canopystyle audit report

Organisation Contact

Tangshan Sanyou Xingda Chemical Fibre Co. Ltd.

No 5, Xiwang Rd, Nanbao Development Zone, Tangshang, China

Contact person: Zhou Shengwei, Email: [email protected]

No 5, Xiwang Rd, Nanbao Development Zone,Audit managed by

NEPCon FMBACopenhagen, DenmarkContact person: Gweneth LangdonTel: +1 802 434 3420Email: [email protected]

CanopyStyle Audit Reportfor Tangshan Sanyou Xingda Chemical Fibre Co. Ltd.

Assessment 2019

Evaluation date: 16th August 2019

Report finalization date: 16 September 2020

2 CanopyStyle Audit Report

TABLE of CONTENTS

INTRODUCTION _______________________________________________________ 3

1. GENERAL DESCRIPTION ___________________________________________ 4

2. EVALUATION SCOPE ______________________________________________ 5

3. EVALUATION PROCESS ____________________________________________ 6

4. EVALUATION RESULT _____________________________________________ 8

Appendix A: STANDARD CHECKLIST (CanopyStyle Verification Framework – CorporateSourcing) ___________________________________________________________ 15

Appendix B: STANDARD CHECKLIST (CanopyStyle Verification Framework – Viscose Mill 1Yuanda Checklist) _____________________________________________________ 40

Appendix C: STANDARD CHECKLIST (CanopyStyle Verification Framework – Viscose Mill 2Xingda Checklist) _____________________________________________________ 46

Appendix D: RECOMMENDATIONS FOR IMPROVEMENT ________________________ 52

3 CanopyStyle Audit Report October 2019

INTRODUCTION

NEPCon is an international, non-profit organisation that delivers sustainability services andengages in innovation projects to facilitate the transformation of business practices andconsumer behaviour to promote the responsible use of natural resources. Around 1,300Chain of Custody-certified clients benefit from our over 15 years of experience in providingservices to the forest supply chain sectors – including timber processing and manufacturingcompanies, printing houses, publishers, paper merchants, traders and retailers of all sizes.Through a well-developed network of regional representatives and contractors, NEPConoffers timely and cost-effective certification services around the world.

The purpose of this report is to document performance of Tangshan Sanyou XingdaChemical Fibre Co. Ltd. hereafter referred to as ”Company”, against the requirements ofthe Verification Framework and Guidelines, (February 2019 version 1 ) and guidancedocuments 2 developed by Canopy and approved, supported and requested by theCanopyStyle Fashion and Textile Leaders for Forest Conservation (Leaders Group)3 and theover 200 brands, retailers and designers looking to implement their sourcing policies forman-made cellulosic textiles. The focus of this verification audit is to manage the risk andavoid sourcing from ancient and endangered forests and other controversial sources andimplement other sustainable sourcing measures, across the supply chain from the point ofwood harvesting in forests and/or plantations and through to the brand and retailcustomers. Man-made cellulosic fibre (MMCF) producers, are required to document andprovide evidence towards a set of pre-defined social and environmental criteria and keyprogress indicators as part of the CanopyStyle initiative.

The audit presents the findings of NEPCon auditors who have evaluated company systemsand performance against the applicable standard(s). Section 4 below provides theevaluation conclusions. The auditor reviewed and used Canopy’s map of ancient andendangered forests, which has been overlaid with the sourcing regions and list of suppliersof the company, as well as further guidance document such as a Dissolving Pulp millClassification4, to assess the level of risk.

Dispute resolution: If NEPCon clients encounter organisations or individuals havingconcerns or comments about NEPCon services, these parties are strongly encouraged tocontact the relevant NEPCon regional office or any member of the NEPCon Chain of CustodyProgramme. Formal complaints and concerns should be sent in writing.

1 https://canopyplanet.org/wp-content/uploads/2019/04/CanopyStyle-Audit-Guidelines-and-Framework-2019-version.pdf2 https://canopyplanet.org/resources/canopystyleaudit/canopystyle-audit-guidelines/3Current members of this group are H&M, M&S, Inditex/Zara, EILEEN FISHER, Stella McCartney and Canopy4 https://canopyplanet.org/resources/canopystyleaudit/canopystyle-audit-guidelines/


1. GENERAL DESCRIPTION

1.1 Company overview

Tangshan Sanyou Xingda Chemical Fibre Co. Ltd is one of the worlds’ five largestmanufacturers of man-made cellulosic fibre by production capacity. It is asubsidiary of Tangshan Sanyou Group, which owns 13 subsidiary companies, suchas Alkali Industry, Sanyou Chemical, Sanyou Chlor-alkali, Sanyou Silicon, etc, andits main products are soda ash, viscose staple fibre, and PVCs, etc.The Company owns a sub-company - Tangshan Sanyou Yuanda Chemical Fibre Co.Ltd, two manufacturing mill sites - Xingda mill and Yuanda mill, both located inTangshan. The total annual productivity is 800,000 tons, products include highwhiteness fibre for non-woven, color fibre, modal fibre, fine denier fiber(1.2D*38mm) and bamdal fibre, etc. The Company is FSC CoC certified (SGSHK-COC-330228), also certified against ISO 9001, ISO 14001, OHSAS and OEKO-TEX.The company has been participating in the CanopyStyle Initiative since 2015 andunderwent first audit in December 2016.

Two mills:Xingda MillThere are 1424 employees working in the factory. The facilities are equipped withtotally automated process control systems, and consists of 6 lines with a totalproduction capacity of 180,000 t/a HT fiber and NW fiber. The Company is alsoprocessing anhydrous sodium sulfate which is widely used in the detergent, glass,textile dyeing, and pulp and paper industries in the domestic as well as internationalmarket.Yuanda MillThere are 2996 employees working in the factory. The facilities are equipped withtotally automated process control systems, and consists of 8 lines with a totalproduction capacity of 620,000 t/a HT fiber and NW fiber. The Company is alsoprocessing anhydrous sodium sulfate which is widely used in the detergent, glass,textile dyeing, and pulp and paper industries in the domestic as well as internationalmarket.

1.2 Company scope (sites, locations, etc)

1.3 Company sourcing policy

Name/Description of sites Location

Tangshan Sanyou Xingda Chemical FiberCorporate Office

Tangshan, Hebei province, China

Xingda Mill North of Dongrongda avenue, Chuangye Rd, NanbaoDevelopment Zone, Tangshan, Hebei province

Yuanda Mill No 5, Xiwang Rd, Nanbao Development Zone,Tangshan, Hebei province


The Company published their Fibre Procurement Policy for Protecting Forests,effective 28th July 2015, and committed to

· Conserve Ancient and Endangered Forests and intact forest landscapes.· Recognize, respect and uphold human rights of communities· Develop innovative and alternative fibre programme· Advocate for conservation solutions· Promote forest certification· Transparency, traceability and verification· Reduce greenhouse gap footprint· Prevent pollutions· Enhance communication

The policy is made publicly available on the company’s website: http://www.ts-sanyou.com.cn/syhx/contents/1027/37903.html.

2. EVALUATION SCOPE

Scope Item Check all that apply to the Certificate Scope

Mill type: Single Multi-site

Input Material Source: Listed in Supplier COC form Other suppliers

Majority fiber input: Dissolving pulp

Map of Ancient andEndangered Forests OverlayCompleted:

Yes

Comments:

No

Comments:

Not fully completed because somesuppliers did not provide detailedinformation of origin that allow tooverlay the map of Ancient andEndangered forests.

Mill Capacity: 500,000 ton/year

Primary activity: Viscose production

Outsourcing: FSC-certified Subcontractors Non-certified Subcontractors

Outsourcing of the complete production process

High risk subcontractor site(s) included

No Outsourcing


3. EVALUATION PROCESS

2.1 Audit Team

Workforce: Permanent male: 4034 Permanent female: 1386

Contract male: 0 Contract female: 0

TOTAL: 4420

Name/Description of sites Location

Tangshan Sanyou Xingda Chemical FiberCorporate Office

Tangshan, Hebei province, China

Xingda viscose mill North of Dongrongda avenue, Chuangye Rd, NanbaoDevelopment Zone, Tangshan, Hebei province

Yuanda viscose mill No 5, Xiwang Rd, Nanbao Development Zone,Tangshan, Hebei province


Auditor name(s) Qualifications

Gaojun Zhao Responsible Sourcing Specialist, NEPCon; FSC FM/CoC LeadAuditor and NEPCon LegalSource auditor; Majored in forestrymanagement and has more than 11 years of experience in thefields of Timber Legality Verification, Forest Management andFM/COC certification in China.

2.2 Audit Overview

Note: more details about audit process are provided in a separate audit plan

2.3 Description of Overall Audit ProcessDesktop audit to the Corporate office:

On 21st August, the auditor conducted desktop audit by reviewing the documentedevidences provided by Tangshan Sanyou HQ.

Before evaluation, the company sent the auditor a number of documents several times.The auditor also communicated and confirmed with the company about the validity of somedocuments.

