2017 ANNUAL AND SUSTAINABILITY REPORT
resolutefp.com
1 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
A REWARDING CULTURE
Over the past six years, Resolute In recognition of our industry-leading Forest Products has emerged as a sustainability, environmental and safety performance, Resolute won over 20 regional, global sustainability leader, working North American and international awards and closely with employees, retirees, union distinctions in the past year alone. representatives, customers, business We value this recognition because it provides and Aboriginal partners, community tangible proof that our vision and values are not leaders, government officials, and merely aspirational words; they are the driving force behind our improved performance and industry peers on issues that matter to global success. The awards garnered in 2017 us all: protecting the natural resources speak directly to our core values of working safely, in our care, mitigating climate change, being accountable, ensuring sustainability and investing in clean sources of energy succeeding together. Our achievements in sustainable development as well as our and deepening our commitment to business practices reflect the principled Aboriginal peoples. Our vision and leadership of our management team values capture our business approach and the hard work and dedication and our shared sense of purpose, of our employees. guiding our business decisions, actions and behaviors. Our success is linked to a rewarding culture, where profitability and sustainability drive our future. 2 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
2017 awards and distinctions International Business Award (gold Stevie®) for best health, safety and environment program in the United States and Canada • Best in Biz International Award (silver) in the most environmentally responsible company of the year category • MEI John Dobson Medal for Free Enterprise to President and CEO Richard Garneau • Business Intelligence Group Sustainability Leadership Award to Corporate Communications, Sustainability and Government Affairs Vice President Seth Kursman • DuPont Safety and Sustainability Award honorable mention for sustainability strategy • AF&PA Sustainability Award for carbon reduction program • Peer Award for Excellence in carbon reduction and reporting • PAPTAC Business Award for safety leadership • Corporate LiveWire Innovation & Excellence Award for sustainable forest products • CN EcoConnexions Partnership Program Award • Canada's Top 100 Corporate R&D Spenders • MerComm International Mercury Award for excellence in combined financial/sustainability reporting and annual report writing • iNOVA Award for online corpo- rate social responsibility reporting • Store Brands Best New Paper Product for Green Heritage® recycled bath tissue for the at-home market • Canada’s Clean50 Top Project Award, Mercure Award (Les Mercuriades), Environmental Leader Award and Novae Award for Resolute’s participation in Toundra Greenhouse • Biomass North Award for industry leadership in the bioeconomy (Ontario operations) • APA−The Engineered Wood Association Safety and Health Awards (Resolute-LP Larouche and Saint-Prime) • CNESST Occupational Health and Safety Award for innovation (Girardville) • Northwest Pulp & Paper Association Environmental Excellence Award (Ponderay) • West Virginia Governor’s Commendation for International Market Entry (Fairmont) • Tennessee Chamber of Commerce & Industry Award for energy excel- lence (Calhoun) • Tennessee Valley Authority Carbon Reduction Leadership Circle Awards (Calhoun and Grenada)
www.resolutefp.com/awards_and_recognition 3 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
TABLE OF CONTENTS
4 Letter from the Chairman and the President and Chief Executive Officer 6 Board of Directors and Executive Team 8 Business and Sustainability Strategy 9 Our Approach to Sustainability
ECONOMIC ENVIRONMENTAL SOCIAL INDICATORS OF SUSTAINABILITY INDICATORS OF SUSTAINABILITY INDICATORS OF SUSTAINABILITY
10 Year at a Glance 18 Year at a Glance 24 Year at a Glance 11 Financial Highlights 20 Environmental Performance 26 Social Performance 12 Forests 22 Climate Change, Water, 28 Employee Health, Safety 13 Wood Products Waste and Energy and Well-Being 14 Market Pulp 30 Community Engagement 15 Tissue and Business Partnerships 16 Newsprint 17 Specialty Papers
32 Shareholder Information
Little Free Library inspires a love of reading by fostering neighborhood book exchanges for kids around the world. Resolute is a proud sponsor of the community program in Rock Hill (South Carolina), near our Catawba mill.
http://blog.resolutefp.com 4 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
LETTER FROM THE CHAIRMAN AND THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Resolute Forest Products is a Financial performance returns and our ongoing pension contribu- stronger, more dynamic and tions. As anticipated, our voluntary exit In 2017, we reaffirmed our strategic from Quebec funding relief regulations far more sustainable company direction, underpinned by a competitive and other steps undertaken to optimize today. We have expanded cost structure, a diversified asset base, our contributions provided additional a conservative capital structure and a financial flexibility by reducing our total our pulp and wood products sustainable business strategy. businesses and established pension contributions by $30 million to For the year, adjusted EBITDA was $132 million in 2017. When compared a solid foundation in tissue. $364 million, compared to $263 million to the 2016 baseline, we estimate that While we maintain a significant in 2016. Our wood products and market pension contributions will decrease footprint in newsprint and pulp segments generated $329 million of by approximately $170 million between 2017 and 2020, including specialty paper markets, we EBITDA, a $155 million improvement over last year, while our newsprint segment’s the $30 million realized in 2017. recognize evolving market EBITDA decreased by $15 million to Capital expenditures were $164 million realities and manage declining $43 million, and EBITDA for specialty for the year, below the 2017 target of demand with discipline. The papers declined, from $64 million in 2016 $185 million, largely due to the timing of project expenditures. As previously company culture is rewarding, to $36 million in 2017. Our tissue busi- ness, which only includes the Florida tissue disclosed, the total project cost for the transparent and inclusive. operations, generated negative EBITDA of Calhoun tissue facility was $295 million. And we have a new level and $1 million. At year-end, total liquidity stood at a solid $418 million, allowing us the financial expectation of accountability. We reported an operating income of flexibility to pursue opportunistic growth $49 million in 2017, compared to a to complement our product mix or improve We believe that our overall approach to loss of $26 million in 2016, as operating the competitiveness of existing assets. sustainability is a distinguishing charac- results in 2017 benefited from higher teristic that provides us with a competi- selling prices across most segments. tive advantage. Our focus on being both The decrease in pension and other post- Operational highlights profitable and sustainable unites our retirement benefit (OPEB) expenses and Resolute’s annual financial results bene- 8,000 employees across some 40 facili- the net benefit of restructuring efforts, fited from ongoing operational improvement ties and power generation assets in the offset in part by higher natural gas pricing, efforts. Capacity closures and restructuring United States and Canada in meeting the increased fiber, maintenance and freight initiatives undertaken at several paper needs of our customers, while creating costs, and higher long-term and short-term mills, as well as the incremental production shared value for our shareholders, business incentive plan expenses, contributed to increase in market pulp and wood prod- and Aboriginal partners, and the communi- our profitability. The stronger Canadian ucts, contributed to improved profitability. ties in which we live and work. We ensure dollar, higher start-up costs mainly Initiatives undertaken in 2017 to the stewardship of the natural resources related to the Calhoun (Tennessee) tissue redefine our tissue sales and marketing in our care as we continue to maintain facility, and inventory write-downs related strategy – including broadening our third-party certification of all our managed to closures unfavorably impacted the product offering, rebranding as Resolute woodlands to internationally recognized company’s results. Tissue and reinforcing the sales force – forest management standards, as well Despite a decrease in applicable discount are beginning to yield results. At the end as fiber-tracking systems with chain of rate and an unfavorable currency impact, of the first quarter of 2017, the new tissue custody certification. our net pension and OPEB liability machine started up in structured mode decreased by $26 million, to $1.3 billion at our Calhoun integrated tissue operation, at year-end, largely due to strong asset producing premium private-label tissue for LETTER FROM THE CHAIRMAN AND THE 5 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT PRESIDENT AND CHIEF EXECUTIVE OFFICER
