UPM'S STAKEHOLDER MAGAZINE 2/2016

A NEW ERA OF EXCELLENCE

Climate

Biodiversity

Water

Responsibilitycriteria

Social Responsibility

The sign of responsibility.

Our responsibility criteria cover the whole lifecycle of a product from forestry and sourcing to sustainable production. They also cover the social responsibility aspects that are important for us. Explore and experience the world of Responsible FibreTM at responsiblefibre.upm.com. You will see how every little choice can make a difference.

UPM – The Biofore Company. www.upm.com

Responsible FibreTM verified by UPM guarantees that the product meets the industry's most demanding environmental and social responsibility criteria verified by a third party.

2/2016 | 03

Global megatrends are not short-term issues. Their full impact will only be felt in the future. In this issue of Biofore magazine we take a look at the major global forces taking shape today which will significantly impact our business landscape through to 2030 and beyond.

The challenge for every business and society is how to adapt and adjust to the new operating reality that is emerging as a result of the megatrends. Ultimately it is a question of how to address the risks and how to capitalize on the opportunities.

We at UPM are in the perfect position to do both. We have for many years been integrating the bio and

forest industries with the help of technology and the power of human innovation. The foundations of our biomass-based business can be summarized in three Rs: renewable, recyclable and responsible.

Our expertise in biomass processing has earned us a leading position in wood-based product innovation. In accordance with the Biofore strategy, our innovation is driven by our commitment to develop sustainable, future-oriented solutions. In short: solutions that address global megatrends and capitalize on business opportunities in a profitable and responsible manner.

Elisa Nilsson

Vice President, Brand and Communications, UPM

Biofore addresses global megatrends

UPM – The Biofore Company

UPM leads the integration of b io and forest industries into a new,

sustainable and innovation-driven future. Our company consists of six business areas: UPM Biorefining, UPM Energy,

UPM Raflatac, UPM Paper Asia, UPM Paper ENA (Europe & North America)

and UPM Plywood. Our products are made of responsibly sourced, renewable raw materials. They offer alternatives to

replace non-renewable fossil-based materials.

We develop new innovative and sustainable businesses. Biofuels, bio-

composites and biochemicals are based on our extensive know-how and

strong position in the forest biomass sourcing and processing value chain.

We live by our values – trust and be trusted, achieve together,

renew with courage.

BIOFORE IS UPM'S GLOBAL STAKEHOLDER

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04 | BIOFORE 2/2016 | 05

The transparent digital touch screen is made from

nano-cellulose, which is a

material that is optimal to use

in conjunction with electronics

because of its conductive

properties.

The screen is transparent and

can be placed in front of objects

to photograph or explore them.

© T

omor

row

Mac

hine

06 | BIOFORE 2/2016 | 07

C O N T E N T S

03 EDITORIAL

04 THE TRANSPARENT DIGITAL TOUCH SCREEN

06 CONTENTS

08 IN TIME

10 SMART SOLUTIONS TO GLOBAL CHALLENGES

Climate change is pushing our planet to the limit. UPM’s Biofore strategy is a response to the great sustainability challenge.

14 NEW ROADMAP TO RESPONSIBILITY

UPM updated its responsibility focus areas, adopting ambitious new targets and performance indicators up to the year 2030.

17 MORE VALUE FROM SIDE STREAMS

UPM’s target for 2030 is zero solid waste dumped at landfills and zero incineration of side streams.

19 LIGHTER LANDFILL LOADS

Finnish forestry is decreasing its landfill waste volumes – a trend set to continue through more efficient use of side streams.

20 SUSTAINABILITY LEADERS UNITE!

UPM is the first forest industry company invited to join the United Nations’ Global Compact LEAD, a platform dedicated to advancing sustainability.

22 RESPONSIBILITY IN ACTION UPM expects all 25,000 of its suppliers to operate responsibly. But how is this assessed? A round table of UPM experts share their insights.

EDITOR-IN-CHIEFElisa Nilsson

EDITORIAL STAFFHeli Aalto, Annukka Angeria,

Sari Hörkkö,Terhi Jokinen, Klaus Kohler, Monica Krabbe,

Anneli Kunnas, Marjut Meronen, Pia Nilsson, Marika Nygård,

Sini Paloheimo, Juha Pitkäranta, Mari Ruissalo, Annika Saari,

Päivi Salpakivi-Salomaa, Jaana Simonaho, Reetta Södervik,

Päivi Vistala-Palonen, Vivian Wang, Antti Ylitalo.

DESIGNValve

PRINTINGErweko Oy

COVERUPM Finesse Silk 200g/m²

PAGESUPM Finesse Silk 130 g/m²

UPM-KYMMENE CORPORATIONPO Box 380

FI-00101 HelsinkiFinland

Tel. +358 (0)204 15 111

www.upm.comwww.upmbiofore.com

27 UNDER THE SHARP EYE OF LYRECO

The French office products company expects all its suppliers to comply with strict standards. The UPM Changsu mill passed Lyreco’s recent audit with flying colours.

28 A NEW ERA OF EXCELLENCE

A EUR 277 million investment in Changshu, China will enable UPM to deliver value-added, advanced paper products worldwide.

30 BIOFORE TEA HOUSE

Ancient tradition meets modern biomaterials in the Biofore Tea House.

31 WORLD'S LARGEST MACHINE FOR RELEASE LINERS

UPM’s Chairman Björn Wahlroos shares his thoughts on UPM’s future in China at the grand opening ceremony of the Changshu mill.

32 THE NEW SHAPE OF PACKAGING

Biofore peers into the crystal ball and looks at the exciting future of packaging in 2030.

35 SHOPPING GOES ONLINE

Retail and packaging are being radically reshaped by global megatrends and the growing volume of online commerce.

36 THREE DECADES OF HENGAN

We meet UPM’s partner Xu Lianjie, founder of China’s largest manufacturer of tissue paper, Hengan International Group.

39 UPM AND UTEC

Uruguay’s first regional university builds on cooperation between industry and the academia.

42 THE FIVE MEGATRENDS OF PRINT

Nils Müller, CEO of TRENDONE, looks at the future of print and how it can complement digital products in innovative ways.

44 THE FUTURE IS IN YOUR HANDS

The reinvented New Future office paper family provides a fresh example of Biofore thinking.

14

UPM expects all 25,000 of its suppliers to operate responsibly. But how is this assessed? A round table of UPM experts share their insights.

UPM updated its responsibility focus areas, adopting ambitious new targets and performance indicators up to the year 2030.

36A EUR 277 million investment in Changshu, China will enable UPM to deliver value-added, advanced paper products worldwide.

32

Biofore peers into the crystal ball and looks at the exciting future of packaging in 2030.

We meet UPM's partner Xu Lianjie, founder of China's largest manufacturer of tissue paper, Hengan International Group.

28

22

08 | BIOFORE 2/2016 | 09

I N T I M E

You can now read Biofore Magazine and interesting stories at www.upmbiofore.com.

ISCC PLUS certification

for bio-based

applications

UPM Biofuels has extended its sustainability certification to cover

all of its output streams from the Lappeenranta Biorefinery

in Finland under the International Sustainability and Carbon

Certification Scheme ISCC PLUS. UPM Biofuels produces renewable

diesel and naphtha at the Lappeenranta site. Wood-based renewable diesel UPM BioVerno

for transportation is the main product. However, the process

also generates a smaller amount of renewable naphtha, which

can be used as a biocomponent for petrol.

Schwedt mill to be sold to

LEIPA Georg Leinfelder

GmbH

UPM has signed an

agreement to sell its Schwedt newsprint mill site and relevant assets to LEIPA

Georg Leinfelder GmbH. All employees at the Schwedt mill will be

transferred to LEIPA. The transaction price is EUR

70 million. The transaction is subject to customary third-

party approvals.

As part of the transaction, the parties have agreed to enter into a contract

manufacturing agreement for newsprint for a transition

period which would conclude at the end of 2017 at the latest. The capacity of the mill is 280,000 tonnes of

newsprint annually.

LEIPA will convert the mill for liner production. The

planned production capacity would be approximately 450,000 tonnes of liner

annually.

The Institute for Molecular Medicine Finland (FIMM), at the University of Helsinki and UPM Biochemicals have started a joint research project with the purpose of investigating the applicability of UPM's new cellulose-based gel material for cancer research.

The project focuses on growing cancer cells on a three-dimensional culture using UPM's new biomaterial and studying the drug responses of the cancer cells. This exciting research project brings together two growth areas: bioeconomy and personalised medicine.

"One of the key challenges in experimental drug testing is being able to grow cells in a laboratory in an environment that resembles the human body," says Senior Researcher Vilja Pietiäinen, who is responsible for coordinating the project at FIMM.

"We need better three-dimensional models for cell culture so that cells from cancer tissue would retain their distinctive characteristics also outside the body. Creating an environment that resembles tissue requires new types of materials."

