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Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
Timber Certification and the Role
of ITTO
Emmanuel ZE MEKA, Executive Director
International Tropical Timber Organisation
...
PEFC Week, Kuala Lumpur,
November 2013

State of forestry in the
Asia-Pacific Region
Bruno Cammaert
FAO Regional Office fo...
Structure of the presentation

 Forest cover change
 Forest products
 Forest use and tenure
 Drivers of change
 Progr...
Forests of Asia and the Pacific - 2010

26%

OF TOTAL LAND AREA

740,000,000 ha
But only 0.2 ha
per person
Forest area by sub-region – 2010
(million ha)

255
80

214

191
Area (million hectares).

Forest Area Change 1990-2010
800
700
600

1990

2000

2010

500
400
300
200
100
0
East Asia

Sou...
Primary forests
19% OF ASIA-PACIFIC FORESTS
30% OF SOUTH EAST ASIA’S FORESTS
34% OF THE WORLD’S FORESTS
Other naturally regenerated forests

65% OF ASIA-PACIFIC FORESTS
63% OF SOUTHEAST ASIA’S FOREST
60% OF THE WORLD’S FORESTS
Planted forests
16% OF ASIA-PACIFIC FORESTS
7% OF SOUTHEAST ASIA’S FORESTS
7% OF THE WORLD’S FORESTS
Wood products – industrial round wood
ASIA

OCEANIA
Wood products – sawn wood, panels, and
paper
Wood products – key trends


Significant decline in wood
production in some countries


Exhaustion of forest resources

...
Forest Tenure
Forest ownership in Asia-Pacific
Private
sector
4%

Owned or
designated
for use by
communities
28%

Owned or...
Forest Use

 32% primarily for the
production of wood
and NWFPs

 20% multiple-use
management

 14% Conservation of
bio...
Key drivers of change

What happens to forests and forestry is
determined to a large extent by what
happens outside the fo...
Key drivers of change: Demographics

 Asia-Pacific – world’s most
densely populated region

 Population increase
3.6 bil...
Key drivers of change: Economics
 High growth rates increasing the
demand for food, fiber and fuel

 Poverty rates will ...
Key drivers of change: Agriculture

 Agricultural expansion is the

primary reason for forest
conversion in many countrie...
Key drivers of change: Infrastructure

 Road network expansion
greatest in more
developed countries
 Impacts greatest in...
Key drivers of change: Politics and
policies
 Greater democracy and political accountability
 Transparency in functionin...
Key drivers of change: Societal and
Environmental concerns
 Local and national issues and
actions

 Global and regional
...
Progress toward Sustainable Forest
Management

 Improved stakeholder participation and






local forest tenure main...
Thank you
Snapshot of Forest Certification
in the Asia region
Ben Gunneberg, Secretary General
PEFC Council

25
Forest Certification Globally

•
•
26

•

10% of the world forests are certified (UNECE/FAO 2013)
28% of industrial roundw...
Forest Certification in Asia

• 2% of forests in Asia are certified (UNECE/FAO 2013)
• 8% of forests in Southeast Asia are...
National progress in Asia

28

Source: 2013, Certification system’s published data
Markets – Chain of Custody

•

Total of 7768 CoC certificates in Asia

29

Source: 2013, Certification system’s published ...
Reasons for optimism?


Legality & Governance issues being addresses at the highest
levels



FSC actively promoting cer...
THANK YOU
PEFC International
10 Route de l’Aéroport, 1215 Geneva, Switzerland
www.pefc.org
info@pefc.org
31
Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
PEFC Stakeholder Dialogue 2013

The EU FLEGT Action Plan –
lnfluencing Forest Industry
Transformation
EFI FLEGT Facility
A...
EU FLEGT Action Plan – 2003
Objective:

Address the driving forces of illegal logging both on the
demand side as well as i...
FLEGT Global Historical perspective
G8
Forestry
Action
Program
-1998IL as 1 of
5 areas
of action

East Asia
FLEG
Bali

Afr...
What is a Voluntary Partnership Agreement?
Legally-binding bilateral treaty (not “voluntary” once
agreed)
Timber-producing...
37
38
EU Timber Regulation

What products are covered?
1
Covered (almost all):
•
•
•
•

Solid wood products
Flooring
Plywood
Pul...
40
How do businesses comply with the EU Timber
Regulation?
Full implementation of VPA : Producing country’s timber
accompanie...
42
FLEGT-related discussions at ASEAN
level

43
Promoting specific regional exchange
to share lessons and address
challenges

44
45
46
47
48
49
50
51
52
Thank you
EU FLEGT Facility
Tomi Tuomasjukka
00358 50 433 9049
Tomi.tuomasjukka@efi.int
www.euflegt.efi.int

53
EU –China BCM
Bilateral
Cooperation
Mechanism on
FLEG signed
2009,
implementation
started in 2010

54
China-Africa FLEGT VPA Informationsharing Workshop, October 2013.

55
56
Thank-you.

57
Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
FOREST CERTIFICATION & ILO CORE LABOUR
CONVENTIONS
BWI – BUILDING WOOD WORKER’S INTERNATIONAL
WHO WE ARE
The BWI (www.bwint.org) :

•

Global union Federations on Wood, Fore...
Pacific Rim Forestry Network

SUPPORT GROUPS
ILO
Regional Networks

•Online
•Capacity Building
•Solidarity Actions

Japan/...
REGIONAL INITIATIVES

WOOD IS GOOD, CERTIFIED WOOD IS THE BEST!
REGIONAL COOPERATION POSSIBILITIES

WOOD IS GOOD, CERTIFIED WOOD IS THE BEST!

» Pan-ASEAN Timber Certification Initiative...
PILOT PROJECT COOPERATION ON MYANMAR FOREST
CERTIFICATION

CERTIFICATION: WHY IS IT IMPORTANT?

