Forestry challenges

Certification is a very imporant tool for any forestry business seeking to establish its credibility as a responsible organisation. In our view it sets the minimum sustainable development standard that we should seek in those areas where we own, lease or manage land and it provides the assurance that wood and fibre purchased from external sources is from sustainably managed forests.

We use Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC) systems.

The underlying sustainability that certification promotes is a vital aspect of our operations - fully transparent and subject to regular assessment by independent accreditation organisations.

Mondi was the first commercial business to adopt FSC's standards in South Africa, where all land we own is now entering the fourth cycle of certification. In Russia's Komi Republic, we have certified 1.6 million hectares of land and a further 0.8 million hectares are due for certification in 2008.

PEFC forest certification supports a large number of our suppliers in Europe.

The PEFC and FSC Chain of Custody certifications have been implemented at all of our mills except the newly acquired Bulgarin mill at Stambolijski, for which a plan will be developed.

Supporting small growers

Gaining certification is complex and expensive for smaller growers. Many of these businesses are small and working to tight margins, so we are actively seeking to ease the process for them without compromising sustainable forestry practices.

There are some 16 million small commerical growers in Europe alone, and numbers in South Africa are growing fast. Helping those in our supply chain gain certification is one of the biggest challenges we face. We are working through The Forests Dialogue to find an acceptable and practical solution.

In Russia's Komi forest there are areas known as High Conservation Value (HCV) forests, where commercial forestry may be prohibited or restricted due to their particular ecological or social significance. The issues surrounding HCV status can be complex, however, because it is often difficult to identify them.

As resource stewards, we are active in working with a wide range of stakeholders, including the Russian State Forest Department, WWF (which has awarded us its prestigious Panda Award for our efforts in this area) and Greenpeace through Silva Taiga, to define those HCV areas accurately and implement a workable process that indicates their status.

A critical factor in HCV areas, however, is the situation of local people: it is very important that their sources of income are not threatened, so there is regular dialogue with communities during the process.

In South Africa, we are committed to minimising the impact of our plantations on the environment. In addition to creating employment through plantations, we recognise that any monoculture has an impact on the environment. We have a reponsibility to help protect vulnerable ecosystems like indigenous forest, wetlands and grasslands.

In particular, our South African plantations are in an area of the of the world where fresh water is a scarce and valuable natural resource - 65% of the country receives less than 500mm annual rainfall, making the potential for drought an ever-present danger.

Over many years, it has been recognised that plantation forestry has a significant negative impact on water resources. In most areas, reduction in stream-flow is the most common negative outcome, while the maintenance of good quality water is generally a positive impact.

Developing new practices

We have for some years been working closely with NGOs and scientific institutions, such as universities and research centres, to gain a fuller understanding of plantation water issues. The Water Research Commission, University of the Orange Free State and the Council for the Scientific and Industrial Research have made substantial contributions to this work on Mondi land.

We are the principal sponsor of the Mondi Wetlands Project (MWP) established in 1991 by WWF and the Wildlife and Environment Society of South Africa. Due to the wide implementation of its findings, this is one of WWF's most successful projects anywhere in the world and we have agreed a new five-year sponsorship agreement from April 2008. the MWP is making a substantial contribution to the protection and rehabilitation of wetlands in South Africa, and the new agreement includes a particular focus on wetlands in poor rural communities and incapacitated municipalities.

Alongside MWP, the South African government and several leading scientists, we chaired a process over a number of years resulting in a national procedure for wetland delineation.

The most important result has been our decision to remove all our trees on or close to riparian or wetland areas, creating 'buffer zones' around them to encourage the recovery of natural fresh-water sources. This ongoing process has involved removing some 5% of our land from forestry production to date.

Mondi has placed increasing emphasis on our responsibility to conserve natural resources and, where possible, to help restore those that have been damaged.

Rehabilitating ecosystems

We are working closely with WWF and some or our peers in the industry on refining the science and practice behind what WWF calls 'New Generation Plantations', a project due for completion in early 2009. Early indications are already showing that the practices we are developing have some very positive implications for the rehabilitation of functioning ecosystems, wetlands and riparian systems in particular.

