www.mondigroup.com Mondi Europe and International Division Syktyvkar Logging Operations SEAT Report 2015 Socio-economic assessment toolbox report Contents 1 Executive summary 1 2 Introduction 2 3 Assessment objectives and methodology 4 3.1 Assessment objectives 4 3.2 Methodology and process 4 3.3 SEAT team 4 3.4 Key stakeholders 4 3.5 Acknowledgements 5 4 Overview of surroundings 6 4.1 The Komi Republic 7 4.2 Logging areas 8 5 About Mondi Syktyvkar 9 5.1 Production 9 5.2 Financial performance 10 5.3 Wood procurement 11 5.3.1 Structure of Logging Operations 11 5.3.2 Wood supply chain 11 5.4 Forestry and environmental practices and developing forest capital 14 5.4.1 Road and bridge construction 14 5.4.2 Silviculture and intensive forestry 15 5.4.3 Engagement with non-governmental organisations (NGOs) 16 5.4.4 High conservation value forests 17 5.4.5 Biodiversity and natural forest dynamics 17 5.4.6 Water management 18 5.4.7 Waste and emissions management 19 5.5 Social management systems and performance 19 5.5.1 Employment 19 5.5.2 Business relations 19 5.5.3 Social and economic partnership programmes 20 5.5.4 Working with stakeholders 20 5.5.5 Safety 21 5.5.6 Social benefits for employees 21 5.5.7 Training programmes 22 6 Results of the assessment 23 6.1 General observations 23 6.2 Positive findings 23 6.3 Identified challenges and stakeholders’ further comments and 25 expectations Social concerns 25 Performance 27 Employment and labour 28 Suppliers and contractors 30 Contact details OBC SOCIO-ECONOMIC ASSESSMENT TOOLBOX REPORT 1 Executive summary • Mondi SYK is considered by both local and regional authorities Mondi Syktyvkar JSC in Russia has as a responsible partner and good tax and forest rent payer; completed its fifth SEAT (socio-economic • Suppliers and contractors describe Mondi as a reliable partner, acknowledging recent positive changes in planning assessment toolbox) review in 2015, and this and tender management; report – available in English and Russian – • Corporate social investment initiatives and cooperation reflects the comments made by stakeholders with NGOs and education institutions are well-known and highly-supported; during the SEAT sessions and the responses • Modernisation of forestry operations and improved working provided by Mondi SYK management. conditions for logging camp employees are acknowledged; • The FSC® (Forest Stewardship Council®) certification process Socio-economic and environmental conditions form an important is well-known and supported by all stakeholders; and backdrop to the contribution by Mondi Syktyvkar JSC (Mondi SYK • Mondi SYK’s environmental responsibility as well as its or the company) to the sustainable development of a region. Our improved reforestation and silviculture are highly appreciated. formal and fully-transparent assessments of the impacts of our industrial activities on the socio-economic environments of host Challenges identified by stakeholders: communities and regions are carried out on a regular basis. This • Concerns over infrastructure issues: deterioration of roads process, known as SEAT (socio-economic assessment toolbox), and closing down of rafting are among the main concerns is a series of open and transparent sessions of dialogue with our raised by stakeholders; stakeholders and is facilitated by an independent third party. • Unemployment concerns in logging areas; • Lack of transparency in the use of social investment funds by The main goal of the SEAT process is to obtain a thorough local administrations, and in some areas, an insufficient amount understanding of how our stakeholders perceive the company, of social investment; what changes and trends have occurred since previous SEATs, • A gap between Mondi's high operational standards and and what are the positive and negative impacts of our operations the equipment and practices used by contractors for soil on the surrounding communities and stakeholders. This SEAT, preparation, logging, transportation and silviculture; driving conducted during October 2015, focused on the Logging through villages by contractors (instead of by-passes); and, Operations of Mondi SYK. in many cases, the use of overloaded vehicles; • Impact on soils during harvesting was identified as one of the The SEAT assessment team for Mondi SYK included Mondi main environmental concerns; SYK Logging Operations, Mondi Group and third-party • Reward systems and social benefits for Logging Operations representatives. Key stakeholders that attended SEAT sessions and the Mill are seen to be different, e.g. a lack of a included employees of Mondi SYK Logging Operations, performance-related wage incentive system for supporting/ contractors, non-governmental organisations (NGOs) non-operations staff at logging