Evolve

Evolution in the natural world is a slow process. But in the hyperconnected world in which we live and work, it’s
fast – and becoming faster all the time. As an example, twenty years ago, very few people had ever heard of the ‘Internet of Things’. Ten years ago, the term ‘Industry 4.0’ had not yet been coined. At the start of 2020, few people had paid attention to terms such as coronavirus, social distancing, lockdowns or infection waves. Yet today, these terms are part of our everyday vocabulary, showing just how fast the world around us is changing.

In response to our rapidly changing landscape, five years ago, we embarked on a strategy of intentional evolution, which involved diversifying our product portfolio in higher margin segments. By 2020, despite market challenges, we had essentially met and in many ways, exceeded this ambition.

Evolution is based on a series of events, processes and responses. Around the world, people are responding to natural resources constraints by seeking responsible alternatives to non-renewables and solutions that are truly sustainable from seed to final product.

We are responding to these needs by building on our success in intentional evolution to accelerate an enhanced journey of evolution aligned with our Thrive25 strategy. We are doing so from a foundation based on a coalition of diverse perspectives and expertise; as well as a history of seeking out and investing in breakthroughs that enable lasting outcomes for our partners and a lighter footprint on the world. We are building on these to ensure that every solution we create supports our goal of making everyday products more sustainable and that we accelerate meaningful change.

Reimagine

Stars form when celestial clouds collapse, feeding a rotating disc of gas and dust into a dense, hot central core. Amongst other things, pulsating stars give off carbon, a key ingredient for life as we know it. From chaos, something beautiful – and essential – is created.

We can view this as a metaphor for the coronavirus pandemic that infected and affected people regardless of nationality, class or wealth, leaving intense disruption in its wake. However, it also ushered in a global drive to reimagine our way of being on the planet. A new agenda for change is emerging, gaining traction and raising questions that will not go away.

Questions like: How do we reimagine a collective future where changed behaviours will allow us to live more in balance with nature than before? How do we

maintain and even intensify the sense of connection, caring and community that was one of the unexpected, but welcome, impacts of the pandemic? How do we deal with the uncertainty on the horizon when future surges of Covid-19 occur?

At Sappi we are taking bold, decisive action to respond to these challenges by extracting the full potential of trees and woodfibre to develop practical innovations for everyday impact and innovate what we should, not just what we can. We’re also establishing and maintaining proactive dialogue with all our stakeholders as well as working with and supporting local communities.

In doing so, we can not only create a more sustainable future, but also unlock significant long-term value for all our stakeholders.

Resilience

Rocks are the ultimate symbol of resilience. They are fused together over time from solid crystals of different minerals. These natural processes bind them all together, imparting strength and resilience. But even rocks are shaped and reshaped over time by natural forces like water, wind and sun.

They’re a reminder that none of us are impervious to the global forces shaping our world. Forces like climate change, urbanisation, social inequality and of course, the new reality brought about by the coronavirus pandemic and Covid-19.

We’ve proven our resilience to succeed in the ‘new normal’ and we will continue to do so as we work to accelerate our decarbonisation journey, meet the changing needs of rapidly urbanising populations while managing our environmental footprint and promoting a diverse, inclusive workforce.

At Sappi we operate across different geographies, meeting the needs of customers from New Zealand to New Mexico, but our common purpose makes us stronger and more resilient: Sappi exists to build a thriving world by unlocking the power of renewable resources to benefit people, communities, and the planet. This is our inspiration and our call to create a brighter future for the world and for our business.

Emerge

Collectively, the world is drawing a deep breath as we slowly emerge from the coronavirus pandemic and impact of Covid-19.

During the crisis, the safety of our people was our top priority. After which, like many enterprises across the world, our underlying goal was economic survival. To achieve this, we focused on the preservation of liquidity, lowering costs by deferring non-critical capex projects and postponing some annual maintenance shuts. We also took commercial downtime across all segments as required, in order to match supply to demand and prevent the build-up of inventory.

The verb ‘emerge’ is derived from the classical Latin ēmergere, meaning ‘to rise out or up’. We are proud

to say that we are rising from the impact of Covid-19 with strong growth in sales and profitability for the packaging and speciality papers segment, quickly recovering dissolving pulp market and steady month-on-month improvement for graphic papers.

As OneSappi we are steely in our determination to emerge from survival mode back onto a growth curve. A curve based on our strategy of diversifying our product portfolio into higher margin and growing segments – a strategy fully justified during the events of the past year.

Doing so is challenging, but we believe we can realise our vision of a thriving world by collaborating with all our stakeholders to create solutions for our collective needs and emerge stronger than ever before.

Momentum

Linear momentum is defined as the product of a system’s mass multiplied by its velocity. The greater an object’s mass or the greater its velocity, the greater its momentum. In other words, momentum is about both magnitude and direction.

It can be difficult to maintain momentum in times of profound change or crisis, but it’s important to do so. That’s because action creates movement which in turn can create unanticipated opportunities.

Recognising this, at Sappi we responded to the coronavirus pandemic and Covid-19 in order to keep our forward momentum. We swiftly implemented a comprehensive Covid-19 action plan that ensured the health and safety of our employees and enabled us to operate in a safe, uninterrupted manner where demand permitted. Working closely with our

customers and suppliers we systematically increased activity and output in response to improved market demand. Our support for local communities helped mitigate the impact of the pandemic and the ensuing socio-economic consequences on them.

Looking ahead, we are confident that we can accelerate our momentum to navigate forward: We have the mass in the form of wide-ranging expertise, extensive infrastructure, strong foundation of research and development, together with our range of sustainable solutions produced from renewable woodfibre. And we have the velocity in the form of our ambitious but achievable Thrive25 strategy, which allows us to take advantage of the changing dynamics between the environment, consumers and the products they require. Above all, our passionate, committed people provide the impetus to power us forward.

Our key relationships

One of the strategic fundamentals of our Thrive25 strategy is to enhance trust.
This means improving our understanding of – and proactively partnering with – various stakeholders, driving sustainability solutions and, in particular, meeting the changing needs of every employee at Sappi.

