Eco-certification: Who watches the watchers?

More than half of the world’s tropical forests have been devoured through market-driven consumption. But preventing global deforestation is not as easy as it sounds: the global supply chain from origin to disposal is rarely accounted for by self-regulated multinationals, from logging corporations to retailers. Yet the tide appears to be turning. Pressurised by consumer demand, companies such as Lidl, a leading German food retailer, have begun using ‘green’ certified wood fibre to manufacture products.

The movement that appears to have catalysed the paradigm shift, specifically targeting the vast ecological footprints of ‘first world’ consumers, is the Forest Stewardship Council (FSC), an international non-profit organisation founded in 1993. Trained to interpret reality not as humans or even citizens but consumers, global populations have responded to the call through the only political tool accessible: wallets. The brand, adorning myriad products from toilet paper to books, is now worth US$20 billion - a massive increase from the US$5 billion estimated just three years ago (bit.ly/9Qo0kp).

FSC signifies a voluntary market-driven vehicle designed to introduce and implement a new value system structured around sustainability. There is even a day to commemorate the event - FSC Friday on 24 September. The system, present in over 50 countries, operates through services ranging from standards to trademarks and accreditation (bit.ly/bESZRZ).

Purchasing products branded ‘green’ by the movement, we’re informed, constitutes a conscience choice to be ‘part of the solution’. This is because, according to the FSC, the brand is the only system enabling consumers to invest in products protecting the rights of indigenous peoples, prohibiting ‘conversion of natural forests or other habitat’ around the world, the use of ‘highly hazardous pesticides’, and ‘the cultivation of genetically modified trees’. Given that as much as 80 per cent of timber is illegally harvested in many developing nations, FSC’s unique forest certification standard is not only backed by major ‘green’ muscle such as Greenpeace International and the World Wildlife Fund (WWF) but oftentimes it is perceived as the only acceptable system by organisations such as the American Green Building Council.

FSC is self-described as a membership organisation, comprised of concerned individuals and organisations. Members constitute the general assembly (GA), allegedly the decision-making body whose policies and standards are unanimously adopted by the FSC board of directors. The GA is divided into three chambers: environmental, social and economic, with representative directors reflecting equal status of all chambers (bit.ly/aRZBoj). According to the FSC, ‘all policies and standards go through at least two rounds of public consultations. In these consultations everybody interested in the fate of the world’s forests can comment.

‘Buying FSC certified products is the only way to be certain that the interests of the forests, the species that live in them, and the people that rely on them to make a living are being considered,’ stated Colin Butfield, head of the WWF-UK campaign (bit.ly/9ihUx4).

As far off as Romania and Bulgaria, timber-producing countries are acutely aware that first-world ‘consumers’ are increasingly active. To date, 120,052,350 ha have been certified (4.3 per cent of global forested land), an increase of 11 per cent since October 2009 (bit.ly/ad5K2e). Romania, for instance, now seeks to certify 40 per cent of forested land by 2011, with Bulgaria hitting lightly lower at 30 per cent (bit.ly/dunADd).

‘If a European client is demanding an FSC certificate, timber companies are very motivated to get certified,’ said Neli Dontcheva, head of Bulgaria’s Forestry Certification Information Centre (bit.ly/dunADd). ‘At the information centre we often get requests from people who have no idea what FSC is, but know that they must get certified or get dropped by their clients.’

Ironically, until 1997, when the FSC relaxed criteria, multinationals weren’t biting. In 1993, just three approvals were issued. Relaxation allowed for multinationals to utilise the ‘best standard’ logo provided that 50 per cent of wood used came from acceptable sources. The remainder would make the cut on the basis of legal ownership of concessions.

In former Francafrique territories, French corporations exploited more than five times the legal concessions. According to one senior official at the Cameroonian Centre for Environment and Development based in Yaoundé, ‘the police shy away from investigating the matter…because those who are profiting illegally from logging allegedly include senior police officials.’ As one French national involved in the logging industry revealed to IPS, ‘We’re asked for bribes amounting to millions of CFA francs, and we often pay these out.’

France remained a key importer of illegally logged timber from Liberia during the reign of former president and warlord Charles Taylor. Taylor himself would admit that timber, logged by Dutch arms dealer Guys Kouvenhoven, generated ‘more than half the gross national product’, through Kouvenhoven’s Oriental Timber Company (OTC). In 2001, for instance, OTC (accounting for 41 of 60 timber-loaded vessels departing from Liberia), exported timber to foreign buyers including France and China, two primary objectors to timber sanctions. Since 1996, in fact, half of all timber logged from Central Africa has been exported to Asia, namely China and Taiwan, making inroads in traditionally European strongholds through ‘political non-interference’ (bit.ly/9phlUX).

