Collapse: How Societies Choose to Fail or Succeed

by Jared Diamond

  With such logging companies, as with the mining companies that we already discussed, we have to ask ourselves why they behave in a way that is morally reprehensible. The answer, again, is that their behavior is profitable to them because of the same three factors motivating mining companies: economics, the industry’s corporate culture, and attitudes of society and government. Tropical hardwood logs are so valuable and in demand that rape-and-run logging of leased tropical forest land is immensely profitable. Acquiescence of local people can frequently be obtained, because the local people are desperate for cash and have never seen the disastrous consequences that clear-cutting tropical rainforest brings to local landowners. (One of the most cost-effective ways by which organizations opposed to tropical rainforest logging have induced landowners to refuse permission is by taking them to already-logged areas to talk with regretful landowners and to see for themselves.) Officials in the government forestry department can often be bribed, lack the international perspective and financial resources of the logging companies, and may not realize the high value of finished timber. Under those circumstances, rape-and-run will continue to be good business until the companies start to run out of unlogged countries, and until national governments and local landowners are prepared to refuse permission and to muster superior force in order to resist unpermitted logging backed by force.

  In other countries, notably western Europe and the United States, rape-and-run logging has become increasingly unprofitable. In contrast to the situation in much of the tropics, western European and American virgin forests have already been cut or are in steep decline. Large logging companies operate on land that they own or else hold by long-term lease rather than short-term lease, thereby giving them under some circumstances an economic incentive for sustainability. Many consumers are sufficiently aware environmentally to care whether the wood products that they are purchasing have been harvested in destructive non-sustainable ways. Government regulation is sometimes serious and restrictive, and government officials are not readily bribed.

  The result is that some logging companies operating in western Europe and the United States have become increasingly concerned not only about their ability to compete against Third World producers with lower costs, but also about their own survival, or (to use mining and oil industry terminology) their “social license to operate.” Some logging companies have adopted sound practices and have attempted to convince the public of that, but they found that their claims on their own behalf lacked credibility in the eyes of the public. For instance, many wood and paper products that are offered to consumers for sale carry labels making pro-environmental claims such as “for every tree felled, at least two are planted.” However, a survey of 80 such claims found that 77 could not be substantiated at all, 3 could be only partially substantiated, and almost all were withdrawn when challenged. Understandably, the public has learned to dismiss such claims made by companies themselves.

  Adding to the timber companies’ concern about their social license and credibility was their concern about the impending extinction of forests, the basis of their business. More than half of the world’s original forests have been cut down or heavily damaged in the last 8,000 years. Yet our consumption of forest products is accelerating, with the result that more than half of those losses have occurred within the past 50 years—for instance, because of forest clearance for agriculture, and because world consumption of paper has increased five-fold since 1950. Logging is often just the first step in a chain reaction: after loggers build access roads into a forested area, poachers follow those roads to hunt animals, and squatters follow them to settle. Only 12% of the world’s forests lie within protected areas. In a worst-case scenario, all of the world’s readily accessible remaining forests outside those protected areas would be destroyed by unsustainable harvesting within the next several decades, although in a best-case scenario the world could meet its timber needs sustainably from a small area (20% or less) of those forests if they were well managed.

  Those concerns about the long-term future of their own industry impelled some timber industry representatives and foresters in the early 1990s to launch discussions with environmental and social organizations and associations of indigenous peoples. In 1993 those discussions resulted in the formation of an international non-profit organization called the Forest Stewardship Council (FSC), which is headquartered in Germany and funded by several businesses, governments, foundations, and environmental organizations. The council is run by an elected board, and ultimately by the FSC’s membership, which includes representatives of the timber industry and of environmental and social interests. The FSC’s original tasks were three-fold: to draw up a list of criteria of sound forest management; then, to set up a mechanism for certifying whether any particular forest satisfied those criteria; and, finally, to set up another mechanism for tracing products from such a certified forest through the complex supplier chain all the way to the consumers, so that a consumer could know whether the paper, chair, or board that he or she was buying in a store, and that carried the FSC logo, actually came from a soundly managed forest.

  The first of those tasks resulted in the formulation of 10 detailed criteria of sound and sustainable forest management. Those include: harvesting trees only at a rate that can be sustained indefinitely, with growth of new trees adequate to replace felled trees; sparing of forests of special conservation value, such as old-growth forests, which should not be converted into homogenous tree plantations; long-term preservation of biodiversity, nutrient recycling, soil integrity, and other forest ecosystem functions; protection of watersheds, and maintenance of adequately wide riparian zones along streams and lakes; a long-term management plan; acceptable off-site disposal of chemicals and waste; obedience of prevailing laws; and acknowledgment of the rights of local indigenous communities and forest workers.

