About this report

Letter to stakeholders and Q&A with CEO

Trail

Every trail we follow is shaped by people – the communities we serve, the teams we empower, and the values we uphold. At Sappi, we believe that sustainable progress begins with understanding local needs and investing in shared value.

Like the fox navigating snow-covered terrain, we move with agility and intent – alert to change, guided by experience, and grounded in ethical purpose. This instinctive adaptability mirrors our approach: making smart decisions swiftly, with courage and integrity, and always with safety foremost in mind.

The communities beyond our fence lines are places we are also proud to call home. Their prosperity is not only linked to our own – it is deeply valued and actively nurtured. Our social impact approach is collaborative. We partner with communities to jointly identify and leverage opportunities that support local needs while aligning with Sappi’s purpose. While each region has its own programmes, they share common themes – forestry-related activities, environmental protection and conservation, education, and community welfare.

Through targeted enterprise and supplier development (ESD) programmes, we support local businesses and foster inclusive economic growth. We maintain open, proactive dialogue with stakeholders to build trust and mutual understanding.

Internally, we invest in training, succession planning, and skills development to prepare our workforce for future demands. We manage reputation with care and uphold ethical standards in every decision – ensuring that our path is shaped by smart choices and ethical resolve, moving swiftly but never at the expense of safety or integrity.

Our people-centred approach strengthens our social licence to operate and reinforces our commitment to shared progress – with every step, we remain alert, responsive, and purposeful.

Our sustainable value proposition

Channel

A channel is more than a passage – it is a chosen course, shaped by intention and skill. As we begin the next phase of our Thrive strategy, we reflect on a journey steered with stamina, precision, and responsiveness. Like a gondolier navigating shifting waters, we have moved through capacity expansion, product realignment, and strategic repositioning – attuned to our environment and guided by purpose.

At Sappi, prosperity is not defined by profit alone. It is the ability to create enduring value – financial, social, and environmental. For shareholders, it means disciplined stewardship and operational excellence. For communities, it means investing in renewable resources and partnering for shared progress. For the planet, it means embracing sustainable solutions with eco-effective ingenuity.

Looking ahead, for the immediate future we return to our basics: sustaining financial health, optimising asset utilisation, cash generation and managing costs. While demand for graphic papers continues its structural decline, our focus on market-share growth is delivering results and reinforcing our competitive position. In the dissolving wood pulp (DWP) segment, we remain cautiously optimistic. Despite global headwinds, the long-term outlook is positive, and we are well-positioned to respond with agility and clarity.

In a resource-constrained world, prosperity flows through the channels we choose – those defined by resilience, ethical resolve, and collective strength. As we navigate toward our next horizon, we do so with quiet confidence and a steady hand, steering toward value that endures.

Delivering value
for a thriving world

Course

Every course we chart is shaped by our relationship with the natural world. At Sappi, we are custodians of land and forests, committed to using woodfibre responsibly – not only to drive business success, but to contribute to long-term environmental and social value across generations.

Our environmental strategy is rooted in certification, traceability, and continuous improvement in sourcing and land management. Through precision forestry practices, we optimise plantation health and productivity while advancing biodiversity protection. These efforts ensure that our raw materials are sourced from responsibly managed plantations that meet rigorous sustainability standards.

We take proactive steps to reduce our environmental footprint. Our operations are guided by robust environmental management systems that help us lower emissions, conserve water, and improve energy efficiency – often with internally generated bioenergy. As part of our climate action strategy, we are accelerating decarbonisation across our value chain, aligning with science-based targets and global climate frameworks.

Stewardship at Sappi means moving beyond compliance. We integrate circular design principles, regenerative land-use practices, and climate resilience into our operations, balancing business needs with ecological integrity. Our approach is intentional, adaptive, and informed by the evolving expectations of our stakeholders and the realities of a changing climate.

As we adjust our sails to meet the shifting tides of climate change and global expectations, our direction remains clear: to protect, restore, and regenerate the natural systems that sustain us, through measurable action, transparent reporting, and continuous innovation.

Ensuring value creation through good governance and recognition and rewards

Voyage

Our voyage is powered by innovation – guided by purpose, leadership, and a steadfast commitment to sustainability. Sappi uses renewable resources to make woodfibre-based products, and we are a diversified, innovative, and trusted leader focused on sustainable processes and solutions. From dissolving wood pulp to packaging and speciality papers, we continue to expand our portfolio with offerings that meet evolving customer needs and rising environmental standards.

