Paper companies committed to making products with recycled fibre did very well last year within an industry rocked by "unprecedented" mill closures and financial uncertainty, says a report released yesterday.

While most Canadian paper producers faced record losses in 2007, green paper mills fared well with increased sales and market access, says the report by the environmental publishing organization Markets Initiative.

Vancouver-based Hemlock Printers, which in 2005 became the first printing company in North America to receive an overarching Ancient Forest Friendly designation, has watched sales of its green paper grow by a half to two-thirds each year since 2004.

Cascades Fine Paper Group -- a Quebec firm that is the only Canadian producer to hold the Ecologo, FSC Recycled and Chlorine Free Producers Association certifications -- enjoyed a 235-per-cent increase in the sales of its 100-per-cent recycled paper last year over 2006, the report says.

Sales for Domtar Inc's FSC paper doubled from 2006 to 2007, it adds.

"Over recent years, Cascades has clearly emerged as an environmental innovator amongst paper producers," the report says. "They have slashed their water consumption and effluent discharge, which is now three times less than the Canadian average."

Green mills are reacting to strong consumer demand for recycled paper products, the report says, noting Canada's publishing and printing industries are worth a combined $19 billion a year.

"In total, more than 520 Canadian book publishers, magazines, newspapers, catalogue manufacturers and printers are now implementing their Ancient Forest Friendly or eco-paper purchasing policies" -- up 300 per cent from the 172 outfits who had the policy in 2006.

New polling included in the report says that 95 per cent of Canadians "think it's important for companies to develop an environmental policy action plan and show clear progress toward targets."

"The only bright light for the paper industry this past year has been a green light," said Nicole Rycroft, executive director of Markets Initiative.

"The forestry and paper industries are often deemed to lack innovation, but with green product demand rising as it is, there are a number of Canadian mills already benefiting from environmental innovation," she added.

"This is good news for the climate and Canada's Boreal Forest."

But more must be done to recycle paper in Canada, the report says, noting Canada was recently ranked 25th in the world for its paper recycling rate.

Just 49 per cent of Canadian paper was recycled in 2006, compared to 78 per cent in Korea, the world leader, and No. 2 Germany, which recovers 77 per cent.

"Given that more than 80 per cent of Canadian consumers think using recycled paper is a high-priority environmental solution, market support for enhanced paper-recovery rate and recycled paper use promises to be strong," the report notes.

gclark@png.canwest.com

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