The Ethics of Forest Certification: When Unintended Consequences Result

forest photo“One of the great mistakes is to judge policies and programs by their intentions and not by their results.”  — Dr. Milton Friedman

The free market has long been recognized as one of the best methods for consumers to get a wide variety of choices, while at the same time the competition for the consumer dollar incentivizes producers and sellers to offer the best possible value for the price.

Free market advocates have demonstrated that, all too often, interventions in the market such as tariffs, regulations, taxes, and so forth – imposed with the best of intentions – not only rob the consumer of choice but increase the ultimate cost of goods and services.

As Milton Friedman liked to point out, such interventions frequently resulted in outcomes exactly the opposite of what was intended by those advocating the interventions. In short, the law of unintended consequences operates to frustrate those who seek to impose their own subjective values on the free market.

This is becoming the case in the huge market for forest products from paper to furniture to building supplies.

The battle lines are forming over competing forest certification standards.  Such certifications are evidence to consumers that the forest product they may be purchasing has been certified to meet certain environmental standards.  The well-intended purpose is to help stop a variety of abusive forestry practices.  Products that met the standards were stamped with the forest certification logo of whichever group’s standards were met.  As an added measure, the standards were to be ensured by third-party inspectors.

As the practice started out to be entirely voluntary and the groups tended to be non-profit organizations, nothing in the arrangement violated the principles of free market enterprise.  Consumers who preferred one system over another or no system at all were all free to use such certifications as a useful way to make informed decisions.

Approximately 90% of the world’s forests have no certification of any kind.  Internationally, more than 30 different such certification systems exist.  In North America, there are four forest certification programs:

The Sustainable Forestry Initiative Program (SFI)

This is the most widely used certification standard in the U.S. with 196 million acres certified as of the end of 2011.

The American Tree Farm System (ATFS)

ATFS is the system used by some 83,000 small family forest landowners who have about 26 million acres of certified forests.  SFI recognizes the ATFS standard and forest products are tracked using the SFI chain of custody standard.

The Canadian Standards Association (CSA)

This standard is used in Canada.  Forest products are tracked using the SFI chain of custody standard.

The Forest Stewardship Council (FSC)

This standard is international with a mixture of some 28 regional and national standards. The FSC is based in Germany and about 90% of its certifications are outside the U.S.

The various competing standards are remarkably similar with each one emphasizing its own best qualities in order to persuade the marketplace to become loyal to their particular brand.  Those organizations which closely follow the issue have made this observation. For example, the National Association of State Foresters passed a forest certification statement resolution in 2008 stating:

While in different manners, the ATFS (American Tree Farm System), FSC(Forest Stewardship Council), and SFI systems include the fundamental elements of credibility and make positive contributions to forest sustainability…No certification program can credibly claim to be ‘best’, and no certification program that promotes itself as the only certification option can maintain credibility.

The collegiality of the certification programs should have been further improved by their shared views on sustainability and sound forestry practices and also by the fact that 90% of the world’s forests were not certified at all.

This was not to be.

Advocates of FSC soon found ways to gain advantages over their competition.

The U.S. Green Building Council (USGBC), a private environmental group, developed a system called Leadership in Energy and Environmental Design (LEED) in 2000.

LEED uses a point-based rating system for buildings that only recognizes forests certified by FSC. In practice, this bias means that most of North America’s certified forests are severely disadvantaged since FSC certifies only about one-quarter of North America’s certified forests. The other three-quarters of certified forests – certified by SFI, CSA, and ATFS – are shut out of the competition, despite standards which are quite similar to those of FSC, and in some cases significantly better than the FSC standards.

To make the anti-competitive nature of the LEED system worse, advocates of the FSC standard have sought to get government involved in promoting the LEED standard using taxpayer dollars to favor one private program over another.

A textbook example of this is the U.S. General Services Administration, which is one of the largest building owners and managers in the nation.  As cited in the GSA LEED Cost Study Final Report:

GSA requires all new construction, and major renovation and modernization projects to be certified through the LEED program, with project teams strongly encouraged to achieve LEED ‘Silver’ ratings.          

The Essence of Hypocrisy: Hardline Activists Who Demand That FSC Be the Only Allowable Certification System Ignore FSC’s Major Flaws

hy·poc·ri·sy  n. 1: a feigning to be what one is not

Those who advocate that no other forest certification system than FSC should be allowed have one thing in common: they roundly condemn alternate certification systems while ignoring the voluminous evidence that FSC’s flaws are often far worse.

That is the essence of hypocrisy.

