“Over the last 100 years the forestry sector in West Africa has almost solely involved of the logging of the natural forest, the area having once been almost entirely covered by primary rainforest. This has resulted in almost 90 percent deforestation over the period,” says Andrew Collins, Chief Executive of Miro Forestry.
Deforestation, illegal logging and climate change are acute problems in West Africa. At the same time, there is a strong and growing need for sustainably produced wood and wood products. Timber is increasingly needed for example for industrial use, construction and for transmission poles for rural electrification. For instance, according to FAO, Food and Agriculture Organization of United Nations, with current levels of natural forest exploitation, Ghana’s forest resources will be exhausted by 2030.
Miro Forestry is a commercially focused and sustainable forestry business with operations in Ghana and Sierra Leone. Since its inception in 2010, the company has strived to be the leading commercial and sustainable plantation business in the region. The company has been aiming to become certified under the Forestry Stewardship Council (FSC®) Principles and Criteria, which provide a global benchmark to assess the sustainability of commercial forestry.
Now, the company is there; the process of having their Forest Management Units certified started in 2016, and now the units both in Sierra Leone and Ghana have passed the audits and are awaiting on the formal certificates.
Finnfund has been financing Miro Forestry since 2014. Becoming FSC certified has also been one of the aims of the support. In addition to requiring its clients to work towards compliance with international good practice standards, such as the IFC Performance Standards on Environmental and Social Sustainability. Finnfund also wants to encourage its forestry clients to become certified and provides support along the journey.
“There is no doubt that the FSC process improves a company’s operations across the board, it is not about the certificate but about the positive, sustainable and responsible management and systems that make the journey possible,” says Stephanie Doig, Director of Environmental, Health, Safety and Social Development.
The company operates sustainable forestry plantations with 30,000 hectares of land, including approximately 7,000 hectares of planted forest with a mix of fast growing species for the production of sawn timber, plywood, poles and biomass for the local and regional market. It manages its own forestry plantations, currently establishing 3,000 hectares of new plantations per annum.
It has taken Miro about three years to achieve FSC certification. This is because, operating in remote rural environment where there has been very little exposure to international health and safety standards, environmental and social practices, it has taken time to build such knowledge and natural compliance to such standards. The pre-assessments and audits have been carried out by the accreditation body SGS, based in South Africa.
“In West Africa, an area where FSC certification is rare, it is of increased importance that Miro Forestry operates responsibly, delivering significant social development and environmental enhancement, with an overall goal of being the favoured partner for all stakeholders, local and international,” Doig says.
Sustainability has been in the core of Miro’s way of working from the very beginning. Therefore, in terms of social and environmental sustainability, the FSC process has not changed the course of practices dramatically. What FSC does provide is external assurance, as well as transparent reporting channels.
“The largest challenge has been the introduction and implementation of new systems, especially the checks and balances aspect, integral to the FSC Principles and Criteria.”
“Another large challenge has been the awareness surrounding FSC, the Company has had to work with all stakeholders to increase the knowledge and understanding of FSC. This has been especially challenging in Sierra Leone, where Miro are FSC pioneers. This awareness ranges from local communities, employees to governmental bodies,” Doig says.
Miro views the step towards FSC certification as a multi-beneficial decision. Firstly, it will drive the company towards an increased focus on systems, controls and procedures to improve management effectiveness, quality control and operational cost efficiency. Secondly, FSC certification opens up access to international markets.
Thirdly, FSC certification standards currently provide guidance and frameworks to foster good environmental and social interaction, reducing risk of negative effects whilst enhancing the significant positive effects, and thus company value.
“For instance, FSC ensures that companies operate according to international human rights and labour standards, this has a positive impact on all employees, as often employers in rural Africa operate at a much lower standard”, Doig explains.
Additionally FSC ensures legal compliance, in a land-based industry this is especially important in terms of customary and legal tenure rights. FSC also ensures Free, Prior, Informed Consent (FPIC), which ensures a positive and mutually beneficial relationship with local stakeholders.
