Copyright 2007. No quotation or citation without attribution.
IR/PS CSR Case Study 07-25

The Sustainable Forestry Initiativevs.
The Forest Stewardship Council:
Evaluating the Credibility of Competing Forest
Certification Schemes

By: Elizabeth Stryjewski

GRADUATE SCHOOL OF INTERNATIONAL RELATIONS AND PACIFIC STUDIESUNIVERSITY OF CALIFORNIA, SAN DIEGO
Prepared for Professor Peter Gourevitch
Edited by Jennifer Cheng, MPIA 2008
Corporate Social Responsibility
Fall 2007

2

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Table of Contents
I. Introduction..................................................................................................................... 3
II. Why Certify?.................................................................................................................. 4
A. Costs ................................................................................................................................ 4
B. Benefits/Pressures ............................................................................................................ 5
III. Comparison of SFI and FSC......................................................................................... 6
IV. Independence from Certified ....................................................................................... 7
A. Origin............................................................................................................................... 7
B. Funding............................................................................................................................ 8
C. Governance ...................................................................................................................... 8
V. Standard Making ......................................................................................................... 10
VI. Quality of Standard .................................................................................................... 11
A. Clarity ............................................................................................................................ 14VII. The Certification Process.......................................................................................... 15
A. Certification Bodies........................................................................................................ 15
B. Thoroughness of onsite verification ................................................................................ 16
C. Major and Minor Infractions .......................................................................................... 17
D. Outside Review............................................................................................................... 17
E. Stakeholder Interviews.................................................................................................... 18
F. Failed Certification ........................................................................................................ 18
G. Transparency and thoroughness of Reporting ................................................................ 19
VIII. Chain of Custody Guarantee................................................................................... 19
IX. Oversight..................................................................................................................... 21
A. Vigilantes, Activists ........................................................................................................ 21
B. Complaints Procedures................................................................................................... 22
X. Conclusion .................................................................................................................... 24
XI. Discussion Questions................................................................................................... 25
XII. Appendix I: FSC and SFI Report Card .................................................................. 26

Copyright 2007. No quotation or citation without attribution.
I. Introduction
The Forest products industry is one of the largest and most ecologically destructive in
the global economy. Driven by a growing demand for forest products in the 20th century,
mainstream forestry companies increasingly turned to harvesting methods that maximize
extraction, no matter the social and environmental consequences. Common practices,
including old growth logging, clear-cuts, introduction of non-native species, and the use ofharmful chemical pesticides and herbicides seriously undermine the ability of many of theworld’s forests to regulate natural water systems, absorb carbon dioxide, and provide habitats
for native plant and animal species. In addition, illegal logging, often connected with illegal
trade and corruption in developing countries, not only endangers entire ecosystems but also
the native populations that traditionally depend on them.
Environmental NGOs and consumers became more vocal about harmful forestry
practices in the 1990s, sparking a widespread corporate social responsibility movement tocertify sustainable forestry production as a way to ensure socially and ecologically
responsible forest management. The Forest Stewardship Council (FSC), begun in 1993 by agroup of forest product consumers and traders, as well as social and environmental
nonprofits, operates on a global scale and was the first of these forest certification
organizations. Soon after, a plethora of other forest monitoring systems emerged. In 1994
the American Forest and Paper Association (AF&PA), an industry trade group, initiated its
own certification scheme, the Sustainable Forest Initiative (SFI), currently the largest certifierof forest management in North America.
This paper will explore the issue of forest certification credibility by comparing the
SFI and FSC certification schemes. First, this paper examines the relative costs and benefitsof each system. Next, by evaluating each scheme’s independence, standard-making
procedure, standard quality, certification and monitoring process, transparency, chain ofCopyright 2007. No quotation or citation without attribution.
custody procedures, and oversight mechanisms, this paper will weigh the credibility of eachcertification scheme. From this analysis, we can conclude that in terms of environmental
protection, independence, and oversight, FSC is marginally more credible. However, it isimportant to note that both systems have several serious flaws. In addition, SFI has
continued to improve its program and strengthen its standard, coming to look increasingly
similar to FSC.
II. Why Certify?
Before discussing the exact characteristics of these two certification systems, it isworth exploring the relative costs and benefits of each in order to better understand thereasons forestry companies choose to pursue one or the other type of certification.
A. Costs
The direct
costs of these twocertification systems
are difficult tocompare since exact
costs are calculated for individual operations based on the location and size of the forestland
as well as the revenues of the company. One double certification that took place in 2003
faced costs displayed in the table above, averaging $1.99 per acre for FSC and $2.30 per acre
for SFI1. However, indirect costs of compliance with the standard are an equally important
issue. As detailed later in this paper, FSC represents the stricter of the two standards,
involving tighter controls on clear-cuts, use of GMOs and non-native species, and logging inendangered habitats. Therefore, certification to FSC standards causes large forest operations
to forego the financial benefits of logging large areas indiscriminately and using fast-growing
1

Frederick Cubbage, et al. “Forest Certification of State and University Lands in North Carolina,” Journal ofForestry. December: 2003: 27-28.

