a

Forest ProductsLegality Assurance

Supplementary Report on Chain-of-Custody Schemes

27 June 201443283791/00/02

Prepared for:Department of Agriculture

Prepared by URS Australia Pty Ltd

AUSTRALIA

DOCUMENT PRODUCTION / APPROVAL RECORD

Issue No. Name Signature Date Position Title

Prepared by Blair Freeman 26 June 2014 Sub consultant

Prepared by Jodie Mason 26 June 2014 Principal Consultant

Checked by Andrew Morton 26 June 2014 Vice President, URS Forestry

Approved by Andrew Morton 26 June 2014 Vice President, URS Forestry

Forest Products Legality Assurance Name:Chain-of-Custody Assessment

Sub Title:Supplementary Report on Chain-of-Custody Schemes

Forest Products Legality Assurance No.43283791/00/02

Status:Final

Client Contact Details:Nathan JohnsonDepartment of AgricultureGPO Box 858, Canberra, ACT 2601

Issued by:URS Australia Pty LtdLevel 6, 1 Southbank BoulevardSouthbank VIC 3006Australia

T: +61 3 8699 7500F: +61 3 8699 7550

© Document copyright of URS Australia Pty Limited.No use of the contents, concepts, designs, drawings, specifications, plans etc. included in this report is permitted unless and until they are the subject of a written contract between URS Australia and the addressee of this report. URS Australia accepts no liability of any kind for any unauthorised use of the contents of this report and URS Australia reserves the right to seek compensation for any such unauthorised use.

Document Delivery.URS Australia provides this document in either printed format, electronic format or both. URS Australia considers the printed version to be binding. Theelectronic format is provided for the client’s convenience and URS Australia requests that the client ensures the integrity of this electronic information ismaintained. Storage of this electronic information should at a minimum comply with the requirements of the Electronic Transactions Act 2000 (Cth).

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DOCUMENT REVISION RECORD

Issue No. Date Details of Revisions

01 6 June 14 Draft report

02 27 June 14 Incorporate client comments on draft report

TABLE OF CONTENTS

1 INTRODUCTION 11.1 Introduction 11.2 Background 11.3 Review scope 21.4 Report outline 22 OVERVIEW OF SELECTED SCHEMES 32.1 PEFC 32.2 FSC 42.3 The European Union Timber Regulation (EUTR) 52.3.1 PEFC and the EUTR 52.3.2 FSC and the EUTR 63 ASSESSMENT METHODOLOGY 83.1 Overview of approach 83.2 Review of key elements of COC schemes 83.3 Review of assessment criteria 93.4 Consideration of other relevant criteria 103.5 Assessment scorecards 133.6 Review of information sources 133.7 Guidance on assessment outcomes 144 ASSESSMENT FINDINGS 164.1 PEFC 164.1.1 Verification requirements 164.1.2 Audit requirements 184.1.3 Governance requirements 204.2 FSC 224.2.1 Verification requirements 234.2.2 Audit requirements 254.2.3 Governance requirements 275 CONCLUSIONS 296 LIMITATIONS 30

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TABLESTable 3-1 Assessment criteria for COC schemes, URS 2010 9

Table 3-2 Alignment of assessment criteria with other relevant criteria 10

Table 3-3 Guidance on scoring against assessment criteria 14

Table 4-1 Assessment of PEFC verification requirements for COC schemes 16

Table 4-2 Assessment of PEFC audit requirements for COC schemes 18

Table 4-3 Assessment of PEFC governance requirements for COC schemes 20

Table 4-4 Assessment of FSC verification requirements for COC schemes 23

Table 4-5 Assessment of FSC audit requirements for COC schemes 25

Table 4-6 Assessment of FSC governance requirements for COC schemes 27

APPENDICESAppendix A Assessment scorecards

Appendix B Assessment scoring for COC schemes

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ABBREVIATIONS

Abbreviation Description

ASI Accreditation Services International

COC Chain-of-custody

DAFF The (previous) Australian Government Department of Agriculture, Fisheries and Forestry

DDS Due diligence system

the Department Australian Government Department of Agriculture

EN English (version of standard)

ETTF European Timber Trade Federation

EU European Union

EUTR European Union Timber Regulation

FLEGT Forest Law Enforcement, Governance and Trade

FSC Forest Stewardship Council

IAF International Accreditation Forum, Inc.

IEC International Electrotechnical Commission

ISEAL International Social and Environmental Accreditation and Labelling

ISO International Standards Organisation

OCP Online Claims Platform

PEFC Programme for the Endorsement of Forest Certification

ST or STD Standard

URS URS Australia Pty Ltd

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1 INTRODUCTION

1.1 Introduction

This supplementary report provides an assessment of the leading chain-of-custody (COC) certification schemes operating globally to inform and provide further support to the Australian Government Department of Agriculture (the Department) in the application of the regulations under the Illegal Logging Prohibition Act 2012.

This update assessment is focussed on the COC schemes operating under the global forest certification programs administered by the Forest Stewardship Council (FSC) and the Programme for Endorsement of Forest Certification (PEFC).

For definitional purposes, COC certification from forest to end-user ensures that forest management certified materials and products have been checked at every stage of processing so that customers purchasing labelled products can be assured that they are sourced from certified, well-managed forests.

1.2 Background

In 2009, the then Department of Agriculture, Fisheries and Forestry (DAFF) engaged URS Australia Pty Ltd (URS) to develop a framework for differentiating legality verification and COC schemes operating across the Asia Pacific region. URS completed this study in 2010 and prepared a comprehensive report titled ‘Legal Forest Products Assurance: A framework for differentiating legality verification and COC schemes.’

The 2010 report provided DAFF with a comprehensive assessment of legality verification and COC schemes operating at that time. This assessment included consideration of the PEFC and FSC, two of the leading forest certification programs operating globally, but only to the extent of their coverage and representation within the Asia Pacific region.

In 2013, DAFF engaged URS to prepare a supplementary report incorporating an update on developments relating specifically to the timber legality frameworks operating globally under the PEFC and FSC forest management certification programs, as well as the EU Forest Law Enforcement, Governance and Trade (FLEGT) licensing scheme, which had advanced significantly in the intervening period. That supplementary report, titled ‘Legal Forest Products Assurance: Supplementary report on selected timber legality assurance frameworks’, provided an assessment of the rigour and robustness of these three timber legality frameworks at the global level, as distinct from the related national schemes and standards that are endorsed or otherwise recognised by these global (umbrella) frameworks.

In 2014, the Department engaged URS to prepare this second supplementary report, incorporating an update on developments relating specifically to COC schemes operating globally under the PEFC and FSC forest management certification programs, and in particular the rigour and robustness of these COC schemes.

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1.3 Review scope

As was the case for URS’ 2013 supplementary report on timber legality frameworks, this review of the leading COC schemes reflects an assessment at the global level, as distinct from the related national schemes and standards that are endorsed or otherwise recognised by these global (umbrella) frameworks, or those schemes or standards that are in the process of implementation.

This supplementary report on COC schemes is based on the same set of assessment criteria developed by URS for the previous report in 2010. This report has also considered other comparative studies, published since 2010, which have used assessment criteria to assess timber legality and COC schemes. The other relevant criteria available in these studies were found to be broadly consistent with the criteria developed previously for the Department. As a result of this finding, URS considers the assessment criteria from the 2010 study continue to provide a sound basis for assessing the rigour and robustness of legality verification frameworks.

1.4 Report outline

This supplementary report comprises:

an overview of the COC schemes and relevant developments in recent years (Section 2);

the methodology used to assess these COC schemes, including the development and application of the assessment criteria (Section 3);

an assessment of both of the COC schemes against the criteria (Section 4); and

a synthesis of the assessment findings, followed by conclusions in the implementation of relevant regulations (Section 5).

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2 OVERVIEW OF SELECTED SCHEMES

This supplementary report provides an update assessment of the COC schemes managed by the two programs operating globally – the PEFC and the FSC. While there are other COC schemes in operation across the Asia Pacific and other regions, the PEFC and FSC are by far the most prominent forest certification schemes worldwide. On this basis, they have been selected by the Australian Government for particular consideration in the application of the regulations under the Illegal Logging Prohibition Act 2012. A brief outline of these two schemes and recent policy changes is presented below.

2.1 PEFC

The PEFC was established in 1999 and is an international non-profit, non-governmental organisation that promotes sustainable forest management through independent third-party certification against credible standards. PEFC operates as an ‘umbrella’ organisation. It works by endorsing national forest certification schemes developed through multi-stakeholder processes and tailored to local priorities and conditions. Each national forest certification scheme undergoes third-party assessment against PEFC's international standards to ensure consistency with its international requirements.

Currently the PEFC scheme encompasses 37 national members and 34 endorsed national certification schemes, representing over 250 million hectares of forest area [PEFC Facts & Figures – online: pefc.org/about-pefc/who-we-are/facts-a-figures]. On this basis, PEFC claims to be the world's largest forest certification program. National members in the Asia Pacific region include Australia (the Australian Forestry Certification Scheme), Malaysia (the Malaysian Timber Certification Scheme), and most recently China (the China Forest Certification Scheme); while the Indonesian Forestry Certification Cooperation initiative has also applied for PEFC endorsement.

The PEFC COC standard requires a due diligence system to be implemented to minimise the risk of material originating from controversial sources. It incorporates a risk assessment of procurement of material from controversial sources for all material received, except material delivered by a certified supplier with a claim that controversial sources have been excluded. The due diligence system and risk assessment methodologies are prescribed, and the PEFC scheme has specified indicators for the classification of risk [PEFC ST 2002:2013, Section 5]. The due diligence system is required to be a systematic process, supported by a management system with minimum requirements specified in relation to meeting International Standards Organisation (ISO) standards – and specifically, ISO 9001 or ISO 14001 [PEFC Chain of Custody – online: pefc.org/standards/chain-of-custody].