Certification:
• Ensures l...
PROPOSED PROGRAMME COOPERATION FRAMEWORK

•

Evolve the national forestry certification scheme through
tripartite mechanis...
FOREST CERTIFICATION & ILO CORE LABOUR CONVENTIONS

CERTIFICATION: WHY IS IT IMPORTANT?
Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
Responsible Asia Forestry and Trade
A partnership for strengthening capacity and sharing knowledge
Chen Hin Keong, Forest ...
RAFT (2012-2015)
Provide capacity building & knowledge sharing services
to promote trade in responsibly harvested &
manufa...
RAFT Partners
Institute for Global Environmental Strategies (IGES)
•
•
•
•

Analytical inputs on timber legality and susta...
RAFT Partners
• Tropical Forest Foundation (TFF)
•
•
•
•

RAFT work in Indonesia & Papua New Guinea
RIL training for fores...
RAFT Partners
WWF Global Forest & Trade Network (GFTN)
•

Alongside TRAFFIC, developing practical guidance for establishin...
RAFT Partners
The Nature Conservancy (TNC)
•

Provides strategic coordination for the RAFT Partnership as a whole

•

Impl...
.

RAFT Support:
•Some financial support for selected buyer-supplier dialogues
& international knowledge sharing events
•M...
www.responsibleasia.org
Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
RECOFTC’s Regional Experiences
with Forest Smallholders

Martin Greijmans
14 November 2013
PEFC Stakeholder Dialogue, Kual...
Brief Organizational Background
•Mission: Local communities and indigenous people are
actively engaged in sustainable mana...
3 Guiding Principles

Strong and
secure rights

Good
governance

Fair benefits

Securing
Community
Forestry

Enhancing
Liv...
RECOFTC’s Functional Approach
Capacity Development Cycle
Training and
learning
networks

Piloting and
demonstrating

RECOF...
Forest Smallholders
More than 450 million people
depend on forests in Asia and the
Pacific, earning an income of 20%
Fores...
ForInfo Project
Teak Collateral

Background:
• Teak harvested prematurely for
immediate cash needs
• Lack of economic and ...
ForInfo Project
Teak Collateral

Outcomes:
• Smallholders secure clearer tenure rights
• Longer rotation of teak cultivati...
FSC Training of Trainers Asia
Aim:
• Develop pool of local
trainers to support and
respond to specific needs
of smallholde...
FSC, PEFC, REDD, FLEGT may exacerbate
regulations for communities & smallholders
Different scale of regulatory barriers ac...
RAFT and Conflict Transformation

• Promote social justice in
SFM practices
• In part by reducing incidence
and negative i...
RAFT and Conflict Transformation
Approach with RECOFTC:
Training of Trainers in Conflict
Transformation
•Build confidence,...
FLEGT & RECOFTC Thailand
• In Thailand FLEGT allows for renewed claim
for communities to play a role and become a
respecte...
What’s Next?
• Beyond the forest:
– Broad landscape approach
– Link with agriculture and energy policies
• Improve capacit...
Asia

Forest Connect Asia
• Support smallholder enterprises
to connect to each other, policies
and markets
• FCA to build ...
Thank You

For further information, please contact

Martin Greijmans
martin.greijmans@recoftc.org
www.recoftc.org
Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
Investors supporting
transformation towards
sustainability in the forestry
sector

Adam Grant
Manager, Certification and E...
Important Note
© New Forests 2013. This publication is the property of New Forests. This material may not be reproduced or...
Overview of New Forests
 Founded in 2005
 Managing forestry investment for
institutional investment clients
 Currently ...
What Differentiates New Forests?
Strategically, New Forests is…
1. Focused on Asia Pacific opportunities

Unique for a TI...
New Forests’ Business

Back Office, Administration, Risk and Compliance Systems and Governance
Financial and Forest Resour...
Tropical Asia Forest Fund - TAFF
TAFF is a commingled fund investing in tropical timber plantations in South
East Asia wit...
The Changing Forestry Landscape
1. Shift to plantations and the
declining economic frontier of
natural forests
2. Global t...
Natural Forest Harvest in SE Asia in Decline
Steady Decline in Natural Forest Logging in Malaysia and Indonesia

Slide 102...
Limited Plantation Investment
Asia has lagged behind other
regions in the development of
commercial plantations for higher...
Opportunities for TAFF

4-year old clonal teak in Java

Slide 104

 Investing in Southeast Asia with
priority for Indones...
Sustainability as a “Stay in Business” Issue
 Institutional Investors require
sustainability policy, labour
policy, corru...
Sustainability at New Forests
New Forests is a signatory to the UN
Principles for Responsible Investment
(PRI) and commits...
TAFF Sustainability Goals
New Forests is committed to sustainable management of TAFF investments
 Environmental, social a...
Opportunity Costs in the Landscape
Markets set prices for timber products, but how do we value other
benefits?
 Forests p...
Innovating Markets
New Forests established Malua
BioBank in 2008 with seed
investment from The Eco
Products Fund.

Unlocki...
Environmental Markets Lessons Learned
 Price signals work







SO2 market drove changes in fuel from high to low su...
Towards the Future
Can forestry represent a “natural infrastructure” asset class?


Projections are that global industria...
Key Points & Conclusions












Slide 112

World timber demand will continue to rise, markets will evolve to
en...
www.newforests.com.au
Appendices
New Forests’ History


July 2005 – Company established in Sydney and
receives Australian Financial Service Licence



Ma...
Supply from Russia is Declining
Russian softwood exports have hit a wall…
Russian log exports have
fallen dramatically ove...
Canadian Supply Falling
Policy Constraints and Mountain Pine Beetle impact will lead to near-term
decline in timber supply...
Natural Forest Logging Collapse (repeated
from main preso)
Regional Collapse in Natural Forest Logging in Malaysia and Ind...
Australian Plantation Harvest Rising
Australian hardwood plantations are steadily replacing
a declining supply from native...
Increasing Importance of Plantations
 Global industrial roundwood
demand is likely to rise from 1.5
billion m3 in 2013 to...
Plantation Productivity Can Increase
Example of Productivity Gains –
Softwood in Australia

*Source: Timberlands Pacific P...
What Government Policies are Needed?
A modern forest policy framework needs to address wood
supply, forest conservation an...
TAFF Certification & Sustainability
New Forests is committed to sustainable management of TAFF investments
 Third-party v...
External Motivations
 New Forests designed its Social and Environmental Management
System (“SEMS”) in 2010 and began full...
Linking Sustainable Forest
Product Supply Chains
through Asia
PEFC Stakeholder Dialogue 2013
14-15th November, Kuala Lumpu...
PEFC Forest Certification Week 2013: Stakeholder Dialogue
PEFC Forest Certification Week 2013: Stakeholder Dialogue
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PEFC Forest Certification Week 2013: Stakeholder Dialogue

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PEFC's Stakeholder Dialogue (Kuala Lumpur, Malaysia, 14/15 November 2013) brought together 300 diverse stakeholders and key actors across forest sector landscape to engage in solutions-oriented discussions. The Dialogue was part of the PEFC Forest Certification Week, which also featured the 18th PEFC General Assembly and associated workshops.

