Australian Paper is an Australian company and wholly owned subsidiary of Japanese company Nippon Paper Industries. It produces and supplies a wide range of paper products in Australia and exports to over 70 countries. Its head office is in Melbourne and it has pulp and paper mills in Victoria and New South Wales. In 2011, its total pulp and paper production was over 1 million tonnes and its sales volume was 668,749 tonnes. Its key brands for paper products in Australia include Mega, Sorbent, and Tudor.

1. Sustainability
Report 2011

2. contents
Contents Governance 15
Message from Jim Henneberry, Sustainability Goals and Targets 17
Chief Executive Officer 2
Environment 20
Message from Shaun Scallan, General Manager,
Corporate Social Responsibility 4
People 34
Sustainable Paper – the Choice 5
Economic 47
About this Report 6
Glossary 49
Australian Paper – an Overview 7
GRI Content Index 50
Stakeholder Engagement and Material Issues 10
GRI Application Level Check 52
Future Fibre Strategy 13
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.

4. Our
People,
the fibre
of our
business. 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
Jim Henneberry challenges into opportunities by incorporating a
risk management approach. We have responded to
Chief Executive Officer marketplace requirements. Our strategy this past year
Australian Paper 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

5. AUSTRALIAN PAPER sustainability report 2011
We have a domestic market keen to buy Australian Continued engagement with diverse stakeholder groups
made product. The opportunity is here for us to around future fibre sourcing will help us to continue
truly consolidate our position as a proud and iconic to balance our economic, social and environmental
Australian company that customers want to support. performance and build mutually beneficial relationships.
Australian Paper has, after all, clocked up over 140 years
of operation in its various forms. The acquisition of In 2012, we will conduct a feasibility study into the
the assets of local manufacturer Australian Envelopes development of a major recycling plant at our Maryvale
after they entered voluntary receivership in July 2011 mill. We want to ensure that increased customer
provided us with a growth opportunity. We have demand for recycled product can be met through local
ensured the future of envelope manufacturing in manufacturing rather than imported sources. The
Australia and have further strengthened our position development of this plan would divert large amounts
in the marketplace. Australian Paper now has the of paper from landfill and provide further regional
largest envelope manufacturing facility in the country. employment in the Latrobe Valley.
Australian Paper will continue to look for growth
In some areas, such as in water reduction, we haven’t
opportunities in the market to strengthen our economic
achieved the goals we set in the last reporting year. Our
position in the marketplace.
partnership with the Gippsland Water Factory was set to
A necessary consolidation of our stationery commence in 2011, however due to significant rainfall
manufacturing operation also took place, with the in the period following the time of approval, the intake
closure of the Regency Park stationery manufacturing of recycled water was not required. What truly became
plant in South Australia and relocation to Preston evident in 2011 is that Australian Paper’s integration with
in Victoria. Increased carbon neutral product has Nippon Paper Industries (NPI) in 2009 has improved
been well received by customers across the board efficiencies across our operations. Through the adoption
and we are pleased to note that we achieved our five of Japanese manufacturing best practice processes
year Forest Stewardship Council® re-certification. at our Australian locations, our fixed costs have
Our Preston manufacturing plant achieved Australian significantly reduced.
Forestry Standard Chain of Custody certification which
Co-operation and support from our friends at NPI
now extends our certified product range to include
has continued despite the devastating impacts of
locally manufactured envelopes. Australian Paper
the Japanese earthquake and tsunami in March 2011
continues to be the largest industrial producer of base
on Japanese operations. We greatly appreciate NPIs
load renewable energy in Victoria. We have also seen
continued commitment to Australian Paper which has
improvements in safety with a cultural embrace of our
become core to our sustainability as a business.
Zero Harm strategy at our Maryvale mill.
In 2012, Australian Paper will seek to maximise further
An invigorated response to external stakeholder
opportunities in the marketplace, through increased
engagement through our Future Fibre Strategy, launched
distribution of product and expanding our range of
in June, has also been essential in finding out what our
environmentally preferable products. We will also
stakeholders expect from Australian Paper in terms of
continue to increase our production of renewable
sourcing an acceptable long term fibre supply.
energy and aim to further reduce our energy use and
Any shifts in fibre supply strategy need to be carefully waste per tonne of pulp and paper production across
studied as what is determined today will still remain the our sites. While 2011 proved to be a challenging year for
fibre sourcing solution over the next 30 years. Australian Paper, I firmly believe that we can continue to
turn challenges into opportunities. I’d like to encourage
The Future Fibre Strategy will also include an increase in the Australian manufacturing sector to demonstrate
plantation fibre to address the shortfall in our long term that through innovation and the adoption of best
requirements. This shortfall is due to the impact of fire practice processes, Australian businesses can be smart,
on our existing plantation supplier and the inability of sustainable and here for the long term.
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
Jim Henneberry.
and the first deliveries of these additional plantation
volumes are anticipated for early 2012.
a message from the CEO 3

