Marketing Strategies, Functions, and Benefits of Forest Certification: A Cross-cultural Comparison Toshiaki Owari, Ph.D. (The University of Tokyo, Japan)

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Certified Forests and Products 2007 (Kraxner et al., 2007) The area of certified forests worldwide totalled 294 million hectares, or about 7.6% of the world’s forests. The potential roundwood supply from the world’s certified forests is estimated at approximately 387 million m 3. The number of CoC certificates totalled 8,600, of which 63.4% were by FSC and 36.6% by PEFC.

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) The Market for Certified Forest Products … may have a significant impact on business and policy-making (Kraxner et al. 2005) … is not well understood due to the absence of official trade statistics (Rametsteiner et al. 2003) Market actors and policy makers are hampered by lack of information (UNECE 2005)

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Motivation We examined the role of forest certification in the Finnish wood products suppliers (Owari et al., 2006). In a country with different certification schemes in operation, there may be different perceptions within companies about forest certification. Further research should examine the situation in a number of different countries to reveal similarities and differences among them.

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Purpose The purpose of this study was to compare the role of forest certification in marketing between Nordic Europe (Finland and Sweden) and Japan.

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Status of Forest Certification FinlandSwedenJapan Certified forest (ha) 433,752 (FSC) 22,144,082 (PEFC) 11,233,982 (FSC) 7,047,960 (PEFC) 276,492 (FSC) 391,780 (SGEC) Chain of custody certificates 21 (FSC) 107 (PEFC) 115 (FSC) 68 (PEFC) 490 (FSC) 25 (PEFC) 64 (SGEC) FSC: Forest Stewardship Council PEFC: Programme for the Endorsement of Forest Certification schemes SGEC: Sustainable Green Ecosystem Council (August 2007)

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Study Framework Marketing strategies Products Customers Market area Competitive advantage Marketing functions Communication Pricing Supplier benefits Business performance Customer relations Public relations How important is certification for companies? How do companies use certification in marketing? What benefits have they gained from certification?

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Methods A nationwide survey with standardized questionnaire scheme was used for each country. Finland  Personal interviews with 25 wood products companies in Sep-Dec 2004  All having PEFC CoC, mainly small and medium sized Sweden  A self-administered electronic survey distributed to 149 companies in Dec 2004 (49 surveys undelivered)  27 usable responses by Mar 2005 (adj. resp. rate 27%)  70% having FSC CoC, 48% having PEFC CoC

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Methods Japan  A mail survey targeted 247 companies with FSC, PEFC, or SGEC CoC in Oct  132 usable responses (adj. resp. rate 54%)  93% FSC CoC  52% from paper products, 48% from wood products Non-response bias was examined using the extrapolation method and not considered a problem.

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Importance of Certification (Finland and Sweden) Not at all important Very important

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Importance of Certification (Japan) Not at all important Very important

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Channels Used for Communication (Finland and Sweden) Not used at all Used very often

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Channels Used for Communication (Japan) Not used at all Used very often

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Price Premiums (Finland and Sweden)

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Price Premiums (Japan)

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Benefits of Certification (Finland and Sweden) No benefit at all Very great benefit

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Benefits of Certification (Japan) No benefit at all Very great benefit

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Summary Marketing strategies  Certification as a reactive measure (Nordic Europe, Japan-paper)  Certification as a proactive measure (Japan-wood) Marketing functions  Communications did not actively use certification  A price premium was not possible for most companies Marketing benefits  Certification improved customer/public relations  Certification did not improve financial performance

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Discussion Why did the Japanese wood products suppliers have a unique perception?  Small forestry and wood industry companies proactively introduced forest certification as a tool to differentiate themselves in the marketplace. Is forest certification an effective marketing tool?  In contrast to the original premise, forest certification may compel suppliers, not consumers, to bear the cost of sustainable forest management.

Oct. 30, 2007 IUFRO All Division 5 Conference, Taipei (Owari, T.) Acknowledgements I thank Dr. Yoshihide Sawanobori and Mr. Tsutomu Ito for their assistance with data collection. This study was conducted in part through the Programme for the Promotion of Basic Measures in Forests and Forestry, sponsored by the Japan Forestry Agency. This paper was partly supported by the Japan Forestry Agency, and the Ministry of Education, Culture, Sports, Science and Technology, Grant- in-Aid for Young Scientists (B), , 2007.