Viscose Giant Responds to Indonesia Deforestation Accusations

Jasmin Malik Chua
·7 min read

A new joint report has accused the world’s largest viscose and paper packaging producer of imperiling some of the world’s largest rainforests.

In “Pulping Borneo,” Greenpeace, the Environmental Paper Network and others charged Royal Golden Eagle of flouting its own no-deforestation policy through the actions of its viscose subsidiaries, Sateri and Asia Pacific Rayon; its paper and packaging firms, Asia Pacific Resources International Limit (a.k.a. APRIL), Asia Symbol and Bracell; and the “chain of offshore shell companies” with which it is associated.

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Using satellite imagery and trade and supplier disclosure data, the report alleged that the Singapore-headquartered conglomerate’s pulp mill in China has been employing wood from companies that have recently cleared swathes of tropical rainforest in Kalimantan, the politically Indonesian part of the Southeast Asian island of Borneo that is home to an endangered subspecies of orangutan.

Greenpeace et. al. claimed that in 2021 and 2022, Asia Symbol’s pulp and paper mill in Rizhao, China, received wood from Bornean companies that cleared rainforest via PT Balikpapan Chip Lestari, a woodchip mill in Kalimantan that they said is connected to RGE. They said that since June 2015, when RGE’s deforestation-prohibiting Forestry, Fibre, Pulp & Paper Sustainability Framework kicked into gear, suppliers to the woodchip mill have cleared 37,105 hectares of natural forest in Central, East, and North Kalimantan, “an area over half the size of Singapore.”

The organizations also cast a gimlet eye at corporate records documenting RGE’s ties with a new “mega-scale” pulp mill, PT Phoenix Resources International, currently under construction in northeastern Kalimantan. The mill, according to the project’s Environmental Impact Assessment, will have two lines for the production of 1.7 million tons per year of semi-chemical pulp. Once operating at full throttle, it’s anticipated to require at least 3.3 million green metric tons of wood fiber every year. This, the report said, will place “new pressures” on Indonesia’s natural forests, spurring the conversion of natural forests and peatlands to monoculture pulpwood plantations.

Forest areas most vulnerable include those within forestry concessions currently supplying Balikpapan Chip Lestari in the provinces of North, East and Central Kalimantan and those linked to RGE companies in South Papua and West Papua.

“This mill is a flashing red-alert signal for a new wave of industrial-scale deforestation, this time in Kalimantan and Papua,” said Syahrul Fitra, senior forest campaigner at Greenpeace Indonesia. “In Sumatra, the demand for wood from mega-scale pulp mills drove catastrophic and irreversible deforestation. Now the same pattern could repeat itself in Kalimantan, starting with this new mega-scale pulp mill.”

RGE said that the group “categorically refutes” the report’s premise that PT Balikpapan Chip Lestari and PT Phoenix Resources International are under its “common control,” an allegation that the report made by following a complicated trail of breadcrumbs, including LinkedIn profiles.

“Previous employment by individuals at our business groups is presented in the report as an indication of a current connection to RGE,” the company said. “We operate in a free and open employment market in which employees can choose to join or leave companies as they wish. None of the arguments alleged in the report establish any connection or form of ‘control’ to these companies.”

Because it can confirm that “no such association, influence or control exists in relation” to PT Balikpapan Chip Lestari and PT Phoenix Resources International, it is “not therefore possible or appropriate for RGE to comment on matters related to those parties and unrelated to RGE,” it added.

RGE, which recently embarked on a five-year partnership with Singapore’s Nanyang Technological University to create a textile recycling system appropriate for urban settings, said that its business groups operate in accordance with the Forestry, Fibre, Pulp & Paper Sustainability Framework, which includes “explicit” no-deforestation commitments. It noted that each group also develops and enforces its own sustainability policies “consistent with their operating context and RGE’s overall framework,” including “ambitious 2030 sustainability targets that aim to contribute to the achievement of national and global goals on climate, nature protection and sustainable development.”