6. Message from Shaun Scallan,
General Manager, Corporate
Social Responsibility
The creation of my role in March 2011 marked a More focus is given to highlighting our governance, risk
concerted effort by the executive team to take and compliance approach to business, which we believe
responsibility for sustainability throughout Australian will also benefit other companies in the manufacturing
Paper. We recognised that we needed to communicate sector. A greater focus is also given to our people –
our sustainability story in a way that shows that we are those who our CEO Jim Henneberry referred to as ‘the
accountable for our actions. The result of this of course fibre of our business’ in 2010. Greater engagement with
was the publication of our 2010 Sustainability Report our internal stakeholders in 2011 gave us insight into
– our first report aligned with the Global Reporting what really matters to them about the way we operate
Initiative (GRI) framework. our business and how we communicate with them.
It was important for Australian Paper to lay the Continuous improvement projects developed and
groundwork for future sustainability reporting using a implemented by our staff demonstrate what we can
transparent and credible mechanism such as the GRI achieve as team members with shared objectives and
framework. Last year’s achievement in publishing our how we can remain a sustainable and viable business
first report has also proved stimulating for our internal in Australia.
and external stakeholders. Interest in our sustainability
practices is gaining momentum throughout our With our second and future GRI reports, we intend to
operations and beyond. increase the focus on how our business runs and better
articulate where we’re going. Put simply, we’re providing
For our 2011 report we have chosen to move from a more information to our stakeholders and encouraging
Level C report to a Level B report – hoping to broaden feedback so that we know what is expected of us.
our story as a business and to communicate our
strategic direction more effectively. It was the natural We’re a corporate citizen – we believe a good one, and
next step in our sustainability reporting journey. our 2011 Sustainability Report aims to communicate this.
We welcome your thoughts.
Shaun Scallan.
Shaun Scallan
General Manager
Corporate Social Responsibility
Australian Paper
4 a message from the General Manager, Corporate Social Responsibility

7. AUSTRALIAN PAPER sustainability report 2011
sustainable paper
– the choice
A growing number of businesses and individuals
Paper Company % Certified Fibre*
understand the complexities of the sustainability criteria
Australian Paper 85%
in paper selection. However, we have some work to
do to raise awareness of the buying choices available UPM Kymmene 78% (see: www.upm.com)
to Australian consumers. We see one of our roles as Stora Enso 66% (see: www.storaenso.com)
educating businesses and individuals in their choice of Mondi 61% (see: mondi.com)
paper as there are far reaching environmental, social and
Resolute Forest 35% (see: resolutefp.com)
economic implications of their purchasing decisions. Products
In 2010-2011, Australia had a trade deficit of around $1.9 International 30% (see: www.internationalpaper.com)
Paper
billion in paper products. This provides a strong signal
Domtar 28% (see: Domtar.com)
that a very large proportion of paper and paper products
available in Australia is imported – $110 million of this * ertified fibre figures show the combined percentage of PEFC and FSC®
C
deficit comprises commonly used white cut ream office certified fibre and were sourced in June 2012 from publicly available
paper (see: www.industryedge.com.au). information
Clearly this is negatively impacting our economy, and The procurement of sustainable paper products should
impacting Australia’s opportunities to grow domestic be defined by authentic sustainability criteria that
manufacturing and to increase local employment in the address key issues relating to environmental, social and
paper manufacturing sector. economic outcomes. Chain of Custody certification
allows fibre to be tracked through the supply chain to
Many consumers may also not be aware that imported its source. By incorporating a robust sustainable paper
paper flooding our market is often from countries procurement framework, businesses and individuals can
with controversial environmental and social practices. make a sustainable choice.
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

8. about this report
Australian Paper’s 2011 Sustainability Report is the External assurance has not been sought for this
second aligned with the Global Reporting Initiative’s report, as Australian Paper undertakes assurance
(GRI) sustainability reporting framework. We have activities around energy and emissions, and financial
compiled this report in accordance with the GRI’s Level data to ensure that data collection and reporting
B reporting requirements and the report has received a methodologies and procedures are in accordance with
GRI Application Level Check. industry best practice.
We progressed from a Level C to a Level B report This report provides an overview of Australian Paper’s
as part of our continuous improvement processes sustainability performance for the 2011 calendar year.
and to provide greater detail of our environmental, The Global Reporting Initiative’s ‘Guidance for Defining
social and economic impacts throughout the Report Content’ document shaped the report structure
organisation and beyond. Moving to a greater level of and content. Our next planned report will be our 2012
disclosure was influenced by a number of factors: our sustainability report, to be published in 2013.
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
Report Boundary
the overwhelmingly positive response to our 2010 The report boundary has been extended from our
sustainability report, our Risk Management team 2010 report. Environmental data for this year includes
approved the evolution of our report from a Level C to a energy and greenhouse gas emissions for our Preston
Level B for 2011. manufacturing facilities. In 2010, we included this
information for our mills only. All other environmental
The scope of our report has not changed greatly since
data represents activity at our Maryvale mill in Victoria,
our last report in 2010, as although more in-depth
and Shoalhaven mill in New South Wales unless
stakeholder engagement was undertaken in this
otherwise stated.
reporting year to determine material issues, we found
that according to stakeholder feedback most issues All information covers our Australian based divisions
remained the same. Greater focus has however been only. Reporting on overseas divisions of Australian Paper
given to fibre sourcing through discussion around is beyond the report boundary. We do not anticipate
our Future Fibre Strategy and also to reporting on reporting overseas information in the foreseeable future.
more employee focused data as was the request by There are no further limitations on scope or boundary.
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

