Version Sep 30 2008 FSC Controlled Wood standard

Version: Sep 30 2008 FSC Controlled Wood standard FSC-STD-40 -005 V 2 -1 Standard used in Conjunction with Chain-of-Custody Certification

TOPICS Controlled Wood Concept • Definition • Why? • Applicability • Background 1 The Standard • Quality System • Supply Requirements • Verification Program • Sales & Promotion 2 3 CW Evaluation Guidance 2

Controlled Wood Concept What is Controlled Wood? Materials that: the forest origin is known, and avoid wood from categories defined as unacceptable for use in FSC product groups 3

Controlled Wood Concept Controlled Wood avoids: 1. Illegally harvested wood; 2. Wood harvested in violation of traditional and civil rights; 3. Wood harvested in forests where high conservation values are threatened by management activities; 4. Wood harvested in forests being converted to plantations or non-forest use; 5. Wood from forests in which genetically modified trees are planted. 4

Controlled Wood Concept Why Controlled Wood? For mixing FSC-certified and non. FSC virgin material in one product To exclude “unacceptable” materials in products sold with FSC claims To ensure the on-product FSC claim is true 5

CW Concept: Applicability Primary manufacturers Secondary manufacturers Brokers / traders Distributors Paper Merchants Printers CW evaluation is required when An FSC-certified company wants to produce FSC Mixed products using FSC-certified/reclaimed material and non-certified virgin material • Non-certified sources shall be controlled according to 40 -005 A company wants to buy and/or sell FSC Controlled Wood • Company shall comply with the purchase and sales requirements according to 40 -005 (part 4 & Annex 4) 6

Controlled Wood Concept Standards required for certificate scopes that include Controlled Wood: (for Co. C operations) FSC-STD-40 -005 Standard for Company Evaluation of FSC Controlled Wood (version 2 -1) & FSC-STD-40 -004 FSC standard for Chain of Custody Certification (version 2 -0) Note: All COC companies that need to have CW in the certificate scope, SHALL also be certified against 40 -004 (even if only selling FSC Controlled Wood products) 7

Controlled Wood Concept History of the CW Standards 40 -005 V 2 -1 issued with slight revisions Second version approved by FSC board Final public consultation TWG agrees on version 2 of the CW standard First public consultations of draft standard Controlled Wood Technical Working Group (TWG) established for revision of the standard First version approved by FSC board in conjunction with Co. C 40 -004 V 1 8

Controlled Wood Concept CW effective dates (Version 2 -1) CW requirements apply to ALL applicable companies during 2008 For secondary manufacturers/ brokers, CBs shall evaluate compliance at latest during 2008 annual audits regardless of Co. C standard (for primary manufacturers it was with 2007 annual audits) CW is compulsory for all new, applicable assessments 9

FSC-STD-40 -005 V 2 -1 Standard for Company Evaluation of FSC Controlled Wood 10

CW system overview CERIFICATION PROCESS INPUT OUTPUT FSC Controlled Material FSC-CW Uncontrolled Verification Program Check district of origin Check sales documents and certificate validity Risk Assessment Unspecified risk Low risk Field audit om n plia C FSC Mixed or FSC controlled Wood ce Noncompliance Uncontrolled 11

FSC-STD-40 -005 V 2 Contents Scope Standard effective date References Terms and definitions Part 1: Quality System Requirements Part 2: FSC Controlled Wood Supply Requirements Part 3: Risk Assessment and Verification Program Part 4: Sale of FSC Controlled Wood Annex 1 Glossary Of terms Annex 2 Annex 3 Criteria for assessing risk Requirements for company verification program (Field audits for non-low risk) (Risk Assessments) Annex 4 Provisions for claims related to FSC Controlled Wood 12

