Document 4
Guidelines for SGEC CoC Certification
Requirements for CoC Certification
Preface
The guidelines for SGEC CoC certification provides accurate and verifiable information to
citizens and consumers relating to the origin of forest based product in sustainably managed
forest and other environmental sound non-controversial sources. Through such information
dissemination, it aims that citizens and consumers are encouraged to purchase the products fromsustainably managed forests and environmentally friendly products selectively, thus encouraged
its demand and supply will contribute to enhancing market-driven sustainable use of forest goodand services in Japan as well as globally.
The uniqueness of this guidelines could be found in due consideration to promotion of local
forest and forestry and inclusion of Japanese traditional wooden house certification system aswell as effective use of Japanese government procurement policy of legality verified wood.
Also this guideline has also been amended for mutual recognition with PEFC.
1.

Scope
Guidelines for SGEC CoC Certification stipulated in Article 3, Section 1 of Operational Rulesof Forest Management Certification and Forest Products Chain of Custody Certification by
SGEC shall be provided herein.
As to establishment and application of Due Diligence System in SGEC scheme, the contentsof legality verification in Japanese government procurement policy shall be utilized/referredproperly in meeting this guideline’s requirements.
Any inquiry on the SGEC, the Japanese language version is the official document for thematters linked to the SGEC system and the English language version is the official
document for the matters linked to the PEFC.

2.

Terms and definitions
2-1 Accredited certificate
A certificate issued by a certification body within the scope of its accreditation whichbears the accreditation body’s symbol.
2-2 Certified material
Raw material which is covered by the CoC claims.
Note: The criteria for certified material and its suppliers are defined as a part of thedefinition of SGEC claim(s) which can be found in Attachment 4-1.
2-3 Certified productProduct which is claimed as including certified material whose content is verified by
CoC.
2-4 CoC of forest based products
Process of handling of information on the material category of forest based products
which allows the CoC organization to make accurate and verifiable claims on the content
of certified material.
2-5 Claim
Information which indicates certain aspects of a product.
Note: The term “claim” used in this guidelines indicates usage of the official CoC claims(see Attachment 4-1) relating to the SGEC claim.
2-6 Claim period
Time period for which the CoC claim applies.
2-7 Conflict timber“Timber that has been traded at some point in the CoC by armed groups, be they rebel
factions or regular soldiers, or by a civilian administration involved in armed conflict or
its representatives, either to perpetuate conflict or take advantage of conflict situations
for personal gain…conflict timber is not necessarily illegal” or the exploitation of timber
mat itself be a direct cause of conflict. (Definition used by UNEP)
2-8 Controlled sources
Material for which the risk of originating from controversial sources has been minimized
through the implementation of the SGEC Due Diligence System.
2-9 Controversial sources
Forest activities which are:a) not complying with local, national or international legislation, applying to forest
related activities, in particular in the following areas:-

forestry operations and harvesting, including biodiversity conservation andconversion of forest to other use-

management of areas with designated high environmental and cultural values,
protected and endangered species, including requirements of CITES,
health and labor issues relating to forest workers,
indigenous peoples’ property, tenure and use rights,- third parties’ property, tenure and use rights,- payment of taxes and royalties,b) not complying with legislation of the country of harvest relating to trade and customs,
in so far as the forest sector is concerned,c) utilizing genetically modified forest based organisms,d) converting forest to other vegetation type, including conversion of primary forests2

