WHY IS ENVIRONMENTAL SUSTAINABILITY RELEVANT TO THE UK PUBLISHERS? A White Paper prepared for the PPA Sustainability Action Group, Final version May 2017 ANNEX TO THE MAIN REPORT This document has been prepared by Innventia Edge working on behalf of the PPA

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Background

The PPA and its membership continue to be committed to meeting their obligations established via the current Responsibility Deal with Defra. Through the deal, Defra acknowledges the environmentally proactive attitude of magazine publishers. However, the sustainability agenda is constantly evolving. This was evident during the 2015 PPA Sustainability Forum. Attendees in the final Sustainability Action Group (SAG) meeting of 2015 evaluated the learnings from the Forum and from the discussions held it is clear that, whilst the actions required by the Responsibility Deal have achieved a great deal in terms of raising awareness within the PPA membership, a shift in emphasis is needed. Subsequently, a need for more knowledge of the strategic risks and opportunities that some of the current and emerging sustainability challenges present for the publishers and their supply chains has been identified. The SAG concluded that this insight is essential to bring sustainability more fully into the business agenda. To address this need a package of work within the frame of the annual environment and sustainability support provided by Innventia Edge to PPA and its members was commissioned. The aim of the work was to gain insights into the wider implications of the fast evolving sustainability agenda for publishers and their supply chains. The findings are presented in a white paper. This Annex presents the background evidence base that was used to prepare the white paper.

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Utilities – Energy Costs and Energy Disruption

Evidence base and sources of uncertainty

UK energy policy introduces uncertainty and risk As illustrated in Figure 1, electricity costs for UK non-domestic users have more than doubled in the period 2005-2015. Gas prices have also increased along a similar projector. Figure 1: UK non-domestic electricity and gas price indices 2005-2015 (2005=100)

Source: Supply chain Transformation and Resource Efficiency, How can big businesses save billions?, Carbon Trust, April 2016

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How these prices evolve in the future will be dependent upon future UK energy production scenarios, decisions around subsidies and the development of carbon pricing. The COP21 commitment to limit global warming at a level below 20C will require a rapid transition to a low carbon economy, and this in turn will necessitate a rapid decarbonisation of energy systems. At the same time, UK energy security and capacity are recognised as significant challenges which need to be addressed. This is widely known as the UK energy trilemma. Figure 2: The UK Energy Trilemma

Source: Nuclear power in the UK, Report by the Comptroller and Auditor General, National Audit Office, 13th July 2016

The UK energy policy response to this trilemma was set out in a “policy reset” by Amanda Rudd in November 2015. Although the policy reset itself left many open questions, and the subsequent Brexit vote introduces new uncertainties, two key themes emerge with regards to the possible future UK energy scenario: 1) There is a clear ambition and target to phase out unabated coal power by 2025 2) Although renewables are expected to make up a significant proportion of the future UK power mix, there is a strong belief within the government that

renewable energy alone is too expensive and that a significant share of nuclear power and an expansion of gas capacity (primarily from shale gas technology which has unresolved economic and environmental concerns) as a bridging fuel to replace the phased-out coal capacity is needed to provide a more cost effective route to decarbonisation

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However, continued assertions that nuclear provides a more cost-effective solution than renewables have been widely met with surprise amongst many stakeholders. Globally, the renewables industry is booming, attracting investment and achieving step-changes in performance and cost. Many analyses demonstrate tumbling prices for wind and solar generated energy (see for example Figure 3 or https://www.theguardian.com/sustainable-business/2016/feb/13/renewable-energy-investment-fossil-fuel-divestment-investor-summit-climate-change ). To date, the government assertion that nuclear and gas will be a more cost-effective strategy has not been backed up by detailed and compelling data. A recent report from the National Audit Office examining alternative strategies for meeting the looming capacity gap (see Figure 4) highlighted the falling costs of renewables compared with nuclear, projecting that onshore wind and solar will be the cheapest ways of generating electricity by 2025. Furthermore, there are a number of clear contradictions within the government’s own logic:

• Whilst the government has made clear its aversion to long-term subsidies of any kind (with an apparent determination to eliminate over time subsidies of fossil fuels as well as resisting long-term subsidies for renewables), it has subsequently acknowledged that the £92.50 per MWh offered to EDF for power from the planned Hinckley Point C power station will constitute a subsidy.

• However, even with this incentive there were significant difficulties in getting the Hinckley development progressed (including an eleventh hour postponement by the government itself of the deal signing ceremony). The difficulties getting Hinckley over the line may undermine the confidence of potential backers for other planned nuclear investments, and at best highlights the long planning and administrative process for building nuclear capacity.

• It is widely acknowledged that achieving the legally-binding emissions targets enshrined in the Climate Change Act will require the complete phase out of all unabated fossil fuels within 15 to 20 years. Unless carbon capture and storage (CCS) technology can be rapidly developed and implemented (unlikely, given the government’s recent abandonment of CCS research – see http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/12597443.html ) the new gas-fired power stations required as part of the strategy will face early closure, making them an unattractive proposition for prospective investors.

• Some commentators have further argued that the chosen technologies of nuclear and gas are not only less cost effective than renewables but also offer only a limited potential for decarbonisation (e.g. see Figure 5).

The lack of clarity has created a situation of uncertainty, in which investors are holding back on UK renewables (at the risk of the UK being left behind while renewables expand rapidly elsewhere). The uncertainty is unlikely to dissipate for at least a couple of years following the Brexit vote, leaving energy policy ill-defined and placing the UK at risk of failing to achieve decarbonisation, affordable energy ambitions or energy security, with a looming capacity gap that is currently not being adequately addressed.

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Figure 3: Costs for electricity generation from different technologies

Source: Nuclear power in the UK, Report by the Comptroller and Auditor General, National Audit Office, 13th July 2016

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Figure 4: The UK’s energy challenge to 2035

Source: Nuclear power in the UK, Report by the Comptroller and Auditor General, National Audit Office, 13th July 2016

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Figure 5: Relative carbon impact of alternative electricity sources relative to the needs for achieving the Climate Change Commitment

Source: Progress towards All-Renewable Electricity Supplies, Professor Keith Barnham (presentation given at APPCCG Panel Discussion “A 100% Renewable Future”, 9th December 2015)

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There are energy challenges in Europe too Finding clear information on the energy supply and demand situation outside of the UK has not been possible, but there are indications that other European countries face similar challenges to the UK. Certainly, across Europe as a whole, there is still a significant reliance on fossil fuels (see Figure 6) which will need to be rapidly phased out and replaced with cleaner energy sources. However, many countries already have higher shares of and firmer commitments to renewable energy sources. Given the rapidly falling costs of these energy solutions, this is likely to contribute to relatively higher electricity costs in the UK compared to the rest of Europe. This will have implications for the relative production costs for print sourced from the UK compared to print sourced from overseas. Figure 6: Gross electricity production in Europe by fuel type

Source: Overview of electricity production and use in Europe, European Environment Agency, 2015

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Carbon prices will rise Published analysis suggests that to meet the COP21 commitment (to maintain global warming below 20C) the price of carbon emissions in the various emissions trading schemes will need to converge at a value as high as $200 per tonne by 2030 (see Figure 7). This compares to a current price in the EU Emissions Trading Scheme of less than $10 per tonne. Clearly, such prices will add further cost pressure on energy intensive sectors such as papermaking and printing. Figure 7: Global carbon price projections

Source: Supply chain Transformation and Resource Efficiency, How can big businesses save billions?, Carbon Trust, April 2016

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How exposed is the publishing sector’s upstream (and downstream) supply chain? The Carbon Trust identifies supply chains as multipliers of energy cost and carbon risk. They analysed several sectors to determine how the share of energy demand is distributed for different supply chains (see Figure 8). Figure 8: Supply chain energy consumption for an example set of manufacturing sectors

Source: Supply chain Transformation and Resource Efficiency, How can big businesses save billions?, Carbon Trust, April 2016

The PPA’s own work suggests that the situation for printed publications is not too dissimilar, with impacts from pulp and papermaking and from print and finishing accounting for the majority of the footprint for printed magazines (although some case studies undertaken by PPA have also shown that own operations can be surprisingly important – hence, more focus on this aspect in future case studies should be pursued). A similar picture could also be anticipated for events, with supplier impacts likely to contribute the largest share of the footprint.