Taylor conceded during his trial that millions in ‘covert’ sums had been deposited into bank accounts from Taiwan. Yet even though downstream industries in importing ‘South’ countries such as Malaysia and China appear to represent demand, wood products are often exploited for the purposes of Western markets in Europe and the US. Beneath the emerging ‘Asian’ face of resource-hungry investors, lies the same old market driven logic, structured around comparative advantage, ‘legality’ in property rights, and the notion of the market as the most ‘efficient allocator’ of resources.

The dubiousness of legality is further compounded by the opacity through which corporations are certified, chiefly via auditing institutions such as SGS S.A., worldwide accredited and ‘deputised’ by FSC as watchdogs.

The company states, ‘SGS Qualifor is the world’s leading and most recognised forest certification program. Since 1994, wood processing enterprises and wood product producers have achieved the SGS Qualifor certification in 60 countries around the world (bit.ly/9Q2OeI).’

SGS, a Geneva-based auditing firm specialising in inspection and certification, supplies the forestry industry with both training as well as a chain-of-custody certification system including, ‘audit of the transport and transformation of wood - based products from the forests, through processing, to final product at consumer outlets (bit.ly/9Q2OeI)’.

But who watches the watchers?

The choice of Geneva, Switzerland as its corporate residence is far from accidental. Similar to the multinationals that require external auditing for accountability purposes, SGS intentionally selected the only legal jurisdiction in the world characterised by complete opacity. This extends from banking secrecy and protected cell companies and sealing off of assets, to secretive ring-fenced legal and financial environments requiring little or no disclosure concerning beneficiaries, ownership and internal financing structures.

SGS was already a 90 year old business by the time the IMF and World Bank came knocking in the early 1980s via the pre-shipment inspection (PSI) industry. By the early 1990s, one quarter of SGS’s revenues, reported at US$1.2 billion, was generated from PSI and the company maintained a presence in 140 countries, with just 40,000 staff. SGS would later be retained by the Bank, this time in an official capacity, as the Bank’s ‘global auditor’ to conduct ‘spot audits’ in Kenya and other countries to sniff out corruption (bit.ly/aywlnC).

By 1997, SGS admitted to paying ‘substantial commission’ - conservatively estimated at US$15 million - to Pakistan’s President Benazir Bhutto and her husband. Pakistani officials believe that, cumulatively, Bhutto and hubby made off with US$1.5 billion in total from a variety of sources. SGS payments were remitted in true SGS-style through shell entities incorporated in secret jurisdictions such as the British Virgin Islands. Two years later, SGS was banned from operating in Ethiopia for similar reasons. Of course, SGS was interlocked with, and even represented by, systemically powerful interests and persons, such as James Woolsey, a former CIA Director who listed SGS as a client (bit.ly/ao5eO4).

Following the boom and bust of SGS’s PSI industry, and despite receiving an average of 12 per cent revenue from countries such as Zimbabwe, Madagascar and Indonesia, SGS shifted to certification targeting private industries rather than countries. More crucially, it also began focusing on eco-certification.

Despite mass deforestation through illegal logging and commercial and monoculture development taking place across the continent, Africa hosts a minute presence with just 2.9 per cent of forest cover certified by the FSC. Countries experiencing mass deforestation such as Cameroon and the Republic of Congo, chiefly through China and France, have certified just 2.7 per cent and 3.3 per cent of land. This is, of course, save for South Africa, a 17.8 per cent (1,567,811 ha) - averaging one-fifth of the continent’s overall FSC certification.

Within South Africa 80 per cent (2005) of FSC-certified forests constitute industrial timber plantations (ITPs) composing 1,34 million and 1,8 million hectares of monocultures initially developed by the apartheid regime as a means of independently sourcing wood products (bit.ly/cmjULF).

The initiative began with state-led plantations between 1920 and1960. The development of ITPs under Mondi and SAPPI in the 1980s was preceded by the lucrative undertaking of private companies in the 1960s. The government established a tax incentive system, such as the general export incentive scheme, later voided by the ANC liberation government in 1994 (bit.ly/afOZzn). During that time expansion accounted for 45,000 ha annually (1990s), five times that of indigenous forests. By 1996, the Natal Agricultural Union reported an 82 per cent reduction in stream flow over a 20 year period in areas where grasslands were ‘developed’ by commercial plantations.

The ANC government further emphasised the importance of plantations to growth, gender income and employment. ‘Forestry makes a significant contribution to the economy,’ revealed Lindiwe Hendricks when Minister of Water Affairs and Forestry. ‘In 2006 this contribution amounted to approximately R14 billion and 170,000 people were employed in the sector, which includes about 30,000 small scale growers most of whom are women. With forestry being a rural activity, this sector has enormous potential to contribute to the economy and to job creation.’