Copyright 2007. No quotation or citation without attribution.
GMO and non-native species. We would therefore expect the indirect costs of compliancewith the FSC standard to be much greater than the costs of compliance with SFI standards forlarge operations, representing these foregone benefits from ecologically harmful management
practices. However, smaller forest operations, which are generally less dependent on suchlarge-scale, destructive practices, do not face as high costs in complying with FSC standards.
The costs of compliance for small operations are usually concentrated in the management anddocumentation systems that are required for both schemes.
B. Benefits/Pressures
There are several benefits from pursuing forest certification. One of the most obvious
is that certification often brings preferential market access. This may come from verifying
legality and sustainability in order to meet government procurement policies, gaining accessto buyers’ groups like the Global Forests and Trade Network (GFTN), or gaining preferredstatus with large buyers like Home Depot or Lowe's. Along with preferred market access,certification also differentiates suppliers in the market, giving responsible operations amarket advantage and influencing some customers’ buying decisions. Suppliers may also beable to increase revenues through price premiums. Although evidence of consistent pricepremiums is not clear, some markets pay 1-20% less for uncertified wood2. An additional
benefit of certification is as a hedge against potentially harmful campaigns by environmentalgroups.
In particular, SFI and FSC certification bring with them slightly different benefits.
For instance, since SFI strengthened its chain of custody standard in 2005, it was allowed tojoin the Program for the Endorsement of Forest Certification Schemes (PEFC). Thisdevelopment gives SFI-certified operations increased access to international buyers.

2

Kari Sann and Kirsti Thornber, “Impact of Market-based instruments and initiatives on the Trade in Forest
Products and Sustainable Forest Management,” p 45. Available at: www.fao.org/forestry/foris/data/trade/
pdf/lts.pdf

Copyright 2007. No quotation or citation without attribution.
Although many buyers and retailers officially endorse the FSC, many of them also do notdiscriminate against SFI-certified products. However, FSC likely has more benefits frommarket access to buyers and buyer groups like the GFTN and other environmentally focusedorganizations that source FSC products exclusively. As a hedge against adverse
environmental campaigns, FSC clearly holds the greater benefits, as there are many ongoing
campaigns against SFI and SFI-certified companies.
In summary, although the costs associated with FSC certification are slightly higher
than SFI certification, in terms of benefits, there is no clear advantage to one or the other.
This is indicative of the fact that virtually all large industrial forest operations in the US
prefer SFI to FSC. Without increased consumer preference for FSC-certified products, SFI
certification will continue to make the most economic sense for large forest productsuppliers.
III. Comparison of SFI and FSC
Rewarding responsible forest producers in the marketplace through forest certification
can only take place by sending consumers a credible signal that the products they purchasecome from forests that are managed according to certain social and environmental standards.
Both SFI and FSC attempt to accomplish just this. They both consist of a standard, acertification process, and rules to guarantee that products carrying their label are actuallyderived from certified forests. However, when the average concerned consumer in Lowe’s orHome Depot is faced with one FSC labeled product and one SFI labeled product, they haveno way of knowing if there is a difference, or which is the more credible system formonitoring forestry management and protecting forest ecology. In this section we will
analyze the most important aspects of a certification system to evaluate the relative credibilityof SFI and FSC.

Copyright 2007. No quotation or citation without attribution.

IV. Independence from Certified
Just as a conflict of interest in the political or corporate arena creates an appearance ofimpropriety, so dependence of a CSR monitor on the industry being monitored can destroy
public confidence in their impartiality. Conversely, the ideal monitor would be a third-party
with a vested interest in reducing the negative outcomes of the CSR issue in question. The
degree of industry independence for FSC and SFI differs greatly in the areas of origin,funding and governance.
A. Origin
The origin of the FSC lies in the 1992 United Nations Conference on Environmentand Development. After the Conference failed to reach a binding agreement that would curb
the destruction of tropical rainforests, the World Wide Fund for Nature (WWF), theRainforest Alliance, several small logging companies, foresters and social groups continued
the dialogue, creating the FSC in 1993 as a market-oriented alternative to a binding
convention.
SFI originated with AF&PA, the US industry’s major trade group. Due to increased
pressure from the media, consumers, and environmental groups, and partially in response tostrict FSC standards, the AF&PA began exploring ways to “visibly improve industrial forest
practices.”3 In an interview with the Property and Environment Research Center, an
employee of International Paper, one of the largest pulp and paper companies in the world,
explained the need for SFI: “We realized that unless we regain the public’s trust, that ability
to gain access to fiber and a fair regulatory playing field could become a problem.”43
4