9. AUSTRALIAN PAPER sustainability report 2011
australian paper
– an overview
Head Office Our Product
• Company head office is located in Melbourne, Categories
Victoria.
Australian Paper manufactures and supplies a wide
range of papers for many end uses, from office paper
Our Markets to invoices and statements, book and publication
papers, food wrappers and bags, paper for carton liners,
• Primary: envelopes, coloured papers and boards. Watermarked
— Australia and New Zealand business to consumer and embossed security and cheque papers are
and business-to-business markets manufactured and we convert stationery and envelope
• Secondary: products. We also manufacture certified pulp to use
— Australian Paper brands are exported through in the production of our printing, communication and
our Paper Products Marketing (PPM) division packaging papers. Pulp is also sold to other businesses
to over 70 countries in Asia, North America, such as tissue manufacturers.
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
our paper and pulp production
933,441 918,458 920,698 986,937 1,039,706
total pulp and paper (‘000)
600
500
Our Sales Volume
400
• 668,749 tonnes
300
200
100
0
2007 2008 2009 2010 2011
paper pulp
australian paper – an overview 7

10. Our Brands
Australian Paper manufactured and owned brands are:
Our Company Our Operations
Structure Australian Paper’s domestic operations comprise a
number of business units, each with its own capability
Paper Australia Pty Ltd, trading as Australian Paper is
spanning manufacturing, production, printing, and sales
wholly owned by Nippon Paper Industries Co. Ltd.,
and marketing. Australian Paper’s mills are located in
incorporated in Japan. Paper Australia Pty Ltd. wholly
Maryvale, Victoria and Shoalhaven in New South Wales.
owns and operates the Australian Office division in
Our envelope and stationery manufacturing is located
Australia. Foreign entities listed below are all subsidiaries
at Preston in Melbourne. Sales and marketing operations
of Paper Australia Pty Ltd., and operate Paper Products
are primarily located in Melbourne, and additional sales
Marketing (PPM).
offices are located in Queensland, New South Wales,
ACT, South Australia and Western Australia. Overprinting
machines are also located in Queensland, New South
Significant subsidiaries Country of Ownership
and their divisions incorporation Interest Wales, and Western Australia.
Paper Australia Pty Ltd
• Australian Office Australia 100%
Paper Products Marketing
Pty Ltd
Australia 100% Company Ownership
Paper Products Marketing Taiwan 80% Australian Paper is an Australian Proprietary Company,
Taiwan Ltd limited by shares and registered with the Australian
Paper Products Marketing Hong Kong 100% Securities and Investments Commission (ASIC). Nippon
Hong Kong Ltd
Paper Industries Co. Ltd is the sole shareholder.
Paper Products Marketing Malaysia 100%
Pty Ltd
Paper Products Marketing
Singapore Pte Ltd
Singapore 100%
Our People
Paper Products Marketing USA 100% • 1368 employees Australia wide as at December 2011
USA Inc.
PPM Frohlen-Reddeman Germany 100%
GmbH
Australian Paper
Australian Paper Australian Paper Australian Maryvale Shoalhaven Paper Products
Print Packaging Office Mill Mill Marketing Group
(PPM)
Offset Kraft liner board Office Papers Integrated Speciality and Export Sales
Web Sack and Stationery Pulp and Paper Security Papers and
Specialty bag papers Envelopes operation Global Paper
Transactional Trading
Mail Security
8 australian paper – an overview

11. AUSTRALIAN PAPER sustainability report 2011
Our Certifications • Australian Forest Products Association (AFPA)
• Australian Industry Group
Products
• Australian Forestry Standard (AFS) Our partnerships
• Programme for the Endorsement of Forest • Monash University
Certification (PEFC)
• Swinburne University
• Forest Stewardship Council®
• Australian Institute of Management
• National Carbon Offset Standard (NCOS)
• Environmental Choice New Zealand
Awards
Sites
• Australian Forestry Standard (AFS) Chain of Custody Safety
• Forest Stewardship Council® Chain of Custody Australian Paper Maryvale mill received the Safety
• ISO 14001 – environmental management (Maryvale Scheme of the Year Award from Manufacturer’s Monthly
and Shoalhaven mills) magazine for the ‘Refresher Training Toolbox 24/7’
scheme launched in 2010.
• NATA certified onsite laboratory at Maryvale mill
• ISO 9001 – quality management (all operations) The Victorian Association of Forest Industries (VAFI)
presented Maryvale mill with the Occupational Health
• AS 4801 – safety (Maryvale mill)
and Safety Award for best practice in OHS processes
* dditional to our own certifications, we look for our suppliers to have
A and results.
either certified product or fibre that meets the AFS/PEFC and FSC®
requirements.
Community
Our Licences
Maryvale mill was also the recipient of VAFI’s Local
Community Engagement Award, for ongoing outreach
• Environment Protection Authority (Maryvale and efforts with the local Latrobe Valley community.
Shoalhaven mills)
• Major Hazardous Facility (MHF) at Maryvale mill Corporate Social Responsibility
• Australian Made, Australian Grown Australian Office received Corporate Express Australia’s
inaugural award for Corporate Social Responsibility
Supplier of the Year in recognition of Australian
Our Memberships Office’s proactive approach to further improve the
environmental credentials of Corporate Express’ Own
• FSC® Australia
Brand copy paper as they transitioned from EXP to
• AFS Limited Staples Carbon Neutral Copy Paper. The product is
• WWF’s Global Forest and Trade Network (GFTN) certified to AFS, PEFC and NCOS. As Corporate Express
customers move from EXP products to Staples Carbon
• Victorian Association of Forest Industries (VAFI)
Neutral, this will reduce carbon emissions equivalent to
• Timber Communities Australia (TCA) taking 16,500 cars off the road each year.
• Standards Review Committee – Australian
Forestry Standard
australian paper – an overview 9

