Presentaci

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WBCSD _at_ RIIA London, January 25th, 2007 Illegal
Logging Update Stakeholder Consultation
Global Company Perspectives James Griffiths,
WBCSD Sustainable Forest Products Industry
working group
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Agenda today

• Offer global company perspectives on action and
  strategies to address illegal logging illegal
  trade challenges
• The business case for action
• Profile a range of current business initiatives,
  including member companies
• But start by introducing the World Business
  Council for Sustainable Development (WBCSD) and
  its focus and involvement on sustainable forest
  management

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WBCSD who are we?

• Coalition of 200 leading global companies
• 35 countries, 25 major sectors, including
  forestry/forest products
• Global network of 60 national regional business
  councils partner organizations
• Critical mass member company aggregations
• USD 5,000 billion revenues Japan
• 12 million employees gt Portugal
• 3 billion consumers per day serviced/supplied

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WBCSD what do we do?

• Shared commitment to Sustainable Development
• Economic growth Ecological balance Social
  progress
• Development now without compromising prospects of
  future generations
• Mission is to provide business leadership as a
  catalyst for Sustainable Development
• Business action Policy development Best
  practice Global Outreach programs and
  activities to earn, retain and expand the
  business license to operate
• www.wbcsd.org

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WBCSD forestry/forest products

• Sustainable Forest Products Industry (SFPI)
  working group formed 1996 but active since
  2002/03
• International forestry/forest product companies
• Aracruz, Grupo Portucel Soporcel, International
  Paper, MeadWestvaco, Metsäliitto, Mondi
  International, Nippon Paper, Norske Skog, Oji
  Paper, SAPPI, SGC Paper, Stora Enso, Sozano, UPM,
  Weyerhaeuser (_at_ 55 global forest product sales)
• Major customers/service/ suppliers Caterpillar,
  Global Forest Partners, Kimberly-Clark, P G,
  Time Inc, PwC
• Observers The Forests Dialogue, National
  Council for Air Stream Improvement,
  International Council of Forest Paper
  Associations.

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SFPI Working Group

• Mission
• Global platform for leading companies to
  collaboratively define sustainability in the
  forest products industry.
• Improve performance enhance customer
  stakeholder confidence.
• Scope
• License to operate, innovate, develop and market
  forest products by addressing critical
  international issues associated with
• Sustainable Forest Management, Wood Fiber
  sourcing
• Energy, Carbon emissions sequestration
• Approach
• Collaborative relationships Catalyze consensus
  building with other stakeholders Individual and
  joint company leadership action

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Illegal Logging Illegal Trade

• A very serious and high priority concern for
  international forest industry
• Undermines sustainable forest management and
  creates significant market distortions
• Negative environmental social impacts
• Unfair competition by depressing prices
  profitability
• Damages industry reputation, undermines market
  acceptance and encourages product substitution
• AFPAs study clearly identified scope/scale (Nov
  2004)
• Concern shared by governments, IGO, NGO,
  customers communities

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Combating Illegal Logging

• A priority issue for the SFPI Working Group our
  response strategy
• Task Force of company specialists (since 2003)
• Data and definitions size scale of the
  problem to inform our response (2003/04)
• Pilot Project shared learning initiatives
  (2004/05)
• Multi-stakeholder dialogue consensus (2005)
• Intergovernmental processes FLEG/Ts (2005)
• Company leadership actions (2006 - 2007)

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There is real value in joint action

• Worked with WWF International under Collaborative
  Framework Agreement
• Latvian pilot project developing best practice
  wood tracking verification (2003/04)
• Refining thinking on the term of illegal logging
  sourcing, harvesting trade
• Joint statement for the The 1st Forests Dialogue
  (TFD) on Practical Actions to Combat Illegal
  Logging, March 2005 in Hong Kong

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The Forests Dialogue seeking multi-stakeholder
consensus

• Hong Kong TFD made several recommendations
• Encourage collaboration to address problem
• In high risk countries consider developing
• nationally relevant legality standards
  clarification process
• rating systems for targeted countries species
• Encourage companies to use effective wood tracing
  systems
• Urgent individual and collective Government
  action e.g.
• G8 and other inter governmental approaches such
  as FLEGs
• Target bilateral programs ODA investments in
  capacity building
• Greater enforcement of existing legal remedies

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TFD 2-3 November, 2005 in St Petersburg

• Some important society/business messages
  targeting the Europe North Asia FLEG
  Ministerial Process TFD
• Partnerships between responsible forest industry
  and civil societies have led to innovation and
  best practice. However, this is not a substitute
  for comprehensive government action.
• More regulation without addressing corruption
  leads to further corruption and fraud.
• Provide positive incentives for forest business
  with a proven track record.
• Support the markets for legal and sustainable
  forest products in ways which avoids penalizing
  legal operations.

