governance review 2008

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PEFC Governance Review Page 1 of 104 Final 23 May, 2008

PEFCGOVERNANCE

REVIEW

MAY, 2008

Final Report


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TABLE OF CONTENTS

MANAGEMENT SUMMARY ...................................................................................................................5 I NTRODUCTION ...........................................................................................................................................5 R ECOMMENDATIONS .................................................................................................................................. 7

Phase One Get Resourced.................................................................................................................7 Phase Two Get Structured.................................................................................................................9 Phase Three Get Engaged...............................................................................................................11 Phase Four Get Influential..............................................................................................................13

R EVISED PEFC O RGANISATIONAL BODIES .............................................................................................14 R EVISED PEFC O RGANISATIONAL STRUCTURE .....................................................................................15 R EVISED PEFC A SSESSMENT , E NDORSEMENT AND MUTUAL R ECOGNITION PROCESS .......................16

I. INTRODUCTION..................................................................................................................................17 PEFC S TRATEGIC PLAN ...........................................................................................................................17 MANDATE .................................................................................................................................................17 PANEL ........................................................................................................................................................17 PREVIOUS A NALYSIS ................................................................................................................................18 FINDINGS ...................................................................................................................................................18

II. METHODOLOGY ............... ................................. ................................ ................................ ................19 III. ORGANISATIONAL REVIEW........................................................................................................21

BACKGROUND ...........................................................................................................................................21 PEFC R EVIEW ..........................................................................................................................................22 R ECOMMENDATIONS BY CATEGORY .......................................................................................................24

Transparency.......................................................................................................................................24 Participation........................................................................................................................................25 Evaluation............................................................................................................................................25 Complaint and Response ....................................................................................................................26

IV. ISSUES ASSESSMENT - WHAT COULD BE BETTER?.......................................................27 GOVERNANCE MODELS ............................................................................................................................27

Balance of Power (Members, Board, Secretariat)............................................................................28 Bottom-Up versus Top-Down .......................................................................................................28

Inclusiveness........................................................................................................................................29 Transparency.......................................................................................................................................30

ORGANISATIONAL STRUCTURE AND MANAGEMENT ..............................................................................31 Members Expectations versus Organisational Capacity ................................................................32

Board Workload/Focus.......................................................................................................................32 Technical Resources Insufficient .......................................................................................................33 Complementary Initiatives/Investments.............................................................................................33

STAKEHOLDER GROUPS ............................................................................................................................33 Low-Hanging Fruit Has Been Harvested .......................................................................................34 Lack of Diverse Stakeholder Representation ....................................................................................34

Levels of Integration and Influence ...................................................................................................35 STANDARDS ..............................................................................................................................................36

Variance in Robustness of PEFC Member Standards ......................................................................36 Meta-Standard Could Also Be More Robust ..................................................................................37 Northern-Hemisphere Standard Barrier to New Members ...........................................................37

Panel of Experts Insufficiently Robust, Clear ...................................................................................38 EXTERNAL PERCEPTIONS .........................................................................................................................38

Poor Global Awareness of PEFC ......................................................................................................38 PEFC is Industry-Driven ...............................................................................................................39 First Impressions are Opaque .........................................................................................................39

OTHER ISSUES ...........................................................................................................................................40 Organisational Conflict FSC, ENGOs ...........................................................................................40 Flash-point Issues ............................................................................................................................41


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Next Generation Challenges............................................................................................................41 V. OPTIONS - WHAT COULD WE DO ABOUT IT? ....................................................................42

EXTERNAL PERCEPTIONS OF PEFC..........................................................................................................42 Focus On - Transparency and Public Information...........................................................................42 Focus On Changing Critics from Within .......................................................................................43 Focus On Inclusion to Transform the Organisation......................................................................43 Options - External Perceptions of PEFC ..........................................................................................43

PEFC E FFECTIVENESS ..............................................................................................................................44 Focus On Standards and Enforcement ...........................................................................................44 Focus On Operations and Administration .....................................................................................45 Focus On Members and Board .......................................................................................................45 Options - PEFC Effectiveness ............................................................................................................45

PEFC' S R ULES AND STANDARDS .............................................................................................................46 Focus On National Standards and Quality ....................................................................................47 Focus On PEFC Meta-standard and Quality ................................................................................47 Focus On Additional or Parallel Criteria ......................................................................................47 Options Rules and Standards ..........................................................................................................48

IMPLEMENTATION AND MONITORING OF GOVERNANCE ........................................................................49 Focus On Centralising Decision-Making Power...........................................................................49 Focus On Open Membership to All Stakeholders..........................................................................49 Focus On Trouble-shooting: Engage and Broker .........................................................................49 Options Implementation and Monitor ing of Governance .............................................................50

BUY -IN" FROM PEFC' S EXISTING STAKEHOLDERS ...............................................................................51 Focus On Increase Support and Value to Members ......................................................................51 Focus On Expand Market Share.....................................................................................................51 Focus On Simplify, Clarify, and Improve Efficiency .....................................................................52 Options Buy-In from Existing Stakeholders ................................................................................52

D IALOGUE WITH E NVIRONMENTAL NON -G OVERNMENT ORGANISATIONS (ENGO S)..........................53 Focus On Marketing Push...............................................................................................................53 Focus On Identify and Partner with One Key ENGO ...................................................................53 Focus On Open Membership to ENGOs ........................................................................................54 Options Dialogue with ENGOs.......................................................................................................54

VI. RECOMMENDATIONS - SO WHAT NOW? ...........................................................................56 PHASE O NE G ET R ESOURCED ...............................................................................................................56

1. Publish Governance Review.......................................................................................................56 2. Establish International Headquarters .......................................................................................56 3. Review Board By-Laws (Executive Committee)........................................................................57 4. Update Staff Position Descriptions............................................................................................57 5. Delegate Operational Authority to Heads of Unit....................................................................57 6. Quantify PEFC Impact ............................................................................................................57 7. Commit to the High Road ........................................................................................................58 8. Apply the Plain-English Principle ..........................................................................................58 9. Promote a Management-Summary Practice ..........................................................................58 10. Update Website for Accessibility .............................................................................................58 11. Invest in Marketing Capacity ...................................................................................................59 12. Join Stakeholder Initiatives ......................................................................................................59 13. PEFC International Conference on Forestry and the Environment .....................................60 14. Develop Annual Internal Governance Check-Up ................................................................60 15. Volunteer for One World Trusts Governance Review...........................................................60

PHASE TWO G ET STRUCTURED .............................................................................................................61 16. Strategically Update Board Model..........................................................................................61 17. Focus Board Role .....................................................................................................................61 18. Recruit Additional Stakeholders into National Governing Bodies (NGBs) ..........................61 19. Expand Extraordinary Members into a Forum....................................................................62 20. Add Stakeholder Forum Right of Agenda.............................................................................62 21. Expand Secretariat Capacity ...................................................................................................62 22. Tighten Independent Consultant and Panel of Experts Role................................................63 23. Launch Tropical Initiative........................................................................................................63


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24. Add Fundraising Capacity .......................................................................................................64 25. Increase Support to Members ..................................................................................................64 26. Sponsor Applied Research in Environmental Impact.............................................................64 27. Create Entry-Level Tier of Endorsement..............................................................................64 28. Provide Capacity-Building Assistance ....................................................................................65

PHASE THREE G ET E NGAGED ...............................................................................................................65 29. Post Position Descriptions for Seconded Staff.....................................................................65 30. Nominate Two Board Members from Forum..........................................................................65 31. Nominate Members of the Panel of Experts from Forum ......................................................66 32. Name Board Member to Chair Stakeholder Forum ...............................................................66 33. Revise Engagement Between Board and PEFC International Headquarters ......................66 34. Review and Clarify PEFC Complaints and Appeals Procedures..........................................66 35. Reduce Number of Board and General Assembly Meetings ..................................................67 36. Leverage Engagement with FSC..............................................................................................67 37. Give Stakeholder Forum Votes in the General Assembly ......................................................67

