I don't often find myself praising Tesco, but – deep breath – here goes. This summer it did something brave and good. It de-listed a supplier: not on its usual commercial grounds but for ethical reasons. This was not an easy decision. The company in question is a huge concern, whose political and economic connections make Tesco look like a corner shop. Its produce is cheap. But Tesco made the right call. It seems to me that Asia Pulp and Paper (APP) could make a fair claim to being one of the most destructive companies on the planet.

APP is part of the Sinar Mas conglomerate, a Chinese-Indonesian company owned by a fantastically rich dynasty called the Widjajas. Founded in 1962, it grew during the regime of Indonesia's dictator General Suharto into one of Asia's most powerful companies, with interests in palm oil, coal, property and banking. It has been the focus of criticism from human rights and environmental groups for years. But now it is a company with an urgent mission.

In 2001, APP defaulted on loans amounting to an amazing $13.9bn (£8.8bn). Most companies would have gone under. But some of the debt was picked up by Indonesian taxpayers, while around half was restructured. Its critics claim it is clearing its debts by clearing the rainforest.

The forests of Sumatra are disappearing faster than any others. Those that remain have the highest diversity of plants on earth. Many of their large mammals – such as the tiger, orangutan, elephant and clouded leopard – are in danger of extinction. The clearance there affects everyone, because it exposes one of the world's largest deposits of peat. When the peat is exposed and drained, it begins to oxidise, making carbon dioxide. Forest clearance is the reason why Indonesia now has the third-highest greenhouse gas emissions in the world, after the US and China.

The environment group WWF alleges that APP is responsible for "more natural forest clearance in Sumatra . . . than any other company". Since the 80s, it claims, APP has cleared more than 1m hectares. In July this year, a group of NGOs in the Sumatran province of Riau published a devastating investigative report about APP's activities. Among the forests whose destruction the NGOs alleged were areas inside a biosphere reserve that APP claims to be protecting, as well as other places critical to tiger conservation.

In 2003, APP announced it would stop turning rainforests into pulp by 2007, switching exclusively to plantation wood. But the NGOs' report alleged it was flagrantly breaking that promise.

WWF maintains that APP is threatening the forests in which the critically endangered Sumatran orangutan has, at great expense and trouble, been reintroduced. This year, Greenpeace followed logs cut in critical tiger habitats to the company's pulp mills. It published photos with GPS readings of the deforestation there. Maps published by the Indonesian forest ministry show that many of the areas from which APP companies claimed to be extracting plantation fibre contain no harvestable plantations.

In 2003, Human Rights Watch detailed a series of attacks on people whose lands were ceded by the government to one of the companies in the APP group. The attacks, it says, were carried out by Indonesian police and by the company's own enforcers.

APP has always denied the allegations and insisted that it is environmentally responsible, acting in the interests of indigenous peoples. APP did not respond to a request for comment from the Guardian.

While expansion might help APP to clear its debts, its alleged activities are also driving away customers. In 2008 the office supplies company Staples decided that buying paper from APP presented a "great peril to our brand". Office Depot, Carrefour, Gucci, H&M, Hugo Boss, Volkswagen, Fuji Xerox, Ricoh, Sainsbury's, Marks & Spencer and Tesco are among many large companies that have come to the same conclusion. In March this year, 35 Indonesian NGOs sent an open letter to APP's remaining customers, asking them to dissociate themselves from the company. Greenpeace followed with a similar plea this summer.

So what do you do if your brand is turning toxic? You hire the Canadian public relations consultant Patrick Moore. Moore runs a company based in Vancouver called Greenspirit Strategies, which has developed "sustainability messaging" for logging, mining, lead-smelting, nuclear, biotech, fish-farming and plastics companies. He is a clever rhetorician, skilled at turning an argument round. He is seen by some environmentalists as the most brazen of the spin doctors they face.

He has described clear-cut logging as "making clearings where new trees can grow in the sun". He has suggested that sea lice (which spread from farmed salmon to wild fish, often with devastating effects) are "good for wild salmon", as the fish can eat the larvae. He has justified gold-mining operations that have caused devastating spills of sodium cyanide by arguing that "cyanide is present in the environment and naturally available in many plant species". But his greatest asset to the companies he represents is this: Patrick Moore was one of the founders and leaders of Greenpeace.

In 1971 he was a young, idealistic PhD student with an afro and a Sgt Pepper moustache, fiercely opposed to US plans to test H-bombs in the Aleutian islands. He was chosen to join the inaugural voyage of a small group called The Don't Make a Wave Committee. It planned to sail an old halibut boat to the test site. The crew renamed the boat the Greenpeace. When the committee changed its clunky title, it took the same name.

