House of Commons - Environmental Audit

Select Committee on Environmental Audit Second Report

THE NATIONAL APPROACH: CENTRAL POINT OF EXPERTISE ON TIMBER

60. The Government's approach to addressing the use of illegal and unsustainable timber within the UK has been to lead by example and focus on central Government procurement. Central Government departments are estimated to purchase 20% of all timber bought in the UK. The overall figure including all local authorities and other governmental bodies could be as high as 40%. However as there is no centralised data collection of what is purchased by governmental bodies (for all procurement spend, not only timber) this is a very rough estimate. Despite this lack of information it can be concluded that governmental spend has a significant influence on the timber trade in this country. As a result there have been longstanding campaigns from organisations such as Greenpeace and Friends of the Earth aimed at ensuring Government projects lead by example by sourcing only sustainable timber, and well-publicised efforts have been made to highlight that this has often not been the case.

61. Until July 2000 Government departments were subject to voluntary guidance on their timber purchasing. This changed with the announcement to the House of Commons by Michael Meacher MP, Minster of State for the Environment, that there would be a binding requirement on departments to "actively seek to buy from sustainable and legal sources".[67] However, despite this, it was concluded by our predecessor Committee that there was no systematic or even anecdotal evidence of any significant change in the pattern of procurement in the two years following that announcement. As a result the 2002 EAC Report on Timber Procurement included in its recommendations that the Government should by the end of that year set a sustainable timber procurement policy as a priority; establish a clear criteria for the assessment of certification schemes and provide definite guidance to procurement officials.[68]

62. In its response to the Timber Report the Government, in July 2003, announced that it would be setting up a Central Point of Expertise on Timber (CPET) to facilitate implementation of actions recommended by consultants and officials.[69]We very much welcome the changes in Government policy on sustainable timber procurement that have been put in place since our predecessor Committee's report in July 2002. We also recognise the personal commitment of the Minister, Elliot Morley MP, to the subject and we very much welcome his determination to continue to tackle this very important issue.

Timber purchasing in Government

63. According to the Sustainable Development in Government (SdiG) 2004 report, around £2.5 million was spent on timber in 2003-4 by government departments.[70] How accurate these figures are is questionable as five Departments (DWP, DfT, FCO, CO and DCA) did not provide data on their purchases of construction timber and seven other Departments (DfES, DoH, DTI, ECGD, HMT, LOD and ODPM) reported zero spend. Of the £2.5 million, £885,278 was spent on construction timber from a recognised certified source and a further £898,000 was spent on construction timber with evidence of sustainable and legal sourcing but not certified. This represents 71% of total spend. Two Departments (DCMS and HO) spent a total of £32,260 on construction timber with no evidence of sustainable and/or legal sourcing. The MoD spent a total of £800,000 on construction timber but was unable to break down its sources. Total spend on manufactured timber products by Departments was reported as £17.5 million. Of this, 78% was spent on timber products from a recognised certified source and 19.5% was spent on timber products with evidence of sustainable and legal sourcing but not certified. A total of 2.5% had no evidence of legal sourcing. When considering the above figures it must be remembered that, although performance appears to be improving, both ourselves and the National Audit Office have questioned the robustness of the data provided by departments on procurement in the past.[71] Indeed the problems with this data have been acknowledged by the Minister who stated that "there are some issues that we need to address in relation to how individual departments collect a range of data, not just on timber, and how it is made available both to the Government and indeed to the EAC. I think we have some work to do on that."[72] This is extremely disappointing particularly as it is an issue that was raised by our predecessor Committee three years ago, and acknowledged by the Government in its response two years ago when it stated:

The Government also set out the need for a comprehensive system of recording and reporting timber spend to a central point where the information would be used to inform resource requirements, determine appropriate targets and shape future policy developments. With this in mind, whilst we welcome the news the Government intends to commission ProForest, and independent consultancy that runs CPET for DEFRA, to audit a sample of departments to assess the quality of the information on which the reporting on timber purchasing in the Sustainable Development in Government is based, this seems far too little far too late. It seems incredible to us that the complete lack of reliable data, clearly identified as a fundamental hurdle to improving sustainable timber procurement at least four years ago, and recognised as such by the Government, has yet to be properly addressed.

