Climate Change

Sustainability is baked into every step of the work we do every day. From climate-smart, ecosystem-based forest management, through responsible procurement in the value chain, to the resourceful use of materials to produce sustainable products.

Within the carbon cycle and for climate change mitigation, wood products have three beneficial roles: as a store of carbon, as an alternative to fossil fuel-based materials, and for generating carbon-neutral energy. West Fraser’s operations have the opportunity to contribute to climate change mitigation by capturing carbon dioxide (CO2) in forests, storing it in the products we make, generating renewable energy and providing renewable alternatives to carbon-intensive materials.

Our commitment to and practice of certified, sustainable forest management is a high-impact contributor to mitigating climate change by absorbing and storing carbon
The products we produce are ecological, renewable alternatives to carbon-intensive materials like concrete and steel. West Fraser’s solid wood products (83% of 2019 revenues), averaging 50% carbon by weight. Converting more construction to wood is identified as a solution for chopping global GHG emissions, two-fold emissions benefit because of carbon storage in solid wood in addition to the displacement of higher carbon building materials.
West Fraser’s high-efficiency primary manufacturing recovers raw materials for a range of valuable secondary products, including pulp, energy and potential substitutes for plastics and petroleum-based chemicals, with 75% of our energy needs met by renewable sources

We support national and international collaborative action and policies to combat climate change, including recognizing the sequestration and storage of carbon through productive, sustainably managed forests and market-based approaches to carbon pricing.

Reflecting the recommendations of the Task Force for Climate-Financial Disclosure (TCFD), West Fraser provides the following information about our strategic approach, risks, opportunities and performance related to climate change.

MORE REPORTING RELATED TO Climate change

Carbon stored in production (2019): 9.4 million metric tonnes of CO2e
Our Performance: GHGs and Emissions, Energy
Forests, land management and carbon sequestration: Forests & Timber, particularly in Ecosystem-Based Sustainable Forestry & Climate Change

Governance & Accountability

West Fraser’s CEO and Executive Management Team, are responsible for developing and implementing the Company’s corporate strategy and achieving the associated sustainability objectives. The Executive Management Team considers environmental risks, goals and objectives in developing and implementing its Strategic Plan.

The Board provides oversight of the Executive Management Team, regularly reviewing the principal risks and risk management strategies affecting the Company. Climate change is included as a category of risk and potential vulnerabilities that the Executive develop plans to actively manage. This includes the review and monitoring of environmental performance and consideration of climate-related issues in corporate-level strategies and capital investment decisions.

The Board’s Health, Safety & Environment Committee receives regular reports on internal and external environmental audits, and the effectiveness of the policies, procedures and practices in place to administer the Company’s environmental programs.

Learn more about our governance approach (GRI 102), the mandate of our Board of Directors, and the Charter of the Board’s Environment, Health and Safety Committee.

Governance & Accountability for Climate Change

West Fraser’s CEO and Executive Management Team are responsible for implementing the Company’s strategy and sustainability targets.

The Vice President, Canadian Woodlands oversees compliance with Canadian forestry regulations and certification. He is responsible for the practice and maintenance of sustainable forest management, strategic issues with regard to forest management-related environmental performance, climate risks and opportunities, and forest carbon.

The Vice President, Pulp & Energy Operations oversees pulp and bioproducts manufacturing, bioenergy development, projects, energy reduction initiatives and GHG emissions reporting

The Manager, Energy & Bioproduct Development leads corporate initiatives in energy reduction, bioproduct research and development and GHG reporting

The Vice President, Corporate and Government Relations is responsible for the preparation of this report and regularly engages with federal and provincial governments on climate policy, and the Company’s environmental performance.

The Manager, Environmental Affairs assists West Fraser’s operations to meet climate and carbon policy and regulations that may affect the Company or manufacturing facilities

Strategy

Through the Paris Agreement in 2015, the international community committed to keeping global temperature rise below 2°C. West Fraser has an opportunity to address the challenge of this worldwide commitment and contribute to the bioeconomy.

West Fraser is a diversified producer of responsibly manufactured wood products with access to extensive, sustainable timber resources. Our certified, sustainable forestry, responsible wood sourcing and value-added wood product portfolio represents some of the best opportunities to fight climate change and meet the world’s demand for climate-conscious materials and renewable alternatives to fossil-fuel derived materials.

Our responsible manufacturing process is efficient and resourceful. Resource efficiency is critical to achieving West Fraser’s strategic goal to be a low-cost producer of wood products. The material recovered from primary solid wood manufacturing processes and is used to make additional value-added products. By maximizing every log’s potential to be converted into valuable resources, we have created a robust portfolio beyond solid wood products and tapped into resources for generating renewable energy.

How West Fraser operationalizes its climate change strategy

Timber Procurement and Forest Management: We source wood fibre sustainably and responsibly, as demonstrated by our fibre sourcing and chain of custody certifications.

Where West Fraser directly manages forests, our harvest, management and reforestation planning processes incorporate potential short, medium and long-term impacts of climate change on the landscape, within a landscape-level, ecosystem-based approach. Forest plans identify, monitor, and adapt forest management practices, silviculture and in forestry operations to address climate changes in the environment.

