SDGs in supply chain strategy

Turning global goals into local business

Dr Liz Wilks – APP European Director, Sustainability & Stakeholder Outreach

Lee Henderson – APP European Sustainability Director

London

27th June 2018

SDGs in supply chain strategy – turning global goals

into local business

• The Importance of the SDGs to Industry

•How APP maps SDGs onto strategy commitments

•Engaging with local suppliers and local NGOs using APP’s landscape

approach, key challenges and critical success factors

•Measuring progress, how APP aligns with customer objectives

Earth Security Report

• Planetary limits are forcing a rethink of business

models. Companies must align commercial and

sustainability imperatives.

• Regional pressures affecting competitiveness

require companies to focus on SDGs that are

material to their sustainable growth.

• More interconnected social and environmental

issues require companies to adopt systemic

thinking when responding to societal trends.

• Government policies are pivotal to industry

transformations. Business diplomacy is needed to

shape the conditions for inclusive growth.

Earth Security Group, 2017, www.earthsecuritygroup.com

• Asia’s largest pulp & paper manufacturer and one of the largest in the world

• 15 production companies across China and Indonesia, with 19 million tonnes annual

combined capacity

• Sales of paper, tissue and board in more than 120 countries

• 2.6 million ha (26,000 km2) of forest supply chain in Indonesia

• 79,300 employees worldwide & global revenues of over $11.3bn

Indonesian Context – APP Facts & figures

• Largest archipelago in the world –

17,000 islands

• 275million people

• Landscape with various

• stakeholders – palm oil, rubber,

• tobacco, communities, pulp and

paper

- PPC

- Woodfree

- Facial Tissue

- Handkerchief

- Toilet Paper

- Corrugated medium

- Computer Forms

- Exercise Book

- Spiral

- Loose leaf

… and more

- C1S and C2S

- Text/Cover

- HSWOPRODUCTS

APP product category

- Cast Coated Paper

- Carbonless Paper

- Brief card

- Color PPC

- Color WF

- SBB/FBB

- Triplex

- Duplex

- Liner

- Flute or

TissueUWF

CWF

Specialties

Converted

Products

Pack-

aging

PEFC-Chain of Custody

(and PEFC-nc)

APP Vision 2020

Sustainability Roadmap

Forest Conservation Policy

Integrated Sustainable

Forest Management Plan

Landscape Conservation

Integrated Forestry &

Farming System for

Community

POLICY

COMMITMENT 1:

PROTECTING

NATURAL

FOREST

POLICY

COMMITMENT 2:

PEATLAND

MANAGEMENT

POLICY

COMMITMENT 4:

GLOBAL

SUPPLY CHAIN

POLICY

COMMITMENT 3:

SOCIAL

COMMITMENTS

APP Forest Conservation Policy

Natural forest clearance moratorium was implemented to allow

assessments which will determine how best to protect natural forest areas,

and provide recommendations for the sustainable forest management of

APP suppliers’ concessions.

HCV STUDY

Areas with

outstandingly

significant or

critically important

ecological, social

or cultural value.

HCS STUDY

Areas that contain

high above-ground

biomass/vegetatio

n cover, meaning

it stores a large

amount of carbon.

PEATLAND

MANAGEMENT

Peat experts

assessment and

recommendations

for best practice

management.

SOCIAL

MANAGEMENT

FPIC for new

developments,

social mapping for

responsible

conflict resolution.

GROWTH &

YIELD

Assessing current

& potential

plantation yield

across all

suppliers area.

Integrated Sustainable Forest Management Plan (ISFMP)

No deforestation & Sustainable Forest Management

Our journey 2012 - 2018

JANUARY –

APRIL 2012

APP first to

achieve SVLK.

Supports VPA

ratification in

Indonesia.

