IP SustainabilityReport

2010 Sustainability Report
About this Report

This report covers International Papers sustainability performance for calendaryear 2010 and all data are reported as of December 31, 2010, unless otherwise noted. Additional information on sustainability at International Paper is available online at www.internationalpaper.com. We compiled this report using the Global Reporting Initiative (GRI) G3 Indicator Protocols and self-declare that it meets Level B application requirements under the GRI guidelines when supplemented with additional information and a GRI index that are available via links in the online version of this report. Information on the GRI reporting framework can be found at www. globalreporting.org. We began publicly sharing our sustainability objectives and performance progress nearly two decades ago and continue to do so. To keep our customers, investors, employees and other key stakeholders informed and up to date, we intend to publish our next Sustainability Report in the spring of 2012 and annually thereafter.
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Content Development
In preparing content for this report, International Paper identified relevant topics and GRI indicators using the GRI reporting principles of materiality, stakeholder inclusiveness, sustainability context and completeness. To determine material topics for inclusion, we asked our operations, business functional departments and other stakeholders to identify: main sustainability interests and expectations of our stakeholders, especially those who we expect to review this report: employees, customers, investors, nongovernmental organizations, government officials, suppliers and members of the communities in which we operate; major topics and future challenges for the sector reported by peers and competitors; current and emerging laws, regulations, international agreements and voluntary agreements with strategic significance to our Company and our stakeholders; the Companys sustainability impacts, risks and opportunities; our key organizational values, policies, strategies, operational management systems, goals and targets; core competencies of our Company and how they contribute to sustainable development.
For questions or more information about this report, contact: sustainability@ipaper.com.
International Paper 2010 Sustainability Report

Our vision is to be one of the best and most respected companies in the world. As we continue our efforts to become a stronger, more competitive, more focused company, the key to success will be our unwavering commitment to people, customers and operational excellence. This commitment reaches into every corner of our business and makes International Paper a sustainable company that is well-positioned for the future. To achieve our vision, we have to be the best at what we do. This means attracting and retaining top talent in every area of our business. By nurturing a culture of inclusion where diverse employees have opportunities to learn, grow and work safely, we have made International Paper an employer of choice for entry-level graduates and experienced professionals alike. Todays paper, pulp and packaging customers demand more of their suppliers than high-quality, innovative products. They want a supply chain partner who can help them achieve their sustainability objectives. At International Paper, we drive responsible management through every step in our supply chain to meet our customers expectations and to enhance our own sustainability. Our manufacturing operations require substantial resources wood fiber, water, energy and chemicals. Our goal is to use these resources efficiently and to leave the smallest footprint behind. We use continuous performance improvement to measure our progress. In 2010, we saw improvement in global energy use, greenhouse gas emissions, and sulfur emissions. Being a good neighbor means participating in our communities and lending a helping hand when needed. Throughout 2010, International Paper and our employees contributed time, talents and financial aid more than $10 million to support environmental education and literacy programs, health and human services organizations and disaster relief efforts around the globe. Sustainability is integrated throughout our corporate governance, from the Board of Directors and senior leadership to business leaders and facility managers. It is the result of a culture of integrity, in which ethical conduct and open communication are the norm. Ethics training is routine and required for salaried employees, and all employees have a variety of pathways for reporting ethics violations.
Sustainability at International Paper Page 6
Putting People First Page 8
Responsibility Throughout the Paper and Packaging Life Cycle Page 12
Protecting and Conserving the Environment Page 18
Supporting Our Communities Page 32
Governance and Ethics Page 38
Letter from the Chairman and CEO
Since our last published sustainability report in 2006, the world around us and our Company itself significantly changed. In that five-year span, we took the first steps toward a major transformation plan, repositioning International Paper as a global paper and packaging company while making us stronger and more competitive. We also entered and emerged from the longest, deepest recession in more than seventy years. Throughout these events, our dedication to sustainable practices never wavered. Sustainability has been a part of International Papers practices for more than 110 years. Its a heritage that begins with the wood fiber used during our manufacturing process. In North America, we purchase most of our wood fiber from private landowners who wisely manage their land, and in many cases, pass that land down to the next generation. To ensure responsible forest management, as well as the renewability, transparency and accountability of our resource chain, we partner with independent certification organizations including the North American Sustainable Forestry Initiative, the Programme for the Endorsement of Forest Certification, and the Forest Stewardship Council. In the U.S., our industry plants more trees than it harvests each year planting nearly 1.7 million trees per day. Its a strong example of a shared commitment to responsible forestry. At International Paper, we are well-positioned to bring similar leadership to emerging markets worldwide. In Russia, where sustainable forestry is a growing concept, International Paper is a leading advocate of safe logging and responsibly managed forest leases. As part of a recent venture into India, we plan to participate in a nursery program fostering local growth of Casuarina, Leucaena and Eucalyptus trees. And in Brazil, our harvest of fast growing, renewable hardwood plantations means there is less pressure on native Brazilian forests. At all points on the globe, responsibly managed wood and recovered fibers make up the raw materials used to produce our paper and packaging. As a partner in the Environmental Protection Agencys Climate Leaders initiative, we strive to produce these materials in a minimally invasive way, relying on clean fuels and self-sustained energy.
In our U.S. mill system, nearly 75 percent of generated energy is derived from renewable biomass and biofuels. Over the past decade, we have reduced our non-renewable fuel usage in the U.S. by 38 percent and corresponding greenhouse gas emissions from fossil fuels by 40 percent. Outside of North America, close to 70 percent of our energy needs are generated by renewable sources. Recent investments at our mills in Svetogorsk, Russia, and Kwidzyn, Poland, increased electrical self-sufficiency at each site to 50 percent and nearly 90 percent, respectively. A number of the products we make can be reused and recycled many times over. Each year, International Paper recovers six million tons of fiber about 12 percent of total U.S. fiber collection, making International Paper the fourth largest processor of recovered fiber and the largest consumer of recovered fiber in the U.S. Being good citizens also means protecting employee health. For the 11th year in a row, we improved our safety performance and achieved our lowest-ever global total incident rate (TIR) of 0.83. Since the year 2000, we have improved our TIR by 68 percent. This past year, we introduced the LIFE program LifeChanging Injury and Fatality Elimination as a way to connect with people and eliminate accidents worldwide. Its our commitment to the employees of International Paper and their wellbeing. We are proud to play a sustainability leadership role, and to date, remain pleased with our progress. But our work is not yet done. Leadership and constant improvement go hand-in-hand. In the days ahead, we will find ways to use water and energy more efficiently, further reduce our emissions, and eliminate life-changing injuries and fatalities from our workplace. Each of these goals encompasses a part of our larger value system, and its a value system shared by nearly 60,000 employees in 24 countries worldwide. At International Paper, we stand ready, willing and able to make even greater strides toward a more sustainable world. Sincerely,
John Faraci Chairman and CEO, International Paper
International Paper Company Profile
International Paper is a global leader in the paper and packaging industry. With about 60,000 employees in 24 countries, we manufacture a wide range of coated and uncoated paper, consumer packaging, pulp and industrial packaging products that deliver quality, reliability and innovative business solutions to customers worldwide. In 2010, our total production volume was 17 million metric tons. Through xpedx, our North American distribution business, we also provide a wide variety of print, packaging and facility supplies and equipment to printers, manufacturers, retailers and commercial facilities. International Paper Company is incorporated in New York, with our global headquarters located in Memphis, Tenn. Our stock is traded internationally on the New York Stock Exchange (ticker symbol IP).
Customers
Our major customers include the banking, commercial printing, printing papers, tissues and absorbent products, foodservice, consumer products, protein, industrial chemical, office superstore, book publishing, agriculture, distribution and recycling industry sectors.
Facilities
Over the last decade, International Paper has evolved with acquisitions and divestitures designed to help us improve our financial performance, focus on our core strengths and take advantage of strategic opportunities. International Papers operations include pulp and paper mills and converting and packaging plants in the Americas, Europe, Asia, Russia and North Africa. Our U.S. facilities include 20 pulp, paper and packaging mills, 144 converting and packaging plants, 19 recycling plants and three bag facilities. Outside the United States, our facilities include eight pulp, paper and packaging mills, 67 converting and packaging plants and two recycling plants. We distribute printing, packaging, and facility supplies and equipment through more than 250 locations in the United States, Canada, Mexico and Asia.
Forestlands
International Paper sold most of our previously owned forestland in the United States as part of our five-year transformation plan that was completed in 2010. At year-end we owned or managed approximately 260,000 acres in Brazil and had forest harvesting concessions for more than 860,000 acres of government-owned forestland in Russia.
International Papers Worldwide Presence
Number of offices and facilities (by country) 1-9 10-99 100
Financial Highlights
International Paper remains committed to a balanced use of cash, including incremental debt reduction and returning cash to shareowners. We will pursue only investments that make International Paper a stronger, better company in the years ahead. We are confident this approach, together with our current portfolio of businesses, can generate strong earnings and free cash flow while generating better than cost-of-capital returns over the economic cycle.
Results (in millions, as of and for the year ending December 31, 2010)
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,179 Retained Earnings. . . . . . . . . . . . . . . . . . . . . . $2,416 Industry Segment Operating Profit. . . . . . . . . $1,686 Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . $25,368
In the United States, we will capitalize on our strong position in paper and packaging and focus on generating solid, sustainable free cash flow from those businesses. We are well-positioned to succeed and grow profitably while serving customers in high-demand, low-cost markets including Brazil, China, Eastern Europe and Russia. This balanced global portfolio will pave the way for significant earnings improvement throughout 2011 and beyond.
Sustainability at International Paper
For more than 110 years, International Paper has championed the sustainable management of natural resources. Today, we continue to build on this tradition as we look for new and innovative ways to further improve our environmental footprint, strengthen our strategic partnerships and strike a critical balance among environmental, social and financial performance. Because our products are primarily made with wood fiber, our commitment to environmental excellence naturally begins in the forest. While our global forestland ownership has decreased, our commitment to stewardship has not. Our products, policies and procurement practices continue to help keep the worlds forests healthy and productive. Customer needs for our paper and packaging products drive our demand for wood fiber, most of which we purchase from private landowners. In turn, our commitment to purchase fiber from responsibly managed sources encourages these landowners to plant more trees and continue to manage their lands rather than convert them to nonforest uses such as commercial development. In fact, the U.S. forest products industry plants more trees than it harvests each year about 1.7 million trees per day. When trees are grown in responsibly managed forests, they are a renewable resource. Beyond the forest, our environmental commitment continues through the life of our products. From design and manufacturing to end use, recycling and disposal, we view product sustainability as fundamental to running a successful business.
Key Opportunities
We see a number of potential opportunities to enhance our sustainability performance, including: enhancing our efforts to promote responsible forest management globally; educating our employees, our customers and the general public about the relationship between the demand for paper products and the growth of the forests; using water and energy even more efficiently; finding new ways to help customers meet their sustainability goals; leveraging the inherent sustainability of paper and packaging with innovative product designs; partnering with our stakeholders to advance mutual sustainability objectives; moving closer to our goal of eliminating life-changing injuries and fatalities in our workplaces; and strengthening our participation and support in the communities where we operate.
Stakeholder Engagement
The process used to identify and select the stakeholders with whom we engage is driven by our business needs. Our businesses and facilities engage with individuals and organizations in a variety of ways to better understand and address their expectations and interests. Some ways in which we engage with our most significant stakeholders are described below.
Employees Intranet sites, newsletters, presentations, sustainability champions Customers Sales relationships, regular visits, strategic meetings, customer service surveys, special
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events, internationalpaper.com and websites for Company initiatives Investors Internet site, webcasts and presentations, analyst meetings, press releases, financial reports, interaction with institutional ranking organizations Government officials Legislative advocacy, discussions on trends and positioning, plant tours Local community members Economic and charitable partnerships, plant tours, Community Advisory Councils, internet site, media, participation in community organizations Nongovernmental organizations Internet site, meetings between NGOs and business leaders, corporate communications Suppliers Meetings between suppliers and our procurement team, supplier surveys
International Paper Industry Organization Memberships and Participation