64. The Government needs to set out a clear strategy to address this lack of data for all procurement, ideally within SDiG. In the meantime Central Point of Expertise on Timber (CPET) should lead the way by focusing on timber procurement and we would like to see set out in detail how this will be done.

Certification Schemes

65. CPET was tasked, once set up in December 2003, with firstly assessing the five internationally recognised certification schemes most commonly used by departments for their ability to meet the Government's criteria for sustainability and legality. These criteria were compiled, following consultation, by ProForest.

Certification schemes work by setting forestry management standards that have to be met by organisations who own forest concessions or process timber and who seek certification. These standards are assessed by accreditation bodies that have been accepted by the certification schemes as being competent in carrying out the work. The Rainforest Alliance, for example, has accreditation for assessing compliance with FSC standards. A clear and transparent Chain of Custody (CoC) and rules regarding labelling and claims made for timber must also be enforced to ensure that claims made for timber at point of sale are true.

66. Timber certification, or Category A proof, as it is referred to by CPET, cannot be exclusively used to decide on a supply of timber, as it would be in contravention of WTO trade rules by discriminating against timber suppliers that were not able to provide a certificate under any of the approved schemes. Furthermore certification only covers 10% (300 million hectares) of the world's total productive forest area, mostly in temperate forests. Many of those forests that are in most need of protection and sustainable management are in tropical areas and not certified. As a result a Category B proof of legality and sustainability will allow departments to purchase timber that carries alternative proof of its sustainability and legality. Whilst extensive work had been done to assess acceptable Category A proof, the standard of allowable proof for category B has yet to be set out by CPET.

67. Reliable certification is recognised as the easiest method for ensuring the environmental credentials of any timber and timber products purchased. There are a large number of certification schemes worldwide, which generally fall into two categories: national schemes and those that are international in scope. The first international certification scheme, the Forest Stewardship Council (FSC), was set up specifically to address the need for a credible way of determining whether timber has been sourced and processed sustainably. The FSC came into existence in 1993 and certified its first timber in 1996. It currently certifies over 55 million hectares of forests and estimates the global market of FSC certified timber at US$5 billion of which the UK market constitutes US$1.7 billion.[74] Throughout our inquiry the FSC was held up as the "gold standard" of forest certification both for the extent of stakeholder involvement in its processes and the degree to which it takes into account environmental and social considerations. Indeed Greenpeace told us that " the FSC is the only internationally recognised forest certification scheme on the market that can give rigorous and credible assurance that timber products come from well managed forests".[75] However, Simon Fineman from Timbmet told us that while FSC is the gold standard "it is a very difficult gold standard for certain areas of the world to aspire to".[76]

68. The second major international certification scheme is the Programme for the Endorsement of Forest Certification (PEFC) schemes. The PEFC describes itself as an independent, non-profit, non-governmental organisation, which promotes the sustainable management of the world's forests through independent, third party certification and which currently certifies 123 million ha of forests. It works as a global umbrella organisation for the assessment and mutual recognition of national forest certification schemes. The PEFC (then the Pan European Forestry Certification) Scheme was set up in 1999 when it was seen by some as a response by the European timber industry angered by what it saw as interference from environmental groups and retailers.[77] However it has also been pointed out to us that FSC's original approach was not particularly appropriate for small forest owners, particularly in Nordic countries and this is one of the issues PEFC addressed.[78]

69. There are a large number of national schemes. However, the majority of these now come under the PEFC umbrella or are attempting to do so. As Saskia Ozinga from Fern told the Sub-Committee:

The array of different certification schemes and their different groupings, whether national or international, cause confusion in the market:

70. This is a clear illustration of the need for simplicity to help increase customer awareness and encourage responsible purchasing. Ideally we would have one international body that assured the legality and sustainability of any timber on the market by setting a minimum—stringent—standard for all certification schemes to meet. Unfortunately, as we have seen, this is very unlikely to arise in the near future. Failing this, the EU could have a role in creating an EU-wide sustainable and legal timber label. Unfortunately, the desirability of such a role is not accepted by the Commission, which told us:

We disagree with this position. The problems associated with illegal and unsustainable timber in Europe are too serious and too urgent to rely on market-based mechanisms to produce a clear and meaningful timber certification system which at the moment, with the FSC, PEFC and the large number of national schemes, is far from reality.

