Forest Management Auditing

Certification of Forest Products and Services

Lucio Brotto, Davide Pettenella, Lucio Brotto, Davide Pettenella

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781317596967
• Edition: 1
• Topic: Technik & Maschinenbau
• Subtopic: Forstwirtschaft

Forest management auditing is expanding from its traditional focus on forest management, stewardship and Chain of Custody certification to more innovative topics such as ecosystem services, forest carbon credits, Non-Wood Forest Products, wood energy and Fair Trade certification. Forest managers, auditors and project developers require a new range of skills, capacities and expertise to monitor these issues.

This book outlines the market-based tools that are required by such professionals to ensure corporate social responsibility in the forestry sector. It shows how a mutual learning process between established forest certification processes and innovative markets is needed. It addresses key topics such as High Conservation Value (HCV) approaches, the role of independent certification versus due diligence process and the engagement of smallholders and SMEs. Beginning with a market and policy analysis, the book fosters a deeper understanding of standards, methodologies and auditing techniques. Numerous case studies are included from a wide range of contexts, including both temperate and tropical forests in developed and developing countries. Overall, the book analyses all the steps towards forest management and forest products and services certification.

Chapter 1
Cutting edge

Sustainability in the forestry sector

Lucio Brotto, Davide Pettenella and Alex Pra

The attention towards sustainability in the forestry sector has been growing at unprecedented levels in the last decades, accompanied by the emergence of corporate social responsibility (CSR) as a key tool to address sustainability challenges. There are several definitions of CSR in literature. In the context of this book, we make reference to the definition given by the European Commission (2011), which defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis” (p. 6). The concept of CSR first appeared in scientific studies in the 1980s (Carroll, 1999). Since its initial focus on social aspects, nowadays CSR is increasingly aligned with the concept of sustainability, encompassing a broader range of business aspects such as environment, governance and economics (Vidal and Kozak, 2008). Different approaches to the relationship between business and society have generated different ways of looking at CSR (Han, 2010):

• Instrumental theories: CSR is considered only as a tool to achieve economic goals, hence long-term profit maximization (Friedman, 1970);
• Political theories: business is powerful and can impact society; the more social power there is in a business, the more social responsibilities there are (Davis, 1960);
• Integrative theories: business depends on society and a company should listen and integrate social demand (Preston and Post, 1975);
• Ethical theories: ethical standards are facilitating good business-society relationships; the company is committed not only to shareholders but also to stakeholders (Freeman, 1984).

In the forestry sector, CSR instruments emerged in the early 1990s (Cashore, 2002), to face the growing public interest and concern about environmental and social problems related to forests, in particular, those problems linked to the core issues of deforestation and degradation processes and forest illegality. The awareness towards these issues has been growing substantially since the 1990s, together with the number of companies and organizations engaging with CSR tools to increase transparency, minimize reputational risks and reduce costs connected to lawsuits and boycott campaigns; and also to gain market competitiveness (e.g. avoid loss of market share, enter new markets and obtain price premium), improve reputation and legitimacy and integrate stakeholders’ interest through win-win synergic value creation activities (Kurucz et al., 2008; Jenkins and Smith, 1999; Vidal and Kozak, 2008).

From a more global perspective, the self-regulation process of the private sector has been driven by a number of factors: (i) the growing difficulties of governments in regulating and monitoring transnational corporations and the financial market; (ii) the failure of policy instruments (command and control instruments) in promoting the sustainable management of natural resources; (iii) the “rolling back the frontiers of the State” with a transfer of environmental and social decisions from State level to corporate sphere (Heal, 2008); (iv) an increased role of civil society in decision-making, shifting from a “government” to a “governance” level; and (v) the internationalization of companies with the shifting of operations in less developed countries characterized by poor law enforcement and fragile social situations (Heal, 2008; Voegtlin et al., 2011; Zhang et al., 2014).

