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ForestStewardshipCouncil ®CanadaANNUALREPORT2011-2012

Table ofCONTENTS1 Reflections from the Co-Chairs2 A Message from the President3 A Year at a Glance 2011-20124 Leaders in Forest Certification5 Developing and Maintaining Standards6 New Frontiers7 A Growing Demand8 Report on Financials9 Our Donors, FSC Canada Board of Directors, FSC Canada StaffForest Stewardship Council Canada400-70 The EsplanadeToronto, ONM5E 1R2Www.fsccanada.orgFSC ® 000205

Reflections from theCO-CHAIRS1On the heels of the Annual General Meeting inOctober 2011, the FSC Canada board recognizedthe need to move purposefully to meet theexpectations of members, certified companies andpartners. Many shared the observation that whilethe success of the FSC brand in the marketplacewas evident and impressive, there was not anequivalent financial capacity or stability to nurtureand grow the organization in Canada. Staff,consultants and the board set to work to address thischallenge.Under the initial leadership of Lorne JohnsonPresident/CEO (interim) and continued by newPresident/CEO Francois Dufresne, FSC Canadatackled the objective of diversifying its revenuesources. Accessing funding from FSC Canadapartners and competing aggressively for a fair shareof FSC International Centre (FSC IC) funding weretwo strategic goals. We are pleased to be able toreport significant accomplishments in the transitiontowards revenue self-sufficiency and capacitygrowth. Through two competitive processesundertaken over several months, we were awardedthe largest amount granted to a FSC National Officein 2012. We take this outcome as a tangibleindication by FSC IC of the leadership role that FSCCanada can play and in the global FSC contextgoing forward.This funding over the next 12 to 18 months providesthe opportunity for FSC Canada to addresssignificant challenges head-on. Key program areasinclude the planning and implementation of aForest Management Standard revision process at anational scale, Canadian Controlled Wood riskassessment, development of a strategic partnerprogram and overseeing an efficient and successfulFSC certificate transfer process in Quebec.Receiving specific funding to strengthen ourAboriginal programming with First Nation and Métiscommunities and organizations is an excitingdevelopment, as we firmly believe that FSC Canadahas a leadership role to play on a global networkscale.On the second objective of engaging our strategicpartners directly, we are grateful for the financialsupport of The Richard Ivey Foundation and manyforest product companies across Canada. Thesecontributions are invaluable to our organization aswe plan for an expanded service footprint acrossCanada to meet our member and partner needs.What about forests? Of course our organization hasat its core the mission of increasing the abundanceof well-managed forests through the application ofFSC standards on forests large and small, private,public and First Nation across Canada. Whileaddressing the financial future of the organization isan important first step, engaging our members andpartners in how FSC can grow in impact andeffectiveness, is the next. There is a lot to discuss.We look forward to the conversation,Chris McDonellCo-Chair, FSC Canada &Valerie CourtoisCo-Chair, FSC Canada

A Message from thePRESIDENT2This past year has been characterized by majorchanges for FSC Canada. Our focus is to rebuild theorganizations capacity and structure beginning withthe hiring of a new President as well as opening a newoffice located in Montreal, Quebec As the newlyappointed President of FSC Canada, I am proud to bethe from the province of Quebec. In order to rebuild,FSC Canada has updated its five year strategic planfocusing on transitioning to a business model thatsupports core service delivery. This includes anincreased presence in Eastern and Western Canada,increase demand for FSC-certified solid wood productsand engage First Nations support for FSC.Globally, FSC passed some exciting milestones as FSCmembers approved the revised Principles and Criteriaand the development of the new international GenericIndicators which will serve as the basis for all FSCStandards, including Canada’s Forest ManagementStandards.These milestones mark the beginning of an importantnext phase in FSC’s work. In parallel to the revision, FSCCanada will engage stakeholders in revising andaligning the Forest Management Standards with thenew Principles & Criteria and has also embarked indeveloping a National Controlled Wood RiskAssessment.These two initiatives will require significant resourcesfrom FSC Canada over the course of the next twoyears as they are scheduled to be completed byDecember 2014.As a consequence of a new Forest Tenure law inQuebec, all FSC Forest Management certificates in theprovince are in the process to be transferred from theindustry to the Provincial Government. Since there aresome 21 million hectares of FSC-certified forest inQuebec, FSC Canada is deploying significantresources to ensure its success.FSC Canada is uniquely valued within the globalFSC supply chain resulting in a growing supply ofvisible FSC products in the marketplace. We areproud to report that, as of September 2012, thereare over 50 million hectares of FSC-certified forestlands in Canada, which represents one third of allFSC-certified forests globally.As we bring FSC Canada to a new level, I wouldlike to thank all our Members and stakeholders fortheir support. We look forward with renewedenthusiasm to the year to come, and withgratitude to all those who made this past year sosuccessful.Sincerely,François DufresnePresident, FSC Canada