The PEFC scheme requires that only companies and forest owners that have achieved PEFC certification and have obtained a Logo Usage Licence are allowed to use the PEFC logo and label directly on a product. Use of the label for marketing is also controlled through the scheme [PEFC website – online: pefc.org/certification-services/logo-use].

The current PEFC standard for COC certification is PEFC ST 2002:2013. This standard was issued in May 2013, replacing PEFC ST 2002:2010.

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In Australia, there is the Australian COC Standard for certified wood and forest products (AS4707—2006), which is recognised by PEFC through the Australian Forest Certification Scheme. Australian Forestry Standard Limited is responsible for the development and revision of AS4707. Australian Forestry Standard Limited is an accredited Standards Development Organisation in Australia and is the Australian member of the PEFC Council.

Alongside the PEFC COC standard, AS4707 provides another route to COC certification for businesses in Australia. AS4707 is currently being reviewed and Australian Forestry Standard Limited anticipates there will be even closer alignment between PEFC ST 2002:2013 and AS4707 in the near future [Australian Forestry Standard, 2014, Media release – New PEFC Chain of Custody now in effect and draft guidance available - online: forestrystandard.org.au/announcements/new-pefc-chain-of-custody-now-in-effect-and-draft-guidance-available (accessed 19 May 2014)].

2.2 FSC

The FSC was established in 1993 and has become a global, not-for-profit organisation working on the promotion of responsible forest management worldwide. The FSC has developed a range of standards related to forest management and timber supply chain controls. It also administers product labelling of timber and timber products as third party certified against its standards.

The FSC is administered by FSC International and is implemented as an umbrella approach through National Initiatives, which promote FSC in particular countries and support the development of national or sub-national FSC standards.

To track the wood from responsibly managed forests through all stages of processing and distribution, the FSC established three types of COC certification – these are: individual COC certification; project certification; and multiple site certification.

The main standard within the FSC COC scheme is the standard for individual companies that manufacture and trade FSC certified forest products. The current standard is FSC-STD-40-004 (V2-1), which was released in 2011 – i.e. after the URS’ 2010 review of the FSC COC schemes and other legality schemes. The standard was designed to track FSC certified material through the production process from the forest to the consumer, including all stages of processing, manufacturing and distribution. Only FSC COC certified operations are allowed to label products with the FSC trademarks.

The FSC standard specifies management and production requirements for COC control with respect to sourcing, labelling (where applicable) and sale of products as FSC-certified, which provides the basis for a range of options for making FSC claims. FSC requires certified organisations to identify the origin of raw materials used in FSC-certified products, keep FSC-certified products separate from other products throughout the production process, and allow their tracking from one operation to the next.

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Small enterprises may form or join a group of operations and apply for group COC certification. FSC has designed group COC certification to make certification more accessible to small companies. The current standard for group certification is FSC-POL-40-002, which includes guidelines for certification bodies. Larger companies operating at multiple locations can choose to apply for multi-site COC certification. Assessments for multi-site certification are based on a separate standard, FSC-STD-40-003.

In Australia, FSC Australia (a National Office) provides support for the application of the FSC international standard FSC-STD-40-004 (V2-1).

2.3 The European Union Timber Regulation (EUTR)

One of the most significant policy developments impacting on the development of the PEFC and the FSC COC schemes since 2010 has been the introduction of the European Union Timber Regulation (EUTR) for the European Union (EU) market.

The EUTR came into force in March 2013, making it illegal to place illegally harvested timber and timber products on the EU market. The legislation affects all those that first place timber on the EU market, as well as traders further down the supply chain.

It is now a crime to place illegal timber on EU markets and all organisations affected by the Regulation have to adopt practices to assure that the timber or timber products they trade and supply are legal, as a minimum.

EU Operators (those first to place timber or derived products on the EU market) are obligated under EUTR to implement a Due Diligence System (DDS) to minimise the risk of putting illegal timber or derived products on the market. The DDS employed by operators is required to consist of three key elements:

(i) Informationgathering;

(ii)  Risk assessment; and,

(iii)  Risk mitigation.

2.3.1 PEFC and the EUTR

Over the past three years the PEFC has been working to ensure that its COC standards are aligned with the EUTR. The PEFC undertook a gap analysis of its COC standard in 2012, which concluded that small but important changes were needed to align with the EUTR.

Subsequent to this, the PEFC revised its COC standard. Key changes included:

Expansion of the definition of controversial sources to include EUTR-specific requirements such as compliance with trade and customs legislation in addition to legislation relating to international, national, or local legislation concerning forest-related activities;

Addition of information requirements to include all information needs of legislative and regulatory processes, such as the EUTR or Australia’s Illegal Logging Prohibition Act 2012, including details on tree species and country of harvest;

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Alignment of PEFC’s Due Diligence System (DDS) to the EUTR concept of negligible risk including: ensuring the standard distinguishes between high risk, medium risk and negligible risk; and making risk mitigation necessary for all risk categories except negligible risk; and

Development of a formal claim to identify PEFC DDS-certified material. The PEFC DDS certification is an integral part of PEFC COC certification but can now also be applied separately.

The PEFC review of its COC standard incorporated an open consultation process, conducted during 2012 and 2013. The revised standard was released in mid-2013, and came into full effect in February 2014.

2.3.2 FSC and the EUTR

Like the PEFC, FSC has sought to position its certification processes and standards as cost-effective solutions for companies operating along the timber supply chain to demonstrate regulatory compliance with the EUTR. In a recent review of the scope for FSC to address the EUTR requirements, the FSC noted a range of key initiatives including [FSC, 2013 Questions & Answers about FSC and the EU Timber Regulation (revised 11 March 2013)]:

Further development of an Online Claims Platform (OCP) - This is a web-based cloud tool to both improve and simplify control over FSC certified transactions along the supply chain. FSC certificate holders entering claims that come directly from forest management units are now required to collect and enter species and country/region of origin. This information will then be passed along and will be available to certificate holders receiving goods from a certified supplier. The information on species and origin could then be made available for inspection by the competent authorities in the EU Member States on request.

Further revision of the Chain of Custody Standard (FSC-STD-40-004) - This process includes the phase out of the exemption for “minor components” from the requirements of the COC scheme within the scope of the EUTR. It also adds the obligation for all Certificate Holders to provide the relevant information as required by the DDS to the Online Claims Platform.

Publishing of Advice Notes for key stakeholders - This includes providing ‘Questions & Answers about FSC and the EUTR’ for a range of stakeholders, and addressing National Offices and Certification Bodies to advise how they can include any additional elements of the “applicable legislation” into the current FSC list of laws within National Standards and forest certificate specific indicators.

Revision of the Controlled Wood Standard (FSC-STD-40-005) and changing its Risk Verification Program - The responsibility for risk assessment for Controlled Wood is being shifted from Certificate Holders to FSC International, who will work with FSC National Offices where they exist and otherwise with consultants. This process has commenced and will be ongoing and refined over time as more information becomes available on national risk criteria.

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In this context, one of the monitoring organisations for the EUTR, NEPCon, has recognised in its LegalSource Standard that the FSC certification scheme meets the LegalSource and EUTR requirements for third party certification schemes as outlined in the relevant Regulation [EU No 607/2012 Article 4]. The FSC has noted that competent authorities in the EU may still require an operator to justify why it is relying on FSC as a valid certification scheme to be used in a DDS [FSC website, 2014 – online: http://www.fsc-uk.org/eu-timber-regulation-eutr.82.htm (accessed 19 May 2014)].

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3 ASSESSMENT METHODOLOGY

In 2010, URS developed an assessment framework for timber importers and domestic producers to differentiate between legality and COC schemes. This framework was designed to assist importers to complete a due diligence assessment of the legal origin of timber and wood products. A significant component of the approach taken was the distillation and synthesis of key elements and common criteria and indicators for verifying legality.

This supplementary report utilises the same approach; however, it is focussed solely on COC schemes, and excludes specific consideration of the legality verification components of the timber legality framework.

3.1 Overview of approach

The approach to conducting this supplementary assessment comprised the following steps, which are discussed below:

1 Review of the key elements of COC schemes, based on URS’ previous report in 2010;

2 Review of the assessment criteria to be used to analyse the selected COC schemes, based on URS’ previous report in 2010;

3 Review of other relevant criteria available to consider the alignment and ongoing applicability of the assessment criteria developed in 2010;

4 Development of the assessment scorecards to be used for this supplementary assessment;

5 Review of appropriate information sources for each of the COC schemes to be assessed, specifically the most up to date information that is publicly available; and

6 Assessment of each COC scheme against the same set of criteria, to determine their rigour and robustness on a consistent basis.

3.2 Review of key elements of COC schemes

The three key elements of legality schemes identified within URS’ previous report in 2010 were:

Verification: The specific standards or requirements against which the COC is assessed.

Audit: The audit processes employed to assess whether requirements of the scheme have been met.

Governance: Structure and processes for standard setting and management of the scheme.

For the purpose of this report, these three key elements are used to frame the assessment of the PEFC and FSC COC schemes.

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3.3 Review of assessment criteria

A set of assessment criteria developed for the 2010 report was revised to compare the three key elements of COC schemes. These criteria are presented in Table 3-1. The criteria presented in this report exclude specific consideration of the legality verification components that were addressed in the 2010 report (In relation to the exclusion of specific consideration of the legality verification components addressed in the 2010 report: This includes the original criterion 2.2 - which was used to assess whether ‘stakeholder consultation is undertaken as appropriate during the audit’, and was applicable to legality verification schemes only – not COC schemes. For the purposes of this 2014 supplementary report, label 2.2 has been reallocated to a new criterion (refer to Section 3.4 of this report)).

