Matching Business Values with Forest Certification Systems

Transcription

1 A M E T A F O R E P U B L I C A T I O N Matching Business Values with Forest Certification Systems A F O R E S T C E R T I F I C A T I O N E V A L U A T I O N T O O L F O R B U Y E R S J U L Y

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3 Matching Business Values with Forest Certification Systems M E TA F O R E R E P O RT J U LY This evaluation tool was written and edited by Metafore s Sheldon Zakreski, Samuel C. Doak and Mark Evertz. The authors thank the many expert reviewers from the business, educational, environmental and governmental communities for providing valuable comments and advice on various drafts of this document. The information and counsel provided was instrumental in delivering the final comprehensive evaluation tool.

4 Table of Contents Foreward Forest Certification Tool for Buyers Overview Certification Framework Flowchart Identifying Corporate Objectives for Forest Certification Business Values Matrix Independent Third-party Certification Systems Building a Certification Strategy from Values Summary: Putting It All Together APPENDIX: Meshing Business Values with Forest Certification Systems Third-party certification: Key Elements of Independent Credibility Defining Certification Guiding the Profile Defining Foundations of Independent Certification Systems Governance Standardization Accreditation Verification Tracking and Labeling Conclusions References

5 Foreword The Forest Certification Evaluation Tool for Buyers is Metafore s latest offering designed to help business buyers purchase wood and paper in a responsible manner. This new tool delivers a business-driven approach for incorporating forest certification into responsible forest product purchasing practices. We believe starting with business values instead of force-fitting certification standards into existing purchasing procedures enables corporations to take a more holistic approach to incorporating forest certification into the way they buy wood and paper-based products. The use of forest certification to express environmental commitment and ensure a consistent, high-quality and affordable supply of wood and paper is gaining widespread recognition in organizations that rely on forest products to conduct business. It is in this climate of growing interest and adoption that Metafore has taken on the task of presenting certification as one of the many ways for the corporate sector to implement responsible purchasing practices. There are a wide variety of forest certification systems available in the world today each with unique benefits for business consumers. This tool helps business procurement personnel arrive at their own conclusions on certification, and then mesh their corporate values with the attributes available within the various certification systems. As such, this tool does not compare certification systems or provide direction on which certification system is best. We believe that is up to you the business buyer. 1 This evaluation tool represents a logical starting point for businesses as they grapple with ways to further their corporate social responsibility initiatives through responsible forest product purchasing and use. Beyond the scope of the Forest Certification Evaluation Tool for Buyers, Metafore s evolving approach to global forest integrity includes an array of business actions that can be taken immediately to enhance global forest conditions. Some of these actions include business decisions such as avoiding forest products derived from illegal sources, responsible material selection and the efficient use of wood and paper for business operations. We look forward to working with you in the future as you implement wood and paper purchasing practices built on a solid foundation of business logic, environmental goals and social objectives. Warm regards, David A. Ford President and Chief Executive Officer Metafore

6 A Forest Certification Evaluation Tool for Buyers OVERVIEW The concept of independently verifying forest management practices began in the late 1980s. The idea behind this movement was to use market-based incentives to encourage sustainable forest management practices that reach regions where regulation is lacking, and exceed governmental standards in more regulated countries as a means of being proactive. Growing environmental awareness and consumer demand for more socially responsible businesses helped third-party forest certification emerge in the 1990s as a credible mechanism for communicating environmental and social performance of forest operations. Using this approach, an independent organization develops standards of good forest management, with independent auditors issuing certificates to forest operations that comply with those standards. This certification verifies that forests are well-managed as defined by a particular standard and ensures that certain wood and paper products come from responsibly managed forests. 2 This rise of certification as a prevailing forest management practice led to the emergence of several different systems throughout the world. As evidenced by the rise of multiple certification systems, there is no single accepted forest management standard worldwide, as these systems take divergent approaches to define standards for sustainable forest management. The various forest certification systems are distinct in terms of their creation, motivation and scope. These differences present a challenge for potential users of certification who are interested in determining which systems best meet their needs. There are many potential users of certification including forest managers, companies, investors, environmental advocates and individual citizens all with varying interests and objectives. Metafore developed this forest certification evaluation tool especially for business buyers interested in clarifying the role of certification as part of a comprehensive responsible forest products purchasing policy. This tool enables the evaluation and specification of the wood and paper products purchased in the course of business, whether part of product lines, capital projects or daily operations. Third-party forest certification is an important tool for businesses seeking to ensure that the paper and wood products they purchase and use come from forests that are well-managed and legally harvested. Incorporating third-party certification into forest product procurement practices can serve as a centerpiece for comprehensive wood and paper policies that include protection of sensitive forest values, thoughtful material selection, efficient use of products, and more. This business tool allows the user to establish his or her unique reference point for evaluating third-party forest certification systems. This baseline is established by first identifying and prioritizing a company s values and objectives through a certification-oriented lens.

