WBCSD @ RIIAWBCSD @ RIIALondon, January 25th, 2007London, January 25th, 2007

Illegal Logging Update & Illegal Logging Update &

Stakeholder ConsultationStakeholder Consultation

Global Company PerspectivesGlobal Company Perspectives James Griffiths, WBCSDJames Griffiths, WBCSD

Sustainable Forest Products Industry Sustainable Forest Products Industry working groupworking group

Agenda today Agenda today

1.Offer global company perspectives on action and strategies to address illegal logging & illegal trade challenges

• The business case for action

2.Profile a range of current business initiatives, including member companies

But start by introducing the World Business World Business Council for Sustainable DevelopmentCouncil for Sustainable Development (WBCSD) and its focus and involvement on sustainable forest management

WBCSD – who are we?WBCSD – who are we?Coalition of 200 leading global companies:

• 35 countries, 25 major sectors, including forestry/forest products

• Global network of 60 national & regional business councils & partner organizations

• Critical mass: member company aggregations

– USD 5,000 billion revenues = Japan

– 12 million employees > Portugal

– 3 billion consumers per day serviced/supplied

WBCSD – what do we do?WBCSD – what do we do?Shared commitment to Sustainable Development

• Economic growth + Ecological balance + Social progress

• Development now without compromising prospects of

future generations

Mission is to provide business leadership as a catalyst for

Sustainable Development

Business action + Policy development + Best practice + Global

Outreach programs and activities to earn, retain and

expand the business license to operate

www.wbcsd.orgwww.wbcsd.org

WBCSD & forestry/forest productsWBCSD & forestry/forest productsSustainable Forest Products Industry (SFPI) working

group – formed 1996 but active since 2002/03

• International forestry/forest product companies:

– Aracruz, Grupo Portucel Soporcel, International Paper,

MeadWestvaco, Metsäliitto, Mondi International, Nippon Paper,

Norske Skog, Oji Paper, SAPPI, SGC Paper, Stora Enso, Sozano,

UPM, Weyerhaeuser (@ 55 % global forest product sales)

• Major customers/service/ suppliers: Caterpillar, Global Forest

Partners, Kimberly-Clark, P & G, Time Inc, PwC

• Observers: The Forests Dialogue, National Council for Air & Stream

Improvement, International Council of Forest & Paper Associations.

SFPI Working GroupSFPI Working Group Mission:Mission:

– Global platform for leading companies to collaboratively define

sustainability in the forest products industry.

– Improve performance; enhance customer & stakeholder confidence.

Scope:Scope:

– License to operate, innovate, develop and market forest products by

addressing critical international issues associated with:

• Sustainable Forest Management, Wood & Fiber sourcingSustainable Forest Management, Wood & Fiber sourcing

• Energy, Carbon emissions & sequestration

ApproachApproach::

– Collaborative relationships; Catalyze consensus building with other

stakeholders; Individual and joint company leadership & action

Illegal Logging & Illegal TradeIllegal Logging & Illegal Trade• A very serious and high priority concern for international

forest industry

• Undermines sustainable forest management and creates significant market distortions

– Negative environmental & social impacts

– Unfair competition by depressing prices & profitability

– Damages industry reputation, undermines market acceptance and encourages product substitution

» AFPA’s study clearly identified scope/scale (Nov 2004)

• Concern shared by governments, IGO, NGO, customers & communities

Combating Illegal LoggingCombating Illegal Logging

A priority issue for the SFPI Working Group – our response strategy:

1.Task Force of company specialists (since 2003)

2.Data and definitions = size & scale of the problem to inform our response (2003/04)

3.Pilot Project – shared learning initiatives (2004/05)

4.Multi-stakeholder dialogue & consensus (2005)

5. Intergovernmental processes FLEG/T’s (2005)

6.Company leadership actions (2006 - 2007)

There is real value in joint actionThere is real value in joint actionWorked with WWF International under Collaborative

Framework Agreement

• Latvian pilot project developing best practice wood

tracking & verification (2003/04)

• Refining thinking on the term of illegal logging –

sourcing, harvesting & trade

– Joint statement for the The 1st Forests Dialogue

(TFD) on Practical Actions to Combat Illegal

Logging, March 2005 in Hong Kong

The Forests Dialogue – seeking multi-The Forests Dialogue – seeking multi-stakeholder consensusstakeholder consensus

Hong Kong TFD made several recommendations:

• Encourage collaboration to address problem

• In “high risk” countries consider developing

– nationally relevant legality standards – clarification process

– rating systems for targeted countries & species

• Encourage companies to use effective wood tracing systems

• Urgent individual and collective Government action e.g.

