Collapse: How Societies Choose to Fail or Succeed (87 page)

national government of most of the potential value of their resource. The companies frequently obtain the required government logging permit by bribing government officials, and then proceeding to build roads and cut
logs beyond the boundaries of the area actually leased. Alternatively, the
companies merely send in a logging ship, quickly negotiate permission with local people, carry out the logging, and dispense with a government permit.
For example, about 70% of all wood cut in Indonesia comes from illegal op
erations that cost the Indonesian government nearly a billion dollars a year
in lost taxes, royalties, and lease payments. Local permission is obtained by wooing village leaders who may or may not have the power to sign away
logging rights, and by taking those leaders to the national capital or else
overseas to Hong Kong, where they are plied with luxury hotel accommoda
tions, food, drink, and prostitutes until they sign. This sounds like an ex
pensive way to do business, until one realizes that a single big rainforest tree
is worth thousands of dollars. Acquiescence of the ordinary village popula
tion is bought by paying them an amount of cash that seems to them enor
mous but that they will actually spend on food and other consumables
within a year. In addition, the company also obtains local acquiescence by
making promises that will not be carried out, such as a promise to replant
the forest and build hospitals. In some well-publicized cases in Indonesian
Borneo, the Solomon Islands, and elsewhere, when loggers have arrived at a
forest with a permit from the central government and started logging, local
people who realized that this would be a bad deal for them attempted to
stop the logging by blocking roads or burning sawmills, whereupon the log
ging company enlisted the police or army to enforce their rights. I had
heard that logging companies also intimidate opponents by threatening to
kill them.

Aloysius was such an opponent. The loggers did threaten to kill him, but
he persisted because he was confident that he could take care of himself.
They then threatened to kill his wife and children, who he knew could not take care of themselves, and whom he would not be in a position to protect
whenever he was away at work. To save their lives, he moved them overseas
to another country and became more vigilant about possible murder at
tempts on himself. That explained his new nervousness and the loss of his
former happy, confident manner.

With such logging companies, as with the mining companies that we al
ready discussed, we have to ask ourselves why they behave in a way that is
morally reprehensible. The answer, again, is that their behavior is profitable
to them because of the same three factors motivating mining companies:

economics, the industry's corporate culture, and attitudes of society and
government. Tropical hardwood logs are so valuable and in demand that
rape-and-run logging of leased tropical forest land is immensely profitable. Acquiescence of local people can frequently be obtained, because the local
people are desperate for cash and have never seen the disastrous conse
quences that clear-cutting tropical rainforest brings to local landowners.
(One of the most cost-effective ways by which organizations opposed to tropical rainforest logging have induced landowners to refuse permission is
by taking them to already-logged areas to talk with regretful landowners
and to see for themselves.) Officials in the government forestry department
can often be bribed, lack the international perspective and financial re
sources of the logging companies, and may not realize the high value of fin
ished timber. Under those circumstances, rape-and-run will continue to be
good business until the companies start to run out of unlogged countries,
and until national governments and local landowners are prepared to refuse
permission and to muster superior force in order to resist unpermitted log
ging backed by force.

In other countries, notably western Europe and the United States, rape-
and-run logging has become increasingly unprofitable. In contrast to the
situation in much of the tropics, western European and American virgin
forests have already been cut or are in steep decline. Large logging compa
nies operate on land that they own or else hold by long-term lease rather than short-term lease, thereby giving them under some circumstances an
economic incentive for sustainability. Many consumers are sufficiently
aware environmentally to care whether the wood products that they are
purchasing have been harvested in destructive non-sustainable ways. Gov
ernment regulation is sometimes serious and restrictive, and government
officials are not readily bribed.

The result is that some logging companies operating in western Europe
and the United States have become increasingly concerned not only about
their ability to compete against Third World producers with lower costs,
but also about their own survival, or (to use mining and oil industry ter
minology) their "social license to operate." Some logging companies have
adopted sound practices and have attempted to convince the public of that,
but they found that their claims on their own behalf lacked credibility in the
eyes of the public. For instance, many wood and paper products that are of
fered to consumers for sale carry labels making pro-environmental claims such as "for every tree felled, at least two are planted." However, a survey
of 80 such claims found that
11
could not be substantiated at all, 3 could

be only partially substantiated, and almost all were withdrawn when chal
lenged. Understandably, the public has learned to dismiss such claims made
by companies themselves.

Adding to the timber companies' concern about their social license and credibility was their concern about the impending extinction of forests, the
basis of their business. More than half of the world's original forests have
been cut down or heavily damaged in the last 8,000 years. Yet our consump
tion of forest products is accelerating, with the result that more than half of those losses have occurred within the past 50 years
—for instance, because
of forest clearance for agriculture, and because world consumption of paper
has increased five-fold since 1950. Logging is often just the first step in a
chain reaction: after loggers build access roads into a forested area, poachers
follow those roads to hunt animals, and squatters follow them to settle.
Only 12% of the world's forests lie within protected areas. In a worst-case
scenario, all of the world's readily accessible remaining forests outside those
protected areas would be destroyed by unsustainable harvesting within the
next several decades, although in a best-case scenario the world could meet
its timber needs sustainably from a small area (20% or less) of those forests
if they were well managed.

