Our supply base consisted of approximately 3,903 suppliers in 2023. Fiber accounted for 24% of overall procurement spend and approximately 40% of the external procurement spend in our wood products business. When logging and hauling spending is included, over 45% of procurement is fiber sourcing related. The suppliers of logs to our wood products facilities and the contractors in our timberlands are typically local and as a result, we create a material impact in the areas from which we source. We estimate that approximately 58% of our procurement spend is local.

The raw materials for lumber and plywood include logs from our own company lands, logs from other private industrial and family-owned landowners, and from public agency landowners. No matter where these logs originate, we commit that they are sourced in a manner that protects the values these forests provide.

Some of the logs we use in our manufacturing facilities come from land that is certified to either Sustainable Forestry Initiative® (SFI®) or Forest Stewardship Council® (FSC®) standards including our own timberland ownership, other industrial landowners that have been certified, and some state and county agency lands. Given that approximately 90% of the world’s forests are not certified, however, both the SFI program and FSC program are systems intended to ensure responsible procurement occurs when purchasing fiber from non-certified lands. We use both the SFI standard and FSC Chain of Custody (CoC) programs to assure our customers and stakeholders that the wood we purchase to make our products originates from responsible sources.

All seven of our wood products manufacturing facilities are certified to the SFI standard, which provides structure to how we, as an SFI Program Participant, purchase fiber from both certified and non-certified forestland. This standard is designed to extend the positive reach of sustainable forestry information and practices to landowners on such topics as forest regeneration, forestry best management practices for water quality, wildlife and biodiversity, use of professional logging contractors, and avoiding controversial sources, such as illegal logging.

The 2022 SFI Fiber Sourcing Standard has 13 Principles, 11 Objectives, 29 Performance Measures and 59 Indicators, all designed to promote legal and responsible procurement. In addition to sharing sustainable forestry information with landowners, we also must demonstrate adherence to all federal, state, and local forestry laws, invest in forestry research, science, and technology, and develop verifiable monitoring systems to evaluate the use of best management practices across the geographic area where we procure wood.

In 2023, 100% of the fiber consumption at all our wood products facilities was certified according to the SFI standard. Our Gwinn, Michigan, and Warren and Waldo, Arkansas facilities are also FSC CoC certified. We track the path of our products from the forest through the supply chain, ensuring that FSC-certified material is distinguished from non-certified material throughout that chain. In addition, FSC CoC certification includes an FSC Controlled Wood standard for wood that is procured from land that is not FSC certified. The FSC Controlled Wood standard requires that the non-certified wood we purchase does not come from undesirable sources. FSC considers all the following undesirable sources: illegally harvested forests; forests that were harvested in violation of traditional and civil rights; forests where high conservation values are threatened by management activities; natural forests that were converted to non-forest uses; and forests with genetically modified trees.

In 2023, 54% of timber consumption at all our wood products manufacturing facilities was FSC CoC certified, and 100% of the timber consumption at our Gwinn, Warren, and Waldo facilities was FSC CoC certified. In 2023, 38% of timber consumption at all our wood products facilities was FSC Controlled Wood certified.

We have traceability systems at all wood products manufacturing facilities based on our procedures that ensure compliance with the SFI standard. Our procedures are designed to ensure that our sourcing is from legal and responsible sources with emphasis on uncertified sources. In 2023, we tracked over 99% of all log purchases to section, township, and range, with the only exception being two remote concentration yards where we know state and county of origin, and wood received from small suppliers like farmers and ranchers. In every case, we have a system to assess the risk that logs could be acquired from illegal logging sources. This system includes communications with suppliers, contract documentation, and maintenance of records. We identify and address any significant risks.

Our risk assessment procedures, plan implementation and results are evaluated in internal and third-party audits. We did not identify any issues with illegal sourcing in 2023. In addition, we have policies and procedures designed to promote compliance with all applicable chain of custody laws and to extend legal compliance throughout our supply chain. Our procedures for chain of custody legal compliance are internally and externally audited and we did not identify any material issues with legal compliance in 2023. All our sourcing in 2023 was verified to be from legal, responsible sources and over 97% was produced by trained logging contractors.

PotlatchDeltic understands the importance of good forest stewardship not only on our own land but also with the many other landowners with whom we work. This stewardship plays a key role in our commitment to sustainability for our shareholders, customers, communities in which we operate, and numerous other stakeholders.

Sustainable Forestry Initiative and SFI are registered marks owned by Sustainable Forestry Initiative Inc. Forest Stewardship Council and FSC are registered marks owned by The Forest Stewardship Council and are used pursuant to license codes FSC-C005430 and FSC-C102909.