2007 FPAC Biannual Sustainability Report

FOREST PRODUCTS ASSOCIATION OF CANADA

Sustainability Report

2007

This report is printed on Canadian offsetpaper containing 30% post-consumer fibres.

FPA-9000_V4_Sustain_Cvr_EN 1/23/07 9:41 AM Page 1

CONTENTS

ABOUT THIS REPORT ......................................................... 2

MESSAGE FROM THE PRESIDENT & THE CHAIR................ 3

FPAC CEO SUSTAINABILITY COMMITMENTS ..................... 5

FPAC SUSTAINABILITY INITIATIVE .................................... 6

ENVIRONMENTAL RESPONSIBILITY .................................. 8

SOCIAL DESIRABILITY ..................................................... 17

ECONOMIC VIABILITY ....................................................... 21

CONCLUSION ................................................................... 24

1

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3

MESSAGE FROM THE PRESIDENT& THE CHAIR

Sustainability is more than a slogan or a mantra and morethan the sum of all the charts and graphs in this firstbiennial report on the FPAC Sustainability Initiative.

For FPAC members, sustainability is first and foremost acollective mindset to be a strong, competitive, and profitableindustry that can perpetuate itself while earning recognitionas a good steward of the environment, a good employer, agood neighbour, and a reliable supplier and trading partner.It means taking concrete actions, addressing issues in acollaborative fashion, advancing common interests with localforestry communities and Aboriginal peoples, and buildingstrong partnerships for conservation with organizations suchas the Canadian Boreal Initiative, Canadian Wildlife Federation,Ducks Unlimited Canada, and the World Wildlife Fund. Itmeans taking principled leadership positions on globalissues and exerting leadership on key sustainability files:

· Climate change: We’re committed to reducinggreenhouse gas emissions beyond the 44% reductionachieved since 1990. We’re adding more green powergeneration capacity at our mills, mainly from biomasscogeneration. Already the industry generates enoughpower to supply all of Greater Vancouver, a city of twomillion people.

· Sustainable forestry: Our pledge to certify all FPACmember-managed forest areas to a major sustainableforest management standard by 2006 has been fulfilled.

· Paper recovery: We believe that no good paper should go to landfill. We have committed to work with partnersto increase Canada’s paper recovery rate to 55% by 2010,making Canada a world leader in paper recovery.

· Illegal logging: We worked with the InternationalCouncil of Forest and Paper Associations (ICFPA) to gain international commitments to oppose illegallogging, and we adopted an FPAC statement on illegal logging as well as a traceability commitment.

Sustainability is dynamic, an evolutionary journey with nofinal destination. As much as we know, there is so muchmore to learn. The more we leverage new knowledge,techniques, and technologies, the more efficient andcompetitive our operations become. That’s good for allstakeholders, including our shareholders.

ABOUT THIS REPORT

The Canadian forest products industry contributes tosociety’s well-being through its products and services—from forest to market. The industry is committed to workingin a manner that is environmentally responsible, sociallydesirable, and economically viable. Members of the ForestProducts Association of Canada (FPAC) are committed to a sustainable development path built on a profitable andcompetitive industry.

This first Sustainability Report measures FPAC members’progress against a range of environmental, economic, and social indicators that will evolve over time. Byreporting biennially on these indicators, FPAC membershope to demonstrate steady and substantive progresstoward their stated commitments and broadersustainability goals. FPAC members are proud of theirprogress to date and are determined to build upon itthrough continual improvement in both their collective and their individual performance.

The FPAC Sustainability Report 2007 is a first step. As westrengthen our reporting tools and gain more experience, wewill further develop and refine the Sustainability Initiative uponwhich this report is based to better address the needs of FPACmembers and their communities of interest across Canada.

This report includes data and information for FPACmembers’ Canadian operations for the 2005 and 2006calendar years. Additional details on a specific member’soperations are available on its website or within itscorporate publications.