to forest plantations.
2-10 Customer
A single entity, either buyer or user of the CoC organization’s products, to whom theclaim is made.
Note: The term customer also covers internal customer within the CoC organization
where more subsequent product groups exist.
2-11 Due Diligence System (DDS)
A framework of producers and measures, namely information gathering, risk
assessment and risk mitigation, to exercise due diligence.
2-12 Forest based material
Raw material originating in forst areas or from other areas recognized by the SGEC as
eligible for SGEC FM certificate, including recycled material originally coming fromthose areas.
Note: Forest based material includes wood based as well as non-wood material.
2-13 Forest based products
Products which include forest based material.
2-14 Planted forest
Planted forest is established through planting or seeding of specific tree species which
occupy more than 50% of the stand either by volume or number. Natural forest is theones which are not planted forest.
2-15 Labelling
Usage of labels (on- or off-product).
Label will be displayed with license number, percentage of certified raw material anddescription of certified product as well as logo.
2-16 Material category
The characteristics of the place where the raw material is coming from.
Note: This guideline uses three material categories: certified, neutral and other material,
whose definitions are made specifically for individual claims.
2-17 Neutral material
Material which is not forest-based and is therefore considered as neutral in thecalculation of the certification percentage.
2-18 CoC organization
Any entity which is making claims on products and is implementing the requirementsof this guideline.
2-19 Other material
Forest based material other than certified material.
2-20 SGEC recognized certificate
SGEC recognized certificate is a valid accredited FM certificate or CoC certificate
issued by a SGEC notified certification body.
3Note: SGEC scheme documents are found at the SGEC website: www.agec-eco.org.
2-21 Physical separation
A procedure in which various materials/products of different material categories are
kept separate so that the category of the materials/products used and transferred to thecustomer is known.
Note: Physical separation can involve physical separation at a CoC organization’s
facility e.g. in separate bays or in specific storage areas of the facility, or it can
include clear marking or usage or having distinguishing marks, to readily identify thematerials of different origin categories.
2-22 Primary forest
Forest of native species where there are no clear visible indications of human activities
and the ecological processes are not significantly disturbed.
Note: Includes areas where non-wood forest goods are collected with less humanimpact. Some trees may have been removed.
2-23 Product group
Set of products manufactured or traded in the specified processes which are coveredby the CoC organization’s CoC.
Note 1: The CoC organization can establish one or more groups as a result of parallelor subsequent processes.
Note 2: The CoC product group can also include a single product for which the CoC
is implemented.
2-24 Recycled material
Forest based material that isa) diverted from the waste stream during a manufacturing process. Excluded isreutilization of materials such as rework, regrind or scrap generated in a process
and capable of being reclaimed within the same process that generated it.
Excluded are by-products such as sawmilling by-products (sawdust, chips, bark,etc.) or forestry residues (bark, chips from branches, roots, etc.) as they do not
represent “waste stream”.
b) generated by households or by commercial, industrial and institutional facilities
in that their role as end-users of the product which can no longer be used for its
intended purpose. This includes returns of material from the distribution chain.
Note 1: The above definition is based on definitions of ISO 14021:1999 in which a) isdefined as “pre-consumer material” and b) is defined as “post-consumer material”
Note 2: The term “capable of being reclaimed within the same process that generatedit” in a) means that the material generated in one process is continuously returned tothe same process at the same site. An example is residue generated by a press line ina panel board production which continuously re-enters the same press line. This is
not considered as recycled material.
4Note 3: Material classified under the grades of recovered paper according to theguidelines of Japan Paper Recycling Promotion Center is recognized as meeting thedefinition of the recycled material.
2-25 Rolling percentage calculation
Calculation of the certification percentage based on input material procured during thespecified period before the product’s manufacturing or trading.
2-26 Simple percentage calculation
Calculation of the certification percentage based on input material physically includedin the product for which the certification is made.
Note: An example of the simple percentage calculation is a printing job where thecertification percentage is calculated from the material purchased and used for thisspecific printing job.
2-27 Supplier
A clearly identified single entity directly supplying input material to the relevant
product group.
Note 1: In cases where the material is physically delivered by another entity than thathaving the ownership title to the material, the CoC organization shall appoint a single
supplier for the purposes of this definition, either an entity with the ownership title oran entity physically delivering the material. E.g. a printing house procuring material
from a distributor, which is however delivered directly by a paper producer, may
consider as the supplier either the distributor or paper producer.
Note 2: The term supplier also covers an internal supplier within the CoC organization
where more subsequent product groups exist.
2-28 Legality verification based on the Japanese government procurement policy andguidelines
Legality verification based on “Guideline for verification on legality andsustainability of wood and wood products” by Forestry Agency of Japan on February
2006 (see http://www.rinya.maff.go.jp/j/boutai/ihoubatu/pdf/gaido1_e.pdf)
3.

Identification of the material category of materials/products
3-1 Identification at delivery (incoming) level3-1-1 The CoC organization shall obtain from the suppliers for each delivery of certified
materials/products information necessary to verify their certified status.
Note 1: For each delivery of material entering the CoC product group, the CoC
organization shall obtain from the supplier the information that is necessary to
identify and verify the origin, category and composition of the procured material.
Note 2: An example of the delivery documentation is an invoice or delivery note.
3-1-2 A document associated with each delivery of materials/products shall include atleast the following information:5a) the CoC organization’s name as the customer of the delivery,b) supplier identification,c) product(s) identification,d) quantity of delivery for each product covered by the documentation,e) date of delivery / delivery period / accounting period,
Additionally the document shall include for each product with SGEC claim:f) the formal claim on the material category (percentage of certified material)
specifically for each claimed product covered by the documentation, as
applicable,g) the identifier of the supplier’s CoC or FM certificate or other document
confirming the supplier’s certified status.
3-1-3 For each delivery, the CoC organization shall classify the procured material as
certified, neutral or other material following the claim specification for which the
CoC was implemented.
3-2 Identification at supplier level3-2-1 The CoC organization shall require, from all suppliers of certified material, a copyof or access to the FM or CoC certificate or another document confirming the
supplier’s certified status.
3-2-2 The CoC organization shall evaluate the supplier’s certified status with the criteria
for the suppliers of certified material based on validity and scope of documents
received under 3-2-1 above.
4.

Minimum Due Diligence System (DDS) requirements
4-1 General requirements
4-1-1 The CoC organization shall operate a Due Diligence System (DDS), in
accordance with the following elements of this guideline, which is based on risk
management techniques to minimize the risk that the procured material originatesin controversial sources.
4-1-2 The SGEC DDS shall be implemented for all input forest based material coveredby the CoC organization’s SGEC CoC with the exception of:a) recycled material; andb) material originating from species listed in Appendices I to III of CITES
provided it complies with applicable international and national legislation
relating to CITES.
4-1-3 The CoC organization’s SGEC DDS shall be supported by the CoC organization’s
management system meeting requirements of item 7 of this guidelines.
4-1-4 The CoC organization shall implement the SGEC DDS in three steps relating to:a) gathering information,b) risk assessment and6c) management of significant risk supplies.
4-1-5 The CoC organization procuring raw material originating from species listed in