71. Failing any intervention we would hope to see the approach and standard used by FSC becoming the target for all other certification schemes, such as PEFC. Given the difficulties acknowledged by many in achieving FSC's high standards quickly, we would also like to see a phased approach to certification introduced which would allow companies making progress towards certification to be labelled as such, as long as progress was clear and continuous and certification was achieved within a set period of time. This would also assist producers in developing countries that have a long way to go to achieve certification.

CPET's Criteria

72. CPET carried out a desk based assessment of the following certifying organisation's policies:

Forest Stewardship Councils (FSC)

Programme for the Endorsement of Forest Certification Schemes (PEFC)

Canadian Standards Association (CSA)

Sustainable Forestry Initiative (SFI)

Malaysian Timber Certification Council (MTCC)

Of the above CSA, SFI and MTCC are now all members of the PEFC assembly, the scheme's governing body, although only the CSA and SFI schemes have been endorsed as conforming with PEFC standards. This raises the issue of how the MTCC can be a member of PEFC's governing body despite its scheme not currently meeting the required standard for endorsement.

73. ProForest firstly set out 26 criteria it would use to assess any certification schemes.[83] The criteria were then scored as 0 (inadequately addressed and not accepted), 1 (partially addressed) or 2 (acceptable). A score of at least 1 was required for all criteria relating to legality for a scheme to be deemed to guarantee legality. A score of 75% or more including at least a score of 1 for all criteria applicable to sustainability was deemed to guarantee sustainability. ProForest's argument for limiting the scoring system was that it made the process less subjective:

The proposed criteria were reviewed by departments, by the certification schemes involved and by an advisory body that included members from both industry and NGOs. All apparently supported the majority of the criteria.[85]

74. Whilst simplicity is always something to be welcomed wherever possible, in this case the scoring system is too simple to give meaningful results. Limiting the scores to three possibilities has made the process much less informative and much less useful than might have been possible as it has combined in one single category those certification schemes that are doing some work towards meeting a criterion together with those schemes that are close to fully meeting the criterion. Since the publication of ProForest's conclusions NGOs have been critical of the endorsement of some schemes, of how some of the criteria have been interpreted and of the scores awarded to the different certification schemes. Given the narrow range of scores used, which can encompass such varying performance, these disagreements were inevitable.

SOCIAL CONSIDERATIONS

75. Sustainable development has three equal strands: social, environmental and economic. It is therefore of great concern to us that the Government's current interpretation of the EU rules governing procurement do not allow social considerations to be taken into account when awarding a procurement contract. This means that the assessment of the various forestry certification schemes did not include an assessment of how social issues, such as the rights of indigenous people, are dealt with. The FSC is currently the only certification scheme that does this comprehensively. Many environmental groups and members of the timber industry, such as Timbmet, argue that a forest cannot be said to be sustainably managed if it does not protect the rights, health and livelihoods of people who live in or adjacent to forests and are dependent on them. We would agree.

76. We therefore question whether it is possible for the Government to state that it has a sustainable timber policy—legal, yes—if the social implications of how and where it purchases timber are not a consideration. As it stands sustainable timber procurement is a misnomer.

77. We were told by the Minister that "my advice is that it is not, in terms of contracts, legally possible to insist upon the social element in relation to sustainable forestry management".[86] Denmark, one of the EU Member States, which along with the UK has a more advanced sustainable procurement policy, does allow social considerations to be taken into account. Commenting on Denmark's position Mr Morley stated that "Denmark have taken a slightly different approach, although their approach only applies to tropical timber…I understand that Denmark are considering applying this criteria in their definition of sustainability as a compulsory requirement".[87] We urge the Government to seek clarification regarding the basis of the Danish approach and the EU position on the inclusion of social considerations in procurement contract. Furthermore, given that the decision not to include social considerations for once appears to be unrelated to restrictions under any WTO agreement, the Government must work hard within the EU to change policy and remove these restrictions, should it become clear that they are real rather than apparent.