To achieve this, we establish and maintain proactive dialogue with all our stakeholders. In doing so we recognise that stakeholder needs are dynamic and that we need to be responsive to the evolving stakeholder landscape. In addition to responsiveness, our approach to engagement is based on the principles of inclusivity, materiality, relevance and completeness.

We assess the quality of our relationships both informally, as set out on the following pages and formally – regular employee and customer surveys, community forums and Poverty Stoplight in South Africa.

Our stakeholder work is aligned to the governance framework of King IV namely performance and value creation, adequate and effective controls and trust, as well as reputation and legitimacy and ethics.

Trust is not possible without an ethical culture underpinning our everyday activities, which is why we train our employees, customers and suppliers on our Code of Ethics and also promote awareness of the Sappi hotlines in each region which allow all stakeholders to report breaches of the code in full confidentiality without fear of reprisal.

Read more: Maintaining ethical behaviour and compliance.

  United Nations Global Compact (UNGC) Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

 

 

Self-assessment of quality of relationship: Good

Why we engage

As we take Sappi into the future based on the clear roadmap entrenched in our Thrive25 strategy, leadership's task is to help our people understand the plan and clear their path to success. Our aim is to unlock the wide-ranging, significant expertise of our people today and tomorrow. In doing so, we secure our exciting future in woodfibre as a business that provides relevant solutions, delivers enhanced value and is a trusted partner to all our stakeholders.

  Shared priorities     Our response
  Constructive action with regard to Covid-19    
  • Our main focus is on the safety of our people and on providing them with support, information and resources
  • In addition, we were able to continue to operate throughout the lockdowns which enabled us to reduce the impact on our people
  • Our operations were classified as essential and wherever possible, we provided the IT support and human resources processes to allow people to work from home
  • Where people did contract coronavirus, they were provided with support and isolated according to health and safety protocols
  • In each region, we established Covid-19 information hubs to support our staff, customers and their families

Read more: Covid-19 and our response.

  Involvement in safety    
  • The theme for Global Safety Awareness week was 'I Value Life'. In the light of the Covid-19 pandemic, virtual webinars and e-media were used to convey the messages to our people
  • Ensuring the safety of our employees and contractors is part of our collaborative approach to doing business. Health and safety committees are in place at all our operations. Through these committees, our people are consulted about the development/review of policies and procedures and changes that affect workplace safety or health:
    • In SEU, formal health and safety committees are in place at different levels of the business in line with statutory requirements. All employees are represented by the safety committees
    • In SNA, all unions have the opportunity to participate in joint management worker safety committees
    • In SSA, (including Sappi Limited), health and safety representatives are elected from non-supervisory staff. In line with legislation, there is one representative for every 50 workers
    • Sappi Trading does not have formal joint management worker health and safety committees due to the small size of the offices, but there are appointed safety officers
  Effective wellness and recognition programmes    
  • Well-being and wellness programmes are tailored to the needs of each region
  • Our recognition programmes include:

    Sappi Limited

    • Technical Innovation Awards
    • CEO Award for Excellence

    SEU

    • Annual Coryphaena Award

    SNA

    • TOUTS Recognition Awards and
    • periodic regional President's Awards

    SSA

    • Excellence in Achievement Awards (EAA)
    • Annual Safety Awards

    Sappi Trading

    • SMART Awards

Read more: Ensuring the safety of our employees and contractors.

  Connection with Sappi's strategic goals and high levels of engagement    

We conduct engagement surveys every second year, with the last one taking place in 2019. Questions probe issues such as whether our people feel they have the right tools and resources to do their jobs well; whether their goals for career growth are being met, whether they feel safe at work and whether they are clear on the direction in which Sappi is moving.

In 2020, group and regional leadership engaged extensively on the close out of our 2020Vision business strategy and the launch of our Thrive25 strategy. In South Africa, we introduced the Ask Alex initiative whereby the regional SSA Chief Executive Officer (CEO) held employee roadshows (in person and online), with employees who were encouraged to ask him questions related to current and future operating conditions. In Europe, the CEO established virtual update briefings and in North America virtual briefings were also undertaken.

Read more: Engaging more closely with our employees.

  Resources that enable our people to grow intellectually, fulfil their potential and drive innovation in Sappi; policies and procedures that promote a diverse workforce    

In FY2020 we:

  • Invested an average of US$434 per person in training and development
  • Established a 2025 gender diversity target
  • Continued to provide access to self-learning modules

Read more: Attracting, developing and retaining key skills.

  UNGC Principle 6:
The elimination of discrimination in respect of employment and occupation.
  Encourage employee volunteerism through initiatives like    

SEU: Support of various local education, cultural and environmental projects based on annual requests and identified needs.

SNA: The Employee Ideas that Matter initiative through which we provide grants to employees to fund their individual projects to support good in local communities. Sustainability Ambassadors also lead and participate in local events, supporting community in programmes as well as educating the community about the wood products industry, sustainable forestry practices, mill operations and the importance of recycling.

SSA: Employee well-being committees at each mill support local community projects as well as Mandela Day.

Read more: Sharing value with our communities.

  Understanding of Sappi’s commitment to sustainability, which underpins our strategy    

Globally, targeted internal publications and social media campaigns linked to global days like Global Ethics Day and our signing up to Business for Nature's call to action #nature is everyones business enhance understanding of the sustainability landscape in general as well as our actions to ensure that we play an active role in driving responsibility within this landscape, in particular.

Given the launch of our Thrive25 strategy and 2025 targets, which are aligned with the UN SDGs, communication focused on SDG targets to show our people how they can become part of the global and regional drive and raise awareness of how our individual actions can collectively count towards a greater change.

SNA runs an active Sustainability Ambassador programme and held a virtual Sustainability Ambassador Assembly workshop this year. Due to the virtual nature of the workshop, there was a greater diversity of participation since there were no travel costs involved.

