The True Price of Low-Cost Paper

The True Price of Low-Cost Paper
A Brief for U.S. Companies about Sinar Mas Group/Asia Pulp & Paper
Sinar Mas Group/Asia Pulp & Paper (APP) is one of the world’s largest paper companies
and the largest paper company in Indonesia, with an annual capacity of over 15 million
tons per year. The company markets a variety of paper, tissue and towel products,
shopping bags and packaging produced mainly in Indonesia and China.
APP’s Indonesian raw material sourcing operations are centered in the Riau and Jambi
provinces of Sumatra. There are also forestry operations in Borneo and APP is eyeing
Indonesia’s last forest frontier, Papua.
APP is part of the Sinar Mas Group, a huge conglomerate widely considered one of the
worst environmental and human rights offenders in the global forest sector. Other Sinar
Mas Group holdings include palm oil, mining, oil and gas, real estate and banking.
How is APP impacting tropical forests?
The tropical forests of central Sumatra contain the richest plant biodiversity on Earth.
But this area of Sumatra also has the world’s fastest rate of deforestation, due largely
to conversion for pulpwood and palm oil plantations. Between 1982 and 2007, Riau
Province lost more than 4 million hectares of natural forest, feeding Indonesia’s
phenomenal 22-fold increase in pulp production between 1985 and 2007.
The many faces of APP
Sinar Mas/APP operates through numerous
subsidiaries, affiliates and distributors in
the U.S., including tissue/towel companies
Solaris Paper and Mercury Paper (LIVI and
Paseo brands plus private labels), and paper
distributors Global Paper Solutions, Eagle Ridge
Paper (Ovation brand papers) Gold East Paper
USA, PaperMax, and The Blue Planet Group.
In recent years APP has ramped up its efforts
to project a glowing, but misleading picture of
its operations, masking its environmental and
socially destructive practices.
In the early 2000s, APP was delisted from the
New York and Singapore stock exchanges after
defaulting on $13.9 billion in loans – the largest
default in history.2
APP is responsible for more deforestation in Sumatra than any other single company.
Since operations began in 1984, APP and its affiliates have pulped more than 2.5 million
acres of natural forests in Riau and Jambi provinces, an area approximately the size of
Connecticut.
Despite more than 20 years of pulp production and forestry operations, APP has never
developed a sustainable plantation base and continues to rely on large-scale clearance
of tropical forests in Sumatra for a significant portion of its pulp production. APP and
its affiliates have been draining peat and cleaning natural forests in Riau's VNESCO
Biosphere Reserve while advertising globally its full support for the reserve.1
In 2008, APP was ordered by a New York federal
judge to pay back more than $100 million of
that debt to the taxpayer-financed U.S. ExportImport Bank. The debt remains unpaid.
How is APP impacting local and indigenous communities?
APP’s stakeholder updates cite the company’s contribution to the Indonesian economy and jobs. What APP does not acknowledge is the devastating
social and environmental costs of its operations on local communities.
APP is clearing tropical rainforests in many areas in Riau and Jambi. One that is of great concern is the Bukit Tigapuluh forest landscape, straddling
the Riau and Jambi provinces. This forest is home to two forest-dependent indigenous communities, who will have nowhere to go and lose their
livelihoods if their forest is cleared. There have been many reports of APP committing human rights abuses, such as intimidating villagers and
prohibiting villagers’ access to previously public areas.
In December 2008, an APP-affiliated company and Riau
police destroyed 500 homes in a village that had been
in a land dispute with the company. At least one child
was killed, homes were firebombed from helicopters and
villagers arrested or evicted, according to news accounts
and the Indonesian National Commission on Human
Rights.3
APP’s unsustainable forest clearing drives escalating
human-wildlife conflict and fatalities of people killed by
tigers and elephants, which are forced into close contact
with people as their forests disappear. An analysis of
human-tiger conflicts in central Sumatra in 2009 found
that 55 people and 15 Sumatran tigers have been killed
during conflict encounters since 1997 in Riau Province –
and that most of the incidents occurred near sites being
cleared by APP and its affiliates.4
How is APP impacting endangered species?