When completing the evaluation, auditor explained the main findings to the Company.

Short notice audit to the viscose mill:

NEPCon announced the short-notice audit on 11th December 2019.

In the afternoon of 12th December, the auditor started the onsite audit with an openingmeeting with the presence of top management and the key staff in all departments. Theobjective and scope of the audit, agenda, conflict of interest (COI) issues, etc wereintroduced by the auditor. Also, the management representative gave a brief introductionof the Company and operation activities it involves.

Following the opening meeting, the auditor interviewed the management team on thepractices and strategic plan on Canopy policy commitment.

After interviews, related documents were reviewed, such as Wood Fibre Sourcing Policyand operational procedures, purchase documents (invoices, packing list, bill of lading etc.),Risk Assessment Reports, Training Plan and records, communication with the suppliers,etc.

Then, the auditor toured the company’s two mills including the production line andwarehouses.

In combination with reviewing documents and visiting the company’s facilities, the auditorinterviewed the staff from various departments: production, warehouse, EHS, R&D, HR,purchase, labor union.

Site(s) Audit type Audit date Total desktopaudit time

(Hours)

Corporate Office Destop audit 21 August 2019 8 hours

Viscose mill 1 (Yuanda) Short-notice audit 12 December 2019 3 hours

Viscose mill 2 (Xinda) Short-notice audit 13 December 2019 5 hours


The closing meeting was held at the office at 11:00am of 13th December 2019 with thepresence of the management. During the meeting the main findings were presented andexplained to the Company.

4. EVALUATION RESULT

4.1 Evaluation Conclusion

Positive findings:

Tanshan Sanyou has developed a sourcing policy in line with CanopyStyle initiative andcommunicated this policy with all suppliers. The standard operational procedure wasdeveloped by the HQ and implemented company wide.

The Company has made significant improvements in their systems to comply with theCanopyStyle audit, particularly in the areas of training, Leadership Group engagement, riskassessment, and commitments to increase the % of FSC certified materials.

In addition to these system improvements, Tangshan Sanyou succeeded in producingviscose staple fiber made from 50% post-consumer recycled cotton textiles. Also, in 2019,the company positively participates in an afforestation program in a desert area in China.

Areas for improvement:

The Company made significant attempts to collect information from their suppliers onforest or plantation of origin, but often received only enough information to locate thedissolving pulp mill location. Therefore, sometimes origin of material is only known at acountry level, creating a broad sourcing area with potential overlap with ancient andendangered forests. More information on forest of origin is needed to understand if thesemills are in fact sourcing from ancient and endangered forests or controversial sources.

Prior to the audit, Canopy shared an advice note (effective 1 June 2019) that introducesa new tool (Dissolving Pulp Mill Classification) to be used in addition to the Forest Mapperwhen conducting risk assessments for sourcing from ancient and endangered forests.The new tool outlines commonly used dissolving pulp mills and a determination of riskconsidering priority ancient and endangered forests. In comparing the company riskassessment with the new Canopy classification tool, there are differing in risk results:

Supplier Company Risk Assessment Canopy Dissolving PulpClassification*

Sodra Morrum Low risk No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.

Sun Paper (ShandongYanzhou mil, ShandongZoucheng mill, Laos mill)

Low risk In a region that containsIFL and wheredeforestation is a threat(Laos). Further sourcinginformation and/or auditingrequired.

Caima Low risk No sourcing issuesidentified based on current


information and/orCanopyStyle audit.

AustroCel Low risk No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.

Sappi (South Africa) Low risk No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.

Domsjo Low risk No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.

Pheonix Unconfirmed In a region that containsIFL and wheredeforestation is a threat.Further sourcinginformation and/or auditingrequired.

Enocell, Stora Enso Low risk In proximity to Ancient andEndangered Forest andIFLs. Based on currentinformation and/or auditfindings.

Juntai Low risk Further sourcinginformation and/or auditingrequired.

Rayonier, Quebec Unconfirmed Located within the BorealForest, and IFLs. Furthersourcing informationand/or auditing required.

AVC Atholville Low risk No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.

AVN Nackawic Unconfirmed No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.

Cosmo Low risk In proximity to coastaltemperate rainforests andIntact Forest Landscapes.Further sourcinginformation and/or auditingrequired.

Lenzing Biocel Low risk No sourcing issuesidentified based on currentinformation and/orCanopyStyle audit.


Huatai Unconfirmed Further sourcinginformation and/or auditingrequired.

Qingshan Low risk Further sourcinginformation and/or auditingrequired.

*Note: In August 2020 Canopy published a revised Dissolving Pulp Classification Tool.

The Company has made great efforts to conduct a risk assessment on sourcing fromancient and endangered sources, but more assessment is needed for controversialsources. The Company sources from many forest management units that are plantations,and information has been requested on the establishment date of these plantations, butnot much information has been received.

4.2 Summary of findings

Rating ColorNot Applicable

Commitment Met

Commitment in Progress

Commitment Not Met

Insufficient Information Available

Key Commitment Performance Indicators Rating1. The MMCF producer has publiclycommunicated and is implementingthe Invest Group Sourcing/ForestPolicy

1.1 Senior executive and key managers make apublically available commitment to fullimplementation of the forest sourcing policy **

CommitmentMet

1.2 The MMCF producer has developed standardoperating procedures (SOP) required to implementthe Policy with input from and agreement of civilsociety stakeholders. **

Commitment inProgress

1.3 The MMCF producer has assigned personnel withresponsibility for Policy implementation. **

CommitmentMet

1.4 The MMCF producer has developed capacity andCompanyal structure to implement the Policy.

CommitmentMet

1.5 The MMCF producer has communicated itscommitment to implement its Policy to all itssuppliers. **

CommitmentMet

1.6 The MMCF producer has included requirements toimplement the Policy in agreements/contracts withcurrent and future suppliers. **



1.7 The MMCF producer has developed, and isimplementing a system to monitor supplierconformance with the Policy. **


1.8 The MMCF producer has put in place atransparent/public grievance procedure with the inputand agreement of civil society stakeholders


1.9 The MMCF producer has developed, and isimplementing, an action plan that address anyidentified non-conformance and grievance received.**

Commitment Met

1.10 Key managers at each production site are awareof the Policy and demonstrate a similar commitmentto implement it. **

Commitment Met

1.11 Each production site managers have developedprocedures to implement the Policy, when relevant.**

Commitment Met

2. The MMCF producer only sourcesraw material from suppliers that aretransparent, traceable and are inconformance with the policy

2.1 An assessment of the MMCF producer supplychain has been completed globally and shared withLeaders Group. This assessment will be updatedevery year and shared with the Leaders Group. **


2.2 The assessment identifies all suppliers in the chainthat supply the MMCF mills, beginning at the forest orplantation of origin.


2.3 A risk assessment has been done with theinformation and shared with Leaders Group.


2.4 This supply chain assessment has been presentedto the Leaders Group and stakeholders, allowing forquestions to be answered and information gaps to behighlighted.

Commitment Met

2.5 The MMCF producer publishes its supplierspublicly, or, in the absence of such transparency, isproviding its customers with a robust track and tracesystem that can be used throughout the supply chainup to clothing and textile retailers.


3. No conversion of natural forest toplantations

3.1 The initial date of the plantation development hasbeen documented and sourcing only occurs in areasidentified pre 1994, or post 1994 with a supportingvalid FSC certificate. **

Commitment NotMet

4. Since the signature of the Policy,all sourcing from ancient andendangered forests and othercontroversial sources have beeneliminated

4.1 The MMCF producer has adopted clear definitionsfor the terms included in their Policy, such as “ancient& endangered forests”, “intact forest”, “naturalforest”, “endangered species”, “controversialsources”, “high conservation value”, “high carbonarea”, “peatlands”, etc. that are consistent with thisdocument and the forest sourcing policy template. **

Commitment Met

4.2 All areas meeting the definition of “ancient andendangered forests” have been identified and mappedand suppliers and fibre that have a high risk of beingconsidered controversial sources have been identifiedand shared with Leaders Group. **


4.3 Any raw materials in the MMCF producer’s supplychain originating from ancient and endangeredforests or other controversial sources, and acquiredbefore the Policy was adopted by the company, suchas stocks in log yards, will be documented, identifiedaccordingly and utilised by the mills. **

Not Applicable

4.4 The MMCF producer is aware of all relevant local,national and international laws and there is noevidence of non-compliance, with local, national orinternational laws. **

Commitment Met

4.5 The commitment not to source from ancient andendangered forests and other controversial sources isverified. **



5. If suppliers contravene thesecriteria, the MMCF producer will firstengage them to change practicesand then re-evaluate its relationshipwith them

5.1 All MMCF producers’ suppliers are identified andthe forest of origin is known. **


5.2 The MMCF producer has developed procedures forengaging with suppliers, up to withdrawing frompurchase and other agreements in situations wherenon-conformance is found. **(Note: This means potential legal and contractualissues associated with withdrawal are identified andaddressed.)