PHASE FOUR G ET I NFLUENTIAL ............................................................................................................68 38. Lead Forestry Policy on Carbon .............................................................................................68 39. Update PEFC Brand ................................................................................................................68

APPENDICES ................. ................................ ................................ ................................ ............................ 69 A. I NTERNATIONAL OVERSIGHT PANEL BIOGRAPHIES ...........................................................................70

Jamie Lindsay, Chair..........................................................................................................................70 Bjrn Andrn .......................................................................................................................................70 Jon Dee ................................................................................................................................................ 70 Dr Johannes (Hans) Drielsma ...........................................................................................................72 Dr. Maharaj Muthoo...........................................................................................................................72 Frederick M. ORegan........................................................................................................................73 Dirk Teegelbekkers .............................................................................................................................73

B. I NTERNATIONAL OVERSIGHT PANEL TERMS OF R EFERENCE ............................................................75 C. PEFC G OVERNANCE SURVEY .............................................................................................................77 D. G OVERNANCE R ECOMMENDATIONS BY SUBJECT AREA ....................................................................88 E. PEFC S TAKEHOLDER FORUM .............................................................................................................91 F. PEFC O RGANISATIONAL STRUCTURE ................................................................................................93 G. PEFC A SSESSMENT , E NDORSEMENT AND MUTUAL R ECOGNITION PROCESS ..................................96 H. E VALUATING LEGITIMACY AND QUALITY OF FOREST GOVERNANCE BY TIM CADMAN ..............98


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MANAGEMENT SUMMARY

Introduction

The PEFC Council (Programme for the Endorsement of Forest Certificationschemes) is an independent, non-profit, non-governmental organisation,which promotes sustainably managed forests through independent thirdparty certification. To this end, PEFC provides an assurance mechanism topurchasers of wood and paper products that they are promoting thesustainable management of forests.

PEFC was launched on the 30th June 1999 in Paris by representatives ofeleven officially constituted national PEFC governing bodies with the supportof associations representing some 15 million woodland owners in Europe andof many international forest industry and trade organizations.

Since then, its membership has increased and broadened, becoming thelargest forest certification umbrella organisation covering national schemesfrom all over the world, and delivering hundreds of millions of tonnes ofcertified wood to the processing industry.

This Governance Review was mandated in PEFCs October 2007 StrategicPlan and the Z/Yen Group was contracted to convene an independentGovernance Review Panel to guide and contribute to the process. The

Panels mandate includes: external perceptions of PEFC; PEFC effectiveness; PEFC's rules and standards; implementation and monitoring of governance; "buy-in" from PEFC's existing stakeholders; dialogue with environmental non-government organisations.

Z/Yen reviewed over thirty leading individuals in sustainable forestry,sustainability and environmental protection, international organisations,standards and certification bodies. After careful review, Z/Yen selected aPanel of seven individuals 1 (four independent experts, and three from PEFC),chaired by Lord Jamie Lindsay of UKAS (United Kingdom AccreditationService), and including Bjrn Andrn of Holmen Skog AB, John Dee, founderof Planet Ark, Hans Drielsma of Forestry Tasmania, Dr. Maharaj Muthoo ofthe Hari Environment & Development Society, Frederick O'Regan of theInternational Fund for Animal Welfare, and Dirk Teegelbekkers of PEFCDeutschland e.V.

1 See Appendix A for biographies of the Panel Members


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The Panel established baseline assumptions about the Review and directedZ/Yen to design an online survey 2 about PEFC Governance and to deploy itas widely as possible. Z/Yen also conducted semi-structured interviews withkey stakeholders, opinion formers, and technical leaders in the forestry andenvironmental community in order to enrich the data collection and expandbuy-in to the overall process. The consultation process has been widelypublicised within the relevant communities. 152 people have responded tothe survey, and 26 have been interviewed or have presented contributions tothe Panels review and Z/Yens analysis in this report. The Panel also drewon previous research by Z/Yen on PEFCs Image and Impact, LocationReview, and Governance Desk Study, and incorporated input from PEFCSecretariat staff during a day-long visit, observation, and interviews. In itsfinal meeting, the Panel also heard presentations and had discussions aboutPEFCs governance and environmental issues in sustainable forestmanagement with Tim Cadman in the School of Government of the

University of Tasmania 3, and Saskia Ozinga of FERN.

Drawing on comparative research in the field, the Panel has also incorporateda review of PEFCs Governance against criteria established by the One WorldTrust, a leading institution conducting research on practical ways to makeglobal organisations more responsive to the people they affect. This reportalso includes analysis of PEFC based upon the analytical methodologydeveloped by One World Trust as the basis of its annual review 4 of thegovernance of thirty of the world's most powerful organisations fromintergovernmental, non-governmental, and corporate sectors.

Key issues and challenges identified in the Governance Review fell broadlyinto five main categories: Governance Models, Organisational Structure andManagement, Stakeholder Groups, Standards, and External Perceptions.Specific questions focused on the decision-making relationship between theMembers, the Board, and the Secretariat; responsible means to continue toincrease membership and certified hectarage; where inclusiveness andrepresentation happens within PEFCs bodies and initiatives; and how best todevelop or improve public and peer understanding of PEFCs work.

Once the Panel had identified the main challenges facing the organisation, itreviewed a wide range of options for resolving each issue. In consideringoptions, the Panel gave preference to recommendations that:

directly responded to one or more discrete elements of its mandate; should have broad support among existing and potential stakeholders; sit largely within the purview of PEFC itself (without significant

dependencies upon external actors); leads to enhanced credibility of the PEFC scheme;

2 See Appendix C for the numerical results of the survey3

See Appendix H for a summary of Tims analysis on Evaluating Legitimacy and Quality ofForest Governance4 See the Global Accountability Report 2007 at: http://www.oneworldtrust.org/


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fit logically into an incremental process of improvement; would be financially responsible, reduce costs, or contribute a new

funding stream for the organisation; and contributed to addressing multiple issues at once.

Recommendations

After review of options, the Panel has made the following recommendationsin four general, incremental phases:

collecting the necessary resources to enable PEFC to undertake thisprogramme of governance work - Get Resourced ;

make necessary organisational changes necessary for efficient growthand effective governance - Get Structured ;

implement a variety of outreach initiatives designed to reinforcePEFCs Mission with stakeholders Get Engaged ;

proactively to lead policy on sustainable forest management GetInfluential.

Phase One Get Resourced

Phase One recommendations are immediate-impact options, identified bothfor their relative ease of initiation/implementation and their role as the basisfor subsequent recommendations. Recommendations in this phase alsoinclude the first steps in longer-term, more complex initiatives.

1. Publish Governance Review Transparency has been identified as a priorityfor PEFC, as such, an important first step would be to publish this Reviewprominently on the PEFC web-site, and to publicise it widely.

2. Establish International Headquarters - In line with its expandedresponsibilities and capacity, rename the Secretariat the PEFCInternational Headquarters, and re-title the Secretary-General theDirector-General of the organisation.

3. Review Board By-Laws (Executive Committee) -Review, clarify, and reviseexisting procedures on the Boards Executive Committee for transparency(for example, how the Chair and Vice-Chairs are selected, what decisionsare within their purview, when meetings take place, how minutes aredistributed to the full Board.)

