sustainabilityreport            PORTUCEL GROUP
Portugal: papermakers to the world
More Forest Better Future.We want you to get the factson the main issues about paperproduction so you can makeup your own ...
sustainability            report    contents    . about this report                                            . messag...
aboutthis Report
PORTUCEL GROUPabout this report      The Portucel Group is delighted to publish its fourth bi-annual Sustainability      R...
sustainability                 report                                                    The topics identified result from ...
messages12	 Chairman of the Board of Directors14	 Chief Executive Officer
sustainability              report     Chairman of the Board of Directors     paper: our role     in society     This Sust...
PORTUCEL GROUPposition. We are Portugal’s third largest exporter, the      We hope that all our stakeholders will witness,...
sustainability              report     Chief Executive Officer     paper: our     sustainable future     As a fitting respon...
PORTUCEL GROUPand biodiversity in the woodland in our care. This stance   incorporated into all our processes, visible in ...
sustainability              report     ‘Two of our central concerns     over this period have been     biodiversity and fo...
highlights /  
sustainability              report     ..      Group wins award for “Green           Organization of the Internation...
sustainability              report     ..      Publication of the Group’s Code of     Another new project: “Optimizi...
discover thePortucel Group22	   Group Profile26	   Governance Structure30	   Meet the Stakeholders32	   Sustainability Man...
sustainability       report     ‘A leading player on the     international pulp and paper     market, the Portucel Group  ...
PORTUCEL GROUPCacia (Pulp = 285,000t)                 Figueira da Foz                       Setúbal (Pulp = 530,000t/ Pape...
sustainability              report     • We are committed to continuous improvement of          Economic performance      ...
PORTUCEL GROUPEconomic impact of the Portucel Group                             2009        2010      2011             Com...
sustainability              report     .. Governance Structure                                  An Ethics Committee has ...
sustainability              report     Message from the Environmental Board                          In the field of manufa...
PORTUCEL GROUPand trust in dealings with stakeholders, generating                   Finally, we would like to express our ...
sustainability                 report                                                                          Periodic re...
sustainability                report     .. Sustainability                                                      short, m...
PORTUCEL GROUPThe Group’s approach to sustainability management                The Sustainability Policy lays down the mai...
sustainability                 report     Overview of management policies                             The aim is to ensure...
sustainability                   report     The Group’s policies are embodied in management              • Environmental M...
PORTUCEL GROUPRisk factors in the Group’s operations                      Commitment to innovationThe Management Reports a...
sustainability              report     RAIZ has helped set up a research and training network    Strategic Goals     which...
meetthe people40	 The People43	 Professional Development46	 Health and Wellbeing at Work
sustainability        report     ‘In order to help achieve its strategic     goals for sustainability, the Group     has i...
sustainability                  report         Commitment /         To implement the Code of Ethics         Public...
PORTUCEL GROUP5.2. Professional                                                                                2008*      ...
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Sustainability report 10 11

  1. 1. sustainabilityreport PORTUCEL GROUP
  2. 2. Portugal: papermakers to the world
  3. 3. More Forest Better Future.We want you to get the factson the main issues about paperproduction so you can makeup your own mind.www.paper-from-portugal.com
  4. 4. sustainability report contents . about this report  . messages  Chairman of the Board of Directors  Chief Executive Officer  . highlights /      . discover the Portucel Group  Group Profile  Governance Structure  Meet the Stakeholders  Sustainability Management  . meet the people  The People  Professional Development  Health and Wellbeing at Work  . explore the forest  The Portucel Group and Forests  Forest Management and Certification  Forest fire prevention and support for fire-fighting  Biodiversity Conservation  Chain of Custody  . discover the plants  The Industrial Units  An Eco-efficient Process  Safety in Industrial Processes  . meet the market  The Portucel Group’s Paper  Misconceptions in the Market  . meet the community  Engagement with the Community  Social Responsibility  . appendix  Appendix I. Human Resources  Appendix II. Notes on Methodology  Appendix III. Glossary  Appendix IV. GRI Index  Appendix V. Verification Report from External Auditor  Appendix VI. Statement GRI Application Level Check  Contacts 
  5. 5. aboutthis Report
  6. 6. PORTUCEL GROUPabout this report The Portucel Group is delighted to publish its fourth bi-annual Sustainability Report. This report refers to the period / and is designed to provide our main stakeholders with information on the Group’s economic, environmental and social performance over the past two years. This report has been drawn up in accordance with the Global Reporting Initiative guidelines, version G., self-declaring level A, as confirmed by KPMG, SROC, SA, by means of external verification, allowing the Group to achieve a level of compliance of A+ as defined under the G. guidelines. As in the past, sustainability information is being reported on a bi-annual basis. The information contained in this report should be viewed in conjunction with the Management reports for  and  and the Corporate Governance Reports for the same periods, available on the Portucel Group’s corporate website, at www.portucelsoporcel.com. This report encompasses all the Group’s companies and activities which contribute to pulp and paper production and sales businesses, except for the financial indicators which, for reasons relating to consolidation, include all the Group’s business operations. The scope of this report does not include the power generation business, as the entire document is focussed on the pulp and paper production business. All the information provided with regard to the power generation business is intended merely to complement the Group’s strategic approach to its core business of pulp and paper production. The report is organized into two distinct sections. The first part takes the form of an easy-to-read pull-out section, designed to provide stakeholders with an overview of sustainability issues during the two years of the reporting period. The second part comprises a technical report complementing the information provided in the first, setting out more detailed data, so as to meet the needs of different stakeholders. 
