Examination of Witnesses (Questions 80-99)
MR SIMON
FINEMAN AND
MR ADAM
MATTHEWS
25 OCTOBER 2005
Q80 Colin Challen: Mr Fineman, have
you ever turned away a customer because you could not source their
requirements from a sustainable source?
Mr Fineman: I think we have often
had to say that we cannot do it, yes, unfortunately, yes.
Q81 Colin Challen: What happens to
them, do you know? Do you ever get to hear on the grapevine what
they have done?
Mr Fineman: Well, I do not think
they always find what they are looking for, so they probably have
to compromise their high standard at some stage.
Q82 Mr Hurd: I have got some questions
about the demand side for legal timber, but first of all I have
some questions about CPET and your views on how it is working
today. I understand you have expressed some criticism and concerns
in the past. How would you summarise your level of satisfaction
at the moment with CPET?
Mr Fineman: I think the focus
of our criticism would be on implementation. Overall, we think
it is tremendous. It has moved the issue on a long way, particularly
with regard to government procurement, but there is still a problem,
that the actual people who are procuring timber for government
projects do not understand the issues and do not even understand
the specifications that are handed down to them. When we first
became aware of this problem, our response was that we set up
our own training organisation where we actually invited them to
come and see us and, in collaboration with Greenpeace, we formed
a day course and we were educating people, contractors, specifiers,
even architects, on how to interpret the environmental specifications
in contracts for government.
Q83 Mr Hurd: Is that a role you are
still performing?
Mr Fineman: Well, yes, but we
have kind of exhausted all the guys who were going to come and
spend a day with us and now what we find is that the best we are
going to get is an hour of their time in their premises, so we
do not run a formal course in the same way that we used to. Instead,
we send people out to them to spend an hour talking to them. More
often than not, this issue comes to light because after the event
somebody has realised that there was an environmental specification
which they have ignored. If you phone up Timbmet today and you
say, "I want to buy some timber for a government project",
that will immediately trigger in the salesperson at the other
end of the line a response of, "Do you know about certification?"
If you do not mention that it is for government and somehow or
other it does not come out in the conversation, which is quite
likely, then the whole thing can be ignored and it only catches
up with somebody afterwards when I assume somewhere further down
the supply chain when the building is finished some bright spark
says, "Where did the timber come from?" and then all
hell can break loose and often has.
Q84 Mr Hurd: So is the role for government,
as far as you can see, in terms of educating those responsible
for public sector procurement?
Mr Fineman: I think it ought to
be, yes.
Mr Matthews: As a broad project,
CPET has been able to provide clarity to the market and that has
been extremely important. It has taken a long time to get there
and I think the industry has been progressive and I think the
industry wanted to see that happen a lot earlier, but we are there
now. They have categorised the schemes and that has been very,
very helpful to operators. It has sent an important message back
also to producers in, for example, central and west Africa where
they know of the schemes, but the market is still small in terms
of sustainable timber. In terms of actually setting a date for
when sustainable becomes a basic requirement of government purchasing,
that has yet to be done and I think that is very important. That
will help encourage the market considerably to be able to respond
to increased demand and it will help those producers that are
struggling in central and west Africa where, for example, the
Commission for Africa is focused on actually trying to encourage
investment. That will help those kind of progressive producers
actually respond to that demand and at the moment there is not
actually a set date, I understand, for when that will become a
minimum requirement, so that would be useful. The other problem,
I think, with CPET is that there has been phenomenal work done
by those in it and the staff there, but they are under-resourced
and part of the reason that people, contractors and those actually
specifying timber in government projects, do not know the full
facts is because they do not have the resources centrally in CPET
to be able to fully educate their own people and purchasers across
government. The further you get away from central government to
agencies, et cetera, that come under the government procurement
policy, the further away you get from those that actually are
fully aware of the requirements under the policy, so greater resource
would enable those to actually know what the policy is, what they
need specifically to specify and the difficulties in actually
specifying.
Q85 Mr Hurd: Can I bring you back
to the issue of standard clutter, an expression Mr Pritchard used.
We have heard very clear signals that FSC is the gold standard.
We have heard some criticism from NGOs that the other specifications
are significantly weaker and in fact there have been some questions
about the suitability of their being certified. Do you have a
view on that, on the suitability of the other four certification
schemes and, therefore, CPET's decision to endorse those as suitable?
Mr Fineman: I think in the context
of certain supplier countries having been shown to be producing
up to 70% or 80% illegal logging, I think any independent standard
is better than no standard and all of the standards are a massive
improvement on illegal logging, so I am very supportive of all
of them and I cannot see that it is my place to choose between
them.
Q86 Mr Hurd: So no judgments on the
suitability of any of the other four schemes or the decision process
that led to them being endorsed?
