Theoretical Background

Overall, traditional forms of forest governance, under different forms of command and control approaches and economic instruments, have not been sufficient to address the environmental and social issues caused by forest operations worldwide. On the one hand, command and control approaches, for example, have frequently lacked credible enforcement mechanisms to make forestry businesses comply with state laws and regulations (McDermott et al., 2010). The practical application of economic instruments have had modest outcomes in many cases, on the other (e.g. Bull et al., 2006).

In this context, new forms of forest governance have arisen to address many of the above issues – under the form of self-regulation approaches. It is thus very notable that many – particularly large forest corporations – forestry businesses have adopted corporate reporting (Toppinen and Korhonen‐Kurki, 2013) and environmental management systems (EMSs) (Tikina and Innes, 2008; Cashore et al., 2005). Again, these self-regulation initiatives have not been sufficient either for large corporations or small and medium-sized forestry businesses to address their sustainability issues since they have not been necessarily associated with a better environmental performance, motivating some criticism (e.g. Poynton, 2015). Hence, as we will see in the next paragraph, new forms of forest governance emerged to address the significant limitations of a number of traditional and self-regulation approaches.

From the perspective of this research the most important forms of new forest governance are performance-based (i.e. outcome based) known as Non-State Market Driven (NSMD) mechanisms. They group different forest certification schemes. The term NSMD systems or mechanisms was firstly coined by Cashore (2002) to refer to approaches where “the state does not provide implicit or explicit, compliance incentives but a private organization develops rules designed for achieving pre-established objectives such as sustainable forestry in the case of forest certification” (Auld et al., 2008a:424). They have a number of distinctive characteristics that were introduced in Chapter 1 and are described in detail in Appendix 1.

Importantly, the major focus of the literature has been on explaining the difference in performance of different forest certification schemes (see for example Cubbage et al., 2010; McDermott et al., 2008; Gulbrandsen, 2005; Masiero et al., 2015). For the most part, such comparative studies have focused on the Forest Stewardship Council (FSC), which is often viewed as a benchmark against which other standards can be judged. In broad terms, the studies, far from moving towards a consensus view, are seriously divergent in their findings about certification impacts, and as a result leave many important questions unanswered. For example, one obvious first question is to identify to what extent NSMD mechanisms have yielded better

outcomes in forest management than other instruments of forest governance, and while this question has certainly been asked previously, no clear answer has emerged. A related question concerns what differences different forest certification schemes make to forestry businesses.

NSMD mechanisms have had substantial effects. Put simply, in terms of their internal effects, certification has largely influenced the environmental, social and economic performance of certified forestry businesses. Table 2.1 summarises the main conclusions of studies of certification impacts on environmental, social and economic issues; those impacts are also discussed in detail in Appendix 2. Overall, whereas many studies have reported important benefits in the environmental and social performance of companies, others have contradicted these results. Likewise, in economic terms, there is mixed evidence concerning the effects of certification on the performance of forestry businesses. These issues therefore warrant further investigation.

Aspect Specific issues

Environmental issues

 Deforestation: certification does not address deforestation outside certified forest areas. Most certified forests are in temperate regions and developed countries, not in tropical and less developed countries where most deforestation and degradation occur.

 Biodiversity and conservation issues: certification has encouraged better

practices to protect biodiversity including identification, assessment and protection of flora and fauna species; some studies also suggest an improvement in the conservation status of endangered, threatened and vulnerable species. Conversely, other studies refute any claims concerning improvements in species conservation status.

 Forest management practices: certification makes forest owners and their staff more aware of the environmental impact of forest operations; other changes are the implementation of reduced impact logging (RIL) techniques, and better documentation and monitoring of forest operations. In some transitioning countries (Russia and Estonia), certification has helped to improve forest practices but it has not reduced extensive clear-cuts. Other studies suggest that certification mimics standards set by state forest policies (best management practices [BMP] in developed countries, rather than going beyond legal compliance.

Social issues  Impact on forestry workers: certification generally improves working conditions and workers’ welfare. Some examples include: fair wage practices, Occupational Health and Safety (OHS) training, appropriate provision of Personal Protective Equipment (PPE), and proper accommodation and meals in forest camps. Certification has been perceived as a negotiation tool by forestry workers to get better social benefits. However, it is not yet clear whether these benefits are simply complying with social regulations or going beyond legal compliance, across the diversity of certification contexts (e.g. developed and developing countries, forest type).

 Impact on local communities and other stakeholders: certification has

empowered and given voice, through consultation processes, to NGOs, local communities and Indigenous peoples who inhabit forested territories; they have been able to leverage decision-making processes concerning forest operations. In some cases, traditional Indigenous peoples’ rights have been formally respected and there are changes in the power balance between companies and their stakeholders. Notwithstanding those findings, other authors have not found compelling evidence of fewer conflicts with Indigenous peoples attributed to certification.

Economic issues

 Microeconomic effects: there is mixed evidence concerning both improved access

to environmentally sensitive markets and the payment of premium prices for certified timber: in some cases, certified companies have obtained those competitive advantages, whereas in others not. Certification has imposed important associated costs, from modifying operations, for large forestry businesses; small forestry businesses have experienced both direct and indirect costs. In general, plantation forestry businesses would face lower costs than those operating in other forest types.

 Macroeconomic effects: overall, there are two macroeconomic effects of

certification; the first is that certification would encourage better transparency in the timber supply chain; and the second is that, in the long term, certification would reduce the worldwide timber supply as a consequence of curtailing illegal or unsustainable harvesting.

Table 2.1 Summary of the main certification impacts on the sustainability performance of forestry businesses.

Finally, certification has also had an impact beyond the forest management unit (FMU) level, in terms of broader forest governance (see Appendix 2). Perhaps, the most important effect is that it enforces legal compliance. Some scholars (Gale and Haward, 2011; Lister, 2011; Gulbrandsen, 2014) have noted this a “co-regulatory arrangement” between NSMD governance and public policies. Of course, much empirical research is needed to confirm this theory and to establish if and when certification is capable of providing an effective enforcement mechanism, or even going beyond legal compliance.