KPMG Forest Certification Services Inc. Telephone (604) 691-3000 Box 10426, 777 Dunsmuir Street Fax (604) 691-3031 Vancouver BC V7Y 1K3 www.kpmg.ca

To: Zellstoff Celgar Limited Partnership FSC® CoC/CW Stakeholders

October 5, 2017

Dear Stakeholder, Stakeholder Consultation

KPMG Forest Certification Services Inc. (KPMG FCSI) to conduct an FSC® Chain and Custody/Controlled Wood Re-certification Audit of Zellstoff Celgar Limited Partnership

Purpose and scope of the audit

KPMG Forest Certification Services Inc. (KPMG FCSI) will be conducting a re-certification audit of Zellstoff Celgar Limited Partnership (ZCLP) against the requirements of the current Forest Stewardship Council® (FSC) chain of custody (CoC) and controlled wood (CW) standards. A stakeholder consultation process is planned for the fall of 2017, with the main assessment scheduled to begin on November 22, 2017 and conclude on November 24, 2017. The supply area for ZCLP includes those portions of the WWF listed below that are located as follows: USA and Canada: • NA0507 – Cascade Mountains leeward forests • NA0518 – Northern Central Rockies forests • NA0522 – Dry forest USA only: • NA0505 – Blue Mountains Forest – (Very small overlap at the very southern edge of their supply area) • NA0528 – South Central Rockies Forest – (Very small overlap at the very southern edge of their supply area) • NA0808 – Montana Valley and Foothill grassland ( is Temperate Grassland, Savannas, and Shrublands) • NA0813 – grassland – (Biome is Temperate Grassland, Savannas, and Shrublands) • NA1309 – Snake-Columbia shrub steppe – (Biome is Deserts and Xeric Shrublands) Zellstoff Celgar Limited Partnership FSC® CoC/CW Stakeholders October 5, 2017 Page 2

A map of the WWF ecoregions containing forest landscapes from which ZCLP procures fiber is located at: https://zellstoffcelgar.maps.arcgis.com/sharing/rest/content/items/ef90bedfddf54bfa87ead63ee91 74a06/data The audit will be based on the current FSC CoC (FSC-STD-40-004 V3-0) and CW (FSC-STD-40- 005 V3-1) standards. This letter serves as an invitation to interested and affected stakeholders who wish to provide comments that are pertinent to ZCLP’s FSC CoC/CW certification. The comments received will be considered by KPMG FCSI in reaching its conclusions regarding ZCLP’s conformance with the applicable FSC CoC and CW standards.

About FSC and the CoC and CW standards The FSC is an international non-profit organization founded in 1993 to support environmentally appropriate, socially beneficial, and economically viable management of the world's forests. It supports the development of national and regional standards to be used to evaluate whether a forest is being well-managed. It is an association of members consisting of a diverse group of representatives from environmental and social organizations, forest and product industries, Indigenous People's organizations, community forestry groups and certification bodies from around the world. Membership is open to all who are involved in forestry or forest products and share its aims and objectives. FSC, with its head office in the city of Bonn, Germany, is governed by an elected Board which consists of people from industry, environmental, social and labor groups, Indigenous People's representatives and others. FSC-STD-40-004 V3-0 and FSC-STD-40-005 V3-1 were recently released for use by FSC. Organizations holding certifications to the previous versions of these standards must be assessed against the current version by December 31, 2017 (in the case of FSC-STD-40-005 V3-1) and March 31, 2018 (in the case of FSC-STD-40-005 V3-1).

Your role We would appreciate your comments on issues that are pertinent to ZCLP’s FSC CoC/CW certification. Such comments may include, but are not necessarily limited to, concerns or observations regarding the Company’s due diligence system (i.e., the system of measures and procedures developed by the organization to minimize the risk of sourcing material from unacceptable sources), one component of which is the company risk assessment (which FSC has decided may continue to be used until an approved national risk assessment for Canada and the USA are in place). Comments received will be considered by KPMG FCSI in assessing ZCLP’s performance against the requirements of the applicable FSC CoC and CW standards. A summary of stakeholder comments will also be included in the ZCLP FSC CoC/CW certification audit summary report.

