House of Commons - Environmental Audit

Select Committee on Environmental Audit Minutes of Evidence

Memorandum from FERN

How useful has the work of the CPET proved? How should its role develop to ensure future progress on the issue of sustainable timber procurement?

USEFULNESS OF CPET WORK

The CPET (Central Point of Expertise) process has been instrumental in developing criteria for the endorsement of forest certification schemes that are acceptable to all stakeholders, including the timber industry and environmental NGOs. The process to develop these criteria has been transparent and inclusive, which should be commended.

PROBLEMS WITH THE WORK OF CPET

However, the second step of the process has been questionable, to say the least. This step—the scoring of certification schemes on the basis of CPET criteria—has been criticised by FERN and other environmental NGOs as being unscientific, not sufficiently inclusive, and open to challenge. In this submission, we focus on how CPET should improve significantly its assessment and scoring of existing certification schemes, as we believe that this is the key element to ensure progress on sustainable timber procurement.

FERN, jointly with Greenpeace, FoE and WWF, has assessed the SFI (Sustainable Forestry Initiative) and the PEFC (Programme for the Endorsement of Forest Certification), using the CPET criteria. This consortium disagreed with DEFRA (or rather ProForest—the consultancy appointed by DEFRA) on the scoring of more than half of the criteria. In our assessment, neither scheme would have been endorsed. Therefore, it is our conclusion that the current CPET scoring system cannot be supported and needs to change.

Furthermore, there is growing well-documented evidence that forest certification schemes do not always implement their own policies. We are particularly concerned with the CSA (Canadian Standards Association) scheme, as most of the CSA's certificates have now been formally challenged by the Sierra Legal Defence Fund, on behalf of environmental NGOs (Sierra Club) and indigenous peoples' organisations (National Aboriginal Forestry Organisation). The appeal states that in 11 of the 12 companies investigated, there were no reasonable grounds to conclude that the CSA's requirements had been met. [2]

The CPET assessment, being a desk assessment only, will not always be able to identify non-compliance. This leaves it vulnerable to endorsing schemes that do not deliver sustainable forest management on the ground. One solution to this problem would be field audits, although this would be a costly solution. Another option would be to re-examine the CPET criteria if, after further scrutiny, it is revealed that timber from badly managed forests was being accepted.

It is imperative that CPET ensures that all endorsed certification schemes continue to deliver timber sourced from well-managed forests. Failure to do so would undermine the stated aims of CPET and with them, the UK Procurement Policy.

WAYS FORWARD

To address these concerns, we would suggest the following changes to the CPET process:

— CPET, on behalf of DEFRA, would need to carry out an urgent revision of the existing accepted forest certification schemes, taking into account the full FERN, Greenpeace, FoE and WWF analysis.

— A new procedure would need to be developed for the revision of accepted schemes. We propose a procedure that would allow for annual revisions, and would take into account comments received by interested parties, such as NGOs and the timber industry.

— CPET would have to undertake a fully inclusive process of reviewing its criteria and developing guidelines on how to implement these criteria, to prevent certification schemes that permit bad forest management practices slipping through the net and being accepted under the CPET assessment procedure.

— CPET would have to consult all stakeholders on the guidelines to be prepared for the scoring of schemes based on the above.

How reliable are the certification schemes for timber endorsed by CPET? Are there concerns regarding either the sustainability or legality of any of them?

There are serious concerns with regard to the sustainability of three of the four approved schemes and with regard to the legality of all endorsed schemes.

With regard to sustainability: As stated above, FERN, together with WWF, FoE and Greenpeace, has carried out an assessment of two of the four endorsed schemes, namely the PEFC and the SFI. We dispute 13 of the 26 criteria for the PEFC, and 18 of the 26 criteria for the SFI. In our opinion, the SFI and PEFC schemes clearly do not meet the threshold for endorsement, as developed by CPET, and therefore should not have been endorsed.

In FERN's analysis[3] neither the CSA, the PEFC, the MTCC (Malaysian Timber Certification Council) or the SFI meet the minimum requirements for a credible certification process described by governments, NGOs and the timber industry. All these actors have described what minimum requirements for credible certification schemes should be [see box 1]. These include: minimum performance-based standards, transparency, and independence of vested interests. A close look at all four schemes shows that, with the exception of the FSC, not one meets all of these minimum standards. The MTCC, CSA, SFI and PEFC all lack clear minimum thresholds before issuing a label; and the PEFC and SFI schemes lack transparency because crucial documents, such as certification reports and documents relating to certification procedures, are not made available to the public. Also, the PEFC, CSA, SFI and MTCC are not independent of vested interests as in all cases "economic" interests (the timber industry or forest owners) have a larger say over the development of standards than social or environmental interest groups.

