The elusive credibility of forest management certification claims

JULIO CESAR CENTENO

JUNE 20, 1996

Introduction
Background
Issues under consideration
Yield projections
Certification assessement
FSC acreditation
Premature endorsement and loss of impartiality
The claim to an FSC certificate
The reclame code commissie
Depth of the economic analysis as part of a certification process
Conclusions
References

topINTRODUCTION

The worldwide concern with the fate of the planet’s forest heritage has led to a series of proposals to overcome its degradation and destruction. Among these proposals is the attempt to limit the trade and use of industrial timber to that originating from forests managed according to internationally recognized principles. Such forests would be certified by reliable and properly accredited certification organizations. The accreditation of certification bodies would in turn be the responsibility of one or more authorized organizations, of worldwide recognition and credibility.

The public concern with the degradation and destruction of forests has also led to an emerging market for certified timber and timber products. This has encouraged all kinds of claims of "sustainably produced" timber, from tropical, temperate and boreal regions of the world, from natural forests and from plantations.

We have simultaneously witnessed the appearance of a variety of self-proclaimed certifiers, some lacking basic technical background, with questionable objectivity, independence and transparency. The credibility of some certifiers has been further eroded by their issuing of certificates of "good forest management" on questionable grounds. One such case relates to a certificate issued by the Rainforest Alliance, a certifier based in the USA, to a Dutch owned company in Costa Rica by the name of Flor y Fauna.

Different aspects of this case have been previously reported [references 1, 2, 3, 4, 5]. On March 12, 1996, the Rainforest Alliance issued a public statement, in an attempt to justify what seem to be obvious flaws in its management of this case, and to recover its serious loss of credibility as a reliable certification body. Unfortunately, its statement seems to have only served to further erode its reliability as an objective and capable forest management certifier.

On May 09, 1996, the Reclame Code Commissie [Code of Ethics Committee on Advertising] of the Netherlands made decisions related to two complaints which had been introduced there. The first related to the yield of timber upon which financial returns from the Flor y Fauna plantations are based. The other related to the claim to an "FSC Certificate" for the plantations.

[NOTE: The Reclame Code Commissie is referred to in English in different ways by different people. Some translate the name as The Code of Ethics Committee on Advertising, some as The Code Committee on Advertising, and some refer to it as the local branch of the European Advertising Standards Alliance].

The following day, on May 10, 1996, the Netherlands office of the World Wide Fund for Nature [WWF-NL] published a statement which attempts to make believe all is well at the teak front. It presents the conclusions of the RCC as follows:

<< The Dutch Advertising Code Committee concludes that:

OHRA has NOT published misleading advertisements;

OHRA has NOT painted a too rosy picture of the returns; and

OHRA has NOT made false claims regarding the FSC certification >>

 This posting deals with these developments of the Flor y Fauna case.

topBACKGROUND

Flor y Fauna is a Dutch owned company with over 3,000 hectares of teak plantation in northern Costa Rica. Planting started in 1989. Flor y Fauna sold the economic ownership of the standing trees in most of the plantation to the Dutch insurance company OHRA, who in turn sold it to the general public in The Netherlands, in small lots of one-eighth of a hectare each.

The cost of planting, harvesting and maintenance during the 20 year rotation is less than 5,000 dollars per hectare. Investors are entitled to 85 per cent of the revenues from the thinnings at years 12, 16 and 20, when a clear cut is planned. The returns to investors were promised to range from a minimum of 600,000 US dollars per hectare, to a maximum of US$ 1,450,000 per hectare in 20 years. The cost to investors was 65,000 US dollars per hectare [Details in Ref. 1].

Investments in OHRA’s Teakwood project were tied to a life insurance, with a guaranteed return equivalent to the premium paid plus a marginal nominal interest, varying from 0.4 to 0.7 percent per year (IRR), depending on the age of the investor. Such an insignificant interest rate should be easily overshadowed by inflation, except in the unlikely event that inflation in the Netherlands remains at zero during the 20-year investment period. The guaranteed interest is 7 to 10 times lower than what is normally the case for insurance policies in The Netherlands.

