CRR Discussion Document

Version 1

Discussion Document

Version 1: 25 March 2004

Guidelines on Corporate Responsibility Reporting

for the Forest Industry, with specific focus on

the Pulp and Paper Sector

Introduction

1.Background

Corporate responsibility has become an important element in the corporate sector. It is widely agreed that companies play a key role in building the path toward sustainability. Companies that incorporate sustainability at the core of their business and take responsibility for their impacts are needed for a healthy environment. In order to be identified as a company committed to sustainability and differentiated from those that do not, companies should disclose their economic as well as social and environmental performance through periodical Corporate Responsibility Reporting[1] (CRR).

CCR is essential not only to demonstrate a companies' commitment to Sustainability but also a pre-requisite for a sound evaluation of these companies by ratings agencies, investors and financial institutions who produce and use indices such as the Dow Jones Sustainability Index.

Some pulp and paper companies provide environmental information, many even an environmental report detailing a range of issues from forest management standards to air and water emissions, waste management and transport issues. Some companies have gone further producing more complex reports where economic, social and environmental issues (3 bottom lines of Sustainable Development) are put together to report on sustainability.

Unfortunately, only a short number of companies report their sustainable performance and the scope of their reporting differs significantly. The lack of reporting standards results in a huge variation in the quality of reports: information seen as central for WWF and other stakeholders is missing, and comparing environmental and social performance is often difficult. This situation makes it difficult to identify those companies working towards sustainability[2].

WWF believes that sector specific standards would: guide and encourage companies to operate in a manner that supports sustainability; enable the sector to communicate its environmental and social credentials to a broad range of stakeholders; increase the transparency of corporate environmental and social programs; and ultimately facilitate market recognition for companies that take a leadership role, by improving their visibility with ratings agencies, investors and financial institutions.

WWF has prepared this discussion document on suitable CRR guidelines for the Pulp and Paper sector and welcomes the opportunity to work with the industry to define guidelines on Corporate Responsibility Reporting, including defining suitable criteria as well as best practice standards.

2.Content of the document

WWF proposes in this document those aspects that pulp and paper companies moving in a sustainable direction should responsibly address, and therefore report on. Also, it proposes indicators to measure corporate performance for each aspect. These aspects are considered essential but not necessarily sufficient to address sustainability. This is a living document and the listed aspects are the bases for discussions with industry to prepare guidelines for CRR which can be adopted by the pulp and paper sector. WWF welcomes comments on the guidelines.

3.Scope of the document

Defining the scope and boundaries of CRR is a very complex and challenging. WWF does not intend to unravel it in this document. It welcomes further development on the boundaries of CRR.

WWF encourages companies to progress from environmental reporting to sustainability or corporate social responsibility reporting. Even though WWF focuses on conservation and environmental issues, it believes that sustainability requires a more holistic approach where key economic, social and governance issues are also addressed. This document emphasises environmental aspects as well as draws attention to basic social and governance aspects. Although economics aspects are also important for WWF, we consider that these are adequately addressed through company financial accounts.

WWF encourages companies to produce sustainability reports “in accordance” to the GRI guidelines and the suitable sector specific supplement. However, some aspects specific to the forest products sector are not totally covered on the GRI framework. WWF therefore encourages companies to report on the aspects listed in this document when they are not covered under GRI framework. WWF would welcome the development of new tools, as a GRI sector supplement, which address forest products sector specific aspects such as those included in this document.

The information reported should allow an understanding of current and future corporate trends. GRI notes: “at a minimum, reporting organisations should present data for the current reporting period (e.g., one year) and at least two previous periods, as well as future targets where they have been established. This information provides essential context for understanding the significance of a given piece of information. Comparison with industry average, where available, can also provide useful context.“ (GRI 2002:34).

4.Companies to which this document applies

The content of this document should be applicable for processing companies within the forest products sector, however there is a focus on pulp & paper mills, which are direct users of raw materials from forests. In many countries they form a significant part of the economy and therefore have a huge potential impact on the environment, not only in the forest, but throughout the entire product supply chain. Many of the aspects are applicable also to the panel and solid wood product sectors.

CRR for the Forest Products Sector

Note: During the development of this section, the following documents have been used:

WWF GFTN: Responsible Purchasing Guide

WWF International Guidelines for Investments in operations that Impact Forests

WWF-Business & Industry Unit guidance on sustainability reporting for companies

Global Reporting Initiative (GRI) framework

Targets and Milestones from WWF’s programmes on Toxics, Freshwater, and Climate Change.

1. Corporate profile

The company provides brief information such as: name, activity, ownership, governance structure, locations, contact details and scale (employees, turnover, etc.). WWF encourages companies to report on corporate profile in accordance to GRI Guidelines, Part C, Section 2: Profile and Section 3: Governance Structure and Management Systems.

