APP is destroying forests

Posted: 18 October 2006 in APP, China, Indonesia, WWF

Sorry about stating the blinding obvious, but Asia Pulp and Paper is still destroying forests to feed its pulp mills. WWF put out a report in July 2006 which states that APP is responsible for 80,000 hectares forest loss every year. Nazir Foead, WWF-Indonesia’s Director of Policy and Corporate Engagement says, “We estimate that around 450,000 hectares of natural forests have been cleared over the past five years to supply APP’s pulp mill in Riau.”

I recently took part in a meeting at the German Ministry for Economic Co-operation and Development (BMZ) in Berlin. The meeting, with BMZ’s Ute Heinbuch (whose job title is “Export Credit Guarantees/Guarantees for Direct Investments Abroad”) was about possible export credits to future pulp developments in Indonesia. We were there to suggest that these would not be a good idea, given the social and environmental record of the pulp industry in Indonesia (and elsewhere).

I asked Heinbuch to say a bit about the due diligence process that Hermes carried out before agreeing to give a guarantee to APP China. She replied that APP had carried out a restructuring of its approximately US$14 billion debt. The restructuring included a clause on the environment. The environment clause was worked out with WWF. Officially WWF withdrew from its partnership with APP, but it “continued to work behind the scenes”, said Heinbuch. Anyway, the agreement with APP China said that the wood should come from “clean sources”, she said.

I pointed out to her that Greenpeace China had documented how APP China was logging illegally in Yunnan. “Yunnan? What is this?” she replied. I explained that it’s a province in China.

“ECAs are a means of supporting German companies in difficult markets,” said Heinbuch. By now I was struggling to keep quiet. China a difficult market? For the pulp industry? I kept quiet.

Then things got really strange. Heinbuch explained that the difficulty with a paper machine is that it can function with legal raw material. The machinery manufacturer has nothing to do with APP.

Heinbuch’s argument boils down to the fact that the guarantees that Hermes gives (and that she is supposed to be monitoring) go to German companies who are manufacturing machinery. The fact that they are selling the machinery to a company with a record of pulping 80,000 hectares of forest a year is irrelevant, because the machinery would still function no matter where the wood came from. So that’s all right, then.

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  1. A.N. Other says:

    APP fails to protect High Conservation Value Forests

    11 Juli 2006

    PRESS RELEASE – Embargoed for release on 11 July 2006 at 12.00hr Jakarta

    Jakarta, Indonesia – A new WWF monitoring report reveals that Asia Pulp & Paper (APP) continues to threaten forests in Indonesia that are important to both wildlife and people. This despite earlier commitments and pledges made by the company to its buyers.

    According to the report, the company has been responsible for about 80,000 hectares of natural forest loss every year, equivalent to roughly one-half of the Indonesia province of Riau’s annual forest loss since 2002. As of 2005, the company controlled nearly one-fifth, or 520,000 hectares, of the natural forests left on Riau’s mainland. All these forests are under threat, as are any additional forests that APP acquires in its quest to fill its wood supply gap and expand pulp production.

    “We estimate that around 450,000 hectares of natural forests have been cleared over the past five years to supply APP’s pulp mill in Riau,” said Nazir Foead, WWF-Indonesia’s Director of Policy & Corporate Engagement. “APP’s failure to commit to the protection of high conservation value forests means that many more hundreds of thousands of hectares of forests will go the same route.”

    High Conservation Value Forests (HCVFs) are forests of outstanding and critical importance due to their environmental, socio-economic, biodiversity or landscape values. At a meeting with WWF last month, APP refused to guarantee that such forests would be excluded from its future logging and wood sourcing operations. APP had called for the meeting in response to WWF’s report. It was the first official meeting between the two since February 2004 when WWF ended its formal engagement with APP over the company’s refusal to address key environmental and social concerns in its sustainability action plan.

    Since 2001, WWF and some of APP’s customers had been calling for the company to develop a sustainable wood supply plan that would protect HCVFs. APP had previously committed to protecting several HCVF blocks, however, recent monitoring reports show that the company failed to protect these blocks from illegal logging and fires.

    “By refusing to protect HCVFs, APP is endangering the very survival of the tigers, elephants and other species that inhabit Indonesia’s forests,” Foead added. “It is not justifiable for one company to destroy forests which are highly valuable for the sake of corporate profits.”

    WWF is working with the central and local governments in Indonesia to factor the protection of conservation values into land-use planning and licensing processes. These procedures currently do not ensure protection of all HCVFs. The global conservation organization is already successfully working in partnership with palm oil producers, including APP’s sister company, PT Smart, to develop practices that maintain HCVFs in and around their oil palm plantations.

    WWF is also assisting global pulp and paper buyers to apply responsible purchasing policies that require avoiding products that contain fibre sourced from illegal logging operations or from unprotected HCVFs.

    “There is no excuse for buyers with responsible purchasing policies to trade with a company that continues pulping high conservation value forests,” said Duncan Pollard, Director of WWF’s Global Forest Programme.

    Contacts
    Nazir Foead, WWF Indonesia, nfoead@wwf.or.id , +62 811 977604
    Rod Taylor, WWF International, rodtaylor@wallacea.wwf.or.id , +62 811 387308
    Soh Koon Chng, WWF International, skchng@wwfint.org, +41 22 3649018

    Notes to Editors:
    1. According to The Eleventh Hour for Riau’s Forests – Two pulp and paper companies will decide their fate, a background paper that accompanies the WWF Monitoring Report, half of Riau’s forests disappeared between 1988 and 2005 at an average rate of 170,000 hectares a year, or 460 hectares a day. But the average rate tells only part of the story: annual rate of forest cover loss was 2.2% in 2002, 4.2% in 2004 and 6.8% in 2005, illustrating a rapid acceleration over the past few years. The key cause of the forest loss has been clearance to feed timber to the two pulp mills belonging to multinational companies, APP and Asia Pacific Resources International (APRIL). Since 2001, WWF Indonesia has been calling for both companies to protect HCVFs, not only in Riau, but also globally. In July 2005, APRIL publicly committed to protect and exclude all HCVFs from its global wood supply.

    2. For guidance on responsible purchasing, see WWF’s “The Responsible Purchasing of Forest Products” (first edition) at http://assets.panda.org/downloads/220rpg.pdf.

    3. Monitoring reports indicating APP’s failure to protect HCVFs can be obtained upon request from SmartWood (jhayward@smartwood.org or ljones@smartwood.org)

    4. PT Smart, APP’s sister company in the Sinar Mas Group, has already committed to protect HCVFs at the Roundtable on Sustainable Palm Oil (RSPO). Initiated by WWF and various partners in 2003, the RSPO is an independent, non-profit, multi-stakeholder association focused on promoting sustainable palm oil and achieving a common definition of responsible palm oil production. A key element of responsible palm oil production is HCVF protection. All companies that are members of the RSPO must identify forest areas of high conservation value (i.e. HCVFs) before establishing new plantations or expanding existing ones. (www.rspo.org)

    5. The documents mentioned in this press release are available on WWF Indonesia’s web site at the following url: http://www.wwf.or.id/index.php?fuseaction=news.detail&language=e&id=NWS1151055588

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