The Navigator Company, S.A. (NVG) Earnings Call Transcript & Summary

Good morning. Welcome to the webinar on Discover Forests, Sustainability and Paper hosted by The Navigator Company. Thank you for joining us today. My name is Carla Tavares, and I will be moderating this live session. Our panelist presenters are Anand Punja, Chief Engagement and Partnerships Officer from FSC International; Jonathan Tame, Managing Director from Two Sides; and Julia Young, Director from WWF Global Forest Sector Transformation. From The Navigator Company, we have Paula Guimarães and Pedro Filipe Silva, Sustainability Managers; and we have João Escoval, Brand Manager. Thank you to our panel of speakers who will be touching on relevant sustainability topics linked to the paper sector, such as, what is the value add of sustainable forest management? What are partnerships and collaboration around sustainability? What is circular economy in practice? What is FSC Forest Certification and consumer needs? How to tackle common myths and misinformation about paper? And we'll also be showcasing an example of sustainability communication at a brand level. So it's 1.5 hours that's packed with information, and we're hoping it will bring you full circle on sustainability. Before we begin, I have a few housekeeping notes. Today's session is being recorded. So it will be available post webinar to those who have registered. It's also an interactive session, although you are all on mute due to a number of viewers. We do encourage you to ask questions for the presenters. And for this, please use the Q&A feature in the Zoom panel at the bottom of your screen. And we will be taking questions at the end of the webinar. So now let's begin with our very first presenter. Let's welcome Paula Guimarães. Paula holds a Master of Science in Forestry. She represents The Navigator Company in several initiatives, such as the World Business Council for Sustainable Development. She also represents The Navigator Company in multi-stakeholder platforms such as WWF's Forests Forward. Paula will be taking us through what is the added value of sustainable forest management. Over to you, Paula.

Okay. Thank you. Thank you, Carla. Okay. So thank you very much. Yes, I will be navigating you through this challenge, which is to try and discover the links between forests, biodiversity and sustainability. So how do these interconnect? Well, shall we discover the answer? Of course, forests and biodiversity seem easy. Sustainability is on the agenda of companies, of people, individuals and the society as a whole. But do we really know the interconnections and how deep this goes. And what is the relation? Why are we talking about this when we're talking about paper, about discovery? So I'll try and give you some hints. So -- well, landscapes, as you know, landscapes are home for several types of forests and several types of land users. So in the same landscape level, we can have production planted forests as well as multiple used forest spaces, but also we can have patches of zones with interest for conservation and they may all inhabit the same landscape and be managed together with different objectives -- management objectives. And as long as they are responsibly managed, perhaps, these objectives can come together and bring added value to the landscape itself. So responsible forest management is about what? It's about respecting and harmonizing values, and we're talking about environmental, social and economic values, the 3 pillars that underpin the big term sustainability. But we also want to conciliate yields with responsibility. So it's combining the use of forest resources but also maintaining ecosystem services, protecting whatever values are in place, may they be natural values or social, historical or cultural values, but also taking into consideration the expectations of the local communities and other stakeholders that have interests in that area. So this is what's responsible forest management is about. And to put this in practice, you have to implement best practices in managing, in addressing impact, in monitoring, in -- and best practices need to be recognized also by external stakeholders. So it's not sufficient that you are convinced that we're doing the best. External recognition of these best practices of this responsible forest management is needed and it's conceded by forest certification schemes such as PEFC or FSC. They are both internationally recognized, and they bring added value also to the best practices that are implemented. And what about plantations? Do they fit in this idea of responsibly managing forests within the landscape? Of course, they do. Because if they are adequately located and if they are well managed, plantations are really important to reduce pressure on raw material extraction from other areas where natural forests still exist. They are also a solution for the growing needs of forest-based industries that the society is requiring more and more. And if they are adequately managed, of course, they also can bring increased value at the landscape value level. So -- and what does this mean? It means that you have to manage 4 production purposes, but also taking into account the other values that are around. And if we're talking about natural values, we're talking about biodiversity and ecosystem services. So whatever management you are doing, we need to have field assessments. We have to have 3 operational assessments of the values in place but also the potential impact that operations can cause. We normally have to engage with specialists and the local communities, but we have to perform systematic monitoring. We have to gather information, the best available information on what -- how important this biodiversity is and what are the appropriate measures to conserve it so that we can implement conservation measures and -- if we need to bring back to conservation stages of the [ degraded ] areas, we can pass from conservation to restoration. And this is a natural sequence of managing also biodiversity, even if you are managing production forests at landscape level. So what we want when we're managing forests is to have a no net loss of biodiversity, but as much as possible a net positive gain, so in reaching the area in biodiversity. And how do we do it at The Navigator Company? This is just an example. So we manage more than 107,000 hectares. But not everything is production forests. It's about 75%. All this area is certified both by FSC and PEFC, but we also preserve habitats. We do monitoring of fauna and flora. We have encountered 46 different Natura 2000 habitats that we have met and that we protect. We display connectivity features in the field so that this biodiversity is able to complete their functions. And of course, we do several initiatives for forest protection so that we can ensure health and vitality of the forest as a whole. This is what about -- this is what responsible forest management is about, I'm sorry. So this is how we do it. And -- well, how can we relate this with sustainability? Well, the WBCSD has issued the Forest Sector SDG Roadmap, which is a reference document for the companies in the forest sector to maximize their contribution for the sustainable development goals of the United Nations. And looking at the forest products value chain as a whole, now passing from the forest to the products, we can see that across the whole value chain, there are opportunities for positive impact. So if we look at the first products value chain, we can look at sustainability pillars by working forests. And what are working forests? It's the type of forests that I have been describing. Forests that are managed both for production and conservation purposes, and also for bioeconomy. Bioeconomy is more and more a need for the society, a need for the future we're trying to build, moving away from fossil fuel -- from fossil-based materials. So working forests and bioeconomy are really the 2 main pillars to provide a positive impact and a maximum contribution for the sustainable development goals. But that goes around also with impacting people in procurement, in climate, in water circularity and communities. And what does this mean in practice? Well, I'll take you on a deep dive also based on what we do. So as you know, forests are made of trees. And trees and other plants have this extraordinary capacity of sequestrating carbon dioxide, and this means that they are also helping fight climate change. But forests also provide raw materials and wood as the raw materials are natural raw materials that are renewable, recyclable and because of that, there are good alternatives to fossil ones. And then with the first management model that entails the components I have described, we can also contribute to a diverse and resilient landscape. That produces timber and nontimber forest products. And because these timber and nontimber forest products are being looked at with more and more attention nowadays, if you apply research and development and innovation, we can also move from conventional products only to more innovative bioproducts. So we are in the world of bioeconomy. So by doing this, we want to go further, and we can't go further alone. So we need to foster ecosystems of collaboration with other stakeholders. And I'm talking about the academia. I'm talking about NGOs, other companies, sectoral, intersectoral cooperation towards this maximization of the contribution of forests and to the sustainable development goals. So this is an idea of how. Very simply, we can see that the value added of responsible forest management comes across several sustainable development goals as the ones that are here depicted. So to end this presentation, what are the links? Well, the links are these words, these keywords. So the links between forests, biodiversity and sustainability are responsible management. Management is important. It's building up resilient landscapes, not only in terms of nature, but also in terms of socioeconomic lives, livelihoods of the communities. And it's also about collaboration. It's also about the responsible use of resources and circularity, which needs innovation, which needs long-term commitments. This long-termist approach is very basic concept of sustainability. And of course, doing this by creating shared value. So the message I wanted to leave you is that forests are really part of the natural solutions that contribute to a low-carbon and bio-based circular economy. So they can help tackle climate change and drive the sustainable development. So more and more we need to increase our knowledge, improve our communication, make informed choices and engage in collaboration with others. So this will help make the case for forests and forest products in the wider discussion of climate change as they are nature-based solutions for the whole product. So when we buy a forest-based product, don't forget to see if the links are there, the forest, the biodiversity and the sustainability. Thank you.

