Local and international watchdogs have criticized Indonesia’s biggest pulp and paper producer for what they deem a failure to live up to its flagship zero-deforestation policy.
The joint statement lambasting Asia Pulp and Paper (APP) comes on the fifth anniversary of the launch of the company’s Forest Conservation Policy (FCP) in February 2013, in which it pledged to not destroy natural forests for its pulpwood plantations.
According to estimates by Eyes on the Forest, a coalition of environmental NGOs, APP had cleared more than 20,000 square kilometers (7,720 square miles) of natural forest in Indonesia in the three decades to 2010 — an area roughly the size of the U.S. state of New Jersey.
Under its FCP pledge, the pulp giant sought to address the criticism by excluding timber sourced from the clearing of peatlands and rainforests. It also vowed to reduce social conflict and seek free, prior informed consent (FPIC) from communities when establishing new plantations. The policy is meant to apply to all APP operations and those of its suppliers.
But the recent review by a group of 10 NGOs of how the FCP had been implemented over the past five years concluded that while APP had made some progress, the company still had a long way to go, and highlighted five key issues.
Many of the concerns revolve around APP’s massive new pulp mill in Ogan Komering Ilir (OKI) district, in South Sumatra province.
Critics say they are worried the mill will boost APP’s appetite for pulpwood, compelling the company to clear more natural forest and peatlands. APP’s overall demand for wood fiber in Sumatra could rise by more than 50 percent once the OKI mill reaches its initial production capacity, stated to be 2 million tons of bleached hardwood kraft (BHK) pulp a year, according to a 2014 analysis by various NGOs.
APP says the company could eventually increase the mill’s capacity to 2.8 million tons a year. But a 2017 report in Singapore’s Straits Times found the mill had been approved to produce up to 3.25 million tons of pulp a year, further stoking fears that large-scale deforestation is inevitable.
If production capacity rises to APP’s stated figure, the company’s wood demand could increase by nearly 75 percent, according to the NGO report. But if the production capacity hits the higher reported figure, then APP’s demand could increase by 85 percent.
The Indonesian Forum for the Environment (Walhi), the country’s biggest green NGO, says there is no way APP’s existing plantations in Sumatra and Kalimantan, the Indonesian portion of the island of Borneo, can supply the OKI mill with enough fiber to produce 2.8 million tons of pulp a year.
Walhi notes that the government has ordered APP to retire some of its plantations in peat areas for conservation purposes under a new peat protection regulation. The regulation bans all types of commercial plantations in areas with deep peat domes. As compensation, the Ministry of Environment and Forestry will provide non-forested areas for affected companies under a land-swap mechanism.
At present, half of APP’s 800,000 hectares of concessions in South Sumatra are in peat areas, according to Hadi Jatmiko, the head of the provincial Walhi chapter.
“And when the land-swap policy is enacted, there will be new conflicts in other regions,” he said at a recent press conference in Jakarta. “Because where else do we have mineral soils in Indonesia [suitable for planting]? The land-swap mechanism violates President Joko Widodo’s commitment to solve agrarian conflicts.”
Elim Sritaba, the director of sustainability and stakeholder engagement at APP, says that even once the OKI mill is producing at full capacity, the company will not resort to clearing rainforests.
“Because of the issue of peatland and forest fires, NGOs always think that we won’t have enough supply [to feed the OKI mill] and accuse us of eventually clearing natural forests,” she told Mongabay in an interview at her office in Jakarta. “But so far, we haven’t done that for the past five years.”
And while the OKI mill could eventually produce 2.8 million tons per year, it will need substantial capital investment in machinery to upgrade from the current capacity of 2.5 million tons, Elim said.
“We’re committed to our FCP and we’re well aware of the concerns [surrounding the OKI mill],” she said. If supply cannot meet capacity, she said, “then we will lower our production, or import chip.”
Another concern highlighted by the NGOs in their five-year review is that APP’s conservation areas continue to be deforested by third parties. Elim acknowledged the problem, calling it APP’s biggest challenge.
“That’s what we’re struggling with the most at the moment,” she said. “Our commitment is that after we protect our conservation areas, we have to at least maintain them or even improve them. So if there’s anything degraded, we have to restore them back.”
However, Elim said APP had made some progress in tackling illegal logging by third parties, citing a drop in the deforestation rate to less than 1 percent of its conservation areas per year.
“But we still want to curb it [further],” she said.
The coalition of NGOs have also slammed APP for not working fast enough to resolve outstanding land conflicts with local communities.
In 2016, APP said it had resolved 42 percent of the conflicts it had with communities. By the end of 2017, the number was 43 percent. Elim attributed the slow pace of progress to the high complexity of the disputes.
“We’re also committed to solving all of our conflicts through deliberation and consensus. And that takes a long time,” she said.
In a public statement on its website, APP acknowledged the sluggish progress: “We would agree that we hoped to be further along in resolving conflicts. However we are also committed to resolving conflicts in a lasting way.”
The NGOs also criticized the company for not being transparent about the issue, with no information on the number of different conflicts it is dealing with, how many have been resolved, or what kind of resolution process was used.
