2020 GROUP SUSTAINABILITY REPORT



Helping to mitigate climate change

Why it’s material

Concentrations of greenhouse gases in the Earth’s atmosphere are at record levels, and emissions that saw a temporary decline due to the pandemic are heading towards pre-Covid levels, while global temperatures continue to hit new highs. Climate change is already affecting every country on every continent through changing weather patterns, rising sea levels, and more extreme weather events. Recent reports of methane leaking from the sea floor in Antarctica and unprecedented wildfires in the Arctic region in 2019 and 2020 highlight the seriousness of the situation.

How this issue links to other aspects of our business

Our global priority SDGs

 
 

Our top ten risks

3 Evolving technology and consumer preferences
4 Sustainability expectations
9 Climate change

Our strategic fundamentals

  • Grow our business
  • Drive operational excellence
  • Enhance trust

The global forces shaping our Thrive25 strategy

  • Climate change continuing to impact businesses and reshape societies
  OUR 2025 TARGET
 

DECREASE SPECIFIC GHG (SCOPE 1+2) EMISSIONS

17%

Taking urgent and appropriate actions to combat climate change and its impacts is a shared responsibility. We are focused on the continued reduction of Sappi’s greenhouse gas emissions.


The five-year period since the signing of the Paris Agreement on climate change will be the hottest on human record — with average global temperatures of 1.1°C above pre-industrial levels.

  FAST FACTS1

1 Source: United in Science 2020

Key developments in 2020

Climate scenario planning

We currently developing a climate change strategy that will be published in FY2021. In addition, following the establishment of a working group to implement the recommendations of the Task Force on Climate-related Financial Disclosure, Sappi is taking a purposeful phased approach to the use of climate scenarios in our climate change-related risk assessment and strategic planning processes. Currently we are involved in two projects using climate scenarios.

The first scenario was modelled at Saiccor Mill. We retained an independent consultant who used publicly available models. This work builds on earlier flood risk assessment work conducted in 2010 and again in 2017. We used Representative Concentration Pathways (RCPs) 2.6, 4.5 and 8.6. For the middle of the road projection RCP 6.0, we intend to upgrade the water model with the work being done by the Global Change Institute (GCI) at the University of the Witwatersrand (described in the following paragraph) when it is complete. The scenario planning process used at Saiccor Mill could be replicated at our other mills in South Africa.

For our mills in SNA and SEU we will be using climate data to assess physical risk consistent with RCP8.5 values. For our two primary upstream considerations, water and woodfibre sources in both North America and Europe we will be relying on available government and academic reports that generally use a combination of RCP values.

The second climate scenario project is with other industry members and the GCI in South Africa. Phase 1: 2020: Generation of raster climate surfaces for the entire forestry domain of South Africa, at 8 km resolution, with monthly time resolution, for the years 2020, 2030 and 2040 to 2100. Phase 2: 2021 onward: A second iteration of the variables generated for the one-year product, refining the indicators and making them more specific for species or issues; and/or including more ensemble members or scenarios to broaden the robustness of the evaluation; and/ or 1 km data for selected parts of the country.

Our plantations and Saiccor Mill have been prioritised because South Africa is already experiencing climate-related physical and transitional risks whereas the risk in North America and Europe is not as profound. The overarching time horizons for our assessments to ensure a more consistent approach in all three regions are short: 1-2 years; medium: 3-5 years (2025); and long 5-30 years (2050), consistent with our five-year goal setting process as well as our commitment to the SBTi.

Mitigating climate change impacts

In South Africa, we own and lease approximately 394,000 hectares of plantations that are already being impacted by climate change. Accordingly, as traditional tree breeding is a relatively slow process and in order to keep up with environmental changes, Sappi Forests’ tree breeding programme is producing and selecting the most optimally suited hybrid varieties for each climatic zone. Our tree breeding division has a target of developing a hybrid varietal solution for all our sites by 2025. We are also making use of genetic tools, like DNA fingerprinting, to enhance and accelerate their breeding and selection process. In addition, as pine and eucalypt hybrids are more successfully propagated through rooted cuttings rather than seed, a strategy is being rolled out to meet future requirements.

  FAST FACTS1

RCP stands for ‘Representative Concentration Pathway’ - To understand how our climate may change in future, we need to predict how we will behave. For example, will we continue to burn fossil fuels at an everincreasing rate, or will we shift towards renewable energy?

The RCPs try to capture these future trends. They make p/redictions on how concentrations of greenhouse gases in the atmosphere will change in future as a result of human activities. The four RCPs range from very high (RCP8.5) through to very low (RCP2.6) future concentrations. The numerical values of the RCPs (2.6, 4.5, 6.0 and 8.5) refer to the concentrations in 2100.


FAQ

HOW DO TREES ACT AS CARBON SINKS?

Measuring and monitoring our GHG emissions

Direct emissions (Scope 1) (t CO2e/adt)

Note:
Scope 1 emission calculations are based on the GHG Protocol, using IPCC emission factors (Chapter 2, Table 2.2, 2006) and 5th Assessment GWP factors.

