Stora Enso's Bulletin for Stakeholders regarding our operations

S T O R A E N S O ´ S B U L L E T I N F O R S T A K E H O L D E R S
Dear stakeholder,
Stora Enso’s operations in Guangxi, China, have recently evoked stakeholder interest and criticism. On 20
March, Stora Enso announced a decision to build a world-class 1.6 billion consumer board and pulp mill in China.
This investment has provoked discussions concerning the responsibility of Stora Enso’s tree plantation operations
and engagement with the local community in Guangxi. A Finnish documentary film ‘The Red Forest Hotel’ has
contributed to the debate by making several allegations related to the sustainability of Stora Enso’s operations. The
film claims that the local authorities in Guangxi have used violence to force local villagers to give up their lands, and
misled villagers who have signed land contracts. It also claims that eucalyptus trees dry out local springs and rivers,
and deplete the soil. The documentary, which premiered in 2011, was broadcasted again on the Finnish national
television channel YLE on 16 April and on the Swedish television on 20 and 22 May.
Stora Enso has so far leased 90 000 hectares of land in Guangxi in order to supply wood to the board and pulp mill.
These lands amount to just over one percent of the forested area of Guangxi Province. Two-thirds of these leased
lands are owned by the Chinese State. The other third is “social land” – land collectively managed by local
communities, usually villages. China has a long history of land disputes. For this reason, Stora Enso has made
special efforts to ensure the legality and fairness of all land agreements. Back in 2009, Stora Enso found that some of
the 1 633 contracts made for the leasing of social lands were legally unclear, and therefore started a legal contract
screening process aiming to correct or revoke unclear contracts. The correction of these contracts is still ongoing.
Land lease agreements for social lands cannot usually be made directly with the villages, as most of the villages have
already rented out their land. This is why Stora Enso has earlier made such land agreements through intermediaries,
in the shape of local forest entrepreneurs who had already rented land from the villages. This procedure is fairly
common in China, yet it remains problematic, since lands may be sub-leased many times over. This can mean that
there are long chains of intermediaries between Stora Enso and the village that originally rented out the land.
Long-term commitment
Stora Enso has been committed to act with high sustainability standards ever since the company established tree
plantations in China. The Group operates according to one set of rules – our sustainability policies and principles –
everywhere in the world. In Guangxi, Stora Enso has cooperated with the United Nations Development Program
(UNDP) on sustainability issues since 2006. To ensure responsible tree plantation operations, Stora Enso set up a
new sustainability agenda in 2010, covering forest certification, a legal and ethical forest land acquisition system,
continuous local stakeholder dialogue, a conflict resolution system, and a programme of social monitoring run
together with the local university. In connection with the newly announced investment, Stora Enso will also take new
actions related to responsibility, since the company’s impacts locally will be significantly increased.
What we have learned in China is that ensuring the legality of the land lease contracts, following Chinese laws and
regulations, and putting in place high-standard sustainability practices, is not enough. We are making a pioneer
investment in Guangxi, and solving the land lease contract issues must mean going beyond the legislation to ensure
that the way we operate takes into account both the legal and ethical perspective.
We will first make a thorough analysis of our current sustainability agenda, revise it, and seek to incorporate
recommendations from the UNDP into it. Those land agreements that have not yet been corrected will be corrected
as rapidly as possible, at the latest by the time the industrial operation in Guangxi starts.

In cases where disputes prove to be irreconcilable, Stora Enso will forgo the land. Stora Enso has so far refused to
lease about 7 000 hectares of land that did not fulfill the company’s legal and social criteria. Some villagers have been
dissatisfied with this solution, as they have lost potential income.
In the medium term, Stora Enso will start buying out most of the intermediaries in order to shorten the chains of subleases.
This is the only way to ensure clear and fair contracts, transparent pricing, and direct dialogue between the
villages and Stora Enso. The idea of making direct agreements without intermediaries is also the wish of many of the
local villagers who find the current land contracts unfair.
For Stora Enso, engaging with the local communities is not only about fair land agreements and efficient
communications. We are investing in Guangxi for the long term, and will build the project together with the local
communities. This requires constant dialogues with villagers, especially on issues that touch upon their lives Stora
Enso will, for instance, plan new infrastructure such as roads and electricity grids together with villagers, so that they
will also benefit whole communities.
The new investment in Guangxi will also benefit the local community by creating employment opportunities. The
UNDP estimate that the investment will directly or indirectly create as many as 30 000 jobs. The investment will also
transfer valuable knowledge and skills to the area. Stora Enso will speed up such development by creating business
opportunities for local tree farmers. Preparations have already begun on a pilot scheme for out-growers. This will
involve buying some of the fibre for the mill directly from local eucalyptus farmers. This will promote local and regional
economic development in both the short and the long term.
If you have any questions regarding the claims made in the film, or the responsibility of our operations in China, do
not hesitate to contact us.
Yours sincerely,
Terhi Koipijärvi, Head of Global Responsibility, tel. +358 2046 21347
terhi.koipijarvi@storaenso.com