1. CSR in the forestry sector and the sustainable timber supply
Module 2
CSR in the forestry sector and the sustainable timber supply
STA – UE Trainings of SMEs operators
(Place & Date)

2. Objectives: The concept of CSR and “sustainable forest management”
The environmental, social and economic consequences of illegal and unsustainable forest management practices
The concept of “legal timber” and the EU Timber Regulation
Sustainable forestry and chain of custody certification: FSC & PEFC
The fair trade in the timber sector
Remind participants to ask questions if something is not clear. Inform participants about the evaluation form to be completed at the end.

3. Introduction:
[interactive]
Group exercise – speak to neighbour. What do you think CSR and sustainable forestry means? (5 mins)
Collect answers on flipchart (10 mins)
WE will collect the answer and we will check later if they are correct or not....

4. The Corporate social responsibility
Social marketing = “Company’s decisions are taking into account the long-term interests not only of the internal but also of the external, indirect stakeholders, including:
clients and private customers
suppliers
environmental organizations
human rights organizations and trade unions
State and other Public Authorities
(Kotler, Armstrong, Saunders, Wong, 2001 mod.)
* The choice for a CSR tool is almost always voluntary, but it might be force or strongly suggest by a governmental regulation and market condition, like GPP policies or EU governance acts, li EUTR..
From SM to CSR = “CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary* basis” (EC definition do CSR)

5. CSR = operations & interactions
The CSR assumes different features according to the different level of interactions the company undertake and according to the different stakeholder involved

6. ? Un-sustainability paradigm Not always interlinked.... Non-fair FM
Illegal logging ?
Illegal logging, non-sustainable and non-fair forest management can be strongly, but not necessarily, interlinked. Some logging practices can be illegal from a juridical point of view, for example when laws for acquiring permission are not clear enough, and yet are sustainable and/or fair. Vice versa, legally sourced timber does not guarantee that the forest it comes from has been managed in a sustainable and fair manner.
Non-sustainable FM 6

7. The illegality in the forest sector
Country
% over total production
Bolivia 80
Brazil
Cambodia 90
Cameroon 50
Colombia 42
Ecuador 70
Gabon
Ghana 60
Indonesia
Laos 45
Malaysia
Up to 35
Myanmar
Papua New Guinea
Peru
Thailand 40
Vietnam
20-40
The illegality in the forest sector
Every 2 secs, across the world, an area of forest the size of a football field is clear-cut by illegal loggers, leading to the degradation and possible eventual destruction of five million hectares of forests each year.
In some countries, up to 90% of all the logging taking place is illegal.
Criminal activity generates approximately US$10–15 billion annually worldwide—funds that are unregulated, untaxed, and often remain in the hands of organized criminal gangs.
The illegal logs still being cut each year would stretch ten times around the Earth
(World Bank, 2012).
Much timber is still logged illegally
Some figures for tropical countries 7

8. Sustainable forest management
In May 2012 Global area of certified forest 394 million Ha
+ 4% (14.8 million hectares) since May 2011
Notes: Data cover all FSC- and PEFC-certified forest land together with land certified under the following large national certification
systems: Malaysian Timber Certification System (MTCS), American Tree Farm System (ATFS), Sustainable Forest Initiative
(SFI) and Canadian Standards Association (CSA). Data for national systems subsequently endorsed by PEFC (MTCS, ATFS,
SFI, CSA) are amalgamated into the PEFC data and not shown separately after the date of endorsement. The shown statistics are
not adjusted to reflect an estimated overlap of roughly 6.5 million hectares in FSC and PEFC certification.
Sources: Individual certification systems, Certification Canada and authors’ compilation, 2012
The world’s certified forest area is approaching 10%
Source: UNECE FAO 2012

