UPM’S STAKEHOLDER MAGAZINE 3/2016

RESPONSIBILITY BRINGS STABILITY

Investing in a sustainable future

The strategic wisdom of ethical investment

Focusing on human rights in business Responsibility

Responsible Fibre™ verified by UPM guarantees that the product meets the industry’s most demanding environmental and social is a good responsibility criteria verified by a third party. BIOFORE IS UPM’S GLOBAL STAKEHOLDER MAGAZINE investment The sign of As the leader in integrating the bio and forest industries, UPM takes responsibility for building a sustainable and healthy future for future generations. At the same ORDER YOUR PERSONAL HARD COPY AT time we recognize our responsibility to our employees, order@upm.com responsibility. shareholders, customers, partners and other stakeholders. We must be able to prove every day that being profitable and increasing social value go hand in hand. Our responsibility criteria cover the whole lifecycle of a product This issue of Biofore discusses responsibility as an SUBSCRIBE TO OUR PRESS from forestry and sourcing to sustainable production. They also investment. Investors – as well as all other stakeholders RELEASES AT www.upm.com/media cover the social responsibility aspects that are important for us. – value responsibly operating companies that fuel positive environmental, economic and social change Explore and experience the world of Responsible Fibre™ UPM through business. These companies have the ability to at responsiblefibre.upm.com. You will see how every little create both shareowner value and social value in ways TWITTER choice can make a difference. – The Biofore Company which are sustainable. In our main story (pages 10–13) @UPM News, UPM’s Chairman of the Board Björn Wahlroos states www.twitter.com/ UPM leads the integration of b​io that a responsibly operating company manages risks UPM News UPM – The Biofore Company. and forest industries into a new, generally better than others and will generate more stable www.upm.com shareholder returns in the long term. He also emphasizes sustainable and innovation-driven future.​ the responsibility of the company to other stakeholders Our company consists of six business LINKEDIN and society as a whole. www.linkedIn.com/ areas: UPM Biorefining, UPM Energy, Responsibility is the very core of UPM’s Biofore company/ UPM Raflatac, UPM Specialty Papers, Climate strategy. For us, responsible business means focusing UPM-Kymmene UPM Paper ENA (Europe & North America) not only on our own operations but on the whole value and UPM Plywood. Our products are chain, and finding sustainable business solutions in made of responsibly sourced, renewable active dialogue with our customers, suppliers and YOUTUBE raw materials. They offer alternatives partners. www.youtube.com/ to replace non-renewable fossil-based Responsibility is about values Biodiversity upmdotcom materials. and commitment, but first and foremost, it is about actions. We develop new innovative and As always, actions speak louder than words. FACEBOOK sustainable businesses. Biofuels, bio­ Water www.facebook.com/ composites and biochemicals are UPMGlobal based on our extensive know-how and Elisa Nilsson strong position in the forest biomass Vice President, sourcing and processing value chain. Brand and Communications, UPM We live by our values – trust and Social Responsibility be trusted, achieve together, responsibility criteria renew with courage.

3/2016 | 03 An increasing number of

investors are looking to invest

in responsible companies with

open reporting principles.

04 | BIOFORE 3/2016 | 05 CONTENTS

Investors buy forest 03 EDITORIAL – UPM guarantees steady timber demand and 06 CONTENTS 10 32 sustainable profits. 08 IN TIME “UPM has made balanced adjustments in a challenging 28 BIOCHEMICALS – NEW VALUE 40 OTEPÄÄ RAMPS UP environment,” says Björn 10 SHAREHOLDER VALUE ALWAYS FROM WOOD UPM PLYWOOD PRODUCTION Wahlroos, Chairman of COMES FIRST UPM Biochemicals leads the industry UPM’s modernized plywood mill in EDITOR-IN-CHIEF the Board. Elisa Nilsson All strategic steps taken by UPM in as a developer of wood-based Otepää, Estonia is set to double its recent years have served the interests chemicals. production capacity this autumn. EDITORIAL STAFF Heli Aalto, Sari Hörkkö, of shareholders, affirms UPM’s Kristiina Jaaranen, Terhi Jokinen, Chairman of the Board Björn Wahlroos. 30 CLEANER MARINE SHIPPING 43 WHAT’S BEHIND A WINE LABEL? Monica Krabbe, Anneli Kunnas, Johan Lindh, Sami Lundgren, WITH UPM BIOVERNO Italian wine bottler Cielo e Terra Marjut Meronen, Nina Norjama, 14 MEGATRENDS DRIVE PULP DEMAND With the marine industry striving to and UPM Raflatac partner to Sini Paloheimo, Aili Piironen, Annika Saari, Kaisa Vainikka, Pulp is a versatile raw material, and its 14 drive down emissions, recent tests understand and reduce environ­ Päivi Vistala-Palonen. Global demand for demand is on a trajectory of constant promise a bright future in marine use mental impacts using lifecycle bleached pulp is predicted DESIGN for UPM BioVerno. assessment. growth, particularly in emerging to grow 2.5% annually Valve markets. for the next ten years. PRINTING 32 INVESTORS SEE FORESTS AS MORE 44 LUXURY IS NEVER OUT Erweko Oy THAN JUST TREES OF FASHION 19 WHY RESPONSIBLE INVESTMENT COVER IS A WIN-WIN STRATEGY A growing number of local and Inspiring looks, exquisite texture UPM Finesse Silk 200 g/m² international investors are taking an More and more investors are investing and a luxuriant finish: what works PAGES in responsible businesses – and with interest in Finnish forest estates – and for fashion also makes a great fashion UPM Finesse Silk 130 g/m² wisely so. supplement – starting with a paper very good reason. UPM-KYMMENE CORPORATION that oozes style. PO Box 380 35 RAPPING FOR LITERACY FI-00101 Helsinki 22 FOCUSING ON HUMAN RIGHTS Finland IN BUSINESS ‘Words Matter’ is a UPM-sponsored 46 WHY COMPLIANCE IS Tel. +358 (0)204 15 111 project that inspires vocational school SMART BUSINESS Business and human rights expert www.upm.com Anna Triponel shares insights on students to improve their reading Operating responsibly brings a www.upmbiofore.com how the UN Guiding Principles 22 skills through rap music. competitive edge in several ways. have changed business over the Shift’s Anna Triponel helps last five years. businesses embed human rights 38 SUPPORTING TEACHER EDUCATION 48 INVESTING IN issues in their corporate DNA. IN URUGUAY A SUSTAINABLE FUTURE 26 NUTRIENT RECYCLING FOR The UPM Foundation in Uruguay Investors learn how to integrate A HEALTHIER BALTIC SEA supports in-service training of environmental, social and governance UPM is employing novel approaches teachers in Río Negro Department (ESG) issues into their portfolio to minimize its impact on local to update and strengthen their decisions at the annual PRI in water resources. pedagogical skills. Person conference.

06 | BIOFORE 3/2016 | 07 IN TIME From Finnish woods to Chinese nurseries DJSI LEADER Demand for Nordic timber is at an all-time high in the Chinese FIVE TIMES IN furniture industry, especially in the children’s furniture segment.

A ROW “China is the third largest market for UPM Timber, and the furniture industry is our main end-use segment,” says Mikko Hyvärinen, UPM has been listed as the forest Director of Sales and Supply Management. and paper industry leader in the Finnish timber has a good reputation in China, and Finland is Dow Jones Sustainability Europe seen as a dependable business partner. “Nordic wood is perfect Index (DJSI) for 2016–2017. for children’s furniture, since it is 100% non-toxic, safe and long- This is the fifth time that UPM has lasting,” says Hyvärinen. LABEL retained its leadership position. Chinese furniture-makers appreciate the high quality and beautiful In October, UPM was included EXPANSION light shade of Nordic timber, which adds a touch of Scandinavia on the CDP Climate A List, to Chinese nurseries. “UPM Timber is honoured to be involved in meaning the company received IN POLAND creating a safe and healthy environment for Chinese children to an “A” grade for its actions to play, sleep and live in,” Hyvärinen adds. UPM Raflatac is expanding its asset mitigate climate change. This platform in Wroclaw, Poland. UPM Raflatac is the eighth year that UPM has Old meets new will strengthen its position by building a received recognition from the new coating line at the Wroclaw label stock CDP’s climate change program for in Helsinki’s market square factory. By installing a new coating line and its climate actions and transparent related reel handling and slitting capacity climate reporting. additions, the company aims to meet Plywood is the starring material in new designer market stalls that will rejuvenate increasing demand for self-adhesive label Helsinki’s 200-year old Market Square. The design is based on a competition stock in Europe. The new line is planned to won by four Aalto University students. The prototype is a sturdy combination come on stream in the first half of 2018. of plywood and canvas celebrating the simple beauty of Nordic design. The plywood was supplied by UPM.

“The winning stall is original, yet connected to local tradition. The materials are surprisingly light and beautiful,” described the jury.

The new stalls are set to grace the Market Square in summer 2017 when Finland

celebrates 100 years of independence.

THE NAME Junction of innovators You can now read SAYS IT ALL UPM was looking to connect with innovators and find Biofore Magazine and As of 1 October 2016, the UPM Paper Asia exciting new digital solutions for its supply chain at the other interesting stories at business area was renamed UPM Specialty Junction hackathon in Helsinki in November. Junction is Europe’s Papers. The new name highlights the leading hackathon, bringing together top developers, designers and www.upmbiofore.com. business area’s strategic focus on entrepreneurs from across the world. UPM offered participants the challenge of specialty papers and its global creating digitalized solutions, services and data analytics utilizing supply chain data. scope of operations.