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However, for digital activities the picture will look very different. The largest share of the footprint comes not from publisher’s operations or even those of their suppliers, but rather from the downstream consumption of content – our case studies show that the carbon arising from the energy used to manufacture and power the device used to consume content is the dominant contribution, followed by energy used for distribution of content. If we consider the risk exposure for production of paper for printed magazines, some positive aspects should be noted: 1) The paper industry already extensively utilises renewable energy sources, e.g. process residues such as black liquor or biofuels such as woodchips 2) Many papermills generate a proportion of their own electricity, and in some cases this is sourced from renewables such as their own hydro-plants 3) A significant proportion of the papers used by UK publishers are sourced from countries where there is a higher reliance on renewable energy or low carbon

sources for electricity production (e.g. Finland, Sweden, France) These factors serve to reduce the overall exposure of paper suppliers to upstream carbon risks, although it should still be recognised that as an energy intensive industry paper prices will inevitably rise in reflection of increased electricity, gas and carbon costs in the future. In contrast, printers have less options for reducing their exposure to energy costs and carbon prices, although some printers are now taking advantage of their extensive roof spaces by installing photovoltaics. For digital content, the energy efficiency of devices has continued to increase, but these gains are potentially being outstripped by increased content consumption. The UK economy as a whole is becoming ever more data intensive. With constrained energy electricity production, it may be anticipated that energy consumption for data storage and draw down will come under greater scrutiny. In the future, publishers may face greater financial penalty for the energy required to store and drawn down their data1. On a positive note, in the data storage and distribution business, cloud-based data storage offers efficiencies of scale whilst data storage service providers are increasingly seeking to reduce their own energy cost exposure with energy efficiency programmes and other innovative solutions (especially with regards to cooling energy). Conclusions There is a potentially high probability of increased electricity and gas prices in the UK. Commentary on the potential for disruption of electricity supply is mixed, but the evidence based identified for this research suggests that if UK is to meet its own climate change commitments and phase out electricity from unabated fossil fuels then there is a real and significant risk of a future shortfall in electricity generating capacity. These risks are mirrored, but to a lesser degree, across Europe.

Risk Identification Qualitative Risk Rating Risk Response

1 From personal communication with Susanne Baker, Head of Programme, Environment & Compliance, techUK

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Risk or opportunity Potential adverse or beneficial effects Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Increased UK gas and electricity costs

Increased overheads for publishers’ own operations (office premises) Increased costs for UK sourced print and finishing Increased costs for UK venue hire Increased data management costs

• Directly impacting the publishers

• Impacting on Tier 1 suppliers

High High-medium

Implement internal energy efficiency programmes Purchase green electricity Challenge suppliers on energy efficiency, energy sources and carbon emissions UK publishing sector to proactively lobby government for policy and investments in infrastructure (smart grids, storage, distributed energy), renewable and low carbon energy, including maintaining existing green investment incentives Seek out low carbon data management providers and cloud-based solutions Offer digital content which is efficient to access from a user perspective

Manageable overheads and acceptable production and operational costs

Availability of UK electricity supply

Disrupted supply interrupts publishers’ activities leading to lost working time and potential missed deadlines Disrupted supply interrupts printing leading to potential missed deadlines and ultimately higher production costs Disrupted supply affects delivery of an event Disrupted supply interrupts availability of digital products

• Directly impacting the publishers

• Impacting on Tier 1 suppliers

Medium to High

High UK publishing sector to proactively lobby government for policy and investments in infrastructure (smart grids, storage, distributed energy), renewable and low carbon energy, including maintaining existing green investment incentives

Provides certainty in planning in a deadline critical industry

Increased gas and electricity costs in Europe

Increased costs for print and finishing sourced from overseas Increased costs for overseas venue hire Increased data management costs

• Impacting on Tier 1 suppliers

• Impacting on Tier 2 suppliers

Medium Medium Challenge suppliers on energy efficiency, energy sources and carbon emissions Seek out low carbon data management providers and cloud-based solutions Offer digital content which is efficient to access from a user perspective

Manageable overheads and acceptable production and operational costs

Availability of electricity supply in Europe

Disrupted supply interrupts printing leading to potential missed deadlines and ultimately higher production costs Disrupted supply affects delivery of an event

• Impacting on Tier 1 suppliers

Medium High Limited actions available Provides certainty in planning in a deadline critical industry

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Transport Fuels – Costs and Availability

Evidence base and sources of uncertainty

Alternative fuels are a key focus of research and development Availability and the price of fossil fuels for transport is a complex issue, currently influenced more by politics than by environmental concerns. However, the drive for a low carbon economy and pressure to leave fossil fuels in the ground must have ramifications for future price and availability of fossil-derived petrol and diesel. However, according to the U.S. Energy Information Administration’s (EIA) International Energy Outlook 2016, the global supply of crude oil, other liquid hydrocarbons, and biofuels is expected to be adequate to meet the world's demand for liquid fuels through 2040, although there is substantial uncertainty about the levels of future liquid fuels supply and demand (see http://www.eia.gov/tools/faqs/faq.cfm?id=38&t=6 ). Looking beyond 2040, there is a huge body of research and development into alternative sources of transport fuels. This includes alternative sources of (non-fossil fuel derived) liquid transport fuels (e.g. biofuels from crop residues, food processing wastes, lignin and other natural sources; waste-derived fuels) and alternative sources of power (e.g. hydrogen, electric powered vehicles, etc). Just a few examples of this body of work include:

• Work of the National Corn to Ethanol Research Centre in the US: (https://web.archive.org/web/20120320192458/http://www.ethanolresearch.com/ethanolresearch/about.shtml

• Companies, such as Iogen, POET, and Abengoa, are building refineries that can process biomass and turn it into bioethanol

• Companies, such as Diversa, Novozymes, and Dyadic, are producing enzymes that could enable a cellulosic ethanol future

• UPM BioVerno is a brand new renewable diesel that has been produced in Finland from mostly domestic raw materials. It can be directly used in all diesel engines. The biofuel is based on UPM's own innovations; it is derived from crude tall oil, a residue of pulp production. Because of its significant environmental benefits, UPM BioVerno is a responsible choice (http://www.upmbiofuels.com/renewable-diesel-upm-bioverno/Pages/Default.aspx )

• Hydrogenated marine biofuel from GoodFuels Marine being trialled for shipping (http://www.shipefficiencyreview.com/port-of-amsterdam-to-trial-biofuel-on-its-fleet/ )

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Conclusions Thus, whilst in the short and medium terms there may be both politically and environmentally motivated fluctuations in availability and price of fossil fuels for transport, it is not currently anticipated that this will be a major sustainability challenge that will impact on the ability of magazine publishers and their supply chain partners to produce and distribute product. This is summarised in the transport fuels risk table for presented below.

Risk Identification Qualitative Risk Rating Risk Response Risk or opportunity

Potential adverse or beneficial effects Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Limited availability and/or increased cost of fuels for transport

Increased production costs due to increased upstream logistics costs Increased distribution costs Interrupted production or supply

• Directly impacting the publishers

• Impacting on Tier 1 suppliers

Low High-medium

A watching brief on supply/demand/pricing of fossil fuels A watching brief on alternative transport fuels and power

Anticipating any future risks Readiness to take advantage of new fuels/power solutions when they become technically and economically viable.