  7. 7. sustainability report The topics identified result from an internal review of the issues reported on in the previous reporting period, which resulted in turn from a process of benchmarking and consultation with the Group’s main stakeholder groups. The internal review conducted for the purposes of this report took the following aspects into consideration: • The need to take in all the Group’s activities in the production and marketing of pulp and paper; • The economic repercussions, for the Group, of the main environmental issues; Tell us your opinion • The relevance of the issues identified by the main stakeholder groups; Your opinion can be important in helping the Group to improve its sustainability • Whether the topics identified were appropriate in terms of business management and the drafting of its reports. development. A questionnaire has been designed for your feedback on this report, and we would be delighted to receive your contribution. In , the Group initiated a needs analysis process for its sustainability Please complete the questionnaire at www.portucelsoporcel.com. function, honouring the second economic commitment made in the previous report, “To prepare the Group in the field of Sustainability, in For any further information about this report, or for any related enquiries, please order to equip it to apply for a Company Assessment”. The findings of this contact: needs analysis will be set out in the next Sustainability Report. Manuel Gil Mata Phone:    | Fax:    In order to highlight feedback on the commitments made in the previous e-mail: gil.mata@portucelsoporcel.com reporting period and the degree of attainment, these commitments have João Manuel Soares been assessed and marked in the text using the following labels: Phone:    | Fax:    e-mail: joao.soares@portucelsoporcel.com • Commitment not honoured Ana Nery Phone:    | Fax:    • Commitment partially honoured e-mail: ana.nery@portucelsoporcel.com • Commitment honoured
  8. 8. messages12 Chairman of the Board of Directors14 Chief Executive Officer
  9. 9. sustainability report Chairman of the Board of Directors paper: our role in society This Sustainability Report, referring to the period To all these questions – and only with the uncertainty /, is published at the start of a particularly created by a merciless brand of globalization which difficult year for the European economy in general and often distorts free competition – my answer, as for the Portuguese economy in particular. chairman of the Portucel Group, is an unhesitating yes. It will therefore be of interest to all the Group’s This is a response and a conviction rooted in the quality stakeholders, and even for the casual reader, to find and excellence of our human resources, in the quality in it assurances that the path we are following, in our and excellence of our industrial facilities and in the quest for sustainable development, is based on sound quality and excellence of the paper fibre we use, from foundations able to withstand the turbulent times in our plantations of Eucalyptus globulus. which we live. I cannot, alas, be equally bold and optimistic when faced In the woodland that we manage, with forestry with the local costs to which we are subject: practices certified under the world’s most respected and strictest schemes, will we continue to apply • Woodland which belongs to thousands of private exemplary standards of forest husbandry and landowners who face difficulties of scale and environmental performance? Will our industrial management and others deriving from the facilities continue to operate in rigorous compliance deficiencies of legislation: with the best benchmarks in European legislation? • Complex red tape throughout the administrative Will the energy we consume continue to be mostly system, which has still to be resolved; produced from renewable biomass? Will the Group • Logistical infrastructures in Portugal which are continue to seek standards of low carbon intensity? expensive and inefficient, penalizing people who, like Will the forestry producers, our Employees and the us, export all over the world from the far-western tip human communities around our plants continue to of Europe. enjoy adequate levels of income, standards of living and quality of life? In short, will the Group continue to Even so, and at a time of national financial crisis, we be economically viable, environmentally responsible are proud to make an active and extremely positive and socially acceptable? contribution to improving our country’s financial
  10. 10. PORTUCEL GROUPposition. We are Portugal’s third largest exporter, the We hope that all our stakeholders will witness, monitorfirst in terms of national value added, we create and and accompany us on this journey.multiply jobs and pay taxes, all this whilst rigorouslyrespecting the natural resources and ecosystems with I invite you to read this Report, and to send us yourwhich we interact, namely the soil, water, forests, air opinions and ideas, to help us attain the inspiring goaland biodiversity. of sustainable development, just as our children and grandchildren demand and deserve.All this naturally results in an extremely positivecontribution, directly and indirectly, to the wellbeing of Pedro Queiroz Pereirathe local, regional and national communities to which Chairman of the Board of Directorswe belong.And it is with the same aspirations that guide us alongthe paths described in this Report, drafted and certifiedwith the highest standards of transparency, rigour andaccuracy, that we are making very serious plans toexpand the Group’s operations to other continents.We will continue to pursue a strategy of integration,starting with the woodland and adding value, piece bypiece, making the most of local resources, respectingnature and its resources, valuing people and respectingtheir cultures.The road ahead is clearly mapped out in theSustainability Policy drafted and approved by theCompany in . 
  11. 11. sustainability report Chief Executive Officer paper: our sustainable future As a fitting response to the fact that the international trade balance, as demonstrated in this report. We are forestry, pulp and paper industry boasts a higher proud of this contribution and confident that it will be percentage of companies issuing sustainability reports recognized by the country and its leaders. than any other sector, the Portucel Group is proud to submit its fourth bi-annual Sustainability Report, for the The feelings expressed by our broad and diverse range financial years of  and . of stakeholders have provided us with guidance and inspiration for scaling up our dedication to issues of We trust that this report will convey our unshakeable sustainability and for perfecting the relevant practices. conviction that business sustainability is achieved We hope that this report will provide a clear picture of through innovation, by creating value, engaging the progress made over the last two years. with stakeholders, protecting ecosystems, through eco-efficiency, by seeking out and retaining talent, and Two of our central concerns over this period have been through transparency in a broad and honest process of biodiversity and forests, with the International Year of communication with society. Biodiversity in  and the International Year of Forests in . Both these concerns are particularly dear to the We embarked on this latest two-year period with our Portucel Group, which has enthusiastically sought to focus clearly set on innovation, as we fine-tuned the explore them to the full. largest, most demanding and most innovative paper machine in the world for uncoated printing and writing The Biodiversity Declaration we drew up and published, paper. We have broken new ground in technology, and to which we have voluntarily and confidently products and markets, succeeding in the vast challenge committed ourselves, first took shape in the Group in the we set ourselves, Portuguese manufacturing, European wake of the publication of our Sustainability Policy in industry and the paper sector. , when we presented our first Sustainability Report, but this commitment is something we feel even more In the difficult times through which we have lived in strongly today. Portugal in the last two years, the Portucel Group has been true to its vocation to export goods on a large From early on, we realized we needed to take an scale, with a high level of national value added, making innovative approach to forestry management, an extremely valuable contribution to Portugal’s ailing embracing respect and conservation of natural assets