Commitment Met

5.3 The MMCF producer has documented withdrawalsfrom supply agreements where non-conformance hasbeen found. **

Commitment Met

6. The MMCF producer welcomesinterested stakeholders and LeadersGroup observers to verify theimplementation.

6.1 Leaders Group and other stakeholder observersare invited to participate freely and to reportobservations during this verification process. **

Commitment Met

6.2 Large scale scientifically based conservationplanning, High Conservation Value assessments,and/or High Carbon Value assessment, identifyingareas for protection, has been completed, based onbest available science, by a credible third party, andmade public. **

Not Applicable

6.3 If sourcing from controversial areas, with recordsof conflict and human rights violation, an assessmentthat includes participatory mapping of lands owned orclaimed by indigenous and local communities,identification of areas for protection, areas for conflictresolution and remedy of past harms that involveaffected parties, their chosen advisors and relevantstakeholders, have been completed by a credible andmutually agreed third party and made public. **

Not Applicable

6.4 The MMCF producer has developed amanagement plan that identifies measures to protectareas identified in large scale scientifically basedconservation planning, HCV and HCS assessmentswith the Free, Prior and Informed Consent ofindigenous and local communities whose land or landclaims are impacted and with input from credibleENGOs. **

Not Applicable

6.5 The MMCF producer has developed andimplemented a time-bound action plan to activelyseek the legal protection of these areas with finalland-use decision-makers in a way that meetsprinciples of Free Prior and Informed Consent. **

Not Applicable

7. The MMCF producer shallrecognize, respect and upholdhuman rights and the rights ofcommunities and workers affectedby the operations of their supplychain and affiliated companies

7.1 The MMCF producer has developed and requiresits suppliers to adopt a similar policy, systems andprocedures to implement Free, Prior and InformedConsent of indigenous people and local communities.**


7.2 Suppliers document how they conform with theMMCF producer’s commitment to recognize andrespect human rights, community rights, First Nationsrights and rights of workers. **


7.3 The MMCF producer and its suppliers showresponsible handling of complaints and resolution ofconflicts in a transparent and accountable mannerthat is mutually agreed by the parties and includesrelevant stakeholders.


7.4 The MMCF producer and its suppliers havedeveloped internal capacity and Companyal structureto recognize and respect the rights of its workers

Commitment Met


7.5 The MMCF producer has developed procedures toensure its Tier one suppliers uphold the InternationalLabour Company (ILO) Declaration on FundamentalPrinciples and Rights at Work and will require theequivalent of their own suppliers.


7.6 Recognition and respect for human rights isdemonstrated. There is no evidence of avoiding orfailing to resolve social conflicts and remedy past orcurrent human rights violations. **

Commitment Met

8. Development of Innovative andAlternative Invest Group

8.1 The MMCF producer has developed andimplemented an internal action plan to collaboratewith innovative companies and suppliers to exploreand encourage the development of new alternativeInvest Group sources that reduce environmental andsocial impacts, such as agricultural residues andrecycled Invest Groups. **

Commitment Met

8.2 The research and development phase for theproduction of pulp and cellulosic Invest Group madefrom alternative Invest Group sources has beensuccessfully completed and the MMCF producer isentering a commercial scale phase.

Commitment Met

9. Voluntary advocacy forconservation solutions

9.1 The MMCF producer has a track record ofparticipating in events that support collaborative andvisionary system solutions that aim protect remainingancient and endangered forests. **


9.2 When prompted, the MMCF producer uses itsbrand influence or purchasing influence to positivelyimpact conservation and development solutions thathave the Free, Prior and Informed Consent of affectedindigenous and local communities. **


9.3 The MMCF producer publicly supports science-based international and national target(s) andprograms for preserving designated protected andconservation areas that have the Free, Prior andInformed Consent of affected indigenous and localcommunities.

Commitment NotMet

9.4 The MMCF producer is developing andimplementing specific programs to increase theendangered species population and the maintenanceof their habitat through time, with governmentand/or ENGO programs. **

Not applicable

10. Responsible forest management 10.1 The MMCF producer has defined criteria forresponsible forest management, gives a preferencefor FSC certification and has developed andimplemented an action plan to increase FSC intake.**


11. Reduction of Greenhouse Gas(GHG) Footprint by recognizing theimportance of forests and peatlandsas carbon storehouses

11.1 The MMCF producer has developed andimplemented procedures to evaluate their suppliers’performance in reducing GHG.


11.2 The MMCF producer can document givingpreference to suppliers that have identified andadopted management measures to protect forestedpeatland at the concession and landscape level (peatdome) and that have identified, withdrawn from andrestored peatlands and their hydrology. **


12. Pollution Prevention 12.1 * This verification process will not address thepulp and viscose manufacturing process which canlead to air and water emissions that impact overallenvironmental quality.

However, it will be noted when MMCF producersinvest in and use the cleanest dissolving pulp andviscose manufacturing technology



(i.e. lyocell process). The indicators will be thenumber of mills using such cleaner processes andthe % of overall volumes produced with suchtechnology. This information will be treated andframed as additional bonus performance by the MMCFproducer.

4.3 Volume Summaries

Reporting period: from 29 December 2017 to 28 December 2018

Category Explanation Volume % OverallFSC Controlled Wood Material received with an FSC Controlled Wood claim

(either from an FM or COC certified company)29,248 tons 4.16%

Controlled material Noncertified material controlled by the company'sFSC Due Diligence System

0 0

FSC Mix Material received with an FSC Mix Credit or FSCMix % claim from an FSC CoC certified company

27,020 tons 3.84%

FSC 100% Material received with an FSC 100% claim from anFSC certified company (FM or COC).

0 0

Non-FSC Material received with no FSC claim. 563,698 tons 80.16%

PEFC Material received with an PEFC claim. Note materialscan be received with both a PEFC and FSC claim (nodouble counting)

83,478 tons 11.84 %

Total 703,444 tons

In the whole year 2019, the company purchased 169,555tons certified pulp accountingfor 24.95% of the pulp used, including 107,955 tons FSC Controlled wood, 10,000 tonsFSC Mix 70% and 51,600 tons PEFC certified pulp.


Appendix A: STANDARD CHECKLIST (CanopyStyleVerification Framework – Corporate Sourcing)

1. Evaluation of Site: Tangshan Sanyou Xingda Chemical Fibre Co.Ltd CorporatesourcingPrimary Responsible Person:(Responsible for control systemat site(s))

Zhou Shengwei, Purchase Manager

Auditor(s): Gaojun Zhao

People Interviewed, Titles: Zhou Shengwei, Purchase manager;

Brief Overview of AuditProcess for this Location:

Desktop audit.

Comments: The company’s material supply department is responsible for development andenforcement of the company sourcing policy and purchasing raw materials for the two mills.

2. Standard Checklist

1. The MMCF producer has publicly communicated and is implementing their FibreSourcing/Forest Policy

Indicators Findings

1.1 Senior executive and key managers make apublicly available commitment to fullimplementation of the forest sourcing policy.**

Conformance with Indicator:

Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The Company made a public commitment topromote sustainable forest management andconserve ancient and endangered forests(effective in 28th July 2015). The policy wasposted on the website http://www.ts-sanyou.com.cn/syhx/contents/1027/37903.html

The records of training on the policy to allrelevant departments were provided.

1.2 The MMCF producer has developedstandard operating procedures (SOP) requiredto implement the Policy with input from andagreement of civil society stakeholders.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:

The Company presented auditors a SOPdeveloped in January, including management


standard of pulp supplier, evaluation standard ofsupplier, forest management standard andcomplaints control procedure.

However, no evidence showed the standardoperating procedures (SOP) was not consultedwith civil society stakeholders.

1.3 The MMCF producer has assigned personnelwith responsibility for Policy implementation.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The appointment letter for implementation ofCanopy requirements are provided, page 8 ofSOP.The material supply department is assigned forthe implementation of the policy, with supportfrom the corporate management department.

1.4 The MMCF producer has developed capacityand Company structure to implement thePolicy.


Not Applicable

Commitment Met


Commitment Not Met



The Company structure for implementation ofpolicy was shared with the auditor, page 8 of SOP.

The material supply department is assigned forthe implementation of the policy, with supportfrom the corporate management department.

The training records for all relevant staff wereprovided.

1.5 The MMCF producer has communicated itscommitment to implement its Policy to all itssuppliers.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:- The company has notified all suppliers its

commitment and pulp sourcing policy viaa notification letter. Most of the suppliersconfirmed the receipt of the notificationletter and will work together with the


Company for the compliance of theircommitment.

