[Title will be auto-generated] by Forest Products Association of Canada

A Buyers’ Guide to

Canada’s Sustainable Forest Products

Contents Foreword

Sustainable Procurement

Introduction

Sustainable Procurement Policies

Canada’s Forest Resources

Key Issues Related to Sustainable Procurement Sourcing and Legality Aspects

6 6

• Origin: Where do the products come from?

• Information accuracy: Is fibre sourcing information credible and traceable?

• Legality: Have the products been legally produced?

Environmental Aspects

• Sustainability: Have forests been sustainably managed?

• Environmental protection: What action has been taken?

• Energy and climate change: Have climate issues been addressed?

• Recycled fibre: Has recycled fibre been used appropriately?

Social Aspects

• Social Desirability

Sample Forest Products Procurement/Financing Policy

Green Building with Canada’s Forest Products

About FPAC

About PricewaterhouseCoopers

FPAC Member Companies

Annex 1: Glossary

Annex 2: Useful Links, Reference Guides and Standards

Annex 3: Environmental Performance Data

Endnotes

Tables and Figures Figure 1 Forest Regions of Canada

Figure 2 Land Classification

Figure 3 Canadian Certification in a Global Context

Table 1 Source of Raw Materials for Paper and Paperboard

Foreword Buyers of wood and paper-based products are increasingly concerned about sustainability issues, leading them to consider factors beyond the traditional attributes of price, quality, service and availability. The purpose of this Buyers’ Guide is to provide information on the issues that should be considered when developing policies and programs for sustainable procurement and financing. We also present environmental performance data from members of the Forest Products Association of Canada (FPAC) and examples of how Canadian companies are responding to the sustainability agenda. To ensure the Buyers’ Guide is consistent with global procurement guidelines, this document has drawn on the expertise of external organizations familiar with issues in the marketplace: • The Buyers’ Guide is structured around the key sustainability questions posed in the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI) Sustainable Procurement guide (with permission). WBCSD/WRI have produced a guide to Sustainable Procurement of Wood and Paper-based Products. This initiative is designed to help organizations throughout the supply chain contribute to the sustainability of the earth’s forest-based resources. • FPAC has worked with PricewaterhouseCoopers LLP (PwC) in the development of this Buyers’ Guide in order to benefit from their knowledge and experience with sustainable procurement issues and to help address the questions that knowledgeable customers are asking. PwC works with both forest companies and their customers to assist with the development and implementation of sustainable procurement strategy and policies. Through this process they have gained significant insight into the common issues and challenges that are being addressed throughout the forest products supply chain. The 2008 edition of CEO Perspectives, published by PwC, found that retailers and consumers increasingly want to be sure that the products they purchase are not damaging the environment. A copy of the report can be found at www.pwc.com/ca/fpp. The Canadian forest products industry is committed to working in a manner that is environmentally responsible, socially desireable and economically viable. FPAC members have made commitments around sustainability issues such as conservation, sustainable forest management, certification, biodiversity and climate change. Through annual reporting, FPAC members are able to demonstrate steady and substantive progress toward their stated goals. FPAC’s first sustainability report can be found at http://fpac.ca/en/who_we_are/publications.php. We welcome enquiries, visits, comparisons and your interest in Canadian forest products. Sincerely,

Avrim Lazar President & CEO Forest Products Association of Canada

A Buyers’ Guide to Canada’s Sustainable Forest Products

Bruce I. McIntyre Leader, Forest, Paper & Packaging Practice PricewaterhouseCoopers LLP

Sustainable Procurement Introduction Decisions regarding the purchase and use of wood and paper-based products can have far-reaching, longterm impacts. Beyond the immediate and obvious consequences of their purchases, consumers, retailers, investors and communities are taking an increased interest in how their buying decisions affect the environment. They also want to know if products are produced sustainably and seek assurance that buying forest products today will not adversely affect the quality of the environment for future generations.

The environmental and social aspects of wood, pulp and paper products are becoming part of the purchasing decision, including questions surrounding sustainable procurement. This has led buyers to consider factors beyond the traditional attributes of price, service and quality. A variety of tools, initiatives and labels have been developed to guide consumers of wood and paper-based products. This Buyers’ Guide to Canada’s Sustainable Forest Products is designed to address the major considerations presented by the WBCSD/WRI in their guide to Sustainable Procurement of Wood and Paper-based Products1, with respect to forest products produced in Canada, including:

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Sourcing and Legality Aspects • Origin: Where do the products come from? • Information accuracy: Is information about the products credible? • Legality: Have the products been legally produced? Environmental Aspects • Sustainability: Have forests been sustainably managed? • Environmental protection: Have appropriate environmental controls been applied? • Special places: Have special places, including sensitive ecosystems, been protected? • Other resources: Have other resources been used appropriately? • Climate change: Have climate issues been addressed? • Recycled fibre: Has recycled fibre been used appropriately? Social Aspects • Local communities and indigenous peoples — have the needs of local communities or indigenous peoples been addressed? Organizations that procure forest products should take a complete life-cycle approach to evaluating the sustainability attributes of the products that they purchase. A life cycle assessment helps to objectively determine the environmental impacts of products, processes or services, through production, usage and disposal of the products. This assessment typically encompasses raw material procurement, manufacturing, distribution, consumer use and post-consumer recycling/disposal.

safety. In addition, these regulations require comprehensive forest management planning subject to public review and government approval. Planning requirements vary between the provinces but generally include: • Strategic forest management plans that are long-term and can range from 50 to 250 years • Tactical forest management plans that are generally 20 to 25 years in scope and based upon strategic forest management plans • Rolling five-year forest development plans and site specific annual operating plans FPAC member companies are committed to sustainable development. The FPAC Board of Directors, representing its member companies, has adopted a Sustainability Initiative2 to guide their efforts as individual companies and collectively through FPAC for their operations in Canada. Chief executives of member companies have endorsed a formal commitment to demonstrate their support for, and participation in, the FPAC Sustainability Initiative. “It is hereby confirmed that we are participants in the Forest Products Association of Canada’s Sustainability Initiative and endorse its vision and principles. As participants in the initiative we will integrate these principles into our business practices and contribute to sustainable development through continual improvement. We will provide information on our performance to the Forest Products Association of Canada for the development of a biennial, public Sustainability Report.”