BOX 1

AGREED MINIMUM CRITERIA FOR FOREST CERTIFICATION SCHEMES

Governments, industry and NGOs appear to agree to some extent on the key components of a credible certification scheme, including: the assessment of performance on the ground (not just on paper); transparency; and independence of vested interests.

1. Performance on the ground

The first intergovernmental agreement on forest certification was reached within the Intergovernmental Panel on Forests (IPF) under the auspices of the United Nations Commission on Sustainable Development. In 1997, the IPF adopted a number of Proposals for Action relating to certification. The panel emphasised "that the development of criteria and indicators [through governmental processes such as the Helsinki and Montreal processes] is primarily intended for promoting and monitoring sustainable forest management, and not for imposing certification schemes for forest products. [These] criteria and indicators are not performance standards for certifying management at any level." [4]

The message that certification schemes need to be based on performance requirements has since been repeated in different forums, such as the FAO (UN Food and Agricultural Organisation) and the European Union: "it is important to recognise the differences between indicators for sustainable forest management and certification standards. While indicators are used to show the state of the art and to monitor changes with regard to relevant aspects of sustainable forest management (as defined by criteria), certification standards lay down a certain quality level or performance standards that has to be achieved." [5]

2. Transparency, participation and independence

The IPF Proposals for Action, agreed by all governments, state: "Governments have a role in encouraging transparency, the full participation of interested parties, non-discrimination and open access to voluntary certification schemes." [6]Proposal For Action 133, relating to certification and labelling, reads: "[the panel] urged countries to support the application to certification schemes of such concepts as: open access and non-discrimination in respect of all types of forests, forest owners, mangers and operators; credibility; [7]non-deceptiveness; cost-effectiveness; participation that seeks to involve all interested parties including local communities; sustainable forest management and transparency."

The Forestry Industry (in the International Forestry Industry Roundtable (IFIR)) supports this approach in its report, Proposing an international mutual recognition framework. [8]It lists the following criteria for credible certification schemes: conformity with sustainable forest management standards and legislation; "the influence of all stakeholders shall be balanced and consensus outcomes shall be sought"; scientifically supported; continual improvement; non-discriminatory "accommodating all forest types, sizes and ownership structures"; repeatability, reliability and consistency; independence and competence; transparency; SFM claims; chain of custody.

Finally, the World Bank, when adopting its new Forest Policy in November 2002, states that: [9]

"To be acceptable to the Bank, a forest certification system must require:

(a) compliance with relevant laws;

(b) recognition of and respect for any legally documented or customary land tenure and use rights as well as the rights of indigenous peoples and workers;

(d) conservation of biological diversity and ecological functions;

(e) measures to maintain or enhance environmentally sound multiple benefits accruing from the forest;

(f) prevention or minimisation of the adverse environmental impacts from forest use;

(g) effective forest management planning;

(h) active monitoring and assessment of relevant forest management areas;

(i) the maintenance of critical forest areas and other critical natural habitats affected by the operation.

In addition to the requirements above, a forest certification system must be independent, cost-effective, and based on objective and measurable performance standards that are defined at the national level and are compatible with internationally accepted principles and criteria of sustainable forest management. The system must require independent, third-party assessment of forest management performance. In addition, the system's standards must be developed with the meaningful participation of local people and communities; indigenous peoples; non-governmental organisations representing consumer, producer, and conservation interests; and other members of civil society, including the private sector. The decision-making procedures of the certification system must be fair, transparent, independent, and designed to avoid conflicts of interest."

CONCLUSION

In short, the World Bank, governments and the forestry industry all seem to agree on most of the conditions for credible certification schemes such as balanced participation, transparency, consistency and replicability, and measurable, minimum performance-based standards. Nonetheless, most of the certification schemes researched here do not meet these demands. No scheme, with the exception of the FSC, requires balanced participation of all stakeholders and no scheme, with the exception of the FSC, is based on clear and meaningful minimum performance standards. The SFI and CSA allow individual forestry companies to customise the standards against which they will be measured and certified. This means that the standards of these programmes vary on a case-by-case basis. Transparency is a serious problem in most schemes. Finally, the World Bank clearly states that certification schemes must be designed to avoid conflict of interests; this demand is violated by the CSA, PEFC, and SFI, as the decision-making structure is clearly dominated by the forestry sector.