In 1993, OHRA and Flor y Fauna obtained exclusive endorsement of this plantation project by the Netherlands office of the World Wide Fund for Nature [WWF-NL]. This endorsement turned WWF into an active and interested partner in the venture, while adding credibility amongst the general public to which investments were sold. The terms of endorsement excludes the possibility of support by WWF to other similar initiatives. In return, and according to a memo from WWF-Netherlands to WWF-International of April 16, 1993, the financial retribution to WWF-Netherlands would exceed 85 million US dollars [Ref. 6].

topISSUES UNDER CONSIDERATION

Following a request by WWF, an assessment of the project took place in 1993, concluding in a report entitled ECONOMIC ANALYSIS OF FLOR Y FAUNA’S TEAK PLANTATIONS IN COSTA RICA, dated December 22, 1993 [ref. 1]. Several key issues were raised there:

  • The unrealistic projections on the yields of commercial timber expected at the time from the plantations, ranging from 40 to 48 cubic meters per hectare per year.

  • The unrealistic projections on the prices at which this timber could be sold [ Up to 830 dollars per cubic meter for 8-year old logs, and up to 2,100 US dollars per cubic meter for 20-year old logs, both at the plantation site].

  • The consequent highly unrealistic internal rates of return promised to investors at the time, ranging from 16.8 per cent to 22.4 per cent. [memo from Van Rossum & Van Veen, a representative of Flor y Fauna, addressed to WWF-US, dated April 08, 1993; in Ref. 1].

  • The unbalanced distribution of the risks associated to the uncertainty of these projections, designed to protect the interests of Flor & Fauna and OHRA, while severely skewed against the interest of investors.

  • The legal and ethical implications of the gross disparity between what people were led to believe in order to make their investments, and what they might actually receive, based on the best available information to date.

  • The highly speculative gap between costs incurred [less than US$ 5,000 per hectare] and the price at which investment policies were sold to the public in The Netherlands [US$ 65,000 per hectare].

 In August of 1994, the contents of this report were leaked to a local newspaper in Costa Rica by the name of THE TICO TIMES. In two separate half-page articles on the subject, the fundamental and most controversial findings of the report were exposed. A sample of what was then published follows:

<< A Costa Rican tree company popular with Dutch investors and the Dutch branch of the World Wildlife Fund is making exaggerated claims, warned an internal investigation of the World Wildlife Fund >>

<< "Investors are led to believe that they will receive returns which are highly unlikely" wrote Centeno...>>

<< Ebe Huizinga, Owner of Flor y Fauna, responded to Centeno’s report by saying: "He doesn’t know anything about insurance or teak plantations" >>

<< Yet, the World Wildlife Fund doesn’t endorse this company, said Miguel Cifuentes, regional director of the World Wildlife Fund in Central America. "Flor y Fauna works only with the WWF branch in Holland" Cifuentes stressed. >>

<< While teak realistically can be expected to grow 15 to 16 cubic meters annually per hectare, Flor y Fauna investors are told to expect an average of 40 to 48 cubic meters annually per hectare >>

<< If Flor&Fauna’s projections are not true, the credibility of the World Wide Fund for nature could be damaged >>

<< Centeno warned the Dutch World Wildlife Fund that it seems involved in an agreement with questionable economic, technical and ethical dimensions >>

One of the issues highlighted in the report was the non-existence of a management plan at the time of the assessment.

topYIELD PROJECTIONS

One fundamental point of controversy is the yield expected by the company, which in turn affects the financial returns offered to investors. In Flor y Fauna’s promotional material, as well as in their correspondence with WWF, they claimed that as a minimum they would produce 40 cubic meters of commercial timber per hectare per year under one scenario, and an average of 48 cubic meters per hectare per year under another, during the 20 year rotation period [References 1, 12].

The yield of timber was expected to stay within normal range during the first 8 years, at 15 M3 per hectare per year. But an abnormal behavior was expected to take place after each thinning. The first thinning, at the age of 8, was expected to increase growth to between 40 and 50 M3 of tradable timber per hectare per year. The second thinning, at the age of 12, was expected to further increase growth to between 59 and 71 M3 per hectare per year. And the third thinning, at the age of 16, would increase growth even further, to the astonishing figure of 68 to 83 cubic meters per hectare per year ! [see reference 1 and 12 for details].