Globally, there was an increase. In SEU, this was largely due to lower saleable production, attributable to increased product portfolio and trials at Condino Mill; lower Covid-19 related production at Gratkorn Mill and a lower load on the CHP system at Lanaken Mill. Emissions at Ehingen Mill increased due to a reduced volume of spent liquor (related to reduced pulp production). The increase in SNA was the result of more natural gas firing and less combustion of black liquor at Cloquet Mill due to curtailment of the pulp mill. Somerset utilised more natural gas because of Covid-19 related price reductions. The increase in SSA was due to curtailed production at Ngodwana and Stanger Mills; as well as boiler instability at the latter – the result of equipment failures and power outages that led to increase use of heavy fuel oil during start-ups. At Ngodwana Mill, less biomass was burned in the Pulverised Fuel (PF) boiler increasing coal consumption. This was attributable to the Ngodwana energy biomass boiler interfacing; PF boiler tube leak; reduced PF boiler steaming rate due to newsprint commercial downtime and reduced PF boiler steaming rate due to TG2 transformer failure.

Indirect emissions (Scope 2) (t CO2e/adt)

Note:
Scope 2 emissions are calculated based on the market-based method as defined by the GHG Protocol.

Globally, there was decrease. However, there was an increase in SEU as Kirkniemi Mill purchased more power and reduced production at Stockstadt Mill led to process inefficiencies. Emissions decreased in SNA, mainly due to a significantly lower purchased power emission factor as a result of less coal power plants supplying the north east region with electricity. In SSA, emissions also decreased. This was due to an increase in recovery boiler availability at Saiccor Mill and a related increase in power self-sufficiency. Imported power at Ngodwana Mill decreased because of better quality coal (enhanced steam generation) leading to high levels of power self-sufficiency. However, the biggest driver for this was the commercial downtime on newsprint - a product generally associated with very high power demand). All the pulp produced for newsprint is either from groundwood or external sources and no energy is given back to the system as is the case with kraft linerboard.

Scope 3 GHG emission categories (2020)

Scope 3 emissions are defined as indirect emissions not included in Scope 2 from activities of the organisation, occurring from sources that they do not own or control and covering emissions along the value chain.

Our Scope 3 carbon footprinting is based on guidelines provided by the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (also referred to as the Scope 3 Standard). We are committed to acting responsibly throughout our value chain.

Calculating Scope 3 emissions allows us to make decisions not only based on price but also on the environmental performance of suppliers and customers, as well as consumer behaviour. Integrated and nonintegrated mills are also more comparable when the total Scope 1 + 2 + 3 emissions are considered.

The GHG Protocol divides Scope 3 emissions into 15 categories. Sappi reports upstream emissions (Categories 1 - 7 comprising of emissions from purchased goods and services, capital goods, fuel and energy related activities, upstream transportation and distribution, waste generated, business travel and employee commuting) as well as downstream emissions (Categories 10 and 12, comprising of emissions from processing of sold goods and end of life treatment of sold goods), the other categories are not relevant for Sappi. Upstream emissions comprise of 35.8%, and downstream emissions of 64.2% of total Scope 3 emissions.

Excluded categories:

Category 8, Upstream leased assets, is not applicable. Category 9, Downstream transportation and distribution, is not applicable, because Sappi pays for the transport and is therefore included in Category 4, Upstream transportation and distribution. Category 11, Use of sold products, is not applicable as our products do not directly consume energy in the use phase.

There was an increase in Scope 3 emissions from FY18 to FY19 due to an increase in data accuracy. Reduced production because of Covid-19 caused a reduction in Scope 3 emissions when comparing FY20 to FY19.


Please refer to Our 2020 Planet indicators on www.sappi.com/ 2020GSDR-Planetindicators for these and other graphs detailing

Using our expertise to help create a climate-smart future

Mitigating climate risk on our plantations

We mitigate climate-related risk to our plantations by:


Collaborating to reduce fire risk

In line with our focus on being a trusted partner and establishing and maintaining proactive dialogue with all our stakeholders, we incorporate a broad spectrum of stakeholders into our fire protection strategy, including our staff, neighbouring communities and fire protection associations (FPAs). In fact, SSA was a pioneer, having introduced aerial fire-fighting to the South African forest industry in 1981.

Fire risks are managed via an integrated Fire Risk Management System. In addition, significant investment has improved fire detection, while fire crew training and improved equipment has significantly improved response times to fires. Sappi staff play key roles in the provincial and local FPAs that have contributed greatly to changing South African legislation about the prevention and protection against wildfire. Involvement and leadership provided at FPAs ensures integrated fire management practices are embedded in the greater community and resource efficiencies and reaction is optimised. For example, together we ensure that suppression resources are optimally placed on high fire risk days, response readiness is confirmed and deployment is coordinated in an integrated manner. This enhances risk management both on and off our property.


Advanced breeding techniques

Research and development of genetically improved planting stock has been conducted at Sappi’s Shaw Research Centre in Howick for over 25 years. Tree improvement is aimed at increasing pulp yield produced per hectare by testing various species and hybrids across Sappi’s diverse landholdings. As well as growth improvements, trees are bred for superior wood properties and resistance to biotic and abiotic threats including frost, drought, pests and diseases. A broad genetic base, acquired over 25 years and a skilled breeding team exploiting new technologies are some of the assets of the programme.