Cengage Advantage Books: Foundations of the Legal Environment of Business 2nd Edition by Marianne Jennings, Albert Napier, Marianne Jennings

Exercise 15

Win-Win on Timber
Asia Pacific Resources International Holdings, Ltd. (called April) signed a landmark agreement with the World Wildlife Fund, an environmental activist group. April agreed to curb timber-cutting areas in Sumatra, Indonesia, to preserve a natural rain forest with great biodiversity. Over the past 20 years, more than half of the forest has been cut down for lumber.
April's customers, such as Procter Gamble (makers of Charmin and Bounty paper towels), were shunning April as a supplier because of its damage in Indonesia. While April complied with Indonesian law (leaving 20 percent of the forest untouched), it left long ribbon strips that could not support the local wildlife.
Terms of the deal include the following:
• April will not allow other loggers to use its transportation system (barges and roads).
• April will verify the source of all logs it purchases.
• April will plant tree plantations and sell only plantation-grown wood (begun in 2009).
Local residents resented these agreements with environmental groups because their livelihoods were blocked as April closed its road and prohibited use by illegal loggers.
What advantages do you see in these private contract promises on environmental policy? What disadvantages do you see? What ethical issues exist for April?
Source: Steve Stecklow, "Environmentalists, Loggers Near Deal on Asian Rainforest," Wall Street Journal, February 23, 2006, pp. A1, A14.