Table 3-1 Assessment criteria for COC schemes, URS 2010

KEY ELEMENT ASSESSMENT CRITERIA , 2010

Verification

1. Principle: Auditable systems are in place for tracking and monitoring the flow of wood products from the forest through the supply chain

1.1. The scheme requires systematic processes to verify the origin of materials and ensure there is valid documentation that matches nominated materials

1.2. The scheme requires a COC system to track certified or verified legal wood along the certification chain, using appropriate inventory methods and documented controls

1.3. The scheme requires effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain

1.4. The scheme has a defined policy for product labelling and processes for managing associated product claims

Audit

2. Principle: Compliance with the scheme is audited regularly and the results are publicly available

1.1. Compliance with all scheme requirements is documented and maintained for audit

1.2. Not applicable (see footnote)

1.3. Audit reports and certificate holder status for the scheme are publicly reported

Governance

2. Principle: Robust standard setting processes are in place for verification and audit and for management of non-compliance

2.1. The scheme’s standard has been developed by a nationally or internationally recognised standards authority

2.2. The scheme has been developed with broad stakeholder input

2.3. There is a clear basis for establishing compliance and corrective actions for non-compliance

2.4. Auditors are independent third parties that are accredited by an independent accreditation body

Source: URS

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This supplementary report builds on URS’ previous report in 2010, and uses the same assessment criteria as the basis for reviewing selected COC schemes operating internationally.

3.4 Consideration of other relevant criteria

As part of the scope for this supplementary report, a high-level review was undertaken to identify other relevant assessment criteria that have been developed since 2010.

This review identified one other study with a set of assessment criteria that is directly comparable. In 2012, the European Timber Trade Federation (ETTF) commissioned a comparative study of a selected range of certification and legality verification schemes, including PEFC and FSC, specifically to assess the conformance of these schemes with the EUTR [Proforest, 2012, Assessment of certification and legality verification schemes. Report for ETTF. Final report, 6 December 2012].

This study, undertaken by Proforest of the UK, developed criteria for assessing a range of certification and legality verification schemes based on the definition of ‘applicable legislation’ under the EUTR, and the requirements set out in the Implementing Regulation for the EUTR (The Proforest report noted that ‘applicable legislation’ is defined in the EUTR (Article 2 (h)) as the legislation in force in the country of harvest, covering a range of specific matters, such as rights to harvest timber, and payment for harvest rights).

For the purpose of a high-level comparison, Table 3-2 presents the Proforest criteria (2012) and the indicative alignment with the URS criteria (2010).

Table 3-2 Alignment of assessment criteria with other relevant criteria

PROFOREST CRITERIA (2012) FOR EUTR COMPLIANCE

ALIGNMENT WITH URS CRITERIA (2010)

1.1 Forest standard on legal compliance

Not relevant to this study

1.2 National application of legality criteria

Not relevant to this study

2. Scheme transparency

2.1 Certification/legality verification scheme must make its requirements publicly available.

Broadly consistent with criterion 2.3

3. Certification/verification process

3.1 Certification/verification must be undertaken by a body which is accredited to evaluate against a forest management standard that covers the legality requirements.

Refer related criterion 4.1 below

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PROFOREST CRITERIA (2012) FOR EUTR COMPLIANCE

ALIGNMENT WITH URS CRITERIA (2010)

3.2 Certification/verification must be undertaken by a body whose organisation, systems and procedures conform to ISO Guide 17065 or ISO/IEC 17021:2011, or publicly available equivalent.

Refer related criterion 4.2 below

3.3 Certification/ verification audits must include review of documentation and system, and assessment along the wood products supply chain (Note: The Proforest criteria relating to ‘Certification/verification process’ is principally aligned with forest certification, and Proforest criterion 3.3 refers to “… assessment in the forest”; for the purpose of this check on alignment, URS has adopted the principle and applied the requirement, “assessment along the wood products supply chain”).

The first part is consistent with criterion 2.1; in relation to the second part, URS criteria do not explicitly require assessment along supply chain

3.4 Certification/verification audits must be carried out at least once every 12 months.

Not specifically addressed in URS criteria

4. COC

4.1 Assessment of COC must be undertaken by a certification body which is accredited to evaluate COC standard.

Broadly consistent with criterion 3.4

4.2 Certification/verification must be undertaken by a body whose organisation, systems and procedures conform to ISO Guide 17065 or ISO/IEC 17021:2011, or publicly available equivalent.

Broadly consistent with criterion 3.1, coupled with criterion 3.4

4.3 There must be a COC control along the supply chain, from the forest source to the final product.

Consistent with criterion 1.2

4.4 If mixing of certified/verified and uncertified/unverified material in a product or product line is allowed, the uncertified/unverified material must be covered by a verifiable system which is designed to ensure that it complies with relevant legality requirements.

Broadly consistent with criterion 1.2, coupled with criterion 1.3

Source: URS

URS has not conducted a detailed analysis of the Proforest criteria, nor engaged with the ETTF in relation to the application of these criteria to assessing COC schemes that may seek to provide levels of assurance of compliance with the EUTR.

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However, based on this high-level comparison, URS considers the set of criteria developed by Proforest in 2012 are consistent with the URS criteria developed in 2010. There are some Proforest criteria relating to requirements not specifically covered by the URS criteria. These are:

Certification/ verification audits must include review of documentation and system, and assessment [along the COC supply chain] (Proforest criterion 3.3) [Refer note above in relation to Proforest criterion 3.3. Note the URS 2010 study incorporated criteria that are consistent with the first part of Proforest criterion 3.3, but do not explicitly address the second part of this criterion]; and

Certification/verification audits must be carried out at least once every 12 months (Proforest criterion 3.4).

Assessment along the supply chain

In respect to Proforest criterion 3.3: the URS’ 2010 assessment criteria encompass the first part of this criterion, relating to audits including a review of documentation and systems. The second part of the criterion, in its original form, referred to “assessment in the forest”. URS has interpreted this as a requirement for a field assessment; and in the context of COC schemes, would encompass an “assessment along the COC supply chain” (URS re-interpretation for the current study).

URS notes that most forest management certification and COC schemes operating today require or strongly encourage the independent auditors to undertake in-situ assessments, in the forest and along the supply chain, respectively. However, for the purpose of clarity, URS considers it appropriate to make this requirement clear and explicit in the assessment criteria for differentiating between COC schemes. As such, it is proposed that an additional criterion be added under the Audit requirements; specifically:

New criterion: Site-based assessments within facilities along the supply chain are undertaken as appropriate during the audit.

Audit frequency

In respect to Proforest’s requirement for audits to be carried out at least once every 12 months, URS considers this would be a minimum level of frequency expected across COC schemes, including the PEFC and FSC schemes.

Other considerations

There are also some URS criteria that are not specifically covered by the Proforest criteria. These include URS criteria relating to:

The scheme requires systematic processes to verify the origin of materials and ensure valid documentation matches nominated materials (URS criterion 1.1);

The scheme has a defined policy for product labelling and processes for managing associated product claims (URS criterion 1.4);

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The scheme has been developed with broad stakeholder input (URS criterion 3.2); and

There is a clear basis for establishing compliance and corrective actions for non-compliance (URS criterion 3.3).

As a result of this high-level comparison with other available criteria, URS considers that with the inclusion of one additional criterion relating to audit requirements, the assessment criteria developed in 2010 continue to provide a sound basis for assessing timber legality and COC schemes.

For consistency purposes, these same criteria, incorporating minor amendments discussed above, were applied for this supplementary assessment of the PEFC and FSC COC schemes.

3.5 Assessment scorecards

The scoring system used in this assessment is consistent with that used on the 2010 and 2013 reports. For transparency purposes, assessment scorecards were developed for assessing the COC schemes. The scorecards used for this supplementary report are set out in Appendix A.

These scorecards incorporate the criteria that were designated as applicable to verification of legal origin and legal compliance in the 2010 report, which collectively comprised criteria for timber legality verification. The scorecards also incorporate indicators for each of the assessment criteria. The indicators were derived to provide guidance for scoring of the criteria, on a scale of 0 to 2. On this scale, a score of 0 indicates that there is no substantial compliance with the criterion and a score of 2 indicates full compliance with the criterion. A score of 1 represent partial compliance. In each case, additional notes were captured for each criterion to provide guidance to the basis for this assessment.

Recognising that the number of criteria differs between elements, the total scores for criteria for each element were converted to a normalised score out of 10. This provided a consistent basis for assessing each framework, through a comparison of assessment results across the key elements.

3.6 Review of information sources

Information sources for this review comprised publicly available information that provides specific guidance on the COC requirements of each scheme and the key elements that support these requirements – verification; audit; and governance. Specific guidance documentation includes:

Standards - e.g. PEFC International Standard – COC of Forest Based Products – Requirements (PEFC ST 2002:2013); and the FSC Standard for COC Certification (FSC-STD-40-004 V2-1 EN);

Certification directives and procedures – e.g. FSC Directive on COC Evaluations (FSC-DIR-20-011 EN); and the PEFC Annex 6 – Certification and Accreditation Procedures; and

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Other guidance information – e.g. the International Accreditation Forum (IAF) Guidance on the Application of ISO/IEC Guide 65: 1996, providing General Requirements for Bodies operating Product Certification Systems.

The specific documentation referred to in assessing the PEFC and FSC COC schemes is listed in Section 4.

