Someshwar Singh on Treebook 2

SUNS, #4393, Friday 12 March 1999

Kind permission for the use of this article was given by the editor of 'south-north development monitor suns', a non-profit, non-commercial daily news letter published from geneva dealing with trade, development and environment issues.

THE DUTCH TEAK CONTROVERSY MAKES ECO-LABELLING SUSPECT

Geneva, Mar 11 (Someshwar Singh) -- Developing countries, which house nearly 80% of the earth's remaining biodiversity, can "welcome investment, especially in the forestry sector, but not at all costs", warns a new book, which exposes an international 'collusion' in the name of green investments.

The just published book is by Paul Romeijn, "Green Gold - On Variations of Truth in Plantation Forestry", by Treemail publishers. Romeijn expanded his initial dissertation thesis into a book -- after a year-long wide-ranging debate and comments from well-known forestry and ecological experts, thanks to the information gateway opened by the internet.

The book has an accompanying CD-Rom disc containing all the resource material and citations used in the book.

Among the first victims of the "international collusion", the book says, were thousands of Dutch investors who thought by investing in "teak dollars" in Costa Rica, they were doing a good deed, and making good money as well. They are not sure any more.

The institutional investors, approached earlier by the promoters with the same "sell", apparently stayed away.

Dutch lawyers are said to be looking whether investors could have their contracts annulled in Dutch courts. [According to a report in the Dutch daily 'de telegraaf', of 2 March and 4 March, six people from two of the dozen-odd tree-plantation schemes operating in The Netherlands, have been arrested, in connection with other forestry investment programs -- for pine and walnut plantations in Portugal and tropical forestry programs in Surinam.]

Romeijn's expose in his book focuses on both the processes and institutions involved in this international collusion on forest investments.

As the world's tropical forests are fast disappearing, the certification of forest management and labelling of forest products have become prominent issues in the field of international forestry.

According to "Green Gold", which has done an in-depth examination of the operation of a timber certification scheme, the process itself has received a severe blow as there are some fundamental questions that remain unanswered regarding its "credibility, accountability and independence."

The case in question involves a company called Flor y Fauna, based in Costa Rica but owned by a Dutch citizen. Established in 1989, this company was in the business of exporting cut flowers. Later, it branched into teak plantations, and attracted thousands of Dutch investors keen on high returns from 'sustainable forestry.'

Millions of Dutch Guilders flowed in. In 1995 alone, reportedly, 500 million Dutch Guilders were invested in teakwood and other Dutch teak investment projects combined.

But the enterprise really succeeded in tapping the investment, only after it managed to get support for the scheme from WWF (World Wide Fund For Nature), an international NGO network priding itself as the 'world's largest and most respected independent conservation organization.'

For its support, says the book, "the minimum revenue for WWF, following Flor y Fauna's projections, is about $27 million, and a maximum of $73 million. WWF reportedly even expects these revenues to exceed $85 million, 'if the project is successful as expected.' Later, WWF supported additional plantation areas ... with proportional expectations for WWF revenues."

Quoting the articles of association of the WWF-Netherlands, the book says "all contractual arrangements of the WWF-Netherlands chapter and its public pronouncements in the Flor y Fauna case were made in representation of the WWF International."

As WWF, through its Netherlands chapter, came on board, Flor y Fauna linked up with OHRA - a Dutch Insurance and Banking company which helped make the teak investments more attractive by linking it with Life Insurance. The WWF and OHRA joined the teakwood scheme in March 1993. To convince people that they were making the right choice, there were two strong elements contained in the publicity package.

According to the 1993 Teakwood brochure, "WWF has ascertained that, in ecological and financial terms, the Flor y Fauna plantations set a worldwide example."

First, the rate of return promised on the teak investments were very good. Secondly, the public was told in the related ad-campaigns, that they could trust the stamp of approval provided by the FSC - Forest Stewardship Council, which is professedly set up to promote sustainable forest management practices.

Founded in Toronto, Canada, in 1993, with support from WWF and other non-governmental organizations, the FSC was established as a legal entity in Mexico only on 25 October, 1995. FSC is supposed to accredit the certifying agencies.

