FSC® / Fair Trade dual labelling offers opportunities for product differentiation in an increasingly legal market

Kikole kidsInternational timber markets have undergone a major shake down in recent years. High profile Lacey Act investigations and the introduction of EU Timber Regulation have driven a focus on supply chain transparency to the point that in order to gain market access, legal assurance is no longer an option but is rapidly becoming a necessity.

Whilst much work remains to be done on weeding out illegal dinosaurs in the supply chain, the trend is undoubtedly set and this fundamental shift in attitudes to legality raises a challenge to those companies who wish to differentiate their products in terms of their ethical attributes.

Just a few years ago, a manufacturer could acquire a USP simply by sourcing wood responsibly and producing an FSC® 100% product. Over the coming years, as certified products trend towards industry standard, such differentiation is going to be harder to achieve.

New ethical wood standards

The FSC® / Fairtrade, dual labeling scheme, which has been under-going a limited trial since 2011, offers new opportunities for wood producers who have the highest ethical standards and product manufacturers who wish to use such claims in their marketing mix.

The initiative involves community forest-produced wood products that come packaged with the usual FSC® 100% ethical standards, but also the added value of a Fairtrade premium – a 10% added to the value of the wood when it is bought from the community.

Whereas it seems very hard, some might say impossible, to make FSC® premiums stick, consumers seem far more amenable to Fairtrade premiums and the general concept.

A 2008 international survey in 15 different countries found that over 50% of consumers recognized the brand and this is rapidly translating into market share: for example, 53% of bananas in Switzerland and 22% of ground coffee in the UK (source: Fairtrade Foundation, UK)

FSC® International recently announced that the dual labeling initiative would be extended for a further 3 years and new community forestry programmes would be brought into the scheme.

Ethically traded wood from Tanzania

Sound and Fair, which was established in 2009 to market FSC® 100% African blackwood from Tanzanian community forests, hopes to benefit from this announcement.

Although Sound and Fair does not yet have Fairtrade certification, from the outset it has been presented as a fundamentally fair trade initiative on the basis that it has enabled community forest owners to benefit from a 100-fold revenue gain, taking their share of log sale revenue from USD1 to USD100, far in excess of the typical 10% Fairtrade premium.

Jasper Makala, CEO of Mpingo Conservation and Development Initiative, which manages the Tanzanian FSC® community forestry group scheme, recently said:

“Through the fair trade in FSC® 100% hardwoods we are starting to see the transformation of livelihoods for forest-dependent people in Tanzania, with the foundations laid for new schools, improved healthcare, clean water supplies and diversified incomes.

“Companies that buy these newly available FSC® 100% fair trade hardwoods have the opportunity to become stakeholders in the community development process and, through ethical trade, acquire a powerful marketing message that can add significant value to their brand.”

Sound and Fair continues to market FSC® 100% African blackwood, primarily to the music industry, but in 2014 will be launching four newly available FSC® 100% fair trade hardwood species:

The species vary in density from East African padauk at 620kg/m3 to African lignum vitae at 1,100kg/m3. They have a wide variety of potential applications, including luxury furniture, flooring, windows and doors, highly durable decking, professional musical instruments and exclusive household and consumer products.