4-1-6

4-1-7

4-1-8
4-1-9

Appendix I to III of CITES shall comply with applicable international andnational legislation relating to CITES.
The CoC organization shall not include the restricted forest based material
originating from countries which are covered by applicable UN or national
government sanctions restricting the export/import of such forest based products.
The CoC organization, for the time being, shall not include any material fromgenetically modified forest based organisms in products covered by the CoC
organization’s SGEC DDS.
Conflict timber shall not be used by the CoC organization.
The CoC organization shall not include in products covered by the CoC

organization’s SGEC DDS any wood based material originating in conversion offorests to other land use, including conversion of primary forests to planted
forests.
4-2 Gathering of information
4-2-1 The SGEC DDS is based on information provided by the supplier. The CoC
organization shall have access to the following information:a) identification of the material/product, including its trade name and type;b) identification of tree species including in material/product by their common
name and/or their scientific name where applicable;c) country of harvest of the material and where applicable sub-national region
and/or concession of harvest.
Note 1: Access to the scientific name of species is required in cases where theusage of a common name could pose a risk of wrong identification of the species.
Note 2: Usage of a trade name of species is considered as equivalent to thecommon name in cases where all species covered by the trade name have an
equivalent risk of originating in controversial sources.
Note 3: Access to the sub-national level of the material origin is required in cases
where sub-national regions within one country do not represent an equivalent risk
relating to the controversial sources.
Note 4: The term concession of harvest means a long-term and exclusive contract
for harvest on defined geographical area of the publicly owned forests.
Note 5: The term “country/region” is further used throughout this clause to
identify a country, a sub-national region or a concession of harvest of thematerial/product origin.
4-3 Risk assessment
The CoC organization shall operate SGEC DDS on all input forest based material for
trading forest based products certified.
7

4-3-1 The CoC organization shall carry out the risk assessment of procuring raw
material from controversial sources for all input forest based material covered by
the CoC organization’s SGEC DDS, with the exception of:a) certified material/products delivered with a claim by a supplier with SGEC
recognized certificate,b) other material/product delivered with a claim by a supplier with SGEC
recognized CoC certificate.
4-3-2 The CoC organization’s risk assessment shall result in the classification of
supplies into the “negligible” or “significant” risk category.
4-3-3 The CoC organization’s risk assessment shall be carried out based on an
evaluation of:a) the likelihood that activities defined under the term controversial sources
occur in the country/region of the supply or for the tree species of the supply(hereinafter referred to as “the likelihood at the origin level”) and;b) the likelihood that the supply chain has not been able to identify a potential
controversial source of supply (hereinafter referred to as “the likelihood at
the supply chain level”).
Note: “at the origin level” is meant by FM level, and “at the supply chain level”
is meant by CoC level.
4-3-4 The CoC organization shall determine the risk, based on the likelihood at theorigin level and the likelihood at the supply chain level and their combination, inorder to classify all supplies as “significant” risk where one or both levels areassessed as having high likelihood (see Figure 1).

Likelihood on supply

Lowchain levelHigh

Significant Risk

Significant Risk

Negligible Risk

Significant Risk

Likelihood on origin level
Low

High

Figure 1: Risk categories
4-3-5 The following tables list indicators which shall be used for the classification of
the risk of supplies. The CoC organization may use the Guideline forverification on legality and sustainability of wood and wood products by Forestry
Agency of Japan, upon verification as appropriate, in risk assessment of supplies.
8Note: The indicators for “low likelihood” on origin as well as on supply chain
level (Table 1) describe options for a first step of risk mitigation (e.g. provisionof additional information) before starting the formal risk mitigation processdescribed in 4-5 below. Hence, if the supplies can be characterized by indicators
indicating “low likelihood” on the supply chain level or the origin level, risk
assessment in Table 2 and 3 is not necessary.
Table 1: List of indicators for “low” likelihood on origin and supply chain level(negligible risk)
Indicators
Supplies:a) certified material/products delivered with a claim by a supplier with SGEC
recognized certificate,b) other material/products delivered with a claim by a supplier with SGEC
recognized CoC certificate.
Supplies declared as certified against a forest certification scheme (other than
SGEC endorsed) supported by a FM or CoC certificate issued by a third party
certification body.
Supplies verified by governmental or non-governmental verification or
licensing mechanisms other than forest certification scheme focused on
activities covered by the term controversial sources.
Supplies supported by verifiable documentation which clearly identifies
 country of harvest and/or sub-national region where the timber was
harvested (including consideration of the prevalence of armed conflict) trade name and type of product as well as the common name of tree
species and its full scientific name in case of Note 1 of 4-2-1 above all suppliers within the supply chain and the forest management unit of the supply origin
 documents or other reliable information indicating compliance of thosetimber and timber products with activities referred to by the term
controversial sources.
Special attention shall be given to documentation which is produced by agovernmental body of the country with Transparency International’s
Corruption Perceptions Index (TI CPI) below 50. However, timber produced
in Japan is not in this category because TI CPI of Japan is 80.
Note 1: The timber verification by a DDS according to the requirements of theEuropean Timber regulation, monitored by a Monitoring Organization, can beused as evidence for the legality of the supplies.
Note 2: A specific geographical approach for the identification of negligible risk9

is described in 4-3-8 below.
Table 2: List of indicators for “high” likelihood on origin level
Indicators
The actual corruption perception index (CPI) of the country presented byTransparency International (TI) is lower than 50*.
The country/region has a prevalence of armed conflict.
The country/region is known as a country with low level of forest governanceand law enforcement.
Tree species included in the material/product is known as species withprevalence of activities covered by the term controversial sources.
*Transparency International has indicated that its CPI is not always appropriate
for forestry. And therefore, where more appropriate indicators exist, these canbe used with a prior agreement with the SGEC in consultation with TI.
Table 3: List of indicators for “high” likelihood on supply chain level
Indicators
Actors and steps in the supply chain before the first verification by averification system accepted as indicator for low risk in this risk matrix are
unknown.
Countries/regions where the timber and timber products have been traded
before the first verification by a verification system accepted as indicator for
low risk in this risk matrix are unknown.
Tree species in the product are unknown
Evidence of illegal practices by any company in the supply chain
4-3-6 The risk assessment shall be carried out for the first delivery of every individual
supplier. It shall be reviewed and if necessary revised at least annually.
4-3-7 The risk assessment shall be carried out for every delivery by an individual
supplier in which changes regarding the characteristics in 4-2-1 above occurred.
4-3-8 An CoC organization can conduct a risk assessment and identify negligible riskfor deliveries from a specific geographical area, subsequent to the following
conditions:a) The CoC organization shall keep updated:
i.
ii.
iii.

