201 2 s us tainable gro w th re p ort
Building a sustainable future. Together.
TABLE OF CONTENTS Domtar at a glance ............................................................................................................................. 1 Message to stakeholders ................................................................................................................. 2 Our network ......................................................................................................................................... 3 Our approach to sustainability ..................................................................................................... 4 Key performance indicators ........................................................................................................... 5 Our stakeholder engagement ........................................................................................................ 6 Our fiber ................................................................................................................................ 10 Our environmental impact ................................................................................................ 15 Our products ........................................................................................................................ 23 Our people ............................................................................................................................. 27 Our communities ................................................................................................................. 32 Financial highlights and governance ....................................................................................... 38 Global Reporting Initiative content index .............................................................................. 40
domtar at a glance
Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets, and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers, and adult incontinence products. The foundation of its business is a network of world-class wood fiber converting assets that produce papergrade, fluff, and specialty pulps. The majority of its pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer of uncoated freesheet paper in North America with recognized brands such as Cougar ®, Lynx ® Opaque Ultra, Husky ® Opaque Offset, First Choice ®, and Domtar EarthChoice ®. Domtar is also a leading marketer and producer of a complete line of incontinence care products marketed primarily under the Attends ® brand name. Domtar owns and operates Ariva ®, a network of strategically located paper and printing supplies distribution facilities. In 2012, Domtar had sales of US$5.5 billion from some 50 countries. The Company employs approximately 9,200 people. To learn more, visit www.domtar.com.
3 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
message to stakeholders
Building a sustainable future. Together. Welcome to the Domtar 2012 Sustainable Growth Report. This year’s
Another marker of our sustainability commitment is our cross-
detailed look at the Company’s sustainability performance is not
business, key performance indicator (KPI) framework that was
simply a rear-view mirror exercise: it’s also about how we are imagin-
unveiled in our 2011 Sustainable Growth Report and is now being
ing the future and how we are working to build it through our core
introduced across our manufacturing facilities. This is a key first
values of Agility, Caring and Innovation.
step in our repositioning and reinvention as a global leader in wood
Given the nature of our business, trees have long been at the figurative
and literal roots of our business model. We have an obvious interest in
Measuring ourselves against the objectives we have set and reporting
seeing forests responsibly managed to ensure the viability of our key
on progress – part and parcel of our commitment to transparency – is
manufacturing input. So there is perhaps no better proof point for our
also an engine that will drive performance improvements over time. In
“business as usual” approach to sustainability than the decade-long
this regard, we have set a greenhouse gas reduction target, committed to supporting our network of mills across North America in developing
effort we have put into sustainable fiber procurement.
water and waste reduction targets by 2014, and challenged ourselves
Our flagship brand of socially and environmentally responsible papers
to engage our supply chain to identify carbon efficiency opportunities.
– EarthChoice – is now the largest of its kind in North America, and rep-
We look forward to updating our stakeholders on our progress against
resents close to one quarter of all the paper we sell. Our early support of Forest Stewardship Council (FSC ) certification established our
these stated commitments in future reports.
leadership position in the industry, and it’s one on which we continue
In the meantime, we continue to push ourselves when it comes to
to raise the bar. To this end, we have set an aspirational goal to
running our business more efficiently – by reducing material inputs,
lowering emissions, creating less waste, and ultimately harnessing
eventually procure 100% of our wood fiber from FSC certified forests.
greater value from the wood fiber upon which we have built our history and are forging our future. Through it all, we will maintain our relentless focus on a world-class health and safety performance, a key foundation of our sustainability commitment.
And our commitment to inspiring positive change extends beyond our mill walls and community boundaries. Building a better, more sustainable world is in fact at the heart of our corporate mission, with our teams of EarthChoice Ambassadors helping colleagues and customers make more informed environmental choices in their lives. The collective power we have as a 9,000+ team of sustainabilityminded individuals is truly inspiring. So stay tuned. These are exciting days for Domtar’s sustainability evolution. I’m proud of what we have achieved so far, and I know that the coming years have much more in store, as together, we build our future in fiber.
John D. Williams President and Chief Executive Officer
4 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Head Office Montreal, Quebec
Pulp and Paper Operations Center Fort Mill, South Carolina
Uncoated Freesheet Ashdown, Arkansas Espanola, Ontario Hawesville, Kentucky Johnsonburg, Pennsylvania Kingsport, Tennessee Marlboro, South Carolina Nekoosa, Wisconsin Port Huron, Michigan Rothschild, Wisconsin Windsor, Quebec
Pulp Dryden, Ontario Kamloops, British Columbia Plymouth, North Carolina
Converting and Distribution – Onsite Ashdown, Arkansas Rothschild, Wisconsin Windsor, Quebec
Converting and Distribution – Offsite Addison, Illinois Brownsville, Tennessee Dallas, Texas DuBois, Pennsylvania Griffin, Georgia Indianapolis, Indiana Owensboro, Kentucky Ridgefields, Tennessee Rock Hill, South Carolina Tatum, South Carolina Washington Court House, Ohio Zengcheng, China
Forms Manufacturing Dallas, Texas Indianapolis, Indiana Rock Hill, South Carolina
Enterprise Group – United States Addison, Illinois Albuquerque, New Mexico Altoona, Iowa Antioch, Tennessee Birmingham, Alabama Boise, Idaho Brook Park, Ohio Buffalo, New York Charlotte, North Carolina Chattanooga, Tennessee Cincinnati, Ohio Denver, Colorado Duluth, Georgia El Paso, Texas Garland, Texas Hayward, California Hoboken, New Jersey Houston, Texas Indianapolis, Indiana Jackson, Mississippi Jacksonville, Florida Kansas City, Kansas Kent, Washington Knoxville, Tennessee Lakeland, Florida Langhorne, Pennsylvania Lexington, Kentucky Louisville, Kentucky Mansfield, Massachusetts Medley, Florida Memphis, Tennessee Milwaukee, Wisconsin Minneapolis, Minnesota Omaha, Nebraska Overland, Missouri Phoenix, Arizona Piper, Indiana Pittsburgh, Pennsylvania Plain City, Ohio Richmond, Virginia Riverside, California Salt Lake City, Utah San Antonio, Texas Wayland, Michigan Wayne, Michigan
Enterprise Group – Canada
Ariva – Canada
Calgary, Alberta Dorval, Quebec Brampton, Ontario Delta, British Columbia
Halifax, Nova Scotia Montreal, Quebec Mount Pearl, Newfoundland Ottawa, Ontario Quebec City, Quebec Toronto, Ontario
Regional Replenishment Centers (RRC) – United States Addison, Illinois Charlotte, North Carolina Garland, Texas Jacksonville, Florida Kent, Washington Langhorne, Pennsylvania Mira Loma, California
Regional Replenishment Centers (RRC) – Canada Mississauga, Ontario Richmond, Quebec Winnipeg, Manitoba
Representative Office – International Guangzhou, China Hong Kong, China
Distribution Divisional Head Office Covington, Kentucky
Ariva – Eastern Region
Personal Care Divisional Head Office Raleigh, North Carolina
Attends North America – Manufacturing and Distribution
Head Office Montreal, QC
Operations Center – Pulp and Paper Fort Mill, SC
Pulp and Paper Mills Converting and/ or Forms Operations Distribution, Supply, and Service Facilities Representative Office
Greenville, North Carolina
Divisional Head Office – Distribution
Attends Europe – Manufacturing and Distribution
Attends Europe – Direct Sales Organizations Boxmeer, The Netherlands Espoo, Finland Keerbergen, Belgium Newcastle upon Tyne, United Kingdom Oslo, Norway Pasching, Austria Rheinfelden, Switzerland Schwalbach am Taunus, Germany
Albany, New York EAM Corporation – Boston, Massachusetts Manufacturing and Distribution Harrisburg, Pennsylvania Jesup, Georgia Hartford, Connecticut Lancaster, Pennsylvania New York, New York Philadelphia, Pennsylvania Southport, Connecticut Washington, DC/Baltimore, Maryland
Ariva – Midwest Region Cincinnati, Ohio Cleveland, Ohio Columbus, Ohio Covington, Kentucky Dayton, Ohio Fort Wayne, Indiana Indianapolis, Indiana
5 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Divisional Head Office – Personal Care Raleigh, NC Manufacturing and Distribution Greenville, NC Aneby, Sweden Attends Sales Offices – Europe
EAM Corporation Jesup, GA
Our Approach to Sustainability
A year ago, we undertook a careful evaluation of Domtar’s progress
As difficult as it is to define “sustainability,” the idea of measuring it is
in the pursuit of sustainability. We determined that this pursuit had
even more difficult. Yet this reality has not dissuaded many credible
made us a better company – to our customers, our employees, our
and well-intentioned organizations from trying. Some go so far as to
shareholders and our neighbors.
“rank” different companies, from different industries making different products in different parts of the world, on a single list using simple
We also recognized that our early adoption of sustainability prin-
formulas that mix and match data about resource consumption,
ciples, particularly with regard to forestry practices, is having a
tax liabilities, labor agreements, dividends paid, workforce demo-
transformative effect across our industry. Today, previously reluctant forest products companies are embracing the benefits of using
graphics... and the list goes on and on.
wood that is certified in accordance with the standards of the Forest
We are sanguine that Domtar has been identified as a sustainability
Stewardship Council and are realizing the benefits of constructively
leader in some of these rankings and are pleased that the subject is
engaging environmental organizations such as the Dogwood Alliance
becoming part of the cultural mainstream. However, we also question
and the World Wildlife Fund. We are pleased, because we think this
whether it is actually possible to draw meaningful sustainability
makes our entire industry stronger.
comparisons amongst so much dissimilarity. Indeed, the notion
We also concluded that we had only scratched the surface of what
of sustainability more logically suggests that companies across different sectors are inseparably linked to one another in a web of
may be possible by more comprehensively integrating sustainability principles into our daily operations. So we set out on a new stage in
Domtar’s sustainability journey, identifying five essential success
This is why we place more emphasis on, and have more confidence in, the perspectives of those who know us best – our customers, our
factors that frame the content of this report:
suppliers, and sustainability thought leaders who constructively engage us to continuously improve our performance. Some of their insights are included in this report. It is also why we have taken the
The sourcing of our fiber
rigorous approach of establishing 35 key performance indicators
The environmental footprint of our facilities
to more meaningfully track our progress across our principal man-
The satisfaction of our customers
ufacturing facilities. This effort takes us beyond merely complying
The quality of our workplaces
with regulations; it represents a precautionary approach to risk
The relationships with our communities
management that we believe preserves and grows shareholder value. So, one year into this plan, how are we faring? We are finding it thoroughly engaging, immensely challenging and encouragingly rewarding. The combination of establishing site-specific measures,
In so doing, we recognized that “sustainability,” as an organizing
empowering frontline managers, and partnering with customers,
principle, is such an expansive and systemic idea that it is not easily
suppliers and environmental leaders, is unlocking the power of new
contained within one common definition. Some may suggest this is a weakness; we think this may prove to be the concept’s inherent
and better ideas.
strength. The “define sustainability” discussions that we (and many
We are growing the supply of certified fiber; significantly improving
other organizations) have had remind us of the connectivity between
our water efficiency; diverting almost half of what used to be con-
the decisions we make and, if done honestly, the resulting trade-offs
sidered “waste” from landfills to beneficial uses; improving supply
they require. Such introspection, whether by individuals or corpor-
chain efficiency to lower both emissions and costs; unlocking pro-
ations, can only help us in our quest to optimize our performance
ductivity improvements and creating innovative new products;
amongst our multiple and sometimes divergent goals.
learning from our newly acquired operations in Europe; and, operating more safely than ever before. Please take a look and let us know what you think. Much opportunity remains, but we believe we are on a path that is allowing us to create a more sustainable future. Together.
6 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Our Products Pursuing innovative, fiber based solutions that allow us to be the supplier of choice to our customers
Ensuring the fiber we utilize comes from responsible sources 1. Procure 100% of our fiber from sources that are certified to the FSC
standard. As a midcourse objective, increase our utilization of FSC fiber above current levels by 25% by 2020.
24. Track and improve our customer satisfaction performance. 25. Implement programs and partnerships to help customers use our
2. Percent of FSC Controlled Wood
products more responsibly across the fiber cycle.
3. Percent of FSC fiber 4. Percent of SFI fiber
5. Percent of CSA fiber 6. Percent of ATFS fiber
Fostering a work environment that attracts, develops and empowers people, enabling them to work safely and creatively
7. Percent of certified fiber 8. Continue to offer our customers a variety of recycled content products.
Publicly report changing market conditions for recycled product offerings. Support the development and utilization of life cycle analysis to ensure the most eco-efficient use of recovered fiber.
26. Report total workforce by region. 27. Demonstrate commitment to not employ child labor as part of our workforce.
28. Track the estimated hours of training provided to employees annually.
Our Environmental Impact
29. Report injury rate by workforce.
Reducing the impacts of our facilities that make our products
30. Conduct exit interviews to identify emerging workforce issues.
9. Reduce Scope 1 & 2 GHG emissions of pulp and paper mills by 8% by 2020
32. Maintain continuity plans and executive leadership programs.
31. Form EarthChoice Ambassadors across our facilities by 2020.
from 2010 levels.
Develop competency and skill development programs for front line leaders. Continue technical manufacturing skills development programs.
10. Total GHGs 11. GHGs per tonne of product produced
33. Benchmark employee participation in the Wellness Program.
12. Energy used per tonne of product produced 13. Percent of renewable energy used per tonne of product produced
14. Develop an initiative to estimate GHG emissions of key suppliers by
2013. Collaborate with key suppliers to identify and pursue mutually beneficial carbon efficiency improvements in our supply chain and report on results.
Enhancing the livelihoods of the communities in which we operate
15. Identify, by the end of 2013, additional, sustainable opportunities to
reduce, reuse and recycle byproducts and waste streams from our manufacturing facilities. Establish site-specific performance goals for achievement by 2016. Report, at the enterprise level, the percent of material beneficially re-used and percent landfilled.
34. Continue the Community Investment Committee, track and report our contributions.
35. Measure and report on decentralized community engagement efforts, and institute programs to increase them by the end of 2013.
16. Ensure that the utilization of water resources at Domtar facilities
maintains the integrity of unique, site-specific natural water flows and levels. Identify, by the end of 2013, significant, sustainable opportunities to lower operating costs by reducing the need to pump and treat water.
