ENVIRONMENTAL performance in 2013

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ENVIRONMENTAL performance in 2 UPM Changshu

Through the renewing of the bio and forest industries, UPM is building a sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Paper Asia, UPM Paper Europe and North America and UPM Plywood. Our products are made of renewable raw materials and are recyclable. We serve our customers worldwide. The group employs around 21, people and its annual sales are approximately billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM The Biofore Company- www.upm.com UPM Changshu UPM Changshu paper mill, a subsidiary of UPM-Kymmene Corporation, is situated at Changshu Economic & Technological Development Zone against south bank of Yangtze River, approximately 9 km west of Shanghai. UPM Corporate ENVIRONMENTAL statement 2 UPM pulp and paper mills The mill has two paper machine (PM) lines. PM1 produces purely wood-free uncoated paper while PM2 makes both wood-free coated and wood-free uncoated paper. The mill is also equipped with auxiliary facilities including a power plant, a waste water treatment plant, a process water plant and an inhouse jetty. The mill started its first production in early 1999. A new paper machine PM3 is under construction and is scheduled for operation by the end of 215. Environmental protection is one priority in the daily activities at UPM Changshu paper mill and great efforts have been made to minimize the impact on the environment in its business operations. It is also the mill s long-term commitment to achieve and maintain the world-class environmental performance. UPM Changshu paper mill Environmental Performance 2 is a supplement to the Corporate Environmental Statement of UPM s pulp and paper mills (available at www.upm.com) and provides mill-specific environmental performance data and trends for the year 2. The annually updated mill supplements and the UPM Corporate Environmental Statement together form the joint EMAS Statement of UPM Corporation. The next Corporate Environmental Statement and also this supplement will be published in 215. This report summarizes the mill s environmental achievements of year 2 as well as the focus areas for the year 214. The scope of this report covers UPM Changshu paper mill as well as the activities of UPM Asia Research Centre, but excludes UPM Raflatac Changshu label plant. Production capacity 8, tonnes of wood-free uncoated and coated paper Personnel 614 employees (excluding global function) Products Graphic Paper Products: UPM Finesse Classic Matt UPM Finesse Classic Gloss UPM Fine Office Paper Products: UPM Jetset UPM Copykid UPM Yes Future UPM Office SOHO Certificates EU Ecological Management & Audit Scheme (EMAS) certificate Environmental Management System ISO141 Quality Management System ISO91 Occupational Health and Safety Management System OHSAS181 FSC Chain of Custody, SGS-COC-2249 PEFC Chain of Custody, SGS-PEFC/COC-941 The certificates can be found at www.upm.com > Responsibilities > Principles and Performance > Certificate finder For FSC products, visit www.fsc.org For PEFC products, visit www.pefc.org Environmental labels China Green Labelling for copy paper Cert. No.: 58P141R1M 2 UPM Changshu Paper Mill, ENVIRONMENTAL PERFORMANCE IN 2

Environmental year 2 Achievements and Challenges Clean Run Campaign initiated by UPM Group continued at UPM Changshu paper mill in 2 and there were a number of improvements in the mill environmental management despite the challenges in the past year. Firstly, the mill environmental risks were reassessed according to UPM new standard. New preventative actions were generated and implemented as a result of the assessment in order to keep under control all operational risks in a safer way. An investment decision to upgrade the existing boiler flue-gas treatment system was made by UPM Board of Directors in March 2. The sixteen- million-usd investment covers the modifications of the de-sulfurization, de-nitrification and the particulates removal system. This optimization project is in full swing and scheduled for completion in later half of 214, which enables the mill to cope with the new challenge of air protection in China. authority in 2. Most of the mill environmental parameters were within the optimum ranges indicated in the Best Available Techniques (EU BAT BREF 21) except for the electricity consumption, where further improvement is still expected. There was not environmental complaint received from any of the external parties or individuals in 2. Environmental Monitoring The following environmental monitoring activities are carried out in the mill area Bi-monthly test of Yangtze River water nearby the mill by Changshu Water Bureau Measurement of mill waste water flow, ph, COD and NH 4-N: continuously by on-line meters ph, COD, TSS, BOD 5, P, N, NH 4-N: daily by mill laboratory all effluent parameters: annually or biannually by third party upon request quarterly sampling by authority without pre-informing Air (mill boiler stack) CO, particulates, SO 2 and NOx: continuous measurement Sampling of SO 2, NOx and particulates: quarterly by authority Continuous measurement of air quality in Changshu city centre by authority Annual test of mill border noise by third party Monthly site inspection by local environment authority All key indicators of mill waste water were at excellent levels except the total nitrogen (TN) concentration which slightly exceeded the permit limit on a few occasions. This TN deviation is still the main challenge to be settled for the mill waste water emission. However, the situation was remarkably improved after intensive efforts had been made in May 2 at the waste water treatment plant. The mill passed the 2nd round of Cleaner Production Audit performed by the local Mr. Pentti Putkinen Mill general manager Mr. Jin Lisheng Mill environment manager UPM Changshu Paper Mill, ENVIRONMENTAL PERFORMANCE IN 2 3