Available at :http://www.sfiprogram.org/history.cfm
Available at: http://www.perc.org/perc.php?id=225

Copyright 2007. No quotation or citation without attribution.
B. Funding
According to an independent comparative study jointly commissioned by FSC and
SFI, and carried out by the Meridian Institute in 2001, the sources of program funds for thetwo organizations at that time differed considerably. Approximately 85% of FSC
International funding came from private foundations, with the other 15% from membershipand accreditation fees. A portion of these membership fees do come from for-profit forestry
companies, however, since they can only comprise one-third of the membership body,industry is not likely to exert excessive control over the organization. Private foundations
covered 100% of FSC-US funding. SFI, on the other hand, received only 18% of its funding
through grants, revenue from meetings, publications, and the Licensee Program. The other
82% came from AF&PA members through dues and contributions.5 While this data is now
several years old, SFI claims in its own marketing literature that the program “does not
exclusively rely on annual foundation funding or grants and has the support and funding
infrastructure necessary to ensure an economically viable program into the future.”6
Presumably, SFI still depends on support from AF&PA. However more information on thepresent fiscal relationship between SFI and the forestry industry is needed.

C. Governance
FSC International authority ultimately lies with its membership body, with equal
representation from economic, environmental, and social interests. The Board of FSC
International and FSC-US is also equally representative of these three chambers. All
members and board members and their designated chambers are clearly posted on the FSC

5Comparative Analysis of the Forest Stewardship Council and Sustainable Forestry Initiative Certification
Programs (Meridian Institute, 2001).
6
Advantages of the Sustainable Forestry Initiative (SFI) available at: www.sfiprogram.org/miscPDFs/
AdvantagesSFI.pdf

Copyright 2007. No quotation or citation without attribution.
website. This structure is meant to ensure that the forest industry, or any other single interest
group, cannot dominate the governance process. FSC-US also employs its own staff.
SFI has steadily been moving from extremely dependent toward increasingly
independent governance. At its start in 1994 it was under complete control of the AF&PA.
The External Review Panel (ERP) was established in 1995 by the AF&PA board to advise
the SFI, and became an independent organization in 1997. However, the independence of its
membership is not known. In 2000, AF&PA established the Sustainable Forestry Board to
manage the SFI standard. According to the SFI website, 40 percent of the board was madeup of participant companies, while the other 60 percent were made up of “diverse stakeholder
groups.”7 However, these groups are not identified. As of 2001, the SFB became an
independent, not-for-profit organization even though the SFI executive was employedthrough AF&PA, and the program used AF&PA staff.8 In 2002, the SFB moved toward achambered structure similar to FSC’s with equal representation given to environmental,
organizations, forestry organizations, and SFI participants. Finally, at the beginning of 2007,
SFI became a fully independent organization with control over all aspects of the program.
Although SFI has been moving away from its industry origin, the organization’s
history and likely continued financial dependence on the forest industry it monitors, makes itvulnerable to suspicion that it is less than objective. FSC on the other hand, has maintained
its independence and accepted no funds from the forest industry, lending it relative credibilityon this point.

7“SFI Program History” <http://www.sfiprogram.org/history.cfm>
Comparative Analysis of the Forest Stewardship Council and Sustainable Forestry Initiative Certification
Programs (Meridian Institute, 2001).
8

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V. Standard Making
The standard making procedure of a credible certification system will be open andtransparent, including representation from diverse stakeholder groups as well as oversight by
the concerned public at large. Both FSC and SFI receive mixed marks in this category.
FSC does a good job of making clear on its website its process for standard review
and revision. Methodology, as well as membership of the FSC-US Standards Committee andworking group are all clearly identified. It is also indicated that the review process builds off
an independent review of the regional standards, however the origin of this review is notprovided. Committee membership is composed equally of economic, environmental, andsocial interests. However, as suggested by a 2005 comparison carried out by the forest
products group UPM with the WWF, the FSC lacks broad support and membership fromforest industry representatives and large-scale forest owners, due in part to the dominance of
SFI among this segment9. Therefore, its standard making procedure may not be fully
representative, resulting in a standard that is so heavily focused on environmental factors thatit may not be practical for mainstream industry. For instance, in 2006, after FSC added
several new pesticides to its list of highly hazardous chemicals, many forest managers
submitted complaints to certifiers about the obvious lack of industry input on chemicals thatare widely used to control disease and invasive species10. Through the FSC website, allinterested individuals are given the opportunity to review background documents, join review
committees to provide feedback to working groups, and provide comments on the latest draftof the National Standard. Although the extent to which outside review contributes to thestandard making process is not clear, disclosed methodology and membership, including
environmental representation, increases confidence that the standard making process is fair

