S u s t a i n a b i l i t yR e p o r t

About Australian Paper 2What sustainability means for Australian Paper 2Nippon Paper Group’s commitment to sustainability 3What we do 4Our community 6 A leading employer 7

Zero Harm 8 Maryvale community open day 9 Supporting women in sport 9Our economic contribution 10 Exporting to the world 11 Investing for our future growth 12Our environment 14 Wood supply 15

Victorian forest facts 16 Creating partnerships through recycling 17 Beyond compliance 18Our future 20 Our mission: sustainable growth for the next generation 21 The four key elements of our mission 22

Contents

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Australian Paper is based in Victoria with a 150 year history stretching back to 1868 and our Maryvale Mill is one of the Latrobe Valley’s largest employers producing a wide range of recyclable papers and boards for the growing packaging market. We are the only local manufacturer of copy paper including Australia’s favourite brand Reflex® and also produce printing papers, envelopes and stationery.

Cover photo: Early morning water testing is conducted weekly in the Maryvale pondage system.

About Australian Paper

Australian Paper is an Australian registered company wholly owned by Nippon Paper Industries. We aim to minimise our impact on the environment and maximise our social and economic contribution to the communities in which we operate.

CommunitySupporting local employment, working in partnership with the community and providing a safe working environment for our employees.

EnvironmentGoing beyond compliance in our operations, supporting sustainable wood sourcing and reducing our emissions footprint.

Economic contribution

Contributing to a strong local economy by creating value for the Latrobe Valley region.

What sustainability means for Australian Paper

Nippon Paper Group’s

commitment to sustainability

Human

Future

Nature

Leisure

Package Paper

Cellulose Nanofiber

Agribio Business

Chemical productsLogs, Lumber and Building Materials Energy business

Overseas Businesses

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Nippon Paper Group’s growth strategies

Nippon Paper Group is committed to building a sustainable society based on a business model which focuses on:• Sustainable forest management • Recycling of paper products • Carbon neutrality

These are underpinned by a commitment to work to solve social issues and turn these solutions into business opportunities. These global principles drive performance across the Group.

Nippon Paper Group is actively engaged in projects which support people, the environment and industry through leveraging technologies that expand the possibilities for paper and make efficient use of wood resources.

* PwC Global Forest, Paper & Packaging Industry Survey—2016 Edition, p. 10.

About Nippon Paper Group

Australian Paper is Nippon Paper Group’s

largest investment outside Japan

One of the world’s top 10 paper and packaging

companies*

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Largest production capacity in Japan for paper and paperboard products

Australian Paper...everywhere, every daywe doWhat

Millions of people all over Australia and around the world use premium, recyclable packaging made from paper manufactured at our Maryvale Mill.

Australian Paper is also Australia’s leading manufacturer of copy and printing papers, envelopes and stationery.

4

5

community Our

6

A leading employerOur people are our most valuable asset and are vital to the ongoing growth and success of our business.

854FTE jobs at Maryvale including contractors1

Australian Paper directly employs

new FTE employees including contractors

2387Supports

jobs across the Latrobe Valley region2

5576Supports

jobs across Victoria3

Australian Paper is one of the Latrobe Valley’s largest employers and we are continuing to take on new employees. In 2018 Maryvale employed:

1 As at 31 December, 20182 Economic & Government Revenue Impacts: Australian Paper. Western Research Institute January 2017, p. 4 (FTE including flow on effects)3 IBID p. 3 (FTE including flow on effects)

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82Our values

integrityWe act honestly and openly

with each other, our stakeholders and the broader community

teamworkWe are one team with

one mission

embracechallengesWe always find a way

to succeed

trustWe can be relied on to deliver

our commitments

Zero HarmAustralian Paper believes a safety culture begins with embedding safety in everything we do. As part of this commitment, we relaunched our safety vision of Zero Harm in June 2018.

Since the relaunch of Zero Harm, Australian Paper has seen an increase in positive safety behaviours over the previous year. We aim to use this shift as a foundation for further improvement in 2019.

23% 49%decrease in

Medical Treatment Injuries*decrease in

Lost Time Injuries*

8

* 2018 in comparison to 2017

Our Safety PrinciplesWorking together to make safety

an integral part of our DNA

We cultivate safety forour future

When we see something, we say something, and do something

Safety is everyone’sresponsibility, and management’saccountability

We report hazards and incidents to promote positive change

We train and skillour people to besafe people

We believe all injuries are preventable

If we compromise safety, we accept injuries

Our Safety PrinciplesWorking together to make safety an integral part of our DNA

Maryvale community open day Australian Paper prides itself on being part of the Latrobe Valley community. Our Maryvale Mill has been in existence since 1937, and our story is part of the history of the Valley where we have been a major employer for generations. Australian Paper Maryvale opened its gates on 25 March 2018 to celebrate 80 years of paper making at the Mill. The community open day was a great success with more than 2,300 people touring the Mill and many more enjoying the wide range of fun family activities on the Maryvale Oval. Thank you to the 183 volunteers from Australian Paper who ensured the day ran smoothly.