Those concerns about the long-term future of their own industry impelled
some timber industry representatives and foresters in the early 1990s to
launch discussions with environmental and social organizations and associ
ations of indigenous peoples. In 1993 those discussions resulted in the formation of an international non-profit organization called the Forest
Stewardship Council (FSC), which is headquartered in Germany and funded
by several businesses, governments, foundations, and environmental orga
nizations. The council is run by an elected board, and ultimately by the
FSC's membership, which includes representatives of the timber industry and of environmental and social interests. The FSC's original tasks were
three-fold: to draw up a list of criteria of sound forest management; then, to
set up a mechanism for certifying whether any particular forest satisfied those criteria; and, finally, to set up another mechanism for tracing prod
ucts from such a certified forest through the complex supplier chain all the
way to the consumers, so that a consumer could know whether the paper,
chair, or board that he or she was buying in a store, and that carried the FSC
logo, actually came from a soundly managed forest.

The first of those tasks resulted in the formulation of 10 detailed criteria

of sound and sustainable forest management. Those include: harvesting
trees only at a rate that can be sustained indefinitely, with growth of new
trees adequate to replace felled trees; sparing of forests of special conserva
tion value, such as old-growth forests, which should not be converted into
homogenous tree plantations; long-term preservation of biodiversity, nutri
ent recycling, soil integrity, and other forest ecosystem functions; protection
of watersheds, and maintenance of adequately wide riparian zones along streams and lakes; a long-term management plan; acceptable off-site dis
posal of chemicals and waste; obedience of prevailing laws; and acknowledgment of the rights of local indigenous communities and forest workers.

The next task was to establish a process for ascertaining whether the
management of a given forest does meet those criteria. The FSC does not certify forests itself: instead, it accredits forest certification organizations
that actually visit a forest and spend up to two weeks inspecting it. There are
a dozen such organizations around the world, all of them accredited to op
erate internationally; the two that do most of the inspections in the U.S. are
called SmartWood and Scientific Certification Systems, headquartered in Vermont and in California, respectively. An owner or manager of a forest
contracts with a certification organization for an inspection, and pays for
the audit, without any advance guarantee of a favorable outcome. The certi
fier's response after the inspection is often to impose a list of pre-conditions
that must be met before approval, or just to grant provisional approval
based on a list of conditions that must be met before use of the FSC label
will be permitted.

It should be emphasized that the initiative in getting a forest certified must always be taken by the owner or manager; the certifiers do not go
around inspecting forests uninvited. Of course, that raises the question why any forest owner or manager would choose to pay in order to be inspected. The answer is that increasing numbers of owners and managers decide that
it will be in their financial interest, because the certification fee will be earned back as a result of access to more markets and consumers through
the improved image and credibility gained through independent third-
party certification. The essence of FSC certification is that consumers can believe it, because it is not an unsubstantiated boast by the company itself but the result of an examination, against internationally accepted standards
of best practice, by trained and experienced auditors who don't hesitate to
say no or to impose conditions.

The remaining step was to document what is called the "chain of cus
tody," or paper trail by which wood from a tree cut in Oregon ends up as a

board offered for sale in a store in Miami. Even if a forest itself is certified,
the forest's owners may sell its timber to a sawmill that also saws uncertified
timber, then the sawmill may sell its cut wood to a manufacturer that also
buys uncertified cut wood, and so on. The web of interrelationships be
tween producers, suppliers, manufacturers, wholesalers, and retail stores is
so complex that even companies themselves rarely know where their wood
ultimately comes from or goes to, except for knowing their immediate sup
pliers and customers. For the ultimate consumer in Miami to be able to
have confidence that the board she is buying really came from a tree in a certified forest, intermediate suppliers must keep certified and non-certified
material separate, and auditors must certify that every intermediate supplier is actually doing that. That constitutes "certifying the chain of cus
tody": tracking certified materials through the whole supply chain. The end
result is that only about 17% of the products from certified forests end up
bearing the FSC's logo in a retail store; the other 83% get commingled with
non-certified products along the chain. Certifying the chain of custody
sounds like, and really is, a big pain in the neck. But it is an essential pain
in the neck, because otherwise the consumer could not be confident of the
ultimate origins of that board in the Miami store.

Do enough members of the public really care about environmental is
sues for FSC certification to help sell wood products? When asked in sur
veys, 80% of consumers claim that they would prefer to buy products of environmentally clean provenance if given the choice. But are those just
empty words, or do people really pay attention to FSC labels when they are
in a store? And would they be willing to pay a little more for an FSC-labeled
product?