17. Monitor, report and improve Total Suspended Solids (TSS) in water discharge.
18. Monitor, report and improve Adsorbable Organic Halogens (AOX) in water discharge.
19. Monitor, report and improve Biological Oxygen Demand (BOD) in water discharge.
20. Monitor, report and improve Sulfur Dioxides (SO₂) emissions. 21. Monitor, report and improve Nitrogen Oxides (NOX) emissions. 22. Monitor, report and improve Total Reduced Sulfur (TRS) emissions. 23. Develop, by 2013, a process for assessing the sustainability
commitments and performance improvements of Domtar’s key suppliers.
7 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
OUR STAKEHOLDER ENGAGEMENT
Domtar routinely consults with a variety of organizations and individuals who provide us with diverse perspectives on emerging trends and opportunities in the area of corporate sustainability, and offer constructive advice on the approaches we take and the progress we make in advancing our sustainability agenda. Some of the advice we receive is solicited, some is not, but it is all welcome. Some of the consultations we have are private and some are public, and we believe both can be useful.
Roger Ballentine President Green Strategies Inc. Former Chair President Clinton’s Climate Task Force
We value the collaborative nature of most discussions that occur on the subject of sustainability and the willingness of participants in these dialogues to learn from each other.
Sometimes it seems that there are as many definitions of “sustainability” as there are people to ask. But when it comes to industry-leading companies implementing cutting edge sustainability best practices, one almost always sees a common set of approaches and measures. In reviewing Domtar’s Sustainable Growth Report, I was thrilled to see that the Company is squarely in that leadership and best practice category.
While we are always attentive to the sustainability goals of our customers, we also make a point of routinely seeking perspectives on sustainability from the communities where we have our principal operations, from environmental organizations that constructively challenge us and also help us celebrate our successes, and from our employees, who are often in the best position to identify practical ideas that work. In 2012, we also made a special effort to expand our engagement of key suppliers, in cooperation with the Carbon Disclosure Project (CDP), to seek mutually beneficial opportunities for efficiency improvements in our supply chain.
Domtar understands that sustainability is first and foremost about being a better company – not just from the perspective of stakeholders, but also from the perspective of employees and shareholders. By integrating sustainability into its core business, Domtar is overtly using sustainability best practices to gain competitive advantage, to innovate, to increase value for shareholders, and to increase value for stakeholders. Driving innovation, efficiency, good will, reputation, and top-line and bottom-line improvement creates greater value for the enterprise and for all of those who are impacted by the business. The Company, like fellow leading businesses, is taking a 360 degree approach to improvement and value creation. In its sector, for
The following seven excerpts are some examples of what we have heard:
example, driving sustainability upstream includes using certified sources of raw materials, expanding the use of recycled inputs and, ultimately, using sustainability metrics to identify and commercialize new sources of raw materials. Within the four corners of its operations, Domtar is looking to reduce waste – and pollution – with greater process efficiencies in its use of steam and of electricity, for example. These measures reduce emissions and reduce costs – creating “shared value”. And downstream, the Company is offering greener product options, educating consumers on sustainable supply chains, and encouraging smarter packaging and recycling. Sustainability is not a test or a task; it is a tool. It is a tool for greater competitiveness, stronger returns, enhanced market share and for ensuring a cleaner – and more sustainable – planet. Congratulations to Domtar for seizing a leadership position and setting the standard for its sector.
8 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Betty Cremmins Manager Supply Chain Initiative CDP
Andrew Goldberg Dogwood Alliance & Carbon Canopy
As a member of CDP's supply chain program, Domtar annually
Forests are essential to the health of the planet, providing everyday
engages its strategic suppliers – specifically its carriers – in order
products such as timber and paper, but also other critical eco-
to manage climate risk and improve transportation efficiency.
system services including protection of biodiversity, water
CDP’s global platform for suppliers to report their emissions
protection, and flood prevention. The forest products industry
information enables Domtar to collaborate effectively with
is closely tied to the fate of the world’s forests and how the
corporations around the world and across sectors to engage
industry responds to these issues is critical to how this gener-
these key suppliers.
ation leaves the planet for the future. Domtar has set the pace
Domtar has set ambitious goals to minimize its operational
for responsible management in the forest products industry.
emissions and to engage key suppliers in measuring, reporting and reducing emissions throughout the value chain. By working
Domtar has set the pace for responsible management in the forest products industry.
to achieve the environmental and economic benefits of sustainable supply chain management through CDP, Domtar and its suppliers are poised to build business resilience by realizing the complementary goals of reducing greenhouse gas emissions and the related costs throughout their operations.
Domtar was the first large pulp and paper company to adopt Forest Stewardship Council certification, recognized as the gold standard in forest certification in the U.S. South, the largest
CDP will support Domtar as it works to increase its engagement beyond a core group of suppliers in the near future.
forest products producing region in the world. Domtar is partnering with forestland owners and investing in FSC group certification, building their own supply chain, to meet their FSC sourcing goals and marketplace opportunities. This active engagement with on-the-ground improvements in the woods
By driving awareness of how to increase efficiency, realize monetary savings and capitalize on commercial opportunities
from the management of energy, climate change and water
Domtar has joined with Dogwood Alliance and other partners
across the supply chain, CDP will support Domtar as it works
in the Carbon Canopy project to build new sources of revenue
to increase its engagement beyond a core group of suppliers
for landowners willing to conserve and enhance forest carbon
in the near future.
stocks on their land. This kind of investment in cutting-edge strategies is critical as we move forward in leaving our legacy on the world’s forests.
9 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
OUR STAKEHOLDER ENGAGEMENT
Marc Gunther Contributing Editor Fortune magazine
Craig Philip President and CEO Ingram Barge Company
How does a pulp and paper company set itself apart? For Domtar,
Domtar demonstrates industry-leading environmental stew-
a commitment to sustainable business practices that goes back
ardship, building upon key organizational values and creating
for more than a decade has proven to be a competitive advant-
sustainability opportunities beyond the conventional.
age. Domtar boldly broke with the industry norm, embracing the goals of the Forest Stewardship Council, a multi-stakeholder
Engagement across the supply chain, and with outside stakeholders, fosters conversations leading to new innovations, along with expectations tied to measureable actions.
collaborative favored by NGOs that has been engaged in a long-running competition over standards with the industryinitiated Sustainable Forestry Initiative. Domtar’s commitment strengthened its relationship with major customers, including Staples and Office Depot – an example of how a company can do well by doing good. Since then, Domtar has broadened its sustainability efforts to include the environmental impact of
Domtar and Ingram Barge Company recognize our business
its own operations, its workforce practices and community
operations are inextricably linked to natural resources – air, land
and water. Certification programs such as FSC, along with publication of the Sustainable Growth Report, strengthen Domtar’s
I'd like to see Domtar play a bigger role in the public policy arena around environmental issues.
accountability and transparency efforts to value and protect these natural resources. Engagement across the supply chain, and with outside stakeholders, fosters conversations leading to new innovations, along with expectations tied to measureable actions.
What, if anything, is missing from the Domtar sustainability
Collaborative efforts that engage a diverse stakeholder base
portfolio? I'd like to see the company’s goals placed in a broader
offer benefits that go beyond what have traditionally been
science-based context. Domtar has pledged to reduce the green-
expected. Those companies, like Domtar, that maximize the full
house gas emissions of its pulp and paper mills by 8% in 2020
value of nature’s resources will not only sustain their business,
from a 2010 base. Why 8%? Is that what the world's atmosphere
but will serve a greater value to society.
needs, or merely what the company thought it could achieve at a reasonable cost? I'd also like to see Domtar play a bigger role in the public policy arena around environmental issues, including the question of whether governments should tax or cap carbon emissions.
10 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Keanon Swan Manager Vendor Management & Postal Strategy Sprint
Mary Watzin Dean College of Natural Resources North Carolina State University
Sprint recognizes the role paper and print play in our business
Discussions about sustainability abound in businesses and on
operations. Our goal is to minimize the impact our services,
college campuses around the world. I have come to understand
products and operations have on the environment while pro-
that sustainability is most valuable as a framework for making
tecting current and future generations’ quality of life.
difficult choices in a world where resources are finite and many conflicting social, economic, and environmental goals must be
Sprint selected Domtar as a billing statement paper supplier
balanced. There is no single “engineering solution” that will
in 2012 because the company demonstrates a supportive
provide a sustainable future; instead a constantly evolving
alignment with Sprint’s Paper and Print Procurement Policy,
series of tradeoffs reflects our values and our commitment to
manifested by their commitment to paper innovation.
a different kind of future.
We’re pleased with Domtar’s engagement in FSC certification expansion into privately owned forests. This increases availability of FSC certified paper to support growing demand.
Domtar's 35 key performance indicators show a commitment to environmental stewardship and vibrant communities.
Sprint selected Domtar as a billing statement paper supplier in 2012 because it demonstrates a supportive alignment with Sprint’s Paper and Print Procurement Policy.
I applaud Domtar’s efforts to infuse sustainability considerations throughout its operations and to share publicly its progress through 35 key performance indicators. These indicators show a commitment to environmental stewardship and
Domtar demonstrates environmentally and socially responsible
vibrant communities. As a North Carolinian, I am pleased by the
business practices important to Sprint’s interests. Working with
efforts I see in Plymouth, NC to turn waste into useful value-ad-
Domtar supports Sprint’s 2017 goals of 25% post-consumer
ded products, and to optimize benefits to local landowners
waste and 90% FSC.
and the community. I encourage Domtar to continue to push the envelope on innovation, transparency, and documentation, leading the way to new sustainability solutions.
11 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Our fiber Compared to many other industries, responsible makers of forest products have a head start in the pursuit of sustainability. Our demand for reliable, economical and marketable sources of fiber creates an incentive for landowners to maintain forest cover rather than converting land to other uses. Those forest lands, of course, end up providing many other environmental and social benefits, including the protection of water supplies, biodiversity, hunting, fishing and camping. By working together with a range of forest stakeholders and investing in forest management practices that focus on the long term, Domtar is helping ensure we can all continue to enjoy those benefits for many generations to come. Preservation through collaboration
The FSC provides independent certification standards for identifying
While some well-intentioned organizations make the mistake of
and promoting forest stewardship. Domtar’s early support for FSC
focusing on “saving trees,” those who understand forestry in North
was based on the fact that its certification standards are established
America recognize what really matters is saving intact landscapes of
by a broad, diverse group of interests including labor, indigenous
working forests to sustainably meet the world’s growing need for fiber
populations, academia, conservation organizations and industry.
along with the many other benefits that forests provide. Achieving this
We are committed to increasing our utilization of FSC-certified fiber
vision works best when landowners, wood buyers and environmental
above our 2010 levels by 25% by 2020. Longer term, our goal is to
organizations work together. That is why Domtar collaborates with
procure 100% of our fiber from sources certified to the standard.
the American Tree Farm System, the Sustainable Forestry Initiative,
According to Kerry Cesareo, Managing Director, Forests at World
The Nature Conservancy and other organizations, including state and
Wildlife Fund, “Domtar’s commitment to progressively increase
provincial wildlife and environmental agencies.
the volumes of Forest Stewardship Council certified material in its
As part of our commitment
supply chain is helping contribute to the conservation of the world’s
to responsible forestry and
most valuable and threatened forests and bring more FSC-certified
trade, we participate in
products into the marketplace. WWF is encouraged by Domtar's
the World Wildlife Fund’s
efforts to raise consumer awareness about the benefits of FSC certi-
Global Forest & Trade
fication and its continued support to help family forest owners pursue
Network (GFTN) and are
FSC group certification in the southeastern U.S.”
Forest Stewardship Council
Even though well-managed working forests are the norm in North
certified. GFTN provides a
America, we believe the market benefits from the confidence that
common, global framework for companies to gain a better under-
comes from FSC certified products. We are proud that Domtar has
standing of their fiber sources so they can set and achieve effective
helped introduce FSC certified products to many paper customers
goals around responsible sourcing. In the North American market,
for more than a decade. Today, we face two principal hurdles in
where Domtar primarily operates, all the wood we use – whether by-
further expanding the market share of such products: customers
products from sawmills, thinning forests, or trees from family-owned
are unwilling to pay additional costs incurred for certification, and
farms – typically comes from areas that have as much or more forest
small and medium-sized landowners are unwilling to incur the cost
cover than existed a century ago.
of certification if they are not going to get paid for it. In some of the
increase in FSC fiber utilization above our 2010 levels by 2020
areas where Domtar sources its fiber, including Pennsylvania’s Lehigh Valley and the Ashdown timber basin (learn more on page 12), we are becoming directly involved in initiatives to help reconcile the two.
12 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Delivery of wood from certified forests Year
2009 numbers have been adjusted mainly to reflect the sale of the Forest Products business and the Woodland Mill, as well as to comply with WWF’s Global Forest & Trade Network reporting format.
Forest certification (as of December 31, 2012) Jurisdiction
Domtar Owned Hectares
Domtar Licensed (directly and co-operative)
% Certified FSC
% Certified FSC
Quebec – Windsor
Domtar owned forests in Ontario are in the process of being sold or are not in operation.
Birds of a feather… What would the forest be without the
for our winged and four-legged neighbors
birds in the trees? Protecting the animals
by thinning forests, planting soft mast
and plants living on Domtar owned and
trees that provide important nutrition for
managed lands goes hand in hand with
wildlife, and seeding grasses to provide
our FSC certification, so we’ve made it an
forage all year long. Tannor also installed
integral part of our forestry and operat-
nest boxes for wood ducks and bluebirds,
ing practices. Consider the work that’s
and set up chambered boxes to attract
being done at our Marlboro Mill, where
bats to the area. You could say that when
they hired an environmental conserva-
it comes to our feathered friends, we flock
tion co-op student to develop a two-year
habitat management plan for the mill’s 1,800-acre property. Tannor Mulford focused on creating a healthier ecosystem
Wood duck nest box in Marlboro
13 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Finding favor for FSC in Ashdown Two years of intensive work and innovative partnership paid off on November 28, 2012, when Domtar announced that 55 private owners with over 70,000 acres of forestland in the Ashdown timber basin had been granted FSC Forest Management Certification by the Rainforest Alliance. Domtar has chosen to make FSC certified timber the preferred source for its wood fiber, in part due to the growing demand for FSC certified products. But this fiber is not always easy to come by since certification is a rigorous process with a number of requirements. The forests of the southern United States offer unique challenges to this process, and the Ashdown area has been no exception. So we decided to try and help forest landowners help us. To jump start the certification process, Domtar formed the Four States Timberland Owners Association (FSTOA) in fall 2010.
