FSC certification poses risk to business

Forest certification and risk management: FSC certification poses risk to business

The Forest Stewardship Council (FSC) certification scheme poses significant risks to businesses that choose to adopt it.

A study by ITS Global found that the FSC has allowed itself to serve the agenda of environmental NGOs, including that of its key founder – the World Wildlife Fund (WWF).

Findings from the study show that while both the FSC and the other leading certification system – the Program for the Endorsement of Forest Certification (PEFC) – are comparable in the delivery of environmental outputs and serve to certify well managed forests, the FSC poses additional risks to business. This is due to its standard setting processes and governance structures that ensure an overwhelming NGO bias. This bias has given environmental campaigners leverage to intensify attacks on well intentioned operators who subscribe to the system, irrespective of their environmental performance.

The ITS Global report, Forest Certification – Sustainability, Governance and Risk, analyses two of the world’s largest forest certification systems – FSC and PEFC (Programme for the Endorsement of Forest Certification). The comparative assessment uses wide ranging criteria that include environmental outputs, organisational governance and ‘best practice’ standard setting processes.

The study is the first of its kind; while past comparisons have focused exclusively on the environmental outputs of forest certification, ITS Global’s methodology provides a broad overview of the entire certification scheme. This approach highlights the potential business risks associated with forest certification.

By making assessable a wealth of scholarly and technical material, the report is an indispensable tool for sustainability and corporate affairs managers, as well as end of line consumers, interested in understanding forestry certification and its politicisation.

Key finding:

PEFC and FSC – Similarities

The study found a number of similarities between the two systems. Overall PEFC and FSC define Sustainable Forestry Management (SFM) in similar terms and achieve common outputs in many respects. Notably, both systems achieve similar environmental outputs, and provide consumers with a form of guarantee that a wood product is sourced from responsibly managed forests.

PEFC and FSC – Fundamental Differences

Yet there are significant differences between the two schemes. Findings highlight the role of FSC as part of WWF’s global strategy to restrict commercial forestry. PEFC, on the other hand, enables forestry producers to demonstrate sustainability. Key differences are discernable across four areas:

1. How they deliver sustainable forest management

• Under PEFC, standards are fixed; reflect national interests; and cannot be varied without the consensus of stakeholders. Furthermore, PEFC endorsed standards must meet specific requirements based on inter-governmental processes and scientific research.
• In the FSC system the executive arm, dominated by NGO representatives, determines if an operator practices SFM. FSC standards have little guarantee of long term consistency and do not necessarily reflect national interests. Rather, standards are based on the deliberations of FSC members instead of scientific process or intergovernmental consensus.

2. What the systems are designed to deliver

• PEFC was established to enable forestry operators to demonstrate to consumers that their product originates from sustainably managed forests.
• FSC was established by WWF to advance specific forestry objectives by altering the practice of forestry operators. Their leading objective today is to cease any further conversion of natural forest land for other purposes. Notably governments have largely refused to pursue these objectives over the last 20 years as they conflict with national interests and development goals.

3. How the systems are used

• PEFC is used by operators to demonstrate sustainable forestry practice.
• FSC is used by NGO groups as part of a broader political program to pressure businesses to demand elements at the upper end of the forest and wood products supply chain to adopt the FSC system; after achieving this, campaigners pressure business to accept increasingly demanding standards as time passes – under threat of public criticism for not acting sustainably.
4. How the systems are managed
• PEFC follows the best practice standards of how to set standards and how to organize conformance as laid down by the International Organization of Standards (ISO) and the International Accreditation Forum (IAF).
• The FSC system cannot comply with those best practice arrangements. The organization operates by majority vote where NGOs outnumber commercial entities. Some criteria (such as those to protect High Conservation Value Forests) are not prescriptive and do not have objective indicators.

Managing Business Risk

These differences have allowed the FSC to be used as a tool by environmental campaigners. In many cases businesses – under the impression that forestry certification is good risk management – have subscribed to FSC only to find that baseless environmental attacks are intensified.

Case studies examined in the report show that once in the FSC system, forest operators and other businesses have found that:

• They face ever-increasing obligations in order to conform to FSC members’ political agendas.
• NGO members have the ability to lobby the organisation to suspend certification regardless of operational conformance.
• Environmental campaigning against industry operators often increases once a producer gains certification. NGOs gain greater leverage through FSC certification, and are in a position to intensify attacks on brands.
• Operators and consumer companies are pressured to subscribe to forestry policies that are not environmentally justified and, if implemented, can undermine national development objectives in developing countries.

Source
ITS Global (2011), Forest Certification – Sustainability, Governance and Risk, accessible at: http://www.itsglobal.net/sites/default/files/itsglobal/Forestry%20Certification-Sustainability%20Governance%20and%20Risk%20%282011%29.pdf

Forestry & Development E-News is published monthly by ITS Global (http://www.itsglobal.net).
ITS Global are accredited assessors for the International Programme for the Endorsement of Forest Certification Schemes (PEFC)

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Forestry & Development (F&D) is an online resource on sustainable forestry. It supports commercial forestry as a viable source of economic growth which is compatible with sustainability.