Mattel Inc (MAT.O) will increase the amount of recycled and sustainable fiber used in its packaging and products, months after the toy maker was criticized for packaging that allegedly came from Indonesian rainforests.

The moves announced on Wednesday focus on using post-consumer recycled content whenever possible and avoiding virgin fiber from controversial sources. Mattel, the world's largest toy company, said it is also trying to increase the amount of fiber it uses that can be certified by a third party such as the Forest Stewardship Council.

In early June, Greenpeace said it had evidence that Barbie doll packaging came from Indonesian rain forests. Greenpeace activists, dressed as Ken dolls, rappelled down the side of Mattel's headquarters near Los Angeles to unfurl a banner saying Barbie packaging contributes to rainforest destruction. [ID:nL3E7H81F7]

Soon after that, Mattel told its printers to stop contracting with Indonesian paper firm Asia Pulp & Paper Co Ltd [SINAMS.UL], which Greenpeace accused of destroying rain forests. Mattel said it does not contract directly with Asia Pulp & Paper.

The El Segundo, California-based toy maker aims to do a better job of learning where fiber is coming from, said Lisa Marie Bongiovanni, Mattel's vice president of corporate affairs.

This is a process of continuous improvement for us, she said. This is just the beginning step for us on this issue.

Most of the packaging that Mattel uses, from the cartons that house products shipped to stores, to the boxes that shoppers bring home, is paper-based.

By the end of 2011, 70 percent of Mattel's paper packaging will be made from recycled material or sustainable fiber. It said it aims to raise that to 85 percent by the end of 2015.

Mattel is also telling suppliers that it prefers FSC-Certified Fiber.

Mattel spoke with Greenpeace before and after the June event and has held talks with other environmental groups.

Mattel has established a clear purchasing policy for how to address sustainable sourcing that will help prevent deforestation, said Mark Comolli, director of the market program for sustainable forestry at the Rainforest Alliance.

Greenpeace appreciates Mattel's efforts and wants companies such as Walt Disney Co (DIS.N) and Hasbro Inc (HAS.O) to take similar action to protect rainforests, Bustar Maitar, head of Greenpeace's forest team in Indonesia, said in a statement.

Hasbro, which has been working on paper sourcing for some time, said it would soon announce a new paper policy.

Hasbro said that in 2010 it set goals including one that by 2011 at least 75 percent of paper packaging would come from recycled material or sources that practice sustainable forest management. By 2015, Hasbro aims for 90 percent usage of such materials and sources for its paper packaging and products.

A representative for Disney could not be immediately reached for comment.

Greenpeace said that Indonesia has one of the fastest rates of forest destruction, with its government estimating that more than 1 million hectares of rainforests are lost each year.

Asia Pulp & Paper operates under the Sinar Mas brand, as does Sinar Mas Agro Resources & Technology (SMAR.JK), or SMART, which last year released an independent audit after Greenpeace alleged the company bulldozed high conservation value forests and damaged carbon-rich peatlands. In June, Asia Pulp and Paper said its products meet the legal requirements for all countries, including Indonesia.

Asia Pulp & Paper applauded Mattel's commitments on Wednesday. Ian Lifshitz, Asia Pulp & Paper's sustainability and public outreach manager in the Americas, said that while the company supports all credible industry certification, it strongly urges companies to not limit their procurement policies to one standard.

Mattel's earlier environmental changes included eliminating plastic-coated wire ties that used to be used to secure Barbie dolls and other goods to their boxes. That effort was spearheaded by Wal-Mart Stores Inc (WMT.N), Mattel's largest customer.

Wal-Mart California Los Angeles Toys