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WBCSD and ICFPA joint position

• The Ministerial Declaration NEEDS TO -
• State that law enforcement is a government
  function.
• Recognize national sovereignty over natural
  resources and use.
• Reflect the importance of
• Well-defined and full respect for property rights
• Clear requirements obligations for land tenure
  and use rights.
• Transparent processes for allocating pricing of
  harvesting rights.
• Clear and unambiguous legal definitions and
  regulations. e.g. no conflicting regulations over
  forest management and resources use.

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WBCSD and ICFPA joint position

• The Indicative Action Plan NEEDS TO -
• Mobilize existing legislation and enforcement
  agencies targeting criminal activities.
• Review existing legislation before considering
  additional laws.
• Avoid legality licensing regulations or the use
  of Government procurement policies as primary
  response mechanisms.
• Do not to burden legitimate business and hamper
  its competitiveness against illegally sourced
  products or substitute materials.
• Recognize which activities within in/beyond the
  direct control of business.
• Appreciate stakeholders respective roles but
  promote collaboration.

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WBCSD and ICFPA joint position

• Enable and stimulate the use of a tool kit of
  flexible, cost effective solutions for forest
  managers/processors operating in high risk areas
• Geographic Information System (GIS)
• Environment Management System (EMS)
• Responsible Purchasing policies
• Tracking/Tracing Systems
• Forest certification
• Chain-of-custody for certified sources
• Codes of Conduct
• Company Sustainability Reporting
• Independent 3rd party Auditing and Certification

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Advice on Company level strategies

• Actively recognize, analyze manage the risks
  related to legality and sustainability due
  diligence investment screens
• Assurance of the origin legality of wood is an
  essential part of procurement principles and
  practices
• Focus on long term partnerships and investments
• Have active local representative network
• Involvement leadership of local industry
  associations
• Increase own logging operations keep supply
  chains short
• Offer training and capacity building to promote
  sub-suppliers performance
• Implement third party verified traceability and
  CoC systems
• Engage in stakeholder dialogue and demonstration
  and shared learning projects

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The business case for action  
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Business case for action - recognizes

• Frontline role of governments
• Framework conditions
• Forest law enforcement governance
• But also the roles needs of other stakeholders
• Societal circumstances, concerns and expectations
• Customer consumer assurance

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Business case for action - recognizes

• Need for a targeted approach
• Illegal logging has global impacts but local
  roots causes
• Value of coordinated and cooperative approaches
• Investing in FLEG capacity building SFM for
  economic growth a greater focus of ODA
  assistance/multilateral programs
• Stakeholder initiatives business, NGOs,
  communities
• Scope and limits of company level effectiveness
• Company operations supply chain management
  where companies can have greatest direct control
  and impact

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Business case for action - recognizes

• Need for appropriate responses that do not
• Penalize legitimate operators local forest
  owning dependent communities
• Raise the cost of legal forest products and
  thereby make illegal logging trade even more
  profitable
• Undermine the competitiveness of forest products
  relative to non wood alternatives
• Steel, cement, plastic
• Non renewable, higher energy intensity and not as
  recyclable

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Traceability important supply chain tool to
document verify wood origin legality

• Traceability systems
•  At risk  wood flows
• Verify wood origin
• Verify compliance with corporate policies and
  national legislation
• Can be third party verified through EMAS, ISO
  14001, Chain-of-Custody, Controlled Wood
  Verification
• Source Latvia Case Study

Contracts
A
Wood origin data
B
Auditing
C
External audits
D
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Profiling some industry company
initiatives  
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Forest Products Association of Canada

• Scope All Canadian operations of FPAC member
  companies
• How Traceability commitment in 2006
• FPAC members commit to tracing their fibre
  supplies back to the forest area of origin, by
  the end of 2008, to assure customers that the
  wood fibre they are using comes from legal
  sources.
• Traceability is a condition of membership to
  FPAC. FPAC has also a Statement on Illegal
  Logging which commits its members to purchase
  and use wood coming only from legal sources
  http//www.fpac.ca/en/customer_centre/resources/St
  atement_on_Illegal_Logging.pdf

