Green products are here for the long haul.

Modern sensitivities are forcing companies to examine their environmental credentials and there is no halting the green juggernaut. "Environmentally friendly" is a phrase routinely used to market everything from industrial paint and pesticides to soap and even household sanitation systems. Yet within the paper industry there remains some skepticism as to whether or not there is really a separate "green" market that can be exploited for profit, or whether all the clever marketing and glossy brochures are needed more as an insurance policy against attacks from environmental groups.

The issue is further complicated by the fact that in a global industry where product is regularly transported thousands of miles, different markets exhibit huge variations in their attitude to environmental issues. On top of that, some product groups are more sensitive than others--for example if they have featured in a campaign by one of the many environmental lobbying groups. Throw in a generous dose of politics, "junk science," any number of vested interests and a few downright lies and the field is perfectly set up to play a multi-billion dollar game of risk.

GOING GREEN

There is certainly risk since the stakes are so high. Today, any corporation that gets hit by a high profile consumer boycott, for whatever reason, will find its share price heading south rapidly. That alone makes environmental issues a worthy topic, hence the huge interest in CSR (corporate social responsibility) in recent years. In an era where being seen to do business ethically is as much a part of corporate image as the graphics in the annual report, few companies want to be featured on the wrong side of a campaign by a non-governmental organization (NGO).

In spite of all the work that the paper industry has done to date, it still finds itself in an awkward position. As one of the first sectors targeted by pressure groups such as Greenpeace, pulp and papermakers face a highly effective infrastructure of scrutiny and the propaganda legacy of decades of successful negative campaigns against the industry.

On the other hand, the industry can rightly claim to have spent literally billions of dollars cleaning up both its mills and its image. Consequently, many of those in management positions feel that they get little credit either for the massive steps they have made, or for the fact that the modern papermaking has the potential to become one of the most truly sustainable industries on the planet.

FOLLOW THE PATH

The question remains, though, is a more environmentally, conscious society forcing corporations into designing "green" products and facing up to their responsibilities, or is it all a striking example of the effectiveness of "issue politics" and the power of targeted campaigns?

One industry insider, who did not wish to be named, seems certain at least. "Maybe decades ago, such campaigns made sense. Thirty years ago, this might reasonably have been considered a pretty dirty industry, but after the environmental boom in the 1980s, the rise of TCF (totally chlorine free) and ECF (elemental chlorine free) pulp, the Cluster Rule in the States, the increase in recovery and recycling content, and everything else, I think we do fairly well. And that's not being complacent," he stated. "But when you see some of the rubbish that still gets thrown at us, you have to wonder whether we're just being used as a fundraising tool for some of these groups."

Certainly, the current campaign being run by Greenpeace is characteristically emotionally charged. Encouraging new members to sign up, the group asks its web site visitors what the forests of Canada, Finland and Russia are being turned into and offers this answer:

"Mainly paper products like tissues and toilet paper. Yes - one of the world's last great ecosystems is being flushed down the toilet. Half of the wood from Canadian forests is turned into disposable products like facial tissues and toilet paper. Next time you wipe your nose with a tissue or use some super soft toilet paper there is a good chance you are helping deprive a bear cub of a home. Your garden shed could be built with the former home of an endangered eagle."

Needless to say, accusations like these don't feature well in association with large corporations, which is why so many producers, merchants and retailers have bent over backwards to ensure that they are not sucked into that particular PR black hole.

SCARY STUFF

Arguably, Europe has progressed furthest along the "green" path, led by the German-speaking and Nordic countries. In the case of countries such as Finland and Sweden, economics has long been a driving force in the country's environmental agenda since forestry was recognized as a crucial part of the region's natural asset base many decades ago.

In Germany, the evolution of the country's strong environmental movement stemmed from different roots, but there is no doubting the influence that the environment has for German people as Green parties currently control 8.5% of the seats in the main chamber of government, the Bundestag.