4. Update Staff Position Descriptions - Bring position descriptions of staff inline with responsibilities anticipated in the Geneva office, and developdraft position descriptions for roles likely to be needed in the next twelvemonths.

5. Delegate Operational Authority to Heads of Unit - Give responsibility andauthority to Heads of Unit to oversee relevant recommended changes ineach of their respective areas, overseen by the Director-General.


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6. Quantify PEFC Impact - Begin to identify the impact of PEFCs work interms of environmental, social, economic, or political impact onsustainable forest management and non-commercial interests (forexample, Every hectare of PEFC certified deciduous forest removes Xtonnes of carbon dioxide from the atmosphere every year)

7. Commit to the High Road -Develop an internal policy, with guidance anddraft materials/text for PEFC leadership, staff, and members that sets outan organisation-wide principle of universally constructive response tocriticism; the most strident or vitriolic the attack, the more gracious andengaging the response should be, consistently across the organisation.

8. Apply the Plain-English Principle - Create versions of the most frequentlyaccessed PEFC resources (for example Elements of credible forest

certification schemes) free from expert language for the non-technicalreader, and highlight PEFC efforts in broader communities moreprominently (namely content currently located under Did you know? onthe web-page);

9. Promote a Management-Summary Practice - Ensure that PEFC documents,reports, and technical documents are prefaced by a short, easy-to-understand summary of the key points, and where applicable include arecommendation for decision-making;

10. Update Website for Accessibility -Redesign the PEFC web-site to have fourdistinct, dynamic, and well-supported functions:

First PEFCs customers, partners, licensed users of the logo, andconsumers of PEFC certified products;

Second - general information for the public, media, civil societyorganisations, and environmental movement;

Third - technical information for forestry agencies, certification,accreditation, and standards specialists, as well as the academic/scientific community; and

Fourth - a members-only section with discussion forums, PEFCresources, organisational updates, and opportunities for peer-based networking and information-sharing.

In addition, the web-site needs to improve the Frequently Asked Questions(FAQ) (currently published as Did You Know?) and add a What Do I DoIf section both to cover the most common issues visitors will have, but alsoas a resource for PEFC Members on the organisations position andperspective on a variety of subjects (High Conservation Value forests,contributions of certified forest to carbon mitigation, and so on).


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11. Invest in Marketing Capacity - PEFC has a dynamic and engaging story totell, and needs the capacity to promote the organisation globally to themedia, potential new members, the general public, and stakeholders;

12. Join Stakeholder Initiatives - PEFC should review options to joinstakeholders initiatives (for example, Conservation Internationals Centerfor Environmental Leadership in Business, or the International Union forConservation of Natures Commission on Environmental, Economic andSocial Policy) both to support complimentary efforts in sustainability andpromote a broader understanding of PEFCs work and contributions;

13. PEFC International Conference on Forestry and the Environment - Announce aPEFC-sponsored conference in Geneva (targeted to take place in 2009)with the express purpose of inviting participation and dialogue withEnvironmental NGOs. Form and support a four-person conference

planning committee with two PEFC representatives, and two ENGOrepresentatives (paid as consultants) to develop conference agenda, andnegotiate broad participation.

14. Develop Annual Internal Governance Check-Up - Include an internal reviewof organisational governance as part of the PEFC annual reporting process(in the same way as the financial audit) conducted by a variety of internalstakeholders in a consistent methodology to allow for measurement ofprogress over time. Include a review of Board capacity, procedures andgoals against organisational strategy and changes in the sector.

15. Volunteer for One World Trusts Governance Review - Invite One World Trust,a leading not-for-profit organisation focused on accountability withininternational organisations and corporations, to include PEFC in theirannual review 5 of the governance of international trans-nationalcorporations, international NGOs, and international organisations.

Phase Two Get Structured

Phase Two recommendations are a mix of next-step suggestions for previousinitiatives and organisational changes that will take some internal preparationand development.

16. Strategically Update Board Model - Develop an updated model of a Boardcomprised of a diverse mix of individuals with both relevant skills, andrepresentational constituencies (e.g. forest owners, environmental NGOs,corporate leadership, labour organisations, indigenous organisations.)Also consider the utility and format of Board sub-committees (e.g. finance,fund-raising, environment, marketing, technical/expert), andopportunities for additional sub-committee membership from the

5 See: http://www.oneworldtrust.org/


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Stakeholder Forum 6. As current Board members terms expire, ensure thatreplacement members match strategic goals.

17. Focus Board Role -Draft a new preface to by-laws focusing Board duties onfour primary functions: management and financial oversight, networkingand fundraising, promotion and outreach, and strategic planning.Operational, administrative, and technical issues should be theresponsibility of the PEFC International Headquarters.

18. Recruit Additional Stakeholders into National Governing Bodies - Encourage,facilitate, and assist National Governing Bodies to identify and recruit awide variety of local stakeholders to participate in their activities anddecisions. As members of NGBs, stakeholder representatives should beable to participate substantively in PEFC International.

19. Expand Extraordinary Members into a Forum - PEFC ExtraordinaryMembers should be expanded to include a broader range of stakeholders,be renamed the Stakeholder Forum 7, and be granted specific rights andresponsibilities in the organisations governance process.

20. Add Stakeholder Forum Right of Agenda -The Stakeholder Forum shouldhave the right (as a collective body) to add policy and other issues to theagenda of the PEFC General Assembly in its periodic meetings, and toconvey to the PEFC International Headquarters Requests for Review onspecific issues or questions identified by its members.

21. Expand Secretariat Capacity - The management, administrative, andtechnical capacity of the Secretariat should be expanded to better supportPEFC members, develop an increasingly robust meta-standard 8, andexpand membership and partnerships.

22. Tighten Independent Consultant and Panel of Experts Role - Establish anaugmented set of position descriptions, compressed work-flow/time-table, minimum requirements for professional eligibility, qualification test,formal review mechanism for quality of completed work, terms ofreference that includes a signed Statement of Independence for eachconsultant.

23. Launch Tropical Initiative - PEFC should partner with a complementaryorganisation of excellence (e.g. ITTO, or the Rain Forest Trust), or lead aninitiative in advancing sustainable forest management in tropical forests,

6 See Recommendation 19, and Appendix E The Stakeholder Forum7 See Appendix E PEFC Stakeholder Forum for more information8 A certification scheme applying for PEFC endorsement and mutual recognition needs to

meet PEFC rules for standard setting. This is often referred to as the PEFC meta-standard.See http://www.pefc.org/internet/html/documentation/4_1311_400/4_1208_165/5_1177_288.htm


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utilising the project also to expand membership, create new alliances andpromote the PEFC standards contributions in the developing world.

24. Add Fundraising Capacity - Recruit a dedicated fund-raiser in the PEFCInternational Headquarters to identify and leverage non-membershipbased funds, including company and other foundations, contract andgrant funding in forestry from international development organisationsand donors (e.g. World Bank, DFID, UNDP, EU.)

25. Increase Support to Members - The PEFC International Headquarters shouldsurvey existing members to identify and provide additional support (forexample, collecting and disseminating members-only best practices,building a database of technical experts and key contacts globally, imagelibrary, draft marketing materials, procurement database, conductingtraining, comparative budget templates, support to increase market share,

and other services.)

26. Sponsor Applied Research in Environmental Impact - Invite the StakeholderForum to identify and commission independent research on at least twomajor issues, advancing the field of sustainable forest management.

27. Create Entry-Level Tier of Endorsement - With an aim to expandingmembership globally, PEFC should create an entry-level tier ofendorsement (including separate tools and processes such as the chain-of-custody procedure) based upon timber legality certification to allow

significantly more developing countries to begin participating in the PEFCprocess. This level of certification should be carefully distinct from mutualrecognition, and in no way dilute or weaken the PEFC meta-standard.

