Lord Mandelson has been recruited to advise a multinational company accused of illegally chopping down endangered rainforest.

The Labour peer and his staff in the political consultancy that he set up after leaving government have been meeting officials on behalf of Asia Pulp and Paper.

For more than a decade, APP, one of the world's largest pulp and paper companies, has been accused by environmental groups such as Greenpeace of destroying thousands of hectares of Indonesian rainforest and endangering some of the world's rarest animals. A growing number of firms have boycotted APP.

The disclosure comes as Mandelson and other peers are expected to face pressure from the House of Lords authorities to declare their clients.

Global Counsel, the consultancy Mandelson chairs, does not name its clients as it "respects their privacy". But after inquiries by the Guardian, he has confirmed that Global Counsel has a contract with APP, the first time he has acknowledged a client of his firm. The company says it is helping APP meet new EU rules requiring timber imported from Indonesia to be sustainably sourced.

The peer acquired a large roster of contacts from his time as the European trade commissioner between 2004 and 2008, and as a key member of the administrations of Tony Blair and Gordon Brown.

There has been long-running concern about politicians who exploit their contacts and knowledge gained while in public office after they leave power.

Mandelson said his work for APP centred on a new licensing regime that would mean Indonesian companies could sell timber products to Europe only if they came from legally harvested trees. He was advising APP on making the new regime a success and "raising awareness of these tough new standards" with APP customers and stakeholders. A significant proportion of APP exports are to Europe.

The peer has travelled twice to Jakarta in recent months and held meetings with the EU ambassador there; his staff have met members of the Indonesian government.

When Mandelson lost his post as business secretary after the 2010 general election, he set up the "strategic advice consultancy" with financial backing from WPP, the marketing services group headed by Sir Martin Sorrell. Under Whitehall rules, he was barred from lobbying ministers and officials in the British government for two years after he left office. It appears that he has been concentrating on getting work from foreign companies.

Mandelson has been accused of using a loophole in the Lords register of financial interests to sidestep a new requirement to disclose certain clients of Global Counsel. He is understood to reject the accusation on the grounds that he acted with advice from the Lords authorities. A Lords committee is reportedly recommending that peers who have set up consultancies declare their clients or leave the parliament.

APP is a controversial Chinese-Indonesian company owned by the Wijayas, a rich dynasty. In recent months, APP has come under growing pressure after it was accused of illegal logging in Indonesia and damaging the habitats of rare animals such as the Sumatran tiger. A year-long Greenpeace investigation, published in March, alleged that endangered trees, known as ramin, have been chopped down and sent to factories to be pulped and turned into paper. The trees grow in peat swamps in Indonesia where the dwindling number of surviving Sumatran tigers hunt. Greenpeace alleged that it found ramin logs in a paper mill belonging to APP on nine occasions over a year. Chopping down ramin trees, a protected species under an international treaty, has been illegal under Indonesian law since 2001. Wood from the rainforests is being turned into everyday products around the world such as photocopying paper, tissues and paper packaging, according to Greenpeace.

APP, part of the Sinar Mas conglomerate, denied any wrongdoing, saying that it "maintains a strict zero-tolerance policy for illegal wood entering the supply chain and has comprehensive chain of custody systems to ensure that only legal wood enters its pulp mill operations. APP's chain of custody systems are independently audited on a periodic basis." It said it welcomed the Greenpeace report as it would help "identify and act on any weaknesses in its chain of custody systems".

Last month, three large companies said that they were going to stop buying paper products from APP, either for ever or until they were satisfied that the products were being produced sustainably.

At least 67 companies worldwide, such as Tesco, Kraft Foods and the office suppliers Staples, have boycotted APP since 2004, according to a Greenpeace list.

APP has consistently said it has always acted in an environmentally responsible manner, that it has not been destroying large areas of Indonesian rainforest and that it was a prime mover behind establishing a sanctuary for the Sumatran tiger.

A Greenpeace spokesperson : "Asia Pulp and Paper has been responsible for the destruction of vast swaths of Indonesia's rainforests, including areas of habitat for the critically endangered Sumatran tiger. Mandelson joins a growing list of spin doctors and industry stooges who have tried to rehabilitate APP's image."

APP said its aim was to work with countries to "build and strengthen an efficient mechanism to eradicate the illegal logging trade".

The aim of the regime is to stamp out the illegal logging and rapid deforestation which has been taking place in Indonesia since the 1990s. The disappearance of the forests are also responsible for climate change.

The peer, who is also an adviser to investment bankers Lazard, has been recruiting to Global Counsel individuals whom he reportedly "rated in government and who have the skills and connections to help him in his business". His staff include the ex-civil servants Stephen Adams and Duncan Buchanan.

Adams worked as a speechwriter for Mandelson at the European commission and the business department, while Buchanan was the head of the South Asia unit of UK Trade and Investment, the government agency that promotes exports. A spokesperson for Global Counsel said : "Global Counsel are advising APP on how to ensure that the new voluntary partnership agreement on legal and sustainable timber trade between the European Union and Indonesia is a success ... As companies in emerging economies grow across the globe meeting high European and American standards is one of their key challenges."

• This article was amended on 11 May 2012 to correct the spelling of the Wijaya family name.