Gunns and FSC

Baby steps have been taken in Australia’s highly charged forestry debate – a few in the right direction. A wobbly Gunns Ltd has signalled it will seek Forest Stewardship Council certification for the bulk of its managed native forest and plantation estate.

That is significant. For years Gunns has been a key sponsor of the Australian Forestry Standard, an industry-backed code that approves the logging of native forest.

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Gunns faces big hurdles: under FSC principles, any plantation converted from native forest after 1994 is ineligible for accreditation. Gunns will not say what proportion of its plantations was converted since 1994, but many – especially in Tasmania – were grown on land cleared of old growth forest, often using napalm to burn off waste and 1080 bait to protect seedlings, in a clear case of environmental vandalism.

The conversion process accelerated after the Tasmanian Regional Forest Agreement was signed in 1997 and after the 1998 introduction of the Managed Investment Scheme regime, which gave upfront tax deductions for plantation forestry.

A possibility might be for Gunns to seek FSC’s lesser “controlled wood” status for any plantations converted after 1994, meaning the wood meets five basic criteria, among them that it excludes wood from high conservation value areas or areas being converted from native forest.

Controlled wood could be mixed with FSC-certified material in a “mixed sources” labelled product.

It is a bit like the ”first tool” jump-cut in the opening of 2001: A Space Odyssey – if it gets FSC accreditation, anything could happen for Gunns. It would have to give up its reliance on native forest timber but that has been Gunns’ fallback plan for a decade anyway.

The company just needed a shove from the Tasmanian government – a shove that never came. In the end the Swedish partner Sodra appears to have provided the motivation, by making FSC accreditation a condition of its support for Gunns’s proposed $2 billion Bell Bay pulp mill.

In January Gunns said – following its acquisition of management rights to the forestry schemes run by the collapsed Great Southern Plantations – that it could feed the pulp mill with 100 per cent plantation timber.

Just as environmental objections to the pulp mill are being addressed, Gunns’ ability to fund and deliver the project is again seriously in doubt. Gunns put investors offside when it reported a 98 per cent fall in profit for the December half-year. It didn’t help that chairman John Gay saved himself $2 million by selling down his own shareholding in advance of the shock earnings result. Gunns shares have been hammered.

The Gunns story shows FSC will be the world standard for timber accreditation, and the Australian forest products industry will have to adjust.

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