12. stakeholder engagement
and material issues
Ongoing communications with our key stakeholder • Develop and build working partnerships with
groups is an essential part of our business and provides stakeholder groups
an important platform from which we make informed
• Mitigate risk to our business and products
business decisions, shape our future strategies and
determine which issues are material and should be • Manage our reputation by providing open channels
reported on. Engaging with our stakeholders provides of communication, and
us with an opportunity to better negotiate working • Explore innovative approaches to achieve
relationships, evaluate the potential impacts of our common goals.
business decisions and understand activities undertaken
by various stakeholder groups. Engagement also We communicate with our stakeholders through
helps us to achieve balanced economic, social and numerous methods such as our ongoing monthly
environmental outcomes. Community Consultative Committee (CCC) in
the Latrobe Valley in Victoria, annual community
2011 saw a more formalised approach to stakeholder consultation group at Shoalhaven, New South Wales,
engagement than in previous years. We took the time to face-to-face discussions, multi-stakeholder forums,
capture issues and concerns from numerous individuals surveys, website, road shows, communications materials
and organisations about our products and operations, and others.
allowing us to group the issues by stakeholder group,
and prioritise material issues for action. Maryvale’s CCC provides feedback on environmental
improvement opportunities to ensure Australian Paper
Through this process, our stakeholder groups were activities are aligned with community expectation.
identified as: In 2011, a collaborative engagement workshop was
• Nippon Paper Industries (NPI) – our parent company held with Australian Paper and EPA Victoria to further
improve responses to community complaints and
• Employees
to look at ways to encourage direct communication
• Customers between the public and the Maryvale mill.
• Suppliers
The majority of our stakeholder engagement activities
• Federal, state and local government in 2011 centred on the review of Australian Paper’s
current fibre sources with a view to shaping our Future
• Non-Governmental Organisations (NGOs), including
Fibre Strategy to align with stakeholder expectations
Environmental Non-Governmental Organisations
where possible.
(ENGOs)
• Unions A number of formal engagement activities took place
including multiple face-to-face discussions with many
• Local communities, and
stakeholders, to ensure we were hearing as many voices
• Industry associations and groups.
as possible. Australian Paper and these groups discussed
in detail, strategic planning and day-to-day aspects
With continued stakeholder engagement, Australian
of ours and our supplier operations, to effectively
Paper aims to:
and transparently communicate our plans and seek
• Understand the needs and wants of stakeholders stakeholder input and feedback.
• Achieve the best possible outcome for all parties
involved, where possible
• Engage in open and transparent communications
10 stakeholder engagement and material issues

13. AUSTRALIAN PAPER sustainability report 2011
Key topics raised in the Future Fibre Strategy review included:
Issue Stakeholder How we What we heard Our response Resulting stakeholder
group engaged driven goals and targets
Environment ENGOs Directly Preference for Western We commissioned the Future Fibre Strategy
through Victorian plantation Poyry report to provide a rollout
meetings and fibre to replace detailed analysis of fibre
also through native regrowth fibre sourcing options in Western
the Global supplies Victoria. Feedback on the
Forest Trade Poyry report was provided
Network
Concern about Australian Paper instigated
Leadbeater’s possum a review of VicForests and
habitat from wood DSE practices. Site visits
production and fire were focused around the
impact protection of biodiversity
and water. We also asked
for ENGO engagement
for Future Fibre Strategy
development
Concern about illegal Australian Paper continues We will continue to
logging to support GFTN principles report annually against
the GFTN Trade Action
Plan 2011-2013
Would like stronger We engaged with ENGOs We will continue to
certification for forest on a review of AS4708 and support strong protection
management in joined the standards review for biodiversity and
Australia committee improved stakeholder
engagement through the
Timber Industry Action
Plan and Australian
Forestry Standard
State Meetings The state government We discussed directly We will support events to
Government and direct is committed to and wrote to the state engage our stakeholders
engagement the protection of government to encourage with forest science
biodiversity including communications on experts
rare, threatened and threatened species research
endangered species already underway
Social Timber Meetings Concern about the We engaged with state We aim to gain industry
Communities and direct future of the timber government and the support from state and
Australia engagement industry, particularly union to establish industry federal government
with relation to support for continued
jobs availability and operations
security in timber
communities
Union Meetings Concern about job
security for members
Local Meetings Concern about the We provided factual We aim to ensure that
Government and through impact of the Ethical information on issues Municipal Association
– regional Timber Paper campaign on of concern through our Victoria (MAV) is
Victoria Towns the viability of the information portal – Ethical adequately informed of
forestry industry Paper – the Facts the facts available related
and impact on local to this campaign
communities
Local Email and MAV members were
Government invitation to being encouraged to
– across stakeholder support the Ethical
Victoria events Paper campaign
(continued overleaf)
stakeholder engagement and material issues 11