Perhaps not surprisingly, the production derived from the first thinning at the age of 8, the only one within normal range, happens to be reserved for Flor y Fauna. The return to investors depends mainly on the accomplishment of the highly unlikely growth rates projected from the second thinning till the final clear-felling at age 20.

Such were the figures presented to investors from the beginning of 1993 till an undisclosed date, in the autumn of 1995, when partial corrections were introduced. During this time, thousands of investors were led to believe in unrealistic projections, magnified by equally unrealistic estimates of the price at which the timber could be sold.

The silvicultural behavior expected by the company, upon which projections of returns to the public in The Netherlands were based, is an absolute anomaly for teak. The unrealistic behavior expected by Flor y Fauna, both in the magnitude of the yields, and in the effects of each thinning, could no be clarified by the company. Evidence to support such projections could not be obtained, although specifically requested. The report [1] thus highlights:

<< The expected yields are unjustified, reverting in equally unjustified expectations on the financial returns to be obtained. Investors are thus led to believe they will receive returns which are highly unlikely. This may be considered fraud >>

topCERTIFICATION ASSESSMENT

Following a request from Flor y Fauna, at the end of 1993 the Rainforest Alliance carried out an initial assessment of the plantations. According to the Rainforest Alliance, the assessment concluded that: "Flor y Fauna did not qualify for Smartwood certification in 1993" [References 7, 8].

One important reason for the lack of qualification for positive certification was the non-existence of a management plan for the project, even though over 1,300 hectares had already been planted by the end of 1993. It is estimated that by the time the management plan was finally prepared, the general public in the Netherlands had already invested over 200 million dollars in the project. The acceptability of the project amongst the general public was largely due to WWF’s endorsement, with the consequent assumption that the potential environmental, social and economic impact of the project had been taken into consideration.

That was precisely one of the main concerns with the position of WWF at the time. The organization had been stating in international negotiations, such as the International Tropical Timber Organization [ITTO], through the Forest Stewardship Council [FSC], publications and other media, that a plantation project would NOT be acceptable without the prior existence of a comprehensive management plan, where the potential environmental, social and economic impact of the project should be thoroughly analyzed. However, one of its national organizations, WWF-Netherlands, was formally endorsing a plantation project in a tropical country, without the existence of such a management plan, a pre-requisite the organization demanded from others. This attitude was reminiscent of the old colonial dogma:

"Do as I say, not as I do".

Despite what the Rainforest Alliance has reported to be the conclusion of the first assessment of the plantations, Flor y Fauna, OHRA and WWF-Netherlands publicly claimed that this assessment concluded in the operation being "pre-certified" as of mid 1993.

The certifier has not yet explained the contradiction between what it claims was the result of its initial assessment, and the claim made by the interested parties involved. Should the information supplied by the Rainforest Alliance be the truth, then it could be concluded that the Dutch public was purposely misled by the allegations of those who procured investments in this scheme, and who had a direct economic interest in the project.

The Rainforest Alliance proceeded later with a second evaluation of the project, which concluded in April of 1995 with a formal certificate to the plantations as "well managed". In this manner, the Rainforest Alliance ended up endorsing Flor y Fauna’s claims to fictitious yields and rates of return.

In a message from the Rainforest Alliance, dated February 01, 1996, it is stated:

"Based on interviews, field work, and research data collected in Costa Rica, we did not find that F&F’s projections in terms of growth and yields were inaccurate, but that further empirical substantiation was important from a variety of different management perspectives..."

If the RA did not find these projections to be inaccurate, it in fact found them to be accurate. What it expects in the future is simply further substantiation of this finding. This is fundamental to the discussion, and therefore the RA seems to be under the responsibility of bringing this evidence openly to the attention of the different parties involved. This would resolve the case to the benefit of its client, and the whole discrepancy would be largely settled. Why has the RA not done so yet?

What is the nature of the fieldwork that led the RA to come to this conclusion?

What sort of research data is the RA referring to? Where can the relevant reports be found?

In a message from the Chairman of the Board of the FSC, dated January 22, 1996, and referring to the director of the Rainforest Alliance, it is stated:

<< He [the director if the RA] informed me that FyF significantly reduced its growth estimates based upon empirical data from the monitoring program...>>

What sort of significant reductions is the RA referring to?

