mondi grouppromotions.mondigroup.com/portaldata/1/resources/...and chemical industries; and...

Mondi Group Sustainability report 2007

Forestry

21 Credibilitythroughcertification

23 Managingbiodiversity

24 Watermanagementinourplantations

25 Woodtracingtodefeatillegallogging

26 Meetingsocialneedsinourforests

Contents

Overview

2 Groupstructure

4 Chiefexecutive’sstatement

6 Boardsustainabledevelopmentcommitteechairman’sstatement

7 Oursustainabilityjourney

8 Progressagainstsustainabledevelopmentcommitments

Governance

12 Accountabilitystructure

13 Externalcorporatestakeholderengagement

15 Scopeandassurance

Economic contribution

17 Businessandmarkets

17 Financialreview

18 Reviewofoperations

19 EconomicstrengthoftheGroup

Environmental performance

29 Reducingenergyintensityandcarbonemissions

30 Water–usingless,reusingmore

31 Workingtogethertocleartheair

32 Focusingonthelandfillchallenge

Product stewardship

34 Productlifecycle

34 Risingtothepackagingchallenge

Social responsibility employees 39 Implementingglobal

employmentstandards

39 ThenineSafetyRulestoliveby

Social responsibility communities 43 Communityengagement

andCSI

44 Ethicalbusinessconduct

South African-specific issues

47 BBBEEratings

49 OurCSIapproachinSouthAfrica

50 Landclaimsandindigenouspeople

51 CombatingtheHIV/AIDSepidemic

Appendix

52 ERMassurancestatement

54 Datatables

56 Glossaryofterms

57 GRIG3ReportingGuidelinesIndex

Cover photograph: The advanced imaging system, recently installed at our Zeltweg converting plant in Austria, allows us to quickly identify and correct defects in coating materials we produce.

Mondi Group

Unlessweprotectresourcesandtheearth’snaturalcapital,weshallnotbeabletosustaineconomicgrowth.

AtMondi,weareintegratingsustainabledevelopmentintoourbusinessmodel.Thisreportdemonstratesourprogresstowardsmeetingoursustainabilitycommitments.

Former United Nations Secretary General Kofi Annan

www.mondigroup.com Sustainabilityreport2007 Mondi Group 3

Annualglobaldemandforbusinesspaperisrunningataround155milliontonnes,ofwhichuncoatedfinepaper–Mondi’sprincipalproductinthissector–accountsforsome54milliontonnesandnewsprintforaround39milliontonnes.TheGroup’sbusinesspaperoperationsarebasedmainlyinwesternandemergingEurope,RussiaandSouthAfrica.

Key productsUncoatedfinepaper(UFP),including‘universal’BandCgradeofficeandoffsetpapers,andspecialityAgradeofficepaper,colourlaserandtintedpapers

Newsprintandtelephonedirectorypaper

Merchantingofgraphic,packagingandofficecommunicationpapersandotherofficesupplies

Market positionsNo 1producerofofficepaperinEurope

No 1inUFPandnewsprintinSouthAfrica

No 2producerofUFPinEurope

–

–

–

–

–

–

Packaging

TheglobalpackagingindustryiswortharoundUS$450billionannually.Roughlyathirdispaper-basedpackaging,whichisMondi’sprincipalactivity.TheGroup’spackagingoperationsarebasedmainlyinwesternandemergingEurope,Russia,TurkeyandSouthAfrica.

Key productsVirginandrecycledcontainerboard,andconvertedproductsincludingcorrugatedboxes,corrugatedboardandpoint-of-saledisplays

Kraftpapersandindustrialbagsforbuildingmaterials,chemicals,foodandanimalfeed

Flexibleplastic-basedproducts,includingreleaseliner,extrusioncoatingandspecialityconsumerflexiblespackaging

Market positionsNo 1producerofkraftpaperinEurope

No 1inbagconvertinginEurope1

No 1incorrugatedpackaginginSouthAfrica1

No 1incartonboardinSouthAfrica1

No 1inrigidplasticpackaginginSouthAfrica1

No 2producerofkraftlinerinEurope

No 3incorrugatedpackaginginEurope1

–

–

–

–

–

–

–

–

–

–

Business paper

Percentages of sales from product groups 2007

FlexiblesCorrugatedBags31% 19%50%

Businesspaper76%

Newsprintandmerchanting

24%

1basedonsales

includingnewsprintandmerchanting

Percentages of sales from product groups 2007

ForestryWoodistheessentialrawmaterialforallofMondi’svirginpaper-basedproducts.TheGroupownsorleasesmorethan1.9millionhectaresofhardwood(e.g.eucalyptus)andsoftwood(e.g.pineandspruce)forestsinthelowcostregionsofRussiaandSouthAfrica,providinganannualallowablecutof8millionm3.ThismakesMondipotentiallyself-sufficientinwoodformorethanhalfitspulp-productionneeds.

PulpIn2007Mondiproducedaround3.8milliontonnesofpulp,thebasicingredientofallpaperandpaper-basedpackaging,fromnineintegratedpulpandpapermillsinAustria,Bulgaria,CzechRepublic,Poland,Russia,Slovakia,SouthAfricaandSweden.Pulpisproducedfromwoodfibre.ExcludingHungary,in2007,theGroupwas96%self-sufficientinpulpforpaperproduction.

Packaging paperIn2007Mondiproducedaround3.4milliontonnesofpackagingpaper:kraftpaper,containerboard,kraftliner,recycledcontainerboard(allfromsoftwoodandrecoveredpaper)andpackagingboardforliquids(fromhardwood).TheGroupproducesmorepackagingpaperthanitconsumesinitsconvertingoperations,sellingthebalancetoexternalcustomers.

Converted packagingMondiaddsvaluetoitspackagingpaperoutputbyconvertingitintoarangeofproducts:

high-strengthkraftpaper,madefromvirginfibre,isconvertedintoindustrialbagsforthebuildingandchemicalindustries;and

kraftlinerandrecycledcontainerboardareusedtomakecorrugatedboxes.

–

–

Packaging customersMondisellsitspackagingproductstofourmainmarkets:

fast-movingconsumergoods(FMCG)companies;

packagingconverters(whouseMondi’svirginandrecycledcontainerboardtoproducecorrugatedboxesforfoodanddurablegoods);

buildingandconstructioncompanies;and

variousotherindustries(e.g.chemicals,pharmaceuticalsandelectronics).

Business paperUncoatedfinepaperismanufacturedmainlyfromhardwoodpulp.

Softwoodpulpandde-inkedrecoveredpaperareusedtomanufacturenewsprint.

Converted paperUncoatedfinepaperistypicallyusedforphotocopierpaperandprintingapplications.Itissoldascut-sizeofficepaper,infolioformorinlargereels.

Business paper customersMondisuppliesbusinesspaperthroughthreemainchannels:

merchants;

originalequipmentmanufacturers(OEMs);and

officesuppliersandretailers.

Recovered paperMondiusessubstantialquantitiesofrecoveredpaperasarawmaterialinitspapermills.25-30%oftheGroup’spaperproductsaremanufacturedfromrecycledmaterials.

ReplantingEachyear,Mondireplenishesitsforestryassetswithextensivereplantingprogrammes.In2007,theGroupplantedmorethan18,000hectaresofnewtreesinRussiaandSouthAfrica.

–

–

–

–

–

–

–

includingMondiPackagingSouthAfrica

Sales

€3.9bnSales

€2.3bn

4 Mondi Group Sustainabilityreport2007

I am pleased to introduce our first full sustainability report as an independent Group. 2007 was a significant year of change in which we continued our efforts to integrate sustainable development (SD) into our business. While we recognise that independence brings with it many changes, new responsibilities and challenges, it also presents us with opportunities.

An improved performanceOurcontinuingstrongfinancialperformanceenablesustoprovidesignificantsocio-economicbenefitstomanystakeholdersandtoimplementinitiativesandinvestmentsaimedatfurtherimprovingoursustainabilityperformance.

Weproducedastrongfirstsetofresultswithasubstantialrecoveryinoperatingprofit.Thesereflectthegenerallypositivetrendsinourkeybusinesssegments,despitecontinuedpressurefromtradeflowsonthebackoftheweaknessoftheUSdollarandhighinputcosts.Ourunderlyingoperatingprofitrose33%to€502million.TheGroupdeliveredongoingefficienciesandcostsavingsof€167million,despiteupwardpressureoncosts.Productionvolumesalsoincreasedforallourmainproducts.

Wehavenowdevelopedoursustainabledevelopmentmanage-mentsystem(SDMS),thetoolwhichwillprovideuswiththemechanismtodeliversuccessfullyonourSDcommitments.ImplementationofthesystemhasalreadystartedthroughouttheGroup.

CoupledwiththedevelopmentoftheSDMS,in2007wealsodevelopedandareintheprocessofimplementinganewSDreportingandinformationsystem,MORIS.ThisreplacestheAngloAmericanplcdatabaseandwillsupportusinthemanagementofoursustainabilityreportingandhelpustomanageoursustainabilityperformanceeffectively.

WehavealsobeenawardedmembershipoftheDowJonesSustainabilityWorldIndex(DJSIWorld)andthePan-EuropeanDowJonesSTOXXSustainabilityIndex

(DJSISTOXX).WealsoqualifiedforinclusionontheJohannesburgStockExchange’s(JSE)2007SociallyResponsibleInvestment(SRI)Index,demonstratingourcommitmenttosustainabilityandtheprogressandimprovementswearemaking.

Inaddition,wehavebecomesignatoriestoanumberofinternationalinitiativeswhich,webelieve,makeamajorcontributiontobuildingmoresustainablefutures.TheseincludetheWorldBusinessCouncilforSustainableDevelopment(WBCSD)andatechnicalco-operationagreementwithWWF.

Throughoutthebusiness,wehavecontinuedtoaddressawiderangeofkeysustainabledevelopmentissues.Abriefoverviewofthesefollows.

Global employment standards

Wearecommittedtoglobalstandardsofemploymentthroughoutouroperations,providingpeoplewiththeopportunitytoprogressandprosperaspartofourorganisation.Westrivetoensurehighemploymentstandardsthroughoutourbusinessandprovidewide-rangingtrainingandeducationprogrammes.Inparticular,ourprimaryfocusisalwaysthesafetyofouremployeesandcontractors.Despitemeetingourlost-timeinjuryfrequencyrate(LTIFR)targetof0.23fortheyear,this26%improvementinourinjuryperformancefromthepreviousyearwasmarredbythedeathsofthreecontractorsinseparateincidents.

InvestigationsintothecausesofeachfatalitywereusedtoreviseourSafetyRules,asetofstandardsthataddressthekeyfatalityrisksinourbusiness.TheMondiSafetyRulesalsoformpartoftheSDMS,andasummaryofthesecanbefoundonpage39.

Chief executive’s statementDavidHathorn

Weremaincommittedtoemployeeandcontractorwell-beingandourzero-harmgoal.Wearecontinuouslystrivingtoimproveoursafetyrecord.

In2007,westartedtobenchmarkemployeeattitudesagainstourglobalpeergroup,tohelpusaddressareaswherewefallshortofbestpractice.Wearecommittedtoenablingouremployeestodeveloptheircareerswithus,andrunawiderangeoftechnicalandsoftskillstraininginitiativesthroughoutouroperations.TheseincludetheMondiAcademy,whichin2007passedamajormilestonewhenitprovidedtrainingtoits2,000thMondilearner.

Forestry

Weremaincommittedtoresponsibleforestryandfocussignificanteffortonensuringthatourforestsaremanagedsustainably.

Forus,sustainableforestrymeansnotonlyconsideringthebiologicalintegrityandcommunityneedsofourforestsandecosystems,butalsothesustainabilityofourwoodsupply–whethersourcedfromourownforestsorthroughthirdparties.Wehavedevelopedourownsystemandproceduresfortheresponsibleprocurementofwood,virginfibreandbiomasstoensurethatallwoodandfibreweuseisalwayssourcedfromsustainablymanagedforests.Fullimplementationofthissystemisexpectedinmostareasduring2008.

OurplantationforestsinSouthAfricaweresuccessfullyawardedForestStewardshipCouncil(FSC)recertificationin2007.Furthermore,anadditional0.4millionhectaresofforestsonwhichweholdloggingrightsinRussiaweresuccessfullycertifiedforthefirsttimeduring2007andafurther0.7millionhectareswillbecertifiedtothisstandard.


Chief executive’s statementDavidHathorn

Inaddition,wearerunningfocusedcapitalinvestmentprogrammesintoexistingoperations,forexampletheprojectwhichisduetocompletethemodernisationofourpulpandpapermillatSyktyvkarinRussiaby2010.Theprojectwillhaveapositiveimpactonouremissionstoair(particularlysulphurdioxide(SO2)andnitrogenoxide(NOx)andparticulates),whileenablingustomeettheRussianmarket’sgrowingdemandforuncoatedfinepaperatthelowestpracticablecost.

Itisencouragingtoreportthatoureffortsinstrivingforoperationalexcellencehavemadefurtherimprovementsinreducingemissions.Inparticular,wehaveseenthattotalchemicaloxygendemand(COD)emissionsfortheGroupfellby21%in2007fromthe2005baselinelevel.Wehavealsoexceededourabsorbablechlorinatedorganics(AOX)emissionsreductiontargetbyreplacingallelementalchlorinebleachingprocessesinouroperations.ThishasseenourAOXlevelsfallby65%in2007fromthe2005baselineyear.

Products and brands

Paperandpackagingrepresentsomeofthemostwidelyusedtypesofproductintheworldandweremaincommittedtoimprovingconsumers’livesbyprovidinghighqualityandsustainableMondiproducts.Everystageoftheproductlifecyclehasanenvironmentalorsocialimpact,fromharvestingrawmaterialsthroughmanufacturingtoultimatedisposalandrecycling,andweareconstantlyinvestingincleanproductiontechniquesandreduceduseofmaterialstoincreasesustainability.

Investmentinproductsafety,particularlyinhumanfoodpackaging,isanimportantemphasisforourbusiness.

Communities

TheSocio-EconomicAssessmentToolbox(SEAT),developedbyAngloAmericanplc,isoneofthemanytoolsweusetoengagewiththecommunitieswithinwhichweoperate,toensurethatouractivitiesareinlinewiththeirneedsandourobjectives.Thesearein-depthassessmentsofcommunityneeds,undertakeninpartnershipwithawiderangeofstakeholders,thathelpdriveourcommunityprogrammes.AnimportantexampleofthekindofresultssuchanapproachcanhaveisourcontinuinghealthprogrammeinandaroundourSyktyvkarmillinRussia,wheretheincidenceofillnesshasalmosthalvedinunderfouryears.In2007,75,338peoplevisitedthepolyclinicwesupportinEzhva,thelocalcapital.

Corporate stakeholder engagement

WeareactivemembersoftheWorldBusinessCouncilforSustainableDevelopment(WBCSD).Thisisacoalitionofsome200internationalcompaniesunitedbyasharedcommitmenttosustainabledevelopment.Itoffersaplatformfromwhichglobalbusinesscanworktogetherwithgovernmentsandcivilsocietyleaderstocreateanenvironmentofmutualadvantage,wherebusinesssuccessgoeshandinhandwithsuccessfulsocietiestheworldover.

WehavecontinuedourmutuallybeneficialtechnicalcooperationwithWWF.ThisandthecontinuingsuccessoftheMondiWetlandsProjectinSouthAfricaandtheHCVforestsprojectwithSilverTaigaintheKomiRepublicinRussiaaretestamenttoeffectiveandopendialoguewithWWFandothernon-governmentalorganisations(NGOs).

Mondiwasprivilegedtohavebeenoneoffiveglobalcompaniesto‘roadtest’theEcosystemsServicesReview,aproactiveecosystemmethodologyandprojectoftheWBCSD,WorldResourcesInstitute(WRI)andtheMeridianInstitute.Moredetailsonthisprojectcanbefoundonpage14.

South Africa

SouthAfricaisanationundergoingrapidtransformation.Asamajoremployerandlandownerthere,wearecommittedtohelpingthegovernmentachieveitsBroad-BasedBlackEconomicEmpowerment(BBBEE)andlandreformobjectivesandcombatskillsshortages.Wearealsoworkingtoimplementawiderangeofcommunityinitiatives,includingseveraldesignedtoimpactonthecountry’sHIV/AIDSepidemic.

Investing in youth

UndertheMondiAustriaPrivateFoundation,wehaveawardedover30specialscholarshipstointernationalstudentswishingtostudyinAustria–justoneofourschemesdesignedtoprovideeducationalopportunitiesforyoungpeople.

Thisreportprovidesareflectionoftheprogresswehavemadeinaddressingthesustainabledevelopmentagendaoverthepastyear,andsetsoutourcommitmentsgoingforward.ThereporthasbeenpublishedwithreferencetotheGlobalReportingInitiative’sG3guidelines,inlinewithourcommitmenttobeingtransparentandresponsivetoourstakeholders.

David Hathorn 31March2008

WearecontinuingtoconcentrateontheprotectionofthegloballysignificantHighConservationValue(HCV)forestsinRussia’sKomiRepublic.

Energy and climate change

Climatechangeisamajorglobalissuethataffectsallofus.Itiswidelyagreedthatgreenhousegasemissionshavetobesignificantlyreduced.Theforestproductsindustryisinapositiontomakeapositivecontributiontowardsglobaleffortstomitigateclimatechange,throughimprovingoperationalefficienciesandbysubstitutingfossilfuelswithcarbon-neutralbiofuels.Ourproductsalsostorecarbonthroughouttheiractiveservicelife,arerecyclableandprovidealesscarbon-intensivealternativetomanycompetingproducts.Todate,wehaveachieveda11%reductioninspecificCO2emissionsfromfossilfuels.Thisequatestoa6%reductionintotalCO2emissionsfromfossilfuels,fromatotalof5.19milliontonnesin2004toatotalof4.86milliontonnesin2007.

Wehavealsoreporteda3%improvementinourenergyusagepertonneofproductproducedsince2004,with41%ofourtotalenergybeingsuppliedbybiomass.WeareusingthetoolsprovidedintheKyotoProtocolof1997toassistusinmeetingourcommitments.

Environment

Strivingforoperationalexcellenceisoneofourkeystrategies,coveringallaspectsofourbusinessincludingourenvironmentalperformance.Anumberofinitiativeshavebeendeveloped,basedoninternalandexternalbenchmarking,tohelpususeourexistingassetsbetter,tomakeprocessessimplerandmoreefficientandprocurementinitiativestohelpusgainthefullbenefitofourbuyingpower.

Underlying operating profit

+33%Profit after tax

€280m


Board sustainable development committee chairman’s statementColinMatthews

Wearealsocommittedtosensitivityandopennessinourdealingswiththecommunitiesaffectedbyouractivities.Maintainingconstructivedialoguebetweenourcommunitiesandoperationsbothreducesriskandpresentsuswithopportunitiesformutuallybeneficialagreementswhichwehopewillcontributetothesuccessofourbusinessintothefuture.

Sustainabilityissuescannotbeeffectivelymanagedwithoutastronggovernancestructureinplacetomonitorandaddresscurrentchallengesandminimisebusinessriskseffectively.Oursustainabledevelopmentmanagementsystem(SDMS),developedduring2007,isstructuredaroundourkeysustainabilityrisksandoffersacoherentapproachtomanagingoursustainabilitychallenges.

TheroleoftheBoardsustainabledevelopmentcommitteeistosupporttheeffortsofMondi’sexecutivemanagementtoachievethehighsustainabilitystandardstowhichtheGroupiscommitted.

During2007,aspartofitsdevelopment,anindependentreviewoftheSDMSwasconductedtoassesswhetherMondi’ssustainabledevelopmentpolicies,standardsandperformancerequirementsprovideanappropriatebasisformeetingtherequirementsofanumberofselectedexternalstandardsandcommitments.ThedevelopmentandreviewoftheSDMSwasanimportantprocessasMondibecameanindependentGroup.Onpage13wediscussthestructureandelementsoftheSDMS.

In recent years, expectations of businesses to address the sustainability topics that result from global environmental issues have been progressively increasing. Awareness of climate change, resource depletion, pollution, levels of poverty across the globe and other issues is continuing to rise. As a result, there are strong demands and expectations for businesses to seek the most effective ways to manage their activities with the least possible impact on the global environment and a positive impact on society.

It is now acknowledged that good management of sustainability issues is an essential component of good corporate management, and businesses are expected to fulfil their roles as responsible corporate citizens.

Setting the sceneMondihasoperationsindevelopingandtransitionaleconomies,whichfacemanychallenges.Theseincludehighlevelsofunemploymentandlessthanacceptablewastemanagementandresourceefficiencypractices.

Theforestryindustryisoftenunderscrutinyoverconcernsaboutbiodiversitylosses,unethicalwoodsourcing,illegalloggingandtheinfringementofsurroundingcommunities’rights,particularlythoseofindigenouspeople.Inaddition,thepaperandpackagingindustryisassociatedwithgrowingconcernsovertheresponsibleuseofrawmaterialssuchaswaterandenergy,emissionstotheairandwater,andthedisposalofsolidwaste.

Mondi’sgoalistobethebestperformingpaperandpackaginggroupintheworld.Itisvitalthatsustainabledevelopmentremainsakeypartofourstrategyanditisessentialthatourstakeholdersunderstandourcommitment.Goodsustainabilityperformancecanleadtobetterprofitability,andreducestakeholderrisk,enablingustoeffectivelyaddressthesustainabilitychallengesofthefuture.

Thiscommitmentinvolvesmanyfactors,includingtheactivestewardshipoftheforests,land,freshwatersystemsandbiodiversityofourowned,managedorleasedoperationsaswellasallocatingsufficienthumanandfinancialresourcestoensureweuseournaturalresourcesinawiseandsustainablemanner.

Throughoutthereport,youwillfinddescriptionsofourmainactivitiesandachievementsinthespheresofsafety,forestry,climatechangeandenergy,theenvironment,corporatesocialinvestment(CSI)andmore,includingafocusonouractivitiesinSouthAfrica.Wehaveachievedsomeverypositiveresultstowardsmeetingourpubliccommitments,particularlyinrelationtocleanerproduction.

Weremaincommittedtoopen-nessandtransparencyinourcommunicationswithstakeholdersandthisreportisanimportanttoolinhelpingusmeetthisobjective.

ToensureMondi’sfuturesuccessandtoensurethatwemakeavaluablecontributiontosociety,wewillcontinuetocommunicatewithallourstakeholdergroupstoidentifyanychangesthatpresentnewrisksorcreatenewopportunitiesandsolutionsfortheworld’ssustainabilitychallengesintothefuture.Thisiscriticalifwearetoachieveourvisionofbeingthebestinourindustry.

Colin Matthews 31March2008

Our sustainability journey

Mondiiscommittedtooperatingitsbusinesssustainably.FollowingourdemergerfromAngloAmericanplcin2007,wetooktheopportunitytoreviewoursustainabilitypoliciesandpracticesacrosstheMondiGroup,toensurethattheyfullyaddressoursustainabilitychallenges.Thewayinwhichwerunourbusinesscandirectlyaffectourshareholders,ouremployees,thecommunitiesinwhichwe

operateand,moregenerally,broadersocietyandtheenvironment.Ensuringthatourbusinessissustainableisapriority,asreflectedinourSDcommitments.Aspartofourreviewin2007,werevisedourSDcommitments,spanningallkeysectorsandreachingoutto2014.Thesecanbefoundinfullinthisreportandatourwebsite:www.mondigroup.com

Reducing environmental impact

Sustainable forestry

Safety and health stewardship

Long-term social, community and stakeholder relationships

Toensurethatourforestrypracticesenableustoprovidethefutureresourcesourbusinessneedsinasustainablemanner.

Tosuccessfullymaintainthecertificationofoursustainableforestrypracticesandtracewoodandvirginfibrethroughoutthesupplychain,soenhancingourreputationasresponsibleforestrystewardsandresourcedevelopers.

WewillmeetallrequirementsofourForestryPolicyandOperatingStandards–tomanagerisksandissues,includingthoserelatingtoforeststewardship,responsiblepurchasing,woodtracing,ecosystemsandbiodiversityactionplanning,landaccessandindigenouspeople.

Asamemberofglobalsociety,tohelpmeettheworld’spaperandpackagingneedsandsimultaneouslyreducetheenvironmentalfootprintofourproducts,especiallymitigatingtheimpactofgreenhousegasemissionsontheclimate.

Tofurtherreduceourenvironmentalfootprint,supportedbyourkeyenvironmentalperformanceindicatorswhichsetspecifictargetsinareasofsignificantimpact.Goingforward,ourcurrentperformanceresultshaveformedthebasisforidentifyingareaswhichrequireenhancedfocusandthesearereflectedinourprioritiesfor2008,including:advancesintheinventoryofgreenhousegases,reductioninwastetolandfillinSouthAfricaandplansforfurtherreductionoforganicwastewaterloads.

WewillmeetallrequirementsofourClimateChangeandEnvironmentalPoliciesandOperatingStandards.Ourtargetisa15%reductionincarbon-basedenergyuseperunitofproductionbyyear-end2014,againstthe2004baseline.Wealsohaveatargetofa15%reductioningreenhousegasemissionsperunitofproductionoverthesameperiod.

Challenge Our commitmentsPriorities in 2008

Toachieveourvisionofzero-harmworkplaces,ensuringthatallpeopleworkingforMondiunderstand,rigorouslyapply,andfullycomplywithoursafetystandards.Ouroccupationalandcommunityhealthchallengeistoensurethatourhealthprogrammesrecogniseandinfluencethehealthfactorswhichimpactouremployees,contractors,theirfamiliesandourneighbouringcommunities.

Toeliminatefatalitiesfromourbusiness.Ourplanistoaddressourmostmaterialsafetyrisksin2008withafocusontransportation,inparticularmobileplantandequipment.Inaddition,wearetargetingasignificantreductionininjuriestohandsacrosstheGroupin2008.Wearealsotakingfurtherstepstoaddresstheriskofnoise-inducedhearingloss.WearecontinuingtoworkatalocalleveltofightHIV/AIDSinSouthAfrica,bybotheducatingourcommunitiesandmanagingdiseaseinfectionrates.

Wevaluelifeaboveallelseandregardoneinjuryasonetoomany.Ourcommitmenttoachievealevelofperformancebelow0.5TRCR(TotalRecordableCaseRate)andbelow0.1LTIFR(LostTimeInjuryFrequencyRate)byyear-end2010isconsideredtobeworld-class.This,togetherwithachievingourothertargetofzerofatalities,willtakeusclosertoourstatedobjectivesofzero-harmworkplacesandsafetyexcellence.

Tounderstandsocialandcommunityissuesandexpandourroleascorporatecitizens,sothatthecommunitiesinwhichweoperatevalueourcitizenship.

Tocontinuewithcommunityparticipationandengagement.WhileMondioperatesthemajorityofitscommunityengagementprogrammesatalocallevel,itfacilitatesaconsistentapproachtocommunitydevelopmentviatheSocio-EconomicAssessmentToolbox(SEAT).

Wewillbearolemodelintermsofsocialimpactandtransparencyinourindustry.Toachievethis,wewillcontinuewithcommunityengagementplansforallsignificantoperations.Wewillcontinuetomakeanti-retroviraltreatmentavailabletoemployeestocombatHIV/AIDSinSouthAfrica.Wewillalsomaintainamerit-basedandempoweringculturewhichmeetstherequirementsofourCorporateCitizenshipandGlobalEmploymentPoliciesandOperatingStandards.

Progress against Sustainable Development (SD) commitments*

GovernanceGoodcorporategovernanceandtransparencyinrelationtosustainabledevelopment.

2005 commitments Status 2008 and future targets Date Status

Developasustainabledevelopmentmanagementsystem(SDMS).

Achieved AchievecompliancewiththeintegratedSDManagementStandards.

2010 Inprogress.Complianceauditscorestobereportedforthefirsttimein2008.

Rolloutthesustainabledevelopmentmanagementsystem.

Achieved Establishanauditprogramme,settargetsandreportagainstthese.Ensurethat25%ofallsecond-partyauditsarecarriedoutaspeerreviews.

2007 Partlyachieved.Auditprogrammeforsafetyhasbeenestablishedandbaselinesafetyauditshavebeenconducted.Peerreviewswerecarriedoutasplanned.

Developanewinformationtechnology(IT)platformforsustainabledevelopmentreportingtoimproveaccuracyofdata.

Achieved DevelopanSDreportingtoolin2007,followedbyaninformationmanagementtoolin2008.

2007/2008

Inprogress.Mondireportingandinformationsystem(MORIS),whichfulfilsallaspectsofnon-financialSDreporting,hasbeendevelopedandisintheprocessofbeingimplemented.

Improvesecondpartyassuranceofsustainabledevelopmentdataandconductthirdpartyassuranceofsignificantsustainabledevelopmentinformationreported.

Achieved ConductaverificationoftheMondiSDMSin2007andfollow-upcomplianceauditsfrom2008.

2007/2008

Inprogress.Verificationcompleted.Complianceauditscorestobereportedforthefirsttimein2008.

