Sustainability

January 2012

Sustainability- What is it?

To International Paper this means . . .

1. Managing Natural Resources

2. Reducing Environmental Footprint

3. Building Strategic Partnerships

Sustainability is meeting present needs without compromising the ability of future generations to meet their own needs*

* Source: Brundtland Commission

Vibrant Economy

Social Equity

Healthy Environment

Sustainability

Guiding Principles

Evaluate the entire supply chain for sustainability opportunities• Raw Material

• Manufacturing

• Packaging Design

• Distribution

• Product Use

• Recovery / End of Life

Build partnerships for greater success

• Collaboration helps uncover additional opportunities

• Partnering enables supply chain improvements beyond one’s own company

Renewable Paper-based packaging is made from trees, a renewable resource-- our fiber-based packaging is 100% renewable

Third-Party Certified Our containerboard and boxes are third party certified

Our use of a particular standard is dependent upon the location of the facility or forest--sourcing fiber from the closest source is one way that we ensure our environmental responsibility

Currently 100% of our boxes can be labeled with the SFI Fiber Sourcing logo

Regenerate the Forest Regeneration is a critical component of the forest life cycle, and use of our corrugated packaging encourages long

term, responsible forest stewardship

Demand for trees helps ensure that tree farmers will continue to keep their land forested rather than sell their land for development or clear it to grow other crops

Demand for wood-based products helps to maintain forests and ensures that trees are managed responsibly

Recycle Balance We balance renewable, virgin fiber with recycled fiber for optimal performance for our customer’s supply chain

Raw Material Sourcing Managing Natural Resources

Third-Party Certification

Organizations like the Sustainable Forestry Initiative (SFI) set certification standards, then accredited auditing firms verify a company’s performance against those standards–much like a financial audit verifies a company’s financial performance

Certification is supported by conservation groups, fights illegal logging while recognizing rights of indigenous peoples and protects water, soil, wildlife, and endangered forests

The SFI® mark is a registered mark of the Sustainable Forestry Initiative .

90% of paperboard and 93% of containerboard produced in the United States is supplied by SFI Participants

Certification ensures wood fiber is tracked from the forest to the consumer, with assurance that it comes from responsibly managed forests

Certification StatisticsHow Many Forests Are Certified?

Across the world less than 10 percent of forests are certified, and in North America, approximately 30 percent are certified.

U.S. Forestland OwnershipWho owns the American Forests?

Because approximately 70% of U.S. forestland is privately-owned, certifying forests is difficult and very fragmented

Privately-Owned(356 million

acres)

Government-Owned(146 million acres)

Commitment to 3rd Party Certification

International Paper supports 3rd party certification – all credible organizations

Our use of a particular standard will be dependent upon the location of the facility or forest

The idea that one forest certification system is preferable over all others is based on non-empirical, obsolete information

We believe that the focus should be on reaching the 90% of the forests that are uncertified with improved standards, rather than debating areas that are already sustainably managed

Our global certification policy and the certification status of our operations are publicly available at ipsustainability.com

Balance in Sources of FiberWhich is better virgin (new) or recycled?

Virgin Fiber

Collection/separation

• Distance to transport

• Re-pulp & de-ink

• Fossil fuel energy

• Solid waste

Harvest

• Distance to transport

• Chip & pulp

• Biomass energy

Recovered Fiber

There is no one “right” answer -- each choice results in tradeoffs between performance and environmental impact

Virgin vs. Recycled ComparisonOver the lifetime of a box

Cyclic humidity (50% RH for 6 hours 90% RH for 6 hours .Loaded at 6.4% of BCT(or 11.4% of BCT @ 85%RH

Considerations for your supply chain requirements and demands should be assessed to get the optimal performance.

Performance was similar in the first 2,000 minutes, after which the recycled box failed

And eventually (after 5,000 mins) so did the virgin box

Summary Virgin vs. RecycledWhich is better for the environment?

It Depends!

Paper fibers can be recycled an average of 4-7 times, so both are essential to making the entire system more sustainable

There cannot be recycled paper without virgin paper to begin and sustain the cycle

Virgin fiber that is grown and harvested sustainably helps keep private land forested

Requiring SKU / product specific recycled content percentages sub-optimize the system and can lead to less sustainable practices

IP finds the best suitable outlet for the fiber, leading to a balance between virgin and recovered fiber.

Energy Our mills use >70% renewable energy which is self-generated and carbon neutral

Since 2003, IP has invested over $250 million in energy efficiency improvements.

Green House Gas (GHS) Emissions We are founding members of the voluntary Chicago Climate Exchange (CCX) and the EPA Climate Leaders

Program in the U.S.

Under the Climate Leaders program, we committed to reducing emissions 15% from 2000-2010, and exceeded that goal by double

Fuel We have increased the amount of renewable fuel usage by over 5%since 2004, and decreased fuel oil and

natural gas use by 49% per ton of product since 2001 in the U.S.

