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Group overview

Delivering sustained value

Traction

Traction refers to the friction between a moving object and the surface it moves on. Just as traction allows a vehicle to move forward without slipping, it enables our business to progress steadily.

With the introduction of our Thrive25 business strategy in 2020, we moved through phases of Adapting, Advancing, and Reshaping. Now, having gained traction, our momentum is driving significant progress.

We also observe this traction in social settings, such as the growing consumer preference for renewable and recyclable products. In response, we continue to expand our range of renewable solutions, enabling society to meet sustainability goals and support the global transition to a low-carbon, circular economy.

We are also gaining traction in our efforts to extract value from the whole tree. Traditionally, papermaking used only half of the raw wood material. Sappi is continually developing new processes and applying innovative technology to extract more value from each tree. Our paper packaging reduces plastic use, and we utilise every part of the trees harvested – whether for our biomaterials, dissolving wood pulp, speciality papers, or bio-energy – finding eco-friendly alternatives for a better future.

Responding to our context

Pace

‘Keeping pace’ in nature, refers to the ability of organisms to adapt and evolve in response to environmental changes. For species to survive, they must continuously adjust to shifting conditions, such as climate change, availability of resources, and interactions with other species. It’s a dynamic process that requires resilience, flexibility, and the capacity to innovate.

At Sappi, we see this as our competitive agility – our ability not to be outpaced by market trends, technological advancements and consumer demands. Momentum in business involves maintaining a steady flow of progress and growth, which we achieve through continuous improvement, innovation, being close to our customers and strategic planning.

It is this ability that allows us to progress steadily and consistently while always keeping pace and staying abreast of market changes through continuous innovation and adaptation. By understanding and responding to the latest environmental regulations and market innovations, we comply to and integrate global sustainability standards, ensuring that we remain effective and relevant in our commitment to the planet and our efforts to advance a circular economy.

Diving deeper into our
performance and prospects

Headway

Much like ships of old navigated through uncharted waters to discover new lands, ours is often a journey of discovery as we find new ways to develop technologies that address critical challenges, driving progress in fields like renewable energy and biotechnology.

We are making headway in reducing our carbon footprint through renewable energy projects and we have made significant strides in our sustainability efforts. Our milestone Power Purchase Agreement with EnPower will appreciably reduce our Scope 1 and Scope 2 emissions – not only supporting our own decarbonisation objectives – but also contributing to the transformation of the South African electricity supply industry by providing cleaner and more affordable power.

Sappi is also making headway as we enter exciting new markets with our innovative technology for producing furfural using the hemicellulose co-product from our Verve cellulose operations. By utilising this co-product, we maximise the portion of the tree used to create renewable, value-added products. This approach ensures that our furfural production is supported by the same sustainability and forest stewardship credentials as our Verve production, much like navigating new waters with a trusted and reliable vessel.

Governance and compensation

Rise

In a world where companies pursue accelerated growth through irresponsible and short-term actions, activities like deforestation and pollution, place a collective toll on natural resources. As a company reliant on sustainable woodfibre, we recognise the critical role of ecosystem services. By investing in sustainable forestry practices, we build resilience, safeguard resources, and potentially reduce long-term costs, all while pursuing accelerated growth in a responsible manner.

It’s vital to focus not only on net-zero targets and reducing greenhouse gas emissions but also on a nature-positive approach. We future-proof our business by restoring biodiversity and regenerating ecosystems, aligning with the Taskforce on Nature-related Financial Disclosures (TNFD). We disclose our actions not just because we must, but because we believe it’s the right way to secure our existence as a company committed to the circular economy.

Our plantations are designed with sustainability at their core, supporting biodiversity and ecosystem services. We integrate conservation areas within our plantations, setting aside significant portions of land for active protection. These areas include indigenous forests, wetlands and grasslands that serve as habitats for local wildlife, supporting a variety of species, some endangered or rare.

While we pursue accelerated growth, we do so with foresight, mindful of the impacts of our actions and the measures needed to balance them. Embracing a nature-positive strategy enhances ecological outcomes and drives value creation, positioning Sappi to thrive in a future where nature, alongside carbon, becomes a central element of sustainability.

Appendices

Speed

In business, gathering speed is crucial for driving progress and achieving goals. Equally important is to control this speed to prevent things from spiralling out of control. This balance is essential for sustainable growth and long-term success.

In our efforts towards sustainability, speed determines whether we meet customer expectations and whether we are ready for new rules whether domestic or global. However, we must also keep a steady hand on the ship, steering it in the right direction towards success with careful planning and execution.