ReportprogressagainstourSDcommitmentsinternallyandexternally.

2007 Achieved

Sustainable forestrySustainableforestrymeansconsistentlyconsideringtheproductivecapability,biologicalintegrityandcommunityneedsoftheforeststhatweown,manageandsourcematerialfrom.


AchieveForestStewardshipCouncil(FSC)certificationof1.16millionhectaresofforestintheKomiRepublicinRussia.

Achieved CertifyallexistingMondiforestrytoFSC.Newforestrywillbesubjecttoatime-boundplanforcertification.

2007 Achieved0.4millionhectaresinRussiacertifiedduring2007andafurther0.7millionhectaresdueforcertificationin2008.Plansforfurthercertificationspanoutto2010.

Developwoodtracingsystemsandtargets.

Systemdevelopedbuttargetsnotset.

Implementtheminimumstandardforwoodandvirginfibre.

2008 Inprogress.Arolloutplanfortheprocedureforresponsibleprocurementofwood,virginfibreandbiomasshasbeendevelopedforfullimplementationin2008.

Achievetraceabilityforprocurementofwoodandvirginfibreproducts.

2008 Inprogress.TheMondiWoodInformationPlatform(WIP)hasbeendevelopedandisintheprocessofbeingimplemented.

Monitor,settargetsandreportontheprocurementofcrediblycertifiedwood,virginfibreandbiomassproducts.

2008 Inprogress.DatafromWIPwillbereportedforthefirsttimein2008.

Workwithcertificationbodiesandsmallgrowerstofindapracticalsolutiontotheircertification.

2007/2008

Inprogress.MondiisaparticipantinTheForestsDialogue,whichistacklingthisissue,amongstothers.

*Fordefinitionsoftechnicalterms,refertotheGlossary(page56).

Cleaner production and energyWeactivelystriveforrecognisedbestenvironmentalperformanceinouroperations.


ISO14001atallmaterialoperations. Achieved Maintainindependentverificationoftheeffectivenessoftheenvironmentalmanagementsystemsandobjectivesatsignificantoperations.

2007 AchievedAllenvironmentallymaterialmills,exceptnewacquisitionStambolijski,areISO14001certified.

DevelopaGroupenergystrategy. Achieved AllEuropeanmillslocatedintheEuropeanUniontoachieveBAT-compliantperformance.

2007 Achieved

Reducespecificenergyusageandfossilcarbondioxide(CO2)emissionsby15%by2014againsta2004baseline.

Ongoing 2014 Inprogress.A3%reductioninspecificenergyusageandan11%decreaseinspecificCO2emissionsfromfossilfuelshavebeenachievedtodate.

Reductionofchemicaloxygendemand(COD)emissionsby75%attheRichardsBaymillinSouthAfrica.

TargethasbeenincorporatedintothetotalGroupCODreductiontarget.

Reducethetotaleffluentload(measuredasCOD)intoreceivingwatersby30%againsta2005baseline.

2010 Inprogress.A21%reductionintotalCODemissionshasbeenachievedtodate.

Reduceadsorbablechlorinatedorganics(AOX)emissionsfromtheSyktyvkarmillinRussiaby70%.

TargethasbeenincorporatedintothetotalGroupAOXreductiontarget.

ReducethetotalAOXemissionlevelsby30%againsta2005baseline.

2010 AchievedA65%reductionintotalAOXemissionlevelshasbeenachievedtodate.

Reductionofsulphurdioxide(SO2)emissionsby66%fromtheMerebankmillinSouthAfrica.

Achieved

ReducetheTotalReducedSulphides(TRS)emissionstotheatmosphereby65%againsta2005baseline.

2010 Inprogress.A60%reductionintotalTRSemissionlevelshasbeenachievedtodate.

Reducethetotalwastetolandfillby20%againsta2005baseline.

2010 AchievedA20%reductionintotalwastetolandfillhasbeenachievedtodate.

Reportannuallythenumberofoperationsthatcompletedlandfillassessmentstoreviewtheimpactoftheirpastandpresentactivities.

2007 Achieved AlllandfilloperationsweresubjecttoanindependentauditwhichformedpartoftheAngloAmericanplcdemerger.Sincethen,adetailedlandfillassessmentprogrammehasbeeninitiated.ThefirstlandfillassessmentauditwascarriedoutattheRichardsBaymill.

Ceasethedisposalofhazardouswasteintolandfills.

2009 Inprogress.AlternativesolutionsforhazardouswasteatMerebankandRichardsBayarebeinginvestigated.

Monitorandreportfreshwaterusageofmaterialoperationsinwater-stressedregions(IsraelandSouthAfrica).

Ongoing AchievedWaterusagedataisprovidedinthisreportonpage30.

Furtherdevelopacultureofzeroprocessincidentsandcontinuetoreportlossesofcontainmentthatcauseorhavethepotentialtocauseharm.

Ongoing AchievedThenumberoflevelIincidentsisreportedinternally.ThenumberoflevelIIandlevelIIIincidentsisreportedonpage28.

Monitorandreportthepercentageofrecycledfibreusedinthefinalproduct(asrawmaterialandastonnessold).

Ongoing Partlyachieved.Theuseofrecycledfibredataisreportedonpage35.RecycledfibreasarawmaterialhasbeenincorporatedintotheMORISreportingrequirements.

DevelopaprogrammeofSDprojectswithcustomers.

2007 AchievedAnumberofspecifictargetedprogrammeswereidentifiedandimplementationstartedin2007,particularlyintheareaofenvironmentalfootprintofourbusinesspaperproducts.

Cleaner production and energyWeactivelystriveforrecognisedbestenvironmentalperformanceinouroperations.


ISO14001atallmaterialoperations. Achieved Maintainindependentverificationoftheeffectivenessoftheenvironmentalmanagementsystemsandobjectivesatsignificantoperations.

2007 AchievedAllenvironmentallymaterialmills,exceptnewacquisitionStambolijski,areISO14001certified.

DevelopaGroupenergystrategy. Achieved AllEuropeanmillslocatedintheEuropeanUniontoachieveBAT-compliantperformance.

2007 Achieved

Reducespecificenergyusageandfossilcarbondioxide(CO2)emissionsby15%by2014againsta2004baseline.

Ongoing 2014 Inprogress.A3%reductioninspecificenergyusageandan11%decreaseinspecificCO2emissionsfromfossilfuelshavebeenachievedtodate.

Reductionofchemicaloxygendemand(COD)emissionsby75%attheRichardsBaymillinSouthAfrica.

TargethasbeenincorporatedintothetotalGroupCODreductiontarget.

Reducethetotaleffluentload(measuredasCOD)intoreceivingwatersby30%againsta2005baseline.

2010 Inprogress.A21%reductionintotalCODemissionshasbeenachievedtodate.

Reduceadsorbablechlorinatedorganics(AOX)emissionsfromtheSyktyvkarmillinRussiaby70%.

TargethasbeenincorporatedintothetotalGroupAOXreductiontarget.

ReducethetotalAOXemissionlevelsby30%againsta2005baseline.

2010 AchievedA65%reductionintotalAOXemissionlevelshasbeenachievedtodate.

Reductionofsulphurdioxide(SO2)emissionsby66%fromtheMerebankmillinSouthAfrica.

Achieved

ReducetheTotalReducedSulphides(TRS)emissionstotheatmosphereby65%againsta2005baseline.

2010 Inprogress.A60%reductionintotalTRSemissionlevelshasbeenachievedtodate.

Reducethetotalwastetolandfillby20%againsta2005baseline.

2010 AchievedA20%reductionintotalwastetolandfillhasbeenachievedtodate.

Reportannuallythenumberofoperationsthatcompletedlandfillassessmentstoreviewtheimpactoftheirpastandpresentactivities.

2007 Achieved AlllandfilloperationsweresubjecttoanindependentauditwhichformedpartoftheAngloAmericanplcdemerger.Sincethen,adetailedlandfillassessmentprogrammehasbeeninitiated.ThefirstlandfillassessmentauditwascarriedoutattheRichardsBaymill.

Ceasethedisposalofhazardouswasteintolandfills.

2009 Inprogress.AlternativesolutionsforhazardouswasteatMerebankandRichardsBayarebeinginvestigated.

Monitorandreportfreshwaterusageofmaterialoperationsinwater-stressedregions(IsraelandSouthAfrica).

Ongoing AchievedWaterusagedataisprovidedinthisreportonpage30.

Furtherdevelopacultureofzeroprocessincidentsandcontinuetoreportlossesofcontainmentthatcauseorhavethepotentialtocauseharm.

Ongoing AchievedThenumberoflevelIincidentsisreportedinternally.ThenumberoflevelIIandlevelIIIincidentsisreportedonpage28.

Monitorandreportthepercentageofrecycledfibreusedinthefinalproduct(asrawmaterialandastonnessold).

Ongoing Partlyachieved.Theuseofrecycledfibredataisreportedonpage35.RecycledfibreasarawmaterialhasbeenincorporatedintotheMORISreportingrequirements.

DevelopaprogrammeofSDprojectswithcustomers.

2007 AchievedAnumberofspecifictargetedprogrammeswereidentifiedandimplementationstartedin2007,particularlyintheareaofenvironmentalfootprintofourbusinesspaperproducts.

Social – Enhancing employee well-being

Employee culture Implementingfairlabourpracticesatourworkplaces,treatingemployeesatalllevelswithrespectandconsideration,andensuringcompliancewithapplicablelawsandindustrystandards.


Developaglobaldiversitystrategy. Ongoing.AdiversitystrategydevelopedfortheSouthAfricanoperations.

Monitorandreportgenderandnationaldiversityatmanagementlevel.Establishaworkforcemonitoringsystem.

2007 Partlyachieved.GenderandnationaldiversityhavebeenincorporatedintotheMORISreportingrequirements.

ConductaGroup-wideclimateandculturesurvey.

Completed Encourageemployeestotakepartinbusinessunitorregionalemployeesurveys.

Ongoing AchievedDuring2007,employeesurveyswereexpandedintopeerreviewsurveystoenablebenchmarkingwithothercompanies.

Safety and fatalities Protectingthehealth,safetyandsecurityofouremployeesandthosewhoworkonourbehalfisacorevalueforMondi.Webelieveinzero-harmworkplaces,whereallincidentsarepreventable.

Zerofatalities. Notachieved. Preventallwork-relatedfatalinjuries.

Ongoing Notachieved.Wehadthreecontractorfatalitiesduring2007.

AchieveaLostTimeInjuryFrequencyRate(LTIFR)oflessthan0.4.

Achieved ReducetheLTIFRforemployeesandcontractorsby70%to0.1in2010againstthe2006baseline.Thetargetfor2008isanLTIFRof0.19(a17%reductionfrom2006).

2007/2008

Inprogress.Our2007LTIFRtargetof0.23wasachieved.

MeetAngloAmerican’stargetof75%thirdpartyhealthandsafetysystemscertificationbytheendof2005.

Achieved Reportsicknessabsenceratesinrelationtotherelevantnationalaverageatalloperations.

2007 Partlyachieved.SicknessandabsencedatahasbeenincorporatedintotheMORISreportingrequirements.

ImplementOHSAS18001at39%ofMondioperationsin2005.

Achieved

Social – Caring for local communities

Beingagoodcorporatecitizenmeansmakingarealandlastingcontributiontothecommunitiesinwhichweoperate.


Conductsocio-economicassessments(SEAT)attheŠtĕtíandRužomberokmills.

Achieved Allmaterialoperationstocontinuetohaveacommunityengagementplaninplace,supportedbyaSEATprocessonathree-yearlycycle.

Ongoing AchievedArollingplanforSEATassessmentshasbeencommissioned.

Developlocaleconomicdevelopmentguidelines.

IntegratedintotheSEATprocess.

Monitorandreportcomplaintsfromthepublic.

Ongoing AchievedThenumberoflevelIcomplaintsisreportedinternally.ThenumberoflevelIIandlevelIIIcomplaintsisreportedonpage28.

WerecognisethehumantragedycausedbytheHIV/AIDSepidemic.WehaveaclearprogrammeforaddressingAIDSintheworkplace.

Extendvoluntarycounsellingandtesting(VCT)toallsitesinSouthAfrica.

AchievedAllsitesinSouthAfricacovered.

Continuetomakeanti-retroviraltreatmentavailabletoallemployeesinSouthAfrica.ProvideresourcesfortrainingandawarenesscampaignsandcontinuetobuildpartnershipswithlocalclinicsandNGOs.

Ongoing AchievedHIV/AIDSinformationcanbefoundonpages51and55ofthisreport.

ThewoodyardatRužomberokinSlovakiafeedsoneofcentralEurope’slargestpulpandpapermillswithvirginfibrefromsustainablymanagedforests.

Wood yard in Ružomberok, Slovakia.

GovernanceManagingthebusinessforasustainablefuture

We have management processes at Mondi to ensure that we continuously improve both our management of sustainability issues and our sustainability performance. During 2007, we approved a new SD policy and completed the development of our sustainable development management system (SDMS), an SD management frame-work that provides the sector policies, governance structures, commitments and reporting systems we need to meet our SD commitments.

Accountability structureFollowingourdemergerfromAngloAmericanplcinJuly2007,weundertookareviewofourgovernancestructure.WenowhaveseverallevelsofaccountabilityforsustainabilityviaourBoardSDcommittee,theexecutivecommittee,theMondiSDpanelandthreeglobalspecialistnetworkgroups.

TheSDcommitteeischairedbyanindependentnon-executivedirector,ColinMatthews,anditsmembersincludeSirJohnParker,jointchairmanoftheMondiGroup,andourchiefexecutive,DavidHathorn.

TheSDcommitteeprovidesassurancetotheboardsofMondiLimitedandMondiplcthattheappropriatesystemsandpracticesareinplacetodealeffectivelywiththesustainabilityrisksandopportunitiesthatweface.Insodoing,ithasresponsibilityforensuringthattheGroup’ssustainabledevelopmentstrategy,policiesandcommitmentsremainrelevantandinlinewithglobalbestpractice.

TheSDcommitteemeetssixtimesayear.Keyagendaitemsduring2007includedaspecialfocusoncontractormanagement,theapprovalofthenewSDpolicyandsupportingmanagementsystem,approvaloftheGroup’scommitmentsandanemphasisoncurrentandemergingforestryissues.

Theexecutivecommittee,chairedbyDavidHathorn,hascollectiveexecutiveresponsibilityforsustainabilityperformance.Withintheexecutivecommittee,theGroupHRandlegaldirectorhasspecificresponsibilityforSDpolicy,adviceandsupport.

TheMondiSDpanel,comprisedofSDexpertsfromthroughouttheGroupandchairedbytheGroupHRandlegaldirector,meetsfourtimesayearandisresponsibleforadvisingandsupportingtheexecutivecommitteeandoperationsmanagers.Thepanelpromotessustainabilityissues,monitorsthechangingnatureoftheconcernsandrequirementsofstakeholders,measuresoursustainabilityperformanceandidentifiespriorityissues.

Wealsohavethreeglobalspecialistnetworkgroups–thesafety,healthandoccupationalhygienenetwork,theenvironmentalnetworkandtheenergynetwork.ThesecomprisespecialistsfromthroughouttheGroupwhoprovideexpertiseandknowledgefromalargerpoolandcanacceleratethepaceofchangeontopicsofGroup-widesignificance.

Sustainable Development Management System

During2007,Mondidevelopeditssustainabledevelopmentmanagementsystem(SDMS),acomprehensivemechanismwhichhelpsusensurestronggovernance.

TheSDMSisownedataGrouplevelandisapplicabletoallsites,operationsandactivitiesthroughouttheworld.Theseinclude:

facilitiesandactivitiesweownandoperate(includingthosewhereweownamajorityshare);

newdevelopments,mergers,acquisitionsandbusinessesweplantodivest;

activitiesundertakenbycontractorsonMondisitesorunderourmanagement.

TheapplicabilityoftheSDMSvariesacrosstheMondiGroupanddependsonthenatureandlevelofmaterialriskofeachindividualoperation.

TheSDMScomprisesthefollowingelements:

theSDPolicy,whichoutlinesouroverallstrategyandkeyareasoffocus,andissupportedbysevensectorpolicies(thesecanbefoundatwww.mondigroup.com);

tenmanagementstandards,whichprovideboththegovernancerequirementstowhichwearecommittedandthelinktoourcorporategovernancestructures;

tenoperatingstandards,developedforeachofourpolicyareas,whichdefinetheminimumrequirementsforgoodmanagementandcontrolatoperationallevel.TheyalsoprovideguidanceonthecorporateexpectationsandimplementationofeachelementoftheSDMSatallthreelevelsofthebusiness–theGroup,thedivisionsandtheoperations;

–

–

–

–

–

–

asetofdetailedandcom-prehensiveperformancerequirements,whichgiveouroperationspersonneladetailedandmandatorysetofpracticesforimplementingthestandards;

asetofspecific,quantifiableshort,mediumandlong-termSDcommitments.

Weareprogressingwiththeaudittoolthatisbasedonouroperatingstandardsandreflectsthedetailsdescribedinourperformancerequirements.TheaudittoolwillassistusinachievingourcommitmentoffullcompliancewiththeSDMSthroughouttheGroupby2010.

During2007,wealsodevelopedandstartedtoimplementoursustainabledevelopmentreportingandinformationsystem,MORIS.WewillalignMORISdefinitionstotheGroup’scommitmentsandanewsetofminimumreportingguidelineswillbeissuedduring2008.ThesewillreplacetheAngloAmericanplcreportingguidelines,andwilldefinethescopeandfrequencyofreportingandtheperformancedataweshouldreport.Theseinternalreportingproceduresandpracticeswillgiveusthebasisforourfutureannualsustainabilityreports.

EnvironmentalResourcesManagementCertificationandVerificationServices(ERMCVS)conductedanindependentreviewin2007ofourSDMSandconcludedthatoursustainabledevelopmentpolicies,standardsandperformancerequirementsprovidedanappropriatebasisformeetingtherequirementsofthefollowingselectedexternalstandardsandcommitments:

ISO14001:SpecificationforEnvironmentalManagementSystem;

–

–

–


OHSAS18001:OccupationalHealthandSafetyManagementSystem;

UNEPInternationalDeclarationonCleanerProduction;

BS8900:2006GuidanceforManagingSustainableDevelopment;

SA8000:2001SocialAccountability;

UnitedNationsUniversalDeclarationofHumanRights;

OECDGuidelinesforMultinationalEnterprises;

UnitedNationsGlobalCompact;

PrinciplesandCriteriaforForestStewardship;

WorldBusinessCouncilforSustainableDevelopmentSustainableForestProductsIndustryWorkingGroup;

TheForestsDialogue(TFD);

WBCSD/WRIGreenhouseGasProtocol.

Public commitments

WehavealsodevelopedasetofpubliccommitmentsaspartoftheSDMS.TheseweredevelopedbyourSDpanelandapprovedbytheSDcommittee,andtakeintoaccountpubliccommitmentsandsignificantrisks,aswellaslegalandotherrequirementsrelatingtosustainabilityissues.Theyspanallsectorsofoursustainabledevelopmentagendaanddemonstrateourcommitmenttoreducingourfootprintfurther.WemonitorprogressatourquarterlySDpanelmeetingstoensurethatthecommitmentsaremetbythetargeteddate.Youcanfindourprogressagainstthesecommitmentsonpages8to10.

–

–

–

–

–

–

–

–

–

–

–

External corporate stakeholder engagement Informing, reporting, engaging

Ouractiveprogrammeoflisteningtoandengagingwithourexternalstakeholdersisvitaltoensurethatweremainresponsivetotheirconcerns.Anumberofourkeystakeholderscommentthatweare‘willingtoengage’.Weappreciatethedialoguewiththemandwillcontinuetobuildrelationshipswithexternalstakeholderssuchasshareholders,customers,governments,non-governmentalorganisations(NGOs)andthemedia.

Membership associations

Wetakepartinawiderangeofforumsatlocal,regionalandinternationallevels.Thisparticipationbyourseniormanagementinlocalandinternationalbusiness,engineering,industry-relatedandotherorganisationsgivesusanimportantplatformforlocal,regionalandinternationalnetworking,ensuringthatweareinformedofcurrentorproposeddevelopmentsintheregulatoryandbusinessenvironment.

Atagloballevel,Mondiisanactivememberand/orparticipantofthefollowingorganisations:

TheWorldBusinessCouncilforSustainableDevelopment(WBCSD):acoalitionofsome200internationalcompaniesunitedbyasharedcommitmenttosustainabledevelopment;

–

“Ourgovernancestructureisdesignedtomaintainstrongcorporategovernanceprinciples,policiesandpracticesinlinewithourobjectivetobeleadersinourindustry.TheGroup’soverallapproachtosustainability,therefore,continuestoformanintegralpartofourstrategicandoperationalmanagement.” Sir John Parker, joint chairman of the Mondi Group and member of the Board SD committee



Case study Mondi road tests new toolWorldResourcesInstitute(WRI),withthesupportoftheWorldBusinessCouncilforSustainableDevelopment(WBCSD)andTheMeridianInstitute(MI),developedtheEcosystemsServicesReview(ESR),atooltoproactivelyidentifyrisksandopportunitiesinacompany’sdependenceonecosystems.MondiwasoneoffiveglobalcompaniestoroadtesttheESRonasectionofitsplantationforestsinSouthAfricaduring2007.Thefindings,whichwillbepublishedduring2008,willbeusedtofurtherdeveloptheconceptofbusinessandecosystems.

TheWBCSD’sSustainableForestProductsIndustryWorkingGroup(SFPIWG):aworkinggroupinvolvingsome26leadingglobalforestproductscompanies,whichaimstotacklesustainabilityissuesintheglobalforestindustry;

HighConservationValue(HCV)Network:aglobalnetworkoforganisationsandindividualssupportingtheHCVapproachthatpromotesapracticalconservationandconsistentapproachtoHCVareas.ThenetworkhasthesupportofawiderangeofNGOs,companies,andresearchinstitutions.HCVisakeyaspectofourforestryprogrammeinRussiaandSouthAfrica.MondiparticipatesasamemberoftheHCVnetworksteeringgroup;and

TheForestsDialogue(TFD):aglobalmulti-stakeholderforumconsistingofstakeholdersfromdifferentregions,committedtotheconservationandsustainableuseofforests.TFDprovidesaplatformfortheforestryindustrytoengagesocietyonsignificantissuesrelatedtotheindustry.ParticipantsincludeglobalforestrycompaniesandglobalNGOssuchasWWF,WorldResourcesInstitute(WRI),ConservationInternational(CI),Greenpeace,TheNatureConservancy(TNC),theWorldConservationUnion(IUCN)andtheForestPeoplesProgramme.

–

–

–

OnaEuropeanlevel,wearealsoamemberoftheConfederationofEuropeanPaperIndustries(CEPI),whichrepresentstheinterestsofthecontinent-widepulpandpaperindustrytoEuropeaninstitutions.

Wearealsomembersoftherelevantindustryassociationsinthecountrieswhereweoperate,enablingustoestablishandmaintainconstructiverelationshipswithgovernments,especiallyinSouthAfricaandRussia.

Inclusion in sustainability indices

SincewebecameanindependentbusinessinJuly2007,MondihasbeenawardedmembershipofboththeDowJonesSustainabilityWorldIndex(DJSIWorld)andthePan-EuropeanDowJonesSTOXXSustainabilityIndex(DJSISTOXX).Wearetheonlycompanyfromtheforestryandpapersectorthatisrepresentedinboththeseindices.

TheDowJonesSustainabilityIndicesfollowabest-in-classapproach,includingthesustainabilityleadersfromeachindustryonaglobalandregionallevel.Theyreviewthebusinessestheylistannually,basedonanintegratedassessmentofpubliclyavailableinformationoncorporateeconomic,environmentalandsocialperformancewithastrongfocusonlong-termshareholdervalue.Wewillcontinuetofocusoureffortsonaddressingareasforimprovementidentifiedduringtheassessment.

Governancecontinued

International NGOs

Since2004,WWFhasbeenusingpubliclyavailableinformationtoassessthestandardsofcorporateresponsibilityreportingbypulpandpapercompaniesoperatinginEurope.Initsreport‘CorporateResponsibilityReportinginthePulpandPaperIndustry2007’,Mondisharedthirdplacewithfourofourindustrypeers,havingreportedonover75%ofWWF’scorporatereportingrequirementsandcriteria.

Inaddition,MondihasmaintaineditstechnicalcooperationagreementwithWWFsince2005andduring2007thefocuswasontheMondiWetlandsProjectinSouthAfrica,aprojectwhichpromotessustainablebestpracticeforplantationforestrydesign.InRussia,MondicontinuedtocooperatewithlocalNGOSilverTaigaandWWFonthedefinitionandidentificationofHCVforestryareasintheKomiRepublic.

OurparticipationintheWBCSDEcosystemsServicesReviewprojectinvolvedourcloseco-operationwiththeWorldResourcesInstituteandtheMeridianInstituteduring2007.Theimportanceofecosystemsforbiodiversity,services,businessandlivelihoodsissettoattractsignificantglobalattentionoverthenextfewyearsandwewillcontinuetomakeourservicesavailableforthenextstageoftheprocess.

Inaddition,wequalifiedforinclusiononthe2007SociallyResponsibleInvestment(SRI)IndexoftheJohannesburgStockExchange(JSE).Thisassessestheenvironmental,socialandeconomicsustainabilitypracticesoflistedcompanies,tomeettheneedsofthosestakeholderswhoareinterestedinsociallyresponsiblebehaviourandinvestment.


Case study Protecting pristine forest AsweworktoensuretheprotectionofHighConservationValue(HCV)forestinRussia’sKomiRepublic,oneofthegreatestchallengesisidentifyingthosepristineareas,withahighecologicalvalue,inwhichloggingshouldnottakeplace.

Thisisparticularlychallenging,becausesuchprotectionisnotenshrinedinlegislation.Inaddition,itisnecessarytobalanceappropriatelytheinterestsofarangeofstakeholders.

Oursolutionistoworkco-operativelywithdifferentinterestgroups,includingsuchstakeholdersasthelocalpopulationandadministration,othercompanies,NGOsandthegovernmentandStateForestServiceoftheKomiRepublic.

Todate,some23%oftheRepublic’s21millionhectaresofproductiveforesthasbeenidentifiedaspotentially‘pristine’.

MondiandlocalNGOSilverTaigahavealsocreatedtogetheraninventoryofover3.4millionhectaresofpristineforest,aswellasgainingsignificantexperienceinmanagingHCVforestsduringtheFSCcertificationprocess.Thisishelpingusensurethattheforestryactivitiesweundertakeareenvironmentallyandsociallyresponsible.Lookingahead,ourplanfor2008includesreachingagreementonnewareasandopeningdialogueonothers.

National and local NGOs

Wehaveformedproductivepartnershipswith,amongstothers,nationalNGOssuchasSilverTaigainRussia(HCVforestsprojectinRussia)andtheWildlifeandEnvironmentSocietyofSouthAfrica(MondiWetlandsProject).Thesepartnershipshaveresultedinpositivesocio-environmentalbenefits.Inaddition,wecontinuetocooperatewithsmaller,localNGOsonarangeofprojects,includingourworkinSouthAfricaontheprotectionandconservationofrareandendangeredspeciessuchastheWattledCraneandOribi.

Scope and assuranceOur approach to sustainability reporting

Thisreportreviewsoureconomic,socialandenvironmentalperformancefortheperiodbetween1Januaryand31December2007andfollowsonfromtheSustainabilityprogressreport2005–2006.ThereporthasbeenpublishedusingtheGlobalReportingInitiative(GRI)G3guidelinesasareferenceinsofarastheyareapplicabletoourbusinessandourlevelofreportingmaturity.AlimitedreviewofourstatusagainsttheGRIG3reportingcriteriaisprovidedonpages57and58,whilstacompletereviewofourstatusagainsttheseguidelinescanbefoundatwww.mondigroup.com.

Wehavecompiledthereport’scontentbothonthebasisofourinternalriskassessmentprocessesandbyattemptingtoaddressthemainsustainabilityconcernsthatexternalstakeholdershaveraised.Wereceiveandmonitorfeedbackandviewsfromawidevarietyofopinionformers,employees,regionalandnationalgovernments,communitymembers,NGOs,customers,investorsandsociallyresponsibleinvestmentanalysts.

Intermsofsubjectscope,thereportincludesacross-sectionofthesocial,economicandenvironmentalissuesthataremostmaterialtoouractivities.

Wehavestriventoremainobjective,toidentifyanddiscusspotentialissuesandchallengesinabalancedwayandtoreportopenlyandhonestly.

Scope and boundaries of our report

Thereportcoversalltheactivitiesoftheglobalproductionoperationsinwhichweholdaminimum50%shareholdingoroverwhichwehaveoperationalcontrol.

