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\u201cWe take a renewable natural resource, which is wood fiber, we add value to it, and we make a product that, in the case of corrugated box, 90% of those are recycled\u2026it helps our customers when they try to tell their sustainability story<\/strong>, that they\u2019ve got sustainable farming or sustainable practices in getting their products grown and made, and then they serve it and get it to market in a sustainable package\u2026it\u2019s not top of mind for a lot of investors<\/strong>\u201d \u2013 CEO, Mark Sutton [1]<\/p>\n As a global leader in the industrial and consumer paper and packaging industry [2], International Paper faced mounting pressure to take a larger\u00a0role in addressing environmental sustainability across its supply chain. While deforestation is most commonly associated with paper businesses due to reliance on wood as an input, paper and packaging manufacturing is a heavy industrial process with intensive energy needs, and has the potential to create significant air and water pollution. [3]<\/p>\n While International Paper\u2019s manufacturing operations are subject to \u201cextensive\u201d federal and state regulation, particularly related to air emissions standards [4], many environmental issues related to packaging are not subject to comprehensive regulatory review. Although energy consumption, water usage, and recycling promotion had been discussed by management throughout the 2000\u2019s, no plans were put in place to systematically improve the company\u2019s performance on these metrics.<\/p>\n As the influence of environmental groups on consumer purchasing behavior continued to grow, International Paper\u2019s [IP] customers faced increasing pressure to formally address sustainability, particular as many of IP\u2019s key products were highly visible as potential threats to the environment (e.g., industrial packaging like container board and consumer packaging like disposable food packaging and cups). [5] As customers continued to formalize sustainability targets for their own businesses and develop targets for their suppliers, IP\u2019s management launched its Vision 2020 sustainability plan in 2010. While the business was not bound to achieve its targets, IP pledged to publish an extensive report each year detailing progress towards its goals. [6]<\/p>\n Key initiatives in the Vision 2020 plan included [7]:<\/p>\n Originally driven to take action in part by their customers, International Paper has successfully implemented a strategy to address key sustainability concerns across all of its stakeholders. As part of the launch of Vision 2020, IP has systematically approached mapping each stakeholder’s needs to its actions to demonstrate the steps it has taken to go above and beyond minimum regulated behaviors. This initiative has required significant investment in research and development and meaningful increases in capital expenditures; and through careful communication, these efforts have helped to align sourcing and manufacturing processes with the key concerns of its customers and environmental advocacy groups. Over-time, the short-to-medium term needs of customers have aligned with shareholder needs for value protection and creation, while also pushing higher sustainability standards upstream into the paper and packing supply chain.<\/p>\n While the company has taken important steps to institutionalize its commitment to sustainability over the last decade, there is meaningful room for growth on existing initiatives, and industry observers have noted how additional issues related to sustainability and climate change may impact IP in the future (e.g., sensitivity to changes in weather patterns impacting production costs or input prices [8]). Addressing these issues will require continued proactive responses across the planning, sourcing, and manufacturing groups in addition to coordination across all company stakeholders.<\/p>\n (793 words)<\/p>\n <\/p>\n Exhibit 1: Fiber Certification<\/span><\/p>\n Exhibit 2:\u00a0Mapping Issues and Actions Against Customer Stakeholder Issues<\/span><\/p>\n <\/p>\n Citations<\/span><\/p>\n [1] Julie Segal, \u201cInternational Paper CEO Mark Sutton Thinks inside the Box,\u201d February 14, 2014 http:\/\/www.institutionalinvestor.com\/article\/3547363\/banking-and-capital-markets-corporations\/international-paper-ceo-mark-sutton-thinks-inside-the-box.html#.WBv7RvorLmE<\/a>, accessed November 2016<\/p>\n [2] International Paper Company Overview http:\/\/www.internationalpaper.com\/docs\/default-source\/english\/company\/about-ip\/company-overview\/company-overview.pdf?sfvrsn=68<\/a>, accessed November 2016<\/p>\n [3] Richard E. Smith, \u201cThe Environmental Sustainability of Paper\u201d. Graduate Studies Journal of Organizational Dynamics. Vol. 1(1) (2011)<\/p>\n [4] International Paper 2015 10-K http:\/\/s1.q4cdn.com\/597881801\/files\/doc_financials\/2015\/IPA0007_04192016_10K-FINALONLINE_with-10K-Form.pdf<\/a>, accessed November 2016<\/p>\n [5] International Paper 2015 Annual Report, accessed November 2016<\/p>\n [6] International Paper 2010 Sustainability Report, accessed November 2016<\/p>\n [7] International Paper 2015 Sustainability Report http:\/\/www.internationalpaper.com\/docs\/default-source\/english\/sustainability\/2015-gri-report.pdf?sfvrsn=46<\/a>, accessed November 2016<\/p>\n\n
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