08 | BIOFORE 3/2016 | 09 TEXT MATTI REMES PHOTOGRAPHY TUOMAS UUSHEIMO, JANNE LEHTINEN Shareholder value always comes first

“All measures taken by UPM in recent years have been implemented with the best possible management of our shareholders’ assets in mind,” says Björn Wahlroos, Chairman of the Board of Directors, UPM.

jörn Wahlroos was elected as Chairman of the Paper business in fighting form UPM’s Board of Directors in 2008. Even back then, Wahlroos believes that the smart strategic choices made by the forest industry was by no means new territory UPM’s paper business in Europe and North America (ENA) to him: the prominent economic expert had become – the company’s largest business area – have been most Bclosely acquainted with the industry during his prior long important from the shareholders’ perspective. career in banking. “The demand for paper has been declining continuously in “It is nearly impossible for an investment banker operating developed countries, so it’s really an issue of employing delay in the Nordic region not to know the forest industry. I felt that tactics. The companies with the best resources will be the it was the field of industry I was most familiar with and that it most successful in this situation.” offered an interesting challenge,” states Wahlroos. Wahlroos notes that UPM’s paper machines outperform Recent years have posed more than enough challenges for the competition in terms of efficiency. Optimally located the Board of Directors. Due to the rapidly changing business production capacity and well-planned operations have environment, the company has had to thoroughly review its additionally helped the company to uphold high capacity future course. utilization rates at its mills. “UPM has been able to make balanced adjustments “This has enabled us to maintain profitability even in to its capacity and ways of working in a very challenging a situation which has forced many of our competitors into environment.” a struggle for survival.” High operational efficiency and low fixed costs helped Clear consensus on direction UPM Paper ENA to achieve a strong result in the third quarter. After eight years, what does Wahlroos regard as the most “We still need to continue our strict cost management in rewarding aspect of chairing UPM’s Board of Directors? the future,” Wahlroos states. “Collaborating with President & CEO Jussi Pesonen, by far. We come from different backgrounds, you see. Jussi is the best New growth through innovation forest industry expert I know. I, in turn, may have been able During Wahlroos’ term, UPM has advanced its Biofore strategy, to offer some help with financial and strategic matters, as well which pools the strengths of the bio and forest industries to as insights and background related to Sweden.” build new growth and a sustainable, innovation-driven future. According to Wahlroos, the Board of Directors and the “The forest industry is often considered technologically operative management share a clear consensus. All strategy stable and rather conservative, but ‘conservative’ is not a word work is based on the principles of increasing shareholder value that describes UPM.” and prioritizing shareholder views. Wahlroos offers UPM’s biofuels business as an example: “All strategic measures we have taken in recent years have the company has already initiated commercial production of been implemented with the best possible management of our a renewable wood-based diesel fuel. UPM also develops wood- shareholders’ assets in mind. There have been times when based biochemicals. The demand for these kinds of products traditional industries have lost sight of this principle.” is expected to grow significantly over the coming years. >>

10 | BIOFORE 3/2016 | 11 “We are at a fascinating technological turning point where According to Wahlroos, UPM has learned from past mistakes. we are seeing major progress in the use and refinement of wood The company will continue making investments, but the process fibres. This opens up new opportunities for UPM.” will be smarter and more selective. By way of example, he points to UPM’s substantial investments Firm foothold on pulp market improving the efficiency of pulp mills and increasing production The pulp business is an important growth area for UPM. capacity in Finland and Uruguay. Earlier this year The demand for pulp is continuing to grow, particularly The investments that have already been realised or are in developing economies. Wahlroos points out that the currently ongoing will increase capacity by 500,000 tonnes, which UPM started up a new special investments recently made by UPM in its production facilities corresponds to the capacity of one traditional pulp mill. paper machine in China that has will help to strengthen the company’s foothold in the pulp “Our investments have been targeted very precisely. We have market. been able to increase production capacity significantly by making increased capacity by nearly The efficiency of UPM’s pulp mills and their use of the latest relatively small investments and by removing bottlenecks in our 400,000 tonnes. technology are among UPM’s core strengths, he notes. production.” “Another extremely significant factor is choosing the right Among its largest recent investments, earlier this year sales strategy for pulp: in other words, we must carefully define UPM started up a new special paper machine in China that has the pulp we want to sell to others and the pulp we intend to use increased capacity by nearly 400,000 tonnes. In addition, UPM in our own production.” has announced that the company is assessing the possibility of Two thirds of the pulp produced by UPM is sold to customers building a new short-fibre pulp mill in Uruguay. Wahlroos states around the world, mainly in Europe and China. The company’s that UPM’s strong balance sheet provides a solid basis for planning own paper businesses purchase the remaining third. these and other cautiously targeted investments. “The fundamental questions involved in the pulp business “There has probably never been a comparable case in the are extremely interesting, because market pulp is a truly global history of the forest industry where a company can take its time raw material.” considering a two-billion-euro investment without having to worry about financing. UPM is in this fortunate position today.” Shareholders want dividends In recent years, reducing the company debt and strengthening Responsibility brings stability “We are at a fascinating the balance sheet has been a key objective for UPM. Wahlroos Wahlroos is optimistic about the current global economic outlook, technological turning point is happy with the results of these efforts. In the third quarter of which provides a positive cue for new investments. Even so, there 2016, net debt was reduced to less than EUR 1.5 billion. In 2008, are economic and political risks associated with this positive where we are seeing lots of progress the total sum stood at EUR 4.3 billion. trend. in the use and refinement “The huge debt was beginning to pose a risk. Our corporate “The global economy is expected to grow at an annual rate of wood fibres. This opens up credit rating had fallen into the ‘junk’ category, and climbing of 3–4 per cent in the next five to ten years. This growth is driven back up has been a tough job. Our credit ratings still haven’t by China and India. Unfortunately, this casts Europe in the role new opportunities for UPM.” improved enough, but they will continue to get better.” of the ‘sick man’ of the global economy.” Meanwhile, UPM has increased the dividends paid to These days investors take a long-term view when assessing shareholders year by year. companies and their chances of success. Wahlroos notes that a “UPM’s shareholders include many large foundations, funds responsible business is usually more efficient at risk management and foreign investors. These shareholders expect a significant and provides a more stable profit return for its shareholders portion of the company’s increased capitalization value to be in the long run. distributed as dividends. In such cases the wisest thing the He regards it as important for UPM to promote responsible company can do is to listen to them and apply a stable, relatively practices in a systematic manner, both in its own business and generous dividend policy.” throughout the value chain. “For me, responsibility means that we are primarily responsible Balancing dividends and investment to those who have invested the most resources in our company. Public debate and the media sometimes voice a call for This means that our primary responsibility is to our shareholders companies to invest in production instead of distributing and our secondary responsibility is to the financiers,” he states. dividends. Wahlroos warns against such generalised demands, “In addition, we are also responsible for ensuring that the because the situation is different for every company and company complies with all legal regulations and the highest industry. standards of good practice in all its operations. This way, we In his opinion, UPM has struck a good balance between are also shouldering our responsibility with respect to other distributing dividends and making investments. stakeholders and society overall.” “The greatest curse in the history of the forest industry has Wahlroos additionally emphasizes the importance of adhering been overinvestment. Time and again, companies have ruined to a responsible human resources policy. their profitability and sometimes even undermined their “In recent years, we have made a special point of promoting financial standing by letting money burn a hole in their pocket safety at work, for example. Our efforts have paid off. UPM’s and making unwise investments.” occupational safety statistics have improved dramatically.”

12 | BIOFORE 3/2016 | 13 TEXT MATTI REMES PHOTOGRAPHY TUOMAS UUSHEIMO, JANNE LEHTINEN

Pulp is a versatile raw material, UPM’s annual and its demand is on a trajectory pulp production of constant growth, particularly capacity will reach in emerging markets. UPM has 3.7 million tonnes strengthened its foothold in these next year. growing markets by investing in all its pulp mills.

Anssi Klinga

n recent years, UPM has made says. Upgrades have been made at the UPM announced further production Continuous improvements are major investments in order to Pietarsaari, Kymi and Kaukas mills in expansion at Kymi mill to be also being made to production streamline its pulp production Finland and the Fray Bentos mill in completed by the end of 2017. processes. “We have focused on and increase its production Uruguay. “Through these investments, we employee competence and mill Megatrends Icapacity in both Finland and Uruguay. Last year a new pulp drying have successfully expanded our pulp maintenance and achieved excellent As a result, the company’s annual machine was completed at the Kymi production capacity by a total of results in these areas. UPM pulp pulp production capacity will reach mill. With this added drying capacity, 500,000 tonnes in recent years, which mills are extremely competitive by 3.7 million tonnes next year, reports the Kymi mill has been able to is equivalent to the entire annual global comparison, and our recent Anssi Klinga, Senior Vice President at increase its annual pulp production output of a medium-sized pulp mill,” improvements will make us even drive pulp UPM Pulp. UPM’s overall pulp capacity by more than 170,000 tonnes. In July, Klinga explains. stronger,” Klinga says. has grown by more than 500,000 tonnes >> since 2013. Two thirds of this pulp is sold to customers around the world, mainly in Europe and China, with UPM’s Large modern assets allow growth through demand own paper businesses purchasing debottlenecking with high pay-off at low risk approximately one third. “The long-term outlook for the global pulp market is excellent, as PIETARSAARI FRAY BENTOS KYMI KAUKAS KYMI several megatrends will increase pulp demand in the long run. This is why our pulp production pulp production pulp production pulp mill efficiency pulp production recent investments have been timely,” ­expansion 70,000 t ­expansion 100,000 t ­expansion 170,000 t improvement ­expansion 170,000 t Klinga explains.