2


FPAC CEO SUSTAINABILITYCOMMITMENTS

FPAC is committed to sustainable development in the forestproducts industry in Canada. The FPAC Board of Directors,comprising its member companies, adopted the FPACSustainability Initiative and accompanying principles inFebruary 2005 to guide their efforts as individual companiesand collectively through FPAC.

CEOs of member companies have endorsed the followingformal commitment statement to demonstrate their supportfor and participation in the FPAC Sustainability Initiative:

“It is hereby confirmed that we are participants in theForest Products Association of Canada’s SustainabilityInitiative and endorse its vision and principles.

As participants in the initiative we will integratethese principles into our business practices andcontribute to sustainable development throughcontinual improvement. We will provide informationon our performance to the Forest Products Associationof Canada for the development of a biennial, publicSustainability Report.”

The corporate logos for those companies endorsing theinitiative are presented below:

There will always be new challenges. The Canada–U.S.softwood lumber dispute is behind us, but the devastatingmountain pine beetle infestation is causing majorenvironmental damage with economic implications inBritish Columbia, and is spreading east. At the same time,our need to improve our international competitiveness has resulted in closures and curtailments in many of thecommunities in which we operate. The FPAC SustainabilityInitiative is a work in progress and provides a forum foraddressing these and other challenges.

Future versions of this Sustainability Report will includemore benchmarks. We invite you to follow our progress, toprovide us with feedback to help us improve our reporting,and to continue to expect more. We expect nothing lessfrom ourselves.

Avrim LazarPresident & CEOForest Products Association of Canada

James (Jim) A. ShepherdPresident & CEOCanfor Corporation Chairman of the BoardForest Products Association of Canada

54


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76


140

120

100

80

60

40

20

0

2001

2002

2003

2004

2005

200

6

TOTAL SFM CERTIFICATION IN CANADA

Mill

ions

of h

ecta

res

Source: Canadian Sustainable Forestry Certification Coalition, December 2006.

FPAC MEMBERS

123.7

(96.2 million hectares)

140

120

100

80

60

40

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0

41.7

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and

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ada

CANADIAN CERTIFICATION IN A GLOBAL CONTEXT

Mill

ions

of h

ecta

res

1.9 4.3 4.4 4.9 6.3 7.8 9.917.4 22.1


FPAC MEMBERS(96.2 million hectares)

ENVIRONMENTAL RESPONSIBILITY

Our commitment to environmental responsibility means morethan compliance with all applicable regulations. In adopting a focus on continual improvement in our environmentalperformance, we strive to reduce the environmental footprintof our operations by using raw materials and energyefficiently, managing our environmental releases, andpromoting even more recovery, reuse, and recycling. FPACmembers’ practice of sustainable forest management (SFM)along with SFM certification assures customers that theproducts they buy are made from legally and sustainablysourced wood and that forestry operations are managed inaccordance with internationally recognized SFM standards.

Sustainable Forest ManagementConcern for the state of the world’s natural resources andthe environment in general has never been more focused.People want to know that forests are being regenerated,that wildlife habitats are being protected, and that forestbiodiversity is respected and maintained. Buyers of forestproducts want to show their customers and the public thatthey are making responsible purchasing decisions.

Over the past five years, FPAC and its members havedemonstrated world-class leadership in responding to theseconcerns. In January 2002, FPAC members committed toachieving third-party SFM certification on all lands undertheir management by the end of 2006 to one of threeinternationally recognized standards: Canadian StandardsAssociation (CSA), Forest Stewardship Council (FSC), or

ENVIRONMENTAL RESPONSIBILITY INDICATORS

Sustainable Forest Management· Total SFM certification in Canada· Canadian certification in a global context· Annual allowable cut from certified forests —

FPAC members

Environmental Performance· Total reduced sulphur — FPAC members· Total particulate matter — FPAC members

Resource Use· Energy intensity — FPAC members· Percentage of energy from biomass —

FPAC members· Greenhouse gas emissions intensity —

FPAC members· Water use — FPAC members

Product Recycling· Canada’s paper recovery rate

Approximately one million hectares of Canadian forestare harvested annually by the forest productsindustry. This amounts to less than one-half of onepercent of Canada’s forestlands.