the retail market. With its state-of-the-art extensive advocacy by publishers, Our proactive approach to preventing tissue operation and integration of pulp commercial printers and other parties environmental incidents is clearly showing from the adjacent pulp mill, Calhoun is opposing uncoated groundwood duties. results. In 2017, we recorded 18 environ- expected to be one of the most efficient mental incidents, a 40% reduction over and cost-competitive tissue operations in Safety performance 2016. Our ultimate goal remains zero North America. incidents. Over the course of the year, we sold the Safety is a core value at Resolute – As part of our targeted recruitment efforts, permanently closed newsprint mill in one in which all employees are actively last year we partnered with numerous Mokpo (South Korea), indefinitely idled engaged. In 2017, we achieved a world- academic institutions to provide training our Thorold (Ontario) newsprint mill, and class Occupational Safety and Health and employment opportunities, especially permanently closed two paper machines Administration (OSHA) incident rate of for Aboriginal students, and we also raised in Calhoun and one in Catawba (South 0.66, matching our best-ever OSHA perfor- the profile of our engineering graduate Carolina) – all against the backdrop of mance recorded in 2015. We also recorded program. the ongoing significant decline in North the lowest ever company-wide severity rate. We remain committed to providing a safe American paper consumption as well as Countering activist the increasing cost of recovered paper. work environment and, ultimately, creating In addition, we sold our Saint-Hilarion an injury-free workplace. misinformation (Quebec) sawmill and consolidated We are transparent about our sustain- the two Senneterre (Quebec) sawmills. Sustainability leadership ability record. We stand firmly in the face We also restarted an indefinitely idled of activist misinformation, partnering with Our sustainability strategy – based on specialty paper machine in Alma (Quebec). union officials, mayors and community a balanced approach to environmental, And in late December, Resolute became leaders, First Nations and other business social and economic performance – the sole owner of the Clermont (Quebec) partners, customers, and government repre- is underscored by public commitments operation by acquiring the remaining sentatives at all levels and of all political in several key performance areas. 49% interest held by The New York Times stripes. Together, we hold activists and Company in the Clermont newsprint Highlights for the year included their allies accountable for their attacks on machine, one of the most cost-efficient announcing a major clean energy initia- our company, our customers, and a way of in our network. tive to improve efficiency and reduce life. Our hometown communities are the greenhouse gas (GHG) emissions at our source of our legitimacy, and our efforts Trade duties Thunder Bay (Ontario) pulp and paper mill. with them – as well as on their behalf – We also joined forces with FPInnovations, remain front and center. We believe our Three of our products – softwood lumber, a Canadian research institute for the principled position is a moral and ethical supercalendered paper and, more recently, forest products industry, to establish a imperative, entirely aligned with good uncoated groundwood paper – are subject bio-refinery pilot project at the Thunder corporate governance. to unfair and arbitrary trade measures Bay mill to develop new ways to efficiently imposed by the United States Department produce and commercialize innovative of Commerce. In 2017, our cash duty bio-chemicals derived from wood. deposits on Canadian exports of these products to the U.S. totaled $75 million. While we surpassed our goal of reducing Our belief in the importance and value absolute GHG emissions by 65% by of free trade is unchanged. We applaud 2015, compared to 2000 levels, we are the Government of Canada for taking committed to further reducing our carbon a firm position in its approach to trade footprint. At the end of 2017, we had with the U.S., and we appreciate the lowered our GHG emissions by 76%. LETTER FROM THE CHAIRMAN AND THE 6 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT PRESIDENT AND CHIEF EXECUTIVE OFFICER
A look ahead Much of Resolute’s success today is BOARD OF DIRECTORS attributable to the strong and principled 1 Bradley P. Martin b, c For 2018, we are focused on three stra- leadership of former President and Chairman of the Board; tegic priorities: complete the ramp-up of Chief Executive Officer Richard Garneau. Vice President for Strategic Investments Fairfax Financial Holdings Limited the Calhoun tissue operation and continue Over the past seven years, his unwavering 2 Yves Laflamme to secure business through superior quality commitment to a safe workplace and and broadened product offerings; improve Corporate Director; environmental stewardship earned the President and Chief Executive Officer overall productivity and yield at our company regional, North American and Resolute Forest Products sawmills; and complete the optimization global recognition and respect. Moreover, (as of February 1, 2018) of our specialty paper operations. his commitment to genuinely sustainable 3 Randall C. Benson b, c, d outcomes while ensuring ongoing profit- Corporate Director; Diversification is an important component Principal, RC Benson Consulting Inc. ability has set a strong foundation for the of our future. From cucumbers to bio- a, b, d future. Richard announced his retirement 4 Jennifer C. Dolan products and other uses for wood fiber Corporate Director and residual material, we will continue to on February 1, 2018. 5 Richard D. Falconer a, c, d explore opportunities to incorporate our The many awards and distinctions garnered Corporate Director; current assets into industry diversification. in 2017 are also a tribute to the extraordi- Senior Partner, Lazard Canada 6 Jeffrey A. Hearn b Workforce turnover is an ongoing challenge. nary dedication of our employees – guided by a solid set of values – who work hard Corporate Director Over the past two years alone, we replaced a, c to enhance the performance and reputa- 7 Alain Rhéaume one quarter of our employee base as Lead Director; workers retired, and this accelerated hiring tion of the company each and every day. Managing Partner, Trio Capital Inc. We remain resolute on delivering results, rate will continue. Collective bargaining 8 Michael S. Rousseau a, c, d agreements in Canada and the United positioning the company as a competitive Corporate Director; States are slated for renewal in 2018 and employer, and meeting the challenges and Executive Vice President and 2019, respectively. We have built strong, opportunities that lie ahead. Chief Financial Officer, Air Canada collaborative relationships with union BOARD COMMITTEES leadership over the past several years a. Audit Committee and believe the trust and transparency b. Environmental, Health and Safety Committee that has been developed will benefit all c. Finance Committee in the upcoming negotiations. d. Human Resources, Compensation and Nominating and Governance Committee
Bradley P. Martin CORPORATE OFFICERS Chairman of the Board of Directors 2 Yves Laflamme President and Chief Executive Officer
9 Steve Boniferro Senior Vice President, Human Resources
10 John Lafave Yves Laflamme Senior Vice President, Pulp and Paper President and Chief Executive Officer Sales and Marketing (as of March 23, 2018)
11 Jo-Ann Longworth Senior Vice President and Chief Financial Officer
12 Patrice Minguez President, Tissue Group
13 Richard Tremblay Senior Vice President, Pulp and Paper Operations
14 Jacques P. Vachon Senior Vice President, Corporate Affairs and Chief Legal Officer 7 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
BOARD OF DIRECTORS AND EXECUTIVE TEAM
7 5 8 14 12 13 10
6 4 3 1 2 11 9 8 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
BUSINESS AND At Resolute Forest Products, we report our business and SUSTAINABILITY sustainability results together. Our business and sustainability STRATEGY strategies have been expressly developed to align our efforts in environmental stewardship and social responsibility with our business objectives. This approach reinforces our vision that profitability and sustainability drive our future.
Business strategy Our business strategy is focused on transforming Resolute into a more sustainable organization, one that can generate consistent value for shareholders through a competitive portfolio of manufacturing assets and a solid presence in long-term growth markets. This includes, on the one hand, a gradual retreat from certain paper grades and, on the other, using our strong financial position to act on opportunities to diversify and grow. Our corporate strategy relies on three core themes: maximizing value generation from paper; growing in pulp, tissue and wood products; and integrating our pulp into value-added, quality tissue. In order to successfully execute this strategic plan, we also recognize the need to maintain a disciplined approach to capital allocation, as well as a level of financial leverage and flexibility that supports the evolution of our transformation.