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PEFC Forest Certification Week 2013: Stakeholder Dialogue

  1. 1. Linking Sustainable Forest Product Supply Chains through Asia PEFC Stakeholder Dialogue 2013 14-15th November, Kuala Lumpur 1
  2. 2. Timber Certification and the Role of ITTO Emmanuel ZE MEKA, Executive Director International Tropical Timber Organisation 2
  3. 3. PEFC Week, Kuala Lumpur, November 2013 State of forestry in the Asia-Pacific Region Bruno Cammaert FAO Regional Office for Asia and the Pacific Bangkok
  4. 4. Structure of the presentation  Forest cover change  Forest products  Forest use and tenure  Drivers of change  Progress towards SFM
  5. 5. Forests of Asia and the Pacific - 2010 26% OF TOTAL LAND AREA 740,000,000 ha But only 0.2 ha per person
  6. 6. Forest area by sub-region – 2010 (million ha) 255 80 214 191
  7. 7. Area (million hectares). Forest Area Change 1990-2010 800 700 600 1990 2000 2010 500 400 300 200 100 0 East Asia South Asia Southeast Asia Oceania Asia and the Pacific
  8. 8. Primary forests 19% OF ASIA-PACIFIC FORESTS 30% OF SOUTH EAST ASIA’S FORESTS 34% OF THE WORLD’S FORESTS
  9. 9. Other naturally regenerated forests 65% OF ASIA-PACIFIC FORESTS 63% OF SOUTHEAST ASIA’S FOREST 60% OF THE WORLD’S FORESTS
  10. 10. Planted forests 16% OF ASIA-PACIFIC FORESTS 7% OF SOUTHEAST ASIA’S FORESTS 7% OF THE WORLD’S FORESTS
  11. 11. Wood products – industrial round wood ASIA OCEANIA
  12. 12. Wood products – sawn wood, panels, and paper
  13. 13. Wood products – key trends  Significant decline in wood production in some countries  Exhaustion of forest resources  Concerns about environmental protection Regional focus focus International Round wood exports added exports  Value- Emergence as a major producer/exporter of wooden furniture
  14. 14. Forest Tenure Forest ownership in Asia-Pacific Private sector 4% Owned or designated for use by communities 28% Owned or administered by governments 68%
  15. 15. Forest Use  32% primarily for the production of wood and NWFPs  20% multiple-use management  14% Conservation of biodiversity
  16. 16. Key drivers of change What happens to forests and forestry is determined to a large extent by what happens outside the forestry sector and by larger societal changes.
  17. 17. Key drivers of change: Demographics  Asia-Pacific – world’s most densely populated region  Population increase 3.6 billion (2005) 4.2 billion (2020)  Greatest increases in densely populated “developing” countries  Urban population 38% people in urban areas (2005) 47% people in urban areas (2020)
  18. 18. Key drivers of change: Economics  High growth rates increasing the demand for food, fiber and fuel  Poverty rates will decline, but the number of poor will remain high  Recent reductions, export orientated countries hit hardest (e.g., Cambodia, Malaysia, Thailand)  Swelling middle class  Structural changes: • Declining importance of agriculture in income and employment • Globalization • Diminishing importance of the role of governments
  19. 19. Key drivers of change: Agriculture  Agricultural expansion is the primary reason for forest conversion in many countries  A few agricultural crops account for a large proportion of deforestation  Rubber plantations are expanding in forest areas  Oil palm plantations set to spread significantly
  20. 20. Key drivers of change: Infrastructure  Road network expansion greatest in more developed countries  Impacts greatest in less developed countries
  21. 21. Key drivers of change: Politics and policies  Greater democracy and political accountability  Transparency in functioning and accountability of public institutions and officials – rights to information  Forest governance under increased public scrutiny  Demands for participation in public policy decision making  Shift from timber-focused management to multiple-use management  Greater emphasis on ecosystem services and sustainable development  Potential contributions of forestry to “green economy”
  22. 22. Key drivers of change: Societal and Environmental concerns  Local and national issues and actions  Global and regional environmental drivers: International commitments and the outcomes of climate change negotiations Pressure from stakeholders in the “global forest resource”
  23. 23. Progress toward Sustainable Forest Management  Improved stakeholder participation and     local forest tenure mainstreamed into National Forest Programmes Sustained efforts in REDD+ readiness FLEGT: demand and supply Third party certification of legality, SFM and Chain-of-Custody Payments for ecosystem services (PES)
  24. 24. Thank you
  25. 25. Snapshot of Forest Certification in the Asia region Ben Gunneberg, Secretary General PEFC Council 25
  26. 26. Forest Certification Globally • • 26 • 10% of the world forests are certified (UNECE/FAO 2013) 28% of industrial roundwood production is certified 60% of total certified area is PEFC
  27. 27. Forest Certification in Asia • 2% of forests in Asia are certified (UNECE/FAO 2013) • 8% of forests in Southeast Asia are certified (WB/Profor 2012) • 11% of production forests in Southeast Asia are certified 27 (WB/Profor 2012)
  28. 28. National progress in Asia 28 Source: 2013, Certification system’s published data
  29. 29. Markets – Chain of Custody • Total of 7768 CoC certificates in Asia 29 Source: 2013, Certification system’s published data
  30. 30. Reasons for optimism?  Legality & Governance issues being addresses at the highest levels  FSC actively promoting certification in many countries throughout the region – results are evident  PEFC working to scale up its Asia Promotions Initiative and expand our presence in the region  Number of national certification organizations emerging with the potential to achieve wider uptake in forests & markets  Companies continuing to make commitments to sourcing sustainable products – driving up demand signals  30 WBCSD Declaration, Consumer Goods Forum, Unilever, etc
  31. 31. THANK YOU PEFC International 10 Route de l’Aéroport, 1215 Geneva, Switzerland www.pefc.org info@pefc.org 31
  32. 32. Linking Sustainable Forest Product Supply Chains through Asia PEFC Stakeholder Dialogue 2013 14-15th November, Kuala Lumpur 32
  33. 33. PEFC Stakeholder Dialogue 2013 The EU FLEGT Action Plan – lnfluencing Forest Industry Transformation EFI FLEGT Facility Asia Regional Office Kuala Lumpur, Malaysia 14 November 2013 33
  34. 34. EU FLEGT Action Plan – 2003 Objective: Address the driving forces of illegal logging both on the demand side as well as in the timber producing countries. Course of Action/Main Instruments Public Procurement Policies (demand) Voluntary Partnership Agreements (supply) EU Timber Regulation (demand and supply ) 34