Manufacturing: The Company’s efforts have focused on replacing fossil fuel energy sources where feasible with carbon-neutral biomass energy and capital investment to improve the energy efficiency of our manufacturing processes. For the last several years, West Fraser has pushed forward on an aggressive capital program to invest in modern, efficient new equipment to improve the efficiency of our manufacturing assets. We seek out economic opportunities to reduce fossil fuel energy use, favour the use of thermal and bioenergy and are exploring the development of green energy sources, such as the solar power purchase agreement announced early in 2020.

Looking forward: Our focus areas will continue to be the monitoring and management of overall GHG emissions, improving the resource efficiency of our manufacturing operations. We will continue to produce wood-derived products with more sustainable life cycles than fossil-fuel derived alternatives, and to beneficially manage forest resources to increase carbon sequestration.

Risk Management and Opportunities

Climate change brings risks of change and uncertainty. We have a comprehensive process to identify, manage, and mitigate risk wherever possible. West Fraser’s risk management process includes holistic risk assessments that incorporate climate-related risks, energy and carbon costs and potential of opportunities when considering significant investment decisions. From a climate change perspective, we have compiled the central opportunities and risks for our business below. For further information and discussion of risks and West Fraser’s business, see the “Risks and Uncertainties” outlined in West Fraser’s 2019 Annual Report (page 55-64).

The climate risks facing our business are predominantly physical in nature.

The health of forest systems, water resources, fibre supply and the procurement supply chain, transportation logistics, and facility operations are exposed to natural and man-made adverse events. Over the last several years, the timber in Western Canada has been impacted by the greater severity and spread of insect infestations, including the well-documented mountain pine beetle infestation, which killed half of the commercial lodgepole pine in B.C. In addition, forestry practices, operational and transportation activities must adapt to a shifting climate that is creating more frequent extreme weather events, like increased wildfires.

We’ve categorized our climate-related opportunities and risks as:

Markets & Products – climate-related concerns which positively or negatively influence shifts in supply and demand for our products
Policy, Legal & Reputation – The impact of government actions, investor or societal views related to climate change, including carbon pricing and new environmental regulations for our business.
Physical (acute and chronic) – Direct climate change impacts for our fibre supply and forest management, operations and supply chain infrastructure, including transportation
Technical Innovation – Innovation, research and emerging technologies that may change the carbon impact on resources or operational efficiencies.

Selected climate-related opportunities	Selected climate-related risks
Services, Resilience, Physical: Canadian forests managed for timber production are a carbon sink. West Fraser’s entire manufactured product portfolio stores carbon. Our ecosystem-based sustainable forest management approach supports effective carbon sequestration through the reestablishment of young forests (forest renewal and reforestation).	Physical (chronic): Forest and tree health impacted by disease, habitat range shifts and land cover differences that affect wildlife habitats, species-at-risk range, invasive species spread and/or increasing insect and pest problems. For example, Western Canada’s mountain pine beetle infestation resulted in diminished grade, increased production costs and our access to or availability of timber.
Services, Resilience, Physical, Technical Innovation: Enhancing forest health and the carbon sequestration capability (forest carbon pools) in managed forest areas. Using approaches such as intensive and enhanced forest management, stand tending, and silvicultural treatments to increase carbon accumulation per tree or per hectare.	Physical (acute): Greater unpredictability and frequency of natural events, including extreme and/or irregular weather such as floods, droughts, hurricanes, and wildfires which can disrupt operations at our physical facilities, timber supply quality, our access to or availability of timber, the facilities of our suppliers or customers, and transportation logistics.
Markets & Products, Resource Efficiency, Technical Innovation: Accessing expanded market opportunities due to increased interest and demand for carbon-storing wood products. Including greater use of wood products as a choice for lower-emissions in the built environment, particularly the selection of wood as a low-carbon footprint, renewable building material, as more ecological and economical, carbon-storing building product compared to alternatives when carbon costs are factored.	Physical (chronic): Trends towards heavier precipitation patterns, changes to water quality and water storage on the land base resulting in the overall degradation of water quality and reduced water supply levels. Temperature shifts and changes to seasonal norms for winter and summer, which has effects for forest productivity and reforestation success, harvesting & mill operations, transportation, and the adaption capability for tree growth to these changing conditions.
Markets & Products, Resource Efficiency, Technical Innovation: Deriving valuable chemicals and materials from wood and woody biomass, including the byproducts of wood and pulp processing, as replacements for certain petroleum-based chemicals, single-use materials and plastics (lignin, bioplastics, and biocomposites).	Policy, Legal & Reputation: Government action to address climate change, carbon emissions, water and land use and the protection of threatened or endangered species and critical habitat, including activity prompted by stakeholder, social license concerns. This includes public policy choices affecting the costs of energy and carbon, including jurisdictional differences in carbon taxation (‘carbon leakage’), legislation in various jurisdictions affecting energy-intensive, trade-exposed industries and international agreements on climate change.
Energy Source, Resource Efficiency, Technical Innovation: Our access to lower-carbon, lower GHG biomass energy sources for all of our manufacturing operations, reducing energy transition risk. West Fraser generates the majority (75%) of our energy needs from renewable sources, the majority of which are recovered from primary manufacturing processes.	Policy, Legal & Reputation: Rising prominence of environmental, social and governance concerns among investors and institutional investor advisory groups may impact the investment making decisions of investors in companies requiring access to natural resources or the land base.