3.7 Guidance on assessment outcomes

The assessment of selected COC schemes was conducted at the desktop level, using the scorecards and with reference to publicly available information for each of the frameworks at the time of this review. No consultation was undertaken by URS in assessing the schemes, other than some limited contact to obtain further information.

The scorecards prepared for this assessment assume equal weightings to each of the assessment criteria and indicators. A more definitive assessment of COC schemes would require direct inputs from relevant schemes and a broad stakeholder review of the proposed criteria and indicators.

On this basis, the assessment outcomes were grouped into broad categories relating to the level of assurance that the respective schemes can provide safe custody for timber and wood products from a known point of origin along a certified supply chain to the end user.

These categories were defined in terms of the extent to which the schemes provide ‘high’, ‘moderate’ or ‘low’ levels of assurance, as shown in Table 3-3. In this way, they provide direct guidance to policymakers and also importers on the requirements for additional information.

Table 3-3 Guidance on scoring against assessment criteria

LEVEL OF ASSURANCE

NORMALISED SCORE (SCORE OUT OF 10)*

GUIDANCE FOR IMPORTERS

High >7.5 High level of assurance that the scheme can provide safe custody for timber and wood products

Requirements for additional information about the supply chain may be minimal

Moderate 5 - 7.5 Reasonable level of assurance that the scheme can provide safe custody for timber and wood products

Further information may be required to address key areas of risk

Low <5 Low level of assurance that the scheme can provide safe custody for timber and wood products

Further information would be required to obtain a reasonable level of assurance

Source: URS; *normalised scores enable comparison on a scale from 0 (nil) to 10 (highest level of assurance).

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Using the key elements as the basis for the assessment, COC schemes were further considered in the context of both their ‘rigour’ and ‘robustness.’ For the purpose of this analysis, these terms are defined as follows:

Rigour The coverage and depth of a scheme’s processes and procedures for verification and audit against the requirements of the scheme. The assessment criteria developed under the key elements of ‘Verification’ and ‘Audit’ requirements are considered to relate directly to this measure.

Robustness A measure of the scheme’s structure and capacity to withstand external influences while also responding to industry dynamics and drivers for change. The assessment criteria developed under ‘Governance’ relate directly to this measure.

The dimensions of rigour and robustness are incorporated in this approach to the assessment, to assist policymakers and industry stakeholders in considering whether the COC schemes assessed in this report have the capacity to provide a level of assurance that the respective schemes can provide safe custody for timber and wood products from a known point of origin along a certified supply chain to the end user.

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4 ASSESSMENT FINDINGS

The two COC schemes under review in this report were assessed following the methodology outlined above, and based on publicly available information for each of the schemes at the time of this review. The assessment findings from this review are set out below.

Detailed assessment scores for each of the schemes are provided in Appendix B.

4.1 PEFC

The assessment of the PEFC COC scheme is based primarily on the following standards and technical references:

PEFC ST 2002:2013 – COC of Forest Based Products – Requirements.

PEFC ST 1001:2010 – Standard Setting – Requirements. These are the PEFC Council requirements for standardising bodies in the development and revision of both forest management and scheme-specific COC standards. These requirements are based on ISO/IEC Guide 59.

PEFC ST 2003:2012 – Requirements for Certification Bodies operating Certification against the PEFC International COC Standard.

PEFC ST 2001:2008 – PEFC Logo Usage Rules – Requirements (Second edition).

This assessment of the PEFC COC scheme has not directly considered the PEFC requirements for forest management or legality verification schemes.

4.1.1 Verification requirements

A summary of the assessment of PEFC verification requirements is presented in Table 4-4. Overall, the assessment indicates the PEFC scheme complies with all of the criteria.

Table 4-4 Assessment of PEFC verification requirements for COC schemes

CRITERIA FOR VERIFICATION REQUIREMENTS COMPLIANCE

1.1 The scheme requires systematic processes to verify the origin of materials and ensure there is valid documentation that matches nominated materials

Full

1.2 The scheme requires a COC system to track certified or verified legal wood along the certification chain, using appropriate inventory methods and documented controls

Full

1.3 The scheme requires effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain

Full

1.4 The scheme has a defined policy for product labelling and processes for managing associated product claims

Full

Source: URS

The assessment criteria for verification requirements are addressed primarily by the PEFC’s COC of Forest Based Products – Requirements (PEFC ST 2002: 2013).

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1.1 Systematic processes to verify the origin of materials and ensure there is valid documentation that matches nominated materials:

The PEFC COC standard allows timber certified to the PEFC Forest Management standard (PEFC ST 1003:2010) and other wood from non-controversial sources to be used in certified product groups. In regard to legality of certified timber, the PEFC’s sustainable forest management certification scheme was assessed in URS’ 2013 report as being fully compliant with the verification criteria.

Non-certified forest-based material is required to be sourced from ‘non-controversial sources’, the definition of which includes legal compliance, as well as others such as precluding the use of genetically modified organisms and conversion to non-forest or plantations. Legal compliance definitions require that the relevant forest activities comply with local, national and international legislation applying to forest related activities across a broad range of values including biodiversity, cultural values, health and labour issues of forest workers, indigenous and other third party rights, and payment of taxes and royalties. Compliance with the legislation of the country of harvest relating to trade and customs relevant to the forestry sector is also required [PEFC ST 2002:2013, Section 3.9].

The PEFC COC standard [PEFC ST 2002:2013, Section 4.2] requires the organisation to obtain a copy or have access to each suppliers’ forest management or COC certificate to confirm certified status of procured material. Identification of all incoming forest produce, whether certified or not, is required through an accompanying document that details the customer, supplier, product, quantity of each product, and relevant dates [PEFC ST 2002:2013, Section 4.1]. On this basis, the PEFC COC scheme is considered to comply fully with Criterion 1.1.

1.2 Appropriate inventory methods and documented controls:

The PEFC standard specifies two COC methods for tracking the origin and quantity of product inputs. These are physical separation; and a percentage based method. The organisation is required to use the method most appropriate to its product. Within the percentage based method, the standard details two methodologies for calculating the percentage of certified material. It is also specifies that generally recognised or defined and credible conversion ratios and methods must be used [PEFC ST 2002:2013, Section 6]. Records must be established and maintained of suppliers and input material and supporting documentation; inventory calculations and product sales or transfers [PEFC ST 2002:2013, Section 8.4]. On this basis, the PEFC scheme is considered to comply fully with Criterion 1.2.

1.3 Effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain:

The PEFC standard requires a due diligence system to be implemented to minimise the risk of material originating from controversial sources. It requires a risk assessment of procurement of material from controversial sources for all material received, except material delivered by a certified supplier with a claim that controversial sources have been excluded. The due diligence system and risk assessment methodologies are prescribed, and the PEFC scheme has specified indicators for the classification of risk. The due diligence system is required to be a systematic process, supported by a management system with minimum requirements specified in relation to meeting International Standards Organisation (ISO) standards [PEFC ST 2002:2013, Section 5].

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The PEFC COC standard does not specifically require the physical separation of ‘significant risk’ material from ‘negligible risk’ material. However, material assessed as representing a ‘significant risk’ is required to be further assessed through accessing additional information about the forest management unit and supply chain, and implementation of a verification program that incorporates site inspections [PEFC ST 2002:2013, Section 5.5]. Material may not be processed or traded through a PEFC certified COC unless appropriate documentation has been provided and verified to allow it to be classified as “negligible risk” [PEFC ST 2002:2013, Section 5.6.2].

URS notes the PEFC requirements for effective controls are based on a due diligence system and the application of a systematic risk assessment for the procurement of timber and timber products. As such they are aligned with Australia’s illegal logging legislation and regulations, which are also based on due diligence requirements and the need for businesses to assess and manage the risk that the timber they are importing for processing has been illegally logged. On this basis, the PEFC scheme is considered to comply fully with Criterion 1.3.

1.4 Defined policy for product labelling and processes for managing product claims:

The PEFC COC standard requires that labelling is undertaken in accordance with an international standard (ISO 14020:2000) [PEFC ST 2002:2013, Section 1], which provides requirements on the development and use of environmental labels and declarations. There is also a separate standard – PEFC Logo Usage Rules (PEFC ST 2001:2008 v2) - that details the circumstances and manner in which the PEFC logo can be used [PEFC ST 2001:2008 – PEFC Logo Usage Rules – Requirements]. The Logo Usage Rules provide detailed guidance for usage by a range of authorised users, and rules for on-product and off-product usage of a range of PEFC labels. On this basis, the PEFC scheme is considered to comply fully with Criterion 1.4.

4.1.2 Audit requirements

A summary of the assessment of audit requirements under the PEFC COC scheme is presented in Table 4-5. Overall, the assessment indicates that the PEFC scheme complies with all of the criteria, with one qualification.

Table 4-5 Assessment of PEFC audit requirements for COC schemes

CRITERIA FOR AUDIT REQUIREMENTS COMPLIANCE

2.1 Compliance with scheme requirements are documented and maintained for audit

Full

2.2 Site-based assessments are undertaken as appropriate during the audit process Full

2.3 Audit reports and certificate holder status for the scheme are publicly reported Partial

Source: URS

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2.1 Compliance with scheme requirements are documented and maintained for audit:

The PEFC standard requires that records are established and maintained for five years to provide evidence of conformance with the standard, including confirmation of supplier compliance, records of delivery of material, inventory and certified percentage calculations, sales and delivery, due diligence system records, internal audits and corrective actions taken [PEFC ST 2002:2013, Section 8.4].

Furthermore, there is a requirement for internal audits to be undertaken at least annually, covering all aspects of the standard [PEFC ST 2002:2013, Section 8.6]. On this basis, the PEFC scheme is considered to comply fully with Criterion 2.1.