28. Provide Capacity-Building Assistance - Develop the Technical Unit of PEFCwith specific staff capacity to provide capacity-building services tomembers and prospective members, and serve as the implementationfunction of the PEFC Secretariat in its partnerships (contractual orotherwise) with international and development organisations. Revenuesfrom technical assistance projects can also provide an important funding-stream for the organisation, and can serve as an additional opportunity forStakeholders to participate in PEFCs broader work of sustainable forestmanagement.

Phase Three Get Engaged

Phase Three recommendations are significant changes, medium-term projects,or major milestones in incremental organisational re-alignments. They willrequire significant preparation, and systematic engagement of internal andexternal stakeholders to ensure sufficient buy-in.

29. Post Position Descriptions for Seconded Staff -Create a mechanism for andencourage PEFC Members to second appropriate staff for specific needs in


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the PEFC International Headquarters (identified in the revisedorganisational chart and position descriptions) for a period of no less thanone year. Secondment (paying the salary of a full-time employee whoworks in the Headquarters) increases opportunities for leading Membersto contribute to the organisation, and reduces operating budget costswhile advancing new capacity and initiatives.

30. Nominate Two Board Members from Forum - The Stakeholder Forum shouldhave the right to nominate two members of the PEFC Board of Directorsthrough the PEFC Nominating Committee.

31. Nominate Members of the Panel of Experts from Forum - The StakeholderForum should have the right to nominate technical/standards advisors tothe PEFC Panel of Experts.

32. Name Board Member to Co-Chair Stakeholder Forum - One of the Boardmembers (not nominated by the Stakeholder Forum) should be named toserve as the Co-Chair of the Stakeholder Forum, working with the internalleadership set up by that body to integrate it dynamically into theorganisation.

33. Revise Engagement Between Board and PEFC Headquarters - Recognising thatthe Board will be taking a higher-level role in the organisations Mission 9 and delegating operational and administrative management to the PEFCInternational Headquarters, the Panel recommends developing a more

consistent and integrated working relationship between the PEFCInternational Headquarters and the Board 10 to ensure necessary supportand oversight.

34. Review and Clarify PEFC Complaints and Appeals Procedures - Reviewexisting decentralised Complaints and Appeals Procedures in eachelement of the certification process and provide a user-friendly interfaceon the PEFC web-site to facilitate understanding of the appropriate levelsand recipients for complaints and appeals. Publish complaints submittedthrough the formal PEFC process and their responses on an appropriatepage of the PEFC web-site.

35. Reduce Number of Board and General Assembly Meetings - Review thefrequency of recurring organisational meetings (recognising that SpecialSessions of the Board and other bodies may sometimes be necessary), andincrementally reduce the number of ordinary meetings as the capacity ofthe International Headquarters increases. Additionally, invest in high-quality virtual meeting technology, as well as dynamic technologies toenable a continuous dialogue among members. Extend the General

9See Recommendation 17 Focus Board Role10 In whatever form the current Executive Committee emerges in the new Board model see

recommendation 16


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Assembly to three full days from one and a half to allow for moresubstantive debate on issues and effective networking and education ofmembers.

36. Leverage Engagement with FSC - PEFC should increasingly engage with FSCin areas and endeavours of mutual benefit or concern (e.g. illegal logging),increasing communication, and where a united front can advance theglobal interests of sustainable forest management (for example, invitingFSC to General Assemblies, exchange of staff at headquarters, jointdevelopment projects, mutual recognition of timber legality certification, joint chain-of-custody certification, and/or collaboration in forestryprojects with international development organisations.)

37. Give Stakeholder Forum Votes in the General Assembly - Give the StakeholderForum votes up to 50% (rounded down) of those of PEFC Council (e.g.

currently there are 35 PEFC Council members who have a total of 61votes 11, the Stakeholder Forum would have 30 votes on that basis.)Members of the Stakeholder Forum will decide internally how those votesare allocated 12.

Phase Four Get Influential

Phase Four recommendations are capstone conclusions to which many otherpreceding initiatives lead. Implementing these recommendations shouldactually begin as early as possible, recognising the long lead times for

collective opinion within and outside the organisation to change sufficientlyto make these issues essentially self-evident by the time all others have beencompleted.

38. Lead Forestry Policy on Carbon - PEFC should engage relevant internationalorganisations (e.g. the United Nations Framework Convention on ClimateChange (UNFCC), or the World Bank Forest Carbon Partnership Facility(FCPF)) to offer the organisations technical assistance in establishing andimplementing the global standard for forestrys contribution as a carbonsink in a post-Kyoto Protocol agreement.

39. Update PEFC Brand - The PEFC brand should be reviewed for accuracy andcomprehensiveness with new organisational alignment and expandedfocus and stakeholder engagement.

The Panels recommendations are incremental, mutually reinforcing andinter-dependent, and envisaged to take place ideally within two years.

11PEFC Member-Schemes may have more than one vote based their certified hectarage, sothat the largest members of PEFC may have up to five votes on issues.

12 See Appendix E PEFC Stakeholder Forum for more information


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Revised PEFC Organisational Bodies

National Governing Bodies (NGBs) As PEFC is a membership organisation,NGBs remain the ultimate source of authority. To accomplish their Mission,though, they have delegated certain authority to the Board of Directors andthe International Headquarters to carry out and represent it internationally.

General Assembly The General Assembly is the decision-making body ofthe organisation, comprised of the PEFC Council and the Stakeholder Forum.Member-Schemes in the PEFC Council have between one and five votes. TheStakeholder Forum collectively will have votes equal to half the number(rounded down) of the total votes in the PEFC Council 13.

PEFC Council Members of the Council represent Schemes in their country inthe General Assembly.

Stakeholder Forum The Stakeholder Forum is made up of internationalorganisations supportive of sustainable forest management, and engaged inimproving and expanding PEFC work 14.

Board of Directors The Board of Directors is drawn from internal andexternal sources as appropriate, and represents a mix of functional capacitiesand representation of key constituencies within PEFC.

Executive Committee The Executive Committee is made up of the Chair andVice-Chairs (2) of the Board, who are chosen from by Board members andwho work closely with the Director-General guiding the organisation.

Sub-Committees The Board of Directors convene and lead standing or adhoc Sub-Committees (e.g. on Finance and Audit, Fundraising, or Social Issues)that support the work of International Headquarters, and serve as venues forin-depth or topical discussion among members of the General Assembly.

International Headquarters Led by the Director-General, the staff of theInternational Headquarters implements the work of the PEFC, and has accessto the specialised knowledge of Sub-Committees in a variety of areas.

Independent Consultants Qualified Independent Consultants 15 areresponsible for reviewing proposed new member schemes for compliancewith the PEFC meta-standard.

Panel of Experts The Panel of Experts is a pool of consultants that reinforcesthe work of the Independent Consultants, and upon request by the Director-

13

See Appendix E The Stakeholder Forum for specifics on voting rights14 See Appendix E The Stakeholder Forum15 See Recommendation 22 -Tighten Independent Consultant and Panel of Experts Role


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General or Board, supports the organisation by providing advice andinterpretation on technical issues to the General Assembly, the InternationalHeadquarters.