Zellstoff Celgar Limited Partnership FSC® CoC/CW Stakeholders October 5, 2017 Page 3

A questionnaire is provided with this letter for your comments on issues that are pertinent to ZCLP’s FSC CoC/CW certification. However, additional materials and other methods of communication will also be accepted. Upon request, arrangements may also be made to allow stakeholders to meet with members of the audit team prior to or during the on-site portion of the audit.

Access to information FSC requires that stakeholders be provided access to certain information as part of the consultation process, including: • A description of the supply area and respective risk designation. This information is included within the body of this letter and the summary of the ZCLP Due Diligence System (DDS). • A written summary of the ZCLP DDS. A copy of this document is available in the ZCLP FSC CoC stakeholder information package located on KPMG FCSI’s website at https://home.kpmg.com/ca/en/home/services/audit/sustainability-services/forest-management- consultations.html • Copies of the applicable FSC CoC and CW standards. These can be obtained from FSC International document center located at: https://ic.fsc.org/en/document-center. • A copy of the current (January 2017 version) ZCLP company risk assessment. This can also be obtained from FSC International at: https://info.fsc.org/details.php?id=a0240000005sVXRAA2&type=certificate Note: The latest 2017 version of the ZCLP company risk assessment is in the process of being updated at time of writing. Once finalized by ZCLP and approved by KPMG FCSI it will be posted to the above FSC website. • The procedure for filing complaints. A copy of KPMG FCSI’s dispute resolution procedures are available on KPMG FCSI’s website at: https://home.kpmg.com/ca/en/home/services/audit/sustainability-services/kpmg-forest- certification-services-inc.html. • Contact information of the person or position responsible for addressing complaints. This can be obtained by visiting the KPMG FCSI website at: https://home.kpmg.com/ca/en/home/services/audit/sustainability-services/kpmg-forest- certification-services-inc.html

KPMG FCSI Contact information All comments and requests for additional information should be directed to Craig Roessler at:

KPMG Forest Certification Services Inc. PO Box 10426, Pacific Centre Vancouver, B.C. V7Y 1K3 Fax: (604) 691-3031 Zellstoff Celgar Limited Partnership FSC® CoC/CW Stakeholders October 5, 2017 Page 4

Our commitments 1 The source of specific comments received will remain confidential unless the commenting party specifically indicates to the contrary. 2 We will respond to all stakeholders who provide comments and provide information on how their comments were taken into account. 3 A summary of stakeholder comments and how they were considered by KPMG FCSI will be included in the ZCLP FSC CoC/CW certification audit summary report.

Yours very truly,

Craig Roessler, RPF(BC), EP(EMSLA) Senior Manager (604) 691-3115

Enclosures Stakeholder Questionnaire – 2017 Zellstoff Celgar Limited Partnership FSC® Chain of Custody/Controlled Wood Re-certification Audit To: Craig Roessler, KPMG FCSI Fax #: 604-691-3031 From: Phone #: ______Organization (if applicable):

KPMG Forest Certification Services Inc. (KPMG FCSI) will be conducting a re-certification audit of Zellstoff Celgar Limited Partnership (ZCLP) against the requirements of the current Forest Stewardship Council® (FSC) chain of custody (CoC) and controlled wood (CW) standards. A stakeholder consultation process is planned for fall of 2017, with the main assessment scheduled to begin on November 22, 2017 and conclude on November 24, 2017. This questionnaire is intended to obtain information from interested and affected stakeholders regarding issues that are pertinent to ZCLP ’s FSC CoC/CW certification. Such comments may include, but are not necessarily limited to, concerns or observation’s regarding the Company’s due diligence system (i.e., the system of measures and procedures developed by the organization to minimize the risk of sourcing material from unacceptable sources), one component of which is the company risk assessment (which FSC has decided may continue to be used until approved national risk assessments for Canada and the USA are in place). Comments received will be considered by KPMG FCSI in assessing ZCLP’s performance against the requirements of the applicable FSC CoC and CW standards. A summary of stakeholder comments will also be included in the ZCLP FSC certification report. However, the identity of individuals/organizations providing comments will be kept confidential by KPMG FCSI unless the party providing comments specifically indicates in writing to the contrary.

NB: In order to be considered during the 2017 audit, comments must be received no later than November 24, 2017.