West Fraser continues to work to better understand how climate change will affect the fibre supply chain of timber sourcing, forest management, land use, silviculture practices, operations and transportation logistics in the future.

Climate Change Legislation and Carbon Pricing

We support climate change solutions that are national and international in scope, to reduce the competitive disadvantages of uneven climate policy and taxation approaches that mitigate the potential for ‘carbon leakage.’

Our manufacturing operations span multiple jurisdictions in two countries. Our exposure to energy costs includes the cost to purchase electricity, natural gas, propane, gasoline, diesel fuels, carbon taxes and fuel surcharges on purchased transportation.

In Canada, carbon pricing has been implemented, and our operations are subject to carbon taxes. We consider current and anticipated future costs of carbon when evaluating projects. We are affected by jurisdictional choices of the cost of energy and carbon, particularly at our two Canadian BCTMP mills, which are energy-intensive manufacturing operations exposed to international trade.

Our business is global, and it must compete with jurisdictions who have no or little carbon tax or legislation (carbon pricing) and, therefore, may not carry the equivalent production costs. Ineffective and uneven application of climate policies or carbon pricing can have the unintended consequences of shifting manufacturing from lower-carbon, climate policy-legislated regions, to jurisdictions that are not taking action on climate change or pricing carbon.

This ‘leakage’ of carbon-priced production to areas where climate action is not equivalently recognized in the economy can result in production moving from lower- to higher-carbon use regions, taking economic opportunity away from early adopters of climate policies and ultimately resulting in a net increase of global carbon emissions by shifting production activity to higher carbon use locations.

We directly engage with policymakers, work with our trade associations and fund research organizations about these concerns. Areas of our policy activity include:

Emission Reduction Regulation: Consultations with federal, state and provincial governments regarding the development of GHG reduction regulatory schemes,
Clean Energy Generation: Through the production and supply of biomass green energy, and
Adaptation Resiliency: Regarding sustainable forest management practices to mitigate and support adaptation to climate change impacts on the landbase.

Legislation and Carbon Pricing in Our Operating Areas

In Canada, we participate with federal and provincial governments (BC and Alberta) to provide input on the development of climate change policy and legislative initiatives, such as GHG reduction regulatory schemes, production and supply of green energy to the power grid, and sustainable forest management practices that can play a role in adaptation to climate change impacts.

The province of B.C. implemented North America’s first broad-based carbon tax in 2008. As of April 2019, B.C.'s carbon tax rate is $40 per tCO2e. The tax rate will increase each year by $5 per tonne until it reaches $50 per tonne in 2021.

British Columbia's CleanBC plan has outlined 2030 GHG reduction goals and an approach to climate change adaption and emissions reduction for the province. The plan identifies commitments to develop a lower-carbon industrial strategy. It also outlines approaches for climate change-related transition around waste reduction, efficiency of building energy management systems and the encouragement of low carbon building materials, such as encouraging wood-based construction through a Wood First Initiative.

In Alberta, West Fraser is affected by the Technology Innovation and Emissions Reduction (TIER) Regulation (it replaced the Carbon Competitiveness Incentive Regulation (CCIR) in January 2020). TIER applies to any facility that has emitted 100,000 tonnes or more of carbon dioxide equivalent (CO2e) greenhouse gases (GHGs) in 2016 or any subsequent year. Facilities that satisfy the criteria under the regulation may also apply to opt-in to the regulation. TIER excludes carbon dioxide (CO2) emissions associated with biomass, but requires reporting of these emissions for government GHG inventory purposes. Required annual compliance reports are subject to validation, verification and audit requirements by a qualified third-party assurance provider. The TIER levy is $30 per tonne as of April 1, 2020 (from $20/tonne).

Canada is a signatory to the United Nations Framework Convention on Climate Change’s 2015 Paris Agreement. The government has committed to increasing the country’s ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emission development. Announced in 2016, the Pan-Canadian Framework on Clean Growth and Climate Change puts in place a national, sector-based greenhouse gas reduction program. It implements policies to ensure a national floor price on carbon that will rise to $50/tonne by 2022.

External Memberships & Initiatives

Forest Products Association of Canada (FPAC)’s 30 by 30 Climate Change Challenge, West Fraser is committed to a sector initiative to remove 30 megatonnes (MT) of CO2 per year by 2030 —13% of the Canadian government’s emissions target.
West Fraser is a member of both the American Wood Council and Canadian Wood Council, which seek to expand market access and increase demand for wood products by contributing to the development of sound public policies, codes, and regulations which allow for the appropriate and responsible manufacture and use of wood products. They provide technical and knowledge transfer services relating to building codes, standards and regulations.
American Forest & Paper Association, the national trade association of the paper and wood products industry and advances public policies that promote a strong and sustainable U.S. forest products industry in the global marketplace.

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