This is Norske Skog in words and numbers. Norske Skog is a leading Norwegian industrial company which focu- ses on these core areas: printing paper for newspapers and maga- zines, bleached sulphate pulp, and wood-based building materials. The Group has about 5,800 employees, and its operating income in 1996 was NOK 13,265 million. 78% of its income came from export markets, primarily in Europe, but also in the US and the Far East. The Group operates 23 companies in Norway, one mill in Austria and one in France. Its activities are organized in fourAreas: Paper, Fibre, Building Materials and Resources. In printing paper, Norske Skog is one of the world's leading suppliers, with capacity of 2.3 million tonnes in a market that totals about 50 million tonnes. Norske Skog is the third largest manufactu- rer of printing paper in Europe, and the world's fifth largest news- print producer. The pulp sold by the Group is used in the production of printing paper, fine paper and tissue. Norske Skog Bygg AS is Norway's largest producer of building materials: sawn timber for building purposes, board for the building and furniture industries, and flooring products. Since its foundation in 1962, Norske Skog has grown rapidly through mergers with other companies, and major investments in new mills, both in Norway and abroad. Since 1990 the Group has in- creased its printing paper capacity by one million tonnes, or just over 70%. Norske Skog has a sound financial basis, with total assets of NOK 16,623 million, and an equity capital ratio of 45,9%. The Group has about 18,000 shareholders. The largest shareholder groups are forest owners' associations in Norway, funds, financial institutions and pri- vate individuals. Norske Skog's goal is to continue its development as an inter- national industrial group. The Group will strive for long-term profit- ability and must be able to compete with the leaders in its product and market areas. Norske Skog shall be known for high standards in all environ- mental matters. Production capacities 1997 Paper Building materials *) Newsprint 1,505,000 t Sawn timber 590,000 m3 Magazine paper 760,000 t Particle board 350,000 m3 Special grades 35,000 t High-pressure laminates 4,000,000 m2 Total paper capacity 2,300,000 t Parquet flooring 1,500,000 m2 Fibre Resources **) Sulphate pulp 365,000 t Total property area 180,000 hectares Chemithermomechanical pulp (CTMP) 90,000 t Of which productive forest area 81,000 hectares Total capacity market pulp 455,000 t With sustainable annual timber yield of ***) 102,000 m3 Mean annual electricity output (hydropower) 415 GWh *) This activity also includes eight units for trading in building materials and further treatment of sawn timber. **) This activity also includes procurement of round timber, waste paper and energy and management of the Group's property. ***) The amount which can be harvested annually, without reducing future harvesting. 1 Group President and CEO Jan Reinås: The forest industry is based on renewable natural resources. That is our great strength and great challenge. Open, objective environmental reporting is a part of Norske Skog's environmental policy. The Group's environmental policy embraces the whole life cycle of our products, from raw material, via production, transport, recycling and waste treat- Photo: Anne Nordseth ment. That is reflected in this report. It is vital that we adopt an overall view in our environmental work. The environmental effects of an activity or a product cannot be seriously evaluated unless one approaches it in this way. It is in this perspective that we must also evaluate the possibilities of the forest industry. We manufacture recyclable products based on renewable raw materials which will not be exhausted, if we manage them sensibly. We are not just talking about a cradle to grave life cycle, but a life cycle from cradle to cradle, in which the raw mate- rials and most of the energy sources we use renew themselves and can be used over again. This is our industry's great strength - and great challenge. A high environmental standard is important to Norske Skog. We have a responsibility to ope- rate our activity with the smallest possible negative impact on the environment. But the environ- ment also has a commercial aspect. Our customers, employees, investors and insurance compa- nies are giving steadily increasing weight to environmental standards and environmental policy. In order to manage better, and to satisfy the demand for information to our market and the public, we must be able to document our environmental efforts. Norske Skog aims to achieve this through environmental certification and environmental management systems, with EMAS and ISO 14001 as tools. In the course of 1996 the Skogn, Hurum and Bruck paper mills were ISO-certified and/or EMAS-approved, and others will follow in 1997. Our policy is that all the relevant units in the Group