AGI
    LITYEXPAND

Group overview

Hummingbirds are the trapeze artists of the avian world. They can fly forwards, backwards, even upside down and are also the only vertebrae capable of hovering in place. In addition to being agile, hummingbirds are extraordinarily fast. They have been observed at speeds of nearly 48 kilometres per hour (km/h) in direct flight and over 72 km/h during courtship dives.

Adaptability is another hummingbird characteristic. These tiny birds have fewer feathers than other birds, because they need to have an efficient body that is as lightweight as possible in order for the flight aerobics they perform. As the insulation that they get from their feathers is insufficient, at night they go into torpor, a hibernation-like state that allows them to conserve energy by slowing down their metabolism, heartbeat and respiration rate. Furthermore, hummingbirds remember migration routes and every flower they’ve ever visited. They can also figure out how long to wait between visits so the flowers have time to generate more nectar.

Inherent in our approach is being agile to stay ahead of market changes, preferences, customer needs and expectations.

ON
    WARDSEXPAND

Creating value by responding strategically

When presented with a dandelion, few people can resist the urge to hold the flower and blow at it to see how far the seeds will travel. It’s the same when presented with a beautiful coffee table book or an impactful piece of print – there is an almost irresistible urge to pick it up, examine it and touch it. Studies have shown that even the simple act of touching objects, like premium packages, brochures and direct mail, can subconsciously increase the perceived value of a brand and its products in the eyes of customers.

Touch can make a stronger impact than sight or sound alone. That’s because touch has the power to shift the brain into a deeper level of engagement, one more conducive to building lasting knowledge. In fact, a number of studies have found that communication through physical media, particularly paper, is more likely to lead to knowledge than communication via digital media.

The haptics of paper and board, together with our need to touch and feel, have created high-growth, cash-generative niche opportunities for Sappi.

We continue to move onwards in terms of paper and paper packaging: Our paperboard packaging product lines are some of the most renowned and valued brands with high-finish premium solutions for cosmetics and perfume, health and beauty care, consumer electronics, confectionery, luxury drinks, food packaging and more. Our packaging brands constitute a great portion of the food packing and labels on shop shelves today. And our graphic papers are used to grab the attention of consumers all over the world.

BLO
    SSOMEXPAND

Our performance review

In mythology, the beautiful, delicate dragonfly symbolises change, transformation and adaptability. This change is said to be about understanding the deeper meaning of life, with the dragonfly’s scurrying flight across water representing an act of going beyond what’s on the surface to look into the deeper implications of life.

Looking beyond – and deeper – is reflected in our Thrive25 sustainability strategy which incorporates our belief that to continue thriving as a global business, we must create long-term value for all stakeholders by supporting a low-carbon circular economy through relevant products from sustainable woodfibre.

Our strategy also recognises that we must understand the forces that heavily impact our lives and work.

Dragonflies have huge compound eyes with thousands of lenses and photoreceptors sensitive to different wavelengths of light, each bringing in information about the insect's surroundings. In other words, they have near-360- degree vision. Which is why they’re able to go after their prey – butterflies, moths, bees and flies – with such accuracy.

At Sappi, we understand that by widening our scope to the broader ecosystem and a wide range of stakeholders, we can identify uncertainty and opportunity beyond our periphery of vision. We leverage insights into our operating context and patterns from our data, stay ahead of nascent technologies and draw on the acumen of our people, to embrace change and create innovative solutions that are relevant to all our stakeholders.

VELO
    CITYEXPAND

Governance and compensation

The cheetah’s light, streamlined body makes it well-suited to short, explosive bursts of speed, rapid acceleration and executing extreme changes in direction while moving at high speed. Contrary to the common belief that cheetahs – known to be the fastest land animal – hunt by simply chasing their prey at high speeds, they are in fact extremely strategic. They don’t randomly sprint towards anything, but wait until the timing is right, varying their speed during the chase. Speed and smartness are attributes that resonate with us at Sappi, given that ‘making smart decisions which we execute with speed’ are among our core values.

Under our Thrive25 strategy, we foster a safety-first culture, using collaboration and the power of partnerships to respond to changes in our environment, moving Sappi forward and deliver value to our customers.

AMP
    LIFYEXPAND

Governance and compensation

In a continuous flow of energy and life, water always finds the lowest level in an incredibly efficient manner. It penetrates any crevice or path that will facilitate its downward flow, steadily meandering and descending in search of lower planes.

In a similar fashion, our focus is on amplifying value creation for all our stakeholders. The landscape around us is changing rapidly. Stakeholders’ needs and expectations have shifted, in particular as regards the environment and social equity.

We are responding to natural resource constraints by seeking responsible alternatives to non-renewables and solutions that are truly sustainable from seed to final product. We strictly monitor and control our use of energy, water and other raw materials and are investing in reducing our reliance on fossil fuels.

We work to amplify value creation through innovation and R&D. Innovation is the way we operate that provides competitive advantages and ensures we grow, flourish and progress. R&D is focused on realising our ambitious but achievable strategy of extracting more value from each tree. Our strategy is supported by technology centres in each region which cover every section of the value chain. We deliver value by optimising our production processes, maximising existing capacity and work to constantly improve our best overall machine efficiency levels.

In the communities where we operate, we prioritise projects that support education, entrepreneurship and environment, as well as health and welfare, while working to break the cycle of poverty through stable, safe employment.

By amplifying value creation in this way, we accelerate and advance meaningful change.