a clear definition of the particular area
a list with tree species delivered from the area
appropriate evidence to verify that its sources of supply are limited to theidentified geographic area and tree speciesb) No indicator listed in Table 2 and Table 3 above shall be applicable.
c) The area specific risk assessment shall be carried out before the first delivery
10from the area. It shall be revised at least once a year.
d) The area specific risk assessment shall be reviewed and if necessary revisedif a) above is changed.
4-4 Substantiated comments or complaints
4-4-1 The CoC organization shall ensure that substantiated concerns provided by third
parties concerning supplier compliance with legal requirements and other aspectsof controversial sources are promptly investigated and, if validated, result in(re-)assessment of the risks associated with the relevant supplies.
4-4-2 In case of substantiated concerns material originally excluded from the risk
assessment (see 4-3-1 above) shall undergo a risk assessment according to therequirements in 4-3 above.
4-5 Management of significant risk supplies
4-5-1 Identification of supplies
4-5-1-1 For supplies identified as “significant” risk, the CoC organization shallrequest the supplier to provide additional information and evidence, if
possible, which allows the CoC organization to classify the supply as
negligible risk. The supplier shall ensure that:a) it will provide the CoC organization with necessary information to
identify the forest management unit(s) of the raw material and thewhole supply chain relating to the “significant” risk supply.
b) it will enable the CoC organization to carry out a second party or a third
party inspection of the supplier’s operation as well as operations of theprevious suppliers in the chain.
Note: These procedures can be ensured e.g. by contractual agreements or awritten self-declaration by the supplier.
4-5-1-2 The CoC organization shall establish a second or third party verification
program for supplies classified as “significant” risk. The verification
program shall cover:a) identification of the whole supply chain and forest management unit(s)of the supply’s origin;b) on-site inspection whenever relevant andc) risk mitigation, corrective and preventive measures as required.
4-5-2 Identification of the supply chain
4-5-2-1 The CoC organization shall require, from all suppliers of “significant” risk
supplies, detailed information on the whole supply chain and forest
management unit(s) of the supply’s origin.
4-5-2-2 In cases where the supplies can be verified as negligible risk according to
the indicators in Table 1 above at one step in the supply chain, the CoC
organization is not required to track the whole supply chain to the forest11management unit.
4-5-2-3 The information submitted shall allow the CoC organization to plan andexecute on-site inspections.
4-5-3 On-site inspections
4-5-3-1 The CoC organization’s verification program shall include on-site
inspections of suppliers delivering “significant” risk supplies. The on-site
inspections can be carried out by the CoC organization itself (second party
inspection) or by a third party on behalf of the CoC organization. The
CoC organization may substitute the on-site inspection with documentation
review where the documentation provides sufficient confidence in thematerial origin in non-controversial sources.
4-5-3-2 The CoC organization shall demonstrate that it has sufficient knowledge
and competence in the legislation applicable to the origin of “significant”
risk supplies and relevant to the definition of the controversial source.
4-5-3-3 Where the on-site inspection is carried out by a third party on behalf of the
CoC organization, the CoC organization shall demonstrate that the third
party has sufficient knowledge and competence in the legislation as
required by Attachment 2-10.
4-5-3-4 The CoC organization shall determine a sample of “significant” risk
supplies from one supplier to be verified by the verification program. The
size of the annual sample shall be at least the square root of the number of“significant” risk supplies per one year: (y=√x), rounded to the nearest
whole number. Where the previous on-site inspections provided to beeffective in fulfilling the objective of this guideline, the size of the sample
may be reduced by a factor of 0.8, i.e.: (y=0.8√x) , rounded to the next
whole number.
4-5-3-5 The on-site inspections shall cover:a) the direct supplier and all previous suppliers in the supply chain in order
to assess compliance with the supplier claims on the origin of the raw
material and;b) the forest owner/manager of forest management unit of the supply
origin or any other party responsible for management activities on that
forest management unit in order to assess their compliance with legal
requirements.
4-5-4 Corrective and prevention measures
4-5-4-1 The CoC organization shall define written procedures for implementing
corrective measures for non-compliance for suppliers identified by the CoC
organization’s verification program/
4-5-4-2 The range of corrective measures shall be based on the scale and12seriousness of the risk that timber or timber product(s) may be fromcontroversial sources and shall include at least one or more of the following:a) clear communication of the risk identified with a request for addressing
the risk identified within a specific timeline so as to ensure that timber
or timber product(s) from controversial sources is not supplied to the
CoC organization;b) requiring suppliers to define risk mitigation measures relating to forest
management units compliance with legal requirements or efficiency of
the information flow in the supply chain;c) cancelation of any contract or order for timber or timber product(s) until
the supplier can demonstrate that appropriate risk mitigation measures
have been implemented.
4-6 No placement on the market
4-6-1 Timber or timber product(s) from unknown sources or from controversial sources
shall not be included in product groups covered by the CoC organization’s chainof custody scheme.
4-6-2 Timber known or reasonably suspected as coming from illegal sources(controversial sources a) or b) of 2-9 above) shall not be processed and, shall not
be traded and/or shall not be placed on the market unless appropriate documented
evidence has been provided and verified which allows the timer supplied to beclassified as presenting “negligible” risk.
5.

