Revision of the FSC Controlled Wood system. Phase out of company risk assessments & transition to the revised standard

Slide 2 Agenda Introduction - Controlled Wood overview FSC-STD-40-005 - sourcing CW CW revision: purpose & implications scope and timelines FSC risk assessments Advice Note under consultation Time for questions FSC F000100 - FSC International All rights reserved

Slide 3 What is Controlled Wood? Controlled Wood is material from acceptable sources that can be mixed with certified material in products that carry the FSC Mix label. P&C + Controlled Wood = http://ic.fsc.org/background-documents.311.htm The framework/system Exists to address limited availability of certified material and to enable a mass balance (credit) system: Create supply - encourage production of certified material Increase visibility - Increase number of certified products in the market FSC F000100 - FSC International All rights reserved

Slide 4 What is acceptable? FSC Controlled Wood Defined by 5 Categories of unacceptable sources (Controlled Wood categories) Material is acceptable when it is NOT harvested: 1. illegally 2. in violation of traditional and civil rights 3. where high conservation values are threatened by management activities 4. in forests being converted to plantations or non-forest uses 5. where genetically modified trees are planted FSC F000100 - FSC International All rights reserved

Slide 5 Controlled Wood standards 2 standards further define how to source and classify material: CW-FM Standard (FSC-STD-30-010) For forest managers wanting to supply FSC Controlled Wood CW-CoC Standard (FSC-STD-40-005) For Chain of Custody organizations wanting to source FSC Controlled Wood through a risk assessment process FSC F000100 - FSC International All rights reserved

Slide 6 CW-CoC standard (FSC-STD-40-005 V2-1) Most CW sourced with this standard Requirements for companies purchasing from non-fsc certified suppliers Companies determine risk of sourcing unacceptable material by risk assessment (check FSC-approved risk assessment, or conduct their own) Buy FSC CW from supplier certified according to FSC- STD-40-005 Verify if material is controlled Buy FSC CW from supplier certified under FSC-STD- 30-010 Already controlled Check National Risk Assessment OR develop Risk Assessment Already controlled If low risk If unspecified risk Material is controlled Field audit of the forest where material is sourced from requirements met requirements not met (Requirements consistent with FSC-STD-30-010) Material is controlled Material CANNOT be used FSC F000100 - FSC International All rights reserved

Slide 7 Controlled Wood revision Background 2011 FSC GA Policy Motion 51: Strengthening the Controlled Wood system Replace company-developed risk assessments with FSC risk assessments Review and revise existing company-developed risk assessments Revision of CW normative documents FSC F000100 - FSC International All rights reserved

Slide 9 CW revision - remaining scope FSC-STD-40-005 V3-0 and FSC-STD-30-010 V3-0 Consultations (40-005 & 30-010) September - November 2013 May - July 2014 Accreditation standards (FSC-STD-20-011 & FSC-STD-20-012) Consultation June August 2014 Field testing (main standards along with the accreditation standards) September October 2014 (Australia, Romania, Vietnam) Additional field (pilot) testing for FSC-STD-40-005 and FSC-STD-20-011 in 2015 Plan for approval: BoD meeting November 2015 Planned publication date: the earliest December 2015 Planned effective date: 2016, after the phase out date for company risk assessments FSC F000100 - FSC International All rights reserved How much has FSC spent on this CW revision process? A lot of time, as we started in 2011 after the General Assembly, and the Controlled Wood Technical Committee began work in 2012. Risk assessment requirements were approved last year and we hope to have CW standards delivered this year, finalizing the actual revision process. Will there be another comment period open for the final draft of the standards? Currently this is not planned. Both CW standards were consulted twice, once in 2013, then in 2014. The contents were to a great extent agreed by the Controlled Wood Technical Committee after these, but due to further discussion relating to minimum outcomes for control measures, and the FSC Board of Director s decision to conduct further field testing, producing a final version has been postponed. However, we do not plan to conduct further public consultation. How can I get auto notifications about open consultations? The best solution would be to subscribe to the FSC newsletter, which can be done here: http://ic.fsc.org/newsletter.153.htm. All information on our consultations is included here. If you are only interested in consultations that relate to Controlled Wood, you can email us directly, and we can contact you whenever there is communication about consultations. Any FSC International consultation will also always be displayed here: http://ic.fsc.org/consultations.106.htm.

Slide 10 Revised sourcing model (FSC-STD-40-005 V3-0) How can CW be sourced using NRA/CNRA? REVISED REQUIREMENTS! If low risk (all 5 CW Categories) We are an organization wanting to source Controlled Wood using risk assessment (FSC-STD-40-005) Check National Risk Assessment or CNRA Designates the risk of sourcing unacceptable material (low risk or specified risk) If specified risk Risk is not low, and the type of risk(s) present have been specified by the risk assessment Apply specific risk mitigation means (Control Measures) CMs effective CMs not effective Material is controlled Material cannot be used But, what if the country does not have a NRA or is not covered by the CNRA? Areas not covered by FSC risk assessments FSC F000100 - FSC International All rights reserved A certification body can evaluate the forests we want to supply from according to the CW-FM standard Interim Risk Assessment (until 31 Dec 2017) (C)NRA a key component of the revised system as the prime source of risk designation 10