Opportunities for value creation

  • Alignment with our strategic direction enables our people to contribute more positively to the business as well as their personal and career development
  • By building our human capital base, we establish a base of technical skills needed by the industry
  • A diverse workforce enhances our ability to service global markets and promotes a culture of inclusivity
  • An increased commitment to safety delivers benefits at personal, team and operational levels
  • By establishing an ethical culture where corporate citizenship is promoted, we ensure the ongoing viability of our business, enhance reputation and become an employer of choice
 

Challenges for value creation

  • Recruitment and retention of key skills
  • Loss of institutional memory as older employees retire

Self-assessment of quality of relationship: Fair

Why we engage

Unions are important members of civil society and can contribute meaningfully to addressing societal challenges and creating sustainable growth and prosperity for all. In 2020, globally, 57% of our workforce was unionised, with 75% belonging to a bargaining unit. Given these high levels of representation, it makes sound business sense to maintain constructive relationships with our employees and their representatives to maintain and promote productivity, stability and engagement.

  Shared priorities     Our response
  Freedom of association, collective bargaining and disciplined behaviour    

Sappi endorses the principles of fair labour practice as entrenched in the UNGC and Universal Declaration of Human Rights. At a minimum, we conform to and often exceed labour legislation requirements in countries in which we operate. Protecting the right to freedom of association and collective bargaining is fundamental to the manner in which we do business. We engage extensively with representative trade unions. Discussions range from remuneration issues, to training and development, health and safety and organisational changes.

Given the active role taken by labour in South Africa, we have established a number of structures to enhance ongoing positive engagement with union leadership. This is facilitated by structures such as the National Partnership Forum, which includes senior members of management and senior union leaders who hold regular meetings where business, safety and union challenges are discussed.

Disciplined behaviour is essential for individual well-being, and to achieve our group goals and objectives. In each region, disciplinary codes ensure appropriate procedures are applied consistently, while grievance policies entrench the rights of employees, including the right to raise a grievance without fear of victimisation, right to seek guidance and assistance from a member of the human resources department or their representative at any time and the right to appeal to a higher authority, without prejudice.

Read more: Supporting sound labour relations.

  UNGC Principle 3: Businesses should uphold freedom of association and the effective recognition of the right to collective bargaining.
  Safety and wellness initiatives    

The health and safety committees at all our operations provide a forum for consultation about the development/review of policies and procedures and changes that affect workplace safety or health. Wellness programmes include fitness and medical screening programmes, as well as psychological and financial support.

  Remuneration, working hours and other conditions of service    

Our labour standards ensure that our remuneration practices are fair, with compensation levels set to reflect competitive market practices and internal equity as well as company and individual performance. In rural areas, forest products companies like Sappi are often the only, or major, employers, which makes the local population very dependent on the company and which could, in turn, lead to exploitative behaviour and an indirect form of forced labour. Against this backdrop, in all three regions, labour is sourced on the open market, we pay market-related wages in line with or above local legislation and ensure that working hours and practices are fair.

  UNGC Principle 4: The elimination of all forms of forced and compulsory labour.
  Resolving grievances, engaging on strategy    
  • Well-established grievance channels, disciplinary procedures and whistleblower protocols provide a non-retributory framework
  • We regularly engage with unions on economic conditions, market dynamics and growth plans

Opportunities for value creation

  • Good employee/management relations enable us to resolve new and difficult labour issues as they develop
  • When employees understand strategic direction and operating context, they are more likely to be more committed to Sappi, leading to a more stable labour force and higher levels of productivity
 

Challenges for value creation

  • Multi-union landscapes, particularly in North America and South Africa, add to complexities in the labour environment
  • Unrealistic expectations about wage increases, particularly in light of the Covid-19 pandemic

Self-assessment of quality of relationships: Excellent

Why we engage

The more closely we engage and collaborate with our customers, the more likely we are to understand and respond to their evolving needs by offering relevant solutions in the form of sustainable and practical products and services. This partnership approach builds the loyalty and long-term relationships that enable us to thrive.

  Shared priorities     Our response
  High levels of service    

In SEU, we enhanced services levels by launching Paperini that allows customers to accurately track their paper deliveries. The tool, which can create an automated arrival notification and, subsequently, an automated credit note, is currently being trialled by several logistics and carrier companies in Europe. We also established new infrastructure in Sweden and Denmark that enables us to distribute paper to printers within 48 hours.

The SNA eCommerce site is a customer portal with multi-language capability that connects customers 24/7 to real-time information such as order status, inventory checks, document printing, claims reporting and order placement so they can plan and manage their business better. This included access to our carbon calculator where the GHG emissions associated with their order can be determined, as well as the amount of emissions avoided by using a Sappi product that has a lower carbon footprint than the US pulp and paper industry average. In 2020, Sappi expanded the eCommerce customer experience to include casting and release globally.

During Covid-19 lockdowns, all regions ensured that they engaged with customers to ensure we could meet their immediate requirements.

  New or enhanced products that meet rapidly changing market demand    

Consumers have become increasingly aware of social and environmental issues and our customers are looking to us for help in this regard. Against this backdrop, our innovation and sustainability teams enable us to put sustainability at the heart of everything we produce, enhance our understanding of our customers' current and future needs and enable us to bring new products to market at a faster pace.

Where relevant, we will conduct R&D and develop products to suit customers' specific needs.

Read more: Developing and commercialising innovations in addition to adjacent businesses.

  Support for paper, packaging, dissolving pulp (DP) and sustainability goals    

In FY2019, Sappi joined the Sustainable Apparel Coalition (SAC) and in 2020, Cloquet Mill completed the Higg Facility Environmental Module (FEM) sustainability self-assessment for Verve, our DP brand. The results position the mill as a leader in sustainable practices, evidenced by a low environmental footprint. The Higg FEM self-assessment tool is part of the Higg Index suite of tools that was developed by the apparel industry to evaluate materials, products, facilities, and processes based on environmental performance, social labour practices, and product design choices.