7 The evaluation tool is also unique in that it approaches certification with a business values first approach. Metafore is well aware that policies on certification that are in conflict with or of a lower priority in relation to business objectives are tough for businesses to implement. It is for this reason that the first step in employing the Forest Certification Evaluation Tool for Buyers is to clarify business values and objectives through a Business Values Matrix that helps companies define top priorities. This completed matrix then guides the evaluation of which certification system or systems are the best fit for the business. This document includes a profile on the key elements present in independently credible certification systems. The profile presents a high-level overview on operations, governance, verification procedures and actual standards of the most widely used certification schemes in North America, with guidance from the International Organization for Standardization (ISO). The Forest Certification Evaluation Tool for Buyers includes three primary steps companies can take to develop internal strategies for using forest certification systems as a tool for responsible wood and paper purchasing. Step 1: Clarify Corporate Values and Objectives The intent of the tool is to aid businesses in determining which attributes of certification best match their own values and objectives. To help businesses incorporate corporate objectives into purchasing policies, Metafore developed the Business Values Matrix to help companies rank and prioritize values and objectives as they relate to forests and forest certification. 3 Step 2: Consider Only Credibly Independent Third-party Systems A truly independent certification system is developed and implemented in an open, transparent and reasonably unbiased manner. These terms are defined in greater detail later in this report. Using both guidance from ISO and the practical experience of three systems operating in North America, Metafore identified governance, standardization, accreditation, verification, and tracking and labeling as the components necessary for a credibly independent third-party system. Step 3: Link Business Objectives to Specific Certification Systems This final step requires deeper investigation to mesh corporate objectives with available certification systems. The investigation involves extracting or creating core values for the company related to forest products use and purchasing, and using those to influence which certification system characteristics best integrate with those values. A forest certification evaluation tool flowchart on the following page illustrates this step-by-step process, and provides a quick-access reference sheet for buyers as they begin the certification evaluation process.

8 Metafore is available to assist interested users in facilitating the decision-making process when applying this framework. In addition, Metafore also welcomes the opportunity to consult with companies and their advisors to make this policy development exercise relevant and useful to the organization. Certification Framework Flowchart 4

9 Identifying Corporate Objectives for Forest Certification Forest certification is a tool that businesses can use to meet specific objectives as they purchase wood and paper products. For businesses that seek to develop strategies for using forest certification, the first step is to clarify those objectives and the core corporate values and goals that influence them. Business goals may range from enhancing corporate reputation and supply chain integrity to driving social and environmental progress on the ground and at a global level. The Business Values Matrix is the starting point for users of the Forest Certification Evaluation Tool for Buyers. The matrix is designed to help companies clarify and prioritize corporate values and objectives as they begin to develop strategies on forest certification relating to purchasing wood and paper. The matrix is divided into four sections, representing four broad goals: Enhancing corporate reputation, improving supply chain efficiency, advancing forest ecosystem conditions, and promoting improved social conditions. Within each goal, users can select objectives that mirror the core values of their businesses. The Business Values Matrix is designed to help companies clarify and prioritize corporate values and objectives as they begin to develop strategies on forest ENHANCING CORPORATE REPUTATION certification relating to Improving a company s reputation with various stakeholders purchasing wood and paper. has a number of strategic benefits. For example, many businesses want to develop favorable relationships with environmental groups because of the knowledge they may provide on a multitude of environmental issues. In addition, the support of these groups can often translate into improved business credibility with customers and shareholders. Regulators are often intrigued by companies that are taking leadership positions on issues such as environmental and social responsibility. By doing so, companies stay ahead of potential regulatory initiatives that might affect their businesses by being proactive on the environment. Finally, companies can benefit by helping their trade associations meet certain goals related to the forest products they use. Therefore, the values matrix allows users to assess the attractiveness of using their certification strategy as a basis for engaging environmental non-profits (ENGOs), regulators, trade associations and other stakeholders. 5 IMPROVING SUPPLY CHAIN EFFICIENCY Certification can be used as a tool to develop a more efficient and environmentally responsible wood and paper supply chain. The most direct motivation is to attract or increase the share of consumers who also consider environmental attributes prior to making forest product purchases. Aligning with like-minded companies along the supply chain promotes symbiotic relationships built on shared values, which helps streamline the production process. Another benefit of using certification to improve the supply chain is the ability to use certification as