Forest certification, i.e., the third-party control of the responsible management of forest resources and the tracking of forest products from the forest to the final consumers, has emerged as one of the leading voluntary CSR tools in the forestry sector. The book by Viana et al., Certification of Forest Products: Issues and Perspectives, published in 1996, begins as follows: “Certification of forest products is a new and exciting phenomenon. Its future is still uncertain, but it could have a significant impact on forest practices around the world in coming years”. After more than 20 years, we can say that the certification of forests and forest products is a consolidated tool of corporate social responsibility (CSR) incorporating almost one-sixth of the world’s forest cover (UNECE, 2016), tens of thousands of processing companies and millions of consumers around the world. Moreover, even if the Ecolabel Index database¹ is recording 16 forest-related ecolabels used in the forestry sector, two standards and their certification procedures are dominating the market and are by far more visible than others. CSR tools in the forestry sector are rapidly evolving far beyond the use of standards related to responsible forest management and related independent systems of control. First of all, there has been an enlargement of the area of concern of the standards, with new aspects considered and with new certification systems developed: environmental services, Non-Wood Forest Products including, also, edible and medicinal products and woody biomass to be used for energy production or in the building sector. There has also been an enlargement of the sources of information about the performance of the companies operating in the sector – data and information are collected not only with external desk and field audits, but also through reporting by stakeholders with mobile technology, through remote sensing based on fine resolution images, through sensors placed inside the forest. The origin of the forest products can be investigated with wood and fibre testing (both traditional wood anatomy and DNA/isotope future capacity) and can be tracked with blockchain technology (Dudder and Ross, 2017).

In the last years, certification has been progressively associated to the broadening scope of CSR strategies to social, environmental, economic and governance aspects (Toppinen and Zhang, 2010) with the disclosure and reporting of sustainability performances associated to new social demands by consumers, public authorities and investors (see, for example, the development of impact investments associated to the need of generating positive and measurable social and environmental impacts alongside financial returns). This, in the framework of CSR, is a general trend in all the economic sectors, but forestry represents an interesting – and, from many perspectives, singular – case for two main reasons. Firstly, it represents an emblematic case where the private sector not only anticipated public institution initiatives (it was not until the beginning of the 2000s that the need to address forestry sustainability challenges was reflected in the international forestry policy agenda and regulatory initiatives were implemented), but in many cases, voluntary CSR tools functioned as a catalyser of approaches and methodologies that have been then adapted or have inspired public institutions initiatives. Secondly, few other large primary sectors have experienced such a high number of initiatives to address legality and sustainability issues, creating an unbalanced competitive condition among wood products and alternative raw materials in which CSR standards and requirements are not developed and used (plastic, metals, fossil fuels, etc.).

Looking at this complex and dynamic context, the book aims to outline the innovative market-based tools that are shaping CSR in the forestry sector. Starting from a market and policy analysis, the book tries to capture the quickly evolving world of standards, methodologies and auditing techniques applied in the forestry sector. The book analyses all the steps towards forest management and forest products and services certification, supported by case studies and tools as examples, providing auditors and project developers with new multiple capacities and knowledge.

The book is organized in three main parts. The first part introduces the definitions and the overall framework of CSR in the forestry sector. The second part presents the main standards and systems for the certification of forest products and services. The third part complements the previous by presenting the auditing techniques related to the main standards. The structure of the book is presented in Figure 1.1.

Chapters 2 to 5 compose the first part of the book, describing the driving forces behind the uptake of CSR in the forestry sector and the evolution of

Figure 1.1 Book structure

Source: Own elaboration

the regulatory initiatives of public institutions on the one hand and voluntary CSR tools on the other.

