ForestEthics fired the first shots a few days ago, filing complaints of both tax fraud and greenwashing against the Sustainable Forestry Initiative. It sent letters last week asking the IRS to revoke SFI's tax-exempt status and requesting that the Federal Trade Commission investigate SFI's "unfair and deceptive" marketing practices. ForestEthics claims that SFI's forestry-certification program is inferior to Forest Stewardship Council certification.
SFI responded today by calling the ForestEthics complaints "an affront to the tremendous efforts by foresters, businesses, governments, consumers, SFI and other standards groups to preserve and protect our forests for future generations."
“We should all be focusing our resources and efforts on supporting responsible forest management and fighting deforestation and illegal logging, not wasting energy on bickering among ourselves," SFI added. A United Nations report recently concluded that the once-rapid growth of forest-certification efforts has stagnated during the past three years, Dead Tree Edition reported last month.
I'm skeptical whether FSC, which has had its own credibility issues in places like Indonesia, is significantly superior to SFI, but I welcome comment on the subject. I think the most useful service Dead Tree Edition can offer at this point is extensive excerpts from the complaints and SFI's response. Note: The rest of this article consists entirely of statements from ForestEthics and SFI that do not necessarily represent the views of Dead Tree Edition:
ForestEthics' letter to the IRS (excerpt)
"Although it is approved as a 501(c)(3) tax-exempt organization, SFI is organized, governed, and operated more like an industry trade association that promotes its private “certification” label than a separate charitable organization dedicated to setting high standards for forest products. First, SFI’s purposes — certification of private forests for a limited number of large industrial timber and paper companies — do not lessen the burden of government because the government is not in the business of providing “certification” of forestry practices.
Second, SFI substantially serves the private interest of non-exempt SFI-certified timber and paper companies. SFI became exempt under IRC 501(c)(3), but SFI was incorporated by individuals affiliated with timber and paper companies and SFI’s by-laws assign timber and paper companies one-third of its director positions. SFI is, by its own admission, virtually completely funded by the timber and paper companies whose lands and operations SFI certifies. SFI’s environmental standards are substantially developed by persons with close ties to the forest companies subject to SFI’s certification standards. During the past several years SFI has continued to maintain close administrative ties to the American Forest and Paper Association, a 501(c)(6) trade association which created SFI in 1994. SFI also serves private interests because its forestry “standards” are vague, ambiguous, and grant wide discretion to the companies whose products are certified by SFI. These standards thus appear to provide too much latitude for forest landowners to serve their private interest in profitable forestry, rather than in the charitable endeavor of protecting the environment. In practice, SFI certification standards provide in many geographic areas of the U.S. little or no more added environmental protection than state and federal laws governing for-profit forestry.
Finally, we have a good faith basis to believe that SFI, a 509(a)(2) organization, may run afoul of the IRC requirement that a 509(a)(1) public charity must receive at least one-third of its financial support from “public sources” and that this one-third cannot be donated by “disqualified persons.” By its own admission, virtually all of SFI’s financial support (which was approximately $5 million in 2007) comes from the companies whose forests or products are certified by SFI. SFI refused to provide us with a breakdown of its contributors so we are unable to make a “disqualified person” analysis but it appears that SFI may be violating the IRC’s “disqualified” person rules as a result of its prosperous fundraising and relatively small universe of corporate donors.
SFI’s 501(c)(3) and 509(a)(2) status permits it to claim the mantle and tax benefits of a nonprofit public charity, thereby seeking to gain environmental and social credibility, and allowing its supporters to deduct their contributions. SFI’s 501(c)(3) status not only impacts taxpayers but works to the disadvantage of forest certification organizations that serve a public charitable purpose but must compete with SFI.
We request the IRS to investigate and, if appropriate, determine that SFI is not properly organized and operated as a tax-exempt charitable organization under Code sections 501(c)(3) and 509(a)(2).