  12. 12. PORTUCEL GROUPand biodiversity in the woodland in our care. This stance incorporated into all our processes, visible in ourhas yielded interesting results for wildlife in the areas manufacturing activities and in our products, which arewe have managed, constituting the best gift we would increasingly flag-bearers for sustainability.make to biodiversity, in the year in which the theme wascelebrated internationally. Over the last two years, we have paid special attention to eco-efficiency in energy, consolidating our position asWhilst we acknowledge the fundamental importance a major Portuguese power generator, from outside theof biodiversity, we believe that the forest is much more energy sector, and also as the country’s leading producerthan this, and so our attitude, as owners and managers of renewable energy from biomass. We have devotedof our woodland heritage, is one of commitment to special efforts to calculating and improving our carbona global concept of Sustainable Forests. To this end, footprint, even when we know that the CO retainedwe have opted to adhere to a strict Forestry Code of each year by our woodland is thirteen times greaterConduct, without neglecting the social and economic than our annual emissions licenses, and aware of thedimensions of this sector and the importance of these importance of the issue of climate change for the futuredimensions to its present and its future, for the sake of of the planet and life on earth.sustainability. Environmental awareness therefore remains a constantWe have accordingly been tireless in our efforts to help concern and on this particular topic of sustainability Ithe general public and the administrative authorities to would like to highlight the contribution made by ourrealize the importance of social and economic activities, Environmental Board, whose members, with theirinextricably bound up with the life of forests, for the academic expertise and independent judgement, havesustainability of those same forests, and for that of offered their time and wisdom to create clarity on thisPortugal and its people. This is also one of the best issue within the Group.gifts we could have made to our forests, in the year inwhich they, in their turn, came under the international As always, issues of business ethics have been treatedspotlight. with seriousness and special attention has been paid to human resources and to the local communities aroundIn the industrial field, this report reflects our constant our facilities and estates.and sincere concerns with eco-efficiency, a concept 
  13. 13. sustainability report ‘Two of our central concerns over this period have been biodiversity and forests, issues which are particularly dear to the Group.’ In this important area, we are delighted to have set up Of the various organizations working towards these an Ethics Committee and to have published a Code of excellent goals in Portugal, I would like to draw Ethics, designed to perfect, regulate and consolidate special attention to BCSD Portugal (Business Council the ethical culture which has always permeated our for Sustainable Development), which during the activities and which is required, without exception, from reporting period celebrated its tenth anniversary. The all Group Employees. Group is proud to have been amongst its founders and I personally have the honour of being its current We have continued to pay great attention to cultivating Chairman. This organization has functioned as an talent, to personal development and to motivating our excellent forum for debate and investigation of business Employees, who have been joined by hundreds of young sustainability issues, making a great contribution to the recruits who we have been able to train and to whose social, entrepreneurial and environmental vision that future we are confident of contributing, by offering now permeates the Portucel Group and which I trust will them the opportunity to work in our new Paper Mill in be clearly conveyed by this Sustainability Report. Setúbal, at a time when jobs are so difficult to find in Portugal, especially for the young. José Honório Because of its symbolic, but no less important, Chief Executive Officer contribution at this time of national hardship, I would like to mention our “Social Project”, a scheme for helping underprivileged families living in the areas around our industrial facilities. For the Portucel Group, prosperity is an aim that goes hand in hand with improving the living conditions of our local communities and preserving our environment. We are accordingly eager to take an active part in organizations that seek to understand and develop the connections between environmental conservation and issues of social welfare.
  14. 14. highlights /  
  15. 15. sustainability report ..  Group wins award for “Green Organization of the International Group licensed to use the Energy and Biofuels” from Seminar on “Biodiversity, an Asset EU Ecolabel on the paper it the magazine Pulp & Paper with a Future”, in November, as manufactures and markets, in the International: part of the commemoration of the office papers and printing papers In , at the second awards International Year of Biodiversity sectors; ceremony organized by the journal ; Pulp & Paper International (PPI), Soporcel voted Best Company in the Portucel Group was selected The LEAN Project starts up, with Central Portugal: for the Green Energy and Biofuels a philosophy based on lean For two years running, in  Award. This international honour manufacturing and aiming to and , Soporcel has been represented an international achieve ongoing improvements awarded the title of “Best Company endorsement of the Group’s in the processes at the Group’s in Central Portugal” by Invest renewable energy strategy, industrial units. magazine, based on parameters consolidated in a successfully of cash flow generation, growth in completed investment plan and Optimization of the environmental profits and job creation. In , reflected in its current position performance of the biomass this award was joined by another as Portugal’s leading producer of boiler at the Cacia Mill, through for “Best Businessman of the “Green Energy”. conversion from a rotary grate Year” for Pedro Queiroz Pereira, furnace to fluidized bed technology. Chairman of the Board of Directors, Publication of the Regulations in recognition of the Group’s and Career Manual for Operative Start-up in September of the new outstanding work in the Portuguese Workers; turbogenerator with a capacity of business world.  MW at the industrial complex in Publication of the Forestry Code of Figueira da Foz. Conduct;
  16. 16. sustainability report ..  Publication of the Group’s Code of Another new project: “Optimizing Group awarded Medal of Honour Ethics, on  March; Management of Packaging of the City of Setúbal: Materials at the Group’s Paper On  September , as part Standardization of salary scales for MIlls” of the celebrations marking City operative workers; The aim is to improve efficiency and of Setúbal Day, on which the city control of the process, seeking to commemorates Bocage, the th International Conference on achieve excellence and sustainability century Portuguese poet associated “Plantations in Tomorrow’s in the supply of packaging materials with the city, the Portucel Group Forests”, to mark the International to the Group and optimizing the was awarded this medal which is Year of Forests ; value of its stock. used to pay tribute to individuals, companies and institutions who The Group’s investment in fire Launch of the “Social Project” to have made a special contribution to prevention and support for fire support underprivileged families the life of Setúbal and its people. fighting topped three million euros, in the local communities around representing the largest private the Group’s industrial facilities, by Group voted “Best Major Export sector contribution to this cause in providing essential foodstuffs. Company – Tradable Goods”: Portugal; The Portucel Group company Group wins prize for Best Exporting operating the new Paper Mill in Calculation of the Carbon Footprint Company: Setúbal – About the Future – was for all the paper produced by the The Portucel Group won an awarded the price for Best Major Group, in line with the methods award in  for Best Exporting Export Company – Tradable approved by Cepifine/Cepiprint for Company from Travelstore – Goods at the  Export and the sector; American Express, as part of the International Expansion Awards. Business Travel Fair, held at the The awards are organized by Launch in February of a corporate Belém Cultural Centre, in Lisbon, Banco Espírito Santo and Jornal campaign “Portugal: papermakers in February. The panel of judges de Negócios, in partnership with to the world”; for the “Business Travel Awards” Coface and McKinsey & Company, included representatives of AICEP, and the Company received its prize A new project starts up: “Enhancing Air France/KLM, the Lágrimas at a ceremony held in Lisbon and Customer Experience”: Group, Star Alliance, Accor, Hertz, attended by the Minister of the The aim is to improve service to the Air Plus and Travelstore. Economy. Group’s paper customers, thereby boosting our competitiveness in this business.
