The company has been the focus of criticism from environmentalists, primarily for its four woodchip mills which produce 4 million tonnes of chips for export annually. Green groups claim that native forests are harvested specifically for woodchipping, whereas Gunns claim that the majority of their chips come from residue from their sawmilling and veneer operations. Gunns' major customers are paper producers in Northern Asia, mainly Japan, including Mitsubishi, Nippon and Oji Paper. Gunns has also been criticized for its logging operations in the Styx Valley and for its use of 1080 poison to kill wildlife including protected species (baiting and particularly aerial spraying of forest prior to clearfelling ).
In 1989, the chairman of Gunns, Edmund Rouse, unsuccessfully attempted to bribe a Labor member, Jim Cox, to cross the floor, which would have allowed the pro-logging Tasmanian government of premier Robin Gray and the Liberal Party to resume power. A Royal Commission followed and convicted Rouse. Robin Gray is now a director of Gunns Limited.
Further allegations of corruption appeared when Paul Lennon, Premier of Tasmania, had his heritage home renovated by a Gunns-owned company at the height of Gunns' push for the Bell Bay Pulp Mill. Lennon refused to disclose how much he paid for the renovations.
The company is planning to build a $2 billion pulp mill in the Tamar Valley, near Launceston. The proposed mill will use the Kraft process, Elemental Chlorine Free (ECF) bleaching, and fed with eucalypt forest timber. The project is supported by the State Government for economic and employment benefits which are said to include $6.7 billion in spending over 25 years and 2000 temporary jobs created during the construction phase, but opposed by environmental groups. Federal Environment Minister Malcolm Turnbull gave approval for the project on Wednesday 3rd October 2007.
The original list of defendants was:
Gunns claims that the defendants have sullied its reputation and caused it to lose jobs and profits. The defendants claim that they are protecting the environment. The defendants have become collectively known as the Gunns 20.
Opponents and critics of the case have suggested that the writ was filed with the intent to discourage public criticism of the company, in a similar vein to a Strategic lawsuit against public participation, commonly used in North America, and the English McLibel case of McDonald's Restaurants against environmental activists Helen Steel and David Morris over a pamphlet critical of the company. Gunns has maintained the position that they are merely trying to prevent parties enjoined to the writ from undertaking unlawful activities that disrupt their business.
At a hearing before the Supreme Court of Victoria, an amended statement of claim lodged by the company and served on defendants on July 1, 2005 was dismissed.. However, the judge in the case granted the company leave to lodge a third version of their statement of claim with the court no later than August 15, 2005.
The application continued before the court, before being brought to a close on October 20, 2006. In his ruling, The Honourable Justice Bongiorno, made an award of costs in favour of the respondents only as far as it covered those costs incurred with the striking out the third version of the statement of claim, and costs incurred associated with their application for costs.
In November 2006, Gunns dropped the case against Helen Gee, Peter Pullinger and Doctors for Forests. In December 2006, it abandoned the claim against Greens MPs Bob Brown and Peg Putt.