American Forest and Paper Association American Industrial Hygiene Association American Society of Safety Engineers Brazilian Pulp and Paper Association (Bracelpa)
Brazilian Pulp and Paper Technical Association (ABTCP) Council of Industrial Boiler Owners
Confederation of European Fine Paper Industries
Corporate Eco Forum
Fiber Box Association
Forest Stewardship Council
Industrial Energy Consumers of America
Mercer-ORC Worldwide International Emissions Trading Association (Occupational Health and Safety and Occupational Health Forums) National Council for Air and Stream Improvement Russian Association Pulp and Paper Safety Association of Pulp and Paper Organizations & Enterprises (Bumprom) World Environment Center National Association of Environmental Managers
National Association of Manufacturers
Sustainable Forestry Initiative
TAPPI (worldwide pulp and paper association)
Putting People First
International Papers employees are the foundation of our sustainability. They make our products, support our customers, manage our day-to-day environmental performance and make our communities better places to work and live. To help us attract and retain the best of the best, we promote a diverse work environment where our employees can learn, grow and, most importantly, work safely. Approximately 61 percent of our employees, excluding joint ventures some 36,120 are located in the United States. Of these U.S. employees, approximately 23,460 are hourly and about 12,660 are salaried; about 13,920 are represented by labor unions. Outside the United States, approximately 15,350 employees are hourly and 7,790 are salaried.
Health and Safety

International Papers comprehensive health and safety program is designed to effectively manage health and safety hazards and drive continuous performance improvement. Led by our employees, our safety initiatives focus on identifying hazards, promoting awareness and defining expectations that help us eliminate unsafe conditions and behaviors. Our approach to safety includes six key elements.
Leadership. Senior management is an active and visible driver of our safety programs, with frequent
management communications and support of high profile safety initiatives, such as the Life-changing Injury and Fatality Elimination (LIFE) initiative (see page 9). This safety commitment is shared by leaders at all levels of the organization and by our employees who are actively engaged in improving our safety performance. Corporate Standards. We are establishing a series of standards that define expectations for managing common health and safety hazards across the Company. Focus areas include moving equipment, ergonomics, dock safety, hearing conservation, zero energy states and lockout/tag-out procedures, among many others. Training and Awareness. We implement a range of training and awareness activities to ensure employees have the knowledge and skills necessary to manage safety hazards consistent with corporate standards and to nurture and enhance our safety culture. For example, in 2010 we conducted 10 internal EHS University sessions for paper mill managers, mill environment, health and safety (EHS) managers and converting plant EHS professionals. Content included a wide range of topics, from EHS leadership, employee engagement and EHS management tools to current and emerging regulations, compliance guidelines and incident investigation. Risk Elimination Process. We use hazard risk assessments and auditing tools to identify and eliminate potential unsafe conditions. This approach helps to ensure the health and safety of our employees
by encouraging them to observe specific work activities or areas of our facilities and to identify and address potential safety concerns. Metrics, Goal-setting and Accountability. Guided by our vision of an accident-free workplace, we drive continuous safety performance improvement by setting specific annual safety goals for each of our locations and businesses. Success in achieving these targets is formally considered in performance evaluations. Safety incident reporting is a formal process consistently implemented on a global basis. Data are reported to and reviewed by corporate management and are incorporated in the goal-setting process. Annual Plans. Targeted annual plans are developed for each business to address priority improvement opportunities based on a holistic review of safety incident trends.
LIFE Preventing the Most Serious Injuries and Fatalities

While we are proud of our paper and packaging industry-leading TIR, safety at International Paper is not about numbers. It is about the health and wellbeing of our employees and making sure they return home safe and healthy every day. In October 2010, Chairman John Faraci launched the Life-changing Injury and Fatality Elimination (LIFE) initiative during his quarterly broadcast to employees. The program is helping us sharpen our focus on the types of injuries that can potentially end lives or forever change them. The goal of LIFE is for International Paper to eliminate fatalities and life-changing injuries. The program emphasizes five categories of LIFE injuries: equipment safeguarding/zero energy state, motorized equipment incidents, falls, exposure to harmful substances or environments, and driver safety. LIFE initiative components include information and data driven initiatives, program and risk management initiatives, training and education, communication and employee engagement.
Health and Safety Performance

One of International Papers key safety metrics is the Total Incident Rate (TIR), which helps us track our safety performance by measuring the number of reportable incidents per 100 person-years worked. We achieved our best-ever TIR of 0.83 in 2010. This is an incremental improvement over 2009 and represents a 68 percent improvement over the last 10 years. As we move closer to our goal of zero safety incidents, we are focused on continued reduction in total incidents as well as in lost workday and severe, life-changing injuries. Despite these efforts, we are particularly saddened to report three employee fatalities during 2010, each of which was thoroughly investigated. As of January 2011, 116 of our global facilities achieved an important safety milestone: one year or longer without a recordable injury. Eleven of these locations have not had a recordable incident for at least five years. In addition, approximately 40 of our sites have been recognized by the U.S. Occupational Safety and Health Administrations (OSHA) Voluntary Protection Program (VPP). The VPP recognizes exemplary worksites that have comprehensive, successful safety and health management systems and maintain injury rates below their industry average.
LIFE
Its about...
LIFE-CHANGING INJURY AND FATALITY ELIMINATION
Total Incident Rate, 20002010

3.0 2.5 2.0 1.5 1.0 0.5 0.0 2000 2002 2004 2006 2008 2010
Employee Wellness
In October 2010, International Paper introduced HealthyLife, a new wellness benefit for current U.S. employees with salaried benefits and their spouses or domestic partners. A partnership between employees and the Company, HealthyLife provides incentives for active participation in our wellness program. It offers eligible employees and their spouses or domestic partners not only the rewards of better health, but also up to an annual $600 reduction in their medical insurance premiums. For International Paper, investing in prevention and wellness is the first step toward managing rising health care costs. We also provide an Employee Assistance Program (EAP) for all employees worldwide. The EAP provides employees and their immediate families access to professional counseling resources that can help address wide-ranging issues, from substance abuse and depression to work/life balance and child and elder care.
Employee Relief Fund

