Gonsolida@ffiffi'trtH=j:^T.

By R. Wade Mosby Senior Vice President Collins Comoanies

I'orest certification has been a hot topic among wood product manufacturers and environmentalists for the past two years. The movement towards certification began in Europe during the late 1980s as environmental organizations boycotted the use of tropical rainforest wood in northern Europe. The answer to the boycott was the creation of an independent, third-party forest certification system that would ensure, through chain-of-custody tracking, that the wood came from well-managed certified forests.

The World Wildlife Fund, the largest international conservation organization, and B&Q, the largest U.K. building materials retailer, were the driving forces behind independent certification. Their commitment spawned the creation of the Forest Stewardship Council, whose responsibility was to accredit certification bodies and promote voluntary third-party certification. The Council is an independent, international, member-based organization representing industry, social and environmental interests. As a matter of fact, the strict standards set by the FSC make it the only organization in the world that is endorsed by the major environmental groups including: the World Wildlife Fund,

Rainforest Alliance, Wilderness Society, Natural Resources Defense Council and World Resources Institute. Currently, FSC recognizes certified forests in over 40 countries, and it is the only major certification system to have broad international recognition. In 1993, Collins was the first U.S. manufacturer to be certified under the FSC criteria.

In response to FSC certification, two major competing certifications systems were developed in North America. First was the Sustainable Forest Initiative, created by the AF&PA, an industry group. Originally a second-party certifier, it has recently added a voluntary, independent third party component. Next, in Canada, where over 9OTa of the timberland is government owned, the Canadian Standards Association was developing a set of rigid forest certification standards.

Certification was given a big boost in the U.S. in August 1999, when Home Depot announced a preference for FSC certification. This was followed in spring of 2000 by a similar announcement from Lowe's. Other retailers and homebuilders such as Centex and Kaufman & Broad have adopted similar policies, but generally without the FSC preference. Home Depot and Lowe's, which between them sell nearly 15Vo of all the building materials in the U.S., made a major impact in the marketplace.

There is no doubt that certification is here to stay. The only question remaining is which certification system will prevail. Clearly, the preference of the major retailers and environmental groups is for the more stringent FSC standards that measure all aspects of a forest's health, not just the harvesting of trees. Most major industry players have opted for the SFI system, with a good forestry component but less stringent environmental and social requirements. Several of the major Canadian operators have opted for CSA certification which, in my opinion, lies somewhere between FSC and SFI. FSC certified wood currently comprises less than 27o of the U.S. market share.

What I envision for the next three years is an increasing demand for certified wood as consumers become more aware of its availability and its environmental advantages. The key market advantage is the ability to sell a preferred product in a market that is oversupplied and will remain so for the next two years. Currently higher prices are achieved, but that advantage will moderate as more certified wood becomes available.

My forecast? I believe there will be a consolidation or mutual recognition of the three North American systems over the next four or five years. FSC has recently moderated its percentage-based requirements on chips and composite panels, primarily because of pressure from the industry sector. SFI will probably soon adopt a chain-of-custody component. Clearly the winner in this movement will be the forest industry and the consuming public (1}Vo of which identify themselves as environmentally friendly). By purchasing wood and wood products that have been certified through an independent third-party verification system, consumers will be assured that the wood they buy comes from a sustainable forest, managed as a total forest ecosystem with as much attention paid to the trees as to the environmental and social impacts.

I would estimate that by 2005, we'll see about 2OVo of the forest base certified under the auspices of one of the major certification systems. Certified wood will be the standard by which sustainable forestry will be measured and its success in the marketplace will be our guide. In an industry that has a remarkable story of sustainability and renewability this will be a welcome change from the contentiousness of the past few years.

fication is here to stay.

Since making our pledge, we have seen tremendous growth in certification, even in whole categories that now compete with products also carrying the FSC logo. Sales of FSC wood products are up 3007o since we began tracking in June. And while our first FSC products were lowvolume, higher-retail items, today we are selling high volume FSC certified items at the same cost as their non-certified competitors.

Our merchants are no longer searching for certified products to sell in the stores; instead, they are certifying the items we currently sell! Some vendors are seizing this as an opportunity to grow their business, while others are taking a wait-and-see attitude. It is not difficult to conclude which vendors are gaining access to new opportunities.

Because efficiency and long term sustainability do not always shake out in the first few years of a program, it is too early to tell how certification will affect pricing. However, any increase in cost would be expected to level as the volume of certified wood continues to grow.

If we all focus on what certification is meant to be, a market-based mechanism for responsible forest management, together we can attain true sustainability.

Certification presents a tremendous opportunity to use the market to meet our needs as well as the needs of forests and comrnunities that depend on them.

It should be our quest to work step by careful step in building an industry based upon sound ecological principles. It is not enough to be friendly toward the environment. We must adapt to it!