A landmark commitment by one of the world’s largest producers of tissue and paper to stop cutting down Indonesia’s prized tropical forests is under renewed scrutiny as the company prepares to open a giant pulp mill in South Sumatra. To fanfare more than three years ago, Asia Pulp and Paper promised to use only plantation woods after an investigation by one of its strongest critics, Greenpeace, showed its products were partly made from the pulp of endangered trees.

Greenpeace welcomed the announcement as a breakthrough and the company, long reviled by activists as a villain, rebranded itself as a defender of the environment, helping it to win back customers that had severed ties. At the same time, it was pressing ahead behind the scenes with plans to build a third pulp mill in Indonesia.

When it went public with its plans for the OKI mill in 2013, APP announced it would produce 2 million tons a year and then earlier this year acknowledged the mill’s capacity could in the future increase to 2.8 million tons.

New research released Wednesday by a dozen international and Indonesian environmental groups estimates that APP will face a significant shortfall in its supply of plantation-grown wood after the new mill begins operating, even at a 2.0 million ton capacity. The company could then face a choice between using higher-cost imported wood or looking the other way as its suppliers encroach upon virgin forests.

“APP, while it has been presenting itself as a champion of zero deforestation, is building one of the world’s biggest pulp mills,” said Christopher Barr of Woods & Wayside International, one of the organizations involved with the report.

“There will be a great deal of pressure to ensure it receives adequate supplies of wood to keep it operating at full capacity,” he said. “Our analysis shows the group’s existing planted area in South Sumatra is unlikely to produce the volumes of wood the mill is expected to consume at projected capacity levels.”

How the mill, which could operate for more than half a century, is fed will be a factor in the survival of Indonesia’s tropical forests and the endangered wildlife they shelter. More generally, the draining and destruction of peatlands for forestry or agriculture will over decades release vast amounts of carbon that could jeopardize Indonesia’s ability to meet its emission reduction targets under an international agreement due to be signed within days.

The report estimates that APP’s plantations in South Sumatra have never produced half of the wood needed to feed a 2.0 million ton a year pulp operation. That shortfall is compounded by devastating forest and peatland fires across Indonesia last year that destroyed more than a quarter of APP’s planted trees in South Sumatra, according to an on-the-ground survey by Hutan Kita Institute and other civil society groups.

The company said it would it respond to concerns about the mill.
APP is the crown jewel of the Sinar Mas conglomerate, one of Southeast Asia’s largest companies. For a time it was a pariah in financial markets after defaulting in 2001 on $13.9 billion of debt, which still ranks as the biggest default by a company from a developing nation. It has secured Chinese funding for the OKI mill.

The draining of peatlands, which make up the bulk of the concession land in South Sumatra that supplies APP, is a fraught issue for Indonesia’s neighbors. Record fires on peatlands and forests last year caused $16 billion of losses for Indonesia, according to the World Bank, and sent a smoky, health-damaging haze across the country and into Singapore, Malaysia and Thailand.

The mill and its plantations, meanwhile, affect the livelihoods of thousands of people who have lived for decades on land used by APP. The company is embroiled in hundreds of land use conflicts across Indonesia and has yet to reach an agreement with any community after vowing to settle such disputes in 2013

Once the new mill begins operating, “I think it will be even more difficult for communities to get their land back” said Aidil Fitri, of Hutan Kita Institute, which is advocating for two communities in conflict with APP in South Sumatra.

“Now they have OKI mill and we believe they need more lands for their plantations,” he said. “On the other side, the communities who have conflicts with APP need their lands back for their livelihood, to do agriculture, not for acacia plantations.”

Greenpeace forests campaigner Andy Tait said APP has maintained it will only supply the mill with plantation or imported wood. But he acknowledged that APP’s assessment that its plantation wood supply is adequate predates last year’s “horrendous” fires, which heavily affected the company.

“We don’t see any sign of APP pulling back from its commitments on no deforestation at this stage and it would obviously be commercial suicide for them to do so,” he said. “But this mill construction raises a number of critical questions that need to be addressed.”

Indonesia (AP)

We are often asked whether it is OK to buy paper from Indonesia, now that the biggest Indonesian pulp and papers have committed to a moratorium on rainforest logging. Here, Sergio Baffoni explains why it is still too early.

On February 5, 2013, after decades of environmental and social conflicts in Indonesia, Asia Pulp & Paper (APP) announced a new Forest Conservation Policy (FCP) including a commitment to zero deforestation. Over the past many years, APP has been criticized for its practices which led to the clearing of millions of hectares of rainforest, the destruction of tiger habitat, displacement and human rights violations of indigenous and rural communities, as well as the release of huge amounts of greenhouse gases into the atmosphere due in large part to the conversion of peatlands into industrial pulp plantations. In April 2014, APP expanded its commitment to include the protection or restoration of a million hectares of Indonesian rainforest. Then in February 2015 APP announced a new implementation plan to address issues raised by an independent evaluation. Actions were announced in August 2015 by APP on the development of peatland management standards, high-tech LIDAR mapping of peatland , and removal and restoration projects on 7,000 hectares of plantations.