Revised PEFC Organisational Structure

Note: For comparative illustrations of the current and revised Organisational Structures, please see Appendix F

ExecutiveCommittee

General Assembly

PEFC Director-General

InternationalHeadquarters

PEFC

IndependentConsultants(Qualified Pool of

Technical S ecialists)

StakeholderForum

(up to 50% of PEFCCouncil Votes)

PEFC Council(One to Four Votes per

Member)

PEFC Panel ofExperts

(Nominated by theCouncil and

Stakeholder Forum)

PEFC Board ofDirectors

(Twelve Members,Two Nominated byStakeholder Forum)

Sub-Committees(Standing or Ad Hoc)

PEFC NationalGoverning

Bodies (NGBs)


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Revised PEFC Assessment, Endorsement and Mutual Recognition Process

Note: For comparative illustrations of the current and revised Assessment Process, please see Appendix G

Prospectivemember/scheme

decides to apply formutual recognition by

PEFC

PEFC InternationalHeadquarters

transmits applicationto external review for

assessment andrecommendation

PEFC Board ofDirectors reviewsscheme, technicalassessment and

decides on status

PEFC GeneralAssembly decides on

endorsement by

Internet ballot

Transmits Approval

(including withconditions)

TransmitsRejection Prospective

member/scheme chooses to amendscheme or appeal to

PEFC Board

Submission Amendment

Appeal

Rejection

Approval

Rejection

Timeline (Illustrative)

1. Prospective member may work withPEFC International Headquarters [Ongoing as necessary until submission]

2. Upon submission, scheme transmittedfor Independent Assessment (Consultant and Panel of Experts) forcomment, review, and recommendation[100 Days]

3. Decision of Independent Assessment transmitted to Members (on approval),back to prospective member (onrejection), or Board of Directors (onappeal of Assessments recommendation)

4. Decision by Board of Directors (inspecial session) upon appeal of rejectionor findings of Assessment (if applicable)[14 Days]

5. General Assembly decides onendorsement by Internet ballot [14 Days]

IndependentConsultant and Panel

of Experts review,comment, and makerecommendation on

ro osed scheme

Independent Assessment

Transmits Appeal of

Independent Assessment

Transmits

Recommended

PEFC InternationalHeadquarters may

work with prospectivemember/ scheme to

improve quality

CapacityBuilding

Proposed Scheme receives mutual

endorsement

Acceptance


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I. INTRODUCTION

PEFC Strategic Plan

The Programme for the Endorsement of Forest Certification Schemes (PEFC)adopted their Strategic Plan 16 in early October, 2007. Setting out goals insustainable forest management, market access, economic benefit, and ruraldevelopment, the Plan also called for a comprehensive review of theorganisations governance:

3.1 PEFC recognises governance, in its broadest sense, as the key strategic determinant inachieving its overall strategic goals.

PEFC will implement a restructuring of its terms of Governance, following thecompletion of a detailed review by external consultants.

The Z/Yen Group 17 was contracted by PEFC to carry out the review in thefirst half of 2008.

Mandate

The PEFC Strategic Plan gave the mandate for the Review:

The objectives of the review and restructuring are to update the PEFC Council, its rulesand standards thus making it more effective by:

Improving external perceptions of PEFCs governance. Making the PEFC organisation more effective. Ensuring that PEFCs rules and standards are simple and easy to understand;

implement and operate. Ensuring that PEFC robustly implements and continuously monitors its own

requirements at all levels. Removing obstacles to dialogue with international ENGOs.

Panel

Z/Yen, in conjunction with the PEFC Board and Secretariat, drew together anInternational Oversight Panel 18 made up of seven international experts 19,three from PEFC, and four independent of the organisation (including theChair.) Its members included:

Lord Jamie Lindsay of UKAS (United Kingdom AccreditationService), Chair

Bjrn Andrn of Holmen Skog AB John Dee, Founder of Planet Ark Hans Drielsma of Forestry Tasmania

16 http://www.pefc.org/internet/html/documentation/4_1311_1392/4_1208_1380/5_1177_1719.htm17

For more information, see: http://www.zyen.com/18 See Appendix B International Oversight Panel Terms of Reference19 See Appendix A International Oversight Panel Biographies


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Dr. Maharaj Muthoo of the Hari Environment & DevelopmentSociety

Frederick O'Regan of the International Fund for Animal Welfare,and

Dirk Teegelbekkers of PEFC Deutschland e.V.

Z/Yen staff provided support and analysis.

Previous Analysis

Z/Yen was familiar with PEFC and its work, having conducted internalresearch for the organisation, including Image and Impact, Location (of itsheadquarters), and a Governance desk study.

These reports contributed to the Panels understanding of PEFC, its work, andpotential.

Findings

This report sets out the findings of the Panel.


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In early April, Z/Yen staff flew to the PEFC Secretariat in Luxembourg andconducted a day-long process of interviews with all PEFC personnel,including its Secretary-General.

Z/Yen identified a number of methodologies for measuring organisationalgovernance, and selected that of the One World Trust (a leading internationalNGO in organisational transparency and accountability) to use as the basis foran organisational review of PEFC. During this process, the Secretary-Generalwas requested by the Panel to complete a self-assessment of the organisationusing One World Trusts key indicators.

In its final meeting, the Panel invited several presentations and discussion byrepresentatives of the environmental movement, including Tim Cadman, aPh.D. candidate at the School of Government in the University of Tasmaniawho is completing his dissertation on the evaluation of global forest

governance systems 22, and Saskia Ozinga, who is the co-founder of the NGOFERN, where she is currently the campaigns coordinator.

Drawing from all these sources, and directed by the Panel, Z/Yen staffdrafted this report of its findings, and submitted it to the PEFC Board ofDirectors in May, 2008.

22 See Appendix H for a summary of Tims analysis on Evaluating Legitimacy and Quality ofForest Governance


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III. ORGANISATIONAL REVIEW

Background

Good governance in organisations has long been a study as well as a practice,and a number of institutions have invested a great deal of effort building amethodology for comparative research and analysis on the issue. One of themost comprehensive and prominent internationally is One World Trust:

The One World Trust works tomake global governance moreaccountable. With its GlobalAccountability Project (GAP) theOne World Trust aims in particularto generate wider commitmentamongst global organisations toestablish and adhere to commonprinciples and values ofaccountability in the relationshipwith the people they affect; and tostrengthen the capacity of civilsociety to engage in global policyand decision making processes. The2007 Global Accountability Report isthe fourth major report published bythe Trust as part of this project.

The Global Accountability Report isan annual assessment of thecapabilities of 30 of the worlds mostpowerful global organisations fromthe intergovernmental, non-governmental, and corporate sectorsto be accountable to civil society, affected communities, and the wider public. The Reportuses the four dimensions of the Global Accountability Framework transparency,participation, evaluation, and complaint and response mechanisms as the basis of theassessment. Over time, the Report will reassess organisations to track changes inaccountability and highlight progress.

One World Trusts methodology draws from a variety of sources in order toscore an organisation: interviews and internal documentation from theorganisation, secondary data on the organisation from other sources, andexpert and stakeholder input. There are numerous international and externalverification loops throughout the process that allow for qualitative input tothe quantitative assessment.

The final result is a maximum score of 100 points, with High Performersdefined as organisations have the most consistently developed

accountability policies and management systems scoring over 50 percent in at

Source: One World Trust Global Accountability Report 2007http://www.oneworldtrust.com/


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least three of the four dimensions. In the 2007 analysis, organisationsreviewed scored as follows:

PEFC Review

While it is impossible to replicate One World Trusts entire processindependently, publicly available materials provide insights into the criteriathey use to assess each of the four categories: transparency, participation,evaluation, and complaint and response. The Panel requested the PEFCSecretariat to complete a narrative self-assessment based upon One WorldTrusts methodology:

Transparency

One World Trusts Global Accountability Indicator List (GAIL) 23 assesseswhether an organisation has a specific disclosure of information policydocument outlining the commitment to respond to all information requestswithin a specified timeframe with the conditions for non disclosure andappeals process for the denial of information. The disclosure policy should beoverseen by a trained board member or senior executive and this policyshould be widely accessible to external stakeholders in several languages.

