Credit: Matt Hall for Earthsight (after KC Green)

FSC hall of shame: The ethical wood label’s long line of scandals

25.10.2021

The Forest Stewardship Council (FSC) logo isn’t hard to find. The tree-tick symbol can be found on hundreds of products on supermarket shelves, furniture shops and DIY stores. It’s on books, toilet paper and plywood, even car tyres.

The FSC, the world’s leading ethical wood label, says its branding tells shoppers the products come from legal and sustainable sources. Rampant fraud within its systems suggests otherwise.

As loggers, timber traders, environmentalists and the FSC’s other international members gather online for the start of the four-day FSC General Assembly on Monday 25 October, Earthsight has compiled a list of some of the green scheme’s most notable scandals.

The cases show:

  • The world’s largest wood, paper and pulp firms are complicit in illegal logging, destructive land clearances, corruption and human rights abuses. Huge resources and specialised staff make the industry giants, often billion-dollar firms, the best placed of the FSC’s certificate holders to ensure their own practices do not harm people and the planet. But if the ethical label’s most powerful business members are running roughshod over their environmental and social commitments, why should we expect smaller firms to be acting any better? Major paper, pulp and wood companies are not by default worse than smaller ones, but are more likely to have any dirty practices exposed because the non-profit organisations (NGOs) and journalists investigating the global trade in wood and wood products are more likely to come across them.
  • No forest is safe. The scandals don’t just involve the ‘usual suspects’. They are not confined to a few countries with well-known problems related to deforestation and forest governance, like tropical timber sourced from so-called “high-risk” forests in Indonesia and Brazil. They span multiple continents and forest types, including temperate forests within the European Union (EU) and protected ones in Russia.
  • FSC let the same problems pop up again and again. By treating its scandals as isolated incidents, the sustainable wood scheme has left its fundamental flaws unaddressed and ignored suggestions on how to fix them. The FSC still stubbornly resists meaningful reform despite mounting evidence exposed by NGOs of weaknesses within its systems.
Today, the FSC is fast becoming not fit for purpose. Until the green scheme publicly admits its deep-rooted problems, and takes meaningful action to address them, its tree-tick logo will only serve to mask environmental and human rights abuses.

In our current climate emergency, with emissions from deforestation the second biggest contributor to climate change globally, what happens in forests certified by FSC affects us all. This fact compelled Earthsight and other environmental groups to publish an open letter on Monday 25 October urging the FSC to commit to immediate structural reform.

If FSC doesn’t meet the challenge, then its long list of scandals will almost certainly lengthen. These cases include:

Drone shot of destroyed forest in Romania. Credit: Shutterstock

1. Corruption and illegal logging in Europe’s last intact forests (2015-present)

Culprits: HS Timber Group (then known as Holzindustrie Schweighofer), one of Europe’s largest sawn timber producers (plus its many high-profile customers); Romania’s state forest administration agency, Romsilva.

Offences (brought to FSC’s attention by third parties): In 2015, a report by the non-profit Environmental Investigation Agency (EIA) documented how Schweighofer had been the biggest driver of recent illegal logging in Romania, home to Europe’s last virgin forests as well as bears, wolves and lynx. The Austrian firm bought and traded vast volumes of illegal timber, findings confirmed by Romanian government inspections. The wood included materials sourced from protected and high conservation value (HCV) forests. Schweighofer also made misleading claims about the ‘chain-of-custody’ certification it had obtained from FSC, implying that it was relevant to all of its wood purchases when it actually only applied to those from FSC-certified forests. FSC auditors appeared not to notice corrupt and fraudulent land transactions happening over Schweighofer’s FSC-certified forests in Romania. 

EIA has also highlighted major concerns over Romania’s state forest administration agency, Romsilva. Romsilva, which was FSC-certified, controlled about a third of the country’s forests. The former head of the agency resigned in 2016 after a probe by Romania’s National Anti-Corruption Directorate (DNA) into the largest land restitution scandal in the country’s history. In 2020, whistleblowers told Al Jazeera reporters of threats and attacks faced by employees who stood against illegal logging in forests they managed. Since 2020, the European Commission has held Romania in violation of EU law for failing to safeguard protected areas, including Romsilva’s FSC-certified sites.