1. Do you have any specific concerns regarding the ZCLP due diligence system YES (DDS), company risk assessment or other issues that are pertinent to the Company’s FSC CoC/CW certification? NO Comments: NA

Stakeholder Questionnaire – 2017 ZCLP FSC CoC/CW Audit To: Craig Roessler, KPMG FCSI Fax #: 604-691-3031 From: Phone #: ______

2. If you answered yes to question 1 above, have you communicated your YES concerns to ZCLP? Comments: NO

NA

3. If you answered yes to question 2 above, in your opinion, has ZCLP made a YES reasonable attempt to address your specific concerns? Comments: NO

NA

Stakeholder Questionnaire – 2017 ZCLP FSC CoC/CW Audit To: Craig Roessler, KPMG FCSI Fax #: 604-691-3031 From: Phone #: ______

4. Do you have any other concerns regarding ZCLP’s FSC CoC/CW certification YES that have not been addressed in the above questions? Comments: NO

NA

5. Are there any specific issues or requirements of the FSC CoC or CW standard YES (FSC-STD-40-004 V3-0 and FSC-STD-40-005 V3-1) that you believe merit special attention during the 2017 ZCLP FSC CoC/CW audit? NO Comments: NA

Due Diligence System

1 PURPOSE The purpose of this due diligence system (DDS) is to meet the requirements set out in FSC-STD-40-005 V3-1 the Requirements for Sourcing FSC Controlled Wood Standard (CW Standard). This document will act as an overall guidance to Zellstoff Celgar LP’s (Celgar) Fibre Purchase Program and associated documents.

2 SCOPE Celgar is currently registered under the FSC Chain of custody code KF-COC-0001030 and the FSC Controlled wood Code KF-CW-001030. Due to the limited supply of 100% certified FSC fibre in Celgars sourcing area controlled wood is the only FSC product group that Celgar trades in. Where FSC certified fibre enters Celgars supply chain it is currently treated as Controlled Wood only. Celgar produces one product group: Northern Bleached Softwood Kraft Pulp (NBSKP).

3 DESCRIPTION OF SUPPLY AREA, DISTRICTS OF ORIGIN AND SUPPLY CHAIN: Celgar operates a bleached kraft pulp mill in Castlegar, , Canada. The mill requires approximately 2.7 million cubic metres of coniferous fibre annually to supply manufacturing processes at targeted capacity. Celgar sources fibre in the form of round wood (logs) and chips. Approximately 75% of Celgars fibre supply is in the form of residual chips sourced from sawmills and 25% is in the form of logs.

Celgar sources fibre from a supply area in that comprises of selected counties within the states of , Idaho, and Montana and selected Timber Supply Areas (TSA’s) in the Southern Interior of British Columbia. (See attached map). Celgar defines these districts of origin as British Columbia, Washington, Idaho and Montana and has conducted their risk assessment as such at the level for each district.

4 ECOREGIONS Celgars supply area overlaps with the following ecoregions1:

US and Canada: • NA0507 - Cascade Mountains leeward forests - • NA0518 - Northern Central Rockies forests - • NA0522 - Okanagan Dry forests - US Only • NA0505 – Blue Mountains Forest – (very small overlap at the very southern edge of our supply area) • NA0528 - South Central Rockies Forest - (very small overlap at the very southern edge of our supply area) • NA0808 - Montana Valley and Foothill grasslands – (Biome is Temperate Grassland, Savannas, and Shrublands) • NA0813 – Palouse grasslands - (Biome is Temperate Grassland, Savannas, and Shrublands) • NA1309 – Snake-Columbia shrub steppe - (Biome is Deserts and Xeric Shrublands)

1 World Wildlife Fund – US, Terrestrial Ecosustems of the World, 2004, URL: https://www.worldwildlife.org/biomes/temperate-coniferous-forest

Due Diligence System

5 DUE DILIGENCE SYSTEM OVERVIEW Celgars due diligence system (DDS) is comprised of 4 parts.

• Risk Assessment • Risk Verification System • Risk Mitigation • Procedure for Filing Complaints Celgar conducts annual surveys and field verifications as a component of its Risk Verification system and to verify the relevance, effectiveness, and adequacy of this DDS. Implementation of the DDS will be evaluated as part of Celgars annual internal audit.

