The company in brief
International Paper (IP) is one of the world’s leading producers of fiber-based packaging, pulp and paper. We create value for our stakeholders by: sustaining forests, investing in people, improving our planet, creating innovative products and delivering inspired performance. Our vision is to be among the most successful, sustainable, and responsible companies in the world.
Why a natural capital assessment?
Water stewardship is central to our commitment to invest in the long-term sustainability of natural capital. Our industry is water-intensive, yet IP returns more than 90% of the water we use back to waterways. Our 2020 water goal is to build on facility water risk assessments by incorporating water stewardship efforts and local stakeholder engagement to address water-related issues. Attaching a value to water is an important next step towards water stewardship.
What was the Forest Products Sector Guide used for?
In 2017-2018 we piloted the Natural Capital Protocol framework with focus on water valuation at three integrated paper/pulp mills, to assess the true value of water as an input for strategic decision-making. The methodology was designed to seek values for various impacts and dependencies as they related to IP and local stakeholders. The framework helps us make better governance decisions on water as we take a rigorous, quantitative approach to valuing the resource, similar to how we treat our sourcing of wood fiber.
How did you conduct your assessment?
The project was led by our Global Citizenship organization, with support from subject matter experts in Environmental Health and Safety, Manufacturing, and Finance. We selected three geographically diverse manufacturing sites from each of our three core businesses. The evaluations were conducted independently of one-another, but followed the same methodology developed with our third-party experts from Sustain Value; it was important that we come away with consistent metrics from each site. Each study involved several weeks of desk research and data collection from internal and external sources, followed by a one-day site visit with the mill team. After a few more weeks of analysis and research, we reviewed the results with our subject matter experts and presented to internal Councils to determine next steps.
The main challenges were related to scope, methods, and internal buy-in. First, it was critical to agree on the study boundaries, and we recognized that a narrow scope would produce the best results. For example, we decided to focus on water intake and effluent only, not operational water use within the mill itself. This allows for a standard approach that works within different manufacturing models (e.g. bleached pulp vs. containerboard). We needed our teams to understand that our focus was not only on operational water efficiency, but rather creating a framework that could influence such investment decisions in the future. Second, we elected to create a custom model designed for our purposes, as we did not see an existing one that accurately accounted for our relationship with water resources. However, this approach required constant adjusting along the way as new questions came up. Thus, in order to scale the model to other sites, we would likely need to create a simplified version. Finally, support from internal decision-makers was critical. We worked within our Global Citizenship governance structure to gain approvals and maintain transparency throughout the project, and held individual follow-ups to ensure we had diverse perspectives represented. Natural capital valuation is still a relatively new concept, so it is important that we bring our internal stakeholders along, especially regarding the “why” behind this work.
What were the outcomes of the assessment?
The key insights we gained were: cost and value of water to the company, cost and value of water to the community and other local users, and IP’s economic value-add per unit of water used. As anticipated, the three sites produced different results, water being an inherently local issue. We anchored the results around the global benchmark of $1/m3 as a societal value on water. This helps to put our analysis in the context of our external stakeholders. We also applied widely available alternative tools to compare the results of the different methodologies.
Our findings will help shape our approach to water risk management and stewardship efforts.
We are designing a plan for integrating water value into our operational models in order to internalize key “externalities” related to our water intake and discharge. This may involve creating a new governance structure and a strategic framework to help guide our approach. This is an important element of our strategic reorientation from water management to water stewardship, in order to make better decisions on water, especially at site in high priority areas. It will help to improve the sustainability of materials and resources used in our sourcing and manufacturing processes and will help IP deliver on our vision to be among the most successful, sustainable and responsible companies in the world.
Sophie Beckham (firstname.lastname@example.org), Senior Manager, Natural Capital Stewardship
Matt Inbusch (email@example.com), Sustainability Project Leader