The process of certification

PLO Onegales is a regional holding managing six logging companies: the Joint-Stock Companies Maloshuikales, Nimengales, Onezhskoe Wood floating enterprise, Kargopolles, Iarnemales, Onegales (www.ongegales.ru); most of them were established on the basis of old Soviet lespromkhozes. This holding, as well as its managing company, was established in 2003 by the Open Joint-Stock Company Onezhskii LDK (wood processing plant), which managed these logging companies before 2003 and was the main consumer of their production.

Onezhskii LDK with its suppliers was integrated into the international holding Group Orimi, from which Investlesprom bought them in 2007. Thus, Onezhskii LDK and all enterprises of PLO Onegales became part of one of the largest and actively developing forest holdings in Russia (www.investlesprom.ru).

The process of forest management certification and the chain of custody at the logging companies of PLO Onegales took several years. Maloshuikales was the first company entering the process of certification, in 2003. It was chosen for pilot certification to approve the process and estimate the resources needed and benefits provided by the FSC certificate (interview with a director of Maloshuikales 2003, 2004). The decision concerning certification was based on economic reasons. On the one hand, it was the requirement of foreign purchasers of carving wood; on the other hand, Onezhskiy LDK hoped to raise the prices of certified production (interview with a representative of the administration of Onezhkiy LDK 2003).

The international NGO WWF played an important role in publicizing the necessity and benefits of certification. The Arkhangelsk Certification Center, which is closely associated with WWF, was invited for consultations. Its experts helped to prepare documents and organize events required by certification. They also prepared a program of corporate social responsibility for the company, which was designed as a «Plan of social and economic development for the 49-year leasing period» and included some concrete measures for developing the social infrastructure of the settlements. The company signed a moratorium on cutting on plots of the old-growth forests with Greenpeace (interview with a person responsible for certification of Maloshuikales 2004).

The administration of PLO Onegales was somewhat disappointed in the results obtained as certification of Maloshuikales required substantial expense and did not yield any palpable economic result. The wood-processing plant Onezhskii LDK could not certify its chain of custody because the amount of the wood coming from Maloshuikales was too small. Certification of other wood suppliers was also necessary.

This process was also precipitated by the protest actions organized by Greenpeace in Germany in 2004, which concerned not only Onezhskii LDK but all forest companies of the Arkhangelsk region. Greenpeace -Germany blockaded ships of Solomalskiy LDK carrying wood cut in old-growth forests of the Arkhangelsk region. These actions forced regional forest companies to make extra efforts to prove their environmental responsibility (Interview with the chairman of the board of the Association «Industrialists of Pomorie» 2004).

In 2004 Onezhskii LDK received an FSC certificate for Nimengales. In 2005 management issues were transferred to PLO Onegales, which certified the following group of companies: Onegales, Onezhskoe Wood Floating Enterprise, Iarnemales and Kargopolles. Nirmengales was later able to join this group certificate (Certification public reports, www.fsc.ru).

Various interested parties, such as experts, NGOs, representative of state agencies and business play an important role in FSC certification. FSC is a voluntary certification system, promoted in the forest sector all over the world by an alliance of international NGOs and associations of socially and ecologically responsible companies. FSC, makes logging companies more transparent and open to cooperation with different interested groups. FSC is based on ten general principles, 56 criteria and many indicators which adapt international principles and criteria to conditions of specific regions. Auditing companies accredited by FSC check the implementation of FSC requirements in forest companies annually. Real implementation of the FSC is, however, possible only if logging companies create a constructive dialogue with NGOs, local citizens, and other interested parties desiring to coordinate their needs in forest use with the company’s operations and can control the social and ecological responsibility of the companies.

In the following we will analyze the role of experts and NGOs in the construction of trust towards PLO Onegales, focusing on the change in practices of corporate social and environmental responsibility, which is crucial for bufJding trust.

 

The role of NGOs and experts in construction of trust

The participation of NGOs and experts in FSC forest management certification in PLO Onegales considerably influenced the process of building trust between the company and the local and regional communities. NGOs became the guarantors of the quality of certification and often determine how global practices of the FSC forest certification are localized in changing the corporate environmental and social responsibility of companies.

 

 

The role of International NGOs

In our case the most prominent international NGOs, WWF and Greenpeace, contributed to increasing of the eco-social responsibility of the company, although using different approaches and constructing not only trust (WWF) but also mistrust (Greenpeace).

