2004 Report on Sustainable Development

Home , Bernard Lemaire, Cascades (company), Paper mill

Corporate Social Responsibility 2004 Highlights

Respect, our guiding force. Corporate Social Responsibility

Packaging Sector

Boxboard Group

Containerboard Group Norampac Inc., 50%

Specialty Products Group Cascades Inc.

Tissue Sector

Fine Papers Sector

Cascades is active in three main sectors.

Contents 3 A Message from the Lemaire Brothers 5 Our Planet 11 The Human Element 17 The Economic Environment 19 Governance 20 Recognition 2004 Sustainability Highlights

Profile Founded in 1964, Cascades produces, transforms and markets packaging products, tissue paper and fine papers, composed mainly of recycled fibres. Cascades employs nearly 15,800 men and women who work in some 150 modern and flexible production units located in North America, in Europe and in Asia. Cascades’ management philosophy, its more than 40 years of experience in recycling and its continued efforts in research and development are strengths which enable the company to create new products for its customers and thus offer superior performance to its shareholders. The Cascades shares trade on the Toronto stock exchange under the ticker symbol CAS.

Our values Respect • Team Work • Autonomy • Adaptability Initiative • Communication

Vision

Cascades is a group of distinct entities that operate in different sectors collaborating with each other to optimize synergies. United by an attitude of respect for the individual, these entities share a sense of belonging and pride. Each sectorial group ensures its own growth by taking advantage of interesting business opportunities that arise and are in keeping with prevailing ﬁnancial and economic market realities. Our commitment to these fundamental values will guarantee our future. Corporate Social Responsibility

Our commitment to the environment, society and the economy is entrenched in our corporate culture.

2 2004 Sustainability Highlights

Long before Corporate Social Responsibility (CSR) was developing environmentally friendly alternatives a buzzword, Cascades was operating in an environmen- for our customers and the community. Our sense of tally, socially and economically sustainable manner. respect clearly extends to our planet, and we believe In fact, our Company was built on a strong respect for this approach yields better profits and a better world. the land, the people and the communities where we We are committed to promoting personal conduct our business. And, the solid values we espoused development and quality of life, not just for the 41 years ago still hold true today. Everyday we strive to be 15,800 employees whose daily work fuels the growth of fair employers, good corporate citizens and ethical busi- Cascades, but also for the communities that surround nesspeople, respectful of the environment. our 150 business units. By putting people first, we have Over the years, Cascades has evolved from a successfully channelled the energy and talent of our small-town family business to a major, multinational employees to build a world-class company. player. In spite of our tremendous growth, our values Our financial performance has enabled us to remain constant. They are our guiding force. reinvest, innovate and grow. This has had a positive economic impact on shareholders, employees, suppli- It all starts with respect ers, customers and communities. Our profitability has Respect is woven into the very heart of our philosophy. also enabled us to invest in Research and Development, It is clearly articulated in our vision and entrenched in leading to new products and processes. our daily culture. And with that foundation of respect We have become recognized as a pioneer and comes transparency in our business and a spirit of leader largely because of our innovative vision toward open dialogue. By keeping our doors wide open, human resources, as well as our commitment to qual- both inside the organization and out to the world, we ity, technological development and the protection of remain true to our origins. Simply put, Cascades is, the environment. despite its size, a company with a human face. The pages that follow provide a glimpse into some Our thorough approach to business enables us of our activities and performance in the area of CSR. to continuously deliver quality products. We never With some exceptions, they cover all our operations stop raising the bar, elevating our standards in all in North America and Europe. While this brief report that we do. cannot address the vast number of CSR issues, it The entrepreneurial spirit is alive and well at articulates our continued commitment to conduct Cascades. Empowerment and accountability are a our business ethically and responsibly. way of life at the business unit and the individual employee level. For Cascades, it’s a work style that Alain Lemaire yields results. President and Chief Executive Officer Bernard Lemaire Environmental, Social and Economic Impact Chairman of the Board We believe that environmental and social responsibility do not preclude financial performance. On the Laurent Lemaire contrary, environmental stewardship and progressive Executive Vice-Chairman of the Board management practices underlie our success. Cascades started as a waste recovery and recycled fibre business built on the idea that paper could be made from waste paper. Since then, we have been leaders in paper recycling and energy conservation,

3 Corporate Social Responsibility

Protecting the Earth for future generations.

4 2004 Sustainability Highlights Our Planet

Cascades has a strong legacy of environmental Objectives and Targets stewardship — all the way back to 1964 and to the Cascades operations aim to meet or exceed all current Company’s pioneering work in paper recycling. environmental regulations. Each of Cascades’ facilities Today, we continue to lead the industry in responsible has the responsibility to set individual environmental resource management and eco-friendly products by goals, aligned with our environmental mission. upholding a basic tenet that has sustained us for more than 40 years. Monitoring Our Environment Department routinely monitors and Environmental Mission audits operations to ensure that mills consistently comply This is our commitment to environmental protection, not only with current government standards but also which we revised in 2003 in order to clearly lay out with our environmental mission. Our team of experts corporate and senior management responsibilities. also provides technical support to Cascades business It is based on ISO 14000 principles and outlines units and helps plant managers develop and implement speciﬁc programs to: environmental programs. • Identify important environmental issues and establish clear objectives; • Promote employee awareness on the topic of Saving trees environmental protection; The 2.5 million short tons of • Promote conservation of resources by saving paper and cardboard recycled energy and raw materials; by Cascades allows us to save • Ensure compliance with environmental legislation 30 million trees, or the in force; and equivalent of 30,000 hectares • Inform Board members and management of of forest each year. environmental issues.

Environmental Management System Up to Standard Our Environmental Management System (EMS) As of December 31, 2004, 10 of the Company’s mills allows us to judiciously monitor and control the had achieved certification under the ISO 14001 Company’s diverse environmental situations. It’s an environmental management system standard. important tool to proactively identify potential issues, reduce risks and ensure continuous improvement through immediate disclosure of environmental inci- dents. Moreover, quarterly reporting of environmental issues are transmitted to the Board. Periodically, the Company reviews its EMS to ensure it continues to remain an effective monitoring tool.