2. Corporate commitment to Sustainability

Statement from CEO (or equivalent senior manager) describing the organisation’s vision, commitment and strategy regarding its contribution to sustainable development as well as introducing the content of the report[3].

3. Corporate sustainable policy and management

After the general corporate commitment to sustainable development, the Company adopts specific policies and management systems in order to address sustainability for each of the following key aspects at the governance, environmental and social levels.

GOVERNANCE:

3.1.Compliance with national laws and international conventions

The Company has a policy and a management system in place to comply with all local, state, national laws and international conventions. This includes inter alia the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), World Heritage Convention (WHC), and the Convention on Biological Diversity (CBD) to which the country concerned is a party (as well as moratoria on logging, declarations of protected areas, forestry laws, environmental protection legislation, as well as labour and social laws. The Company extends this aspect to suppliers/contractors by only working with those achieving its same level of legal compliance.

Indicator:

-Number of prosecutions

-GRI Indicator EN16: Incidents of and fines for non-compliance with all applicable international declarations/conventions/treaties, and national, sub-national, regional, and local regulations associated with environmental [and social] issues. (Explain in terms of country of operation)

-Number of suppliers dismissed due to inability to meet legal compliance or persistent failures on legal compliance.

Criteria: Best practices

3.2.Credibility

The Company has a policy and a management system in place to be credible on sustainability. The elements to be address are:

  • Accountability: The Company implements, monitors and reports on corporate commitment to sustainability in such a way that all the aspects listed on this document are tackled. The responsibility and accountability for it is delegated by the Board of Directors of the Company to one of its members.
  • Transparency: The Company adopts and implements procedures for regular consultation of key stakeholders and encourages their participation in project decision-making where such decisions affect them, and are based on the principle of “prior informed consent”.
  • Independent verification: The Company carries out independent third party annual audits to assess the internal compliance with the corporate commitment to sustainability by verifying the information reported. The key elements listed on this document should be addressed by the annual audit. The summary results of these audits should be made public.

Indicator:

-Is there an Annual Audit to verify the information reported on sustainability?

Criteria: yes or not.

3.3.continual improvement

The Company has a policy and a management system in place to continually improve its performance on sustainability. The elements to be address are:

  • Review of corporate sustainability performance: The Company assesses its performance and achievements on a regular bases in order to review its procedures regarding sustainability.
  • Environmental Management System[4] (EMS): The Company adopts an environmental management system such as the International Organisation for Standardisation’s Environmental Management System ISO 14001, with procedures to minimise and monitor the safe transport, storage, use and disposal of chemicals, biological control agents, particulate, smoke, liquid, gas and solid organic and inorganic wastes in an environmentally and socially responsible way. The EMS includes procedures to minimise noise pollution, environmental emergency protocols, and monitors conversion efficiencies, minimisation of resource inputs, and use of recycled products.
  • Environmental Impact Assessment[5] (EIA): At the project design and scoping stage, the Company is encouraged to establish an environmental Assessment Team that would consult widely with key stakeholders to identify forest issues likely to arise during the project. The EIA must uses an integrated approach in which social, health, environment, biodiversity issues are fully addressed in light of the potential impact of the project on forests and/or the rights and welfare of local communities.
  • Social Impact Assessment[6] (SIA): The Company conducts a Social Impact Assessment to identify the full range of social impacts and responses to the project by people and institutions, including those thatare vulnerable and poor.The Company undertakes the Social Impact Assessment in parallel with the EIA. In many cases, proper protection of the rights of indigenous people will require the implementation of special project components that may lie outside the primary project's objectives. These components can include activities related to health and nutrition, productive infrastructure, linguistic and cultural preservation, entitlement to natural resources, and education.
  • Capacity Building: The Company undertakes training programmes of all personnel involved in carrying out the corporate commitment to sustainability to ensure an adequate level of understanding and ability to develop it adequately.

Indicators:

-Environmental Management System in place such as ISO 14001 or EMAS segmented by facilities (e.g., pulp and paper mills)?

Criteria:

-Indicator 100% satisfied where EMS is on 100% of company’s facilities.

-Indicator 0% satisfied where EMS is on 0% of company’s facilities.

3.4.Communication of corporate commitment and performance regarding sustainability

The Company has a policy and a management system in place to communicate its corporate commitment and performance regarding sustainability. The elements to be address are:

  • Disclosure: The Company makes publicly available its commitment and performance on sustainability.
  • Scope: At least, the aspects listed on this document are address during the reporting process.
  • Target: The Company communicates its corporate commitment and performance to: clients and suppliers, other companies, as well as stakeholders interested on company’s activities.

Indicator:

-Publicly available CSR or Sustainability Report

Criteria:

-Indicator 100% satisfied where company reports 100% of the aspects listed in this document.

