Today a coalition of civil society organisations published a report about deforestation and peatlands degradation on the rainforest-rich island of Borneo in Southeast Asia. Based on analysis using satellite imagery, the report documents significant deforestation, including clearance of forests on peatlands, in the concession area of PT Adindo Hutani Lestari (Adindo), one of global pulp and paper producer APRIL Group’s largest suppliers of wood to its pulp mill in Indonesia.
The report’s findings represent significant violations of both the APRIL Group’s and its corporate parent the Royal Golden Eagle (RGE) Group’s commitments to stop new development on forested peatlands – and more broadly, they challenge the integrity of the groups’ “no deforestation” pledge made in June 2015, according to the civil society groups publishing the report that includes the international campaign organisations Greenpeace and Rainforest Action Network.
The report’s findings impact the sustainability commitments of downstream users of APRIL’s pulp, including its sister company Sateri, a leading producer of viscose staple fiber (VSF). It is believed that Sateri’s customers, and, indirectly, APRIL’s, include many of the world’s largest fashion brands, “big box” clothing stores, and online retailers. Changing Markets has identified the companies disclosing supply relationships with Sateri’s VSF mills in 2019 to include Tesco, H&M, Marks and Spencer, and Espirit – even as many brands do not share their supply sources.
APRIL has sought to assure stakeholders that it is complying with its Sustainable Forest Management Policy 2.0 by commissioning KPMG Performance Registrar Inc. to produce “limited assurance reports” since 2016. Yet neither the latest KPMG “assurance report”, published in July 2019, nor any of the previous ones, indicated that extensive deforestation has occurred within the Adindo concession area, much of it on forested peatlands.
The coalition report also found that APRIL’s description of Adindo as an “Open Market Supplier” is difficult to reconcile with the multiple layers of linkages to companies and individuals associated with APRIL and the RGE Group. Adindo’s complex corporate structure – with links to a web of offshore holding companies, many of which are domiciled in low-tax jurisdictions – has the effect of obscuring who ultimately is responsible for the company.