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Fibre Supply

Evidence base and sources of uncertainty

Sustainable forest management schemes The PPA’s membership has demonstrated a strong commitment to the use of sustainably sourced paper. The annual PPA survey of paper procurement amongst PPA members indicates that over 90% of paper purchased is either PEFC or FSC certified2. The inclusion of printed publications within the scope of the EU Timber Regulations will also drive further transparency and increased accountability in the supply chain for papers. PEFC is the world’s largest forest certification system (based on area coverage). It seeks to transform the way forests are managed, both globally and locally, to protect the environmental, social and economic benefits of forests. It also claims to be the certification system of choice for small, non-industrial private and family-owned forests. FSC is a multi-stakeholder forest management organisation bringing together NGOs, indigenous peoples’ organisations, community forest groups, forestry professionals, timber and timber product traders and retail companies. The FSC label is intended to reassure consumers that they are purchasing products made from timber or fibres sourced from well-managed forests. Both schemes have similar commendable aims and have achieved a high degree of acceptance in the market place. However, both PEFC and FSC are not without criticism. General criticisms of both schemes include:

• Significant influence of vested commercial interests over the policies of the schemes – both schemes would argue that their structures incorporate full stakeholder participation, but the influence of NGOs and others in comparison to the commercial enterprise partners has been questioned

• Relationship between auditor and client – it is the client who contracts and pays the auditor, leading to suspicions that auditors are less challenging than they could be in order to secure future work. These suspicions are further fuelled by a lack of transparency in the audit process and results for both schemes.

A specific criticism levelled at the PEFC scheme regards its decentralised structure which is perceived as having produced major inconsistencies between countries in relation to both the rigour of the certification process and the public availability of data. Specific criticisms of the FSC scheme include the prohibitive expense of FSC certification tends to favour large suppliers, certification of some large scale plantations that cannot realistically guarantee compliance, a lowering forest management standards, particularly with regards to even-aged management (clear-cutting) in temperate forests (see e.g. http://www.wildcalifornia.org/blog/industrialforestryreform/eyeongreendiamond/forest-products-marketing-firm-commits-major-blunder-in-the-redwoods/ ), and replacement of managed native forests with plantations of low biodiversity and ecosystem value( see e.g. https://fsc-watch.com/2014/08/12/guest-post-how-fsc-is-helping-to-greenwash-the-destruction-of-us-forests-for-european-power-stations/)

WWF has evaluated both schemes using its own Certification Assessment Tool (CAT) – see http://wwf.panda.org/wwf_news/?246871/WWF-Forest-Certification-Assessment-Tool-CAT . The CAT suggests that FSC, with stronger system strength, provides the most credible forest certification scheme at present. While PEFC

2 Nonetheless, there is still more that can be done, as it is the remaining 10% of fibre that may be at highest risk of being from unsustainable sources: Personal communication, Anna Jenkins, Director, Ethical Change

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performs well in areas such as water and soil management, it scores less on several important criteria, such as biodiversity, and workers’ rights. The CAT result highlights weaknesses in the PEFC system around accreditation and certification. One significant weakness identified is that the controversial sources definition related to non-certified material in the PEFC chain of custody standard could mean that certified products may contain wood from areas where traditional and civil rights are violated, or where poor forest management threatens areas of high conservation value. However, other independent evaluations of the two schemes, for example the UK government CPET assessment (see https://www.gov.uk/government/groups/central-point-of-expertise-on-timber for CPET policy and file:///C:/Users/Michael/AppData/Local/Microsoft/Windows/INetCache/IE/RE92VJKL/CPET_Cat_A_Criteria_4th_Ed_Oct14.pdf for details of the evaluation criteria applied), have found both PEFC and FSC meeting 100% of legal criteria and over 70% of the sustainability criteria, with results for the two schemes very similar. Further independent assessments have also been undertaken by other European Governments including the Dutch TPAC assessment, all finding equality amongst the schemes3. An increased focus on biodiversity and ecosystem value may be particularly relevant for the future credibility and acceptability of certification schemes. Tropical, temperate and boreal forests offer a diverse set of habitats for plants, animals and micro-organisms. Consequently, forests hold the majority of the world’s terrestrial species. However, these biologically rich systems are increasingly threatened, largely as a result of deforestation, fragmentation, climate change and other stressors. With increasing recognition of not only the environmental but also the economic and social importance of biodiversity then any failure of certification schemes to protect and even enhance biodiversity could lead to significant negative reaction from the public and scientific communities. Drive for a bio-based economy The bio-based economy is a new model for industry and the economy with the sustainable use of renewable biological resources (including virgin materials, recycled materials and biological wastes) at its core. In the bio-based economy, renewable natural resources provide the needs for food, energy and industrial goods. The transition from a fossil fuel-based to a bio-based economy is expected to reduce our dependency on fossil fuels and achieve a more sustainable society as well as contributing to climate and environmental protection. The European commission is committed to driving forward this transition, an intention articulated through its Bioeconomy Strategy published in 2012. Such a transition will see more demand for renewable materials. Emerging green chemistry and technologies are already broadening the potential applications of the cellulose and hemicellulose. Potential applications for forest derived raw materials include bio-polymers, bio-fuels, pharmaceuticals, cosmetics and textiles, As R&D into these technologies and materials matures and pressure to reduce consumption of non-renewable polymers increases, competition for forest fibres will increase, potentially reducing availability of fibres for paper and/or increasing prices. On the other hand, demand for certain paper grades in Europe (including printing and writings grades) may offset some of the increased demand for fibres, helping to balance the costs. According to the WWF “Living Forests” report demand for wood for timber, paper and fuel is expected to triple by 2050 (available to download at http://wwf.panda.org/about_our_earth/deforestation/forest_publications_news_and_reports/ ). The report questions how we produce more wood without

3 Personal communication with Alun Watkins, Executive Director, PEFC UK

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destroying or degrading forests, in a world where competition for land and water is increasing. The authors state: “This challenge spans the whole supply chain, from where and how wood is grown and harvested to how wisely and efficiently it is processed, used and reused. It also involves changes to consumption patterns – such as eliminating excessive and wasteful use of paper in rich societies, while improving access for the poor to paper products that can improve education, hygiene and food safety.” Even allowing for increased recycling, reuse and efficiency in production and use, The Living Forests Model projects a significant rise in demand for wood (including as a feedstock for bioenergy) over the coming decades. According to the model, this demand can be met by a combination of enlarging the portion of the world’s natural forests that is managed for production, and establishing new tree plantations. Overall, their analysis suggests there is no shortage of wood in the world’s forests; however, the sustainability of extracting more depends on many local variables in community aspirations, ecology and forest management practices. Of course, trees take a long time to mature for harvesting, so action to increase the area of natural forests managed for production and establishment of new tree plantations will need to be taken promptly. However, the awareness of the value of forests within the bioeconomy, and the high level of commitment to achieving the transition at both a policy level and amongst leading forest industry multi-nationals suggests that the will exists to ensure that this happens. In fact, in Europe at least the area of forests is already growing. With European forests having expanded by 44,000 square kilometres over the past 10 years (see Food and Agriculture Organization of the United Nations (FAO), 2015. Global Forest Resources Assessment 2015. How are the World's Forests Changing?). This is a trend

which needs to be repeated across the globe. Non-European fibre Overall the forests of Europe are expanding and seem to be well placed to cope with the challenges of climate change (at least from the perspective of timber production). The forests in Europe provide a significant share of the fibres used in the papers used for magazines (CEPI reports that more than 82% of fibres used by the European paper industry are sourced from Europe). However, fibres are also sourced from other regions. The future sustainability of these regions and their ability to cope with climate change induced stresses is not as clear as for European forests, but Figure 9 below shows that there are clearly some challenges that need to be addressed. Figure 9: Non-European forest extent 2000-2100

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Source: Living Forests Report, Chapter 1, WWF

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Figure 10: Historical Forest Carbon Balance, 1855-1995

Source: Vital Forest Graphics, UNEP, 2009

Public understanding of forestry and paper are mixed However, a recent survey by the paper campaign organisation Two Sides (see The attractiveness and sustainability of Print and Paper – The UK consumer’s view, A survey of UK consumers undertaken by Two Sides, June 2016) found that more education is needed to raise awareness about the industry’s positive environmental message related to sustainable forest management and recycling. For example, despite the fact that European forests are expanding, 65% of UK respondents perceive that European forests are shrinking. The majority of respondents do not know that paper is one of the most recycled products in Europe with recovery rates of 72%. The 18-24 years old age group had a lower awareness of the state of European forests and recycling rates for paper when compared to overall survey results. On a positive note, 73% of all UK respondents agreed that paper is based on a renewable resource.