9

Parallel Field Testing of Forest Certification Standards (UPM, WWF: 2005) p. 9.
“SmartWood USA FM certificate holder comments regarding FSC’s new ‘highly hazardous’ pesticides”(Forestry Center: 2006) < www.forestrycenter.org/library>
10

Copyright 2007. No quotation or citation without attribution.
and open. Surprisingly, the possibility that FSC does not have enough industry
representation may present problems for its long-term viability and growth in the US.
The SFI standard making process, although also ostensibly involving publiccomment, is considerably more opaque. The SFI standard is mainly developed by the SFI
Resources Committee, sub-committees and working groups. However, the representation ofinterests within these groups is not clearly identified. Although SFI is not currently
undergoing a standards review, making it difficult to compare with FSC’s process, SFI’s
review procedure outlined on their website illustrates several interesting points11. First, we
can see that a “Customers Forum” plays a role both in the beginning and again in the middleof the process. It is unclear whether this “Customers Forum” is made up of certified forest
managers, consumers, or retailers of certified wood products. If it is the first, this is an
obvious conflict of interest, and is not balanced with input from any environmental groups.
In addition, the method of public comment is not identified. Overall, the process appears socomplicated that it is difficult to know who has decision-making power and whether all
interests, and particularly environmental interests are represented.
VI. Quality of Standard
The standard itself is an important factor in determining whether either of these twocertification systems can truly offer a guarantee of environmental sustainability or is simply away to green-wash status quo industry practices. Although SFI’s 2005-2009 standard are asignificant improvement over the previous standard in several important areas, and were
declared clearer by one independent study, at this point FSC still provides the stronger
standard for environmentally and socially responsible forest management.
FSC’s standards are generally more focused on environmental sustainability andsocial issues, with a broader scope and more stringent standards. SFI on the other hand, with
11

“SFI Standard Setting” (SFI: 2004) < http://www.sfiprogram.org/standard.cfm>

Copyright 2007. No quotation or citation without attribution.
its roots in industry, is more heavily focused on maintaining sustainability of productive
capacity, with lower environmental standards in several key areas. In 2005, the forest
products group UPM conducted a parallel field test by assessing their forestland according toseveral different standards simultaneously. According to the study, the forests complied fully
with SFI standards across environmental, social, and economic criteria. However, assessedby FSC standards, the same forests were found to have minor or major non-conformities
across environmental, social and environmental criteria. This illustrates that the FSC
standard is tougher on environmental performance, going beyond government regulations andstatus quo industry practices.
For years the SFI standard received severe criticism from environmental groups andwas the target of environmental campaigns attacking its legitimacy. In particular, the successof campaigns that pressured retailers into declaring their preference for FSC over SFI wood
was a major blow to SFI credibility. In response, the 2005-9 SFI standard includes several
notable additions from previous versions. These include prohibitions against logging old
growth forests, limits on chemical use, and limitations on use of exotic species. As the SFI
standard improves and comes to look more like the FSC standard, SFI gains credibility and ismore difficult for environmental groups to target.
At present, clear differences still exist regarding reserve areas, clear-cutting
restrictions, use of GMOs, and conversion to plantations. The following table compares thetwo standards on key environmental elements.
Rare, Threatened,
Endangered Species

12
13

FSC12
“Safeguards shall exist which
protect rare, threatened, andendangered species and theirhabitats.”

SFI13“Collect information on
imperiled and criticallyimperiled species” and“incorporate research results…into forest management“FSC Principles and Criteria for Forest Stewardship” (FSC: 2000) <http://www.fscus.org/standards_criteria/>“SFI 2005-9 Standard” (SFI: 2005) <http://www.sfiprogram.org/standard.cfm>

Copyright 2007. No quotation or citation without attribution.

Biological Diversity

Reserve Areas
Water Quality
Clear-cutting

Chemical Use

Exotic Species

GMOs
Conversion to Plantations“Representative samples ofexisting ecosystems within
the landscape shall beprotected in their naturalstate…”
Required“Written guidelines shall be
prepared and implemented toprotect water resources.”“Forest conversion to nonforest land uses shall notoccur” except when limited
in size, (1% of forest area by
one US standard, 40 acres byanother) not on highconservation value forests,
and when enables long-term
conservation benefits“Management systems shallpromote the development andadoption of environmentallyfriendly non-chemical
methods of pest management
and strive to avoid the use ofchemical pesticides.”“Use… shall be carefully
controlled and actively
monitored to avoid adverse
ecological impacts.”

prohibited“Forest conversion to nonforest land uses shall notoccur” except when limited
in size, not on highconservation value forests,
and when enables long-term
conservation benefits.

decisions”“Program participants shallhave programs to promotebiological diversity at standand landscape levels.”
No specific requirements
Meet or exceed applicablelaws and best management
practices
Not to exceed 120 acres

