Business Ethics

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BUSINESS ETHICS
ASSIGNMENT –
TASK 3

CONTENTS
Introduction………………………………………………………………………………………………………….…Pg 3 Background on Asia Pulp and Paper Co’…….………………………………………………….……..Pg 4 Question of Ethics – Deforestation and Illegal logging……………………………………….…Pg 5 Wildlife Extinction…………………………………………………………………………….……………………Pg 6 APP becoming sustainable…………………………………………………………………….……………….Pg 8 Recommendations to live and operate sustainably ……………………….…………………….Pg 9 Ethical code for APP……………………………………….……………………………..……………………..Pg 11 Conclusion.…………………………………………………………….………………………………………...…..Pg 12 References.…………………………………………………………….……………………………………….…...Pg 13

INTRODUCTION

This report aims to analyse and research ethical issues faced by corporations in the paper produce industry. The corporation chosen to be analysed is Asia Pulp and Paper Co. Headquartered in Jakarta, Indonesia, its main business activities- primarily logging– to produce pulp and manufacture paper - takes place in the forests of Indonesia and China. This report will study the various practices of the corporation, the issues it faces from an ethical standpoint of Non- Governmental Organisations (NGO’s), how the corporation reacts to the criticism and if they do anything at all to operate sustainably and to minimize damages done to the Indonesian forests and its surrounding ecosystem which not only are habitats and breeding grounds to various animals such as the Sumatran Tiger and Orang Utans – which is close to extinction- but also to the quickly diminishing indigenous groups of Indonesia.

Background information on Asia Pulp and Paper Co. (APP)

Founded in 1972 under Patriarch Eka Tjipta Widjaja, Asia Pulp and Paper Co. was originally a caustic soda company. In 1978, the company started producing paper at 12,000 tons per year. Indah Kiat Perawang was formed as a joint venture between CV Berkat (an Indonesian company), Chung Hwa Pulp Corporation and Yuen Foong Yu Paper Manufacturing Company Ltd. from Taiwan. Indah Kiat is APP’s largest pulp supplier in Indonesia.

In 1992, APP began investments in China, specifically on the Yangtze and Pearl River Deltas. Currently, Ningbo Zhonghua, Goldeast Paper, Ningbo Asia, Gold Huasheng, Gold Hongye, and Hainan Jinhai Pulp and Paper are the paper and pulp mills in China who provide pulp for APP. As of current year statistics, the company now produces more than 2 million tons of pulp and up to 5 million tons of paper in a year’s calendar.

APP owes much of its success to its excellent geographical placement on the map. Due to the breeding conditions of being on the equator, its Indonesian hardwood that is required to produce the pulp needed to manufacture paper, takes one third of the time to mature than the North American trees. This give APP an added leverage on the market as it is able to produce to meet its demand as required, unlike its American counterparts who suffer a drought in manufacturing after a harvest.

Eventually APP became the world market leader in manufacturing all sorts of paper products and exporting them to a whopping 60 different countries. Its low cost raw materials which were traded using the Indonesian Rupiah, started yielding high returns in all the strong currencies such as the United States dollars, Euros and British Pounds.

However, not everything has been smooth sailing for this paper giant. While in their quest to make big bucks as soon as possible, APP has been found to be acting unethically within its supply chain and has attracted much unwanted attention from Non- Governmental Organisations, environmental, human and animal rights activists.

Question of Ethics? – Deforestation & Illegal logging
While on a fast track to become the world’s market leader in paper products, APP also went all out in failing to operate their business in a sustainable way. Case in point – Deforestation and Illegal Logging. Greenpeace – a non-profit environmental organization that regularly...
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