When buying forest products from Canada, customers can be confident knowing that the products they purchase originate from sustainably managed forests. Over 93% of Canada’s forests are publicly owned and are subject to rigorous federal and provincial legislation and regulations. Privately owned forests are also subject to regulation. This legal framework provides a high level of scrutiny and control over timber and non-timber values such as wildlife and biodiversity, harvest levels, road development and worker

A Buyers’ Guide to Canada’s Sustainable Forest Products

Sustainable Procurement Policies

• Responsible fibre sourcing, including traceability or chain of custody • Sustainable forest management certification • Forest and biodiversity conservation • Avoidance of illegal logging • Maintaining and enhancing air and water quality • Energy efficiency and emissions reduction • Efficient use of resources • Recycling • Social responsibility • Research and education • Public reporting • Continual improvement

To ensure the appropriate emphasis is placed on environmental and social attributes of forest products, customers, as well as suppliers of financial services, can embody key sustainability principles in procurement or financing policies. In keeping with internationally accepted principles of free trade, purchasing policies should be non-discriminatory and transparent. Sustainable procurement policies should include the following elements:

Figure 1

Forest Regions of Canada FOREST REGIONS

White spruce, black spruce, balsam fir, jack pine, white birch, trembling aspen White spruce, black spruce, tamarack

BOREAL – FOREST AND GRASS

Trembling aspen, willow

SUBALPINE

Engelmann spruce, alpine fir, lodgepole pine

MONTANE

Douglas fir, lodgepole pine, ponderosa pine, trembling aspen

COAST

YUKON TERRITORY

Western red cedar, western hemlock, Douglas fir

DECIDUOUS

Beech, maple, black walnut, hickory, oak Red pine, eastern white pine, eastern hemlock, yellow birch, maple, oak 125 250

ACADIAN

NUNAVUT

Western red cedar, western hemlock, Sitka spruce, Douglas fir

COLUMBIAN GREAT LAKES – ST. LAWRENCE

NORTHWEST TERRITORIES

PRINCIPAL TREE SPECIES

BOREAL – FOREST AND BARREN

BOREAL – PREDOMINANTLY FOREST

GRASSLANDS

Red spruce, balsam fir, maple, yellow birchkm Trembling aspen, willow, bur oak

TUNDRA

Hudson Bay

BRITISH COLUMBIA

NEWFOUNDLAND andLABRADOR

ALBERTA

Pacific Ocean

SASKATCHEWAN

MANITOBA

QUEBEC

PRINCE EDWARD ISLAND

ONTARIO NEW BRUNSWICK

NOVA SCOTIA

Atlantic Ocean

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In order to support these sustainable procurement objectives, FPAC requires member companies to become certified to internationally recognized sustainable forest management programs. Examples of credible certification programs include the Canadian Standards Association (CSA) Sustainable Forest Management Standard (CSA Z809),3 the Forest Stewardship Council (FSC)4 certification program and the Sustainable Forestry Initiative® (SFI).5 In addition, the FSC and Programme for the Endorsement of Forest Certification schemes (PEFC)6 are global umbrella organizations for the assessment and mutual recognition of national and regional forest certification schemes developed in a multi-stakeholder process. In Canada, PEFC recognizes the SFI and CSA sustainable forest management standards. Certification programs have also developed Chain of Custody standards that enable companies to track sustainably produced forest products through the supply chain and to use the appropriate on-product labels.

There are over 400 million hectares of forest and other wooded land. The 92 million hectares of other wooded land consists of treed wetland as well as slow-growing and scattered-treed land (not represented in Figure 2). Canada has over 310 million hectares of forest land; of this, 144 million are considered accessible and most likely to be subject to forest management activities. Of the 144 million hectares, less than one million hectares are harvested annually. There were 9,700 recorded forest fires in Canada in 2006 with over two million hectares of forested land burned. Source: Statistics Canada & the Canadian Forest Service

Canada’s Forest Resources Forests are part of our Canadian heritage and culture. Almost half of Canada’s land area is forest. Canada has maintained nearly all, or 91%, of its original forest cover — more than any other country in the world (see Chart #1, Annex 3). This is even more remarkable when you consider that Canada has been a world leader in the production of forest products for over a century. The forest regions of Canada are shown in Figure 1 and the classification of land in terms of forest management activities is shown in Figure 2.

Figure 2

Land Classification in Millions of Hectares (millions of acres)

402 Ha (993 acres)

Total forest and other wooded land

310 Ha (767 acres) Forest land

144 Ha (356 acres)

Land most likely subject to forest management activities

0.9 Ha (2.2 acres)

Harvested forest (annual)

A Buyers’ Guide to Canada’s Sustainable Forest Products

Key Issues Related to Sustainable Procurement Sourcing and Legality Aspects A determination to meet customers’ and society’s expectations has produced a spirit of continual improvement on the part of Canada’s forest products sector. Origin: Where do the products come from? Knowledge of the products’ origin, the supply chains they have followed and the manufacturing processes used to produce them will help buyers assess key factors such as the credibility of information about product origins, the legality of sourcing and sustainable forestry practices. To help trace the origin of raw materials, buyers can request that suppliers provide supporting documentation such as harvesting permits, bills of lading and other pertinent documentation to validate product origins. Management systems and controls, such as traceability and third-party verified Chain of Custody programs, are also a good approach to tracking product attributes through the supply chain.

The forest industry is confronted by intensifying pressure for environmental and social responsibility — as illustrated by rigorous scrutiny of forest management activities by a broad range of stakeholders: consumers, investors, activists, governments and the general public.

Figure 3

Canadian Certification in a Global Context 138

USA

Finland

Russia

Australia

Germany

Brazil

Malaysia

France Chile

Forest product supply chains for wood and paper products produced in Canada can range from simple to complex. The raw materials in a finished product may come from a variety of sources, including temperate, boreal and foreign tree species. The manufacturing process may source primary or secondary fibre from numerous suppliers and locations, from both within and outside Canada, making these supply chains even more complicated.

Sweden

3 2 0

100

120

140

(millions of hectares) FPAC Members

Source: Canadian Sustainable Forestry Certification Coalition, January 2008

The origins of wood and paper-based products from Canada are well-known and documented, with further improvements being made as a result of implementing traceability and Chain of Custody programs. Some forest products originating from developing regions and/or areas with less rigorous supply chains may have questionable origins. This requires that customers ask appropriate questions of their suppliers. Information accuracy: Is fibre sourcing information credible and traceable?

