Copyright 2007. No quotation or citation without attribution.
IR/PS CSR Case #07-20

Rainforest Alliance
SmartWood Certification:
Assessment of Program Credibility

By: Cindy Hwang

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

Abstract:
Forest destruction and degradation are a serious problem facing today’s world. There are many
nonprofit and nongovernmental organizations around the world seeking to change the trajectoryof deforestation. This case study focuses on the creation and implementation of a third-party
certification and monitoring program for sustainable forest management practices. This casestudy will outline the standards set forth by the Forest Stewardship Council, examine theorganizational characteristics and processes of the Rainforest Alliance and its SmartWood
certification program for forestry, and develop an assessment of the program’s credibility.
SmartWood has established itself as the leading player in the forestry certification field, but theorganization must continue to take steps to instill confidence and strengthen credibility.

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Table of Contents
I. Introduction..........................................................................................................................3
A. The CSR Problem ...................................................................................................................4
II. The CSR Standard- Forest Stewardship Council ...............................................................4
III. Rainforset Alliance ............................................................................................................6
A. Organizational Overview........................................................................................................6
B. Board of Directors..................................................................................................................9
C. Funding Sources...................................................................................................................10
IV. SmartWood Certification Program .................................................................................10
A. Scope of Program .................................................................................................................12
B. Types of Certification ...........................................................................................................12
C. Application and Monitoring Process ....................................................................................14
V. Program Assessment and Credibility...............................................................................16
A. Incentives of Stakeholders.....................................................................................................19
VI. CONCLUSION ................................................................................................................21VII. APPENDIX A: Class Discussion Questions...................................................................22

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3

I. Introduction
Over the years, more and more attention has been placed by nonprofit organizations onsustainable forest management practices. Population growth has led to increasing demand forwood, timber, and other products derived from forests. The result is that forests worldwide arecontinuing to diminish. In the period 1990-2000, the total net loss of forestland was 8.9 million
hectares per year. In the five-year period from 200-2005, the world’s total net loss of forestland
was 7.3 million hectares per year. The environmental impacts of deforestation are huge,accounting for 20% of global greenhouse gas emissions that contribute to global warming.1
Moreover, the magnitude and severity of the problems associated with the current state of forests
around the world is illustrated by the fact that “only 12% of the world’s forests lie withinprotected areas. In a worst-case scenario, all of the world’s readily accessible remaining forests
outside those protected areas will be destroyed by unsustainable harvesting within the next
several decades.”2

Through the work of media, nonprofit and nongovernmental organizations, increased publicawareness on the destructive effects of business practices such as logging has put pressure oncompanies to adopt more eco-friendly forest management practices. Forests are essential toensuring “environmental functions such as biodiversity, water and soil conservation, watersupply and climate regulation.”3 To protect the world’s forests, there has been a movement
towards implementing sustainable management for entire forest ecosystems, thereby meeting
ecological, economic, and social needs. As a result, nonprofits have established standards and1

United Nations Food and Agriculture Organization
Diamond, p. 473
3
United Nations Food and Agriculture Organization
2

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4

policies, including certification programs, through which companies’ business practices can bemonitored and evaluated.
A. The CSR Problem
There are two main parts to the CSR problem that needs to be addressed. First, organizations
need to ensure that forest operations are managed in a socially beneficial way and forest products
are harvested at a renewable rate to meet ecologically sustainable and economically viable
standards. Second, companies along the supply chain have to be convinced to buy and offer
sustainable forest products to customers.

This paper will address how standards and certifications developed and administered by thirdparty, nonprofit organizations seek to solve the stated CSR problem. The case study will outline
the Forest Stewardship Council’s standard, describe Rainforest Alliance as an organization,
evaluate the SmartWood certification program, assess the program’s credibility, and analyze the
incentives of different stakeholders within the system.
II. The CSR Standard- Forest Stewardship Council
The Forest Stewardship Council (FSC) was established in 1993 as an international, nonprofit,
membership based organization. The goal was to create an umbrella organization that would
serve as the global standard setting body for responsible forest management practices. Througha consultative process involving environmental organizations, social groups and businesses, a setof 10 Principles and 56 Criteria were developed for forest stewardship.4 These forest
management principles and criteria incorporate elements that fall under three general categories:

4

See Appendix B for FSC’s Ten Principles.

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•

5

Environmentally Appropriate: “Ensures that the harvest of timber and non-timber
products maintains the forest's biodiversity, productivity and ecological processes.”•

Socially Beneficial: “Helps both local people and society at large to enjoy long term
benefits and also provides strong incentives to local people to sustain the forest resources
and adhere to long-term management plans.”•

Economically Viable: “forest operations are structured and managed so as to be
sufficiently profitable, without generating financial profit at the expense of the forest
resources, the ecosystem or affected communities. The tension between the need togenerate adequate financial returns and the principles of responsible forest operations canbe reduced through efforts to market forest products for their best value.”5

By highlighting all three components, FSC has developed a set of standards that represent asustainable solution to the problems associated with destructive forest management.

To implement these standards, FSC accredits third-party certification bodies that assess and audit
forest management operations in adherence to the principles and criteria. There are two basic
types of certifications available: forest management, and chain-of-custody. Currently, the FSC
has accredited 16 certification bodies to carry out forest management and/or chain-of-custodycertifications. Of the 16 certifying bodies, there are two located in the United States: Rainforest
Alliance and Scientific Certification Services.6 While a comparison between the two certifying
bodies is outside the scope of this case study, future reports may seek to analyze these twoorganizations. The certification process is voluntary and must be initiated by the forest owner ormanager seeking certification.

5
6

FSC Website.
Ibid.