Sustainability strategy Our sustainability strategy, based on a balanced approach to environmental, social and economic performance, is designed to enhance our competitive position by focusing on: improving resource efficiency, which helps control fiber, fuel and power costs; moving beyond regulatory compliance and environmental incident management to differentiate the company as an environmental supplier of choice; positioning Resolute as a competi- tive employer; and building solid relations in our operating communities.
www.resolutefp.com/about_us 9 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
OUR APPROACH TO SUSTAINABILITY
At Resolute, we build Sustainability oversight Benchmarking and on our past and current and reporting stakeholder engagement accomplishments by aspiring The overall responsibility for our sustain- We are committed to effective manage- to be a more efficient and ability performance resides with our ment practices in sustainable develop- competitive company, president and chief executive officer, ment. An independent benchmarking of but we rely on our sustainability committee corporate sustainability practices that a better employer, a stronger to support the delivery of our key commit- we commissioned in 2017 confirmed business partner, and even ments and implement related plans. The Resolute’s progression as an industry more deeply engaged in the committee’s mandate is to recommend leader in sustainability. The benchmarking communities in which we live strategies, set goals and measure results, exercise – which included environmental, oversee reporting and communications, social and governance criteria – ranked and work. The three pillars ensure continuous improvement, and the company strongly compared to industry of sustainability drive this assess stakeholder expectations and peers. The exercise also identified oppor- approach: environmental, sustainability trends. tunities for disclosing our performance more effectively. social and economic. As an industry leader, we have moved beyond minimal regulatory compliance Resolute will work to build on these oppor- and incident management. We are tunities in 2018. Other recommendations committed to transparency and maintaining identified as part of this benchmarking have annual sustainability reporting. In 2017, been presented to our corporate sustain- we published our sixth combined annual ability committee and will be implemented and sustainability report with substantial as appropriate considering local context, content on our sustainability performance. business priorities and potential impact. Since our first Global Reporting Initiative For the most current sustainability informa- (GRI)-compliant report in 2010, we have tion, including key performance indicators continuously improved our sustainability and disclosures prepared in accordance reporting practices to follow evolving GRI with the GRI standard, visit the sustain- standards. By year-end 2018, we will ability section of our corporate website. transition to the recently released GRI Standards for sustainability reporting. www.resolutefp.com/sustainability 10 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
ECONOMIC INDICATORS OF SUSTAINABILITY
YEAR AT A GLANCE
Sales distribution 25% Total sales of by segment SPECIALTY PAPERS $3.5
26% 9% billion MARKET PULP
27% 10%
Adjusted EBITDA of $364 Adjusted EBITDA1 2% distribution million TISSUE by segment
23% WOOD 24% PRODUCTS NEWSPRINT 54%
Liquidity of $164 $418 million million invested in fixed assets
1. Chart of adjusted EBITDA distribution by segment excludes “corporate and other.” ECONOMY 11 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
FINANCIAL HIGHLIGHTS
Years ended December 31 (in millions, except per share amounts) 2017 2016 2015
Sales $ 3,513 $ 3,545 $ 3,645 Operating income (loss) per segment: Market pulp 79 37 71 Tissue (6) (10) (1) Wood products 186 69 2 Newsprint (23) (16) (25) Specialty papers (9) 19 23 Segment total 227 99 70 Corporate and other (178) (125) (289) Operating income (loss) 49 (26) (219) Net loss attributable to Resolute Forest Products Inc. (84) (81) (257) Net loss per share attributable to Resolute Forest Products Inc. common shareholders: Basic $ (0.93) $ (0.90) $ (2.78) Diluted (0.93) (0.90) (2.78) Adjusted EBITDA2 $ 364 $ 263 $ 260
Years ended December 31 (in millions) 2017 2016 2015
Net loss including noncontrolling interests $ (78) $ (76) $ (255) Interest expense 49 38 41 Income tax provision (benefit) 84 19 (1) Depreciation and amortization 204 206 237 EBITDA $ 259 $ 187 $ 22 Foreign exchange (gain) loss (9) 7 4 Closure costs, impairment and other related charges 87 62 181 Inventory write-downs related to closures 24 7 2 Start-up costs 27 8 5 Net gain on disposition of assets (15) (2) — Non-operating pension and OPEB (credits) costs (12) 8 50 Acquisition-related costs — — 4 Other expense (income), net 3 (14) (8) Adjusted EBITDA2 $ 364 $ 263 $ 260
As of December 31 (in millions) 2017 2016
Cash and cash equivalents $ 6 $ 35 Total assets 4,147 4,277
2. Earnings before interest expense, income taxes, and depreciation and amortization, or “EBITDA,” and adjusted EBITDA are not financial measures recognized under generally accepted accounting principles, or “GAAP.” EBITDA is calculated as net income (loss) including noncontrolling interests from the Consolidated Statements of Operations, adjusted for interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA means EBITDA, excluding special items, such as foreign exchange gains and losses, severance costs, closure costs, impairment and other related charges, inventory write-downs related to closures, start-up costs, gains and losses on disposition of assets, non-operating pension and OPEB costs and credits, acquisition-related costs, and other charges or credits. We believe that using non-GAAP measures such as EBITDA and adjusted EBITDA is useful because they are consistent with the indicators management uses internally to measure the company’s performance, and it allows the reader to more easily compare our operations and financial performance from period to period. EBITDA and adjusted EBITDA are internal measures and, therefore, may not be comparable to those of other companies. These non-GAAP measures should not be viewed as substitutes to financial measures determined under GAAP. ECONOMY 12 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
FORESTS From our woodlands to our sawmills and on to our pulp and paper mills, you can be sure that Resolute’s fiber supply has been responsibly sourced, and that 100% of the forestlands we own or manage are certified to internationally recognized standards.
Ensuring the sustainability Collaborating on forest of forests in our care management planning We strongly believe that trees can be Public consultation is an essential step 100% carefully harvested, while maintaining in the sustainable forest management of managed forests biodiversity and protecting the forest and planning process on public lands. In values important to a range of stake- 2017, Resolute continued to collaborate third-party holders. The regeneration of harvested with Quebec’s Department of Forests, woodlands is an essential component of Wildlife and Parks as a member of the certified sustainable forest management. Resolute newly established Table of Partners for Forest Products relies on various forest the Implementation of the Management management techniques and best prac- of Woodland Caribou Habitat Action Plan. tices, including regeneration surveys, site In Ontario, we support a coalition of leaders preparation, the planting of seedlings, from northern and Aboriginal communities, and aerial and terrestrial seeding – all in providing the provincial government with combination with natural regeneration. feedback on the management of species Accordingly, our commitments extend well at risk. At the federal level, we collabo- 2 beyond strict compliance with applicable rated on Environment and Climate Change 1 forestry regulations, which in Quebec Canada’s proposed action plan to protect 3 and Ontario are already among the most and contribute to the recovery of the – if not the most – rigorous in the world. woodland caribou. Resolute maintains certification for 100% 3 of the forests we manage to at least one Responsible fiber sourcing of two internationally recognized forest Resolute has instituted fiber-tracking management standards: Sustainable Forestry systems3 at our facilities to ensure that our Initiative® (SFI®) and Forest Stewardship wood fiber supply comes from acceptable Council® (FSC®). We continue to be one of sources such as certified forests and legal the largest holders of SFI and FSC forest harvesting operations. These systems are management certificates in North America. third-party certified according to internation- WOODLANDS OPERATIONS ally recognized chain of custody standards: In 2017, we collaborated on the develop- 1 ONTARIO SFI, Programme for the Endorsement of ment of new FSC standards for controlled Northwestern Ontario Forest Certification (PEFC) and FSC. wood, chain of custody and forest manage- 2 QUEBEC ment. We are also active members of a We strive to improve our forest manage- Abitibi and Nord-du-Québec, Côte-Nord, Lac-Saint-Jean, Mauricie, Outaouais number of SFI Implementation Committees ment and wood fiber procurement prac- 3 UNITED STATES in Canada and the United States. tices, and we encourage our wood and fiber Southeastern and Northwestern U.S. suppliers to also demonstrate continuous improvement in forest resource manage- ment, wood and fiber procurement, and third-party certification.
