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Steady improvement, plus breakthroughs.

Over the past 20 years, environmental values and shareholder values have become more closely aligned than many of us would ever have imagined. Indeed, today "CEO" does mean chief environmental officer as much as chief executive officer. At Union Camp, we use environmental challenges as strategic building blocks to gain competitive advantage that will reward shareholders. Our efforts to develop manufacturing technologies and products that fulfill society's desire for a cleaner environment will increasingly enhance shareholder return. Achieving these results takes not only the dedication of the company's employees but also the personal involvement of the chief executive officer.

It is also clear that environmental quality, like any other societal value, requires a healthy economy. In fact, improvement in environmental quality is really held hostage to economic health. Historically, prosperity raises peoples' expectations for a higher quality of life and generates capital for environmental investment. America must not forget that a profitable corporate sector is a critical component in making this happen. The CEO must therefore continue to tell this story, too -- companies need capital to invest in environmental improvements and investors must see a reward for supplying the capital. Economic growth is this reward. Our experience at Union Camp provides an illustration on how we attempt to achieve this linkage.

As a natural resource company producing paper, packaging, chemicals, and wood products with large and highly visible manufacturing facilities, Union Camp has for decades been both target and solution in a variety of environmental issues. In response to our nation's increasing emphasis on environmental quality, we made the strategic decision to lead the environmental movement in our industry, steadily improving our manufacturing process technology to minimize our impact on the land, air, and water.

Our approach is based on solid science and good business principles. Union Camp, like most of American industry, has used improving science to identify and mitigate many environmental problems over the years. Indeed, an objective view of pollution data clearly demonstrates that, contrary to what typically is reported by the popular press, environmental quality in the United States today is good and improving, particularly relating to air quality, water quality, and solid waste. American industry has made significant contributions to this record. In fact, our measuring techniques to monitor the environment have improved drastically from the standard measurement in 1956 of parts per million. By 1986, we had developed the capability to measure parts per quadrillion -- that's the equivalent of one second in 32 million years. And now technology is even beginning to actually measure in parts per quintillion -- the equivalent of one second in 32 billion years!

Our ability to develop better technology may have outpaced our ability to understand the implications. A continuing challenge will be to apply this knowledge of minute environmental measurement to risk assessment and environmental damage so that our shareholders' dollars are put to most effective use in improving both environmental and economic performance.

So, improving technology is certainly a major component in our environmental efforts, but just as important are the attitudes and efforts of our people. We look upon the environment as a shared company-wide commitment -- the responsibility of everyone from the "chief environmental officer" to the mill worker, the woodlands manager, and the corporate engineer. We've adopted a set of Environmental, Health, Safety and Forestry Principles which apply to all employees and company operations. These principles guide our stewardship of natural resources through responsible forest management, wastewood utilization, manufacturing waste reuse and recycling, and recovering and recycling wastepaper that would otherwise be incinerated or landfilled.

Environmental issues and concerns require a proactive approach in our communications efforts as well. We are educating all of our employees so they understand that we simply will not tolerate environmental indifference. Our Environmental, Health, Safety and Forestry Principles enlist all employees in the quest for continual improvement. We know we're not perfect, but the company is moving hard and fast to integrate these principles into our company culture, and in doing so communication becomes a major focus. These principles also call upon us to engage the public to explain our programs, to help educate them about our progress, and to listen and respond to their concerns.

Land Stewardship

We believe that sensitive stewardship is a fundamental obligation of landowners. Our very livelihood depends on healthy, abundant forest resources. While we manage our 1.6 million acres of Southeastern woodlands, primarily for the production of wood fiber, Union Camp shares the public's concern about healthy forest environments and the long-term sustainability of forest lands. We recognize that our approach to forest management is often as much an emotional issue with the public as a scientific one. Our goal is to improve the productivity of our forest resources in a safe and responsible way so that we require fewer acres to supply our wood requirements.

Today, we are using more of the tree, and getting more out of the tree we use. And our efforts to foster the continually renewable life cycle of the forest are demonstrated by our replanting of 30,000 acres annually. This year we will plant our one billionth seedling from our Georgia nursery, a feat few, if any, industrial nurseries have achieved.

In the area of land management and conservation, Union Camp has actively pursued a Land Legacy Program, which involves the donation and protection of company lands that have special ecological, recreational, or historical significance. In 1973, company Chairman Alexander "Sox" Calder Jr. started the program with the donation of 50,000 acres to The Nature Conservancy for immediate transfer to the U.S. Department of the Interior. This land has since formed the core of what is now the Great Dismal Swamp National Wildlife Refuge in Virginia. Over the last 20 years we have donated more than 84,000 acres under the program, including, for example, lands adjoining the Okefenokee National Wildlife Refuge in Georgia, the Zuni Pine Barrens in Virginia, and a section of Alabama's Lake Guntersville State Park.

Sox Calder's pioneering cooperative conservation ethic also lives on through the annual Alexander Calder Conservation Award, which recognizes and rewards individual achievers in conservation partnerships. Together with The Conservation Fund, a national environmental organization that creates partnerships with the private sector to promote land conservation, Union Camp is promoting and encouraging this ethic by sponsoring this award.

Earned Recognition

Union Camp is aggressive in its efforts to safeguard air and water resources. Our mills, using advanced technology from the ground up, not only comply with government regulations on emission limits but they achieve the best performance in the country on many of those measurements. Recently, our Eastover, S.C., mill's environmental record earned recognition by the U.S. Environmental Protection Agency as the best in water quality among 33 bleached kraft mills throughout the U.S. Our Franklin, Va., mill came in a close second.