Thank you very much, Paula. We will now move -- thank you for providing that presentation, which really gives us an overview of the value-add of sustainable forest management and the links to biodiversities, ecosystems and the SDGs. Our upcoming speaker is Julia. Julia Young is -- has been working for WWF for nearly 15 years. She has focused -- she's been focused on global forest management and related trade and markets. She led the Global Forest Trade Network in the U.K. for almost a decade. She now focuses on innovative ways to drive impact on the ground within the context of production forests globally. And she is going to be presenting us with WWF's Forests Forward program. But prior to that, we do have a related video to share. So I'm going to be posting that video, just 1 second. Okay. [Presentation]

Thank you. So over to you, Julia.

Thanks, Carla. So can you see my screen okay?

Yes.

So I want to say a little bit about the way that WWF approach is working on forests through actually a lot of collaboration and partnerships. And as Paula has mentioned and Carla too, The Navigator Company are actually part of those and have been for a long time in different forms. And what we believe is that we can drive different solutions which are, I guess, built from taking what are the challenges, what are the opportunities, what's some of the science, what actually are the stakeholders involved in different issues that perhaps present risk or threat to forests and how do we move through those together. So the program itself Forests Forward, it's building on about 30 years of work that we have done in forest sector transformation, as we call it, where we look at what's actually happening in terms of the life management of production forests of different types? What's happening in the establishing of new plantations or in existing plantations globally? What actually are people asking for in the markets? How are they describing the products that they sell? Are they paying attention to some of the issues that Paula has raised? And actually, we try to look for points where we can convene or inspire or influence different companies, different communities, different investors. Also, I guess, different consumer markets to say, yes, we want to see what's happening to forests and that they are being managed better, taking into account a broader range of important factors so that we can keep resilient forests for the future. So we work with companies and communities on, for example, starting changes to forest management practices and moving towards certification, trying to make the case for good forest management and how that can deliver, for example, social outcomes, which have been proven through FSC? Trying to give a better idea of what's the availability of certified products in the market, or how can we connect good producers to sensitive markets? But we also want to make sure that now that many, many organizations worldwide have absorbed more the need for sustainable consumption and production, that we're not forgetting that we're not just talking about coming up to a baseline, which is good enough not to create any damage or to prevent further damage, we actually need to repair some of the damage we've done for forests, to ecosystems, to improve livelihoods, to tackle poverty. And that's where we've been innovating more in Forests Forward to say, "Okay, how can we get really specific investments into forested landscapes to ensure that we have a mixture of forests in a good landscape, but we're looking at different issues related to climate [indiscernible] biodiversity." We're thinking about the role that different people play in decisions made in the landscape in land management, planning and use. And I think that's very important to remember is that you have privately owned land in different countries. You have publicly owned land in different countries according to their own national policies and regulations. You have community or indigenous people owned lands as well. And so whenever you start to talk about making a change for forests, there are many, many people who have to be involved in different negotiations about what is going to happen? What is the most appropriate and best outcome? So this is where us in WWF, in Forests Forward, we have a presence in many, many forest countries, with teams that work on the ground on wildlife issues, on water, on forests, and we try to help look for making connections or influencing what happens in a positive way when those kind of decisions are being made. So when we're doing this, and when we're seeing what roles people can play in different places, what roles we can help to emerge, and as, over time, people have been making changes, for example, in plantations management, how can those roles develop [ on a long ] appropriate pathway? We have been also trying to raise transparency and awareness to try and inspire more people to say, yes, this is how we can join up within forested landscapes to make a difference together through different collaboration and constellations, I suppose, if you want to call that. So we have a dashboard for Forests Forward program. And this is a snapshot of The Navigator's information from our dashboard that I took last week, I think it was. And what you will see, if you look at this later is that The Navigator company, for example, are saying, we're going to undertake very specific actions with communities, which are about undertaking restoration in particular areas. We're also going to be taking particular steps, which are very much focused on helping build community enterprise. At the same time, we're going to be doing our ongoing work on responsible plantations management because we're not saying that, that isn't still important. That is, of course, extremely important to continue. And we want to make sure that we've got ecosystem integrity in the places that an organization like The Navigator is present in the landscape. And over time, we're building up these relationships and partnering so that we can say, yes, we are having a good impact in this area in lots of different dimensions. And we're keeping track of those and, hopefully, inspiring others to do the same. So when we are working with the businesses, this is what we're looking for. What ambition can we have beyond the boundaries of a forest management unit or a concession to be much more integrated in society to create the enabling environment, to make a positive environment for good futures for forests? So in Forests Forward at the moment, we launched it in June last year, but it was building on a lot of long-term work with organizations through our new-generation plantations program and [indiscernible] treatment program. But what we've been doing is we've been negotiating with a lot of different companies through a transition period to say, "Okay, well, you've been doing a lot of core work on forest management and/or with supply purchasing, where are we going now? How can we still work together to make big differences, particularly to biodiversity, particularly to social dimensions in the places that people are sourcing?" So this is just a snapshot of the companies that are currently within Forests Forward, and we've got more in the pipeline as well as communities that where we want to describe really explicit impact investments that people are making and the long-term commitment to continued responsible operational practices that they'll come to sort of understand and expect. So we would like to see that through opening up, through describing what is possible, through saying, "Okay, we might not have a perfect ambition in a particular place, but we want to start with good targets, good ambitions. We feel that it's possible for companies, for communities, for NGOs to sort of build together the kind of investments and roles and responsibilities that will lead to resilient forests for the future, both in terms of protecting natural forests, restoring forest areas and maintaining the production forestry that we need to meet high and growing global wood demand." So we want to use Forests Forward to bring forests to life, to share -- to have a channel to share what people are doing in these very specific places, but also show how it's possible to design, monitor and verify that things are changing because that's what a lot of customers, society, other NGOs, other competitors and so on, they want to see is it possible to drive change and how is that? So how is that going to happen? How is it possible? So I look forward to questions around what we can do through this kind of partnering, and I'll stop there. Thank you.