International Paper established the Employee Relief Fund (ERF) to assist our colleagues and communities impacted by natural disaster, personal tragedy or other events beyond their control. In addition, the ERF enables the Company and our employees to pool our resources in response to disasters around the world. In 2010, donations to the ERF totaled just over $380,000, including $150,000 from our employees and $230,000 from the Company. The ERF is managed by a dedicated committee of employee volunteers. The team discusses each application, determines eligibility and ensures grants are quickly processed to assist employees with immediate needs. In 2010, 26 International Paper employees faced significant losses from house fires, flooding, tornados and earthquakes. We provided ERF grants totaling $45,000 to help these employees meet food, shelter and clothing needs. IP employees stepped up early in the year following the January earthquake in Haiti with donations that helped provide immediate care, emergency shelter and clean water for earthquake survivors. With the Companys initial donation of $50,000 plus the dollar-for-dollar match on more than $134,000 in employee gifts, International Papers donations for Haiti relief surpassed $300,000. Just 60 days later, a magnitude-eight earthquake shook Graneros, Chile, where International Paper has a container plant and 180 employees. The Company and employees rallied again, raising nearly $60,000 through the ERF. These funds helped 12 International Paper employees who suffered significant property losses.
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Workplace Diversity and Talent Retention

Since 2001, International Papers diversity efforts have been led by our Chairmans Diversity Council. The Council comprises senior leaders who work with a representative group of employees to create and maintain a culturally rich and collaborative work environment. Employees participate on the Council on a rotating basis to promote inclusiveness. The goals of our overarching diversity and inclusion initiative Many Voices, One Vision: A Blueprint for Success are to provide a more progressive, flexible and inclusive workplace and to enhance representation at all levels of the Company so we can compete effectively in the diverse national and global environment. The Councils Blueprint for the Workforce outlined strategies for attracting and retaining women and minorities at International Paper. Today, 32 percent of our corporate officers are women or minorities, compared to only 17 percent in 2006. The Council continues to work on a Blueprint for the Workplace, engaging employees to find ways to more effectively manage the challenges of balancing careers with family issues, school and other aspects of daily life.
Total Employees: 60,000 as of December 31, 2010
Female, 24 percent
Male, 76 percent Over 50 years old, 30 percent Under 30 years old, 15 percent
3050 years old, 55 percent
Supplier Diversity
In addition to our internal efforts, we have a supplier diversity initiative designed to provide women and minority business owners with equal access to purchasing and sourcing opportunities. This effort extends from our global sourcing teams to local facilities and contributes to the economic well-being of the communities where we operate. It reflects not only our own core values, but also those of our customers. Over the last five years, International Papers purchases from women- and minority-owned suppliers have increased to an annual average of $340 million. As part of our commitment, we hold training and awareness sessions to educate employees on our supplier diversity strategy and process. We also provide new minority- and women-owned suppliers with an orientation on how to effectively conduct business with us and we communicate our diversity progress to major customers who value diversity, strengthening our relationships with both.
Leadership Institute
International Papers Leadership Institute is an interactive place of learning and growth where our leaders develop skills that help them engage employees in executing our operational strategies and exceeding our business objectives. The Institute provides programs, instruction, services and resources that align with our key business strategies and initiatives, and it promotes leadership development through observation, assessment, feedback and coaching. These efforts support a consistent leadership philosophy while introducing new trends and approaches that are essential to our Companys future success. Since 2005, nearly 1,300 employees have participated in our Leadership Institute programs.
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Responsibility Throughout the Paper and Packaging Life Cycle
From the design of our paper and packaging products and the harvesting of trees, to the ultimate recycling of paper and packaging, International Paper drives responsible management through every step in the life cycles of our products. As a forest products company, we understand that these life cycles extend beyond our operations to include the vendors that supply materials to us and the customers that buy our products. We recognize that our drive for continuous performance improvement also means assisting our customers in meeting their own paper- and packaging-related supply chain sustainability goals.
Fiber-Based Product Life Cycle

Product Manufacturing Distribution
Raw Material Sourcing
Product Use
Product Design
Recovery or Disposal
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Responsible Forestry
For generations, International Paper has led the forest products industry in promoting the planting and responsible harvesting of trees, in monitoring forest productivity and in conserving and protecting forest biodiversity in the United States and around the globe. By participating in research and promoting innovation, we encourage continuous improvement in the sustainable management of global forest resources. We help assure the responsible management of millions of acres of forestland worldwide through our participation in credible third-party forest and fiber-procurement certification programs. We also provide a robust wood fiber market to thousands of responsible landowners and sustainably manage our Company-owned land in Brazil.
Certifying the Supply Chain

How third-party certifications cover the supply chain from forest to consumer.
Forest Management Certification
Fiber Procurement Certification
Chain of Custody Certification
FOREST
PROCUREMENT
HARVESTING
MANUFACTURING
CONVERTING
DISTRIBUTION
CUSTOMER
Go Paper. Grow Trees.

Go Paper. Grow Trees. is a consumer awareness campaign sponsored by International Paper that gives consumers the facts about the impact paper products have on U.S. forests. A key element of this campaign is the interactive website, GoPaperGrowTrees.com, which uses forestry facts, multimedia tools and engaging videos to tell the true story and dispel myths about paper production. Go Paper. Grow Trees. connects consumers to the challenges private landowners face in growing and maintaining healthy forests and demonstrates how paper usage helps create and sustain a demand for trees. For more information, log on to GoPaperGrowTrees.com and share the message by linking to your favorite social media platforms.
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Global Policy on Certifications

International Paper recognizes and supports the following third-party certification standards: Programme for the Endorsement of Forest Certification (PEFC) a global umbrella organization that endorses national certification standards and promotes sustainable forest management and chain of custody. www.pefc.com Forest Stewardship Council (FSC) a globally recognized standard that uses regionally developed forest management standards and includes chain of custody. www.fsc.org Sustainable Forestry Initiative (SFI) a North American certification standard that includes provisions for forest management, fiber procurement and chain of custody, and is endorsed by PEFC. www.sfiprogram.org
SFI-00006
PEFC/29-31-11
Promoting Sustainable Forest Management www.pefc.org
Other PEFC-endorsed standards such as Cerflor and American Tree Farm System (ATFS) www.inmetro.gov.br/qualidade/cerflor.asp www.treefarmsystem.org Most of International Papers operations are certified to one or more of these third-party fiber procurement, chain of custody or forest management certification standards. Our fiber certification programs assure that all of the fiber we use originates from responsibly managed sources. It is our policy that in countries or regions of the world that do not have established forest certification standards, we will establish International Organization for Standardization (ISO) 14001 environmental management systems on our wood procurement systems.
The SFI program includes a bigger picture that supports conservation, integrity, and community. As a certified SFI program participant, International Paper embodies this bigger picture through required actions such as educating landowners on the benefits of responsible forest management, sourcing fiber from trained loggers, and supporting research to provide for continuous improvement in forest practices on all lands. Kathy Abusow, president and CEO, Sustainable Forestry Initiative Inc.
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Chain of Custody Certification

Certification of International Papers operations to credible chain of custody (CoC) standards verifies that we have the policies, systems and procedures in place to track certified fiber as it moves from the forest through our manufacturing and converting processes to our customers. As customer demand for certified products has grown, International Paper has not only increased the availability of certified products, but also has become a global leader in CoC certification. With most of our pulp and paper mills and converting operations certified to the FSC CoC standard, we have one of the largest FSC-certified manufacturing platforms in the world today. In 2007, International Papers distribution business, xpedx, became the first U.S. paper distributor to receive both SFI and FSC chain of custody certifications. In 2008, xpedx was also certified by PEFC. In 2010, xpedx maintained the chain of custody for more than 3,500 CoC-certified products produced by manufacturers worldwide. Today, xpedx actively promotes CoC certification and has implemented programs to educate printers, designers and corporate end users about its merits.
We are pleased International Paper sees value in FSC certification. Indeed, IP has a tremendous opportunity to drive the responsible use and conservation of forests, especially in the Southeastern United States. In the years ahead we look forward to working with IP to promote responsible forest management. Corey Brinkema, president, FSC-US
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Endangered Forest Policy

International Paper does not use wood from endangered forests. Endangered forests are those forests that are either naturally rare or have lost much of their original extent due to human influence and continue to be threatened with further habitat loss or degradation. Our Company works to protect these forests, including old growth forests, through our wood fiber procurement systems.
Forest Footprint Disclosure Project