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Public perceptions of forests and forest products are extremely important for the reputation of publishers delivering printed products. These need to be carefully monitored and where relevant the positive benefits of forests and the role the forest management for forest products plays in maintaining forests should be communicated. The speed and ease with which social media allows campaigns to be managed and spread makes this increasingly important. Forest carbon stocks Data show that European forests, and the carbon stored within them (in trees, undergrowth, soil, etc), are growing (see annual National Inventory Reports, https://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/9492.php ). However, the relationship between forest carbon stocks and forest management is complex. The balance depends on the type of forest, reforestation and growing regimes, etc. This should remain a watching brief for users of paper and board products, and emphasis should remain on the sourcing of independently certified products. Carbon offsetting is an opportunity Whilst European papers themselves are not drivers for the global deforestation challenge, publishers and their supply chain partners do have the opportunity to contribute to solutions to this high profile and critical environmental impact. Carbon offsetting schemes are available which specifically focus on protecting important primary forests and/or re-afforesting previously deforested areas. Publishers and their partners could consider utilising such schemes to offset their unavoidable GHG emissions (avoidance and reduction should always be the main priority, but there will be unavoidable GHG emissions). Participation in such offsetting schemes provides environmental benefits beyond the straight-forward GHG offsetting, as forests provide a wide-range of environmental services. Protecting forests secures habitat (thereby protecting wildlife), manages water flow through catchments (preventing flooding and soil erosion), etc. Conclusions Issues surrounding future fibre production and availability do not appear to be a significant concern although a watching brief is required. However, public understanding of the sustainability credentials of forestry and paper is mixed and further work is need to educate the consumer and to demonstrate the commitment of the publishing industry to a sustainable paper supply chain.

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Risk Identification Qualitative Risk Rating Risk Response Risk or opportunity

Potential adverse or beneficial effects

Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Unsustainable forest management

Reduced availability of fibre for papers Increased paper prices Reputational damage

• Directly impacting the publishers

• Impacting on Tier 1 suppliers

Low to Medium

High Continued commitment within the sector to certified papers Challenge the scope of sustainable forestry and engage with FSC/PEFC Where appropriate investigate and utilise other sustainable forestry resources (e.g. WWF monitors pulp sources) Consider offsetting schemes (for unavoidable GHG emissions) which focus on forest protection/re-afforestation

Secured future fibre supply / affordable paper Social “licence to operate” Demonstrating genuine commitment and leadership on environmental topics

Public perceptions of forest management

Reputational damage • Directly impacting the publishers

• Impacting on Tier 1 suppliers

• Impacting on Tier 2 suppliers

Medium High Communicate the use of FSC/PEFC papers Challenge the scope of sustainable forestry and engage with FSC/PEFC Where appropriate investigate and utilise other sustainable forestry resources (e.g. WWF monitors pulp sources) Communicate the benefits of forests and sustainable forest management Consider offsetting schemes (for unavoidable GHG emissions) which focus on forest protection/re-afforestation

Social “licence to operate” Demonstrating genuine commitment and leadership on environmental topics

Increased competition for fibres

Reduced availability of fibre for papers Increased paper prices

• Impacting on Tier 1 suppliers

• Impacting on Tier 2 suppliers

Medium

Low to Medium

Watching brief Investigate/re-evaluate/monitor recycled-content papers Efficient use of fibres (minimise process wastes and unsolds) Encourage recycling of post-consumer magazines

Preparedness Secured future fibre supply / affordable paper

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Water Risk

Evidence base and sources of uncertainty

Reduced water availability There is increasing awareness regarding the physical, regulatory and reputational water risks to companies and their investors. Access to water could constrain company growth and/or profitability, particularly for water intensive sectors and/or for operations, markets or supply chains in water-stress areas. This is evidenced by the fact that 53% of the Global 500 companies that participated in the Carbon Disclosure Project (CDP) Global Water Report Survey 2012 had experienced detrimental water-related business impacts, with associated costs for some companies placed as high as US$200million. According to the CEO Water Mandate’s Corporate Water Disclosure Guidelines, forestry and paper is a sector that has a high level of exposure to water-related risks, whilst the printed media sector has a medium exposure to water-related risks (Figure 11). Figure 11: Industry Sectors with High and Medium Exposure to Water-Related Risks

Source: Ceres Aqua Gauge: A Framework for 21st Century Water Risk Management 2011 (reproduced in The CEO Water Mandate: Corporate Water Disclosure Guidelines, Toward a common approach on reporting water issues, August 2012)

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Individual companies can approximate their exposure to risk and the likelihood of creating adverse external impacts based on their geographic location by determining their exposure to water stress using a variety of freely tools. After this high-level assessment of water risks based on industry sector and geography, companies can locate themselves on the matrix in Figure 12.

Figure 12: Measuring relative risk exposure to water risks and impacts

Source: The CEO Water Mandate: Corporate Water Disclosure Guidelines, Toward a common approach on reporting water issues, August 2012

Those companies that fall into the red areas will benefit from managing water in a robust fashion and reporting on water in a detailed manner. Those that fall in the orange areas should consider their water-related challenges and seek, at a minimum, to prioritize reporting high level water-related information. A previous high-level risk assessment for the PPA’s SAG in 2014 looked at the operating locations for the major European suppliers of magazine grade papers. These were plotted using the World Resource Institute’s Aqueduct Water Risk Assessment tool (see Figure 13).

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Figure 13: European magazine grade papermills

Source: Analysis made for PPA by Innventia UK using WRI Aqueduct tool, 2014. The analysis found that the majority (60%) of mills are located in areas of low or low to medium risk. However, just over a third of mills are located in areas of medium to high risk, whilst no data was available for the catchment basins where two mills are located. No mills were located in areas of high or extremely high risk (Figure 14).

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Figure 14: Results for high level water risk assessment for European mills producing magazine grade papers

Risk category Number of mills in this category

Low risk 6

Low to medium risk 19

Medium to high risk 15

High risk 0

Extremely high risk 0

No data for the catchment 2

However, there are some significant limitations to this analysis that should be considered:

• Water risk assessment is still developing – there are a lot of data gaps, especially with regards to ground water (groundwater data is missing for 48% of the locations investigated in this analysis)

• Water risk is a composite of many different aspects - some sites have particular challenges as they have a low overall score but are subject to very high risk for some selected indicators

• Although the majority if fibres used in European paper production are sourced from within Europe, this analysis does not take into account the fact that many mills are also sourcing market pulp from overseas (including North and South America, Asia and Russia) where more significant water risk challenges may exist.

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Conclusions Although water availability is critical for pulp and paper production, the overall risk for the supply chain for magazine grade papers is considered only low to medium. It is anticipated that paper producers will be able to react to changes in situation by sourcing alternative market pulp to fulfil demand. Risk Identification Qualitative Risk Rating Risk Response Risk or opportunity

Potential adverse or beneficial effects

Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Reduced water availability for industrial processing

Disruption to production of pulp and paper Increased pulp and paper costs

• Impacting on Tier 1 suppliers

Low to Medium

Medium to High

Learn more about the geographical source of our fibres Challenge suppliers about their own water risk assessments

Secured future fibre supply / affordable paper

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Resource Availability

Evidence base and sources of uncertainty

Pulp and paper additives and chemicals Chemicals make up about 15% of the cost profile of paper production in Europe (Figure 15) and can be a significant constituent of magazine grade papers.

