update 2012

Sustainability update 2012

This leaflet provides the reader with a 2012 update of the figures reported in Sappis 2011 European Sustainability Report. Our Business Year 2012, which started 1 October 2011 and ended 30 September 2012, again showed further consolidation within our European business. Our Biberist mill, which ceased production in August 2011, is consequently not part of our SD reporting anymore. The coated fine paper production at M-reals nekoski mill ceased as well in 2012. This production that we sold as an agent was relocated to our European mills. Nonetheless, as a result of this consolidation our total output declined compared to the previous year by 4.6%.

Our targets and results

Specific CO2
Specific fossil CO2 kg/t, incl purchasing power at 400g CO2/kWh 600 500 400 300 200 100

Our approach to sustainability is based on a holistic view of Planet, People and Properity (the 3Ps). We remain as dedicated as ever to our charter commitments in these areas, and the following sections provide an update against our targets.

Planet 2012 update*

Our commitment to sustainability though remains as firm as it always has been. We overachieved our target to reduce the specific water use with the target reduction of 5% and actual reduction of 8.5%

Specific water use

Specific water use m3/t 25.0 20.0 15.0 10.0 5.0 0.0 2008 2009 2010 2011 2012 Spec. water use Target 5% base year

0 2008 2009 2010 2011 2012 Spec. CO2 (fossil) kg/t Target 5% base year

We overachieved as well on the specific CO2 emissions (with a reduction target of 5%) more than doubling the target 11.4%. We have gradually certified the energy management systems at our European mills. Stockstadt, Kirkniemi, Nijmegen, Alfeld, Gratkorn and Ehingen are all ISO 50001 certified. Maastricht and Lanaken will follow by 2014. The reduction is achieved due to energy efficiency improvements at our mills. Another effect is owed to the high gas prices and comparably lower power prices during the summer period, which made us to decide to generate less power in our power plants and purchase more power from the grid. This was done at our Alfeld, Gratkorn and Kirkniemi mills, where we made use of this opportunity. This also had an impact on the specific share of renewable fuel.

The water use is based on the volume of manufactured pulp and saleable paper.(1)

Certified fibre
Certified fibre share SFPE 100 90 80 70 60 50 40 30 20 10 0 2009 PEFC 2010 FSC 2011
TM

Business year

Total number of employees in Europe

Total number of population eligible to participate in Performance Management

Total number of completed performance appraisals

Completion rate

2009 2010 2011

6,870 6,615 6,010

3,200 5,600 5,233

2,400 3,976 3,980

75% 71% 76%

The update is still pending as the data will be available in Feb 2013.
2010 2011 2012

Women as % of total European workforce 2012 Target Women as % in European Management positions

12.5%

12.2%

12.1

12.0%

12.4%

13.8

Our 2012 target for certified fibres overall is 70%. We have been able to achieve this high figure since 2009, and it has held steady in 2012. The total figure was slightly lower than in the previous year, but an increase at this high level remains a challenge as we also have the preference to source locally. Any non-certified material entering our products is subject to strict risk assessment processes, which meet the FSC Controlled Wood requirements and those of the PEFC Due Diligence System.

Safety

1.9% 30 30.4
35 30 25 20 15 10 5 0 2009

People 2012 update

BY 2012: the voluntary staff turnover rate at Sappi hours of training per year is the target we are aiming for. In the past two years (2010 and 2011) the average amount was 25-26 hours

We did not achieve our safety target in 2012, which we had set as LTIFR = 0.21 (Lost Time Incident Frequency Rate). The LTIFR of our European operations was 1.24 in 2012. The best performing mill was our Nijmegen mill in the Netherlands, with an LTIFR of zero. This is undoubtedly remarkable, and particularly considering that the mill had a severe fire at the paper machine which caused an unplanned downtime of several weeks. It also shows that zero accidents are indeed possible.

Prosperity 2012 update

By generating Prosperity, we can continue to attract investors, leverage growth opportunities and invest more in our processes, people, and the communities in which we operate. This ensures that the business becomes more customer-centric, and keeps us focused on ongoing product, process and service innovation. Investing in research and development ensures we maintain a competitive global advantage. In 2012 we continued our cost-saving programs, and our production efficiencies and customer service continue to improve, reaching very good levels. The 2012 target we set ourselves was to achieve a RONA (Return on Net Operating Assets) of 7.1% which we almost met with 6.9%.

