APP policy on illegal wood
APP claims there is no illegal wood in its pulpwood supply chain. Its ‘exclusive’ supplier, Sinarmas Forestry, claims it ensures the legality of all pulpwood fibre supplied to APP’s pulp mills. APP claims it inspects all inbound deliveries of logs from its suppliers and imposes sanctions for policy violations.
The Sinar Mas group describes itself as 'one of the world's largest natural resource groups'. The conglomerate operates across multiple sectors including pulp and paper, agribusiness, mining and forestry.
Asia Pulp & Paper (APP) is the pulp and paper division of the Sinar Mas group and claims to be the third largest pulp and paper manufacturer in the world. It aspires to be number one, and is expanding rapidly. Sinarmas Forestry (SMF) is the logging and plantation division of the Sinar Mas group.
13 January 2012 'tweet' from APP Twitter account claims it has 'zero tolerance for illegal wood'.
Sinarmas Forestry is the 'exclusive' pulpwood supplier to APP
Sinarmas Forestry, whose operations are primarily located in Sumatra, states that it is 'the exclusive pulpwood fibre supplier to APP's two pulp mills'. APP Indonesia's flagship pulp mill, Indah Kiat Perawang, is the largest pulp mill in Indonesia. It is situated in Perawang, Riau Province on the island of Sumatra.
APP describes Sinarmas Forestry as the 'exclusive' supplier of pulpwood to Indah Kiat Perawang. According to Indah Kiat's 2010 financial statements to investors, it agreed a 30-year contract in 2001 with PT Arara Abadi, a Sinarmas Forestry company, 'to exclusively purchase the pulpwood' from Arara Abadi, and Arara Abadi has 'agreed to supply the pulpwood to [Indah Kiat Perawang] at a certain agreed price'. Although Arara Abadi holds concessions in its own right, it also manages other APP-affiliated pulpwood operations and coordinates trade to Indah Kiat Perawang.
Sinarmas Forestry's environmental commitment and fibre supply policy claim to ensure legality of pulpwood fibre supplied to APP's pulp mills
According to the Sinarmas Forestry environmental commitment: 'With a large percentage of its forest concessions located on the island of Sumatera, SMF is fully aware that its forestry operations, from the nurseries to harvesting and the transportation of fiber, have an effect on this unique and invaluable environment. For this reason, SMF is committed to implementing sustainable forest management throughout its operations. […] SMF pursues continual improvement in its environmental performance by complying with all applicable environmental legislation and regulations [and] continuously monitoring its environmental performance.'
Sinarmas Forestry's fibre supply policy claims to ensure the legality and integrity of the fibre supplied to the mills through strict chain of custody and other legal verification protocols: 'One of the most crucial issues is ensuring that the fiber from the harvesting site is the same fiber – and the only fiber – that is delivered to the customers' pulp mills. With our strict chain of custody and legal verification system and protocols, the legality of the fiber supplied is guaranteed [when it is] delivered to the customers' pulp mills.'
APP claims Sinarmas Forestry complies with its Declaration of Sustainability
APP promotes itself as committed to protection of threatened wildlife species through 'conservation beyond compliance' and has made a number of policy commitments to ensure that its 'exclusive' pulpwood supplier – Sinarmas Forestry – complies. Its Fibre Procurement Policy and Declaration of Sustainability were first articulated in 2004 and subsequently updated in 2008 and 2009.
31 August 2011 APP advertisement in the South China Morning Post claims APP has always strictly complied with Indonesian law.
APP 'Declaration of Sustainability'
The group's 2009-updated Declaration of Sustainability states that APP commits to the following [emphases added]:
- 'Unequivocal compliance with national and local laws and relevant international regulations;
- Zero tolerance for illegal wood in our supply chain means maintaining robust standards for fiber suppliers through APP's Fiber Procurement Policy covering environmental standards, conservation principles and social impact'.
APP 'Fiber Procurement Policy'
APP's 2008-updated 'Fiber procurement policy' commits the group [emphasis added] 'to purchasing only legal wood fiber for pulp-making operations from sustainably-managed forestry sources.'
To implement this, APP commits to the following [emphases added]:
- 'Ensure that wood suppliers maintain compliance with all relevant regional, national and international regulations for sustainable forestry and land use management; […]
- Ensure that wood is properly checked and verified as to legal origin and chain of custody before it enters the mill;
- Maintain systems and procedures to reasonably ensure that wood coming from illegal sources shall be rejected before it enters the mill; […]
- Expect that wood suppliers undertake conservation programs and preserve protected species as listed in IUCN and CITES'.
APP issued a press release in 2011 committing Sinarmas Forestry to supplying its mills with 100% plantation fibre by 2015.
