UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Chain of custody certification : current status and level of knowledge in the North American solid wood… Vidal, Natalia Giugni 2003

Your browser doesn't seem to have a PDF viewer, please download the PDF to view this item.

Item Metadata

Download

Media
831-ubc_2003-0100.pdf [ 5.37MB ]
Metadata
JSON: 831-1.0075032.json
JSON-LD: 831-1.0075032-ld.json
RDF/XML (Pretty): 831-1.0075032-rdf.xml
RDF/JSON: 831-1.0075032-rdf.json
Turtle: 831-1.0075032-turtle.txt
N-Triples: 831-1.0075032-rdf-ntriples.txt
Original Record: 831-1.0075032-source.json
Full Text
831-1.0075032-fulltext.txt
Citation
831-1.0075032.ris

Full Text

C H A I N OF C U S T O D Y C E R T I F I C A T I O N : C U R R E N T STATUS A N D L E V E L OF K N O W L E D G E IN T H E N O R T H A M E R I C A N SOLID WOOD SECTOR. by N A T A L I A GIUGNI V I D A L Bachelor of Science in Forestry, Sao Paulo State University, Brazil , 1998 A THESIS S U B M I T T E D IN P A R T I A L F U L F I L L M E N T OF THE R E Q U I R E M E N T S FOR T H E D E G R E E OF M A S T E R OF S C I E N C E in THE F A C U L T Y OF G R A D U A T E STUDIES Faculty of Forestry Department of Wood Science We accept this thesis as conforming to the required standard The University of British Columbia January 2003 © Natalia Giugni Vidal , 2003 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department The University of British Columbia Vancouver, Canada DE-6 (2/88) A B S T R A C T C h a i n o f custody certif ication has influenced the marketplace for forest products over the past two decades. A category o f forest cert if ication, chain o f custody cert if icat ion is responsible for p rov id ing a guarantee that the wood product purchased was manufactured wi th raw materials from environmental ly certified sources. Information on how Nor th Amer i can pr imary wood product companies are addressing chain o f custody cert if ication is scarce. However , it is cr i t ica l for the further development o f this concept. A survey o f pr imary wood products manufacturers was conducted in order to verify the current status o f chain o f custody certif ication in Canada and the Un i t ed States. Accred i ted cert if ication bodies in Nor th A m e r i c a were also interviewed by telephone. Results indicate that approximately 50% o f pr imary wood producers w i l l be cert if ied by 2007 and that the acquisi t ion o f benefits from chain o f custody certif ication may be a key factor in increasing adoption levels. A cluster analysis and a determinant function analysis suggest that company size is an important variable to be considered when analyzing the adoption o f chain o f custody cert if ication by pr imary wood producers. A c c o r d i n g to these analyses, larger companies are more l i ke ly to be chain o f custody certified than smaller companies. In addit ion, larger companies seem to be more cognizant o f the benefits to be accrued from chain o f custody cert if icat ion. The costs o f implementing chain o f custody certif ication are also related to company size wi th a general trend being lower costs for larger companies. i i Table of Contents ABSTRACT ii TABLE OF CONTENTS iii LIST OF TABLES vi LIST OF FIGURES vii ACKNOWLEDGEMENTS viii 1. INTRODUCTION 1 2. BACKGROUND 4 2.1. DEVELOPMENT OF FOREST CERTIFICATION 4 2.2. FOREST CERTIFICATION SCHEMES 6 2.3. FOREST CERTIFICATION AS A M A R K E T ACCESS T O O L 10 2.4. CHAIN OF CUSTODY CERTIFICATION 13 2.4.1. Definition and Importance of Chain of Custody Certification 13 2.4.2. Technical Aspects of Chain of Custody Certification 15 2.4.3. Supply Chain Management and the Consequences of Chain of Custody 16 2.4.4. How Chain of Custody Certification Works 18 2.5. P R O B L E M STATEMENT AND OBJECTIVES 21 3. METHODOLOGY 23 3.1. T H E APPROACH 23 3.2. DEFINITION OF POPULATION 23 3.3. SURVEY DESIGN 24 3.3.1. Mail Questionnaires 24 3.3.2. Telephone Interviews 25 3.3.3. Cover Letters 26 3.3.4. Other Considerations 26 3.4. IMPLEMENTATION 26 3.4.1. Mail Questionnaire 27 3.4.2. Telephone Interviews 27 3.5. DATA ANALYSIS 28 iii 3.5.7. Mail Questionnaires 28 3.5.2. Telephone Interviews 29 4. R E S U L T S 31 4.1. M A I L SURVEYS 31 4.1.1. Types of Responses 31 4.1.2. Response Rates 32 4.1.3. Non-Response Bias 32 4.1.4. Current and Expected Adoption Levels for Chain of Custody Certification 33 4.1.5. Respondent Profiles 34 4.1.6. Chain of Custody Certification by Region 38 4.1.7. Non-Certified Companies 39 4.1.7.1. Companies Planning on becoming Chain of Custody Certified 39 4.1.7.2. Expectations of Non-Certified Companies 44 4.1.7.3. Reasons for Not becoming Certified 47 4.1.8. Certified Companies 48 4.1.8.1. Product Lines of Certified Companies 49 4.1.8.2. Certified Raw Materials 51 4.1.8.3. Chain of Custody Methods and Technologies 52 4.1.8.4. Costs of Chain of Custody Certification 52 4.1.8.5. Difficulties of Chain of Custody Certification 54 4.1.8.6. Benefits Resulting from Chain of Custody Certification 55 4.1.9. Expected versus Actual Benefits of Chain of Custody Certification 57 4.1.10. Cluster Analysis of Actual and Expected Benefits of Chain of Custody Certification 59 4.1.11 .Discriminant Function Analysis of Certified and Non-Certified Companies 63 4.1.11.1 .Assumptions 63 4.1.11.2.Important Discriminating Variables 64 4.1.11.3.Classification Functions 65 4.1.11 AMisclassification Error Rates 65 4.2. TELEPHONE SURVEYS 66 4.2.1. Response Rate and Adoption Levels 66 4.2.2. Costs of Chain of Custody Certification 67 iv 4.2.3. Benefits of chain of custody certification 69 5. D I S C U S S I O N 71 5.1. ADOPTION AND K N O W L E D G E L E V E L S AND TECHNOLOGIES 72 5.1.1. The Influence of Benefits on Adoption Levels 72 5.1.2. Communication and Future Adoption Levels 72 5.1.3. Tracking Technologies 74 5.2. BENEFITS AND COSTS AS A FUNCTION OF C O M P A N Y Y TYPE 74 5.2.1. Expected versus Perceived Benefits 74 5.2.2. Costs and Company Size 76 5.2.3. The Effect of Company Type on Benefits 76 5.2.4. Influence of Company Size on Certification Status 78 5.3. RESEARCH LIMITATIONS AND SUGGESTIONS 79 5.3.1. Telephone Interviews with Certification Bodies 79 5.3.2. Classification Functions 80 6. C O N C L U S I O N 81 7. R E F E R E N C E S 84 A P P E N D I X I: M A I L Q U E S T I O N N A I R E F O R C O M P A N I E S 89 A P P E N D I X II: T E L E P H O N E S U R V E Y F O R C E R T I F I C A T I O N B O D I E S 95 A P P E N D I X III: C O V E R L E T T E R S 101 A P P E N D I X I V : A N S W E R S O F T H E O P E N - E N D E D Q U E S T I O N S 106 v List of Tables Table 4-1: Number and type of responses 31 Table 4-2: Number and type of non-complete responses 31 Table 4-3: Variables tested for non-response bias 33 Table 4-4: Sales revenue in 2001 for chain of custody certified and non-certified companies 35 Table 4-5: Location of respondents from the United States and Canada 38 Table 4-6: One-way A N O V A for means of level of knowledge 41 Table 4-7: Types of product lines used to answer question on expect costs of chain of custody certification 41 Table 4-8: 95% confidence intervals of non-certified companies attitudes about the benefits of chain of custody certification 46 Table 4-9: Groups of product lines 50 Table 4-10: Information on the product lines of certified companies (n = 48) 50 Table 4-11: Supply of raw materials for chain of custody certified companies 51 Table 4-12: Groups of product lines used to specify the costs of chain of custody certification 53 Table 4-13: 95% confidence intervals of average agreement levels 56 Table 4-14: Other benefits derived from chain of custody certification 57 Table 4-15: Final clusters centers 60 Table 4-16: Distance between final cluster centers 60 Table 4-17: Characteristics of the three clusters 61 Table 4-18: One-way A N O V A for average sales revenue of the three clusters 61 Table 4-19: One-way A N O V A for average number of employees of the three clusters 61 Table 4-20: One-way A N O V A for average number of product lines of the three clusters 61 Table 4-21: z-tests for proportion of certified companies in the three clusters 62 Table 4-22: z-tests for proportion of US companies in the three clusters 62 Table 4-23: Box ' M test of equal within-group covariance matrices 63 Table 4-24: Kurtosis and skewness values for predictor variables 64 Table 4-25: Important discriminating variables 64 Table 4-26: Classification function coefficients 65 Table 4-27: Classification rates 66 Table 4-28: Chain of custody accreditation status of certification organizations 66 Table 4-29: Parameters used to determine the price of chain of custody certification 67 Table 4-30: Lowest and the highest values of each range of costs of chain of custody certification 68 List of Figures Figure 2-1: Forest certification chronology (Fanzeres and Vogt 2000, Upton and Bass 1996, Lyke and Fletcher 1992) 5 Figure 2-2: Impact of reputational advantage on the financial performance of a firm (adapted from Miles and Covin 2000) 13 Figure 2-3: Identification of chain of custody with regard to the manufacture of doors from rubberwood. Source: Upton and Bass 1996 20 Figure 4-1: Adoption level of chain of custody certification 34 Figure 4-2: 2001 sales revenue of respondents 35 Figure 4-3: Number of employees in respondents' companies 36 Figure 4-4: Number of employees of certified and non-certified companies 36 Figure 4-5: Total number of product lines in respondents' companies 37 Figure 4-6: Number of product lines in certified and non-certified companies 37 Figure 4-7: Preferences for certification bodies of non-certified companies 40 Figure 4-8: Non-certified companies levels of knowledge on chain of custody certification 41 Figure 4-9: Expected costs of implementing chain of custody certification 42 Figure 4-10: Expected costs of auditing chain of custody 42 Figure 4-11: Expected costs of maintaining chain of custody certification 43 Figure 4-12: Expectations of highest costs for chain of custody certification 44 Figure 4-13: Expected customers of certified products 45 Figure 4-14: Attitudes of non-certified companies towards the potential benefits that chain of custody certification could provide 46 Figure 4-15: Reasons for not becoming chain of custody certified 48 Figure 4-16: Accredited certification bodies used for chain of custody certification 49 Figure 4-17: Customers for chain of custody certified products 49 Figure 4-18: Types of wood used in certified products 51 Figure 4-19: Technologies used to identify material source 52 Figure 4-20: Costs of implementing chain of custody 53 Figure 4-21: Costs of auditing chain of custody 54 Figure 4-22: Costs of maintaining chain of custody certification 54 Figure 4-23: Most difficult factors in implementing chain of custody certification 55 Figure 4-24: Attitudes of certified companies regarding benefits derived from chain of custody certification 56 Figure 4-25: Expected versus perceived benefits from chain of custody certification 58 Figure 4-26: Benefits from chain of custody certification - certification bodies' perspective 69 Figure 5-1: Company type and perception of benefits 78 vii A C K N O W L E D G E M E N T S It is not possible to complete this type o f work without great deal o f support from others. In my case, I believe that I was very pr iv i leged during the complet ion o f this study. A s such, I want to thank the fo l lowing individuals and institutions: • Forintek Canada Corp . , International Environmental Institute (Japan), Canada Mortgage and Hous ing Corporat ion, and the Univers i ty o f Br i t i sh C o l u m b i a for the f inancial and technical support; • Dr . Robert K o z a k for his support and guidance; • Dr . D a v i d Cohen for his guidance and insightful comments; • Dr . Gary B u l l for being part o f my committee, and Drs . D a v i d H a l e y and Thomas Maness for also part icipat ing in this thesis defense; • A l l faculty and staff that in some point were invo lved in this work and were always so helpful; • The M - L a b students who were always source o f encouragement and good laughs; • M y fami ly and friends for be l iev ing in me even when I d id not; and • We l l i ng ton Spetic whose support was indispensable. v i i i 1. I N T R O D U C T I O N Companies must continually adapt to new conditions in the marketplace. A case in point is forest certification, which has been recently introduced into the marketplace for forest products over the past two decades. A result of public concern about environmental degradation, forest certification aims to provide a guarantee to customers that a forest product comes from a sustainably managed forest (Upton and Bass 1995). There are two types of forest certification: (1) forest management certification, which certifies forestry practices only; and (2) chain of custody certification, which certifies every stage of the supply chain involved in the production of certified wood products. The type of forest certification that should be used depends on the company's position in the supply chain; chain of custody certification could be considered a continuation of forest management certification. Chain of custody certification is a guarantee that the wood product purchased really comes from an environmentally certified source (Groves et al. 1996). It requires the implementation of tracking systems that trace the certified raw material from the time it leaves the forest until the final product reaches the end consumer (Groves et al. 1996). Chain of custody certification is still considered to be a new concept. Nevertheless, it is already exerting considerable pressure on forest products companies (Vogt et al. 2000). The main objective of this research is to determine the actual status of chain of custody certification in primary wood industries in Canada and the United States. The following specific objectives will be achieved: 1. To assess the current and expected adoption levels of chain of custody certification; 2. To assess the level of knowledge and perceived benefits/costs that non-certified companies have about chain of custody certification; 3. To examine the requirements of implementing chain of custody certification, including costs, methods and technologies used, and the resulting benefits. Forest certification is one of the results of a series of events dating back to 1960's that aimed to address the degradation of natural resources (Fanzeres and Vogt 2000). It was 1 developed as an alternative to several other actions from governmental and non-governmental institutions that did not have the expected results (Elliott and Donovan 1996). In order to understand the objectives of forest certification, it is necessary to understand the context in which forest certification was developed. Chapter 2 provides information on the historical background of forest certification as well as the main characteristics of this mechanism. In short, the main aim of forest certification is to improve forest management by providing participating companies with marketing incentives (Upton and Bass 1995). In other words, companies are encouraged to participate by the promise of acquiring benefits like access to niche markets. The mechanism of forest certification as a market access tool is explained in Chapter 2. Specific information on chain of custody certification is generally scarce. There are few studies regarding this topic, especially related to the primary wood industry in North America. However, it is important to understand how chain of custody certification works in order to provide companies with better means of addressing this issue. Information concerning the characteristics and consequences of implementing chain of custody certification for a company is also presented in Chapter 2. A survey of primary wood products companies in Canada and the United States was conducted in 2002. It had the objectives of identifying the current characteristics of chain of custody certification for these companies as well as their perceptions about many of the aspects of chain of custody certification. The study also included a survey of North American certification bodies. The specific research and analysis methodology used and the results of these surveys are presented in Chapters 3 and 4, respectively. The current status of chain of custody certification for primary wood products companies in North America is dependent on many variables. The identification of variables that are important in determining the certification status of companies is essential for future developments of the chain of custody certification concept. Chapter 5 consists of a discussion of these main points. 2 Lastly, concluding remarks on the status of chain of custody certification for primary wood products companies in Canada and the United States are provided in Chapter 6. 3 2. B A C K G R O U N D 2.1. DEVELOPMENT OF FOREST CERTIFICATION Forest cert if icat ion is a recent topic that is having an increasing impact in forest product markets as w e l l as generating great interest among forest landowners and forest products manufacturers (Vogt et a l . 2000). It is the consequence o f a series o f events dating back to the late 1960s when society started to become concerned about the preservation o f the natural environment (Fanzeres and V o g t 2000). Figure 2-1 summarizes some o f the most important events in the history o f forest cert if ication. A l l o f these events led to the concept o f sustainable forest management, meaning that forests should be managed wi th equal importance given to environmental , soc ia l , and economical aspects (Fanzeres and V o g t 2000). However , it was only in late 1980s that forest certif ication started to become a reali ty. A t that t ime, there was great publ ic concern wi th regards to the deforestation rates o f t ropical forests. A s a result o f this increasing concern, boycotts o f tropical forest products were organized by some environmental organizations (Fanzeres and V o g t 2000). This apprehension was gradually extended to a l l types o f forests (El l io t t and Donovan 1996). The 1992 Uni ted Nat ions Conference on Environment and Development ( U N C E D ) was a cr i t ica l event in the launch o f forest cert if icat ion. It was after U N C E D that "the first set o f pr inciples , criteria, and indicators was released on how sustainable forest management should be conducted and evaluated for forest cer t i f ica t ion" (Fanzeres and V o g t 2000). W h i l e forest cert if ication had its or ig in in the increasing publ ic concern about environmental degradation, it was created as an alternative to "ineff icient international ini t iat ives, government pol ic ies , and boycotts in reducing deforestation and promoting sustainable forest management" (El l io t t and Donovan 1996). Forest cert i f icat ion was developed as a guarantee to customers that a forest product comes from a source managed in accordance wi th the pr inciples o f sustainable development and does "not favor unsustainable or inequitable practices" (Upton and Bass 1996). 4 Figure 2-1: Forest certification chronology (Fanzeres and Vogt 2000, Upton and Bass 1996, Lyke and Fletcher 1992). Date Event Description 1968 The Biosphere Conference The introduction of the concept that environmental degradation is a consequence o f "rapid population growth, urbanization, and industrialization" (McCormick 1989 cited in Fanzeres and Vogt 2000). 1970 First Earth Day Commemorated in the United States in A p r i l 1970. This event demonstrated that an increasing number of people were discontent with environmental devastation. 1972 United Nations Conference on the Human Environment The paradigm o f sustainable development was of f ic ia l ly introduced as the "development that meets the needs o f the present without compromis ing the abi l i ty o f future generations to meet their own needs". It was later publ ished as the Brundtland Report. 1972 Creation of the United Nations Environmental Agency "This agency aimed to bring the design o f environmental-related policies to an international framework, and to provide assistance for developing countries through information sharing and technology transfer" (Fanzeres and Vogt 2000). 1983 Wor ld Forest Appraisal Program The 1983 report of this program of the United Nations Food and Agriculture Organization ( F A O ) generated alarm about the state o f the world's forests and a worldwide debate on forest issues and sustainable development (Fanzeres and Vogt 2000). 1983 International Tropical Timber Agreement This agreement established the International Tropical Timber Organization (ITTO). 1985 The Tropical Forest Act ion Plan This was a joint ini t iat ive o f F A O , U N D P * 1 , the W o r l d Bank, and the W o r l d Resource Institute. It was developed wi th the aim o f s lowing tropical deforestation and helping countries achieve sustainable forest management (Fletcher 1992). 1987 The Brundtland Report " A l s o known as Our Common Future, this report alerted the wor ld to the urgency o f making progress toward economic development that could be sustained without depleting natural resources or harming the environment." ( A R I C 2001). 1988 The Muntingh Proposal The European Community stated that they would only import certified tropical wood products produced under sustainable forest management and protection programs (Crosley 1996 cited in Fanzeres and Vogt 2000). 1990 ITTO Guidelines for the Sustainable Management of Tropical Forests A n ITTO initiative on providing a reference for member countries in their course towards sustainable forest management. 1992 United Nations Conference on Environment and Development Produced the Rio Earth Summit. It was the first worldwide attempt to reach consensus on forest issues. Officially, forest certification is considered one of the consequences o f this conference. 1992 Austria prohibited importation of tropical forest products The Austrian government passed legislation in response to the increasing pressure o f local N G O s * 2 . This measure was suspended in 1996 by the Wor ld Trade Organization. 5 Date Event Description 1992 Dutch Working Group of Experts The Dutch government created this group as an effort to determine what the standards for sustainable forest management would be. Strong denunciations to the General Agreement for Tariffs and Trade and the European Union stopped the process. 1992-93 Indonesia Lembaga Ekolabel Pressure from importing countries led Indonesia to create the Indonesian Ecolabeling Institute and to develop standards by which sustainable forest management should be conducted. 1993 Initiative Tropenwald This German initiative developed criteria for an evaluation o f the sustainable management of tropical forests. 1993 Creation of F S C The Forest Stewardship Counci l (FSC) is a non-profit, non-governmental organization headquartered in Mex ico that was created to support sustainable forest management. 1993 ISO created Technical Committee (TC) 207 The International Standards Organization (ISO) created the T C 207 to develop standards and guidelines for sustainable forest management. 1994 Year 2000 Objective The International Tropical Timber Organization (ITTO) member countries* 3 voluntarily committed themselves to ensure that all trade of tropical timber would be completely from sustainable managed forests by the year 2000. 1994 Establishment o f SFI program The American Pulp and Paper Association ( A F & P A ) established the Sustainable Forestry Initiative (SFI) as a response to increasing public pressure on forest practices issues. 1995 Creation of the first buyers' group The Global Trade and Network program was an initiative of the Worldwide Fund for Nature ( W W F ) as a means o f creating demand for certified forest products. 1999 Creation o f the P E F C The Pan European Forest Certification (PEFC) Counci l is a European initiative created to support sustainable forest management. *'UNDP = United Nations Development Program; * 2NGOs = Non-Governmental Organizations; * 3 ITTO member countries = Cameroon, Central African Republic, Congo, Cote d'lvoire, Democratic Republic of the Congo, Gabon, Ghana, Liberia, Togo, Cambodia, Fiji, India, Indonesia, Malaysia, Myanmar, Papua New Guinea, Philippines, Thailand, Vanuatu, Bolivia, Brazil, Colombia, Ecuador, Guatemala, Guyana, Honduras, Panama, Peru, Suriname, Trinidad and Tobago, Venezuela, Australia, Canada, China, Egypt, European Union (Austria, Belgium/Luxembourg, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Sweden, and United Kingdom), Japan, Nepal, New Zealand, Norway, Republic of Korea, Switzerland, United States of America. 2.2. F O R E S T C E R T I F I C A T I O N S C H E M E S Forest cert if ication can be accomplished in three different ways: first, second, or third-party cert if ication. These three categories describe the nature o f the relationship between the auditor and the party being audited. First-party cert if ication is "an internal assessment by an organization o f its own systems and practices." Second-party cert i f icat ion constitutes an 6 assessment o f a company 's practices by a customer or outside trade organizat ion. The assessment o f forestry activit ies, based on a set o f accepted pr inciples and standards, defines third-party cert if icat ion (E rv in et a l . 1996, Hansen 1997, Bruce 1998 cited by Furnas et a l . 2000). This type o f cert if ication is undertaken by accredited cert if ication organizations that have no self-interest in specific forest activities (Upton and Bass 1996). Forest cert if ication can also be classif ied by the cert i f icat ion system approach. Performance-based and management system-based are the two most commonly used categories. A performance-based cert if ication means that the audited party is meeting a set o f accepted standards. A management system-based certif ication guarantees that "the audited party has developed and adopted a management system wh ich is conducive to environmental moni tor ing and improvements in environmental performance over t ime" (Furnas et a l . 2000). Based on these classifications, some organizations have developed their own standards on how to manage forests along wi th sustainabili ty pr inciples . They include the Forest Stewardship C o u n c i l ( F S C ) , the Sustainable Forestry Initiative (SFI) o f the A m e r i c a n Forest & Paper Assoc ia t ion ( A F & P A ) , the International Organizat ion for Standardization ( ISO) , the Canadian Standards Assoc ia t ion ( C S A ) , and the Pan European Forest Cer t i f ica t ion C o u n c i l ( P E F C ) (Furnas et a l . 2000, Hansen et a l . 