14. Key topics raised in the Future Fibre Strategy review included (continued):
Issue Stakeholder How we What we heard Our response Resulting stakeholder
group engaged driven goals and targets
Economic Government Directly Concern about the We identified and Identify and develop
– local, state through economic impacts communicated these opportunities for
and federal meetings throughout the impacts to the state and Australian Paper to
local community federal government successfully continue
if jobs were lost as operations in regional
a consequence of Victoria with industry
a downturn in the support from state and
industry federal government
Suppliers Directly Concern for the Future Fibre Strategy
through impact of supplier rollout
meetings economic viability if
they cannot source
sufficient wood
through various
impacts and decisions
Major Combined Buying sustainable We are committed to Future Fibre Strategy
customers meetings products is important sourcing certified wood rollout
with and communicating
customers sustainability information of
and ENGOs our products
Buying price We are committed to using
competitive and Australian fibre sources and
Australian products is manufacturing locally
important
Products must be Locally manufactured
price competitive product will be
competitively priced if
we have available and
competitively priced fibre
sources
Support for recycled We have broadened our Carbon neutral products
paper and carbon carbon neutral offering, will continue to provide a
neutral product and hope to increase our significant portion of our
recycled product range offerings, and a de-inked
pulp facility feasibility
study will be completed
in 2012
Australian Paper We are committed We will continue with
brand reputation to transparent focused stakeholder
is important for communications with engagement in coming
customers to continue our stakeholder groups in years
to buy coming years and have
undertaken major work
with industry bodies
Clarification required We are committed to both Continue to maintain
about the differences standards and believe that FSC® and AFS Chain of
between FSC® and both standards can be Custody certification
PFEC/AFS certification improved
Internal stakeholder feedback was sought through an As we progress with our stakeholder engagement,
online survey to gauge opinions on our first GRI aligned we expect that our key stakeholder groups will look
sustainability report released in 2011. The survey gave us to the Australian Paper sustainability report as a
insight into employees’ awareness of Australian Paper’s transparent representation of our activities. We also look
sustainability performance, further issues deemed to be guided by our stakeholders to determine future
material for future reports, employee perception of our material issues.
company as a sustainable and responsible company,
and recommendations for improvement for the report In 2012 we will:
and the business. A number of environmental, social and • Develop a stakeholder engagement policy to provide
economic topics in this report are included as a direct an ongoing framework for our engagement activities
result of internal stakeholder feedback. Suggestions
• Develop formal internal stakeholder engagement
for improvements in how we communicate our
processes to reach out to more staff and employees
sustainability report have also been taken on board.
to receive feedback on our sustainability activities
Sustainability report briefings were also held with staff and sustainability reporting
and employees and information disseminated in the • Provide an online feedback mechanism to which
weeks prior to publication. stakeholders can respond to our sustainability report.
12 stakeholder engagement and material issues

15. AUSTRALIAN PAPER sustainability report 2011
future fibre strategy
Announced in June 2011, Australian Paper’s Future Fibre
Strategy details a 30 year planning window to our fibre Utilisation of existing
sourcing plans. and other plantation
The strategy’s direction was informed by an extensive sources
stakeholder engagement program which reviewed
Australian Paper’s current fibre sources. As a result The findings of the Poyry report did not reduce
of this engagement, we were able to shape the most Australian Paper’s need for additional plantation
environmentally, social and economically viable long and recycled fibre sources to meet long term fibre
term fibre sourcing strategy. requirements. As a result, in September, we announced
our plan to increase plantation inputs by maximising
The review included discussion on the potential for usage from existing suppliers, utilising investment
future fibre sourcing including plantation timber from plantations in Central Gippsland and accessing some of
Western Victoria, other plantation sources, sustainably the closest parts of the Western Victorian plantations.
managed wood from regrowth state forestry operations
and recycled fibre. Investigations are also being undertaken into the
feasibility of using other plantation sources. We are
completing trials to increase our plantation supply
Investigating yields and are negotiating to take additional volumes
from a new Victorian supplier. We are also looking
plantation timber carefully at the creation of new plantations close to
sources from Western our Maryvale mill.
Victoria
Plantations 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

16. Recycled fibre Sustainably managed
Australian Paper is the only Australian manufacturer of wood from regrowth
office, packaging and printing papers and supplies the
majority of the recycled paper sold in Australia each
state forestry
year. The high grade de-inked recycled pulp used by operations
Australian Paper in recycled office and printing papers is
The harvesting of sustainably managed regrowth for
manufactured from local wastepaper at Amcor’s Fairfield
sawn timber produces significant quantities of low
Mill in Victoria.
grade residual wood which is ideal for paper making.
Due to the anticipated closure of the Fairfield plant from Australian Paper is one of the outlets for this wood
mid 2012, Australian Paper will conduct a Feasibility which would otherwise be left on site to rot or be burnt,
Study for a large recycled pulp facility at our Maryvale or sent overseas as woodchips. Australian Paper sources
Mill. Based on the size of the Fairfield plant, this facility this wood from VicForests and local sawmills.
would more than triple Australian Paper’s usage of
The Victorian government estimates that certified,
de-inked recycled fibre and would significantly expand
sustainably harvested regrowth timber generates
the Australian market for recycled office and printing
approximately 11,000 jobs in forestry and downstream
papers. This plant would divert around 80,000 tonnes of
processing, the majority of which are in regional areas.
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

