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Our key material issues – Planet

Planet

Issues discussed here are covered in greater detail in the Planet section.

Material issue   Why it’s
important
  What we did about it in 2019   How it
links to risk
  How it links to other aspects of our business
Climate change1  

Woodfibre is one of the main inputs in our business. Climate change could pose a risk to our plantations in South Africa.

 

Sappi together with other forestry companies in South Africa, and with financial support from the Department of Science and Technology Forest Sector Innovation Fund, has initiated a detailed climate change mapping project with the Global Change Institute (GCI) at the University of the Witwatersrand. See box on following page. This project will enable us to spatially map the risk across our entire land base, and understand how it changes on decadal intervals.

In addition, we continued to:

  • Adjust and direct our tree breeding strategy by using modelled future climate data. This will help us to produce and select the most optimally suited hybrid varieties for each climatic zone.
  • Replace pure species with hybrids which are more suited to future climatic conditions to enhance security of supply.
  • Together with rapid understanding of the relative tolerance/susceptibility of our growing stock to new pests or disease, these techniques are critical in successfully managing the viability of our woodfibre base.
  • Use satellite imagery and drones to rapidly detect and respond to change.
  • Monitor soil – under hotter and drier climatic conditions, the importance of soil organic matter will increase because of its ability to reduce soil temperature, and to increase the soil water infiltration rate and soil water holding capacity.
  • Implement an extensive fire protection strategy, as climate change exacerbates potential for fires.
 

 Risk

#5 Natural resource constraints

Integration of sustainability

Climate change

 

Operating context – Increasing consumer and brand owner concerns about sustainability-related issues

1 We have established a working group to integrate the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) into our risk assessment of climate change.

CASE STUDY

Understanding climate risks

A preliminary climate change investigation conducted by Sappi Forests' scientists indicated that climate change is likely to be greater in Southern Africa compared to the world average. The study indicated that maximum temperatures are more likely to increase than minimum temperatures, especially in the spring and summer months. It is also likely that spring rainfall will decrease, with more high-intensity rainfall during summer. The combined effect of higher temperatures and lower rainfall in spring is likely to increase tree stress. This in-house study highlighted that simply understanding changes to annual averages is not enough if we are to mitigate potential losses. Currently, available climate projections do not meet Sappi's needs for the following reasons:

  • The time resolution is too infrequent – projections are typically for mid-century and end of century, whereas we need something closer to decadal intervals.
  • The spatial resolution is too coarse – often regional, rather than plantation-block specific.
  • The variables provided are too general – annual rainfall rather than its monthly distribution, mean temperatures rather than the extremes, wind, humidity and other variables absent.

Accordingly, Sappi and other forestry companies in South Africa, with financial support from the Department of Science and Technology Forest Sector Innovation Fund, has initiated a detailed climate change mapping project with the Global Change Institute (GCI) at the University of the Witwatersrand. The GCI team is made up of South Africa's leading climate change experts. The project entails two phases:

  • Phase 1: 2020: Generate 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, 2040 to 2100. The variables would include up to about 20 important bioclimatic indicators and both averages and information about their statistical distribution, such as variances, confidence ranges and probabilities of exceedance.
  • Phase 2: 2021 onward: A second iteration of variables generated for the one-year product, refining the indicators or making them more specific for species or issues; and/or inclusion of more ensemble members or scenarios to broaden the robustness of the evaluation; and/or 1 km data for selected parts of the country.

The regional climate modelling capacity established at Wits GCI can resolve all the needs of the industry, listed above. Wits GCI runs the CCAM Global Climate Model, a state-of-the-art Global Circulation Model (GCM), fully coupled with land and ocean. It can seamlessly use the same framework to ingest the output of ensembles of other GCMs, and downscale them for Southern Africa in a very robust way. Outputs can be generated at any time interval. The Southern African downscalings already under way produce coverage at a fundamental resolution of 8 x 8 km over the entire South African forestry domain, fine enough to represent important local phenomena (like the escarpment) that are invisible to GCMs. All primary climate variables are generated, so producing them as output tailored to the needs of forest bioclimatology is relatively straightforward.