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6

According to the FSC, the main benefits of certification based on FSC standards are internationalrecognition for forestry management practices, and an opportunity to tap into new markets forcertified products. Since its establishment, various research reports, books, and literature haveexamined the impact of FSC certification on the world’s forests. These reports come from avariety of sources including other nonprofit organizations, multilateral NGOs, and academics.7
III. Rainforest Alliance
A. Organizational Overview
The Rainforest Alliance was founded in 1987 as a nonprofit organization. The organization’s
mission is “to conserve biodiversity and ensure sustainable livelihoods by transforming land-use
practices, business practices and consumer behavior.”8 The Rainforest Alliance is based on New
York City currently has around 33,000 members and supporters. The organization’s reach
expands to over 50 countries around the world in Africa, Asia, Central America, Europe, North
America, Oceania, and South America.

The Rainforest Alliance is an FSC-accredited certification organization. In addition, it also has
certification programs in agriculture and tourism. For certified operations in forestry,
agriculture, or tourism, a Rainforest Alliance Certified seal of approval is issued to differentiate
products that have been deemed to be sustainable in the way they are grown or made. The
Rainforest Alliance asserts that products carrying its seal serve as a guarantee to consumers that

7
8

Selected reports available at http://www.fsc.org/en/about/about_fsc/reports.
Rainforest Alliance website.

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7

those products “are the result of practices carried out according to a specific set of criteria
balancing ecological, economic and social considerations.”9

The Rainforest Alliance’s agriculture certification program certifies crops such as bananas,
cocoa, coffee, citrus, tea, and flowers and ferns based on a set of standards developed by
Sustainable Agriculture Network. Additionally, Rainforest Alliance has been a pioneer in thearea of tourism certification. The organization is a major mover behind the establishment of the
Sustainable Tourism Stewardship Council, a proposed global accreditation body for ecotourism
certifications. A list of retail venues selling Rainforest Alliance certified products is shown inAppendix C.

As part of its education and awareness efforts, the Rainforest Alliance issues a variety of
publications and newsletters in different languages. Rainforest Matters is a monthly e-newsletterthat provides information on conservation news, program developments and interviews. EcoEducation Matter is another monthly e-newsletter, but is targeted at teachers and educators andprovides curriculum ideas and classroom best practices. These are just two examples ofRainforest Alliance’s different publications and illustrate one way through which theorganization is building consumer awareness and supporting educational initiatives. Anotherway the organization seeks to increase awareness is through case studies that profile bestpractices in sustainability. These profiles, available for agriculture, forestry, and tourism, show
how collaborative partnerships can achieve sustainable, conservation goals. In addition,
Rainforest Alliance staff members and partners are active publishers of research papers onforestry and certification practices.
9

Rainforest Alliance website.

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8

In terms of organizational capacity, the Rainforest Alliance employs 160 staff members, with
offices in New York, Vermont, California, Minnesota, Oregon, Costa Rica, Bolivia, Guatemala,Indonesia, Mexico, The Netherlands, and Spain.10 Many of the organization’s staff members areexperts in their respective fields, with highly qualified academic credentials and professional
experience. Tensie Whelan, the executive director since 2000, originally served on the Board of
Directors and also as a consultant. In her previous career as a journalist, she served as managing
editor of an international environmental journal. She has also authored a book on eco-tourism,
titled Nature Tourism: Managing for the Environment. Another key staff member is Richard
Donovan, who has served as the Director of SmartWood since 1992, and became the Chief ofForestry in 2000. He has over “22 years of experience in forest conservation and ruraldevelopment,” and has also personally conducted on-site assessments and audits. He has a
Masters of Science degree in Natural Resources Management.

Since its founding, the Rainforest Alliance has built the organizational capacity to implement andmanage conservation programs and services. The organization has a track record of success,attracting experts in their respective fields to join its staff. The Rainforest Alliance has also built
a reputation for the organization through its certification programs as an important player in thesustainability and conservation movement, with a label that is recognizable by consumers.

10

Rainforest Alliance 2006 Annual Report.

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9

B. Board of Directors
Rainforest Alliance’s Board of Directors consists of 20 voting board members, 2 non-voting
board members who are Rainforest Alliance staff, and 3 emeritus members.11 As shown in thefollowing breakdown of voting board members, those with a corporate background represent the
majority of members.
Type
Number on Board
Nonprofit
4
Corporate
12
Media & Entertainment 3
Medical1
Total
20
The number of board members coming from the private sector is large, even if they are necessary
for bringing in funding. This however, raises the question of whether the organization is held
captive to the special interests of corporations, who may also be the targets of the Rainforest
Alliance’s programs. For the most part, the board members are not representing companies thatare directly involved in the logging or agricultural industries, the main targets of environmental
endeavors.

The Chairman of the Board is Daniel Katz, one of the founders and former executive director ofRainforest Alliance. He currently serves as a Senior Advisor to The Overbrook Foundation,
directing the Foundation’s giving in environmental areas. There are a number of board members
where a conflict-of-interest between the organizations they represent and the Rainforest Alliancecan lead to causes for concern. Frank Dottori was the founder of Tembec Inc, which is aninternational forestry company. Although he is no longer an employee of Tembec, the company
is a recipient of FSC/Rainforest Alliance certifications for forestry practices. Another board

11

See Appendix D for more information.

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member who may have a conflict of interest is Henry Juszkiewicz, the CEO and Chairman of
Gibson Guitar Corporation. Gibson Guitar has been a major partner of Rainforest Alliance, as
the first company to use certified wood in its guitar production, and as a sponsor of key special
events. The different ways through which Gibson Guitars is involved with Rainforest Alliance,
as customer, sponsor, and board member could lead to misalignment of incentives.
C. Funding Sources
In 2006, the Rainforest Alliance had an operating budget of $15.29 million. The bulk of theexpenses, at 32% or around $4.7 million, went to SmartWood’s program and services. Overall,
92% of expenses were spent on program budgets. In terms of revenue, the organization
generated $15.23 million, with the top two sources of funding, government and certification fees,
accounting for 32.5% and 31.2%, respectively.12 This represented an operational deficit of justunder $60,000 in 2006. The main sources of government funding are the United States
government, the World Bank, the International Development Bank, and other multilateralorganizations. These funds are generally earmarked for project funding.13 The fees for services
represent fees paid for certifications in forestry, agriculture, and tourism. While the funding
structure for the Rainforest Alliance appears to be diversified from a variety of sources, thespecific funding structure for SmartWood will be addressed in the next section.
IV. SmartWood Certification Program
SmartWood is the Rainforest Alliance’s certification program for forestry. It was founded in
1989 to certify responsible forestry. It became FSC-accredited in 1995, after the establishment of
the FSC as the global standard setter in sustainable forest management practices. Since its
12
13

See Appendix E for more information.
PinkerCopyright 2007. No quotation or citation without attribution.