APP's procedures to exclude illegal wood
APP claims that the Indah Kiat Perawang mill has introduced procedures 'to confirm that no illegal or controversial wood enters the mill's pulpwood supply chain'. The Sinar Mas group's website states explicitly that its procedures ensure that any illegal logs are identified and excluded from the supply chain before pulpwood enters the Indah Kiat Perawang pulp mill gate [emphasis added]:
'Wood from sustainable sources is transported by trucks and check points have been created before the logs enter the scale meter and weighing bridge at the mill gate. A document tracking trail, including Faktur legalization, delivery form and weigh bridge report, ensures the legality of the raw materials for the pulp and paper manufacturing.'
In terms of procedures to ensure that its wood suppliers do not trade any 'protected species as listed in IUCN and CITES', APP claims to inspect all inbound deliveries of logs from its suppliers to ensure that no ramin or other protected species enter the mill gate. According to a December 2011 company statement: 'All of the mills are equipped with wood checking stations that require the registration of each inbound load of logs and the supplier delivering the shipment. At the wood checking station a manual inspection is conducted of the load to verify that there are no protected species that have been illegally harvested.'
APP sanctions against suppliers for policy violations
APP's 'Fiber procurement policy' makes it clear that [emphasis added]: 'wood suppliers who are found in breach of relevant legal requirements and the provisions of the policy shall be immediately warned and, for repeated violations, have their contracts terminated'.
Figure 1: APP operational structure shows PT Arara Abadi, a Sinarmas Forestry company, as 'exclusive' pulpwood supplier to Indah Kiat Perawang. Source: APP (2009) 'Growing a sustainable future – environmental and and social sustainability report for Indonesia 2007': 127.
Ramin is legally protected
Indonesia’s ramin is legally protected from logging and domestic and international trade. Used to make products such as furniture, toys and decorative mouldings, ramin is facing a ‘high risk of extinction in the wild in the medium-term future’. In Indonesia, extensive areas of peat swamp forest – a key ramin habitat – have been cleared since 2001, driving ramin and other CITES-listed wildlife such as Sumatran tigers closer to extinction. Virtually all trade in products derived from Indonesian ramin is illegal.
What is ramin?
Ramin is the common trade name given to a number of light-coloured tropical hardwood tree species native to areas of South East Asia, principally Indonesia and Malaysia. Ramin wood has significant commercial value and is used to make products such as furniture, toys, broom handles, blinds, dowels and decorative mouldings.
The name ramin applies to ~30 tree species that all belong to the same genus (group of related species) Gonystylus. Fifteen species in this genus are classified as 'vulnerable' on the International Union for the Conservation of Nature (IUCN) 'Red List of Threatened Species'. This means that due to observed, inferred or projected habitat loss and overexploitation ramin 'is facing a high risk of extinction in the wild in the medium-term future'.
Within Indonesia, ramin is largely confined to rainforests below 1,500 metres. The predominant habitat for one of the main species of ramin in Indonesia (Gonystylus bancanus) is peat swamp forest in the Sumatran provinces of Riau, Jambi and South Sumatra, and in the provinces of West and Central Kalimantan. Other species of ramin are found in these provinces in lowland and even hill forest areas.
Why loss of ramin habitat threatens other CITES-protected species with extinction
Kerumutan, Riau, Sumatra, Indonesia: Sumatra's peat swamp forests are critical habitat for both Sumatran tigers and ramin, an internationally protected tree species.
Historically, peat swamp forests in Sumatra and Kalimantan have been targeted for commercial exploitation of one key commercial species of ramin, with a detrimental impact on the species. These same areas remain heavily targeted for clearance and conversion to pulpwood plantations.
In Indonesia, these factors have led to ramin's overexploitation and to significant loss of its habitat through forest degradation resulting from logging, forest fires and conversion to agriculture.
The same peat swamp forests where ramin grows are also crucial to the survival of other endangered and critically endangered species, including the Bornean orang-utan and the Sumatran tiger, of which only 400 remain in the wild. While international trade in these species is heavily regulated under CITES, they continue to face extinction in the wild, in part due to loss of forest habitat.
CITES international conservation agreement – famous for controlling ivory trade
Many prominent species including rhinos, tigers, elephants, whales and gorillas are protected through CITES, the international treaty that regulates global trade in products for endangered species such as rhino horn and elephant ivory.
The United Nations Convention on the International Trade in Endangered Species (CITES) was drawn up in 1973 to protect wildlife against overexploitation, through regulating international trade of species threatened through trade.
Through it, all international commercial trade in products including rhino horn, ivory, whale meat, tiger skins and 'medicine' is either heavily regulated or banned.
CITES now lists over 5,000 species of animals and 29,000 species of plants, including 350 tree species, in three categories stipulating different degrees of legal protection from overexploitation through international trade. According to the CITES website, illegal trade in wildlife – now estimated to be worth in excess of $10 billion per year – is pushing many species towards extinction.