Program Participants shallminimize the chemical use
required to achieve
management objectives while
protecting employees,
neighbors, the public, and theforest environment.
Requires “minimized
plantings of exotic tree
species and researchdocumentation that exotic
tree species, planted
operationally, pose minimal
risk
AllowedNo specific prohibition

Historically, FSC’s standards of socially responsible forestry have also been stronger
than SFI’s. With its global scope, FSC was created to fill the gap in government regulation indeveloping countries. It therefore includes high standards for the protection of indigenousCopyright 2007. No quotation or citation without attribution.
peoples’, workers’, and community interests. These topics were not seen as a priority for SFI
in the North American context. However, a major theme of the revisions that took place forthe 2005-9 standard was to strengthen the social element of the SFI standard. Notable
additions include requirements to confer with affected indigenous peoples, and to identify
and protect culturally important sites14.

A. Clarity
Clarity is also a very important aspect of the standard because the clearer theindicators, the less room there is for loose interpretation during the certification process.
According to the UPM field test, expert assessors experienced difficulty interpreting 40% of
the criteria under the FSC Maritimes standard, even though this standard was also found tohave more detailed environmental criteria. Only 10% of SFI’s criteria were vulnerable tounclear interpretation.15 There are several problems with using this study. First, the SFI
standard used was probably not the most recent 2005-2009 standard. Second, the FSC
Maritimes standard is only one of the many FSC standards in operation in North America andmay have since undergone a revision. However, this study suggests that SFI’s criteria may
be more clear and precise, which may make this standard more robust against capture during
the certification itself.
Overall, The SFI standard has improved dramatically over the past few years, coming
to look increasingly similar to FSC’s. Whereas in the 90s, the SFI standard was widely
considered green-washing of status quo practices, today that accusation is much more

14

“Summary of Significant Changes in the 2005-9 Sustainable forestry Initiative Standard and Audit
Procedures and Qualifications” (SFI: 2005) < http://www.sfiprogram.org/standard.cfm>
15“Parallel Field Testing of Forest Certification Standards,” (UPM, 2005). < http://w3.upmkymmene.com/upm/internet/cms/upmcms.nsf/$all/F9DA3F3EFF672804C225700A001D30FD?Open&qm=men
u,0,0,0>Copyright 2007. No quotation or citation without attribution.
difficult to make. There is also some evidence that SFI’s standard is clearer and more easilyinterpreted. However, looking across all environmental and social indicators, FSC is still themost stringent for environmentally and socially responsible forestry.
VII. The Certification Process
The next crucial step toward providing a credible guarantee of responsible forestry is
to ensure that the standard is actually being met on the ground. This is done through acredible certification process. The ideal process would be open and transparent, free of any
conflict of interest, subject to outside review, and sufficiently standardized to prevent skewed
interpretation. Though FSC may be stronger in a few areas, SFI and FSC have similar
certification processes, and therefore have similar weaknesses to the credibility of theircertification process
A. Certification Bodies
Certification under FSC and SFI standards both rely on third-party verification
through accredited certification bodies. 6 certification bodies are accredited to perform
certification audits to the SFI standard in North America, and 4 for FSC, all of which havesatellite offices throughout area. Two of these certifiers—Bureau Veritas Certification and
SGS Systems and Services-- are accredited to certify to both standards. Certification feesvary depending on the size and geographic distribution of the forestland, and the annual
revenues of the managing corporation and are paid directly to the certifier. To provide ageneral idea of certification costs: direct costs of certification of the same North Carolina
state lands came to $41,940 for SFI and $24,594 for FSC16; Michigan State Forest Program
was given a quote by SFI of $16,000 per year for surveillance audits and $82,000 in year five16

Frederick Cubbage, et al. “Forest Certification of State and University Lands in North Carolina,” Journal ofForestry December: 2003: 27-28.

Copyright 2007. No quotation or citation without attribution.
for recertification17. Certifiers depend on the fees of those they certify to keep them inbusiness. This presents a clear conflict of interest since Certifiers have an incentive to certify
forests regardless of whether they meet the standard, to ensure a stream of future earnings
from surveillance audits and re-certifications. No matter what the accreditation process ofcertifiers, they do not have an incentive to uphold the highest standards of responsible forest
management on the ground. It is therefore difficult to accept a guarantee of compliance witheither standard. A more ideal system might be for the forest owners to pay FSC or SFI, who
would then use those fees to hire reliable certifiers. In this way certifiers would have an
incentive to adhere strictly to FSC’s guidelines in order to win more contracts, resulting in
more credible certification.
B. Thoroughness of onsite verification
A credible certification system should thoroughly inspect the forest site against every
indicator of the standard. According to one on the ground comparison of the two certification
processes, the SFI and FSC teams were both made up of 3 to 4 auditors, both included officevisits and planned and unannounced field visits. However, the FSC team generally visited
fewer sites. Interestingly, the SFI team sought field verification of individual standards,
while the FSC team examined roads, silvicultural practices and “broader philosophicalissues.”18 According to another reverse evaluation of certification audits under SFI and FSC
carried out by the Pinochet Institute for Conservation in 2004, managers of public anduniversity lands found FSC to be more thorough in coverage of biological, ecological, andsocial issues in the field audit and final reporting19. Of course, these are isolated cases, andshould not lead to any generalized conclusions. While both assessments found the audit

