Chain of Custody – failures could “cause FSC to break down altogether”

Last month, we reported on how FSC’s former  Executive Director, Andre de Freitas, had raised serious doubts about the FSC’s Chain of Custody (CoC) certification mechanism, describing it as a “myth”. Now a new and, for the FSC, more worrying voice has been added to those expressing concern about the integrity of CoC certificates; that of NEPCon, one of FSC’s accredited certifiers.

As NEPCon explains in a new posting on its website, Chain of Custody certification is critical, because it

traces and controls certified material flows throughout the supply chain. This provides assurance for the end consumer that the eco-labelled product they buy conforms to the rules of certification schemes“.

CoC auditing is normally done through annual audits that include on-site inspection, sample control of documents and staff interviews. However, as NEPCon explains, the system is:

not well adapted for detecting fraud or gross errors in terms of the volumes [of certified material] that are sold as certified.”

NEPCon points out that:

there is no systematic way of tracking transactions between certified companies, and that’s where the biggest potential for double-dealing lies. The company may well be selling products containing a volume of ‘certified’ timber material that exceeds the volume of certified raw material that they are buying. We don’t know how many Chain of Custody fraudsters there are.

There have probably been serious problems with the CoC system since the very inception of the FSC.  Under pressure from the certification bodies and FSC’s ‘economic interests’, it was agreed that, unlike the certification of ‘forest management’ (ie, the actual production of timber from forests’), the certification of the links in the supply chains of companies using or selling certified timber would not be open to pubic scrutiny. Of the many tens of thousands of reports of CoC certification for companies trading in certified timber, not a single one has ever been made public; FSC’s entire CoC system is shrouded in a veil of ‘commercial confidentiality’.

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NEPcon Director Peter Freiburg: “Ignoring the issue could spell disaster” 

This website has for many years reported on doubts about the Chain of Custody system. However, the lack of transparency in the system, plus the requirement to carry out frequent audits, has meant that it has been a ‘licence to print money’ for FSC’s accredited certification companies. As NEPCon’s director, Peter Freiburg says, “Many critics haven’t voiced their concerns very loudly for fear of causing harm to the systems or their participants.” Yet, as Freiburg points out the problem needs to be addressed because it “constitutes a threat to the credibility of eco-labels. Ultimately that could cause the systems to break down altogether“.

Whilst the FSC has toyed with other ways to verify that what companies and members of the public buy in good faith really is from FSC certified sources, it has remained largely complacent. It seems likely that any solutions to the problem will require much greater transparency in supply chains, which many companies will resist. Most importantly, it will likely mean a reduction in the certification companies’ profits, resistance to which has always been a serious obstacle to every attempted reform of the FSC.

As a comprehensive 2013 paper from researchers at UK’s Essex Business School and Cass Business School put it, FSC is an organisation in “crisis”. The long-overdue questions about the integrity of the Chain of Custody system is yet another major challenge to the FSC’s credibility.

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6 comments

  1. Have NEPcon’s Director and the ex-FSC Exectutive Director looked recently at the version of the CoC standard that appears on the respective web sites? In Part 5 of V-2 of the standard, for each product group an organisation should keep material accounting records and maintain annual volume summaries which provide quantitative information for each material category received, used and sold. If certification bodies are ignoring this part of the standard why have they been allowed to do so?

    I started supporting FSC certification in the early days but have seen it degenerate into a massive and ugly scam. The only beneficiaries would seem to be the certification bodies. It is worth repeating: the monitoring and control of certification bodies provided by ASI is inadequate and unprofessional. In 2008 a group of NGOs including Greenpeace, FERN and TFT called on the FSC to increase the baseline level of sample audits to at least 1% of all CoC audits. In the 12 month period starting October 2013, ASI carried out witness audits on 156 CoC certificates. This represents just 0.5% of the 28,300 CoC certificates currently valid. ASI managed 29 Forest Management witness audits, 2.3% of the total. The NGOs had asked for a minimum of 3%. How can the FSC claim to have certification bodies under control when the level of monitoring is consistently so low?

  2. I don’t know what the problem is. I have conducted many COC audits and the verification of product groups and the balance between FSC inputs and outputs is the principle focus of the work. There are issues with interpretation of where a product might fit if its not specifically listed in the FSC Product Classification standard FSC-STD-40-004a V2-0 EN, but certified companies are required to demonstrate how their production process traces the certified volumes of raw materials purchased against the certified volumes or product sold, no matter how the product is categorized, and auditors are required to validate that process. There is no huge mystery to it. The conversion rates of raw material to product (i.e. round wood tonnes to board feet) are carefully tracked as key production metrics for every company I have been in. The audit effort has always been adjusted to allow the time required to do this math. That is to say, and auditor would be expected to spend more time on site at a paper mill than he or she would a small printer. Its not brain surgery and its pretty easy to validate inputs and outputs. The fussiness here is misplaced.

  3. This entire system is largely a scam and a laughable joke, and FSC and the certifiers are laughing all the way to the bank, congratulations FSC on making it as far as you have, scam!

  4. Dirk Diggler – I totally agree. People need to stop drinking the Kool-Aid. FSC is the biggest money grab in years. They charge thousands and thousands of dollars and do nothing and I mean nothing. Our prices have increased 66% in two years and they can’t justify why.

  5. Using FSC’s own logic, a palm oil plantation is a ‘forest’.
    It occurred to me that FSC does not certify palm oil plantations although they are made-up of trees. However, FSC certifies other plantations made-up of trees such as E.globulus. FSC then calls monoculture plantations often composed of clonal trees a ‘forest’. I would like a direct answer from FSC International. Is a palm oil plantation a ‘forest and if not why?

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