  17. 17. discover thePortucel Group22 Group Profile26 Governance Structure30 Meet the Stakeholders32 Sustainability Management
  18. 18. sustainability report ‘A leading player on the international pulp and paper market, the Portucel Group is one of Portugal’s strongest international brands’ .. Group Profile A leading player on the international pulp and paper market, the Portucel Group is one of Portugal’s strongest international brands. The Group’s production structure is based on three industrial sites located in Cacia, Figueira da Foz and Setúbal, making it an international benchmark for quality and competitiveness, thanks to its size and sophisticated modern technology. The business operated by the Portucel Group starts with its forestry activities, generating annual turnover in the order of . billion euros. The Group is firmly committed to the leading forest certification schemes, in particular those of the FSC® (Forest Stewardship Council®) and the PEFC (Programme for the Endorsement of Forest Certification schemes) which guarantee that the Company’s woodland is managed in an environmentally responsible manner, in keeping with strict, internationally recognized criteria. With a history stretching back half a century, the Portucel Group is today a leading force in Portugal, and is one of the country’s top three exporters. Its operations are based on a renewable resource, eucalyptus timber, much of which is sourced from within Portugal, processing this into a product with a high level of value added, UWF (uncoated woodfree) printing and writing paper, a sector in which the Group is the European leader, using essentially Portuguese manpower and suppliers. The Portucel Group has an annual manufacturing capacity of approximately . million tons for paper and around . million tons for pulp, of which close to . million tons has been used for paper production, since the new Paper Mill in Setúbal came into full operation.  User license code: FSC C  User license code: PEFC/--
  19. 19. PORTUCEL GROUPCacia (Pulp = 285,000t) Figueira da Foz Setúbal (Pulp = 530,000t/ Paper = 795,000t) (Pulp = 560,000t/ Paper = 790,000t)Possibly the country’s leading exporter in terms of national value added,the Group’s operations are vitally important to the Portuguese economy,not only because of their contribution to GDP, due to their Gross ValueAdded, but also because of their knock-on effect in the wider economy,both upstream and down.Our paperOur paper makes us more important in the world than you might imagine:• We are the leading European producer of UWF (Uncoated Woodfree) printing and writing paper;• We are the leading European producer of BEKP (bleached eucalyptus kraft pulp);• We manage woodland with an approximate area of 120 thousand hectares;• We manage 61% of Portuguese woodland certified by the FSC and 54% of those certified under the PEFC;• We represent 0.7% of the country’s GDP;• Our foreign sales represent approximately 3% of Portuguese exports of goods;• We account for 9% of the total export cargo, conventional and containerized, handled at Portuguese ports;• In 2010 we concluded an investment plan worth 900 million Euros;• We have annual production capacity for 1.6 million tons of paper (world’s 6th largest producer) and 1.4 million tons of BEKP (world’s 4th largest producer);• We are the leading Portuguese producer of energy from biomass;• We account for 4% of all electricity generated in Portugal; 
  20. 20. sustainability report • We are committed to continuous improvement of Economic performance our capacity to compete, through constant efforts in Today the Group occupies a leading position in the the field of innovation and R&D; national and international pulp and paper market, as • We operate a sustainable model of forestry the leading European producer of BEKP and uncoated management, based on best practice and our printing and writing papers. accrued expertise; • Our agro-forestry crops also include cork and wine, The expectations of increased operations with the reflecting the diversification of land use; start-up of the new Setúbal Paper Mill have proven • We work to conserve biodiversity as well as the wholly justified, with growth in output and turnover. cultural heritage of our local communities. In , the Group’s turnover was up by % on , • We enjoy a worldwide reputation in the pulp whilst pulp and paper sales, by volume, grew by % industry; over the same period. • We design, produce and sell some of the world’s top brands of uncoated office and printing industry Output of uncoated printing and writing paper at the papers; new Setúbal Paper Mill has continued to increase, • Our products are flag-bearers for sustainability. providing greater quantities for placement on the market. Portucel Group Brands The Portucel Group’s exports totalled approximately . billion euros in both  and , accounting for around % of Portuguese exports of goods. These figures underline the Group’s international importance, with exports to  countries across five continents. Office paper brands for professional or home use In  and  • We generated turnover of approximately . and . billion euros in  and , respectively; • We produced approximately . million tons of paper in  and account for . million in ; • We manufactured . million tons of pulp in  and . million in ; • We had a workforce of , at year-end ; Leading premium or preprint • We exported goods worth more than . billion brands in the printing paper segment euros in .