Grim Locke, left, and Jimmy Sherman, owner of Sherman Logging, tagging their first load of FSC certified wood in Ashdown.
The association continually evolved as the landowners and managers learned more about the certification standard and developed methods to apply it to their own
“I fully support this program, and am very
“Our team stepped up beyond the regular
proud to have been the first FSTOA member
call of duty and worked diligently to see
to supply a load of FSC-certified wood to the
this project become a reality. Our efforts
Hearing of the success of the FSTOA – and
Ashdown Mill,” said Grim Locke, Managing
are making a difference by helping Domtar
eager to become favored Domtar fiber sup-
Partner, Lockwin Ltd. and one of the first
respond to customer demand for FSC cer-
pliers – other landowners in the area soon
people to join the association.
tified products,” declared Digger Pond,
began to inquire about how they could join the association and get their forests FSC certified. The number of participants and acreage has already increased by about 25% – and we are on target to double our initial land base by the end of 2013.
“In 2011, Domtar announced a goal of 100% FSC for our fiber supply. Through the Four States initiative, the Ashdown team has shown that the FSC group model can be applied and move considerable amounts of land towards certification. We look for-
The members of the FSTOA are fully com-
ward to seeing the Ashdown model expand
mitted to the FSC principles and share
and be replicated throughout the Domtar
Domtar’s dedication to responsible forest
system,” stated Lewis Fix, Vice-President,
14 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Forestry and Woodyard Manager at the Ashdown Mill. “We’ve raised the bar for private land certification in the south and we’re extremely proud of that!”
Promoting responsibility with Recyclebank Domtar’s commitment to sustainable paper
on responsible paper use; we’ve also offered
grants for unique environmental projects
does not end with the sale. Paper is already
promotions like retail rewards for Domtar
that make a positive impact on students and
the most recycled material on the planet, but
EarthChoice Office Paper through Staples and
their communities. We provided donation
we continue pushing to do more.
several Learn and Earns where members play
dollars to help fund a number of projects,
One of our main partners in this endeavor is
games that teach them about the origins of
and also awarded a year’s supply of Domtar
Recyclebank. The association has been very
EarthChoice Office Paper to the school with
rewarding for Domtar but it’s also reward- “Consumers already know they should recycle,
the most innovative idea.
ing for all Recyclebank users – literally!
and have been hearing for years that they
This year’s winner was Henry County Middle
Recyclebank motivates its members to take
should use less paper. By engaging directly
School in McDonough, GA, which will
green action every day by offering points they
with Recyclebank members, Domtar can
transform used books into “book tree” art
can redeem for discounts on merchandise
show them that where their paper comes
projects that will be displayed throughout
from local and national retailers.
from also makes a difference,” said Kathy
the community to promote literacy and the
Because it shares Domtar’s core belief that
Wholley, Director of Communications
importance of recycling. Now that’s inspiring!
informed consumers make more responsible choices, Recyclebank also has a large edu-
and Strategy, Sustainability and Business Communications at Domtar.
cational component to its activities. We’ve
In early 2013, we joined Recyclebank to spon-
worked together with them to create content
sor its Green Schools Program, which awards
Earn big rewards for small green actions! Reduce. Reuse. Recycle. Every little thing you do can be so rewarding. To join, visit www.recyclebank.com/Future Enter code Domtar2013 You’ll earn 10 Recyclebank Points just for signing up!
15 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Sustainability is in our fiber At Domtar, sustainability is more than a management theory; it is a practical way of evaluating how we can make things run better. This was reinforced when Jack Bray, Vice-President of Manufacturing, became chairman of the company’s crossfunctional Sustainability Committee in 2012. When you think about it, with 32 years of hands-on manufacturing experience, Jack was a natural choice. “Domtar has made sustainability a key part of its manufacturing strategy because we understand that it’s a competitive advantage. Reducing our footprint is not only good for the environment but can generate efficiencies and reduce our costs,” declared Jack, who has been a member of the Sustainability Committee since its inception. “Given the number of sustain-
Paige Goff and Jack Bray
ability initiatives underway at our mills, it’s perfectly logical for an operations guy like me to be heading this committee.” Jack, who has been one of the driving forces behind embedding sustainability into our manufacturing, took the reins from last year’s chairman, Lewis Fix. Lewis is one of Domtar’s pillars of sustainability
sustainability initiatives, including our
key management positions. While Domtar
acclaimed PAPERbecause advocacy cam-
takes a ground-up approach to making sus-
paign. Paige believes that one of Domtar’s
tainability progress, we also recognize that
biggest strengths is our long-term,
having the right leadership matters.
meaningful collaboration with leading environmental organizations.
“Sustainability initiatives at Domtar run the full gamut from major capital our competitors – we set the standard for investments to employee what it means to be a sustainable paper involvement. It’s truly a company with decisions like certifying all of part of who we are.”
and a respected figure in the NGO com- “Sustainability is top of mind every day at munity (he was named a 2012 Corporate Domtar. It’s how we’ve stood apart from Social Responsibility Professional of the Year). In 2012, he moved from leading the Sustainability and Business Communications group to become Vice-President
our facilities and offering a broad selection
of Pulp Sales, bringing his passion for
of certified products,” said Paige. “Other
sustainability to the front lines of our
manufacturers are trying to catch up but
manufacturing operations and our end-
we continue to raise the bar, doing more
than what’s expected.”
Sustainability and Business Communi-
Jack’s, Lewis’ and Paige’s new assign-
cations is now under the leadership of
ments represent Domtar’s deliberate,
ten-year Domtar veteran, Paige Goff, who
purposeful approach to putting strong sus-
worked on many of our most successful
tainability leadership into the company’s
16 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
– Jack Bray
Our Environmental Impact Of our key sustainability performance indicators, those that measure our environmental impact are perhaps the most demanding. In part, this is because we recognize that, amongst all of our sustainability objectives, our efforts to improve our environmental footprint may also deliver the most direct and long term benefits to our shareholders. It is also because we have been working to standardize the measurement and tracking of our environmental performance in order to enhance our ability to recognize and realize improvement opportunities. While this remains a work in progress, our focus on using data to help drive progress has already yielded tangible results. Water For example, in 2011, we reported 410.1 million cubic meters of
a significant portion of our production to lighter basis weight
water discharged from our pulp and paper mills. In 2012, that
paper (i.e., more paper production that actually weighs less),
number increased to 419.4 million cubic meters. When normal-
the change in overall water efficiency for the company is not
ized for tonnes of production, the numbers reveal a slight
decrease in water efficiency of approximately 2.5%. However,
In terms of the quality of the water we return to the environment,
when one considers that over this same period we shifted
we monitor organic material that consumes oxygen as it degrades (BOD5), adsorbable organic halogens (AOX), and suspended solids (TSS). In 2012, we reduced the overall discharge rate for all three of
Volume discharged in 2012 by mill and receiving water
Port Huron, MI
St. Clair River
BOD₅ TSS AOX
2010 2011 2012
17 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
2010 2011 2012
Pee Dee River
Volume discharged (million m3)
2010 2011 2012
Our Environmental Impact
Air emissions (kg/tonne)
The three conventional air emissions that are tracked as part of our sustainability performance are nitrogen oxide (NOX), sulfur dioxide
NOX SO2 Process TRS
(SO2), and total reduced sulfur (TRS). NOX and SO2 are principally the result of the combustion of fossil fuels. In both cases, improvements were realized in 2012 (particularly for SO2) normalized for production. TRS emissions are a by-product of the kraft chemical pulping process
Over the next few years, a number of measures are planned that will continue Domtar’s trend of continuous improvement relative to air
2010 2011 2012
2010 2011 2012
resulting emissions of TRS.
recovery rates from our biomass-based process, while reducing the
being implemented to maintain the advantage of our high energy
process changes at one of our mills. A comprehensive plan is now
optimize our use of renewable (i.e., non-fossil) fuels. In 2012, we saw an uptick in our overall TRS emissions, resulting principally from
and are related to the recycling of our chemicals and our drive to
2010 2011 2012
Energy One of our industry’s distinct sustainabil-
This adjustment avoids the double counting
forests have the benefit of being greenhouse
ity advantages is our reliance on one of the
of Domtar’s significant renewable power gen-
gas neutral over the long term.
world’s most renewable resources. The chem-
eration. These sales represent an additional
ical components in wood, when separated,
3.3% of renewable energy and are deducted
provide us both the fiber that forms the basis
from the renewable total below.
for the products we make and much of the
While reducing our reliance on fossil fuel
energy required to make them. For the past decade, Domtar has been squeezing more and more of the renewable energy value out of this chemical process.
helps our competitive position in the
*2012 data has been restated from the printed version of this report to account for recalculations, including the net purchase of electric energy and sale of renewable energy credits.
market, this effort also introduces less new carbon into Earth’s natural carbon cycle. The Intergovernmental Panel on Climate Change
In 2002, 67.8% of the company’s energy
has held that carbon dioxide emissions from
requirements were met with renewable
fuel derived from sustainably managed
energy. Since then, Domtar has consistently led the industry in improving this perform-
Total use of renewable energy
ance year-over-year. By 2011, 76.1% of our
(% renewable energy)
energy requirements were met without the
“green” power to other electricity consumers.
and renewable energy credits that Domtar sells to utilities, enabling them to supply more
adjustments to account for renewable power
electric grid. This includes making downward
electrical power by our mills to and from the
to account for the net selling and buying of
Note that these percentages are adjusted
tinued, increasing to 76.3%.*
need for fossil fuels. In 2012, that trend con-
18 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Self generation of electricity
Regarding our greenhouse gas emissions
(% self-generated energy)
from our mill system, we achieved, in 2012, an absolute reduction in emissions from our direct (scope 1) energy consumption of
have control. Unfortunately, indirect (scope
2.6%. These are the emissions for which we 2) greenhouse gas emissions from sources that we do not control, such as purchased power, increased 1.3%. The combined (scope 1 and 2) net result was a decrease in absolute greenhouse gas emissions of 1.3%. Adjusted for production, our combined direct and indirect greenhouse gas emissions
decreased from 630.8 to 626.6 kilograms per tonne. This decrease in emissions on a production basis is significant when considered in the context of our changing product mix to
Scope 1Â and Scope 2Â GHGÂ emissions
(million tonnes CO2 eq./year)
more lightweight papers. A tonne of production today actually represents more usable, saleable product than a year ago. cipal focus for energy efficiency and emission
reduction opportunities, in 2012 we expan-
While our integrated mills remain our prin-
ded our effort by examining the energy used and the resulting direct and indirect greenhouse gas emissions from our standalone paper converting centers. Within our
industry, Domtar stands out as a leader for its approach to managing the value-added pro-
cess of cutting and packaging paper, including the production of forms. This management approach has resulted in world class efficien-
GHG intensity trends
cies in terms of paper converting. We are now
(kg CO2 eq./tonne)
leveraging that management commitment to efficiency to the energy these facilities use. Our first step was establishing a baseline by
produced nearly 1.33 million tons of paper
ten stand-alone paper converting centers
which to mark future progress. In 2012, our 800
products, using approximately 261,000 cubic meters of natural gas and 53,000 megawatt hours of electricity. Using formulas provided
by the U.S. Environmental Protection Agency,
of carbon dioxide emissions for every metric
we estimate that this resulted in 23 kilograms 2002
19 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
tonne of product these facilities produced.
Our Environmental Impact
Finding the power to optimize Energy is a big deal at Domtar. We use over a billion dollars’
opportunities to reduce energy use, and plans were quickly
worth of energy every year. It’s also the subject of two of our
developed to get these projects underway. Each mill established
35 sustainability KPIs and the focus of continuous effort by our
a dedicated energy optimization team made up of two repres-
paper mills to reduce the energy they consume and rely more on
entatives from each of the following operational groups: power
generation, the pulp mill, the paper machines, environment, and finance or accounting.
“It was important for the energy optimization teams to have a variety of experts that can make things happen in the best way possible. A paper mill is a giant circuit and everything is interconnected.” There were surprises during the audits, such as the fact that some energy efficiency improvements could be made at no cost other than a simple change in internal processes. Of course, this could not always be the case, and Domtar is investing in a number of projects that will make a real difference in the short and long terms. At the Hawesville Mill, for example, the water used to process pulp is heated to 180 degrees to make paper. Rather than treating this water after a single phase of the process and returning it to the local source, the mill is now filtering the water and reusing it. This
eliminates the need to source and heat new water, resulting in lower energy use and less effluent. For an investment of $20,000
The weight of our commitment to energy management was firmly
Domtar will save over $200,000 in energy costs annually thanks to
established in 2012 with the hiring of a company-wide Director of
this process innovation.
Energy Optimization. Chris Suresh arrived at Domtar with decades
Chris does not want the mill under review to be the only one to
of power generation and engineering expertise. Soon after he
benefit from this exercise, so he sends every final audit report to
assumed this newly created position, he launched a comprehensive
every mill in the system. This achieves two things: 1) the lessons
energy audit across our entire paper mill system. Four of these
learned are shared and stimulate change at other facilities that
audits were completed in 2012, with another five scheduled in 2013
have similar improvement opportunities, and 2) it starts the mills
and the remaining four in 2014.
thinking about their own operations and how they could identify
“To me, there are two facets to sustainability for a company like Domtar. You must sustain the business for the long-term, for your investors, employees and other stakeholders,” said Chris. “At
energy conservation initiatives prior to their own audit. “Because some of the solutions are relatively simple and economical, the mill energy optimization teams can be proactive. And I’m
the same time, you have to ensure that you create your product
pleased to say that we’ve already seen energy savings at mills we
without destroying the environment. These two things go hand in
haven’t audited yet; and some teams have even found opportun-
hand, and that’s how we’re approaching our energy optimization
ities we didn’t spot during our initial audits!”
audits.” By the end of the year, audits were completed at our Hawesville, Plymouth, Kingsport and Ashdown mills. In each case, we found
20 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Solid Waste One way we were able to further improve water quality in 2012 was by improving our effectiveness at removing organics and other solid materials that settle in our wastewater treatment systems. While this is a net gain for the environment, it did cause a slight increase in the amount of removed solids that required landfilling. This is an example of the trade-offs that are revealed by taking the more holistic view of the sustainability of an integrated industrial operation.
