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F PA C S U S TA I N A B I L I T Y I N I T I AT I V E FPAC VISION A L E A D E R I N A D VA N C I N G T H E G L O B A L C O M P E T I T I V E N E S S A N D S U S TA I N A B L E S T E WA R D S H I P O F T H E C A N A D I A N F O R E S T P R O D U C T S I N D U S T RY

F PA C S U S TA I N A B I L I T Y S TAT E M E N T The Canadian forest products industry contributes to society’s well-being through its products and activities—from forest to market. FPAC members are committed to a sustainable development path built on a profitable and competitive industry. We will operate in a manner that is: Economically viable, Environmentally responsible, Socially desirable

ECONOMIC VIABILITY To maintain the profitability of our industry as the basis for sustainable development • Financial viability: Ensure the profitability of our industry and its long-term economic viability. • Competitiveness: Continuously improve the competitiveness of our industry within the global marketplace. • Customer focus: Develop and deliver quality products and services to meet present customer and future market needs.

E N V I R O N M E N TA L R E S P O N S I B I L I T Y To ensure that our activities are conducted in a sustainable manner that protects the environment

SOCIAL DESIRABILITY To conduct our business with integrity and reflect evolving societal values in our performance

• Environmental performance: Comply with all applicable regulatory requirements and continuously improve the environmental performance of our operations.

• Our employees and workplace safety: Provide economic opportunities and a safe and productive work environment for our employees and contractors.

• Sustainable forest management: Practice sustainable forest management in all our operations in accordance with recognized standards and ensure that wood supply is from legal sources.

• Community and stakeholder relations: Engage our stakeholders in a proactive and transparent manner and be respectful of their interests.

• Resource use: Continuously improve the efficient use of natural resources, material, and energy. • Product recycling: Promote and continuously improve product recovery and re-use.

• Relations with Aboriginal Peoples: Be respectful of the economic and cultural interests of Aboriginal Peoples and encourage their participation in the forest products industry. • Economic contribution: Contribute to the economic and social well-being in communities where we operate, as well as regionally and nationally.


F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A

OUR COMMITMENTS

FPAC will be a leader in advancing the global competitiveness and sustainable stewardship of the Canadian forest products industry. Leaders lead by deeds. Four years ago, it was decided that as a condition of continuing membership all FPAC members would be required to have all of their Canadian forestry operations 3rd-party certified to one of three major sustainable forest management standards by the end of 2006. By the end of 2005, we were 95% of the way there. Now, the membership is taking accountability to the next level through the FPAC Sustainability Initiative. Every two years, FPAC will report on the collective performance of its members in three key areas: economic viability, environmental responsibility, and social desirability. Reporting biennially in this fashion recognizes the integrated nature of these three key pillars and demonstrates our commitment to continual improvement. In this 2005 Annual Review, we report an initial set of eight environmental and forestry indicators that will be expanded for 2007. For added context, FPAC performance will be compared with that of the rest of the Canadian forest products industry.

Economic Viability: Maintaining an economically strong industry will ensure that we can meet the expectations of major stakeholders, including customers, lenders, and investors, by providing a platform for sustainable development and continual improvement. An economically viable industry produces a greater magnitude of benefit for society. The single-most important facets of economic viability are being competitive on a global scale and retaining a strong customer focus— delivering quality products and services to meet present customer and future market needs.

Environmental Responsibility: Our commitment includes compliance with all applicable regulations and more. By promoting continual improvements in every aspect of our environmental performance, we will strive to reduce the environmental footprint of our operations through efficient use of raw materials and energy and to promote even more recovery and re-use/recycling. Practising sustainable forest management along with forest certification will assure customers that the products they buy are made from wood legally sourced and from forestry operations managed in accordance with internationally recognized standards.

“The Canadian forest products industry wants to make a statement: FPAC members are proud of their improving record pursuing sustainability in every aspect of our business. In 2005, FPAC’s Board of Directors approved the FPAC Sustainability Initiative formalizing our commitment to achieve further sustainability improvements, and expanding our accountability to all Canadians. As a result, FPAC members will now publicly benchmark and report on their performance every two years against a range of environmental, social, and economic indicators that are litmus tests for sustainable development and global competitiveness. We’re not going to make it easy on ourselves. We welcome the challenge.”

Social Desirability: This is about being good neighbours and employers. We will provide economic opportunities and productive and safe work environments for employees and contractors as well as encourage the participation of Aboriginal Canadians in the industry in a manner consistent with their economic and cultural interests. By engaging our communities in a proactive and transparent manner and striving to contribute to their economic and social well-being, this industry can be a source of strength and stability, locally, regionally, and nationally.

John W. Weaver Chairman, FPAC Sustainability Committee President & CEO, Abitibi-Consolidated

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TOTAL PARTICULATE MATTER (PM) EMISSIONS (kg/tonne) Average for pulp and paper mills reporting

TOTAL REDUCED SULPHUR (SO2) EMISSIONS (kg/tonne) Average for pulp and paper mills reporting

FPAC Members

2.0

Source: FPAC Environmental Data Survey.

2003

2001

2000

1999

2003

2001

2000

1999

0

ENERGY INTENSITY (Pulp and Paper Mills) Percentage change (GJ/tonne product)

GREENHOUSE-GAS EMISSION INTENSITY (Pulp and Paper Mills) Percentage change (CO2e kg/tonne product)

FPAC members continue to make energy efficiency improvements to enable pulp and paper mills to reduce their energy consumption per tonne of product. Minimizing site disturbance: As part of its certification requirements, an Ontario company has helped develop guidelines for minimizing site disturbance and damage from harvesting. This has been successful in further reducing the extent of rutting and site disturbance on harvested areas.