EIA report ‘Saving the Last Forest’, 2015. Credit: EIA

FSC’s response: FSC’s ‘Policy of Association’ allows it to blacklist firms found guilty of the most serious abuses. Yet despite the evidence in this case being confirmed by its own independent probe, FSC initially refused to blacklist Schweighofer, putting the firm on “probation” instead. It finally disassociated from the company in 2017 – but only after outside groups uncovered evidence that the company was still using illegal wood. Even then, FSC began procedures to allow the company back in. No action has been taken on Romsilva, whose forests still retain the green label.

Underlying weaknesses exposed: Unreasonably high burden of proof required for action (FSC will not disassociate even where the “preponderance of evidence” indicates serious wrongdoing); failure to address widespread misrepresentation of FSC chain of custody (CoC) certification; culture of assuming innocence even for confirmed wrongdoers; inability of FSC’s systems to detect serious wrongdoing, even where supporting evidence is in the public domain.

An area of Siberian forest illegally logged by a Russian timber baron used by Ikea. Credit: Maxar Technologies/Google Earth

2. Ikea linked to logging abuses in protected forests crucial to Earth’s climate (2021)

Culprits: Ikea, the world’s largest furniture retailer (among other buyers of the FSC-certified wood concerned); Russian businessman and local politician Evgeny Bakurov; forest managers in Russia’s Irkutsk region.

Offences (brought to FSC’s attention by third parties): Earthsight’s 2021 report IKEA’s House of Horrors revealed how the multibillion-dollar retail giant had for years sold children’s furniture made from wood linked to illegal logging in Siberia, where rampant tree-cutting threatens forests crucial to the planet’s climate. The Russian companies engaged in the illegal practices are controlled by Evgeny Bakurov, a local politician in the country’s remote Irkutsk region. Bakurov’s companies felled thousands of trees in protected forests on the false pretext they were dead, damaged or diseased – what’s known as “sanitary felling”. (It’s a common lie used to flout Russian forestry laws.) Bakurov’s pine was certified by the FSC and ended up in Ikea stores around the world. FSC audits did not notice obvious evidence of wrongdoing. Earthsight also uncovered evidence that Bakurov’s companies laundered non-certified wood using the FSC logo.

FSC’s response: Bakurov’s logging firm chose to voluntarily terminate its FSC certificate shortly after learning of Earthsight’s findings. FSC’s public response to Earthsight’s report implied that the discovery of wrongdoing by auditors had triggered this, but the ‘non-confirmities’ they had detected were minor and unrelated to the evidence Earthsight exposed. The ethical wood label also issued a moratorium on sales of wood and wood products originating from sanitary logging in Russia’s Irkutsk region, but claimed that this decision was unrelated to Earthsight’s findings. FSC also tasked their subsidiary Assurance Services International (ASI) to investigate the report’s findings – but ASI’s own findings are likely to remain secret. Bakurov’s sawmill still has a valid FSC Chain of Custody certificate, allowing it to sell FSC labelled wood.

Underlying weaknesses exposed: Assumption of innocence / lower standards than EU law (companies formally accused in court of serious offences can remain certified until they are convicted); Conflicts of interest at the heart of FSC (contributing to FSC-accredited certifiers’ unwillingness to act); lack of transparency around FSC processes (CoC published summaries and ASI investigations do not need to be made public); FSC’s lack of “transaction verification” for wood purchases (allowing wood to be laundered easily through certified supply chains); narrow definition of associated companies in policy of association; absence of systems to check compliance with policy of association; failure to utilise readily available satellite imagery as part of standard auditing.

3. Chinese plywood giant’s lumber laundry (2020-21)

Culprits: Jiangsu High Hope Arser (“Arser”), China’s largest plywood exporter and a state-owned foreign trade enterprise.