“if you consider the entire industrial ecosystem, a waste material can be redefined as a resource,” said Barry Zuercher, Director, Environmental Operations. “Our beneficial use framework shows how much work is being done at Domtar to transform by-products that might have been permanently landfilled into something new that brings value either to our own operations or other industrial applications.”
Domtar by-products are being used as an agricultural supplement.
While we are pleased with the benefits real-
Historically, we would have assessed our per-
ized from getting solids out of our effluent
formance by examining incremental changes
and safely contained in licensed landfills, we
in the number of kilograms of material land-
are even more delighted with the change that
filled per tonne of production. Today, through
has occurred across our mills in how mater-
the wider lens of sustainability, we are track-
ials that were traditionally assumed to be
ing what percent of all the by-products we
waste destined for a landfill are now viewed
produce are being diverted from landfills
as resources that can be beneficially re-used.
and being beneficially re-used. This shift in focus has supported efforts underway at all 13 of our mills.
Solid waste to landfill
Material diverted from landfills and beneficially re-used (%)
In the past calendar year, the amount of material that was diverted from landfills and beneficially re-used increased 25%. Today,
“waste” is now providing economic value. Our effort to reduce the amount of material landfilled does not end with our own
almost half of what was previously considered
manufacturing operations. Domtar has supported research to assess the current state of the post-consumer fiber market in order to improve the effective recovery and re-use of used paper. To read the report, please visit the GreenBlue website at: www.greenblue.org.
21 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Our Environmental Impact
Waste not, want not One man’s trash can be another man’s treasure. That’s how Domtar
“We’ve worked through regional North Carolina State University
mills like Plymouth and Kingsport are approaching experimental
Agricultural Extension Agents to kick off the project and coordinate
projects to beneficially reuse by-products and waste streams from
with area farmers, and interest from the farmers is promising,” said
Diane Hardison, Environmental Manager at the Plymouth Mill.
In 2012, the Plymouth Mill began testing an alternate application
The Kingsport Mill has a groundbreaking project of its own. Having
for its wet ash, or char, which has traditionally been put back in the
previously won an environmental award from the state for their
facility’s bark pile to be re-burned in the biomass boilers. The char
low cost, quality soil amendment, the mill’s management team
is now being trialed as the carrier material for other substrates in
in 2012 found yet another opportunity to meet an environmental
bagged potting soils, which are commercially marketed in home
need that makes business sense.
and garden centers. The trials will continue throughout 2013 to determine the product’s marketability and revenue potential.
The mill’s primary and secondary sludge, fly ash, bottom ash, and other by-products are being combined into an optimal mix and used as an alternate daily cover at a nearby Class I landfill site.
Plymouth is also well on its way to reducing, by more than 90%, the tonnage of other materials currently sent to the onsite landfill, such as ash, grits, dregs and lime residuals, by transforming them into a soil amendment for local farmers, called K-lime®. The byproducts are being mixed on site by a certified third party into a high-performing blend that would cost growers a quarter of what they spend for traditional fertilizers. The necessary lab work and
Well-managed landfills have exposed areas covered daily with
applications are complete, and the Plymouth Environmental Team
a blanket of soil. When a landfill cell is permanently closed, it is
is now waiting for regulatory approvals.
covered with soil and grass – sometimes at great expense. The Kingsport Mill’s new product offers a more economical option for
Bagged potting soil containing by-products from the Plymouth Mill
the owners and operators of landfills. “This has been a very strategic recycling initiative since we now are able to use all of our residuals, not just one or two, for this one application that fills a real business need. This project has been a multi-year effort working with various stakeholders, and it effectively translates into almost zero industrial waste going to landfill for us. For 2013 and beyond, this initiative should dramatically and positively impact the amount of materials being beneficially reused at Domtar,” declared Anthony Robinson, Manager of Environmental Affairs at the Kingsport Mill. He also noted that, while there are individual stream applications, he doesn’t know of any other company developing this type of all-encompassing soil product for Class I landfills. In addition to the outstanding environmental benefits of this project, the Kingsport Mill will also save around $650,000 each year in costs by eliminating third-party landfill fees. While passionate about their current waste transformation projects, both Diane and Anthony point out that they will continue to look for higher and better uses for their mill residuals.
22 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Transportation and logistics
“Every exit is an entry somewhere else.” – Tom Stoppard Domtar has a sophisticated and cost-effective distribution network for getting its products to customers. Yet our Transportation and Warehousing group, led by Senior Director David White, is still always looking for ways to ship our products more efficiently, economically and responsibly. “For us, being sustainable means getting the right product from the right facility to the right customer in the best way possible,” explained David.
“We ship millions of tons of paper and pulp across the country every year, and I look at every mile between the mill floor and the customer’s door as an opportunity to improve.” David White
and his team have spent years cultivating
Carbon Disclosure Project (CDP) Supply
relationships with trucking companies, rail
Chain Initiative, whose tagline is coincid-
shippers, intermodal transportation sup-
entally, “Driving Sustainable Economies.”
pliers (which load trucks onto railcars for
Domtar has been publically reporting its
route segments), and ocean freight com-
emissions through the CDP since 2006, and
panies to optimize every aspect of our
12 of our key transportation partners have
logistics. Recently, sustainability has become
willingly accepted our invitation to share
an important part of the conversation.
their emissions information with the goal
Tons of GHG emissions avoided compared to trucking
of finding mutually beneficial efficiency
economic sense. An optimal route using the
“Better understanding our partners’ sustain-
right mode of transportation benefits the
ability best practices can help us improve
customer, but it can also make a difference on
our own. And that’s important to the growing
fuel consumption, which positively impacts
number of customers looking for a world-
both costs and emissions. Domtar reduced its
class – and low carbon footprint – paper
GHG emissions by over 58,000 tons in 2012 by
optimizing the right mix of road and rail for different delivery requirements.”
23 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
graphic sense also makes environmental and
Number of rail cars used
“We’ve all learned that what makes geo-
Outbound pulp and paper shipments by rail and avoided GHG emissions
progress through our partnership with the
We are now seeking help in making further
been realizing these opportunities. David
Great partnerships are one of the ways we’ve
Our Environmental Impact
Floating a good idea pays off A barge unloading system may not sound
nearby site where American Indian artifacts
very exciting to most people. But for the
team at the Hawesville Mill, news that the Army Corps of Engineers had granted their
its chips in from 10 miles away. That’s both good for the environment and welcome
Thoughtful measures like widely spaced foundations, care in protecting the biod-
permit to build a new mile-long conveyor
iversity of the river and floodplain, including
and fleeting area to transport their wood
a mussel survey and minimal vegetation
chips from the Ohio River was almost like
removal, and providing anchorage away
finding the pot of gold at the end of the
from the river’s bank went a long way to
rainbow. Of course, this was not the result of
making this a real sustainability success
good luck. The years of careful planning and
story. On that note, the new system will
collaboration that went into this project
also eliminate 54,000 truck trips every year
showed regulators that it would do nothing
on local roads burning 110,000 gallons of
to threaten the surrounding wetland and
fuel, since the mill will no longer be trucking
news to our neighbors, who will benefit from less noise and traffic on their streets!
“We are excited that the Company is making this significant investment at our facility. This investment will benefit the environment, our community, and the long-term competitiveness of our mill.” - Steve Henry, general manager Hawesville Mill
Environmental Fines Domtar paid one environmental fine of $4,900 in 2012 for an unfore-
No environmental harm occurred. The elevated BOD was the result
seen, temporary elevation of lead levels in boiler ash at the Marlboro
of the mill’s replacement of conventional aerators with supposedly
Mill. The issue has been addressed and has not recurred.
more energy efficient equipment paid for with a grant from the
In December of 2011, an environmental fine was paid that did not
Government of Canada. The new technology did not perform as
get reported in the company’s last Sustainable Growth Report. That
expected. The original aeration equipment was quickly re-installed to
fine was paid to Ontario for elevated biological oxygen demand
better oxygenate the water. The Province fined the mill CDN$16,438
(BOD) in water returned to the Spanish River at the Espanola Mill.
for the temporary exceedance.
24 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Our products Our sustainability as a company includes considerations that go beyond the wealth we generate, the people we employ, the resources we use and the efficiency of our production and delivery. In fact, none of these things would matter for long if we were not making products that perform as expected and make life better wherever they are used – and that is quite a few places: at work, the doctor’s office, at school, the home improvement store, the pharmacy, the bank and even at church. We believe “sustainability,” defined broadly, includes both the performance of our products and the satisfaction of our customers. EarthChoice
Print Logic infographic, created in collabor-
Expect more than paper
ation with Natural Logic and the Institute
Our flagship EarthChoice brand continues to
For years, the EarthChoice brand has been
for Sustainable Communication, is a fun and
grow and evolve. Already the largest offer-
synonymous with environmentally respons-
visual way for users to determine when it
ing of environmentally responsible papers
ible, FSC certified paper – only now it means
is best to print and when to stay digital. We
ever assembled, it offers a broad range of
also promote responsible printing by helping
business and office papers, commercial and
end-users plan and execute their print pro-
digital printing papers, converting papers,
jects effectively to minimize their resource
publishing papers, and specialty papers. In
consumption and environmental footprint.
2012, several additional products became
We believe that informed choices lead to better, more sustainable lives and a better world. That involves increasing
part of the EarthChoice line:
responsibility for the entire fiber lifecycle – from the forest,
EarthChoice Colors Opaque, Text & Cover
through responsible production, to usage and recycling. WHERE FIBER COMES FROM
In various ways, Domtar has
HOW PRODUCTS ARE MADE
EarthChoice30 Recycled Office Paper
helped end-users understand
EarthChoice50 Recycled Office Paper
how their paper is made and
EarthChoice Opaque Offset 30%
why their procurement choices matter. According to Lisa Stocker,
EarthChoice Colors Index, Tag and Vellum Bristol
EarthChoice HOTS RECYCLING/NEXT LIFE
Sustainable Business Manager,
EarthChoice Colors Multipurpose
“Our customers know that using We also produce co-branded papers with
environmentally responsible papers is a good way to demonstrate their
Through our EarthChoice Advisory Services,
large North American office supply chains,
commitment to sustainability. It can also
we share individually tailored insights
such as EarthChoice Office Paper with Staples
have a positive impact on their bottom line
about paper with our customers, as well as
and ImagePrint® with Office Depot.
and help protect their brand.”
our decade of experience working with the
We support our customers in their sustainability considerations through The Paper Trail, Domtar’s online tool that calculates the environmental and social impacts of many of our papers (and the only one like it in our industry). Our colorful Pixel and
Rainforest Alliance, World Wildlife Fund and the Forest Stewardship Council. These perspectives can be invaluable in helping our customers create paper policies that match their unique sustainability objectives and business goals.
25 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Personal Care: engaged in sustainability When Domtar acquired Attends Healthcare Products in 2011 and formed its Personal Care division, it was soon apparent that the fit between the two companies went far beyond product complementarity. Attends found immediate affinity with our values and commitment to the client. The same was true of our approach to sustainability. Matt Zielinski, Group Vice President, Sales & Marketing Optimization, Personal Care Division, spoke to us about his group’s ready– and fairly seamless – adoption of Domtar’s sustainability framework. Domtar’s framework of 35 KPIs shows a commitment to sustainability across its
operations. Did you find common ground with Personal Care? Absolutely. The KPIs reflect a lot of what the division has been measuring and disclosing for years as part of its own green initiatives. But Domtar goes further in some areas, which is exciting. This year, we’ve started to formally integrate our group’s efforts into the Domtar reporting framework so we can give a more complete picture of what’s being accomplished corporation-wide. How easy has this process been? There are a lot of differences between our consumer-based business and a pulp and paper mill, but there are also some similarities, especially in our manufacturing. We identified at least a dozen of the Domtar metrics on which we can make a meaningful impact in the short term. And we’re establishing processes to address all the remaining KPIs.
There are a lot! I can’t go into them all here,
proposition”, and shows all the sustain-
but one of our big sustainability (and oper-
able actions the company is taking in areas
ational) coups is that, by the end of 2013,
like raw materials, innovation, production,
our Attends Healthcare Products Greenville
logistics and waste.
plant will be sourcing the majority of its pulp from Domtar’s Plymouth Mill, which is FSC chain-of-custody certified. We’re also going to have EarthChoice Ambassadors in four of our North American locations by the end of the year. Two new companies, Attends Europe and EAM Corporation, joined the Personal Care Division in 2012... Yes, and in both cases, we have a great sustainability story to tell! Attends Europe is a recognized sustainability leader in the industry in its corner of the world. In
And EAM Corporation? For sure! The process EAM uses to make its airlaid and ultrathin laminated absorbent cores is naturally green. They don’t contain any synthetic (e.g. bicomponent) fibers, and the product is 100% recyclable in process. The trend towards ‘thinner’ is also beneficial from a sustainability standpoint because it helps reduce packaging and the company can ship more product for the same carbon footprint. So sustainability is an important part of their business as well.
2012, it received a European Incontinence
Sounds like Attends Europe and EAM
Care Green Excellence Award for, among
Corporation are also great fits with
other things, some product innovations
Domtar when it comes to sustainability.
You’ve really embraced the Domtar
that resulted in a major decrease in waste
No doubt about it. And starting next year,
process! Are there other exciting sustain-
generation. It has an incredible website
we hope to include their data in this report
able achievements you’d like to tell us
(www.attendsingreen.com) that discusses
so we can portray an even more detailed
its vision, “Green is a principle, not a
picture of Domtar’s sustainable actions.
26 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Specialty papers for special uses
In 2012, Domtar made two strategic acquisitions in this segment. The
Most people know that paper is our specialty but some might not
addition of Attends Europe to our Personal Care division consolidates
know that we also make specialty papers. The biggest story in 2012
our position in the AI market. Meanwhile, EAM Corporation brings
on this front was the announcement of Domtar’s 15-year, $3-billion
us long-term research and technology capabilities, and its patented
agreement with Appleton Papers to supply most of the uncoated base
airlaid and ultrathin laminated absorbent cores will contribute to the
paper it needs to produce its thermal, carbonless and other specialty
performance of our AI products going forward. EAM brand NovaThin®
paper products. This is the paper used countless times every day for
and NovaZorb® cores are currently used in feminine hygiene, baby
boarding passes, concert tickets, store receipts and shipping labels.
diapers and other medical, healthcare and performance packaging
To make sure we meet all of the needs of this key client, Domtar has
solutions, as well as in AI products.
turned its Marlboro Mill into a specialty paper manufacturer.