APP’s commitments represent a great opportunity to address its legacy of environmental and social impacts and to change its future practices away from deforestation. However, implementation on the ground is slow and in some cases barely non-existent. An independent evaluation by the Rainforest Alliance, as well as recent reports by other NGOs, have shown gaps and serious challenges that will require more time to be addressed.

These reports revealed that, while APP suppliers’ own deforestation and new peatland development has stopped, deforestation by third parties continues in many of their concessions. Additionally, numerous social conflicts remain unresolved and improved peatland management and landscape restoration plans have yet to be developed. These independent reports on APP’s performance during the last two years, and future monitoring by NGOs, should provide good direction for continued learning and improvement by APP.

The following unresolved issues have arisen within recent months:

• The magnitude of unresolved social conflict emerged tragically with the murder of the farmer union activist Indra Pelani in February 2015 by security guards contracted by APP. In June, Indonesia’s National Human Rights Commission found gross human rights violations transpired with this case, indicating that significant risk of additional legal violations remains.
• The Rainforest Alliance evaluation found that the company is failing to stop third party deforestation, which is still widespread in set-aside forest, inside APP and supplier concessions.
• About half of APP’s plantations are located on peat soil that, once drained, is highly inflammable. The unaddressed heritage of decades of bad peatland practices, combined with third party deforestation and with a long dry season, has made APP plantations one of the sources of the fires that have been ravaging Sumatra and Borneo. The fires have created a smoke and haze crisis that is affecting the entire South East Asian region. It has impacted the health of millions of people in Indonesia and neighboring countries and has led to several deaths. The crisis has also caused schools to close around the region, shut down air transport, and released each day more greenhouse gasses than the average daily emissions from all of the USA. Investigations in Indonesia have reportedly led to the arrest of an APP affiliated concession manager (Bumi Mekar Hijau) while authorities in Indonesian and Singapore (under the Transboundary Haze Pollution Act) have opened legal investigations into APP.

NGO stakeholders have been discouraged by the pace of progress on key issues and by recent changes in stakeholder engagement formats. The ongoing fires, the unresolved social conflicts highlighted by Mr. Pelani’s murder, the ongoing deforestation by third parties, the gaps reported by the Rainforest Alliance evaluation and the company’s expansion plans are worrying developments that risk jeopardising the credibility of APP’s forest policy.

On 6 October 2015, Environmental Paper Network co-ordinated NGOs came together to send an open letter to APP expressing their concerns and proposing a broader set of recommendations.

APP’s answer to this letter is unsatisfactory, essentially reiterating the many steps that have been announced in the past months, without giving any new response to NGO concerns and recommendations. APP’s willingness to act on these recommendations and demonstrate change on the ground must be the measure that paper customers and investors adopt in their scrutiny of APP’s performance. Until such changes are independently verified, APP poses too many social, environmental and governance risks to do business with.

A report published by the World Watch Institute’s Vital Signs project, entitled Paper Production Levels Off, suggests that global paper consumption may have peaked. In 2011 it reached 400 million tonnes, but 2013 figures are slightly below that (397.6 million tonnes).

The top priorty for our network, and the first pillar of our Global Paper Vision is to reduce consumption and ensure fair access to paper. In rich countries we use far more than our fair share of this precious commodity. We want everyone on earth to access the benefits paper can bring to literacy, democracy and hygiene, without increasing overall production, but this is only possible if people reduce the amount of paper we use in Europe, North America and other high-consumption parts of the world.

There are now signs that paper use is dropping in some countries, largely as a result of a shift to digital, and even China’s rapid consumption growth seems to have stopped. This vindicates our insistence on the need for and feasibility of an end to growth of global paper consumption. We believe that more people benefiting from paper does not need to mean more paper being used overall.

An end to the growth in paper use is necessary, coupled with an increase in the content of recycled fibre and agricultural residues, in order to reduce pressure for wood. There is increased demand on forests for biomass energy and agricultural use, amongst other things, and it is dubious whether there is enough forest to go round without major cuts in consumption.

An end to growth in paper use shows that peaking consumption is possible. Is this ‘the end of more’? Let’s hope so!

Last year was a successful year for the EEPN, with the launch of the Global Paper Vision, strong collaboration with the Chinese and North American Environmental Paper Networks, excellent progress in our Indonesian rainforest paper campaign and much more. You can read all about it in our Annual Report for the year by following this link: EEPN 2014 annual report

Aditya Bayunanda of WWF-Indonesia said, ‘We question the real conservation benefit of the implementation of this policy. APRIL’s HCV protection process continues to be flawed and NGOs continue to find natural forest clearance and canal developments by APRIL without HCV Resource Network peer-reviewed assessment.’