FIMM, the academic partner in the research project, specialises in research into personalised medicine. The institute's high throughput screening unit allows researchers to determine the response of different types of cancer cells to hundreds of drugs in only a few days. The constantly increasing amount of data enables researchers to identify cancer cell characteristics that help predict the most efficient drug for each type of cancer. In time, this information will also help patients.

UPM Biochemicals is establishing an innovation unit at the Biomedicum research and educational centre in Meilahti, Helsinki, Finland. The unit will focus on biomedical applications for the cellulose nanofibril technology developed by UPM. At Biomedicum Helsinki, the UPM team will be working more closely with medical researchers and other operators in the field.

GrowDex®, UPM's first commercial product developed for biomedical purposes, is a cellulose nanofibril hydrogel for 3D cell culture applications, such as pharmaceutical research and development. GrowDex® is highly biocompatible with human cells and tissues.

UPM PELLOS REACHES ITS 10 MILLION MILESTONE

In Pellosniemi in south-eastern Finland, plywood has been produced for supply to the world's markets for almost half a century. The first plywood mill started its operations back in 1968, with the other two mills following in 1994 and 2002. Some 1.6 million cubic metres of particleboard was produced between 1964 and 1994. In April, UPM Pellos reached the milestone of 10 million cubic metres.

UPM's WISA-Spruce plywood is a familiar sight at construction sites, in particular in the Central European region where it is used as floor, wall and ceiling material. Additionally processed special plywood panels are also used in concrete-forming applications and in the transportation industry.

Today, the mills employ some 600 people. The annual production capacity of all three mills combined is around 480,000 m³, with two plants operating in three shifts every day of the week. At the oldest mill, Sundays are considered a day off, with no operation taking place. Maintaining a production level such as this requires over a million cubic metres of wood each year; a figure that corresponds to 70 to 80 truckloads of large-diameter spruce logs per day, or one truckload every twenty minutes. The raw material is sourced from sustainably managed forests located nearby.

Innovation unit at the Biomedicum research and educational centre

Joint project between UPM and FIMM

2/2016 | 11

Megatrends such as population growth, urbanisation and climate change are placing strain on the Earth's carrying capacity. UPM developed its Biofore strategy as a smart response to global sustainability challenges.

10 | BIOFORE

TEXT MATTI REMES PHOTOGRAPHY JANNE LEHTINEN, UPM; COURTESY OF THE INTERVIEWEE

The world’s carrying capacity became a widely recognized issue in 1972, when a think tank of scientists known as the Club of Rome published the report The Limits to Growth.

One of the authors, futurist Jørgen Randers, predicts that the scarcity of natural resources and population growth will continue to be the most important megatrends shaping the future.

“Climate change has now claimed its place among the other two megatrends, as we now have proof of its

progression,” says the 70-year-old Norwegian professor.

Randers believes that significantly lower growth figures will remain a dominant economic trend in the next few decades, especially in developed countries.

This is due to the ageing population and a decline in the profitability of work.

As society grows wealthier, employment becomes concentrated in the service sector.

In addition, health and social services will employ more people than before.

“Increasing productivity in these fields is much harder than in the manufacturing industry or agriculture. I doubt we will be willing to accept robots taking care of the elderly in the future.”

Funding the fight against climate change Randers expects to see the world’s GDP (the amount of products and services produced) double within the next

Jørgen Randers

Smart solutions to global challenges

>>

2/2016 | 13

40 years. At the same time, he anticipates that population growth will start to slow down and reach a peak of 8.1 billion people in 2040.

This means that average consumption per person will grow. Randers is nevertheless hopeful that in the future a larger portion of national income will be spent on investments in a sustainable future instead of daily commodities. Within the last couple of decades, an average of 25% of national product has been spent on investments. In the future, we might have to increase this to 40%.

By investments, Randers means infrastructure like roads and production facilities, transportation and education. A vast amount of money will have to be spent everywhere in the world adjusting to climate change and repairing its damage .

“The rise of the sea level will force the Netherlands to build higher protective barriers. Norway will have to excavate long tunnels to protect the roads in the mountainous fjord areas from landslides caused by the melting of permafrost,” Randers explains.

The game is not lost yetThe transition from fossil fuels to renewable and emission-free energy sources will also require massive investments, as will the increasingly efficient use of natural resources.

As for future investment needs, Randers adds the struggle to reduce global poverty and economic inequality. Without corrective actions, refugees and armed conflicts threaten the stability of global political and economic systems.

Randers emphasizes that despite the grim outlook, the game is not over yet.

“What we need now are solid, long-term decisions based on facts to guide society in the right direction.”

AfricaAsia

EuropeLatin America and the Caribbean

North AmericaOceania

Global

AfricaAsia

EuropeLatin America and the Caribbean

North AmericaOceania

Global

AfricaAsia

EuropeLatin America and the Caribbean

North AmericaOceania

Global

AfricaAsia

EuropeLatin America and the Caribbean

North AmericaOceania

Global

Source: United Nations, World Population Prospects: The 2015 Revision.

Global population trends United Nations population growth estimates by continents, million people

Energy consumption by region

BP 2016 Energy Outlook OECD

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of o

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)

1965 2000 2035

Other

Other Asia

China

OECD

Global GDP growth is set to slow down over the next 50 years, 2010–2060

Pers

enta

ge p

oint

s

2001–2010 2010–2020 2020–2030 2030–2040 2040–2050 2050–2060

OECD

Non-OECD

a positive effect on UPM’s business. “They increase the demand for pulp, hygiene, wood and

label products especially in developing economies.”

Ahead of the curve with Biofore Business based on renewable and recyclable raw

materials is at the core of UPM’s Biofore strategy. Ståhlberg believes this to be a solid foundation for

the future.“For a long time now, UPM’s businesses have

been based on sustainable ground. It helps us to answer the pressure for change and gives us a competitive advantage over many competitors.”

The fight against climate change received an encouraging boost from the Paris Climate Conference

in December. UPM has joined the fight by developing bio-based fuels to replace fossil energy sources producing

emissions.The company also produces biocomposites and bio -

chemicals to replace oil-based materials. These products create added value and may be a significant source of growth in the future.

“UPM’s strong balance sheet and income stream enable us to invest also in riskier prospects that may become new growth sectors in the future.”

Ståhlberg points out that retaining competitiveness requires continuous improvement of cost efficiency and productivity.

“UPM has shown that it is possible for a company using renewable raw materials to continuously improve its productivity.”

Ståhlberg notes that the revenue per hectare of forest plantation has increased significantly.

“By increasing productivity, we are able to spread wellbeing among the owners, employees and the surrounding society.”

18

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Kari Ståhlberg

Randers’ recent book “2052 – A Global Forecast for the Next Forty Years” has been translated into nine languages and has sold 150,000 copies.

Environmental organisations criticize Randers for being overly optimistic in believing that there will be no shortage of food and water if humankind only makes the right choices.

Meanwhile, many people in the business sector criticize him for not having enough trust in the free market’s ability to mend these issues.

“I have been criticized equally by both sides – it has made me even more convinced that my prediction is solid. The biggest difference to before is that we now have enough information to make a realistic estimate for the next decades.”

Megatrends mean big opportunitiesUPM’s strategy director Kari Ståhlberg believes the challenges related to the Earth’s carrying capacity can be overcome.

Natural resources are used and recycled more efficiently than before, which helps to satisfy the growing demand associated with population growth and higher living standards.

“I believe that the world will continue to go forward and become a better place for us all to live in. Higher living standards in China and other developing economies do not affect western countries negatively,” says Ståhlberg.

UPM follows global megatrends closely because they create both challenges and new opportunities for the company. For example, urbanisation, the growing middle class and the increased purchasing power of consumers have

4.0

3.0

2.0

1.0

0

4 8 12

Million people

12 | BIOFORE

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Goals are linked to our operations. We want to encourage companies to take on an important role in related efforts,” she adds.

Compared to the previous UN Millennium Development Goals, the new goals have a wider, global scope. As sustainability problems are global, the solutions must also embrace a global perspective, which is why the new UN Goals highlight cooperation and human rights.

“Making the world a better place for everyone requires the cooperation of countries, companies, non-governmental organisations and individuals as well. This is a puzzle that the whole world must solve together,” concludes Norjama.

UPM updated its responsibility focus areas, adopting ambitious new targets and performance indicators up to the year 2030.

The main pillars of UPM’s corporate responsibility policy are economic, social and environmental

responsibility.Nina Norjama, Director,

Responsibility Development and Support, affirms that UPM is committed to continually deepening its corporate responsibility work in the long term. UPM promotes responsible practices across the whole value chain and is actively searching for new sustainable solutions in cooperation with its customers, suppliers and partners.