5 Corporate Social Responsibility

Environmental Performance from the pulp to the finished product. And, our No matter how much the paper industry changes, Saint-Jérôme fine papers mill is the only Canadian Cascades firmly intents to remain a leader by main- mill to be EcoLogo™ certified, Environment Canada’s taining the environmental objectives we have set recognition for reduced energy consumption and for ourselves: to better protect the environment and greehouse gas emissions, to name a few. forests by increasing the volume of recycled materials, further reducing greenhouse gas emissions, recovering Other milestones: waste from water treatment systems and maximizing • New Life DP100™, the most environmentally energy efficiency. friendly consumer paper on the market. Made of 100% postconsumer content, not a single tree is Raw Fibre Supply cut in its manufacture. And, the de-inking process The Cascades group has an annual recycled fibre used to manufacture it uses 80% less water than consumption of over 2.5 million short tons. To ensure conventional methods. 2004 2004 a reliable supply of recycled fibreRemuneration for our unique paper • Rolland Enviro100™ and Rolland Enviro Edition™ Remuneration (PAYROLL, BENEFITS, Training Training $ products,($M) snapshot we set up a significant($M) AND PROFIT recovery SHARING) networksnapshot are the environmental($M) spent choice for the commercial that provides our North1,000 American mills with a large printing20 and publishing industries since they are Gross payroll 900 Number of hours 18 ™ percentage608 of their raw material. 347,604 chlorine-free, accredited Eco-Logo and made from 800 16 Cascades Fine Papers Group is at the forefront 100% postconsumer fibre. On average, 17 mature 700 Employee benefits Number of employees 14 of the recycled paper market, with the widest rangetrained trees are saved for every 48 boxes of letter size New 237 600 12 of Canadian-made alkaline papers that contain 8,062an Life DP100™ paper. Page 11 500 10 reward performance Energy averageProfit of sharing 30% postconsumer400 fibres. We are theInvestment • Cascades Tissue8 Group has commited, within 28 11 $M only company in North America300 certified by the three years,6 to acquire over 90% of its virgin

200 ChlorineTotal remunerationFree Products Association (CFPA), attestTraining- costs/ pulp from4 sources meeting the strict certiﬁca- total remuneration 873 100 2 ing that our certiﬁed products are 100% chlorine-free1.3% tion standards of the Forest Stewardship Council 0 0 02 03 04 (FSC). This 02environmentally03 04 progressive move

Raw Fibre Supply Air Emissions Energy

Million Recycled fibre⁄ short Recycled Particulate Energy % Total fibre tons paper purchases kg/T CO2 equivalent kg/T matter GJ/T consumption 100 5 400 2 40 90 4.5 360 1.8 36 80 4.0 320 1.6 32 70 3.5 280 1.4 28 Raw fibre supply 60 3.0 240 1.2 24 and Air emission 50 2.5 200 1 20 40 2.0 160 0.8 16 30 1.5 120 0.6 12 20 1.0 80 0.4 8 10 0.5 40 0.2 4 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 Cascades Canadian Industry Cascades Canadian Industry Source: Cascades Inc. and Forest Products Association of Canada Source: Cascades Inc. and Forest Products Association of Canada (2001). (2001), in millions of short tons, includes 100% of Norampac. Page 17, the economic environnement Total suspended solid 6 Dissolved Water Mill consuming residue rejected organic matter Valorized m3/T consumption less than 10 m3/T kg/T in effluent kg/T in effluent % of total residue 80 20 4.0 2 100 72 18 3.6 1.8 90 ($M) Dividends 20 64 16 3.2 1.6 80 18 56 14 2.8 1.4 70 Water and résidue 16 48 12 2.4 1.2 60 14 40 10 2.0 1 50 12 32 8 1.6 0.8 40 10 24 6 1.2 0.6 30 8 16 4 0.8 0.4 20 6 8 2 0.4 0.2 10 4 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 2 Cascades Canadian Industry 0 02 03 04

2004 Employees Consolidated Net Workforce Total by geography ($M) Sales ($M) OIBD* ($M) earnings* 1 snapshot employees % 2004 4,000 500 200 20,000 100 3,600 450 180 Number of employees 18,000 90 3,200 400 160 15,800 16,000 80 2,800 350 140 % unionized 63% 14,000 70 2,400 300 120 Workforce profile Average years 12,000 60 2,000 250 100 of service2 10,000 50 9 1,600 200 80 Average age2 8,000 40 1,200 150 60 40 6,000 30 800 100 40 Interns hired 207 4,000 20 400 50 20 Students hired 2,000 10 0 0 0 711 0 0 02 03 04 02 03 04 02 03 04 02 03 04 Canada United States Europe

Cash flow Capital Business ($M) from operations ($M) expenditures ($M) aquisitions Lost-time Lost-time 400 150 150 frequency rate* severity rate 360 135 135 10 100 320 120 120 9 90 280 105 105 8 80 240 90 90 7 70 200 75 75 Health and safety 6 60 160 60 60 5 50 120 45 45 4 40 80 30 30 3 30 40 15 15 2 20 0 0 0 1 10 02 03 04 02 03 04 02 03 04 0 0 02 03 04 02 03 04

2004 Remuneration 2004 Remuneration (PAYROLL, BENEFITS, Training Training $ ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 1,000 20 Gross payroll 900 Number of hours 18 608 347,604 will help in the protection800 of ancient forests in Air Emissions16