FSC Controlled Wood quality system supply requirements 13

Part 1: Quality System Requirements 4. Records • All relevant records shall be kept for 5 years (4. 1) Quality System Requirements 1. Policy 2. Procedures • Policy commitment to avoid wood from the 5 unacceptable categories of materials for FSC product groups (1. 1) 3. Training • Specify and implement training requirements for all relevant staff; record training Events (3. 1, 3. 2, 3. 3) • Procedures or work instructions covering all applicable requirements and identifying responsible personnel for implementing each procedure (2. 1, 2. 2) 14

Part 1: Quality System Requirements 1. 1 Written, publicly available policy The Policy shall: include a clear commitment to implement best efforts to avoid trading & sourcing unacceptable materials clearly list the 5 unacceptable categories (vague or general language is NOT acceptable) be made publicly available be endorsed by the most senior management level NB! The policy is a pre-condition for companies implementing their own verification program. 15

Part 2: Supply Requirements Company can purchase and use the following material types 1. 2. 3. 4. FSC-certified material from certified suppliers (need to check required info on purchase documents) Reclaimed materials verified against FSC-STD-40007 FSC Controlled Wood material from suppliers certified to deliver FSC Controlled Wood (need to check required info on purchase documents) Wood which is controlled by the company itself. In such case company is implementing its own verification program according to 40 -005. NB! Companies who do not use the 4 th category above and only buy from the first three categories, do not need to have a verification program, including risk assessments. 16

Uncontrolled material (9. 1) Companies MAY also buy material which is not certified and where the origin is not known/controlled. All such material SHALL be maintained physically separate from materials for FSC products. Separation and tracking system of uncontrolled material shall be carefully audited if company uses uncontrolled material. 17

Part 2: Supply Requirements 5. Supplier identification Categorize supplies (5. 1): FSC-Certified from FSC Suppliers FSC-certified inputs may be used as FSC CW; CB-COC-00 XXXX required FSC Controlled Wood from FSC Suppliers “FSC Controlled Wood”; CB-CW/FM-00 XXXX or CB-CW-00 XXXX required Controlled material from Company’s own Verification Program Non-FSC virgin inputs verified through company verification program Uncontrolled wood Keep it separate from all inputs to FSC product groups! Wood certified by other certification systems such as PEFC or SFI cannot be accepted as FSC CW without verification. 18

Part 2: Supply Requirements 5. 2 Maintain list of suppliers of controlled material that includes: name and address of suppliers (5. 2 a) a description of the inputs (5. 2 b) species and volume of the inputs (5. 2 b) relevant purchase documents (5. 2 c) 19

Part 2: Supply Requirements 7. FSC Controlled Wood from FSC-certified Suppliers Supply documentation shall include (7. 1): • “FSC Controlled Wood” product description • FSC Controlled Wood code (e. g. SW-CW-123456) SW-CW-123456 Inputs received, shipping documents, and invoice can be cross-referenced (7. 1) FSC-certified supplier certificate scope shall include sales of “FSC Controlled Wood” products (www. fsc-info. org) 20

Part 2: Supply Requirements 7. FSC Controlled Wood from FSC-certified Suppliers FSC-certified supplier certificate scope shall include sales of “FSC Controlled Wood” products (7. 2): www. fsc-info. org 21

FSC Controlled Wood verification program 22

Verification Program Overview Step 1: District of Origin (8. 0) Required for all verification programs Step 2: Risk Assessment (11. 0, 12. 1, Annex 2) Required for all verification programs Step 3: Field Audit Verifications (12. 2, 13. 0, Annex 3) Required only when inputs are used from sources with unspecified risk Step 4: Complaints Mechanism (14. 0) Required for all verification programs NB: Verification program is not applicable when the company only purchases “FSC Controlled Wood” 23

Verification Program CERIFICATION PROCESS INPUT OUTPUT FSC Controlled Material FSC-CW Uncontrolled Verification Program Check district of origin Check sales documents and certificate validity Risk Assessment Unspecified risk Low risk Field audit om n plia C FSC Mixed or FSC controlled Wood ce Noncompliance Uncontrolled 24