Canada has the largest area of third-party certified forests in the world (Figure 3).

Canada

Business, environmental groups and labour and trade organizations generally agree that independent, thirdparty verification of forest operations to internationally recognized standards is desirable and an effective way to ensure products are derived from legal and sustainable sources. From a raw material perspective, voluntary programs enable producers to be certified to standards for sustainable forest management. The two major global programs are the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification schemes (PEFC).

Some regions of the world are at risk of poor forest management, illegal harvesting and weak governance, so companies sourcing wood products from those areas often apply a greater degree of scrutiny and due diligence. To help trace the origin of raw materials and record the

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A Buyers’ Guide to Canada’s Sustainable Forest Products

Key Issues Related to Sustainable Procurement

Legality: Have the products been legally produced?

sale of certified products, Canadian forest companies are increasingly utilizing traceability and third-party certified Chain of Custody systems (CoC). Chain of Custody certification provides a link between the certified forest and the certified product, adding credibility to product claims and labels. FSC and PEFC have developed internationally accepted standards for CoC. To ensure international alignment, CSA and SFI have established CoC requirements that are based on the PEFC CoC standard. Transparency and credibility is further enhanced by thirdparty assurance of sustainability or corporate social responsibility reports, which contain information about sustainable production or sourcing of forest products.

According to the WBCSD, illegal logging has risen to the top of the international forestry agenda over the past five to 10 years. Buyers should be concerned about practices such as wood harvested without appropriate permits, logging of protected species, violation of human rights, and corruption or fraud. To reduce the risk of purchasing illegally harvested forest products, buyers should identify regions of higher risk and develop appropriate controls. Canada has a strong legal and institutional framework, a solid commitment to sustainable forest management and virtually no systemic issues around illegal logging. In addition to strict legal controls, many Canadian forest companies, including all FPAC member companies, provide additional assurances of legality through independent thirdparty certification that their forest management practices are conducted responsibly.

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In 2006, FPAC members signed a commitment to global sustainability.7 This commitment, which now includes 93 industry signatories from around the world including FPAC members, opposes the practice of illegal logging, which contributes to deforestation and undermines the viability of legally harvested and traded products worldwide. This commitment encourages the development of laws and regulations, as well as effective government monitoring, enforcement and assessment of forests, all of which are necessary to counteract illegal logging and trade of illegally harvested wood. This commitment also includes poverty alleviation to combat illegal logging and support of government initiatives to promote and advance sustainable forest management and the conservation of designated protected areas. Building on their expertise and resources, FPAC and the Canadian forest industry are committed to doing their part to prevent illegal logging, using a variety of tools, such as Geographic Information Systems, Environmental Management Systems (EMS),8 responsible purchasing policies, traceability and Chain of Custody systems, third-party forest certification, codes of conduct, corporate sustainability reporting, and independent thirdparty auditing and certification.

Environmental Aspects Sustainability: Have forests been sustainably managed? Sustainable forest management integrates economic, social and environmental aspects of management into an appropriate balance that meets the needs of today’s society without jeopardizing the ability of future generations to meet their needs. Forest management standards that Canadian forest companies subscribe to include these three aspects of sustainability. The Canadian forest products industry contributes to society’s well-being through its products and services from the forest to markets. Moreover, it is committed to working in a manner that is environmentally responsible, socially desirable, and economically viable and is committed to a sustainable development path built on a profitable and competitive industry. In early 2005, FPAC member companies agreed upon a Sustainability Initiative.9

A Buyers’ Guide to Canada’s Sustainable Forest Products

The Sustainability Initiative is designed to: • Improve sustainability performance in key areas agreed by the FPAC membership including building on sustainability commitments (certification, climate change and recycling); measurement and reporting; collaboration and partnerships; and understanding the interests of customers and other stakeholders • Enhance the reputation and credibility of the FPAC membership FPAC’s first Sustainability Report10 measures FPAC members’ progress against a range of environmental, economic and social indicators. By reporting selected indicators biennially, FPAC members will demonstrate steady and substantive progress toward their stated commitments and broader sustainability goals. FPAC members are proud of their progress to date and are determined to achieve continual improvement in both their individual and collective performance. FPAC and its members work collaboratively with other stakeholders to continually improve environmental performance and raise the bar for sustainable management. Example projects include WWF/FPAC High Value Forest Identification Toolkit; Ducks Unlimited Canada/FPAC Boreal Wetland System Mapping; Canadian Boreal Initiative/FPAC Conservation Planning Agreement; Air Quality process with ENGOs; and water working group collaboration with Aboriginal Peoples, NGOs, labour, academics and the federal government to address pulp and paper effluent discharges. As outlined earlier, independent third-party verification of forest operations to internationally recognized standards is an effective way to ensure products are derived from legal and sustainable sources. Canada is the world leader in third-party verified sustainable forest management certification, with over 138 million hectares (341 million acres) certified to the CSA, FSC or SFI sustainable forest management standards, as shown in Figure 3.

Key Issues Related to Sustainable Procurement

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Environmental protection: What action has been taken? A large aspect of environmental controls is the control of pollution. Different types of pollution can occur at various points along the forest products supply chain. These include air emissions, solid waste, water emissions and noise. Pulp bleaching is a potential source of pollution that has generated interest with several stakeholders. Canada’s ecology is diverse with many unique and sensitive places, including sensitive ecosystems and culturally important areas. FPAC’s Sustainability Initiative strives to identify and preserve these identified special places through a variety of mechanisms, including FPAC’s commitment to forest certification, which incorporates the protection of special places. Canada’s boreal forest represents significant environmental, economic and social values and the thirdparty certification of FPAC members’ forest management practices helps ensure the values of the boreal forest are maintained and protected. Forests act as a filter for the world’s freshwater; absorb CO2 to mitigate the effects of climate change and provide habitat for hundreds of species. They provide an array of useful and renewable products, and in Canada, they support over 300 communities across the country. FPAC and the Canadian Boreal Initiative (CBI)11 have committed to ensure planning for conservation of ecological and cultural values prior to the approval of new forest tenures in unallocated parts of Canada’s boreal forest. This commitment recognizes the urgent challenges facing the boreal forest and some key elements of a path forward to a more sustainable future for ecological, economic and cultural sustainability. The agreement references the need for conservation planning, and scientific and traditional knowledge research, as well as respect for Aboriginal rights in resource development decisions. To that end, FPAC and member companies continue to work closely with Canada’s Aboriginal communities. On the manufacturing side, Canadian mills have made dramatic strides towards significantly reducing or