  Information and campaigns to promote print as a communication medium and encourage the use of packaging    
  • Globally and regionally, we continue to participate in industry initiatives like TwoSides
  • SNA participates in the Paper and Paper Packaging check-off programme that promotes the sustainable nature of paper and packaging
  • We also participate in a number of tradeshows such as the PRINTING United tradeshow in Dallas, Texas (USA) where we presented our new Transjet Drive dye sublimation paper, different papers for large format inkjet printing and our new Ultracast casting and release papers
  • The Covid-19 pandemic meant that events we sponsor, like the Citrus Symposium in South Africa were postponed. The pandemic also precluded our participation in the usual number of trade shows. However, where possible, we interacted on online platforms. For example, the Sappi Packaging and Speciality Papers (PSP) sales and marketing teams hosted their first virtual Interpack Fair. Based on the motto 'Pro Planet: Paper Packaging – welcome to the new pack-age', the virtual event featured six livestream presentations that focused on our management of the Covid-19 situation, as well as our global packaging product offering
  Information about the fibre sourcing and production processes behind our brands    

Customers generally approach us for information about the fibre sourcing and production processes behind our brands, including carbon footprint. In response to these requests, in SEU, SNA and SSA we publish Paper Profiles and/or information sheets for our papers. We also respond to many questionnaires from our customers that collect data on our carbon reduction plans and performance. In SNA, we hold customer council meetings and have developed our own GHG emissions' calculator that quantifies the amount of emissions associated with a customer order and how those emissions compare against the industry average.

  • At the request of our customers we participate in EcoVadis. All three regions achieved platinum medals in the latest EcoVadis rating. The platinum rating, a new medal category created in 2020, recognises the top 1% of companies evaluated for their environment, labour and human rights, ethics and sustainable procurement performance
  • We also publish covering topics like climate change, as well as forest and energy certification
  Technical and thought leadership information    

Globally, a series of technical brochures and thought leadership pieces are available on our website: www.sappi.com

  • Communication regarding the haptics of touch and neuroscience of touch speak to the power of printed communication
  • The PSP site provides targeted information on packaging and speciality papers (www.sappi-psp.com)
  • The POP site is aimed at marketers, creatives, designers and printers looking to innovate in their categories (www.sappipops.com)
  • Sappi etc is an educational platform for designers and printers (www.sappi.com/sappietc)

Our paper and paper pulp product offerings are supported by strong technical teams at our technology and R&D centres.

Opportunities for value creation

  • Meet customer needs for products with an enhanced environmental profile
  • Innovate to align with evolving market trends
  • Increase awareness of the importance of sustainability
  • Promote our customers' own sustainability journeys
  • Keep abreast of market developments
  • Showcase our products and promote the Sappi brand
 

Challenges for value creation

  • Confusing harvesting and forest management with deforestation and lack of understanding about the manner in which the forests and plantations from which we source woodfibre help mitigate global warming
Collaborating to boost disruptive innovation
We joined forces with VIGC (Flemish Innovation Centre for Graphic Communication) and EY to launch one of the first graphic arts industry hackathons – a method of creative problem solving designed to boost disruptive innovation. During 24 hours, teams of start-ups, scale-ups, corporates and students, supported by a team of experts and coaches, could collaborate and create digital and innovative solutions relevant for the graphic arts industry. After the hacking, ideas were presented to a mixed jury. Winners of the innovation contest were given the opportunity to showcase their Minimum Viable Product/s to experts and industry decision-makers at VIGC's Het Congress event. They also received a Sappi sponsorship of EUR3,000 as well as three months of mentorship by Sappi experts to help bring their ideas to fruition.

Self-assessment of quality of relationship: Good

Why we engage

As we take Sappi into the future based on the clear roadmap entrenched in our Thrive25 strategy, leadership's task is to help our people understand the plan and clear their path to success. Our aim is to unlock the wide-ranging, significant expertise of our people today and tomorrow. In doing so, we secure our exciting future in woodfibre as a business that provides relevant solutions, delivers enhanced value and is a trusted partner to all our stakeholders.

  Shared priorities     Our response
  Constructive action with regard to Covid-19    
  • Our main focus is on the safety of our people and on providing them with support, information and resources
  • In addition, we were able to continue to operate throughout the lockdowns which enabled us to reduce the impact on our people
  • Our operations were classified as essential and wherever possible, we provided the IT support and human resources processes to allow people to work from home
  • Where people did contract coronavirus, they were provided with support and isolated according to health and safety protocols
  • In each region, we established Covid-19 information hubs to support our staff, customers and their families

Read more: Covid-19 and our response.

  Involvement in safety    
  • The theme for Global Safety Awareness week was 'I Value Life'. In the light of the Covid-19 pandemic, virtual webinars and e-media were used to convey the messages to our people
  • Ensuring the safety of our employees and contractors is part of our collaborative approach to doing business. Health and safety committees are in place at all our operations. Through these committees, our people are consulted about the development/review of policies and procedures and changes that affect workplace safety or health:
    • In SEU, formal health and safety committees are in place at different levels of the business in line with statutory requirements. All employees are represented by the safety committees
    • In SNA, all unions have the opportunity to participate in joint management worker safety committees
    • In SSA, (including Sappi Limited), health and safety representatives are elected from non-supervisory staff. In line with legislation, there is one representative for every 50 workers
    • Sappi Trading does not have formal joint management worker health and safety committees due to the small size of the offices, but there are appointed safety officers
  Involvement in safety    
  • Well-being and wellness programmes are tailored to the needs of each region
  • Our recognition programmes include:

    Sappi Limited

    • Technical Innovation Awards
    • CEO Award for Excellence

    SEU

    • Annual Coryphaena Award

    SNA

    • TOUTS Recognition Awards and
    • periodic regional President's Awards

    SSA

    • Excellence in Achievement Awards (EAA)
    • Annual Safety Awards

    Sappi Trading

    • SMART Awards

Read more: Ensuring the safety of our employees and contractors.

  Connection with Sappi's strategic goals and high levels of engagement    

We conduct engagement surveys every second year, with the last one taking place in 2019. Questions probe issues such as whether our people feel they have the right tools and resources to do their jobs well; whether their goals for career growth are being met, whether they feel safe at work and whether they are clear on the direction in which Sappi is moving.