Figure 15: Cost structure of European Paper Industry, 2012

Source: RISI 2012 (reproduced by CEPI)

The paper industry, particularly printing and writing paper, is by far the largest volume user of industrial minerals (IM). The principal IMs used in paper making are kaolin (approximately 40% of all kaolin produced worldwide is used in paper production – source: https://www.britannica.com/science/kaolin ), talc, ground calcium carbonate, precipitated calcium carbonate and bentonite. Binders such as starch and latex are also added to provide strength and right ink absorption characteristics. Binders, pigments and fillers typically make 30-50% of the composition of magazine grade papers by weight. Kaolin, Talc, and Calcium carbonate (see http://www.paperage.com/2016news/07_07_2016roskill_pcc_gcc_report.html ), and bentonite are all abundant resources (reflected in the low abiotic depletion values associated with these resources in life cycle impact assessment methodologies).

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Starch is widely available and can be sourced from a wide variety of sources (e.g. potato starch, etc). Latex can be either natural or synthetic. There are naturally abundant alternatives that could be accessed if necessary. Thus, none of these inputs are likely to become limiting factors for paper production. Printing inks and consumables Inks are composed primarily of pigment, thermoplastic resin, wax (e.g. paraffin wax) and solvents. Natural pigments and plenty of alternatives are likely to be available in the future. Thermoplastic resin and waxes should be producible from alternatives (see section below on polymers). No information has been found on the current availability of solvents, but research and development towards ionic liquids (e.g. http://nci.org.au/research/solvents-of-the-future/ ) and supercritical fluids (see http://humantouchofchemistry.com/supercritical-water-the-solvent-of-the-future.htm ) as alternatives for the future provide promise (although cost is still a challenge for these). As a fossil resource based product, availability of IPA may be threatened in the future, but again it is anticipated that non-fossil derived alternatives will be developed through the extensive body of research into Green Chemistry. Polymers These are used for polywrap, polybags, major part of covermounts, casing for hardware, etc. and are also a component in inks and some consumables. The need to leave fossil fuels in the ground will potentially take away the oil and gas which is the basis for many of the chemicals used in plastics today. At worst, considerably higher prices could be expected, as these chemicals will no longer be byproducts of the oil industry, but would have to shoulder a larger share of the extraction and processing cost. At worst, a lack of availability could be expected, as oil companies and associated refining industries collapse as some commentators predict (e.g. Renewable chemistry research has traditionally focused on finding alternatives to petrochemical-based fuels. But oil produces far more than just fuel. The modern world is both built from and powered by oil and interest is now shifting more to finding alternative sources for the range of chemical feedstocks that crude oil also provides (see https://www.chemistryworld.com/feature/a-biomass-bonanza/5906.article and http://www.rsc.org/chemistryworld/2014/03/future-feedstock-biomass-renewable-chemicals for examples). Research and development into Green Chemistry is identifying and developing a wide range of alternative feedstocks, for example:

• Biopolymers from crops and crop wastes, forest materials, algae, chitosan (shell fish) – currently quantities and performance are limiting, but this is likely to change in the future as processes improve and upscale.

• Alternative chemical feedstocks – for example, waste sulphur from other processes – see http://phys.org/news/2016-01-plastics-future-sulfur-oil-good.html

• GHG-based plastics – i.e. plastics using feedstocks derived from captured CO2 emissions (e.g. Newlight Technologies https://www.newlight.com/ ) and polymers from methane capture (e.g. Mango Materials http://mangomaterials.com/ )

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The Ellen MacArthur Foundation clearly and concisely puts the case for a new plastics economy (see the report The New Plastics Economy – Rethinking the future of plastics, 2016 (available to download at http://www.ellenmacarthurfoundation.org/publications). Some significant users of plastics have pledged to move to alternative feedstocks. For example, Lego has made a commitment to move to oil-free plastics by 2030, demonstrating the increasing level of confidence that end-users have in the development and future supply of alternative feedstocks (see https://www.fastcoexist.com/3048017/why-lego-is-spending-millions-to-ditch-oil-based-plastic) So, it looks like there could be alternatives developed in future, but the challenge will be for these to come online quickly enough and the fact that the costs are likely to be higher unless economies of scale or cost-out levers can be found. Rare Earths The European Commission produces a list of critical raw materials. This was most recently updated in 2014. The 2014 list includes 13 of the 14 materials identified in the previous list of 2011, with only tantalum moving out of the list (due to a lower supply risk). Six new materials appear on the list: borates, chromium, coking coal, magnesite, phosphate rock and silicon metal bringing the number up to 20 raw materials which are now considered critical by the European Commission. The other 14 raw materials are: antimony, beryllium, cobalt, fluorspar, gallium, germanium, indium, magnesium, natural graphite, niobium, platinum group metals, heavy rare earths, light rare earths and tungsten. “Electronics companies will be affected by the future availability of rare earth elements (REE), also known as rare earth metals. REE are used in commercial and military electronics, "green energy technologies," and other applications. Although REE are located all over the world, most of the current global supply is sourced from active mines in China. A number of studies and a recent survey of electronics companies all signify that the demand for REE is likely to exceed supply very soon. Unfortunately, ongoing discussions within governments about the future shortage of REE have not yet been converted into laws or other tangible actions. Electronics companies should pay close attention to the rapidly changing trends in REE supply because any shortage of REE in the near future will affect the electronics industry.” (from https://www.ipc.org/ContentPage.aspx?pageid=Future-Supply-of-Rare-Earth-Elements) “Due to use of REEs in many major manufacturing techniques, and their presence in many consumer electronics, it is certain that decrease in supply would affect prices across a wide range of sectors.” (from http://web.mit.edu/12.000/www/m2016/finalwebsite/problems/ree.html)

Food “The affordability of food for the UK population is subject to domestic and international risks affecting production and prices. Extreme weather events affecting international production, trade and supply chains could make food prices volatile with occasional spikes. Longer term incremental changes in climate are likely to alter the agricultural productivity of regions that are important for global food production. The resilience of the UK food system in the long-term will depend on the stewardship of natural resources here and overseas, and how international markets respond to the pressures from climate change. There is the potential for

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domestic production to increase in a warmer climate but this will be constrained unless more action is taken to address the declining quality of soils and projected water deficits in the most productive UK regions.” (Source: UK Climate Change Risk Assessment 2017 Synthesis Report, Committee on Climate Change, 2016) Conflict minerals The presence of conflict minerals is a major concern for manufacturers of electronic hardware (see for example http://www.resolv.org/site-ppa/). Many of the conflict minerals are included in hardware (tablets, smartphones etc), but traceability of minerals is challenging in such complex supply chains. Conclusions Generally, the availability of the non-fibre resources used by the publishing sector should not be a major challenge in the future. Developments in Green Chemistry will deliver alternative, non-fossil derived chemicals and materials. Implications for food prices for catering are less predictable, and this should be a watching brief as it can be a significant cost component for events. Rare Earths and Conflict Minerals are a challenge for the suppliers of the IT hardware necessary for distributing and consuming digital content, but there is little influence that publishers can have over these aspects.

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Risk Identification Qualitative Risk Rating Risk Response Risk or opportunity

Potential adverse or beneficial effects

Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Reduced availability of chemicals and additives used in paper

Increased pulp and paper costs • Impacting on Tier 1 suppliers

Low Low to Medium

None required

Not applicable

Reduced availability of polymers

Increased print costs (polymers in inks) Increased packaging costs Increased cost of covermounts

• Impacting on Tier 1 suppliers

• Impacting on Tier 2 suppliers

Low Low to Medium

Generally, none required.