In this capacity, it recognized the New York based Rainforest Alliance for its programme on natural forest management, including its 'complaints procedure' to deal with complaints. The Rainforest Alliance, in turn, certified the Flor y Fauna operations in Costa Rica.

The Romeijn book charges both the FSC and the Rainforest Alliance of collusion in the Flor y Fauna case.

Romeijn gives in his book an account of what he calls a 'fictitious' complaint handled by the Rainforest Alliance -- involving the Rainforest Alliance responding to a complaint in which the author was made a "plaintiff", though he had filed no complaint with the Alliance, and a ruling was made on this "complaint."

While the documents relating to that ruling are apparently still held as classified, the conclusion was reported in these terms: "Rainforest Alliance has concluded that Flor y Fauna continues to merit certification by Smart Wood Program as 'well-managed plantation, despite the current controversy."

The FSC endorsed the account given by Rainforest Alliance (of its complaint procedure and handling) as "acceptable." But while going through the court proceedings (in Netherlands), the author found an FSC document of January 1996, a letter from the FSC Director to senior officers of WWF Netherlands that the "statements .... designed for your support and use."

The FSC accredited the Smart Wood certification programme (through which Flor y Fauna was certified) of the Rainforest Alliance for natural forest management on in February of 1996. And, by January 1998 (following a year of silence about the scheme), the FSC expanded its accreditation of the Rainforest Alliance to include plantation forestry.

The WWF had helped to establish the FSC. According to a WWF publication (WWF changing world - 35 years of conservation achievement) "the FSC has been set up to provide consumers with reliable information about forest products of all kinds,.... It does not certify forests, timber, or wood products - rather the FSC evaluates, accredits, and monitors other certification organizations which, in turn, inspect forest operations and grant labels certifying that their timber has been produced sustainably."

The article also gives a justification of why there should be market-led consumer discrimination in favour of FSC-approved timber.

"And as the World Trade Organization, which exists to promote and monitor free trade, does not allow importing countries to discriminate against goods on environmental grounds, there is little incentive to improve environmental performance in either production systems or import controls," the article said.

The WWF article was co-signed by Francis Sullivan, Leader of WWF International's Global Forests Campaign. Sullivan also held the position of the Treasurer of the FSC Board, Green Gold notes.

Another publication, "WWF's Global Conservation Progamme-1998/1999," notes under the heading of Forest Certification, "Timber certification is increasingly recognised as an effective market mechanism for management. Working with the Forest Stewardship Council, in 1996 WWF established a global target - to have at least 10 million hectares of sustainably managed forests secured by the end of 1998. This was achieved six months ahead of schedule in June 1998."

Problems arose for the Flor y Fauna on two counts - 'exaggerated' rates of return promised on investments and the manner in which approvals and clearances were issued and exchanged by and between FSC and the Rainforest Alliance.

The rates of return, when challenged in Dutch media, were initially defended by Flor y Fauna/ OHRA/WWF. But eventually a Dutch Advertising Standards Committee ruled that the advertisements 'paint too rosy a picture' and 'to be misleading'. The returns were then scaled down.

The pressure exerted by the Dutch media - particularly the NOVA TV broadcasts - led to the closure of the teakwood investment scheme in the fall of 1996.

Among those who challenged the high rates of return on the teak investments were the author Paul Romeijn and Professor Julio Centeno (whose contributions are included in the new book). Both are well known tropical forestry experts.

Dr. Romeijn has advised the Netherlands Remote sensing Board on the coordination and execution of remote sensing research of tropical forests on numerous occasions. He also represented the Netherlands in the working group that drafted the European Space Agency's policy and the Ministerial resolution on developing countries' needs in telecommunications, earth observation and space research.

Julio Cesar Centeno is a forestry specialist from Venezuela who was commissioned by the WWF to provide an economic analysis of Flor y Fauna's teak plantations in 1993. Centeno was one of the key negotiators of the International Tropical Timber Agreement, negotiated under UNCTAD auspices, and served as a spokesman for tropical countries.

The fact that Centeno was critical about the way the whole Flor y Fauna case was steam-rolled in the Netherlands should have rung alarm bells in many quarters much earlier, says Romeijn.

For, Centeno is a founder member of the Board of Directors of the FSC as well as a former member of the Board of Advisors of the Rainforest Alliance Smartwood Program.

