Australian Paper Sustainability report 2011

Sustainability Report 2011

Contents

Message from Jim Henneberry, Chief Executive Officer 2

Message from Shaun Scallan, General Manager, Corporate Social Responsibility 4

Sustainable Paper – the Choice 5

About this Report 6

Australian Paper – an Overview 7

Stakeholder Engagement and Material Issues 10

Future Fibre Strategy 13

Governance 15

Sustainability Goals and Targets 17

Environment 20

People 34

Economic 47

Glossary 49

GRI Content Index 50

GRI Application Level Check 52

This report and the information contained in this report is for the sole purpose of informing the public about Australian Paper’s efforts and achievements in operating sustainably. It is to be read as a whole. Except where it has specifically consented in writing, Australian Paper does not consent to, or warrant the use of, or reliance on this report or the information in it, for any other purpose.

contents

OurPeople, the fibreof ourbusiness.

Jim HenneberryChief Executive OfficerAustralian Paper

2011 has been a challenging year for Australian Paper. As most local companies in the manufacturing sector have seen, Australia’s strong currency has proved to be a major obstacle. Our company has been under intense competitive pressure from imported papers and our export markets have also been significantly impacted. Despite these difficulties, the steps we have taken in recent years to improve the sustainability of our operations has strengthened our position in a difficult marketplace.

In adverse market conditions, we have turned challenges into opportunities by incorporating a risk management approach. We have responded to marketplace requirements. Our strategy this past year has been to ‘think local’, ‘act local’ and continue to improve efficiencies throughout the business. We’ve been ‘operating smarter’.

2 a message from the CEO

We have a domestic market keen to buy Australian made product. The opportunity is here for us to truly consolidate our position as a proud and iconic Australian company that customers want to support. Australian Paper has, after all, clocked up over 140 years of operation in its various forms. The acquisition of the assets of local manufacturer Australian Envelopes after they entered voluntary receivership in July 2011 provided us with a growth opportunity. We have ensured the future of envelope manufacturing in Australia and have further strengthened our position in the marketplace. Australian Paper now has the largest envelope manufacturing facility in the country. Australian Paper will continue to look for growth opportunities in the market to strengthen our economic position in the marketplace.

A necessary consolidation of our stationery manufacturing operation also took place, with the closure of the Regency Park stationery manufacturing plant in South Australia and relocation to Preston in Victoria. Increased carbon neutral product has been well received by customers across the board and we are pleased to note that we achieved our five year Forest Stewardship Council® re-certification. Our Preston manufacturing plant achieved Australian Forestry Standard Chain of Custody certification which now extends our certified product range to include locally manufactured envelopes. Australian Paper continues to be the largest industrial producer of base load renewable energy in Victoria. We have also seen improvements in safety with a cultural embrace of our Zero Harm strategy at our Maryvale mill.

An invigorated response to external stakeholder engagement through our Future Fibre Strategy, launched in June, has also been essential in finding out what our stakeholders expect from Australian Paper in terms of sourcing an acceptable long term fibre supply.

Any shifts in fibre supply strategy need to be carefully studied as what is determined today will still remain the fibre sourcing solution over the next 30 years.

The Future Fibre Strategy will also include an increase in plantation fibre to address the shortfall in our long term requirements. This shortfall is due to the impact of fire on our existing plantation supplier and the inability of our 2007 Management Investment Scheme agreement with Macquarie Investment to establish sufficient plantations local to our Maryvale mill.

The strategy included a detailed study which explored the feasibility of plantation supply from Western Victoria. A small portion of this resource has proven to be viable and the first deliveries of these additional plantation volumes are anticipated for early 2012.

Continued engagement with diverse stakeholder groups around future fibre sourcing will help us to continue to balance our economic, social and environmental performance and build mutually beneficial relationships.

In 2012, we will conduct a feasibility study into the development of a major recycling plant at our Maryvale mill. We want to ensure that increased customer demand for recycled product can be met through local manufacturing rather than imported sources. The development of this plan would divert large amounts of paper from landfill and provide further regional employment in the Latrobe Valley.

In some areas, such as in water reduction, we haven’t achieved the goals we set in the last reporting year. Our partnership with the Gippsland Water Factory was set to commence in 2011, however due to significant rainfall in the period following the time of approval, the intake of recycled water was not required. What truly became evident in 2011 is that Australian Paper’s integration with Nippon Paper Industries (NPI) in 2009 has improved efficiencies across our operations. Through the adoption of Japanese manufacturing best practice processes at our Australian locations, our fixed costs have significantly reduced.

Co-operation and support from our friends at NPI has continued despite the devastating impacts of the Japanese earthquake and tsunami in March 2011 on Japanese operations. We greatly appreciate NPIs continued commitment to Australian Paper which has become core to our sustainability as a business.

In 2012, Australian Paper will seek to maximise further opportunities in the marketplace, through increased distribution of product and expanding our range of environmentally preferable products. We will also continue to increase our production of renewable energy and aim to further reduce our energy use and waste per tonne of pulp and paper production across our sites. While 2011 proved to be a challenging year for Australian Paper, I firmly believe that we can continue to turn challenges into opportunities. I’d like to encourage the Australian manufacturing sector to demonstrate that through innovation and the adoption of best practice processes, Australian businesses can be smart, sustainable and here for the long term.

Jim Henneberry.

a message from the CEO 3

AUSTRALIAN PAPER SUSTAINAbILITy REPoRT 2011

More focus is given to highlighting our governance, risk

and compliance approach to business, which we believe

will also benefit other companies in the manufacturing

sector. A greater focus is also given to our people –

those who our CEO Jim Henneberry referred to as ‘the

fibre of our business’ in 2010. Greater engagement with

our internal stakeholders in 2011 gave us insight into

what really matters to them about the way we operate

our business and how we communicate with them.

Continuous improvement projects developed and

implemented by our staff demonstrate what we can

achieve as team members with shared objectives and

how we can remain a sustainable and viable business

in Australia.

With our second and future GRI reports, we intend to

increase the focus on how our business runs and better

articulate where we’re going. Put simply, we’re providing

more information to our stakeholders and encouraging

feedback so that we know what is expected of us.

We’re a corporate citizen – we believe a good one, and

our 2011 Sustainability Report aims to communicate this.

We welcome your thoughts.

Shaun Scallan.

The creation of my role in March 2011 marked a

concerted effort by the executive team to take

responsibility for sustainability throughout Australian

Paper. We recognised that we needed to communicate

our sustainability story in a way that shows that we are

accountable for our actions. The result of this of course

was the publication of our 2010 Sustainability Report

– our first report aligned with the Global Reporting

Initiative (GRI) framework.

It was important for Australian Paper to lay the

groundwork for future sustainability reporting using a

transparent and credible mechanism such as the GRI

framework. Last year’s achievement in publishing our

first report has also proved stimulating for our internal

and external stakeholders. Interest in our sustainability

practices is gaining momentum throughout our

operations and beyond.

For our 2011 report we have chosen to move from a

Level C report to a Level B report – hoping to broaden

our story as a business and to communicate our

strategic direction more effectively. It was the natural

next step in our sustainability reporting journey.

Message from Shaun Scallan, General Manager, Corporate Social Responsibility

Shaun ScallanGeneral Manager Corporate Social ResponsibilityAustralian Paper

4 a message from the General Manager, Corporate Social Responsibility

sustainable paper – the choice

Paper Company % Certified Fibre*

Australian Paper 85%

UPM Kymmene 78% (see: www.upm.com)

Stora Enso 66% (see: www.storaenso.com)

Mondi 61% (see: mondi.com)

Resolute Forest Products

35% (see: resolutefp.com)

International Paper

30% (see: www.internationalpaper.com)

Domtar 28% (see: Domtar.com)

* Certified fibre figures show the combined percentage of PEFC and FSC®

certified fibre and were sourced in June 2012 from publicly available

information

The procurement of sustainable paper products should

be defined by authentic sustainability criteria that

address key issues relating to environmental, social and

economic outcomes. Chain of Custody certification

allows fibre to be tracked through the supply chain to

its source. By incorporating a robust sustainable paper

procurement framework, businesses and individuals can

make a sustainable choice.

A growing number of businesses and individuals

understand the complexities of the sustainability criteria

in paper selection. However, we have some work to

do to raise awareness of the buying choices available

to Australian consumers. We see one of our roles as

educating businesses and individuals in their choice of

paper as there are far reaching environmental, social and

economic implications of their purchasing decisions.

In 2010-2011, Australia had a trade deficit of around $1.9

billion in paper products. This provides a strong signal

that a very large proportion of paper and paper products

available in Australia is imported – $110 million of this

deficit comprises commonly used white cut ream office

paper (see: www.industryedge.com.au).

Clearly this is negatively impacting our economy, and

impacting Australia’s opportunities to grow domestic

manufacturing and to increase local employment in the

paper manufacturing sector.

Many consumers may also not be aware that imported

paper flooding our market is often from countries

with controversial environmental and social practices.

Sustainability criteria such as the fibre source,

land acquisition and the treatment of traditional

landowners and factory workers may be difficult to

trace. Governance and transparency mechanisms are

often unclear.

Australian Paper is a proud Australian manufacturer.

Traceability of our products is clear, process to

determine low risk and certification of our fibre supply

is robust and we take seriously our responsibility to

support and work with our local communities.

Our commitment to PEFC and FSC® certified fibre

also benchmarks strongly against leading paper

manufacturers worldwide.

www.onpaper.com.au

sustainable paper – the choice 5


about this reportExternal assurance has not been sought for this

report, as Australian Paper undertakes assurance

activities around energy and emissions, and financial

data to ensure that data collection and reporting

methodologies and procedures are in accordance with

industry best practice.

This report provides an overview of Australian Paper’s

sustainability performance for the 2011 calendar year.

The Global Reporting Initiative’s ‘Guidance for Defining

Report Content’ document shaped the report structure

and content. Our next planned report will be our 2012

sustainability report, to be published in 2013.

Report BoundaryThe report boundary has been extended from our

2010 report. Environmental data for this year includes

energy and greenhouse gas emissions for our Preston

manufacturing facilities. In 2010, we included this

information for our mills only. All other environmental

data represents activity at our Maryvale mill in Victoria,

and Shoalhaven mill in New South Wales unless

otherwise stated.

All information covers our Australian based divisions

only. Reporting on overseas divisions of Australian Paper

is beyond the report boundary. We do not anticipate

reporting overseas information in the foreseeable future.

There are no further limitations on scope or boundary.

Australian Paper’s 2011 Sustainability Report is the

second aligned with the Global Reporting Initiative’s

(GRI) sustainability reporting framework. We have

compiled this report in accordance with the GRI’s Level

B reporting requirements and the report has received a

GRI Application Level Check.

We progressed from a Level C to a Level B report

as part of our continuous improvement processes

and to provide greater detail of our environmental,

social and economic impacts throughout the

organisation and beyond. Moving to a greater level of

disclosure was influenced by a number of factors: our

stakeholders asked us to provide more information,

access to additional information available around

material issues at Australian Paper and any risk

associated with additional disclosure. Encouraged by

the overwhelmingly positive response to our 2010

sustainability report, our Risk Management team

approved the evolution of our report from a Level C to a

Level B for 2011.

The scope of our report has not changed greatly since

our last report in 2010, as although more in-depth

stakeholder engagement was undertaken in this

reporting year to determine material issues, we found

that according to stakeholder feedback most issues

remained the same. Greater focus has however been

given to fibre sourcing through discussion around

our Future Fibre Strategy and also to reporting on

more employee focused data as was the request by

internal stakeholders.

Restatements have occurred in some parts of the

environmental, social and economic sections of

the report as some historical data was inadvertently

reported incorrectly in 2010. Data has been corrected

and notated wherever restatements are required. Data

gathering processes in this area have been streamlined

to ensure correct reporting in this and future years.

No errors occurred that would significantly change

trends in environmental or social performance. Data

measurement models and techniques are described

throughout the report.

6 about this report

australian paper – an overview

Our Product CategoriesAustralian Paper manufactures and supplies a wide

range of papers for many end uses, from office paper

to invoices and statements, book and publication

papers, food wrappers and bags, paper for carton liners,

envelopes, coloured papers and boards. Watermarked

and embossed security and cheque papers are

manufactured and we convert stationery and envelope

products. We also manufacture certified pulp to use

in the production of our printing, communication and

packaging papers. Pulp is also sold to other businesses

such as tissue manufacturers.

Our Sales Volume• 668,749tonnes

Head Office• CompanyheadofficeislocatedinMelbourne,

Victoria.

Our Markets• Primary:

— Australia and New Zealand business to consumer

and business-to-business markets

• Secondary:

— Australian Paper brands are exported through

our Paper Products Marketing (PPM) division

to over 70 countries in Asia, North America,

Latin America, Europe, Middle East, the Indian

subcontinent, Europe, Africa and Papua New

Guinea. PPM supplies 463,000 tonnes of paper,

including Australian Paper product to over 75

countries from more than 100 suppliers from

Australia, New Zealand, Asia, Japan, China, USA,

Europe and Brazil.

Our Pulp and Paper Production

australian paper – an overview 7


tota

l pu

lp a

nd

pap

er (

‘00

0)

600

500

400

300

200

100

0

our paper and pulp production

918,458

2008

933,441

2007

920,698

2009

1,039,706

2011

986,937

2010

paper pulp

Our Company StructurePaper Australia Pty Ltd, trading as Australian Paper is

wholly owned by Nippon Paper Industries Co. Ltd.,

incorporated in Japan. Paper Australia Pty Ltd. wholly

owns and operates the Australian Office division in

Australia. Foreign entities listed below are all subsidiaries

of Paper Australia Pty Ltd., and operate Paper Products

Marketing (PPM).

Significant subsidiaries and their divisions

Country of incorporation

Ownership Interest

Paper Australia Pty Ltd • AustralianOffice

Australia

100%

Paper Products Marketing Pty Ltd

Australia 100%

Paper Products Marketing Taiwan Ltd

Taiwan 80%

Paper Products Marketing Hong Kong Ltd

Hong Kong 100%

Paper Products Marketing Pty Ltd

Malaysia 100%

Paper Products Marketing Singapore Pte Ltd

Singapore 100%

Paper Products Marketing USA Inc.

USA 100%

PPM Frohlen-Reddeman GmbH

Germany 100%

Our BrandsAustralian Paper manufactured and owned brands are:

Our OperationsAustralian Paper’s domestic operations comprise a

number of business units, each with its own capability

spanning manufacturing, production, printing, and sales

and marketing. Australian Paper’s mills are located in

Maryvale, Victoria and Shoalhaven in New South Wales.