“We have adopted more ambitious targets in our updated Responsibility focus areas. The greatest change is that

New roadmap to responsibility

>>

TEXT VESA PUOSKARI PHOTOGRAPHY JANNE LEHTINEN, UPM

In the field of economic responsibility, UPM’s target is to create added value through responsible sourcing in cooperation with suppliers. For example, UPM is conducting supplier audits that are helping to improve its suppliers’ performance in everything from product quality to occupational health and safety as well as environmental responsibility issues.

Synergy with UN goalsIn the process of updating its responsibility targets, UPM initiated comprehensive discussions on the Sustainable Development Goals ratified by the UN General Assembly in autumn 2015.

Workshops were organised in different management teams to discuss all 17 UN Sustainable Development Goals, the target being to identify the issues of greatest relevance to UPM.

“We found a link between every UN goal and UPM’s operations. In the end, we selected 11 that we regarded as the most relevant to UPM. These targets either relate to promoting a desired outcome or thwarting an undesired one. Slowing down climate change is one such example.”

Forests and biodiversity were, as to be expected, top of UPM’s discussion agenda.

“This has been our focus area for a very long time. UPM also has an excellent opportunity to influence this field in the future. In wood sourcing and forestry we are carrying out very detailed operations to achieve our targets,” notes Norjama.

Active voice in global forumsUPM is active in many international forums as a key participant in dialogue with other companies.

“For example, we took part in the Sustainability Salon forum organised in China. There we introduced listeners to UPM’s Biofore strategy and how UN Sustainable Development

Nina Norjama

United Nations Sustainable Development Goals guiding UPM Targets

now we are looking at things from a broad term perspective up to the year 2030,” she adds.

The goal of UPM’s responsibility work is to create a competitive advantage and long-term value through the efficient use of resources and the input of high performing people.

“We are using very accurate indicators to measure our responsibility performance. If we reach our targets earlier than we expected, we’ll keep on shooting even higher,” asserts Norjama.

Continuous improvementA safe, healthy working environment and the wellbeing of personnel are among UPM’s main social responsibility focus areas.

“We want to make safety a permanent part of UPM’s culture. A zero compromise culture is the only way to continuously lower accident rates both among our own personnel and among external contractors working at the company’s premises.”

Last year’s lost-time accident frequency was the lowest in the company’s history. At the end of the year, 12 production units achieved more than one year without any lost-time injuries.

An inclusive, diverse working environment is among the new targets defined in UPM’s social responsibility agenda. This year, UPM is launching an initiative aiming to promote diversity in the working environment and thereby improve its business results.

“Our target is for all UPM employees to feel they are treated as individuals regardless of gender, age, race or nationality by 2030. These targets will be monitored through the Employee Engagement Survey, which already looks at the diversity question. In the 2015 survey 77% of the respondents said they had not experienced discrimination within UPM,” she adds.

16 | BIOFORE 2/2016 | 17

>>

More value from side streams

Currently around 90% of the side streams produced at UPM mills are reused in other processes. UPM’s target for 2030 is zero solid waste dumped at landfills and zero incineration of side streams unless the energy is re-harnessed and exploited.

Pekka Ståhlberg, Director of UPM Business Support says that Finland’s ongoing Zero Solid Waste project confirms UPM’s position as a frontrunner in the circular economy. Stricter waste legislation and increasing cost pressures are key drivers behind this trend.

“We have to find a sustainable solution for side streams, enabling us to reuse excess materials and generate added value for us. Our aim is to define the best operational practice in these areas and scale them up UPM-wide in Finland. The target is for UPM to become a Zero Solid Waste company in Finland.”

Harnessing side streams will also have a clear impact on UPM’s EBITDA. Not only does it eliminate costs

UPM's Zero Solid Waste project aims to develop sustainable solutions for side streams generated in industrial production processes. The project is an integral part of the UPM Responsibility 2030 Agenda.

Pekka Ståhlberg, Katja Viitikko

Thomas Krauthauf

based fraction, deinking sludge and ash for various end uses. Deinking sludge is used as an additive and raw material in brick production and in the cement industry as a carrier and filler.

Thanks to these determined efforts, UPM mills have reduced solid landfill to zero in Germany.

Thomas Krauthauf, Senior Manager Business Development at the UPM Schongau/Ettringen mill notes that the costs of disposing of solid waste streams have decreased significantly in recent years due to closed recycling loops with other industries.

As an example, the UPM Schongau mill has successfully developed new recycled products from ash generated in recovery boilers.

“We have created new products by selecting certain ash fractions and developing their properties further. These fractions are now more effective in soil stabilisation and they can be used in other new applications as well,” Krauthauf says.

For commercial applications to be successful, it is essential to find the right partners and to know the customers’ production processes in order to invent optimised new products in the field of secondary raw materials.

“We can guarantee our customers a continuous raw material stream. At the same time we have improved our quality control system to ensure that our raw material properties match specifications. With demand for these materials growing, we have successfully increased prices while also decreasing our cost,” he adds.

coming from solid waste treatment and landfills, but it also creates extra income from external sources.

The Zero Solid Waste project focuses on five main side streams: ash, sludge, dregs, wood-based fraction and landfill operations. Most of UPM’s solid side streams are used for landscaping or incinerated for energy. Only a small fraction of waste goes to landfill.

“We are currently doing research and development exploring several new applications where we could use these side streams. Fractions could be used in applications such as biogas production or in fertilisers. At the same time, we intend to create new business models and find new partners for cooperating in this field,” adds Katja Viitikko, who is responsible for the side stream reuse programme at UPM R&D.

Ahead of the curveGermany has a long tradition of exploiting side streams such as wood-

You can read more about our responsibility targets for 2030

in UPM's Annual Report 2015.

The Finnish forest industry is rapidly decreasing its landfill waste volumes, and this trend will continue through more efficient use of side streams, predicts Maija Heikkinen, Senior Environmental Adviser at the Finnish Forest Industries Federation.

Lighter landfill loads

“At the beginning of this year, Finland banned the dumping of organic waste at landfills. We hope that new legislation will also facilitate the fabrication of new products from side streams. This would make sound business sense as well. Forest industry companies are often the ones to pay for others exploiting their side streams as raw material.”

The forest industry’s total landfill waste volume in 2013 amounted to 114,000 tonnes. The latest statistics for 2014 confirm that this total decreased to 92,000 tonnes. This welcome trend is set to continue in coming years.

According to Heikkinen, the forest industry’s side streams could be used more effectively in fields such as landscaping, but legislation has posed obstacles.

“When the Finnish Land Use and Building Act is amended, we will try to ensure that we can increase the use of various recovered materials. Also, threshold limit values should be revised so that ash can be used more widely for maintaining and building forest roads.”

Boosting Europe's circular economyIn December 2015, the EU Commission published a new action plan for the circular economy. The aim is to close the loop of product lifecycles through more efficient recycling and reuse, bringing benefits to both the environment and the economy.

“From the perspective of the forest industries, the new action plan places slightly more emphasis on the bioeconomy and the use of renewable raw materials, which is important for our industry. However, it still seems to focus on the recycling of non-renewable natural resources,” says Heikkinen.

The new action plan also includes measures to monitor the circular economy and measure the use of resources. “We hope these indicators will take into account the difference between renewable and non-renewable natural resources. This is genuinely a big challenge.”

The Commission’s action plan includes some 50 proposals to boost Europe’s circular economy in coming years. This includes actions in the fields of production, product design, waste, public procurement and consumer information.

Maija Heikkinen

18 | BIOFORE 2/2016 | 19

geographical regions and industry sectors that participate

in LEAD. The total number of member

companies in the UN Global Compact is

approximately 8,500.

Designing for the futureLEAD’s work is about developing tools for companies to apply in integrating sustainability into all aspects of their work.

In 2016, the focus of Global Compact and LEAD is on integrating global goals and local business.

“The Sustainability Development Goals (SDG) are a useful source of inspiration and a tremendous opportunity for businesses to innovate, invest and collaborate to create a more sustainable future for all of us,” notes Ole Lund Hansen, Chief, Business of Tomorrow, at the UN Global Compact.

Lise Kingo

Pirkko Harrela

Ole Lund Hansen

Another important emphasis is on designing future business models, including those that are emerging from the digital revolution. For example, LEAD has a new Young Innovators Programme that will engage young professionals from LEAD companies.

“The target is to understand and benefit the potential of organisations emerging from Silicon Valley and elsewhere. The programme gives the industries a chance to explore and transform these developments into new sustainable business models and

opportunities,” continues Hansen.Currently, with UPM the only forest industry company in

LEAD, Hansen expects an important contribution, especially in the field of bioeconomy and all 11 UN goals that are considered to be important targets

for UPM.“We hope that

UPM will benefit from the collaboration and find

inspiration when working together with other industry leaders, exploring the potential for radical new and more sustainable business models within the sector,” Hansen concludes.

companies that LEAD is an integral part of the UN Global Compact and thus the driving force in the creation of a large global movement.”