We invest in meaningful engagement across the value chain – collaborating with customers as well as brand owners, converters, and suppliers to unlock shared value. By listening closely and partnering widely, we identify opportunities to enhance product performance, all the while looking to reduce environmental impact, and supporting long-term returns.

Our product strategy is dynamic and forward-looking, anchored in circularity, and market relevance. Through fact-based support and technical expertise, we help customers navigate their own ESG challenges with confidence and clarity.

In a world transitioning from a fossil-based economy to a circular bioeconomy, Sappi offers a compelling vision: a sustainable business with an exciting future in woodfibre – delivering relevant solutions, enhanced value, and trusted partnerships. Beyond our product portfolio, we offer a suite of technical and development services supported by highly qualified teams of technicians to improve customer efficiencies and scientists who continuously explore new applications for woodfibre and collaborate with customers through targeted R&D initiatives.

On this voyage of delivering traceable, responsibly sourced products, we deploy state-of-the-art technology to ensure precision, reliability, and transparency. Every offering is a step forward – advancing purpose-led growth, regenerative design, and global impact. We are actively building a circular economy that benefits both business and the world.

Appendices

Path

Just as rivers carve their course over centuries – shaping landscapes through persistence and adaptability – our journey begins with a path defined by nearly 90 years of resilience, reinvention, and purpose. Sappi’s Thrive business strategy is more than a roadmap; it is a long-term commitment to sustainable growth, operational excellence, and enduring trust, all while creating meaningful value for our stakeholders.

As Thrive evolves, we stand at an inflection point. The environment around us is shifting – reshaped by global forces that continue to redefine business: climate change, resource scarcity, consumer and employee expectations, and the rapid pace of technological innovation. Our strategy evolves in response, slightly adjusted to remain fit for purpose, reaffirming our commitment to building a thriving world through renewable innovation and shared prosperity.

Our path is not static – it adapts with intention. Whether responding to market pressures or environmental imperatives, we remain focused on long-term value creation. Strategic clarity, technological innovation, and disciplined execution keep us on course – propelling us forward with purpose.

As we look ahead, our focus sharpens: sustaining financial health, deepening stakeholder value, and unlocking opportunity through collaboration and eco-effective ingenuity. The river may change course, but its direction remains true.

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Our operating context

Our external operating environment presents us with both risks and opportunities, impacts our ability to generate social and enterprise value and informs our approach to our stakeholders, as well as our approach to material matters.

Slow global macroeconomic growth

Context

Global macroeconomic growth in 2025 remained muted, shaped by the cumulative effects of prolonged inflation, elevated interest rates, and increased geopolitical instability. Central banks maintained restrictive monetary policies to curb inflation, dampening consumer confidence and reducing discretionary spending – particularly in advanced economies reliant on consumption-led growth. The introduction of new US tariffs in 2025 added further strain on global trade flows, increasing costs and disrupting supply chains. Persistent geopolitical tensions, including the ongoing conflict in Ukraine and renewed US-China trade frictions, have compounded uncertainty and constrained investment sentiment. Sappi, whose business segments include packaging and speciality papers for consumer goods, dissolving wood pulp (DWP) for the textile value chain, and graphic papers for commercial print, is directly impacted by these consumer-driven economic challenges.

Our response

Sappi is proactively addressing weak demand dynamics within our markets by carefully managing capacity utilisation to align with current demand levels, optimising production efficiency, and controlling costs. This approach is complemented by a strong focus on cost-saving initiatives, strengthening customer relationships, and practising disciplined capital allocation, all aimed at sustaining our financial health during this challenging period. By maintaining flexibility and prioritising financial resilience, Sappi is well-positioned to capitalise on future economic recovery, ensuring we are prepared to support growing demand as market conditions improve.

Evolving sustainability expectations

Context

Global sustainability expectations are evolving rapidly, driven by growing awareness of the environmental impact of fossil-based products and an urgent desire for greener alternatives. Consumers, businesses, and regulators increasingly recognise the role of traditional materials in contributing to climate change, pollution and resource depletion, leading to stronger demand for sustainable products.