ForestEthics' letter to the FTC (excerpt)
"The Washington Forest Law Center represents ForestEthics, a non-profit conservation organization based in Bellingham, WA, and San Francisco, CA, dedicated in part to promoting credible forest certification programs through consumer awareness and the marketplace. This complaint reports the “Sustainable Forestry Initiative, Inc.” (SFI),1 a forest “certification” system which we believe engages in several unfair and deceptive acts and practices on which corporate and individual lumber and paper consumers are relying. Hundreds of millions of dollars in “green” spending may be at issue. We ask the FTC to investigate this complaint and to seek appropriate declaratory and injunctive relief in the courts to require SFI to comply with federal trade law.
Alarmed by global warming and worldwide deforestation, wood and paper consumers today are increasingly demanding more environmentally-friendly forest products. Consequently, the marketplace for “green” forest products, which could soon reach $80 billion in four years, is cluttered with claims and labels that a forest product has been “certified” or was “sustainably” grown and harvested in an environmentally and socially sound manner. But if these claims are going to compete fairly in the marketplace, and if they are going to produce real on-the-ground improvement in forestry, it is essential that the FTC investigate and respond when claims of “sustainable” and “environmental” forest management rely on deception, confusion, vagueness, or ambiguity.
The SFI forest certification program was started in 1994 by the American Forest and Paper Association (AFPA), a Washington D.C.-based timber and paper trade association. Since 2007, SFI has represented itself as an “independent not-for-profit public charity.” SFI’s budget was over $5 million in 2007. The companies it certifies own 90% of private forestland in the U.S. and produce about 50% and 85% of wood and panel products, respectively, in the U.S. We believe the SFI forest product certification system competes unfairly and deceptively for several reasons.
Deceptive Label: SFI maintains at least one label on its products that is deceptive and misleading. SFI’s “Certified Fiber Sourcing” label implies that wood or paper bearing the label comes from SFI-certified forests. Yet, in fact, the SFI “Certified Fiber Sourcing” label provides no guarantee that any of the material was harvested from an SFI-certified forest.
Independent, Non-Profit Public Charity: In aggressive and well-funded national advertising, SFI and SFI-certified companies represent to lumber and paper purchasers and the general public that SFI is an “independent, not-for-profit public charity” directed and operated by a diverse and “independent” board of directors. These attributes are key to SFI’s campaign for environmental credibility and marketing. This claim is deceptive because SFI is funded almost entirely by the large timber and paper companies whose forests are certified by SFI and SFI receives virtually no general public financial support. Moreover, true to its origin as a program of the AFPA, SFI’s governance, administration, and standards-setting process is dominated by SFI-certified companies and individuals. While SFI has nonindustry board members, many of these individuals are affiliated with organizations that receive substantial financial support from SFI-certified companies. In the final analysis, SFI is not a standards-setting entity in which industry members participate; it is a heavily marketed industry-developed and funded “green” label that represents itself as an independent charitable organization.
Deceptive and Unverifiable Environmental Standards: SFI’s forest certification standards are deceptive and misleading. SFI’s standards deploylofty ecological terms but, in fact, they are vague, ambiguous, filled with qualifiers and loopholes.” On balance, they give forest managers discretion to manage their forest lands in ways that are inconsistent with SFI’s lofty environmental standards. To make matters worse, SFI certification lacks transparency: a member of the public or a competitor cannot find out what a landowner is doing (or not doing) in its forests and has access only to uselessly general audit summaries. Furthermore, SFI’s standards are enforced only by auditors which are landowner-paid consulting entities.
The Sustainable Forestry Initiative's statement
Washington, D.C. – From governments to conservation groups to foresters, the Sustainable Forestry Initiative has been globally recognized as a credible and effective forest management certification program. “The rapid growth of our program shows that more customers and consumers recognize the value of third-party forest certification, and it means we are making a difference on the ground,” said SFI President and CEO Kathy Abusow. “We are dedicated to finding ways to work together with all credible forest certification standards toward our common goal of expanding certification. That is especially important when you consider that 90 percent of the world’s forests are not certified at all.”