Water We are focused on water conservation, recycling water within our mills and protecting water quality in waterways

that receive our water after use

From 2004-2008, our effluent decreased by 4%

When accounting for evaporation and precipitation, over 99.5% of total water inputs are returned to the environment

 

ManufacturingReducing Our Environmental Footprint

30% Decrease in GHG Emissions

GHG Emissions

Climate Leaders Data, includes all US Operations

Under the Climate Leaders program, we committed to reducing emissions 15% from 2000-2010, and exceeded that goal by double

Remove Through innovative paper and packaging design, we have made extensive progress in removing unnecessary

packaging and less desirable materials while delivering value to suppliers, retailers and end-users

Reduce Using performance-based and lighter weight papers and liners, our design experts optimize the amount of

material in the packaging, so it’s not over engineered but serves its purpose across the supply chain

“Right-size” and optimize packaging design for performance, product-to-packaging ratio and cube utilization for efficiency across the supply chain

Renewable Our structural design experts help customers determine the right balance of fibers and the right packaging

design to minimize material requirements without compromising strength and performance

Recycle / Recyclable Our corrugated packaging is 100 % recyclable and contains an average of 34% recycled content

We offer many innovative solutions that replace packaging materials that are not recyclable

We collectively improve packaging sustainability and the environmental impact when we share the latest innovations, collaborate together and incorporate new ideas into products and activities 

Packaging Design

Remove Packaging

CORRDrum™ with Triplewall Corrugated Technology™ A revolutionary all corrugated drum which replaces fiber, steel, plastic, and composite drums

• Made from recyclable linerboard and medium

• Complies with SFI sourcing standards

• Can be reused after providing product protection and end-user or consumer storage

• Used in a variety of food products such as cereal, pasta, vegetables, and industrial chemical products

• The package is recyclable with OCC eliminating the cost of landfill disposal and can provide revenue to retailers and end-users

Reduce Packaging

Box Compression Test Pro

• Optimizes corrugated packaging solutions by removing unnecessary packaging and reducing suppliers’ total costs through the supply chain

• BCTPro tests result in better utilization of materials, transportation and energy

• Proprietary technology built in to BCTPro helps deliver packaging solutions that perform throughout the supply chain

Box Compression Test Pro (BCTPro), International Paper’s corrugated packaging solution helps suppliers of Wal-Mart improve their sustainability commitments.

Reduce Packaging

Square or near square RSCs waste material Resizing for same cube or reorienting the opening can reduce

blank size

20 x 20 x 10 17.4 Sq ft

20 x 10 x 2013.2 Sq ft

24% reduction

Reusable Packaging

• Display-Ready Packaging for Fresh Produce

• Common footprint, modularity, and shelf- ready packaging minimize waste and improve cube utilization

• Improve efficiency and retail appeal while reducing material use, “less desirable materials,” handling and waste

• Using performance-based papers, optimized basis weights and removing excess materials “right-sizes” the packaging

Global footprint Our vast geographic footprint enables quick delivery and speed to market, which equals quicker

sales and realized profits

Strategic locations close to major retailers to better serve them and our CPG customers

Transportation Multiple locations reduces travel distance

Turnkey solutions under one roof enable manufacturing, pack out, etc. to all occur in one location vs. travel from facility to facility

Through optimized design, we reduce materials used, maximize cube utilization and product-to-packaging ratio, freight costs and reduce truckloads and lower green house gas emissions with less fuel

Warehouse Efficiency gains in labor and warehousing with fewer pallets, modular designs, and shelf-ready

packaging

Distribution

Reduce Packaging

Power Wing Display / Self-Shipper

Reduces the environmental footprint of the standardpower wing display by minimizing the number of components andeliminating the master shipper

• Self-shipping display uses an “overwrap” with a perforated die-cut that can be removed for

easier retail setup

• 40% less corrugated material used – reduction of display components and no master shipper

• Overall cost savings – 4 fewer pallets needed for same quantity of displays shipped

• The gravity feed design provides large billboard space to communicate brand message and product benefits

Reuse Our corrugated containers are often used multiple times to transport, protect and store products. Our

engineers develop packaging systems with the entire supply chain in mind and use materials that are reusable and returnable

Our corrugated packaging is 100 percent recyclable, so after its initial useful life it can be recycled and reused to make another product

Performance Products are designed and engineered for top performance with minimal environmental impact—

from protection and retail sales to reusability and recoverability

Design incorporates in-store activities to minimize the number of components and complexity of getting the display to the retail floor and shopped by the customer

Product Use

Reusable Packaging

Bulk Bin Packaging

• Used in a variety of food products such as pumpkins and watermelons

• Freight, labor, warehousing, and waste are reduced with International Paper reusable bulk packaging systems

• Many paper-based packaging solutions produced by the company can be reused after providing product protection and end-user or consumer storage

International Paper engineers develop multiple-trip and closed-loop bulk packaging systems for the supply chain with corrugated materials that are reusable and returnable.