This shift is particularly pronounced in sectors where fossil-based products are prevalent, such as packaging and textiles. Many are now seeking biobased, renewable and recyclable options that offer reduced carbon footprints and minimal environmental harm, pushing companies to innovate and transition toward materials that support a circular economy and long-term environmental health.

Our response

Aligned with our Thrive strategy, Sappi is ideally positioned to respond to these evolving expectations as we focus on creating responsibly sourced, eco-friendly alternatives to fossil-based materials such as sustainable packaging solutions and dissolving wood pulp for wood-based textile fibres. The sustainability benefits of wood-based textile fibres, being renewable, biodegradable, and offering a lower environmental impact than synthetic alternatives, have been a key driver for Sappi's ongoing strategic focus on dissolving wood pulp. By prioritising dissolving wood pulp, we are not only meeting the growing demand for sustainable, wood-based textile fibres but also advancing our commitment to reducing reliance on fossil fuels and promoting a circular economy in the textile industry. Similarly, the global shift away from plastic packaging driven by both consumer demand and new environmental regulations presents substantial growth opportunities for us. In line with this vision, we have invested US$500 million in our Somerset Mill to convert PM2 from producing coated woodfree graphic papers to solid bleached sulphate paperboard (SBS), a versatile material that supports environmentally sustainable packaging. We are also broadening our portfolio of compostable and recyclable packaging options, including innovative products like bagasse-based, compostable, thermomoulded food-grade bowls and plates and paper-based label paper solutions for all consumer goods applications. These initiatives reflect our commitment to leading the way in sustainable packaging, providing viable, plastic-free options that benefit consumers and the environment alike.


Transitional climate developments

Context

Transitional climate impacts – such as the shift toward a low-carbon economy – are driving significant regulatory changes in our operating regions which represent risks to our licence to operate. In Europe, ambitious emissions reduction targets under the European Green Deal are prompting stricter climate policies, including carbon pricing and renewable energy mandates. North America, particularly the United States and Canada, is advancing climate regulations focused on clean energy incentives, emissions reporting, and supply chain transparency as part of broader sustainability goals. South Africa, meanwhile, is implementing carbon taxes and developing climate adaptation policies to align with global standards and address its unique vulnerabilities to climate change. These regulatory shifts aim to curb emissions, increase resilience and accelerate a just transition to more sustainable economies across these regions.

Our response

Sappi mitigates transitional risk by actively monitoring regulatory developments and engaging with policymakers to help shape climate-related policies that recognise the critical role of forests and forest products in addressing climate change. Our advocacy emphasises the unique benefits of sustainable forestry and renewable products in supporting a low-carbon future. To reinforce our commitment, we have set science-based 2030 decarbonisation targets and established a comprehensive climate transition plan to meet our climate action goals. This proactive approach not only secures our licence to operate but also strengthens our competitive edge as a leading provider of renewable, low-carbon solutions for a circular bioeconomy. Through these actions, Sappi continues to create long-term value aligned with global climate action priorities.

Nature-positive developments

Context

The 'nature-positive' movement is transforming how we interact with and value the natural world, emphasising the restoration and sustainable management of ecosystems rather than mere conservation. This global shift recognises that reversing biodiversity loss and addressing ecosystem degradation are essential not only for environmental health but also for economic resilience and human wellbeing. By integrating nature-positive principles into decision-making, businesses, governments, and communities are rethinking how they assess impacts, risks and opportunities, viewing biodiversity as a core asset. This approach is reshaping industries, promoting regenerative practices, and driving policies that prioritise ecological balance, ultimately aiming for a future where human progress and nature thrive together.

Our response

Given our high dependency on sustainable woodfibre for our raw material, Sappi is actively integrating nature-positive actions into our sustainability strategy to protect and enhance the natural ecosystems upon which we rely. Through our membership in the WBCSD Forest Solutions Group, we are collaborating with industry peers to define nature-positive actions specifically for our sector and to identify meaningful metrics that can be used to set appropriate targets and track progress. In line with our commitment to transparency and stakeholder trust, Sappi is aligning with the TNFD disclosure framework to better understand and communicate our nature-related impacts, risks and opportunities. Additionally, aligned with the goals of the Global Biodiversity Framework (GBF), we have designated 30% of our forestry landholdings for conservation and have set biodiversity improvement targets within these areas to help drive positive outcomes for nature.