2.2 Site-based assessments are undertaken as appropriate during the audit process:

PEFC’s standard Certification Bodies operating certification against the PEFC International COC standard (PEFC ST 2003:2012) specifies that certification and recertification audits are to be undertaken on-site [PEFC ST 2003:2012, Section 10.1.2]. Certificates can be granted for a maximum of five years and annual (at a minimum) surveillance audits must be undertaken. Surveillance audits are to be undertaken at the client organisation’s site; however, in some specified exceptions, document review can replace some site visits such that the period between site visits does not exceed two years [PEFC ST 2003:2012, Section 13.1.2].

Furthermore, the same requirements for Certification Bodies sets out a specific methodology when undertaking sampling for on-site audits in order to gain sufficient confidence in the compliance of multi-site client organisations with the COC requirements (refer Annex 3 – Multi-site COC certification). In these cases, site selection criteria include but are not limited to, the results of internal audits or previous certification audits, significant variations in the size of the sites and the production processes of the sites, and variations in the applied COC methods. On this basis, the PEFC scheme is considered to comply fully with Criterion 2.2.

2.3 Audit reports and the certificate holder status to be publicly reported:

PEFC’s requirements in its standard Certification Bodies operating certification against the PEFC International COC standard requires that the certification document (which may be presented as a certificate) includes the name of the client organisation [PEFC ST 2003:2012, Section 12.2.1] and is made publicly available [PEFC ST 2003:2012, Section 12.2.7]. Furthermore, all major and minor non-conformities are required to be addressed and corrective actions verified before a certificate is granted [PEFC ST 2003:2012, Section 12.1.2]. However, there is no requirement to make the certification report (or ‘Evaluation report’ in PEFC terminology) publicly available.

PEFC’s Certification and Accreditation Procedures (Annex 6) requires that a summary of the certification report for assessments against the Forest Management standard shall be made available to the public [PEFC Certification and Accreditation procedures (Annex 6), 5 October 2007]. However, these procedures are silent in respect to making the certification report for COC evaluations publicly available.

On this basis, the PEFC scheme is considered to comply mostly but not fully with Criterion 2.3.

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URS sought further information from PEFC on the reason why the COC certification report is not made publicly available. Advice provided by the PEFC’s member in Australia indicated that this matter has not been raised as an issue previously. It is assumed that this is because COC audits deal with straightforward logistical matters, whereas Forest Management audits cover a wider range of more complex and less tangible issues and are where the main stakeholder interests exist [PEFC Australia, National Secretary, pers. comm. 17 June 2014].

4.1.3 Governance requirements

A summary of the assessment of PEFC governance requirements for COC schemes is presented in Table 4-6. The assessment indicates that the PEFC scheme complies with all of the criteria.

Table 4-6 Assessment of PEFC governance requirements for COC schemes

CRITERIA FOR GOVERNANCE REQUIREMENTS COMPLIANCE

3.1 The scheme’s standard has been developed by a nationally or internationally recognised standards authority

Full

3.2 The scheme’s standards have been developed with broad stakeholder input Full

3.3 There is a clear basis for establishing compliance and corrective actions for non-compliance

Full

3.4 Auditors are independent third parties that are accredited by an independent accreditation body

Full

Source: URS

The assessment criteria for governance requirements are addressed primarily by the PEFC standard setting requirements [PEFC ST 1003:2010] and also the PEFC certification and accreditation procedures.

3.1 Scheme’s standard has been developed by a nationally or internationally recognised standards authority:

The PEFC Council, a worldwide organisation, has prepared an international standard for standards development - Standard Setting – Requirements (PEFC ST 1001:2010). This document is based on ISO/IEC Guide 59; in addition, the ISEAL Code of Good Practice for Setting Social and Environmental Standards was taken into consideration (ISEAL is an internationally recognised, non-government organisation that aims to strengthen standards to benefit communities and the environment. Online: isealalliance.org/about-us).

The standard setting requirements define the standardising body, which is the entity that is responsible for the development and maintenance of standards for the forest certification scheme. The standardising body can be a PEFC national governing body or the standardising body can be separate from the governance of the forest certification scheme.

Further to this, the requirements state the standardising body has recognised activities in standardisation (in accordance with ISO guidelines for standardisation processes). On this basis, the PEFC requirements are considered to comply fully with Criterion 3.1.

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3.2 Scheme’s standards have been developed with broad stakeholder input:

The PEFC has standard setting requirements for the development and revision of forest management and scheme-specific COC standards [PEFC ST 1001:2010, Section 1]. These standard setting requirements specify detailed requirements for consultation with a broad representation of stakeholders. It refers to the nine major stakeholder groups defined by Agenda 21 of the United Nations Conference on Environment and Development in Rio de Janeiro in 1992 [PEFC ST 1001:2010, Section 3.9] and requires that the standard setting body to identify stakeholders relevant to the scope of the standard. There are specific requirements for facilitating the engagement of disadvantaged and key stakeholders; and for broader public consultation on drafts [PEFC ST 1001:2010, Section 5].

The standard setting body is also required to have procedures for the balanced representation of stakeholders and establish a working group with a balanced representation of stakeholders responsible for standard setting activities [PEFC ST 1001:2010, Section 4]. Therefore, the PEFC requirements are considered to comply fully with Criterion 3.2.

3.3 A clear basis for establishing compliance and corrective actions for non-compliance:

The PEFC Requirements for Certification Bodies operating certification against the PEFC COC Standard defines the scope of major and minor nonconformities and observations that certification bodies can make during an assessment [PEFC ST 2003:2012, Section 3.3]. The process for establishing corrective actions is also documented. Corrective action plans must be reviewed and accepted by the certification body and the standard prescribes a maximum timeframe for completion and verification of corrective actions of three months after the surveillance audit [PEFC ST 2003:2012, Section 12.1.3]. These processes are publicly available through the standard. Therefore, the PEFC requirements are considered to comply fully with Criterion 3.3.

3.4 Auditors are independent third parties accredited by an independent accreditation body:

Under the PEFC Requirements for Certification Bodies operating certification against the PEFC COC Standard, the PEFC Council requires that COC certification shall be carried out by certification bodies that are accredited by accreditation bodies that are signatories of the Multilateral Recognition Arrangement (MLA) for product certification of International Accreditation Forum (IAF). Annex 1 – Accreditations accepted by the PEFC Council, provides further guidance, specifying that certification bodies must be accredited by accreditation bodies that are signatories of the MLA for product certification of IAF or IAF’s Regional Accreditation Groups such as European co-operation for Accreditation (EA), Interamerican Accreditation Cooperation (IAAC), Pacific Accreditation Cooperation (PAC) and Southern African Development Community in Accreditation (SADCA).

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Under Annex 1, PEFC requires that the scope of the accreditation shall explicitly cover the PEFC COC standard (PEFC ST 2002:2010) in its valid version and/or with reference to any future changes and amendments adopted by the PEFC Council and presented at the PEFC Council official website. The scope of accreditation shall also explicitly state compliance with ISO/IEC Guide 65 (subsequently replaced by ISO/IEC 17065 in 2012), which includes requirements for impartiality and independence [IAF GD 5:2006, IAF Guidance on the Application of ISO/IEC Guide 65:1996, Part G.4.2.8] and to demonstrate how the business is managed to eliminate conflict of interest [IAF GD 5:2006, IAF Guidance on the Application of ISO/IEC Guide 65:1996, Part G.4.2.24. Online: iaf.nu/upFiles/333053.IAF-GD5-2006_Guide_65_Issue_3.pdf (accessed 29 May 2014)].

Furthermore, PEFC requires national accreditation bodies to be independent from the standards setting body [PEFC website, 2014, Certification & Accreditation. Online: http://www.pefc.org/standards/national-standards/certification-accreditation-requirements (accessed 29 May 2014)] and to be members of the IAF [PEFC ST 2003:2012, Foreword ], the world association of accreditation bodies, to facilitate consistency and comparability of operations internationally. On this basis, the PEFC requirements are considered to comply fully with Criterion 3.4.

4.2 FSC

The assessment of the FSC COC scheme is based primarily on the following standards and technical references:

FSC-STD-40-004 V2-1 EN: FSC Standard for COC Certification (2011).

FSC-STD-40-005 V2-1 EN: FSC Standard for Company Evaluation of FSC Controlled Wood (2007).

FSC-STD-20-011 (V1-2) D2-0 EN: FSC Accreditation Standard for COC Evaluations (Draft for public consultation) (2013).

FSC-STD-60-006 (V1-2) EN: Process requirements for the development and maintenance of National Forest Stewardship Standards (2009).

FSC-STD-20-001 (Version 3-0) EN. General requirements for FSC accredited certification bodies – application of ISO/IEC Guide 65:1996 (E) (2009).

FSC-STD-50-001 V1-2 EN: Requirements for use of the FSC trademarks by Certificate Holders (2010).

As noted previously in this report, this assessment of the FSC COC scheme has not directly considered the FSC requirements for forest management or legality verification schemes.

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4.2.1 Verification requirements

A summary of the assessment of FSC verification requirements is presented in Table 4-7. Overall, the assessment indicates the FSC scheme complies with all of the criteria.

Table 4-7 Assessment of FSC verification requirements for COC schemes

CRITERIA FOR VERIFICATION REQUIREMENTS COMPLIANCE

1.1 The scheme requires systematic processes to verify the origin of materials and ensure there is valid documentation that matches nominated materials

Full

1.2 The scheme requires a COC system to track certified or verified legal wood along the certification chain, using appropriate inventory methods and documented controls

Full

1.3 The scheme requires effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain

Full

1.4 The scheme has a defined policy for product labelling and processes for managing associated product claims

Full

Source: URS

The assessment criteria for verification requirements are addressed primarily by the FSC Standard for COC Certification (FSC-STD-40-004 V2-1 EN) and the Controlled Wood Standard (FSC-STD-40-005 V2-1 EN).