Maintaining bird populations: A Manitoba company has undertaken a forest bird monitoring project to study the relationship between stand-level habitat attributes and the presence and abundance of specific species during breeding season. This will help develop biodiversity strategies predicting the population of species as the forest landscape changes over time.

Source: FPAC Energy Monitoring Report.

Non-FPAC

2004

2002

-60

2001

-40

2000

2004

2003

2002

2001

2000

-20

FPAC Members

-20

Non-FPAC

2003

FPAC Members

-5

-15

Better watercourse conservation: To mitigate soil disturbance and sedimentation into watercourses, a Nova Scotia company is incorporating a GIS tool developed by the University of New Brunswick into its management planning to identify potential unmapped watercourses.

1

FPAC members are decreasing sulphur dioxide emissions, reducing a pollutant that contributes to smog and acid rain and is associated mainly with the burning of fossil fuels.

-10

FOR FPAC MEMBERS FROM COAST TO COAST, EVERY ECOSYSTEM IS A LIVING LABORATORY FOR IMPROVING CANADA’S ENVIRONMENT.

2

FPAC members are reducing total emissions of particulate matter, a significant component of poor air quality.

Source: FPAC Energy Monitoring Report.

ENVIRONMENTAL INDICATORS

TRACKING OUR PROGRESS

1998

.5

3

1998

Source: FPAC Environmental Data Survey.

1.0

THE FPAC SUSTAINABILITY INITIATIVE

Non-FPAC

4

1.5

0

FPAC Members

5

Non-FPAC

FPAC pulp and paper members have made significant reductions in greenhouse-gas emissions per tonne of product.

Caribou conservation: Protecting woodland caribou is a priority across Canada. In Quebec, one company has developed a new logging pattern that conserves caribou habitat. It hopes to learn more about how forestry impacts the herds and to adapt forest management planning and practices to maintain and even increase current caribou populations.

Carbon tracking: An Alberta company recently commissioned a carbon lifecycle analysis for its operations as well as a critique of its current business plan. This is helping prepare the company for regulatory emission reductions as well as for development of initiatives enabling carbon uptake and storage.


SFM CERTIFICATION IN CANADA 2001–2005 Millions of hectares

EFFLUENT FLOW: BOD and TSS per tonne trend (kg/tonne) Average for pulp and paper mills reporting

100 Total Forest Land Certified – FPAC Members

4

Fossil fuel

19%

Purchased electricity

20%

Other

Source: FPAC Energy Monitoring Report 2004.

BIOMASS SHARE 2004 (Pulp and Paper Mills) 59%

2%

Biomass and small hydro power accounts for nearly 60% of the energy used by Canadian pulp and paper producers.

Sowing the urban forest: FPAC members recycle over five million tonnes of waste paper annually. This is more than 20 million cubic metres of material diverted from landfill, or about enough to fill Toronto’s domed stadium 13 times over.

20 0

FORESTRY INDICATORS

FPAC members are contributing to the reduction of BOD (Biochemical Oxygen Demand) and TSS (Total Suspended Solids), two indicators of water quality. The lower each indicator is, the less the impact of mill operations on river health and aquatic life.

Self-generated (biomass, small hydro)

40

2003

2001

2000

1999

1998

1

60

2002

2

Source: Canadian Sustainable Forestry Certification Coalition, December 2005.

Source: FPAC Environmental Data Survey.

3

0

Total Forest Land Certified – Non-FPAC

80

2005

TSS per tonne – Non-FPAC

FPAC members have committed to full 3rd-party certification (CSA, FSC, or SFI) of forest lands under their management by the end of 2006.They are currently 95% (96 million hectares) towards achieving their goal.

ANNUAL ALLOWABLE CUT (AAC) Millions of cubic metres

Total AAC certified in Canada (FPAC and non-FPAC) 100

Total AAC certified in Canada by FPAC members only 73

Source: Canadian Sustainable Forestry Certification Coalition, December 2005.

TSS per tonne – FPAC Members

BOD per tonne – Non-FPAC

2004

BOD per tonne – FPAC Members

2003

5

Of the annual allowable cut from certified forests in Canada (100 million m3), FPAC members account for 73% (73 million m3).

Fuel conversion: A Manitoba company recently upgraded its energy system by including a wet fuel burner/dryer energy system to burn 100% of its wood residues, resulting in significant energy savings, waste reduction, and lower emissions, including of greenhouse gases. The design includes a recirculation feature that helps to reduce energy demand from the mill’s pollution-control equipment, further reducing greenhouse-gas emissions.

Waste not: A Quebec paper mill derives about 75% of its thermal power needs from landfill gas piped in from a municipal landfill nearly 13 kilometres away. The gas provides steam for the mill’s paper machines and heats the buildings in winter. It replaces 36 million cubic metres of natural gas and reduces carbon dioxide emissions by 540,000 tonnes per year.

Aboriginal partnership: The Missanabie Cree First Nation of Ontario signed a comprehensive forestry partnership agreement with the province and an FPAC member to generate jobs, training, and other benefits in exchange for access to forest harvesting rights in part of the First Nation’s traditional territories.

Air quality improvements: FPAC launched the Pulp and Paper Air Quality Forum process to stimulate investments at pulp and paper mills that improve air quality. One example: Taking biomass that used to be incinerated in beehive burners and using it to fire a cogeneration plant will give two mills in Prince George, B.C., all the heat and electricity they need plus enough surplus power for 39,000 homes, while closing the beehive burners will lower emissions significantly in the local airshed.


2005 FPAC Sustainability Initiative