  35. 35. FLEGT Global Historical perspective G8 Forestry Action Program -1998IL as 1 of 5 areas of action East Asia FLEG Bali Africa FLEG Yaoundé FLEGT EU Action Plan Europe & North Asia FLEG St Petersburg FLEGT regulation Regional FLEG ministerial meetings EU FLEGT AP FLEGT implementing regulation EU Timber regulation 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 US Lacey Act amendment 35 Australian Illegal Logging Prohibition Act
  36. 36. What is a Voluntary Partnership Agreement? Legally-binding bilateral treaty (not “voluntary” once agreed) Timber-producing countries agree to licence their timber exports as legal EU agrees to accept only licensed imports Backed by EU trade legislation (2005 FLEGT Regulation) Legality assured through an agreed Timber Legality Assurance System (TLAS) Supported where necessary with development cooperation 36
  37. 37. 37
  38. 38. 38
  39. 39. EU Timber Regulation What products are covered? 1 Covered (almost all): • • • • Solid wood products Flooring Plywood Pulp and paper 2 Not covered: • • • • Recycled products Musical instruments Printed matter including magazines, newspapers and books Some special products, like wooden toys Most timber products are covered. The products covered may change in future. 39
  40. 40. 40
  41. 41. How do businesses comply with the EU Timber Regulation? Full implementation of VPA : Producing country’s timber accompanied by FLEGT-license which attests to its legality. • Private sector initiatives :Timber certified under the main forest certification schemes is still subject to due diligence requirements. Other means of providing information on legality 41
  42. 42. 42
  43. 43. FLEGT-related discussions at ASEAN level 43
  44. 44. Promoting specific regional exchange to share lessons and address challenges 44
  45. 45. 45
  46. 46. 46
  47. 47. 47
  48. 48. 48
  49. 49. 49
  50. 50. 50
  51. 51. 51
  52. 52. 52
  53. 53. Thank you EU FLEGT Facility Tomi Tuomasjukka 00358 50 433 9049 Tomi.tuomasjukka@efi.int www.euflegt.efi.int 53
  54. 54. EU –China BCM Bilateral Cooperation Mechanism on FLEG signed 2009, implementation started in 2010 54
  55. 55. China-Africa FLEGT VPA Informationsharing Workshop, October 2013. 55
  56. 56. 56
  57. 57. Thank-you. 57
  58. 58. Linking Sustainable Forest Product Supply Chains through Asia PEFC Stakeholder Dialogue 2013 14-15th November, Kuala Lumpur 58
  59. 59. FOREST CERTIFICATION & ILO CORE LABOUR CONVENTIONS
  60. 60. BWI – BUILDING WOOD WORKER’S INTERNATIONAL WHO WE ARE The BWI (www.bwint.org) : • Global union Federations on Wood, Forestry, Construction and Building Material Sectors; • 328 Free and Democratic Trade Unions around the world, 89 of them in Asia-Pacific Region; • Representing more than 12 million members around the world; • Number of International Framework Agreements (IFA’s): • Mission: to promote the development of trade unions in our sectors throughout the world and to promote and enforce workers rights in the context of sustainable development.
  61. 61. Pacific Rim Forestry Network SUPPORT GROUPS ILO Regional Networks •Online •Capacity Building •Solidarity Actions Japan/China Pacific •IP-SFM •Legal Network •Organising •Unsustainable Logging SEA f t o cts en du T m o e ve t Pr LEG ang g o M res /F Ch din A a Fo VP ate Tr n lim rbo C a C •Unsustainable logging •Outsourcing •FC/MNC •Organising •Gov’t Agreement South Asia •Unsustainable logging •Self-Help Groups •Organising
  62. 62. REGIONAL INITIATIVES WOOD IS GOOD, CERTIFIED WOOD IS THE BEST!
  63. 63. REGIONAL COOPERATION POSSIBILITIES WOOD IS GOOD, CERTIFIED WOOD IS THE BEST! » Pan-ASEAN Timber Certification Initiative » Climate Change ASEAN ADB
  64. 64. PILOT PROJECT COOPERATION ON MYANMAR FOREST CERTIFICATION CERTIFICATION: WHY IS IT IMPORTANT? Certification: • Ensures legality of the woods and products; • Secures a higher priced, highly sought after timber; • Adds value to the wood products: Myanmar Timber is $500 per ton vs. Malaysian Timber is $20,000 per ton; • Enables unions to organise and promote decent work.
  65. 65. PROPOSED PROGRAMME COOPERATION FRAMEWORK • Evolve the national forestry certification scheme through tripartite mechanism process • Confidence and Capacity Building Measures • Strengthening of Technical Assistance in cooperation with MTCC and PEFC • Tripartite workshop on promotion of Decent Work Agenda in wood and forestry industry • Training progarmme on ILO Core Conventions • Joint training for auditors • Exchange programme • Trade Union Development
  66. 66. FOREST CERTIFICATION & ILO CORE LABOUR CONVENTIONS CERTIFICATION: WHY IS IT IMPORTANT?
  67. 67. Linking Sustainable Forest Product Supply Chains through Asia PEFC Stakeholder Dialogue 2013 14-15th November, Kuala Lumpur 69
  68. 68. Responsible Asia Forestry and Trade A partnership for strengthening capacity and sharing knowledge Chen Hin Keong, Forest Trade Programme Leader, TRAFFIC Andrew Ingles, Chief Technical Adviser, TNC November 2013
  69. 69. RAFT (2012-2015) Provide capacity building & knowledge sharing services to promote trade in responsibly harvested & manufactured wood products •More verified legal products traded •More forests independently certified sustainably managed. RAFT recognizes the Forest Stewardship Council (FSC) certification scheme as the current premium standard •Reduced CO2 emissions from land-use change & forestry
  70. 70. RAFT Partners Institute for Global Environmental Strategies (IGES) • • • • Analytical inputs on timber legality and sustainable forest management certification Conducted a RAFT study on the potential role of Customs Authorities Produced the first draft of the ASEAN chain of custody guidelines for timber Undertaking a comprehensive review of timber legality issues in PNG TFT (The Forest Trust) • • • RAFT work in Indonesia, Vietnam, Lao PDR & China Develops industry guidance documents for producers, processors & exporters on how to meet legality requirements Provides in-person practical training to: • improve the level of legality compliance • make progress towards credible certification standards in the factory & forest
  71. 71. RAFT Partners • Tropical Forest Foundation (TFF) • • • • RAFT work in Indonesia & Papua New Guinea RIL training for forest concessions & training organisations Facilitates legality & chain-of-custody audits & related trainings for forest industries and concessions Provides certification support in technical & management matters TRAFFIC, the Wildlife Trade Monitoring Network • • • RAFT work in China, Indonesia, Lao PDR, Myanmar, and Viet Nam Contributes to awareness raising of forest managers & processors about: • specific steps to ensure compliance with relevant forestry legislation • where operators can find additional resources & assistance Provides support & capacity building for selected companies & industry associations on legality standards & verification systems