Doing more with our fiber
Our other specialty grades, produced at various Domtar mills, include customized papers for medical gowns and drapes, sandpaper backing,
Fiber technology innovation is what we do. Nowhere is this more
food wrappers, bibles and papers that offer special security features
apparent than in the creative ways we’re transforming our primary
such as watermarks. All our food packaging, medical and most of our
resource – wood fiber – into new, sustainable products.
industrial products are FSC certified.
BioChoice™ lignin Domtar set out on an exciting new path with the start-up of a commer-
Making the grade in pulp
cial lignin separation plant at its Plymouth Mill in early 2013. Lignin
Most of the pulp we make is consumed internally to produce our
is one of the chemical building blocks of wood – the component that
paper and consumer products. But part of our production is also
binds cellulosic fibers together. The specialized facility in Plymouth
sold on the open market and used in a variety of end products, such
will have the capacity to produce up to 75 tons per day of BioChoice
as printing and specialty papers, bathroom and facial tissue, baby
lignin. The product serves as a performance enhancing additive
diapers, adult incontinence products, exterior housing siding and
in a wide range of applications, from the automotive industry to
electrical insulating papers. Domtar is one of the world’s largest
road construction to a thermoplastic substitute in some consumer
producers of market kraft pulp, supplying hardwood, softwood and
products. BioChoice lignin can also be used as a bio-based alternative
fluff pulp to customers in more than 30 countries around the world.
to fossil fuel. Years of research culminated in this opportunity to commercial-
Personal Care: sustaining quality of life
ize this new method for effectively separating lignin from the pulp
The impact of our products on sustaining quality of life is partic-
making process. By collaborating on such innovations, Domtar helps
ularly meaningful with the adult incontinence (AI) products that
demonstrate the connection between sustainability leadership and
our Personal Care division manufactures, sells and distributes. This
the development of new products and markets. It is also an opera-
full range of products includes briefs, protective underwear, under-
tional enhancement since it helps solve a recovery boiler bottleneck
pads, pads and washcloths, mainly under the Attends® brand but
issue, thereby rendering the pulp-making process in Plymouth more
also through private labels. We serve the acute care, long-term care,
homecare and retail markets in North America. In Europe, we offer our products through retailers, prescription and closed contract channels. “Our products do more than just help people with a medical condition; they give them back their dignity, their freedom. They provide a health benefit, but also an emotional benefit that comes from renewed confidence,” said Matt Zielinski, Group Vice President, Sales & Marketing Optimization, Personal Care Division. “There’s also a long-term financial benefit through lowered medical costs. These products, by keeping the skin dry and clean, protect users from serious skin issues which can become debilitating and are very costly to address.”
27 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
The Plymouth lignin separation plant project was funded, in part,
by a $7 million grant from the U.S. Biomass Research Development
The beneficial reuse of our waste streams is one of the linchpins of
Initiative, an interagency collaboration co-chaired by the U.S.
our environmental program, and the clean technology joint venture
Department of Agriculture and the U.S. Department of Energy.
we are currently pursuing at our Dryden Mill is a great example of how Domtar is combining this objective with its mission as a fiber
innovation company. Working in partnership with the Ontario-based
CelluForce, our joint venture in Windsor, has produced a large enough inventory of cellulose nanocrystals (NCC) for us to continue developing a customer base for this specialized product. NCC particles, which are extracted from wood fiber, offer exceptional strength and
Centre for Research & Innovation in the Bio-economy and Battelle, the world’s largest private research and development institute, we are developing a technology called “fast pyrolysis” that uses heat without oxygen to quickly and cleanly convert woody material to
resilience, and can be used in everything from dietary supplements to anti-ageing cosmetics. We are currently actively looking for a stra-
renewable bio-oil and bio-gas.
tegic partner on this project who can deliver business opportunities in the near-term while supporting CelluForce in the next phase of development.
Satisfied customers We always try to go one step further to
We were delighted when two of our import-
FSC-certified Office Depot branded papers,
make sure our customers are getting the
ant customers gave us special nods this
which bear the Rainforest Alliance and
quality products and support they need,
year for the quality of our service and our
World Wildlife Fund logos, Domtar has
when they need them. To help gage our
commitment to supporting their sustain-
become part of their sustainability strategy.
performance, our pulp and paper busi-
Our products provide performance today
nesses measure key indicators like claim
We were honored with the 2012 Green
and can make a difference tomorrow – a
rate, cost of quality, on-time shipments, and inventory availability. The way we see it, a satisfied customer means that we’re doing our job right.
Award from Office Depot for our role in helping them achieve their environmental commitments to “Buy Greener; Be Greener; Sell Greener.” By supplying their
winning recipe for retailers like this who can benefit from their brand being associated with “the right thing to do.” The importance of the Domtar relationship was spotlighted during the awards ceremony in a video produced by Office Depot featuring experts from both companies. Our colleagues at Domtar Asia were awarded a Top 10 Supplier award from Vinda for their commitment to a very successful and longstanding supplier partnership with this leading Chinese tissue paper company. Vinda has been using Domtar pulp since 1993, and the relationship grew in 2009 when they started ordering pulp grades from our Marlboro and Plymouth mills.
The Domtar team received the Green Award during Office Depot's annual gala awards night.
28 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Our people The sustainability culture that is deeply rooted throughout Domtar is not a corporate directive. It is the product of a strongly held and shared belief that collaboration, collegiality and respect for the ideas of others make us a stronger and better company. Supported by our values of Agility, Caring and Innovation, our employees play a strategic role in our success by speaking up when they see a better way of doing things and then helping us build systems that allow all of our facilities and communities to benefit. To us, a sustainable workplace is one that invites this kind of creativity and provides a safe environment where it can thrive. We think our results speak for themselves. What a year in health and safety! In 2012, we recorded our lowest total frequency rate (TFR)
China employees at a Health and Safety Week activity
ever at 1.08. This unprecedented performance is a 20% improvement over 2011 and a solid 17% lower than the target we had set for the year. Thereâ€™s more. We worked six months at a 1.00 TFR or below (including our U.S. Personal Care operations, our distribution business Ariva, and China converting/merchant group), and many of our sites were injury-free for the entire year. We calculate TFR according to U.S. Occupational Safety and Health Administration guidelines, or the number of incidents per 200,000 work hours. Hands, fingers and soft tissue musculoskeletal incidents led the way in frequency in 2012, which tells us where we need to improve.
23 of our locations worked incident-free in 2012
Lost Time Frequency Rate
Pulp and Paper Mills
7 Converting (including China)
Personal Care North America
14 Ariva Distribution
Fort Mill Operations Center
1 Personal Care
(per 200,000 work hours)
Total Frequency Rate
Number of recordable injuries
29 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Internal safety audits Every year, a team of internal health and safety experts visits several
Meanwhile, our crews in Ashdown continued to build on the mill-
of our facilities to audit their safety activities. Thirteen of these audits
wide Hazard Mapping initiative, which has dedicated internal teams
were completed at our pulp and paper mills, converting centers
examine mill processes to identify potential dangers and establish
and Ariva in 2012. When improvement was needed, the audit teams
remediation plans. This exercise resulted in several important safety
and workers in the affected area immediately set about identifying
improvements in key areas like the post-consumer waste bale re-
corrective measures. The audited mills had completed over 90% of all
pulping line, where they addressed the issue of busted bails by testing
remediation projects by year-end.
different packaging options. By the end of the project, they found a
Safety Industry Recognition
re-pulpable, allowing them to be reused in the process.
vendor that uses straps that maintain better bale integrity and are The Pulp and Paper Safety Association (PPSA) acknowledged the safety achievements of several Domtar facilities again this year.
Rothschild's “D” Crew
PPSA 2012 Safety Awards Best Record Fine Paper Converting: Washington Court House Converting Center Most Improved Fine Paper Converting: Addison Converting Center No OSHA Recordables Addison Converting Center Brownsville Converting Center Ridgefields Converting Center Rock Hill Converting Center Tatum Converting Center Washington Court House Converting Center
No Day-Away-from-Work Cases DuBois Converting Center Hawesville Pulp Mill Indianapolis Converting Center Owensboro Converting Center
Employees doing it for themselves It’s part of our culture to directly involve employees in making their workplace safe, and all company locations have safety committees that include both management and hourly representatives. This is something they do for themselves, their co-workers and their families. When you look at our OH&S results for last year, you’ll believe us when we say that it’s some of their best work. Rothschild is a great example of employee engagement in health and safety. The Rothschild Mill was able to bring the number of injuries at the mill from sixteen in 2011 down to three in 2012. They got full support from management, which promoted a risk assessment process
The Ashdown pulp dryer Hazard Mapping team
that focused on “upset and non-normal conditions.” This program took into account the potential risks that came with the start-up of the new onsite biomass co-generation plant. It also factored in the transfer of knowledge that’s occurring due to a high number of retirements and new hires.
30 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Be well, stay well
Wellness Works at Domtar is not only the
People, as a general rule, like to feel they are
effort. The vision we have for ourselves – a place to work that is Agile, Caring and
name of a company-wide occupational
part of something bigger than themselves
health and safety program; it’s a fact. Strong
– that they are part of a team where their tal-
Innovative – requires sustaining an organiz-
participation in initiatives like the Health
ents and efforts are not just recognized, but
ational culture that engages everyone, earns
Risk Assessment (68% participation rate)
leveraged to realize synergies that create
trust and deepens relationships. This allows
shows that our people plan to be around
meaningful value and shared benefits. Clear
us to learn and develop, as individuals and
for a long time, not just working for Domtar
and consistent expectations, the right tools
as teams, which empowers us to execute
but enjoying their life to the fullest. This year,
and training, and a culture of fairness and
our plans with excellence and accelerate
we learned that our main health risks across
equal opportunity can unlock remarkable
the company are obesity, unhealthy eating
productivity and satisfaction. These behavi-
In 2012, Domtar invested approximately $15.7
habits, lack of exercise, and smoking. This is
ors allow individuals to grow and companies
million to provide more than half-a-million
vital information our wellness leaders will
hours of training to keep our colleagues safe,
use to build more programs like the Lifestyle
At Domtar, we believe that creating and main-
to maintain the highest standards of eth-
taining such a work environment doesn’t just
ical business conduct, and to develop skills
happen; it requires continuing, conscious
necessary to succeed and grow in their jobs.
Health Coaching, which offers employees one-on-one guidance from wellness experts.
Philip Thomas from the Ashdown Mill (before and after), one of the beneficiaries of the Lifestyle Health Coaching program
Our Vision, Mission, and Values Our vision is to be the leader in innovating fiber-based products, technologies,
Our facilities showed a lot of imagination in
and services, committed to a sustainable and better future.
creating vibrant programs such as the free
Our mission is to deliver the highest value to our customers,
health screenings at the employee clinic in
to empower our employees to excel, and to positively impact our communities.
Ashdown and Weight Watchers at Work in
To achieve our goals we will rely on the three core values that unite us, define us,
Plymouth. The Fort Mill, Marlboro, and Ariva
and create our success together: Agility, Caring, and Innovation.
Covington locations even earned recognition from the American Heart Association as Fit
It’s in our fiber to be
It’s in our fiber to be
It’s in our fiber to be
Friendly Worksites for their commitment to
Our industry is changing and so
We look out for each other’s safety
We always look to the future
are we. When we need to change
as well as our own. We never forget
beyond the horizon. We always
All these great stories – and sources of
course, we do it. We are doers, not
that our company is woven into the
want to make things better, and we
inspiration – are shared across the com-
talkers, but when we act, we act
fabric of our communities above
work together to do it. We bring our
thoughtfully. We’re always looking
resourcefulness and creativity to
pany through a monthly newsletter and
for simpler, more efficient ways
quarterly exchange among our local wellness
31 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
bear for long-term success.
We also support employees wishing to return to school to obtain additional qualifications that are directly or reasonably related to their position within the company. We reimburse up to 80% of costs related to courses taken at approved institutions, provide the applicant achieves a given level of performance. The performance of all salaried employees is supported with a structured management program that enables employees to focus on clear goals, priorities and expectations. Performance objectives are established at the beginning of the year, reviewed midyear, and evaluated at year’s end. This consistent, structured approach is intended to help employees achieve their development goals which also serves to strengthen and sustain Domtar’s organizational capabilities. In 2012, we also initiated a leadership program of “360-degree” surveys to support our organizational goals. These surveys enable managers to see themselves as their managers, peers and direct reports see them in the work environment. The most obvious indicator of employee satisfaction, the annual turnover rate, suggests that Domtar remains an attractive place to work. The employee turnover rate for salaried employees is approximately 5%. For hourly employees the turnover rate is even less. Domtar is exploring additional employee survey measures to deepen our understanding of employee satisfaction in order to maintain the company’s competitive position in attracting and retaining the right talent. Domtar requires evidence from all applicants for permanent employment that they are 18 years of age or older. Domtar does not discriminate against any employee or applicant because of age, race, color, religion, sex, sexual orientation, marital status, national origin, veteran status or disability. We support the goal of affirmative action to establish and maintain equal opportunity in the workplace.
Headcount by gender Q1 2013
Total workforce by region Q1 2013
32 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
EarthChoice Ambassadors in action The EarthChoice Ambassadors program is our way of inviting Domtar employees to bring life to our sustainable business
2012 was a banner year for the The Windsor EarthChoice Ambassador Chapter was established during the mill’s 25th Anniversary celebration.
EarthChoice Ambassadors. Chapters were established in our Kingsport,
TN, Windsor QC, Ashdown, AR manufacturing facilities and the Rock Hill, SC converting facility, bringing
800 What’s Your EarthChoice?
Partnering with the Student Conservation Association, over 100 employees participated in
educate and inspire our employees about topics such as Domtar’s collaboration with the Rainforest Alliance, Eating Locally with Bush-n-Vine, Pesticide Free Gardening and Composting, and The Environmental Impact of Food Waste.
The Fort Mill Operations Center and our Kingsport, TN mill held electronic waste collection events, collecting over 4000 pounds of old TV’s, computers, cables, phones, printers, fax machines, and monitors that might otherwise end up in a landfill.
At Work for the Planet, in Montreal, QC and Rock Hill, SC.
spoke to over 1800 4th graders, parents and teachers about how important trees ar from toothpaste, to homes, to electricity, to paper.
EarthWeek activities were held in Kingsport, Fort Mill and Domtar House celebrating International EarthDay on April 22.
