Social Conscience Means Good Business

Deep in the Laotian countryside a village chief has good things to say about a large Nordic forest company. In a short film produced by Stora Enso he tells how experts hired by the company dig up unexploded bombs that had been dropped from US planes.
The bombs date back to the Vietnam War, when the United States tried to disrupt supply routes of the communists which ran through Laos.
When the explosives are dismantled, the villagers can grow rice again. The harmonious imagery is crowned by children dancing behind their village chief.
Next to the rice fields there are eucalyptus trees belonging to the forest company. The film shows that it is possible to grow rice and trees side by side.
Should this film, which was produced by the Stora Enso communications department, be believed?
Stora Enso wants to take activities similar to what it is doing in Laos to tropical areas of Brazil, China, and Uruguay. In these countries pulp is the common denominator, whose raw materials are harvested from fields of trees.
Land is coveted by millions of poor people who need to grow crops to feed their families. That is why disputes easily occur, and a wealthy Nordic forest company is an easy target.
Even if a company were to win a land dispute in court, the sympathies of the public at large easily gravitate toward local farmers and environmental organizations. This, in turn, affects attitudes in the main market of the clients in Europe.
Stora Enso CEO Jouko Karvinen feels that reputation matters, even though the company has fairly little to do with the end-users.
“People and especially the young generation are interested in the environmental and social responsibility of a company. For instance, in disputes in Northern Lapland, our customers received critical letters from Greenpeace. When the matters were settled, the messages became positive”, Karvinen says.
Karvinen feels that simply obeying the law is not enough.
“We need to do more. The different continents are in very different phases of development. For instance, in Uruguay legislation on land ownership is in good shape, but in Brazil it is in a big flux.”
“In China the system is very complicated. The state owns all land, and then there is social land.”
According to Karvinen, the customers are not interested in the fact that the company obeys laws. “It is more important for us that we are on the list of the world’s 100 most responsible enterprises. It is a competition factor.”
In Karvinen’s view, the present system in which a factory acquires raw timber only from its own plantations will change. In Brazil and Uruguay private land and forest farms are being set up alongside the plantations, and they sell wood to the pulp and paper factories.
“The goal could be that less than a third of the wood would come from local farmers. We help them get started in their business.”
He does not want the Stora Enso plants in Uruguay or Brazil to be solitary, isolated islands which only deliver pulp to Europe. With the help of the forests he links the local community with the activities of the factory.
“We do not want thousands of hectares of private farms. Instead, we want farms whose average size could be about 200 hectares.”
However, for managing flows of wood it is more convenient if all of the forests are in the company’s ownership.
“Once contracts are signed with private owners, it is possible to make the system quite efficient. After all, in Finland we manage to operate without owning all of the forests.”
In Finland the average size of a private forest holding is 30 hectares.
Because of land and environmental disputes, Karvinen has had more dealings with civic groups than with other large forest bosses. He feels that engaging the associations in dialogue is worthwhile, even though their influence is based on loud voices, and not on the ownership of shares.
“People in civic groups are sincere, and they are well acquainted with their issues. If these discussions prove to be useful to local people and the company, then this is what is worth doing.”

 “Although criticism sometimes hurts and is annoying, and the final outcome is often positive for us.”
Stora Enso is not likely to build a large pulp mill in Laos. This is an experiment, with which the company is trying to link the interests of the rural people with its own. At the same time the company is trying to avert future land disputes.

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