Forest Certification, Part II

Conceived some 10 years ago and practiced now for about five, certification is having several effects beyond its original objective of sustainable forestry. This article's second part explores the impacts of certification not only on forest management but also on forest products' trade and consumer information.

Certification and Sustainable Forestry
It is important to analyze the impact certification has on forestry because the instrument was initially conceived to promote sustainable forest management. The overwhelming majority of certificates that have been attributed to date, under Forest Stewardship Council (FSC), ISO-14001, and derived systems (SFI -- Sustainable Forestry Initiative verification program, CSA -- Canadian Standards Association sustainable forestry certification system) and national schemes (e.g., Finnish Forest Certification System), are located in industrialized countries, particularly the United States, Canada, Sweden, Finland and Poland. In developing countries, adoption of certification is comparatively weak. A key paradox is that while it arose from concerns over tropical deforestation, certification is expanding mostly in industrialized countries.

Another striking feature of forest certification efforts to date is the dominance of industrial forests. While most registrations under ISO-14001 and derived systems pertain to industrial forests, the dominance of industrial operations is also present with the FSC scheme, where private small-scale and community forestry represents less than 10% of the total certified area. According to Bass & Simula (1999), most industrial forestry corporations that have secured certification under FSC had already reasonable capacities in place. For these authors, FSC has had a positive impact on management capacity by helping to improve management systems, induce lower costs and enhance company status.

While Bass & Simula also underline that companies find that ISO-based approaches are effective by helping them tailor their own path through the transition to sustainable forestry, Bass (1998) considers that ISO-14001 offers an excellent tool to improve forest management. Empirical evidence of the positive impacts of ISO-14001 certified forestry will, however, take time to materialize simply because registrations under ISO and derived systems are so recent.

Regarding the FSC certification of state forests, reference can be made to the large-scale certification of public forests in Poland, covering now more than 2.2 million hectares. While there is no FSC working group or regional standard in Poland, and despite criticisms (see, e.g., Friends of the Earth 1997, Counsell 1999), these FSC certificates appear, according to the available summary assessment reports, to have led to very little change in forest management practices.

Regarding nonindustrial forests, the effects of certification on forestry are difficult to measure. In the context of a program such as American Tree Farm System, education of private landowners is probably the key to explaining improved forest management practices, and not certification per se. In Europe, a recent study (Ramsteiner 1999) indicates that 56% of surveyed forestry experts hold the opinion that certification could bring slow improvement in European forestry, which is dominated by small nonindustrial forests.

An emerging issue, illustrated by recent developments in New Brunswick and Finland, relates to how private certification initiatives can contribute to achieving public forest policy objectives. In New Brunswick, the ministry responsible for forests recently denounced the new FSC regional standard, judging it unrealistic and the result of the concerns of special-interest groups. This polarization contrasts with the Finnish situation, where the national certification system is based largely on new forest legislation. Forest certification, through the adoption by forest owners of the Finnish Forest Certification System, is expected to contribute in the implementation of the new forest legislation.

Impact on Forest Products' Trade
Forest certification is having important trade implications, particularly when implemented in the framework of supporting measures. Public measures in the Netherlands are worth noting. The government, through public purchasing policies and other mechanisms, is promoting the widest possible use of certified forest products on the Dutch territory.

But as the Netherlands imports more than 90% of domestically consumed forest products, the governmental measures mostly have an extraterritorial effect. Of particular significance is that the Dutch government has defined "minimum requirements" for certification, covering criteria for sustainable forest management, forest management systems, certification systems and certifiers, and chain of custody. As there is no international agreement on any of these requirements, the Dutch policy has, to a significant extent, a unilateral dimension. While the compatibility of these requirements and supporting measures with World Trade Organization rules is questionable, legislation passed by the Dutch Parliament requiring the green labeling of certified timber and the labeling in red of uncertified timber was found to contravene European Union internal market laws.