Upgraded production capacity “We have carried out carefully targeted 2014 2015 2016 2017 investments at all of our mills in order to increase production capacity as Capacity increase since 2013 more than 500,000 tonnes cost-efficiently as possible,” Klinga with investments of ~ EURm 350

14 | BIOFORE 3/2016 | 15 the demand for pulp-based products,” and becoming more affluent. The says Petri Jokinen, Senior Principal expansion of the pulp market will Recent investments at Pöyry Management Consulting. continue for several decades in these A rapidly growing product group countries.” will further are tissue products such as toilet strengthen UPM’s paper, facial tissue, hand towels and Less recycled fibre, more pulp paper handkerchiefs. The demand for “Contrary to what might seem logical, position as an pulp-based board and other packaging reduced consumption of printing international pulp materials is also growing. “The lifestyle papers does not reduce the demand market leader. of the increasingly wealthy middle for pulp. In fact, the demand for pulp class is becoming more westernized. may even increase,” Klinga says. Instead of buying products from Printing papers are recycled after traditional outdoor markets, use, and the recycled fibre is used as consumers increasingly buy packaged raw material for making products products at supermarkets,” Jokinen such as tissue and board. When the describes. amount of available printing paper Increase in end use The rapid growth of e-commerce decreases, there will be less recycled will also push demand for packaging fibre available, and hence more Mt materials, which are needed for the need for pulp. THE COMPETI- 500 transport of ordered goods. Growing The decreased consumption of Decline in Megatrends accelerate packaging needs will also increase printing paper is thus perhaps surpris­ Graphic papers the demand for wood fibres 400 demand for pulp-based labels and ingly beneficial for pulp demand, TIVE EDGE OF Healthy growth other specialty products. because only a small portion of pulp 300 in other White is used in the production of printing ECOLOGICAL Papers & Boards Consumption on the rise in China paper, whereas new pulp will be High population growth areas in Asia, 200 China is an increasingly important needed to make up for the decreased PULP Africa and the Middle East enter the world +++ Strong growth player in the global pulp market, availability of recycled fibre. of “disposable products” (tissue & hygiene 100 in Container­ already accounting for approximately ­products, food packaging) boards one third of global pulp consumption. Pulp bales travel best (brown fibre) 0 According to Jokinen, the recent UPM’s recent investments will further Corporate responsibility is becoming 2010 2020 2030 deceleration of China’s economic strengthen the company’s position as increasingly important in the pulp The ageing population is a driver of the growing Source: UPM growth will not have the same effect an international pulp market leader, market, states Anssi Klinga, Senior hygiene segment (products for the elderly) ++ on pulp as it will on the demand for says Klinga. “A growing volume of Vice President at UPM Pulp. The raw Pulp demand is expected grow in metals and other capital goods. pulp is needed for products that are material used for manufacturing the future. The trend is supported by urbanization and the increasing “In China, the focus of the economy manufactured close to consumers. UPM pulp is wood that complies with The urbanisation trend is going strong. purchasing power of consumers. is shifting from investment to For instance, in the case of tissue, the principles of sustainable forestry. Growing urban demand for food and other household consumption. This means it is not profitable to transport the The company furthermore always consumables is increasing the need for that the demand for packaging and end product from Europe to China, knows the precise origin of all of the packaging products (carton board, container +++ personal care products will grow.” so local production plants do the wood that it uses. board, tissue, specialty) Market to grow 2.5% per year Jokinen expects the Chinese pulp manufacturing.” “Responsibility starts with Consulting company Pöyry estimates market to remain on a growth track for Pulp bales are the most cost- sustainable wood sourcing, but it is that the global demand for bleached a long time. “It will take decades before efficient solution for transporting raw also critical to act responsibly along Fast growing e-commerce requires increasing chemical market pulp will grow by the country’s standard of living is at material, even over long distances to the entire production chain, from amounts of cost efficient and sustainable approximately 2.5% per year for the western level.” Jokinen adds that markets that have no raw materials forests to pulp mills and pulp mills to ++ packaging solutions (carton board, container the next ten years. This trend is the demand for pulp is also growing in available locally for pulp production. customers. Corporate responsibility board, specialty) supported by global megatrends, other emerging economies, including The majority of the pulp that UPM is also benchmarked by performance first and foremost urbanization and other densely populated countries sells in China arrives in bales from in areas such as work safety, the increasing purchasing power in Asia. the Fray Bentos mill in Uruguay. employee competence, continuous Continued penetration of digital solutions is of consumers. “Indonesia, Vietnam and India are China lacks sufficient raw materials improve­ment at mills, transparent reducing demand for graphic papers demand “The disposable income of the at different stages of development, to cover its growing pulp demand, reporting and dialogue with stake­ + and decreasing the availability of white middle class is growing, particularly but the middle-class populations which means that pulp imports will holders,” Klinga emphasizes. recycled fibres in emerging markets. This will increase of all three countries are growing continue in the future. >>

16 | BIOFORE 3/2016 | 17 TEXT MATTI REMES PHOTOGRAPHY UPM; COURTESY OF THE INTERVIEWEES

Due to global population growth and growing consumption, the planet’s limited resources need to be used more efficiently, states Petri Jokinen, Senior Principal at Pöyry Management Consulting. More renewable resources should be used instead of increasing consumption of non-renewable natural resources. “Pulp that is Why made of sustainable raw material is an ecologically sustainable solution compared to many other alternatives.” responsible Klinga believes that the range of pulp-based products will expand in the future because pulp is such a versatile and renewable raw material. Pulp- investment More and more investors are based materials can be used to replace investing in responsible businesses oil-based plastics, for instance. Pulp is also used in biomedical innovations Tonnes of trust – and with very good reason. such as UPM’s GrowDex® hydrogel, is a win-win Ethical companies are usually more which is used for cell culturing in laboratory environments. The majority of UPM’s pulp customers are growth-seeking industry leaders efficient at risk management and with a need for ever-increasing volumes of raw materials. “Such customers strategy yield more stable long-term profits. want to do business with a reliable supplier who is able to deliver pulp of uniform quality to meet their growing needs,” says Anssi Klinga, Senior Vice President at UPM Pulp. Advanced technical customer service is one of UPM Pulp’s business cornerstones. “We collaborate with our customers to find solutions to help Pulp-based materials them optimize their production and improve their competitiveness. Our ccording to a study conducted at Aalto University, responsible can be used to replace technical specialists know the challenges that paper manufacturers face environmental and social practices and good governance oil-based plastics. and ensure that our customers are able to create the best possible products have positive effects on a company’s long-term financial using our pulp.” performance. Klinga emphasizes that customer expectations must be met every A“However, this is only true of companies whose corporate sustainability single day. strategy is put into action rather than just remaining at the “UPM Pulp’s customer promise can be summarized in these words: level of empty words,” says Hanna Silvola, Assistant ‘Tonnes of trust’.” Professor at the Aalto University School of Business. According to Silvola, the benefits apply Partnering expands portfolio particularly to companies that are industry One of UPM’s strengths is its extensive portfolio of pulp products. The frontrunners in sustainability. range includes northern softwood pulp, birch pulp and eucalyptus pulp. “UPM’s position on the global pulp market has been strengthened The rewards of doing the right thing by our collaboration with Canadian pulp manufacturers Canfor Pulp,” Companies that operate responsibly can benefit says Klinga. The two companies entered into a sales and marketing in many different ways. For starters, it fosters a collaboration agreement in 2014. As a result, UPM’s pulp sales network positive image that generates further market interest represents Canfor Pulp products in Europe and China, while the Canadian in the company’s products and services, thus providing a Hanna Silvola company sells UPM pulp products in North America and Japan. competitive advantage. The next step will be expanding the collaboration to South Korea, where The corporate executives interviewed by Silvola’s research group also both companies are already doing business. As of January 2017, Canfor’s stated that responsible companies find it easier to secure funding. sales company in Seoul will begin selling UPM pulp in South Korea. “When a company openly discloses information on its operations and “This is a unique collaboration model that offers our two companies the risks, the cost of capital is lower.” opportunity to provide customers with a wide range of northern softwood Silvola points out that responsibility initiatives are most profitable when pulps, birch and eucalyptus pulp and mechanical pulp. Our customers incorporated into the company’s operative management, using score cards benefit from the wide range of technical customer service available via and rewards, for example. Setting clear objectives and measurement of the both our companies,” Klinga concludes. results is essential. >>

18 | BIOFORE 3/2016 | 19 PERFORMANCE OF S&P 500 VS. S&P 500 ESG world’s biggest investors, is regarded companies in which NBIM invests. as a frontrunner in responsible “As a large, long-term investor, investment. NBIM controls the we usually have good access to senior S&P 500 ESG INDEX TR 400 Norwegian Government Pension management and specialists in the Fund, which is financially backed companies that we invest in. We let

300 by Norwegian oil profits. At the end the companies know what we expect of August, the market value of the from them and encourage them to

200 NBIM’s portfolio was approximately show openness in their public S&P 500 INDEX TR Marthe Skaar INDEX EUR 797 billion. dis­closure and communication.”

100 “Responsible investment is an integrated part of our investment “We see climate change, UN Global Compact

0 process. We are a long-term fund children’s rights and points the way 3/09 9/11 12/12 3/14 6/15 with investments in more than 9,000 Skaar is happy with the rising trend of sustainable water companies,” says Marthe Skaar, disclosure of ‘non-financials ’ such as NBIM’s Manager of communications management as important emission figures. Sustainability pays off: Integrating financially and external relations. “Comprehensive non-financial material ESG information into investment pillars in well-run companies decisions can lead to outperformance, as Under its current mandate, the information is important to us, as it depicted in the above chart. Since 2009, the fund can invest 60% in equities, within a long-term horizon,” helps us understand the effects good S&P 500 ESG index, which uses a weighting 35–40% in fixed-income securities governance and environmental and scheme based on an ESG Factor Score, has says Marthe Skaar. outperformed the S&P 500 in a back test. and up to 5% in real estate globally social issues may have on the risks THE GROWTH OF outside Norway. and profits related to our investments. THE UN GLOBAL COMPACT “As a large investor, NBIM also We therefore encourage companies Number of business participants wants to contribute to the develop­ to disclose this information more 2000–2015. ment of international principles extensively.”