Slide 11 Pilot testing of FSC-STD-40-005 Ongoing in Canada (Celgar, Tembec) and Russia (Titan) Focus on minimum outcomes for Control Measures (FPIC, IFLs) Contact Joanna Nowakowska j.nowakowska@fsc.org for involvement Outcomes will also affect FSC National Risk Assessment Framework http://ic.fsc.org/controlled-wood-testing.856.htm FSC F000100 - FSC International All rights reserved

Slide 12 National Risk Assessments Risk assessment is a multi-stakeholder process Determines the risk of sourcing unacceptable material from sourcing areas (country, region, eco-region) LOW RISK? SPECIFIED RISK? Separatelly for categories: 1) Illegality 2) Traditonal and human rights 3) High Conservation Values 4) forest conversion 5) GMO (trees) FSC F000100 - FSC International All rights reserved 12 How much does an organization conducting an NRA (where there is no FSC National Office) have to pay FSC to conduct an NRA? No working groups have to pay FSC to conduct a risk assessment. Where FSC has no FSC National Office, we welcome working groups that have qualifications and are willing to conduct an NRA we ask them to submit a formal proposal so we can evaluate it and look to engage on the project. No payment to FSC is needed. How long will it take FSC International to approve an NRA? We have requirements for this in FSC-PRO-60-002 V3-0 The Development and Approval of FSC National Risk Assessments. It states that within 30 days of receiving the NRA FSC International will make the decision to approve it, or to reject approval with reasons for this. It has often been the case that the NRAs submitted require more work from the applicant, and timelines are extended. This is why we stress the importance of cooperating with FSC IC during the process, so we can ensure the NRA is well developed before it is submitted for approval. When a working group applies to FSC to conduct an NRA, how much time is needed for final approval of a conducted assessment where there is no FSC national office? In such a case, the approval first comes from the working group itself, then it is checked by the FSC Regional Office (if applicable), then FSC International. The final decision is made by the FSC Policy and Standards Director. The Procedure for NRA development states that FSC has 30 days to approve (or reject) a draft NRA. Approvals will therefore be made within this time, but if changes are needed (to be made by the NRA Working Group), the time needed for approval will depend on how quickly any issues are resolved by the working group.

Slide 13 Approved NRAs the need for the revision https://ic.fsc.org/national-risk-assessments.310.htm Australia Belgium Brazil Bulgaria Chile Czech Republic Denmark Germany Italy Japan New Zealand Poland Portugal Romania Russia Spain Switzerland United Kingdom Ukraine No NRA Ongoing Approved Revisions needed - changes in the risk indicators! FSC F000100 - FSC International All rights reserved 13 Will we have any idea how the US based RA is coming along and an idea of when it will become effective? Currently there is an NRA underway in the US. The Working Group has now been engaged in the process for 3 years. The first consultation was already conducted, and colleagues are working on the revised draft based on the new risk assessment requirements. Once the draft is aligned with these it will be consulted again. We hope it to be finalized as soon as possible. Do you have any idea when the process of country assessment will be completed in Brazil? Brazil is a particular situation. It does have an approved NRA. It was developed according to previous requirements, as it was supposed to, but it also provided specified risk categories, which are of course from the new risk assessment requirements. The revision of the NRA according to revised risk assessment requirements is being streamlined with the CNRA, which is still being finalized. Are documents available that can support a process of risk assessment of an organization in Colombia? Unfortunately we are not aware of any such documents. We have the support of an FSC International Policy Officer working in our regional office in Latin America RO and we can contact her. Also, a member of the Controlled Wood Technical Committee is from Colombia: Miguel Pacheco Ganoza, who works for WWF. We can approach him also. After the NRA is approved, does it need renewal? NRAs shall be reviewed at least every five years. If the information collected during that time requires a change in the NRA, it shall be revised. Normative requirements for this are contained in FSC-PRO-20-002 V3-0.

Slide 14 Centralized National Risk Assessment Based on the same requirements as National Risk Assessment Facilitate sourcing CW in the revised system (initially focusing on low risk determinaiton) Reduce uncertainty in planning of CW sourcing for Certificate Holders Deliver harmonized international risk determination To stimulate NRA processes and contribute to NRA development national process to refine/elaborate scale and risk specification http://ic.fsc.org/centralized-national-risk-assessment.700.htm http://ic.fsc.org/risk-assessment-updates-and-planning.781.htm FSC F000100 - FSC International All rights reserved Will approved CNRAs will be included on the Global Forest Registry? Yes, as with National Risk Assessments, finalized and approved Centralized National Risk Assessments will also be uploaded to the Global Forest Registry, and the database will reflect their risk designations. Under the CNRA some experts are being hired. Are these experts approved by a chamber balanced committee? No, there is no official chamber-balanced process for hiring the consultants. We believe we are cooperating with the best experts, based on their expertise and prior work. We have also put out a call for more experts to join the project: http://ic.fsc.org/technical-updates.325.1141.htm.