The European Commission recently passed the Packaging and Packaging Waste Directive into law. What started as a quick-win political campaign quickly degenerated into a quagmire of confusion as European Parliament members and Commission officials struggled to understand the complexities of the supply chain and recycling systems and the road to law has been a tortuous one for everyone involved.

In fact, the ordeal has prompted Commission officials to promise a more "holistic" approach to all future environmental legislation, but the battle scars have also meant that European paper companies are far more aware of the importance of early and regular lobbying for their cause.

According to Craig Halgreen, communications manager for Sappi Fine Paper Europe, paper companies are far less defensive about environmental issues now than they used to be. "It's just something that you need to do out of concern for the environment and at the same time, it's important for the company's image. We've done a lot of work on this over many years at our European mills," he explained. "All of our mills are ISO 140001 certified. But as people are also relying on the European Commission to protect the environment through legislation, we're also committed to EMAS (the eco-management and audit system run under the auspices of the European Union) and all our coated paper mills are certified. We are also involved in sustainable forestry certification. In a way, you can say that it is still being driven by customer demands though, as they are the ones asking us for proof of certification. Paper specifiers want to be sure that there are sourcing their products from responsible companies."

That is a view that is echoed by the Swedish pulp group, Sodra, which is regularly lauded for its environmental credentials. Information Manager Ulf Gunnarsson pointed out, "The demand for environmental products from our customers is certainly real, especially in Germany which is a big market for us. We have some customers asking for TCF-only pulp, others ask for forest certification and we can also supply them with EMAS certificates and ISO 140001. It started more in the German-speaking markets, but it's now more of an issue in the UK as well. Of course, some of our customers don't care, but for us it's part of our corporate strategy to provide high quality, consistent product that covers the right environmental issues."

Another figure involved in the pulp trade even indicated that the German publisher of the Harry Potter book series demanded that TCF pulp be used to produce all the paper needed to print the books.

MAKE CERT

Most industry consultants believe that securing the appropriate certification is now a crucial part of any corporate environmental strategy. This is certainly true of European paper companies, nearly all of which have launched sustainability reports outlining policies and progress on a range of related topics including:

* wood procurement

* water consumption

* effluent levels

* energy use

* recycling

* recovery

* CSR (corporate social responsibility)

* EMAS and ISO statements

Sappi, Stora Enso, M-Real, UPM-Kymmene and others now have web sites stuffed full of material related to environmental performance and compliance.

This is becoming a major issue--especially the big retailers looking to avoid the attention of pressure groups or even potential boycotts. Groups such as lkea and other big European retailers have long established green policies that have been in operation for years, especially among the German-speaking countries, and it is now commonplace in Europe for office products companies, food stores and DIY chains to demand environmental policies, certification and compliance procedures from suppliers.

FAILURE TO COMPLY

Environmental compliance and certification is now a massive industry across Europe, but this is also an area that has long been contentious for corporations, NGOs, pressure groups and consumers. By its very nature, determining environmental impact is a highly complex task. As the external affairs manager for Rexam, Anders Linde, explains, "We produce all sorts of packaging including glass, plastics and paper, and I absolutely believe that there is no such thing as environmentally preferable packaging. You always have to look at the specific product in context."

Assessing environmental impact is often also complicated by factionalism and protectionism--a recurring trend across Europe, which is already littered with a maze of environmental certification schemes. Any number of players--green groups, industry, the certification bodies themselves--have vested interests in either supporting or condemning one scheme or another, for example:

* pressure groups argue that a scheme is not tough enough and that the scheme they support should be the sole determinant

* companies may argue that one industry group is trying to gain a competitive advantage over another through compliance regulations

* industry groups may argue that one country is using a certification scheme to keep competitors out of its market

* companies may argue that the certification body is acting as a monopoly and generating excess profits at the industry's expense

The list goes on. According to one expert in this area, at one stage there were dozens of green certification schemes just for Europe's paper industry, while a "harmonized" system in Germany was accused of acting as a monopoly and price gouging.