2000). These organizations usual ly accredit third-party certification bodies that work in accordance wi th their pre-specified standards (Upton and Bass 1996). Ac t iv i t i e s around the creation o f the F S C began in 1990, but it was only of f i c ia l ly founded in 1993. F S C is an independent, international, non-profit , and non-governmental organization based in Oxaca , M e x i c o (Furnas et a l . 2000). There are 11 certif ication organizations accredited by F S C wor ldwide ; the S i l v a Forest Foundat ion in Canada 1 , the Rainforest A l l i a n c e Smar tWood Program and Scient if ic Cer t i f ica t ion Systems in the Uni t ed States are the cert if icat ion bodies accredited by F S C in Nor th A m e r i c a ( F S C 2001). F S C endorses ten pr inciples and their respective criteria for forest management. It is not a 1 It should be noted that the Silva Forest Foundation ended their forest certification operations in 2003, while K P M G FCSI (Forest Certification Services Inc.- Canada) received FSC accreditation in 2003. 7 management system-based approach, although it does include management planning and moni tor ing (Rotherham et a l . 2000). Cer t i f ied companies are a l lowed to label their products using the F S C logo (Furnas et a l . 2000). The SFI program o f the A F & P A was adopted in October 1994. The A F & P A is a non-profit organization based in Washington, D . C . , representing approximately 84 percent o f paper production, 50 percent o f so l id wood production, and 90 percent o f the industrial t imber companies in the Uni t ed States (Furnas et a l . 2000, Rotherham et a l . 2000, Jenkins and Smith 1999) . They operate only in Canada and the Uni t ed States. It is a management system-based program wi th five sustainable forestry pr inciples guid ing 11 objectives that are supported by specific performance measures (Rotherham et a l . 2000, M e r i d i a n Institute 2001). Companies comply ing wi th the SFI program can choose to conduct a se l f evaluation, to be evaluated by a customer or another company, or to contract a third-party independent auditor (Rotherham et a l . 2000) . Third-party verifiers must be accredited by the Registrar Accred i ta t ion Board ( R A B ) or by its jo in t Na t iona l Accredi ta t ion Program wi th the A m e r i c a n Na t iona l Standards Institutes ( A N S I ) . There are four categories o f environmental auditor in R A N and A N S I , anyone being v a l i d for S F I ' s purposes. The program has developed two types o f logos: one for companies that have not completed third party ver i f icat ion and another for companies that have completed it (Mer id i an Institute 2001). ISO is an international non-governmental organization based in Geneva, Switzer land. It is composed o f several member organizations from different countries. These ISO members are national standards bodies wi th the objectives o f promoting international standards and faci l i tat ing trade (Rotherham et a l . 2000). ISO 14000 is a series o f international, voluntary management standards concerning environmental management ( ISO 2000). The most important standard for forestry is the ISO 14001 Environmenta l Management Systems ( E M S ) standard approved in 1996 (Rotherham et a l . 2000, ISO 2000). A n independent third-party contractor accredited by the loca l ISO member performs the cert if icat ion. There is no product label ing for ISO (Furnas et a l . 2000, Rotherham et a l . 2000). 8 The ISO approach has been largely accepted in Canada. The C S A has been developing the Sustainable Forest Management ( S F M ) system standards heav i ly based on ISO 14000 standards. The C S A is a non-profit organization located in Miss i s sauga , Ontario. The S F M program operates only in Canada, wi th third-party auditors being accredited by the Standards C o u n c i l o f Canada ( S C C ) . A t the moment, there are two accredited registrars, Q M I and K P M G . PricewaterhouseCoopers is currently going through the appl icat ion process (Johnson 2002, Rotherham et al . 2000). Product labels were approved as o f June 2001 ( C S A 2001). The Pan European Forest Cer t i f icat ion ( P E F C ) C o u n c i l is a voluntary private sector ini t iat ive, init iated in August 1998 and of f ic ia l ly founded in June 1999. U n t i l now, this management system-based scheme has operated main ly in Europe. However , it has a global scope and w i l l be administered wor ldwide ( P E F C 2001, Hansen et a l . 2000). Standards are developed nat ional ly by the member countries and then submitted to the P E F C C o u n c i l Boa rd for approval . Na t iona l accreditation organizations accredit cert if icat ion bodies to perform the audits. Cer t i f ied institutions are a l lowed to use P E F C logo on their products and/or product documentation ( P E F C 2001). Standards created by each o f the major cert if ication organizations have the purpose o f serving as guidelines for the assessment o f forestry practices. I f forestry activit ies are in accordance wi th the respective sustainable forest management pr inc ip les , a forest management cert if ication is issued. However , some certif ication organizations have also developed standards that guide the moni tor ing and inspecting o f a l l the l inks between the forest and the final consumer. These kinds o f standards lead to chain o f custody cert i f icat ion ( V i a n a et a l . 1996, Smart W o o d 2001). The choice between forest management cert i f icat ion and chain o f custody cert if ication w i l l depend on the specific characteristics o f each company, especial ly w i th respect to its posi t ion in the supply chain. The F S C , C S A , and P E F C are currently the only certif ication organizations that have developed standards for chain o f custody assessment. SFI has approved rules for the creation o f an on-product label , but its use has not yet been authorized (Mer id ian Institute 2001). 9 2.3. FOREST CERTIFICATION AS A M A R K E T ACCESS T O O L Marke t ing has an important social and economic role in society. In the latter case, the marketing process stimulates the consumption o f goods and services, act ivating economic development. Marke t ing also has a social role, informing customers about the avai labi l i ty o f goods and services that w i l l improve their quali ty o f l i fe . However , the actual patterns o f consumerism based on disoriented production and consumption o f goods lead to a heavy impact on environmental resources (Sheth and Parvatiyar 1995). Some init iat ives for improv ing marketing 's impact on the natural environment have been developed and the concept o f sustainable development has been an important guide. Cons ider ing market ing 's social and economic roles, its contribution to sustainable development w i l l have to be based on two important strategies: (1) to educate and shape customers ' needs and expectations wi th regards to environmental ly beneficial products; and (2) to provide goods and services that meet these expectations (Sheth and Parvatiyar 1995). This new market ing approach is ca l led "environmental market ing" and it can be better defined as market ing activit ies that consider environmental stewardship as both a business opportunity and corporate responsibi l i ty (Coddington 1993). The development o f environmental marketing concept is a consequence o f recent publ ic concerns regarding environmental preservation. These concerns created potential marketing opportunities and one o f the main objectives o f environmental market ing is to communicate the ethics o f a company and the environmental quali ty o f a certain product to consumers. Product cert if ication is considered one o f the most efficient ways o f communica t ing these aspects o f a company/product (Was ik 1996, Coddington 1993). A s a result, different kinds o f certif ication have been developed for several types o f products and their packaging (Coddington 1993). Forest products cert if ication was the specific response o f the forestry sector. It is a voluntary program based on the be l i e f that consumers o f forest products are l i k e l y to put a greater value on organizations committed to proving their protective attitudes towards the natural environment. 10 Consequently, forest cert if ication has the double objective o f "(a) w o r k i n g as a marketing incentive to improve forest management, and (b) improv ing market access and share for the products o f such management" (Upton and Bass 1996). The in i t ia l idea was that demand for environmental ly fr iendly products wou ld be translated into premium prices (Jenkins and Smith 1999). F o l l o w i n g this assumption, several studies investigating customers' wi l l ingness to pay these premium prices showed posi t ive results (Ozanne and Smith 1995, Ozanne and V l o s k y 1997, Forsyth et a l . 1999). However , an expressed wi l l ingness to pay does not always translate into purchase behavior (Sheth and Parvatiyar 1995, Hansen 1997). In a survey o f U S merchants o f certified forest products, Humphr ies et a l . (2001) ver i f ied that the majority o f the respondents d id not receive any premium prices at a l l when se l l ing their cert if ied products. Some researchers consider that the lack o f p remium prices is due to market immaturi ty (Humphries et al . 2001). Others say that the existence and the amount o f premium paid for cert if ied products depends on the base price o f the product: the more expensive the product is , the smaller premium for that product w i l l be (Humphries et a l . 2001, V l o s k y et a l . 1999). Despite disagreement on this topic, the fact is that the consumer group for certified wood products is g rowing and is l i ke ly to continue expanding (Teis l et a l . 2002). However , Hansen (1997) states that there is lit t le evidence to suggest mass demand for cert if ied forest products. Current ly , much o f the demand for certified forest products has been generated through niche markets and large retailers that favor suppliers offering cert if ied products (Ozanne and V l o s k y 1997, Hansen and Jus l in 1998, U N / E C E Timber Commit tee 2000, Jenkins and Smi th 1999). Even though premium prices are generally thought o f as the ma in general benefit for certified forest products companies, other benefits can come from forest products cert if ication. Investments in environmental ly responsible activities l ike forest cert i f icat ion can be translated into improved competi t ive advantage. A c c o r d i n g to M i l e s and C o v i n (2000), companies that invest in soc ia l ly and environmental ly responsible activit ies may enhance their f inancial performance. Th is is explained by the fact that these types o f investments improve the reputation 11 2 o f a f i rm. A firm's reputation is the result o f stakeholders ' perceptions o f the quali ty o f its management (Hammond and S locum 1996) and is a function o f c red ib i l i ty , trustworthiness, re l iab i l i ty , and responsibi l i ty (Fobrum 1996 cited by M i l e s and C o v i n 2000). Superior reputation generates reputational advantage, wh ich may result in benefits l ike lower perceived r isk and enhanced marketing opportunities (Mi l e s and C o v i n 2000, H a m m o n d and S locum 1996). Investments in environmental ly and soc ia l ly responsible activit ies demonstrate a f i rm's sensit ivity to external events, wh ich means that the f i rm is able to anticipate and ' con t ro l ' its changing environment. Investors may perceive this type o f f i rm as a lower r isk investment opportunity (Hammond and Slocum 1996). Furthermore, enhanced market ing opportunities, such as the chance to target environmental ly sensitive markets, may result i n : (1) protection o f market share; (2) p r ic ing concessions; and (3) increased strategic f l ex ib i l i t y (S inc la i r 1992, Upton and Bass 1996, M i l e s and C o v i n 2000). The poss ib i l i ty to exploit profitable market ing opportunities, in addit ion to a lower perceived risk, may serve to increase the market value o f a f i rm cert ifying wood products, and thus its profi tabi l i ty ( M i l e s and C o v i n 2000) (see Figure 2-2). The relationship between reputational advantage and f inancial performance o f a firm has been wide ly discussed in the literature (Mi l e s and C o v i n 2000, H a m m o n d and S locum 1996, Russo and Fouts 1997, M e n o n and M e n o n 1997). It should be noted that this section summarized only the key points in an attempt to explain how forest cert i f icat ion can function as a market access tool . 2 Stakeholders are usually represented by investors, corporate managers, recruiters, employees, and customers. 12 C R E D I B I L I T Y to investors, customers & [_, suppliers T R U S T W O R T H I N E S S to employees, customers & community R E L I A B I L I T Y R E S P O N S I B I L I T Y 1. Environmental 2. Social 3 . Financial I Risks t Market Value T Marketing Opportunities Figure 2-2: Impact of reputational advantage on the financial performance of a firm (adapted from Miles and Covin 2000). 2.4. CHAIN OF CUSTODY CERTIFICATION 2.4.1. Definition and Importance of Chain of Custody Certification Pub l i c concern about environmental issues not only affects forest companies and their forestry practices but also affects companies along the supply chain that use wood as a raw material for their products. The concept o f chain o f custody is used in forest cert if ication as an identif icat ion tool for products manufactured wi th certified wood . C h a i n o f custody is a concept used in different areas and can be generally described as a process used to maintain and document the history o f facts. It has been long used in areas such as legal services where it is necessary to identify each person having custody o f evidence as means o f p rov ing the integrity o f the evidence col lected (Morr i s 1998). Recent ly , chain o f custody has been an important tool in the electronics industry. The use o f internet and network resources has grown considerably among indiv iduals and institutions. In general, these resources are used for several purposes, from simple communica t ion to important trade transactions. However , c r imina l actions through these resources are also increasing, and several cases are left unsolved due to the lack o f integrity o f electronic evidence. Therefore, 13 chain o f custody is being used as a tool "by wh ich computer forensics specialists preserve the cr ime scene" ( M S N B C 2000). C h a i n o f custody is also used in security management o f a l l types o f facil i t ies in order to keep control o f materials, equipment, and products. Logis t i cs operations also use chain o f custody as a tool for inventory control (Alb r igh t 1998, Johnson and M c C a t t y 1998). Cha in o f custody has been p lay ing an important role in environmental protection. Publ ic concern about environmental destruction also affects agriculture-related sectors l ike the food and textile industries. In the case o f textiles, conventional methods o f cotton product ion are usual ly associated wi th environmental and health costs. The concern and pressure o f industr ia l ized countries about the environmental impact o f cotton product ion and processing is resulting in changes towards "sustainable alternatives such as organic cotton, integrated pest management and chemical free processing" (Robins and Roberts 1998). Cer t i f ica t ion processes for organic cotton product ion were established and chain o f custody is used as a guarantee that the cotton is real ly produced according to sustainable standards. The case o f the textile industry is very s imi lar to forest cert i f icat ion. L i k e the textile industry, F S C , C S A , and P E F C have developed standards for chain o f custody cert if ication. C h a i n o f custody cert if ication is an inventory control process w i th the objective o f assuring that the wood or the forest product purchased real ly comes from a environmental ly certified source (Upton and Bass 1996, Groves et a l . 1996, Estey 2000, Cer t i f ied Woods Products Marke t 2000). C h a i n o f custody certif ication is an important component o f cert i f icat ion systems because it provides the l ink between the customers and producers o f cert if ied forest products (Groves et a l . 1996). However , it is extremely complex and causes a great deal o f confusion and misunderstanding for companies considering implementing chain o f custody strategies. Jenkins and Smith (1999) emphasize that crit ics o f forest cert if icat ion generally address chain o f custody requirements as being too complicated. A s a result, chain o f custody cert i f icat ion has been responsible, at least in part, for many companies reluctance to become cert if ied (Hansen and Jus l in 1998). 14 2.4.2. Technical Aspects of Chain of Custody Certification C h a i n o f custody certif ication requires easily interpreted records and phys ica l evidence l ike tags and labels to identify and segregate materials (Cert i f ied W o o d Products Marke t 2000). There are usual ly two requirements for a wel l - funct ioning chain o f custody: (1) a documentation system needs to be in place; and (2) a l l o f the material being traced must be properly identified and segregated (Upton and Bass 1996). Groves et a l . (1996) identified the most common methods o f ins ta l l ing a documentation system. Record ing information on paper was described as the most tradit ional and the most common way o f capturing, communicat ing, and auditing data associated wi th the materials used. However , they also stated that computers are rapidly gaining acceptance due to their abi l i ty to store "large volumes o f information that can be readily accessed and cross-referenced." Groves et a l . (1996) also described some o f the methods and technologies used to identify the or ig in , species, and volume o f wood materials coming from a forest. Paint, hammermarks, labels, and latschbacker tags were identif ied traditional techniques. Paint was described as being the most common type o f marking; it can be used to indicate the forest o f o r ig in , species, and volume. Hammermarks are "commonly used to mark logs to verify measurements taken at the time o f f e l l i ng . " Labels are s imi lar to painting because they can display the same information, but can be removed much more easily, especial ly in water. Latschbaker tags are numbered plastic tags; they contain only a number, so that information about the material must be stored elsewhere. Some new techniques, such as barcoding, radio-frequency identif icat ion devices, and touch memories, are also described and briefly explained by Groves et al (1996). A c c o r d i n g to the authors, barcoding is the most common method used and consists o f barcode labels affixed to the material . They can be read by a barcode scanner attached to a personal computer. They provide fast and accurate information about the material , and are extremely safe to use. Rad io -frequency identif icat ion devices are "pre-programmed computer chips that incorporate a smal l 15 area through wh ich data can be received or transmitted." However , they are currently s t i l l too expensive to be used wide ly . Touch memory is a battery-powered computer chip i n a c ircular metal housing. It can store the equivalent o f one page o f text that can be easi ly read wi th a touch memory reader attached to a personal computer (Groves et a l . 1996). The process o f chain o f custody i tself includes several steps, depending on "the range o f sources, the complexi ty o f the manufacturing process, and the type o f market into wh ich the product is so ld" (Upton and Bass 1996). Groves et a l . (1996) identif ied and d iv ided chain o f custody into three key stages: (1) from the forest to processor/manufacturing m i l l ; (2) during the processing/manufacturing stage; and (3) from processing to the marketplace. They explain that the first stage o f chain o f custody usually involves developing a technique to trace the product from the forest to the processing center. The emphasis on the second stage is placed on moni tor ing the material through the m i l l during the manufacturing o f the product. F i n a l l y , in the third stage, the product "may be packaged, stamped wi th a label or ident i fying tag, and/or shipped in a banded bundle." The products are usual ly accompanied by documents such as invoices , b i l l s o f lading, or a General Agreement on Tariffs and Trade ( G A T T ) F o r m A Certif icate o f O r i g i n . These documents provide an auditable t ra i l , w h i c h can be used to trace the product to its o r ig in . 2.4.3. Supply Chain Management and the Consequences of Chain of Custody Supply C h a i n Management ( S C M ) is a business management theory introduced in the late 1950s. The S C M phi losophy considers the supply chain as a single inst i tut ion rather than as a set o f fragmented parts work ing ind iv idua l ly . Furthermore, it considers that "each f i rm in the supply chain direct ly or indirect ly affects the performance o f a l l the other supply chain members" (Mentzer et a l . 2001). Mentzer et a l . (2001) defined S C M as "a systematic, strategic coordinat ion o f traditional business functions wi th in a particular company and across businesses w i th in the supply chain, for the process o f improv ing the long-term performance o f the ind iv idua l companies and the 16 supply chain as a whole . " They added that an effective implementat ion o f S C M requires that a l l supply chain members: (1) mutual ly share information, rewards, and r isks; (2) cooperate wi th each other; (3) have the same goals and the same focus o f serving customers; (4) integrate their processes; and (5) create long-term partnerships (Mentzer et a l . 2001). Companies establish S C M wi th the objective o f enhancing their competi t ive advantage. Successful S C M leads to a reduction in costs due to improved operational efficiencies and an increased customer focus. Together, this w i l l result in improved customer value and satisfaction, and thus prof i tabi l i ty ( M c D o u g a l l 1999, Cross 1999, B o r c k 2001, Mentze r et a l . 2001). L i k e S C M , chain o f custody certif ication requires an integrated effort on the part o f a l l members o f the supply chain in order to provide the end consumers w i th products and services that w i l l satisfy their needs and wants (environmentally fr iendly products in this case). Cha in o f custody cert if icat ion creates increased customer value wi th respect to the consumer 's perception o f how w e l l the product purchased meets his or her expectations ( N i x 2001). In theory, this customer value w i l l generate a competi t ive advantage that results in improved prof i tabi l i ty (Mentzer et a l . 2001). Groves et a l . (1996) and Upton and Bass (1996) reaffirm this concept in discussing possible benefits o f chain o f custody cert if ication. A c c o r d i n g to these authors, the chain o f custody process can br ing about management advantages as a result o f the need for better information systems; more complete information about materials can be accessed more rapidly , wh ich can, in turn, provide better inventory control , as w e l l as more precise and clear information to investors. F i n a l l y , more direct communicat ion amongst a l l o f the actors in the supply chain w i l l l i k e ly result in an increased understanding o f potential markets. S C M can also present problems related to mutual trust among the members o f the chain. Sharing o f information, risks, and rewards requires a great deal o f trust, w h i c h can be very diff icul t to develop (Mentzer et a l . 2001). The implementat ion o f chain o f custody strategies deals wi th such problems. However , there are very specific problems that occur wi th in the forestry sector. Some authors (Upton and Bass 1996, V l o s k y and Ozanne 1995, Groves et a l . 17 1996, Hansen 1997, Hansen and Jus l in 1998, Estey 2000) consider the total costs o f implement ing and maintaining chain o f custody cert if ication to be a major problem. Segregating the material that comes from different sources usual ly results in h igh costs (Hansen 1997; Hansen and Jus l in 1998; Estey 2000). Up ton and Bass (1996) refute this idea, stating that "the necessity o f segregation can be reduced i f an easy and efficient ident if icat ion system o f the material is established." However , material segregation is not the only source o f costs. V l o s k y and Ozanne (1995) estimated that chain o f custody trai l audits usual ly generate significant expenses as w e l l . However , they did not specify the types o f expenses they are referring to. "Ga tewood" was identified as another frequent problem in implement ing chain o f custody (Groves et a l . 1996, Estey 2000). This term refers to the raw material that arrives at the "gates" o f a manufacturing faci l i ty wi th little or no information pertaining to the or ig ina l source. It is usual ly l inked to the supply o f products from small land ownership. 2.4.4. How Chain of Custody Certification Works The previous sections explored the defini t ion and importance, the technical aspects, and the possible consequences that chain o f custody cert if icat ion may have for forest products companies. The process o f implementing a chain o f custody may seem very complex due to the need for tracing the wood material and documenting every move it makes through the supply chain. A n example w i l l be presented in this section in order to group most o f the information presented previously and to facilitate the understanding o f the process. The chain o f custody process has several steps. The number o f steps depends on the characteristics o f each company in the supply chain and on the market target by these companies (Groves et a l . 