Naturally, Mondi can only influence activities where we own the land. But we believe that the work we are doing, integrated with the government's 20-year grassland conservation plan and the Ezemvelo KZN Wildlife Land Stewardship Programme, is indicating a future direction for other landowners and interested parties. We are committed to ensuring that 25% of our land in South Africa is left unforested and we make optional use of this area to support associated HCV areas.

Developing eco-corridors

The development of ecological networks, using undeveloped 'corridors' of land to create biological pathways linking different HCV habitats or ecosystems is significant. Professor Michael Samways who heads the Department of Conservation Ecology and Entomology at Stellenbosch University, is leading developments in this field and making use of Mondi's forest resources.

Along with our work on water systems, applying scientific research in this way is strongly influencing our commercial approach.

World Heritage partners

SiyaQhubeka Forestry in South Africa is a partnership between Mondi and its black empowerment partners, and government, and was the first commercial organisation to delineate an accurate 'eco-boundary' line between a World Heritage Site and a forestry plantation. This approach has protected sensitive wetland and other HCV areas on the site, enabling our plantations and associated ecosystems to become part of a globally recognised game park and extending the habitat of species including elephant, rhinoceros and buffalo along with a myriad of plants, invertebrates and birdlife.

We are now concentrating on how we can apply the lessons we are learning through projects such as SiyaQhubeka Forestry to our northern forestry operations in Russia's Komi Republic.

One of the greatest challenges facing the industry is the continued prevalence of illegal logging, a major cause of damage to the world's valuable boreal and tropical forests.

Wherever possible, we and other leading businesses in our industry use the FSC and PEFC chain of custody certification schemes to track our raw material supplies. These comprise a transparent and accountable process through every step from the forest to consumer.

In this way, we can both minimise the risk of illegal timber or fibre entering our supply chain, and provide evidence that the forests from which we procure our wood are sustainably managed.

In 2007, we developed our procedure for the responsible procurement of wood, virgin fibre and biomass utilising version 1 of the FSC Contolled Wood Standard. Since the proceedure was developed, FSC has revised the Controlled Wood Standard. We have identified the need to update our proceedure to align it with the latest Controlled Wood Standard. This was also confirmed by ERM in their assurance assessment.

We have also worked on the development of a risk-based wood and fibre tracing system that will enable us to assure the legality of the wood we receive from the so-called 'smallest management unit'. This system is designed to ensure that all our suppliers are legally compliant and meet all our wood procurement requirements.

We are also supporting the tracing system with our Wood Information Platform (WIP) which monitors all the wood and fibre entering all our processing plants by species and by certification type. Together, this minimum wood standard, the risk-based wood and fibre tracing system and our WIP form the basis of our procedure for the responsible procurement of wood, virgin fibre and biomass.

Many of the people who live and work in the forests where we operate face severe economic hardship. We regard it as an important responsibility at Mondi to ensure that our stakeholders directly associated with our business, rural communities in particular, benefit from our activities. In addition to the direct support we provide, we act as a catalyst to leverage resources from government and other agencies for the advancement of impoverished communities.

Tangible support

Our Social Economic Assessment Toolbox (SEAT) reports provide the basis for our activities with communities. Among other things we endow schools, hospitals and community centres in Russia, we provide clinics to help address the HIV/AIDS epidemic in South Africa, and we support emerging small growers to give them the expertise and business rigour they need to be a sustainable part of our supply chain.

Managing modernisation

In both Russian and South Africa we face a fundamental modernisation challenge that requires the utmost sensitivity to address. As our business moves forward, even the poorest people are increasingly unwilling to undertake heavy labour, particularly in extreme cold of one country and the extreme heat of the other. Forestry is increasingly competing for labour as people are leaving the forests and rural areas for cities. Mondi works exclusively with contractors in these areas and is taking steps to attract and maintain their services.

We are investing in new, advanced forestry machinery that, while providing a more comfortable working environment, will also ahve an immediate impact on the number of people we can directly employ in the forests. During 2007, based on SEAT findings, we continued to progress with mechanised forestry systems in a measured, methodical manner that minimises the social impact of modernisation while seeking to maximise its economic benefits for the affected communities.

We support and actively participate in the efforts of The Forests Dialogue to address the global topic of poverty reduction and commerical forestry.