1. FSC Controlled Wood standard FSC-STD-40-005 V2-1 Standard used in Conjunction with Chain-of-Custody Certification Version: Sep 30 2008

2. 2 TOPICS 132 Controlled Wood Concept Definition Why? Applicability Background The Standard Quality System Supply Requirements Verification Program Sales & Promotion CW Evaluation Guidance

3. 3 Controlled Wood Concept What is Controlled Wood? the forest origin is known, and the forest origin is known, and avoid wood from categories defined as unacceptable for use in FSC product groups avoid wood from categories defined as unacceptable for use in FSC product groups Materials that:

4. 4 Controlled Wood Concept 2. Wood harvested in violation of traditional and civil rights; 1. Illegally harvested wood; 3. Wood harvested in forests where high conservation values are threatened by management activities; values are threatened by management activities; 4. Wood harvested in forests being converted to plantations or non-forest use; plantations or non-forest use; 5. Wood from forests in which genetically modified trees are planted. are planted. Controlled Wood avoids:

5. 5 Controlled Wood Concept For mixing FSC-certified and non- FSC virgin material in one product To exclude “unacceptable” materials in products sold with FSC claims To ensure the on-product FSC claim is true Why Controlled Wood?

6. 6 CW Concept: Applicability Primary manufacturers Brokers / traders Distributors Printers Paper Merchants Secondary manufacturers CW evaluation is required when An FSC-certified company wants to produce FSC Mixed products using FSC-certified/reclaimed material and non-certified virgin material Non-certified sources shall be controlled according to 40-005 A company wants to buy and/or sell FSC Controlled Wood Company shall comply with the purchase and sales requirements according to 40-005 (part 4 & Annex 4)

7. 7 Controlled Wood Concept Standards required for certificate scopes that include Controlled Wood: (for CoC operations) FSC-STD-40-005 Standard for Company Evaluation of FSC Controlled Wood (version 2-1) FSC-STD-40-004 FSC standard for Chain of Custody Certification (version 2-0) & Note: All COC companies that need to have CW in the certificate scope, SHALL also be certified against 40-004 (even if only selling FSC Controlled Wood products)

8. 8 First version approved by FSC board in conjunction with CoC 40-004V1 Controlled Wood Technical Working Group (TWG) established for revision of the standard First public consultations of draft standard TWG agrees on version 2 of the CW standard Final public consultation Second version approved by FSC board 40-005 V2-1 issued with slight revisions History of the CW Standards Controlled Wood Concept

9. 9 CW requirements apply to ALL applicable companies during 2008 For secondary manufacturers/ brokers, CBs shall evaluate compliance at latest during 2008 annual audits regardless of CoC standard (for primary manufacturers it was with 2007 annual audits) CW is compulsory for all new, applicable assessments CW effective dates (Version 2-1)

10. 10 Standard for Company Evaluation of FSC Controlled Wood FSC-STD-40-005 V2-1

11. 11 FSCFSC-CW Controlled Material Verification Program Uncontrolled Check sales documents and certificate validity Check district of origin Risk Assessment Low risk Unspecified risk Field audit FSC Mixed or FSC controlled Wood Uncontrolled CERIFICATION PROCESS INPUT OUTPUT Compliance Non- compliance CW system overview

12. 12 FSC-STD-40-005 V2 Contents Part 4: Sale of FSC Controlled Wood Part 1: Quality System Requirements Part 2: FSC Controlled Wood Supply Requirements Part 3: Risk Assessment and Verification Program Scope Standard effective date References Terms and definitions GlossaryOfterms Annex 1 Annex 2 Annex 3 Annex 4 Criteria for assessing risk (Risk Assessments) Requirements for company verificationprogram (Field audits for non-low risk) Provisions for claims related to FSC ControlledWood

13. 13 FSC Controlled Wood quality system supply requirements

14. 14 Part 1: Quality System Requirements 4. Records 3. Training 2. Procedures 1. Policy Quality System Requirements Policy commitment to avoid wood from the 5 unacceptablePolicy commitment to avoid wood from the 5 unacceptable categories of materials for FSC product groups (1.1) Procedures or work instructionsProcedures or work instructions covering all applicable requirements and identifying responsible personnel for implementing each procedure (2.1, 2.2) Specify and implementSpecify and implement training requirements for all relevant staff; record training Events (3.1, 3.2, 3.3) All relevant records shall be kept forAll relevant records shall be kept for 5 years (4.1)

15. 15 Part 1: Quality System Requirements 1.1 Written, publicly available policy The Policy shall: include a clear commitment to implement best efforts to avoid trading & sourcing unacceptable materials clearly list the 5 unacceptable categories (vague or general language is NOT acceptable) be made publicly available be endorsed by the most senior management level NB! The policy is a pre-condition for companies implementing their own verification program.