Slide 15 NRA and CNRA - differences Centralized National Risk Assessment International experts with local experts and FSC network Different categories assessed by different experts Number of assessed CW categories may differ National Risk Assessments National chamber-balanced working groups Full assessment covering all the categories in a particular area, based on CNRA (where available) National stakeholder engagement Scope of the process goes beyond risk assessment only FSC F000100 - FSC International All rights reserved 15 How are stakeholders going to be involved within the integrated process (CNRA and NRA)? Participation through the development of the NRA is the preferable option, and FSC-PRO-60-002 V3-0 The Development and Approval of FSC National Risk Assessments, specifies requirements for this. The body that is developing the NRA is responsible for approaching stakeholders and obtaining and addressing their feedback (stakeholder consultations). We are more limited in how we can approach national stakeholders for involvement in the CNRA, but we are doing this through several ways. Our preferable option is to cooperate with FSC Network Partners we ask them to consult relevant CNRAs with their NRA Working Group and to publish stakeholder consultation. If they do not have the capacity to do this, or in countries without a Network Partner we conduct consultation on the FSC International website. In doing so we treat it the same as the development of an FSC standard publishing news about the consultation and hosting it on the website. You can also contact us and ask to be involved in the risk assessment of a country. We can put you in touch with the consultant(s) conducting the risk assessment(s) that you are interested in, so that you can provide feedback during the risk assessment/drafting process. Are National Risk Assessments (NRAs) and Centralized National Risk Assessments (CNRAs) mutually exclusive? Or is it possible for a particular country (like Brazil, for example) to be governed by both an NRA and CNRA? If numerous sources of risk designations are available, we have rules for which one shall be used. Only one risk designation per Controlled Wood category shall be used (see Clause 2 of the draft Advice note on slide 21). Each Controlled Wood category is treated separately when seeing which source of risk designations is available and shall be used

Slide 16 CNRA Consultants and scope Phase 1 (2014, Categories 1,2,5 Top 20, Category 3 - Brazil and Finland ) Phase 2 (2015-2017, 53 Countries Categories 1,2,4,5) Argentina Colombia India (19) New Zealand Spain (11) Australia Czech Republic (14) Indonesia Norway Swaziland Austria (13) Denmark Ireland (18) Peru Sweden (5) Belarus Ecuador Italy PNG Switzerland Belgium (17) Estonia (6) Japan (16) Poland (9) Turkey Bolivia Finland (12) Laos (Greater Mekong) Portugal Ukraine Brazil (10) France (7) Latvia (3) Romania United Kingdom Bulgaria Georgia Lithuania (8) Russia (4) USA (1) Canada (2)** Germany Malaysia Slovakia (15) Vietnam Chile Guatemala Mexico South Africa (20) China Honduras Myanmar (Greater Mekong) South Korea Consultants: NEPCon (Cat. 1,3,4,5), Wolfgang Richert Consulting (Cat 2), Proforest (Cat. 3), Sarmap (Cat. 4), others FSC F000100 - FSC International All rights reserved Currently the CNRA will not include HCV, so this will be classed as Unspecified Risk. If I assume sourcing from Norway with a CNRA how do I assess HCV as a company? At present, we don t have an NRA or the CNRA available for Norway. Therefore for all categories, the Global Forest Registry would have to be used. If risk is unspecified, then for this category (and any others), field verification according to annex 3 would be needed. There wouldn t be a risk assessment for any category. When is CNRA Category 4 planned for top 20 countries? We would like to have the assessments conducted this year. Until now we were waiting for practical reasons. There are two possibilities to assess this category. The first assesses how conversion thresholds may or may not be exceeded with by assessing the content and enforcement of legislation. Where this isn t possible (and where low risk isn t found), spatial analysis will be conducted. For the assessment of content and enforcement of legislation that relates to forest conversion, we have wanted to use outcomes of the category 1 (legality) assessments. Assessments for the countries that can have low risk confirmed with legality assessment should be ready this year. Spatial assessment for the remaining countries are to be outsourced by end of year. Most countries have no legal requirement about forest conversion, so the legality analysis will not help in most cases. At this stage we would disagree. In the legality analysis conducted so far a number of countries have been identified that have strong legislation relating to forest conversion, and this is useful for the category 4 assessment. The CNRA results looked very surprising on the comment round - no European country passed. How will the stakeholder views be taken into account? Somehow the results sound unbelievable, almost as if someone was creating more consultation/evaluation work for themselves. The risk assessment requirements were developed and approved through FSC s chamber balanced process, and these procedures were followed to conduct the risk assessments. If following the requirements leads to specified risk designations, then that is the outcome of the risk assessment. We will continue to ensure the analysis and outcomes

of the assessment are consulted with stakeholders and we will analyze the results of that, as we are currently doing for the previously consulted assessments, in order to finalize assessments.

