5
|
September
|
2012
First Quarterly Progress Report
1. Subject to maximum 5% allowance for Mixed Tropical Hardwood waste and residues as defined by strict Government
regulations, and which are not listed under CR IUCN & CITES Appendix I.
1. BAckGround
On June 5th 2012, Asia Pulp & Paper Group (APP) announced its Sustainability Roadmap for the next decade and beyond. The Sustainability Roadmap extends APP’s commitments on further improving environmental performance, biodiversity conservation and protection of
community rights.
Highlights of the Roadmap are:
• By 2015, APP will have the capacity to be wholly reliant on raw materials from plantations1.
• By 2015, all current APP suppliers will operate by the standards of High Conservation Value Forest (HCVF), providing the most robust protection for biodiversity, rare ecosystems and local community rights.
• By 2020, all current APP suppliers will have credible certification for Sustainable Forest Man-agement (SFM) – matching global best practice in this field.
A cornerstone of the Sustainability Roadmap is APP’s operation-wide High Conservation Value Forest (HCVF) assessment process. The independent assessments for APP’s suppliers in Indone-sia are conducted by independent HCV experts at Re.Mark-AIndone-sia and Daemeter, and led by Loy Jones, Managing Director of Asia Pacific Certification Services.
On June 1st 2012, APP suspended natural forest clearance and peat land conversion on all APP owned concessions in Indonesia while the HCV assessments are conducted. APP also an-nounced a plan to roll out HCV assessments to all of its independent suppliers in Indonesia by the end of 2014.
2. First QuArterly ProGress rePort
2.1. APP Group
2.1.1. Major Milestones
Asia Pulp & Paper Group has accelerated its roadmap com-mitments to sustainability by announcing a suspension of natural forest clearance in the environmentally-critical Jambi region of Sumatra in Indonesia, 3 months ahead of target.
Two independent pulpwood suppliers in Jambi – Tebo Multi Agro (TMA) and Rimba Hutani Mas (RHM) - have agreed to join APP’s own Wira Karya Sakti (WKS) company in the region, by suspending natural forest clear-ance with immediate effect while HCV assessments are conducted.
The Jambi moratorium will cover a gross concession area of 55,584 hectares - in addition to APP’s own WKS concession (gross concession area of 293,812 hectares), where suspension of natural forest clearance is already in place.
These two independent TMA and RHM concessions in Jambi are vital areas for a large land-scape forest conservation initiative.
APP imposed moratorium of natural forest clearance across its supply chain in Jambi province. Two independent suppliers, TMA and RHM, joined APP-owned WKS’s HCVF commitment.
MAjor Milestones #1
As of September 1st 2012 APP, working together with our
independent pulpwood suppliers, is imposing a moratorium on all natural forest clearance across its supply chain in Jambi
province until HCVF assessment is completed. APP is proud to report that in
APP Responsible and Sustainable Business Policies include:
• Environment Stewardship Policy
• Responsible Fibre Procurement & Processing Policy • Corporate Social Responsibility Policy
• Employee Welfare Policy
• Chemical Substance & Article Procurement Policy
These policies have been developed by listening to our stakeholders and consulting experts in a variety of professional fields. This has taken place with the recognition that a balance of the three sustainability pillars – environmental, social and economic – is required for the long-term success of our business and for the long-term needs of the communities and forested areas in which we operate around the world. They are part of our management system and shall be regularly reviewed and revised as necessary in accordance with the current best practices.
MAjor Milestones #2
APP has also completed its updated Responsible and Sustainable Business Declaration, which covers all aspects
of our operations with key policies that support our
commitment to operate responsibly and sustainably.
APP puts the responsible management of its fibre supply as a priority in its commitment to sustainable operations and environmental protection. The fibre that we use to manufacture our paper products is a combination of virgin wood fibre and fibre from recycled paper waste, from imported and local sources.
The foundation of our supply chain is wood legality. To be a responsible consumer of wood fibre we have to go a step further to secure a sustainable source of wood. Therefore, we shall continue to drive processes to ensure that we only accept:
• Wood that is properly checked and verified as to legal origin and chain of custody • Wood harvested that does not violate traditional and civil rights
• Wood harvested in forests in which high conservation values are protected by forest management activities
• Waste and wood residues, as set out by Government regulations, that are not listed under CR IUCN & CITES Appendix I
• Wood from forest management units free from genetically modified trees, unless assessed under best practice standards
• Wood harvested in compliance of the ILO Core Conventions
APP Responsible Fibre Procurement & Processing Policy
key Policies And Guidelines:
In support of our policies to protect the environment and procure our fibre responsibly, APP has developed this policy implementation guideline for our commitment to high conservation value (HCV) protection. This provides steps and a timeline to guide us and our suppliers in our efforts to ensure that the wood we use is harvested from forest in which high conservation val-ues are protected by forest management activities. The policy has eight principles:
I. APP will be 100% reliant on sustainable pulpwood plantations by 2015. We will continue to develop ‘low carbon lands’ for plantations post 2015, having defined a cut off (in TC/Ha) for ‘low carbon lands’ as part of High Carbon Stock (HCS) research.