3. Excluding the Hialeah (Florida) tissue mill, which sources 100% of its recycled fiber from our U.S. pulp network. ECONOMY 13 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
WOOD PRODUCTS Wood is one of the most versatile and renewable resources. Not only is it the most sustainable building material, it is energy- efficient and cost-effective. From the flooring right up to your rooftop, Resolute’s wood products are the natural choice for today’s environmentally conscious homeowner.
Framing the spaces we live in #1 Resolute Forest Products is a leading 2 facilities producer of lumber and other wood products Canadian 11 facilities 2 facilities for the residential construction and home renovation markets, as well as for special- 1 facility 3 4 wood products 3 facilities 5 ized structural and industrial applications. 2 1 With an annual production capacity of producer 4 5 2.4 billion board feet, our 14 sawmills east of the produce construction-grade stud and Canadian Rockies dimension spruce-pine-fir lumber and are a major source of wood chips for our pulp and paper mills in Canada. Our sawmills also generate wood residue, which is primarily used to fuel the company’s power WOOD PRODUCTS OPERATIONS cogeneration assets and other opera- 1 SAWMILLS (ONTARIO) tions, as well as to produce wood pellets. Atikokan, Ignace, Thunder Bay In 2017, we shipped 1.9 billion board 2 WOOD PELLET PLANT (ONTARIO) feet of construction-grade lumber within Thunder Bay North America. 3 SAWMILLS (QUEBEC) Our two remanufactured wood products Comtois (Lebel-sur-Quévillon), Girardville, La Doré, Maniwaki, Mistassini, Opitciwan facilities produce bed frame components, (Obedjiwan),7 Outardes (Pointe-aux-Outardes), finger joints and furring strips, while our Produits Forestiers Mauricie (La Tuque), two engineered wood products facilities6 Saint-Félicien, Saint-Thomas, Senneterre produce flooring I-joists for the construc- 4 REMANUFACTURED WOOD PRODUCTS tion industry. FACILITIES (QUEBEC) Château-Richer, La Doré 5 ENGINEERED WOOD PRODUCTS FACILITIES (QUEBEC)6 Resolute-LP − Larouche and Saint-Prime
4. Our current fiber supply limits our operating capacity to about 2.1 billion board feet per year. 5. On July 13, 2017, Resolute sold its Saint-Hilarion (Quebec) sawmill. 6. Resolute-LP Engineered Wood Larouche Inc. and Resolute-LP Engineered Wood St-Prime Limited Partnership are unconsolidated entities in which Resolute has a 50% interest in each entity. 7. Société en Commandite Scierie Opitciwan is an unconsolidated entity in which Resolute has a 45% interest. ECONOMY 14 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
MARKET PULP You’ll find our pulp in a range of consumer products you use every day – from facial tissue, paper towels and coffee filters to printing and writing papers as well as disposable diapers and other absorbent products.
Pulp for a variety of needs Resolute Forest Products is one of the #3 few producers capable of supplying a MARKET PULP PORTFOLIO wide variety of grades of market pulp. • Northern bleached softwood kraft (NBSK) market pulp • Northern bleached hardwood kraft (NBHK) Our seven facilities have a total annual • Southern bleached softwood kraft (SBSK) production capacity of 1.7 million metric • Southern bleached hardwood kraft (SBHK) producer • Recycled pulp tons, or approximately 10% of North • Fluff pulp in North America American capacity, making us the third largest pulp producer on the continent. Resolute is also the world’s top producer of recycled pulp and a competitive producer of northern and southern bleached hardwood kraft pulp.
6 In 2017, we completed the ramp-up of the continuous pulp digester at our 7 Calhoun (Tennessee) mill. This world-class equipment has added 100,000 metric tons 5 to our annual market pulp capacity and
4 improved the quality of the southern bleached hardwood kraft pulp as well as
1 2 the specialty papers and tissue produced at Calhoun. 3
MARKET PULP OPERATIONS 1 Calhoun (Tennessee) 2 Catawba (South Carolina) 3 Coosa Pines (Alabama) 4 Fairmont (West Virginia) 5 Menominee (Michigan) 6 Saint-Félicien (Quebec) 7 Thunder Bay (Ontario) ECONOMY 15 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
TISSUE Whether wiping up spills in the kitchen, cleaning the lunchroom or tending to personal hygiene, you can rely on Resolute’s tissue products to get you through the day.
Green Heritage® named best new paper product by Store Brands magazine’s 2017 Editors’ Picks awards
Growing our tissue business In February 2017, our Calhoun (Tennessee) state-of-the-art facility began producing Resolute Forest Products is building an 1 premium private-label tissue for the integrated and competitive tissue business retail market. The company’s Hialeah by exceeding customer expectations for and Sanford (Florida) mills manufacture flexibility, quality and service. branded and private-label recycled and 3 Our tissue products are manufactured from virgin paper grades for retail and away- 2 100% recycled pulp or from virgin fiber from-home markets. Our mills have a from the company’s internal pulp network. combined annual production capacity This allows us to control the production of 128,000 short tons (116,000 metric process – from material input to final tons) across four tissue machines and product – ensuring precise control, 14 converting lines. cost-competitiveness and consistent In 2017, Resolute launched a premium TISSUE OPERATIONS quality, while offering the customization 100% recycled line of tissue products for 1 Calhoun (Tennessee) and personalization customers demand. the retail market under the Green Heritage® 2 Hialeah (Florida) brand. In 2018, the company will add 3 Sanford (Florida) a full range of products to its Harmony® brand of virgin tissue grades – Harmony® Pro and Harmony® Pro Ultra for the away-from-home market. ECONOMY 16 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
NEWSPRINT Our newsprint makes the front pages of the world’s top newspapers every day. But there’s more to the story. Through inserts, flyers, circulars and other print products, we also help advertisers connect with consumers.
Carrying the day’s headlines Resolute Forest Products is the largest #1 global producer of newsprint. With eight mills8 strategically located to serve newsprint major markets throughout North America and abroad, we supply customers in over producer 50 countries. We sell newsprint to commer- cial printers in North America and to in the world newspaper publishers around the globe. Our annual production capacity is approximately 1.8 million metric tons, representing about 8% of worldwide capacity and 43% of North American capacity. 3
3 NEWSPRINT OPERATIONS 4 1 5 1 Amos (Quebec) 4 8 1 5 2 Augusta (Georgia) 7 3 Baie-Comeau (Quebec) 9 4 Clermont (Quebec)9 7 5 Gatineau (Quebec) 8 6 Grenada (Mississippi) 7 Ponderay, Usk (Washington)10 8 Thunder Bay (Ontario) 2
6 2
6
8. On March 9, 2017, Resolute permanently closed its Mokpo mill, located in South Korea, and on March 10, the company announced the indefinite idling of its Thorold (Ontario) mill. 9. On December 21, 2017, Resolute acquired full ownership of Donohue Malbaie Inc. 10. Ponderay Newsprint Company (Washington) is an unconsolidated partnership in which Resolute has a 40% interest. ECONOMY 17 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
SPECIALTY PAPERS From the bestseller you just can’t put down to the magazines on your coffee table and the flyers in your mailbox, our specialty papers make a great impression.
