Executive Briefings

Responsible Supply Chains: More Manufacturers Develop New Best Practices

Economist Milton Friedman once said that "the social responsibility of business is to increase its profits." But then again, Friedman spent his entire career in academia - not manufacturing.

He never had to face down shareholders and customers demanding that his company establish sustainability goals and then regularly report on their progress toward reaching those goals. For manufacturers today, it definitely matters that companies include corporate social responsibility as part of their standard business practices. If a company appears to be lax on the CSR front, it can take a lot of time - and-money - to restore their reputation. Just ask Asia Pulp & Paper (APP), the third biggest paper manufacturer in the world.

As a multinational company whose products are agricultural-based, APP uses a lot of natural resources to create its paper-based products, including tissue and packaging materials. The paper production process involves the cutting down of a lot of trees, amounting to more than 20 million metric tons of pulp and paper per year. APP is headquartered in the island nation of Indonesia, which has the largest rainforest in Asia and the second largest in the world (after Brazil).

There’s a fine line between the business of producing paper and reckless deforestation practices, and according to activist non-government organizations (NGOs) like Greenpeace and the World Wildlife Fund, APP crossed that line and then some, since the charges were leveled that the company was endangering both the flora as well as the fauna of the rainforest by stripping bare the habitats of tigers and orangutans, threatening the lifestyles of indigenous peoples living in the rainforest, and even contributing to climate change due to a large amount of greenhouse gas emissions.

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He never had to face down shareholders and customers demanding that his company establish sustainability goals and then regularly report on their progress toward reaching those goals. For manufacturers today, it definitely matters that companies include corporate social responsibility as part of their standard business practices. If a company appears to be lax on the CSR front, it can take a lot of time - and-money - to restore their reputation. Just ask Asia Pulp & Paper (APP), the third biggest paper manufacturer in the world.

As a multinational company whose products are agricultural-based, APP uses a lot of natural resources to create its paper-based products, including tissue and packaging materials. The paper production process involves the cutting down of a lot of trees, amounting to more than 20 million metric tons of pulp and paper per year. APP is headquartered in the island nation of Indonesia, which has the largest rainforest in Asia and the second largest in the world (after Brazil).

There’s a fine line between the business of producing paper and reckless deforestation practices, and according to activist non-government organizations (NGOs) like Greenpeace and the World Wildlife Fund, APP crossed that line and then some, since the charges were leveled that the company was endangering both the flora as well as the fauna of the rainforest by stripping bare the habitats of tigers and orangutans, threatening the lifestyles of indigenous peoples living in the rainforest, and even contributing to climate change due to a large amount of greenhouse gas emissions.

Read Full Article