Among the facts usually overlooked by those pushing for FSC to be the monopoly forest certification system :

(1) Most FSC certified wood products come from outside the U.S. meaning there are more transportation costs – not exactly a selling point for environmentalists.

(2) There is no one FSC standard since the standards vary greatly depending on the place of origin, thus undercutting any certainty to the consumer of exactly what standards apply to the product being purchased.

(3) Many of the perceived “abuses” – such as clearcutting and harvesting of old growth trees – can occur even if a wood product is FSC certified.

Whenever the more strident activists are campaigning against alternate certification systems to FSC, their trump card is the claim that FSC is the superior system for those who value the environment.  This line of argument all too often is associated with efforts to either denigrate corporations which chose these alternate systems or to promote anti-competitive arrangements like the LEED system.

The net result of a monopoly FSC certification system is higher economic costs on the wood products industry which means higher prices for consumers.

Ironically, this anti-consumer effort would not be possible without a textbook example of hypocrisy: misrepresenting a very flawed forest certification system to be a reliable environmental standard when the facts show clearly that it is not.

If the Webster’s definition of “hypocrisy” is feigning to be what one is not, the marketing of FSC certification as the only allowable environmental standard is based substantially on hypocrisy.

And the Law of Unintended Consequences Kicks In: Energy Costs to Transport FSC Certified Products

Since 90% of FSC certifications are from outside the U.S. and about 75% of the certified forests in the U.S. in North America are certified using certifications other than FSC, that means that the non-recognition of the other systems by LEED and therefore GSA, the U.S. government is paying a much larger amount in transportation costs when it has to import a product from overseas when a similar product is readily available here.

Since the environmental movement is largely opposed to the use of fossil fuels generally, while favoring strict conservation, one has to wonder how they believe these FSC forest products are transported to the U.S.

Even FSC knows that the limitation on FSC certified products often results in having to transport forest products from a foreign country. FSC’s 2010 Business Value and Growth market survey stated:

Nearly half of respondents have sought out an alternative supplier in another country when FSC certified timber or products were not available in their own country.

In a May 21, 2012 letter to the U.S. Green Building Council, a bi-partisan group of Congressmen protested that organization’s discrimination against the use of most certified forest products from the U.S. in their LEED system :

…FSC certified products from Brazil, China, or Russia can earn this credit, yet domestic products from forests certified to SFI and ATFS cannot earn these same credits. There are over 86 million acres certified to SFI and ATFS across the United States. These forests are responsibly managed, protect biodiversity and water quality and generate products that would be excellent components of what is categorized as a green building.

Other Costs

From the beginning, the economic thinking behind forest certification was that consumers would pay more for certified forest products because they endorse the accountability represented by the certification process.  To some degree that is true when the premium costs are not too high and when real competition between competing certification systems keeps those added costs modest.

As any student of monopolies knows, the attraction of a monopoly to the monopolist is to gouge the consumer on prices when the consumer has no alternative in the marketplace.  That explains why the FSC advocates, who are trying to shut out competing certification systems, are ultimately hurting the consumer.

While cost comparisons in a marketplace as huge and diverse as that for forest products can sometimes be difficult, abundant evidence suggests that the FSC certification does not compete as well on price.  Aside from the cost of transportation already noted, those who are most involved in the forest products marketplace have noted the increased cost factor.

The GSA LEED Cost Study Final Report already cited found a cost premium to build according to the LEED system which accepts only the FSC certification on wood products.           

A Washington Post article, “Why green-certified products may not always be the best choice” by Katherine Salant on April 30, 2012 cites a good example of when the FSC certification adds nothing but a significant cost increase:

Several architects said that some certifications add to a product’s cost and the certification can be unnecessary. For example, Tom Shiner, an architect and furniture maker based in Bethesda, said using wood with a Forest Stewardship Council (FSC) stamp to make his furniture adds a significant cost. Shiner acknowledged that the FSC stamp is important if you don’t know where the wood is from because it indicates that the wood was harvested using sustainable practices, but in his case he uses locally harvested poplar and oak, and he knows the person who cut the trees.

When is a Standard not a Standard?

For a brand or even a brand’s logo to mean anything at all, it implies that the product or service of that brand meets certain uniform standards.

The strong implication is that the FSC certification means certain uniform standards of forestry practices have been met.

But that is not the case with FSC.

In reality the FSC certification can mean all sorts of different standards – and there is virtually no way to know by looking at the label.

The reason for this is that the FSC certification is actually a hodgepodge of different standards since they vary from country to country and region to region.