#1 4 1 Exceptional value proposition 5 Resolute Forest Products sells a wide 6 producer spectrum of coated and uncoated mechan- ical papers, including uncoated freesheet of uncoated grades, to major commercial printers, direct mailers, publishers, catalogers mechanical and retailers, mostly in North America. 2 3 We have a total annual production capacity papers of approximately 1.2 million short tons in North America (1.1 million metric tons) of specialty papers across six operations. Resolute is the largest producer of uncoated mechan- ical papers in North America, with 22% of SPECIALTY PAPER OPERATIONS capacity, and the third largest producer of 1 Alma (Quebec) coated mechanical papers, with 14% of 2 Calhoun (Tennessee) North American capacity. 3 Catawba (South Carolina) 4 Dolbeau (Quebec) We focus on meeting and exceeding the 5 Kénogami, Saguenay (Quebec) needs and expectations of our customers 6 Thunder Bay (Ontario) by offering quality, cost-effective solutions for every application – backed by excellent customer service. Our papers are ideal for printing magazines, catalogs, bags, retail inserts, flyers, instruction manuals and books. 18 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
ENVIRONMENTAL INDICATORS OF SUSTAINABILITY
YEAR AT A GLANCE
100% forest regeneration (natural and planted)
76% reduction in GHG emissions (scope 1 and 2) since 2000 ENVIRONMENT 19 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
40% Approximately reduction 10,000 mt/yr in recorded of GHG environmental emissions to be avoided at Toundra incidents Greenhouse – equivalent to removing 2,100 cars over 2016 from the road
82% 63% of fuel energy of pulp, paper and tissue mill derived from residues biomass redirected sources toward beneficial uses ENVIRONMENT 20 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
ENVIRONMENTAL PERFORMANCE
New and ongoing Environmental commitments performance update Being proactive for the environment means As part of our ongoing commitment to Our manufacturing processes have environ- steadily reducing Resolute Forest Products’ regulatory compliance and environmental mental impacts related to the consumption environmental footprint, making measur- incident management, we take a proactive of resources. To ensure the responsible able performance improvements and and preventive approach through compre- management of our environmental foot- ensuring the careful stewardship of the hensive tracking, investigation, implemen- print, we continuously monitor, analyze forests in our care. We closely measure, tation of corrective measures and reporting. and update issues of concern, or shared track and report on the company’s perfor- priorities, with internal and external Resolute continues to report climate, mance and progress toward a range of new stakeholders. The shared priorities that water and forest data to CDP, a global and ongoing sustainability commitments. most affect our business include: reporting system for organizations, cities We remain committed to maintaining and governments. In 2017, we received −− sustainable and responsible forest 100% forest management (FM) and an “A-” leadership score for forest management (to third-party chain of custody (CoC) certifications to management disclosures, in recognition certification standards) internationally recognized standards, of our actions to manage harvest risk and −− fiber supply access such as Sustainable Forestry Initiative® implement monitoring and measurement −− biodiversity (SFI®), Programme for the Endorsement programs. We also earned an “A-” leader- −− conservation and protected areas of Forest Certification (PEFC) and ship score for water disclosures, demon- −− GHG emissions Forest Stewardship Council® (FSC®). strating our enhanced understanding of −− energy consumption water resource management. For climate −− water consumption and All of our operations are certified, change performance and disclosures, protection of water resources or are in the process of being certified, we received an awareness score of “C,” −− regulatory compliance to the ISO 14001 environmental manage- reflecting the tightened guidelines of −− mill environmental incidents ment standard. In 2018, we are continuing the program. the implementation of the certification process at our Menominee (Michigan) pulp mill as well as at our recently acquired tissue facilities in Florida. In addition, we are in the process of completing the transition to the 2015 version of the ISO 14001 standard in order to comply with its increasingly stringent requirements. ENVIRONMENT 21 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
The company’s key environmental commitments, 2017 performance and 2018 targets are presented in the following table. This data is preliminary and may be subject to change. Updated information – including environmental performance indicators and disclosures prepared in accordance with the Global Reporting Initiative (GRI) standard, as well as other performance highlights – can be found on the company website.
www.resolutefp.com/sustainability
Commitments 2017 Performance Rating 2018 Targets
Set new greenhouse gas11 (GHG) Achieved a 76% reduction in Operate within established GHG reduction target – a longer term GHG emissions (scope 1 and 2) reduction frameworks, e.g., AF&PA objective through 2030 to align with over 2000 levels > industry goal of surpassing a 20% FPAC’s “30 by 30” Climate Change reduction of GHG emissions by 2020 Continued to evaluate GHG reduction Challenge, as well as GHG reduction based on 2005 levels, and FPAC’s “30 potential at our operations targets at our operations by 30” Climate Change Challenge
Provide disclosure on regulatory Reported 1 regulatory infraction Report no more than 3 regulatory infractions in Canadian woodlands for Ontario infractions in each province operations, with a long-term goal + Reported 1 regulatory infraction of 0 infractions for Quebec
Report 38 or fewer environmental Recorded 18 environmental incidents, Report 32 or fewer incidents, with a long-term goal a 40% reduction compared to 2016 ++ environmental incidents of 0 incidents
Implement ISO 14001-certified Conducted gap analysis for Complete ISO 14001 EMS Environmental Management System ISO 14001 EMS certification > certification, except at Hialeah (EMS) at all company operations of Florida tissue mills and U.S. and Sanford (Florida) tissue mills, chip production facilities to be certified in 2019
++ Surpassed commitment + Achieved commitment = Maintained achievement > Ongoing progress x Commitment unattained
11. Early in 2017, some minor adjustments were made to our carbon inventory data to improve the accuracy of the greenhouse gas emissions reported. These adjustments did not materially affect the numbers reported. ENVIRONMENT 22 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
CLIMATE CHANGE, WATER, WASTE AND ENERGY Resolute takes concrete actions to reduce our GHG emissions and our overall environmental footprint by improving the energy efficiency of our operations, producing renewable energy, managing water efficiently, and reducing waste and our reliance on fossil fuels.