Our envelope and stationery manufacturing is located

at Preston in Melbourne. Sales and marketing operations

are primarily located in Melbourne, and additional sales

offices are located in Queensland, New South Wales,

ACT, South Australia and Western Australia. Overprinting

machines are also located in Queensland, New South

Wales, and Western Australia.

Company OwnershipAustralian Paper is an Australian Proprietary Company,

limited by shares and registered with the Australian

Securities and Investments Commission (ASIC). Nippon

Paper Industries Co. Ltd is the sole shareholder.

Our People• 1368employeesAustraliawideasatDecember2011

Australian Paper

Australian Paper Print

Offset Web

Specialty Transactional Mail Security

Kraft liner board Sack and

bag papers

Office Papers Stationery Envelopes

Integrated Pulp and Paper

operation

Speciality and Security Papers

Australian Paper Packaging

Australian Office

Maryvale Mill

Shoalhaven Mill

Export Sales and

Global Paper Trading

Paper Products Marketing Group

(PPM)

8 australian paper – an overview

• AustralianForestProductsAssociation(AFPA)

• AustralianIndustryGroup

Our partnerships• MonashUniversity

• SwinburneUniversity

• AustralianInstituteofManagement

Awards

Safety

Australian Paper Maryvale mill received the Safety

Scheme of the Year Award from Manufacturer’s Monthly

magazine for the ‘Refresher Training Toolbox 24/7’

scheme launched in 2010.

The Victorian Association of Forest Industries (VAFI)

presented Maryvale mill with the Occupational Health

and Safety Award for best practice in OHS processes

and results.

Community

Maryvale mill was also the recipient of VAFI’s Local

Community Engagement Award, for ongoing outreach

efforts with the local Latrobe Valley community.

Corporate Social Responsibility

Australian Office received Corporate Express Australia’s

inaugural award for Corporate Social Responsibility

Supplier of the Year in recognition of Australian

Office’s proactive approach to further improve the

environmental credentials of Corporate Express’ Own

Brand copy paper as they transitioned from EXP to

Staples Carbon Neutral Copy Paper. The product is

certified to AFS, PEFC and NCOS. As Corporate Express

customers move from EXP products to Staples Carbon

Neutral, this will reduce carbon emissions equivalent to

taking 16,500 cars off the road each year.

Our Certifications

Products• AustralianForestryStandard(AFS)

• ProgrammefortheEndorsementofForest

Certification (PEFC)

• ForestStewardshipCouncil®

• NationalCarbonOffsetStandard(NCOS)

• EnvironmentalChoiceNewZealand

Sites• AustralianForestryStandard(AFS)ChainofCustody

• ForestStewardshipCouncil® Chain of Custody

• ISO14001–environmentalmanagement(Maryvale

and Shoalhaven mills)

• NATAcertifiedonsitelaboratoryatMaryvalemill

• ISO9001–qualitymanagement(alloperations)

• AS4801–safety(Maryvalemill)

* Additional to our own certifications, we look for our suppliers to have

either certified product or fibre that meets the AFS/PEFC and FSC®

requirements.

Our Licences• EnvironmentProtectionAuthority(Maryvaleand

Shoalhaven mills)

• MajorHazardousFacility(MHF)atMaryvalemill

• AustralianMade,AustralianGrown

Our Memberships• FSC® Australia

• AFSLimited

• WWF’sGlobalForestandTradeNetwork(GFTN)

• VictorianAssociationofForestIndustries(VAFI)

• TimberCommunitiesAustralia(TCA)

• StandardsReviewCommittee–Australian

Forestry Standard

australian paper – an overview 9


stakeholder engagement and material issues

• Developandbuildworkingpartnershipswith

stakeholder groups

• Mitigaterisktoourbusinessandproducts

• Manageourreputationbyprovidingopenchannels

of communication, and

• Exploreinnovativeapproachestoachieve

common goals.

We communicate with our stakeholders through

numerous methods such as our ongoing monthly

Community Consultative Committee (CCC) in

the Latrobe Valley in Victoria, annual community

consultation group at Shoalhaven, New South Wales,

face-to-face discussions, multi-stakeholder forums,

surveys, website, road shows, communications materials

and others.

Maryvale’s CCC provides feedback on environmental

improvement opportunities to ensure Australian Paper

activities are aligned with community expectation.

In 2011, a collaborative engagement workshop was

held with Australian Paper and EPA Victoria to further

improve responses to community complaints and

to look at ways to encourage direct communication

between the public and the Maryvale mill.

The majority of our stakeholder engagement activities

in 2011 centred on the review of Australian Paper’s

current fibre sources with a view to shaping our Future

Fibre Strategy to align with stakeholder expectations

where possible.

A number of formal engagement activities took place

including multiple face-to-face discussions with many

stakeholders, to ensure we were hearing as many voices

as possible. Australian Paper and these groups discussed

in detail, strategic planning and day-to-day aspects

of ours and our supplier operations, to effectively

and transparently communicate our plans and seek

stakeholder input and feedback.

Ongoing communications with our key stakeholder

groups is an essential part of our business and provides

an important platform from which we make informed

business decisions, shape our future strategies and

determine which issues are material and should be

reported on. Engaging with our stakeholders provides

us with an opportunity to better negotiate working

relationships, evaluate the potential impacts of our

business decisions and understand activities undertaken

by various stakeholder groups. Engagement also

helps us to achieve balanced economic, social and

environmental outcomes.

2011 saw a more formalised approach to stakeholder

engagement than in previous years. We took the time to

capture issues and concerns from numerous individuals

and organisations about our products and operations,

allowing us to group the issues by stakeholder group,

and prioritise material issues for action.

Through this process, our stakeholder groups were

identified as:

• NipponPaperIndustries(NPI)–ourparentcompany

• Employees

• Customers

• Suppliers

• Federal,stateandlocalgovernment

• Non-GovernmentalOrganisations(NGOs),including

Environmental Non-Governmental Organisations

(ENGOs)

• Unions

• Localcommunities,and

• Industryassociationsandgroups.

With continued stakeholder engagement, Australian

Paper aims to:

• Understandtheneedsandwantsofstakeholders

• Achievethebestpossibleoutcomeforallparties

involved, where possible

• Engageinopenandtransparentcommunications

10 stakeholder engagement and material issues

Key topics raised in the Future Fibre Strategy review included:

Issue Stakeholder group

How we engaged

What we heard Our response Resulting stakeholder driven goals and targets

Environment ENGOs Directly through meetings and also through the Global Forest Trade Network

Preference for Western Victorian plantation fibre to replace native regrowth fibre supplies

We commissioned the Poyry report to provide a detailed analysis of fibre sourcing options in Western Victoria. Feedback on the Poyry report was provided

Future Fibre Strategy rollout

Concern about Leadbeater’s possum habitat from wood production and fire impact

Australian Paper instigated a review of VicForests and DSE practices. Site visits were focused around the protection of biodiversity and water. We also asked for ENGO engagement for Future Fibre Strategy development

Concern about illegal logging

Australian Paper continues to support GFTN principles

We will continue to report annually against the GFTN Trade Action Plan 2011-2013

Would like stronger certification for forest management in Australia

We engaged with ENGOs on a review of AS4708 and joined the standards review committee

We will continue to support strong protection for biodiversity and improved stakeholder engagement through the Timber Industry Action Plan and Australian Forestry Standard

State Government

Meetings and direct engagement

The state government is committed to the protection of biodiversity including rare, threatened and endangered species

We discussed directly and wrote to the state government to encourage communications on threatened species research already underway

We will support events to engage our stakeholders with forest science experts

Social Timber Communities Australia

Meetings and direct engagement

Concern about the future of the timber industry, particularly with relation to jobs availability and security in timber communities

We engaged with state government and the union to establish industry support for continued operations

We aim to gain industry support from state and federal government

Union Meetings Concern about job security for members

Local Government – regional Victoria

Meetings and through Timber Towns

Concern about the impact of the Ethical Paper campaign on the viability of the forestry industry and impact on local communities

We provided factual information on issues of concern through our information portal – Ethical Paper – the Facts

We aim to ensure that Municipal Association Victoria (MAV) is adequately informed of the facts available related to this campaign

Local Government – across Victoria

Email and invitation to stakeholder events

MAV members were being encouraged to support the Ethical Paper campaign

(continued overleaf)

stakeholder engagement and material issues 11


Issue Stakeholder group

How we engaged

What we heard Our response Resulting stakeholder driven goals and targets

Economic Government – local, state and federal

Directly through meetings

Concern about the economic impacts throughout the local community if jobs were lost as a consequence of a downturn in the industry

We identified and communicated these impacts to the state and federal government

Identify and develop opportunities for Australian Paper to successfully continue operations in regional Victoria with industry support from state and federal government

Suppliers Directly through meetings

Concern for the impact of supplier economic viability if they cannot source sufficient wood through various impacts and decisions


Major customers

Combined meetings with customers and ENGOs

Buying sustainable products is important

We are committed to sourcing certified wood and communicating sustainability information of our products


Buying price competitive and Australian products is important

We are committed to using Australian fibre sources and manufacturing locally

Products must be price competitive

Locally manufactured product will be competitively priced if we have available and competitively priced fibre sources

Support for recycled paper and carbon neutral product

We have broadened our carbon neutral offering, and hope to increase our recycled product range

Carbon neutral products will continue to provide a significant portion of our offerings, and a de-inked pulp facility feasibility study will be completed in 2012

Australian Paper brand reputation is important for customers to continue to buy

We are committed to transparent communications with our stakeholder groups in coming years and have undertaken major work with industry bodies

We will continue with focused stakeholder engagement in coming years

Clarification required about the differences between FSC® and PFEC/AFS certification

We are committed to both standards and believe that both standards can be improved

Continue to maintain FSC® and AFS Chain of Custody certification

As we progress with our stakeholder engagement,

we expect that our key stakeholder groups will look

to the Australian Paper sustainability report as a

transparent representation of our activities. We also look

to be guided by our stakeholders to determine future

material issues.

In 2012 we will:

• Developastakeholderengagementpolicytoprovide

an ongoing framework for our engagement activities

• Developformalinternalstakeholderengagement

processes to reach out to more staff and employees

to receive feedback on our sustainability activities

and sustainability reporting

• Provideanonlinefeedbackmechanismtowhich

stakeholders can respond to our sustainability report.

Internal stakeholder feedback was sought through an

online survey to gauge opinions on our first GRI aligned

sustainability report released in 2011. The survey gave us

insight into employees’ awareness of Australian Paper’s

sustainability performance, further issues deemed

material for future reports, employee perception of our

company as a sustainable and responsible company,

and recommendations for improvement for the report

and the business. A number of environmental, social and

economic topics in this report are included as a direct

result of internal stakeholder feedback. Suggestions

for improvements in how we communicate our

sustainability report have also been taken on board.

Sustainability report briefings were also held with staff

and employees and information disseminated in the

weeks prior to publication.

Key topics raised in the Future Fibre Strategy review included (continued):

12 stakeholder engagement and material issues

future fibre strategyUtilisation of existing and other plantation sourcesThe findings of the Poyry report did not reduce

Australian Paper’s need for additional plantation

and recycled fibre sources to meet long term fibre

requirements. As a result, in September, we announced

our plan to increase plantation inputs by maximising

usage from existing suppliers, utilising investment

plantations in Central Gippsland and accessing some of

the closest parts of the Western Victorian plantations.

Investigations are also being undertaken into the

feasibility of using other plantation sources. We are

completing trials to increase our plantation supply

yields and are negotiating to take additional volumes

from a new Victorian supplier. We are also looking

carefully at the creation of new plantations close to

our Maryvale mill.

Announced in June 2011, Australian Paper’s Future Fibre

Strategy details a 30 year planning window to our fibre

sourcing plans.

The strategy’s direction was informed by an extensive

stakeholder engagement program which reviewed

Australian Paper’s current fibre sources. As a result

of this engagement, we were able to shape the most

environmentally, social and economically viable long

term fibre sourcing strategy.

The review included discussion on the potential for

future fibre sourcing including plantation timber from

Western Victoria, other plantation sources, sustainably

managed wood from regrowth state forestry operations

and recycled fibre.

Investigating plantation timber sources from Western VictoriaPlantations in Western Victoria were established

for the export woodchip market and were located

approximately 500km from Maryvale mill.

In response to a study written by the National Institute

of Economic and Industry Research (NIEIR), Australian

Paper commissioned an independent report from

global forestry experts Poyry Management Consulting

to investigate the viability of sourcing plantation timber

from Western Victoria to replace wood currently

sourced from managed regrowth.

The Poyry report ‘Review of Issues affecting the

Transition of Victoria’s Hardwood Processing Industry

from Native Forest to Plantations’ found that on a

large scale, sourcing plantation timber from Western

Victoria could not occur without significant long term

Government subsidy as the additional cost of delivering

wood to the Maryvale mill compared to that of managed

regrowth operations would be $31 million per year. (For

the full report: www.onpaper.com.au).

future fibre strategy 13


Sustainably managed wood from regrowth state forestry operationsThe harvesting of sustainably managed regrowth for

sawn timber produces significant quantities of low

grade residual wood which is ideal for paper making.

Australian Paper is one of the outlets for this wood

which would otherwise be left on site to rot or be burnt,

or sent overseas as woodchips. Australian Paper sources

this wood from VicForests and local sawmills.

The Victorian government estimates that certified,

sustainably harvested regrowth timber generates

approximately 11,000 jobs in forestry and downstream

processing, the majority of which are in regional areas.

Recycled fibreAustralian Paper is the only Australian manufacturer of

office, packaging and printing papers and supplies the

majority of the recycled paper sold in Australia each

year. The high grade de-inked recycled pulp used by

Australian Paper in recycled office and printing papers is

manufactured from local wastepaper at Amcor’s Fairfield

Mill in Victoria.

Due to the anticipated closure of the Fairfield plant from

mid 2012, Australian Paper will conduct a Feasibility

Study for a large recycled pulp facility at our Maryvale

Mill. Based on the size of the Fairfield plant, this facility

would more than triple Australian Paper’s usage of

de-inked recycled fibre and would significantly expand

the Australian market for recycled office and printing

papers. This plant would divert around 80,000 tonnes of

waste paper per annum from Australian landfill and also

support local employment opportunities.

The potential for a significant expansion in recycled

supply is a key component of Australian Paper’s Future

Fibre Strategy and an announcement on the recycled

feasibility study is expected in the third quarter of 2012.