A Buyers’ Guide to Canada’s Sustainable Forest Products

eliminating several classes of toxic substances that affect the quality of air and receiving waters. Since 1992, FPAC members have achieved significant improvements in environmental performance through reduced mill effluents, air emissions and water use, as shown by the environmental performance data provided in Annex 3. Dioxins and furans have been virtually removed from effluents, and Absorbable Organic Halogens (AOX) (total amount of organic chlorine and other compounds) have been reduced by 90%. Another class of toxic substances, containing nonylphenol and its ethoxylates (NPEs), has been virtually eliminated by Canadian pulp and paper mills. In addition FPAC members have achieved a 70% drop in total suspended solids in mill effluents. Ongoing capital improvements combined with new and upgraded technologies will contribute to further efficiencies in the use of water resources. In addition, Canada’s federal regulatons include a comprehensive Environmental Effects Monitoring (EEM) program. Mills must measure the effects of their discharges on fish and fish habitat every three years. This program is unique to Canada and is not undertaken by any other forest industry in the world. Energy and climate change: Have climate issues been addressed? Climate change is at the forefront of the sustainability agenda for the Canadian forest products industry, governments and consumers. It is considered one of the primary environmental threats facing the world today. Forests can mitigate climate change by removing carbon from the atmosphere (carbon sequestration) and then storing it as biomass. Wood products also store carbon. Sustainably managed forests can also mitigate climate change by providing biomass energy that can replace fossil fuels. Biofuel derived from forest biomass is preferable to fossil-fuel energy because carbon is recycled to the atmosphere, whereas fossil fuels introduce new carbon. The forest industry is energy intensive, but in Canada a significant percentage of energy needs are being met with the use of biomass. For instance, the pulp and paper sector generates 60% of its own electricity from carbon-neutral

biomass, up from 50% in 1990. A sustainably managed forest landscape can be considered relatively carbon neutral if logged areas are reforested, which is required by law in Canada. Canada’s forest products industry is a leader in addressing global climate change. Reducing energy consumption is a significant focus for the industry. For example, energy costs represent nearly one-quarter of all operating costs associated with newsprint manufacturing in Eastern Canada. Over the past two decades, Canadian forest products companies have upgraded equipment and implemented leading-edge technology at their manufacturing operations in a continuing effort to improve their environmental performance and limit their impact on climate change. From an environmental perspective, these efforts have had tangible results. Since 1990 the energy and greenhouse gas emission intensity of FPAC members’ pulp and paper operations improved by 18% and 54% per tonne of output, respectively. This improvement represents an absolute GHG emissions reduction of 44% — more than seven times Canada’s percentage reduction target under the Kyoto Protocol. In addition, fossil fuel consumption dropped 45%, and between 1996 and 2005 landfill waste has been reduced by 40%. These environmental improvements also bring distinct economic benefits, as FPAC members have increased their production by 20%. The industry is an active participant in the Canadian Industrial Program for Energy Conservation (CIPEC). Since 1990, the industry has met CIPEC’s annual voluntary commitment of a 1% per year reduction in energy intensity. CIPEC is a joint government-industry partnership with a mandate to promote and facilitate energy conservation within the Canadian industry. FPAC recently set a new bar for Canadian environmental responsibility at the second annual Business of Climate Change Conference12 in Ottawa, through an industrywide carbon neutrality commitment by 2015, without the purchase of carbon offset credits. An external advisory group of experts and issue leaders will inform and help guide the initiative.

FPAC recently commissioned a report by the National Council for Air and Stream Improvement (NCASI) titled “The Greenhouse Gas and Carbon Profile of the Canadian Forest Products Industry,” making the Canadian forest products industry the first forest industry in the world to assess and report on its total carbon profile with the aim of achieving carbon neutrality across the value chain by 2015. The NCASI report will help provide a foundation from which the industry can identify areas for continued progress and improvement. To achieve the carbon-neutral commitment, FPAC members, working in partnership with key stakeholders including governments and environmental organizations, will pursue an aggressive strategy focused on: • Reducing direct and indirect emissions • Increasing the sequestration potential of forests and products • Increasing avoided emissions Climate change presents a number of complex challenges and opportunities. These include indirect repercussions of global warming, such as the massive mountain pine beetle infestations in Western Canada. More can be done to determine policies and standards for reducing the overall environmental footprint of the industry. As a result, FPAC and WWF-Canada have initially agreed on a two-year project that will focus on: • Identifying potential greenhouse gas savings from renewable energy, cogeneration and other mitigation options • Enhancing forestry-related life cycle analysis • Working together on landscape-level and stand-level measures that are both carbon and conservation friendly • Using case studies to develop recommendations and proposed guidelines for bioenergy production and wood product manufacturing so that forest product use and greenhouse gas savings are maximized, while biodiversity impacts are minimized

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A Buyers’ Guide to Canada’s Sustainable Forest Products

Key Issues Related to Sustainable Procurement

Recycled fibre: Has recycled fibre been used appropriately? Recycling is an important aspect of the forest products value chain. The paper industry uses low-value trees and byproduct wood chips from sawmills to produce wood pulp, while other residues such as bark are used for energy. The use of recycled fibre can reduce the demand for virgin fibre from forests and reduce greenhouse gas emissions from paper sent to landfills.