  72. 72. RAFT Partners WWF Global Forest & Trade Network (GFTN) • Alongside TRAFFIC, developing practical guidance for establishing legality verification systems including: • updating GFTN’s “Guide to Legal and Responsible Sourcing and Exporting in a Shifting Legal Landscape” • raising awareness and understanding of legality issues • Providing technical assistance to selected tree growers, companies, industry associations & training institutions regarding legal compliance • Providing support to forest management companies for mainstreaming legal & responsible forest management using GFTN’s existing model, tools and learning
  73. 73. RAFT Partners The Nature Conservancy (TNC) • Provides strategic coordination for the RAFT Partnership as a whole • Implements activities at the regional level and in China, Indonesia & PNG • Supports policy and systems development governing land management & spatial planning • Provides technical support to national timber legality verification systems in China and Indonesia • Pioneering logging practices that reduce carbon emissions • Helping roll out community-based natural resource management in PNG
  74. 74. . RAFT Support: •Some financial support for selected buyer-supplier dialogues & international knowledge sharing events •Mostly provides technical assistance to governments, forest managers, wood processors, & buyers of wood products through its implementing partners
  75. 75. www.responsibleasia.org
  76. 76. Linking Sustainable Forest Product Supply Chains through Asia PEFC Stakeholder Dialogue 2013 14-15th November, Kuala Lumpur 78
  77. 77. RECOFTC’s Regional Experiences with Forest Smallholders Martin Greijmans 14 November 2013 PEFC Stakeholder Dialogue, Kuala Lumpur
  78. 78. Brief Organizational Background •Mission: Local communities and indigenous people are actively engaged in sustainable management of forest landscapes •Vision: Capacity development for optimum social, economic, and environmental benefits •Engages with various stakeholders, including governments, NGOs, private sector and local communities •Since its foundation in 1987, has trained over 25,000 people from more than 27 countries
  79. 79. 3 Guiding Principles Strong and secure rights Good governance Fair benefits Securing Community Forestry Enhancing Livelihoods and Markets People, Forests, and Climate Change Transforming Forest Conflicts
  80. 80. RECOFTC’s Functional Approach Capacity Development Cycle Training and learning networks Piloting and demonstrating RECOFTC Knowledge Hub Strategic communication Research, analysis and synthesis
  81. 81. Forest Smallholders More than 450 million people depend on forests in Asia and the Pacific, earning an income of 20% Forest-based community enterprises account for 13-70% of all forestry enterprises
  82. 82. ForInfo Project Teak Collateral Background: • Teak harvested prematurely for immediate cash needs • Lack of economic and silvicultural consideration Issuing Teak Management Certificates: • Tree valuation data, Farmer identity, Plot location • Information for future planning: thinning plans and thinning products 84
  83. 83. ForInfo Project Teak Collateral Outcomes: • Smallholders secure clearer tenure rights • Longer rotation of teak cultivation, mature trees more valuable • Used as collateral for microfinance loans • Certification provides stand and financial valuation • Improve negotiating power of smallholders Securing user rights and creating access to microfinance for smallholder teak plantations
  84. 84. FSC Training of Trainers Asia Aim: • Develop pool of local trainers to support and respond to specific needs of smallholders in achieving FSC certification • More clearly link certification to livelihoods, value chains, business models, and enhanced market linkages
  85. 85. FSC, PEFC, REDD, FLEGT may exacerbate regulations for communities & smallholders Different scale of regulatory barriers according to forest type and tenure arrangement The number of regulations increase along the continuum from plantations to natural forests, while for income per hectare is the opposite (i.e. higher for plantations than for natural forests) November 22, 2013 87
  86. 86. RAFT and Conflict Transformation • Promote social justice in SFM practices • In part by reducing incidence and negative impact of natural resource conflict
  87. 87. RAFT and Conflict Transformation Approach with RECOFTC: Training of Trainers in Conflict Transformation •Build confidence, skills, and connections of practitioners working with timber industry •Promoting collaborative management and conflict resolution helping producers attain certification •Promoting HCVF as a standard
  88. 88. FLEGT & RECOFTC Thailand • In Thailand FLEGT allows for renewed claim for communities to play a role and become a respected actor in the timber sector • RECOFTC is raising awareness of the CF Networks and CSOs about VPA process – Enabling them to participate actively future government-led consultations
  89. 89. What’s Next? • Beyond the forest: – Broad landscape approach – Link with agriculture and energy policies • Improve capacity of small entrepreneurs – Business planning & development skills – Links to markets, finance, policy processes • Ex: Rights and Resources Initiative (RRI) collaboration, • Ongoing efforts to engage communities and improve role in forest sector – RECOFTC brokering PPP processes: collaboration with private sector with increased understanding, mutual gain – Ex: Stora Enso
  90. 90. Asia Forest Connect Asia • Support smallholder enterprises to connect to each other, policies and markets • FCA to build enterprise capacity, facilitating and broker linkages, pilot and document best practices in their specific context
  91. 91. Thank You For further information, please contact Martin Greijmans martin.greijmans@recoftc.org www.recoftc.org
  92. 92. Linking Sustainable Forest Product Supply Chains through Asia PEFC Stakeholder Dialogue 2013 14-15th November, Kuala Lumpur 94
  93. 93. Investors supporting transformation towards sustainability in the forestry sector Adam Grant Manager, Certification and Environmental Markets PEFC Kuala Lumpur, Malaysia November 2013