The end result is often bafflement for consumers and widespread suspicion between companies and NGOs. According to one senior paper industry figure, "The problem with eco-labels is that they are always rather limiting. If you take the Nordic Swan for example, you end up ticking boxes and when you look at the real environmental impacts involved it becomes too limiting to be of much use for the paper industry, and that's especially true of packaging."

IN THE FOREST

Today in Europe, forest certification is providing an excellent example of the type of battle that has plagued certification in Europe. Greenpeace and several other NGOs argue that the FSC (Forest Stewardship Council) certificate should be the only symbol that consumers pay attention to. On the other hand, the Programme for the Endorsement of Forest Certification Schemes (PEFC) is now the world's largest forest certification system by area, having endorsed 13 national forest certification systems across Europe. PEFC is an umbrella organization for the mutual recognition of national or regional forest certification schemes that meet internationally recognized requirements for sustainable forest management, including forest certification, chain of custody and product labeling and fulfilling the PEFC standard requires independent third-party verification. The PEFC principles were agreed at a conference of European forest ministers, but certain green groups argue that it is too closely tied to industry to be trusted.

Cepi (the Confederation of European Paper Industries) has encouraged convergence and mutual recognition between the various schemes. However, industry insiders argue that it will be politically impossible for the green groups to accept such a move from their "arch-enemy," the paper industry. This is despite the fact that many experts believe the FSC and PEFC criteria are actually rather similar.

"Sometimes it feels like being in the Somme in World War I," said one consultant. "Both sides are sitting in the mud fighting away and no-one is moving anywhere."

MAKING SURE

Understandably, several European paper companies are taking a "belt and braces" approach. Some are getting PEFC, SFI and FSC certification for example, while others are examining the different systems to find out which might produce the most suitable approach.

UPM-Kymmene, for example, recently certified its Caledonian paper mill in Scotland to both the PEFC and FSC Chain of Custody standards. As the executive vice president of resources, Markku Tynkkynen, explained, "Forest certification has been under public debate for a long time. However, only approximately 4% of the world forests have been certified. UPM aims at increasing significantly the use of certified fiber in all our mills. In Scotland we want to investigate the functionality of the different standards in practice, and the double certification provides an excellent opportunity to compare the two certification standards on an unbiased basis."

UPM-Kymmene is strongly in favor of mutual recognition of forest certification systems that have congruent, and therefore comparable, standards for sustainable forest management. As a result, the group is supporting several national and international certification schemes including PEFC, FSC and SFI (Sustainable Forest Initiative), the latter managed by the American Forest & Paper Association. This approach is shared by Stora Enso and others and as a result is now a stated policy of Cepi, which argues that mutual recognition is the only way forward.

There are also indications that forest certification is set to sweep through other continents. Aside from the impact of the policies of the big European players being exported abroad, North American firms also appear to be embracing certification. Monadnock Paper Mills in New Hampshire, for example, recently received FSC certification on one of its brands, Astrolite PC 100. While Monadnock might be ahead of the pack, the big groups know what's in store. Indeed, Office Depot, a dominant U.S. based office products retailer, has already briefed key suppliers--Abitibi Consolidated, Bowater, International Paper and Weyerhaeuser--that it expects them to work with the dominant North American forest certification systems: CSA International, the Sustainable Forestry Board (the governing body of SFI) and the FSC.

There is no mention of any consequences should discussions go badly, but a statement from Office Depot's chairman and CEO, Bruce Nelson, leaves little margin for error: "We are perfectly clear on the values we want to promote and advance, the types of forests we want our suppliers to avoid, and the forest practices we will and will not accept," he said.