-Indicator 0% satisfied where company reports 0% of the aspects listed in this document.

ENVIRONMENT:

3.5.Materials

WWF GOAL: optimal balance of Raw Materials and Recycled.

The Company has a policy and a management system in place to make efficient use of materials and give preference to environmentally friendly materials. The elements to be addressed are:

  • Environmentally friendly material: The Company looks for materials that come from renewable sources, have least negative environmental impacts and have a higher potential to be reused and/or recycled.
  • Efficiency: company’s operations should maximise the utility of materials used.

Indicator: Raw material per unit of production and the absolute levels, segmented by type (Roundwood/chips, Pulp, fillers and chemicals)

Criteria: Best practices

3.6.Forest management

WWF GOAL: Stepwise Approach to Certification

The Company has a policy and a management system in place to minimise negative environmental impacts of its forest-related operations. The elements to be addressed are:

  • Legality[7]: The Company is not involved in illegal logging operations. Where the Company owns the land, it must provide full legal and verifiable title to the land and has all relevant and current permits and approvals. Where the Company does not own the land on which forest operations are to take place, forest products must be extracted with full authorisation of those holding rights to the land or forest resources, and with the required authorisation, permits and approvals from all relevant governments agencies.
  • Protection of High Conservation Value Forests (HCVFs): The Company does not carry out forestry operations that damages or degrades or negatively impacts HCVFs[8].
  • Protected Areas[9]: The Company does not carry out forestry operations in proposed or legally designated protected areas or designated protected area buffer zones.
  • CITES[10] Listed Species: The Company should avoid all activities and trade in CITES Appendix I listed species. For CITES Appendix II and III listed species a degree of caution must be exercised. If harvesting and trade in CITES II and III is undertaken, the Company ensures all legal obligations and permits on the part of all exporters, importers and traders in these species is fully respected. It is strongly suggested that with regard to CITES species it is best to explore alternative species except where credibly independent certified (and suitably documented) sources exist.
  • Forest Restoration[11]:If the project involves forest restoration or plantation development, the Company ensures that, as appropriate, the project design incorporates means of addressing the following issues: the potential of forest restoration to improve biodiversity and ecosystem functions; the potential to establish plantations on non-forest lands that do not contain HCVFs; the need to avoid conversion or degradation of natural habitats; and the capacities of the government, nongovernmental organisations, and other private entities to cooperate in the forest restoration and plantation development.
  • Forest conversion[12]: The Company is not involved in conversion of HCVFs, projects on land converted after 1994, unless proven to be non-HCVFs, and respect for local land claim and dispute resolution procedures and adherence to the principles of “informed consent”.
  • Method of clearing: The Company adopts practices of forest clearing that avoid negative impacts on the environment beyond the immediate area planned to be cleared, including forest clearing on steep slopes, river banks, and water catchments. The Company avoids all uncontrolled and illegal use of forest fires for clearing.
  • Plantations[13]: The Company does not invest in plantations that involve any conversion or degradation of HCVFs, including adjacent or downstream critical natural habitats. Where the Company invests in plantations, it gives preference to siting such projects on unforested sites or lands already converted (excluding any lands that have been converted in anticipation of the project). The Company must provide a development and management plan for the plantation.The Company must adopt good management practices that minimise environmental impacts such as air and water pollution, forest fires, soil erosion, pest invasion and biodiversity loss. The Company must implement water conservation measures in plantation management practices.In view of the potential for plantation projects to introduce exotic species and threaten biodiversity, such projects must be designed to prevent and mitigate these potential threats to natural habitats. Exotic species, which shall be used only when their performance is greater than that of native species, shall be carefully monitored to detect unusual mortality, disease, or insect outbreaks and adverse ecological impacts.
  • Genetically Modified Organisms[14] (GMOs): The Company agrees not to engage in the cultivation or planting of genetically modified tree species or procure timber from sources engaging in the planting of such species. The Company further agrees:

­to support moratorium on use or release of GMOs (e.g., soy) into the general environment until ecological interactions are fully researched and safeguards are put in place;

­to carry out transparent, comprehensive environmental impact assessment of planned releases into the environment, to include consideration of the impacts of changing crop management practices, as well as the invasion of natural and semi-natural habitats or competitive displacement of native species by transgenic plants and animals;

­to avoid additional impacts through genetic modifications which:

  • facilitate or stimulate greater use of chemicals;
  • harm pest controlling and other locally beneficial insects associated with crops:
  • lack safeguards against gene flow into native organisms; and
  • use artificially constructed genes (whose effects are harder to predict and control)

­control of gene technology, including government regulation and the establishment of independent statutory authorities, scientific and community assessment, and effective monitoring of the use and spread of GMOs, including effects on different habitats and species, and on human health and livelihoods; and