When where they introduced?

How did they affect expected financial returns?

Where can the corresponding reports be obtained?

Why was it necessary for Flor y Fauna to make significant reductions to growth estimates, when the RA found during the evaluation process that the original projections were accurate?

The information supplied by the Rainforest Alliance to the FSC, regarding "significant reductions" in growth rates by Flor y Fauna, is contradicted by the Adjunct Director of OHRA, Henk Janssen. He denies that there was ever a downward adjustment. In a declaration to the "Het Financieele Dagblad" on May 7, 1996, he states:

"It is an old misunderstanding... OHRA has, from the very start in March of 1993, used the range from 20 to 42.5 m3 in its advertising materials."

This assertion is clearly contrary to facts. It is contradicted by the firm Van Rossum & Van Veen, a direct representative of Flor y Fauna and with close relations to OHRA. In a letter addressed to WWF-US, dated April 08, 1993, while lobbying for WWF’s support, they highlight growth rates ranging from 40 to 48 cubic meters per hectare per year. It is also contradicted by WWF-Netherlands, in their communication of 17-02-93, reference avk/rw/93-256, where the same growth rates were reported [Copies of both in the Appendix of Reference 1]

In its promotional brochure: TEAKWOOD III: AN INVESTMENT IN A GREENER FUTURE [Ref. 11], Flor y Fauna pushed investments in its venture promising unaware customers a total of 950 M3 of tradable timber per hectare in 20 years [equivalent to a mean annual increment of 47.5 M3 per hectare per year, and refers only to the proportion of the timber whose economic value belonged to investors]. At that time Flor y Fauna sold directly to investors, requesting 28,600 US dollars per hectare. The return to investors was highlighted at over 1.6 million dollars per hectare!

In March of 1993, Flor y Fauna published its TEAKWOOD VI brochure, also entitled EEN INVESTERING IN EEN GROENERE TOEKOMST [An Investment in a Greener Future, Ref. 12]. It portrays the WWF panda-logo on its cover, with the statement:

"In Cooperation with the World Wide Fund for Nature".

This promotional brochure highlights a yield range for commercial timber from 40 to 48 cubic meters per hectare per year under its three scenarios. These are the same scenarios reported in the 1993 assessment [Ref. 1]. WWF’s open endorsement of this publication clearly shows its agreement with the figures. It also provided credibility to such unrealistic projections, now denied by OHRA itself.

The same promotional brochure was submitted by Flor y Fauna as evidence to a court of law on December 7, 1993, and by OHRA to the Reclame Code Commissie in March of 1996.

As late as December of 1995, Flor & Fauna introduced as evidence in a court of law a document from the Ministry of Agriculture of the Netherlands, dated December 28, 1993 [Reference 9], where the MINIMUM expected yield for these plantations is established at 1,057 M3 per hectare during the 20 year rotation period. This implies a MINIMUM mean annual increment of nearly 53 M3 per hectare per year!

The same document was introduced as evidence by OHRA to the Reclame Code Commissie in January of 1996.

[NOTE: This document has proved to be an embarrassment to the Ministry of Agriculture, due to its speculative nature, to its lack of professionalism, and to the inclusion of such an array of elementary mistakes that would flunk first year forestry students at any University]

To deny now such documented evidence of grossly exaggerated growth rates is a serious miscalculation of the memory and intelligence of the investors OHRA it bound to serve.

In the Summer of 1993 issue of OHRA’s inhouse magazine, an article entitled HET GROENE GOUD [The Green Gold], boasts nominal rates of return from 15% to 25% for the Flor y Fauna plantations.

In a May 29, 1995 ad in the newspaper ‘De Telegraaf’, investment in the teak plantations are promoted by OHRA with the following caption:

"Your Return: 14%, 18% or More!".

Only a few days later, a circular by OHRA of June 7, 1995, with a caption "Investing Green with High Rates of Return", states:

"Pending on the assumptions made, a rate of return is expected of 15% to 25%."

Six months later, in a personalized letter to all Teakwood investors by Huesmann, chairman of OHRA, dated December 1, 1995, investors are assured that:

"The trees grow well... If we judge the realized growth rate of the teaktrees, and if this growth continues, we can conclude that we will attain results somewhere between our pessimistic (11%) and optimistic (25%) rates of return."