1.1 Systematic processes to verify the origin of materials and ensure there is valid documentation that matches nominated materials:

The FSC COC standard allows the following timber to be used in certified product groups:

Timber certified to the FSC Principles and Criteria for Forest Stewardship;

Other wood from non-controversial sources through the Controlled Wood standard [FSC-STD-40-005: Standard for Company Evaluation of FSC Controlled Wood.]; and

Reclaimed material through its Reclaimed Material standard [FSC-STD-40-007: FSC Standard for Sourcing Reclaimed Material for Use in FSC Product Groups or FSC-certified Projects.].

In regard to the legality of certified timber, the FSC’s sustainable forest management certification scheme was assessed by URS in 2013 as being fully compliant with two of the verification criteria and partially compliant with two other criteria. The limitations identified related to the absence of explicit requirements for harvesting activities to comply with codes of practice; and absence of explicit recognition of approved operational plans and regulated harvestable levels.

All FSC COC certificate holders who wish to include non-certified material in products require compliance with FSC’s Controlled Wood standard. This requirement is designed to enable companies to avoid material from controversial sources, including illegally harvested wood [FSC-STD-40-005, Part A].

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The FSC COC standard requires that the organisation maintains a register of all suppliers for FSC product groups that includes product types and material categories (e.g. FSC Mix material; FSC Controlled Wood). Organisations are also required to check the scope and validity of suppliers’ certificates in relation to the supplied products; and on delivery, check that delivery documentation complies with the standard and accurately reflects the delivered material. On this basis, the FSC COC scheme is considered to comply fully with Criterion 1.1, notwithstanding the limitations of the FSC Forest Stewardship Standard identified in URS’ 2013 report.

1.2 Appropriate inventory methods and documented controls:

The FSC COC standard requires segregation of inputs to different product groups during storage [FSC-STD-40-004, Section 4.2]. It also specifies that the organisation develops and maintains conversion factors [FSC-STD-40-004, Section 5.1] for processing that results in a change of material volume or weight; and maintains a ‘material accounting record’ and volume summaries to track inputs and outputs of certified material [FSC-STD-40-004, Section 5.2]. It prescribes three different inventory methods that must be used depending on the type of product groups produced by the organisation [FSC-STD-40-004, Sections 7, 8 and 9]. Records must be established and maintained for five years for all applicable aspects of the standard [FSC-STD-40-004, Section 1.4]. On this basis, the FSC COC scheme is considered to comply fully with Criterion 1.2.

1.3 Effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain:

The FSC Controlled Wood standard allows companies to supply FSC Controlled Wood to FSC certified COC companies for the purpose of mixing with FSC certified material; while at the same time, it allows companies to demonstrate that they are implementing best efforts to avoid the trade in illegally harvested timber. All FSC COC certificate holders are required to comply with the Controlled Wood Standard. The standard uses a set of indicators [FSC-STD-40-005, Part B.1] to classify geographic wood supply regions as either ‘low’ or ‘unspecified’ risk. For areas of unspecified risk, a verification program is required that includes providing evidence of legality, including legal right to harvest, payment of royalties, and compliance with management plans and allowable harvest rates [FSC-STD-40-005, Annex 3].

The FSC COC standard does not explicitly require physical separation of the various inputs to each product group; however, it does require all non-FSC certified product to be Controlled Wood and that inputs for product groups are maintained separable from one another. Similarly, the Controlled Wood standard does not require physical separation of material, but it requires the organisation to establish a system to ensure that uncontrolled material is not mixed with controlled and certified material [FSC-STD-40-005, Section 9.1]. On this basis, the FSC requirements are considered to comply fully with Criterion 1.3.

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1.4 A defined policy for product labelling and processes for managing associated product claims:

The FSC COC standard specifies which product groups may be labelled with the various FSC labels claiming percentages of certified material [FSC-STD-40-004, Part III Labelling]. There is also an FSC standard specifically designed to control on-product labelling that details the circumstances and manner in which the FSC logo may be used [FSC-STD-50-001 - Requirements for use of the FSC trademarks by certificate holders]. The FSC Certification Holder Trademark Requirements provide detailed guidance for usage by a range of authorised users, including detailed requirements for specific situations and uses. On this basis, the FSC scheme is considered to comply fully with Criterion 1.4.

4.2.2 Audit requirements

A summary of the assessment of audit requirements under the FSC COC scheme is presented in Table 4-8. Overall, the assessment indicates the FSC scheme complies with all of the criteria, with one qualification.

Table 4-8 Assessment of FSC audit requirements for COC schemes

CRITERIA FOR AUDIT REQUIREMENTS COMPLIANCE

2.1 Compliance with all scheme requirements is documented and maintained for audit

Full

2.2 Site-based assessments are undertaken as appropriate during the audit process Full

2.3 Audit reports and certificate holder status for the scheme are publicly reported Partial

Source: URS

The assessment criteria for audit requirements are addressed primarily by the FSC Standard for COC Certification (FSC-STD-40-004), and the FSC Accreditation Standard for COC Evaluations (FSC-STD-20-011).

2.1 Compliance with scheme requirements are documented and maintained for audit:

The FSC COC Standard requires the organization seeking certification to maintain complete and up-to-date records covering all applicable requirements of this standard; and these records shall be maintained for at least five years [FSC-STD-40-004, Part I Universal Requirements, clause 1.4]. On this basis, the FSC COC scheme is considered to comply fully with Criterion 2.1.

2.2 Site-based assessments are undertaken as appropriate during the audit process:

The Accreditation Standard for COC Evaluations (FSC-STD-20-011) states that certification audits are based on the certification body’s evaluation of the means of verification for each requirement of the applicable certification standards. The means of verification include a review of documentation and records, on-site observations, and interviews with managers, employees and contractors. Audit evidence may be collected over a range of sites and using different means of verification.

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The Accreditation Standard further specifies that evaluations shall include the identification and assessment of management documentation and a sufficient variety and number of records at each operational site; and physical inspection of all sites selected for evaluation. The Standard specifies requirements in relation to sampling of sites for multi-site operations; sampling of sites or COC operations is only permitted for evaluations of group and multi-site certificates. All sites or operations included in the scope of a single COC certificate have to undergo full evaluations by the certification body [FSC-STD-20-011, Section 2.7]. Surveillance audits are to be conducted at least annually [FSC-STD-20-011, Section 3.6]. On this basis, the FSC COC scheme is considered to comply fully with Criterion 2.2.

2.3 Audit reports and certificate holder status for the scheme are publicly reported:

The FSC requires the COC certification body to publish a public summary of the organisation’s risk assessment on the FSC database within seven days of certification [FSC-STD-20-011, Section 5.7], and to add the COC certificate to the FSC database (accessible online) before it is issued [FSC-STD-20-001, Section 19.5]. The certificate is required to include the name and address of the certified company [FSC-STD-20-001, Section 19.6]. However, there is no requirement for making audit reports publicly available for the FSC COC scheme.

This contrasts with FSC requirements for public summary reports for Forest Management evaluations. Under FSC’s general requirements, accredited certification bodies are required to document the findings and conclusions of all evaluation activities prior to review and decision-making in a certification report [FSC-STD-20-001, Section 18]. In the case of Forest Management certification, this requirement extends to public summary reports; in the case of COC certification, this requirement extends to the certification reports only, which are not made public.

On this basis, the FSC COC scheme is considered to comply partially with Criterion 2.3.

URS sought further information from FSC on the reason why the COC certification report is not made publicly available. Guidance provided by the FSC International Center noted COC reports might include, for example, information on suppliers’ names, customers’ names, product specifications and production technology, which may be commercially sensitive - and in principle, the publication of such information does not add value to the integrity of the FSC system. Therefore, under the FSC scheme, auditors are required to sign a confidentiality agreement for each audit in order to ensure the protection of confidential business data [FSC International Center, Chain of Custody Program Manager, pers. comm. 18 June 2014].

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4.2.3 Governance requirements

A summary of the assessment of FSC governance requirements for COC schemes is presented in Table 4-9. The assessment indicates compliance with all of the criteria.

Table 4-9 Assessment of FSC governance requirements for COC schemes

CRITERIA FOR GOVERNANCE REQUIREMENTS COMPLIANCE

3.1 The scheme’s standard has been developed by a nationally or internationally recognised standards authority

Full

3.2 The scheme’ standards have been developed with broad stakeholder input Full

3.3 There is a clear basis for establishing compliance and corrective actions for non-compliance

Full

3.4 Auditors are independent third parties that are accredited by an independent accreditation body

Full

Source: URS

The assessment criteria for governance requirements are addressed primarily by the FSC Accreditation Standard for COC Evaluations (FSC-STD-20-011) with supporting documentation on the FSC website in relation to standard setting processes.

3.1 Scheme’s standard has been developed by a nationally or internationally recognised standards authority:

The Policy and Standards Unit of FSC International, an internationally recognised standards development and management organisation, was responsible for developing the FSC COC standard [FSC website, 2014, Standard Setting – online: ic.fsc.org/standard-setting.212.htm (accessed 29 May 2014)]. FSC follows the Code of Good Practice for Setting Social and Environmental Standards developed by ISEAL [FSC website, 2014, Standard Setting – online: ic.fsc.org/standard-setting.212.htm (accessed 29 May 2014)], an internationally recognised, non-government organisation that aims to strengthen standards to benefit communities and the environment. On this basis, the FSC scheme is considered to comply fully with Criterion 3.1.