  21. 21. PORTUCEL GROUPEconomic impact of the Portucel Group 2009 2010 2011 Commitment 2010/2011Purchases from local 70% 69% 69%suppliersLocal suppliers 84% 83% 83% To increase overall paper output by 25%Exports as a proportion ofthe Portucel Group’s pulp 94% 94% 95% Total paper output increased byand paper sales 28.3% in the period 2010/2011The Portucel Group’s sales (compared to 2008/2009).as a proportion of total 3% 3% 3%national exports of goodsGeneration and distribution of wealthIndicator (million €) 2008 2009 2010 2011Economic Value Generated Revenues 1,158 1,125 1,400 1,510 Operating Costs 771 786 872 990 Salaries and benefits 112 115 127 134Economic Value Distributed Payments to capital providers 46 86 199 16 Payments to the State 33 21 48 55 Investments in the Community 0.358 0.401 0.774 0.650Accrued economic value 192 114 153 314 
  22. 22. sustainability report .. Governance Structure An Ethics Committee has also been set up, comprising three independent and widely respected individuals Board of Directors appointed by the Board of Directors. This committee The governance of the Portucel Group is entrusted to considers and assesses any situation which may arise a Board of Directors comprising a chairman and ten in respect of compliance with the rules of the Code of other members, elected at the General Meeting for a Ethics, including those involving the Group’s corporate four-year term. officers. The committee also serves to advise the Board of Directors on matters concerning the application and interpretation of the Code of Ethics. Executive Committee Five of the eleven members of the Board of Directors The Ethics Committee issues an annual report on are designated to conduct the executive management compliance with the standards laid down in the Code of the Group, making up the Executive Committee. of Ethics, detailing any irregularities which may come to its attention, together with its findings and follow- up proposals adopted in the various cases analyzed. Specialist Committees This report is included in Appendix V of the  The Board of Directors is also supported by a number Corporate Governance Report and Appendix Vof the of specialist committees which make contributions  Corporate Governance Report. in their specific fields of expertise to ensure that the Group’s approach to sustainability is duly overseen The Board of Directors plans to provide the Group’s and monitored. Members of these committees are Employees with clarification of any issues arising in selected for their experience, dept of knowledge respect of the Code of Ethics, by means of a direct and ability to support the Board of Directors and the channel accessible by all. Executive Board in pursuing their objectives. These are the Sustainability and Ethics Committees and the Environmental Board. Environmental Board In view of the specific nature of the Group’s business and the environmental risk involved, the Board of Sustainability Committee Directors decided in  to set up an Environmental The Group has a Sustainability Committee, chaired by a Board, to monitor and make recommendations on non-executive member of the Board of Directors. The the environmental aspects of the Company’s main committee is primarily responsible for defining and undertakings, paying special attention to legal overseeing the implementation of the sustainability requirements, licensing terms and the Group’s policy policy and all the other policies complementing the in this area. The Environmental Board comprises five strategic approach adopted by the Portucel Group in members, all of them independent academics with an the field of sustainability. The Sustainability Committee established technical and scientific reputation, whose met four times in  and six times in . areas of expertise coincide with central environmental concerns relating to the Group’s operations as they exist today. The Environmental Board met three times Ethics Committee in  and three times in . The main opinions Over the course of its history, the Portucel Group has and recommendations issued by the members of the faced significant internal and external challenges, Environmental Board are contained in this Report in some of which have required processes of change, the Message from the Environmental Board, presented which have been managed in the light of important opposite overleaf. ethical issues. Formally embodying the principles which have always guided the Group’s conduct, the Code of Ethics, in force since , provides a benchmark for all Employees and officers, setting out the values, principles and procedures which should underlie their actions at all times.
  23. 23. sustainability report Message from the Environmental Board In the field of manufacturing, the Environmental Board has periodically reviewed the information provided During  and  the Portucel Group consolidated to the environmental and regulatory authorities, a development strategy consistent with the and is pleased to note significant improvements in Sustainability Policy it adopted in . This strategy environmental performance, notably at the industrial has been supported by the Group’s Environmental facilities in Cacia, thanks to the biomass cogeneration Board, which comprises academics and research boiler, which has been converted to fluidized bed scientists with particular expertise in environmental technology, with substantial reductions in consumption and sustainability issues. of fuel oil and in emissions of solid particles. The Environmental Board has regularly monitored the The Board has likewise followed with lively interest the Group’s performance, looking at the skills and processes launch of About the Future, the company operating the employed and the results of the forestry and industrial new Paper Mill in Setúbal, home to the world’s largest practices involved in the daily operations of a vertically and most sophisticated paper machine. This new mill integrated company in the forestry sector. was constructed in line with the Group’s development programme, with the aim of setting new standards in On forestry matters, the Board has been able to examine the international paper industry. the Group’s work to halt biodiversity losses, in keeping with the message of the International Biodiversity We wish to congratulate the Portucel Group on its Year in . This has consisted of adopting specific success and on its work in improving the environmental measures in the field of forestry management, with a performance of the facilities it operates and the products habitat-based, and not merely species-based, approach. it manufactures. The Board has had the chance to make field trips to witness at first hand the Company’s practice in these The reliability of processes and the quantity and rigour fields. We have also been aware of the Group’s active of the information provided are two aspects to which the and important contribution on the recently reorganized Board attaches particular importance, and it urges the Policy and Standards Committee of the FSC. Group to maintain its policy of transparent dealings with stakeholders. The Board is delighted to report the importance attached to these matters by the Group, and to draw attention to its The Environmental Board has also expressed its continuous efforts to assure that plantations are properly keen interest in the Group’s development projects managed. These efforts have included the publication and stayed abreast of plans for future development, of a Code of Good Practice, which we believe will prove both in Portugal and abroad. The Board has learned fundamental to assuring the ecological balance of the that the Company has assessed investment projects geographical patchwork to which the plantations belong, in Brazil, Uruguay and Mozambique, and that these preventing any possible conflict between biodiversity and investment plans are confined at this early stage to competitiveness. The Group has also strived to assure that forestry resources. Once the forestry operations are the Code is applied without exception by its forestry staff consolidated, capital projects in the industrial sector and workers, both internally and externally. The Board is may potentially follow. also pleased to refer to the interest of the International Forestry Seminary held in Lisbon. The Board has sought to strengthen ties between the Portucel Group and universities, in particular by offering The Environmental Board continued to monitor the scholarships for students to pursue doctoral studies in process of the Group’s certification under the FSC and a corporate setting, with a view to pooling resources PEFC, fundamental for sustainable forestry management between the industrial and academic sectors. We are and for the sustainability of its business. also aware that the Group has looked carefully into issues of crucial importance to the sustainability of its The Environmental Board also monitored investment business and we have actively sought to contribute to projects in the energy sector, using forestry biomass the success of this process. and cogeneration technologies, having seen at first hand the excellent facilities at the Cacia biomass power It is with great satisfaction that we note that publication station, matched by the facility in Setúbal, and also the of the Sustainability Report has continued. This is a important new steam turbogenerator in Figueira da Foz. means of building a commitment to transparency