9. Social related issues
Forests are home to an estimated 15 M indigenous people
Important cultural and social role of forests in many countries
Commercial logging competes for access to the land
Low concern for health and safety along the supply chain
Commercial logging, especially if illegal or non-sustainable, competes for access to the
land and its resources with those that live in forests, sometimes resulting in property and
resource-use rights conflicts or losses of local customary rights. In the worst cases,
unsustainable logging and management can result in corruption and localized violence, the
destruction of indigenous peoples' rainforest territories (with the related phenomenon of
migration), the disempowerment of local and indigenous communities, and the denial of
their human rights17.
Revenues from illegal logging have sometime fuelled national and regional armed
conflicts, as happened for example in Liberia, Democratic Republic of Congo, and
Cambodia18.
Illegal logging strongly contributes to the marginalisation (in both economic and political
terms) of SMFEs, thus limiting the recognised important roles that these enterprises can
play in rural development and the alleviation of rural poverty. Last but not least,
unsustainable forest management may not respect labour rights and health and safety of
forest workers. Big logging companies tend to offer local people temporary, low skilled and
hazardous jobs. This insecure “employment policy” may result in the loss (or a nonincrease)
of local social capital, and aggravate social distress and conflicts inside
communities19. 9

10. Environmental impacts
Deforestaion
The unsustainable consumption of forest products may lead to deforestation and forest degradation, with the loss of “ecosystem services” provided by forests and land use changes (i.e. forest conversion to plantations). Degraded forests decrease or lose the function to protect soil and water, contributing to soil erosion, flooding, landslides, worsening of soil fertility and water quality, and severe declines in productivity. 10

11. Environmental impacts
Land use conversion
1) Soy plantations: +100% in Latin America between 1994 and 2000
2) Grazing lands: 80% of Brazilian grazing lands took from natural forests
3) Oil palm plantations: covering 40% of Malaysian rural lands (including forests)
4) In Ecuador, Perù, Brazil and other countries, forests are cleared out to leave space to oil wells and oil pipes 11

12. Deseases, tree fall, fires…
Environmental impacts
Forest degradation
Sometimes, “naturally induced” forest-fires and disease outbreaks have stronger impacts on the forest then normal logging activities. Forest degradation due to abandonment is also consequence of a non-sustainable forest management
Deseases, tree fall, fires… 12

13. Economic impacts
Numerous and complex, and often strictly interrelated with social impacts
Lost revenues for producer countries' governments (Tanzania*)  market distortions + erosion of funds for poverty alleviation
Non-sustainable forest management can decrease forest productivity harming informal and subsistence economies
The economic impacts connected with unsustainable models of forest product
consumption are numerous and complex, and often strictly interrelated with social impacts
(see 2.4). Assuming some simplification, illegal logging practices result mainly in lost
revenues for producer countries' governments and global market distortions. The
opportunity costs of the lost revenue are huge: funds available for essential poverty
alleviation and development activities (e.g. health care, education, etc.) are reduced.
*Tanzania: For years now, Tanzania has been named as one of the countries in the world losing millions of revenue due to increasingly smuggling and illegal business of forest products. According to a report by Traffic International, a joint programme by the World Wildlife Fund (WWF) and the World Conservation Union (WCU), Tanzania lost some 58M US dollars annually during 2004 and 2005 in timber revenue due to poor governance and corruption in the forestry sector.
More lost revenues related to hunting, gathering and fuel wood and positive development opportunities (e.g. eco-tourism and NTFP markets) 13

14. Economic impacts
The present situation is better then 10 yrs ago, but loss are partly compensated by plantations...
Degradation (and loss of forest value) processes are not considered..
Source: 2011, FAO – FRA 2010 14

15. Social impacts
Losses of traditional local knowledge over cultural heritage, identity, values, and way of living
Property and resource-use rights conflicts or losses of local customary rights
Revenues from i.l. have fuelled armed conflicts (Liberia, RD Congo)
Commercial logging, especially if illegal or non-sustainable, competes for access to the
land and its resources with those that live in forests, sometimes resulting in property and
resource-use rights conflicts or losses of local customary rights. In the worst cases,
unsustainable logging and management can result in corruption and localized violence, the
destruction of indigenous peoples' rainforest territories (with the related phenomenon of
migration), the disempowerment of local and indigenous communities, and the denial of
their human rights.
Revenues from illegal logging have sometime fuelled national and regional armed
conflicts, as happened for example in Liberia, Democratic Republic of Congo, and
Cambodia.
Illegal logging strongly contributes to the marginalisation (in both economic and political
terms) of SMFEs, thus limiting the recognised important roles that these enterprises can
play in rural development and the alleviation of rural poverty. Last but not least,
unsustainable forest management may not respect labour rights and health and safety of
forest workers. Big logging companies tend to offer local people temporary, low skilled and
hazardous jobs. This insecure “employment policy” may result in the loss (or a nonincrease)
of local social capital, and aggravate social distress and conflicts inside
communities. 15