Chain of custody method
5-1 General
The CoC organization shall manage certified material/products, at incoming,
production/processing, storage, shipment stages, by one of the following two methods.
5-2 Physical separation method
5-2-1 General requirements for physical separation method
5-2-1-1 The CoC organization whose certified material/products are not mixed withother material/products and/or where the certified material/products can be
identified during the whole process, shall use the physical separation
method.
5-2-1-2 The CoC organization applying the physical separation method shall ensurethat the certified material is separated or clearly identified at all stages ofthe production or trading process such as incoming, production/processing,storage, shipment stages.
Note: Status of physical separation above shall be demonstrated at all stages
and be identified in documents.
13

5-2-1-3 The CoC organization may also apply physical separation method to thecertified products with various content of certified material.
Note: The CoC organization may physically separate a product(s) with thesame percentage based claim from other products with or without different
percentage claims.
5-2-2 Separation of certified material/products
5-2-2-1 The following methods shall be applied for clear identification throughout
the whole production/trading process:a) physical separation in terms of production and storage space orb) physical separation in terms of time orc) clear identification of the certified material/products during the process.
5-3 Percentage based method
5-3-1 Application of the percentage based method
5-3-1-1 The CoC organization whose certified material/products are mixed withother material/products and where the certified material/products cannot be
identified during the whole process, shall use the percentage based method.
5-3-2 Definition of the product group
5-3-2-1 The CoC organization may treat the products produced under the specificchain of custody process of this guideline as the specific product group.
The CoC organization may also treat the products produced under the
specific CoC process and products produced partly different process as thegroup of products.
5-3-2-2 The product group shall be associated with (i) a single product type or (ii)a group of products, which consist of the same or similar input material
according to, for example species, sort, etc.
5-3-2-3 The material entering the group of products shall have the samemeasurement unit or units that are transferable to the same measurementunit.
5-3-2-4 The product group shall be associated with products which have been
produced or manufactured by the CoC organization at one production site.
5-3-2-5 The above requirement is not applicable to the CoC organizations and its
processes where the production site cannot be clearly identified, e.g. forest
contractors, transportation, trade, etc.
5-3-2-6 Calculation of percentage of material certified shall be based on therequirements in 5-3-3 of this guideline.
5-3-3 Calculation of the certification percentage
5-3-3-1 The CoC organization shall calculate the certification percentage separately
for each product group and for a specific claim period according to thefollowing formula:14

Pc [%] = Vc / (Vc + Vo) * 100
Pc: Certification percentage
Vc: Volume of certified material
Vo: Volume of other material
Note: In addition to certified and other material, the criteria of specificclaims also define neutral material which does not enter into the calculation
formula. Therefore, the total volume of the material is the sum of certified
material, neutral material and other material. (Vt=Vc+Vo+Vn; where Vt
is total volume of material and Vn is volume of neutral material).
5-3-3-2 The CoC organization shall calculate the certification percentage based ona single measurement unit used for all raw material covered by thecalculation. In cases of conversion to a single measurement unit forcalculation purposes, the CoC organization shall only use generally
recognized conversion ratios and methods. If a suitable generally
recognized conversion ration does not exist, the CoC organization shalldefine and use a reasonable and credible conversion ratio.
5-3-3-3 If the procured product includes only a proportion of certified material, then
only the quantity corresponding to the percentage claimed by the suppliershall enter the calculation formula as certified material. The rest of
material shall enter the calculation as other material.
5-3-3-4 The CoC organization shall calculate the certification percentage either as:a) simple percentage orb) rolling percentage.
5-3-3-5 The CoC organization applying the simple percentage calculation shallcalculate the certification percentage based on material physically includedin the specific products of the products group for which the percentage iscalculated.
5-3-3-6 The CoC organization applying rolling percentage shall calculate thecertification percentage for the specific product group and claim period
based on material procured in the specified material input period preceding
the claim period. The claim period, in the case of rolling percentage, shallnot exceed three months and the material input period shall not exceed 12months.
Example: The CoC organization which has chosen three months claim
period and 12 months material input period will calculate the rolling
percentage for the coming three months from the quantity of material15

procured in the previous 12 months.
5-3-4 Transfer of the calculated percentage to the outputs
5-3-4-1 Average percentage methoda) The CoC organization applying average percentage method shall use thecalculated certification percentage for all the products covered by the
product group for which the calculation has been made.
Example: If the certified percentage calculated for the three months
claim period is 54%, all products covered by the product group can,during this claim period, be sold/transferred as certified products
including 54% of certified material, e.g. “54% SGEC Certified”.
5-3-4-2 Volume credit methoda) The CoC organization shall apply the volume credit method for a single
claim. The CoC organization receiving a single delivery of material
with more than one claim relating to the material category shall either
use it as a single inseparable claim or shall only use one from thereceived claims for calculating the volume credits.
Note: The CoC organization which is receiving a single delivery ofmaterial with two claims relating to two certification schemes either
establishes a credit account for the multiple claim or decides, for asingle delivery, which claim will be entered into the respective volume
credit account.
b) The CoC organization shall calculate the volume credits using either: certification percentage and volume of output products or input material and input/output ratio.
c) The CoC organization applying the certification percentage shallcalculate the volume credits by multiplying the volume of output
products of the claim period by the certified percentage for the relevantclaim period.
Example: If the certified percentage for the product group of thespecific claim period, which consists of 100 tones of output products,
is 54%, the CoC organization achieves volume credits equal to 54 tones(100*0.54) of the output products.
d) The CoC organization that can demonstrate a verifiable ratio between
the input material and output products, may calculate the volume
credits directly from input certified material by multiplying the volume
of input certified material by the input/output ratio.
Example: If the volume of input certified material is 70 m3 andinput/output ratio is 0.60 (e.g. 1 m3 of round wood results in 0.60 m3
of sawn wood), the CoC organization achieves volume credits equal to16

