Company's logo |
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| Type | Produce & trade |
|---|---|
| Industry | Paper & pulp |
| Founder(s) | Eka Cipta Widjaja |
| Website | asiapulppaper.com |
Asia Pulp & Paper, also known in the paper industry as APP is based in Singapore, is one of the largest pulp and paper companies in the world. It was founded by Eka Cipta Widjaja, who had significant ties to the Suharto ruling family in Indonesia. APP claims to obtain 80-90% of the fiber for papermaking from sustainable plantations.[1] While several organizations continue to claim that a significant portion of its raw materials come from rainforests in addition to farmed wood, APP recognizes an imperfect early track record and is now working actively to rely on sustainable plantations for future production and to promote preservation of rainforests and peat lands.[2]
It can produce about 2 million tons of pulp and more than 5 million tons of paper and packaging materials per year. Part of the Sinar Mas Group, it operates plants in Indonesia and China and sells to clients in more than 60 countries around the world[3]. In the late 1990s various NGO's made allegations of poor environmental practices, but in recent years the company has defended itself more vocally while also making vigorous reforms in its management of land and water and its cooperation with local and national governments and other organizations. APP has announced a partnership with Carbon Conservation, an environmental and sustainability consulting firm, to craft Vision 2020, a roadmap to guide sustainability principles, goals and program execution across all aspects of the company’s Indonesian operations through the year 2020.[4]
The company has been at the center of many environmental controversies and has been accused of being involved in illegal logging in Cambodia and in Indonesia, and has breached agreements with three major environmental organizations. The company is also well known for defaulting on debt repayments in 2001, during a period of wide-scale financial problems in the South East Asia region.
In recent years, however, the company has significantly increased spending to advance sustainability and environmental protection. By the end of 2009, APP-China has invested more than 5 billion RMB in environmental protection, with emission indicators said to exceed national and international standards.[5] At the end of June 2008, APP-China's six main pulp and paper mills and two forestry companies completed a greenhouse gas assessment (GHS) covering the entire plantation-to-industry chain, making APP-China the first Chinese pulp and paper company to conduct a comprehensive carbon footprint analysis. In 2009, APP's Gold East Paper company completed the GHS by Carbon Trust and became the first Chinese paper producer to pass PAS 2050.
To address the many challenges from limited raw material resources in Asia for pulp and paper production, APP has introduced a program called Plantation-Pulp-Paper Integration. This program combines advanced scientific forest management methods for sustainable plantations with supply chain management across its product lines. APP has also adopted a "Paper Contract with China Manifesto" that calls for the adoption of pollution standards. Key indicators being tracked for improved environmental stewardship include water consumption per ton of pulp, wastewater discharge per ton of pulp, COD emissions per ton of pulp/paper, all of which are said to now be well below international standards. [6]
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Asia Pulp and Paper (APP) has its roots in 1972, when the company Tjiwi Kimia was founded by Eka Tjipta Widjaja as a small caustic soda manufacturer. In 1978, Tjiwi Kimia commenced paper production of 12,000 tons/year. In December 1976, Indah Kiat was formed as a joint venture between CV Berkat (an Indonesian company), Chung Hwa Pulp Corporation and Yuen Foong Yu Paper Manufacturing Company Ltd. from Taiwan. In April 1979 Indah Kiat Tangerang mill’s Paper Machine 1 and 2 started with a production of 100 tons/day of wood free paper. By March 1984 Indah Kiat Perawang mill’s Pulp Machine 1 started producing bleached hardwood kraft pulp with an initial capacity of 250 tons/day.
In May 1986 Sinar Mas Group acquired 67% of Indah Kiat’s total shares. Chung Hwa and Yuen Foong Yu had 23% and 10% shares respectively. In 1987 the first cast coating machine installed at Tjiwi Kimia, and in April 1990 Tjiwi Kimia was listed on the Jakarta and Surabaya Stock Exchange.
In 1991 Tjiwi Kimia’s PM 9 started operation with an annual capacity of 207,000 tons. The following year Indah Kiat acquired PT Sinar Dunia Makmur, a manufacturer of industrial paper located in Serang with a production capacity of 900 tons/day.
Tjiwi Kimia commissioned the Carbonless Paper Plant in March 1993, an experiment
The company Pindo Deli under control of APP in Feb. 1994, and by 1997 its paper machine #8 and #9 would both have begin operation with production capacity of 240,000 tons per year. In 1998, paper machine #11 started tissue production in Pindo Deli with annual production capacity of 400,000 tons started to operate.
