Sustainable Resource Procurement a Big Part of Becoming One of the World's Top Five Pulp and Paper Companies: The Journey of the Nippon Paper Group

JFS Newsletter No.81 (May 2009)
"Towards a Sustainable Japan -- Corporations at Work" (No. 79)
http://www.np-g.com/e/index.html

Japan's Nippon Paper Group is a leading pulp and paper company in Japan and the rest of Asia. Its management vision is guided by four ideals: achieving good and stable profits for shareholders; winning and keeping the trust of customers; having positive, forward-looking employees; and maintaining solid corporate ethical performance.

In 2007, however, it was found that some of its mills were emitting amounts of soot and smoke that exceeded emission standards, besides some cases of handling data inappropriately. It was then disclosed in 2008 that three companies of the Group had been manufacturing and distributing certain recycled-paper products with substandard de-inked pulp content and had misrepresented the quality of that content.

In response, the Group management placed a top priority on restoring trust in the company. First, in the Group's Sustainability Report 2008 it clarified the process that resulted in misrepresentation of the recycled content of its pulp, including the causes and then the measures to prevent a recurrence of the problem. The report also included the measures now in place to prevent excess soot and smoke emissions. By aiming to take full advantage of the information in the report, which offered opportunities for the company to reconsider how its products impact the environment and society, the Nippon Paper Group has been trying to increase the awareness of employees about compliance issues and accelerate its progress in environmental and sustainable activities.
(See the Sustainability Report 2008 at
http://www.np-g.com/contents/000186104.pdf.)

In particular, the Group is now focused on four challenges that stakeholders have said they are highly interested in: acting to counter global warming, the sustainable procurement of raw materials, promoting the recycling of used paper, and engaging in activities that contribute to society.

In this issue of the JFS Newsletter, we look at the Nippon Paper Group's efforts in the area of sustainable resource procurement, which includes parts of an interview with Hiromi Ito -- Deputy General Manager of the Corporate Social Responsibility Department of the Corporate Social Responsibility Division, Nippon Paper Group Inc. -- and Tetsuo Matsumoto -- Senior Manager of Forest Resources Department of Raw Materials and Purchasing Division, Nippon Paper Industries Company.

Nippon Paper's Green Action Plan 2010

The Group established the Nippon Paper Group Charter on the Environment in 2001, and revised it in 2007. It emphasizes a fundamental respect for biodiversity and is based on the philosophy that the Group should work on environmental conservation at the global scale, from a long-term point of view, and contribute to the creation of a recycling-oriented society.

In the revised Charter on the Environment, six items were set as basic policy, and the Green Action Plan 2010 was formulated to promote them. The Group has since been making efforts on each item, in accordance with the action plan. For sustainable growth of its pulp and paper business, it is important to build systems and structures to sustainably procure forest resources, the major raw material of the industry. Under one of its basic policies, "Protect and develop forest resources," the Group laid out four goals: (1) promote the "Tree Farm Initiative," an overseas afforestation project; (2) acquire forest certification of all company-owned forests in Japan and abroad; (3) increase the proportion of material from certified or afforested forests to 100% of imported hardwood chips; and (4) develop advanced technologies to boost timber cultivation.

Company Sets a Goal to Develop 200,000 Hectares of Plantation Forest

The Group launched its overseas afforestation project, called the "Tree Farm Initiative," in 1992 to secure a sustainable source of hardwood chips for its operations. More specifically, the initiative focuses on managing a raw material supply sustainably under a ten-year plantation cycle by planting trees and then harvesting and using them after ten years, once they have grown large enough.

The Group initially set a goal of developing 100,000 hectares of tree plantations by 2008, yet it achieved this two years earlier than originally planned. Now it has a new goal of having more than 200,000 hectares of plantations by 2015.

According to Matsumoto, it is extremely important to coexist with local communities in foreign countries when promoting afforestation projects. He said, "Just planting trees is not enough. By considering various factors comprehensively, ranging from ecosystems in the area to social contributions and addressing labor issues, we can operate our projects more smoothly."

In its afforestation project in Chile, for instance, the Group is promoting the planting of eucalyptus trees while respecting the local culture of Indian traditions, which is in line with Chilean governmental policy. And in South Africa, as the national government places emphasis on economic development in rural areas, the Group's initiative includes providing job opportunities for people in farming villages, as well as contributing to local society by offering wood from forest thinning work for local firewood use and installing water storage tanks to supply safe drinking water.

As well, in Australia, a country rich in forest resources, the Group's afforestation business is conducted by three of its related companies, and operated in accordance with the nation's strict forest management regulations and agreements to conserve the natural environment and ecosystems.

