Examination of Witnesses (Questions 120-139)
MR JOHN
WHITE, MR
ANDY ROBY
AND MR
PETER LATHAM
25 OCTOBER 2005
Q120 Colin Challen: Have any members
actually gone through the complaints procedure of the Federation?
Mr White: We have had a couple
come through the complaints procedure.
Q121 Colin Challen: What sort of
complaints were they?
Mr White: They were inter-company
disputes, which I think is the best way to characterise them.
Q122 Chairman: Can I just go back
to my original question and ask whether or not the company Wolsey
is a member of your organisation?
Mr White: They are. Six of the
seven companies mentioned in the Greenpeace report, and I am sorry,
I forgot to answer that question, are members of the TTF.
Q123 Chairman: I understand from
the Greenpeace report that they play a key role in public procurement,
including as a supply partner for councils like Liverpool and
Manchester. Given what you have just said about the expectation
that you would have from companies, would that qualify for some
kind of disciplinary action as outlined in the Code of Conduct
Mr Challen just referred to?
Mr White: It depends. We are already
going through the process of working both with Greenpeace and
the companies concerned to understand the evidence behind the
allegations that Greenpeace have made in its report and we will
take appropriate action once that investigation has been completed.
Q124 Colin Challen: Coming to a question
that was asked earlier on, if all of your members are committed
to sourcing their timber from legal and well-managed forests,
when it came to launching your Responsible Purchasing Policy in
July, you said that only 26 members signed up. We have heard,
though it may not be the word you would use, that some of those
were coerced into signing up. Why do you think so few of your
160 members have actually signed up to it and perhaps you could
say whether any more have subsequently signed up to it?
Mr White: They have and we now
have 30 companies signed up to it who represent probably about
30/31/32% of the wood traded in the UK, so we have got a lot of
the large companies, including Wolsey, who are signed up to it.
The scheme is currently voluntary, so there is not an element
of coercion involved at this stage. The reasons are quite personal
ones, things which I have observed coming into the Federation
fairly recently, that it has been quite a complex process for
people to get their heads round and they have needed a considerable
amount of time to digest it. That digestion is now nearly complete
and I have been asking very publicly on a kind of hands-up basis
who is going to sign up to the RPP, the Responsible Purchasing
Policy, and I am now getting a very positive response from the
members.
Q125 Colin Challen: At this stage,
what would you expect? Presumably these companies are going to
produce their annual reports next year, so what would you expect
to be in them? Is it just going to be a lot of "Well, we've
reviewed this and reviewed that and we're going to have future
actions" and so on, or are they actually going to say that
they have taken concrete measures already in the first year?
Mr White: The RPP is designed
to be a tool for member companies to help them extract the information
that they need to be able to, first of all, rate their suppliers
of wood as either high risk, medium risk or low risk of supplying
illegal timber to the supply chain. On the basis of that risk
rating and the evidence that is provided, and evidence is required,
they can then make an assessment of how they are going to move
their high-risk suppliers further towards medium and low risk
categories and that may be, for example, accessing some funds
under the Timber Trade Action Plan to help get systems in place
to help improve their environmental procedures, so that is an
example of the sorts of things they can do and they would set
that out in their Action Plan. That of course is then independently
monitored by an auditor, in this case SGS, and we will be monitoring
it as well to make sure that there is this continuous progress
and that is what this is all about, continuous progress towards
better and better environmental management and standards.
Q126 Colin Challen: Those companies
that have signed up, do they all fall into one camp or the other,
softwoods or hardwoods?
Mr White: They are across the
board.
Q127 Colin Challen: So it is a fair
mixture of all of them.
Mr White: Yes.
Q128 Chairman: Do you want to come
in on that, Mr Roby?
Mr Roby: I could come in at any
point, but my boss is doing a great job!
Mr Latham: I would like to make
one point which is that we are a publicly quoted company and,
in our annual report, we make an environmental statement which,
given the nature of our business, obviously concentrates on our
purchasing policy. In the year just finished, we spent quite a
lot of time explaining to our shareholders the Government's purchasing
policy and timber certification because we thought they were also
potential buyers. I imagine that when we do the current year's,
we will actually disclose what our targets were in terms of our
risk profile for timber purchasing, what the targets were, what
our achievement was and what our target will be for the following
year.
Q129 Colin Challen: Do you think
we will ever get to the stage in this country where our annual
demand for timber will all be met by legal sources?
Mr White: I will pass that one
to Andy because he has probably got a better feel for how much
is certified and how much is legal in the world generally.
Mr Roby: The simple answer to
that question is that we do not yet know how to verify what is
legal. When you say "legal", it is quite a loaded word.
We are assured that the vast majority of our suppliers are operating
entirely legally and it is just in a handful of controversial
or high-risk countries where there are issues of legality and,
as I think FSC mentioned, we know that the Indonesian Government
has declared that 80% of its timber is illegal. In due course,
based on our Timber Trade Action Plan and the work that we plan
to do with our suppliers, I would say that we are aiming to get
just 20% of our suppliers from those high-risk countries as verified
legal in five years, so that is our estimate based on our existing
experience of supplier improvement.