1996, Up ton and Bass 1996). It is the responsibi l i ty o f each organizat ion in the chain to establish a process o f identif ication and recorded information o f the certified wood material in question (Upton and Bass 1996). These procedures should be unique and created according to the scale o f each organization. The records w i l l be used to easi ly "trace the product 18 to its immediate source; or iginal shipment and/or batch; and cert if ied source o f o r i g i n " (Upton and Bass 1996). Up ton and Bass (1996) presented an example o f chain o f custody for the product ion o f doors from rubberwood for export (Figure 2-3). There were three parties invo lved in the chain o f custody process in question: the producer o f certified rubberwood, Suppl ier 1 (primary processor), and Suppl ier 2 (the door manufacturer). The producer o f cert if ied rubberwood must have the appropriate documentation del ivered to the Suppl ier 1 at the time o f the sale. After receiving the cert if ied rubberwood from the producer, Suppl ier 1, who is the pr imary manufacturer, should go through two sets o f documentation: one regarding the harvesting process and the second regarding the pr imary processing o f the wood . The specific information each type o f documentation should contain is specified in Figure 2-3. Suppl ier 2, the door manufacturer, w i l l have a set o f documentation and procedures for each stage o f the manufacturing process. The first stage consists o f documentation o f transporting and receiving the sawnwood at the secondary faci l i ty . Nex t , comes the k i l n drying stage fo l lowed by the storage o f dried rubberwood. F r o m the storage, the k i l n dried rubberwood goes to the mould ing and door assembly department. After the product was assembled, the shipping department needs to prepare the transportation documents. F i n a l l y , the accounting department prepares the last set o f documents before the product is exported (see details in Figure 2-3). There are important points that must be fo l lowed by the chain o f custody certified supply chain. First , it is very important that, in each stage o f the process, the output stay into a reasonably percentage o f the input amounts. This means that "the quantity o f certified material bought by the organization should approximate to the amount sold after a l l o w i n g for processing losses" (Upton and Bass 1996). Second, a l l the rejects resulted from the manufacturing and transportation processes must be registered. F i n a l l y , the output must have a sequential serial number that can be used to relate it back to the inputs o f fresh wood (Upton and Bass 1996). Since good documentation is the essential element o f a successful chain o f custody, it is 19 recommended that each organization in the chain maintain the following records: purchase records, stock records, production records, and sales records (Upton and Bass 1996). Producer Certif ied rubber plantation Supplier I Harvesting: 1 confirmation that site is in replanting plan 2 confirmation of felling on designated day 3 sight of felling contract 4 record of volume harvested Primary processing: 1 check transport documentation 2 sample check on volume transported 3 sight and check delivery records 4 sight and check sawnwood pallet marking 5 complete input/output audit Supplier 2 Transport and receipt of sawnwood at secondary processing: 1 sight of delivery contract 2 check transport documentation (especially delivery order) 3 sight delivery invoice and check volume allowing for rejects 4 relate value to volume wherever possible Kiln drying: 1 sample check bundle labels 2 sample check segregation of bundles f rom certified source 3 sight kiln drier schedule and check volumes 4 sight and check rebundling record 5 complete input/output audit Dried rubberwood store: 1 sight and check delivery record 2 sample check segregation of bundles f rom certified source 3 complete input/output audit Moulding and door assembly department: 1 check daily master record 2 check bundle number against internal department bill 3 sample check continuous bundle tracing sheets 4 check door assembly record 5 complete input7output audit Shipping documentation department: 1 sight copy of L/C and corresponding bills of lading 2 sight container loading reports 3 check delivery details and obtain shipment schedule Accounts department: 1 check financial details support deliveries 2 check consistency of quantities 3 complete input/output analysis Export Figure 2-3: Identification of chain of custody with regard to the manufacture of doors from rubberwood. Source: Upton and Bass 1996. 20 2.5. P R O B L E M S T A T E M E N T A N D O B J E C T I V E S Several questions surround chain o f custody cert if icat ion procedures, strategies, and consequences. Forest products companies may not have enough information about chain o f custody to make a decis ion on whether or not they should implement it. Therefore, this study aims to determine the level o f knowledge o f non-cert if ied companies and the current status o f chain o f custody cert if ication in Canada and the Uni t ed States. Cha in o f custody is a relat ively new topic in forestry, especial ly when related to commodi ty markets l ike lumber. W i t h the recent attention that forest products cert if ication is receiving, forest companies are now required, more than ever, to consider this issue. However , the majority o f the wood industry in Nor th A m e r i c a considers the implementat ion o f chain o f custody to be too complicated (Jenkins and Smith 1999). Part o f this complexi ty can be explained by the fact that chain o f custody involves elements that are sometimes outside o f the landowners ' control (Estey 2000). Information on chain o f custody cert i f icat ion usual ly describes possible results and consequences that it could have on companies and no further studies have been conducted to verify these assumptions. This lack o f knowledge on the actual characteristics and consequences o f the process has led to skept icism from companies, s lowing the adoption o f chain o f custody cert if icat ion. Information on how much companies know about chain o f custody cert if icat ion and the effects that it is having on certified forest companies can provide strong support for further developments in this area. Information on the benefits accrued by cert if ied companies and the costs o f the entire process can provide other forest companies wi th a stronger base for making decisions regarding investing in chain o f custody cert if ication. Furthermore, a through analysis o f chain o f custody issues may lead to the identif ication o f important gaps not real ized before. The results may also serve as incentives and guidelines for the development o f further research on this subject. F i n a l l y , it w i l l provide benchmarking data on the importance and evolution o f chain o f custody cert if ication for companies in the first decade o f its existence. 21 The main objective o f this research is to determine the actual status o f chain o f custody cert if ication in pr imary wood industries in Canada and the Uni t ed States. The fo l l owing specific objectives w i l l be achieved: 1. To assess the current and expected adoption levels o f chain o f custody cert i f icat ion; 2. To assess the level o f knowledge and perceived benefits/costs that non-cert if ied companies have about chain o f custody cert if ication; 3. To examine the requirements o f implementing chain o f custody cert i f icat ion, inc luding costs, methods and technologies used, and the resulting benefits. 22 3. M E T H O D O L O G Y 3.1. T H E APPROACH The research conducted in this study took place in two distinct phases. First , a ma i l questionnaire was designed and sent to pr imary wood products manufacturers in Canada and the Uni ted States. The second phase consisted o f telephone interviews wi th accredited certif ication bodies in Canada and the Uni ted States. B o t h chain o f custody certified and non-certif ied companies were part o f this study. The part icipat ion o f non-certif ied companies was necessary to assess the level o f knowledge and the costs/benefits that these companies expect from chain o f custody cert i f icat ion. Cha in o f custody certified companies were important in p rov id ing information on costs, methods and technologies used, and benefits. F i n a l l y , both certified and non-certif ied companies were required to provide information on current and expected adoption levels o f chain o f custody cert i f icat ion. Accred i t ed cert if ication bodies were included to complement information provided by companies. Cer t i f ica t ion bodies that do chain o f custody assessments, as w e l l as those that w i l l l i ke ly be doing it w i th in the next five years, participated in the survey. 3.2. DEFINITION OF POPULATION The first phase o f this study concerned pr imary wood producers o f pulp logs, veneer logs, lumber, timbers, and veneers. Bo th chain o f custody certified and non-cert if ied pr imary wood products manufacturers from Canada and the Uni ted States were part o f this survey. A list o f 204 chain o f custody certified companies in these two countries was obtained from the accredited cert if ication bodies. Since it was a smal l populat ion, a l l companies were included in the survey. A list o f 3,150 non-certif ied companies from both Canada and the Un i t ed States was obtained from two industry directories: W o o d Technology (1999) and Forest Source (2002). A total o f 796 companies were randomly selected from this list, br inging the total sample frame to 1,000 companies. Different reasons led to the choice o f this number o f companies. First , a greater response rate was expected from the certified companies since it was thought that they w o u l d 23 have interest in the topic o f chain o f custody cert if ication. Thus, consider ing a 10% to 15% response rate for the non-certif ied companies and a 40% to 50% response rate for the certified ones, s imi lar numbers o f companies o f each segment could be analyzed. F i n a l l y , this number was chosen because o f budgetary constraints. A list o f eight accredited certif ication bodies that administer chain o f custody assessments in Canada and the Uni ted States or w i l l be l i k e l y doing it w i th in five years was obtained from major cert if ication organizations. The populat ion is very smal l ; thus, a l l eight organizations were included in this phase o f the study. 3.3. SURVEY DESIGN 3.3.1. Mail Questionnaires A ma i l questionnaire was designed to survey chain o f custody cert if ied and non-certified companies (see Append ix I). The questionnaire had a total o f 27 questions d iv ided into four different sections. Section 1 was designed to collect information on adoption levels and the levels o f knowledge o f non-certif ied companies. The first question o f this section intended to separate the certified respondents from the non-certif ied ones, wi th the cert if ied companies asked to proceed to Sect ion 2 o f the questionnaire. The other questions in this section were addressed to non-cert if ied companies. These questions collected information on the companies ' intent to become certif ied, levels o f knowledge about chain o f custody cert if icat ion, expectations regarding the costs o f cert if ication, considerations o f potential markets for certified products, perceived benefits resulting from the cert if ication process, and reasons for choosing not to become certif ied. The second and third sections o f the questionnaire were directed only to certified companies. Section 2 aimed to collect information on companies ' customers and products (certified or not), technologies used to track material sources, costs o f the process, and types o f cert if ication standards used. The third section was directed to col lect information on the benefits and diff icult ies resulting from the chain o f custody cert if ication process. 24 Prof i le information was collected in the fourth and last section o f the questionnaire. Information such as companies ' locations, sales revenues, number o f employees, and total number o f product lines was gathered in this section. The definitions o f pr imary wood products and chain o f custody cert if icat ion considered for this project were placed on the top o f the first page o f the questionnaire. Companies to wh ich the defini t ion o f pr imary wood products d id not apply were asked to check the box "Does N O T A p p l y " and return the questionnaire to us. Those respondents that wanted a copy o f the results o f this study could include their names and addresses in the space provided at the bottom o f the last page. 3.3.2. Telephone Interviews The accredited certif ication bodies were surveyed by telephone interviews (see Append ix II). This interview was composed o f an introduction and four sections. The introduction had the purpose o f ver i fy ing the number cal led, ident ifying the interviewer, expla in ing the project, and informing the respondent about the duration o f the interview. Sect ion 1 contained questions concerning adoption level o f pr imary wood products companies that are chain o f custody certified. The questions ver i f ied i f the cert if ication body does chain o f custody assessments; and determined the number o f companies that have been certified and the number o f companies currently in the process o f doing so. Section 2 concentrated on the costs o f chain o f custody cert i f icat ion. Respondents were asked to identify how companies were charged for chain o f custody cert i f icat ion and to estimate the range o f costs for chain o f custody assessments, annual audits, and cert if icat ion renewals. The benefits that companies can acquire from chain o f custody cert if ication were assessed in Section 3. Section 4 aimed to collect information on the organizat ion profi le . Questions in this section served to identify the organizat ions ' locations. Respondents were also offered the option o f requesting a copy o f the results. I f they were interested in receiving a copy o f the results, they were asked to provide their names and addresses. 25 3.3.3. Cover Letters Three letters were designed for the mail questionnaire (see Appendix III); each letter was mailed in different phases of the implementation process. All three letters had basically the same purpose: presenting and explaining the project, requesting and explaining the importance of their voluntary participation, guaranteeing respondent anonymity, offering contact information, and in the case of the second letter, thanking the respondents for their participation. The differences between the letters related to the different phases of the implementation process. The letter for the first mail out mainly intended to present the study. The letter of the second mail out aimed to thank the participants that had already responded and ask those that had not to do so. The letter of the third mail out had a more desperate tone and aimed to emphasize the importance of their participation for the success of this study. An advance letter was designed to notify the accredited certification bodies of the telephone interviews (Appendix III). This letter had the objective of eliminating the surprise element, providing evidence that the interviewer is doing legitimate research, providing a concise description of the study, and offering contact information (Dillman 1978). 3.3.4. Other Considerations The Behavioral Research Ethics Board of the University of British Columbia issued a Certificate of Approval of the surveys and letters listed above on January 29th, 2002. This approval declared that the surveys and letters for this project had been reviewed by the Ethics Committee and were in accordance with ethical grounds for research involving human subjects. 3.4. IMPLEMENTATION The telephone interview and the written questionnaire were implemented independently. Each process is presented in separate sections below. 26 3.4.1. Mai l Questionnaire The implementation process o f the ma i l questionnaire fo l lowed the pr inciples set forth by Total Des ign M e t h o d (Di lemmas 1978). This method has the objective o f increasing response rates and was s l ight ly modif ied to fit the conditions o f this study. Three mai l outs were made from U B C . The first ma i l out inc luded the survey, a cover letter, and a pre-paid return envelope and was sent on M a y 10 t h , 2002. The second mai l out consisted o f a letter only and was made two weeks after the first one on M a y 24 t h , 2002. The last step consisted in ma i l ing out the survey, a cover letter, and a return envelope to those participants that had not responded the first two mai l outs. This ma i l out took place one month after the first one on June 7 t h , 2002. The survey was printed in a professional booklet format by B e n w e l l A t k i n s L t d . -Printers and Ma i l e r s , who also printed the letters and envelopes. The surveys for the first ma i l out were coded from 0001 to 1,000 in order to keep track o f respondents. Pre-paid business reply return envelopes were used in Canada and del ivered to B e n w e l l A t k i n s . The ones sent to the A m e r i c a n companies had stamps wi th the sufficient postage to be mai led back to B e n w e l l A t k i n s . Responses were collected for three weeks after the first m a i l out. O n l y companies wh ich d id not respond the first two ma i l outs were contacted a third time. 3.4.2. Telephone Interviews The advance letters were sent to the part icipat ing cert i f icat ion bodies on M a y 14 t h , 2002. The interviews took place from M a y 24 t h to 2 9 t h , 2002. Each interview had a duration o f between five and twenty minutes, depending on the involvement o f the organizat ion wi th chain o f custody cert if ication. In some institutions, several calls were made in order to contact the right person for the interview. W h e n asked i f the time was appropriate for them to answer the interview, most o f the respondents asked to be interviewed at another t ime. Interviewees were generally very receptive and demonstrated g o o d w i l l when responding to the questions. 27 3.5. DATA ANALYSIS Both descriptive and inferential statistics were used to analyze the data collected in the mail and telephone surveys. The analysis plan was defined in accordance to the types of scales used in each question as well as the research question posed in this project. Multivariate techniques were used in order to analyze data sets consisting of multiple variables. The data analysis for each survey is described below. SPSS 10.0 and Microsoft Excel 97 were the software used to do these analyses. 3.5.1. Mail Questionnaires Some of the mail survey questions collected information on nominal data: simple dichotomy questions (i.e. yes/no questions), preference for certification bodies, market identification, types of technologies used, and company location. These data were analyzed using frequency calculations. Data from Likert scale questions was used to compute means and standard deviations. Questions that requested the respondents to indicate their level of agreement on the possible benefits of chain of custody fell into this category. Ninety-five percent confidence intervals were computed for the means of each statement. Each mean was also tested against a neutral point in order to verify whether the means were significantly different from "3" (alpha level of 0.05), the point in the scale that indicates a neutral attitude. Ratio data was also collected: proportion of certified raw material used, sales revenue, number of suppliers, number of employees, etc. Relative and cumulative frequencies were used to analyze these data. Questions relating to costs and difficulties of chain of custody certification asked the respondents to rank their answers from 1 to 3, with 1 being the highest rank. The ordinal nature of this data does not allow for the use of inferential statistics; therefore, rank order was used to do the analyses. Finally, questions collecting information on the costs of each phase of the chain 28 o f custody process invo lved categorical scales. These were analyzed us ing tallies and proportions. A cluster analysis was also conducted in order to identify the type o f companies that are most l i ke ly to perceive/obtain benefits from chain o f custody cert i f icat ion. Questions 9 (Section 1) and 2 (Section 3) were identical questions asked in different sections in order to reach al l types o f respondents (certified and non-certified). The answers to these questions merged in order to run the cluster analysis. A part i t ioning or non-hierarchical technique was used to analyze this data. K - M e a n s clustering is the part i t ioning technique offered by S P P S 10.0 for W i n d o w s and is a suitable technique for larger data sets l ike the one o f this study ( L e M a y 2001). The clustering procedure o f this technique constitutes o f searching for "a part i t ion wi th smal l error component E by moving individuals from one cluster to another unt i l no transfer o f an ind iv idua l results in a reduction in E " ( D i l l o n and Golds te in 1984). K - M e a n s clustering requires the number o f final cluster to be known and specified in advance. The existence o f different groups was verif ied as w e l l as the aspects that differentiate them. A discriminant function analysis was computed for cert if ied and non-cert if ied companies. This type o f analysis has the pr imary objectives o f f inding "the dimension or dimensions along wh ich groups differ, and to find classif icat ion functions to predict group membership" (Tabachnick and F i d e l l 2001). Discr iminant function analysis was used in this study in order to f ind out how the groups o f chain o f custody certified and non-cert if ied companies differ from each other based on sales revenue, number o f employees, and number o f product l ines. This analysis was also used to specify classif icat ion functions to predict group membership. 3.5.2. Telephone Interviews The data collected by telephone interviews was analyzed through descriptive statistics l ike means, standards deviations, and proportions. M o s t o f the data col lected by the telephone survey consisted o f nominal data; these data were ta l l ied and described. F i n a l l y , these data were 29 collected in order to provide insights and back up information for the results of the mail questionnaire sent to companies. 30 4. R E S U L T S 4.1. MAIL SURVEYS 4.1.1. Types of Responses One thousand questionnaires were mai led out to pr imary wood products companies in Canada and the Uni ted States. Part icipat ing companies mai led back 270 questionnaires. These questionnaires were d iv ided into two groups: complete and incomplete surveys. A defini t ion o f what was considered pr imary wood products was placed on the top o f the first page o f the questionnaire. Respondents for whom this defini t ion d id not apply were asked to check the box "Does N O T apply" and return the questionnaire. These questionnaires and those that had one or more required sections that were left in blank were classif ied as "non-complete" responses. Frequencies and relative frequencies were calculated for complete and non-complete questionnaires and can be seen in Tables 4-1 and 4-2. M o r e than ha l f (59%) o f the responses were complete responses; the remaining 4 1 % o f responses were non-complete (Table 4-1). Seventy-six percent o f the respondents who d id not complete the questionnaire stated that the survey d id not apply to them (Table 4-2). In total, 158 complete questionnaires were used for further analyses. Table 4-1: Number and type of responses. Complete Questionnaires Total Frequency % 158 59%. 270 100% Table 4-2: Number and type of non-complete responses. Does Not Apply Blank Sections Total Frequency % 85 76% 27 24% 112 100% 31 4.1.2. Response Rates The response rate for the written questionnaire was calculated in two different ways depending on how non-complete questionnaires were accounted for. The first method d id not consider non-complete questionnaires as responses, whi le the second method d id . Response rate ( R R ) using the first method was calculated as fo l lows : R R = Complete Responses Total M a i l Outs - Returns - Non-Complete Response rate using the second method was calculated as fo l lows: R R = Complete Responses + Non-Complete Total Ma i l Outs - Returns A total o f one thousand questionnaires were mai led out. O f the 270 responses received, 158 were complete responses, 112 were non-complete responses, and 64 were returned to sender because o f changed or non-existent addresses. The response rate calculated wi th the first method was 19.17%. B y considering non-complete questionnaires as v a l i d responses, the response rate was 28.85%. A wide range o f acceptable response rates is found in the literature, vary ing from below 20% to 100% (Babbie 2000). In this case, both response rates are considered acceptable for drawing inferences on the populat ion o f pr imary wood products industry in Canada and the Un i t ed States ( M i l l e r 1977, Babbie 2000). 4.1.3. Non-Response Bias The sampling process may produce errors that result in a sample that is not representative o f the populat ion. This non-response bias occurs when those people who d id not respond to the questionnaire differ in significant ways from those that d id (Kanuk and Berenson 1975). In order to test for non-response bias, the data set was d iv ided into two groups according to the arr ival dates o f each response: responses from the first ma i l out and respondents from later ma i l outs (Armstrong and Overton 1977). Data from the early respondents were combined and tested 32 against the data from the later respondents. Spec i f ica l ly , proport ions o f cert if ied and non-certified companies, average sales revenue, and average number o f employees were compared for the early and late groups (Table 4-3). Table 4-3: Variables tested for non-response bias. Early Late (n = 83) (n = 75) Certification Status Certified 43.37% 34.67% Non-Certified 56.63% 65.33% Average # of Employees 127.31 164.22 Average Sales Revenue $26,901,030.77 532,504,194.29 A z-test was used to compare the proportions o f cert if ied and non-cert if ied companies in the two groups. A t an alpha level o f 0.05, there was no significant difference between the proport ion o f cert if ied companies in the two groups. Z-tests for means were used to compare the average number o f employees and the average sales revenue o f the two groups since the sample sizes in each group exceeded 30. A t an alpha level o f 0.05, there were no significant differences between the number o f employees and the sales revenue o f the two groups. The fact that there were no statistical significant differences detected by these tests indicates that there is no sign o f non-response bias. Therefore, statistical inferences can be drawn from the results o f this study. 4.1.4. Current and Expected Adoption Levels for Chain of Custody Certification Respondents were asked to specify whether they were chain o f custody certified. Frequencies and relative frequencies were computed and are seen in Figure 4-1. Thir ty-nine percent o f the respondents stated that their companies were chain o f custody certif ied. Nine ty -five percent confidence intervals were computed for the proportions o f certified and non-certified companies. The confidence intervals for the proportions o f cert if ied and non-certif ied companies are 0 . 