E3339b_report 1/3/05 9:46 AM Page 1 Sustainability Report 2004 E3339b_report 1/3/05 9:46 AM Page 2 E3339b_report 1/3/05 9:46 AM Page 3 Temple-Inland Inc. is a major manufacturer of cor- rugated packaging and forest products with a diversified financial services operation. The Company’s 2 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiative® (SFI) program of the American Forest & Paper Association to ensure forest management is con- ducted in a scientifically sound and environmentally sensitive manner. Temple-Inland’s common stock (TIN) is traded on the New York Stock Exchange and the Pacific Exchange. Temple-Inland’s Internet address is www.templeinland.com. TEMPLE-INLAND SUSTAINABILITY REPORT 2004 1 E3339b_report 1/3/05 9:46 AM Page 4 CONTENTS Chairman’s Letter 3 About Our Company 4 Responsible Forest Management 8 Forest Stewardship 14 Environment, Health and Safety Stewardship 16 Environmental Programs 18 Air 20 Water 22 Waste 23 Employee Health and Safety Programs 24 Corporate Citizenship 26 Corporate Governance 32 Appendix 35 Awards and Recognition 35 Certifications 35 Forestry Principles 36 Environment Health, and Safety Policy and Principles 38 Global Reporting Initiative® Index 39 Contact Information 40 2 TEMPLE-INLAND SUSTAINABILITY REPORT 2004 E3339b_report 1/3/05 9:46 AM Page 5 WORKING TOGETHER TO CREATE VALUE-DRIVEN ECONOMIC,ENVIRONMENTAL, AND SOCIAL SUSTAINABILITY “We continuously look for new opportunities to deliver higher levels of sustainability through internally developed programs and activities; through our supplier relationships; and new and expanding partnerships with environmen- tal and community-based organizations.” — Kenneth M. Jastrow, II Chairman and Chief Executive Officer At Temple-Inland, we are working together everyday to • becoming a charter member of the Chicago create value-driven economic, environmental, and social Climate Exchange; sustainability. • assisting low-income families through the Supporting our efforts is a single vision, mission, and set Community Reinvestment Program; of values, which are rooted in our commitments to our • signing a five-year cooperative agreement with shareholders, customers, and employees. This set of princi- The Nature Conservancy in September 2002; and ples provides us with a value-driven guide for interacting • assisting 10 government agencies with recovery with our environment, workplaces, and communities. We of the Space Shuttle Columbia debris that fell on are committed to operate in a way that is economically, envi- our forestlands in Texas in 2003. ronmentally, and socially sustainable. Our commitment to sustainability presents us with many This report describes who we are and what we do. The opportunities. First, we value the opportunity to participate report also introduces you to some of the people who in sustainability activities on the over 2 million acres of bring Temple-Inland’s corporate citizenship to life and forestlands we manage, in the more than 200 communities in touches on some of our success stories. which we live and work, and in the world we all share. If you would like more information, please visit our Second, we continuously look for new opportunities to Web site at www.templeinland.com. deliver higher levels of sustainability through internally If you have specific questions not answered in this developed programs and activities, our supplier relation- Sustainability Report or through our Web sites, please ships, and new and expanding partnerships with environ- email us at [email protected]. mental and community-based organizations. Thank you for your interest in our company’s eco- Finally, we value the opportunity to share our wide-rang- nomic, environmental, and social sustainability activities ing sustainability activities and achievements. This is evi- and achievements. denced by our selection as the packaging sector leader of the Dow Jones Sustainability Index for the fourth consecutive year since its inception. We are proud of our efforts which are Sincerely, exemplified in our many accomplishments and activities including these recent highlights: • receiving the American Forest & Paper Association’s Environmental & Energy Achievement Kenneth M. Jastrow, II Award for our “Conservation Forest Program” Chairman and Chief Executive Officer of Temple-Inland in 2003; TEMPLE-INLAND SUSTAINABILITY REPORT 2004 3 E3339b_report 1/3/05 9:46 AM Page 6 A COMPANY ON A JOURNEY TO BE THE BEST About Our Company Pembroke, Ontario MN Temple-Inland is a market-driven, NY customer-focused company. Our CA PA OH NJ mission is to be the best by con- IN IL DE MO VA sistently exceeding customers’ CO KS KY AZ NC TN expectations, maximizing assets, OK SC AR lowering operating costs, and