Certification: Case Study

Rachel ButlerEnvironmental ManagerFinnforest UK Ltd

Chatham House Feb 22nd 2007 2

0 500 1,000 1,500 2,000

Kunz (est.)Setra Group

Pfleiderer Engineered WoodSwiss Krono (est.)

Stora Enso TimberSonae Indústria Kronospan (est.)

UPM Wood Products IndustryEgger

Finnforest

Sawn timber Wood-based panels

EWP Building Systems

Distribution of wood & building material

Leading wood product companies in Europe

€ million

*Presented turnover distribution is based on estimates of Finnforest. Presented wood product categories refer to turnover of manufacturing operations, deducted by sales for own in-house manufacturing units. The rest of the intra-group eliminations have been deducted from turnover of distribution operations.

Chatham House Feb 22nd 2007 3

Industry Position Statements:

Timber is the only raw material that can potentially claim to be truly renewable & sustainable; if well-managed.

Forest certification is our USP over other materials. Provides independent verification that timber is legal & sustainable; so we support it.

Industry want assurance that the integrity of the schemes are not undermined

We do not want to lose eNGO support!!!

Chatham House Feb 22nd 2007 4

UK IS WORLD’S THIRD LARGEST IMPORTER OF ILLEGAL TIMBERA new report from the WWF has found that the UK is the third largest importer of illegal timber in the world. This seriously undermines the assumed green credentials of timber construction believes Steve Elliott, project director of the British Association of Reinforcement.

The report shows that only China and Japan import more illegal timber than the UK, which imports into the country 3.2m hectares a year – an area the size of Belgium. More than 65% of this is used by the construction industry and the majority of it originates or comes through Sweden, Finland, Russia, Estonia and Latvia.

“Illegal logging devastates forests. The extent of illegal logging from unsustainable sources from Scandinavia and Russia is considerable. The WWF findings undermine the green claims of the timber industry”, said Elliott.

BRITISH ASSOCIATION OF REINFORCEMENT

Chatham House Feb 22nd 2007 5

Recent FSC Infringement Issue:

FSC Plywood, Cymao Mill Malaysia

Indication that quality issues were not right; so glueline was being investigated

Report that timber was not of Malaysian origin as our contract specifies

Greenpeace conducted a test (ours was late!). Confirmed to be poplar core & not FSC radiata pine with Okoume veneer.

Corrective actions were put in place by FFUK to remove product from the supply chain & got on a plane to investigate

but is this an isolated case..?Picture by: A J Roby

Chatham House Feb 22nd 2007 6

FFUK: Business Implications

FFUK demonstrated due diligence in terms of Chain of Custody requirements and accept some responsibility as the buyer – but not all!!

But company implications; Loss of reputation Loss of business (didn’t happen but could have done) Loss of money – some recouped

Loss of faith in certification; if it was Meranti rather than Okoume or glueline OK, would it have ever been picked up?

Chatham House Feb 22nd 2007 7

Investigation results!

Mill: fraudulent, made a mistake or misunderstood? But are they totally to blame?

Broader issues to consider;

Difficulty in establishing species which are not easy to identify

Surveillance report in May was poor; no FSC production and no mention of Controlled Wood Standard

Little evidence of CB’s support to mill on important issues such as CWS; questions on validity of FSC certificate.

Many sheets were produced & not picked up FFUK visited another mill…CWS…no understanding &

unclear advice from CB

Chatham House Feb 22nd 2007 8

Preventing Misunderstanding & Fraud

Inconsistent messages/auditing from CB’s could be addressed through training, ensures baseline knowledge with auditors & they understand new standards e.g. CWS

Review guidelines for audits e.g. no auditing when there is no production?

Vary frequency of audits with perhaps more desk-based/documentation assessments based on;

Value of products – commercial risk Country Risk

Regular reconciliations by CB’s between certified product sold & certified purchased by each certificate holder; possibly desk based to cut costs?

Chatham House Feb 22nd 2007 9

“Tweaking of CoC requirements”…We can do that!

FSC Controlled Wood Standard – great concept & fully support it!

Implementation still in early days but evidence, so far, suggests understanding limited, CB’s interpretations different.

Answering trade/customer questions……a black hole!

PEFC Controversial Sources – legality only! Moving more into high risk countries needs to go further;

same issues will be encountered? Listening to customers and eNGO’s!

Consider joint initiatives e.g. training & Chain of Custody Qualification?

Chatham House Feb 22nd 2007 10

Cymao; on a happier note…………

Tropical Forest Trust & WWF have agreed to work together and issue

Cymao with a joint action plan under the Timber Trade Action Plan

& Global Forest & Trade Network

Thank you

Contact: rachel.butler@finnforest.comTel: + 44 (0) 7710 998 680