Major rival Staples has also come out as a fan of certification in recent months. In fact, the company has outlined a number of environmental targets that will undoubtedly have a serious impact on its customers' buying habits (as well as its own purchasing policies) over time, including:

* giving preference to products produced with post-consumer-waste (PCW) and alternative fiber content

* increase the average percent of PCW recycled and alternative fiber products made available for sale to 30%, pushing higher later

* use only PCW paper products for internal operations

* working with vendors to enable greater use of recycled cut sheet paper beyond current levels

* actively promoting recycled paper to customers and employees

* and by the end of 2006, the company aims to offer only certified paper products.

Of course, all the targets come with the caveat the Staples operates within the constraints of market conditions, consumer demand and cost factors. But there is no question that Staples is already on track to change the buying habits of its customers.

According to company spokesman, Owen Davis, "Staples has been offering recycled content product since we started out, but last year we decided to formalize our commitment to the environment, including appointing a board member for environmental affairs, selling more recycled products, setting up recycling programs and trying to educate our customers about the benefits of using recycled products. We think it's the right thing to do as a business, but also there are specific customers that are looking for that kind of commitment nowadays. I don't have the figures, but anecdotally I can tell you we've had a very positive response."

HERE AND NOW

Staples is already "in discussions" with all its suppliers about achieving price parity between recycled and virgin products. Clearly then, environmental purchasing is already a hard fact of life for the paper industry. But the reasons for its rise to prominence are far more complicated than simple demand from end-users.

As Petri Vasara of the consultant Jaakko Poyry points out, "To be honest, it's not really about whether the consumer wants green products or not. The environmental debate is huge juggernaut that is not about to stop, and consumer demand is only one element of that. There are plenty of other drivers, for example, technology and what is actually possible. There's pressure from green groups and then there's environmental legislation, which is partly tied in with another driver--politics. In fact, it's because it's such a complex mixture of different drivers that we've developed monitoring tools within Jaakko Poyry to track what we call these 'weak signal indicators.'"

Davis also recognizes the "weak signal" theory. "Of course, we have to respond to our customers, but we also have to take into account our shareholders and the NGO groups. It's comes down to the individual company deciding what's right."

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Paivi Salpakivi-Salomaa, director of environmental forestry affairs at UPM-Kymmene tends to agree as well. "I don't know if the man on the street is so interested really, but there's definitely a big interest from our customers who are looking for best practice from us. We did a survey with our German customers and they said they were interested in price, timing and consistent quality. But concern for the environment was up there as well, so it is very important for us. Of course, the attitudes depend on the specific market a little as well."

PACKING UP

So-called "green products" and the even more nebulous term 'environmentally preferable product' appear to be with us for good. The problem remains finding a consensus on what actually constitutes a 'green' product.

As the long and arduous debates over the EU's Packaging and Packaging Waste Directive have taught us, one person's environmentally friendly' glass bottle, can be someone's else's expensive, heavy, energy guzzling container that needs to be transported in huge volumes over large distances.

To date, there is no compelling evidence that would lead us to believe that the majority of consumers will pay significantly more for green products versus regular goods. What there is evidence for is that demands will be made to make regular goods more acceptable in environmental terms.

Whether it's pulp, newsprint, fine papers, containerboard, tissue or diapers, the green juggernaut is not going to stop. For the paper industry, it's a case of get on board and get involved in the discussion, help shape the argument and help educate the legislators, consumers and customers. Otherwise, you'll simply get run over.

IN THIS ARTICLE YOU WILL LEARN:

* How environmental concerns are reshaping markets.

* How forest certification is spreading around the globe.

ADDITIONAL RESOURCES:

* www.sappi.com/Environment

* www.greenpeace.org

* www.pefc.org

* www.fscoax.org

* www.fscus.org

* www.mpm.com

* www.conservation.org

* nature.org

* www.staples.com/recycle

JIM KENNY, CONTRIBUTING EDITOR/EUROPE

ABOUT THE AUTHOR

Jim Kenny is contributing editor/Europe, for Solutions! magazine, and is based in Brussels, Belgium. He is the former vice president of editorial for Paperloop and today heads his own company, DSI. Contact him by phone at [phone], or by email at [e-mail].