APP's toy sector customers

Background - November 26, 2011
The toy sector uses a lot of glossy packaging. Forensic testing shows that the packaging used by leading toy brands regularly contains Indonesian rainforest fibre. Greenpeace International investigations have also established links between these brands and APP, the largest and most notorious pulp and paper company operating in Indonesia.

Toy sector graphic

  • Forensic testing shows regular use of rainforest fibre (MTH) in the packaging of major toy brands manufactured in China or Indonesia.
  • Chain-of-custody evidence in China and Indonesia shows that APP is an important supplier of packaging materials for major toy brands.
  • Indonesian rainforests are being cleared to produce APP pulp, which is supplied to the packaging sector in both Indonesia and China.

Toy sector review

2011: Mattel toy brand packaging contains Mixed Tropical Hardwoods (rainforest fibre).

 

The Sinar Mas conglomerate's Asia Pulp & Paper (APP) group[1] is a largely anonymous paper company, notwithstanding its claim to rank as one of the world's top three pulp and paper producers. APP's main pulp production base is Indonesia.[2] Mixed tropical hardwood (MTH) from the clearance of Indonesia's rainforests and peat swamp forests makes up one fifth of the fibre pulped in APP's mills.[3]

This loss of forest is pushing critically endangered species such as tigers closer to extinction as well as driving climate change.

In 2008, Staples - the world's largest office products company[4] - stated that remaining a customer of APP would be 'a great peril to our brand'.[5]

Riau, 2010: Active clearance of peat swamp forests in PT BDL, an APP linked concession.

 

According to recent data, China has overtaken the USA as the world's largest producer of paper and board by volume.[6] Packaging production accounts for about 60% of this.[7] Whilst the sector does use large quantities of recycled pulp, it also makes significant use of virgin fibre.[8]

APP's main production base for paper and packaging is in China, where it characterises itself as 'The Provider of High-Quality Paper Products'.[9] China is the second largest market after the USA for luxury packaging.[10] APP uses virgin fibre for high-quality packaging materials.

Riau, 2010: Recent rainforest clearance of tiger habitat by APP linked supplier in Bukit Tigapuluh area.

 

Key sectors for packaging include food, drinks, pharmaceuticals, home and personal care products and electrical goods.[11] APP presents a brand risk to companies within these sectors, linking them through their paper and packaging supply chains to the destruction of Indonesia's rainforests.

The toy sector is a highly visible example of consumer brands that use a lot of glossy packaging. Publically available APP figures do not make it possible to calculate the financial importance of the toy sector to the group. However, well over half of APP's packaging material is produced in China, mainly by two mills in Ningbo, Zhejiang Province. This province also hosts many large printing houses catering for the packaging needs of the toy sector.

Unlike some progressive companies such as Unilever or Nestlé, top players in the toy sector seem oblivious to the risk to their brands through links to deforestation.

End matter

Footnotes

[1] APP does not formally exist as such. It is a loose group of Sinar Mas companies operating in the pulp & paper sector. PT Purinusa Ekapersada is the main controlling shareholder in PT Indah Kiat, PT Pindo Deli, PT Lontar Papyrus and PT Pabrik Kertas Tjiwi Kimia. PT Purinusa Ekapersada controls 52.7% of shares in PT Indah Kiat. Source: Indah Kiat (2009): 48. PT Purinusa Ekapersada controls 97.73% of shares in PT Pindo Deli. Source: Pindo Deli (2010): 56. PT Purinusa Ekapersada controls PT Lontar Papyrus through PT Pindo Deli (see above), which owns 99.79% of shares in PT Lontar Papyrus. Source: Lontar Papyrus (2010): 33. PT Purinusa Ekapersada controls 59.6% of shares in Tjiwi Kimia. Source: Tjiwi Kimia (2010): 53
[2] APP (2009a). See also Tempo Interaktiv (2010)
[3] % in 2007, according to APP (2009a). Greenpeace calculations based on Indonesian government data likewise resulted in 20% for 2009. Source: MoFor (2010a)
[4] Staples website
[5] Wall St Journal (2008)
[6] WRAP (2011): 5. Sources used by WRAP are China Paper Association, RISI, HMRC and WRAP estimates
[7] WRAP (2011): 5
[8] WRAP (2011): 5
[9] APP website
[10] According to Pira (2011), China is the leading luxury packaging market in the Asia Pacific region and the world's second largest market after the USA. Luxury packaging is defined in the study as primary and secondary packaging, including caps and closures, used specifically for goods at the premium price end of consumer goods sectors
[11] Freedonia (2010) and Datamonitor PLC (2009)

Forensic evidence links the toy sector to Indonesian rainforest destruction

Barbie Fashionistas Forensics report. Sample forensics report from the testing laboratory IPS analysing the species content in the top liner of several packaging samples, including Barbie Fashionistas. Image (a) is the signed covering letter. Image (b) Table 4 is the summary results for Barbie Fashionistas, confirming the presence of MTH in the sample. Image (c) Table 7 is the breakdown of the testing results for Barbie: ~74% of the hardwood component of the packaging sample is MTH by weight, from at least 10 different tree types. The table also shows that 70% of the sample is hardwood. Therefore, about 50% of the overall sample is MTH, ie rainforest fibre.

 

Indonesia is the only large-scale producer of either MTH or acacia pulp.[12] Within Indonesia, there are only two large-scale producers of pulp using MTH - APP and APRIL.[13] APRIL does not produce packaging materials in Indonesia,[14] suggesting that APP is the predominant producer of any packaging material with MTH content.