11

inception, SmartWood has become FSC’s leading certifier worldwide, accounting for over 40%of the world’s total of FSC certified forest management operations. Additionally, SmartWood
asserts the claim that “no FSC/Rainforest Alliance certificate has ever been overturned by the
FSC,”14 as a testament to the quality of the certification program and services.

On an organizational level, SmartWood employs around 60 staff members worldwide. About 10
are employed at SmartWood’s headquarters in Vermont, with the remaining 50 spread around 7
regional offices and 2 partner offices. To learn more about SmartWood beyond the information
presented on the website, a 45-minute phone interview was conducted with Dr. Wolfram Pinker,
Managing Director of SmartWood, followed by two e-mail exchanges. As the managing
director, Dr. Pinker “oversees the day-to-day operations of the SmartWood program including
certification services, finance, certification quality and systems, and strategic marketing andsales.”15 Dr. Pinker holds a PhD in industrial science, as well as a Masters degree in forest
management. Before coming to SmartWood, he spent five years as a director at Scientific
Certification Systems, a SmartWood competitor in the certification business.

In contrast to the diversified funding stream for Rainforest Alliance, SmartWood derives its
entire operational budget from certification fees paid by applicant companies. However, it wasnoted that SmartWood does collaborate with other types of funders to support the certification ofsmaller, community forest operations, who do not have the financial resources to pay thecertification fees themselves.16

14

SmartWood website.
Rainforest Alliance website.
16
Pinker15

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A. Scope of Program
In 2006, total SmartWood certified land grew by 66%, with chain-of-custody certificates issued
increasing by 22%.17 The growth trend has continued in 2007, with 2,051 certified forest
management and chain-of-custody operations in 61 countries, covering more than 42.6 million
hectares to date.18 SmartWood certifies all forest types including tropical, temperate and boreal.
The chart below presents the breakdown of certified area by geography. Canada accounts for
45% of total SmartWood certified area, followed by Europe with 18%, and South America with13%.19B. Types of Certification
SmartWood issues certifications to qualifying operations and business based on the FSC’s
principles and criteria. The two basic types of certifications that this paper will examine areforest management and chain-of-custody.

17

Rainforest Alliance 2006 Annual Report.
Pinker.
19
SmartWood website.
18

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Forest management certifications are targeted towards all the different types of forest
landowners, including large and medium-sized forest managers, and groups of small landowners.
The goal of the forest management certification is to ensure that forest owners and managers aremeeting FSC standards for sustainable management and harvesting. To date in 2007,
SmartWood has issued 358 forest management certifications, which accounts for 17.5% of thetotal certificates. Forest management certifications typically cost approximately $5,000 to
upwards of $50,000. The fee structure is dependent on a variety of factors including theoperation’s geographic area or region, size, and company revenue. The varying degrees ofcomplexity also leads to a certification that can range from several weeks to months, from thetime an application is submitted to the certification decision.20

The main audience for chain-of-custody certifications is forest product operators along the
supply chain, such as manufacturers, suppliers, and retailers. Chain-of-custody certificatestracks wood from certified forests to the point of sale, assuring along each step of the supply
chain that each operation is producing and delivering a certified product.21 To date in 2007,
1,693 chain-of-custody certificates have been issued to sawmills, secondary manufacturers,
broker and distributors, wholesalers, retailers, printers, paper merchants, and other operations,accounting for 82.5% of the total. Comparatively, chain-of-custody certificates are less costly,
ranging from $1,500 on the low-end to $4,000 on the high-end, depending on the complexity ofthe operation. The time required to complete the certification process is similarly less, taking on
average 1 to 3 weeks.22

20

Pinker.
See Appendix F for a SmartWood flyer.
22
Pinker21

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In both cases, certification is issued for a five-year period. Certified operations are able to place
both the Rainforest Alliance certified seal of approval and the FSC certified label on its products.
Once an application is received by a SmartWood representative, and initial assessment will be
performed to determine certification eligibility. In some cases, a pre-assessment may also be
conducted at the request of the applicant. After a certification is issued, SmartWood conducts at
a minimum 4 annual audits. The details of the assessment and audit processes will be examinedin the next section.
C. Application and Monitoring Process
The following flowchart shows the overall application and monitoring steps employed by
SmartWood throughout the certification process for both forest management and chain-ofcustody certificates. Examples of both types of application forms can be found in the Appendices
G and H.

Application
Submitted

InitialAssessment

Certification
Decision

AnnualAuditsOnce an application is submitted, SmartWood sends an assessment budget proposal of thecertification fee back to the applicant. Although the range for certification fees for each typewere given, further information on how SmartWood’s specific fee structure could not be found.

If the applicant decides to proceed with the certification process, then an initial assessment isperformed by SmartWood auditors. The exact number of people on the auditing team will differ
depending on the scale and scope of the certification, but in general, a “multi-disciplinary team,Copyright 2007. No quotation or citation without attribution.

