Sunday, October 25, Procurement of African Timber - Supporting Sustainable Forest Management and Development -

Sunday, October 25, The environmental and safety commitment of the Danzer Group is consistent with our motivation to be acknowledged as a leader in the wood products industry.environmental and safety commitment Our Environmental and Safety Management (ESM) system (according to ISO 14001) seeks to protect all employees, the general public, and our ecosystem by establishing its foundation on the principles of: Continual Improvement Management through Teamwork Leadership by Involvement Prevention through Planning Compliance with Regulations and Standards The Danzer Group’s Commitment to Your Safety, to Our Health, and the Habitat We Share The Danzer Group commitment

Sunday, October 25, Procurement Policy Africa: Danzer Group “Procurement Rules African Timber” We commit to gradually, credibly and independently demonstrate that the forests in our control and those from where we are also sourcing timber are managed legally and responsibly. By gradually we mean to implement a process adapted to the situation of those of our suppliers willing to commit to our goals. By credibly we mean to implement a holistic, transparent, and documented process that takes the life cycle of our products into consideration and is based on internationally recognized standards especially in regard to sustainable forestry. By independently we confirm that the process and its outcomes will be audited and certified by qualified third parties.

Sunday, October 25, Scope Third party Procurement of African Timber - Support: 1) Legal and 2)Sustainable management Sustainable Forest Management of Forest attributed to Danzer Group companies: IFO (Rep. Of Congo) & SIFORCO(DRC) Trade and Sales of Timber

Sunday, October 25, Objectives & Targets: “The Danzer ladder” Legality as a threshold with a Progressive Approach towards Sustainable Forest Management Level of performance (time frame) 4. Unacceptable timber: illegal origin 3a. Full legal compliance (+ no conflict with local population or government), 2 nd or 3 rd party verified (short term) Acceptable 3b. Known origin up to forest source (concession, logging permit) and proof of the legal right to harvest timber (Controlled by the Danzer Group verification programme) 2. Progressing towards SFM (long term) Superior 1.Sustainable Forest Management (SFM) (Certification) Consistent with the ISO Standard : - Legal compliance & - Continual Improvement

Sunday, October 25, Stepwise approach with following Timber Categories: 1. Timber originating from a forest with a sustainable forest management, approved by an independent third party certification, Is: Timber that has been certified under an internationally recognized system according to ATO / ITTO criteria or criteria reaching the same level at the minimum (FSC, PEFC,...); Timber that comes from a forest with a well implemented Environmental Management System, which social and environmental objectives reach as a minimum the level of ATO/ITTO criteria and has been third-party verified (e.g. ISO 14001); 2. Timber with a proof of legal origin and demonstrated progress toward sustainable forest management must be verified by a recognized initiative (FORCOMS, WWF producer group, TFT initiative, FSC-MAP approach…) or by a 2nd party audit from Danzer; 3. Timber with a proof of legal origin is controlled by: a)Ideally, a Chain-of-Custody and legality certification for full legal compliance; b)or a well documented traceability, controlled by the 3rd party audited verification programme of the Danzer Group, based on 2nd party audits according to the risk of suppliers, with the proof of the legal right to harvest timber. Legality treshhold Objectives & Targets (continued): Legality as a threshold with a Progress towards SFM

Sunday, October 25, Illegal and unwanted timber is timber with a clear suspicion or proof that it comes from: Conflict areas: Areas where timber harvesting is associated with human rights violations, underwriting armed conflicts or the breaking of UN trade sanctions; Suppliers that have a suspicious background and are associated with armed conflicts and illegal logging; Areas where local communities and worker rights are violated or where government and concession managers are in open conflict; Protected areas / national parks; Harvest in breach of forest law (within or outside a forest harvesting permit); The conversion of forest to a non-forest land-use type without the conversion having a clear long term social and economical benefit Objectives & Targets (continued) Legality as a threshold with a Progress towards SFM

Sunday, October 25, Procurement Procedures - How to distinguish?

Sunday, October 25, Procurement procedures Steps for Implementation 1.Preliminary risk assessment based on spatial risk rating and killing factors; 2.Collection of legal documents on timber origin 3.Suppliers sign a Declaration of Legality; 4.Risk assessment of suppliers and collection of detailed legal documentation of the origin of timber - Questionnaire 5.Targeted 2nd party (or 3rd party) visits / audits of suppliers based on the risk assessment; 6.External audit of procurement policy and procedures to verify consistency and effectiveness;

Sunday, October 25, Step 4. Risk assessment of suppliers Questionnaire: Identification of supply chains, progress towards SFM and Collection of legal documentation Procurement Danzer Group Forest – producer own concession/forest Forest – producer known source 1st Supplier Forest – producer known source 1st Supplier Traders / transformers known Forests ?? (unknown sources) Traders / transformers x unknown 1. : 1 intermediary, direct supply 2. : two intermediaries, supplier buys from source 4. : more than 2 intermediaries, UNKNOWN SOURCE 3. : more than 2 intermediaries 1st Supplier = producer (transformer) 1st Supplier Traders / transformers known Transformatio n High risk timber

Sunday, October 25, Implementation: Responsibility / Accountability Decision and Communication Flow Chart No Ye s Positive Negative SFM certified or CoC / Legality verified by third party? Extend risk assessment (Questionnaire) TIMBER (PRODUCT) SUPPLY or SUPPLIER Result of preliminary risk assessment (analysis of supplier by Environmental coordination unit) Procurement in country of timber origin? Legal documentation of timber origin? No Negative Declaration of legality signed by supplier or publicly available? BUY TIMBER Don’t buy Inform higher hierarchy and environmental coordination Control procedures based on result of risk assessment Ye s Max. 2 months

Sunday, October 25, Thank you for your attention !!