Catalyst rewarded for environmental sensibility

By  Michael Swan, The Catholic Register
  • April 17, 2007
TORONTO - The guys who control the mill jobs in several small towns on Vancouver Island, who cut down swaths of rainforest to make paper for phone books and catalogues and who deal in pulp for paper mills up and down the west coast of North America are now officially good guys of Canada’s forest products industry.
Catalyst Paper of Vancouver has been added to the Jantzi Social Index as a best of sector company for its range of environmentally friendly business practices.

The world’s largest manufacturer of paper for telephone books and western Canada’s biggest paper recycler is a good choice for socially responsible investors, said Greenpeace Canada’s forest campaign leader Richard Brooks.

“Catalyst has done well. They’ve shown some great leadership in terms of securing agreements for conservation in the Great Bear Rain Forest,” Brooks said.

In choosing Catalyst for its socially responsible version of the S&P/TSX 60, Jantzi noted that the company is certified by the Forest Steward Council for its ability to trace where it has obtained all the wood fibre in its products, meaning no Catalyst products are made from illegally harvested wood. The company has also put a lot of effort into energy efficiency, and by 2005 had reduced its greenhouse gas emissions to 70 per cent below 1990 — better than the Kyoto Accord calls for.

Almost unique among forestry companies, Catalyst hasn’t been convicted of a health and safety or environmental violation during the last five years and is constantly engaged in talks with native people and local communities.

Speaking before the company’s March 28 annual general meeting, Catalyst vice president for corporate affairs and social responsibility Lyn Brown told The Catholic Register the paper maker’s commitment to sustainability is about doing business with foresight.

“We certainly see people paying more attention to, for instance, carbon risk,” she said. “That’s coming from the insurance community. That’s also coming from institutional investors. There’s certainly an investment community interest in how our industry and any business conducts its business with regard to not only today’s interests — which must be managed — but also to future requirements, and how the business is adjusting or preparing itself for future demands.”

The near civil war which marked relations between environmentalists and the logging industry in British Columbia in the 1990s is long over, but the two sides are still learning how to get along.

“Is everybody absolutely linking arms? No. But, are we finding a path forward that is more constructive and solutions oriented? I think the answer to that is yes,” said Brown.

While full of praise for how Catalyst has responded to challenges from environmental campaigns, Brooks said he wasn’t ready to buy the stock for his own portfolio.

“I wouldn’t personally invest in a forest products company,” he said.

But Brooks is happy there are investors who would reward a responsible paper company over those who still resist sustainable forestry.

“The socially responsible investment community can be quite powerful in moving certain companies in different directions,” he said.

Catalyst traces its roots back to British Columbia Forest Products Limited. In 1987 it became part of Fletcher Challenge Ltd. of New Zealand, along with Crown Forest Industries. In 2000 the Norwegian paper company Norske Skog bought Fletcher Challenge’s B.C. pulp and paper assets. The resulting NorskeCanada became Catalyst Paper Corporation in 2005.

Catalyst replaces Domtar Inc. on the Jantzi Social Index after Domtar was bought by Weyerhaeuser Inc. and removed from Canadian stock listings.

Last year Catalyst lost $15.9 million on revenues of $1.9 billion. Management counts that as a big improvement over a 2005 loss of $25.6 million on revenues of $1.8 billion. On straight operations the company made $3.9 million in 2006 compared to a loss of $25.1 million in 2005.

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