– G8 and other inter governmental approaches such as FLEGs

– Target bilateral programs & ODA investments in capacity

building

– Greater enforcement of existing legal remedies

TFD 2-3 November, 2005 in St PetersburgTFD 2-3 November, 2005 in St Petersburg

Some important society/business messages targeting the Europe &

North Asia FLEG Ministerial Process TFD

• Partnerships between responsible forest industry and civil societies

have led to innovation and best practice. However, this is not a

substitute for comprehensive government action.

• More regulation without addressing corruption leads to further

corruption and fraud.

• Provide positive incentives for forest business with a proven track

record.

• Support the markets for legal and sustainable forest products in ways

which avoids penalizing legal operations.

WBCSD and ICFPA joint positionWBCSD and ICFPA joint positionThe Ministerial Declaration NEEDS TO -

• State that law enforcement is a government function.

• Recognize national sovereignty over natural resources and use.

• Reflect the importance of

– Well-defined and full respect for property rights

– Clear requirements & obligations for land tenure and use rights.

– Transparent processes for allocating & pricing of harvesting rights.

– Clear and unambiguous legal definitions and regulations. e.g. no conflicting regulations over forest management and resources use.

WBCSD and ICFPA joint positionWBCSD and ICFPA joint position

The Indicative Action Plan NEEDS TO -

• Mobilize existing legislation and enforcement agencies targeting criminal activities.

• Review existing legislation before considering additional laws.

• Avoid legality licensing regulations or the use of Government procurement policies as primary response mechanisms.

• Do not to burden legitimate business and hamper it’s competitiveness against illegally sourced products or substitute materials.

• Recognize which activities within in/beyond the direct control of business.

• Appreciate stakeholders’ respective roles but promote collaboration.

WBCSD and ICFPA joint positionWBCSD and ICFPA joint position

Enable and stimulate the use of a “tool kit” of flexible, cost effective solutions for forest managers/processors operating in high risk areas:

– 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 3rd party Auditing and Certification

Advice on Company level strategiesAdvice on Company level strategies

• Actively recognize, analyze & manage the risks related to legality and sustainability – due diligence & investment screens

• Assurance of the origin & legality of wood is an essential part of procurement principles and practices

• Focus on long term partnerships and investments• Have active local representative network• Involvement & leadership of local industry associations• Increase own logging operations & keep supply chains short • Offer training and capacity building to promote sub-supplier’s

performance• Implement third party verified traceability and CoC systems• Engage in stakeholder dialogue and demonstration and shared

learning projects

The business case The business case for actionfor action

  

Business case for action - recognizesBusiness case for action - recognizes

“Frontline” role of governments:

– Framework conditions

– Forest law enforcement & governance

But also the roles & needs of other stakeholders

– Societal circumstances, concerns and

expectations

– Customer & consumer assurance

Business case for action - recognizesBusiness case for action - recognizesNeed for a targeted approach

– Illegal logging has global impacts but local roots causes

Value of coordinated and cooperative approaches

– Investing in FLEG capacity building & SFM for economic growth a greater focus of ODA assistance/multilateral programs

– Stakeholder initiatives – business, NGOs, communities

Scope and limits of company level effectiveness

– Company operations & supply chain management where companies can have greatest direct control and impact

Business case for action - recognizesBusiness case for action - recognizes

Need for appropriate responses that do not:

• Penalize legitimate operators & local forest owning & dependent communities

• Raise the cost of legal forest products and thereby make illegal logging & trade even more profitable

• Undermine the competitiveness of forest products relative to non wood alternatives

– Steel, cement, plastic

– Non renewable, higher energy intensity and not as recyclable

Traceability – important supply chain tool to Traceability – important supply chain tool to document & verify wood origin & legality document & verify wood origin & legality

Traceability systems

• « At risk » wood flows

• Verify wood origin

• Verify compliance with

corporate policies and national

legislation

• Can be third party verified

through EMAS, ISO 14001,

Chain-of-Custody, Controlled

Wood Verification

Source: Latvia Case Study

Auditing

Wood origin data

Contracts

C

B

A

External auditsD

Profiling some Profiling some industry & company industry & company

initiativesinitiatives  

Forest Products Association of Canada Forest Products Association of Canada

Scope : All Canadian operations of FPAC member companies

How : Traceability commitment in 2006

“FPAC members commit to tracing their fibre supplies

back to the forest area of origin, by the end of 2008, to

assure customers that the wood fibre they are using

comes from legal sources.”