Slide 17 Phase out date approaching 31.12.2015 XX.XX.2016 Effective date of V3-0 XX.XX.2017 Effective date of V3-0 + 1 year 40-005 V2-1 40-005 V3 (transition period) 40-005 V3 NRA/ Company risk assessment? NRA/CNRA/Interim risk Assessment Company risk assessments NOT possible The need for risk designation source where there is no NRA FSC F000100 - FSC International All rights reserved What is the planned effective date of the revised Controlled Wood standard? Our proposal from last year when approaching decision making bodies about the approval of risk assessment requirements (procedures) was that as soon as we prepare the final, publishable version of the standard, we will submit that to the Board. The effective date was planned to be 1 January 2016, but during the approval process for the revised risk assessment requirements the Board of Directors decided that field testing of particular requirements (namely minimum outcomes for control measures for mitigating particular types of risk) shall be conducted. These are contained in the latest draft of the standard FSC-STD-40-005 V3-0, so it was decided that the requirements would be tested through the pilot testing of the standard (for information on the pilot testing, please see http://ic.fsc.org/controlled-wood-testing.856.htm). This process of field testing with multi-stakeholder participation takes time to engage stakeholders, coordinate activities related to the implementation of the standard with CHs, CBs, etc. Therefore the standard and outcomes from the pilot tests will be submitted to the Board of Directors in time for their scheduled meeting in November, so they can take everything into account when making decisions. We will therefore have to postpone the effective date of standard. The effective date is not known yet, but it is not anticipated to be 1 January 2016 it is more likely to be mid-2016. Apart from the timing of the Controlled Wood revision process, it will also depend on the major revision of the FSC Chain of Custody (CoC) standard, FSC-STD-40-004. FSC-STD-40-005 is only an addition to the main CoC standard. Therefore if the CoC revision ends by or during the beginning of 2016, it is likely that we would try to align the effective dates of both standards. But firstly, we have to pass through the decision making process for the Controlled Wood standard, and only after that will we decide on dates. Certification Bodies need to be provided with the final version of the standard well in advance before the effective date (preferably 6 months in advance) We understand the needs of certification bodies. Relating to the procedure for transition rules, it applies for all documents. Before the procedure was approved, consultation with CABs was made and 3 months was agreed.

If the effective date of FSC-STD-40-005 V3-0 were to be February 2016, the end of the transition date then would be February 2017. After that date that version of the standard would have to be used, and Interim Risk Assessment would be needed for areas where no CNRA or NRA is in place. But in this case would only be valid until end 2017. Is my understanding correct? Yes, if we have a revised standard effective that contains requirements as they are currently drafted, companies may conduct IRA until the end of 2017. Is Interim Risk Assessment available until the end of 2017? Yes, it will be, provided that the revised version of the standard is approved and still contains this possibility when it is. Can you confirm that the evaluation by a certification body for areas not covered by FSC risk assessments will be possible also after 31st December 2017? In the latest draft of the revised version of FSC-STD-40-005 (V3-0), it is stated that in unassessed areas may outsource field verification to an FSC-accredited certification body. If this is approved, this will be possible after 2017. This is unaffected by this draft Advice Note. You said "Phase out of company risk assessment", but I don't understand why, if up to 2017, the Interim Risk Assessment developed by certificate holders is still possible (in countries where no other risk assessment is available). Am I wrong? No, you re not wrong you are correct. The key to the phase-out of company risk assessments is the use of Annex 2 of the FSC-STD-40-005 V2-1. The possibility for an Interim Risk Assessment in the revised standard has been proposed in order to ensure Controlled Wood can still be sourced in countries where an FSC risk assessment doesn t exist once the revised version of the standard is in place, but only until the end of 2017. This was negotiated and agreed by the Controlled Wood Technical Committee, and FSC has committed to providing risk assessments to be used by certificate holders in time. Does the new FSC CW standard version take into account EU Timber Regulation requirements, ensuring that FSC certification would be one of tools to meet EUTR requirements? Definitely yes, the revision of the CW standard has been designed so that it includes a due diligence system. Apart from simply wanting to improve and strengthen the standard following Motion 51 of the 2011 FSC General Assembly (the reason for the CW revision), the main reason for including a DDS in the standard is the EUTR, With all the tools (NRA/CNRA) in place, would this be considered as fulfilling the due diligence requirement such as EUTR? In the revised standard, the use of a risk assessment is one step of complying with EUTR, but complying with EUTR would be done by implementing the rest of the standard.