II. With respect to APP owned concessions in Indonesia:
High Conservation Value Protection Policy Guideline
2
a. Effective from June 1st 2012, we suspended natural forest clearance while High Conservation Value Forest (HCVF) assessments are conducted.
b. We have engaged credible experts to conduct HCVF assessments, in accordance with HCV Resource Network best practice. The assessments will be based on a multi-stakeholder approach.
c. We will accept and abide by the full HCVF Assessment results to protect and enhance HCV accordingly.
To implement this commitment, we will:
• Maintain systems and procedures to reasonably ensure that wood from illegal sources shall be rejected before it enters the mill. These systems and procedures will be regularly veri-fied and certiveri-fied to the highest standards by independent and certiveri-fied 3rd party auditors. • Ensure that a multi-stage environmental assessment process is conducted prior to forest
plantation development. In addition to Government regulated assessments, we will also pursue the High Conservation Value Forest assessment in accordance with HCV Resources Network methodology and tools.
• Expect that wood suppliers comply with our commitment above.
a. With an international NGO partner, we will engage, with immediate effect, our independent suppliers to adopt HCVF assessments, to be completed by end of 2014. b. We will review and re-evaluate supply agreements where HCVF assessments are
not conducted.
In addition to HCVF assessment on our wood suppliers’ production forest concession areas, APP will undertake the following activities in support of our effort to protect and conserve HCV areas:
IV. We will enhance our multi-stakeholder strategies to conserve HCV forests.
V. APP will lead an independent research initiative and multi-stakeholder engagement on High Carbon Stock (HCS) to define and implement an HCS cut-off point for pulpwood plantation development.
VI. We protect peat land in accordance with the Government of Indonesia’s laws and regulations.
VII. We will enhance our community engagement programmes to ensure that we are operating in line with best practice requirements for Free, Prior and Informed Consent.
VIII. We will continue to review and further strengthen our traceability systems. III. With respect to APP’s independent pulpwood suppliers in Indonesia:
2.1.2. Progress towards 100% Reliance on Plantation Fibre
• APP’s target is to end the use of Mixed Tropical Hardwood (MTH) in the supply chain by 2015.
• APP’s target is to achieve 100% reliance on plantation fibre by 2015, subject to a maximum 5% tolerance for MTH waste and residues.
• APP is already ahead of its target to reduce MTH in the supply chain. These residues and waste are defined by strict Government regulations, and are not listed under CR IUCN & CITES Appendix I. For examples residues may include wood from land clearing for Govern-ment infra-structure and settleGovern-ment developGovern-ments.
Good progress has been made in accelerating the roll-out of our new HCVF commitments to both owned pulpwood concessions and independents.
Progress on preliminary HCV assessment on APP owned concessions:
• APP is on track to complete the HCV assessment process for its own pulpwood concessions by the first quarter of 2013.
• For owned concessions in Jambi and Riau provinces, the HCV assessment process is over 80% completed, and is at the draft report stage.
• For owned concessions in West Kalimantan, the HCV assessment process is over 50% completed, with site visits currently taking place.
2.2. APP Indonesia
2.2.1. Acceleration of HCVF Commitments
• APP is confident that it can end the use of MTH in its supply chain by the 2015 deadline, while steadily enhancing protection of HCV in its supply chain.
Plantation Fibre Use: Target Vs. Realisation
80 82 84 86 88 90 92 94 96 98 100%
2011 2012 June 2013 2014 2015
Roadmap Target Realisation
• For APP owned concessions in East Kalimantan, the HCV preliminary assessment process is at the first stage of ‘ecological desktop analysis’, with site visits to the area planned in the coming months. There is a slight delay in completing the assessment in East Kalimantan due to accessibility of loca-tion and weather condiloca-tions, but we are confident that we will complete the preliminary assess-ment by Q1 2013 as scheduled.
Progress on HCVF commitment by independent concessions:
• APP has communicated the HCVF commitment to 100% of independent suppliers.
• The Jambi moratorium has put APP’s HCVF compliance process for independent suppliers well ahead of schedule. The moratorium in Jambi province follows a multi-stakeholder engagement pro-cess that began in April 2012 and incorporation of information provided by environmental NGOs.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Riau
Jambi West Kalimantan East Kalimantan
APP owned concessions
• The Indonesian Government recognises two certifications in forestry and timber industry: SVLK, a mandatory verification system enacted in 2009 for wood legality, and PHPL, a man-datory Sustainable Forest Management (SFM) certification system. Currently only Ecolabel-ling Institute of Indonesia (LEI) issues voluntary SFM and Chain of Custody (CoC) certifica-tion for pulpwood plantacertifica-tion and paper industry in Indonesia. In forestry, SVLK is the initial step to achieve full PHPL SFM certification.