23 See: http://www.oneworldtrust.org/documents/Indicator_list_-_2008_report_-_final.pdf


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Current PEFC PerformanceDue to limited resources the PEFC Council decided to make all keydocuments, as well as the full results of its PEFCs principal work, on theendorsement of forest certification schemes publicly available on line. Thisincludes the full PEFC requirements, processes, results and decisions onassessments.

Actions to be ConsideredPEFC should consider developing and adopting a disclosure andtransparency document covering the disclosure of information through boththe website as well as direct information requests, including a compliancemonitoring mechanism.

Participation

GAIL assesses the engagement of both internal and external stakeholders inan organisations decision making.

Current PEFC PerformanceExternal stakeholders: Opportunities to participate is defined withinindividual documents covering specific PEFC processes e.g. standards settingand the endorsement process. The documents are publicly available andinvitations to participate in specific consultations are disseminated throughthe website and direct emailing e.g. Scheme assessments, documentationrevision and governance review etc.

Internal stakeholders: The role of members and extraordinary members in thedecision making and control of the organisation is to large extent covered bythe PEFC Council Statutes.

Actions to be ConsideredPEFC should consider developing and adopting a participation policydocument outlining the opportunities for external stakeholders to participatein PEFC processes as well as procedures ensuring meaningful participation

Evaluation

GAIL assesses the processes through which an organisation monitors andreviews its progress against goals and objectives, feeds learning from this intofuture planning, and reports on the results of the process.

Current PEFC PerformancePEFC reviews its progress against goals through actions and documents suchas the periodic reviews of PEFC requirements for certification schemes andGovernance review; strategic and annual operational implementation plans asapproved by the Board; its annual reviews and reports to the GeneralAssembly including financial reports.


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Actions to be ConsideredPEFC should consider developing a documented policy covering themonitoring of PEFCs performance against strategic and annual targets aswell as the monitoring of member performance on a range of requirements.The engagement of external stakeholders in these monitoring processesshould also be considered.

Complaints and Response

GAIL assesses the channels and processes through which both external andinternal stakeholders can file a complaint or an appeal.

Current PEFC PerformanceGAIL requirements are covered in large by PEFCs guideline on complaintsand appeals procedures for external stakeholders.

Actions to be ConsideredPEFC should consider revising its guidelines in the light of indicators in GAILcurrently not addressed. These include amongst others issues of retaliationagainst internal stakeholders (members) and monitoring processes.

Recommendations by Category

The Panel has recommended that PEFC carefully review the specificrequirements for formal participation in a future review by One World

Trust24

. To that end and in the meantime, other specific recommendationswill contribute to addressing gaps in PEFCs Governance when seen throughOne World Trusts analytic methodology.

Transparency

One World Trust defines transparency as an organisations capabilities forfostering openness in their operations, activities, and decision makingprocesses.

Recommendations in this Review that support greater transparency in PEFCinclude:

1. Publish Governance Review3. Review Board By-Laws (Executive Committee)8. Apply the Plain-English Principle10. Update Website for Accessibility14. Develop Annual Internal Governance Check-Up34. Review and Clarify PEFC Complaints and Appeals Procedures

24 See Recommendation 15 Volunteer for One World Trusts Governance Review


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Additional recommendations will improve transparency indirectly (e.g. JoinStakeholder Initiatives), increasing understanding of PEFC and its workthrough collaborative efforts in a variety of complementary initiatives insustainable forest management.

Participation

One World Trust defines participation as fostering equitable member controland the consistent and coherent engagement of external stakeholders indecision making and activities.

Recommendations in this Review that support greater participation in PEFCinclude:

13. PEFC International Conference on Forestry and the Environment16. Strategically Update Board Model18. Recruit Additional Stakeholders into National Governing Bodies19. Expand Extraordinary Members into a Forum20. Add Stakeholder Forum Right of Agenda27. Create Entry-Level Tier of Endorsement30. Nominate Two Board Members from Forum31. Nominate Members of Panel of Experts from Forum36. Leverage Engagement with FSC37. Give Stakeholder Forum Votes in the General Assembly

While PEFC cannot control the breadth and vigour of engagement bypotential stakeholders to its process, recommendations in this Reviewsubstantively create a clear, substantive framework for it to take place.

Evaluation

One World Trust defines evaluation as fostering high quality evaluationsthat generate learning and strengthen accountability.

Recommendations in this Review that support more effective evaluation inPEFC include:

5. Delegate Operational Authority to Heads of Unit6. Quantify PEFC Impact14. Develop Annual Internal Governance Check-Up17. Focus Board Role21. Expand Secretariat Capacity22. Tighten Independent Consultant and Panel of Experts Role26. Sponsor Applied Research in Environmental Impact

PEFC is still a very small organisation compared to other institutionsreviewed by One World Trust (e.g. UNDP or Coca-Cola) and as such, much ofits evaluatory process will be embedded in its staff and bodies (i.e. the Panel


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of Experts or the Board). Still, the One World Trust methodology sets outimportant additional options that the Director-General should consider.

Complaint and Response

One World Trust defines complaint and response as capabilities for handlingcomplaints from staff, partners, affected communities, and the public at largeon issues of non-compliance with organisational policies (e.g. codes of ethics,environmental policies, information disclosure policies, etc.) and providingthem with a response.

Recommendations in this Review that support more efficient complaint andresponse mechanisms in PEFC include:

5. Delegate Operational Authority to Heads of Unit8. Apply the Plain-English Principle10. Update Website for Accessibility20. Add Stakeholder Forum Right of Agenda22. Tighten Independent Consultant and Panel of Experts Role34. Review and Clarify PEFC Complaints and Appeals Procedures

PEFCs process involves a number of independent organisations with theirown internal complaints and appeals procedures. While PEFC has no controlover those discrete elements, it can improve the clarity and accessibility of itsown process and consider options to assist or facilitate enquiries or

complaints to reach resolution through the proper channels as quickly andthoroughly as possible.


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IV. ISSUESASSESSMENT- WHAT COULD BE BETTER?

Any organisation faces challenges maturing at a pace to match its growth, andsystems that were sufficient at its creation and in its early years grow less andless effective as the needs of its members and its market change.

Separate from the practicalities of accomplishing its Mission, everyorganisation must also wrestle with the perceptions of how well it is governed,organised, or carrying out its work. Frustrating as it might be at times,perception is reality and also remains critical to an organisations success.

As mentioned previously, PEFC has been successful at significant growth inboth membership and certified hectarage. Nevertheless, there are specificchallenges that the organisation faces.

Governance Models

Governance can be defined as how an organisation reaches its goals withoutcompromising its values. More specifically, governance is often said to bemade up of three main components or approaches:

Formal Compliance Direct compliance with legislation andrecommended practice, e.g. UN Statement of Good Practice, OECD

Principles of Corporate Governance and, in PEFCs particular case,ASBL law and IAF principles as well.

Constitutional Structure thinking from the perspective of powers,checks and balances, and representation. For an organisation likePEFC, this should mean ensuring that the constitution for PEFCcovers the following aspects of legislative, executive and judicialpowers: stakeholder inclusiveness, separation of powers, decision-making processes, and ethical standards.

Systems Integrity developing, maintaining and enhancingorganisational systems to help reach the organisations goals. For anorganisation like PEFC, this should include: strategic planning, humanresources management (both executive and governing bodies),transparency and disclosure, audit and accountability.

All three aspects of governance are important, and must exist within anorganisation in balance, with their priority shifting more toward one or theother as needs and challenges arise.