CPET's Conclusions

78. CPET's conclusions were that FSC and CSA certification schemes gave assurance of legality and sustainability. SFI, MTCC and PEFC were considered to give assurance of legality though not sustainability. Following these conclusions the SFI and PEFC schemes modified their procedures and are now deemed to be proof of sustainably sourced timber. These conclusions contrast with the views of NGOs such as WWF, Fern and Greenpeace, and other bodies such as the Tropical Forest Trust, who consider the FSC to be the only scheme stringent enough to offer a guarantee that timber purchased has been harvested sustainably. This disagreement is based on three issues: the lack of inclusion of social considerations; the reliability of a paper based assessment and the environmental record of some of the certification schemes.

79. Firstly, regardless of what is or is not allowed under EU rules, a certification scheme that is not judged on its social impacts cannot be considered to have been fully assessed for its sustainability. As we have made clear we agree that one of the integral aims of any sound forest and timber policy must be to protect the rights of those indigenous and other people who depend on healthy forest ecosystems for their livelihood. Secondly, assessing a certification scheme on what it sets out on paper as its approach to sustainability is not sufficient to guarantee accurate assessment. Though we can understand the approach taken by ProForest—a thorough assessment of practice on the ground would be prohibitively costly and time-consuming—it is an issue that cannot be ignored. Whilst we would not expect CPET to assume the role of watchdog, we would expect it to reassess its conclusions should any evidence be brought to its attention regarding how schemes implement their polices in practice, which calls into question legality or sustainability.

80. Lastly, there are concerns that although many—if not all—of the schemes may be proof of legality they are in actual fact endorsing many unsustainable practices. For example Greenpeace states that PEFC endorses the Finnish Forest Certification Scheme (FFCS) (which itself has submitted a memorandum to the Committee) despite its logging of some of the few remaining Finnish old growth forests on disputed land that is being claimed as belonging to the Saami people. The SFI endorses schemes where forests containing endangered species are being logged and certifies timber that comes from areas that are being completely cleared for development. The CSA allows logging companies to set their own forest management standards, with no minimal agreed standard. Currently its rights to log 13 million hectares of Canadian forest are being disputed by environmental and indigenous groups in the Canadian courts.[88] The MTCC raises the most concerns. Greenpeace has published a report entitled Missing Links: Why the MTCC Certificate doesn't prove that MTCC timber is either legal or sustainable. The report highlights the lack of stakeholder consultation in Malaysia when concessions for logging are granted and that the resulting certificate is issued on a state-wide level (therefore endorsing widely variable methods of management offering no guarantee of sustainable management practices). It also expressed serious concerns regarding a very weak Chain of Custody (CoC) from log stump to processing mill, which makes it particularly easy for illegally logged timber to enter the supply chain. In its memorandum Greenpeace told us that "by accepting CSA, SFI, and PEFC certification schemes as evidence of legality and sustainability and MTCC as evidence of legality, CPET is giving a veneer of respectability to schemes that fail to recognise the rights of indigenous people, to protect forests of critical importance that have a weak chain of custody tracing and no third party auditing. It is, in effect, driving procurement officers to certification schemes that certify timber from destructively logged sources."[89]

PROGRAMME FOR THE ENDORSEMENT OF FORESTRY CERTIFICATION

81. Whilst we support the approval of the FSC by CPET and are supportive of its work in assessing a variety of schemes we do have some concerns regarding the endorsement of PEFC. As an umbrella scheme it encompasses a large number of different national schemes and it is unclear whether all of these achieve a common minimal standard. When asked what minimum standards PEFC requires of members during our evidence session no answer was forthcoming. Since then PEFC has written to us setting out how various standards are applied in different parts of the world by its members. This however still begs the question of why PEFC does not have in place a clear set of principals and standards that apply to all members. This would ensure that—from wherever PEFC certified timber was sourced—it would come with a clear guarantee of what exactly it represents. That this is not the case is troubling. As we were told by FERN:

If you say: "Is the PEFC a greenwash?" my answer would be: "In some countries, yes; in other countries, no." That is an intrinsic problem for a scheme which has one label and one logo.[

Given this it is difficult to see how it is possible to endorse the scheme as a whole, without having concerns about the different standards applied in different countries. It also raises the question of what would happen if it became clear that one or more of the national schemes were not conforming to DEFRA's sustainability or legality standards. Would the PEFC be removed from CPET's approval list as a whole and, if so, what is the value of approving it rather than the schemes individually? If under such circumstances, CPET were not prepared to remove PEFC as a whole from the approved list then it makes a travesty of the whole process. Procurers purchasing timber bearing the PEFC logo would do so under the impression that they were purchasing sustainable timber when it may be nothing of the sort.

82. Our concerns are partly addressed by CPET's decision to review PEFC's approval within 6 months. However this is not enough, unless some form of assessment is carried out of some of the schemes it covers. In particular CPET should pay special consideration to cases where the legality of a logging concession is being called into question in the courts or there are concerns regarding the extent of logging in old growth forest areas. CPET should make clear to PEFC that it would be desirable for it clearly and simply to set out the minimum standards it expects all its national members to conform to if it wants continued approval of its scheme.

CATEGORY B PROOF

83. We understand from DEFRA's evidence that the criteria for Category B proof of sustainability and legality of timber are in the process of being developed. We absolutely support this work, not only from a WTO perspective, but because, as pointed out several times during evidence, many of the forests that are most in need of protection from damaging harvesting are in tropical areas where there is little hope of achieving certification for a significant amount of time. Given the concerns raised regarding CPET's assessment of certification schemes, it is vital that any category B assessment is thorough and CPET gives clear guidance on what will be considered acceptable and clear proof of legality and sustainability. Mr Andy Roby, from the Timber Trade Federation, told us what he would consider acceptable proof of legality in light of his experience of working in Cameroon:

I would ask to see evidence that concessions have been allocated legally, I would ask to see evidence that the taxes have been paid and that there is some sort of tracking back according to the government system, so three pieces of paper, and that, to me, would constitute in the first instance Category B evidence of legality of timber from Cameroon.[

With regard to proof of sustainability, where no certification scheme was in place he said:

84. It is clear from the above that providing proof of legality and sustainability, other than by certification, will be complex. Indeed, it is difficult to see how untrained procurement officers will have sufficient knowledge or experience to be able to judge for themselves. Our view was confirmed by Timbmet who told us they have found that:

Because of this we would hope the advisory role of CPET, particularly its helpline, will include practical assistance for procurers when it comes to judging whether proof provided is acceptable. It is important that whatever form Category B proof takes, CPET establishes a clear and comprehensive method of assessment that really delivers legality and sustainability and leaves no room for confusion amongst suppliers or procurers regarding what is required. It is also vital that CPET offers practical support to procurement officers in making judgements as to whether or not proof provided is acceptable.

85. In the same way that CPET's focus on certification schemes has resulted in worldwide changes as to how such schemes carry out the work, we would hope to see credible Category B criteria encouraging major suppliers of hardwood timber to have a robust chain of custody in place to ensure the legality and sustainability of their supply. Progressive timber companies have proved that it is possible to do so and are likely, very deservedly, be at an advantage when supplying Government contracts in future. However even companies such as Timbmet have recognised that it is impossible to guarantee that all the timber it supplies is legal because despite all the systems that have been implemented "the market at the moment is just so flooded with illegal logging".[94] Yet again this makes a very strong case for legislation that prevents illegal timber entering the market in the first place.

