- A new report urges bank and buyers to stop doing business with Asia Pulp & Paper (APP), one of the world’s biggest paper producers, for its alleged failure to uphold its own sustainability commitments.
- The report, by the Environmental Paper Network (EPN), a coalition of NGOs, lists a litany of violations — from destruction of tropical peat ecosystems to the prevalence of burning to persistent community conflicts — associated with APP’s operations in Indonesia.
- The company has denied the allegations, saying it continues to make strides in restoring peat areas of its concessions and resolving land disputes with local and Indigenous communities.
- However, the EPN points to a lack of transparency and verifiable progress in both APP’s sustainability commitments and resolution of conflicts.
JAKARTA — Activists have called on financiers and clients of Asia Pulp & Paper (APP), one of the world’s biggest paper producers, to stop doing business with the company, citing alleged violations of its own sustainability commitments.
“APP is a wolf in sheep’s clothing,” said Sergio Baffoni, coordinator of a campaign by the Environmental Paper Network (EPN) to protect Indonesia’s rainforests. “For years they have pretended to be a green champion, but their commitment to forest conservation and social responsibility remains empty words. Conflicts, intimidation and violence continue to ravage communities living in the areas exploited by APP and its suppliers.”
The EPN has published a new report linking APP to deforestation, forest and peat fires, and social conflicts in its areas of operation in Indonesia. It also alleges APP failed to fulfill its promises to rehabilitate degraded peatlands and conserve rainforest.
Other criticisms leveled against APP include a failure to be truly transparent in its operations and the implementation of its sustainable policies, and a weakening of its criteria for assessing future suppliers.The report says these shortcomings are proof that due diligence by the buyers and banks doing business with APP have been ineffective, allowing the company to violate its own forest conservation and human rights pledges. As a result, conflicts and violence have continued unabated in the Indonesian regions where it produces and sources pulpwood for its paper production, EPN says.
The group has written to international banks, urging them to stop financing APP until a trustworthy independent third-party verification has demonstrated that APP and its affiliates have improved their practices, remedied past social and environmental harm, and met the demands made by the local and international NGOs detailed in the report.
“APP remains a highly controversial supplier of pulp and paper products to the global market,” said Rusmadya Maharuddin, forest campaigner at Greenpeace Indonesia, one of the NGOs named in the report. “All buyers, financiers, banks and companies that continue to do business with APP and [parent company] the Sinar Mas Group are complicit in their abuses”.
In response to the criticisms, APP says it remains firmly committed to its sustainability pledges and that it continues to make progress on those goals.
“This year, we announced new targets to meet as part of our Sustainability Roadmap Vision 2030,” APP said in a statement to Mongabay. “We are not perfect and we value constructive criticism that will help us to improve. And as always, we have an open invitation for any concerned stakeholders to visit our operations, conduct their own evaluations and arrive at their own informed conclusions.”
Deforestation and fires
APP committed to ending deforestation in its Indonesian concessions in 2013. While land clearing decreased after this, destruction of peatland from fires increased, the EPN report says, with APP’s suppliers and sister companies involved in massive forest and peat fires throughout Indonesia in 2015, 2018, 2019 and 2020.
In 2015, the total area burned inside APP concessions in South Sumatra province was 293,065 hectares (724,179 acres), nearly three-fifths of which constituted carbon-dense peatland. In 2019, APP concessions in South Sumatra burned again, with a total affected area of more than 60,000 hectares (148,000 acres).
The EPN report attributes this repeated burning to the fact that APP continues to operate in fragile and highly flammable peat ecosystems.
“The fact is that plantations on drained peat become an extensive stock of fuel, and when a forest and peat fire starts there it is unstoppable,” the report says. “This is why dried peat must be immediately re-wetted.”
But instead of restoring the dried peatland to its original wet condition to prevent it from burning, APP remains heavily reliant on peatland plantations, the report says, with half of the concessions of its pulpwood suppliers being on peatland. Even with best-practice management, cultivating pulpwood plantations on drained peatlands is not sustainable, the report adds.
