Environmental, Social, & Governance Report
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2 02 0 ENVIRONMENTAL, SOCIAL, & GOVERNANCE REPORT ENVIRONMENTAL TABLE OF CONTENTS PotlatchDeltic Overview 4 22 From Our President and CEO 6 MILLION 2020 ESG Report 7 SEEDLINGS PLANTED LONG-TERM SUSTAINABLE FOREST Our Approach 8 MANAGEMENT PLANS INCORPORATE United Nations SDGs 10 BEST MANAGEMENT PRACTICES Materiality Assessment 14 ENVIRONMENTAL RESPONSIBILITY 18 Our Approach 19 FORESTRY PRACTICES Timberlands 20 Real Estate 34 100% Wood Products Facilities 38 HARVESTED 3.2% THIRD PARTY CERTIFIED Our Value Chain 48 OF TIMBERLANDS, Climate Change 50 INCLUDING THINNING SOCIAL RESPONSIBILITY 60 PROTECTED ENDANGERED Our Approach 61 SPECIES AND Human Capital Investment 62 PROMOTED Health and Safety 72 BIOLOGICAL Working With Suppliers and Contractors 80 DIVERSITY Community Involvement 82 RESPONSIBLE GOVERNANCE 90 PROTECTED 2,300 Our Approach 91 MILES OF RIVERS AND STREAMS Board of Directors 92 Ethics and Legal Compliance 94 ESG Governance 95 SCOPE 1&2 GHG EMISSIONS Risk Management 96 Cybersecurity 98 Stakeholder Engagement 100 91,347 METRIC TONS OF CO2e Public Policy and Advocacy 102 OUR PATH FORWARD 108 NEARLY 100% Our Approach 109 OF LOGS UTILIZED APPENDIX 110 SASB / TCFD Tables 111 RENEWABLE ENERGY = Footnotes 117 Forward-Looking Statements 119 43% OF TOTAL USED AT FACILITIES 7.5 MILLION METRIC TONS OF CO2e SEQUESTERED 2 | 2020 PCH ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT SOCIAL GOVERNANCE VPP STATUS AT 22% FOCUSED ON DIVERSITY INDEPENDENT WOMEN DIRECTORS AND INCLUSION 4 OF 7FACILITIES BOARD OF DIRECTORS ESG GOVERNANCE INCORPORATES PUBLIC ADVOCACY CROSS-FUNCTIONAL AND PARTICIPATION TEAMS AND IN OVER OUR WOOD PRODUCTS TCIR IS BOARD OVERSIGHT WOMEN CONSTITUTE 1.6 30 OUR SAFETY ASPIRATION IS RESEARCH ORGANIZATIONS 32% AND COALITIONS OF OUR ZERO INCIDENTS SALARIED ROLES ONGOING STAKEHOLDER CONNECTED TO OUR COMMUNITIES ENGAGEMENT ENTERPRISE RISK MANAGEMENT FRAMEWORK, INCLUDING CLIMATE RISKS NEARLY ALL OF TIMBERLANDS AVAILABLE FOR PUBLIC ACCESS AND RECREATION COMPREHENSIVE POLICIES REFLECT OUR HIGH WORKFORCE STANDARDS AND ETHICS DEVELOPMENT 2020 PCH ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT| 3 POTLATCHDELTIC OVERVIEW UNLOCKING THE VALUE OF OUR LAND PotlatchDeltic (NASDAQ: PCH) is a $4 billion1 timber Real Estate Investment Trust (REIT) head- quartered in Spokane, Washington. We operate in three business segments: Timberlands, Wood Products, and Real Estate. PotlatchDeltic was founded in 1903 and has a long legacy of excel- lence in timberland management. Our high-quality timberlands are managed on a sustainable basis and our forestry practices are 100% third party certified. We are a leading lumber producer in the U.S. and our facilities focus on responsible manu- facturing and on resource efficiency . We unlock the value of our lands that have a higher and bet- ter use than timberland management and contin- ue to grow our timber base. We provide economic benefit to the communities in which we operate and solid returns to our shareholders. ST. MARIES SPOKANE, WA BEMIDJI GWINN million manufacturing facilities acres of that produce lumber 1.8 timberland 7 and plywood OLA LITTLE ROCK HIGH WARREN QUALITY TOP 10 WALDO TIMBERLANDS U.S. LUMBER STRATIFYING PRODUCER LAND TO DELIVER VALUE 4 | 2020 PCH ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT POTLATCHDELTIC OVERVIEW Timberlands REGION STATE ACRES2 Our northern timberlands consist of approximately 627,000 acres in northern NORTHERN Idaho and 20,000 acres in Minnesota. Our Idaho timberlands are the most productive Pacific IDAHO 627 Northwest timberlands east of the Cascades. MINNESOTA 20 High value sawlogs represent 90% of our Idaho Total Northern Region 647 harvest volume and we index about 75% of our sawlogs to the price of lumber. Our southern timberlands consist of over 1.1 million acres lo- cated across four states - Arkansas, Mississippi, SOUTHERN ARKANSAS 923 Alabama and Louisiana. Our integrated operating MISSISSIPPI 98 model provides a natural hedge against sawlog ALABAMA 91 prices that remain below long-term trend levels. LOUISIANA 6 PotlatchDeltic benefits from a strong customer Total Southern Region 1,118 base near our timberlands and proximity to major housing markets. TOTAL 1,765 Wood Products 3 PotlatchDeltic is a top 10 lumber pro- ANNUAL CAPACITY ducer in the United States, utilizing tim- SAWMILLS: ber sourced from our sustainably managed Bemidji, Minnesota 140 MMBF forests to meet about half of our fiber needs. Our Gwinn, Michigan 185 MMBF sawmills are well capitalized through ongoing Ola, Arkansas 150 MMBF investment to increase productivity and efficien- St Maries, Idaho 185 MMBF cy. For builders and distributors alike, we produce Waldo, Arkansas 190 MMBF a wide array of lumber products at our mills in Arkansas, Idaho, Michigan, and Minnesota with Warren, Arkansas 220 MMBF a focus on product reliability and a dedication PLYWOOD MILL: to customer service. We also produce industrial St Maries, Idaho 150 MMSF grade plywood at our St. Maries, Idaho complex. 