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APP Defaults on Debts and Environmental Promises

A new report shows APP has decimated tiger habitat forests that it promised to conserve

A new report from Eyes on the Forest—a coalition of Sumatran NGOs including WWF Indonesia—reveals Asia Pulp & Paper (APP) has been accused of a “double default” on international creditors. This follows an investigation which revealed the company has decimated the same tropical forests it promised to conserve under “legally binding” debt restructuring agreements. These tropical forests are essential to the survival of tigers and other species. In 2004 APP agreed to protect high conservation value forest under debt restructuring agreements it made with taxpayer-backed financial institutions in nine countries. The debt restructuring agreements were negotiated in 2001 after APP defaulted on $US13.9 billion of debt and as a result, was delisted by the New York and Singapore stock exchanges.

Under the 2004 agreement, APP promised to be fully sustainable by 2007, something it defined as producing all pulp exclusively from plantation wood. The company described the agreements as a “legally binding contractual obligation.” But the Eyes on the Forest investigation shows that 2007 was the year APP’s wood suppliers began clearing high conservation value forest in the Kerumutan tiger landscape of central Sumatra. This same area had been highlighted by APP as an example of a new “scientific basis for the sustainable development of our plantations and the management of our conservation areas”. APP’s actions were legally questionable for other reasons, including clearing on peat land that was more than four metres deep, resulting in massive carbon emissions.

APP missed self-imposed deadlines of 2004, 2007, and 2009 for supplying its pulp mills exclusively from renewable plantation wood. An announcement that it would finally fulfil this promise by 2015 was recently amended to a new deadline of 2020—when there is a risk there will be little forest left in Sumatra.

Eyes on the Forest calls on investors not to finance APP’s plans to expand existing, or open new, pulp and paper mills in Indonesia, in China and around the world.

Learn More:
How APP is destroying tiger forests and what you can do to help
Eyes on the Forest Report (PDF)