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.

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17 thoughts on “Competition Among Certification Standards Helps Consumers and the Environment

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