Canada. Cascades Tissue700 Group is also com- In support of the Kyoto Protocol, we have substantially Employee benefits Number of employees 14 trained mitted237 to avoiding the 600use of chlorine to bleach decreased our12 GHG (Greenhouse gases) rates of 8,062 Page 11 500 10 reward performance its products. emissions by reducing our energy consumption and Energy Profit sharing 400 Investment 8 28 using cleaner energy sources. 300 11 $M 6 Water Cascades has patented an enzyme process for 200 Total remuneration Training costs/ 4 One of Cascades’ top priorities is to reduce thetotal remunerationproducing calcium carbonate, a white pigment that 873 100 2 1.3% consumption of fresh water0 in our paper manu- will be used 0in the manufacturing of paper. The new facturing. And we’re making 02excellent03 04 progress. process reduces the02 quantity03 04 of GHG, which should Our sophisticated in-plant water recycling systems have a positive industry-wide impact. enable Cascades mills to use an average of 18.1 cubic metres of water per metric ton of manufactured product. This compares favourably to the Canadian

industry average of 65Million cubic metres of water per Recycled fibre⁄ short Recycled Particulate Energy metric% Total ton fibre of manufactured tons paper product. purchases kg/T CO2 equivalent kg/T matter GJ/T consumption 100 But it doesn’t stop there.5 Several of our mills400 now 2 40 operate90 with less than 104.5 cubic metres of water360 and 1.8 36 6 mills80 use less than 5 cubic4.0 metres; 3 have managed320 Every drop1.6 of water in 32 70 3.5 280 1.4 28 to reuse all the water per metric ton. A remarkable our operations is reused Raw fibre supply 60 3.0 240 1.2 24 and Air emission performance50 that we hope2.5 to improve upon through200 - 40 times1 before being 20 out 40our operations in the 2.0future. 160 treated and0.8 returned cleanly 16 30 1.5 120 to the environment.0.6 12 20 1.0 80 0.4 8 10 0.5 40 0.2 4 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 Cascades Canadian Industry Cascades Canadian Industry

Water Residues Page 17, the economic environnement Total suspended solid Dissolved Water Mill consuming residue rejected organic matter Valorized m3/T consumption less than 10 m3/T kg/T in effluent kg/T in effluent % of total residue 80 20 4.0 2 100 72 18 3.6 1.8 90 ($M) Dividends 20 64 16 3.2 1.6 80 18 56 14 2.8 1.4 70 Water and résidue 16 48 12 2.4 1.2 60 14 40 10 2.0 1 50 12 32 8 1.6 0.8 40 10 24 6 1.2 0.6 30 8 16 4 0.8 0.4 20 6 8 2 0.4 0.2 10 4 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 2 Cascades Canadian Industry 0 02 03 04 Source: Cascades Inc. and Forest Products Association of Canada (2001).

2004 Employees Consolidated Net Workforce Total by geography7 ($M) Sales ($M) OIBD* ($M) earnings* 1 snapshot employees % 2004 4,000 500 200 20,000 100 3,600 450 180 Number of employees 18,000 90 3,200 400 160 15,800 16,000 80 2,800 350 140 % unionized 63% 14,000 70 2,400 300 120 Workforce profile Average years 12,000 60 2,000 250 100 of service2 10,000 50 9 1,600 200 80 Average age2 8,000 40 1,200 150 60 40 6,000 30 800 100 40 Interns hired 207 4,000 20 400 50 20 Students hired 2,000 10 0 0 0 711 0 0 02 03 04 02 03 04 02 03 04 02 03 04 Canada United States Europe

Three major projects got underway in 2004 –2005 Residues that together are expected to reduce by 13% our Almost two thirds of residue from manufacturing

CO2 emissions per year or the equivalent of recycled paper and board were diverted from landfill in 100,000 tonnes. 2004. We are continually looking for new and innova- • Biogas, a project enabling gas generated by tive ways to reuse these materials, such as in biomass organic waste to power our paper mill in Saint- boilers to produce energy or the conversion of sludge Jérôme, Québec. from waste water treatment into fertilizer. • A steam reforming facility in Norampac’s Trenton, Our ultimate goal is to eliminate landfilling that Ontario, pulp mill. The steam reformer technology results from our operations. Our water treatment converts pulping liquor from the mill into energy. systems allow some plants to operate at close to a • Norampac’s Cabano, Québec, mill installed a zero-effluent level. new boiler in its containerboard mill to burn wood residue in replacement of heavy bunker oil. Energy Through our investment in Boralex, a producer of alternative and renewable energy, we have completed the purchase of wood chip and gas cogeneration plants, while at the same time developing wind energy tech- These three projects will save nological expertise. 100,000 metric tons Early in 2004 we formed a partnership with

of CO2 per year, equivalent Gaz Metro, Québec’s largest natural gas distributor, to the exhaust emissions from to use biogas from organic waste to power our fine 25,000 cars. paper plant in Saint-Jérôme, Québec. The biogas is delivered via pipeline from a landfill site about 13 kilometres away and is the first waste-to-energy project of its kind in Québec. Cascades invested $2 million in the plant conversion for the biogas, which is expected to meet most of the mill’s energy requirements for the next 10 years. At every level of the Company, we employ meas- ures to reduce the Company’s energy consumption. Many solutions come from employees who are tire- lessly engaged in the effort of energy conservation. In 2004, Cascades’ management approved, in addition to sums allocated directly to mills, a sum of $2 million a year for five years to fund energy efficiency projects in our plants. The fund will be managed by Cascades’ Energy Intervention Group.

8 2004 Sustainability Highlights

A pioneering spirit During the 1950s, as mass consumerism began to take root, environmental considerations were often overlooked. Not by Antonio Lemaire. What most consumers considered disposable, Antonio recognized as having value. Following a fire at the family home in Drummondville, he rebuilt the house with material salvaged from various sources. It was a fitting start to a long and promising enterprise. In 1957, the Lemaire family founded Drummond Pulp & Fibre, a waste recovery and recycled fibre business. A few years later the family officially started making paper.

Waste collection Cascades’ waste collection program has been extremely successful. The extensive program collects 16 different categories of waste generated from our plants, including the collection of hazardous materials such as batteries, ﬂuorescent tubes, IT equipment, solvents and used oils which are either recycled or disposed of safely.

Acting on climate change Cascades was the first Canadian company to manufacture styrofoam products that are free of chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs). CFCs are the most significant element in the depletion of the ozone layer and a cause of global warming. HCFCs also deplete the ozone layer.

9 Corporate Social Responsibility

Business with a human touch — the secret of our success.