In the current review of PEFCs governance, certain constitutional issueswere particularly noteworthy: where decisions get made, how those decisions


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are implemented, who participates in the decision-making, and how clearlythat process is understood inside and outside the organisation.

Balance of Power (Members, Board, Secretariat)

Separation of powers is the issue for strategy and human resources there are not good lines of demarcation between Chairman and Secretary-General, and spillover between the two makes both sub-optimal. Not sure if it is structural or a function of the individuals in those positions. The Board should make policy and the Secretariat

implement the work, prioritised and/or delegating as necessary.

PEFC was created inorder to better support,represent, and promotethe interests of small-forest owners withinthe broader sustainableforest management(SFM) movement. Theinitial structure wasalmost completelyassociation-based, withboth the organisationallegitimacy and theoperational capacityvested in the members

themselves, with littlecentralised capacity.

The Board wasconstituted in a way tobe both broad andflexible, as it would bethe primary Executivebody, dealing with the regular decision-making and policy. The Secretariatwas an administrative body, simply supporting decisions taken by the Board,and organising regular meetings of the members.

Over time, as PEFC grew in membership and certified hectarage, the verydecentralised structure of the organisation has resulted in significant stress onits institutions. PEFC leadership must now consider if and how that balanceof power should shift to include the Secretariat to a greater degree.

Bottom-Up versus Top-Down

PEFC, in contrast to other organisations in the field, is structured in a bottom-up fashion, with the emphasis in its Mission focused on local conditions ineach member state and unique, local solutions as the most effective means ofimplementing its global Mission. An over-arching meta-standard of

Percentage of survey respondents answering Most Preferable (1)and Preferable (2) to the question Rank the four organizationtypes illustrated based upon your opinion of which would bestadvance PEFC's Mission in the future


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minimum common requirements in forest certification, and mutualrecognition of schemes provides a common framework and point of referencefor members.

Advantages to this approach include fostering creative solutions andmaintaining ownership in the overall process and organisation by virtue ofthe subsidiarity principle 25. Challenges include supporting members whoseschemes arent perceived to be as robust as others, or who have limitedinstitutional support, capacity, or budget.

Inclusiveness

The non-participation of Environmental organisations is an issue as it gives thewrong perception, the PEFC has to almost go over the top to prove that it is as good

as other schemes to achieve the same acceptance.

PEFC is strongly dominated by conventional forestry sector, credibility wouldincrease if its governance would incorporate different views and people with different

backgrounds. Low representation of women in the governance is also a shame.

PEFC was originally constituted to better represent the needs andperspectives of small forest owners, primarily in Europe. With the earlysuccess of the organisation, it expanded to include North American members,and most recently, a number of countries in other regions of the world.

While the organisation does now include Extraordinary Membersrepresenting a variety of other institutions and companies, the core leadership

25 Subsidiarity is an organisational and political term meaning that resources should bedevoted to solving problems at the level closest to them.

Percentage of survey respondents to the question Which of the following would better enhancePEFCs reputation?


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and decision-making capacity is still generally held by the originalconstituencies.

With over 200 million hectares of certified forests represented by its membersand standard, PEFCs Mission now has sufficient global weight andfootprint to influence complementary sustainability efforts in otherorganisations (e.g. United Nations Food and Agriculture Programme(UNFAO), the Rainforest Alliance), and in other sectors (e.g. efforts to protectbio-diversity, or combat climate change.)

Those stakeholders, though, arent substantively represented in PEFCgovernance process, preventing PEFC from benefiting from their insights andefforts, increasing chances of misunderstanding among organisationsengaged in reinforcing activities, and robbing them of the impact that PEFCcould have enriching and advancing their Missions as well.

Transparency

PEFCs language and process are completely hard to understand for anyone outsidethe narrow circle of technical experts in forestry

The 2007 governance report was not accessible on the PEFC website. Alsodocuments relevant to governance (e.g. Board meeting outcomes and audits) not

obvious on the website

Technical organisations by their definition are designed to support and

engage a discrete population with a deep understanding of a specific issue,and fluency in a thematic vocabulary. PEFC is no exception.

As the organisation grows to include individuals with a broader range (anddepth) of backgrounds in forestry, however, efforts must be made to ensurethat core documents and other resources, public-information materials,background and reference papers, and day-to-day administrative work ispresented in the clearest, most accessible language possible.

Similarly, over time the organisations internal procedures and decision-making processes will naturally suffer from increasing bureaucratic creep.Assumptions that internal familiarity with how things somehow get doneequate to external clarity in the public, media, or other interested parties oftenresults in charges of deliberate obfuscation.

As a result, PEFC needs to make special effort first to simplify, and then toover-communicate and demonstrate its internal processes publicly andtransparently.


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Organisational Structure and Management

In spite of clear organisational charts, logical flow-charts, and mechanicalmethodologies and processes, organisations are clearly organic beasts. Theygrow in unpredictable directions, rarely respond in entirely predicablefashion to the best of intentions, and frequently fall victim to the path of leastresistance and comfortable habit. That it happens is not a fault; failing torespond to it and evolve however, is.

PEFCs recent Strategic Plan 26 and subsequent Strategy Implementation Plan 27 are important steps in that evolution. However, existing inter-relationshipsand inter-dependencies between the Members, Board, Secretariat, and otherbodies are insufficient or misaligned to accomplish those goals effectively.This Governance Review contributes in practical terms to resolving thosechallenges and focuses on PEFC internal bodies, their capacities andinteraction with each other specifically in light of the expectations thatMembers place upon them.

26 PEFC Paper 4: Adopted at the 11 th General Assembly on 05 October, 2007, Munich,

Germany.27 PEFC Paper 13: Adopted at the Board of Directors Meeting on 01 February, 2008,Luxembourg.

Percentage of survey respondents answering More Of to the question For each of the functionsbelow, please tick whether you would like to see PEFC do more of, the same amount, or less ofeach function (and have the necessary budget to do so)


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Members Expectations versus Organisational Capacity

The problem for PEFC has been the lack of resources and by that limited ability toemploy manpower. Those employed have done a very good job.

The PEFC Strategic Plan sets organisational growth targets for the next tenyears (by 2017) of 45% of industrial roundwood capacity, 60% of totalestimated certifiable area (512 Mha), and 50% of estimated chain-of-custodygrowth (32,000).

Recognising long lead-times necessary for such growth, the five-year Planidentifies objectives in Market Access, Communications, Governance, andOperations necessary to reach the targets. The plan also recognises thatcentralised capacity must increase to implement the Strategy, with reasonableassociated budget.

There remains a gap between current and foreseen capacity in theorganisation, in particular in change-management capacity specifically relatedto implementation of recommendation in this Review, overall staffing levelsnecessary to reach targets set by the Strategic Plan, and clear and reasonablelevels of autonomous authority to implement decisions and act on policy setby the PEFC Board.

Board Workload/Focus

Currently the roles of different actors are unclear for example the board, secretariatand executive committee, making it impossible to have effective checks and balances,

separation of powers and decision making processes.

Because PEFC was created as a decentralised, association-style organisationwith limited capacity in its Secretariat, the Board of Directors has played agreater role in day-to-day management and decision-making, particularly inthe past two years as rapid growth and an increasing understanding ofnecessary changes prompted incremental steps toward new structures andprocedures.

With the increased clarity of the Strategic Plan, and the expectations andresources set for the Secretariat, the Board of Directors is in a position toreduce its technical, operational and administrative responsibilities and focuson a more strategic and long-term role for the organisation.

In order for that evolution to happen, a new model of Board compositionmust be developed, and gradually integrated as operational managementauthority shifts to the Secretariat.


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Technical Resources Insufficient

Working with founding members is difficult, what in the world are we going to dowhen we have to figure out how to include Congo or Indonesia?