8. District of Origin 25

8. District of Origin 1. Determine country & district of origin (8. 1 a) For each controlled material input the company shall be able to determine its origin to the forest district level Supplier declaration is not satisfactory 2. Maintain records of country & district of origin (8. 1 a, b) Ensure documentation is maintained to demonstrate district of origin (8. 1 b) May include: • Legally required transport documents through supply chain • Proof of purchase documents for FMU 3. Implement audit process to verify authenticity (8. 1 c) Specify the audit process to verify authenticity of specified documentation to confirm district of origin Conduct the audits based on frequency defined 26

FSC-ADV-40 -016 & Supply Requirements FSC Advice Note: Implementation of FSC Controlled Wood requirements in FSC-STD-40 -005 V 2 -1 and FSC-STD 20 -011 V 1 -1, 24 June 2008 F. District shall be defined at the forest level (not supplier site) H. Demonstrate to the CB that the CW supply chain is identifiable and traceable down to the district. I. Demonstrate the origin of the wood and that it has not been mixed with uncontrolled through the supply chain. 27

8. District of Origin NB! The requirement to confirm district of origin makes implementation of a verification program practically unrealistic to meet CW for secondary manufacturers and companies further downstream: • Proof of origin is usually not possible; • Assurances needed for supply chain systems 28

11. / Annex 2 Risk Assessment 29

11. Risk Assessment Conduct risk assessment per Annex 2 for each district (11. 1) Allow risk assessment results to be publicly available (11. 2) www. fsc-info. org Low risk (12. 1) In case of doubt, Classify district as unspecified risk (11. 3, 12. 2) FSC Controlled Wood 30

11. Risk Assessment Conducting risk assessments First – does the district already have a risk designation? Check for FSC-approved designations FSC National Initiatives or other FSC parties may conduct risk assessments and have approved and published by FSC IC Check the FSC CW Resource Center: www. fsccontrolledwood. org If not – conduct your own risk assessment Start at country level for each category If not low risk – go to lower level, e. g. region, county, municipality If district cannot be confirmed to be low risk – there are 2 options: a) classify as uncontrolled and keep separate, b) implement field auditing per annex 3 NB: Once FSC approves designations, companies are allowed 6 -months to align their results 31

Annex 2: Risk Assessments Risk assessment shall include sources of information used; clear risk designation (“low risk or “unspecified risk”); clear and relevant justification for risk designation (why and on which basis); Risk assessment shall cover all five categories and shall address all indicators in Annex 2 Risk assessment shall be conducted for each district of origin (from where controlled materials are sourced) 32

FSC-ADV-40 -016 & Risk Assessments FSC Advice Note: Implementation of FSC Controlled Wood requirements in FSC-STD-40005 V 2 -1 and FSC-STD-20 -011 V 1 -1, 24 June 2008 B. CB shall verify the adequacy of the results & shall post the risk assessment public summary at fsc-info within 7 -days of issuing the CW code. C. Minimum content of the risk assessment public summary (see inserted Word document). G. New districts require CB approval of a new risk assessment and posting at fsc-info PRIOR to use of the input as controlled material. 33

Risk Assessment Public Summary www. fsc-info. org screen shot to show where risk assessment public summaries are posted: 34

13. / Annex 3 Supplier field audit verification system 35

13. Field Audit Verification Program Applicable if company is sourcing from areas with “unspecified risk” and wish to use this material in FSC product groups (13. 1). Include FMUs in field audits according to Annex 3 (13. 1). Provide field audit findings including non-conformances with Annex 3, section B to CB (13. 2). Default to FSC guidance/ interpretation (FSC IC, FSC RO, FSC NI) when it exists (13. 3). 36

Annex 3: Field Audit Verification Program Requirements applicable to those categories not confirmed as low risk Sources with unspecified risk require FMUs to be in a field audit verification program to provide evidence that the material has been controlled for the non-low risk categories Identify and provide rationale for documents / other evidence to demonstrate CW Specify and implement audits to confirm authenticity of evidence, including stakeholder consultation, staff interviews, and visits to harvesting sites 37

