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RAFT Story of Change: On the Trail of Responsible Timber ow can you know if your dining room table is legal and truly ‘green’? One major furniture retailer found the answer by going to China to meet its suppliers and tracing the factories’ timber supplies all the way back to the forest.This is one example emerging from the era of responsibility in forestry and timber trade. For years, the global timber supply chain has too often been a liability for forests, making it easy for importers and manufacturers to overlook their enormous and often very destructive footprint in faraway tropical forests. Focused on short-term profits, companies lacked motivation to ask hard questions about the source of wood used in furniture and flooring, and the links in the chain along which their products traveled.Today it is different. Consumer demand for socially and ecologically responsible timber products and policies in Washington and Brussels are creating changes in forests from West Kalimantan to Luang Prabang. An international supply chain requires an equally transnational response from conservationists, and the Responsible Asia Forestry and Trade (RAFT) program offers such a response. Active across eight countries in the region – from communities in Lao PDR to factories in China – RAFT has worked to bring transparency to the global timber supply chain, along with legal and sustainable management to the forests of Asia and the Pacific. This includes: strengthening laws to prohibit imports of illegal timber; helping companies and governments to design and use chain of custody systems to track forest-product exports all the way back to the forest; and fostering business-to-business learning about why it is important to clean up a timber supply chain and how to actually do it. H Sawn wood labeled to be tracked and verified as legal at CV. Citra Jepara factory, Central Java, Indonesia. © Aji Wihardandi/TNC.

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Page 1: RAFT Story of Change - Responsible Asia Forestry & Trade ......RAFT Story of Change Responsible Asia Forestry and Trade Before you can sleep soundly in a legally and sustainably produced

RAFT Story of Change: On the Trail of Responsible Timber

owcanyouknowifyourdiningroomtableis legalandtruly‘green’?Onemajorfurniture retailerfoundtheanswerbygoingtoChinatomeetitssuppliersandtracingthefactories’timbersuppliesallthewaybacktotheforest.Thisisoneexampleemergingfromtheeraofresponsibilityinforestryandtimbertrade.

Foryears,theglobaltimbersupplychainhastoooftenbeenaliabilityforforests,makingiteasyforimportersandmanufacturerstooverlooktheirenormousandoftenverydestructivefootprintinfarawaytropicalforests. Focused on short-term profits, companies lacked motivationtoaskhardquestionsaboutthesourceofwood used in furniture and flooring, and the links in the chainalongwhichtheirproductstraveled.Todayitisdifferent.ConsumerdemandforsociallyandecologicallyresponsibletimberproductsandpoliciesinWashingtonandBrusselsarecreatingchangesinforestsfromWestKalimantantoLuangPrabang.

Aninternationalsupplychainrequiresanequallytransnationalresponsefromconservationists,andtheResponsibleAsiaForestryandTrade(RAFT)programofferssucharesponse.Activeacrosseightcountriesintheregion–fromcommunitiesinLaoPDRtofactoriesinChina–RAFThasworkedtobringtransparencytotheglobaltimbersupplychain,alongwithlegalandsustainablemanagementtotheforestsofAsiaandthePacific. This includes: strengthening lawstoprohibitimportsofillegaltimber;helpingcompaniesandgovernmentstodesignandusechain of custodysystemstotrackforest-productexportsallthewaybacktotheforest;andfosteringbusiness-to-businesslearningaboutwhyitisimportanttocleanupatimbersupplychainandhowtoactuallydoit.

H

Sawn wood labeled to be tracked and verified as legal at CV. Citra Jepara factory, Central Java, Indonesia. © Aji Wihardandi/TNC.

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� RAFT Story of Change

Responsible AsiaForestry and Trade

Before you can sleep soundly in a legally and sustainably produced bed, you have to ask a lot of questions; from the forest, to a port piled high with timber, to an overseas factory, and so on, until a showroom or retailer on the other side of the world. There are many places along the timber supply chain where things can go wrong. Or, where they can go decidedly right.

Today,notaskingthosequestionscangetacompanyintoalotoftrouble.Furnitureandflooring retailers face new incentives to both cleanand‘green’theirtimbersupplychains.Newlawsinconsumermarkets,suchasthe2008AmendmentstotheLaceyActintheUnitedStates(US)andtheEuropeanUnion’s(EU)TimberRegulation,holdimportersaccountableforthepedigreeoftherawmaterialsthatgointotheproductstheysell.IntheUS,companiesthatcannotdemonstratethesourceandthelegalityof the wood they import can be fined US $500,000, face jail time of up to five years and havetheirshipmentseized.Atthesametime,asglobalattentionturnstotheroleofforestsincombatingclimatechange,majorinstitutionslike

theWorldBankareincreasinglylookingtocommodity supply chains as a way to influence reductionsofcarbondioxideemissionsfromagricultureandforestrypractices.