However, there may be an opportunity for publishers heavily involved in polymer-based covermounts to take a leadership position and investigate alternative polymers

Not applicable Enhanced reputation and value proposition; preparedness for future changed supply situation

Reduced availability of components in printing inks

Increased print costs • Impacting on Tier 1 suppliers

• Impacting on Tier 2 suppliers

Low Low to Medium

None required

Not applicable

Reduced availability of rare earth elements (REEs)

Increased IT (hardware) costs for publishers Increased device costs for consumers (perhaps leading to lower consumption of digital content?)

• Directly impacting the publishers

• Impacts on consumers

High Low to Medium

No obvious action available to the PPA and their membership, other than to maintain a watching brief

Not applicable

Presence of conflict minerals in supply chains for digital media (infrastructure hardware, consumer devises

Reputational risk for technology providers

• Impacting on Tier 2 suppliers

Medium Low No obvious action available to the PPA and their membership, other than to maintain a watching brief

Not applicable

Disruption to or reduced (or increased) food production patterns in UK and globally

Increased (or reduced) catering costs for events

• Directly impacting the publishers

• Impacting on Tier 1 suppliers

High High (for event-based activities)

A watching brief Careful menu planning Careful portion planning and quantity ordering Local food/local suppliers? Utilise available tools to help the catering industry reduce food waste4

Controlled costs for events

4 E.g. http://www.wrap.org.uk/content/supporting-resources-hospitality-and-food-service-sector-0 and http://waste.unileverfoodsolutions.co.uk/mobile/index.html

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Climate Change - Changing Weather Patterns and Extreme Weather Events

Evidence base and sources of uncertainty

Interrupted supply and Increased shipping costs a projected increase in storms in some regions could raise the cost of shipping by forcing ships to take longer routes that are less storm-prone, and may increase maintenance of ships and ports. More frequent delays and cancellations of ferries could result from extreme weather events. However, the Arctic Ocean is projected to become progressively more accessible to shipping in summer as sea-ice extent decreases, with a virtually ice-free ocean likely by mid-century. This will allow routine use of the Northwest Passage, the Northern Sea Route and other routes, and increase maritime access to coasts in northern Canada, Alaska (the United States), Russia and Greenland. However, the increase in shipping through these sensitive ecosystems could lead to an increase in local environmental and climate change impacts. (See Climate Change: Implications for Transport, Key Findings from the Intergovernmental Panel on Climate Change Fifth Assessment Report, University of Cambridge/BSR, 2014).

Flood events Flooding has been identified as a key risk for the UK as a result of climate change. Although not affecting the magazines supply chain, the impacts of Storm Desmond in December 2015 demonstrated how flood events can affect paper and printing:

• James Cropper’s specialty papermill in Cumbria suffered flooding as the neighbouring River Kent reached record levels, leading to reported excesses of £15,000 for stocks and £1m for consequential losses. At the time, its share price fell by 5% but have since recovered. Planned site-wide repair and replacement work totalling £712,000 had to be postponed until the 2016/2017 financial year following the floods to allow maintenance teams to focus on immediate repairs. The board has now approved an additional £1m of capital investment to protect key structures or relocate them away from the flood risk zone in Burnside.

• A number of small printers in the area suffered severe losses as flooding wrote of equipment, leaving clients to find alternative printers at short notice.

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Figure 16: Top 6 inter-connected climate change risks

Source: UK Climate Change Risk Assessment 2017 Synthesis Report, Committee on Climate Change, 2016

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A key aspect highlighted by the report of the Committee on Climate Change was the inter-connectedness of impacts. In particular, flooding does not just impact on flooded properties, but also has the potential to impact more widely on infrastructure, such as transport networks, energy supplies, Internet provision, etc (see Figure 16).

Figure 16: Inter-connectedness of impacts

Inter-connected climate change risks, Source: UK Climate Change Risk Assessment 2017 Synthesis Report, Committee on Climate Change, 2016

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Changes to forest productivity European forests are a major source of the fibres used in magazine grade papers. Several inter-related climate change effects could positively or negatively influence forest productivity in Europe (from the Climate change impacts and adaptation factsheets).

• Atmospheric CO2 levels

• Temperature and precipitation

• Natural disturbances

• Pests and pathogens Rising concentrations of CO2 in the atmosphere increase the rate of photosynthesis for some tree species, directly enhancing the growth of young trees and seedlings. However, this may not follow through as increased forest productivity as trees may adjust their development under elevated CO2 levels, or because other factors may become limiting. For example, nitrogen is required in relatively large quantities in connection with all growth processes, thus availability of this nutrient may limit the ability of trees to increase their growth rates in response to further increases in CO2 concentration. CO2 concentration in the atmosphere will continue to increase for at least several decades. However, predicting the response of tree growth to increasing CO2 remains difficult as reactions of trees to CO2 are variable, might diminish over time, and may be much more influenced by plant-soil interactions than is currently understood. Temperature changes will influence different forest zones in different ways. In the northern boreal forest zone temperature is a key limiting factor and thus higher air temperature will prolong the growing season and thereby increase production. An increase in temperature is also beneficial for tree growth on temperate sites as long as water supply is sufficient. In the Alpine zone, water is limiting at low altitudes, but is temperature is limiting at higher altitudes where precipitation is significantly higher. Under the predicted change, production will increase mainly because of the prolonged growing season. In the Mediterranean areas, where heat is often a stress factor and production is limited by low water availability, it is predicted that the growth and yield under climate change will decrease. Rising temperatures without an increase in precipitation or with decreasing precipitation can lead to drought, especially in Mediterranean and temperate continental zones. Drought conditions reduce forest growth in sensitive species, although some species are more tolerant of dry conditions. These influences will affect the species composition of forests. High temperatures and dry conditions can negatively influence nutrient availability in soils and lead to enhanced loss in nitrogen via accelerated nitrification. These conditions also lead to aggravated competition of tree seedlings with other vegetation. Changes in cloud cover alter the amount of incoming radiation at a site. These influences are currently not predictable, but may affect how different species compete for resources at a particular site and subsequently influence the productivity of forests.

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Climate change will happen so quickly that forests will only adapt accordingly with human intervention, but appropriate management will increase the forest habitat’s adaptability (see http://www.midlandpaper.com/adapting-to-climate-change-a-major-challenge-for-forests/?utm_source=Paperclips+Weekly&utm_campaign=cd1cb1306c-Paperclips_Weekly_Edition&utm_medium=email&utm_term=0_b11cab1475-cd1cb1306c-251652425 and http://www.wsl.ch/medien/news/wald_klimawandel_schluss/index_EN ).

Regarding natural disturbances:

• Fire (both naturally occurring and human-induced) is expected to increase throughout Europe, especially in the dry and fire-prone Mediterranean, but also in Northern and Central Europe.

• Wind and snow damage are a considerable cause of economic loss in Europe. Climate change models predict increased wind and reduced soil freezing (and therefore weaker tree anchorage) in Northern Europe, leading to increased windthrow and storm damage. Heavier snowfalls may also contribute to increased damages. In the temperate oceanic region, more precipitation is predicted to fall in intensive rain events. Waterlogged soils increase susceptibility to windthrow. The economic impact of wind damage is particularly severe in managed forests because of the reduction in yield of recoverable timber, increased costs of unscheduled thinning and clear-cutting, and resulting problems in forestry planning. Market distortions occur when large amounts of salvaged timber are placed on the market, further aggravating losses due to reduced prices. Disruption by windthrow also destabilises the forest ecosystem, opening up opportunities for pests and tree injuries provide pathways for tree pathogens.

• Extreme flooding events are likely to occur more frequently. The number of rain days is predicted to decrease, but the number of days with heavy rain events is predicted to increase. Plant responses to flooding during the growing season include injury, inhibition of seed germination, changes in plant anatomy, and promotion of early senescence and mortality.