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Our operating context

Our external operating environment presents risks and opportunities, impacts our ability to generate value and informs our response to our stakeholders as well as our approach to material matters.

The ongoing Covid-19 pandemic

Context

The pandemic and associated lockdowns continued through most of FY2021 across the world.

Our response

With safety as our core value and top priority, we continued to emphasise the importance of safety protocols. As at year end, just over 1,600 members of our workforce of 12,492 people had been infected, with numbers peaking in December 2020 and January 2021. We embarked on an extensive awareness campaign to encourage people to get vaccinated. In South Africa, where the roll out was slow, we introduced on-site vaccination stations from the beginning of August for employees, their families and for contractors.

In each region where we operate, we responded to the needs of society by donating funds and supplies.

Social unrest and need

Context

Halfway through 2021, South Africa was engulfed by the worst unrest and mass violence since the end of apartheid, triggered by ex-President Jacob Zuma’s imprisonment for contempt of court. Described as an insurrection targeting the country’s economy and infrastructure, the root causes go far deeper to ongoing lack of service delivery, the economic and social fall outs of Covid-19, endemic corruption and the fact that almost half of South Africa’s adult population of 35 million live below the breadline. While there was no material damage to any of our plants as a result of the civil unrest, work at our three mills in KwaZulu-Natal and associated logistical supply chains was halted at the height of the unrest. We incurred a permanent loss of sales volumes of about 28,000 tons of dissolving pulp (DP) and 7,000 tons of paper.

Our response

While we deplore the violence and regret the loss of sales volumes, working as closely with the communities surrounding our operations as we do, we understand and empathise with the underlying root causes. We cannot fulfil the functions of government; nevertheless, we have intensified our focus on working with communities to help resolve their challenges.

Our work to uplift the communities around us began as far back as 1983 when we launched our flagship enterprise and supplier development (ESD) programme, Sappi Khulisa (previously known as Project Grow). The total area currently managed under this programme, which encompasses individual and community tree farming, is 34,755 hectares. In 2021, under this programme, 225,509 tons of timber (2020: 284,038 tons) worth some ZAR207 million (2020: ZAR232 million) was delivered to our operations. Since 1995, a total volume of 4,731,488 tons to the value of ZAR2.9 billion has been purchased from small growers under this programme.

Our ESD strategy, first initiated in 2018, has gathered sustained momentum. With the ESD strategy now embedded in the business and commitment and support at all levels of the organisation, we have seen positive improvement in stakeholder and community relations. Sappi SA has successfully integrated a total of 145 small and medium enterprises (SMEs) into the value chain. These businesses account for procurement spend of over US$9.4 million, exceeding the set annual target by US$2.45 million. In addition to the ESD spend figures, 587 jobs were sustained by the active local SMEs.

In addition, our Community Management Committees at each mill site continue to provide support to communities. (See here for further details.)

In 2021, we partnered with the National Business Institute (NBI) to develop a small business development hub within the Ilembe District in KwaZulu-Natal, where both Tugela and Stanger Mills operate. Sappi’s community members will benefit from this partnership.

The Sappi Skills Centres at our Saiccor and Ngodwana Mills train both Sappi employees and unemployed youth both for employment and for starting new businesses. The centres produced fabric face masks for internal use during lockdown and have expanded to making workwear and other items.

During the year, we also concluded two community engagement agreements at the above mills which commit both ourselves and our communities to work together in driving shared value for mutual benefit.

Intensified focus on climate change and social issues

Context

The spotlight on climate change has been intensifying, given the extreme weather events that took place in FY2021: floods in Germany and China; fires in Canada, California and Greece; rain, rather than snow falling in Greenland and a ‘heat dome’ along the Pacific northwest coast in the USA and Canada, among others.

The Deloitte Global 2021 Millennial and Gen Z survey* highlights the importance of social change and accountability for these sectors of the population. As consumers, these sectors of the population often stop or initiate relationships based on how companies treat the environment, protect personal data and position themselves on social and political issues.

Our response

Consumers are already aware of the need for less carbon intensive products. However, as they are exposed to the extreme weather events just described, we expect this focus to gather momentum, accelerated by the increased purchasing power of Millennials and Gen Z-ers for whom environmental principles are just as important as social ones. We have an advantage in that our manufacturing process begins with sustainably harvested, renewable forest resources and we operate according to circular economy principles. We can offer a broad range of products that meet the needs of eco-conscious consumers.

Our ability to offer more environmentally friendly papers with barrier coatings was enhanced by our 2017 acquisition of Rockwell Solutions.

In terms of social considerations, we facilitate social and economic wellbeing by using labour drawn from local communities, and the services of small and medium enterprises situated in the areas around plantations and production facilities.

* www.deloitte.com/global/en/pages/about-deloitte/articles/millennialservey.html.

Banning single use plastics

Context

Just before our year end, the first-ever global Ministerial Conference on marine litter and plastic pollution took place, with nations across the world moving to ban single use plastics.

Our response

The ban on single use plastics represents an opportunity for Sappi in that our packaging products are based on renewable, rather than petroleum-based, resources. The move to ban single use plastics is in line with the principles of the circular economy to which we are committed and with our Thrive25 commitment to creating responsibly sourced and sustainable solutions as viable alternatives to fossil-based products.

We expect to see the global forces identified under our Thrive25 strategy to continue until at least 2025. Set out on these pages are specific issues that arose in 2021.