TORONTO - Canada's top pulp and paper companies, and the environmental groups that spent years fighting them, have united in an unlikely alliance to stop logging 29 million hectares of threatened northern forests in what has been dubbed "the world's largest conservation agreement."
The Canadian Boreal Forest Agreement, announced Tuesday in Toronto, comes after three years of negotiations and a fierce public relations campaign that criticized Canada's forestry companies for the degradation of the country's so-called boreal forests in British Columbia, Alberta, Manitoba and Ontario.
Environmentalists seated at one end of a table and industry leaders at the other — both on the same side — emphasized the precedent-setting nature of the three-year framework agreement, which calls for world-leading environmental standards, protecting species at risk and action on climate change.
For their part, the nine environmental groups are suspending "do not buy" campaigns.
"Old think was to say it's either the environment or the economy, that kind of distinction just doesn't hold anymore," said Avrim Lazar, president and CEO of the Forest Products Association of Canada.
Lazar said the former foes were able to trust each other after realizing the practicality in compromise: that loggers need trees to make a living, but that endangered woodland caribou need a habitat to live.
"We're all saying both have to happen. Mills have to run, people have to earn a living, and at the same time, we have to have sufficient protection," he added.
The agreement covers 72 million hectares including the 29 million where forestry companies have agreed to immediately stop new logging after pressure from environmental groups on major paper suppliers trickled down the supply chain, and convinced business leaders a green shift would help revitalize business.
The area where logging will be stopped is equivalent to 290,000 square kilometres, approaching half the size of Manitoba.
Environmental groups, including Greenpeace, Canopy and ForestEthics, had previously lobbied paper retailers Staples and Office Depot, publishers such as Random House and Scholastic, and fashion house Victoria's Secret against buying paper from Canadian companies.
Richard Brooks of Greenpeace Canada, spokesman for the environmental groups, said concerns from the public and the marketplace about wilderness conservation were key to arriving at the agreement.
"The forest products association and its 21 member companies are responding to the demand for greener products and that marketplace is going to pay close attention," Brooks added. "And they will reward the companies when things begin to be implemented and the change happens on the ground."
Lazar said the industry, which suffered massive losses as advertising and print media demand stalled during the recent economic downturn, has taken notice that the marketplace is getting "more environmentally progressive."
"In the forest industry, the status quo has not been a lot of fun for us, we've been going through a very difficult time, a lot of jobs have been lost," he said.
"Our future depends upon our capacity to transform, our capacity to create the next generation of Canada's forest industry."
He said that next generation of forestry companies will be more productive, sell more to Asia and integrate biochemicals and bioenergy into operations, as well as meet world-class environmental standards.
"This forms a key element of our going forward economic policy to keep the jobs in Canada."
Don Roberts, vice-chairman of renewable energy and clean technology at CIBC World Markets, said the agreement will distinguish Canadian companies at a time when forestry companies are having difficulty moving products.
"This is a classic example of how a crisis is a terrible thing to waste because there was a crisis and it's forced us to say 'well, now how do we rethink things?' And I think it was a good time for the environmental groups to do this because once markets come back people get distracted and focus on other things," he said.
Roberts added that he considers it unlikely forestry prices will rise as a result of the pact, but that at least loggers will be able to sell their products.
"That's important in a sector where your operating rate means a lot to your unit costs," he said.
He added the implementation shouldn't require much funding because Canadian loggers have already been restructuring to reduce capacity and cut rates, and have also adopted other green practices.
Todd Paglia, executive director of ForestEthics, said environmental groups that have had the power to lobby suppliers to cancel contracts will instead influence big companies like Staples to buy from Canadian suppliers if the agreement stays on track.
"You're not going to have to worry about people coming to your stores and protesting if you buy from these guys because it's going to be world-leading green practices, so that's going to be a huge shift," Paglia said.
Lazar said having nine environmental organizations on board will provide a business edge for signatories including Canfor Corp. (TSX:CFP), AbitibiBowater, Tembec (TSX:TMB), West Fraser (TSX:WFP) and privately owned Kruger.
"When someone comes and tries to bully us, the agreement actually requires that they come and work with us in repelling the attack and we'll be able to say fight me, fight my gang," he said.
John Dunford, manager of forestry and sustainability at Kamloops, B.C.,-based Tolko Industries, said market recognition was key to passing the agreement.
"We think we're going to be the preferred supplier for most major customers around the world with this new agreement," he said.
Roger Barber, general manager of forestry and fibre resources at AbitibiBowater, said criticism from environmental groups has been difficult in a tough economy, adding that he was hopeful the pact would help position Canadian companies as leaders in the emerging green economy.
"We're hoping that this will level the playing field to some degree. If its only about better practices in Canada all the time, with no leverage on the other competitors, then there will be an imbalance...so we're hoping to see others respond to the challenge."
The union representing Canada's forest sector issued a statement Tuesday saying that positive market impacts from the agreement could help struggling Canadian forest companies in global markets.
"This agreement is a light of hope for a battered industry," said Dave Coles, president of the Communications, Energy and Paperworkers Union. "It is time now to make environmental leadership a value-added advantage for Canadian forest products."
Coles called on provincial and federal governments to support the agreement with funding.
"The missing players are the governments who are stewards of this resource and the federal government which has the ability to make value-added and environmental transformations possible for the Canadian forest industry," he said.