42 m3 of sawn wood.
e) The CoC organization shall create and manage a credit account in af)single measurement unit and shall enter the volume credits into thecredit account. The credit account shall be established for individual
product types of the products group or for the whole product groupwhere the same measurement unit is applied to all product types.
The total quantity of credits cumulated at the credit account shall not
exceed the sum of credits entered into the credit account during the last
12 months. The 12 months maximum period can be extended to theaverage products production period where the products production
period is longer than 12 months.
Example: If the average production period of fuelwood (including

drying process) is 18 months, the CoC organization can extend the 12months maximum period for the accumulation of credits to 18 months.
g) The CoC organization shall distribute the volume credits from the credit
account for the output products covered by the credit account. The
volume credits shall be distributed to the output products in a way thatthe certified products will be considered as containing 100% of
certified material or as containing less than 100% certified material andmeeting the CoC organization’s own threshold. The result of thevolume of certified products multiplied by the output percentage ofcertified material included in the certified products shall be equal to the
distributed volume credits withdrawn from the credit account.
Example: If the CoC organization decides to distribute 54 tonnes ofvolume credits to output products, then the CoC organization can either
sell 54 tones as certified products including 100% of certified material
or X tones as certified products including Y % of certified material,
where X*Y=distributed volume credit (e.g. 77 tonnes of output
products can be sold as “70% SGEC Certified”, where 77 t*0.70=54 t).
5-3-4-3 House constructed by material certifieda) The CoC organization applying the certification percentage of woodmaterial used in house construction may apply the percentage ofcertified material in main structural material of the house constructed.
Note: Percentage of certified material in house construction shall be
stipulated in Attachment 2-2.
6.

Sale and communication on claimed products
6-1 Documentation associated with sold/transferred products
6-1-1 At the point of sale or transfer of the certified products to the customer, the CoC
17

organization shall provide the customer with a copy or access to a copy of its
chain of custody certificate or other document confirming the organization’s
compliance with criteria for the supplier of certified products. The CoC
organization shall inform the customer about any change in the scope of its
certification.
Note: In the case of multi-site certification where individual sites receive aseparate document (referring to the main certificate) confirming their certified
status, the organization (the site) provides its customers copies of this document
together with the main certificate.
6-1-2 For the purposed of communication of the chain of custody claim, the CoC
organization shall identify the type of document(s) associated with the deliveryof all sold/transferred products. The document(s), including the formal claim,shall be issued to a single customer. The CoC organization shall keep copies of
documents and ensure that information contained within those copies cannot bealtered after the originals are delivered to the customers.
Note 1: “Document associated with the delivery” shall be invoice or delivery note.
Note 2: The document(s) associated to each delivery covers the media andinformation, including electronic media.
6-1-3 In the course of shipment of certified products, the CoC organization shalldemonstrate its products as SGEC certified products by using SGEC logo or label
and shall provide at least the following information to the customers:a) name of the CoC organization and its certified number,b) customer identification,
c)
d)
e)
f)
g)

supplier identification,
product(s) identification
quantity of delivery for each product covered by the document
date of delivery /delivery period / accounting period,
the formal claim on the material category (including percentage of certified
material) specifically for each claimed product covered by the document, asapplicable,h) the identifier of the supplier’s chain of custody certificate or other document
confirming the supplier’s certificate status.
Note: The formal claim, which means the claim in its exact wording, as well as
documents confirming the certificate status are specified by this guideline or otherdocument(s) defined by the SGEC.
6-1-4 The CoC organization shall keep records of certified material/products, stock andshipment for at least five years.
Note: The document to be recorded shall be the media and information, including
electronic media.
186-2 Usage of logos and labels
The CoC organization shall ensure that the certified products are labeled properly based
upon the rules for usage of SGEC logos and labels stipulated in Attachment 2-2 and canbe provided to the customers.
6-2-1 The CoC organization which uses a logo or label, for on-product and/or offproduct purposes, relating to the CoC certification, shall have an authorizationfrom the SGEC and the usage shall be carried out according to the terms andconditions of the SGEC.
Note 1: Where the CoC organization decides to use the logo/label, the logo/label
usage rules specified by the SGEC become an integral part of the chain of custodyrequirements.
Note 2: In case of SGEC Logo usage, “authorization” means a valid license issued
by the SGEC and the “terms and conditions” of the license requires compliancewith Attachment 2-2 and Attachment 2-2-1.
6-2-2 The CoC organization may only use the label on-product for those certified
products that meet the eligibility criteria for product labelling as specified by the
SGEC.
6-2-3 The CoC organization which makes on-product claims on the product itself or its
packaging (without a logo or label) relating to CoC certificate shall always use
formal claim and the CoC organization making the claim shall be identifiable.
Note: The term “formal claim” means the claim in its exact wording as specified
in Attachment 4-1 or other document(s) defined by the SGEC.
6-3

7.