In China, there are only three obvious routes by which MTH can appear in packaging products: firstly, through importing packaging board from Indonesia, where APP is the major producer; secondly, through importing from APP or APRIL MTH pulp that is subsequently made into packaging material in China; and thirdly, through importing chipped logs from rainforest clearance in Indonesia that are subsequently pulped and then made into packaging material in China.

APP is one of the largest producers of paper and packaging in China.[15]

Two thirds of APP China's pulp production in 2009 was based on imported wood,[16] from countries including Indonesia. Additionally, APP China imports almost one third of its pulp needs,[17] including from Indonesia. Given that APP China materials contain MTH, it is most logical that this is imported from APP Indonesia.[18] Unlike other pulp companies, APP does not advertise its pulp for sale on the open market or on its website.[19]

APP sources mixed tropical hardwoods (MTH) to produce high-quality virgin pulp for use in copy paper, tissue paper, packaging and glossy print materials.[20] In fact, it has estimated that about 20% of the fibre going into its pulp mills comes from clearance of natural forest.[21] The remainder comes from plantations - largely acacia.

Greenpeace investigations have sought to identify corporate consumers within the toy sector using packaging products manufactured in China or Indonesia with links to rainforest destruction and links to APP.

The key steps for Greenpeace's investigation were as follows:

  1. Greenpeace identified a selection of leading brands of toy products in a number of countries around the world.
  2. Greenpeace sent samples of the packaging materials to IPS, the global authority for testing of paper products, widely used by the paper sector.[22]
  3. An IPS expert prepared and examined the packaging samples under a forensic microscope to identify the wood species used.
  4. In most cases, the virgin fibre content of the glossy top layer of packaging board was examined to identify the share of MTH - mixed tropical hardwood - or acacia fibre in the packaging.[23]
  5. The presence of either MTH or acacia strongly indicates that the pulp fibre originates from Indonesia.[24]

IPS has confirmed the presence of MTH and acacia in a range of samples.[25] This forensic evidence links major players in the toy sector to the destruction of Indonesia's rainforests.

Having established a link between the packaging used by several major toy brands and the destruction of the Indonesian rainforest, Greenpeace investigations sought to confirm the trade link to APP.

 

End matter

Footnotes

[12] See eg: Pihlajamåki & Hytonen (2004). The authors are working for pulp and paper industry specialist consultancy Jaakko Pövry
[13] The other two companies producing large amounts of pulp, Kertas Nusantara (ex Kiani Kertas) and PT Tanjung Enim Lestari, use acacia fibre only. See Pirard & Cossalter (2006)
[14] APRIL (2009). APRIL produces its paperboard at its SSYMB mill in China
[15] APP (2009a): 6
[16] APP (2010): 36
[17] APP (2010): 36. Official China customs data show that APP China's paperboard mills import Indonesian pulp. Source: CTI (2010). Confidential trade data obtained by Greenpeace show that APP's pulp mill in Perawang, Riau is a large exporter of pulp to China. Source: Confidential data 2010, copy held by Greenpeace International
[18] Only APP and APRIL produce MTH pulp in Indonesia. Both export this pulp to China. Both have mills in China. However, it would seem highly unlikely that APP China would buy from its competitor APRIL
[19] See APP website
[20] See APP website
[21] % in 2007, according to APP (2009a). Greenpeace calculations based on Indonesian government data likewise resulted in 20% for 2009. Source MoFor (2010a)
[22] Integrated Paper Services (IPS)
[23] Following industry standard TAPPI T401
[24] If a product contains mixed tropical hardwood (MTH), it comes from Indonesia. Other countries with tropical forest do not clearcut and pulp their forests on a commercial trade scale. Acacia pulp is also largely confined to Indonesia. In other tropical regions, eucalyptus is the principal species used in pulpwood plantations
[25] IPS test results 2010-2011. Copies held by Greenpeace

Related downloads

Greenpeace investigations link the toy sector to APP

Mattel brand packaging containing MTH (rainforest fibre), printed by Sansico.

 

Many top brands within the toy sector are manufactured in China and Indonesia and are marketed in a lot of glossy packaging.

None of leading toy manufacturers Mattel, Disney, Hasbro and LEGO has organisation-wide policies to ensure that neither it nor any of its third-party suppliers or licensees are contributing to the destruction of the world's remaining rainforests.[26]

Greenpeace decided to investigate whether there were trade links within Indonesia and China between APP and major players in the toy sector.

The key steps for the investigation were as follows:

  1. Greenpeace sourced a selection of toy products from leading brands in a number of countries around the world.
  2. Greenpeace identified and investigated printing houses or packaging manufacturers from the packaging, where possible.
  3. Greenpeace identified APP corporate consumers through trade data, publicity materials and confidential sources.

The investigations show that packaging for Mattel-, Disney-, LEGO- and Hasbro-branded merchandise is made using APP paper.

These investigations are just the tip of the iceberg in terms of revealing the potential scale of the trade links within Indonesia and China between the toy sector and APP, as well as the impact on Indonesia's rainforests.

Most consumer products are sold with packaging. In the absence of strong corporate procurement policies, any company or brand sourcing paper products from China or Indonesia is at risk of being linked to APP and of driving destruction of Indonesia's rainforests.

End matter

Footnotes

[26] Greenpeace review of publicly available environmental and procurement policies for Mattel, Disney, LEGO, Hasbro and others

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