In 2010, International Paper was one of 78 companies to participate in the Forest Footprint Disclosure (FFD) Project. Modeled on the Carbon Disclosure Project, the two-year-old FFD Project is a U.K. government-supported initiative created to help investors identify how an organizations activities and supply chains contribute to deforestation and to link this forest footprint to the organizations value. As an FFD Project participant, International Paper provided information on how our operations and supply chain may impact the worlds forests and on what we are doing to responsibly manage these impacts. We expect to expand the scope of our reporting in 2011.
Supporting Biodiversity
International Paper is a long-time supporter of cooperative research projects and biological surveys designed to better understand the ecological role of planted and natural forests in providing healthy habitat for a wide variety of wildlife.
To help investors identify the sustainable businesses of the future as well as possible risks related to a companys forest footprint, the FFD Project publishes disclosure information annually. The 2010 report is available at www.forestdisclosure.com.
On our more than 250,000 acres of Company-owned land in Brazil, we demonstrate our commitment to the conservation of natural habitat by integrating forestry planning and management activities with initiatives to preserve ecosystems and conduct research on local flora and fauna. We have conducted surveys to more fully understand these natural habitats and their inhabitants and identified approximately 400 individual species of animals, including birds and mammals, and 350 different native tree species. In 2010, an International Paper Brazil biodiversity project was recognized by the Food and Agriculture Organization of the United Nations as an exemplary case of sustainable forest management in Latin America and the Caribbean region. In cooperation with the So Paulo State Botanical Institute, IP Brazil created a private conservation area by reforesting 462 acres (187 hectares) with native species, including more than 100 types of trees. This was the first area to meet new state requirements for high biodiversity values on reforested lands. Through this continuing partnership, which began in 2002, we conduct plant and animal research aimed at improving public policy on ecological restoration. To spread the knowledge gained from this research with the local community, we are working with the Institute to develop workshops on restoring degraded areas in the municipality of Mogi Guau.
Conservation Easements in the United States

Over the past decade, we have protected about 1.5 million acres of U.S. forestland through donations, land sales and conservation easements to state and federal agencies and environmental groups. During this time, in a historic agreement, International Paper, The Conservation Fund and The Nature Conservancy worked together to protect 218,000 acres of forestlands across 10 states in the largest
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private land conservation sale in the history of the U.S. south. These were some of International Papers most ecologically important lands, home to species such as bald eagles, black bear and the endangered red-cockaded woodpecker. Much of these lands remain as working forests, allowing the sustainable harvest of timber while continuing the protection of sensitive areas. Our Company also donated the International Paper John Dillon Park, a 15,800-acre conservation easement, to the state of New York. The park blends accessible recreation, conservation and education within working forests and is the first wilderness area with facilities specially designed to accommodate people with disabilities.
Landowner Outreach
More than 90 percent of International Papers fiber supply in the United States comes from privately owned forests, most of which are small and family-owned. One of the ways we encourage family tree farmers to protect the environment and nurture the natural resources we use to make our paper and packaging products is our participation in the Sustainable Forestry Initiatives State Implementation Committees (SICs). In 2010, we provided nearly $170,000 in financial assistance to SICs in 15 states where we source fiber, and IP employees actively participate on each of the committees. These highly effective committees reach out to landowners and logging professionals at the state and local level to provide training, promote best practices, expand certification and maintain the integrity of the SFI program. Our outreach efforts also include the distribution of Sustainable Forestry for Landowners, our award-winning landowner outreach booklet. Distributed by our foresters and suppliers to landowners and customers in both printed copy and electronic format, the booklet provides valuable information on sustainable forest management. It includes basic information and guidance to additional resources on topics ranging from developing responsible forestry management plans and using best management practices to conserving wildlife habitat and protecting endangered species. A copy of the booklet is available on our website at www.internationalpaper.com/documents/EN/ sustainability/LandOwnersBrochure.pdf.
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Working forests are part of the basic infrastructure the green infrastructure of America, providing clean air, clean water, and supporting more than a million jobs. For as long as I have been in the conservation movement, International Paper has been a leader in support of working forests transitioning from great stewardship of company-owned lands to helping small forestland owners be great stewards of their lands. IPs legacy in conservation extends far beyond the nearly 400,000 acres of magnificent working forest that we at The Conservation Fund have helped to protect, to also include forest certification of privately owned land and endangered species protection. Larry Selzer, president and CEO, The Conservation Fund
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Protecting and Conserving the Environment
Policy on Environment, Health, Safety and Sustainability

International Paper is committed to excellence in environmental, health, safety and sustainability practices and performance, and continually works to wisely manage natural resources. Health and safety are fundamental values, and we strive to design, operate and maintain accident and injuryfree workplaces for our employees, contractors and visitors around the globe. Sustainable practices represent the foundation of our business, and we endeavor to minimize environment, health and safety impacts during the design, manufacture, distribution, use and at the end-of-life of our many products. This includes a commitment to the communities where we operate, work and live to responsibly manage our forests, facilities and related businesses. International Paper seeks to do business with customers, suppliers, vendors, contractors, jointventure partners and other business associates who share our high standards of ethical business behavior. International Paper champions the innovative and ethical management of natural resources. We partner with suppliers of responsibly grown fiber and routinely certify our fiber supply chain to widely recognized standards. Our commitment extends past the forests to include manufacturing and supply chain excellence. To fulfill these commitments globally, we hold our leaders responsible for the engagement of all employees to ensure: compliance with all applicable laws and regulations; implementation of this Policy, IPs global EHS&S management systems and performance standards; and transparent reporting of our EHS&S metrics and progress against our commitments. Continuously improving our environmental, health, safety and sustainability performance is a cornerstone of our future business success and fundamental to The IP Way.
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International Paper is passionate about delivering the innovative, high-quality products our customers want and about protecting the environment while we do it. We focus on the efficient use of natural resources, pollution prevention and continuous performance improvement through technology and employee engagement. We are implementing an environmental, health, safety and sustainability (EHS&S) management system across our sites globally. The system builds upon a foundation of our EHS&S Policy, technical standards, metrics and reporting, training, auditing, subject matter experts, clearly defined roles and responsibilities, and accountability at the corporate, business unit and site levels.
Energy Use and Greenhouse Gas Emissions

Our operations use a significant amount of energy and emit greenhouse gases (GHG). Years before legislation and regulation to reduce GHGs were initiated, International Paper began measuring and tracking our GHG emissions and committed to reducing them voluntarily. In part, we do this through increasing the energy efficiency of our operations. Increasing onsite electricity generation has long been a component of our strategy to reduce energy consumption. Our manufacturing operations use high-efficiency combined heat and power (CHP) systems to generate both thermal energy and electricity used in our production processes. The energy conversion efficiency of our CHP systems ranges between 60 percent and 80 percent, much higher than the 25 percent to 45 percent for traditional electricity-only utilities. Onsite generation accounted for 63 percent of the electricity consumed by our global pulp and paper manufacturing facilities in 2010, and improving self-sufficiency continues to be a priority. In 2010, a $36 million investment at our Kwidzyn Mill in Poland increased that sites electrical self-sufficiency from 40 percent to nearly 90 percent. We recently announced investments in a CHP facility at our Svetogorsk Mill in Russia that will increase efficiency from 33 percent to 50 percent. In 2010, we met nearly 70 percent of our global energy requirements with renewable biomass such as bark and wood residuals. Biomass is internationally recognized as carbon neutral by entities such as the Intergovernmental Panel on Climate Change, the World Business Council for Sustainable Development and the European Union Emissions Trading Systems (EU ETS). Greenhouse gas emissions resulting from their use are excluded from most environmental reporting requirements. We invested $45 million in capital projects during 2010 to improve overall energy efficiency and further reduce our fossil fuel use and associated GHG emissions in the United States. We expect these projects to result in a 3.5 trillion Btu annual reduction in fossil fuel use and a GHG reduction of 200,000 metric tons annually an emission reduction equivalent to removing nearly 40,000 passenger vehicles from the road.
About Our Data

Quantitative data regarding air emissions, water use and solid waste cover only the evennumbered years because our environmental data collection aligns with the North American trade associations data collection process, which is conducted every other year. Water use data for 2006 is not judged to be sufficiently accurate to include in this report. Energy and GHG emissions data are compiled annually, based on purchasing data, and used for our Carbon Disclosure Project and EPA Climate Leaders reporting commitments. We have plans in place to move toward annual reporting for all our environmental metrics.
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Since 2007, we have reduced our total global energy use by 3 percent and our use of non-renewable energy by 9.5 percent per metric ton of product. From 2007 to 2010, we reduced fossil fuel direct and indirect GHG emissions from stationary combustion sources by 29 and 1 percent, respectively. In absolute terms, we reduced our total energy use by nearly 7 percent over the same time period. Thats about the same amount of energy needed to power 420,000 homes, or the reduction equivalent of removing one million passenger vehicles from the road
Energy Use million BTUs per metric ton of production
30 25 20 600 15 10 5 0
NonRenewables Renewables
Greenhouse Gases metric tons per 1000 metric tons of production

1000
800
400
200
2007
2008
2009
2010
Scope 2 (indirect) Scope 1 (direct)
2007
2008
2009
2010
Using Carbon Neutral Biomass Energy

The carbon neutrality of biomass is a longstanding and widely established principle. Organizations recognizing the carbon neutrality of biomass emissions include the European Union, U.S. EPA, and the United Nations Intergovernmental Panel on Climate Change (IPCC). When biomass, such as wood, is combusted for energy, it releases back into the atmosphere carbon dioxide that it has absorbed from the atmosphere during growth. When harvested biomass is replanted, the cycle repeats. Through sustainable forestry policies, including re-growth and management, the biomass stock is renewed. There is more forestland in the U.S. today than just 20 years ago.
Climate Change Approach

