Corporate Takeover Adds to Urgency for Protections in Boreal

Update on June 24, 2021: 68 organizations from around the world have urged key stakeholders to oppose Paper Excellence’s bid to buy Domtar, a rival pulp and paper producer. The groups highlighted that the acquisition, which would arguably make Paper Excellence the most powerful company manufacturing pulp and paper in Canada, would be made with “tainted” money. Paper Excellence is related to the notorious conglomerate Asia Pulp and Paper (APP) Sinar Mas. For years, environmental and human rights groups have highlighted this conglomerate’s ties to deforestation and human rights abuses. Today’s letter signatories warned that the acquisition would reduce Domtar’s transparency and accountability, and would further expand a corporate empire already profiting from the global destruction of forests. The move could also weaken Domtar’s already insufficient commitments to Forest Stewardship Council (FSC) certified wood. It is both important to prevent deals like this from moving forward, and to finally secure permanent protections for intact forests including the boreal, in ways that empower communities and safeguard irreplaceable carbon stores.

May 13, 2021: Just weeks after the release of new evidence indicating that major actors in Canada's forestry industry aren’t operating sustainably, the state of forestry in Canada appears on the verge of getting worse. Pulp and paper giant Paper Excellence has announced plans to purchase rival company Domtar—a move that suggests bad news for Canada’s boreal forest and efforts to safeguard it from reckless logging practices. This corporate announcement increases the urgency of government policies and supporting corporate commitments that safeguard the climate-critical boreal forest, and protect the rights of communities that depend on it.

Prior to the breaking announcement, Domtar already had critical gaps in its wood and pulp sourcing policies, including failing to require free, prior and informed consent from Indigenous Peoples potentially impacted by operations, and sourcing from forests with weak certification schemes. Nevertheless, Domtar made public social and environmental commitments to which it could be held accountable, and as a publicly traded company it had responsibility to shareholders that are increasingly calling for stronger forest commitments. But Domtar’s acquisition by Paper Excellence would reportedly make the company privately owned, and would put at its helm a family that’s internationally notorious for both human rights abuses and deforestation.

Since 2007, Paper Excellence has embarked on a “buying spree” of mills across Canada, and has become one of the largest pulp producers in North America. The company has a large presence in both Canada and Brazil where it produces throwaway single-use products from boreal and tropical-based pulp, and its purchase of Domtar would significantly expand its operations across North America including in Canada’s boreal forest. Paper Excellence is owned by the same family as Asia Pulp and Paper (APP) Sinar Mas, an Indonesia-based behemoth that markets its products in over 150 countries across six continents. Critics have highlighted that the companies’ obscure management structures have shielded sister companies like Paper Excellence from the globally-infamous activities of APP.

Indeed, APP and its subsidiaries and sister companies have been linked to numerous alarming instances of environmental and human rights violations, for which they have faced severe international censure. For example:

• APP has been the subject of widespread censure from international non-governmental organizations including the World Wildlife Fund for failing to demonstrate compliance with its zero-deforestation commitment, which it made almost a decade ago in response to international outcry over its industrial deforestation operations, and for not remedying major abuses of community rights where it operates.
• The Forest Stewardship Council, the world’s most widely respected forestry certification group, disassociated with APP “because of substantial, publicly available information that APP was involved in destructive forestry practices and was thus in violation of the Policy for Association.” Greenpeace also ended all engagement with the company in 2018, determining that APP was “not genuinely serious about stopping deforestation in Indonesia.”
• Reporting by Indonesian organizations and the Environmental Paper Network highlighted that APP’s pulpwood plantation expansions in Indonesia led to land-grabbing, displacement of local populations, and violence against protesters.
• Just one year ago, a coalition of 90 non-governmental organizations published an open letter calling on buyers and investors to avoid brands and papers linked to APP, Paper Excellence, and their sister companies. The organizations decried the companies' links to the poisoning of communities and the murder of an environmental activist in Indonesia.
• Canadian press has detailed that in Nova Scotia, a Paper Excellence subsidiary’s mill polluted toxic effluents into areas sacred for Indigenous Peoples, prompting Indigenous-led blockades of its operations.

The agreement is expected to close in the second half of 2021, depending on shareholder and regulatory approvals. While Paper Excellence states that Domtar will retain its own management team, the purchase reportedly would move the company from being publicly traded to a private company. Such a move could limit both transparency and accountability over the sustainability of Domtar’s already-large footprint in Canada’s boreal forest, at a time when the evidence is clear that the exact opposite is needed.

Paper Excellence’s latest announcement appears to signal a new threat to the long-term prospects of Canada’s boreal forest. To some extent, however, it further proves what was already true: the odds are exceedingly low that forestry operations will operate sustainably and uphold Indigenous Peoples’ rights without strong and binding protections in the boreal forest. Canada and provincial governments need to have policies that match their sustainability claims, which include legally implementing Indigenous rights protections and establishing overdue protections for threatened species habitat. Logging companies and corporations that purchase wood and pulp, too, need to demonstrate that their operations meet the highest social and sustainability standards, are transparent, and are honest about the true environmental costs of industrial logging. In the absence of strong government leadership and corporate accountability, the climate-critical boreal forest will only become more vulnerable to reckless logging practices.