Q130 Colin Challen: Do you think
there should be stricter laws in this country against the supply
of illegal timber? It seems to me, as I was trying to indicate
earlier on in the previous question, that if the laws in the supplying
country are weak and not enforced, then perhaps we should have
some kind of responsibility ourselves to employ legal sanctions
against importers who knowingly import illegal timber, but those
laws, from what I have read, do not seem to exist. Do you think
we should have a review of that area?
Mr White: We would support a ban
on illegal timber. I think any pressure that we can bring both
on the supply and the demand sides of the equation to bring an
end to this practice has got to be welcomed.
Q131 Mr Ainsworth: I was just wondering,
of the 30 companies, members, who are now signed up to your Responsible
Purchasing Policy, whether Wolseley was one of them.
Mr White: It is, yes.
Q132 Mr Ainsworth: Does that not
rather weaken the whole point of having a Responsible Purchasing
Policy and underline the case that was put earlier to us by Timbnet?
Mr White: The Responsible Purchasing
Policy, as I was describing, is a tool and it is in its first
year of operation. I think we need to understand a lot better
what evidence rests behind the allegations that Greenpeace have
made in relation to the China report before we can assess whether
or not the RPP would have addressed those or not addressed those
in its full operation. We just cannot answer that until we have
had an opportunity to discuss the evidence more fully with members.
Q133 Chairman: It would be very helpful,
once you have had a chance to have a look at the facts of the
matter, if you could perhaps share a copy of your conclusions
with us.
Mr White: We will keep you informed.
Q134 Mr Ainsworth: Presumably you
regard this as an important initiative whose integrity must be
protected, so I take it you would be willing to take fairly severe
action against one of your members that had let the entire industry
down.
Mr White: It is going to be appropriate
action according to what we discover when we conclude our investigation,
but we will let you know.
Mr Latham: Can I just go back
slightly on this question of a ban because I think that a ban
on illegal timber will become appropriate, but if one was to say
tomorrow that you ban all illegal timber, it will cut out a lot
of timber from the tropics which are countries whose governance
and forestry policy we are trying to correct. If we took that
decision now, they would find other markets and it would undo
the work that we are currently doing. I would like to take an
example of Indonesia where Greenpeace produced their earlier report,
it must have been, about two years ago. It was on the day that
the Timber Federation was having a meeting with Indonesian mills,
looking at the very issue that Greenpeace had highlighted. The
Federation took a view to continue engagement with the Indonesian
mills following the Greenpeace report. We commissioned the Tropical
Forest Trust to carry out a survey with mills who agreed to take
part in it. Originally the mills said that they would not take
part, but companies like my own were able to have one-to-one dialogues
with our suppliers and say, "Well, the European market is
going to demand this. You really ought to let these people in",
and they did. Now we have one plywood mill in Indonesia which
has actually achieved FSC certification and we have a couple of
others which will come on stream in the next year. If you had
said that two years ago, people would have laughed at you, but
the policy of engagement rather than the implementation of a ban
has been successful in that case.
Q135 Chairman: And what conclusions
would you reach in respect of the transitional costs that I referred
to in the question I put to our previous witnesses?
Mr Latham: Well, in terms of the
cost, I think of course that there is some government funding
through DFID to help the process towards certification and undoubtedly
that has been helpful, but the position at the moment is that
the early companies achieving certification are getting a premium
and I would like really to make a comment in relation to the FSC's
comment about the trade getting the margin. We do not get the
margin on the certified wood, but we are having to pay more for
it and we have been going to our suppliers and saying, "If
you do get certified, we will pay you a premium", and that
has encouraged them.
Q136 Chairman: Who does get the margin
on the certified wood?
Mr Latham: It is not margin, it
is cost. It is cost for the producer, it is not margin.
Q137 Mr Hurd: I have a few questions
about CPET. You have been supportive in the past, but perhaps
I can get from you a mood of constructive criticism. What has
worked well and what could work better?
Mr White: I think that is probably
best answered by Andy, the industry representative here.
Mr Roby: It has been great in
terms of certification schemes, but, as previous commentators
have said, it is confusing with all these standards and we now
have a government, a major buyer of timber, saying, "This
is sustainable and this is acceptable to us", so it has become
a framework for mutual acceptance which is very valuable.
Q138 Mr Hurd: Do you agree with the
conclusions about the schemes?
Mr Roby: Yes, the standards were
fairly put together in a very consultative way and were rigorously
enforced by the consultants that did the job. We played our role
as watchdogs and ensured that there was fair play for at least
our constituency and yes, we are very satisfied with the outcome.
What I would add is that we were concerned it was taking so long
to develop that policy and implement it, but now there seems to
be serious government funding behind the second phase of it and
we are very hopeful that it will address the far more sticky issues
of Category B evidence.
Q139 Mr Hurd: We are going to come
on to that, but do you share the concerns of Timbmet, for example,
about the implementation and lack of education in the system?
Mr Roby: Equally, yes. In the
building industry, we have seen the bigger companies coming on
board with this, but certainly the jobbing builders and the "sub-ees",
as they are known, are not aware of government timber procurement
and quite often they are the ones going into the builders' merchants
making the purchases, so there is a whole question to us if it
is a government building project as to whether some sort of auditing
is going on to make sure that government suppliers are meeting
their criteria.
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