8 9


10

Sustainable Forestry Initiative® (SFI).1 As of December 2006,FPAC members had essentially achieved their goal.2

Certification imposes rigour and goals and intensifies thefocus on continual improvement. FPAC members nowaccount for almost 80% of the 123 million hectares certifiedin Canada. According to The State of Canada’s Forests2005–2006 report, less than half of the 310 million hectares(143 million hectares) of forestland in Canada is madeavailable for the forest sector to use and subject to forestmanagement. Eighty-six percent of Canada’s managedforests have been certified.

The FPAC commitment has also pushed Canada into theworld leadership position for certified forestlands. Of the1/10th of the world’s production forests that are certified, Canada accounts for more than half of the certificationsrecognized by the global Programme for the Endorsement ofForest Certification schemes (PEFC) and almost one-quarterof FSC certifications.

While considerable progress has been made in sustainableforest management, challenges still remain, and FPAC istackling these issues head-on. During 2006, FPAC and itsmembers adopted a statement on illegal logging, recognizingthat illegal logging not only contributes to deforestation but also undermines the viability of legally harvested andtraded forest products and is a serious detriment to forestsustainability. Within this statement, FPAC and its membershave committed to purchasing and using wood only fromlegal sources and to firmly condemning corruption andcriminal activities related to illegal logging.

To support this commitment, FPAC members have furthercommitted to trace their fibre back to the forest area of originby the end of 2008, to assure customers that the wood fibrethey are using comes from legal sources.3 FPAC will track itsmembers’ progress against this commitment and give anaccount in future reports.

Environmental PerformanceThe forest products industry has a strong record of investmentand success in addressing environmental issues. Since 1990,FPAC members have dedicated over $8 billion to successfullyaddress a range of issues associated with mill effluent and airemissions. Looking to the future, our membership is equallycommitted to making genuine and significant progress withefforts to improve ambient air quality and protect our water. 3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

1992

1999

2001

2003

2005

TOTAL PARTICULATE MATTER—FPAC MEMBERS (PULP & PAPER FACILITIES)

kg /

tonn

e

Source: FPAC Member Survey.

FPAC MEMBERS

TOTAL PULP & PAPER INDUSTRY


* Total reduced sulphur (TRS) for 2005 has been calculated as kg per unbleached tonne of kraft pulp production to harmonize calculation methods with the U.S. forest sector. Before 2005, TRS was calculated as kg per tonne of pulp production.

0.8

0.6

0.4

0.2

0.0

TOTAL REDUCED SULPHUR (as HYDROGEN SULPHIDE)—FPAC MEMBERS (PULP & PAPER FACILITIES)

kg /

tonn

e

FPAC MEMBERS


1992

1999

2001

2003

2005

11

125

100

75

50

25

0

2002

2003

2004

2005

2006

ANNUAL ALLOWABLE CUT (CERTIFIED FORESTS)—FPAC MEMBERS

Mill

ion

m3


1 New members and new mergers have five years to achieve this certification.

2 One FPAC member’s division underwent a third-party certification audit and isawaiting its FSC certificate in early 2007. The land base representsapproximately 1% of FPAC’s committed lands.

3 Given tenure arrangements in Canada, it is often the fibre supplier that holdsthe legal right to harvest, whether through tenure or ownership. Therefore, inthe Canadian context, knowing the fibre supplier is often equivalent to knowingthe forest area of origin. The source is considered legal if it is certified orrecycled or originates from a forest where the supplier is the owner and/or has evidence of the legal right to harvest.


Air Quality

Since 1999, FPAC members’ paper mills have cut particulateemissions per tonne of output by 40% while simultaneouslyreducing odour-associated releases of total reduced sulphurby 50%.