16. 16 Part 2: Supply Requirements Company can purchase and use the following material types 1.FSC-certified material from certified suppliers (need to check required info on purchase documents) 2.Reclaimed materials verified against FSC-STD-40- 007 3.FSC Controlled Wood material from suppliers certified to deliver FSC Controlled Wood (need to check required info on purchase documents) 4.Wood which is controlled by the company itself. In such case company is implementing its own verification program according to 40-005. NB! Companies who do not use the 4th category above and only buy from the first three categories, do not need to have a verification program, including risk assessments.

17. 17 Uncontrolled material (9.1) Companies MAY also buy material which is not certified and where the origin is not known/controlled. All such material SHALL be maintained physically separate from materials for FSC products. Separation and tracking system of uncontrolled material shall be carefully audited if company uses uncontrolled material.

18. 18 5. Supplier identification Categorize supplies (5.1): FSC-Certified from FSC Suppliers FSC-certified inputs may be used as FSC CW; CB-COC-00XXXX required FSC Controlled Wood from FSC Suppliers “FSC Controlled Wood”; CB-CW/FM-00XXXX or CB-CW-00XXXX required Controlled material from Company’s own Verification Program Non-FSC virgin inputs verified through company verification program Uncontrolled wood Keep it separate from all inputs to FSC product groups! Wood certified by other certification systems such as PEFC or SFI cannot be accepted as FSC CW without verification. Part 2: Supply Requirements

19. 19 5.2 Maintain list of suppliers of controlled material that includes: name and address of suppliers (5.2a) a description of the inputs (5.2b) species and volume of the inputs (5.2b) relevant purchase documents (5.2c) name and address of suppliers (5.2a) a description of the inputs (5.2b) species and volume of the inputs (5.2b) relevant purchase documents (5.2c) Part 2: Supply Requirements

20. 20 Supply documentation shall include (7.1): “FSC Controlled Wood” product description SW-CW-123456FSC Controlled Wood code (e.g. SW-CW-123456) Inputs received, shipping documents, and invoice can be cross-referenced (7.1) FSC-certified supplier certificate scope shall include sales of “FSC Controlled Wood” products (www.fsc-info.org) Part 2: Supply Requirements 7. FSC Controlled Wood from FSC-certified Suppliers

21. 21 FSC-certified supplier certificate scope shall include sales of “FSC Controlled Wood” products (7.2): www.fsc-info.org Part 2: Supply Requirements 7. FSC Controlled Wood from FSC-certified Suppliers

22. 22 FSC Controlled Wood verification program

23. 23 Verification Program Overview Step 1: District of Origin (8.0) Required for all verification programs Step 2: Risk Assessment (11.0, 12.1, Annex 2) Required for all verification programs Step 3: Field Audit Verifications (12.2, 13.0, Annex 3) Required only when inputs are used from sources with unspecified risk Step 4: Complaints Mechanism (14.0) Required for all verification programs NB: Verification program is not applicable when the company only purchases “FSC Controlled Wood”

24. 24 Verification Program FSCFSC-CW Controlled Material Verification Program Uncontrolled Check sales documents and certificate validity Check district of origin Risk Assessment Low risk Unspecified risk Field audit FSC Mixed or FSC controlled Wood Uncontrolled CERIFICATION PROCESS INPUT OUTPUT Compliance Non- compliance

25. 25 8. District of Origin

26. 26 8. District of Origin 1. Determine country & district of origin (8.1a) For each controlled material input the company shall be able forest to determine its origin to the forest district level Supplier declaration is not satisfactory For each controlled material input the company shall be able forest to determine its origin to the forest district level Supplier declaration is not satisfactory 2. Maintain records of country & district of origin (8.1a, b) Ensure documentation is maintained to demonstrate district of origin (8.1b) May include: Legally required transport documents through supply chain Proof of purchase documents for FMU Ensure documentation is maintained to demonstrate district of origin (8.1b) May include: Legally required transport documents through supply chain Proof of purchase documents for FMU 3. Implement audit process to verify authenticity (8.1c) Specify the audit process to verify authenticity of specified documentation to confirm district of origin Conduct the audits based on frequency defined Specify the audit process to verify authenticity of specified documentation to confirm district of origin Conduct the audits based on frequency defined