10 a filter for determining which businesses to work with and those to avoid. Inquiries into a supplier s willingness to provide certified products is not only a gauge of their environmental leadership, it may also indicate their overall responsiveness as a supplier. Additionally, many companies are increasingly concerned about the source materials of the forest products they buy. This is especially true for companies that source forest products globally. Typically, with global sources, there is a higher risk that the forest product could be derived from an ecologically significant ecosystem, harvested illegally or extracted using unsustainable forestry practices. Such risks could harm a company s reputation, cause it to lose market share or even create legal challenges. Therefore, companies might be motivated to pursue a certification strategy emphasizing the ability of the different systems to assure the products they consume are derived in a legal and sustainable manner. In response to these concerns, factors for companies to consider include the sale of certified forest products, identification of more responsive suppliers and the ability to track the source of the product. 6 ADVANCING FOREST ECOSYSTEM CONDITIONS Many companies have values that address corporate objectives relating to sustainable development and minimizing environmental impacts. These values often reflect a company s core activity such as energy production or dependence on a natural resource such as water quantity and quality. A certification strategy offers a means for further communicating a company s commitment to larger environmental issues. These include, but are not limited to, encouraging forest management practices that protect ecologically significant forests, enhancing the biodiversity value of forests and working to restore degraded forest ecosystems. PROMOTING IMPROVED SOCIAL CONDITIONS Another broad motivation of companies is to use their purchasing practices to promote the improvement of national or global social conditions. When purchases are made from foreign countries, for example, the labor conditions, human rights standards and forest law enforcement capacities all should be factored into purchasing decisions for those businesses seeking to make a positive impact on social conditions. In addition, purchases associated with practices that are detrimental to forest-dependent indigenous groups, local communities, and done without regard to public feedback, present a potential risk to corporate reputation and market standing. For these reasons, some companies might find it useful to incorporate the impacts of forest operations on social well-being into their certification decision-making process. C O M PA N Y-S P E C I F I C G OA L S This business values matrix is designed to be applicable to a broad range of companies by incorporating a section to include goals relevant to them that are not represented in the matrix. These company-specific goals entries, for example, might include water consumption as a key input because of a company s concern about the ability of certified forest operations to enhance water quality. To address such concerns, the matrix allows for companies to factor in other important, yet unlisted, company goals into the certification evaluation process.

11 The Business Values Matrix User s Guide The business values matrix on the following page is at the core of guiding companies in the development of a certification strategy. Since it is essential for facilitating the decision-making process on the intricacies of the certification systems, it is important to closely review and understand the structure of the matrix before using it. To maximize the value of the matrix, Metafore suggests that users follow the process outlined below: 1. Review the matrix to become acquainted with the range of possible goals and objectives related to forest certification systems. 2. Rank only the objectives that are important to your company and warrant further examination. It is not necessary to rank all of the objectives. There is no minimum or maximum number of objectives a company should rank. The amount and range of ranked objectives reflects an individual company s desire to explore different issues relevant to forest certification systems. 3. Define and rank company-specific goal entries if there are corporate objectives not listed in the matrix that warrant further examination based on your company s values. 4. Discuss priorities with key stakeholders within the company and solicit executive input for those objectives that received a ranking Examine the final list of company priorities and determine how they relate to the standards of each scheme.