We are proud to support the ambitions of women in sport through our partnerships with the women’s Southern Saints and Sydney Roosters.

As St Kilda prepares to march into the AFL Women’s competition in 2020, Reflex® has committed to a five year sponsorship deal with the club. Reflex® will be a major sponsor of the VFL Women’s Southern Saints team in 2018 and 2019, before continuing as major sponsor of St Kilda’s inaugural AFLW team for at least three years from 2020.

Australian Paper also joined the Roosters in late 2018, becoming an apparel partner and player sponsor of the Sydney Roosters women’s team as they won their way through to the Grand Final.

Supporting women in sport

9

economic contribution

Our10

EGYPT

SOUTH AFRICA

MAURITIUS

POLANDGERMANY

UNITED KINGDOM

UKRAINEROMANIA

TURKEY

JORDANLEBANON

ITALYGREECE

SPAIN

NIGERIA

SAUDI ARABIAUNITED ARABEMIRATES

QATAR

YEMEN

PAKISTAN

MALAYSIASINGAPORE

INDONESIAPAPUANEW GUINEA

CHILE

ECUADOR

EL SALVADOR

PERU

PORTUGAL

BANGLADESHNEPAL

THAILANDINDIA

SRI LANKA

SOUTH KOREA

NEW ZEALAND

MACAU

VIETNAM

CHINAUNITEDSTATES

CANADA

HONDURASDOMINICAN REPUBLICJAMAICA

BRAZIL

TAIWANHONG KONG

PHILIPPINES

In 2018 Australian Paper was one of the largest users of the Port of Melbourne, exporting a wide range of premium papers to more than 70 countries in Asia, Europe, North America, South America, Africa and the Middle East.

We are joined by rail to the Port with our own spur line connecting Maryvale Mill to the rest of the world.

Our export business is managed by Paper Products Marketing (PPM) which has overseas sales offices in Germany, Hong Kong, Malaysia, Singapore, Taiwan and the United States. PPM has been operating as Australian Paper’s exclusive global agent for more than 40 years.

Growing international demand for renewable and recyclable food packaging materials has created strong markets for Maryvale’s high quality bag and sack papers. New opportunities are emerging for PrintRight inkjet paper, high wet strength and grease resistant papers and 100% recycled business and communication papers.

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19%

81%Australian Paper is one of the largest exporters from the Port of Melbourne

2018Export

Domesticand NZ

Exporting to the world

Investing for our future growth

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Australian Paper is committed to upgrading key strategic infrastructure at the Maryvale Mill through our five year, $200 million capital investment program. 2018 was the second year of our ambitious schedule of work.

The 2018 Maryvale capital works and maintenance shut was scheduled over August and September and a total of $51 million was invested to upgrade key strategic infrastructure at Maryvale over this four week period.

The shut was also a major boost for the Latrobe Valley economy with more than 50 local businesses involved and over 1,000 workers and contractors on site during peak periods of work.

117,168 contractor labour hours

1,147 peak number of workers onsite

$51m total investment

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R5 Recovery Boiler upgrade

$17.5minvestment

The R5 Recovery Boiler is a key piece of the power generation infrastructure making Maryvale Mill Victoria’s

largest producer of baseload renewable energy.

As a result of the upgrade we will achieve:

• Higher production output

• Increased efficiency

M4 Wet End rebuild

$15m investment M4 is our largest paper machine producing approximately 225,000 tonnes per annum of high quality board for Australia’s booming packaging market.

Our rebuild will:

• Improve efficiency

• Increase production output

Lime Kiln restoration

$5.5minvestmentThe Lime Kiln at Maryvale is 106 metres in length, operates at 1,000°C and is central to our chemical recovery process.

The restoration will result in:

• Higher production output

• Increased efficiency

environment Our

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15

68% 26% 6%

HARDWOODSAWMILL

CHIPS

STATE WOOD

PLANTATION WOOD

Wood supply

Australian Paper sources 100% of our wood from Victorian suppliers.

2018 wood sources

Australian Paper is committed to purchasing wood from sustainably managed Victorian sources.

We rely on forest certification to ensure that our major wood suppliers have implemented sustainable management practices. The Programme for the Endorsement of Forest Certification (PEFC™) and the Forest Stewardship Council (FSC®) are the

internationally recognised benchmarks for sustainable forest management.