15

usually a forester, an ecologist, and a community relations specialist” will conduct an on-site
assessment of the candidate operation.23 According to SmartWood, there are currently 200 active
auditors, of which 20% are employed by SmartWood as staff, and the remaining are contract
auditors. As part of the on-site visit, the auditors inspect selected sample sites of the operation.
In addition, consultation is sought from other stakeholders such as environmental groups, local
communities, government, and scientific researchers. Feedback and public comment arecollected through a variety of means, including “mailed questionnaires, face-to-face andtelephone interviews and public meetings.”24

Depending on the operation’s ability to meet FSC standards, a certification recommendation ismade by the auditing team. As part of the certification decision, the auditors may issue
additional corrective action requests or observations that require actions of improvement on thepart of the operation. If a certificate is issued, SmartWood will return for at least 4 annual audits
throughout the remaining certification period. Interim audits may be performed if infractions arefound during the course of the certification period. The annual audits typically include an on-site
visit by auditors, a review of management records, and an evaluation of overall compliance with
FSC standards. Some operations do choose to withdraw from the certification scheme, citinglack of sales, no source of certified products, and financial reasons as the main reasons.
However, no exact rate of withdraw is known. Public summaries from the initial assessment andsubsequent annual audits are available on the Rainforest Alliance website. The organization
appears to be highly transparent in this respect, as the auditors names and backgrounds are listed,

23
24

Rainforest Alliance website.
Rainforest Alliance website.

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areas of inspection identified, and anyone is able to view the audit results by downloading thereports from the website.25

SmartWood also has a specific dispute resolution process in place. This process allows forcomments or complaints to be submitted on certified operations. SmartWood maintains that it
will follow-up within a specified time period and issue a public response.26 Overall, SmartWoodis quite transparent in providing information about the organization. For most of the informationthat was not available on the website, answers were obtained by calling and emailing staff
members. It should be noted however, that in earlier exchanges with Dr. Pinker, he citedconfidentiality reasons for withholding information on funding and auditors. In the last emailcommunication, he was able to provide that information after viewing the presentation slides
prepared for this case study.
V. Program Assessment and Credibility
In 2005, SmartWood published a research report on the global impact of its certification process,as a testament to the success of the program. The report concluded that SmartWood
certifications had played a significant role in changing the behavior of forestry operations along
environmental, social, and economic lines. In terms of environmental impact, the most prevalentchanges made by certified operations were improved aquatic management, improved treatmentof high conservation value forests, and improved protection of threatened and endangered
specified. The most prevalent social changes that were made include better communication andconflict resolution amongst stakeholders, and improved worker training and worker safety.
Finally, the most important economic and legal impacts were deeper understanding of operation
25
26

A sample audit report can be found in Appendix I.
The complete dispute resolution process can be found in Appendix J.

17

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profitability and efficiency, and improved compliance with laws. Overall, SmartWood
certification achieved better management system operations, monitoring, and chain-of-custodypractices.27

On the surface, it appears that SmartWood has succeeded, through its certification program, toaffect change in forestry operations around the world. A program report card that summarizes
the following findings is shown in Appendix K. The deeper analysis reveals that there are threemajor reasons that undermine the program’s credibility:
1. Autonomy from Target of Monitoring.
As previously stated in Section IV’s overview of the SmartWood Certification program, theprogram relies entirely upon certification fees to sustain its operating budget. This creates astrong conflict-of-interest on the part of SmartWood. On the one hand, it is certifying an
operation based on a specific set of standards developed by the FSC. On the other hand,
SmartWood needs the revenues to remain operationally viable. A possible result is that
SmartWood will issue certifications to non-compliant operations.
2. Monitoring Practice.
SmartWood conducts at least one one-site visit each year for certified operations. Although it
reserves the right to unannounced visits, the website states specifically that “the designatedcontact person at the certified operation must be notified of unannounced random site visits priorto actual field inspection of a field operation.” By notifying the contact person ahead of time,
this effectively negates the unannounced, random nature of a site visit. Therefore, SmartWood
does not actually carry out on the threat of conducting unannounced visits.
3. Evaluations.
27

Newsom and Hewitt.

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In almost all SmartWood assessment and audit reports, corrective action requests (CARs) are
issued to the certified operation, stating changes that need to be made or areas that need
improvement. In most cases, an explicit time period for compliance is stated and there is a threatthat noncompliance may lead to decertification. However, no concrete information could beobtained from either the website or SmartWood staff regarding an actual rate of decertification.
Although Dr. Pinker stated that decertification is “very rare,” because of SmartWood’s due
diligence in the pre-assessment process to identify the operations that would not passcertification, no information could be found on the select few operations that have been
decertified. In reviewing series of audit reports, it appears that CARs that are not met by thestated time are generally upgraded in status and more time is given to the operation to comply.
In the end, the recommendation typically allows the operation to remain certified, on thecondition that it complies with the CARs. According to the FSC, it is also the FSC’s policy that
it will not insist on 100% satisfaction of the principles and criteria. Rather, individual certifiers
make the final decision on disqualifying a candidate from certification, or decertifying a certified
operation based on identified major failures in meeting FSC standards.28

In addition to the three areas explained above, there are two other aspects that may be cause ofconcern:
1. Sources of Information.
Although SmartWood takes a multi-stakeholder approach during the initial assessment period,
subsequent annual audits seems to rely more heavily on self-reported changes made by theoperation. Particularly in terms of management practices and systems, SmartWood has to relyon the information that is provided by the certified operation. However, it is difficult to confirm
28

FSC website.

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19

whether changes made in company documents are actually implemented or enforced in practice.
Moreover, on-site visits are most often conducted at sample sites that have been pre-selected by
the certified operation. While the auditor reserves the right to make the final decision on whichof the sample sites are inspected, the original set of possibilities has already been self-selected by
the operation.
2. Auditors Training and Compensation
Given that only 20% of the 200 total auditors are employed by SmartWood, quality control ofauditors can become an issue. In general, auditors receive training in the forms of classroom, on
the job, materials such as handbooks, guides and checklists, lead auditor sessions, web seminars,
etc. In addition, compensation for auditors is stated to be a daily rate plus expense
reimbursement. However, information could not be obtained on the average years of experienceof auditors, how much training an auditor has to undergo to be used by SmartWood, the amountof the daily rate of compensation, and most importantly, how an auditor’s performance isevaluated. To be fully confident that SmartWood’s auditors have the capability to carry out
unbiased inspections, these questions need to be answered.
A. Incentives of Stakeholders
Within the certification process, there are many stakeholders with different incentives to conformto FSC and SmartWood standard, or cheat and undermine the system. The conflict between the
incentives to conform and cheat result in potential behavior on the part of each stakeholder that
can then strengthen the overall credibility of the system, or lead to collusion amongst different
parties. The chart below summarizes each stakeholder’s different incentives and potential
behavior.