Furthermore, the SFI, CSA, PEFC and MTCC all allow for forest management practices, widely seen by the environmental and social NGO community as being non-conducive to sustainable forest management. These include large-scale clear-cuts, the use of genetically modified trees, and the conversion of (old growth) forests to tree plantations or other land uses. The PEFC scheme is known to have certified the logging of the last few stands of old growth forests in Scandinavia and violated customary rights of Sami people in Lapland; the SFI has certified forestry practices which are seen as the most destructive in the US, and the MTCC has certified logging operations in forests without the authorisation of indigenous groups living in these areas.

Attached (Annex 1) is a short analysis of why FERN believes that these schemes do not yet meet minimum requirements for a credible consumer label. By endorsing these schemes as providing "sustainably produced" timber, the CPET process has seriously undermined progress towards true sustainable forest management.

With regard to legality: Verifying legality is often seen as a first step towards certifying sustainability, including in the approach chosen by the UK Government. However, several studies have pointed out problems with this approach. A recent final draft of a report by SGS Global Trade Solutions, written for the World Bank/WWF Alliance, states:

The same report points out that improving the "current rules and regulations" may not be adequate to detect illegal logging and to prevent fraud. Concerning certification in Africa, the report states:

Another World Bank report, [12]clearly states the need for physical segregation of certified products from non-certified products throughout the chain from forest to retailer, as well as the need for independent monitoring of the chain of custody to detect illegal practices. If a label endorsing a forest product as being from well-managed forest is to be used as independent validation that the wood is legally sourced, three conditions have to be fulfilled:

(i) the forest certification standard needs a clear requirement that national laws have to be abided by;

(ii) the standard needs to be implemented effectively; and

(iii) there needs to be effective chain of custody control from the forest to the point at which the product is labelled.

In order to effectively exclude non-certified content, a credible chain of custody should include three main elements: identification, segregation and documentation. Segregation requires clients to physically keep certified wood separate from uncertified wood at all phases of transportation, production, distribution, sale and export. Accurate records need to be maintained for the production of certified products.

In conclusion, FERN believes that forest certification schemes are not ideal tools to address illegal logging practices, although some schemes are notably better at identifying illegal practices than others, depending on the standard requirements and implementation processes and the rigour of the chain of custody. Currently, only the Canadian Standards Association's scheme (CSA) and the Forest Stewardship Council (FSC) have a chain of custody that requires segregation for solid wood products and demand legality in their standards and could therefore qualify as a first step in verification of legality. However, these schemes are not (yet) based on unannounced audits, continuous sampling and independent monitoring of the chain of custody, which is seen as essential for verification of legality.

Is the use of certification schemes enough to ensure that the timber requirements of the UK and EU countries does not have detrimental impacts on forests and biodiversity in developing countries? What other approaches should be used?

The following facts are important:

— According to the World Resources Institute, at most 20% of the wood produced in the tropics is exported; whereas at least 80% is typically consumed in the local markets. In Brazil, 86.6% of all the wood produced in the Amazon region is sold on the domestic market. Certification requirements in Europe will only directly impact on those forests that export timber and wood products to the European market.

— More 90% certified forests lie in the North. Only an estimated per cent of certified forests are situated in the tropics. Hence, certification as a tool will have a larger impact on forest biodiversity in the North than in the tropics.

— Of the four major certification schemes (SFI, CSA, PEFC and FSC), only the FSC has a large number of certifications in the South. Forest certification in the tropics is not simple or straightforward. It is still relatively new concept and only a few certifications are applicable on a commercial scale. If we consider just the Amazon region, there are more than 3,000 lumber mills; only a handful has been granted (FSC) certification. As of October 2000, only five forest areas in Brazil have been certified (a total of 21.440 ha).

— The tropical certification schemes which have been created in recent years, are the MTCC (Malaysia), Cerflor (Brazil), and Certfor (Chile) and their focus is primarily on certification of plantations rather than forests. All have been highly criticised by local and national NGOs in their respective countries as certifying "business-as-usual practices" and for failing to contribute to improved forest management.

In short, forest certification will only address a certain percentage of timber imports. Forest certification is not a panacea to solve the forest crisis, other measures are needed. Clearly more is needed to ensure that the timber requirements of the UK and EU countries do not, in so far as possible, cause negative impacts on forests and biodiversity in the tropics. This varies from aid and trade measures to re-adjusting financial flows, notably investment flows, to timber procurement measures. For aid, trade and financial measures I would like to refer to FERN reports which address these issues. [13]

In terms of timber procurement it would be advisable to:

— Develop and implement strategies to reduce timber and pulp and paper consumption and increase recycling and re-use of timber, pulp and paper;

— Use, wherever possible, timber and timber products (including paper) originating in Europe. This is important to lessen the demands on forests in developing countries—specifically with growing demand in India and China—as well as to ensure a healthy European forestry industry which cannot easily compete with cheap imports of paper and pulp from the South.