3.2 The scheme’ standards have been developed with broad stakeholder input:

The FSC standard setting process incorporates broad stakeholder input. The FSC manages its standard development through a technical working group with oversight by an internal steering committee. The Policy and Standards Unit develops a draft in collaboration with the working group. The Policy and Standards Unit then facilitates public stakeholder consultation on the first draft, and on subsequent drafts, until the working group is able to recommend a final draft for approval by the Board of Directors [FSC website, 2014, Standard Setting – online: ic.fsc.org/standard-setting.212.htm (accessed 29 May 2014)]. There is not necessarily balanced representation on the working groups; however, the FSC states that it actively seeks input from its membership and other stakeholders [FSC website, 2014, Standard Setting – online: ic.fsc.org/standard-setting.212.htm (accessed 29 May 2014)]. On this basis, the FSC scheme is considered to comply fully with Criterion 3.2.

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3.3 Clear basis for establishing compliance and corrective actions for non-compliance:

The FSC Accreditation Standard for COC Evaluations defines major and minor nonconformities, and specifies the respective processes for addressing these nonconformities [FSC-STD-20-011, Section 4.3]. The standard documents the process for establishing corrective actions and the implications of not completing these actions in a timely manner. The standard prescribes maximum timeframes for correction of major nonconformities of three months and minor nonconformities of one year after the surveillance audit, in normal circumstances [FSC-STD-20-011, Section 4.5]. These processes are made publicly available through the standard. Therefore, the FSC scheme is considered to comply fully with Criterion 3.3.

3.4 Auditors are independent third parties that are accredited by an independent accreditation body:

Auditors (certification bodies) of the FSC COC scheme are required to comply with ISO Guide 65 [FSC-STD-20-001, General requirements for FSC accredited certification bodies – application of ISO/IEC Guide 65:1996, Part 1.], (subsequently replaced by ISO/IEC 17065 in 2012), which includes requirements for impartiality and independence [IAF GD 5:2006, IAF Guidance on the Application of ISO/IEC Guide 65:1996, Part G.4.2.8. – online: iaf.nu/upFiles/333053.IAF-GD5-2006_Guide_65_Issue_3.pdf (accessed 29 May 2014)] and requirements to demonstrate how the business is managed to eliminate conflict of interest [IAF GD 5:2006, IAF Guidance on the Application of ISO/IEC Guide 65:1996, Part G.4.2.24 – online: iaf.nu/upFiles/333053.IAF-GD5-2006_Guide_65_Issue_3.pdf (accessed 29 May 2014)].

All certification bodies must also carry accreditation by Accreditation Services International (ASI). ASI is responsible for checking certification body compliance with the FSC rules and procedures through a combination of field and office audits.

FSC is represented on the ASI Board of Directors, thereby creating a relationship between the organisations. However, this relationship should be recognised in the context of ASI’s role as the sole accreditation body for the FSC (since 2006), as well the sole accreditation body for the Marine Stewardship Council (since 2006), Aquaculture Stewardship Council (since 2010), the Roundtable on Sustainable Palm Oil (since 2012), and the Roundtable on Sustainable Biomaterials (since 2013) [ASI website, 2014 – Programs – online: http://www.accreditation-services.com/programs (accessed 3 June 2014)].

ASI is a full member of the ISEAL Alliance and has been audited to confirm that its procedures conform fully to ISO 17011 international requirements for accreditation bodies.

Furthermore, under Annex 2 to FSC-STD-20-001, the FSC requires that all lead auditors shall be in possession of a formal ISO 9001, ISO 14001 or OHSAS 18001 lead auditor certificate, achieved through a recognized accredited training course.

Based on these components, the FSC scheme is considered to comply fully with Criterion 3.4.

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5 CONCLUSIONS

This supplementary report provides an update on the leading COC schemes operating internationally, and assesses the rigour and robustness of these schemes against criteria developed for URS’ previous review of legality verification and COC schemes in 2010, with some updates and amendments that reflect refinements rather than substantive changes.

Both of the COC schemes assessed in this report – the PEFC and FSC schemes - scored strongly against the assessment criteria across the three key elements comprising verification, audit and governance requirements. On this basis, the key finding from this assessment report is as follows:

The PEFC and FSC COC schemes are considered to have a high level of rigour and robustness; and therefore they provide a high level of assurance that timber and wood products traded under their respective banners have had safe custody from a known point of origin along a certified supply chain to the end user.

There is one qualification to this finding and the qualification is applicable to both schemes. The qualification relates to the extent to which audit reports are publicly reported. Both schemes require the Certification Body to provide information such that the certificate holder status is publicly available; but neither scheme requires that the audit report (also referred to as the Certification report or Evaluation report) or audit summary report be made publicly available.

This raises for consideration the question of whether the lack of public access to COC audit reports substantively impacts on the rigour and robustness of the schemes. In this regard, it is noted:

Under their broader frameworks for forest management certification, both PEFC and FSC require Certification Bodies to provide public summary reports for assessments against their respective forest management schemes. This reflects a clear intent by both schemes to make audit reports for forest management assessments publicly available; while indicating there is not the same requirement for COC schemes.

URS sought further information from both schemes in this regard, and received advice from PEFC that this matter has not been raised as an issue previously. In broad terms, neither PEFC nor FSC see a requirement for this, as COC audits tend to be more focussed on logistical matters than Forest Management audits, where the main stakeholder interest exists. In addition, FSC in particular noted that that COC reports may include information that is commercially sensitive, and there is a need to ensure the protection of confidential business data.

Furthermore, Proforest’s 2012 assessment of certification and legality verification schemes (refer Section 3.4 of this report) did not include a requirement for certification reports to be made publicly available; Proforest only required that the requirements of the scheme be made publicly available.

Taking these considerations into account, in the context of otherwise high scores against URS’ assessment criteria, the qualification relating to audit reports not being made publicly available is not considered to a major limitation to the rigour and robustness of the schemes.

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6 LIMITATIONS

URS Australia Pty Ltd (URS) has prepared this report in accordance with the usual care and thoroughness of the consulting profession for the use of the Australian Government Department of Agriculture and only those third parties who have been authorised in writing by URS to rely on this Report.

It is based on generally accepted practices and standards at the time it was prepared. No other warranty, expressed or implied, is made as to the professional advice included in this Report.

It is prepared in accordance with the scope of work and for the purpose outlined in the contract dated 30 April 2014.

Where this Report indicates that information has been provided to URS by third parties, URS has made no independent verification of this information except as expressly stated in the Report. URS assumes no liability for any inaccuracies in or omissions to that information.

This Report was prepared between 2 May and 27 June 2014 and is based on the conditions encountered and information reviewed at the time of preparation. URS disclaims responsibility for any changes that may have occurred after this time.

This Report should be read in full. No responsibility is accepted for use of any part of this report in any other context or for any other purpose or by third parties. This Report does not purport to give legal advice. Legal advice can only be given by qualified legal practitioners.

Except as required by law, no third party may use or rely on this Report unless otherwise agreed by URS in writing. Where such agreement is provided, URS will provide a letter of reliance to the agreed third party in the form required by URS.

To the extent permitted by law, URS expressly disclaims and excludes liability for any loss, damage, cost or expenses suffered by any third party relating to or resulting from the use of, or reliance on, any information contained in this Report. URS does not admit that any action, liability or claim may exist or be available to any third party.

Except as specifically stated in this section, URS does not authorise the use of this Report by any third party.

It is the responsibility of third parties to independently make inquiries or seek advice in relation to their particular requirements and proposed use of the site.

Any estimates of potential costs which have been provided are presented as estimates only as at the date of the Report. Any cost estimates that have been provided may therefore vary from actual costs at the time of expenditure.

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APPENDIX A ASSESSMENT SCORECARDS

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A.1 Assessment scorecards

VERIFICATION

Principle 1: Auditable systems are in place for tracking and monitoring the flow of wood and wood products from the forest through the supply chain

Basis for scoring

Criterion 1.1 The scheme requires systematic processes to verify the origin of materials and that documentation is valid and matches nominated materials

Indicator 1.1.1. Requirement for a system to verify the legal origin of wood direct from the forest through checks on accompanying documentation

2

Indicator 1.1.2. Requirement for a system to verify that wood received direct from the forest matches accompanying documentation, but no requirement for verifying the legal origin at the source

1

Indicator 1.1.3. There is no requirement for a system to verify the legal origin of wood direct from the forest through checks on accompanying documentation

0

Criterion 1.2 The scheme requires a COC system to track certified or verified legal wood along the certification chain, using appropriate inventory methods and documented controls

Indicator 1.2.1. Requirement for a COC system to track wood from specified sources along the supply chain, with appropriate inventory methods and controls that can be audited at any time

2

Indicator 1.2.2. Requirement for a means to trace wood from specified sources through the supply chain but no specific requirement for an inventory-based accounting system to account for verified wood flows over time

1

Indicator 1.2.3. There is no requirement for a system to trace wood from specified sources through the supply chain

0

Criterion 1.3 The scheme requires effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain

Indicator 1.3.1. Requirement for effective controls to prevent unverified wood from entering the supply chain, such as a risk assessment to identify and manage wood from high risk sources, and physical segregation of wood from high risk or otherwise unverified sources

2

Indicator 1.3.2. Requirement for controls to separately track verified wood from unverified wood, but minimal specification of the types of controls that should be used to be effective

1

Indicator 1.3.3. There is no requirement for controls to prevent unverified wood from entering the supply chain

0

Criterion 1.4 The scheme has a defined policy for product labelling and process for managing associated claims

Indicator 1.4.1 Requirement for product claims to be used in accordance with a product labelling policy relating to claims on legality verification

2

Indicator 1.4.2. Requirement for product labels or claims to be used with scheme approval only, and limited guidance on the permitted use of such claims

1

Indicator 1.4.3. There is no requirement or specification relating to product labelling or associated claims under the scheme

0

Total - Maximum score 8

Total - Normalised score (out of 10) 10

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AUDIT

Principle 2: Compliance with the scheme is audited and recorded regularly and results are publicly available

Basis for

scoring

Criterion 2.1 Compliance with scheme requirements are documented and maintained for audit

Indicator 2.1.1. Requirement that records of compliance with the scheme are accurate, complete and up-to-date

2

Indicator 2.1.2. Requirement to comply with relevant legislation and other requirements, but no reference to document compliance with all aspects of the scheme

1

Indicator 2.1.3. There is no requirement that records of legal compliance with the scheme be maintained

0

Criterion 2.2 Site-based assessments are undertaken as appropriate during the audit process

Indicator 2.2.1. Requirement for the audit to be conducted on-site, and there is specific guidance on the scope and designation of on-site assessments across the range of sites under operational control.