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From the chart, it is evident that economic incentives are often the most important reasons
behind cheating. From the point of view of SmartWood, the program survives based on thecertification fees received. While SmartWood does have a reputation of integrity, transparency,
and credibility to protect, there is a constant struggle with making enough money to continue
operating its programs and services. For forest operators and companies along the supply chain,
they are hoping to create a differentiated product that meets consumer demands and builds a
positive public brand image. However, that is weighed against the increased costs associatedwith certification and implementation of changes. Therefore, there is a likelihood that
SmartWood and these target companies have an incentive to collude. On the one hand,
SmartWood receives certification money to continue its programs and services, while thecompanies display the certification seal of approval. On the other hand, SmartWood is lessvigilant in monitoring compliance to ensure that companies retain the certification.

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Ultimately, the only stakeholder with a compelling incentive to blow the whistle is the public,
which can include consumers and the media. This behavior has manifested itself in the form ofwebsites and blogs from consumer watchdog groups that highlight infractions of SmartWood
certified operations. While some of these efforts have succeeded in building a critical mass towarrant a response from SmartWood, in most cases, these vigilantes may be too small or
unorganized to make a measurable impact.

VI. CONCLUSION
Overall, Rainforest Alliance has done an admirable job in implementing FSC standards throughits SmartWood certification program. Accounting for 40% of total FSC certified land,
SmartWood has built a reputation as the major FSC certifier, and raised consumer awareness ofcertified products. The major caveat is the inherent conflict-of-interest between SmartWood
relying solely on certification fees for its operational needs, and the need to remain objective inthe certification process. Additionally, SmartWood should be more forthcoming in its
decertification of operations. Rather than undermining the program’s credibility, this type ofaction can actually build credibility in the minds of consumers. The SmartWood certification
system is not completely corrupt and unreliable, but more can be done to strengthen measuresand metrics that will instill confidence in the organization.

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VII. APPENDIX A: Class Discussion Questions
1. What is the importance of Rainforest Alliance publications? Are they simply a public
relations tool, or do they help build credibility for the organization?
2. Why is it important to look at the Board of Directors and governance structure of a nonprofit
organization involved in certification and monitoring?
3. What are the pros and cons of the Rainforest Alliance having certification programs inforestry, agriculture, and tourism? Does this make you more or less confident in the capabilitiesof the organization?
4. What are some measures or actions that Rainforest Alliance can take to improve confidence
in its certification system?
5. Are you confident that a product carrying the Rainforest Alliance Certified seal of approval iscertified to the standards for FSC’s principles and criteria? Why or why not?
6. Compare this case with the two cases on the Forest Stewardship Council (Veach andStryjewski). Does this case study on the Rainforest Alliance strengthen the Forest StewardshipCouncil’s credibility? Why or why not?
7. How well does the Rainforest Alliance’s SmartWood Program solve the two CSR problems
set forth by the author?

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APPENDIX B: FSC Principles

Ten Principles:
Principle #1: Compliance with laws and FSC Principles
Principle #2: Tenure and use rights and responsibilities
Principle #3: Indigenous peoples' rights
Principle #4: Community relations and worker's rights
Principle #5: Benefits from the forest
Principle #6: Environmental impact
Principle #7: Management plan
Principle #8: Monitoring and assessment
Principle #9: Maintenance of high conservation value forests
Principle #10: Plantations

Complete Principles and Criteria available on FSC Website:
http://www.fsc.org/keepout/en/content_areas/77/134/files/FSC_STD_01_001_V4_0_EN_FSC_P
rinciples_and_Criteria.pdf

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24

APPENDIX C: Rainforest Alliance Certified Products• Holiday Inns in the United States (coffee)• Plus Markt in The Netherlands (coffee)• Staples in Canada (FSC/RAC paper)• Deen Supermarkt in The Netherlands• Target stores (FSC-certified furniture)(coffee)• Ikea (FSC wood - worldwide, RAC coffee• Super de Boer supermarket in The- Italian stores only)
Netherlands (coffee)• Seven Eleven stores in Sweden (coffee)• Stenaline Ferry from UK to France (coffee)• Wal-Mart, Target, Sam's Club and grocery• Easy Jet, a European budget airline (coffee)
stores across the US (coffee)• Supermarkets across Europe (bananas)• The United Nations (coffee)• Franken & Kok café in Amsterdam (FSC
• All Nippon Airways lounges (coffee)
wood tables)• Asiana airlines (coffee in business class)• Flashing Billboard at Piccadilly Circus in• Imperial Hotel, Tokyo (coffee and orange
London (McDonald's ad)juice)• Tchibo, a German and Austrian coffee• KLM flights (coffee)
shop/market (coffee)• McDonald's restaurants in the UK and• McD cafes and McD stores in Germany
Ireland (coffee)(coffee)• Prado Museum in Madrid (FSC wood)• Ben & Jerry's in Germany (coffee)• Whole Foods in the US (coffee, bananas,• Monimbo coffee, sold online and out of
chocolate)home in Germany (coffee)• Harry Potter final book (FSC paper)• Train tickets for the Deutsche Bundesbahn• As Intermitências da Morte by Nobel(FSC paper)
Laureate Jose Saramago (printed on FSC• Slow Food International Terra Madrecertified paper)
meeting (coffee)• Goldman Sachs world headquarters (FSC
• Slow Food International fair "Saloine delwood)
Gusto" (coffee)• Bank of America East Coast Operations• Middlebury College (FSC wood)
Headquarters (1 Bryant Park, under• Phillips Academy Andover (FSC wood)construction) (FSC wood)• United Nations Headquarters in New York• ABC Carpet and Home (FSC wood(coffee)furniture)• Minneapolis St. Paul Airport (coffee)• Crate & Barrel (FSC wood furniture)• Shinkansen (Japanese Bullet Train) (coffee)• Arby's (coffee - Indiana only)• Fresh Direct website (based in New York)• Caribou Coffee cafes across the United(coffee)States (coffee)• Thistle Hotels in the UK (coffee)• Gloria Jeans cafes across the US and• Yellowstone, Yosemite and the Grand
Australia (coffee)
Canyon National Parks (coffee)• Some New York City park benches,• The Casa Claudia Catalogue in Brasil (FSC
bridges & decking (FSC wood)
wood)• Institute of Contemporary Arts in Boston• Select Equinox Gym Vendors, New York(FSC ceiling paneling and decking)
City (coffee)• Pottery Barn/Williams-Sonoma catalogs• Green & Easy website (FSC wood)(FSC paper)• Waitrose Supermarkets in the UK (coffee)• Victoria's Secret catalogs (FSC paper)• Mousetraps in Brooklyn, NY (FSC wood)• All Harper Collins books published in the• Specialty chocolate stores in Sweden
UK (FSC Paper)(chocolate)Copyright 2007. No quotation or citation without attribution.
• Penn State University - gym (FSC wood)• Duke University's Nicholas School of theEnvironment (FSC wood)• Madisons Coffee Shops - UK wide (coffee)• Prêt a Manger - UK wide (coffee)• The Natural History Museum, London(coffee)• The Science Museum, London (coffee)• Eden Project, Cornwall UK (coffee) As
Intermitências da Morte• Morrisons in-store Cafes, UK wide (coffee)• Sainsburys, Tescos, Asda, Morrisons andother major supermarkets across the UK(100% certified coffee and innocent
smoothies with certified bananas)• B&Q (FSC wood)• Home Depot (FSC wood)• The Antwerp Zoo (beginning mid-June)• Thalys, a fast train through Europe (coffee)• Accor Hotels in the Netherlands (coffee)

