Forest Certification Schemes for Corporate Supply Chains

(Post by Caroline D’Angelo, IGEL Communications Coordinator and lead author of the report from which this post is adapted. This research and report was made possible by a Wharton Global Initiatives Research grant.)

Forests are the planet’s biodiversity reserves: One hectare of tropical forest may contain up to 750 species of tree and millions of other species of insects, fungi, bacteria, reptiles and mammals – and of course, the most intelligent of primate, humans. This biodiversity provides medicine, income, food and shelter for millions of people around the world, as well as supply materials and products for corporate supply chains. Beyond hosting an impressive array of species, trees are also reserves for carbon, consuming and storing this greenhouse gas in their soils, bark and leaves. (Indeed, protecting and re-generating forests may be the cheapest way to mitigate climate change – see REDD+.)

However, due to over-consumption, population growth, development, corruption and inadequate planning, forests are rapidly disappearing. The environmental impacts of deforestation are vast, including soil erosion and degradation, diminished water quality, biodiversity and habitat loss and destruction of carbon sinks. Perhaps the best-known face of this loss is the orangutan, whose numbers are dwindling due to habitat destruction from logging and palm oil plantations.

On the human side, the impacts associated with poor natural resource management – including forests – and their detrimental impacts on local economies and communities is demonstrated by Jared Diamond in his 2006 work Collapse. Beyond local impacts, deforestation is a resource management problem with causes and repercussions on local, regional and global scales. It is thus necessary for companies to address illegal logging and irresponsibly sourced forest products within their supply chains.

Already, the global illegal wood market may be worth as much as $3 billion annually and comprise as much as 8 – 10 percent of the global forest products trade (Contreras-Hermosilla & Fay 2005; Paper Life Cycle 2010). In some countries, the illegal logging rate is much higher: reports estimate between 40 and 88 percent of logging in Indonesia is illegal (Schmidt 2010). Perhaps not incidentally, at least two of the three major suppliers of China’s building boom are noted for illegal logging. Papua New Guinea has high rates of illegal logging and displacement of tropical forest peoples, while illegal deforestation may be as high as 70 percent in Gabon (Packer 2004; Camby et. al 2008).

(Photo by Samuel Luna)

One way of addressing deforestation is through ecolabeling and certification programs that aim to increase sustainable management of forests, such as those run by the Forest Stewardship Council, World Wildlife Fund and Indonesia Ecolabeling Institute. These management, audit and oversight systems often attempt to stymie environmental harm wreaked from market failures and management and governance problems that favor cheap and illegal wood. Certification can help companies make better purchasing decisions because many nations lack or do not enforce laws and regulations regarding endangered species and forest management. There is certainly a long way to go – certified forestry products may only account for as little as four percent of the international forestry trade (The Nature Conservancy 2011).

There are approximately 60 forest certification programs[1] worldwide, of which some are international, some national and some are sector- or company-based (The Nature Conservancy 2011). Additionally, there are more than a hundred eco-labeling schemes[2] globally that label downstream forest products. These product eco-labels either build on forest certifications or incorporate sustainable forestry ideals into their information, such as Cradle-to-Cradle, Leadership in Energy and Environmental Design (LEED), and the Hong Kong Flooring Scheme, to name a few.

Besides certification schemes, companies can also create partnerships with NGO partners to reduce deforestation. As Sarene Marshall, Managing Director of the Climate Change program at the Nature Conservancy explained at IGEL’s annual conference in April, the Conservancy works with businesses in Brazil and Indonesia to manage forests more sustainably. They also verify suppliers so that corporations know that their soybean and forest sources are responsibly managed. Other NGO programs in this space include the Rainforest Alliance’s certification and verification suite and the World Wildlife Fund (Global Forest & Trade Network).

In sum, companies that are interested in getting rid of illegal and irresponsibly sourced wood products from their supply chains should evaluate certification schemes and potential NGO partners on their environmental and social rigor and brand strength. Committing to certification and labeling programs that use metrics and audits will reduce reputational risk from consumer backlash or future lawsuits. To reduce supply chain risk from illegal or unsustainable wood sources, companies can consider partnerships with NGOs, sourcing directly from community-managed forest enterprises and investing in transparency and tracking.

Click here to read the full report.

Part 2 in this series will examine case studies in forest certifications from Indonesia and Malaysia.

[1] Certification and eco-labeling are linked concepts: certified operations are allowed to use an eco-label and access particular markets (like Leadership in Energy and Environmental Design – LEED). According to ISO 14021 labeling guidelines, eco-labels should be independently verified and have measurable goals. Only eco-labels with this standard are within the scope of this paper. There are also hundreds of essentially meaningless eco-labels without standards on the market.

[2] Author survey using, BASF, and literature. The author would like to thank and BASF for allowing IGEL access to their databases.

Camby, Kersten et. al. China and the Global Market in Forest Products. Forest Trends and Global Timber, 2008.
Contreras-Hermosilla, Arnoldo, and Chip Fay. Strengthening Forest Management in Indonesia through Land Tenure Reform: Issues and Framework for Action. Forest Trends/World Agroforestry Centre, 2005.
Diamond, Jared M. Collapse: How Societies Choose to Fail or Survive. London: Penguin, 2006. Print.
Home Depot. Wood Purchasing Policy. 2010. (accessed 12 06, 2011).
Paper Life Cycle. The Rising Costs of Illegal Logging. 2010.
Packer, Mike. Annex III: West and Central Africa: Progress and Prospects for Forest Certification. Forest Trends, 2004.
Schmidt, Jake. Illegal Logging in Indonesia: Environmental, Economic, & Social Costs Outlined in a New Report. 05 04, 2010. (accessed 12 03, 2011).
The Nature Conservancy. Forest Conservation: Responsible Trade. 2011. (accessed 12 03, 2011).

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