Environmental and Social Sustainability Report 2007 &ENVIRONMENTAL SOCIAL Environmental and Social Sustainability Report 2007 Asia Pulp and Paper China SINAR MAS GROUP-APP CHINA Asia Pulp and Paper China This report covers the policies, practices and performance of APP China from (APP China) January 1, 2007 to December 31, 2007 CONTENTS Overview 01 Chairman’s foreword 03 Introduction to APP China 05 Sustainability and APP China可持续发展 13 Environmental Sustainability 15 Social Sustainability可可持续发展 29 Facts and Figures 39 Global Reporting Initiative Report Index引 41 Verification Report 47 Glossary and Appendices 49 Overview APP China’s 2007 Environmental and Social Sustainability Environmental and social performance is Report follows closely on the heels of last year’s inaugural thus an important measure of the underlying report. As a responsible corporate citizen, APP China always seeks to commit itself to a high standard of corporate social health of our company. Consequently, APP responsibility. Since the establishment of our first paper China’s business emphasis is to contribute to mill in Ningbo, Zhejiang Province, APP China has always a harmonious society and address important strived to use best available technologies to save energy and reduce our consumption of natural resources. environmental and social issues. Environmental and Social Sustainability Report 2007 Since publishing our 2006 report, we have received a We welcome your review of our performance and any positive response from our stakeholders and the general comments and suggestions for further enhancement of public. After another year of continuous improvement, we APP China’s information disclosure. You are also welcomed now issue our second report to show our progress towards to browse or download our report from our website: environmental and social sustainability. Inspired by our www.app.com.cn motto “Challenge the Limit, Pursue Perfection” APP China always aims to provide leadership and best practices in China’s paper industry. In 2007, we have focused our energies on the following: • Sustainable Plantation and Resources Management; Contact Us • Energy Efficiency and Climate Change; and, • Philanthropic Donations. Name Mr. Zheng Rui Position Executive Director Similar to our 2006 report, this report is compiled based Email [email protected] on the Global Reporting Initiative (GRI) G3 framework, and a table is attached at the end of this report for easy comparison. Through this Report we hope to communicate our efforts, achievements and on-going challenges to our employees, customers, suppliers and contractors, peer businesses, partners, governments, communities, as well as the public.This report is published in both English and Chinese versions and is available on our corporate website. Performance data contained in our Report has been verified by an independent, third-party reviewer, Det Norske Veritas (DNV). DNV’s verification statement is presented at the end of this report. 2 Chairman’s Foreword APP China’s business grew steadily in 2007 and our pulp and paper production capacity has now reached 7.15 million tons. APP, including APP Indonesia’s business, is now one of the world’s top five paper and pulp producers based on total output. In 2007, APP China continued to integrate our forestry, pulp and paper operations, and insisted on ‘low exploitation, high utilization and low emissions’ principles throughout our operations. We guided our forestry plantation, and paper and pulp production to form a sustainable cycle. We also formed a green production cycle by recycling waste paper to utilize second fiber resources and minimize wastage. China’s President, Hu Jintao, promised at the 15th Economic Leader’s Meeting of the Asia-Pacific Economic Cooperation (APEC) forum in September 2007 that China will continue to mitigate Greenhouse Gas (GHG) emissions while developing its economy. China will reduce energy consumption per unit of domestic gross product by 20 percent as well as reduce pollutant discharges by 10 percent between 2006 and 2010. Forestry coverage will also increase from 18.2 percent to 20 percent. APP China has already responded to President Hu Jintao’s call through our 15 year effort to introduce cleaner production technologies to China that improve China’s environment and address GHG emissions. In the future, we will continue to integrate sustainable development and corporate social responsibility ideas into our production and operations. In our plantations, APP China has established Standard Operating Procedures (SOPs) for poplar and eucalyptus forestation, felling, green manure and intercropping, as well as growing models. We also invested RMB 4 million into new plantation products, selection of fertilizer formulas, and pest