12 The Business Values Matrix Goal 1: Enhancing Corporate Reputation OBJECTIVES BACKGROUND RANK With environmental groups (ENGOs) Environmental groups can play a significant role in influencing consumer perceptions on corporate reputation. Therefore, for many businesses avoiding an ENGO campaign or seeking an endorsement of an environmental group, ENGO engagement can translate into a significant market advantage. With trade associations Some companies might be pursuing certification as part of a commitment made by a trade association of which they are a member, or as a result of pressure by a key trade association. With regulators Pursuing certified products is a way companies might be able to ease pending regulations. It is also a way to demonstrate leadership and gain input into the regulatory process. 8 Company-specific objective(s) Are there any other groups (excluding consumers) with whom you would like to enhance your reputation? Goal 2: Improving Supply Chain Efficiency OBJECTIVES BACKGROUND RANK To sell certified forest products Some companies are interested in selling certified forest products in the retail market in order to increase market share by appealing to environmentally conscious consumers. To have the ability to verify the source of the product Some companies are interested in being able to trace the origin of the raw material associated with their forest product purchases. Verifying the origin of the material is a way to mitigate the risk that companies face associated with environmental campaigning on the issues of illegally logged products and the support of harmful practices. To be able to identify better suppliers Certification can be used as a means for identifying like-minded suppliers and improving the efficiency of the supply chain. Company-specific objective(s) Are there any other supply chain objectives not presented here that are a priority for your company?

13 Goal 3: Advancing Forest Ecosystem Conditions OBJECTIVES BACKGROUND RANK To encourage improved management and monitoring of ecological and/or culturally significant forests Some companies are facing pressure to avoid purchasing wood or paper-based products that include raw material sourced from particular regions. Addressing this issue through certified purchases could reduce the potential that products come from sensitive forest areas. To encourage the protection of biodiversity and environmental resources Biodiversity and environmental resource protection are often key components of a company s corporate social responsibility program. Purchasing certified products offers a way to integrate these objectives into every-day procurement decisions. To encourage the restoration of degraded ecosystems Some companies are interested in being part of projects that reverse the condition of degraded sites. Purchasing certified products could contribute to restoring degraded forest ecosystems. Company-specific objective(s) Are there any specific environmental issues important to your company not included here? 9 Goal 4: Promoting Improved Social Conditions OBJECTIVES BACKGROUND RANK To verify that the rights of indigenous people are respected Some companies that purchase products using raw material that originates from certain regions face the risk that their consumption patterns have a negative social impact on indigenous people. Purchasing certified products could help mitigate this risk. To verify the local impacts of forest operations (local jobs, other local forestdependent industries, public response) For some companies, it is important to highlight actions that generate benefits to local communities. Pursuing certified products enables companies to demonstrate their positive contribution to community development. To encourage public participation and involvement in forest management activities Some companies can also generate positive community benefits by supporting products that allow local and ENGO stakeholders to participate in the forest management planning process. Company-specific objective(s) Are there any social issues not included here that are important objectives for your company?

14 Independent Third-party Certification Systems It is useful from the perspective of a business user of forest certification to consider only credible independent third-party systems. Credibility, in this sense, is addressed only in terms of the independent nature of certification systems. This refers to their ability to develop, promote and implement standards in an open, transparent and reasonably unbiased manner. It does not, for the purposes of this report, address the level of on-the-ground performance required by standards produced under these systems. While the system standard is a critical element, it is best evaluated based on the specific objectives and expectations of the individual user. An open system is one that provides opportunities for input and participation by stakeholders. A transparent system is one in which the decision-making process is conducted in a way that is visible and transparent to interested parties. A reasonably unbiased system is one in which decision-making bodies are composed of an array of interests and backgrounds as a means to mitigate the biases that all humans naturally bring to any process. 10 Metafore identified the key elements of credible independent third-party certification systems by drawing on guidance from ISO and on the practical experiences of three existing forest certification systems operating within the North American sphere the Canadian Standards Association, the Forest Stewardship Council and the Sustainable Forestry Initiative Program. Together these systems present a range of viable models for independent forest certification systems from structural and operational design perspectives. Despite the fact that each certification system adapts uniquely to real world business uses, all three are transparent, include disparate viewpoints and offer procedures for communicating forest management performance. Echoing guidance provided by ISO, these systems also share similar characteristics when it comes to the key operational and structural criteria for assessing the credibility of a certification program. While the full profile is available as an appendix to this document, the key elements of credible independent third-party certification systems can be summarized within the components of governance, standardization, accreditation, verification, and tracking and labeling.