Three issues need to be highlighted at this point in relation to the estimates on returns. Their variability. The significant drop of the minimum return promised to investors. And the perception that, in the very worst case, you would receive between 11% and 15% yearly returns on your investments.

topFSC ACCREDITATION

The Rainforest Alliance was accredited by the Forest Stewardship Council as a certifier on February 21, 1996. This FSC accreditation is conditional to certification of natural forests management only. It is specifically established that this accreditation does not in any way imply an endorsement by the FSC of certificates which might be issued by accredited certifiers on plantations.

topPREMATURE ENDORSEMENT AND LOSS OF IMPARTIALITY

Nevertheless, in a written statement by the Executive Director of the FSC, dated December 21, 1995, it is established that the FSC Secretariat scrutinized all the certifications reports existing up to that date, and concluded:

<< We believe that the Flor y Fauna evaluation report was thorough and competent >>

This is, or could legitimately be interpreted as, an endorsement by the FSC of the certificate issued to this plantation by a still non-accredited certifier. At the time this endorsement was presented, the FSC had not yet approved its basic principles for the management of plantations. Furthermore, the FSC was at the time not authorized to endorse the activities of any certifier until the time they were fully accredited, least of all endorse a certificate on a plantation. Especially not after a highly controversial and potentially damaging public debate had already erupted in The Netherlands, precisely on that particular plantation operation.

Now that the certificate is being openly questioned, the need for independent arbitration from the FSC Secretariat is clearly and seriously curtailed by its previous endorsements of the certificate issued to Flor y Fauna, as per the statement above.

topTHE CLAIM TO AN FSC CERTIFICATE

During the last quarter of 1995, the claim that the plantations established by Flor y Fauna in Costa Rica had been awarded an "FSC CERTIFICATE" appeared in full-page advertisements in the largest newspaper in The Netherlands, De Telegraaf. The claim was also included in full page ads in other newspapers [Volkskrant, issues of 19-08-95 and 23-09-95], in promotional brochures, and in thousands of letters sent by OHRA to potential investors. Even WWF-Netherlands boasted of an "FSC Certificate" for the plantation it is formally endorsing, in a full color promotional brochure placed on distribution as late as January of 1996 [Ref. 9]

It is well known that the FSC is not a certifier, and that it is not within its mandate to issue certificates of good forest management anywhere. However, despite the contractual agreement, which is presumed to exist between the Rainforest Alliance and Flor y Fauna, no mention to the actual certifier, the Rainforest Alliance, was made in such advertisement claims. The name of the FSC was thus openly abused and manipulated to add credibility to the project, and to lure investors into the scheme.

By the time the press ad-campaign was launched at the end of 1995, the Rainforest Alliance had not yet been accredited by the FSC. Even today, plantation operations are formally excluded from the FSC range of operations. There is now obvious pressure for the FSC to quickly expand its endorsement to plantations.

The claims which have been made by Flor & Fauna, OHRA and WWF-Netherlands to the effect that their plantations have been certified as "well managed" by the FSC is well documented. OHRA itself has publicly recognized this fact, referring to it as a mistake, a slip of the pen, and promising it won’t happen again, as in the declaration by its Adjunct Director, Henk Janssen, in the February 17, 1996 issue of Elsevier Magazine.

According to the FSC Secretariat, WWF-Netherlands has also recognized its own misuse of the FSC name, and has promised the FSC that they would include a disclaimer in the brochure where WWF refers to the "FSC Certificate" for the plantation. According to the FSC Secretariat:

" WWF-NL informed us that they realized their error after the fact, and subsequently included a correction notice inside the brochure"

It is absurd and counter-productive to continue to deny at this stage what has been publicly advertised through the press, brochures and letters, for months in The Netherlands. Especially when these untruthful claims have already been publicly recognized by OHRA itself, and by WWF to the FSC.

Following the decisions of the February 96 meeting of the Board of Directors of the Forest Stewardship Council, the FSC reported the following:

" The Secretariat has sent letters to both OHRA and WWF-NL to explain our policy, and to request that they correct any mis-statements in their respective brochures and other places where the original mis-statements circulated".

