Asia Pulp & Paper and Greenpeace: Building New Directions, Together

In early 2012, the shareholders of Jakarta-based Asia Pulp & Paper, known as APP, met face-to-face with Greenpeace executives.

It was a charged meeting. Greenpeace had been hammering APP for over a year with a public campaign to “bear witness to the forest destruction caused by companies like Asia Pulp and Paper,” APP customers from Hasbro to Kraft to Staples were distancing themselves from the company because of the bad press, telling suppliers to avoid sourcing paper and packaging from APP.

Aida Greenbury, managing director for sustainability for APP, was at that meeting. Her take on Greenpeace when she walked into the room? “You’re just an evil organization that’s trying to destroy our company.”

But that meeting was a turning point. Slowly and steadily, a kind of trust began to develop between the company and the gadfly NGO. Eventually, Greenpeace became a kind of partner in helping APP figure out how to become a greener company and how to take a leadership role in the zero deforestation movement.

In a conversation with David Kiron, executive editor for MIT Sloan Management Review’s Big Idea Initiative, Greenbury explains how a third party helped APP analyze the requests for new measures, in what ways the company has made its work transparent for all to see and why she now says of Greenpeace, “They’re actually very smart people. They understand what they’re talking about.”

Could you describe APP? Where it’s based, how big you are, who your main consumers are?

The Asia Pulp & Paper brand is attached to many different paper products, from photocopy paper to stationery to notebooks to packaging to tissues. APPs production facilities are split into two: One is headquartered in Shanghai, China, and the other is headquartered in Jakarta, Indonesia.

Our production capacity for both facilities is roughly 20 million tons of pulp, paper and packaging. We now market our products to 120 different countries.

Let’s start with your approach to forest management, and how that has evolved.

For many years it was basically the best practices available, at that time, in Indonesia and China. What was applicable when we started was a mandatory sustainable forest management verification and certification standard. We needed to comply with that. It was revised in 2010 to become a little more rigid, more traceability-focused instead of just sustainability-focused.

Was this in Indonesia, this standard you’re talking about?

Indonesia.

And then the part that’s in China?

They’re using a national standard in China called CFCC (China Forest Certification Council) Scheme.

And were they different, the national standards in Indonesia and China?

Standards are always different from one country to another, depending on their environmental, economic, political and social conditions. You can’t really compare the two.

Since 2003, there have been many Indonesian forest issues raised by NGOs globally. Initially, back then in 2003, it was raised by Friends of the Earth, and then moved to Robin Wood, based in Germany, then WWF. Then, probably in 2010 until 2013, the issues were raised by Greenpeace — very, very strongly by Greenpeace. And if you have a look at all of those campaigns or the issues they are trying to convey to us and to other stakeholders, it’s all about deforestation.

Back then, before 2012, we thought that complying with the national regulations was enough. We complied legally according to the government license and everything. We thought we did the best we could. But then, if we are doing the best we could, why are there different voices out there? What is the difference between what we’re trying to do here, doing the mandatory certification of sustainable practice, to the one that’s been raised by Greenpeace? Because we couldn’t really understand the gaps —

— like why your best was not good enough.

Yes. We couldn’t really understand. We’re running a paper company. We’re not a conservation group. We’re not a wildlife group. We’re a business. We wanted to understand the gap between what we’re doing and what has been requested by the NGOs, and why they are requesting that. We also need to understand the why.

That’s when we engaged with The Forest Trust, an independent nonprofit organization.

When was this?

This is in mid-2012. The Forest Trust, or TFT, is a non-profit organization, and they are very well equipped in Southeast Asia, to help companies clean up their supply chain. They are very familiar with this issues raised by these NGOs.

We reached out to them and asked, “This is our current situation, and this has been requested by these NGOs who are affecting our stakeholders, including customers. Where is the gap? Tell me where the gaps are, and what we need to do to address these issues.”