A Year at a Glance2011-20123September 2011: Resolute Forest Products, formerlyAbitibiBowater, certifies largest FSC forest in Ontario whichcovers over 2.4 million hectares of forestlands.October 2011: Lorne Johnson joins FSC Canada as InterimExecutive Director.October 2011: FSC Canada attends the InternationalGreenbuild Conference & Tradeshow and the FSC US‘Design & Build with FSC’ Awards in Toronto, ON. Over25,000 participants from across North America were inattendance during the first week of October in Toronto,making this the first time the event has been held outsidethe United States.October 2011: Mattel Inc. launches new sustainablesourcing principles stating their preference for FSC-certifiedproducts for the paper and wood fiber used in theirpackaging products.October 2011: Rainforest Alliance study finds that WorldHeritage Sites and other protected areas benefit whenneighboring forests achieve FSC certification.November 2011: FSC-certified printers come out on top atCanadian Printing Awards. Of the 63 awards presented , 50of the awards were presented to FSC-certified printers andpaper manufacturers.November 2011: Resolute Forest Products commits to“increase Forest Stewardship certification of managedwoodlands from18% in 2010 to 80% by 2015” in its 2010Sustainability Report.January 2012: FSC Members approve Revised Principlesand Criteria.January 2012: Levi Strauss & Co. launches new SustainableForest Products Procurement Policy stating their preferencefor FSC-certified products for all of their productpackaging, hangtags, corrugate, construction anddecoration materials and furniture.February 2012: FSC Canada welcomes Vivian Peachey asStandards and Policy Advisor.March 2012: FSC Canada launches the development ofa National Controlled Wood Risk Assessment.May 2012: FSC Canada, FSC International, and FSC USco-host the 2012 FSC Forum to discuss and address keytopics and issues in the FSC system during the week ofthe Global Forest Products Leadership Summit andInternational Pulp week in Vancouver, BC.May 2012: FSC Canada Board of Directors welcomesFrancois Dufresne as FSC Canada’s new President.May 2012: International Paper Announces new FSCcertified100% Recycled PaperJune 2012: Tembec plants 300th million tree in FSCcertifiedNorthern Ontario Gordon Cousens Forestlocated near Kapuskasing, Ontario.June 2012: CIBC announces their continuedcommitment to Canada's forests through its purchase ofFSC-certified paper, increasing CIBC's total FSC-certifiedstock to 94 per cent.June 2012: Resolute Forest Products becomes the largestmanager of FSC-certified forests in the world with over10.3 million hectares.September 2012: People around the world celebrateour forests on FSC Friday. FSC asks Canadians toparticipate by posting about FSC using social mediaplatforms (e.g. Facebook and Twitter).September 2012: Canada reaches the milestone ofover 50 million hectares of FSC-certified forests– an areathe size of Spain!September 2012: Groupe Lignum becomes the first FSCChain of Custody Group Certificate in Quebec.September 2012: Corner Brook Pulp and Paper (QMI-FM/COC-001506), a subsidiary of Kruger Forest Productsreceives the first FSC forest Management certificationfor the province of Newfoundland and Labrador.

LEADERS INFOREST CERTIFICATION4Canada reached over 50million hectares of FSC-certifiedforests. Making Canada a worldleader in FSC forest certificationwith over 30% of the world’s FSC-certified forests.This past year has seen Canada’s FSC-certifiedforest area expand by 13% to over 50 million ha.Even more remarkable is the fact that over thepast five years, the area of forests in Canada thatmeet FSC’s rigorous environmental and socialstandards has increased by 178%.This rapid growth in supply of FSC-certified fibre isanticipated to continue as an additional 10million ha of forests are in the process ofbecoming certified.Achievements in Forest CertificationIn November 2011, Taan Forest, owned by HaidaEnterprise Corporation of Haida Gwaii, in BritishColumbia, achieved FSC certification, becomingthe first forest in British Columbia to meet FSCStandards since 2009.In June 2012, Resolute Forest Products became thelargest manager of FSC-certified forests in the worldwith over 10.3 million hectares.Also in June 2012: Tembec planted its 300th milliontree in FSC-certified Northern Ontario GordonCousens Forest located near Kapuskasing, Ontario.In September 2012, Corner Brook Pulp and Paper(QMI-FM/COC-001506), a subsidiary of Kruger ForestProducts received the first FSC forest Managementcertification for the province of Newfoundland andLabrador.Province FSC-Certified Area (ha) FM Certificates (#)Alberta 5,624,350 1British Columbia 2,778,015 6Manitoba 0 0Maritimes (NB, NS, PEI) 747,385 5Ontario 18,013,697 21Quebec 21,909,606 29Saskatchewan 1,831,964 1Total 52,398,422 64

