APP statement on NGO allegations regarding APP suppliers and corporate structure

After studying in detail the report put together by the Koalisi Anti Mafia Hutan (KAMH), we are unsure of what wrongdoing they are alleging APP have committed.

It is not unusual for any company to have significant economic or operational relationships with other companies in their supply chain. This is especially so in highly integrated supply chains like ours. APP’s key focus is to ensure that our wood supply is free from deforestation. Our links and influence over our suppliers play a major part in ensuring that.

As stated in the KAMH report’s disclaimer, all the information presented about the ownership structures of companies in our supply chain are from publicly available sources, including our own disclosures. We are unsure as to how KAMH has arrived at the conclusion that this information is being deliberately hidden from public view.

APP has previously stated, we firmly enforce the FCP across our supply chain and will not hesitate to discipline and dismiss suppliers that breach the FCP, even if former employees, or Widjaja family members, are shareholders of these companies. We are focused on the actions and practices of our suppliers rather than their shareholding structure.

However, in order to put our stakeholders’ minds at ease, APP will engage an third party auditor to look into the shareholding of all forestry businesses in Indonesia to determine if any APP employees are involved in businesses that present a conflict of interest. We will be organising a workshop to discuss the results of this audit with interested parties when the report is complete. We hope this will put an end to unmerited aspersions once and for all.

Since 2013, we have dedicated ourselves to playing a major role in fighting climate change, working closely with stakeholders and NGOs to ensure implementation of our policies. There have been significant progress in these areas. We should be working together to look at how to build upon this as this work makes a real difference to protecting natural forests and alleviating poverty.

For over a year, there has been a sustained attack on APP. First, it was an assertion that due to OKI mill’s approved capacity, APP will have to deforest in order to feed the mill’s capacity. This despite the fact that two independent parties, as well as the mill’s financier, have all done their own studies determining that OKI will have enough supply without contravening the FCP, and that there has been no evidence of any deforestation to supply OKI or any of the mills under APP’s banner.

Then, it was the accusation that APP was green washing due to its corporate structure. The “evidence” was that some of our suppliers are owned by companies which shared corporate addresses with Sinar Mas, social media posts or are/have been employees of APP or Sinar Mas. When pressed as to which of these wood suppliers were actually deforesting, the companies named actually do not supply wood to APP, and no one was able to present any evidence that any of our suppliers were actually deforesting.

Now the same “evidence” is being used to make allegations of “possible tax evasion” and “avoiding responsibility”.

The report calls for APP to be investigated on the possibility that crimes have been committed, yet provides no evidence of any wrongdoing. Under Indonesian law, there are strict requirements for legal compliance in our corporate holdings. APP complies with all applicable laws and regulations.

KAMH further alleges that APP uses independent suppliers in order to make it easier for us to attain sustainability certifications. This does not reflect the engagement we have been having with certification bodies. We group all our ownership and suppliers for certification purposes, for which shareholders take collective responsibility. We have also applied a single standard – the FCP – across our entire supply chain, regardless of whether APP has shareholding in that supplier or not. We do this because the only thing that will make it easier for us to attain sustainability certification is for our entire supply chain to be sustainable.

APP understands and appreciates the role media and NGOs play in watching over corporations such as ourselves. Working together with NGOs, we have been able to make an impact not only on the environment but also the livelihoods of communities in an around our concessions. We remind the KAMH that Indonesia is governed by the rule of law and a presumption of innocence, not “guilty until proven innocent”.

Once again, we urge stakeholders to engage with us and if they think there is any wrongdoing, to lodge it via our grievance mechanism which will compel APP to investigate. Many stakeholders have done so in the past and it has resulted in affirmative action by APP.

We strongly believe that if one is serious about fighting climate change and eliminating poverty, then a collaborative effort between corporations, regulators and civil society is needed to make true progress.

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