NGO's Strangle Pulp and Paper Industry

Ian Lifshitz

7/27/2010 12:01:00 AM - Ian Lifshitz

Environmental activists have long employed dramatic practices, such as boycotts and public protests, to hasten the adoption of their environmental agendas. Partly due to the tight competition between old industry and the emerging producers, the pulp and paper industry has been particularly targeted by environmental NGOs and their agendas that force environmental priorities over economic realities.

Some environmental organizations have given lip service to bridge-building with the corporate sector, indeed, a number of environmental groups are reliant on corporate donations and sponsorships to remain viable. But increasingly, any efforts to find the middle ground are hampered by a more subtle, and a significantly more disruptive tactic: politicizing forestry certifications to create barriers for trade between countries.

This tactic is a technique for environmental organizations to directly influence the domestic and international pulp and paper market, potentially affecting billions of dollars of trade and the livelihood of millions of workers throughout the world. Trade experts have started to call the new tactic ‘greenmail’ for the way that environmental groups can hold paper customers and suppliers hostage to their certification schemes.

Holistically, effective verification and certification schemes for products are a benefit to all parties and play an important role in ensuring corporate practices are tempered with natural resource management. The ideal example in forestry is for a third-party environmental certification organization to work with pulp and paper companies and environmental NGOs together to identify practical, sustainable techniques for harvesting trees that balances environmental responsibilities with regional social and economic realities. In this scenario, all parties, including the paper producers, buyers and consumers, as well as the environmental NGOs, have their interests represented, and they develop a balance of environmental and economic priorities to produce a sustainable product and support the free market.

Glenn Beck

In contrast to the ideal scenario, environmental NGOs have created a certification scheme, the Forest Stewardship Council (FSC), with which they have defined to their own standards and removed input from the paper companies and governments’ policies. Without these insights, FSC doesn’t properly acknowledge the economic realities of pulp and paper manufacturing, and focuses solely on ‘environmental’ priorities, despite how unsustainable it is, from NGOs.

With FSC in place, NGOs do not recognize any other third-party certification, even those that represent globally accepted sustainability standards such as the Programme for the Endorsement of Forest Certification Schemes (PEFC). NGOs then use their consumer influence to limit the options of paper buyers who must also face demand for certified products.

NGOs strongly support FSC because many were the founders of the scheme and are key stakeholders in the organization’s financial success. However, according to a recent report, some analysts have found FSC certification can add as much as $32 per hectare for operations in emerging markets ; a substantial investment for companies to manage in developing markets. Already, FSC is influencing trade by setting an investment barrier for the certification, and the impact is going to grow since it’s anticipated that by 2015, emerging markets are going to represent 30 percent of the pulp and paper markets globally.

Accordingly, ‘greenmail’ is especially prominent in developing countries, where companies must balance environmental factors with social responsibilities to develop business, create jobs and alleviate poverty. Such countries cannot in turn make such significant financial investments to meet the demands of environmental NGOs. For example, Asia Pulp & Paper (APP) is the third largest pulp and paper manufacturer in the world and a significant employer in Indonesia and China, responsible for more than 120,000 employees. APP’s major paper mills are PEFC-certified and the company is committed to sustainable forestry practices. However, it faces a constant struggle against NGOs that unfairly attack its environmental practices and use their influence to deny APP ‘NGOs-approved’ certification for their mills and forestry standards.

APP received FSC certification in early 2007 for several of its sites in Indonesia and China; but by October, the FSC decided to disassociate with APP with no due process and no opportunities for appeal. Removing the certification was an attempt by NGOs to ‘greenmail’ APP and erects a trade barrier between the large paper buyers that require the certification standard. This type of arbitrary control over certifications, and other attacks on APP customers, puts millions of jobs at stake under the influence of environmental NGOs.

Instead of letting markets operate freely, NGO’s are using their influence to put environmental priorities above market realities and are potentially preventing economic growth for industries and developing countries. Environmental responsibility is an important issue, but NGO ‘greenmail’ also needs to be managed responsibly.