27. 27 FSC-ADV-40-016 & Supply Requirements FSC Advice Note: Implementation of FSC Controlled Wood requirements in FSC-STD-40-005 V2-1 and FSC-STD- 20-011 V1-1, 24 June 2008 F. District shall be defined at the forest level (not supplier site) H. Demonstrate to the CB that the CW supply chain is identifiable and traceable down to the district. I. Demonstrate the origin of the wood and that it has not been mixed with uncontrolled through the supply chain.

28. 28 8. District of Origin NB! The requirement to confirm district of origin makes implementation of a verification program practically unrealistic to meet CW for secondary manufacturers and companies further downstream: Proof of origin is usually not possible; Assurances needed for supply chain systems

29. 29 11. / Annex 2 Risk Assessment

30. 30 11. Risk Assessment Conduct risk assessment per Annex 2 for each district (11.1) In case of doubt, Classify district as unspecified risk (11.3, 12.2) Allow risk assessment results to be publicly available (11.2) www.fsc-info.org Low risk (12.1) FSC Controlled Wood Low risk (12.1) FSC Controlled Wood

31. 31 First – does the district already have a risk designation? Check for FSC-approved designations Check for FSC-approved designations FSC National Initiatives or other FSC parties may conduct risk assessments and have approved and published by FSC IC Check the FSC CW Resource Center: www.fsccontrolledwood.org If not – conduct your own risk assessment Start at country level for each category Start at country level for each category If not low risk – go to lower level, e.g. region, county, If not low risk – go to lower level, e.g. region, county, municipality municipality If district cannot be confirmed to be low risk – there are 2 options: a) classify as uncontrolled and keep separate, b) implement field auditing per annex 3 Conducting risk assessments 11. Risk Assessment NB: Once FSC approves designations, companies are allowed 6-months to align their results

32. 32 Risk assessment shall include sources of information used; clear risk designation (“low risk or “unspecified risk”); clear and relevant justification for risk designation (why and on which basis); Risk assessment shall cover all five categories and shall address all indicators in Annex 2 Risk assessment shall be conducted for each district of origin (from where controlled materials are sourced) Annex 2: Risk Assessments

33. 33 FSC-ADV-40-016 & Risk Assessments FSC Advice Note: Implementation of FSC Controlled Wood requirements in FSC-STD-40- 005 V2-1 and FSC-STD-20-011 V1-1, 24 June 2008 B. CB shall verify the adequacy of the results & shall post the risk assessment public summary at fsc-info within 7-days of issuing the CW code. C. Minimum content of the risk assessment public summary (see inserted Word document). PRIOR G. New districts require CB approval of a new risk assessment and posting at fsc-info PRIOR to use of the input as controlled material.

34. 34 Risk Assessment Public Summary www.fsc-info.orgwww.fsc-info.org screen shot to show where risk assessment public summaries are posted: www.fsc-info.org

35. 35 13. / Annex 3 Supplier field audit verification system

36. 36 13. Field Audit Verification Program Applicable if company is sourcing from areas with “unspecified risk” and wish to use this material in FSC product groups (13.1). Include FMUs in field audits according to Annex 3 (13.1). Provide field audit findings including non-conformances with Annex 3, section B to CB (13.2). Default to FSC guidance/ interpretation (FSC IC, FSC RO, FSC NI) when it exists (13.3).

37. 37 Annex 3: Field Audit Verification Program Sources with unspecified risk require FMUs to be in a field audit verification program to provide evidence that the material has been controlled for the non-low risk categories Sources with unspecified risk require FMUs to be in a field audit verification program to provide evidence that the material has been controlled for the non-low risk categories Identify and provide rationale for documents / other evidence to demonstrate CW Identify and provide rationale for documents / other evidence to demonstrate CW Specify and implement audits to confirm authenticity of evidence, including stakeholder consultation, staff interviews, and visits to harvesting sites Specify and implement audits to confirm authenticity of evidence, including stakeholder consultation, staff interviews, and visits to harvesting sites Requirements applicable to those categories not confirmed as low risk

38. 38 Conduct field verification audits: Performed by qualified personnel Audit should be conducted timely after receipt of wood Consultation with workers shall take place without management representatives Reports of the verification shall be kept for 5 years and available to SW CB shall conduct field verifications of company verification program Annex 3: Field Audit Verification Program