1.6 The MMCF producer has includedrequirements to implement the Policy inagreements/contracts with current and futuresuppliers.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The requirement to implement the policy wasincluded in the agreement/contract with theChinese suppliers: Hunan Juntai New MaterialTechnology Co., Ltd, and Shandong Taiyang. Foroverseas suppliers, the Company sources via theSanyou Group’s branch in Hong Kong, a tradingcompany, therefore all purchase contracts forimported pulp were between Tangshan Sanyou(Hong Kong) Trading Co. Ltd and the Company,where the requirement to implement the policywas included.However, the contracts between its own tradingcompany and overseas suppliers are notprovided as well as other three Chinesesuppliers: Chongqing Lee&Man, Sichuan Tianzhu,and Anhui Huatai.13th December 2019 updated:The requirement to implement the Canopysourcing policy was newly added in the contractwith Fujian Qingshan.

The company has not purchased bamboo pulpfrom the bamboo pulp supplier ChongqingLee&Man and Sichuan Tianzhu for several years.

1.7 The MMCF producer has developed, and isimplementing a system to monitor supplierconformance with the Policy.**


Not Applicable

Commitment Met


Commitment Not Met



The company developed SOP which includes theevaluation of supplier evaluation standard.

The Company updated the supplier evaluationprocedure and submitted to auditors for review onSep 5, 2017.

In the procedure, the Company developed a pointtest system awarding suppliers who1) have validFSC certificates, 2) are known forest origin, 3)support the Company’s commitment, 4) advocatethe reducing GHG initiative, and 5) havedeveloped conservation programmes. Thesupplier with the point between 8-10 is


categorized as A class, 6-7 as B class as below 6as C class.

However, the supplier evaluation records werenot provided, at the time of this audit.

13th December 2019 updated:The supplier evaluation for each supplier wasconducted in January 2019 with the recordskept.The supplier evaluation indicators include (pointsystem):

- Commitment to Sanyou’s sourcing policy(2 points);

- Provide the information of timber origin(2 points, bonus 2 points);

- Valid FSC or PEFC certificate (2 points,bonus 1 point);

- Measures to reduce GHG emissions (1point);

- Forest protection activity or program (1point);

Also, the solid evidences of supplier’s forestprotection program were not provided. For someof them, the evidences provided is for supportresponsible/sustainable forest managementcertification, forest regeneration or comply withinternational or local regulations rather thanprotection plan of ancient and endangeredforests.

1.8 The MMCF producer has put in place atransparent/public grievance procedure withthe input and agreement of civil societystakeholders.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:There is a public grievance procedure included inSOP.

However, no evidence showed that the grievanceprocedure has taken the input and agreement ofcivil society stakeholders into account and hasbeen made publicly available.

1.9 The MMCF producer has developed, and isimplementing, an action plan that address anyidentified non-conformance and grievancereceived.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:No complaints have been received, declared bythe company.


1.10 Key managers at each production site areaware of the Policy and demonstrate a similarcommitment to implement it.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:13th December 2019 updated:In 2019, the mill conducted several trainingsessions on the policy and Canopy requirements.Training records were provided for auditor review.Auditor interviewed key managers of the twoviscose mills who are aware of Canopy pulpsourcing policy, definition of ancient andendangered forests and controversial sourcesand related procedures.

1.11 Each production site manager hasdeveloped procedures to implement the Policy,when relevant.**


Not Applicable

Commitment Met


Commitment Not Met



The Company shared the standard operationalprocedure (Pulp sourcing manual) with theviscose mills, which ensures the wood sourcingpolicy is implemented.

Summary: The Company has developed a sustainable fibre sourcing policy with supportingprocedures for implementation. However, these procedures (including grievance procedure)developed have not been consulted with stakeholders

2. The MMCF producer only sources raw material from suppliers that are transparent,traceable and are in conformance with the policy

Indicators Findings

2.1 An assessment of the MMCF producersupply chain has been completed globally andshared with Leaders Group. This assessmentwill be updated every year and shared with theLeaders Group.**


Not Applicable

Commitment Met


Commitment Not Met



The Company has assessed the supply chains tothe sourcing policy and shared with Leaders Groupthis August.


The assessment is updated annually and sharedwith the Leaders Group. See finding 2.3 on thecompleteness of the assessment.

2.2 The assessment identifies all suppliers inthe chain beginning at the forest or plantationof origin, that supply the MMCF mills.


Not Applicable

Commitment Met


Commitment Not Met



The sourcing information form was provided. Thecompany is sourcing from 9 tier one suppliers whosource from a total of 20 dissolving pulp mills.The dissolving pulp mills on the supplier chain areidentified. The country of origin andstate/province in some cases are known.However, the suppliers of the dissolving pulp millsback to the forest or plantation were not alwaysidentified. In most cases, only the country oforigin or state/province is known.

2.3 A risk assessment has been done with theinformation and shared with Leaders Group.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The risk assessment was conducted by thecompanies and shared with Canopy withpermission to share with Leaders Group thisAugust.

However, two suppliers (Sichuan Tianzhu andChongxin Lee & Man) was not assessed and fivesuppliers (Phoenix Khon Kaen Mill, Jesup Mill &Fernandina Mill, AVN Nackawic Mill, AVC AtholvilleMill, Rayonier, Huatai mill) was not assessedcompletely with uncertain risk, due to lack offorest location.

Additionally, the assessment did not fully takecare of the risk of sourcing from controversialsources and only focused on ancient andendangered forests. Controversial sources notassessed are those linked to illegal activity,Violations of the rights of indigenous peoples,local communities and workers, Plantationsestablished after 1994 through the conversion orsimplification of natural forests, the use ofgenetically modified organisms (GMO), etc.

13th December 2019 updated:


The company has stopped purchase from the twobamboo pulp suppliers Tianzhu and ChongqingLee&Man for more than 3 years.

Prior to the audit, Canopy shared an advice note(effective 1 June 2019) that introduces a new tool(Dissolving Pulp Mill Classification) to be used inaddition to the Forest Mapper when conductingrisk assessments for sourcing from ancient andendangered forests. The new tool outlinescommonly used dissolving pulp mills and adetermination of risk considering priority ancientand endangered forests. The results of this riskassessment have been compared to Sanyou’s riskassessment in the evaluation result section of thisreport.

2.4 This supply chain assessment has beenpresented to the Leaders Group andstakeholders, allowing for questions to beanswered and information gaps to behighlighted.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The supply chain assessment has been presentedto Canopy with permission to share with theLeaders group for comments this August andcompany had a conference call with Canopy todiscuss some issues.

2.5 The MMCF producer publishes its supplierspublicly, or, in the absence of suchtransparency, is providing its customers with arobust track and trace system that can be usedthroughout the supply chain up to clothing andtextiles retailers.


Not Applicable

Commitment Met


Commitment Not Met



The Company didn’t publish its suppliers at thetime of the audit but will do so by posting supplierinformation with the public version of this report.The Company also confirmed there are able totrace their viscose throughout the supply chain toclothing and textiles retailers via the QR approach,which was tested for customers’ requests, but notimplemented for all supply.

The Company is FSC certified and all suppliers arewith FSC/PEFC certification, however these chainof custody systems are not being used to makeclaims to all customers.

Summary: The risk assessment was conducted by the companies and shared with Leaders Groupthis August. However, some suppliers have not been assessed completely, due to lack of forestorigin location and some risk conclusions do not align with Canopy’s risk assessment of commonlyused dissolving pulp manufacturers (see evaluation result section of this report).


3. No conversion of natural forest to plantations

Indicators Findings

3.1 The initial date of the plantationdevelopment has been documented andsourcing only occurs in areas identified pre1994, or post 1994 with a supporting FSCcertificate.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:Based on the sourcing information form, twosuppliers (Enocell and Cosmo specialty mill)declared the material was sourced from naturalforest. There are no supporting documentsprovided to confirm the forest type is naturalforest. For all other suppliers, the forest type andthe establishment date of plantations areunknown.

19.84% purchased pulp in 2018 is FSC Mix, FSCcontrolled wood or PEFC certified.

Note: Some suppliers have been assessed for thisindicator in Canopy’s Dissolving Pulp Classificationtool, and confirmed low risk, but not all.

Summary: For most of suppliers, the forest type and the establishment date of plantations areunknown.

4. Since the signature of the Policy, all sourcing from ancient and endangered forests andother controversial sources have been eliminated

Indicators Findings

4.1 The MMCF producer has adopted cleardefinitions for the terms included in their Policy,such as “ancient & endangered forests,” “intactforest,” “natural forest,” “endangered species,”“controversial sources,” “high conservationvalue,” “high carbon area,” “peatlands,” etc.that are consistent with this document and theforest sourcing policy template.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The Company is using the definitions of ancient &endangered forests, intact forests, andcontroversial sources same as the CanopyStyleframework.A document of definition was provided.

4.2 All areas meeting the definition of “ancientand endangered forests” have been identifiedand mapped and suppliers and fibre that havea high risk of being considered controversialsources have been identified and shared withLeaders Group.**


Not Applicable

Commitment Met


Commitment Not Met



Description of the finding:The company collected forest origin map fromsome suppliers and shared with Leaders Group.

