McGill Environmental Research Forest Certification Project

Emerging Trends In Forest Certification:
The Role of Chain of Custody Systems

Discussion and Conclusions

New Forms of Certification

Performance based certification systems, such as the FSC, provide a more credible form of certification to environmentally conscious buyers. The FSC approach to certification is more rigorous and has a more demanding supply chain verification system. The market penetration of performance based systems, however, relies upon a great enough demand for wood products to provide sufficient incentives to producers. Our research demonstrates that the demand for FSC certified wood products does not seem to be generating the market incentives it was expected to in theory. Most organizations do not receive a premium for FSC certified wood products, have not recuperated their costs from certification, and do not have a significant percent of certified sales.

The FSC is apparently aware of this trend and has launched a series of add campaigns to reinforce their brand name and increase the demand for FSC certified wood products from large retailers. Home Depot, for example, has enough influence, as a buyer, to ensure that their suppliers become COC certified, even when they themselves are not. The future impact of box stores, such as Home Depot, however is not well understood. Information is extremely difficult to extract from large retailers and more research is required.

FSC COC certification is most effectively applied to value added goods, such as hardwood furniture and molding, manufactured by smaller companies which are able to place themselves into the chain of custody relatively easily. These firms require a comparatively small amount of timber for high quality products and are conducive to what the FSC describes as sustainable forestry. The FSC system is somewhat more difficult to apply to larger and more intensive branches of the industry, such as pulp production, where there is no strong demand from either buyers or end consumers for products from well managed forests. This lack of demand effectively excludes the FSC from having a notable impact on the most destructive form of North American forestry. If the FSC wishes to affect the sustainability of North American forestry as a whole, it should strongly consider and research the possibility of becoming applicable to the softwood and pulp and paper industries.

The Future of FSC COC

The FSC is still in its infancy and the coming years will be crucial in determining its future success. Our research indicates that the FSC does have a bright future. FSC COC certification has been adopted by a growing number of North American organizations since 1994 and our data is consistent with this trend; 75 percent of the organizations interviewed received their certification since the year 2000. Further, 82 percent of our interviewees plan to renew their certification when it expires. This trend is somewhat puzzling: FSC COC certification seems to be gaining popularity despite the lack of market incentives. One explanation for this is that FSC COC certification does provide other benefits that have engendered confidence among certificate holders. Furthermore, 88 percent of our interviewees that received benefits from certification also plan to renew their certification. Our data suggests that certified organizations are remaining positive about the future of FSC COC certification because they are retaining their market share, improving their public image, receiving important non-market benefits, and ensuring they will be competitive in the future market.

The next step for the various certification systems will be important in determining their future within the forestry industry. The most likely strategy for the FSC will be to reinforce its status as the most prominent international third party certification scheme through its logo, in the hopes that this will lead to widespread acceptance among environmentally sensitive consumers. Alternatively, the FSC may attempt to integrate other certification programs into their system, thus harmonizing chain of custody standards. The best case scenario for the FSC is one in which their label becomes universally accepted as the standard for bona fide products originating from exceptionally managed forests.

Issues and Recommendations for the FSC

One of the most important issues the FSC must address if it is to be successful is the inadequacy of the certified wood supply. Our data suggests that there is a general insufficiency of supply throughout the chain of custody, irrespective of geographic location and the size of the organization. Such inadequate supply, however, is likely experienced in different forms. Smaller organizations, for example, may have an inadequate supply because the supply does not exist locally or regionally, whereas larger organizations, which are able to import wood from farther away, may simply be unable to find certified wood products in the quantity that they desire. It is interesting to note, however, that FSC certified forest managers responded to having sufficient supply to meet their buyers' demand. This apparent contradiction in the supply of certified wood within the chain of custody demands further attention and is a worthwhile topic for future research.

Findings from our research suggest that the FSC might be currently underutilizing the powerful potential of its chain of custody mechanism. The FSC is in the unique position of being able to further expand the market's capacity to produce guaranteed certified wood products. By taking advantage of their existing database, the FSC could further establish a supply information network. The current database is in fact limited, as it does not facilitate communication between buyers and suppliers of certified wood products. It would thus appear worthwhile for the FSC to develop this database to include more relevant information and increase awareness of its existence among certificate holders. Once in place this database could provide important information on what certified wood products are available, where they are located, and at what price. This might help address the apparent contradiction existing between FM holders who appear to have an excess of certified wood available, and COC holders farther up the chain who point to an inadequate supply.

General Conclusions

Our research suggests that the FSC's chain of custody system is currently the most credible and verifiable; its participants are largely motivated by wanting to maintain their market access; its costs have not been recuperated; its supply of certified wood is inadequate; and its certificate holders remain optimistic despite limited market incentives such as premiums. In addition, it was found that the majority of FSC COC certificate holders are aware of parallel certification systems and would support a harmonizing of their different chain of custody standards.

The primary goal of the FSC is to provide a guarantee that a wood product has come from a sustainably managed forest, according to agreed social, economic and environmental standards (FSC Doc. 1.2, 2000). In essence, they seek to recognize sustainable forestry through voluntary performance based certification. As a voluntary system the FSC ensures that its goals will not be compromised and that its program will not undermine government regulations. The FSC's certification system is an important first step towards achieving sustainable forestry practices, especially in North America where forestry has such a destructive legacy. However it must be acknowledged, that the potential for forest certification to move beyond merely producing sustainable outputs to achieving long-term sustainability, will only fully be realized once such measures are coupled with drastic new consumption patterns.


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