Slide 18 Proposed Advice Note under consultation Purpose Regulate the use of FSC-STD-40-005 V2-1 after 31 December 2015 (no company risk assessments) and during the transition period to the revised standard Why? Need to phase out company risk assessments (decision by membership) Was planned to occur through the revision of the standard BUT standard undergoing additional field testing, approval now planned in November 2015. Standard will not be effective 1 January 2016. Advice Note ensures that normative requirements are in place to enforce the phase-out of company risk assessments as of 31 December 2015. FSC F000100 - FSC International All rights reserved Why not just postpone the phase-out date of company risk assessment until the effective date of new version of 40-005? This option is logical for many, but the FSC Board of Directors has already informed us that there will be no more extensions of the phase-out date, after it was extended from 2012 to 2014, and then to 2015. We therefore have to look for other possibilities to address the need to enforce it in the normative framework, before the revised standard is made effective. The use of company risk assessments has been extended in the past. Given the uncertainty about whether NRAs or CNRAs will be completed by Dec 31, 2015, what is the risk of simply extending the use of company CRAs until the process is completed? This is one of the most difficult discussions we ve been having since the beginning of the project. Last year the FSC Board of Directors decided that the extension until the end of 2015 would be the last and they do not support any further extension. The risk of not having approved FSC risk assessments is lessened by the future possibility for companies to conduct an interim risk assessment in unassessed areas under the revised standard. At General Assemblies, the FSC membership has twice voted against the use of Advice notes - it is very disappointing that FSC are still using them. The decisions not to use Advice Notes, and reasons for these are certainly acknowledged. Before the release of the draft Advice Note, different ways to address the current situation (the need for interim rules to phase out company risk assessments until the new version of the standard is effective) have been discussed. For example, a formal interpretation of the current standard would not be possible due to the subject matter and need to make a significant change to the standard, and at this stage of the whole Controlled Wood revision it was not judged to be worthwhile to produce a temporary revised version of the standard. Furthermore, the latter wouldn t be possible following FSC normative requirements for the revision of normative documents.

The draft Advice Note would effectively modify the normative framework to achieve its purpose, and it, along with all other FSC Advice Notes relevant to the use of FSC-STD-40-005, will no longer exist once the revised version (V3-0) of the standard is in place and the current version (2-1) is withdrawn. How have the economic influences for the certificate holders been taken into consideration with the new model if the new model really means significantly more audits in different countries due to the CNRA results? We have assumed that more audits will be needed. This has often also been the case when an NRA is approved the NRA finds unspecified risk when company risk assessments have previously determined low risk. We recognize that audits are costly, but importantly, the challenges to the performance of the Controlled Wood system (which lead to the motion to strengthen the system) were very critical of company risk assessments. It is impossible to phase out all risk assessments by end 2015 because some audits are already done. Yes, but in audit conducted 2016, the certificate holder will have to provide evidence to their certificate holder that after 2015 they were not using their company risk assessment developed according to Annex 2. One of the slides expressed a need to ensure company risk assessments are phased out by Jan 1 2016. How are CBs supposed to enforce this outside of the scheduled annual audit timeframe? There needs to be evidence provided by the certificate holder at the next audit that they had stopped using their own risk assessment. It is similar to when a national risk assessment is approved at the next audit companies show that they were using it by the required time frame.

Slide 19 The Advice Note in practice Buy FSC CW from supplier certified according to FSC- STD-40-005 Verify if material is controlled Buy FSC CW from supplier certified under FSC-STD- 30-010 Already controlled Check National Risk Assessment OR develop Risk Assessment * Only until 31 December 2014 Already controlled If low risk If unspecified risk 31 December 2015 OR Centralized National Risk Assessment Or Global Forest Registry Material is controlled Field audit of the forest where material is sourced from requirements met requirements not met (Requirements consistent with FSC-STD-30-010) Material is controlled Material CANNOT be used Steps for verification of material according to the current requirements of the standard FSC-STD-40-005 Company Evaluation of Controlled Wood (V 2-1) by Certificate Holder This sourcing model will change with the new standard! (2016) FSC F000100 - FSC International All rights reserved

Slide 20 Proposed Advice Note in detail (1) The phase-out of company risk assessments 1. For suppliers included in the company's own FSC Controlled Wood verification program, the company shall not use Annex 2 of FSC-STD-40-005 V2-1 for determining the risk designation of a district of origin after 31 December 2015. This part simply removes use of Annex 2 (company risk assessment) BUT, need other sources of risk designations! (Clause 2) FSC F000100 - FSC International All rights reserved

Slide 21 Proposed Advice Note in detail (2) 2. After 31 December 2015 the company shall use risk designations for Controlled wood categories from the following sources: a) National Risk Assessment (NRA), or, if an NRA is not available; b) Centralized National Risk Assessment (CNRA; https://ic.fsc.org/centralizednational-risk-assessment.700.htm; https://ic.fsc.org/consultation-on-thecentralized-national-risk-assessment.777.htm), or, if the CNRA is not available; c) Global Forest Registry (GFR; http://www.globalforestregistry.org/map). When the National Risk Assessment or Centralized National Risk Assessment provides a specified risk designation, it shall be treated as unspecified risk. FSC F000100 - FSC International All rights reserved The following sentence (within point 2 of the Advice Note) needs further clarification: When the National Risk Assessment or Centralized National Risk Assessment provides a specified risk designation, it shall be treated as unspecified risk. Does this sentence mean that supplier verification program based on FSC-STD-40-005 V2-1 Annex3 is still possible for unspecified risk areas during the transition period? If so, the following sentence (in background) does not make sense (Because FSC-STD-40-005 V2-1 Annex3 is indeed a company risk assessment): This Advice regulates the use of FSC-STD-40-005 V2-1 after 31 December 2015 and during the transition period without the possibility to conduct company risk assessments. The draft Advice Note under consultation is relevant only for current standard (FSC-STD-40-005 V2-1), which operates on the risk designations of low or unspecified risk. In low risk areas Controlled Wood can be sourced, and in unspecified risk areas the certificate holder needs to conduct a supplier verification according to Annex 3 of the standard. As the Advice Note is currently drafted, National Risk Assessments approved according to the new risk assessment requirements, and the CNRA (which has been conducted according to new requirements) shall also be used for risk designations, but the issue is that these risk assessments provide risk designations of low and specified (not unspecified risk) risk. This doesn t align with the current standard, so we need the rule that specified risk designations shall be treated as unspecified risk (as they are both not low ). Doing this makes it possible to implement Annex 3 for unspecified risk areas. The use of Annex 3 is not conducting a risk assessment Annex 3 is for verifying with evidence that material from suppliers is low risk. Annex 2 is used to make risk assessments, and it is this annex that was the target of decisions about the phase out of company risk assessments, and that will not be allowed under the proposed rules of the draft Advice Note.

