By Tom Nelson, Chairman, President & CEO

Sustainability. We’re hearing the word more and more. But, what does it mean?

There are many definitions. Some have political overtones. Some voice real concern for nurturing and preserving our natural resources for future generations. Others took root long ago in the caring concern of conservationists.

Here’s a definition the Environmental Protection Agency uses: Sustainability: meeting the needs of the present without compromising the ability of future generations to meet their own needs.

The global sustainability movement has three “pillars”: the environment, society, and the economy. In essence, these three should be in balance. For the environment, scientists point to several cycles critical to sustaining life. The carbon cycle is the one getting the most attention. In the carbon cycle, most goods consumed in today’s society begin in their most basic form as something mined, drilled, or grown.

You may be asking, what does this have to do with National Gypsum? As a company, we are a major consumer of energy and resources. We have a growing group of customers who want sustainable products – products manufactured with the least possible impact on the environment. This represents both great responsibility and great opportunity, and we place high priority on managing our natural assets carefully. It is quite simply the right thing to do. Many of our products and production methods currently support sustainability:

• We manufacture our wallboard facing paper from recycled paper stock.
  
• We use byproduct gypsum (a power plant waste product) at several of our locations.
  
• We recycle the paper and wallboard scrap in our manufacturing process.
  
• We use recycled wallboard scrap from new construction sites where it is available.
  
• We work diligently to reduce the number of miles our product travels from the plant to the customer.
  
• We invest capital to improve the energy efficiency of our kilns and to recycle water in our manufacturing processes.

Can we do more? I think we can. A number of studies over the past decades highlight how companies who place sustainability as a key element of their strategy have outperformed their peers and the broader equity markets.

The research goes on to conclude that companies are successful not only because sustainability is important, but because they are well run organizations. In other words, environmental performance is a powerful indicator of overall management quality.

Our Management Committee met this summer for its annual Strategic Planning Meeting. Sustainability and the impact it will have on our company and participation in the movement was a central discussion. The Management Committee agreed we have made great progress, but we all felt we must do more.

To that end, I am establishing a Sustainability Team and charging it with leading our sustainability initiatives. This team will include those who have been looking at sustainability for several months plus additional individuals. The team will represent all facets of our company, and I would like for it to specifically address the following objectives:

• Implement a campaign to position National Gypsum as a thought leader in the architectural and sustainable design community.
• Expand our use of synthetic gypsum and ensure we are maximizing the amount of recycled content in our products, particularly in key markets where our current synthetic plants cannot effectively ship products.
• Explore opportunities to reduce energy consumption and carbon emission through improved efficiency, co-generation, and renewable energy.
• Identify ways to reduce energy and water consumption in our products and processes.
• Engage in the sustainability discussion with governmental agencies and groups such as the US Green Building Council.
• Increase the visibility of our commitment and accomplishments to customers, associates, and our community.

John Mixson, director of Marketing, will head this team and select its members from various company functions. With this team in place, I believe we will be successful in improving our sustainability position with our customers, the communities where we work, and for future NGC associates.       9/26/2008