Ramin is legally protected under Indonesian laws and its national CITES regulations
Only 400 Sumatran tigers remain in the wild, and peat swamp forests are critical for their survival.
Footage still courtesy of WWF.
In 2001, the Indonesian Ministry of Forestry banned the logging of any species of ramin, and any associated domestic or international trade. In the same year, Indonesia unilaterally placed its populations of ramin on Appendix III of CITES, giving importing countries a mandate to halt the import of any ramin exported illegally.
In 2004, given ongoing loss of ramin habitat and illegal logging of ramin, the Ministry of Forestry requested CITES party countries to grant all ramin species the higher Appendix II listing, requiring far greater trade controls, in a bid to achieve improved enforcement of the export ban through increased international scrutiny of potential trade violations under CITES.
Virtually all trade in products derived from Indonesian ramin is illegal
The Appendix II CITES listing covers any specimen that may contain Indonesian ramin, its parts or derivatives with a few, very limited exceptions like seeds, seedlings and tissue cultures. Pulp or paper products are not specifically exempted from (thus are covered by) the provisions of the listing.
In practice, there is only one legal source of ramin – the FSC-certified PT Diamond Raya selective logging operation and its associated processing companies. Since 2001, the CITES trade database shows that Indonesia's official exports of ramin are limited to sawn wood and timber products. Any other internationally traded products containing Indonesian ramin – be they items made from ramin timber or processed products containing ramin – represent a violation of ramin's CITES Appendix II listing.
Similarly, within Indonesia, any logging and trade in any ramin other than the Diamond Raya harvest is illegal and represents a violation of Indonesia's CITES regulations. Penalties for smuggling/misdeclaration or trade of protected species not in accordance with the provision of the regulation include imprisonment, confiscation of goods, fines and revocation of operating permits.
APP and habitat loss
Ramin habitat continues to be destroyed despite the ban. The Ministry of Forestry – responsible for forest protection and the forestry sector – recommends ‘no more conversion of peat swamp forest to other utilisation’. Greenpeace mapping analysis of the Ministry’s data indicates that APP’s pulpwood suppliers have been a significant driver of the clearance of Sumatra’s peat swamp forests, a key habitat for ramin and Sumatran tigers.
The Ministry of Forestry is responsible for both forest protection and forestry sector exploitation
Kerumutan, Riau, Sumatra, Indonesia, 2011: Active clearance of peat swamp forest by APP pulpwood supplier PT Mutiara Sabuk Khatulistiwa.
The Ministry of Forestry plays two roles in relation to the companies involved in the forestry sector and their compliance with laws governing the protection of ramin.
The Ministry of Forestry is Indonesia's CITES Management Authority, through the Directorate General for Forest Protection and Nature Conservation (PHKA). It issues quotas and licenses to specific operations for the legal harvest of CITES species and confirms, through the issuance of a CITES Export Permit, that any exports of CITES Appendix II listed specimens or their derivatives originate from a legal source and that their harvest is not 'detrimental to the survival of the species in the wild'.
Since 2001, the CITES Management Authority in Indonesia has notified the CITES Secretariat – the coordination and advisory body to CITES party nations – on several occasions that the only legal source of Indonesian ramin is the PT Diamond Raya selective logging operation. This is the only operation approved by the PHKA as meeting the non-detrimental finding that is a necessary prerequisite for any Appendix II listed species to be traded internationally. Therefore, any other Indonesian ramin entering international trade is illegal.
The Ministry of Forestry is also the licensing body to forest concessionaires through the Directorate General for Forest Production. As well as awarding selective logging concessions, it grants extensive areas of Production Forest – land zoned for exploitation by the forestry sector – for clearance and conversion to pulpwood or other timber plantations. Some of these areas include important ramin habitat in peat swamp forests.
The Ministry of Forestry 'Let's save ramin, let's save peat swamp forests' initiative to stop ramin habitat loss
Since the 2001 ramin trade ban, the Indonesian Ministry of Forestry has published a number of reports hosted on its dedicated website, 'Let's save ramin and peat swamp forest for our future'.
The aim of the reports was 'to enhance institutional capacity for successful CITES implementation', in order to prevent the further loss of ramin and to ensure the sustainable management of its habitat in Indonesia.
One of the first reports found that much important ramin habitat is found in production forest concession areas 'mainly managed by forest concessionaires'. Further reports recognise that legal forest clearance is a leading threat to remaining ramin habitat. Reports acknowledge institutional weaknesses, conceding: 'No substantial [enforcement of the logging ban] is taking place'.
In terms of recommendations, one report states: 'No more conversion of peat swamp forest to other utilisation.'