Thank you, Julia. That was an excellent presentation on how we need a diverse set of actors to bring forests to life. Just a quick question in terms of the dashboard that you showed, it's on WWF's website, correct, Julia?

Yes. If you Google WWF Forests Forward, you'll get to our main web page, and then there's a link under the Participants tab to the dashboard.

Okay. Thank you. So that brings us to -- yes, please post questions and answers -- or questions to Julia in the Q&A at the bottom of your panel, and we'll get those answered at the end of the session. We now move on to Jonathan Tame. And Jonathan is the Managing Director for Two Sides. And he has 30 years' experience in the sector of print and paper, promoting sustainability of print and paper. He's been d Head of Environment for PaperlinX merchants. He's also led a successful government program to increase the consumption of recycled paper. And he's going to, amongst other things, teach us about the great reasons to love paper and also how to tell myths from facts. We can already see your screen, Jonathan. Over to you.

Good. Can you hear me as well? Yes? Good.

Yes.

First of all, I'm absolutely delighted to be talking for Navigator today to help explain some of the good reasons, sustainable arguments about paper. So look, these are things that you see very regularly. There are things you hear, there are things that people think print is bad for the environment. The paper is bad for the environment. It ends up in landfill, it destroys forests. These are quite common things that are said in the forest world. And one of the reasons is this information is commonly out there. It's a particular problem for our industry. Brands are encouraging their customers to go paperless, to go online, to go digital. One of the key reasons I'm sure you're all aware of is because it helps save them money, it's more cost effective, it might be more convenient for them, but these negative statements are very damaging for our industry. When we do a consumer survey, one thing Two Sides does a lot of is we do consumer surveys to find out what consumers think. So this was a consumer survey that we did recently. And just some of the key things that came up was 64% of Europeans think that European forests are shrinking, only 10% actually understand they're growing in size. They believe paper is wasteful, that it uses natural resources in its manufacture and creates carbon and impacts on climate change. I know Pedro is going to cover this later but they feel that only recycled paper should be used without understanding the circular economy of paper and how it runs. And really damaging for us is they perceive that generally electronic communications is better for the environment. So this was really the basis on which Two Sides was formed. It's a not-for-profit organization, and we help inform people around the world. We have campaigned very strong in Europe, but also throughout the Americas and Australasia. And it's there to help challenge and explain some of the good sustainability stories about paper. So look, I'm not going to spend too long on this. We'll come back to myths and facts later. But one of the key things we've always discussed is that consumers are concerned that European forest are shrinking. Now, look, let's be really clear about this. This is no way I'm saying that there aren't huge deforestation pressures on forests globally. But within Europe, particularly where the majority of wood is produced for production of paper in Europe, European forests are growing. Not are they just growing, but they're actually benefits in terms of biodiversity, in terms of providing jobs in the green economy for people and doing a lot of huge benefits in terms of removing CO2 and are part of the solution for climate change. As I've said, important, particularly as WWF were saying there are terrible pressures on global forests, but actually industry, commerce, money, finance is part of the solution to help protect forests for the future in terms of working forests, which do good for climate change. One of the other things is that paper is wasteful. Hopefully, most of you are familiar with the good recycling rate for paper. 74% in Europe is recovered and recycled into new products. We have a great recycling rate. If it's paper-based packaging, 84% of paper-based packaging is recovered and remanufactured into new products. We have the most amazing recycling rate and paper is part of the circular economy in terms of our resource use. And this is one we've touched on earlier that electronic communication is better for the environment. Too often you hear this without any reference to the impacts that electronic communications have as well. The amount of electricity used to power service, the amount of natural materials or even natural precious materials that we use to make laptops, PCs, digital phones and the infrastructure to power and provide energy, to power these devices and there is real issues in terms of how these materials are recovered and recycled? Paper is a very natural form of communication, and it's really important that we do understand that electronic communications have impacts, too. And this other one, digital is the preferred means of communications. Actually, when we do surveys, it shows that 74% of European consumers want the right to choose how they receive their communications. And actually pushing people to digital often disadvantages those most desperate within our society who don't have access to electronic media and communications. But at the end of the day, consumers want the right to choose, and they do not want to be forced down a digital-only route. So Two Sides, really, we have 3 key areas, and I'm going to be really quick as I go through these. We tackle some of these misleading statements. But what we probably want to cover most though is how to engage consumers that paper is got a good sustainable story and bits you can get involved with and then information that we provide to the industry. So what we call greenwash misleading statements, it influences millions of consumers in their perceptions. And here are just some examples of some of the things that I've said. Go online and save a tree, move to electronic statements and save a forest today. Some of the players who make these statements might be in the petrochemical industries or other. They've got enormous impact themselves by saying going green by going online is disingenuous. And these messages reach millions of people without consideration as has already been covered that actually forests are a renewable resource. So Two Sides does engage with these businesses. We provide them with facts with information. We've already covered the myths and the facts and we cover the myths and facts with them. We also explained what advertising regulations are surrounding green claims. Certainly in the U.K. and throughout much of Europe now, there is increasing focus that organization shouldn't be making misleading sensational statements that an activity is greener when it may not be for their only commercial interests. So Two Sides, we're here to provide information. There is a fact sheet here if anyone is interested in learning more to go into some of the detail. But how do we improve consumer perception? So we introduced Love Paper. This is a global advertising campaign. You can see the language. It covers forest growth. It covers high recycling rates from renewable energy. And these are adverts in newspapers and magazines, which appear around the world. And last year, we had over 1,200 adverts in the leading newspapers and magazines and it's backed up also by digital. So we do use digital. Of course, it's an important means of communication. We're not anti-digital anyway, but it's backed up with websites, with social media. But our messages reach over 12 million consumers every month, explaining the sustainable nature of forest-based products. And this is something that, if you're a distributor, paper merchant or a printer, you can carry the Love Paper logo on your materials. I will say very quickly that I know within France and particularly Italy, the countries of love that Love Paper with a black logo is often not the best use, it's considered a sign of death. So actually, you'll be pleased to hear we are changing the color of the Love Paper logo to green over the coming weeks and months. But distributors can use it. Also brands can use it, and we are having increasing interest from brands. Two examples there to use love paper on their materials. It leads to a very simple website, no commercial interest. It's not promoting a product. It's not promoting a supply. It just explains the sustainable nature of paper-based products. It's not a standard in any way. So it is certainly not like FSC, PEFC. It's not a standard, but it can only be used on products which meet European timber regulations, but brands are increasingly keen to use this in their own communications. And then, finally for me, we produce tools and resources. Our most common Myths and Facts booklet published last November. We covered it earlier, but it covers the key myths and truths about our industry and most importantly, for either your staff or if you're a brand, just to better inform you, it has fact-based information with dated sources about the information within that brochure. But it covers sustainable forestry recycling rates, circular economy, all the things that you want answers about. And we have one more specifically for packaging. So if it's paper-based packaging, covered, too. We produce fact sheets. So in much more detail information about forestry, about recycling rates, alternative fibers, but fact sheets with a lot more detail. Finally, we produce infographics, mini videos for the industry to use to help explain some of these key messages. And all of our resources can be personalized for members and supporters. So as you can see, the Myths and Facts booklet, they're all available to be personalized to people within the supply chain. Very finally, I promised Carla, Two Sides communications. You can subscribe to our campaign update. You should subscribe to the Two Sides newsletters. This will provide you with information on what we're doing, what our activity is. Our resources are available to you and also on news that will provide you with very topical news stories, the latest on sustainability, print paper, anything to do with sustainable procurement and the sustainability of paper-based products. So for me, there are some great reasons to love paper. I hope you spend some time visiting our website. You're very welcome to send me any questions that you have. And obviously, I'm hanging around to take any questions in the Q&A session right at the end. But for me, I've finished, and I'll hand back to Carla. Thank you.