We have an audit date of 31 January. If the United States NRA is approved by 31 December 2015, will our next audit in 2016 be subject to the approved NRA or our company's CWRA? If the NRA is available earlier, this shall be used in 2016. If it is not available, the opportunity for CRA will be removed, and risk designations must come from the CNRA or the Global Forest Registry. If the US NRA is completed, approved, & in place by Jan. 1, 2016, and covers all 5 CW categories, would that mean that the Advice Note 21 would not be applicable? In other words, if that were the case, would we simply operate under our NRA and the control measures it designates? If the US NRA is approved, the ADV applies and risk designations provided by this NRA shall be used (low risk=low risk, specified risk = unspecified risk) and the current standard will be followed. For unspecified risk areas field verification according to Annex 3 shall be conducted. Control measures are associated with the revised standard and will not apply. Only risk designation from the NRA will be used. If the U.S. NRA is not 100% completed, is there a possibility that it could be employed on a partial basis, that is, it could cover certain of the 5 CW categories (or even portions of a single category) for which it was completed, but not others for which it was not completed? Only risk designations of NRAs or the CNRA that are completely finalized and formally approved by FSC IC shall be used. NRAs will not be approved by category, but when the complete NRA has been developed, and finalized and approved at the national level. What if an NRA is just specified for some categories? For example, NRA France is unspecified for Category 3 and 5. What should a certificate holder do? An NRA is not available for France, but we have the CNRA available for some categories. For categories that are not covered by an NRA or the CNRA, certificate holders shall use the Global Forest Registry. As is currently the case, all categories shall be treated separately when seeing if field verification is needed for a category. What if within the CNRA only some categories are going to be assessed? For any country or area, if there are only Centralized National Risk Assessments for some categories, these shall be used, and for the categories that are not covered, the risk designations on the GFR shall be used. As is currently the case in the current version of FSC-STD-40-005, the risk designations of the different CW categories need to be treated separately, including for field verification according to Annex 3, if needed. FSC-STD-40-005 V2-1 Annex 3 is a company risk assessment. We do not agree with this statement. Annex 3 is part of the verification program and serves to confirm risk at the forest level, but not to conduct the assessment itself, which is the subject of Annex 2, which is what we refer to in the draft Advice Note. To clarify where field evaluation by a certification body is required, is it correct that it is required under v2-1 Annex C and v3-0 8.1.1? Is it correct that it is not required under v3-0 8.1.2 and 8.2? FSC-STD-40-005 V2-1 Section 13 of the standard provides the requirements for when field verification by a certification body is required, and the requirements for the verification itself are provided in Annex 3. FSC-STD-40-005 V3-0 [DRAFT 3-2 for testing minimum outcomes] Latest draft, please see: http://ic.fsc.org/preview.draft-fsc-std-40-005-requirements-for-sourcing-controlled-wood.a-4541.pdf In the latest draft, field verification is required/an option according to 5.1.1 Outsource field verification of Supply Units located in unassessed risk areas according to Section 6 to an FSC-accredited certification body. Section 6 provides the actual requirements (like Annex 3 of V2-1) Please comment on potential impact of costs for certificate holders. We do not have data on what the actual costs would be, but costs to certificate holders was, and always is, a consideration. The option to outsource field verification is only an option companies can verify their own suppliers. In general, we do expect that there will be an increase in the area of unspecified risk worldwide, but it is important to remember the reasons for the revision of the Controlled Wood system, of which criticism of company risk assessments was central. The membership motion that called for the revision of the Controlled Wood system decided to phase out company risk assessments, and while the date was extended, this needs to be fulfilled.

