How Timber Suppliers Keep Forest Certifiers Honest

In the absence of strong legal systems and enforcement in some parts of the world, how can consumers know the certified timber they are receiving is legitimate? A commentary from the managing director of a timber company supplies one answer.

Michael Hermens of APP Timber, a company specializing in Asian timber, wrote about an experience he had recently with PEFC and FSC. Hermens noticed an advertisement by a Malaysian company using incorrect logos for the two certification systems. Wanting to protect the value of his own certified product and of the certification systems, he contacted each of them. Finding the incorrect logos, Hermens writes he:

…sent a copy to both PEFC and the Rainforest Alliance (whom is our FSC auditor). The reason I do this is to alert both organisations on companies claiming to be certified but often are not. This happens a lot in China where the illegal use of trademarks seems to be common practice. It is important that companies like us who play by the rules and pay large sums to maintain our certification are protected from those “cheaters”.

Having spent money and time to become certified, his company has an incentive to protect the value of those certification systems.

What comes next is more interesting. PEFC quickly responded that the Malaysian company was, in fact, certified but was using the wrong logo and had been contacted.

The response from FSC, however, flummoxed Hermens. Instead of standing up for the validity of their logo, FSC aimed its fire at PEFC, telling Hermens that companies are “not allowed to place FSC logo in the same position with PEFC logo. PEFC is FSC’s competitor in forest certification.” Hermens feels FSC should not see PEFC as a competitor. I disagree.

Competition among the systems can be quite healthy. Certification systems that compete are encouraged to improve the value of their products, the high standards of their auditing and the value of their brand. The story Hermens tells is a case in point. If timber suppliers begin to feel that FSC’s logo can be easily forged and FSC’s auditors won’t take action to protect it, suppliers will question the value of the system. Why follow rigorous rules when others can simply cheat without consequence?

FSC’s perception that PEFC is a competitor will actually work to improve the value of the brand. It prevents FSC from ignoring threats to its brand and credibility. It forces them to be responsive to their clients, understanding that timber suppliers could go elsewhere. As we’ve written before, the creation of SVLK in Indonesia is a positive step in this process of increasing competitive pressures toward high business and environmental standards.

Hermens frustration is understandable in one sense. He would like to receive multiple certifications to cover his bases. If FSC prevents that, he is put in a difficult position.

Overall, however, competition among the systems is a good thing. In this case it allowed him to pressure the systems to protect their brand, and I am willing to bet that FSC is more likely to be responsive in the future.

Competition Among Certification Standards Helps Consumers and the Environment

With the recent certification of four of Asia Pulp & Paper’s mills by Indonesia’s SVLK certification system, there is increasing attention on that system and the role it will play in ensuring Indonesian forestry meets environmental standards.The system was created in 2009 in part to satisfy laws against illegal timber harvesting in the EU and United States.

We will examine the system and its implementation at a later date, but for now, two things stand out about these new certifications under SVLK.

First, the system demonstrates the incentives of large forestry companies to engage in responsible forestry. One role certification systems play is to reduce the amount of illegal logging in countries where laws and enforcement can be uneven. By requiring clear chain of custody evidence, buyers can have some assurance they are purchasing legally harvested wood.

Forestry companies, however, also want to reduce illegal logging. Illegal logs tend to increase supply and are sold at lower prices, undercutting the market share of producers that act legally. Where laws and enforcement are lax, certification systems can fill the vacuum. This was one of the original justifications for creating certification systems — provide incentives to be good stewards where local laws and politics don’t.

Used in this way, certification systems are not only good for the environment, they are good for the bottom line.

Many on the left see the fight as being between timber producers and the environment. Done correctly, however, certification systems harmonize the incentives of forestry companies with efforts to stop illegal harvesting.

Second, the creation of SVLK demonstrates the benefit of having multiple certification systems. Some supporters of FSC have tried to make that system the sole arbiter of good forestry. This effort even led to a claim of anti-competitive practices by FSC a few years back. This isn’t surprising. Just as a company would seek to obtain monopoly power, so too do advocates of their favored certification system.

Competition among systems, however, keeps everyone honest and pushes them to improve their brand by increasing the benefits of being certified under that system, scientifically and economically. If competing certification systems want to increase their market share, they will need to focus on serving potential participants rather than simply using lobbying and politics to force participation.

Ultimately the goal of forest certification is to encourage responsible forestry and provide consumers an opportunity to put their wealth where their values are. Increasing the number of certification systems can serve those purposes by harnessing the incentives of forestry companies to oppose competitors that operate illegally.  Ultimately, the environment and consumers benefit when competition forces competing certification systems to continually improve.