Greenpeace found 3,500 hectares (8,650 acres) of peatland that had been cleared in three concessions with ties to APP between August 2018 and June 2020. Peat clearing is typically done ahead of planting pulpwood trees such as acacia and eucalyptus.
Greenpeace also found 53 kilometers (32 miles) of drainage canals dug during the same period — a deliberate practice to drain the moist peat layer in preparation for planting, but one that also renders the soil highly susceptible to catching fire.
APP has denied the allegations of peatland clearing by the three associated concession holders, saying it has had a strict policy in place since 2013 of not converting peatland and not burning. It said it has also implemented several programs to address fires in its concessions.
“While APP suppliers are prohibited from land clearance by fire, this does not mean that no fires will ever take place within concessions,” the company said. “There are, however, still challenges on the ground due to the complexity of the land use within our suppliers’ concessions. This can include villages located inside and around the concessions.”
There’s also the matter of rehabilitating and protecting degraded peat ecosystems, which the EPN says APP has promised to do but largely failed to deliver on.
In August 2015, APP committed to retire 7,000 hectares (17,300 acres) of plantations on peatland. But this represents just 1.2% of APP’s total peat concessions, which cover 600,000 hectares (1.48 million acres), the report says.
“It would have been a good first step, if followed by a re-wetting of dried peat on a large scale,” the report says. “This did not happen, and peat fires keep periodically ravaging.”
APP says that since it retired the 7,000 hectares of peat plantations, it has been busy identifying the native tree species to protect and working with government and university researchers on restoration strategies. It says “further plantations on peatlands will be voluntarily retired and restored after they have been harvested,” and touts a target of restoring 35,000 hectares (86,500 acres) of peatland over the course of 10 years.
In an earlier pledge, from 2014, APP said it would restore 1 million hectares of rainforest and other ecosystems in 10 landscapes in Indonesia. The aim was to remedy historical deforestation of natural forest caused by APP’s operations. But that promise remains unfulfilled, with no clear plan and minimal progress on its implementation to date, according to the EPN report.
It says the only tangible achievement, besides the retirement of the 7,000 hectares of peat plantations, is the start of restoration work on 5,000 hectares (12,400 acres) of degraded forest, which represents only 1.2% of the million-hectare goal that APP has publicly committed to.
Weakened supplier policy
In 2013, APP adopted its “responsible fiber procurement and purchasing policy” (RFPPP), which bans suppliers involved in any deforestation activity. It followed that up in 2014 with a policy to evaluate future suppliers, which it called the “association procedure for implementing a no-deforestation commitment in APP’s supply chains.”
But according to the EPN report, APP dropped the association procedure from its website after NGOs criticized the company for its continued violations in 2017. The report says the omission of the association producer effectively weakens APP’s policy on its suppliers, which falls short of prohibiting development of peatlands and the clearing of forests with high carbon stock (HCS) , and does not require the immediate termination of suppliers found in breach of policy. It also scrapped the cutoff date of Feb. 1, 2013, for suppliers to comply, the report adds.
APP refutes the allegation that it changed its association procedure with a weaker policy, saying the procedure was integrated into its initial screening tool for suppliers, known as the “supplier evaluation and risk assessment” (SERA), in 2018.
“This merging of the procedural functions in no way affects the policy commitments themselves,” APP said in a statement to Mongabay. “Our HCS/HCV [high conservation value], peatland management requirements and cut-off date remain unchanged.”
Transparency (or lack thereof)
Another point of contention is APP’s lack of transparency, the EPN says.
A 2018 report shows APP has closer ties to its wood suppliers than it publicly discloses, with dozens of individuals who “appear to be current or past employees” of APP and its parent group, Sinar Mas, being listed as executives, directors and shareholders in the supplier companies.
APP acknowledged this, but said it’s “normal” for APP employees to be “seconded” to the suppliers in order to provide technical support. It added this practice ended in 2013. APP also refuted the report’s finding that seven of the eight individuals listed as owners of 24 of the suppliers appear to have worked for APP.
According to the EPN report, this use of hidden corporate structures has allowed APP to avoid responsibility for fires in its suppliers’ concessions.