Responsibly managing our Our climate change mitigation efforts As papermaking is a water-intensive environmental footprint received extensive recognition in 2017 process, we reuse water as much as by governments, industry and environ- possible, returning 95% to the environ- Reinforcing our environmental credentials mental organizations. Among other ment. The remaining 5% is captured in by taking appropriate steps to responsibly corporate accolades, our Calhoun the end product or evaporated during the manage our environmental performance is (Tennessee) and Grenada (Mississippi) manufacturing process. All the water we a primary area of focus of Resolute Forest mills took top honors at the Tennessee use passes through primary and secondary Products’ sustainability strategy. At the Valley Authority’s (TVA) first-ever carbon effluent treatment prior to being returned end of 2017, we had reduced the compa- reduction awards. The TVA presented to the environment. Data on water ny’s GHG emissions by 76% relative to the mills with Leadership Circle Awards, discharge is aggregated, analyzed and 2000 levels, and we continue to evaluate which acknowledge customers with the reported to reputable organizations, the emission reduction potential at lowest carbon emission rates during such as CDP. our operations. the year. In addition, the Ponderay The reuse of water is well illustrated at (Washington) newsprint mill received the We are committed to operating within Toundra Greenhouse, formed in 2014 Northwest Pulp and Paper Association’s established GHG reduction frameworks. as a partnership between Resolute, the Environmental Excellence Award. As a member of the American Forest & City of Saint-Félicien (Quebec) and local Paper Association (AF&PA), Resolute investors. Located on land adjacent to our supports the industry’s goal of surpassing Striving for water efficiency Saint-Félicien pulp mill, the state-of-the- a 20% reduction in GHG emissions by Resolute is committed to managing art greenhouse fulfills 90% of its water 2020 based on 2005 levels. We also water efficiently and, with this in mind, requirements through rain water and snow embrace the Forest Products Association we regularly evaluate water consump- recovery, while producing over 45 million of Canada’s (FPAC) “30 by 30” Climate tion at our network of facilities using the cucumbers annually. Change Challenge and its aggressive World Business Council for Sustainable objective to remove 30 megatons Development’s Global Water Tool™ as of CO2 a year by 2030. well as the World Resources Institute’s In addition, Resolute is a member of Aqueduct platform. These resources help the Carbon Pricing Leadership Coalition us assess current water stress levels in (CPLC), a voluntary global partnership predicting variations due to climate change that addresses climate change by putting on a facility-by-facility basis. a price on carbon. We support the CPLC’s Each of our pulp and paper mills carbon pricing policies as a means to drive has an annual water reduction target, competitiveness, create jobs, encourage and, in 2017, we achieved a 3% and innovation and deliver meaningful 22% reduction in water-use intensity and emission reductions. absolute water withdrawal, respectively, over 2014 levels. 23 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
74% of energy requirements sourced from renewable sources
Reducing waste In 2017, our Thunder Bay (Ontario) pulp Producing renewable energy at our facilities and paper mill launched a clean energy project to improve energy efficiency and Our network of 14 power generation assets Resolute is focused on reducing the waste reduce GHG emissions. The mill plans to has a total installed capacity of 496 MW. generated by our operations. Our approach reduce the use of natural gas by recovering We also utilize alternative fuels, such as to waste management includes identifying waste heat from its exhaust streams and used oil, tire-derived fuels, railroad ties, beneficial-use alternatives, such as land optimizing condensate returns by installing and construction and demolition residue, spreading and mine-site rehabilitation, in efficient steam traps. By mid-2019, the to reduce fossil fuel consumption. order to reduce the amount of waste sent C$11.5 million project is expected to Resolute’s hydroelectric generation and to landfills. We also pursue process effi- provide annual natural gas cost savings of transmission network, Hydro-Saguenay, ciencies, such as optimizing fiber use, to more than 35%, while lowering the mill’s has an installed capacity of 170 MW minimize the cost of effluent treatment. annual GHG emissions by over 20% – and helps power our Alma and Kénogami or approximately 43,000 metric tons Our waste disposal programs have (Quebec) paper mills. Last year, Hydro- of CO equivalents per year. increased the amount of waste recycled 2 Saguenay produced 978 GWh of electricity. or repurposed, reduced our environmental We are also investing C$3.5 million in The seven cogeneration facilities are impact and generated cost savings. a strategic R&D project, partnering with located at the following company mills: For example, a number of facilities have FPInnovations to establish a biorefinery Calhoun (Tennessee), Catawba (South cardboard, clean wood waste and pallets pilot plant at our Thunder Bay mill. Carolina), Coosa Pines (Alabama), composted instead of disposed of in The project will focus on developing Thunder Bay (Ontario), and Dolbeau, landfill sites. new ways to efficiently produce and Gatineau and Saint-Félicien (Quebec). commercialize innovative bio-chemicals A significant amount of the waste produced In 2017, we sourced 74% of our total derived from wood. The C$21 million at our manufacturing facilities is used as energy (electricity and fuel) needs from initiative has the support of the municipal, fuel, reducing our reliance on fossil fuels renewable sources, including biomass Ontario and Canadian governments. and supporting our production of green and hydroelectricity. Resolute has steadily energy. In 2017, nearly 25% of the waste Adjacent to our Saint-Félicien pulp mill, increased the use of biomass fuel, and we continue to seek opportunities to grow our we produced was recovered for use in CO2 Solutions Inc. is working to imple- energy production. ment its patented technology to efficiently clean power generation assets. capture carbon from the mill. Once imple- Improving energy efficiency mented, about 30 metric tons per day of CO2 will be sent to Toundra Greenhouse, and increasing the use of reducing the facility’s natural gas usage by lower carbon fuels 25%. In addition, the project will reduce Resolute’s commitment to green energy the mill’s carbon footprint by approximately benefits both the environment and our 10,000 metric tons per year. bottom line. Energy alone accounts for 100% 26% of the company’s paper produc- tion costs. We focus on improving energy coal-free efficiency and replacing high-emission operations fuels, like coal, with less carbon-intensive (scope 1) options. We also continue to explore opportunities to develop new, sustainable products that have a lower carbon footprint. 24 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
SOCIAL INDICATORS OF SUSTAINABILITY
YEAR AT A GLANCE
1,041 new hires
World-class OSHA incident rate of 0.66
63% of employees unionized SOCIETY 25 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
39 info-sharing 1.9 million 41,500 hours groups or more than 11 years near-misses reported monthly without a recordable injury reported community outreach at Maniwaki sawmill activities
Close to $2 million in community, education and health contributions
In the wake of the hurricanes that hit the southern United States in 2017, Resolute provided two railcars of lumber to Habitat for Humanity programs in Florida and Texas to help rebuild and repair damaged homes. SOCIETY 26 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
SOCIAL PERFORMANCE
New and ongoing Social performance commitments update Resolute Forest Products’ role in our Optimizing customer satisfaction key Our business activities have social impacts operating communities extends well beyond performance indicators (KPIs) is an on a wide range of stakeholders, from our the jobs we create, the taxes we pay and ongoing focus at our pulp and paper employees and customers to the communi- the charitable support we provide. We mills, as “champion teams” composed ties in which we operate. To ensure the are committed to continue building solid, of mill employees work to reduce quality responsible management of our social mutually beneficial business relationships, and transit claims, and improve overall performance, we continuously monitor, grassroots support, and positive govern- customer satisfaction. analyze and update issues of concern, or ment and overall community relations shared priorities, with internal and external To ensure compliance with product through transparency and information- stakeholders. The shared priorities that stewardship regulations and expand the sharing, as well as through active involve- most affect our business include: possible end uses of our products, we ment in local organizations and projects. continue to monitor areas for improvement −− engagement with local communities We regularly engage with employees and through our product stewardship committee −− occupational health and safety retirees, union representatives, customers that includes environment, operations, −− First Nations relations and and suppliers, Aboriginal and community legal and sales representatives. economic partnerships partners, investors, governments, environ- −− transparency and communication Resolute also remains committed to mental non-governmental organizations and regularly reviewing our procurement and other stakeholders in order to ensure that supplier engagement practices in order to our sustainability strategy, public commit- track and report on supply chain sustain- ments and reporting continue to reflect ability in key procurement sectors. Our their interests and needs. guidelines for suppliers are disseminated In 2017, we launched a new tracking to nearly 3,000 business partners annu- initiative to report detailed information ally. A supplier management program is on our community outreach, including currently under development to further stakeholder engagement activities, chari- structure supplier qualification, selection, table contributions and volunteer work. evaluation and development, with the Engagement by community information- long-term goal of establishing more sharing groups, composed of company durable relationships. employees and local stakeholders, is now tracked and reported on a monthly basis. We are committed to enhancing the structure of this initiative to ensure consistent participation and reporting across the company. SOCIETY 27 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
The company’s key social commitments, 2017 performance and 2018 targets are presented in the following table. This data is preliminary and may be subject to change. Updated information – including social performance indicators and disclosures prepared in accordance with the Global Reporting Initiative (GRI) standard, as well as other performance highlights – can be found on the company website.