Moore became one of Greenpeace's most articulate and effective spokespeople, leading campaigns against nuclear warships, whaling and seal clubbing. He became head of the Greenpeace Foundation, which later turned into Greenpeace Canada, and he was a director of Greenpeace International. Then, in the 80s, it all went horribly wrong. Moore claims he fell out with Greenpeace over scientific issues. Greenpeace maintains that he left after his autocratic style lost him the votes he needed to stay on the board. In either case, in 1986 he left Greenpeace and started a fish-farming business on Vancouver Island. In 1991 he wound it up after the price of salmon halved. Moore then made two moves that came to define his later career. He joined the board of the Forest Alliance of British Columbia, a group set up by logging companies to fight the greens trying to prevent the clear-cutting of ancient forests; and he set up the first of his consultancy businesses. In 2001 he founded Greenspirit Strategies with two of the public relations experts he had worked with at the Forest Alliance.

He has done well. He tells me: "I make less than the average corporate lawyer but consider myself successful" – for someone who started his career as an academic. He has homes in the city of Vancouver, in a fishing village on Vancouver Island and in Baja, California. His services have been widely used not only by controversial companies, but also by the media, for which he writes articles and gives interviews attacking environmental groups and their campaigns. While he is invariably billed as a co-founder of Greenpeace, I have come across only two instances in which viewers or readers are told that he works for companies with an interest in the issues he's discussing.

Moore denies that he is at war with the green movement. At one point in our correspondence he asserted: "I do not attack environmentalists, show me an example." It happened that on the same day he had sent an email to the green group GMWatch, in which he told them: "You are a bunch of murdering bastards." When I pointed this out to him, he told me: "I made an exception for murdering bastards . . . Besides which it was not against any particular person but rather at the whole lot of the murdering bastards."

Moore was the obvious man for APP to turn to in its struggle with Greenpeace and other groups. It commissioned Greenspirit Strategies to spend 10 days "reviewing APP operations in Indonesia", in order, says Moore, to "determine if the company is behaving in an environmentally responsible manner". His report was published a fortnight ago. It is a fascinating document.

Far from damaging the rainforest, Moore and his fellow investigators decided, APP is "engaged in world-class sustainable forest management". In fact, without APP's operations, "Sumatran tiger habitat would likely be further endangered", as APP's forest concessions act as a "buffer" between forests where tigers live and "human encroachment". It is cutting down only "degraded" forests, where removal of the trees is "necessary to make room for plantation fields".

The deforestation there is being caused, the report says, not by APP, but mostly by peasants "illegally encroaching on forests in search of better livelihoods". By employing Indonesian people, APP is reducing deforestation, as more employment means less poverty, which means less pressure to move into the forest. Criticism of Indonesia's pulp industry, Moore alleges, is the result of "western colonial powers" trying to prevent Indonesia from modernising its economy.

The evidence accumulated by environmental groups tells a different story. It suggests APP is clearing tracts of the very forests that Moore's report says it is protecting. Far from preventing people from encroaching on the forest, green groups claim that APP is accelerating it, by building roads into previously inaccessible areas. Even so, detailed mapping of commercial concessions, supported by satellite images and ground-level photography, strongly suggest that it is pulp companies, not peasant farmers, who are mostly responsible for deforestation in these places. WWF says APP classifies as "degraded" any forest it wants to cut down. As for relieving poverty, APP is accused of exacerbating it by pushing local people off their land and persuading the government to pick up its debts.

But the claims it makes are not the only odd features of Moore's report. It says it is an "inspection" of APP's operations. But Moore's company is not a monitoring firm, and the two people he took with him are experts not in tropical ecology or Indonesian law, but public relations. In his 43-page report, there is not a single source or reference cited (Greenpeace's latest investigation of APP, by contrast, is 40 pages long and contains 304 references).

But most damning is this. Moore has claimed that "people don't pay me to say things they've written down or made up. They pay me to tell them what I think." He insists that "APP has not shaped our conclusions or imposed its opinions". But sections of his report have been copied from a PR brochure produced by APP earlier this year. In some places APP's text is reproduced verbatim; elsewhere it appears to have been paraphrased. Facts and figures in its brochure are repeated unchallenged. When I asked Moore about this, he didn't deny cutting and pasting, but replied: "It does not follow that if we use language from APP's reports it is then impossible to evaluate their practices and programmes."

Whatever its merits, the "inspection" did the job. The Washington Post has repeated some of Moore's claims about APP on its website, without questioning them or explaining that he was paid by APP. Moore tells me that his report is now "in the hands of everyone in the paper trade". His credentials as a co-founder of Greenpeace, with a PhD in ecology lend it a weight it might not otherwise possess.

But it seems to me that he cannot play this card for ever. There will come a point at which his credibility as a "leading environmentalist" runs out. He too will become a toxic brand, likely further to taint a company trying to clear its reputation. But for now the work keeps rolling in.