The forests that APP is clearing are some of the last refuges for the endangered Sumatran elephant and the critically endangered Sumatran tiger. If
forest clearing isn't halted, both could become locally extinct in a few years' time.
APP continues to clear more and more natural forests
surrounding Bukit Tigapuluh National Park, including the
site of the world’s only successful reintroduction program
ever established for the critically endangered Sumatran
orangutans.5
Nearly 100 orangutans now live in this area but are
threatened by APP’s continuing forest clearance.
Forest loss is the single biggest threat to Sumatra’s
elephants. Most of Sumatra’s past “extinctions” of local
elephant herds happened where large areas of forest
were lost or severely fragmented.
Riau’s elephant population has declined from 1400 to less
than 200.
How is APP impacting carbon and climate?
APP, as the top forest converter in Sumatra, generates such massive carbon emissions from its forest clearing that they are having a measurable
impact on global climate change, according to a 2008 study of deforestation in Sumatra by WWF and world-renowned peat scientists.6
And it will only get worse: Much of APP’s future forest clearance is planned in areas with deep peat, some more than 16 meters deep, which
houses vast quantities of carbon that will be emitted as it is disturbed. The draining of peatlands by the plantation industry, and associated peat
fires, have been one of the drivers that make Indonesia the third-largest emitter of CO2 in the world, behind only China and the United States.
Why are APP’s claims about certification and legality misleading?
APP touts certifications of one of its plantation suppliers obtained through an Indonesian standard called Lembaga Ekolabel Indonesia (LEI). In
its current state, the LEI system for plantations cannot be seen as an assurance for sustainability and must be strengthened. 7 APP also publicizes
some chain-of-custody certifications it obtained through PEFC. In 2009, PEFC issued a statement clarifying that these certifications have nothing
to do with APP’s Indonesian forest operations, and that APP cannot obtain PEFC certification for its forest management in Indonesia.8
Many environmental and human rights organizations have raised concerns about the legality of APP’s operations. This situation should be of
particular concern to U.S. companies in light of the Lacey Act, a U.S. law amended in 2008 making it a federal crime to import, purchase, sell and
transport products made from illegally sourced wood.
Who has already cut ties with APP?
Large paper consumers around the world have determined that buying paper products from APP incurs too much risk, both reputational and
legal. Target, Unisource, the Gucci Group, H&M Group, Lindt & Sprüngli, Hugo Boss, Volkswagen, Staples, Office Depot, Carrefour, Woolworths Ltd.
(Australia), Fuji Xerox, Ricoh, Metro Group, and Idisa Papel have all stopped doing business with APP or APP affiliates.
Internationally respected NGOs have also cut ties with APP. In 2007, the Forest Stewardship Council formally dissociated itself from APP, citing
'substantial publicly available information that suggest that APP, a Sinar Mas subsidiary, is associated with destructive forestry practices'.
Rainforest Alliance and WWF had both tried to engage positively with APP, but both ended discussions after the company broke specific
commitments not to convert high conservation value forests.
In February 2010, a number of U.S. advocacy NGOs such as Rainforest Action Network, Forest Ethics, Sierra Club and others called upon U.S.
companies to avoid APP paper. Those NGOs are on the lookout to highlight companies that are still sourcing Sinar Mas/APP products. In March
2010, more than 400 civil society groups in Indonesia, represented by three NGO alliances - Walhi, CAPPA and Jikalahari - published a joint press
release calling on global buyers and investors not to do any business with APP.9
Every business is in the paper business. The good news is that your company can avoid risks and influence responsible forestry practices
through your choice of paper, tissue and packaging products. By doing so, you will demonstrate environmental leadership to your customers,
shareholders and other stakeholders. Here are some things you can do:
1. Avoid sourcing products from APP and its affiliates. For more information about APP and its affiliated suppliers, refer to Eyes on the Forest,
Rainforest Action Network, Greenpeace, APP Watch and others.