In our country we have an NRA (prepared according to FSC-PRO-60-002 V2-0 and FSC-STD-40-005 V2-1) and CNRA (only for categories 1, 2 and 5). Is it correct that after 31 December 2015 certified companies shall apply the following documents for evaluating CW? Categories 1, 2, and 5 (and 4 when it is developed): CNRA Category 3: Conduct IRA according to FSC-PRO-60-002a, because the NRA evaluates this category as unspecified risk and there's no CNRA. Firstly, the draft Advice Note is relevant only for the current version of FSC-STD-40-005 (V2-1), so no IRA is possible until the revised version of the standard (that currently contains this possibility) is effective. Therefore, according to the current draft Advice Note, after 31 December 2015 certified companies shall only use NRA, CNRA, or GFR for risk designations (in that order). Because you have an NRA, the risk designations in that shall be used for all categories. If the NRA has unspecified risk, field verification according to Annex 3 of FSC-STD- 40-005 will be required. The situation will only change once the revised standard FSC-STD-40-005 is effective. Then (until there is an updated NRA, revised according to new requirements) the risk designations for the CNRA shall be used (because it was conducted according to the revised risk assessment framework). If the CNRA does not cover category 3, the unspecified risk designation will be treated as unassessed, and an IRA can be conducted for that category. You showed that company should assess the risk of sourced wood based on NRA or CNRA in transition period. If the country has both NRA and CNRA, for example Japan, which assessment should the company use? In the case that an NRA and the CNRA is available for a country, the risk assessment that should be used is the order in which they are listed in Clause 2 of the draft Advice Note. NRA is listed first, and it says if an NRA is not available, then CNRA shall be used. If the NRA or CNRA is not available, the Global Forest Registry shall be used. If a country has a National Risk Assessment, they should only use that. For sourcing Controlled Wood in Japan, companies should only use the NRA for Japan, as is currently the case. If, for example, Japan did NOT have an NRA, but only had the CNRA for some categories, for the Controlled Wood categories that are covered by the CNRA, the CNRA shall be used for those categories. (E.g., if the CNRA covers CW categories, 1, 2, and 5, the risk designations from the CNRA for these categories shall be used). For categories 3 and 4, risk designations would have to come from the Global Forest Registry, which is listed last on the Advice Note. To be clear, a company should no longer assess the risk of the wood they are sourcing based on the NRA, CNRA or Global Forest Registry they take the risk designations directly from these assessments. What will happen in a country where there is not an NRA working group? What will be the procedure to evaluate the risk for controlled wood? We assume here that if there is no NRA Working Group or FSC Network Partner, that there is no NRA available. In such countries, FSC is trying to provide the Centralized National Risk Assessment. If the country will not be covered by this (or only for some countries), the Global Forest Registry shall be used (as proposed in the draft Advice Note). How is it possible to know which country must follow a NRA or CNRA? If the Advice Note is approved, we will provide clear information that states which sources of risk designations shall be used for each country, following the rules of the Advice Note. There is a country which a company has previously assessed as low risk but there is no NRA or CNRA. So from 1 Jan 2016, what happens? In that case, certificate holders in the country shall use the risk designations of the Global Forest Registry. This database is already referenced in risk assessment procedures and is to be used as a base by companies doing a risk assessment. When CNRA is used you said that Specified Risk shall be treated as Unspecified Risk. Does it mean that Annex 3 of current standard 2-1 shall be used? Yes. The current standard doesn t contain requirements for specified risk. As soon as we treat these designations as unspecified, we have the possibility to use Annex 3. Does the statement "When the NRA or CNRA provides 'specified risk' designation, it shall be treated as 'unspecified risk' " simply mean that, if the NRA or CNRA does not assess an area as "low risk," that an interim risk assessment must be conducted?

No, because we are still using the current version of the standard (V2-1), which doesn t contain interim risk assessment (this is in the revised version of the standard). Instead, areas of unspecified risk will need field verification following Annex 3 of FSC-STD-40-005 V2-1, as is currently the case. Am I correct in understanding that companies can use Annex 3 of the current standard or the control measure requirements of new V3 as mitigation of NRA specified risk for the transition period? No, that is not what has been proposed. The Advice Note would only be relevant for current version of the standard. As soon as the transition period ends, or as soon as the certificate holder implements the revised standard, the Advice Note will no longer be a part of the normative framework. The current standard operates in full until the end of year. In 2016 it has been planned that it will continue along with the consulted Advice Note, until the revised standard is transitioned to. There will be no option to implement control measures until the revised version of standard is used. Where risk assessment has not been done, shall all companies perform a field verification? We need the Advice Note for exactly this reason. Otherwise, after the phase-out date, we wouldn t have risk designations for countries without an NRA. Therefore the draft Advice Notes states which sources of risk designations should be used. Only areas of unspecified risk will need field verification, as is currently the case. If there is no NRA or CNRA, the Global Forestry shall be used for risk designations. If risk is low, Controlled Wood may be sourced, but companies shall conduct field verification for cases of unspecified risk. Will companies be able to do their own risk assessments (but now according to new rules), as long as FSC risk assessments do not exist? Or do they need to check Global Forest Registry? Companies will only be able to do their own risk assessments according to new rules when the new version (V3-0) of the standard FSC-STD-40-005 is in place. The draft Advice note under consultation applies to the current standard, and the only options to obtain risk designations have been proposed to be from NRAs, the CNRA and the GFR. Is an Interim Risk Assessment going to be developed by CHs after 2015? No. Interim Risk Assessment is only possible in the revised version of the standard, which is not yet finalized or approved. As soon as it is effective, certificate holders will have to follow revised requirements, which allow Interim Risk Assessments to be carried out in unassessed areas (those not covered by an FSC risk assessment). The possibility to do this wasn t included in the draft Advice Note, because it relates to the current standard, which uses low risk or unspecified risk designations. In areas not covered by NRAs or the CNRA, the use of GFR is seen as a more reliable source of risk designations (low or unspecified risk). With the current version of CNRAs our whole wood procurement area in Europe (five countries) would be in unspecified risk. Would these multisite participants really need a separate annual audit of their own because of the risk classification? According to the requirements of the current standard, if risk is unspecified, field verification will be needed and this would need to be audited. Sampling for field verification (Annex 3) is done based on the Forest Management Units where Controlled Wood is sourced from it is not based on the sites in the certificate. What procedures and quality system do you apply for the Global Forest Registry? Who has the decision making role? How do you handle complaints on risk classifications? No written procedures are in place for the Global Forest Registry, however we have a legal service agreement in place with NEPCon for the management of the database, and they provide the risk designations for countries without an NRA. The Terms of Reference of the service agreement includes maintenance of the GFR, as well as continuous monitoring of the database for quality. Any complaints regarding risk designations on the GFR would and shall be forwarded to FSC, though we have not received any. FSC has a complaints procedure that would be used for any complaints received regarding the GFR. If stakeholders have concerns about any information or risk designations on the GFR, we would welcome you to approach us directly, so that they can be addressed on a case by case basis. The GFR uses inaccurate or dead resource links in some cases. If there is no NRA or CNRA in a particular country and the GFR is inaccurate and designated as low risk, what happens? We would encourage you to approach us if you find cases of wrong information or other issues. We are in constant contact with the staff managing the GFR and we will investigate such instances on a case by case basis.

