Asia Pulp and Paper (APP), part of the Sinar Mas Group (SMG), is one of the world’s largest producers of pulp and paper, and by far the largest pulp & paper producer operating in Indonesia. APP has historically been responsible for more than 2 million hectares of deforestation and severe impacts on people, biodiversity and the environment in Indonesia, as well as the global climate.
APP’s products include bleached hardwood pulp, stationary, printing and graphics papers, tissue, paper towels, shopping bags, packaging, and converted products. Its products are sold globally under a variety of brands like Imperia, Enova, Fiora, and Riviera, as well as those of various affiliates and purchaser companies. Other North American subsidiaries and affiliates include Eagle Ridge Paper, Global Paper Solutions, Mercury Paper, PaperMax, and Solaris Paper.
Asia Pulp & Paper (APP) is one of the world's largest pulp & paper companies and the largest in Indonesia and China, with an annual combined pulp, packaging, and converting capacity of over 15 million tons a year.
The company markets products in more than 65 countries, including copy paper, toilet tissue, printing paper, shopping bags, stationery and paper cup stock. It produces mainly in Indonesia and China.
APP is part of the Sinar Mas, a large conglomerate with interests in forestry, coal mining, palm oil and banking company, amongst other sectors.
In early 2013, after years of massive envronmental and social conflicts, APP announced a new forest policy. In the following months, the company also made public a number of new commitments, to meet the demands coming from the NGOs, coordinated by EPN.
EPN led joint work among NGOs to produce a number of milestones that this company needs to meet before being acceptable to customers again. As a result of these milestones, APP filled most of the gaps in its policy with new commitments:
- In April 2014, APP expanded its commitment to include the protection or restoration of a million hectares of Indonesian rainforest.
- In February 2015 APP announced a new implementation plan to address issues raised by an independent evaluation.
- Actions were announced in August 2015 by APP on the development of peatland management standards, high-tech LIDAR mapping of peatland, and removal and restoration projects on 7,000 hectares of plantations.
APP’s commitments represent a great opportunity to address its legacy of environmental and social impacts and to change its future practices away from deforestation. However, implementation on the ground is slow and in some cases barely non-existent. An independent evaluation by the Rainforest Alliance, as well as recent reports by other NGOs, have shown gaps and serious challenges that will require more time to be addressed.
These reports revealed that, while APP suppliers’ own deforestation and new peatland development has stopped, deforestation by third parties continues in many of their concessions. Additionally, numerous social conflicts remain unresolved and improved peatland management and landscape restoration plans have yet to be developed. These independent reports on APP’s performance during the last two years, and future monitoring by NGOs, should provide good direction for continued learning and improvement by APP.
The following unresolved issues have arisen within recent months:
- The magnitude of unresolved social conflict emerged tragically with the murder of the farmer union activist Indra Pelani in February 2015 by security guards contracted by APP. In June, Indonesia’s National Human Rights Commission found gross human rights violations transpired with this case, indicating that significant risk of additional legal violations remains.
- The Rainforest Alliance evaluation found that the company is failing to stop third party deforestation, which is still widespread in set-aside forest, inside APP and supplier concessions.
- About half of APP’s plantations are located on peat soil that, once drained, is highly inflammable. The unaddressed heritage of decades of bad peatland practices, combined with third party deforestation and with a long dry season, has made APP plantations one of the sources of the fires that have been ravaging Sumatra and Borneo. The fires have created a smoke and haze crisis that is affecting the entire South East Asian region. It has impacted the health of millions of people in Indonesia and neighboring countries and has led to several deaths. The crisis has also caused schools to close around the region, shut down air transport, and released each day more greenhouse gasses than the average daily emissions from all of the USA. Investigations in Indonesia have reportedly led to the arrest of an APP affiliated concession manager (Bumi Mekar Hijau) while authorities in Indonesian and Singapore (under the Transboundary Haze Pollution Act) have opened legal investigations into APP.
NGO stakeholders have been discouraged by the pace of progress on key issues and by recent changes in stakeholder engagement formats. The ongoing fires, the unresolved social conflicts highlighted by Mr. Pelani’s murder, the ongoing deforestation by third parties, the gaps reported by the Rainforest Alliance evaluation and the company’s expansion plans are worrying developments that risk jeopardising the credibility of APP’s forest policy.
On 6 October 2015, Environmental Paper Network co-ordinated NGOs came together to send an open letter to APP expressing their concerns and proposing a broader set of recommendations.
APP’s answer to this letter is unsatisfactory, essentially reiterating the many steps that have been announced in the past months, without giving any new response to NGO concerns and recommendations. APP’s willingness to act on these recommendations and demonstrate change on the ground must be the measure that paper customers and investors adopt in their scrutiny of APP’s performance. Until such changes are independently verified, APP poses too many social, environmental and governance risks to do business with.
Potential business partners and investors must continue to evaluate APP’s performance on implementing its FCP commitments as well as milestones listed in the Environmental Paper Network’s “Performance Milestones for Asia Pulp and Paper’s (APP) Sustainability Roadmap – Vision 2020 and new Forest Conservation Policy.”
Companies, investors and other stakeholders should continue to require independent verification of APP’s social and environmental performance of the FCP against the EPN Performance Milestones to assess progress.
Interactive lists of public data on identified Royal Golden Eagle (RGE) and Sinar Mas forest-products subsidiaries, affiliates, and brands. For more background on these companies, see the Indonesia Risk Assessment Case Study.
