RFS led a project in Ecuador (as a sub-contractor to SGS Ecuador), that had two primary objectives: 1) an in-depth analysis of the regulatory framework to identify weaknesses in the institutional context, and in the mechanisms designed to control the harvesting, transportation and sale of timber; and 2) an audit of a sample of approved harvesting permits in order to identify the most common types of illegality, and assess the prevalence of illegality, in the province of Esmeraldas. Marcelo Levy was based in Ecuador for most of the four months’ duration of this project. The sample of permits audited focused on permits issued for the province of Esmeraldas. The methodology was built on selecting a sample of approved permits that were inspected, and their contents contrasted against what is legally required. By looking at the control and enforcement mechanisms and comparing them with the data obtained during the audit, RFS was able to provide detailed insights into root causes of the problems with the permits (e.g. the weak link between the permits issued by government agencies and the physical product along the supply chain), identify the most common types of illegal activities, the actors involved, and the role of the enforcement agencies. Other social and economic factors, particularly issues around land ownership, were found to contribute to a widespread pattern of illegal/informal activities.
In Colombia, RFS led two projects that were part of the “Positioning for Forest Governance” project financed by the EU FLEG-T. RFS worked with CARDER (Corporación Regional de Risaralda, a regional environmental government agency), that was leading the Forest Governance project; the latter also included collaboration with an additional 10 regional agencies. RFS conducted an analysis of Colombia’s regulatory framework, and the social and economic factors that contribute in different ways to deforestation, illegal logging and the informal approach prevalent in the forest products sector. RFS identified weaknesses at an institutional level (e.g. different ministries with partial and overlapping responsibilities over forest resources) but also at the level of the agencies issuing permits, approving management plans and monitoring operations. The report included a summary of the weaknesses found, and recommendations aimed at strengthening forest governance overall, as well as the technical capabilities of the agencies responsible for implementing forest control and monitoring. RFS was subsequently sub-contracted to execute a second project aimed at the implementation of some of the recommendations (better, standardized procedures, identification of technical needs, etc.) and the design and roll-out of an expanded pilot project in four regions.
Due Care/Due Diligence – Private Sector Global Supply Chain
Due Care and Supply Chain Traceability Audits
RFS has performed forest products Due Care work in Latin America for private clients. As part of these companies’ Due Diligence / Due Care efforts in sourcing legal wood from tropical regions, RFS was contracted to conduct a series of Supply Chain Traceability Audits (SCTAs – RFS’ proprietary methodology). One key point of emphasis of RFS’ scrutiny of clients’ vendors was on verifying how robust the connection of the documented and actual point of origin of wood products is, i.e. how the paper trail and physical traceability align. RFS believes that this is a core component of exercising Due Care, and minimizing the exposure to potential/existing supply chain risk, based on global experience in the sector. RFS focused on key timber species of interest in order to understand the supply control systems vendors have in place in relation both to legal requirements, and also to their ability to verify the origin of the wood, i.e. from the stump to the forest “gate” and on to the mill. As a result of this diagnostic activity, RFS identified steps for minimizing/mitigating some of the key risk factors.
Due Diligence Review; Prepared for Lenders
Nick Moss Gillespie has conducted in-depth evaluations of forest products companies in Bolivia, Guatemala, and Mexico, which are either in receipt of investment from the EcoEnterprises Fund (initially launched by The Nature Conservancy US), or being considered for such investment. The methodology focuses on financing aspects as well as management strategies, and includes extensive document review and in-depth interviews with company officers and owners, as well as fieldwork to assess both social and environmental performance indicators. Benchmarking against FSC Principles & Criteria is engaged in for forestry operations and supply chain analysis, and processing facilities and manufacturing operations are included in the scope of review. Finally, access to markets for FSC-certified products, and also potential access to carbon markets as additional source of financing is considered. Deliverables inform portfolio management process for the EEF, and provide monitoring function of ongoing project activities. More recently, under the second phase of the re-launched Fund (EcoEnterprises Partners II, with participation of a number of new investors), Nick has conducted Due Diligence visits to producers of non-timber forest products in the northern Brazilian Amazon.