BY 2012: hours/employee (Female: 37.3 hours/employee, Male: 29.4 hours/employee)

Hours training per employee

2010

2011

2012 2012 Target

Hours training per employee

*Notes Important to note: targets were initially set in 2008 to be achieved in 2012, but as we acquired several M-real mills in 2009 we had to adjust accordingly by including the performance of those mills retrospectively in the targets as well. The benchmark is the average of the mill performances of the year 2009 for Kirkniemi and Stockstadt, and 2008 for Alfeld, Gratkorn, Ehingen, Lanaken, Maastricht and Nijmegen. The reference year 2008 is actually better than 2009 due to the higher emission average of the new mills and mainly due to the extremely low utilisation of our paper machines in this year. Reduction of Specific CO2 Our 2012 target is the reduction of specific direct fossil CO2 emissions (i.e. tons of CO2 per tons of manufactured pulp and saleable paper), including purchased power emissions (calculated at 400g/kWh) by 1% per year. The CO2 figures shown in the graph are the sum of specific direct CO2 emissions and the indirect CO2 emissions from the external electricity supply. It is calculated with the factor of 400g/ kWh. The national average factors in the countries of operation are lower or higher than the 400g. The 400g is close to the European average and also the factor used by the EU-Flower criteria for copying and graphic paper. This target has the disadvantage in that the capacity of the integrated chemical pulp production is limited, as is the availability of our most important biofuel black liquor, for which generation is proportional to the pulp production.

Key performance indicators

The following information is an update on the key performance indicators we have reported in our 2011 regional sustainability report. If the indicators are also GRI indicators, they are reported according to these guidelines. SO2 and NOx (GRI indicator EN-20), water use (GRI indicator EN-8 and EN21), COD and TSS (EN-21), solid waste to landfill (EN-22). The key performance findings from 2012 are: Waste to landfill increased due to spread over lower productions l An increased renewable fuel share l Successful reduction of our water needs
l

Emissions

SO2 and NOx are two emission parameters linked to the use of black liquor, the by-product of the chemical pulping process and oil and coal. Both specific parameters increased slightly due to a small shift in the shares of the fuel types due to the closure of Biberist, which operated on gas and purchased steam, which has little or no impact on these parameters. NOx emissions (kg/adt) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10

Fibre

Overall area of certified forests is slowly increasing in Western, Central and Eastern Europe. Last year we slightly increased our integrated sulphite pulp, BCTMP (bleached chemo-thermo mechanical pulp) and PGW (pressurised ground wood) production at our mills. With an overall lower paper output, particularly due to the closure of our Biberist mill in 2011, the relation between integrated and market pulp reversed. We produced 53% of our fibre needs ourselves in 2012.

2008

2009

2010

2011

2012

S02 emissions (kg/adt) 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 2008 2009 2010 2011 2012

Intergrated pulp 53%

Fibre Split

Market pulp 47%

Water Emissions

COD and TSS are key indicators for organic pollution to water Chemical oxygen demand (COD) (kg/adt) 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

Waste

The specific waste figures increased due to the waste ash from our power plants. The Biberist mill had very little residual waste from its energy generation (natural gas and purchased steam). The waste ash from the other mills, particularly Stockstadt and Gratkorn which basically remained stable was distributed over a smaller production number in 2012. Waste to landfill (kg/adt) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 2008 2009 2010 2011 2012

2008

2009

2010

2011

2012

Total suspended solids (TSS) (kg/adt) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 2008 2009 2010 2011 2012

Also these parameters increased slightly due to the specific increase in pulp production, which generated a higher organic waste water load than the paper making process.

Energy

The higher share of integrated pulp production has a positive effect on the share of renewable fuels used in our mills. The optimised management of reducing the internal power generation in low power price periods in the summer contributed to this effect, as this marginal power generation would have been done with fossil fuels. The renewable fuel share increased to 37.2%. renewable fuel share 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Water

We have been very successful in further reducing our water needs. For further information we are also showing the difference between water drawn and water discharged and the different water sources. Its important to bear in mind that the closure of Biberist impacts the distribution, with regard to water use reduction. Water use (m3/adt) 25.0 20.0 15.0 10.0 5.0

2008

2009

2010

2011

2012

0.0

The distribution of the specific fuel types changes slightly accordingly:

2008 Water intake

2009

2010

2011

2012

Water discharge

3% 10% 14%

For a complete water balance, we would have to consider the water in our raw materials, products (paper contains about 5% of water), evaporation and precipitation. By far the largest share of our water is abstracted from river or surface waters. One rather less usual share of our waste water is owed to the amount of waste water we treat from external processes. 0.2% 1.1%

33%

Total Energy use sfpe 2012 39%

18.7%

Total Water Withdrawal by Source 2012

1% Coal Fuel oil Purchased steam Natural gas Renewable fuel Net purchased electricity 79.9%

Extraction from river Own boreholes

Ex utility Waste water from outside operations

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