APP-China began investing in China in 1992, with an emphasis on the Yangtze and Pearl River Deltas. APP-China's pulp and paper mills now include Ningbo Zhonghua, Goldeast Paper, Ningbo Asia, Gold Huasheng, Gold Hongye, and Hainan Jinhai Pulp and Paper.[7]
APP-China was registered in Singapore in October 1994. APP-China employs over 37,000 people and created 5,000 new jobs in 2009.[8]
In 1994, the company moved its headquarters from Indonesia to Singapore and began to borrow money to expand aggressively. It was soon heavily leveraged; from 1996 to 1998, it only produced 1.5 times as much cash flow as its interest costs.[9] In March 2001, during the Asian Debt Crises, it defaulted on its debt, most of which was subsequently rescheduled at lower values.[10] In November 2003, Jakarta-based subsidiary Indah Kiat sued the underwriter and holders of an issue of debt (in United States dollars) it had issued in 1994 under New York law; it sued, however, in Indonesia, and in February 2007 the Indonesian court declared the debt invalid.[11]
APP-China invested over 300 million RMB in environmental conservation facilities and activities in 2009 alone, and had invested over 5 billion RMB in environmental protection by 2009.[8] APP-China inn 2009 also achieved 100% treatment of its solid waste from its six major pulp and paper mills. APP-China was honored in 2009 with the "Award of Contribution to Low Carbon Business (Multinational Corporation)" at the first meeting of the Low Carbon Forum hosted by the National Committee of the Chinese People's Political Consultatative Committee (CPPCC) and the China Association for Science and Technology. APP-China also received the "Green China Campaign-2009 Scientific Development of Forest Plantation Special Award" by the China Green Foundation and the State Bureau of Forestry, Center for Economic Development Research. Further, APP-China received the "2009 Scientific Forest Plantation Development Award" by the China Green Times.[12]
In November 2007, Forest Stewardship Council (FSC) decided to rescind the rights of APP to use their logo, following pressure from other FSC Stakeholders, and a new policy approach by FSC Board of Directors.[13]
A investigation published in March 2008 by an environmental coalition called Eyes on the Forest [14] showed evidence of a new road built by APP, heading through the Kampar peninsula, one of the world's largest contiguous tropical peat swamp forests, with more carbon per hectare than any other ecosystem on Earth. The investigation found tracks on the new road of the critically endangered Sumatran Tiger, whose wild population has been reduced to less than 500 individuals. APP claimed that it was building this state-of-the-art, paved highway for the benefit of the local communities, though satellite imagery shows that the road does not go anywhere near the two settlements.
The authors of the report stated:
We strongly urge APP to join the ranks of responsible businesses and conduct its operations within the law.[15]
APP was also found to be conducting illegal logging in Yunnan Province in China in 2005,[16], while a subsidiary of the firm called "Green Rich" was caught illegally logging in Cambodia, leading a 2005 investigation into the company to conclude:
APP's business model is a tactically aggressive one: it turns huge profits by quickly stripping forests bare, exploiting age-old forests and indigenous peoples, and leaving town before the environmental consequences are felt. By the time communities and governments lodge complaints and lawsuits, APP has divested itself of local interests and assets.[17]
The firm has made efforts to improve its green image, hiring the PR firm Ogilvy & Mather, and ran advertisements in The Times and the New York Times claiming that the company was committed to "conservation beyond compliance" [18]. On the termination of all ties with the FSC in 2007, a spokesman for WWF commented "Apparently the company has decided to run a global propaganda campaign rather than protect forests with high conservation values[18]."
In 2003, APP signed a Memorandum of Understanding with the World Wide Fund for Nature, but this ended six months later after WWF refused to approve the environmental management plan, and questioned the figures APP was supplying. WWF then began lobbying buyers worldwide to boycott APP products.[19]
APP responded to early boycotts and protests with threats of legal action. Zhejiang Hotels Association announced in 2004 that it would no longer purchase APP products because of the firms illegal logging activities in Yunnan province, leading APP to threaten sue to company. The suit was later dropped because of a major publicity campaign by Greenpeace China, who claimed:
APP was wanting to scare the hotel association to revise its green procurement policy, but it didn’t count on the huge public support (for the defendant).[20]
Despite the failure of the WWF partnership, APP entered into a five year partnership with Rainforest Alliance in 2005. This partnership was supposed to allow Rainforest Alliance to identify and monitor high conservation value forest within four concessions managed by APP in Pulau Muda, Serapung, Siak, and Bukit Batu, and provide independent "verification statements" to attest to the scope and results of the company's efforts to protect these high conservation value areas. Rainforest Alliance made a number of requests for changes in the management of these areas in the first year of the contract, and found that the situation had deteriorated by late 2006 and some areas had been cleared, leading Rainforest Alliance to terminate the agreement in February 2007, stating:
The company has not demonstrated a comprehensive, consistent or dedicated approach toward conservation management necessary to maintain or enhance the forest ecosystems fundamental to the survival of the High Conservation Value Forests present there.[21]
In January 2008, the office retailer Staples ended their 11-year relationship with APP, which had formerly supplied between 5 and 9% of the paper sold at the chain "due to their clear lack of progress in improving their environmental performance."[22] Other companies including Office Depot and Wal-Mart had cut ties previously on environmental grounds,[23] and these have been followed more recently by Australian retailer Woolworths Limited.[24]
In July 2010 40 European envionmental organizations signed a letter to the paper industry demanding to stop any eventual purchase of paper from APP [25]
On June 8, 2011, Greenpeace launched "Barbie, It's Over", an international campaign criticising Mattel's use of Asia Pulp & Paper's products in its packaging, particularly in its line of Barbie products.[26] Within two days of the campaign's start, Mattel ordered its packaging suppliers to stop buying from Asia Pulp & Paper pending an investigation into Greenpeace's deforestation allegations, and further ordered its suppliers to report on how they source materials. Asia Pulp & Paper welcomed Mattel's response, believing that Mattel's investigation would conclude that its "packaging materials are more than 95% recycled paper sourced from around the world."[27]
On October 5, 2011, Greenpeace announced that Mattel stated[28] that it would no longer purchase pulp and paper products from Asia Pulp & Paper due to the effects that its logging practices had on the Sumatran tiger population.[29]
During late July 2011 Greenpeace revealed images and footage on their website[30] that showed a critically endangered Sumatran tiger. This tiger had become trapped by an animal snare at the edge of an APP concession, and had been there for at least seven days, without food or water. Attempts to tranquilise and rescue the tiger failed due to its poor condition of health. APP denied any responsibility, despite reports to the contrary.
English writer George Monbiot stated that "Asia Pulp and Paper (APP) could make a fair claim to being one of the most destructive companies on the planet."[31]