• By 2012, over 50% of the concessions of all APP’s pulpwood suppliers are PHPL certified and over 40% are LEI certified.
• Together with our NGO partners, APP is in the process of completing a score card to mea-sure our fibre suppliers against our Responsible Fibre Procurement & Processing Policy (RFPPP). The score card will be used to identify the critical areas and readiness within our pulpwood suppliers to adopt HCVF commitment and RFPPP compliance.
• An important part of rolling out the HCVF commitments to independent suppliers is the pro-cess of Social Compliance. Over the coming months, the independent HCV assessment team will conduct detailed social mapping and analysis in the areas where independent suppliers operate, with a focus on examining existing methods of conflict resolution and ensuring that the HCV assessment process can be implemented with the full consent and participa-tion of local communities.
2.2.2. Toward 100% SFM certiied
Action Plan 07/2012 08/2012 09/2012 10/2012 11/2012 12/2012 1Q/2013
HCV Compliance
Development of HCVF Compliance Score Card
Independent Suppliers Score Card
Social Mapping & Field Check
Review of Existing Conflict Resolution
Method
Methodology Improvement: Pilot Projects
Development of Conflict Resolution Roadmap
Roadmap Implementation
High Carbon Stock (HCS) Research
Pilot Project to Measure HCS Cut Off
Well ahead of target: Jambi Moratorium
As part of its operation-wide commitment, APP has commenced deployment of activities cov-ering operations in China . In line with the deployment model for Indonesia, APP China and its independent NGO partner have completed an initial review of operations. From this review a comprehensive high level action plan has been formulated and communicated. APP is build-ing its internal implementation capacity and work has commenced with independent suppliers from within China and from key supplying markets.
• A comprehensive certification action plan has been built to ensure that 100% of APP’s pulpwood supply will be certified by 2020.
2.3. APP China
For all APP-owned and independent pulpwood suppliers in Indonesia
Forest Certiication
0 10 20 30 40 50 60 70 80 90 100%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Mandatory PHPL
SFM Certi�ication
Voluntary
SFM Certi�ication
Scoping Visits
APP and its independent NGO partner have initially targeted APP owned pulp mill operations in Hainan and Guangxi Provinces of China. Site visits have commenced covering APP China man-aged forestry plantations, pulp mill operations and independent suppliers. Independent sup-plier reviews are underway both in terms of domestic and international supply, logs and chip respectively. Through the APP developed score card, teams have commenced a review of inde-pendent suppliers towards the formulation and implementation of specific actions to ensure compliance with APP’s Responsible Fibre Procurement & Processing Policy.
2. Strategically APP, under the Sustainability Roadmap, prioritised actions within Indonesia and soon thereafter in China.
Action Plan
07/2012 08/2012 09/2012 10/2012 11/2012 12/2012 1Q/2013Operation Review
High Level Action Plan Socialization
Capacity Building
Site visit for Mills & Owned Concessions
Site Visit for Independent Concessions
3. APP will be 100% reliant on sustainable pulpwood plantations by 2015. We will continue to develop ‘low carbon lands’
for plantations post 2015, having deined a cut of for ‘low carbon lands’ as part of High Carbon Stock (HCS) research announced earlier this year.
4. APP is on track to achieve full compliance with Indonesia’s new SVLK legality standards by irst quarter of 2013. 5. Despite recent media reports, neither APP nor Sinar Mas group, has any share ownership (ailiation) with PT. Bumi
Persada Permai (“BPP”), the company reported to be developing a new pulp/tissue mill in South Sumatra.
Given the progress reported in this quarterly update, APP is on track to achieve all targets by 2015 including: • 100% HCVF compliance for all suppliers
• 100% reliance on pulpwood plantations for raw materials3
• 100% independent legality verification for all suppliers4
• 100% compliance with mandatory Sustainable Forest Management regulations and standards
At this stage neither APP nor any part of the Sinar Mas group has firm plans for expansion in the pulp and paper sector5. We are constantly evaluating the needs of our business and the
mar-ketplace for opportunities to benefit our customers, partners, and shareholders. We would like to assure all stakeholders that should any future expansion take place, this will (a) abide by the relevant laws and regulations; (b) be in line with APP Sustainability Roadmap’s HCVF conservation policy and responsible procurement guideline; and (c) rely only on sustainable plantation wood.
2.4. APP Group Sustainability Roadmap: 2015 Targets
2.5. Future Expansion HCVF socialisation to independent suppliers:
100%
Wood Legality
2012 2Q 2013 2Q 2014 By 2015 By 2020
Voluntary SFM
Target 100% HCVF Assessment Compliance for Independent Suppliers Mandatory
SFM
Plantation capability 100% with max 5% of MTH waste & residues tolerated
