Forest Certification: Selected Market Issues

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Forest Certification Selected Market Issues

• Robin Clark, RPF
• Sustainable Forestry Certification Watch
• tel [phone] - fax [phone]
  e-mail sfcw_at_sfcw.org web site
  http//sfcw.orgPO Box 48122, Montreal H2V 4S8,
  Qc, Canada

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Presentation Outline

• Green consumerism and certification
• Willingness to pay for certified timber
• Buyers groups and market access
• Direct threats to corporations
• Brand marketing strategies
• Concluding remarks

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Green consumerism and certification

• 1990 first survey in UK by MORI for WWF
  tropical timber is then the issue
• WWF and other ENGOs argue that the private sector
  has an increased role to play and criticize how
  TFAP is managed by governments
• Results of first MORI/WWF survey 1/3 of surveyed
  population willing to pay 15 for green labelled
  tropical timber
• To be noted this poll was surprisingly seen by
  WWF and others as a reason to start certification

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Willingness to pay (or WTP)for certified forest
products

• WTP is a contentious concept, as actual behavior
  can considerably differ. WTP plays a somewhat
  marginal role, according to existing studies
• Vlosky Ozanne 1996"None of the groups
  (architects, building contractors and home
  improvement retailers in the US) felt that
  customers would pay a premium for certified
  products, and home center retailers felt most
  strongly that their customers would not pay such
  premium"
• European Forest Institute 1998"the future of
  certified forest products markets will not so
  much depend on demand or supply reactions in a
  classical sense, but largely on the activities of
  a few, but prominent actors within the forestry
  wood chain, industrial users and - outside this
  chain - environmental NGOs (eg WWF buyers
  groups)"

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WTP Recent BC ExamplesAt the Silva Forest
Foundation Press Conference March 29, 2000

• FSC Certified Woodlot Owner, Al Hopwood I
  did not go into it for the profit, more for the
  approach there is not an additional price. for
  his wood.
• Ornamentum Furniture Our products are made to
  order, the wood cost is virtually the same as
  wood that is not certified. There is no price
  margin due to the source of wood being certified.

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Buyers groups and market access

• Buyers groups
• in Europe established by WWF in UK, Belgium,
  Germany, France, Spain, etc.
• in North America Certified Forest Products
  Council
• up to now quasi exclusive committment to FSC
• Issue at stake market access, particularly in
  the home improvement / DIY sector
• Important development BQ, of the UK 1995Group,
  now recognizes Finnish scheme

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Direct threats to corporations

• "Big easy targets" home centre chains such as
  Home Depot, Homebase, etc
• Campaigns by groups such as Greenpeace,
  Rainforest Action Network (RAN), etc.
• Example of recent threat by RAN
• "We respectfully encourage your company to do the
  following 1) Completely phase out all
  purchases from old growth forests. 2)
  Increase sales of solid wood products from second
  growth forests that are certified by the Forest
  Stewardship Council."
• "if your company refuses to make this commitment,
  our alliance of environmental organisations will
  launch a public campaign in early October, the
  purpose of which will be to inform your customers
  and shareholders of your continued inaction."

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Brand marketing strategies

• Certified Forest Products Council "Certified
  Well-Managed Forests" trademark
• 10 Goals
• 7 To develop up-to-date, objective
  assessments of forest certification and other
  management and labeling programs so as to assist
  members in determining those programs that are
  the most credible, comprehensive, and effective

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Brand marketing strategies (..2)

• Forest Stewardship Council - US ads featuring
  Olivia Newton John, Pierce Brosnan, in high
  circulation magazines such as
• Playboy (3.5 million)
• People (3.3 million)
• TIME (1.4 million)
• Etc.

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Brand marketing strategies (..3)

• Richard Donovan, Director of Smartwood
• By and large, US consumers arent yet aware
  of certification. When you explain it to them,
  they respond pretty positively, but we want to
  take it to another level

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Brand marketing strategies (..4)

• Kimberly Woodbury, Manager of Environmental
  Programs, The Home Depot
• Our customers today are not asking for
  certification. They dont have any idea what it
  is
• They are asking use to sell the best products at
  the best value. As you see us bringing more and
  more certified products into our stores, youll
  see us marketing point-of-purchase displays. But
  right now the brand awareness of that label
  doesnt exist. We think we can create that.

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Should There Be Price Premiums For Certified
Forest Products?

• Why should consumers have to pay more for more
  environmentally sound products?
• Could there be a tax shift to give certified
  forest products producers an advantage in the
  market place? (i.e.. Awarding those who do the
  right thing)

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Minister of Finance on Tax Shifts

• Minister of Finance Paul Ramsey
• Its not about higher or lower taxes, but
  rather, what we tax. Our goal is to explore
  whether the existing tax base could be modified
  to better reflect the environmental values of
  British Columbians and, in the process move us
  towards a more environmentally sustainable
  society.

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Concluding remarks

• Green marketing was key to establish forest
  certification.
• WTP is not the key reason why certification
  progresses.
• More important factors buyers groups, direct
  threats to corporations, and maintaining market
  share.

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Concluding remarks

• The focus of certification has become more of a
  trade issue with political lobbying on all sides
  and is increasingly more remote from sustainable
  forestry.