Canada is a global leader in waste paper recovery. Continually improving paper recovery and the use of recycled content is high on the Canadian forest industry’s agenda. FPAC members have been working since the early 1990s to develop reliable sources of recycled content and increase the content in their finished products. Consumers use paper to meet many different needs and each distinct use requires different properties, such as strength, brightness and absorbency. Blends of both fresh and

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recycled fibres, in varying proportions, are being used to deliver the required properties to the consumer. While it is technically impossible to sustain society’s long-term paper needs without new fibre, Canadian companies believe that no good paper should go to a landfill. Fibre losses from the use of recovered paper vary from 10% to 30%, depending on the grade of paper being produced. Without fresh fibre, society would run out of paper in a year or less. What was once considered waste has become an increasingly important source of fibre for the paper industry. For more information concerning the fibre cycle please visit Metafore’s Fibre Cycle Project13. Table 1 illustrates the increased use of residues and recycled paper for the manufacturing of paper and paperboard. The following are some key facts about FPAC member companies’ fibre recycling efforts: • In 1989, only one mill in Canada could manufacture recycled-content newsprint. Today, 18 mills • As a consequence of over $2 billion in investment, there are over 60 mills in Canada that use recovered paper for making all or part of their paper products • Many Canadian companies haul waste paper from the U.S. into Canada in the same trucks that are used to deliver new paper to customers, saving on non-renewable fossil fuels used in transportation • Canada’s paper industry now recycles nearly three times as much as it did almost two decades ago • 28% of Canada’s wood fibre supply for new paper comes from recycled paper • Due to new technology, recycled paper and sawmill residues (chips, shavings and sawdust) account for 87% of the fibre for making new paper and paperboard in Canada • Between 1996 and 2005 Canadian mills reduced their landfill wastes by 40% • FPAC members support all programs that encourage greater recovery of waste paper, and strive to ensure that “no usable paper should be sent to landfill”

A Buyers’ Guide to Canada’s Sustainable Forest Products

• FPAC members announced in January 2003 that they supported a 25% increase in recovery rates in Canada. This target was to increase the annual recovery rate to 55% by 2012. This target has now been reached ahead of schedule with an estimated recovery rate for 2007 at 58% • FPAC does NOT support government regulated recycledcontent levels, believing that these decisions should be the result of buyer-supplier negotiations • FPAC is working with organizations in Canada to increase the amount of paper collected Table 1.

Source of Raw Materials for Paper and Paperboard Year 1990 1995 2000 2003 2007*

Roundwood Sawmill Residues Recycled Paper % % %

38 27 21 20 13

51 51 55 56 59

11 22 24 24 28

Source: Statistics Canada, FPAC, PPPC * Estimate

Social Aspects Social Desirability Respecting the rights of Aboriginal Peoples and workers in forest and manufacturing facilities is an important part of sustainable procurement. In addition, proper equipment and training are essential to ensure the safety of workers, because logging and processing operations are potentially dangerous. Corporate Social Responsibility (CSR) is a term used to describe a company’s commitment to operating in a socially, environmentally and economically sustainable manner, while respecting the interests of its stakeholders. Canadian forest industry stakeholders include the communities in which the companies operate, their employees, customers, shareholders, suppliers and others affected by their operations.

Key Issues Related to Sustainable Procurement

The Canadian forest products industry has a proud tradition of working with Aboriginal Peoples, environmental groups, local communities, labour groups and other interested stakeholders to find common ground and mutually agreeable solutions for prosperity. Engagement, partnership and continual improvement are the industry’s goals. FPAC member companies have adopted the following principles, which relate directly to the key issues identified in the WBCSD/WRI Sustainable Procurement guide as important considerations when procuring wood and paperbased products:

• To conduct our business with integrity and reflect evolving societal values in our performance • Provide economic opportunities and a safe and productive work environment for our employees and contractors • Engage our stakeholders in a proactive and transparent manner and be respectful of their interests. Be respectful of the economic and cultural interests of Aboriginal Peoples and encourage their participation in the forest products industry • Contribute to the economic and social well-being in communities where we operate, as well as regionally and nationally

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Some of the actions FPAC members have been taking toward incorporating CSR into their activities include: • Recognizing that success is closely linked to the communities in which they operate and providing support for these communities. Examples of organizations that benefit from industry contributions include cultural and sports centres; schools, colleges and universities; foundations and non-profit organizations; hospitals and local infrastructure • A continual focus on community development through scholarship and training programs. Habitat for Humanity is one example of the many programs endorsed by FPAC member companies to aid and strengthen the communities in which they are located • Establishment of public participation mechanisms such as public advisory groups in order to ensure that a balance exists between the needs of the community and that of the company

A Buyers’ Guide to Canada’s Sustainable Forest Products

• Strengthening health and safety programs in the workplace • Building partnerships with non-governmental organizations to enhance and promote collaborative, proactive agreements with a variety of stakeholders. Examples include the industry’s current work with groups such as the Canadian Boreal Initiative and Metafore14 The next section of this document contains an example of a sustainable forest products procurement/financing policy. The example illustrates the type of commitments FPAC member companies support and that customers/lenders should consider when developing purchasing or financing criteria.

Sample Forest Products Procurement/Financing Policy This section contains an example sustainable forest products procurement/financing policy for you to consider for your own organization. A background discussion on each of the issues addressed in the policy is provided throughout the Buyers’ Guide.

1.0 General Principles __________ recognizes that leadership carries a responsibility to the environment and, in particular, conserving the world’s natural resources. As an industry leader, __________ is positioned to contribute to the development and implementation of environmental solutions in the forest products sector. We are committed to a course of action that reduces risk for society and the environment. As we learn about the impacts of our actions, we take responsible steps to reduce those that are negative. These actions are thoughtfully viewed through a life cycle filter, as opposed to a single criterion approach. As a buyer/financer of forest products, we are committed to: • Building a business that is socially, environmentally and economically sustainable on a long-term basis • Sourcing/financing forest products that are derived from forests that are managed to promote sustainable forest management and/or from recycled sources • Encouraging recovery of recycled papers and thereby facilitating higher levels of recycled content paper • Sourcing/financing our products from suppliers that are working towards continual improvement of their forest management and production processes • Sourcing/financing our products based on a life cycle approach • Working with our stakeholders to ensure our procurement/ financing strategy is socially and environmentally responsible, and economically viable

2.0 Responsible Fibre Sourcing / Financing __________ cares about our forests and the products made from forests. It is our commitment and our challenge to know the sources of our supply and to work with our suppliers/clients to meet and/or exceed regulatory requirements for sustainable forest management. 18

By [date] we will require all suppliers to provide chain of custody or traceability of their fibre back to the forest area of origin. 2.1 Sustainable Forest Management (SFM) 3rd-Party Certification __________ will give preference to suppliers/borrowers who meet and go beyond legal requirements for forest management by seeking independent third-party certification to recognized and credible SFM standards. We also support an inclusive approach to certification and recognize the following standards: • Canadian Standards Association (CSA) • Forest Stewardship Council (FSC) • Sustainable Forestry Initiative® (SFI) There may be other SFM certification standards developed in the future that we may add to the above list. We support mutual recognition efforts through independent assessments that include comprehensive review of the rigorous and critical elements of the entire certification program, such as the Programme for the Endorsement of Forest Certification schemes (PEFC). 2.2 Forest & Biodiversity Conservation __________ values forest products suppliers/borrowers that seek to conserve the ecological and cultural values of forests and the biological diversity they contain; maintain the habitat of forest-dependent species; support the conservation of biodiversity; and collaborate with conservation organizations, government and others to ensure the long-term sustainability of the resource. 2.3 Illegal Logging/Legally Sourced __________ will not knowingly purchase/finance forest products that are illegally harvested.

