Legal Wood Verification
Approach of a Private Sector
Inspection Company
Presentation Summary
! SGS Profile
! SGS Forestry Services
! SGS TLTV Programme
! Legality Case Study One
•
Papua New Guinea
! Relevance to China
Bruce Telfer
Manager Asia/Pacific Region
SGS Forestry Monitoring Services
2nd November 2007
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SGS Forestry Services
SGS Group Profile
SGS is the world’s leading inspection, verification, testing and
certification company. SGS, a Swiss company, is recognized as the
global benchmark for quality and integrity. With more than 50'000
employees, SGS operates a network of over 1’180 offices and 321
laboratories in 145 countries around the world.
More information: www.sgs.com
Businesses
! Governments & Institutions
! Automotive
! Food & Agriculture Sectors
! Oil, Gas, Petrochemicals
! Minerals
! Industrial, Engineering &
Manufacturing
! Life Science (CRO, QC)
! Consumer Products
! Systems & Service Certification
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!
Forest Management Certification
(Forest Stewardship Council (FSC), Program for endorsement of
certification systems (PEFC), SFI (USA), Certfor, Cerflor, MTCC a.o.)
!
SGS Forestry Monitoring Programme
• Government export monitoring contracts in Cameroon and Congo
(Brazzaville) as well as Papua New Guinea
• Private sector Legal Verification Services including TLTV (Congo,
Cameroon, Indonesia, Russia and Papua New Guinea)
!
Chain-of-Custody Certification
(FSC, PEFC, TLTV)
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SGS in China I JK
SGS China Forestry Services
! Forest Certification: No.1 Service Provider in China
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! 294 Chain of Custody Certificates (FSC & PEFC)
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! 3 Forest Management Certificates covering 428,000 ha (FSC)
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Timber Legality & Traceability Verification (TLTV)
Why independent verification of legality?
Copyright Edward Parker Images
The TLTV Service is designed to ensure that timber has been legally
produced by the forestry companies. The legality verified timber is
traced throughout the supply chain.
!
Broad awareness of illegal logging and
timber trade problem – due to NGO
campaigns and market imbalances from
under-priced illegally-produced timber
!
Governments of importing countries
addressing the problem with introduction
of import legislation and regulations for
public procurement
!
Individual companies or associations
seeking to comply with those regulations
or searching for an alternative to
certification
!
Legality verification widely regarded as
relevant step towards full “sustainability”
Courtesy of www.danzergroup.com
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SGS TLTV Generic Legal Standard
! Audit a Company against the Generic
SGS Legality Standard with Verifiers
added to suit local laws and
regulations.
Copyright Edward Parker Images
How will we do it?
! 9 Principles, 30 Criteria &
100 Indicators; plus Local
Verifiers
! Covers company, forest
harvesting, environmental
and social legislation
! Audit the Chain of Custody from tree
stump in legitimate forest concession
to point of sale
! Full copy available on web
or from presenters
Copyright Edward Parker Images
! Same process as for Forest
Certification except that “Legality
Standard” substitutes the
“Sustainability Standard”.
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Potential Benefits For The Company
TLTV Statements
! Risk mitigation in your purchases and sales,
! Ensuring a competitive edge and access to high-value markets for
your timber products,
! List of statements
published on the SGS
Corporate website
! Demonstrating legal compliance to national authorities,
! Meeting due diligence requirements while applying for finance,
! Meeting customer demands for independent proof that the timber is
sourced from legally-managed forests
! Special SGS ‘mark’
(product label) is under
development
Copyright Edward Parker Images00
Copyright Edward Parker Images00
! ‘LV’ = ‘Legality-Verified’
product mark
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TLTV Current Clients
Legal Production - 4.8m ha
TLTV Current Clients - CoC
CoC Certificates (20)
! Republic of Congo – 2 LP Certificates
• Congolese Industrielle des Bois (CIB DLH)
• Industrie Forestière du Ouesso (IFO DANZER)
!
!
!
!
!
!
!
!
! Democratic Republic of Congo – 1 LP Certificate
• Société Forestière et Industrielle du Congo (SIFORCO DANZER)
! Cameroon – 3 LP Certificates
• Compagnie Forestière du Cameroun (CFC VICWOOD)
• Société d’Exploitation des Bois du Cameroun (SEBC VICWOOD)
• Société Forestière et Industrielle de la Doume (SFID ROUGIER)
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Republic of Congo - 1
Democratic Republic of Congo – 1
Switzerland – 3
Belgium - 3
United Kingdom - 2
Germany - 2
Netherlands - 6
France - 2
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Legality Verification Case Study:
Papua New Guinea
Background
! Since 1994 SGS has been appointed by the PNG
Government as the Independent Monitor of the Log Export
industry
! Scale of 3m m3 p.a. from 45 to 50 isolated shipping points
around PNG’s coastline (85% goes to China)
! Project was initiated to deal with massive financial losses
resulting from transfer pricing in the absence of proper
monitoring.