Theexceptionsare:

Europapier(ourpaperdistributioncompany)inwhichwehavea90%shareholding,oursalesofficesandothersmalleradministrativefunctionsarenotincludedinthescopeofthisreport;and

MondiShandukaNewsprint,theSouthAfricannewsprintcompany,inwhichwehavea50%shareholdingbutwhichisindependentlymanaged.MondiShandukaNewsprintisincludedinthescopeofthisreportsinceithasadoptedMondi’sreportingprocessesandprocedures.WedonotreportonourUK-basedindependentlymanagedjoint-venturecompany,AylesfordNewsprintLimited.

Incaseswhereourshareholdingislessthan100%,wereportthedataona100%basis.

Allfinancialdataisreportedineuros(€)unlessthedataspecificallyrelatestoSouthAfrica,inwhichcase,financialdataisreportedinSouthAfricanrand(R).

–

–

ThereportincludesdataonourStambolijskimillforthefirsttime,butdoesnotincludedataforourmostrecentacquisitions.

Thefollowingexceptionstotheaboveapplytothedatawereport:

Safetydataincludesdataforbothouremployeesandcontractors;

HIV/AIDSdataisreportedforallourmanagedSouthAfricanoperationsandMondiShandukaNewsprint,includingadministrativefunctions.ThisisinlinewiththeHIVandAIDSriskinSouthAfrica;

Weonlyreportenvironmentaldataforourenvironmentallysignificantproductionoperations(youcanfindalistoftheseinthedatatablesonpage54).In2007,wereportedforthefirsttimeonStambolijskiandonMondiShandukaNewsprint.Furthermore,thesetwooperationshavebeenincludedinourbaselinedatasothatweareabletomakevalidcomparisonsinouryear-to-yeardata;

Fromtimetotimewehavereportedonoperation-orregional-specificdata.Intheseinstances,adescriptionofoperationsorregionscoveredhasbeenprovided.

Data collection and internal reporting

In2007,allinformationanddatawerecollectedbytheindividualoperations,andreportedonamonthlyorquarterlybasistotheMondiGroupusingtheAngloAmericanplcdatabase,reportingguidelinesanddefinitions.Thesereportsidentifydeviancesorexceptionsinperformance,progressagainsttheGroup’ssustainabilitycommitments,informationonanymajorincidentsandinstancesofnon-compliance.

–

–

–

–


Individualoperationscollectandprocessthedatausingthebestavailablenationalorinternationalmethodologiesandtechniquesformeasurement,calculationandanalysis.Eachoperationisresponsiblefortheaccuracyandconsistencyofitsdata.Althoughwehavetakeneveryefforttoensuretheaccuracyofthedata,werecognisethatsomemaybesubjecttouncertaintyarisingfromdifferentinterpretationsoftheinternalreportingguidelinesandpossiblehumanerrorinrecordingandsubmittingthedata.Thisreflectsthevaryingdegreesofreportingsophisticationacrossthescopeofoperationsandsustainabilitytopics.

Insomeinstances,theabilitytocomparedatahasbeenaffectedbyrefinementsindatadefinitionsandimprovementsindatacollectionsystems.Whereissueshavebeendetectedinourhistoricaldata,wehaverestatedthisdata.Wehavealsoindicatedinstanceswheredatadeviatesfromourdefinitionsorwheredatahaschangedintheappropriatesectionsofthisreport.

During2007wedevelopedournewsustainabledevelopmentreportingandinformationsystem,MORIS.Tofacilitatecomparabilitywithpreviousyears’datainthefuture,wewillalignthenewdefinitionsfromMORIStotheGroup’sstandingcommitments.Theywillalsoprovidethebasisforourannual,externalsustainabilityreportsgoingforward.

Independent performance monitoring

Inadditiontotheexternalassuranceassociatedwithoursustainabilityreport,externalauditsarealsoundertakenatourenvironmentallysignificantproductionoperationsonaregularbasisaspartofISO14001,ForestryStewardshipCouncil(FSC),FSCChainofCustody,ProgrammefortheEndorsementofForestryCertificationschemes(PEFC)andPEFCChainofCustodycertifications.Currently,alltheseoperations(excepttherecentlyacquiredStambolijskimillinBulgaria)areeitherISO14001certifiedand/orhaveFSCorPEFCChainofCustodycertificationinplace.Furthermore,asignificantnumberofouroperationsareOHSAS18001andISO9001certified.

Maintainingcertificationtotheabove-mentionedstandardsrequiresregularauditsonoursafety,occupationalhealth,environmentalandqualitymanagementsystemsbyexternalassuranceproviders.

External assurance

Asoutlinedintheassurancestatementonpages52and53,aselectedsampleoftheperformancedatainthisreporthasbeenindependentlyassuredbyEnvironmentalResourcesManagementLimited(ERM).ERM’sscopeofassuranceincludesanassessmentastowhetherwehaveappropriatelyreportedtheselectedperformancedata,includingareviewoftheunderlyingdatacollectionandaggregationandvalidationofthesystemsandprocessesinplace.

Inaddition,theyalsoconductedareviewtoassessthestatusofalignmentofourprocedurefortheresponsibleprocurementofwood,virginfibreandbiomasstotheFSCStandardforCompanyEvaluationofFSCControlledWood(FSC-STD-40-005(Version2-1)EN)(October2006),referredtointhisreportastheFSCControlledWoodStandard.Theimplementationstatusofourprocedurefortheresponsibleprocurementofwood,virginfibreandbiomassandourMondiWoodInformationPlatform(WIP)wasalsoreviewed.

Recommendations for improvement

IntheirassuranceofourSustainabilityprogressreport2005–2006(publishedinlate2007)andthisreport,ERMmadeanumberofhigh-levelfindings–allofwhichwehaveacceptedandareactingupon.

Theseweretheneedto:

ensurethatfutureMondisustainabilityreportsaddresstheSDimpactsandopportunitiesconsistentlyacrossallourmanagedoperations;

reviewthecurrentapproachtoselectingandupdatingtheconversionfactorsforcalculatingCO2emissionsandenergyuseandalignittothenewMondiSDmanagementobjectives;

developenhancedMondiGroup-widetraining,guidanceandsupportforouroperationsduring2008toensureeffectiveimplementationofourreportingandinformationsystems;

–

–

–

furtherrefineournewreportingandinformationsystemtoensurethatitfullymeetsourfuturemanagementinformationrequirementsandexternalreportingcommitments,particularlyintheareasofreportinghumanresourcesinformationandhumanrights;and

updateourprocedureforresponsibleprocurementofwood,virginfibreandbiomassin2008,inlinewiththeFSCControlledWoodStandardversion2-1.

Wearealreadyactiveinimplementingalltheserecommendations,andwillreportontheprogresswehavemadeinournextsustainabilityreport.

–

–

Governancecontinued


Economic contributionBringingwealthandemploymenttolocaleconomies

Business and marketsTheGroupisprincipallyinvolvedinthemanufactureofpackagingpaper,convertedpackagingproductsanduncoatedfinepaper(UFP).

Mondiisfullyintegratedacrossthepaperandpackagingproductionprocess,fromthegrowingofwoodandthemanufactureofpulpandpaper,totheconversionofpackagingpapersintocorrugatedboxesandindustrialbags.Italsohasagrowingspecialitypackagingbusinessfocusedontheproductionofreleaseliner,extrusioncoatingandconsumerflexiblesproducts.

TheGrouphasaparticularlystrongpresenceinwesternandemergingEurope,RussiaandSouthAfrica,whereitoccupiesthenumberoneortwomarketpositionsinalmostallitschosenpackagingandUFPproductsegments.

Acquisitions and disposals

TheGroupcontinuedtoexpandthroughorganicgrowthandnotableacquisitionsin2007includeda53.6%majoritystakeinTireKutsan,Turkey’sleadingcorrugatedpackagingcompany,a100%stakeintheAustrian-basedUnterlandflexiblepackagingbusinessand100%stakeintheLencoacquisitioninSouthAfrica,amainlyrigidplasticsbusiness.Disposalsduring2007includeda5.3%stakeinMondiPackagingPaperŚwiecieS.A.andthedisposalofvariouscorrugatedconvertingoperationsaspartofarestructuringdrive.

Financial review€million 2007 2006

Groupturnover 6,269 5,751

EBITDA 870 726

Underlyingoperatingprofit 502 377

Cashgeneratedfromoperations 957 657

Capitalexpenditure 406 460

Investmentinforestryassets 41 50

Netoperatingassets 5,452 5,171

TheGroupdeliveredasubstantiallyimprovedperformancein2007,withunderlyingoperatingprofitup33%to€502million(2006:€377million),producinganunderlyingoperatingmarginof8%(2006:6.6%).Profitbeforetaxandspecialitemswasup33%to€405million(2006:€305million),underlyingearningspersharerose74%to46.9eurocents(2006:27.0eurocents)andcashflowfromoperationswasup46%to€957million(2006:€657million).

Alldivisionssawimprovedprofitabilityasaresultofan

improvedtradingenvironment,whichledtobetterpricing,andthebenefitsofoperationalefficiencies,inparticular€167millionofcostsavings.Thesepositivedevelopmentswerepartiallyoffsetbysignificantincreasesinrawmaterials,particularlythecostsofwood,pulpandrecycledfibre.

Mondiendedtheyearwithastrongfinancialposition:theGroup’snetdebtfinancechargewascovered9.6timesbyEBITDAandyear-endgearingwas45.2%oftotalequity.

€459m

€386m

€377m

€502m

2004

2005

2006

2007

Underlying operating profit up 33%

Group revenue up 9% at €6,269million

€5,385m

€5,364m

€5,751m

€6,269m

2004

2005

2006

2007

EBITDA up 20% at €870million

€779m

€718m

€726m

€870m

2004

2005

2006

2007

€4,929m

€5,169m

€5,171m

€5,452m

2004

2005

2006

2007

Net operating assets

Underlying Grouprevenue operatingprofit

€million 2007 2006 2007 2006

MondiPackaging 3,590 3,167 312 226

CorrugatedBusiness 1,644 1,497 158 120

BagBusiness 1,265 1,162 127 97

FlexibleBusiness 786 607 27 9

Inter-segmenteliminations (105) (99) – –

MondiBusinessPaper 1,898 1,889 152 104

MondiPackagingSouthAfrica 419 360 35 35

MerchantandNewsprint 591 539 40 29

CorporateandOther 28 31 (37) (17)

Inter-segmenteliminations (257) (235) – –

TotalGroup 6,269 5,751 502 377


Review of operationsMondiPackaging’sunderlyingoperatingprofitincreasedby€86million,or38%,reflectingpriceincreasesachievedacrossallmajorpapergrades,someimprovementintheconvertingoperationsandbetterperformancesinbothbagsandflexibles.Inaddition,costsavingsof€81millionwereachieved.Thisimprovedresultwasdelivereddespite€17millioninrestructuringcosts(2006:€17million)incurredaspartoftheongoingrationalisationofourdownstreamconvertingassets.

MondiBusinessPaper’sunderlyingoperatingprofitincreasedby€48million,or46%,principallyduetoasignificantturnaroundintheSouthAfricanoperationsaswellasastrongresultfromRussia.Theresultalsobenefitedfrommodestincreasesinpaperpricing.TheimprovedSouthAfricanperformancewasachievedthrougharestructuringofthebusinessandabetteroperatingperformancefromthePM31papermachinein

Merebank,togetherwithcostreductionsthroughoutthebusinessof€82million.Theseimprovementswerepartiallyoffsetby€10millioninrestructuringcostsmainlyincurredtoreducedivisionaloverheads.

MondiPackagingSouthAfrica’sunderlyingoperatingprofitof€35millionwasup8%inlocalcurrency,butthereportedfigurewasflaton2006duetotranslationintoeurosatasignificantlyweakerrandexchangerate.TheincreaseismainlyduetogooddemandandvolumegrowthfollowingastrongagriculturalseasoninSouthAfrica.

Ourmerchantandnewsprintbusinesses(profitsup€11million,or38%)benefitedfromimprovedpricinganddemandand,intheUK,fromlowerenergycosts.

Netcorporatecostswere€20millionhigher,reflectingthecreationofMondi’sowncorporatestructurefollowingthedemergerfromAngloAmericanplc.

Summary of production information

Yearended Yearended 31December 31December 2007 2006

MondiPackaging

Containerboard tonnes 2,101,363 2,044,391

Kraftpaper tonnes 891,385 850,271

Corrugatedboardandboxes millionm² 2,088 2,103

Industrialbags millionunits 3,642 3,606

Coatingandreleaseliners millionm² 2,971 2,360

Pulp–external tonnes 179,059 180,166

MondiBusinessPaper

Uncoatedfinepaper tonnes 1,987,574 2,012,295

Newsprint tonnes 192,329 187,100

Pulp–external tonnes 125,679 114,099

Woodchips bone-drytonnes 690,447 886,612

MondiPackagingSouthAfrica

Packagingpapers tonnes 368,574 369,300

Corrugatedboardandboxes millionm² 367 328

NewsprintJointVentures

Newsprint(attributableshare) tonnes 314,847 320,876

Aylesford(attributableshare) tonnes 185,990 196,864

Shanduka(attributableshare) tonnes 128,857 124,012

Economic contributioncontinued


Economic strength of the GroupSuppliers

Paymentstosuppliersin2007totalled€4,531million(2006:€4,204million).This8%increaseisattributabletothehighervolumestradedin2007andreflectstheimpactoftheacquisitionsduringtheperiod.Themajorityofthesepaymentsrelatetoinputfibrecosts,energy,chemicals,packagingandmerchantproductexpenses.

Employees

Thevaluedistributedtoemployees,includingbasewagesandotherrelatedcosts,totalled€906million(2006:€874million).

Capital expenditure

Totalcapitalexpenditurein2007amountedto€406million(2006:€460million),andisbroadlyinlinewithdepreciationof€363millionifthe€40millionexpenditureonthetwomajorcapitalprojectsinPolandandRussiaisexcluded.ThisreflectsMondi’scontinuinginvestmentinmajorcapitalprojectsandacquisitionsinlow-costemergingmarkets.

Taxes and other payments to governments

In2007Mondipaidatotalof€189millionintaxesandrelatedpaymentsinthecountriesinwhichtheGroupoperated.Theseincludedcompanytaxes,employeetaxes,royalties,importandexportduties,transferduties,salesandothertaxes.

Attributable to shareholders

ThenetprofitattributabletoshareholdersoftheGroupaftertaxationwas€233million.

AdetailedreviewoftheGroup’sfinancialandoperationalperformance,includingstatementsbythejointchairmenandchiefexecutiveofficerandafullsetofaccounts,canbefoundinMondi’s2007annualreport.

TheannualreportisalsoavailabletodownloadfromtheGroup’swebsiteatwww.mondigroup.com

Total capital expenditure (€m)

€450m

€413m

€281m

€241m

2004

2005

2006

2007 €165m

€168m

€138m

€179m

Emerging markets Mature markets

Value distribution (%)

To employees for wages 14%

Paid to suppliers 73%

Paid to providers of funds 2%

To government for company taxation 1%

Depreciation 6%

WesternEurope

41%EmergingEurope

33%

Russia9%

Africa11%

Other6%

Payments to suppliers (%)

WesternEurope

57%

EmergingEurope

13%Russia10%

Africa16%

Other4%

Distribution to employees (%)

Capital expenditure by geography (%)

WesternEurope

41%EmergingEurope

24%

Russia13%

Africa18%

Other4%

Taxes paid €189million

€76m2007 €113m

Employeetaxes Othergovernmenttaxesandpayment

Retained for shareholders 4%


ForestrySummary

Forestsarethelivingheartofouroperations–andtheirsustainabilityisfundamentaltoourfuture.

Scientificadvances,awillingnesstoengageandacommitmenttoourcommunitiesareallkeytoMondi’sforestrymodelfortodayandtomorrow.

Thissectiondescribesourmainactivitiesandareasofprogressin2007.

Moreinformationisavailableat:www.mondigroup.com

Page 21 Credibility through certification

Page 24 Water management on our plantations

Page 23 Managing biodiversity

Page 25 Wood tracing to defeat illegal logging

Page 26 Meeting social needs in our forests

Policy Mondi attaches great importance to the sustain-ability of the supply of wood, fibre and biomass it sources, and to the environment.

Pristine forests in Russia. Image courtesy of Silver Taiga.

Sustainabilityreport2007 Mondi Group 21

Agrowingbusiness–aspiringtobestpracticeinMondi’sforests

Positive change

AtMondi,webelievethatthesescientificadvanceshavethepotentialtomovetheindustrytoapositionwhereitisrecognisedasaforceforpositivechangeandaleadingindustryinthemitigationofclimatechange.

Wearenotyetthere.Theimpactofpastoperationsandsomepersistentpoorpracticecarriedoutbysomemembersofourindustryontheglobalenvironmentandlocalcommunities,particularlytheunsustainableexploitationoftheboreal(northern)forestsandtropicalrainforests,hasbeentoodeeptobeeasilyforgotten.

Insouthernhemisphereplantations,whichnowaccountforlessthan5%oftheworld’sforestsbutmorethan30%ofitswoodproduction,earlyplantationpracticehashadanimpactonwatersupplies,biodiversityandsenseofplace.

ThishasbeenthecaseinSouthAfrica,wheretodayMondiownsandmanages350,000hectaresofplantationforests.FollowingagovernmentdecisionafterWorldWarIthatthecountryshouldbeself-sufficientinforestry,wall-to-wallplantingandtheinappropriateuseofgrasslandandwetlandareascreatedenvironmentalandsocialproblemsthatwearefocusedoneradicatingtoday.

Responsible forestry

InrecentyearsatMondiwehavebeendevelopinganapproachthatwecall‘responsibleforestry’,ascience-basedmethodinvolvingkeystakeholders.Thenewgenerationplantationsthatareresultingfromthisapproachreflectthegreatestimprovement,becauseoftheirshortseventonineyearrotations(thetimefromplantingtologging).

MondiisworkinggloballywithNGOsandthescientificcommunitytodevelopandimplementbestpracticeforsustainableforestmanagement.

Exciting advances

Wearepleasedbysomeoftheadvancesthattheseeffortsarealreadyproducing.Forexample,bydelineatingwetland(riparian)zonesandcreatingaplantation-free‘bufferzone’aroundriparianareas(closetoariver,streamorlake)andwetlands,wearemanagingtoconservewaterresourcesandassociatedbiodiversityinourSouthAfricanplantations.Bylinkingseparateecosystemsviaundeveloped‘ecocorridors’,wearemaintaininganimportantelementofbiodiversityinthreatenedareas.InRussia,wearepartofamulti-stakeholderprocesssuccessfullysettingasideareasofpristinevirginforestwhileenablingruralpeopletocontinuemakingtheirlivingfromtheforest.

Credibility through certificationCertificationisaveryimportanttoolforanyforestrybusinessseekingtoestablishitscredibilityasaresponsibleorganisation.Inourview,itsetstheminimumsustainabledevelopmentstandardthatweshouldseekinthoseareaswhereweown,leaseormanagelandanditprovidestheassurancethatwoodandfibrepurchasedfromexternalsourcesisfromsustainablymanagedforests.MondiusesForestStewardshipCouncil(FSC)andProgrammefortheEndorsementofForestCertification(PEFC)systems.

TheFSCwasestablishedintheearly1990stocreateasystemforidentifyingwell-managedforestsasanacceptablesourceofforestryproducts.Withamissiontoensure

environmentallyappropriate,sociallybeneficialandeconomicallyviablemanagement,itrunsacertificationschemethat’swidelyrecognisedbyNGOsasthepremierglobalstandardforresponsibleforestry.

Underlying sustainability

Forus,theunderlyingsustainabilitythatcertificationpromotesisavitalaspectofouroperations–fullytransparentandsubjecttoregularassessmentbyindependentaccreditationorganisations.FSCcertificationprovideswidelyrecognisedevidenceofourcommitmenttosustainablepractices.

MondiwasoneofthefirstcommercialbusinessestoadopttheFSC’sstandardsinSouthAfrica,wherealllandweownisnowenteringthefourthcycleofcertification.InRussia’sKomiRepublic,Mondihascertified1.6millionhectaresoflandandafurther0.7millionhectaresaredueforcertification.ThisfurthercertificationwillagaininvolveclosecooperationwiththeStateForestryDepartmentandlocalNGO,SilverTaiga.

PEFCisaglobalumbrellaorganisationthatassessesandrecognisesnationalschemes,alreadyrepresenting23programmesandwithafurther12workingtowardsrecognition.PEFCforestcertificationsupportsalargenumberofoursuppliersinEurope.

ThePEFCandFSCChainofCustodycertificationshavebeenimplementedatallofourmillsexceptthenewlyacquiredBulgarianmillatStambolijski,forwhichaplanwillbedeveloped.

The face of the global forestry industry is changing fundamentally. Historically, the industry has often been a focus of criticism from some quarters for poor environmental and social behaviour in its management of plantations, of natural forests and of local communities.

The Earth Summit in Rio de Janeiro in 1992 on Sustainable Development marked a turning point for the forestry industry and, in the succeeding years, scientific advances in forestry have coincided with an understanding and acceptance of corporate responsibilities to enable a new, sustainable approach to forestry. Mondi is fully participating in this quiet revolution, working with NGOs and the scientific community in Europe, Russia and South Africa to develop and implement best practice for sustainable forest management.


Supporting small growers

Gainingcertificationiscomplexandexpensiveforsmallgrowers.Manyofthesebusinessesaresmallandworkingtotightmargins,soweareactivelyseekingtoeasetheprocessforthemwithoutcompromisingsustainableforestrypractices.

Therearesome16millionsmallcommercialgrowersinEuropealone,andnumbersinSouthAfricaaregrowingfast.Helpingthoseinoursupplychaingaincertificationisoneofthebiggestchallengeswefaceaswemovetowardsrequiringthemalltobecrediblycertified.

Aswellasdevelopingclearguidelinesonwhatweexpectfromoursuppliers,weareworkingthroughTheForestsDialogue(TFD)tofindanacceptableandpracticalsolution.Thisisanongoingeffort,onwhichwewillreportagaininfuture.

High Conservation Value forests

InRussia’sKomiforestthereareareasknownasHighConservationValue(HCV)forests,wherecommercialforestrymaybeprohibitedorrestrictedduetotheirparticularecologicalorsocialsignificance.TheissuessurroundingHCVstatuscanbecomplex,however,becauseitisoftendifficulttoidentifythemprecisely.

Asresourcestewards,weareactiveinworkingwithawiderangeofstakeholders,includingtheRussianStateForestDepartment,WWF(whichhasawardedusitsprestigiousPandaAwardforoureffortsinthisarea)andGreenpeacethroughSilverTaiga,todefinethese

HCVareasaccuratelyandimplementaworkableprocessthatindicatestheirstatus.

SilverTaiga,inparticular,hasmadeasubstantialcontributiontothisprocess,withpracticalimplementationofonesolutioninvolvingasimple‘trafficlight’system.Inthis,reddemarcates‘nogo’areas,amberindicateswherespecificconditionsapplyandgreenallowsnormalcommercialoperations.

AcriticalfactorinHCVareas,however,isthesituationoflocalpeople.Itisimportantthattheirsourcesofincomearenotthreatened,sothereisregulardialoguewithcommunitiesduringtheprocess.

Managing the impact of plantations

InSouthAfrica,wearecommittedtominimisingtheimpactofourplantationsontheenvironment.Inadditiontocreatingemploymentthroughplantations,werecognisethatanymonoculturehasanimpactontheenvironment.Wehavearesponsibilitytohelpprotectvulnerableecosystemslikeindigenousforest,wetlandsandgrasslands.

Forestrycontinued

Accurate eco boundaries are protecting wetland and other High Conservation Value (HCV) areas to enable plantations to operate side-by-side with globally significant habitats.


Rehabilitating ecosystems

Withthisinmind,weareworkingcloselywithWWFandsomeofourpeersintheindustryonrefiningthescienceandpracticebehindwhatWWFcalls‘NewGenerationPlantations’,aprojectdueforcompletionin2009.Earlyindicationsarealreadyshowingthatthepracticeswearedevelopinghavesomeverypositiveimplicationsfortherehabilitationoffunctioningecosystems,wetlandsandripariansystemsinparticular.

Thisisvitalwork.SouthAfricangrasslands,whichcovertheeconomicallymostproductivethirdofthecountry,havebeensignificantlyimpactedbydevelopmentofmanykindsincludingagriculture,miningandurbanexpansionaswellasforestry.Remnantsofsomeoftherareandendangeredgrasslandsareunderseriousthreat,placinganumberofbirdandanimalspecies,includingtheWattledCrane,OribiandBlueSwallow,onthevergeofextinctioninsomeareasofthecountry.

Naturally,Mondicanonlyinfluenceactivitieswhereweowntheland.Butwebelievethattheworkwearedoing,integratedwiththegovernment’s20-yeargrasslandconservationplanandtheEzemveloKZNWildlifeLandStewardshipProgramme,isindicatingafuturedirectionforotherlandownersandinterestedparties.Wearecommittedtoensuringthat25%ofourlandinSouthAfricaisleftunforestedandwemakeoptimaluseofthisareatosupportassociatedHCVareas.

Developing eco-corridors

Justassignificantisthedevelopmentofecologicalnetworks,usingundeveloped‘corridors’oflandtocreatebiologicalpathwayslinkingdifferentHCVhabitatsorecosystems.ProfessorMichaelSamwayswhoheadstheDepartmentofConservationEcologyandEntomologyatStellenboschUniversityinSouthAfrica,isleadingdevelopmentsinthisfieldandmakinguseofMondi’sforestresources.

Alongwithourworkonwatersystems(seepages24and25),applyingscientificresearchinthiswayisstronglyinfluencingourcommercialapproach.InSouthAfrica,weareinvolvedinseveralprojectswhereintensiveforestryisnowoperatinghand-in-handwithworld-classconservationactivities.

World Heritage partners

SiyaQhubekaForestryinSouthAfricaisapartnershipbetweenMondianditsblackempowermentpartners,andgovernment,andwasthefirstcommercialorganisationtodelineateanaccurate‘eco-boundary’linebetweenaWorldHeritageSite(nowiSimangalisoWetlandPark,formerlyGreaterSt.LuciaWetlandPark)andaforestryplantation.ThisapproachhasprotectedsensitivewetlandandotherHCVareasonthesite,enablingourplantationsandassociatedecosystemstobecomepartofagloballyrecognisedgameparkandextendingthehabitatofspeciesincludingelephant,rhinocerosandbuffaloalongwithamyriadofplants,invertebratesandbirdlife.

Managing biodiversityTheEarthSummitinRiodeJaneiroin1992wasanimportantcatalystfortheworld’sleadingforestrycompanies,awakeningthemtotheimportanceofbiodiversityandsustainablepracticesintheiroperations.

DuringtheyearssincetheRiosummit,Mondihasplacedincreasingemphasisonourresponsibilitytoconservenaturalresourcesand,wherepossible,tohelprestorethosethathavebeendamaged.

ThisapproachisconsistentwiththeMillenniumEcosystemAssessment,whichin2001compiledintoasinglereportthefindingsofover1,360environmentalexpertsfromallovertheworld.

Thisshowedthat,whilethelast50yearshaveseenmorechanges(includingdegradation)toecosystemsasaresultofhumanactivitythananyotherperiodinhistory,changesinpracticecouldreversemanyofthemoverthenext50years.

Othersiteswheresimilarpartner-shipswithsharedresourcesareunderwayincludetheeMakhosiniOphatheHeritageParkandGilboaForestEstatewhereourwillingnesstodropformalboundaries,shareecosystemresourcesandknowledgeandcommunicatewithlocal,nationalandglobalNGOsisresultinginmutualbenefitsbasedonaclearunderstandingofeachother’sinterests.

Mondi’srelationshipswithworldandlocalconservationbodieswilltakeonanewdimensionin2008whenwebecomemoreinvolvedwiththeeMakhosiniOphatheHeritagePark,nearUlundiintheKwaZuluNatalprovinceofSouthAfrica.ThisnewparkincludesthevalleywhichisthebirthplaceoftheZulunationandwheremostoftheZulukingsareburied.

WearenowconcentratingonhowwecanapplythelessonswearelearningthroughtheseandotherprojectstoournorthernforestryoperationsinRussia’sKomiRepublic.

Understanding the issues

Theglobalforestindustryhasacriticalroletoplayinthepreservationofendangeredecosystemsandbiodiversityandanimportantcontributiontomaketowardsthemitigationofclimatechange.Mondiisproudtobeapartofthisglobalcontributionandintendstopublishsignificantachievementsinthisregardinourfuturereports.

Seedlings planted per year

36millionin South African plantations


Water management in our plantationsOurSouthAfricanplantationsareinanareaoftheworldwherefreshwaterisascarceandvaluablenaturalresource–65%ofthecountryreceiveslessthan500mmannualrainfall,makingthepotentialfordroughtanever-presentdanger.

Overmanyyears,ithasbeenrecognisedthatplantationforestryhasasignificantnegativeimpactonwaterresources.Inmostareas,reductioninstream-flowisthemostcommonnegativeoutcome,whilethemaintenanceofgoodqualitywaterisgenerallyapositiveimpact.