International Paper uses a four-pronged approach in addressing the challenges posed by global climate change.
Understanding our footprint. We track our global GHG emissions
and report them annually through our participation in the Carbon Disclosure Project, the U.S. Environmental Protection Agencys Climate Leaders program, the EU ETS, the Chicago Climate Exchange (CCX) and various state, regional and national reporting programs. Encouraging balanced climate policy. International Paper participates in climate discussions at the regional, national and international levels to encourage balanced public policies that recognize the importance of forest sustainability, the carbon neutrality of biomass, pulp and paper manufacturing jobs and international competitiveness. In this manner, we will continue to engage in comprehensive dialogue on climate and energy issues toward a goal of well-constructed policies that are beneficial to the environment and International Paper. Investing in the future. We continue to invest in efforts to conserve energy, reduce our fossil fuel use and increase our use of bioenergy. Learning by doing. We participate in GHG trading programs that are helping us better understand how to reduce GHG emissions in a cost effective manner. We participate in the European Unions carbon trading system through our European mills, and we helped develop a well-functioning market for carbon trading as a founding member of the CCX.
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IT Team Reduces Energy Consumption for Computing

International Papers information technology (IT) team has made great progress on greening our data center in Memphis, Tenn., resulting in a significant decrease in overall energy consumption. Thanks to their efforts, we have achieved the following successes. IT power consumption has dropped each year over the past four years while data center infrastructure continues to grow. At our main data center, power consumption is 7 percent lower today than in 2006 while server workload has increased 25 percent and storage capacity has increased 275 percent. We are actively replacing traditional stand-alone servers with virtual servers. Replacing traditional servers with new virtual servers wherever possible decreases our need for power and cooling while allowing for the same or greater computing capacity. Our server environment is about 40 percent virtual today and that percentage is increasing every year. For several years, we have been using newer-generation personal computers that require less power than older models. We are also rolling out new power management capabilities to our PCs, which is expected to reduce our carbon dioxide emissions by 6,000 to 7,000 tons per year. To create an even greener data center, we continue to improve efficiency of existing assets and revamp our IT infrastructure.
Reducing Carbon Footprint Associated with Our Bulk Box Products

As part of a sustainability initiative at our Bulk Box Plant in Lafayette, La., we eliminated corrugated spacers between bulk boxes when loading our freight vehicles. While the spacers provide easy access for forklifts to unload bulk boxes from the trucks, they are not necessary for safe unloading. Eliminating the spacers reduced material inputs, energy use and CO2 emissions associated with their production and improved the packing efficiency of our trucks. In total, we reduced the number of truck deliveries by 8 percent and reduced CO2 emissions associated with spacer production and transportation by more than 25,000 pounds per year.
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Rey Econature Paper Known for Improved Environmental Footprint

Our mill in Saillat, France, produces Rey Econature multipurpose office paper using wood from nearby forestland and energy from renewable biomass. Rey Econature is not made with optical brightening agents, meaning that fewer chemicals are used in the manufacturing process. The paper therefore has a natural ivory shade, setting it apart from other white papers on the market.
Air Emissions
In addition to GHGs, we track and report other air emissions from our manufacturing facilities, including sulfur dioxide (SO2) and nitrogen oxides (NOX). Were committed to reducing these emissions and strive to move beyond levels of regulatory compliance wherever possible, focusing on innovative processes, advances in technology and best management practices. International Paper has a long-standing ozone-depleting substances policy and were on track to phase out refrigerants, eliminating the use of R22 by 2020 as required by U.S. regulations. Since 2006, International Paper has reduced overall air emissions from our mills worldwide. Emissions of SO2 and total reduced sulfides (TRS) per ton of production decreased 34 percent and 49 percent, respectively, while emissions of particulate matter (PM) and NOX remained relatively flat when normalized for production. The decrease in TRS is a direct result of process changes and additional infrastructure control to reduce and reclaim sulfur-containing compounds. Asset consolidation and investment in a new precipitator contributed to our 2010 PM and SO2 emissions reductions.
Air Emissions metric tons per 1000 metric tons of production
3.0 2.5 2.0
Particulate Matter
1.0 0.5 0.0
2006
2008
2010
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Nitrogen Oxides
1.5
Sulfur Dioxide
Total Reduced Sulfides
Water Use
Sustainable water management is critical to our business. At our pulp and paper facilities, we use water to manufacture our products and to cool equipment. Our water conservation and management practices focus on recycling water within our mills and protecting the water quality in waterways that receive our treated process water. Several of our operations treat wastewater for other nearby manufacturers and the local community. When compared against production, our water withdrawal and discharge volumes did not change significantly from 2008 to 2010.
Water Use cubic meters per metric ton of production
50
40
30
20
Effluent Influent
10
2008
2010
We intend to apply best practices learned from our operations and our energy conservation projects and programs to identify opportunities to enhance water efficiency, to reduce overall water use and to maintain the quality of the water that we discharge.
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Solid Waste Management

International Papers waste management hierarchy emphasizes reducing the amount of waste generated, followed by reusing or recycling waste that could not be eliminated. We use the residuals of the papermaking process as fuel to generate energy and, where possible, employ it for other beneficial uses such as fertilizer or other soil amendment. As a last resort, this waste is safely landfilled. Since 2006, our solid waste landfilled has increased by 2 percent per metric ton of production. This increase resulted from fewer outlets for the beneficial reuse of ash in cement due to the global downturn in the construction industry and the purchase of Weyerhaeusers recycling infrastructure, which generated an increased amount of recycling-related reject materials. During the same period, we increased the proportion of solid waste burned for energy or beneficially used up from 43 percent in 2006 to 48 percent in 2010.
Solid Waste by disposition

Beneficially Applied to Land, 18 percent Other Beneficial Use, 15 percent
Solid Waste Landfilled metric tons per 1000 metric tons of production
80 70 60 50 40 Burned On Site for Energy, 15 percent 30 20 10 0 2006 2008 2010
Landfilled, 52 percent
In 2010, our Cedar Rapids, Iowa, containerboard mill partnered with a local company, Fiberight, LLC, to convert short fiber waste into cellulosic ethanol, resulting in up to 6 million gallons of renewable fuel annually.
Environmental Expenditures
International Paper expects our facilities to comply with all applicable environmental laws and regulations. In 2010, we spent $62 million on capital projects to comply with our environmental permits, more effectively control releases into the air and water, and assure environmentally sound management and disposal of waste.
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Communicating with Stakeholders About Paper and the Environment

International Paper launched its Down to Earth series in 2008 and has been continuously updating the series with new topics ever since. The series of educational pieces, available in print or on the web, is designed to provide easy-to-understand information on a variety of complex environmental topics related to paper and packaging. Currently, there are eight topics addressing questions such as: Are pixels greener than paper? How does using paper lead to more trees? What are the benefits of certification labels and logos? The series is available online at www.down2earthonline.com.
more online
In many instances, International Paper assumes responsibility for environmental liabilities originated by production sites gained through acquisitions and mergers; in many cases, International Paper never operated these sites. Our remediation team manages these and other IP environmental liabilities that arise under various regulations related to past release, disposal or management of waste and hazardous substances.
Product Stewardship
From product design and acquisition of raw materials through the manufacturing processes to the end user and recycling or disposal, we take considerable care to ensure our products meet high standards for environmental responsibility and human health and safety. In addition to sourcing our wood fiber from responsibly managed forests, we manage our supply chain to assure all product inputs are safe and environmentally acceptable. We design products with our customers carbon footprint, recycled-content and other sustainability objectives in mind and then manufacture them to our own standards for environmental excellence, safety and quality. We monitor raw materials, chemicals and manufacturing processes. We also conduct regular, comprehensive testing to demonstrate that our products are safe, free of substances of concern and suitable for their intended purposes. When our customers need help to comply with requirements for various voluntary standards, we provide the information needed to support product labels, claims and third-party certifications. An example of this commitment to address customer needs responsibly is our ecotainer compostable foodservice packaging. During the development of each specific product, material options are evaluated against many criteria such as environmental impact, FDA compliance and functionality. Once a final design is approved, we validate our understanding with third-party certifications for claims such as compostability. From raw-material through end-of-life, we are committed to ensuring our products deliver results responsibly.
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Product Certification and Documentation

To help our customers meet their information needs related to the products they buy from us, we provide product certifications or documentation on:
regulatory status suitability for intended use chemicals of concern certification standards recycled content recyclability and compostability
To provide customers with certification information as efficiently and consistently as possible, we developed a software system that allows access to this information by our Sales team and other IP employees. Our Product Stewardship staff handles nonstandard and complex requests. We also provide supporting documentation, such as product test results and information obtained from suppliers. All information is updated periodically to make sure it represents current product offerings.
Paper Profile Initiative

International Paper is a member of the Paper Profile initiative (www.paperprofile.com), a voluntary environmental product declaration scheme developed to help pulp and paper manufacturers uniformly report on key environmental aspects of their products and help their customers make informed product choices. The Paper Profile sets specific rules for collecting, calculating and presenting information. Profiles are currently available for a dozen International Paper products manufactured in Brazil, Poland, France and Russia with plans to expand to other mills in the future. More information is available on our website at www.internationalpaper.com/EMEA/EN/ Company/Sustainability/pp.html.
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Sustainable Green Printing Partnership