00 “Responsibility targets should be and industry standards related to NBIM is one of UPM’s shareholders. Skaar believes things are moving as simple as possible, going all the corporate responsibility,” adds Skaar. According to Skaar, deforestation is in the right direction. An increasing 01 way down to the level of individual one of the risk factors to which NBIM number of companies recognize that employees. In energy saving initiatives, Steering sustainability pays particular attention. corporate responsibility helps them 02 for example, clear numerical targets Climate change and children’s rights “When we investigate possible put their values and goals into action 03 can be set for electricity and fuel have been NBIM’s focus areas for the investment choices, we focus on areas and meet stakeholder expectations. consumption.” last decade. NBIM assesses corporate such as sustainable forestry practices A good example of the growing 04 disclosures on these issues on an and certification schemes related to interest in sustainability is the UN’s Smart risk management annual basis. paper production.” voluntary Global Compact initiative, 05 International studies confirm that “We see these areas as important whose member companies commit 06 an increasing number of investors pillars in well-run companies within Active ownership to responsible business practices in are looking to invest in responsible a long-term horizon,” Skaar points out. In some cases, NBIM decides to divest areas such as human rights, working 07 companies with open reporting The third focus area is sustainable if a company’s long-term risks look conditions, the environment and anti-

08 principles. These companies are water management. In 2015, NBIM too high. Last year, NBIM divested corruption. considered a safer investment with published a revised version of its its stake in 73 companies following In the last 15 years, the number of 09 greater promise of yielding steady, NBIM Investor Expectations: Water an assessment of environmental and companies participating in the Global long-term profits. Risk management Management guide. The purpose of the social risk factors. Compact has grown from a couple of 10 is in fact the key motive for many guide is to express how NBIM expects Skaar emphasizes, however, dozen to more than 8,000. 11 responsible investors. companies to manage the challenges that active ownership is the most UPM joined the Global Compact Investors also believe that and opportunities related to water important way for NBIM to influence in 2003. In January, the UN invited 12 responsible companies keep up with resources. the companies in which it invests. This UPM to join Global Compact LEAD, the times and are able to successfully UPM was one of the companies starts with voting and contributing which consists of 50 of the most 13 tap into ethically conscious market consulted by NBIM for input and statements at annual general meetings. sustainably advanced companies 14 trends. A good example of this is new discussions during the drafting of the Skaar reveals that NBIM participated across all geographical regions and products and services that help fight guide, as UPM ranks among the top in more than 3,500 annual general industry sectors. UPM is the first forest 15 climate change. performers in NBIM’s framework meetings in 2015. industry company and also the first 2,000 4,000 6,000 8,000 10,000 Norges Bank Investment assessing water disclosure in corporate She also emphasizes the importance Finnish company ever to receive such Management (NBIM), one of the reporting. of continuous dialogue with the an invitation.

20 | BIOFORE 3/2016 | 21 TEXT VESA PUOSKARI PHOTOGRAPHY JANNE LEHTINEN, SUVI-TUULI KANKAANPÄÄ, UPM; COURTESY OF THE INTERVIEWEE

Business and human rights expert FOCUSING ON Anna Triponel shares insights on how the UN Guiding Principles HUMAN RIGHTS have changed business over the IN BUSINESS last five years.

PM and the Ilmarinen Mutual Pension Insurance there are more and more millennials who want to do the Company invited Anna Triponel to Helsinki in right thing and work for responsible companies. September to give a comprehensive presentation on human rights in business. Embedded in corporate DNA U“UPM’s aim for the event was to increase understanding “Through the UN Guiding Principles, companies are of human rights within business in order to establish a more thinking about their responsibilities and the kind of practical comprehensive dialogue on the subject with stakeholders and measures they can put into place to respect the human rights investors,” says Nina Norjama, Director of Responsibility of all people affected by their business,” says Triponel. Development at UPM. ‘Embedding’ is the key word here, she adds. Businesses The conversation concentrated on themes such as the key must create the right environment and take active measures drivers for respecting human rights and related international to ensure that a policy can be effective. legislation, as well as the recognition and assessment of human “You might have a policy commitment on paper, but that rights risks in business and supply chains. doesn’t mean a thing if it’s not embedded. Companies have UPM presented a case on responsible sourcing practices to take practical measures so that human rights become part and supplier audits, and Ilmarinen gave an overview of its policy of their culture and DNA,” Triponel explains. on human rights due diligence concerning the companies in “This can relate to things like contractual provisions, which it chooses to invest. training or performance incentives for workers. There are “Nowadays, it’s difficult for companies to turn a blind eye many different measures that together signify commitment to human rights issues due to various risks that could have to respecting human rights in reality.” a significant impact on their business,” says Triponel, a project associate from Shift, the leading centre of expertise on the Giving people a voice UN Guiding Principles. Workers and other potentially impacted stakeholders play “Expenses are often difficult to quantify, but once a crisis a key role in helping companies identify where their impacts hits, companies will regret not paying attention to human rights may be, and what they should be doing about them. from the outset,” she adds. “Companies are increasingly setting up mechanisms to There is a growing tendency for governments, international engage people on the ground. For instance, this might involve financial bodies and the EU to integrate human rights agendas engaging specific NGOs, workers and trade unions or creating into their regulations. effective channels to hear about people’s concerns and “For example, the Modern Slavery Act impacts all companies complaints,” Triponel says. over a certain size that conduct business in the United Kingdom. “Prevention and mitigation efforts are focused on Furthermore, OECD countries are setting up national contact attempting to stop potential impacts before they happen, points to address allegations of human rights abuses.” or to reduce their severity as much as possible. This is Pressure is also coming from inside companies, as employees’ essentially risk management with the lens focused on risks values are drivers for respecting human rights. Specifically, to people, to avoid harm to people,” she emphasizes. >>

22 | BIOFORE 3/2016 | 23 Rights of protection for the child

Examples of Right to health Right to internationally Rights to freedom of education Right to form and thought, conscience and recognized join trade unions UPM RESPECTS religion Rights to liberty human rights and the right to strike and security of the person Source: Modified version PEOPLE of original Shift diagram Right to freedom Right to work of association AND HUMAN

Right to enjoy just and favourable Right to an RIGHTS Right to equality before conditions of work adequate the law, equal protection standard of the law, and rights of of living Tiina Landau non-discrimination Rights of protection of the family and the right to marry UPM is committed to full compliance with the United Nations Universal Declaration of Human Rights. This includes rights such as freedom Right to privacy explains Tiina Landau, Senior whether we need to react to the issue.” of thought, opinion, expression, Advisor for Responsible Investments The primary objective of active religion and the right to assemble at Ilmarinen. ownership is for companies to pursue peacefully, as well as the right to “We expect companies to comply a responsible course of action. “Selling freedom from any discrimination Rights of minorities not only with national legislation ownership and blacklisting is the last based on race, age, nationality, “It is all about having channels for workers and but also with the principles of the resort, and only used if engagement gender or sexual orientation. community members to express their concerns about UN Global Compact, including with the company does not lead to the working conditions and other company impacts. They international labour and human preferred outcome,” adds Landau. UPM promotes the health and mustn’t live in fear of raising their voice. That really rights, anti-corruption and freedom wellbeing of its employees. It aims is at the heart of all of this.” of association,” she explains. Complying with to empower and engage employees THE STRATEGIC SIDE OF “In our analysis we also look at international norms at all levels of the organization Blind spots in audits issues such as excessive working The most serious cases are companies through responsible leadership. Supplier audits play a role, but audits alone are an ETHICAL INVESTMENT hours, poor wages and mistreatment that have systematically violated UPM endeavours to promote the insufficient method of knowing exactly what is going of migrant workers.” norms or caused significant damage observance of human rights as on. “Many recent factory collapses or cases of modern through their operations. defined by the UN both in its slavery have happened in factories that had been Why is sustainability becoming strategically Active ownership “Violations are easier to confirm if own operations and those of its audited previously,” notes Triponel. important for institutional investors? Ilmarinen About a year ago Ilmarinen adopted its companies have caused them directly stakeholders. The use of forced or “We are moving towards a new system of audits that own sustainability rating system. with their own actions. Finding Mutual Pension Insurance Company explains child labour is not tolerated under is less of a compliance tick-box approach and more a “Currently we have sustainability evidence that a company is responsible its sustainability rating system. any circumstances. way of looking at how to work with business partners to ratings for over 3,000 companies. From for the wrongdoing of suppliers is more develop their human rights risk management processes.” the system, our portfolio managers difficult,” notes Landau. It is up to everyone to make their Actions with different stakeholders, including peer Beyond just looking for a reliable immediately see the sustainability “If discussions with a company workplace inspiring, diverse and companies and governmental authorities, can also play return on investment, Finnish pension risks related to those companies. result in an engagement process, our inclusive. All employees are required an important role in tackling the root causes of systemic company Ilmarinen also takes into Our rating system has four categories: goal is to ensure that the undesirable to do their utmost to ensure a safe, human rights issues facing companies. consideration environmental, social There are some 600 companies in the activity ends and that similar healthy workplace for everyone Triponel admits that there is still a lack of visibility and governance (ESG) issues when two lowest categories,” says Landau. violations are not repeated in the working at UPM. in many companies’ supply chains, whether concerning making investment decisions. “If we suspect that a company is future,” she adds. Employees are additionally migrant flows, sub-contracting of labour or poor “We have three sustainability violating regulations and we know “Responsibility requirements encouraged to take an active role environmental standards that then negatively impact principles guiding our investments. them well, we can then have a direct have become much tougher lately. in their personal and professional on people. Our key values are in compliance with conversation with the company. It’s no longer enough for companies development and growth to ensure “There is still a lot of work to be done, but it is international norms, active ownership Another option is to contact them just to follow local rules – they have UPM’s future business success. encouraging to see the level of uptake of the UN Guiding and integration of sustainability through our service provider together to comply with international norms Principles by companies.” analysis into investment decisions,” with a larger investor group to find out as well.” Source: UPM Code of Conduct

24 | BIOFORE 3/2016 | 25 TEXT MATTI REMES PHOTOGRAPHY TUOMAS UUSHEIMO

good example is offered Nearly 100% of nutrients Committed to a cleaner Group (BSAG), which promotes by the UPM Rauma recovered Baltic Sea the restoration of the Baltic Sea’s mill, where efficient Advanced nutrient recovery and Rissanen describes nutrient recycling ecological balance. collaboration in effluent recycling practices have directly as a good example of the circular One of the BSAG’s main tools is to NUTRIENT treatmentA has significantly reduced reduced pollution of local water economy, where natural resources are secure commitments from companies the amount of nutrients ending up resources. recycled and reused as many times as and organizations pledging concrete in the Baltic Sea. “Nearly 100% of the nitrogen and possible. actions to improve the ecological Since 2002, the mill has been phosphorus in the city’s effluents can “For example, phosphorus is status of the Baltic Sea. UPM is a co-treating both its own and the be reused at the co-treatment plant, an exhaustible resource that will long-term donator and supporter RECYCLING city’s effluents. According toPäivi so they no longer contribute to the eventually run out. The Rauma mill’s of the BSAG. Rissanen, Director, Environment eutrophication of the sea ,” notes co-treatment model shows that it’s Responsible water management & Responsibility, UPM Paper ENA Rissanen. possible to use recycled nutrients in is also included in UPM’s Biofore for a healthier Baltic Sea (Europe & North America), the The waste heat derived from the new applications at other production Share and Care programme, which different types of effluent balance effluents is used to dry out sludge facilities.” fosters collaborative initiatives with each other out very well in biological from the treatment plant, which is in UPM is currently identifying partners in areas that support UPM’s treatment. turn used in energy and Rauma city’s other possible sources of similar responsibility targets. In line with its sustainable water “The city’s effluents have surplus district heating production. The ash nutrients near its other mills. Possible “We want to highlight the management principles, UPM is employing nutrients that need to be removed generated in the process is reused in options would be the sidestreams significance of water resources and during the treatment process, whereas landscaping applications. and effluents from other industries or sustainable water management novel approaches to minimize its impact forest industry effluents are lacking Rissanen points out that biogas plants. all around the world,” Rissanen on local water resources. in nutrients and need to be enriched co-treatment brings welcome cost UPM’s target is to start using 100% emphasizes. in order to remove the organic load,” savings. The City of Rauma would recycled nutrients in all of its effluent Rissanen says. otherwise have had to make further treatment plants by 2030. By co-treating the two effluent types, investments in nitrogen removal at This target is written into UPM’s virgin nutrients no longer need to be its own effluent treatment plant. commitment to the Baltic Sea Action added to the process. Other recycled nutrients can be used if needed.

