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Resolute responds to challenge

Dec. 13, 2013 – In response to the press release issued by the Grand Council of the Crees issued earlier today, Resolute Forest Products has released the following letter.

"On December 11, 2013, Resolute received confirmation of the temporary suspension of three of our FSC certificates. Two of these certificates are located in the Lac-Saint-Jean region of Quebec and the other is located north of Thunder Bay in Ontario.

None of the issues raised in relation to these certificates involve our on-the-ground practices or our compliance with any laws or regulations. They solely concern meeting very specific FSC requirements and differences in the interpretation of some of these requirements with the certification body. While such temporary suspensions are not uncommon, Resolute takes the matter seriously and our foresters are working diligently to have our certificates reinstated.

Resolute remains committed to our goal of achieving FSC certification for 80% of our managed woodlands and in fact, is pleased to share the news that just last month we played an active role in securing dual FSC and SFI certification for the Abitibi River Forest, a large tenure in Ontario. The certificate was issued to Abitibi River Forest Management, Inc., in which Resolute is a major shareholder. Given this new certification, and until the suspensions go into effect, 76% of the forests we manage or on which we hold significant harvest rights are FSC-certified.

We want to reiterate that Resolute takes these temporary suspensions seriously and we know that this is an important issue for many of our customers and partners. As such, and because the matter is complex, we would like to provide some detail on how Resolute is addressing them.

FSC certificates are generally valid for five years and are subject to an annual review to monitor conformance to standards, a process known as a "surveillance audit." The temporary suspension of certificates is part of the FSC process and is intended to give certificate holders time to address potential issues.
The reality is that most FSC certificates in the boreal region will eventually face the same issues that brought about Resolute's temporary suspensions. The timing of the audits of our certificates was such that we are among the first to experience them.

The three certificates being suspended follow the FSC National Boreal Standard, which comprises over 200 indicators. While in the past auditors could group similar non-conformance reports (NCRs) together, all certification bodies have recently been instructed to consider each of the indicators separately, making it more likely that temporary certificate suspensions will become more common.

With regard to the process itself, during the 2012 and 2013 surveillance audit, Rainforest Alliance, the FSC-accredited certification body for these certificates, identified several "minor" NCRs affecting these certificates. While most were resolved, some could not be closed within the specified time, thus becoming "major." A "minor" NCR that cannot be resolved within the mandated timeline automatically becomes a "major" non-conformance. The terms "minor" and "major" have specific meanings within the context of FSC: As noted above, "minor" means that the certificate remains in good standing while the issues are being addressed, while "major" means that the issue must be resolved within three months; otherwise, the certificate is suspended until the issue is resolved to the satisfaction of the certification body. The latter is the case with two of the three certificates in question. Detail on each of the suspensions follows.

Quebec certificates (Lac-Saint-Jean and Mistassini-Péribonka)

• Requirements related to First Nations: The area of the Lac-Saint-Jean certificate is at the centre of a complex territorial dispute between two First Nations and the Quebec government, in which Resolute plays no role. In this context, the process in place between the First Nations involved and the government was deemed inadequate by the registrar. The consultation process for obtaining the consent of First Nations for the proposed management activities was also deemed inadequate. It is important to note that the responsibility to consult First Nations and to harmonize forest management practices with their cultural and traditional uses both lie with government. In addition, land claim issues are also the government's responsibility. Within this framework, Resolute collaborates with First Nations and the Quebec government in order to promote constructive discussions that we hope will lead to long-term solutions.

• Caribou conservation: Following the major tenure reform implemented in Quebec in April 2013, the government is now responsible for the bulk of forest management planning, including caribou conservation planning. The audits for both certificates in the Lac-Saint-Jean region were conducted while the government was in the process of reviewing its current caribou conservation plan to ensure balance between environmental, social and economic imperatives. The interim caribou conservation plan that was provided for the purposes of the audit was assessed by the auditors as not adequately reflecting specific elements of the new proposed federal recovery strategy. The registrar's interpretation of FSC requirements on this issue could result in major socio-economic impacts on local communities and could jeopardize Resolute's viability in the region. Resolute is working actively with government to develop a workable solution.

Ontario certificate (Black Spruce – Dog River Matawin)
The need to secure support from interested parties: In order to maintain our certificate, Resolute must secure support from interested parties for our proposal to expand the network of protected areas within the area covered by the certificate. We had planned to fulfill this requirement through our participation in the Canadian Boreal Forest Agreement (CBFA) process, which involved environmental groups; however, the process has been difficult in light of the breakdown of negotiations in May 2013. Resolute has developed an action plan for securing the required support, and we are hopeful that this certificate can be reinstated within a few months.

We hope the information above is helpful in understanding the nature of the issues we face, as well as providing the assurance of our firm, ongoing commitment to sustainable forest management and FSC certification. As a Company, Resolute has committed to being a sustainability leader within our industry. We are proud of the progress we have made so far, and we will work continually to do even better."

December 13, 2013  By Resolute Forest Products