39. 39 FMU field audit sampling: Identify the total number of FMUs. Classify FMUs into sets of similar units for audit sampling: forest type, location (district), size of operation. Apply sampling equation to each set of FMUs. Select the FMUs for auditing randomly. Conduct annual FMU audits in each set: x = 0.8√y x = 0.6√y (SLIMF) E.g., district includes 136 FMUs, audit sample: x10 x = 0.8(√136) = 0.8X11.66 = 9.33 = 10 NB! Company shall conduct field audits based on sampling BEFORE CB approval of the sources for use as controlled inputs Annex 3: Field Audit Verification Program

40. 40 FSC-ADV-40-016 & Field Audits FSC Advice Note: Implementation of FSC Controlled Wood requirements in FSC-STD-40-005 V2-1 and FSC-STD- 20-011 V1-1, 24 June 2008 L. Any FMU in the audit sampling that does not fulfill the requirements in Annex 3B shall be removed from the CW sources and another FMU from that set shall be randomly selected for an audit within that same year.

41. 41 14. Complaints Mechanism

42. 42 14. Complaints Mechanism 14.1 Procedures shall be in place in case of complaints: Assess the evidence within 2 weeks Field verification if evidence is considered relevant, within 2 months Exclude the supplier if non- compliances found Supplier may only be used for FSC CW once it demonstrates compliance Maintain records of all complaints and actions taken

43. 43 Company shall inform the FSC NI / FSC RO & CB when there is a non- compliance in areas designated as low risk (14.2) If there are frequent non- compliances from low risk areas – the risk assessment shall be reviewed (14.3) 14. Complaints Mechanism

44. 44 FSC Controlled Wood claims and sales for FSC CW product groups

45. 45 Part 4: Sale of FSC Controlled Wood An FSC CoC certificate is required (15.1) Sales and shipping documents shall include:   Statement “FSC Controlled Wood” (15.3);   FSC CW code, e.g. SW-CW- 123456 (15.2) 15. Supplying FSC Controlled Wood

46. 46 SW-CW-00XXXX Issuance FSC CoC certificate required with CW approved in the scope;FSC CoC certificate required with CW approved in the scope; Company may or may not have FSC-certified product groups;Company may or may not have FSC-certified product groups; Company may or may not have FSC CW product groups;Company may or may not have FSC CW product groups; CoC tracking and handling standard requirements apply to any FSC CW product groups;CoC tracking and handling standard requirements apply to any FSC CW product groups; CoC and CW codes match, e.g., SW-COC-001234, SW-CW- 001234;CoC and CW codes match, e.g., SW-COC-001234, SW-CW- 001234; 40-005 V2 evaluation required for assessments and upcoming audits.40-005 V2 evaluation required for assessments and upcoming audits.

47. 47 Annex 4: Claims Related to FSC CW FSC CW sales shall only be to FSC CoC certificate holdersFSC CW sales shall only be to FSC CoC certificate holders “FSC Controlled Wood” shall not be used on-product or in promotional items“FSC Controlled Wood” shall not be used on-product or in promotional items Segregation marks may include “Controlled Wood” when not reaching final points of sale; CW code is requiredSegregation marks may include “Controlled Wood” when not reaching final points of sale; CW code is required FSC label and CoC code shall not be used in conjunction with FSC CWFSC label and CoC code shall not be used in conjunction with FSC CW

48. 48 Controlled Wood Evaluation

49. 49 Relevant Documents CoC-01 Supplementary Guide to Evaluation, includes Annex L, which is focused exclusively on CW 40-005 evaluation. CoC-33 Master Report Template shall be used including the FSC-STD-40-005 checklist appendix. CW-13 Risk Assessment Public Summary template can be provided to companies; the header table is required. CW-14 Field Audit Verification Checklist - For SW’s audits of FMUs with unspecified risk.

50. 50 Risk Assessment Evaluation Risk assessment evaluation is part of the RRA process, but may require regional expertise RRA quality reviewers shall ensure the certificate scope correctly identifies CW in the RRA. This is critical for issuing and maintaining the CW code. Upon approval, task manager is responsible to ensure the risk assessment public summary is sent to the certification administrator (for upload to FSC database).