17“Gap Analysis and Comprehensive Scoping Assessment Michigan State Forest Program”. 2004. P 11.
<www.michigan.gov/documents/MI-DNR_SFI_ScopingReport-FINAL_12_161552_7.16.04.pdf>
18
Cubbage.
19
Alaric Sample, et al. “Certification on Public and University Lands: Evaluations of FSC and SFI by the
Forest Managers,” Journal of Forestry. Dec, 2003.

Copyright 2007. No quotation or citation without attribution.
teams to be quite thorough, it would be interesting to test this with multiple, commerciallyheld lands to see how consistent the process is, how susceptible to capture, and how strict inpointing out violations.
C. Major and Minor Infractions
Neither SFI nor FSC do a good job of clarifying the procedures surrounding major
and minor infractions. The distinction between major and minor infractions is not clearlystated and seems to be at the discretion of the certification body. It is also unclear how many
infractions are sufficient to justify failed certification. For instance, it is not uncommon tosee more than 20 “corrective action requests” or CARs in FSC certification reports. Therealso does not appear to be any penalty for not addressing CARs within the given time frame.
In a surveillance audit of North Carolina State University forests, 18 CARs were to beaddressed within one year, yet when only 11 actually were, no corrective action was taken20.
SFI audits on the other hand usually find very few or no “areas of nonconformance” andseveral “opportunities for improvement,” both of which require “corrective action plans.”
However, corrective actions are not always completed, with no penalty for the forest beingcertified. It is possible that the certification bodies are still upholding the spirit of thestandard even if they allow minor oversights, however, a clear and consistent methodclassifying and dealing with infractions would inspire more confidence in the certification
system. With more time and resources, it would be interesting to do a thorough investigationof these certification reports to look for how often major infractions are found and how often
decertification actually takes place.
D. Outside Review
In spite of some of the problems outlined above, independent, expert review of each
forest management certification is one way to improve credibility in the certification process.
20

North Carolina State University, Dept of Foresty Surveillance audit 3,<http://www.us.sgs.com/forestry_us/forestry_certification_us/qualifor_fmr_united_states_us.htm>

Copyright 2007. No quotation or citation without attribution.
According to FSC procedures, at least two disinterested and credible peer reviewers are
required for every forest certification, with the exception of small and low intensity
operations. However, perhaps because most FSC-certified forests in the US are small or low
intensity, most FSC US audit reports do not include peer review comments. SFI has no suchpolicy of outside peer review. Therefore, FSC may be the stronger system on this point.
E. Stakeholder Interviews
Stakeholder interviews provide another avenue for individuals outside and inside of
the forest management company to blow the whistle on irresponsible management practices.
FSC has always required stakeholder interviews, while SFI has added them to theircertification process in 2005. While requiring stakeholder interviews does increasecredibility, in practice, the quality of these interviews as an oversight tool varies widely
across certification bodies. FSC SmartWood does the best job of including many
stakeholders from different categories and clearly reporting the issues they raise. Other FSC
certifiers, like SGS, often either include no information on stakeholder interviews or include
only the number and type of stakeholders interviewed without including their comments.
None of the many SFI reports from different certification bodies examined for this paper
included any mention of stakeholder interviews. Like peer review, stakeholder input isanother procedure that is often cited as evidence of credible forest certification, but inpractice often falls far short of providing any real assurance.
F. Failed Certification
It would be very interesting to look at rates of failed certification under each system.
However, both SFI an FSC effectively weed out those operations that are not likely to
become certified through a preliminary assessment process. The preliminary assessment is a
way to alert forest operations to issues that may keep them from being certified, and analyze
the feasibility and potential costs of the certification process. Unfortunately, theseCopyright 2007. No quotation or citation without attribution.
preliminary assessments are the property of the forest operation and not subject to public
review.
G. Transparency and thoroughness of Reporting
Both SFI and FSC require certification and surveillance reports to be posted for public
review. These are available through the SFI website and individual certification body
websites. However, reports vary in length, style, and thoroughness, making directcomparison difficult. Some formats are very clear and comprehensive, taking more than 20
pages to clearly outline performance on all indicators, while others give a cursory approval in
two pages. One format for certifying to FSC standards is particularly thorough, including all
subsequent surveillance audits with the original certification audit, making it easy to follow
the progress and continued shortcomings of the forest operation over time. Price Waterhouse
Cooper audits to the SFI standard are perhaps the most inadequate, providing a 1-page
summary of surveillance audit findings, with no update on previous non-conformities or areas
for improvement. In addition, as mentioned previously, very few audits include a thoroughaccount of stakeholder interviews, or peer review input. Considering that these are two of the
major avenues of oversight on the certification process, this is a very serious shortcoming.
Overall, it would inspire much more confidence in the certification process if certification
bodies were all held to a standard structure of reporting that included a thorough account of
the process, performance on all indicators, stakeholder and peer review input, and a record of
non-conformities and corrective action requests.
VIII. Chain of Custody Guarantee
After certification is complete, FSC and SFI must be able to make a credible
guarantee that the forest products sold on the shelf with an FSC or SFI label actually comefrom the same forests that have been certified for environmental and social sustainability.
They attempt to do this through a chain of custody (CoC) certification that theoreticallyCopyright 2007. No quotation or citation without attribution.
allows wood to be tracked through every step in the value chain, from the forest to theretailer.
CoC certification has been part of the FSC process since it first started certifying in
1993. SFI on the other hand allowed the use of an SFI label on forest products without any
system of CoC certification for years. After intense criticism by environmental groups and asa requirement of joining the Europe’s PEFC system, SFI began a system of CoC certificationin 2005.
Today the two CoC procedures are largely the same, and therefore both entail similar
flaws. CoC requirements cover the following areas:•

