West Fraser Mills Ltd. – B.C

West Fraser Mills Ltd. – B.C. and Alberta Woodlands – 2018

Between February and November 2018 an audit team from KPMG Performance Registrar Inc. (“KPMG” or “KPMG PRI”) carried out a surveillance audit of West Fraser Mills Ltd. (West Fraser)’s B.C. and Alberta Woodlands Operations and associated production facilities against the requirements of the Sustainable Forestry Initiative® (SFI) 2015-2019 forest management and fiber sourcing standards. To provide for a more efficient audit, PEFC and FSC chain of custody audits were conducted at the same time. This Certification Summary Report provides an overview of the process and KPMG’s findings regarding the Company’s conformance with the SFI 2015-2019 forest management and fiber sourcing standards. SFI Forest Management and Fiber Sourcing Certifications All of West Fraser’s B.C. and Alberta Woodlands Operations are included within the scope of multi-site SFI forest management and fiber sourcing certificates issued by KPMG PRI. The Company’s current SFI certifications are valid until August 12, 2020.

West Fraser’s B.C. and Alberta Woodlands Operations The area included within the scope of the Company’s SFI forest management certification includes the following 12 West Fraser Woodlands Operations: ▪ 100 Mile Woodlands ▪ Alberta Plywood Woodlands (part of North Central Woodlands (NCW)) ▪ High Prairie Forest Products Woodlands (part of North Central Woodlands (NCW)) ▪ Blue Ridge Lumber Woodlands ▪ Chetwynd Forest Industries Woodlands ▪ Fraser Lake Woodlands ▪ Hinton Wood Products Woodlands ▪ Manning Forest Products (MFP) Woodlands ▪ Pacific Inland Resources (PIR) Woodlands ▪ Quesnel Woodlands ▪ Sundre Woodlands ▪ Williams Lake Woodlands The above West Fraser woodlands operations currently cover a total of approximately 8.5 million hectares (gross area), and provide the Company with a combined allowable annual cut (AAC) of 13.9 million m3 per year. The audit found that Company continues to conform to the AACs applicable to these operations (for 2017 the actual harvest level from company tenures was 11.45 million m3).

West Fraser’s B.C. and Alberta Woodlands operations are all covered by a corporate sustainable forest management (SFM) plan that addresses the Objectives of the SFI forest management standard and includes a variety of targets in relation to them. In addition, government-approved forest stewardship plans (for all B.C. Woodlands) and #0746 forest management plans (for all Alberta woodlands) that address both timber and non- timber values are also in place. In addition, various higher level plans developed by government (e.g., Land and Resource Management Plans, etc.) also provide direction to forest management within the areas managed by the Company.

The Company’s B.C. and Alberta woodlands operations fall within the following World Wildlife Fund (WWF) ecoregions: (1) Fraser Plateau and Basin Complex, (2) North Central Rockies Forest, (3) Cascade Mountains Leeward Forest, (4) Central British Columbia Mountain Forests, (5) Okanagan Dry Forests, (6) Alberta-British Columbia Foothills Forests, (7) Alberta Mountain Forests, (8) Canadian Aspen Forests and Parklands, (9) Mid-Continental Canadian Forests, and (10) Northern Cordillera Forests. The above ecoregions also represent the area of B.C. and Alberta from which the Company procures fibre from third parties to supplement supplies harvested from its own woodlands operations.

The forests managed by the Company are dominated by the following commercial tree species: Pinus contorta var. latifolia (Lodgepole pine), Picea glauca (White spruce and

