02.10.2018 |
Asia P.
Why Companies Must Look Beyond Their Own Supply Chain to Address Sustainability

There are many reasons that a holistic focus on sustainability and a sustainable supply chain is critically important in business today. Consumers are demanding sustainably sourced products. Shareholders and corporate boards are increasingly focused on CSR efforts and the business risks associated with issues such as climate change.

Corporate investments in conservation efforts through NGO partnerships are certainly nothing new. And we’ve all seen big name brands announce major commitments to increasing sustainability across their supply chains. Just consider a few recent examples: McDonalds has pledged to manufacture all packaging from renewable, recycled or certified sources by 2025, and Dunkin Donuts will eliminate the use of foam cups by 2020.

Beyond meeting customer demand and creating positive PR, what’s really driving these efforts?  The reality is that it’s not just about customer loyalty, it’s also about protecting and managing their supply chain from outside risks.

To take a truly complete approach to corporate sustainability, companies must also look beyond their own supply chains to address overarching environmental issues that could impact their business.

Consider a coffee company and its connection to the forestry sector. Its local suppliers in Sumatra are growing coffee beans – but what if that supplier’s neighbours begin starting fires nearby? What impact can these indirect actions have on the coffee company’s bottom line?

At Asia Pulp & Paper, we have been on a comprehensive sustainability journey for over five years. An important element of our Forest Conservation Policy has been ensuring that our suppliers and our suppliers’ suppliers are also meeting the commitments we have made. This is an ongoing process that we must diligently focus on. But beyond this visibility into our supply chain, we actively monitor and work to address risks outside of our immediate network.

Like many others working in the forestry and agriculture sectors, the success of our business and our supply chain relies on a healthy landscape. As a result, we invest significant resources on forest conservation and building partnerships with local communities. We understand the need to address various aspects of forest conservation and habitat protection – we’re particularly involved in protecting wildlife, ending encroachment, preventing forest fires and supporting sustainable farming practices.

There are farmers and villagers living in close vicinity of all of our concession areas. Working closely with these neighbors to protect their land and engage with them on land use options is critical to protecting our supply chain. While the actions of local communities are not directly within our corporate purview, they can have a ripple effect. Slash-and-burn practices create forest fires that spread. Illegal farming of crops such as palm oil creates a false economy that limits the ability to grow our supply chain – and can ultimately limit the livelihood of the local farmers.

Our Integrated Forestry & Farming System (IFFS) program educates local farmers in sustainable farming practices to protect forest lands from encroachment and fires. Through agricultural practices, APP has committed $10 million to implement this program by supporting 500 villages across five Indonesian provinces over the next 5 years. In addition to helping to protect our resources for paper production, these efforts build trust from the impacted communities and help communities to find alternative livelihoods in the long term.

While consumer expectations are driving brands to take an active role to incorporate sustainable sourcing in supply chains, it’s not just about using sustainability to market products. Adding transparency in your supply chain and supporting conservation efforts should be core values of your company because it’s the right thing to do.

By Ian Lifshitz, Vice President of Sustainability & Stakeholder Relations, Asia Pulp and Paper

 

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