Quality of the company’s internal procedures, staff training and record-keeping;•

Wood and fiber sourcing requirements including which materials can be included incertified products and the requirements for receiving and storing these materials;•

Production controls and record-keeping requirements for the quantity of material
received and used in each product group, batch numbers, and average content of FSC
material for each product group.

•

Labeling standards depending on the amount and type of certified material used•

Requirements for information to be included in sales invoices and shipping
documentation.

According to an FSC CoC user guide, “accurate and complete documentation ensures thechain of custody is maintained from one company to the next21.” Indeed, FSC and SFI bothhave comprehensive requirements for record keeping, documentation procedures, internal
auditing, and inventory controls. Documentation should certainly play a key role in any CoC
scheme. However, an over-reliance on documentation may also be a weakness of the CoC
concept. Certain of these documents may be easy to forge or exaggerate. In addition,
21“FSC Chain of Custody User Guide”<www.scscertified.com/PDFS/forest_STD40004UserGuide121004.pdf>

Copyright 2007. No quotation or citation without attribution.
requirements for keeping certified materials physically separated from non-certified materials
when auditors are not present seem particularly difficult to guarantee. Frequent physicalinspection, and especially surprise audits would be necessary to fully credible CoC system.
However, both SFI and FSC require only annual audits.
Although the CoC is not the main focus of this paper, it is a complex an importantpart of any credible forest certification system and therefore warrants further exploration.
With more time, it would be interesting to examine CoC audit reports in more depth and learn
more about the procedure for on-the-ground audits.

IX. Oversight
Besides the internal oversight mechanisms outlined above, it is also worth exploring
who, if anyone, provides additional outside oversight of the SFI and FSC certification
systems. Environmental groups that have a genuine and demonstrated interest in protecting
the world’s forests are the logical choice for providing oversight of forest certification andblowing the whistle on ecologically harmful forest operations.
A. Vigilantes, Activists
There are currently many environmental groups that monitor SFI and FSC as well as
the forests they certify. Groups like Greenpeace directly target forest product suppliers andmanufacturers that they have identified as using harmful forest practices to call publicattention to forest destruction and pressure companies into switching to FSC certified
sources. For instance, one of Greenpeace Canada’s current campaigns is against SFI certified
sources that they claim are destroying Canada’s Boreal Forest. Greenpeace, along with othergroups like Sierra Club, Dogwood Alliance, ForestEthics, the Rainforest Action Network,and the National Wildlife Federation have come together to create the Alliance for CredibleCopyright 2007. No quotation or citation without attribution.
Forest Certification. Through their website, www.dontbuysfi.com, this campaign attempts topersuade consumers with information on why they should choose FSC over SFI certified
products. Some of these organizations, like the Rainforest Action Network, also focus on theretail end of the issue, engaging in highly visible campaigns against groups like Home Depot
and Staples, to pressure them into switching to FSC certified products. RAN has achieved
notable success in convincing Home Depot and Staples to endorse FSC over SFI. At thesame time, all of these campaigns have also brought pressure against SFI itself to strengthen
its credibility through a stronger standard, more comprehensive chain of custody certification,and increased independence from the forest industry.
Interestingly, one of the few campaigns critical of FSC is the FSC Watch, whichclaims that “power within the FSC is increasingly captured by vested commercial interest.22”
Besides the names of its three founders, one of whom was a founding member of FSC, very
little else about this organization and its funding is known. RAN, although supportive of
FSC, also acknowledges in its official blog that FSC must “raise public awareness, strengthen
its governance, rebuild flagging consensus among its members and reestablish itself as acredible tool for conserving forests.23”
B. Complaints Procedures
An effective procedure for eliciting and acting on complaints against certification
bodies and certified forest operations would be another way to ensure sufficient oversight of
the SFI and FSC systems. That is, if consumers can be assured that all complaints ofwrongdoing and poor forest management are seriously investigated and can result indecertification, then the certification system would be much more credible.