Top 50 sustainability leadersPirkko Harrela, Executive Vice President, Stakeholder Relations, UPM, sees the invitation as recognition of UPM’s long-term commitment to sustainability work.

“For us, joining LEAD will be a great opportunity to stay abreast of developments within the industry and to generate and implement advanced corporate sustainability practices together with other sustainability leaders and committed stakeholders,” she says.

UPM is the first forest industry company and the very first Finnish company to receive an invitation to join this group.

“LEAD is a well-managed operation with clear targets and good planning. With this in mind, we look forward to good cooperation both with the LEAD management and the peer companies,” Harrela says.

There are currently 50 sustainably advanced companies across

Global Compact LEAD is a unique United Nations leadership platform designed for companies with leading sustainability standards.

“Participating in LEAD offers UPM an excellent opportunity to show its sustainability leadership on a global stage. Companies in LEAD can uniquely demonstrate how good business practices can advance global Sustainability Development Goals,” says Lise Kingo, Executive Director of Global Compact.

When inviting new companies to join LEAD, the UN Global

Compact scans a variety of global and local

sustainability rankings and indices, including the Global Compact 100 and the Dow Jones Sustainability Index.

Kingo sees membership as a relevant

tool for publicly listed companies like UPM.

“LEAD is uniquely positioned to foster better communication and collaboration with different types of investors. This is something we are going to prioritise even more in the years to come,” says Kingo.

“Finally, I also believe it is a big advantage for the participating

TEXT VESA PUOSKARI PHOTOGRAPHY UPM; COURTESY OF THE INTERVIEWEES

UPM is the first forest industry company invited to join the United Nations' Global Compact LEAD, a platform dedicated to advancing sustainability leadership through innovation and action.

Sustainability leaders unite!

>>

2/2016 | 21

If anyone understands the principles of responsible sourcing, it’s Petri Heinonen, Tuomas Niemi, Nina Norjama and Kimmo Ståhlberg. Their daily work involves auditing UPM suppliers to ensure that they comply with the strict requirements that UPM sets

for its suppliers as a forest company committed to operating responsibly. The primary goal of these supplier requirements is to recognize and

reduce risks related to business operations. But that’s not all: they also aim to support suppliers in their continual improvement efforts.

On-site visits are one way of assessing suppliers. Heinonen and Ståhlberg have travelled the world carrying out such audits. Niemi in turn monitors pulp suppliers’ operations mainly based on documents. In the following, they recount their experiences in Brazil, China and Russia, with added expert commentary from Norjama, Director, Responsibility Development and Support.

Responsibility in action

UPM expects all 25,000 of its suppliers to operate responsibly. But what is responsibility and how can it be assessed? A round table of UPM experts share their insights on this complex topic.

“Sometimes it takes months of discus-sions for us to gain permission to carry out a supplier audit at a certain production facility. We always give reasons for why we want to visit them on-site. But our perseverance pays off,” says Nina Norjama.

“Audits are always about improvement. We have to agree with the supplier

on the direction and actions that need to be taken so that we can continue

working together,” says Petri Heinonen.

“We don't expect any big surprises in the chain of custody in Russia, because forest-related issues have been under the microscope for

such a long time. The concept of responsibility has shifted more and more towards social

responsibility and there may be lessons to be learned there,” says Tuomas Niemi.

“If we are carrying out audits abroad and really want to review everything thoroughly, we always need to have someone with us who speaks the local language and knows how to carry out audits,” says Kimmo Ståhlberg.

“We audited the production process, our first priority being to ensure quality output. During the same visit we also checked the working hour logs, employee conditions, wages, safety and other responsibility related issues,” says Kimmo Ståhlberg.

>>

20 | BIOFORE

TEXT HELEN MOSTER PHOTOGRAPHY TUOMAS UUSHEIMO, JANNE LEHTINEN, PETRI HEINONEN

22 | BIOFORE 2/2016 | 23

Kaolin from the Amazon Petri Heinonen, Manager, Supply Chains, recently conducted a supplier audit in eastern Brazil, where he scrutinized the operations of Imerys, UPM’s kaolin supplier. UPM uses kaolin in the paper production process. Imerys was selected for auditing due to certain risks related to mining and land management in Brazil.

Petri: Imerys Rio Capim Caulim Co.’s production facility is located in Barcarena in the state of Pará. The actual open-pit mines are located 160 kilometres inland in the middle of the rainforest. Thousands of hectares of land have been reserved for extraction, but only a fraction of the rainforest area has been cleared for extraction. We were keen to look into how the extraction permits were obtained and what happens to the land after all the kaolin has been extracted. In the mining area, we saw a tree nursery where native tree species were being grown. This way rainforests are being restored in areas where extraction has been completed.

Nina: Had restoration already started?Petri: Yes, it had, and everything seemed to be going well.Nina: Tell me about the people. What are the local

surroundings like?Petri: There are nine poor neighbourhoods, favelas,

around Barcarena. Imerys has created a social programme for the residents providing support such as remedial education and activities for children as well as dental care and water workouts. In the jungle around the open-pit mines there are villages that are even poorer than the favelas. The company also helps the village residents by providing health education and buying vegetables from them for their canteen.

Nina: What about the factory itself? Can you tell me about the working conditions there?

Petri: I talked to some of the factory workers at random. I asked them whether they had had holidays and whether the company had paid them their wages. I also reviewed the employee register and working hour tracking system. I found everything to be at a good level. The company also had a programme to employ people with disabilities.

Paper machine parts from ChinaKimmo Ståhlberg, Director, Chemical & Consumables, Raw Material Sourcing, recently audited the Hebei Asian Sage Industry’s machine workshop in China. Asian Sage supplies doctor blades for the UPM Changshu paper mill. The family business located in Hengshui manufactures products from carbon fibre and has around 50–100 employees.

Kimmo: The Changshu mill has used products made by Asian Sage for a long time now, and we wanted to see whether we could also use them in Europe and the United States. We audited the production process, our first priority being to ensure quality output. During the same visit we also checked the working hour logs, employee conditions, wages, safety and other responsibility-related issues. The company’s documents were in

Chinese, so we had experts on our team who understood Chinese.Nina: And you found there were major issues concerning safety

at work?Kimmo: The employees lacked safety boots and respirators even

though a lot of dust is generated during production. The company corrected all the issues that we pointed out to them. They installed an epoxy floor in the chemical store, which reduced the amount of dust. They also labelled all the chemical barrels and provided employees with safety equipment.

Nina: Asian Sage is an excellent example of a supplier willing to invest in improvements. They also had capital earmarked for such investments.

Kimmo: Exactly. They knew they did not meet the demands of western companies and they wanted to improve. They were grateful for the “free consultation.”

Nina: What about holidays? Were the employees given enough time off?

Kimmo: The employees wanted to work longer hours so that they could have time off to help at home during the harvest. We told the company about western requirements and persuaded them to upgrade their holiday pay, for example.

Fibre from around the worldUPM has been assessing the origin of wood sourced from Russia for several decades now. The origins of UPM’s pulp fibre are also subject to scrutiny. But why should the origin of wood and fibre be monitored in the first place? Hasn’t wood sourcing been under the microscope all over the world for a long time already?

“In fibre sourcing, raw

material supply chain

management has been

revolutionized over the past

20 years. It would be great if

the same level of performance

was achieved for other raw

materials as well. That’s our

goal,” says Nina Norjama.

Wood sourcing has been under the microscope all over the world for a long time.

Imerys has created a social programme for the residents providing support such as remedial education and activities for children.

On-site visits are one way of assessing suppliers. Petri Heinonen recently conducted a supplier audit in eastern Brazil, where he scrutinized the operations of Imerys, UPM's kaolin supplier.

24 | BIOFORE 2/2016 | 25

Lyreco, the French worldwide distributor of office products, has been purchasing UPM’s paper grades for more than 15 years. All of Lyreco’s operations are guided by its EcoFuture strategy, which aims to build a sustainable future through economic development, social responsibility and environmental protection.

Both Lyreco and UPM expect all their suppliers to comply with equally strict standards.

In January 2016, Nasser Kahil, Lyreco Group Quality, Security & Sustainability Director audited the UPM Changshu mill in China, which produces graphic papers and copy

UNDER THE SHARP EYE OF LYRECO

deficiencies related to wages, contracts or insurance,” says Kahil.

“We did detect some issues, particularly in relation to fire safety in employees’ living premises, that will no doubt be addressed in a proper way. In recent years, Lyreco has initiated two programmes with the purpose of ensuring that our suppliers comply with local laws, respect human rights and take care of safety at work. We carried out the first supplier assessment in 2015. In that assessment, UPM was ranked first among all the paper suppliers.”

Suppliers are selected for

auditing by UPM based on

risk assessments.

