Mhlnews 7292 Forest 0

Seeding the Forest for the Trees

Sept. 9, 2016
APP reinvents its supply chain from the ground up to win back lost business.

If you think it really doesn't matter to your customers and stakeholders whether or not your company is a good global citizen, consider the saga of Indonesia's Asia Pulp & Paper (APP), the third biggest paper company in the world.

APP, like other multi-national giants whose products are agricultural-based, uses a lot of natural resources to create its products (paper, cardboard, tissue, and packaging materials). The paper production process involves the cutting down of trees, of course—lots and lots of trees, constituting more than 20 million metric tons of pulp and paper per year. Indonesia is home to the largest rainforest in Asia, so not surprisingly, when you factor in the long-running controversy over the deforestation of the world's rainforests, APP found itself firmly in the cross-hairs of activist groups Greenpeace, the World Wildlife Fund and other NGOs.

The "deforestation" accusations weren't limited just to APP's cutting down of trees, as stories began to emerge about APP's logging practices (which some NGOs claimed were illegal); how the habitats of Sumatran tigers were being destroyed; that the livelihoods of the indigenous peoples of the rainforest were being threatened; that APP's milling practices were threatening the environment due to the large quantity of greenhouse gas emissions. A very public campaign urging major companies to stop doing business with APP ultimately led Mattel, Staples, Walmart and others to end their relationships with APP.

That, as you might expect, got APP's attention, and then some.

In 2013, when the fallout from negative press and lost business reached a critical point, APP announced its Forest Conservation Policy, which promises to dramatically reverse the effects of deforestation by halting the harvesting of natural forest timber throughout APP's entire supply chain. The company's intent is to be completely reliant on plantation-sourced (as opposed to rainforest-sourced) pulpwood; to certify that all of the plantation owners strictly adhere to principles that protect biodiversity, rare ecosystems and local community rights; and that carbon emissions are reduced by 26% by 2020.

APP creates “clones” of acacia and eucalyptus trees in its corporate R

That all looks good on paper, so to speak, but APP also had developed a reputation among the NGO community over the years of greenwashing: speaking a good sustainability game, but failing to live up to those promises. To prove it was serious about its new initiative, APP invited the Rainforest Alliance to independently evaluate its progress. The latest evaluation states, basically, that APP is off to a good start, but a lot of work still needs to be done. As Aida Greenbury, APP's director of sustainability, told me, "We can't do it alone. We're addressing our legacy, but to achieve zero deforestation with our suppliers, we have to work together to find solutions."

As that work continues, APP is doing all it can to let the world know about the extent of its sustainability efforts, and to that end the company recently invited business journalists (including me) to come to Indonesia and see for ourselves what progress is being made. Far from being a PR stunt, APP's intrepid media relations staff escorted us to Sumatra, where we toured the sprawling paper mill campus of Riau, where logs are brought in, pulped and processed. We took a helicopter ride over the island to see the company's biosphere reserve, where plantations are strategically harvested and then systematically replanted. We saw the environmental best practices set in place to reduce GHG emissions.

Most fascinating of all was the R&D Center, where the modern-day supply chain of a forest now begins. APP's scientists clone trees, one seedling at a time, to create a hardier crop of acacia and eucalyptus trees, which grow to their full height of 65 feet within five years. Clearly, a company that relies pulpwood to make its products can't actually stop harvesting trees, so it's a testament to human ingenuity to see how modern science has figured out a way to replenish inventory literally from the ground up.

Latest from Global Supply Chain