Offences (brought to FSC’s attention by third parties): EIA’s report The Lie Behind the Ply, published earlier this year, linked Arser to an apparent fraud involving the laundering of tropical-faced Chinese-made plywood. The company appears to have lied about where the tropical timber used in the plywood came from and falsely claimed the materials were certified by the FSC. Though some European importers seemed to be aware the claim was dubious, EU and UK firms imported more than 100,000 tons of the plywood between 2016 and 2018. The imports took place in apparent breach of the EU’s flagship timber import law, hugely undermining the legislation. EIA’s report also recommended that FSC introduce a mandatory, transparent system to trace transactions of wood and wood products, as well as tackle fraud rife among Chinese plywood firms.

EIA report ‘The Lie Behind the Ply’, 2021. Credit: EIA

FSC’s response: FSC’s own independent investigation uncovered additional laundering and fraud by Arser and resulted in the firm losing its certificate before EIA’s findings were published – but this one-off investigation was triggered by third-party information. FSC has also apparently taken no action against the FSC-certified European importers which EIA undercover investigations demonstrated were well aware of the likelihood of laundering by Arser but failed to act.

Underlying weaknesses exposed: FSC’s lack of systems to track certified wood through supply chains, leaving it wide open to rampant fraud; FSC’s lack of transparency.

Rainforest cleared for a palm oil plantation in Indonesia. Credit: Earthsight/The Gecko Project

4. Precious rainforests bulldozed in Indonesia (2007-present)

Culprits: Asia Pulp and Paper (APP), and APRIL, two of the world’s largest pulp and paper firms; Korindo, among the largest tropical plywood exporters globally; Djarum Group.

Offences (brought to FSC’s attention by third parties): Clearing large tracts of valuable tropical forest in Indonesia, in some cases illegally and/or in violation of traditional customary rights.

FSC’s response: FSC blacklisted the two pulp and paper giants after concerted effort by NGOs, and then, in the case of APP, failed to enforce that disassociation, allowing the firm to keep selling products under the FSC label unnoticed for over a decade. As in the Schweighofer case mentioned above, FSC chose to trust the word of Korindo, a company found guilty of serious abuses, that it would clean up its act, and only blacklisted it after NGOs exposed continued wrongdoing. The case of Djarum (which left FSC before it could be kicked out) revealed the inability of FSC to learn wider lessons from its scandals. After the very similar Korindo case, no effort was made to identify other FSC-certified logging companies in Indonesia which also had related firms involved in converting forest to oil palm plantations, even though the high risk of this was obvious to anyone with knowledge of forest issues in the country.

Underlying weaknesses exposed: Failure to pro-actively monitor compliance with FSC Policy of Association (FSC does not require checks on companies affiliated with certificate holder/s); the unreasonably high burden of proof needed for FSC to investigate alleged wrongdoing; flawed scope of FSC’s Policy of Association criteria; conflicts of interest within the certification scheme.

A scene of deforestation in the Ukraine Carpathians. Credit: Shutterstock

5. Wood panel and paper giants plunder Ukraine (2018-present)

Culprits: State-owned logging companies in Ukraine; numerous multi-billion dollar corporates, many of them Austrian, and including the three largest wood panel manufacturers on the planet and the world’s largest paper producer; household-name retailers selling their products.

Offences (brought to FSC’s attention by third parties): Earthsight’s 2018 report Complicit in Corruption found evidence of widespread illegality and corruption relating to timber felled in state-owned, FSC-certified logging enterprises in Ukraine. The suspect wood was traced to some of the world’s largest wood firms, some of which were mentioned in Ukrainian criminal investigations into corruption, illegal logging and exports of illegal wood. One of them, a subsidiary of the now-renamed HS Timber Group (the Austrian firm mentioned earlier in the FSC hall of shame), was directly implicated in a corrupt scheme masterminded by Ukraine’s former forestry chief, Viktor Sivets. FSC auditors continued to certify state-owned logging firms despite convictions and/or formal allegations from local prosecutors of serious illegalities and corruption. Partly thanks to FSC giving the wood its green label, the panel and paper giants had imported large volumes of wood from state logging enterprises subject to such investigations and purchased timber exported in contravention of a log export ban. FSC auditors failed to note any of this at the time. 