  24. 24. PORTUCEL GROUPand trust in dealings with stakeholders, generating Finally, we would like to express our great sadness at thebenefits and improving the prospects for the Group’s news, received at the end of the reporting period, of thesustainability. passing of Prof. Fernando Ramôa Ribeiro. It behoves us to pay tribute to the achievements of this distinguishedThe Environmental Board wishes also to recommend that academic and to acknowledge his fundamentalinvestment should continue in human capital and in R&D contribution, as chairman, to the work of this board.in environmental and energy fields. It also advisesthe Group to maintain and increase its commitment The Environmental Board, 31 December 2011to R&D cooperation with other organizations, toparticipation in international organizations and in Rui Ganhospecific forums for the paper industry, so as to stay João Santos Pereiraabreast of international developments and to anticipate Casimiro Piofuture demands in this sector. Maria da Conceição CunhaThe Company’s Committees Board of Directors Company Secretary Environmental Sustainability Internal Control Executive Board Committee Committee Committee Pension Fund Asset Risk Analysis Corporate Governance Supervisory and Supervision Ethics Committee Committee Committee Committee 
  25. 25. sustainability report Periodic reporting of financial, environmental, social .. Meet the Stakeholders and Group governance information allows us to present practices and results which respond to the The communication policy adopted by the Portucel expectations identified in the periodic surveys of our Group involves engaging with and listening to the relevant stakeholders. Group’s stakeholders. Stakeholders Form of interaction Issues of relevance to stakeholders Reporting ll topics with a potential impact on the reputation or financial performance of the Portucel Group are of relevance to shareholders. • Investor relations Report and Accounts Shareholders Regular financial reporting and compliance with best  and  • Regular financial reporting practice in the field of corporate governance makes for transparent and effective communication with shareholders and the capital markets. • Periodic meetings between Executive Committee and The workforce assures the Company’s long-term Sustainability Report Workers’ Committee prosperity. / Workforce • INFO newsletter Training, professional development, pay and health Chapter: and safety at work are all relevant to management of • Intranet • Meet the people the Group’s human capital. • Mill visits • Periodic meetings including factory visits • Satisfaction surveys and technical assistance • Corporate and brand Monitoring of business and market trends, generating websites customer expectations and innovating systematically Sustainability Report Customers in branding. Management of expectations and own / • Periodic consultation processes brands, regular communication and innovation in the Chapter: products marketed are all aspects of relevance to the • Meet the Market • Joint initiatives and Group’s dealings with its customers. projects • Advertising campaigns • Promotional activities • Press Releases Sustainability Report NGOs have special expertise on important / environmental and social issues with the potential Chapters: NGOs for influencing management practices which seek • Explore the Forest to reach out to these concerns, such as biodiversity management. • Discover the Plants • Explore the Market Policies and commitments to mitigate environmental and social impact depend in part on cooperation by Sustainability Report suppliers and their willingness to complement the / • Meetings Group’s good practices. Examples of this are the supply Suppliers Chapters: of certified timber by suppliers who have implemented • Group initiatives good practices, or the correct disposal of hazardous • Explore the Forest waste. These issues are relevant both to suppliers, due to the commercial relationship and to the Group, which has • Discover the Plants implemented a system for Chain of Custody management. Forest Sustainability Report • Cooperation agreements The central issues are forest certification, good / Landowners practices in forest management and strategies for and Forestry • Technology showcases improving yields. Chapters: Associations • Explore the Forest The reporting of the Group’s good management Sustainability Report • Formal response to legal practice provides information on compliance with / State and requirements the relevant laws and regulations and allows the Regulatory Chapters: • Meetings and response to regulatory authorities to learn about sophisticated Authorities facilities and procedures which contribute to the good • Explore the Forest consultation processes of society. • Discover the Plants
  26. 26. sustainability report .. Sustainability short, medium and long term. The policies, systems Management and practices which it has implemented, developed and perfected over its history allow it to cut risks to a Sustainability management is based on management minimum and to carve out its own distinctive place in of the aspects crucial to the Group’s success in the an increasingly globalized market. Material issue Impacts (risk/opportunity) Management policies and practices Forestry Policy, embodied by FSC and PEFC certification; Protection of The preservation of biodiversity and conservation of Biodiversity Declaration; woodland and woodland means preserving an ecosystem which supplies conservation timber, the main raw material for producing pulp Forestry Code of Practice; of biodiversity and paper. Supplier Policy, in the form of a Chain of Custody Management System allowing for the purchase of certified or controlled wood. Mitigation of the main environmental and social impacts and the creation of socio-economic value depend on an Policy of Engagement with Local Communities; Dealings with external effective and mutually beneficial relationship with the Communication Policy; stakeholders relevant stakeholders. The more effective our engagement and communication with the relevant stakeholders, the Forestry Code of Practice. greater the opportunities for creating value. Management Systems Policy, in the form of The various risks classified by the Group include management systems and practices certified under environmental risks which could lead to increased ISO  and ISO ; Eco-efficiency production costs or environmental damage in local of operations Licence for use of European Union Ecolabel; communities, with negative consequences for the Company’s reputation. Investment in technological innovation leading to increased eco-efficiency in production Investment in renewable energy; Limits on CO licenses may lead to new financial charges Investment in technological innovation and if emissions exceed the available licenses. Minimizing Atmospheric emissions ongoing improvements to industrial processes; emissions means not just cutting costs but also increasing our contribution to the fight against climate change. Responsible forestry management, permitting expansion of Portugal’s woodland. Corruption and fraud cause organizations to suffer Ethical conduct and financial and reputational damage. Successful Human Resources and Social Assets Policy; measures to combat management and monitoring of the organizational Incentives for ethical conduct and measures to fraud and corruption environment makes it possible to minimize the risks of combat fraud and corruption (Code of Ethics) fraud and corruption. Commitment to Management Systems based on The Group owns premium brands with a reputation for continuous improvement, and in particular to the quality and innovation. Its products are distributed to quality management system certified under ISO Product quality more than  countries across five continents. Quality ; assurance allows for better levels of customer satisfaction, Commitment to innovation; helping the Group and its brands to even greater success. Management of brands and customer satisfaction. Increased production capacity opens the way to growth Increased production in other business indicators, allowing the Group to grow Start-up of the new Paper Mill in Setúbal. capacity stronger