  The next task was to establish a process for ascertaining whether the management of a given forest does meet those criteria. The FSC does not certify forests itself: instead, it accredits forest certification organizations that actually visit a forest and spend up to two weeks inspecting it. There are a dozen such organizations around the world, all of them accredited to operate internationally; the two that do most of the inspections in the U.S. are called SmartWood and Scientific Certification Systems, headquartered in Vermont and in California, respectively. An owner or manager of a forest contracts with a certification organization for an inspection, and pays for the audit, without any advance guarantee of a favorable outcome. The certifier’s response after the inspection is often to impose a list of pre-conditions that must be met before approval, or just to grant provisional approval based on a list of conditions that must be met before use of the FSC label will be permitted.

  It should be emphasized that the initiative in getting a forest certified must always be taken by the owner or manager; the certifiers do not go around inspecting forests uninvited. Of course, that raises the question why any forest owner or manager would choose to pay in order to be inspected. The answer is that increasing numbers of owners and managers decide that it will be in their financial interest, because the certification fee will be earned back as a result of access to more markets and consumers through the improved image and credibility gained through independent third-party certification. The essence of FSC certification is that consumers can believe it, because it is not an unsubstantiated boast by the company itself but the result of an examination, against internationally accepted standards of best practice, by trained and experienced auditors who don’t hesitate to say no or to impose conditions.

  The remaining step was to document what is called the “chain of custody,” or paper trail by which wood from a tree cut in Oregon ends up as a board offered for sale in a store in Miami. Even if a forest itself is certified, the forest’s owners may sell its timber to a sawmill that also saws uncertified timber, then the sawmill may sell its cut wood to a manufacturer that also buys uncertified cut wood, and so on. The w
eb of interrelationships between producers, suppliers, manufacturers, wholesalers, and retail stores is so complex that even companies themselves rarely know where their wood ultimately comes from or goes to, except for knowing their immediate suppliers and customers. For the ultimate consumer in Miami to be able to have confidence that the board she is buying really came from a tree in a certified forest, intermediate suppliers must keep certified and non-certified material separate, and auditors must certify that every intermediate supplier is actually doing that. That constitutes “certifying the chain of custody”: tracking certified materials through the whole supply chain. The end result is that only about 17% of the products from certified forests end up bearing the FSC’s logo in a retail store; the other 83% get commingled with non-certified products along the chain. Certifying the chain of custody sounds like, and really is, a big pain in the neck. But it is an essential pain in the neck, because otherwise the consumer could not be confident of the ultimate origins of that board in the Miami store.

  Do enough members of the public really care about environmental issues for FSC certification to help sell wood products? When asked in surveys, 80% of consumers claim that they would prefer to buy products of environmentally clean provenance if given the choice. But are those just empty words, or do people really pay attention to FSC labels when they are in a store? And would they be willing to pay a little more for an FSC-labeled product?

  These issues are crucial to companies pondering whether to apply and pay for certification. The questions were put to the test in an experiment carried out at two Home Depot stores in Oregon. Each store set up two nearby bins containing plywood pieces of the same size, and similar except that the plywood in one bin carried the FSC label and the plywood in the other bin didn’t. The experiment was run twice: either with the plywood in the two bins costing the same, or else with the FSC-labeled plywood costing 2% more than the unlabeled plywood. It turned out that, when the cost was the same, FSC-labeled plywood outsold unlabeled plywood by more than 2 to 1. (At one of the stores in a “liberal,” environmentally aware university town, the factor was 6 to 1, but even at the store in the more “conservative” town the labeled plywood still outsold unlabeled plywood by 19%.) When the labeled plywood cost 2% more than the unlabeled plywood, of course most customers preferred the cheaper product, but nevertheless a large minority (37%) still proceeded to buy the labeled product. Thus, much of the public really does weigh environmental values in its purchasing decisions, and a significant fraction of the public is willing to pay more for those values.

  When FSC certification was first introduced, there was much fear that certified products would indeed end up costing more, either because of the expense of the certification audit or of the forestry practices necessary for certification. Much subsequent experience has shown that certification usually does not add to a wood product’s inherent cost. In cases where markets did price certified products higher than comparable non-certified ones, that turned out to be due just to the laws of supply and demand rather than inherent costs: retailers selling a certified product available only in short supply, for which there was high demand, found that they could get away with raising the price.