Thank you. Thank you, Jonathan. That was really interesting. And if you have any questions for Jonathan, please do post them at the bottom of the Q&A section. We have Pedro Filipe Silva. He will be taking us through the presentation on the circular economy. A brief introduction on Pedro. He has represented The Navigator Company at EUROGRAPH, the European Association of Graphic Papers Producers, as Chairman of the Environmental Working Group for more than 10 years. In addition to that, Pedro Silva also represents The Navigator Company at Two Sides amongst other organizations. Pedro has more than 20 years' experience as a product manager, and he's going to be taking us a little bit through towards the end of the value chain. He's going to be addressing the topic of what is the role of virgin fiber in the circular economy. Over to you, Pedro.

Thank you, Carla. Good morning, everybody. Well, I will start by comparing paper with plastic. And besides being paper a renewable product and plastic coming out from a fossil resource, there is another reason that makes paper much more sustainable than plastic. And that is the fact of having a high recycling rate, like Jonathan has already mentioned, 74% in Europe. And also a cascade in multiple use of the fibers that are introduced in the -- as virgin in the beginning and while plastic is mainly a single-use product. European paper and board recycling rate has almost doubled in the last 30 years. On the bottom right corner, you see the evolution of the recycling rate in Europe. And it has almost come from the '90s with we have 40% recycling rate 30 years ago, and now it's 74%. We are almost reaching the theoretical maximum because there is 20% -- around 20% of paper that we archive or we cannot recycle like the tissue paper. So from this 74%, what comes up as an input is also the majority recycled fiber, 56% is recycled fiber and 44% of the input to make paper is virgin fiber coming from mainly sustainable forests or controlled sources. And why there is a reduction of 18%? Obviously, there are process losses. Obviously, there is exports of wastepaper for outside Europe. And there is also other uses for waste paper like for producing energy or for the construction. But where should we use this 56% of recycled fiber? That is the big question. And when we look to the split that we have of paper products in Europe, we see that 57% of the paper and board that we consume is packaging. The vast majority of the paper and board that we consume goes to packaging. The part that represents office paper is only a mere 4% of the total European paper consumption, 5% is newsprint, 11% tissue paper, so sanitary and hygienic papers, 18% other graphic paper, like papers for books, for other publishing, magazines, et cetera, advertising, envelopes, notebooks, et cetera, and other paper and board represents only 5%. So where can we use this 56% of recycled fiber? We can go through 2 paths. One, which is choosing the path on the right of the slide, which is producing a gray or brown pulp, and we will reach a much higher in volume end product. So we have about 62% of the output there, 5% newsprint plus the 57% of packaging. And it would not even be enough to produce all the 62% of the output. If we use the whole recycled fiber to produce newsprint and packaging. Or we can choose the path on the left, which is to produce white pulp. And if we produce white pulp, then we reach a much lower volume of the end segment. It's only 15% of the output. And while having environmental problems namely the inking that we have to do, which always creates sludges from the flotation process, which is clearly an environmentally concern, environmental problem. So when we look to the list of products in Europe, and to the use of -- to the percentage of recycled fiber that they incorporate, we see that the corrugated board and the newsprint is, in fact, the vast users of recycled fiber, while the office paper is the one where predominantly there is virgin fiber paper. So it's the percentage today of the incorporation of recycled fiber in each paper category, in each paper type in Europe, okay? So when we check where is going the volume of recycled fiber into the products, we see that the vast majority of recycled fiber, 86%, if we add up packaging and newsprint, 86% goes to these 2 categories to packaging and to newsprint, letting only 14% of the recycled fiber to the other grades. And in fact, the European circular economy in paper and board is a reality for many years, for many years. Being the graphic papers, where office paper is included, the main entry for virgin fiber and letting go fibers to go to the other cycles, like the packaging or like the tissue production. The virgin fiber that will refresh this cascade because it's more a cascade than a complete full cycle. It's not a loop. It's a cascade of different steps. And this cascade after being recycled several times, the fibers can still be used for the production of energy in the end. And by that, we avoid the emission of fossil fuels, or for isolation in construction, and then it functions like carbon, zinc in the end of life. In fact, if we -- and now I call your attention to the bottom left corner of the graphic. If we only used recycled fiber since the beginning, in less than 1 year, we were achieving 30% of the initial material. So we would not -- the system would collapse if we would not introduce virgin fiber paper. We would do not have fibers enough for -- in 1 year time, okay? And the fibers, the paper fibers, there are 2 types mainly of paper fibers. And this is something that you have here in this slide. There are -- on the left, we have the softwoods or the long fibers, some fibers that are coming from coniferous trees, like the pine, like the spruce, et cetera. And at the right, we have the hardwoods or short fibers or fibers that come from broad leaf fees. And the evergreen eucalyptus globulus is, in fact, a short fiber that has a very thick cell wall and this thick cell wall guarantees higher paper thickness even with a lower basis weight. When we have, for example, when we compare a 75 gsm made from eucalyptus globulus with the 80 gsm made from other 3 species, we can have even a higher thickness in the sheet of paper produced from globulus and also a paper rigidity, which implies a higher machine performance, a higher machine printing performance in the end. Eucalyptus globulus fiber, because it's thicker than the others, is also going to be more prepared for entering in the higher number of recycling cycles. And this, by the end, is the ideal fiber, I would say, to have on the top of the cascade to the -- on the top of the paper cascade. And I end up here. Send me your questions through the question and answer, and I will respond in the end. Back to you, Carla.

Thank you very much, Pedro. That was really interesting, and we will be sharing the presentation as well as the recording. There's a lot of really rich information that we know that we're sharing through this webinar. The upcoming speaker is Anand Punja, so we'd like to welcome Anand. Anand has -- since October 2021, so end of last year, Anand has led the development of FSC's stakeholder engagement and partnership program. Prior to this role, Anand worked as FSC's European Director from 2016, and he has also for 11 years prior to that been actively involved in sustainability issues in the timber and forest products sector. Anand is a charity trustee of his local Woodland Trust, and he's going to address how FSC certification creates positive outcomes. He's also going to provide us with some really interesting related consumer research findings. So Anand I -- just 1 second so we can see you. There we go. It's over to you.

And you see my slides, yes?

Yes, we can. Great.

