WBCSD & WWF Collaboration on sustainable forest management

Per Rosenberg Executive Director, Global Forest and Trade Network

The Forests DialogueHong Kong, 09 March, 2005

Content WBCSD WWF Collaborative Framework

Agreement WWF WBCSD Joint Statement for the TFD

on illegal logging Presented by Per Rosenberg, GFTN

Provide context for joint case study on verifying legality of wood origin in Latvia Presented by Anna-Liisa Myllynen, Stora Enso,

Chair WBCSD WWF Pilot Project Team

WBCSD WWF Collaborative Framework Agreement Objective – positively influence global sustainable

forest management & industry issues, processes and developments

Signed Jan 2003 between WWF International WBCSD’s Sustainable Forest Products Industry working

group (14 global forestry/forest product companies) Framework for

Consultation and platform joint research, work programs & communications on strategic issues

WBCSD WWF Collaborative Framework Agreement Principles

Open & honest dialogue/Chatham House Rule Consensus on joint action & communications on

Framework activities Involvement of other stakeholders Credible outputs based on research, transparency

and stakeholder input e.g. via The Forests Dialogue Priorities 2004 and 2005

Forest certification Illegal Logging & Illegal Forest Products Trade

WWF WBCSD Joint Statement for the TFD on illegal logging What is it and what is our intent?

Leadership statement from global NGO and business stakeholder groups for the TFD process

Outlines our common views about illegal logging & its impacts

Provide some clarity around the definition of illegal logging to facilitate stakeholder focus and action

Outlines set of joint activities to combat the problem

Others are welcome to support and join us!

WWF WBCSD Joint Statement: Recognize:Recognize:

Extensive scope & serious env, eco & social impacts Coordinated action needed to strengthen good

governance, ensure law enforcement & combat practices that undermine sustainability

Clear understanding of the term will facilitate and focus stakeholder action to address casual factors

Stakeholders need to appreciate respective roles, set priorities and implement cost effective, just and timely responses

WWF WBCSD Joint Statement:Understand – our Understand – our « definition »:« definition »:

Focus on widespread, systematic and premeditated violations, and not isolated, unforeseen infractions

Three components parts Illegal sourcing - when unprocessed wood is procured in

absence of the sellers legal right to sell or harvest Illegal logging – timber harvesting in violation of relevant

forestry & environmental laws and regulations Illegal forest products trade – procurement, processing,

distribution & marketing of forest products from wood obtained by illegal sourcing or illegal harvesting and/or not in compliance with relevant national & international trade laws

WWF WBCSD Joint Statement:Agree that:Agree that: Varies in causes, intensity, impact & nature

Different responses and levels of stakeholder participation needed

Some illegal activities require international action because of level/extent of impacts

In some countries this is part of larger governance and corruption problems

Forest products meet legitimate needs but lack of information on raw material origin can undermine confidence

WWF WBCSD Joint Statement:Agree that:Agree that:

Robust, reliable and auditable tracing systems can help stakeholders counteract/curtail illegal activities

Best practice traceability and procurement systems can help when consistently applied by companies

Credible, independent forest certification can help if legality and enforcement addressed, although limitations in countries with extensive corruption

Enhanced public awareness important to support political solutions in countries weak enforcement

Legal compliance is a basis requirement but cannot in itself guarantee long term sustainability forests & ecosystems

Processes need to be sensitive risk of injustice, comply competition, consumer, environmental & trade law

WWF WBCSD Joint Statement:Announce collaboration with Announce collaboration with stakeholders to:stakeholders to:

Further joint projects focusing regions/framework conditions that drive illegal sourcing, harvesting & trade

Evolving best practice company traceability and responsible purchasing policies e.g. Latvia case study

Support TFD & positively engage FLEG/FLEGT Urge WBCSD member companies to seek dialogue

around tracing systems and improve practices if needed Encourage other stakeholders to appreciate distinction

between illegal sourcing, harvesting & trade in their discussions and responses

Activity promote agreement to other audience groups

WBCSD & WWF Pilot Project on Illegal Logging in Latvia Anna-Liisa Myllynen

VP, Forest Environment, Stora Enso Wood Supply Europe

The Forests DialogueHong Kong, 09 March, 2005

Content

What is WBCSD & WWF pilot project on illegal logging in Latvia?

