FSC audit of SGS leads to suspension of largest tropical logging certificate

It was announced today that FSC’s largest certificate for tropical forest management, had been suspended. The certificate, issued by SGS-Qualifor to the Barama company, the Guyanese subsidiary of the controversial Malaysian-based logging transnational, Samling, was put on hold following an investigation by the FSC’s Accreditation Service International (ASI) in November 2006.

The announcement will come as a particular embarrassment to WWF. In March 2006, when Barama received their certificate, WWF proclaimed it as a record-setting accomplishment for tropical forest conservation in South America. The company had received “technical and financial support from WWF“, which included “training forestry staff in reduced impact logging practices, improving factory safety operations, and reviewing the company’s performance against the rigorous standards” set by the FSC. “With this milestone” WWF exclaimed, “Barama serves as a catalyst for improved forest management systems in the Guianas“.

Sadly, as FSC’s investigations have now revealed, WWF were as misguided in these claims as were SGS, who had issued the certificate. Only 9 months later, WWF have been forced to admit that they are deeply disappointed by Barama’s failures to comply with the certification. Clearly, WWF’s ‘support’ to Barama was missing certain key elements. Trying to put a positive spin on their disappointment (and investment), WWF claimed that “The suspension of Barama’s certification by SGS is a good example of what the FSC system was designed to do“.

In fact, the announcement provides interesting insights into both SGS and the FSC, as it has revealed a long string of major failures by SGS to perform as required under the FSC’s rules. The FSC found that a “lack of appropriate evaluation against FSC certification requirements has resulted in systematic major nonconformities which had not been addressed.”

According to the FSC’s report, “At the time of the ASI audit, there was evidence that [Barama] had not implemented appropriate procedures to comply with FSC certification requirements.” In other words, SGS had awarded a certificate to a company which simply did not live up to FSC’s Principles and Criteria. This resulted in the FSC issuing a Major Corrective Action Request to SGS.

Another Major CAR was issued against SGS for failing to comply with FSC’s requirements for ‘partial certification’. Confirming what local stakeholders had been alleging since the time Barama was certified, FSC found that: “SGS has not adequately addressed FSC partial certification requirements. SGS reported the forest areas owned by the Samling Group abroad and makes disclosure of some forest areas within Guyana over which the company has some management responsibilities. Areas visited by the ASI audit team…we not managed in the spirit of FSC P&C and major nonconformities could be witnessed by the ASI audit team.

Another major failure was in relation to the rights of indigenous people living within the certified area. According to the FSC, “At the time of the ASI surveillance audit, in areas under the indirect control of the company…there was evidence that local indigenous communities could not maintain full control over forest management on their land. They had delegated control without free and informed consent according to their representatives.

A further failing was in relation to environmental protection. The FSC found that “At the time of the ASI surveillance audit the company had not performed appropriate environmental impact assessments prior to performing activities with a very high and significant environmental impact. SGS did not ensure that the company had appropriate EIA procedures in place before making a positive certification decision. This lack of appropriate evaluation against FSC criterion 6.1 has resulted in systematic major nonconformities.

Finally, SGS was condemned for issuing a certificate to a company which appeared not to even have a forest management plan. According to FSC’s report, “At the time of the ASI audit, the certified company did not have a management plan for the certified compartment 4 (378,596 ha). This lack of appropriate evaluation against FSC Principle 7 has resulted in a systematic major nonconformity at principle level.

Importantly, the FSC found that SGS had also failed to take into account the views of independent ‘peer reviewers’ who are supposed to provide advice before a certificate is issued. It is clear that some of the problem which FSC found had already been identified by these peer reviewers, but these had been disregarded in SGS’s decision to issue the certificate anyway. This is probably a common practice amongst the FSC certifiers, and is one way in which embarrassing facts which might prevent a certificate being issued can be conveniently buried.

Altogether, SGS was issued with no fewer than 9 Major Corrective Action Requests, 7 Minor CARs and four ‘Observations’.

FSC-Watch applauds the Accreditation Service of FSC for its investigation into SGS and Barama and for issuing the Corrective Action Requests against SGS. However, this does raise several questions. In effect, FSC found that SGS had issued a certificate to a company that was not protecting the environment or indigenous peoples’ rights, had no management plan, and was in breach of other important FSC policies, such as that concerning ‘partial certification’. SGS had also clearly not been operating proper internal procedures to ensure that certificates were only awarded to companies that really deserved them. It is hard to imagine how a certifier could be more comprehensively, culpably and blatantly in contravention of the FSC’s requirements. (This all inevitably raises this question of exactly why SGS issued this certificate.) And yet, SGS is allowed to remain accredited to the FSC.

FSC-Watch believes that such egregious breaches of the FSC’s rules should result in the immediate suspension of the certifier. Unless such steps are taken, we believe that certifiers will continue to abuse and discredit the FSC system.

A further issue arises over FSC’s findings in relation to Barama’s less-than-totally opaque financial dealings. As FSC-Watch reported in November 2006, the certification of Barama was highly questionable in relation to the FSC’s requirements that certified companies should be ‘economically viable’ – whereas, for reasons that are known only to Barama and certain members of the Guyanese government, Barama has not declared a profit (and therefore not paid the relevant taxes) for 15 years. Investigating this situation, the FSC noted that it does not actually require “forest companies to make a profit. The evaluation of the financial performance of forest enterprises is outside the scope of FSC certification and was not investigated during [our] surveillance audit“. This extraordinary admission raises questions over the whole economic ‘pillar’ of the FSC, as it is very unclear how ‘economic viability’ could be assessed without actually assessing the financial performance of the company in question.

The FSC Accreditation Services report is available here:SGSsuspendsBaramacertificateASI_report.pdf


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