We are returning to the topic of our last article. A subject we would like to forget about, but it is just too important to ignore. We are referring to the Advice Notes that were recently published by the Forest Stewardship Council (FSC) – extending their Core Labor Requirements (CLR) to include Outsourcing for CoC companies.
FSC has a long history of inventing new requirements, out of thin air, and dropping them unannounced on its community of Certificate Holders (CH). Readers of this blog will be familiar with many of these stories. One of the underlying themes of this behavior is a chronic disconnect between the folks who run the FSC program (mostly staff based in Germany) and the people who actually implement the standards. FSC staff have always been shockingly disconnected from their key supporters and stakeholders, and this seems to get worse over time. This latest policy change may be the worst example of this in the 25-year history of the program.
The Details
We summarized this for you last week. If you didn’t read that article, please do (it’s short). We avoided trying to explain and summarize the details last week, as we usually do. We will do that now.
CLR Implementation Today
Implementation of the Core Labor Requirements over the last 2 years has been deeply unpopular, but fairly smooth. Certified companies have had to meet two key requirements:
A Policy Statement – promising, in effect, to obey the law, to not engage in slavery, child labor, & discrimination; and to respect workers’ rights to organize.
A Self Assessment – annually completing and signing a document that affirms that they are respecting their CLR Policy.
The Policy is just a document affirming basic ethical values that any ethical company conforms to anyway. The Self-Assessment is a rather silly piece of annual paperwork that accomplishes the same thing as the Policy.
Importantly, the current CLR Implementation is limited to things that a certified company can control and can, in practice, be expected to take responsibility for. This – of course – is what changed last week.
The New Requirements (for Outsourcing)
In addition to the items noted above, FSC has now decided that certified companies must apply the same key requirements to all of the companies who provide them with material handling services (Outsource Vendors):
The Policy Statement – each vendor will be expected to have their own policy statement; promising, in effect, to respect FSC social standards even though they are not FSC-certified. It will be up the certified company to verify that these policies are in place and conform to FSC requirements.
The Self Assessment – the annual CLR Self-Assessment will cease to be just a silly piece of paperwork confirming the CLR Policy. That’s because the CH will need to take responsibility, not just for themselves, but also for their vendors. In effect, FSC-certified companies will be required to assess and certify that their service vendors are in compliance with the social principals in the CLR: forced labor, child labor, discrimination, and the right to organize.
The problem here is obvious. At least it is obvious to everyone who doesn’t work for FSC. It is relatively easy to ask reputable companies to attest in writing that they conform to internationally recognized, and legally required, business norms. It is another thing entirely to ask them to attest to the same thing on behalf of another, independent company. This is exactly what FSC is asking every CH to do.
But Wait, There’s More
The changes we just outlined can be considered catastrophic on their own. Unfortunately, though, it gets worse.
In addition to imposing this new requirement on Certificate Holders (CH), FSC staff have also made it clear that they expect the implementation of CLR compliance of Outsourcers and the integrity of vendor self-assessments to be subject to 3rd party audit. Beginning – in theory – this month. This has enormous practical consequence because of the way that Outsourcing Services are audited today.
Most Chain of Custody (CoC) Outsourcing involve custom material handling and specialty services to certified manufacturers. A typical and common example is specialty binding services to printers. In many cases, the outsourced activity introduces negligible risk to the integrity of the CoC and is classed as Low Risk. Low Risk outsourcing does not require on-site visits during 3rd-party audits.
As the new CLR protocols are implemented, Certification Bodies (CB) will be faced with the necessity of developing audit trails to verify (i.e. ‘prove’) that outsource vendors are conforming to the CLR’s. This will mean site visits. Lots and lots of site visits to businesses that have never been visited in the past. The cost of this will be uneven of course, falling most heavily on the CH’s who do the most Outsourcing. In aggregate, it will certainly impose millions of dollars of added cost to the marketplace, and severely strain the logistics and capacity of the whole certification business.
Why Are We Doing This?
This question is not a rhetorical question, but a tangible one. The fact is that we – the FSC community – are doing this to ourselves for real and specific reasons. It just happens that all of these reasons are bad.
FSC has suffered, since its founding, with a persistent fallacy. We can call it: “harder is better”. The idea is simple. Good standards are hard. Therefore, to make a standard ‘better’,we need to make it ‘harder’. This idea has its roots in FSC’s roots, which began with the development of rigorous and meaningful standards for the management of forests. Forest management is hard. And good forest management is – usually – harder. Applying this logic to supply chain traceability, on the other hand, is nonsense. A dangerous and naïve misunderstanding. Chain of Custody should be easy!!
To answer the question directly: We are doing this to ourselves for one reason only. Not to improve social and labor conditions for wood product workers. Not to enhance the ‘value’ and ‘credibility’ of the FSC brand. Not to add value to the marketplace for certified wood products. No. These changes to the FSC requirements are intended to make Certified companies expend more time, effort, and money in return for the ‘privilege’ of maintaining their FSC certification. All to satisfy the deeply mistaken (though generally well-intentioned) biases of a handful of professional staff at the international office. In short, a mistake. A very big, expensive mistake
In Summary – a solution
A nameless wise person once offered this useful advice:
“When things are going wrong, and you don’t know what to do, begin by doing something different.”
To put it another way – for our colleagues in Bonn – if you can’t think of any way to make this better, you aren’t paying attention. You can begin by stopping.