10 2004 Remuneration 2004 Remuneration (PAYROLL, BENEFITS, Training Training $ ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 1,000 20 Gross payroll 900 Number of hours 18 608 347,604 800 16

700 Employee benefits Number of employees 14 trained 237 600 12 8,062 Page 11 500 10 reward performance Energy Profit sharing 400 Investment 8 28 300 11 $M 6

200 Total remuneration Training costs/ 4 total remuneration 873 100 2 1.3% 0 0 02 03 04 2004 Sustainability Highlights02 03 04

Recycled fibre⁄ Million Recycled Particulate Energy short The Human % Total fibre tons paper purchases kg/T CO2 equivalent kg/T matter GJ/T consumption 100 5 400 2 40 Element 90 4.5 360 1.8 36 80Our employees are the4.0 driving force behind 320Casdades’ We 1.6encourage our employees32 to try new approaches 70success and they have3.5 a solid say in the way280 we run and take1.4 risks—it’s all part of keeping28 our approach to Raw fibre supply 60our business. Our people3.0 have a right to fair240 labour business1.2 on the cutting edge.24 Cascades’ work and Air emission 50 practices and a safe2.5 and healthy work environment200 environment1 is one where everyone’s20 idea is heard. 40where performance2.0 is rewarded. At Cascades,160 we We continuously0.8 strive to promote16 an open, tolerant 30believe they also have1.5 a right to a good quality120 of life environment0.6 that encourages innovative12 thinking. 20 1.0 80 0.4 8 after work not only through sports and social activities, 10 0.5 40 0.2 4 0 but also through our0 active participation in0 the com- Rewarding0 Performance 0 munities01 02 03 where04 our employees01 02 03 04 live. We constantly01 02 03 04 We believe that01 02 sharing03 04 and respect01 can02 03contribute04 as striveCascades to meet theseCanadian expectations Industry and to find newCascades and muchCanadian to the Industrybottom line as sound financial manage- beneficial ways of working together. ment. Our employee profit-sharing plan is a shining example of this belief. In keeping with this principal Page 17, the economic environnement Employees Total of empowerment, we recognize the performance of Openness, Empowerment and Tolerance suspended solid our employeesDissolved by sharing with them a portion of our Water Mill consuming residue rejected organic matter Valorized m3/T Weconsumption believe that employeesless than are 10 m motivated3/T kg/T byin effluenta more profitskg/T comprisingin effluent a share of our% of totalcashresidue flows calculated 80 relaxed, egalitarian20 style of management,4.0 not a rigid for 2each specific business unit.100 In 2004, within its ($M) Dividends 72 hierarchy. That’s the18 rationale behind our3.6 open-door global1.8 compensation policy, Cascades90 distributed 20 64 16 3.2 1.6 80 policy emphasizing dialogue, openness and respect. This $28 million (including 50% of Norampac) to employ- 18 56 14 2.8 1.4 70 Water and résidue management style extends far beyond simply providing ees through the profit-sharing plan. 16 48 12 2.4 1.2 60 14 40 an employee with10 the freedom to go into2.0 a manager’s 1Employees also have the option50 to participate in 12 32 office to voice an opinion8 and have it appreciated.1.6 It Cascades’0.8 share ownership plan.40 All permanent 10 24 means that at Cascades,6 anyone can take the1.2 floor and employees0.6 of our Canadian divisions30 are eligible to 8 16 be heard. We believe our4 employees can make0.8 a positive contribute0.4 up to 5% of their salary20 and the Company 6 8 contribution to the success2 of the Company0.4 and this matches0.2 those contributions by10 25% (vested over 4 0 0 0 0 0 belief01 02 fosters03 04 a work environment01 02 03 04 where information01 02 03 is04 two years).01 02 03 04 01 02 03 04 2 shared and relationships are nurtured. The well-being of our employees is a top priority Cascades Canadian Industry 0 and Cascades offers a wide range of benefits many of 02 03 04 which exceed legal requirements. For instance, in Workforce Profile Canada, Cascades provides a 95% top-up of maternity 2004 Employees benefits for the first 15 weeks. Consolidated Net Workforce Total by geography ($M) Sales ($M) OIBD* ($M) earnings* 1 snapshot employees % 2004 4,000 500 200 20,000 100 3,600 450 180 Number of employees 18,000 90 3,200 400 160 15,800 16,000 80 2,800 350 140 % unionized 63% 14,000 70 2,400 300 120 Workforce profile Average years 12,000 60 2,000 250 100 of service2 10,000 50 9 1,600 200 80 Average age2 8,000 40 1,200 150 60 40 6,000 30 800 100 40 Interns hired 207 4,000 20 400 50 20 Students hired 2,000 10 0 0 0 711 0 0 02 03 04 02 03 04 02 03 04 02 03 04 Canada United States Europe 1. The number of employees includes all Cascades employees plus those of its joint ventures. 2. Averages represent the individual averages of each group.

Cash flow Capital Business ($M) from operations ($M) expenditures ($M) aquisitions 11 Lost-time Lost-time 400 150 150 frequency rate* severity rate 360 135 135 10 100 320 120 120 9 90 280 105 105 8 80 240 90 90 7 70 200 75 75 Health and safety 6 60 160 60 60 5 50 120 45 45 4 40 80 30 30 3 30 40 15 15 2 20 0 0 0 1 10 02 03 04 02 03 04 02 03 04 0 0 02 03 04 02 03 04

Learning and Advancement Opportunities development. We offer reimbursement of professional Talented, well-trained employees are the root of our association membership dues for employees who success. With ambitious growth plans and the prospect belong to professional organizations. We encourage the of fewer up-and-comers, Cascades is committed to hiring of young talent: in 2004, we hired 207 interns ensuring the renewal of its labour force. Our training and 711 students. programs help advance employee knowledge and skills to evolve our workforce and ensure sustainability. Health and Safety We have also worked in partnership with edu- Respect for our employees is at the heart of Cascades’ cational institutions to develop programs that are philosophy. We are committed to protect the health, tailored to the meet the needs of our Company. safety and well-being of employees, both during and Our employees have access to tuition aid and allow- after working hours. ances for courses that are related to their work. We also In the workplace, we have systematically imple- have an in-house mentoring program as well as in- mented an accident prevention program throughout house training to assist our employees in their career the Company. Three years ago, we launched a Health and Safety action plan aimed at reducing the frequency and severity of accidents in all of our North American facilities. We recently launched a similar Cascades is committed to program in our European facilities. investing between 1% and Our approach to the health and safety of our 2% of its total payroll cost employees is two-pronged. It addresses not only behav- into a wide-range of employee iour but also employee and management attitudes training programs. toward safety. Working with the health and safety committee of each plant, we have implemented procedures for investigation and analysis, developed follow-up mechanisms and trained employees to help meet objectives.

