Archived press release

Do You Really want to Invest in Rainforest Destruction?

9 November 1999

Friends of the Earth and campaigners from Indonesia are today meeting with Norwich Union and Legal and General to challenge the companies over investments that are fuelling rainforest destruction and the violation of human rights in Indonesia. Both UK insurance giants invest in UPM-Kymmene, a huge Finnish pulp and paper company. UPM is the first Western paper company to be directly involved in rainforest destruction and has channelled millions of dollars into a controversial pulp mill in Riau, Sumatra belonging to Asia Pacific Resources International (APRIL) [1]. UPM has also helped to sell 'rainforest paper' from this mill in Europe.

APRIL has two concessions totalling 286,950 hectares. They comprise logged-over rainforest which will eventually be replaced by monoculture acacia plantations [2]. These rainforests are currently extremely valuable for their non-timber forest products and are a likely habitat for endangered but highly secretive species such as Sumatran tigers and elephants.

Large parts of the Riau Andalan concessions are also forest lands traditionally a resource for local people. Although APRIL has agreed compensation terms with some communities,there have been numerous and sometimes violent conflicts where local communities have lost their land to APRIL concessions [3].

Friends of the Earth Finland and Indonesian activists are demanding that UPM must stop funding APRIL's saw mill which supplies 'rainforest paper' to Europe and that investors in UPM raise their concern over how their investments are being used.

UPM's contribution to the loss of biodiversity is therefore considerable. The clearance of ancient forests is now nearly complete in Europe and forestry companies from this part of the world are now seeking out natural forests for clearance and conversion in the tropics.UPM is leading the charge.

Pak Anwar from the Indonesian NGOs Network for Forest Conservation said:

“By coming to the UK to meet institutional investors we hope that they will see how

their investment decisions can impact upon communities and wildlife on the other

side of the world. We are battling with a huge company who has no regard for our land rights and environment. We are sure that customers of Norwich Union and Legal & General would not want their insurance premiums to fuel such a travesty.”

Sarah Tyack from Friends of the Earth said:

“The insurance sector potentially has a lot of leverage in promoting environmental responsibility. This is one of many examples of UK investments being linked to environmental destruction. Companies like Norwich Union and Legal & General should set an example and look not just at the bottom line but also at where their investments are going. If the insurance sector refused to invest in destructive companies they would soon clean up their act and treat local communities and the environment with the respect they deserve.”

NOTES

[1] UPM-Kymmene has assisted Asia Pacific Resources International Holdings Limited(APRIL) with loans and financing totalling US$235 million in order to get fine paper operations up and running in China and Indonesia and still retains an option to take a direct stake in APRIL's Riau pulp and paper operations. APRIL still holds US$121 million of this loan from UPM-Kymmene which may be converted into an equity stake in Riau pulp. Indonesia has lost much of its primary rainforests to an out-of-control forestry industry built on cronyism and corruption during the Suharto era.

The heart of the deal, and opposition to it, revolves around APRIL's Riau Andalan Pulp and Paper operations in Riau province, mid-Sumatra. The Riau pulp mill is the world's largest single-line chemical pulp mill, with a capacity of 750,000 tons a year. It produced almost 669,000 tons of pulp in 1998 and there are plans to increase capacity to 2 million tons per year.

[2] Replacing natural stands with monoculture plantations is one of the greatest current threats to forest ecosystems worldwide and a major cause of social dislocation and local conflict.

[3] Demonstrations from villagers have been met with oppression by the Indonesian state and personnel from APRIL. For example, in October 1997 a road block of Delik villagers was violently cracked down by special police called in by APRIL. In July 1998 a villager was stabbed to death by a member of APRIL staff in the course of a demonstration.

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Published by Friends of the Earth Trust