Okay, great. Thanks. I've got a bit of a dry throat. So if I start coughing, I apologize for that in advance. So I've got some water here to just keep me right. So thanks very much for inviting me to speak. Great to hear the presentations of our colleagues. And I guess the question that comes to me at the kind of end of this, why are we all doing this? Well, we're doing it to create outcomes, outcomes in forests. And that's one of the things that at FSC we're challenged most about is after almost 30 years of existence, what do we deliver as a system, as a scheme for companies like Navigator and our business stakeholders in particular. Well, all stakeholders around us to deliver outcomes on the ground in the forests around the world. So I'm going to be focusing on outcomes, and I don't know why that didn't work, there you go. I'm going to be focusing a little bit on outcomes and trust is another thing that came up through the other presenter's conversation -- presentations about greenwashing, about -- Paula mentioned it why you need kind of external verification, et cetera, as well. And so, yes, FSC delivers outcomes against expectations. That's quite a bold statement, and I've got information to kind of back that up. So last year, we did our consumer survey. About -- around FSC, but also around kind of what expectations consumers have around forests, and what are their main concerns, priorities, how they want to see them manage, et cetera. And I've picked a few slides out of that. And the first slide I've picked out here is this graph that basically shows that within forest issues, in particular, not the whole globe where climate issues came on at the top, but biodiversity and climate come on the top. When you ask consumers about what do they -- are their top concerns regarding forests, and how would they -- how they can play their role being educated to use their buying power to make change? So biodiversity and climate comes up top. So that's where -- as a proxy for us, that's where consumers want to see outcomes of systems like FSC and companies being responsible in those areas in particular. When you look at the paper and card, more -- value chains more specifically, then you get -- then again, the sustainability-focused areas are, again, the top. Protection of plants and animals where wood paper comes from and sourced from responsible managed forests. So the top 2 consumer kind of concerns, important scores. So when I was doing the -- putting this presentation together, I looked out what we have as an Impact Dashboard. And you see that the link to -- when you go to slides, there's a link to the Impact Dashboard down here on the slide itself. And you may not be able to see much. This is a screenshot so it's not an interactive one. But you can see that many of the studies that are now done on FSC are actually in line with expectations around consumers. So consumers wanted to see the outcomes or how -- have concerns around plant and animal biodiversity. You can see that there are now a number of studies, which we class as not the most robust studies, but there are studies that indicate that FSC does lead -- FSC certification leads to better plant and animal diversity in the forests when they're sourced from FSC certified forests. And then you've got these kind of carbon stock as well. So we try to be very transparent about our Impact Dashboard here in terms of the outcomes. We've looked at the quality of the study or the level of robustness of the study and where that is high, we've kind of given a solid green dot and where there are negative, we also indicate where there are negative as well as positive. There are some negative impacts according to this. I don't know where they are because it's an interactive dashboard from some studies studying in parts of the world. So most of these studies are done in different parts of the world and are then collected, so we're trying to look at ways where we can start to think about how we can present, communicate these at a more systematic level as well. So FSC, we can now show much more clearly that FSC certification delivers outcomes on the ground that are in line with consumer concerns. The second point I really want to make is that the scale of our footprint now, of the FSC certification footprint, I should say, delivers outcomes at scale. So not are we delivering outcomes that mean or address the concerns of consumers, we are also delivering outcomes at a scale that is pretty huge now. This snapshot was taken about 2 weeks ago, and I've done it from a worldwide perspective, but also a Portuguese perspective because of the Navigator Group being Portuguese. But also I believe that around 70% of the source fiber that comes into the Discovery brand, in particular, is from Portugal. So I wanted to kind of just take a snapshot of that. So we have now 230 million, or almost 231 million hectares of forests certified around the world and around 550,000 hectares in Portugal. And you can see the different scale of reach of FSC certification. In terms of forests impact, this is the key one, the FM areas, the forest management areas, that are impacted. But this also shows the impact in terms of how many companies or how many forest managers and owners around the world are interested in showing impact through a product that we developed called Ecosystem Services, which captures and helps forest managers to capture the data around ecosystem services in a more methodological way, in a more trusted way and present that to the world in a verified way. And I guess I wanted to come back to the Portuguese forests because of that sourcing in particular. So we talked about scale. Now the forest area in Portugal is around 6.1 million hectares, of which 3.2 hectares is kind of is seen as forest. The rest is seen as