— Buy FSC certified timber, when purchasing timber from the tropics cannot be avoided. Currently, the FSC is by far the least disputed certification scheme;

How satisfactory are the EU proposals for FLEGT? Will they be stringent enough to have a significant impact?

This is as yet unclear. The central activity of the Action Plan is to develop voluntary bilateral or regional partnership agreements, with the aim of creating a caucus of the main wood-producing and importing countries. Timber exporting partner countries would then "license" as "legal" all timber exports to the EU (or other importing countries joining the caucus). The licensing scheme would initially cover a limited range of products (logs, sawn timber and plywood) and eventually be extended to other categories. In order to implement these voluntary partnership agreements the Commission must draft a regulation that will form the legal basis for a licensing scheme and would allow customs to seize non-licensed timber products. Obviously this "licensing scheme" begs a lot of questions such as: "who decides what is legal"; "who decides which timber will be licensed as legal or illegal"; "who decides when and how to award a licence for legality"; "what control mechanisms need to be in place?"; "who will benefit from such a scheme?" etc.

Furthermore, there is a clear danger that the EU's efforts to curb illegal logging with such a licensing scheme will unwittingly encourage national governments to water-down their existing environmental laws rather than strengthen them. This could lead to weakening existing forest laws, or even to legalising current illegal practices, in order to satisfy the EU and other international markets. All this would certainly undermine local struggles for forest law reform and would have a significant—but negative—impact.

Nevertheless, FERN has been cautiously positive about the FLEGT Action Plan—why?

Firstly, the Action Plan highlights clearly some of the underlying causes of forest loss by mentioning the challenge to "ensure that actions to address illegal logging, particularly enhanced law enforcement, do not target weak groups, while leaving powerful players unscathed. This requires careful considerations in countries where corrupt elements within the police and judicial services operate in complicity with large-scale illegal business activities." This is the first EU document that actively promotes policy reform. Also, in terms of highlighting the underlying causes of illegal and unsustainable logging practices and hinting towards possible solutions, this Action Plan is the most progressive EU document on forests to date, thereby opening a door to discuss issues such as forest law reform, tenure rights and corruption.

Secondly, the Council of the European Union, in its adoption of the Action Plan, showed that it is fully aware of the political nature of the issue, as it called on the European Community and its member states in implementing the Action Plan to: [14]

— strengthen land tenure and access rights especially for marginalised, rural communities and indigenous peoples;

— strengthen effective participation by all stakeholders, notably of non-state actors and indigenous peoples, in policy-making and implementation;

— increase transparency in association with forest exploitation operations, including the introduction of independent monitoring;

— reduce corruption in association with the award of forest concessions and the harvesting and trade of timber.

Thereby the Council has paved the way for the implementation of the Action Plan, which could address the underlying causes leading to forest loss such as unclear and unjust tenure rights, corruption, lack of transparency and lack of participation in policy making.

Thirdly, the FLEGT process has, to date, created some political space for NGOs from the South—notably Indonesia, Ghana, and Brazil—to push for their own agenda, including most of the issues listed above.

Fourthly, the Action Plan goes beyond just the FLEGT licensing scheme and also calls for long overdue diligence procedures for financial institutions, such as export credit agencies and private banks, as well as asking member states to look into implementing other measures such as money laundering legislation and stolen goods legislation. By doing so, the Action Plan has opened a debate for reform of financial institutions and forced member states to look at their own legislation.

So, on the one hand, the FLEGT Action Plan, including the FLEGT licensing scheme, has the potential to create opportunities for civil society to push for solutions to highly political issues, such as land rights and tenure rights, transparency, corruption and often much needed forest law reform. Yet conversely, the FLEGT Action Plan, and particularly the FLEGT licensing scheme, has the potential to undermine national and local campaigns. It all depends on what the final texts look like and how the FLEGT licensing scheme will be implemented. At this stage, it is too early to say whether the FLEGT Action Plan will have a positive or a negative impact.

