Designing a relationship of trust – distrust between a Finnish forest company and its stakeholders in Russia

 

Авторская статья опубликована ранее в научном международном журнале Environmental education and environmental culture of the population. Prague: Vědecko vydavatelské centrum «Sociosféra-CZ». 2013. p. 47-61. (является англоязычной версией предыдущей авторской статьи «Конструирование отношений „доверие - недоверие“ между лесной компанией и местным сообществом»).

Summary

In this article examines the example of the relations of trust and distrust existing between the Finnish forest company Metsaliitto and local stakeholders in Russia. Metsaliitto Podporozhye - first logging company in Russia, which must be certified by the scheme PEFC (Programme for Endorsement of Forest Certification). The process of certification plays an important role in the building of trust relations.

The author presents a short history of Metsaliitto Podporozhye, which is important for the analysis of relations with a local community, and also analyzes the social and economic context and presents the main characteristics of the local community and local stakeholders. The main focus of the analysis is on the reasons and mechanisms underlying the construction of trust and distrust. The author proposes several indicators that can help in the analysis of trust relations, and reveals some of the factors that help in overcoming distrust between company and stakeholders.

Key words: construction of trust and distrust, sustainable forest management, PEFC certification, forest company and stakeholders, local citizens, ecovillages.

 

Introduction

This article examines how the relationships of trust and mistrust are built up between the Russian logging company Metsaliitto Podporozhye (a subsidiary of the Finnish Metsaliitto company) and its local stakeholders. The case of Metsaliitto Podporozhye was selected for analysis because the company has all of the characteristic features of foreign logging companies operating in Russia.

On the other hand, this particular case also has a unique feature that adds a special interest to its analysis. The company operates in a region where the local stakeholders are very active and display a high degree of interest in forest conservation. This adds a unique character to the case study. Conservation of the forests, which is of importance to the local population, provided the main context for the construction of trust.

Metsaliitto Podporozhye is a branch of a large international company of Finnish origin, characterized by a high level of corporate social and environmental responsibility. Its corporate policy, as developed by the head office, determines its high standards in many operational aspects, including human recourse strategies, labor safety, logging technology, its attitude to the global environment and social conventions, and many others. This policy is introduced in all of the company’s subsidiaries operating in many countries of the world [23].

Metsaliitto Podporozhye is the first and only company in Russia to have been certified by the PEFC [25] voluntary forest certification system [18]. This certification system is an alternative to the international FSC (Forest Stewardship Council) system of voluntary certification [24], which is the most respected and most rapidly spreading worldwide. Before the Metsaliitto Podporozhye was PEFC certified, FSC certification was the only international voluntary certification scheme operating in Russia, and about 26 million hectares of forests have already been FSC-certified up to the present time.

The goal of both systems has been the promotion of sustainable forest management based on environmental and social responsibility and on economic performance. Nevertheless, the systems were initiated by various stakeholders. The FSC certification system was initiated by international NGOs, most of them environmental, while the PEFC system was initiated by forest companies [17]. Another difference between the two systems is that the FSC standards have been developed at a global level, and they determine a framework that is common for all participating countries. The details of its implementation are, however, adapted to suit each specific country and region. The PEFC, in contrast, unites standards developed at a purely national level, with the result that the standards of this system in one country may differ significantly from the standards practiced in another.

In general, the international community regards the PEFC standard as less effective than the FSC standard, especially in the area of social responsibility and protection of the rights of local inhabitants and indigenous peoples [12]. In our case, the Russian National Certification Standard was accredited by the PEFC system [26]. Development of this Russian National Standard was supported by the public authorities and forest companies. However, as it was being developed after the Russian version of the FSC Standard had already been developed and used in practice, the key developers of the latter had already been involved in development of the PEFC standard [11]. This has led to the fact that the content of the National Standard, accredited by the PEFC, is in fact very similar to the FSC Russian version.

Metsaliitto Podporozhye was the first PEFC certified company in Russia. It was a model certification, and hence it was prepared very thoroughly, and it has impacted greatly on relations with local communities. The process of certification has played an important role in the construction of trust relationships between the company and the local community.

Our study was conducted in 2007-2010 within the framework of the project «Trust in Finnish-Russian Forest Industry Business Relations», supported by the Academy of Finland. The data was obtained through semi-structured interviews with managers of Metsaliitto Podporozhye and the Metsaliitto company, representatives of the local management of the public forest agencies, local administrations, and local residents and activists. In total, 20 interviews were recorded. Five focus groups within the local community and conversations with activists and residents were also conducted, as well as participatory observation at meetings of stakeholders.

