GERMANY: FSC's 'Green' Label for Wood Products Gets Growing Pains

Publisher Name: 
Wall Street Journal

The environmental group that runs a widely recognized labeling system to


identify "green" wood and paper products has acknowledged that some


companies using its label are destroying pristine forests and says it


plans to overhaul its rules.




The admission by the Forest Stewardship Council, based in Bonn,


threatens the credibility of an organization whose tree-with-a-check-


mark logo adorns products for sale at big retailers including Home Depot


Inc., Lowe's Cos. and Ikea AB.




Some environmentalists have long complained the FSC's rules are too lax.


A catalyst for the group's move to tighten its standard came earlier


this month when it emerged that Singapore-based Asia Pulp & Paper Co.


Ltd. -- one of the largest paper companies in the developing world and a


target of criticism for its forestry practices -- planned to start using


the FSC logo. The FSC has also faced questions about companies in other


parts of the world that use its logo.




A rising number of "green" product-labeling organizations face a dilemma


similar to the FSC's: how to maintain high standards while promoting


their logos and increasing the supply of approved products to meet


demand from conscientious consumers and big retailers.




For the past 14 years, the FSC -- with diverse members, from


environmental groups to big retailers -- has endorsed paper, furniture,


tissues and other products. Initially, the label signified that 100% of


the wood used in a product was harvested by sustainable methods. The


original standard measured a company's performance in specific forest


areas and its overall environmental record.




But there weren't many takers. In 1993, the year it was founded, the FSC


issued just three approvals and in the next few years not many more. To


boost the supply of FSC-endorsed products, the organization in 1997


added a more relaxed labeling standard, allowing producers to use an FSC


logo for paper in which just 50% of the pulp came from forests that that


met the organization's original criteria.




For the rest of the pulp, companies had to show only that it came from


legal sources. Products that passed this test could use an FSC logo with


the words "Mixed Sources" printed underneath.




The number of FSC endorsements soared. As of last year, it issued 6,276


certifications. In all, the FSC's logo now adorns about $5 billion in


products a year, in terms of retail sales, the FSC says.




The move to increase the number of certifications had an unintended


consequence, FSC officials say, allowing forestry companies to put the


FSC label on some of their products even if they are destroying large


tracts of rain forest in other places. "Companies are free-riding on our


name," said Andre de Freitas, head of operations at the FSC. "I feel bad


about it."




The FSC, which has a headquarters staff of just 26, relies on a network


of outside auditors to decide whether a company passes muster. These


auditors are paid directly by the companies they assess, a practice that


has also drawn criticism.




For APP, the auditor was SGS Group, a Geneva-based surveying firm.  




Salahudin Yaacob, a Malaysia-based SGS executive who carried out the APP


audit, said that under FSC rules, his role was limited to ensuring that


about 472,000 acres of an APP tree plantation was legally owned by APP.


Also in accordance with FSC standards, he gave a green light to APP to


use pulp from that plantation mixed with fully FSC-certified pulp from


companies in Brazil and Australia to make paper that APP could label


with the FSC "mixed sources" logo.




But environmentalists charge that APP has devastated a Delaware-size


portion of natural forest on Indonesia's Sumatra island, putting the


survival of orangutan, tiger and elephant species there at risk.


Several large paper purchasers, including Ricoh Co. Ltd., of Japan;


Office Depot Inc. in the U.S.; and Idisa Papel, of Spain, have canceled


contracts with APP out of concern that its practices destroy rain


forests.




But some environmentalists were dismayed. "If they [APP] can get an FSC


accreditation, there must be something wrong with the system," says


Nazir Foead, director of the Indonesian-species program at the


Geneva-based World Wildlife Fund, a co-founder of the FSC.




After inquiries from The Wall Street Journal for this article, the FSC


this month proposed new, tighter regulations to its members, which


include environmental groups WWF, Greenpeace, and Friends of the Earth,


as well as Ikea and Home Depot.




Heiko Liedeker, executive director of the FSC, rescinded the FSC's


approval of APP products at the same time he proposed a tightening of


the FSC's rules. "This company goes against our mission," he said in an


interview.




APP reacted angrily. "We played by the rules," Mr. Munoz said. "To say


one company or group cannot come out with an FSC logo is, to me,


ridiculous." He said APP plans to seek certification for its products


from a standards-setting organization that competes with the FSC.




The FSC's proposed new rules, which the group's board will vote on next


month, are aimed at preventing any company that destroys rain forests or


engages in illegal logging from using the FSC's label.  "This is a


significant change in the FSC systems, although it addresses an issue


which has concerned FSC stakeholders for many years," the FSC said in a


statement to members.




If approved, the measures will make it harder for companies to acquire


the green credibility -- and higher sales -- that FSC approval confers.


But it could also reduce the amount of FSC-approved paper at a time when


big retailers say it already is hard to come by.  Home Depot, the Atlanta-based home-improvement giant and an FSC member, formally expresses a "preference" for wood certified by the group. Yet so little is available that it still represents "under 10%" of the company's total wood purchases, says Ron Jarvis, senior vice president of environmental innovation at Home Depot.




Critics say it is too late to prevent the damage done to the label's


credibility, and it remains unclear how it may affect the products


already on store shelves. FSC officials haven't yet decided whether the


new standards will apply to companies retroactively -- a move that could


potentially require an extensive review of the practices of every


approved forestry company.




While the FSC's standard has the widest geographic reach and the most


endorsements by environmental groups, it competes with many rivals.  


In North America, for example, the timber-industry-originated


Sustainable Forestry Initiative, or SFI, encompasses about 135 million


acres of forests, while the FSC covers just 73 million acres, according


to industry records. The SFI was started in 1994 by members of the


American Forest and Paper Association in response to the FSC's founding


a year earlier, but SFI officials say they now operate independently


from industry.




Still, many environmentalists regard FSC as the best of the existing


forest certification groups. "It's a question of how do we improve the


system, not whether we can keep the system," says Brant Olson, director


of the old-growth-forest campaign at the Rainforest Action Network in


San Francisco. "Because if you look at the alternative systems run by


industry, those are even weaker."




Yet Mr. Salahudin, the SGS auditor, cautions that the FSC's moves to


tighten its rules could simply push big companies in the developing


world to stop working toward approval from the council. The proposed


rules, he says, "will surely drive away most of the big players in


tropical forestry."


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