UPM Annual Report 2016

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UPM Annual Report 2016 UPM Annual Report 2016 14 15
In brief Businesses Stakeholders Governance Accounts Strategy
Responsibility is good business
INDUSTRY LEADER
Our consistent efforts regarding responsibility
issues have received recognition from several third
parties and have made us one of the industry
leaders in several fields.
UN Global Compact LEAD: UPM is the first forest
industry company and the first Finnish company
to ever receive an invitation to join LEAD.
Dow Jones Sustainability Index: UPM has been
listed as the industry leader in the forest and
paper sector in the Dow Jones Sustainability
Europe Index (DJSI) for 2016–2017 for the fifth
time in a row.
Corporate Knights: UPM has been ranked
25th within the list of the 100 most sustainable
corporations in the World (Global 100) in 2016.
RobecoSAM’s annual Sustainability Yearbook:
UPM has been ranked as an industry leader with
gold-class distinction in 2016.
CDP’s Forest Program: UPM has been recognised
with a global leadership position in the 2016
Forest A List for timber and timber-based products.
CDP’s Climate Change Program: UPM has been
included in the CDP Climate A List for climate
actions and transparent climate reporting.
CDP’s Water Program: UPM has received an
A- score, granting it a leadership position within
CDP’s ranking system.
PPI Awards: UPM has received the PPI Bio
Strategy Award 2016 for its biofuels business.
Below50 coalition: UPM Biofuels joined the
below50 coalition to increase sustainable fuel
usage for a low-carbon world.
UPMpromotes responsible practices throughout the value chain and is
active in finding sustainable solutions in co-operation with its customers,
suppliers and partners. Creating value for society both as a company and
through our products is an essential part of the Biofore strategy.
UPM follows 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 Enterprises. Our operations
are also guided by our own basic principles: e.g. we do not use wood or
fibre from tropical rainforests or produce or use elemental chlorine-
bleached pulp.
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. In 2016, UPM joined the UN
Global Compact LEAD forum as the first representative of the forest
industry and the first Finnish participant.
UPMpromotes the Sustainable Development Goals (SDG) of
the 2030 Agenda for Sustainable Development published by the UN.
Examples:
• Goal 3 (Good Health andWellbeing): UPM’s management and
safety practices
• Goal 13 (Climate Action): wood-based renewable diesel
UPMBioVerno. The UN Global Compact LEAD forum has made
UPMBioVerno an example case for this goal.
• Goal 15 (Life on Land): wood-based products and the company’s
global biodiversity programme, which has been part of its
sustainable forest management for over 20 years.
In addition to participating in global projects, UPM also works
with several local expert organisations in order to promote the SDGs.
Corporate responsibility is an integral part of all our operations and seen as
a source of competitive advantage. UPM is strongly committed to continuous
improvement in economic, social and environmental performance.
Code of Conduct to be made visible
in everyday operations
The company’s Biofore strategy and the revised UPMCode of Conduct,
approved by the Board in February 2016, lay the foundation for responsible
business operations and continuous improvement.
The UPMCode of Conduct covers good business conduct, human rights,
occupational safety and environmental practices. During 2016, discussions
concerning the UPMCode of Conduct took place throughout the
organisation and almost all employees attended a mandatory UPMCode of
Conduct training. An assessment of the detailed policies, rules and guidelines
that complement the UPMCode of Conduct is currently under way.
The revision of the UPMCode of Conduct resulted, for example, to an
update of UPM Supplier Code. The extended content of the UPM Supplier
and Third Party Code complies with the UPMCode of Conduct and covers
suppliers as well as agents and joint venture partners. The practical
implementation of the Supplier and Third Party Code will begin in 2017.
Managing corporate responsibility
The Board of Directors, assisted by the Board’s Audit Committee, is
responsible for monitoring compliance with the UPMCode of Conduct and
other corporate policies (read more p. 73–74). The Group Executive Team,
headed by the President and CEO, is in charge of the daily management of
corporate responsibility, determining the course of action and guiding
development work. In practice, corporate responsibility efforts take place in
businesses and functions, and in the Group’s Environment & Responsibility
team, which coordinates the projects carried out by businesses and
functions. UPM continually strives to improve its performance by using
various tools, such as certified management systems.
Several focus areas
The main focus in 2016 was on the internal UPMCode of Conduct trainings.
In addition, the effects of UPMCode of Conduct was extended to cover
UPM’s suppliers and third party intermediaries.
The safety of employees and contractors remained an important focus
area. In 2016, UPM introduced a global reporting tool, One Safety, for all
UPMers and contractors. The tool covers environment, health and safety,
product and process safety as well as security. In 2016, UPM’s pulp business
developed a joint integrated management system for its four pulp mills.
A similar project has started for UPM’s paper mills in Finland.
UPM conducted a high-level human rights assessment in 2013. An action
plan for developing responsible sourcing was created after the assessment
and it has been systematically applied throughout the supply chain. In
addition, UPMhas continuously focused on improving occupational health
and safety and has conducted programmes related to improving employee
health, reducing environmental impact and enhancing product safety. UPM
considers its salient human rights issues to include child labour, forced
labour, environmental pollution, product safety, occupational health and
safety, working conditions, discrimination and corruption. In assessing
human rights, the rights of the following vulnerable groups are especially
taken into account: children, minorities, migrant workers and indigenous
people. In 2016, UPM initiated a global assessment of human rights focusing
on activities at UPM sites, community relations and local sourcing. This
assessment will be completed in 2017 and action plans determined for all
sites where improvement is required.
The materiality analysis (below) of the company’s responsibility issues covers topics
that directly or indirectly influence the ability to create, maintain or acquire econom­
ic, environmental or social value for UPM, its stakeholders and society. Analysis
is performed annually, based on follow-up of interests and concerns of different
stakeholder groups, including communities, employees, NGOs, customers, suppliers,
investors and media. For example, all the customer questions and stakeholder
concerns received during the year are taken into consideration. Specific external
stakeholder interviews for materiality purposes are conducted every second year
by independent third party. Most material economic, environmental and social
responsibility topics identified in this process are presented on the right. UPM’s
responsibility focus areas and targets (p. 18) reflect these material aspects. UPM
does not distinguish topics within the section from each other but considers all
equally material.
Read more:
CONTENTS
Global Compact
LEAD
CLIMATE
UPM’s materiality analysis 2016
Importance to stakeholders
MEDIUM
HIGH
MEDIUM HIGH
Significance of current or potential impacts on UPM
BIOFORE STRATEGY
Performance (economic, social, environmental)
Growth
Portfolio development and value creation (direct/indirect)
Innovation
4
3
2
1
SOCIAL
Health and safety
Employee engagement
Human rights
Diversity
SOCIAL
People development & talent attraction
Responsible restructuring
Local engagement
ECONOMIC
Anti-corruption
Risk and opportunity management
Taxation
Regulatory environment
ENVIRONMENTAL
Sustainable land use
Third-party verified
management systems
of UPM active employees
completed the Code of Conduct
training (continuous target) 97%
TARGETS
2030
ECONOMIC
Compliance, ethics and values
Competitiveness
Responsible sourcing and selling
ENVIRONMENTAL
Sustainable forest management
(incl. biodiversity)
Product stewardship
Resource efficiency and
environmental performance
Climate change
ENVIRONMENTAL
Logistics’ emissions
Packaging materials
GMO positioning
ECONOMIC
Value offering and
collaboration with customers
Security (IT, data)
SOCIAL
Rewarding