3 9 ± 0 . 0 8 and 0.61+0.08, respectively. O f the 6 1 % o f the respondents that were not chain o f custody certified, the majority (81%) have no intention o f becoming chain o f 33 custody certified wi th in the next five years. The ninety-f ive confidence interval for the proport ion o f companies that do not plan on becoming cert if ied w i th in the next five years is 0.81+0.08. Non-Certified 61% Figure 4-1: Adoption level of chain of custody certification. 4.1.5. Respondent Profiles Respondents were asked to indicate the approximate sales revenue for their companies in 2001 in U S dollars. Responses were d iv ided into nine classes (based on the categories in the questionnaire) and relative frequencies were computed for each class (Figure 4-2). The majority o f respondents (approximately 57%) had sales revenues o f between US$1 .1 and U S $ 2 5 m i l l i o n in 2001. Rela t ive and cumulat ive frequencies o f certified and non-cert i f ied companies were computed for each class (Table 4-4). Approx ima te ly 54% o f the non-cert if ied companies had sales revenues o f less than U S $ 5 m i l l i o n . In general, cert if ied companies had higher sales revenues in 2001, wi th 64.6% o f the companies having sales revenues o f up to U S $ 2 5 m i l l i o n . 34 3 0 % 2 5 % 2 0 % £ 1 5 % §• 1 0 % £ 5 % •B o% L e s s t h a n $ 1 0 0 , 0 0 1 $ 5 0 0 , 0 0 1 $1.1 to $5 $5.1 to $ 1 0 $ 1 0 . 1 to $ 2 5 . 1 to $ 1 0 0 , 0 0 0 to to m i l l i o n m i l l i o n $ 2 5 m i l l i o n $ 5 0 m i l l i o n $ 5 0 0 , 0 0 0 $ l m i l l i o n Sales Revenue in 2001 (USD) $ 5 0 . 1 to $ 1 0 0 . 1 $ 100 m i l l i o n a n d m i l l i o n o v e r Figure 4-2: 2001 sales revenue of respondents. Table 4-4: Sales revenue in 2001 for chain of custody certified and non-certified companies. Sales Revenue in 2001 (USD) Certified (n = 48) Non-Certified (n = 67) Relative Frequency Cumulative Frequency Relative Frequency Cumulative Frequency Less than $100,000 4.2% 4.2% 4.5% 4.5% $100,001 - $500,000 10.4% 14.6% 13.4% 17.9% $500,001 - $1,000,000 0.0% 14.6% 4.5% 22.4% $1,000,001 - $5,000,000 14.6% 29.2% 31.3% 53.7% $5,000,001 - $10,000,000 12.5% 41.7% 7.5% 61.2% $10,000,001 - $25,000,000 22.9% 64.6% 20.9% 82.1% $25,000,001 - $50,000,000 12.5% 77.1% 9.0% 91.0% $50,000,001 - $100,000,000 16.7% 93.8% 4.5% 95.5% More than $100,000,001 6.3% 100.0% 4.5% 100.0% Respondents were asked to identify the number o f employees w o r k i n g in their companies. The median was used as measure o f central tendency due to the skewness o f the distr ibution (Figure 4-3). The median number o f employees per company is 35. Results were also separated into seven classes and frequencies were calculated for each class (Figure 4-3). Thir ty-seven percent o f the companies have up to 20 employees work ing for them, and 24% have between 21 and 50 employees. O n l y 39% have more than 50 employees. 35 40% 35% -30% 25% 1 1 M 1 . l-j"""!*/.^! Up to 20 21 - 50 51 - 100 101 - 250 251 - 550 551 - 1,000 1,001 - 4,000 Number of Employees Figure 4-3: Number of employees in respondents' companies. Results relating to the number o f employees were also computed separately for certified and non-cert if ied companies. Relat ive frequencies for the same seven classes seen in Figure 4-3 were computed for each class (Figure 4-4). M o s t o f the cert if ied companies either have 20 employees or less (27%) or between 51 and 100 employees (24%). M o s t o f the non-certif ied companies (70%) have up to 50 employees. Up to 20 21 - 50 51 - 100 101 - 250 251 - 550 551 - 1,000 1,001 - 4,000 Number of Employees • Certified H Non-Certified Figure 4-4: Number of employees of certified and non-certified companies. F i n a l l y , respondents were asked to indicate the total number o f product lines that their companies manufacture. The median number o f product lines is 14.8. Results were separated into six classes and frequencies were calculated for each class (Figure 4-5). For ty- f ive percent o f the companies have up to three product l ines, and 22% have between four and six. O n l y 33% manufacture more than six product lines. 36 50% 40% 30% •S 5 20% 0 5 £ 10% 0% 1 to 3 4 to 6 7 to 10 11 to 25 26 to 50 51 and over Number of Product Lines Figure 4-5: Total number of product lines in respondents' companies. The number of product lines was also computed independently for certified and non-certified companies and separated into the same six classes as in Figure 4-5. Relative frequencies were computed and are shown in Figure 4-6. More than half (55%) of the non-certified companies have between one and three product lines. Thirty-two percent of the certified companies have between one and three product lines, and 25% have between four and six product lines. Only 26.4% of the certified companies and 12.0% of the non-certified companies have more than 11 product lines. 60% 50% w 40% s <u 3 cr 30% « 20% 10% a 0% 1 to 3 4 to 6 7 to 10 11 to 25 26 to 50 51 and over Number of Product Lines • Certified • Non-Certified Figure 4 - 6 : Number of product lines in certified and non-certified companies. 37 4.1.6. Chain of Custody Certification by Region Respondents were asked to identify the location of their companies. Seventy-nine percent of the respondents were from the United States and 21% were from Canada. In order to better understand the regional effects, states and provinces were collapsed into four regions in the United States (West, Midwest, South, and Northeast) and three regions in Canada (Central, East/Maritimes, and West/North). Frequencies of responses of regions and countries were computed separately for certified and non-certified companies as well as for the entire sample (Table 4-5). In the United States, the majority of respondents (38) resided in the West, which was the only region where the number of certified companies was greater than the number of non-certified companies. The South region had the lowest number (18) of respondents as well as the lowest number of certified respondents (3). The majority of respondents (17) from Canada were from the West/North region. The Central and West/North regions had more non-certified companies than certified companies. In the East/Maritimes region, there was an equal number of certified and non-certified companies (3). Table 4-5: Location of respondents from the United States and Canada. Total Certified Non-Certified United States 110 49 61 West 38 22 16 (AK, AZ, CA, CO, HI, ID, MO, NM, NV, OR, UT, WY, WA) Midwest 24 12 12 (IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI) South 18 3 15 (AL, AR, DC, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV) Northeast 30 12 18 (CT, MA.ME, NH, NJ, NY, PA, RI, VT) Complete Responses Missing 18 Non-Complete Responses 78 Canada 29 11 18 Central 6 1 5 (MB, ON, SK) East / Maritimes 6 3 3 (NB, NF, NS, PEI, QC) West / North 17 7 10 (AB, BC, NT, YT) Complete Responses Missing 1 Non-Complete Responses 0 38 4.1.7. Non-Certified Companies N i n e o f the questions in the survey were directed only to companies that were not chain o f custody certified. Results are separated into two categories be low: (1) questions directed only to those companies that intend on becoming chain o f custody certified w i th in the next five years; and (2) questions designed for a l l non-certif ied companies. 4.1. 7.1. Companies Planning on becoming Chain of Custody Certified F i v e questions were asked o f those 19% o f non-cert if ied respondents that intend on becoming chain o f custody certified wi th in the next five years. Respondents were presented wi th ten options o f cert if ication bodies and asked wh ich ones w o u l d l i k e l y be used in chain o f custody cert if icat ion. Rela t ive frequencies were computed for each response category (Figure 4-7). The Sustainable Forestry Initiative (SFI) was the preferred cert i f icat ion body, wi th 34% of responses 3 . The Smar tWood Program (SW) o f the Rainforest A l l i a n c e was second wi th 25% o f the responses. The Canadian Standards Assoc ia t ion , the S G S Qual i fo r program, and the "other" category were the third choices o f respondents, wi th 8% o f the responses each (the most common responses in the "other" category were " I S O 14000" and "the least expensive") . 3 SFI had not launched its on-product label by the time this survey was designed. However, it was under development and could have been a valid response for companies planing on becoming chain of custody certified within the next five years. 39 © IS SFI sw Don't Know Other CSA SGS K P M G PuC SFF SCS 0.0 0.0 0.0 •^•aw*e»<tfw.y ^"•^mmhiv-v.-M 3'4.0 I 8.0 '•< 8.0 ij..-..->>^ a-:d8.o |4l0 ^ 13.0 25.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Relative Frequency (%) Figure 4-7: Preferences for certification bodies of non-certified companies. Respondents were asked to rate their level o f knowledge on five steps o f chain o f custody cert if ication. A four-point scale vary ing from "1 = not at a l l knowledgeable" to "4 = very knowledgeable" was used. Means and standard deviations (SD) were computed for each response and are summarized in Figure 4-8. A one-way A N O V A test (alpha level o f 0.05) was conducted in order to find out whether the means o f the five chain o f custody steps were s ignif icant ly different from each other. The test supports the c l a im that there is no significant difference between the means (Table 4-6). 40 Certification Renewals Annual Audits CoC Assessments Implementation of Tracking Technologies & Methods Segregation of Certified Raw Material 1 2 3 4 Not at all Knowledgeable (1) - Very Knowledgeable (4) Figure 4-8: Non-certified companies levels of knowledge on chain of custody certification. Table 4-6: One-way ANOVA for means of level of knowledge. Source of Variation SS df MS F P-value F crit Between Groups 7.252 4 1.813 1.862 0.122 2.454 Within Groups 107.130 110 0.974 Total 114.383 114 Respondents planning on becoming certified were also asked about their expectations regarding the costs o f chain o f custody cert if ication. Firs t , respondents were asked to give examples o f product lines in their companies and then choose the most appropriate product line for answering the question. Responses were tal l ied and classif ied into three groups: lumber, other pr imary, and value-added products. Table 4-7 presents details on the products compr is ing each group. Table 4-7: Types of product lines used to answer question on expect costs of chain of custody certification. Group 1 Group 2 Group 3 Lumber Other Primary Value-Added softwood lumber timbers pallets hardwood lumber veneers furniture veneer logs kitchen cabinet doors bark mulch lock-wired florist pick sawdust wood turnings logs studs wood chips plywood L V L industrial panels y o n - i j y i v g . ' , ' - . '®8*Z?W 3-0 (SD = 1.0) •. 2.7 (SD = 1.0) .}.?i€Xi!-•' ; ; | 2 - 5 (SD = 0.9) g 2 . 4 (SD=1.1) i*M-:^Sfr:^^;}\2.2 (SD = il.0) 41 Respondents were also asked about their expectations regarding costs o f three phases o f chain o f custody cert if ication for a typica l product l ine: implementat ion (i.e. making the necessary changes), audit ing, and maintenance (i.e. annual audits and renewals). S ix categories o f cost ranges ( in U S dollars) were presented for each one o f the three phases. The summaries o f the responses are seen in Figures 4-9, 4-10, and 4-11. 120 £ under 25 25 - 50 50 - 100 100 - 150 150 - 200 200 and over Cost (thousands USD) in Lumber E2 Other Primary • Value-Added Figure 4-9: Expected costs of implementing chain of custody certification. c K S IT 0> & 120 100 80 60 40 20 0 under 25 25 - 50 50 - 100 100 - 150 150 - 200 200 and over Cost (thousands of USD) QI Lumber 0 Other Primary I Value-Added Figure 4-10: Expected costs of auditing chain of custody. 42 120 under 25 25 - 50 50 - 100 100 - 150 150 - 200 200 and over Cost (thousands of USD) DI Lumber • Other Primary • Value-Added Figure 4-11: Expected costs of maintaining chain of custody certification. The majority o f the respondents using lumber (70%) and a l l respondents using value-added product lines to answer this question expect costs to be under U S $ 2 5 , 0 0 0 for each one o f the three phases o f chain o f custody (i.e. implementing, audit ing, and maintaining) . O n l y ha l f o f the respondents using a pr imary wood product l ine other than lumber expect the costs o f implement ing chain o f custody certif ication to be under US$25 ,000 . The other ha l f expect it to be between US$50 ,000 and US$100 ,000 . However , the majority o f this group (67%) expect the costs o f audit ing and maintaining chain o f custody cert if ication to be under US$25 ,000 . Respondents were presented wi th five aspects o f implement ing chain o f custody and asked to rank what they v iewed as being the three most expensive aspects, wi th 1 being the most expensive 4 . Arb i t ra ry scores o f 3, 2, and 1 were assigned for ranks 1, 2, and 3, respectively. Based on this scoring system, evaluation points were computed and summarized in Figure 4-12. Cha in o f custody assessments were considered the most expensive factor wi th 30 points. However , the three factors clustered together not far behind: implementat ion o f new technologies and methods (28), maintenance o f chain o f custody (27), and segregation o f raw material (26). These close scores make it diff icul t to tel l whether there is a difference between the first four responses. Statistical analyses cannot be carried out for this data due to the arbitrary nature of the scale. 43 CoC Assessments Implementation of Technologies & Methods Maintenance of CoC Segregation of Raw Material Other 1 . i 1 30 j wm^^m^m^w^-m 28 1 27 \ ! 0 5 10 15 20 25 30 35 Evaluation Points Figure 4-12: Expectations of highest costs for chain of custody certification. 4.1.7.2. Expectations of Non-Certified Companies Four questions regarding respondents' expectations o f the benefits, potential customers, and uses o f certified wood products were directed at a l l non-cert if ied companies identif ied in the survey. In a l l four questions, respondents were asked to assume that they w o u l d become chain o f custody cert if ied wi th in the next five years. Firs t , respondents were asked to estimate the proport ion o f raw material that w o u l d come from non-cert if ied source in the case that they were to become chain o f custody certified. The mean was computed revealing that, on average, 59% o f the raw material w o u l d come from non-certified sources. A list o f seven types o f customers was presented to respondents and they were asked to choose the ones that they considered to be potential customers for cert if ied products. Relat ive frequencies were calculated and the results are summarized in Figure 4-13. Twenty-four percent o f the respondents expected that industrial customers w o u l d be potential customers for certified products, whi le 2 3 % expected wholesalers to be potential customers. 44 industrial customer wholesalers retailers end users/consumers builders architects & engineers other kmim'mmmsmi.^mm^mmkmit^'-'rmi\ 24.3 g*<».>;»!f<riaa*-;"vrami 22.5] •&Mms%38ammmmmmms!.>Jl 15.6 ^•mt*#mBteim9mim!sM 14.5 9.8 <a»«gw>wBt*«.MiBa| 8 . 7 ? 5 g B £ g | 4.6 10 15 20 Relative Frequency (%) 25 30 Figure 4-13: Expected customers of certified products. A list o f thirteen benefits was presented and respondents were asked to state whether they agreed or disagreed that chain o f custody cert if ication w o u l d help their companies to achieve those benefits. Spec i f ica l ly , they were asked to choose from a f ive-point L ike r t scale vary ing from "1 = strongly agree" to "5 = strongly disagree". Means and standard deviations were computed for each statement and results are summarized in Figure 4-14. Nine ty- f ive percent confidence intervals were also computed for the means o f each statement and the means o f each statement were then tested against a neutral point (Table 4-8). This t radit ional hypothesis test ver i f ied i f responses were s ignif icant ly different from " 3 " (alpha level o f 0.05), the point on the scale that represents an undecided or neutral attitude. O n l y four statements were not s ignif icant ly different from " 3 " : "better communicat ion wi th customers (3.2)"; "better communica t ion wi th social groups (3.1)"; "reduced pressure from Non-Governmenta l Organizat ions ( N G O s ) (3.1)"; and "better publ ic relations (3.0)". 45 Waste reduction Increased efficiency Better inventory control Increased profits Better info to investors Better communication with gov't Better understand of consumer mkts Increased market share Maintain market share Better communication with customers Reduced pressure from NGOs Better communication with social groups Better public relations te^asR^^^ 4.2 (SD = 1.0) a S s ^ l ^ ^ e ? ' ^ 4.1 (JSD = 1.0h i^affeyaa^  -w--| 4.0 (SD = I.I) v M 3 . 8 (SU = 1.2) •;. vr^.r i l3 .8 (SD = 1.2) • 3.8 (SD = 1.1) • • - : • . - |3 .5 (SD = 1.1) ' - ^ - ' . ' . q ; :rz r-T ^ - ; ^ ] 3l4 (SDi=l . l ) |6%tgl»ga^ 3.3 (SD = 1.2) ! ' (SD = 1.2) '(SD = 1.3) m^m^m^n^-'rm^'^mi^sfM 3.2 l 5 g ' l S ^ « g l 4 ! l » 5 » B ^ S g | 3.1 \&-&%p>mMmmmmmwamE&i\ 3.1 (SD = 1.2) !l-gBS^»ag^^ 3.0 (SD = 1.3) ' I ! I .0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Strongly Agree (1) - Strongly Disagree (5) 5.0 Figure 4-14: Attitudes of non-certified companies towards the potential benefits that chain of custody certification could provide. Table 4-8: 95% confidence intervals of non-certified companies attitudes about the benefits of chain of custody certification. 9 5 % Confidence Interval Waste reduction 4.2 ± 0.21* Increased overall efficiency 4.1 ± 0.22* Better inventory control 4.0 ± 0.24* Increased profits 3.8 ± 0.25* Better information to investors 3.8 ± 0.25* Better communication with the government 3.8 ± 0.24* Better understanding of consumer markets 3.5 ± 0.23* Increased market share 3.4 ± 0.24* Maintain market share 3.3 ± 0.25* Better communication with customers 3.2 ± 0.24 Reduced pressure from environmental organizations 3.1 ± 0.27 Better communication with social groups 3.1 ± 0.24 Better public relations 3.0 ± 0.26 * Significantly different from a neutral point of 3 (a = 0.05) 46 Las t ly , an open-ended question was posed asking respondents to identify any other benefits from chain o f custody cert if ication that were not l is ted in the previous question. Responses were ta l l ied and categorized into three types o f responses. A group o f respondents (46%) declared that they thought that chain o f custody w o u l d br ing no benefits at a l l for pr imary wood products companies. Another group (31%) o f respondents bel ieved that chain o f custody cert if ication could br ing some benefits to certified companies l ike pr ice premiums, increased competi t ive advantage, and increased profit margins. The third group (23%) main ly stated that they do not agree wi th the idea o f chain o f custody cert if icat ion. Deta i led responses are presented in Append ix I V . 4.1.7.3. Reasons for Not becoming Certified Companies that do not intend on becoming chain o f custody cert i f ied were asked to rank the three most important reasons for this decis ion, wi th 1 being the most important. Arb i t ra ry scores o f 3, 2, and 1 were assigned to ranks o f 1, 2, and 3, respectively, and evaluation points were computed for each statement. B y far, the most important reason (164 points) for not becoming certified is the fact that respondents believe that chain o f custody cert if ication wou ld not bring any benefits to their companies. L a c k o f incentive from the government had little importance, on average (82 points). The other five reasons had s imi la r levels o f importance to respondents, wi th points ranging from 104 to 123 (Figure 4-15). 47 Will not bring any benefits Will not affect our market share Do not agree with CoC idea Costs of CoC are too high Already uses sustainable wood Lack of information about CoC Lack of incentive from government 0 20 40 60 80 100 120 140 160 180 Evaluation Points Figure 4-15: Reasons for not becoming chain of custody certified. 4.1.8. Certified Companies Thir ty-nine percent o f the 158 companies that completed the survey were chain o f custody certif ied. These companies were asked to answer two sections (Sections 2 and 3) o f the questionnaire speci f ica l ly designed for certified companies. First , respondents were asked to specify wh ich accredited cert i f icat ion body or bodies certified their companies. Relat ive frequencies were computed for each cert i f icat ion body and are seen in Figure 4-16. The majority o f respondents (60%) were cert if ied by the Smar tWood Program ( S W ) o f the Rainforest A l l i a n c e . Scient i f ic Cer t i f ica t ion Systems ( S C S ) certified 26% o f the respondents. The "other" category comprised 9% o f the responses, the most common o f which was the "Sustainable Forestry Initiative ( S F I ) " 5 . • ^ c j ^ ^ - ^ 123 ;.;^ 7:<*.—.,;v| 114 ^51 104 t] 82 SI 164 5 SFI was still developing an on-product label and had not launched it by the time this survey was conducted. Therefore, SFI was not included as an option for certified companies. 48 25.7 60.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 Relative Frequency (%) Figure 4-16: Accredited certification bodies used for chain of custody certification. Cert i f ied respondents were also asked to identify the customers for their companies ' certified products. Rela t ive frequencies (Figure 4-17) show that 2 2 % o f the respondents stated that " industr ial customers" purchase their certified products. "Reta i le rs" and "wholesalers" each accounted for 20% o f the responses. y . ^ y y w T ^ - r i W ' T ^ 2o.l Industrial Customers Retailers Wholesalers End Users/Consumers jgs , » v a ^ ? ^ f e B ' - w~ Builders i I ^ - ^ t f ^ ; ; v V ' * ' f g ^ f ^ l 8.6 Architects & Engineers p . y . ^ . % * ; ^ ; * i . ^ ' i & > \ 7.2 Other -'•'•%-l.-';-"-;;---et>,v.--v«,a| 6.5 ^ r t i l 16.5 0.0 5.0 10.0 15.0 Relative Frequency (%) 20.0 25.0 Figure 4-17: Customers for chain of custody certified products. 4.1.8.1. Product Lines of Certified Companies Respondents were asked to present information on their companies ' cert if ied and non-certified product l ines. Spec i f ica l ly , they were asked to list up to four o f their most common wood product l ines. Next , they were asked to provide information on 2001 sales revenues for each o f the product l ines, whether or not it was certified, as w e l l as the proport ion o f certified 49 raw materials used in each product l ine. Responses on types o f product l ines were ta l l ied and d iv ided into three groups: lumber, other pr imary, and value-added wood products. Group membership is seen in Table 4-9. Table 4-9: Groups of product lines. Lumber Other Primary Value-Added hardwood lumber veneer moulding softwood lumber logs sidings timbers decking structural beams flooring plywood stair parts studs flooring panelling fencing chips garden gazebos sawdust pallet stock M D F fixtures shingles For each product l ine, Table 4-10 summarizes median sales revenues, relative frequencies o f the cert if icat ion status, and average proportions o f cert if ied raw material used. The median was used for sales revenues due to the presence o f outliers. L u m b e r was the most frequent (40.6%) type o f product l ine listed. A l though respondents were asked to l ist only the pr imary wood product l ines, value-added product lines accounted for 34.7% o f the responses. This may indicate that the words "pr imary wood product l ine(s)" should have been better defined in the question. A t U S $ 5 m i l l i o n , the approximate sales revenues o f " lumber" and "other pr imary" product lines were the same. The highest proport ion o f cert if ied product lines (22.0%) was seen in " lumber", fo l lowed by "value-added" (13.6%). A l t h o u g h "other p r imary" wood products had the lowest average proport ion o f certified product l ines, this group had the highest proport ion (67.6%) o f cert if ied raw material used. Table 4-10: Information on the product lines of certified companies (n = 48). Group Relative Sales Revenue in 2001 Status % Certified Raw Frequency (Median in USD) Certified Non-Certified Material Lumber 41.5% $5,000,000 22.0% 78.0% 40.8% Other Primary 25.5% $7,500,000 11.1% 89.9% 67.6% Value-Added 33.0% $6,000,000 15.8% 84.2% 36.0% 50 4.1.8.2. Certified Raw Materials Respondents were asked to identify the types o f wood that they used in their certified products: softwoods, hardwoods, t ropical hardwoods, or other. Rela t ive frequencies were calculated for each type o f wood and results are summarized in Figure 4-18. Forty-four percent o f the respondents stated that they use non-tropical hardwoods in their cert if ied products, whi le 4 2 % use softwoods. O n l y 11% use tropical hardwoods. 1 , 1 . Non-tropical hardwoods 44.3 I ! Softwoods 14i.8 Tropical hardwoods •J 11.4 Other 3 2.5 0.0 10.0 20.0 30.0 40.0 50.0 Relative Frequency (%) Figure 4-18: Types of wood used in certified products. Respondents were also asked to indicate whether their companies supplied a l l o f their logs. Rela t ive frequencies were computed and are presented in Table 4-11. Approx ima te ly 85% o f the respondents stated that they do not supply a l l o f their logs. These respondents were asked to indicate the number o f log suppliers that their companies used and how many o f these supplied certified logs. The mean was computed for both answers. O n average, respondents use a total o f 82.8 log suppliers, and an average o f 9.7 o f these supply certified logs. Table 4-11: Supply of raw materials for chain of custody certified companies. Supply A l l of Its Logs? Frequency % No 50 84.7% Yes 9 15.3% Total 59 100.0% 51 4.1.8.3. Chain of Custody Methods and Technologies A list o f technologies was provided and respondents were asked to identify wh ich ones their companies used to track materials for chain o f custody. Rela t ive frequencies were computed and are summarized in Figure 4-19. Paint daubs and labels were the two most commonly used techniques wi th 30 .3% and 29.3% o f the responses, respectively. Barcode labels and "other" were the third (16.2%) and fourth (14.2%) most frequent answers, respectively. The "other" category included computer stamps, loading and del ivery s l ips , trip/scale tickets, and material segregation. Hammermarks (8%), latshbacker tags (2%), touch memories (0%), and radio frequency (0%) are not as commonly used. Paint daubs Labels Barcode labels Other Hammermarks Latshbacker tags Touch memories Radio-frequency 0 5 10 15 20 25 30 35 Relative Frequency (%) Figure 4-19: Technologies used to identify material source. 