Lunch and Learns were held to In the fall of 2012, Domtar House became a drop-off point for Lufa Farms - the first commercial rooftop greenhouse in the world - offering Domtar employees fresh, seasonal vegetables baskets.
During EarthWeek, over 800 Domtar Employees answered the question –
our count to over 75 EarthChoice Ambassadors in six locations! Together, the EarthChoice Ambassadors completed over 50 activities.
Opus Public Transit Program at Domtar House – through the purchase of an annual subscription, over 125 Domtar employees are receiving a discounted public transit pass.
Over 450 Domtar House employees were encouraged to participate in the In-Town without My Car celebration – promoting sustainable transportation options in Montreal.
A Volunteer Fair was held in Fort Mill providing employees with volunteer opportunities in our community, including York County Habitat for Humanity, Fort Mill Care Center, Classroom Central, York County Humane Society and Hospice & Community Care.
and donated 39 boxes of food to Moisson Montréal.
Domtar House collected
YEAR IN REVIEW
Kingsport employees participated in the Community Greenbelt Clean-Up Day. The greenbelt runs eight miles along the Holston River and Reedy Creek, and close to our Kingsport Mill.
Domtar’s 2011 Sustainable Growth Report listed 35 key performance indicators; one of which was: Form EarthChoice Ambassadors across our facilities by 2020.
Over 150 Domtar employees participated in an electric car and hybrid test drive event at the Fort Mill Operations Center, hosted by Ford Motors.
practices by making a difference in the world through a focus on our customers, colleagues, company and communities.
FREECYCLE Six FreeCycle Days were
Four EarthChoice Heros were recognized in Fort Mill: Melody Millsaps, Julianne Guzik, Susan Knox and Ron Watkins. An EarthChoice Hero is a Domtar employee who is committed to a sustainable lifestyle, be it social, environmental or service-based in nature, and is a positive influence in our office.
60 33 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
held throughout the year. FreeCycling is the act of giving away usable unwanted items for free instead of throwing them away. Any items not FreeCycled were donated to local charities.
Over 60 coats, hats and gloves were collected and donated, by Kingsport employees, to Frontier Industries for distribution to the needy.
Our communities The connection between Domtar and its host communities runs deep. We have built our past and present together, and we are shaping our future through the natural give-andtake that comes from shared interests. We rely on our communities to provide us with a skilled workforce that is vested in sustaining a strong performance and healthy working environment at our facilities. In turn, we are committed to contribute meaningfully to their development – both in prosperous times and when the economy is less than thriving. We are partners in every sense of the word, because our achievements and long-term prospects are inextricably linked. An economic engine... Domtar is often one of the largest employers in the cities and towns
skills and training, and taxes for their respective municipalities. It
where we have mills, plants or offices. All told, our payroll spending is
also means we are in the privileged position of being able to have
more than $900 million a year. That means we are an important source
a real and positive impact on these communities that goes beyond
of local purchasing, wages and benefits for residents, investment in
Energizing Rothschild – “We” did it! Construction of the 50-megawatt, biomass
waste to produce steam for Domtar’s oper-
by 30% because the biomass will replace
fueled power plant on the grounds of our
ations and electricity for the Wisconsin grid.
fossil fuels for steam generation. The pro-
Rothschild Mill is a prime example of a
Since it was launched in 2011, the construc-
duction of carbon neutral, renewable energy
partnership that’s benefitting the local community and residents of the state. The facility, a $255-million joint project with We Energies, is using renewable wood
tion project has employed 450 local trades, and much of the building material has been sourced from area suppliers such as Merrill Iron & Steel in nearby Weston. When
was an important factor for We Energies, which is required by state law to meet a 10% renewable energy requirement by 2015. “With the biomass plant, we are diversify-
fully operational, the plant will employ 34
ing our sources of renewable energy,” said
workers who will transition from working
Gale Klappa, Chairman, President and CEO
on Domtar’s aging steam boilers, which
of We Energies. “Unlike our wind turbines
will be shut down. The plant will also be a
that require certain conditions to generate
source of recurring revenues for the village
power, we can call on the Rothschild plant
of Rothschild and Marathon County.
when we need it, at any time of the day or
In addition to its primary mission, the new
night, or any season of the year.”
facility will increase efficiencies at Domtar’s
The Rothschild biomass power plant is on
Rothschild Mill while improving emissions
schedule to start up at the end of 2013.
Rothschild biomass power plant
34 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
...and a cornerstone of our communities
As a corporation, our giving is guided by our Community Investment
We care about the people and the places around us, and our team
Policy, which focuses on three main areas of support: Social
can be seen coaching youth sporting teams, leading Scouts and Girl
Development, Health and Environment, and Development of our
Guide troops, being active in local government and on school boards,
Communities. A number of major donations were allocated in these
and helping charities of nearly every vocation. At the mill level, every
three areas in 2012, five of which are highlighted below. Domtar and
location supports local, regional and national causes that provide a
its employees also committed $780,000 to Centraide/United Way last
better quality of life for those in need. The extent of their involvement
year, to assist in the umbrella organization’s mission to “improve lives
is hinted at in our “Caring File” on pages 34-35 – even such a long list
by mobilizing the caring power of communities around the world to
could only scratch the surface of our employees’ involvement.
advance the common good.”
Music, learning and healthy living Through our community investment pro-
The Montreal Chamber Orchestra (MCO) was
gram, we gave over $1.6 million in 2012 to
thrilled when we renewed our commitment
organizations that engage our youth, enhance
to partner for the Domtar Discovery Concert
our environment, ensure our wellbeing and
Series 2012-2013. Classical and contemporary
contribute directly to the quality of life in our
music lovers were treated to virtuoso per-
formances by emerging artists like trombonist
The McGill University Health Centre
Keith Dyrda and violinist Nikki Chooi. MCO
Foundation (MUHC) and the Fondation du Centre hospitalier de l’Université de Montréal (CHUM) were granted $1 million over six years
maestra Wanda Kaluzny revealed the true impact of our support when she said, “Thanks to Domtar’s contribution, our audiences can keep on discovering exceptional talents from
Since arriving on the scene, First Book has
around the world, many of whom are perform-
distributed more than 90 million books and
healthcare. The CHUM has allocated the funds
ing their Canadian debut on our stage.”
educational resources to programs and
to better understanding mental illness, and
A solid education and a love for books are two
schools serving kids from low income famil-
how best to prevent and treat this growing
of the things we wish for every child in our
to help build two medical facilities that will place Montreal on the cutting edge of global
social affliction. The MUHC, in recognition of
communities, which is why we were proud
our donation, is naming the Pulmonary Gym
to support the dedicated efforts of First Book
at its new hospital in Domtar’s honor.
and Classroom Central.
ies in the U.S. and Canada. Last year, we joined their fight for childhood literacy by providing much needed financial support, including a grant that put books directly into the hands of children who can really use them. For Classroom Central, we decided to mix business and pleasure with a little dash of fundraising during our Vendor Partnership Meeting and Charity Golf Event. Classroom
35 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Central provides paper and many other types of school
the caring file
supplies to over 200 high-poverty districts in North and
It is customary for companies to highlight some of the meaningful
South Carolina. By soliciting contributions from our
engagements they have in their communities, especially with organ-
vendors in exchange for a day on the links – and making
izations that provide needed services or cultural opportunities that
a contribution of our own – we raised more than $150,000
make the places where we live special. We have highlighted a few
to provide these tools for learning to the teachers and
of them in more detail on the previous pages, however, we believe
students who need them most.
it is also important to recognize the extent to which our employees
For our work with the Student Conservation Association
routinely engage in activities in their communities. Just take a look at
(SCA), everyone got in on the fun! In addition to provid-
their contributions in 2012!
ing financial assistance, we organized two volunteer days and enlisted the help of Domtar employees, their families and friends. In the Montreal area, more than 50 volunteers converged on Parc des Rapides for an intensive day of removing invasive reeds, and planting Social Development Junior Achievement of Arkansas volunteer teaching › Science Screen Project video in Ashdown › Annual Dryden Conservation Course for high school students › Keewatin Patricia District School Board donation › Children’s Delight Entertainment Series donation › Paper donations to the Espanola / Massey Literacy Council and Éveil à la lecture literacy initiative in the Windsor area › Sponsorship of Fort Mill High School Marching Band trip to Dublin › Support to the North Carolina State University School Foundation › Drop-out prevention support for Pitt County public schools › Boys and Girls Clubs of Pitt County afterschool and special event activities › Project Graduation and After Prom in Hawesville › Hancock County and Cannelton Back to School Bash › Adopt a Class in Hancock and Perry Counties › Silent auction items for Kamloops Mayor’s Gala for the Arts and Twin Rivers Education Center › Support for Thompson Rivers University Foundation › “Heavy Metal Bus Tour” introducing Nekoosa area students to manufacturing › Business /education partnership in Nekoosa › Washington Court House local P-16 Council promoting education from preschool to college › Mock interview and application exercise for soon-to-be graduates at Washington Court House area schools › Windsor Mill scholarships to Laval University and École le Tournesol › Windsor engineer volunteers at École le Triolet school in Sherbrooke › Promotional support for Eastern Townships book fair › Crayons to Computers program in Covington › Volunteering at the soup kitchen and collecting warm coats for the homeless through Hosea House in Covington › Support for the Covington Boy Scouts › Health and Environment Cancer Society Relay for Life in Jessup, Espanola, Fort Mill, Hawesville, Johnsonburg, Kamloops and Kingsport › Susan G. Komen Race for the Cure in Ashdown, Fort Mill and Hawesville › Community clean-up days in Ashdown and Johnsonburg › School recycling bin donation program in Ashdown › Sponsorship of handicapped youth athlete in Aneby, Sweden › Attends Cup community soccer tournament in Aneby › Support for ski, running team, gym and gymnastics clubs in Sweden › Donation of reflective clothing to Swedish nursery school kids › Support for a drug free society in Sweden › Sponsorship of Alpe d’HuZes foundation to benefit the Dutch Cancer Society › Food drives for local and regional food banks in Covington, Dryden, DuBois, Johnsonburg, Kingsport, Montreal and Plymouth › Enbridge Ride to Conquer Cancer in Montreal › Mo-vember to raise awareness of men’s health in Montreal › Blood drives in Espanola, Fort Mill, Montreal, Kingsport and Marlboro › Holiday toy drives for underprivileged kids in Ashdown, Dryden, DuBois, Jessup, Johnsonburg, Kamloops, Kingsport, Marlboro and Plymouth › Montreal Pineapple Challenge to benefit Leukemia and Lymphoma Society of Canada › Local
indigenous trees and shrubs. An equally motivated team from Fort Mill gathered at Andrew Jackson State Park to build a trailhead kiosk and picnic tables, establish authorized fishing areas, and install steps.
“Volunteering and raising funds for deserving organizations is one of the meaningful ways we give back to the communities where we live and work. It’s more than just rewarding; it can also be a lot of fun!” said John D. Williams, Domtar’s President and CEO, who swung a golf club at the vendor meeting to raise money for schools, and swung a hammer to help build new equipment for the state park. Community investment 2012 United Way/Centraide – $780,000 (employees and Domtar) Corporate giving – $1.643 million* Mill communities – over $300,000 * Sum includes $1million pledge to the McGill University Health Centre (MUHC) and the Centre hospitalier de l’Université de Montréal (CHUM) to be dispersed over the next six years.
36 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
and state Special Olympics donation › Canadian Cancer Society donation › Dryden Minor Hockey donation › Grace Haven Seniors Respite Care Program donation › Dryden District Conservation Club donation › Big Brothers/Big Sisters Bowling for Kids’ Sake volunteer bowlers › Hosting of the DuBois Wounded Warrior Project Golf Outing › Espanola Big Bike Race for Heart and Stroke › Copy paper for Espanola United Way › Adopt a Senior Step-A-Thon in Espanola › Espanola Emergency Response Unit at Camp Quality to give kids suffering from cancer rides on tyrolean traverse ropes › Charlotte Energy for Life Walk to benefit the United Mitochondrial Disease Foundation › Giving to the American Red Cross for Emergency Services rescue relief › American Heart Association – Research, Education, Health Care and Advocacy › Tissue packs to “Bunco for Breast Cancer” event › Duke University Hospice Services Development Fund › The Foundation for Health “Lights for Life” › Daffodil Days for the American Cancer Society › Johnsonburg Brain Aneurysm Awareness 5k fun run › Fundraiser in Johnsonburg for the Juvenile Diabetes Research Fund (JDRF) › Silent auction items for the Kamloops AAA, Kamloops Stroke Recovery, Elizabeth Fry Hearts for Homes, Nikkei Hockey trip, and BC high school curling › Prizes for P&P curling bonspiel, Kamloops Harley Owners Poker Run, Kamloops Volves Spring Tourney and Kamloops Blaze Soccer Club › Tents for Kamloops Therapeutic Riding Association, ALS Society of BC, JDRF Swing for the Cure charity golf tournament, Kamloops Kidney Walk, Logan Lake minor hockey, Westsyde Alumni basketball tournament, Atom hockey tournament and Kamloops Wish Trail Ride › Royal Inland Hospital Foundation › Kingsport chili cook-off for Second Harvest food bank › Hamburger steak lunch and coin drive for the Give Thanks Walk for St. Jude Children’s Research Hospital in Kingsport › Supplies for Kingsport animal shelter › Cell phones and eye glasses donated and recycled › Shoes and coats donated to Kingsport organizations › Contribution to the Windsor Héros en trente program to purchase a defibrillator for the local arena › Community hazardous waste collection in Windsor › Support and volunteer time to the Centre hospitalier de l’Université de Sherbrooke Foundation › Val-St-François social services network Walkathon in Windsor › Clothing drive for New Horizons Supported Services in Upper Marlboro › Donation of non perishable food and personal care items to Matthew 25 Ministries in Covington › Paper donation to Mental Health America of York and Adams Counties › Paper donation to Nova Scotia Sports Hall of Fame, the MS Society of Nova Scotia and the Yarmouth Hospital Gala fundraiser › Krebshilfe for kids with
cancer in Germany › Assistance to the needy in Germany through Leben gestalten/Förderverein der evangel. Familienbildung › Assistance to underprivileged mothers and children in Germany through AWO › Caritas in Germany › Attends team in Oxfam Trailtrekker Development of our Communities Salvaged materials donation to Ashdown technical training school › First Nations Natural Resource Youth Employment Program to develop forestry and resource management skills in Dryden › 10,000 seedlings donated and Domtar foresters volunteered to plant trees with the Dryden Lions Club › Sponsorship of the Aboriginal Trades and Employment Symposium in Northern Ontario › Paper to Patricia Regional Tourist Council for production of a fishing map to promote tourism in Northwestern Ontario › Donation to Community Volunteer Connections in Dryden › Float in the 2012 DuBois Community Days Parade › Table top rolls of paper to the community of Espanola › Donation to Carolina Thread Trail, a regional network of greenways and trails › Fort Mill Rotary Club activities › Pitt Community College Capital Campaign training initiatives › East Carolina University Educational Foundation scholarships › East Carolina University funding and intern program › Premature baby diapers to the Monkey World Ape Rescue Centre from Attends Europe › Contribution to STRIVE, which provides support and professional skills to those with employment challenges › Support for Hawesville area fire department › Hancock, Perry and Spencer county fairs › City of Hawesville Steamboat Festival and Christmas parade › Lewisport Heritage Festival and Christmas parade › Hancock County 4th of July celebration › Paper donations to Hawesville area city and council offices › Kamloops Highland Games tent › BC Honey Producers silent auction items › Christmas cards sent from Marlboro and Tatum employees to soldiers overseas › Nekoosa Giant Pumpkin Festival › Safety Council Steering Committee supporting three counties › Paper for Progrès forestier magazine published by the Association forestière des Cantons de l’Est › Booth at Forêt jardinée community event › Sponsorship of the Windsor Paper Festival › Optimist Club Christmas celebration for Windsor area kids › Paper donation for La Poudrière historical site promotional calendar › Work with Old North Dayton Business Association › Participation in a KIDS roundtable in the UK on sharing expertise and skills with local businesses › Support for the Wakefield Community Foundation and the Wakefield Junior Triathlon
37 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
top-of-the-minute synopsis of the latest news.