14 future fibre strategy

governanceBoard Charter and Risk Management Framework. Risk &

Compliance Committee and OHSE Committee member

composition is decided by the Executive Committee on

the recommendation of subcommittee members.

Remuneration arrangements for Australian based

executives and directors are determined against

the same merits as all other Australian Paper staff

employees. Japanese director remuneration is

determined by NPI.

NPI directly assesses the board’s economic,

environmental and social performance.

Risk ManagementAustralian Paper has established an enterprise-wide

risk management process, consistent with the risk

management principles, framework and process of ISO

31000 Risk Management Principles and Guidelines. The

risk management governance structure is set out in and

governed by the Board Charter and Risk Management

Policy. Committee members are responsible for

reporting areas of risk within their business area.

Other senior managers involved in operational matters

are responsible for:

• Implementationoftheriskmanagementframework

and guidelines within their respective areas of

responsibility

• Reportingonthestatusoftheriskregisteraspartof

the annual planning and review cycle

• Ensuringcompliancewiththeprocessrequirements

for the risk assessment of new projects and contracts,

and

• Conductinganannualreview,teamingupwithsenior

functional heads of risk.

Risk groups include group issues (financial, insurance,

legal and strategy), operational issues (mills and sales/

marketing), systems issues, human resources issues and

safety, health, environment and community.

Paper Australia Pty Ltd, trading as Australian Paper is a

private company. Financial reports are communicated to

parent company Nippon Paper Industries Co Ltd (NPI).

An appointed auditor audits our accounts each year,

and financial statements are lodged with the Australian

Securities and Investment Commission (ASIC) as

required by the Corporations Act (2001).

Our boardThe Australian board of directors is elected by our

shareholder NPI and includes Australian Paper’s

Chief Executive Officer, Chief Financial Officer, NPI

Representative Director and NPI Tokyo based directors.

The Australian board of directors is comprised of five

males, and a female secretary.

Each director completes a declaration and consent to

become a director in which the director declares their

interests and makes a standing order under section 192

of the Corporations Act.

A chairman is elected at each board meeting, held three

to four times per year. Each board meeting provides

an opportunity for any director to give notice of any

conflict of interest.

Australian Paper’s Board Charter deals with the process

to be applied for the handling of any conflict of interest.

There are no independent directors, as non-executive

directors are employed by NPI or Paper Australia Pty Ltd.

Our CommitteesAn Executive Committee is a delegated subset of the

Board and is comprised of two executive directors

and one NPI representative director. An Occupational

Health, Safety and Environment Committee reports to

the Executive Committee and the Risk and Compliance

Committee. The structure, scope and reporting regime

for all committees, including member accountabilities

and responsibilities is set out in Australian Paper’s

governance 15


Code of ethicsOur code of ethics commits Australian Paper to the

following actions. We:

• Strivetobeasafe,positive,preferredplacetowork

where high standards are upheld

• Committoimproveourownindividualandteam

performances, and to build our organisational

capability

• Upholdthehighestlevelofintegrityinmeeting

customer and shareholder needs and expectations

• Ensurefairandtransparentdecisionmakingwhere

our employees can be heard

• Acceptthatthebestsolutionsmaycomefrom

different levels of the organisation

• Committobeingahighlyregardedcorporate

citizen, caring for the environment and positively

working with our local communities and broad

range of stakeholders.

Communicating with our employeesOur senior managers, including the CEO and NPI

Representative Director, address and update staff

and employees on the state of business including

production, financial performance, market related

updates, external factors impacting on the business, and

major initiatives and actions taken in order to build a

sustainable business. Communications are undertaken

on a regular basis. Briefings are also provided for trade

union officials who represent our employees.

Communication of risks and recommended actions

is the responsibility of the individual to whom a risk

is allocated for review and is comprised mostly of

members of the relevant committee. The committee

members are also responsible for providing updates to

the committee when it meets.

The Risk and Compliance Committee usually meets

quarterly. Summary findings are reported to the

Executive Committee, Internal Audit and Board.

16 governance

Audit: J-SOX

NPI Co Ltd

Executive Committee

Board of Directors

Risk and Compliance Committee

Internal Audit Function

Occupational Health, Safety

& Environment Committee

sustainability goals and targetsProgress on 2011 sustainability goals and targets

Goals Targets Progress Commentary

Yes No In progress

Environment

Uphold FSC® fibre certification

Complete a full 5 year FSC® re-certification audit

X

Review long term future fibre sourcing options

Consult a broad range of stakeholders and invite participation in Future Fibre Review

X

Review and implement Future Fibre Strategy

X

Reduce water use at Maryvale mill

Gippsland Water Factory to supply Maryvale mill with eight mega litres of recycled water per day for use in industrial processes from May 2011

X Approval for the project was received in September, and increased demand on Gippsland Water’s resources over the summer period delayed provision of recycled water

Achieve a 1% reduction in water use X Total water use increased by 4.3% due to an increase in production

Reduce carbon emissions

Reduce carbon emissions by 1% X Restatement required – target incorrectly identified in 2010. Target should be a 1% reduction of energy per tonne of pulp and paper

1% reduction in energy per tonne of pulp and paper

X Achieved a 0.562% decrease

Reduce waste at Shoalhaven mill

Roll out a composting program where recovered paper solids are converted to compost

X

Reduce waste at Maryvale mill

Introduce bins to the machine floor to reduce metal waste

X

Introduce bins to recycle plastic, aluminium, paper, stainless steel and co-mingled metals

X

Introduce bins to the canteen area and kitchens

X Will commence in 2012

Investigate battery recycling programs for Maryvale

X

Look for innovative, alternative uses for waste across operations

X Fibre Finders Project at Shoalhaven mill

Grits and dregs recycling proposal at Maryvale mill

(continued overleaf)

sustainability goals and targets 17


Goals Targets Progress Commentary

Yes No In progress

Safety

Increased management control and improvement of behavioural safety at Maryvale mill

Implementation of the Zero Harm OHS Strategic Plan 2011-2015

X The strategic plan is tracking well

Improve safety and reduce safety risk at Shoalhaven mill

Achieve separation of people and mobile equipment where practicable

X To be completed in 2012

Implement a permit to work system X

Review working at heights and complete upgrades to the paper machine

X

Complete safe lifting upgrades X

Complete a joint investigation action plan

X

Implement a cardinal rules, fair treatment model and safety charter

X Cardinal rules and fair treatment model has been completed. Safety charter in progress

Implement a drug and alcohol policy X Will be completed in 2012

Improve safety and reduce safety risk at Australian Office

Achieve WorkCover self insurance X Will be completed in 2012

Implement extra guarding on machinery

X

Prepare for and implement new national OHS legislation including compliance codes

X Will commence in 2012 as legislation was delayed

Implement individual site training plans X

Reduce noise on machines X Commenced in 2011 and will continue in 2012

Continuous Improvement

Implement continuous improvement measures at Australian Office

Continue the 5S lean manufacturing process

X Will continue throughout 2012

Health and Wellbeing

Improve employee development program at Australian Office

Focus on employee development program

X Developed a training matrix for all staff and developed training plans for lead team and high potentials as part of succession planning

Improve the health and wellbeing of Australian Office staff

Hold seminars in conjunction with WorkSafe in 2011 around programs on diabetes

X Only a small number of employees were identified as high risk. These employees then contacted their own doctors.

Hold seminars through the QUIT Stop Smoking campaign and reduce the incidence of smoking onsite

X Cancelled – no plans to carry this into 2012

Progress on 2011 sustainability goals and targets (continued)

18 sustainability goals and targets

our sustainability goals and targets for 2012

Goals Targets

Environment

Increase recycled fibre options as part of the Future Fibre Strategy

•Conductafeasibilitystudyofwhetherarecyclingplant could be built at Maryvale mill

•Conductafeasibilitystudytodeterminewhetherdeveloping a de-inked Pulp plant in Melbourne to increase recycled fibre sources is feasible

Improve waste management

•Workwithsupplierstodeterminewhetherwecan collect data on both the type and volume of waste being recycled

•WorkwithMonashUniversitytofindaregionalsolution to reduce solid waste at Maryvale landfill

Improve energy efficiency

•Continuetolookforwaystoimproveenergyefficienciesthroughoutouroperations

Monitor wetlands •Carryoutongoingmonitoringandmanagementofthebillabongandsurroundingwetlands

Ongoing odour management

•Finaliseandsubmittheodourmanagementplanto the EPA

•ContinuetomonitorandreportNOx and SOx – a mandatory requirement of our operating licences

Stakeholder Engagement

Further develop stakeholder engagement policy and processes

•Developastakeholderengagementpolicyto provide an ongoing framework for our engagement activities

•Provideanonlinefeedbackmechanismtowhich staff and employees can respond to our sustainability report

•Developformalinternalstakeholderengagement processes to reach out to more staff and employees to receive feedback on our sustainability activities and sustainability reporting

Safety

Improve safety and reduce safety risk at Maryvale mill

• Implementacontractorsafetymanagementsystem and plant improvement plans

•ConductPersonalProtectiveEquipmentandManual Handling risk reviews

•Developanalcoholanddrugspolicydesignedtosupport and inform employees about managing alcohol and drugs with relation to the workplace

•UndertakeMajorHazardousFacilityLicencerenewal with WorkSafe

•Undertakesafetyspecificcontractorinspections

•Developanareatrafficmanagementplan

•Reviewdangerousgoodsmanagementprocesses

•Rolloutanemergencymanagementplan

•Reviewleadingindicators

•ContinueWASPandTake5Stepsbehaviouralsafety programs

Improve safety and reduce safety risk at Australian Office

•ReviewandimplementNationalOHSLegislationagainst current systems

•Continuehazardriskreductiononmachinery,manual handling and noise

•Commenceelectricalsafetyreviewproject

•AchieveadditionalOHSsupportbyemployinganadditional OHS professional

Improve safety and reduce safety risk at Shoalhaven mill

•Finalisetrafficmanagementplan

•Implementadrugandalcoholpolicy

•Commenceemployeeandcontractorinductionprogram

•Finaliseandimplementthenewpermittoworkprocess

•CommenceTPMImprovementandareabasedteams in the finishing department

Maximise human resource effectiveness

•Hireadditionalex-AustralianEnvelopesstafftofully support our increase in skilled staff in paper converting

•Seefurtherconsolidationinourheadoffice,salesand manufacturing operations to improve our fixed cost base

•Continuewithtargetedemployeedevelopmentopportunities

•Continuewithourrangeofhealthandwellbeinginitiatives

Employee Development

Continue with employee development at Australian Office

•Furtherdevelopsuccessionplanningmodel

Improve training and succession plans

•CreateatalentcouncilmadeupofseniorexecutivestooverseeAustralianPaper’strainingandsuccession plans

sustainability goals and targets 19


Fibre sources 21

Biodiversity 23

Water 24

Water treatment 25

Energy and Greenhouse Gas Emissions 26

Transition to National Carbon Offset Standard 28

Waste and Recycling 28

Innovation in Packaging 31

Air Emissions 31

Improving Transport Efficiency through Rail 32

Responsible Product Labelling 33

Environ ment

Our five year FSC® re-certification audit involved three

separate physical audits between September 2010

and July 2011, resulting in the renewal of our Chain of

Custody certification in August 2011.

Since 2008, Australian Paper has also been Chain of

Custody certified to the Australian Forestry Standard

which is the only forestry standard that is recognised by

Standards Australia. The AFS is globally endorsed by the

Programme for the Endorsement of Forest Certification

(PEFC); the world’s largest forest certification organisation.

Chain of Custody certification under the Australian

Forestry Standard and FSC® means that Australian Paper’s

manufactured products can be tracked clearly from the

origin of the wood source, through the processing phase,

and finally, to the end product, ensuring confidence

in the responsible management of the entire paper

manufacturing and distribution process..

The proportion of fibre input sources remained relatively

unchanged in the last reporting year, with the greatest

inputs being plantation fibre and fibre sourced from

managed regrowth forests in Victoria. Waste paper

and de-inked pulp together comprise around 9% of our

fibre source and in 2011, 52,894 tonnes was used in our

recycled products.

Almost two thirds of our fibre is from hardwood and

softwood plantations, primarily grown in the Gippsland

region in Victoria. From early 2012 we also expect to

source additional plantation fibre from the closest parts

of Western Victoria.

Sustainably managed regrowth forests in the Central

Highlands of Victoria provide our second largest fibre

source. This wood is sourced from VicForests – a state

government owned enterprise. VicForests, together with

the Victorian government’s Department of Sustainability

and Environment (DSE) and Department of Primary

Industries (DPI), is responsible for protecting, conserving

and managing areas approved for timber harvesting.

VicForests abides by the mandatory legislative

requirements and codes of practice set by all tiers of

government and was an early adopter of voluntary

forest certification. VicForests operations are certified to

the Australian Forestry Standard (AFS).

While 2011 was a challenging year, our environmental

governance framework has provided a structure

for resilience. Moving beyond the requirements of

Australian Paper’s environmental policy to ensure the

‘effective use of energy, water and materials’, we have

implemented innovative and effective ways as part

of our continuous improvement commitment and to

reduce risk.

We intend to maintain this momentum in the coming

years and firmly endure as a successful example

of environmental innovation in the Australian

manufacturing sector.

As a result of our continuous improvement projects,

we have:

• reducedwastetolandfillandsubsequentlyminimised

cost – a key measure of sustainability

• re-engineeredwastesothatitisusefuleitherinour

manufacturing processes or for other uses including

compost

• significantlyincreasedourrenewableenergy

production using black liquor

• improvedeffluenttreatmentand

• decreasedodourcomplaints.

Fibre sourcesSustainable fibre sourcing remains a focus for Australian

Paper. Our Future Fibre Strategy outlines plans to

increase plantation and recycled fibre from the current

ratio of almost two thirds.

Australian Paper is one of the foundation members of

FSC® Australia and has been FSC® Chain of Custody

certified since 2006. FSC® certificates are valid for

five years and annual surveillance audits are conducted

to verify continued compliance.

environment

environment 21


Key facts• 86%virginfibreisfromcertifiedsources

• 13%issourcedfromsawmillwaste

• 3%issourcedfromprivatelandholders

• 85%offibresourcedwasAustralianForestry

Standard certified

• 47%isFSC® certified.

Is plantation wood more sustainable than managed regrowth wood?