TFT plays the role as the mediator but also translator. We, as a corporation, sometimes didn’t understand the NGO language. What is the meaning of deforestation? We didn’t have a full understanding of the NGOs’ definition of deforestation. And why is it being talked about?

So TFT basically said, “The NGOs have been telling you to do this, this and this. Let’s analyze them one by one; what does each actually mean, and how will it affect your business if you implement it?” When we read the requests by the NGOs, none of them made sense. I thought at the time, “These organizations are crazy. They want to drive us into bankruptcy.”

So TFT translated those demands and analyzed them one by one and how we can actually implement them in our operation. And we, in turn, as a company, we analyzed those explanations. Is it good for our business or not? If it’s not good for our business, why bother, right?

We had a process internally as well to analyze, can we do this? If we do this, what happens to the supply chain? What happens to the sustainability of the area that we’re relying on? What about legality compliance? Can we still comply with national regulations while doing implementing a zero deforestation policy at the same time? All those considerations.

So the company was working with The Forest Trust to review all the requests made by Greenpeace and others about deforestation policy. What did you finally conclude?

We came up with the conclusion that as a business, yes, we can. We can do it, and it’s actually a very logical business solution for the sustainability of our plantations, the sustainability for our business, and for the risk management of our operations as well.

So it was a logical business solution for our company. But can we actually implement it across our supply chain, across our suppliers? We provided suppliers six months to socialize the idea, to educate our suppliers about the ideas.

What kind of messages were you receiving from the executive level, maybe the CEO even, about the accusations that the NGOs are making? Was the message, “We need to have these voices stopped?” What was your mandate?

There are stages. In every process there are always stages. Stages of denial. “That’s wrong. We’re doing the right thing.” So you need to explain to them that they’re wrong. There’s always that stage. And then the next stage when you start to question, “wait a minute, are they wrong?” And then the third one is when you’re actually convinced whether you’re right or wrong.

We went through those stages for years. The initial stage is always denial. “No, we’ve been doing this for 30 years. We know what we’re doing. We’ve been expanding, so we must have done something right.” But then expansion stopped because the markets stopped buying.

Markets stopped buying from you — were you losing customers?

Yes, of course, because of the attacks by Greenpeace, we lost — who did we lose? The big 2011 Greenpeace campaign against Mattel, for example, the Barbie campaign was everywhere. I was actually in London when they launched the attack. It was on the bus stops and every bus going through London. I guess they probably spent millions of dollars to campaign against us.

Was there a turning point when you decided that these criticisms, these accusations from the NGOs, had merit? Or was there opportunity?

Yes, I think it happened in January 2012 when the shareholders of the company and myself actually met face-to-face with Greenpeace top executives. And wait a minute, they actually believe in the right thing. We don’t want to destroy the environment. We don’t want to destroy forests. We actually have something in common here.

From that meeting, we saw them as human beings who are trying to do the right thing, and they knew that we’re not bad either. We also want to do the right thing. So that process, that trust, started from that meeting.

What kind of shareholders did you have at this meeting with Greenpeace?

The major shareholders.

Like presumably institutional representatives of —

— no, our company is family owned. The majority of the shares in our company is owned by the Widjaja family.

Okay, so it’s kind of easy to get them to —

— I wouldn’t call it easy, but with shareholders who are just there to buy shares to get profit, they don’t have that kind of connection. With a family-owned company, they care because they know they need the business to continue to exist for their great, great, great grandchildren. They want to make sure the business is sustainable

So it became clear from this point, early 2012, that this was something that they were going to support.

Yes. Without that, I wouldn’t be here talking to you. The shareholders have been supporting this initiative from the beginning. It’s a huge amount of work, and without the shareholders supporting this 100%, it would be impossible to make it happen.

What were the characteristics The Forest Trust that made them a good choice to help you navigate this crisis?

We asked Greenpeace, “Guys, if we want to have a look at what you’re asking us to do, we can’t do this alone, because we’re professional pulp and paper people. Who should we talk to, to help us implement this?” In January 2012, they said “Why don’t you try The Forest Trust, because they have experience in dealing on this kind of thing. They have experience in cleaning up supply chains in Asia. Maybe they can help you.”