4.1.8.4. Costs of Chain of Custody Certification Respondents were asked about the costs o f implement ing (i.e. making the necessary changes), audit ing, and maintaining (i.e. annual audits and renewal) chain o f custody cert if icat ion for a typica l product line in their company. First , respondents were asked to specify w h i c h product l ine they were using to answer the question. Responses were then ta l l ied and separated into three groups: lumber, other pr imary, and value-added. The types o f product lines included in each group are seen in Table 4-12. 52 : i | i . I I PTT--sT*Tfcy'y:re'gre.s«g-vr«w^ -vmx*!7-csM 29.3 , i I .,1 .^,^n.-v,H-m^_, ^vf,, : ; g | 16.2 | ' 1 '— ! | i r . - - y - . - . - r y . , - - ••<, . - e l 14.2 ! I K .,<tr| 8 . 0 Table 4-12: Groups of product lines used to specify the costs of chain of custody certification. Lumber Other P r imary Value-Added Softwood lumber veneer shingles Hardwood lumber plywood moldings panelling decking timbers stair parts chips flooring logs furniture wood handle fencing S ix cost ranges were l isted for each phase o f chain o f custody certif ication (implementation, audit ion, and maintenance) and respondents were asked to choose the most appropriate response for each stage. A summary o f the relative frequencies is presented in Figures 4-20, 4-21, and 4-22. The majority o f respondents (from 8 5 % to 95%) from al l three groups o f product lines stated that the costs o f implement ing, audit ing, and maintaining chain o f custody cert if ication for a product l ine in their company was under U S $ 2 5 , 0 0 0 for each act ivi ty. 100 -| d under 25 25 - 50 50 - 100 100 - 150 150 - 200 200 and over Cost (thousands USD) ID Lumber 0 Other Primary • Value-Added Figure 4-20: Costs of implementing chain of custody. 53 under 25 25 - 50 50 - 100 100 - 150 150 - 200 200 and over Cost (thousands USD) HI Lumber • Other Primary B Value-Added Figure 4-21: Costs of auditing chain of custody. under 25 25 - 50 50 - 100 100 - 150 150 - 200 200 and over Cost (thousands USD) Dj Lumber 0 Other Primary B Value-Added Figure 4-22: Costs of maintaining chain of custody certification. 4.1.8.5. Difficulties of Chain of Custody Certification Respondents from the certified companies were asked to rank the three greatest diff icult ies (1 being the most diff icul t issue) that their companies faced when implementing chain o f custody cert if ication. Arb i t ra ry scores o f 3, 2, and 1 were assigned to ranks o f 1, 2, and 3, respectively and evaluation points were computed for each category (Figure 4-23). B y far, " insufficient supply o f certified w o o d " was ranked the greatest d i f f icul ty when implementing chain o f custody cert if ication wi th 126 points. "Mate r i a l segregation" (55 points), "employees ' t ra in ing" (52 points), and "high costs" (50 points) were each very close and therefore, a l l three can be equally considered to be the second most diff icul t issues when implement ing chain o f 54 custody. " L a c k o f information about the process" was the third most di f f icul t factor, wi th 41 points, fo l lowed lastly by "other" factors and " lack o f government col labora t ion" . Insufficient supply of certified wood i i [ i va | 126 Material segregation 1 I . , . 7 - . ,-,| 55 1 I Employees' training .-..> " .'V^iT;' •„;: > -3 52 1 High costs 50 Lack of info about the process 1 1 Other .>.:••.-mix\ 32 Lack of government collaboration 120 I ; j I i i 0 20 40 60 80 100 120 140 Evaluation Points Figure 4-23: Most difficult factors in implementing chain of custody certification. 4.1.8.6. Benefits Resulting from Chain of Custody Certification A l ist o f thirteen statements regarding possible benefits obtained by chain o f custody cert if ication was presented. Respondents were asked to specify whether they agreed or disagreed wi th each statement, selecting responses from a five-point L i k e r t scale vary ing from "1 = strongly agree" to "5 = strongly disagree". Means and standard deviations were computed for each statement and are summarized in Figure 4-24. Nine ty- f ive percent confidence intervals were also computed for each statement and means o f each statement were tested against a neutral point (Table 4-13). This hypothesis test ver if ied i f responses were s ignif icant ly different from " 3 " (alpha level o f 0.05), wh ich is the point in the scale that represents an undecided or neutral attitude. F i v e statements did not have means s ignif icant ly different from " 3 " . They indicated that respondents, on average, neither agree nor disagree that chain o f custody cert if ication is p rov id ing their companies wi th "increased market share", "maintenance o f market share", "better communicat ion wi th customers", "reduced pressure from N G O s " , and "better publ ic relations". 55 Respondents disagree with all other statements including "better understanding of consumer markets", "better communication with social groups", "better information to investors", increased profits", "better inventory control", "increased overall efficiency", "waste reduction", and "better communication with the government". Better communication with gov't Waste reduction Increased overall efficiency Better inventory control Increased profits Better information to investors Better communication with social groups Better understanding of consumer markets Reduced pressure from NGOs Maintenance of market share Increased market share Better communication with customers Better public relations ( S D ( S D ; = 1.2 (SD = 1.1) (SD = 1.1) (SD = 1.1) (SD = 1.1) (SD = 1.2) (SD = 1.2) = 1-1) (SD (SD = 1 (SD = 1 1.2) . I (SD = 1.2) (SD = 1.3) 1 2 3 4 Strongly Agree (1) - Strongly Disagree (5) Figure 4-24: Attitudes of certified companies regarding benefits derived from chain of custody certification. Table 4-13: 95% confidence intervals of average agreement levels. 9 5 % Confidence Interval Better communication with the government Waste reduction Increased overall efficiency Better inventory control Increased profits Better information to investors Better communication with social groups Better understanding of consumer markets Reduced pressure from environmental organizations Maintain market share Increased market share Better communication with customers Better public relations 4.0 ± 0.28* 3.9 ± 0.27* 3.8 ± 0.29* 3.7 ± 0.28* 3.7 ± 0.30* 3.6 ± 0.31* 3.3 ± 0.29* 3.3 ± 0.30* 3.3 + 0.31 3.1 ± 0.32 3.1 ± 0.35 3.1 ± 0.29 2.8 ± 0.33 Significantly different from a neutral point of 3 (a = 0.05). 56 Respondents were also presented wi th an open-ended question as a means o f identifying any other benefits that were derived from chain o f custody cert i f icat ion that had not been listed previously (details in Append ix I V ) . Responses were ta l l ied and six groups were identif ied (Table 4-14). Approx ima te ly 47% o f the respondents stated that they have not observed any benefits from chain o f custody cert if ication thus far. They explained that this fact might be a consequence o f underdeveloped markets, a lack o f supply o f cert if ied products, and non-existent demand for certified products. "Other benefits" was the second most frequent response wi th 17% o f responses. This varied group included propaganda, increased efficiencies, personal satisfaction, strengthened relationships wi th suppliers, and enhanced sustainable forest management. 4.1.9. Expected versus Actual Benefits of Chain of Custody Certification The same question l is t ing thirteen statements about benefits der ived from chain o f custody cert if icat ion was asked o f certified and non-cert if ied companies. The results o f both questions were plotted together in Figure 4-25 in order to compare the benefits that non-certif ied companies expect to obtain from chain o f custody cert if ication wi th the benefits that certified companies are obtaining in reality. A series o f z-tests (alpha level o f 0.05) were made for the means o f certified and non-certif ied companies in each statement. The tests showed that there were no significant differences between the responses o f cert if ied and non-cert if ied companies for a l l statements. Table 4-14: Other benefits derived from chain of custody certification. Relative Frequency Market access Employee morale/pride Competitive advantage Enhanced image with local environmental groups No benefits so far Other benefits 13.3% 6.7% 10.0% 6.7% 46.7% 16.7% 57 In general, the average of most of the responses was between "neither agree nor disagree" and "disagree". However, non-certified companies seemed to be somewhat more disagreeable in most of the statements. The only exceptions to this were for: "improved communication with the government", "improved communication with social groups", and "reduced pressure from non-governmental organizations". Communication with government Waste reduction Increased overall efficiency Better inventory control Increased profits Better information to investors B etter communication with social groups Better understanding of consumer markets Reduced pressure from NGOs M aintenance of market share Increased market share B etter communication with customers Better public relations 2 3 4 1 = strongly agree / 5 = strongly disagree I Non-Certified (Expected Benefits) • Certified (Actual Benefits) Figure 4-25: Expected versus perceived benefits from chain of custody certification. 58 4.1.10. Cluster Analysis of Actual and Expected Benefits of Chain of Custody Certification Cluster analysis can be used to find natural under ly ing groupings o f objects. In the case o f this study, a cluster analysis was conducted in order to identify the types o f companies that are most l i ke ly to derive benefits from chain o f custody cert if icat ion. Questions 9 (Section 1) and 2 (Section 3) were identical L ike r t scale questions asked in different sections i n order to reach both types o f respondents (certified and non-certified companies). The answers to these questions were merged, constituting the raw data for the analysis. A part i t ioning or non-hierarchical technique was used to analyze this data. K - M e a n s clustering is the part i t ioning technique offered by S P P S 10.0 for W i n d o w s and is a suitable technique for larger data sets l ike the one o f this study ( L e M a y 2001). Th is technique requires the number o f final clusters to be known and specified in advance. Solut ions for two, three, and four clusters were considered and the three-cluster solution seemed the most appropriate one because it presented a clearer defini t ion o f clusters wi th more uni form results than the other two solutions. The number o f iterations that was required to achieve the f inal cluster centers was ten. F i n a l cluster centers and the distances among them are presented in Tables 4-15 and 4-16, respectively. Means o f the final cluster centers were computed for each cluster. The mean for Cluster 1 was 4.9 indicat ing that respondents classif ied in this cluster tend to "strongly disagree" that chain o f custody certif ication is br inging or w i l l br ing any benefits to their companies. W i t h a mean o f 3.5, respondents from Cluster 2 tend to "neither agree nor disagree" wi th this point. Respondents from Cluster 3 are between "agree" and "neither agree nor disagree" wi th a mean o f 2.6. Nine ty- f ive percent confidence intervals were computed for each cluster center mean: Cluster 1 had a confidence interval o f 4 . 9 ± 0 . 2 , Cluster 2 had one o f 3 . 5 ± 0 . 3 , and Cluster 3 had one o f 2.6+0.3. 59 Table 4-15: Final clusters centers. 1 Cluster 2 3 Better inventory control 5 4 3 Waste reduction 5 4 3 Increased profitability 5 4 3 Increased market share 5 3 2 Maintenance of market share 5 3 2 Increased overall efficiency 5 4 3 Better information to investors 5 4 3 Better understanding of consumer markets 5 3 3 Enhanced communication with the government 5 4 3 Enhanced communication with customers 5 3 2 Enhanced communication with social groups 5 3 3 Reduced pressure from environmental organizations 5 3 2 Better public relations 4 3 2 Mean 4.9 3.5 2.6 Table 4-16: Distance between final cluster centers. Cluster 1 2 3 1 4.9 7.7 2 4.9 3.3 3 7.7 3.3 Characterist ics o f each cluster were identif ied in order to establish profi les o f the clusters. Spec i f ica l ly , the proport ion o f certified and non-cert if ied companies, average sales revenues, average numbers o f employees, average numbers o f product lines,, and locations were computed for each cluster (Table 4-17). One-way A N O V A was used to verify i f there were any significant differences (alpha level o f 0.05) between the means o f sales revenue, number o f employees, and number o f product lines for the three clusters. Results o f the three one-way A N O V A tests showed that means for sales revenue, number o f employees, and number o f product lines are not s ignif icant ly different for the three clusters (Tables 4-18, 4-19, and 4-20). 60 Table 4-17: Characteristics of the three clusters. Cluster 1 Cluster 2 Cluster 3 (n = 36) (n = 60) (n = 53) Sales Revenue $6,983,182 $15,580,161 $14,431,111 # Employees 38.8 57.0 50.5 # Product Lines 3.3 5.5 6.2 Certification Status Certified 38.9% * 28.3% * 52.8% * Non-Certified 61.1% 71.7% 47.2% Location USA 86.1% * 81.7% * 71.7% * Canada 13.9% 18.3% 28.3% Cluster Centers Means 4.9 3.5 2.6 * Significantly different from remaining two clusters (a = 0.05). Table 4-18: One-way ANOVA for average sales revenue of the three clusters. Source of Variation SS df MS F P-value F crit Between Groups l . l x l O 1 5 Within Groups 2 . 4 x l 0 1 6 2 96 5 . 7 x l 0 1 4 2.2372 0.1 123 2 . 5 x l O M 3.0912 Total 2.6x10"' 98 Table 4-19: One-way ANOVA for average number of employees of the three clusters. Source of Variation SS df MS F P-value F crit Between Groups 4,962.6 Within Groups 351,553.0 2 106 2,481.3 0.7482 0.4757 3,316.5 3.0820 Total 356,515.6 108 Table 4-20: One-way ANOVA for average number of product lines of the three clusters. Source of Variation SS df MS F P-value F crit Between Groups 136.2 Within Groups 2,589.4 2 105 68.2 2.7621 0.0678 24.7 3.0828 Total 2,725.7 107 Z-tests were used to compare the proportions o f cert if ied and non-cert if ied companies. Three tests were necessary to verify i f differences between the three clusters were significant. The Bonfer roni adjustment procedure was used to adjust the alpha level o f each ind iv idua l test in order to ensure that the overal l alpha level would remain 0.05. A c c o r d i n g to this correction, the alpha level for each one o f the tests should be 0.017 ( S I S A 2002, Tabachnick and F i d e l l 2001). The same procedure was used to compare the proport ion o f companies from Canada and from the 61 Uni ted States in each cluster. The z-tests indicated that the proport ion o f cert if ied and non-certified companies were s ignif icant ly different (alpha level o f 0.017) in the three clusters (Table 4-21). The proport ion o f companies in Canada and the Uni t ed States was also s ignif icant ly different (alpha level o f 0.017) in the three clusters (Table 4-22). Table 4-21: z-tests for proportion of certified companies in the three clusters. z-test z critical Alpha Level Significant Difference Cluster 1 x Cluster 2 -33.7 + 2.39 0.017 S Cluster 1 x Cluster 3 -12.0 V Cluster 2 x Cluster 3 -28.8 S Table 4-22: z-tests for proportion of US companies in the three clusters. z-test z critical Alpha Level Significant Difference Cluster 1 x Cluster 2 7.19 ± 2.39 0.017 V Cluster 1 x Cluster 3 17.7 S Cluster 2 x Cluster 3 15.8 S Even though the means for sales revenue, number o f employees, and number o f product lines are not s ignif icant ly different for the three clusters, a distinct trend is noted showing that companies from Clusters 2 and 3 tend to be larger. Cluster 3 was the only cluster that had a higher proport ion o f certified companies (52.8%) than o f non-cert i f ied companies (47.2%). This cluster was also the most agreeable wi th respect to benefits der ived from chain o f custody cert if icat ion (2.6) and is the cluster w i th the greatest proport ion o f Canadian companies (28.3%). Cluster 2 had the smallest proport ion o f certified companies (28.3%) and generally a neutral attitude regarding the benefits o f chain o f custody cert if ication (3.5). Cluster 1 tended to contain smaller companies, the most disagreeable attitude about benefits o f chain o f custody, and the largest proport ion o f A m e r i c a n companies (86.1%). 62 4.1.11. Discriminant Function Analysis of Certified and Non-Certified Companies A discriminant function analysis was undertaken for cert if ied and non-certif ied companies. This analysis was used in order to f ind out how chain o f custody cert if ied and non-certified companies differ based on sales revenues, numbers o f employees, and numbers o f product lines. The specification o f classif icat ion functions to predict group membership was also an objective o f the discriminant function analysis. Discr iminant function analysis "is h igh ly sensitive to the inc lus ion o f outl iers" (Tabachnick and F i d e l l 2001). Therefore, the first step o f this analysis consisted o f identifying and removing outliers from the raw data. In order to accompl i sh this, data for the three discriminant variables were standardized. Values wi th z-scores o f greater than 3.29 were el iminated (Tabachnick and F i d e l l 2001). 4.1.11.1. Assumptions Discr iminant function analysis is based on two assumptions. Firs t , the within-group covariance matrix should be the same for a l l groups. Second, predictor variables should a l l be continuous and normal ly distributed ( M a n l y 1994). The assumption o f equal within-group covariance matrices was ver i f ied using a B o x ' s M test, wh ich tests the nu l l hypothesis o f equal populat ion covariance matrices. Results are summarized in Table 4-23. The test found a p-value o f 0.000 (alpha level o f 0.05), wh ich indicates that the within-groups covariance matrices do not differ. Table 4-23: Box' M test of equal within-group covariance matrices. Box's M F Approx. dfi df2 P-value 48923.342 .000 41.564 6.672 6.000 Each predictor variable was tested for normali ty in order to verify the assumption o f multivariate normali ty . Values o f skewness and kurtosis were computed for each variable and are 63 summarized in Table 4-24. A normal distr ibution has values o f skewness and kurtosis equal to zero. A l l three variables had values o f skewness and kurtosis different from zero, each being pos i t ive ly skewed and having posi t ive kurtosis. However , "discr iminant function analysis is robust to failures o f normali ty i f v io la t ion is caused by skewness rather than outl iers" (Tabachnick and F i d e l l 2001). Therefore, the fact that variables are skewed l i ke ly do not have any major effects on the results o f this analysis. Table 4-24: Kurtosis and skewness values for predictor variables. Kurtosis Skewness Sales Revenue 18.6 3.8 Number of Employees 5.7 2.4 Number of Product Lines 11.7 3.4 4.1.11.2. Important Discriminating Variables One o f the main objectives o f this discr iminant function analysis was to find out how certif ied and non-cert if ied companies differ based on discr iminant variables (sales revenue, number o f employees, and number o f product l ines). It is possible to determine wh ich discr iminant variables were the most important in separating or d i scr imina t ing between certified and non-cert if ied companies. This procedure includes the use o f d iscr iminant loadings, wh ich are the correlations between the canonical discr iminant function and the three predictor variables ( D i l l o n and Golds te in 1984). The higher the discriminant loading (absolute value), the greater the importance o f the variable in d iscr iminat ing the groups ( D i l l o n and Golds te in 1984) (Table 4-25). The number o f employees and number o f product lines had re la t ively high loadings: 0.678 and 0.611, respectively. These two variables were the most important variables in d iscr iminat ing between chain o f custody certified and non-certif ied companies. Table 4-25: Important discriminating variables. Predictor Variables Function 1 Number of Employees 0.678 Number of Product Lines 0.611 Sales Revenue 0.315 64 4.1.11.3. Classification Functions One o f the objectives o f discriminant function analysis is to f ind c lass i f icat ion functions that predict group membership (Tabachnick and F i d e l l 2001). The analysis yields one classif icat ion function for each group. Data for a new case are inserted into each classif icat ion function resulting in a classif icat ion score for each group. The new case is assigned to the group wi th the highest classif icat ion score (Tabachnick and F i d e l l 2001). Class i f ica t ion function coefficients for both groups are presented in Table 4-26. The Fisher ' s l inear discriminant functions for the certified companies group (Z | ) and non-cert if ied companies group ( Z 2 ) are as fol lows: Z , = -1.420 + (3 .667x lO" 2 ) (X, ) + ( 5 . 9 3 2 x l 0 " 3 ) ( X 2 ) + ( - 7 . 9 9 8 x l O " 1 0 ) ( X 3 ) (Equation 1) Z 2 = -0.927 + (1 .724x lO" 2 ) (X, ) + (1 .648x lO" 3 ) (X 2 ) + ( 1 . 0 0 8 x l 0 " 8 ) ( X 3 ) (Equat ion 2) In order to determine which group a new company w o u l d belong to, the values o f the discriminant variables for that company must be entered into the two equations. The equation y i e ld ing the highest result indicates the group membership for the new company. Table 4-26: Classification function coefficients. Variables Groups certified non-certified Constant -1.420 -.927 Xi # of Product Lines 3.667xl0'2 1.724xl0"2 x2 # of Employees 5.932xl0"3 1.648xl0"3 x3 Sales Revenue -7.998xl0"10 1.008xl0-8 4.1.11.4. Misclassification Error Rates Cross val idat ion was used to test how w e l l the model constructed classifies the companies. This method consists o f fitting the discr iminat ing function using a l l but one observation, calculat ing the misclassif icat ion error rate, and repeating this procedure n times. 65 Table 4-27 presents detailed information on classif icat ion rates. O r i g i n a l grouped cases had a success rate o f 63.4%, and 61.3% o f the cross-validated cases were c lass i f ied correctly. This indicates a fa i r ly h igh degree o f consistency o f the classif icat ion model constructed (Tabachnick and F i d e l l 2001). Table 4-27: Classification rates. Predicted Group Membership Total Groups non-certified certified Original Count non-certified 43 10 53 certified 24 16 40 % non-certified 81.1 18.9 100.0 certified 60.0 40.0 100.0 Cross-validated Count non-certified 42 11 53 certified 25 15 40 % non-certified 79.2 20.8 100.0 certified 62.5 37.5 100.0 a. 63.4% of original grouped cases correctly classified. b. 61.3% of cross-validated grouped cases correctly classified. 4.2. TELEPHONE SURVEYS 4.2.1. Response Rate and Adoption Levels In addit ion to the mai l questionnaire, a telephone survey o f cer t i f icat ion organizations was also implemented (Appendix II). A n attempt was made to reach a l l o f the organizations invo lved in cert if icat ion. F ive o f the eight cert if ication organizations contacted agreed to participate in this study, wh ich represents a 62.5% response rate. Respondents were asked whether their organizations conduct chain o f custody assessments. Four o f the five organizations stated that they do (Table 4-28). The organization that does not perform chain o f custody assessments explained that they were not planning to do so wi th in the next five years. O n l y the respondents that were accredited to conduct chain o f custody assessments answered the remaining questions. Table 4-28: Chain of custody accreditation status of certification organizations. Yes No Total Does CoC assessments? 4 1 5 If not CoC accredited - planning to? 0 1 1 66 A l l o f the institutions that conduct chain o f custody assessments are accredited by the Forest Stewardship C o u n c i l ( F S C ) . Therefore, it is important to bear in mind that results o f these interviews represent the F S C approach to chain o f custody cert i f icat ion. These institutions were asked to identify the number o f pr imary wood products companies in Nor th A m e r i c a that were chain o f custody certified by them. The mean was computed and, on average, cert if ication institutions have certified 60.5 pr imary wood products companies for chain o f custody. Responses ranged from 2 to 160 companies. W h e n asked i f there were any companies in the process o f becoming certif ied, a l l four institutions said yes. The mean was computed and, on average, there are eight companies in the process o f becoming certified. Responses varied from two to 18 companies. 4.2.2. Costs of Chain of Custody Certification The second section o f the survey collected information on the costs o f chain o f custody cert if icat ion for pr imary wood products companies. First , respondents were asked i f their institutions had some k ind o f unit for measuring the costs o f chain o f custody cert if ication. One respondent said yes, but declared that the information was confident ia l . Respondents were then asked to specify how their institutions determined the price charged for chain o f custody assessments, annual audits, and renewals. Responses were ta l l ied (Table 4-29) for five factors wh ich were used in determining the costs o f chain o f custody: company locat ion, size o f the company, number o f manufacturing faci l i t ies , complexi ty o f the manufacturing process, and annual sales revenue. Table 4-29: Parameters used to determine the price of chain of custody certification. Parameter Frequency Company location 2 Size of the company 3 Complexity of manufacturing process 2 Annual sales revenue 1 Number of manufacturing facilities 2 Total 10 67 Respondents were asked about the range o f the costs for each phase in the chain o f custody process: assessments, annual audits, and cert if ication renewals. Means were computed for each range o f costs. A c c o r d i n g to the cert if ication organizations, chain o f custody assessments have costs vary ing from US$2,727 .50 to US$5 ,093 .75 . A n n u a l audits have costs vary ing from US$935 .75 to US$1,630 .00 . F i n a l l y , costs o f cert i f icat ion renewals every five years range from US$1 ,350 .00 to US$2 ,260 .00 . However , it is important to note that there was a great deal o f variat ion in defining the ranges. For example, the average lower range o f chain o f custody assessments was US$2,727 .50 , but the values used to calculate this average varied from U S $ 3 1 5 to US$4 ,000 . The variat ion wi th in each lower and upper range is summarized in Table 4-30 6 . Table 4-30: Lowest and the highest values of each range of costs of chain of custody certification. Lowest Value Highest Value Minimum Maximum Average Minimum Maximum Average CoC Assessment Annual Audits Certification Renewal $315 $315 $1,260 $4,000 $1,440 $1,440 $2,727.50 $937.75 $1,350.00 $1,890 $630 $2,000 $17,000 $2,000 $2,520 $5,093.75 $1,630.00 $2,260.00 The last question regarding costs o f chain o f custody cert i f icat ion asked respondents to estimate the annual indirect costs o f implementing chain o f custody for a forest products company. None o f the respondents could give an exact or even an approximate value, but a l l o f them stated that it depends on the size o f the company. Large companies usual ly have some k ind o f quali ty management system (ISO 9000) in place that facilitates the implementat ion o f chain o f custody and lowers costs. Respondents also stated that large companies usual ly put more resources into marketing and promotional campaigns. Smal l companies usual ly have higher costs than large companies when implementing chain o f custody. Respondents explained that this happens because smal l companies usual ly do not have quali ty management systems in place. 