Understanding the Forest Product Chain-Of-Custody Certification Standard

UNDERSTANDING THE FOREST PRODUCT CHAIN-OF-CUSTODY CERTIFICATION STANDARD

A discussion about the challenges, impacts and opportunities for the Forest Product Chain-of-Custody (CoC)

February 2012

AUTHOR Gerrit Marais Director of Qualifor Program, SGS ABSTRACT

The purpose of this document is to provide an introduction to the Forest Product CoC certification requirements. This document is not intended to be a full explanation of the certification standards and related requirements or of its implementation. Rather, it aims to promote understanding of the standard and its benefits to organisations doing business at a domestic or international level within the forestry supply industry.

CONTENTS

I. EXECUTIVE SUMMARY 1

II. FOREST MANAGEMENT 2

III. FOREST PRODUCT CHAIN-OF-CUSTODY 4

IV. GLOBAL SOLUTIONS FOR FOREST PRODUCT CHAIN-OF-CUSTODY 6

V. CONCLUSIOn 9

I. EXECUTIVE SUMMARY

From logs, to lumber, furniture, wood pulp and paper products, and to any other item made from wood, it is becoming more and more important to know exactly where your materials have come from. Added to that, mandatory requirements are becoming more stringent and consumers, aware of environmental issues, are demanding wood and paper products from well-managed forests. Consumers expect this information up-front, in addition to being assured that your company will continue to meet their needs now and in the long term. Yet with more and more wood being supplied and manufactured from different global sources, the process of tracking has become more complicated. Providing traceability of information right through the supply chain assures your customers and the consumers of your products about the origin of the wood. The Forest Product CoC certification enables you to demonstrate your commitment to traceability in your supply chain, helps consumers trust your wood supply, satisfies customer demand, and continuously improves your corporate image.

1 II. FOREST MANAGEMENT

Each year about 13 million hectares (ha) of the world’s forests are lost due to deforestation. Illegal logging and the associated timber trade: • contributes to deforestation, causing loss of biodiversity and destruction of ecosystems • undermines responsible/sustainable forest management • has serious economic and social implications for the poor and disadvantaged • creates unfair competition for those companies behaving responsibly and ready to play by fair rules • encourages waste and low productivity due to cheap raw material • undermines international security, being frequently associated with corruption, money laundering, organised crime, human rights abuses, violent conflicts, etc Forest management certification is an independent assessment of the forest management unit to check that a forest complies with the internationally recognised standards of the Forest Stewardship Council (FSC®) or the Programme for the Endorsement of Forest Certification (PEFC). Forest Product CoC certification involves tracking the origins of wood to guarantee its authenticity through the entire supply chain. It also provides an assurance to customers, stakeholders and investors of the quality of forest management at the original source of the timber.

CERTIFICATION OF FOREST MANAGEMENT VS. FOREST PRODUCT CHAIN-OF-CUSTODY

Certification of Forest Management is a guarantee of responsible management.

Certification of Chain-of-Custody guarantees the origin of forest raw material

Certified Forest SGS Certified Product

2 THE ORIGINS OF FOREST / FOREST Some highlights*: PEFC is an umbrella organisation. It PRODUCT CERTIFICATION STANDARDS • FSC is nationally represented in more works by endorsing national forest certification systems developed ABOUT FSC than 50 countries around the world through multi-stakeholder processes FSC is an independent, non-governmental, • More than 148 million ha of forest and tailored to local priorities and not-for-profit organisation established to worldwide are certified to FSC conditions. Each national forest promote the responsible management of standards certification system undergoes the world’s forests. Established in 1993 • With over 22,000 COC certificates rigorous third-party assessment as a response to concerns over global worldwide 1078 FM/CoC certificates against PEFC’s unique Sustainability deforestation, FSC is widely regarded as * As of December 2011. Benchmarks to ensure consistency one of the most important initiatives of the Source: www.fsc.org. with international requirements. last decade to promote responsible forest With about 30 endorsed national management worldwide. ABOUT PEFC certification systems, PEFC is the world’s In 1993, the FSC also published a largest forest certification system. standard which outlined 10 principles The Programme for the Endorsement Some highlights*: and criteria for forest stewardship and of Forest Certification (PEFC) is an the requirements for CoC. international, non-governmental, • More than 242 million ha of forest not-for-profit organisation dedicated worldwide are certified to PEFC FSC is a certification system that to promoting Sustainable Forest standards, which represents nearly two- provides internationally recognised Management (SFM) through thirds of all certified forests globally standard-setting, trademark assurance independent third-party certification. It • More than 8,500 companies and and accreditation services to companies, was established in 1999 in response to organisations have achieved PEFC organisations, and communities concerns about the preservation of the CoC certification interested in responsible forestry. world’s forests. • PEFC is represented by nearly The FSC label provides a credible PEFC works throughout the entire forest 520,000 forest owners link between responsible production supply chain to promote good practice in and consumption of forest products, the forest, and to ensure that timber and * As of December 2011. enabling consumers and businesses to non-timber forest products are produced Source: www.pefc.org make purchasing decisions that benefit with respect for the highest ecological, people and the environment as well as social and ethical standards. Thanks to providing ongoing business value. its eco-label, customers and consumers are able to identify products from sustainably managed forests.