RAFTtargetsthemostcriticallinksalongthetimbersupplychaintofurtherimprovedforestmanagementonthegroundandtheaccompanyingreductionsincarbonemissions.Itdoes this using a three-pronged approach:

First,partnerships.Itisimportanttoavoid‘reinventingthewheel’.RAFTbringstogethersomeoftheleadingorganizationsonsupplychainmanagementtobuildonexistingrelationshipsandworkportfolios.

Second,supply chains.RAFTrecognizestheneedtoworkwithregulators,retailbuyers,manufacturersandforestmanagerstochangebehaviorupanddownthetimberproductssupplychain.

Andthird,RAFTconnectspolicy and practice.RAFThelpsgroundpolicyinpracticalrealities,whileworkingwithfactoryandforestmanagerstotranslategoodpolicyintogoodpractice.

Logs labeled with yellow to show that they meet the responsible sourcing criteria of RAFT-partner The Forest Trust (TFT) at CV. Citra Jepara factory, Central Java, Indonesia. © Aji Wihardandi/TNC.

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�On the Trail of Responsible Timber

BeyondinformationaboutnewlegislationinconsumermarketstheguideincludesallrelevantlawsinproducerandprocessorcountriesthatsuppliersmustdemonstratetheircompliancewithinordertokeepsellingtheirproductstotheUSandtheEU.“Laceysaysyoucan’tviolatelawsinproducingandprocessingcountries,butitdoesn’tsaywhatthoselawsare,”explainsTRAFFIC’s Chen Hin Keong. “For the first time, theguideexplainstomajorproducingandprocessingcountrieswhatinouropinionLaceyshouldmeanforthem.”

IncreasedawarenessamongChinesecompaniesofwhatexportmarketsrequireisalsobeingfeltinChina’sfast-growingdomesticmarketforwoodproducts.Forexample,B&QChina–partofKingfisher Group, the world’s third largest home improvementretailer–attendedoneofRAFT’slegality trainings in Shanghai. Kingfisher has since strengthenedtheimplementationofitsresponsibletimberpolicyinChinabyannouncingitsparticipation in GFTN-China’s program to work towardstheultimategoalofsourcing100%ForestStewardship Council (FSC) certified timber. With hundredsofbuyersabroadandathome,B&QChinaisoneexampleofhowRAFT’seffortsarehavinganimpactbeyondcompaniessendingtheirproductsoverseas,andreachingoneofthefastestgrowingconsumermarketsintheworld.

AnotherexampleofhowthetrainingsaresendingripplesthroughouttheindustryarewoodproductcompaniesEastWinandSusfor-OasisWood.RAFT’slegalitytraininginShenzhenintroducedmanagementtothenewrequirementsofinternationalmarkets,ultimatelyleadingbothcompanies to participate in GFTN-China and adopt FSC certification as company policy – both fortheforeststheysourcefromasfarawayasBrazilandBolivia,totheirsawmillsandfactoriesinChina.In2011,Susfor-OasisWoodhelditsowneventforbuyersandotherpartnersinChinatoraise awareness of FSC certification and the work theyaredoingtosourceresponsibly.

In2011,legalitytrainingswereheldinThailand,LaoPDRandagaininChina,wherethedemandishigh.Togethertheeventsattractednearly1000industryrepresentatives.“ThelargenumberofpeoplewewereabletotrainandinformabouttheLaceyActandtheresourceswewereabletoproducehaveleftalegacyofinformationwheretherewasoncea vacuum,” says GFTN Head George White. “Now weseecompaniestakingthatinformationandmakingdecisionsthatareleadingthemdownthepathtoresponsibletrade.”

Before the training in Shenzhen, we didn’t know anything about GFTN-China or FSC certification. Now, we are open to working with NGOs, and see FSC as an important tool to promote sustainable forest management in all of our operations.

Terry Tang, Eastwin and Susfor-Oasis Wood.

A lot has changed since 2001, when governments from major wood producing and consuming countries recognized a shared responsibility to deal with the problem of illegal logging in the forests of Southeast Asia. One important change was the 2008 Amendments to the US Lacey Act, the country’s oldest wildlife protection law, to include plant products such as wood, and anything made from it. This was the first law of its kind, designed to support trading partners in their efforts to combat illegal logging. Since then the EU, Switzerland, and more recently Australia, have also taken big legislative steps to ensure that consumer markets are not creating demand for illegal wood. With these new laws, suppliers that are unable to demonstrate the legality of the products they export will find it much harder to stay in business.