The broader issue of whether plantation wood

is more sustainable than wood from managed

forests is complex. Most major office paper

manufacturers in Europe and North America do

not place an emphasis on plantation sources and

source the majority of their fibre from managed

natural forests, choosing to focus on certification

as the material issue. In this way the whole tree

can be utilised with high grade wood being used

for sawn timber and low grade wood being used

for paper manufacturing. The trees are then

regrown using local seed to maintain biodiversity.

Certainly from an FSC® perspective, the emphasis

is on the responsible management of natural

forests for wood production. By area, only 8.4%

of FSC® certified forests worldwide are plantations.

63.5% of FSC® certified forests worldwide are

natural forests and 28.1% are a mixture of natural

forests and plantations (see: www.fsc.org).

22 environment

fibre inputs

imported pulps

managed regrowth*

*including sawmill waste

de-inked pulp

waste paper

plantation*47%262,960tonnes

37%210,911tonnes

7%37,177tonnes

3%17,456tonnes

6%35,438tonnes

ton

nes

600,000

500,000

400,000

300,000

200,000

100,000

0

total fibre source

waste paper de-inkedwood imported pulp

2007

504,404

38,23811,740

63,581

390,845

515,073

32,44215,447

50,746

416,438

2008

489,905

33,40314,97132,399

409,132

2009

536,456

36,96819,06130,084

450,343

2010

563,942

35,43817,45637,177

473,871

2011

1,700,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

wood purchased

cub

ic m

etre

s

2008

1,476,586

2009

1,454,784

2010

1,591,907

2011

1,674,684

2007

1,413,411

BiodiversityAustralian Paper’s ethos is to encourage our fibre

suppliers to protect the biodiversity found in

Victoria’s forests.

Australian Paper works with managed regrowth wood

supplier VicForests to ensure that Victoria’s uniquely

diverse forest fauna species are protected through

the stringent management of commercial forestry

practices. VicForests values forest biodiversity and all

operations comply with the legislative framework that

governs sustainable timber harvesting in Victoria. Our

suppliers adopt the precautionary principle where there

is the threat of serious or irreversible damage to the

environment, in addition to a range of instruments to

protect biodiversity.

This framework protects a range of environmental

values present in our forests and requires various

measures to be put in place when harvesting operations

are undertaken. These measures can include:

• Retaininghabitattreestoallowfornesting

• Retainingseedtreestohelpregeneratetheforest

• Retainbufferzonesalongsiderivers,creeksandother

key environmental features, and

• Retainingadditionalprotectionzoneswhere

no harvesting is permitted or where harvesting

operations are modified.

This legislation also requires the protection of threatened

species and their habitat including Leadbeater’s Possum,

listed as endangered on the IUCN Red List.

Victoria has 4.8 million hectares of National Park and

conservation reserves which protect habitat for rare and

threatened species.

Additional measures are also used to protect species

and potential habitat in our state forests, including

an assessment of all areas prior to harvesting. This

process commonly involves the exclusion of forest from

harvesting. Specific fauna surveys are also undertaken

in forest deemed likely to contain rare or threatened

species. If a threatened species is detected during a pre-

harvest survey, harvesting operations are managed to

ensure habitat for the species is adequately protected.

Methods adopted within the pre-harvest surveys are

well known and commonly used and tested research

techniques. Survey methods continue to be updated and

refined ensuring an adaptive approach to threatened

species management.

Special Management Zone Plans have been created by

VicForests to appropriately manage operations in areas

where rare or threatened species have been recorded.

These Special Management Zone Plans may result in the

exclusion of harvesting in some areas and modifications

to harvesting operations in others to ensure adequate

suitable habitat is protected. Survey results are

forwarded to DSE for addition in the Victorian Wildlife

Atlas to improve our understanding of how native fauna

is utilising our forests.

In the future, VicForests will:

• Continuetoinvestigatetheroleofregenerating

forests as a source of habitat for native fauna

• Ensurecommunicationchannelsaredevelopedand

maintained between DSE and VicForests and other

research institutes to ensure a co-operative approach

for the management of target species

• Continuetoreviewitssurveymethodologytoensure

it remains adaptive and best placed to manage

biodiversity in Victoria’s State forests.

Key facts:• Around6%ofVictoria’s7.8millionhectaresof

native forest is available and suitable for wood

production

• VicForestsharvestsaround5,000hectareseach

year which is less than 0.07% of the total forest

• Allharvestedareasarefullyregeneratedwiththe

original mix of local species

environment 23


WaterAlthough we have been fortunate that drought

conditions of previous years have subsided, we

recognise that conserving and managing water

is important to prepare for the unknown. Paper

manufacturing is a water intensive activity and our

responsibility is to ensure that our water usage and

water quality is effectively managed throughout our

operations. Our goals are to:

• ReduceourtotalrawwaterintakefromMoondarra

Dam in Victoria and the Shoalhaven River in New

South Wales

• Reusewaterwherepossible

• Userecycledwaterwhenthatoptionbecomes

available

• Meetorexceedalllegislatedwaterrequirements.

Water Use

In the last reporting year, Australian Paper set a target

of reducing water across mill operations by 1%. Despite

our best efforts, total water use at Australian Paper

mills increased by 4.3% in 2011 due to an increase

in production. Water use per tonne of pulp and

paper however, has slightly decreased as a result of

implementing operational efficiencies. We maintain our

commitment to the EPA to source less than our total

water limit of 33,000 mega litres per annum inclusively

at our mills.

Australian Paper’s partnership with the Gippsland Water

Factory to treat Maryvale mill’s trade waste associated

with odour successfully commenced in the reporting

year. Victoria’s Department of Health also provided

approval in September 2011 for the Gippsland Water

Factory waste treatment plant to supply recycled water

to the mill.

However, during this period, Gippsland Water’s storages

were at capacity due to significant levels of rainfall and

the production of recycled water was not required.

When available, we anticipate that the water factory will

supply the mill with up to eight mega litres of recycled

water per day for use in the mill’s industrial processes.

Note:

•2010datacorrectionsareincluded

•DataisforMaryvaleandShoalhavenmillsonly

•Anerroroccurredinthedatapresentedonwateruseinour2010

sustainability report due to the use of internal reports produced through

different operational areas at our mills. To improve the reporting process for

our sustainability reports, from this year custodian data sourced from our

water supplier is included as the total water use figure. Operational area data

continues to be collected for continuous improvement purposes.

Billabong Management Plan

We reported in 2010 that mercury contamination was

detected at Maryvale mill’s billabong. The billabong is

located at the north east of the site adjacent to the Latrobe

River and is situated on the Latrobe river floodplain. We are

continuing to monitor the billabong and there have been

no significant changes in water conditions.

Although mercury concentration levels were found to

be within Australian and New Zealand Conservation

Council guidelines, Australian Paper has committed

to minimising the impact on the ecosystem by

implementing a billabong management plan using the

Index of Wetland Condition (IWC).

24 environment

2007

tota

l Ml w

ater

27,000

26,000

25,000

24,000

23,000

22,000

water use

total water kl/t

2008

kl /

to

nn

e p

ulp

an

d p

aper

2009 2010 2011

23,11022,889 23,322 23,413 24,431

maryvale pulp mill upgrade27.0

26.0

25.0

24.0

23.0

22.0

In 2012, we will:

• Carryoutongoingmonitoringandmanagementof

the billabong and surrounding wetland.

Water treatment

Effluent Management

Effluentmanagementatourmillshascontinuedto

be successful, with no major spills into waterways

occurring during the reporting year. Biological oxygen

demand (BOD) loading from river and sewer outlets at

our mills for 2011 were 1.75 kg per tonne of pulp and

paper. Calculations provided in 2010 included river

outlets only. Chemical oxygen demand (COD) was 9.83

kg per tonne of pulp and paper. From 2012, we will

report on COD figures instead of BOD as EPA licence

conditions and reporting requirements have changed

and no longer require recording of BOD.

The IWC framework, developed by Victoria’s

Department of Sustainability and Environment provides

a series of indicators to measure aspects of the

billabong’s soil condition, water properties and quality,

and wetland catchment (see: www.dse.vic.gov.au).

By incorporating the framework into Maryvale mill’s

billabong management plan, we will be able to

determine whether any significant changes to the

wetlands are the effects of natural or human-induced

activities.

Implementing the management plan will also ensure

that we have a best practice approach to managing

and preserving ecosystem health within and around

the billabong.

The billabong management plan also outlines an

ongoing monitoring program, review of alternative

remediation strategies and a schedule to provide regular

feedback to the Community Consultative Committee.

Case study: Waste water temperature control reduces water and energy use at Maryvale mill

With the start-up of the new Gippsland Water Factory,

Maryvale mill needed to reduce the temperature of trade

waste water for processing from less than 42 degrees

Celsius to less than 40 degrees to meet the new

processing requirements.

While the mill had always cooled trade waste water for

processing, an upgrade of the main sewer pump was

needed to meet these new requirements.

Prior to implementing the waste water temperature

controls, trade waste was cooled by dilution with

additional cooling water. This not only increased the

volume of waste water being sent to the Gippsland

Water Factory, but also increased the mill’s total water

usage and subsequently increased energy costs due to

the cooling of water. In the summer months, up to four

mega litres of water per day was added to cool the trade

waste water.

Three opportunities to reduce temperature, water

use and energy use were identified through auditing

process streams:

1. One stream of very hot and clean water from the batch mill evacuation cyclone previously used in processing was diverted out of the trade waste system into the waste water system. A five cubic metre tank, pump, 160 metres of piping, and associated instrumentation were fitted

2. A small section of piping was redirected and an additionalstreamofacideffluentaddedintotheheatexchange so that heat could then be used to warm another water stream in the system (less steam was used as a result). The heat exchanger was originally bypassedbythiseffluentstreambecauseofconcernsabout scale build up in the heat exchanger. Scale build up is being monitored, and a spare plate pack is now on hand to facilitate changing as required

3. The bleach plant acid heat exchanger was expanded to increase cooling capacity. Extra plates, with associated piping modifications, were installed. This heat was again used to warm the warm water system, reducing steam use requirements.

The outcome of this project was:

• Areductionintradewastetemperatureofupto

6.8 degrees

• Areductionofenergyuseandexpenditure,and

• Areductionofuptofourmegalitresofwateruseper

day in summer months.

environment 25


Purchased electricity accounts for 5% of our total energy

use – equating to 42% of our carbon emissions output.

While this is the first time that direct and indirect energy

usage has featured in our sustainability report, historical

data collated shows that direct energy consumption has

fallen by 4%. This is due to efficiencies achieved through

the increased recovery of black liquor solids. Indirect

energy consumption has increased by around 16% in

2011 due to various factors, including the larger than

usual increase of paper machine downtime. Greenhouse

gas emissions trends are reflected in these figures.

Carbon emissions per tonne of pulp and paper produced

has remained relatively stable.

Improvements in effluent treatment at Shoalhaven

The decision was made to recommission a biological

tank(partoftheeffluenttreatmentplant)todelivera

long term reduction in BOD concentration and load.

This resulted from exceeding the BOD licence limit in

2010,Shoalhavenmillneededtoimprovetheeffluent

management processes. Within two months, an average

of 30% reduction in BOD was evident.

Energy and Greenhouse Gas EmissionsPulp and paper manufacturing is an energy intensive

process. Australian Paper derives energy from renewable

energy and direct energy sources from fossil fuels such

as natural gas, liquefied petroleum gas (LPG), diesel and

petrol. We also purchase electricity, an indirect energy

source, to operate manufacturing, processing and office

sites located around Australia.

Significant progress was made in increasing renewable

black liquor biofuel energy production at Australian

Paper’s Maryvale mill during the reporting year. A 13%

increase in black liquor production since 2010 was the

result of the upgrade of existing evaporating systems at

the mill.

The upgrade has enabled us to produce black liquor

at a higher solids concentration than was previously

possible. This renewable energy source accounts for

49% of our total energy use at our manufacturing sites

and was Australian Paper’s primary source of energy in

2011. Maryvale mill is the largest industrial generator of

base load renewable energy in Victoria.

Note:

•2007and2008dataforblackliquorsolidsreportedinthe2010

sustainability report were underestimated and have been correctly

recalculated for this report using the Australian Government’s National

Greenhouse Accounts Factors workbooks

•BlackliquorisproducedonlyatourMaryvalemill.

26 environment

ton

nes

(‘0

00

)

700

600

500

400

300

200

100

0

black liquor solids – biofuel production

502,372

2007

504,816

Maryvale pulp mill upgrade

2008

598,739

2009

587,874

2010

664,165

2011

Note: Data for Maryvale and Shoalhaven mills only.

In 2012, we will:

• Continuetolookforwaystoimproveenergy

efficiencies throughout our operations.Note:

•DataforMaryvaleandShoalhavenmillsonly

•CO2e – figures reported in the 2010 sustainability report were

underestimated and have been correctly recalculated for this report

using the Australian Government’s National Greenhouse Accounts

Factors workbooks.

environment 27


GJ

(‘00

0)

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

energy use

total energy ‘direct’renewable energy total energy ‘indirect’

Preston data includedfor 2010 and 2011

2008

6,229,413

7,897,714

768,434

2007

6,259,718

8,123,963

788,069

2009

7,424,364

7,905,869

717,315

2010

7,289,638

7,778,797

731,300

2011

8,235,646

7,465,525

852,361

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

CO2-e emissions by energy source

ton

nes

CO

2 -

e p

er t

on

ne

of

pu

lp &

pap

er

gas electricity


0.726

0.289

0.437

2008

0.717

0.292

0.425

2007

0.708

0.269

0.439

2009

0.632

0.265

0..367

2011

0.642

0.239

0.403

2010

sources < 0.01 tonnes CO2-e per tonne of pulp & paper have not been

included in the graph and are provided below

2008 2009 2010 2011

black liquor 0.004 0.005 0.005 0.005

coal 0.002 0.000 0.000 0.000

other 0.004 0.010 0.004 0.004

note:

CO

2-e

ton

nes

(‘0

00

)

500

400

300

200

100

0

direct and indirect greenhouse gas emissions

direct emissions indirect emissions

2008

411,276

265,433

2007

434,930

272,282

2009

411,185

247,583

2010

404,602

243,312

Preston data includedfor 2010 and 2011

389,156

282,963

2011

Note: 2010 and 2011 data includes usage by Maryvale mill,

Shoalhaven mill and Australian Office manufacturing operations

in Preston, Melbourne.