The wonder of reading was opened to millions
In situations where it is simply impolite to
of young muggles (and other young-at-heart
What do Mad Men, power lunches in
read electronic devices over a meal, but
readers) through the magic of Harry Potter.
Washington, a boy wizard named Harry and
important to stay “in the know,” the printed
Domtar paper helped make this phenomenon
something called a “paper hotspot” share in
restaurant receipt might provide breaking
possible. But not everyone has ready access
news, the latest vote tally in Congress – or
to books. That is why, in 2012, Domtar teamed
common? They are all unexpected – but highly effective – strategies for reinforcing how a 2,000-year-
sports scores. You’ll notice there’s also an
up with the First Book program to put some
invitation from Domtar...
20,000 books in the hands of children in need in the communities where we operate. The
old product continues to sustain and
partnership was recently expanded, and we’ll
enhance some of the most inspiring forces
be offering another 60,000 books in 2013.
of modern society: literacy, entertainment
We are also a sponsoring partner for World
Book Night and are proud of our colleagues
Domtar’s innovative approach to product
at two dozen Domtar facilities who helped
advocacy is recognized for its success. It
hand out some 500,000 free specially printed
includes a new series of comedic videos
books to people who don’t read frequently
praised in an article in The New York Times,
or have limited access to books. We believe
and garnered the readers’ choice award for
that falling under the spell of a good book
an advertisement created especially for the
can help unlock more than just imagination.
1960’s-themed “Homage to Mad Men” issue
It can unlock opportunity.
While we are helping to close the gap for
The next time you are rubbing shoulders
those amongst us who have limited access
with power brokers lunching a block from
to books and the benefits of reading, it is safe
the White House at The Old Ebbitt Grill, or
to say that there is another segment of the
at the Hamilton restaurant, and you witness
population that is on information overload.
a competition to pick up the check, it may
They have such ready access to information,
be because the printed receipt includes a
the opportunity for introspection and insight Because you’re never too young to appreciate paper, we’ve created a youth-oriented offshoot of PAPERbecause, www.domtar. com/paperisgood. Through an action-packed video and captivating classroom materials, we’re helping educators teach kids how useful and fun paper can be in this age of tablets and handheld video games. Our messages were repeated in truly kaleidoscopic fashion in a poster inserted in the Spring 2013 issue of Learning magazine, popular with parents and teachers alike. Our youth campaign has proven the ideal complement to Domtar’s interactive website for children, the Forest Academy, launched in 2012 at www.theforestacademy.com.
38 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
can be lost or overlooked. Little wonder that at one of the premier annual technology showcases in North America, the South by Southwest (SXSW) Interactive Festival – promoted as “an incubator of cutting-edge technologies and digital creativity” – Domtar’s creation of a technology free zone proved irresistible. Hidden cameras captured the creators of the next generation of information technology happily unplugging and unwinding in the “paper hotspot” to collaborate, write, think, create and play… with paper.
Speaking up for our industry and our customers
introduced House Resolution 97, calling on federal agencies to provide
There’s much more to Domtar’s advocacy work than encouraging
paper-based communications for programs and services.
responsible paper use. We’re a regular voice heard on industry-
The right to choose paper returned to the forefront after U.S. Secretary
related issues and reforms at the federal, state and provincial levels.
of Education, Arne Duncan, stated that: “Over the next few years,
not alone. Last spring, congressmen Sean Duffy and Mike Michaud
From truck weights, to postal reform, maintaining consumer choice
textbooks should be obsolete.” Members of the Domtar senior man-
for delivery of statements, and preserving the use of textbooks for
agement team took to the pages of local and national newspapers
students, our Government Relations team was on post protecting
to question the wisdom of this approach given all the research that
our interests throughout the year.
shows children learn better from books than online. Following meet-
One of our highest advocacy priorities in 2012 was directly linked to
ings with the Secretary’s office, we received a pledge that, from now
our environmental sustainability objective of finding mutually bene-
on, paper and pixels would continue to co-exist as equally important
ficial carbon efficiency improvements in our supply chain (KPI #14).
tools in the American education system.
We joined with other shippers in a variety of industries to make the case for reducing traffic, fuel consumption and resulting emissions by introducing trucks that are configured to safely carry heavier loads on certain sections of the interstate highway system. Domtar continues to advocate that states should be allowed to raise truck weight limits to 97,000 lbs on six-axle vehicles on these roads (most states are currently limited to vehicles weighing no more than 80,000 lbs on five-axles). Numerous studies demonstrate that the extra axle makes these trucks as safe, or safer, than what is operated in existing fleets. For Domtar, this change would mean that we could ship one-third more paper in each truckload, thus reducing the number of trucks needed to carry a given volume. Another key issue this year was the potential elimination of “six-day” delivery by the U.S. Postal Service, something that could seriously impact our customers. Domtar went straight to the top, meeting with the U.S. Postmaster General, Patrick R. Donahoe, to express concern over the proposed legislation. We put our stamp on postal reform in Canada as well, when we teamed up with the National Association of Major Mail Users to discuss Canada Post’s (CPC) “E-Post” service. “CPC was promoting this
Stefan Nowicki and Thomas Howard of the Government Relations department
electronic document management service as ‘more environmentally responsible than paper’, and we took issue with that,” said Bonny Skene, Regional Public Affairs Manager. “We took the opportunity to
“It’s crucial that Domtar be aware and stay involved in shaping the
raise this concern directly with CPC President and CEO, Deepak Chopra,
outcome of issues that affect our company and its customers. Actions
in an effort to ensure CPC would no longer market this service at the
taken by any level of government can have tremendous repercus-
expense of paper media based on environmental factors.”
sions – positive or negative – on our business,” said Thomas Howard,
Domtar believes that consumers – especially the many seniors intim-
Vice-President of Government Relations. “We have an obligation to
idated by digital media – should be able to continue receiving printed
have our voice heard and to provide leadership on the issues with
copies of their social security checks, veteran’s benefits, and other key
documents. We shared our view with many federal agencies this year, such as the Social Security Administration and the IRS. It seems we’re
39 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Financial Highlights and Governance Domtar measures its annual corporate performance against four stra-
Purchases from suppliers
tegic key performance indicators (KPIs) of health and safety, customer
Domtar strives to build and maintain long-term relationships with
satisfaction, pulp productivity and profitability. Performance against
its suppliers and upholds the highest standards of governance. Our
targets in each of these cross-business categories is the foundation
supply of wood fiber is secured from multiple sources, mostly local to
of the Company’s Short-Term Incentive Plan.
each mill, providing a meaningful direct economic impact in our communities. This procurement represents the largest cost component
These targets are supported by the KPI framework unveiled in last
for the Company. Other raw materials such as chemicals and energy
year’s Sustainable Growth Report. Together, they demonstrate the
consumed in our manufacturing are purchased through a central
extent to which Domtar defines success broadly, through the lens of
purchasing group responsible for negotiating rates and ensuring
social, environmental and financial sustainability.
appropriate stocking and continued supply to our mills. Freight and distribution is executed solely by third parties and managed either
By the numbers In 2012, Domtar generated sales of $5.5 billion ($5.6 billion in 2011)
centrally or at the mill using a combination of rail, trucks, vessels and
and Earnings before Interest, Taxes, Depreciation and Amortization
barges. Domtar spent in 2012 an estimated $2.2 billion for various raw
(EBITDA before items*) of $799 million ($1.1 billion in 2011). The
materials (wood fiber, chemicals, energy) used in the manufacturing
decrease in profitability compared to 2011 was largely due to the
of its products, as well as freight and logistics to deliver the finished
company’s exposure to global pulp prices and lower sales volumes in
products to its customers.
paper that contributed to the equivalent of 61% and 13% respectively
Compensation to employees
of the EBITDA* decline when compared to the prior year.
Domtar is an equal opportunity employer providing competitive and
Our diversification into the global personal care market, our agility
attractive salaries, benefits and talent development initiatives. The
in repurposing our existing pulp and paper making operations to
Company paid more than $900 million in salaries in 2012 to approxim-
better meet market demand, and our continued efforts in fiber-centric
ately 9,300 employees in the United States (63%), Canada (31%), Europe
research and development are the foundation of our commitment
(5%) and Asia (1%). Approximately 53% are covered by collective bar-
to create $300-500 million of earnings from new business streams
gaining agreements, generally on a facility-by-facility basis. Domtar
within five years.
also provides its employees with various options for group insurance programs and contributes to various pension plan types including
Economic impact measurement
both defined-contribution (DC) and defined-benefit (DB) pension
Domtar assesses the economic impact of its activities throughout
plans. The total net cost for pensions in 2012 amounted to $75 million
a cross section of business partners and stakeholders including
($24 million for DC, $51 million for DB).
suppliers, employees, stockholders, debt holders, governments and host communities.
Value creation for shareholders
Facing the twin challenges of a secular demand decline for uncoated
Domtar is highly committed to building a sustainable business that
freesheet paper in North America and the cyclical nature of global
creates long-term value for its shareholders by executing on our
pulp markets, Domtar has set three strategic priorities to build a
Perform – Grow – Break Out strategic roadmap. Success is measured
business that will create sustainable shareholder value. First is to
using both a comparative Total Shareholder Return (TSR) to a peer
grow and find ways to become less vulnerable to the secular decline
group and a Return on Invested Capital (ROIC) (refer to the 2013 Notice
of uncoated freesheet paper demand, second is to reduce volatility
of Annual Meeting of Stockholders and Proxy Statement).
in earnings by increasing the visibility and predictability of our cash
As the Company implements its strategic plan, we remain committed
flows, and third is to create shareholder value over time by using our
to returning the majority of future free cash flow* to shareholders
through dividends and share buybacks. In 2012, 68% of Domtar’s free cash flow was returned to shareholders through a combination of share buybacks and regular dividends, for a total of $215 million. Domtar also announced on May 1, 2013 a 22% increase to its regular
* Non-GAAP financial measure
dividend to $2.20 annually, to be paid on a quarterly basis.
40 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Domtar continued its expansion of the Personal Care division with two
A solid foundation of corporate governance
acquisitions in 2012: Attends Healthcare Limited (“Attends Europe”)
At Domtar, all of our salaried employees, at every level of the organiz-
in March 2012 for $232 million, and EAM Corporation (“EAM”) in May
ation, must annually undergo an online training module and certify
2012, for $61 million. The addition of Attends Europe consolidates
their compliance with our strict Code of Business Conduct and Ethics.
Investing in the future
the Attends brand on both sides of the Atlantic, while EAM gives the
We believe that competitive markets are essential to our long-term
division long-term research capabilities to further differentiate its
sustainability. Vigorous competition is the means by which we con-
tinuously improve our performance and is how our commitment to
Domtar also made major capital investments to reposition and repur-
innovation is rewarded. All of our senior management and all of our
pose some of its pulp and paper operations. A $32 million project
salaried employees directly engaged in sales, marketing, or procure-
at the Marlboro Mill was invested to convert the facility from the
ment are required to complete an online antitrust training module
manufacture of declining communication paper grades to specialty
on an annual basis.
papers. An investment totalling $26 million was also made on one of
In line with the Foreign Corrupt Practices Act (FCPA), Domtar employ-
the pulp lines at the Ashdown Mill, to gain flexibility in switching from
ees engaged in activities related to our operations in China and
hardwood to softwood pulp-making. The mill’s low cost position and
who thereby may have dealings with a foreign official are required
the compelling global market outlook for softwood pulp were the
to undergo an anti-corruption training annually. For employees of
catalysts for this repurposing project. In total, capital expenditures for
our Chinese subsidiary, this training is conducted in person with a
maintenance, environmental projects and infrastructure amounted
representative of our Legal Department or external legal counsel. For
to $236 million in 2012 (2011 – $144 million), representing 61% of the
all other employees engaged in activities related to our operations in
Company’s depreciation and amortization charge.
China, this training is offered online. All members of our Board of Directors are independent, except for our President and CEO, and all are bound by a rigorous Code of Business
Value creation in 2012
Conduct for Members of the Board of Directors, as well as Corporate Governance Guidelines that comply with the listing standards of the
Raw materials* (purchased from suppliers) – $2.2 billion
New York and Toronto stock exchanges.
Salaries paid to employees – more than $900 million
To consult Domtar’s corporate governance documents and policies,
Capital investments in our mills impacting communities – $236 million
including our Code of Business Conduct and Ethics, and Antitrust
Capital returned to stockholders – $215 million
Policy, go to www.domtar.com. For details on our corporate governance structure, policies and practices, we invite you to refer to our
Cash taxes paid to fiscal authorities – $76 million
2013 Notice of Annual Meeting of Stockholders and Proxy Statement,
Interests paid to debt holders – $69 million (excluding $47 million for debt tender premium)
and our 2012 Annual Report on Form 10-K, also available on our website.