Remuneration* Training*

2004 Remuneration 2004 Remuneration (PAYROLL, BENEFITS, Training Training $ ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 1,000 20 Gross payroll 900 Number of hours 18 608 347,604 800 16

700 Employee benefits Number of employees 14 trained 237 600 12 8,062 Page 11 500 10 reward performance Energy Profit sharing 400 Investment 8 28 300 11 $M 6

200 Total remuneration Training costs/ 4 total remuneration 873 100 2 1.3% 0 0 02 03 04 02 03 04

* Data includes our share in our joint ventures.

Page 17, the economic environnement Total suspended solid Dissolved Water Mill consuming residue rejected organic matter Valorized m3/T consumption less than 10 m3/T kg/T in effluent kg/T in effluent % of total residue 80 20 4.0 2 100 72 18 3.6 1.8 90 ($M) Dividends 20 64 16 3.2 1.6 80 18 56 14 2.8 1.4 70 Water and résidue 16 48 12 2.4 1.2 60 14 40 10 2.0 1 50 12 32 8 1.6 0.8 40 10 24 6 1.2 0.6 30 8 16 4 0.8 0.4 20 6 8 2 0.4 0.2 10 4 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 2 Cascades Canadian Industry 0 02 03 04

2004 Donations snapshot ($M) Donations* 5.0 Education 18% 4.5 Sports and leisure 4.0 7% 3.5 Social and Community partner community causes 3.0 (including federated 2.5 appeals) 52% 2.0 Health 1.5 11% 1.0 Other: (Business,Arts & Culture, Environnement) 0.5 12% 0 02 03 04 2004 Remuneration 2004 Remuneration (PAYROLL, BENEFITS, Training Training $ ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 1,000 20 Gross payroll 900 Number of hours 18 608 347,604 800 16

700 Employee benefits Number of employees 14 trained 237 600 12 8,062 Page 11 500 10 reward performance Energy Profit sharing 400 Investment 8 28 300 11 $M 6

200 Total remuneration Training costs/ 4 total remuneration 873 100 2 1.3% 0 0 02 03 04 02 03 04

Page 17, the economic environnement Total suspended solid Dissolved Water Mill consuming residue rejected organic matter Valorized m3/T consumption less than 10 m3/T kg/T in effluent kg/T in effluent % of total residue 80 20 4.0 2 100 72The plan has produced18 good results but in3.6 order Employee1.8 Rights 90 ($M) Dividends 20 to continuously64 improve16 safety performance, 3.2we are Our culture1.6 of respect permeates all that80 we do. Our 18 now56 in the process of implementing14 health and2.8 safety respect for1.4 human rights is firmly entrenched70 in our Water and résidue 16 management48 systems. In12 keeping with Cascades’2.4 culture and1.2 explicitly stated in our code60 of ethics. 14 40 10 2.0 1 50 culture, the systems emphasize the need for account- Cascades will not tolerate discrimination based on race, 12 32 8 1.6 0.8 40 ability and responsibility at the local level. religion, sexual orientation, gender, ethnicity or other 10 24 6 1.2 0.6 30 8 16 4 0.8 characteristics0.4 as governed by Human Rights20 Charter. 6 Wellness8 2 0.4 0.2 10 4 Our0 responsibility to support0 employee well-being0 does Community0 Partner 0 not end01 when02 03 our04 employees01 leave02 03 the04 plant or office.01 02 03 Cascades04 actively01 02 03contributes04 to the welfare01 02 03of 04its 2 Cascades Canadian Industry 0 It extends far beyond our walls. It’s no secret that healthy neighbouring communities because quality of life does 02 03 04 employees are often happier and more productive, so not only depend on good working conditions, but also on we encourage Cascaders to join fitness and wellness a healthy social environment. In 2004, we contributed programs or take part in team sports. We have an on-site more than $4.1 million to some 400 organizations in 2004 Employees Consolidated Net fitnessWorkforce facility in Kingsey FallsTotal and we sponsor a byvariety geography ($M) Sales ($M) OIBD* ($M) earnings* 1 of activitiessnapshot throughout ouremployees locations. In Québec,% 2004 for 4,000 500 200 instance, hockey and20,000 softball tournaments100 abound. In 3,600 450 180 Number of employees 18,000 90 3,200 400 160 France, 15,800 it’s soccer and pétanque (lawn bowling). 16,000 80 Cascades encourages its 2,800 350 140 We% unionized believe in the old adage that an ounce of 63% 14,000 70 employees to join 2,400 300 120 Workforce profile fitness preventionAverage years is worth a12,000 pound of cure. But when60 the 2,000 250 100 of service2 and wellness programs need arises, we are10,000 there to support our50 employees 9 or take part in team sports. 1,600 200 80 who areAverage seeking age2 help 8,000in their daily lives. 40We have 1,200 150 60 40 6,000 30 800 100 40 severalInterns Employee hired Assistance programs that provide a range 207of solutions including4,000 short-term psychotherapy,20 400 50 20 Students hired 2,000 10 0 0 0 crisis intervention711 and legal/financial advice. 0 0 02 03 04 02 03 04 02 03 04 02 03 04 Canada United States Europe

Health and Safety Cash flow Capital Business ($M) from operations ($M) expenditures ($M) aquisitions Lost-time Lost-time 400 150 150 frequency rate* severity rate 360 135 135 10 100 320 120 120 9 90 280 105 105 8 80 240 90 90 7 70 200 75 75 Health and safety 6 60 160 60 60 5 50 120 45 45 4 40 80 30 30 3 30 40 15 15 2 20 0 0 0 1 10 02 03 04 02 03 04 02 03 04 0 0 02 03 04 02 03 04

* Lost time and severity rates per 200,000 hours worked, excluding temporary assignments.