Further improvements have been necessary, however, toprotect human health and the environment. FPAC launcheda multi-stakeholder Pulp and Paper Air Quality Forum tasked with developing a long-term strategy capable ofaddressing air quality issues in the sector in a coordinatedand comprehensive manner that also recognizes thebusiness environment in which the sector operates.

FPAC also contributed to the Forum by aggressivelycharacterizing the nature of emissions arising from theoperation of our wood products facilities. We will use theknowledge gained to give an account on releases fromthese facilities in future reports.

Resource Use

Climate Change and Energy

Availability of competitive energy resources has traditionallybeen a key advantage for the Canadian forest productsindustry. In recent years, however, energy costs haveincreased substantially and now account for a significantportion of our cost base. For example, energy costs representnearly one-quarter of all operating costs associated withnewsprint manufacturing in Eastern Canada.4 To maintaintheir competitiveness, FPAC members have made majorinvestments to modernize and improve the energy efficiencyof their pulp and paper mills.

As a result of these investments, the energy intensity of ourmembers’ pulp and paper operations improved by 18% from1990 to 2005. This improvement reflects the members’ 1%annual improvement commitment made under the CanadianIndustry Program for Energy Conservation (CIPEC).

During the past decade, the forest products industry has become Canada’s leader in renewable energy use.Since 1990, FPAC members have cut their fossil fuelconsumption by 45%. Today, almost 60% of the energyneeds of FPAC member companies are met by renewableresources. These sources are mostly wood residue andother biomass from our SFM-certified forests, as well as through cogeneration, which means that some of our mills have the potential to be net energy producers.

This strategy of substituting biomass for fossil fuels and usingless emissions-intensive natural gas in place of oil and coalhas seen our pulp and paper mills reduce their aggregate

1312

Source: FPAC Energy Monitoring Report 1990–2005.

30

25

20

15

10

5

0

1990

2000

2001

2002

2003

2004

2005

ENERGY INTENSITY—FPAC MEMBERS (PULP & PAPER FACILITIES) (REDUCED INTENSITY TO 18% BELOW 1990 LEVELS)

GJ

/ to

nn

e

PERCENTAGE OF ENERGY FROM BIOMASS— FPAC MEMBERS (PULP & PAPER FACILITIES)

Pulp & Paper Energy Sources, 1990

0%

22%30%

49%

2%

16%

56%

25%

Pulp & Paper Energy Sources, 2005

FOSSIL FUELS

NET ELECTRICITYPURCHASES

BIOMASS

OTHER (NET)PURCHASES


ENERGY AND CLIMATE CHANGE LEADERS

FPAC members are at the forefront in addressing theissue of global climate change. Since 1990, we have:

· Improved the energy intensity of ouroperations by more than 18%.

· Cut our fossil fuel consumption by 45%.

· Increased the share of biomass energy so thatwe now meet almost 60% of our total energyneeds with low-impact renewable sources.

· Reduced our total greenhouse gas emissionsfrom our pulp and paper operations by 44% (a 54% reduction per tonne of output).

4 Source: CIBC World Markets, March 2005.


15

greenhouse gas emissions by 44% since 1990 (or 54%reduction per tonne of output, because we make 20% morepulp and paper than we did in 1990). But we’re still notsatisfied. The industry is targeting further emissionsreductions. Pulp and paper mills are committed to additionalreductions to fossil fuel emissions per tonne of output by 2012. FPAC has put this pledge in writing as part of the firstmemorandum of understanding on greenhouse gas emissionsreductions between industry and the Canadian government.

Water Use

In little more than a decade, Canadian mills have madedramatic strides towards significantly reducing oreliminating several classes of toxic effluents that affect the quality of nearby water.

Dioxins and furans have been removed from effluents, andAOX levels (total amount of organic chlorine and othercompounds) have been reduced by 90%. Another class oftoxic substances, containing nonylphenol and its ethoxylates(NPEs), has been virtually eliminated by Canadian pulp andpaper mills, and we have achieved a 70% drop in totalsuspended solids in our mill effluents.

