This is the fourth in a series of four articles resulting from a months-long investigation into Paper Excellence, a B.C.-headquartered pulp and paper company that has quickly grown to control large tracts of Canadian forests and become the largest company of its kind in North America. The stories are part of Deforestation Inc., an investigation led by the International Consortium of Investigative Journalists (ICIJ) involving 140 journalists from 27 countries.
On the west bank of the Kootenay River, towering piles of logs are stacked over 20 rows deep. The stockpile of trees, some drawn from up to a thousand kilometres away, are part of a complex network of long-term fibre deals made behind closed doors to feed the nearby Skookumchuck Pulp Mill.
Like many communities in British Columbia, the mill helped build the town, providing over 200 well-paid jobs since it was first opened in 1968. But its presence has come at a cost: the pulp mill also helped drive deforestation in the East Kootenays. In the last two decades, the region has lost as much as 17 per cent of its forest cover, according to Global Forest Watch.
When Paper Excellence bought the mill in 2013, seven caribou herds inhabited the surrounding forests, said local conservationist Eddie Petryshen. Over the next few years, deforestation brought the population to the brink — and then pushed it over the edge. By 2019, the entire South Selkirk herd was dead.
“We’ve known since the 1970s that the pace and scale of the logging is impacting the caribou,” Petryshen said. “We knew and we let it happen.”
“We are exhausting our forests.”
Amid record deforestation, an ‘unprecedented’ corporate takeover
Since 2000, Canada has lost more than 19.6 million hectares of primary forest, the third highest rate of intact forest loss in the world after Brazil and Russia. B.C. saw by far the biggest decline in tree cover of any province, losing more than 8.5 million hectares.
Much of that loss has been due to the pulp and paper industry. Roughly 40 per cent of the trees cut in the province every year end up in a pulp mill, according to data collected by Canopy, a Vancouver-based organization that works with over 900 major brands to create sustainable forestry supply chains.
“A single word would be ‘massive,’” said Canopy executive director Nicole Rycroft.
The pace of loss comes as decisions over Canada’s forests are increasingly being concentrated into the hands of one private company — Paper Excellence. This month, the company acquired Resolute Forest Products, making it the largest forestry company in North America. Paper Excellence now controls 22 million hectares of Canadian forests and has ownership over 37 pulp and paper mills across Canada, the U.S., France and Brazil.
Greenpeace’s Shane Moffat told the ICIJ such an expansion is “terrifying.”
“When you think of the influence that they're going to have... It's going to be huge,” he said.
Last year, Greenpeace was among several environmental watchdogs that published a report into the links between Paper Excellence and Asia Pulp & Paper (APP), the forestry arm of a Sino-Indonesian conglomerate alleged to have driven the deforestation of primary rainforest, including critical habitat to elephants, orangutans and tigers.
Paper Excellence and APP both say they are independent from one another.
A Glacier Media investigation carried out with partners from the International Consortium of Investigative Journalists (ICIJ) — including the CBC, Halifax Examiner, Le Monde and Radio France — has uncovered evidence suggesting Paper Excellence and APP have a deeper relationship than what has been so far publicly reported. The investigation is part of Deforestation Inc., a journalistic collaboration bringing together 40 media outlets in 27 countries to examine deforestation and greenwashing.
Previous stories in this series drew on shipping records, leaked emails, corporate filings, public records and interviews with former employees to trace Paper Excellence’s 15-year rise.
In this last of a four-part series, Glacier Media and its ICIJ partners examined Paper Excellence’s impact on local forests, and how its claims of sustainable production match with evidence on the ground.
The growing footprint of pulp and paper
In 2020, Paper Excellence released its first sustainability report with the pledge: “Our fibre is derived from well-managed, sustainable North American and European forests.”
According to critics, such statements are incompatible with a company that consumes more tree fibre every year than any other pulp and paper company in British Columbia.
In 2020, the company estimated its mills pulped more than 14 per cent of B.C.'s total annual allowable cut. According to "precautionary estimate” from B.C. forester Herb Hammond, that works out to more than 26,000 hectares of forest that year alone — or nearly half the size of Nova Scotia.
