Illegal Logging Update and Stakeholder Consultation
Chatham House, 10 St. James’ Square, London SW1.
Thursday 25th – Friday 26th January 2007
Chairs: Duncan Brack, Jade Saunders, Richard Tarasofsky (Chatham House); John Hudson, Hugh Speechly (DFID)
Thursday 25 January
Combating illegality in the forest products industry: global company perspectives – Keynote speaker: James Griffiths, World Business Council for Sustainable Development
The World Business Council for Sustainable Development (WBCSD) is a coalition of 200 leading global companies, based in Geneva. In addition, there are 60 national and regional BCSDs and partner organisations. The businesses involved have a shared commitment to sustainable development and aim to provide leadership through action, policy development, best practice and global outreach programmes and activities in order to earn, retain and expand the business license to operate.
Forestry has been a focus for the WBCSD since the formation of the Sustainable Forestry Products Industry (SFPI) working group in 1996, whose members account for approximately 55% of global forest products sales. Other members include customers and suppliers, plus observer groups such as The Forests Dialogue, National Council for Air and Stream Improvement, and the International Council of Forest and Paper Associations.
The mission of the SFPI working group is to provide a global platform for leading companies to define sustainability in the forest products industry, and to improve performance and, hence, customer and stakeholder confidence.
Illegal logging is a serious concern for business because it distorts the marketplace, reduces prices and undermines market acceptance of products, as well as having negative environmental and social impacts. A report by the American Forest and Paper Association illustrated the commercial impacts of illegal logging on the US wood products industry [the report can be found in the Documents section on http://www.illegal-logging.info/papers/afandpa.pdf
The SFPI response strategy has involved:
1. A task force of company specialists.
2. Collating data and clarifying definitions on the size and scale of the problem to inform decision-making.
3. A pilot project with WWF on shared learning initiatives.
4. Multi-stakeholder dialogue and consensus building.
5. Intergovernmental processes, such as FLEG/FLEGT.
6. Company leadership actions, such as initiatives in supply chains.
WBCSD worked with WWF under a Collaborative Framework Agreement which involved a Latvian pilot project developing best practice in wood tracking and verification, and refining thinking on the term ‘illegal logging’, broken down into sourcing, harvesting and trade. A joint statement was produced for the first Forests Dialogue on Practical Actions to Combat Illegal Logging in Hong Kong in 2005. The Hong Kong Forests Dialogue made a number of recommendations which fed into G8 and the ENA FLEG process in St Petersburg in 2005.
WBCSD and the International Council for Forest Products Associations (ICFPA) developed a joint position on what should be included in the Ministerial Declaration. A key point to come out of the discussion was that law enforcement is the responsibility of governments and cannot be delegated to others.
Key requirements for the Indicative Action Plan include mobilising existing legislation and enforcement agencies that target criminal activities, avoiding legality licensing regulations or the use of government procurement policies as primary response mechanisms, recognising activities that are within and beyond the direct control of businesses, and promoting collaboration whilst recognising individual stakeholder’s roles. A ‘tool kit’ of flexible cost-effective solutions should be developed for forest managers and operators working in high risk areas and this should include:
· Geographic Information System (GIS)
· Environment Management System (EMS)
· Responsible purchasing policies
· Tracking/tracing systems
· Forest certification
· Chain-of-custody for certified sources
· Codes of conduct
· Company sustainability reporting
· Independent third-party auditing and certification
WBCSD also provides advice on company-level strategies for combating illegal logging: for example, keeping supply chains as short as possible, particularly when dealing with high-risk areas, focusing on long-term partnerships and investments, engaging in stakeholder dialogue and implementing third-party verification and chain-of-custody systems.
WBCSD’s approach can be summed up as the business case for action, which recognises:
· The frontline role of governments but also the roles and needs of other stakeholders.
· The need for a targeted approach – illegal logging has global impacts but local root causes.
· The value of coordinated and cooperative approaches, such as FLEG and other stakeholder initiatives.
· The scope and limits of company-level effectiveness – company operations and the supply chain are where companies can have the most direct influence.