  94. 94. Important Note © New Forests 2013. This publication is the property of New Forests. This material may not be reproduced or used in any form or medium without express written permission. The information contained in this publication is of a general nature and is intended for discussion purposes only. The information does not constitute financial product advice or provides a recommendation to enter into any investment. This presentation has been prepared without taking account of any person’s objectives, financial situation or needs. This is not an offer to buy or sell, nor a solicitation of an offer to buy or sell any security or other financial instrument. Past performance is not a guide to future performance. Past performance is not a reliable indicator of future performance. You should consider obtaining independent professional advice before making any financial decisions. The terms set forth herein are based on information obtained from sources that New Forests believes to be reliable, but New Forests makes no representations as to, and accepts no responsibility or liability for, the accuracy, reliability or completeness of the information. Except insofar as liability under any statute cannot be excluded, New Forests, including all companies within the New Forests group, and all directors, employees and consultants, do not accept any liability for any loss or damage (whether direct, indirect, consequential or otherwise) arising from the use of this presentation. The information contained in this publication may include financial and business projections that are based on a large number of assumptions, any of which could prove to be significantly incorrect. New Forests notes that all projections, valuations, and statistical analyses are subjective illustrations based on one or more among many alternative methodologies that may produce different results. Projections, valuations, and statistical analyses included herein should not be viewed as facts, predictions or the only possible outcome. Before considering any investment, potential investors should conduct such enquiries and investigations as the investor deems necessary and consult with its own legal, accounting and tax advisors in order to make an independent determination of the suitability, risk and merits of any investment. New Forests Advisory Pty Limited (ACN 114 545 274) is the holder of AFSL No 301556. New Forests Asset Management Pty Limited (ACN 114 545 283) is registered with the Australian Securities and Investments Commission and is an Authorised Representative of New Forests Advisory Pty Limited (ACN 114 545 274, AFSL 301556). New Forests Inc. has filed as an exempt reporting adviser with the Securities and Exchange Commission. Slide 96
  95. 95. Overview of New Forests  Founded in 2005  Managing forestry investment for institutional investment clients  Currently managing nearly US$2 billion in assets in the Asia-Pacific region  Head office in Sydney; 38 employees in Australia, New Zealand, Singapore, and San Francisco  Managing over 420,000 hectares of land and forestry assets across the Asia-Pacific region and United States  New Forests has generated excellent returns to our clients over 8 years, and has aimed to operate as a leading sustainable and responsible investor in the forestry sector Slide 97
  96. 96. What Differentiates New Forests? Strategically, New Forests is… 1. Focused on Asia Pacific opportunities  Unique for a TIMO—headquartered in Sydney with an office in Singapore  Largest forestland owner in Australia and active in markets throughout Australia, New Zealand, and Asia  Providing investors with exposure to the integrated Asia Pacific regional timber trade–extensive experience in domestic and export markets 1. A leader in sustainable forest management  Investment team experienced in sustainable forest management and environmental markets; company-wide Social and Environmental Management System  Member of Forest Stewardship Council (FSC) International and FSC Australia  Signatory to United Nations Principles for Responsible Investment (PRI) 3. Forward Thinking  Engaged with international NGOs, and participating in global initiatives including World Economic Forum Global Council, Aspen Institute, etc. Slide 98
  97. 97. New Forests’ Business Back Office, Administration, Risk and Compliance Systems and Governance Financial and Forest Resource Modeling Services Sustainability and Responsible Investment Investor Services Slide 99
  98. 98. Tropical Asia Forest Fund - TAFF TAFF is a commingled fund investing in tropical timber plantations in South East Asia with US$171 million in commitments. Clients include pension funds and development banks. Forestry in Asia is changing: Originated from logging concessions in natural forests Low cost of timber from these concessions meant attractive returns were possible without operating efficiently or sustainably Natural forest timber has been largely depleted Global concern over rainforest logging and a demand for certification and sustainable forest management models are on the rise Fast-growing, high-quality managed timber plantation estates are emerging as the basis for the future of the industry, which will require significant capital TAFF will: Invest in existing forestry enterprises or assets Upgrade and expand those businesses Help Implement modern forestry systems and practices Obtain certification and where possible, access environmental markets Exit after 10-15 years of investment Slide 100
  99. 99. The Changing Forestry Landscape 1. Shift to plantations and the declining economic frontier of natural forests 2. Global timber demand growing and restructuring to accommodate Asian demand growth 3. Shifts in Pulp & Paper markets and increasing demand for bio-energy, bio-fuels, and other bio-products 4. Rising institutional ownership of high productivity timber plantations 5. Sustainability imperatives and the pricing of ecosystem services Three-year old Teak Plantation – Solomon Islands Slide 101
  100. 100. Natural Forest Harvest in SE Asia in Decline Steady Decline in Natural Forest Logging in Malaysia and Indonesia Slide 102 Sources: Malaysia Timber Council and personal communication with Yayasan Sabah; ITTO; Indonesian Forestry Department Annual Report, 2008.
  101. 101. Limited Plantation Investment Asia has lagged behind other regions in the development of commercial plantations for higher value end uses. Significant plantation areas in Indonesia, South China (approximately 6.0 million hectares) and Vietnam are being grown on short rotations for chip/pulpwood only. Both China and Vietnam currently import plantation hardwoods from South America, North America, Europe and Africa primarily to fulfill demand for certified timber. There are significant cost advantages to regional sourcing. Source: New Forests Asia estimates based upon RISI 2011 Pulp and Chip wood Conference, ITTO 2005 Sustainable Forestry Management Report, and government data sets. Data does not include rubber estates and is based on private/government commercial scale plantations not small holders (except for Thailand where small scale private growers are fundamental to the industry) Slide 103