TheintroductionoftheselawsinconsumermarketscreatedanopportunityforRAFTpartnerstohelptranslatelegislationinbuyermarketsintomuchneededactioninAsia’sflooring and furniture factories and, ultimately, in forests. In 2010, RAFT Partners WWF’s Global Forest & Trade Network (GFTN) and TRAFFIC developed“ExportinginaShiftingLegalLandscape”,aguidetohelpcompaniesassesstheirownperformanceinmeetingtheneedsoftheirUSandEUbuyers.Theguidewasusedinaseriesoflegalitytrainingsheldinfourcountries–China,Indonesia,MalaysiaandVietnam.ThetrainingcombinedTRAFFIC’sresearchandtraining abilities and GFTN’s extensive industry networks. Experts from the US Government and the European Forest Institute’s EU FLEGT Asia Programmeintroducedmorethan950woodmanufacturerstotherequirementsofthenewlegislationinbothmarkets.

Navigating a Shifting Legal Landscape

Terry Tang of Eastwin and Susfor-Oasis Wood and George Zhao of B&Q China announce their participation in GFTN-China together with GFTN-China Head Jin Zhonghao, Shanghai, China. © IWCS.

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� RAFT Story of Change

Checking the Boxes of Responsible Sourcing

Timber Traceability Checklist

Onceacompanyhasdevelopedaresponsiblesourcingpolicyandtrainedtheirstafftocarryitforward,traceabilitymustbeestablishedby placing sources in one of the following six ‘environmental status’ categories: recycled; known source; known licensed source; progressing to certification source; or, credibly certified source. Establishing a CoC system that traces and tracks sources flowing into a company’s supplychainisanimportantstepinacompany’sjourneytoresponsiblesourcing.RAFTpartnersworkwithwoodmanufacturerstoeliminate ‘unwanted’ sources and increase the quantity of known licensed, and ultimately credibly certified, sources in their supply chains.

The term ‘supply chain’ signifies how raw materialsandproductsmaketheirwaythroughanumberofcountriesandstagesintheproductionprocess,ultimatelyendingupaseverydayitemsinoffices and homes all over the world. For most productshowever,thejourneyfromforesttofinal destination is more a game of ‘connect the dots’thana‘chain’.Piecesandpartsmoveinmultipledirections,fromonecountrytoanotherandbackagain,drivenbythehardeconomicsofsupplyanddemand.

Forthefirsttimeinhistor y,connectingthosedotscannowdeterminewhether

companiesstayinbusiness.Thisconnectingprocessiscalledchainofcustody(CoC),apapertrailthatfollowsaproductfromtheforest,throughtranspor tationandprocessing,tofinalmarket.CoCcer tification,likethatofferedbytheForestStewardshipCouncil(FSC),isincreasinglycriticalbecausewoodthatbeginsitsjourneyfromanFSC-cer tifiedforestcannotmaintainthatstatusasitmovesthroughtheproductionprocesswithoutCoCcer tification.RAFThashelped20factoriesachieveFSCCoCcer tification,includingthefirsttwocer tificatesinLaoPDR.

RECYCLED

KNOW SOURCE andUNWANTEDSOURCE

KNOW LICENSEDSOURCE

PROGRESSING TOCERTIFICATION SOURCE

CREDIBLY CERTIFIED SOURCE

START

Recycled?

Full traceabillity?

Complies with policy?

Know

Licensed source?

Licensed

Complies with policy?

Progressing toCertification?

Progressing

Continued Progressing?

Credibly Certified

FINISH

Unknow orUnwanted

No

No

No

YesRecycled

High Risk?

Verified legal timber

This diagram is provided by GFTN’s online Guide to Legal and Responsible Sourcing. For more information: www.gftn.panda.org.

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�On the Trail of Responsible Timber

Inmanycountries,outdatedandsometimesconflicting policies combined with multiple and overlapping levels of authority, make it very difficult foreventhemostdeterminedbusinessestobesureofalloftherulestheymustfollowinordertobelegal.RAFThashelpedaddressthisproblembyworkingwiththeAssociationofSoutheastAsianNations(ASEAN)todevelopregionalCoCguidelinesforlegalandsustainabletimber.Atthenationallevel,theDepartmentofForestInspection(DOFI)inLaoPDRhasusedtheseregionalguidelines to develop the country’s first national CoCsystemthattrackstimberfromtheforesttothepointofexport.By2015,allASEANMemberStateswillberequiredtodothesame.

