Despite APP’s efforts to show the world that it undertakes sustainable practices, it remains at the forefront of criticism from NGOs, which has led several companies to stop doing business with APP.

Five key issues that were brought up in the interview have been transcribed below, along with reaction from Greenpeace, which was denied access to the event by APP. Draw your own conclusions by watching the the interview at printweek.com/go/webcasts.

Certification
Matt Whipp: One of APP’s Indonesian mills is certified with PEFC Chain of Custody...

Aida Greenbury: That’s right.

MW: But there’s a question mark over one element of that and the certification body is now looking into that and re-auditing itself. Is there any update?

AG: There are no updates. We comply with every PEFC regulation… We are happy for our auditors to have a look at our operations again with the extra audits and look at our supply chain and how we produce non-controversial paper for PEFC production. The audit is ongoing, but we are certain we are fully compliant with PEFC.

MW: Are there any PEFC-certified plantations in Indonesia?

AG: No, not yet.

MW: So you have some mills in Indonesia that are PEFC certified, but they don’t take any Indonesian timber. What would you say to people who say that this is painting a veneer of sustainability over the APP operations, when actually they’re taking wood from somewhere completely different?

AG: All paper companies around the world do exactly the same thing. Chain of custody certification (CoC) is given to a producer, for example, Company X that produces paper anywhere, and they will receive materials from all over the world. CoC is given to that company because it already complies with the PEFC regulations. This means it can have a clear production line that can separate certain materials with certain environmental status. It’s implemented for all pulp and paper around the world, not just APP.

MW: Does it not seem odd that you have a mill that has to take wood from somewhere else in order to achieve the certification?

AG: No, because we have been doing it all this time. So many paper mills around the world take wood from Chile or Brazil.

MW: It’s not very environmentally friendly to be shipping wood thousands of miles, is it?.

AG: I will not criticise our competitors, but no I don’t think so. The most environmentally friendly way is to make sure the supply is nearby, but to make paper we need to mix different sorts of fibre. Those cannot be grown at the same spot.

MW: What’s the current relationship with FSC? Is there an ongoing dialogue?

AG: We have complied with everything FSC has asked us to do since the last meeting in 2007. FSC has asked us to come up with a certain plan to comply with its requests, which we have complied with according to the deadline it set, but we have not received any response from FSC so far.

According to Greenpeace, APP has PEFC COC certification in some of its mills "in order to provide confidence that no illegal or controversial wood enters the mills’ fibre supply chain" (APP stakeholder update, May 2008). Some APP plantations have been audited under PEFC rules for non-controversial timber – but they aren’t certified. This ‘non-controversial’ verified timber is then for specific use in the PEFC mixed-source products APP produce. But, it was never designed to give any assurance about the rest of the timber used by APP.

Even here there was controversy, claims the NGO, with some parts of these concessions located on areas of deep peat. Following the release of its Pulping the Planet report, an investigation into this issue was launched, although PEFC is allowing the same auditor which verified the plantations in the first place to conduct these checks.

Customer contract cancellations
MW: Brands such as Tesco and Carrefour have disassociated themselves from APP. What sort of impact does that have on you becoming a global player?

AG: We have not had any customers disengage with us because of environmental issues so far.

MW: So why were they disengaging with you?

AG: I don’t think they are disengaging.

MW: Well Tesco no longer uses APP products for its own brand.

AG: I cannot make comments about our customers.

In 2008, US retail giant Staples disengaged with APP describing the company as a "great peril to our brand". This year, a Financial Times article written in July included a quote from Carrefour that said: "…has decided to stop production in Indonesia of APP supplies for Carrefour branded products from this summer".

Kraft also announced earlier this year that "in light of the serious allegations … regarding its pulp and paper operations in Indonesia we have begun working with our suppliers and shifting our sourcing away from APP/Sinar Mas for paper-related products until the Sinar Mas group clearly demonstrates its entities comply with local laws and are able to source pulp and paper material sustainably."

There is no doubt that some APP customers are concerned over its practices, although Greenbury claimed that, despite the headlines, there has been no impact on production levels.

Peat
MW: Greenpeace alleged earlier this year that an APP supplier operating in the Keramutan peat swamp forest had converted and drained areas of peat deeper than 3m. This is illegal in Indonesia, yet I haven’t seen any evidence to deny or explain this.

AG: We engaged ITS Global, an Australian-based auditing company to audit the allegations a month ago. It has released a report, but I didn’t really go through this myself. Keramutan is an area in the Riau province and we have two pulp wood suppliers in that area. If I’m not mistaken, based on the independent ecological and social assessment, the two pulp suppliers set around 50% of the total concession area for protection, conservation and community. We respect that independent finding.

MW: I’m still confused whether that means there is evidence that you commercially exploited peat lands deeper than 3m or not.

AG: Indonesian law actually said that peat land with 3m local upstream and in the swamp should be protected against development. In the implementation of it, they have what we call independent assessment, and within this assessment we look at so many different aspects including high-conservation-value forests, and also at the implementation of the law.
There will be an independent assessment team going to the area and they will look if there’s critical peat land that has to be identified. That assessment has been completed. As a result, around 50% of the gross concessions area has been set aside to be protected and used for community use as a result of those assessments.

MW: So you’re saying this didn’t happen?

AG: No.

However, Greenpeace says that, although APP has not published its concession maps or the assessments to which Greenbury refers, nor provided any independent evidence to support its claims, its GPS photography and the peatland mapping work done by experts in this field shows extensive deep peat in APP-supplier concessions which are being drained and cleared. A month after the Pulping the Planet report was released, Greenpeace returned to Kerumutan and documented APP suppliers again using diggers to clear forests on peatland. The peatland swamps in this area are so extensive and deep that in one instance, it claimed a supplier’s digger had sunk into the peat. Additionally, although Greenbury claimed the ITS Global Report was independent, it was commissioned by APP.

ASA
MW: Greenpeace made a complaint about an APP advert and that was upheld by the Advertising Standards Authority (ASA). The APP agreed to no longer use this advert. Some complaints were that it has what looked liked endorsements from third parties. You’ve agreed to take them down and no longer use them - does this mean the claims within the adverts have no merit?

AG: We didn’t agree to take them down, the issues were taken by the ASA but we actually won the case. We put that advertisement in the Telegraph and The Times and we were only planning on doing it once. Greenpeace filed a complaint to the ASA and the ASA contacted us… we fully complied and provided them with full support and documentation that support our claims publicly.

MW: I understand they upheld the complaint but given that you decided not to continue with that campaign, they left it.

AG: No, I don’t think so. If they had upheld the complaint they would have gone through with the investigation, but the investigation wasn’t done.

Greenpeace said it felt APP’s adverts contained claims that couldn’t be backed-up such as that "poverty is the biggest cause of deforestation in Indonesia" and that "APP and its pulpwood suppliers support 500,000 hectares of forest protection".

The ASA said that, as APP confirmed it would not repeat the adverts and it had promised it would seek guidance on environmental claims before advertising in future ads it considered the issue resolved.

Arco
MW: How is Arco Paper associated with APP?

AG: Arco Paper is one of our merchants/marketing arms.

MW: Why doesn’t it have APP branding?

AG: Arco isn’t part of the APP Group.

As of the beginning of August 2009, Rui Zheng was listed at Companies House as Arco’s director. Greenpeace says he is also named as senior director and head of the chairman’s office at APP China.

It added that this means Arco customers are unaware that when they buy from Arco, they’re buying APP products.