Audits are based on UPM’s

supplier requirements

compiled in accordance

with international

standards (ISO 9001, 14001,

OHSAS 18001, SA8000).

Audits have improved

working conditions and

safety at work

at a number of sites.

“In recent years, Lyreco has initiated two programmes with the purpose of

ensuring that our suppliers comply with local laws, respect human rights

and take care of safety at work,” says Nasser Kahil.

papers for Lyreco. The audit was carried out over two days, providing a comprehensive overview of the mill.

“Lyreco is supplied by 63 factories located in developing countries, mainly in China. I used to go to the Southeast Asia for auditing purposes quite often, on average once a month. We inspected such things as working conditions, wages and safety at work. We noticed a number of positives at the Changshu mill. Everything was in order with the buildings, the organisation and the working environment. The premises were clean and bright. A lot of attention had been focused on safety and hygiene. We did not identify any

The answers are provided by Tuomas Niemi, Senior Specialist, Systems and Tools, Ecolabels and Reporting, who monitors pulp suppliers in collaboration with the sourcing team.

Tuomas: Our goal is to source all wood from certified forests, but in Russia the majority of forests have not been certified. That’s why we have to carry out a risk assessment and make sure the wood has not been harvested illegally or from a conservation area. The use of child labour is prohibited.

We have hundreds of suppliers in Russia. We started carrying out audits in the 1990s, so our wood suppliers are used to them. They know that everything must be in order. We regularly come across deficiencies and deviations, however, and sometimes we have to terminate our contract with the supplier.

Nina: Pulp sourcing is also an area where suppliers are being monitored carefully.

Tuomas: That’s right. We annually collect detailed information from suppliers related to their environmental and social responsibility and wood sourcing. If necessary, we carry out audits to verify the collected data.

Nina: As for fibre sourcing, raw material supply chain management has been revolutionized over the past 20 years. It would be great if the same level of performance was achieved for other raw materials as well. That’s our goal.

Nasser Kahil

26 | BIOFORE 2/2016 | 27

TEXT JAN HÖKERBERG PHOTOGRAPHY TUOMAS UUSHEIMO

After two years of preparation, engineering work, construction, installations and trial

runs, the time finally came for the ribbon-cutting ceremony at the official inauguration of the brand new Paper Machine 3 (PM3) at the Changshu mill in China.

PM3 is the biggest investment in the UPM Group over the past two years and is valued at EUR 277 million.

Some 450 dignitaries, customers and suppliers were invited to the on-site grand opening event on 12 April. The festivities also included a traditional eye-dotting ceremony, in which UPM’s Chairman Björn Wahlroos and Zhou Weiqiang, Deputy Communist Party Secretary and Executive Vice Mayor of Suzhou

“In Changshu, we’re building an excellent platform for exploring future opportunities. We at UPM believe that we can help to build a new sustainable and innovative future by continuing to integrate the bio and forest industries,” Pesonen concluded.

Other speakers included Zhou Weiqiang, the Changshu Party Secretary and Changshu Mayor Wang Yang, Finland’s Consul- General to Shanghai Jan Wahlberg, and the Executive Vice President for UPM Paper Asia Bernd Eikens.

City, dotted the eyes and forehead of a golden lion in a blessing that symbolises prosperity, wealth and good fortune.

“As China continues to shift from being the factory of the world to an advanced manufacturer, there’s a need for outstanding and responsible industrial practices and products. For UPM, our new era of excellence in Changshu means that we will focus on delivering value-added, advanced paper products for new segments in China and worldwide,” said UPM’s President and CEO Jussi Pesonen in his inauguration speech.

“At this site, we’re introducing totally new innovative manufacturing technology, not only for China but for the whole paper industry worldwide,” he added.

A new era of excellence

The EUR 277 million investment in PM3 at Changshu, China, means that UPM will focus on delivering value-added and advanced paper products across China and worldwide.

Innovation at the forefrontAt a well-attended press conference with some 50 Chinese journalists, Pesonen pointed out that the world is changing because of the scarcity of resources, climate change, the power shift in the global economy towards Asia and,

not least, the digitalisation of media.“All these new challenges provide

us with a lot of opportunities where we can use our knowledge and innovation to find new, more energy efficient, renewable and recycled materials and products as well as advanced high-quality biofuels based on wooden raw materials, which we are the first in the world to produce,” said Pesonen.

>>

“Innovation and technology in China is moving fast and we want to be a part of it,” says Jussi Pesonen,

President and CEO, UPM.

Valued at EUR

277 million, PM3

is the biggest

investment

made by the

UPM Group

over the past

two years.

28 | BIOFORE 2/2016 | 29

World's largest machine for release liners

“This doesn’t happen so often,” Wahlroos said. “In today’s world, it’s not so common to see investments of this size.”

The PM3 start-up comes at a time when China's economy is slowing down. How does that affect UPM's investment?“We produce paper for the whole Asia-Pacific region, and China has the biggest share. One main reason behind this investment is that, long term, we don’t intend to increase the production of the same grades previously produced in Changshu – that is fine paper for printed matters. The new paper machine is, in the longer term, mainly meant to produce release liners or glassine, and this is the world’s largest machine for that product group. Our competitors within that product group have much smaller machines which means we’re less sensitive to changes in economic growth rates.”

There has been a power shift towards Asia in the global economy. How will that affect UPM's future activities?“The power has perhaps not moved towards Asia; it has moved away from Europe and it’s affected us very much. We’ve been forced to shut down more than a dozen paper machines

He added that the core of UPM’s future business success in China is closely integrated with China’s 13th Five-Year Plan’s new concepts, which puts innovation at the forefront in a strategy aimed at a balanced, coordinated and sustainable growth pattern.

“Innovation and technology in China is moving fast and we want to be a part of it,” said Pesonen.

Pesonen said he was especially proud of the project’s safety record, with almost 4.5 million safe working hours and no lost-time accidents. “I’ve never heard of anyone being able to run a project of this size without any accidents, so this must be the best

safety performance in the world,” he said.

“This project differs from the PM1 project (carried out between 2003 and 2007) since for PM3 two-thirds of our investment was sourced within China,” said Bernd Eikens of UPM Paper Asia. “As a frontrunner in both bio-economy and sustainability, we’re now well prepared for long-term growth for our customers and partners here in Asia.”

UPM first invested in China in 1998

and has since invested more than US$ 2 billion in the region. Today, the site boasts a fully integrated production and converting capability that incorporates a paper mill, a labelstock factory, an Asia research and development (R&D) centre as well as a supply chain centre for the Asia-Pacific region. With the new investment, UPM is able to produce 1.4 million tonnes of labelling material and fine papers for customers across the Asia-Pacific region and beyond.

UPM's Chairman Björn Wahlroos and several directors of the board attended the grand opening ceremony in Changshu.

in Europe. This is a trend that unfortunately will continue. The European market is no longer growing and European demand for paper, especially newsprint, is falling. This means that we have to adjust to the global economy by decreasing our capacity in Europe, even though we’re quite profitable there today because we’ve maintained our best machines there, but we’ll expand in new areas, such as pulp production in Latin America and paper production in China.”

China has become the world’s largest paper producer, but China’s paper industry also suffers from overcapacity ...“China’s paper industry is somewhat special. There are plenty of machines of various sizes and different production costs. We can see that China has a large number of very small, often not very efficient, machines. As in other markets, old, ineffective machines are gradually replaced.

“Changshu is one of the world’s largest mills. We now have three big paper machines here: the two earlier ones, which each produce more than 400,000 tonnes, while the new PM3 means that we’ll be able to produce in total 1.4 million tonnes annually.”

Mr. Zhou Weiqiang, Deputy Party Secretary of Suzhou Municipal Communist Party Committee & Executive Vice Mayer of Suzhou Municipal Government

and Mr. Björn Wahlroos Chairman of the Board, UPM.

From left to right: Mr. Jussi Pesonen, Mr. Björn Wahlroos, Mr. Zhou Weiqiang, Deputy Party Secretary of Suzhou Municipal Communist Party Committee &

Executive Vice Mayer of Suzhou Municipal Government; Minister Bu Zhengfa, Chairman, China Light Industry Council; Wang Yang, Party Secretary, Changshu

Communist Party Committee & Mayor of Changshu Municipal Government.

Some 450 dignitaries,

customers and

suppliers were

invited to the on-site

grand opening event

on 12 April.

“Our competitors

have much

smaller machines,

which means we’re

less sensitive to

changes in economic

growth rates.”

Björn Wahlroos,

Chairman, UPM.

30 | BIOFORE 2/2016 | 31

UPM and the Shanghai-based Tongji University College of Design & Innovation launched a joint project in 2015 to create a modern concept

for the traditional Chinese tea house using UPM’s innovative wood-based biomaterials. The project saw its culmination with the unveiling of the Biofore Tea House at the Moi Helsinki event in Beijing, China on 13–15 May 2016.