3 III. FOREST PRODUCT CHAIN-OF-CUSTODY

CoC is the path wood products take whether there is any accidentally or and other attributes is available to from the forest to the consumer, intentionally caused irregularity and managers of the CoC system; including all processing, manufacturing, discrepancy in the system which has transformation, storage and distribution to be addressed and corrected; 3. Adequate training and links. The CoC certification from SGS supervision of personnel plays an important role in ensuring 2. Management of critical A fundamental component of an the traceability of wood from its origin control points (CCPs) through the entire supply chain, which effective CoC system is to have the enables companies to provide third party CCPs have to be managed by systems responsible and assigned personnel verification of the claims they make to their usually based on the principles of adequately trained, instructed and customers. It involves three key elements: identification, segregation, and supervised to strictly follow the documentation. This is handled established procedures for CoC control. separately at each point along the 1. Accurate and reliable information * A controlled wood source is the term supply chain or where material from on quantities of materials purchased, used by FSC to identify wood or paper a certified or controlled* source products which do not originate from an produced and sold potentially could become mixed with or FSC certified forest but which meet the A central part of any CoC system is to replaced by material from uncertified requirements for inclusion with certified gather, record and verify information from uncontrolled** sources. products that carry FSC claims. on quantities and volumes of materials Certification identification affixed to **Uncontrolled sources do not meet involved. Linking and cross-checking the logs or other products are keyed the requirements necessary for the quantities at subsequent stages to documentation so that information product inclusion with others that of the supply chain provides evidence on wood volume, species, quality, carry the FSC claims.

CHAIN-OF-CUSTODY EXAMPLE

Certified source 1

Certified SAWMILL source 2 MANUFACTURER PACKING PLANT

CONTROLLED DISTRIBUTOR source 1

CONTROLLED RETAIL CHAIN source 2

4 AIMS OF CHAIN-OF-CUSTODY mixing does not occur. The way that SCOPE OF CERTIFICATION mixing can be prevented at CCPs is CoC certification provides evidence that The scope of a CoC certificate defines through a combination of identification, the certified product originates from the sites, products (by product types segregation and appropriate certified, well managed forests and/ and labelling category/material status), documentation together with adequate or controlled sources, and/or reclaimed and processes/activities that are training. The stronger the controls are, sources. It also verifies that these included in an evaluation, together with the lower the risk of uncontrolled mixing products are not mixed with products the certification standard(s) against of product, ensuring a more robust COC. from uncontrolled timber at any point which these have been audited to Once the CCPs have been identified, in the supply chain. When percentage ensure that products from those sites the setting up of the CoC system within labelling or a credit system is being and processes meet all the applicable the certification framework can be used, strict controls allow for the mixing requirements. It determines the point achieved. A good documented system of products from well-managed forests at which the certified CoC system of procedures and controls is essential. with controlled and/or post consumer starts (i.e. the point at which the recycled material. certificate holder takes possession of BASIC PARTS OF A CoC certification is required whenever certified and non-certified material), the a company takes physical or legal CHAIN-OF-CUSTODY SYSTEM basic material-related processes (e.g. ownership of a timber based product • A system for the purchasing and processing, manufacturing, labelling, and wishes to make claims that the acquiring of certified materials, storage and/or transport), up to the product originates from an FSC or including the evaluation of vendors, point at which it finishes (i.e. the point PEFC certified supplier and/or recycled and the acquisition and maintenance at which the certified products leave the sources and/or controlled sources. of records, ensuring traceability of the certificate holder’s control). Any product products to their source. which is within the defined scope of the certificate at the time the certificate is ACHIEVING A SECURE • A system for the handling of certified issued may be considered to comply CHAIN-OF-CUSTODY materials within the scope of your with the applicable requirements of business (i.e. keeping them distinct The first step for an organisation relevant certification standard(s). from non-certified materials). wanting to implement CoC is to identify all CCPs. Each of the points identified • A system for providing certified will need controls to ensure that materials to your customers, including the provision of the necessary information and documentation allowing traceability and verification.