Mr Fineman: Not from me. Would
you?[6]
Mr Matthews: Clearly I think,
from an industry perspective, a company that has been here for
100 years and will be in 100 years' time, the high standard is
the one that we would like to see adopted across the board, but
there are steps to achieving that. It is unhelpful competition
between standards to the industry and clearly government procurement
policy specifying that X standard meets its requirement is very
helpful, but I think it is very difficult for us to be able to
comment specifically.
Q87 Mr Hurd: One of the specific
concerns of the NGOs is that the assessments are very much desk-based
and they urge that implementation should be looked at on the ground.
Do you have a view on that?
Mr Fineman: I think that is absolutely
right, but I think all of the standards that CPET approves, to
the best of my knowledge, they actually do look on the ground.
They look at the forests themselves and they do require a certain
degree of independent certification.
Mr Matthews: I think it is also
worth noting the response of a couple of the standards that did
not reach the sustainability criteria. Okay, the UK market is
reasonable, but it is by no means the biggest player at all and
yet, through CPET's ranking of the standards to legal and sustainable,
you have two schemes that immediately have gone away and reviewed
their processes to actually ensure that they can provide the sustainability
standard, so I think that is an example of the power that the
UK Government's own procurement can play in the market which is
quite important.
Q88 Mr Hurd: I am getting slightly
mixed messages because one minute you are saying that any standard
is better than no standard at all, but, on the other hand, you
are saying it would be much better to have one standard. Surely
it would be better to have one standard if you could find a way
of reporting or measuring people on their road towards achieving
that one standard? Do not all these other standards just clutter
the horizon?
Mr Fineman: Yes, I think that
that confusion comes in because, having been around in the industry
for as long as we have, we kind of know that it is almost unattainable
in reality. It is very hard for me to imagine, having been to
places in west Africa, that there is a reasonable step chance
within my career of them hitting the gold standard; I just do
not believe they will. I do not quite know why you asked the question,
but I wonder if it is because you are looking to get a gold standard
into government procurement, which is great, but an awful lot
of the market, by far the larger part of the market, is the non-government
market, the private market for timber and that is where we have
our big, big problems because there we are competing head on against
people who are peddling illegal timber on the UK market and day
in, day out they are doing it and they make life commercially
extremely difficult for us.
Q89 Mr Hurd: I want to come on to
ask about the demand side, but I have a final question on CPET.
Would you like to see it extend its work to cover timber products
and paper?
Mr Fineman: I think it has to,
yes, because, as you mentioned earlier, there are so many timber-manufactured
both components and products coming in not just from China, but
from the east generally and from eastern Europe and it is important
that they are regulated just the way everything else is.
Mr Matthews: Also it would be
useful to get local authorities to adopt CPET. I know there is
no authority to do that, but they have a very large market. The
other gap is foundation hospitals which have no requirement under
CPET to adopt their standards, but it might be worth reviewing
that.
Q90 Mr Hurd: So demand for legal
timber, is it just the public sector or are there other major
buyers? You just said there were.
Mr Fineman: It is very much driven
by the public sector and the remainder of the demand comes from
customers of ours who are then selling on to government. I do
not think there is any groundswell of demand that comes from private
industry or the private construction sector.
Q91 Mr Ainsworth: Do you ever have
discussions with the National Housebuilders' Federation about
access to sustainable timber?
Mr Fineman: I am not aware that
we have discussions with them directly. We certainly talk to housebuilders,
but we are not in that world particularly because they tend not
to use that much hardwood. Most houses are built of softwood and
it is a bit off my agenda really.
Mr Matthews: I think the TTF are
up next who do have a far greater dialogue with some of these
bodies and they will be able to respond on that.
Q92 Mr Hurd: Do you find you are
having to do a lot of education of consumers about sustainable
timber? You talked before about the need to educate government
about its own procurement.
Mr Fineman: Actually Adam and
I were in a meeting last week when we were talking about preparing
for this and at the same time a housebuilder dropped in on us.
He was building holiday cottages in Wales and I popped down to
talk to him, as you do. He had a contract for 60 houses and they
had wooden floors and they were clad in wood as well. I was with
my colleague who is our environmental responsible purchasing manager,
whatever, and he said to him, "Well, aren't you interested
in certification?", it is a very typical conversation, and
he said, "Oh, yes, that's a good idea". Then we got
on to talking about it and it transpired that in order to buy
certified product for those houses, it would cost around about
£400 extra per unit and that was it, that was the end of
the discussion. They were not going to pay a penny more for it,
so they are interested in it, and this is very typical, they are
very interested in it until they hear the price.
Q93 Mr Hurd: Do you get the sense
there is any knowledge of any certification schemes other than
FSC?
Mr Fineman: We were not actually
pushing FSC on to them, but we were suggesting the Canadian standard
for the cladding which would have been western red cedar and the
flooring, I cannot remember.
Q94 Mr Hurd: But in general do you
detect a wide awareness of the certification schemes other than
the FSC for those who are interested?