AgoodnationalCoCsystemlaysaclearpathtolegalityforallcompaniestofollowandhelpslevelthe playing field for responsible businesses by settingthebaseline.AclearnationalCoCsystemendorsedbyseniordecisionmakerscanalsohelpenforcement and customs officials to do their jobs.

Foranygloballytradedcommoditytherearemanylinksalongthesupplychain,eachcarryingtheriskof‘tainting’theentirechainwithillegalactivity.

Thereisonethingthatalllegallytradedproductshaveincommon–customs.“Customsistheonlyagencythatmonitorsallproductsthatleaveandenterthecountry,”saysTRAFFIC’sChenHinKeong.However,customsagentsneedsupportfromexpertsinthedifferentproductcategoriestounderstandaproductandhowitistraded,tohelpthemcontrolitstrade.

RAFT’sworktostrengthencollaborationbetweenChinaandIndonesiaonpromotingresponsibleforestryandtradeoffersoneexampleofhowsuchsupportcouldplayoutatabilaterallevel.ThroughexchangeswithIndonesia,Chineseforestry, customs and trade officials have learned abouttherequirementsforlegaltimberexportonIndonesia’sside.ThisknowledgeenablesChina,asanimporter,tosupportIndonesia’seffortstocombatillegalloggingandtradeathome.

TheEuropeanUnion’sVoluntaryPartnershipAgreements(VPAs),liketheonesignedwithIndonesiainMay2011,offerasimilarapproachwherebyalicensingsystemisagreeduponbetweentheEUandtheexportingcountry.ThelicensethenbecomesoneofthedocumentsrequiredbycustomsforashipmenttoentertheEU.

Paper ‘chain of custody’ system for tracking timber sources at CV. Citra Jepara factory, Central Java, Indonesia. © Aji Wihardandi/TNC.

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� RAFT Story of Change

Demonstrating due care and due diligence is easy if you are sourcing legal wood.

Nguyen Thanh Binh, Nguyen Thanh Furniture Company (NTC).

In 2010, Vietnam sent more than US $3.4 billion in wood products to 120 countries, making it Southeast Asia’s largest wood products exporter. The US and the EU are the dominant markets, representing 45 and 30 percent of the total exports respectively. In 2010, RAFT’s regional timber legality training series came to Vietnam. After learning the basics of the amended US Lacey Act and the EU Timber Regulation, factory operators in Vietnam wanted to know more about what legality requirements in their main markets mean for their day-to-day operations.

TwofurniturefactoriesinHoChiMinhCityare answering this question, for the benefit of their businesses, and for the benefit of Vietnam’s forestproductssectoratlarge.WiththehelpofRAFTpartnerTheForestTrust(TFT),thetwofactories–HiepLongandNguyenThanhFurnitureCompany(NTC)–havetakentheleapfromtheorytopracticebyputtinginplacearesponsiblesourcingsystemthatallowsthemtodemonstratethelegalityofthewoodtheyusebacktotheforestitcamefrom.

“I’vebeentomanyworkshopsandconferences,andreadalotofvariousinformationonLaceyandEU,”saysNguyenThanhBinhofNTC,“butwedidn’tunderstandwhatitmeanspracticallyforourbusiness.Wenowunderstandthemainriskisnotnecessarilylitigationbutthelossof

From Competitor to Colleague

marketsifwecan’tdemonstratethatweconformwithrequirements.”

InJune2011,HiepLongandNTCmetwith20colleagues–andcompetitors–todiscusswhattheyhavedoneintheirfactories,thestepsinvolvedinbuildingatransparenttimbersupplychainandwhattheyhavelearned.Thisuniquebusiness-to-businessapproachhasbroughtacredibilitytoRAFT’ssupplychainsupportworkthatonlyfellowfactoriescanprovide,andoffersamuchmorepracticalcaseforchangethanthesameinformationcomingfromgovernmentsorNGOs. However, the line between cooperation and competition is a fine one, and TFT has struck therightbalance.“Businesseslearnbestfromotherbusinesses,”saysTFT’sHoVanCu.“Thechallengeistocaptureandsharetheknowledgewithoutcompromisingbusinesses’competitiveadvantage.”

TFThasusedthishands-onlearningtodevelopa ‘practical steps’ manual to share the benefit ofHiepLongandNTC’sexperience,walkingfactoriesthroughtheprocessofcleaningand‘greening’theirsupplychainsinordertoprotecttheiraccesstomajormarkets.ThisworkispartofanagreementsignedbetweenTFTandtheHandicraftandWoodIndustryAssociationofHo Chi Minh City (HAWA). With its high profile andrespectedstatus,HAWAhasprovidedtheperfectplatformforsharingthispracticalguidancewithits350members.

