This column highlights companies in the business of providing solutions to
social and environmental challenges. Featured companies are typically held in
the SmallCap Innovations portfolios offered to Walden’s clients.
"Half the world's forests are now gone, and well over 30 million acres more
are lost each year. In the United States, more than half our national forests
have been logged, mined, or otherwise industrialized." This comment by the
Natural Resources Defense Council is typical of the disturbing reports issued
regularly by leading environmental advocacy groups. Responses to the plight of
the world’s forests have included limits on clear-cutting practices,
restrictions on logging in ancient forests, and increased use of recycled
content paper products. In addition, environmentalists, consumers, socially
responsive investors, and other stakeholders have pushed corporate consumers to
adopt more environmentally sensitive purchasing policies. Success stories
include new timber sourcing standards at The Home Depot, recycling programs at
Staples, and packaging standards at Nike.
As customers alter their purchasing habits, forest products companies have
responded. One well-regarded initiative to certify sustainably harvested timber
is the Forest Stewardship Council (FSC). Certifiers for the nonprofit FSC¾
a network with affiliates in 40 countries¾ audit
forest management activities and track the "chain of custody" of certified
forest products
Domtar Inc. is the largest North American forestry company to make paper that
meets FSC standards. Based in Montreal, Canada, Domtar manages 22 million acres
of forestland and operates 11 mills in the United States and Canada. Among the
well-known products using Domtar FSC-certified paper are some of the Harry
Potter books. Already 17 percent of Domtar’s timberland is FSC certified,
although only a small portion of its revenues come from sales of FSC-certified
paper. Domtar has partnered with World Wildlife Fund (WWF) Canada, however, and
aims to certify all of its forestland to FSC standards in the coming years. A
representative of WWF Canada told Walden that Domtar is a well-run company that
has the systems in place to move forward quickly with FSC standards
The U.S. forest products industry has its own Sustainable Forestry Initiative
(SFI). According to the Maine Audubon Society, the FSC and SFI standards are
similar with regard to protection of soil productivity, water quality, and
harvest rates. However, Maine Audubon notes that FSC standards exceed those of
SFI with regard to biological diversity, forest chemicals use, plantations,
exotic species, support for local communities and workers, indigenous peoples
rights, and reporting. Environmental groups also have an appeals process within
FSC to address concerns. For example, Rainforest Action Network, which is a
member of FSC and an opponent of SFI, is appealing an FSC certification
pertaining to Sumatran tiger habitat. —K. Scott and J. Frame (intern)