Update: Toy Maker Mattel Supply Chain Implicated in Indonesia Deforestation

Toy maker Mattel (Nasdaq: MAT) announced it is developing a sustainable procurement policy for all its product lines that  addresses deforestation as it relates to its product packaging. The announcement came in response to the negative media attention resulting from a Greenpeace campaign launched last week.

Greenpeace targeted Mattel for its use of packaging material that the environmental group says can be traced to deforestation in Indonesia. Media and industry experts covered the story in great detail, after Greenpeace scaled the side of Mattel’s Los Angeles headquarters and hung an enormous banner depicting a frowning Ken doll and the caption: "Barbie, it’s over. I don’t date girls that are into deforestation."

Mattel says its new policy will include requirements for packaging suppliers to commit to sustainable forestry management practices. In addition to addressing current concerns about packaging sourcing, Mattel’s policy will also cover other wood-based products in its toy lines, such as paper, books and accessories.

The company did not say when the policy will go into effect, but Lisa Marie Bongiovanni, vice president of corporate affairs at Mattel, says the company will continue to communicate with interested stakeholders on the company’s progress.

"Mattel has a long track record of playing responsibly across all areas of our business, which includes how we impact the world around us," she says. "While we don’t have all the answers yet, we are working to make continual improvements across our business, and that includes packaging."

Earlier this year, she says, Mattel completed a lifecycle assessment of packaging across multiple product lines to identify impacts and opportunities for future improvements.

Greenpeace executive director Phil Radford posted on the group’s blog: "Indonesia has vast areas of already cleared land that can be used for expanding pulpwood plantations. The paper industry can continue to grow while actually reducing its impact on our environment. All it needs is a clear signal from Mattel – and others like Hasbro and Disney – that they won’t allow deforestation to contaminate their products. Without that commitment, playtime is over."

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Below is the story as reported last week:

Toy maker Mattel is the subject of a Greenpeace campaign launched this week because it’s packaging material  contributes to deforestation in Indonesia.

Greenpeace members scaled the side of Mattel’s Los Angeles headquarters on Tuesday, hanging an enormous banner that depicts a frowning Ken doll and the caption: "Barbie, it’s over. I don’t date girls that are into deforestation."

Mattel sources fiber materials for disposable packaging from the company Asia Pulp and Paper. Greenpeace has been targeting the company for years because its pulpwood suppliers are clearing ecologically important forests in Sumatra, including areas designated as tiger habitat.

In a blog post, Greenpeace writes: "The trail leads directly from Mattel to Asia Pulp and Paper and its suppliers in a chain of destruction that spans the globe."

Mattel responded with a statement, saying that it was "surprised and disappointed" at Greenpeace’s actions. The company says it has been "in communication with Greenpeace on a variety of paper-sourcing issues."

But Greenpeace apparently decided that talking wasn’t enough. The group suggested other toymakers may soon be targets of the campaign as well, "We have evidence on Disney, Hasbro and Lego too," the group said on its blog. " Some of their branded merchandise also contains the same mixed tropical hardwood fibre which is only produced on a commercial scale by two companies in Indonesia, one of which is Asia Pulp & Paper.

Greenpeace has been successful in getting other major companies to cut ties with Asia Pulp and Paper. Last year, Tesco, Kraft, Unilever and Nestle announced they would develop new sourcing policies for packaging fiber that would exclude them if the company does not implement more sustainable practices.

Asia Pulp and Paper says the Greenpeace allegations are unfounded, and that the company only logs forests under legal agreements with the Indonesian government. The company also says it has a goal of processing only sustainable plantation pulp by 2015. Unfortunately, the Indonesian government has been severely criticized for its unsustainable logging policies, and the plantations are too often developed after primary forests are clearcut.

After seeing this article, Aida Greenbury, Sustainability Chief at Asia Pulp & Paper, sent this to us via email: "Despite Greenpeace’s unsubstantiated allegations, the facts are that our packaging materials contain more than 95% of recycled paper sourced from around the world. Less than two percent of the pulp in those carton boxes comes from legal and sustainable Indonesia pulpwood plantations.  

And the remainder is from PEFC certified forests.  APP is one of the few companies in Southeast Asia which has been working hard to promote the production of this type of recycled carton box packaging.  We are happy to share the scientific analysis of our packaging materials with anyone who wants to review it."

And H.M. Mansur, Chairman of the Indonesian Pulp & Paper Association, wrote: "The Greenpeace report on global toy companies and Indonesian packaging material demonstrates little understanding of Indonesia’s strict forest protection laws and about our industry’s commitment to preserving this priceless natural resource. Government law about wood legality is both clear and enforced. Companies ignore the law at the risk of prosecution – and losing their plantation concessions."

In a recent article, Indonesia Finally Signs Forest Deforestation Moratorium, we noted there could be various exemptions, such as the extension of old permits. It is well known that Indonesia’s forest clearing activities are a major source of primary rainforest destruction and GHG emissions.

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Comments on “Update: Toy Maker Mattel Supply Chain Implicated in Indonesia Deforestation”

  1. ShareholderFriend

    There is more than one area that Mattel needs to improve. This is from a shareholder proposal submitted for Mattel’s 2011 annual meeting:

    The Corporate Library http://www.thecorporatelibrary.com, an independent investment research firm, rated our company “High Concern” in executive pay with $11 million for our CEO, Robert Eckert. The maximum bonus payout for Mr. Eckert was increased from 150% of base salary to 200%. The target bonus for 2010 was increased from 100% to 130%.

    We had no shareholder right to an independent board chairman, cumulative voting (removed in 2007) or to fill director vacancies (removed in 2006).

    Mattel directors got at least 26% in negative votes, including our newest directors.

    At our annual meetings Mr. Eckert does not allow any shareholder discussion when the management ballot items are introduced. However there is no corresponding restriction on management discussion when shareholder proposals are introduced.

    Reply
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