  The list of big businesses that participated in the initial formation of the FSC, joined the board of directors, or committed themselves more recently to FSC goals includes some of the world’s largest producers and sellers of timber products. Among U.S.-based companies are Home Depot, the world’s largest retailer of lumber; Lowe’s, second only to Home Depot in the U.S. home improvement industry; Columbia Forest Products, one of the largest forest product companies in the U.S.; Kinko’s (now merged with FedEx), the world’s largest provider of business services and document copying; Collins Pine and Kane Hardwoods, one of the U.S.’s largest producers of cherry; Gibson Guitars, one of the world’s leading guitar manufacturers; Seven Islands Land Company, which manages a million acres of forest in the state of Maine; and Andersen Corporation, the world’s largest manufacturer of doors and windows. Major participants outside the U.S. include Tembec and Domtar, two of Canada’s largest forest managers; B & Q, the United Kingdom’s largest do-it-yourself-in-the-home business, analogous to Home Depot in the U.S.; Sainsbury’s, the second largest United Kingdom supermarket chain; Swedish-based IKEA, the world’s largest retailer of ready-to-assemble home furnishings; and SCA and Svea Skog (formerly Asi Domain), two of Sweden’s largest forestry companies. These and other businesses all embraced the FSC because they saw it as advancing their economic interests, but they reached that conclusion through varying combinations of “push” and “pull.” The “push” is that some of these firms were targets of campaigns by environmental groups dissatisfied with company practices such as dealing in old-growth timber: for instance, Home Depot was pressured by the Rainforest Action Network. As for the “pull” factor, companies recognized many opportunities for maintaining or increasing their sales to an increasingly discerning public. In defense of Home Depot and other companies whose motivation included some “pushing,” they understandably had to move cautiously while making changes in the network of suppliers that they had built up over many years. They then proceeded to learn quickly, to the point where Home Depot itself is now pressuring its suppliers in Chile and South Africa to adopt FSC standards.

  In connection with the mining industry, I mentioned that the most effective pressure on mining companies to change their practices has come not from individual consumers picketing mine sites, but from big companies that buy metals (like DuPont and Tiffany) and that sell to individual consumers. A similar phenomenon has unfolded in the timber industry. While the largest consumption of wood is for home construction, most homeowners don’t know, select, or control the choice of forestry companies producing the wood used in their house. Instead, the customers of forestry companies are big forest products companies, like Home Depot and IKEA, and big institutional buyers, like the City of New York and the University of Wisconsin. The role of such companies and institutions in the successful campaign to end apartheid in South Africa demonstrated their ability to command the attention of even such powerful, rich, determined, well-armed, and apparently rigid entities as the apartheid-era South African government. Many retail and industrial companies in the forest products chain have increased their clout by organizing themselves into what are termed “buyers’ groups” that commit themselves over a specified time frame to increase their sales of certified products, with preference for FSC-labeled products. Around the world today, there are more than a dozen such groups, of which the largest is in the United Kingdom and includes some of the largest U.K. retailers. Buyers’ groups are also increasingly strong in the Netherlands and other western European countries, the U.S., Brazil, and Japan.

  Besides these buyers’ groups, another potent force behind the spread of FSC-labeled products in the U.S. is the “green building standard” known as LEED (Leadership in Energy and Environmental Design). This code rates the environmental design and use of materials in the construction industry. An increasing number of American state governments and cities give tax credits to companies adopting high LEED standards, and many American government building projects require companies involved to follow LEED standards. This has turned out to be a significant consideration for builders, contractors, and architectural firms that don’t deal directly with the public and are not very visible to consumers, but that nevertheless choose to buy FSC-labeled products because they benefit from decreased taxes and increased access to bidding on projects. I should make clear, in connection both with LEED standards and with buyers’ groups, that both are driven ultimately by environmental concerns of individual consumers, and by the desire of companies to have their corporate brand become associated with environmental responsibility by consumers. What LEED standards and buyers’ groups do is to provide a mechanism whereby individual consumers can influence the behavior of companies that would otherwise not be directly responsive to individual consumers.

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bsp; The forest certification movement has spread rapidly around the world since the FSC’s launching in 1993, to the point where at present there are certified forests and chains of custody in about 64 countries. The area of certified forests now totals 156,000 square miles, of which 33,000 are in North America. Nine countries each contain at least 4,000 square miles of certified forests, led by Sweden with 38,000 square miles (representing more than half of that country’s total forested area), and followed in descending order by Poland, the U.S., Canada, Croatia, Latvia, Brazil, the United Kingdom, and Russia. The countries in which the highest percentages of forest products sold are FSC-labeled are the United Kingdom, where about 20% of all wood sold is FSC-certified, and the Netherlands. Sixteen countries have individual certified forests exceeding 400 square miles in area, of which the largest in North America is the 7,800-square-mile Gordon Cosens Forest in Ontario, managed by the Canadian timber and paper giant Tembec. By the near future, Tembec intends to certify all of the 50,000 square miles of forest that it manages in Canada. Certified forests include both publicly and privately owned ones: for instance, the largest single owner of certified forest in the U.S. is the State of Pennsylvania, with about 3,000 square miles.

  Initially after the formation of the FSC, the area of forests certified was doubling each year. More recently, the rate of growth has slowed to “only” 40% per year. That’s because the first forest companies and managers that became certified were ones that had already espoused FSC standards. The companies whose forests have become accredited more recently tend to be ones that must change their operations in order to achieve FSC standards. That is, the FSC initially served mainly to recognize companies with environmentally sound practices, and is now increasingly serving to change the practices of other companies that were initially less sound environmentally.