6 Readers should be cautious when interpreting this information since it is not g iven in costs per unit and is, therefore, diff icul t to compare. 68 4.2.3. Benefits of chain of custody certification Accred i t ed certif ication institutions were asked about the benefits that companies may accrue from chain o f custody cert if ication. Respondents were asked to state whether they agreed or disagreed wi th five statements about benefits o f chain o f custody cert i f icat ion. Respondents chose their answers from a five-point L ike r t scale vary ing from "1 = strongly agree" to "5 = strongly disagree". These statements were adapted from Questions 9 (Sect ion 1) and 2 (Section 3) o f the written questionnaire designed for companies. Means o f the answers were computed and are illustrated in Figure 4-26. Respondents tend to agree that chain o f custody cert if ication is helping companies to "increase their market share", to "mainta in their market share", to " improve their communicat ion wi th stakeholder groups", to "increase their prof i tabi l i ty" , and to have a "better inventory control" . Respondents were also asked to state any other benefits that they thought could result from chain o f custody cert if ication. Respondents stated that chain o f custody cert i f icat ion: > helps to connect l inks (in the supply chain); > helps to maintain and promote the idea o f cert if icat ion; > improves the environmental image o f the company; and > brings a sense o f pride and prestige to the employees. Increased profitability i ft;-Kr^ax:»r'-.!"•, M| 2.5 Increased market share M ^ I J ^ / ^ . T v - ^ l 2.3 1 Better communication with stakeholder groups ! 313ri>fSeil 2.0 Better inventory control s^MAS'i1-?;*! 2.0 Maintain market share 1 2 3 4 5 1 = strongly agree / 5 = strongly disagree Figure 4-26: Benefits from chain of custody certification - certification bodies' perspective. 69 Respondents were then asked whether their institutions provide support beyond cert if ication in assisting companies to acquire benefits from chain o f custody. I f they said yes, they were asked to specify the type o f support. Three out o f the four respondents said that they do provide some form o f support in assisting companies to acquire benefits from chain o f custody. A l l three o f them stated that this support is provided in the form o f special programs that provide assistance and clar i f icat ion about chain o f custody, l ike pre-audits, educational web sites, and subsidy programs to help smal l companies to become cert if ied. 70 5. DISCUSSION Pr imary wood products companies in Canada and the Un i t ed States seem to have diverse expectations and perceptions about chain o f custody cert if icat ion. Some o f the analyses revealed that the image companies have o f chain o f custody cert if icat ion is probably related to factors such as company type, size, and even location. Results from questionnaires mai led to companies were described in Chapter 4. They exhibit diverse information about different aspects o f chain o f custody cert if icat ion such as adoption levels , types o f certified product l ines, customers o f cert if ied products, preferred cert if icat ion bodies, and perceived and expected benefits and costs o f chain o f custody cert if ication. This information w i l l be useful in understanding key aspects o f chain o f custody cert if ication and may help direct further research and development o f this topic. Information gathered by telephone interviews wi th cert i f icat ion bodies was very useful in complementing the information obtained from companies. It was especial ly important in understanding the costs o f the process and how they relate to other aspects o f chain o f custody cert if ication. Information gathered in this study w i l l be discussed wi th in the context o f the literature related to this topic and the objectives o f this study: 1. To assess the current and expected adoption levels o f chain o f custody cert if ication for the Nor th A m e r i c a n pr imary wood industry; 2. To assess the level o f knowledge and perceived benefits and costs that non-certif ied companies have about chain o f custody cert if ication; 3. To examine benefits and costs certified companies obtained from the process and the technologies they use to track certified material source. 71 5.1. ADOPTION AND KNOWLEDGE LEVELS AND TECHNOLOGIES 5.1.1. The Influence of Benefits on Adoption Levels Current and future adoption levels indicate that approximately ha l f (51%) o f the pr imary wood product companies from Canada and the Uni t ed States w i l l be chain o f custody certified wi th in the next five years. Thir ty-nine percent o f the companies were already chain o f custody certified at the time o f this study and 12% were planning on becoming cert if ied. A n obvious question is whether there are any factors that may influence/change the adoption levels o f chain o f custody cert if ication. The benefits accrued from chain o f custody cert if ication seem to play a major role in whether or not a company w i l l become certified. The comment o f one non-certif ied respondent illustrates this point: "So far, consumers have not indicated a wi l l ingness to pay more for certified products. W h e n they w i l l do so, we w i l l part icipate." Interestingly, non-certif ied companies identif ied a lack o f benefits as the most important reason why they are not becoming certified (Figure 4-15). Benefits for cert if ied companies in the form o f market ing incentives are, in fact, an important part o f what forest cert if ication proposes (Upton and Bass 1995). However , many chain o f custody certified companies seem to be disappointed by the lack o f benefits from the process. A certif ied respondent illustrates this idea: "So far, I can see no benefits for sales [of certified products] - the most important reason to go through it [i.e. chain o f custody cert if icat ion]." Another certified respondent commented: "We have been frustrated wi th our chain o f custody cert if ication because it has not resulted in access to new markets or access to certified woodlands." The gaining o f benefits from chain o f custody cert if icat ion by certified companies is an important and useful way o f promoting chain o f custody certif ication and helping to increase its adoption. 5.1.2. Communication and Future Adoption Levels Cha in o f custody certif ication is a concept that was originated in order to address society 's concern wi th the degradation o f natural resources and, thus, it a imed to improve forest 72 management (Fanzeres and V o g t 2000, Up ton and Bass 1995). Some authors defend that the dissemination o f concepts and ideas l ike chain o f custody cert i f icat ion is nothing more than a marketing process (Fine 1981, Ko t l e r and Roberto 1989). F ine (1981) also defends that socia l ly beneficial ideas w i l l f ind increased efficacy in their efforts to educate target audiences through marketing strategies. In a broad sense, marketing is the dissemination o f information and education about a product, service, or idea (Fine 1981). A c c o r d i n g to Fine (1981), no matter the product being marketed, it is important to communicate information about the benefits o f the product/idea to the consumer. Cer t i f ica t ion bodies stated that they usual ly provide educational programs as a means o f helping companies to obtain benefits from chain o f custody cert if ication. These programs provide assistance and clar i f icat ion about chain o f custody cert i f icat ion. The fact that companies seem to be more knowledgeable about aspects o f chain o f custody certif ication covered by these educational programs (Figure 4-8) indicates that these programs seem to be effective. However , it may also indicate that companies are searching for more information on this topic. Several respondents stated that they know nothing or l i t t le about chain o f custody cert if icat ion, wh i l e others requested more information about it. Shibutani (1966) cited by Fine (1981) defends that the communicat ion o f an idea/concept must contain relevant information to the group being targeted. He defends that the lack o f relevant information w i l l either make the group take whatever information it can get or it w i l l create it. Thus far, cert if ication organizations are the main source o f information on chain o f custody cert if icat ion. It is important to identify what types o f information companies are demanding, as w e l l as to identify the most efficient way o f communica t ing these ideas. The use o f a marketing approach may prove to be a very efficient way o f transmitting information about chain o f custody cert if icat ion, wh ich may in turn pos i t ive ly affect its adoption. 73 5.1.3. Tracking Technologies A n important technical aspect o f chain o f custody is the capacity to track material source in any phase o f the manufacturing process and at any level o f the supply chain. Cer t i f ied companies identif ied paint daubs as the most used technique for t racking material source (Figure 4-19), wh ich is in accordance to Groves et al . (1996). Groves et a l . (1996) also indicated that barcode labels were a commonly used technology and respondents conf i rmed this trend (Figure 4-19). 5.2. B E N E F I T S A N D C O S T S AS A F U N C T I O N O F C O M P A N Y T Y P E 5.2.1. Expected versus Perceived Benefits Cert i f ied and non-certif ied companies demonstrated s imi la r attitudes wi th respect to the benefits o f chain o f custody cert if ication; on average, responses from both types o f companies ranged from disagreement to a lack o f opinion on a number o f statements related to benefits (Figure 4-25). In general, non-certified companies tend to have a more negative v i ew o f the benefits o f chain o f custody cert if ication. A s one non-cert if ied respondent stated: "There are no benefits. C h a i n o f custody certif ication is only an effort to appease environmental groups." The fact that, on average, cert if ied companies do not perceive that they are rece iv ing benefits from chain o f custody cert if ication does nothing to change this image. W h y are certified companies not receiving benefits from chain o f custody certif ication? One possible explanation is the fact that companies may be expecting direct benefits when, in fact, most o f the benefits are indirect. A comment from a cert if ied respondent supports this c l a im: "There real ly have not been tangible short term benefits [from chain o f custody cert if icat ion]." Investments in responsible activities l ike forest cert i f icat ion usual ly improve the reputation o f a f i rm, wh ich may result in improved competi t ive advantage and, thus, in increased prof i tabi l i ty (Mi l e s and C o v i n 2000). In other words, the benefits associated wi th chain o f custody cert if ication are usual ly both long-term and indirect. 74 Immaturity o f the market for certified wood products may be another explanation for the perceived lack o f benefits. A c c o r d i n g to Humphries et a l . (2001), market immaturi ty is responsible for the lack o f premium prices that most certified companies are ver i fy ing . Premium prices are a direct benefit and are generally thought o f as the main benefit from chain o f custody cert if ication. A certified respondent confirmed this notion: "Cha in o f custody cert if icat ion is a failure unt i l there is a market dr iven demand for f inished cert if ied products. (...) W e do believe in chain o f custody cert if ication, but we have no economic reason for this op in ion ." Another certified respondent complements this line o f th inking: " [Chain o f custody cert if icat ion provides] N o premium, no advantages, no market share. [Only] Higher costs [and] more paperwork." The lack o f premium prices for certified products helps to perpetuate the image that chain o f custody cert if icat ion does not br ing companies any benefits. It is necessary to clar i fy the types o f benefits resulting from chain o f custody certif ication so that companies do not have misguided expectations about these benefits. The long term and indirect nature o f benefits from chain o f custody cert if icat ion as w e l l as the immaturi ty o f the market for certified forest products are leading forest cert if ication to become a necessary factor; companies are having to consider forest cert i f icat ion in order to maintain their competitiveness. The image that direct and immediate benefits w o u l d result from chain o f custody cert if ication gave companies the idea that once they became certified they w o u l d necessarily have posit ive and vis ib le results. In fact, the first companies to explore cert if icat ion as a market tool ver if ied benefits this way. Seven Islands L a n d Company from M a i n e and C o l l i n s Pine Company from Oregon are good examples o f early entrants that obtained almost immediate and posi t ive results from forest cert if ication (Knudson 1995). A s more companies became chain o f custody cert if ied it became clear that these successful stories w o u l d not be a common rule. Nevertheless, companies were s t i l l ver i fy ing considerable pressure from society and environmental groups. Even though these pressures may s t i l l be an important factor in inf luencing companies to become chain o f custody certif ied, most companies do not know i f or expect that their certified status w i l l prevent confl ict wi th 75 environmental groups or improve their communicat ion wi th social groups (Figure 4-25). One possible explanation may be the great gap that exists among the ideology o f companies and environmental groups; both groups disagree greatly on how environmental related issues should be addressed. One non-certif ied respondent illustrates this idea: " I f adopting chain o f custody cert if ication w o u l d place an end to the continual attack by environmental groups (...), industry w o u l d incur the costs and move ahead. The truth is that opposi t ion to harvesting wants a zero cut and w i l l not let up unt i l industry is dead." 5.2.2. Costs and Company Size Costs o f chain o f custody certif ication were always considered to be one o f the major problems o f the process (Upton and Bass 1995, V l o s k y and Ozanne 1995, Groves et a. 1996, Hansen 1997, Hansen and Jus l in 1998, Estey 2000). Information that cert i f icat ion bodies provided on the average range o f costs for chain o f custody assessments, annual audits, and cert if ication renewals every five years show that chain o f custody cert if icat ion is not as expensive as it is bel ieved to be. However , the costs o f implement ing chain o f custody for a company are seem to be h igh, especial ly for smaller companies that do not have quali ty management systems in place. A c c o r d i n g to certif ication bodies, smal l companies are the ones that usual ly verify higher implementation costs. The development o f methods that a im to reduce costs may be the solut ion to one o f the major problems o f chain o f custody cert if ication. Cer t i f ica t ion bodies may have found an answer; they are s impl i fy ing and making the implementat ion o f chain o f custody cert if ication less expensive by t rying to adapt to whatever systems companies already have in place. 5.2.3. The Effect of Company Type on Benefits The cluster analysis o f perceived and expected benefits indicated an interesting trend: a possible relationship between attitudes towards benefits from chain o f custody cert if icat ion and certain characteristics o f companies, especial ly company size. Moreover , costs o f implementing 76 and maintaining chain o f custody may be a major factor affecting the way companies perceive benefits (Figure 5-1). Cluster 1 was composed o f smaller companies when compared to the other two clusters (refer to Table 4-17). O n average, companies in this cluster disagree that chain o f custody cert if ication w i l l br ing them any benefits. This fact may indicate that smaller cert if ied companies are not obtaining any benefits from chain o f custody cert if icat ion, wi th possible explanations being the high costs o f implementing chain o f custody for these companies and a general lack o f funds for the promotion o f their certified products. The interviewed cert if icat ion bodies explained that smal l companies have higher implementat ion costs when compared to large companies. This happens because small companies usual ly do not have a quali ty management system in place, and the implementation o f a t racking system can be very expensive. Smaller companies also have less, i f any, funds available for promotion and market ing campaigns o f their cert if ied products. Promot ional campaigns are important to communicate the characteristics o f a product to customers. They may result in several benefits to the companies, such as the abi l i ty to command higher prices in the marketplace, to increase demand, and to differentiate a product (Beckman et a l . 1982). Thus, the lack o f funds for promot ion and market ing campaigns may decrease their chances o f achieving the desired benefits from chain o f custody cert if ication. Larger companies were allocated into the remaining two clusters. A group o f larger companies that have no opinion about the benefits o f chain o f custody cert if icat ion occur in Cluster 2 (Table 4-17). Companies in this cluster may have one o f the fo l l owing attitudes: (1) the company has not decided what to think about chain o f custody cert i f icat ion; or (2) they do not believe that chain o f custody certif ication is an important issue. The comment o f one non-certif ied company belonging to this cluster illustrates this idea: " W e are currently watching to see what the market demands. W e have ISO 14001 cert if icat ion, but have decided to wait to see which land based certif ication scheme gains the most momentum." In fact, this cluster has the smallest proport ion o f certified companies and it is also the largest cluster o f the three. This may be an interesting target group for the promotion o f chain o f custody cert i f icat ion. 77 The other group o f larger companies belongs to Cluster 3. O n average, companies in this cluster agree that chain o f custody cert if ication can br ing them some benefits (Table 4-17). Interestingly, this was the cluster wi th the greatest proport ion o f cert if ied companies. A c c o r d i n g to the cert if ication bodies, large companies have lower costs o f implement ing chain o f custody because they usual ly have a quali ty management system established. Cer t i f ica t ion bodies also explained that large companies invest more in marketing and promot ional campaigns o f their certified products, wh ich may help these companies to verify the potential benefits o f chain o f custody cert if icat ion. 3 Clusters Smaller Companies i Cluster 1 d i s a g r e e w i t h b e n e f i t s t °/o o f U S c o m p a n i e s Larger Companies Cluster 2 I h a v e no o p i n i o n • 4* % o f c e r t i f i e d c o m p a n i e s Cluster 3 i - a g r e e w i t h b e n e f i t s - t % of c e r t i f i e d c o m p a n i e s - t °/o Of C a n a d i a n c o m p a n i e s Figure 5-1: Company type and perception of benefits. 5.2.4. Influence of Company Size on Certification Status The discr iminant function analysis confirmed the trend indicated in the cluster analysis. The classif icat ion functions o f the discriminant function analysis showed that the greater the number o f product lines and number o f employees that a company has, the greater the l i ke l ihood o f that company being chain o f custody certified. This indicates that the cert if icat ion status o f a 78 company may be linked to the size of the company. However, it is necessary to be careful when determining which variables are to be used to measure company size. In the case of this analysis, sales revenues of companies, which is often considered a measure of company size, was not helpful in separating chain of custody certified and non-certified companies. The fact that sales revenue is not a determinant variable of the certification status of a company may indicate that characteristics related to the manufacturing process of the company, like number of employees and number of product lines, may be the most determinant variables. Usually, the more complex the manufacturing process of a company, the more organized that company has to be in order to remain competitive. Thus, these companies are more likely to have good manufacturing and quality control systems in place. As showed earlier, the existence of some type of a quality management system facilitates the implementation of chain of custody certification and also decreases the costs of certification for that company. 5.3. R E S E A R C H L I M I T A T I O N S A N D S U G G E S T I O N S 5.3.1. Telephone Interviews with Certification Bodies Accredited certification bodies were interviewed in order to complement the information collected from companies. The telephone surveys were designed based on the mail surveys for companies in order to collect the same type of information about chain of custody certification. Even so, it was expected that interesting information would be collected because it came from a group with different points of view about this topic. Thus, it would be possible to compare information and attitudes from the two groups. The telephone surveys were conducted during the implementation phase of the mail questionnaires for companies. However, after analyzing the data of both surveys, it became clear that the telephone interviews with certification bodies should have been done before the implementation of mail questionnaires. This way, some of the data collected in the telephone surveys could have provided additional guidance in the design of the questionnaire for companies. 79 Fortunately, this course of action did not result in any serious problems with this study. Questions regarding costs of chain of custody certification were most affected. Specifically, the ranges of costs presented in the questionnaire were off, which resulted in lack of precision on information regarding the costs of the process. However, the combination of data on costs from both surveys made it possible to collect some of the information sought in this study. It also rendered good insights in the comparison of data from both surveys. A suggestion on further studies on this topic would be to include these types of interviews as part of the exploratory research. They provide clarification and useful insights that can be of great assistance in the design of questionnaires. 5.3.2. Classification Functions Classification functions were one of the outcomes of the discriminant function analysis. These types of functions are used to predict group membership and can be a useful tool when preparing strategies for the promotion of chain of custody certification. Information on the types of companies that are more likely to become certified will help to identify better ways of influencing companies towards chain of custody certification. The classification functions for the data in this study presented an acceptable success rate; however, it should be used carefully when a great precision of future group membership is necessary. Other discriminant variables could be included in the analysis in order to improve the success rate of these functions. Suggestions for further studies include the addition of a variable specifying the number of manufacturing facilities for each company and other variables that can measure the complexity of manufacturing processes. 80 6. C O N C L U S I O N C h a i n o f custody certif ication is exerting a new pressure over pr imary w o o d products companies. M o r e than ever, companies are having to consider this issue and make decisions on whether or not adopt this program. For this, they usual ly seek information about the implementat ion o f chain o f custody cert if ication, inc luding descriptions o f the characteristics, requirements o f the process, costs and benefits. However , l i t t le information can be found on these aspects o f chain o f custody cert if ication, wh ich may be affecting the adoption levels for this program. Current ly , 39% o f the pr imary wood products companies from Canada and the Uni ted States are chain o f custody certified, 12% are planning on implement ing chain o f custody strategies wi th in the next five years, and 4 9 % have no intention o f becoming cert if ied in the near future. It seems that the adoption levels o f chain o f custody cert i f icat ion are very much connected to the idea o f obtaining benefits from this process. O n average, cert if ied companies do not perceive that they are receiving benefits from chain o f custody cert i f icat ion, wh ich helps to perpetuate the idea that chain o f custody cert if ication is not effective. The image that chain o f custody certif ication does not br ing companies any benefits may be the result o f mis leading information and expectations. Companies usual ly expect premium prices and other direct benefits from chain o f custody cert i f icat ion, when in reali ty, most o f the benefits are indirect and long-term. M o r e effective communicat ion strategies should be used to make companies aware o f the real benefits o f chain o f custody cer t i f icat ion. Communica t ion and marketing strategies may also be the key to better dissemination o f the concept o f chain o f custody cert if ication. A n understanding o f the types o f information that pr imary wood product companies are demanding w i l l a l low cert i f icat ion bodies to convey the most relevant information to this target group. Thus, the use o f a market ing approach may be a very effective way o f educating companies about the concept o f chain o f custody certif ication and increasing its adoption level . 