· The need for responses which do not penalise legitimate operators, raise the cost of legal forest products or undermine the competitiveness of forest products in relation to other materials.
A key finding from the work with WWF in Latvia is the importance of traceability as a supply chain tool to document and verify wood origin and legality. Traceability initiatives have had a very significant impact on WBCSD member companies. For example, traceability is a condition of membership of the Forest Products Association of Canada (FPAC). FPAC members must report annually and include traceability information in a biennial sustainability report.
WBCSD has worked with many other companies and industry associations to encourage initiatives to combat illegal logging. Examples can be found in the PowerPoint presentation.
WBCSD commitments for 2007 include establishing a set of SFPI Membership Principles and Responsibilities which will be finalised by 31 March 2007. This is a voluntary code of conduct but will be a condition of participation in the SFPI. The code is broader than commitments on logging and includes commitments on governance, resource management, fibre sourcing, eco-efficiency and emissions, climate mitigation, health and safety, community/stakeholder engagement, and human rights/labour standards.
In conclusion, WBCSD would stress the importance of the following three points:
· Law enforcement is a government function.
· Do not impose regulations on legitimate business that will hamper its competitiveness.
· Work collaboratively with different stakeholders to find the most cost-efficient and effective tools relevant to the specific situation.
The full PowerPoint file of this presentation is available at: www.illegal-logging.info/presentations/25-260107/Griffiths.ppt (502k)
Discussion
Voluntary code of conduct: It was pointed out that the UK Timber Trade Federation (TTF) has had a code for a number of years; putting in place sanctions for your own members is difficult and third-party auditing has therefore been used. The question was raised as to whether WBCSD would have third-party auditing as part of their scheme. WBCSD want to secure the toughest principles possible and negotiations have so far taken a year. It is now up to individual companies to sign off on the principles. WBCSD is not a watchdog – the code is a tool that will work on an informal basis and the best judge of whether it works will be the stakeholders.
WBCSD and smaller companies: A question was asked about WBCSD’s involvement with smaller companies. WBCSD is associated mainly with larger companies, but its members will increasingly be involved in training and capacity-building for their suppliers. This issue is currently generating much debate as it is recognised that the approach of larger companies will need to change if they are to be able to fulfil their commitments.
Human rights: This is one of the eight points in the code of conduct but it was asked what impact it would have. Consultation on the set of principles raised concerns about the need to address human rights. The starting point must be national laws and in places where the law is silent on this issue, international mechanisms will be used.
EU FLEGT ACTION PLAN UPDATE
Commission update, including VPA status and Additional Options Consultation - Julia Falconer and John Bazill, European Commission
Recent developments include:
1. FLEGT partnership negotiations –
· Malaysia: the first session concluded on 19th January in Sarawak.
· Ghana announced in December 2006 in Brussels its ambition to conclude the agreement by the end of 2007.
· Indonesia intends to conclude the agreement by the end of 2007 and the first session is planned for March.
2. Informal discussions on FLEGT partnerships – informal discussions and preparatory work are ongoing with Cameroon, Congo, Central African Republic, Liberia, Gabon, Vietnam, Côte d’Ivoire and Ecuador. New enquiries are being received daily about the process.
Voluntary Partnership Agreements (VPAs) establish legality licensing for timber exports to the EU, allow EU customs to exclude timber if it does not have a FLEGT license from the partner country, and include capacity-building measures and measures to mitigate negative impacts on poor people. They will initially apply to a limited range of product categories but there is scope for partner countries to expand this.
Starting formal negotiations is the decision of the partner government. By entering into formal negotiations, there is a perceived commitment to reach an agreement, therefore there are risks; it will be difficult for the partner country to back out after six months if they are not happy with the process. The challenge is to address difficult governance issues while supporting responsible trade. Improving governance includes:
· Improved control systems to track and verify legal compliance.
· Systems to better capture revenues and rents.
· Enhanced transparency.
· Capacity-building – of governments, civil society and the private sector.
· Political and legal reform.
· Securing and maintaining market share.