He had also served as forestry advisor to the Secretariat of the UN Conference for Environment and Development (UNCED) in 1992, and as Director of the Latin American Forestry Institute between 1980 and 1990. And for his work in the forestry sector, Centeno was invested by Prince Bernhard of The Netherlands with the Golden Ark Award -- a WWF award that recognizes excellence in conservation.

The most damaging account of the teakwood forest scheme in Costa Rica has come from Julio Centeno. Though WWF commissioned him to assess the scheme, the Romeijn book says WWF went ahead with the scheme ignoring Centeno's recommendations.

The full Centeno report, according to the book, has still not been divulged by WWF. But journalists in the Netherlands published parts of it and the report can now be found in the web pages at the address: http://forests.lic.wisc.edu/gopher/centamer/crteakpl.txt.

"WWF's integrity and prestige would be affected if it does not warn those most likely to lose if such projections are in fact exaggerated," Centeno is reported to have said in his report.

On other occasions, Dr. Centeno has noted "I have nothing to gain in this debate, but to let those people know, and so many others who have invested in similar ventures, that someone is willing to defend the technical and ethical dimensions of a forestry project in the tropics."

"To allow these irregularities to continue, without raising a responsible warning to all parties involved, is to endorse what I consider to be a seriously flawed operation, bordering on fraud."

Dr. Centeno acknowledges that tree plantations may create jobs, wealth, and foreign exchange in countries under severe economic and social limitations. They may contribute to the alleviation of poverty, and of the related pressure on tropical forests.

Nevertheless, he contends "we must make sure that such initiatives fall within acceptable technical and ethical limits, to ensure their success and multiplication in the future."

"Projects such as Flor y Fauna's may discourage further private investments in plantations in tropical countries, thereby preventing the alleviation of the unsustainable pressure on their natural forests, and on their unique biological, ecological and strategic value," Dr. Centeno said.

But Romeijn considers the results of this study as 'highly disturbing for the credibility of forest certification' schemes.

In a memorandum to European Parliamentarians, Romeijin has said "the EU should play the role of a watchdog, to include other Governmental Agencies, that should become more than mere sponsors of forest certification endeavours."

Also worrying, he says, is the WWF-World Bank partnership for forest conservation and sustainable use. The global alliance includes amongst its objectives to "bring an additional 200 million hectares of the world's forests under independent certification by the year 2005."

According to an article in the Economist (22 August,1998, page 64) "this precisely is FSC's aim too."

Other charges included in the book are use of banned pesticides in the Costa Rica teak plantations; non-compliance with Dutch regulations; and lack of a management plan and area - both considered essential in a certification process.

The book brings out that Flor y Fauna, and its partners had plans to expand their forestry investment business into other developing countries, and for launch of investment funds in new plantations in Brazil, as well as Colombia, Ecuador and Africa later. The closure of the Flor y Fauna Costa Rica scheme appears to have put an end to these expansion plans.

Says Romeijn, "in view of the established readiness to lie to government officials, including Ministers, and judges, on the part of key individuals to the promotion of the FSC accreditation and certification scheme, it seems justified to signal a word of caution to donor institutions."

FSC depends on donor support for 90% of its income. That includes significant contributions from Government donors, including The Netherlands.

"More than anything else, the High-level symposia on Trade and Environment and Trade and Development at the WTO (15-18 March) should question the trust that civil society places in eco-labelling. There is more than lip-service to be paid for sustainable development," Dr.Romeijn said in a telephone interview.

"Sooner or later, the WTO will have to look into these kinds of cases - whether from the point of view of Trade and Environment (in terms of the veracity of eco-labelling claims) or from the perspective of sustainable development (as Development is being projected as of the most crucial concern in the forthcoming new Round of multilateral negotiations)."

The WTO will have to question, at some stage, whether the trust it places on certain NGO bodies as pillars of the so-called 'civil society' it is really keen to open up to, is worth the investment þ particularly if they choose to remain silent against charges of 'green-wash' levelled by eminent experts who the NGO bodies themselves have recognized with their highest honours.

In the final analysis, the affected parties are not just thousands of Dutch investors (and apparently some German nationals too) who invested in the plantations but millions others across the world who have placed their trust, confidence and money in these international organizations that champion the cause of sustainable development.

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