The ‘other places’ where the original "mis-statement" circulated obviously includes the press.

This decision of the FSC Board of Directors has so far been ignored by both OHRA and WWF-NL, for no such corrections have been reported anywhere in the Dutch press. The credibility of the FSC itself is therefore at stake. These organizations openly abused the name of the FSC to sell their products, while arguing that the FSC was the most authoritative body in forestry. Now that they have been exposed, they have chosen to ignore the decision of its board of directors.

topTHE RECLAME CODE COMMISSIE

A recent decision by the Reclame Code Commissie, dated May 09, 1996, dossier 95.8994, includes two different aspects of the Flor y Fauna - OHRA case:

1). A statement on the rates of returns promoted by OHRA in a May 29, 1995 ad in the newspaper ‘De Telegraaf’:

<< Your Return: 14%, 18% or More! >>.

2). The claim to an FSC certificate.

With regard to the rates of return promised to investors, the decision of the Committee highlights:

<< With regard to the return, the advertiser [OHRA] leaves no doubt that there is no certainty at all about that >>

It also indicates that OHRA made the following allegations:

<< The yield of the first cut, taking place only after 20 years, depends upon 3 variables, namely the growth of the trees, the exchange rate of the dollar, and the development of the price of the timber. Of course at this moment no certainty exists about the development of these variables >>

<< The return can vary. This implies that the return can also be less than the percentages named in the expression >>

The Committee further elaborates:

<< The guarantee, which goes according to the advertiser [OHRA] not much further that the paid premiums, once more points out that certainty with regard to the achievable returns is missing >>

It is then clear that OHRA has no confidence at all about the yield of timber to be expected, the prices at which it may be sold, and the rates of return to be expected. OHRA argued at the RCC that it does not guarantee any rate of return whatsoever, except for the insignificant internal rate of return averaging 0.5 percent attached to the life-insurance aspect of the policy!

Following this line of considerations, the Committee concluded:

<<...the possible achievable return is not pictured brighter than it is >>

With regard to the FSC certificate, the Committee simply indicates:

"..in the advertising submitted to the Committee it is not stated that the Flor y Fauna project is provided with an official certificate by the FSC. This part of the complaint is therefore lacking actual basis".

The Committee ruled on advertisements which did not contain the claim to an FSC certificate. The decision of the Committee indicates:

"The complaint concerns an advertisement in DE TELEGRAAF, of May 29, 1995, and an advertisement in the magazine PANDA, issue of Winter 1996."

Neither of these advertisements includes the claim to an FSC certificate. The claim to such a false certificate was made in over 1.5 million full-page ads in the following newspapers:

Volkskrant, issue of 19-08-95

Volkskrant, issue of 23-09-95

De Telegraaf, issue of 07-10-95

Plus hundreds of thousands of brochures and letters delivered to potential investors by OHRA.

The claim to a false ‘FSC Certificate’ has also been made public by WWF-Netherlands, in its full color promotional brochure NAAR EEN HOUTBARE WERELD, 1996, apparently intended to promote the FSC in The Netherlands [Ref. 9]. It has also been reported as part of WWF-NL statements to the papers "De Gelderlander" and "Het Brabants Dagblad" as late as February 9, 1996.

I understand an appeal before Reclame Code Commissie is pending for the end of June 1996, with the introduction of some 30 exhibits. It is only prudent to wait and see what the final decision will be.

Nevertheless, it is clear the Dutch branch of WWF has rushed to distort the findings and conclusions of the Reclame Code Commissie. An action that can only backfire, further eroding its own reputation and credibility.

In a fax widely circulated at the end of January 1996 [even though it is dated "December 28, 1996"] the Rainforest Alliance claimed it would take "immediate action" as soon as it was aware of documented evidence about the false FSC certificate claimed by its client. Somehow this has not yet taken place.

topDEPTH OF THE ECONOMIC ANALYSIS AS PART OF A CERTIFICATION PROCESS

It has never been suggested that the Rainforest Alliance, or any other certification program, should guarantees specific financial returns from forest management operations anywhere. That is obviously not the intent of certification, and has not been proposed or implied by anyone, as far as I am aware.