25• Cafeteria atop Mt. Hood, Oregon (coffee)• True Grounds in Somerville, Massachusetts(coffee)• PCC Natural Markets in eight Seattle,
Washington locations (chocolate)• Cape May Bird Observatory, New Jersey(coffee)• Stop & Shop Supermarket (coffee)• Marvelous Market in Washington, DC(coffee)• Books-A-Million in Washington, DC(coffee)• Gaiam catalogue (FSC cork bath mat)• American Airlines Terminal (Juan Valdezcafé), JFK airport, New York (coffee)• Explorations catalogue (printed on FSC
paper)• Long Road Out of Eden by the Eagles(packaged in FSC paper)• Greendale by Neil Young (packaged in
FSC paper)

Source: Rainforest Alliance Website,
http://www.rainforest-alliance.org/marketplace/venues.html

Copyright 2007. No quotation or citation without attribution.
APPENDIX D: Rainforest Alliance Board of Directors
Name
Position on
Title
Board
Daniel R. Katz
Chairman
Senior Advisor, Overbrook
Foundation
Labeeb M. Abboud
Vice
General Counsel, International AIDS
Chairman
Vaccine Initiative
Bert Aerts
MemberPresident, Fujifilm Hunt Chemicals
USA
Dr. Noel Brown
MemberFormer North American Director, UN
Environment Program
Mrs. Karen M. Clark
MemberFormer editorial positions in Vogue,
Glamour, House and Garden
Magazines
Daniel Cohen
MemberPresident, Dan Cohen & Sons LLC
Karl Fossum
MemberPresident, Park Madison Professional
Laboratories
Wendy Gordon
MemberFounder and General Manager, The
Green Guide
Robert M. Hallman
MemberPartner, Cahill Gordon and Reindel
Henry E. Juszkiewicz
MemberCEO and Chairman, Gibson Guitar
Corporation
Sudhakar Kesavan
MemberPresident, Chairman, CEO, ICF
Consulting
Mary Stuart Masterson Member
Actress
Anthony Rodale
Member
The Rodale Institute
Eric Rothenberg
MemberPartner, O’Melveny & Myers LLPPeter M. Schulte
MemberFounding Partner, CM Equity Partners
Kerri A. Smith
MemberPublic Speaker
Martin Tandler
MemberPresident and Principal, Tandler
Textile, Inc.
Annemieke Wijn
MemberFormer Senior Director, Kraft Foods
Mary Williams
MemberOwner and Founder, MJW Consulting
Alan Wilzig
MemberEntrepreneur and Inventor
Diane Jukofsky
Non-Voting Director, Rainforest Alliance’s
MemberCommunications and Education
Department
Chris Wille
Non-Voting Chief of Rainforest Alliance’s
MemberSustainable Agriculture Program
Henry P. Davison II
Emeritus
Vice President, J.P. Morgan Private
Banking Group
Patricia J. Scharlin
Emeritus
Principal, The Environment Group
Judith P. Sulzberger
Emeritus
M.D., Retired

26

Type
Nonprofit
Nonprofit
Corporate
Nonprofit
Media
Corporate
MedicalMedia
Corporate
Corporate
Corporate
Entertainment
Nonprofit
Corporate
Corporate
Corporate
Corporate
Corporate
Corporate
Corporate
Nonprofit
Nonprofit
Corporate
Nonprofit
MedicalComplete biographies available at http://www.rainforest-alliance.org/about.cfm?id=board_allCopyright 2007. No quotation or citation without attribution.

APPENDIX E: Rainforest Alliance Revenues and Expenses
Financial Overview – Summary of Activities
SUPPORT AND REVENUE
Fee for Services
Foundation/Corporation/Government
Membership/Contributions
Special Events
Government
Other
TOTAL
EXPENSES
ProgramFundraising
Management/General
TOTAL
Change in Net Assets
Source: Rainforest Alliance 2006 Annual Report.
Breakdown of Expenses

Source: Rainforest Alliance 2006 Expenses.

2006
4,750,928
2,668,232
1,575,539
833,446
4,908,363
495,852
15,232,360

2005
4,526,856
2,255,435
1,455,748
646,2313,496,090
97,365
12,477,725

14,083,452
986,873
220,383
15,290,708(58,349)

10,984,645
764,342
198,775
11,947,762
529,963

27

Copyright 2007. No quotation or citation without attribution.
APPENDIX F: Chain-of-Custody Flyer

Source: Rainforest Alliance/SmartWood website.