In the areas where Miro operates, deforestation is rife and there have been minimal efforts towards conservation. The FSC ensures that Miro is conserving at least 10 percent of its total land area, which has a direct positive impact on local biodiversity. Another benefit is the improved environmental and conservation awareness within the local communities which in the long term can promote further conservation, beyond the company’s direct contribution.
“Economically, there is no doubt that the systems that the FSC Principles and Criteria promote make for a tighter run ship. It also integrates internal processes and teams across the three FSC pillars, i.e. environmental, social and economic operations,” Doig explains.
Miro estimates that the total cost of complying with FSC standards will be approximately USD 250,000. On the assumption that a greenfield plantation forestry business is operating at a scale of 1,000 hectares of plantation establishment per annum, Miro estimates that this FSC compliance cost translates into an additional approximately 3 percent on total business costs on an ongoing basis.
Given the additional access to international timber markets, access to a greater pool of international capital, and the probability of enhanced local and international stakeholder support and workforce motivation, Miro believes the additional percentage cost increase is well outweighed by these benefits.
The forestry sector in West Africa is still dominated by logging of natural forests, but given the limited remaining forest areas and the increased drive to enforce sustainable logging practices, the region has now become a net importer of timber. This has increased the impetus and commercial proposition behind the establishment of forest plantations in the region – to grow timber commercially for forest industry and biomass-based energy, and to reduce the pressure on the remaining natural forests.
As a result, according to the CEO Andrew Collins, the last five years particularly has seen the start-up of a significant number of plantation forestry businesses as well as increased plantation development initiatives by the respective governments.
“It will however take another 50 years or more for this sector to start to mature as the understanding of plantation forestry, and commercial solid timber product manufacture from plantations is currently minimal,” Collins says.
“It is important now that plantation forestry continues to develop across West Africa, facilitated by government policy and catalyst sector investors, to build a sustainably industry and wood supply chain, and thus avert environmental catastrophes caused by deforestation and lack of sustainable timber supply.”
Country: Sierra Leone, Ghana
Sector: Forestry and logging
Year of investment: 2014
Forestry Stewardship Council (FSC®)
FSC is a global, not-for-profit organization dedicated to the promotion of responsible forest management worldwide. FSC certification ensures that products come from well managed forests that provide environmental, social and economic benefits. Forest owners and managers may want to become FSC certified to demonstrate that they are managing their forests responsibly. Along the supply chain, FSC certification can provide benefits such as access to new markets.
Since its inception in 1994, FSC certification has grown steadily. It now stretches across 81 countries covering over 194 million hectares of forests worldwide. Today, about 15 percent of global roundwood supply in the timber and pulp and paper sectors is FSC-certified.
The environmental and social benefits of FSC certification have been well researched, resulting in verified increased social and environmental benefits, however there has been little research on the economic impacts of FSC on forest operators. A recent report by the WWF entitled Profitability and Sustainability in Responsible Forestry; Economic impacts of FSC certification on forest operators summarises that on average companies can expect to see an extra USD 1.80 (or 30 percent) earned for every cubic metre of FSC certified roundwood sold, predominantly via price premiums and increased company efficiency. The study shows that although the investment costs of entering into an FSC certification process can be considerable, achieving FSC certification is likely to produce a net positive financial outcome for plantation forestry businesses.
Finnfund and forestry certifications
In addition to requiring its clients to work towards compliance with international good practice standards, Finnfund encourages its forestry clients to become certified and provides support along the journey.
The support provided can take various forms, including input to the development of management plans and practices, capacity building for the client’s E&S staff, knowledge sharing from other projects, introductions to new contacts, etc.
FSC or other certifications, such as PEFC, are well suited for both natural forest as well as plantation forest management in Finnfund’s operational area. Many of Finnfund’s forestry clients are already FSC certified and many are in the process. Finnfund considers FSC certification as a clear and practicable commitment to sustainable forest management practices as well as a competitive advantage in today’s global markets.
Photos: Miro Forestry ja CDC Group Plc