5 IV. GLOBAL SOLUTIONS FOR FOREST PRODUCT CHAIN-OF-CUSTODY

WHY FOREST PRODUCT HOW DOES THE FOREST PRODUCT • Step D – If any issues are identified, CHAIN-OF-CUSTODY? CHAIN-OF-CUSTODY CERTIFICATION these will be discussed with you and, if necessary, Corrective Action Forest Product CoC certification PROCESS WORK? Requests (CARs) will be raised. provides the following benefits: Product CoC certification process Where a major CAR is raised, consists of eight steps: • Anyone, anywhere in the supply chain certification will not proceed until this can determine that wood and paper • Step A – During the on-site evaluation, has been addressed. The organisation products originate from certified an opening meeting will be held where will normally have twelve months forests and/or recycled material and/or the assessor will briefly explain the to address any minor CARs, except controlled sources certification process and will ask to be for PEFC where any non-conformity • Evidence that your products originate given an overview of the CoC system (CAR) will preclude certification. before beginning the evaluation. This is from certified, well-managed forests • Step E – On completion of the on- to help identify points where controls or from other controlled wood sources site evaluation, the assessor will are likely to be required. The assessor and/or recycled material provide feedback during the Closing will need to see your procedures • Provides access to internationally Meeting on the findings of the audit covering the requirements of the recognised trademarks and whether a recommendation relevant CoC standards. for certification will be made. The • Mitigates the risk of using • Step B – The assessor will then need assessor will then complete the environmentally sensitive products to visit each part of the site covered in evaluation report, which will be • Protection for you and your the scope of certification, including, as submitted to the SGS Qualifor office customer’s brand appropriate for your organisation: for review and a certification decision. • The certification process from the Purchasing department or area where • Step F – On account of a positive evaluation to the delivery of the information on purchasing is stored certification decision, a certificate will certificate can normally be completed Areas where raw material arrives be issued and in the case of FSC, the within 20 days on average and is stored website (www.info.fsc.org) will be • International recognition to boost your updated to reflect this new certificate. Processing and manufacturing organisation’s credibility In the case of PEFC, the organisation facilities will be notified and the PEFC website • Compliance with forestry management Product storage areas (www.pefc.org) will be updated. standards reduces the risk of product denial and possible litigation Sales department • Step G – Surveillance audits will be conducted on at least an annual basis to • Helps develop and improve Training department or area where ensure continued compliance with the performance training records are stored requirements of the relevant standard. Any sub-contractors included under the scope of certification • Step H – The certificate is valid for five years and before the expiry of • Step C – In each place visited, the the certificate, a re-evaluation will assessor will need to talk to staff, be conducted which will allow the examine procedures, check records and reissuing of a certificate. look at methods used for identification (e.g. labelling of certified material) and segregation (e.g. separate storage areas for certified material) to ensure your organisation is in compliance with the relevant CoC requirements as stated in the different standards.

6 FOREST PRODUCT CHAIN-OF-CUSTODY CERTIFICATION PROCESS

Assessment and certification Surveillance

Step F Step H Step A Step B Step C Step D Step E Certificate Step G Recertification Onsite Site Site CARs Audit Issued for Audit on Annual Surveillance Audits Evaluation Visits Interviews Raised and Completed 5 years Completion th Addressed of 5 Year