At the same time, water consumption at our mills is downby 10 cubic metres per unit of production (15%) since 1999.Ongoing capital improvements combined with new andupgraded technologies will contribute to further efficienciesin the use of water resources.

Product RecyclingConsumers use paper to meet many different needs andeach distinct use requires different properties, such asstrength, brightness, and absorbency. Blends of both freshand recycled fibres, in varying proportions, are being usedto deliver the required properties to the consumer.

While it is technically impossible to sustain society’s long-termpaper needs without fresh fibre, FPAC member companiesbelieve that no good paper should go to landfill. What wasonce considered waste has become an increasingly importantsource of fibre for the paper industry. Forty-nine percent of all the paper and paper-based packaging consumed inCanada in 2006 was recycled, up from 28% in 1990.

An FPAC member from Quebec won a 2005 CIPECIndustrial Energy Innovator Award for achievingimmediate energy savings of 3.6% through anemployee energy-awareness week, an energy-efficiency ideas contest, and a series of workshops.


90

75

60

45

30

15

019

92

1999

200

1

2003

2005

WATER USE—FPAC MEMBERS (PULP & PAPER FACILITIES)

m

3 / to

nne

FPAC MEMBERS


Source: Pulp and Paper Products Council.

CANADA’S PAPER RECOVERY RATE

Per

cent

* Estimate

50403020100

1990

2000

2006

49% *


GREENHOUSE GAS EMISSIONS INTENSITY—FPAC MEMBERS (PULP & PAPER FACILITIES) (PERCENTAGE IMPROVEMENT FROM 1990 LEVELS)

kg C

0 2e /

tonn

e

60%50%40%30%20%10%

0%

1990

2000

2001

2002

2003

2004

2005

14


16

SOCIAL DESIRABILITY

Social desirability is about being good neighbours andemployers. It is about providing economic opportunitiesand productive and safe work environments for employeesand contractors and encouraging the participation ofAboriginal people in the industry in a manner consistentwith their economic and cultural interests. By engaging our communities in a proactive and transparent mannerand striving to contribute to their economic and socialwell-being, this industry can be a source of strength andstability—locally, regionally, and nationally.

Employee and Workplace SafetyWith a combined activity in 2005 of more than 110 millionperson hours worked by 55,000 employees, occupationalhealth and safety is of utmost priority to our members.Within each facility, the health and safety performance ofour workforce is closely monitored, measured, and managed.Over the last decade, FPAC members have achieved continualimprovement in their performance and have reduced therecordable incident rate (RIR) by 30% in the past five yearsalone. More importantly, FPAC members have takensignificant steps to improve the safety of their sawmilloperations, with the goal of ensuring that these workplacesare no less safe than the balance of their operations.

Aboriginal RelationsAboriginal communities play an important role in theCanadian forest products industry.

FPAC companies engage with Aboriginal communities on anongoing basis, typically maintaining relationships with dozensof different communities at an operational level. Theserelationships include seeking Aboriginal people’s input intoplanning and decision making, identifying traditional forestuses, and sponsoring cultural events, business partnerships,and opportunities. Aboriginal people’s cultural perspectivesand needs play an important role in many of our decisions

We know more can be done. FPAC members support acommitment to increase Canada’s paper recovery rate to55% by 2010. The industry is investing to enable recycledpaper to have a longer life and greater durability. Ourmember companies are also investing in programs and activities with our customers, businesses, and localgovernments to increase the amount of paper collected and to ensure that it is clean and free of contaminants.

HOW MANY TRACTOR-TRAILERS?

One of FPAC’s members is the largest recycler ofnewspapers and magazines in North Americaand annually diverts approximately 1.9 milliontonnes of waste paper from landfills—theequivalent of 95,000 tractor-trailers of recyclablepaper! This member’s innovative community-basedpaper recovery program not only keeps valuablerecyclable paper out of landfills, but alsocontributes to community development, becauseinvolved community organizations—schools,churches, and non-government organizations(NGOs)—are paid for their paper-recycling efforts.