The Sustainable Green Printing (SGPSM) Partnership welcomed xpedx as a Gold Patron in 2010. The SGP Partnership is a non-profit organization devoted to increasing the social responsibility of the print and graphic communication industry through sustainable printing practices. xpedxs Gold Patron sponsorship helps the SGP Partnership keep program participation fees low for printers.
Facility Solutions
xpedx provides customers with expertise in green cleaning procedures and infection control strategies, supporting their needs to create healthy, clean and sustainable environments. Nationally certified ISSA (the Worldwide Cleaning Industry Association) certified experts are on staff, helping customers implement ISSAs Cleaning Industry Management Standard Green Building. xpedx is also a member of the U.S. Green Building Council and provides resources that support achieving and maintaining Leadership in Energy and Environmental Design (LEED) certification.
Life Cycle Assessment

Science-based life cycle assessment (LCA) is the leading method for measuring the environmental impacts associated with every stage of the life of a product. For paper and packaging products, an LCA includes everything from the harvesting of trees through the manufacturing processes to recycling or disposal. International Paper conducts LCAs to help us measure the environmental footprint of our products and identify areas for improvement that benefit our customers and contribute to internal process innovation. All of our assessments comply with applicable ISO standards. Examples of International Papers LCA efforts include:
completing an LCA on our new fiber and recycled content solid bleached sulfate products in 2007; assisting customers with data needs for their own life cycle studies; participating in industry-wide LCAs for various paper and packaging products, from which data were
shared with the U.S. Life Cycle Inventory database for public use in LCA studies; calculating the product carbon footprints for all our pulp and paper mills in Europe, the Middle East and Africa (calculations follow the guidelines developed by the Confederation of European Paper Industries); participating in the development of the University of Pennsylvanias 2009 conference on LCA organized through the Wharton Schools Initiative for Global Environmental Leadership, which we helped found; and participating in the National Council for Air and Stream Improvements GHG LCA of black liquor, a residual of the pulping process.
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Commitment to Customer Satisfaction

Customer satisfaction is a priority in everything we do at International Paper, and sustainability continues to gain importance in customer evaluations of our products and performance. We assess our customers views on our performance by using surveys, meetings and other tools with varying frequency, depending on the customer and the business. We use this feedback to help us build strategic supplier and customer partnerships, develop innovative new products and improve performance that helps both International Paper and our customers meet and exceed our business and sustainability objectives.
IP Container France Receives Gold Award

IP Container France recently received a Gold Award from ONDEF, the French Corrugated Packaging Manufacturers Association, for its unique packaging design. This design significantly improves product accessibility and visibility when placed in a supermarket. The packaging is simpler than other designs available, creates less production waste and provides easier storage.
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ClimaProof cartons give us the opportunity to offer our trade customers an environmentally friendly packaging option for our hydro-cooled and iced products. Weve been able to give our trade customers quantifiable improvements to their own carbon footprints simply with their purchase of Ocean Mist Farms commodities that are packed in a ClimaProof carton versus the traditional, industry standard of a waxed carton. Kori Tuggle, marketing manager, Ocean Mist Farms
A Recyclable Alternative
We developed our ClimaSeries packaging technologies to provide customers with a recyclable alternative to petroleum-based wax barriers for use in meat, poultry and agriculture packaging applications.
Recycling and Recycled-content Products

Helping to increase the recovery and recycling of our products is a vital part of our commitment to environmental stewardship. With 19 facilities in the United States and one in Mexico, our International Paper Recycling business is one of the largest recyclers of recovered office paper and corrugated boxes in North America. We annually recover some 6 million tons of fiber about 12 percent of total U.S. fiber collection as well as 2 million tons of additional recyclable material. Our recycling services include secure document destruction; collecting, sorting and processing recovered material; designing recycling plans for businesses; and supplying high-quality recovered paper for use in new products to mills worldwide. In 2010, nearly 90 percent of Americans had access to curbside or drop-off recycling systems that contributed to an all-time-high recovery rate of 63.4 percent of all paper and paperboard used in the United States. While the exact amount varies by region, local recycling infrastructure and local regulations, most of International Papers products can be recovered for recycling.
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International Paper is the largest user of recycled fiber in the United States, with 90 percent of our mills using some level of recovered fiber in the products they manufacture and three mills making products with 100 percent recovered fiber. Where it has been determined that recovered fiber meets the food contact guidelines established by the U.S. FDA, we also produce recycled-content paper for food contact and packaging applications. We know that a sustainable paper industry is an integrated one that uses both new and recovered fiber for the greatest environmental and economic benefit. Depending on the product manufactured, using recycled content can sometimes require more fossil fuel, water, fiber and chemicals, making new fiber the right environmental choice. Also, paper can be recycled only six or seven times before fibers degrade during reprocessing. By producing paper made with fiber harvested from responsibly managed forests, we create a supply of high-quality recyclable fiber that can continually replace recycled fiber that is lost after multiple uses.
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Pilot Effort Turns Recovered Used Cups into New Cups

International Paper is committed to expanding current, and developing new, end-of-life options for our products. In the fall of 2010, we partnered with Starbucks Coffee Company and Mississippi River Pulp, LLC to prove, for the first time, the feasibility of turning used paper cups back into new, FDA-compliant, paper cups. During the pilot effort, hot cups that had been used by consumers were collected from coffee houses and other retail locations. The material was sorted and baled at a nearby material recovery facility, then it was sent to Mississippi River Pulp. At its location in Natchez, Miss., the recovered cups were combined with other raw materials and processed in the same manner currently used to produce FDA-compliant materials for Starbucks hot paper cups. Internal and third-party tests confirmed the resulting de-inked pulp met the appropriate standards and did not indicate an increase in contamination. The pulp was then made into cupstock at International Papers coated paperboard mill in Texarkana, Texas, which was converted into new cups at our Kenton, Ohio, cup plant. Although we did not identify any adverse effects of processing the material in any of the manufacturing operations, several challenges related to the collection and sorting of the cups still exist and must be addressed before we are able to make the Cup-to-Cup concept a widespread reality. As part of our commitment to advancing end-of-life options, International Paper will continue to work with our valued partners during 2011 to address the recovery and processing challenges of used paper cups.
This innovation represents an important milestone in our journey. We still have a lot of work to do to reach our 2015 goal of ensuring 100 percent of Starbucks cups are reusable or recyclable, but were now in a much stronger position to build momentum across the recycling industry. Jim Hanna, director of environmental impact, Starbucks
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Supporting Our Communities
International Papers products and services touch more markets, communities and individuals than ever before. As we strive to meet the needs of our employees, customers, and shareholders in a responsible manner, we believe it is vital to maintain high standards as a good neighbor and that our efforts contribute to a sense of community with benefits that extend far beyond our bottom line.
International Paper Foundation

We conduct our global philanthropic activities through International Paper Foundations in the United States, Poland and Brazil, through business contributions in the communities where we operate and through the IP Employee Relief Fund. Our giving is concentrated in three areas:
environmental and literacy programs health and human service programs disaster assistance for employees and global communities
In 2010, our giving exceeded $10 million and was distributed to hundreds of non-profit organizations in communities around the globe. The examples below represent the types of programs we support.
Coins 4 Kids. International Paper and the World Food Programme formed this first-of-its-kind school
feeding program to assure that more than 72,000 children in Nairobi, Kenya, get the daily nourishment they need to learn in school. Since the programs inception in 2004, school attendance has skyrocketed from 62 percent to 97 percent. Coins 4 Kids is funded by donations from our Company and its employees. International Paper was named National Eagle Leadership Institute (NELI) Award winner based on the creation and support of Coins 4 Kids.
United Way. For more than 30 years, International Paper and its employees have come together to raise
funds and awareness for the United Way and its partner agencies. United Way is a key component of International Papers giving as it balances our focus on environmental education and literacy with the need to support health and human service needs in the communities where our employees live and work. Each year, employee gifts to United Way along with the Companys 60 percent match raise more than $3 million.
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National Civil Rights Museum Freedom Awards. We
are a leading sponsor of the museums largest annual fund-raising event, which honors individuals who have made significant contributions to civil rights and equality. Since 1991, the Freedom Awards have served as a symbol of the continuing fight for human rights in America and around the world.
Childrens Museum of Memphis Exhibit. We
Volunteers of International Paper

One of International Papers core principles is to make a difference in the communities in which we live and work. The International Paper Foundation provides funding for employee-led grant review committees to encourage community involvement.
sponsor this exhibit, which promotes natural resource conservation through everyday living. It engages visitors in the life cycle of a tree, demonstrates the important role of trees in our environment, and touches on topics like ecosystems, sustainability and tree products.
Life of the Forest Poster Series. This poster series has been praised in classrooms across America as an effective tool for teaching children of all ages about the forest. In 2011, the International Paper Foundation renewed the series and will continue to offer it for distribution to our employees, educators and other interested parties. Some of the topics in the series include learning how a tree eats, drinks and breathes; understanding leaves and needles; and reading the rings of a tree.
At our corporate headquarters in Memphis, Tenn., we encourage and nurture volunteerism as soon as employees join the Company. Our employee orientation includes a section on philanthropy and volunteerism. Our executive leadership supports giving back to the community by providing paid time off to volunteer, and many teams tie at least one teambuilding activity to a volunteer event annually. A 2010 survey indicated that 86 percent of Memphis employees had volunteered during work hours for a local non-profit organization, and 95 percent said they were familiar with volunteer opportunities provided by the Company and our key charitable partners in the community.
Biosphere Guardians. Sponsored by International Paper and designed for children in the 1st to 4th grade, Biosphere Guardians is a series of digitally animated films about Brazilian ecosystems and how to preserve them. The films are distributed to about 36,000 public and private schools all over Brazil, and are accompanied by educational material and games. In addition, they are broadcast to over 50,000 educational institutions in partnership with the Brazilian Ministry of Education. It has been estimated that Biosphere Guardians has been seen by 9 million children all over Brazil.
Community Involvement
Community involvement is an essential element in our sustainability commitment and we actively support the communities where we operate. Our financial and in-kind donations to local nonprofit organizations are aligned with our employees volunteer activity and with our three targeted areas of support. Our participation in the community surrounding our Memphis headquarters is representative of the types of organizations we support. In 2010, we contributed financial and volunteer assistance to the United Way of the Mid-South, the Susan G. Komen Race for the Cure (for breast cancer), St. Judes Childrens Research Hospital, and Memphis chapters of the American Heart Association and Juvenile Diabetes Research Foundation. This type of employee-driven community involvement happens at IP locations around the globe.
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Nurturing Strategic Partnerships