So they gave us the name, and I reached out to the director of TFT. And he said, “Yes, but it’s going to be tough, guys. You’re going to have to be ready to change quite a lot in the way you operate. These are the hurdles that you’re going to go through.”

So we didn’t just pluck them out of the sky. We actually talked to Greenpeace, who was the biggest critic at that time, about who should we talk to about this.

So what exactly brought you to the zero deforestation concept?

That’s the concept that was introduced by Greenpeace.

The zero deforestation concept has several principles underneath it. Principle number one is to identify, protect and enhance high conservation values. Principle number two is to identify, protect and enhance high carbon stock — basically assessing the biodiversity of the land to regenerate regrowth. Number three, protection of forested peat land. Number four is to respect the rights of indigenous communities.

Those are the principles that we needed to analyze one by one, to finally convince us that it’s good for business and it is supported by a majority of our suppliers. That’s when we launched our forest conservation policy, in February of 2013.

So how would you describe the evolution of this relationship with Greenpeace? Because it seems like this relationship has actually been pretty influential in the evolution of your own company.

Yes. Never in our history would our shareholders sit in the same room with a “radical” NGO like Greenpeace. So it’s quite ground breaking that, today we sit down together in our boardroom and discuss strategy together, incorporating their input.

To be clear: There’s no agreement between Greenpeace and APP. Greenpeace says that they’re nobody’s friends and nobody’s enemies. There is no nondisclosure agreement signed. There’s no payment.

The interesting bit is the trust-building process, it happened pretty quick. We built our mutual trust within six to eight months. At first they asked us questions and we said, “Why do you want to know?” And then they asked the same question again, and we thought, okay, we’ll give you a little bit of information and see if they misuse that information. They didn’t. They asked more questions, and we gave them more information. And they were responsible with every piece of information that we provided.

So it slowly built more and more trust between Greenpeace and us. They’re not just radical NGOs running around on the street unrolling banners on buildings and stuff like that. They’re very smart people. They know what they’re talking about.

This high carbon stock concept, for example, was introduced by Greenpeace. Without them, we wouldn’t know how to implement this. So they are scientific in their approach. They are responsible. They are trustworthy. And that’s a good partner to implement this policy.

How collaborative would you say your organization has been with outside organizations up until the 2011 timeframe?

Drastic change. Radical change. I mean, not only in engaging external stakeholders, but also in transparency. You look at our online dashboard right now, and, basically, we have every aspect in the implementation of our zero deforestation policy available to the public. I mean, almost every aspect. Of course not the long, boring reports. Almost every aspect is available, including the list of our suppliers, a map of our suppliers’ concessions, where they are, where the conservation area is, where the plantation is planted.

Everything is available publicly. Check other pulp and paper players around the world and tell me if there is one single company out there that has more transparency than APP. Our transparency has changed radically. Every time we implement an initiative, we always have five other stakeholders look and verify it themselves. Anybody can join. Any NGO can join to have a look and verify how we impose the moratorium on natural forest, where the border is, how we measure the moratorium area.

Did any of the companies that you lost as customers come back as a result?

Yes, many.

Did Greenpeace help with that, or was it just through your publicity around what you were doing? How did you get these customers back?

Recognition comes naturally. We made progress, and people see that. All of those externals, they call to review our progress, to review our achievement. Journalists also come and witness themselves. So we’re not paying them to come. There are other third-party voices. It doesn’t have to be from Greenpeace.

Greenpeace’s position has been very clear. They have it posted on their website. Initially, maybe three months after we announced our policy, they said, “No, no, don’t buy from APP yet. Wait.” And then 10 months after they said, “Okay, you can go back to APP, but you need to make sure that APP implements their forest conservation policy.”

So their position has been clear. That’s their role in how we engage with customers.

In the implementation of this, you’re having to work with many, many suppliers. How do you actually engage with a fragmented community that’s in control of so much of the timber that is your supply?