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hybrids), Picea engelmannii (Engleman spruce and hybrids), Picea mariana (Black spruce), Pseudotsuga menziesii (Interior Douglas-fir), Abies balsamea (Balsam Fir), West Fraser Mills Ltd.—B.C. and Abies lasiocarpa (Sub-alpine fir), Populus tremuloides (Trembling aspen), Populus Alberta Woodlands balsamifera (Balsam poplar), Betula papyrifera (Paper birch). 2018 SFI Surveillance Audit Findings The forest management approach employed by the Company at its B.C. and Alberta woodlands operations is based on even-aged management, ground-based and/or cable harvesting systems, clearcut harvesting with the retention of reserves of standing trees Open non-conformities either within or adjacent to harvest areas, replanting of harvest areas within a few years 0 with a mix of ecologically suited tree species and control of competing vegetation through from previous audits the use of government-approved chemical herbicides (only some woodlands operations) and/or mechanical means. Controls are in place to help reduce reliance on chemical brush control where feasible to do so. New major non- 0 conformities West Fraser’s B.C. and Alberta Woodlands Manufacturing Facilities New minor non- 1 The mills included within the scope of the Company’s SFI fibre sourcing certification conformities includes the following West Fraser manufacturing facilities: ▪ 100 Mile Lumber sawmill New opportunities for 9 ▪ Alberta Plywood veneer plant improvement ▪ Blue Ridge Lumber sawmill ▪ Chasm sawmill ▪ Chetwynd Forest Industries sawmill ▪ Edson Forest Products sawmill Types of audit findings Major nonconformities: ▪ Fraser Lake sawmill Are pervasive or critical to the ▪ High Prairie sawmill achievement of the SFM Objectives. ▪ Hinton Wood Products sawmill Minor nonconformities: ▪ Manning Forest Products sawmill Are isolated incidents that are non-critical ▪ Pacific Inland Resources (PIR) sawmill to the achievement of SFM Objectives. ▪ Quesnel sawmill and plywood mill ▪ Slave Lake pulpmill All nonconformities require the development of a corrective action plan ▪ Sundre Forest Products sawmill within 30 days of the audit. Corrective ▪ West Fraser LVL mill action plans to address major nonconformities must be fully ▪ Williams Lake sawmill and plywood mill implemented by the operation within 3 months or certification cannot be The Company’s fiber sourcing needs vary considerably between facilities. While the achieved / maintained. Corrective action majority of fiber is sourced directly from the Company’s own woodlands, approximately plans to address minor nonconformities one-third (4.0 million m3 in 2017) is purchased from third parties, a portion of which is must be fully implemented within 12 purchased stumpage that is logged by West Fraser contractors under the Company’s months. environmental management system (EMS). Major nonconformities must be West Fraser participates in the Western Canada SFI Implementation Committee addressed immediately or certification (WCSIC) Purchase Wood Monitoring Program by completing risk assessments for all cannot be achieved / maintained. wood purchases and purchase wood inspections as necessary. The results are collated Opportunities for Improvement: by the WCSIC in order to identify opportunities for improvement. The large majority of wood purchases are from other organizations (forest companies and B.C. Timber Sales) Are not nonconformities but are who hold their own SFM certifications, with a small percentage coming from uncertified comments on specific areas of the SFM System where improvements can be private land and oilfield salvage operations. made.