The pulp sector is a key driver of loss of habitat for CITES-protected species
Greenpeace mapping analysis of Ministry of Forestry data shows that between 2003 and 2009, Sumatra lost 800,000 ha (28%) of its peat swamp forests. Of this loss, over one-fifth (180,000 ha – an area more than twice the size of New York City) occurred within areas that are now allocated to APP-affiliated pulpwood suppliers; this represents a loss of 40% of the peat swamp forest in these areas; some of this loss may have occurred before APP suppliers took control of concessions.
The wider threat from clearance and development of peat swamp forest, a key ramin and tiger habitat, is illustrated by further mapping analysis of the Ministry of Forestry data:
- In 2003, Sumatra and Kalimantan held ~6 million ha of peat swamp forest.
- Half this 2003 peat swamp forest (2.9 million ha) was in Sumatra. Nearly half of this (1.3 million ha) was situated on deep peat (>4m), a particularly crucial ramin habitat.
- 80% of Sumatra's 2003 peat swamp forest was also identified as tiger habitat. The Sumatran tiger is a CITES Appendix I listed species.
- 2 million ha (69%) of the area that was Sumatra's peat swamp forest in 2003 is in areas zoned for clearance or development into timber plantations (HP, HPK, APL).
- 1.2 million ha (43%) of the area that was Sumatra's peat swamp forest in 2003 is now allocated for industrial timber plantation or palm oil concessions (ie clearance).
- 0.9 million ha (30%) of this 2003 Sumatran peat swamp forest area is now in concessions allocated to timber plantations – half to APP suppliers.
Overlaying Ministry of Forestry forest cover maps for 2006 and 2009 with maps of concession areas illustrates that, between 2006 and 2009, APP's pulpwood suppliers have been a significant driver of the clearance of Sumatra's peat swamp forest.
Given that pulp is a commodity used extensively within products traded globally, and that APP is one of the two major players in Indonesia's pulp sector, this extensive overlap between key ramin habitat and areas licensed for clearance to supply the pulp sector (including APP) with mixed tropical hardwood (MTH) species highlights the scale of the potential threat to the long-term viability of Indonesia's ramin populations.
The heavy dependence of the pulp sector on rainforest logs from the clearance of ramin habitat creates the risk that ramin trees are being illegally logged along with other rainforest species, getting mixed up in the pulpwood supply chain and subsequently entering into international trade.
What APP's policies mean in practice
Sinarmas Forestry and APP policies commit them to ensuring there is no ramin in APP’s pulpwood supply. Greenpeace investigations reveal that illegal ramin logs are regularly mixed in with other rainforest species stockpiled at APP’s main pulp mill waiting to be pulped. Sinarmas Forestry is APP’s ‘exclusive’ supplier, and this evidence indicates that Sinarmas Forestry is failing to rigorously police pulpwood supply to the mill. Sinarmas Forestry and APP are in breach of Indonesia’s laws.
This page from a 2010 Indah Kiat report to its stakeholders shows an image APP described as showing 'one of the [wood] checking points before the transported logs enter the mill'.
Successful implementation by APP of its 'Commitment to sustainability' and 'Fibre procurement policy' relies upon Sinarmas Forestry policing its pulpwood supplies effectively.
The following is what Sinarmas Forestry and APP's policies should mean with regard to ramin, given its banned status:
- Sinarmas Forestry is committed to ensuring compliance with Indonesia's ramin ban and CITES regulations. This includes ensuring that its operations do not include the harvest or trade of ramin to APP pulp mills.
- APP maintains zero tolerance for ramin in its supply chains. This includes ensuring that its 'exclusive' pulpwood supplier, Sinarmas Forestry, does not harvest or trade any ramin to APP pulp mills.
- In its mill operations, APP is committed unequivocally to compliance with Indonesia's ramin ban and its national CITES regulations, and regulations governing international trade. This includes ensuring that no ramin passes through the Indah Kiat Perawang mill gate.
- APP will terminate its contract with any pulpwood suppliers that are breaking Indonesia's ramin law and its national CITES regulations through clearance, trade or use of ramin.
Illegal ramin at APP's main mill
This investigation reveals that illegal ramin gets through the Indah Kiat Perawang mill gate or its port facility with other logs from natural forest clearance - so-called mixed tropical hardwood - and is stockpiled in the main MTH logyards within Indah Kiat Perawang (APP's main pulp mill in Indonesia).
Given that both Sinarmas Forestry and APP claim that Sinarmas Forestry is the 'exclusive' pulpwood supplier to Indah Kiat Perawang, it must be assumed that Sinarmas Forestry supplies the MTH pulpwood found in the logyards within the mill compound. As such, this illustrates a failure by Sinarmas Forestry to police rigorously its pulpwood supply to the mill, in breach of its policy and of Indonesia's ramin laws and its national CITES regulations.
It also illustrates APP's failure to ensure compliance with its policies and with Indonesia's ramin ban and its national CITES regulations.