APRIL’s Links with Supplier in Borneo Undercut “No Deforestation” Pledge

KOALISI ANTI MAFIA HUTAN PRESS STATEMENT:

KPMG “ASSURANCE REPORTS” CALLED

INTO QUESTION BY NEW FINDINGS

Jakarta, Indonesia: A coalition of civil society organizations on Tuesday 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 organizations 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.

Related News