Our pulp wood suppliers are now very committed to the forest conservation policy. Six months before we announced our policy, we began socializing the idea of the zero deforestation business model among our suppliers. Ultimately, we asked them, “Are you going to commit? If you’re going to commit, you must switch off bulldozers and chain saws by the 31st of January. If you can’t do that, we have to say goodbye.”

The prioritization of different conservation areas is based on stakeholder consultation. That means we are consulting with the concession owners, with the community, with the NGOs, with APP, with everybody. It’s going to be consensus- and scientific-based.

So I’m not worried so much about the suppliers. What I’m worried about is about the other players. Because in that landscape, there are so many different players. There’s palm oil growers, coffee growers, some rubber companies supplying other factories, some infrastructure, mining activities. They’re everywhere in this landscape. How can we engage them? How can we make them understand what we’re trying to do? How can we make them support what we’re trying to do? In some areas, I can engage them through association. But in other areas, we just have no place to engage them with. That’s the difficult part, not our suppliers. This deforestation issue is not broadly accepted as yet.

Tell me about that.

Well, when we announced our forest conservation policy, we received a lot of invitations, if you can call them invitations. Actually, we were being summoned to meet with the forest association, the pulp and paper association. Being questioned, “What the hell did you do? You’re killing the industry. You’re killing other players, because we can’t do what you’re doing. You probably can, but we can’t.” You know, giving me reasons why they can’t.

And that’s just from my industry. From other industries, there is a lot of resistance as well. From some of the palm oil industry, for example, they don’t want to adopt zero deforestation. Some still want to continue converting natural forest.

So we need some kind of back up or support. We got that back up from the NGOs, especially Greenpeace. But we need to pick up support from the government as well.

So for many years, your company was following the best practices as determined by the government. And now you’re going beyond that. That puts the government in an awkward position, because then they’re in a position of saying, “hmm, maybe we need to be a little stricter.”

There is movement going on now. The government is reviewing the principles that we’re committed to. For example, high carbon stock is now being reviewed by the government. But they also take it slowly. They want to say, “Let me just wait and see, learn from you how it gets implemented before we actually come up with any regulation about it.” I hope we are influencing the government to make regulations a little bit more strict.

That’s excellent. How important is that for you to have that happen?

It’s important, because it gives us more certainty. For example, we identify certain conservation values in a particular forest, and we want to set it aside as a conservation area, but if there’s no regulation to support that, that area can be deforested at any time in the future by others. But if there are regulations to support protection and conservation, then it will be more secure.

For generations.

Yes, because it would be protected by law.

What would you say you’re most worried about, and most excited about?

I want to be totally honest with you. What I’m really worried about? Unhealthy competition. Asia Pulp & Paper right now is probably one of the largest pulp and paper producer in the world. And before, we were the bad guys. We are the company that’s been accused of destroying forests, so our competitors had the advantage of being able to sell their products whenever they want, wherever they want, and they could say, “No, don’t buy from APP because they’re not environmentally friendly.”

Now our competition doesn’t have that excuse anymore, so we will take over some of the market. And we need to be supported, even by competitors, because we’re talking bigger picture here. We’re not just talking about paper products, we’re talking about the global environment, about climate change, trying to reduce greenhouse gas emissions. What is the role of competitors in that? Are they supposed to support us, or are they supposed to try to make us fail?

That’s what I’m worried about. That our competitors somewhere are not happy with this development and want to make us fail.

What am I’m very excited about? The whole thing. I’ve been with the company for 10 years, and I’ve never been tired of working on sustainability. It’s non-stop work on sustainability issues at APP. And for this breakthrough with our forest conservation policy, zero deforestation, it’s so exciting. There’s a hell of a lot of work to be done, but it’s very exciting because we’re changing the world. Because of our size, we can have a huge impact, and not just in our own supply chain. We’ve become a leader in the industry. We’ve become a leader in trying to protect the forest. We’re changing the world. That’s what’s so exciting about this moment.