www.resolutefp.com/sustainability
Commitments 2017 Performance Rating 2018 Targets
Through new tracking initiative, 39 information-sharing groups tracked Enhance structure of tracking initiative report detailed information on and reported community outreach to ensure consistent participation community outreach, including activities on a monthly basis > and reporting throughout the company stakeholder engagement activities, charitable contributions and volunteer work
Develop additional customer satisfaction Continued tracking KPIs at all Compare year-over-year KPIs, KPIs, institute a root cause problem paper mills and instituted KPIs at with focus on improving on-time elimination process, and share best all pulp mills delivery and reducing transit damage practices company-wide Reduced paper claims by 13% > Fully implement root cause problem Improve on-time delivery and compared to 2016 elimination process order fulfillment, as well as (30% compared to 2015) Share best practices company-wide customer satisfaction Developed root cause procedure and trained technical personnel
Achieve an Occupational Safety and Achieved OSHA incident rate of 0.66 Achieve an OSHA incident rate Health Administration (OSHA) incident and severity rate of 18.25 of 0.75 or less, and a severity rate rate of 0.90 or less, with a long-term ++ less than or equal to 19 goal of 0 injuries, and a severity rate less than or equal to 24
Ensure all hourly employees submit 95% of hourly employees submitted Ensure all hourly employees submit 3 proactive near-miss reports annually at least 2 to 3 near-miss reports 3 proactive near-miss reports > Hourly employees reported 41,500 near-misses
++ Surpassed commitment + Achieved commitment = Maintained achievement > Ongoing progress x Commitment unattained SOCIETY 28 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
EMPLOYEE HEALTH, SAFETY AND WELL-BEING Ensuring the health, safety and well-being of over 8,000 employees helps Resolute attract results-driven and action-oriented talent. We are committed to fostering a “total safety organization,” with a long-term goal of zero incidents and zero injuries across our operations.
Safety comes first In 2017, we recorded an OSHA incident LiveWell: Feel good for life! rate of 0.66, well below our target of 0.90 Safety is a core value at Resolute Forest and matching our best-ever performance Our U.S. employees are stepping up to Products. Every employee – from the achieved in 2015. Twenty-six operations the challenge of living healthier lives. mill floor worker to the president and completed 2017 without a single record- Over 1,000 employees and spouses have chief executive officer – is responsible for able injury. enrolled in our LiveWell program, which identifying potential safety hazards and is designed to help manage and prevent helping create an injury-free workplace. The company’s severity rate – indicating disease, as well as reduce healthcare costs. We maintain world-class standards and the number of workdays lost or restricted LiveWell provides biometric screening, continuously measure and improve our due to injury per 100 full-time employees counseling and wellness challenges, along safety efforts and results. – decreased to 18.25 in 2017, below the annual target of 24 and our lowest severity with online programs and fitness tracking. We take a proactive approach to risk control rate ever. This is equivalent to 1,464 lost In three years, participating employees by combining management and supervision or restricted workdays, or 18 workdays and their spouses logged 2.5 billion steps, with individual accountability, supported by per 100 full-time employees. helping to collectively lower their body a stringent safety management system that mass index, blood pressure and cholesterol includes employee training and awareness, Last year, 95% of hourly employees levels by about 10%. audits and monitoring, as well as employee submitted two to three near-miss reports. Resolute is completing a feasibility study participation through local joint health Of the 41,500 reports submitted, 85% on expanding the program into Canada, and safety committees. were reviewed and closed, with the balance set for review in 2018. with implementation tentatively slated Our new safety audit process requires for 2019. supervisors to review pre-task hazard Across our operations, nearly $5 million analysis with employees six times a year was spent on safety guards, ergonomic Workforce renewal based on six quality-execution criteria. equipment and walkway security measures. We can then track the number of facilities We also purchased close to $2 million of and retention reporting risk of injury as well as the effec- personal protective equipment (PPE) as Resolute’s long-term competitiveness tiveness of the safety audit process at each part of the implementation of our general, is tied to our ability to attract, develop facility. Risk assessments are also under- chemical and hot material PPE procedures. and retain top talent, as well as to allow taken on our operations’ service providers, employees with strong leadership abilities including maintenance and transportation A strong safety ambassador to learn and grow within our organization. contractors. We closely manage and track our perfor- Our commitment to health and safety led mance in a number of key areas, including Since 2014, we have achieved to our partnership with Marianne St-Gelais, staffing demand, employee demonstrated annual Occupational Safety and Health 2017 world champion and winner of effectiveness and labor relations. Administration (OSHA) recordable incident three Olympic medals in short track rates below 1.0, which is considered speed skating. A native of Saint-Félicien We continue to train our employees world-class safety performance. (Quebec), Marianne grew up in a family on Resolute’s Code of Business Conduct, of foresters, a natural fit for a partner- and all new and existing employees ship with Resolute. Carefully planning her receive communications about the races to protect against crashes and injury, company’s equal employment, anti- Marianne’s dedication to safety and discrimination and harassment policies. preventive measures makes her an ideal Resolute safety ambassador. SOCIETY 29 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
We also have in place a diversity policy We have also forged ties with partners in • In Amos, we recruited professionals designed to encourage an inclusive work several of our Quebec operating regions to from Cambodia, Cameroon, Congo, environment by providing equal consid- achieve our hiring goals. These initiatives, Senegal and Thailand through Emploi- eration and opportunities to all of our combined with innovative immigration Québec’s Immigrant and Visible Minority employees. policies and programs, are providing Employment Assistance Program. solutions to our staffing challenges: Last year, we completed implementation of • We maintain a partnership with Cégep de the demonstrated effectiveness appraisal • Several mill-specific programs have Saint-Félicien in support of a three-year process for all salaried employees, begin- been developed to help attract women program in forest products manufac- ning with the president and chief executive to the workforce, implement custom- turing, admitting students from as far officer. These formal annual reviews are ized training programs for millwrights away as France. validated through a peer-reviewed evalua- and truck drivers, and establish • At Toundra Greenhouse in Saint-Félicien, tion and calibration process. forest roadwork training for workers a joint venture in which we have a 49% from the Mashteuiatsh and Pessamit Resolute works diligently with employees interest, 43 Guatemalans have been communities. and union leadership on the mutually hired under the facility’s collective beneficial renewal of collective agreements. • We plan to hire electromechanical agreement via Fondation des entreprises Four agreements covering 262 employees engineers from several Maghreb coun- en recrutement de main-d’œuvre agricole at Quebec operations were renewed tries under four-year contracts at our étrangère, a non-profit organization in 2017. Nineteen agreements covering Baie-Comeau, Comtois and La Tuque specialized in recruiting foreign workers. 1,291 employees are set for renewal in sawmills. Canada in 2018. Last year, we hired 1,041 new permanent and temporary employees and raised our employer profile through targeted recruit- ment practices. Meeting staffing demand is an ongoing challenge for the company. With more than 1,000 new hires each year, turnover – of which a large propor- tion is due to retirement – needs to be addressed through innovative recruitment and retention strategies. In early 2018, we completed the redesign of our “Jobs where you grow” employer brand in order to better reflect our recruitment efforts in Quebec, Ontario and the U.S. SOCIETY 30 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
COMMUNITY ENGAGEMENT AND BUSINESS PARTNERSHIPS Resolute is committed to building solid community relations by maintaining stakeholder outreach activities, developing strategic partnerships and engaging employees in our operating communities. We also focus on cultivating relationships with Aboriginal groups, as we understand how integral natural resources are to the prosperity of their communities.