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Audit Scope The SFI portion of the audit entailed a limited scope assessment against the requirements associated with the following SFI 2015-2019 forest management and fibre sourcing objectives: ▪ Forest health and productivity; ▪ Management of visual quality and recreational benefits; ▪ Adherence to best management practices; ▪ Legal and regulatory compliance; ▪ Forestry research, science and technology; ▪ Community involvement and landowner outreach; ▪ Public land management responsibilities; ▪ Communications and public reporting, and; ▪ Management review and continual improvement. The Audit ▪ Audit Team – The audit was conducted by Dave Bebb, RPF, EP(EMSLA), Craig Roessler, RPF, EP(EMSLA), Branden Beatty, RPBio, Orrin Quinn, RPF and Bodo von Schilling, RPF, EP(EMSLA). Members of the audit team have conducted numerous forest management audits under a variety of standards including SFI, ISO 14001, CSA Z809 and FSC®. ▪ SFI Surveillance Audit – The audit involved an on-site assessment of the West Fraser B.C. and Alberta Woodlands Operation’s EMS and SFI program. Site visits were made to a total of 4 out of 12 woodlands divisions (Pacific Inland Resources, 100 Mile House, Alberta Plywood and High Prairie) as well as the Company’s Quesnel, B.C. Corporate Office. This sample size is consistent with IAF requirements regarding audit sampling for multi-site certifications. The audit involved a review of selected EMS and SFI records, interviews with a sample of staff, contractors and regulatory agency personnel and visits to a sample of field sites (38 roads, 35 cutblocks, 19 silviculture sites, 2 camps and 7 wood procurement sites) to evaluate SFM system implementation and effectiveness. The SFI portion of the 2018 West Fraser audit took approximately 30 auditor days to complete, 20 days of which were spent on-site. The balance of audit time was spent preparing the audit plan, conducting an off-site review of selected Company documents, completing various audit checklists and preparing the main and public summary audit reports. ▪ West Fraser’s SFI Program Representatives – Stephen Vinnedge, RPF (West Fraser’s Stewardship and Environmental Manager) and Julie Dinsdale, RPF (West Fraser’s Stewardship and Policy Forester) served as the Company’s SFI program representatives during the audit. In addition to visiting completed harvest Audit Objectives units in order to assess full site plan implementation (including implementation The objectives of the audit were to evaluate the SFM system at West Fraser’s B.C. and of block completion activities, such as Alberta woodlands operations to: road and structure deactivation, soil and ▪ Determine its conformance with the requirements of the SFI 2015-2019 forest water protection measures, fire hazard management and fibre sourcing standards; abatement, etc.), the field audit also fo- cuses on active harvest units in order to ▪ Evaluate the ability of the system to ensure that the Company meets applicable assess logging contractors performance regulatory requirements; respecting awareness of operational and ▪ Evaluate the effectiveness of the system in ensuring that West Fraser Mills Ltd. environmental issues, including aware- meets its specified SFM objectives, and; ness of site plan specifications, compliance with fire and fuel management pre- ▪ Where applicable, identify opportunities for improvement. paredness and protection requirements and efficient utilization of harvested timber (pictures taken at PIR).

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Audit Conclusions The audit found that West Fraser Mills Ltd. – B.C. and Alberta Woodland’s SFM system:

▪ Was in conformance with the requirements of the SFI standards included within the scope of the audit, except where noted otherwise in this report; ▪ Continues to be effectively implemented, except to the extent that non-conformities have been identified during the current audit or in previous audits if they have yet to be adequately addressed, and; ▪ Is sufficient to systematically meet applicable requirements and expected outcomes, provided that the system continues to be implemented and maintained as required.

As a result, a decision was reached by the lead auditor to recommend that West Fraser The field audit observed noteworthy ex- Mills Ltd. – B.C. and Alberta Woodlands continue to be certified to the SFI forest amples of effectively installed drainage management and fibre sourcing standards. structures on on-block roads, including (as shown in this picture) the use of na- Evidence of Conformity with SFI 2015-2019 Standards tive timber bridges on all crossings of ephemeral and intermittent streams Primary sources of evidence assessed to determine conformity with the SFI 2015-2019 when installed under non-frozen condi- forest management and fiber sourcing standards are presented in Table 1 below. tions in the North Central Woodlands.

SFI Forest Management Objective Sources of Key Evidence of Conformity

1. Forest Management Planning Not in scope for the 2018 audit.

2. Forest Health and Productivity SFM plan, Forest Stewardship Plans (FSPs), Detailed Forest Management Plans (DFMPs), EMS operational controls, site plans, silviculture records, staff and contractor interviews, field inspections. 3. Protection and Maintenance of Not in scope for the 2018 audit. Water Resources

4. Conservation of Biological Not in scope for the 2018 audit. Diversity 5. Management of Visual Quality SFM plan, Forest Stewardship Plans and Recreational Benefits (FSPs), Detailed Forest Management Plans (DFMPs), site plans, visual impact assessments, staff and contractor interviews, field inspections. 6. Protection of Special Sites Not in scope for the 2018 audit. 7. Efficient Use of Fibre Resources Not in scope for the 2018 audit. 8. Recognize and Respect Indige- Not in scope for the 2018 audit. nous Peoples’ Rights 9. Legal and Regulatory Compli- SFM plan, corporate environmental, social ance and health & safety policies, Corporate Stewardship Report, management review records, non-compliance records, field inspections, interviews with regulatory agency personnel.