  27. 27. PORTUCEL GROUPThe Group’s approach to sustainability management The Sustainability Policy lays down the main thrustis founded on its Sustainability Policy and on its other of investment in sustainability, in which the Grouppolicies which address its main environmental, social adopts the principles of “accountability, transparencyand economic risks and opportunities. and social responsibility, without losing sight of the fact that economic feasibility is a crucial component of its strategy.”Policy Architecture Sustainability Policy Human Forestry Policy Resources and Social Assets Policy Management Sytems Policy Policy of Engagement Supplier Policy with Local Communities Communication Policy 
  28. 28. sustainability report Overview of management policies The aim is to ensure the efficient and competitive management of plantations and agro-forestry holdings, and to promote respect for conservation of natural resources: • Use of forest management models which contribute to the preservation and continuous improvement of the economic, ecological and social functions of woodland; Forestry Policy • To make an active contribution to efforts to halt illegal forestry operations; • To encourage suppliers to adopt best practice; • To manage our woodland heritage in line with the principles and criteria of the FSC and in line with the Pan-European Criteria for Forestry Management. The aim of this policy is to formalize values and principles in the management of the Group’s human resources, dealing primarily with: • Furthering the personal and professional development of all our workforce, raising their skills Human Resources levels; and Social • Adoption of a pay and professional development policy geared to achieving dedication, Assets Policy productivity and excellence; • To encourage all the workforce to support the aims of sustainable development and quality; • To prevent risks of accidents at work and occupational diseases. Designed to help meet the needs and expectations of customers, through supply of high quality products, the pursuit of excellence, innovation and sustainable business development, and dealing primarily with the following aspects: • Assuring high standards of excellence in products and services, building a relationship with Management customers supported by strict honouring of commitments; Systems Policy • To maintain Management Systems which are appropriate to the Group’s products, activities and services, in compliance with standards (ISO ,  and NP ) and normative references (OHSAS , FSC and PEFC); • Active participation in research and development projects; • To encourage suppliers to develop products and services which meet the Group’s requirements. This policy sets out to establishment a benchmark for the development of responsible relationships between the Group and its suppliers and service providers. In this regard, the Suppliers Portucel Group assigns priority to suppliers who: Policy • Respect and uphold human rights legislation and the relevant environmental practices. • Seek to build long-term relationships, without prejudice to the principles of free enterprise and fair competition. The main aim of this policy is to set out the basic principles on which the Group manages its dealings with the community, and deals primarily with the following issues: • Support for projects and activities in its local communities; Policy of Community • Encouraging staff to involve themselves with organizations working to improve living Engagement conditions in the community; • To pave the way for job opportunities for members of local communities; • Making it possible for the Group to source locally the products and services it needs for its forestry and industrial operations. The aim of this policy is to set the parameters for the Group’s communication with stakeholders. Communication Openness, transparency, dialogue and interactivity are essential features of this process Policy when dealing with shareholders, customers, suppliers, Employees, local communities and other partners.
  29. 29. sustainability report The Group’s policies are embodied in management • Environmental Management System for all systems, certified by accredited external bodies, in production facilities, under ISO ; accordance with internationally recognized standarts. • Occupational Health and Safety System for the In  and , the Portucel Group maintained its all the Group’s industrial operations under management systems and renewed certification of OSHAS ; the following: • Chain of Custody for all plants and wood yards operated by the Portucel Group, under FSC and • Quality Management System, at the Cacia Plant and PEFC rules. the Setúbal Industrial Complex, under ISO ; Industrial Facilities External Certifications / Accreditation Figueira da Foz Setúbal Industrial Wood Yards Cacia Mill Industrial Complex Complex QUALITY – ISO     First certificate N/A April  April  January  Latest certificate expires ENVIRONMENT – ISO     First certificate N/A April  April  July  Latest certificate expires SAFETY – OSHAS  e NP     First certificate N/A August  November  February  Latest certificate expires CHAIN OF Custody – FSC- STD--, FSC-STD--,     FSC-STD-- March  March  March  March  First certificate Latest certificate expires PEFC – ST      First certificate March  March  March  March  Latest certificate expires ACCREDITATION OF LABORATORIES – ISO/IEC     N/A First certificate Valid Valid Valid N/A Validity N/A - Not Applicable
  30. 30. PORTUCEL GROUPRisk factors in the Group’s operations Commitment to innovationThe Management Reports and the Social Governance Innovation plays an important role in keeping theReports for 2010 and 2011 describe the work carried Group competitive, increasing its uniqueness andout by the Group in identifying, controlling and helping to create value. Its importance is such that themanaging the main risks deriving from its activities Group decided in 2006 to set up a specific Innovationand business operations. These risk factors may be Management area. This division is principally engagedstructured as follows: in monitoring and assessing the Group’s research and development and innovation projects, allowing it to1.  Specific risks in business sectors in which the Group draw up an Innovation Plan, by collating information operates: systematically. The Innovation Plan offers a tool for • Risks associated with the forestry sector; analyzing the results and risks involved in R&D and • Risks associated with timber supplies; innovation projects, and helps in disseminating these • Risks associated with the production and projects to different levels of company management. marketing of pulp (BEKP) and paper (UWF); • Risks associated with energy production; The Group invests significantly in applied research, • Environmental risks; through RAIZ – Instituto de Investigação da Floresta • Social risks e do Papel (Forest and Paper Research Institute), a • General context risks. private research institute set up on a non-profit basis in 1995, supporting the forestry and paper industries2.  Risks derived from the way in which the Group in research, technological support and specialist carries out its business: training. RAIZ works to strengthen the competitiveness • Risks associated with debt and liquidity levels; of the Group’s business areas, focussing primarily on • Interest rate risk; forestry and paper production. • Foreign exchange risk; • Credit risk. RAIZ operates on the basis of transforming knowledge into technology, so as to increase sustainable forestryThis report focuses primarily on the management yields, to improve the quality of the fibre produced, toof the central environmental and social risks, reduce production costs and to improve the quality ofcomplementing the information contained in pulp and paper.the Report and Accounts and in the CorporateGovernance Report. 