Elim said APP opted not to disclose its data on conflict resolution because of the risk that it might be misused, and thus hamper the resolution process.
“They asked us to open [access to] our data, but if we do that then there will be lots of parties involved [in the process] and it’ll be harder to resolve the conflicts,” she said.
The NGOs said their monitoring revealed that many communities affected by APP operations in the Sumatran provinces of Riau, Jambi and South Sumatra remained locked in conflict with the company. In cases where an agreement has been reached, some questions remain with regard to the quality and implementation of the agreement, they said.
In addition, many communities that lost land, forest and livelihoods to APP’s operations remain unaware the company has made commitments to respect their rights and address their grievances.
In response to this criticism and to speed up the conflict-resolution process, Elim said APP had set up working groups in each region in which it had conflicts with local communities, to facilitate discussion for all stakeholders.
“We’re opening up the platform for anyone who wants to get involved,” Elim said, adding that this included local communities, NGOs, academics and government representatives. “This has been ongoing for the last six months.”
The working groups will focus on those conflicts deemed particularly challenging, which Elim said accounted for roughly 30 percent of the conflicts in which APP is engaged.
“There’s a lot of illegal logging, around 80 percent, happening in this 30 percent,” she said.
In 2014, APP publicly announced its commitment restore 10,000 square kilometers (3,860 square miles) of ecosystems in Indonesia, representing an area equivalent to the total plantation area from which it sourced its pulpwood in 2013.
But the NGOs say there’s still no robust plan or clear progress to implement this ambitious restoration commitment.
APP says it remains committed to restoring peatlands by focusing its initial efforts on mapping its concessions that contain areas of peat. In 2013, it hired Deltares, a Dutch consultancy with expertise in wetlands issues, to map its concessions using the high-resolution laser surveying technique known as lidar.
“After the initial result of the mapping came out in 2014, Deltares immediately told us which areas have to be conserved,” Elim said. “So we decided to retire 70 square kilometers [27 square miles] of our concessions in South Sumatra and Riau to save a national park located next to our concessions.”
In 2016, Deltares conducted a second round of lidar mapping to get more detailed data to improve the water management of APP’s peat concessions. The results of that survey are still being analyzed by APP, Elim said.
The company and its suppliers have also revised their long-term work plans as mandated by the government under the 2016 peat regulation. That regulation calls for the conservation of at least 30 percent of all peat domes — landscapes where the peat is so deep that the center is topographically higher than the edges. It also requires the conservation of areas where the peat is deeper than 3 meters (9.8 feet) and which contain high biodiversity.
The Ministry of Environment and Forestry has asked pulp and paper companies, including APP and its suppliers, to revise their work plans based on the ministry’s peat map, so that areas zoned for conservation under the 2016 regulation can be taken out of contention for development and rewetted to prevent future fires.
APP says its new work plans have been approved by the government. However, there are differences between the ministry’s peat map and APP’s lidar-generated map, due to the difference in resolution. The ministry’s map has a scale of 1:250,000, while APP’s more detailed map has a finer resolution of 1:50,000.
To reconcile these differences, APP plans to carry out field surveys to complement the lidar mapping, Elim said.
A recent investigation by the Associated Press uncovered ownership ties between APP and more than two dozen plantation companies linked to devastating fires and deforestation in Indonesia.
The news agency used hundreds of pages of corporate records to determine that APP, through parent company Sinar Mas, had “extensive behind-the-scenes ties and significant influence” over a vast network of suppliers that the paper giant had consistently asserted were independent entities. Twenty-five of those suppliers were found to be owned by 10 individuals, including six current and two former employees of the Sinar Mas conglomerate, several of whom work in the latter’s finance department.
The coalition of NGOs believe APP has misled stakeholders about the company’s relationship with the suppliers, and thus avoided accountability for Indonesia’s annual dry-season fires.
Responding to the report, APP said it had never sought to mislead its stakeholders about its relationships with its suppliers. It also said it had undergone an independent assessment in 2013 and 2014 into its relationships with not only its suppliers but also several other companies that NGOs said had similar ties to APP.
The assessment found that APP had business and economic influence over nine of those companies, and business transactions with 26. “And then there are three suppliers with which we had no transactions,” Elim said.
While APP reports its progress in the implementation of its FCP every year, the coalition of NGOs said there was no independent and credible third-party certification to verify the actual progress being made.
The world’s most highly regarded forestry certification standard, the Forest Stewardship Council (FSC), dissociated itself from APP in 2007, citing the deforestation carried out by the company. The coalition of NGOs called on APP to find a way to revive its association with the FSC.
APP said it welcomed stakeholder involvement in monitoring the implementation of the FCP through the independent assessment of FCP progress undertaken by the Rainforest Alliance, various public consultations, formal grievance mechanisms, and stakeholder advisory forums, which are held twice a year. The next such forum is scheduled for March 22.
“We are open to work with the NGOs listed in this statement, and all other interested stakeholders, on improving how we report on progress so that concerns can be put to rest,” APP said.