13 2004 Donations snapshot ($M) Donations* 5.0 Education 18% 4.5 Sports and leisure 4.0 7% 3.5 Social and Community partner community causes 3.0 (including federated 2.5 appeals) 52% 2.0 Health 1.5 11% 1.0 Other: (Business,Arts & Culture, Environnement) 0.5 12% 0 02 03 04 2004 Remuneration 2004 Remuneration (PAYROLL, BENEFITS, Training Training $ ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 1,000 20 Gross payroll 900 Number of hours 18 608 347,604 800 16

700 Employee benefits Number of employees 14 trained 237 600 12 8,062 Page 11 500 10 reward performance Energy Profit sharing 400 Investment 8 28 300 11 $M 6

200 Total remuneration Training costs/ 4 total remuneration 873 100 2 1.3% 0 0 02 03 04 02 03 04

Page 17, the economic environnement Total suspended solid Dissolved Water Mill consuming residue rejected organic matter Valorized m3/T consumption less than 10 m3/T kg/T in effluent kg/T in effluent % of total residue 80 20 4.0 2 100 72 18 3.6 1.8 90 ($M) Dividends 20 64 16 3.2 1.6 80 18 56 14 2.8 1.4 70 Water and résidue 16 48 12 2.4 1.2 60 14 40 10 2.0 1 50 12 32 8 1.6 0.8 40 10 24 6 1.2 0.6 30 8 16 4 0.8 0.4 20 6 8 2 0.4 0.2 10 4 0 0 0Corporate Social Responsibility0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 2 Cascades Canadian Industry 0 02 03 04

2004 Employees Consolidated Net Workforce Total by geography ($M) Sales ($M) OIBD* ($M) earnings* 1 snapshot employees % 2004 4,000 500 200 20,000 100 3,600 450 180 Canada,Number of employees the U.S.18,000 and Europe. Our donations90 exceed Education and Training 3,200 400 160 15,800 the objective of16,000 1% of pretax profits,80 meeting the We believe in developing the talent of young people 2,800 350 140 % unionized 63% 14,000 70 2,400 300 120 Workforce profile objectives set by Imagine Canada in its definition of a for they represent the workforce of the future. We Average years 12,000 60 2,000 250 100 “Caringof service2 Company.” therefore focus our investments on well-thought-out 10,000 50 9 In keeping with our philosophy of corporate initiatives that ensure their training. Cascades has 1,600 200 80 Average age2 8,000 40 1,200 150 60 autonomy, 40 giving at Cascades is very decentralized. partnered with various educational institutions 6,000 30 800 100 40 WithInterns hired the exception of a few long-term Company-wide including Ryerson University’s School of Graphic 207 4,000 20 400 50 20 donations,Students hired each plant2,000 is free to support10 programs and Communication Management, Université du Québec 0 0 0 711 initiatives that are0 meaningful and 0beneficial to its à Trois- Rivières, Université de Sherbrooke and 02 03 04 02 03 04 02 03 04 employees and community.02 03 04In fact, priority is always Université du Québec à Montréal. We also support givenCanada to donationUnited requests States that involveEurope our employees. the ICPF (International Corrugated Packaging Foundation), a non-profit organization dedicated to the development of a qualified labour force for the corrugated carton packaging industry. Cash flow Capital Business ($M) from operations ($M) expenditures ($M) aquisitions Lost-time Lost-time 400 150 150 frequency rate* severity rate Sports and Leisure 360 135 135 10 100 Cascades supports a number of professional ath- 320 120 120 9 90 letes in their quest for gold including freestyle skier 280 105 105 8 80 In 2004, Cascades and its Pierre-Alexandre Rousseau, internationally renowned 240 90 90 7 70 employees donated more 200 75 75 Health and safety cyclist Charles Dionne and tennis player, Stéphanie 6 60 than $330,000 to 160 60 60 5 50 Dubois. In addition, the Company also supports local Centraide/United Way. 120 45 45 4 40 sporting events to encourage employee participation 80 30 30 3 30 and physical activity. 40 15 15 2 20 0 0 0 1 10 02 03 04 02 03 04 02 03 04 Federated Appeals, Social and Community Initiatives 0 0 02 03 04 02 03 04 Cascades is a loyal Centraide/United Way sponsor, providing significant financial support and dedicated volunteer work. In 2004, Cascades and its employees contributed more than $330,000. Other organizations Community Partner also received our support for their funding campaigns. 2004 Donations Employees are always ready to support commu- snapshot ($M) Donations* nity causes by participating in events like the Classique 5.0 Louis-Garneau Montréal – Québec, a 270 km race Education 18% 4.5 held to raise funds for Little Brothers—Friends of Sports and leisure 4.0 7% the Elderly. 3.5 Social and Community partner community causes 3.0 (including federated 2.5 appeals) 52% 2.0 Health 1.5 11% 1.0 Other: (Business,Arts & Culture, Environnement) 0.5 12% 0 02 03 04

* Represent 100% of Cascades Inc. and its joint ventures.

14 2004 Sustainability Highlights

Health An aging population is putting concerns about healthcare at the forefront of the social agenda. Cascades’ commitment to health is demonstrated through its support of various goodwill organizations such as the Fondation de l’Hôpital Sainte-Justine, Fondation de la Maison Michel-Sarrazin, Fondation du Centre Normand-Léveillé and other organizations such as the Canadian National Institute for the Blind. Newborns tested for congenital disorders Since 1971, more than 2 million Québec Emergency Response newborns have been tested for congenital When disaster strikes, Cascaders are there to lend a disorders through a province-wide program. helping hand. For instance, during the 1998 ice storm Cascades supplies all Québec hospitals with that blacked out most of Québec, Cascades mobilized the necessary collection its employees and equipment to help the community. materials, absorbent We also used the Boralex cogeneration plant to supply paper and a pad that energy to the town of Kingsey Falls and surrounding parents use to collect their areas. In the same spirit, the Cascades Tissue Group babies’ urine samples. responded to Florida hurricanes by collecting and These are then mailed to a donating truckloads of products to send to victims. medical lab that run tests for 30 disorders including Employee Volunteerism mental retardation. In Cascades encourages employees in their volunteer instances where a disorder work by freeing them from their work in order to con- is detected, early tribute to a social cause supported by the Company. intervention sometimes entails more effective treatment of the condition.