Water is an essential ingredient in the papermaking process. Union Camp's conservation programs have reduced mill water consumption by a factor of two. For example, since 1970, our Franklin, Va., mill doubled production while reducing water consumption by 25%. Our Eastover mill reuses water up to 22 times before it's treated and returned to adjacent rivers.

As a major producer of paper and paper packaging, we help reduce the amount of solid waste that must be landfilled by manufacturing paper containing recycled fiber. We continue to make major capital investments in new and improved technologies to incorporate even more wastepaper into our products.

The results of our efforts to gain competitive advantage through environmental improvements have proven the soundness of our approach throughout every part of our operations. I'll offer a few examples to demonstrate our performance record of late.

The EPA solicited participation in a totally voluntary program to achieve a 33% reduction in the emissions of certain toxic chemicals by 1992 and a 50% reduction by 1995. We volunteered and exceeded our 1995 target last year, three years ahead of schedule.

Since 1972 Union Camp has reduced by one-third its consumption of fossil fuel per ton of paper produced.

And, long before the analytical techniques capable of detecting dioxin were available, our company had started research activities to reduce consumption and improve the purity of water discharged from our mills. We wanted to eliminate unwanted chemicals from our white paper mill effluent. As a result, we were one of the first in this country to install oxygen bleaching as a substitute for chlorine.

In a major industry breakthrough, last year we started up a $100 million facility at our Franklin white paper mill to produce C-Free |TM~ pulp. This 1,000 ton-per-day plant is the world's first of its kind using patented ozone technology to replace chlorine gas to bleach wood pulp. It provides a range of major cost-effective environmental benefits through our ability to recycle most of the bleach plant's wastewater, which means we use less water and discharge much less effluent than before. The effluent we do send to our treatment system is as clear as tap water.

A 10-Year R&D Effort

This process is the result of more than 10 years of Union Camp research and development on paper bleaching. This summer, the Research and Development Council of New Jersey honored scientists at our Princeton Research and Development Laboratory with the Thomas A. Edison Patent Award for their work in developing this process. The process has also earned the American Forest and Paper Association's highest award for water pollution control.

In the area of recycling, we have greatly expanded our ability to use wastepaper in our products. We now have the capacity to produce 1,200 tons per day of recycled kraft pulp to produce the strong brown paper used in bags and shipping containers. We've also begun construction of a recycling facility at our Franklin mill that will process more than 400 tons per day of office wastepaper into bleached pulp for new, high-quality recycled grades of business and printing papers while at the same time diverting the waste from our nation's landfills.

Union Camp was recently honored as Company of the Year for 1993 by American Papermaker magazine for our long history of environmental responsibility, sound management strategies, and global involvement. In receiving this recognition, Union Camp was also described as a company that looks to learn from its experiences and its employees and takes what others might see as stumbling blocks and turns them into opportunities, reflecting the best virtues and values of today's paper industry. We were also pleased to be listed by Fortune as one of the 10 most improved companies in its environmental performance report (July 26, 1993).

We're confident that the marketplace will recognize these investments through greater demand for our products and a higher return for our shareholders.

The Right Thing

Union Camp has been working hard for many years to be a responsible corporate citizen, not just to meet more demanding environmental requirements but because it was simply the right thing to do. This environmental ethic lives in our corporate policies and our organization.

Our board of directors established a public issues policy committee whose responsibility is to review the company's environmental performance at the board level. Our management works closely with our outside directors to ensure that our environmental policies reflect their concerns, and we welcome and encourage their role. Our corporate environmental group, which is responsible for coordinating all of our operations' environmental compliance and auditing, reports directly to senior management. A significant part of our research is directed toward improvements in environmental health and safety with a mandate to exceed our environmental legal requirements where appropriate, and we train employees at every level to encourage accountability for environmental matters.

A Personal Perspective

I think we are going through one of the most exciting periods in the world's history and firmly believe that industry must and will go further in its participation in environmental issues. Our challenge as business people is to integrate economic growth with environmental performance. We need to continue to look for the practical ways to achieve this linkage.

By advocating technological breakthroughs and by working with our community and our elected officials, we can bring reason and balance into all of our efforts at continual improvement.

We in industry are beginning to understand that it is in our interest to use the cleanest technology we can develop and to analyze our whole production processes and the life cycles of our products from an environmental viewpoint.

It is industry, together with government, academia, and other groups, that bears the burden of responsibility to move this process down the path to "sustainable development." In the report, "Our Common Future," the World Commission on Environment and Development defines sustainable development as "Meeting the needs of the present without compromising the ability of future generations to meet their own need." Corporations have and must continue to be the engine that drives our society toward a higher quality of life that is sustainable. As the World Commission stated, "Sustainable development cannot be conceived without a versatile and dynamic industrial sector capable of producing the goods we need."

Industry CEOs -- the chief environmental officers -- must lead their companies to produce the goods we need while pursuing environmental excellence. These achievements will reward our shareholders and provide a cleaner environment for ourselves and our children.

R. Eugene Cartledge is Chairman and Chief Executive Officer of Union Camp Corp., one of the country's major paper and packaging manufacturers. He joined the company as a salesman in 1956, became President and COO in 1983, and was elected Chairman and CEO in 1986. He is presently serving as Chairman of the Solid Waste Task Force of the American Paper Institute. He also serves as a Director of Delta Air Lines Inc., NationsBank, and Sun Co. Inc. In the following article, he discusses how the CEO designation represents chief environmental officer as much as chief executive officer, and how Union Camp's combination of steady manufacturing improvements, technological breakthroughs, and company-wide environmental ethic has positioned it to gain competitive advantage through environmental leadership.
COPYRIGHT 1993 Directors and Boards
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Special Section: Answering the Call for Leadership; Leadership in Environmental Initiatives
Author:Cartledge, R. Eugene
Publication:Directors & Boards
Date:Sep 22, 1993
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