Sinar Mas reels from PR woes as Carrefour ends deals

The Jakarta Post, Jakarta | Wed, 07/07/2010 10:27 AM

Sinar Mas Group, a paper producer with investments in palm oil and financial services, has received another blow to the public image of its production network, as to retail giant Carrefour suspending all orders.

Carrefour has decided to cease all supplies of paper products from Sinar Mas’ subsidiary, Asia Pulp & Paper (APP), following a report from Greenpeace, which claims the paper company relies on timber from two forests areas that were home to endangered species.

“Carrefour is committed to sustainable development and has decided to cease sourcing of APP supplies for private label products from mid-year this year until further notice.” Carrefour Indonesia external communication manager Hendri Satrio told The Jakarta Post in a letter.

Carrefour’s decision is the latest in a series of bad news for Sinar Mas ever since Greenpeace issued its report in June. On July 1, US-based food producer Kraft foods also decided to cease buying all paper products from APP.

On Dec. 11 last year, PT Unilever Indonesia decided not to make new orders of crude palm oil (CPO) from Sinar Mas’ subsidiary, PT Sinar Mas Agro Resources and Technology (SMART), due to Greenpeace findings that showed SMART’s oil palm operation had devastated large tracts of rainforest and peatlands.

Following Unilever’s decision, Switzerland-based food producer Nestle joined the move in April, also deciding to suspend purchases of CPO from SMART.

Greenpeace’s report on APP accuses the paper company of sourcing raw materials from two forest areas in Riau that are supposed to be protected, Bukit Tigapuluh and Kerumantan forests. The two areas are the habitats for endangered species including the Sumatran tiger.

The status of land is a constant source of conflict in Indonesia due to complicated and overlapping laws, poor enforcement regulations and deeply entrenched corruption through all levels of government.

“The company’s commitment to produce sustainable commodities are hardly worth the paper it is written on, and some of the world’s best-known brands are literally pulping the planet by buying from them,” Greenpeace Southeast Asian forests campaigner Bustar Maitar told reporters on Tuesday.

Bustar added, “We have not calculated the damages that the APP had caused on the two forests.”

Greenpeace said other giant retailers such as Walmart and Hypermart and fast food franchisers such as Kentucky Fried Chicken, Burger King and Dunkin’ Donuts all sourced products from APP. The report also lists WH Smith, the retail group, Corporate Express, the Dutch office supplies company now owned by Staples, and PaperlinX, the Australian paper merchant.

Sinar Mas Managing Director Gandhi Sulistiyanto denied all accusations made by Greenpeace and argued that the environmental group had a sinister agenda behind their campaign.

“They are part of the global competition. We suspect that Sinar Mas is merely an intermediate target,” Gandhi said over the phone. He added, “The NGO’s main target is the government. Our commodities have the potential to be the country’s main export.”

He said it was strange that Greenpeace was only attacking his company and hardly attacking other companies.

He stated that his company would this month release verification work conducted by independent consultants to counter all of Greenpeace’s accusations.

For the verification process, SMART has appointed two independent consultants, Control Union Certification (CUC) of the Netherlands and the British Standards Institute Group (BSI) through their representative offices in Kuala Lumpur, Malaysia, and in Singapore.

Sinar Mas, which was founded in 1962 by prominent Indonesian entrepreneur Eka Tjipta Wijawa, currently comprises hundreds of incorporated companies with a total of 150,000 employees and an asset value worth over US$20 billion, with a presence in Asia, North America, Europe and Australia. (rch)

Related Article:

Greenpeace Urges Wal-Mart, Yum to Stop Buying Sinar Mas Paper