Version:19 Sep 2008 Transfer System FSC-STD-40-004V2 Key Topic

Definition of the Transfer System Contents 1 Definition of the Transfer System 2 Defining FSC Product Groups 3 Inputs to the Transfer System 4 The System 5 Sales & FSC Claims 6 FSC-labeling 7 Exercises

1. Definition 1 of 3 optional systems for making FSC Product Group claims Raw material claim is carried forward Segregation is required Shall be used for FSC Pure Shall be used for FSC Recycled 100% Shall be used for trading finished products Shall be used for organizations without sites Typical for Brokers, traders Distributors, wholesalers Printers, paper merchants 3 possible systems are Transfer, Percentage, Credit. Companies may implement more than one system for different product groups. Brokers, traders can implement the percentage or credit system for inputs (that are not finished products) going through one physical site. Printers can implement the percentage system.

1. Definition Important Terms: Conversion Factor (C.F.) Ratio between input and output volume of a product/component Controlled Wood (CW) FSC CW – non-FSC virgin material controlled by an FSC-certified organization Controlled material – non-FSC virgin material controlled by the organization using the input Eligible Input Inputs eligible for use in FSC Product Groups (see material category) FSC Claim FSC Pure, FSC Mixed X%, FSC Mixed Credit, FSC Recycled X%, FSC Recycled Credit, FSC Controlled Wood Material Category Category of inputs: FSC Pure, FSC Mixed, FSC Recycled, FSC CW, Controlled material, post-consumer reclaimed, pre-consumer reclaimed (Uncontrolled material is ineligible) Minor Component Uncontrolled wood-based component <5% of the product volume and specifically approved for use in an FSC Product Group Site A single physical unit located at one locality geographically unique from other units Post-consumer Reclaimed (PCR) Reclaimed from a consumer or commercial product that has gone through its final end-use

2. Defining FSC Product Groups Transfer system provides flexibility Products grouped based on General product type, Species, & FSC claim Product groups may fluctuate based on customer order and availability of FSC inputs in the marketplace General product groups shall be approved by the CB and represented in the Product Group Schedule (PGS) FSC Product Group Product Type FSC Claim Species Printed material 3259 FSC Mixed N/A FSC Recycled Restrictions are lessened in the transfer system since there is no basis for obtaining credit or calculating a percentage based on inputs. Certain companies (like brokers, custom manufacturers) may have product groups that change with every customer order. The PGS can be general by listing the main category of product and various species. Then a clarifying statement is good to qualify the generalities, e.g., products and species vary depending on customer order and availability of supply as FSC-certified.

All eligible inputs are possible: Input Material Category Potential FSC Claims FSC Pure FSC Pure, FSC Mixed FSC Mixed FSC Recycled FSC Mixed, FSC Recycled FSC Controlled Wood FSC Mixed, FSC Controlled Wood Post-consumer / Pre-consumer Reclaimed Controlled Material Minor Component This table shows where inputs may be applied to final product group claims. See information in later slides regarding use of different input material categories for one product group and determining the FSC claim. It is possible to make FSC CW claims for any eligible inputs/combinations

Brokers, traders, distributors, etc. 4. The System Brokers, traders, distributors, etc. (No product transformation) Companies of this category will most often be under the transfer system, however, it is an option to assemble mixed units using the percentage or credit system.

Inputs of the same material category are transformed 4. The System Inputs of the same material category are transformed (or combined), e.g., Input Material Category FSC Claim FSC Pure FSC Mixed Credit FSC Recycled 85% Controlled material FSC Controlled Wood This is a very simple scenario and is most common when only one type of input is used for the product, e.g., lumber input for solid wood moulding. “or combined” refers to operations that do not transform the product in a production system, but combine the same input type which may be from different suppliers. E.g., a distributor may combine existing inventory of FSC Mixed Credit chips with a new unit of FSC Mixed Credit chips to complete a customer order.