If the GFR says specified risk, can a company still do their own Interim RA? We must clarify that the draft Advice Note is only applicable to the current standard, which does not have requirements for Interim Risk Assessment (these are found in the draft revised standard). Until that standard is in place, no Interim Risk Assessment will be possible, and then, only for unassessed areas, not areas of specified risk. Using the current standard, and according to the draft Advice Note, if the risk designations that shall be used state specified risk, they shall be treated as unspecified risk, and field verification according to Annex 3 of the current standard will be needed. GFR information is not updated (latest 2011). How frequently is the information supposed to be updated? In general we have a review period of 5 years same as for FSC national standards. Previously, under the old requirement for risk assessments, it was three years, but recognizing that the revised requirements are strong and mean the NRA will be done much more thoroughly and require more work in the first place, this was extended during the revision of new requirements. The GFR will be updated whenever needed (e.g., when there is information available that would change the risk designation), but otherwise data will be reviewed every five years. The GFR website does not function smoothly in China. The map is based on Google Maps, which is shielded. Thank you for notifying us this is interesting and we were unaware of any such issues. We will follow up with the developers/managers of the GFR.

Slide 22 Proposed Advice Note in detail (3) Transition rules between versions 2-1 and 3-0 of the standard FSC-STD- 40-005 3. During the transition period existing Certificate Holders may choose to be evaluated according to either version of the standard. 4. By the end of the transition period, all Certificate Holders shall have transitioned to the revised version of the standard. 4. During the transition period, new applicants shall conform to the revised version of the standard. Environmental members of the CWTC do not support differing level of requirements between the standards FSC F000100 - FSC International All rights reserved If companies can choose between the old and new standard during the transition year, but Annex 2 cannot be used in the old standard (V 2-1), how can companies use the old standard? Annex 2 provides requirements for conducting a risk assessment. The purpose of this is to have risk designations of supply areas. In removing this possibility, the Advice Note provides rules for other sources of risk designations; NRA, CNRA or Global Forest Registry. With risk designations from these, the rest of the standard can be used. If an organization chooses to be audited under v2-1 during the interim, and there is "specified risk," is the interim risk assessment then implemented under Annex 3 of v2-1? If an organization chooses to be audited under V2-1 of the standard, that whole standard (and it s Advice Notes) will need to be implemented. Areas of specified risk will need to be treated as unspecified risk (clause 2 of the draft Advice Note), and there will be no Interim Risk Assessment (because we are using V2-1 of the standard). However, Annex 3 of V2-1 should be implemented. FSC-STD-40-005 V2-1, Section 13 Verification program for wood supplies from sources with unspecified risk provides the requirements for how unspecified risk areas shall be treated (directs to the use of Annex 3). If an organization chooses to be audited under v3-0 during the interim, and there is "specified risk," does the organization have the option of addressing that under v3-0 8.1.1 or 8.1.2? Can a combination of the two be employed, based on groups or categories of Supply Units? Regarding questions related to V3-0 of FSC-STD-40-005, please refer to the latest draft version of that standard, currently being field tested, and available here: http://ic.fsc.org/preview.draft-fsc-std-40-005-requirements-forsourcing-controlled-wood.a-4541.pdf. Your reference to Clauses 8.1.1 and 8.1.2 correspond with 5.1.1 and 5.1.2 in this version. Your question has been clarified in this latest draft version of the standard, and the requirements are included below (see right column, but the requirements you refer to are also included for reference on the left). It is stated that the