Sustainable Forest Finance Toolkit - PwC

More documents

Recommendations

Info

Illustrative – Higher risk client approachNew Application HOMESTARTConduct managementinterviewConduct a managementinterview to documentresponses to clientperformance requirements.Potentiallysignificantissuesidentified(e.g. poorlabourstandards)Conduct stakeholderenquiriesConduct enquiries with local interested parties inorder to understand the external view andprovide insight into a company’s position onsustainability. Potential groups include:• Environmental regulators• Government forestry departments• Other relevant government departments (e.g.Dept of Justice and Human Rights)• Unions and community groups• Forestry auditors and certification groups• Global and local NGOsPotentiallysignificant issuesidentified (e.g.involuntarydisplacement,denial of forestdwellers’ rights)Conduct a site visit or commissionprofessional due diligenceWhere possible issues have been raised,conduct a site visit or commission robust duediligence from a qualified Sustainable ForestManagement (SFM) specialist (and otherrelevant sustainability issue specialists asappropriate) with specific attention to theregional environmental issues and historiccompany management of such risks. This mayinclude an independent VLO audit.During a site visit, the bank representative orconsultant should be required to gatherevidence against key points in an agreed ‘sitevisit checklist’.PotentiallysignificantrisksidentifiedNo / manageablerisks identifiedNo / manageablerisks identifiedNo / manageablerisks identifiedDocumentation and MitigationAttach the completed interview template to client documentation and provide informed commentary to explain how areas of higher risk have beentackled.[BANK TO DETERMINE WHETHER RESPONSE MEANS ‘COMPLIANCE WITH POLICY’ OR ‘COMPLIANCE WITH POLICY SUBJECT TO….’ BEFORE FUND DRAWDOWN]Attach the results and conclusions of any stakeholder enquiries and site visits.Where manageable environmental risks have been identified, consider mitigation measures such as:• Covenants or conditions precedent that require the issue to be resolved• Renegotiating prospective deal price/terms• Where relevant, extending insurance coverConsider declining or exitIf concerns on sustainability areassessed to be insoluble,consider if these issues place aprospective or current clientoutside the bank’s lendingpolicies. Appropriate action mayinclude a time-boundimprovement plan for theprospective client, or decliningto proceed.Banks may of course choose to decline the relationship or transaction at any point in this process, preferably following explanation to the client of their sustainability concerns.Page 22pwc
Legality issue briefing note1 of 5New Application HOMEWhat is the issue?A straightforward although not all-encompassing definitionof illegal logging is: timber harvest, transport, purchase orsale that violates applicable federal, state, or provincial laws.Illegal harvesting may include:• Extracting timber without permission from the appropriateauthorities• Damaging or cutting protected species• Exceeding timber extraction quotasIllegal transport may include:• Illegal processing and export• Fraudulent customs declarations• Avoidance of taxes or other chargesIt is generally acknowledged that legality is not a synonymfor Sustainable Forest Management, and that what issustainable may not always be legal. Some examplesof what have been considered illegal forestry activitiesare shown opposite.Examples of illegal forestry activitiesIllegal activities can generally fall into two broad categories: illegal origin (ownership, title or origin), and lack of compliance inharvesting, processing, and trade. The following are examples of activities that have been identified and/or included in somefurther definitions of illegal logging (Contreras-Hermosilla, 2002; Miller et al., 2006; GFTN, 2005).Illegal origin (ownership, title, or origin)• Harvesting of wood in protected areas without proper permission (e.g. in national parks and preserves). This may includeinstances where authorities allocate harvesting rights without properly compensating local people.• Logging protected species.• Logging in prohibited areas such as steep slopes, riverbanks and water catchments.• Harvesting wood volumes below or above the limits of the concession permit as well as before or after the logging periodstated in the harvesting licence.• Harvesting wood of a size or species not covered by the concession permit.• Trespass or theft, i.e. logging in forests without the legal right to do so.• Violations, bribes and deception in the bidding process to acquire rights to a forest concession.• Illegal documentation (including trade documents).Lack of compliance throughout the supply chain (harvesting, manufacturing, and trade)• Violations of labour laws (e.g. illegal labour, underpaying workers, etc.) and violation of legally protected traditional rightsof local populations and indigenous groups.• Violation of ratified international human rights treaties and conventions.• Wood transported or processed in defiance of federal, state, or provincial laws.• Violations of international trade agreements (e.g. CITES species).• Failure to pay legally prescribed taxes, fees and royalties.• Illegal transfer pricing (e.g. when it is to avoid duties and taxes), timber theft, smuggling.• Money laundering.• Failure to fully report volumes harvested, or reporting different species for tax evasion purposes.Different definitions of illegal logging can lead to different estimates, which makes addressing the problem more difficult(Contreras-Hermosilla et al., 2007; Rosembaum, 2004). Defining illegal logging is not only a technical issue, but one withpotentially far-reaching political implications (Contreras-Hermosilla et al., 2007).Page 23pwc
Page 1 and 2: Sustainable ForestFinance ToolkitTh
Page 3: Guidance for using the ToolkitThis
Page 6 and 7: How does economic development impac
Page 8 and 9: Challenges and problems associated
Page 10 and 11: Sustainability issues in the forest
Page 12 and 13: Costs and benefits of certification
Page 14 and 15: Costs and benefits of certification
Page 16 and 17: 1 New ApplicationThis section provi
Page 18 and 19: Illustrative - Management Interview
Page 20 and 21: Illustrative - Management Interview
Page 24 and 25: Legality issue briefing note2 of 5N
Page 26 and 27: Legality issue briefing note 4 of 5
Page 28 and 29: Small scale and community forestent
Page 30 and 31: Sustainable ForestManagement briefi
Page 32 and 33: Special places briefing note 1 of 4
Page 34 and 35: Special places briefing note 3 of 4
Page 36 and 37: Planted forests briefing note 1 of
Page 42 and 43: Certification briefing note 1 of 7N
Page 46 and 47: Certification briefing note5 of 7Ne
Page 50 and 51: Pollution and EnvironmentalManageme
Page 52 and 53: Local communities and indigenouspeo
Page 54 and 55: Local communities and indigenouspeo
Page 56 and 57: Forest carbon and otherecosystem se
Page 58 and 59: Forest carbon and otherecosystem se
Page 60 and 61: Brazil - country briefing note 1 of
Page 62 and 63: Indonesia - country briefing note 1
Page 64 and 65: Malaysia - country briefing note 2
Page 66 and 67: Russia - country briefing note 2 of
Page 68 and 69: 2 Portfolio ManagementOne of the ha
Page 70 and 71: FMU / supply chain performance 1 of
Page 72 and 73:
3 Policy DevelopmentA carefully con
Page 74 and 75:
Suggested Internal Bank ForestryPol
Page 76 and 77:
Suggested Internal Bank ForestryPol
Page 78 and 79:
4 ProcurementIn 2007, the WBCSD and
Page 80 and 81:
Sample procurement policy2 of 2Proc
Page 82 and 83:
Appendix 1: Special places 2 of 3De
Page 84 and 85:
Appendix 2: Client performancerequi
Page 86 and 87:
Appendix 2: Client performancerequi
Page 88 and 89:
Appendix 4: Consolidated duediligen
Page 90 and 91:
Appendix 5: Acronyms1 of 1ASEAN Ass
show all

Sustainable Forest Finance Toolkit - PwC

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?