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Precious Woods is a
leading company in the sustainable management and use of tropical forests. It
conducts its operations in accordance with the criteria of the Forest
Stewardship Council (FSC) and is convinced that the standards set by this
voluntary certification programme will gradually change the way in which
tropical forests in many parts of the world are managed. The FSC is proving to
be more effective than many an international regulatory system or national
forest authority.
A key feature of the FSC is the open process and dialogue among the various
economic, environmental and social stakeholders. In common with all the
supporters of the FSC, Precious Woods is totally committed to this joint
"learning-by-doing" project which was launched almost 15 years ago.
The main reason for the effectiveness of the FSC is the fact that forestry
operations are assessed by third party certifiers which are themselves
accredited and monitored by the FSC and NGOs.
Precious Woods owns forests in Brazil
and timber plantations in Costa Rica
and Nicaragua.
In 2005 the company decided to extend its business activities to Africa in order to:
- expand its resource base
- use its experience and expertise to promote FSC certification in
the CongoBasin by achieving – if possible –
the step-by-step certification of more than 5 million hectares of moist
tropical forest.
In May 2005, Precious Woods announced that it had signed a Memorandum of
Understanding with Nordsüdtimber (NST), the largest forestry conglomerate in
the Democratic Republic of Congo. It was originally planned to acquire a 10%
stake, with the option of acquiring the majority interest within the following
seven years.
In June 2006, however, Precious Woods announced that it would not be signing
the contract with NST after all. The decision not to do so was due to the
political situation in the DR Congo and the uncertainty regarding the
legitimacy of the exchange of concessions under the new forestry legislation.
In March 2007, Precious Woods acquired a minority interest in NST. The amount
invested, however, was significantly
below the 10% stake envisaged originally. The option to substantially increase
Precious Woods' participation at a later date remained unchanged. In the
meantime, NST's subsidiaries have begun preparing their operations for
certification according to the criteria of the FSC.
Shortly after acquiring its minority interest in NST, Precious Woods became
aware of a Greenpeace report on logging in the DR Congo. This report, which
contains several points of criticism, accuses a number of forestry companies
operating in the DR Congo – including some of the companies that are part of
the NST Group – of undermining the 2002 moratorium on the granting of logging
concessions. The World Bank also comes under criticism in the report for
failing to effectively enforce the moratorium that it had initiated. Precious
Woods supports the ongoing review by
an inter-ministerial commission of the existing forestry concessions.
Precious Woods is in close contact with the management of the NST companies and
is using its influence to ensure the rapid implementation of the steps that
need to be taken on the path towards FSC certification. Members of Precious
Woods' senior management regularly meet with the management of Sodefor and
Soforma in order to raise and discuss all points that have a bearing on the
future development of these companies. The 5,000 or so employees of Sodefor,
Soforma, CFT and Forabola on the one hand, and the forests of the Congo Basin
on the other, can only benefit from the steps being taken now with the aim of
achieving full FSC certification at a future date.
How large is Precious Woods' stake in NST
and what does its involvement consist of?
It is significantly below 10%. For this reason Precious Woods currently has
only limited influence over NST, let alone control of the Group. However, it
may increase its participation over the coming years.
What has Precious Woods done to make
sure that it has not acquired an interest in a company involved in illegal
logging?
An important point to consider is that in the DR Congo concessions continued to
be re-allocated, and in some cases, exchanged in 2002 and 2003 with the full
approval and permission of the Ministry for Forests. In response to pressure
from the World Bank, the moratorium was introduced in 2002 by presidential
decree but was not published until 2004. The date on which it entered into
force is therefore unclear. Forestry companies and even representatives of the
Ministry have declared that they had no knowledge of the decree until it was
made public in 2004. Among other things, concessions were exchanged and
modified in 2002 and 2003 in reaction to the introduction of much higher
concession fees which were even payable in respect of unforested concession
areas.
Who is going to check that NST holds
legitimate concessions and has paid the respective taxes and other fees?
An official review of the forest concessions was decreed in 2005. With the
support of an independent international expert, an inter-ministerial commission
is currently reviewing the legality of all156 existing concessions. The
commission's report is expected to be completed at the end of September 2008.
The various NST Group companies are sure that they have paid all taxes and fees
and have complied with the terms of the concessions.
What will Precious Woods do if the
inter-ministerial commission finds evidence that NST holds its current
concessions unlawfully and that the Group is operating illegally?
At present there is no indication that this is the case. The NST Group is
managed professionally and employs some 5,000 people. Should - contrary to
expectations – many of the existing concessions not be converted into new ones,
Precious Woods would probably not increase its participation and would instead
decide to sell its stake in NST.