81 According to the results of the cluster analysis, the way that primary wood products companies perceive benefits of chain of custody certification is related to the size of the company and its location. In general, smaller companies do not perceive that they are receiving benefits from chain of custody certification as do a higher proportion of American companies. Larger companies are divided into two groups: one that has no opinion about the benefits from chain of custody certification and another that agrees that chain of custody certification can bring them benefits. The group of larger companies that has no opinion about benefits of chain of custody certification had the lowest proportion of certified companies, which makes this group an interesting target group for the promotion of this concept. The group of larger companies that agrees that chain of custody certification can bring them benefits had the highest proportions of certified and Canadian companies. Company size is also related to two other aspects of chain of custody certification: implementation costs and the certification status of a company. The larger the company, the smaller the implementation costs of chain of custody certification tend to be. Large companies usually have quality management systems in place, while small companies do not. Thus, small companies end up having higher implementation costs. Results of the discriminant function analysis indicated that the larger the company, the higher the chance of that company being chain of custody certified. However, only measures of company size related to the manufacturing process seem to be effective in indicating its certification status. Companies with complex manufacturing processes are more likely to have quality management systems in place, facilitating the implementation of chain of custody. Chain of custody certification is a broad topic that can be affected by several different variables. This study concentrated on just some of the aspects concerning chain of custody certification. Moreover, chain of custody certification is in constant evolution due to the fact that it is a concept in a relatively early phase of its development. Further studies concentrating on different characteristics of chain of custody certification for primary wood products companies would be very useful in the guidance of further research on this topic. 82 Among the information collected in this study, the result that may be the most effective in advancing the development of chain of custody certification in a relative short time is the use of marketing strategies to educate companies about this concept. As a closing remark, the comment of one certified respondent summarizes the problems that chain of custody certification faces: "The biggest problem [of chain of custody certification] is the lack of understanding on the simplicity of the system. Many fear a great deal of additional work, but do not have an understanding of the requirements. Also, the lack of visible benefits is discouraging and prevents people from following through." 83 7. R E F E R E N C E S Albr igh t , B . 1998. C B S T V Equipment 'Bone Y a r d ' E l imina ted . Au tomat ic I .D . News , p.22 and 24, September, 1998. A R I C 2001. Encyc loped ia o f Sustainable Development. Atmosphere , Cl imate & Environment Information Program, Manchester Met ropo l i t an Univers i ty . ht tp: / /www.doc.mmu.ac.uk/ar ic/ Armst rong , J .S. and Overton, T .S . 1977. Est imat ing Non-Response B ia s in M a i l Surveys. Journal o f Marke t ing Research 14: 396-402. August 1977. Babbie , E . 2000. The Practice o f Socia l Research. 9 t h Ed i t ion . Wadswor th /Thomson Learning , Belmont , C A . Beckman et a l . 1982. Foundations o f Marke t ing . Th i rd Canadian E d i t i o n . H R W . B o r k , J . R . 2001. Private trading exchanges jump-start supply-chain eff ic iency without mess. In: Enterprise Strategies. Infoworld: 86. A p r i l 16, 2001. w w w . i n f o w o r l d . c o m Cer t i f ied W o o d Products Marke t 2000. Cer t i f ica t ion. Introduction to cert i f icat ion: October 2000. www.scat tercreek.com/~l ize l l Coddington , W . 1993. Environmenta l Marke t ing : Posi t ive Strategies for reaching the Green Consumer. M c G r a w - H i l l , Inc. Cross , L . 1999. L i n k i n g up to manage supplies. Graphic Ar t s M o n t h l y : 54-58. August 1999. Di lemmas , D . A . 1978. M a i l and Telephone Surveys: The Tota l Des ign Me thod . A W i l e y -Interscience publ ica t ion, N e w Y o r k . D i l l o n , W . R . and Golds te in , M . 1984. Mul t ivar ia te A n a l y s i s , Methods , and Appl i ca t ions . John W i l e y and Sons, Toronto. E l l i o t , C . and Donovan R. Z . 1996. Introduction. In: Cer t i f ica t ion o f Forest Products: Issues and Perspectives. Island Press. Washington, D . C . E r v i n et a l . 1996. The Accredi ta t ion Process. In: Cer t i f ica t ion o f Forest Products: Issues and Perspectives. Island Press. Washington, D . C . Estey J . S. 2000. Cha in o f custody as an impediment to cer t i f icat ion. In: Forest Cer t i f icat ion: Roots , Issues, Challenges, and Benefits. K r i s t i i n a A . V o g t [et al.] School o f Forestry and Envi ronmenta l Studies, Y a l e Univers i ty , N e w Haven , Connect icut . Fanzeres, A . and Vogt , K . 2000. Or ig ins o f the Concept o f Forest Cer t i f ica t ion . In: Forest Cer t i f ica t ion: Roots , Issues, Challenges, and Benefits . Y a l e Unive r s i ty , N e w Haven , Connecticut . C R P Press. F ine , S . H . 1981. The Marke t ing o f Ideas and Soc ia l Issues. Praeger Publ ishers , N e w Y o r k , N Y . Forest Source 2002. Directories , forestsource.com. http:/ /www.forestsource.com 84 Forsyth , K . , Ha ley D . , and K o z a k R . 1999. W i l l consumers pay more for certified wood products? Journal o f Forestry, 97(2): 18-22. F S C 2001. F S C Accred i t ed Cert i f icat ion Bodies . Document 5.3.1 A p r i l 6, 2001. h t tp : / /www.fscoax.org/html/5-3- l .html Furnas et a l . 2000 .Analys i s o f Forest Cer t i f icat ion Approaches. In: Forest Cer t i f ica t ion: Roots, Issues, Challenges, and Benefits. Y a l e Univers i ty , N e w Haven , Connect icut . C R P Press. Hammond , S. A . and S locum, J. W . Jr. 1996. The impact o f pr ior f i rm f inancia l performance on subsequent corporate reputation. Journal o f Business Ethics 15(2): 159-165. Hansen et a l . 2000. Forest Cer t i f icat ion Update for the E C E Reg ion , Summer 2000. Geneva T imber and Forest Discuss ion Papers. E C E / T I M / D P / 2 0 . Un i t ed Nat ions , N e w Y o r k and Geneva, 2000. http:/ /www.unece.org/trade/t imber/docs/cert if ication/dp-20.pdf Hansen, E . 1997. Forest Cer t i f icat ion and its Ro le in Marke t ing Strategy. Forest Products Journal 47 (3): 16-22. Hansen, E . 1997. Forest cert if ication and its role in marketing strategy. Forest Products Journal 47(3): 16-22. Hansen, E . and Jus l in , H . 1998. Markets and marketing o f cert if ied products. In: The status o f forest cert if ication in the E C E region. Geneva T imber and Forest Discuss ion Paper. www.unece.org/trade/t imber/docs/cert if ication/dp-14.pdf Hansen, E . and Punches, J . 1999. Deve lop ing markets for cert if ied forest products: A case study o f C o l l i n s Pine Company. Forest Products Journal 49(1):30 - 35. Humphries , S., V l o s k y , R . P . , and Carter, D . 2001. Cer t i f ied W o o d Products Merchants in the Un i t ed States: A Compar ison Between 1995 and 1998. Forest Products Journal 51(6): 32 - 38. I S O 2000. I S O / T C 207 Frequently A s k e d Questions, http:/ /www.tc207.org/faqs/faqs_main.html Jenkins, M . B . and Smith , E . T. 1999. The Business o f Sustainable Forestry: Strategies for an Industry in Transi t ion. Island Press. Johnson, B . R . and M c C a t t y , P . A . 1998. Securi ty 's A m a z i n g Recovery . Securi ty Management p. 31-38, October 1998. Johnson, P . 2002. Personal communicat ion. Program Manager , Forest Products M a r k i n g Program, Forest Products Group, Canadian Standards Assoc i a t i on , Miss i ssauga , O N . Kanuk , L . and Berenson, C . 1975. M a i l Surveys and Response Rates: A Literature Rev iew. Journal o f Marke t ing Research 12: 440-53. November 1975. Knudsen , J . 1995. U s i n g third-party certif ication to market forest products. Structural Changes wi th in the G l o b a l Forestry Sector. Industry Focus Session o f the 4 9 t h A n n u a l Mee t ing o f the Forest Products Society, Port land, Oregon, June 1995. Kot le r , P . and Roberto, E . L . 1989. Socia l Marke t ing . The Free Press, N e w Y o r k . 85 L e M a y , V . 2001. F O R E S T R Y 531 - A p p l i e d Mul t ivar ia te Statistics. Facul ty o f Forestry, The Univers i ty o f B r i t i s h C o l u m b i a , Vancouver , B C . L y k e , J . and Fletcher, S. R. 1992. Deforestation: A n Ove rv i ew o f G l o b a l Programs and Agreements. C R S Issue B r i e f for Congress. The Na t iona l C o u n c i l for Science and the Environment , ht tp: / /www.cnie.org/nle/for-4.html M a n l y , B . F . J . 1994. Mul t ivar ia te Statistical Methods: A Pr imer . Second Ed i t i on . Chapman & H a l l / C R C Press, B o c a Raton, F L . M c D o u g a l l , D . 1999. Into the new mi l l enn ium: Technology sparks a revolut ion. W o o d technology: 54-57. A p r i l 1999. M e n o n , A . and M e n o n , A . 1997. Enviropreneuria l marketing strategy: The emergence o f corporate environmental ism as market strategy. Journal o f M a r k e t i n g 61(1): 51-67. Mentzer et a l . 2001. What is supply chain management? In: Supply C h a i n Management. Sage Publ icat ions , Inc. M e r i d i a n Institute 2001. Comparat ive Ana lys i s o f the Forest Stewardship C o u n c i l ® and Sustainable Forestry In i t i a t i ve® Cert i f icat ion Programs: Execut ive Summary. Consensus Statement on Salient Similar i t ies and Differences Between the T w o Programs; Based on Programmatic Mater ia l Ava i l ab l e as o f June 2001. October 2001. h t tp : / /mad ison .mer id .o rg /compar i son /FSC_SFI_Comp_Analys i s -Exec_Summary .pdf M i l e s , M . P . and C o v i n , J . G . 2000. Environmenta l marketing: a source o f reputational, competi t ive, and f inancial advantage. Journal o f Business Eth ics 23: 299-311, 2000. M i l l e r , D . C . 1977. Handbook o f research Des ign and Soc ia l Measurement. T h i r d Ed i t i on . D a v i d M c K a y Company, Inc., N e w Y o r k . M o r r i s , R . N . 1998. Evidence . International Rev i ew o f L a w Computers & Technology 12(2): 279-285, 1998. M S N B C 2000. C D Universe Evidence Compromised . June 7, 2000, 5:00 P M P T . h t tp : / /zdnet .com.com/2100- l l -502482.h tml N i x , N . W . 2001. Supply Cha in Management in the G l o b a l Environment . In: Supply C h a i n Management. Sage Publ icat ions, Inc. Ozanne, L . K . and Smi th , P. M . 1995. Envi ronmenta l ly cert if ied w o o d products: what do consumers think? In: Structural Changes wi th in the G l o b a l Forestry Sector. Industry Focus Section o f the 4 9 t h A n n u a l Mee t ing o f the Forest Products Society, Oregon, Port land, June 1995. Ozanne, L . K . and V l o s k y , R. P . 1996. W o o d products environmental cert i f icat ion: The Uni ted States perspective. The Forestry Chronic le 72 (2): 157-165. Ozanne, L . K . and V l o s k y , R. P. 1997. Wi l l ingness to pay for environmental ly certified wood products: a consumer perspective. Forest Products Journal , 47(6): 39-48. P E F C 2001. Abou t the Pan European Forest Cert i f icat ion, http:/ /www.pefc.org/about4.htm 86 Robins , N . and Roberts, S. 1998. Environmental Respons ib i l i ty in W o r l d Trade: The Workbook . A B r i t i s h C o u n c i l International Conference 6-9 September 1998, London . ht tp: / /www.i ied.org/smg/pubsworkfin.html Rotherham et a l . 2000. Compar ison o f M a i n Cer t i f ica t ion Systems o f Interest in Canada. Cer t i f ied W o o d Products Market , h t tp : / /www.ka lama.com/~l ize l l / Sample ,V . A . 2000. Forest Management Cer t i f icat ion: Where we are, and how d id we get here? Forest His tory Today. Spr ing 2000. ht tp: / /www.lib.duke.edu/forest / index.html Sheth, J. N . and Parvatiyar, A . 1995. E c o l o g i c a l Imperative and the Ro le o f Marke t ing . In: Envi ronmenta l Marke t ing : Strategies, Practice, Theory, and Research. The Hawor th Press, Inc. S inc la i r , S. 1992. Forest Products Marke t ing . M c G r a w - H i l l Series in Forest Resources. M c G r a w -H i l l , Inc. S I S A 2002. Bonferroni Correct ion Onl ine . Adjustment for M u l t i p l e Comparisons . S imple Interactive Statistical Ana lys i s , http://home.clara.net/sisa/bonhlp.htm Smar tWood 2001. Chain-of -Custody Guidel ines , ht tp: / /www.smartwood.org/guidelines/chain-of-custody-guidelines.html Stevens, J . , A h m a d , M . , and Rudde l l , S. 1998. Forest products cert i f icat ion: A survey o f manufacturers. Forest Products Journal 48 (6): 43-48. Tabachnick, B . G . and F i d e l l , L . S . 2001. U s i n g Mul t ivar ia te Statistics. Four th E d i t i o n . A l l y n and Bacon , Pearson Educat ion Company, Needham Heights , M A . T e i s l , M . F . et a l . 2002. Consumer Reactions to Envi ronmenta l Labels for Forest Products: A Pre l iminary L o o k . Forest Products Journal 25(1): 44 - 50. Up ton , C . and Bass S. 1995. The Forest Cer t i f ica t ion Handbook. St. L u c i e Press. De l ray Beach, F L . U N / E C E Timber Commit tee 2000. ECE/FAO Forest Products Annual Market Review, 1999-2000. T imber B u l l e t i n , V o l . L I I I , E C E / T I M / B U L L / 5 3 / 3 . www.unece.org/trade/t imber/docs/rev-00/13.pdf V i a n a et a l . 1996. Cer t i f ica t ion o f Forest Products: Issues and Perspectives. Island Press. Washington, D . C . V l o s k y , R. P. and Ozanne, L . K . 1995. Chain-of-custody for environmental ly certified wood products. In: Proc. o f the W o o d Technology Show and C l i n i c , Por t land, Oregon. M i l l e r Freeman Pub. , San Francisco, C A . V l o s k y , R . P . , Ozanne, L . C . , and Fontenot, R . J . 1999. A conceptual M o d e l o f U S consumer wil l ingness- to-pay for environmental ly certified w o o d Products. Journal o f Consumer Markets 16(2): 122 - 136. V o g t et a l . 2000. Issues in Forest Cer t i f icat ion. In: Forest Cer t i f ica t ion: Roots , Issues, Challenges, and Benefits . Y a l e Univers i ty , N e w Haven , Connect icut . C R P Press. 87 Wasik , J. F . 1996. Green Marke t ing and Management: A G l o b a l Perspective. B l a c k w e l l Publishers, Inc. Wil tberger , C . 1999. Eco-f r iendly labels attract buyers. F D M , Furniture Des ign and Manufactur ing, September 1999: 58-62. W o o d Technology 1999. 1999 Directory o f the W o o d Products Industry. P r imary Manufacturers Business Trave l Ed i t i on . M i l l e r Freeman. A Uni t ed N e w s & M e d i a publ ica t ion, San Francisco, C A . 88 A P P E N D I X I: M A I L Q U E S T I O N N A I R E F O R C O M P A N I E S Survey on Chain of Custody Certification for Primary Wood Products Companies in North America This survey concerns primary producers of chip and veneer logs, lumber, timbers, and veneers. If this does N O T apply to your company, please check the following box and return in the addressed envelop included. D Does NOT apply In answering the questions of this survey, please keep the following definition in mind: Chain of custody certification: Assurance granted by a third-party certification organization that the wood purchased really comes from an environmentally certified source. Section 1 - Adoption Level and Level of Knowledge 1. Is your company chain of custody certified? • Yes (Please go to Section 2 - page 2) 4. Does your company plan on becoming chain of custody certified within the next 5 years? • Y^ es • No (Please, go to question 7 - page 2) 5. If your company has plans to achieve chain of custody certification within the next 5 years, which of the following accredited certification bodies would likely be used? (Please check all that apply.) • SmartWood (FSC) • Silva Forest Foundation • KPMG • (FSC) Other • SGS - Qualifor • Canadian Standards • PricewaterhouseCoopers (FSC) Association (Please specify) • Scientific • Sustainable Forestry • Don't know Certification Initiative (AF&PA) System (FSC) Please rate your level of knowledge for each of the following steps in chain of custody certification? (Select one for each case.) V E R Y S O M E W H A T N O T V E R Y N O T A T A L L K N O W L E D G E A B L E K N O W L E D G E A B L E K N O W L E D G E A B L E K N O W L E D G E A B L E a) Segregation of certified raw ' C ' QL-V- :. • . . . -material ' . : • •.. • . - .,.vv-- .• b) Implementation of tracking • • • • technologies and methods | c) Chain.of custody assessments Annual Certifies 5; years)' d) audits • • • • e) •Gertificat4brf1renewals.(every - • • • 3 -• 7. This question asks about the costs of chain of custody certification for a typical product line. Please give example(s) of product line(s) in your company and state the product that you will use to answer this question. Example(s) of product line(s) in your company: Product used to answer this question: a) What do you expect the total cost (in US dollars) of implementing chain of custody for a typical product line in your company to be (i.e. making the necessary changes)? • under $25,000 ! • $25,001 - • $50,001 - • $100,001 - • $150,001 - • $200,001 and i $50,000 $100,000 $150,000 $200,000 over b) What do you expect the total cost (in US dollars) of auditing chain of custody for a typical product line in your company to be? • under $10,000 • $10,001 - • $25,001 - • $50,001 - • $100,001 - • $150,001 and $25,000 $50,000 $100,000 $150,000 over 90 c) What do you expect the total cost per year (in US dollars) of maintaining chain of custody for a typical product line in your company to be (i.e. annual audits and renewals)? | • under $25,000 | • $25,001 - • $50,001 - 1 • $100,001 - • $150,001 - | • $200,001 and $50,000 $100,000 1 $150,000 $200,000 over 8. What do you expect the three most expensive factors to be when implementing chain of custody strategies in your company? (Rank from 1 to 3, with 1 being the most expensive.) a) segregation of raw material b) implementation of tracking technologies and methods at your manufacturing facility c) chain of custody assessments (on-site evaluation that leads to certification decisions) d) maintenance of certification conditions (annual audits + certification renewals every 5 years) e) other (Please specify) 9. Assuming that your company becomes chain of custody certified, please estimate the proportion of the total raw material used that would be from non-certified sources. % 10. Which of the following would you consider to be the customers of your company's chain of custody certified products? (Please check all that apply.) • industrial customers • end users / consumers • retailers • wholesalers • builders • architects and engineers • other (Please specify) 1. Which of the following benefits would you expect from chain of custody certification? (For each statement, please circle one number indicating your level of agreement.) CHAIN OF CUSTODY CERTIFICATION WILL PROVIDE M Y COMPANY WITH. 1 - Strongly agree 2 - Agree 3 - Neither agree nor disagree 4 - Disagree 5 - Strongly disagree better invenfory^coritrol.. \ •"'.,*.^^r/;- \V.••••'!' waste reduction. 1 increased profitability. . ii . ' ; -'-v. , ; : v-l; increased market share. 1 maintenance of market share. Cr" increased overall efficiency. 1 clearer information to investors 1 enhanced understanding of consumer markets. 1 improved communication with the government 1 improved communication with customers. 1 improved communication with social community •.groups;'"'.id reduced pressure from environmental organizations. 1 better public relations. 1 "2j 2 2" 2 ' - j -~2 2 2 2 2 ~2 2 ~2~ "3 • 3jV;r 3 " 3 3 3 3 3 3 3 ~3~ 4 •:. "4 .17; "4" "4 " 4 4 4 4 4 4 4" ""'5 '5." " ' " 5 " " - 5 ; " 5 " 5 5 5 5 5 5 ~ ~ 5 12. Can you think of any other benefits that chain of custody certification might bring to your company? Please specify. 13. If your company does NOT have plans to become chain of custody certified within the next 5 years, please rank the following reasons for making this decision in order of importance. (Please rank from 1 to 3, with 1 being the most important reason.) a) It will not bring any benefits for this company b) There is a lack of information about chain of custody certification. c) ; There is alack ofincentive from the.government;; • •• • -,•':;••, . •• •.-, d; The implementation cost of chain of custody certification is too high. .e) This,company already uses.wood.from"su'sta'ihably managedTorests. f) We do not agree with the idea of chain of custody certification. 91 g) It will riot'-affect this:company's market share.; STOP!!! The remainder of this survey concerns primary wood product manufacturing companies that are chain of custody certified. If your company does not manufacture primary wood products or is not chain of custody certified, please proceed to Section 4. Thank you! Section 2 - Company's Certification Information 1. Which of the following accredited certification bodies have certified your organization? (Check all that apply.) • SmartWood • SGS -Qualifor • Scientific Certification System • Silva Forest Foundation • Canadian Standards • other Association (Please specify) 2. Who are the customers for your company's certified products? (Check all that apply.) • industrial customers • retailers • architects and engineers • other • end users / consumers • wholesalers • builders (Please specify) 3. What types of wood does your company use to manufacture the certified products? (Check all that apply.) • softwoods • non-tropical • tropical hardwoods • other  hardwoods (Please specify) 4. Please provide the following information about the primary wood product line(s) (chain of custody certified and non-certified) that your company produces: Product Line Approximate sales revenue (in US dollars) of each product line in 2001 Is this product line chain of custody certified? | Proportion of certified | raw material used in i each product line 1. US$ • Yes • No 1 % 2. US$ • Yes • No % 3. US $ • Yes • No 1 % 4. us$ • Yes • No 1 % 5. Does your company supply all of its logs? a) How many suppliers of logs does your company have? # of suppliers • Yes (Please go to question 7) b) How many of these supply certified logs? # of suppliers of certified logs Which of the following technologies does your company use to track material source? (Please select all that apply.) • Paint daubs indicating the forest of origin, species, and volume. • Labels indicating the forest of origin, species, and volume. • Hammermarks made at the time of felling to identify the forest of origin. • Latshbacker tags - numbered plastic labels. • Barcode labels attached to the product. • Radio-frequency identification devices - pre-programmed computer chips. • Touch memories - battery-powered computer chips in a circular metal housing. • Other (Please specify) 8. This question asks about the costs of chain of custody certification for a typical product line. Please state the product that you will use to answer this question. Product used to answer this question: 92 a) What was the total cost (in US dollars) of implementing chain of custody for a typical product line in your company (i.e. making the necessary changes)? • under • $25,001 - • $50,001 - i • $100,001 - 1 • $150,001 - • $200,001 and | $25,000 $50,000 $100,000 ! $150,000 | $200,000 over b) What was the total cost (in US dollars) of auditing chain of custody for a typical product line in your company? • under • $10,001 - • $25,001 - • $50,001 - 1 • $100,001 - ! • $150,001 and $10,000 $25,000 $50,000 $100,000 $150,000 1 over c) What is the total cost per year (in US dollars) of maintaining chain of custody for a typical product line in your company (i.e. annual audits and renewals)? • under • $25,001 - • $50,001 - • $100,001 - • $150,001 - | • $200,001 and $25,000 $50,000 $100,000 $150,000 $200,000 | over Section 3 - Benefits and Difficulties Please rank the three greatest difficulties that your company faced when implementing chain of custody certification? (Please rank the following alternatives from 1 to 3, with 1 being the most difficult issue.) a) b) c) d) e) f) g) lack of information about the process lack of government collaboration high costs insufficient supply of certified wood material segregation employees' training other (Please specify) What benefits has chain of custody certification brought to your company? (For each statement, please circle one number indicating your level of agreement. CHAIN OF CUSTODY CERTIFICATION HAS PROVIDED MY COMPANY WITH. better inventory control. ... waste reduction. increased profitability ... increased market share. maintenance of market share ... increased overall efficiency. . clearer information to investors ... enhanced understanding of consumer markets. ... improved, communication with the government. , ... improved communication with customers. ... improved communicationiWith community groups. ... reduced pressure from environmental organizations. ... better public relations. 