APP Sustainability Report 2008-2009 - Asia Pulp and Paper

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Introduction to APP Indah Kiat Pulp & Paper Perawang Mill Lontar Papyrus Pulp & Paper Industry Sumatera Achieving APP’s goal of being the 21 st century’s premier pulp and paper manufacturer needs the concerted effort and commitment of all involved with the production, marketing and distribution of our products. Indah Kiat Pulp & Paper Tangerang Mill Pindo Deli Pulp & Paper Mills Indah Kiat Pulp & Paper Serang Mill HEAD Quarter Jakarta JAVA Ekamas Fortuna Pabrik Kertas Tjiwi Kimia Asia Pulp & Paper (APP) is a brand that encompasses pulp and paper products manufactured at eight pulp and paper mills in Indonesia. APP started in 1972 with the establishment of a chemical plant, PT Tjiwi Kimia, producing caustic soda and associated products in Mojokerto, near Surabaya in East Java. The company’s name was changed in 1978 to PT Pabrik Kertas Tjiwi Kimia (Tjiwi Kimia Paper Mill), to reflect the addition of two small paper machines to the site, which produced a modest 12,000 tonnes of paper a year for the domestic market. The subsequent growth of APP through a combination of acquisitions, the redevelopment of existing paper mills and the green-field development of both integrated pulp mills and stand-alone paper mills, has created a world-scale company. APP now has a wood pulp production capacity approaching 3M tonnes/annum and a paper production capacity of some 7.3M tonnes/annum, with products sold in Africa, America, throughout the Asia Pacific region, in Europe and in the Middle East. Two companies within APP, Indah Kiat and Tjiwi Kimia Tbk., are publicly listed and trade on the Jakarta and Surabaya Stock Exchanges in Indonesia. APP’s two integrated pulp and paper mills are located in the provinces of Jambi and Riau on the island of Sumatra. Our other six mills are stand-alone paper mills on the island of Java. Four are in the provinces of Banten and West Java, all relatively close to the capital, Jakarta; one is close to Surabaya, Indonesia’s second largest city, in East Java, and one is close to Malang, a large but relatively isolated city, also in East Java. The widespread distribution of our mills, our company history of both green-field developments and growth by acquisition, makes for a complex corporate structure and culture. The mix of operational and cultural considerations – sometimes inherited through acquisition – within the mills means that APP must take a decentralized approach to the management of its sites. We describe, in subsequent sections of this report, how each of our sites has uniquely responded to its distinct set of operational, cultural, community, socio-economic and environmental challenges and statutory obligations within our corporate framework for sustainability and social responsibility. APP sells its paper products through distributors and directly through its own regional marketing offices around the world. Today, APP’s products include bleached hardwood paper pulp and a full range of fine paper, tissue, packaging and stationery products. This spans commodity-grade base papers, tissue and industrial papers, valueadded writing and printing papers, art paper and boards, converted hygiene products, speciality papers, carton and box boards, plus a wide range of converted stationery products and office supplies. To become the 21 st century’s premier pulp and paper manufacturer demands the concerted effort and commitment of all involved with the production, marketing and distribution of our products – in short, it requires the support of APP’s management, our operational, engineering and administrative employees, and all of our suppliers and contractors. In 2009, APP had directly employed 43,617 people and indirectly employed 19,037 third-party workers at our facilities, including pulpwood suppliers. [2.6, 2.8] [2.8] 4 APP 08/09 Sustainability Report APP 08/09 Sustainability Report 5
Chairman’s Statement We believe in operating our business transparently and seeking regular stakeholder engagement. Welcome to our third sustainability report. At Asia Pulp & Paper (APP) we have a single, focused mission: To be the world’s number one pulp and paper manufacturer and a responsible global leader in all aspects of our business. We recognise that company size, reach and sales revenue are incomplete benchmarks, and not the only meaningful indicators of global leadership and responsibility. This is why we judge our success by the impact our activities have on Indonesian society at large, on the environment and on the nation’s economy. By what we do every day to promote positive social and economic benefits for our employees, their families and the wider communities in which APP operates. And by what we do every day to minimise the environmental impact of our operations and to protect Indonesia’s natural treasures. We are long-term players and we take these long-term obligations seriously. Our goal, with this APP 2008 / 2009 Sustainability Report, is to discuss both our operational performance and our progress with the environmental and socio-economic initiatives we have underway. We believe we owe our shareholders, worldwide stakeholders, employees and their families, the country of Indonesia and the people living in and around the communities where we operate transparent reports of our achievements and of our challenges. This