CO

2-e

per

to

nn

e

0.78

0.76

0.74

0.72

0.70

0.68

0.66

0.64

0.62

0.60

CO2-e per tonne of pulp and paper 2011

2008

0.74

2007

0.76

2009

0.72

2010

0.65

2011

0.64

In recognition of successfully transitioning to the NCOS

standard, Mark Dreyfus QC MP, Parliamentary Secretary

for Climate Change and Energy Efficiency visited the

Maryvale mill to award Australian Paper carbon neutral

certification for our range of premium carbon neutral

paper, including Reflex Carbon Neutral and our full range

of carbon neutral office paper, printing and publishing

grades. The award covered both the Maryvale and

Shoalhaven mills.

Waste and Recycling

Waste paper recycling depot, Maryvale Mill, regional Victoria.

We are committed to managing waste responsibly

and use a defined waste hierarchy to minimise waste.

As with most manufacturing processes, generation of

waste is unavoidable, however, what we can do is try to

minimise waste generated, and reuse and recycle the

many different types of waste associated with paper

manufacturing processes. Innovative ways of reducing

waste to landfill by transforming it into other useful

materials has been part of our continuous improvement

process in recent years. In 2011, total waste to landfill

volume decreased by around 8% at our Maryvale and

Shoalhaven mills, continuing a downward trend since

2007. This result is even more impressive given our

production volumes increased over this time.

Transition to National Carbon Offset StandardIn 2011, we successfully transitioned from the Federal

government’s Greenhouse Friendly program to the

National Carbon Offset Standard (NCOS).

This transition allows Australian Paper to continue to

manufacture and sell a wide range of 100% certified carbon

neutral products in accordance with the NCOS standard.

Australian Paper purchases carbon offsets, also known as

abatements, from internationally qualified offset schemes

such as Verified Carbon Standards and Gold Standards.

These schemes are approved by NCOS who also verify

Australian Paper’s purchase of carbon offsets each year.

These offsets are additional to those committed to by

Australia’s national emissions reduction targets under the

Kyoto Protocol. In the reporting year, Australian Paper

invested in greenhouse gas reduction projects from

around the world such as switching high carbon intensity

fuels for a lower intensity (biomass), hydro power, wind

power and converting landfill gases to generate electricity.

In 2011 we saw a slight reduction in CO2-e per tonne of

paper manufactured from 2010, however an increase in

sales of certified carbon neutral grades meant that the

total amount of offsets purchased to achieve zero net

emissions also increased to 41,140 tonnes.

Shaun Scallan, General Manager, Corporate Social Responsibility and Mark Dreyfus QC MP Parliamentary Secretary for Climate Change and Energy Efficiency.

28 environment

Solid Waste Reduction at Maryvale mill

2011 saw the rollout of a solid waste reduction

management plan at our Maryvale mill. The recycling

initiative is part of a longer term solid waste reduction

plan that also includes the recycling of wood fibre waste

into compost material as part of the PineGro initiative,

and also the recycling of other solid inorganic materials

from the paper manufacturing process.

The objectives of the management plan are to:

• Reducetheoverallamountofconsumerand

industrial waste generated throughout the mill going

to landfill by recycling

• Engagewithmillemployeesandcommunicatethe

value of recycling onsite

• Encourageparticipationbyemployeesandbuilda

sense of ownership around the initiative.

Consumer waste (materials brought into the mill)

included glass, paper, plastics, aluminium and stainless

steel, and industrial waste (waste generated in the

manufacturing process) included metal offcuts from the

machine floor and plastic packaging materials.

Information about the solid waste recycling initiative

was communicated to employees through meetings,

notices and newsletters.

The initiative was rolled out in three phases throughout

the three key areas of Maryvale mill:

Phase 1 – Production Areas

Four different coloured 240 litre plastic wheelie bins were

introduced into the production areas of the mill. Each

bin is clearly labelled with the respective waste type to

educate staff members on how the waste is separated, and

encourage the correct separation of waste.

Phase 2 – Machine Floor

Larger tipper bins and skip bins were set up to collect

industrial waste such as metal offcuts and mixed metals.

Waste Hierarchy

Avoidance

Reuse

Recycling

Recovery of energy

Treatment

Containment

Disposal

Note: Data for Maryvale and Shoalhaven mills only

Key waste streams generated across Australian Paper

mills and manufacturing divisions are:

Waste type Disposal method

Total (tonnes)

Recovered fibre waste, sludge (RPS), pine wood fine and bark, eucalyptus wood fines and bark, effluentsolidsrecoverysludgeand sewer and secondary sludge

Composting 44,721

Mixed metals, paper, cardboard, LDPE, co-mingled and plastics

Recycling 3,333

Mixed waste Landfill 34,477

Black liquor solids Recovery 664,164

environment 29


cub

ic m

etre

s (m

³)

120,000

100,000

80,000

60,000

40,000

20,000

0

waste to landfill

total m³/t

m³

/ to

nn

e o

f p

ulp

an

d p

aper


2010

37,295

2011

34,316

2008

84,524

2009

37,437

0.140

0.120

0.100

0.80

0.60

0.40

0.20

0.00

2007

96,303

To improve fibre recovery rate, the cyclone process was

reconfigured simply by changing the separation method,

resulting in more effective separation of dirt from fibre

than the traditional four stage cyclone process.

The rejected fibre is recovered and tested to determine

whether the waste product is suitable for composting.

A certificate of compliance is issued by the mill manager

and sent to a third party to be converted into locally

manufactured compost. Approximately 861 tonnes of

fibre waste material was sent to composting in 2011.

Fibre loss from this production area has dropped from

an average of 0.27 tonnes per day over the previous 18

months, to 0.07 tonnes per day over the 9 month period

to December 2011.

Forming board and foil boxes have also been replaced,

allowing more fibre to be retained during the orientation

and formation of paper.

Shoalhaven mill reached the 3% reduction target six

months ahead of schedule.

Exploring innovative waste to landfill solutions at Maryvale mill

In 2011, Maryvale investigated alternative solutions

to landfill for grits and dregs, a by-product of our

waste stream.

When lime is mixed with green liquor in a lime kiln,

‘grits’ are produced. Maryvale mill explored the option

of using grits as a road stabilisation product, however,

technical results were inconclusive and the project was

economically unviable.

Maryvale mill also investigated the option of grinding

grits and returning them into the manufacturing process

to capture still useful residual lime. This innovative

project is currently in the works approval development

stage with the Environment Protection Authority. Should

the project be approved, a significant reduction in raw

material inputs, and subsequent high recycling rates of

grits will contribute to our ongoing mission to reduce

waste to landfill.

Phase 3 – Offices and Administrative Areas

Smaller bins were introduced into the offices and

administrative areas of the mill. Each of these bins

are labelled with visual aids and instructions that

correspond with the labels and instructions on the

larger 240 litre wheelie bins. Staff members voluntarily

empty the smaller bins into the larger bins.

Key Outcomes

As well as a reduction in solid waste going to landfill,

feedback from staff has been positive and greater

employee engagement has been evident with

employees negotiating the location of bins and

improvement of bin labels over time.

In 2012, we will:

• Workwithsupplierstodeterminewhetherwecan

collect data on both the type and volume of waste

being recycled. Currently only the volume of waste

to landfill is calculated. Collecting data such as waste

type and volume will aid in benchmarking and

provide a better method of waste management so

that accurate future targets for solid waste reduction

can be set.

Over time, Australian Paper’s Maryvale mill hopes to

introduce recycling of up to 20 types of waste generated,

including batteries, rubber, wood, and e-waste.

Fibre Finders Project at Shoalhaven Mill

As part of parent company Nippon Paper Industries’ (NPI)

continuous improvement plan, a review of Shoalhaven

mill’s fibre recovery process was undertaken in 2011, and

a target was set to reduce fibre loss from 5% to 3% by June

2012. The aim of the Fibre Finders project was to increase

fibre recovery rate throughout the Shoalhaven mill.

Separation and cleaning of stock prior to fibres

entering the paper machine was identified as an area

for improvement.

30 environment

Extensive trialling was undertaken within the mill and

the supply chain, including the transporting of product

with the new wrapper to Queensland and back to

Victoria, to test how heat and humidity would impact

the altered technical specifications. A 2.8% reduction in

wrapper size was achieved, which translated to a saving

of 35 tonnes per annum of raw materials used in 2011.

Improving our envelope packaging

The Australian Office division instigated a project to

improve and reduce the amount of packaging across a

range of highest selling envelopes manufactured at our

Preston manufacturing facility.

The project involved an assessment of current envelope

and packaging dimensions to identify potentially too

much air space which could not only compromise the

product and packaging due to inadequate containment

and strength of the cartons but also offer an opportunity

to reduce the amount of packaging materials required.

A smaller carton has been considered as a potential

replacement which reduces the footprint of the

packaging, raw materials, movement and potentially the

amount of damaged goods (products and cartons).

Air EmissionsAustralian Paper is required to report on air emissions to

the Federal Government’s Department of Sustainability,

Environment, Population and Communities. An

annual report is submitted to relevant State authorities

for verification and then forwarded to Australian

Government for annual publication.

Oxides of nitrogen (NOx) and sulphur (SOx) are

produced as a by-product of combusting fossil fuels at

our Maryvale and Shoalhaven mills and can sometimes

cause odour. These air emissions are monitored and

calculated using a guide and sector specific manuals

provided by the Government.

Additionally, the mill is looking for ways to reduce waste

to landfill by washing ‘dregs’. Dregs are the by-product

of insoluble unburned carbon and inorganic impurities

contained in green liquor and are removed in a series

of clarification tanks. This by-product may be suitable

for composting.

The project is currently in the design phase and different

washing options are being evaluated.

In 2012, we will:

• WorkwithMonashUniversitytofindaregional

solution to reduce solid waste at Maryvale landfill.

The university will investigate the possibility of

combining specific by-products from local mining

activities and waste from Maryvale to develop

a buffering component that may assist in the

prevention of leaking metals used by industry.

This project will further reduce waste to landfill.

Progress on these projects will be reported on in 2012.

Innovation in packagingAs a signatory to the Australian Packaging Covenant,

Australian Paper is constantly investigating ways to

reduce the footprint or weight of packaging and to

reduce waste.

We outsource production of two major packaging

components (cartons and wrappers) to Australian

suppliers and partner with them to ensure that the ideal

packaging outcomes for our products are achieved.

Two significant improvements in packaging were

achieved to improve the sustainability of our envelope

and office paper manufacturing in the reporting year.

Wrapper surface area reduction project

Australian Office saw an opportunity to reduce the

amount of raw materials used in the packaging of

Australian Paper A4 manufactured copy paper.

environment 31


Improving Transport Efficiency through Rail

L to R: Jim Henneberry, the Hon Peter Ryan MP, Russell Northe MP, Cr Sharon Gibson, Deputy Mayor of Latrobe City.

Australian Paper looks for the most efficient and

sustainable ways to minimise impacts on the environment

in transporting products around the country.

The construction of a new 15 metre single span concrete

bridge was undertaken to replace a deteriorated wooden

trestle bridge so that a greater volume of paper could be

transported via rail rather than relying on heavy vehicle

transport on local roads. A 5.7 kilometre rail spur line

linking the Maryvale mill to the main Victorian regional

rail line at Morwell has been operational since the

1930’s. Given the critical role rail plays in the overall

uplift and movement of paper volumes from the

mill, the installation of the new bridge was timed to

coincide with a major Maryvale maintenance shut in

February 2011.

Odour complaints occur when certain atmospheric

conditions combine such as the absence of wind

distribution and rainfall occurrence, which makes

odour detectable in surrounding areas. 2011 saw a 34%

decrease in odour complaints from 2010 at our Maryvale

mill. As part of our engagement with the EPA, we have

committed to undertaking odour modelling, measuring

and abatement activities for diffuse odours across the

mill. Pleased with our commitment, the EPA requested

an odour management plan to provide further detail of

our planned activities.

Australian Paper commenced planning preparation

for the odour management plan in late 2011. The plan

lays out processes to measure odours across the entire

Maryvale site and develop a modelling technique

to determine odour impact on the surrounding

Traralgon area.

As part of our partnership with Monash University,

a student from Monash University has been invited

to work on the odour management plan and senior

management has committed to funding allocation

following approval of the plan by the EPA.

In 2012 we will:

• Finaliseandsubmittheodourmanagementplan

to the EPA

• ContinuetomonitorandreportNOx and SOx –

a mandatory requirement of our operating licence

32 environment

ton

nes

800

700

600

500

400

300

200

100

0

NOx and SOx

NOx SOx

683 335

Note: Maryvale and Shoalhaven mills data for 2011 only

Note: Maryvale mill data only

100

80

60

40

20

0

external odour complaints

2007

32

2008

73

2009

20

2010

29

2011

19

com

pla

ints

per

yea

r Maryvale pulp mill upgrade

Packaging design is coordinated with the brand

management teams and includes a review by our Legal

Counsel for any new products or significant consumer

design alterations. This ensures compliance with the

variety of consumer packaging regulations and relevant

certification or licensed logos featured. Great care is

taken to deliver clear messages to our consumers and

business customers.

Television advertising is approved by the Advertising

Standards Board and any communications around the

FSC® is reviewed by the FSC®.

Sales and marketing staff undertake Trade Practices

training every two years to ensure compliance

with legislation.

Product technical information sheets are available for

all food and industrial paper and packaging products.

Australian Paper’s packaging grades undergo regular

testing in an accredited third party laboratory to verify

conformance with USFDA and/or European Regulation

requirements.

Internal systems to manage changes in packaging

are constantly in transition to ensure that customer

expectations are met.

The rail line is integral to transporting paper products

to the Melbourne Export Wharves, Brisbane, far north

Queensland and Perth. Construction of the new bridge

ensured the ongoing availability of approximately

300 train round trips every year between Maryvale

and Melbourne and prevents the need for up to 24,000

additional truck movements on our roads every year.

Had the rail bridge not been upgraded, heavy vehicle

transport would have provided an unsustainable

transport alternative.

The project was supported by Regional Development

Victoria.

The key outcomes of this project are:

• Anincreaseinrailusagebythemill

• Anincreaseinrailvolumestransported(200kt

in 2010 to 250 kt in 2011 – increased production

required increased rail volumes)

• Areductioninpotentialheavyvehicletransporton

local roads

• Areductioningreenhousegasemissions

Key facts:• Theexistingrailoperationsemit~1,634tonnes

of carbon emissions. If this task was conducted

using road transport, carbon emissions would

be~4,906tonnes.

