January 04, 2005
Latin American Forest Products Company Illustrates Best Practice Sustainability Reporting
by William Baue
Terranova issues its second Global Reporting Initiative-based sustainability report, exhibiting
many exemplary practices such as stakeholder engagement and external verification.
Late last month, forest products company Terranova issued its second
sustainability report based on Global Reporting Initiative (GRI) guidelines. What makes this development
particularly significant is that the company is based in Chile, a country not often associated with
cutting-edge corporate sustainability performance. To put things into perspective, only four
US-based forest and paper products companies--Georgia-Pacific (ticker: GP), International Paper (IP), MeadWestvaco
Weyerhaeuser (WY)--have issued GRI-based
also distinguishes itself on several other counts, including its straightforward presentation
of information and easy readability, its depth of engagement with stakeholders, and its external
"Several positives stand out for me in Terranova's 2002-2003
Sustainability Report as useful models for reporters," said Riva Krut, a vice president at Cameron-Cole, an environmental management
services (EMS) consultancy. Dr. Krut has been tracking sustainability reporting since 1993.
"Their environment footprint chart is a model of how this type of information can be
displayed," Dr. Krut told SocialFunds.com, referring to the concise one-page diagram graphing 2003
environmental performance in both sawmill and forestry operations. "GRI data is offered in an
easy-to-follow format with metrics included in the GRI table." Often, sustainability reports
provide indexes linking sections of the text to GRI indicators, but rarely do they include
corresponding performance metrics in these indexes.
Terranova streamlined its presentation
in response to stakeholder demand.
"Our employees, neighbors, suppliers, and customers
requested that our reports be shorter and written in layman's terms," the report states. "We are
confident that we have complied with their expectations; this confidence is supported by
stakeholders' opinions of this report included at the end of this document."
stakeholder opinions appear throughout the report.
"Terranova's stakeholder engagement
efforts seem conscientious," said Dr. Krut. "They seem to have integrated stakeholder engagement
at a deeper level."
"And of course, as you want to see in this sector, there is a strong
emphasis on the land rights of indigenous communities, and of preserving biodiversity," she added.
The report illustrates the strength of Terranova's engagement on indigenous land rights
issues in the words of stakeholders themselves.
"The most important changes related to
joint collaboration with the Mapuche communities are more evident in Terranova, as the company
encourages dialogue whenever there is a land dispute," states Aucan Huilcaman, president of the
Todas Las Tierras Council in Chile, in the report. "This does not mean that the company gives
"Rather, there is a policy to listen, talk, and understand what each claim
is about," he continues. "Twelve years ago Terranova had a different position, and today the change
is due to the realization that the company cannot ignore the Mapuche communities, as this will
propagate conflict." The report includes a chart of the current status of all land claim dispute
Boldly, Terranova cites not only pats on the back, but also highly critical
statements from stakeholders. For example, the section on clear cutting juxtaposes an opinion from
the Clemson University Forest Resources Department defending the practice with an opinion from
Chilean Forest Defenders criticizing the practice in the particular context of the mountainous
Throughout the text, Terranova lists commitments from its 2001
sustainability report that have been realized, as well as disclosing those that have not and those
that are in process. At the end of the clear cutting section, Terranova states its commitment to
sow "protective strips of other rapidly growing species" to reduce the "visual impact of future
harvesting activities," addressing concerns raised by Clemson but not those raised by Chilean
The structure of the report benefited from interaction with other
outsiders as well, namely its assurance auditor, KPMG.
"The experience of working with external
verification has been particularly interesting in that it has helped us considerably improve our
information and reporting systems," the report states. "It also made us realize that our
environmental and social concerns need better systematization, and has helped us define our aims
and objectives in these areas more accurately."
Terranova instructed KPMG to base its
assurance on AA1000, the foremost standard in sustainability reporting developed in 1999 by AccountAbility, a decision "to be
commended" according to Ms. Krut.
Even KPMG's assurance work took sustainability into
"Terranova's AA1000 assurance providers, KPMG, worked with Future Forests to offset the CO2 emissions associated
with their travel--a carbon-neutral assurance project," said Ms. Krut.