Does Precious Woods sell timber from NST
in Europe or plan to do so?
Precious Woods Europe does not sell any
timber from the DR Congo and does not intend to do so until the concession
conversion process is completed at the end of 2008.
What guarantees will Precious Woods
require before increasing its participation in the NST Group?
The decision to increase Precious Woods' participation will depend on a number
of factors: the existence of satisfactory answers to the questions related to
the granting of concessions, the prospects for certification of the forest
operations and the economic viability of the operations.
Is there any danger of Precious Woods
losing its investment in the DR Congo? Could this affect the company's
activities in Latin America?
Precious Woods – and its shareholders – are aware of the risks inherent in
investing in the DR Congo. Precious Woods decided to invest in the DR Congo
because it is convinced that the sustainable management of tropical forests in
the Congo Basin is not only possible but also of
utmost importance for the future of these forests. In the worst case scenario,
Precious Woods would have to dispose of its stake in NST. However, this would
not endanger the company's operations in Latin America.
What would happen if Precious Woods were
to withdraw from the DR Congo or decide not to increase its participation?
Given the growing demand for timber from East Asian countries, companies in the
DR Congo would have no difficulty in finding new buyers in Asia.
It is, however, highly unlikely that such new owners would embrace their social
and environmental responsibilities and seek to achieve FSC certification.
Was Precious Woods' positive assessment
of the proposed investment in the DR Congo unduly influenced by the
opportunities for financial gain mentioned in the company's publications?
Absolutely not. Precious Woods has a proven track-record in the sustainable
management of tropical forests. In contrast to other companies which engage in
destructive logging practices or convert the forests to other uses, to obtain
pulp, soya or palm oil for example, Precious Woods' activities contribute
towards the preservation of intact tropical forests. Moreover, the company
firmly believes that its approach is not inconsistent with economic viability.
Is Precious Woods in contact with
Greenpeace?
There have not been any formal
talks between official delegations from Greenpeace und Precious Woods. On the
other hand, Precious Woods Brazil, for example, maintains close contact with Greenpeace
Brazil.
In Europe, numerous personal relationships
exist between individual Greenpeace officers and members of Precious Woods'
management. Among other things these enable an ongoing dialogue about the
principles and details of forestry activities in tropical forests.
What is Precious Woods' opinion on the
Greenpeace report?
Precious Woods shares Greenpeace's concern for the tropical forest in the DR
Congo and has an interest in working together with organisations dedicated to
nature conservation - such as WWF and Greenpeace - in order to improve the
situation, as has been the case in Brazil. According to the Greenpeace report,
only the government is able to save
the tropical forests in the DR Congo. However, as there are practically no
forestry authorities with the ability to enforce forest laws and the
institutional framework in the DR Congo is generally weak, this amounts to an
illusion and serves to illustrate yet again the important role played by the
FSC's independent certification scheme in ensuring that forestry companies meet
their corporate responsibility obligations.
Some of the allegations in the report, such as the accusation that Sodefor
has failed to pay concession taxes and other fees, are, according to Precious
Woods' information, completely unfounded.
To what extent does the harvesting of
timber contribute towards deforestation?
In Africa, timber is extracted from tropical
moist forests on a highly selective basis. On average only one tree per hectare
is harvested and this in a felling cycle of 25 years. Such slight disturbances
are not a problem for the forest. If the forest is opened up by roads, however,
deforestation can be accelerated by slash and burn clearance for farming
purposes. In populated areas this has led to the destruction of large areas of
forest. An important aspect of FSC certification therefore, is the permanent
protection of concessions from illegal agriculture.
Why is deforestation a problem in the DR
Congo but not in Gabon?
In the DR Congo – particularly in the eastern provinces and as a result of the
displacement of people during the war - the population density is much higher
than in Gabon.
Spontaneous settlement has occurred in many forest areas, regardless of whether
forestry operations have been carried out there or not. Today, carefully
administered and monitored logging concessions are able to provide better
protection against illegal encroachment, particularly when these are based upon
an independent certification process.
To what extent do forestry operations
contribute to the destruction of the forest fauna?
In large forest areas with a low population density – for example in many parts
of Gabon
– it is usually easy to find protein in the form of bush meat. Indigenous
peoples such as the Pygmies living in Central African forests completely depend
on bush meat. As soon as the human population grows and the forest becomes
fragmented, the number of animal and plant species found there declines
drastically. Forestry companies which actively endorse the commercial hunting
of bush meat by providing trucks and boats for transportation purposes, are
partly responsible for destroying animal life. As already mentioned, nature
conservation is a precondition for certification according to the criteria of the
FSC.
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