17


that affect land and resources. Virtually all of our membercompanies have relationships with Aboriginal businesses—as contractors, partners in joint ventures, or suppliers.

The forest products industry creates economic opportunity formany Aboriginal communities and individuals. The industry isthe largest industrial employer of Aboriginal people in Canada.Aboriginal businesses provide an ever-growing share of goodsand services to the industry, and our member companies arepleased with the many business relationships that have beenestablished with Aboriginal organizations.

FPAC and our member companies are committed to workingwith Aboriginal communities to strengthen their capacity inthis important sector and to further their opportunities forparticipation in the Canadian forest products industry. Wewill be developing meaningful indicators to more accuratelybenchmark our progress on our commitments to Aboriginalcommunities in future reports.

Community and Stakeholder RelationsFPAC members recognize the importance of sound andconstructive relations with the local communities in whichthey operate. They have a record of working with Aboriginalpeople and stakeholders such as environmental groups,local communities, and labour groups to find commonground and mutually agreeable solutions. Engagement and partnerships are important ways to strengthen FPACmember relations with communities and other stakeholders.

Our commitment to sustainable forest management, which includes open and transparent public participation as a fundamental requirement, ensures that we engage our stakeholders, including those who are directly affectedor interested in forest management, on an ongoing andmeaningful basis. This interaction is vital for identifying the unique cultural, social, environmental, and economicvalues that guide our operations in each community andregion in which we operate. Future sustainability reportswill include meaningful indicators for community andstakeholder relations.

Investment in the CommunityFew industries affect Canada as profoundly as the forestproducts industry, which represents 3% of Canada’s grossdomestic product and exports over $40 billion annually. The industry is one of Canada’s largest industrialemployers, operating in hundreds of Canadian communitiesand providing nearly 900,000 direct and indirect jobs acrossthe country, primarily in rural communities.

FPAC members keenly understand that their success isclosely linked to the health of the communities in whichthey operate. For this reason they see that their support to these communities is vital, and they give back to thecommunities in ways that are locally significant.

1918

FOCUS ON COMMUNITY INVOLVEMENT

An FPAC member has created Community AdvisoryForums in each community in which it operates toensure open communication. These Forums holdregular meetings to discuss matters related to thecompany’s operations, to serve as a place wherecommunity concerns are shared, and to offer ideasfor the company’s consideration. Community Forumparticipants include home and business owners,environmental groups, employees, Aboriginal people,health care personnel, and local government.

SOCIAL DESIRABILITY INDICATORS

Employee and Workplace Safety· Employee recordable incident rate —

FPAC members

Aboriginal Relations· Qualitative discussion

Community and Stakeholder Relations· Qualitative discussion

Investment in the Community· Qualitative discussion

18

15

12

9

6

3

02001 2002 2003 2004 2005

FORESTRY

SAWMILLS

PANELBOARD MILLS

PULP MILLS

TOTAL FORESTRY PRODUCTS


EMPLOYEE RECORDABLE INCIDENT RATE—FPAC MEMBERS

Rec

orda

ble

inci

dent

s /

200,

000

hour

s w

orke

d


The community investment approach of FPAC members isfocused on providing value-added support that meets localneeds—giving where it is important to the community andwhere the company can make a lasting contribution. This can range from investments in health, education,scholarships, and youth programs to donations for localinfrastructure, in-kind support, and employee volunteering.

Global market pressures have brought about a significanteffort by the industry to restructure. The industry recognizesthat efforts to strengthen its competitive position in globalmarkets have had a significant impact on the communities in which it operates.

The industry is also working aggressively to strengthen itsoverall competitiveness to minimize the need for future millclosures. This includes working with governments to createa more competitive fiscal environment for our operations aswell as making investments to improve the competitivenessof our own operations. Future sustainability reports will seemeaningful indicators to more precisely measure progresswith respect to community investment.