In 2020, group and regional leadership engaged extensively on the close out of our 2020Vision business strategy and the launch of our Thrive25 strategy. In South Africa, we introduced the Ask Alex initiative whereby the regional SSA Chief Executive Officer (CEO) held employee roadshows (in person and online), with employees who were encouraged to ask him questions related to current and future operating conditions. In Europe, the CEO established virtual update briefings and in North America virtual briefings were also undertaken.

Read more: Engaging more closely with our employees.

  Resources that enable our people to grow intellectually, fulfil their potential and drive innovation in Sappi; policies and procedures that promote a diverse workforce    

In FY2020 we:

  • Invested an average of US$434 per person in training and development
  • Established a 2025 gender diversity target
  • Continued to provide access to self-learning modules

Read more: Attracting, developing and retaining key skills.

  UNGC Principle 6:
The elimination of discrimination in respect of employment and occupation.
  Encourage employee volunteerism through initiatives like    

SEU: Support of various local education, cultural and environmental projects based on annual requests and identified needs.

SNA: The Employee Ideas that Matter initiative through which we provide grants to employees to fund their individual projects to support good in local communities. Sustainability Ambassadors also lead and participate in local events, supporting community in programmes as well as educating the community about the wood products industry, sustainable forestry practices, mill operations and the importance of recycling.

SSA: Employee well-being committees at each mill support local community projects as well as Mandela Day.

Read more: Sharing value with our communities.

  Understanding of Sappi’s commitment to sustainability, which underpins our strategy    

Globally, targeted internal publications and social media campaigns linked to global days like Global Ethics Day and our signing up to Business for Nature's call to action #nature is everyones business enhance understanding of the sustainability landscape in general as well as our actions to ensure that we play an active role in driving responsibility within this landscape, in particular.

Given the launch of our Thrive25 strategy and 2025 targets, which are aligned with the UN SDGs, communication focused on SDG targets to show our people how they can become part of the global and regional drive and raise awareness of how our individual actions can collectively count towards a greater change.

SNA runs an active Sustainability Ambassador programme and held a virtual Sustainability Ambassador Assembly workshop this year. Due to the virtual nature of the workshop, there was a greater diversity of participation since there were no travel costs involved.

Opportunities for value creation

  • Alignment with our strategic direction enables our people to contribute more positively to the business as well as their personal and career development
  • By building our human capital base, we establish a base of technical skills needed by the industry
  • A diverse workforce enhances our ability to service global markets and promotes a culture of inclusivity
  • An increased commitment to safety delivers benefits at personal, team and operational levels
  • By establishing an ethical culture where corporate citizenship is promoted, we ensure the ongoing viability of our business, enhance reputation and become an employer of choice
 

Challenges for value creation

  • Recruitment and retention of key skills
  • Loss of institutional memory as older employees retire

Self-assessment of quality of relationships: Fair to good

Why we engage

Recognising that we are part of the communities beyond our fence lines and that their prosperity is linked to our own, we strive to make a purpose-driven, meaningful contribution towards their well-being and development. We work to create positive social impact by jointly identifying and leveraging opportunities, thereby demonstrating our commitment to transparency and collaboration.

Community engagement meetings take various formats in our mills in the regions where they operate. These range from broad liaison forums for business, local government and communities to legally mandated environmental forums that form part of the licensing conditions of mills. In South Africa, there are local farmer and community forums related to our forestry communities.

In response to the Covid-19 pandemic, we refocused our response to enable rapid community support including through support for local (in our operating communities) clinics, hospitals, feeding schemes and schools. Read more on Covid-19 impacts and response.

  Shared priorities     Our response
  Community support including employment, job creation, business opportunities, economic and social impacts/contributions and community support    

SEU

  • Employees are encouraged to nominate and participate in local community projects and events
  • At a local community level our focus is to add to the well-being, safety and health of our communities. We support various local schools, sports and hobby clubs, forest products industry students, local safety and environmental organisations and local charities
  • As a pilot project, one of our mills created an opportunity for youth in the community to be sustainability ambassadors and engage with sustainability projects
  • Sappi is a partner in the Marc Cornelissen Brightlands Award, which encourages talented pioneers to persevere in creating a sustainable world

SNA

  • Each unit has a community connections group to channel local support
  • Education programmes are supported at targeted colleges and universities as are programmes to encourage study in fields relevant to our operations
  • Our employees participate in initiatives like Living Lands and Waters and the Charles River Watershed Association focused on environmental stewardship and education
  • The Ideas that Matter programme continues to recognise and support designers who support good causes. Since 1999 the programme has funded over 500 non-profit projects and has contributed more than US$13 million to a wide range of causes around the world that use design as a positive force in society
  • The Employee Ideas that Matter programme provides direct funding to the non-profit organisations that our employees are most passionate about

SSA

  • Community support has been bolstered by the creation of a dedicated multi-disciplinary team comprising of the ESD team, the Human Resources team and the Corporate Citizenship team. This structure has been rolled out at each mill site and is referred to as the Community Management Committee (CMC). The purpose of this CMC is to identify shared value opportunities which help identify and support local entrepreneurs as well as to promote the sourcing of goods and services from local suppliers where possible. The CMC also reports on the employment of locals and ensures investment in communities addresses specific needs. The CMC at all times aims to collaborate with government, non-governmental organisations (NGOs) and the private sector for scale
  • Given South Africa's significant development needs, the bulk of community support is allocated to this region. Support is directed to education, environment and socio-economic development, based on helping communities help themselves
  • Initiatives include:
    • Sappi Khulisa, our enterprise development scheme for timber farmers
    • The Abashintshi Youth programme
    • Education throughout the education value chain, including early childhood development (ECD); Khulisa Ulwazi, our training centres for small growers and two training centres for local unemployed youth at Saiccor and the Ngodwana Mills
    • Support for local tourism through our mountain biking and trail running sponsorships and promoting recreational riding on Sappi land

Read more: Sharing value with our communities.