Since the environmental impacts of shrinking forests began to be reported, the topic of sustainable use and conservation of forest resources in Tasmania has been actively discussed by the Australian government, Tasmanian state government, and environmental non-governmental organizations (NGOs) for many years. Based on such a background, both Ito and Matsumoto said, "Australia has been thoroughly promoting the conservation of biodiversity. No other country has a stricter forest management system than Australia."

Nippon Paper is also making efforts to deepen mutual understanding on Tasmanian forest issues. For instance, it participated in a tripartite meeting of representatives of Japanese paper manufacturers, the Tasmanian state government, and Australian environmental NGOs in May 2008.

Another good example of the Group's efforts to participate and coexist with local society where it operates is the Bunbury Treefarm Project, a sustainable forestation project in Bunbury, West Australia. Here, an effective land-use farming method called agroforestry is being practiced by growing trees, farm crops, and raising livestock, all on the same piece of land. Meanwhile, one of its related companies has been conducting long-term water quality research in the Blackwood River, which runs through southwestern West Australia. The project also links the research activities with an environmental education program offered to local elementary and junior high schools.

Matsumoto said, "Forestry is an industry deeply rooted in localities. We think it is necessary to address issues concerning each local society, whether domestic or overseas, and make a conscious effort to develop together with those communities."

Moving Toward Sustainable Forest Management

Nippon Paper Group has been working on activities to conserve forest resources, such as shifting its total imports of hardwood chips to those supplied from certified forests or tree plantations, as well as acquiring forest certification for its domestic and overseas forests in fiscal 2008.

Ito said, "The main ingredient of most of our paper products, such as copier paper, is hardwood chips. According to data on the procurement of imported hardwood, Nippon Paper purchases more from outside suppliers' tree farms than from in-house tree farms. Based on the assumption that this trend will continue for the time being, we are trying to enhance the traceability of imported wood chips." Regarding the Group's procurement policy, "Besides monitoring each supplier's compliance with related regulations, we look at the regulations in suppliers' countries and confirm that their operations meet our requirements for corporate social responsibility, or CSR," added Matsumoto.

The Group set the challenging goal of obtaining forest certification for its own forests both domestically and abroad by 2008, as it had set the same challenge for overseas suppliers of hardwood to obtain third-party forest certification for that same year.

All of the company-owned domestic forests had obtained forest stewardship accreditation by 2007 from Japan's Sustainable Green Ecosystem Council (SGEC), which is based on Japanese standards. As for the forests abroad, the Group set the goal of attaining certification from either the Programme for the Endorsement of Forest Certification Schemes (PEFC) or from the Forest Stewardship Council (FSC) -- which are the two dominant performance-related forest management certification schemes that evaluate forest quality and conditions -- and ISO14001, which is an environmental management system certification. The Group fulfilled its commitment of having all overseas plantations certified before the end of fiscal 2008.

Domestic Paper Mills Utilizing Local Materials

Regarding the Group's overall procurement of raw materials, 70 percent is imported and 30 percent is from Japanese forests. More specifically, 60 percent of its coniferous forest resources come from Japanese sources, which was accomplished largely by more effectively utilizing wood waste from lumber mills. In particular, the Asahikawa Mill in Hokkaido Prefecture and the Iwanuma Mill in Miyagi Prefecture get their wood materials almost entirely from domestic sources.

Ito said, "The Yatsushiro Mill in Kumamoto Prefecture, Kyushu, has an outstanding performance in processing cedar trees, which are difficult to process as a raw material for paper. The Kyushu area is a big producer of cedar trees, and by utilizing this local product, the mill produces newsprint from cedar and recycled paper pulp."

For its domestic mills, the Group is engaged in reducing fossil fuel use by promoting energy saving and fuel conversion through the introduction of biomass boilers. These efforts are aimed at reducing carbon dioxide (CO2) emissions, which is one of the goals in its Green Action Plan 2010.

Specifically, Nippon Paper's emissions reduction target per unit of production is a 16 percent cut of CO2 emitted from fossil fuel use and a 20 percent cut of fossil fuel use compared to the 1990 levels. Ito said, "We utilize black liquor, a byproduct of making pulp from woodchips, as a fuel, and it provides one-third of all our energy needs. Non-fossil fuels provides about 40 percent of all the energy used by the Group, and our challenge is finding ways to increase this rate." Then he added, "Along with all our trials and errors in our efforts towards sustainable corporate activities that also protect the global environment, we are striving to be one of the top five paper and pulp companies in the world by 2015, along with the aim of being a corporate group that generates genuine value for society."

Written by Reiko Aomame