Australian Paper is Chain of Custody certified to both FSC® and Responsible Wood (globally endorsed by the PEFC™) and we require our major suppliers to be certified to either of these systems.

PEFC™ and FSC® certification highlights Australian Paper’s commitment to

environmentally responsible, socially acceptable and economically viable practices. Through a rigorous independent auditing process, the PEFC™ and FSC® systems verify our paper’s journey from its point of origin through to the end consumer, providing assurance that our wood supply originates from sustainably managed forests and plantations.

Australian Paper is dual certified to PEFC™ (through RW) and FSC®.

In 2018 Australian Paper Maryvale purchased 1,654,142 tonnes of wood from the following sources:

Plantation wood

The majority of Australian Paper’s plantation wood supply is purchased locally from HVP, one of Australia’s largest private timber plantation companies. HVP is dual certified to FSC® and PEFC™. For more information visit www.hvp.com.au

State wood

Australian Paper purchases regrowth wood from VicForests, a state-owned business responsible for the sustainable harvesting, regrowing and commercial sale of timber from public forests. VicForests is PEFC™ certified and is preparing for an evaluation against the FSC® Controlled Wood standard in 2020. For more information visit www.vicforests.com.au

Hardwood sawmill chips

Australian Paper purchases wood chips from a number of Victorian hardwood sawmills processing wood harvested from state forests. These chips are produced as a result of the sawmilling process.

100% Victorian sources

From PEFC™ and/or FSC® certified

forestry operations

Chain of Custody certified to PEFC™

and/or FSC®

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Victorian forest facts

VicForests harvested 3,045 ha of state forest in 2017/18; equivalent to only 0.04% of Victoria’s 7,645,000 ha of native forest. All harvested areas are fully regrown.

VicForests’ operations produce many grades of Victorian hardwood including high value timbers to be processed by local sawmills and lower grade wood ideal for paper manufacturing.

Supplying markets for the full range of products harvested from VicForests’ operations reduces wastage by utilising the whole tree.

In this way VicForests provides a wide range of natural hardwood timbers ideal for housing construction, timber flooring, furniture manufacturing, kitchen bench tops, fencing, logistics pallets and high quality Australian made paper. For more information visit www.vicforests.com.au

Victoria has 8.2 million hectares of forest covering 36% of the state.

Native forest:

7,645,000 ha

Commercial plantation:

415,000 ha

Other forest: 162,000 ha*

Source: Australia’s State of the Forests Report 2018, Table 1.1: Australia’s forest area, by jurisdiction, p.47* Comprising mostly non-commercial plantations,

planted forests of various types, and non-planted forests dominated by trees of introduced species.

Victoria has a high level of biodiversity protection The UN Convention on Biological Diversity has set an international target for at least 17% of forests to be protected for biodiversity.Source: www.cbd.int/sp/targets/rationale/target-11/

85% of Victoria’s native forest is managed for the protection of biodiversity which is well above the international target of 17%.Source: Australia’s State of the Forests Report 2018, Table 1.31: Area of native forest on land managed for protection of biodiversity, by jurisdiction, p.100

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Creating partnerships through recycling

Planet ArkTo help businesses, government departments, schools and households make the switch to Australian recycled paper, we teamed up with Planet Ark in 2013 to form the Make it Australian Recycled campaign. This campaign aims to show the importance of closing the paper recycling loop, increasing the use of locally made recycled paper (50% recycled or more), encouraging office paper recycling and reducing the amount of waste paper going to landfill.

Planet Ark Mindful Paper is 100% recycled, carbon neutral and FSC® certified. It is proudly made by Australian Paper at the Maryvale Mill.

Pinegro We have partnered with Pinegro since 2008 to compost the majority of our wood residue and solid waste from our pulp and papermaking activities. This waste is transformed into valuable agriculture products for composting and soil remediation.

Each year Pinegro manufacture and market over 600,000 m3 of landscape and garden products throughout Australia. Our ongoing partnership with Pinegro ensures we are reducing our landfill footprint and improving waste practices within Australian Paper.

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Beyond compliance Australian Paper is seeking to take a beyond compliance approach to the legal and regulatory requirements which apply to our operations.We continue to work hard to decrease our non-conformance notifications to the EPA and improve our performance.

80

70

60

50

40

30

20

10

0

2013 2014 2015 2016 2017 2018

Non-conformance notifications to EPA: Maryvale Mill

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Compost

Although there was a minor reduction in the amount of organic waste composted in 2018, we are continuing to divert the majority of our organic waste from landfill.

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Com

post

(m3)

Land

fill (

m3)

Maryvale landfill Offsite landfill Pinegro composting

Increasing composting

Waste to landfill

Towards zero landfill remains an important objective for Australian Paper Maryvale. Ongoing work for more than a decade has seen a dramatic reduction in the volume of solid waste being sent to landfill. A focus on the measurement of individual waste streams has driven improved waste management practices at the site.