Usage of PEFC Logos and Labels
The CoC organization can use and display PEFC logos, labels and official claims on
SGEC-certified products after the mutual recognition between SGEC and PEFC becomes
effective.
Upon using PEFC logos and labels, the display of PEFC logs and labels shall be done
appropriately following PEFC ST 2002 “Forest Product CoC –requirements-“, PEFC ST
2002 Appendix 1 “Specification of the PEFC claims” and PEFC ST 2001 “PEFC Logo
Usage Rules –requirements-“

Minimum management system requirements
7-1 General requirements
The CoC organization shall operate a management system in accordance with thefollowing elements of this guideline, which ensure correct implementation, andmaintenance of the CoC process(es). The management system shall be appropriate to
the type, range and volume of work performed.
Note: An organization’s quality (ISO 9001:2008) or environmental (ISO 14001:2004)19

management system can be used to meet the minimum requirements for the management
system defined in this guideline.
7-2 Responsibilities and authorities on certified products
7-2-1 General responsibilities
7-2-1-1 The CoC organization’s management shall define and document its
commitment to implement and maintain the CoC requirements inaccordance with this guideline. The CoC organization’s commitment
shall be made available to the organization’s personnel, suppliers,
customers, and other interested parties.
7-2-1-2 The CoC organization’s management shall appoint a member of the
management who shall have overall responsibility and authority for theorganization’s chain of custody including identification of the material
category of materials/products, process management, documentation and
SGEC logo/label usage.
7-2-1-3 The CoC organization’s management shall carry out a regular periodic
review of the organization’s chain of custody and its compliance with therequirements of this guideline.
Note: ISO 19011:2002 can be referred for internal auditing activities.
7-2-2 Responsibilities and authorities for CoC
The CoC organization shall identify the personnel performing activities for the
implementation and maintenance of CoC and shall establish personnel
responsibilities and authorities relating to CoC for at least the following elements:a) raw material procurement and identification of the origin,b) product processing covering physical separation or percentage calculationand transfer into output products,c) product sale and labelling,d) record keeping,e) internal audits and non-conformity control,f) due diligence system.
Note: The responsibilities and authorities for the CoC given above can be
cumulative/
7-3 Documented procedures
7-3-1 The CoC organization shall establish written documented procedures for its CoC.
The documented procedures shall include at least the following elements:a) organizational structure, responsibilities and authorities relating to CoC,b) description of the raw material flow within the production/trading
process(es), including definition of product groups,c) procedures for CoC process covering all requirements of this guideline,
including:
20




identification of the raw material category (refer to Attachment 4-1),
physical separation of certified material (for the CoC organizations

applying the physical separation), definition of product groups, calculation of the percentage, calculationof volume credits, management of credit accounts (for the CoC
organizations applying percentage based method), sale/transfer of products, on-products claims and on-product labelling.
d) procedures for the due diligence system,e) procedures for internal audits,f) procedures for complaints resolution.
7-4 Record keeping
7-4-1 The CoC organization shall establish and maintain records on its CoC to provide
evidence of conformity with the requirements of this guideline and its
effectiveness and efficiency. The CoC organization shall keep at least thefollowing records relating to the product groups covered by the CoC:a) records of all suppliers of certified material, including copies of the suppliers’
FM or CoC certificates or other documents confirming the supplier’s
compliance with the criteria for suppliers of certified material,b) records of all input material, including claims on the material category anddocuments associated to the delivery of the input material,c) records of calculation of the certified percentage, transfer of the percentage
to output products and management of the credit account, as applicable,d) records of all products sold/transferred, including claims on the material
category and documents associated to the delivery of the output products,e) records of the due diligence system, including records of risk assessments
and significant risk suppliers management, as applicable,f) records of internal audits, periodic CoC review, non-conformities which
occurred and corrective actions taken,g) records on complaints and their resolution.
7-4-2 The CoC organization shall maintain the records for a minimum period of five
years.
Note: The records cover the media and information, including electronic media.
7-5 Resource management
7-5-1 Human resources/personnel
The CoC organization shall ensure and demonstrate that all personnel performing
activities affecting the implementation and maintenance of the CoC arecompetent on the basis of appropriate training, education, skills and experience,
7-5-2 Technical facilities
The CoC organization shall identify, provide and maintain the infrastructure and21technical facilities needed for effective implementation and maintenance of theorganization’s CoC with the requirements of this guideline.
7-6 Inspection and control
7-6-1 The CoC organization shall conduct internal audits at least annually covering all
requirements of this guideline and establish corrective and preventive measures
if required.
7-6-2 A report on the internal audit shall be reviewed at least annually.
7-7 Complaints
7-7-1 The CoC organization shall establish procedures for dealing with complaints fromsuppliers, customers and other parties relating to the organization’s CoC.
7-7-2 Upon receipt of the complaint, the CoC organization shall:a) acknowledge the complaints to the complainant,b) gather and verify all necessary information to evaluate and validate thecomplaint and make decision on the complaint,c) formally communicate the decision on the complaint and of the complainthandling process to the complainant,d) ensure that any appropriate corrective and preventive actions are taken.
7-8 Sub-contracting
7-8-1 The CoC organization may outsource or sub-contract activities under the CoC
certificate to other organizations within or outside the CoC organization’s site.
In this case the CoC organization’s CoC shall also cover activities of subcontractors involved in the manufacturing of products covered by theorganization’s CoC process(es), within or outside the organization’s site.
7-8-2 The CoC organization may only consider those activities as sub-contracting
where the sub-contractor receives the material from the organization which is
physically separated from other material and returns the material back to theorganization after the sub-contracted work is completed or where the organization
remains responsible for the sale or transfer of the product to the customer.
Note 1: An example of sub-contracting is outsourcing of cutting and stapling
process by a printing house with CoC where the printed material is transferred tothe sub-contractor and returned back to the printing house after the sub-contracted
activities have been performed.
Note 2: An entity which is either involved in procuring the raw material or saleof the output products is required to implement its own CoC. The terms“receives the material from the organization” and “returns the material back to
the organization” also cover situation where the material is received by the subcontractor directly from the supplier on the CoC organization’s behalf or is sentby the sub-contractor to the customer on the CoC organization’s behalf. The
CoC organization still remains responsible for all parts of the CoC, including22requirements relating to the material procurement and sale and communication.
Note 3: Sub-contracting is not considered as being in conflict with 5-3-2-5 abovethat requires the product group to be manufactured at one site as stipulated in 53-2-4 above.
7-8-3 The CoC organization shall take full responsibility for the all sub-contracted
activities in relation with the organization’s CoC.
7-8-4 The CoC organization shall have a written agreement with all sub-contractors
ensuring that the organization’s material/products are physically separated fromother material or products.
7-8-5 The CoC organization’s internal audit program shall cover the subcontractor’s
activities.
8.