51. 51 When is it low risk? A district can be classified as low risk if: Evidence of enforcing logging related laws, and There is a robust system for harvesting licenses, and No (or limited) reports on illegal logging, and Low level of corruptions related to harvesting permits and law enforcement. Intention An area can be considered as low risk when illegal harvesting is not a threat to the forest, people and communities. A district can still be classified as low risk in case of only minor issues such as minor violation from the area of harvesting, filing of paperwork late or small violation related to transport. Illegally harvested wood

52. 52

53. 53 Low risk High risk

54. 54 A district can be classified as low risk if: No UN security council ban on timber export, and Not designated as source of conflict timber, and No evidence of child labor or violation of ILO fundamental principles rights, and There are recognized and equitable processes in place to resolve conflicts of substantial magnitude pertaining to traditional rights including use rights, cultural interests or traditional cultural identity. Intention A district can be considered as low risk when there is no major violation of traditional or civil rights. Districts where there is an international ban on import or area with major violations of the ILO fundamental principles or use of child labour shall not be classified as low risk When is it low risk? Wood harvested in violation of traditional and civil rights

55. 55 A district can be classified as low risk if: The forest management activities do not threaten the high conservation values within the ecoregion, or There is a strong system in place for protecting the conservation values within the ecoregion Intention Intent of this category is to avoid wood coming from regions where there is a significant occurrence of deforestation of natural and semi- natural forests. For the risk assessment, the company shall first assess if there are any high conservation values threatened at the ecoregion level. If this is the case, the company shall assess how forest management activities relate to these HCVs at a district level. When is it low risk? High conservation values are threatened

56. 56 HCV Continued An ecoregion is defined as a large area of land or water that contains a geographically distinct assemblage of natural communities that (a) share a large majority of their species and ecological dynamics; (b) share similar environmental conditions, and; (c) interact ecologically in ways that are critical for their long-term persistence. Info:http://www.worldwildlife.org/science/ecoregions.cfm http://www.worldwildlife.org/science/ecoregions.cfm Maps: Ecoregion map Ecoregion mapEcoregion map Decription:List List What is an eco-region?

57. 57 A district can be classified as low risk if: There is no net loss of natural forests and other naturally wooded ecosystems such as savannahs and no significant rate of loss (> 1% per year) of natural forests and other naturally wooded ecosystems such as savannahs. Intention A district can be classified as low risk if there is no conversion of natural forest and other naturally wooded ecosystems When is it low risk? Wood harvested in forests being converted

58. 58 A district can be classified as low risk if: There is no commercial use of the species in the district, or Licenses are required for commercial use and no licenses have been issued, or It is forbidden to use generically modified trees in the country Intention A district can be classified as low risk if there is no use of genetically modified trees within the district When is it low risk? Wood from forests in which genetically modified trees are planted

59. 59 FMU field audits (unspecified risk) NB! Company shall implement field audits before supplies can be approved in the certificate scope! SW auditor shall conduct sampling field audits with or immediately following the company’s auditing; these shall be finalized within two-months from the assessment. Its important to budget and plan for field audits before the assessment. It may be efficient to do FMU audits with the company visit. One a company is certified, new districts with unspecified risk shall go through this process before the supplies can be approved in the certificate scope. NB! Company shall implement field audits before supplies can be approved in the certificate scope! SW auditor shall conduct sampling field audits with or immediately following the company’s auditing; these shall be finalized within two-months from the assessment. Its important to budget and plan for field audits before the assessment. It may be efficient to do FMU audits with the company visit. One a company is certified, new districts with unspecified risk shall go through this process before the supplies can be approved in the certificate scope. *See sampling requirements on next slide Requirements based on STD-20-011 and ADV-40-016

60. 60 SW audit sample is a sampling of the FMU audits conducted by the company: 0.8√company sample Example: Company is sourcing from 136 FMUs and is conducting field audits of 10 FMUs: SW Sample = 0.8√10 = 2.53 = 3 SW auditor shall conduct at least 3 audits (from the 10 FMUs audited by company), to verify the company’s audit results according to Annex 3. FMU field audits (unspecified risk)

61. 61 Missing or incomplete risk assessments; Use of CW inputs without CB approval of the risk assessment; Absence of a publicly available written policy commitment; Absence of a complaints mechanism; Absence of supply FMU field audits in districts with unspecified risk; Absence of sufficient documentation to demonstrate the district of origin for each supply (supplier declaration is not sufficient) Major Non-conformances ADV-40-016 Examples of Major Non- conformances with 40-005:

62. 62 THANK YOU!