Odour

70

60

50

40

30

20

10

0

2001-2003 2004-2006 2007-2009 2010-2012 2013-2015 2016-2018

No. o

f com

plai

nts r

ecei

ved

Odour complaints/year

Understanding the impact of odour on the community is an important area of focus for the Maryvale Mill. Our odour emissions have been steadily decreasing over the past two decades as a result of increased efficiencies, improved process control and investment in a range of upgraded technologies. Achieving a better understanding of community perceptions around this issue remains an important priority for Australian Paper.

Australian Paper is continuing its efforts to better understand the site odour emissions profile to help identify opportunities to reduce community odour impacts. The work planned includes improved odour sampling and measurement techniques and a review of kraft mill best practice technology to help identify odour abatement opportunities for the Maryvale Mill.

future Our

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Strategic investment Innovation

Globalcompetitiveness

Sustainable �bre supply

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Our mission: sustainable growth for the next generation

Australian Paper’s mission of Sustainable Growth for the Next Generation targets four key strategic focus areas to secure our future success; sustainable fibre supply, strategic investment, global competitiveness and innovation.

Australian Paper processes approximately 1.7 million tonnes of recycled fibre and Victorian wood annually and long term access to sustainable, local wood supplies is foundational to our future.

Due to the impact of recent bushfires, investment in additional plantation resources is key to our ongoing wood supply.

As one of the Latrobe Valley’s largest employers, we welcomed the Victorian Government’s 2017 Budget commitment to invest $110 million in new timber plantations for the Latrobe Valley as

a positive first step towards securing Australian Paper’s future requirements.

We also support VicForests’ commitment to achieving FSC® Controlled Wood certification by 2020. Australian Paper is Chain of Custody certified to both Responsible Wood and FSC® and our preference is for our major wood suppliers to also pursue dual certification, providing further assurance that the wood we use originates from sustainably managed forests.

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The four key elements of our mission

Sustainable fibre supply

Strategic investment plays a key role in our continued operations. As part of our $200 million five year reinvestment strategy we are reinvigorating our infrastructure base to meet future market needs and challenges.

This ongoing investment ensures we will continue to thrive and support our local community.

Strategic investment

Strategic investment Innovation

Globalcompetitiveness

Sustainable �bre supply

BioPathways Partnership

Funded under the State Government Workforce Training Innovation Fund, BioPathways is a strategic partnership between Australian Paper, Federation Training and Federation University to support Gippsland’s future biomanufacturing training needs.

The project aims to develop accredited biomanufacturing training to support a Gippsland bioeconomy and future opportunities for Australian Paper.

Australian Paper’s Maryvale site produces more than 600,000 tonnes of lignin-based biofuel annually and in the future this could be processed into a range of new generation bioproducts such as:

• Substitutes for plastics

• Complex chemicals and biofuels

• Carbon fibre

Aquaculture Partnership

Australian Paper and Mainstream Aquaculture are investigating a potential aquaculture facility in the Latrobe Valley.

The facility would operate separately, leveraging Maryvale’s oxygenation, water heating and water treatment capacity. A feasibility study is expected to be announced in 2019.

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The four key elements of our mission

Innovation

Global competitivenessPursuing energy self-sufficiency

Like many local manufacturers, Australian Paper is facing challenges and we need to stay competitive with global markets.

While Australian Paper is Victoria’s largest generator of baseload renewable energy, we are also the state’s largest industrial user of natural gas and a significant electricity consumer, facing increasing energy prices and supply uncertainty.

We are currently partnering with SUEZ to develop a $600 million Energy from Waste facility for our Maryvale site. The facility would reduce Victoria’s net CO2 emissions by an estimated 543,000 tonnes annually.

This project would support Maryvale’s 850 jobs, create a further 1,046 Victorian jobs each year for the three years of construction and 911 direct and indirect jobs thereafter.

Growth in packaging

Australian Paper Maryvale is a leading manufacturer of packaging grades including bag and sack papers, and kraft liner board for boxes.

Packaging demand is growing and Australian Paper is committed to new product innovation and ongoing investment in our production assets to position ourselves for future market opportunities.

Paper Australia Pty Ltd ABN: 63 061 583 533

Head Office307 Ferntree Gully Road(Private Bag 87)Mt Waverley 3149Victoria AustraliaPh: +61 3 8540 2300Fax: 1300 302 319www.australianpaper.com.au

Printed on PEFC™ certified Grange Offset 120gsm, proudly made at Australian Paper Maryvale.

Our certifications

Maryvale Mill