Our move towards digitisation exemplifies this balance. By streamlining our IT systems and processes for greater efficiency along our entire value chain – from procurement, through logistics, and into manufacturing systems like the Manufacturing Execution System (MES) at our mills – we are making headway in enhancing our operational capabilities. Additionally, aligning our Sales, Supply Chain, Logistics, and Finance processes through SAP marks a significant milestone in our journey towards a streamlined, data-driven future.

Through global collaboration, we are paving the way for enhanced productivity, transparency and operational excellence across our organisation. We are driving this transformation with a sense of urgency, but also with the necessary caution. By thoroughly testing systems and taking a phased approach, we ensure that our efforts are sustainable and effective.

Together, we are navigating new waters, gathering speed and steering our ship towards a successful and sustainable future.

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Sustainable development goals – Q&A

Tracy Wessels,
Group Head Investor Relations and Sustainability, Sappi Limited

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“Embracing the UN SDGs is not just our commitment to a better world, it’s our strategic investment in a future where social responsibility and business success converge thereby securing a sustainable legacy for generations to come.”

Sappi and sustainable development: nature focus

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

Q1

The concept of ‘nature positive’ is gaining momentum. How does Sappi view this trend and what actions are you taking?

The concept of ‘nature positive’ is emerging as a new benchmark for sustainability, moving beyond net-zero carbon goals to consider broader ecological impacts. While net-zero targets have focused on reducing GHG emissions, a nature-positive approach aims to regenerate ecosystems, restore biodiversity, and enhance the health of natural systems. This shift addresses growing awareness that climate action alone cannot solve the interconnected crises of biodiversity loss and ecosystem degradation. As human activities like deforestation and pollution continue to put immense pressure on natural habitats, nature-positive goals are becoming essential for addressing both climate and biodiversity imperatives.

For Sappi, adopting nature-positive strategies represents an opportunity to future-proof our businesses in a world where natural resources are increasingly constrained, and environmental expectations from regulators, consumers, and investors are rising. Considering nature impacts in our Thrive strategy allows us to mitigate risks associated with biodiversity loss, such as supply chain disruptions, resource scarcity and reputational damage. As a company that depends entirely on sustainable woodfibre, we recognise that ecosystem services are critical to our success. By investing in sustainable forestry practices that protect and restore natural ecosystems, we can build resilience, safeguard forestry resources, and potentially reduce costs over the long term.

Furthermore, a nature-positive approach aligns with emerging global standards and frameworks, such as the Taskforce on Nature-related Financial Disclosures (TNFD), which is encouraging businesses to evaluate and disclose their impacts and dependencies on nature. As regulatory pressure to account for nature-related risks grows, companies that act now can position themselves as sustainability leaders, attract environmentally conscious consumers, and foster goodwill with investors who prioritise environmental, social and governance (ESG) factors. Embracing a nature-positive strategy not only enhances ecological outcomes but can also drive value creation, positioning Sappi to thrive in a future where nature, alongside carbon, becomes a central element of sustainability.

Q2

How does Sappi contribute to biodiversity protection and enhancement in its plantation forestry landscape?

Sappi’s plantation forestry in South Africa is instrumental in preserving natural and high-value forest ecosystems by providing a sustainable, alternative fibre source that reduces commercial pressure on natural forests. By cultivating eucalyptus and pine trees on plantations specifically designed for fibre production, we help meet the commercial demand for wood products without resorting to harvesting old-growth or high-value biodiversity-rich forests. This approach allows us to source raw materials without contributing to deforestation or the degradation of ecosystems that are essential for climate regulation, biodiversity and water cycles. In turn, plantation forestry creates a sustainable fibre supply chain that aligns with global goals to curb deforestation and preserve critical natural habitats.

Moreover, our plantations are designed and managed with sustainability at their core, supporting biodiversity and ecosystem services in the landscapes where we operate. We integrate conservation areas within our plantation landscapes, setting aside significant portions of land for active protection. These areas often include indigenous forests, wetlands, and grasslands that serve as habitats for local wildlife and support a variety of species, some of which are endangered or rare. By establishing these conservation zones and safeguarding natural features within our plantations, we create diverse habitats and enhance ecological connectivity, promoting resilience across the broader landscape.

Sappi’s commitment to sustainability extends beyond conservation alone; we actively create ecological corridors to connect isolated habitats, which helps species migrate, adapt to environmental changes and maintain genetic diversity. These corridors also allow for the natural movement of plants, animals and pollinators, which are critical for ecosystem balance. Furthermore, our plantations are managed using best practices that minimise chemical inputs and promote soil health and water retention, contributing positively to the surrounding environment. As a result, our plantation forests not only provide a responsible source of woodfibre but also reinforce our broader environmental objectives, supporting both biodiversity and the services forestry ecosystems provide for communities and the planet.