should meet EMAS standards. In the forest sector, Norske Skog is playing an active part in the drive to develop environmental standards and documentation sys- tems for sustainable forestry, among other things through the “Living Forests” project. This is an area attracting keen international attention. As part of our quality assurance in the environment field, this year's environmental report has - for the first time - been verified by an external auditing firm, with special competence in this discipline. Jan Reinås 2 Nature’s variety – an important factor for our existence. Photo: Farbbild-Service 3 The life cycle concept. Our virtuous circle: The raw materials are renewable, the products can be used without danger to health or the environment, and they can become a source of bioenergy when they can no longer be used or recycled. The forest industry's activity is linked to nature's own cycle. new wood. Thus the cycle is completed. The binding of This provides a unique opportunity to develop this industry CO2 by the forest also helps reduce the so-called “green- in the direction of a sustainable activity. house effect”. Our activity processes renewable raw materials from the The forest industry in Norway enjoys, in addition, forest. The sun's energy and photosynthesis produces wood another significant environmental advantage connected with and oxygen, in an everlasting process. The forest industry uses nature's cycle. The activity is to a large extent based on the wood to produce building products and paper, while the clean, renewable hydro power, in addition to the bioenergy forest is renewed through planting and natural regeneration. recovered from bark and other production waste. The natural cycle gives the forest industry fundamental advantages. Of course, however, this activity is not without negative effects on the environment. Forestry affects the CARBON DIOXIDE balance of nature and the forest's biodiversity. Emissions Business Graphics TTHEHE FFORESTOREST CCYCLEYCLE from production processes and transport cause pollution. Waste generated by production and consumption can add to ENERGY RECOVERY environmental problems. The effects of all this can be made apparent through life cycle analysis which evaluate the environmental impact PAPER RECYCLING of products from the raw material stage through recycling and destruction. Research instituti- ons are currently undertaking such analysis in connection with Norske Skog’s activities. This forms part of a large cycle. At the same time, the This environmental report products have a cycle of their own. Used paper and timber will take a closer look at various can be recycled into new products, or used to produce bio- environmental effects arising energy through incineration in energy recovery plants. Bio- from Norske Skog’s activity at energy is so-called CO2-neutral energy, as long as forest all stages of the life cycle. growth exceeds harvesting. When CO2 (carbon dioxide) is released from wood products through burning or decay, it is d absorbed by the forest and used in photosynthesis to produce 4 Environmental challenges. This is a report about some of what we have done and achieved. Let us not forget, nevertheless, that many environmental challenges remain. Presentation of this report use of renewable, non-polluting energy sources such as Norske Skog’s environmental policy has been defined under hydropower and bioenergy. eight headings (page 6), and embraces the life cycle of our Discharges products. This environmental report is presented in the same Our discharges have been sharply reduced during recent way. It covers the concrete content related to each individual years, and the Group will continue its efforts to reduce them. point of policy for 1996, in terms of measures, results, prob- Discharge statistics often provide a good picture of the gene- lems and examples. ral environmental standard at individual plants, and such statistics will continue to be one of the government’s most Content of the report important tools for monitoring industrial activity. The possi- The report covers all relevant production units belonging to ble effects of discharges are mainly linked to the production the Group, as well as subsidiaries which are consolidated of pulp and paper – not much to the production of building into Norske Skog’s accounts. Most of these units are in materials. This is reflected in this environmental report. Norway, but about a quarter of the Group's paper production is located in France and Austria. The specific figures and Environmental Management data in the report are concentrated on Norske Skog's activity In view of the Group’s goal that all relevant units should be – that is, the Group’s own production, own forestry, own EMAS-approved, considerable resources will be devoted to research and so forth. However, the report also deals with this at our plants during the coming period.