UPM Rauma Mill’s efficient collaboration in effluent treatment has significantly reduced the amount of nutrients ending up in the Baltic Sea.

26 | BIOFORE 3/2016 | 27 TEXT MATTI REMES PHOTOGRAPHY JANNE LEHTINEN Global megatrends, like resource scarcity, population growth, urbanization and higher living standards are increasing interest in biochemicals. UPM Biochemicals leads the Biochemicals industry as a developer of wood- based chemicals. The market for these environmentally friendly – new value products is expected to expand significantly over the coming years. from wood

oth industry and consumers interest in biochemicals. These to replace fossil-based resins in are keen to reduce the include resource scarcity, population plywood production,” Konttinen world’s dependency on growth, urbanization and higher living says. fossil-based raw materials standards,” Ovaska says. Biofibrils are cellulose-based Band move towards products that The European Chemical Industry micro- and nanofibril products are manufactured from renewable Council (Cefic) estimates that that can be used for shaping and materials with a minimal impact on the 2013 market value of the reinforcing different materials. Jyrki Ovaska and Juuso Konttinen the environment. global chemical industry was Biofibrils can also be used in new “The key drivers behind this EUR 3.2 trillion. By 2030, the figure biomedical applications. UPM trend are climate change mitigation is expected to rise to EUR 6.3 trillion. has newly launched GrowDex®, and efforts to reduce greenhouse “As yet, however, bio-based a proprietary hydrogel for cell gas emissions,” says Jyrki Ovaska, chemicals still account for only a culturing in medical research and decisions are made, we need to be sure Executive Vice President for small proportion of this figure,” other applications. that the technology works.” Technology at UPM. Ovaska points out. Konttinen adds that innovations For example, the food industry R&D rollouts begin require collaboration between is looking into packages made Replacing oil in plastic UPM has been investing in biochemi­ ­ universities, research institutions and from bio-based materials instead UPM Biochemicals is currently ­cal research for several years now. the companies developing the new of crude oil. Global corporations focusing on four product categories: “R&D is a long-term initiative that technologies and businesses. manufacturing products such as toys chemical building blocks, lignin requires perseverance. We are finally “All the required expertise cannot and furniture are also looking for products, biofibrils and biomedical approaching the point when we can come from within the company similar options. products. gradually start to commercialize alone. Finding the right partners and “And there are various other “Bio-based chemical building our innovations in biochemicals,” networks is essential.” megatrends that are increasing blocks can for example be used reveals Ovaska. A good example of this type of to replace oil-based chemicals in UPM’s breakthroughs with broad-ranging collaboration is UPM’s plastic production,”­ explains Juuso biochemicals follow in the wake of ValChem project, which aims to Konttinen, Vice President, UPM the company’s success in biofuel demonstrate the viability of producing Biochemicals. development. After a long research chemical building blocks and Wood-based lignin is meanwhile phase and successful testing at a lignin from wood raw material. The yielding ideas for a wide array of pilot facility, UPM has established international project pools expertise UPM Biochemicals has already products designed for various a production plant for its biofuel from the forestry, chemical and commercialized the first lignin applications and biomedical products. end-uses. innovation, UPM BioVerno. biotechnology industries. ValChem One example is GrowDex, hydrogel “It can for instance be used “Commercial production requires has received EUR 13.1 million in for 3D cell culturing. to manufacture bio-based resins sizeable investments. Before any funding from the EU.

28 | BIOFORE 3/2016 | 29 TEXT MATTI REMES PHOTOGRAPHY UPM; COURTESY OF THE INTERVIEWEE UPM BioVerno was tested in a marine vessel during dredging operations for the Marker Wadden Eco-Islands landscaping project in the Netherlands.

of their vessels by up to 80–90%. Biofuels also eliminate sulphur oxide emissions, and reduce nitrogen oxide emissions by approximately 10% and particulate matter emissions by 50%. Current estimates predict that biofuels could account for 5–10% of all marine fuels by 2030. “The successful test is an important step for us, as it opens up a new customer segment for UPM BioVerno in the future,” says Mannonen.

The Netherlands leads the way The Netherlands is a frontrunner in

the reduction of CO2 emissions. The Dutch environmental organization With the marine industry striving to Dirk Kronemeijer, CEO of GoodFuels and Natuur & Milieu is encouraged by the drive down emissions, recent tests Maiju Helin, Senior Manager, UPM Biofuels test results achieved by GoodFuels and Boskalis. promise a bright future in marine “This project is a true example for use for UPM BioVerno. UPM’s both the shipping and the biofuels industry of the successful utilization wood-based biofuel is also a good of waste- and residue-based biofuels,” match with marine diesel engines. comments Maarten van Biezen, Mobility Policy Director at Natuur & Milieu. The test was performed in the first half of 2016 during dredging operations for the Marker Wadden ecent tests on a diesel- Shrinking CEO of GoodFuels. Eco-Islands landscaping project. The

powered dredger in the carbon footprint Sari Mannonen The marine industry is test resulted in a CO2 saving of 600 Mt Cleaner marine Netherlands yielded GoodFuels, Boskalis currently looking for cost-efficient for the duration of the project. promising results for and marine engine manufacturer ways to reduce shipping emissions in Marker Wadden is a large-scale RUPM BioVerno. The tests were Wärtsilä have established a consortium compliance with new international project in the Markermeer in Central performed by dredging and marine running a two-year pilot programme regulations. Sulphur emissions can for Netherlands. Islands and wetlands are shipping with experts Boskalis and GoodFuels to accelerate the rollout of sustainable instance be reduced by equipping the being constructed to restore the area’s Marine, the leading provider of biofuels in the marine industry. vessels with sulphur scrubbers, but this delicate ecosystem. The wetlands will sustainable marine biofuels. UPM BioVerno is the first wood- is a costly investment. provide important nesting areas for “This was the first time that UPM based biofuel to be tested in an “UPM BioVerno is a sustainable, birds, and the underwater landscaping UPM BioVerno BioVerno was tested in a marine vessel. operating marine vessel. competitive fuel that can be used in will create new spawning grounds So far, it has been used in road traffic, “We are extremely proud to bring marine engines without any additional for fish. where it performed excellently in all in UPM as a new partner in our investments,” notes Mannonen. The new nature reserve helps diesel engines,” says Sari Mannonen, ground-breaking test programme. protect endangered animal and plant Head of UPM Biofuels. This co-operation will help to further New market segment species. UPM BioVerno is produced at accelerate the supply of sustainable for UPM BioVerno There are also plans to develop the UPM’s Lappeenranta biorefinery. biofuel to the global maritime Sustainable biofuels enable shipping Marker Wadden area as an important

industry,” says Dirk Kronemeijer, companies to reduce the CO2 emissions destination for nature tourism.

30 | BIOFORE 3/2016 | 31 TEXT MATTI REMES PHOTOGRAPHY JANNE LEHTINEN

A growing number of local and international investors are taking an interest in Finnish forest estates – and wisely so. Investors expect the Responsibly managed forests principles of sustainable forest management to be provide their owners with stable applied in all the forests returns at relatively low risk. that they own.

Riitta M. Väisänen and Tapio Tilli

nvestors are interested in forests because they’re “We expect the principles of sustainable forest looking for steady returns. They understand the nature management to be applied in all the forests that we own. “ of forestry as a long-term investment,” says Riitta M. The regeneration of the forest must be ensured after logging, Väisänen, UPM’s Sales Manager responsible for forest either by planting new trees or other appropriate measures,” Iestate sales. Tilli states. When UPM divests a large forest estate, a long-term wood He also stresses the importance of environmental trade and forest service agreement is signed with the buyer. performance in areas such as certification criteria and the “The agreement covers everything that the new preservation of natural forest habitats. forest owner needs to manage their forest, such as forest The steady, long-term demand for timber is another management operations, logging and timber sales,” Väisänen asset making Finnish forests such an attractive investment, explains. he adds. Investors see “Forestry is an important industry in Finland, and the Sustainable portfolios in high demand wood market is witnessing a dynamic period of expansion. Since 2015, the OP-Metsänomistaja investment fund has Significant investments are currently being made in the been purchasing forest estates from UPM located in various industry.” forests as more parts of Finland. This non-UCITS fund offers a wholly new type of forest ownership option to its target group, which Finland’s special appeal consists of private investors. AXA IM Real Assets, a leading European real estate portfolio Having a long-term cooperative agreement in place with and asset management company, has acquired three Finnish than just trees UPM guarantees steady demand for the timber, says Portfolio forest estates from UPM, together measuring 3,700 hectares Manager Tapio Tilli of OP Group. It also ensures that the in total area. forests will be managed professionally and in accordance “The investments we have made in Finnish forests are with the objectives set for the fund. highly compatible with our objectives related to responsible “We are very happy with our collaboration with UPM. investment,” says Christophe Lebrun, Head of Forest Our forests have been managed as agreed,” Tilli says. Investment at AXA IM Real Assets. OP Group – the largest financial services corporation in He notes that investing in Finnish forests helps to Finland – assigns high priority to corporate responsibility protect customer assets from financial crises and economic in all its investment activities. downturns. >>

32 | BIOFORE 3/2016 | 33 TEXT VESA PUOSKARI PHOTOGRAPHY MARKO SIMONEN, VESA PUOSKARI

“UPM’s vast experience in forest management and forestry encouraged us to distribute some of our investments to Finland,” says Christophe Lebron.

