Tolko Industries Ltd. 1998/99 Sustainability Report

SALES AND ADMINISTRATION

Tolko's forest products are shipped to 22 countries world-wide, with sales reaching $693 million. Led by the Company's sales and marketing teams and supported by corporate Business Services, Tolko ensures market access by focusing on the environmental, social and economic values of the Company and its products.

ENVIRONMENTAL
Forest products are, by their very nature, environmentally friendly. They are renewable and recyclable, and their manufacturing processes consume less energy than alternative building products. The carbon from the atmosphere that has been accumulated by trees is locked in for the life of the product.

Many of Tolko's laminated and composite products offer additional environmental benefit. OSB is an engineered product that makes more efficient use of fibre that once held minimal worth. OSB, plywood, veneer and specialty products add value to basic wood use. The strength of Tolko's unbleached specialty Kraft paper provides customers with a solution to reduce packaging.

The way products are bundled is another important environmental consideration. The protective cover used on Tolko's lumber is recyclable, as is the steel strapping used to bind the lifts. Some wood is used for packaging and transportation purposes, and wherever practical, this wood is recycled. Tolko is seeking ways to improve recycling of packaging materials used in shipping its products.

To ensure the greatest possible efficiency in moving its products, Tolko invests time and resources in transportation planning. The Company's Traffic Department works to streamline rail car and truck utilization and coordinate exports, thereby reducing delivery fuel consumption. Tolko has taken initial strides toward an EDI (Electronic Data Interchange) system for invoices, customer confirmations and bills of lading to reduce paper use and improve business processes.

SOCIAL
Tolko's operations are backed by a fully-integrated infrastructure, with teams representing such departments as Human Resources, Information Systems, Traffic, Financial and Business Services and Sales and Marketing. The Company offers decision-making guidance in a regularly updated Policy Manual, and its corporate vision, mission, values and commitment are incorporated in all communications. Ongoing strategic and succession planning at all levels throughout the Company targets the greatest possible continuity and stability of operations.

Tolko provides employees with training and support in a variety of ways, including an Employee and Family Assistance Program (EFAP), recognition and reward programs, training opportunities and social clubs. Communication within the Company is enhanced through Divisional newsletters and corporate publications (the Circular and EcoLogic). Employees provide feedback through biannual opinion surveys and focus groups.

ECONOMIC
Tolko's economic impact is highlighted by its commitment to being "customer oriented and results focused." This commitment is evident in the Company's efforts with respect to employment, customer relations, financial contribution and community support.

In 1998, Tolko reached its third straight year of $100 million growth in revenues, and employees were rewarded with profit-sharing. The Company has invested in a large and diversified sales force, including Mill Sales, Kraft Paper Sales, Brokerage, Panel Sales, Export Sales and TDS (Tolko Distribution Services). This multi-faceted group was complemented by the addition of Tolko US and a sales agency agreement with Tiger International (Japan) in 1998. Tolko works closely with customers to ensure maximum satisfaction, regularly seeking formal input through opinion surveys.

Tolko contributes to community economic development through locally-directed investment, and selection priority is given to local employment and local suppliers.

1998 CORPORATE PAYMENTS TO FEDERAL & PROVINCIAL GOVERNMENTS

Tolko interacts proactively with its communities. For example, the Company is involved with a number of industry associations, and many employees contribute to and participate in public forums. Tolko donates financial and product support to community events, projects and fundraisers, and employees readily volunteer their time.

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