February PEFC Chain of Custody Certification

History of PEFC Pan European Forest Certification Council  Created in 1999 by European forest land owners as an umbrella organisation to provide a framework for the mutual recognition of credible national forest certification standards  11 founding European nation members Programme for the Endorsement of Forest Certification  Canada the first non-European nation to join in 2001  Name changed in 2003 to recognize growth beyond Europe  Not a forest management certification standard but an endorsement of national standards that meet the PEFC Sustainability Benchmarks  Exception is the PEFC Chain of Custody standard 2

35 member countries - 30 with endorsed standards ArgentinaCanadaGabonMalaysiaSlovenia AustraliaChileGermanyNetherlandsSpain AustriaCzech Rep.IrelandNorwaySweden BelarusDenmarkItalyPolandSwitzerland BelgiumEstoniaLatviaPortugalUK BrazilFinlandLithuaniaRussiaUSA CameroonFranceLuxembourgSlovakia Uruguay 3

PEFC Canada  Canada a member of PEFC International since 2001 and represented by CSA International until 2009  PEFC Canada is a not-for-profit legal entity formed in 2008  Became the member of PEFC International for Canada in January 2009  Represents interests of organizations certified to the CSA Sustainable Forest Management standards  Manages PEFC Chain of Custody program for Canadian companies (except for SFI participants)  Issues PEFC logo use licences to qualified organizations in Canada 4

PEFC Presence: Globally→Canada→Ontario  35 member countries  32 endorsed national standards in 30 countries - 2 each in Canada and USA  238 million ha certified globally in 27 countries 63 million ha certified to CSA SFM standards in Canada – 2.4 million ha in Ontario 53 million ha certified to Sustainable Forestry Initiative in Canada – 12.8 million in Ontario  8,690 Chain of Custody certificate holders 184 in Canada – 38 in Ontario  36,000 PEFC logo use licence holders 79 in Canada – 24 in Ontario 5

PEFC Chain of Custody Documents PEFC ST 2002:2010 Chain of Custody of Forest Based Products - Requirements PEFC GD 2001:2011 Chain of Custody of Forest Based Products - Guidance for Use PEFC ST 2001:2008 PEFC Logo Usage Rules - Requirements 6

Certified Material Accepted in PEFC COC Material from forests 3 rd party certified to following standards:  CAN/CSA-Z809 Sustainable Forest Management  CAN/CSA-Z804 SFM for Woodlots and Other Small Area Forests  Sustainable Forestry Initiative  American Tree Farm System  any of the other 28 national forest certification standards endorsed by PEFC 7

What to do to get certified – PEFC COC Details  Scope  COC Requirements – Physical Separation  COC Requirements – Percentage Based Methods Average Percentage Method Volume Credit Method  Sale of Certified Products  Controversial Sources – Non-certified raw material  Management System Requirements  Complaints  Subcontracting  Multisite Organization Chain of Custody  Social, Health and Safety Requirements 8

Scope  PEFC Chain of Custody applies to forest based products  Can be used by any organization harvesting, transporting, handling or processing forest based material at any stage from forest to final consumer  Chain of custody is used in connection with the definition of certified material in PEFC endorsed forest certification standards  Labelling of products is an optional communication tool which may be incorporated into the chain of custody process 9

Scope PEFC Standard Definitions  Chain of custody of forest based products - Process of handling of information on the origin of forest based products which allows the organisation to make accurate and verifiable claims on the content of certified material  Certified material - Raw material whose origin is covered by the chain of custody claims  Certified product - Product which is claimed as including certified material whose content is verified by chain of custody 10

Physical Separation  Organisations should use physical separation as the preferred option: where certified material is not mixed with uncertified material, or, where certified material can be identified during the whole process  Physical separation can be achieved by: physical separation in terms of production and storage space, or, physical separation in terms of time, or, clear identification of the certified material during the process 11

Percentage Based Methods  Percentage based method of chain of custody applies to organisations that are mixing certified material with uncertified material Calculation of certification percentage: Where: Pc = Certification percentage Vc = Volume of certified material Vo = Volume of other material 12

