Bloomberg News

Asia Pulp Assures Customers After ‘Misleading’ Greenpeace Claims

June 26, 2012

Asia Pulp & Paper Co. is reassuring customers that it is uses no illegally logged trees in its paper mills after Greenpeace International accused the company of destroying the habitat of the endangered Sumatran tiger.

Asia Pulp, a unit of Indonesia’s Sinar Mas Group, is going directly to its customers to counter “misleading or simply untrue,” claims from the environmental group, according to Aida Greenbury, managing director of sustainability for the company. In a May report, Greenpeace said the company is clearing natural rain forests to supply its mills, logging in areas considered among the last refuges for the Sumatran tiger, which is protected under international conservation programs.

“In general terms, we understand why customers are concerned about some of the allegations,” Greenbury said in an e-mail. “That’s why we have a duty to explain to customers the real facts in this and other cases.”

Asia Pulp has been the target of environmental groups for more than a decade. In a 2001 report, Friends of the Earth said the Indah Kiat Pulp & Paper Corp. (INKP), an Asia Pulp unit that operates pulp and paper mills, got 75 percent of its timber from clearing rain forest.

More than 60 companies have broken supply contracts or ruled out buying Asia Pulp products, according to Greenpeace. Greenbury declined to discuss “confidential customer issues.”

Customer Churn

“In terms of the impact on our business, APP continues to grow and is now one of the largest pulp and paper companies in the world,” Greenbury said. “A certain degree of customer churn is normal in any business, and APP is no exception.”

In May, Greenpeace supporters hung a sign on Yum! Brands Inc. (YUM:US)’s headquarters building in Louisville, Kentucky, accusing Yum of buying paper products from Asia Pulp made with rain forest wood for its trademark KFC chicken buckets.

Independent tests on food boxes purchased at stores in Indonesia, the U.K. and China in the past two years found fibers from tropical hardwood trees, according to a May 23 Greenpeace report. More than half the material in some KFC chicken buckets in China came from such wood, said Rolf Skar, forest campaign director for Greenpeace.

“Whenever you see significant amounts of mixed tropical hardwoods, that means that rain forest have been chewed up and torn apart,” Skar said.

The presence of mixed tropical hardwood fibers “says nothing about whether the product is sustainable or not,” Asia Pulp said in a May 23 statement. Rain forest wood fiber can come from degraded, logged-over or burned out forest areas, the company said.

Legal Harvesting

“The mixed hardwood fibers that we are harvesting are legal and not of high conservation value,” Greenbury said in a telephone interview.

The company said it’s in compliance with Indonesian government laws and regulations and that an independent report confirmed that no protected tree species were entering the supply chain. The government cleared Asia Pulp of that charge, the company said.

Sixty percent of the paper purchased by Yum comes from sustainable forests, “and we won’t stop working on it until we’ve reached 100 percent,” the company said in a statement last month after the Greenpeace report was issued. Yum, which owns and franchises more than 37,000 restaurants worldwide, had no further comment on the matter, Yum spokesman Christopher Fuller said yesterday.

Yum Report

Food packaging should have “the least impact on the environment as possible,” Yum said in a 2010 report.

“From the moment the accusations were published, we produced a number of updates for customers,” Greenbury said. “Regarding Greenpeace, it is understandable that customers would have questions on their allegations.”

Logging forests in Indonesia threatens the Sumatran tiger, one of six subspecies of tiger. It is classified as critically endangered with about 400 left in the wild, according to WWF’s website.

Skar said Greenpeace has used other methods such as satellite images that show how trees from natural forests end up in Asia Pulp mills.

While Asia Pulp has challenged Greenpeace’s findings, Greenbury praised the group and others for highlighting areas that need improvement. Asia Pulp said last month that beginning June 1, it would suspend clearing natural forests in areas where it hold government licenses to produce pulpwood to take “account of critical issues raised in our dialogue” with non- governmental organizations.

Asia Pulp units have equity stakes in six companies that hold pulpwood plantation concession licenses in Indonesia. By 2015, Asia Pulp said it will have the capacity to “be wholly reliant” on raw materials from plantations.

“It’s a long process,” Greenbury said in an interview, crediting the contributions of non-government organizations. “It’s a long, learning experience. We wouldn’t be where we are right now if the NGO community didn’t let us know where we can improve ourselves.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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