2

Indicator 2.2.2. Requirement for the audit to be conducted on-site, but there is no specific guidance on the scope and designation of on-site assessments across the range of sites under operational control.

1

Indicator 2.2.3. There is no requirement for the audit to be conducted on-site. 0

Criterion 2.3 Audit reports and certificate holder status for the scheme are publicly reported

Indicator 2.3.1. Requirement that audit reports and certificate status for certificate holders are made public, including names of companies

2

Indicator 2.3.2. Requirement that certificate status for certificate holders are made public, including names of companies, but no such requirement for audit reports

1

Indicator 2.3.3. There is no requirement for audit reports and certificate status for certificate holders to be made available in the public domain or by request

0

Total - Maximum score 6

Total - Normalised score (out of 10) 10

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GOVERNANCE

Principle 3: Robust standards setting processes are in place for verification, audit and management of non-compliance

Basis for

scoring

Criterion 3.1 The scheme's standard has been developed by a nationally or internationally recognised standards authority

Indicator 3.1.1. The scheme's standard has been developed by an internationally or nationally recognised standard setting authority

2

Indicator 3.1.2. The scheme's standard has not been developed by an recognised standard setting authority; however, the scheme manager has substantial experience with standards development and auditing in the forestry sector

1

Indicator 3.1.3. The scheme has been developed without reference to a nationally or internationally recognised standard setting body

0

Criterion 3.2 The scheme’s standards have been developed with broad stakeholder input

Indicator 3.2.1. Requirement that broad stakeholder input is sought during the development of the scheme

2

Indicator 3.2.2. Limited requirement that stakeholder input is sought during the development of the scheme

1

Indicator 3.2.3. There is no requirement for stakeholder input during the development of the scheme

0

Criterion 3.3 There is a clear basis for establishing compliance and non-compliance and corrective actions for non-compliance

Indicator 3.3.1. Requirement that non-compliance with scheme requirements are identified and the processes for corrective actions are clearly documented and made publicly available

2

Indicator 3.3.2. Requirement that non-compliance with scheme requirements are identified, but the processes for corrective actions are not clearly documented or made publicly available

1

Indicator 3.3.3. There is no requirement for non-compliance with scheme requirements to be identified and corrective actions implemented

0

Criterion 3.4 Auditors are independent third parties that are accredited by an independent accreditation body

Indicator 3.4.1. Requirement that auditors are independent third parties, free of conflict of interests with the parties they audit, and can demonstrate accreditation by an accreditation body independent of the scheme

2

Indicator 3.4.2. Requirement that auditors are independent third parties, but are not necessarily accredited by an independent accreditation body

1

Indicator 3.4.3. There is no requirement for auditors to be independent or free of conflicts of interest with the parties they audit

0

Total - Maximum score 8

Total - Normalised score (out of 10) 10

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APPENDIX B ASSESSMENT SCORING FOR COC SCHEMES

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VERIFICATION

Principle 1: Auditable systems are in place for tracking and monitoring the flow of wood and wood products from the forest through the supply chain

PEFC FSC

Criterion 1.1 The scheme requires systematic processes to verify the origin of materials and that documentation is valid and matches nominated materials

2 2

Indicator 1.1.1. Requirement for a system to verify the legal origin of wood direct from the forest through checks on accompanying documentation

Indicator 1.1.2. Requirement for a system to verify that wood received direct from the forest matches accompanying documentation, but no requirement for verifying the legal origin at the source

Indicator 1.1.3. There is no requirement for a system to verify the legal origin of wood direct from the forest through checks on accompanying documentation

Criterion 1.2 The scheme requires a COC system to track certified or verified legal wood along the certification chain, using appropriate inventory methods and documented controls

2 2

Indicator 1.2.1. Requirement for a COC system to track wood from specified sources along the supply chain, with appropriate inventory methods and controls that can be audited at any time

Indicator 1.2.2. Requirement for a means to trace wood from specified sources through the supply chain but no specific requirement for an inventory-based accounting system to account for verified wood flows over time

Indicator 1.2.3. There is no requirement for a system to trace wood from specified sources through the supply chain

Criterion 1.3 The scheme requires effective controls to prevent products from unverified and potentially illegal sources from entering the supply chain

2 2

Indicator 1.3.1. Requirement for effective controls to prevent unverified wood from entering the supply chain, such as a risk assessment to identify and manage wood from high risk sources, and physical segregation of wood from high risk or otherwise unverified sources

Indicator 1.3.2. Requirement for controls to separately track verified wood from unverified wood, but minimal specification of the types of controls that should be used to be effective

Indicator 1.3.3. There is no requirement for controls to prevent unverified wood from entering the supply chain

Criterion 1.4 The scheme has a defined policy for product labelling and process for managing associated claims

2 2

Indicator 1.4.1 Requirement for product claims to be used in accordance with a product labelling policy relating to claims on legality verification

Indicator 1.4.2. Requirement for product labels or claims to be used with scheme approval only, and limited guidance on the permitted use of such claims

Indicator 1.4.3. There is no requirement or specification relating to product labelling or associated claims under the scheme

Total - Actual score (out of 8) 8 8

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Total - Normalised score (out of 10) 10 10

AUDIT

Principle 2: Compliance with the scheme is audited and recorded regularly and results are publicly available

PEFC FSC

Criterion 2.1 Compliance with legality verification requirements are documented and maintained for audit

2 2

Indicator 2.1.1. Requirement that records of compliance with the scheme are accurate, complete and up-to-date

Indicator 2.1.2. Requirement to comply with relevant legislation and other requirements, but no reference to document compliance with all aspects of the scheme

Indicator 2.1.3. There is no requirement that records of legal compliance with the scheme be maintained

Criterion 2.2 Site-based assessments are undertaken as appropriate during the audit process

2 2

Indicator 2.2.1. Requirement for the audit to be conducted on-site, and there is specific guidance on the scope and designation of on-site assessments across the range of sites under operational control

Indicator 2.2.2. Requirement for the audit to be conducted on-site, but there is no specific guidance on the scope and designation of on-site assessments across the range of sites under operational control

Indicator 2.2.3. There is no requirement for the audit to be conducted on-site

Criterion 2.3 Audit reports and certificate holder status for the scheme are publicly reported

1 1

Indicator 2.3.1. Requirement that audit reports and certificate status for certificate holders are made public, including names of companies

Indicator 2.3.2. Requirement that certificate status for certificate holders are made public, including names of companies, but no such requirement for audit reports

Indicator 2.3.3. There is no requirement for audit reports and certificate status for certificate holders to be made available in the public domain or by request

Total - Actual score (out of 6) 5 5

Total - Normalised score (out of 10) 8.5 8.5

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GOVERNANCE

Principle 3: Robust standards setting processes are in place for verification, audit and management of non-compliance

PEFC FSC

Criterion 3.1 The scheme's standard has been developed by a nationally or internationally recognised standards authority

2 2

Indicator 3.1.1. The scheme's standard has been developed by an internationally or nationally recognised standard setting authority

Indicator 3.1.2. The scheme's standard has not been developed by a recognised standard setting authority, however the scheme manager has substantial experience with standards development and auditing in the forestry sector

Indicator 3.1.3. The scheme has been developed without reference to a nationally or internationally recognised standard setting body

Criterion 3.2 The scheme’s standards have been developed with broad stakeholder input

2 2

Indicator 3.2.1. Requirement that broad stakeholder input is sought during the development of the scheme

Indicator 3.2.2. Limited requirement that stakeholder input is sought during the development of the scheme

Indicator 3.2.3. There is no requirement for stakeholder input during the development of the scheme

Criterion 3.3 There is a clear basis for establishing compliance and non-compliance and corrective actions for non-compliance

2 2

Indicator 3.3.1. Requirement that non-compliance with scheme requirements are identified and the processes for corrective actions are clearly documented and made publicly available

Indicator 3.3.2. Requirement that non-compliance with scheme requirements are identified, but the processes for corrective actions are not clearly documented or made publicly available

Indicator 3.3.3. There is no requirement for non-compliance with scheme requirements to be identified and corrective actions implemented

Criterion 3.4 Auditors are independent third parties that are accredited by an independent accreditation body

2 2

Indicator 3.4.1. Requirement that auditors are independent third parties, free of conflict of interests with the parties they audit, and can demonstrate accreditation by an accreditation body independent of the scheme

Indicator 3.4.2. Requirement that auditors are independent third parties, but are not necessarily accredited by an independent accreditation body

Indicator 3.4.3. There is no requirement for auditors to be independent or free of conflicts of interest with the parties they audit

Total - Actual score (out of 8) 8 8

Total - Normalised score (out of 10) 10 10

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