Opportunities for value creation

  • Enhanced licence to operate and thrive
  • Promoting socio-economic development that could, in the long term, lead to increased demand for our products
  • Initiation of real social mobilisation and change for the better
 

Challenges for value creation

  • Unrealistic expectations for jobs, supplier opportunities and service delivery
  • Ensuring mutual ownership and commitment

Self-assessment of quality of relationships: Good

Why we engage

Business makes a significant positive contribution to society and is a core partner in developing the world we want to see. Being an active member of trade, voluntary and other business forums and bodies ensures that we help to spread this message, and that issues of concern to us are included in the agenda. We also support and partner with industry initiatives aimed at promoting the use of our products. One of our longest global relationships is with the UNGC, to which we have been a signatory since 2008. Under our Thrive25 strategy, which emphasises partnership and collaboration, we have been focusing more intensively on working closely and more often with those who share both our values and commitment to our industry.

  Shared priorities     Our response
 
  • Issues that affect the sustainability of our industry and products that promote sustainability
  • The impact of increased regulations on business
  • The social and environmental credentials of our products
  • Ensuring that the positive role played by business in society is amplified and recognised
   

Globally we:

  • Committed to the science-based targets initiative in line with our group-wide decarbonisation strategy. Read more: Prioritising renewable and clean energy
  • Signed up to Business for Nature's Call to Action: #nature is everyones business
  • Participated in a biodiversity information pilot with a range of brand owners, and biodiversity experts under the auspices of the Textile Exchange. The latter will be using the information to develop a biodiversity rating tool for brand owners
  • Collaborated with one of our DP customers on a blockchain project to enhance traceability within the supply chain
  • Joined the 4evergreen alliance, a group of prominent companies and organisations from all areas of the fibre-based packaging industry, to work together towards a more sustainable economy that minimises the product's environmental impact. We are collaborating with the 4evergreen alliance to develop a greater understanding of recyclability in packaging, understand the future need for recycling systems and communicate findings to stakeholders
  • Established a collaboration agreement with HP Indigo's Alliance One programme, which covers commercial and market-related topics. Our Magno Gloss and Satin ranges, and our GalerieArt Gloss and Silk products have also all been certified for use on the HP Indigo-installed base
  • Provided comments to the Nordic Swan criteria renewal process
  • Participated in the task force under the auspices of the Green Resource Initiative established to propose legislation to combat deforestation
  • Continued to support The Prince of Wales Global Sustainability Fellowship in Transforming the Pulp and Paper Industry (at the Cambridge Institute for Sustainability Leadership). The fellowship seeks to contribute new pathways within the context of the sustainable pulp and paper industry
  • Partnered with WWF-SA on a water stewardship project in a key catchment in South Africa
  • Continued to be an active member of the Sustainable Apparel Coalition Raw Materials Roundtable, and the 2020 Higg FEM Task Team
  Clean energy generation, climate policy and climate regulations    
  • The European Green Deal is a set of policy initiatives by the European Commission with the overarching aim of making Europe climate neutral in 2050. Sappi regularly submits inputs to policy consultations both directly and via the Confederation of European Paper Industries (CEPI)
  • The Society of American Foresters (SAF) promotes and supports science-based policies and actions that consistently recognise the positive role that forest management plays in: mitigating GHG emissions through the sequestration of atmospheric carbon in resilient, well-managed forests (trees and soil); producing wood-based products to replace both non-renewable materials and fossil fuel-based energy sources. This policy was scheduled to be updated per SAF protocol. Sappi helped to rewrite the policy, expanding the discussion on the role that trees play in sequestering carbon, both as a living tree as well as a wood product
  • The energy manager for Somerset Mill is a member of the Maine Climate Council, an assembly of scientists, industry leaders, bipartisan local and state officials, and engaged citizens to develop a four-year plan to put Maine on a trajectory to reduce emissions by 45% by 2030 and at least 80% by 2050. By executive order, the state must also achieve carbon neutrality by 2045
  • In South Africa, Sappi is subject to a carbon tax that came into effect in 2019 and is due for payment at the end of October 2020. While we recognise the need to reduce fossil fuel usage in South Africa, the country urgently needs to promote socio-economic development and enhance competitiveness. Carbon tax poses a potential risk to such growth and competitiveness. We engaged National Treasury via PAMSA to motivate taking into account carbon sequestration by companies that own their own forests. Sappi's process starts with the planting of trees and our total supply chain is carbon positive. We are still awaiting clarity on whether the proposal will be accepted

 

  Our response
   
 

Our membership of industry and related associations or bodies.

Sappi Limited

  • Business Leadership South Africa
  • Cambridge Institute for Sustainability Leadership (CISL)
  • CEO Initiative
  • Ethics Institute
  • International Stakeholder member of the programme for the Endorsement of Forest Certification (PEFC)1
  • Paris Pledge for Action
  • Sustainable Apparel Coalition
  • TAPPI (Technical Association of the Pulp and Paper Industry)
  • Textile Exchange
  • UNGC

SEU

  • 4evergreen alliance
  • Biobased Industries Consortium (BIC)
  • BioChem Europe
  • CELAB: Towards a Circular Economy for Labels
  • CEFLEX: A circular economy for flexible packaging
  • CEPI
  • Eurograph
  • Ligninclub
  • Print Power
  • The Alliance of Energy-Intensive Industries
  • TwoSides

SNA

  • American BioFuels Association (ABFA)
  • American Forests and Paper Association (AF&PA)
  • Alliance for Pulp & Paper Technology Innovation (APPTI)
  • Biorenewable Deployment Consortia (BDC)
  • Forests in Focus
  • Forest Products Working Group
  • Forest Stewardship Council (FSC)
  • Paper and Paper Packaging Board
  • Ruffled Grouse Society
  • Sustainable Packaging Coalition (SPC)
  • Sustainable Forestry Initiative® (SFI®)
  • TwoSides
  • University of Maine Paper Surface Science Consortia
  • University of Minnesota Sustainable Forests
  • Education Cooperative

SSA

  • Business Unity South Africa
  • Fibre Processing and Manufacturing Skills Education and Training Authority (SETA)
  • Forestry South Africa
  • FSC
  • National Business Initiative (NBI)
  • Manufacturing Circle
  • Packaging SA
  • Paper Manufacturers' Association of South Africa (PAMSA)
  • Printing SA (PIFSA)
  • Recycle Paper ZA
  • South African Chamber of Commerce and Industry (SACCI) and local chambers of commerce and industry
  • TwoSides

Sappi Forests

  • BiCEP (Biological Control of Eucalypt Pests)
  • Biorenewable Deployment Consortium (BDC)
  • CAMCORE Eucalyptus Genome Network (EUCAGEN)
  • Forestry and Agricultural Biotechnology Institute (FABI)
  • The Tree Protection Co-operative Programme (TPCP)
    • founding member

Opportunities for value creation

  • Address complex topics
  • Develop sustainable, transparent supply chains
  • Maintain and expand markets for our products
  • Enhance understanding of our social and environmental credentials
  • Influence policy
  • Promote dialogue
 

Challenges for value creation

  • High costs and resource allocation of certain industry memberships.