Developing new practices

Itwascommonplantationpracticeintheearlydaysoftheforestryindustrytouseeveryavailablepieceoflandforplanting.Nowweknowthatplantinginsensitiveriparian(closetoariver,streamorlake)orwetlandareasresultsinthetreestakingupmorewaterthantheyneed,duetoitsreadyavailability.

Mondiwasamongthefirstforestrycompaniestorecognisewaterasthemostimportantenvironmentalissueinmanyareas.Asaresult,wehaveforsomeyearsbeenworkingcloselywithNGOsandscientificinstitutions,suchasuniversitiesandresearchcentres,togainafullerunderstandingofplantationwaterissues.TheWaterResearchCommission,UniversityofKwaZuluNatal,UniversityoftheOrangeFreeStateandtheCouncilforScientificandIndustrialResearch(CSIR)havemadesubstantialcontributionstothisworkonMondiland.

Ourlandishometoanumberofimportantwaterresearchtrials.Thesehaveledtosomesignificantchangestoourforestrypracticedesignedpurelytominimisetheimpactofouroperationsonwaterresources.

WearetheprincipalsponsoroftheMondiWetlandsProject(MWP),establishedin1991byWWFandtheWildlifeandEnvironmentSocietyofSouthAfrica.Duetothewideimplementationofitsfindings,thisisoneofWWF’smostsuccessfulprojectsanywhereintheworldandwehaveagreedanewfive-yearsponsorshipagreementthatbeginsinApril2008.TheMWPismakingasubstantialcontributiontotheprotectionandrehabilitationofwetlandsinSouthAfrica,andthenewagreementincludesaparticularfocusonwetlandsinpoorruralcommunitiesandincapacitatedmunicipalities.

A cooperative effort

AlongsideMWP,theSouthAfricangovernmentandseveralleadingscientists,wechairedaprocessoveranumberofyearsresultinginanationalprocedureforwetlanddelineation.

Themostimportantresulthasbeenourdecisiontoremoveallourtreesonorclosetoriparianorwetlandareas,creating‘bufferzones’aroundthemtoencouragetherecoveryofnaturalfreshwatersources.Thisongoingprocessinvolvesremovingsome5%ofourlandfromforestryproduction.

Forestrycontinued

Case studyRehabilitating the WetlandsTheMondiWetlandsProjectaimstobringabouttherehabilitation,wiseuseandsustainablemanagementofvaluablewetlands,includingspringsandseeps,marshes,floodplains,swampforests,mangroveswampsandestuaries.ItiswidelyrecognisedasSouthAfrica’smostsuccessfulnon-governmentalwetlandsproject,successfullypromotingconservationamonggovernmentagenciesandprivateandcommunalwetlandusers.

...today

before... during...

The Zohar Wetland.

Mondi is removing

5%of our land forestry production to create ‘buffer zones’


WeareencouragedbytheresultsofourworkwithMWPandtheresearchprojectsheldonMondi’sland.Therehabilitationofwetlandandriparianareashasbeenremarkablysuccessful,clearlydemonstratingthatitisbothpossibleandpracticaltoreversemostofthedamagethesesensitivesiteshavesufferedthroughpoorplantationpractices.Infact,wehavedemonstratedonawiderangeofsitesthatrecoveryofthesesitesispossiblewithinasinglegrowingrotationofseventonineyears(seecasestudyonpage24).

Thisisjustoneresultofourclose,activeinvolvementwithMWP,whichhasachievedoutstandingresultsovermanyyearsintheconservationandrehabilitationofSouthAfricanwetlands.Lookingtothefuture,wehavenowagreedtochallengingtargetsforthedelineationandmanagementofwetlandsinourplantations,andwillcontinuetobenefitfromMWP’stechnicalsupport.

Benefiting communities

Mostimportantly,wearenowworkingtogethertoapplyourfindingstowetlandsoncommunityareasborderingourland,spreadingthebenefitsofourworktohelpthewiderenvironmentandsociety.

Similarly,thewaterresearchsitesonourlandincludeanumberofsophisticatedwater-catchmentexperimentsundertakenbyanumberofscientificinstitutions.ThesearesuccessfullyprovidingimportantinformationthatwillleadtothebettermanagementofSouthAfrica’sfreshwaterresourcesasawhole.

Inthisandotherways,theforestryindustryandMondiinparticulararecontributingtothefuturesustainabilityofthecountry.

Wood tracing to defeat illegal loggingOneofthegreatestchallengesfacingtheforestryindustryisthecontinuedprevalenceofillegallogging,amajorcauseofdamagetotheworld’svaluableborealandtropicalforests.

Whereverpossible,weandotherleadingbusinessesinourindustryusetheFSCandPEFCchainofcustodycertificationschemestotrackourrawmaterialsupplies.Thesecompriseatransparentandaccountableprocessthrougheverystepfromtheforesttotheconsumer.

Inthisway,wecanbothminimisetheriskofillegaltimberorfibreenteringoursupplychain,andprovideevidencethattheforestsfromwhichweprocureourwoodaresustainablymanaged.

WefaceawiderangeofcontrolissuesoverourforestryoperationsincentralandeasternEurope,particularlyinRussia’sKomiRepublic,duetotheremotenessofmanyoftheareasfromwhichourwoodissourced.Inaddition,thesheerquantityofindependentcommercialgrowersintheregionmakeseffectivemonitoringofalltheiractivitiesamajorchallenge.

Thesearesomeofthereasonswhywearenowintheprocessofstrengtheningourownprocessesandsystems,basedonourSustainableForestryPolicy,toreducetheriskofillegalwoodenteringoursupplychaininRussia.

In2007,wedevelopedourprocedurefortheresponsibleprocurementofwood,virginfibreandbiomassutilizingversion1oftheFSCControlledWoodStandard.Sincetheprocedurewasdeveloped,FSChasrevisedtheControlledWoodStandard.WehaveidentifiedtheneedtoupdateourprocedureandtoalignitwiththelatestControlledWoodStandard.ThiswasalsoconfirmedbyERMintheirassuranceassessment.

Assuring legality

Next,weworkedonthedevelopmentofarisk-basedwoodandfibretracingsystemthatwillenableustoassurethelegalityofthewoodwereceive,fromtheso-called‘smallestmanagementunit’.Thissystemisdesignedtoensurethatalloursuppliersarelegallycompliantandmeetallourwoodprocurementrequirements.

WearealsosupportingthetracingsystemwithourWoodInformationPlatform(WIP)whichmonitorsallthewoodandfibreenteringallourprocessingplantsbyspeciesandbycertificationtype.Together,thisminimumwoodstandard,therisk-basedwoodandfibretracingsystemandourWIPformthebasisofourprocedurefortheresponsibleprocurementofwood,virginfibreandbiomass.

Todate,theabove-mentionedsystemhasbeendevelopedandreportingofdataintheWIPhasstarted.Toensurethatwemeetourtargetoffullimplementationofthesystembytheendof2008,wehaveputintoplaceadedicatedpersontoimplementourdetailedrolloutplan,whichincludeson-sitetraining,educationandconsultationwithprocurementspecialistsacrosstheGroup.

Intheseandotherways,weareworkingtomeetourcommitmentonlytousewood,fibreandbiomassfromsustainablesources.


Meeting social needs in our forestsManyofthepeoplewholiveandworkintheforestswhereweoperatefacesevereeconomichardship.WeregarditasanimportantresponsibilityatMonditoensurethatourstakeholdersdirectlyassociatedwithourbusiness,ruralcommunitiesinparticular,benefitfromouractivities.Inadditiontothedirectsupportweprovide,weactasacatalysttoleverageresourcesfromgovernmentandotheragenciesfortheadvancementofimpoverishedcommunities.

Wereportonanumberofinitiativesrelatingtothisissueelsewhereinthisdocument.Inparticular,seepage43foradescriptionofthetransparent,methodicalSEAT(Socio-EconomicAssessmentToolbox)processthatweusetomeasuretherealneedsofourcommunities.Andseepage48foradescriptionofourworkwithsmallforestry-basedbusinessesviaMondiZimele,ourSouthAfricanenterprisedevelopmentarm.

Case study KwaZulu-Natal arts and craftsOneofthemaindrawsfortouriststoKwaZulu-Natalisthehighqualityofthearea’sartsandcrafts.Inastrongefforttohelpcraftspeoplemarkettheirworkmorewidely,wehavelaunchedaninitiativetounifythelocalindustry.

Ourcommunityengagementfacilitatorshavevisitedthecommunities,encouragingpeopletoworktogether,accordingtotheirparticulartalents.Today,128membersarekeentocooperateonmajorprojectsthattheycannotfulfilalone.

AswellasfundingstandsandcreatingcataloguesformajorexhibitionsliketheRoyalShow,ZululandExpoandCrafttoLondon,wealsohelparrangevisitsfromtraders,whowanttoselllocalproductsininternationalmarkets.

Tangible support

OurSEATreportsprovidethebasisforouractivitieswithcommunities.Amongmanyotherthingsweendowschools,hospitalsandcommunitycentresinRussia,weprovideclinicstohelpaddresstheHIV/AIDSepidemicinSouthAfrica,andwesupportemergingsmallgrowerstogivethemtheexpertiseandbusinessrigourtheyneedtobeasustainablepartofoursupplychain.

TypicalexamplesofouractivitiesincludeaprojectinSiyaQhubekaForestryinSouthAfricathatisbothhelpingtoprotecttreesandtoprovidebusinessopportunitiesforlocalpeople.

Inthis,wehavehelpedfivewoodcarverssetuptheManukelanaArtandNurseryproject,inwhichtheyreplaceeverytreetheyuseforcarvingtheirart.Thishasnowledtoanactivebusiness,inwhichtheyselltreestoneighbouringschoolsandcommunities.Significantly,theyhavereceivedacontractfromthemunicipalitytoprovidetreesthathavenowbeenplantedinanewlocaltownship.

Managing modernisation

Thesetypifyinitiativesacrossourforestryoperations,butinbothRussiaandSouthAfricawefaceafundamentalmodernisationchallengethatrequirestheutmostsensitivitytoaddress.Asourbusinessmovesforward,eventhepoorestpeopleareincreasinglyunwillingtoundertakeheavylabour,particularlyintheextremecoldofonecountryandtheextremeheatoftheother.Forestryisincreasinglycompetingforlabouraspeopleareleavingtheforestsandruralareasforcities.Mondiworksalmostexclusivelywithcontractorsintheseareasandistakingstepstoattractandmaintaintheirservices.

Weare,therefore,investinginnew,advancedforestrymachinerythat,whileprovidingamorecomfortableworkingenvironment,willalsohaveanimmediateimpactonthenumberofpeoplewecandirectlyemployintheforests.During2007,basedonSEATfindings,wecontinuedtoprogresswithmechanisedforestrysystemsinameasured,methodicalmannerthatminimisesthesocialimpactofmodernisationwhileseekingtomaximiseitseconomicbenefitsfortheaffectedcommunities.

WesupportandactivelyparticipateintheeffortsofTheForestsDialogue(TFD)toaddresstheglobaltopicofpovertyreductionandcommercialforestry.TheinitialscopingmeetingwashostedbyMondiinSouthAfricaandduring2007successfuldialogueswereheldinIndonesiaandBoliviaandarereportedontheTFDwebsite.

Forestrycontinued



Summary

Asamanufacturingbusiness,weuseintensiveprocessesthatconsumeenergyandwater,aswellasgeneratesolidwasteandemissionstobothairandwater.

We’recommittedtocontinuousimprovement.Hereweexplainhowwe’redecreasingourenergyintensityandgreenhousegasemissionsfromfossilfuels,usingcleanermanufacturingtechniquesandtechnologies,andmanagingourwastedisposalactivitiesbetter.


Reducing energy intensity and carbon emissions

Page 31 Working together to clear the air

Page 30 Water, using less – reusing more

Page 32 Focusing on the landfill challenge

Policy We actively strive for recognised best environmental performance in our operations. We aim to achieve this by integrating environmental principles into our business strategy.

In South Africa, and worldwide, Mondi makes every effort to live in harmony with the environment.


Every time we use an industrial process to change the state of a material we both consume resources and generate by-products that need to be controlled.

All well-run commercial organisations are constantly seeking new operating efficiencies that will reduce the cost of doing business. At Mondi, we recognise that commercial and environmental imperatives are often very closely related – doing more for less simultaneously both reduces our environmental impact and improves our profitability.

These twin considerations are behind our rolling programme of change, comprising a powerful link between our financial and our environmental performance. This is fundamental to our environmental policy, which commits us to integrating environmental principles, such as conserving raw materials, using clean production processes and reducing by-products from our operations.

Improved performance

Wearealreadyseeingtheresultsofinvestmentsandimprovedpracticesdeliverbenefitsintheformoflowergreenhousegasgeneration,reducedemissionstowaterandtoair,betterwastemanagementpracticesandanimprovedhealthandsafetyperformance.

Andlookingahead,weexpectconsiderableresultsfromfutureinvestments,particularlythe€525millionprojectthatisduetocompletethemodernisationofourpulpandpapermillatSyktyvkarinRussiaby2010.ThisisthelargestinvestmenteverannouncedbyMondiandwillhaveamajorimpactonouremissionstoair(particularlysulphuroxides,nitrousoxidesandparticulates)whileenablingustomeettheRussianmarket’sgrowingdemandforuncoatedfinepaperatthelowestpracticablecost.

This,though,isonlyoneprojectamongmany,basedontheindividual‘roadmap’plansofourmaterialproductionsites,whichtogetheramounttoaGroup-widestrategyofcontinuoussustainableimprovement.Closelyinterlinkedwiththeseisaseriesofspecifictargetsfor2010,relatingtoparticularenvironmentalmeasuressuchaseffluentloadtotheenvironmentandwastetolandfill.

Reducing emissions

Collectively,theseplans,activitiesandtargetshelpedustotakesomeveryimportantenvironmentalstepsforwardin2007,includingthetotalremovalofelementalchlorinebleachingfromallourproductionprocesses.Inturn,thishasalreadyseenouradsorbablechlorinatedorganics(AOX)emissionlevelsineffluentacrossourpulpproductionoperationsfalltobelowour2010target,decreasingby65%from439tonnesin2005to153tonnesin2007.AchievementssuchasthishavehelpedusreducetheimpactofourenvironmentalfootprintacrossMondi.

Applying the lessons learned

WeuseBestAvailableTechniques(BAT),theEU-defined‘ideal’forpollutionpreventionandcontrolforabusinessofoursizeandindustry,tomeasureourperformance.Thisisausefulguide,showingbothwhereweareunderperformingandwhereweareleadingbestpractice.AnencouragingexampleofexcellencewithinMondicomesfromourRužomberokmillinSlovakia,whereourAOXemissionlevelsare10timeslowerthantheBATminimumrecommendations.

Overthenextfewpages,you’llfinddetailsonanumberofprojectsandachievementsthathavecontributedtoourimprovingperformancein

Environmental performanceLimitingourimpactontheworld’sresources

achievingourpolicygoalofcleanerproduction,morespecificallyworkaimedatreducingourimpactonwater,airandland–someofwhichhasbeenhighlysuccessful,withotherareasstillrequiringcloseattentiontoachievetheresultsweareaimingfor.

Fines, incidents and complaints

Mondimonitorsandreportsitsfines,incidentsoflegalnon-complianceandallenvironmentalincidentsandcomplaints.

LevelIincidentsandcomplaints,i.e.thosewithaminorimpactand/orshort-termeffect,arereportedandmonitoredinternally.

ZerolevelIIcomplaintsand22levelIIincidents(refertoglossaryonpage56)werereportedduring2007,16ofwhichwerereportedbytheSyktyvkarmillinRussia.Ofthe22levelIIincidentsreported,mostwerelevelIincidentsrelatedtowaterquality,airemissionsandnoiselevelswhichcontinuallyexceededpermissiblelimitsoveranextendedperiodoftimeduringtheapplicablereportingperiodsandwhichwerethenelevatedtolevelIIincidentsinlinewithourreportingdefinitions.

NolevelIIIincidentsorcomplaints(refertoglossaryonpage56)werereportedduring2007.

Incidents and complaints1,2

2005 2006 2007

LevelIIIncidents 22 10 22

LevelIIComplaints 1 0 0

1Pleasenotethisgraphincludesdataforourenvironmentallymaterialoperationsonly.2Baselinedatahasnotbeenadjustedfor2005and2006toincludedatafromStambolijski

andMondiShandukaNewsprint.


Reducing energy intensity and carbon emissions

Stabilising the cost of energy and reducing carbon emissions

ByactivelyusingtheprovisionssetoutinArticle17oftheKyotoProtocolof1997,weareabletosmoothoutfluctuationsinthecostofenergyandreducecarbonemissionsfromenergygeneration,soenablingustoplanourfutureinvestmentsstrategically.

TheKyotoProtocolsetnationalemissionstargetswhichwerethenappliedtomajorindustrialsitessuchasourpulpandpapermills.Thesetargetsonaveragerequirethatbetween2008and2012emissionsarereducedto5.2%below1990levels.

WhenweoutperformourtargetsinourinstallationsintheEU,weareallowedtosellourexcessallowancestootherorganisationsascarbon‘credits’(comprisingtonnesofCO2).

Anothercost-effectivemeansofreducingCO2emissionsandmanagingthecostofenergythattheKyotoProtocolenablesistheabilitytoinvestinCleanDevelopmentMechanism(CDM)projectsindevelopingcountries.Formorethantwoyears,wesuccessfullyfocusedondevelopingthemethodologyforCDMprojects–theresultsofthisworkcametofruitioninSouthAfricaduring2007,withthecompletionofabarkboilerandtheinstallationofagasturbineatourRichardsBaymill.

WearenowstudyingindetailthechangestotheProtocolproposedinBaliinDecember2007,andwillreportinfutureonanyresultingamendmentstoourapproach.

Improving energy efficiency

OneofMondi’smostsignificantenvironmentalcommitmentsistoreduceitsspecificfossilfuelCO2emissionsby15%fromthe2004figureby2014.In2007,weachievedan11%specificreductiononthe2004figure.Thisisa6%reductionintotalfossilfuelCO2emissionsfrom5.19milliontonnesin2004to4.86milliontonnesin2007.

Throughoutthebusiness,manypeopleinmanydifferentrolesarecontinuouslyseekingnewmeansofcontributingtothistarget.Theseincludededicatedenergymanagers,basedatourmaterialoperations,whosemainrolesaretoidentify,implementandshareprovenbestpracticeinreducingenergyconsumption.

TheyareimportantparticipantsinDianaEnergy,aMondi-widenetworkofenergyexperts,withaparticularfocusonefficiencyincreases.TheresultsoftheirworkaredocumentedonourMORISdatabase,andusedacrosstheGroupforbenchmarkingandmanagementinformation.

Someoftheideasandsolutionstheenergyexpertspromotearesimple,fromusingimproved,moreefficientcompressedairsystemsorwaterpumps,toreducingwaterconsumptionthroughtheuseofclosed-loopsystemsandincreasingthemotorefficienciesofequipmentthroughoutthebusiness.

Thegainstobemadefromeachindividualimprovementarelikelytobesmall–butreplicatingthemintensofsitesacrossMondimakesapowerfulcontributiontowardshelpingusachieveourcarbonemissiongoals.

Case study A clean methodology TheinstallationofabarkboileratourRichardsBaymillwasMondi’sfirstCleanDevelopmentMechanism(CDM)project.DevelopingandapplyinganefficientandeffectivemethodologythatmeetstheneedsofthesiteandtherequirementsoftheDepartmentofMineralsandEnergytooknearlythreeyears.Withthebarkboileralreadycuttingthemill’stotalCO2emissionsfromfossilfuelsby51%since2004levels,wehavenowcommissionedagasturbineatthemill.

Policy Mondi shares the concerns of the international community about climate change, and believes that industry should play an important role in worldwide efforts to reduce greenhouse gas emissions.

AtMondi,ourGroup-wideenergystrategycommitsustoensuringthatourfinancialandenvironmentalenergycostsareaslowaspossible.

In2007,wedescribedtheenergyvisionwehadformulatedtosupportthisstrategy.Thishascommittedustoarangeofpracticesandactionsthatnowneedtobeentrenchedasfundamentalfeaturesofhowweoperate.Andwhileeachappearstobestraightforward,therealityisthatachievingthemrequiressignificantongoinginvestmentandmanagementwill.

Thebasisofourvisionisfourfold–thatweshould:

manageenergypricevolatilityeffectively;

consistentlyimprovetheenergy-efficiencyofourproductionprocesses;

increasetheproportionofpowerthatweproduceourselves;and

increasetheoverallshareofenergyfromrenewablesourcesasaproportionoftheenergyweuse.

During2007,wehavedoneagreatdealtoaddressandmeettherequirementsofeachcommitment,bringingthestrategytolifeasacentralandevolvingfeatureofMondi’soperations.

Ourworkrangesfromintensiveinvestmentprogrammes,tochangesinourworkingprocessesandsmallimprovementsthatwecanreplicatemanytimesacrossthebusiness.

–

–

–

–

CO2 from fossil fuels*†

Energy sources 2007

Chemical oxygen demand emission

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006

TSR graph of Mondi plcand FTSE All-Share Index

120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007

Mondi plc FTSE All-share Index

TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000

Number of occupational health disease cases

0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300

Waste water flow*†

215,000

220,000

225,000

230,000

235,000

240,000

245,000

Chemical oxygen demand*†

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Water for primary activities in water-stressed countries such as South Africa and Israel*†

AOX*†

0

50

100

150

200

250

300

350

400

450

500

Particulate emissions*† Waste to landfill*†

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Total reduced sulphides*†°

0

50

100

150

200

250

300

350

400

450

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um

Number of fatalities*

0

1

2

3

4

5

6

7

8

Lost-time injury frequency rate*

0.00

0.125

0.250

0.375

0.500

LTIF

R

SO2 emissions at the Merebank mill

tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

tonnes/

annum

kg/t

onne p

roduct

kg/t

onne p

roduct

’000m

3/a

nnum

m3/t

onne p

roduct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007

* Pleasenotethisgraphincludesdataforourenvironmentallymaterialoperationsonly.

† BaselinedatahasbeenadjustedtoincludedatafromStambolijskiandMondiShandukaNewsprint.

• Dataincludesenergysuppliedtothirdpartiesandthusspecificfiguresareslightlyoverstated.

GroupspecificGrouptotal


More self-generated energy

AcrossMondi,asadirectresultofinvestinginourownenergyproduction,wereducedourconsumptionofelectricalenergyfromthegridby4,788GWhin2007from2006.

Wherepossible,wehavereplacedtheinefficientproductiontypicalofaconventionalpowerplantwithcloseto100%implementationofgreatlymoreefficientcombinedheatandpower(CHP)technology.

Inaddition,weareactivelyusingtheenergyproducedasaby-productofourindustrialprocesses.Forexample,atourproductionplantinŚwiecieweareusingthesteamproducedinourrecoveryboilertogenerateelectricity.Wearealsosellingsustainably-producedenergyviarenewableenergysupportschemesintheCzechRepublicandPoland.

Forus,thisisavisionofthefuturewherecommunitiescanactivelybenefitfromourprocesses.Forexample,todaywearesupplyingtownswithexcessheatfromourSyktyvkarandRužomberokmills.InAustria,ahospitalissuccessfullyusingourexcesslow-temperatureheatfollowinganinvestmentbythelocalauthority.

Whilewehavemadeagreatdealofprogressonthisfrontinrecentyears,thereisstillalongwaytogobeforewebecomeanetsupplierofrenewableenergyinsomesites,andthisremainsanobjectiveforthebusinessaswelearnmoreaboutthefullpotentialofsuchdevelopments.

Our use of renewable energy

Ourindustryhasthepotentialforreducingitscarbonimpactbysubstitutinghighcarbonfossilfuelssuchascoal,ligniteorheavyfueloilwithlowcarbonfossilfuelssuchasgasorwithrenewablebiologicalenergysources.

Weareaimingtosteadilyincreasetheuseofourown-producedbiomass,blackliquor,sludge,talloilandotherrenewablefuels,bydrivingourinvestmentsinthetechnologyneededtouseit.Consumptionoftraditionalfuelsforourself-producedenergyaccountsforapproximately52%oftheenergyusedinourpulpandpapermills.Currently41%ofourtotalenergyisfrombiomass,anumberwhichhasremainedstableoverthepastthreeyearsandwhichweaimtoincreaseinyearstocome.

Critically,withoutthemeansofusingbiomassasafuel,itwouldbeawasteproductconsignedtolandfill.Itisahighlyinefficientfuel,butourinvestmentsinCHPsolutionsatoperationsareprovingthattheuseofbiomassnotonlyreduceswaste,butalsoimpactsgreenhousegasemissionsandcutstheoverallcostofsteamandpowertotheGroup.

Byconvertingourcommitmentsintoaction,projectsliketheseareactive,workingdemonstrationsofimplementingourenergystrategy.

Environmental performancecontinued

Water – using less, reusing moreAtMondi,wecontinuouslyfacetwomainissuesintheuse,conservationandprotectionoffreshwater.

Thefirstofthese,protectingsuppliesinourforestryoperationswithinwater-scarceareasoftheworldsuchasSouthAfrica,isaddressedonpage24ofthisreport.Thesecondmajorissueishowweusewaterinourintensiveindustrialprocessesthroughouttheworld.Ourongoingchallengeistoachieveconsistentreductions,bothinthequantitiesofwaterweuseandintheamountofwater-bornepollutantsthatresultfromourprocesses.


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

tonnes/

annum

kg/t

onne p

rod

uct

kg/t

onne p

rod

uct

’000m

3/a

nnum

m3/t

onne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

ann

um

GJ/t

on

ne p

rod

uct

’000

GJ/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’000

ton

nes/

an

nu

m

’000m

3/a

nnum

m3/t

onne p

roduct

ton

nes/

ton

ne p

rod

uct

tonnes/

ann

um

kg/t

onne p

rod

uct

kg/t

onne p

rod

uct

’000m

3/a

nn

um

m3/t

onne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007

Groupspecific

MondiShandukaNewsprint

Felixton

PietRetief

Springs

Merebank

RichardsBay

Hadera

Energy sources 2007

Biomass 41.4%

Natural gas 38.3%

Coal 11.7%

Electricity purchased 6.3%

Oil 1.9%

Other fossil 0.2%

Note:datatotalsto99%duetorounding.


Working together to clear the air Noindustrialprocesscantakeplacewithoutreleasesintotheair.

Mondiiscommittedtoreducingitsemissionsintotheatmospheretoaslowasreasonablypracticableinallitsoperationsthroughouttheworld,throughasetofambitiousimprovementtargetssupportedandenabledbyarollinginvestmentprogramme.

Themainissuesaffectingusareemissionsoftotalreducedsulphur(TRS),sulphurdioxide(SO2)and,toalesserdegree,nitrogenoxide(NOx).

Focusing on nuisance odour

Atanumberofoursites,localcommunitieshavecomplainedofa‘nuisanceodour’.InmostcasesthisisduetoTRSemissionsandreducingtheTRSlevelscausedbythepulp-makingprocessisthereforeanimportantgoalforMondi.Wearecommittedtoa65%reductiontargetfrom2005levelsby2010.

Todate,wehavereducedourtotalTRSemissionsby60%to153tonnesin2007.Thisisapleasingresultthatputsuswellontracktomeetour2010targetforthebusiness.

Working with communities

ThemostimportantprogresshasbeenmadeatSyktyvkar,wheretheimplementationofanewventedsteamtreatmentsystemhashelpedusreduceTRSemissionstowithintheBATrange.However,thenuisanceodourremainsanimportantissueinthearea,andacommunityplanisinprogresstohelpusfurtherimprovethesituation.FurtherairemissionimprovementsareexpectedfromtheSyktyvkarmodernisationproject,withreductionsalsoexpectedinSO2,NOxandotherparticulates.

NuisanceodourisalsoamajorissueatourRichardsBaymillinSouthAfrica.AtRichardsBay,wereceivedmorethandoublethenumberofcomplaintsin2007thanthepreviousyear,makingitimportantthatwerisetothechallengesuccessfullyovertheyeartocome–particularlybecausewehavemadeacommitmenttobea‘smell-free’millby2009.Withthisinmind,wehavecommittedtoplannedengineeringandequipmentinvestmentsaswellasadditionalmonitoringduring2008.ThemillintendstoworkcloselywiththeRichardsBayCleanAirAssociationonthisproject.

Tackling COD emissions

ForCOD,wearecommittedtoaGroupreductionof30%from2005productionlevelsby2010.WehavealreadysuccessfullyreducedCODlevelsby21%from138,189tonnesin2005to108,819tonnesin2007.Significantly,35%and56%reductionsintheselevelshavebeenreportedattheSyktyvkarmillinRussiaandtheRichardsBaymillinSouthAfricarespectivelysince2005.

Reducing AOX levels

OurreductioninAOXlevelshasbeensuccessfuloverall,withtremendousprogressbeingmade–particularlythroughourdecisiontoreplaceelementalchlorineasableachingagentforpaperwithadvanced,cleanerelementalchlorine-free(ECF)technology.