15 Governance The governing bodies of independent certification systems are composed of a diverse array of representatives who oversee the approval of standards, marketplace initiatives, communications and dispute resolution. While the actual composition and relative balance may vary from system to system, governing bodies typically consist of some representation balance among industry, academia, conservation groups, forestry professionals and the general public. Standardization Independent systems have formal development processes that allow for the participation of multiple stakeholders such as educational representatives, non-governmental organizations, on-the-ground forestry professionals and the forest industry business sector. They also employ a separate committee to review and approve standards, requirements to periodically update the standards, and procedures for leveling complaints against the process. Accreditation The accreditation process involves a separate body formally granting accreditation and conducting periodic surveillance and review of the certification body. Credible systems have well-rounded processes that involve an accreditation. This review examines the internal capacity of the certification body, its auditing procedure, and includes site visits of previous audits. Verification Independent verification processes require third-party auditors to conduct preassessments of operations and an in-field assessment. The results are then sent to separate committees that decide on the certification, and conduct annual monitoring visits and regular renewals to maintain certification. 11 Tracking and Labeling While tracking and labeling components are not necessary for effective certification of forest management, they are necessary for buyers to connect forest management practices to actual products. Credible product claims are backed by auditable systems that permit the tracking of raw material back to its source and have clear requirements for which sources count and do not count as certified content.

16 Building a Certification Strategy from Values While businesses may be able to purchase wood and paper certified by several different credible independent third-party forest certification systems, buyers may find that their values and objectives are best addressed by only one or two systems. There is no guarantee, for example, that standards developed and promoted by any one credible certification system no matter how independent or transparent will address the specific values and environmental or social objectives of a particular buyer. Moreover, there may be certain characteristics of systems that are simply more or less appealing to the values and objectives of a business buyer. Although many systems may meet the essential structural and operational criteria for independent third-party certification systems, companies interested in developing proactive strategies for purchasing certified products need to do more work on their own. Companies need to understand how the implementation and business operation realities of employing the standards of a certification system conform or do not conform to their corporate values and objectives when purchasing certified products. Understanding the market practicalities of each system and forest management standards is critical for developing a well-informed position. 12 The third and final step in the Evaluation Tool for Buyers is linking corporate values to the specifics of different certification systems. As previously mentioned, Metafore is available to assist interested users in facilitating the decision-making process when applying this framework. Once a company s values and objectives related to certified forest products are clear, there are three levels where these values can be applied when developing a certification strategy. These are the system level, the standard level and the certificate level. THE SYSTEM LEVEL Business users may have an interest in assessing additional attributes of forest certification systems beyond the core elements of a credible independent system. Additional areas of interest include the type and number of endorsing organizations, the main actors behind creation and management of the system, the potential volume of certified wood or paper available from the system, the existence or nature of material tracking components, and the general focus of the system. T H E S TA N DA R D S L E V E L This level of analysis involves linking the company s main objectives to performance attributes such as silviculture, environmental protection and social considerations of the different systems. Standards vary by region and in some cases, by individual application. It is important to note that regional standards within a single certification system may address similar environmental issues differently. Standards also may vary over time, based on the fact that most certification systems are reviewed and updated as part of a continuous improvement process. T H E C E RT I F I C AT E L E V E L Some companies may find value in examining specific certified forest operations. At the discretion of the forest manager, an individual certification may include attributes or standards that exceed the baseline requirements of a system or regional standard. In some cases, the actual certification may meet a particular user s objectives, but the system or standard does not. It might, therefore, become useful to perform some due diligence of a specific operation.

17 Summary: Putting It All Together Certification of well-managed forests and wood and paper products involves a complex mix of technical requirements, organizational ideologies, geopolitical and business realities and more. There are many potential users of certification including forest managers, companies, investors, environmental advocates and individual citizens. For businesses seeking to purchase and use wood and paper responsibly, it is not a question of whether certification makes sense, but which systems best match their unique business values and objectives. The first step for any business seeking to incorporate forest certification as a tool for responsibly purchasing wood and paper is to clarify corporate values and objectives. Only then can objectives be matched to different attributes available within independent thirdparty certification schemes. Depending on a business interests and vision, these may be assessed either at the level of the certification system, the appropriate standard or individual certifications at the forest operations level. Metafore developed the Forest Certification Evaluation Tool for Buyers as a non-technical guide on certification for businesses to use as they evaluate and specify the wood and paper products they purchase and use in the course of business. Thoughtful application of this evaluation tool can help businesses develop and implement responsible wood and paper purchasing strategies that mirror their business values. The first step for any business seeking to incorporate forest certification as a tool for responsibly purchasing wood and paper is to clarify corporate values and objectives. 13 Metafore is available to assist interested users in the process of applying this framework. In addition, Metafore welcomes the opportunity to work with companies and their advisors to make this policy development exercise relevant and useful to the organization.

