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UPM Annual Report 2016


In brief





UPM Annual Report 2016






Creating value to shareholders

Comparable EBIT growth through focused top-line growth and margin


Comparable ROE: 10%

Net debt/EBITDA: around 2 times or less

Comparable EBIT increased by 25% to EUR 1,143 million (916 million).

Comparable ROE was 10.9%.

Net debt/EBITDA was 0.73 times.


Ensuring accountability and compliance

100% coverage of participation to UPM Code of Conduct training


97% of active employees completed the renewed Code of Conduct training.

Responsible sourcing

Adding value through responsible business practices

80% of UPM spend qualified against UPM Supplier Code (continuous)

100% of UPM raw material spend qualified against UPM Supplier Code

by 2030


Continuous supplier auditing based on systematic risk assessment practices

80% of supplier spend qualified against UPM Supplier Code.

(+1pp compared with 2015).

94% of raw material spend qualified against UPM Suppler Code.

Since 2013, the number of risk assessment-based supplier audits

has been doubled, with a much wider geographical area than earlier.


Diversity and inclusion

Developing organisational culture and local conditions to ensure

inclusive and diverse working environment for business success

All UPM's employees are treated as individuals regardless of gender, age,

race, nationality etc. 100% favourable responses in Employee Engagement

Survey by 2030

Diversity and inclusion initiative in place

Responses to Employee Engagement Survey’s diversity question

were 79% favourable (+2 ppt).

Diversity initiative was started.

Continuous learning and development

Ensuring high performance for business success and continuous

professional development for future employability

Target setting and development plan for all employees, completion rate

100% by 2030

Employees experience the opportunity for learning and development,

80% favourable in Employee Engagement Survey by 2030

87% of all permanent employees had a personal performance review with

their managers.

Responses to Employee Engagement Survey’s question regarding

learning and development were 64% favourable.

Responsible leadership

Emphasising value-based and inspiring leadership and integrity

Continuous development of working environment

Employee engagement index overall favourable score in global top quarter

by 2030

Employee engagement index overall favourable score increased to 69% (66%).

This is 8 percentage points below global top quarter.

Working conditions

Ensuring safe and healthy working environment and

wellbeing of employees

No fatalities or serious accidents in UPM operations

Continuous improvement in safety: Lost time accident frequency (LTAF) <1

and Total recordable injury frequency (TRIF) <2 levels permanently

reached including contractors

All operations have certified OHS system by 2030

Health Promotion Programme is in use at all UPM sites and businesses

by 2030

Absenteeism rate < 2 % in all organisations by 2030

Two fatal accidents in 2016, one involving an UPM employee and one

contractor accident.

LTAF was 3.7 for own employees and 6.2 for contractors. TRIF was 9.3

for own employees and 7.5 for contractors.

All production sites have an OHS management system in place. 38% of

the sites got external certification of their OHS system.

A majority of the sites implemented their programme.

The absenteeism rate was 3.4% (3.7%) in 2016.

Community involvement

Ensuring local commitment

Continuous development of strategic sustainability initiatives with leading


Continuous sharing of best practices of stakeholder initiatives

UPM’s Biofore Share and Care programme brings significant added value

Co-operation with BirdLife and Vida Silvestre continued.

Sharing of best practices ensured through well-established operational

stakeholder forums, for example.

Programme with four focus areas was launched.



Product stewardship

Taking care of the entire lifecycle

Environmental Management Systems in 100% use (continuous)

Environmental Product Declarations for all products (continuous)


All applicable products ecolabelled by 2030

96% of production sites have a certified environmental management system

in place, remaining have implementation underway.

Environmental declarations are available for all relevant UPM products.

The share of ecolabelled products was 69% (70%). (Scope widened)


Promoting material efficiency and

circular economy – reduce, reuse and recycle

No process waste to landfills or to incineration without energy recovery

by 2030

89% of UPM’s total process waste was recycled or recovered.


Creating climate solutions and

working towards carbon neutrality

Fossil CO


emissions from own combustion and purchased electricity (Scope

1 and 2) reduced 30% by 2030

Maximise the business benefits of greenhouse gas claims (continuous)

Improve energy efficiency annually by 1% (continuous)

70% share of renewable fuels (continuous)

Acidifying flue gases (NOx/SO


) reduced 20% by 2030


Despite improvements, actions have not compensated for the increased level

caused by the Myllykoski acquisition in 2011 and increased CO


factors for

purchased power.

UPM sold greenhouse gas claims worth of 480,000 CO


tonnes. Without sales

UPM’s reported emissions (Scope 1 and 2) would have been over 7% lower.

Energy efficiency target was not achieved.

Level of 69% (67%) reached in the use of renewable fuels.

24% reduction achieved since 2008 for the UPM average product.


Using water responsibly

Effluent load (COD) reduced 40% by 2030


Wastewater volume reduced 30% by 2030


100% of nutrients used at effluent treatment from recycled sources by 2030

27% reduction in effluent load achieved since 2008 for the UPM average


13% reduction in wastewater volume achieved since 2008 for the UPM

average product.

Project was started in 2016, one site almost reached the level already.

Forests and biodiversity

Ensuring sustainable land use and keeping forests full of life

100% coverage of chains of custody (continuous)

All fibre certified by 2030

Coverage is 100%.

The share of certified fibre remained at 84%.

Guided by

the Biofore strategy

UPM’s Biofore strategy guides

the company in achieving its

responsibility targets for 2030 and

in contributing to UN Sustainability

Development Goals (SDG).

In order to guide its responsibility activities,

UPMhas established a set of responsibility focus

areas with targets and key performance indicators.

They are analysed every year based on a materiality

analysis (page 14). The focus areas cover economic,

social and environmental responsibility.

Having successfully transformed its business

model and improved its business performance, UPM

has renewed its long-term financial targets in January

2017. Targets related to diversity and inclusion as well as

community engagement were changed from launching

to implementation. Climate-related focus area was

strengthened with two new targets for energy efficiency

and share of renewable fuels. The scope of ecolabelled

products was widened to cover also UPMRaflatac's


In the area of economic responsibility, UPM’s focus

areas are economic performance, good governance

and responsible sourcing. By economic performance

the company creates value to the entire surrounding

community. Good governance helps UPM to avoid risks

and enables growth and new business opportunities.

Responsible sourcing not only minimises risks, but

also creates extensive direct and indirect added value.

In the area of social responsibility the focus is

on the fulfilment of human rights, occupational health

and safety, local stakeholder engagement and UPM’s

role as a responsible employer. UPM is committed to

respecting human rights. Being a responsible employer

improves employee performance, engages people and

creates a safe working environment.

As a result of its significant local presence,

UPM adds value to society. The company also strives

to increase this value through stakeholder engagement.

Environmental responsibility covers sustainable

products, the climate, the use of forests and water,

and waste reduction. Some of the targets are continuous

and some have been extended to 2030. Long-term

targets are also monitored on an annual basis.

For environmental targets, the reference year is 2008.


Covers all UPM raw material spend including wood

and wood-based biomass sourcing and excluding energy


Environmental targets: from 2008 levels


Includes paper, timber, plywood, pulp and label


Numerical targets relevant for pulp and paper production




United Nations Sustainable Development Goals guiding UPM Targets