The presentation about explains how forest certification can help in capturing opportunities and mitigating risks inherent to the financing of forest-related assets, financial products, companies and operations by providing transparent information, traceability and assurance of sustainable management practices.
3. PEFC Forest Certification and
the Finance Sector
Ben Gunneberg, Secretary General, PEFC International
London, 25th October 2012
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4. What is PEFC?
§ Global, not-for-profit, non-governmental organisation based in
Geneva, Switzerland
§ Voluntary mechanism promoting sustainable forest management
providing independent, third party certification of good practices
§ Alliance of national forest certification systems with global
representation and an international chain of custody
§ World's largest forest certification system and provider of two thirds of
the world’s certified sustainably managed wood
§ Certification system of choice for small family forest-owners
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Programme for the Endorsement of Forest Certification
5. Finance, Forestry & Certification
Financial Significance Sustainability Significance
§ Global investment universe of § 17% of global CO2 emissions
managed forests: ~300-500 bn § 1 in 5 people depend on forests
USD (+100 bn USD by 2030) § 80% of terrestrial biodiversity
§ Physical assets
§ 10-15 bn USD assets and
§ Financial assets revenues lost annually from illegal
§ Lending, investing, banking, logging
commodity trading, credit ratings
Enhances the underlying asset value Reduces risk
Sustainable Forest Management
Standards, assurance, transparency and traceability
5 Forest Certification
6. What is Forest Certification?
Elements of Certification Certification Delivers
Sustainable wood raw material is:
• legal: the wood is harvested following
local legislation and international
agreements and the forest owner has
been compensated accordingly
Forest Management Certification
• from well managed forests: forestry
operations have been conducted
maintaining forest s ecological, social
Chain of Custody Certification and economic values
• traceable: the raw material supply chain
is controlled and verified from the
harvesting site up until finished products
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7. PEFC Sustainable Forest
Management Requirements
§ Requires compliance with all fundamental ILO conventions
§ Tailored to specific needs ranging from company to family and
community owned forestry
§ Sets highest standards for forest certification aligned with the
majority of world’s governments, including
– Maintaining & enhancing biodiversity
– Prohibition of forest conversions
– Prohibition of most hazardous chemicals, GMOs
– Protecting workers rights & welfare
– Encouraging local employment
– Recognizes principles of FPIC (free, prior, informed consent), UN
Declaration on the Rights of Indigenous Peoples, ILO 169
§ Provisions for consultation with local people and stakeholders
§ Exclusion of certification of plantations established by
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conversions
8. Relevance of Forest Certification
to Finance Sector
§ Globally recognized mechanism to codify sustainable forest
management standards & verify practices
§ Screening indicator for financial and ESG-related decision-
making
§ Provides assurance throughout the entire supply chain;
strengthening of traceability
§ Ensures long-term management of forest assets
§ Elimination of illegal activities; deforestation of primary forests
§ Improved access to markets
§ Better environmental risk management
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9. Increasing the recognition of
Forest Certification
§ ESG issues have potential to create or diminish shareholder
value so need to be managed
§ Over 70 leading banks signed up to the Equator Principles for
project finance. Principle 3 recommends compliance with IFC’s
Performance Standards, including Standard 6 - Biodiversity
which requires independent certification of sustainable practices.
§ Following Rio+20 Earth Summit – 40 institutions have signed
Natural Capital Declaration supporting development of
methodologies to integrate natural capital considerations into
decision making process for all financial products and services
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11. Certification Globally
9% 26% 66%
§ Only 9% of the world’s forests are certified
§ Only 26% of the world’s industrial roundwood supply is certified
§ 66% of the total area certified is to PEFC
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12. Acceptance by Government
Procurement Policies
§ PEFC is recognised by the Belgian, British, Danish, Dutch, Finnish,
French, German, Japanese, and Swiss Timber Procurement Policies
§ Recommended by the European Commission Guidelines on Green
Public Procurement
§ EU Ecolabel
§ European Retail Environmental Sustainability Code
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13. Acceptance by Other
Procurement Policies
§ Green Building Councils in Australia, Italy, and Singapore, the Code
for Sustainable Homes, BREEAM in the Netherlands and the UK,
and SKA rating in the UK
§ Green Building Assessment Protocol for Commercial Buildings and
the National Green Building Standard (US), and Built Green
(Canada)
§ Comprehensive Assessment System for Built Environmental
Efficiency (CASBEE) Japan
§ Singapore Environment Council
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15. UK Public Procurement CPET
According to the assessment reports, the certification systems comply with the
CPET criteria as follows:
§ FSC: 92%*
§ PEFC: 89% (97% for revised standard**)
* for for chip and fibre products with less than 70%. certified material
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Source: CPET 2010 Review of forest certification schemes
** own assessment
16. Conclusions
§ Forest certification provides benchmark and assurance tool of
SFM practices and is one of several ESG indicators
§ Helps to verify compliance and mitigate risk
§ When investing in or lending to forest related projects:
– Screens for quality re selection/inclusion in funds and for projects /companies
– Risk mitigation tool when dealing with smaller enterprises
§ When insuring forest – related activities:
– Increases assurances when providing insurance to forest enterprises – esp
smaller actors
§ When trading forest products including timber:
– Traceability and risk mitigation
§ Should also be incorporated into financial institutions’ own
procurement policies
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17. Why PEFC?
PEFC is the world’s largest forest certification system
1. Basedon intergovernmental agreements & internationally
recognized processes
2. Upholds highest SFM standards without exceptions
3. Intentioned
to maintain focus on promoting Sustainable Forest
Management
4. Level of stakeholder engagement equally high for all standards
5. Demands independence between the different aspects of the
forest certification
17 BUILDing on local action, PEFC cares for our forests globally