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3.0 Environmental Performance

4.0 Social Responsibility

3.1 Air & Water Quality

__________ values forest products suppliers/borrowers that ensure the health and safety of their employees and their communities, support and improve community development, and collaborate with Aboriginal Peoples.

__________ is committed to source/finance its products from suppliers who can demonstrate that they meet and go beyond the requirements of air and water quality regulations and collaborate with conservation organizations, government, research organizations and others to protect and improve long-term air and water quality. 3.2 Climate & Energy __________ values forest products suppliers/borrowers that are fuel switching or have already switched to less greenhouse gas-intensive energy sources such as carbonneutral biomass, and who are committed to further emission intensity reductions and/or energy efficiency. 3.3 Efficient Use of Resources __________ values forest products suppliers/borrowers that promote the efficient use of natural resources in their operations, such as fibre use optimization; reuse and recycling, and decreasing water use in operations. 3.4 Recovery & Recycling __________ is committed to encouraging recycling of paper and wood; implementation of paper collection programs in our corporate offices; and recognizing that recycled content will ultimately be driven by a variety of factors including consumer requirements that include strength, brightness, stiffness; availability of supply; as well as the environmental cost/benefit of transporting recovered paper to achieve recycled content objectives.

A Buyers’ Guide to Canada’s Sustainable Forest Products

5.0 Research & Education __________ will educate our staff, suppliers, shareholders and customers about our commitment to continually improving environmental performance and will promote awareness and accountability on related issues. We support those organizations that contribute to research on sustainable forest management, conservation of biological diversity and the development of new technologies that will improve resource utilization and efficiency, while minimizing environmental impacts.

6.0 Monitoring & Reporting __________ encourages all suppliers/borrowers to monitor and regularly report on their sustainability performance. We will produce an annual report on our sustainable procurement/financing commitments and progress in achieving our sustainability objectives.

7.0 Continual Improvement __________ will continue to look for opportunities to improve our procurement/financing policy and associated partnerships and initiatives, as we learn through experience, new research and collaboration with our stakeholders.

Forest Products Association of Canada | PricewaterhouseCoopers LLP

Green Building with Canada’s Forest Products Wood has been a staple in the world of homebuilding in North America for generations, and interest in wood construction is spreading quickly to other parts of the world. Wood construction has many advantages over alternatives. In addition to its natural energy-saving performance, building costs are generally lower than alternatives. Wood offers a warmth and beauty unmatched by the alternatives, and provides design flexibility. When builders, architects and consumers are thinking about the environmental impacts of the homes they build and buy, nothing outperforms wood. Wood is the only completely renewable building material. Canadian forests are abundant and constantly being regenerated. In fact, Canada’s rate of deforestation is virtually zero as reported by the United Nations FAO State of the World’s Forests (March 2007)15. The minimal amount of deforestation can be attributed to operational infrastructure such as road construction in remote areas. It is impossible to construct a building without having some impact on the environment. Designers and building owners in North America and elsewhere are embracing the concept of “Green Building” and are making choices that reduce energy use, reduce the use of non-renewable materials, and reduce the pollution caused by the manufacture of materials. In this way, they are able to minimize the impact or “environmental footprint” of a building. As designers make conscious environmental choices, they are turning back to wood. In addition to being renewable, wood is the only major building material that actually helps in alleviating climate change by sequestering carbon. Wood also requires less energy to work with and produces less air and water pollution than alternative materials. FPAC member companies are also employing new technologies to produce engineered wood systems to optimize the use of materials.

A Buyers’ Guide to Canada’s Sustainable Forest Products

There are many claims of environmental performance, making it difficult for designers to determine the right choices. In order to assist designers, builders and building owners in these choices, criteria and methods to evaluate performance are being developed. Life Cycle Analysis (LCA) is a useful tool for comparing the total environmental impact of specific products by enabling an ecological comparison of two or more products made of different raw materials but used for the same purposes. The result of a comparative LCA study provides useful data for decision-making when selecting environmentally sound fuels, raw materials, products and production processes. LCA is rapidly becoming a popular tool for assessing the impact of building material choices on the environment. According to LCA information provided by the Athena Institute, wood consistently outperforms concrete and steel in the following environmental aspects: • Release of pollution to air and water • Production of solid waste • Requirement of resources to produce finished product • Emission of greenhouse gases Further information can be obtained from the Canadian Wood Council16 and other sources noted in Annex 2.

About FPAC

About PwC

The Forest Products Association of Canada (FPAC) is the voice of Canada’s wood products, pulp and paper producers nationally and internationally in government, trade and environmental affairs. FPAC’s 21 member companies represent the largest Canadian producers of forest products and are responsible for approximately 75% of forests under management in Canada. FPAC’s vision is to be the leader in advancing the global competitiveness and sustainable stewardship of the forest products industry. Under the leadership of its members, FPAC designs programs to promote Canada’s performance in trade and economic matters, sustainable forest management and environmental stewardship.

PricewaterhouseCoopers (www.pwc.com) provides industryfocused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP has over 5,200 partners and staff in offices across the country.