Annex 3: Field Audit Verification Program Conduct field verification audits: Performed by qualified personnel Audit should be conducted timely after receipt of wood Consultation with workers shall take place without management representatives Reports of the verification shall be kept for 5 years and available to SW CB shall conduct field verifications of company verification program 38

Annex 3: Field Audit Verification Program FMU field audit sampling: Identify the total number of FMUs. Classify FMUs into sets of similar units for audit sampling: forest type, location (district), size of operation. Apply sampling equation to each set of FMUs. Select the FMUs for auditing randomly. Conduct annual FMU audits in each set: x = 0. 8√y x = 0. 6√y (SLIMF) E. g. , district includes 136 FMUs, audit sample: x = 0. 8(√ 136) = 0. 8 X 11. 66 = 9. 33 = 10 NB! Company shall conduct field audits based on sampling BEFORE CB approval of the sources for use as controlled inputs 39

FSC-ADV-40 -016 & Field Audits FSC Advice Note: Implementation of FSC Controlled Wood requirements in FSC-STD-40 -005 V 2 -1 and FSC-STD 20 -011 V 1 -1, 24 June 2008 L. Any FMU in the audit sampling that does not fulfill the requirements in Annex 3 B shall be removed from the CW sources and another FMU from that set shall be randomly selected for an audit within that same year. 40

14. Complaints Mechanism 41

14. Complaints Mechanism 14. 1 Procedures shall be in place in case of complaints: Assess the evidence within 2 weeks Field verification if evidence is considered relevant, within 2 months Exclude the supplier if noncompliances found Supplier may only be used for FSC CW once it demonstrates compliance Maintain records of all complaints and actions taken 42

14. Complaints Mechanism Company shall inform the FSC NI / FSC RO & CB when there is a noncompliance in areas designated as low risk (14. 2) If there are frequent noncompliances from low risk areas – the risk assessment shall be reviewed (14. 3) 43

FSC Controlled Wood claims and sales for FSC CW product groups 44

Part 4: Sale of FSC Controlled Wood 15. Supplying FSC Controlled Wood An FSC Co. C certificate is required (15. 1) Sales and shipping documents shall include: Ø Ø Statement “FSC Controlled Wood” (15. 3); FSC CW code, e. g. SW-CW 123456 (15. 2) 45

SW-CW-00 XXXX Issuance • FSC Co. C certificate required with CW approved in the scope; • Company may or may not have FSC-certified product groups; • Company may or may not have FSC CW product groups; • Co. C tracking and handling standard requirements apply to any FSC CW product groups; • Co. C and CW codes match, e. g. , SW-COC-001234, SW-CW 001234; • 40 -005 V 2 evaluation required for assessments and upcoming audits. 46

Annex 4: Claims Related to FSC CW • FSC CW sales shall only be to FSC Co. C certificate holders • “FSC Controlled Wood” shall not be used on-product or in promotional items • Segregation marks may include “Controlled Wood” when not reaching final points of sale; CW code is required • FSC label and Co. C code shall not be used in conjunction with FSC CW 47

Controlled Wood Evaluation 48

Relevant Documents Co. C-01 Supplementary Guide to Evaluation, includes Annex L, which is focused exclusively on CW 40 -005 evaluation. Co. C-33 Master Report Template shall be used including the FSC-STD-40 -005 checklist appendix. CW-13 Risk Assessment Public Summary template can be provided to companies; the header table is required. CW-14 Field Audit Verification Checklist - For SW’s audits of FMUs with unspecified risk. 49

Risk Assessment Evaluation Risk assessment evaluation is part of the RRA process, but may require regional expertise RRA quality reviewers shall ensure the certificate scope correctly identifies CW in the RRA. This is critical for issuing and maintaining the CW code. Upon approval, task manager is responsible to ensure the risk assessment public summary is sent to the certification administrator (for upload to FSC database). 50