These issues are crucial to companies pondering whether to apply and
pay for certification. The questions were put to the test in an experiment carried out at two Home Depot stores in Oregon. Each store set up two
nearby bins containing plywood pieces of the same size, and similar except
that the plywood in one bin carried the FSC label and the plywood in the other bin didn't. The experiment was run twice: either with the plywood in
the two bins costing the same, or else with the FSC-labeled plywood costing
2% more than the unlabeled plywood. It turned out that, when the cost was
the same, FSC-labeled plywood outsold unlabeled plywood by more than
2 to 1. (At one of the stores in a "liberal," environmentally aware university
town, the factor was 6 to 1, but even at the store in the more "conservative" town the labeled plywood still outsold unlabeled plywood by 19%.) When
the labeled plywood cost 2% more than the unlabeled plywood, of course

most customers preferred the cheaper product, but nevertheless a large mi
nority (37%) still proceeded to buy the labeled product. Thus, much of the
public really does weigh environmental values in its purchasing decisions,
and a significant fraction of the public is willing to pay more for those values.

When FSC certification was first introduced, there was much fear that certified products would indeed end up costing more, either because of the
expense of the certification audit or of the forestry practices necessary for
certification. Much subsequent experience has shown that certification usually does not add to a wood product's inherent cost. In cases where markets did price certified products higher than comparable non-certified ones, that
turned out to be due just to the laws of supply and demand rather than in
herent costs: retailers selling a certified product available only in short supply, for which there was high demand, found that they could get away with
raising the price.

The list of big businesses that participated in the initial formation of the FSC, joined the board of directors, or committed themselves more recently
to FSC goals includes some of the world's largest producers and sellers
of timber products. Among U.S.-based companies are Home Depot, the
world's largest retailer of lumber; Lowe's, second only to Home Depot in
the U.S. home improvement industry; Columbia Forest Products, one of
the largest forest product companies in the U.S.; Kinko's (now merged with
FedEx), the world's largest provider of business services and document copy
ing; Collins Pine and Kane Hardwoods, one of the U.S.'s largest producers of
cherry; Gibson Guitars, one of the world's leading guitar manufacturers;
Seven Islands Land Company, which manages a million acres of forest in the
state of Maine; and Andersen Corporation, the world's largest manufacturer of doors and windows. Major participants outside the U.S. include Tembec and Domtar, two of Canada's largest forest managers; B & Q, the United Kingdom's largest do-it-yourself-in-the-home business, analogous to Home
Depot in the U.S.; Sainsbury's, the second largest United Kingdom super
market chain; Swedish-based IKEA, the world's largest retailer of ready-to-
assemble home furnishings; and SCA and Svea Skog (formerly Asi Domain),
two of Sweden's largest forestry companies. These and other businesses all
embraced the FSC because they saw it as advancing their economic interests,
but they reached that conclusion through varying combinations of "push"
and "pull." The "push" is that some of these firms were targets of campaigns
by environmental groups dissatisfied with company practices such as dealing
in old-growth timber: for instance, Home Depot was pressured by the Rain-

forest Action Network. As for the "pull" factor, companies recognized many
opportunities for maintaining or increasing their sales to an increasingly
discerning public. In defense of Home Depot and other companies whose
motivation included some "pushing," they understandably had to move
cautiously while making changes in the network of suppliers that they had
built up over many years. They then proceeded to learn quickly, to the point
where Home Depot itself is now pressuring its suppliers in Chile and South
Africa to adopt FSC standards.

In connection with the mining industry, I mentioned that the most ef
fective pressure on mining companies to change their practices has come not from individual consumers picketing mine sites, but from big compa
nies that buy metals (like DuPont and Tiffany) and that sell to individual
consumers. A similar phenomenon has unfolded in the timber industry. While the largest consumption of wood is for home construction, most
homeowners don't know, select, or control the choice of forestry companies
producing the wood used in their house. Instead, the customers of forestry
companies are big forest products companies, like Home Depot and IKEA,
and big institutional buyers, like the City of New York and the University of
Wisconsin. The role of such companies and institutions in the successful
campaign to end apartheid in South Africa demonstrated their ability to command the attention of even such powerful, rich, determined, well-
armed, and apparently rigid entities as the apartheid-era South African gov
ernment. Many retail and industrial companies in the forest products chain
have increased their clout by organizing themselves into what are termed "buyers' groups" that commit themselves over a specified time frame to increase their sales of certified products, with preference for FSC-labeled
products. Around the world today, there are more than a dozen such
groups, of which the largest is in the United Kingdom and includes some of the largest U.K. retailers. Buyers' groups are also increasingly strong in the
Netherlands and other western European countries, the U.S., Brazil, and
Japan.

Besides these buyers' groups, another potent force behind the spread of
FSC-labeled products in the U.S. is the "green building standard" known as
LEED (Leadership in Energy and Environmental Design). This code rates the environmental design and use of materials in the construction industry.
An increasing number of American state governments and cities give tax credits to companies adopting high LEED standards, and many American
government building projects require companies involved to follow LEED standards. This has turned out to be a significant consideration for builders,