Q3

The EU has recently promulgated a law regarding deforestation, the EU Deforestation Regulation (EUDR), how does this impact the forest sector and Sappi specifically?

The EU Deforestation Regulation (EUDR) has significant implications for the forest sector and pulp and paper products, as it sets stringent requirements for traceability across forest sector supply chains. Under the EUDR, companies involved in importing, exporting, or processing wood and wood-based products, including pulp and paper, must prove that these materials are not linked to deforestation or forest degradation post-2020. This means that pulp and paper companies must provide precise geolocation data for all woodfibre sources and demonstrate that it originates from deforestation-free areas. Compliance requires robust tracking systems and detailed record-keeping necessitating substantial investment in new technologies and partnerships to maintain transparent supply chains.

For the forest sector, the regulation is intended to drive industry-wide shifts toward more sustainable practices, but companies face potential risks and costs associated with non-compliance, including penalties, supply chain disruptions, and potential loss of market access. The EUDR requires companies to work more closely with suppliers and forest managers to ensure alignment with the regulation and will ultimately increase operational complexity and costs for the sector.

Whilst companies that comply with EUDR must demonstrate that their supply chains are deforestation free, this is only one small aspect of sustainable forestry and does not address the overall nature and social impacts of forestry operations. Forestry certification programmes like Forest Stewardship Council™ (FSC™), Programme for the Endorsement of Forest Certification (PEFC) and Sustainable Forestry Initiative® (SFI®) incorporate rigorous processes and systems that assure stakeholders of deforestation-free, sustainable supply chains. These certifications require forest managers and companies to adhere to strict standards that promote responsible forestry, biodiversity conservation, and the protection of high-conservation-value forests. To maintain certification, forestry operations must go through comprehensive assessments covering legal compliance, ecological impact, and community rights, ensuring that all timber and wood products come from well-managed, sustainable sources.

A key component of these certifications is the chain of custody system, which tracks materials through every stage of the supply chain – from forest to final product. This tracking system allows companies and stakeholders to verify that certified materials are segregated and not mixed with uncertified or illegally sourced wood, guaranteeing the deforestation-free status of certified products. Additionally, independent, third-party audits are conducted regularly to confirm that all certification standards are met consistently, further enhancing transparency and accountability.

Certification standards also mandate the use of geolocation data, documentation of sustainable forest practices, and the implementation of conservation measures such as setting aside areas for biodiversity protection and maintaining ecological corridors. These requirements and controls not only help prevent deforestation but also enable stakeholders to confidently support and invest in forestry operations that prioritise environmental and social sustainability.

Sappi has long demonstrated a strong commitment to sustainable forest management (SFM) and deforestation-free supply chains, as reflected in the high proportion of certified woodfibre used across our operations. One of our strategic 2025 sustainability targets is focused on increasing forest certification, underscoring our dedication to responsible sourcing. Additionally, we are actively collaborating with our supply chain partners and industry bodies to ensure full compliance with the EUDR when it comes into effect in December 2025. This proactive approach helps us uphold the highest standards of sustainability and transparency in our forest-based operations and supply chains extending our focus well beyond regulatory compliance.

Q4

How does Sappi ensure that its climate and nature strategies account for the complex interdependencies and socioeconomic impacts of environmental issues?

Sappi’s strategic evaluations of risks and opportunities recognise that climate and nature are deeply interconnected, influencing and reinforcing each other across areas like biodiversity, waste, water and resource efficiency. For instance, climate change directly impacts biodiversity by altering habitats and species distributions, which in turn affects ecosystem resilience and the availability of resources critical to our operations. Deforestation, often driven by economic pressures, both releases carbon emissions and reduces natural carbon sinks, exacerbating climate change. In addressing these interdependencies, we rely on frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD) to guide our risk assessment and strategy development.

Waste and resource efficiency are also tightly linked to climate and nature impacts. Reducing waste and maximising resource use can lower GHG emissions, conserve natural resources and reduce pollution that harms ecosystems. Water is another crucial area where climate and nature intersect; as climate change leads to more extreme weather events, water scarcity becomes a growing risk, impacting both biodiversity and operational reliability. In this complex landscape, nothing can be considered in isolation; we must evaluate each factor in the context of geographic, environmental and socioeconomic variables. Moreover, evolving our climate and nature-positive strategies requires careful consideration of social impacts and trade-offs, such as the effects on local communities and employment, ensuring that our plans for resilience also foster equitable development. This holistic approach enables us to contribute meaningfully to a sustainable, interconnected future across the regions where we operate.