The Amazon Alternative (TAA)
In 2012, RFS was contracted to conduct a mid-term evaluation of The Amazon Alternative program, financed by the Sustainable Trade Initiative of the Netherlands, and dedicated to facilitating FSC certification in the Amazon regions of the three target countries, Peru, Bolivia and Brazil. The evaluation criteria included assessing the effectiveness of the program for small, medium and large enterprises as well as community forestry operations; its social and economic impacts; and the efficiency of management strategies deployed. Management strategies were furthermore assessed in the light of dual programme goals; of leveraging sustainability to gain market traction with companies/governments implementing responsible procurement policies; and to further poverty alleviation objectives encapsulated in the Millennium Development Goals. RFS conducted interviews with a wide range of TAA participants and stakeholders, as well as NGOs and government agencies, in order to make recommendations regarding the strategic alignment of the program.
Validation of Small-Scale Forest Carbon Methodology in Bolivia – RFS undertook the evaluation of a forest plantation scheme in the Cochabamba Tropics of Bolivia’s Amazon region, to verify its compliance with the requirements of the Plan Vivo methodology for issuance of carbon credits. The scheme in question, ArBolivia, works with small private property owners to plant native species on a portion of their farms, and thus provide a revenue stream that helps counter pressures to deforestation in the agricultural frontier of Bolivia. The Plan Vivo methodology places great weight on effective social participation in forest carbon schemes, and the evaluation included intensive document review and fieldwork, plus extensive consultation with participants, mostly Quechua-speaking indigenous farmers, originally from the highlands of the Andes. The final report submitted resulted in approval of ArBolivia’s methodology, to allow the sale of carbon credits, based on recognition of the social and environmental benefits of the project.
Evaluation International Model Forest Network
The International Model Forest Network was funded by the International Development Research Centre (IDRC) and the Canadian International Development Agency (CIDA). The Model Forests are a permanent platform for social agreements with the objective of becoming areas of sustainable development, with a governance style suited to that end, aiming at reducing poverty, conserving the environment and meeting international agreements and targets such as the Millennium Goals, the Convention on Climate Change, the Convention on Biodiversity, and the ILO Conventions. AVES Consulting sub-contracted RFS to undertake the review of the Ibero-American Model Forest Network (IAMFN). Marcelo Levy of RFS travelled to Bolivia for a REDD preparedness workshop organized by the International Model Forest Network (IAMFN) providing a cost effective opportunity to interview IAMFN staff, as well as representatives of Model Forests in Latin America. The evaluation was a performance review against stated objectives and targets through an analysis of activities and outcomes. It required am extensive document review, consultation through interviews with IAMFN staff and with representatives of individual Latin American Model Forests, and, contributors, partners and collaborators.
Legal Compliance Audits
RFS Principals are both accredited (and experienced) Lead Auditors for FSC/PEFC Forest Management and Chain of Custody, as well as Lead Auditors for Legal Compliance Verification under SGS’ Timber Legality and Traceability Verification (TLTV) program. In 2011 and 2012, in Indonesia, RFS Principals led teams composed of local Forestry experts in verification audits of the Legal Compliance of large-scale plantation operations supplying major pulp mills, on behalf of major SGS clients in the region. Audits covered over 2 million hectares of forestry plantations in East Kalimantan (Borneo) and in Sumatra, and assessed compliance of management practices with all legal, social, and environmental requirements, as well as adat (customary law).
In terms of wider experience, RFS has been involved in government-mandated Independent Forest Audits in Ontario, Canada, taking responsibility for verifying the stakeholder and indigenous peoples’ consultation component of the third-party IFA process, covering millions of hectares of publicly-owned forestlands.
Forestry & Finance
Forest-Backed Bonds Proof of Concept Study
Nick Moss Gillespie was engaged as an Associate by EnviroMarket Ltd., in the City of London, to participate in a research project commissioned by IFC and DfID as part of an ongoing research programme. The study in question aimed to test the market for innovative fixed-income products backed by securitized forestry assets, and assess the potential Social and Environmental (S&E) impacts of financing mechanisms proposed.
Research on Access to Capital for Forestry Companies in Emerging Economies
Working in conjunction with EnviroMarket Ltd. (as above), Nick Moss Gillespie participated in research commissioned by WWF’s Global Forest Trade Network aimed at assessing the forest investment screening policies of Financial Institutions. Results focused on the difficulties that producers in e.g. Latin America face in terms of raising capital, and identified policies and mechanisms that could favour greater uptake of responsible forest management, including FSC certification.