July 7, 2010 / 1:10 PM / in 7 years

Carrefour drops products from Indonesia's APP

* Suspends sourcing of APP products until further notice

* Cites sustainability concerns

* Indonesia’s APP calls allegations “ridiculous”

By Sunanda Creagh

JAKARTA, July 7 - French retail giant Carrefour (CARR.PA) said on Wednesday it will stop buying certain products from Indonesian paper firm Asia Pulp and Paper (APP), citing concerns over environmental sustainability.

The decision came a day after Greenpeace aired fresh accusations that APP -- owned by the Sinar Mas group -- was planning to destroy Indonesian rainforest and called on retailers including Carrefour to stop buying its products. [ID:nJAK226637].

APP has rejected the allegations as “ridiculous”.

Preservation of rainforest and peatlands is seen as crucial to putting a brake on climate change because they trap vast amounts of greenhouse gases.

Hendri Satrio, spokesman for Carrefour’s Indonesian unit, said the group had met with APP to discuss the decision.

“Carrefour is committed to sustainable development and has decided to cease sourcing of APP supplies for Private Label products from mid-year this year until further notice,” he said in a statement emailed to Reuters.

He did not say how much business was affected by the move.

He said private label products come from various suppliers but are sold using the Carrefour brand or logo. Carrefour sells private label products supplied by APP only in Indonesia, which is seeing strong economic growth on domestic consumption.

APP spokeswoman Aida Greenbury said the firm was in talks with Carrefour.

Several top palm oil buyers, including Unilever (ULVR.L) and Nestle NESN.VX, have said they will stop buying from Sinar Mas after earlier Greenpeace accusations that Sinar Mas units, including APP and palm oil producer PT Smart Tbk (SMAR.JK), cleared tropical rainforests and peatlands.

Another Sinar Mas customer, Cargill Inc [CARG.UL], has also said it will stop buying from the Indonesian firm if allegations of rainforest logging are proven.

Bustar Maitar, a forestry campaigner from Greenpeace in Indonesia, welcomed Carrefour’s decision.

“It’s good to hear Carrefour is moving and we also ask other suppliers to clean up their sourcing from a company that’s doing deforestation, like Sinar Mas,” he said by telephone text message.

Editing by Neil Chatterjee and Michael Shields

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