22“FSC Watch” <http://www.fsc-watch.org/about.php>“Forest Stewardship Council Credibility on Thin Ice” (Understory: the official blog of RAN: 2007)<http://understory.ran.org/2007/10/31/forest-stewardship-council-credibility-on-thin-ice/23

Copyright 2007. No quotation or citation without attribution.
The websites of SFI and SFI’s CBs’ websites do not indicate any clear method ofcomplaint filing and review. Most of the local SFI Implementation Committees (SICs) dorequest on their websites that any inconsistent practices be reported to a toll free number.
However, each SIC has its own policy for handling complaints of inconsistent practices. In atest of SFI’s complaint procedure, in December of 2006 two environmental groups asked SFI
to investigate and decertify the Plum Creek Timber Company in Maine and Weyerhaeuser
Company in Washington for breaking state forestry laws and logging critical habitats24. The
outcome of these complaints will be an interesting indicator of how well SFI integrates
outside monitoring through its complaint procedures.
FSC US also does not have a clear form on its website for filing a complaint. One CB
website indicates that the forest operation itself should have its own established process foraddressing complaints and should be the first point of contact for any complainant. Only
then, if the complainant is not satisfied with the company’s response should it contact the CB
itself. The Rainforest Alliance’s SmartWood Certifier requires complaints to be submitted
in writing to local SmartWood representatives. SmartWood’s website does feature the resultsof a SmartWood investigation into complaints against a forest operation in Peru, but none of
the complaints were verified. FSC Watch faults FSC’s dispute resolution mechanism forbeing overly “legalistic and labyrinthine.25”
Both SFI and FSC seem to be lacking robust complaint resolution procedures. A
centralized or at least standardized mechanism for complaints would make the process easierto understand, access, and monitor, therefore inspiring more credibility. In particular, SFI
and FSC websites should feature prominent and easy to understand complaint submission

24“WFLC Takes On Deceptive Sustainable Forestry,” (Washington Forest Law Center: 2006)<http://www.wflc.org/advocacy/advocatowl/SFI>
25“FSC’s Complaints Procedures in Chaos” (FSC-Watch: 2007) <http://www.fscwatch.org/archives/2007/06/02/FSC_s_complaints_procedures_in_chaos>Copyright 2007. No quotation or citation without attribution.
information as well as records and updates on all pending complaints and complaintinvestigations.
X. Conclusion
In the forest industry, the main CSR goal examined in this paper is to ensure that
forest product suppliers operate in an environmentally responsible manner. Both FSC and
SFI attempt to make this guarantee to consumers through their certification and labelingprocess. Base on the strength of the standard and the independence of the two schemes, one
might conclude that FSC is clearly the more credible system. However, both have serious
flaws that make their guarantees questionable, the most important of which include conflictsof interest within the certification process, inadequate outside review, excessively paperbased CoC certification, and fragmented complaint procedures. Therefore, while FSC may
be marginally more credible than SFI, both have significant room for improvement. By
continuing to improve the certification process, both schemes can not only strengthen their
credibility, thereby increasing the benefits to their label, but also improve the ecological stateof our world’s forests.

Copyright 2007. No quotation or citation without attribution.
XI. Discussion Questions
1. How can competition among certification schemes affect the ultimate CSR goal? Is
competition a good thing or a bad thing?
2. Does FSC’s relative strength in certain areas outweigh its shortcomings in otherareas?
3. If you were faced with one FSC-certified product and one SFI-certified product,
which would you choose?
4. How likely would the FSC and SCI standards merge into one standard in the future?
If likely, which standard will prevail?
5. What can FSC and SCI do to differentiate its label from one another to informconsumer preferences?

Copyright 2007. No quotation or citation without attribution.
XII. Appendix I: FSC and SFI Report Card

Average Score:
Autonomy from Target of Monitoring:
Organizational Strength:
Monitoring practice:
Sources of Information:
Standards vs. Monitoring:
Evaluations:
Sanctions:
Transparency of Monitoring Organization:
Shadow of the State:

FSC
2.78
2
?
3
2.5
2.5
3
4
2-3
?

SFI
3.28
4
?
3.5
3
2.5
3
4
3
?