18 Matching Business Values with Forest Certification Systems 14 APPENDIX: T H I R D - PA RT Y C E RT I F I C AT I O N : K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y J U LY

19 Third-party Certification: Key Elements of Independent Credibility Many studies of forest certification systems have attempted to assess credibility in terms of the ability of different standards to meet specific objectives stated or assumed relative to sustainable forest management. This profile addresses credibility only in terms of the independent nature of certification systems and their ability to develop, promote and implement standards in an open, transparent and reasonably unbiased manner. Therefore, this profile focuses on the elements of independent certification systems that dictate how they operate and assure a quality standard development and certification process. An open system is one that provides opportunities for input and participation by stakeholders. K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : A transparent system is one in which the decision-making processes is conducted in a way that is visible and transparent to interested parties. A reasonably unbiased system is one in which decision-making bodies are composed of an array of interests and backgrounds as a means to mitigate the biases that all humans naturally bring to any process. Defining Certification 15 As an initial criterion toward independence, this profile examines only third-party certification systems. Certification is generally defined as a system for verifying and highlighting practices that conform to a particular standard. There are three approaches for verifying that an operation is certified based on a particular standard. First-party verification is an internal assessment by an organization that its systems and practices meet the requirements of a certain standard. Second-party verification is an assessment by an external entity that has a stake in the organization s conformance to a pre-defined standard. Third-party certification is an independent evaluation by a qualified auditor of an organization s conformance to an independently established standard. Third-party is normally considered the most credible means of communicating forest management performance to consumers because it represents the most independent and unbiased means of developing and verifying a standard.

20 APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y Guiding the Profile In examining the elements of third-party certification system credibility, this profile draws on guidance from the International Organization for Standardization (ISO), and the practical experiences and implementation challenges faced by some existing systems. ISO is responsible for developing more than 14,000 standards of all types for businesses and governments that are international in scope, making it a useful reference for broader insight into the design and operation of a certification system. However, since ISO is designed to address a broad audience this can result in a gap between ISO guidance and issues that are specific to forest certification. Therefore, another important consideration is the multitude of external factors unique to the design of forest certification systems. These external factors include the geographical scope of the system, economic and legal realities faced by targeted operations and forest ownership characteristics. For this reason the profile also examines the practical experiences of three major third-party certification systems currently operating within the same sphere of North America. Three comprehensive third-party forest certification systems presently in wide use in the United States and Canada are The canadian Standards Association, Forest Stewardship Council (FSC) and the Sustainable Forestry Initiative (SFI) Program. The practical experiences of these three systems lend themselves well to this profile. 16 CANADIAN STANDARDS ASSOCIATION SUSTAINABLE FOREST MANAGEMENT STANDARD The Canadian Standards Association (CSA) is an accredited Standards Development Organization that was established in 1919 and is a non-profit voluntary association with a core focus on the development of a range of standards and product certification. In 1994, the CSA was asked by federal and provincial governments and a coalition of forestry associations to establish a multi-stakeholder technical committee to develop a Sustainable Forest Management (SFM) standard for Canada. The initial standard developed by a committee of educators, governmental, industry and nongovernmental groups was released in 1996, with a revised version released in The CSA and the standards it develops are designed to conform to ISO requirements. In 2001, the Canadian Standards Association Forest Products Group was created to develop and manage CSA chain of custodytracking and product marking. As of July 2004, there are seven forest management companies that hold 32 individual certificates in seven Canadian provinces under the CSA standard. Additionally, there are six companies operating in a certified forest area that hold a joint certificate. Together, these companies manage approximately 64 million acres of certified forestland. FOREST STEWARDSHIP COUNCIL The FSC is an international non-profit organization that offers forest certification on an international basis. The FSC is a membership organization with nearly 600 members from more than 70 countries. Membership is open to organizations and individuals representing social, economic and environmental interests. As of July 2004, auditors issued 632 FSC forest management certificates covering 110 million acres in 73 countries around the world. Of these, 121 certificates are in Canada and the U.S., covering more than 23 million acres.