7 REQUIREMENTS FOR ALL COMPANIES and documentation to confirm the • Outsourcing – when companies conversion ration from raw material to outsource certain types of work to • A person or position having overall finished products specialist companies, for the material responsibility for the CoC system • Identification of outputs (sales processing of their certified products • General staff awareness of the documentation, invoices, transport • Multi-site operations – when there are company’s CoC procedures and delivery notes) more than two sites operated across a • Written procedures or work instructions • Labelling and logo use, and procedures centrally controlled network of facilities showing compliance with the standard and permissions for use if intended • An up-to-date manual with all the WHAT IS INVOLVED IN ATTAINING • For evaluation against the PEFC procedures necessary for maintaining standard, it is required that the CHAIN-OF-CUSTODY? the system (CCPs of the CoC system) company must have processed and records for the implementation of For most companies, CoC certification certified material before SGS conducts the system (all records for the system is a simple process that can be easily the main evaluation and, at the time of must be maintained for a minimum of managed in a short period of time. The the main evaluation, evidence that the five years) heart of the process is basic inventory company had conducted an internal control procedures. In most cases, in- • Assigned roles and responsibilities audit of their CoC system and that this place business procedures are sufficient, of staff in relation to their role in system and the results of the audit with slight modifications, to meet the maintaining the CoC system had been reviewed by management requirements of the standards. • A formal training plan with records of For large organisations with training for staff as defined for each OTHER OPTIONAL REQUIREMENTS formalised operating procedures, CoC procedure in the system These other optional requirements implementation usually requires minor • The maintenance of a product group also have their own sets of procedures adaptation of existing procedures and list (the certified products for sale) relevant to the standard: training of key personnel. using the FSC STD 40-004a V1 as the • Controlled wood – the purchase For smaller organisations with product classification guide and use of controlled materials informal operating procedures, CoC • A verification procedure for identifying (uncertified) in the production process implementation usually requires potential certified suppliers using the for FSC certified products drafting of simple, written procedures FSC website (info.fsc.org) to cover the standard requirements, • Non-controversial wood – the training of key personnel, and the • A verification procedure for incoming purchase of non-controversial development of some customised raw material from certified suppliers materials (uncertified) in the record-keeping systems. (checking of documentation to see production of PEFC certified products that it complies with procedures) • Reclaimed material use – when a • A process of controlling identification company sources reclaimed materials and segregation during the for use in manufacture manufacturing/processing stages

8 V. Conclusion

Forest Product CoC certification combines the benefits of a business management tool linking forest management and business processes with the ability to meet growing global customer requirements for a certified, well managed forest. Forest Product CoC certification ensures the authenticity of timber and wood-based products as they travel through the supply chain from processing to the consumer. The international recognition that Forest Product CoC brings is a boost to any organisation’s credibility. Compliance with forestry management standards reduces the risk of product denial and possible litigation. Certifying your Forest Product CoC/forestry management will help your organisation develop and improve performance.

PEFC/01-4-12 FSC-ACC-015

ABOUT THE AUTHOR ABOUT SGS Partnering with SGS opens the door to better performing processes, increasingly SGS is the world’s leading certification skilful talent, consistent and compliant Gerrit Marais body in Forest Management with supply chains and more sustainable Director of Qualifor Program, SGS over 4,000 Chain-of-Custody (CoC) customer relationships delivering certifications worldwide. SGS is profitable competitive advantage. Work Gerrit Marais has more than 30 years also a global certification body that with the global leader and take your experience in the forestry business, certifies wood from forest to market, commitment to the next level. including forest and environmental against the most recognised forestry management, and has been directly standards (FSC©, PEFC, SFI). With We have a history of undertaking and involved with the certification business CoC certification from SGS, anyone, successfully executing large-scale, since 2002. He is currently the head anywhere in the supply chain, can complex international projects. With a of SGS’s forest and forest product determine the origins of wood products. presence in every single region around certification programme, Qualifor. Gerrit It provides evidence that your products the globe, our people speak the language holds a BSc degree in Forestry and a originate from certified, well-managed and understand the culture of the Master’s degree in landscape architecture. forests or from other controlled wood local market and operate globally in a sources and/or recycled material. In consistent, reliable and effective manner. addition, the process is efficient and SGS global FSC certification is can be completed within 20 days on performed under the terms of: average. SGS can also certify forestry • Global accreditation for FSC forest management programmes and management and chain-of-custody standards of forestry practice together held by SGS South Africa (Pty) Ltd with CoC, saving both time and money. (FSC-ACC-015) Recognised as the global benchmark • Global accreditation for FSC chain-of- for quality and integrity, we employ custody held by SGS North America, over 70 000 people and operate a Inc. (FSC-ACC-030) network of more than 1 350 offices and laboratories around the world. We are • Accreditation for FSC chain-of-custody constantly looking beyond customers’ held by SGS Hong Kong Limited for and society’s expectations in order China, Honk Kong, Japan, Republic of to deliver market leading services Korea (South Korea), Vietnam, Taiwan wherever they are needed. and Macau (FSC-ACC-032)

9 For more information, visit www.sgs.com/forestry or email [email protected]

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