The Variable Resolution Earth System Model used for the regional downscalings can then be used a second time, to generate projections with a resolution of as fine as 1 x 1 km, over an area of 200 x 200 km. This is a 'cloud-resolving' scale, so it can capture the specificity of rainfall in relation to terrain and aspect. The process is computationally intensive, so cannot immediately be applied to all the forest extent in South Africa but, over time, key areas will be prioritised.


Material issue   Why it’s
important
  What we did about it in 2019   How it
links to risk
  How it links to other aspects of our business
Energy  

Given the high energy intensity of our industry, the cost and availability of energy is a key consideration that must be weighed in the context of a carbon-constrained world.

 

Energy is a key input for our industry. Aggressively managing energy use leads to a reduction in carbon emissions and enhanced cost efficiencies. Globally, purchased energy costs as a percentage of cost of sales have not fluctuated significantly over the last five years, and were 8.74% in FY19 (2018: 8.98%).

Environmental impact is reduced by the amount of energy, and also by the type of energy consumed. We have made significant efforts to reduce our reliance on fossil fuels, thereby reducing fossil-related greenhouse gas (GHG) emissions and separating our operations from the volatility of energy prices. In 2019, globally, our use of renewable energy as a percentage of total energy used was 52.9%. However, while globally our direct (Scope 1) GHG emissions were stable in the review period, indirect (Scope 2) emissions increased by 5.7% year-on-year. The main reason for the increase was the deteriorating emissions factor of energy derived from Eskom, the South African state power utility.

 

 Risk

#5 Natural resource constraints

Climate change

Integration of sustainability

 
Achieve cost
advantages

Operating context – Increasing consumer and brand owner concerns about sustainability-related issues

Renewable energy (%)
Energy self-sufficiency (%)
Purchased energy costs as a percentage of cost of sales (COS) (%)

 

Reduction of energy consumption (GJ/adt)
Absolute direct (Scope 1) and indirect emissions (Scope 2) (m tCO2e)

 

Material issue   Why it’s
important
  What we did about it in 2019   How it links to risk   How it links to other aspects of our business
Biodiversity  

The plantations and forests from which we source woodfibre depend on healthy ecosystems and beneficial biotic processes taking place.

 

Globally, 74.8% of fibre supplied to our mills is certified. The internationally accepted, independently verified forest certification systems we use—PEFCTM, SFI® and FSCTM – all make provision for biodiversity management. Within PEFCTM-certified forests, for example, managers must make make provisions for Criterion 4: ''Maintenance, conservation and appropriate enhancement of biological diversity in forest ecosystems1'', while SFI® guidelines stipulate the protection of biodiversity. Principles 6.5 of the FSC's Principles and Criteria states: ''The Organization* shall effectively maintain the continued existence of naturally occurring native species and genotypes, and prevent losses of biological diversity*, especially through habitat management in the Management Unit2''.

We set aside approximately 30% of permanently unplanted land on our owned and leased landholdings in South Africa to conserve natural habitats and the biodiversity they contain

In SSA, we have used systematic conservation planning to identify 166 Important Conservation Areas (ICAs) on our land using a systematic conservation planning approach based on the presence of both plant and animal red data species, the size, connectedness, condition and aesthetic and recreational value of the area.

 

 Risk

#5 Natural resource constraints

Climate change

Integration of sustainability

 

Operating context – Increasing consumer and brand owner concerns about sustainability-related issues

Water   Our operations are highly dependent on the use and responsible management of water resources. Water is used in all major process stages, including raw materials preparation (woodchip washing), pulp washing, screening, and paper machines (pulp slurry dilution and fabric showers). Water is also used for process cooling, materials transport, equipment cleaning and general facilities operations.   In FY19, globally we returned around 95% of water extracted to the environment.  

 Risk

#5 Natural resource constraints

Climate change

Integration of sustainability

Social unrest

 

Operating context – Increasing consumer and brand owner concerns about sustainability-related issues

1 https://www.pefc.org/
2 https://fsc.org/en
Specific water returned to extracted (m3/adt)