euroclear Finland Ltd
on the dividend record date of 31 March 2017. The Board of
Directors proposes that the dividend be paid on 12 April 2017.
Signatures of the annual accounts and the report of the Board of Directors for the year 2016
Helsinki, 31 January 2017
Björn Wahlroos Berndt Brunow Henrik Ehrnrooth
Chairman
Piia-Noora Kauppi Wendy E. Lane Jussi Pesonen
President and CEO
Ari Puheloinen Veli-Matti Reinikkala Suzanne Thoma
Kim Wahl
On the date of the dividend proposal, 31 January 2017,
the Company’s registered number of shares is 533,735,699. The
aforementioned number of shares includes 230,737 treasury shares
which are not entitled to dividend. As a result, the proposed dividend
would total EUR 506.8 million.
On 31 December 2016, the distributable funds of the parent
company were EUR 3,387,589,976.70 including EUR 254,985,094.81
profit for the period. 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.