4 Real Estate RURAL RURAL – Some of our holdings have a higher or better use than timberland or Large proportion are no longer strategic. We have identified of sales have 120,000 rural acres that we intend to sell over time CONSERVATION at a premium to timberland value. OUTCOMES 120,000 ACRES DEVELOPMENT – We own two exceptional real estate development projects located in Arkansas – Chenal Valley located in West Little Rock and DEVELOPMENT (Chenal Valley located in West Little Rock) Red Oak Ridge in Hot Springs. Residential lots are sold to private and regional builders. Commercial ~57% HENAL ~65% acres are sold for office, multifamily , senior living, Commercial Residential churches, or retail end uses. Sold 350 ACRES Sold 1,775 LOTS $250,000/ACRE $77,500/LOT 2020 PCH ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT| 5 FROM OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER “Each of us has to step up to make the world a better place every day. We are committed to responsible stewardship of the environment, our people, our communities, and towards creating sustainable value.” The past year presented us with an extraordinary from policy and market opportunities associated mix of challenges, including the impacts of the with the benefits arising from the role forests play COVID-19 pandemic and the turmoil surrounding in carbon sequestration and carbon capture in social unrest. These events remind all of us to ask wood products. what we can do differently, and how we can do it better, to make the world a better place. They also We continue to advance our ESG efforts in our reinforced that our environmental, social and gov- analysis, reporting and initiatives with broad ernance commitments and initiatives are a critical corporate involvement and oversight by our piece of a much broader global effort towards Board of Directors. In addition, we actively collab- responsibility and sustainability. orate towards climate policy through our work in coalitions and industry associations. We recently Early in the COVID pandemic, the paper and forest signed the CEO Principles5, an alignment between products supply chain was designated as critical environmental, conservation and forest business infrastructure, recognizing our important role and leaders to establish a common vision on the role our responsibility to adapt to the dynamic environ- that privately-owned working forests can play in ment in which we operate. We stayed informed, mitigating the effects of climate change. Our work communicated with our employees, customers, ahead includes identifying new approaches to and other stakeholders, and took prompt mea- attract and promote talented, diverse employees, sures to reduce infection risks in the workplace. and to achieve even better engagement with our These efforts permitted us to maintain continued workforce. It also includes the challenge of further employment for our workforce and to provide integrating ESG throughout our business, evaluat- increased financial support for those impacted in ing our ability to align with net-zero goals, and de- our communities. veloping science-based CO2e reduction targets. We have made enormous progress over the past Global climate change and the shift to a net-zero two years on our ESG journey, and I look forward economy are also challenges that will require us to continued progress on our ESG efforts in the to adapt and innovate. They will create both risks years ahead. and opportunities, along with complex interde- pendencies. Overall, I believe our climate change scenario analysis will show that PotlatchDeltic is well positioned to face these challenges, with climate change favorably impacting the growth Eric J. Cremers rate of our timber. In addition, we expect to benefit President and Chief Executive Officer 6 | 2020 PCH ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT 2020 ESG REPORT 2020 ESG REPORT We have made significant progress on our ESG climate scenario analysis by identifying potential journey since our inaugural 2019 ESG Report. Late physical and transition risks and opportunities in last year, we conducted a materiality assessment our business. We are committed to completing to help align our ESG reporting with the issues our scenario analysis for our business, aligned with stakeholders view as most important. In addition, guidance from the Task Force on Climate-related we incorporated the United Nations Sustainable Financial Disclosures (TCFD). Development Goals (SDGs) into our ESG reporting through mapping the goals and targets that best We engaged in initiatives surrounding climate