16. Quiz
How many ha of forest have been lost in the last decade worldwide?
How many people depend on the forests?
Do you think timber present in your domestic market may come from deforestation or illegal logging?
Do you think unsustainable forest management is undertaken within your country/region/province?... etc.
Participants answer together in groups, then give answers back to the group (10 mins)
Answers:
1) Around 13 million hectares of forest were converted to other uses or lost through natural causes each year in the last decade compared with 16 million hectares per year in the 1990s. Both Brazil and Indonesia, which had the highest net loss of forest in the 1990s, have significantly reduced their rate of loss 2) Around 10 million people are employed in forest management and conservation – but many more are directly dependent on forests for their livelihoods… 16

17. Taking actions
A growing awareness about environmental and social problems

18. Consumers increasingly interested in provenance of what they buy

19. What is a sustainable timber?
“Sustainable forest management, as a dynamic and evolving concept, aims to maintain and enhance the economic, social and environmental value of all types of forests, for the benefit of present and future generations (UN, 2007)
Sustainable management of forest implies three main issues:
Legality – that the forest owner/manager holds the legal right to harvest, and timber is harvested, processed and traded in compliance with relevant international, national and regional laws
Environmental sustainability – that the forest is managed in a way which preserves the health of the forest for future generations
Social sustainability – that timber is harvested, processed and traded with respect to the rights and working conditions of those directly affected
Legality will be considered a pre-condition once the EUTR will be fully implemented from March 2013 19

20. EU responsibilities in illegality
import 82,24 Mmc di illegal timber (~ 20%)
(EC e WWF UK, 2004)
ITALIA (or other country):
6° importatore mondiale
2° importatore europeo
1° partner di Camerun, Costa d’Avorio, Romania, Bosnia, Albania e Serbia
1°imp. legna da ardere
4° imp. cippato e scarti
10% imp. totale di legno per 2-4 Mld. US$
Idem
National data can be introduced here 20

21. How EU try to face illegality
EU Timber Regulation (EUTR) (from March 2013) prohibits the first placing of illegally harvested timber and timber products on the EU market. The legislation will require that due diligence is applied by companies that first place timber products on the EU market
EUTR cannot fully guarantee that all timber purchased by public authorities comes from legal sources, but the risk will be considerably lower from 2013 21

22. Other initiatives for legality
EU Forest Law Enforcement Governance and Trade (FLEGT) Action Plan that sets out actions to prevent the trade in illegal wood establishing Voluntary Partnership Agreements (VPAs) between the EU and several timber producing countries
As of February 2012 VPAs exist between the EU and Cameroon, Central African Republic, Ghana, Indonesia, Liberia, and the Republic of Congo
Essentially, FLEGT-licensed timber will be considered as legal for the purposes of the “EUTR
Different actions are being taken internationally to combat illegal and unsustainable forestry, and the most important of these are regulations to prohibit illegal timber, and certification schemes for sustainable forestry 22

23. Ensuring sustainability
FOREST EUROPE criteria for sustainable forest management (MCPFE)
ASPECTS
CRITERIA
Ecological aspects
1. Maintenance and appropriate enhancement of forest resources and their contribution to global carbon cycles;
2. Maintenance of forest ecosystem health and vitality;
3. Maintenance, conservation and appropriate enhancement of biological diversity in forest ecosystems;
4. Maintenance and appropriate enhancement of protective functions in forest management (notably soil and water);
Economic aspects
5. Maintenance and encouragement of productive functions of forests (wood and non wood)
Social aspects
6. Maintenance of other socio-economic functions and condition
These are also the reference criteria for PEFC forest management standards 23