! Project continues to be a big success for Govt. as the
financial gains from SGS monitoring far outweigh the
costs.
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SGS PNG Log Export Monitoring
Export Database
Under the terms of its contract to the PNG Government
SGS:
Provides Regular Compliance Reports and Statistics to:
! checks all logs prior to export for correct species
identification and measurement
! Forest Department for forest management purposes
(& compliance to Regulations)
! Central Bank to monitor foreign exchange
remittances
! Tax Department for Company tax audits
! Customs for duty calculation
! then monitors all ship loading and provides the PNG
Govt. Authorities (Customs & Forestry) with an
independent cargo summary for duty and tax
! maintains a central database of all shipping records plus
a reporting system which provides both valuable
management information and an audit trail for Govt.
agencies to supervise the forest industry.
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Technology Used
Achievements 1995 to 2006
! Bar-coded Log Tags
! Volume Inspected 26.1 million m3 with an fob value
of US$ 1,543 million from 80 logging camps
! Project Cost – US$ 17.7 m
! Additional Foreign Exchange Earnings – US$ 120 m
! Additional Revenue to Government – US$ 92 m
! Additional Revenue to Landowners – est. US$ 10 m
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What does the SGS Service mean
in terms of “Legality”
Technology Used
! Portable Data recorders & barcode scanners
Through the SGS system the PNG Government is providing
log buyers with an independent third-party assurance that
these exports are:
! from a known source (concession of some kind)
! have both an Export Permit and Export License from
the relevant authorities
! are correctly measured & identified
! have had Export Tax and Landowner Royalties and
Levies paid
! and in most cases we see evidence that the foreign
exchange is actually received in country
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What does the SGS Service mean
in terms of “Legality”
Log Tracking
! The SGS bar-coded tag no. is also the official PNG Govt.
no. for every log produced
! Provides strong evidence for lack of Log Smuggling (like
the former illegal Merbau log trade from West Papua,
Indonesia to China)
• So every log produced in PNG has a unique code number
! Log details are held by the PNG Forest Authority
! Document database being used to verify authenticity of log
shipments purporting to be from PNG (e.g. Philippines and
Indonesia)
• Includes species, dimensions, landowner and origin in terms of
approved setup
! Details of logs exported are held by SGS
! Chinese importers of logs with paperwork claiming they
are from PNG can check with SGS directly or via the PNG
Forest Authority (to exclude smuggled logs ex West
Papua)
! Clear potential for Log Tracking System for all of PNG’s
production
• Possible to do manually but obvious need for a Database
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What the SGS PNG Government Contract does NOT mean
in terms of “Legality”
Government Initiatives
! Does not fully address the increasing demands of stakeholders, for
evidence of “legality”
! Expand the scope of independent export monitoring to
include processed wood products
! In PNG these demands are focusing on resource acquisition and
consultation processes with traditional landowners plus the
compliance of timber companies with social and environmental
regulations.
! Combine log production, processing and export records
into a single central database to facilitate the chain-ofcustody verification
• This is included in a current project application to the
International Tropical Timber Organisation (ITTO)
! The PNGFA and other Government Agencies (e.g. Dept. of
Environment and Dept. of Labour) sometimes lack the funding and
other resources needed to provide adequate monitoring.
! SGS does not monitor forest operations upstream from the point of
export and so the SGS project cannot claim to cover all aspects of
“legality” of forest operations.
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PNG Industry Initiative
Potential Impact on China
! A large PNG forestry company, Rimbunan Hijau (with assistance from
the PNG Forest Industries Association) has agreed to have a pilot
SGS TLTV project on one of its PNG logging and sawmilling
companies.
! 85% of PNG’s logs are exported to China
! NGO’s (especially in Europe) are putting pressure on
importers not to buy Chinese plywood on the grounds that
this contains veneer made from “illegal” PNG logs
! The Company has been granted funding of US$ 45,000 by the ITTO
! Progress to date:
• SGS TLTV Generic Legal Standard has been adapted for PNG
• The PNG version of the SGS Standard has been put out for public
consultation – ends 1 December 2007
• Field audit planned for Feb/Mar 2008
• RH & PNGFIA propose to engage in further Stakeholder Consultation
• If pilot is successful, RH will expand to all its PNG forest areas (approx.
50% of PNG’s log production)
! A widespread SGS TLTV programme in PNG will enable
Chinese log buyers to purchase “legality-verified” logs
from PNG and thus protect their future business
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Services to Forest Sector in China
Thank you
Through its network in China and internationally, SGS can
provide:
Bruce Telfer
! Forest Management Certification or Legality Verification
(TLTV) Services in any country of origin
Manager Asia Pacific Region
SGS Forestry Monitoring Programme
! SGS has significant forestry expertise in the major and
“problematic” forest export countries in Asia/Pacific,
Russia and Africa
e-mail:
[email protected]
Website:
www.forestry.sgs.com
! Chain-of-Custody Certification
! the 15 trained auditors of SGS China can provide a
range of CoC Certificates (e.g. FSC, PEFC and TLTV)
from a single field audit
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