Percentage Based Methods Product Group  Certification percentage is calculated for a specific product group  The product group is associated with: 1. a single product type, or, 2. a group of products which consist of the same or similar input material, i.e. species, sort, etc.  Material used in the product group must have same unit of measurement or units that can be converted to the same unit of measurement  Product group must be produced at a single production site 13

Percentage Based Methods  Certification percentage can be calculated as either: 1. simple percentage, or, 2. rolling percentage  For rolling percentage the claim period cannot exceed 3 months, i.e. the certification percentage claim is calculated from the average volume of raw material used during the previous 3 months 14

Average Percentage Method  Organisations using the average percentage method (either simple or rolling percentage) apply the calculated certification percentage to all the products covered by the product group  There is no minimum threshold for the certified percentage  Example: If the certified percentage calculated for the 3 month claim period is 54 %, all products covered by the product group can be sold as 54 % PEFC Certified 15

Volume Credit Method  The volume credit method is used to distribute the certified volume of raw material over a portion of output product  Example: If the raw material for 100 tonnes of output product is 54% certified, then the 100 tonnes can be sold as 54% certified using the average percentage method, or 54 of the 100 tonnes cold be sold as 100% certified using the volume credit method. No certification claim can be made on the remaining 56 tonnes of product  The volume credit can also be distributed to the product at less than 100% certified  Example: The organisation can decide to distribute the 54 tonnes of volume credits to sell product as 70% certified, where 54tonnes / 70% = 77 tonnes available for sale as 70% certified 16

Volume Credit Method  The organisation using volume credit must create and manage a credit account in a single measurement unit  The credit account must be established for individual product types of the product group or for the whole product group where the same measurement unit is applied to all product types  Certified credits can be accumulated in the credit account for a maximum of 12 months, meaning that if the total credits are not used in a 12 month period then the credits accumulated 13 months ago are lost 17

Sale of Certified Products  At any point of transfer or sale of certified products the organisation must provide: a copy of a forest management or chain of custody certificate, or, another document confirming the supplier’s certified status, or, access to a copy of the chain of custody certificate, i.e. on a website  The organisation must use a single type of document with each delivery of the certified products, i.e. invoice or delivery slip 18

Sale of Certified Products  The document accompanying each delivery of certified products must include the following information: customer identification supplier identification product identification quantity of delivery for each product date of delivery / delivery period / accounting period formal claim including certified percentage for each product the number of the supplier’s chain of custody certificate or other document confirming the supplier’s certified status 19

Controversial Sources  PEFC Chain if Custody requires avoiding raw material from controversial sources, defined as forest management which is: (a) not complying with local, national or international legislation, in particular related to the following areas: – forestry operations and harvesting, including conversion of forest to other use – management of areas with designated high environmental and cultural values, – protected and endangered species, including requirements of CITES, – health and labour issues relating to forest workers, – indigenous peoples’ property, tenure and use rights, – payment of taxes and royalties, (b) utilising genetically modified organisms, (c) converting forest to other vegetation type, including conversion of primary forests to forest plantations. 20

Controversial Sources  The organization must have a Due Diligence System (DDS) to avoid raw material from controversial sources  Three steps to implementing a DDS: 1. supplier’s self declaration that material supplied does not originate from a controversial source 2. risk assessment indicating either a “low” or “high” risk of material coming from a controversial source 3. management and verification program for material coming from sources that have been assessed as “high risk” 21

Management System Requirements  The organisation must have a management system to ensure correct implementation and maintenance of the chain of custody  At a minimum the management system must: document the commitment to implement and maintain the chain of custody appoint a manager with overall responsibility and authority for the chain of custody establish documented procedures for all elements of chain of custody establish personnel responsibilities, authorities and competencies regularly review the chain of custody and its compliance conduct internal audits at least annually 22

