APP-China Sustainability Report 2010

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02The year 2010 marked a significant year for the paper industry in China. The Chinese paper industry, recovered from the global financial crisis, continued to grow rapidly and steadily. In less than two decades China has become the largest paper and packaging board producer in the world as a result of the surge in production by major domestic industry players. The opening up of the Chinese paper sector has also led to the restructuring of the global paper industry, bringing substantial investments from global giants in upgrading and mergers with domestic paper producers. All the increasing production capacity was realized in 2010. On the other hand, during this year the European Union initiated anti-dumping and anti-subsidy investigations while the U.S. began to levy both anti-dumping and anti-subsidy duties on imports of coated fne paper from China. Rising domestic capacity and drastic reduction in export to the U.S. and European markets posed dual challenges to APP-China. In the meantime, ferce global competition for raw materials, changes in the Governments policy towards foreign investments, and increasingly stringent environmental compliance and regulations has led APP-China to face with key global issues. In spite of these mounting pressures, APP-China, guided by the companys sustainability pledge Paper Contract with China, succeeded in achieving production volumes of 8 million tons and an export volume of 1.64 million tons of paper and packaging board products in 2010. This accounted for 8.6% of the national production capacity and 37.9% of the total export volume of Chinas paper industry*. APP-Chinas total assets amounted to RMB96.834 billion (US$14.90 billion) with sales revenue of RMB37.915 billion (US$5.83 billion) and proft of RMB2.517 billion (US$0.39 billion). This years outstanding achievement was made possible by APP-Chinas management teams leadership in a rapidly changing market and our 38,900 employees commitment to the corporate philosophy of Challenging Limitations and Pursuing Excellence. With a keen eye on the changing business environment, APP-China acted quickly in tapping into new international markets by increasing export volume as well as improving product quality and creating added value for the needs of domestic customers. Spearheaded by the strong Integration of Plantation-Pulp-Paper green business model, APP-China has remained competitive in securing raw materials by continuing to develop plantation sites and through acquiring pulp mills in Asia. For the corporate management, 2010 was a year of implementation with a focus on efficiency. To further reduce our greenhouse gas emissions and lower our overall environmental impact, APP-China raised the bar on the efficient use of energy and water, power generation and power plant effciency, and the recycling and reuse of production waste and byproducts. This strategy was proven a success, as evidenced by a strengthened competitive edge and a reduction in production costs. We are proud that APP-China has one of the lowest consumptions of energy and water per unit of production in the paper industry, both in China and the world at large. We have met the ambitious environmental standards in the Yangtze River, Taihu Lake and Hainan Island regions, which employ environmental standards more stringent than the national standards. To further the sustainable development of Chinas paper industry, APP-China continues to share our industry-leading sustainability practices and management expertise with our counterparts. APP-China places strong emphasis on employee and community development. In 2010, APP-China founded APP University and developed a succession plan to identify and cultivate an innovative management team with insights and competence. As a strong advocate of corporate social responsibility, APP-China subscribes to the spirit of harmonious and economic development by providing employment opportunities and growth in the regions in which we operate. In addition to acting quickly and effectively in contributing to disaster relief and rehabilitation, APP-China has been investing in education and training for the underprivileged, promoting environmental protection, protecting cultural diversity, and supporting the Governments modernization of agriculture and rural transformation. With the management team taking the lead and translating words into actions, APP-China employees are encouraged to take part in community services, and individual employees community service hours are critical towards their career advancement. In the light of intensified market competition, the integration of strategies and resources is crucial to APP-Chinas sustainable devel opment i n the next three to fi ve years. Thi s i ncl udes consolidating resources from APP-Chinas various business units to accelerate market responses, expanding into new markets through market integration, consolidating financial resources to explore alternative financing options and solidify the firms financial risk management, and building a diversifed product mix with a focus on creating high value added products to stimulate the industry value chain. Given the global environmental changes and the National Twelfth Five Year Plan, APP-China will look into product life cycle to leverage our integrated plantation-pulp-paper model, and continue to make improvements on the effcient use of resources and promote a recycle economy with sustainable development.Teguh Ganda WijayaChairman & CEOSinar Mas and APP-ChinaMessage from the Chairman* Information source: China Paper Year Book 2011, China Paper AssociationContentsMessage from the ChairmanAbout This ReportCorporate ProfleAchievements and AwardsCorporate Governance Organization Chart Ethical Business Practices Anti-corruption and anti-bribery International trade compliance Stakeholder Engagement Stakeholder study Matrix of stakeholder concerns and impacts Stakeholder communications channelsSustainable Development and Management Sustainable Development and Management SystemSustainable Forest Plantation Development Overview of APP-China Forestry Forestry Operation Management APP-China Forestry sustainable development strategy Management policies Legal compliance Environment, health and safety management Supply chain management Modern Science and Technology Approach Utilization of forest plantation resources High conservation value protection Enrichment of forest plantation composition, structure and diversity Greener fertilizing programs Impact assessment and monitoring Building Harmony within Communities Fire prevention and control Illegal logging prevention Building social cohesion, harmony and security245791719Sustainable Pulp and Paper Production Overview APP-China 2010 performance map of sustainable plantation-pulp-paper integration Green Procurement Energy Saving and Resources/Emissions Reduction Maximizing water utilization rates Energy effciency Waste management