“Finland presents European forest investors with an interesting avenue for diversifying their portfolio in the long term. Forestry plays a significant role in the national economy. Furthermore, Finland is part of the Eurozone, which decreases the exchange risk.” Lebrun is pleased with his collaboration with UPM, which holds ongoing responsibility for the sustainable Aleksis Salusjärvi (left), Mikko Sarjanen management and use of the forest estates acquired by AXA IM. “UPM’s vast experience in both forest management and forestry encouraged us to distribute some of our investments to Finland. It was a very good decision.” The bottom-line value of stability Rapping for literacy Having travelled the world meeting investors, Riitta M. Väisänen has acquired a specific understanding of what they wish to achieve by investing in forests. ‘Words Matter’ is a UPM-sponsored project that inspires vocational school Prior to the decision to invest, the investors conduct a thorough due diligence audit to assess both the specific students to improve their reading skills through rap music. estate for sale and other general factors affecting the return on investment. “Societal stability, for instance, is an important factor in risk management. In Finnish society, everything is done in “After completing their basic education, half of all Finnish compliance with legal and statutory requirements. Finland students go on to vocational school, where the number of also offers an example of some of the most progressive forest hours dedicated to Finnish lessons is only one quarter that of legislation in the world.” upper secondary schools. This places them at a disadvantage Väisänen has spent almost 30 years working in different in terms of continuing their education at a higher level,” says forestry-related positions at UPM. During that time, she Ilmi Villacís, Executive Director of the Finnish Reading has seen forests become something more much than a mere Centre, coordinator of the Words Matter project. source of timber supply in the eyes of forestry professionals. According to a study on adult literacy compiled by the “We are constantly training our own personnel and UPM’s Biofore Share and Care programme focuses Programme for the International Assessment of Adult contractors in matters related to sustainable forest manage­ on projects that are relevant to both UPM’s business Competencies (PIAAC), young people who completed and responsibility goals. The focus areas are: ment. All this know-how and expertise is a resource that we Reading & Learning, Engaging with communities, vocational training did not show a significant improvement make available to our customers as well.” Responsible water use and Boosting bioinnovations. in their reading skills after their basic education.

>>

34 | BIOFORE 3/2016 | 35 The Words Matter project is about helping to improve the literacy skills of young people studying in vocational schools in Finland. The ability to Supporting youth understand texts and write down ideas is a valuable skill in the workplace in future as well. particularly important in today’s literacy worldwide media environment as a guard against fraud.” Upcoming workshops will be hosted by other guest stars such as martial arts athletes, who will discuss Promoting literacy and learning among children and themes related to mental discipline. young people is a focus area of UPM’s Biofore Share and Care programme. Two-way learning opportunity­ “Through our contribution to the Words The Finnish Reading Centre will be Matter project, UPM is helping vocational school organizing a total of 100 functional students in technical fields to improve their literacy workshops for vocational textual skills. As a nation-wide organization, school students in technical fields all the Finnish Reading Centre is well-equipped to over Finland. tackle this challenge,” says Pirkko Harrela, UPM’s Villacís adds that the project is Executive Vice President of Stakeholder Relations. also targeting the adults working Pirkko Harrela “We too are concerned about young people’s with these young people, such as reading skills, and we want to increase awareness of the teachers and principals at vocational importance of reading and lifelong learning. Pictures and videos institutions. play an important part in the lives of young people today, but in the “The workshops are only part of the workplace the ability to understand texts and write down your ideas “The Words Finnish and general thinking about the value of good initiative. The lessons learned and the is a valuable skill,” she adds. Matter project is our knowledge syllabus due reading skills,” explains Emmi Jäkkö, materials compiled throughout the UPM is also involved in other reading and learning-related way of addressing to funding cuts. Students Communications Officer at the project will become a resource for all projects in Finland, Germany, Uruguay and China. this issue and helping today are expected to be Finnish Reading Centre. vocational schools. After the project, >> to improve the literacy more proactive. Jäkkö states that the project’s the teachers will be able to use the skills of these young “We believe that improving ultimate goal is to challenge young videos to organize similar workshops people,” she adds. Ilmi Villacís your reading skills is ultimately people to read more. on their own.” The international PISA study down to your attitude. The situation is “Many of the students have lost the The Words Matter project is a UPM supports reading among refugee children in Germany through German Stiftung Lesen. shows that the literacy gap between more likely to improve if the students joy of reading and the gratification co-effort between the Finnish Reading The foundation donates reading and story girls and boys is growing in Finland. are more motivated.” that comes with it. With this project, Centre, Finnish teachers working in boxes to refugee centres all around Germany. This trend worries Villacís, as boys we’re trying to inspire them vocational schools, authors, as well also achieve below-average results in Hip hop inspiration to read more on their own. as researchers in the field. It will also international literacy comparisons. The 18-month Words By getting personal, we involve collaboration with libraries. Boys make up approximately 80 per Matter project had believe we can achieve Villacís praises UPM’s contribution. cent of all students in technical fields its launch in autumn the best results.” “Companies are seeing corporate at vocational schools. 2016. The first Plans for the future social responsibility as an increasingly “Literacy is closely linked to workshops were include a media important part of their agenda – and mathematical skills as well as success taught by literary workshop where what could be more important than in society as a whole. Boys with poor and art critic Aleksis participants discuss supporting people’s competence and reading and writing skills find it harder Salusjärvi and rapper trolling and analyse literacy in tomorrow’s competence- to succeed in further studies and Mikko Sarjanen from clickbait headlines used on based society?” working life in general. Slow readers the rap group Atomirotta. Emmi Jäkkö internet sites. She adds: “This project also also find it difficult to improve their “The workshops took a closer The feedback from the students has provides an excellent learning other professional competencies. look at themes present in Finnish been encouraging. “The workshops opportunity for us, since there has This is why we need to work hard to rap music lyrics. The instructors have made them aware that a text not been much collaboration between improve the situation.” did their best to build a positive, may have hidden meanings and that culture and business in Finland yet. Making matters worse, vocational spontaneous connection with the they should pay attention to messages We hope that the project will provide schools have recently cut back their young participants to get them between the lines. Literacy is also us with a good model for the future.”

36 | BIOFORE 3/2016 | 37 Supporting education is one of UPM Foundation’s key focus areas in Uruguay. The SUPPORTING Foundation organizes in-service training of teachers together with local education TEACHER authorities and the Catholic University EDUCATION of Montevideo. IN URUGUAY

The UPM Foundation in Uruguay supports in-service training of teachers in Río Negro Department to update and

strengthen their pedagogical skills. Pablo Rohner on the left.

“In addition to practical tips, “So far, we have discussed various topics the course has provided new and methods of evaluating pupils. We have theoretical skills I can apply also practised new teaching methods and learned to organize students’ learning in to my everyday work,” says In China, UPM is promoting learning and literacy and targeting donations at areas a new way,” says history teacher Pablo history teacher Pablo Rohner. where schools have limited resources to Rohner, one of 28 participants in the obtain this equipment. training programme. Rohner works in the village of Nuevo Berlín, which has a population of about 2,500. The local school has roughly 200 pupils. Rohner mainly teaches fourth Head Coordinator, Maria Cuevas. can benefit from their expertise and “The focus is on encouraging and fifth year in secondary school. “Follow-up training is especially experience.” children to become interested in Participants in the two-year training hard to find in the inner parts of The training programme started in books and learn to read as early as In Finland, UPM has partnered up with the Guides and programme teach their normal classes from Uruguay, as these kinds of classes are autumn 2015, and the first teachers will possible, which in turn accelerates Scouts of Finland and Me & MyCity. In Germany, UPM supports Monday to Friday, and then travel to Fray usually only available in the capital graduate in the spring of 2017. the development of their writing the Stiftung Lesen reading foundation, which helps to improve Bentos once a month to participate in Montevideo. Our aim is to strengthen skills. Parents are also encouraged literacy among refugee children by donating books and learning weekend workshops. the pedagogical skills of teachers.” Sparking interest in books to read stories out loud to act as role materials to refugee centres all around Germany. “So far, we have gained many new ideas Co-organized with local education Another key project supported by the models and motivate their children,” In China, UPM has helped to set up mini-libraries in rural from the training. In addition to offering authorities and the Catholic University UPM Foundation is the Cuenta Quien Ibanez adds. schools in Yunnan Province to promote learning and literacy practical tips, the course has provided new of Montevideo, the course is the first Cuenta programme supporting new The programme is a great success in schools that have limited access to books. Another Chinese theoretical skills I can apply to my everyday in-service training programme offered teachers in Paysandú Department. – a survey reports that 84% of parents project is the Little Scientist Lab, which provides primary schools work. The UPM Foundation’s support to teachers outside Montevideo. “The Cuenta Quien Cuenta now read a story to their children every with laboratory equipment for teaching natural sciences. UPM’s offers us an excellent opportunity to According to Cuevas, the programme is designed to support day. Since 2012, over 1,800 children donations are targeted at areas where schools have limited develop our teaching skills,” Rohner adds. participating teachers range from student teachers working with children have attended approximately 150 resources to obtain this equipment. The training includes a total of 14 recent graduates to experienced in rural areas as well as promoting workshops, with almost 500 families The Biofore Share and Care programme focuses on projects courses. In addition, the teachers complete veterans. literature and reading to children and involved. that are a natural fit with UPM’s business and responsibility remote web assignments on laptops “The teachers selected for the their parents,” says Magdalena Ibanez, In addition to UPM Foundation, the targets. In addition to reading and learning, other focus areas provided by the UPM Foundation. programme are very motivated and Manager of the UPM Foundation. programme is supported by public and include engagement with communities, responsible water use have made great progress during the In 2016, nearly 40 student teachers private organizations such as the MATE and boosting bioinnovations. Reaching out to rural regions training. They are also committed have participated in the training, NGO, communal leaders, the teacher Supporting education is one of UPM to helping us for two years after the applying their new skills in practice in education institute of Paysandú and the Foundation’s key focus areas, says the programme ends, so that future classes 16 schools in Paysandú Department. Department’s education authorities.