• Railis~33%moreenergyefficientthanroad

transport

• Therailoperationuseslessenergyand

produces less greenhouse gas emissions than

road transportation

Responsible Product LabellingAustralian Office employs a full time Packaging

Development Manager within the marketing function,

with the expertise and skill set required to effectively

liaise with internal functional teams and external

suppliers involved in our robust artwork design and new

packaging development process.

environment 33


Employment terms and conditions 36

Our Workforce 36

Safety 38

Our Safety Performance 38

Development and Training 42

Continuous Improvement at our Mills 43

Employee Benefits 44

Employee Rights 44

Health and Wellbeing 44

Supporting the Community 45

People

We have maintained our formal graduate and

apprenticeship programs, and also explored

opportunities available from closer relationships with

tertiary institutions.

Australian Paper has continued its commitment to

the health and wellbeing of our employees and has

maintained an umbrella of workplace initiatives across

all operations.

Two significant changes occurred at our Australian

Paper’s Australian Office division in 2011. The first

was the closure of Australian Office’s stationery

manufacturing facility in Regency Park, South

Australia and subsequent consolidation of the

manufacturing operation to our Preston manufacturing

site in Melbourne.

The second was the acquisition of the assets and stocks

of local envelope manufacturer Australian Envelopes

which saw Australian Office absorb a portion of the

company’s production capabilities and customers,

significantly expanding our envelope manufacturing

volume. Australian Office also employed 32 Australian

Envelopes employees in 2011, which has proved

extremely beneficial in terms of retaining significant

skills and experience in envelope manufacturing.

An additional 40 employees were hired in 2011 in the

production, overprint, warehousing and sales functions

to meet the associated increase in envelope production

and sales as a result of the acquisition of Australian

Envelopes assets and stocks.

Australian Office worked with unions to achieve the

best possible outcome for the 48 staff affected by

the closure of our Regency Park, Adelaide stationery

operations. Staff were assisted through the provision

of retrenchment payments, outplacement services,

financial advice, government assistance support,

superannuation advice, and assistance in finding work

with other local employers. Regency Park staff were

given two months notification of the closure and

provided with an opportunity to move interstate to the

Australian Office operations in Melbourne. Australian

Office also liaised with local government to seek

guidance on job retraining options.

In this difficult time for the Australian manufacturing

sector, we recognise the very talented people we

have across the business. Innovative ideas are being

generated because our employees have found ways to

be more efficient and work smarter. They have asked

“How can I do things better, more efficiently and more

cost effectively?”, and have consequently responded

with new ideas and processes.

These actions have made a difference to us. Australian

Paper has a loyal employee base with many employees

having worked for the organisation in excess of 30 years.

We formally recognise our employees’ years of service

milestones and are grateful for their ongoing effort

and loyalty.

30 Years Service Australian Paper Employees – 2011. Top row: Neil Geoffery Webb, Craig Mcdonald, Mark Bonnor, Peter Freeman, Darren Trehan. Middle Row: Max Pattinson, Eddy Shankland, Terry Spector, Don Prout. Bottom Row: Gerard Rutjens, David Plant, Peter Henry, Jeff Curtis, Geoff Dorling, Stephen Russell, Neil Donald Webb.

In 2011, Australian Paper has focused on keeping

costs down across the board. Our investment in

employee development has been more focused than in

previous years.

With all vacant positions, the focus has been on how

we maximise the value derived from recruiting for

that position.

The impact of the mining boom and the reluctance of

many experienced candidates to move to a regional

location has meant that we have been consistently

challenged in the retention and recruitment of engineering

and trades related roles to our Maryvale mill.

people

people 35


Non staff employees are covered by collective

bargaining agreements which are usually negotiated for

a period of two to three years.

Conditions covered by our collective bargaining

agreements include wages and allowances,

superannuation, leave, hours of work including shift

work and overtime, redeployment and redundancy,

consultation arrangements around the introduction of

major changes in the workplace, procedures to manage

discipline and grievances or disputes, termination of

employment arrangements, and union right of entry,

amongst other conditions. In the case of significant

operational changes, our policy is to advise all

employees of any major workplace changes as soon as

is practicable after the decision has been made.

81% of Maryvale and Shoalhaven mill staff are covered

by collective agreements (871.7 and 73 employees

respectively). 45% or 125 Australian Office employees

are covered by collective agreements. Traditionally

staff in trades related roles are covered by this type

of agreement.

Staff contracts are in place for remaining non-trades

related roles.

Our WorkforceOur workforce is comprised predominantly of full time

workers, with part time and casual workers making up

less than 1% of the total employment type respectively.

All of our part time and casual staff are female.

Staff and employees in both regional and urban areas

are selected based on their job suitability. Around four

out of ten senior management roles in the Maryvale

Leadership team are filled by long term local employees,

and some of the team who relocated to Maryvale are

now regarded as part of the local community. All of

Shoalhaven mill’s senior management team are filled by

local employees.

Critical in transitioning staff from Regency Park and

Australian Envelopes into the Australian Office Preston

operations was initiating and maintaining a high level of

direct communication with all existing and new staff to

help new employees assimilate to a new environment

and ensure a harmonious positive culture.

In 2012 we will:

• Hireadditionalex-AustralianEnvelopesstaff

to fully support our increase in skilled staff in

paper converting

• Seefurtherconsolidationinourheadoffice,sales

and manufacturing operations to improve our fixed

cost base

• Continuewithtargetedemployeedevelopment

opportunities

• Continuewithourrangeofhealthand

wellbeing initiatives.

Employment terms and conditionsStaff members are financially rewarded in accordance

with fair and equitable principles applied uniformly

across Australian Paper. Staff remuneration reflects the

knowledge, skills and experience the individual brings to

the role and the overall impact their position has on our

business. Remuneration is based on well established job

evaluation principles, and reflects a competitive market

remuneration level. Remuneration for staff is reviewed

annually.

Australian Paper recognises the legitimate freedom of

association rights of our employees to be represented

by the trade union of their choice. As per the provisions

of the Fair Work Act, all employees are advised of the

intention of Australian Paper to enter into negotiations

for an enterprise bargaining agreement and of their right

to be represented by a bargaining representative of their

choice. A registered trade union is the default bargaining

representative of any employee who is a member, unless

that member elects to be represented by someone else.

The obligation on Australian Paper and a bargaining

representative is to bargain in good faith.

36 people

people 37


Note: 48 members of Australian Office staff turnover due

to Regency Park closure

500

400

350

300

250

200

150

100

50

0

900

800

700

600

500

400

300

200

100

0

1200

1100

1000

900

800

700

600

500

400

300

200

100

0

1200

1100

1000

900

800

700

600

500

400

300

200

100

0

60

55

50

45

40

35

30

25

20

15

10

5

0

70

60

55

50

45

40

35

30

25

20

15

10

5

0

position type by gender

employees by region and gender

employment type

new hires

employee turnover by gender

no

. of

emp

loye

esn

o. o

f em

plo

yees

no

. of

emp

loye

es

no

. of

emp

loye

esn

o. o

f em

plo

yees

executives

staff contract

collective agreement

NSW australianpaper head

office

australianpaper head

office

maryvalemill

maryvalemill

shoalhavenmill

shoalhavenmill

australianoffice

australianoffice

managers

QLD

profes-sional

SA

administra-tion

VIC

sales staff

WA

service staff

53

1

16

2

46

9

98

2

4

3

15

2

3

5

6

32

16 30

59

192

2 11

10

10

1107

882 343

43

51

19

21

109

48

95

67

16

941

male female

male female

male

female

male

female

male

female

no

. of em

plo

yees (service staff

on

ly)

Formal agreements ensuring the best health and safety

conditions for our employees identified in our 2010

report are current and continue with the Construction,

Forestry, Mining and Energy Union (CFMEU),

Australian Manufacturing Workers Union (AMWU),

Communications, Electrical and Plumbing Union (CEPU)

and the National Union of Workers (NUW).

No fatalities occurred at Australian Paper in the

reporting year.

SafetyOur management approach to safety applies to all

Australian Paper activities and operations, whether

at our Maryvale and Shoalhaven mills, our Australian

Office manufacturing and warehousing facilities or

our customer service centres. Core to our strategy to

improve safety across the business are our efforts to:

• Promoteazerotolerancetoinjury,nomatter

how minor

• Embedsafetyintheoperationalculture

• Ensurethatallemployeesareeducatedonsafework

practices and comply with all relevant policies

• Ensurethatalllevelsofmanagementunderstand,

respect and act in a manner that recognises their

accountability for ownership and implementation of

our safety systems

• Systematicallytransferknowledgegainedinonearea

of business to another where the same knowledge

and experience can be learnt from

• Establishasystems-drivenproactiveapproachto

replace prescriptive reactionary approaches

• Regularlyprovidearobustandobjectiveanalysisof

site safety systems

• Demonstratethatonsitestaffexposedtohazards

understand the nature of those hazards and know

how to effectively implement corresponding

control measures.

Our Safety PerformanceAustralian Paper’s safety performance has continued

to improve in 2011, with reductions in both Lost Time

Injury Frequency Rate (LTIFR) and Medically Treated

Injury Frequency Rate (MTIFR). All Australian Paper

employees are represented in formal joint management-

worker health and safety committees that help monitor

and advise on occupational health and safety programs.

Every employee has access to attend or have

representatives (HSR) to attend the committee or Safety

Cells, including employees contractors and suppliers.

Note:

•LTIFR/MTIFRfigurespresentedinthe2010reportwerecalculated

incorrectly and have been amended accordingly in the above table

•DatarepresentsMaryvaleandShoalhavenmills,andPreston

manufacturing operations

•CalculationofMTIFRis:

[(MTIs + LTIs) ÷ hours worked] × 1,000,000

•Datadoesnotincludecontractorinjuries

Safety at Maryvale mill

The mill’s LTIFR remained relatively unchanged from

2010, although MTIFR was below target and down by

26%. The mill’s first aid injury frequency rate decreased

by 7% and 12 month average daily injury rate decreased

by 10%. 56.7% of days (207 days) in 2011 were injury free.

38 people

30

25

20

15

10

5

0

lTIFR & MTIFRlo

st h

ou

rs

mtifr ltifr

2007

25.0

21.3

4.7

2008

24.8

19.9

4.9

2009

24.4

18.4

6.0

2010

22.7

16.4

6.3

2011

19.5

13.7

5.8

Safety at Shoalhaven mill

Shoalhaven mill’s safety performance improved in 2011,

however, still requires more work to improve safety

performance in the future. The fatality at our Shoalhaven

mill reported in 2010 remains with Work Cover NSW. The

OHS committee at Shoalhaven mill continues to operate

with initiatives to improve employee safety discussed at

meetings every four weeks.

Key safety initiatives at our Shoalhaven mill in 2011

included:

• Reviewofworkingatheightsandcompletionof

upgrades to the paper machine

• Completionofajointinvestigationactionplan

• Partialcompletionof(tobecompletedin2012):

— Achieving separation of people and mobile

equipment where practicable

— Implementing a permit to work system

— Completion of safe lifting upgrades

— Implementation of a cardinal rules, fair treatment

model and safety charter

— Implementation of a drug and alcohol policy

In 2012, Shoalhaven mill will:

• Finaliseatrafficmanagementplan

• Implementadrugandalcoholpolicy

• Commenceemployeeandcontractorinduction

program

• Finaliseandimplementanewpermittoworkprocess

• CommenceTPMimprovementandareabasedteams

in the finishing department

In 2011, Safety Cell groups and Toolbox training at

our Maryvale mill identified gaps in safety including

greater site wide availability to portable defibrillators in

case of emergency. Three units were purchased and

placed with shift managers, enabling swift emergency

treatment if necessary.

Key safety initiatives for 2011 at our Maryvale mill

included:

• Directcommunicationwithsupervisorsonsafety

leadership responsibilities

• CompletionoftwodayOHStrainingformanagers

and supervisors

• ContinuationofWorkersAdoptingSafePractices

(WASP) and Take 5 Steps behavioural safety programs

• TrainingandHighRiskLicencerecordsweremade

available to staff on the intranet

• Identificationandselectionofintegratedsafety

workflow management software

• Standardisedsitewidetrafficmanagementachieved

• Simplificationofemergencymanagementplan

• SimplificationofMajorHazardousFacility(MHF)

Safety Case in preparation for five year WorkSafe

approval process.

In 2012, Maryvale will:

• Undertakesafetyspecificcontractorinspections

• Implementacontractorsafetymanagementsystem

and plant improvement plans

• ConductPersonalProtectiveEquipmentandManual

Handling risk reviews

• Developanareatrafficmanagementplan

• Reviewdangerousgoodsmanagementprocesses

• Developanalcoholanddrugspolicydesignedto

support and inform employees about managing

alcohol and drugs with relation to the workplace

• UndertakeMajorHazardousFacilityLicencerenewal

with WorkSafe

• Rolloutanemergencymanagementplan

• Reviewleadingindicators

• ContinueWASPandTake5Stepsbehavioural

safety programs.

people 39


Safety at Australian Office

Each year at our Australian Office manufacturing

facility, site training plans are developed by the Safety

and Operations team ensuring the continued safety of

our employees.

Of note in 2011, Australian Office successfully relocated

10 stationery machines from Regency Park SA to the

Preston site. The process was managed internally

with the use of our engineering team as well as some

selected specialist contractors. A comprehensive Job

Safety Analysis and permit to work process was used to

manage the project safely and was completed without

incident or injury.

In 2012, Australian Office will:

• ReviewandimplementNationalOHSLegislation

against current systems

• Continuehazardriskreductiononmachinery,

manual handling and noise

• Commenceelectricalsafetyreviewproject

• AchieveadditionalOHSsupportbyemployingan

additional OHS professional

Notes:

•AllMaryvaleinjuriesreceivedbymales

•Shoalhaveninjuriesincludesbothmalesandfemales

•86%ofestimateddayslostatPrestonmanufacturingoperations

represent two long term injuries

•StatisticsarerecordedasperAS1885.1–1990requirements

•Estimateddaysrefertoscheduledworkdays,startingthenextfullday

of lost time

•Injuriesincludefirstaidlevelinjuries

40 people

tota

l nu

mb

er o

f in

juri

es

300

250

200

150

100

50

0

estimated days lost

43

prestonmanufacturing

maryvalemill

shoalhavenmill

9 241

tota

l nu

mb

er o

f in

juri

es

375

350

325

300

275

250

225

200

175

150

125

100

75

50

25

0

mill injury count

363

2009 2010 2011

351 322

shoalhaven prestonmaryvale

Case study – Creating and Maintaining a Safety Frame of Mind

One of Maryvale’s small project teams reflected on the

dilemma of how to keep employees engaged with safety

messages – particularly employees that have been absent

from work from a small period of time to a larger length

of time.