“Wedon’texpectthebusinessestoopentheirdoorstocompetitors,”Hoadds,“butallfactorieshaveacommoninterestinbuildingastrongermorerespectedVietnamesewood-productexportindustry.”

Above and below:People working at a furniture factory, Ho Chi Minh City, Vietnam. © TFT.

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�On the Trail of Responsible Timber

Moving Forward

FSC certified timber ready for export at Malaysia Timber Industry Board (MTIB) warehouse, Peninsular Malaysia. © Allison Bleaney/RAFT.

Taking Timber Legality Deeper.

Lesson: TheLaceyActandtheEUTimberRegulationarechangingthetimbertrade.Companiesarepayingattentiontolegalityandaregenuinelyconcernedaboutwhattheymustdotostaycompetitive.Awarenessofthelawsandrequirementsisspreadingrapidly.Whatisneeded,bysmallandmedium-sizedcompanies in particular, is a better understanding of the specific steps they must take in order to comply.

Action: More sector- and product-specific training in responsible sourcing is needed, including hands-on support to develop legality verification systems as case studies and demonstrations to guide other companiesdownthesamepath.Thisworkshouldbeorganizedincollaborationwithindustryassociationsinbothconsumerandsuppliercountrieswithsupportingmaterialsinnationallanguages.

Connecting with Customs.

Lesson: UndercurrentimplementationoftheUSLaceyActandplannedimplementationoftheEUTimberRegulation,customsagenciesarenotbeingusedtothefullpotentialoftheirauthorityandability,creatingunnecessaryloopholesthatallowforillegaltrade.UndertheEUTimberRegulationforexample,monitoringbodiesthatwillverifythelegalityoftimberproductsimportswilloperateindependentlyofcustomsauthorities.Theabilityofcustomsauthoritiestoplaytheirpartisalsoseriouslylimitedbytheabsenceofanymechanismforregularcommunicationwithcounterpartsintradingpartnercountries.

Action: Conduct consultations and a gap analysis to determine specific loopholes and the appropriate stepstoreinforcecustomsagencies’authorityandcapacitytostrengthenenforcementoftheUSLaceyActandEUTimberRegulation.Thiscouldbedoneaspartofaregularseriesofdialoguesinvolvingforestryandcustoms officials and other relevant regional and international bodies.

Growing Markets for Certified Wood.

Lesson: While the number of FSC CoC certificates in Asia has risen steadily over the last five years, there remain many FSC CoC certified factories that continue to source uncertified wood alongside their FSC orders, due to insufficient demand for FSC certified products. Within the industry, there are also concerns that illegal sources continue to be mixed with wood used by competitors in products labeled as FSC certified.

Action: Strengthenmonitoringandmarketingofresponsiblewoodproductstosupportstrongenvironmentally and socially responsible purchasing policies and increase demand for FSC certified products. Toughermonitoringwillensurethatthewoodusedisinfactcomingfromawell-managedforest.Thisintelligence can provide the basis for a stronger effort to educate consumers about the benefits of buying responsible products. There are many examples of how NGOs and companies are already working together todothis.Theseshouldbeexpanded.

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� RAFT Story of Change

The Responsible Asia Forestry and Trade (RAFT) Program, funded by USAID’s Regional Development Mission for Asia, influences the development and implementation of the public policies and corporate practices needed to improve forest management and bring transparency to the timber trade in Asia, thereby reducing carbon emissions from deforestation and forest degradation.

Contact:Jack Hurd, Asia Pacific Forest Program [email protected]

www.responsibleasia.org

ThispublicationismadepossiblebythegeneroussupportoftheAmericanpeoplethroughUSAID.Thecontentsarethe responsibility of the ResponsibleAsia Forestry andTrade program and do not necessarily reflect the views of USAID or the United States Government.

RAFT is managed by The Nature Conservancy and implemented in partnership with IUCN, RECOFTC – The Center for People and Forests, The Forest Trust, the Tropical Forest Foundation, TRAFFIC – the Wildlife Trade Monitoring Network and WWF’s Global Forest & Trade Network. In addition to these core implementing partners, RAFT works with government, industry, inter-governmental organizations and academic institutions from across the globe.

RAFT works in eight countries in Asia and the Pacific: Cambodia, China, Lao PDR, Indonesia, Malaysia, Papua New Guinea, Thailand and Vietnam.