 

The role of WWF

WWF, in the frames of its forest program, promotes sustainable forest utilization which supposes the equilibrium of its economic, environmental and social aspects (www.wwf.ru). One of the goals of this program is building trust in the abstract system of FSC-certified forest companies in general. Affiliation with the WWF forest program legitimizes the forest utilization of the company. WWF takes part in promoting FSC-certified production to environmentally and socially sensitive markets by constructing an image of responsibility of certified companies both on the international and national levels. Since 2008, WWF has joined the process of constructing a ’green’ market in Russia and creating a new national system of buyers’ trust in the FSC-certified production of Russian forest companies. WWF builds trust in an FSC-certified company in the public space and at the same time increases trust in its own brand and the expert services it provides by creating partnerships with forest business and trade corporations, organizing informational activities, educational programs and various events such as conferences, seminars etc.

Trust in an abstract system - any FSC-certified company - is localized through the stimulation of the corporate social and environmental responsibility of a concrete company, which creates or increases existing personal trust in the company on the regional and local levels. Before PLO Onegales took over the company, the eco-social responsibility of the logging companies managed by Onezhskii LDK was stimulated by interaction with WWF. Due to this cooperation, the company enjoyed the confidence of international and regional eco-NGOs and had an image of an eco-socially responsible company. Onezhskii LDK successfully participated in ratings organized by WWF (for the eco-ratings of the forest industry sector of the RF, see www.wwf.ru/about_we_do/forests/aeol/ratings/doc457/pagel), which were largely published in the mass media. Furthermore, Onezhskii LDK satisfied the ISO 14000 requirements for certification of ecological management. WWF involved Onezhskii LDK managers in its educational programs. Onezhskii LDK managers participated in the Russian National FSC expertise initiative (see list of participants of FSC Russian National Initiative, www.fsc.ru). Later, by this time PLO Onegales became a «candidate member» of the Association of Environmentally Responsible Forest Companies organized by WWF (for a list of participants of environmentally responsible industrialists, see www.wwf.ru). Interaction with the WWW Arkhangelsk office was based on the same principles and helped the company to build trust in its activity and policy on the regional level. The administration of the Onezhskii LDK participated in regional events organized by the WWF: conferences dedicated to FSC certification, seminars, meetings of the working group developing FSC regional standards.

 

The role of Greenpeace

Relationships with Greenpeace were constructed on another basis. Initially, Greenpeace molded public mistrust in the company and its logging enterprises and motivated it to certain actions. These actions were then legitimized by the eco-NGO and became part of the construction of trust. Long relationships with this radical eco-NGO even resulted in personal trust, as we will later see.

Interaction by the company with Greenpeace on the old-growth forests issue took place in parallel with its interplay with the WWF concerning certification. In the first stage, relationships between the eco-NGO and the company were mistrustful and cautious. To conserve large plots of old-growth forests the eco-NGOs put forward the idea of creating a national reserve, Onezhskoe Pamorie, on the Onega peninsula. The idea was supported by regional and federal authorities. Until 2001 the administration of Onezhskii LDK actively objected to this decision. In their public presentations they explained that «creation of this park would result in cutting down 2/3 of their production area and reducing wood processing by 80.000 cubic meters per year» (Will «Onezhskoe Pomorie» … 2001). Nor did this correspond to the interests of the economy of the region. The efforts of Greenpeace helped leaders of Onezhskii LDK to change their position, and locate a compromise: to create a smaller reserve. One of representatives of Onezhskii LDK commented on their relationships with Greenpeace and its leader as follows: «We personally know Iaroshenko, because we had long discussions about the Onezhskoe Pomorie National Reserve… And we have good contacts with him» (Interview with the representative of the administration of Onezhskii LDK 2003). Finally, the creation of a national park on leased territories of the holding was agreed. Logging enterprises signed a moratorium on cutting old-growth forests on leased territories. Interaction with international eco-NGOs provided the logging enterprises of the holding with the image of an environmentally and socially responsible company and constructed consumers’ trust, which improved their position in the international and internal markets. This case shows how the practice of building trust by international NGOs not only forces a company to undertake various actions to be more environmentally responsible locally, but also helps to build personal trust between representatives of NGOs and the company.