The issues raised regarding this odd mixture of different standards all covered by one FSC label were described nicely in a 2009 letter by Steptoe & Johnson attorney Tom Collier to the Federal Trade Commission in which he also addressed anti-competiveness in the area of forest certification:

The variance of national and regional standards promulgated by FSC, coupled with the fact that FSC labels do not disclose under which FSC standard a wood product may have been certified, makes it extremely difficult to substantiate any meaningful FSC-related product claims. FSC operates under a system of dozens of varying regional and national standards across the United States and around the world. In North America alone, there are 13 regional standards with nine of those in the United States.

Mr. Collier went on to show wide disparities, such as a land set aside of 5% in Sweden as compared to 15% in the United Kingdom. In one place the standards are strict, while elsewhere lenient.

Even more incredible, Mr. Collier documented how in countries without an accepted national standard, the FSC permits certification bodies to certify according to their own “interim” standards, which do not meet either International Organization of Standardization (ISO) or International Social and Environmental Accreditation and Labeling (ISEAL) Alliance requirements.

As Mr. Collier summed up, “The result is that while consumers are informed that a product bearing a FSC label is FSC-certified, consumers have no way of knowing under what conditions the wood may have been grown or harvested.”

What’s Wrong with a Monopoly Forest Certification Program?

Another major unintended consequence of the more strident environmental groups trying to make FSC the only government-approved forest certification is that monopolies traditionally are insensitive to the wishes of those who have no choice but to use them.  In the case of forest certification there has been an increasing outcry from environmentalists about how FSC is less than true to its mission.

One of the Founder Members of FSC, Simon Counsell, has set up a web site to monitor FSC:

FSC-Watch’s motto is “because transparency matters.”  The web site appears to be regularly updated with well-researched news of problems regarding FSC operations:

It’s official: the FSC is now setting out to use its grotesque Controlled (sic) Wood Policy in order to ‘launder’ wood from areas experiencing recent deforestation into the FSC certified wood supply chain.” (May 25, 2012)

The myth of sustainable FSC certified logging in Sweden is explored in a new article, ‘Sweden’s Green Veneer Hides Unsustainable Logging Practices’… The article describes the growing consensus that the “Swedish model’ of forestry is failing to protect biodiversity, and old growth forests continue to be clear-cut, including those with FSC certification.” (December 2, 2011)

One doesn’t have to be a total cynic to ask: if the FSC certification can be stamped on wood products obtained by clear-cutting old growth forests and destroying biodiversity, then what exactly does FSC’s brand of forest certification mean?

For those who are interested in the account of FSC certified forest operations in Sweden clear-cutting old growth forest, German investigative journalism video is on YouTube under the title “FSC Certified Clearcuts in Sweden.” The six-and-a-half-minute video shows a machine capable of taking down 900 trees a day, including centuries-old trees, in an FSC certified forestry operation. The video is shown to a forest ecology professor, who roundly condemns the actions. The video of the abusive practices is then used to confront an FSC official who does his best not to be embarrassed by the video and the reporter’s questions.

The sharp contrast between the FSC’s public relations spin and the reality of the practices it allows should give pause to any activist who wants to force the FSC standard on the government, corporations and on all consumers.

Despite the many demonstrated environmental and economic issues undercutting the FSC claims, it has attracted the support of some of the more radical environmental activists.  One activist group, ForestEthics, makes no bones about its sometimes confrontational tactics against companies which do not get on the FSC bandwagon. As its web page states:

Sometimes companies need a little encouragement. When companies refuse to change their harmful practices, ForestEthics holds them publicly accountable. We get creative with online and offline actions, including protests, websites, email campaigns, and national advertisements. No corporation can afford to have its brand be synonymous with environmental destruction.

That implicit threat to denigrate the brand of companies who do not toe the ForestEthics line on forest certification speaks volumes as to how this group operates.

While the group uses its pressure tactics to criticize the Sustainable Forestry Initiative, what about the voluminous evidence of abusive forestry practices associated with the Forest Stewardship Council?  The clear-cutting of old growth forests in Sweden?  The destruction of biodiversity by FSC-approved operations?  Or even the many criticisms of FSC as carefully documented by fsc-watch?

Lots of luck finding anything critical of FSC – or anything balanced about SFI, ATFS, or CSA.

Unlike many of the people and organizations with expertise in forestry issues who have put forth balanced and careful statements about the pros and cons of the various certification methods, the approach of ForestEthics and some other activist groups is starkly one-sided. You are either with them – or maybe they need to make your “brand be synonymous with environmental destruction.”

When it comes to granting monopoly status to the FSC forest certification policy, Milton Friedman’s observation that policies should be judged by their results and not their intentions is a compelling reason to reject those who would force a deeply flawed policy on the public.