AL MS GA improving efficiency. Our opera- TX LA tions include corrugated packag- FL ing, forest products, and a diversi- Puerto Rico MEXICO fied financial services group. With headquarters in Austin, Texas, the company operates businesses throughout North America. Corrugated Packaging Forest Products Financial Services (markets served) Forest (areas of landholdings) Temple-Inland is committed to consistently delivering high-quality, innovative products that meet customers’ demands. Temple-Inland is focused on customers’ needs and product quality — the cor- nerstones of an economically sustainable company. Corrugated Packaging The principal product of Temple-Inland’s corrugated pack- aging business is containerboard, which is used to create corrugated packaging and is the largest segment of the U.S. paper market. Containerboard is made using softwood fiber, and Temple-Inland’s 2 million acres of forestland provide the majority of its fiber requirements. In addition, old cor- rugated containers (OCC) furnish 32 percent of Temple- Inland’s fiber at its paperboard mills. Our Maysville, Kentucky and Ontario, California mills produce 100 percent recycled corrugated containers. In 2003, the corrugated packaging business encompassed 84 facilities including five containerboard mills, one corrugating medium mill, and 78 converting or other operations. These locations were dis- persed throughout the continental United States with loca- tions in Mexico and Puerto Rico. In 2003, the corrugated packaging operation accounted for approximately 58 per- cent of the company’s revenue. Russell Gipson, Box Plant Manager 4 TEMPLE-INLAND SUSTAINABILITY REPORT 2004 E3339b_report 1/3/05 9:46 AM Page 7 County, Texas. The company has continuously operated a sawmill at the original site since 1894. From the early 1900s to the housing boom following World War II, basic lumber products for the construction and furniture industries were produced using both pine and hardwood. By the early 1950s, technology advances allowed chips, sawdust, and shavings to be used to manufacture wood panels and fiber- board sheathing. During the next two decades, the compa- ny pioneered the early research and development of Southern Pine plywood, and began producing particle- board, gypsum wallboard, and other building materials. Financial Services Temple-Inland’s financial services segment, operating under the name Guaranty Financial Services, offers a wide range of financial products and services. These include a full-service savings bank, mortgage banking, an insurance brokerage, and real estate development activities. Our savings bank activities are in Texas and California. Guaranty is one of the few financial services companies with the ability to offer Emily Goodwin, Research Forester banking, insurance, and mortgage services from a single source. In 2003, the financial services segment provided 25 percent of the company’s revenues. Brief History — Corrugated Packaging Brief History — Financial Services The corrugated packaging operation began in 1918 when The financial services segment began in 1954 as an out- Herman C. Krannert started making ventilated corrugated growth of an association of lumber dealers based in Austin, boxes for the shipment of baby chicks. These boxes met the Texas. It was created to encourage home building and to growing need for lightweight and inexpensive containers to help finance new houses. In 1971, the company acquired replace traditional wooden crates and barrels. The business controlling interest of the business. In 1987, Temple-Inland thrived, even during the Great Depression of the 1930s, as the purchased its first thrift, a savings bank in Kilgore, Texas. demand for corrugated boxes grew for domestic commerce. Since then, Guaranty has acquired more than 20 savings By 1939, the company had acquired four box plants and ini- institutions throughout Texas, and in the late 1990s further tiated vertical integration. The growth accelerated in the acquisitions gave Guaranty a major presence in California. mid-1940s as the number of sites, the range of products, and the base of customers expanded. Today, Temple-Inland is the third-largest manufacturer of corrugated packaging in North America. Forest Products Temple-Inland’s forest products business segment operates 19 plants and mills throughout the U.S. and in Canada. These facilities manufacture a wide range of construction and industrial building products including lumber and studs, wood trim and siding, particleboard, medium density fiber- board (MDF), gypsum wallboard, and fiberboard products. The forest products segment maintains an interest in a gyp- sum joint venture and an MDF joint venture. The forest products segment also manages