“That is a huge amount,” said Ben Parfitt, a resource policy analyst with the Canadian Centre for Policy Alternatives. “They are chipping an enormous number of logs.”
Paper Excellence has said between 10 and 14 per cent of the wood feeding its mills comes from old-growth trees.
Two months before the COVID-19 pandemic hit B.C., Paper Excellence called on the provincial government to increase the overall annual volume of trees that could be harvested across the province and continue green-lighting old-growth logging “in its current form.”
Parfitt and Rycroft say calls represent a failure to appreciate how fast forests are declining in B.C.
Scientists and policymakers interviewed for this story said pushing to log more of B.C.’s forests is not sustainable, especially at a time when the federal government is attempting to boost the number of trees in Canada to ward off the worst effects of climate change.
When a forest disappears, it effects anything and anyone nearby. Communities lose their best natural water filter and a buffer against extreme temperatures. Plants and animals lose everything. And when it comes to putting a brake on greenhouse gas emissions, losing the top one per cent diameter trees — often old growth — could mean losing half the carbon in all world forests, according to one estimate.
“We have forest stands in British Columbia that hold some of the highest sources of carbon of any forest,” said Rachel Holt, an independent forest ecologist who has served as a member of B.C.’s old-growth technical advisory panel.
In the last 20 years, B.C.’s old-growth stands have been cut in half, and government data shows industry is targeting the bigger, iconic old-growth trees, says Rycroft. That’s led to serious declines in several species that rely on intact primary forests, like moose, caribou and the spotted owl.
“Despite what the B.C. and the Canadian forest industry will put out on their brochures, we are not managing Canada's forests responsibly or sustainably,” said the sustainable supply chain expert.
As old-growth trees feed mills, FSC measures fall short
Since the 1990s, over a dozen forest certification schemes have emerged with stated plans to hold companies accountable for their practices. Among the most rigorous is that of the Forest Stewardship Council (FSC), an international organization based in Germany.
Several Paper Excellence mills in Canada and France certified under the FSC's controlled wood standard. Among other things, the standard is supposed to ensure trees going to certified mills were not harvested illegally, or in a way that would threaten pockets high-value primary forests.
That standard was introduced across the world 15 years ago to “find more flexibility” for companies looking to sell products as FSC-certified, said the international organization’s director general Kim Carstensen in an interview with the ICIJ.
“In an ideal world,” governments would protect old-growth forests, added an FSC spokesperson. “We believe it is better to manage them under a top-level management standard like FSC than to leave them open for business as usual or even illegal approaches.”
Rycroft said the controlled-wood seal represents the lowest bar in the FSC system. A controlled wood standard gives mills the ability to produce certified pulp with up to 30 per cent of the wood coming from non-certified forests.
“FSC will certify logging from old-growth forests. It will certify logging in high carbon or growth forest. It will certify logging even in endangered species habitat,” said Rycroft.
The only catch: a third-party auditor must sign off on a risk assessment. It’s a bar that several Paper Excellence mills have repeatedly failed to meet.
Paper Excellence currently controls very little forest tenure in B.C., instead relying on deals with suppliers or buying fibre on the open market.
A 2019 audit of Paper Excellence’s Howe Sound mill found the company had failed to verify where its suppliers were sourcing wood and had made “only limited progress” two years later.
In 2021, the mill received a “major non-conformity" after failing to establish control measures to ensure trees feeding the mill were at low risk of coming from critical habitat for endangered species. And in another breach of FSC policy, the Howe Sound mill was found to be sourcing wood from Alaska without completing a mandatory company risk assessment.
At the time, the KPMG auditor did not recommend the Howe Sound mill get re-certified, but due to COVID-19 restrictions, gave the company six months to fix its violations. In 2022, Paper Excellence dropped KPMG as an auditor, opting for SAI Global. That firm’s latest audit in March 2022 gave Paper Excellence another three months to get in line with FSC.