Designed by students from Tongji University, the Biofore Tea House has a modular design supporting efficient manufacturing and mobility. Under the guidance of Professor Chen Yongqun and lecturer Mo Jiao and with the support of UPM’s experts, a team of six design students conducted an in-depth exploration of Chinese tea culture and UPM’s innovative bio-based products.

“This project is a good example of Biofore thinking in practice. It involves international collaboration with talented young students who used their design skills and UPM’s innovative biomaterials to produce something that is beautiful, meaningful and sustainable. The Biofore Tea House is the perfect symbol for Biofore in China. It pays tribute to China’s rich cultural heritage and looks to the future with confidence,” says Elisa Nilsson, Vice President, Brand and Communications, UPM.

All UPM materials used in the Biofore Tea House are sustainable and recyclable. Strong, stiff and durable WISA® Plywood is used for the frame and decorative skin. UPM Grada®, a durable and ecological thermoformable wood

material, showcases its endless design opportunities in the

main walls. The floor is made of high-

quality, modern UPM ProFi® Design Deck composite, which is both recycled and

recyclable. It pleases the eye with beautiful

colours inspired by Finnish nature. It is also

pleasant to touch and is a strong, virtually carefree material.

Biofore Tea House Ancient tradition meets modern biomaterials in the Biofore Tea House.

The Biofore Tea House

pays tribute to China’s

rich cultural heritage

and looks to the future

with confidence.

Six students with designer Shen Jingliang.

Elisa Nilsson

Chen Yongqun

Mo Jiao

32 | BIOFORE 2/2016 | 33

The new shape of packaging

Editor Philip Chadwick from Packaging

News affirms that the main function of packaging will remain unchanged: its primary role will always be to protect products. However, megatrends such as the quest for sustainability are reshaping the industry.

“In the packaging industry, this means developing and designing more ecological materials that will decrease environmental impacts at the end of the production chain. For example, in the UK the industry has responded very well to these challenges by developing recyclable and biodegradable packages.”

One of the innovations driving progress in the food industry is smart packaging, which helps to keep food fresh for a longer time, thereby decreasing waste going to landfills and improving the ecological performance of products.

“Because packaging is a relatively

small but visible part of the whole supply chain, there are a lot of diverse interests

coming from the part of consumers but also

legislators to decrease the use of packaging

materials,” notes Chadwick. Packaging has become a

competitive advantage for companies that demonstrate a commitment to sustainability. “I think the industry has done a good job of being sustainable. It has responded to the requirements of both national and EU legislation,” Chadwick adds.

Packaging pulls a vanishing actNoora Nylander, designer and expert on packaging technology, confirms that demand for sustainability is becoming a paramount concern in several areas of packaging. Nylander teaches packaging design and branding at the Lahti Institute of Design.

“Fibre-based packaging solutions like paper and board will certainly gain popularity as substitutes for

plastics in the future. A lot of R&D is also being done in Finland to create new packaging materials like biocomposites, biodegradable plastics and combinations of different fibres.”

The main challenge for researchers and manufacturers is to make new innovations more competitive than traditional technologies and materials. To enable smooth integration into the production chain, new bio-based materials should be as user-friendly as – or preferably even better than – current materials.

Tomorrow Machine is a Swedish-based design studio that leads the way in developing biodegradable bio-based packages. The company’s vision is to create packaging with a lifecycle of exactly the same length as its contents. Once the package is opened, it dissolves.

“They have a fresh attitude combining design, material innovation and chemistry. They might just be the most progressive company in the whole field. This could be an important new trend of the future,” predicts Nylander.

Population growth and resource scarcity are among the megatrends that are changing consumer habits – and the packaging industry along with them. Philip Chadwick and Noora Nylander peer into the crystal ball and look at the future of packaging in 2030.

TEXT VESA PUOSKARI PHOTOGRAPHY TOMORROW MACHINE, UPM; COURTESY OF THE INTERVIEWEES

Philip Chadwick

>>

Sustainable expanding bowl

Swedish research company Innventia teamed up with design agency Tomorrow Machine to

develop a sustainable package customised for freeze-dried food.

The self-expanding instant food package combines different aspects of sustainability.

It saves space in transportation by being compressed – at the same time as it is made

out of a 100% bio-based and biodegradable material, invented by Innventia.

34 | BIOFORE 2/2016 | 35

Shopping goes online

Personalised productionIT and digital printing technology have increased opportunities for personalising packaging products, which can now be printed in smaller editions. This trend helps to decrease mass production and boost small-scale fabrication.

Chadwick predicts that digital printing will not replace analogue printing but instead both technologies will complement each other.

“Analogue technology will be used in printed packages that are fabricated in bulk. However, digital printing is linked to the sustainability trend as it allows shorter runs with fewer consumed raw materials. That is a big plus for brands.”

Digital printing has brought the packaging industry into the heart of marketing campaigns as well. Major print manufacturers are boldly investing in this field.

“By using digital and 3D printing or laser cutting technology it is possible to produce small quantities cost efficiently. Instead of investing in huge production facilities these new technologies can provide a more flexible alternative. For example, there are several materials that can be used in 3D printing now,” adds Nylander.

Mining social mediaNylander says that people are becoming more willing to provide information about their

consumer habits via social media, which provides a

valuable source of behind-the-scenes data.

She claims that younger generations no longer trust brand messaging but they willingly share consumer information and their user experiences in the social media.

“When we design products we search for information about certain target groups by browsing Instagram photos where people share pictures of their homes or how they use products. From the designers’ perspective this kind of visual observation offers in-depth understanding of the target group.”

While most information is migrating to the internet, Nylander believes that packaging will survive as a print media, with intelligent packages and tags delivering digital information between consumers and producers.

“Brand owners and the packaging industry should try to leverage information from social media more efficiently. Now, most companies are simply content to deliver information through their web pages or social media channels.”

Retail and packaging are being radically reshaped by megatrends and the growing volume of

online commerce, says Mikko Rissanen, Business Development Director, Label,

Pack & Release.“Daily retailing and the market for

Fast-moving consumer goods (FMCG) products will likely move towards online commerce. Selling groceries

and brewery products online is not a big business yet, but it will certainly

grow in the future. The transformation is ongoing, but its impact on the packaging

industry won’t be visible until later.”Packaging design is currently focused on attracting

and persuading consumers to purchase products from store shelves.

“The increasing volume of online commerce will highlight the importance of brands because consumers are making their decisions based more on brand image and previous user experience rather than the visual appearance of the packaging. However, brand recognition will remain an important attribute and products need to look the same at the point of delivery as in the physical stores.”

Rissanen adds that ageing populations in industrialised countries is another key trend that is influencing the packaging industry. “The percentage of single-person households is constantly growing. Packaging sizes are therefore decreasing while demand for pharmacy and hygiene products is growing.”

UPM’s packaging portfolio includes packaging papers as well as label and release materials. “We currently operate in the flexible packaging segment. Our paper products offer good synergies together with our labelling materials business,” Rissanen notes.

The steadily growing number of urbanised middle-class consumers means that shoppers are switching from markets to supermarkets. More products have to be packed and personalised and their whole logistics chain has to be fully traceable.

“Our materials that go into self-adhesive products are used for applications such as package and product identification. This is our home turf, so growth in this field is great for our future prospects.”

Rissanen confirms that UPM has worked hard to increase the sustainability of its labelling material products. “We have improved our paper release liner recycling and developed thinner labelling products that will decrease the amount of waste.”

In production, UPM uses renewable and certified raw materials. “The efficient use of energy and water also offers sustainability and cost advantages. In logistics we are looking for the most sustainable solution for our transportation.”

Packaging design is

currently focused on

attracting and persuading

consumers to purchase

products from store

shelves.

Noora Nylander

Microgarden – the new way of growing greens at home

Swedish design studio Tomorrow Machine partnered up with the Berlin-based indoor farming start up INFARM to develop a never-before-seen indoor growing kit – so anyone can grow their own microgreens at home. The Microgarden kit contains a reusable and renewable sheet of plastic which folds into a self-contained greenhouse.

Mikko Rissanen

36 | BIOFORE 2/2016 | 37

THREE DECADES OF HENGAN

Biofore chats with Xu Lianjie, founder and CEO of Hengan, China's top tissue company, on the occasion of company's 30th anniversary.

Building better quality of life for women Most Chinese women had never heard of sanitary pads in the late 1980s – Chinese society was conservative and information was scarce. Xu named Hengan’s first sanitary pad product ‘Anle’, meaning ‘comfort’. Uniting the Chinese characters for ‘happy’ and ‘at ease’, the word communicates the product’s aim to improve quality of life for Chinese women.