17. AUSTRALIAN PAPER sustainability report 2011
governance
Paper Australia Pty Ltd, trading as Australian Paper is a Board Charter and Risk Management Framework. Risk
private company. Financial reports are communicated to Compliance Committee and OHSE Committee member
parent company Nippon Paper Industries Co Ltd (NPI). composition is decided by the Executive Committee on
An appointed auditor audits our accounts each year, the recommendation of subcommittee members.
and financial statements are lodged with the Australian
Securities and Investment Commission (ASIC) as Remuneration arrangements for Australian based
required by the Corporations Act (2001). executives and directors are determined against
the same merits as all other Australian Paper staff
employees. Japanese director remuneration is
Our board determined by NPI.
NPI directly assesses the board’s economic,
The Australian board of directors is elected by our
environmental and social performance.
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 Risk Management
males, and a female secretary.
Australian Paper has established an enterprise-wide
Each director completes a declaration and consent to risk management process, consistent with the risk
become a director in which the director declares their management principles, framework and process of ISO
interests and makes a standing order under section 192 31000 Risk Management Principles and Guidelines. The
of the Corporations Act. risk management governance structure is set out in and
governed by the Board Charter and Risk Management
A chairman is elected at each board meeting, held three Policy. Committee members are responsible for
to four times per year. Each board meeting provides reporting areas of risk within their business area.
an opportunity for any director to give notice of any
conflict of interest. Other senior managers involved in operational matters
are responsible for:
Australian Paper’s Board Charter deals with the process
• Implementation of the risk management framework
to be applied for the handling of any conflict of interest.
and guidelines within their respective areas of
responsibility
There are no independent directors, as non-executive
directors are employed by NPI or Paper Australia Pty Ltd. • Reporting on the status of the risk register as part of
the annual planning and review cycle
• Ensuring compliance with the process requirements
Our Committees for the risk assessment of new projects and contracts,
and
An Executive Committee is a delegated subset of the
• Conducting an annual review, teaming up with senior
Board and is comprised of two executive directors
functional heads of risk.
and one NPI representative director. An Occupational
Health, Safety and Environment Committee reports to
Risk groups include group issues (financial, insurance,
the Executive Committee and the Risk and Compliance
legal and strategy), operational issues (mills and sales/
Committee. The structure, scope and reporting regime
marketing), systems issues, human resources issues and
for all committees, including member accountabilities
safety, health, environment and community.
and responsibilities is set out in Australian Paper’s
15
governance

18. Communication of risks and recommended actions
is the responsibility of the individual to whom a risk Code of ethics
is allocated for review and is comprised mostly of
Our code of ethics commits Australian Paper to the
members of the relevant committee. The committee
following actions. We:
members are also responsible for providing updates to
the committee when it meets. • Strive to be a safe, positive, preferred place to work
where high standards are upheld
The Risk and Compliance Committee usually meets
• Commit to improve our own individual and team
quarterly. Summary findings are reported to the
performances, and to build our organisational
Executive Committee, Internal Audit and Board.
capability
• Uphold the highest level of integrity in meeting
customer and shareholder needs and expectations
• Ensure fair and transparent decision making where
NPI Co Ltd
our employees can be heard
• Accept that the best solutions may come from
different levels of the organisation
• Commit to being a highly regarded corporate
citizen, caring for the environment and positively
working with our local communities and broad
Audit: Board of
J-SOX Directors range of stakeholders.
Communicating with
Executive
our employees
Committee
Our 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
Occupational
Risk and major initiatives and actions taken in order to build a
Internal Audit Health, Safety
Compliance
Function Environment sustainable business. Communications are undertaken
Committee
Committee
on a regular basis. Briefings are also provided for trade
union officials who represent our employees.
16 governance

19. AUSTRALIAN PAPER sustainability report 2011
sustainability goals
and targets
Progress on 2011 sustainability goals and targets
Goals Targets Progress Commentary
Yes No In
progress
Environment
Uphold FSC® Complete a full 5 year FSC® X
fibre certification re-certification audit
Review long Consult a broad range of stakeholders X
term future fibre and invite participation in Future Fibre
sourcing options Review
Review and implement Future Fibre X
Strategy
Reduce water Gippsland Water Factory to supply X Approval for the project was received in
use at Maryvale Maryvale mill with eight mega litres September, and increased demand on
mill of recycled water per day for use in Gippsland Water’s resources over the
industrial processes from May 2011 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 Reduce carbon emissions by 1% X Restatement required – target incorrectly
emissions identified in 2010. Target should be a 1%
reduction of energy per tonne of pulp and
paper
1% reduction in energy per tonne of X Achieved a 0.562% decrease
pulp and paper
Reduce waste at Roll out a composting program where X
Shoalhaven mill recovered paper solids are converted to
compost
Reduce waste at Introduce bins to the machine floor to X
Maryvale mill reduce metal waste
Introduce bins to recycle plastic, X
aluminium, paper, stainless steel and
co-mingled metals
Introduce bins to the canteen area and X Will commence in 2012
kitchens
Investigate battery recycling programs X
for Maryvale
Look for innovative, alternative uses for X Fibre Finders Project at Shoalhaven mill
waste across operations
Grits and dregs recycling proposal at
Maryvale mill
(continued overleaf)
sustainability goals and targets 17

20. Progress on 2011 sustainability goals and targets (continued)
Goals Targets Progress Commentary
Yes No In
progress
Safety
Increased Implementation of the Zero Harm OHS X The strategic plan is tracking well
management Strategic Plan 2011-2015
control and
improvement
of behavioural
safety at
Maryvale mill
Improve safety Achieve separation of people and X To be completed in 2012
and reduce mobile equipment where practicable
safety risk at
Shoalhaven mill Implement a permit to work system X
Review working at heights and X
complete upgrades to the paper
machine
Complete safe lifting upgrades X
Complete a joint investigation action X
plan
Implement a cardinal rules, fair X Cardinal rules and fair treatment model
treatment model and safety charter has been completed. Safety charter in
progress
Implement a drug and alcohol policy X Will be completed in 2012
Improve safety Achieve WorkCover self insurance X Will be completed in 2012
and reduce
safety risk at Implement extra guarding on X
Australian Office machinery
Prepare for and implement new national X Will commence in 2012 as legislation was
OHS legislation including compliance delayed
codes
Implement individual site training plans X
Reduce noise on machines X Commenced in 2011 and will continue in
2012
Continuous Improvement
Implement Continue the 5S lean manufacturing X Will continue throughout 2012
continuous process
improvement
measures at
Australian Office
Health and Wellbeing
Improve Focus on employee development X Developed a training matrix for all staff
employee program and developed training plans for lead team
development and high potentials as part of succession
program at planning
Australian Office
Improve the Hold seminars in conjunction with X Only a small number of employees were
health and WorkSafe in 2011 around programs on identified as high risk. These employees
wellbeing of diabetes then contacted their own doctors.
Australian Office
staff Hold seminars through the QUIT Stop X Cancelled – no plans to carry this into
Smoking campaign and reduce the 2012
incidence of smoking onsite
18 sustainability goals and targets