The team noticed that safety posters seemed to lose

impact after 14 days. The solution was simple and effective:

• Avideodisplayunithasbeenplacedatthetwo

pedestrian entrances. The unit displays safety posters

from the mills collection of over 200 posters and

safety video commercials from WorkSafe Victoria and

WorkSafe BC. The video display unit runs 24 hours

a day, seven days a week and is designed so that

employees and contractors will never see the same

group of posters or commercials for at least a 12

month period with exception of every second poster

showing icons of basic safety knowledge.

• Avideodisplayunitwasalsointroducedatthe

entrance of the main meeting room site canteen

where additional exposure of safety messages

is ensured

• Thesafetyposterisfrequentlychangedsothatitis

rarely seen twice

• Thefrequencyofaparticularsafetyaspectis

repeated to aid message recall

The initiative has overwhelmingly received positive

feedback from visitors, tradespeople and Australian Paper

staff, and an increase in compliance to actions such as

wearing mandatory eyewear protection when entering and

leaving the site has been evident.

Case Study – Personal Protective Equipment Trials at Maryvale millIdentifying appropriate Personal Protective Equipment

(PPE) for a job can be a challenging task, often made more

so by having to convince sometimes reluctant staff to

wear and properly use safety gear. Maryvale mill’s Safety,

Health and Environment team consulted with staff to trial

appropriate PPE with the aim of reducing the exposure to

risks created by performing potentially at risk tasks.

In the recovery operating area, it was found that the stoking

of boilers was still resulting in carryover particles entering

the operator’s eyes, even with double eye protection. To

counteract this, a new face shield with a built in wrap

around guard was sourced and has proven to be very

successful in reducing particle exposure and is now a store

item. The team has also trialled a battery operated LED

light vest for staff that move around in high vehicle traffic

areas and between rows of paper reels. The trial is proving

successful with greater visibility of the staff member to

clamp truck drivers entering the area. A vest being trialled

by our waste water operators is a luminous vest that takes

the light from any source and charges the vest so that it

produces a green glow for up to 12 hours.

High Visibility PPE (personal protective equipment).

people 41


Development and TrainingAlthough 2011 saw an overall decrease in the provision

of formal employee development programs, Australian

Paper staff continued to be supported in ways such

as on the job training, mentoring, and subsidised

membership to relevant organisations.

Australian Paper also provides valuable on the job

training by providing trades related apprenticeships

and opportunities for university students to work at our

Maryvale mill.

Employees that would like to undertake further studies

in relevant fields may be reimbursed a portion of

costs, as we see a strong benefit in encouraging career

potential and subsequent learnings can be utilised

throughout our operations. Studies are linked with

employee succession and development plans.

Young engineers are nurtured through our Early Career

Development Program where participants present

projects to senior management, and a structured

Graduate Program is offered to graduates prior to their

settling into a formal role within Australian Paper.

Throughout 2011, Australian Paper established a focus

on succession planning, with management teams

meeting to develop or review succession plans. An open

forum has been created to assist in the training and

career development of key talent within the company.

At our Australian Office division, a number of graduates

have been hired in the Customer Service department

with a vision to work their way up the ranks of the

business. A relationship with the Australian Institute

of Management has been developed with a view to

sending staff on Leadership training and to eventually

obtain a formal qualification.

Trade practices training is completed each year for all

new sales staff, and OHS training is a regular feature at

our mills and factories.

Annual performance reviews throughout Australian

Paper are conducted for those on staff contract.

Employees on collective bargaining agreements do not

participate in the annual performance review process.

In 2012, we will:

• Createatalentcouncilmadeupofseniorexecutives

to oversee Australian Paper’s training and succession

plans.

Transition to Climate Change program

Australian Paper continues to manage the Transition to

Climate Change program in partnership with Monash

University Gippsland campus. Improvements in Life

Cycle Assessment documentation and reporting was the

focus of the program for 2011.

Apprenticeships

Maryvale mill offers apprenticeships in electrical/

instrumentation, mechanical fitting and boiler making.

In 2011, the mill took on four new apprentices, bringing

a total of 20 apprentices onsite throughout various

stages of their apprenticeships.

Partnership with Swinburne University – graduate opportunities for students

Maryvale mill has for many years employed graduates

from the process, mechanical and electrical engineering

disciplines through our structured graduate program.

The mill provides a sound training base for students

and many of our managers today began as graduate

engineers at Maryvale.

Two undergraduate mechanical students were taken

on at Maryvale mill in 2011 for 12 months as part of a

partnership with Swinburne University and the Industry

Placement program. The students have since returned

to University to complete their final year of study.

Their performance was so valuable that a graduate

opportunity has been offered to them starting in 2013.

Australian Paper has offered to reimburse student’s

final year course fees subject to them receiving a credit

or higher in each of their subjects and successful

completion of their degree.

42 people

Continuous Improvement at our Mills

Small Group Activities at Maryvale mill

Small Group Activities (SGA) is a continuous

improvement program characterised by a small group

of employees working together to investigate problems

and implement solutions in their work areas. SGA is

practiced at Nippon Paper Industries (NPI) paper mills

around the world.

Projects can be diverse and range from simple projects,

such as fitting sprays on the paper machine for good

housekeeping to more complex issues such as changing

entireprocessestoreducenegativeeffluentimpacts.An

SGA conference is held once a year at the Maryvale mill,

where teams compete to win an award. Projects are

presented to the management team, with the winning

team invited to attend and present at the NPI SGA

conference in Japan.

Apart from the continuous improvement benefits

to the business, the overwhelming feedback is that

employees enjoy being involved in the SGA teams. An

immediate benefit is usually seen by all staff working in

the area because the solutions are practical ideas they

themselves have developed and implemented.

“SGA activities have really

focused us as a team.

Everyone owns their

continuous improvement

project which becomes part of

how we operate, and part of our

culture. SGA has contributed

to embedding change through

improving process”, said

Bruce Stringer, Maintenance

Support Manager, Maryvale.

Maryvale Mill, regional Victoria.

people 43


Employee RightsAustralian Paper recognises the importance of laws

around equal opportunity in employment, which

includes areas such as sexual harassment and bullying.

Our policies and procedures go beyond legislative

requirements. No incidents of discrimination were taken

in the reporting year.

At our Australian Office division and Maryvale mill,

equal opportunity and regular information sessions

are included in the induction process for new staff, and

existing staff receive equal opportunity training sessions

delivered online and in a face-to-face environment.

Face-to-face training is held every two years.

Shoalhaven mill provides equal opportunity training

upon induction, and then once every four years.

Health and WellbeingAustralian Paper continues to have a strong

commitment to supporting the health and wellbeing of

employees. Investing time and resources in this area is

integral to maintaining a happy and healthy workforce

and reinforces a positive culture throughout the

company.

Throughout 2011, Work Health Checks were completed

at Australian Office through which some employees

were identified at high risk of developing diabetes.

A follow up diabetes program was run for at risk

employees at our head office.

Melanoma checks were also conducted at Australian

Office and Maryvale mill with the outcome that 17

mill employees and four Australian Office employees

were referred to their general practitioners with

recommendations for further biopsy or excision.

Flu vaccinations are offered in Maryvale mill and

Australian Office operations every year and Australian

Paper employs a physiotherapist to look after

staff wellbeing and assist in induction, workplace

assessments and rehabilitation. Subsidised gym

memberships are offered to Australian Office employees.

Caring for Equipment though TPM at Shoalhaven millAs part of Shoalhaven’s Total Productive Maintenance

(TPM) improvement program, work commenced on

improving the Work Area Management and Operator

Equipment Management (OEM) process on the Winder

4 machine. Shoalhaven shift teams commenced project

based on-the-job training to better care for their

equipment and workplace area.

A key outcome from improving this process is that

Shoalhaven will have a workplace that is failure-free

– with no breakdowns, trouble-free – with no quality

problems, and safe – no accidents or incidents.

An extra benefit of the training was that team members

were also offered the opportunity to up-skill by

completing a module in Certificate III in Competitive

Manufacturing: ‘Contribute to the application of a

proactive maintenance strategy’. 12 employees have

since taken up this opportunity.

Employee BenefitsIn addition to training and development opportunities

at Australian Paper, employees enjoy a number of extra

benefits such as novated car leases and cost effective

mobile phone plans.

Australian Paper supports worthwhile community

service and allows authorised leave to employees

participating in a voluntary emergency management

activity or jury service.

As part of Australian Paper’s attention to work-life

balance for employees, flexible working arrangements

are available to assist employees in providing care for

a child and also in helping those that are making the

transition to retirement. Australian Office assists women

coming back into the workforce after maternity leave by

providing an opportunity to work part-time until they

are ready to return in a full-time working capacity.

44 people

Australian Paper continues to be part of the Global

Corporate Challenge where employees are encouraged

to participate in a 10,000 steps a day walking health

initiative.

Shoalhaven mill promotes the ‘Get Healthy’ program

to employees – a state government health service

initiative. The program provides information and

coaching services including learning healthier eating

habits, learning to be more active, making healthier

choices, receiving expert personal coaching and advice

on maintaining a healthy weight. With the majority of

Shoalhaven employees engaging in shift work and also

getting older, promoting the program is important to

encourage an active, fit and healthy lifestyle.

Shoalhaven’s Employee Assistance Program is offered

to employees and their family who may need assistance

with work pressures, relationship problems, family

problems, grief and bereavement, stress, separation,

divorce or addictions. The program is confidential and

provided free of charge.

A similar program has run at Australian Office and at

our Maryvale mill for many years. General health and

wellbeing advice is also communicated to employees

through the intranet.

Supporting the CommunitySocial license to operate within communities places a

substantial influence in shaping the way we support

worthwhile causes, projects and communities in our

regional and urban locations.

The Maryvale Sponsorship Committee looks for

sponsorship opportunities that encourage youth in

our community. Each year, the committee supports

a wide variety of causes which include school award

nights, kinder programs, football clubs, netball

clubs, Art Festivals, Bonfire nights and camps for the

disadvantaged.

To support Monash University Gippsland campus

students, some of the committee’s larger sponsorship

activities include providing cash prizes to Bachelor of

Business and Commerce accounting students in the

categories of highest achievement for first and second

year students, and also most outstanding graduate

student.

Shoalhaven mill sends paper to the Flagstaff Group

for collation into multi-coloured packs which are then

bagged and boxed. The Flagstaff Group is a not for profit

organisation which provides meaningful employment

opportunities for people with a disability. The mill also

donates paper to local schools and community groups

for use in various activities.

Australian Paper continues to house the Maryvale CFA

Fire Brigade, the KIDS Foundation, the Doxa Youth

Foundation and the Breast Cancer Network Australia.

Maryvale mill’s support of the KIDS Foundation

specifically supports local Gippsland schools and

programs.

A new community initiative for 2011 was Maryvale

mill’s support of Variety, the Children’s Charity. The mill

provided an opportunity for 20 local disadvantaged

children to attend a special Christmas party at the

Melbourne Exhibition Centre organised by Variety, the

Children’s Charity. Children were allowed to experience

Christmas, something which some of them have never

had the opportunity to do.

people 45


Maryvale Open Day

Around 1800 visitors attended the Maryvale mill Open

Day in March, taking advantage of a bus tour through

the site. Over 100 Maryvale mill, Australian Paper head

office staff, mill staff family members and companies

associated with the mill volunteered their time. Planning

for the huge event occurred for more than six months

prior to the open day by a Committee comprised of

11 Maryvale mill employees who were in charge of

advertising, logistics, tours and event entertainment.

Many companies donated either money (a total of

$10,200 was raised), prizes and other items needed for

the day such as toilet hire, power generators and water

stations.

All 1800 visitors took a walk along the Paper Machine

No.5 and into the Finishing Converting area to watch

how Reflex is produced with the use of the robotics

in action.

All involved sat through a mandatory site induction, after

which they received a stamp and a slip of paper that

entitled them to purchase a ream of paper for a gold

coin donation. All donations were presented to Lifeline.

Over the 1 ½ hour tour, visitors viewed the harvesting of

a tree, were taken through and around the wood-lines,

past the Batch Mill and Power Recovery area before

stopping at the stairs outside the No.5 Paper Machine

Wet End. Visitors then walked along the Machine floor

from the Wet End down past the Dryers and to the

Winder before entering the Finishing Converting area

across the road. Here they were taken along past the

CSS3 & CSS5 lines to watch how a ream of paper is

made, wrapped and boxed. The robotics were a major

draw card especially with the children who were

fascinated.

One of the most popular activities was the Paper Making

Tent where children were shown how a piece of paper

is made with portable paper making kits and then had

a chance to decorate their paper. The Nippon Paper

tent also proved popular where donations for the Japan

disaster were received.

One of numerous childrens’ activities, Maryvale Mill Open Day, March 2011

46 people

Eco nomic

Our economic performance 48

Economic impacts in the local economy 48

Local procurement 48

economic

Economic impacts in the local economyAustralian Paper continues to be a significant

contributor to the local, regional and national economy.

In 2012 we will undertake an independent study that

will provide a detailed report on our economic impacts

in Maryvale and Shoalhaven as well as state and national

economy. Key findings of the study will be made

available via our Corporate website,

www.australianpaper.com.au

Local procurementAustralian Paper continues our preference for ‘buying

local’. While Australian Paper does not have a formal

policy around engaging Australian based suppliers,

our practice is to select local suppliers based on

their competitiveness. Where significant purchases

of material inputs into our paper making process

are required, suppliers are required to complete a

questionnaire which addresses environmental, safety,

diversity and corporate responsibility issues.

Around 90 – 95% of our procurement budget in 2011

was spent on Australian suppliers.

Our economic performanceAustralian Paper’s economic performance in 2011

was adversely impacted by the general downturn

experienced by the Australian manufacturing sector.

Our revenue consequently decreased from the

previous reporting year. Australia’s strong currency

also negatively impacted our export markets. We hope

to see a turnaround in the next reporting year in our

efforts to meet an increased demand by customers for

Australian made, certified, recycled and carbon neutral

products. Many growth opportunities exist for us, in

particular the acquisition of Australian Envelopes, which

now positions Australian Paper as Australia’s largest

manufacturer of envelopes.

Our continuous improvement strategies to reduce cost

by improving efficiencies throughout Australian Paper

operations will also make a difference to our bottom line.

Throughout 2011, we continued to support local

communities and made voluntary donations and

contributions totalling $228,000.