Global supply chain disruptions

Context

Global supply chains have endured over a decade of major disruptions – from the US-China trade war and the Covid-19 pandemic to the Russia-Ukraine conflict – leaving lasting effects on the flow of goods and resources worldwide. Economic pressures, including persistent inflation and recessionary risks, have continued to threaten demand and pricing stability. Geopolitical flashpoints such as the Red Sea crisis and tensions around Taiwan have amplified risks across key shipping routes, while extreme weather events – hurricanes, floods, fires, droughts, and freezing conditions – have increasingly disrupted production and transport continuity. Rising cyber threats, labour shortages, and infrastructure vulnerabilities, exemplified by the Baltimore bridge collapse, have further exposed weaknesses in global logistics systems. Capacity constraints across maritime, air and land transport persist, and in 2025, the frequency of disruptions stemming from labour unrest, geopolitical conflict, cyber attacks, and climate-related events has underscored the need for greater strategic supply chain flexibility and resilience amid unpredictable global conditions.

In South Africa, deep-rooted inefficiencies within state-owned ports and rail operations have compounded these global challenges. Chronic shortages of freight trains, deteriorating rail infrastructure, and congested port operations have significantly constrained logistics efficiency. It is estimated that poor port and rail performance reduces South Africa's GDP by 5% to 6%, undermining national competitiveness within global supply networks. Sappi Southern Africa, which exports the majority of its dissolving wood pulp (DWP) through the Durban port and relies heavily on rail for the movement of raw materials and finished goods, continues to be directly impacted by these infrastructure and logistics challenges.

Our response

To mitigate the risks from supply chain disruptions, we have taken a proactive approach across all of our regions, strengthening partnerships with suppliers and logistics providers and revisiting our best practices and contractual guidelines to enhance agility and resilience. Recognising the need for flexibility, we have also prioritised innovation in product formulation, exploring recipe modifications to manage raw material shortages while adapting to new, qualified chemicals and additives that enable us to diversify our supplier network effectively. By establishing relationships with multiple vendors and prioritising domestic suppliers where feasible, we are positioning ourselves to better navigate the macroeconomic volatility, geopolitical tensions, and extreme weather patterns shaping the global landscape. This flexible strategy allows us to make swift adjustments to our supply chain as conditions change, ensuring our operational continuity and supply stability amid uncertainty.

In South Africa we have adjusted to the rail and port challenges by increasing road transport routes, working with our logistics partners to contain costs and developed an alternate shipping route from the port of Maputo in Mozambique, rather than the port of Durban. In addition, Sappi is an active participant in the National Logistics Crisis Committee (NLCC) reporting directly to President Ramaphosa, which is focused on immediate operational improvements in the national logistics system as well as longer-term reforms to improve efficiency and competitiveness.

The rise of artificial intelligence

Context

The rapid advancements in artificial intelligence (AI) are fundamentally transforming the way companies operate, enabling them to analyse vast amounts of data from diverse sources to streamline processes and improve decision-making. AI technologies are now seamlessly integrated into daily consumer experiences and are extensively used within organisations to automate repetitive tasks, interpret large datasets, and identify patterns and trends to enhance production, planning and auditing functions. However, the increased use of public AI tools, such as ChatGPT by Microsoft and OpenAI, and Bard by Google, introduces risks, especially around data security and confidentiality. When sensitive information is input into public AI systems, there is a risk that proprietary or confidential data could unintentionally enter the public domain, potentially compromising intellectual property or customer privacy. Additionally, the integration of AI in business operations increases the potential for cyber security vulnerabilities, as AI systems themselves can be targeted by cyber threats. This dual risk of data exposure and heightened cyber security concerns necessitates rigorous data governance and secure AI practices to protect corporate information and maintain customer trust in an increasingly AI-driven business environment.

Our response

We have adopted AI as part of our digital strategy and are using it within existing enterprise resource planning (ERP), security and infrastructure systems as well as machine learning across business functions.

Some of our staff have tested these generative artificial intelligence (GenAI) tools and have asked to be allowed to explore how using GenAI could benefit their work. Our preference is to enable and allow the use of GenAI rather than to ban it as some other companies have done. Accordingly, we have published guidelines for the use of GenAI within Sappi to protect our confidential information. We are also working on a comprehensive enterprise GenAI strategy which will ensure that both risk and opportunities are appropriately addressed as GenAI capabilities are deployed.