Reforming the FSC by Competitive Tendering

One the major structural problems that seems to underlie much of what is going wrong in the FSC is that contracts for certification assessments are arranged directly between logging companies and the FSC’s accredited certifiers. Because of this – and especially because the award of a certificate will ensure future profits for the certifiers from monitoring and re-assessments – certifiers have a strong financial incentive to award certificates even when the logging company does not comply with the FSC’s Principles and Criteria.

Another consequence is that certifiers are effectively competing with each other to show that they are the most likely to award a certificate – and the way that they do this is by lowering their assessment standards, ‘turning a blind eye’ to any major problems that they find, or taking a very ‘sympathetic’ view towards the company under scrutiny. This serves to completely undermine the integrity of the FSC system.

The FSC should, through its monitoring and accreditation procedures, be dealing with these problems, but in practice it cannot and does not: its contract with the certifiers prevents it from doing anything that might ‘harm the economic interests’ of the certifiers. Moreover, some of the ‘Big 4’ certifiers (SGS, SCS, SmartWood and Soil Association Woodmark) have simply threatened to leave the FSC if it is too strict in applying the rules.

Thus, the certifiers are effectively completely out of control.

** A proposed solution**

Contracts to carry out FSC certification assessments should be awarded to accredited certifiers by the FSC Secretariat. The company seeking certification would request the FSC Secretariat for a certification assessment, would pay the FSC directly, and the FSC would in turn pay the certifier winning the contract. Part of the money paid to the Secretariat would be retained for the services provided.

Certifiers would be asked by the Secretariat to tender for upcoming certification assessments . Tenders for certification contracts would be assessed against a number of criteria, including:

  • Technical quality of the proposed certification assessment, including;

*The expertise and range of staff to be employed in the assessment, i.e, specialists in forest ecology, anthropology, forestry and ‘economic forensics’ (to be able to check for corporate fraud and other financial malpractices);

  • Quality of the local, national and international consultation processes to be undertaken;
  • Proven knowledge of the history and broader policy and socio-economic context in which the company to be certified is operating;
  • Clear indication of how any specific issues or challenges within the approved national or regional FSC Standard would be addressed.
  • The certifiers previous track record, including:
  • The number of outstanding Corrective Action Requests (CARs) issued against them through the FSC’s regular certifiers’ monitoring programme, and the speed with which any CARs have been ‘closed out’;
  • The current number of certificates issued by the certifier against which complaints have been initiated.
  • The certifiers’ record in payment of FSC ‘subscription’ fees, penalty fines etc (long-term non-payment of fees and fines would exclude certifiers from eligibility for tendering for contracts).
  • The certifier’s overall ‘certification portfolio’
  • Certifiers would be required to hold a minimum level of certain types of certifications, such as in community forests and ‘eco-forestry’ operations. Extra preference in the award of certification contracts would be given to certifiers exceeding this minimum quota.

The certification contract issued by the FSC would make specific stipulations, such as the date by which the Public Certification summary would be made available. A further condition could be that certifiers would have to commit to making random unannounced monitoring visits to certified companies The contract would include penalty clauses such that any failures to properly implement the contract would result in reductions in final payment by the Secretariat and/or losing the contract. The contract would also provide provision that any subsequent failure identified in the assessment (see below) would render the assessment fee returnable to the Secretariat.

The Secretariat would be required to report to the Board on a regular (monthly or quarterly) basis the request for certification assessment that had been received, and the results of the tendering process, including the full ‘scoring’ of each tendering certifier for each contract awarded.

In order to avoid ‘slippage’ by the Secretariat in the assessment of the quality of tenders – or corruption of Secretariat staff – a random sample of certification contracts and assessments would be inspected annually by an independent external evaluator. This evaluator would report directly to the FSC Board, and its report would be publicly available.

Possible disadvantages

  • It is possible that no certifiers would wish to tender for any given certification contract. However, this would seem unlikely, as the growing number of smaller accredited certifiers would probably wish to pick up on contracts that the current ‘Big 4’ (SGS, Soil Association, SCS and SmartWood) were not interested in.
  • It is possible that some or all of the certifiers would form a ‘cartel’ or attempt to rig the bidding process by agreeing who would bid for what contracts, in advance. However, also because of the growing number of smaller certifiers, this would also seem to be fairly unlikely.
  • The system proposed would probably serve to increase the risk of corruption within the Secretariat. However, this could be mitigated through the proposed random auditing of certificates each year.
  • The proposed system would probably serve to increase the demands on the members of the Board, as they would be required to oversee proper implementation of the tendering and award-issuing system. However, this could also be seen as an advantage, as it would ensure that Board members were required to be more vigilant in the execution of the FSC’s ‘core functions’, and less inclined to engage in activities which distract from this.
  • The proposed system would probably serve to increase the overall cost of certification assessments. However, this would probably be most pronounced for the larger companies, and could be said to be a ‘test’ of their genuine commitment to the FSC (as is required under Criterion 1.6).

Possible advantages

  • The tendering system would ensure that certifiers were required to compete for business on the basis of the rigour of their assessment process (rather than, at present, competing with each other for the weakness of their systems);
  • The system would greatly increase the transparency of the certification assessment process to the Board and members of the FSC and the public;
  • The system would encourage certifiers to include community-based and ‘eco-forestry’ in the operations that they certify;
  • Whereas, at present, the relationship between the FSC and the certifiers is ‘static’ (and set out in one multi-year agreement which ‘ties the hands’ of the FSC’s Secretariat), the proposed system would allow for rapid adjustment and adaptation, either by changing the ‘tendering criteria’ or the terms of the contract between the FSC Secretariat and the certification body;
  • Whereas, at present, almost all the income from certification assessments is accrued by the ‘for-profit’ certifiers, this proposal would ensure that the FSC itself would financially benefit from certification activities. This would help to ensure its long-term financial sustainability and independence from external funders.
  • he elected, multistakeholder, Board would become more directly responsible for ensuring the operational quality of FSC’s core activities, i.e, the quality certification of forestry activities. There would thus probably be less time wasted in protracted policy discussions etc. that serve principally to advance the interests of the forestry industry (such as the ‘partial certification’ debate, percentage-based labelling debate, ‘controlled wood (sic) standard’ etc etc etc).
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