2. Develop a strong paper sourcing policy. Include a commitment to understanding the sources of your paper and avoiding potentially illegal
and controversial sources such as natural forests being converted to plantations, plantations developed on peatlands, and areas where human
rights are impacted. Commit to progressively increasing the volumes of paper you carry from independently verified responsible sources, from
suppliers that have obtained chain-of-custody (CoC) certification.
3. Buy FSC-certified paper. Buy paper from well-managed forests and post-consumer recycled sources that have been independently certified
under a credible, globally accepted system. The standard that best ensures protection of social, environmental and economic values is the Forest
Stewardship Council (FSC). http://www.fsc.org/
4. Ask questions. For any paper that is not FSC-certified ask your supplier: do they have their own responsible sourcing policy? Are they
partnering with any NGOs toward achieving FSC certification? Can they provide you with documentation about the country of origin and how
the raw material was obtained and the forest was managed? Is the paper from forest regions with high risk of illegal and unsustainable logging?
Information about countries with higher risks for such issues can be found at http://globalforestrisk.nepcon.net
Source:
1
Business as Usual in Riau, Sumatra: Pulp Industry Continues Clearance of Natural Forest http://eyesontheforest.or.id/index.php?option=com_content&task=view&id=306&Itemid=1
2
Setiono, B.(2007) Debt settlement of Indonesian forestry companies: assessing the role of banking and financial policies for promoting sustainable forest management in Indonesia/by
Bambang Setiono. Bogor, Indonesia: Center for International Forestry Research (CIFOR).
3
Jakarta Post (daily newspaper) (29 December 2008) “Riau Police guilty of rights abuses: Komnas HAM.”
4
Eyes on the Forest (17 March 2009) PR: Forest clearing by paper giant APP/Sinar Mas linked to 12 years of Sumatran tiger, human fatalities http://eyesontheforest.or.id/index.
php?option=com_content&task=view&id=227&Itemid=6&lang=english
5
Australian Orangutan Project (14 April 2009) press release, http://www.orangutan.org.au/assets/images/uploaded/20090413OrangutanLivesHangInTheBalanceAOPMediaRelease.pdf
6
Uryu et al. 2008. Deforestation, Forest Degradation, Biodiversity Loss and CO2 Emissions in Riau, Sumatra, Indonesia. WWF Indonesia Technical Report, Jakarta, Indonesia www.
worldwildlife.org/who/media/press/2008/WWFPresitem7596.html
7
KKI Warsi, FZS Indonesia Program, PKHS, Jikalahari, Walhi Riau, Walhi Jambi and WWF Riau (19 November 2009) Indonesian NGOs: Even with LEI certification, APP paper products are
unsustainable. http://www.wwf.or.id/index.cfm?uNewsID=12980&uLangID=1%20
8
Program for the Endorsement of Forest Certification schemes http://www.pefc.org/index.php/news-a-media/general-sfm-news/news-detail/item/501-pefc-chain-of-custody-
certification-in-indonesia
9
CAPPA, Jikalahari & Walhi (10 March 2010) Indonesian groups reject APP’s green claims at RISI Paper Conference. NGOs take public stance on paper giant’s misleading marketing push
and call for severing ties with company. http://eyesontheforest.or.id/index.php?option=com_content&task=view&id=286&Itemid=1
Photo credits. Page 1: Clearing of natural forest, Sumatra, © WWF-US; Mixed tropical hardwood at pulp mill, Sumatra (c) WWF ; Page 2 -3: Natural forest cleared in Rimba corr idor,, threatening species habitat (c) WWF; Sumatran Ekeohant (c) Volker Kess/WWF-Canon ; Peat swamp drainage
canal in Riau, Sumatra (c) WWF; Logs on a boat at pulp mill, Sumatra (c) WWF; Aerial image of APP pulp mill, Sumatra. Page 4: Kerinci Seblat National Park Overview of forest Sumatra, Indonesia (c) Mauri Rautkari/WWF-Canon; Bornean orang-utan Bohorok Rehabilitation Station Sumatra (c)
You have a choice