Friday, February 8, 2008

Greening of the Supply Chain; Staples Takes Action

Walmart, Dell and others have been leading notable efforts to "green" their supply chain as part of their comprehensive program to reduce GHG and improve sustainability. These efforts include 3 parts: 1. reduce in operations, 2. reduce in their own produced manufacturer, and 3. reduce in supply chain.

Staples announcement to drop one of it's supplier is an example of how important brand protection is to brand-sensitive firms, particularly in retail.

Staples Cuts Off Paper Supplier

By TOM WRIGHT, Wall Street Journal
February 8, 2008; Page A4

Office-supplies retailer Staples Inc. has severed all contracts with Singapore-based Asia Pulp & Paper Co. Ltd., one of the world's largest paper companies, in a move that shows concerns over forest destruction and global warming are having an impact on big U.S. paper buyers.

Until recently, Staples sourced about 9% of its total paper supply from APP and used the paper for its own Staples-branded stock, mainly photocopy and office paper. Staples had stuck with the company even as other large paper sellers in the U.S., Europe and Asia, including Office Depot Inc., stopped buying from APP in recent years because of alleged environmental misdeeds.

The Framingham, Mass., company canceled its contracts late last month, said Mark Buckley, vice president for environmental issues at Staples. Staples is expected to announce the move next week.

"We decided engagement was not possible anymore," Mr. Buckley said. "We haven't seen any indication that APP has been making any positive strides" to protect the environment. Remaining a customer of APP was "at great peril to our brand," he added.

APP representatives didn't return calls seeking comment. In the past, it has said it is moving toward relying for all of its wood on plantation trees but needs to cut natural forest to maintain production levels.

APP runs one of Asia's largest pulp mills on the Indonesian island of Sumatra and has operations in China. The retailers worry that APP is destroying natural rainforest to feed its mills.

Concerns over rainforest destruction have been heightened in recent months because new data show that Indonesia is the world's third-largest emitter of carbon dioxide, the heat-trapping greenhouse gas, behind the U.S. and China. Fires set to clear natural forests and forested peat swamps after they have been logged are the major cause of those emissions.

APP last year sought permission to use an environmentally friendly logo issued by the Forest Stewardship Council. In October, after inquiries from The Wall Street Journal about APP's planned use of the logo, the FSC barred the company from using it.

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