Defining report content

Determining materiality

We consider material matters to be those matters that could facilitate or inhibit our One Sappi strategy and that could substantively affect―either positively or negatively―our ability to create stakeholder value over the short-, medium- and long term.

The information presented has been determined on the basis of our ongoing extensive engagement with our stakeholders and has been assessed against the backdrop of current business operations, as well as the opportunities, challenges and prevailing trends in our industry and the global economy. These trends occur in the broader context of a world where climate change concerns and resource scarcity are raising expectations to make more and better with less and where sustainably manufactured products derived from renewable resources are more important than ever before.

Based on this context, we have realigned our strategy to maintain our position as a global forest products leader and developed a global vision based on the power of One Sappi. In preparing this report we have tracked environmental findings and research, public opinion, employee views and attitudes, the interests and priorities of environmental and social groups, as well as the activities, profiles and interests of investors, employees, suppliers, customers, communities, governments and regulatory authorities.

Throughout the report, qualitative text is backed up by quantitative information, generally in the form of graphs illustrating performance over five years from 2014 – 2018. We aim to present information that is material, accurate, comparable, relevant and complete. The information presented covers topics and indicators that reflect our significant economic, environmental, and social impacts, as well as issues that would substantively influence the assessments and decisions of stakeholders.

We publish our performance against targets in both the Group Sustainability Report and our regional sustainability reports (see www.sappi.com/sustainability), transparently reporting on success or lack thereof in achieving these targets.

Prioritising content

This report is structured along Sappi’s well-established 3Ps of sustainability: Prosperity, People and Planet. It covers material sustainability focus areas that affect the long-term success of our business, and that relate to any significant impacts we have on the economy, environment or communities in which we operate.

While we do cover economic (Prosperity) issues to some extent, these are dealt with in greater detail in our Annual Integrated Report.

Identifying stakeholders

We have identified the stakeholders we expect to use our report on the basis of our ongoing engagement—formal and informal—with them. The various ways in which we engage our stakeholders are set out in detail in the Key relationships section of this report. The stakeholders we expect to use this report include investors, customers, suppliers, employees, communities, governmental and non-governmental organisations, environmental bodies and all those who are affected by our activities.

External assurance

In 2018, we obtained external limited assurance on selected sustainability key performance indicators included in this report (see Independent Assurance Practitioner’s Limited Assurance Report on Selected Key Performance Indicators).

Assured data

Direct emissions (Scope 1) (tCO2e) 4,297,429LA
Indirect emissions (Scope 2) (tCO2e) 1,473,162LA
Employee (Own) LTIFR (rate) 0.55LA
Contractor LTIFR (rate) 0.34LA

LA: Limited assurance provided by KPMG.

Our sustainability information also continues to be verified by our internal audit team. Their verification process includes reviewing the procedures applied for collecting and/or measuring, calculating and validating non-financial data, as well as reviewing reported information and supporting documentation.

In addition, most of our key operations undergo external verification including the Eco-Management Audit System (EMAS) in Europe, ISO 50001 energy certification in Europe and South Africa and globally, ISO 14001 environmental certification, ISO 9001 quality certification and OHSAS 18001 certification.

We are also assessed in terms of the forest certification systems we use, and in South Africa, our broad-based black economic empowerment (BBBEE) performance is assessed by an external ratings agency.

In 2018, Sappi Limited was a constituent of the FTSE/JSE Responsible Investment Index and the FTSE/JSE Responsible Investment Top 30 Index. Being included in these indices means that our sustainability performance has been externally assessed.

Collectively, these external assessments and certifications as well as interaction with our stakeholders give us confidence that our performance indicators are reliable, accurate and pertinent. The Social, Ethics, Transformation and Sustainability (SETS) Committee is satisfied that the sustainability information presented in this report has been provided with a reasonable degree of accuracy.

External reviews of our sustainability performance

Our focus on continuous improvement and commitment to integrate the principles of sustainability into our everyday business activities is highlighted by the fact that in 2018:

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  • We were included in the FTSE/JSE Responsible Investment Top 30 Index and confirmed as a constituent of the FTSE4Good Index Series.

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  • In all three regions, we were awarded a Gold Recognition Level in sustainability performance by independent rating agency EcoVadis, placing us in the top 5% of 30,000 companies.

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  • In addition, Sappi has been classified as Prime by Oekom, one of the world’s leading environmental, social and governance (ESG) research and rating agencies for sustainable investments.

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  • We reported to the CDP (www.cdp.net/en) in terms of their Climate Change and Forest Programmes, making our responses publicly available.

Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong environmental, social and governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products.

Independent Assurance Practitioner’s Limited Assurance Report on Selected Key Performance Indicators To the Directors of Sappi Limited

We have undertaken a limited assurance engagement on selected key performance indicators (“KPIs”), as described below, and presented in the 2018 Sappi Group Sustainability Report of Sappi Limited (Sappi) for the year ended 30 September 2018 (the Report). This engagement was conducted by a multidisciplinary team including environmental, safety and assurance specialists with relevant experience in sustainability reporting.

Subject Matter

We have been engaged to provide a limited assurance conclusion in our report on the following selected KPIs set out in the Table below and marked with an LA in the “Assured Data” table on page 5 of the Report. The selected KPIs described below have been prepared in accordance with the Global Reporting Initiative Standards (‘GRI Standards’), supported by Sappi’s internally developed guidelines (collectively referred to as “Sappi’s reporting criteria”).