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SFI Forest Management Objective Sources of Key Evidence of Conformity The main product of the Company’s Western Canadian sawmills is spruce/ 10. Forestry Research, Science & SFM plan, Corporate Stewardship Report, pine/fir (“SPF”) lumber. West Fraser also Technology corporate and divisional management re- produces panels (plywood, MDF and view records, research records, staff inter- LVL), pulp (NBSK and BCTMP), energy views. and wood chips. 11. Training and Education Not in scope for the 2018 audit. 12. Community Involvement and SFM plan and related monitoring results, Landowner Outreach WCSIC meeting minutes & resources, community and landowner outreach records, staff interviews. 13. Public Land Management Re- SFM plan, Forest Stewardship Plans sponsibilities (FSPs), Detailed Forest Management Plans (DFMPs), stakeholder consultation and referral correspondence records, site plans, staff interviews, field inspections. 14. Communications and Public Re- Certification summary report, annual report porting to SFI, staff interviews. 15. Management Review and Contin- SFM plan, management reviews, internal ual Improvement audit reports and associated action plans, divisional EMPs, staff interviews. SFI Fibre Sourcing Objective Sources of Key Evidence of Conformity 1. Biodiversity in Fibre Sourcing Not in scope for the 2018 audit.

2. Adherence to Best Management Fibre sourcing policy and records of its Practices distribution to wood producers, written fibre sourcing agreements, records of implementation of the Best Management Practices (BMPs) monitoring system, inspection of a sample of procurement sites. 3. Use of Qualified Resource and Not in scope for the 2018 audit. Logging Professionals

4. Legal and Regulatory Compli- SFM plan, corporate environmental, social ance and health & safety policies, Corporate Stewardship Report, corporate and divi-

sional management review records, non- compliance records, inspection of a sample of procurement sites, interviews with regulatory agency personnel. With SFI Forest Management Objec- 5. Forestry Research, Science & SFM plan, Corporate Stewardship Report, tive 2 (Forest Health and Productivity) Technology corporate and divisional management re- in scope during the 2018 West Fraser view records, research records, staff interviews. Mills’ audit, silviculture programs and activities were reviewed, including field 6. Training and education Not in scope for the 2018 audit. assessments of the implementation of 7. Community Involvement and Not in scope for the 2018 audit. the Company’s planting and brush Landowner Outreach control program. The audit confirmed 8. Public Land Management Re- Records of cooperative public land planning that the large majority of the Compa- sponsibilities processes, plan referrals to local stakehold- ny’s harvest blocks are replanted with- ers, staff interviews. (MFP only) in 2 years of the completion of harvest 9. Communications and Public Re- Certification summary report, annual report (pictures taken in North Central Wood- porting to SFI, staff interviews. lands).

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SFI Fibre Sourcing Objective Sources of Key Evidence of Conformity 10. Management Review and Contin- SFM plan, management review records, ual Improvement internal audit reports and associated action plans, interviews with a sample of corporate and divisional procurement staff. 11. Promote Conservation of Biologi- Program with direct suppliers to promote the cal Diversity, Biodiversity principles of sustainable forestry (POSF), Hotspots and High-Biodiversity records of direct supplier implementation of Wilderness Areas the POSF, procurement staff interviews. 12. Avoidance of Controversial Not in scope for the 2018 audit. Sources including Illegal Logging 13. Avoidance of Controversial Not in scope for the 2018 audit. Sources including Sources without Effective Social Laws