However, two suppliers (Sichuan Tianzhu andChongxin Lee&Man) were not assessed at all andfive suppliers (Phoenix Khon Kaen Mill, RayonierJesup Mill & Fernandina Mill, AVN Nackawic Mill,AVC Atholville Mill, and Huatai mill) were notassessed completely with uncertain risk.

Also, the risk of pulp from the supplier Sodramorrum is assessed as low. However, onesourcing area is Vologda in Russia that canpotentially overlap with ancient and endangeredforests. This sourcing area has been assessed viaa separate CanopyStyle audit as low and isconfirmed.

The supplier Enocell mill is assessed as low risk.However, one of sources areas is Russia. Noevidence showed the timber is not sourced from“ancient and endangered forests”.

Further, no evidence showed the company hasassessed the risk of sourcing from controversialsources.



After the audit, but prior to the finalization of thisreport, Canopy published an advice note thatreleases an assessment of commonly useddissolving pulp manufacturers. This tool includesall remaining suppliers of Sanyou.

4.3 Any raw materials in the MMCF producer’ssupply chain originating from ancient andendangered forests or other controversialsources, and acquired before the Policy wasadopted by the company, such as stocks in logyards, will be documented, identifiedaccordingly and utilised by the mills.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The Company made the commitment andpublished a sustainable fibre sourcing policyeffective on 28 July 2015.Two suppliers (Sichuan Tianzhu and ChongxinLee&Man) was not assessed and these suppliers(Phoenix Khon Kaen Mill, Jesup Mill & FernandinaMill, AVN Nackawic Mill, AVC Atholville Mill,Rayonier, Huatai mill) were not assessed


completely with uncertain risk (Other supplierswere assessed as low risk of material from A&Eforests).In addition, the risk of material from controversialsources are not assessed.Onsite audit to the mills will need to verify if thestocks are documented.


No material on site visits have been identifiedoriginating from ancient and endangered forestsor other controversial sources.

4.4 The MMCF producer is aware of all relevantlocal, national and international laws and thereis no evidence of non-compliance, with local,national or international laws. **


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The company is FSC CoC certified. All applicablenational, provincial international laws andregulations have been collected.No public source shows the company has non-compliance.This indicator will also be evaluated duringimpending on-site audit to the mills.

4.5 The commitment not to source from ancientand endangered forests and other controversialsources is verified.**


Not Applicable

Commitment Met


Commitment Not Met



The commitment letter of not sourcing fromancient and endangered forests and othercontroversial sources was signed by thesuppliers.The risk assessment of sourcing from ancientand endangered forests is based on theinformation collected from the suppliers.The company collected some evidences fromthe pulp mill, such as operation map,sustainability report, FSC report, self-declaration, etc.

However, there is no sufficient evidencesshowing the information and self-declarationprovided by the suppliers has been verified bythe company and ensure the materialpurchased by these suppliers are not from


ancient and endangered forests and othercontroversial sources.



See finding 4.2 above. Canopy has conducted adissolving pulp classification tool that concludesthat further sourcing information and/or auditingis required for some suppliers (reference theevaluation result section of this report).

Summary: The MMCF producer has adopted clear definitions for the terms included in their Policy.However, risk assessments to date by the company and Canopy identify potential risks for somesuppliers.

5. If suppliers contravene these criteria, the MMCF producer will first engage them tochange practices and then re-evaluate its relationship with them

Indicators Findings

5.1 All MMCF producers’ suppliers are identifiedand the forest of origin is known.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:All suppliers up to dissolving pulp mills areidentified and the origin is known at county orstate/province level.However, the forest management units are notalways known.

5.2 The MMCF producer has developedprocedure for engaging with suppliers, up towithdrawing from purchase and otheragreements in situations where non-conformance is found.**

(Note: This means potential legal andcontractual issues associated with withdrawalare identified and addressed.)


Not Applicable

Commitment Met


Commitment Not Met



The Company included the policy andCanopyStyle requirement in supplier controlprocedure.The requirement to implement the policy wasincluded in the agreement/contract with thesuppliers.The supply agreement defined the situation wherethe purchase will be stopped. If the non-conformance can not be addressed within 6-12


months, the company will suspend or decreasethe purchase.In December 2017, the company decided to stoppurchasing from one supplier mill in Brazil whenit’s known that this mill was involving in illegallogging in Brazil.

5.3 The MMCF producer has documentedwithdrawals from supply agreements wherenon-conformance has been found.**


Not Applicable

Commitment Met


Commitment Not Met



After learning of risks related to controversialfibre, the Company stopped sourcing from theirsupplier in Brazil in Sep.2016.

Summary:All suppliers up to dissolving pulp mills are identified and the origin is known at county orstate/province level.The Company included the policy and CanopyStyle requirement in supplier control procedure.The supply agreement defined the situation where the purchase will be decreased and stopped.The company has documented withdrawals from supply agreements where non-conformance hasbeen found.However, the forest management units are unknown. For five suppliers, the origin information doesnot achieve a level of details that allow full risk assessment and determine the risk level.

6. The MMCF producer welcomes interested stakeholders and Leaders Group observers toverify the implementation.

Indicators Findings

6.1 Leaders Group and other stakeholderobservers are invited to participate freely andto report observations during this verificationprocess.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:As the declaration, the company welcomesleader group and other stakeholders toparticipate freely and to report observationsduring this verification process.Sometimes, the company held conference callswith Canopy.

6.2 Large scale scientifically based conservationplanning, High Conservation Valueassessments, and/or High Carbon Valueassessment, identifying areas for protectionhas been completed, based on best availablescience, by a credible third party, and madepublic.**


Not Applicable

Commitment Met


Commitment Not Met




6.3 If sourcing from controversial areas withrecords of conflict and human rights violation,an assessment that includes participatorymapping of lands owned or claimed byindigenous and local communities,identification of areas for protection, areas forconflict resolution and remedy of past harmsthat involve affected parties, their chosenadvisors and relevant stakeholders, have beencompleted by a credible and mutually agreedthird party and made public.**


Not Applicable

Commitment Met


Commitment Not Met



6.4 The MMCF producer has developed amanagement plan that identifies and measuresto protect areas identified in large scalescientifically based conservation planning, HCVand HCS assessments with the Free, Prior andInformed Consent of indigenous and localcommunities whose land or land claims areimpacted and with input from credibleENGOs.**


Not Applicable

Commitment Met


Commitment Not Met



6.5 The MMCF producer has developed andimplemented a time-bound action plan toactively seek the legal protection of these areaswith final land-use decision-makers in a waythat meets principles of Free, Prior andInformed Consent.**


Not Applicable

Commitment Met


Commitment Not Met



Summary: The company welcomes Leaders group and other stakeholders to participate freelyand to report observations during this verification process. Sometimes, the company heldconference calls with Canopy as needed.

7. The MMCF producer shall recognize, respect and uphold human rights and the rights ofcommunities and workers affected by the operations of their supply chain and affiliatedcompanies.

Indicators Findings

7.1 The MMCF producer has developed andrequires its suppliers to adopt a similar policy,systems and procedures to implement Free,Prior and Informed Consent of indigenouspeople and local communities.**


Not Applicable

Commitment Met


Commitment Not Met




The company has certified by FSC and OEKO-Step. It also requires its suppliers to adopt asimilar policy, systems and procedures toimplement Free, Prior and Informed Consent ofindigenous people and local communities.Most of suppliers signed a commitment letterthat includes a commitment to implement FPICof indigenous people and local communities.However, the commitment letters from thesesuppliers (Caima, Domsjo, AVC, Rayonier,Cosmo, Lenzing, Qingshan, Sichuan Tianzhu,Chongqing Lee&Man) were not provided, at thetime of this audit.All suppliers are FSC or PEFC certified. Both FSCand PEFC have some elements of FPIC withintheir standards, but not all. For example, FPICwould not be a required action within non-certified materials used to make a mixedproduct (namely “controlled wood”). Twosuppliers are supply FSC controlled wood andFSC Mix pulp.Therefore, FSC or PEFC certification alonewould not demonstrate full conformance.

13th December 2019 updated:The requirement to implement the Canopysourcing policy was newly added in the contractwith Fujian Qingshan on 2nd October 2019.The Commitment letter from Rayonier,AustroCel，Phoenix, Sappi, Sodra, Stora Enso,Juntai, Sun paper, Huatai, were provided.International Paper (brand: Port Wentworth)provided responsible sourcing policy.Caima provide a statement regarding FSCcertification including species and origin.Domsjo supplies only FSC Controlled wood pulp.The two bamboo pulp suppliers SichuanTianzhu & Chongqing Lee&Man was stopped thepurchase.

7.2 Suppliers document how they conform withthe MMCF producer’s commitment to recognizeand respect human rights, community rights,First Nations rights and rights of workers.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:This requirement is included in the contractswith suppliers.

All suppliers are FSC & PEFC certified. Thecertificate code or FSC reports (in some cases)were collected. Some suppliers provided theSustainability reports. The material with FSC &PEFC claim can be considered being in compliancewith the company’s commitment. But a majorityof pulp is not certified.