38 | BIOFORE 3/2016 | 39 TEXT VESA PUOSKARI PHOTOGRAPHY TUOMAS UUSHEIMO, UPM; COURTESY OF THE INTERVIEWEES

The sixteen renewed production lines of UPM Otepää plywood mill represent the best available technology in terms of safety Otepää and efficiency. ramps up UPM Plywood UPM’s modernized he plywood market has for LNG vessels in the shipping been growing solidly these industry. plywood mill in Otepää, “ last few years. There has “We are the leading supplier Estonia is set to double its been more demand for our of special birch plywood for LNG production Tproducts manufactured at the Otepää carriers. The use and global transport production capacity this plywood mill than we have been able of liquefied natural gas is increasing, autumn. Extensive renewals to provide,” says Mika Kekki, Vice so the growth of this sector looks President, Production and Operations promising in the future as well,” are in progress to benefit of UPM Plywood. he predicts. customers, employees and “Thanks to the investment, we will be able to eliminate bottlenecks in our Making more out of less the environment. production to better respond to the Director and MD of Otepää AS needs of our key customers. Our Ando Jukk explains that the mill has strategic aim is to differentiate installed a new plywood line including ourselves with high-quality all of the machinery needed for veneer products and the most reliable and plywood manufacturing. The new customer service in the peeling and drying line will produce industry,” he adds. the same amount of veneer as the two Kekki explains that the existing lines put together. construction industry is the “The sixteen production lines biggest end user of plywood, represent the best available techno- followed by transport industries logy in terms of safety and efficiency. UPM Plywood’s strategic aim is to Mika Kekki provide high-quality products with that use veneer for truck and This investment will improve our the most reliable customer service trailer flooring. Other important production processes and material in the industry. applications are containment systems efficiency in many ways.”

>>

40 | BIOFORE 3/2016 | 41 The expansion will nearly TEXT MATTI REMES PHOTOGRAPHY UPM; CIELO E TERRA double the mill's output to 90,000 m3 per annum. Production of coated plywood will see a particularly healthy boost at the Otepää plywood mill. What’s behind

more sustainable a wine label? production and has switched to using renewable energy at its Italian wine bottler Cielo e Terra and facility. These changes translate UPM Raflatac partner to understand into direct improvements and reduce environmental impacts using in the wine bottle’s lifecycle assessment. lifecycle assessment. “The lifecycle assessment can also be “For with a new biomass Jukk adds a word of utilized in consumer example, we boiler. appreciation for the local communication to Ando Jukk now need less wood “We will produce road and transportation elf-adhesive label manufacturer UPM Raflatac describe the product’s raw material and glue our heat with a new authorities, who provides labelling solutions for industries such environmental impacts per cubic metre of veneer produced. 18-megawatt biomass contributed to as wine and beverage, food and pharmaceutical in detail,” adds Vainikka. We also have a new, fully automated boiler that will use developing the industries. Among its many environmentally assembly line that will improve work byproducts like bark, infrastructure leading Saware end-users is Cielo e Terra – one of Italy’s largest wine Recycling through efficiency and ergonomics and reduce chips and dust as into the mill. “Road bottlers – who recently collaborated with UPM Raflatac for RafCycle the risk of work-related illnesses.” fuel. Switching from work will be finished the lifecycle assessment of their wine brand Freschello. For several years now, The mill’s personnel grew by one oil to renewable energy soon, which will improve A lifecycle assessment involves the analysis of Cielo e Terra has been a

third as a result of the expansion. reduces CO2 emissions and Timo Salmikuukka traffic safety as well.” a product’s environmental impacts throughout member of UPM Raflatac’s “We have hired 40 new employees improves the profitability of its entire lifecycle, from raw material RafCycle® recycling at the mill. Our labour efficiency the mill thanks to lower heating costs,” Work for locals sourcing through to manufacturing programme for label stock has improved substantially, as our says Jukk. “The investment project has provided and recycling. It provides valuable waste. production efficiency has increased Most of the side products will be sold work for several local companies insight into the product’s value chain, Release liners can for by up to 90%,” he adds. as raw material for pellet plants, wood over the last year and a half,” says revealing the lifecycle stages with instance be used in the The expansion will nearly double boilers and the pulp industry, and the Timo Salmikuukka, Director, the greatest environmental impact. manufacturing of recycled the mill’s output to 90,000 m3 per rest will be incinerated in the bioboiler. Maintenance and Sourcing, who has paper. Other byproducts of annum. Production of coated plywood been responsible for implementing the Tracing impacts the label manufacturing process are used as raw will see a particularly healthy boost Spinoff safety benefits investment project in practice. This was the first-ever lifecycle material for UPM ProFi wood and plastic composite at the Otepää plywood mill. New traffic arrangements will “We have had over 100 suppliers assessment completed for any of Cielo products, or for energy generation at UPM’s The expansion has been carried significantly increase the safety of involved in the project and some e Terra’s products. Kaisa Vainikka production plants. out mainly using existing buildings, employees. Previously, cargo and 80%of all procurements have been “The lifecycle assessment helps Cielo e “Previously, these byproducts were incinerated or infrastructure and resources. A new personnel traffic came into the mill made locally. The main equipment Terra and its subcontractors analyse their processes taken to landfills, but now they can be reused and recycled 8,000 m2 production area has been through the same gate, which increased was bought from Finland and Spain and identify operations where environmental impact can efficiently,” Vainikka says. added by interconnecting existing the risk of accidents. but Estonians did the bulk of the be reduced,” says Kaisa Vainikka, Sustainability Manager Thanks to RafCycle, Cielo e Terra has also managed premises. “During the project we have construction work. This investment at UPM Raflatac. to reduce its waste disposal fees. In addition, the efficient separated cargo transport from created a lot of work for locals.” The analysis revealed that Freschello’s most significant recycling programme strengthens the company’s brand Positive domino effect personnel traffic. We have built new Salmikuukka confirms that the EUR environmental impact is caused by the process of image, which is a welcome advantage amid growing Jukk reveals that planning of the staffrooms for employees from which 40 million investment has proceeded manufacturing the glass bottles in which the wine is sold. environmental awareness on the consumer market. whole investment project began they have direct access over the bridge on schedule, with the Otepää mill Another major impact was related to the winery’s energy “The Freschello wine label will soon carry the RafCycle when management decided to into the mill, while traffic remains at expected to reach full operational consumption and chosen energy sources. logo. This is a clear signal to consumers helping replace the old oil-burning boiler ground level.” capacity by the end of the year. Cielo e Terra sees environmental responsibility as a Cielo e Terra to clearly communicate its commitment competitive advantage. The company is moving towards to sustainability.”

42 | BIOFORE 3/2016 | 43 TEXT SILJA KUDEL PHOTOGRAPHY TELEGRAPH MEDIA GROUP

“A great choice of paper stock gives the magazine

high-end,” says Paul Brady, a lift and a velvety finish.” Operations Director at Telegraph Media Group. LUXURY IS NEVER The magazine stood out at the Paul Brady 2016 newsawards in London last April, where it was selected as the winner of the National Supplement/Magazine of the Year award. Celebrating its 21st anniversary next Feel it in your fingertips year, newsawards is a UK event celebrating “But what really sets it apart from other grades it OUT OF FASHION excellence in Print, Digital and Business its very nice texture. It has a velvety feel that our innovation. Art Director really likes. Added to that, it’s not The judges praised the supplement’s “clean unrealistic in terms of price.” finish, excellent bleeds, great design and sharp Brady has “a great working relationship” Inspiring looks, exquisite texture and a luxuriant finish: acked cover to cover with haute images,” adding that “the luxuriant velvety with UPM, one of the Telegraph Media Group’s couture, supermodels and celebrities, finish has a good feel to it.” They also praised premier long-standing suppliers. “I’m very what works for fashion also makes a great fashion The Telegraph Fashion Supplement the great choice of paper stock, which helped happy to work with UPM. People are open, supplement – starting with a paper that oozes style. is the kind of upmarket magazine The Telegraph secure the top spot and stand out collaborative and very honest. They come and Pthat style mavens love to devour along with from competing entries. “It gives [the magazine] see us regularly and always make themselves their latte and French toast on a lazy Saturday a lift and really lends itself to the product,” they available. They give us a good overview of the morning. commented. marketplace.” Published twice yearly, the hefty Fashion The paper stock in question is UPM Cote Brady has been pleased to receive useful Supplement is The Telegraph’s traditional Matt 1.3 H. “We previously used different paper, technical support from UPM. When UPM Cote Saturday magazine supplement. Leafing but then we came across Cote, and we love it! came onto the market, UPM advised us to try it. through its silky pages – lined with runway It has gone down extremely well with Editorial We did, and we loved it – and the price was right.” coverage, inspired editorial content and and with advertisers also,” says Brady. advertisements for luxury brands such as Beyond Snapchat Gucci, Chanel and Mulberry – readers can Go-to advertising vehicle When asked to predict the future of print in the escape into a beguiling world of glitz and While many magazines continue to struggle digital age, Brady gives a thoughtful hum. “It’s glamour. The high-quality reprographics make with declining subscriptions and newsstand a difficult call. I think we’ll be seeing reduced a clear statement: this mag looks posh and sales, The Telegraph Fashion Supplement has circulations on national newspapers, but more expensive. been going strong for 15 years. bespoke and niche products. Readers will And posh is exactly what UK readers and “Luxury still sells. Magazines like ours still continue to want informed opinions and good advertisers are hungry for. Distributed to remain the go-to advertising vehicle when journalism rather than just bites of Snapchat.” 350,000 households in London and the South clients want to showcase their brands to a Brady believes that print and digital East region, the magazine’s key target group wide audience, and we produce a lot of spin-off media can coexist to mutual benefit. “All of consists of affluent consumers who expect supplements around luxury – luxury foods, our journalists are already working across value for money and enjoy a publication of luxury goods, luxury travel and so on – and both media – the two aren’t enemies. What immaculate quality. obviously we want a luxury paper to go with it,” is more worrying is that readers who states Brady. consume news, as well as advertisers, are Magazine of the Year As head of printing operations at the generally moving away from traditional “It has very strong content and high production Telegraph Media Group for over 15 years, Brady media to the huge cauldron of digital values, which cannot be underestimated in this can appreciate a paper that ticks all the boxes advertising in the Instagram world.” niche market. From the reader’s perspective for superior technical performance. The Telegraph’s newspaper strategy going it’s very upmarket, and the advertising is “Cote has all the assets we are looking for. forward is to maintain its core readership It has a nice bulk and a very good shade. It base and advertising revenues by focusing on prints wonderfully and maintains a finish which its standout assets: journalistic quality and complements strong colours. It’s impressive high-end production values. “People aren’t The Telegraph attracts affluent readers and for a matt paper to have such a super-smooth stupid. They know a high-quality product when high-end advertisers with its luxury supplements. finish,” he describes. they are reading one.”