In light of that common goal, ForestEthics’ recent statements and activities “are an affront to the tremendous efforts by foresters, businesses, governments, consumers, SFI and other standards groups,to preserve and protect our forests for future generations,” said Abusow. “We should all be focusing our resources and efforts on supporting responsible forest management and fighting deforestation and illegal logging, not wasting energy on bickering among ourselves.”
Abusow pointed out that SFI “has been a fully independent non-profit organization since 2007 and our forest certification standard is developed through a transparent public process.” She added that SFI’s “labels and claims conform to government, consumer and audit requirements in the United States and globally.”
Here are some other facts about SFI:
- The group’s three-chamber Board of Directors represents environmental, social and economic interests equally. Board members include representatives of environmental, conservation, professional and academic groups, independent professional loggers, small family forest owners, public officials, labor and the forest products industry. No one sector can control SFI – Board actions must be approved by a minimum of 80% of those present.
- Last year, the Canadian Council of Forest Ministers issued a statement that read in part: “Canada is proud to have more certified forests than any other country. Governments in Canada continue to provide technical and policy support to the ongoing development of certification in Canada. The forest management standards of the CSA, FSC, and SFI all meet the above criteria. Customers can be assured that these forest certification standards are complementary to and demonstrate each Government’s sustainable forest management regime.”
- SFI-certified products are recognized by many leading green building rating programs in Canada, the U.S. and overseas. In North America, this includes the Green Globes™ building assessment and rating system, the American National Standards Institute’s National Green Building Standard (administered by the National Association of Home Builders) and the Built Green Society of Canada. SFI-certified products are also recognized under government procurement policies in Japan and the UK.
- The US Government Services Agency (GSA) recognizes SFI as well as FSC in their Solicitation for Offers requirement SFO Section 7.4 Wood Products (revised August, 2008). It states: “For all new installations of wood products, the Lessor is encouraged to use independently certified forest products. For information on certification and certified wood products, refer to the Forest Certification Resource Center, the Forest Stewardship Council United States, or the Sustainable Forestry Initiative.”
- The Conservation Fund, Conservation International and the American Bird Conservancy are just a few of the more than 1000 organizations involved in the SFI program.
- Several U.S. states, including Washington and Maine have weighed in with support of inclusive green building standards.
- TerraChoice Environmental Marketing recently recognized the SFI label as a credible eco-label in its Greenwashing Report 2009, saying that our program meets three key criteria – third party certified, publicly available standard and transparent standard development process. SFI (along with FSC) are among 14 labels that the group recognizes as “legitimate.”
- Tom Hinton, president and CEO of the 82,000-member American Consumer Council said last year, “We support the good work of SFI and applaud the positive and progressive things SFI is doing.., When it comes to environmentally friendly claims, consumers want to see the proof and not just the sizzle.”
The UN Economic Commission for Europe (UNECE), which represents 56 member states and involves more than 70 international professional organizations and other non-governmental organizations and The UNECE Timber Committee and Food and Agriculture Organization (FAO) European Forestry Commission released a report titled Forest Products Annual Market Review which found that:
- “In terms of numbers, the most significant [forest certification program] is the SFI Program in North America.”
- The rate of increase in global certified forest area slowed dramatically since 2006 (growing by only 1.3% to reach 325.2 million hectares in 2009). By May 2009, about eight percent of the world’s forests were certified (54% in Europe and 38% in North America.
- Green building initiatives are a mixed blessing for forest certification. “Green building initiatives standards giving exclusive recognition to particular forest-certification brands may help drive demand for these brands at the expense of wider appreciation of the environmental merits of wood.”
“SFI has seen tremendous growth and acceptance in the marketplace,” said Abusow. “I am proud that we have over 240 program participants and work closely with not just conservation groups, but also organizations like Habitat for Humanity. We have carefully expended our resources on educating businesses and consumers about the importance of sustainable forest management and producing and purchasing products sourced responsibly. ”