15 Corporate Social Responsibility

The ﬁnancial ripple effect of solid performance.

16 2004 Remuneration 2004 Remuneration (PAYROLL, BENEFITS, Training Training $ ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 1,000 20 2004 2004 Gross payroll 900 Remuneration Number of hours 18 Remuneration608 (PAYROLL, BENEFITS, Training347,604 Training $ 800 16 ($M) snapshot ($M) AND PROFIT SHARING) snapshot ($M) spent 700 Employee benefits 1,000 Number of employees 20 14 trained Gross237 payroll 600 Number of hours 12 900 8,062 18 Page 11 608 500 347,604 10 reward performance 800 16 Energy Profit sharing 400 Investment 700 148 Employee28 benefits Number of employees 300 trained11 $M 6 237 600 12 200 8,062 4 Page 11 Total remuneration 500 Training costs/ 10 reward performance total remuneration Energy Profit873 sharing 100 Investment 2 400 1.3% 8 28 0 300 11 $M 0 6 02 03 04 02 03 04 200 Total remuneration Training costs/ 4 total remuneration 873 100 2 1.3% 0 0 02 03 04 02 03 04

Million Recycled fibre⁄ short Recycled Particulate Energy % Total fibre tons paper purchases kg/T CO2 equivalent kg/T matter GJ/T consumption 100 5 400 2 40 90 4.5 360 1.8 36 Recycled fibre⁄ Million Recycled Particulate Energy 80 short4.0 320 1.6 32 % Total fibre tons paper purchases kg/T CO2 equivalent kg/T matter GJ/T consumption 100 70 5 3.5 400 280 2 1.4 40 28 Raw fibre supply 9060 4.53.0 360240 1.81.2 3624 and Air emission 50 80 2.5 4.0 200 320 1 1.6 20 32 7040 3.52.0 280160 1.40.8 2816 Raw fibre supply 6030 3.01.5 240120 1.20.6 2412 20 1.0 80 0.4 8 and Air emission 50 2.5 200 1 20 2004 Sustainability Highlights 4010 2.00.5 16040 0.80.2 164 0 30 0 1.5 0 120 0 0.6 0 12 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 20 1.0 80 0.4 8 10 Cascades Canadian0.5 Industry 40 Cascades Canadian0.2 Industry 4 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 The Economic Page 17, the economic environnement Cascades Canadian Industry Total Cascades Canadian Industry Environment suspended solid Dissolved Water Mill consuming residue rejected organic matter Valorized 3 3 Innovating with business savvy m /T consumption less than 10 m /T kg/T in effluent kg/T in effluent % of total residue Solid financialPage performance 17, the economic environnementnot only benefits our 80 20 4.0 Total 2 100 shareholders, but it also has a direct economic impact Cascades’ Research and Development Centre is ($M) Dividends 72 18 3.6 suspended solid 1.8 Dissolved 90 on other groups such as employees, suppliers, govern- the largest private research centre in the Water Mill consuming residue rejected organic matter Valorized 20 64 16 3.2 1.6 80 m3/T consumption less than 10 m3/T kg/T kg/T % of total residue in effluent in effluent ments18 and communities. Our investments in areas Canadian pulp and paper industry. In fact, while 80 56 20 14 4.0 2.8 2 1.4 100 70 Water and résidue such16 as Research and Development (R&D) have a many major players have closed their R&D labs 7248 1812 3.62.4 1.81.2 9060 ($M) Dividends less20 direct14 but equally important economic impact over the past 10 years, we have launched more 40 64 10 16 2.0 3.2 1 1.6 50 80 because1812 through these activities we are adding to R&D projects and have expanded our facilities. 5632 148 2.81.6 1.40.8 7040 Water and résidue 10 16 4824 126 2.41.2 1.20.6 6030 the pool of knowledge that leads to new products, Recent innovations include: 148 40 16 10 4 2.0 0.8 1 0.4 50 20 improves productivity and generates better perform- • A completely recyclable moisture barrier that 126 328 82 1.60.4 0.80.2 4010 ance in our industry. replaces wax and the traditional polyethy- 10 4 0 24 0 6 0 1.2 0 0.6 0 30 lene used to protect rolls of paper or cardboard 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 82 16 4 0.8 0.4 20 during transport. Cascades Canadian Industry 0 6 8 2 0.4 0.2 10 02 03 04 4 • A bleaching sequence that produces recycled 0 0 0 0 0 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 2 pulp that’s nearly as white as virgin pulp. Cascades Canadian Industry 0 • Sieving systems that 02 03 04 2004 Employees Consolidated Net lead to softer, more Workforce Total by geography ($M) Sales ($M) OIBD* ($M) earnings* 1 Selected Financial Data absorbent tissue paper. snapshot employees % 2004 4,000 500 200 • A new patented enzyme 20,000 100 3,600 450 180 Consolidated Net 2004Number of employees 18,000 90 Employees 3,200 400 160 process, formulated with ($M) Sales ($M) OIBD* ($M) earnings* Workforce 15,800 Total by geography 16,000 1 80 2,800 350 140 CO solution, for producing snapshot% unionized employees % 2004 4,000 500 200 2 63% 14,000 70 2,400 300 120 calcium carbonate used to Workforce profile 20,000 100 3,600 450 180 Average years 12,000 60 2,000 250 100 ofNumber service of 2employees 18,000 90 3,200 400 160 produce paper. The new 15,800 10,000 50 9 16,000 80 2,8001,600 350200 14080 process reduces green- Average% unionized age2 8,000 40 63% 14,000 70 2,4001,200 300150 12060 40 house gas emissions. Workforce profile 6,000 30 800 100 40 InternsAverage hired years 12,000 60 2,000 250 100 of service2 • The research centre also 207 10,0004,000 50 20 400 50 20 9 1,600 200 80 Students hired2 2,000 10 0 0 0 supports our new product development efforts. 711Average age 8,000 40 1,200 150 60 40 0 0 02 03 04 02 03 04 02 03 04 As an example, the Somerfresh™ cereal box 6,000 30 800 100 40 Interns hired 02 03 04 made by our Folding Carton Division is a 207 4,000 20 400 50 20 Canada United States Europe Students hired 2,000 10 0 0 0 patented carton design made by using Cascades 711 0 0 02 03 04 02 03 04 02 03 04 Boxboard which is then coated with a special 02 03 04 barrier. This revolutionary carton eliminates Canada United States Europe Cash flow Capital Business the need for a plastic or wax liner for food ($M) from operations ($M) expenditures ($M) aquisitions Lost-time Lost-time 400 150 150 protection from moisture and oxygen. frequency rate* severity rate 360 135 135 Cash flow Capital Business 10 100 320 120 120 ($M) from operations ($M) expenditures ($M) aquisitions 9 90 Lost-time Lost-time 400 280 150 105 150 105 8 80 frequency rate* severity rate 360240 13590 13590 7 70 10 100 200 320 75 120 75 120 Health and safety 6 60 9 90 280160 10560 10560 5 50 8 80 240120 9045 9045 4 40 7 70 200 80 75 30 75 30 Health and safety 3 30 6 60 16040 6015 6015 2 20 5 50 0 120 0 45 0 45 1 10 02 03 04 02 03 04 02 03 04 4 40 80 30 30 0 0 3 30 40 15 15 02 03 04 02 03 04 * Exclude specific elements. 2 20 0 0 0 1 10 02 03 04 02 03 04 02 03 04 0 0 02 03 04 02 03 04 17