management which has doubled our annual production volume. In total, our plantations now cover over 320,000 hectares at the end of 2007. We also plan to invest RMB 19.66 million in Ya An City, Sichuan Province to plant 30,667 hectares of bamboo groves. APP China also plans to establish 28,000 hectares of Environmental and Social Sustainability Report 2007 eucalyptus forest and bamboo groves in Guang An City, also in Sichuan Province. This is expected to create new job opportunities and higher incomes for local farmers. APP China also established three plantation monitoring teams covering plantation inventory, assessment and peer review to monitor the forestation felling cycle, and to identify and address problems promptly. The system’s total coverage has now reached 116,000 hectares. By the end of 2008 all our plantations will have been assessed. In November 2007, we invited an independent, third-party to conduct an audit of our plantation environmental management systems (EMS) for the third time. The primary goal of our plantation production is to increase the efficient use of natural resources and reduce unnecessary demand for new land. At our production mills, APP China insists on optimizing the production process, improving environmental performance, and lowering pollution emissions below China’s regulatory requirements. We are able to achieve this because we utilize best production practices and best internationally-available cleaner production technologies. Although there is no requirement to reduce GHG emissions in China, we have already calculated APP China’s carbon footprint and plan to formulate an action plan to reduce carbon emission, to provide our customers with low carbon, high quality products. In terms of charitable contributions, APP China provided more than RMB 41 million to a variety of public and community projects in 2007. Our total contribution to charities at the end of 2007, including previous years, is now RMB 450 million. In 2007, APP China was ranked third in the well known Hurun list of top charitable companies in China, based on our contributions from 1992 to 2006. The Hurun Report also now lists APP China as one of the top fifty best corporate social responsibility companies in China. In 2007, APP China was also immensely proud to establish the Huang Yicong Foundation. The Foundation is a national non-state owned organization whose aim is to support the development of charitable programs, assist the poor, elderly and young, and contribute to China’s harmonious society. APP China always focuses on our staff’s health, safety and development. We offer regular training and job rotation to our staff (including plantation staff) to provide them with greater opportunities to contribute to the company. In 2008, we plan to formulate a forester performance management system to enhance their ability to grow professionally, and increase their motivation and performance. This is APP China’s second environmental and social sustainability report. We achieved this extraordinary result through our everyday activities, and although the results may seem simple, the process requires tremendous effort and hard work. I therefore express my sincere appreciation to APP China’s 36,000 staff for their hard work, as well as the on-going support we receive from the public. In the future, we may confront new risks, threats and challenges, but we will move forward steadily, because together we embrace nature and society. Teguh Ganda Wijaya Chairman 4 Introduction to APP China About APP China With our headquarters in Shanghai, APP China is a sole corporation and holding company with assets of over RMB 70 billion and an annual production capacity of over 5.65 million tons of pulp, paper, paperboard and converting. We own and operate 20 pulp and paper mills and more than 25 forestry units. In 2007, main sales at our mills were RMB 27.1 billion of which domestic sales in Mainland China exceeded RMB 22.4 billion. APP China’s mill operations also provide 17,790 direct jobs and 11,184 indirect jobs for employees, as well as over 4,513 jobs for contractors and suppliers. Our forestry centers provide 3,869 direct jobs and 6,373 positions for additional workers. Plantation Species Business Operations 7% 5% Plantations Eucalyptus 7% Poplar APP China owns and manages forestry plantation units in Acacia nine provinces comprising of eucalyptus, acacia, poplar Others and other endemic trees species. In this report, we focus on five major forestry plantation units, which include 23 companies and a plantation area of 324,245 hectares. 81% Plantation Species (Hectares) Forestry Plantation Units Total Area Eucalyptus Poplar Acacia Others (Hectares) Guangxi 115 080 101 335 0 574 13 171 Hainan 74 336 58 682 0 14 127 1 527 Yunnan 57 175