B.C.’s Paper Excellence under renewed scrutiny over corporate ties to Indonesia

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Paper Excellence Group, the Richmond, B.C.-based company that has amassed an imposing share of Canada’s forest products sector, is coming under renewed scrutiny over its corporate ties to Indonesia.

Environmental activist group Greenpeace Canada and Auriga Nusantara, an non-governmental organization in Indonesia, filed a complaint Wednesday with the Forest Stewardship Council calling on the international non-profit to formally recognize the connection between Paper Excellence and Asia Pulp & Paper (APP), a company with a documented history of rainforest destruction.

The groups say their research and that of media organizations over the past two years shows the two businesses are sister companies controlled by the Indonesia-based Sinar Mas conglomerate. And they want the council, an organization that certifies forest management practices worldwide, to break its association with Paper Excellence and its affiliates just as it has with APP.

“This is an important moment in this saga,” said Shane Moffatt, head of the food and nature campaign at Greenpeace Canada.

The development is another challenge for Paper Excellence, which has rapidly become Canada’s biggest player in pulp and paper. A disassociation by the FSC could prevent the company from obtaining certification for its business practices. That in turn could have knock-on effects in Canada and the United States such as losing customers. Many retailers, including Ikea, say they only use FSC-certified or recycled wood.

In testimony before a House of Commons committee earlier this year, executives with Paper Excellence said the company is owned by one shareholder: Jackson Widjaja, a businessman who lives in Asia. They acknowledged that Mr. Widjaja received assistance from other family businesses for Paper Excellence in its early days, but they said the help has stopped and that it’s completely independent from them now.

“APP and Paper Excellence are separate business entities,” said Paper Excellence spokeswoman Blair Dickerson. She said the company sources wood responsibly and works with environmental groups and experts to improve its performance and help fund conservation programs around the world.

“We believe that the choices we make will leave the forests that we depend on, and the communities we’re a part of, better off in the long term,” Ms. Dickerson said.

Paper Excellence plays defence as MPs grill Indonesian lumber firm over ownership structure, expansion plans

Launched with a single pulp mill in Saskatchewan 15 years ago, Paper Excellence has recently consolidated a big piece of Canada’s forest products sector. It bought British Columbia’s Catalyst Paper Corp. in 2019, Montreal-based Domtar Corp. in 2021 and Resolute Forest Products Inc. in a deal that closed earlier this year.

That speedy growth has generated a significant amount of concern, particularly from environmental groups. They say the company’s documented ties to the Widjaja family’s other holdings, specifically Sinar Mas and APP (run by Jackson’s father), bodes ill for Canada because of APP’s track record of environmental destruction.

After reports by The Globe and Mail and other media outlets earlier this year highlighted Paper Excellence’s growing influence over Canada’s forest products sector, the House of Commons natural resources committee struck a mandate to hear from executives and seek reassurances from government bureaucrats on the due diligence that was done. Executives from the company and federal officials testified.

Lawmakers also invited Mr. Widjaja to appear but he has declined the invitation, according to the committee clerk. Members of Parliament could push things further by issuing a summons for the Paper Excellence owner to appear before them, but that hasn’t happened yet, and it would only be enforceable if Mr. Widjaja entered Canada.

MPs question how deeply Ottawa probed Paper Excellence’s acquisitions

The FSC is an international NGO dedicated to promoting responsible management of the world’s forests. It has a certification system that enables businesses and consumers to choose wood, paper and other forest products made with materials that support responsible forestry.

Paper Excellence has numerous sites that are certified by the FSC, according to the organization’s database. This is in stark contrast to APP, from which the FSC disassociated in 2007, citing “substantial, publicly available information that APP was involved in destructive forestry practices.” APP tried to get recertified, but negotiations stalled over requests for greater transparency into APP’s corporate structure.

FSC approval can be vital for selling products to big retailers who might be concerned about public backlash if they are tied to bad forestry practices. After a Greenpeace campaign in the early 2010s, APP was abandoned by multiple major customers, including Kraft Foods, Unilever PLC and Staples Inc.

Monika Patel, a spokeswoman for FSC Canada, said the FSC has evaluated the shareholder interests between the APP group and Paper Excellence multiple times – most recently a few weeks ago – and has concluded each time that there is no majority ownership relationship between APP and Paper Excellence. “This is the reason Paper Excellence is able to hold FSC certification,” she said.

A separate spokesperson for FSC told The Globe this past spring that the council introduced a new policy at the beginning of this year that “expands on the scope of unacceptable activities” and focuses more broadly on the activities of corporate groups as a whole, instead of individual companies. It wasn’t immediately clear how that would play into any future FSC evaluation of Paper Excellence.