shrub, unproductive land, which could be restored into forest, which could be left to reward. And that's, of course, up to the Portuguese land use planning to do. But when we talk about the Portuguese forests and how they are made up, the national forest is made up mainly of 90 species. And the forest area in Portugal is one of the mainland uses in Portugal. So if you want to have an impact environmentally or socially on the landscape in Portugal, then forest certification can really help that because of how much land is classed as forest land in Portugal. And then when you look at Portugal in terms of the way that FSC certification has grown in Portugal over the last 15 years, and this year, our colleagues at FSC Portugal, who are based in Lisbon, are celebrating 15 years of being a network partner in Portugal -- the local network partner in Portugal. And you can see that kind of geographic scale across Portugal here, the mainland, the Azores, the Madeira. I'm looking away because I've got a 2-screen system here. So yes, so you can see that the FM area in Portugal is also growing. So the scale is also increasing, the scale of impacts through FSC certification that forest managers, forest owners are now making in terms of the Portuguese forest. And finally, in terms of scale, the paper industry in Portugal is a really key driver, a really key factor in pulling the demand for FSC certification. So here, you can see this is some data from our Chain-of-Custody. This is kind of a spread of the Chain-of-Custody certificates in Portugal -- just Portugal, I haven't done it across the Europe, but just -- and you can see that the number of Chain-of-Custody certificates, which is more the traceability side of the system, is very much heavily skewed towards the paper and paper products industry. So in this case, the paper industry in Portugal is a really key driver to pull the demand for -- to send the demand to forest managers, forest owners to go FSC certified and then to create those impacts that I presented earlier on the ground in the Portuguese context and in the Portuguese landscape. And then why FSC? Why go down the FSC route? Well, you go down the FSC route because there is trust in FSC with consumers in particular. And when you look at -- there is strong support for sustainable forestry among attitudes of consumers. And this is, again, the project that we did with GlobeScan last year, mid-last year, which we started to present at the end of last year and early this year. There's again another link down here when you go to slides if you want to look into the consumer insights a little bit more. But these are what consumers are telling us -- or telling GlobeScan that they prefer to buy products that do not damage plants and animals. They expect companies to take this into account in their own sourcing practices. And they try to buy products packaged with renewable materials of paper instead of plastic, which is something of a key factor we've seen over the last number of years. And FSC continues to be, amongst consumers, the most trusted actor to protect forests to actually have a real impact on forests on the ground through the certification system in particular. So trusted companies and brands are fairly low, and they're up and down quite erratically actually, I think, quite up and down. And yes, in government, they're very low, you can see. And that's one of the reasons why companies like Navigator use FSC certification because it also provides them with the assurance and their customers with the assurance that they're working with systems that are the most robust, most trusted to deliver impacts at scale on the ground. And finally, it's the recognition of the FSC logo. So from a sales perspective, the recognition of the FSC logo is high, is fairly high. 56% of global consumers are recourse seeing the logo, of which 23% see often and 33% see occasionally. Now as that logo gets more out there on products and the label through labeling, that educates consumers as well, which then feeds back into consumer expectations and concerns and how they can use their buying power to support responsible forestry and create outcomes on the ground through their buying power. That's really my last slide. I've used -- I've just put this slide in as key takeaways. I'm really not going to go through it that much. It's not probably that easy to read, and I've just kind of left it in there as a key takeaway summary for you when you receive the PowerPoint presentation, some snapshots for you to take away and use in your day-to-day business if you need to use it. And that's me. I want to say thank you for the opportunity. The last thing I'll say, Carla, actually is that you can obviously find us on the social channels. You can contact me if you want to follow up. But also, we have a number of locations across Europe. So just click -- when you get the slide, again, that's an interactive link. If you click on that, it will take you to our website, which will give you all the links to our local offices and our regional office in Europe. So now over to you. Thank you.

Thank you, Anand. That was really interesting. We've really had a couple of questions coming through. We'll leave that to the end, and please do continue to post your questions. Our upcoming speaker is João Escoval. So João Escoval is responsible for managing The Navigator Company's global office paper brand campaign. He has more than 15 years' experience in the marketing field, and he has a long track record of leading companies in their own industries like PwC and L’Oréal. And he's going to present us with the brand case study example of how to communicate forest values at a brand level. Over to you, João. I just need to get you on screen.

Thank you very much, Carla. Okay. I believe that you can see me now.

Yes.