1 - Strongly agree 2 - Agree 3 - Neither agree nor disagree 4 - Disagree 5 - Strongly disagree 3. Can you think of any other benefits that chain of custody certification brought to your company? Please specify. Section 4 - Profile 1. Where is your company located? City/Town: State/Province: 93 Country: 2. Please indicate the approximate sales revenue of your company in 2 0 0 1 : US$ 3. What is the approximate number of employees in your company? # of employees 4. Please indicate the total number of product lines in your company: # of product lines 5. Would you like to make any additional comments about chain of custody certification? Thank you for your time and cooperation in answering this survey! If you would like a summary of the results of this survey, please include your name and address below, and it will be sent to you! Company name: Contact: Address: Please mail (addressed envelope included) or fax to Natalia Vidal at (604) 822-9104 94 APPENDIX II: TELEPHONE SURVEY FOR CERTIFICATION BODIES Certification Bodies Telephone Survey (INTRODUCTION) - C H E C K N U M B E R - Is this ? (name o f the organization) (IF N O T , T E R M I N A T E I N T E R V I E W W I T H , E . G . : I ' m sorry, I have the wrong number.) - This is from the Univers i ty o f B r i t i s h C o l u m b i a . I ' m ca l l ing from the Forest Products Marke t ing Group at the Facul ty o f Forestry. W e are conduct ing a Nor th A m e r i c a n research study in order to f ind out the current level o f knowledge and status o f chain o f custody cert if ication for the pr imary wood industry. So, our study includes those companies that manufacture their products from logs and organizations that d i rect ly deal w i th chain o f custody cert if ication l ike yours. Y o u were selected from a list o f accredited cert i f icat ion bodies provided by major cert if ication organizations. - Last week a letter was sent to you explaining a litt le about this study. D i d y o u receive it? (IF N O T —> I ' m sorry yours d idn ' t reach you . It was a br ie f letter we sent so that people wou ld know that we w o u l d be ca l l ing them.) - The questions I need to ask you should take up to 20 minutes. I want to add that I w o u l d be happy to answer any questions you might have about the study, either now or later, O K ? SECTION 1 (ADOPTION LEVEL) 1. First, I would like to ask you if your organization does chain of custody assessments? YES (GO TO QUESTION 3) 1 NO 0 Would you say that your organization is planning on working with chain of custody certification within the next 5 years? NO (TERMINATE) 0 YES 1 0> This is a survey for accredited certification bodies that do chain of custody assessments or are planning to work with it in the next 5 years. I would like to end the interview with some basic profile questions. (GO TO SECTION 4 - SKIP INTRO) 96 3. Which certification organization has accredited your institution? (DO NOT DO COC -» GO TO SECTION 2) (DO COC ) J ] 4. Could you estimate the number of primary forest products companies that are chain of custody certified by your institution at the present time? I'm referring only to those companies that manufacture their products from logs. COMPANIES Are there any primary forest products companies currently in the process of chain of custody certification? NO (GO TO SECTION 2) 0 YES 1 How many? COMPANIES SECTION 2 (COSTS) - Next I want to ask you about the costs of certification for companies interested in chain of custody. (FOR C E R T I F I C A T I O N BODIES T H A T DO NOT DO C O C U S E T H E E X P R E S S I O N S IN P A R E N T H E S I S ) 1. First, I want to ask you how your organization measures (plans to measure) the costs of chain of custody certification. For example, the unit used in forest management certification is dollars per hectare. Does your organization use some kind of unit for measuring the costs of chain of custody certification? N O (GO TO Q U E S T I O N 2) 0 Y E S i > UNIT: 1 2. What are the parameters used (that w i l l be likely used) by your organization to determine the price charged for chain of custody assessments, annual audits, and renewals? ( P A R A M E T E R S E . G . : # of product lines to be certified, size of the company, etc.) 97 3. What do you estimate the range of costs in US dollars to be for a chain of custody assessment? We don't need exact costs, just approximations. F R O M : US$ TO: US$ C O M M E N T S : 4. Could you estimate the range of costs in US dollars for each annual audit? F R O M : US$ TO: US$ C O M M E N T S : 5. How about the range of costs in US dollars of the certification renewal every 5 years? F R O M : US$ TO: US$ C O M M E N T S : 6. To finish the questions about costs, could you give me an estimate of the annual indirect costs in US dollars of implementing chain of custody certification for a company? Examples of indirect costs would be material segregation, implementation of new technologies to track the wood down, employee training, etc. US $ / Y E A R C O M M E N T S : SECTION 3 (BENEFITS) Next, I ' l l ask some few questions about the possible benefits that can result from chain of custody certification (FOR C E R T I F I C A T I O N BODIES T H A T DO NOT DO C O C U S E T H E E X P R E S S I O N S IN P A R E N T H E S I S ) 98 I am going to read to you 5 benefits that could possibly be generated from chain of custody certification. For each statement, please indicate whether you strongly agree, agree, have no opinion, disagree or strongly disagree. A C i R E E 1 " 2 1 - strongly agree 2 - agree 3 - no opinion 4 - disagree 5 - stronelv disaeree D I S A G R E E 4 5 " i. (a) First, do you strongly agree, agree, have no opinion, ' disagree or strongly disagree that chain of custody certification is providing (will-provide) companies with better inventory control? . . . ,t - ! (b) Do you strongly agree, agree, have no opinion, disagree or 1 2 3 4 5 strongly disagree that chain of custody certification is providing (wil l provide) companies with increased market share? (c) Do you think that chain of custody certification is helping 1 2 3 4 5 (wil l help) companies to maintain their market share? •••<••/• :-, . •-..•••••.! (d) Do you think that chain of custody certification is helping 1 2 3 4 5 (wil l help) companies to improve communication with stakeholder groups? ( S T A K E H O L D E R S E . G . : Stakeholders in this case include customers, investors, government, environmental groups, cojnmun2ties,_etc.) (e) D o y o u ' ^ 1 2 3 4 5 compani'esi.to-Hncrease^jth,eir,'-prqfitabili'l y ? 2. Can you think of any other benefit or benefits that chain of custody certification might bring to primary wood products companies? N O (GO TO Q U E S T I O N 3) 0 Y E S 1 3. Does (Wil l ) your institution provide support beyond certification in assisting certified companies to acquire these benefits? N O (GO TO S E C T I O N 4) 0 Y E S 1 V How? 99 4. Would you like to make any additional comments about chain of custody certification for primary forest products companies? SECTION 4 (DEMOGRAPHICS) - Okay, we have finished the technical questions. Now, to end the interview, I would like to ask you some basic profile questions. 1. In what city is your institution located? State/Province? Country? 2. Would you like to receive a summary of the results of this survey? N O ( T E R M I N A T E ) 0 Y E S 1 \ What is the complete name of your institution? Would you like to have your name included on the envelope? N O Y E S \ The address of your institution: The interview is complete. Thank you for your time and cooperation! Have a nice day! 100 A P P E N D I X III: C O V E R L E T T E R S A P P E N D I X IV: A N S W E R S OF T H E O P E N - E N D E D Q U E S T I O N S 106 S1Q10 - Can you think of any other benefits from chain of custody certification? (only non-certified companies answered this question) N o , there is no demand for this product. Should chain o f custody certif ication be implemented consistently throughout industry, then the "renegade" logging companies w o u l d be el iminated, and thus protecting the environment, balancing the competi t ion f ie ld , etc. M a y increase margins, but it is not l i ke ly because o f the industry compet i t ion. It may get us a couple o f better paying orders. A l l aspects are negative for small pr ivately owned companies. W e may be able to supply products that competitors cannot. M y friends wou ld have one more thing to tease me about. I believe that going to chain o f custody certif ication is an acknowledgment that we do not practice sustainable forest management, wh ich is ludicrous because it is poor business - a l l it does is confuse the consumer, mislead the publ ic . This is wrong - This is g iv ing up control o f private property to government and quasi government agencies. Whether government owns or controls, the results are s imi lar to private prop owner - government tax incentives are an unconsti tutional way o f ga in ing control o f private property - the elastic clause is stretched beyond reason. The added cost w i l l amplify the already high cost o f doing business in Eastern N Y , thus making the decis ion to close manufacturing operations easier. Lots o f paperwork and pain in the butt Use more paper so pulp is more valuable. W e feel that acceptance o f the "certified doctrine" w i l l lead to increased regulation, and ul t imately, damage the resource. There are no benefits. C h a i n o f custody certif ication is only an effort to appease environmental groups. They w i l l never stop. L o o k at the harvest on the Tungass Na t iona l Forest for example. S3Q3 - Can you think of any other benefits from chain of custody certification? (only certified companies answered this question) I f you make your l i v i n g in wood products you must be aware that the resource is manageable. It is necessary to assure that the resource w i l l survive as long as men survive. 107 It won't be successful unt i l more suppliers (logs) become cert if ied. Strengthened relationships wi th suppliers. Largest benefit is market access. It is too early to say as we have not been able to gain a consistent supply o f cert if ied raw material . N o t yet. I f the market develops, we w i l l be there in the first row. W e have been committed since the inception. To date we have experienced more frustration than benefits. W e remain committed and hope supply w i l l catch up in the future. A d d e d addit ional product lines/market awareness for our company. Employee morale - recruitment. N e w business (non-FSC) are customers o f l ike mind . Personal satisfaction. I don't think you truly understand what you are dealing wi th . I am one o f the first sourcing companies for F S C . A c t u a l l y , no other benefit than to help retailers to keep environmental extremers from chaining themselves to their displays! Some exposure in the marketplace. It gives U n c l e Sam one more chance to stick his nose in my business. It has created jobs for Col lege dombasses do lazy work for a l i v i n g . Largest hoax perpetuated on an industry in last 50 years (rivals E N R O N ) . Unique market niche. Deflect "big box" marketing. Proact ive leader in g rowing market. Enhance image in loca l environmental ly con. N e w markets for wood products and greater demand. N o , because we have not f i l l ed any chain o f custody cert if icat ion orders yet. Forced us to look at our material f low and create on paper a schematic product ion model . N o benefits whatsoever. _ The only area that we have found chain o f custody cert if ication useful is in having the cert if ication number. It has not increased our sales nor p rov ided us wi th a p remium product. W e are in the F S C certified business because large customers are in need. A t this time it not profitable for anybody - large shortage o f material . There are no benefits. 108 A b i l i t y to move products during s low times. N o t yet, have not sold any certified wood . Propaganda. Employee pride. There real ly have not been any tangible short term benefits. S 4 Q 5 - Any additional comments on chain of custody certification? (answers from both certified and non-certified companies) Cert i f ica t ion has helped U S to achieve sales to customers who demand F S C cert if icat ion. Otherwise, our non-cert if ied competitors w o u l d l i k e l y have an edge due to more competi t ive p r ic ing . A s mentioned earlier, we have not certified or labeled wood that we have processed p r imar i ly due to a l imi ted supply o f F S C wood . In question 2 (section 3) most o f the answers were in disagreement wi th the statement because I feel we have those issues i n control already - i f a company does not, it w o u l d force them to do so. The F S C chain o f custody cert if icat ion is a very cumbersome process. The cert if ication scheme from the SFI w o u l d be a much better process i f accepted. Cha in o f custody cert if ication is cumbersome and ul t imately does not change forest practices. There are real costs, many hidden, that you haven't asked about. Archi tects need to start wr i t ing "sustainable" specs, not just adding the words " F S C certified" in front o f the usual spec. I w o u l d l ike some information about it. The L E E D measurement system w i l l open the architect's desire to go "sustainable". Never heard o f chain o f custody cert if ication. Cer t i f ica t ion does nothing to improve forest sustainabili ty. I f the cer t i f icat ion movement should cause a shift away from wood , wh ich is environmental ly sound, to non-renewable, h igh energy substitutes, it w o u l d have a negative impact on the environment. W e have managed our timberlands in a responsible and sustainable manner for many decades. W e don't need any hypocr i t i ca l , self-serving environmental group to tel l us how to manage our lands according to their f lawed agenda. Consequently, we also don't need any burdensome, bureaucratic, chain o f custody cert if icat ion scheme. Pandering to "feel good" people who don't exercise their mental capabil i t ies . 109 Our hope of offering certified wood to keep market share has not materialized. A lot of business is going to China. We do not believe the consumer considers certification. We may not renew our certification. This is a well intentional program but availability and prices do not justify the costs incurred. Overall it is a good idea. However, due to the shortage of log supply it is impractical. So far, I can see no benefits for sales - the most important reason to go through it. FSC is time consuming to complete. We take care of our forest anyhow - it's good business. Home Depot and Lowe's won't follow through it - their products cost 10% more. We have no luck in finding a reliable source of logs for use year-around. This has made it difficult to market any products! Chain of custody certification and sale of certified products has to date consumed extensive investments of time with little to no financial return. Lack of availability and non-competitive priced goods are our main problem. Consumers do not want to pay a premium for certified products while the mills want 20-30% premiums to recover their certification costs. Chain of custody certification is not practical in the South given the ownership characteristics of the forest in this region. Attempting to institute it would result in an intellectually dishonest exercise. Absolutely no demand for certified products in our markets. It is my belief that chain of custody certification is just another fancy name for more government-environmental control. Taxes and government regulations in the long run do more harm than the hardwood lumber manufacturers have ever done! Remember it: it is our own best interest to manage our forests for the future! I was and I am one of the pioneers of FSC certified companies. Your questions miss the point with people like me. We buy Forest Service timber. No one adequately deals with this problem. They are the worst managers of forest resources in the world; preach ecosystem management, but fail to manage sustainably. It is ironic that these organizations that have forced this marketing issue, appeal and litigate to keep the agency in gridlock and prevent sustainable management. In the USA the government regulations are more than adequate to protect our resources. For certain schemes, they need to realize this is not a proper forum for cultural engineering. Need more certified forests. Why doesn't China have to comply? It is not wanted or needed by the public or industry. FSC is just in it to live their on pockets. Chain of custody certification is a failure until there is a market driven demand for the finished 110 certified products. I am sorry about my comments - we do bel ieve in chain o f custody cert if icat ion, but we have no economic reason for this opin ion . O n the East Coast o f the U S I w o u l d estimate that about 95% o f the wood that is cut and del ivered to mi l l s and yards come from planted and/or managed forests. These tracts, once they are cut, w i l l be replanted. Sustainable forestry is taught and pract iced in this area. In recent years, cypress and hardwoods have been replanted as swamp is becoming more accessible. In my l imi ted experience wi th cert if ication, imported or exotic woods wou ld , in my opin ion , be worth cert i fying its o r ig in . There are no government t imber sales in this region. I feel that in my small business there is enough needless paperwork without cert i f icat ion. W e are in the midst o f separating our pr imary manufacturing from our wholesale/retai l sales. Our log m i l l i n g fac i l i ty is at a new site. We 've only just begun to m i l l cert if ied logs. N e w site is in Areata, C A . W e have little knowledge o f chain o f custody cert if ication. W h y do you not include F S C in S2 Q I ? W e are C S A / I S O cert if ied but not chain o f custody certified. House logs - l imi ted lumber. No t applicable in A l a s k a (Interior) 99% o f resource timber is State sales; 1% imported from Y u k o n - Canada (maybe) W o u l d l ike to see survey o f secondary wood manufacturers - l ike us - we're cert if ied (SmartWood) and happy to answer any related questions. M o s t o f our raw material is purchased from government agencies or t imber companies that already have strict environmental standards in place. Even smal l open market producers must abide by W A State Forest Practice regulations for harvesting timber. I have personally seen no advantage to a company our size to be cert if ied. It just gives the bigger companies more control over smaller ones. I f companies and their sources for raw materials fo l low the guidelines set by state & federal governments and government agencies pol ice then there should be no reason for cert if ication. Serving architecture/design community , we have two standards to try to appease. The expectation o f a certain appearance o f face veneers, and the ava i lab i l i ty o f such. Putt ing the cert if ication in the equation makes this not possible. It is this group that waves the green flag, yet it is N O T knowledgeable about what they are asking. W e are a smal l fami ly operated m i l l , main ly cedar fence products and our wood source are often from logs the large mi l l s do not want, i.e. too smal l or down and dead. W e feel we are u t i l i z ing wood that cleans up the forest by buying these logs that otherwise w o u l d be left to feed a fire. I l l W e became Smar tWood certified two years ago. It costs around 2,000 per year to maintain. W e imported 2 T / L F S C B r a z i l i a n Cherry f looring. This is a very popular f loor ing wood . Our distributors showed N O interest. W e take inquiries for f loor ing on our web site. W e offered F S C last August . Since then we have had 200 inquiries o f wh ich 2 are F S C cert if ied. The consumer is not asking for certified products. Besides good advertising, there are no benefits. N o premium, no advantages, no market share. Higher costs, more paperwork. W e are a smal l fami ly owned business. W e real ly don't know i f our F S C C O C 246 w i l l help someday. However , i f F S C is helping to stop destruction forestry around the w o r l d , we are proud to be invo lved in the effort. 120 species o f veneer (only 2 certified) - 100 species o f so l id w o o d (no cert if ied inventory). A t this time it has not been an issue, but that may change. Cost is unknown. I real ly wi sh that people who work in this industry (forestry) were consulted or used when coming up wi th these environmental programs. The people who are t ry ing to organize them are doing more harm than good - ever i f they think they are preserving the environment. These programs are make projects for paper pushers and do not help the environment in the way that is intended or needed. I think cert if icat ion sounds good, but smal l pr imary wood producers don't have the T I M E , M O N E Y , or L A B O U R for a l l these processes that governments and pub l ic want them to achieve. It w o u l d be easier and cheaper to quit. We're currently watching to see what the market demands. W e have ISO 14001 certif ication but have decided to wait to see wh ich land based cert if ication scheme gains the most momentum. The generation o f Amer icans who drive the "environmental" debate refuse to pay the added costs o f their ac t iv ism. O n balance, it has been a good thing to ho ld corporations and citizens responsible for environmental externalities, but the pendulum has swung too far. The Amer i can lef t -wing lumped intel l igentsia that had its col lect ive heart broken by the Soviet U n i o n , w i l l move into the next place where it is s t i l l possible to hate capi ta l ism and hate A m e r i c a : environmental ism. It does not work at this time. Large timber companies are reluctant to go F S C certified because N O T profitable. There is a shortage o f F S C certified lumber. It's a waste o f time. So far it is not something that is feasible for smal l companies. Don' t l ike the idea o f someone or some organization te l l ing how to run your business. Cha in o f custody cert if ication is a smal l piece o f the pie when compared to the cert if ication o f 112 the forest land p rov id ing the raw material . Concern ing my attitude about forest cert if ication and the chain o f custody cert if icat ion process w h i c h is associated wi th it, I am phi losophica l ly in agreement wi th the pr inciples o f cert if icat ion. Unfortunately, I have developed a negative attitude concerning volumes o f paperwork and quite frankly I dispense wi th rapidly , unless forced to do otherwise. Consumer interest in certified products in the U S A is too smal l to just i fy much investment in chain o f custody certif ication or paying premiums for products. No t interested! Don' t know what chain o f custody cert if ication is! W e have no plans for chain o f custody cert if ication. Due to the bad management o f federal forest land (no logging) , we must put more pressure on private land owners to survive, wh ich is r id iculous . The federal forests (Shownee & M a r k Twain) w o u l d be healthier i f logging was permitted as or ig ina l ly intended. It is only a matter o f time before we have fires l ike out west, due to dr ied fallen trees and no road access. Open up national forests; y o u ' l l have plenty o f supply - no harm to environmental ly r i sky areas. So far consumers have not indicated a wi l l ingness to pay more for cert if ied products. When they w i l l do, so we w i l l participate. 95% o f our wood is from top logs that have no other use except f i rewood. Cha in o f custody certif ication is a waste o f time. M o n e y is what motivates people. D o you think that someone w i l l pay two dollars more for a 2x4 because someone took a course about green certif ication? Appears to be impract ical for dimension manufacturers and for sawmi l l s that buy gatelogs from large number o f suppliers inventory segregation and cost o f car ry ing inventory w o u l d seem to preclude cert if icat ion. Out o f business - cert if ication was unknown by my customers and d id me no good. Rogue Inst., my certifier, knew nothing about the industry and couldn't give a wor thwhi le audit report to save their l ives I am returning this to you because our lumber m i l l is no longer in business due to m y husband's death in M a y 2000. M r s . Thomas Hodgson. W e are a M a & Pa operation. This is not something we w i l l ever be concerned wi th . Please forward to another company. Our lumber + s awmi l l operation is usual ly less than 10,000/year. I don't know anything about this cert if ication process Don' t know what chain o f custody certif ication is! 113 People s t i l l want to buy as cheap as possible. Cost is a major factor. W e feel that a chain o f custody certif ication mandate w i l l be detrimental to the forest industry. Cer t i f ica t ion is just another nai l in the coffin for the timber industry. A viable , productive, and active t imber base that is economica l ly valuable is the best guarantee o f sustainabil i ty. i I f adopting chain o f custody certif ication w o u l d place an end to the continual attack by environmental groups and ensure some predictable supply o f t imber for our m i l l s in S E A l a s k a , industry w o u l d incur the cost and move ahead. The truth is opposi t ion to harvesting wants a zero cut and w i l l not let up unt i l industry is dead. W e are not totally famil iar about chain o f custody cert if ication. Disappoin t ing so far. L a c k o f customer interest to this point. M o v e effort by government to educate the publ ic and support smal l scale woodlots in their quest for cert if icat ion. A l t h o u g h we have not sold any F S C certif ied wood , we have had a beneficial exposure to markets as a 'green' producer. In process o f C O C cert if ication - Smar tWood assessment audit took place June 14/02. N o problems anticipated. Percentage based claims should have a h igh proport ion o f cert if ied content. Current threshold from pulp and paper products for F S C are too low. No t meaningful . The biggest problem is the lack o f understanding on the s impl i c i ty o f the system. M a n y fear a great deal o f addit ional work but do not have an understanding o f the requirements. A l s o , the lack o f v i s ib le benefits is discouraging and prevents people from fo l l owing through. W e are a very smal l company. Is it real ly worth any effort on our part? W e have been frustrated wi th our C O C because it has not resulted in access to new markets or access to cert if ied woodlands. In i t ia l ly we though that br ing a chain o f custody cert if ication logging contractor w o u l d a l low us to purchase stumpage on cert if ied lands. Bu t certified landowners have generally not chosen to sel l stumpage; rather they have begun market ing logs themselves, or in some cases "extending" cert if ication to the contractor w o r k i n g on the property. B y this time we have not yet sold any logs into certified markets. Please feel free to contact me wi th questions. W e don't have enough supply o f certified wood - so, we don' t have a good volume to answer the questionnaire. 114 

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
https://iiif.library.ubc.ca/presentation/dsp.831.1-0075032/manifest

Comment

Related Items