21 SUSTAINABLE FORESTRY INITIATIVE PROGRAM The American Forest and Paper Association (AF&PA) developed the SFI Program to document member commitment in the United States to a high level of sustainable forestry. The SFI Program was formally adopted by the AF&PA Board of Directors in October In 2000, the Sustainable Forestry Board (SFB) was established to oversee the SFI Standards development and certification processes. Also in 2000, the SFI program extended the SFI standard to include forest operations located in Canada. Although AF&PA member companies are still required to adhere to the SFI Program, certification is open to all SFI Program participants. There are two options under the SFI Program. Companies can measure conformance to the standard using third-party audits. Third-party certification is required for companies that want to use the SFI product label to market their products. Companies can also become SFI Program licensees by measuring conformance to the standard using a second-party audit. As of July 2004, there were 205 program particpants with approximately 151 million acres were enrolled in the SFI Program in Canada and the United States. Of this amount, more than 93 million acres have been third-party certified. Defining Foundations of Independent Certification Systems K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : Although there are many studies that compare forest certification systems, few clearly identify the starting points for judging a particular system. Therefore, many of these studies are difficult to interpret because they do not provide objective context on the ingredients of a credible system. Some of these studies even exacerbate this confusion by evaluating specific details of different systems that are not directly comparable. 17 Credibility is defined here as the relative independence of a certification system in terms of developing and implementing standards in an open, transparent and reasonably unbiased manner. The relative credibility of certification systems is best determined by examining how they address five broad areas. Governance Standardization Accreditation Verification Tracking and Labeling Note that the first four elements are sufficient for confirming certification operating systems provide a credible independent structure for developing and broadly implementing a standard for sustainable forest management. The fifth element tracking and labeling is included here because it represents the public face of the systems and is the most useful way of communicating forest management performance to the general marketplace through variable product claims. This is an important and often overlooked element for business consumers.

22 APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y Governance Governance refers to the mechanisms and procedures for operating a certification system. A governance structure outlines which groups are involved in the standards development and enforcement process, how decisions are reached, what influence each representative has in the decision-making process, and the procedures to ensure decisions are implemented. The ISO Guide 65 General Requirements for Bodies Operating Product Certification Systems offers guidance on issues for bodies to consider in establishing a certification system. This includes defining and documenting the policy objectives of the system, a commitment to continuous improvement of the system, disclosure of minimum certification requirements and the body s sources of financial support. GOVERNANCE IN PRACTICE Although CSA is a general certification organization and FSC and SFI are specifically focused on forest management, the three systems have relatively similar governance structures. Each has a board of directors overseeing the overall functioning of the system and designated staff members to carry out the daily operations. As Table 1 below indicates, the oversight entities are made up of a number of stakeholders, including those in academia, forestry, forest products, conservation organizations and public agency sectors. 18 TABLE 1 Comparing Forest Certification Governance System SYSTEM OVERSIGHT REPRESENTATION OPERATIONS CSA Board of Directors The 27 members are from academic, government, industry and consulting sectors. CSA SFM Project Manager FSC General Assembly Three equal chambers ecological, economic and social with each chamber having equal representation between industrial and developing countries. FSC Secretariat staff and national body staff SFI Program SFB for the SFI Standard. AF&PA for SFI Program label. The SFB is a 15-member board with equal representation from SFI participants, conservation organizations and forestry professionals. Designated SFI Program staff and representatives of member companies participate in managing the labeling program. SFB staff members & SFB Resources Committee; and designated AF&PA staff members

23 The SFI Program differs from CSA and FSC in that two entities play a role in the oversight and strategic direction activities. The SFB is responsible for overseeing standards development, verification procedures, dispute resolution and quality control. The SFB has a designated Resources Committee that is responsible for drafting policy for its approval and directing the work of other SFB committees. The on-product label of the SFI Program is managed by AF&PA through its Office of Label Use, Licensing and Statistics. The FSC differs from CSA and the SFI Program in that FSC allows auditors those who actually verify that standards are met on-the-ground to participate in the governance of the system. These auditors are invited to participate in governing FSC because of their forest management and auditing experience. However, they are not allowed to serve on the board of directors and their participation is limited to council membership and participation in the standards development process. K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : Standardization Standardization is defined as a process of developing, maintaining and enhancing the standards by which the performance of an applicant for certification can be assessed. Standards can be a mix of system requirements that provide guidance and performance requirements that establish a baseline. The ISO Guide 59 Code of Good Practice for Standardization offers comprehensive guidance on standards development. This guidance includes providing a forum for public participation, disclosing standards development procedures, using consensus-based decisionmaking, and having procedures for addressing disputes. The three systems each have a process where a clear majority is needed to approve changes to the standards, the standards development process is open to the public and there is a dispute resolution protocol. 19 STANDARDIZATION IN PRACTICE The three systems each have a process where a clear majority is needed to approve changes to the standards, the standards development process is open to the public and there is a dispute resolution protocol. Further, as ISO recommends, each system has a well-defined process that requires consensus for developing and modifying standards. In general, each system has a regular review process in place, a public commenting period to address any proposed modifications, a reviewing entity that comments on the proposed changes and a separate entity tasked with approving the changes. Table 2 on the following page profiles the standards development process of the three systems. The FSC process reflects the development of national and regional standards as opposed to the process of revising the principles and criteria that guide the FSC globally. This is undertaken by the General Assembly and approved by the FSC International Board of Directors. The description in Table 2 reflects the process that was used for developing the regional standards in use in North America.