International Paper has a long tradition of partnering with customers, environmental and academic organizations, government and other key stakeholders. Strategic partnerships help us to identify areas where the greatest strides in sustainability can be achieved, to develop innovative new solutions for our customers, and to make a positive difference in the communities where we operate.
Building Strong Community Ties in Kwidzyn, Poland

Since we purchased it in 1992, our mill in Kwidzyn, Poland, has been a positive resource for the community. Our on-site wastewater treatment plant handles all of the towns municipal wastewater, and the excess steam generated from our boilers provides 65 percent of the towns residential heating. We funded the expansion and modernization of the Kwidzyn Hospital as well as the construction of a sports facility. And since taking ownership of the mill, we have significantly reduced air emissions, odors and water consumption and increased the use of renewable carbon-neutral biofuels. We provide similar community support from our mill in
Conservation Partnerships
Svetogorsk, Russia. As an award-winning advocate for the responsible management of forests, International Paper supports many conservation efforts. We believe that forests can be managed to balance economic, environmental, recreational and other socially beneficial uses. Our groundbreaking and precedent-setting partnerships and agreements prove that conservation and working forests are not mutually exclusive.
We are proud to have played an important role in protection programs for many endangered species, like the red-cockaded woodpecker. We have also assisted in reintroducing species, such as the boulder darter (an endangered fish), into areas from which they had previously vanished.
Employees Plant a Forest in Beijing

In coordination with the China Green Foundation, International Paper recently donated 12,000 trees to reforest a hill near the Jinshanling section of the Great Wall of China. Employee volunteers helped plant trees on the previously bare hill to prevent soil erosion and sandstorms in the Beijing area. Paul Brown, president, IP Asia, and Gary Gavin, vice president, Industrial Packaging Asia, their families, and leaders from the China Green Foundation worked together with more than 60 IP employee volunteers to carry out this reforestation project.
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Research Partnerships
International Paper partners with many types of organizations, including trade and research organizations, colleges and universities in our effort to continuously improve our processes and products and achieve our sustainability objectives. In 2010, we partnered in a variety of efforts with the National Council for Air and Stream Improvement (NCASI), an independent, non-profit research institute that focuses on environmental topics of interest to the forest products industry. Much of this work was aimed at helping to ensure that environmental policy and decision-making at many different levels is based on sound science and technical information of the highest quality. Among others, target issues included improving environmental performance, effectively managing waste and reducing emissions to air and water. International Paper supports dozens of forestry research initiatives and studies each year in the United States through NCASIs Forest Environmental and Sustainability Task Group and the numerous committees reporting to it, including the Western Wildlife, Sustainable Forestry and Eastern Wildlife, Biodiversity, and Forest Productivity committees. We also participate directly in NCASI research, such as the Optimum Water Storage Conditions study to determine effective water use levels in wood storage yards. Other noteworthy NCASI research that we support addresses the fate of forest fertilizers, the effect of forest roads on water quality, and habitat requirements for forest-dwelling endangered species. International Paper was among the founding companies of the Initiative for Global Environmental Leadership (IGEL) at the Wharton School of the University of Pennsylvania. The mission of IGEL is to develop and disseminate business solutions to sustainability on a global scale through future leaders and public outreach regarding best business practices and sustainable profit opportunities. IGELs business and faculty advisors collaborate to identify solution-oriented, world-class research topics.
Government Partnerships
Strategic partnerships with governments around the globe not only help International Paper enhance our own sustainability, but also give us the opportunity to share our environmental and energy expertise with government leaders in countries where we operate.
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International Paper is actively involved in the American Chamber of Commerce (AmCham) and bilateral organizations in countries where we operate. This includes the U.S.-Russia Business Dialogue, U.S.-Brazil CEO Forum, Shanghai AmCham, Moscow AmCham, Brazil-U.S. Business Council, So Paulo Brazil AmCham, U.S.-Poland Business Council and the U.S.-China Business Council. Our participation in these organizations ensures that International Papers voice is heard at all levels of government in the countries where we operate.
Educational Outreach
Educational partnerships have always been an important facet of The IP Way to help sustain a better world for future generations. Our partnerships are varied and widespread. Environmental education is a main focus of the International Paper Foundations giving. Since 1998, International Paper and the National Geographic Society (NGS) have provided the National Geographic Kids Explorer series of education and literacy materials to millions of schoolchildren, bringing the natural world to student desktops and libraries across the United States. Since 2001, weve provided $5 million in grants to NGS and more than 500,000 Explorer subscriptions to students.
IP Sponsors Student Competition on Innovative Recycling Ideas

In partnership with Staples, Inc. and Net Impact, a global organization dedicated to using business to improve the world, we supported a 2010 competition for innovative ideas to improve recycling rates. Business students participating in the competition developed strategic plans for recovering more paper and packaging from underserved markets, including large, multi-tenant locations, corporate campuses and universities. The winning team of students was from Blekinge Institute of Technology in Karlskrona, Sweden. They proposed a solution for increasing the efficiency of paper recovery, branding the program and communicating real-time recovery rates. The plan featured creative tools to track, monitor and promote a successful program. The competition was a step forward in encouraging thoughtful and innovative solutions to improve paper and packaging recycling in the future. Along with Staples, we are currently considering ways to implement elements of the Blekinge teams plan to recover more renewable paper products and put them back to use.
Our partnership with International Paper and Staples is a win-win. While Net Impact student members are helping IP and Staples come together to uncover environmental opportunities, we are helping build environmentally responsible future business leaders. Liz Maw, executive director, Net Impact
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Awards
We received numerous sustainability-related awards in 2010 recognizing achievements across our operations.
Recognized as 2010 Company of the Year by the American Chamber of Commerce in Russia for
10-year growth, substantive investment in value-added production and corporate social responsibility commitment in the Russian market.
Named Most Admired Forest and Paper Company for the eighth consecutive year by
Fortune magazine.
Selected by the Ethisphere Institutes as one of the Worlds Most Ethical Companies for the fifth
consecutive year, based on ethical leadership, compliance practices and corporate social responsibility.
Recognized for having one of the Top 25 Diversity Councils in the United States by the Association
of Diversity Councils.
Received the National Geographic Societys 2010 Chairmans Award for our environmental
education and literacy efforts.

Listed among IDG Computerworlds 2010 Best Places to Work in IT for providing employees with
professional challenges and great benefits and compensation.

Presented the 2010 Total Cost of Ownership Supplier Award by Celestica for providing the best
possible supply chain solution for its products.

Honored in Brazil by Hewitt Associates and Fortune magazine as one of the globes Top Companies for Leaders. Selected as the Industry Highlight in Social Responsibility by the Brazilian Pulp and Paper
Technical Association.
Recognized by the Mexican Department of Labor for the efficient management of health and safety
in the workplace in our Mexican operations.