Table: Scope of the KPIs prepared for the 2018 reporting period

Category Selected KPIs Coverage/Reporting Boundary
Environment Direct emissions
(Scope 1) tCO2e
Sappi Global
(Total Group)
Indirect emissions
(Scope 2) tCO2e
Safety Employee (Own)
LTIFR (rate)
Sappi Global
(Total Group)
Contractor LTIFR
(rate)

Directors’ Responsibilities

The Directors are responsible for the selection, preparation and presentation of the selected KPIs in accordance with Sappi’s reporting criteria. This responsibility includes the identification of stakeholders and stakeholder requirements, material issues, commitments with respect to sustainability performance and design, implementation and maintenance of internal control relevant to the preparation of the Report that is free from material misstatement, whether due to fraud or error. The Directors are also responsible for determining the appropriateness of the measurement and reporting criteria in view of the intended users of the selected KPIs and for ensuring that those criteria are publicly available to the Report users.

Inherent Limitations

Greenhouse gas emissions quantification is subject to inherent uncertainty because of incomplete scientific knowledge used to determine emissions factors and the values needed to combine emissions of different gases.

Our Independence and Quality Control

We have complied with the independence and all other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. KPMG Services Proprietary Limited applies the International Standard on Quality Control 1, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Practitioner’s Responsibility

Our responsibility is to express a limited assurance conclusion on the selected KPIs based on the procedures we have performed and the evidence we have obtained. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements other than Audits or Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards Board. That Standard requires that we plan and perform our engagement to obtain limited assurance about whether the selected sustainability KPIs are free from material misstatement.

A limited assurance engagement undertaken in accordance with ISAE 3000 (Revised) involves assessing the suitability in the circumstances of Sappi’s use of its reporting criteria as the basis of preparation for the selected KPIs, assessing the risks of material misstatement of the selected KPIs whether due to fraud or error, responding to the assessed risks as necessary in the circumstances, and evaluating the overall presentation of the selected KPIs.

A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks. The procedures we performed were based on our professional judgement and included inquiries, observation of processes followed, inspection of documents, analytical procedures, evaluating the appropriateness of quantification methods and reporting policies, and agreeing or reconciling with underlying records.

Given the circumstances of the engagement, in performing the procedures listed above we:

  • Interviewed management to obtain an understanding of the internal control environment, risk assessment process and information systems relevant to the sustainability reporting process;
  • Inspected documentation to corroborate the statements of management in our interviews;
  • Conducted interviews with relevant key personnel and data owners to understand data collection and report preparation processes, as well as the associated key controls;
  • Inspected supporting documentation on a sample basis and performed analytical procedures to evaluate the data generation and reporting processes against the reporting criteria;
  • Evaluated the reasonableness and appropriateness of significant estimates and judgements made by the directors in the preparation of the selected KPIs;
  • Undertook site visits, to complete the abovementioned procedures; and
  • Evaluated whether the selected KPIs presented in the Report are consistent with our overall knowledge and experience of sustainability management and performance at Sappi.

The procedures performed in a limited assurance engagement vary in nature and timing, and are less in extent than for a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether Sappi’s selected KPIs have been prepared, in all material respects, in accordance with Sappi’s reporting criteria.

Limited Assurance Conclusion

Based on the procedures we have performed and evidence we have obtained and subject to the inherent limitations outlined elsewhere in this report, nothing has come to our attention that causes us to believe that the selected KPIs, as set out in the table included in the Subject Matter paragraph above for the year ended 30 September 2018 are not prepared, in all material respects, in accordance with Sappi’s reporting criteria.

Other Matters

The maintenance and integrity of the Sappi website is the responsibility of Sappi’s management. Our procedures did not involve consideration of these matters and, accordingly we accept no responsibility for any changes to either the information in the Report or our independent limited assurance report that may have occurred since the initial date of presentation on the Sappi Website.

Restriction of Liability

Our work has been undertaken to enable us to express a limited assurance conclusion on the selected KPIs to the Directors of Sappi in accordance with the terms of our engagement, and for no other purpose. We do not accept or assume liability to any party other than Sappi, for our work, for this report, or for the conclusion we have reached. KPMG Services Proprietary Limited

Per PD Naidoo
Director

KPMG Crescent
85 Empire Road
Parktown
Johannesburg
2193

20 December 2018

Sustainability governance

Our approach to sustainability is framed in terms of Prosperity, People and Planet—referred to internally as the 3Ps—and is set out in our Group Sustainability Charter.

This in turn is underpinned by the Code of Ethics and our group value statement:

At Sappi we do business with integrity and courage; making smart decisions which we execute with speed. Our values are underpinned by an unrelenting focus on and commitment to safety.

Regional Sustainability Councils (RSCs) operate in Sappi Europe (SEU), Sappi North America (SNA) and Sappi Southern Africa (SSA). Each RSC focuses on key material issues relevant to their specific region and on incorporating sustainability into everyday business processes.

These RSCs report to the Group Sustainable Development Council (GSDC) which in turn reports to the Social, Ethics, Transformation and Sustainability (SETS) Committee which in turn reports to the board.

Sustainability ambassadors in SEU and SNA and brand ambassadors in SSA help to entrench an holistic approach to the 3Ps of Prosperity, People and Planet throughout the group.

Sappi sustainability governance structure