6 RISK ASSESSMENT SUMMARY Risk assessments have been completed for the various districts of origin and are reviewed annually to briefly initial risk determinations. The current risk assessment results indicates low risk of sourcing wood from uncertified sources when assessed at the ecoregion level against the requirements of standard FSC-STD-40-005 V3-1. The risk ratings indicated below are consistent with the FSC Centralized National Risk Assessment for Canada for Categories 1, 2, and 5 and for the US Categories 1 and 5. Additionally for Category 3 where areas of specified risk have been identified under 3.1 in the detailed risk assessment Indicator 3.2 eliminated (or greatly mitigated) the treat posed to the supply area. A new 2017 risk assessment is underway but the previously approved version can be found at: https://info.fsc.org/details.php?id=a0240000005sVXRAA2&type=certificate. Once finalized and approved by KPMG the 2017 version of the risk assessment will be posted on the FSC website and the old version will be removed.

ZCL District of Category 1: Category 2: Category 3: High Category 4: Category 5: Origin Illegally Violation of conservation Forest Genetically Harvested Traditional or Value Forests Conversion Modified Trees Wood Civil Rights BC Low Risk Low Risk Low Risk Low Risk Low Risk Washington Low Risk Low Risk Low Risk Low Risk Low Risk Idaho Low Risk Low Risk Low Risk Low Risk Low Risk Montana Low Risk Low Risk Low Risk Low Risk Low Risk

Celgar uses this risk assessment along with supplier details to determine if further verification at the geographic district of origin is required to verify fibre being supplied meets the requirements of the Controlled Wood Standard. 7 VERIFICATION OF RISK 7.1 ANNUAL SUPPLIER SURVEY Annually Celgar distributes a survey to all log and chip suppliers who have made deliveries in the past 12 months. This survey is used to determine the status of individual suppliers with respect to the key principles of Celgar’s Fibre Procurement Policy, to verify change in certification status and to verify the Districts of Origin continue to align with established risk assessments. Geographic district of origin is identified at the Timber Supply Area (TSA) level in British Columbia and at the county level for Washington, Idaho and Montana.

7.2 FIELD EVALUATION PROCEDURE For all sources of fibre that cannot be confirmed as low/negligible risk, the Forestry Supervisor will carry out a field investigation (supplier audit) at minimum once every three years (3) or within 12 months if Due Diligence System

they are a new supplier in areas that cannot be confirmed as low/negligible risk. When non- conformities are identified the Forestry Supervisor shall communicate the non-conformity to the supplier with a request for improvement and defined corrective measures. In areas deemed to be low/negligible risk (1) supplier audit must be completed every three (3) years to verify the risk assessment procedure. If there are significant non-conformities with Controlled Wood/Controlled Sources requirements in areas deemed to be low/negligible risk, Celgar will review its risk assessment procedure and revise accordingly. The results of the field verification program will be available for review by FSC accredited certifying bodies.

8 PROCEDURE FOR FILING COMPLAINTS Inquiries and complaints may be made via mail, e-mail, telephone or through the company website, http://www.celgar.com/Contact.aspx . It the complaint is specific to the Company’s FSC certification it will be directed to the Forestry Supervisor. Contact information of the person or position responsible for addressing complaints related to FSC Controlled Wood:

Attn: Forestry Supervisor Zellstoff Celgar Limited Partnership PO Box 1000, 1921 Arrow Lakes Road Castlegar, BC Canada V1N 3H9 Telephone: (250) 365-7211 Facsimile: (250) 365-4211 E-Mail: [email protected]

In the event of complaints related to supplies of FSC Controlled Wood, Celgar will implement the following complaint mechanism: • The Forestry Supervisor will provide written notification to the complainant within two weeks of receipt of the written complaints supported by evidence. • The evidence provided in the complaint will be assessed within 2 weeks of receipt by the Fibre Manager, Forestry Supervisor, and any other relevant parties, • Field verification will be completed by the Forestry Supervisor for cases, in which evidence is considered relevant within 2 months of its receipt, • Once a decision has been made to discredit or validate the complaint, the decision and the complaint handling process shall be formally communicated to the complainant to assure them that appropriate corrective and preventative actions have been taken, • If any non-compliance with Controlled Wood are found, procedures to exclude supply and supplier from Celgar fiber sourcing will be developed and implemented, • For any substantiated complaints the Forestry Supervisor will reevaluate the risk assessment applicable to that supplier and update the risk rating if required. • The Forestry Supervisor will ensure that all records will be kept of all complaints received and action taken. The Forestry Supervisor will inform FSC accredited certifying bodies when there are non-conformities with FSC Controlled Wood requirements in areas considered to be low/negligible risk. Due Diligence System