Complaints  The organisation must establish procedures for dealing with chain of custody related complaints from suppliers, customers and other  Upon receipt of the complaint, the organisation must: acknowledge the complaint to the complainant gather and verify all necessary information to evaluate and validate the complaint and make decision on the complaint formally communicate the decision on the complaint and of the complaint handling process to the complainant ensure that any appropriate corrective and preventive actions are taken 23

Subcontracting  Where subcontractors are used in the manufacture of certified products the subcontracted activities must be covered by the organisation’s chain of custody with the following considerations: applies to work within or outside the organisation’s site material received by the subcontractor must be physically separated from other material and returned after the subcontracted work is completed, or, the organisation with the chain of custody remains responsible for the sale or transfer of the product to the customer organisation shall take full responsibility for the all the subcontracted activities subcontractor activities must be covered by the internal audit 24

Multisite Organization Chain of Custody  Chain of Custody can be implemented within a network of sites: either multi-sites within a single organization/company, or, a group of small independent companies  Multisite organizations must have an identified “central office” which: represents the group in the certification process provides a contractual relationship within the group and with the certification body provides a commitment and procedures to implement and maintain the chain of custody system operates an internal audit program  Individual sites are responsible for implementing the chain of custody requirements applicable to their specific site 25

Social, Health and Safety Requirements 2.1 The organisation shall demonstrate its commitment to comply with the social, health and safety requirements defined in this standard. 2.2 The organisation shall demonstrate that: workers are not prevented from associating freely, choosing their representatives, and bargaining collectively with their employer, forced labour is not used, workers, who are under the minimum legal age, the age of 15, or the compulsory school attendance age, which ever is higher, are not used, workers are not denied equal employment opportunities and treatment, working conditions do not endanger safety or health. 26

Certifying to the PEFC COC Standard  All PEFC Chain of Custody certifications must be carried out by a qualified independent 3 rd party certification body  All certification bodies are accredited to ISO Guide 65 General Requirements for Bodies Operating Product Certification Systems by an International Accreditation Forum member such as Standards Council of Canada (SCC) or the American National Standards Institute (ANSI)  Audit cycle includes an initial certification audit, an annual surveillance audit and a recertification audit every 5 years  Certificates are valid for 5 years 27

Who can certify - Qualified Certification Bodies 1. ALKO-Cert, Germany BMG Trada Certifiering, Sweden BM Trada Certification, United Kingdom Bureau de normalisation du Québec, Québec City Bureau Veritas, Houston Control Union Canada, North Vancouver 7. KPMG PRI, Vancouver PricewaterhouseCoopers, Vancouver QMI-SAI Global, Toronto Scientific Certification Systems, Emeryville SGS Systems and Services Certification, Toronto

PEFC Canada Chain of Custody Fees  PEFC Canada pays membership fees to PEFC International in part based on the number of PEFC COC certificates in Canada  PEFC Canada charges an annual notification fee based on the number sites included in the scope of the COC certificate  Fee collected by Certification Bodies on behalf of PEFC Canada Number of Sites on COC Certificate Annual Fee 1$500 2$1,000 3 – 10$1, – 20$2, – 30$2, – 40$3, $3,500

PEFC Logo Use On-product label Off-product label 30

PEFC Logo Use  PEFC logo use requires a logo use licence issued by PEFC Canada on behalf of PEFC International  Logo use licences available for 4 groups of users: Group A: National governing bodies i.e. PEFC Canada Group B: Forest owners and managers with PEFC endorsed forest certification, including individual and group certificates Group C: Forest related industries with PEFC Chain of Custody Group D: Organizations using the PEFC off-product label for promotional and educational purposes  On-product of the label use requires minimum of 70% of PEFC certified product or recycled material 31

PEFC Logo Use Number of Sites on COC Certificate Annual Fee 1$250 2$500 3 – 10$ – 20$1, – 30$1, – 40$1, $1,750  PEFC Canada charges an annual logo use fee based on the number of sites included in the scope of the chain of custody certificate 32

For More Information  PEFC International at  PEFC Canada at 33