However, for non-certified material, noevidences showed how the suppliers confirmwith the MMCF’s commitment to recognize andrespect human rights, community rights, FirstNations rights and rights of workers.

13th December 2019 updated:All direct suppliers (including traders) signedthe social accountability commitment letter torespect human rights, including Shandong Sunpaper, Hunan Juntai, Sanyou HK, Anhui Huatai.However, the evidence from oversea pulp millsare not provided.

7.3 The MMCF producer and its suppliers showresponsible handling of complaints andresolution of conflicts in a transparent andaccountable manner that is mutually agreed bythe parties and includes relevant stakeholders.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The company has a grievance mechanism toaccept and handle complaints.All suppliers are FSC or PEFC certifiedcompanies which could guarantee theconformance to this indicator, as certifiedcompanies are required to have such amechanism for their certified scope.

However, these requirements are for their FSCcertified scope and products only. The Companyis sourcing 19.84% of materials with certifiedclaims.

7.4 The MMCF producer and its suppliers havedeveloped internal capacity and Companystructure to recognize and respect the rights ofits workers


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:This company has developed internal capacityand Company structure to recognize andrespect the rights of its workers, such as laborunion and OH&S team.All suppliers are FSC or PEFC certifiedcompanies, which could provide a high level ofconfidence that the workers’ rights arerecognized and respected, as certifiedCompanies are required to do this.

7.5 The MMCF producer has developedprocedures to ensure its Tier one suppliersuphold the International Labour Company (ILO)Declaration on Fundamental Principles and


Not Applicable

Commitment Met


Rights at Work and will require the equivalentof their own suppliers.


Commitment Not Met


Description of the finding:The company has requested the suppliers tocomply with CanopyStyle frameworkrequirements and included it into contracts withthe suppliers.However, the company has not developedeffective procedure to verify if the suppliers hasdeveloped similar procedure to its ownsuppliers.

7.6 Recognition and respect for human rights isdemonstrated. There is no evidence of avoidingor failing to resolve social conflicts and remedypast or current human rights violations.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:Recognition and respect for human right isincluded in the Company’s policy.

Also, the company is FSC and OEKO-Stepcertified, which could provide a level ofconfidence that the human rights violations areavoided.

There is no evidence of avoiding or failing toresolve social conflicts and remedy past orcurrent human rights violations, confirmed byconsulting public sources and workers.13th December 2019 updated:The company has been certified againstOHSAS18001:2007, certificate number:15812S7059R3L.

Summary: Recognise, respect and uphold human rights and the rights of communities andworkers was included in the Company’s policy. All suppliers are FSC & PEFC certified which candemonstrate responsible handling of complaints and resolution of conflicts in a transparent andaccountable manner that is mutually agreed by the parties and includes relevant stakeholders.Most of suppliers signed a commitment letter that includes a commitment to implement FPIC ofindigenous people and local communities. There is no evidence of avoiding or failing to resolvesocial conflicts and remedy past or current human rights violations, confirmed by consulting publicsources and workers.The company has requested the suppliers to comply with CanopyStyle framework requirementsand included it into contracts with the suppliers. However, the company has not developedeffective procedure to verify if the suppliers has developed similar procedure to its own suppliers.

8. Development of Innovative and Alternative Fibre

Indicators Findings

8.1 The MMCF producer has developed andimplemented an internal action plan tocollaborate with innovative companies andsuppliers to explore and encourage the


Not Applicable

Commitment Met


development of new alternative fibre sourcesthat reduce environmental and social impacts,such as agricultural residues and recycledfibres.**


Commitment Not Met



June 27th 2019, Tangshan Sanyou succeededin producing viscose staple fiber made from50% post-consumer recycled cotton textiles,supplied by Swedish company Re:newcell. Theremaining 50% is made of FSC COC (ForestStewardship Council chain of custody) woodpulp and audited by CanopyStyle.https://canopyplanet.org/breakthrough-of-unprecedented-innovation-in-the-viscose-sector/13th December 2019 updated:Staff interviewed: Mr. Liu Hui, Researchdepartment. Mr. Li Baikuan, purchase staff.The company provided the report of pilotproduction with input of 50% recycled cottontextile and 50% dissolving pulp, date: 10th June2019. In 2019, a total of 47.47 tons wasproduced.

In 2019, the company purchased 44tons pulpmade of 100% recycled cotton textile and 150tons pulp with 3% recycled cotton textile.

8.2 The research and development phase forthe production of pulp and cellulosic fibre madefrom alternative fibre sources has beensuccessfully completed and the MMCF produceris entering a commercial scale phase.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:Same as above

Summary: In June 2019, Tangshan Sanyou succeeded in producing viscose staple fiber made from50% post-consumer recycled cotton textiles, supplied by Swedish company Re:newcell.

9. Advocacy for conservation solutions

Indicators Findings

9.1 The MMCF producer has a track record ofparticipating in events and taking actions thatsupport collaborative and visionary system


Not Applicable


solutions that aim to protect remaining ancientand endangered forests.**

Commitment Met


Commitment Not Met


Description of the finding:The Company joined and supported the Canopyinitiative and committed to protect the ancientand endangered forests. The Company hasparticipated the events held by Canopy.In 2019, the company planted 5000 trees indesert in Inner Mongolia in collaboration withan Company One Billion Forest.

However, this is not an act that aims to protectremaining ancient & endangered forests.

9.2 When prompted, the MMCF producer usesits brand influence or purchasing influence topositively impact conservation anddevelopment solutions including Free, Prior andInformed Consent of affected indigenous andlocal communities.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The Company requested all suppliers makecommitments on FPIC of indigenous people andlocal communities.The company held promotion events incollaboration with chemical fibre industryassociations to promote the greening of desertand FSC purchase practice.

9.3 The MMCF producer publicly supports largescale scientifically based conservationsolutions, international and national target(s)and programs for preserving designatedprotected and conservation areas including theFree, Prior and Informed Consent of affectedindigenous and local communities.


Not Applicable

Commitment Met


Commitment Not Met



Description of the finding:In 2019, the company planted 5000 trees indesert in Inner Mongolia in collaboration with aCompany One Billion Forest.However, the Company has not providedsupport for conservation solutions orprogramme for preserving designatedprotected and conservation areas

9.4 The MMCF producer is developing andimplementing specific programs to increase theendangered species population and themaintenance of their habitat through time, withgovernment and/or ENGO programs.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The Company has not developed orimplemented a programme on habitat andendangered species protection.

Summary: The Company joined and supported the Canopy initiative and committed to protectthe ancient and endangered forests. The Company has participated the events held by Canopy.In 2019, the company positively participates in forestation in desert. However, the Companydidn’t join or initiate any conservation programmes of Ancient and endangered forests, designatedprotected and conservation areas, increasing the endangered species population and themaintenance of their habitat.

10. Responsible forest management

Indicators Findings

10.1 The MMCF producer has defined criteria forresponsible forest management, gives apreference for FSC certification and hasdeveloped and an action plan to increase FSCintake.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:In the FSC certified pulp purchase plan, it isstated the Company source fibre with thepreference for FSC and PEFC certification.Whether the FSC pulp purchase is increasing ornot needs further evaluation during onsiteaudits.

In 2018, 19.84% purchased pulp is FSC Mix,FSC Controlled Wood or PEFC certified.13th December 2019 updated:In 2018, 19.84% pulp purchased was FSC Mix,FSC Controlled Wood or PEFC certified.In 2019, 24.95% pulp purchased was FSC Mix,FSC Controlled Wood or PEFC certified. Thecompany purchased 169,555tons certified pulp,including 107,955 tons FSC Controlled wood,


10,000 tons FSC Mix 70% and 51,600 tonsPEFC certified pulp.

Summary: In the FSC certified pulp purchase plan, it is stated the Company source fibre withthe preference for FSC and PEFC certification.

11. Reduction of Greenhouse Gas (GHG) Footprint by Recognizing the importance offorests and peatlands as carbon storehouses

Indicators Findings

11.1 The MMCF producer has developed andimplemented procedures to evaluate theirsuppliers’ performance in reducing GHG.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The Company’s supplier evaluation procedureincludes the indicator to evaluate supplier’sperformance in reducing GHG.However, no supporting evidence was providedfor the implementation of the procedure. Itneeds further verification during onsite visits.

13th December 2019 updated:The performance of the pulp mill was evaluatedannually, including the GHG emission.The supporting evidences from each pulp millwere provided.The following are some examples of evidenceprovided by the supplier:Evidence from AustroCel:

Evidence from AV Group


Evidence from Lenzing:

Evidence from Sustainability report of Caima:

11.2 The MMCF producer can document givingpreference to suppliers that have identified andadopted management measures to protectforests, forested peatland at the concession andlandscape level (peat dome) and identify,


Not Applicable

Commitment Met



withdraw from and restore peatlands and theirhydrology.**

Commitment Not Met


Description of the finding:Manager interviews and supplier controlprocedure confirmed the Company will givepreference for FSC certified suppliers, andsuppliers that have management measures toprotect forest and peatlands.