Earned the Regional Safety Award from the Chilean Safety Association.
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Governance and Ethics
We believe that good corporate governance is the foundation upon which we build and achieve our goals and provide value to our shareholders, customers and the communities in which we live. We uphold the highest ethical standards and are accountable for all that we do. John V. Faraci, Chairman and CEO
Board of Directors
International Papers culture of integrity is embraced by our Board of Directors and every employee. Our Board upholds our Company Mission and ensures effective organizational planning, focusing on strategy and risk management while monitoring strategic initiatives. Of the 11 directors, 10 are independent. The current committees of the Board include Audit and Finance, Executive, Governance, Management Development and Compensation, and Public Policy and Environment. The Public Policy and Environment Committee is appointed by the Board of Directors to assist the Board in these key oversight roles:
review and assess public policy issues and risks potentially impacting the Company; review and assess legal issues and risks potentially impacting the Company; review and assess health and safety, environmental and sustainability issues and risks potentially
impacting the Company; and review and assess technology issues pertinent to the Company. Additional information about the Board including director qualifications and performance, addressing conflicts of interest and executive compensation is available in the Corporate Governance Guidelines on our website at www.internationalpaper.com.
more online
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Any shareholder may communicate with the entire Board, the independent Directors as a group, any individual Director or the chair of the Governance Committee, by writing to the Corporate Secretary at our Memphis headquarters.
Sustainability Management
Sustainability-related issues are managed by several functions across the Company. Within the senior leadership team, separate councils have responsibility for overseeing diversity; environment, health and safety; people; risk management; and strategy, among others. Designated staff at the corporate, business unit and facility levels help identify, prioritize and manage sustainability-related risks and opportunities. Business leaders are responsible for planning and managing business-specific sustainability issues.
Ethical Business Practices

While International Papers Code of Business Ethics says that we will comply with applicable laws and regulations where we do business, its about more than compliance. It defines what we expect of our Company and what we expect of each other as we do business around the world. Expecting ourselves and fellow employees to perform our jobs with integrity and expertise is our Company norm. Abusive, deceitful or violent behavior is not tolerated, nor is any violation of Company standards on equal employment opportunity. International Paper is committed to protecting and advancing human rights globally. We will not tolerate child labor, forced labor, physical punishment or abuse. We comply with the employment laws of every country where we operate, and we recognize lawful employee rights of free association and collective bargaining. Our Code of Business Ethics is available online at www.internationalpaper.com, is provided to all employees globally in 11 languages and is given to more than 10,000 suppliers. Our Board of Directors, Chief Executive Officer and all other International Paper leaders are accountable for implementing it. The Company provides a variety of resources to assist employees who need information or advice related to topics covered in the Code.
more online
Anti-corruption and Bribery

We honor the laws and treaties of all countries where we operate. In compliance with the Foreign Corrupt Practices Act (FCPA), we prohibit employees and third parties working on the Companys behalf from paying bribes, offering or promising to pay bribes, or authorizing the payment of money or anything else of value to government officials, employees of government-controlled businesses, political parties or candidates in order to obtain an improper business advantage. In addition, we do not exchange illegal payments or bribes with any commercial party or individual. International Paper experienced no incidents of corruption or bribery in 2010.
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Ethics Training
International Paper provides special education and training programs that address ethics, Company values and compliance matters. Some of these programs are intended for all employees, while others are relevant to employees in particular job functions or business units. Salaried employees exempt, non-exempt and commissioned are required to take all ethics courses. Recently hired employees are required to complete the courses within 90 days of their hire date. Employees who are promoted from hourly to salaried positions must complete the courses within 90 days of the date their promotion is effective. Courses target specific job roles and business risks with a critical focus on harassment and discrimination prevention, the FCPA and anti-corruption compliance, records management and insider trading prevention. Education programs related to business ethics and compliance with laws and Company policies are available through the Office of Ethics and Business Practice, the Corporate Environment, Health and Safety department, Human Resources department and Legal department. Periodically, each of these departments conducts mandatory training programs on compliance with Company policies.
Reporting Violations
Employees who become aware of an ethics code violation or any illegal or unethical behavior are required to report such activity. We provide several pathways for reporting a suspected violation, including a 24-hour, international telephone HelpLine and email address. We investigate each report thoroughly and protect confidential information to the extent possible. International Paper does not tolerate retaliation in response to a reported violation. In 2010, we investigated 546 reports to the HelpLine compared to 412 in 2009. All concerns or allegations of impropriety relating to our accounting, internal controls or other financial or audit matters are immediately forwarded to the chair of the Audit and Finance Committee of the Board of Directors. All such matters are investigated and responded to in accordance with the procedures established by this committee. It is the expectation and intention of the Company that no waivers from any of the provisions of our Code of Business Ethics will be sought or granted. A decision to grant such a waiver may be made only by the Board of Directors, and any such decision will be disclosed promptly and publicly as required by the U.S. Securities and Exchange Commission.
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Report Boundaries, Scope and Measurement Report Boundaries, Scope and Measurement Techniques Techniques
The boundary of this report addresses the economic, environmental and social The boundary of this report addresses the economic, environmental and social impacts of the Company. Data represent our wholly owned and operated impacts of the research Data represent our wholly owned and operated manufacturing, Company.and distribution facilities, warehouses and offices worldwide, unless otherwise noted. In the case of environmental impacts, data offices worldwide, manufacturing, research and distribution facilities, warehouses and include operations at our paper mills worldwide and do notenvironmental impacts, converting, distribution unless otherwise noted. In the case of include joint ventures, data include operations or recycling locations, with the exception of GHG emission data. GHG emission data at our paper mills worldwide and do not include joint ventures, converting, distribution include operations at our paper mills, converting, distribution and recycling facilities or do not include joint ventures. butrecycling locations, with the exception of GHG emission data. GHG emission data include operations at our paper mills, converting, distribution and recycling facilities but do not in this joint ventures. Informationinclude report relates to performance in 2010, unless otherwise noted. Data measurement techniques and the basis of calculations applied to the compilation of the indicators and other information in the report 2010, unless otherwise noted. Information in this report relates to performance in follow industry standards, including the Greenhouse Gas Protocol published by the World Business Council Data measurement techniques and Resources calculations applied does compilation for Sustainable Development/World the basis ofInstitute. This report to thenot of the indicators and other information in the report follow industry There have contain substantial restatements of information provided previously.standards, been no significant changes from prior reporting periods in the scope, boundary or including the Greenhouse Gas Protocol published by the World Business Council measurement methods applied in this report. Institute. This report does not for Sustainable Development/World Resources contain substantial restatements of information provided previously. There have been no significant changes from prior reporting periods in the scope, boundary or Reporting Responsibilityreport. measurement methods applied in this The International Paper Executive responsible for this report is: David Kiser Vice President, Environment, Health, Safety and Sustainability The International Paper Executive responsible for this report is: International Paper 6400 Poplar Avenue Memphis, TN 38197 David Kiser Vice President, Environment, Health, Safety and Sustainability 901.419.9000 International Paper 6400 Poplar Avenue Memphis, TN 38197 901.419.9000
Reporting Responsibility
Printed on Carolina C2S, 10 pt., and Accent Opaque, Smooth White, 100 lb. Text Edited by Kathi Rowzie, The Gagliardi Group LLC Printed on Carolina C2S, 10 pt., and Accent Opaque, Smooth White, 80 lb. Text Edited by Drafted and designed by ERM Kathi Rowzie, The Gagliardi Group LLC
gopapergrowtrees.com
internationalpaper.com
PEFC/29-31-11
Promoting Sustainable Forest Management www.pefc.org
Sustainable Forestry Initiative and SFI are registered marks owned by Sustainable Forestry Initiative Inc. FSC is a registered trademark of Forest Stewardship Council, A.C. PEFC and the PEFC logo are registered trademarks of the PEFC Council.
International Paper Company is an equal opportunity employer (M/F/D/V) Copyright 2011 International Paper Company. All rights reserved. International Paper Logo, Go Paper. Grow Trees and logo, Rey, Down To Earth, Cup-to-Cup, xpedx, Carolina, and Accent are trademarks of International Paper Company. Other company, organization, product, trade names, and service names used and displayed herein may be trademarks or service marks owned by their respective third parties.

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2010 Sustainability Report

About this Report

For questions or more information about this report, contact: sustainability@ipaper.com.

International Paper 2010 Sustainability Report

Sustainability at International Paper Page 6

Putting People First Page 8

Responsibility Throughout the Paper and Packaging Life Cycle Page 12

Protecting and Conserving the Environment Page 18

Supporting Our Communities Page 32

Governance and Ethics Page 38

International Paper 2010 Sustainability Report

Letter from the Chairman and CEO

International Paper 2010 Sustainability Report

John Faraci Chairman and CEO, International Paper

International Paper 2010 Sustainability Report

International Paper Company Profile

International Paper 2010 Sustainability Report

International Papers Worldwide Presence

Number of offices and facilities (by country) 1-9 10-99 100

International Paper 2010 Sustainability Report

Sustainability at International Paper

International Paper 2010 Sustainability Report

International Paper Industry Organization Memberships and Participation

Confederation of European Fine Paper Industries

Corporate Eco Forum

Fiber Box Association

Forest Stewardship Council

Industrial Energy Consumers of America

National Association of Manufacturers

Sustainable Forestry Initiative

TAPPI (worldwide pulp and paper association)

International Paper 2010 Sustainability Report

Putting People First

Health and Safety

International Paper 2010 Sustainability Report

LIFE Preventing the Most Serious Injuries and Fatalities

Health and Safety Performance

LIFE-CHANGING INJURY AND FATALITY ELIMINATION

Total Incident Rate, 20002010

International Paper 2010 Sustainability Report

Employee Relief Fund

International Paper 2010 Sustainability Report

Workplace Diversity and Talent Retention

3050 years old, 55 percent

International Paper 2010 Sustainability Report

Responsibility Throughout the Paper and Packaging Life Cycle

Fiber-Based Product Life Cycle

Raw Material Sourcing

International Paper 2010 Sustainability Report

Certifying the Supply Chain

Forest Management Certification

Fiber Procurement Certification

Chain of Custody Certification

Go Paper. Grow Trees.

International Paper 2010 Sustainability Report

Global Policy on Certifications

Chain of Custody Certification

International Paper 2010 Sustainability Report

Endangered Forest Policy

Forest Footprint Disclosure Project

Conservation Easements in the United States

International Paper 2010 Sustainability Report

Protecting and Conserving the Environment