However, even in the best-case scenario, the FLEGT licensing scheme will only address a small part of the illegal timber trade, namely only the trade with producer countries who choose to start a FLEGT partnership agreement with the EU. As a result, FERN, jointly with Greenpeace and WWF, has argued that the FLEGT licensing scheme should be embedded in broader legislation allowing customs to seize all illegally-sourced timber and supporting partner countries to improve forest management practices. The three organisations have hired a law firm that has developed an EU Regulation which would do exactly that. [15]However, it is unclear if and how this legal proposal would be politically feasible at EU level.

Should the social impacts of forestry be taken into account within certification schemes? Would it be legal to do so?

There is no such thing as sustainable forest management without taking into account social issues including labour rights, tenure rights, and health and safety. FERN has, jointly with FoE and Greenpeace, presented a submission to the UK Environmental Audit Committee[16] (22 February 2005) stating that the UK's current timber procurement position, which excludes social criteria, is in contradiction to international agreements of which the Government is a signatory and which the Government cites in its advice to procurement authorities. Furthermore, the submission clearly outlines that in our view, there is no legal reasoning behind the UK's claim that social aspects of forest management cannot be taken into consideration due to the EU Procurement Directives. In our opinion, environmental matters related to the way in which forests are managed have the same demonstrable bearing on the quality of the finished product as social matters. It is disingenuous to claim, for example, that protection of a rare species is in some way more relevant to a contract to supply timber than a similar criterion concerning prevention of harm to forest-dependent people or protecting indigenous peoples' rights. Other EU governments, such as Denmark's, have included social elements in their procurement policies and the Dutch and German governments are considering doing so also. Therefore, we are pleased that the UK Government has stated that is revisiting this aspect of its policy, as stated by UK Minister Elliot Morley in a meeting with UK NGOs, including FERN. [17]

FERN's position was strengthened by a recent legal opinion, commissioned by WWF, looking into the matter of the use of social and other criteria in the public procurement process. This legal opinion also concludes that ". . . [social] criteria can be lawfully and properly be taken into account in a public procurement exercise if they are objectively justifiable, proportionate and non discriminatory, a fortiori where they reflect (1) generally accepted international standards and legal norms; 2) a policy stance taken in international instruments or agreements to which the EU is a signatory or which the EU has in some other way adopted or supports or (3) an objective of the EU Treaty." [18]In short, there seems to be no legal basis to exclude social criteria, such as land-rights and user rights, from timber procurement policies.

How successful has the bilateral agreement with Indonesia been in reducing the imports of illegal timber into the UK? What progress has there been on negotiating agreements with further countries?

It is too early to tell: the Tropical Forest Trust has carried out research on behalf of the UK and Dutch Timber Trade Federations showing that virtually no timber from Indonesia, entering into the EU, is legally sourced. With illegally sourced timber in the spotlight, many UK and Dutch companies are looking for other sources of timber. Subsequently, (illegal) timber imports from Indonesia to the UK have decreased drastically (by an estimated 30-50%). As there is as yet no formal partnership agreement in place between the EU and Indonesia, the impact of the bilateral agreement between the UK and Indonesia (which can be seen as a potential predecessor of an EU FLEGT partnership agreement) is difficult to measure.

Does the inclusion of forestry projects in the Clean Development Mechanisms within the Kyoto Protocol have any implications for certification schemes?

Yes, the inclusion of forestry projects in the Clean Development Mechanism (CDM) within the Kyoto Protocol has implications for certification schemes, and they are likely to be negative. None of the existing certification schemes was developed with climate change considerations in mind. As a consequence, none of these schemes is set up to assess carbon fluxes in forest ecosystems. In addition, none of the existing schemes includes any provisions to address carbon accounting. These provisions, however, should be of utmost importance to ensure that carbon sequestration objectives do not undermine the objectives of forest certification schemes, which include biodiversity conservation. Experiences to date show that carbon sequestration objectives to run counter to biodiversity conservation objectives. [19]

FERN has always argued against the inclusion of forests (and plantations) in the CDM. The CDM provides an incentive for monoculture, fast-growing species that maximise carbon uptake. This incentive for monoculture tree plantations with exotic species—that typically grow faster than native species- runs counter to efforts to increase the use of native tree species and restore single-age tree stands into multiple-age, diversely structured forests. These aspects are all the more problematic given the controversies as to whether or not carbon fluxes in forest ecosystems can even be measured with the accuracy needed for carbon accounting schemes such as the CDM. FERN, jointly with the Cornerhouse, submitted a detailed memorandum to the UK Parliamentary Environment Audit Committee's Inquiry into the International Challenge of Climate Change, which contains our position on forests and the CDM.[20]

September 2005