and reduction Recollect and Recycle PaperCorporate Responsibility Responsible for Products Product quality and safety management system Eco-labeling and certifcation Eco-friendly product design Customer services Customer satisfaction Responsible for Employees Overview of employees Salary and welfare Training and development Occupational health and safety Employee satisfaction Responsible for Industry Promote industry exchange Take lead in industry development Responsible for Community Contributing to SocietyFacts and FiguresOutlook of APP-China Sustainable Development for 2011ISO26000 Performance StatementAssurance StatementGRI IndexGlossaryFeedback29435758596163676804This is the fifth Sustainability Report published by Asia Pulp & Paper China (APP-China), and the frst to utilize both ISO 26000 and GRI 3.1. Through this report we aim to keep stakeholders informed of our policies, management, actions and performance in sustainable development, as part of our ongoing commitment to society.This report used all of the core and complementary indices of the Sustainability Reporting Guidelines Version 3.1 (G3.1) of the Global Reporting Initiative (GRI) with the application ranking qualifed under level B+.For the frst time, it adopted the ISO26000 Guidelines on Social Responsibility launched in November 2010 by the International Organization for Standardization (ISO). Based on the foundation of the 2009 report, the Sustainability Report 2010 continues to address key stakeholder concerns so as to re-work Message from the Chairman, Corporate Profile, Corporate Governance, Sustainable Development and Management and Stakeholder Engagement etc.Language: Chinese and English;Period: January 1, 2010 December 31, 2010;Frequency: Annually;Last Reporting Period: November, 2010;Assurance: APP-China commissioned SGS-CSTC Standards Technical Service Co., Limited (SGS) to assure the reliability, objectivity and transparency of this report. Please refer to the Assurance Statement.APP-China is committed to promoting and strengthening the sustainable development of our business by keeping an open dialogue with our stakeholders. We welcome your comments, perspectives, and suggestions on our work.Index SelectionIn accordance with the GRI (G3.1), APP-China developed this report based on the following indicators: The analysis of the most relevant and important sustainable development issues; Stakeholder engagement; Continuity with the previous reports.In particular, this report placed emphasis on the first two i ndi cat ors and i nt ends t o address and respond t o key stakeholder concerns and their impacts on APP-China and our stakeholders with a more simplifed approach.APP-Chi na commi ssi oned Det Norske Veri tas (DNV) to conduct an independent third party study on the perceptions, expectations, and recommendations of APP-Chinas key stakeholders. Improvement measures include but not limited to redesign the written questionnaire, conduct the study complimented with face-to face interviews, enlarge the sample size and adopt a semi-quantitative analysis. All aims to examining the key stakeholder concerns and communications channels in a comprehensive manner to establish a benchmark for effective stakeholder communications and cooperation in the future. For more details, please refer to the section for Stakeholder Engagement.Scope of ReportThe APP-China Sustainability Report 2010 includes Hainan Gold Hongye Paper Co., Limited and Hainan Gold Shengpu Paper Co., Limited for the frst time, and was expanded to cover Gold Hongye Paper Group Co., Limited from the previous Gold Hongye Paper (Suzhou Industrial Park) Co., Limited. The full list, including APP-China Head Office, eight pulp and paper mills, APP-China Forestry, and 5 forestry business sub-units, covers the following entities: APP-China Head Offce Gold East Paper (Jiangsu) Co., Limited (Gold East Paper) Hainan Jinhai Pulp & Paper Co., Limited (Hainan Jinhai Pulp & Paper) Ningbo Zhonghua Paper Co., Limited (Ningbo Zhonghua) Ningbo Asia Pulp & Paper Co., Limited (Ningbo Asia) Gold Huasheng Paper (Suzhou Industrial Park) Co., Limited (Gold Huasheng) Gold Hongye Paper Group Co., Limited (Suzhou Gold Hongye) Hainan Gold Hongye Paper Co., Limited (Hainan Gold Hongye) Hainan Gold Shengpu Paper Co., Limited (Hainan Gold Shengpu) APP-China Forestry Business Unit Head Offce (APP-China Forestry) Hainan, Guangdong, Guangxi, Yunnan and Henan Forestry business sub-unitsGiven the large scale, complex organizations and widespread locations, APP-China intends to extend scope of the report to cover more business operations in the future.Data and Information CollectionAPP-China adopted industry-recognized guidelines and criteria in listing, measuring and disclosing the data. The report includes historical reference with no effort spared to help stakeholders evaluate the performance of our sustainable development.Methodology for Data and Information CollectionBuilding upon the foundation of APP-China Sustainability Report 2009 and its methodology for data and information collection, the standards, defnitions, formula, indicators and footnotes used in the 2010 report are an adaptation of major industry guidelines, including; the GRI (G3.1), the International Finance Corporation (IFC) Guidelines for Environment, Health & Safety of Forest Logging Operation and Papermaking Industry, regulations of the national and local authorities where APP-Chinas different business units operate in, as well as APP-Chinas best practices in sustainable development.Clarifcation on Collected Data and Information:Due to a larger reporting scope in 2010, there may be variations or areas where comparison with those of the 2008 and 2009 reports is not feasible. Some data in this report was collected and included for the first time and therefore has no basis for comparison. Information from Hainan Gold Hongye and Hainan Gold Shengpu was collected and included for the frst time and does not have any historical reference. Part of the data presented in the sections of Message from the Chairman, Corporate Profle, and Achievements and Awards is the aggregate amount of all entities operating under APP-China while in all other sections, data and information presented only refer to specifc entities specifed in the scope of the report.About This Report05APP-China is synonymous with Sinar Mas Paper (China) Investment Co., Limited and the group of companies under the direct investments in China. APP-China is a business entity of Asia Pulp & Paper Co., Limited of Indonesian Sinar Mar. Sinar Mas was founded by the renowned Chinese entrepreneur Mr. Huang Yicong and which operates in four major industries including pulp & paper, food & agriculture, fnancial services and real estate & property development. The pulp & paper business was registered as Asia Pulp and Paper (APP) in Singapore in 1994. Over the years APP has grown to be one of the top 10 global pulp and paper companies with a total asset of USD...


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