Elsewhere in the province, a 2018 FSC audit of the Skookumchuck mill found several non-conformities, including mislabelling pulp as “100% FSC Wood” and failing to have a due diligence system in place that ensured the mill wasn’t sourcing wood from critical caribou habitat and supply areas known to contain old-growth trees. The mill kept its FSC controlled wood certificate after taking corrective action.
Holt said it's frustrating to see FSC auditors fail to impose more strict consequences on companies that don’t live up to their standard.
“There has to be a threshold at which you go, ‘OK, you're not meeting the test that people expect when they buy premium or FSC-certified wood,” she said.
Paper Excellence said any problems encountered in its certification process are “routinely corrected to ensure compliance.”
At Paper’s Excellence’s French operations, at least one major case appears to have slipped through the cracks. Reporting from ICIJ partners at Radio France found a Spanish firm was supplying one of Paper Excellence's French mills when it illegally cut hundreds of ancient oaks, ash and pine. On Feb. 23, 2023, a French court of appeal sentenced Manuel Bautista to a two-year suspended prison sentence and a fine of 80,000 euros cutting and stealing trees on 21 lots.
Fibre Excellence told ICIJ partners that it immediately suspended sourcing wood from the firm when it learned what happened in March 2021.
When asked how third-party auditors missed the case, which occurred between 2020 and 2021, a spokesperson for FSC International said risk for controlled wood in France and Spain “is considered low and therefore allowed in the FSC system.”
The spokesperson defended the FSC standard as an “effective tool” and a proven “solution against deforestation and degradation.”
West Kootenay-based forester Herb Hammond, however, is not so sure. As one of the early outfits certified to audit FSC standards in Canada, Hammond says its own policies have been watered down since the FSC first got started in 1994.
Today, he says, “It's definitely a form of greenwashing.”
Paper Excellence now controls forest lands seven times the size of Vancouver Island
As Paper Excellence expands east into Ontario and Quebec, some Métis groups and First Nations have raised concerns around Paper Excellence takeover of Resolute Forest.
In a December 2022 letter to Ontario’s natural resource’s minister, the Métis Nation of Ontario pointed to APP’s environmental and human rights records, saying they had “serious concerns” over Paper Excellence’s ties with the Sinar Mas Group.
“We have witnessed a rapid takeover of the pulp and paper industry,” they wrote.
Past records show Resolute has not always lived up to FSC standards.
In 2010, Resolute said it would bring 80 per cent of the forests it controls under FSC oversight by 2015. But two years before it hit that deadline, the auditor Rainforest Alliance suspended the company’s FSC certificates on 2.4 million hectares of forests. The auditor alleged Resolute failed to gain free and informed consent from First Nations, and didn't have systems in place to avoid degrading old-growth forests and woodland caribou habitat.
Two years later, Resolute announced it would “not pursue new certification.”
Paper Excellence told Glacier Media 100 per cent of Resolute’s operations are sustainably certified, either through the FSC or the Sustainable Forestry Initiative (SFI), an industry certification scheme currently under investigation by Canada's Competition Bureau for alleged greenwashing.
In its latest FSC audit, however, Resolute failed to ensure its supply chain is not converting forests into plantations or some other use. The company remains FSC-certified.
APP on verge of sustainable re-certification
Critics have said the sustainable certification industry — which has ballooned into over a dozen parallel systems — started with good intentions but has become a tool for forestry companies to falsely claim green credentials.
An investigation by Glacier Media an its ICIJ partners has uncovered evidence Paper Excellence is connected to APP through a nexus of 15 years of public and court documents, leaked communications and current and former staff. The investigation has also revealed obscured commercial ties between the two entities.
This month a Panamanian-flagged cargo ship MSC ELA pulled into the port at Shanghai where it transferred a shipment of 540 tonnes of Skookumchuck wood pulp onto another ship bound for Singapore. On March 8, the pulp arrived in the Southeast Asian city-state and entered a murky supply chain run by an indirect common shareholder of Asia Pulp and Paper, shipping and financial records show.