2004 Donations snapshot ($M) Donations* 5.0 Education 200418% Donations 4.5 Sports and leisure 4.0 snapshot ($M) 7% Donations* 3.5 Social and 5.0 Community partner communityEducation causes 3.0 18% 4.5 (including federated 2.5 appeals)Sports and leisure 4.0 7% 52% 3.52.0 HealthSocial and 1.5 Community partner 11community% causes 3.0 1.0 Other:(including (Business,Arts federated & 2.5 appeals) Culture, Environnement) 0.5 1252%% 2.0 Health 0 1.5 11% 02 03 04 1.0 Other: (Business,Arts & Culture, Environnement) 0.5 12% 0 02 03 04 Corporate Social Responsibility

Respect, transparency and commitment: our guiding forces.

18 2004 Sustainability Highlights Governance

Our Board of Directors is responsible for overseeing strategic planning, risk management, integrity of inter- nal controls and management information systems, and the selection, appointment and remuneration of board members and senior management. The Board of Directors is guided by a corporate governance policy, which clearly identiﬁes these roles.

Board committees: Code of Ethics • Corporate Governance Committee Doing the right thing has always been • Administrative Committee the Cascades way. In 2004, we formalized this • Audit Committee work style and introduced a Code of Ethics that • Human Resources Committee applies to directors, employees and consultants. • Environmental, Health and Safety Committee The code covers a broad spectrum of On an on-going basis, the Board reviews its struc- ethical issues inclu-

ture and composition and initiates changes to improve ��ding privacy, confiden-

��tiality, competition, human �� its effectiveness. ��

�� rights, conﬂicts�� of interest,

2004 highlights: �� political activities, enviro- �� nmental impact and social • Revised and adopted Board and Committee �� charters responsibility. Currently, �� • Revised and adopted several corporate policies employees across Cascades including information disclosure are being trained on all • Adopted a code of ethics and complaint procedures aspects of the Code.�� Our for auditing and accounting matters Code of Ethics can be read at www.cascades.com.

19 Corporate Social Responsibility Recognition

The Association des mandataires en vériﬁcation mécanique du Québec, which is partially responsible for road vehicle inspections in Québec, handed Cascades the 2004 Clean Air Award for its efforts in reducing greenhouse gas emissions.

The Phenix Environmental trophy was awarded to Cascades in 2001 and 2003.

With the widest range of Canadian-made alkaline paper containing an average of 30% postconsumer fibre on the market, Cascades Fine Papers Group is at the forefront of the recycled paper industry in Canada. Our Saint-Jérôme facility is only one of two mills in Canada to bear Environment Canada’s EcoLogo™ mark. We are also the only company in North America to be certified by the Chlorine Free Products Association (CFPA), attesting that our production line is 100% chlorine-free, from the pulp to the finished product.

For the second year in a row, Cascades Fine Papers Group was selected as the ofﬁcial paper of Earth Day Canada. Cascades supplied paper for printing promotional tools for the event, which took place in April 2004.

Cascades’ commitment to the protection of ancient forests was lauded by Greenpeace in 2004 after the Cascades Tissue Group announced its decision to start acquiring virgin pulp from sources that meet the strict certiﬁcation standards of the Forest Stewardship Council (FSC). Describing the decision as “environmentally progressive and forward-thinking,” Greenpeace added Cascades tissue products to the positive “green” category of its Shopper’s Guide to Ancient Forest Friendly Tissue Products.

Cascades was named among the 100 Best Employers in Canada in 2003 and 2004. The study rated the Company above average or exceptional in terms of physical workplace, work atmosphere, benefits, performance management, training and community involvement.

Cascades was honoured with awards from the Paperboard Packaging Council for the design and development of two packaging solutions: Sundae Nestlé Cup 2™ and Unilever Marinades™.

The Company received two Mercure trophies, among Québec’s most prestigious business awards.

20 2004 Sustainability Highlights

Respect, excellence, innovation, environmental protection and social responsability are the foundations on which our Company was built. At all times, respect has been strongly rooted and acted as the core of our philosophy: it is the fundamental value which drives us. www.cascades.com

Paper: Rolland Enviro Edition 100™, 100% postconsumer, Smooth Finish, White, 60 lb. Production: Communications Department of Cascades Inc. Design: Ardoise Design Communications Inc. Prepress: Groupe Quadriscan Printing: Quebecor World Graphique-Couleur PRINTED IN CANADA