JUNE 2012

Vision 2020

launched

FEBRUARY

2013

Forest

Conservation

Policy launched

SEPTEMBER

2014

New York

Declaration on

Forests

FEBRUARY

2015

Rainforest

Alliance

assessment

JUNE 2015

PEFC

certification*

AUGUST 2015

APP retires

7,000 ha. of

commercial

plantations on

peat

DECEMBER

2015

APP launches

Belantara

Foundation;

signs Bonn

Challenge

2018

ONWARDS

Vision 2030

20132012

2014

2015 2016 2018

JANUARY 2016

APP rolls out

$100m

Integrated Fire

Management

Plan

SEPTEMBER

2014

Accepted as

member of

CGF

Community

Empowerment

With IFFS

implementation

in 200 Villages

April 2017 : APP collaborates with Belantara and

Government of South Sumatra on applying the

Natural Capital Protocol to assist decision-making

in a pilot landscape

APP – our supply chain

SDGs – a vision, not a recipe for success

10

SDGs – an umbrella for our strategy

11

Sustainable and Responsible

Business

Forests Peatlands

PeopleProduction & Products

Climate Change

Vision 2030 – four key themes, one linking concept

Overall narrative to explain context and APP’s sustainability strategy

Narrative for each theme and the linking concept

Narrative for each headline goal

Targets are stretch, quantitative (where possible) and forward looking

13

‘Vision 2030’

4 themes with linking concept

Headline goals

28 Targets and commitments

• APP Sustainability Report 2017

• APP Sustainability website

• Issue specific communications

• Stakeholder Advisory Froum

• Marketing/product level messaging

Mapping

How APP will communicate the narrative through

2018

Hierarchy of narrative

Vision 2030 – headline goals

14

Climate Change

Forests Peatland

PeopleProduction &

Products

Manage, protect and restore forest landscapes

Engage, support and protect employees, subcontractors and local communities

Protect peat landscapes

Minimise production impacts and develop sustainable products

Stakeholder feedback

Example comments:

• “The four focus areas are strategically right, but be careful about jargon – include a glossary

of terms”

• “We want to see clear outcomes, using KPIs that are SMART”

• “Governance should be an area of increased transparency”

• “This is an opportunity to include new ways of promoting gender equality”

• “Some targets are not believable due to previous violations, negative social impacts and

conflicts, adverse employee events – how can you address this?”

15

Forests

16

Biodiversity conservation

6. Maintain and enhance the habitats of key species (elephant, tiger, orangutan, raminand billian) and monitor their numbers within conservation areas in APP concessions

7. Zero fatal conflicts between humans and national priority and critically endangered species of animals within our concession areas

APP’s LANDSCAPE CONSERVATION COMMITMENT

• In April 2014, APP announced a plan to support the protection and restoration of

one million hectares of forest across Indonesia. 10 landscapes were identified to

be part of this initiative

17

• This ground-breaking initiative was

developed with input from many

NGOs and other stakeholders

• This work is now governed through

an independent foundation, with

seed funding provided by APP and

others, called Belantara

Protection of key species: elephants

•Human-elephant conflict is a key

challenge, given elephants’ large range

of movement, and need of farmers to

protect crops

•APP has undertaken intensive

monitoring of elephant movements in our

supplier areas, aiming to establish

“corridors” to allow elephants to move

between their main habitats

18

IFFS

•The ‘Integrated Forestry and Farming

System’ (DMPA) provides coaching,

awareness raising, and start-up materials

for local communities in natural forest areas,

to support diversification of their incomes

•Projects are targeted towards livestock

(cows), fisheries and food production

schemes, with specific objectives to engage

with women-led groups

19

Engaging local suppliers

Key challenges:

• Few companies seek supplier partnerships that

address the full range of inter-related issues

– a holistic and proactive approach is needed

• Cost, quality and risk are sometimes the only

consideration

– senior management commitment is required

• SMEs may also be less aware of the SDGs

– companies have a responsibility to raise

awareness

• Legislation and compliance auditing has major

limitations

– need for engagement and discussion

How APP aligns with customer objectives

Insurance Compliance Systemic ChangeCustomer

objectives

Certification Customer Audits Joint Projects

Encouragement to engage

APP

Key takeaways

• Define your strategy, align SDGs with existing initiatives and address material gaps.

Reliable baseline data are needed!

• SDGs provide a framework for making long term goals.

Shorter term targets are also needed!

• SDGs are a framework and a communication tool.

Comparisons and benchmarks are difficult!

• SDG goals are an opportunity to create partnerships with customers and suppliers.

Be opportunistic!

• Need to create supplier dialogue mechanisms and promote a holistic approach.

The onus is on you to engage suppliers with positive opportunities!

Thank you

23