In section 6.6 of supplier evaluation procedure,it’s defined that the company will purchasematerial from suppliers involving in forestprotection program, but the implementation ofthe procedure needs supporting evidences andfurther verification.

13th December 2019 updated:The supplier evaluation has taken intoconsideration the availability of the forestprotection program implemented by thesuppliers. However, the solid evidences ofAncient and endangered forest protectionprogram were not provided by the suppliers.For some of them, the evidences provided is forsupport repsonsible/sustainabe forestmanagement certification, forest regeneration orcomply with international or local regulationsrather than protection plan of antient andendangered forests.For example, Enrocell provided the 2018 anualSutainability report mentionning forestcertification coverage for owned and managedlands was 96% and the forests and plantationswhere harvested are duly regenerated.


International paper provided sustainable forestpolicy as follows:


Caima provided the evidence as follows:

The supplier Hunan Juntai provided anintroduction of forest management involving53,300ha plantations in Hunan province ofChina.

Summary: The Company’s supplier evaluation procedure includes the indicator to evaluatesupplier’s performance in reducing GHG and forest protection program.

12. Pollution Prevention

Indicators Findings

12.1 This verification process will not addressthe pulp and viscose manufacturing processwhich can lead to air and water emissions thatimpact overall environmental quality. However,it will be noted when MMCF producers invest inand use the cleanest dissolving pulp andviscose manufacturing technology (i.e. lyocellprocess). The indicators will be the number ofmills using such cleaner processes and the % ofoverall volumes produced with suchtechnology. This information will be treated andframed as additional bonus performance by theMMCF producer.


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:No evidences provided. The company said itcould be evaluated during onsite visits.

13th December 2019 updated:Staff interviewed: Liu Hui, Researchdepartment.Since 2014, the company has been usingLyocell technology. More than 90% of solvent isrecycled and without air emission and solidwaste.The annual production volume of Lyocellviscose is 5000 tons.Ms. Yang Yufang, Environment protectiondepartment.


Staff interviewed: Ms. Yang Yufang,Environment protection department.

The company has invested 800 million CNY in

emission treatment including waste gas, wastewater and solid waste.Since 2007, the company invested 300 millionto recycle NaHS and CS2.According the energy audit report 2017 forXingda mill, the energy consumption is lower11.12 kgce/t than 2016 and the waterconsumption lower 2.2% than 2016.For Yuanda mill, the energy consumption islower 27.9 kgce/t than 2016 and the waterconsumption lower 6.12% than 2016.

Summary: The company has been using Lyocell technology. In addition, the company has investedsubstantially in emission treatment.


Appendix B: STANDARD CHECKLIST (CanopyStyleVerification Framework – Viscose Mill 1 YuandaChecklist)1. Evaluation of Participating site: Yuanda

Primary Responsible Person:(Responsible for control systemat site(s))

Mr. Zhang DongBin


People Interviewed, Titles: - Mr. Dong Zhanshuang, production manager- Wang Chong, Production system control- Cao Jian’ai, Warehouse- Wang Xu, Warehouse- Li Baikuan, purchase- Zhou Shengwei, Purchase- Yan Jianhua, technology- Liu Hui, Research & design- Yang Yufang, EHS manager- Zhang Jing, HR- Dong Hongshun, Labor union


Please refer to Section 2.3 above for Description of OverallAudit Process.

Comments: This mill is responsible for viscose filament rayonproduction and material and products storage withoutinvolvement in pulp sourcing.

2. Standard Checklist1. The MMCF producer has publicly communicated and is implementing their FibreSourcing/Forest Policy

Indicators Findings

1.10 Key managers at each productionsite/mill are aware of the Policy anddemonstrate a similar commitment toimplement it.**


Not Applicable

Commitment Met


Commitment Not Met



The canopy pulp sourcing policy was developedsince July 2015 and posted on the websitehttp://www.ts-sanyou.com.cn/syhx/contents/1027/37903.html


In 2019, the mill conducted several trainingsessions on the policy and Canopy requirements.Training records were provided for auditor review.

Auditor interviewed key managers of this mill,Dong Zhanshuang, Wang Chong & Cao Jian’an,who are aware of Canopy pulp sourcing policy,definition of ancient and endangered forests andcontroversial sources and related procedures.

1.11 Each production site’s/mill’s managershave developed procedures to implement thePolicy, when relevant.**


Not Applicable

Commitment Met


Commitment Not Met



The Company shared the standard operationalprocedure (Pulp sourcing manual) with theviscose mill that ensures the wood sourcing policyis implemented.

The material from different suppliers can beclearly identified with identification card.

Summary: Wood pulp procedure has been established and public on the website of the Company.Trainings were on related procedures and Wood Sourcing Policy has been held. The managers areaware of the pulp sourcing policy and procedures.

2. Sourcing from transparent supply chains that are in conformance with the policy.

Indicators Findings

2.6 The production site/mill maintains allpurchase and sales, documentation related tothe wood fibre inputs. Such documentationincludes an identification of the forest of origin.


Not Applicable

Commitment Met


Commitment Not Met



This mill has no sourcing activity of wood pulp andtherefore does not maintain purchase and salesdocumentation related to the inputs.

2.7 The mill/production site maintains alldelivery documentation received with the woodfibre inputs. Such documentation includes anidentification of the forest of origin.


Not Applicable

Commitment Met


Commitment Not Met




This mill has no sourcing activity of wood pulp.

The sourcing office maintains the deliverydocuments of wood pulp, including commercialinvoice, packing list, bill of lading, certificate oforigin, etc, according to the sourcing office.

The warehouse maintains the bill of lading foreach batch of delivery.

However, the forest of origin is not identified onthese documentations.

2.8 When sourcing from certified or verifiedland origin, the supplier code and claim for theapplicable third-party verification is included onsales and delivery documentation.


Not Applicable

Commitment Met


Commitment Not Met




The certification code and claim are included onthe commercial invoice and packing list from thepulp mill: Sodra, Sappi, DOMSJO.

Following invoices sampled:

Commercial invoice from Sappi, no.92428570,FSC Mix 70%, SGSCH-COC-003171;

Commercial invoice from Ekman (trader ofDomsjo pulp), no.46140202, FSC ControlledWood, DNV-CW-000499;

Commercial invoice from Ekman (trader of Sodrapulp), no.46132746, FSC Controlled Wood, DNV-CW-000499.

2.9 The production site maintains a summary ofannual purchases and then sales to the MMCFproducer.


Not Applicable

Commitment Met


Commitment Not Met



The mill has no sourcing activity of wood pulp.

The corporate office maintains the records ofannual purchase and sales.

The mill maintains the records of pulp receipt andviscose fiber delivery. The warehouse presented


the daily and monthly summary of the pulp bybrand/pulp mill and product delivery.

2.10 All Suppliers provide outgoingtransportation documents that include theforest/plantation of origin and certificationstatus if relevant


Not Applicable

Commitment Met


Commitment Not Met



The delivery notes from the company showed FSCcertificate code and claim of the viscose fiber,such as VAT invoice (No.01334145) and deliverynote dated on 5th Nov.2019.

However, the delivery note does not include theforest/plantation of origin.

Summary: This viscose mill does not involve in purchasing. The delivery documentations aremaintained. Certificate code and claim are included in the invoice and packing list from suppliers forcertified wood fiber. However, neither the delivery documentation from the suppliers nor that fromthe company doesn’t include the forest of origin.

4. Sourcing from ancient and endangered forests and other controversial sources havebeen eliminated.

Indicators Findings

4.4 The production site/mill is aware of allrelevant local, national and international lawsand there is no evidence of non-compliance,with local, national or international laws.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The interviews to the management confirmedthey were aware all relevant laws andregulations.Auditor reviewed the legally requireddocuments in China, such as business licence,environment impact assessment, fireprevention facility approval, etc.

There is no news and info disclosed that theorganize is non-compliance with national andinternational laws. The Company is certifiedagainst the ISO9001:2000 standard qualitysystem, ISO14001:2004 EnvironmentManagement System and OHSAS18001:2007(number: 15812S7059R3L).

4.5 Production site/mill understands thedefinitions of Ancient and Endangered forestsand controversial sources. They also comply


Not Applicable


with the commitment to not procure woodfrom Ancient and Endangered forests andcontroversial sources.

Commitment Met


Commitment Not Met




By interviews, the management of the mill (DongZhanshuang, Wang Chong & Cao Jian’an)demonstrated their understandings on ancientand endangered forests and controversialsources.

Compliance with the commitment has not yetbeen confirmed.

4.6 Production mills have conductedassessment of presence of ancient andendangered forests and other controversialforests in their wood supply areas.


Not Applicable

Commitment Met


Commitment Not Met



The risk assessment was conducted by sourcingoffice at headquarters.