Air Water UPM Changshu power plant is a combined heat and power (CHP) plant. It is equipped with two main coal boilers rated at 241t/h each and four small gas (or light oil) boilers rated at 56(41) t/h each. Power plant produces all steam and most of electricity for paper production. In case there is a shortage of electricity, it will be purchased from national grid. The small boilers are used seldom for producing steam only during main boilers overhauls. Quantity Permits 2 Sulphur dioxide, SO 2 Dust Nitrogen oxides, NOx 3,328 t/a 554 t/a not defined Concentration Limit, GB223-23 (hourly average) Sulphur dioxide, SO 2 4*/1,2 mg/nm 3 Dust mg/nm 3 Nitrogen oxides, NOx 65 mg/nm 3 Boiler flue-gas is currently treated by dry desulfurization system and electrostatic precipitators (ESP). The limits of both the quantity and the concentration of the air pollutants of an industrial enterprise is mandatorily specified by the local or national authorities (quantity: by local permit; concentration: by Emission Standard of Air Pollutants for Thermal Power Plants, national standard code GB223-23). Water used for paper production process is taken from and sent back after treatment to the Yangtze River. Mill waste water treatment plant (WWTP) was running smoothly and key parameters in the purified waste water were stably at optimum level. The only exceptional issue with the waste water was total nitrogen (TN) concentration. This parameter was sometimes above the permit limit slightly for a few days in several months last year. To lower the TN concentration, a number of optimization actions were implemented at WWTP and paper production side as well. These actions led to a 26% TN concentration reduction in average since May 2 and the number of off-limit days were greatly reduced in the second half of the year. Improvement actions for TN deviation will continue. TN deviations and the remedial *local government limit FOSSIL CARBON DIOXIDE, CO 2 1, t/a SULPHUR DIOXIDE, SO 2 t/a BIOLOGICAL OXYGEN DEMAND, BOD 5 t/d 5 1. 8 4.8 6 3.6 4 2.4 2.2 6 7 8 9 6 7 8 9 6 7 8 9 NITROGEN OXIDES, NOx PARTICULATES TOTAL NITROGEN, TN t NO2/a t/a kg/d 2 5 16 8 4 6 3 8 4 2 4 2 6 7 8 9 6 7 8 9 6 7 8 9 Remark1: Above measurements are done according to Chinese standards which are derived from ISO standards, but they might not be fully comparable. Remark2: NOx are monitored by measuring NO and calculated into NO2 Permit limit 4 UPM Changshu Paper Mill, ENVIRONMENTAL PERFORMANCE IN 2

Waste actions were reported to local authority on a quarterly basis. The limits of both the quantity and the concentration of the water pollutants of an industrial enterprise is mandatorily set by the local or national authorities (quantity: by local permit; concentration: by Quantity Permit 2 Chemical oxygen demand, CODcr Total suspended solid, TSS Ammonia nitrogen, NH 4-N Total nitrogen, TN Total phosphorus, TP Concentration Limit (daily average in mg/l) table 3 in Discharge Standard of Water Pollutants for Pulp & Paper Industry, standard code GB3544-28. Table 3 is in China the strictest limit that is only applicable to Tai-lake basin, an area of 36,9 square kilo meters within Yangtze River delta). 834. t/a 166.7 t/a 83.3 t/a not defined 8.3 t/a Item Limit 2 in average CODcr 5 32.2 TSS 2.5 NH 4-N 5.2 TN 7. TP.5.1 Mill solid wastes are mainly boiler ashes, effluent sludge, waste packing and maintenance wastes. The total annual amount of the waste was 6,859t, 99% of which was recyclable or reused. For example, the ashes are reused as raw materials for cement industry and the effluent sludge is incinerated in mill boiler as biofuel after dewatering. Non-recyclable industrial waste and household waste were disposed by landfill. Landfill site is located km south-east of the mill. The site is owned and operated by Changshu city government. There was also a small amount of hazardous wastes which were treated by the qualified environmental companies in compliance with the relevant laws and regulations. The total mill waste amount in 2 was decreased by 6.2% compared with year 2 mainly because less boiler ash produced. CHEMICAL OXYGEN DEMAND, CODcr TOTAL SUSPENDED SOLIDS, TSS SOLID WASTE t/d t/d BD t/a 2.5 2.5 2 2. 2. 16 1.5 1.5 1. 1. 8.5.5 4 6 7 8 9 6 7 8 9 6 7 8 9 Ash for re-use Other recycling wastes Landfill Hazardous wastes 25 2 TOTAL PHOSPHORUS, TP kg/d 5 4 ABSORBABLE ORGANIC HALOGEN COMPOUNDS, AOX kg/d Remark3. The weights included in the figures are dry weights. Effluent sludge is incinerated in mill boilers as biofuel so it is excluded from waste statistics. 15 3 2 5 6 7 8 9 test results were very small 6 7 8 9 Remark1: Above measurements are done according to Chinese standards which are derived from ISO standards, but they might not be fully comparable. Remark2: Daily permit values are calculated from annual permit. Permit limit UPM Changshu Paper Mill, ENVIRONMENTAL PERFORMANCE IN 2 5

