Procurement of African Timber - Supporting Sustainable Forest Management and Development -

1. Procurement of African Timber- Supporting Sustainable Forest Management and Development -

2. The environmental and safety commitment of the Danzer Group is consistent with our motivation to be acknowledged as a leader in the wood products industry. Our Environmental and Safety Management (ESM) system (according to ISO 14001) seeks to protect all employees, the general public, and our ecosystem by establishing its foundation on the principles of: • Continual Improvement • Management through Teamwork • Leadership by Involvement • Prevention through Planning • Compliance with Regulations and Standards The Danzer Group commitment The Danzer Group’s Commitment to Your Safety, to Our Health, and the Habitat We Share

3. Procurement Policy Africa:Danzer Group “Procurement Rules African Timber” • We commit to gradually, credibly and independently demonstrate that the forests in our control and those from where we are also sourcing timber are managed legally and responsibly. • By gradually we mean to implement a process adapted to the situation of those of our suppliers willing to commit to our goals. • By credibly we mean to implement a holistic, transparent, and documented process that takes the life cycle of our products into consideration and is based on internationally recognized standards especially in regard to sustainable forestry. • By independently we confirm that the process and its outcomes will be audited and certified by qualified third parties.

4. Scope • Sustainable Forest Management of Forest attributed to Danzer Group companies: IFO (Rep. Of Congo) & SIFORCO(DRC) • Third party Procurement of African Timber - Support: • 1) Legal and 2)Sustainable management • Trade and Sales of Timber

5. Superior 1 .Sustainable Forest Management (SFM) (Certification) • (long term) 2. Progressing towards SFM 3a. Full legal compliance (+ no conflict with local population or government), 2nd or 3rd party verified 3b. Known origin up to forest source (concession, logging permit) and proof of the legal right to harvest timber (Controlled by the Danzer Group verification programme) Acceptable (short term) 4. Unacceptable timber: illegal origin Objectives & Targets: “The Danzer ladder”Legality as a threshold with a Progressive Approach towards Sustainable Forest Management Consistent with the ISO 14001 Standard : - Legal compliance & - Continual Improvement Level of performance (time frame)

6. Objectives & Targets (continued):Legality as a threshold with a Progress towards SFM • Stepwise approach with following Timber Categories: • 1. Timber originating from a forest with a sustainable forest management, approved by an independent third party certification,Is: • Timber that has been certified under an internationally recognized system according to ATO / ITTO criteria or criteria reaching the same level at the minimum (FSC, PEFC,...); • Timber that comes from a forest with a well implemented Environmental Management System, which social and environmental objectives reach as a minimum the level of ATO/ITTO criteria and has been third-party verified (e.g. ISO 14001); • 2. Timber with a proof of legal origin and demonstrated progress toward sustainable forest managementmust be verified by a recognized initiative (FORCOMS, WWF producer group, TFT initiative, FSC-MAP approach…) or by a 2nd party audit from Danzer; • 3. Timber with a proof of legal origin is controlled by: • Ideally, a Chain-of-Custody and legality certification for full legal compliance; • or a well documented traceability, controlled by the 3rd party audited verification programme of the Danzer Group, based on 2nd party audits according to the risk of suppliers, with the proof of the legal right to harvest timber. • Legality treshhold

7. Objectives & Targets (continued)Legality as a threshold with a Progress towards SFM • 4. Illegal and unwanted timber is timber with a clear suspicion or proof that it comes from: • Conflict areas: • Areas where timber harvesting is associated with human rights violations, underwriting armed conflicts or the breaking of UN trade sanctions; • Suppliers that have a suspicious background and are associated with armed conflicts and illegal logging; • Areas where local communities and worker rights are violated or where government and concession managers are in open conflict; • Protected areas / national parks; • Harvest in breach of forest law (within or outside a forest harvesting permit); • The conversion of forest to a non-forest land-use type without the conversion having a clear long term social and economical benefit

8. Procurement Procedures - How to distinguish?

9. Procurement proceduresSteps for Implementation • Preliminary risk assessment based on spatial risk rating and killing factors; • Collection of legal documents on timber origin • Suppliers sign a Declaration of Legality; • Risk assessment of suppliers and collection of detailed legal documentation of the origin of timber - Questionnaire • Targeted 2nd party (or 3rd party) visits / audits of suppliers based on the risk assessment; • External audit of procurement policy and procedures to verify consistency and effectiveness;

10. Procurement Danzer Group 1st Supplier = producer (transformer) 1st Supplier 1st Supplier 1st Supplier Traders / transformers known Traders / transformers known Transformation Transformation Traders / transformers x unknown Transformation Transformation Forest – producer own concession/forest Forest – producer known source Forest – producer known source Forests ?? (unknown sources) 1. : 1 intermediary, direct supply 2. : two intermediaries, supplier buys from source 3. : more than 2 intermediaries 4. : more than 2 intermediaries, UNKNOWN SOURCE Step 4. Risk assessment of suppliersQuestionnaire: Identification of supply chains, progress towards SFM and Collection of legal documentation High risk timber

11. Implementation: Responsibility / AccountabilityDecision and Communication Flow Chart TIMBER (PRODUCT) SUPPLY or SUPPLIER SFM certified or CoC / Legality verified by third party? No Yes Result of preliminary risk assessment (analysis of supplier by Environmental coordination unit) Negative Positive Procurement in country of timber origin? Yes Legal documentation of timber origin? No No Yes Declaration of legality signed by supplier or publicly available? Negative Extend risk assessment (Questionnaire) Max. 2 months Control procedures based on result of risk assessment Don’t buyInform higher hierarchy and environmental coordination BUY TIMBER

12. Thank you for your attention !!