Recovery / End of Life

International Paper Recycling One of the largest recyclers in the world, with extensive experience in recycling services

A leader in buying and selling recovered paper to mills globally, recovering more than six million tons of recyclable products each year

Well positioned geographically with 20 facilities in the U.S. and Mexico to serve customers in North America and close to major ports for export access

Results Our consulting expertise identifies areas to reduce costs or improve profits,

We help maximize warehouse space for product inventory, maximize the life of recovered fiber by using it in the most optimal application, reduce landfill waste and improve customers recycling revenue stream

Recycling Services

Recycle(able) Packaging

• In 2008, recovery of Old Corrugated Containers was 81%

• But paper production can not rely on recovered fiber alone - Paper fibers can only be recycled 4-7 times

• Recovered fiber growth rate is slower than the projected global fiber demand needs

• International Paper is one of the world’s largest paper recyclers – 6 million tons collected

• International Paper’s corrugated packaging contains an average of 34% total recycled content

Use materials made of the highest recycled content withoutcompromising quality

Recycle(able) Packaging

ClimaSeriesTM

- the latest technology in cold chain packaging that replaces waxed boxes

• Recyclable - Unlike wax products, ClimaSeries® boxes are salable though the regular OCC recovery system.

• Performance - Boxes that meet or exceed the performance of the entire spectrum of current waxed packaging.

• Cost-Effective - ClimaSeries® products help you get product to market fresh, protected, and in a recyclable package. ClimaSeries® products are cost-effective from a product and supply chain perspective.

Recycle(able) Packaging

“Duracool”

• Specially treated package assures ambient moisture and fungicide treatment stay on grapes instead of being absorbed by the package

• Recycles with other OCC and also reduces packaging, freight, and retailer labor costs throughout the supply chain.  

Display-ready, fully recyclable alternative to Expandable PolyStyrene (EPS) packaging

• Certified under the Fibre Box Association protocol as fully recyclable and fully repulpable

Partnerships for Greater Success

Partnering with International Paper’s packaging team gives you experts at every stage in the lifecycle of your corrugated packaging

We can help optimize fiber use and reduce environmental impact throughout the supply chain

We build sustainability into your business with products and practices that are not only the right environmental choice, but also the smart economic choice

 

Wal-Mart’s Sustainability Improvement Goals

• Be supplied 100% by renewable energy• Existing stores 20% more efficient in 7 years

• New stores 30% more efficient in 4 years

• Trucks 25% more efficient in 3 years; 50% in 10 years

• Create zero waste• 25% reduction in solid waste in 3 years

• All private brand packaging improved in 2 years

• Sell products that sustain resources and environment

• 20% supply base aligned in 3 years

• Preference given to aligned suppliers in 2 years

Wal-Mart’s Packaging ScoreboardMetrics Used to Evaluate Packaging

METRIC DESCRIPTION WEIGHT

Greenhouse Gas Emissions

Auto-populated by material with industry average CO2/ton

15%

Sustainable Material (Material H&S)

Material Health & Safety based on industry average OSHA score

15%

Product-Package Ratio Amount of packaging relative to product driven by # units, weight (SKU

spec.)

15%

Cube Utilization Measure of fit – product to package ratio (SKU specific)

15%

Transport Distance Distance converted packaging travels to ‘pack-in’ facility

10%

Recycled Content Auto-populated by material with industry average recycled content

10%

Recovery Value Auto-populated by material with industry average recovery rate

10%

Renewable Energy 3rd party evaluated usage 5%

Extra Credit / Innovation

3rd party evaluated energy efficiency, etc.

5%

Summary

Paper based packaging is inherently sustainable

International Paper has a strong sustainability platform Renewable and recycled fiber sources Biomass utilization and greenhouse gas reductions Performance and design optimization

Wal-Mart’s scorecard reflects an understanding of the integrated nature of the global corrugated packaging industry Scorecard using industry averages for many attributes for corrugated, not an individual company’s recycled vs. virgin.

Packaging design (product to packaging ratio and cube utilization) is critical as you can directly impact the score at the SKU level

International Paper has the tools, resources, and track record to help you with your sustainability goals and improve your scorecard results

NOTICE: The information contained in this document is confidential and proprietary to International Paper Company ("IPCO") and no part may be reproduced, copied or transmitted in any form or for any purpose without the express prior written consent of IPCO. This document and all content are the property of IPCO and is protected by U.S. and international copyright laws and all rights are reserved worldwide. Use of the copyrighted content is subject to the terms and conditions of use established by IPCO. Nothing contained in this document should be construed as granting any license or right to use any of the copyrighted content without the prior written permission of IPCO. The logos, trademarks and service marks that appear on this document are the exclusive property of IPCO or of other respective owners and no use or other rights are granted without the express, written approval of the owner.