9 RISK MITIGATION Control measures to mitigate unspecified risk identified for a controlled wood indicator must be developed in accordance with Section 4 ‘Risk Mitigation’ of the Controlled Wood Standard. Given that low risk is established under all fibre controlled wood categories the development of control measures in accordance with Section 4 of the Controlled Wood Standard is not required. Valemount

Horsefly NAM_190

Williams Lake NAM_176 NAM_171

NAM_156_2 100 Mile House Clearwater

Golden TSA TSA NAM_176 Revelstoke TSA

NAM_156_1 Golden

Clinton NAM_145 NAM_146

NAM_149 British Columbia Revelstoke Cache Creek NAM_141 Lillooet Chase Sicamous Ashcroft Kamloops Salmon Arm Radium Hot SpringsInvermere Enderby Logan Lake NAM_136 Spallumcheen Armstrong Invermere TSA NAM_141

Lytton Vernon Lumby Nakusp Okanagan TSA Meadow Creek Merritt Coldstream Elkford NAM_126 Lake Country NAM_130 New Denver Silverton Kaslo NAM_118 Slocan Sparwood Merritt TSA Okanagan dry forests NAM_116 Kimberley Summerland Balfour

Princeton Penticton Cranbrook Fernie Nelson Hope NAM_108 Kootenay Lake TSA Kent Arrow TSA Cranbrook TSA Boundary TSA Harrison Hot Springs Castlegar Mission Cascade Mountains leeward forests Oliver Chilliwack Keremeos Rossland Abbotsford Greenwood Trail North Central Rockies forests Creston Midway Grand Forks Warfield

NAM_99 NAM_97

Boundary Pend Oreille Sedro-Woolley NAM_89 Okanogan Lincoln Montana Valley and Foothill grasslands Ferry Whitefish Stevens Flathead Arlington NAM_90 Text Bonner Sandpoint Evergreen Kalispell Marysville Everett NAM_83_2 Snohomish Monroe Maltby Duvall Washington Rathdrum Redmond Country HomesMead Hayden Montana Kirkland Douglas Post Falls Issaquah Airway HeightsSpokane Liberty Lake Sanders Medical LakeSpokane Valley Lake Hobart Lincoln Kootenai Covington Wenatchee Cheney East Wenatchee NAM_73 Spokane NAM_83_1 Ephrata Enumclaw Shoshone Quincy Grant Moses Lake Benewah Mineral Ellensburg Adams NAM_63 Missoula Missoula Whitman Snake-Columbia shrub steppe Latah PullmanMoscow NAM_62 Selah Yakima Clearwater Union Gap Palouse grasslands NAM_58 Montana Valley and Foothill grasslands Franklin Toppenish Lewiston Garfield Clarkston Sunnyside Nez Perce Grandview Richland Pasco Columbia Prosser Kennewick Walla Walla Asotin Lewis Finley NAM_59 Blue Mountains forestsBlue Mountains forests College Place Walla Walla NAM_55 Butte-Silver Bow

Idaho WWF Terrestrial Ecoregions within Zellstoff Celgar Supply Area 2017 o o o o o o o oParks (National and Provincial) oooooooo Idaho o o o oConservation and NGO Lands o o o o HCV 2 Intact Forest Landscape

WWF Global 200 Ecoregions South Central Rockies forests WWF Ecoregion Status . Adams . NAM_46 BIOME, WWF_Status Valley Blue Mountains forests Desert - Critical / Endangered 11::22,,000000,,000000 Grasslands - Critical / Endangered Washington Forests - Critical / Endangered Forests - Vulnerable Weiser

Forests - Relativley Stable / Intact Payette

CELGAR_Supply_Area_Outline Drawn By: CS October 4, 2017 Emmett