• Climate change already has direct and indirect impacts on the temporal and spatial dynamics of pest and pathogen species. The direct impacts include influencing the frequency and intensity of outbreaks as well as their spatial patterns, size and geographical range. The indirect impacts include the influence of climate change on plant nutritional quality and plant resistance, and on community interactions with natural enemies. Some pests and pathogens may thrive due to the influences of climate change, whilst others may suffer.

There are many vulnerabilities and uncertainties, but overall:

• In the boreal forests tree growth and timber yield will increase as a result of climate change. Timber yield increase could be as high as 12-13%, bringing increased incomes from wood production.

• In the temperate oceanic region, increased growth will generally generate increased wood production and yields. However, in some southern and eastern parts of this forest type, where water is a more limiting factor, productivity will be reduced.

• For continental temperate forests, wood production is likely to decrease, perhaps as much as 10%

• In the Mediterranean region, wood production may decline significantly under project climate change scenarios.

• In the mountain regions (Alps, Pyrenees and Carpathians) productivity may increase at higher elevations so long as water does not become a limiting factor. At lower elevations sites in drought prone areas will suffer from decreased productivity.

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Conclusions UK weather patterns will significantly increase the incidences of extreme weather, especially flooding. Changing global weather patterns will increase shipping costs and increase shipping hazards. Forest productivity will be affected by changing climate patterns, but this is not anticipated to impact upon fibre availability for pulp and paper production, although this should be a watching brief. Risk Identification Qualitative Risk Rating Risk Response Risk or opportunity

Potential adverse or beneficial effects Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Increased flooding events and storms (more often, more intense)

Disruption to production/supply of pulp and paper Disruption to production/supply of print Disruption to product distribution channels Disruption to energy and/or Internet supply, leading to unavailability of digital offerings Disruption to events leading to cancellation, reduced quality or reduced attendance

• Directly impacting the publishers

• Impacting on Tier 1 suppliers

Medium Medium Medium Medium Medium to High

Low High High Medium High

Challenge suppliers about their flood risk and contingency plans Establish effective production and distribution contingency strategies Challenge venues regarding their flood risk and contingency plans

Certainty of supply Contingency planning to reduce disruption and inconvenience for customers

Increased shipping costs

Increased material costs leading to increased production costs

• Directly impacting the publishers

Medium Medium Investigate use of local materials Increased re-use of unsold covermount materials

Cost control

Changes to forest productivity

Reduced or increased availability of fibre for papers Increased or reduced fibre prices

• Impacting on Tier 2 suppliers

Low to Medium

Medium Learn more about the geographical source of our fibres Lobby for implementation of Paris agreement and beyond

Preparedness Secured future fibre supply / affordable paper

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Environmental Policy, Regulation and Taxation Evidence base and sources of uncertainty

The circular economy At the macro level, in addition to the ambitions of the Paris climate deal and subsequent European energy target, Europe is pursuing policy goals focused on the establishment of a bio-based and circular economy. Whilst there is some uncertainty as to the final outcome it is nonetheless prudent to assume that post-Brexit the UK will continue to pursue parallel environmental goals and policy measures. From the perspective of the circular economy:

• The UK magazine sector already achieves 100% recycling of its unsolds and has identified that there is also a high level of post-consumer magazine recycling (~82% - see Figure 17). The drive for a circular economy should promote a continued demand for these fibres and this may drive good prices for the materials.

• However, there needs to be a ready end-market for these fibres. Newsprint has been the predominant end-use market for unsold magazine fibres. This is a contracting market. Understanding the market dynamics and alternative end-use markets is important for long-term security of this arrangement.

• Some elements of the unsolds remain non-recoverable (covermounts, polybags). The push for a circular economy, landfill bans and/or landfill taxes will increase the pressure to find alternative valorisation channels for these items. This presents both a threat and an opportunity.

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Figure 17: Mass flow analysis for UK magazine publishing, showing 100% recycling of unsolds and 82% recycling of post-consumer magazines

Source: Estimating the Post-consumer magazine recycling rate in the UK - Period covered 2004-2013,

Innventia Edge, 2013 (on behalf of PPA) Growth in environmental tax receipts Generally, it should be anticipated that environmental fees and taxation will increase as a result of environmental policy goals. Environmental taxes have grown steadily over 30 years, subsequently providing a considerable revenue stream for UK government over the past 10-20 years (see Figure 18). Over the past 15 years, revenues from landfill tax have more than doubled (Figure 19). Environmental taxes have been highly successful at achieving policy goals, leading to environmental reductions which will in turn lead to reduced income streams for government. It is therefore likely that the government will be looking at new environmental taxation opportunities in the coming years, and the circular economy is likely to be a key vehicle for identifying and implementing these. It is difficult to know what form these could take, but options could include greater adoption of producer responsibility type legislation, where supply chains may be required to take back their products for recycling or pay a tax to cover the end-of-life management of the product. Whilst magazine publishers already have a good system in place for unsold magazines, challenges could arise around.

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Figure 18: UK government receipts from environmental taxes, 1980-2016

Source: Circular Economy: What is it and how might it impact you?

Presentation by Henry Le Fleming, PwC at PPA Sustainability Summit November 2016

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Figure 19: UK Government landfill tax receipts, 2001-2015

Source: Circular Economy: What is it and how might it impact you?

Presentation by Henry Le Fleming, PwC at PPA Sustainability Summit November 2016 Product specific environmental taxes Product specific carbon taxes could also be envisaged. This is a concept that has already been promoted and litmus-tested in countries such as France and Denmark. Such a tax, for example based on the amount of “embedded carbon” within a product, could be particularly challenging. Publishers generate the intellectual content within the products (whether these are printed magazines, digital products or events) but they do not have direct control over the production processes. This could leave the publishing industry highly exposed to carbon taxation risk. Taking printed magazines as an example:

• Case studies undertaken with publishers using the PPA’s carbon calculator demonstrate that typically the carbon impact of a printed magazine is dominated by the GHG emissions arising from pulp and papermaking and printing/finishing operations

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• Reducing the carbon footprint of printed magazines is therefore highly dependent upon the actions taken by these supply chain partner to reduce the footprint of their own operations

• There has been only limited reduction in the carbon footprint of the magazine paper grades used by PPA members participating in the case studies over the past few years. If the footprint of paper grades does not reduce, then the footprint of printed magazines does not change, potentially leaving magazine publishers exposed should any such product carbon tax be imposed in the future. The limited progress on carbon reduction in papers reflects the capital-intensive nature of the industry – unless easily retrofitted, new carbon efficient technologies cannot be deployed by pulp and papermakers until the next investment cycle. The industry is aware of this, and is challenging itself to identify the solutions that can be implemented in that next investment cycle that will generate serious reductions in carbon intensity. Many potential solutions have been identified and are being researched and developed, but the success or otherwise of these will not be apparent for many years to come.

Sustainable production and consumption Sustainable production and consumption is also a key topic for the EU and UK governments (see e.g. http://ec.europa.eu/environment/eussd/escp_en.htm . Should this manifest itself as a focus on supply chain efficiency, then is it possible that the unsold levels in the magazine supply chain could face greater scrutiny, although it is noted that there is no indication that this is a target area for government at this time.

Air quality regulations Air quality has been a specific issue for the UK in recent years, with around 40,000 people estimated to die prematurely every year in the UK because of bad air quality. As well as the threat of action from the European Commission, the environmental law firm ClientEarth has taken legal action against the UK government in response to the poor air quality in UK cities (see e.g., http://www.bbc.co.uk/news/uk-35689427 ). Whilst Brexit may reduce pressure from above to improve the air quality in our cities (as the threat of action from the European Commission will be removed), pressure from local citizens and action groups increasingly aware of the situation is likely to increase. This could result in policy actions such as the exclusion of certain vehicle types from cities, which may impact upon the current distribution regimes for newsstand magazines.

ISO14001 revisions The revised ISO14001 will also play a role in ensuring that partners in the publishing supply chains effectively address their own risk exposure and opportunities as it includes a greater focus on supply chains5. However, many stakeholders are not fully aware of these new requirements.