Mr Fineman: I think that there
is a very small minority of customers who are well informed and
know what they want. Usually when they do know what they want,
they want FSC. I think the rest, as I said earlier, rely on us
to do it for them and they will take our word for it.
Q95 Chairman: You did not suggest
to your Welsh housebuilder that he should maybe invite Greenpeace
to come along and point out the error of his ways, did you?
Mr Fineman: I think there is always
that fear in their minds.
Q96 Chairman: Consumer power.
Mr Fineman: There is a fear in
their minds that that will happen, but what he said was, "My
customers aren't interested in paying for it and, therefore, I'm
not prepared to absorb the £400 from my margin". Those
were pretty much his words.
Q97 Mrs Villiers: I am going to ask
you about something called FLEGT. We were debating earlier how
to pronounce it. I would like to ask you about the FLEGT Action
Plan. How do you view progress on that Action Plan to date?
Mr Fineman: I virtually know nothing
about FLEGT, I am afraid. Adam, you do.
Mr Matthews: I think it is a good
initiative. Again it has taken a long time to get where they have.
The UK Government's role in FLEGT has been very positive especially
during the UK Presidency. I think yesterday it was announced that
it has been finally agreed and we can now enter into discussions
on voluntary partnership agreements. As an initiative, it is very
positive. It is sending a message to the market and clearly the
greater clarity that can be provided in the European market, the
better. Standardisation of purchasing within the European market,
if it can lead to that, would be good, but the potential for it
to deliver some tangible results in terms of increasing imports
of certified, legal wood from regions that it has voluntary partnerships
with is good. I think it is a step along the road to eventually
the banning of illegal logs more broadly, but, as an initiative,
it is encouraging. It is helpful to the industry, and as for Timbmet's
role within it, we need to be very clear that Timbmet has made
some contribution from the industry as an individual company on
FLEGT and in a more broader sense within the G8 illegal logging
process that the UK has led on under its Presidency and obviously
FLEGT forms part of that. In terms of the broader G8 agreement
in and actions that the G8 can support in relation to producer
countries, we are looking at measures on transparency and whether
those criteria can be introduced into the operations of producers,
so that is some of the work we have been doing, but broadly Timbmet
is supportive of the FLEGT initiative.
Q98 Mrs Villiers: So the work that
you are doing in relation to that initiative, that is working
with the British Government in their Presidency of the G8. Perhaps
you could expand on that a little.
Mr Matthews: Basically about a
year ago with the UK Presidency of the G8, Timbmet has facilitated
a dialogue with no particular agenda, but basically to use the
opportunity of the G8 Presidency where Hilary Benn and Margaret
Beckett both made illegal logging a priority. There was the Derby
ministerial meeting which they co-hosted and the two issues of
climate change and illegal logging were on the agenda. We facilitated
a dialogue between producers predominantly from central and west
Africa in relation to a focus on the Commission for Africa and
looking at the difficulties facing large, progressive companies
that are trying to move towards the higher standards. We incorporate
the whole chain into the consultation, so you have the importers
and also the end users like Travis Perkins. We held a consultation
in January with DFID and Defra in their capacities in the G8 and
we submitted to the ministerial meeting in Derby and we were encouraged
by the statement and range of measures that came out of the Ministerial
and which was subsequently endorsed by the Heads of State. One
of the measures was endorsement of the FLEGT and there was an
important step from the consumer side in the European market and
the other measures we are looking at are what industry can specifically
do to support the implementation of that statement. This consultation
is between a bunch of chief executives, managing directors and
directors that voluntarily come together and want to move this
whole issue forward a bit quicker than it currently is and the
G8 was a good vehicle to do that.
Q99 Mrs Villiers: I would like to
ask you about one of the Action Plan's main features, the voluntary
partnership agreements. If you were a timber-producing country,
would you consider these to be beneficial or would signing up
to exporting only legal and obviously more expensive timber to
the EU be problematic when perhaps their competitors would be
continuing to sell illegal and cheaper timber to the EU?
Mr Matthews: The Timber Trade
Federation who is giving evidence afterwards has been far more
closely involved in the intricacies of the whole development of
FLEGT and I think they have spoken and made very effective representations
in relation to that. I think it is worth noting that the difficulties
for countries to meet the requirements under that are going to
be considerable for African governments. I think governments will
respond because the market is valuable, but it is not the only
market and clearly there are competing interests elsewhere, but
there is the potential that this market pays more if the product
can be developed and if we could level the playing field in favour
of actually a market in Europe of timber that is legal where there
is a fair price paid for it, then if the voluntary partnership
agreements do that, then that is something the industry is very
supportive of and Timbmet in particular.
6 Witness addition: where an NGo criticises
a scheme-eg Greenpeace's critique of MTCC-we take the allegations
seriously and probe the various stakeholders in an attempt to
understand the reality. Commercially, we accept the schemes until
there is consensus from NGOs and the market that we shouldn't
(unless we otherwise become convinced through consultation that
we shouldn't). Back
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