21. AUSTRALIAN PAPER sustainability report 2011
our sustainability goals
and targets for 2012
Goals Targets
Environment
Increase recycled fibre • Conduct a feasibility study of whether a recycling • Conduct a feasibility study to determine whether
options as part of the plant could be built at Maryvale mill developing a de-inked Pulp plant in Melbourne to
Future Fibre Strategy increase recycled fibre sources is feasible
Improve waste • Work with suppliers to determine whether we • Work with Monash University to find a regional
management can collect data on both the type and volume of solution to reduce solid waste at Maryvale landfill
waste being recycled
Improve energy • Continue to look for ways to improve energy efficiencies throughout our operations
efficiency
Monitor wetlands • Carry out ongoing monitoring and management of the billabong and surrounding wetlands
Ongoing odour • Finalise and submit the odour management plan • Continue to monitor and report NO x and SO x – a
management to the EPA mandatory requirement of our operating licences
Stakeholder Engagement
Further develop • Develop a stakeholder engagement policy • Develop formal internal stakeholder
stakeholder to provide an ongoing framework for our engagement processes to reach out to more
engagement policy and engagement activities staff and employees to receive feedback on
processes our sustainability activities and sustainability
• Provide an online feedback mechanism to reporting
which staff and employees can respond to our
sustainability report
Safety
Improve safety and • Implement a contractor safety management • Undertake safety specific contractor inspections
reduce safety risk at system and plant improvement plans
Maryvale mill • Develop an area traffic management plan
• Conduct Personal Protective Equipment and
Manual Handling risk reviews • Review dangerous goods management processes
• Develop an alcohol and drugs policy designed to • Roll out an emergency management plan
support and inform employees about managing • Review leading indicators
alcohol and drugs with relation to the workplace
• Continue WASP and Take 5 Steps behavioural
• Undertake Major Hazardous Facility Licence safety programs
renewal with WorkSafe
Improve safety and • Review and implement National OHS Legislation • Commence electrical safety review project
reduce safety risk at against current systems
Australian Office • Achieve additional OHS support by employing an
• Continue hazard risk reduction on machinery, additional OHS professional
manual handling and noise
Improve safety and • Finalise traffic management plan • Finalise and implement the new permit to work
reduce safety risk at process
Shoalhaven mill • Implement a drug and alcohol policy
• Commence TPM Improvement and area based
• Commence employee and contractor induction teams in the finishing department
program
Maximise human • Hire additional ex-Australian Envelopes staff to • Continue with targeted employee development
resource effectiveness fully support our increase in skilled staff in paper opportunities
converting
• Continue with our range of health and wellbeing
• See further consolidation in our head office, sales initiatives
and manufacturing operations to improve our
fixed cost base
Employee Development
Continue with • Further develop succession planning model
employee development
at Australian Office
Improve training and • Create a talent council made up of senior executives to oversee Australian Paper’s training and
succession plans succession plans
sustainability goals and targets 19

22. Environ
ment
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

23. AUSTRALIAN PAPER sustainability report 2011
environment
While 2011 was a challenging year, our environmental Our five year FSC® re-certification audit involved three
governance framework has provided a structure separate physical audits between September 2010
for resilience. Moving beyond the requirements of and July 2011, resulting in the renewal of our Chain of
Australian Paper’s environmental policy to ensure the Custody certification in August 2011.
‘effective use of energy, water and materials’, we have
implemented innovative and effective ways as part Since 2008, Australian Paper has also been Chain of
of our continuous improvement commitment and to Custody certified to the Australian Forestry Standard
reduce risk. which is the only forestry standard that is recognised by
Standards Australia. The AFS is globally endorsed by the
We intend to maintain this momentum in the coming Programme for the Endorsement of Forest Certification
years and firmly endure as a successful example (PEFC); the world’s largest forest certification organisation.
of environmental innovation in the Australian
manufacturing sector. Chain of Custody certification under the Australian
Forestry Standard and FSC® means that Australian Paper’s
As a result of our continuous improvement projects, manufactured products can be tracked clearly from the
we have: origin of the wood source, through the processing phase,
and finally, to the end product, ensuring confidence
• reduced waste to landfill and subsequently minimised
in the responsible management of the entire paper
cost – a key measure of sustainability
manufacturing and distribution process..
• re-engineered waste so that it is useful either in our
manufacturing processes or for other uses including The proportion of fibre input sources remained relatively
compost unchanged in the last reporting year, with the greatest
inputs being plantation fibre and fibre sourced from
• significantly increased our renewable energy
managed regrowth forests in Victoria. Waste paper
production using black liquor
and de-inked pulp together comprise around 9% of our
• improved effluent treatment and
fibre source and in 2011, 52,894 tonnes was used in our
• decreased odour complaints. recycled products.
Almost two thirds of our fibre is from hardwood and
Fibre sources 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
Sustainable fibre sourcing remains a focus for Australian
of Western Victoria.
Paper. Our Future Fibre Strategy outlines plans to
increase plantation and recycled fibre from the current
Sustainably managed regrowth forests in the Central
ratio of almost two thirds.
Highlands of Victoria provide our second largest fibre
source. This wood is sourced from VicForests – a state
Australian Paper is one of the foundation members of
government owned enterprise. VicForests, together with
FSC® Australia and has been FSC® Chain of Custody
the Victorian government’s Department of Sustainability
certified since 2006. FSC® certificates are valid for
and Environment (DSE) and Department of Primary
five years and annual surveillance audits are conducted
Industries (DPI), is responsible for protecting, conserving
to verify continued compliance.
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).
21
environment