44 | BIOFORE 3/2016 | 45 TEXT VESA PUOSKARI PHOTOGRAPHY TUOMAS UUSHEIMO, JANNE LEHTINEN, VESA PUOSKARI

Heibei Asian Sage Industry supplies doctor blades for the UPM Changshu paper mill.

“Managing responsibility- related issues is core part of our daily work,” says Markus Skrabb.

Markus Skrabb

and other direct and indirect consequences have become a its business operations. UPM is strongly committed real business risk for companies, so they have to be extremely to continuously improving its economic, social and careful with these issues,” he emphasizes. environmental performance, legal compliance setting the Companies also face tougher demands and expectations minimum level. about transparency from stakeholders and consumers. “We have six business areas operating in different Meanwhile, technological progress and today’s digital markets across the world. Our risks are also diverse because communications culture are changing the way people legislation in the energy market is different from that communicate, which is more difficult to influence and control. governing the pulp and paper markets, for example.” “Reputation risks associated with the disclosure of UPM aims to control risks through education, issuing misconduct are ever growing in today’s transparent world, guidelines and communicating clearly with employees and where news of alleged violations spreads quickly through external partners. Risk identification and management are social and traditional media. Now, even minor issues stir up an integral part of UPM’s global compliance practices. compliance is smart ompliance is a cornerstone of our business a big noise. This is another fact of life we have to accept.” “With the help of monitoring and audits, we can operations because it affects our reputation, determine how aware our employees are of responsibility business “ risk management and business results. Taking Tool for engagement and risk management risks and how well risk management has been implemented. responsibility issues seriously protects and All told, however, responsibility is an excellent tool for We can also use external auditors to examine the situation Cimproves our profitability in the long term,” explains engaging employees. Employees who work for companies and find suitable measures to correct any shortfalls.” Markus Skrabb, UPM’s Chief Compliance Officer. that manage their risks properly are more secure. Operating responsibly brings a The Limited Liability Companies Act states that the “Companies want to attract employees who share the same Revised code of conduct competitive edge in several ways. purpose of a company is to generate profit for its owners. positive values. This decreases responsibility-related risks In the spring of 2016, UPM revised its Code of Conduct. “Investors constantly evaluate the gains and risks of their and lowers the employee turnover rate,” says Skrabb. All relevant issues are now explicitly defined in the Code of Personnel, business partners and investments. Risks are greater in companies that fail to “In big companies, a risk can trace back to the conduct Conduct, which communicates UPM’s policy both internally investors all benefit mutually when integrate compliance in all of their actions,” Skrabb adds. of an individual employee. There is less misconduct in and to external partners. Skrabb believes that the corporate environment has companies where employees and subcontractors are aware of UPM’s compliance with laws and regulations – in companies follow regulations and become more aggressive, which is increasing the importance responsibility principles and follow these rules in their work.” particular, competition and anti-corruption laws – forms apply responsible practices. of compliance. Tougher regulations, sanctions and According to Skrabb, the picture is growing more complex a solid foundation for its reputation as a trustworthy stakeholder expectations are forcing companies to be careful with increasing numbers of external suppliers and partners business partner. UPM’s leading principle is that it does in responsibility issues. working for businesses. Companies that otherwise operate not compromise its standards of integrity under any “For starters, EU regulations and related sanctions and responsibly can be saddled with the blame for the misconduct circumstances. enforcements have become stricter. The trend that began of external personnel and suppliers. “Managing responsibility-related issues is a core part of with laws on competition seems to be spreading into the our daily work. We are committed to continuously improving securities market and data protection,” he says. Spelling out right and wrong our operations and practices. Our responsible and ethical “Authorities have noticed that revenue-based sanctions Skrabb affirms that responsibility is an integral part of practices create long-term value for both UPM and its are an efficient way to enforce legislation. These sanctions UPM’s Biofore strategy and the leading principle in stakeholders,” concludes Skrabb.

46 | BIOFORE 3/2016 | 47 TEXT VESA PUOSKARI PHOTOGRAPHY TUOMAS UUSHEIMO, UPM; COURTESY OF THE INTERVIEWEES

The annual PRI in Person conference helps investors understand how to apply sustainable practices such as integrating environmental, social and governance (ESG) issues into their portfolio decisions.

he PRI (Principles investment decisions. of Responsible Roughly 25% of our Investment) is institutional investors the organizer of have adopted ESG at the Tthe world’s leading responsible core of their investment investment event, PRI in Person. Nathan Fabian approach based on NASDAQ This year the event took place in sources. The percentage is more Singapore at the beginning of September, than double that of other industrial and and was attended by over 600 participants. materials companies.” The main mission of this year’s event was to promote responsible investment Green light from Singapore across Asia. The PRI is an independent, non-profit UPM was invited to the conference as organization supported by the United a UN Global Compact LEAD company to Nations. Its role is to encourage discuss the UN Sustainable Development investors to enhance their returns and Goals (SDG) with investors and support manage risks more effectively through them in defining the business case for responsible investment strategies. tackling SDGs. The organization celebrated its tenth Nina Norjama, Director of anniversary this year. Responsibility Development at UPM, “Our aim is to educate, help and says that taking part in the conference support investors so that they understand Investingin a sustainable future was a natural step for the company. the benefits of using sustainable “All of LEAD’s work aims to inspire practices in their investment decisions. and advance the full integration of We work with our members and other sustainability into core business organizations to produce research that operations. In 2016 LEAD continued can help investors on their ESG journey,” its efforts in shaping investor-company describes Nathan Fabian, Director of engagement and communication,” Policy and Research for the PRI. says Norjama. Fabian also confirms that the “I found the discussions with investors outcomes of the Singapore conference very useful, and there is definitely a need were an excellent indication of the for more of this kind of dialogue. We enjoy progress being made in this field. a strong presence among investors who “One of the most exciting recent are integrating sustainability in their statements was about the G20 countries’

48 | BIOFORE 3/2016 | 49 “UPM enjoys a strong presence among investors who are integrating sustainability in their investment decisions compared to other industrial and materials companies,” says Nina Norjama. PULP FOR LIFE Nina Norjama Pulp-based products are an inseparable part of our lives – from morning to evening, from office to party.

Made from natural and renewable fibres sourced from responsibly

intention to encourage responsible governments have changed their the market will be very responsive to managed forests, you encounter UPM’s pulp everywhere. investment and green finance around strategies to design policies that favour investment opportunities, as with the the world. One of the ways they wanted sustainable investment. Asian market. In the US it’s always Versatile pulp is used in all kinds of paper, tissue and board products to achieve this was by supporting the “I think the change reflects a wider a case of putting forward a clear imaginable. Biodegradable and recyclable, pulp is perfect for PRI to expand its activities.” view among policymakers, companies investment proposition.” Another positive sign is the new and investors that sustainability or everyday consumables such as paper bags, food packaging, labels, green financing strategy that is ESG issues are material from a financial New post-crisis landscape dry and wet wipes, hygiene products and fabrics. You find pulp currently being implemented in China. perspective. Investors should therefore Fabian says that investors have been even in foodstuffs and pharmaceutical products. “China has just announced a green be assessing them and ultimately looking at the world from a different finance policy that makes it easier directing more capital into emerging perspective since the financial crisis for investors to buy Chinese green opportunities like biofuels,” says Fabian. of 2008. assets. We really welcome this policy, According to Fabian, there are “They now understand that looking as do our investors, many of whom are excellent responsible investment at financial information in isolation LET PULP Start by visiting looking to include green assets in their opportunities in all markets on which does not give you a full picture of SURPRISE www.upmpulp.com portfolios.” investors can capitalize. how stable a company is. They are The PRI in Person event also hosted “In Asia, investors are very also looking at how companies deal YOU DAILY! #thatsimpressive the Sustainable Stock Exchange (SSE) commercially astute about investment with issues such as transitioning to Initiative, which drew speakers from opportunities. They are making rapid a low-carbon environment, and how stock exchanges, regulatory bodies, progress with green investments, which they treat their employees is equally investors, companies, ministries are being supported by government important.” and international organizations to policies in many countries. That is one Investors are moving on to new Singapore. of the strengths of the Asian markets.” opportunities, especially those In Europe there is a longer-standing concerning the environment, because Emerging opportunities tradition of understanding sustainable these markets are receiving more Fabian says that there is a growing business. Here, investors are actively government and policy support. niche for eco-conscious and social looking for companies that demonstrate “For example, there are excellent investment products targeted at both good performance in this field. opportunities for investors in projects institutional and individual investors. “Social performance and sensitivity such as renewable energy and green One sign is the growth of to the environment are more important transport. Projects like these will grow investment in green bonds, which factors for European investors. The very rapidly worldwide,” he predicts. were created to fund projects that have driver is slightly different but it channels “These markets are well beyond positive environmental or climate capital into sustainable investment, their early phases and there are good effects. which is a good thing,” he adds. and solid investment prospects out Another signal is that investors are Progress is mixed in the US: Good there. Investors have to move quickly to voting on environmental resolutions headway has been made alongside some take advantage of those opportunities, on company boards. Furthermore, reductions. “However, I expect that and that is a promising development.” UPM PULP 50 | BIOFORE

UPM_Pulp_Biofore_Ad_Magazine2016_ENG_161125.indd 1 25/11/2016 9.37 www.upm.com