Woody Harrelson is hugging a tree . Not just any tree, but a massive, century-old kiawe on Honolulu’s glistening Waikiki Beach. This particular species, a member of the deciduous mesquite family, was brought to Hawaii by a Catholic priest in 1827. Its eradication in Peru more than 1,000 years ago is believed to have led to ecological collapse and, ultimately, the demise of an ancient civilization.
Harrelson — whose movie roles tend to be edgy outsiders, but who in person seems more like the lovable goof he played on Cheers — is here to discuss his decades-long crusade to save the world’s forests. In bare feet, jeans, and a T-shirt, he alternately disses corporate America for its environmental record and dishes about one of his upcoming movies, The Hunger Games: Catching Fire, a sci-fi flick about a dystopian society (he plays an inebriated has-been gladiator). But Harrelson, 52, isn’t just a rich and famous actor with a cause du jour. He has spent the past 25 years trying to put a stop to deforestation, lobbying the government to restrict logging and participating in awareness-raising stunts that have resulted in brushes with the law. Now he’s pouring his star power — and significant chunks of his own money — into a small company with an ambitious goal: to build a $600 million mill capable of mass-producing environmentally friendly paper made from agricultural waste. “It’s a paper revolution,” says Harrelson. “And although things are going great, it’s going to take time.”
Harrelson doesn’t appear to be in any rush. When I first meet him, he is ambling about a suite at Oahu’s beachside Halekulani Hotel, his swimming trunks dripping wet from a dip in the Pacific. (“Mind if I take a shower?” he asks in his syrupy drawl.) He has an active filming schedule, but the Hollywood life is not for him. Harrelson resides on an organic farm on Maui with his wife and three daughters. He has been described as an eco-radical and a bit of a recluse. He says he hasn’t eaten a hamburger since 1990 — he tries to stick to a raw, vegan diet. He won’t hold a cellphone to his ear for fear of electromagnetic radiation, though he does check his email on a BlackBerry. He hates air conditioning. “People have been telling me I’m crazy my whole life,” says the Texas native, whose father died in prison while serving two life sentences for the murder of a federal judge.
Harrelson says his love of forests started early. In the sixth grade he wrote an impassioned, 50-page paper on the destruction of natural habitats. In the 1980s his Cheers costars Ted Danson and John Ratzenberger turned him on to environmental activism. But no one imagined how far he would take the calling. In 1992 he lobbied Congress to protect 6 million acres of forest in Montana. A few years later he was arrested after scaling San Francisco’s Golden Gate Bridge to hang banners protesting the logging of ancient redwoods.
Eventually, Harrelson says, he realized that trying to stop deforestation bit by bit could only go so far. The real solution would be to change the way paper was made, taking tree pulp out of the process. In 1998 someone introduced Harrelson to Jeff Golfman, a Canadian-born self-described “eco-entrepreneur” and an expert in the field of non-tree paper. The two teamed up with a Canadian farmer named Clayton Manness to found Prairie Pulp & Paper, a company based in Winnipeg, Manitoba, with a mission to make high-quality, tree-free products. “We had no idea how long this would end up taking, but we knew we were dedicated to making this happen,” says Golfman, the intense but soft-spoken president of the company and its day-to-day operations guy. Golfman describes his initial meeting with Harrelson as “very surreal.” But the unlikely duo shared a love for all things green. For the past 15 years they’ve maintained an almost daily correspondence as Golfman tinkered with different materials (like hemp and flax) and Harrelson pitched in with his connections — and money — when needed. It turned out there was good reason most mass-produced paper was made from trees. Early efforts using alternatives were “kind of crappy,” says Golfman. And finding the right materials wasn’t the only challenge. Facilities with the right equipment to produce tree-free paper were also tough to find.
On a balcony in the Halekulani suite, the founders talk about the business while snacking on gluten-free goodies. “The paperless office is a myth,” Harrelson tells me between bites of quinoa and baba gannouj. Slowing demand for newsprint and snail mail has led to a slight decline in the paper and packaging industry in the U.S. But globally, demand for paper is growing — especially in China, where an estimated 109 million tons of paper will be consumed in 2013 alone, according to RISI, a research firm based in Bedford, Mass., that tracks the global forest-products industry.
According to Harrelson, roughly half of trees cut down in North America are used for making paper. (Memphis-based International Paper, the world’s largest paper and packaging provider, disputes his figures and says the number is closer to 17%). And Harrelson says his company’s paper is not only good for the forests but also good for farmers. Indeed, over the past few years, Prairie Pulp & Paper has finally found a winning ingredient for its products: leftover wheat straw, which farmers normally dispose of by burning.
Prairie Pulp & Paper has six employees. It is producing paper in small volumes at a mill in India and selling it through Staples stores in Canada and online in the U.S.
Harrelson’s dream is to manufacture paper from agricultural residue sourced from the Canadian prairies. He and Golfman are trying to raise upwards of $600 million to build a mill in Manitoba, where straw from nearby farmlands can easily be hauled in. Harrelson has roped in high-powered, deep-pocketed investors like supermarket mogul Ron Burkle and Tom Kartsotis, founder of the Fossil watch brand, for a “proof of concept” round of funding that’s aimed at measuring consumer demand for Prairie Pulp & Paper’s products and making distribution deals. “He’s not just a celebrity who comes in and says this is what I’m paying attention to,” says Burkle, who declined to disclose how much he invested in Harrelson’s company. “He comes in with facts and figures and is very thoughtful and prepared.”
Harrelson is also patient. He has waited a long time to get to this stage — to have a viable alternative to tree-based paper on the market — and he is willing to wait a lot longer. Back on the beach, before the colossal kiawe, he says: “There are a lot of very valid concerns out there. But my thing is always going to be the forests.”
This story is from the September 16, 2013 issue of Fortune.