TheGrouptargetistoreduceAOXby30%fromthe2005levelby2010.TheGrouphasalreadysurpassedits2010target,successfullydrivinglevelsdownby65%to152tonnesin2007.Thisisencouragingprogress,andweexpectfurtherimprovementsintheyearstocome,mainlyastheresultofthemodernisationprojectatSyktyvkar.


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

tonnes/

ann

um

kg/t

onne p

rodu

ct

tonnes/

ann

um

kg/t

onne p

rodu

ct

tonnes/

ann

um

kg/t

onne p

rodu

ct

ton

nes/

an

nu

m

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

kg/t

on

ne p

rod

uct

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


ton

nes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

kg/t

on

ne p

rod

uct

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

tonnes/

ann

um

kg/t

onne p

rodu

ct

tonnes/

ann

um

kg/t

onne p

rodu

ct

tonnes/

ann

um

kg/t

onne p

rodu

ct

ton

nes/

an

nu

m

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

kg/t

on

ne p

rod

uct

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

tonnes/

ann

um

kg/t

onne p

rodu

ct

tonnes/

ann

um

kg/t

onne p

rodu

ct

tonnes/

ann

um

kg/t

onne p

rodu

ct

ton

nes/

an

nu

m

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

kg/t

on

ne p

rod

uct

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007



• Dataincludesenergysuppliedtothirdpartiesandthusspecificfiguresareslightlyoverstated.

° TheSyktyvkarmillhasonlyreporteditsH2Sandmethylmercaptans,whichaccountfor80%ofthemill’stotalTRSemissions.TheŚwieciemillhascalculateditsTRSemissionsbasedonaveragesofsamplestakenatvariousintervals.Thiscouldleadtosomeinaccuraciesinthenumbersreported.

Year-on-year progress

Theongoinginvestmentprogrammesatouroperationsaresuccessfullycontributingtoyear-on-yearprogressonbothfronts.

TogetherwithAOX,chemicaloxygendemand(COD)isoneofthetwomostsignificantwastewaterloadsemittedduringourprocesses.Theseare,therefore,twopriorityinvestmentareasforMondi,andtargetsareinplaceacrosstheGrouptohelpusachievesignificantreductionsinwastewatereffluentlevels.


These notes refer to the graphs on pages 30 and 31.


Case studyClosing and sealing sludge ponds at SyktyvkarWhenwepurchasedtheSyktyvkarpulpandpapermillin2002,sludgepondshadbeeninconstantusesincetheearly1970s.Oneearlydecisionwetookwastoceaseusingthemill’s24-hectarenetworkofwastewatersludgeponds.In2007,wecompletedasuccessfulrehabilitationproject,coveringthepondswithinertmaterialsmadeupofexcessbark,whichsealsthedeposits.

Focusing on the landfill challengeWastedisposaliscomplexforMondi,mademoresobyouroperationsinmanydifferentcountriesandjurisdictions,whichcanhavedifferentwasteclassificationregimes.

Acrossthebusiness,therearetwoquiteseparatewastemanagementpriorities–disposaloftheby-productsofourproduction,anddisposalofourproductsoncetheyhavebeenusedbyconsumers.Seepage35foradescriptionofhowweorganisethecollectionofpaperinSouthAfricaforre-useinourmills.

Reducing landfill volumes

Thedisposalofgreenliquorsludge,createdinthepulpproductionprocessisachallenge.FindingasolutionisamajorfocusareaforMondi.Wearealsoundertakingconstantreviewsofalllandfilloperationstoensuretheirsafety,withaparticularemphasisonthequalityofnearbygroundwater.

InSouthAfrica,ashfromthecoalburningprocessaccountsformostofthewastethatislandfilled.TheMerebankandRichardsBaymillsaccountfor35%oftheGroup’stotalsolidwastethatissenttolandfill.Severalprojectsandinvestigationsareongoingatthesemillstofindalternativeusesforthewasteandtominimiselandfill.

Carefulmanagementcontinuestoachieveprogressivereductionsinwastetolandfill.In2007,wesuccessfullyachievedour20%reductiontargetbyreducingthisnumberto366,893tonnes.Inparticular,significantreductionshavebeenachievedatourSyktyvkarandŚwieciemills.AtSyktyvkar,solidwastelevelshavebeenreducedby86%from2005levelsasaresultofthecontinuingeffortstorehabilitateitssludgeponds.TheŚwieciemillinPolandhasreduceditssolidwastelevelsby79%inthesameperiod.Themill’ssuccesscanbeattributedtoseekingalternativewastemanagementoptions.Infact,themillsuccessfullydiscontinuedallwastetolandfillduringthesecondhalfof2007.


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


ton

nes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

kg/t

on

ne p

rod

uct

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007



Reducing SO2 emissions

SignificantimprovementsinSO2emissions,emittedduringfuelcombustionandenergyconversion,during2007sawusreduceourannualtonnagefrom6,831tonnesto5,615tonnesfromthepreviousyear.

First,bychangingthefuelusedtopowerapapermachineinourIsraelioperationsfromheavyfueloiltonaturalgas(whichhasaverylowsulphurcontent)wehavereducedthemill’sSO2emissionsby25%fromthe2006levels.Anda21%reductionhasalsobeenachievedoverthesameperiodattheRichardsBaymillbyreducingourconsumptionofblackcoalandincreasingtheuseofnaturalgas.

Buildingontheseachievements,wehavebeentargetingsignificantSO2reductionsatourMerebankmill,wherewearealsoduetoinstallalow-NOxburner.Furtherimprovementsby28%inSO2emissionshavebeenreportedatthemillin2007,fromthe2006levels.Thisisduetotheongoingeffectsofthefluegasdesulphurisationequipmentwhichwasinstalledinthemill’scoalboilersinApril2005.


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

ton

nes/

an

nu

m

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


ton

nes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

ton

nes/

an

nu

m

kg/t

on

ne p

rod

uct

kg/t

on

ne p

rod

uct

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007


These notes refer to the graphs on page 32.

Environmental performancecontinued


Product stewardship

Summary

Theproductswemanufacturehelpsocietyinmanyways.Buttheprocessesinvolved–fromharvestingrawmaterialstoultimatedisposal–haveanenvironmentalimpactthatwearedeterminedtominimise.

Hereweexplainsomeoftheissuesinvolved,andhowaresponsibleapproachtotheproductlifecyclecanenableconsumerstomakesustainablepurchasingdecisions.


Page 34 Product lifecycle Page 34 Rising to the packaging challenge

Policy At Mondi, product stewardship means the integrated management of environmental, safety and health factors throughout all stages of our product lifecycle.

Stocks of mother reel in Mondi’s fully-automated warehouse at Hausmening in Austria.


Product lifecycleTheproductswemanufactureanddistributeareeconomicallyandsociallysignificant.

Paperispossiblytheworld’smostwidelydistributedproduct,whilepackagingisakeycomponentofmodernlifestylewithmanyuses.Byprotectingourcustomers’productsfromdamage,fromtheirplaceofmanufacture,throughdistributionnetworksandsalesoutletsintopeople’shomesorworkplaces,packagingcontributestoproductandconsumersafety.

Fromgrowing,harvestingandpurchasingourrawmaterials,throughourindustrialproductionprocessestobrandinganddistribution,wearecommittedtoprovidingourcustomerswiththeproductstheyneedatthelowestpossiblefinancial,environmentalandsocialcosts.

Wehaveinplacearangeofsystemsthatseektoreducetheenvironmentalimpactofourproducts.Theseincludesustainableforestrypractices,acommitmenttoconstantlyimprovingtheenvironmentalperformanceofourplants,recyclinginitiatives,globalemploymentstandardsandintegratedsupportprogrammesforthecommunitiesinwhichweoperate.

Paper – a growing market

Despitewidespreadpredictionsofthelikelyimpactofinformationtechnologyonofficepaperusage,thedemandforpaperproductscontinuestogrowthroughoutourmainmarkets.InwesternEurope,forexample,annualgrowthin2007was3.5%,whileincentralandeasternEuropeitstoodat8%.

Thesearenotableratesbyanystandards,drivenbyashiftintheuseofpaperawayfrombeingamaterialwhichpeoplefiletostoreinformation.Nowpaperisalive

mediumusedtocaptureworkinprogress.Aseconomiesgrow,theuseofpaperintheworkplacegrowsalongsideit,meaningthattheongoingdevelopmentoftheemergingmarketsweservegivesusastrongplatformforprogress.

The role of sustainability

Assessingthesustainabilitypracticesofasupplierhasbecomeastandardelementofprocurementpracticeamonglargebusinesses,forgovernmentcontractsinparticular.Theabilitytodemonstratethatwearetakingstepsacrossabroadrangeofsustainabilityissuesisthereforeimportantbothinwinningsuchbusinessandindemonstratingourcredentialstocurrentandpotentialinvestors.

Ourmainattentioniscurrentlyonfocusareascoveredelsewhereinthisreport,includingrecycling(seetheSouthAfricacasestudyonthenextpage),forestry,productionand–springingfromallthese–certification.

Promoting sustainability

Ourfocusneedstobeoncommunicationtomakeconsumersawareofthetruemeaningofcertification.Thiswillgivethemtheabilitytochoosebrandsdeliberatelyfromresponsiblemanufacturers–thosethatpayattentiontoreducingtheimpactoftheirproductsacrossthefulllifecycle.Thesuccessofour‘GreenRange’businesspaperproductsmakesitclearthat,inwesternEuropeatleast,someconsumersarepreparedtopayapremiumforsustainablymanufacturedproducts.

ThechallengeforusnowistooverlaysustainablepracticesonasmanyaspectsoftheMondibusinessaspossible,whichwehopewillinturnhelppromotesustainablepracticesinthepaperindustryasawhole.Webelievethiswillcontributetothemainstreamingofsustainable

practicesandproductsintonormalcommercialactivityandofferconsumersmorechoice.

Rising to the packaging challengeInourpackagingbusinesses,themainchallengewefaceishowtocontinueimprovingproductandconsumerprotectionwhileconsistentlydrivingdownthecostsofouroperations.

ThisinvolvesasensitivebalancingactforMondi.Financialconsider-ationsandeffortstoreduceoverpackagingarecausingmanyofourcustomerstodemandconstantreductionsintheweightandcostoftheirpackaging,whichinturncandeliverenvironmentalgains.

Growthingreenprocurementpracticesisafundamentalissueforus,andweareconcentratingonensuringthatwecanconsistentlymeetthisfast-developingneed.Wemustalwaysensurethatthesolutionsweproduceremainsufficientlyrobusttoprotectproperlytheproductstheycontain–whichalmostinvariablyrepresentahigherfinancialandenvironmentalcostthantheirpackaging.

Thisiswheretheroleofproductinnovationfitsin.OneofourResearchandDevelopmentcentres,basedinKorneuburginAustria,isdedicatedtoinnovationacrossourcoatingandreleaseandflexiblepackagingbusiness,butcanalsoprovideservicestootherpartsoftheGroup.

ManyMondibreakthroughshaveemergedfromtheInnovationCentresinrecentyears,includingtherevolutionarysingle-plyOneBag(onwhichwehavereportedinthepast).

MorerecentdevelopmentsincludetheAirstreamBag,withitsuniquede-aerationsystemforhigh-speedfillingandimprovedproductshelf-life,andtheAqualinermoistureprotectionbarrier,replacingtheuseofnon-renewablepetroleumproductswithacost-effective,sustainablelinerboard.

Othernewprocessesandproducts–suchasgreateruseofrecycledmaterialsinourcorrugatedbusiness,thinnersealantfilmsforfoodproductsandtheuseofauniquenewtemperature-sensitiveinkthatcanshowifachilledorfrozenproducthasbecometoowarm–areallalsocontributingtoreducedenvironmentalimpactandimprovedconsumersafety.

Case study Innovating for better product safetyOurfocusoninnovationextendsbeyondourproductstotheprocessesweuseintheirproduction,seekingconstantlytofindthesafestandmosteffectivesolutions.Asanexample,wehaverecentlymadeamajorinvestmentinourZeltwegconvertingplantinAustria,intheformofanadvancedimagingsystemthatpicksupdefectsinthecoatingmaterialsweproduce.Whenitspotsadefect,thesystemautomaticallystopsthemachineandremovesthesub-standardsectiontoprovideevenhigherqualitystandards.

Product stewardshipHelpingconsumersbuyresponsibly


Case study Businesses built on used paperBylaunchingsome130usedpaper‘buy-back’centresthroughoutSouthAfrica,Mondiiscontributingtoatidiercountry,ismaximisingtheuseofreclaimedfibreinitsoperations,andhashelpedcreatesome3,000directandindirectjobs.

Abuy-backcentreacceptsandsortscollectedanddonatedpaperandcardboardthathasbeenbought,usedanddiscardedbytheconsumer,beforesupplyingitbacktoMondiforreuse.

In1999,Mondifirstdevelopedtheconceptofapproachingcouncilstogiveusunusedlandtouseasarecyclingcentre.Wewouldthenidentifyasuitableblackentrepreneurtorunitashisownbusiness,whowouldthenberesponsibleforemployingon-sitestaffandateamofindependenttraderstocollectwastepaper.

Inaddition,werecruitedateamofdriverstomakekerbsidecollections–subsequently,thesepeoplehavebecomeself-employed,andmanyhaveboughtsecondandeventhirdvehiclesastheirbusinessesexpand.

Whiletheconceptpreciselymatchescurrentlegislativerequirements,itpredatestheBroad-BasedBlackEconomicEmpowerment(BBBEE)Actbysomeyears.IthasalsomadeussignificantlythelargestrecyclerinourindustryinSouthAfrica,responsibleforthecollectionof380,000tonnesofwastepaperperyearoutofanationaltotalof935,000tonnes.

Andit’sgoodbusinessforus–thecostoffibresourcedinthiswayislowerthanthatfromourplantations.

Part of the product lifecycle

Developmentsshowthatitisincreasinglydifficult(andundesirable)tolookatpackagingissuesinisolationfromtheproductstheyprotect.Inourview,andinlinewitheco-designguidelines,theyshouldbeseenassharingthesameoveralllifecycle,becausethepackagingonlyexiststoenhancethequality,durability,safetyandsaleabilityoftheproduct.

AtMondi,wearekeentohelpdrivethisperceptionmorewidely,amongthemanufacturersandothercustomersweworkforaswellastheend-consumer.ThisisbeingenabledbythegrowingsophisticationofmeanstomeasureandcomparetheoverallenvironmentalperformanceofdifferentproductgroupsthroughtoolsliketheGaBilifecycleassessmentsoftwaresystem.Widelyusedinourcorrugatedbusiness,thissupportsrecycling-orientateddesignbyhelpingusintegratethefulllifecycleoftheproductanditspackaging.

A focus on food

Inareaslikefoodforhumanconsumption,packaginghasgainedincreasingsignificanceinrecentyearsthroughthepopularityofconveniencefood.Essentially,itisthepackagingwhichgivestheproductmuchofitsprimaryvaluetotheconsumer,particularlyintermsofhygieneandshelf-life.

Forthisreason,wehavecommittedtogobeyondthelegislativerequirementsofEuropeanUnion(EU)foodhygienerules,whichcompelustooperatetheGoodManagementPracticequalityassurancesystemthatpromotesfoodsafetyandhygiene.

ForMondi,sourcingrecoveredmaterialforre-useinwesternEuropeisnotdifficultattherightprice.Forexample,ChiemgauRecyclingatourRaublingmillinBavaria,Germany,haslong-termcommunitywastecollectioncontractsthatgiveustheassuranceofsupplyweneed.

Forthisreason,wehavebeenabletomakeappropriateinvestmentsthatensureourproductionsitesarefullyequippedtoprocessrecoveredfibre.ThisisnotyetthecaseinmanyemergingEuropeancountries,wherethereliabilityofsupplyisnotyetsufficientlydevelopedtobethebasisforefficientproduction.

Wehavestartedtoinvestinthisarea,however,inpreparationforamorerobustsupply.TheseincludemajorinvestmentsinacollectioninfrastructureatourPolishmillinŚwiecie,wherewearealsobuyingtheequipmentweneedtoprocesstherecoveredfibre.

In2007,nearly1,000Mondiemployeesworldwideweredirectlyinvolvedinouroperationstorecoverfibre,andweexpectthisfiguretoriseinyearstocomeasrecoveredfibrefurtherincreasesinimportanceasanessentialelementofourbusiness.

By2010,therefore,allofourplantsproducingpackagingforhumanfoodwillhaveachievedoneoftwoformsofaccreditation.TheseareHazardAnalysisCriticalControlPointscertification,aninternationallyrecognisedsystemforfoodsafetymanagement,andtheBritishRetailConsortiumandInstituteofPackaging’s(BRC/IOP)technicalstandardandprotocolthatsetsfoodpackagingqualityforretailer-brandedproducts.

Together,thesetwoschemescertifythatwehaveaddressedallrelevantregulationscoveringfoodhygiene.Todate,some25ofthe40Mondiplantsthatneedithavealreadyachievedfullcertification,andworkcontinuesontheremaining15.

Using more recovered fibre

ForMondi,recoveredfibreisnotwaste–it’savitalrawmaterial,particularlyinourcorrugatedbusiness.Everypieceoffibrecanbereuseduptoseventimesbeforeitbecomestoodegraded,andevende-inkednewsprintcanbeuseduptofourtimes.Weestimatethatusingrecoveredfibrehasjust20%oftheenvironmentalimpactofusingvirginfibre.

Wearethereforeconcentratingsignificanteffortonensuringthatwerecoverandre-useasmuchaswecan.In2007,weusedsome1.7milliontonnesofrecoveredfibrethroughoutourbusinesses,1.3milliontonnesinourEuropeanoperationsalone.

InwesternEurope,recyclinghasbecomeanestablishedelementofbusinessandhouseholdculture.ThesituationisdifferentinemergingEurope,whereratesvaryfromaround40%incountrieslikePolandandSlovakiatoalmostnon-existentinBulgariaandRomania.


Summary

Asafeworkingenvironmentandopportunitiestolearnandprogresswithinourbusinessarebothfundamentalaspectsoftreatingouremployeesresponsiblyandfairly.

Thissectiondescribeshowwearecontinuouslyseekingtogiveourpeoplethebestworkingconditionswecan,particularlythosewhoworkinhigherriskactivities.


Page 39 The nine safety rules to live by

Social responsibility employees

Policy Protecting the health, safety and security of our employees and those who work on our behalf is a core value for Mondi. We believe in zero-harm work-places, where all incidents are preventable.

Page 39 Implementing global employment standards

At this nursery in South Africa, nurturing seedlings is the beginning of the whole process.


At any Board or DLC executive committee meeting, our safety performance is always the first item on the agenda.

This is a critical aspect of our Group-wide zero-harm value that commits us to ensuring that processes are in place in every part of the business to prevent any injury to our employees, contractors or service providers.

2007 was sadly marred by the deaths of three contractors in separate incidents while working on Mondi business, two in our South African forestry operations and one in our Moroccan converting plant. We hold the firm belief that fatalities are totally unacceptable. We always seek to learn lessons from such events, and ensure that all our people are made fully aware of and follow our safety rules at all times. In all three incidents, following detailed investigations into the events, very specific actions were taken to prevent recurrences.

Learning from incidents

Indeed,afteranylost-timeinjury(LTI)incidentanimmediateincidentnotificationissenttomanagementannouncingwhathashappened.Thisisdistributedtoallrelevantemployeesandcontractors,followedbyamoredetailedreportthathighlightstheissuesinvolvedaswellascausesandlearningpoints.

Afterafatality,ourinvestigationsareevenmoredetailed,oftenresultinginchangestopoliciesorpractices.Wetakeadditionalactions;forexample,followingthedeathofacontractorinvolvedinafire-fightingactivityinoneofourSouthAfricanplantations,weimmediatelyengagedthecountry’sleadingexpertonforestfireprotectiontoconductareviewandmakesafetyrecommendations,whichwereimplemented.

Nine Safety Rules

AnimportantdevelopmentduringtheyearwasthereplacementofoursixGoldenRuleswithasetofnineSafetyRules,includinganewoneespeciallycreatedforcontractorsworkinginforestryoperations.TheseSafetyRulesaddressthekeyfatalityrisksinouroperations,coveringthetopicslistedonpage39.

Asasignificantpartofoursafetyrequirements,wealsostartedaGroup-widefocusonthefourmainareasthatwehaveidentifiedascriticaltoimprovingoursafetyrecord–people,process,emergencypreparation&responseandcrisismanagement.

Allourglobaloperationstookpartinthisexerciseduring2007,carryingoutaself-assessmentauditofthe‘people’element.During2008wewillimplementanactionplantoaddressallareasofconcern,andconductatallsitesanauditofthe‘process’elements.

Building on better communication

WeusethecommonlyappliedLostTimeInjury(LTI)FrequencyRate(LTIFR),comprisingthenumberofLTIsmultipliedbyafactorof200,000dividedbythetotalman-hoursworkedacrosstheentireGroupduringtheyear.

ThenewSafetyRulesandaudits,aswellasotherhealthandsafetyauditsandtrainingforallourofficeandproductionstaff,meantthatin2007wewereinextensivecommunicationwithallouroperationsthroughouttheworld.Webelievethatthisregularcontact,whichcontinuouslyhighlightssafetyissues,isanimportantreasonwhyourLTIrecordsawamarkedimprovementoverpreviousyears.

Whileprogresshasbeenencouraging,ourzero-harmcommitmentmakesanyinjuryunacceptable.Weare,therefore,activeinmanyareasthroughoutthebusiness,addressinganyemergingsafetyissuesthroughtheprovisionofeducation,trainingand,whereappropriate,modifiedornewequipment.

Forexample,inourproductionplantsweuseananalysisofpastLTIstoidentifythemainareasforattention.In2008wewillconcentrateonmobileplantandequipment,andhandinjuriesrelatingtomovingmachinery,astwoprimaryfocusareas,whichbetweenthemwereinvolvedin41outofthetotalof125LTIsin2007.

Measuring near misses

TohelpidentifyfurtherthemaincausesofLTIswehavealsobeenundertakingdetailedanalysesof‘nearmisses’–thoseincidentsthatwereavoidedmorebyluckthanjudgement–inandaroundouroperations.

However,itbecameobvioustousin2007thatthecomplexityofnearmissreportingwasreducingthenumberofreportsreceivedbymanagement,sowearenowsimplifyingtheprocess.Thenumberofreportsreceivedinplantsusingthenewsystemhasrisenbymorethan40%overthe2006figure,givingusbetterdataonwhichtobaseouractions.

Workingtowardssafety,fairnessandprogress


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

tonnes/

annum

kg/t

onne p

roduct

kg/t

onne p

roduct

’000m

3/a

nnum

m3/t

onne p

roduct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007

*Theabovegraphsincludedataforemployeesandcontractors.


These notes refer to the graph above.


Addressing forestry danger

WealsopayparticularattentiontoencouragingbettersafetypracticesinourforestryoperationsinSouthAfricaandRussia,wheremanyofourseriousinjuriesaffectingouremployeesandcontractorshavetakenplace.

OnehighlysuccessfulSouthAfricanprogrammeiscalled‘Phepha’(theZuluwordfor‘safety’),whichstates:“Safetyisourresponsibility.Allaccidentsarepreventable.Zeroisourtarget.”Phephaisbasedaroundfourspecially-producedvideos,whichhavenowbeenseenbyallMondi’sforestryemployeesandcontractorsinthecountry.Thevideoscoverthecoreactivitiesofforestrysuchasharvesting,transportandfire-fighting,riskrecognitionandemployeerights.

AmobileindustrialtheatreasthenextadvancementofthePhephaprogrammeisplannedfor2008,withtheactorsvisitingalloftheSouthAfricanforestryoperationstoruntheshow.

Promoting good health

Theapproachtooccupationalhealthisoneofriskassessmentlinkedwithfocusedmedicalsurveillance.Exposuretonoiseinexcessofthe85decibellimitremainsthemostsignificantoccupationalhealthriskintheMondiGroup.2007wasthefirstyearinwhichwehavenotreportedanyincidentsofoccupationalhealthdiseases,incontrastwith11casesin2006.Onecaseofnoise-inducedhearinglossandonecaseofoccupationalasthma,bothreportedinpreviousyearsintheSouthAfricanoperations,wereawardedacombinedtotalof€10,955bytheSouthAfricanWorkersCompensationCommissionerin2007.

AnexampleofhowweworktowardsreducingoccupationalhealthhazardsinouroperationscanbeseenattheRichardsBaymillwherewehaveinstalledanewsodaashdustextractionsystem,followingahealthriskassessmentthatshowedhighexposurelevels.Followingtheinstallation,dustlevelsarenowatunderhalftherecommendedsafetylimit.

Aswellasworkingtopreventoccupationalhealthdiseases,wealsoneedtoworkconsistentlytohelpprotectourpeopleagainstpoorhealthconditions,particularlythosethatmaybeendemicintheircommunities.

OneexampleofourworkonoccupationalhealthwasanHIV/AIDSawarenessinitiativebytheclinicatourRichardsBaymill.Thisfacilitywontwoprizesinthe2007SouthAfricanOccupationalHealthNursingPractitionersAwards.ItwasselectedastheoutstandingpracticeandChristineViljoen,whorunstheclinic,waschosenastheOccupationalHealthNursingPractitioneroftheYear.MoreinformationonMondi’scommunity-focusedhealthprogrammescanbefoundinfurthersectionsofthisreport.

Weconstantlyinvestigateandreviewanypotentialproblems,andwearenowresearchingthepotentiallong-termhealthimplicationsofprolongedexposuretothenoiseandtemperaturelevelscommonlyexperiencedinourproductionplants.Wewillreportonourfindingsinthefuture.

Case study Making the forests saferForestryisanoccupationassociatedwithrisk,andoverthelast10yearshasbeensignificantlythegreatestsourceofLTIsandfatalitiesacrossMondi’soperations.

Wehavenowintroducedarangeofsafetyinitiativestargetingforestry,includingthePhephacampaign,whichenteredphasefourin2007,toemphasisethekeymessages,“Safetyisourresponsibility.Allaccidentsarepreventable.Zeroisourtarget”.

Alongsideotherinitiatives,suchasVumisa(theZuluwordfor‘tostandardise’),complianceaudits,regularemergencyresponsedrillsandlightningdetection,thishashelpedimproveourLostTimeInjuryFrequencyRate.

Social responsibility employeescontinued


Energy sources 2007


140,000

120,000

100,000

80,000

60,000

40,000

20,000

0ton

ne

s/a

nn

um

25

20

15

10

5

02005 2006


120

110

100

90

80

70

60

TS

R

Date03.07.2007 03.07.2007


TSR gand J

120

110

100

90

80

70

60

TS

R

03.07

Energy usage*†

140,000

142,000

144,000

146,000

148,000

150,000

152,000

154,000

156,000


0

5

10

15

20

25

30

35

40

45

50

0

500

1,000

1,500

2,000

2,500

3,000

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

5,300


215,000

220,000

225,000

230,000

235,000

240,000

245,000


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


AOX*†

0

50

100

150

200

250

300

350

400

450

500


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


0

50

100

150

200

250

300

350

400

450to

nnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

kg/t

onne p

roduct

tonnes/

annum

GJ/t

on

ne p

rod

uct

’00

0 G

J/a

nn

um


0

1

2

3

4

5

6

7

8


0.00

0.125

0.250

0.375

0.500

LTIF

R


tonnes

’00

0 t

on

nes/

an

nu

m

’00

0m

3/a

nn

um

m3/t

on

ne p

rod

uct

ton

nes/

ton

ne p

rod

uct

tonnes/

annum

kg/t

onne p

roduct

kg/t

onne p

roduct

’000m

3/a

nnum

m3/t

onne p

roduct

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

23

24

25

32.0

33.0

34.0

35.0

36.0

37.0

38.0

39.0

40.0

41.0

0.0

5.0

10.0

15.0

20.0

25.0

0.00

0.01

0.02

0.03

0.05

0.04

0.07

0.06

0.00

0.02

0.01

0.03

0.04

0.05

0.07

0.06

0.08

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

10

20

30

40

50

60

70

80

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

20

21

22

23

24

25

26

27

2005 2006 2007

2005 2006 2007 2005 2006 2007 2005 2006 2007 20052004 2006 2007

2005 2006 20072005 2006 20072005 2006 2007 2004 2005 2006 2007

2004 2005 2006 20072004 2005 2006 20072004 2005 2006 20072004 2005 2006 2007

Case study Mondi CEO Safety Award CompetitionAlreadyinitsfifthyear,theannualMondiCEOSafetyAwardrecognisesoperationsthroughouttheGroupthathaveachievedandmaintainedexcellentsafetyrecords.Theawardschemeisprimarilybasedoninjuryratesbutalsoreviewsthenominee’ssafetyandhealthmanagementsystem.Theawardschemeconsidersoutputsaswellasinputs,thesafetycultureandtheincidentswithdaysawayfromwork.