Description FY10 $’000

FY11 $’000

Direct economic value generated

a) Revenues Net sales (gross sales from papers less returns, discounts & rebates)

876,260 781,036

Economic value distributed

b) Operating costs Payments to external suppliers for materials, facilities and services, royalties, contractors, employee training costs, OHS costs etc

(720,995) (678,013)

c) Employee wages and benefits Outflows related to employees’ wages, welfare, benefits, FBT excluding contractors

(131,678) (127,461)

d) Payments to providers of funds Payments of interests to loan providers (6,623) (6,114)

e) Payments to government Income taxes exclude deferred taxes 0 0

f) Community investments Voluntary donations and contributions to educational programs

(233) (228)

Total Economic value distributedEconomic Value Retained

Direct economic value generated less Economic value distributed

(859,529)16,731

(811,816)(30,780)

* Reclassification of $719,000 listed as payments to government in 2010 into operating costs has occurred in line with GRI reporting requirements

48 economic

glossarygrits A by-product in the paper manufacturing process when

lime is mixed with green liquor in a lime kilnheat exchanger A process unit designed to allow energy to flow from a

hotter fluid to a cooler fluidindirect energy Emissions that result from activities that are generated

at sources owned or controlled by another organisation e.g. electricity that is imported and consumed

ISO 14001:2004 An international standard that specifies the requirements of an environmental management system (EMS)

ISO 14021:2000 An international standard that sets out requirements for environmental labels and declarations such as environmental claims made for goods and services by the producer

ISO 31000 An international standard that provides principles, framework and a process for managing any form of risk in a transparent, systematic and credible manner

ISO 9001:2008 An international standard for quality managementIUCN Red List The IUCN Red List of Threatened Species™ provides

taxonomic, conservation status and distribution information on plants and animals that have been globally evaluated using the IUCN Red List Categories and Criteria

Kyoto Protocol An international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries for reducing greenhouse gas (GHG) emissions

landfill An area of land or an excavated site that has been designed and built to hold waste

LDPE A plastic commonly used in packaging – low density polyethylene

Major Hazardous Facility (MHF) license

Facilities that have the potential to cause major accidents

Mega-litre One million litresNATA certified National Association of Testing Authorities. NATA

accreditation provides a means of determining, formally recognising and promoting the competence of facilities to perform specific types of testing, inspection, calibration, and other related activities.

National Carbon Offset Standard (NCOS)

The standard serves two primary functions – it provides guidance on what is a genuine voluntary offset and sets minimum requirements for calculating, auditing and offsetting the carbon footprint of an organisation, product or event to achieve ‘carbon neutrality’

NOx Nitrogen oxides, produced during combustionPersonal Protective Equipment (PPE)

Any clothing, equipment or substance designed to protect a person from risks of injury or illness.

plantation wood Large crops of harvestable timber that planted specifically for the timber industry

Programme for the Endorsement of Forest Certification (PEFC)

PEFC is the world’s largest forest certification system

pulp Fibrous material in suspension. In papermaking it is usually wood pulp suspended in water with up to 90% solids content

raw water Ground or surface water that is taken directly from its source without treatment

recycled fibre Fibre that has been reclaimed from a previous product and reprocessed and incorporated into a new product. Sources of fibre for recycling may be reclaimed pre-consumer or reclaimed post-consumer material

recycled water Recycled water is usually treated wastewater which is further treated to varying qualities that is “fit for purpose” for its intended use

re-engineered waste

Waste that is turned into a useful product

renewable energy Any naturally occurring, theoretically inexhaustible source of energy, such as biomass, solar, wind, and power that is not derived from fossil or nuclear fuel

RPS Recovered Paper Solids. At Australian Paper, the solid wastegeneratedfromtheon-siteeffluenttreatmentplant, including fibrous and filler waste from the paper machine and biomass waste from the treatment plant

SOx Sulphur is an invisible gas produced by industrial activity

trade waste water Liquid waste (and liquids containing waste solids) from industrial processes

Victorian Biodiversity Atlas

A web-based information system designed to manage information about native and naturalised species occurring in Victoria

acideffluent Industrial waste water that is acidicAS 1301 Australian Standard to test methods for pulp and paper

(conditioning paper for testing)AS 4801 Australian Standard that specifies requirements for an

occupational health and safety management system (OHSMS), to enable an organization to formulate a policy and objectives taking into account legislative requirements and information about hazards or risks

Australian Forestry Standard (AFS)

Australian standard for forest management that incorporates economic, social, environmental and cultural criteria and requirements for wood production

Australian Packaging Covenant

The Covenant is a voluntary initiative by the Australian Government and Industry to reduce the environmental effects of packaging

biofuel Fuel derived from organic matter (obtained directly from plants, or indirectly from agricultural, commercial, domestic, and/or industrial wastes) instead of from fossil products

Biological oxygen demand (BOD)

Standard method for indirect measurement of the amount of organic pollution (that can be oxidized biologically) in a sample of water

black liquor The liquid material remaining from pulpwood cooking in the soda or sulphate papermaking process

bleach plant Process plant which brightens a feed material by chemical processes, usually in multiple stages

carbon emissions Carbon compounds released as gases into the atmosphere

carbon neutral An organisation, product or service that is responsible for zero carbon emissions as defined by a certified scheme for a specified period of time

carbon offsets Abatement of atmospheric carbon compound concentration which is achieved by reducing or avoiding emissions or removing carbon compounds from the atmosphere

Chain of Custody The process of tracking wood and forest products originating in certified forests through all phases of ownership, transportation and manufacturing from the defined forest area to the final product and delivery to the end consumer

Chemical oxygen demand (COD)

The standard method for indirect measurement of the amount of pollution (that can be oxidized chemically) in a sample of water

compost A mixture of decaying organic matter used to improve soil structure and provide nutrients

controlled wood Virgin wood or wood fibre which has been verified as having a low probability of including wood from any of the following categories:

a) Illegally harvested wood;

b) Wood harvested in violation of traditional and civil rights;

c) Wood harvested in forests in which high conservation values are threatened by management activities;

d) Wood harvested in forests being converted from natural and semi natural forest to plantations or non-forest use;

e) Wood from forests in which genetically modified tress are planted

coupe An area of forest with established boundaries which has been set aside for commercial forestry activities

de-inked pulp Paper pulp produced by deinking of recovered paperdirect energy Emissions from sources that are owned or controlled

e.g. burning fuel for energy within an organisation’s operational boundaries

dregs A by-product of insoluble unburned carbon and inorganic impurities contained in green liquor

Environmental Choice New Zealand

A government owned environmental labelling program in New Zealand

Foil box Process element which hold multiple foils in a suitable orientation to generate desirable flow of a fluid

Forest Stewardship Council®

FSC® is an international network to promote responsible management of the world’s forests

Forming board Process element in a paper machine which retards initial drainage of water through a forming fabric

Global Forest and Trade Network

The GFTN exists to support and facilitate greater coordination of national and regional efforts to expand responsible and credibly certified forest management,

green liquor The liquor that results when the inorganic smelt from the recovery furnace is dissolved in water

greenhouse gas emissions

Greenhouse gases are those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at specific wavelengths within the spectrum of thermal infrared radiation emitted by the Earth’s surface, the atmosphere itself, and by clouds

glossary 49


Full or partial

reportingPage

Number

4.7 Process to determine members of board and executive committee

Full 15

4.8 Values, codes of conduct, and principles relevant to economic, environmental, and social performance

Full 16

4.9 Procedures of the board and executive committee to identify and manage economic, environmental, and social performance, including relevant risks and opportunities

Full 15

4.10 Processes for evaluating the board and executive committee’s own performance

Full 15

4.11 Precautionary principle Full 23

4.12 Commitments to externally developed economic, environmental, and social charters, principles, or other initiatives.

Full 11

4.13 Memberships Full 9

4.14 Stakeholder groups engaged by the organisation

Full 10

4.15 Basis for identification and selection of stakeholders

Full 10

4.16 Approaches to stakeholder engagement

Full 10

4.17 Key stakeholder topics and concerns Full 10-12

Disclosures on Management Approach

Economic performance Full 3, 35

Market presence Full 36

Materials Full 21

Energy Full 21

Water Full 24

Biodiversity Full 23

Emissions,effluentandwaste Full 24

Products and services Full 21

Transport Full 32

Environment overall Full 21

Employment Full 36

Labour/management relations Full 36

Occupational health and safety Full 38

Training and education Full 42

Local communities Full 45

Investment and procurement practices Full 48

Non-discrimination Full 44

Product and service labelling Full 33

Full or partial

reportingPage

Number

Strategy and Analysis

1.1 Statement from the CEO Full 2-3

1.2 Key impacts, risks, and opportunities Full 2-3, 13, 17-19

Organisational Profile

2.1 Name of the organisation Full Front

2.2 Primary brands, products, and/or services

Full 7-9

2.3 Operational structure Full 8

2.4 Location of headquarters Full 7

2.5 Countries located Full 8

2.6 Nature of ownership and legal form Full 8

2.7 Markets served Full 7

2.8 Scale of the organisation. Full 7

2.9 Significant changes during the reporting period

Full 3

2.10 Awards received in the reporting period

Full 9

Report Parameters

3.1 Reporting period Full 6

3.2 Date of most recent previous report Full 6

3.3 Reporting cycle Full 6

3.4 Contact details Full 53

3.5 Process for defining report content Full 6, 10, 12

3.6 Boundary of the report Full 6

3.7 Limitations on the scope or boundary of the report

Full 6

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities

Full 6

3.9 Data measurement techniques Full 6

3.10 Re-statements of information provided in earlier reports

Full 6

3.11 Significant changes from previous reporting periods

Full 6

3.12 Standard Disclosures table Full 50-51

3.13 Current practice around external assurance

Full 6

Governance, Commitments and Engagement

4.1 Governance structure Full 15

4.2 Chair of the highest governance body

Full 15

4.3 Members of the highest governance body

Full 15

4.4 Mechanisms for shareholders and employees to provide recommendations to the highest governance body

Full 15-16

4.5 Compensation for members of the board and executive committee

Full 15

4.6 Processes to address conflicts of interest

Full 15

GRI content index

50 GRI content index

Full or partial

reportingPage

Number

Labour Indicators

LA1 Total workforce by employment type and contract, region and gender

Full 36-37

LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region

Partial 37

LA4 Percentage of employees covered by collective bargaining agreements

Full 36

LA5 Minimum notice period(s) regarding significant operational changes and inclusion in collective agreements

Full 35-36

LA6 Total workforce represented in formal joint management-worker health and safety

Full 38-39

LA7 Rates of injury (LTIFR & MTIFR) and work-related fatalities

Full 38, 40

LA8 Education, training, counselling, prevention, and risk-control

Full 44-45

LA9 Health and safety topics covered in formal agreements with trade unions

Partial 38

LA11 Programs for skills management and lifelong learning of employees

Full 35, 42

LA12 % of employees receiving regular performance and career development reviews by gender

Partial 42

Society Indicators

SO1 Impact of operations on local communities

Full 10-12 14, 45

Human Rights Indicators

HR3 Employee training on policies and procedures concerning aspects of human rights

Partial 44

HR4 Number of incidents of discrimination and actions taken.

Full 44

Product Responsibility Indicators

PR3 Type of product and service information required

Full 33

PR6 Adherence to laws, standards, and voluntary codes related to marketing communications

Full 33

Full or partial

reportingPage

Number

Economic Indicators

EC1 Direct economic value generated and distributed

Full 48

EC6 Policy, practices, and proportion of spending on locally-based suppliers

Full 48

EC7 Procedures for local hiring including senior management

Full 36

Environmental Indicators

EN1 Materials used by weight or volume Full 21-22

EN2 Percentage of recycled input materials

Full 22

EN3 Direct energy consumption by primary energy source.

Full 26-27

EN4 Indirect energy consumption by primary source.

Full 26

EN5 Energy saved due to conservation and efficiency improvements.

Full 25-26

EN8 Total water withdrawal by source Full 24

EN11 Land with activities in areas of high biodiversity value

Full 23

EN13 Habitats protected or restored Full 23-25

EN14 Strategies for managing impacts on biodiversity

Full 23

EN15 IUCN Red List species in areas affected by operations

Partial 23

EN16 Total direct and indirect greenhouse gas emissions by weight

Full 27

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved

Partial 26

EN20 NOx, SOx, and other significant air emissions

Full 31-32

EN21 Total water discharge by quality and destination

Partial 24-26

EN22 Total weight of waste by type and disposal method

Full 28-29

EN23 Total number and volume of significant spills

Full 25

EN26 Initiatives to mitigate environmental impacts of products and services

Full 29-31

EN29 Significant environmental impacts of transporting products

Partial 32-33

GRI content index 51


GRI application level check

52 GRI application level check

production notesPaper

When printing this report we recommend printing on Reflex®

Ultra White Carbon Neutral A4 office paper. For offset printing,

this report uses Australian made recycled paper: text 140gsm/

covers 300gsm. This paper is made from elemental chlorine

free pulp sourced from responsible sources. It is manufactured

in an ISO 14001 accredited mill, and is Certified Carbon

Neutral under the Australian Government’s National Carbon

Offset Standard (NCOS).

Printing

When offset printed we use Mystique, who utilise vegetable

based inks. Mystique is ISO 14001 Certified and Certified

Carbon Neutral by the Australian Government’s NCOS Standard

– as such, this report in it’s entirety, including all printing

processes and embellishments, is carbon neutral.

Design

Design, production and typesetting by OMG! Creative.

OMG! Creative have reduced carbon emissions by adopting an

environmental policy that was created out of the Greenhouse

Challenge Plus program. They are audited by Equilibrium,

use 100% renewable energy and have offset emissions which

cannot be eliminated through Climate Positive.

Finishing

When offset printed, this report’s binding is singer sewn

with unbleached cotton, a process which uses no glues or

solvents and enables the pages to be more easily separated for

recycling. The cover has been embellished with a multi-level

full relief emboss, a mechanical technique which adds no

extra inks, coatings or foils into the recycling process.

Global Reporting Initiative (GRI)

Advisory and Copywriting

GRI advisory and copywriting by ZOOiD – GRI Certified

Training Partner and Organisational Stakeholder.

contact details

Australian Paper

307 Ferntree Gully Road

Mt Waverley, Vic, 3149

Telephone: 03 8540 2300

email: [email protected]

web: www.australianpaper.com.au

Contact person:

Shaun Scallan

General Manager, Corporate Social Responsibility

Australian Paper

This Sustainability Report is printed on Australian made recycled carbon neutral paper,

certified under the Australian Government’s National Carbon Offset Standard (NCOS).

Australian Paper Sustainability report 2011

Investor Relations

Transcript of Australian Paper Sustainability report 2011