Questionnaire to forest companies Results of the questionnaire; best practices Conclusions

Next steps

Participants of the WBCSD & WWF pilot project in Latvia

Norske Skogindustrier ASA Silva / Thomesto Ltd, Metsäliitto Group Stora Enso UPM-Kymmene Pasaules Dabas Fonds WWF International World Business Council for Sustainable Development

Background State Forest Service statistics:

illegal logging was 0.8% of total harvesting volume in 2003 Logging without a felling license in own or other property Ignoring normative requirements

WWF/WB Alliance study: Evasion of income tax: a substantial portion of private forest

owners pay income tax Illegal practices provide a cost advantage of 15-20% in

comparison with legal business Evasion of social charges currently affects 6 000 - 10 000 forest

workers Loss of budget revenue estimated at USD 15-30 million/a

Goal

Case study on developing best wood tracking practices

for verifying legality of wood origin in Latvia,

Based on the existing wood tracking systems of companies operating in Latvia

To support distribution of the best practices in Latvia and other countries

To support dialogue with authorities to improve the law enforcement in Latvia

To support the Forests Dialogue (TFD) process on illegal logging

Working mechanism

Questionnaire sent to the main forest sector enterprises in Latvia

11 biggest logging and wood processing companies Reply from 7 companies

Work group discussions based on questionnaire results Preparing case study paper and slides Distribution

Questionnaire to forest companies What kind of documents do you require from suppliers concerning the origin

of wood?

What kind of additional requirements/activities do you perform to verify wood origin?

Could you describe these activities? What kind of requirements do you include in wood purchase contracts

regarding wood origin?

Suppliers Required byProcurement point

Standing forest By the road side At the mill gate

Forest owners

Law

Company

Logging companies

Law

Company

Wood traders

Law

Company

Results, summary

All respondents at all wood trade points ask for Wood Transportation Waybill (WTWB), as required by law

Additional measures, exceeding the requirement of law: Clauses in wood purchasing agreements Proof of the wood origin and legality is wood cutting license Supplier and forest audits can take place in order to verify the

delivered information and forestry practices Third party verification increases credibility and transparency

Wood origin documentsSupplier

Required by

Delivery place

Standing forest By the road side At the mill gates

Forest owner

Law WTWB (CL) WTWB (CL) WTWB (CL)

Company

CLCL, agreement (Land book, authorization, ID document)

CLCL, agreement(authorization, ID document)

CLCL, agreement(authorization, ID document)

Logging company

Law WTWB (CL) WTWB (CL) WTWB (CL)

CompanyCLCL, agreement

CLCL, agreement

CLCL, agreement

Wood trader

Law WTWB WTWB WTWB

Company

CLCL, agreement

CL, agreementCL or CL list, agreementCL or CL number in WTWBCL or CL number in WTWB, agreement

CLCL, agreementCL or CL list, agreementCL or CL number in WTWBCL or CL number in WTWB, agreement

CL – cutting licenseWTWB – wood transportation waybill

Environmental clauses in contracts Signed

with main suppliers or all suppliers prior to delivery with big suppliers, or on wood delivery with small

suppliers

Included requirements: Supplier has environmental policy Wood origin is known and documentation filed Information can be verified Wood is procured in a legal way Audits can be done by the buyer’s representative or by third party No wood from protected areas unless in line with protection plan Supplier is responsible for sub-suppliers’ and contractors’ activities Clause allows to discharge contract and reject non-acceptable

wood

Wood origin information

Cutting license issued by State Forest Service Cutting license contains information about:

Unique license number Forest owner Property name and location Land register number Cutting site: cutting type, area, main species, volume Etc.

Companies ask for: Cutting license copy Cutting license number in WTWB List of cutting license numbers

Audits Audits assess

the way suppliers collect and file their wood origin data, reliability supplier’s legal status authenticity of the cutting license own wood origin data filing system forestry practices in logging area (legislation and instructions) Environmental and biodiversity aspects in logging area

Different audits Internal audits for control, monitoring and development Supplier audits to verify wood origin information Field audits to verify wood origin and forest management practices

Third party audits of certified system ISO 9002, ISO 14 001, Chain-of-Custody

Wood origin tracking system - recommendations

Basic requirements: Company commitment on wood legality that is addressed to

suppliers with contract Wood origin information is based on cutting license Auditing system is in place to prove wood origin and legality

Optional Third part verification of system as part of ISO/EMAS/CoC

Conclusions

Wood origin tracking system is a major step of verifying the origin and legality of wood

The most important challenge in Latvia is ensuring legal business environment in the forest sector

To ensure fair competition in the market, more attention needs to be paid to preventing phenomena such as tax evasion, money laundering, etc.

This can only be solved by the Latvian government, using a combination of measures, in cooperation with private sector and non-governmental organizations.

Conclusions

The project allowed project partners to develop a better understanding of the scope and magnitude of the problem

The project’s conclusion can also benefit other actors in Latvia, as well as other industries and countries.

WBCSD and WWF pilot project in Latvia is a good example of how the forest companies together with NGO's can work at regional level to reach a common goal.

Next steps

WBCSD & WWF Latvia Case study paper published and communicated

Dialogue with national authorities in Latvia The working group suggests WBCSD & WWF to contribute in

dialogue with Latvian government

Dissemination of results to other regions The working group suggests WBCSD & WWF consider to

engaging in dialogue in other relevant regions and sectors