More carrots, less sticks

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In July, the European Commission set out its climate and energy policy. The proposals for emission reductions and zero-emission energy are most welcomed. UPM has been following this path for a long time, and our schedule is more ambitious than the Commission's. However, will the EU's policies generate green growth?

My first impression is that the climate impact of forests is seen as somehow disconnected from the production and consumption value chain, which offers great potential to replace fossil consumption with renewable raw materials, energy and products.

Sustainable forest management and fossil substitution in key role to enable EU’s green growth

Above all, slowing down climate change requires a shift away from the fossil economy. The potential of sustainable forestry in this transition does not seem to be understood. My concern is that attempts are being made to kick-start green growth through regulation, restrictions or taxes, rather than offering “carrots” to consumers and businesses.

For businesses, climate change is not only a risk but also an opportunity. Climate change is the most strategic issue. Every well-managed company proactively anticipates the change.

UPM published its most thorough climate policy to date in January 2020, when we also became the second Finnish company after Nokia to commit to the UN's 1.5 degree climate target.

The policy was preceded by a year and a half of preparation. During this period, all UPM businesses prepared scenarios on climate risks and opportunities and action plans up to 2030.

Thanks to this thorough work, we were ready to sign The Climate Pledge in February 2021. We are now one of just over 100 companies worldwide committed to meeting the Paris Climate Agreement targets well ahead of schedule.

UPM's climate strategy is clear. We will leave a significant climate impact by developing new products, reducing emissions and managing forests sustainably.

The new products are innovations made from renewable raw materials to replace fossil products. Concrete examples of climate-positive products include wood-based diesel and biochemicals. Plastics can also be made from renewable raw materials.

We are working with the Finnish Environment Institute SYKE in Finland and the Institute for Energy and Environmental Research IFEU in Germany to scientifically and comprehensively verify the positive climate impacts of our products.

We are committed to reducing emissions by 65% (from 2015 levels) by 2030, well ahead of the EU target. We will increase efficiency, recycling and the use of renewable energy. In addition to our production facilities, we will cut emissions from the transportation chain.

We will create more forest than we use. In a climate-positive forestry sector, growth is increased by combining economic, ecological and social aspects. Protecting and enhancing biodiversity is as important as carbon sequestration and creating economic value.

The annual carbon sink of UPM's owned and leased forests is more than 6 million tonnes of CO2, which corresponds to the carbon footprint of more than half a million Finns. In Uruguay, together with landowners, we have created a carbon storage of 40 million tonnes of CO2 in the planted forests, which is sufficient for our needs.

An analyst from a well-known international bank wrote in a July report that "UPM's operations are at the heart of the developing bioeconomy". That is how we see it and we hope that legislators will understand it too.

Above all, companies need an incentive to do so. The public sector can create the conditions for new markets where companies compete, take risks and innovate.

UPM calls for a strong signal to replace fossils with renewable materials when creating EU climate neutrality pathways

Legislators can and should steer the direction of the future, but too much detail is not an incentive. The best guidance comes from consumers and markets.

Enabling market-driven development is an important role for government actors. Consistency is essential. Industrial companies are investing for decades to come.

Long-term business development requires more carrots and less sticks. This also applies to climate issues. Real pioneering changes are made with carrots; with sticks you can herd sheep on the run.

Source: UPM