24. Sustainable forest management certification
A sustainable forest management certification scheme:
requires compliance with the principles of legality, environmental and social sustainability
is able to provide independent, third party verification that timber is sourced from sustainably managed forests
includes mechanisms for tracing products from the forest of origin through the supply chain, to the end consumers called Chain of Custody (CoC). 24

25. Sustainable forest management certification
Internationally, 2 main forest certification schemes:
The Forest Stewardship Council (FSC) –
The Programme for the Endorsement of Forest Certification (PEFC) –
Most sustainable timber procurement policies accept either label as one way of demonstrating compliance with the sustainability requirements 25

26. At international level by ASI
Sustainable forest management certification
Third part verification system
At international level by ASI
At national level
Both FSC and PEFC are based on a 3rd part verification system including and external accreditation. For FSC the accreditation of all certification bodies is at international level by the Accreditation System International, for PEFC is organized at national level, each time by different accreditation organizations. 26

27. Chain of Custody rational
All COC “rings” shall be covered by a valid FSC COC certificate
The principle works for FSC as well as for PEFC 27

28. Labels significance (FSC)
Virgin FSC
FSC Controlled
Reclaimed
FSC 100%: 100% FSC certified inputs
FSC Mix: FSC certified inputs + Controlled Wood inputs + recycled inputs (labelling with min content of 70% certif. input, exception to 50% for some registered products)
FSC Recycled: reclaimed post-consumer (at least 85%) and pre-consumer inputs
For more information refers to FSC-STD V2-1 and FSC-STD V2-0 28

29. Non controversial source
Labels significance (PEFC)
Virgin PEFC
Non controversial source
Reclaimed
PEFC Certified: virgin, recycled and “non controversial” material (min 70% certified inputs and max 85% recycled inputs)
PEFC Certified & Recycled: reclaimed post-consumer or pre-consumer inputs and certified material
(min 70% certified inputs and min 70% recycled inputs)
For more information go to 29

30. Q&A and the CoC of a table
Group activity
[interactive]
Q&A and the CoC of a table
What are the causes of deforestation processes?
What are the consequences?
Is Europe responsible for deforestation?
How do you recognize a certified product?
Do you know certified timber/wood products suppliers in your country?
Let’s describe the chain of custody of a wooden table. Who need the certificate?
Forest manager?
Logger company?
Timber trader (broker)?
Wood worker?
Furniture producer?
Large retailers?
Installer?
To discuss and answer a series of questions based on the presentation to check understanding of concepts (20 min) 30

31. Fair trade in the timber sector
FLO logo, what is this? (Discuss it with your neighbour)
Presentation:
Definition of fair trade
Sectors where FT successfully introduced
Fair trade in forestry and dual certification experiences
Introduction to fair trade in the timber sector
Question to participants: show FLO logo, and ask what it is.(5 min)
Discuss with neighbour, what does “fair trade” mean. Then some report back to group (10 min)
Presentation covering (15 min):
broadly accepted definition of fair trade
Sectors where FT successfully introduced
Fair trade in forestry sector (i.e. so far very little, but would be very worthwhile to introduce – include reference to the few existing initiatives to combine with SFM) 31

32. Fair Trade
"Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the right of, marginalized producers and workers - especially in the South“ [accepted definition of Fair Trade, as agreed by Fairtrade Labelling International (FLO) and the World Fair Trade Organization (WFTO)] 32

33. Fair Trade Core Fair Trade Principles 1
Creating Opportunities for Economically Disadvantaged Producers (poverty reduction) 2
Transparency and Accountability (participation of producers in decision making) 3
Fair Trading Practices (pre payment, long term contract and relationships) 4
Payment of a Fair Price 5
Ensuring no Child Labour and Forced Labour (UN Convention on the Rights of the Child) 6
Commitment to Non-Discrimination, Gender Equity and Freedom of Association 7
Ensuring Good Working Conditions (ILO conventions) 8
Providing Capacity Building to workers and producers organisations 9
Promoting Fair Trade (raise awareness) 10
Respect for the Environment
Accepted principles of Fair Trade, as agreed by Fairtrade Labelling International (FLO) and the World Fair Trade Organization (WFTO)] 33