4.7 The sourcing from regions that containAncient and Endangered forests and othercontroversial sources is verified to low risk bythis CanopyStyle audit.


Not Applicable

Commitment Met


Commitment Not Met



Risk assessment and supplier assessment wereconducted by the group headquarters.

The pulp brand and quantity information used atthe mill is checked the same as that provided indesktop audit and HQ.

Detailed findings please refer to section 2 of thechecklist for Corporate Sourcing (headquarters)

Summary: The interviews with the management links they were aware all relevant laws andregulations. There is no news and info disclosed that the organize is non-compliance with nationaland international laws. Key managers of each position demonstrated awareness of definitions ofAncient and Endanger forests and controversial sources. Supplier risk assessment and materialsourcing risk were evaluated by the sourcing office at headquarters.

5. Actions if suppliers contravene criteria


Indicators Findings

5.4 Production sites/mills have a documentedprogram for monitoring performance ofsuppliers which includes procedures foridentifying non-conformances to theCanopyStyle policy and sanctions to suppliersin such cases where non-conformances areidentified.


Not Applicable

Commitment Met


Commitment Not Met



Supplier performance monitoring program wasconducted by sourcing office at headquarters.

Summary: Supplier performance monitoring program was conducted by the headquarter.


Appendix C: STANDARD CHECKLIST (CanopyStyleVerification Framework – Viscose Mill 2 XingdaChecklist)

1. Evaluation of Participating site: Xingda

Primary Responsible Person:(Responsible for control systemat site(s))

Mr. Zhang DongBin


People Interviewed, Titles: - Mr. Dong Zhanshuang, production manager- Sun Xiping, Production system control- Yi Guobing, Colloid making workshop- Zhang Yingjie, Spinning workshop- Zheng Fengping, Warehouse- Li Sulan, Warehouse- Worker, Gao Chao- Worker, Wang Dongchao- Li Baikuan, purchase- Zhou Shengwei, Purchase- Yan Jianhua, technology- Liu Hui, Research & design- Yang Yufang, EHS manager- Zhang Jing, HR- Dong Hongshun, Labor union


Please refer to Section 2.3 above for Description of OverallAudit Process.

Comments: This mill is responsible for viscose filament rayonproduction and material and products storage withoutinvolvement in pulp sourcing.

2. Standard Checklist1. The MMCF producer has publicly communicated and is implementing their FibreSourcing/Forest Policy

Indicators Findings

1.10 Key managers at each productionsite/mill are aware of the Policy anddemonstrate a similar commitment toimplement it.**


Not Applicable

Commitment Met


Commitment Not Met



The canopy pulp sourcing policy was developedsince July 2015 and posted on the website


http://www.ts-sanyou.com.cn/syhx/contents/1027/37903.html

In 2019, the mill conducted several trainingsessions on the policy and Canopy requirements.Training records were provided for auditor review.

Auditor interviewed key managers of this mill(Dong Zhanshuang, Sun Xiping, Zheng Pingping)who are aware of Canopy pulp sourcing policy,definition of ancient and endangered forests andcontroversial sources and related procedures.

1.11 Each production site’s/mill’s managershave developed procedures to implement thePolicy, when relevant.**


Not Applicable

Commitment Met


Commitment Not Met



The Company shared the standard operationalprocedure (Pulp sourcing manual) with theviscose mill that ensures the wood sourcing policyis implemented.

The material from different suppliers can beclearly identified with identification card.

Summary: Wood pulp procedure has been established and public on the website of the Company.Trainings were on related procedures and Wood Sourcing Policy has been held. The managers areaware of the pulp soucing policy and procedures.

2. Sourcing from transparent supply chains that are in conformance with the policy.

Indicators Findings

2.6 The production site/mill maintains allpurchase and sales, documentation related tothe wood fibre inputs. Such documentationincludes an identification of the forest of origin.


Not Applicable

Commitment Met


Commitment Not Met



This mill has no sourcing activity of wood pulp andtherefore does not maintain purchase and salesdocumentation related to the inputs.

2.7 The mill/production site maintains alldelivery documentation received with the woodfibre inputs. Such documentation includes anidentification of the forest of origin.


Not Applicable

Commitment Met



Commitment Not Met




The sourcing office maintains the deliverydocuments of wood pulp, including commercialinvoice, packing list, bill of lading, certificate oforigin, etc, according to the sourcing office.

The warehouse maintains the bill of lading foreach batch of delivery.

However, the forest of origin is not identified onthese documentations.

2.8 When sourcing from certified or verifiedland origin, the supplier code and claim for theapplicable third-party verification is included onsales and delivery documentation.


Not Applicable

Commitment Met


Commitment Not Met




The certification code and claim are included onthe commercial invoice and packing list from thepulp mill: Sodra, Sappi, DOMSJO.

Following invoices sampled:

Commercial invoice from Sappi, no.92428570,FSC Mix 70%, SGSCH-COC-003171;

Commercial invoice from Ekman (trader ofDomsjo pulp), no.46140202, FSC ControlledWood, DNV-CW-000499;

Commercial invoice from Ekman (trader of Sodrapulp), no.46132746, FSC Controlled Wood, DNV-CW-000499.

2.9 The production site maintains a summary ofannual purchases and then sales to the MMCFproducer.


Not Applicable

Commitment Met


Commitment Not Met





The corporate office maintains the records ofannual purchase and sales.

The mill maintains the records of pulp receipt andviscose fiber delivery. The warehouse presentedthe daily and monthly summary of the pulp bybrand/pulp mill and product delivery.

2.10 All Suppliers provide outgoingtransportation documents that include theforest/plantation of origin and certificationstatus if relevant


Not Applicable

Commitment Met


Commitment Not Met



The delivery notes from the company showed FSCcertificate code and claim of the viscose fiber,such as VAT invoice (No.01334145) and deliverynote dated on 5th Nov.2019.

However, the delivery note does not include theforest/plantation of origin.

Summary: This viscose mill does not involve in purchasing. The delivery documentations aremaintained. Certificate code and claim are included in the invoice and packing list from suppliers forcertified wood fiber. However, neither the delivery documentation from the suppliers nor that fromthe company does not include the forest of origin.

4. Sourcing from ancient and endangered forests and other controversial sources havebeen eliminated.

Indicators Findings

4.4 The production site/mill is aware of allrelevant local, national and international lawsand there is no evidence of non-compliance,with local, national or international laws.**


Not Applicable

Commitment Met


Commitment Not Met


Description of the finding:The interviews to the management confirmedthey were aware all relevant laws andregulations.Auditor reviewed the legally requireddocuments in China, such as business licence,environment impact assessment, fireprevention facility approval, etc.

There is no news and info disclosed that theorganize is non-compliance with national andinternational laws. The Company is certifiedagainst the ISO9001:2000 standard qualitysystem, ISO14001:2004 Environment


Management System and OHSAS18001:2007(number: 15812S7059R3L).

4.5 Production site/mill understands thedefinitions of Ancient and Endangered forestsand controversial sources. They also complywith the commitment to not procure woodfrom Ancient and Endangered forests andcontroversial sources.


Not Applicable

Commitment Met


Commitment Not Met




By interviews, the management of the mill (DongZhanshuang, Wang Chong & Cao Jian’an)demonstrated their understandings on ancientand endangered forests and controversialsources.

Compliance with the commitment has not yetbeen confirmed.

4.6 Production mills have conductedassessment of presence of ancient andendangered forests and other controversialforests in their wood supply areas.


Not Applicable

Commitment Met


Commitment Not Met



The assessment was conducted by sourcing officeat headquarters.

4.7 The sourcing from regions that containAncient and Endangered forests and othercontroversial sources is verified to low risk bythis CanopyStyle audit.


Not Applicable

Commitment Met


Commitment Not Met



Risk assessment and supplier assessment wereconducted by the group headquarter.

The pulp brand and quantity information used atthe mill is checked the same as that provided indesktop audit and HQ.

Detailed findings please refer to section 2 of thechecklist for Corporate Sourcing (headquarters)


Summary: The interviews with the management links they were aware all relevant laws andregulations. There is no news and info disclosed that the organize is non-compliance with nationaland international laws. Key managers of each position demonstrated awareness of definitions ofAncient and Endanger forests and controversial sources. Supplier risk assessment and materialsourcing risk were evaluated by the sourcing office at headquarters.

5. Actions if suppliers contravene criteria

Indicators Findings

5.4 Production sites/mills have a documentedprogram for monitoring performance ofsuppliers which includes procedures foridentifying non-conformances to theCanopyStyle policy and sanctions to suppliersin such cases where non-conformances areidentified.


Not Applicable

Commitment Met


Commitment Not Met



Supplier performance monitoring program wasconducted by sourcing office at headquarters.

Summary: Supplier performance monitoring program was conducted by the headquarter.


Appendix D: RECOMMENDATIONS FOR IMPROVEMENT

To be provided by Canopy…

canopystyle audit report

Documents