Community Investment commitments made to non-profit organizations – more than $2 million
* Wood fiber, chemicals, energy and freight, included in cost of goods sold
41 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
Global Reporting Initiative (GRI) Content Index Domtar’s 2012 Sustainable Growth Report was issued in accordance with the Global Reporting Initiative (GRI) G3.1 guidelines for the B reporting level. The following index shows where information can be found in this report and other sources. Profile
In this report
In other Domtar publications
Strategy and Analysis 1.1 Message from the president and CEO
1.2 Description of key impacts, risks, and opportunities
Pages 4, 43-44
Organizational Profile 2.1 Name of the organization
2.2 Primary brands, products, and/or services
Pages 1, 23, 25-26
2.3 Operational structure
2.4 Headquarters location
2.5 Countries where we operate
2.6 Nature of ownership and legal form
2012 Annual Report on Form 10K
2.7 Markets served
Pages 1, 23, 25-26
2012 Annual Report on Form 10K
Scale of the organization
Pages 3, 30, 38-39
2012 Annual Report on Form 10K
Significant changes in the reporting period
Pages 2, 24-25
2012 Annual Report on Form 10K
2.10 Awards received in the reporting period
2012 Annual Report on Form 10K
Report Parameters 3.1 Reporting period
Page 2, inside back cover
3.2 Date of most recent previous report
Inside back cover
3.3 Reporting cycle
3.4 Contact info
Inside back cover
3.5 Process for defining report content
Inside back cover
3.6 Report boundary
Inside back cover
Specific limitations on scope / boundary
Inside back cover
Basis for reporting on joint ventures, etc.
Inside back cover
3.9 Data measurement techniques
Inside back cover
3.10 Explanation of any re-statements of information from previous reports
Inside back cover
3.11 Significant changes from previous reports regarding scope/boundary
Governance, Commitments and Engagement 4.1 Governance structure
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 15-21] and www.domtar.com/en/corporate/governance
4.2 Chair of highest governance body also an executive officer
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 15-21] and www.domtar.com/en/corporate/governance
4.3 Number of independent and non-executive board members
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 9-12]
4.4 Mechanisms for shareholders/employees to provide recommendations to the board
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 6, 8 and 20]
42 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
In this report
In other Domtar publications
Governance, Commitments and Engagement 4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives and performance
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 12-14, 22-50]
4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided
Code of ethics – www.domtar.com/en/ corporate/ethics/286.asp
4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization’s strategy on economic, environmental, and social topics
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 8-21]
Internally developed statements of mission or values, code of conduct and principles relevant to economic, environmental and social performance
2012 Annual Report on Form 10K
4.9 Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance 4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance
2012 Annual Report on Form 10K
Domtar’s Board of Directors has an oversight role in regards to sustainability KPIs and is not evaluated on the achievement of these targets. Management and employees are responsible for developing and executing the company’s sustainability strategy.
2013 Notice of Annual Meeting of Stockholders & Proxy Statement [pages 18-19]
Page 44 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization
4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses
4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic
American Forest and Paper Association; National Association of Manufacturers; Technical Association of the Pulp and Paper Industry; North Carolina Manufacturers and Chemical Industry Council; Forestry associations of Arkansas, Kentucky, Michigan, North Carolina, Ontario, Pennsylvania, Quebec, South Carolina, Tennessee, Texas, Virginia, Wisconsin; Paper associations of Arkansas, Tennessee, Wisconsin; Envelope Manufacturers’ Association; British Columbia Council of Forest Industries; National Council on Air and Stream Improvements
4.14 Our stakeholders
4.15 Selection of stakeholders with whom to engage
4.16 Approaches to stakeholder engagement
4.17 Key topics and concerns that have been raised through stakeholder engagement
Pages 6-9, 32-33, 37
Economic EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments
Pages 34, 38-39
EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change EC4 Significant financial assistance received from government
Annual Report on Form 10K [pages 75 (Operating Expenses) and 76 (Retained Earnings)]
2012 Annual Report on Form 10K [pages 75-78] Page 26
43 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
In this report
In other Domtar publications
Environmental EN5 Energy saved due to conservation and efficiency improvements
EN14 Strategies, current actions, and future plans for managing impacts on biodiversity
EN16 Total direct and indirect greenhouse gas emissions by weight
EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved
EN20 NO x , SO x , and other significant air emissions by type and weight
EN21 Total water discharge by quality and destination
EN22 Total weight of waste by type and disposal method
EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation
EN28 Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with environmental laws and regulations
EN29 Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce.
Labor practices and decent work LA1 Total workforce by employment type, employment contract, and region, broken down by gender
LA4 Percentage of employees covered by collective bargaining agreements
LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs
LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender
LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious disease
LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings
LA12 Percentage of employees receiving regular performance and career development reviews, by gender
Human rights HR6 Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.
Society SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs.
SO3 Percentage of employees trained in organization’s anticorruption policies and procedures.
SO5 Public policy positions and participation in public policy development and lobbying.
Product responsibility PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.
Pages 5, 26
2012 Annual Report on Form 10K [Message to Shareholders]
44 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
GRI Disclosures on Management Approaches ECONOMIC
For more information about the financial performance of the
A summary of Domtar’s key risks and opportunities, strategic
company, the key risk and opportunities we face, and our sus-
business objectives, economic performance and market presence
tainability strategy and implementation efforts, please refer to
can be found in our 2012 Annual Report on Form 10-K (Business
page 2 (Message to Stakeholders) and page 4 (Our Approach to
Overview [pages 4-17]).
Sustainability), as well as Domtar’s 2012 Annual Report on Form 10-K (pages 14-15).
A detailed analysis of business risks, strategic business objectives, economic performance and market presence can be found
in Domtar’s 2012 Annual Report on Form 10-K (Risk Factors [pages
• Labour practices and decent work
• Human rights
With regard to indirect economic impacts, Domtar is a primary
employer in the large majority of the communities in which we
• Product Responsibility (refer to ‘Our Products’ pages)
operate pulp and paper mills, and Personal Care manufacturing
Domtar’s Code of Business Conduct and Ethics is an expression of
facilities, in North America and Europe. Our more than 9,200 em-
the company’s core values and is a framework for decision making
ployees spend a portion of their wages locally and regionally, and
for employees at all levels of the Corporation, including Officers.
in so doing contribute to the economic lifeblood of their communities. Similarly, the employees of the suppliers of Domtar’s goods
All Domtar employees are required to consult, understand, comply
and services also recirculate a portion of their wages in the com-
and stay up to date with the Code of Business Conduct and Ethics
munities in which they live and work.
on an ongoing basis. This Code embodies the company’s commitment to the highest standards of ethics and business conduct and governs our relationships with customers, suppliers, shareholders, competitors, the communities in which we operate, and with each other as employees. Domtar has also made publically available 13 corporate policies that provide guidance to employees at all levels of the Corporation on various key business aspects, including Antitrust, Whistleblower Protection, Health and Safety, the Environment, Human Rights, amongst others. Domtar’s 24/7 Whistleblower Hotline is independently operated and the phone number is posted prominently on the company’s Intranet site. Domtar has operating facilities in the United States, Canada and Northern Europe, jurisdictions in which anti-child labour, freedom of speech, freedom of association, and safe workplace rights are commonplace. For more information on our Code of Business Conduct and Ethics, please refer to the Domtar website: www.domtar.com/en/corporate/governance/4569.asp
Sustainability Strategy Domtar’s 2011 Sustainable Growth Report unveiled the company’s approach to sustainability. This approach is supported by five success factors with supporting key performance indicators (KPIs) that provide the framework for reporting on sustainability strategy and implementation progress going forward.
45 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
The above success factors and related KPIs
Nine of Domtar’s ten Corporate Directors
Environmental and health and safety is-
were developed through extensive internal
were confirmed as independent by a third-
sues are reported quarterly to the Board
consultation across the business at both
party review in February 2012, in relation
or Directors’ Environmental, Health and
the operational and strategic levels, along
to the independence requirements of the
Safety Committee. The Senior Vice-President,
with external validation with a number of
listing standards of the NYSE and TSX as
Law and Corporate Affairs is responsible
key external stakeholders including NGO
well as the company’s own Corporate
for reporting environmental issues to the
partners and major suppliers.
Governance Guidelines and Director
Committee, while this responsibility for
health and safety issues falls under the
For a full listing of Domtar’s strategic focus areas and associated KPIs, please refer
The Board of Directors meets at least
to pages 4-5.
six times per year, with five Committees
Domtar’s approach to sustainability as a core business strategy and positioning for the future is also referenced in the company’s 2012 Annual Report on Form 10-K (pages 14-15).
of the Board (Audit, Nominating and
environmental impacts of their activities. This training is reviewed and repeated pe-
Environmental, Health and Safety, and
riodically, either under the umbrella of the
Finance) meeting in addition to this.
ISO 14001 system (for those facilities that are
For more information please refer to the
Responsibility for sustainability strat-
egy development and implementation at
Domtar resides in the Law and Corporate
Affairs Department, under the Senior
Domtar’s policies on the Environment and
of Sustainability who also directs a crossfunctional Sustainability Committee comprised of eight senior management level employees from across the business (Operations, Environment, Human Resources, Communications, Marketing, Government Relations, and Finance). The Sustainability Committee convenes on a monthly basis to provide input and guidance to the Corporation’s sustainability efforts.
certified), or under programs that mirror the ISO 14001 standards. Detailed policies highlighting the requirement of these environmental management systems are provided and periodically reviewed by the Law and Corporate Affairs Group. Implementation of these policies, as well as regulatory compliance status, is reviewed periodically via
Affairs, one of nine members of Domtar’s
This strategic work is led by a Vice-President
All facilities receive training related to the
Corporate Governance, Human Resources,
Corporate Governance pages of the Domtar
Vice-President of Law and Corporate
Senior Vice-President, Human Resources.
on Health and Safety set the standard for
independent, third-party audits and the results of these audits are communicated to the Board of Directors.
company performance. We hold the health
Domtar has a wide-ranging strategy to ad-
of our employees, as well as protection of
dress its environmental footprint. This strat-
the environment, as a sacred trust and see
egy includes specific reduction targets for
these as critical to the success of our busi-
both Scope 1 and Scope 2 GHG emissions at
ness. We are committed to promoting the
all pulp and paper manufacturing facilities.
safety and wellness of our employees at
It also addresses non-manufacturing facili-
work and at home and encourage and em-
ties by looking at energy systems and elec-
power employees to actively participate
trical demand management, transportation
in safety on and off the job. To that effect,
of raw materials and finished goods, em-
Domtar has put in place Environment and
ployee behaviors, and product use. While no
Health and Safety policies, to which all fa-
targets are set for these parameters at this
Corporate oversight on sustainability strat-
cilities must abide. These policies can be
time, a process to assess the environmen-
egy is provided to Domtar’s Management
tal impact of these activities is underway.
Committee by Domtar’s 10-person Board of
Directors that is responsible for the overall
stewardship of the Corporation.
In addition to GHG emissions, Domtar’s strategy includes the reduction of its water consumption and waste generation. Detailed action plans are currently being drawn to set reduction targets and these should be completed by the end of 2013.
46 DOM T AR 2 0 1 2 sust a i n a b l e g r o w th r e p o r t
About this report Data
Global Reporting Initiative
This Sustainable Growth Report covers
This Sustainable Growth Report is issued in
David B. Struhs
Domtar’s 2012 activities related to the com-
accordance with the G3.1 guidelines of the
pany’s sustainability agenda. Information
Global Reporting Initiative (GRI).
regarding company sustainability efforts is published annually. Domtar’s last report
was published in 2012 and covered the pe-
Environmental data is gathered at our mills
riod ending December 31, 2011. The informa-
throughout the year and is consolidated
tion reported in this document principally
for reporting. The baseline of 2010 for en-
Comments Feedback from readers is welcome. Please write to us at: email@example.com or call 803-802-8001.
covers our pulp and paper mills, our distri-
vironmental performance target setting
bution and converting operations, and our
was selected to reflect the results of the
personal care division in North America.
data accuracy verification efforts described
Domtar does not collect data on joint ven-
above. Financial and governance highlights
tures in which it has less than 50% interest
are from the 2012 Domtar Annual Report
because they are managed in partnership
on Form 10-K. Information regarding prod-
rather than directly by the company. As a re-
ucts is provided by Domtar’s Sustainability
Printed on a Komori Lithrone 40P 6 color press with inline aqueous coating.
sult, these companies are mentioned only
and Business Communications department.
as being part of Domtar’s assets and are not
Other data, such as that related to forest cer-
quantified in any of the tables. The environ-
tifications, safety performance and environ-
mental data provided in this report, unless
mental performance are compiled through-
otherwise noted, is from Domtar’s pulp and
out the year in consultation with the pulp
paper manufacturing operations as they
and paper mills, distribution and convert-
represent the company’s most significant
ing operations, personal care facilities and
environmental footprint. Environmental
data for 2011 and 2012 have gone through an internal audit process and are deemed accurate. The methodology used to build Domtar’s corporate database for tracking greenhouse gas emissions has been verified externally and is deemed accurate. This verification process includes providing explanations for some of the differences in data presented in previous reports. Financial results are for the fiscal year 2012.
Domtar’s Sustainability Committee deter-
Paper Cougar® Smooth 80 lb. Cover Cougar® Smooth 80 lb. Text
Domtar is pleased to make an annual contribution of $350,000 to WWF from the sale of EarthChoice® products.
mined this report’s content based on our previous sustainability reports, as well as its relevance to the company’s stakeholders, including impacts on local ecosystems and
®WWF Registered Trademark. Panda Symbol © 1986 WWF. © 1986 Panda symbol WWF-World Wide Fund for Nature (also known as World Wildlife Fund). ®“WWF” is a WWF Registered Trademark.
host communities of our principal manufacturing facilities. Environmental data is not currently included from our Personal Care segment and China operations. Domtar’s Form 10-K also provides a materiality framework based on regulatory requirements for business-wide risk and opportunity disclosure therein.
special Thanks Marie Cyr, Assistant Superintendent, Windsor, QC photographed on the cover Jean Sharkey, Sales Representative, Ariva, Albany, NY appearing on page 30 Byron Dowell, Bleach Pulp Mill Supervisor, Hawesville, KY featured on page 35
©2013 Domtar Corporation Printed in the United States
2012 Sustainability Report - Domtar