Conclusions Despite Brexit, environmental taxation is highly likely to increase and expand in the coming years. There may be both direct and indirect ramifications for UK publishers and their supply chains. Costs will increase, although in many cases subsequent environmental improvement efforts have driven significant cost savings (e.g. reduced waste management and resource costs through recycling, reduced energy costs through efficiency efforts, etc). In order to minimise the risk of inappropriate or disproportionate environmental regulation or taxation, it is essential that the UK publishing sector continues to support the PPA’s voluntary responsibility deal and continues to monitor, understand, lobby and influence in emerging areas of environment and sustainability policy such as the circular economy, sustainable production and consumption, etc.

5 Personal communication, Clare Taylor, Clare Taylor Consulting

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Risk Identification Qualitative Risk Rating Risk Response Risk or opportunity

Potential adverse or beneficial effects

Scope Probability Potential impact

Possible actions to mitigate or influence the risk

Benefits of taking action

Circular economy-based regulations and taxes

Increased costs Increased waste management (and supply) costs

• Impacting on Tier 1 suppliers

• Directly impacting the publishers(?)

Medium to High

Medium to High

Publishers to continue to support PPA in the delivery of the Responsibility Deal PPA to continue to monitor developments in circular economy and lobby policy makers for appropriate interventions PPA, publishers and supply chain stakeholders to publicise widely the circular economy successes of the industry (e.g. 100% recycling of unsolds, initiative to recover and reuse unsold covermounts, etc)

Reduce the likelihood of circular-economy regulations specifically targeting publishing Ensure any adopted requirements are appropriate in reach and scale

Product carbon taxes

Increased costs • Directly impacting the publishers

Medium High Continue to work with carbon calculator case studies Challenge paper suppliers and printers on their efforts to reduce the carbon impact of their processes

Understanding of potential supply chain carbon exposure Leveraging improvement to reduce supply chain exposure

Supply chain wastes

Increased or decreased demand for unsolds fibres Increased pressure to recycle unsold covermounts and packaging waste Pressure to reduce supply chain wastes (unsolds)

• Impacting on Tier 1 suppliers

Medium Medium Low

Medium High High

Continue close working relationship with distributor/ papermakers to ensure 100% recycling of unsolds Promotion and adoption of scheme to recover and reuse unsolds Continued work on unsolds management (e.g. SBR)

Avoided landfill costs and avoid unfavourable legislation Avoided costs and avoid unfavourable legislation

Air quality related transport restrictions

Changes needed to the current logistics model

• Impacting on Tier 1 suppliers

Medium Low A watching brief Preparedness to discuss with distributors and wholesalers if this aspect becomes important in the future

ISO14001 Increased emphasis on supply chain • Impacting on Tier 1 and 2 suppliers

High Medium Promote awareness in the supply chain

Suppliers prepared for risks/opportunities

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Conclusions The implications of the big environmental sustainability challenges such as climate change, energy, water, resources and forests can seem abstract and remote when considered from the perspective of the day-to-day business of a publisher. However, as this investigation shows, these challenges have the potential to impact to a greater or lesser extent directly on the activities of publishers and their supply chains. There are of course many uncertainties when considering future impacts, but a review of the best available information identified through a literature search suggests that the most significant risks faced by publishers and their supply chain (considering both the anticipated probability of occurrence and the potential impact) are:

• Increased energy costs – leading to increased publisher overheads, increased paper and print prices, increased data storage costs and increased venue costs

• Disruption to energy availability – potentially leading to lost working time, disruptions to print runs and subsequent missed deadlines for printed publications; down time for digital products; and affecting successful delivery of events

• Public perceptions of forest management – to an extent, misperceptions of paper as a source of deforestation and declining European forest extent persist. This could manifest itself as a threat to the “licence to operate” for publishers of printed publications. The advent of social media and the speed and ease with which campaigns can now be managed and spread increases this risk

• Disruption to food production patterns – leading to increased catering costs for events

• Increased occurrence and severity of flood events – leading to disrupted production and supply and subsequently missed deadlines, and cancellation of, reduced quality of or reduced attendance at events

• Increased taxation and regulation – leading to increased compliance costs

• A specific product carbon tax – leading to increased product costs

• Pressure to recover and recycle covermounts and packaging from unsolds – leading to increased supply chain costs for newsstand magazines which include covermounts as part of the product offering.

Reassuringly, many of the activities already being pursued by the PPA’s Sustainability Action Group, address a good number of these risks. However, there is more that can be done. In response to these risks, the following opportunities should be considered:

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Energy related opportunities:

• Implement internal energy efficiency programmes – PPA has highlighted a number of free services which members can utilise to identify energy efficiency opportunities

• Purchase green electricity – through PPA’s collaboration with the Bafta-led Albert initiative, PPA members have the opportunity to participate in the Creative Energy renewable electricity sourcing initiative for the creative industries (see http://wearealbert.org/inspiration/case-studies/creative-energy for more details)

• Challenge suppliers on energy efficiency, energy sources and carbon emissions

• UK publishing sector to proactively lobby government for policy and investments in renewable and low carbon energy

• Seek out low carbon data management providers and cloud-based solutions

• Offer digital content which is efficient to access from a user perspective (as part of the carbon calculator initiative, PPA has published guidelines on specific actions publishers of digital content can take).

Opportunities to improve public awareness of the sustainability credentials of paper:

• Continued commitment within the sector to certified papers – already there is a high level of commitment to certified papers in the sector; this should be maintained. Publishers should continue to support the PPA in their efforts to demonstrate this by supplying data in response to the annual request regarding papers used

• Challenge the scope of sustainable forestry and engage with FSC/PEFC – to ensure that these continue to challenge forest owners and fully address the concerns of the public and critics of the schemes

• Communicate the benefits of forests and sustainable forest management – continued co-operation with the Two Sides campaign should be one aspect of this, but other opportunities should also be considered.

Opportunities to limit the impacts of changing food production and costs: This topic should hold a watching brief for all publishers involved in events delivery. Specific actions they may consider to mitigate any impacts are:

• Careful menu planning

• Careful portion planning and quantity ordering

• Considering local food and/or local suppliers in order to reduce food transportation costs and impacts Opportunities to limit the impacts of increased flood and other extreme weather impacts: Contingency planning is the key:

• Challenge suppliers about their flood risk and contingency plans

• Establish effective production and distribution contingency strategies

• Challenge venues regarding their flood risk and contingency plans

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Opportunities to limit the potential impacts of future environmental policy, regulations and taxation, including any potential product carbon tax:

• Generally, publishers to continue to support PPA in the delivery of the Responsibility Deal – participation in the Sustainability Action Group and responding to the information needs in the frame of the deal are good starting points

• Continue to work with carbon calculator case studies – this will allow members to understand where they are exposed to carbon-related risks in their supply chains, which could ultimately result in increased costs through regulation and taxation in the future

• Promotion and adoption of the scheme to recover and reuse unsolds – the scheme, organised by The Finishing Line, was presented at the PPA’s Sustainability Forum 2016. It has been successfully trialled and implemented and numerous relevant publishers have expressed interest in working with the approach

• Continued work on unsolds management (e.g. SBR)

• PPA to continue to monitor developments in circular economy and lobby policy makers for appropriate interventions

• PPA, publishers and supply chain stakeholders to publicise widely the circular economy successes of the industry (e.g. 100% recycling of unsolds, initiative to recover and reuse unsold covermounts, etc)

• Challenge paper suppliers and printers on their efforts to reduce the carbon impact of their processes – this can be approached as an action for individual publishers or as a collective through the PPA’s Sustainability Action Group

• Continue close working relationship with distributor/ papermakers to ensure 100% recycling of unsolds. Pursuing these activities does not completely eliminate risks from the publishing supply chain, but it will certainly ensure that publishers are as well placed as they can be to anticipate and mitigate risks and take advantage of opportunities as and when they arise

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