Founding members of PEFC were largely homogenous in their backgroundsand the quality of their schemes. The next wave of members were alsolargely robust and mature in their institutions and management, resulting inlittle culture shock as the organisation expanded.

However, in the past two to three years, with the recent addition of Centraland Eastern European members, as well as other countries in Asia, Africa,and Central/South America, existing technical capacity for review andstrengthening of institutions and schemes has become severely strained.

Looking ahead, and guided by the targets set in the PEFC Strategic Plan, it isclear that the technical needs of new members (likely in developing countries)in the next five years will rapidly overwhelm the Secretariat. Corollaryinstitutions (e.g. Independent Consultant reviews, and the Panel of Experts)are likewise insufficient to address the demand.

Complementary Initiatives/Investments

Promotion is very important but must be done with the NGBs. A lack of or weakenforcement is a great danger to the organisation. Policy leadership createslegitimacy within the broader industry. Education should be aimed at large

retail/professional purchasing organisations. Research may be better done bysomeone else, PEFC needs to know it, but not necessarily run it.

With the increasing recognition of the inter-dependence of forestry with awide variety of global companies, institutions, and initiatives, it has becomeclear that accomplishing PEFCs Mission will also depend upon partnershipsand alliances, international policy leadership, public and technical education,enforcement, and research and analysis.

While these complementary efforts should not over-shadow or detract fromPEFCs primary purpose, the capacity to leverage the potential within them isnot fully calculated into the organisations structure and budget.

Stakeholder Groups

How to get the stakeholder groups which do not want to participate due toentrenched attitudes to participate both at PEFC and national level - the real crux of

PEFC moving forward.

I am not sure how to best answer these questions since there must be a limit to howmany groups and interests that should be directly involved with the governance,

management and administration of PEFC. Yes, the organisation should have close

contact and a good an open dialogue with all important stakeholders. But they shouldnot all necessarily be actively involved in governing bodies.


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PEFC clearly has a core group of internal stakeholders, and the organisationexists to meet their needs as well those of the broader movement forsustainable forest management. As PEFC has grown, the organisationsimpact and influence have extended into areas and issues that bring it incontact with a larger number of stakeholders outside its current membership.

Low-Hanging Fruit Has Been Harvested

Lack of functional general standard (compare with FSC Interim) hamper theadoption of PEFC certification in countries with weak forestry organizations.

By 2008, PEFC has already expanded to include members schemes that fiteasily into the over-arching meta-standard. And while at the moment PEFCis the largest forestry certification organisation in the world, there is a

growing recognition that certification has reached a plateau, and the nextlevel of potential will only be reached by dramatic innovation.

PEFC must consider the next generation of prospective members asstakeholders as well, and analyse their needs, capacity, and challenges in thecontext of advancing sustainable forest management in their territories.

Lack of Diverse Stakeholder Representation

PEFC is very inclusive for the stakeholders that want to be included. The difficult part is the relationship with the environmental organisations that do not want to be

included and support PEFC because they prefer a competitive system under their own control. The problem is the power struggle between the PEFC stakeholders and

the environmental organisations.

The second group of stakeholders critical to PEFCs long-term success are notforestry agencies and schemes at all. They are a diverse, heterogenous, non-technical, boisterous, and demanding constellation of environmental not-for-profits (or non-governmental organisations (ENGOs)), worker and tradeassociations, large-scale timber-product retailers, and representations ofconsumers, and indigenous peoples.

There has been significant debate over this broader palette of stakeholdersand their actual importance and practical impact on PEFCs global Mission. Itis clear however that they play two critical roles: first, that they provide globalcredibility, acceptability, and accountability, and second, they have thecapacity and have evidenced the will to frustrate PEFCs work.

PEFC has moved beyond its initial base and made some effort to engage thesestakeholders at the national level by inviting/including them in NationalGoverning Bodies as they review, develop, and implement schemes.Similarly, at the international level, PEFC has a body for ExtraordinaryMembers that includes some representatives of international stakeholders.


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However, in the context of PEFCs strategic objectives and the broadercontributions that PEFC could make internationally, stakeholders must beintegrated more formally into the organisations governance.

Levels of Integration and Influence

Processes are in place to be inclusive with interested parties/stake-holders, but little guidance on how to proactively engage under-represented participation

While both sets of stakeholders potential new members from developingcountries, and a diverse range of organisations invested in PEFCs market

are arguably critical to the organisations success, it must realistically decideon levels of integration and influence.

It is also important to note that collaboration is not a unilateral process stakeholders must also be willing to engage constructively, to listen,understand and appreciate fundamental values and aims of PEFC, and also bewilling to compromise in an effort to reach greater, common goals.

PEFC, however, must create an internal environment that makes substantiveengagement with stakeholders possible, and set an example externally

working directly to support stakeholders complementary interests, and in thebroader international market and community.

Percentage of survey respondents answering Insufficient to the question For the followingstakeholder groups, indicate whether their level of involvement with PEFC at the moment isinsufficient/sufficient/excessive (minimum of 25%)


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Standards

Strength - enables consistency at the broad level and flexibility at the local level.Weakness is that perceptions about the lowest common denominator may tarnish the

meta-standard.

Strength flexibility, a myriad of species, ecosystems, political and economiccultures. Should enable us to spread wide - where a more rigid approach will fail. But

- inconsistencies or perceived inconsistencies - this is a weakness when engaged in political tussle. Not actually weak system, but the credibility is challengeable.

Strength outweighs the weakness.

PEFC is an organisation that endorses forestry schemes, and maintains itsown international meta-standard of sustainable forest management. As such,it must balance its decentralised nature (deriving its legitimacy from itsmembers) with an increasing demand for a more robust, centralised, and

independent organisation and staff capacity. That balance will contribute tothe responsible growth of PEFC and its standards.

Variance in Robustness of PEFC Member Standards

Low minimum standards at the PEFC international level give broad space to movein, but leads to big differences in the quality of national schemes

Over time the real standards agenda should be harmonisation and convergence.Non-aligned bodies (e.g. FSC) will have the opportunity to criticise the 'lowest-

common denominator' approach at the national level

PEFCs greatest strength the commonality of the meta-standard that retainsthe flexibility of local schemes is also arguably its greatest weakness as well.National and international standards are merely empty frameworks, and relyupon a wide variety of other factors to make them live.

National schemes and the institutions that develop and enforce them mustalso have skilled personnel, access to expert consultants, regular educationand training, opportunities for peer review, support of national governments,industry, and the general public, and sufficient budgetary support.

That distinction is both a caution and a mandate for PEFC: the fullorganisation will remain vulnerable to the criticism and obstruction that canbe levelled against the weakest combination of individual national scheme,and the institution responsible for implementing it, irrespective of thestrength of the overall Mission, or other truly robust schemes and institutions.


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Meta-Standard Could Also Be More Robust

Administrative and standards compliance (in view of the scheme endorsement) hasbeen improving during the past year. Still the rules and the decisions are not fully

consistent and fair to all parties. Some rules are applied strictly, whereas some

problem areas are not tackled proactively at all and any performance will go through.Improvements on in this respect have taken place.

Main weakness is no requirement not to convert forests into plantations. Also, nospecific (stringent) requirements for natural forests, which are vital for climate andbiodiversity. Right of indigenous people not protected. Chain of custody not strictenough to eliminate potential illegal wood from countries at risk. Also, field audit

should be compulsory before the certificate is issued.

The PEFC meta-standard represents the minimum standard which allendorsed national schemes must meet within their jurisdiction. Whilemember schemes may not fall below these levels, they are encouraged toint

governance review 2008

Documents