Anle sanitary pads were first launched on the Shanghai market in 1986, rapidly becoming a nationwide best-seller. Renowned for their high quality, Anle went on to dominate the Chinese sanitary pad market, achieving a market share of 40%. Since then, Hengan has become a household name.

Anhai in China’s Fujian province has always been a prosperous area for traders. Today, it is home to China’s

largest manufacturer of sanitary pads, nappies and tissue paper, Hengan International Group Company Limited, which is listed on the Hong Kong Stock Exchange.

Xu Lianjie originally ran a clothing factory in the early 1980s. That all changed when he happened to see a production line manufacturing sanitary pads. Noting the gap in the market for this emerging product – and with the OEM clothing market becoming increasingly overcrowded – Xu decided to switch industries.

Xu founded Hengan in 1985 and is currently CEO of Hengan International Group. He reveals that ‘Heng’ means permanence and eternity, while ‘An’ refers to his hometown, Anhai.

TEXT VANESSA YANG PHOTOGRAPHY TUOMAS UUSHEIMO Reflecting on the past three decades, Xu says: “Hengan could not have got where it is today without its integrity,

innovation, corporate culture and commitment to responsi-bility. And achieving corpo-

rate social responsibility would not have been possible without the help and support

of our partners.”

>>

38 | BIOFORE 2/2016 | 39

UPM AND UTECUruguay's first regional university builds on cooperation between industry and academia.

TEXT CARINA CHELA PHOTOGRAPHY UTEC

The last time Rodolfo Silveira, one of the Managing Directors of the Technological University of Uruguay (UTEC), visited Finland was when he was living in Sweden

and working on his PhD. Forty years later, he is now in Finland again thanks to a cooperation agreement signed between UTEC and UPM for the construction of Uruguay’s Southwest Regional Technological Institute (ITR).

Following the agreement signed in February 2015, ITR opened its doors to students this spring in Fray Bentos. The cooperation is a model between industry and academia, a synergy that maximises mutual benefit from each other’s capabilities. “We believe that the relationship between the university and the private sector is of great importance. UPM’s contribution has enabled us to build our first regional

production capacity is around one million tonnes. The company’s three major brands are Hearttex, Premium (Youxuan) and Pino, which come in many different pack sizes. Hearttex has been the number one tissue brand in the Chinese market for years.

Working together for sustainable developmentReflecting on the past three decades, Xu says: “Hengan could not have got to where it is today without its integrity, innovation, corporate culture and commitment to responsibility. Furthermore, achieving corporate social responsibility would not have been possible without the help and support of our partners.”

UPM has partnered with Hengan as a pulp supplier since 2009. “UPM is Hengan’s best choice. The help they have provided in raising customer awareness of sustainable development is even more valuable than their products and technical service,” says Xu.

Hengan attaches great importance to sustainable development. Last year, UPM and Hengan started an ongoing active dialogue on corporate responsibility. Environmental and safety issues have been top of the agenda at their joint meetings.

In 2014, domestic tissue production capacity increased by 4.4% to 8.3 million tonnes in China. According to Xu, the Chinese tissue paper industry is now overcrowded and price competition is fierce. Companies that do not comply with environmental requirements or that offer low-quality products will be driven out of the market sooner or later. But regardless of how the market changes, Hengan will continue to advance step by step, pursuing its vision of “building China’s top tissue company.”

Tissues put Hengan on fast track to growthXu’s next breakthrough product, a tissue brand called ‘Hearttex’, provided the company with a springboard for rapid growth.

In 1998, Xu was troubled by sinusitis. Struggling to find handkerchiefs that didn’t shed fibres, he was forced to make frequent trips to Hong Kong. He became keenly aware of a gap in the market for high-quality tissues. With China in the twentieth year of its reform and open-door policy, Xu saw an opportunity to tap into the country’s rising standard of living and changing consumer awareness.

Xu revolutionized the tissue industry by introducing a new, high-quality paper tissue brand. Refusing to stoop to imitation or price wars, he instead built a brand image based on independent innovation. Hearttex quickly conquered the South China market and the entire industry not long after its launch.

Currently, Hengan’s annual tissue

Most Chinese women had never heard of sanitary pads in the late 1980s – Chinese society was conservative and information was scarce.

The university is still under construc-tion but is scheduled to be completed

by August 2016. In future, ITR will have capacity for 2 000 students.

>>

According to Xu, the Chinese tissue paper industry is now overcrowded and price competition is fierce. Companies that do not comply with environmental requirements or offer low-quality products will be driven out of the market sooner or later.

40 | BIOFORE 2/2016 | 41

The degrees that UTEC offers in all of its three regional universities are: Technician in Management of Milk Processing Systems, Licentiate Degree in Milk and Dairy Products, Licentiate in Analysis of Food Products, Technician in Renewable Energy, Technician in Mechatronics and Technical Degree in Information Technology. As of March 2017, Art and Creative Music as well as Biomedical Engineering will be added to the degree syllabus.

Changing people's mindsetsThe purpose of Silveira’s trip to Finland was to explore opportunities to cooperate and to develop programmes together with Finnish universities. Silveira has had meetings

future,” he says. Kääriäinen adds that this

investment in education “will create further development opportunities for generations to come, enhancing the overall competitiveness of the forestry industry in Uruguay in the future.” In 2015, UPM celebrated its 25th year in Uruguay, so the announcement on the new university was the icing on the anniversary cake.

Both teaching and R&DThe ITR students will be able to participate in internships and hands-on training in the agro-industrial sector. Both parties will encourage UPM technicians and professionals to participate in Fray Bentos ITR courses. “Research projects and product development in cooperation with the productive sector is one of the pillars of this university,” says Silveira proudly. “The expectation we have is that we’ll be engaged in both teaching and in research and development. Everything that Biofore represents is a good example of this. The added value and knowledge comes from research and development.”

Registration at ITR started at the end of January 2016. In April, 60 mechatronics students inaugurated the first part of the ITR venue. The university is still under construction but is scheduled to be completed by August 2016. In future, ITR will have capacity for 2 000 students.

technological university. For us that is something very significant,” explains Silveira.

Uruguay’s south-western coastal region is home to a community of approximately 4 000 students who are now able to undertake their university studies without leaving their home towns. “It’s important to offer an opportunity to study in the interior

of the country so that students don’t have to commute to the capital. Uruguay’s education system is heavily concentrated in the capital. Montevideo offers three times more educational opportunities than the other areas. In other words, this is part of a very ambitious project. But we know that one of UPM’s criteria is social responsibility, so it’s a win-win

situation,” says Silveira. According to Juha Kääriäinen,

Vice President of UPM’s Uruguay operations, the investment is a gesture of UPM’s commitment to Uruguay. “It shows how our company strengthens the communities in which it operates by supporting education and the development of the local forestry sector. It is also important that we can hire highly qualified local talent in the

with parliamentary representatives and with officials from the Universities of Applied Sciences TAMK in the city of Tampere, HAMK in Hämeenlinna, and JAMK in Jyväskylä. A three-year plan of activities was agreed with these universities. As a result of this collaboration, Innovation Week will take place in Uruguay in August 2016 with the participation of Finnish lecturers. “We need more innovators and entrepreneurs to facilitate mobility between different degree offerings,” explains Silveira. The first Finnish tutors will start working at ITR in April.

In turn, Silveira talks about “changing people’s mindsets” in order to generate more development opportunities for new generations.

“If we are able to demonstrate that this model of cooperation works, people will respond in a positive way. The natural course of evolution is to move forward. I believe that this cooperation policy will contribute to improving the quality of life in the region, not only in Fray Bentos,” he concludes.

The unique location of ITR is worth a special mention; it is inside the premises of the former Anglo meat packing plant known to the locals as el Anglo. This cultural-industrial landmark is today a UNESCO World Heritage Site. The Anglo Meat packing plant became world-renowned for many of its products that were also exported to Europe for soldiers during the First and Second World Wars.

Rodolfo Silveira

Registration at ITR started at the end of January 2016. In April, 60 mechatronics students

inaugurated the first part of the ITR venue.

“We believe that the relationship between the university and the private sector is of great importance. UPM's contribution has enabled us to build our first regional technological university. For us that is something very significant,” explains Silveira.

The cooperation is a model between

industry and academia, a synergy

that maximises mutual benefit from

each other’s capabilities.

42 | BIOFORE 2/2016 | 43

Smart devicesSince the emergence of Apple’s intelligent assistant – Siri –, more and more smartphone users are speaking to their mobile phones. In the future, books could also soon start talking to us and cardboard packaging can be upgraded with artificial intelligence and cloud-based storage systems.

THE FIVE MEGATRENDS OF

TEXT ANITA WÄLZ PHOTOGRAPHY TRENDONE

As the founder of Europe’s leading consultancy analysing micro trends and key technologies, Nils Müller is convinced that paper is not on the path to extinction. In his study The Five Megatrends in Print, Müller lists various examples of how manufacturers are innovating to

attract consumer and customer attention. Talking books, intelligent packaging and cross-linked business cards are just a few exciting examples of how the market for print and paper has changed within the last few years, offering new possibilities for cross-media campaigns. Furthermore, the use of paper is highly resource efficient; companies like UPM ensure that their paper products are sustainable throughout their whole lifecycle.

