APP has been under fire since the FSC suspended APP's rights to use its logo over allegations of destroying tropical forest in Indonesia last year.

The latest blow came as Woolworths terminated its contract with the paper manufacturer, claiming it could not verify claims by the Indonesia-based pulp and paper company that the Select brand paper products it stocked were sustainably sourced.

Woolworths will develop a new specification for the products with local and international suppliers invited to tender for the contract.

APP said it is company policy not to comment on its contracts. However, it said it believes it remains "on the right tract to achieve global sustainability".

Director of sustainability and stakeholder engagement at APP, Aida Greenbury, said: "Addressing the needs to maintain the sustainability of our operations, preserving our environment and helping to alleviate poverty problems in our country – by providing products that are good for economy through a fair free trade – that's how we conduct our business."

Greenbury added that APP and its fibre suppliers adhere to "strict, independently audited, Legal Origin Verification and Chain-of-Custody (CoC) protocols to ensure that no illegally obtained wood enters the fibre supply".

Its major mills are PEFC, CoC-certified, and Greenbury said that, on average, 90% of APP's Indonesian woodchip supply for pulp-making comes from sustainable plantations operated by its exclusive suppliers.

The company aims to gradually increase the sustainable plantation woodchip supply to 100% by 2010.