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UPM Annual Report 2016
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In brief
Businesses
Governance
Accounts
18
UPM Annual Report 2016
UPM RESPONSIBILITY FOCUS AREA
2030 TARGET
2030 FOLLOW-UP / 2016 RESULTS
ECONOMIC
Profit
Creating value to shareholders
•
Comparable EBIT growth through focused top-line growth and margin
expansion
•
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.
Governance
Ensuring accountability and compliance
•
100% coverage of participation to UPM Code of Conduct training
(continuous)
•
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
1)
•
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.
SOCIAL
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
NGOs
•
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.
ENVIRONMENTAL
2)
Product stewardship
Taking care of the entire lifecycle
•
Environmental Management Systems in 100% use (continuous)
•
Environmental Product Declarations for all products (continuous)
3)
•
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)
Waste
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.
Climate
Creating climate solutions and
working towards carbon neutrality
•
Fossil CO
2
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
2
) reduced 20% by 2030
4)
•
Despite improvements, actions have not compensated for the increased level
caused by the Myllykoski acquisition in 2011 and increased CO
2
factors for
purchased power.
•
UPM sold greenhouse gas claims worth of 480,000 CO
2
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.
Water
Using water responsibly
•
Effluent load (COD) reduced 40% by 2030
4)
•
Wastewater volume reduced 30% by 2030
4)
•
100% of nutrients used at effluent treatment from recycled sources by 2030
•
27% reduction in effluent load achieved since 2008 for the UPM average
product.
•
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
products.
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.
1)
Covers all UPM raw material spend including wood
and wood-based biomass sourcing and excluding energy
2)
Environmental targets: from 2008 levels
3)
Includes paper, timber, plywood, pulp and label
4)
Numerical targets relevant for pulp and paper production
Stakeholders
Strategy
CONTENTS
United Nations Sustainable Development Goals guiding UPM Targets