Building partnerships Our partnerships and business ventures Engaging with our operating with First Nations with First Nations include: communities • Memorandums of agreement, including Resolute Forest Products focuses on devel- Resolute’s community engagement strategy significant contracts for construction oping constructive relationships with First targets philanthropic contributions to two and transportation, that have resulted in Nations, working collaboratively to ensure key pillars of sustainable development: C$100 million in economic opportunities that the boreal forest continues to provide social (community health and education) in Ontario for the Nigigoonsiminikaaning, for future generations. Our long-term and environmental (community projects Kiashke Zaaging Anishinaabek, Lac des consultative and business relationships and education). Our contributions take Mille Lacs, Seine River, Couchiching, with close to 40 Aboriginal communities many forms, including financial and Mitaanjigamiing and Lac La Croix in Ontario and Quebec have resulted in a material support, and countless volunteer First Nations. range of mutually beneficial partnerships. hours by our employees. • Our Thunder Bay (Ontario) sawmill, In 2017, we implemented Aboriginal In 2017, our donations and sponsorships located on Fort William First Nation Procurement Policy Guidelines to further – at both the local and corporate levels – land, that employs approximately strengthen our commitment to Aboriginal totaled over $1 million. We concluded a 200 workers, many from this peoples in our Canadian operating regions. five-year, C$2 million commitment to the First Nation community. The sawmill Our goal is to provide equitable access to Domaine-du-Roy and Maria-Chapdelaine was the first in Canada to work under commercial opportunities and to promote regional county municipalities in support regulations created by the First Nations the economic participation of Aboriginal of economic development projects in Commercial and Industrial Development peoples and businesses in the forest prod- the Lac-Saint-Jean region of Quebec. Act, which facilitates industrial develop- ucts sector. The new guidelines comple- The annual Resolute golf tournament, ment with First Nations on their land. ment Resolute’s Procurement Policies also benefiting the region, raised about and Procedures, as well as our Aboriginal • An agreement to purchase over C$140,000 for medical equipment Peoples Policy, which outlines our commit- 1.5 million seedlings annually from purchases. ment to ensuring that First Nations are the Wabigoon Lake Ojibway Nation tree Employees at our Catawba (South Carolina) consulted in decisions impacting their nursery, established in the late 1990s pulp and paper mill meet regularly to communities. with the company’s help. This venture promote literacy through the Little Free supports our forest regeneration Library initiative. Sponsoring the creation activities in Ontario. of self-serve book boxes, or “exchanges,” • The Opitciwan (Quebec) joint-venture in high-traffic public spaces is a fitting sawmill, in operation since 1999. The way for our employees to engage in their Atikamekw Council of Obedjiwan has a community. Thirteen book boxes now 55% controlling interest in the facility, dot the local landscape. while Resolute owns 45%. • Forest management and harvesting activities we carry out, and stumpage fees we pay, in exchange for volumes allocated to the Kitigan Zibi Anishinabeg First Nation by the Quebec government.
SOCIETY 31 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
Over the past 22 years, Resolute and Supporting education • In Ontario, Resolute encourages the employees at our Augusta (Georgia) and academic research implementation of learning partner- newsprint mill have made combined ships with Aboriginal communities contributions totaling $584,000 to the Over the years, Resolute has provided through memorandums of agreement Children’s Hospital of Georgia. substantial financial support to universi- with Cambrian College in Sudbury, ties and colleges to improve education Confederation College in Thunder Bay In the wake of the destruction caused by outcomes for our operating communi- and the Anishinabek Employment & a series of hurricanes that hit the Southern ties and to help spark innovation in the Training Services (AETS), an Aboriginal United States and the Caribbean in 2017, forest products sector. In 2017, Resolute employment and training organization. Resolute supported rebuilding and relief donated funds for scholarships, research We continue to support Aboriginal youth efforts. In addition to the railcar of lumber grants, buildings and other needs totaling transitioning into the workforce, and our our La Doré (Quebec) sawmill donated $400,000. Here are some examples of programming encourages First Nations to the Habitat for Humanity program in our support for education and research: students to pursue skilled trades. Houston (Texas) to help rebuild damaged homes and to build new ones, our Calhoun • In early 2017, the company committed • Additionally, we host on-site co-op (Tennessee) operation sent thousands of to a donation of C$1 million over five programs, internships and apprentice- packages of bath tissue and paper towels. years toward the creation of a prestigious ships, while most of our facilities provide A second railcar of lumber was donated industrial research chair sponsored by scholarship funds directly to students or to Florida in support of local Habitat the Natural Sciences and Engineering to organizations that award scholarships programs, and we worked closely with Research Council of Canada at the to local youth. humanitarian organizations in Puerto Rico University of Quebec at Chicoutimi to ship cases of bottled water and other (UQAC). Our contribution, along with much-needed emergency supplies from that of the Government of Quebec and our Baie-Comeau (Quebec) mill to the UQAC, will support research on the Port of San Juan. boreal forest as well as the impact of changes in the landscape on black
spruce growth in the context of climate change, with a particular focus on the spruce budworm infestation. 32 RESOLUTE FOREST PRODUCTS — 2017 ANNUAL AND SUSTAINABILITY REPORT
SHAREHOLDER INFORMATION
Annual General Meeting Independent Registered Form 10-K Our annual meeting of stockholders Public Accounting Firm Resolute Forest Products Inc. files its will be held on Friday, May 25, 2018, PricewaterhouseCoopers LLP annual report on Form 10-K with the at 10:00 a.m. (Eastern) at Confederation 1250 René-Lévesque Blvd. West U.S. Securities and Exchange Commission College, 1450 Nakina Drive, Thunder Bay, Suite 2800 (SEC), a copy of which is included with Ontario, P7C 4W1, Canada. Montreal, Quebec H3B 2G4 this annual report to stockholders. Free Canada copies (without exhibits) are available upon Transfer Agent for Common Stock request to Resolute’s Investor Relations Computershare Trust Company, N.A. Investor Information department. The company’s SEC filings, P.O. Box 30170 and Financial Reporting annual reports, news releases and other College Station, Texas 77842-3170 Silvana Travaglini investor information can be accessed at United States Treasurer and www.resolutefp.com/investors. 1-866-820-6919 (toll-free within Vice President, Investor Relations the United States and Canada) 514-394-2217 Stock Listings 781-575-3100 [email protected] The shares of common stock of Resolute www.computershare.com/investor Forest Products Inc. trade under the stock Media Inquiries symbol RFP on both the New York Stock Co-Transfer Agent – Canada Seth Kursman Exchange and the Toronto Stock Exchange. Computershare Investor Services Inc. Vice President, Corporate Communications, 100 University Avenue, 9th Floor Sustainability and Government Affairs Resolute Forest Products – Headquarters Toronto, Ontario M5J 2Y1 514-394-2398 111 Robert-Bourassa Blvd., Suite 5000 Canada [email protected] Montreal, Quebec H3C 2M1 1-800-564-6253 (toll-free within Canada the United States and Canada) 514-875-2160 or 1-800-361-2888 www.computershare.com/investor Vous trouverez la version française de ce rapport au www.pfresolu.com.
Note: Unless otherwise noted, amounts in this report are in U.S. dollars, and data reported is as at December 31, 2017.
The inside pages of this report are printed Certifications at Calhoun include: ® 2 on Connect 70 lb (103.4 g/m ) paper, • SFI, PEFC and Forest Stewardship Council® manufactured at Resolute Forest Products’ (FSC®) chain of custody Calhoun (Tennessee) mill. • SFI fiber sourcing Connect is an uncoated freesheet paper available • ISO 14001 environmental management system with Sustainable Forestry Initiative® (SFI®) • ISO 9001 quality management system and/or Programme for the Endorsement of Forest
Certification (PEFC) chain of custody certifications. Graphic Design / CG3 inc.
2017 ANNUAL AND SUSTAINABILITY REPORT
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