Resultsofthe2006winnerswereannouncedearlyin2007:

Best in Class, Large Unit: Winner:MondiPackagingPaperŚwiecie.Runner-Up:MondiBusinessPaperSzolnokmill

Best in Class, Small Unit: Winner:MondiPackagingRužomberok.Runner-Up:MondiPackagingHammelburg

Most Improved, Large Unit: Winner:MondiBusinessPaperForestsSAOperations.Runner-Up:MondiBusinessPaperKoygorodskiLoggingOperations

Most Improved, Small Unit:Winner:MondiPackagingHolcombe.Runner-Up:MondiPackagingTolentino

Thejuryalsoacknowledgedthecontractorentrant,UkulaKZN(SouthAfricanforestrycontractor),bynominatingthebusinessfortheContractorSafetyAward.


Implementing global employment standardsWhereverweoperateintheworld,wearecommittedtobeinganemployerofchoice–attracting,developingandretainingtheverybestpeopleavailabletous.

Tohelpusbeanemployerofchoice,weneedtobeabletocompetewithlocalandregionalpeersacrossawiderangeoffactors,includinghealthandsafety,trainingandcareerdevelopment,andtermsandconditions.

Wethereforeneedacompleteandconstantunderstandingofhowourworkingpracticescomparewiththoseofothercompanies.

Establishing the quality benchmark

Thisiswhyin2007wedecidedtoexpandourregularannualemployeesurveysintoastraightforwardpeerreviewtoenabledirectcomparisonwiththeworld’sbestperformingbusinesses.Longestablishedinourbusinesspaperoperations,ouremployeesurveycontinuestotrackourprogressacrossanumberofkeybusinessdynamics,includingtheoverallworkplace‘climate’,thequalityofrelationsbetweenstaffandmanagement,workingconditionsandhowstaffrelatetooneanother.

Critically,ithelpsusmeasureemployeealignmentwithourbusinessstrategy,givingusastrongindicationoftheengagementlevelsofemployees.Weusethefindingsofthesurveystochange

workingpracticeswherenecessary,andtoimplementnewsuggestionsthatwebelievewilladdvaluetoouroperations.

In2007,byusingthesurveysinconjunctionwithrecognisedcomparisondatabasessuchasthe‘GreatPlacetoWork’and‘BestEmployerstoWorkFor’surveys,wearenowgainingnewinsightsintoourstandingasanemployer–withinournationalmarketsandinternationally.Wewilldescribeourfindingsandresultingactionsinfuturereports.

Transforming the business

Thegeographicalspreadofourbusinessmeansthatwefacesomehighlysignificantspecificchallengesthatweareworkingtoaddress.ThisisparticularlythecaseinSouthAfricawhich,overthelast10to15years,hasbeenvigorouslyinvolvedinaprocessoftransformation.

AsamajorSouthAfricanemployer,weareawareoftheimportanceofourresponsibilitiestosupportthecountryinbuildingandmaintaininggoodeconomicperformancebasedonemploymentparityandopportunitiesforall–regardlessofrace,genderordisability.

Wearealsocloselyinvolvedinhelpingblack-ownedbusinesseslaunchandbecomeestablishedundertheSouthAfricangovernment’sBroad-BasedBlackEconomicEmpowerment(BBBEE)legislation.

A merit-based approach

OurtransformationeffortshavesuccessfullystartedtochangethefaceofMondiinSouthAfrica.Forexample,in1998therewerenoblackmanagersatourSpringsmill.In2007,34%ofmanagementwasblack,andtheproportioncontinuestoincrease.Critically,thisisbeingachievedonmerit–itisonlywhentwocandidatesforaroleareofequalabilitythatweapplypositivediscriminationinfavouroftheblackcandidate.

Abriefstudyofethnicitystatisticsshowsthatmuchremainsstilltobeachievedbyouremploymentequityinitiatives.Some77%ofourtotalworkforceinourSouthAfricanbusinesspaperbusinessisblack,asis79%ofthepopulationasawhole(withafurther8.9%classifiedascolouredand2.5%asIndian).

OureffortstoincreasetherepresentationoffemalemanagersinSouthAfricahavebeenlesssuccessful,with5%ofmanagementrolesbeingfilledbywomen.WhilethisisnotaltogethersurprisinginaprimarilyindustrialcompanysuchasMondi,thisisanareaonwhichmoreemphasisisrequiredintheyearstocome.Wewillbereportingonourprogressinfuture.

Wealsoneedtoaddressouremploymentacrossthebusinessofpeoplewithdisabilities,whichisatalowlevel.Thisisunsurprising,becausemuchoftheworkatouroperationsisprimarilyphysicalinnature,butwerecognisetheneedtoimproverepresentationamongoffice-basedpositionsandmanagement.

The topics covered by the nine Safety Rules

–Applyingpermits-to-workandcontrollingmodifications

–Operatingmobileplantandequipment–Enteringconfinedspaces–Workingatheights–Makingenergyandmachineryisolation

–Workingsafelyonrotatingandmovingmachinery

–Conductingliftingandmaterialshandling

–Handlingofchemicalsandhazardoussubstances

–Workingsafelyintheforests


Social responsibility employeescontinued

Case study “People, not machines…”AhighlyeffectiveskillstrainingexerciseatourHaderaoperationinIsraelhasresultedbothinimprovedvolumesofsaleablepaperandanenhancedrelationshipbetweenshiftmanagers,thepeopletheymanageandmoresenioremployees.

The16-monthtrainingprogrammefocusedonthepeopleandtask-managementskillsofshiftmanagers,whowereidentifiedasthekeyindividualsindrivingmoreefficientandeffectiveproduction.

Deliveredintwophases,theprogrammefirstconcentratedonhelpingshiftmanagersdefineandunderstandtheirnewrole,establishnewroutinesandimprovetheefficiencyofgroupworking.Implementationthenfocusedondiscussionsandbrainstorminggroupstohelpnewprocesseswork.Theprogrammehassignificantlyimprovedrelationshipsthroughouttheorganisation.

Theresultshavebeenimpressive.Inparticular,ananalysisofthegainsalreadybeingdelivereddemonstratesapositiveeconomicgainthroughbetterefficiencyandproductionquality;adirectresultofinvestingintheskillsofpeople.

Filling the skills gap

StayingwithSouthAfrica,thereisagovernmentconcernthatmajorskillsshortagesthroughouttheworkingpopulationaredamagingtothecountry’seconomicambitions.Alongsideothermajoremployers,wehavearesponsibilitytohelpaddressthesituationbyprovidingouremployeeswitharangeofformaldevelopmentprogrammes.

OurSpingsmillnearJohannesburgillustratesourapproach,withastrongcommitmenttodevelopingfromwithinandrecruitingfromoutside.Thisisaviewthatissharedacrossmanyofourmillsworldwide–thespecialistnatureofourproductionprocessesmakesinternaltechnicaldevelopmentofourpeopleabusinesspriority.

WehavealsobeenrunningasuccessfulapprenticeshipprogrammeatSpringssince2001,whichhasseen66traineesjoinusforafullgroundinginthetechnicalprocessesatthemill,includingaNationalDiplomainpaper-making.Todate,wehaveretained88%ofthisentiregroupandoneofthemisnowaseniormanager.

AttheSpringsmill,wearealsorunninganumberofschemestoimprovethegeneraleducationallevelsoftheworkforce,underthe‘GoodtoGreat’banner,includinghighlysuccessfulliteracyandnumeracycourses.Thisisanessentialelementofoursuccessionplanningapproachthatishelpingusimprovetheethnicmake-upofourmanagementteams.

WearealsopioneeringanewapproachtoskillsdevelopmentatourMondiShandukaNewsprintoperationinDurban,whereaprogrammebasedonperformancemanagementandmission-directedwork-teamsishavinganimportantpositiveeffect.Forexample,thishasseentheefficiencyofoneofourpapermachinesriseuptheglobalperformancerankingsfromnumber105to65intheworld,anditcontinuestorise.

Sharing in Mondi’s success

Ashareschemeforemployeesinourco-ownedbusinessesinSouthAfricaisdeliveringtangiblebenefitsforparticipants.4%ofthesharesinMondiShandukaNewsprintand5%ofMondiPackagingSouthAfricahavebeensetasideinaspecialfundforemployeesundertheEmployeeShareOwnershipPlan(ESOP).ThevalueofeachsharehasrisenfromR0.01atinceptiontoR22.42on31December2007.

Theeconomicbenefitofafurther4%ofthesharesinMondiShandukaNewsprinthasbeensetasideforlocalcommunities.

Case study A company-wide initiativeOnecentraleducationalscheme,underwaysince1998,istheMondiAcademy–asourceoflearningthatisdesignedtoimproveourcorecompetenciesacrosstheGroup,toraisethequalityofoursoftskillsandtoprovideon-demandinformationtechnology(IT)training.Morethan2,000peoplefromover30countrieshaveattendeditsseminars.

In2007,theAcademy’sprimaryfocuswasonimprovingsafetyskills.Thissawusholdaseriesof50seminarsatoursitesthroughouttheworld,eachattendedbygroupsofsome10people.Wearebuildingonthisinitiativein2008byprovidingimprovedinternalresourcestohelpoursitesmakeanynecessarychangestotheirsystemsandprocesses.

OneofthemostimportantbenefitsoftheAcademyapproachistheopportunityitprovidesfornetworkingacrosstheGroup,enablingourpeopletoshareideas,understandingandinsight.ItisafundamentalelementofourGroup-widebidtoconstantlyimproveouroperationsandgiveourpeopleeveryencouragementinbuildingalong,sustainableandprogressivecareerwithus.


Internal communication

MondibelievesthattheinternalcommunicationofourSDcommitmentsisvitaltocreateunderstandingandensurethesuccessfulimplementationofourprogrammesandstandards.Mondirecognisesthatinternalcommunicationneedstobecredibleandmotivating.SincewedemergedfromAngloAmericanplcandlistedasanindependentGrouplastyear,wehavetheopportunitytodelivercommunicationsthataredirectlyrelevanttotheneedsofallourpeople.

Mondi’sinternalcommunicationprocessreliesonpersonaltwo-waycommunicationbetweenmanagersandtheirteams,aswellaspromptmanagementbriefingstorelevantemployeesonkeytopics.Duetotheinternationalnatureofouroperations,wehavefoundthatadecentralisedapproachisthemosteffective.WesettheframeworkataGrouplevelandeachbusinessunitthenmakesuseofacombinationofdifferentcommunicationtoolsincluding:formaldialoguesessions;intranets;awardschemesandprintedpublicationssuchasthe‘Unlimited’employeemagazineintheEurope&Internationaldivisionandthe‘Munye’magazineintheSouthAfricandivision.

Case study Investing in youthTheMondiAustriaPrivateFoundationhasawardedspecialscholarshipsworthupto€12,000-a-yeartomorethan30youngstudentsfromacrosstheworldwishingtostudytechnology,naturalscienceandeconomicsciencesubjectsinAustria.Anannual€1,000travelgrantisalsoavailable.

Foundedin2005,theFoundationwassetuptoprovideAustrianStudentScholarshipstostudentsnotolderthan23fromAfrica,Asia,centralandeasternEuropeandAustriaitselfwhoarekeentoattendanAustrianuniversity,technicalcollegeorsimilarinstitution.

ItwasthebrainchildofDrVeitSorger,formerchiefexecutiveofMondi’sFrantschachbusiness,whosaidatitslaunch:“Thefuturebelongstoyoungtalents.Itisourdutytoinvestinyouth,tothebenefitoftheindividual,theeconomyandsociety.”

Thescholarshipsareprovinghighlyattractive,with630applicationsfrom60countriesreceivedduringthefirsttwoyearsoftheFoundation’slife.Eachawardlastsforuptofouryears(orfortheminimumdurationofthecourse)dependentonthepersonalsuccessofeachstudent.Itmaybeusedtohelpfundabachelor’sormaster’sdegreeforthosewhohavealreadyachievedafirstdegreeintheirhomecountry.

StudentswhoreceiveawardsarenotrequiredtoworkforMondioncompletionoftheirstudies–thecompanyseessuchsupportasanimportantmeansofhelpingindividualsachievepersonalgoalsthatenablesharedbenefits.InthewordsofMondichiefexecutiveDavidHathorn:“Promotingthepotentialofyoungpeopleisaparticularresponsibility.”

Employee Share Ownership Plan (ESOP)

4%of shares in Mondi Shanduka Newsprint

5%of shares in Mondi Packaging South Africa


Social responsibility communities

Summary

Wemakeanimportanteconomiccontributiontothecommunitiesinwhichweoperate.

Butwerecognisethatourresponsibilitiesextendfarmorewidelythanthisalone,includingthereductionofanynegativeimpactwemayhaveandprovidingresourcesthatmakecommunitiesbetterplacestoliveandwork.

Herewedescribesomeofthewaysinwhichwetrytomeetourcommunityresponsibilities.


Page 43 Community engagement and CSI

Ethical business conduct

Policy At Mondi, being a good corporate citizen means making a real and lasting contribution to the communities in which we operate.

This vegetable garden in South Africa is just one of Mondi’s community projects to combat HIV/AIDS.


Community engagement and corporate social investment (CSI)EverysignificantMondioperationhasinplacearollingthreetofive-yearcorporatesocialinvestment(CSI)programmeorcommunityengagementplan,designedtohelpuscreatesustainable,mutuallybeneficialrelationshipswithnationalandlocalcommunitiesthatreflecttheirprioritiesand,wherepossible,matchourbusinessinterests.

Wehaveagreedabroad,genericsetofCSIobjectivesacrossthebusiness,whichhelpusselecttheprojectsweshouldsupport.Theseensurethatweonlygetinvolvedwithprojectsthatenhancethecapabilitiesofourcommunitiesandcontributetotheirsocialandeconomicdevelopment.Inaddition,theprojectsneedtogiveustheopportunitytoformpartnershipswithotherinterestedparties,includingNGOsandgovernment.

A structured approach to CSI

Theactualprojectswechoosetoworkwitharebasedonspecific,tailoredsolutionsthatspringfromtheSocio-EconomicAssessmentToolbox(SEAT)reportsweundertakeonthecommunitiessurroundingourmaterialoperations.

ASEATgivesusastructuredwayofhelpingusimprovethewell-beingofourcommunities.Itinvolvesanumberofdifferentstages:

First,weprofileouroperationsandthecommunitieswithinagivenarea.Next,weengagewiththefullrangeofinterestgroups,andidentifythepositiveandnegativeimpactsofouroperations.Thenweproduceamanagementplandesignedtomeetthecommunity’sdevelopmentneedsandreduceanynegativeimpact.Finally,togetherwithlocalstakeholders,wepublishalocalreportthatprovidesthebasisofourongoingrelationshipwiththem.

ExamplesofrecentSEATreportsincludepublicationsonourŚwieciemillinPoland,ourRužomberokmillinSlovakia,ourŠtĕtímillintheCzechRepublicandourSyktyvkarmillinRussia,allofwhicharedrivingourcommunityprogrammesineachareaandhelpingusimprovethequality,relevance,scopeandeffectivenessofoursocialinvestments.

AtSyktyvkar,forexample,weparticipatefullyinthecommunity’shealthcaresystem,helpingbothtopreventandtreatillnessesandconditionssufferedbyourworkersandtheirfamilies.

Activitiesfallintotwokeyareas,bothofwhichwereidentifiedassignificantintheSEATexercise–providingthemedicalservicesthatareneeded,aswellastheopportunitytoexerciseandparticipateinsportandotherformsofleisureactivity.

Wethereforeprovidepolyclinics,healthcentres,asanatoriumandadispensaryinEzhva,theregionalcapital.Duringthetimethatwehavemanagedthehealthprogramme,wehaveseentheprevalenceofillnessamongouremployeesattheSyktyvkarmillfallfrom4.57%to2.5%.

In2007,wewereparticularlypleasedthatoursanatorium-dispensaryinEzhvawonthesixthawardbytheall-RussiaTradeandHealthcongresstomarkthenation’stopachieverinprotectingworkers’health.Theservicesofoursanatoria-dispensarieswerealsomarkedbytheawardofaspecialqualitydiplomabythegovernmentoftheKomiRepublic.

Throughtheexperiencewehavegainedinthisarea,wearenowextendingourhealthprogrammeintoourforestryoperations,andhavecarriedoutadetailedstudyofouremployeeswhoworkthere.Thishashighlightedtheimportanceofaddressingconditionsaffectingthemusculoskeletalsystem,whichwillreceivesignificantattentionin2008.

OuractivitieshelppromoteanactivephysicalcultureinandaroundSyktyvkar,andwesupportthreemainresourcesintheregion–theBamuzhniksportscentre,theVezhdinoskilodgeandtheParmaholidaycentre.Theseareextremelypopular–in2007,Bamuzhnikreceived253,724visitorsand9,660peoplewenttoParma.

Wealsoencourageouremployeestoparticipateinourownsportingevents,andin20073,209ofourstafftookpartinthe37eventsthatcompriseour‘all-the-year-round’games.Onecompetition,called‘TheSkiTrackofHealth’,isparticularlypopular,with1,202participantsin2007.

Case study Listening to community concernsThroughoutouroperations,aswellassupportinghealth,educationalandothersociallypositiveinitiatives,weuseSEATstohelpusidentifyandaddressanynegativeimpactswehaveonthecommunitieswhereweoperate.

Ourworktoaddressfactorslikethe‘nuisancesmell’atourSyktyvkarmillinRussia’sKomiRepublicandourRichardsBaymillinSouthAfricaisdescribedonpage31ofthisreport.Hereweareengagingwithlocalcommunitiestoestablishtheirconcernsandundertaketheinvestmentandtechnicalworknecessarytoreduceandultimatelyeradicatetheissues.

Forexample,wehavecommittedtomakingRichardsBaya‘smell-free’operationby2009.InJuly2007weheldanopenday,whenwediscussedtheissuefullyandtransparentlyalongsideanumberofotherfactorsofconcerntothecommunity,enablingthemtoensurethatwewerefullyawareoftheirworriesandwereactingtoaddressthem.

Workingtoimprovethecommunitiesinwhichweoperate

Corporate social investment1

€ 2007

Health 302,703.82

EducationandYouth 1,346,113.17

Environment 306,294.77

CommunityDevelopment 325,775.49

Arts,CultureandHeritage 494,042.42

Other* 3,693,721.24

TOTAL 6,468,650.911Corporatesocialinvestmentincludesdonations

forcharitablepurposes,communityinvestmentandcommercialinitiativesinthecommunity.

*Sports/recreation,associations,firebrigades,stateauthorities,etc.


Ethical conduct

Therearefourcentral‘pillars’inourapproachtogovernanceofethicalconduct,designedtohelpthebusinesscomplywithbestpractice.Theseare:

awidelypromotedandaccessibleinformationresourceonourcorporatecultureandethics;

arigorousrisk-managementprocess;

asystemofinternalcontrol;and

a‘whistleblowing’processthatenablesemployeesanonymouslytohighlightinstanceswherehighstandardsofethicalbehaviourmayhavebeentransgressed.

Inaddition,wehaveaninternalauditdepartmenttohelpmanagementmeasureandassesstheeffectivenessofourrisk-managementprocess,internalcontrolsystemandcompliancewithourcorporatestandards.

–

–

–

–

Social responsibility communitiescontinued

Case study Supporting vulnerable peopleOurŠtétímillintheCzechRepublichasformanyyearsactivelysupportedsomeofthemostvulnerablemembersofthelocalcommunity.

OurlocalmanagementregardimprovingthequalityoflifefortheseandotherdisadvantagedpeopleasaclearresponsibilityforamajoremployersuchasMondi.

During2007,themainfocuswasontheDiagnosticMentalandSocialCareinstitutioninthenearbytownofCizkovice,whichwehavesupportedsince2004.

Responsiblefor60mentallyandphysicallychallengedpeople,thefacility’sprofessionalstaffhaveimpressedMondiovertheyearswiththeopennessandobviousdedicationwithwhichtheytreatthoseundertheircare.

Mondihasprovidedsome€4,000eachyeartohelpthecentremoderniseitsfacilitiesandraiseitsstandardsofcaretoworldclass.Recentexamplesoftheinvestmentswehaveenabledincludetheinstallationofastair-lift,abathforthemostseriouslyhandicappedpeople,andarecreationalcycletrack.


In2007MondiadoptedaCodeofBusinessEthics,whichsetsoutthekeyprinciplesguidingconductacrosstheGroup.

The five Mondi principlesLegal complianceMondiwillcomplywithallapplicablelawsandregulations.Honesty and integrityMondiwillobservethehigheststandardsofhonestyandintegrity.Human rightsMondiwillrespecttheUniversalDeclarationofHumanRights.StakeholdersMondiwillhavedueregardtotheinterestsofallitsstakeholders–shareholders,employees,customers,businesspartnersandcommunities.SustainabilityMondiwillconductitsbusinesssustainably,ensuringsafety,healthandtheprotectionoftheenvironment.

Mondiwillencourageallthosewithwhomitdoesbusinesstoobservethesameprinciples.

Case study Enabling excellent community healthcareTheCentralMilitaryHospitalinRužomberok,SlovakiaandMondihavealongtraditionofcooperation.Today,wecontinuetodonatespecialistmedicalequipmentinexchangeforprovidingouremployeeswithoneofthecountry’smostcompleteandhigh-qualitymedicalsupportservices,includingcheck-upsandthein-depthexaminationsthatSlovakianlawdemandsforworkersinourindustry.

Withanationalreputationformedicalexcellence,thehospitalenablesMonditoprovidebetterhealthcarebothforouremployeesandthepeoplewholiveinthewiderregion.

Managing risk

Effortstopreventunethicalorillegalbehaviourareafundamentalelementofourrisk-managementprocess.Ourrisk-managementprocesshastwodistinctbutintegratedelements.First,informationrisesupthroughtheorganisationtoboardlevel.Policyanddirectionpassesdownfromtheboardforimplementationbymanagement.

Anexampleofhowthisworksinpracticeis‘SpeakUp’,ourwhistle-blowingprogramme,inplaceinSouthAfricasince2003andsubsequentlyimplementedinalmostallourglobaloperations.


Whistle blowing

TheSpeak-Upprogrammeensuresthatemployeeswhospotinstancesofdishonesty,discriminationordangerousbehaviourcanconfidentiallycommunicatetheirfindingsorsuspicionstotheGroupforaction.Thisisparticularlysignificantiftheemployeehasreasontosuspectamoresenioremployee,suchastheirlinemanager.Itisanextremelyvaluabletoolinensuringthatourlegalcomplianceandourethicalprinciplesarerespectedatalltimes.

Inordertoensureconfidentiality,weuseanoutsourced,message-basedsystem.Anemployeemayuseadedicatedphonenumbertoleaveamessagewithourthirdpartysupplier–Mondihasnoaccesstotheinformationgiven.Theoutsourcedcompanytheninformsus,highlightingtheissue.Wethenhavetheopportunitytorespond,takingadecisionatanappropriatemanagementlevelonanycorrectiveactionthatshouldbetaken.

Weare,ofcourse,awarethatthesystemmaybeabusedbyemployeeswithagrievanceagainstthebusinessoranindividual.Thereare,therefore,strictproceduresinplacetopreventabuse.Wedoourutmosttoensurethatallactionstakenarejustandfair,inthebestinterestsofMondianditspeople.

Competition compliance

Animportantpartofourcommitmenttolegalcomplianceisourcompetitionlawcomplianceprogramme.Monditakesextensivestepstoensurethatitsemployeesarefullyawareoftherelevantcompetitionlawrequirementsthroughcommunicationandtraining.Thesestepsarereinforcedthroughaninternalsystemofself-certification,assuranceandaudits.

Case study Harmonising business and educationAsagroup,Mondiconstantlyneedsaninflowofnewemployeeswithasoundgraspofengineeringandothertechnicalmatters.ThisrequirementisbehindourongoingsupportfortheSecondaryTechnicalSchoolinRužomberok,Slovakia,wherewearehelpingstaffdevelopcoursesonnewareasoftechnicalspecialisationanddelivermodulesdirectlyrelatedtoourindustry.

Whiletheschoolisanindependenteducationalinstitutiontoday,itusedtobelongtoMondiuntilachangeinlegislationmeantthiswasnolongerpossible.Now,however,thisclosecooperationbetweenMondiandtheschoolisharmonisingourongoingcommercialneedswiththoseofthecommunityforanexcellent,locallyavailablevocationaleducation.

Case study Dealing with traumaMondi is committed to responding to the concerns of its employees and communities. This was behind the R1.3 million sponsorship of a new trauma centre, opened in November 2007 at the Far East Rand Hospital near Johannesburg for the victims of sexual assault. Combining legal and medical facilities, the new centre was the brainchild of employees from our Springs mill in Johannesburg. Working with the Department of Health, Mondi funded and drove the entire centre from scratch, adding a valuable new resource to help support some of the community’s most vulnerable members. The company is maintaining a close involvement for at least the next three years.

MondiisthebiggestemployerinthenorthernPolishcityofŚwiecie,wherewedirectlyandindirectlyemploynearly4,000peopleatourmill–oneofthelargestpapermillsinthecountry.Withthetaxesandroyaltieswepay,thismakesusaveryimportantcontributortothelocaleconomy.

Weseethisasamajorresponsibilityand,toencouragefurtherprivatesectordevelopment,wehaveimplementedapolicyofdealingwhereverpossiblewithlocalsmallbusinesses–thosewithin60kilometresofthemill.Asakeyelementofthispolicy,wewillalwaysgivepreferencetoalocalsmallandmediumenterprise(SME)overaninternationalprovider,providedtheproductsorservicestheyofferareatleastequivalentinqualityandvalue.

Despitethiscommitment,theformerdominanceoflargestateownedbusinessesintheregion

haslefttheSMEsectorcomparativelyweak.SofollowingaSEATanalysisin2005to2006,wedecidedtocatalyseitfurtherbyfirstattractingnewSMEsthroughadvertisingandthenprovidingthemwiththetrainingandtechnicalassistancetheyneedtomeetourstandards.Inaddition,wearecommittedtosettlinginvoicesontimetogivethemassuranceofcashflowandpayrollcertainty.

Theresultshavebeenexcellent,withasignificantnumberofnewSMEsnowinoursupplychain.Aswellashelpingthemimprovetheirenvironmental,healthandsafetyperformance,enhancetheirqualitystandardsandachievegreaterfinancialstability,theinitiativeiscreatingwealthwithinthecommunity.Mondibenefitstoo,throughgreatercompetitionamongbiddersforourbusinessandanenhancedreputationinthecommunity.

Case study Preferred procurement in Poland

Investment in trauma centre

R1.3m



Summary

SouthAfricaisundergoingsweepingtransformationasitsgovernmentoverturnsahistoryofdiscrimination.

AsamajoremployerandlandownerinSouthAfrica,wefullysupportitsworkwithawiderangeofCorporateSocialInvestment(CSI)initiativesalongsideanactivefocusonemploymentequity,landreformandBroad-BasedBlackEconomicEmpowerment(BBBEE).

Herewedescribesomeofthewaysinwhichwearestrivingtohelp.


Page 47 BBBEE ratings

Page 51 Combating the HIV/AIDS epidemic

Page 50 Land claims and indigenous people

Page 49 Our CSI approach in South Africa

Tree planting in South Africa.


Across South Africa, it continues to be a government priority to change the demographics of business.

One of the most important objectives is to ensure that at every level, from major corporations to small privately owned enterprises, previously disadvantaged individuals can seize career and business opportunities that have been denied them.

A key tool in helping them and South African organisations as a whole achieve this goal is a highly sophisticated legislative Act called Broad-Based Black Economic Empowerment (BBBEE). Using the power of mutual self-interest to ensure that transformation gathers pace throughout all strata of business and society, BBBEE promotes a progressive approach among businesses in addressing and rectifying historic imbalances and injustices.

BBBEE ratingsByscoringorganisationsacrosssevenkeyratingsthatmeasurethelevelsofblackinvolvement,influenceandbenefit,BBBEEdrivesandenablespositivesocialprogressbeyondbusinessaloneintoareassuchaseducation,healthandinfrastructure.Throughtheawardofascoreundereachoftheseratings,businessesachieveanoverallrating(between1and8,with1beingthehighestrating)thatmaybeusedbymajorpotentialcustomers,includingthegovernmentitself,tohelpdeterminetheprocurementofgoodsorservicesandtheawardofcontracts.

Thesystemhelpstoensurethatthemorehighlyabusinessisratedthemorelikelyitistowinsignificantcontracts,soitisseenandusedasanimportantincentivetoactivelysupporttheBBBEElegislation.

Thekeyratings,aspertheDepartmentofTradeandIndustry’sCodesofGoodPractice,are:

businessownership;

managementcontrol;

employmentequity;

skillsdevelopment;

preferentialprocurement;

enterprisedevelopment;and

corporatesocialinvestment.

–

–

–

–

–

–

–

AtMondi,wefullysupporttheapproachandaimsoftheBBBEEinitiative.Quiteapartfromthesocialbenefitsthatit’salreadyhelpingustodeliver,webelievethatitisalsoapotentialdriverforbetterbusinessperformancethroughthediversity,lowercosts,improvedstaffmotivationandenhancedcorporatecitizenshipitencourages.