Follow-up on Findings from Previous Audits At the time of this assessment there were no open minor nonconformities from previous external SFI audits that required follow-up. Good Practices A number of good practices were identified during the course of the 2018 audit, as follows: The scope of the audit included the Company’s programs for protecting for- ▪ SFI Forest Management Objective 1: A review of a sample of recent site plans for ests from fire and disease, including fire active harvest blocks found that they included: (1) a good level of detail regarding the abatement strategies (such as piling and resource values present and the prescriptions developed to address them, and (2) a burning to reduce fuel loading on har- clear summary of the applicable Bulkley TSA Higher Level Plan Order (HLPO) requirements and how these had been addressed in the site plan. (PIR) vested sites), divisional fire control plans and fire response equipment and train- ▪ SFI Forest Management Objective 1: The collaboration and good will devoted to ing. developing West Fraser’s Recovery Strategy in the Elephant Hill Fire Area informed by the Elephant Hill Joint Leadership Council was noted during the audit. (100 Mile) ▪ SFI Forest Management Objective 2: The Fire watch checklist used by three contractors was found to be a usefule due-diligence tool. (100 Mile) ▪ SFI Forest Management Objective 2: The audit found two contractors were taking a great deal of pride and care of in-block retention, including a pre-harvest walk of blocks involving the West Fraser supervisor and the buncher operator to identify retention opportunities. (100 Mile) ▪ SFI Forest Management Objective 2: Two spill response training sessions were conducted in 2018 (involving both staff and contractors). The audit found spills and fire drills are emphasized and widely implemented. (100 Mile) ▪ SFI Forest Management Objective 2: PIR has worked with government to develop new landscape level reforestation standards at the Analysis Unit level (which are included in the new FSP) that are more closely linked to the timber supply analysis process than the previous standards. (PIR) ▪ SFI Forest Management Objective 3: The audit found that North Central Woodlands has taken significant strides towards improving the quality of drainage structures on on-block roads, including requiring the use of native timber bridges on all crossings of ephemeral and intermittent streams that are installed under non-frozen conditions. (NCW) ▪ SFI Forest Management Objective 4: An interview with a buncher operator working on block P07 2744 found that he had adopted the practice of recording the location of all of the residual clumps that he had created on his block map. (NCW)

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▪ SFI Forest Management Objective 4: PIR took a lead role in working with other forest licensees to coordinate and fund the 2016 update of the Bulkley TSA Higher Level Plan Order Analysis in order to assess the current status of several key landscape level biodiversity indicators (e.g., seral stage, patch size distribution, core ecosystems, landscape corridors, etc.) and facilitate coordinated forest management planning. (PIR) ▪ SFI Forest Management Objective 5: A recent visual impact assessment for a cutblock on Caverhill Lake completed by Foresite included an online video clip communicating the visual quality objectives. (100 Mile) ▪ SFI Forest Management Objective 9: PIR requires its logging contractors to have GPS units in all feller-bunchers to help reduce the risk of harvest boundary trespass. (PIR) ▪ SFI Forest Management Objective 9: The audit noted one contractor (Kropp) who uses a helicopter to fly all of its blocks prior to commencing operations as a means to help identify sensitive areas. (NCW) ▪ SFI Forest Management Objective 13: PIR posts map-based information on proposed harvest blocks on the Bulkley/Lakes/Morice Information Sharing website as a means to more effectively communicate their proposed harvest plans to external interested parties. (PIR) Nonconformities The following nonconformity was identified during the audit in relation to the requirements of the SFI 2015-2019 forest management standard: ▪ SFI Forest Management Objective 9: Applicable legal and regulatory requirements were overall being complied with, with one exception noted during the audit: a truck mounted fuel tank was not secured to the pickup truck on one active harvest operation field reviewed (in contravention of Transportation of Dangerous Goods regulatory requirements) (NCW). Opportunities for improvement The following 9 opportunities for improvement were identified during the audit in relation to the requirements of the SFI 2015-2019 forest management and fiber sourcing standards: ▪ SFI Forest Management Objective 2: The field audit observed isolated rutting on a seismic line accessing one block, as well as in a ditch off the main road accessing The field audit confirmed that the Com- another block. (NCW) pany divisions identify sensitive soils (such as those vulnerable to compac- ▪ SFI Forest Management Objective 2: The field audit observed isolated instances where tion) at the planning stage and pre- the Company’s emergency preparedness and response procedures were ineffectively scribe in site plans management con- implemented (e.g., an expired fire extinguisher on a loader, a missing spill kit and lack of drip containment on a truck mounted fuel tank and lack of spill kits near a camp’s straints designed to protect the soils generator fuel tanks). (NCW). such as prescribing a season and ground condition that must be met be- ▪ SFI Forest Management Objective 3: A field visit to a contractor’s camp found that the fore harvesting can proceed, such as treatment effluent from a portable waste water treatment facility was pooling on top of frozen ground conditions, as was the the ground and flowing across the camp property. The audit noted an opportunity to improve the outflow to ensure it leaches into the ground after treatment. (NCW) case for the site above (PIR). ▪ SFI Forest Management Objective 3: The field audit identified isolated weaknesses in the quality of on-block drainage structures (e.g., on one recent harvest block the contractor installed a log fill and modified log fill as opposed to native timber bridges as instructed by the supervisor, sill (brow) logs utilized on some native timber bridges inspected appeared to be too small in diameter to provide adequate stream channel clearance and in a few isolated instances the geotextile installed on native timber bridges was not adequately affixed, introducing the risk of soil entry into the creek). (NCW).