24 APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y The representation breakdown of the standards development and governance entities is noteworthy for the FSC and SFI systems. Under the SFI Program, members serve either a governance role or a standards development role, with SFB representatives who participate in the governance of the SFI Program appointing another person within their organization to serve on the Resources Committee. The governance and standards representatives vary under FSC because of the multitude of standards development groups, but there are no restrictions for the same individual or same organization participating in both governance and standards development activities. The representatives under CSA are completely separate and distinct, based on the fact that CSA is a broad-based certification system. TABLE 2 Comparing Standards Development Procedures SYSTEM STANDARDS DEVELOPMENT/ MODIFICATION REPRESENTATIVES REVIEWING ENTITY APPROVING ENTITIES 20 CSA CSA SFM Technical Committee Representation is divided into four categories: Professional/academia; general interest (including environmental, consumer and labor groups); government and industry Internal: CSA Strategic Steering Committee on the Environment External: Standards Council of Canada Standards Council of Canada FSC Regional/National Working Group Open to businesses, environmental groups, individuals, auditors, and government agency personnel National Standards Committee National Board and then FSC Secretariat SFI Program SFB Resources Committee and technical subcommittees and working groups Composed of environmental groups, SFI participants, academics, government agency personnel and forestry professionals SFB with input from Independent External Review Panel SFB Source: Proforest, 2002

25 Accreditation Accreditation is a process where an authoritative body formally recognizes an auditing body as capable of carrying out the tasks necessary to certify a company s operation against a particular standard. It is also commonly referred to as certifying the certifiers. The relevant ISO principles are outlined in ISO Guide 61: General Requirements for Assessment and Accreditation of Certification/Registration Bodies, Guide 62 General Requirements for Bodies Operating Assessment and Certification/Registration of Quality Systems; and Guide 66: General Requirements for Bodies Operating Assessment and Certification/Registration of Environmental Management Systems. These guides outline the requirements and procedures accreditation bodies should employ to be viewed as credible. It addresses issues such as the organization of the accreditation body, technical capacity, dispute resolution, and procedures for carrying out accreditation. Table 3 below outlines a tested process for evaluating whether or not auditing organizations are capable of verifying performance against a particular forest certification standard. K E Y E L E M E N T S O F I N D E P E N D E N T C R E D I B I L I T Y APPENDIX: T H I R D PA RT Y C E RT I F I C AT I O N : TABLE 3 The Accreditation Process Application Evaluation Reporting Address non-conformances The accreditation decision Monitoring The application process involves signing a contract that specifies the scope of the accreditation, the terms and conditions under which the applicant is evaluated, and how accreditation is granted and maintained. The accreditation body carries out an evaluation of the certification body s organization, personnel, auditing system and the procedures for certification assessments and decisions. The accreditation body prepares a profile of the evaluation that describes any areas of non-conformance to the accreditation requirements (if applicable), and the necessary correction actions. The applicant is invited to comment on the details of the profile. The applicant certification body may be required to address corrective action requests before accreditation is granted. Alternatively, accreditation may be granted subject to resolving corrective action requests within a specified time. The accreditation decision is made on the basis of the profile and the outcome of corrective action requests (if appropriate). Accreditation decisions must be taken by a person or persons other than those who carried out the evaluation. The accreditation body periodically reviews the performance of the certification body to ensure that it is complying with the requirements of the accreditation. 21