areas; representatives, municipality and state authorities, community • Retrenchment of some employees in Logging Operations and members, media representatives and customers. the associated increase in workload and responsibilities; and • Suppliers and contractors are concerned about just-in-time Some of the findings of the SEAT process included: logistics which involve very strict and narrow time slots for wood delivery and acceptance at the Mill gate. In many Positive aspects commented on by stakeholders: cases, it is accompanied by inefficiencies in the offloading • Mondi SYK is considered a reliable employer providing organisation at the Mondi SYK site. employment with regular and officially paid salaries; • Mondi SYK is appreciated for genuine attention to health and Mondi SYK management has provided feedback and responses safety requirements; to all issues raised by stakeholders in this report. This report will • Transparent communication and the open door policy of be distributed to all stakeholders, and the findings will be used to Mondi SYK is recognised and appreciated by all stakeholders review and develop an annual community engagement plan that on all levels; aligns the needs of the business and priorities of the community. SYKTYVKAR LOGGING OPERATIONS SEAT REPORT 2015 1 2 Introduction Mondi Group (Mondi) recognises that there is a broad range of The results of the assessment are published in a report and stakeholders who have an interest in Mondi and its activities, and distributed to stakeholders. on whom its operations and products have an impact. Mondi Mondi’s commitment to conducting SEAT studies at its forestry engages actively with its stakeholders – shareholders, customers, operations and pulp and paper mills is reflected in its policies and employees, suppliers, governments, NGOs, academic institutions, standards on corporate citizenship which support Mondi’s overall local communities, certification bodies, regulators and media – to policy on sustainable development. understand and respond to their concerns. Mondi Group does this at a global, national and operational level. Mondi Group’s approach This report reflects the major changes in, and accomplishments and includes both informal and formal multi-stakeholder dialogue; it challenges of logging activities since the previous assessment in seeks to engage and report regularly and transparently. 2009; the issues raised by stakeholders during the SEAT sessions; and the responses provided by Mondi SYK management. Socio-economic and environmental conditions form an important backdrop to Mondi SYK’s contribution to the sustainable We make available electronic versions of the report on the development of a region. Mondi SYK’s formal and fully-transparent Mondi Group website in English and Russian. A printed version assessments of the impacts of its industrial activities on the of the public report is also available. In order to reach as many socio-economic environment of host communities and regions stakeholders as possible, the printed report has been made are carried out on a regular basis. This process, known as SEAT, available in public places and has also been distributed by mail. is a series of open and transparent sessions of dialogue with Information on the dissemination of the public report has been our stakeholders and is facilitated by an independent third party. shared with the community via regional and local media. SECTION 3 SECTION 4 Assessment objectives and methodology Overview of surroundings Introduces SEAT, our socio-economic assessment tool, and Provides a brief overview of the region and districts where Mondi’s reflects on our objectives in conducting such assessments logging areas are located, including selected key economic and in communities where we operate. It also describes our demographic statistics, and maps. methodology in conducting SEATs and provides details on the SEAT team and key stakeholders invited. SECTION 5 SECTION 6 About Mondi Syktyvkar Results of the assessment Describes the company’s standards and practices and Includes the SEAT team’s findings on the issues raised and provides data on production; financial performance; wood commented on by stakeholders during the SEAT sessions. procurement; forestry and environment; and social management The section is split into general observations (overall impressions systems and performance. about the process), positive findings (areas stakeholders were pleased about) and challenges identified (areas stakeholders were concerned about). Individual findings are categorised into groups of broader issues, for example social concerns, performance, employment and labour. Management feedback and response have been provided separately for each individual finding. 2 SOCIO-ECONOMIC ASSESSMENT