Good morning, everyone. It's a pleasure to be here addressing to you all this topic. And it's very interesting because we try -- what we -- I will try to show you is a little bit of wrap up of all the messages that all the other panelists have been showing because in the end we are talking here about products and brands that arrive to the end user, and they need to convey correctly all the messages and all the values that they want to pass, in this case, the forest values. So the big challenge that the brands face today is the capacity to grab attention of consumers. As in more and more the competitive world that we are living, more and more brands, more and more products arriving to the market, it's getting very hard for them to be heard. And it's not only when we speak about the -- inside of their own category or inside of their own industry, they are fighting, they need to grab attention of the consumer even in the other things that the consumer does in their daily life because consumers are getting more and more diverse or scattered attention periods on several supports. So the mobile, the digital area -- era that we are living, it's driving this even more challenging times. And the truth is that there are very few brands in the world that can convey their messages without making a lot of effort to get attention from consumers. So most of the brands, they are challenged to do that. And by doing that, brands need to scream or often they scream. And this leaves the consumer to be more and more confused when they need to make their own decision. So they have to make fast, quick decisions on shelf or in other aspects of their life. And in many cases, they get lost without any clue or what products they should choose. And if the messages of the -- about the products are conveying, are trustworthy. Okay. And based on that, the messages are more and more -- are not necessarily good. And it motivates products and brands to make, many times, claims that are misleading or that are not correct. That's why it's more and more fundamental that brands can assure that the claims and messages are validated by credible third parties. And generically, this takes even more relevancy when we speak environment, and when we speak about forest values in this case. So we need to build trust. And this links correctly with the last presentation of Anand that it's very important that we, brand owners, when we arrive to the market, we can build trust and we can guarantee trust to consumers. This trust always starts with the product, okay? So the example that we are bringing here is the example of Discovery. Of course, there are plenty of other examples, not only in the paper industry, but also in other businesses. And this trust starts with the labeling of course, and this example that we are seeing here is the FSC labeling that we have in our products. But in the end, this summarizes all the topics that we have been addressing and that we have been discussing today. And packaging strategy has been the main touch point of this message. However, there are a lot of other touch points that we need to consider. And that's why in the example of Discovery, we try to build [indiscernible] messages and translate it into very easily to understand claims that afterwards, we defend them and we support them with facts. So Discovery, basically the concept translates into these 3 main topics that is we take care of forests as we saw in the previous presentation. So tree planting, biodiversity protection, responsibly managed forests, carbon fixing, oxygen production and so on. We always see on the planet, so being Discovery low basis weight product in a category where most of the products that are present in the market are 80 grams, Discovery with 75 and 70 grams, states and defends that with this office paper, you are consuming less wood, less waste and so on. And then it's the first step of recycling. As Pedro Silva presented, it's 100% recyclable, guarantees more recycling cycles, and with the cascade concept, a virgin paper that feeds recycling. So we need virgin paper to feed the cascade. Otherwise, the system collapses and what is better than office paper to guarantee that. So with these 3 concepts what then we try to do is to translate them into touch points and into sales collateral or communication supports where we can address these claims correctly. So in the case of Discovery, we have our [indiscernible] after the product itself or the packaging, you can consult our website that I recommend all of you that you need have to look into it. We -- some of you even arrived this webinar based on a campaign that we had focused on the website. We have the Eco calculator where we try to address and to translate the savings and the benefits of the product that is a low basis weight when compared with 80 grams. That is a very simple calculator that we can use. Basically, what we do is you put the consumption of your 80 grams paper, and then you'll see what are the advantages in terms of consumption of resources. Then we have several fact sheets. A little bit like Jonathan Tame I explained for in the case of 2 sizes. Discovery itself has their own fact sheets. Most of them -- some of them with facts that came from Two Sides, from the FSC and even from Forests Forward, we have our social networks with Facebook and Instagram and then we have the adverts. So all of these touch points they try to make moments where we can address the messages, the values -- the forest values that we defend. And of course, they have -- they are all verified and validated by our third-party partners. So in a nutshell, what I would like to address you in terms of key takeaway is that sustainable forest management is paramount for the paper industry, and it's very important for Navigator. And these value need to be communicated to consumers correctly using the different channels and different -- with different levels of depth. Of course, if we are talking about end users, our consumers is a little bit different than when we are talking about to customers or in the B2B area because, normally, we have more time to explain these topics. Trustworthy brands cooperate normally in sustainability topics with many independent parties so that can be public or private sector. What we showed here today is 3 different independent entities that we cooperate in the case of Navigator and Discovery, particularly. And then third-party verified certification schemes legitimized. So it's very important that we can -- in such a competitive world, and as I started my presentation with so many brands screaming for attention, it's very important that what we say and what we show, it's legitimized and it's completely validated by all the stakeholders. I will be very happy to take questions as well now afterwards with all my other colleagues panelists. Thank you very much for your attention. Carla, over to you.

Thank you very much, all. Actually, we did have a question come through for you, which is how can a brand legitimize its common sustainability? And I think you've answered that in your key takeaways, which is working with different entities and making sure that we have third-party verification. So we use valid certification schemes to back up the claims.

Exactly.

I will open up then for questions and answers. So just moving on then to the Q&A session. We did have a number of questions coming through. Starting off then, Jonathan, we had a question on the recycling rate. We had a question from a viewer that asked you, on the recycling rate, what would you say, and this could possibly also be for Pedro, what would you say is the highest possible recycling rate?

That's a great question. And I think there are a few different viewpoints. One, we've worked off over the last few years that we perceive the practical recycling rate maximum to be between about 78% to 80%. And that's exactly for the reasons that Pedro indicated, the amount of materials which go to long-term document storage for books and also tissue and sanitary products, which can't be recovered and recycled. So I do think it is a subjective number, but I see from the collective opinion of organizations like SEPI and Two Sides, that it's viewed as between -- being between about 78% to 80%. But Pedro, please interrupt and give me your view as well, but I think that's probably seen as being about practical maximum.

In the past, the percentage that was mentioned as an archive and tissue, so paper that is not able to be it's not even also tissue. There's food parchment paper and also cigarettes and -- paper cigarettes and other stuff that you cannot recycle. So all that, also the archive included, would be around 20%. So the theoretical maximum would be 80%, I would say. And we are already on the 74%. So -- and we are really touching the theoretical maximum almost.

I think the other important thing, Carla, and this is work which is being undertaken at the minute is to improve recovery rates within -- across all countries. Every country is different. The U.K. is very different from Germany. But as Pedro said within his presentation, it's about improving the amount of recovery recycling. So that actually that utilization of fiber goes up from 3.6x to 4.2 to 4.5. We shouldn't just sit here and say, well, we're at the practical maximum already. We should always be looking, as an industry, to push ourselves further and certainly SEPI are doing that with new targets for countries to try and keep and adhere to in the future.