  102. 102. Opportunities for TAFF 4-year old clonal teak in Java Slide 104  Investing in Southeast Asia with priority for Indonesia, Malaysia, and Vietnam  Attractive growing conditions, low costs, and close access to growing markets  Investment team in financial hub of Singapore  Combination of existing and “greenfield” plantations  Environmental, Social & Governance (ESG) factors and environmental markets offer value-add opportunities
  103. 103. Sustainability as a “Stay in Business” Issue  Institutional Investors require sustainability policy, labour policy, corruption and bribery standards, use of certification, and monitoring of performance standards  Major consumer groups are increasingly demanding certification or product chain of custody documentation  Governments are under pressure to create business environment that will encourage investment and support competitiveness of local industry Slide 105
  104. 104. Sustainability at New Forests New Forests is a signatory to the UN Principles for Responsible Investment (PRI) and commits to integrating Environment, Society, and Governance (ESG) principles into investment decision making ESG policies are implemented at the fund level through a Social & Environmental Management System (SEMS) with internal auditing The SEMS defines third-party certification and responsible management requirements relevant to the asset class and type of investment Sustainability reporting is integrated into funds reporting structure and New Forests publishes an annual Sustainability Report covering responsible investment activities, targets, and progress Slide 106 Sustainability Reporting
  105. 105. TAFF Sustainability Goals New Forests is committed to sustainable management of TAFF investments  Environmental, social and governance best practice will ensure TAFF contributes to:     Reduced greenhouse gas emissions and other forms of pollution Maintenance or enhancement of high conservation value forests and biodiversity Improvements in local livelihoods and safe working conditions Recognition of indigenous rights  Third-party verified sustainable forest management will add significant value:         Slide 107 Price premiums and better market access for certain products Lower project and political risk through reduced social conflicts Improved asset liquidity and lower risk-adjusted discount rates on exit Lower cost of debt capital and better debt access, especially from development banks Improved access to licences, operating permits or additional assets from host countries Reputational risk reduction for fund investors Opportunities for increasing operating efficiencies through better management Opportunities for environmental market products from areas set aside from production
  106. 106. Opportunity Costs in the Landscape Markets set prices for timber products, but how do we value other benefits?  Forests provide not only timber, but a myriad of other benefits related to freshwater, carbon cycling, biodiversity conservation, human health, and well being  These ecosystem services have not been priced and therefore are used wastefully and disregarded in land conversion decisions  Leads to plantation and agribusiness industry using more land rather than increasing productivity per hectare  Policy in conflict with overwhelming economic fundamentals is difficult to enforce on a sustainable basis Slide 108
  107. 107. Innovating Markets New Forests established Malua BioBank in 2008 with seed investment from The Eco Products Fund. Unlocking Demand for Biodiversity -Roundtable on Sustainable Palm Oil (RSPO) compensation mechanism for past HCV clearance -Forest Stewardship Council (FSC) compensation mechanism for past “downwards conversion” Further Investment Potential -Carbon value through proven methodology -Impact or CSR investment to catalyze biodiversity market growth and establish sustainable brand value Slide 109 The project creates an alternative economic value for Borneo’s rainforests and offers sustainability solutions for oil palm supply chain.
  108. 108. Environmental Markets Lessons Learned  Price signals work     SO2 market drove changes in fuel from high to low sulphur coal EU Emissions Trading Scheme (ETS) drove $ billions into carbon funds and carbon companies Australian water market restructured agriculture to increased efficiency and more valuable cropping US Mitigation Banking is a $billion+ turnover industry  The finance and investment sector can facilitate change   Investment funds sprang up related to the EU ETS, Australian Water market, and Mitigation banking industry—creates liquidity to meet market needs Markets create transparency in pricing; futures and options create stability; water rights as collateral for investment in water use efficiency  Stability is necessary, but fine-tuning is also necessary   Meddling by Government killed the SO2 markets Excessive allocations and unexpectedly huge offset supply have made the EU ETS unstable  It needs to cost more to remain outside rather than inside a scheme   Slide 110 Lack of price premium has hampered most voluntary certification schemes REDD has struggled to have impact because private sector is disengaged and continues to operate on a business as usual basis
  109. 109. Towards the Future Can forestry represent a “natural infrastructure” asset class?  Projections are that global industrial roundwood demand will begin to plateau around 2.3-2.5 billion m3 per annum in 2030.  100 to 150 million hectares of commercial plantation area (2.5-3.75% of world forest cover) could supply most of this timber, while timber production from frontier regions (Canada, Russia, tropical natural forests) will stabilize or decline. Biomass demand may double this.   Slide 111 Large scale ‘deals’ like NZ, Australia, Indonesia-Norway, Boreal Canada, etc.  Canopy view of New Forests’ Malua Biobank in Sabah, Malaysia. Mechanisms to price ecosystems via REDD, BioBanking, watershed protection, etc. alongside commercial timber plantations could produce the basis for the stabilization of conservation and production functions Ultimately this must be driven by private capital and investment