Transformation policies

Monditakesitsobligationsveryseriously,andtothisendwehaveinplacearangeofcorporatevaluesthroughwhichweareaddressingthetransformationdemands.Theseare:

removingbarrierstobusinessownersandencouragingtheparticipationofblackpeople;

promotingtheworkingconditionsanddiverseorganisationalculturethatwillmakeusanemployerofchoice;

deliveringemploymentequity,sothattheracialandgenderprofileofMondimatchthoseoftheSouthAfricanpopulationasawhole;

increasingourinvestmentsintheskillsdevelopmentandtrainingofexistingandnewblackprofessionals,particularlyblackwomen;

promotingentrepreneurialdevelopmentandincreasingthenumberandexpertiseofblack-ownedandmanagedfirmsinoursupplychain;

increasingprocurementofgoodsandservicesfromhighlyratedBBBEEsuppliers;and

ensuringgoodcorporatecitizenshipinthecommunitiesinwhichweoperate,includingactivestakeholderengagementandresponsiblesocialinvestments.

–

–

–

–

–

–

–

DrivingtransformationinSouthAfrica

Promoting black ownership

R3billionin empowerment transactions

Procurement practices

31%of discretionary goods andservices procured from black-owned business


Manyoftheseareasareaddressedelsewhereinthisreport.Inthissection,weaimtofocusontheownership,entrepreneurialdevelopmentandprocurementelements.

Promoting black ownership

In2004wetooksignificantstepstoensuregreaterblackownershipofMondi’sbusinesses.ThisinvolvedthecreationofastrategicrelationshipwithShandukaResources,throughwhichwecreatedtwonewentities:MondiPackagingSouthAfrica(Pty)LtdandMondiShandukaNewsprint(Pty)Ltd,owned40%and42%respectivelybyShandukaResources.

Togetherwiththesaletoblackshareholdersof10.8%ofourshareholdinginSiyaQhubekaForestry(Pty)Ltd,theseactivitiesrepresentoverR3billioninempowermenttransactions.

Procurement practices

ItisincreasinglyimportantforbusinessesthatwhereverpossibletheydealwithsupplierswiththebestpossibleBBBEEratings.ToenablethistotakeplacewithinMondi,wehavebeenmakingsomemajorchangestothewayweprocureproductsandservices.

OfaSouthAfricansupplierbasetotallingsome5,000businesses,abouthalfareverysmall.However,between200and300ofthesebusinessesreceivesome80%ofourspend.Someoftheseareverylargecompanies,suchaschemicalsuppliers,whoareunlikelyatthisstagetohavesignificantblackownershiporseniorrepresentationlevels.

ForMondi,thetrueimportanceofBBBEEliesinthecontributionwecanmaketothesustainabilityandsuccessofblack-owned(andparticularlyblackwomen-owned)businesses.InourSouthAfricanoperations,therefore,ourprocurementprogrammeisdrivenbytheneedtoawardmeaningfulopportunitiestobusinessesofthistype.AsofAugust2007,31%ofthediscretionarygoodsandservicesweprocuredwerefromsuchsources,againstachallengingtargetofachieving50%by2012.

Wecanalsoimproveourperformancebyworkingwithsuppliersthat,whilenotblack-ownedthemselves,alsohaveahighBBBEEscoregainedatleastpartiallythroughprocuringfromblack-ownedbusinesses.Westrivetoencourageallsupplierstopaycloseattentiontotheethnicmake-upoftheirownsupplychains.Wearealsointheprocessofdevelopinganelectronicdatabase,whichwillserveasaconsistentpointofreferencefortheBBBEEcredentialsofalloursuppliers.

Investing in quality

Asabusinessthatmakeshighqualitydemandsonitssuppliers,wearealsohelpingsmallandyoungblack-ownedbusinessesraisetheirstandardstothelevelsweexpect.

Thisistrueofexistingoperations,andwehavemadecapitalinvestmentstohelpselectedbusinessesimprovetheirstandardstoappropriatelevels,includingintheareasofproductquality,servicelevelsandethicalbusinesspractices,aswellashelpingtoestablishnewenterprises.

Ourwholly-ownedenterprisedevelopmentagency,MondiZimele,focusessingle-mindedlyonsupportingandhelpinglaunchnewbusinessesthatwillfitintooursupplychain.Itscommitmenttosupportingenterprisedevelopmentextendstotheprovisionoffavourablecreditandpaymentterms,aswellasassuringeffectiveskillstransferandsustainabilitythroughmentorshipandadvice–seethepanel(left)forcasestudiesthatillustrateitsactivities.

Gaining certification

Intime,aprocessofcertificationwillbeinplacethroughoutSouthAfricatoprovidebusinesseswithaprecise,formallyauditedBBBEEscore,whichisthenretainedfor10years.Mondi’sscoresarecurrentlybasedonself-assessmentscarriedoutbyexternalconsultants.

Theself-assessedratingof5issatisfactoryforthemoment,andwehaveaplaninplacethatwillhelpusachievelevel4standardsofachievementwithinfiveyears.WealsobelievethatbothMondiPackagingSouthAfricaandMondiShandukaNewsprintshouldachievelevel4,duetotheirownershipstructure.

Thesefiguresaredueforverificationintheearlypartof2008,whenwewilldecidewhetherornottoadoptaconsolidatedscorecardacrossallourSouthAfricanoperations.

Case studyIndependence through enterprise‘Zimele’means‘tobeabletostandonyourown’intheZululanguage.ThisisthekeyprinciplebehindMondiZimele,ourSouthAfricanenterprisedevelopmentarmthathelpsentrepreneursandsmallbusinesseswiththefundingandskillstheyneedtobecomeanestablishedpartofoursupplychain.

DrivenbytherequirementsofBBBEEandlandreformlegislation,MondiZimeleencourages‘IndependencethroughEnterprise’,providingbusinessexpertiseandinvestmentfundingbasedontheR100millionthatMondihasprovidedoverthreeyears.

OnerecentsuccessstoryisImpumeleloForestryServices,anine-strongcontractingbusinessthatisinvolvedinthefullspectrumofforestryactivitiesfromsilviculturetoharvestingandshort-hauldistribution.WearealsosupportingKhulanathiTimbers,awood-buyingbusinesswithfouremployeesthatprovidesarangeofservices,includingseedlingprovisiontoover3,000growers.

South African-specific issuescontinued


Our CSI approach in South AfricaInSouthAfrica,wehaverecentlystrengthenedourCSIandcommunityengagementposition.

Developing a CSI strategy

InourSouthAfricanbusinesses,thisfollowedanumberofSEATsthatwecarriedoutin2005.Involvingover2,000separateinterviews,theseprovidethecorearoundwhichwehaveconstructedanintegratedCSIstrategy.Thisfavoursstrategicsocialinvestmentsthathaveadirectrelationshipwithouroperationsandtheirimpacts,supportingthetransformationprocessandmaximisingthepositivesocialeffectsofouractivities.

Thismarksamajorshiftinemphasisawayfromaphilanthropicethosmarkedbyhand-outsorsponsorships,toafocusonmeetingrealneedsbyengineeringsustainablebusinessopportunities.

Youcanseesomeoftheresultsofthisnewfocusinoursectionsonmeetingsocialneedsinourforests(page26)andBroad-BasedBlackEconomicEmpowerment(page47).

Ourstrategyisbasedonthreelevelsofproject–first,so-callednational‘flagship’initiatives,whichtake50%oftheavailableCSIbudget;next,40%isspentonlocalcommunityprojectsaroundourplantsandforestoperations;andthe10%balancetakestheformsofdonationsofpapertoschools,hospitals,orphanagesandotherorganisations.

Thestrategyalsodictatesthattheprimaryfocusforanyprojectshouldbealongoneormoreofthefollowingthemes:education(withanemphasisonmathsandscience);environmentalimprovement;communityandneighbourhooddevelopmentandeducation;andthepreventionandtreatmentofHIV/AIDSinfection(seepage51formoreinformationonthistopic).

Flagship and community projects

FlagshipprojectsincludetheUnizulScienceCentrethatfocusesonscienceandmathsdevelopmentinschoolstohelpboostkeyskillsintheSouthAfricaneconomy.Everyyear,some30,000learnersvisitthecentre,wherewehouseapermanentexhibitionintheHallofIndustries,hostMondi’sPaperWeekanddeliverateacher’sworkshoponthepapermakingprocessandenvironmentalissues.

TheMkhondoEducationCentre,meanwhile,wascreatedtoserveasaone-stopshopeducationalfacilitythatcouldsatisfytheneedsofabroadsectionofthelocalcommunitybyprovidingsupportforlearners,adults,educatorsandthoseseekingemployment.Completewithaspecialistmathsandsciencecentre,itreceivedsome15,000learnersbetweenMarchandNovember2007.

Suchprojectsareofparticularimportanceforthefutureofthecountry.Subjectslikemathsandsciencearecriticaltothefuturedevelopmentofmanufacturingbusinesses,especiallythosebasedontechnicalandengineeringexpertise.Thesesubjectsarenotpopularchoicesforfurtherandhighereducationamongyoungpeople,andthefocusoftheprogrammeistoshowthattheycanbefunaswellasultimatelyrewarding.

CommunityprojectsincludesupportforAmangweVillage,aspecialcentreforchildrenwhohavebeenorphanedbySouthAfrica’sHIV/AIDSepidemic.ThiswasoriginallyaMondi-onlyproject(andisstillsitedonourland)butwedonatedittotheZululandChamberofBusiness.In2007,weprovidedthevillagewithsignificantfundsforawiderangeofuses.

Better communication

DespitetheseandmanyotherCSIprojects,our2007CommunitySatisfactionSurveyrevealedthatthereisstillmorethatwecando.From2008wewillbeconcentratingmoreeffortonensuringthatourcommunitiesunderstandouractivitiesbetter.

MondiPackagingSouthAfricapursueslargelythesamestrategybutwithaslightlydifferentemphasis.Itsfocusisonearlychildhooddevelopment,healthandentrepreneurialdevelopmentbasedoncommunityneeds.

Helping people help themselves

MondiPackagingSouthAfricaalsoshareswithourcommunityinvestmentorganisationMondiZimeleacommitmenttohelpingpeopleandorganisationshelpthemselves(seepage48formoredetail).Forthisreason,whenhelpingwiththelaunchormanagementofanenterprise,wemaintainourdirectinvolvementforthreeyearsbeforewithdrawinggraduallytohandoverfullresponsibilitytomanagement.

Forexample,webecameinvolvedintheKwaThemacrècheatourSpringsmill,aprojectthatappearedtobelosingmoneydespitealloutwardappearancesofsuccess.Ourresearchsoonrevealedsomefundamentalproblemswiththebusiness,andresultingactionquicklyledtoafullfinancialrecovery.Thecrècheteamhavegrownintheirknowledgeofbusinesspracticesandmanagementtechniques,whichshouldensureasuccessfulfuture.

A double gain

AttheFarEastRandHospital,nearJohannesburg,wearealsoinvolvedwiththeKangarooMotherCareCentre,basedonanAustralianmodelthatshowsimportanthealthanddevelopmentbenefitsinprematurebabieswhomaintainskin-to-skincontactwiththeirmothers.

Duringthetwotothreeweeksthatwomentypicallystayatthecentre,theyarealsotaughtnewsewingskillsthattheycanusetoearnmoneyontheirreturnhome.Inthisway,wearealsobringingneweconomicopportunitiesdirectlytotheheartofcommunitiesthroughouttheregion.


Major returns

Whilesomeoftheprojectsmentionedrequiresignificantfundingandresources,wearealsoinvolvedinmanywhereevenalittlehelpcanmakeahugedifferencetothequalityoflifeofindividualsandcommunities,aswellasbenefitingourbusiness.

AnexampleofthisisinSiyaQhubekaForestry,wheresomeofourplantationsweresufferingdamagefrom3,500cattlebelongingtoalocalcommunity.Whenwediscussedthesituationwiththem,wefoundthattheyneededhelpinseveralareas,includingprotectionfromcattlethieves.Followingamodestinvestment,wehelpedthemsetupacattlemanagementdatabaseandruntraining,brandinganddippingprogrammes.

Thisisnotonlyprotectingouryoungtreesagainstbeingeaten,itisalsohelpingthecommunityimprovethequalityoftheirherdsthroughthemoreselectivebreedingandbetterhusbandrythatattractsahigherpriceatmarket.Inaddition,ithashelpedenhanceMondi’sreputationinthearea,andisalsodeliveringenvironmentalbenefitsthroughmanagedgrazing.

Inmanyways,thisprojectsumsupthevalueofourCSIactivities,simultaneouslybenefitinglocalcommunities,theenvironmentandourbusiness.

Land claims and indigenous peopleLandreforminSouthAfricaisanissueonwhichweareconcentratingagreatdealofeffort,withtwomajorareasoffocus:toprotectoursourcesofsustainablefibre;andtoensureweoperateintheethicalmannertowhichwearecommitted.

Thehistoryoflandtenureinthecountryisintricateanddetailedinnature.Ithasledtoasituationwherebythegovernmentandbusinesstogetherarecommittedtorectifyingthepastwrongsthathavedeprivedmanyindigenouspeopleoftheirrightfulheritage.

Historical background

Acriticalpointcamein1913whenthegovernmentofthedaydecidedtomakeSouthAfricafullyself-sufficientintimber.Whilemanyareashadalreadybeenforested,thispolicyledtomanypeoplebeingmovedofftriballand,andsignificantstretchesofagriculturallandbeingturnedovertoforestry.

Subsequently,theapartheidsystemfurtherexacerbatedtheproblem,movingpeopleawayfromtheownershipoflandandthusdenyingthemtheircontinuedtraditionalwaysoflife.

In1994,theRestitutionofLandActwaspassed,withastraightforwardobjective:“Toprovidefortherestitutionofrightsinlandtopersonsorcommunitiesdispossessedofsuchrightsafter19June1913asaresultofpastraciallydiscriminatorylawsandpractices.”

Thelawalsoencompassesandaimstoaddressthedescendantsofsuchpeople,aswellascommunitiesthathavelostlandrights.Restitutionitselfcantakeoneofthreeforms–restorationoftheland,paymentofcompensationoracombinationofthetwo.

Mondi’s role

Wearecommittedtoplayingapositiveroleinmeetingthelandreformtargetsthathavebeensetforthecountryandtheforestryindustry.

Currentlythereareclaimsagainstthewholeorpartofsome48%ofMondi’slandinSouthAfrica.Weareworkingcloselywithcommunitiesinanattempttogainanunderstandingoftheirneedsandaspirationsforusingthelandinfuture.

Forus,thechallengeisnotsimplyastowhetherwereachasettlement;itishowwebestdosowithfairnessandequity.Whilewefavourparticularapproachessuchasleasebackandjointventures,thereisno‘one-size-fits-all’modelofrestitution.Thismeansthatweneedtospendtimewiththenewlandownersassistingthemtoidentifyandachievetheiraspirationssothatweseeamovebeyondmerelandrestitutiontogenuinelandreform.

A commercial necessity

Itiscommerciallyvitaltousthatoursourcesoffibrearebothassuredandsustainablymanagedintothefuture,notleastretainingtheirall-importantFSCcertification.

Wearecloselyinvolvedinanumberofcommunity-enablementprojectsandinitiatives,suchasatKranskop,wherewearehelpingtwoland-claimgroupsdeveloptheskillstheyneedtobecomeourbusinesspartnerswithanassuredsourceofbusinessformanyyearstocome.

Thisisanimportantelementofouractiveroleinhelpingnewlandownersbuildthecapacity,infrastructureandunderstandingtheyneedtosucceedinatransformedsocialandbusinessenvironment.

South African-specific issuescontinued


Combating the HIV/AIDS epidemicAccordingtotheSouthAfricanNationalHIVsurveyin2005,10.8%ofallSouthAfricansovertheageoftwowerelivingwithHIV.InKwaZulu-Natal,wheremanyofMondi’soperationsaresited,prevalencehadrisento16.5%.

Whiletherehavebeensomerecentsignsthatinfectionratesarestartingtofall,forSouthAfricatheHIV/AIDSepidemicrepresentsoneofthegreatestofthemanychallengesthecountryfaces.

A duty to protect

AtMondi,werecognisethatemployershaveanimportantresponsibilitytohelpprotectandeducatetheirpeople,aswellaslimitanyfutureimpactsontheavailabilityoflabour.Wealsorecogniseourcorporatedutytohelphaltthegrowthoftheepidemicandsupportthoseaffected.

Wehave,therefore,integratedaviableHIV/AIDSpolicyintooursafetyandoccupationalhealthpolicy,whichisinplaceacrossthebusiness.Thiscoversarangeoffactors,includingananti-discriminationpolicy,managementoftheillnessandanyresultingdisability,educationandawareness,theprovisionofanti-retroviraltreatmentandhelpingmanagetheimpactofthediseaseonMondi’sbusinessandwidersociety.

The key barrier

ForMondiandothermajoremployers,themostimportantbarriertoovercomeisoneofattitude–widespreadmisunderstandingoftheissuessurroundingHIV/AIDSremains,includinghowitistransmitted.Inturn,thisspreadsprejudiceagainstthosewhoareknowntobeHIVpositive,oftenleadingtoalackofwillingnessforindividualstomakeknown,orevenfindout,theirHIVstatus.

Anti-discriminationisenshrinedinouremploymentpractices–employmentapplicationsdonotincludeabloodtest,HIVpositiveemployeesaretreatedinthesamewayasforanyotherchronicdisease,continuinginemploymentunlessmedicallyunfitforwork.Trainingandpromotionisawardedregardlessofstatus.

Mondi programmes

Wehavealsoputinplaceanumberofprogrammes,includingtheSWAT(Status,Wellness,Awareness,Treatment)programmeinourRichardsBayandMerebankmillsandforestryoperations.First,thisurgespeopletoknowtheirstatusandhighlightsthefreetestingthatisavailablethroughhealthchecksprovidedbythecompany.

Next,itpromotestheMondiwellnessprogramme,ageneralwellnessprogrammeforemployeeswithchronicillnessesandourfirststepintheactivetreatmentofHIVandAIDSaspartofanintegratedsystem.Thisincludescounsellingondiet,safesexandotherissues,theprovisionofimmuneboostersandpsychologicalsupportincludingsevenface-to-facemeetingswithamentalhealthprofessionaland24/7accesstohelpviaatoll-freenumber.

Ourmajorsitesalsoprovidepeereducationnetworks,inwhichtrainedemployeeshelptheircolleagueswithadviceandsupport.Thisensuresthatanymistrustofmanagementandevenofoccupationalhealthstaffdoesnotpreventpeoplefromfindingouttheirstatusand,wherenecessary,enteringthewellnessprogramme.

Peer education

OurSpringsmill,forexample,has12peereducatorswhoseconfidentialworktakesaholisticapproachtohealth,includingguidanceondiabetes,tuberculosisandotherconditions–itevenhelpspeoplegiveupsmoking.Itsmainfocus,however,isonencouragingpeopletotakeanHIVtest,whichistotallyvoluntary.

AttheSpringsmill,aswellasinequivalentinitiativeselsewhere,werunthe‘Aid4AIDS’programmeinwhichMondipaysforclinicaltreatmentforafflictedstaffmembers,includingtheprovisionofanti-retroviraldrugs.Thishashadsomeexcellentresultswherepeoplehavesuccessfullyreturnedtoworkfollowingtreatment.

In2007,wearepleasedtoreportthatweincreasedourtotalnumberofpeopleparticipatinginvoluntarycounsellingfrom3,313in2006to3,902people.Ofthese,2,797(72%)optedforHIVtesting.Intotal,178peopleareparticipatingintheMondiwellnessprogrammeand90areonanti-retroviraldrugs.TheHIVprevalenceinourSouthAfricanoperations,basedonknownavailablenumbers,hasbeencalculatedat2.54%.

Supporting communities

AmajorchallengeforMondiremainsinhelpingthefamiliesandcommunitiesofourworkers.Oursupportisalsoalreadyavailabletoourcontractorsinmanyofouroperations.WearealsoincreasinglyworkingwithgovernmentandNGOstosetupspecialisthealthcentresandgatewayclinicsthatprovideaccesstospecialisttreatment,aswellasinvestinginexistingresourcessuchastheKaMagwazaHospital.

Wherethesearesuccessful,weplantousethemasmodelsforwiderintroductionthroughoutourcommunities.Wewillreportonprogressinthisareainyearstocome.

HIV/AIDS programme in South Africa

2005 2006 2007

NumberofVCTuptake 3,494 3,313 3,902

NumberonWellnessProgramme 142 172 178

NumberonAnti-RetroviralTreatment 76 94 90

HIVprevalence Nodataa 4.3%b 2.5%

aHIVprevalencewasnotbeingreportedin2005.

bPrevalencewascalculatedfromresultsofsurveyscarriedoutatthesitesduringtheyear.In2007,thisnumberwascalculatedbasedonactualnumberofemployeesknowntobeHIVpositive.Note:theabovetableincludesdataforMondi’sSouthAfricanemployeesonly.

These notes refer to the table above.

Voluntary HIV/AIDS counselling

+18%increase from 2006 to 2007 in thepercentage of employees who underwent voluntary counselling for HIV/AIDS


AppendixIndependentAssuranceReporttoMondiplcandMondiLimited

Mondi plc and Mondi Limited (Mondi Group) appointed Environmental Resources Management Limited (ERM) to provide independent assurance on selected sustainable development (SD) information presented in its Sustainability Report 2007 (the Report).

Safety (employee and contractor)

Numberofwork-relatedfatalinjuries

Losttimeinjuryfrequencyrate(per200,000hoursworked)

Health

Numberofnewcasesofoccupationaldisease

HIVprevalence(%)

Numberofemployeesthatreceivedvoluntarycounsellingandtheproportionwhichwentonfortestingduring2007

Numberofemployeesonwellnessprogrammes

Totalnumberofemployeesonanti-retroviraltreatment

–

–

–

–

–

–

–

Environment

Totalenergyused(GJ)

TotalCO2emissionsfromelectricitypurchased,fossilfuelsandprocesses(tonnes)

TotalnumberoflevelIIandIIIenvironmentalincidentsreported

TotalnumberoflevelIIandIIIenvironmentalcomplaintsreceived

Totalwastetolandfill(tonnes)

TotalChemicalOxygenDemand(COD)emissions(tonnes)

TotalReducedSulphide(TRS)emissions(tonnes)

Human resources

Totalnumberofemployeesasatend2007

–

–

–

–

–

–

–

–

Scope of our workWedesignedourengagementtoallowustoconcludeastowhetherMondiGrouphasappropriatelyreportedthefollowingintheReport:

Theselected2007SDperformancedata(data)setoutbelowandtheunderlyingdatacollection,aggregationandvalidationsystemsandprocessesinplace:

–

Objectives, basis of our work and limitations

Weplannedandperformedourworktoobtainalltheinformationandexplanationsthatwebelievewerenecessarytogathersufficientevidencetoprovideabasisforourassuranceconclusionsastowhetherthereportedinformationanddatasetoutinthe‘Scopeofourwork’wasappropriatelyreported.

Weundertookassuranceworkatgroupandbusinessunitlevelsandaselectionoffoursites(Syktyvkar,RichardsBay,ŚwiecieandRaubling)forscopeA,atcorporatelevelonlyforscopeBandatcorporatelevelandasampleoftheRussianloggingoperationsforscopeC.Weselectedthesesitesonthebasisofrisk,materialitytotheselectedSDtopics,geographyandrepresentationofthedifferentbusinesses.

Ifwehadbeenaskedtoconcludeonwhetherthereportedinformationontheselectedassurancetopicsismateriallyaccurate,wewouldhaveneededtoconductmoreworkatsitelevelandgatherfurtherevidencetosupportourassuranceopinion.

Thereliabilityofthereportedinformationanddataissubjecttoinherentuncertaintiesgiventheavailablemethodsfordetermining,calculatingorestimatingtheunderlyinginformation.Itisimportanttounderstandourassuranceconclusionsinthiscontext.

Reporting criteria and assurance standards

MondiGrouphasdevelopeditsownSDreportingandinformationsystemandguidanceduring2007.However,asthissystemisstillbeingimplementedacrossMondiGroup,thedataintheReporthasbeenreportedusingtheAngloAmericanSDdatabase,reportingguidelinesanddefinitions.Thebasis,scope,methodologyandinherentlimitationsofthedataaresetoutinthe‘ScopeandAssurance’sectiononpages15and16.The‘Glossary’onpage56providesmorespecificdefinitionsforthedata.

MondiGrouphasdevelopeditsownsystemsandprocedurefortheresponsibleprocurementofwood,virginfibreandbiomassasdescribedonpage25.

WeperformedourworkinaccordancewithERM’sassurancemethodologywhichisbasedontheinternationalassuranceandauditstandards:ISAE3000,ISO19011and,whereappropriatetoourscopeofwork,AA1000AS.

Respective responsibilities and ERM’s independence

MondiGroupmanagementisresponsibleforpreparingtheReportandforthecollectionandpresentationofinformationinit.ERM’sresponsibilityistoexpressourassuranceconclusionsontheselectedscopeofworkagreedwithMondiGroup.

During2007,ERMhasworkedwithMondiGrouponotherconsultingengagements.ERMoperatesstrictconflictchecksandwehaveconfirmedourindependencetoMondiGroupfordeliveringthisassuranceengagement.

Our team and assurance activities

Amulti-disciplinaryteamofenvironmental,health&safety,forestry,socialandsustainabledevelopmentandassurancespecialistsperformedtheengagement.

Thealignmentofitsprocedurefortheresponsibleprocurementofwood,virginfibreandbiomasstotheForestStewardshipCouncil’s(FSC)StandardforCompanyEvaluationofFSCControlledWood(FSC-STD-40-005(Version2-1)EN)(October2006)(theFSCControlledWoodStandardVersion2-1);and

ThestatusofimplementationoftheMondiProcedurefortheProcurementofWood,VirginFibreandBiomass(September2006,version1).

–

–

A.

B.

C.


We conducted the following assurance activities:

ObtaininganunderstandingofandsampletestingoftheSDmanagementsystemsinplacetogenerate,aggregateandreporttheinformationanddatainlinewithMondiGroup’sSDreportingguidanceatgroup,businessunitandfoursites;

Interviewingaselectionofmanagementatgroup,businessunitandsiteleveltounderstandandsampletest,throughreviewofsupportingdocumentation,themanagementcontrolsinplacetoensurecompletedatathatisconsistentwithMondiGroup’sSDReportingguidanceandtounderstandSDperformancetrends;

Conductingananalyticalreviewoftheyearenddatareportedforconsistencywithourassurancefindings;

AssessingMondiGroup’sprocedurefortheresponsibleprocurementofwood,virginfibreandbiomassagainsttherequirementsoftheFSCControlledWoodStandard;

ConductinggrouplevelinterviewsanddocumentationreviewtounderstandtheproductionprocessoftheReportincludingassociatedmanagementdisclosuresregardingtheselectedSDinformationanddata;

Reportedourassurancefindingstomanagementastheyarosetoprovidethemwiththeopportunitytoaddressthempriortofinalisationofourwork;and

ReviewedthepresentationoftheselecteddataintheReporttoensureconsistencywithourfindings.

Our conclusionsBasedonourworkundertakenasdescribedabove,weconcludethat,inallmaterialrespectsMondiGrouphasappropriatelyreported:

Theselected2007SDperformancedatasetonpages54and55,andtheassociatedunderlyingdatacollection,aggregationandvalidationsystemsandrelateddisclosuresondataqualitysetoutonpages15and16;

ThestatusofalignmentofitsProcedurefortheResponsibleProcurementofWood,VirginFibreandBiomasstotheFSCControlledWoodStandardVersion2-1onpage25;and

ThestatusofimplementationoftheMondiProcedurefortheResponsibleProcurementofWood,VirginFibreandBiomassassetoutonpage25.

–

–

–

–

–

–

–

–

–

–

Our key observations and recommendationsBasedontheassuranceactivitiessetoutabove,andwithoutaffectingourassuranceconclusions,weprovidethefollowingkeycommentsandrecommendationsforimprovement.

HighlightsinthemanagementandreportingofSDissuessince2006:

During2007,MondiGrouphasdevelopeditsownSDmanagementandinformationsystems,thataretailoredtotheneedsofitsbusinessandthataddresstherequirementsofthekeyexternalstandardsandcommitmentsrelevanttoitsbusinessaspresentedonpages8to10;and

InrelationtoSDperformancereporting,oncefullyimplemented,thenewSDreportingandinformationsystem(MORIS)shouldbeamorerelevanttoolfortheoperationsasitcanbeusedforinternalmanagementandbenchmarkingofperformanceaswellasforMondiGrouplevelexternalreporting.

Areastoconsiderforfutureimprovements:

TodevelopenhancedMondiGroup-widetraining,guidanceandsupporttoitsoperationsduring2008toensureeffectiveimplementationofitsnewSDinformationsystems;

TofurtherrefineitsnewSDreportingandinformationsystemtoensurethatitfullymeetsMondiGroup’sfuturemanagementinformationrequirementsandexternalreportingcommitments,particularlyintheareasofreportinghumanresourcesinformationandhumanrights;and

TofurtheralignitswoodprocurementandtracingprocedurestotherequirementsoftheFSCControlledWoodStandardVersion2-1thatunderpinsitscommitmenttousewood,fibreandbiomassfromsustainablesources.