20

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ECONOMIC VIABILITY

Maintaining an economically strong and competitiveindustry will ensure that we can meet the expectations of major stakeholders, including communities, customers,lenders, and investors, by providing a platform forcontinual improvement in environmental performance, andthat we can sustain and enhance the broader socio-economicbenefits the industry provides to Canadian society.

The most important facets of economic viability are beingcompetitive on a global scale and retaining a strongcustomer focus—delivering quality products and servicesto meet present customer and future market needs.

Financial ViabilityReturn on capital employed (ROCE) is a financial measure ofthe returns a company is realizing from the capital it invests.At a six-year average of 7.9%, the forest products industry’sROCE is above the average of all Canadian industries, whichwas 7.1% over this period.

Estimates of the cost of capital in the forest products industryare typically in the 9%–12% range, which can make it difficultto attract investment. The industry competes for capitalglobally, and competitors such as Latin America have ahigher return on capital at 9%. The Canadian forest productsindustry’s return on capital has been particularly low in thelast few years as its input costs have risen while demand forsome products has been stagnant or declining.

Limited return on capital can make it difficult for theindustry to invest. Investment has been lower thandepreciation for eight years, but even in this challengingclimate it is estimated that the industry invested over $4 billion in 2005. Many investments have been made inbiomass and cogeneration technologies, as these areimportant sources of renewable energy that also improvethe long-term competitiveness of the mills.

ECONOMIC VIABILITY INDICATORS

Financial Viability· Return on capital employed· Forest products industry’s investment as a

percentage of depreciation

Competitiveness· Forest products industry’s labour productivity

Customer Focus· Qualitative discussion

FOCUS ON YOUTH An FPAC member has implemented a program thathelps provide first-time employment for studentsthrough grants to non-profit organizations. Over thelast three years, this program has provided $750,000in grants to nearly 400 non-profit organizationsacross Canada to hire hundreds of young peoplefor their first summer jobs. The program not onlyprovides young people with invaluable workexperience and eye-opening opportunities, but alsobolsters the resources of non-profit organizations.

FOCUS ON RECREATION FPAC members can play an important role inproviding forest-based recreational opportunities.One FPAC member operates and maintains 24 recreation sites that are in or adjacent to its ForestManagement Area. The company strongly believesthat providing the public with opportunities for recreation in a safe, secure, and enjoyableenvironment is part of its mandate as a foreststeward of the land.

FOCUS ON CAPACITY-BUILDINGMany FPAC members provide donations to help buildlocal infrastructure and facilities such as women’sshelters, hospitals, and community arts and sportsfacilities. Some FPAC members also participate inHabitat for Humanity projects.

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CompetitivenessIt is important that the industry continues to invest in itselfdespite the challenging economic circumstances outlined in the previous section. To compete in an increasinglychallenging environment, the Canadian forest productsindustry must demonstrate clear advantages. One way ofassessing the industry’s work to remain competitive is tomeasure its productivity growth.

The forest products industry’s absolute productivity levelsare higher than those of all of the Canadian manufacturingsector, and have exceeded those of the Canadian economyas a whole for the last 20 years. However, the most relevantmeasure of productivity is the industry’s growth rate. Thewood products sector has had impressive growth in labourproductivity—an average of 4.4% annually over the last nineyears; in fact, it is double that of the U.S. industry. On theother hand, the pulp and paper sector has had an average of 1.6% growth annually over the same period. Both sectorscontinue to find ways to improve productivity to ensure thatthey remain significant players in the global market.

Customer FocusFPAC regularly surveys the industry’s major customers inCanada, the United States, and around the world. Throughthese surveys, FPAC works to:

· Better understand the role and impact of sustainabilityissues in major customers’ decision-making processes.

· Track how perceptions and understanding of the Canadianindustry’s sustainability efforts are changing in responseto the proactive actions of the industry.

· Identify emerging issues and concerns within the majorcustomer sectors.