There is recognition that there are potential loopholes in the licensing system, with potentially illegal products arriving in the EU from countries where no partnership agreements are in place. This has led to a consultation process on additional options for preventing this. The consultation was launched in December 2006 and will run until March 2007. Details and a web-based questionnaire can be found at: www.ec.europa.eu/yourvoice/consultations/index_en.htm
There are four options in the consultation:
- FLEGT VPAs – continue with the bilateral approach of VPAs which allows the targeting of resources. Other options could potentially make this less attractive.
- Private sector actions – the private sector has a key role to play in addressing illegal logging.
- A ban on imports of illegally harvested timber.
4. Legislation on placing on the market illegally harvested timber. A decision would need to be made on where the burden of proof lies - in proving legality or illegality.
A summary of the consultation will be published, followed by an impact assessment study, and decisions made on further measures to be taken.
The full PowerPoint file of this presentation is available at: www.illegal-logging.info/presentations/25-260107/bazill_falconer.ppt (148k)
VPA information point – Saskia Ozinga, FERN
A new website has been launched to monitor VPA negotiations: www.loggingoff.info
The site is a one-stop shop to be used by civil society, NGOs, the media, the timber industry and governments involved or interested in these negotiations.
Individual country pages track the progress of the VPA negotiations for each country which has expressed an interest in a VPA. The site is a tool for discussing and developing ideas and for stimulating best practice.
Discussion
Cost of VPAs: The point was made that VPAs are a very efficient tool for promoting sustainability but that they will put very heavy pressure on African producers – what financial help can they expect in adapting to the FLEG process? There are resources being made available from the Commission and member states. The Commission is seeking to set up different facilities for different stages of the process and needs to anticipate what VPA agreements will look like. There are different pots of money available and much has already been allocated.
The role of the European Forest Institute (EFI): A question was asked about the role of EFI in the VPA process. EFI is providing many services, including support for facilitation and technical assistance. EFI will manage the contracting in for the VPA process and has so far proved to be successful.
Indigenous people: Questions were raised about resources for supporting indigenous people. Money has already been contracted from two separate sources for indigenous people projects. The funds listed in the PowerPoint presentation are already approved and 13 of these involve indigenous people. The contracts are still being worked out and the details are not yet available.
EU procurement policy developments – Janneke de Jong, Dutch Ministry of Housing, Spatial Planning and the Environment; Neil Judd, UK CPET; Christian Lundmark-Jensen, Danish Ministry of Environment
The Dutch government has committed to procuring 100% sustainable timber by 2010, assuming this is available on the market. The government agreed on the need to develop a green procurement policy for timber in 2004, which required timber to be preferably sustainable and, as a minimum, legal. A certification system (BRL) was developed as an instrument to assess existing certification schemes. This was initially accepted but NGOs withdrew support for this in 2006. The government is now working on the development of an Equivalence Assessment Board, which would be similar to the UK Central Point of Expertise on Timber (CPET).
Until 2005, the Danish government had 50 criteria for timber procurement, but these only related to tropical timber purchases. An evaluation of these in 2005 resulted in a 9-point plan on legal and sustainable timber which relates to all timber. These are a temporary set of guidelines and a consultation and criteria assessment will be held in 2007, resulting in new and more specific product guidance. The new guidelines are likely to include 25 criteria for sustainability (approximately 15 will be the same as those used in the UK). There is a recognition that the criteria need to be more transparent and understand buyers’ needs.
The UK has recently carried out an evaluation of certification schemes, which confirmed that five schemes meet the Category A requirements for legality (CSA, FSC, MTCC, PEFC and SFI) and four for sustainability (CSA, FSC, PEFC and SFI). The UK will carry out the next review in 2008. In terms of Category B requirements (alternative means of assurance), the Netherlands, Denmark and the UK require assessment by an impartial party.
Industry is keen to see harmonisation between different country procurement schemes, and meetings are already taking place at government level. The aim is to identify common grounds for timber procurement policies. There is already a high level of convergence between the Dutch, Danish and UK schemes on areas such as the policy objectives, legality, CITES compliance, biological diversity, certification, chain of custody and labelling.