 

Theoretical framework

As the theoretical framework of analysis we use the theory of trust. Trust is conceptualized in sociology as an extended multispace social reality, confronting the complexity and unpredictability of social interaction. Accordingly, trust becomes a necessary strategy for overcoming this complexity and unpredictability, to achieve the desired future [20, 2]. Trust is a collective phenomenon that occurs in the interaction and focuses on a number of shared goals and values [19]. It manifests itself in social systems in that the members of these systems operate in accordance with the expectations and perceptions of each other, or with symbolic representations of another [1].

Developing this theory, Giddens has pointed out that, in today’s globalized society, the relationship of trust based on personal circumstances, which are expressed in the relations of cooperation between social agents, are complemented by an impersonal trust, expressed in belief in the abstract system, i.e. symbolic sign or expert systems. In this, the relationship of trust forms the basis for expansion of spatial and temporal distancing, which is manifested in globalization [6].

In our case, the corporate policies of an international company and the PEFC international certification scheme, coming together at the local level, are no longer an abstract system in the eyes of the local community, which exists under the threat of losing the forests as their habitat and livelihood. The systems provide them with a mechanism for self-preservation in the form of control over the forest management of a certified company, which positions itself as a socially, economically, and environmentally responsible one. If this mechanism is triggered, it starts to work in the building of trust between the company and the local community.

The symbolic mark of certification and the brand of the company are created for a buyer for whom the logos are markers of the social and environmental responsibility of the producer and of the quality of the product. The consumer of the product, whether a big-selling company or a simple buyer in a store, focuses on the purchase of goods produced under high social and environmental standards, will trust the FSC logo and that of the company. Buying certified products, the consumer acts in line with his or her values. Thus, she affects corporate responsibility, which is developed within the framework of the certification system at the local level. This practice of realization of the consumer’s value orientations and demands is regarded by researchers as a practice based on market demand [28]. This is due to the fact that environmentally and socially sensitive western markets increasingly give preference to products and services produced by certified companies, since their certificates attest their corporate social and environmental responsibility.

The trust in certification systems in general was mainly established by NGOs. It was thanks to their efforts that a broad segment of certified forest products appeared on the market. At that time, as has already been mentioned, the FSC certification system evoked more trust than did the PEFC. In contrast to FSC, which was created and promoted by NGOs, trust in the PEFC certification system has been established and promoted mostly by the forest companies, and supported by government and financial institutions. In the case of PEFC certification, NGOs have played a smaller role.

However, in the present case under study, since the FSC certification has already established a network of experts and NGOs promoting and encouraging implementation of certification standards and rules, the first model PEFC certification has come under the scrutiny of these networks. They participated in the preparation of the certification system, legitimizing it, and thus becoming the guarantors of trust in the system.

Experts became a link between the global and local spaces. They have played an important role in changing local practices of corporate responsibility in certified companies. At the same time, NGOs and experts, as certification stakeholders, help the companies to change their practice of responsibility in the local context and to build trust and interaction between the company and the local community, resulting in closer partnership in forest management.

It has to be noted that if, on an international level, trust was formulated for certifying companies in terms of abstract systems, at the local level trust is being built on the basis of personalized relationships between logging companies and the local community, and depends on their specific interaction. Trust grows and becomes stronger with every case of productive and positive interaction. It can, however, disappear instantly in the case of serious slips, such as fraud, public contempt, or something similar which leads to unfavorable social or environmental consequences.

The author highlights a few indicators that can testify to the process of building trust. In the present study, we use the term ’indicator’ in its widest sense. It refers to how the studied category is actually manifested. The first indicator is the presence or absence of common goals and values in the company and the local community or in the company and amongst its employees. The second indicator is the openness, cooperation, and constructive dialogue between the company and the local community. The social capital of the company can grow considerably if it is ready to compromise, to meet at least some of the social needs and to be guided not only by its own economic benefits. The third important indicator that shows the trust of the local community is the willingness and practices of interaction with the company in the form of a constructive dialogue.

Local society can take into consideration the interests of the company if the company does not impinge upon the local community’s interests. Trust is born when the local community is able to influence the company’s decisions concerning the following issues: the ability to protect socially valuable forests, to obtain employment, to have the local infrastructure supported, and to have the civic initiatives of the local community financed. Fourth, a very important indicator of trust is the presence of «human» personal relations between the company and local communities.

It should be noted that the company needs to balance its activity concerning interaction with the local community. If the company is too active in its attempts to build relationships with the community and if it imposes its initiatives, it does not achieve good results in building up trust. The best strategy for building trust on the part of the company is to meet the real needs of the community and to support its own initiatives. In what follows, this will be shown in the example considered in our case study.