Chapter 2 presents the main policy developments since the beginning of 2000s to tackle illegality in the forestry sector and the main initiatives of public institutions aiming to exclude illegal timber from domestic/regional markets. Particular attention is put on the European Union (EU) Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan and the EU Timber Regulation (EUTR) in Europe, the Lacey Act in the United States and the Australian Illegal Logging Prohibition Bill in Australia, discussing the failures and successes of these systems. While Chapter 2 focuses on the public institutions initiatives with regulatory character, Chapters 3 and 4 focus on the voluntary tools that have emerged from the private sphere. The self-regulation process of the private sector, in fact, manifested in the spread of a wide range of CSR tools, from so-called soft tools such as corporate norms, codes of conduct and commitments, to certification schemes and processes. Chapter 3 provides an overview of “soft tools”, distinguishing among: (i) codes of conduct (or codes of ethics), the early generation of corporate self-regulation tools; (ii) corporate reporting, the new generation of corporate self-regulation tools focusing more on external stakeholders, providing also examples of the main international guidelines on reporting (e.g., OECD Guidelines for Multinational Enterprises, United Nations Global Compact); (iii) compensation and offsetting measures; and finally (iv) commitments, an emerging tools where the attention is completely directed to external stakeholder and upstream suppliers. Special attention is provided to the latter tool, describing types and characteristics, implementation strategies and shortcomings and challenges. Chapter 4 presents certification schemes and processes applicable to the forestry sector, which represent the next-level corporate self-regulation tools, and is the core aspect of the book. Forest certification schemes are described starting from the traditional forest management and Chain of Custody (CoC) initiatives – Forest Stewardship Council (FSC^®) and the Program for Endorsement of Forest Certification schemes (PEFC) – moving to the other management schemes not specific to the forestry sector but frequently used by forest organizations (ISO 9001 and 14001, BS OHSAS 18001, etc.) and those related to innovative sectors such as forest carbon offsetting, wood energy, Non-Wood Forest Products (NWFPs), Fair Trade and the newer frontier of ecosystem services certification. The chapter introduces the general concepts, actors and approaches related to certification schemes and processes as well as providing an overview of the contents of the main certification schemes that can be used in the forestry sector. The first part of the book ends with Chapter 5, which provides a snapshot of the markets for certified products and services, focusing on the markets of FSC-certified products, including analysis of the reasons for certification by businesses, public administration and non-governmental organizations (NGOs) – carbon finance, fuelwoods markets, NWFP markets and markets for other services such as watershed and biodiversity.

The second part of the book includes Chapters 6 to 12 and analyses in detail the standards and the certification infrastructures for the certification of forest products and services:

• FSC Forest Management Certification (Chapter 6);
• FSC CoC certification (Chapter 7);
• forest carbon standards (Chapter 8);
• woody biomass for energy standards (Chapter 9);
• NWFP standards (Chapter 10);
• Fair Trade certification of forest products (Chapter 11);
• standards and certification-integrations for ecosystem services (Chapter 12).

Standards are presented and analysed based on the structure of their principles, criteria and indicators with additional references to standard documentation such as such policy documents, guidance notes, etc. The certification infrastructure of each process is analysed considering the standard-setting bodies, certification bodies and accreditation services.

Chapter 6 presents the FSC Forest Management Certification system, presenting the overall framework of the latest standard and the main requirements for addressing socio-economic impacts, environmental impacts, stakeholder consultation and management of High Conservation Value (HCV) forests. In addition, the special tools and approaches for smallholders, such as the Group Certification and Small and Low Intensity Managed Forests (SLIMF), are described. Following this, Chapter 7 presents CoC certification according to FSC, introducing the key concept of CoC in relation to forest supply chains and presenting the requirements according to FSC’s latest CoC standard. In addition, it provides an overview of systems for controlling FSC claims, the FSC Controlled Wood standard, multisite/group certification and FSC labelling requirements. Chapter 8 provides an overview of standards applicable to forest-based carbon projects. It introduces the concept of carbon offsetting and the markets for trading forest carbon offsets, both compliance and voluntary. The future developments connected with the entering into force of the recent Paris Agreement are also discussed. The chapter describes the types of forest-based projects, i.e., afforestation and reforestation projects, Improved Forest Management and Reducing Emissions from Deforestation and Forest Degradation (REDD) projects, including the key elements that standards nee...