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Forest Products Association of Canada

• How Mechanism(s) to verify that the wood
  procured is from legal sources
• supplier evidence of legal right to harvest
  through tenure or ownership or
• a chain-of-custody certificate or
• an auditable supply chain management system or
• relevant audit results from suppliers or
  customers or
• supplier SFM certification
• Assessment Annual reporting to FPAC and
  inclusion in the biennial Sustainability Report
• For more info www.fpac.ca

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American Forest Paper Association

• Who The Alliance to Combat Illegal Logging
• Formed by the American Forest Paper Association
  and Conservation International
• What
• The primary objective of the Alliance is to use
  remote sensing technology to detect illegal
  logging in priority protected areas, and convey
  the information to local enforcement agencies and
  encourage enforcement action.

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American Forest Paper Association

• AFPA / CI Alliance to Combat Illegal Logging
  cont.
• Where The Alliance has identified a series of
  candidate protected areas and is currently
  focusing on work in Indonesia and the
  Philippines
• How Strengthen existing enforcement regimes by
  quickly and accurately detecting illegal logging
  activity using an array of both state-of-the-art
  and low-tech satellite remote sensing techniques
• Promote rapid response by streamlining access to
  high quality information and strengthen the
  capacity of government agencies to follow-up on
  surveillance with effective enforcement.
• Rapid detection will enable local response teams
  to backstop government enforcement personnel, and
  the dissemination of satellite-based evidence of
  illegal logging activity to government, industry
  and civil society will support improved forest
  management and transparency.

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Other examples  
Go to UPM's PPT
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Oji Paper Co Ltd

• What To confirm legality of imported and
  domestic woodchips to comply with new government
  procurement policy of Japan
• How Obtain traceability reports from imported
  woodchip suppliers at every shipment by woodchip
  carriers from domestic woodchip suppliers.
• Assessment Confirmed legality of all woodchips
  purchased by 1,016 reports obtained in FY2005.
• For more info http//www.ojipaper.co.jp/english/
  sustainability/procure_policy/index.html
• http//www.ojipaper.co.jp/english/sustainability/e
  _report/pdf/2006/report_con05_2006.pdf

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From Russiawith Transparency

• Who Stora Enso, Time Inc, Axel Springer, Time
  Inc, Tetra Pak, Randon House local partners
  NGOs (Transparency International)
• What Collaboration to improve the sustainability
  transparency of wood from Russia along an
  entire value chain and final product segments
• How Learning project to increase legal
  compliance, reduce safety risks and enhance SFM
  within Tikhiv and Chalna harvest areas
  training, capacity buildings, new IT tools, pre
  group certification standard development and
  final certification
• Results/Assessment Identifiable improvements in
  all performance areas value and role of 3rd
  party verification confirmed
• For more info Dec 2006 publication
  http//www.tikhvinproject.ru

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WBCSD commitments in 2007

• SFPI Membership Principles Responsibilities
  being finalized by 31 March 2007
• Voluntary code of conduct
• BUT a condition of working group participation
• Eight performance areas reporting on progress
  via company SD reports
• Governance, Resource management, Fiber sourcing,
  Eco-efficiency emissions, Climate mitigation, H
  S, Community/stakeholders, Human rights/labor
  standards

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Provisions address illegality

• Governance
• 1.3 Work against corruption and illegal practices
  in all their forms.
• 2. Resource Management
• 2.1 Use SFM in all forests we own, lease or
  manage
• 2.4 Progressively and systematically introduce
  credible forest certification in the forests we
  own, lease or manage.
• 3. Fiber Sourcing
• 3.1 Manage supply chains to obtain purchased
  fiber from acceptable sources, using contract
  requirements and education and outreach programs,
  as appropriate.
• 3.2 Ensure legal ownership of all fiber and wood
  utilized and comply with all applicable laws in
  forestry operations.
• 3.3 Introduce credible, independently certified
  wood-tracing systems where needed to address
  significant risks.

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Final points

• Law enforcement is a government function.
• Dont impose regulations on legitimate business
  that will hamper its competitiveness.
• Work collaboratively with different stakeholders
  to find the most cost efficient and effective
  tools relevant to the specific situation.

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Thank you! Questions?   www.wbcsd.org