It also points out that APP has refused to share or make public its HCS forest area maps, peatland studies and maps, data on participatory mapping of community and traditional land claims, as well as detailed data about its social conflicts mapping.
“A few of these have been shared but in a very selective way,” the report says. “In October 2019 its commitment towards full transparency was reduced to offering to share information in a ‘closed room in our office.’”
The lack of transparency on social conflict data has resulted in NGOs questioning APP’s progress in resolving conflicts in its concessions and its claim of having resolved 49% of the conflicts.
NGOs have long complained that APP has never revealed to the public which conflicts have been resolved and how. They say full disclosure is essential if APP wants to address its long legacy of land rights violations.
For decades, APP has been criticized for acquiring land without community consent and inflicting harm on Indigenous communities. In 2019, there were at least 107 villages or communities in active conflict with APP affiliates or suppliers.
APP says it’s protecting the privacy of villagers by withholding detailed information on the company’s social conflicts, and that the complexity of the issues prevents it from sharing more information.
The opacity that surrounds the company has also made it impossible for third parties to independently verify the progress that APP has made toward its own promised goals, according to the EPN report. It says APP should disclose sufficient information on all areas relevant for its policy implementation and provide transparent and collaborative monitoring systems that are accessible to the public so that the public can meaningfully monitor the implementation of the policy.
APP should also facilitate a truly independent verification of its progress using a credible set of indicators to measure its compliance, such as those developed by NGOs, the report adds.
APP says it has engaged with stakeholders, including NGOs, through its annual Stakeholder Advisory Forum since the start of the implementation of its Forest Conservation Policy (FCP).
“Through the forum, we have not only provided on our progress updates, we’ve also gathered their feedback for continuous improvement,” APP said. “APP also reports on the progress of its sustainability commitment through annual audited sustainability reports and through regular progress reports. Both of these are published on our website.”
But the EPN says the problem with this approach is that it’s not independent, as the progress is measured by parties paid by the company.
“APP has continued to self-declare its progress on implementing various aspects of its policy through communications or marketing campaigns, buyers’ trips, its Stakeholder Advisory Forum meetings or through endorsements made by second parties such as Earthworm Foundation, formerly The Forest Trust, which is paid directly by the company for its services,” it says in the report. “This approach to reporting on progress in implementing its commitments is merely self-reporting, and is insufficient and unreliable.”
APP said a “truly” independent verification is impossible because any verification program must be paid for.
“The issue with this type of criticism is that ‘truly independent’ is a vague term, and perhaps intentionally so,” APP said. “Any verification program must be paid for, and in so doing, may be perceived as not ‘truly’ independent, therefore excluding any form of verification as not being ‘truly independent.’”
It cited the case of the Rainforest Alliance, an eco-certification NGO commissioned by APP in 2014 to conduct an assessment of its FCP progress. The Rainforest Alliance found through its assessment that APP’s supply chain was free of deforested timber.
“However, that hasn’t stopped other parties, including the EPN from continuing to assert otherwise,” APP said. “If there is unanimous agreement on parties that can be considered ‘truly independent,’ and our critics can agree to accepting the findings of such verification, that would certainly be something we’d be prepared to invest in.”
APP said it has launched a new forest monitoring dashboard to track forest cover changes in near-real time in 2020, as part of efforts toward greater transparency.
The EPN, however, says this new system is still lacking because it’s limited to maps of APP’s conservation areas and concession boundaries, with production areas notably missing. The maps are also of low resolution and can’t be downloaded.
APP said the system is intended to track changes in natural forest cover in its conservation areas, which includes all HCS areas across its supplier concessions, allowing the company to respond more quickly to illegal deforestation or encroachment in remote areas.
“Production areas on the other hand are planted with acacia or eucalyptus,” APP said. “These areas are replanted and harvested in regular cycles. Changes that take place in the production areas are planned in advance and only relevant to production activities. It is unclear why EPN would need such information to be made public.”
Banner image: Native forest and an acacia plantation in Riau, Indonesia. Image by Rhett A. Butler/Mongabay.
Editor’s note: at noon Pacific time on January 11, we switched two images that showed forest clearance in PT RAPP concessions. PT RAPP is associated with APRIL, not APP.
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