34. Fair Trade Sectors where FT successfully introduced1
Catering (fruits, drinks and snaks) 2
Tourist souvenir & merchandising 3
Outdoor furniture 4
Indoor decorative furniture 5
Handicrafts 6
Cloths 7
Leather products
Uncertainty to introduce FT criteria in procurement at EU level
Different national initiatives in EU countries (Bel, Ger, Dan, Ned, etc.)
Social criteria have entered in PA concern just recently, they are not yet a mainstream issue and so far they imply extra cost in procurement 34

35. Fair Trade and timber sector
Around 10 million people are employed in forest management (FAO, 2010)
Many more are directly dependent on forests for their livelihoods
Forestry employment is outside the formal sector  forest work is very important for rural livelihoods (FAO, 2010)
In some regions (Latin America, Africa) forest related employment increased somewhat probably because roundwood production has increased faster than gains in labour productivity.
But working and social conditions did not improve along the time, with direct implications for community livelihood
- Europe, East Asia and North America saw steep declines (15 to 40 percent between 1990 and 2005), 35

36. Combining SFM and fair trade
If forest products do not get a fair or premium price or no market access is assured, why should poor small forest owners spend more time and resources to make their forest management more sustainable?
The Fair Trade concept allows community and small forest owners to be compensated for managing their forests in a sustainable manner through an assurance of fair and premium prices.
Several initiatives that try to promote SFM have failed, due to:
Communities and small forest enterprises have little short term interest in applying sustainable forest management since they typically have other basic priorities.
Sustainable harvesting practices might be more expensive and time consuming: having a plan for controlling impacts on biodiversity might seem something superficial to forest owners that have to feed their families. 36

37. Combining SFM and fair trade
Dual certification case studies, actions and projects
Rubber sports balls
Furniture
Wood
Stationery and wood craft
Chile – SSc Wood Technologies SLIMF
Honduras - COATLHAL
Bolivia - Multiagro
Example
FORCERT: FSC + Fair Trade + Market and Training Services for small and community forestry 37

38. What is a sustainable timber?
Several int. agreements have attempted to define SFM:
Forest Principles. UN Conference on Environment and Development in (UNCED)  developed in FSC P&C for responsible forest management
Ministerial Conference on the Protection of Forests in Europe (MCPFE);
African Timber Organization (ATO);
International Tropical Timber Organization (ITTO);
Montreal Process on Criteria and Indicators for the Conservation and Sustainable Management of Temperate and Boreal Forests;
Pan-European Forest Process on Criteria and Indicators for Sustainable Forest Management (the Helsinki Process of the MCPFE)  origin of PEFC
When defining criteria for public procurement, some policies refer to these international non-binding agreements on principles, criteria and indicators for SFM. 38

39. FSC Principle & Criteria 1/2
Principle 1: Compliance with laws and FSC Principles – to comply with all laws, regulations, treaties, conventions and agreements and all FSC P&C
Principle 2: Tenure and use rights and responsibilities – to define, document and legally establish long-term tenure and use rights.
Principle 3: Indigenous peoples’ rights – to identify and uphold indigenous peoples’ rights of ownership and use of land and resources.
Principle 4: Community relations and worker's rights - to maintain or enhance forest workers' and local communities’ social and economic well-being.
Principle 5: Benefits from the forest – to maintain or enhance long term economic, social and environmental benefits from the forest.
FSC standards refer to the 10 FSC Principles which require the forest owner or manager to do the following activities… 39

40. FSC Principle & Criteria 2/2
Principle 6: Environmental impact – to maintain or restore the ecosystem, its biodiversity, resources and landscapes.
Principle 7: Management plan – to have a management plan, implemented, monitored and documented.
Principle 8: Monitoring and assessment – to demonstrate progress towards management objectives.
Principle 9: Maintenance of high conservation value forests – to maintain or enhance the attributes which define such forests.
Principle 10: Plantations – to plan and manage plantations in accordance with FSC Principles and Criteria. 40