It is one of hundreds of shipments ICIJ documented through bills of lading, industry databases and satellite tracking technology. Former employees and industry experts say the recent shipment forms part of a fibre pipeline connecting Paper Excellence’s mills in Canada and France to APP’s pulp and paper mills in Indonesia and China.
APP denied it buys pulp from Paper Excellence, while Paper Excellence said it’s “no surprise” its pulp would end up feeding APP. The Asian pulp and paper giant “is known to require significant volumes of pulp,” a Paper Excellence spokesperson added.
There are good reasons for that denial, say critics. One is financial: Former APP and Paper Excellence employees said the companies maintain separation due to creditor fallout from APP's $13.9-billion default in 2001.
As one former middle manager at APP put it, “no Western bank would touch them with a ten-foot-pole.”
Since the default, “all creditors were paid in full,” said an APP spokesperson. “This included export credit agencies, banks, financial institutions, local bondholders and international bondholders.”
The other, say insiders, is environmental, and relates directly to certifying wood products as sustainable at a time more customers demand a green alternative. For decades, Canada has fostered a public image as being a renewable source of pulp backed with some of the best sustainability schemes in the world. Some, however, have recently thrown that image into question.
Last fall, Canada’s ambassador to the European Union Ailish Campbell wrote a letter to members of the European parliament raising concerns proposed regulations on deforestation-free products would add “burdensome traceability requirements” and put at risk $1 billion in forestry and agricultural exports.
Criticized by one European MP as an effort to protect Canadian economic interests over its forests, Global Affairs Canada defended the letter in an email to ICIJ partners saying "Canada has legitimate concerns" around geo-tagging products like paper. CBC recently revealed Canadian politicians and diplomats made similar lobbying efforts in the lead up of two U.S. state bills meant to put limits on products tied to deforestation.
“There is a sort of optics benefit to getting fibre from North America, in particular from Canada,” said Courtenay Lewis, a senior advocate at the National Resource Defense Council. “Canada’s logging companies really lean into the messaging that these are Canadian operations with long-term stakes in Canada’s forests.”
“That greenwashing could be less effective if it turned out that conglomerates in Jakarta linked to deforestation and human rights abuses are ultimately calling the shots.”
On the other side of the Pacific, environmental watchdogs like Woods & Wayside International and Environmental Paper Network have been following FSC International’s moves closely in recent months. In 2021, APP said it had “fulfilled its initial pre-requisite to get re-certified" under the FSC scheme.
Then, last year in Bali, Indonesia, the certification body voted to change its rules for suspended companies looking to once again tag their wood products with an FSC seal. Instead of being held accountable for deforestation and human rights abuses all the way back as 1994, the new rule moved the cut-off date for past abuses to 2020.
Rycroft said moving the cutoff date 25 years into the future essentially gives a green light to companies guilty of egregious deforestation.
“People knew and warnings were being sent that the rates of logging in high-carbon forests were completely unsustainable,” said Rycroft. “And yet, those companies moved forward with those operations anyways.”
Last summer, the FSC also expanded its definition of corporate control. The new rules would force the FSC to examine companies’ investment holding structures, public statements, family and management ties, operational or financial control, and any beneficial ownership or sharing of resources.
That raised the hopes of environmental groups, who suggested the new rules might finally treat APP and Paper Excellence as two entities under the same corporate control.
But the FSC’s new rules only apply to alleged deforestation starting Jan. 1, 2023, said a spokesperson for the certification body.
Once third-party verification is complete, “APP will be eligible for association with FSC.”
This is the last in a four-part investigation into Paper Excellence carried out in collaboration with the CBC, Halifax Examiner, Le Monde and Radio France. The stories are part of a wider journalistic collaboration led by the International Consortium of Investigative Journalists (ICIJ) under the banner Deforestation Inc.
Read about the rise of Paper Excellence in part 1, the evidence linking Paper Excellence with Asia Pulp and Paper in part 2, and how it has gained political influence in part 3.