Traceability is a condition of membership to FPAC.

FPAC has also a Statement on Illegal Logging which

commits its members “ to purchase and use wood

coming only from legal sources”

http://www.fpac.ca/en/customer_centre/resources/Statement_on_Illegal_Logging.pdf

Forest Products Association of Canada Forest Products Association of Canada

How : Mechanism(s) to verify that the wood procured is from legal sources :

supplier evidence of legal right to harvest through tenure or ownership; or

a chain-of-custody certificate; or

an auditable supply chain management system; or

relevant audit results from suppliers or customers; or

supplier SFM certification

Assessment: Annual reporting to FPAC and inclusion in the biennial Sustainability Report

For more info: www.fpac.ca

American Forest & Paper AssociationAmerican Forest & Paper Association

Who: The Alliance to Combat Illegal Logging:

Formed by the American Forest & Paper Association and Conservation International

What:

The primary objective of the Alliance is to use remote sensing technology to detect illegal logging in priority protected areas, and convey the information to local enforcement agencies and encourage enforcement action.

American Forest & Paper American Forest & Paper AssociationAssociation

AF&PA / CI Alliance to Combat Illegal Logging cont.

Where: The Alliance has identified a series of candidate protected areas and is currently focusing on work in Indonesia and the Philippines

How: Strengthen existing enforcement regimes by quickly and accurately detecting illegal logging activity using an array of both state-of-the-art and low-tech satellite remote sensing techniques;

• Promote rapid response by streamlining access to high quality information; and strengthen the capacity of government agencies to follow-up on surveillance with effective enforcement.

• Rapid detection will enable local response teams to backstop government enforcement personnel, and the dissemination of satellite-based evidence of illegal logging activity to government, industry and civil society will support improved forest management and transparency.

Other examplesOther examples  

Go to UPM's PPT

Oji Paper Co LtdOji Paper Co Ltd

What: To confirm legality of imported and domestic woodchips to comply

with new government procurement policy of Japan

How: Obtain traceability reports from imported woodchip suppliers at

every shipment by woodchip carriers & from domestic woodchip

suppliers.

Assessment: Confirmed legality of all woodchips purchased by 1,016

reports obtained in FY2005.

For more info: http://www.ojipaper.co.jp/english/sustainability/procure_policy/index.html

http://www.ojipaper.co.jp/english/sustainability/e_report/pdf/2006/report_con05_2006.pdf

From Russia…with TransparencyFrom Russia…with Transparency

Who: Stora Enso, Time Inc, Axel Springer, Time Inc, Tetra Pak, Randon House + local partners + NGO’s (Transparency International)

What: Collaboration to improve the sustainability & transparency of wood from Russia along an entire value chain and final product segments

How: Learning project to increase legal compliance, reduce safety risks and enhance SFM within Tikhiv and Chalna harvest areas – training, capacity buildings, new IT tools, pre group certification standard development and final certification

Results/Assessment: Identifiable improvements in all performance areas – value and role of 3rd party verification confirmed

For more info: Dec 2006 publication http://www.tikhvinproject.ru

WBCSD commitments in 2007WBCSD commitments in 2007

SFPI Membership Principles & Responsibilities being finalized – by 31 March 2007

Voluntary code of conduct

BUT a condition of working group participation

Eight performance areas + reporting on progress via company SD reports

• Governance, Resource management, Fiber sourcing, Eco-efficiency & emissions, Climate mitigation, H & S, Community/stakeholders, Human rights/labor standards

Provisions address illegalityProvisions address illegality1. Governance

1.3 Work against corruption and illegal practices in all their forms.

2. Resource Management

2.1 Use SFM in all forests we own, lease or manage…

2.4 Progressively and systematically introduce credible forest certification in the forests we own, lease or manage.

3. Fiber Sourcing

3.1 Manage supply chains to obtain purchased fiber from acceptable sources, using contract requirements and education and outreach programs, as appropriate….

3.2 Ensure legal ownership of all fiber and wood utilized and comply with all applicable laws in forestry operations.

3.3 Introduce credible, independently certified wood-tracing systems where needed to address significant risks.

Final pointsFinal points

• Law enforcement is a government function.

• Don’t impose regulations on legitimate business that will hamper it’s competitiveness.

• Work collaboratively with different stakeholders to find the most cost efficient and effective tools relevant to the specific situation.

Thank you!Thank you!Questions?Questions?

  

www.wbcsd.orgwww.wbcsd.org