Environmental parameters 2 The figures related to production as well as raw material and energy consumption are published as aggregated figures on group level in the UPM Corporate Environmental Statement. Production capacity Woodfree uncoated paper Woodfree coated paper 45, t 35, t Raw materials and additives Pulp Fillers and coating pigments Chemicals for paper production Other See UPM Corporate Environmental Statement for more information Energy Fossil and biogenic fuels Purchased power Fossil 99%, biogenic 1% See UPM Corporate Environmental Statement for more information Emissions to air Particulates Sulphur dioxide, as SO 2 Nitrogen oxide, as NOx Carbon dioxide, as CO 2 (fossil) 47 t 84 t 62 t 923, t Water intake Process and cooling water including power plant use Municipal water 8,2, m³ 5, m³ Discharges to water Clean cooling water Process effluent volume BOD 5 CODcr Solids Phosphorus, P Nitrogen, N 237, m³ 4,75, m³.7 t 153. t.9 t.4 t 33.5 t Mr Gu Yueming Laboratory Supervisor, Energy and Utility Waste to landfill * Domestic, construction and production wastes 958 t Waste to recycle * Boiler ash Wood waste Waste paper and board Metal Other recycling waste 1, t 544 t 2,57 t 1,55 t 8 t Hazardous waste 1 t Size of mill area 184.5 ha * Dry weight 6 UPM Changshu Paper Mill, ENVIRONMENTAL PERFORMANCE IN 2

Performance against targets in 2 TARGET ACHIEVEMENT COMMENTS Environmental Deviations Category 5 = zero case Category 4 = zero case Category 3 1 cases Emissions to the water CODcr concentration 35mg/l CODcr discharging amount t/month Total nitrogen (TN) concentration deviation to be resolved Water saving target PM1 5.1 m3/t. paper PM2 6. m3/t. paper Yes Yes No Yes Yes No No No No serious deviation happened No significant deviation happened Total nitrogen (TN) concentration in waste water exceeding limit occasionally Actual was 32.2mg/l Actual was.7t/month More water used due to product mix changed Year 214 targets TARGET 1) Clean Run observations encourage employees to report Clean Run observations( 18 reports /year) 2) Water protection effluent total nitrogen concentration deviation solved COD discharge.45t/d TSS 33kg/d Ammonia nitrogen 5kg/d 3) Air protection Existing boiler flue-gas system upgrading project completed and started operation with new limits to be effective on July 1 st, 214 4) Water saving PM1 5.2 m 3 /t. paper PM2 6.5 m 3 /t. paper DEPARTMENT RESPONSIBLE Department managers Environmental manager Water Superintendent Water Superintendent Water Superintendent Power Plant manager PM1 manager PM2 manager 5) Electricity Saving 1.5% for paper production based on 2consumption PM1 and PM2 managers VERIFICATION DECISION As the accredited verifier, Inspecta Sertifiointi Oy (FI-V-1) auditor has checked the UPM Changshu paper mill environmental management system, the Environmental Performance in 2 report and the environmental statement for 2 for UPM paper and pulp mills. On the basis of this audit, it was stated on April 25th, 214 that Environmental Management System of UPM Changshu paper mill, this environmental performance in 2 report and the information regarding UPM Changshu paper mill in the Environmental Statement 2 of UPM s paper and pulp mills comply with the requirements of the EU s EMAS Regulation (EC) No. 21/29. UPM Changshu Paper Mill, ENVIRONMENTAL PERFORMANCE IN 2 7

www.upm.com/cn UPM (China) Co., Ltd. No. 2 Xingye Road, Changshu Economic and Technological Development Zone, Jiangsu Province,China 215536 Tel. +86 5 5265 1818 Fax +86 5 5265 23 For further information, please contact: Jin Lisheng Environment Manager Tel. +86 5 5229 5997 Jin.lisheng@upm.com Pu Yinghong General Manager Assistant Tel. +86 5 5229 592 pu.yinghong@upm.com Printed /214.