  31. 31. sustainability report RAIZ has helped set up a research and training network Strategic Goals which includes leading Portuguese universities in In the Sustainability Report /, “About their specialist areas, thereby providing direct access our Paper”, the Portucel Group made a number of to skills and resources which can contribute to the commitments for the future. The progress made on Group’s operations. these commitments is recorded in the present report, in the relevant sections. The Group also leads the way in the development of innovative concepts, both through the launch of In the current reporting period, the Group has set brands which break new ground (such as Pioneer, itself wide-ranging aims in the field of sustainability, created to respond to the increasingly important role aligned with its business strategy and reflecting its played by women in purchases of office materials), and long-term commitments. These aims reinforce the by introducing products which reach out to consumer Sustainability Policy and the foundations for creating segments never previously exploited in the office value, combining effective risk management and paper sector (such as Navigator Limited Edition, the evolution of the sustainability agenda. first paper developed for buyers looking for exclusivity and affordable luxury). Strategic goals For some of its products, the Group has also invested To keep the Group’s strategy and practice aligned in developing packaging solutions designed not only  with the evolution of best international practice in to underline their intrinsic quality positioning, but the field of sustainability; also to provide maximum protection for paper, using To maintain the commitment to Research and stronger, reusable materials. Development, with a focus on forest management  and improving the production process and products; In addition to this, the Group’s Navigator brand has broken new ground in engaging with its consumers, To continue involving partners in the forestry by running global promotional campaigns, which  sector in compliance with good practice in forestry management. over the reporting period attracted participation by more than . million users, in more than To ensure that the Portucel Group remains  countries. attractive to Employees and to position it as  one of the best companies to work for and a benchmark for attracting and retaining talent.
  32. 32. meetthe people40 The People43 Professional Development46 Health and Wellbeing at Work
  33. 33. sustainability report ‘In order to help achieve its strategic goals for sustainability, the Group has invested in training in quality, sustainability, environment and safety’ .. The People The Portucel Group’s Human Resources Policy is based on a set of values which shape its dealings and investment in its human capital. In , the new Ethics Code took effect, setting out the principles, procedures and rules in force in the business ethics area. The Code of Ethics is available to all Employees, via the Group’s intranet, and in  the Board of Directors set up the Ethics Committee, to advise and assess the implementation of the Ethics Code. This Committee reports annually on its findings and makes proposals for more effective implementation. Social values in the Portucel Group: Accountability • The Group is accountable to its workforce; Respect • Respect for their dignity and recognition of merit; Safety • Ensuring their health and well-being at work; Initiative • In return, it expects professionalism and initiative.
  34. 34. sustainability report Commitment / To implement the Code of Ethics Publication of the Code of Ethics, with information provided to all Group Employees. Most of the Group’s human resources, around % of the , Employees were on permanent contracts at year-end and work in Portugal.a small percentage, %, are located outside Portugal, running the sales and marketing operations in other European countries, the United States and Morocco. The long term commitments involved in the Portucel Group’s operations and its capacity to retain Employees has resulted in a human resources Workforce by occupational category structure in which nearly all Employees are on , , permanent employment contracts (%). , , Freedom of association is a right enshrined in Portuguese legislation, and the Group’s Employees , , , enjoy complete freedom to join any organizations , that defend their occupational rights and interests. During the reporting period, the percentage of Employees covered by collective bargaining stood at % in  and % in , figures attributable solely to the discretion of our workforce, who enjoy absolute freedom in this regard.             * *   Operatives Senior Management Total of and Tecnical Employees Middle Management Top Management * When comparing personnel indicators in this report with those from the / Sustainability Report it should be noted that the figures for  and  do not included the Board of Directors.  When comparing personnel indicators in this report with those from the / Sustainability Report it should be noted that the figures for  and  do not included the Board of Directors.
  35. 35. PORTUCEL GROUP5.2. Professional 2008* 2009* 2010 2011Development Employees receivingIt is standard practice in the Group for performance frequent feedback 97% 97% 97% 98%assessments to be conducted on the basis of clear on their performanceand measurable operational targets. In 2011, the Employees receivingperformance assessment system was revised in order frequent feedback on 88% 87% 88% 94%to include targets relating to satisfaction levels for career developmentservices provided by company departments to their * When comparing personnel indicators in this report with those from the 2008/2009internal customers. Sustainability Report it should be noted that the figures for 2010 and 2011 do not included the Board of Directors.The review of the performance assessment systemmade it possible to strengthen the culture of Employees’ pay comprises a fixed component, setexcellence and quality demanded throughout in accordance with their category and professionalthe Group and to improve effectiveness in the experience, and a variable component, defined on theimplementation of strategic goals. In 2011, 98% basis of the performance of the Employee and his or herof Employees were involved in the performance functional unit, and of the Group’s results.assessment process and 94% in the careerdevelopment process. This makes it possible to align When targets are exceeded, individual Employees enjoythe Employees’ goals with those of the Company higher levels of pay and at the same time the Group isperiodically, identifying the expectations of able to improve efficiency levels and the quality of pulpboth parties. and paper production, whilst reducing environmental and social impacts. As a matter of principle, the Portucel Group sets starting salaries at well above the minimum wage, for women as Commitment 2010/2011 well as men. No distinction is made between men and women in the principles or rules for the pay structure, in any of the occupational categories used. Integrate sustainability The Group has reviewed the career and pay scales for indicators in the Employee operative works in order to adapt careers more closely to the actual work, responsibilities and skills of the performance assessment Employees in question. These measures have made it and management system. possible to include the majority of Employees in the new pay scale. The performance system, revised in 2011, sets financial, environmental and social targets relevant to the Group’s business, with an impact on Employee’s variable remuneration. 

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