Sustainability Report is an effort to present an objective, fair and balanced picture of our activities. Social responsibility often requires complicated and delicate balance, especially in Indonesia’s pulp and paper industry, where virtually every major decision we make must take into account potentially serious social, demographic, economic and environmental challenges. We take very seriously our responsibility, as one of Indonesia’s leading corporate citizens, to play an active role in advancing Indonesia’s social and economic priorities. But we are equally aware that this must not come at the expense of the environment, or of community and social cohesion. We recognize that there is still space for improvement in the way we balance these various aspects when conducting our business. Our commitment to sustainability analysis and reporting and to Environmental Management Systems are some of the ways in which we try to ensure that we will always seek to achieve an optimum reconciliation of the – sometimes competing – interests of all of our stakeholders. In 2008 and 2009 we made great strides advancing our leadership in critical areas that impact the world around us. In this report we are proud to report on our efforts in these key areas: • Achieving 100 percent certified sustainable sourcing of our pulpwood supply, as well as efforts to help ensure we protect the integrity of APP products from the inclusion of any illegal wood. • Increasing investment in new technologies and expanding reliance on bio-fuel sources in our mills to reduce the carbon footprint across our production processes. • Expanding community investment programs to support UN Millennium Development Goals and to make poverty alleviation in Indonesia a number one priority through social, economic development, health and education programs that create opportunities for our people to better their lives. • Establishing public-private partnerships to create and actively manage conservation initiatives to provide real, long-term protection of Indonesia’s High Conservation Value Forests and preservation of critical habitats for endangered wildlife. • Creating genuine opportunities for our employees to advance within the APP family through a disciplined commitment to implementing world-class training and development programs. • Increasing the transparency of APP operations with stakeholders worldwide while measuring our progress through first-of-its-kind carbon and social footprint assessments that both track our work to date and help keep us on the right path for ongoing improvement. We accept our responsibility to be a good steward of the social and natural environments in which our mills operate because we recognise this represents sound, long-term business practice. We view social responsibility as an opportunity rather than as a cost of doing business. We believe that weaving social responsibility into the fabric of our operations will ultimately provide a greater return to our shareholders, as well as improve the lives of employees and the communities in which we operate. In the long run, this helps ensure the sustainability of all aspects of our operations, reduces operating costs, improves employee recruitment, satisfaction and retention, and can directly impact on sales. Improving our return on investment, in turn, provides greater opportunity for investment and innovation in social, environmental and conservation initiatives that can increase the positive impact we have on the world around us. This is part of the “lifecycle balance” we strive to achieve. Global leadership and responsibility is an ongoing journey. As we progress on our path we must always re-examine our performance and raise the bar on how we make a positive impact on society. We have set ambitious goals for our future, for the overall growth of our business, for our sustainable forest management and certification programs, for our carbon footprint reduction initiatives, for our social and economic development activities – all to advance Indonesia’s economy and better the lives of its citizens. Our commitment to our stakeholders worldwide is to continue to grow our business responsibly, to measure our performance honestly and transparently, and to communicate to you our continued efforts and progress. Sincerely, Teguh Ganda Wijaya Chairman – Asia Pulp and Paper [1.1, 1.2] [1.1, 1.2] 6 APP 08/09 Sustainability Report APP 08/09 Sustainability Report 7
Page 2 and 3: Contents Report Scope 02 Corporate
Page 6 and 7: Chairman’s Statement Chairman’s
Page 8 and 9: Corporate Governance Corporate Gove
Page 10 and 11: Sustainable Products Sustainable Pr
Page 32 and 33: Stakeholder Engagement Care for the
Page 34 and 35: Stakeholder Engagement Stakeholder
Page 40 and 41: Social Initiatives and Poverty Alle
Page 46 and 47: Climate Change Climate Change APP h
Page 48 and 49: Responsible Plantation Management W
Page 50 and 51: Responsible Plantation Management R
Page 52 and 53: Responsible Plantation Management R
Page 54 and 55:
Ecosystem Protection Ecosystem Prot
Page 56 and 57:
GRI Index Economic Page Page Societ
Page 58 and 59:
112 APP 08/09 Sustainability Report
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Notes 116 APP 08/09 Sustainability
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APP Sustainability Report 2008-2009 - Asia Pulp and Paper

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