Business Gets It. When Will Politicians?

Staples Cuts Off Paper Supplier By TOM WRIGHT 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.

—The Wall Street Journal As long-time readers know, it is the official policy of NotMakingThisUp that global warming is no mere figment of the imagination of “pot-smoking journalists,” as Warren Buffett’s partner, Charlie Munger, ventured during last year’s otherwise pleasant and enlightening Berkshire Hathaway annual meeting, in what was one of several Grumpy-Old-Man pronouncements that served more to highlight Munger’s age than his famous wit.

Yet, as today’s article demonstates, the ranks of skeptics—several of whom will, no doubt, post caustic rebuttals as soon as this hits their screens—ascribing the horrendous and staggering climate change that has occurred since the advent of the internal combustion engine to random temperature fluctuations comparable to past warming patterns, is growing thinner.

GE—to name but one of many large capitalist enterprises that could very well run its business without the least nod to global warming, but don’t—sees both the writing on the wall and the business opportunity inherent in the problem of slowing, if not reversing, the change. Of course, companies like GE and Staples don’t do stuff just because “pot-smoking journalists” write alarmist stories about something. Consider how long it took for GE to settle on a Hudson River cleanup of the 1.3 million pounds of PCBs GE’s plants dumped in its waters.

And since NotMakingThisUp normally prefers to tweak captains of industry than praise them, we thought it worth highlighting Staples’ move, as reported in today’s Wall Street Journal, cutting off Asia Pulp & Paper as a supplier of paper stock.

Knowing, as we do, something of APP’s past—an old friend used to buy paper from APP, and said exactly the same thing companies like Staples are saying—we are not at all surprised at the link being made between Indonesia’s rapidly depleting rain forest and APP’s rapidly growing topline in the last two decades.

At the risk of stretching “fair use” standards to include the entire Wall Street Journal story—we always urge everyone read the Wall Street Journal cover-to-cover every day, and not just for the business stories—we continue with the rest of today’s article.

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. Write to Tom Wright at tom.wright@dowjones.com

Next time NotMakingThisUp needs new copy paper, we’ll be going to Staples.

Jeff Matthews I Am Not Making This Up

© 2008 Jeff Matthews The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.