When is it low risk? Illegally harvested wood A district can be classified as low risk if: Evidence of enforcing logging related laws, and There is a robust system for harvesting licenses, and No (or limited) reports on illegal logging, and Low level of corruptions related to harvesting permits and law enforcement. Intention An area can be considered as low risk when illegal harvesting is not a threat to the forest, people and communities. A district can still be classified as low risk in case of only minor issues such as minor violation from the area of harvesting, filing of paperwork late or small violation related to transport. 51

52

53 High risk Low risk

When is it low risk? Wood harvested in violation of traditional and civil rights A district can be classified as low risk if: No UN security council ban on timber export, and Not designated as source of conflict timber, and No evidence of child labor or violation of ILO fundamental principles rights, and There are recognized and equitable processes in place to resolve conflicts of substantial magnitude pertaining to traditional rights including use rights, cultural interests or traditional cultural identity. Intention A district can be considered as low risk when there is no major violation of traditional or civil rights. Districts where there is an international ban on import or area with major violations of the ILO fundamental principles or use of child labour shall not be classified as low risk 54

When is it low risk? High conservation values are threatened A district can be classified as low risk if: The forest management activities do not threaten the high conservation values within the ecoregion, or There is a strong system in place for protecting the conservation values within the ecoregion Intent of this category is to avoid wood coming from regions where there is a significant occurrence of deforestation of natural and seminatural forests. For the risk assessment, the company shall first assess if there any high conservation values threatened at the ecoregion level. If this is the case, the company shall assess how forest management activities relate to these HCVs at a district level. 55

HCV Continued What is an eco-region? An ecoregion is defined as a large area of land or water that contains a geographically distinct assemblage of natural communities that (a) share a large majority of their species and ecological dynamics; (b) share similar environmental conditions, and; (c) interact ecologically in ways that are critical for their long-term persistence. Info: http: //www. worldwildlife. org/science/ecoregions. cfm Maps: Ecoregion map Decription: List 56

When is it low risk? Wood harvested in forests being converted A district can be classified as low risk if: There is no net loss of natural forests and other naturally wooded ecosystems such as savannahs and no significant rate of loss (> 1% per year) of natural forests and other naturally wooded ecosystems such as savannahs. Intention A district can be classified as low risk if there is no conversion of natural forest and other naturally wooded ecosystems 57

When is it low risk? Wood from forests in which genetically modified trees are planted A district can be classified as low risk if: There is no commercial use of the species in the district, or Licenses are required for commercial use and no licenses have been issued, or It is forbidden to use generically modified trees in the country Intention A district can be classified as low risk if there is no use of genetically modified trees within the district 58

FMU field audits (unspecified risk) Requirements based on STD-20 -011 and ADV-40 -016 NB! Company shall implement field audits before supplies can be approved in the certificate scope! • SW auditor shall conduct sampling field audits with or immediately following the company’s auditing; these shall be finalized within two-months from the assessment. • Its important to budget and plan for field audits before the assessment. It may be efficient to do FMU audits with the company visit. • One a company is certified, new districts with unspecified risk shall go through this process before the supplies can be approved in the certificate scope. *See sampling requirements on next slide 59

FMU field audits (unspecified risk) SW audit sample is a sampling of the FMU audits conducted by the company: 0. 8√company sample Example: Company is sourcing from 136 FMUs and is conducting field audits of 10 FMUs: SW Sample = 0. 8√ 10 = 2. 53 = 3 SW auditor shall conduct at least 3 audits (from the 10 FMUs audited by company), to verify the company’s audit results according to Annex 3. 60

Major Non-conformances ADV-40 -016 Examples of Major Nonconformances with 40 -005: Missing or incomplete risk assessments; Use of CW inputs without CB approval of the risk assessment; Absence of a publicly available written policy commitment; Absence of a complaints mechanism; Absence of supply FMU field audits in districts with unspecified risk; Absence of sufficient documentation to demonstrate the district of origin for each supply (supplier declaration is not sufficient) 61

THANK YOU! 62