Really good points on that. We have many questions coming through. Thank you for that. We'll move over to one lady that has put forward this question twice, so I know she's really eager for an answer. Paula, the question is what does -- or how does one protect forests from wildfires?

Okay. Well, the first step, the first move is really managing. That's why I said at the closure of the presentation that management is the keyword. So to protect forests from fires or other natural disasters, you have to manage forests. And it's -- and being there with a forest that you need for your business means that you're actually doing the best in order to ensure your objectives, but also to protect forests from these risks. And so The Navigator Company invests primarily in managing forests, in keeping the roads accessible and clean, in keeping the forests stands also duly cleaned and providing forest management according to the best practices I was explaining. But then, again, besides that, besides management, when we come near hotter months, the company also has a company that it has established within the sector dedicated -- with dedicated means and with a specific investment so that targeted equipment and human resources are allocated for vigilance and first action. Because it's very important to, first, avoid fires, and that's why we invest in management, but then to intervene in the first moment when a forest fire happens. And that's what we've been doing. And we must say that with Afocelca, which is the name of that joint company for the forest fires, around almost 90% of the occurrences that the specialists go to are outside our managed areas. So -- and because we neighbor with each other, it's very important to prevent the fires from coming in. So first management then investing in all this, which is not only about means, equipment, trucks and people, human resources, but also capacitation, training and providing all the means. So in both these areas, we invest over EUR 4.3 million. That's the number for 2020. So that's important. And another thing that we do is doing more than just inside the borders of our forests. So we work also with other forest producers and forest owners because we have different programs, and we provide support either by financial support but also training, transference of technological knowledge so that they can improve management of their own areas for different purposes. And this also helps them and trains them also in preventing forests fires. So -- and also, we work with academia so that projects are put in place to study not only the evolution of trends and scenarios in global warming and the impact that they can bring. So we address the issue in very different ways. But again, the more important one is bet on management.

Thank you, Paula. We have raised hand from Anand.

I answered the question actually in the chat, but I see that actually, Julia, you've done the same, it looks like -- our default setting is just to reply chat to host and panelists. So everyone won't see the message that I've posted. So that's something. But it's a good question on fires. And I mean, the way I would answer that as well, the evidence that we've seen or our team led by Joanna in Portugal is that, anecdotally, at least, where -- when the fires in 2017, the big fires in 2017 reached FSC areas, they were more controlled and they spread less. There was less damage in the FSC areas. Of course, fire damages forests. That's just the way it goes, but the damage was less in FSC areas than it was in non-FSC areas. And a big part of that is because of what Paula said as well, the aspect of management. When you bring in the aspect of management, you can bring in some risk controls. You can clear some of the leaves on the floor or whatever, burning risks, et cetera, to minimize the risks of that fire spreading once it reaches your forests. You can't stop it getting there. But when it gets to your forests, you can put in place controls to stop it spreading within your forests as well.

Exactly.

I wouldn't mind just quickly answering the question on biodiversity as well, if that's...

Yes. Go ahead. Go ahead. Would you first say what the question is and then answer it, Anand?

Yes. So there was a question on how does the biodiversity in Portuguese forest is assured if there is a strong push towards [indiscernible]. And again, my answer is, of course, through the FSC system. How does that work through the FSC system? Well, in the FSC system, all forest owners, managers have to put at least 10% of their management unit of their forest area that they manage aside for something what we call conservation areas. So it's something that -- it's a managed area, but it's managed for conservation and not for production in all of the areas. So if you own or manage 100 hectares of forest, 10 hectares of that will have to be -- at least 10 hectares of that has to be put aside for conservation purposes. And that is primarily for biodiversity conservation, but also capturing other high conservation values. It can be cultural values, it can be social values as well as environmental values as well. My colleague, Joanna, is helping me on WhatsApp here as well, and she's basically telling me some data from Portugal, which is actually the data from Portugal is that around half of our [indiscernible] areas are without any legal protection. So they wouldn't be concerned for biodiversity if it wasn't for FSC certification in place. And there is no other legal structure that would put those into a biodiversity conservation management. And the average area of conservation areas in Portugal -- Portuguese FSC forests is not 10%. It's actually 23%, so above that 10% [indiscernible].

What we'll do in that because I know there's -- we've done 1.5 hours, but there's a lot more that we could do and share. We'll put the Q&A, and we'll also send that out of the video. I'm conscious that we have a couple of more questions. So thank you for that. Pedro, we got a question from 1 of the users that asked if we use chlorine in the manufacture of paper? Pedro Silva?

Yes, yes, yes. I don't know today any mill that uses elemental chlor in the manufacturing of paper. Most part of the mills that I know, they are ECF, so elemental chlorine free. And most part of the mills -- the most modern mills already have bleaching process by using oxygen and ozone in the latest stages, which gives, by the end, values of AOX and COD, which are values that measure the chemical oxygen demand or the oxygenation of the effluent, let's say, that is more lower even than pulps that are TCF, total chlorine free. So by the end, what is important, I think? You have seen the rim that João Escoval has shown you. There is another seal right to the FSC seal, which is the Ecolabel, the European Union Ecolabel. And European Union Ecolabel puts limits for the AOX and COD. So the papers should be below those limits, and have a long list of substances, of hazard substances that you cannot use in the manufacturing of paper. So I hope I have answered the question.

Thank you. I'm conscious that we're 2 minutes over time. And in actual fact, we had many more questions to our presenters. We will get these questions answered to you following the webinar, so we'll send out the recording and we'll also send out these answers to you from -- that you've posted. As a wrap-up, I'd really like to thank all of our presenters today. I also want to thank you for attending the session. We hope we have found it -- you found it informative and useful. If you have any additional questions, please reach out to us. We have an e-mail related to this webinar, which is [email protected]. Let's keep the link between forests, sustainability and paper alive in our day-to-day work. We hope you enjoy the rest of the day, and thank you very much. Have a good day.

Thank you. Bye.

Thank you.

Bye.

Thank you very much. Bye-bye.

Thank you. Bye.