28

Copyright 2007. No quotation or citation without attribution.

29

APPENDIX G: Forest Management Certification Application Form

FOREST MANAGEMENTCERTIFICATIONAPPLICATIONCONTACT INFORMATION
Organization/Legal Name:
Type of Legal Entity:

Jurisdiction ofOrganization:
Title:

Primary Contact:
Mailing Address:
City:

State:Country:

Email Address:

Postal Code:Telephone:

Fax:

List of proposed forest management units: (submit separate list of FMUs for larger groups)
Forest Management Unit

Size (ha)Location

Total Area

OPERATION BACKGROUND(Check all applicable boxes)

TYPE OF OPERATION

Forest Area

Total

Private company/landowner

Total forest area:

Public agency/land manager

Productive forest area:

Resource manager

Non-productive area:

Community forest

Conservation zones:

Indigenous lands

Reserves:

YEARS IN OPERATION:

Year most lands acquired:

To beAssessed
Acres

FOREST PRODUCTS:
Logs (only)

Pulp/Paper

Hectares30

Copyright 2007. No quotation or citation without attribution.
Year timber harvesting began:
LumberComposites/Panels

Veneer

Non-timber forest products

Plywood

Other:

Year active management began:

TIMBER SUPPLY% timber procured from:Lands applicant OWNS & MANAGES%

Lands applicant MANAGES only%

Lands managed by known 3 RD PARTY%

MANAGEMENT PLANNING
Do forest management plans exist for ALL

or SOMEof the lands enrolled under this application?

If SOME, then what % of lands are covered by forest management plan(s):%Do forest management plan(s) require approval by a government agency?

YES

NO

HARVEST(Fill-in as applicable)

What is the annual allowable cut?
What was actual harvest for last year?

Volume:

Area:

Cord

Mbf

M3

s

Mbf

M3

s

Acres

Cord

Major species harvested:

AnnualQuantities: (tons, MMbf, ft2, m3)

ANNUAL REVENUES
What are your average GROSS ANNUAL SALES for all products?

US$

Additional information:(a) Signature: _______________________________________(b) Title:____________________________________________(c) Date:____________________________________________SEND TO:
Division Assistant, SmartWood, Goodwin-Baker Building,
65 Millet Street, Suite 201, Richmond, VT 05477
Phone (802) 434-5491

Fax (802) 434-3116

HectaresCopyright 2007. No quotation or citation without attribution.
APPENDIX H: Chain-of-Custody Certification Application FormCHAIN-OF-CUSTODYCERTIFICATIONAPPLICATIONCONTACT INFORMATION
Organization/Legal Name:
Type of Legal Entity:

Jurisdiction ofOrganization:
Title:

Primary Contact:
Mailing Address:
City:

State/P:Country:

Email Address:

Postal Code:Telephone:

Fax:

BUSINESS BACKGROUND
Help us create a profile of your business to plan for your chain-of-custody assessment.
BUSINESS TYPE (check all applicable boxes)
Primary manufacturing:

Secondary manufacturing:

Distribution:

LumberFurniture/Cabinets

Wholesaler

Plywood/Veneer

Millwork/Moulding

Retailer

OSB-MDF-Particleboard

Doors & Windows

BrokerPulp/Paper

Flooring & Ceiling

Import/Export

Engineered wood

Panels & Siding

Distributor

Other

Printed Materials

Other

Tools & Household
Musical Instruments
Other

COMPANY FACILITIES (e.g. manufacturing sites, offices, warehouses, etc…)
Total number of company facilities:
Number of facilities to be included in chain of custody:(List these individually below)
Facility name & type (i.e., sawmill, furniture shop)

Location:

Production capacity:# Employees:

31Copyright 2007. No quotation or citation without attribution.

32

CERTIFIED INPUTS (current or potential)
Certified material that YOU WILL BUY:
(logs, lumber, paper, panels, etc.)

Company name of each source of certified inputs:
Number:Species

Annual Quantities,(tons, MMbf, ft2, m3)

Location: (state, province, country)

FSC Certification

CERTIFIED OUTPUTS / FSC Product Groups (potential)
Certified products that YOU WILL SELL:

Annual Quantities, if known:(tons, MMbf, ft2, m3)

Species: (if applicable)

CHAIN OF CUSTODY PLANNING
Application is for ALL

or SOMEof the forest products your business produces or sells.

Will you need assistance in locating certified sources or materials?

YES

NO

Will you be producing percentage-based products (not 100% FSC)?

YES

NO

Are there other companies in your supply chain that may want to be certified?

YES

NO

If yes, please list them:Is there a specific date when you want to have your certification completed by?

Date:

What are your average GROSS ANNUAL SALES for all wood products?

$

Signature:
Title:
Date:_____________________________________________________________________________________________________________________SEND TO: SmartWood, 65 Millet Street, Suite 201, Richmond, VT 05477
Phone: (802) 434-5491 Fax: (802) 434-3116 Email: info@smartwood.org

Copyright 2007. No quotation or citation without attribution.

33

APPENDIX I: Sample Audit Report

Excerpted from: http://www.rainforest-alliance.org/forestry/documents/nagaya_pubsum06.pdf

Copyright 2007. No quotation or citation without attribution.