The two giants dominating the industry are Mondi and SAPPI. Mondi, formed by Anglo-American in 1967, manages over 450,000 ha with 35,000 employees in more than 30 countries. SAPPI, a global paper and pulp company incorporated in 1936, holds 465,000 ha in SA, with a further 75,000 ha in Swaziland (2007). By 2007, the company manufactured five million tonnes of paper and three million tons of pulp. While percentages of timber products from total exports have increased from 3.4 per cent in 1992 to 3.8 per cent in 2002, timber’s contribution to GDP has decreased in proportion from 2.2 per cent in 1992 to 1.6 per cent in 2002.

Water intensive plantations, covering 1.2 per cent of land, far outweigh natural forest cover (0.3 per cent). Mpumulanga holds 42 per cent of plantations, followed by Kwa-Zulu Natal, which accounts for 38 per cent, and the Eastern Cape, which accounts for 11 per cent. Plantations correspond to the poorest rural communities, aided by unchecked depletion of water sources, displacement, and the ‘capture’ of fertile land for monocultures.

Beyond ITPs, the reality of corporate ‘self-regulation’ - and the externalised social and ecological costs, often concealed under the guise of corporate social responsibility, is not limited to communities living in close proximity to the plantations.

In 2010, Mondi was named one of the top three polluters in south Durban, thanks to the company’s paper mill (bit.ly/9atagv). ‘My nose is painful from inhaling the air here. I just can’t believe how people exist here like this. This is not normal air,’ said Zodumo Mbuli, a spokeswoman for the Ministry of Environmental Affairs in 2003 (bit.ly/bulyuv). Meanwhile, in 2010, SAPPI came under fire in Durban for polluting a critical conduit between sea and land, the Thukela River, with highly toxic chemicals. Despite serious complaints, little has been done. ‘I would have expected some clarity from the department of water affairs by now on what actions have been taken, and what recourse there is,’ said Rudy van der Elst of the Durban-based Oceanographic Research Institute.

‘The department has a responsibility to clarify the position for the public - but the reports of dead fish, the strong odour in the water and treatment with hydrogen peroxide are indicative of a serious problem,’ he was quoted as saying by The Mercury newspaper. (bit.ly/aLrIQ0)

But such realities are not accounted for by FSC’s green-washed branding. According to Timberwatch, a South African civil society organisation, ‘The first FSC “forest” certification in South Africa was awarded in 1997. According to the timber industry, SA now has a far higher percentage (80 per cent) of its plantation area certified than most countries, but this is misleading. If the areas under illegal plantations and unmanaged feral trees were taken into account, it would be under 40 per cent.’ (bit.ly/cmjULF)

The consequences, claims the organisation’s report ‘Life As Commerce’, have been to grant respectability to historical and current destructive aspects of the timber industry, including:

• Community displacement, land dispossession, and social disruption

• Destruction of biodiversity resources and the natural landscape

• Impacts on water resources, drying out of wetlands and aquifers

• Pollution of rivers, streams and wetlands with pesticides, oils and fertilisers

• Contamination and compaction of soil within plantation areas

• Accelerated soil loss on site and increased downstream erosion. (bit.ly/cmjULF)

The report cites the example of Hans Merensky Holdings (HMH) in two provinces - Kwa-Zulu Natal (Singisi Forest Products) and Limpopo (Northern Timbers). Both are certified by SGS Qualifor (2003 and 2000). Interestingly, though HMH’s activities were packaged as a shift toward the private sector, as the author’s go on to reveal, 42.6 per cent of shares at the time were held by the Industrial Development Corporation (IDC), a ‘wholly owned government entity within the national department of trade and industry (DTI). The decision to sell off the plantation holdings through government asset restructuring was allegedly prompted by the need for government to remove a conflict of interest in its role as an impartial regulator and industry player. But assets were merely shifted from one state enterprise, the South African Forestry Company Ltd, to another, the IDC.

South Africa holds one of the world’s largest timber estates. As such, the need for a regulator without vested interests is fundamental to upholding human and environmental rights. The poverty innate in areas converted to alien plantations is characterised by, amongst other aspects, massive outsourcing and sub-contracting, rendering SAPPI a management shell, with significant reductions in direct employment.

Nonetheless, FSC certification - and auditors like SGS - are blind to these externalised realities. Market-driven eco-certification, says Cori Ham, oftentimes has the opposite effect: ‘As a net exporter of forestry products, South Africa’s procurement of new markets and securing of existing markets were critical. The forestry industry saw certification as a marketing tool and accepted it fairly easily. What makes this certification effort more remarkable was that it took place without a national FSC standard and with very little government intervention.’

FSC certification has proved to be a powerful mobilising mechanism motivating for environmental justice. The real question is whether the brand delivers a solution for the environment, communities and consumers, or a green-washed veneer enabling corporate criminals and governments to engage in business as usual.