1 PEFC logo licence code: PEFC/07-32-76.

Joining forces to help progress a sustainable circular economy

In FY2020 we joined the 4evergreen alliance that operates under the auspices of CEPI and brings together participants across the packaging value chain including pulp and paper manufacturers, converters and brand owners. The alliance aims to boost the contribution of fibre-based packaging in a circular and sustainable economy that minimises climate and environmental impact.

The alliance works to:

  • Increase awareness about the benefits of fibre-based packaging materials
  • Improve the overall recycling rates of fibre-based packaging materials
  • Produce guidelines and tools to enhance recyclability through packaging design, collection and sorting

The alliance is a timely response to support Europe's Single Use Plastics Directive, designed to accelerate development of alternative packaging and enable consumers to make more climate-friendly choices. The work of the alliance is also championing change towards the aim of the European Green Deal: climate neutrality by 2050. Our SEU Sustainability Manager is a co-lead in 4evergreen's Information Workstream.

Enhancing understanding of land use and GHG emissions

A member of the Sappi Forests Research team has been working with the World Resources Institute on the GHG Protocol Carbon Removals and Land Sector Initiative Project. This working group will develop guidance on:

  • Types of emissions, removals and sequestration within the land sector
  • Carbon emissions and removals from land use (e.g., forest management, crop and livestock production, bioenergy feedstock production, soil carbon, etc.)
  • Carbon emissions and removals from land use change (e.g., deforestation, afforestation, wetland conversion, etc.), as well as direct and indirect land use change and related impacts from changes in production
  • Agricultural GHG emissions (e.g., livestock methane emissions, soil nitrous oxide emissions, etc.)
  • Biogenic removals and temporary to long-term storage in biogenic products/materials (e.g., furniture, building materials, etc.)
  • Biogenic carbon dioxide emissions and removals from bioenergy production and consumption (e.g., biomass, biofuels, biogas)
  • Land sector accounting approaches
    • Use of land-based vs. activity-based accounting methods
    • Addressing the timing of removals and emissions
    • Separate biogenic carbon emissions and removals accounting vs. bringing biogenic emissions and removals into Scopes 1, 2 and 3
  • Quantification methods and data sources:
    • Reporting requirements
    • Target setting and tracking changes over time
    • Alignment with or revisions to other GHG Protocol standards and guidance

Self-assessment of quality of relationships: Good to excellent

Why we engage

Our aim is to provide shareholders, bondholders and banks with transparent, timely, relevant communication that provides them with an understanding of our industry, sets out the manner in which we hope to achieve our growth ambitions and facilitates informed decisions.

  Shared priorities     Our response
 
  • Understanding Sappi's strategy return on investment
  • Transparent information about risks, opportunities and environmental, social and governance (ESG) performance, in particular the impact of climate change on strategic and financial decisions
  • Ability to generate sufficient cash flows to fund our business and service our debt
   
  • Our Investor Relations (IR) department engages with shareholders and analysts on an ongoing basis
  • Our Chairman and CEO also engage with shareholders on relevant issues. We conduct ad hoc mill visits and road shows, and issue announcements through the Johannesburg Stock Exchange (JSE) – Stock Exchange News Services (SENS), in the press and on our website (see www.sappi.com/SENS) . We publish our annual integrated report (see www.sappi.com/annual-reports) and sustainability reports (see www.sappi.com/sustainability) on the group website. Shareholders can attend and participate in the Annual General Meeting (AGM) as well as the four quarterly financial results briefings
  • We engage with various ratings agencies, particularly in terms of ESG performance. Recognising the importance of climate change in a financial context, we are incorporating the recommendations of the TCFD into our decision-making processes (read more: Helping to mitigate climate change.)
  • We participate in the Carbon Disclosure and Forest Footprint Disclosure projects every year, making our submissions publicly available
  • Our Chief Financial Officer (CFO) and Head of Treasury engage with bondholders, banks and rating agencies continually on the performance of the company. A key point of discussion in FY2020 was the suspension of our credit facility financial covenants from June 2020 to September 2021

Opportunities for value creation

  • Understanding of and commitment to our strategic direction
  • Enhanced reputation
  • Greater investment confidence
  • Broader licence to invest
 

Challenges for value creation

  • Slow post-Covid-19 economic recovery
  • Uncertainty about regulatory developments, for example: carbon tax
 

Self-assessment of quality of relationship: Good

Why we engage

We engage with government departments and regulatory bodies to provide input into issues and regulations that affect our industry. We also engage with regional and local governments and local authorities to obtain support for our operations, show how our activities contribute to local economic and social development and identify issues where we can work together for our mutual benefit.

A key issue in FY2020 was the classification of our operations as essential to enable us to continue with operations throughout the various national lockdown periods. Positive relations with governments enable us to provide assistance or partner on larger scale projects to bring positive impacts to communities and society.