EnvironmentalResourcesManagementLimitedLondon,UK

31March2008

ERMisanindependentglobalproviderofenvironmental,socialandcorporateresponsibilityconsultingandassuranceservices.Overthepast4yearswehaveworkedwithoverhalfoftheworld’s500largestcompanies,inadditiontonumerousgovernments,internationalorganisationsandNGOs.

–

–

–

–

–

A.

B.

C.


AppendixDatatables

Data for Environmentally Material Operations for the year ended 31 December 2007 CO2from CO2from Total Raw Waterused Total Particulate Solid Waste COD AOX ProductionProduction processes& electricity energy material forprimary Reduced emissions wasteto water inwaste inwaste for2006† for2007† fossilfuelsa purchasedb usedc used activities Sulphidesd landfill flow water water

1,000 1,000 1,000 1,000 1,000 tonnes tonnes tonnes 1,000 tonnes tonnes 1,000 1,000 tonnes tonnes GJ tonnes m3 m3 tonnes tonnes

Austria 142 81 3,939 468 6,102 0 0 63 5,431 3,383 0 374 332(HausmeningandKematen)

Szolnok,Hungary 57 24 1,313 89 1,367 0 0 92 1,066 733 0 180 116

Hadera,Israel 75 73 1,428 108 1,005 0 0 581 788 862 0 133 142

Ružomberok,Slovakia 213 59 13,439 1,521 23,697 7 83 29,798 26,465 2,482 12 511 514

Syktyvkar,Russia 2,076 0 53,370 1,383 81,336 95 2,193 5,331 67,105 7,576 58 806 823

Merebank, 481 323 6,941 392 6,004 0 29 79,565 5,319 3,404 0 414 470SouthAfrica

RichardsBay, 304 203 20,708 2,271 25,377 14 497 47,618 21,717 16,862 69 686 716SouthAfrica

Frantschach,Austria 36 6 6,515 468 8,843 0 50 5,441 5,845 388 0 300 307

Štĕtí,CzechRepublic 493 16 13,478 1,603 21,426 11 89 21,597 27,831 3,205 14 471 478

Stambolijski,Bulgaria 103 51 2,277 349 14,001 0 0 21,162 18,098 1,850 0 92 92

Väja,Sweden 18 8 4,708 464 10,886 0 0 11,893 10,886 3,073 0 231 232

Cartonstrong,Italy 24 20 619 106 1,033 0 0 7,682 907 1,859 0 92 97

FrohnleitenAustria 48 8 1,113 173 1,223 0 0 0 895 2,434 0 164 161

Niedergösgen, 4 0 285 185 1,090 0 0 3,200 1,600 1,420 0 164 175Switzerland

Raubling,Germany 106 115 3,007 238 1,500 0 0 422 1,363 353 0 213 210

Świecie,Poland 352 113 14,161 1,997 22,589 26 338 9,393 20,435 3,126 0 824 842

Holcombe,UK 29 21 729 105 640 0 0 4,832 749 2,623 0 101 97

Springs,SouthAfrica 114 102 1,665 139 1,508 0 116 23,937 1,114 2,164 0 133 128

PietRetief, 133 71 1,331 137 1,052 0 346 14,500 608 4,186 0 126 125SouthAfrica

Felixton,SouthAfrica 104 66 1,401 0 2,143 0 0 6,202 2,055 43,007 0 118 111

MondiShanduka 0 486 1,826 398 5,090 0 0 73,584 3,861 4,245 0 215 222Newsprint,SouthAfrica

Totalsfor2007 4,912 1,846 154,253 12,594 237,912 153 3,741 366,893 224,138 109,235 153 – 6,390

Totalsfor2006* 4,731 2,069 151,386 12,061e 253,431 158 3,404 367,779 238,013 106,846 406 6,326 –

a CO2emissionsfromprocessesandfossilfuelsconsumedarecalculatedusingtheWBCSDGreenhouseGasProtocolcalculationtoolsanddonotincludeemissionsfrompurchasedelectricity.b CO2emissionsfrompurchasedelectricityarecalculatedusingcountry-specificfactorsfornationalgridelectricity.c Totalenergyusediscalculatedfromelectricitypurchased,energygeneratedfrombiomassandfossilfuelsconsumed,forownproductionandforthirdparties.d TheSyktyvkarmillhasonlyreporteditsH2Sandmethylmercaptans,whichaccountfor80%ofthemill’stotalTRSemissions.TheŚwieciemillhascalculateditsTRSemissionsbasedonaveragesofsamplestakenat

variousintervals.Thiscouldleadtosomeinaccuraciesinthenumbersreported.e TotalexcludesdataforStambolijskiandMondiShandukaNewsprint.* Totalsfor2006havebeenadjustedtoincludedataforStambolijskiorMondiShandukaNewsprint.Furthermore,someofthe2006datahasbeenrestatedduetofurtherimprovementsandrefinements

inthedatacollectionprocesses.† 2006and2007datahasbeenadjustedsothatforallMondisitesintheabovedatatable,dataisreportedconsistentlyaccordingtodefinitionsfortotalsaleableproduction.

Note:theabovetableincludesdataforMondi’senvironmentallymaterialoperationsasdefinedintheGlossaryoftermsonpage56.


“Althoughourrecordisgood,weregardeveryinjuryasavoidableandeveryfatalityastotallyunacceptable.Eachincidentisthoroughlyinvestigatedandpromptactiontakentoensurethatsuchaccidentsareneverrepeated.”

David Hathorn, chiefexecutive

Environmental incidents and complaints 2005 2006 2007

LevelIIIncidents 22 10 22

LevelIIIIncidents 0 0 0

LevelIIComplaints 1 0 0

LevelIIIComplaints 0 0 0

Note:theabovetableincludesdataforMondi’senvironmentallymaterialoperationsasdefinedintheGlossaryonpage56.

Safety data 2005 2006 2007

Numberofwork-relatedfatalities 5 1 3

Numberoflost-timeinjuries 193 178 125

Lost-timeinjuryfrequencyrate(LTIFR)* 0.30 0.31 0.23

Note:theabovetableincludesdataforemployeesandcontractors.*LTIFRiscalculatedasthenumberoflost-timeinjuriesdividedbythenumberofhoursworkedper

200,000manhours.Itexcludesrestrictedworkcases.

HIV/AIDS data for 2007 2005 2006 2007

Numberofemployeeswhounderwentvoluntarycounselling 3,494 3,313 3,902

NumberofemployeeswhounderwentHIVtesting Nodata* Nodata* 2,797

Numberofemployeesonwellnessprogramme 142 172 178

EmployeesonART 76 94 90

NumberofemployeesknowntobeHIVpositive Nodataa Nodataa 119

HIVprevalence Nodatab 4.3%c 2.5%

*NumberofemployeeswhounderwentHIVtestingwasnotbeingreportedduring2005and2006.aNumberofemployeesknowntobeHIVpositivewasnotbeingreportedduring2005and2006.bHIVprevalencewasnotbeingreportedin2005.cPrevalencewascalculatedfromresultsofsurveyscarriedoutatthesitesduringtheyear.In2007,

thisnumberwascalculatedbasedonactualnumberofemployeesknowntobeHIVpositive.Note:theabovetableincludesdataforMondi’sSouthAfricanemployeesonly.

Occupational health dataNumberofnewcases 2005 2006 2007

Noiseinducedhearingloss 4 8 0

Occupationalasthma/chronicbronchitis 3 1 0

Handarmvibration 0 2 0

Musculoskeletaldisease 2 0 0

Total 9 11 0

Note:theabovetableincludesdataforemployeesfromMondi’smanagedoperationsandtheindependentlymanagedoperation,MondiShandukaNewsprint.

Occupational health diseases reported in 2007

0

Voluntary HIV/AIDS counselling

+18%increase from 2006 to 2007 in thepercentage of employees who underwent voluntary counselling for HIV/AIDS

Decrease in LTIFR from 2006 to 2007

26%


Glossary of terms

Absorbable organic halogens (AOX) Expressestheamountofchlorine-boundorganicsubstancesinwastewater.

AIDS AcquiredImmuneDeficiencySyndrome.

ART Anti-retroviraldrugsforHIV/AIDS.

Assurance Asystemofcorporategovernancethatprovidesfeedbackonthelevelofintegrityofreportedinformation.

Best Available Technique (BAT) Technicallyandeconomicallyfeasibleenvironmentaltechnologythatisefficientandadvanced,generallytoreduceemissionsandtheimpactontheenvironmentasawhole.

Biomass Organicmaterialgeneratedbythegrowthofmicro-organisms,plantsandanimals.

Black person IntheSouthAfricancontextagenerictermwhichmeansAfricans,ColouredsandIndians.

Broad-Based Black Economic Empowerment Act TheSouthAfricanActthatdefinestheeconomicempowermentofallblackpeoplethroughdiversebutintegratedsocial-economicstrategies.

Chemical Oxygen Demand (COD) Theamountofoxygenrequiredtodegradetheorganiccompoundsofwastewater.Itiscommonlyusedtomeasuretheamountoforganiccompoundsinwater.

Cleaner production Thecontinuousapplicationofapreventative,life-cycleenvironmentalstrategytoincreaseefficiencyandreduceenvironmentalpollutionandrisk.

Climate and culture surveys Surveysconductedtogaugethelevelofemployeesatisfactionintheworkenvironment.

CO2 emissions from fossil fuels Carbondioxideemissionsfromfossilfuelsusedinprocessesandutilitiescalculatedbyapplyingconversionfactorstofuelusagevolumes.

CO2 emissions from electricity Calculatedquantityofcarbondioxideemittedinthegenerationofelectricity,whichissubsequentlypurchasedbytheoperation.Country-specificconversionfactorsareusedinthecalculation,unlessregionorsite-specificconversionfactorsareavailable.

CO2 emissions from processes Carbondioxideemissionsfrompointorfugitivesources.Itexcludescarbondioxidefrombiomasssources.

Community Engagement Plan Formalthree-yearsiteplansthatidentifystakeholders,thechannelstobeusedforengagement,thekeyissuesandtheimpactstobemanaged,aswellasmanagementaccountabilityandresources.

Community surveys Surveysconductedtogaugethelevelofsatisfactionofcommunitiesaffectedbyouroperations.

Corporate Social Investment (CSI) Investmentbycompaniesinareasoutsidetheircorebusinessactivities,usuallyinsocio-economicprojectsthatpromotecommunitydevelopmentandeducation.

DLC Dual-listedcompany.

Ecosystems Services Review (ESR) Atooltoproactivelyidentifyrisksandopportunitiesinacompany’sdependenceonecosystems.

Elemental Chlorine-Free (ECF) Pulp Bleachedpulpwithouttheuseofanyelementalchlorine,althoughchlorinecompoundssuchaschlorinedioxideorsodiumhypochloritemaybeusedinthebleachingprocess.

Environmentally material (or significant) operation Listofoperationsthatexceedthe1%thresholdondischarges,wasteandenergyconsumption.Significantoperationsincludeallprimaryproductionssitesandselectedconversionsites.

Fatal injury Thedeathofanemployeeorcontractorresultingfromawork-relatedinjury.

Forest Stewardship Council (FSC) Councildevotedtomanagingforestsinasustainablemanner,endorsedbyinternationalenvironmentalorganisationsandofferinganinternationallyacceptedsustainableforestrycertificationscheme.

FSC Standard for Company Evaluation of FSC Controlled Wood (FSC-STD-40-005 (version 2-1) EN) Astandardthatspecifiesbasicrequirementsforforestrymanagementcompaniestodemonstratetoacompanyorthirdpartycertificationbodythatallwoodsourcedorsuppliediscontrolled.

High Conservation Value (HCV) forests Forestsofoutstandingandcriticalimportanceduetotheirenvironmental,socio-economic,biodiversityorlandscapevalues.

Historically disadvantaged individual IntheSouthAfricancontext,apersonwhoduetotheapartheidpolicythatwasinplace,hadnovotingrightsinthenationalelectionspriortotheintroductionoftheConstitutionoftheRepublicofSouthAfrica.Italsoreferstowomenandpeoplewithdisabilities.

HIV HumanImmunodeficiencyVirus.

HIV prevalence TheproportionofourownemployeesthatareknowntobeinfectedwithHIV.

ISO 14001 InternationalstandardcreatedbytheInternationalStandardsOrganization(ISO)forformalandcertifiedenvironmentalmanagementsystems.

ISO 9001 InternationalstandardcreatedbytheInternationalStandardsOrganization(ISO)forformalandcertifiedqualitymanagementsystems.

Level II and level III environmental incidents and complaints Environmentalincidentsandcomplaintsareclassifiedaseither:LevelII:moderateimpact,medium-termeffect;LevelIII:significantimpact,extensiveorlong-termeffect.

Lost-time injury (LTI) Anyoccupationalinjurywhichrendersthepersonunabletoperformhis/herregulardutiesforonefullshiftormorefollowingthedayonwhichtheinjurywasincurred,whetherascheduledworkdayornot.

Lost-time injury frequency rate (LTIFR) Thenumberoflost-timeinjuriesper200,000manhoursworked.

Managed operations ThoseoperationsoverwhichMondihasmanagementcontrol.ThisincludesalloperationsinwhichMondiownsmorethan50%.

Meridian Institute Anorganisationthatbringstogethergroupswithdiverseperspectivestosolveproblemsofmutualinterest,particularlythosemostcontentiouspublicpolicyissues.

MORIS Mondireportingandinformationsystemforsustainabilitydata.

Non-governmental Organisation (NGO) Organisationthatundertakesactivitiesonalocal,nationalorinternationalleveloutsideofinstitutionalizedpoliticalstructures.

Number of employees Thetotalnumberofpermanentemployeesasattheendofthereportingperiod.

Occupational health disease Adiseasethatresultsfromexposuretoawork-relatedhazardandisclassifiedanddiagnosedassuchinaccordancewiththeappropriatelegislation.

OHSAS 18001 Aninternationaloccupationalhealthandsafetymanagementsystemspecification.

Self-produced energy Theenergythatweproducefromfossilfuelsorbiomassatourownproductionfacilities.

Small and medium sized enterprise (SME) Companieswhoseheadcount,turnover,andbalancesheetareunderdefinedlimits.

Socio-economic Assessment Toolbox (SEAT) MethodologydevelopedbyAngloAmericanplctoestablishthesocialandeconomicimpactsonoursurroundingcommunities.

Silver Taiga KomiRegionalNon-ProfitFoundationfoundedonthebasisoftheWorldwideFundforNature(WWF)KomiProjectOfficetoimplementKomiModelForestProject(“BorealForestConservationandManagement:ModelForest“Priluzje”,KomiRepublic,Russia”).

Stakeholders Allthosewhohaveadirectstakeinorareimpactedonbyourbusiness.Thisincludesouremployees,contractors,shareholders,customers,governmentsandthecommunitiesinwhichweoperate.

Sustainable Development Management System (SDMS) Managementprocessesanddocumentationthatcollectivelyprovideasystematicframeworkforensuringthattasksareperformedcorrectly,consistentlyandeffectivelyacrosstheGrouptoachieveaspecifiedoutcomeandtodrivecontinualimprovementinsustainabledevelopmentperformance.

Sustainable forestry Thepracticeofforestmanagementtoyielddesirableforestproducts,optimisethebenefitstothecommunityfromallusesofforestsandmaintaintheecologicalhealthandbiodiversityoftheforestforthefuture.

Tall oil Oilproducedasaby-productofthepulpingprocess.

Tonnes Ametrictonnewhichisameasurementofmassequalto1,000kilograms.

Total energy used Calculatedfromelectricitypurchased,biomassandfossilfuelsused.

Total Reduced Sulphides (TRS) Reducedsulphurcompounds.TRSisagaseousmixtureofcompoundsconsistingmainlyofhydrogensulphideH2Sinthepaperandpackagingindustry.TRScompoundscanproduceoffensiveodours.

Voluntary Counselling and Testing (VCT) AprogrammeinwhichemployeesundergovoluntarycounsellingandtestingforHIV/AIDS.

Waste to landfill Hazardousandnon-hazardouswastethatisproducedbytheoperationandsenttoalegallandfill.

Water use for primary activities Totalnewormake-upwaterenteringtheoperationandusedfortheoperation’sprimaryactivities.Primaryactivitiesarethoseinwhichtheoperationengagestoproduceitsproductsandexcludesnon-contactcoolingwater.

WBCSD WorldBusinessCouncilforSustainableDevelopment.

Wellness programme Generalwellnessprogrammeofferedtoemployeeswithchronicillnessessuchasdiabetes,stress-relateddiseasesandHIV/AIDS.

Wood Information Platform (WIP) Mondi’sinformationsystemforreportingandmonitoringallwood,fibreandbiomasspurchases.

WWF Thelargestindependentconservationorganisationwiththefundamentalaimofsupportingtheworld’sbiologicaldiversity.

World Resources Institute (WRI) Anon-profitorganisationsupportingresearch,conferences,education,training,andpolicyinitiativesforenvironmentalstewardshipandsustainabledevelopment.


GRI G3 Reporting Guidelines Index

GRIRef Description Levelofreporting Page

1.1 Statementfromthemostseniordecision-makeroftheorganisation • 4,5

1.2 Descriptionofkeyimpacts,risksandopportunities • Reported throughout thereport

2.1 Nameoftheorganisation • Frontcover,2

2.2 Primarybrands,productsand/orservices • 3

2.3 Operationalstructureoftheorganisation • 3

2.4 Locationoforganisation’sheadquarters • 3

2.5 Numberofcountrieswheretheorganisationoperates,andnamesofcountrieswitheithermajoroperationsorthatare specificallyrelevanttothesustainabilityissuescoveredinthereport • 2

2.6 Natureofownershipandlegalform • 3

2.7 Marketsserved • 3,17

2.8 Scaleofreportingorganisation • 2,17,18

2.9 Significantchangesduringthereportingperiodregardingsize,structureorownership • 17

2.10 Awardsreceivedinthereportingperiod • 38

3.1 Reportingperiod • 15

3.2 Dateofmostrecentpreviousreport(ifany) • 15

3.3 Reportingcycle(annual,biennial,etc.) • 15

3.4 Contactpointforquestionsregardingthereportoritscontents • Insidebackcover

3.5 Processfordefiningreportcontent • 15

3.6 Boundaryofthereport • 15

3.7 Stateanyspecificlimitationsonthescopeorboundaryofthereport • 15,16

3.8 Basisforreportingonjointventures,subsidiaries,leasedfacilities,outsourcedoperations,andotherentitiesthatcan significantlyaffectcomparabilityfromperiodtoperiodand/orbetweenorganisations • 15

3.9 Datameasurementtechniquesandthebasesofcalculations • 15,16

3.10 Explanationoftheeffectofanyre-statementsofinformationprovidedinearlierreports • 15,16

3.11 Significantchangesfrompreviousreportingperiodsinthescope,boundary,ormeasurementmethodsappliedinthereport • 15,16

3.13 Policyandcurrentpracticewithregardtoseekingexternalassuranceforthereport • 16

4.1 Governancestructureoftheorganisation • 12

4.12 Externallydevelopedeconomic,environmental,andsocialcharters,principles,orotherinitiativestowhichtheorganisation subscribesorendorses • 13,14,15,44

4.13 Membershipsinassociations • 13,14

4.14 Listofstakeholdergroupsengagedbytheorganisation • 13,14,15,43

4.15 Basisforidentificationandselectionofstakeholderswithwhomtoengage • 13,15

4.16 Approachestostakeholderengagement • 13,14,15,43

4.17 Keytopicsandconcernsthathavebeenraisedthroughstakeholderengagement • Reported throughout thereport

4.2 IndicatewhethertheChairofthehighestgovernancebodyisalsoanexecutiveofficer • 12

4.3 Fororganisationsthathaveaunitaryboardstructure,statethenumberofmembersofthehighestgovernancebody thatareindependentand/ornon-executivemembers.Statehowtheorganisationdefines‘independent’and‘non-executive’ • 12

4.4 Mechanismsforshareholdersandemployeestoproviderecommendationsordirectiontothehighestgovernancebody • 59

4.8 Internallydevelopedstatementsofmissionorvalues,codesofconduct,andprinciplesrelevanttoeconomic, • Policystatements environmental,andsocialperformanceandthestatusoftheirimplementation reported throughout thereport

4.9 Proceduresofthehighestgovernancebodyforoverseeingtheorganisation’sidentificationandmanagementofeconomic, environmental,andsocialperformance • 12,13

EC1 Economicvaluegeneratedanddistributed,includingrevenues,operatingcosts,employeecompensation,donations andothercommunityinvestments,retainedearnings,andpaymentstocapitalprovidersandgovernments(core) • 17,18,19

EC6 Policy,practices,andproportionofspendingonlocally-basedsuppliersatsignificantlocationsofoperation(core) • 45,48

•Fullyreported•PartiallyreportedN/ANotapplicable

ThetablebelowillustratesthoseGlobalReportingInitiative(GRI)GR3guidelineparametersagainstwhichMondihasreported.Thefullsetcanbefoundatwww.mondigroup.com


GRIRef Description Levelofreporting Page

GRI G3 Reporting Guidelines Index continued

EC7 Developmentandimpactofinfrastructureinvestmentsandservicesprovidedprimarilyforpublicbenefit throughcommercial,in-kindorprobonoengagement(core) • 43,44,45,49,51

EC8 Developmentandimpactofinfrastructureinvestmentsandservicesprovidedprimarilyforpublicbenefit throughcommercial,in-kind,orprobonoengagement(core) • 42,43,44,48,50

EC9 Understandinganddescribingsignificantindirecteconomicimpacts,includingtheextentofimpacts(additional) • 19,43,44,45,49,51

EN1 Materialsusedbyweightorvolume(core) • 54

EN2 Percentageofmaterialsusedthatarerecycledasinputmaterials(core) • 35

EN3 Directenergyconsumptionbyprimaryenergysource(core) • 29,30,54

EN4 Indirectenergyconsumptionbyprimarysource(core) • 29,30,54

EN5 Energysavedduetoconservationandefficiencyimprovements(additional) • 29

EN6 Initiativetoprovideenergy-efficientorrenewableenergybasedproductsandservices,andreductionsinenergy requirementsasaresultoftheseinitiatives(additional) • 29,30

EN7 Initiativestoreduceindirectenergyconsumptionandreductionsachieved(additional) • 29,30

EN8 Totalwaterwithdrawalbysource(core) • 30,54

EN9 Watersourcessignificantlyaffectedbywithdrawalofwater(additional) • 24

EN11 Locationandsizeoflandowned,leased,managedin,oradjacenttoprotectedareasandareasofhighbiodiversity valueoutsideprotectedareas(core) • 21,23

EN12 Descriptionofsignificantimpactsofactivities,products,andservicesonbiodiversityinprotectedareas andareasofhighbiodiversityvalueoutsideprotectedareas(core) • 23

EN13 Habitatsprotectedorrestored(additional) • 22,23,24

EN14 Strategies,currentactions,andfutureplansformanagingimpactsonbiodiversity(additional) • 23,24,25

EN16 Totaldirectandindirectgreenhousegasemissionsbyweight(core) • 29,54

EN17 Otherrelevantindirectgreenhousegasemissionsbyweight(core) N/A

EN18 Initiativestoreducegreenhousegasemissionsandreductionsachieved(additional) • 29,30

EN19 Emissionsofozone-depletingsubstancesbyweight(core) N/A

EN20 NOx,SOxandothersignificantairemissionsbytypeandweight(core) • 31,54

EN21 Totalwaterdischargebyqualityanddestination(core) • 31,54

EN22 Totalweightofwastebytypeanddisposalmethod(core) • 32,54

EN23 Totalnumberandvolumeofsignificantspills(core) • 28

EN25 Identity,size,protectedstatus,andbiodiversityvalueofwaterbodiesandrelatedhabitatssignificantlyaffected bythereportingorganisation’sdischargesofwaterandrunoff(additional) • 24

EN26 Initiativestomitigateenvironmentalimpactsofproductsandservices,andextentofimpactmitigation(core) • 34,35

EN27 Percentageofproductssoldandtheirpackagingmaterialsthatarereclaimedbycategory(core) • 35

EN28 Monetaryvalueofsignificantfinesandtotalnumberofnon-monetarysanctionsfornon-compliancewith environmentallawsandregulations(core) • 28

EN30 Totalenvironmentalprotectionexpendituresandinvestmentsbytype(additional) • 24,28,30

LA1 Totalworkforcebyemploymenttype,employmentcontract,andregion(core) • 2

LA7 Ratesofinjury,occupationaldiseases,lostdays,andabsenteeism,andnumberofwork-relatedfatalitiesbyregion(core) • 37,38

LA8 Education,training,counselling,prevention,andrisk-controlprogrammesinplacetoassistworkforcemembers, theirfamilies,orcommunitymembersregardingseriousdiseases(core) • 38,43,44,51

LA11 Programmesforskillsmanagementandlifelonglearningthatsupportthecontinuedemployabilityofemployeesandassistingtheminmanagingcareerendings(additional) • 40

HR2 Percentageofsignificantsuppliersandcontractorsthathaveundergonescreeningonhumanrightsandactionstaken(core) • 44

HR9 Totalnumberofincidentsofviolationsinvolvingrightsofindigenouspeopleandactionstaken • 50

SO1 Nature,scopeandeffectivenessofanyprogrammesandpracticesthatassessandmanagetheimpactsofoperationsoncommunities,includingentering,operatingandexiting(core) • 43

SO2 Percentageandtotalnumberofbusinessunitsanalysedforrisksrelatedtocorruption(core) • 44,45

SO4 Actionstakeninresponsetoincidentsofcorruption(core) • 44,45

SO7 Totalnumberoflegalactionsforanti-competitivebehaviour,anti-trustandmonopolypracticesandtheiroutcomes(additional) • 45

PR1 Life-cyclestagesinwhichhealthandsafetyimpactsofproductsandservicesareassessedforimprovement, andpercentageofsignificantproductsandservicescategoriessubjecttosuchprocedures(core) • 34,35

PR3 Typeofproductandserviceinformationrequiredbyprocedures,andpercentageofsignificantproductsandservices subjecttosuchinformationrequirements(core) • 34,35

PR6 Programmesforadherencetolaws,standards,andvoluntarycodesrelatedtomarketingcommunications, includingadvertising,promotion,andsponsorship(core) • 34,35

•Fullyreported•PartiallyreportedN/ANotapplicable

Feedback

We are interested in your feedbackItisourintentiontoreportinanopen,honestandeasy-to-readmanner.Wewouldliketohearyourviewsandcommentsonourreport.Youropinionswillbevaluableinassistingusincompilingfuturesustainabilityreports.

KindlycompletethefollowingquestionnaireandpostittoMondi,SustainableDevelopmentDepartment,Building1,1stFloor,AviatorPark,StationRoad,Addlestone,SurreyKT152PG,UnitedKingdom.

Thequestionnairemayalsobecompletedonlineatwww.mondigroup.com.

Which of the following applies to you:

Mondiemployee

Customer

Localcommunity

Media

Shareholder

Businesspartner

Research/academia

Financialinstitute

NGO

Government

Other

For what purpose do you use this report?

Please indicate which areas of the report are of particular interest to you.

(you may tick more than one option)

Introduction

Groupstructure,marketsandproducts

Chiefexecutive’sstatement

Sustainabledevelopmentcommitteechairman’sstatement

Oursustainabilityjourney

ProgressagainstSustainableDevelopmentcommitments

Economiccontribution

Forestry

Climatechangeandenergy

Environmentalperformance

Productstewardship

Occupationalhealthandsafety

Globalemploymentstandards

Ethicalbusinessconduct

CommunityengagementandCSI

SouthAfrican-specificissues

Other

Continued overleaf

www.mondigroup.com

How would you rate the report in the following areas:

Overview

verypoor 1 2 3 4 5 verygood

Governance


Economic contribution


Forestry




Product stewardship


Social responsibility




How would you rate our performance and coverage of important issues in the following areas:

Governance


Economic performance


Forestry


Environment


Product stewardship


Health and safety


Global employment standards


Community engagement and CSI






Pleaseindicatehowyouwouldimprovethereportorindicateifthereisanythingspecificthatyouwouldliketoseeinafuturereport.

Thank you for taking the time to complete this form.

Feedback continued

For further information, please contact:

UweFölsterGroupHeadofSustainableDevelopment

Kelsenstrasse7A-1032ViennaAustriaTelephone:+43(0)1790134040Facsimile:+43(0)179013976Email:[email protected]

TanyaPattersonSustainableDevelopmentReportingManager

Building1,1stFloor,AviatorPark,Addlestone,SurreyKT152PGTel:+44(0)1932826364Fax:+44(0)1932826351Email:[email protected]

mondi grouppromotions.mondigroup.com/portaldata/1/resources/...and chemical industries; and...

Documents