· Develop strategic and integrated responses to ensurethat customers’ needs and concerns are fully addressed.

A recent survey of FPAC members’ customers reveals thatconfidence in Canadian products is as high as or higher than in the past and that, while not perfect, Canada is seen as leading if not “superior” in the area of sustainability. While price, quality, and reliability continue to be importantconsiderations for buyers, environmental criteria are playingan increasing role in purchase decisions. Our customers tell us that green considerations are increasingly integratedinto their new requests for proposals from suppliers and that these green procurement policies are being introduced across the board. Finally, customers are telling us that theirrelationships with their FPAC member suppliers areinarguably better than those with any other supplier.

FPAC will be developing meaningful indicators to moreaccurately benchmark our progress on our commitments to customers in future reports.

22 23

Source: Statistics Canada, CANSIM Table 180–0003.

14

12

10

8

6

4

2

0

Min

ing

Fina

nce

and

Insu

ranc

e

Fore

st P

rodu

cts

Air

, Rai

l, Sh

ipTr

ansp

orta

tion

Equ

ipm

ent

Mot

or V

ehic

le P

arts

Pha

rmac

euti

cals

RETURN ON CAPITAL EMPLOYED, 1999–2004 AVERAGE

Per

cent

ALL INDUSTRIES

Source: Statistics Canada.

150

125

100

75

50

25

0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

FOREST PRODUCTS INDUSTRY’S INVESTMENT AS A PERCENTAGE OF DEPRECIATION

Per

cent

Source: Statistics Canada.

6560555045403530

1997

1998

1999

2000

2001

2002

2003

2004

2005

FOREST PRODUCTS INDUSTRY’S LABOUR PRODUCTIVITY

Labo

ur p

rodu

ctiv

ity: o

utpu

t/ho

ur w

orke

d,ex

pres

sed

in 1

997

cons

tant

dol

lars

WOODPULP AND PAPERMANUFACTURING


24

CONCLUSION

The Forest Products Association of Canada and itsmember companies are proud of the performance recordpresented in our first Sustainability Report. This reportdemonstrates that we are making continual improvementin all key areas and realizing significant progress towardour public commitments.

Moving forward, we are determined to build on our recordof continual improvement and to further strengthen andexpand our measurement and reporting systems. We willcommunicate our progress publicly in our next biennialSustainability Report, in 2009.

Report Feedback

The Forest Products Association of Canada values your comments on this report. Please go towww.fpac.ca/en/sustreport_survey/ and fill in the onlinesurvey or send your comments to [email protected].

.


ABOUT FPAC

The Forest Products Association of Canada (FPAC) is the voice of Canada’s wood products, pulp, and paper producersnationally and internationally in government, trade, andenvironmental affairs. FPAC’s 19 member companiesrepresent the largest Canadian producers of forest products and are responsible for approximately 75% of the working forests in Canada.

FPAC’s vision is to be the leader in advancing the globalcompetitiveness and sustainable stewardship of the Canadian forest products industry. Under the leadership of its members, FPAC designs programs to promote Canada’sperformance in trade and economic matters, sustainableforest management, and environmental stewardship. Third-party sustainable forest management certification of member companies’ forest practices is a condition ofmembership in the association—a world first.

Call us, contact us, invite us to brief you:

Canada · Forest Products Association of Canada, 99 Bank Street Suite 410, Ottawa, Ontario, Canada K1P 6B9 · fpac.ca · [email protected]

T 613-563-1441 · F 613-563-4720

Europe · Forest Products of Canada, 12A, Place Stéphanie, 1050Brussels, Belgium

T 32-2-512 50 51 · F 32-2-502 54 02

Design by McMillan. ©2007, Forest Products Association of Canada. Publié également en français.

The Forest Products Association ofCanada is a proud partner of the CanadaWood program.

FPA-9000_V4_Sustain_Cvr_EN 1/23/07 9:41 AM Page 3

Documents

2007 FPAC Biannual Sustainability Report