Social, health and safety requirements in CoC
The CoC organization shall comply with the Fundamental ILO Conventions (except for
those which are not ratified by Japan) and the Labour Standard Act and other domestic
legislations related to ILO 105 and ILO111, which are not ratified by Japan.
8-1 Requirements
8-2-1 The CoC organization shall demonstrate its commitment to comply with thesocial, health and safety requirements defined in this guideline.
8-2-2 The CoC organization shall demonstrate that:a) workers are not prevented from associating freely, choosing theirrepresentatives, and bargaining collectively with their employer,b) forced labor is not used,c) workers, who are under the minimum legal age, the age of 15, or thecompulsory school attendance age, which ever is higher, are not used,d) workers are not denied equal employment opportunities and treatment,e) working conditions do not endanger safety or health.

Supplementary article 1
The Board of Directors has decided to amend this Attachment on 1 April 2012.
Supplementary article 2
The Board of Directors, on 1st April 2015, has decided to amend this Operational Rules.
Notwithstanding this amendment, the previous Operational Rules may be effective up until
30 September 2015.
Supplementary Article 3This revised document will be effective from 1st January 2016.

23

Attachment 4-1:
Specification of the SGEC claims
1

Specification of the SGEC claim on “SGEC certified” material
1-1 ScopeThis Attachment stipulates the requirements for SGEC certified material.
1-2 Formal claim
The CoC organization shall use the claim “x % SGEC certified” when communicating
the content of SGEC certified material in output products.
1-3 Requirements for the categories of input material
1-3-1 Requirements for the categories of input material shall be as follows:a) Certified material:i) since the material from genetically modified trees are not in use for thetime being, forest based material delivered with the supplier’s claim“x % SGEC certified” by the supplier with either: SGEC recognized certificate or A document confirming that the supplier is covered by the SGEC
recognized certificate.
ii) recycled material (other than products delivered with the “SGEC
certificated” claim).
Note: The term “a document confirming that the supplier is covered by the
SGEC recognized certificate” is applicable in case of group FM
certification and multi-site CoC certification where the supplier is provided
with a document referring to the scope of the SGEC recognized certificate.
b) Neutral material:
Other than forest based materialc) Other material:
Forest based material other than certified material, including forest basedmaterial delivered with the supplier’s claim “SGEC Controlled Sources” by
the supplier with either:i) SGEC recognized CoC certificate orii) A document confirming that the supplier is covered by the SGEC
recognized CoC certificate
1-4 Percentage of recycled material
1-4-1 For products covered by the CoC organization’s CoC which include recycledmaterial, the CoC organization shall calculate the content of recycled material
based on ISO 14021 “Environmental labels and declarations: self-declaredenvironmental claims” and inform about it upon request.
24

2Specification of the SGEC claim on “SGEC Controlled Sources” material
Note: The SGEC DDS delivering the Controlled Sources material is described in detail in 4of this guideline (main text).
2-1 Introduction
The specification of this section shall be used together with the requirements of 4 ofthis guideline when the CoC organization establishes a CoC including the due diligencesystem to use a SGEC claim on output products, for which the SGEC DDS has been
implemented as the SGEC Controlled Sources.
2-2 Formal claim
The CoC organization shall use the claim “SGEC Controlled Sources” whencommunicating on output products for which the SGEC DDS has been implemented.
2-3 Requirements for SGEC Controlled Sources input material
2-3-1 Certified material:
Forest based material delivered with the supplier’s claim “x % SGEC certified”
by the supplier with either:a) SGEC recognized certificate orb) a document confirming that the supplier is covered by the SGEC
recognized certificate.
Note: The term “a document confirming that the supplier is covered by the
SGEC recognized certificate” is applicable in case of regional or group FM
certification and multi-site (group) CoC certification where the supplier isprovided with a document referring to the scope of the SGEC recognizedcertificate.
2-3-2 Neutral material:
Other than forest based material.
2-3-3 Other material:
Forest based material other than certified material, including forest basedmaterial delivered with the supplier’s claim “SGEC Controlled Sources” by the
supplier with either:a) SGEC recognized CoC certificate orb) a document confirming that the supplier is covered by the SGEC
recognized CoC certificate.

Supplementary article 1
The Board of Directors has decided to amend this Attachment on 1 April 2012.
Supplementary article 2
The Board of Directors, on 1st April 2015, has decided to amend this Operational Rules.
25

Notwithstanding this amendment, the previous Operational Rules may be effective up until
30 September 2015.

26