Developing and MaintainingSTANDARDS5FSC is committed to developing andmaintaining high standards forresponsible forestry. In the past year,FSC has focused on engaging withits members and stakeholders toensure that our standards andpolicies support healthy forests forgenerations to come.Revised FSC International Principles and CriteriaApprovedIn 2008, FSC International initiated the process ofrevising the FSC Principles & Criteria (P&C). The FSCP&C are the core requirements a forest must meet toachieve FSC certification and provide the social,economic, ecological, cultural and spiritual needs ofpresent and future generations. Since 2008, severaldrafts of the P&C have been released for publicconsultation and comment. In January 2012, therevised Principles and Criteria were approved by theFSC Membership.FSC International Generic IndicatorsThe newly revised FSC International Principles mark thebeginning of an important next phase in FSC’s work.FSC International has launched a working group todevelop a set of International Generic Indicators (IGI)that will be the basis of all FSC Standards. Their purposewill be to ensure consistent application of the globalP&Cs. FSC Canada has selected a representative tosite on the IGI Technical Expert Group and representCanada.Forest Management Standard RevisionWith the approved revisions to the Principles andCriteria, FSC Canada will begin planning to alignNational Forest Management Standards with thenew Principles & Criteria. The revision of the ForestManagement (FM) Standards will take placeconcurrently and the revision process will strive tobuild on previous work and agreements whileproviding opportunities for focused regional andnational discussions. The FM Standards RevisionProcess is expected to take approximately twoyears beginning in the late fall 2012 and aiming tohave the Standards approved by December 31,2014. In an effort to create a stable and broadlysupported process, FSC Canada launched a surveyto gather perspectives on the design of thestandards revision process in October 2012.Great Lakes St. Lawrence Standard DevelopmentFollowing the review and consultation of a draftGreat Lakes St. Lawrence Standard in 2010 and2011, on March 15 th , 2011 FSC Canada submitted toFSC International the GLSL Forest ManagementStandard (Draft 4) for their review and accreditationas per FSC-STD-60-006 v1-2.On June 22, 2011 FSC International provided FSCCanada with a report highlighting their conditionsand recommendations resulting from this review,and which must be met prior to therecommendation of the GLSL standard foraccreditation. After reviewing the conditions,recommendations and with the introduction of thenewly revised FSC Principles and Criteria FSCCanada’s Board of Directors decided to postponethe accreditation of the GLSL Standard.By postponing the accreditation, FSC Canada willnow begin the process to align all of its ForestManagement Standards with the new Principles andCriteria and review all Forest ManagementStandards at the same stage of the revision process.

NewFRONTIERS6National Controlled Wood Risk AssessmentAt the 2011 FSC General Assembly, the highestdecision making body of the Forest StewardshipCouncil, the FSC Membership passed Policy Motion51 to ‘Strengthen the Controlled Wood System’. Themotion includes a revision of the Controlled WoodStandard (FSC-STD-40-003), an evaluation of existingrisk assessments, the phase-out of companydeveloped Risk Assessments and the development ofFSC National Controlled Wood Risk Assessments byDecember 31 st , 2014. A National Controlled WoodWorking Group is currently in the process of providingstrategic direction in the development of theNational Controlled Wood Risk Assessment anddeveloping recommendations on risk designations forforest regions across Canada.Quebec Tenure Transfer ProtocolCommencing April 1st, 2013, the Province of Quebecdictates that public forest managementresponsibilities will be taken away from forestcompanies and taken over by the Ministry of NaturalResources and Wildlife (MRNF). It is MRNF’s intentionto maintain all FSC FM certificates that are in placeprior to that time, which (including certified forestsand those currently in process of certification) willrepresent approximately 40 FM certificates and 25million ha of FSC-certified forests. In order to ensure asmooth and transparent transfer of FM certificatesfrom forest companies to the MRNF, a Protocol forForest Management Certificate Transfer has beendeveloped and approved by FSC International(September 2012).Quebec Tenure Transfer & First NationsAt the FSC Canada Annual General Assembly inOctober 2011, a motion was tabled and passedby the membership pertaining to the Transfer ofFSC FM certificates in Quebec. The motion,presented by Wolf Lake First Nation, seconded byNational Aboriginal Forestry Association states“FSC Canada shall establish a Quebec regionalworking group process with participation from FSCCanada, Quebec government, FSC certifiers, FSCcertified companies and interested First Nations, assoon as possible, to clarify the obligations andresponsibilities of the Quebec government andFSC certified forestry companies to First Nations inorder to ensure continued compliance with FSCPrinciple 3 in the Great Lakes St. Lawrence andBoreal FSC Regional Standards prior to theQuebec Sustainable Forest Development Acttaking effect on April 1, 2013.”FSC Canada will continue to host discussions withrepresentatives of the Ministry of Natural Resourcesand Wildlife - Quebec, First Nations and FSCstakeholders regarding the implementation of themotion. The objective of those discussions is toensure that an orderly, effective, efficient andcredible process is implemented that respects theroles and responsibilities of FSC Canada, FSCInternational, FSC Certifiers and certificate holders.