34

APPENDIX J: Certification Complaints, Appeals and Dispute Resolution Policy“Background: Complaints from stakeholders (e.g., community residents, adjoining landowners,
consulting foresters, government officials, or environmental organizations) may arise about or in
relation to a SmartWood-certified operation or applicant for certification, either before, during or
after the initial SmartWood certification assessment process. During or before the assessment,such perspectives will be considered during the assessment process. This policy is provided
specifically for challenges relating to SmartWood-certified operations, whether in the form ofcomplaints, appeals or other disputes, lodged after the final decision-making stage of thecertification assessment process. In order to be fair to the certified operation, and at the sametime give due process and attention to any observation, complaint or other challenge,
SmartWood must have clear policies and protocols regarding the handling of complaints, appeals
and disputes and the role of programmed or random audits or inspections of certified operations.
This document provides these policies and protocols.
Policies and Procedures: All appeals, complaints and disputes brought before SmartWood bysuppliers or other parties shall be subject to the following procedures. SmartWood shall keep arecord of all appeals, complaints and disputes and remedial actions relative to certification, takeappropriate subsequent action and document the action taken and its effectiveness, in each casepursuant to the procedures outlined below.
A. Lodging of Complaints, Appeals and Disputes: SmartWood may receive either written orverbal complaints, appeals or disputes. If not lodged in writing, the person contacted at
SmartWood will put the challenge in writing and distribute to the following:a) the SmartWood Director or, in his absence, the SmartWood Managing Director or, in his
absence, the SmartWood headquarters (HQ) staff person with responsibility for the region fromwhich the dispute originates;b) the SmartWood task manager (at HQ and/or a regional office, if any) for that certification;c) the designated contact person at the certified operation; andd) the certified operation's file at HQ.
B. Written Response: SmartWood staff will document and respond in writing to all written
challenges within 15 days. A formal FSC Complaints Log is saved on the designated drive at HQby the SW Certification Administrator. Included on the log: date the written complaint isreceived, SW certificate registration code (if not certified, status is noted, e.g., "pending"),
contact person and organization the complaint is received from, SW staff person responsible forfollow-up and date reply to complainant is sent. HQ staff will review verbal challenges. In mostcases, if a challenge is not lodged in writing, SmartWood will not respond.
C. Notification of SmartWood-Certified Operation: As per the above, upon receiving and/or
documenting a challenge, the SmartWood task manager will send documentation of thechallenge to the contact person at the SmartWood-certified operation. This must take place
within seven (7) days of receipt of the challenge. If HQ receives the challenge in writing, a copy
will be forwarded immediately to the certified company with a copy of these policies andprocedures and a cover memo describing actions that will be taken by HQ. SmartWood will

Copyright 2007. No quotation or citation without attribution.

35

honor the confidentiality of the aggrieved party if requested or, in the judgment of SmartWood,in cases where divulging his/her name may be politically or personally dangerous. It is important
to stress that even if a challenge is not lodged in writing, SmartWood may contact the certified
operation and let them know what has been heard and communicate about the response process.
SmartWood will err on the side of responsiveness. HQ staff will formally keep track of responses
to challenges, in writing and in the appropriate HQ file for the certified operation.
D. Opportunity for Certified Operation Response: SmartWood will give the SmartWoodcertified operation an initial opportunity to provide its perspective on the issue, e.g., through theoperation's own version of the incident, historical background, etc. This may be done in either
verbal or written fashion, preferably in writing.
E. Initial SmartWood Response: SmartWood will provide a written response to the aggrievedparty within 15 days from the time that SmartWood receives a written challenge (with copies toall of the entities listed under paragraph A above). SmartWood may ask the certified operation toassist in providing such written response. It is a SmartWood decision whether to seek comment
from the certified operation on the draft response or not. SmartWood may choose to do either.
SmartWood may also choose to contact relevant third parties to clarify the situation. SmartWood
may also need assistance in this regard from the certified operation. SmartWood will deal withsuch situations expeditiously and professionally with a priority on fairness to the certified
operation and the aggrieved party and protecting the credibility of SmartWood. SmartWood
believes such accountability is expected in certification and will respond in a consistent fashion
in all situations.
F. Independent Dispute Resolution: If the aggrieved party is not satisfied with the SmartWood
response, it may request in writing the opportunity to present its case to an entity that has theduty of seeking the timely resolution of disputes, grievances, complaints or appeals made against
Rainforest Alliance, Inc. and is independent of (1) the relevant certification evaluation; (2) the
relevant certification decision; and (3) the day-to-day implementation of the polices of Rainforest
Alliance, Inc. and SmartWood. An example of such an entity is the Rainforest Alliance Chief ofAgriculture. If, after input and actions by such independent entity, there is no resolution,
SmartWood will either ask the aggrieved party to put its continued concerns in writing to the
Director of SmartWood or to the Director of the Forest Stewardship Council, or HQ may forward
all related correspondence to the FSC to commence, if appropriate under FSC's guidelines andprocedures, a formal FSC complaint or appeal process.
G. Resolution: If resolution is reached during any of the steps outlined above, a memorandum forthe record shall be distributed to the contact points listed in paragraph A above, providing final
documentation and/or closure.
H. Public Certification Summary: Depending on the severity of a complaint, appeal or otherdispute, the public summary for a SmartWood certification may include a summary of suchchallenge and SmartWood's response.”
Source: Rainforest Alliance website,
http://www.rainforest-alliance.org/programs/forestry/smartwood/dispute-resolution.html

Copyright 2007. No quotation or citation without attribution.
APPENDIX K: SmartWood Certification Program Report Card36

Copyright 2007. No quotation or citation without attribution.

37

APPENDIX L: References
Diamond, Jared, “Collapse: How Societies Choose to Fail or Succeed,” New York, NY: Penguin
Books, 2005.
Forest Stewardship Council Website, http://www.fsc.org (Accessed Oct 26 2007).
“Rainforest Alliance 2006 Annual Report,” http://www.rainforestalliance.org/about.cfm?id=report (Accessed Nov 10 2007).
Rainforest Alliance Website, http://www.rainforest-alliance.org (Accessed Oct 26 2007).
Newsom, Deanna and Daphne Hewitt, “The Global Impacts of SmartWood Certification,”
Rainforest Alliance, June 9 2005.
Pinker, Wolfram. Telephone Interview. Nov 13 2007.
Pinker, Wolfram. Email Interview. Nov 20 2007.
Pinker, Wolfram. Email Interview. Dec 7 2007.
SmartWood Website, http://www.ra-smartwood.org (Accessed Nov 23 2007).
United Nations Food and Agriculture Organization Forestry Division,
http://www.fao.org/forestry/en (Accessed Nov 23 2007).