Earthsight report ‘Complicit in Corruption’, 2018. Credit: Earthsight

FSC’s response: ASI, the outfit tasked with enforcing FSC’s rules, carried out special checks in Ukraine in response. But its investigation was deeply flawed, and failed to find anything as a result. It did not even follow up on any of the several documented cases of large-scale corruption or bribery. No action was taken against any companies as a result. Meanwhile the local FSC office issued a joint statement with the Ukrainian forest agency about how best to solve “issues” with forestry in the country. The statement made no mention of illegality, instead placing the blame on what its authors considered unreasonable regulation. Rather than calling to remove conflicts of interest, improve enforcement and increase transparency, the statement demanded that the “ecological limitations” placed on logging by sanitary felling laws be removed to make the activity more profitable. As a result, Earthsight found illegality remained rampant in FSC forests in the country two years later. FSC’s response to our second report was also flawed, ignoring most of the allegations.

Underlying weaknesses exposed: Assumption of innocence / lower standards than EU law (companies formally accused in court of serious offences can remain certified until they are convicted); culture at FSC of bending over backwards to accommodate logging interests, including through lobbying governments on their behalf; conflicts of interest leading certifiers into cosy relations with the firms they certify.

Okoume logs piled high in Gabon. Credit: Shutterstock

6. Human rights abuses and deforestation in the Congo Basin (2005-present)

Culprits: Siforco (and then parent company Danzer Group) and Sodefor, two logging firms that have historically represented about half of officially recorded harvesting and exports in the Democratic Republic of Congo; Olam, a multibillion-dollar agribusiness.

Offences (brought to FSC’s attention by third parties): Traditional and human rights abuses, including rape and murder. Degrading and clearing vast tracts of precious tropical forest. In April 2011, local villagers protested Siforco’s failure to respect promises to build a school and clinic by blockading the company’s operations. Police officers the company called in to break up the protest went on a rampage. Several villagers are reported to have been beaten and arrested, six women including three minors raped, and property damaged and burnt. One villager is reported to have died as a result of injuries sustained in the attack. An independent investigation concluded that Siforco was indirectly responsible. It had paid the police and provided them with transport. Another logging giant in the DRC, Sodefor, also received FSC ‘controlled wood’ certification in 2010 despite being involved in human rights violations and the destruction of high conservation value forests. The certifier involved had failed to conduct even the most basic checks. In 2016, another FSC-certified logger operating in the Congo Basin found itself in hot water after being caught bulldozing HCV forest in Gabon. Research by Earthsight later found that Olam – the world’s largest farmer – had cleared more forest during the preceding five years than any other company in the entire Congo Basin.

FSC’s response: FSC only noticed, and acted on, the abuses by Siforco and Sodefor when prompted to do so through complaints by NGOs. Sodefor left before it could be kicked out; Siforco’s parent company was eventually blacklisted but was allowed back a year later after selling its DRC subsidiary. Wider recommendations from the complaints panels in the two cases were not properly followed up, and lessons not learned with regard to pro-actively checking for compliance with Policy of Association, as the many subsequent case studies show. Though it admitted guilt, Olam was allowed to retain its relationship with FSC after promising to stop clearing jungle and make amendments for its past actions. FSC took another four years to launch a formal blacklisting investigation, after Olam allegedly failed to stick to the deal.

Underlying weaknesses exposed: Sodefor and Siforco were certified under a controversial, lower quality FSC ‘controlled wood’ standard, demonstrating the additional risks involved with allowing such materials to be mixed with fully certified material. Failures by the certification companies concerned also illustrated how conflicts of interest were undermining audit standards. The Olam case, as with Schweighofer and the companies in Indonesia, demonstrates FSC’s failure to actively police its Policy of Association.

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