A GrowingDEMAND7FSC Paper & PackagingHigher demand for FSC-certified paper productsstems from a positive market transformation. Justthis past year CIBC announced their continuedcommitment to Canada's forests through itspurchase of FSC-certified paper, increasingCIBC's total FSC-certified stock to 94 per cent.While CIBC has printed its annual report on FSCcertifiedpaper since 2006, they will now transition203 million sheets of client account statementpaper, 116 million statement envelopes and 76million ABM envelopes to FSC-certified stock onan annual basis.Mattel Inc. launches new sustainable sourcingprinciples stating their preference for FSCcertifiedproducts for the paper and wood fiberused in their packaging products. Mattel haspledged that, by the end of 2011, 70 percent ofits paper packaging will be composed ofrecycled materials or sustainable fiber. Mattel isaiming to increase this figure to 85 percent by theend of 2015. Mattel has indicated that they willshow a preference for fiber certified by FSC andwill take steps to encourage its suppliers to pursuechain of custody certification for their ownoperations..FSC & Green BuildingIn September 2011, Remington DevelopmentCorporation announced its new head office,Quarry Park West, achieved LEED Goldcertification with 64 per cent of wood used inconstruction procured from FSC certified sources.Quarry Park West is Alberta's first privatelydeveloped suburban office project to earn thisrecognition.In October 2011, FSC Canada attended theInternational Greenbuild Conference &Tradeshow and the FSC US ‘Design & Build withFSC’ Awards in Toronto, ON. Over 25,000participants from across North America were inattendance during the first week of October inToronto, making this the first time the event hasbeen held outside the United States.The LEED green building rating system continuesto be a major driver of market demand for FSCcertifiedwood products. As of September 2012,32% of LEED Canada projects had achieved theMaterials and Resources Credit 7: Certified WoodCredit. Of this total, 53% have gone on toachieve Platinum LEED status and 44% Gold LEEDStatus. Source: Business Value & GrowthGlobal Market Survey 2011The FSC Global Market Survey helps us answer important questions about our certificate holders such as why theychoose to become FSC certified, what certification means for them, and what challenges and opportunitiescertification will bring in the coming years. Here are some key findings from the 2011 survey:Over 48% of companies have a procurement strategy that shows a preference for FSC-certified products.Global awareness of the FSC label has increased since 2009, with two-thirds of respondents observing higherawareness about responsible forestry and about FSC.More than two-thirds of respondents plan to source more FSC material in order to meet growing demand. More than half those polled say that they expect FSC certification to help them gain new clients in the next 12months.

Report OnFINANCIALS8Revenue FY2012 FY2011FSC AC grants $66,708 $204,397Certification fees $179,078 $112,553Membership fees $31,092 $33,088Foundation and corporate grants $50,000 $15,222Conferences, workshops and otherincome$20,450 $58,534Donations $138,350 $5,059Total Revenue $ 485,678 $428,853Expenses FY2012 FY2011Program and operating expenses $285,370 $ 393,218Deficiency of revenue over expenses $200,308 $35.635

OURDONORS9FSC Canada wishes to thank the following partners for their financialsupport during 2011-2012. Without their support, our work inpromoting responsible management of the world’s forests would notbe possible:Alberta Pacific Forest IndustriesCascadesDomtar Inc.Eastern Ontario Forest GroupFSC A.C.Kruger Forest ProductsResolute Forest ProductsThe Ivey FoundationTembec Inc.Board ofDIRECTORSFSC CanadaSTAFFAboriginal Peoples ChamberBrad Young, National Aboriginal Forestry AssociationWade CachageeEconomic ChamberChris McDonell, Tembec (Co-Chair)Henry Sauvagnat, Cascades Inc.Environmental ChamberChris Henschel, CPAWS (Secretary)John CathroSocial ChamberValerie Courtois (C0-Chair)Orrin Quinn, Ecotrust Canada (Treasurer)Francois Dufresne,President (May 2012-present)Lorne JohnsonInterim Executive Director(Oct 2011-May 2012)Maia BeckerVice PresidentMonika PatelDirector of ProgramsBryce DentonFinancial ManagerVivian PeacheyStandards & Policy Advisor

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