Inputs from different material categories are transformed 4. The System Inputs from different material categories are transformed (or combined), e.g., Input Material Category FSC Claim FSC Pure + FSC Mixed 70% FSC Mixed 70% FSC Recycled 100% + post-consumer FSC Recycled 100% Controlled material + FSC CW FSC Controlled Wood When different inputs are used the company must choose the “lowest” claim for its FSC product group. See slide later in presentation for determination of lower claims. “or combined” refers to operations that do not transform the product in a production system, but combine the same input type but different input material categories. E.g., a distributor may combine FSC Pure and FSC Mixed lumber for a FSC Mixed unit of lumber. It is possible to use the transfer system with non-FSC inputs. The most common scenarios may be: Controlled material input = FSC CW product group Post-consumer reclaimed input = FSC Recycled product group FSC Recycled + Post-consumer reclaimed = FSC Recycled [Note: If the organization prefers to re-calculate the percentage claim, the Percentage System shall be used]

Ensuring traceability 4. The System Ensuring traceability Transfer system requires segregation In space Secure, identifiable Storage areas Production lines Facilities In time Batch runs Days / weeks of production Identification Labeling / marking Segregation Documentation It is acceptable to co-mingle inputs for the same product group. It is crucial that FSC Pure is always separate and secure throughout the system for FSC Pure Product Groups. It is crucial that FSC Recycled 100% (&/or post-consumer reclaimed) are always separate and secure throughout the system as long as the product group will be claimed as FSC Recycled 100%.

Transfer system - essentials 4. The System Transfer system - essentials Purchasing & Receiving Processing Final Storage & Sales Specify material category Check supplier documentation for FSC claim Ensure distinguishing marks (labels) Record volume in tracking system Use distinguishing marks, &/or Distinct batch runs Record time period Record conversion Record volume in tracking system Use distinguishing marks (labels), &/or Designated areas Lowest FSC claim used Record volume in tracking system: inventory, sales Final product cross-references with invoice & transport docs

5. Sales & FSC Claims The invoice essentials Each FSC Product Group is clearly identified with the applicable FSC claim FSC certificate code of the Organization is clearly represented SW-COC-00XXXX for FSC Pure, FSC Mixed, FSC Recycled SW-CW-00XXXX for FSC Controlled Wood Transport / shipping documents Same details required for transport docs when invoice does not accompany product

5. Sales & FSC Claims Choosing the “lowest” FSC claim when different inputs are used for the same FSC Product Group Look at FSC’S #47

6. FSC-labeling The Organization must demonstrate an understanding of the minimum eligibility requirements for FSC-labeling!

6. FSC-labeling FSC 100% Label (FSC Pure) FSC Pure = 100% of raw materials originated in an FSC-certified forest, no exceptions! Exclusive use of FSC Pure inputs allows FSC Pure labeling

FSC Mixed Sources Label (FSC Mixed) 6. FSC-labeling FSC Mixed Sources Label (FSC Mixed) FSC Mixed = any combination of eligible inputs, including some virgin content To apply a variation of the FSC Mixed Sources label, inputs shall allow one of the following FSC claims: FSC Mixed 70% (or greater) FSC Mixed 50% (or greater for chip and fiber until end of 2009) FSC Mixed Credit NB: the mixed % always refers to FSC-certified and/or post-consumer reclaimed content; The label with the recycled moebius loop always refers to the post-consumer content

6. FSC-labeling FSC Recycled Label FSC Recycled = 100% reclaimed content (may include some pre-consumer) To apply a variation of the FSC Recycled label, inputs shall allow one of the following FSC claims: FSC Recycled 85% (or greater) FSC Recycled Credit Label as shown here is only allowed for FSC Recycled 100% (100% post-consumer content) If any virgin content is included, the product automatically becomes FSC Mixed (assuming the virgin is an eligible input) NB: the recycled % always refers to post-consumer reclaimed content; the remaining content shall be pre-consumer reclaimed only!

7. Exercises LINK TO EXERCISES Note: you must exit presentation mode and double-click on the ‘word’ icon to open exercises

THANK YOU!