Globe And Mail: R.O.B Magazine

CSR: Forest Products

February 22, 2007

Forest Products

In the late 1990s, the industry was still digging in its heels in bitter disputes with environmentalists and native communities. Canadian companies were the targets of international boycotts by the Sierra Club, Greenpeace and other activists. Then, in 2001, an agreement between companies, environmentalists, natives and the B.C. provincial government to protect 15.8 million acres of the Great Bear Rainforest heralded a new spirit of co-operation. Two years later, it was followed by the Boreal Forest Conservation Framework, an agreement between producers, natives and environmentalists, which sought to protect at least half of the 1.5-billion-acre forest that stretches across Northern Canada. Disputes remain, however, such as the one between International Forest Products (Interfor) and the Friends of Clayoquot Sound over logging in old-growth forests. And transforming the industry into an environmentally sustainable one remains a challenge. Producing paper and wood products still generates significant air and water pollution, and companies such as Abitibi-Consolidated, Norbord, Tembec and West Fraser Timber have all paid significant fines for violating environmental regulations in recent years. Employee health and safety is also a concern: At least 23 workers among our nine companies and their contractors have died on the job over the past five years.

Catalyst A-

The company is a solid all-round CSR performer and has not been convicted or fined for violating health and safety or environmental regulations during the past five years. In December, 2004, Catalyst joined with Office Depot and PricewaterhouseCoopers to develop a system to track and verify that its paper meets environmental standards through all the production stages, from tree harvesting to manufacturing.

Tembec B+

Tembec is the only company in this ranking to commit to Forest Stewardship Council (FSC) certification for all of its harvesting operations. The certification promotes sustainable forestry, and has been endorsed by other producers, environmental groups and retailers such as Home Depot. At the end of 2006, about 90% of Tembec's Canadian forest holdings had been certified. But the company loses marks for the $1.75 million in fines it has paid since December, 2005. In one case, Tembec paid a record $1-million fine to the Quebec government for polluting the Ottawa River. Tembec says its mill-and-factory complex in Temiscaming has been complying with environmental regulations since December, 2004.

Cascades B-

The company is an industry leader in developing products with reduced environmental impact. For example, Cascades's Tissue Group has committed to acquiring more than 90% of its virgin pulp from FSC- certified sources by 2007, and its Saint-Jérôme, Quebec, mill is the only facility in North America certified by the Chlorine Free Products Association. Cascades's social and environmental reporting improved in 2005, but it still lags industry leaders.

Norbord B-

Norbord gets top scores in the industry for corporate governance. It leads in environmental reporting as well, providing detailed performance data and reports on non-compliance incidents. But the company's score suffers because of environmental violations in 2003.

Canfor C+

The company has implemented a comprehensive health and safety management system, but its diversity policies and programs lag industry leaders.

TimberWest C

TimberWest is an above-average performer in the corporate governance and environmental categories. However, a worker safety report last year in B.C. cited the company for failing to closely supervise one of its contractors.

Abitibi-Consolidated C-

A continuing legal dispute with the Grassy Narrows First Nation in Ontario and recent health and safety convictions offset above-average performance in areas such as diversity.

West Fraser Timber D+

The company is a below-average performer in most CSR categories for this industry.

Interfor E+

Since 2005, Interfor has twice been found guilty of discriminating against workers on disability leave. Also, 12 workers—some employed by contractors—have died at Interfor operations since 2002.

CRITICAL ISSUES FOR FOREST PRODUCTS

First Nations involvement

The industry continues to lag both oil and gas and mining in consulting and working with First Nations communities. Employment is a bright spot, however.In B.C., direct employment of aboriginals in the forest sector increased by 60% between 1981 and 2001, and timber harvested by First Nations bands or companies involving aboriginals increased from just over 0% to 3% of the provincial allowable annual cut.

Health and safety

In 2005, 43 B.C. forest workers were killed on the job, prompting the United Steelworkers union to organize a "fatality summit" in Vancouver, at which workers, industry executives and government officials discussed solutions.

Greenhouse gases

According to the Forest Products Association of Canada, Canadian pulp and paper mills cut their greenhouse gas emissions per tonne of output by 54% between 1990 and 2004, and their total emissions dropped by 30%. Mills increased their total output by 28% over the same period. The industry has committed to reduce its fossil fuel emissions per tonne of output by another 13% by 2012.

The trouble with global warming

Largely because of recent mild winters and dry summers, the mountain pine beetle population in the B.C. Interior has increased to epidemic levels in some areas, devastating forests of lodgepole pine. If the warming persists, the beetle infestations could spread north to the Jack pine in the boreal forest across Northern Canada.

Sustainable forestry

Most major companies at least try to implement logging practices that minimize environmental damage and renew forests, and are seeking certification for their efforts. The Forest Stewardship Council (FSC) standards are the most rigorous of three voluntary codes in the industry, and companies hope compliance will win them points with investors and translate into greater sales. For some eco-friendly retailers and businesses, the FSC is now a minimum standard.