Contact us or invite us to brief you: In Canada: Forest Products Association of Canada 99 Bank St., Suite 410 Ottawa, Ontario, Canada K1P 6B9

Industry specialists in our Global Forest, Paper & Packaging practice offer a broad range of innovative, costeffective solutions that respond to both local and global business issues. PricewaterhouseCoopers assists clients in the forest products sector to manage performance improvement, sustainability, operational risk, mergers and acquisitions, corporate finance, tax, and audit issues. Our industry knowledge and commitment to the forest, paper and packaging sector is demonstrated by our extensive program of industry publications and the annual PricewaterhouseCoopers Global Forest and Paper Industry Conference. For details visit: www.pwc.com/ca/fpp

e-mail: ottawa@fpac.ca Telephone: (613) 563-1441 Fax: (613) 563-4720 In Europe: Forest Products of Canada 12A, Place Stephanie, 1050 Brussels, Belgium e-mail: fpcanada@skynet.be Telephone: +32 (0) 2 512 5051 Fax: +32 (0) 2 502 5402 www.fpac.ca

Forest Products Association of Canada | PricewaterhouseCoopers LLP

FPAC Member Companies AbitibiBowater Inc.

Louisiana-Pacific Canada Ltd.

www.abitibibowater.com

www.lpcorp.com

Alberta-Pacific Forest Industries Inc.

Mercer International

www.alpac.ca

Canfor Corporation www.canfor.com

Canfor Pulp Limited Partnership www.canforpulp.com

Cariboo Pulp & Paper Company www.westfraser.com

Cascades Inc. www.cascades.com

Catalyst Paper Corporation www.catalystpaper.com

F. F. Soucy www.brant-allen.com

Howe Sound Pulp and Paper Limited Partnership www.hspp.ca

Kruger Inc. www.kruger.com

www.mercerint.com

Mill & Timber Products Ltd. www.millandtimber.com

Papier Masson www.papiermasson.com

SFK Pulp www.sfk.ca

NewPage Corporation www.newpagecorp.com

Tembec www.tembec.com

Tolko Industries Ltd. www.tolko.com

UPM-Kymmene Miramichi, Inc. www.upm-kymmene.com

West Fraser Timber Co. Ltd. www.westfraser.com

Weyerhaeuser Company Limited www.weyerhaeuser.com

A Buyers’ Guide to Canada’s Sustainable Forest Products

Annex 1:

Glossary

Biodiversity or biological diversity

Illegal Logging

The variety of living organisms from all sources including terrestrial, marine and other aquatic ecosystems, as well as the ecological complexes of which they are part. This includes diversity within species, between species and of ecosystems. (Source: Convention on Biological Diversity, Article 2, Use of Terms, 2007.)

Logging in violation of an established legal framework. Life Cycle Analysis (LCA)

Chain of Custody (CoC) The systematic tracking of wood-based products from their origin in the forest to their end use. Carbon Sequestration The different processes through which carbon is removed from the atmosphere and stored in soil, biomass, geological formations and oceans. Deforestation The permanent clearing of forest for other uses such as agriculture and urban development. Environmental Management System (EMS) A set of processes and practices that enables an organization to reduce its environmental impacts and increase operational efficiency. (Source: US Environmental Protection Agency, 2007.) High Conservation Value Forest (HCVF) HCVFs are those that possess one or more of the following attributes: a) forest areas containing globally, regionally or nationally significant concentrations of biodiversity values; b) forest areas that are in or contain rare, threatened or endangered ecosystems; c) forest areas that provide basic services of nature in critical situations; d) forest areas fundamental to meeting basic needs of local communities and/or critical to local communities’ traditional cultural identity. Source: FSC Canada Glossary.18

A formalized methodology for the study of environmental aspects and potential environmental impacts throughout a product’s life from raw material acquisition to manufacturing, use, recycling and disposal. (Source: FAO website, http:// www.fao.org/docrep/004/Y3609E/y3609e06.htm, accessed March 5, 2008) The ISO/EN 14040 Standard defines LCA as a technique for assessing the environmental aspects and potential impacts associated with a product by: • compiling an inventory of relevant inputs and outputs of a system; • evaluating potential environmental impacts associated with those inputs and outputs; and • interpreting the results of the inventory analysis and impact assessment in relation to the objectives of the study. Protected Areas An area of land and/or sea especially dedicated to the protection and maintenance of biological diversity, and of natural and associated cultural resources, and managed through legal or other effective means. (Source: World Conservation Union (IUCN), World Commission on Protected Areas website, www.iucn.org/themes/wcpa/, accessed September 2007. Special Places Used generically to mean areas in the forest landscape that have unique qualities and need special attention and treatment, including sensitive ecosystems.

Forest Products Association of Canada | PricewaterhouseCoopers LLP

Supply Chain The different steps (from tree harvesting to product distribution) that wood and paper-based products go through, from harvest to end product. Threatened Species A group of three categories: critically endangered species, endangered species, and vulnerable species. Endangered species are considered to be facing a very high risk of extinction in the wild while vulnerable species are considered to be facing a high risk of extinction in the wild. (Source: World Conservation Union (IUCN), Glossary of Biodiversity Terms, IUCN/WCMC, 2007.) Traceability The ability to track wood between two subsequent points of the supply chain.

A Buyers’ Guide to Canada’s Sustainable Forest Products

Annex 2:

Useful Links, Reference Guides and Standards Some useful references have been provided below. More detailed reference material and additional resources from the WBCSD/WRI Sustainable Procurement “Guide to the Guides,” can be found online at www.sustainableforestprods.org

Forest Certification and Environmental Management System Standards CSA www.csa-international.org/product_areas/forest_products_ marking/Default.asp?language=english

FSC www.fsccanada.org

Sustainable Procurement Metafore www.metafore.org

WBCSD www.wbcsd.org

Sustainable Procurement of Wood and Paper-based Products: An Introduction www.wbcsd.org/includes/getTarget.asp?type=d&id=MjY0Nzg

ISO 14001

WRI

www.iso.org/iso/iso_14000_essentials

www.wri.org

PEFC www.pefc.org/internet/html/about_pefc.htm

SFI www.sfiprogram.org

Chain of Custody FSC www.fsccanada.org/ChainofCustody.htm

SFI www.certifiedwoodsearch.org/sfiprogram/searchproducts.aspx

PEFC http://www.pefc.org/internet/html/activities/4_1137_528.htm

Green Building Athena Institute www.athenasmi.ca

Canadian Wood Council www.cwc.ca

Wood WORKS! www.wood-works.org/index.htm

Recycling National Recycling Coalition (NRC) www.nrc-recycle.org

Canadian Sustainable Forest Management Information Canadian Forest Service (CFS) cfs.nrcan.gc.ca

Canadian Council of Forest Ministers (CCFM) www.ccmf.org

Forest Products Association of Canada | PricewaterhouseCoopers LLP

Annex 3:

Environmental Performance Data Chart 1 Today’s forest as a % of Original Forest Area

Chart 4 Water Use – FPAC Members (Pulp & Paper Facilities)

Source: Earth Trends 2001, World Resource Institute, Forests and Grasslands country reports Canada Norway Sweden Finland Russian Federation Brazil Indonesia Malaysia United States Chile New Zealand Germany China France United Kingdom

Source: FPAC 2007 Sustainability Report

91 90 86 82

75 60

68 66 64 63 60

45 m3 / tonne

40 29 26 21 16

30 15 0 1992

20%

40%

60%

80%

FPAC Members

100%

Chart 2 Total Reduced Sulphur (as Hydrogen Sulphide) – FPAC Members (Pulp & Paper Facilities)

1999

2001

2003

2005

Total Pulp & Paper Industry

Chart 5 Declining BOD & TSS (kg/tonne)

Source: FPAC 2007 Sustainability Report

Source: FPAC 2002 Annual Review

0.8 25

0.6

20 15 10 5

2005

2001

2000

1999

1998

1997

1996

2003

1995

2001

1994

1999

FPAC Members

1993

1992

0.0

1991

0.0 1989

0.2

1990

kg / tonne

0.4

BOD discharge (Biochemical Oxygen Demand) TSS discharge (Total Suspended Solids)

Total Pulp & Paper Industry

* Total reduced sulpur (TRS) for 2005 has been calculated as kg per unbleached tonne of kraft pulp production to harmonize calculation methods with the U.S. forest sector. Before 2005, TRS was calculated as kg per tonne of pulp production.

Chart 3 Total Particulate Matter – FPAC Members (Pulp & Paper Facilities)

Chart 6 Declining AOX (kg/tonne)

Source: FPAC 2007 Sustainability Report

Source: FPAC 2002 Annual Review

3.0

2.5

2.0

1.5

2001

2000

1999

1998

1997

2005

1996

2003

1995

2001

1994

1999 FPAC Members

1993

1992

0 1992

0.0

1 1991

0.5

1990

1.0

1989

kg / tonne

3.5

Total Pulp & Paper Industry

A Buyers’ Guide to Canada’s Sustainable Forest Products

Endnotes 1.

WBCSD Sustainable Procurement of Wood and Paper-based Products web address: http://www.wbcsd.org/DocRoot/sfKM0iTPZMRbbmu8UJLe/ Forestproductsprocurement.pdf

Sustainability Initiative web address: http://www.fpac.ca/en/pdfs/SustainabilityInitiative2005E.pdf

CSA forest certification web address: http://www.csa-international.org/product_areas/forest_ products_marking/Default.asp?language=english

FSC forest certification web address: http://www.fsccanada.org/

SFI forest certification web address: http://www.sfiprogram.org/

PEFC web address: http://www.pefc.org/internet/html/about_pefc.htm

FPAC commitment to sustainability: http://www.fpac.ca/en/who_we_are/pdfs/Publications/ Leadership_Statement_-_English_September_15-2006.pdf

ISO 14001 environmental management standard web address: http://www.iso.org/iso/iso_14000_essentials

17. Many of the glossary terms and definitions have been extracted directly from the WBCSD/WRI document “Sustainable Procurement of Wood and Paper-based Products,” to ensure consistency with the referenced sources.

FPAC Sustainability Initiative web page: http://www.fpac.ca/en/who_we_are/sustainability_initiative.php

18. FSC Canada Glossary web address: http://www.fsccanada.org/Glossary.htm

10. FPAC Sustainability Report web address: http://www.fpac.ca/en/who_we_are/pdfs/Publications/ FPA-9000_Sustain_E_fnl.pdf 11. Canadian Boreal Initiative web address: http://www.borealcanada.ca/ 12. FPAC’s Business of Climate Change web address: http://www.fpac.ca/en/media_centre/press_ releases/2007/2007-10-30_carbonNeutral.php 13. Metafore’s Fibre Cycle Project: http://metafore.org/index.php?p=Metafore_Fiber_Cycle_ Project&s=264 14. Metafore web address: http://www.metafore.org/ 15. FAO’s State of the World’s Forest web address: http://www.fao.org/forestry/site/sofo/en/ 16. Canadian Wood Council: http://www.cwc.ca/

Forest Products Association of Canada | PricewaterhouseCoopers LLP

Disclaimer No warranty: This publication is derived from sources believed to be accurate and reliable, but neither its accuracy nor completeness is guaranteed. The material and information in this publication are provided “as is” and without warranties of any kind, either expressed or implied. PricewaterhouseCoopers and FPAC and their related and affiliated companies disclaim all warranties, expressed or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. Any opinions and views in this publication reflect the current judgment of the authors and may change without notice. It is each reader’s responsibility to evaluate the accuracy, completeness and usefulness of any opinions, advice, services or other information provided in this publication. Limitation of liability: All information contained in this publication is distributed with the understanding that the authors, publishers and distributors are not rendering legal, accounting or other professional advice or opinions on specific facts or matters and accordingly assume no liability whatsoever in connection with its use. In no event shall PricewaterhouseCoopers and FPAC and their related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of any opinion or information expressly or implicitly contained in this publication. Copyright: Unless otherwise noted, text, images and layout of this publication are the exclusive property of PricewaterhouseCoopers, FPAC and/ or their related, affiliated and subsidiary companies and may not be copied or distributed, in whole or in part, without the express written consent of PricewaterhouseCoopers and FPAC or their related and affiliated companies.

A Buyers’ Guide to Canada’s Sustainable Forest Products

Certification by PricewaterhouseCoopers LLP (Canada): details of Certificate #PwC-ICoC-217 available through PwC.

This publication was funded in part by Canada Wood.

The text pages of this document1 contain 100% certified wood fibre, and are produced in accordance with the PricewaterhouseCoopers Independent Chain of CustodyTM Standard (www.pwc.com/fpp/icoc). This Standard facilitates tracking of the environmental attributes of paper and wood products from the forest to the customer including wood fibre certified to sustainable forest management standards and recycled fibre. The cover is printed on stock which contains 30% post-consumer recovered fibre, and produced by wind-generated electricity. This document was printed by Teldon Print Media, Richmond, British Columbia, using vegetable-based inks.

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