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▪ SFI Forest Management Objective 4: Isolated weaknesses were noted in the documentation established and implemented to guide the Company’s practices respecting (1) species at risk (a divisional species at risk guide was last updated in May 2017 and appeared to not have been reviewed during the most recent management review (North Central Woodlands)) and (2) invasive species (a divisional handbook containing key environmental procedures provided to contractors does not contain information that would help opera- tors identify and report invasive species (PIR)). ▪ SFI Forest Management Objective 9: The following isolated weaknesses in EMS docu- ment control were noted on three active blocks field reviewed: (1) an EMS booklet was not readily available to the crew, (2) the required pre-work was not present and (3) a loaderman did not have a map. (NCW). ▪ SFI Forest Management Objective 9: A review of a sample of non-conformance and action plan records found isolated weaknesses in these records (respecting incomplete or unclear documentation and lack of signoff). (NCW). ▪ SFI Forest Management Objective 15: The audit identified isolated deficiencies in the level of detail in the divisional management review records in relation to, for example, lessons learned from stakeholder concerns (100 Mile) and recommendations for improvement (PIR and NCW). ▪ SFI Fibre Sourcing Objectives’ 2 and 3: The audit confirmed that overall the Company is effectively implementing its fibre sourcing program, with areas for improvement identified in 100 Mile (respecting the lack of completed procurement wood risk assessment forms on file for two fibre sources, use of an older version of the form by procurement staff, lack of consolidated tracking of procurement inspections and information package distribution information and a lack of a prompt inspection of one procurement site) and NCW (respecting the information package not being distributed to farmers). The field audit identified numerous ex- Corrective Action Plans amples of effectively implemented tree retention strategies designed to Corrective action plans designed to address the root cause(s) of the minor nonconformity achieve in-block retention targets identified during the 2018 audit have been developed by West Fraser Mills and reviewed and approved by KPMG PRI. The next surveillance audit will include a follow-up assessment of (which was identified as a good prac- these issues to confirm that the corrective action plans developed to address them have been tice in this report for 100 Mile in relation implemented as required. to the proactive identification of retention opportunities by West Fraser su- pervisors and contractor buncher oper- ators) as well as to protect other resource values (riparian, wildlife habitat elements and features, etc.).

Contacts: This report may only be reproduced by the intended client, West Fraser Mills Chris Ridley-Thomas, RPBio, EP(EMSLA) (604) 691-3088 Ltd. with the express consent of KPMG. Information in this issue is of a David Bebb, RPF, EP(EMSLA) (604) 691-3451 general nature with respect to audit findings and is not intended to be acted upon without appropriate professional advice. © 2018 KPMG. All rights reserved.

Through KPMG PRI, KPMG’s Vancouver based forestry group is accredited to register forest companies to ISO 14001, CSA-SFM, SFI and PEFC certification standards.