  110. 110. Key Points & Conclusions       Slide 112 World timber demand will continue to rise, markets will evolve to encompass Asian demand growth Supply increases will primarily come from timber plantations, rather than further expansion of the economic margin in primary forests Increases in plantation area are more difficult to achieve than increases in productivity of existing plantation base—land competition will also rise among food, energy, and fibre crops Institutional portfolios have gone from 5% real assets in 2000 to 15% real assets today, and likely will reach 25-30% by 2025—huge inflow of capital for real estate, infrastructure, agriculture, forestry, etc. Need fopr a financing source for conservation as well as production— this could include REDD+, biobanking, water rights, no net loss supply chains, etc. Social and community integration via benefit sharing, consultation, and governance models, and respect for traditional and legal rights will be core to sustainable outcomes
  111. 111. www.newforests.com.au
  112. 112. Appendices
  113. 113. New Forests’ History  July 2005 – Company established in Sydney and receives Australian Financial Service Licence  May 2007 – Establishes US office  August 2008 – Establishes SE Asian office  October 2009 – Begins Funds Management Business  August 2010 – Closes the AU$490 million Australia New Zealand Forest Fund   2011-2012 – Acquires major softwood plantations and softwood sawmills in Australia  June 2013 – Final close of the New Forests Tropical Asia Forest Fund, now with commitments of US$171 million, and first close of the New Forests Australia New Zealand Forest Fund 2 with AU$570 in commitments  Slide 115 January 2011 – Closes AU$415 million acquisition of 270,000 hectares of Australian forest land from the Receivers of Great Southern Plantations June 2013 Makes first Asian investment, acquiring Hijauan Benkoka plantations in Sabah
  114. 114. Supply from Russia is Declining Russian softwood exports have hit a wall… Russian log exports have fallen dramatically over the past six years while lumber exports have been flat to slightly increasing. Slide 116 Source: FAOstat
  115. 115. Canadian Supply Falling Policy Constraints and Mountain Pine Beetle impact will lead to near-term decline in timber supply, leveling off in the medium to long term. Slide 117 Source: Mark Kennedy, CIBC. “Global Perspectives on Forest Products Trade.” Presentation to Future Forestry Finance 2012.
  116. 116. Natural Forest Logging Collapse (repeated from main preso) Regional Collapse in Natural Forest Logging in Malaysia and Indonesia Slide 118 Sources: Malaysia Timber Council and personal communication with Yayasan Sabah. / Indonesian Forestry Department Annual Report, 2008.
  117. 117. Australian Plantation Harvest Rising Australian hardwood plantations are steadily replacing a declining supply from native forests Slide 119 Source: ABARES, Forest and Wood Product Statistics.
  118. 118. Increasing Importance of Plantations  Global industrial roundwood demand is likely to rise from 1.5 billion m3 in 2013 to 2.5 billion m3 by 2050  Somewhat speculative forecasts suggest biomass energy, biofuels and biomaterials demand could dwarf industrial roundwood demand over next 30 years*  Almost all incremental supply will come from timber plantations—both productivity enhancement and plantation area will need to increase  Investment needed could range between $100 and $500 billion to meet these levels of demand *WWF, 2013 Living Planet Report Slide 120 Source: FAO, 2010. Global Forest Resource Assessment.
  119. 119. Plantation Productivity Can Increase Example of Productivity Gains – Softwood in Australia *Source: Timberlands Pacific Pty Ltd Slide 121  If industrial wood demand grows at an equivalent rate to global GDP can we meet much of this via productivity enhancement rather than land base expansion  Investor strategies focus on silviculture, nutrition, risk management and genetics to increase productivity by 50-100% over the next 50 years
  120. 120. What Government Policies are Needed? A modern forest policy framework needs to address wood supply, forest conservation and sustainability issues  Future wood supply growth will largely be delivered by plantations—this will be from existing plantations managed more intensively and expansion of plantation area— expansion is a key policy challenge  As timber plantations take on increasing share of wood supply, innovation is needed in financial mechanisms for forest conservation—REDD, biobanks, supply chain initiatives  Social outcomes need to balance multiple stakeholders and conflicting interests and rights. Innovations around consultation/governance models, sharing in economic benefits, community benefits are needed Slide 122
  121. 121. TAFF Certification & Sustainability New Forests is committed to sustainable management of TAFF investments  Third-party verified sustainable forest management will add significant value:         Price premiums and better market access for certain products Lower project and political risk through reduced social conflicts Improved asset liquidity and lower risk-adjusted discount rates on exit Lower cost of debt capital and better debt access, especially from development banks Improved access to licences, operating permits, or additional assets from host countries Reputational risk reduction for fund investors Opportunities for increasing operating efficiencies through better management Opportunities for environmental market products from areas set aside from production  TAFF Certification Policy:    Slide 123 Achieve compliance against IFC Performance Standards within three years of acquisition on all assets including plantations, natural forests, and processing facilities Achieve FSC certification on all natural forests within three years of acquisition if the asset meets all FSC eligibility criteria Where plantation assets do not meet all FSC eligibility criteria, engage an FSC-accredited certification body to undertake third-party verification of compliance with all applicable FSC requirements and, depending on market requirements, pursue additional third-party certification against an alternative certification system depending on market demands such as PEFC, LEI, FSC controlled wood, VLO, and/or VLC or other future standard that may be developed
  122. 122. External Motivations  New Forests designed its Social and Environmental Management System (“SEMS”) in 2010 and began full implementation in 2011.  The SEMS is designed to systematically identify, manage, and report on social and environmental issues and potential impacts.  The SEMS helps us win clients:    English pension fund manager said, “You’re the only manager we’ve seen who can show how they manage assets sustainably.” Dutch pension fund manager said, “FSC certification is absolutely required for us as a target and your SEMS shows us how you pursue that.” Provides a reference point and tool for due diligence  The SEMS helps us provide client services and meet requests:   Current clients ask to see audit reports Streamlines responses to client inquiries  Risk management and continual improvement. Slide 124
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