The notorious company Asia Pulp and Paper (APP), linked to illegal logging and the clearance of Sumatran tiger habitat, today suffered another massive blow with Canadian investment giant Mackenzie Investments announcing that it has ceased investing in APP operations.
Greenpeace recently exposed APP’s main mill in Indonesia for using illegal timber to fuel its operations. Not only did Greenpeace investigations find that the Indah Kiat mill is systematically violating Indonesia’s laws protecting the internationally protected tree species ramin, it also found that the mill is supplied with rainforest timber from areas mapped as habitat of critically endangered species like the Sumatran tiger, whose numbers are down to an estimated 400 in the wild.
In a brief statement posted online, Mackenzie stated:
PT Indah Kiat Pulp & Paper Corp. TBK is no longer held by Mackenzie. Based on a full review of the holding and taking all aspects of the investment into consideration, the portfolio manager determined that the sale of Indah Kiat was in the best interest of the Funds.
As an Imagine Canada Caring Company, Mackenzie Investments embraces corporate citizenship and is committed to following ethical and environmentally responsible business practices. Greenpeace strongly welcomes Mackenzie’s move.
The announcement comes on the back of another large international investor, Norway’s Skagen funds, selling its shares in Inda Kiat based on a “review of investment philosophy, ethical guidelines and our aim of providing our unit holders with the best possible risk adjusted return.” Indah Kiat’s share price fell a massive 25% last year alone.
This news will no doubt raise further alarm at APP. The company has been shedding customers at an accelerating rate due to its destructive track record and increasingly toxic reputation. Since Greenpeace exposed APP’s illegal timber scandal earlier this year, a host of major company including Danone, Xerox and Mondi have acted to suspend all contracts.
Until APP cleans up its act and follows through on its commitment to stop destroying rainforests and critically endangered Sumatran tiger habitat, it will continue to shed customers and become even more of a pariah for the investor community. APP’s spectacular default on $US14 billion debt in the early 2000s and at least $US4.2 billion of restructured debts in 2009 already left it a mountain to climb.
It doesn’t have to be this way. The Indonesian government’s, and the industry’s, own figures show that avoiding deforestation does not need to stop the pulp and paper industry from developing and expanding. APP’s sister company, Golden Agri Resources, has introduced a forest conservation policy which shows how it is possible to continue to grow without destroying forests.
The question remains: when will APP be willing to embrace alternatives to rainforest destruction?