Private measures relate mostly to the FSC initiative through its chain-of-custody system and buyers groups. Chain of custody is a procedure by which forest products are certified and authorized to bear the FSC trademark following a monitoring procedure. The procedure, which operates on an inventory basis and is expected to be adopted, in a simplified form, by PEFC, attracts substantial criticisms. AF&PA, for example, contends that "chain of custody is a flawed approach in the U.S. forestry sector" (Berg 1997). Other criticisms include that the system is open to abuse (cases of mislabeling have already come to light) and that, for paper products, it allows for a mixing with recycled fiber, enabling paper products with less than 20% of certified fiber to bear the FSC trademark -- sharply contrasting with requirements for solid wood products.

Buyers groups have been established in European countries such as the United Kingdom, Germany, the Netherlands, Belgium, France and Spain. In the United Kingdom, for example, the WWF 1995+Group now involves leading home improvement retailers, such as B&Q, Wickes, Sainsbury, the publisher BBC Magazines and the leading timber merchant Meyer International. Member companies "support the use of independent, third-party certification and labeling of forest products as a vital tool in the improvement of forest management" and commit to "purchase a substantial and increasing volume of their requirements for forest products from certified sources." (WWF 1999)

Key beneficiaries of the WWF 1995+Group policies have been Swedish industrial forestry operators such as AssiDomän, Korsnas & Stora, which were prompt in marketing FSC-certified material in the United Kingdom. While in theory open to other schemes, the WWF 1995+Group has relied on FSC-International for the recognition of alternative schemes.

In North America, the buyers group is the Certified Forest Products Council. The CFPC is mostly active in the United States and requires similar commitments from its member companies, including The Home Depot.

It is worth commenting here on the recent wood policy announcements of corporations such as The Home Depot and Ikea-International. In addition to planning to phase out products originating from "endangered," "ancient" or "high conservation value" forests, these corporations are putting pressure on their vendors to supply certified forest products.

Academic studies indicate that the likelihood of any price premium for certified forest products is low. In a 1996 study, for example, Vlosky & Ozanne indicate "none of the groups (architects, building contractors and home improvement retailers in the United States) felt that customers would pay a premium for certified products, and home center retailers felt most strongly that their customers would not pay such premium." This suggests that certification is sought mostly to maintain market access and that significant price premiums won't be forthcoming.

A second comment relates to what constitutes a certified forest product. As outlined in the first part of this article, there is a diversity of certification schemes in North America. The FSC system is in fact now substantially distanced by ISO-based schemes and the American Tree Farm System in terms of certified areas. Whether corporations such as The Home Depot and Ikea-International will continue their exclusive support of FSC or widen the range of schemes they recognize -- as B&Q in the United Kingdom did recently by accepting the Finnish Forest Certification System -- is likely to affect the development of forest certification substantially.

Assessing the trade effects of forest certification, implemented in conjunction with private measures such as the buyers groups, poses significant analytical problems. As a recent FAO report notes, "Although many proponents argue that certification is not a trade-restrictive practice, it seems to have many of the characteristics of one. In fact, this is to a degree the very goal that the approach is trying to achieve -- to encourage consumers to discriminate in favor of certain products (and therefore against others)."

Trade diversion is a likely consequence of such discrimination, favoring certified forest products even if those products don't necessarily have better overall environmental performance than the products they displace. Illustrative of this situation is the admission by U.K. home improvement leader B&Q that, although it "accepted" last July the Finnish scheme, it still foresees a reduction in its purchases of Finnish material because it does not bear the FSC trademark.

A related issue is the lack of access to some markets for those producers for which certification is too costly. This occurs, for example, in Europe, and in particular Belgium, where the fragmentation of private forests (100,000 forest landholdings averaging 2.5 hectares each) renders the cost of FSC certification prohibitive. The Belgian forest industry association, Woodnet, has accordingly filed a complaint against the WWF 1995+Group alleging that its activities restrict the free circulation of goods within the European Union.

For its part, WWF notified the European Commission that it had modified the requirements imposed on member companies of its 1995+Group, thereby lifting the exclusive reliance on FSC and accepting "equivalent" certification schemes. Both issues are being analyzed by the European Commission with respect to compatibility with EU antitrust legislation and internal market regulations.