Müller predicts huge potential for paper producers like UPM and recommends being open to new trends in the search for new business opportunities. “Paper producers, print houses, agencies and advertisers need to communicate a lot more. Many companies often don’t know about what customers want or what innovations already exist,” he explains. “New functionalities and finishing touches guarantee a unique experience and create a strong market position.”

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Attention economy Human beings have a limited ability to absorb and process information. New stimuli help to route a message deep into the consumer’s consciousness. This is one of the reasons why manufacturers support digital offerings in tandem with print advertisements and catalogues. One interesting example is the “talking photography book” developed by the Munich-based advertising agency Serviceplan. This features mini loudspeakers which are almost invisible on the page. When the pages are turned, a story is told acoustically as well as visually. The look and feel of paper remains, but the surprising wow factor makes the product interesting and attracts attention. Light effects, videos and augmented reality are further enhancements that can be combined with paper.

Convergence Print and digital are increasingly merging and the prevalence of “seamless media” – the availability of the same information via different types of media such as smartphones, tablets, game consoles and TV – will continue to rise in the future. The Swedish technology company Ericsson is for instance working on an intelligent paper which can be used for food packaging. After touching the paper, information such as the ingredients and nutritional content of the product is sent to the smartphone via the cloud. The concept is similar to NFC (Near Field Communication) business cards. Driven by an integrated micro chip, personal information such as a telephone number or address can be saved on the card and transferred easily to any smartphone.

VirtualisationThanks to virtual reality glasses, users can immerse themselves in a new world in which they can discover new cities, games or even fly. Currently the technology is still very expensive for private use, however. “Cardboard glasses” made from paper make virtual reality available to all. Companies like Volvo already use this kind of technology to allow customers to experience virtual test drives. The cardboard glasses simply have to be folded into shape. The smartphone is then placed into a special panel and the video – which has previously been saved on the phone –starts playing. Watching the video through the glasses creates the impression of being part of the film. A further outcome of the virtualisation trend is 3D printing with paper, which is similar to a standard inkjet printer, but the results are astonishing thanks to the paper’s unique ability to capture millions of colours.

OuternetNot only is the virtual world becoming increasingly connected, but the same also applies to the real world. The internet will be part of our surroundings and everyday objects will become carriers of virtual content. For example, e-readers can determine the reader’s location via GPS and edit text accordingly — an interesting feature for travel guides, for example. Even today there are e-reader novels in which the text adapts itself to the location and adjusts the story accordingly.

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intelligently

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Print has a future, proclaims Nils Müller, CEO and founder of TRENDONE. His motto, “Print+”, refers to the ways print and paper can create memorable experiences that complement digital products in innovative ways.

Nils Müller

2/2016 | 45 44 | BIOFORE

Responsible FibreNew Future is the first product range to carry the new Responsible Fibre trademark adopted by UPM. According to Environmental Director Päivi Rissanen from the Paper ENA business, the new trademark innovatively combines UPM’s environmental responsibility and social responsibility into one cohesive philosophy, which is followed throughout the product lifecycle.

“Responsible Fibre is truly unique. We wanted to introduce a trademark that shows that we are committed to ensuring that all our products carrying the trademark comply with the industry’s most demanding responsibility criteria.”

But can we trust a responsibility trademark developed by the company itself?

“Responsible Fibre was created almost entirely on the basis of our existing

certifications and standards, which are verified by third parties. Even the responsibility data from our internal systems, such as UPM’s carbon footprint calculations, has also been verified by

external parties,” Rissanen emphasises.To be eligible for the trademark, the

wood raw material for the product must be sourced from an FSC®- or PEFC™-certified forest

where measures to guarantee biodiversity have been implemented. The paper must also meet the requirements of

the EU Ecolabel, and the production process must comply with all the applicable occupational and product safety requirements. UPM is additionally committed to operating in a responsible and ethical manner in all communities and societies in which it operates.

The New Future product range was deemed eligible for the trademark only after it successfully met almost twenty different responsibility criteria. And New Future is no exception in UPM’s responsibly produced paper range, notes Rissanen:

“All our products are produced following the same principles and criteria, but not every paper brand needs the trademark. Even so, we produce all our papers with an equal commitment to responsibility.”

Reason and emotionThe advent of the ‘paperless office’ has been predicted for decades. The term was first coined in a 1975 BusinessWeek article forecasting that digital devices and tools such as the internet and e-mail would render paper obsolete. Forty years later, quite the opposite has happened.

UPM has refreshed the look of one of its main

office paper brands. The facelifted and renamed

‘New Future‘ range adds a fresh chapter to

the UPM Biofore story.

The future is in your hands

The Biofore philosophy systematically built up by UPM combines the innovative and sustainable use of wood fibres with alternative solutions to non-renewable materials.

What does this mean in practice? The refreshed New Future product family, comprising three fine paper grades, provides a tangible example of Biofore thinking.

“We wanted to give our office paper brand a visually attractive and narratively cohesive brand facelift. The technical properties of the paper were also adjusted to better meet today’s printing needs,” says Petteri Kalela, Senior Vice President responsible for the Merchants, Home & Office business.

The New Future brand is designed around the use of renewable materials.

“The fibres needed to produce our fine papers come from sustainably managed forests. After use, the same fibres can be recycled and reused,” Kalela says.

TEXT NIKO KILKKI PHOTOGRAPHY UPM

Päivi Rissanen

>>

Petteri Kalela

New Future papers are made of Responsible Fibre™ sourced from sustainably managed forests which maintain ecosystem integrity.

Our New Future range

New Future Premium is an extra white paper for a high-quality finish. New Future Multi is an all-round paper for multifunctional applications. New Future Laser is the ideal choice for high volume black & white copy and print.

A New Future in your hands.

www.responsiblefibre.upm.comwww.upmpaper.com

in your hands

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46 | BIOFORE

Today, the average office worker uses up to 45 sheets of paper per working day, adding up to more than 10,000 printed A4 sheets per year (Waste and Resource Action Programme, UK, 2014). At such huge volumes, the paper you choose makes a difference. The old ‘Think before you print!’ slogan is starting to acquire a new meaning.

“New Future appeals to both the rational and the emotional side of users. There are facts readily available verifying that New Future products are responsibly produced, which means that customers can use them every day with a clear conscience,” says Kalela.

Not only does New Future offer peace of mind to users with high-volume printing needs, but consumers can also be confident that every sheet has a minimal impact: office papers are among the few UPM consumer products that require no further processing.

“We can all make a positive impact on the environment through our choice of paper,” notes Kalela.

The lifecycle of the fibres often continues after the sheet is printed. UPM is one of the world’s top users of recycled paper: approximately 80% of the fibres used in its newsprint are recycled.

“In a way, we come full circle once a fibre continues its life in another product,” Kalela muses.

Will the market get the message?The main potential hurdle is whether the market and consumers will understand the message of responsibility that lies behind the New Future brand and the Responsible Fibre trademark.

Rissanen says that particularly among consumers, this requires a certain degree of awareness and familiarity with the sustainable use of natural resources.

“We aim to make the Responsible Fibre story as approachable as possible. And thanks to the attractive appearance of the New Future product packages, you no longer want to hide them in printing room cupboards. We feel that we have succeeded in making our message visible.”

Social responsibility, in particular, is becoming an increasingly topical and debated issue. Customers have their own risk management schemes and want to ensure that the paper production chain is ethical throughout. They also expect guarantees that UPM ensures the safety of its employees.

“We are committed to openly discussing these issues with our customers and other stakeholders, and we have already received great feedback on our openness around these issues,” says Rissanen.

“I hope that our customers will feel that they play a role in this story, but also that they can gain commercial advantage by using these products. We will follow how well Responsible Fibre is received on the market with great interest, and based on the response we will consider using the trademark on other UPM products as well,” concludes Kalela.

”Responsible Fibre is

unique. It offers unlimited

number of opportunities

to tell our Biofore story

to a wide audience,”

says Elisa Nilsson,

Vice President, Brand and

Communications, UPM.

A UPM trademark

Created on the basis of official certifications and standards

The criteria cover the following four focus areas: climate, water,

biodiversity and social responsibility

Guarantees that the wood fibres used in UPM products come from

sustainably managed forests

Further information is available at www.responsiblefibre.upm.com

RESPONSIBLE FIBRE

NEW FUTUREThe product family includes three different grades of office papers: New Future Premium, New Future

Multi and New Future Laser.

Ideal for high-quality printing at the office or at home.

First paper product to carry the Responsible Fibre trademark.