  Shared priorities     Our response
 
  • The social and economic benefits of our industry nationally as well as at a local level
  • Increased investment
  • Energy issues in general and in particular government moves on carbon taxation
  • The impact of increased regulations on business
   
  • In Europe, we actively follow and influence policy processes to support the development of policies that are both ambitious and practical for the private sector to implement. Sappi is represented on the High-Level Group on Finance and Sustainability Transition as well as the High-Level Group on Trade Policy Innovation
  • We reviewed and provided input to the draft report of the European Parliament with Recommendations to the Commission on an European Legal Framework to Halt and Reverse European-driven Global Deforestation (2020/2006(INL))
  • We support specific government initiatives, including in South Africa, the Public and Private Growth Initiative (PPGI) which targets agriculture (including forestry) as one of the key sectors growth and under which the Forestry Master Plan falls. Under the auspices of Forestry South Africa, we are providing input into the plan
  • In North America we review and provide input to pending legislation and regulations impacting our industry through state and Federal trade associations

Opportunities for value creation

  • Promote understanding of issues and challenges as well as the strategic value of our industry
  • Help create a more receptive regulatory and policy environment
 

Challenges for value creation

  • Policies that take neither our high use of biobased energy into account nor recognise the important carbon sequestration role played by the sustainably managed forests and plantations from which we source woodfibre
  • Uncertainty about regulatory developments, for example: carbon tax
  • Administrative delays

Self-assessment of quality of relationship: Good

Why we engage

Suppliers and contractors are partners in Sappi's safety, sustainability and ethics journey. They contribute to and enable our progress. Consumers are focused on the whole value-chain and not merely the end-product. The actions and commitments of suppliers and contractors are thus critical to us and our customers.

We want to build long-term value partnerships, based on the importance of suppliers to a sustainable supply chain.

  Shared priorities     Our response
 
  • Safety
  • Transparency
   

Given our focus on zero harm in the workplace, we work with our contractors to ensure that they follow Sappi's safety systems.

In South Africa, Sappi Forests continues to work closely with contractors and their workers to implement the innovative Stop and Think Before You Act safety initiative.

Globally, our procurement team made progress in assessing suppliers against our Supplier Code of Conduct: SEU: 61% of spend covered; SNA: 10% and SSA 1%.

 
  • Increased value
  • Decreased costs
  • Security of fibre supply
  • Certification
  • Income generation and job creation
   

SEU: In Europe, we procure wood through the well-established wood sourcing companies Metsä Forest in Finland, proNARO in Germany, Sapin in Belgium and Papierholz Austria in Austria all of which operate with an established pool of forest owners and wood suppliers.

In addition, we are a member of the Confederation of European Paper Industries (CEPI), which participates in actions supporting and promoting the development of sustainable forestry management tools.

SNA: The Sappi Maine Forestry Programme and the Sappi Lake States Private Forestry Programme, staffed by SNA foresters, offer a wide range of services to landowners including contracting with experienced loggers and providing plans to enhance wildlife habitat and forest health. We work directly with landowners, loggers and suppliers to encourage sustainable forest management and provide markets for woodfibre material from harvesting and stand improvement activities. We continue to evaluate, promote and support smallholder certification options where feasible, thereby adding value to both the landowner and marketplace. Procurement practices extend far beyond avoiding controversial sources by requiring the promotion of biodiversity, logger training, forest research, landowner and community outreach, and implementation of best management practices for soil and water conservation, as evidenced by our conformance to the Sustainable Forestry Initiative® (SFI®) Fibre Sourcing Standard.

SSA: Qualified extension officers provide growers in our Sappi Khulisa enterprise development scheme with ongoing growing advice and practical assistance. We have established a training centre, Khulisa Ulwazi, for Khulisa growers. The objective is to develop growers' and contractors' skills so that they can conduct silviculture operations economically and to a high standard. Training material has been developed in conjunction with the Institute of Natural Resources and covers area like entrepreneurship, fire management, harvesting planning, leadership and management development, as well as safety.

In the past 10 years, we have settled claims involving 39,950 hectares of which claimants took ownership of 8,151 hectares and claims for 11,271 hectares in which claimants preferred to seek compensation. Many of these properties previously belonged to commercial farmers who had supply agreements with Sappi. For many of the land claims in which we have been involved, and where there has been a change in ownership, we continue to buy the timber and help to manage those plantations.

Sappi Forests continues to pay growers in our group certification scheme a premium for certified timber.

Our ESD department continues to develop and mentor SMMEs.

Opportunities for value creation

  • Security of woodfibre supply
  • Improved supplier relations
  • Better understanding of the requirements of the Sappi group
  • Expanded basket of certified fibre
  • Support for local economic development
  • Support for emerging supplier/contractor development
 

Challenges for value creation

  • Ensuring that SMMEs have the right social and environmental procedures in place

Self-assessment of quality of relationships: Good

Why we engage

We maintain an open relationship with the media, believing that an informed media is better able to serve public reporting and debate on any issue.

We continue to engage with the media on our belief that it's our responsibility to use the full potential of each tree we harvest. We engage with civil society organisations on issues of mutual interest and belong to key organisations relevant to our operations. We engage with various civil society groups on our societal and development impact.

Globally we interact and engage with a wide range of non-governmental organisation (NGO), especially through our participation with the forest certification systems (FSC, PEFC and SFI®) and our international stakeholder membership of the PEFC. We leverage these platforms to actively contribute to the growth of forest certification world-wide and collaborate with diverse stakeholders.

  Shared priorities     Our response
 
  • Business developments
  • The future of our industry
  • Our impacts on our communities
  • Protecting the environment
   
  • Join key credible organisations as members
  • Develop personal relationships and engage continually
  • Provide support to and sponsorship for key organisations on issues of mutual interest

SEU: We are actively involved in The Forests Dialogue (TFD) Steering Committee and provide annual sponsorship to the organisation. We contributed to the development of a new forests and climate initiative and supported the development of a number of publications including TFD's 20th anniversary book.

SNA: We support the Ruffed Grouse Society and the University of Minnesota Sustainable Forests Education Cooperative.

SSA: In terms of civil society, our forestry operations belong to a number of fire associations, given that fire is a key risk on our plantations. We also provide funding for BirdLife South Africa and have established a project which coordinated efforts to re-establish the Warburgia salutaris (pepper-bark tree) in communities and the wild.

Read more: see our 2020 Sappi Group Sustainability Report at www.sappi.com

Opportunities for value creation

  • Inform and educate media
  • Encourage civil society to share our sustainability and Thrive25 vision through positive actions
 

Challenges for value creation

  • Misunderstanding of our environmental impacts