24. total fibre source
504,404 515,073 489,905 536,456 563,942 Key facts
600,000 • 86% virgin fibre is from certified sources
37,177
30,084
500,000 50,746
17,456 • 13% is sourced from saw mill waste
63,581 32,399 19,061 35,438
15,447 36,968
14,971
11,740 32,442 33,403 • 3% is sourced from private landholders
400,000 38,238
tonnes
• 85% of fibre sourced was Australian Forestry
300,000
Standard certified
200,000 • 47% is FSC® certified.
100,000
0 390,845 416,438 409,132 450,343 473,871 Is plantation wood more
2007 2008 2009 2010 2011
sustainable than managed
wood waste paper de-inked imported pulp regrowth wood?
The broader issue of whether plantation wood
wood purchased is more sustainable than wood from managed
forests is complex. Most major office paper
1,413,411 1,476,586 1,454,784 1,591,907 1,674,684
manufacturers in Europe and North America do
1,700,000
not place an emphasis on plantation sources and
1,600,000 source the majority of their fibre from managed
1,400,000 natural forests, choosing to focus on certification
1,200,000 as the material issue. In this way the whole tree
cubic metres
can be utilised with high grade wood being used
1,000,000
for sawn timber and low grade wood being used
800,000
for paper manufacturing. The trees are then
600,000 regrown using local seed to maintain biodiversity.
400,000 Certainly from an FSC® perspective, the emphasis
200,000
is on the responsible management of natural
forests for wood production. By area, only 8.4%
0
of FSC® certified forests worldwide are plantations.
2007 2008 2009 2010 2011
63.5% of FSC® certified forests worldwide are
natural forests and 28.1% are a mixture of natural
6%
35,438 forests and plantations (see: www.fsc.org).
fibre inputs 3%
tonnes
17,456
tonnes
7%
37,177
tonnes
47%
plantation* 262,960
tonnes
imported pulps
de-inked pulp
waste paper
managed regrowth*
37%
210,911
tonnes
*including sawmill waste
22 environment

25. AUSTRALIAN PAPER sustainability report 2011
Biodiversity 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
Australian Paper’s ethos is to encourage our fibre
ensure habitat for the species is adequately protected.
suppliers to protect the biodiversity found in
Victoria’s forests. Methods adopted within the pre-harvest surveys are
well known and commonly used and tested research
Australian Paper works with managed regrowth wood
techniques. Survey methods continue to be updated and
supplier VicForests to ensure that Victoria’s uniquely
refined ensuring an adaptive approach to threatened
diverse forest fauna species are protected through
species management.
the stringent management of commercial forestry
practices. VicForests values forest biodiversity and all Special Management Zone Plans have been created by
operations comply with the legislative framework that VicForests to appropriately manage operations in areas
governs sustainable timber harvesting in Victoria. Our where rare or threatened species have been recorded.
suppliers adopt the precautionary principle where there These Special Management Zone Plans may result in the
is the threat of serious or irreversible damage to the exclusion of harvesting in some areas and modifications
environment, in addition to a range of instruments to to harvesting operations in others to ensure adequate
protect biodiversity. suitable habitat is protected. Survey results are
forwarded to DSE for addition in the Victorian Wildlife
This framework protects a range of environmental
Atlas to improve our understanding of how native fauna
values present in our forests and requires various
is utilising our forests.
measures to be put in place when harvesting operations
are undertaken. These measures can include: In the future, VicForests will:
• Retaining habitat trees to allow for nesting • Continue to investigate the role of regenerating
• Retaining seed trees to help regenerate the forest forests as a source of habitat for native fauna
• Retain buffer zones alongside rivers, creeks and other • Ensure communication channels are developed and
key environmental features, and maintained between DSE and VicForests and other
research institutes to ensure a co-operative approach
• Retaining additional protection zones where
for the management of target species
no harvesting is permitted or where harvesting
operations are modified. • Continue to review its survey methodology to ensure
it remains adaptive and best placed to manage
This legislation also requires the protection of threatened biodiversity in Victoria’s State forests.
species and their habitat including Leadbeater’s Possum,
listed as endangered on the IUCN Red List.
Key facts:
Victoria has 4.8 million hectares of National Park and
• Around 6% of Victoria’s 7.8 million hectares of
conservation reserves which protect habitat for rare and
native forest is available and suitable for wood
threatened species.
production
Additional measures are also used to protect species • VicForests harvests around 5,000 hectares each
and potential habitat in our state forests, including year which is less than 0.07% of the total forest
an assessment of all areas prior to harvesting. This
• All harvested areas are fully regenerated with the
process commonly involves the exclusion of forest from
original mix of local species
harvesting. Specific fauna surveys are also undertaken
23
environment