It is true, though, that the Rainforest Alliance’s Smartwood Program, like other certification programs, is expected to operate according to the Principles and Criteria approved by the Forest Stewardship Council.

FSC Principle 7, applicable to both natural forests and plantations, states:

"The long term objective of management, and the means to achieve them, shall be clearly stated"

The fundamental objective of the Flor y Fauna teak plantations in Costa Rica is the achievement of a certain financial return, based on specified projections on yields and prices.

Expected returns are a particularly important objective in this case, due to the sale of policies to the general public in The Netherlands, based on advertisement and promotional material which highlights the high revenues to be expected. The same general public, as a matter of fact, from which we expect trust and credibility in the certification process.

In compliance with FSC Principles, then, the means to achieve this fundamental objective should have been properly and thoroughly assessed during the certification process.

The certification of Flor y Fauna by the Rainforest Alliance has obviously become a formal endorsement of the company’s projections on yields, prices and rates of return. This is at least a logical and legitimate interpretation by the public, specially if no reservations are made to this effect when the certificate was issued. Should such projections be significantly out of proportion, this endorsement will inevitably cause serious damage to the credibility of the Rainforest Alliance’s Smartwood Program. This has already proved to be the case.

The certification assessment of Flor y Fauna failed to ensure compliance with FSC Principle 7.

The Rainforest Alliance argues [Reference 7] that its main concerns during the certification process were that:

  • The operation was silviculturally sound.

  • Environmental benefits were maximized

  • A positive impact on local communities and F&F employees

This is possible, while still violating FSC Principle 7.

Despite what it is argued to be an emphasis on silvicultural, environmental and social issues in the Rainforest Alliance certification program, the scope of the economic analysis included in this assessment has been presented to the public as rather thorough. In a brochure published by WWF-NL and IUCN [BOS INFO, October 1995] the director of the Rainforest Alliance is quoted as follows, in relation to Flor & Fauna:

"Richard Donovan emphasized that certification processes encompass more than ecological criteria. He qualified the project as an impressive combination of social responsibility and economic viability"

topCONCLUSIONS

The success of forest management certification is based on the transparency and reliability of the organizations involved, and on the credibility of their judgements. This case highlights how difficult this can be, when there is no clear mechanism to screen the reliability of potential certifiers, and when certifiers are free to operate without due accountability to the public. The lack of transparency of the case has eroded trust in the institutions involved, and has cast shadows over the ultimate objectives pursued.

topREFERENCES

1]. Centeno, J.C: ECONOMIC ANALYSIS OF FLOR Y FAUNA’S TEAK PLANTATIONS IN COSTA RICA. Assessment Report prepared by request of WWF-International and WWF-Netherlands. December 1993.

2]. Centeno, J.C: TEAK CONTROVERSY FLARES UP IN THE NETHERLANDS. Posting to Internet, February 05, 1996.

3]. Centeno, J.C: TEAK STING. Posting to Internet, February 19, 1996.

4]. Centeno, J.C: WORLD RECORD ON TEAK GROWTH: TRUTH OR TRICKERY? Posting to Internet, March 12, 1996.

5]. Centeno, J.C: BLASTING THE FSC IN THE NETHERLANDS. Posting to Internet, March 1996.

6]. Memo from Jos de Wit, WWF-Netherlands, to Frances Horne, WWF-International, dated April 16, 1993.

7]. The Rainforest Alliance: Open letter dated December 28, 1996, actually received on February 1, 1996.

8]. The Rainforest Alliance, February 22, 1996 open statement.

9]. WWF-NL: NAAR EEN HOUTBARE WERELD, 1996.

10]. DE TEAK PLANTAGES VAN FLOR Y FAUNA SA IN COSTA RICA. A.J.M. Wouters, Ministry of Agriculture of The Netherlands, December 28, 1993.

11]. Flor y Fauna: TEAKWOOD III: AN INVESTMENT IN A GREENER FUTURE.

12]. Flor y Fauna - WWF-NL: TEAKWOOD VI: EEN INVESTERING IN EEN GROENERE TOEKOMST. March 1993.


JULIO CESAR CENTENO
PO BOX 750
MERIDA - VENEZUELA
topE-mail: Jcenteno@ciens.ula.ve