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Asia Pulp and Paper is playing a corporate shell game, and #rainforests are losing




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The actions of one of the world’s largest pulp and paper producers––Asia Pulp and Paper (APP)––have a huge impact on Indonesia’s forests, tropical peatlands and communities, and by extension, the world’s climate. Given its legacy of problematic impacts on people and the environment, civil society has viewed its corporate sustainability commitments with hopeful skepticism for years. As this month marks the fifth anniversary of APP’s sustainability commitment, if the recently uncovered corporate shell game its playing is any indication, APP’s corporate promises are not nearly enough - writes Ginger Cassady, Forest Program Director, Rainforest Action Network

Following widespread opposition by Indonesian civil society and international campaigns in the marketplace, in February 2013, APP announced a “revolutionary” new Forest Conservation Policy––committing that the company would stop pulping natural tropical rainforests for paper,  respect human rights and address the many land conflicts with local communities that its operations had created.

With the adoption of this policy, APP underwent an ambitious corporate facelift: publicly acknowledging the damaging social and environmental impacts of their operations, halting the conversion of natural forests to monocrop pulp plantations, bringing on sustainability staff and making structural changes to the company.

While a strong example of the power of market pressure and civil society watchdogging to gain results, the current glossy, “green” veneer of APP hides decades of dubious corporate behavior and ongoing, damaging impacts.

As we mark the five year anniversary of that landmark commitment, APP and its affiliates are still causing serious environmental and social harm, from catastrophic peat fires to significant human rights abuses. In addition, contentious issues around transparency and accountability plague the company, as well as ongoing issues with the slow pace and ineffectiveness of many  implementation efforts.

These concerns are underscored by a recent investigation of APP and Sinar Mas Group’s (SMG) hidden control ––using complex domestic and offshore corporate structures of various shell companies, among other techniques––of a number of concessions currently or potentially intended to feed its massive new OKI pulp mill and other mills in Sumatra.  The investigation found that 25 out of 27 of the suppliers that APP claims are independent have ownership links or are controlled by APP or its sister companies in the Sinar Mas Group (SMG).


Additional issues associated with these “hidden” APP/SMG controlled concessions include alleged natural forest logging and failure to secure the free, prior and informed consent (FPIC) of communities for a concession that APP is now hoping to bring on as a supplier. The Associated Press stories suggest that APP/SMG have falsely claimed that there is separation between the companies and these wood suppliers and potential wood suppliers, and that APP/SMG lack control over them.

More than simply not living up to its own corporate commitments, APP has used this hidden control of problematic suppliers to its own advantage in numerous ways––from denying to the Singapore government and others its responsibility for some of the devastating forest fires in 2015, to misleading customers, government and more about the nature and extent of its social and environmental impacts, to negotiating in bad faith with independent certification bodies about the scope and nature of verification efforts to ensure the company is implementing reform efforts and improving its performance.

These stories also bring into question the nature and veracity of APP/SMG’s disclosure of key information––much of it potentially material––and raise questions about the ultimate beneficiaries of these secret relationships. The answers to those questions may have significant regulatory and tax ramifications.

The investigations paint a high-risk picture for paper buyers, financiers and others not only concerning deforestation and the denial of the rights of communities, but for other expansion efforts being put into place by APP/SMG to feed the giant OKI mill. They should be a wake-up call for financiers, buyers, governments, certification systems and communities alike.

Is APP reverting to the types of practices and impacts for which in the past it has faced criminal charges, market pressure and disassociation from the Forest Stewardship Council? On the five year anniversary of its own commitment, can APP be trusted to keep its word? Devastatingly, for forests and communities alike, the answer seems to be “Not yet.”




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