Paper giants Asia Pulp & Paper (APP) and Asia Pacific Resources International Holdings Limited (APRIL) have been accused of defaulting on their zero-deforestation commitments, according to a new report by a coalition of NGOs.
It alleges the two businesses purchased wood from companies clearing natural forest in the Indonesian Borneo.
Signed by NGOs including WWF, the Indonesian Forum for Environment (Walhi), Environmental Paper Network, GAPETA Borneo and Forest Peoples Programme, the report claims that wood utilisation reports show that in 2017, pulp mills operated by APP and APRIL purchased wood fibre from PT Fajar Surya Swadaya (PT FSS), which manages an industrial pulpwood plantation concession in East Kalimantan with a total area of 61,470 hectares.
Additionally, it is alleged that APP purchased wood from PT Silva Rimba Lestari (PT SRL), which manages an industrial pulpwood plantation concession of 88,000 hectares in East Kalimantan.
PT FSS and PT SRL are majority owned through holding companies by members of the Hartono family founders of the Djarum Group.
According to the NGO report, in 2016 and 2017 PT FSS and PT SRL harvested more than 50,000m3 of commercial wood from natural forests.
Both APP and APRIL have denied the allegations.
APP said: “We believe the report contains factual errors and presents incomplete information.
“APP is not engaged in deforestation, either directly, through companies owned by APP, or indirectly, through third parties.
“APP does not own or control PT Sarana Bina Semesta Alam (PT SBSA), which is alleged to have acquired fibre supply from PT SRL and PT FSS.
“Neither PT SRL nor PT FSS are approved suppliers of fibre to APP. APP did conduct a SERA evaluation on PT FSS from March 2017 – November 2017, but it was not eventually approved as a supplier.
“In an administrative lapse, APP did purchase a quantity of wood from PT FSS. A pilot shipment was delivered after the supplier passed the SERA desktop assessment, but before the SERA onsite assessments were completed.
“This pilot shipment was delivered to APP’s Indah Kiat Pulp & Paper (IKPP) mill in Perawang on 1 November 2017. However, as the SERA onsite assessment surfaced issues surrounding PT FSS, the delivery was flagged and quarantined.
“To date, the shipment remains quarantined in IKPP’s log yard. No fibre from this shipment has entered APP’s production supply.
“This administrative lapse and our quarantine response, was shared with our FCP implementation partner, TFT.
“The report also repeats previously debunked theories that APP owns or controls PT Muara Sungai Landak (PT MSL) and PT Bangun Rimba Sejahtera (PT BRS). APP has no ownership, financial or legal relationships with either company.”
APP added that it has also “engaged a big four accounting firm to conduct a comprehensive assessment of all industrial forest plantation companies in Indonesia”.
“The purpose of this assessment is to shed light on APP’s ownership and governance structure and provide facts towards resolving the ongoing and unsubstantiated allegations of using opaque ownership structures in companies that are in breach of APP’s zero-deforestation commitment.”
APRIL said its operations are “firmly guided by our Sustainable Forest Management Policy 2.0 (SFMP 2.0)” launched in June 2015.
It said: “This policy embeds APRIL’s commitments to no deforestation, responsible peatland management, conservation and restoration, community empowerment and engagement, and verification and transparency.
“These commitments remain steadfast and progress on implementation – including our challenges – continues to be independently verified and publicly reported.”
A spokesman for APRIL confirmed that: “PT FSS is an Open Market Supplier of plantation wood to the company, starting in June 2017, and following completion of the internal due diligence process.
“We confirm that APRIL did not purchase and use natural forest wood from this Open Market supplier or from any other supplier.
“The recently published 2017 audit report from KPMG PRI (report on APRIL Group’s Implementation of Sustainable Forest Management Policy 2.0) confirms that APRIL’s zero deforestation and no mixed hardwood use commitments have been upheld.
“The report also noted significant improvements in enhancing transparency across APRIL’s supply chain and its ability to access supplier data during the year.
“This includes data from Open Market suppliers and is a focus area for the company and the APRIL Stakeholder Advisory Committee.”
APRIL has been in dialog with the FSC since early 2016 on its process to end its disassociation.
In 2018, FSC has continued its dialogue with APRIL and interested stakeholders in view of developing a roadmap towards ending its disassociation.
Part of this process is a baseline assessment to inform the roadmap, which will be carried out by an independent team of experts appointed by FSC.
Over the past decade, APP and APRIL have made heavily publicised commitments to have “zero deforestation”, along with announcements of large capital investments in pulp production and downstream processing to offer assurances that they had adequate supplies of plantation grown fibre to support their raw material needs.
The NGO coalition report added: “This appears to signal that each group has begun to default on its no deforestation commitment as it seeks new sources of wood.”