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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Sappi and the SDGs

Tracy Wessels
Sappi Limited Group Head Investor Relations and Sustainability

“While we strongly subscribe to the principle of profit with purpose, we have a responsibility to our shareholders and our overarching purpose is to generate strong financial returns.”

Q&A with Tracy Wessels, Sappi Limited Group Head Investor Relations and Sustainability

Dr Tracy Wessels headed up the Centre of Excellence for dissolving pulp at the Sappi Saiccor Mill for several years and is now Sappi Group Head Investor Relations and Sustainability.

There are few people who understand the full potential of what trees have to offer better than Tracy, who has dedicated the majority of the last 20 years of her career at Sappi in progressively more senior roles in research and development (R&D).

Q1

What has made the biggest impression on you in your new role?

While my previous role focused on the entire value chain, from the beginning of the DP production process all the way through to the end user, my new role is more multi-faceted. That is because I have greater oversight over more functions within the various value streams across the business.

Within each of these value streams and functions, what has struck me is the manner in which sustainability is entrenched throughout the everyday aspects of our business. I’ve also realised the extent to which our commitment to the Sustainable Development Goals (SDGs) is taking traction. SDG17: Partnership for the Goals is evident at board level, with the Chairman of our SETS Committee having been appointed as the deputy chairperson of the Presidential Climate Commission, chaired by South African President Cyril Ramaphosa. It extends to SDG15: Life on Land, whereby we are steadily increasing the amount of certified fibre supplied to our mills (FY2021: 76%, FY2020: 73%) and in South Africa, in alignment with SDG1: No Poverty, with the work our ESD department is doing (described in further detail here of this report.)

Of course, there is much more evidence throughout Sappi, at every level.

Q2

How were Sappi’s priority SDGs selected?

We prioritised certain SDGs not because they were the easiest to align with, nor because they made for the best optics. We debated them, weighed up the business case for each SDG and selected those that had the most relevance for our business before establishing an agenda and targets for each priority SDG. We also looked at interdependencies. While these significant interdependencies between all the SDGs, some are more profound than others – for example SDG7: Renewable and Clean Energy and SDG13: Climate Action are very strongly linked.

Q3

So you are saying that there is a commercial case for implementing the UN SDGs, that doing so is not only about the optics?

There is definitely a commercial case! While we strongly subscribe to the principle of profit with purpose, we have a responsibility to our shareholders and our overarching purpose is to generate strong financial returns.

To give the most obvious example: Our Thrive25 strategy states that we exist to build a thriving world by unlocking the power of renewable resources: Clearly, we cannot achieve this if there are no renewable resources – primarily trees, in our case. We rely on healthy ecosystems to produce renewable woodfibre which is beneficiated into a range of products. That is why aligning with SDG15: Life on Land makes sound business sense and why we work so hard to enhance sound forestry management practices – both on our own landholdings and on those from which we source woodfibre.

The key is balancing short-term financial returns with longer-term viability. Let’s say we had the opportunity to buy cheap, non-renewable energy. We could decide to ignore the environmental consequences and just focus on the bottom line. As energy costs currently represent 8.2% of cost of sales, the financial impact could be very positive in the short term.

In the longer term, this move could have far-reaching repercussions, particularly as we are transparent about our energy and emissions profiles. Customers generally approach us for information about the fibre sourcing and production processes behind our brands, including carbon footprint. In response to these requests, in all regions we publish Paper Profiles and/or information sheets for our papers. We also respond to many questionnaires from our customers that collect data on our carbon reduction plans and performance. In SNA, we have developed our own GHG emissions calculator that quantifies the amount of emissions associated with a customer order and how those emissions compare against the industry average.

In the hypothetical situation where we would choose to focus only on the bottom line, not only would we experience loss of market share and suffer reputational damage, we would also incur the costs of trying to attract new customers, with research indicating that it costs five time as much to attract new customers as it does to retain existing ones(1).

(1) https://www.forbes.com/sites/jiawertz/2018/09/12/dont-spend-5-times-more-attracting-new-customers-nurture-the-existing-ones/?sh=7aba9045a8e0.

Q4

Is implementing the SDGs only possible with large capital outlays?

The SDGs are transformative and disruptive, and these processes often involve significant financial investment. In Sappi’s case, we have a particular challenge in that our infrastructure is highly capital intensive and it is not possible to transform overnight.

We overcome this by being smart – in line with one of our core values. We are being smart in terms of our Saiccor Mill expansion project, which will not only add shareholder value by increasing DP capacity by 110,000 tpa, but also incorporates the installation of a new recovery boiler and converting the calcium line to magnesium. This will lead to a significant reduction in the fossil fuel energy requirements and increase our renewable energy usage in line with our commitment to SDG7: Affordable and Clean Energy and SDG13: Climate Action.

We are being smart by investing in best practice safety programmes in alignment with SDG8: Decent Work and Economic Growth: Not only do we have a duty of care to all those working at, or visiting, our operations, but safety also impacts profitability and reputation and can play a role in recruitment and retention.

We are also being smart in our shared-value approach to business, which means that communities close to our operations benefit from our extensive socio-economic development programmes.

Q5

Are you satisfied with Sappi’s progress towards your SDG-related Thrive25 targets on a regional and group level?

Progress towards our targets while uneven, has generally been positive. Targets are tracked and presented at our quarterly Group Sustainable Development Council meetings, so we have a good understanding throughout the year of how we are doing. I am confident that we will achieve these stretch targets within the time frame.

Even more important are the actions that have been put in place to achieve these targets and that they are helping to embed the SDGs into our DNA. These actions provide real, tangible evidence of our commitment to the SDGs and help us to identify problems and opportunities for future growth.

They are also an important framework in achieving our purpose of contributing to a thriving Sappi and a thriving world.