Certification as a Market-Based Instrument to Address Illegal Logging Potomac Forum, Feb. 14, 2008

1. Certification as a Market-Based Instrument to Address Illegal LoggingPotomac Forum, Feb. 14, 2008 Kathy Abusow, President & CEO, SFI Inc.

2. Overview • Market Forces • Illegal logging and certification • The Sustainable Forestry Initiative • Certification as a Market-Based Instrument to Address Illegal Logging • The Path Forward

3. Global Demand For Legal & Sustainable Forest Products • Government procurement policies such as the UK, Germany, US and Japan impacting global demand. • Customers incorporating certification procurement policies. • Markets increasingly concerned about illegal logging. • The trend expected to continue to increase.

4. How Certification Meets Market Demands • Forest certification offers a mechanism to demonstrate that the forest is well-managed in accordance with social, environmental and economic requirements. • Chain-of-custody links the product to the certified forest.

5. The Reality is… Area of Forest Certified Worldwide Certified Forests 10% 90% Uncertified Forests

6. Global Trade; Global issues • Most of the world’s certified forests can be found in North America and Europe. • Forest products are traded globally, both certified and uncertified. • The Sustainable Forestry Initiative recognizes this reality.

7. The Sustainable Forestry Initiative

8. The SFI Program is Based on 3 Key Objectives

9. Balanced Governance

10. Conservation Supporters & Partners American Bird Conservancy American Forests Arkansas Wildlife Federation Bat Conservation International Center for Wildlife Information Conservation Federation of Missouri The Conservation Fund Conservation International Ducks Unlimited Forest Trends Izaak Walton League of America Longleaf Alliance National Association of Conservation Districts National Fish and Wildlife Foundation National Fisheries Institute National Tree Trust National Wild Turkey Federation The Pacific Forest Trust Quality Deer Management Association Quail Unlimited Rocky Mountain Elk Foundation Ruffed Grouse Society Soc. for the Protection of NH Forests SC Wildlife Federation Wildlife Management Institute The Wildlife Society

11. The SFI ProgramA Single North American Assurance 1 Standard for all of North America 143 million acres/58 million hectares certified Fully Independent Non-Profit Charitable 501c3

12. The SFI Standard • The SFI standard is revised every five years • Public input period • Updated to reflect latest science, information, market needs. • Open to working with partners to address important issues such as illegal logging.

13. What Forest Certification Delivers • Social, economic and environmental representation in decision-making • Avoidance of illegal timber • Identification of special biological, cultural, heritage sites • Management strategies to protect species at risk • Management strategies to maintain wildlife habitat • Sustainable harvest levels • Prompt regeneration • 3rd party accredited certification audits • Audit reports public available with corrective action clearlyhighlighted.

14. Certification as a Market-Based Instrument to Address Illegal Logging

15. Chain of Custody

16. Chain of Custody and Illegal Logging • Chain-of-custody certification tracks certified and uncertified content. • CoC has mechanisms in place to ensure the uncertified content is not from controversial sources, such as illegal or unauthorized harvests.

17. SFI – Percent Certified Content Labels for Products from Certified Well-Managed Forests Tracks Certified Forest Content Must have 3rd party certification against SFI’s COC or PEFC CoC standard which means it tracks the certified content in the fiber, and can also track the recycled content as well. 

18. Fiber Sourcing in North America • Objective 8 of the SFI standard requires that program participants to encourage landowners from where they source their fiber to: • reforest areas that have been harvested; • use best management practices for protecting water quality; • identify and protect important habitat elements for wildlife, including critically imperiled and imperiled species and communities; and • use the services of qualified resource and logging professionals.

19. Fiber Sourcing Off-shore • Risk assessments are taken to prevent illegal wood fiber or from biodiversity hotspots from entering the product mix • Risk assessments for procured wood in countries without effective laws addressing the following: • a. workers’ health and safety; • b. fair labor practices; • c. indigenous peoples’ rights; • d. antidiscrimination and anti-harassment measures; • e. prevailing wages; and • f. workers’ right to organize.

20. Tracks Procured wood in North America and Off-Shore Must have 3rd party certification against SFI’s fiber sourcing requirements which means a verifiable system to ensure procured wood comes from legal and responsible sources. SFI Fiber Sourcing – A North American Standard with a Global Reach

21. The Path Forward: certification as a market-based tool to combat illegal logging • We need to: • Move past the rhetoric of market campaigns; only 10% of the world’s forests are certified – we need to work together to promote certification – looking to partner with like-minded organizations. • Promote the adoption of inclusive certification policies -- Certification will be synonymous with responsible forest management – it is becoming table stakes for all medium-large companies and governments. • Recognizing that a variety of forest certification standards is the best solution to meet supply needs and reward leadership. • Protect the integrity of the labeling process. • Support forest certification as an important tool to combat illegal logging.

22. Thank you!