But Sergio Baffoni, senior campaign coordinator of the Environmental Paper Network, wasn’t convinced.

“The RGE Group and its subsidiaries, APRIL, Sateri, Asia Pacific Rayon, and Asia Symbol promised that RGE companies have eliminated deforestation in their supply chains, but this report shows that promise has not been kept,” he said. “Ordinary people around the world are using these companies’ products in their everyday lives: the viscose is in clothes from global fashion brands, paper packaging in grocery stores, and tissue products in our kitchens and bathrooms.”

Laurie Parsons, a Royal Holloway, University of London lecturer who co-authored a scathing report in 2021 linking boldface brands such as H&M, Levi Strauss and Ralph Lauren to deforestation in Cambodia, said that the report’s findings, if borne out, are “another clear demonstration” of how long and complex supply chains that underpin global production undermine efforts to achieve sustainable consumption.

“Zero deforestation is a basic commitment in most sectors, from garments to construction materials, yet it is all too common to find that large-scale deforestation is occurring in these supply chains in a way that barely qualifies as an open secret,” he said. “A key issue here is the disintegration of global production, which has accelerated markedly in recent decades. Lead firms now do not take legal responsibility for their supplier ‘partners,’ meaning that no single body has meaningful oversight over the entire supply chain of a given good.”

One issue, Parsons said, is the imbalance in enforcement standards.

“With global Northern governments almost universally enacting only voluntary standards on the supply chains of imported goods—what are known as Scope 3 emissions or environmental impacts—global production continues to be governed by an underlying incentive to exploit areas of the global South where governance is weaker and thus shove the worst environmental costs of cheap goods into the long grass of global production,” he said.

Finding sufficient viscose through reputable sources isn’t easy, said Samantha Taylor, founder of The Good Factory, a sportswear manufacturer in England.

“​​For as long as I have been working in the industry we have had a viscose shortage through sustainably managed routes,” she said. “And where there is a demand, there is always someone who is willing to break the law to supply it. We see the same actions happening with other fibers—organic cotton, for just one example.”

Taylor said that the only way to ensure that deforestation of protected environments doesn’t happen is to regulate how much virgin product can be made each year and to invest in other alternative solutions such as recycling and fines for overproduction.

“While RGE can try and refute the allegations, I expect they will be anticipating the story to disappear within the fast-paced turnover of news, but I hope that brands start to realize they will be called out,” she said. “But without the marketing budget to match the offending brands or widespread legislative backing, this will be a difficult one to curb in the immediate future. Because unless businesses can profit off carbon credits, then the trees aren’t worth as much to them by remaining in the ground.”

Nicole Rycroft, founder and executive director of forestry not-for-profit Canopy, said that this isn’t the first time RGE has been accused of deforestation in recent years. In her organization’s 2022 Hot Button report, which rates viscose producers based on their conservation efforts, Sateri received 19 out of a possible 35 “buttons,” indicating some measure of “known risk.” Asia Pacific Rayon fared even poorer, with 9.5 buttons.

“The days of viscose originating from high-carbon and biodiverse forests need to be firmly behind us,” she said, calling the report a “concerning” one. “Market tolerance for controversy and potential supply risk is waning quickly. Reports like ‘Pulping Borneo’ underscore the imperative to accelerate the transition to—and commercial-scale up of—low-carbon circular next-gen solutions.”

Rycroft said Canopy will be unpacking these allegations with RGE, Sateri and Asia Pacific Rayon as it works with them on their 2023 Hot Button profile over the coming months, as well as the NGOs that contributed to the report.

“Any new logging of high-carbon and biodiverse forests is a step in the wrong direction in this turn-around decade for our planet,” she added. “As more forests are protected to stabilize our climate and biodiversity, and forest resources become more constrained due to regulations, competition of use and forest fires, it seems that continued reliance by suppliers on forest fiber will court increasing controversy.”

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