LOCAL AUTHORITIES AND NDB

86. The significant buying power amongst all areas of Government, including local authorities and non-departmental bodies make it imperative that every effort is made to include all these bodies within the scope of CPET's work. However, we are disappointed that there appears to be little appetite within Government to oblige local authorities to purchase their timber sustainably. We do not see why this should be the case. From an international perspective—if VPAs are to succeed—there is a need for a large and clearly defined market for certified products. There needs to be an obligation on the part of local authorities to buy sustainable timber, and the Government should enter into discussions with the Local Government Association and other bodies to help expand the market for sustainable timber and timber products and support the underlying drive for all this work: protecting and preserving the world's forests. We welcome the Minister's assertion that he is keen to extend the standards set for Central Government to other public bodies, and that he is taking action to do this. We would be very interested in hearing what precise form this action is taking.

TIMBER PROCUREMENT ACROSS EUROPE

87. In the absence of any legislation, effective Government timber procurement is the most powerful tool available to reduce the levels of illegal timber consumed within the EU. However, for procurement to become a truly valuable tool in protecting the world's forests there needs to be effective efforts across the EU to co-ordinate timber procurement policy. This would provide a common standard for timber producers and importers to aim for. It would also provide a very significant common market that would act as an incentive to implement the required standards of proof of legality and sustainability. The fact that as already highlighted only five countries, Denmark, France, Germany, Netherlands and the UK, have put policies in place is discouraging. However, other countries such as France and Belgium are beginning to show some interest in this issue and we hope to see further efforts being made within the FLEGT Action Plan to increase the number of Member States putting sustainable procurement policies in place.

88. Every effort is necessary to ensure a harmonized timber procurement policy across Europe. We welcome DEFRA's efforts to engage with other EU members on the issue of Government procurement and look forward to hearing how it intends to take this agenda forward with its European partners. We would however caution against implementing any common European standard that resulted in a reduction of the standards already put in place by the UK Government.

CPET's Future Work

89. The aim of CPET should be to put in place for the Government an exemplary timber procurement policy that is effective and has clear and measurable impacts. It should also aim to facilitate the creation of an educated procurement workforce that understands the issues surrounding timber and how to resolve them on a day-to-day basis. CPET offers by far the most advanced form of sustainable procurement advice within Government. As such a pioneer we are hoping to see it have significant impact. We also expect it to be used as a tool by DEFRA, OGC and all those involved in procurement, with the hope that what is learnt through improving the Government's procurement process for timber can be applied across all other areas.

90. There has been some attempt to recognise those timber producers and suppliers that are working towards sustainability and certification, but have yet to achieve it. Timbmet told us about their work on an Independently Verified Progress mark which rewards progress towards FSC certification. FSC told us of their recent approval of a modular, approach to achieving certification. The Tropical Forest Trust, financed by the private sector, works with concession managers to help them achieve FSC certification. WWF is doing the same with its WWF-Forest Trade Network. All of these instances recognise that it is important to identify and assist those producers who are working towards achieving sustainability. Notably all these organisations are working towards achieving FSC certification, rather than any other scheme. We encourage CPET to examine ways in which departments and procurers can be encouraged to purchase timber and timber products from producers working to achieve sustainability, over those simply achieving legality, when sustainable products aren't available. This should include the introduction of a third category of timber, above legality and below sustainability, of 'progressing towards sustainability' to be included in guidance as soon as possible.

91. It is also vital for DEFRA to set a clear timetable for implementing a requirement for all departments and other government bodies, local and national, to purchase only sustainable timber. In our view five years would be a realistic deadline. This would give clear signals to the market that legality is not enough and an incentive to work towards increasing sustainable timber production.

92. Setting aside the relatively long time it has taken CPET to get up and running, its creation is very welcome by us, and those campaigning and working in the timber industry. We have received praise of CPET and it's approach from industry, NGOs and even overseas timber organisations. Whatever criticism there may be from ourselves and others with regard to the detail, it is undoubtedly true that CPET's work has the potential, as has already proved to be the case, to have significant impact on timber procurement and timber production worldwide. We look forward to seeing greater positive impacts worldwide as CPET's role expands and develops in the future.

67 HC Deb, 28 July 2000, 947W Back

68 EAC, Buying Time for Forests: Timber Trade and Public Procurement, HC 792-I,24 July 2002 Back