Impact on Consumer Information
The impact of certification on consumer information has been somewhat neglected but requires consideration. Because FSC is the main certification system allowing for product labeling, the analysis below gives particular attention to that system. This analysis may, however, become relevant to other systems, such as PEFC (pan-European forest certification), which is designing a similar approach for chain of custody and forest products labeling.

In 1991, a WWF survey of the U.K.'s wood retail market found that, of more than 600 claims of sustainability, only three companies could substantiate their claims (Read 1991). This became a key rationale for the creation of the FSC and the promotion of "timber certification."

Today, FSC defines its mission regarding consumers as follows: "The FSC provides an independent guarantee of credibility. The FSC provides a credible and consistent approach to certifying forest products. This certification system ensures an independent evaluation of a forest company's practices, according to rigorous, publicly available forest management standards. The FSC is the only system that verifies claims from the forest all the way to the final product, a process known as "chain of custody" monitoring. The result is that when consumers see an FSC logo on a forest product, they can be sure that their purchase supports forestry that meets the highest standards for environmentally and socially responsible forestry." (FSC-US 1999).

In North America, FSC is deploying substantial efforts to achieve recognition of the FSC logo in the general public, through public service announcements featuring celebrities in widely circulated news and consumer magazines.

Whether forest products certification and labeling -- under FSC or other approaches -- are relevant to enhance consumer information remains contentious. In a position statement issued in August 1998, the Consumer Association of Canada states that none of the certification systems operating in the Canadian marketplace "can support their results adequately to make a product claim at this time." While supporting ISO's guidance that no claims of ISO-14001 registration should be made on products, CAC concludes that "the FSC labeling program falls short of CAC requirements for a credible program. Most importantly, the program does not consider the life cycle of the product. It leaves the door open for the shifting of environmental impacts from the forest to the distribution phase of the product. … The FSC actually allows labels to be applied to products which have never been near an FSC forest, as it labels wood on an inventory base at the process level with no adequate chain of custody process. … Probably the most important shortcoming of the FSC program is that it cannot adequately verify the claims it makes at this time."

Another perspective on the ability of certification to enhance consumer information has been expressed by Counsell (1999), who considers that "there is much evidence that the FSC is not presently ensuring that products carrying its logo genuinely originate from sources that are 'environmentally appropriate, socially beneficial and economically viable.'" Counsell argues that "consumers would be misled if they were encouraged to believe that the FSC imprimatur offers such a guarantee."

An interesting paradox regarding certification and consumer information is that environmental groups and industrial organizations show little interest in developing approaches based on life-cycle analysis. Such a cradle-to-grave approach, however, is seen as critical in most consumer-oriented programs, such the European eco-label scheme.

According to a senior official of the European Commission, the Community Eco-label award scheme has, "when compared to forest certification systems, the advantage for the consumers of being a multi-issue instrument based on a life-cycle analysis. That means that it contains information about multiple environmental aspects, which is not the case for single-issue labels. It is of course easier for manufacturers to advertise with a green certificate which doesn't request any environmental improvement of their industrial processes. This probably explains the great success of forest certification when compared to the Eco-label approach." (Kremer 1998)

Summary
Undoubtedly, certification increasingly affects the North American forestry sector. The current status of certification shows a diversity of systems now available to both industrial forestry operations and nonindustrial forest owners. Key implications of certification go beyond the promotion of sustainable forestry. In particular, important issues relating to forest products' trade and consumer information are shown to arise from its development. Despite the uncertainties surrounding certification, many companies, sooner or later, will have to decide whether to adopt certification and what option to choose.

Jean-Pierre Kiekens is the executive director of Sustainable Forestry & Certification Watch, a Montreal-based independent nonprofit organization aimed at improving understanding of forest certification and its various implications. Kiekens edits Forest Certification Watch, a newsletter that analyzes forest certification and timber-labeling trends and developments worldwide. SFCW recently published Forest Certification Watch: 1999 Year in Review, which offers an overview and analysis of the key forest certification developments that occurred in 1999. Kiekens can be reached at 514/273-5777 or by e-mail at kiekens@sfcw.org. SFCW also maintains a Web site at www.sfcw.org.

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